S&P Down to 400 by 2014: And you thought there were bears here!

with the demographic tsunami that is hitting us (bb retiring and labor force already shrinking) i don't doubt something like this is possible.

the only thing that can bring the stock mkt up is inflation, but Bernanke has absolute no control where his liquidity will create inflation. my bet, consumer price inflation and asset price deflation will be here to stay for a decade. exactly hte opposite as for the last 10 years. that wouldn't be bad, it's just tricky as an investor.

now, after watching Bernanke and Paulson printing i came to the conclusion that we are going to print our way out of the problem of having FICA's surplus shrinking (cause the surplus is actually a source of spending) and then turn negative. it should be less than half a trillion per year for 10 years. in 15-20 years demographics seem to improve.

I find this analysis of Tobin's Q Ratio/S&P and the aftermath of our government's effort to flood the economy with liquidity sadly cogent. 15-20 years seems a long time to wait for improvement, and I'm not sure demographics will improve if people decide they can't afford children. Immigration has kept our population size healthy, but there are numerous indicators that the influx of immigrants is quickly waning.

aboutready,

the bulk of the future labor force growth will come from kids of minorities educated in the public school system. improving it is key for future labor productivity. econ growth is not only the size of the labor force but also it's productivity.

I'm pretty sure demographic numbers currently being floated assume a certain rate of growth that I'm not sure we'll reach. Our labor force is highly productive, productivity rates have been increasing at quite an impressive rate. Your assumption also assumes that the next generations will be better educated via the public school system. Japan has a stellar educational system, yet it is being crippled by a rapidly declining birth rate. Economic growth relies on many factors, I was merely indicating one where I felt the projections were overly optimistic.

sure. japan has to deal with a tiny worker/dependent ratio, the cost of longevity. it might be the case that as countries age workers try to lessen the burden by reducing the quantity of young dependents.

productivity growth estimates seem optimistic, unless something new like internet during the last decade shows up, i don't see it happening. besides, the older dependents demand the type of service where productivity improvements are harder to obtain (bathing, driving to the doctor, feeding, ...)