I think the age wave theory has some merits... at least what I've read about it.
Look at Japan.. it has been the fastest aging society in the world and has had a birth rate near the lowest levels in the world since WWII and even a bit before. The early 1990s in Japan were a period of transition where not only was the proportion of people under 15 shrinking, but so was the 15-64 population. In contrast, the 65+ population was growing very quickly and continues to do so as more people retire than join the workforce.
Nobody can deny that since the 1980s, consumer spending in Japan has been weak, housing prices have plummeted, and there has been serious deflation.
Similar trends will occur soon in Europe. In fact, 2008 could have been the start. The post WWII baby boomers have reached their peak spending age of around 50 years old and the number of under 50s in many European countries will decline pretty much indefinitely after this point.
Older people are not as productive, they spend less money, but require much more money to be spent on them.
Luckily of all the developed countries, the U.S. is poised to avoid the nastiest of these effects. We have a relatively large young population compared with other developed nations.. and American women tend to have more children.
There's simply no way of getting around it. The economies in Europe and Japan will continue to shrink in the long term.. with gains in per capita GDP being the only growth due mostly to productivity gains and technological advancement.
That's what they get for being socialist
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