Older Americans embracing bonds

By Robert B. Reich

When middle-aged and older people feel unsafe, they run to the familiar and reliable, even if it’s deadly dull. Younger people who feel threatened are more likely to take risks in hopes of finding something better.

This generational difference explains a great deal about what has happened during the most tumultuous two weeks in recent American economic and political history.

Since Feb. 24, with the lethal coronavirus spreading around the world, middle-aged and older Americans — not only most vulnerable to the disease but also accounting for most retirement savings — have been fleeing stocks for the relative safety of U.S. government bonds.

The stampede has gutted the stock market while reducing bond yields, which move in the opposite direction of bond prices, to unprecedented lows. The interest rates on the 10-year Treasury note fell last Friday to a record-breaking 0.71 percent.

Despite the Fed’s half-percent cut in interest rates last week and the Labor Department’s upbeat jobs report on Friday, the flight to safety continues. Bonds are deadly dull, but when the economy is wracked by uncertainty, they’re the safest havens available.

The rush to safety didn’t end there. In last week’s Super Tuesday primaries, older Democratic voters stampeded toward Joe Biden.

As recently as Feb. 22, only 17.3 percent of Democratic voters supported Biden, according to the RealClearPolitics aggregate of polls. Less than two weeks later, Biden’s support had surged to 34.3 percent.

Biden was helped by his strong showing in the South Carolina primary and by the last-minute endorsements of South Bend, Ind., Mayor Pete Buttigieg and Minnesota Sen. Amy Klobuchar. And by fearmongering over Bernie Sanders by Democratic insiders, big funders and pundits.

But the rapidity of Biden’s ascent was fueled by a sudden flight to safety among older voters.

Biden is the political equivalent of U.S. government bonds. He may be boring, but at least he’s familiar and safe.

Younger voters are still counting on Sanders. They’re looking beyond the immediate coronavirus and financial crises to the larger existential crises of this century — climate change, health care, inequality and corruption. Their time horizons extend beyond those of their parents and grandparents because they’ll be here longer.

The generation gap revealed itself on Super Tuesday. Voters ages 45 to 64 preferred Biden by 17 points over Sanders (42 percent to 25 percent), according to ABC News/Washington Post exit polling.

But Sanders triumphed with younger voters. In Texas, Biden won the support of just 17 percent of voters under the age of 45, while Sanders won only 19 percent of voters over 45. In Colorado, Biden won a mere 8 percent of the under-45s, while Sanders pulled down just 20 percent support among their elders. In California, Biden’s support among sub-45 voters came to a bare 9 percent; Sanders won only 22 percent of those over 45.

Meanwhile, as the coronavirus and its financial fallout continue to spread, Donald Trump appears even more dangerous than he did just weeks ago. The deceptive, narcissistic, vindictive president is helping transform a public health problem and financial slide into a double-barreled national emergency.

Last Friday, while wearing his own re-election campaign merchandise, Trump gave a disjointed news conference during which he called Washington Gov. Jay Inslee, who has criticized Trump’s leadership on the coronavirus, a “snake.”

Trump also claimed the coronavirus test was available to all who needed it, but anyone who’s tried to be tested knows that’s untrue. As of this past weekend, no more than several thousand people could be tested per day.

Trump is facing crises that elude his capacities to con. He can’t bully the coronavirus. He can’t intimidate or threaten it into submission. He can’t convince it to go away or make a deal with it. Nor can he order the stock and bond markets to do better.

The coronavirus is in plain sight. Hospitals and clinics are overwhelmed. As of Sunday afternoon, authorities had reported 537 coronavirus cases in the United States, and at least 21 people have died.

The germ-phobic president may even be worried for his own safety. He called off a scheduled visit to the Centers for Disease Control because of a suspected case of coronavirus at the CDC itself, and then put it back on his schedule when the person tested negative. But at some point not even Mar-a-Lago will be completely safe.

Most of Trump’s supporters are middle-aged and older, with little or no savings to tide them over through a recession. If the double-barreled crisis deepens, they too are likely to flee to safety next November.

Politics and economics are complex, but in times of crisis they follow simple rules. Older people want safety. Younger people want change. Everyone wants leaders they can trust.

Robert Reich’s new book, “The System: Who Rigged It, How We Fix It,” will be out in March.

By Patricia Older

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