Goodby Gerber

 In the 21st century, the U.S. could be the slowly aging leader of a rapidly aging world.

—David Brooks, NY Times, 12 March

We hold that the huge population bulge of young people with little to do in Arab countries is a problem. That’s today. Tomorrow’s bigger problem is that the Arab world has joined much of the rest of the globe with birth rates that are suddenly, stunnningly below  population replacement. According to the US Census Bureau, Iran now has a similar birthrate to New England–which is the least fertile region in the US.

Brooks writes: The speed of the change is breathtaking. A woman in Oman today has 5.6 fewer babies than a woman in Oman 30 years ago. Morocco, Syria and Saudi Arabia have seen fertility-rate declines of nearly 60 percent, and in Iran it’s more than 70 percent. These are among the fastest declines in recorded history.  

It is no secret that Japan is aging, that Russia has 6 million fewer people than in 1992, and by 2030 there will be many more older workers (50-64) than young workers (15-29) in China, putting serious restraints on economic growth (sorry, China bulls). The big news, though, is the fact, inconceivable to perpetual population bomb worriers, that nearly half the population of the world lives in countries with birthrates below the replacement level. (http://www.nytimes.com/2012/03/13/opinion/brooks-the-fertility-implosion.html?_r=2&hp)

Not a good time to be in the baby food business. Or to be training to be a pediatritian, or an obstetrician, or a teacher, or a University, or, a few years from now, an employer desperate to find working age people to fill jobs. Population growth drives economic growth and we are seriously short on baby making now.

This downtrend in birthrates is the most compelling evidence yet of a Grand Supercycle downturn in social mood. Imagine the hysterics when today’s stock investors realize that the stock market, at 25 times earnings, is priced for growth that ain’t gonna be happenin’.

Observations

Speaking of hysteria, the notion that we are running out of oil is worth noodling over.  The hedge fund-driven speculative oil bubble has run up the price enough to have oil men furiously drilling out West and fracking back East, with the mostly unadvertised effect that we’ve got scads of oil now. The Elliott Wave Financial Forecast reports that the US is now “the closest it has been in almost twenty years to achieving self-sufficiency.” Pipelines designed to pump oil and gas into the US are now being reversed to pump oil out. This at a time when US consumption of oil and gas is headed steadily downward.

Once again, oil proves to be just another commodity with boom-bust cycles. I see no reason to alter my idea that gas will be closer to a buck than two bucks a gallon by 2016.

Cheers,

Rod

The author makes no representation as to the accuracy of the quoted material, but believes the sources to be reliable. No one should consider any part of this presentation as a recommendation to buy or sell any securities whatsoever.

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