Business/Finance

The end of the Millennial Generation

By Greg Stene

We may be witnessing the absurdly quick end to the Millennial Generation.

This coming Monday, September 29th may take care of it all.

For years:

  • we had the advertising world getting a handle on the Millennials at a huge cost and professional upheaval of all it once held true
  • we had the world of employment turning itself upside down to accommodate the Millennials’ justified lack of employer-loyalty, work performance on their own terms, and the quick-shift from employer-to-employer they represented
  • there was the idea of friendships made in social groups being more important than those made at work
  • the world of casual friends on social networks was good enough for a lot of people
  • the form of independence from the Millennial stereotype so carefully crafted as the youngsters refused to accept the limitations of the stereotype and grew beyond it every two years or so, keeping marketers from ever really understanding them
  • and the confidence in themselves and the future, that some older people around them never quite got used to …

It all ends over this short weekend.

Two things came up this Thursday night, the 25th.

First, the apparent coming agreement on the massive $700,000,000,000 bailout has been tossed up on the rocks of uncertainty (sounds like a place where it rains a lot) in a mess of a president, two contenders, two political parties, a power struggle and just way too much to bother with here.

So, the money markets become even more unstable, even more unsure of the future. You begin to kiss off investment money into companies and their expansion because money is far too valuable to invest in anything remotely risky, and nearly any company’s survival these days is a real risk.

You begin to kiss off jobs, since companies can’t expand without investment and loans. You begin to kiss off sales since people are afraid to spend money because they’re afraid of losing their job and their homes.

Second thing, announced relatively late this Thursday evening. Washington Mutual (WaMu) failed … the United States’ largest bank failure ever … “the biggest bank failure in history,” according to the New York Times. Regulators rushed in, took over, and sold the whole damned thing off to J.P. Morgan Chase.

This biggest bank failure ever. Tonight. In this country.

And in this crisis of confidence, the Millennials died.

They likely didn’t know it. But their independence on the job and their lack of loyalty to a job just went four-feet-up. Jobs will become scarce, and the competition for them will become real. To have and to hold, will become the dictum. And relationships forged in mere months on the job will be far more important than lifelong social friendships because the people you know on the job will help you stay on the job.

Money once spent on fun will become as hoarded as fresh water in a hurricane’s aftermath.

The belief that you could grow to become a leader where you worked was quashed, replaced by the need to quash those around you to keep your job. There will be little time to think of advancement.

Owning a home was once an independent dream accomplished on your own. Owning a home since this weekend means inheriting it.

What does all this have to do with advertising?

We advertisers thought we owned the Millennials for a good decade or more. We had them stereotyped, we believed we had them figured out and we thought we were just steps away from having them ready to buy into the world we had prepared. And we had spent ungodly amounts of money in ourselves, learning everything about this perfect-storm target generation so we could communicate with them on a meaningful level.

But all that’s been blown to hell now. They are not the people we got ourselves ready for. As of this weekend, they are not the wealthy generation we had thought they would be. The jobs are gone, their parents need their money to keep the house and buy gas, and they don’t share that money with the kids anymore.

We, in advertising, in the short time of a weekend, lost our good friends the Millennials, and they were turned into another generation we have yet to find the right name for.

But we probably have half of the name of our new period in time figured out. It will have a descriptor word or two in front of the actual word. It will have the ring of, The Great … or something like that.

Whatever we front-end it with, it will end with the word we had thought we’d left behind. We will call it The … Depression. The one that killed the Millennials.

29 replies »

  1. About a year ago i was talking with my grandfather, discussing the general state of the world, and i told him that i fear my generation having to rise to the occasion as his did. (I’m not millennial, i’m X, but close enough.) A nearby uncle scoffed; my grandfather stayed silent for a moment…then, “I’m afraid you will too, Lex, I’m afraid you will.”

    Secretly i wanted him to tell me how and why i was wrong.

    I could be wrong, but i get the feeling that “life” wasn’t all that easy before the Great Depression anyhow. Many people lived off the land and so were used to instability and the vagaries of existence. Many more were recent immigrants that had already given up whatever little they had to start over. They were a tough lot to begin with, while we are not.

    Here’s to hope that myself and my siblings (metaphorically) will rise to the challenge, as it may be a significant one.

  2. Lex,

    As nothing is ever guaranteed, we will all have to rise to many challenges in the future. Although I’m fundamentally bullish on this country for many reasons, I run a lot of different quant style economic models for my trading, and the possibility of a world wide depression is not of low probability. That being said, think of a business cycle like a naturally occurring forest fire. One needs a fire every once in awhile in order to clear excess underbrush, recycle nutrients, and allow future growth. The last depression, which bottomed in 1932-33, cleared the way for sustained economic growth until the end of 1969. As one has to accept the change of the seasons, one has to accept the cyclical nature of economic activity that has occurred since biblical times.

    Am I happy with economic malaise…..certainly not, but I do accept the reality and go from there. Do I wish to play the blame game? Again no, as we’re way beyond that. Do I wish to inject politics? No way. Politicians on both sides are merely an extra tax on those who are in the business of earning a profit, and I’ll just have to deal with that.

    That being said, I wish everyone prosperity, and a new sense of rugged individualism whatever their personal credo might be.

    Jeff

  3. Interesting article.

    Nothing natural in the economic cycle about allowing people to drown in deb. Nothing clever about the lifting of the sound rules and regulations that allowed for a conservative, steady and safe approach to doing business.

    Islam and Christianity both warned about the dangers of usury.

  4. Jeff,

    I would not begin to disagree with your take on the economic cycle. I do feel, however, that all of our attempts to escape the lows that must come with the highs will only make the low that much worse when we can no longer avoid it. To use your forest fire metaphor, it seems as though we’ve let the undergrowth get out of control…never allowing it to burn naturally and refusing to clear it, so what would be a normal forest fire becomes an unstoppable inferno when it does catch.

    As for blame, greed is about the only thing worth blaming. It is possible to make a profit without succumbing to greed for having ever more. But that greed certainly bridges party lines. And there is no such thing as an innocent politician.

    I’m lucky to live in a place where the sense of rugged individualism is very much alive and well. We have very few Democrats and Republicans here; we have left leaning libertarians and right leaning libertarians. Rednecks who shop at the food co-op, buy solar panels, and use composting toilets. University liberals who go out and kill things for food in the fall. And we all get along quite well.

    I can’t say whether that rugged individualism is so alive and well elsewhere in America. What i do know is that it is a difficult thing to learn, though necessity is often the best teacher.

    I have no doubt that America can make it through most anything, my doubt is in how we make it. We won’t make it through well unless we come together, accept the reality, not play the blame game, and not inject politics.

  5. Elaine,

    Although Islam and Christianity warn about the danger of usury, it should be noted that money is just a commodity that can be bought, sold, rented, given, stolen, transferred, subordinated, hypothecated, lost, invested, gambled, or hidden in the mattress. Money needs to work to have value to society.

    The nature of business is to maximize profits for owners. The nature of people should be that of thrift, not of living beyond their means. As far as regulations go, it’s kind of late to play the blame game, or the would of-could of-should of. Certain large scale economic events(panics) occur every century or so, and this just happens to be the time for this one.

    Somehow, I think we’ll muddle through this one.

    Jeff

  6. Jeff

    You cannot compare the stupid relaxing of rules and regulations, the complicity of governments in giving the markets a free hand to fleece people as well as feed to them and then make them over-dependent on credit to past financial down-turns when people had more REAL jobs to support them in society. Real jobs in the UK have been decimated.

    I’ve lost count of the number of people trying to sell the ‘natural cycle’ of the current mess to gullible people. It is not natural. The governments on both side of the pond have been irresponsible and the banks disobeyed their own natural cautious instincts when it came to doling out credit to the masses. The true fiscal conservative is now extinct. The dinosaur stands a better chance of coming back.

    China has learned a lot, copied much but will now be less inclined to follow the model.

    Yes, people will muddle through ~ the Dunkirk spirit lives on. :/

    Elaine

  7. Elaine,

    It is hard to discuss business cycles with anyone who refuses to believe that the business cycle is anything but natural. If it’s not natural, then logic would determine that an event(economic cycle) that has occurred on an average of 5 times a century since the the apex of Babylon, to be irrational. I made no mention of government relaxation of regulations and rules(you’re putting words in my mouth)…..but I do encourage the reduction of taxes. Over-dependence on credit is a personal moral failure, not a business failure. Nobody forces one to run up plastic debt while sipping $4.50 lattes at Starbucks. After all, thrift is a virtue. Business only exists to satisfy a need and earn a profit, otherwise it wouldn’t be in existece.

    Actually, governments exist to siphon money from the real producers, the people who earn a profit, and transfer it to others. Government and academia is full of people making rules who have never, ever had to deal with making a profit….and profits are what make the world go around.

    I agree with you that the governments have encouraged excess. In the US, the Community Reinvestment Act, the order for Fannie and Freddie to buy crap mortgages, and the high corporate taxes have all contributed to this slowdown. People who have no business owning houses were buying them like crazy with 2/28 mortgages and other exotic things. The people who bought the houses should have used due diligence in reviewing the terms of the loans, and the government should have enforced lending standards. The standards were there, just not enforced, and I hold the current administration partly accountable.

    I do wonder about your comment on the decimation of jobs in the UK? I cannot find anywhere, a 10% loss in jobs over any period of time since the great depression in the UK, in any of the financial press. All I can find is that unemployment rose to 5.5% from 5.3% over the last quarter, from data released Sep 17th.. Unemployment in the UK was much higher in the pre-Thatcher days, when the UK was a much more socialist place and the unions held sway.

    I do take exception with your statement that “The true fiscal conservative”{ is extinct. There’s plenty of us out there.

    Although the media marvels at the China economic miracle, that same media was touting the Japanese model in the 80’s, and we all know what happened to Japan’s economy. China is not immune to the business cycle, as evidenced by the plunge in their markets, interest rates, and the plunge in the Baltic Dry Index. Corruption is endemic in China, and the average annual income for a professional in China is $3600. Rural workers make an average of $870 per year. There is a significant widening between rich and poor in China, the gap being much worse than in the US and UK.

    However, we are past the blame game and hand wringing. Study the root causes past panics and depressions to figure out how to deal with this one personally, and don’t trust government to bail you out. Markets and economies are so much bigger than any government, and without being proactive, you’re at the mercy of the government.

    Jeff

  8. Jeff

    If people truly en masse followed the old model of credit/debt ratio (and did not spend the credit dollars that they could not afford in today’s consumer based economy on a “starbucks coffee” or car/house/consumer goods) your credit based economy (promoted by governments and spivvy gamblers) would grind to a halt. Deny it all you like but the modern economy operates more like a drug pusher/peddler when it comes to a nation’s people.

    The economy runs on large markets and the ability of people to purchase a car/a house/food/goods. Gosh, there is a danger of that credit flow not re-starting properly right now isn’t there? Must be why Governments have to blow up a few dams to dump water in the dried up riverbeds.

    There is nothing natural about institutionalising greed and making it the modus operandi of society. There is a reason why people consider business to be evil in so many respects. It has the ability to destroy lives. And the mafiosa types sitting in their ivory towers do not care. Whoring as a way of doing business is not something to admire or emulate. Manmade misery is something we can/should do something about.

    Real jobs centres around the real ability of a people to produce their own food, make things and then trade with one another. There is trust, there is a base and there is a solidity. Britain’s REAL jobs (manufacturing) accounts now for only around 13% of all jobs. Compared to what it was counts for a decimation in that industry in my book.

    Clever old China to ban short trading within her borders!

    I am reminded of Global Warming Deniers and their belief that the current challenges we face are ‘natural’.

    http://www.jrf.org.uk/knowledge/findings/housing/569.asp

    Elaine

  9. While i still won’t debate the natural highs and lows of the business cycle in a free market, i will say that what we have is anything but a ‘free’ market. If i understand things correctly, we should have experienced more significant lows several times over the last two decades. But every time we get close, the Fed rushes in and manipulates the market through monetary policy.

    Throwing thrift out the window is a matter of personal responsibility; however, it was not so long ago that most sub-prime borrowers would have been laughed out of the bank if they expected a mortgage. The banks give credit cards to people who have terrible credit, and it seems that the more willing you are to rack up huge credit card debt, the more willing they are to give you a credit card.

    Main Street played right along, but Wall Street blew the real estate bubble to the proportions that it achieved. And now that it’s popped the blowers expect Main Street to foot the bill. That’s not a “free” market. If i took a mortgage that i can’t afford, nobody is going to bail my ass out. I’d lose the house, but at least the house would have some intrinsic value. The paper that Wall Street wants us to buy from them is just that: paper. It has no intrinsic worth.

    Corporate taxes are a canard, Jeff. Yes, the US has a relatively high corporate rate, but it also has loopholes big enough to push a sweatshop through. The last numbers i saw suggested that around 2/3’s of America’s largest corporations pay no taxes at all. It doesn’t matter what the official rate is, it matters how much they actually pay.

    Making a profit is a “noble” pursuit. But the fundamental problem is making a profit without actually making anything. If a profit is made without adding value, that profit is really just skimming. A profit alone is not noble. The quest for profit alone has been the prime mover for labor arbitrage and the like. Maytag’s quarterlies benefit from moving the factory to Mexico and shifting from $27/hr labor to $1/hr labor…but i haven’t noticed any corresponding drop in the price of a washing machine. Which makes me wonder where all that extra money went. It went to a host of people who had nothing to do with making, moving, or selling the washing machine.

    Wall Street has no loyalty to America; its only loyalty is to profit. Consequently, it has sullied a noble pursuit with gluttony and avarice…those were deadly sins the last time i checked.

  10. And why did Maytag have to pay $27/hr in the first place. Manufacturing is going to go to wherever the lowest costs are. If you’ve checked the price of washing machines lately, there’s a good one on sale at Sears for $199 right now.

    If making a profit without making anything is wrong, should a person’s 401-K never increase in price and make a profit? Should you not earn interest on money saved? After all, you’re not doing anything.

    Why should Wall Street be loyal to America?

    Making a profit without “doing anything” is another canard. People who are “skimming” are accepting risk, and rightfully should be paid for that risk.

    When I was a very young man, I read Ayn Rand, and one of her passages provided a road map for my life. She said,

    “The symbol of all relationships among such men, the moral symbol of respect for human beings, is the trader. A trader is a man who earns what he gets and does not give or take the undeserved. A trader does not ask to be paid for his failures, nor does he ask to be loved for his flaws. The mystic parasites who have, throughout the ages, reviled the trader and held him in contempt, while honoring the beggars and the looters, have known the secret motive of the sneers: a trader is the entity they dread — a man of justice.”

    Very aptly put.

    Jeff

  11. Elaine,

    China still allows short selling in companies with a capitalization of 800 million yuan, which is most. However, there are many, many other ways to go short..I could give you at least a dozen ways to short anything without actually shorting the actual stock.

    Speaking of short selling. During the Hunt Debacle in silver(when silver went from $7-50), the NYMEX banned short selling and destroyed the metals markets for 8 years. The Chicago metals markets never recovered. Just because you ban short selling doesn’t mean that the market is not going lower. Short selling adds liquidity, and when liquidity dries up, prices usually fall within a short time.

    That Guardian piece that you linked is an editorial, an opinion…….just like yours or mine

    jeff

  12. Jeff

    I linked to the Guardian piece because it is an opinion worth reading. It helps to have a common language. :/

    If it were not for the Democrats in the USA where would the Republicans take us next? And I mean us. Britain (for better or worse) is joined at the hip to the USA. For now.

    Elaine

  13. Elaine,
    In the USA, the Democrats have enough votes to pass a bailout bill by themselves. They want it to be “bipartisan” because the bill, the concept, stinks so bad that they don’t want to take the blame when it goes South. I find it interesting that sub-prime loans were offered in other countries as well, and the US paper isn’t the only tainted debt out there.

    Actually, in the USA, the Democrats are a majority in congress, and many people forget that they control spending.

    Interesting article from my favorite socialist, Peter Hitchens, on the Chi-Comms.

    http://www.dailymail.co.uk/news/worldnews/article-1063198/PETER-HITCHENS-How-China-created-new-slave-empire-Africa.html

    Jeff

  14. Jeff, I KNOW you aren’t going to try and lay all this on the Dems. Because while they’re certainly proving themselves feckless during their recently acquired majority status (assuming we buy that they’re really one party instead of two masquerading as one), the mess we’re in is of Republican manufacture. And if you were to try and make it about the Dems because they’re in power, you KNOW that your credibility would take a potentially fatal hit, right?

  15. Taking a risk is not the same as adding value (or actually making something), and i did not say that there should be no profit for it. My point was that we’ve got our priorities out of whack. Money saved is a far, far cry from betting.

    I don’t know why Wall Street should be loyal to America. Should i be loyal to America? I’m told regularly that i should be. I’m told that i should “buy American” (even though the American corporation feels no obligation to make American); i’m told that i should be patriotic; one presidential candidate is even telling me to put “Country First”.

    Perhaps a better question would be: who is Wall Street loyal to? And if they have no reason to be loyal to America, how can it expect America to be loyal enough to hand the Street hundreds of billions of dollars to cover its over leveraging, bad bets, and shady instruments of ethereal profit?

    The price of goods has to come down, if for no other reason than the American worker (traditional middle class) has been ground down in the name of quarterly profits to make Wall Street happy.

    I have no fundamental problem with traders, Wall Street, etc. In fact, i’m quite fiscally conservative…which is why i can’t vote for a Republican; it’s been a long time since i’ve seen anything approaching fiscal conservatism from the Republican Party. (or any conservatism beyond gay marriage and abortion).

    “A trader does not ask to be paid for his failures…” does that still hold true? It sure looks like traders and their houses are expecting to be paid for their epic failures of late. I don’t remember hearing any complaints from the Street in 2006 when the leveraging limits were abandoned. But now that over leveraging is causing collapse, we’re being held hostage and hearing about the fire and brimstone that will come down on our 401-K’s, etc unless we pony up and save the Street from its own greed.

    This isn’t personal, its general.

  16. Dr. Slammy,

    I think I earlier said that both sides were implicated. I also said that we’re way too late toplay the blame game.

    Lex,

    The mechanics of the deal doesn’t quite mean that the houses are getting paid. The traders aren’t getting paid…..there’s a great difference between an individual trader than a house. I don’t expect to get paid for any losing trades, nor would I accept any payment for a losing trade. I make a decision, and if I’m right, I expect to be handsomely rewarded for my correctness.

    The government is buying paper that shouldn’t have been issued. However, the ultimate root cause of all that paper was the Community Reinvestment Act. The government has to atone for it’s sins. As I would assume that you get your market news from the mainstream, I’ll give you a pass on your assumptions. Leverage is only part of the underlying causes. The main cause is that bad paper from people who borrowed and defaulted.

    Re: Wall Street’s loyalty: People really don’t have a clue what “Wall Street” is. Wall Street is the sum total of everyone’s ideas distilled into a price. Price knows no loyalty.

    Here’s the real kicker. What happens if/when the bailout doesn’t work? My indications only give it a 50/50 chance of working. Despite government intervention, the market is going to go where it goes. What does that mean for Main Street? There will be pain, but prudence would dictate that the average 401-K holder should hold their position and not capitulate, as there is that inexorable. upward drift of the stock market to contend with.

    As for politics…..we’re way beyond politics at this point.

    Jeff

  17. Jeff: I’d say you’re part right and part less right.

    1) When one party is 90% to blame and another 10% to blame, it is technically accurate to say that both parties are implicated. It is not, however, a statement that leads us closer to the complete truth of things. The truth is that what we’re facing is primarily the result of GOP-driven deregulation that asserts the freedom of the marketplace as the cure for all ills, real or imagined. The right has run amok for at least 30 years or so and now the chickens have come home to roost. This is an important thing to remember.

    2) You’re sort of right in the “blame game” point – assigning fault doesn’t solve the problem. However, the nicely dismissive “blame game” meme that has served Republican leaders so well over the past few years is designed to draw our attention away from the fact that we got where we are for REASONS. More importantly, by noting who was responsible, we DEMAND ACCOUNTABILITY and we hopefully are reminded that if Bob got us into this mess by doing X, then giving Bob free rein to do more X is unlikely to solve the problem.

  18. Dr Slammy,

    As for being right or half right, I only care if I’m right about the market:)

    Since you insist on playing the blame game, here’s a video you ought to watch to see the most accurate description of how we got into this mess. It’s 11 minutes long, but watch it, please. It’s a different take on what you’ve been taught.

    You won’t like it though, because it cuts out the heart of what the mainstream media says.

    Jeff

  19. Jeff, when I try to watch your link I get the following error. “This video is no longer available due to a copyright claim by Warner Music Group”. What’s up with that?

  20. It is apparent that the people that put the video together didn’t get copyright OK. Someone must have complained, as the video had 800,000 hits in 4 days.

    If they re-post it without the music, I will put it up.

    Jeff

  21. Jeff,

    Point taken about differentiating between traders and houses. I get my assumptions from a broad variety of sources. The only mainstream media that i read (don’t watch because i haven’t owned a television since 1999) is The Economist. I always try to find multiple sides of a story and as many actual facts as i can; i then distill them for myself and to the best of my abilities…my abilities my want as economics is not my strong suit. (as an aside, i’m pretty fiscally conservative)

    I agree that the paper should never have been issued, but i agree less on the root cause being the CRA…though i can certainly see where it could be a (major) contributing factor. My take on the bad paper is that the issue is fundamentally about responsibility. Banks may have been forced to extend credit to less than fully worthy applicants in some cases, but i find it more salient that many originators did not have care about what would become of those mortgages. The whole game was to slice them up and rebundle them for sale. If i understand the theory right it was similar to risk pooling in insurance. But because they all got sliced up and rated according to the best bits instead of the worst (or average), the problem exploded. Correct me if i’m wrong, but a major problem with this paper is that nobody can determine what’s good and what’s bad…which forces lenders to assume the worst.

    Can the CRA be blamed for Greenspan giving his tacit approval to the explosion of exotic mortgages? If the CRA is really to blame, shouldn’t we have seen the fallout much sooner? And from what i’ve read, the default rate is not astoundingly high, yet the effects are as if huge numbers of people were defaulting.

    Leveraging may not be the fundamental problem, but it was (as best as i can tell) only in 2002 that the leverage ceiling was removed. I cannot believe that leveraging yourself at 30+ to 1 in order to buy shady paper is good business practice.

    I agree that the bailout is not a guaranteed fix; hell, i have significant reservations because i can see where it could have unintended, highly negative consequences.

    If Wall Street’s only loyalty is to profit, therein lies the problem…particularly if that profit is construed mainly as short-term. I’m not suggesting that Wall Street should forgo profit out of altruism, but there is more to life and a strong nation than profit. But maybe the real trouble is with us little people who bought into Wall Street’s creed of profit uber alles. The question then becomes, who will pay if Wall Street’s pursuit of profit comes crashing down?

  22. Here’s a link to that video that explains how we got to this subprime mess. youtube pulled it after 1.3 million views in 4 days. This is the best explanation, but will probably piss off those who have been spoon fed by the mainstream media. It’s 10 minutes long, but should be seen by everyone.

    But still, we’re way beyond the blame game.

    One should look at the buying opportunities that a good panic brings about. There should be buying opportunities of historic proportions, after this panic and irrationality subsides.

    Lex: The Economist is a worthy magazine, and is very useful to traders as a fade factor. The covers of the mag regarding oil going up and the dollar going down were totally wrong and astute traders used them as an indicator to fade. There have been 6 other instances in the past 4 years where the Economist got it wrong and made people rich. Frankly, I do find it to be a bit pretentious, preferring a Bloomberg terminal and the WSJ. But then again, I still read it.

    As long as there’s something to buy and sell, there is a market for it, and Wall Street will do OK. As for short term profits, those are the sweetest. No quality of cocaine can match the buzz when you put on a trade and make $30K in 4 minutes. That is the highest of the high.

    The best news comes from the National Enquirer, since they stopped the Weekly World News:)

    Jeff

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