Why the next 30 years will kind of suck.

At a dinner party a few days ago, I was trying to explain what the sovereign debt crisis meant to average people and why it kind of sucks to be someone who is just starting their working career today. I hadn't used this analogy before, but might be pretty appropriate.

Imagine you and a few friends are driving a car really far.  Not just across the country, but back and fourth across the country forever, until there is no more country.  This road trip has to last as long as there is still a country.  You have this magic kind of car that produces gasoline for itself, but it doesn't  produce quite enough gas on its own to go very fast.  Say it can typically support the car going 25 miles per hour.  

So, as long as you and everyone in the car decide that 25 miles per hour is fine then you will able to drive forever.  Of course, it would be way more fun to go 80 if you could, right?  Well, a few years ago the drivers of the car made a deal with a gas station that will give you a bunch of gas for free, if you agree to give all that gas back in the future with a little extra.  Of course, just like you, those drivers wanted to go fast, so they signed up for the deal.  They filled the tank to the brim and took off!  Zoom, zoom!  Now, it's 30 years later and everyone has gotten used to driving at 60 miles an hour.

Today, the folks that have enjoyed riding in the car for the last 30 years are retiring and handing the keys over to the next set of drivers.  But after decades of speed, the gas tank is now completely empty.  Thankfully, the magic car still produces enough gas to naturally let us cruise at 25, which would be fine.  But the gas station that lent us all that gas back when is demanding that we pay back the gas that was borrowed.  So, it siphons off 10 MPH worth of gas as we drive.  Now our car can only go 15 miles an hour.  Compared to 60, that kind of sucks.

The sovereign debt crisis is the collective set of all cars slowing down.  Everyone has run out of this extra, borrowed gasoline.  If you are 60 or older, you got the chance to spend most of your working career in a car zipping along at high speeds.  For younger workers, this new pace of 15 is going to feel really slow compared to years past.  If you are just starting your career here, welcome to a period of suck.  It may not be 15 miles an hour forever, but it's very unlikely that you'll get to see 60 MPH in your working years.