416 of 429 people found the following review helpful
5.0 out of 5 stars Endgame: Road to Perdition or Rejuvenation?
John Mauldin and Jonathan Tepper clearly set the stage for how to invest and profit from what they call the "Endgame." The Endgame follows the "Debt Supercycle." The debt supercycle refers to the unsustainable rise of debt over a period of 60+ years mostly in the private sector of the developed world that culminated into the global financial crisis that erupted in...
Published on March 7, 2011 by Serge J. Van Steenkiste
67 of 67 people found the following review helpful
3.0 out of 5 stars Good general overview of current situation
I've been reading John Mauldin for a while now. I've read other books of his and am used to his sometimes strange style that mixes serious scholarship with very colloquial language (for example, he refers to Reinhart and Rogoff, an overview of whose book gets its own chapter, as "wicked smart") with some occasional and annoying name dropping (anybody who's anybody in...
Published on June 24, 2011 by Glenn Corey
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416 of 429 people found the following review helpful
5.0 out of 5 stars Endgame: Road to Perdition or Rejuvenation?,
This review is from: Endgame: The End of the Debt Supercycle and How It Changes Everything (Hardcover)
John Mauldin and Jonathan Tepper clearly set the stage for how to invest and profit from what they call the "Endgame." The Endgame follows the "Debt Supercycle." The debt supercycle refers to the unsustainable rise of debt over a period of 60+ years mostly in the private sector of the developed world that culminated into the global financial crisis that erupted in 2007-08 (pp. 8; 12; 15; 25; 40; 108). The endgame points to a crisis in the public sector debt, which (will) occur when (Western) governments run into the limits of their ability to borrow money at today's low rates (p. 25).
The transition from the debt supercycle to the endgame is characterized, for the most part, by a transfer of debt, not an extinction of it, from the private sector to the public sector (pp. 24-25). Western governments and central banks have run large fiscal deficits and printed massive amounts of money to reduce the impact of the multiyear balance sheet recession in the private sector (pp. 8; 13; 24-25; 29; 58-63; 98-104; 136-141; 155; 158; 172-174; 227; 230; 252; 267-272). To their credit, Mauldin and Tepper clearly explain why deficits matter. Unfortunately, countries like the United States have mostly not run surplus and pay down debt in good times so that there is room for a policy response in bad times (pp. 54-57; 178-180; 188-196; 224; 235; 249). Unless central banks print money, the financing of large government debt runs the risk of crowding out business investment that relies on savings of consumers and businesses (pp. 53; 121-122).
Mauldin and Tepper are not surprised at all about this policy of kicking the proverbial can down the road that will result into greater systemic instability with more macroeconomic volatility and greater variability of inflation rates (pp. 29; 34-44; 73-89; 154; 240; 254; 271). Most politicians in the developed economies have a hard time to address any long-term problem because most voters prefer to opt out of a long-term gain if a short-term pain is required (pp. 3; 7; 118; 129; 182; 188; 218; 238). The authors warn public decision-makers and their respective electorate that the longer hard decisions are put off, the more pain their country, state, or city will have to ultimately endure (pp. 6; 89; 92; 100; 155-156; 219; 226; 239; 245; 253-259). Like the private sector, the public sector will be hold accountable for trying to borrow its way out of a debt crisis (pp. 41; 55-56; 100; 259).
Mauldin and Tepper recommend that:
1. Americans reduce their personal leverage and save more. Policy makers have relied on debt and income transfers to mask the fact that low-end wages have become too high under the relentless pressure of globalization;
2. The U.S. economy shift from consumption, real estate, and finance toward manufacturing to start addressing the structural decline in its civilian participation rate. Germany has been thriving because the world has been buying its goods;
3. The United States put in place more tax policies to encourage new businesses and therefore new jobs;
4. The United States restructure Medicare, Medicaid, and Social Security thoroughly. No reasonably foreseeable rate of economic growth will overcome the structural deficit associated with these three major programs. Otherwise, a substantial value added tax will be needed to cover the cost and result into even slower growth;
5. The United States, its states, and its cities revisit the total remuneration package of their respective workforce. The status quo is unsustainable;
6. The United States take a cue from Canada by giving a higher priority to legal immigrants with degrees and money for a few years;
7. The U.S. economy reduce its over-dependence on foreign oil through steep taxation on gasoline to make alternatives more competitive that they are today. The tax burden in the United States is low compared to other countries around the world;
8. The United States use some of the proceeds, of a significantly higher taxation, on gasoline to fix its infrastructure, which is badly in need of repair;
9. The United States get serious about the much-touted nuclear renaissance by approving the building of a large number of new reactors (pp. 67-69; 85-86; 88-89; 118-119; 124-125; 137; 160; 167-169; 181-214; 243-244).
Mauldin and Tepper point out that there is no way to know in advance when bondholders will suddenly lose confidence in the ability of a government to pay its debt, even if that debt is denominated in a currency that the government can print (pp. 13-14; 32; 54-55; 57; 94-98; 125-127; 186-188; 259; 263; 279-281). When countries have too much debt, they usually inflate away excessive debt. Devaluation and default on debt are the two other options available to over-indebted countries (pp. 25; 110; 122-125; 128-131; 158; 180; 200; 229). To compensate for this higher perceived risk, bondholders will press for a rise in interest rates, which will further debilitate the capacity of a country to refund its debt (pp. 55; 105; 123; 231). A program of austerity becomes a necessity to bring the debt back to acceptable levels and to reinvigorate the confidence of bondholders (pp. 12; 154). Without the precarious and fickle confidence of bondholders, the ability to roll over (large) debt, especially short-term one, or borrow new debt at affordable rates, crumbles concomitantly with the liquidity of the financial markets and the economy (pp. 94; 96; 278).
Although Mauldin and Tepper do not offer any practical investment advice, they give a non-exhaustive list of possible investments to consider if one believes in either deflation and/or inflation (pp. 284-292; 294-296). The authors believe that deflation will precede inflation (pp. 133; 295). Mauldin and Tepper have a low confidence in the ability of Western central banks, including the U.S. Federal Reserve, to appropriately transition their respective economies from a deflationary era to one of controlled inflation. Therefore, timing will be critical to capitalize on an era of increasing volatility (p. 296).
67 of 67 people found the following review helpful
3.0 out of 5 stars Good general overview of current situation,
This review is from: Endgame: The End of the Debt Supercycle and How It Changes Everything (Hardcover)
I've been reading John Mauldin for a while now. I've read other books of his and am used to his sometimes strange style that mixes serious scholarship with very colloquial language (for example, he refers to Reinhart and Rogoff, an overview of whose book gets its own chapter, as "wicked smart") with some occasional and annoying name dropping (anybody who's anybody in economics or investing seems to be his good friend). But the important part of the book, providing an overview of the current situation and various outlooks (intermediate-, long-, and very long-term), is very good and will leave the reader with a more solid understanding of the ongoing financial crisis. It is rather pessimistic in the intermediate to long term, though very optimistic in the very long term (more than 10 years). There are also some interesting suggestions that I hadn't read anywhere else about how to take some positive steps toward mitigating the crisis, at least a little. I don't think those suggestions will be taken serious by policymakers, but they won't be able to say that creative solutions weren't available.
So why just three stars? First, I didn't think the analysis was all that new or profound. If you are coming to the subject for the first time, then you'll probably learn a lot. However, if it's a topic that you already know a lot about, then you probably won't learn all that much that's new to you. Second, and more seriously in my opinion, is what I consider an ethical breach on Mauldin's part. In the epilogue, the authors (mostly Mauldin, it seemed to me) were giving reasons why we should be optimistic in the very long term. The authors believe that the advances taking place in various areas of biotechnology will be revolutionary and make life a lot better and longer for a lot of people. He talks in general about what's going on, but in one particular case, he mentions a specific company. However, he fails to disclose that he has a personal stake in that company, and so this comes across as shameless stock promotion, and for that I deducted a star. Still, the book is worth the read.
246 of 265 people found the following review helpful
2.0 out of 5 stars Skp the Book, Sign up for his Newsletter,
This review is from: Endgame: The End of the Debt Supercycle and How It Changes Everything (Hardcover)
John Mauldin has an outstanding free weekly e-newsletter. It is one of my top 3 sources for business informatin and certainly my favorite source that comes at no cost. Hence I was eagerly anticipating his book and rushed out to buy it when it became available. Unfortunately, the book was a big let down when compared to his newsletter.
Here is the positive:
1) End Game looks at both sides of the flation argument, as opposed to other books that focus on just 1 or the other.
2) Mr. Mauldin tells you what he believes will be the likely outcmes for several countries around the world. 3) The book is straightforward and easy to read.
1) Too much of other people's thinking. This works for his newsletter as you get a broad perspective from a variety of economists. But for a book it just makes it seem like the authors didn't do enough of their own leg work, and were in some hurry to meet a deadline.
2) The chapter on how you should invest shouldn't be called a chapter, it is 4 pages short.
3) While the authors talk both the drivers of inflation and deflation they do not dedicate much time to discussing how, why, and when one will predominate the other. The most specific they get is to say they believe for hte US we will have deflation then inflation, no degrees of, or time frames or things to look out for as to when the change may be occurring.
Overall, I'm happy I bought the book, simply because Mr. Maulding issues such an outstandng e-newsletter for free, that I feel he deservees his royalty fees from my purchase of his book.
47 of 50 people found the following review helpful
5.0 out of 5 stars Good analysis of the global debt crisis,
"What were we thinking?" ask John Mauldin and Jonathan Tepper in the introduction to their latest book. "In a way, we acted like teenagers. We made the easy choice, not thinking of the consequences. We never absorbed the lessons of the depression from our grandparents. We quickly forgot the sobering malaise of the 1970s... We created liar loans, no-money-down loans, and no-documentation loans and expected them to act the same way that mortgages had in the past... Where were the adults supervising the sandbox?"
In Endgame: the End of the Debt Supercycle and How it Changes Everything, Mauldin and Tepper pull no punches and get directly to the point. The crisis of 2008 represented a "massive reset of the global economy." Americans, their financiers, and their elected representatives made a series of irresponsible decisions (or perhaps more accurately failed to make responsible decisions) over the past thirty years that culminated in the greatest financial crisis in a century. We weren't alone, of course. Our counterparts in Japan, Europe, and much of the rest of the world made equally poor decisions. And now, we are left with large debts and no good choices.
Regardless of what our policymakers do, we are looking at a decade of slow growth, high unemployment, and on-again / off-again recessions. The 2008-2009 crisis did not create a garden-variety "business-cycle recession." It gave us a much more malignant "balance-sheet recession" characterized by a long period of debt reduction.
All of this leads us to the "endgame." While a person, company, or government can limp along in technical insolvency seemingly indefinitely, at some point lenders lose confidence and raise rates to punitive levels. Eventually, the debt burden simply becomes unsustainable, and there is a day of reckoning. When people or companies have too much debt, they typically default. But when countries have too much debt, they have one of three options:
1.They can inflate the debt away.
2.They can default on it.
3.They can devalue and hurt any foreigners who are holding the debt.
Each of these comes with its own set of problems, and none are without a good-sized dose of pain.
Before we get any deeper into the book, some introductions are necessary. John Mauldin writes one of the widest-read and best-respected e-letters in the world, Thoughts from the Frontline. He is also the author of the 2004 New York Times best-seller Bull's Eye Investing, and a well-travelled public speaker. Jonathan Tepper is the editor of Variant Perception, a macroeconomic research firm, and a frequent collaborator with Mr. Mauldin.
On a side note, I had the pleasure of first meeting Mr. Mauldin years ago when I was paying my tuition at the London School of Economics by writing articles for a now-defunct British investment magazine. John was gracious enough to grant me an interview, and we discussed his soon-to-be released first book, Bull's Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market.
In that book--which, though now somewhat dated, I still recommend for the wealth of historical research that went into it--Mauldin elaborated on some of the themes he had begun covering during the last years of the dot-com boom. In the wake of the bust he coined the term "Muddle-Through Economy" to describe what he foresaw for the decade to follow. The economy would grow, but given the excesses of the boom that would need to be worked off, it would be at a rate substantially below the long-term trend. He was largely right; growth for the decade of the 2000s was an anemic 1.9%.
In Endgame, Mauldin reiterates this view, arguing that the deleveraging of the financial sector and the fiscal austerity that will eventually be forced on the government will create major headwinds to a robust recovery. Mauldin sees significant parallels between contemporary America and post-1980s-bubble Japan, a country he colorfully refers to as "a bug looking for a windshield."
Endgame is a veritable trip around the world, as Mauldin lays out the uncomfortable choices facing nearly every major country.
All About Deflation
Mauldin is one of the few analysts out there who really "gets" inflation and deflation. In clear thinking, Mauldin differentiates between "good deflation" and "bad deflation." The laptop computer that I am using to write this review is an example of good deflation. It costs one-fourth the price of the laptop I used when I interviewed Mr. Mauldin the first time, back in my LSE days, yet is many times faster and more powerful. This is "supply-based" deflation, and it is the result of technological progress and productivity enhancements that boost supply and lower costs to consumers. Free trade is also a major driver of good deflation.
Unfortunately, our economy is currently plagued by "bad deflation," which is an entirely different animal. Bad deflation is caused from a fall in aggregate demand rather than a rise in supply or a technological breakthrough; this is the deflation of excess capacity. When no one wants to buy your merchandise and you have to lower the price, this sets in motion a vicious cycles of falling demand and falling prices, the likes of which we haven't seen since the Great Depression. Suffice it to say, bad deflation is very bad indeed, and the fear of it is what forced Fed Chairman Ben Bernanke to launch his now wildly unpopular quantitative easing campaigns.
Mauldin also touches on another one of our favorite subjects of recent years, the velocity of money. Most contemporary disagreements about inflation and deflation revolve around a fundamental misunderstanding of what money velocity is and how it works. People get money supply. But money velocity is more abstract and harder to pin down.
Mauldin explains money velocity with characteristic Texas bluntness: "If you print money but it doesn't go anywhere, you won't get inflation."
That pretty well sums it up. Money velocity is the rate at which a dollar circulates through the economy. It makes no difference to the GDP level or the inflation rate whether you spent $2 on two widgets or we pass the same $1 back and forth buying one widget each from each other.
This is why the Fed's doubling of the monetary base has had not led to the hyperinflation that many feared. The Fed has made unprecedented levels of credit available, but the banks have failed to lend it out and consumers have shown little interest in wanting to spend it. (As both Mauldin and ourselves have pointed out, this is the fatal flaw in Milton Friedman's monetarist statement that "inflation is always and everywhere a monetary phenomenon," indicating that money supply alone determined to what extent we had inflation or deflation. Friedman failed to take into account variations in the velocity of money, which he naively assumed to be constant.)
Don't expect money velocity to increase much any time soon. The primary driver of both credit creation and money velocity in the 2000s was financial innovation and securitization. With the mortgage market crippled, this money-churning machine broken is for the foreseeable future.
Though he sees deflation being the dominant force for the time being due to the continued deleveraging of the private sector, Mauldin does acknowledge the possibility that the government's attempts to fight deflation might be too successful and lead to inflation or even hyperinflation. He sees this as being more likely in the United Kingdom and, eventually, Japan rather than the United States, but acknowledges that it is possible here if the Fed loses its independence and acquiesces to an irresponsible Congress: "Hyperinflations are not caused by aggressive central banks; they are caused by irresponsible and profligate legislatures that spend far beyond their means and by accommodative central banks that lend a helping hand to governments."
Around the World
While Mauldin's analysis of the American debt problem is sobering, his comments on Europe are downright frightening.
The focus in the financial press has been on the "PIIGS," the European periphery countries of Portugal, Italy, Ireland, Greece and Spain. The crisis facing these countries is not going away any time soon, but Mauldin points to an enormous risk in tiny Austria that no one else is talking about.
The evolution of a garden-variety recession into what became the Great Depression was triggered, in part, by a bank failure in Austria that created a ripple effect across the global financial system. Ominously, Austria's banking system again looks very risky.
Due to high interest rates in the Hungarian forint, Hungarian home buyers were very interested in lowering their monthly payments by taking out mortgages dominated in lower-yielding currencies like the Swiss franc. The banks in neighboring Austria were only too happy to help.
Sure, it seemed like a good idea at the time. But what about now, when Hungarians find themselves forced to pay back those loans in a depreciated currency? Given Hungary's fiscal condition, additional currency depreciation may be inevitable. What happens then? Will Hungarians choose to strategically default en masse, like many of their American brethren in states like Florida?
Only time will tell. But don't be surprised if the next crisis to roil the European Union starts in Hungary and Austria.
A Bug in Search of a Windshield
Mauldin saves some of his best comments for the chapter on Japan and correctly attributes the country's woes to bad demographics. Mauldin is no stranger to demographic analysis, and he routinely uses population statistics in his books and in his e-letters. Unfortunately, he falls into the same analytical trap that many others--including academic heavyweights like Ben Bernanke and Jeremy Siegel--fall into. He focuses almost entirely on the supply side of demographic analysis, ignoring what we consider to be the more important demand aspects.
Mauldin is largely correct in pointing out that "There are only two, and only two, ways that you can grow your economy. You can either increase your working age population or increase your productivity." This is a case of the tail wagging the dog, however. The post-industrial economy has turned Say's Law upside down.
Supply may or may not create its own demand, but demand certainly creates the incentives to produce more supply. Automation and outsourcing can compensate for lack of human labor; they cannot, however, compensate for a lack of consumers. The economics of the Industrial Revolution were made possible by the promise of ever-increasing population growth. The economist John Hicks openly asked if "Perhaps the whole Industrial Revolution of the last two hundred years has been nothing else but a vast secular boom, largely induced by the unparalleled rise in population."
Mauldin writes that Japan has been unable to grow its economy in over 17 years because government debt has crowded out productivity-enhancing private investment that could have boosted production. But production really isn't the point. In the absence of aggregate demand--which Japan's aging demographics have sapped--new production would simply mean overcapacity and even worse deflation.
Still, he is spot on in his analysis of the impending doom of the Japanese bond market. Mauldin writes,
94 percent of all Japanese government bonds (JGBs) have been bought by Japanese. Optimists point to a large pool of Japanese savings. However, that savings pool is already invested in JGBs, so it isn't the stock of savings that matters but the flow. The flow has been steadily decreasing. Japanese savings rates are now approaching the low that we saw in U.S. savings rates just a few years ago. And this is not due to the Japanese somehow becoming profligate Americans but almost entirely due to demographic necessity.
As Japan's retirees begin to spend down their savings, the country can no longer depend on its citizens to absorb its massive debts. Because of this, Japan will soon be forced to access the international bond markets for really the first time in modern economic history. International investors are far less likely to lend to Japan at current low rates give that outstanding debt is already 200% of GDP. When rates start to rise, then comes the endgame. Japan will finally rocket out of deflation into a hyperinflationary currency collapse. It won't be pretty.
What Happens Now?
Mauldin is very clear that, with the possible exception of Japan, whose fate is all but sealed, the endgames are not set in stone. Actual outcomes are path dependent on what decisions are made today. Will we take our medicine now, embrace austerity, and accept lower growth for several years in order to build a better foundation for the future? Or will we bury our heads in the sand and continue to rack up debts that will be horrendous burdens to future generations? It's not a question of pain or no pain, but rather a question of how much, when, and taken by whom.
We could succumb to the "Argentinean disease" and simply print money until it generates enough inflation to effectively erase our current debts. Or we could take the libertarian "Austrian solution" favored by some in the Tea Party, abolish the Fed, let the banks fail, and embrace massive deflation and high unemployment to purge the system of its excesses.
Neither of these solutions is politically realistic, of course. Mauldin's preferred solution is what he calls the "glide path," which would be a 5-6-year plan to gradually hack the deficit back down to lower than the GDP growth rate. This would (hopefully) prevent the bond markets from rebelling and pushing interest rates higher. It won't be fun to live through, but it would ultimately be much less painful than the alternatives.
In any event, Mauldin reaches the conclusion that we are likely looking at a period of higher-than-normal unemployment, a tepid economy, rising taxes, and lower levels of government service. We can't realistically grow ourselves out of this one.
We recommend you pick up a copy of Endgame. Given the noise dominating the newswires, it is refreshing to find clear, coherent thinking. Our compliments to Messrs. Mauldin and Tepper on a job well done.
34 of 35 people found the following review helpful
2.0 out of 5 stars The unlucky country?,
As a rusty economist (BA(Econ) 1963) I was looking forward to reading this book on a very important subject, and hoped to learn something. Irritating name dropping, flippancy and a generally condescending tone aside, numerous pages are apparently written for economic dummies. On the one hand (deflation) and on the other hand (inflation) is fine, but the few real predictions seem to be influenced by some data mining.
Nowhere in the book can I see reference to the 'exorbitant privilege'
enjoyed by the US in issuing the World's reserve currency. How this plays out against US profligacy is perhaps a topic for another book, but it is highly relevant to the subject at hand.
We know of the high indebtedness of the government and the ageing population. But what about the high level of reserves and Japanese savings? The penultimate paragraph on page 259 merely makes mention that these exist.
I lived in Australia from 1970-1994 so I zeroed in on chapter 14. Selecting the facts to suit a case or assembling facts to make a case? There are sins of omission and of commission.
Nowhere is it stated that Australia has the highest interest rates in the developed World; 4.25% p.a. after a 0.25% cut this December. Consumer debt as a percentage of GDP is very high but Australia's savings rate at 10% is now the second highest in the developed World after Germany, and unlike elsewhere savers have an incentive to save, not being punished by rates close to zero.
Australia has always encouraged home ownership, without engaging in the egregious practices of the GSE's in the US. Mortgage interest on owner occupied homes is not tax deductible. Where in Australia are there the acres and acres of newly built unoccupied homes and useless public infrastructure projects (eg: Don Quijote airport in Spain) that existed in Ireland and Spain BEFORE their busts?
Legal immigration has been encouraged, unemployment at around 5% is relatively low.
The fact that Hong Kong appears next to Australia in The Economist table of property 'overvaluation' (sloppily, no date on the chart and no proper reference to the criteria used) is no coincidence. Restricted land supply and mainland Chinese demand drive the market in Hong Kong. In Australia's case Asian demand and in particular Chinese demand is a significant driver of the market. A slow down in China will hurt Australia's economy. A politically stable democracy, investor friendly, resource rich and relatively free of corruption (how many expanding Asian countries can meet those criteria?) Australia will remain a hard asset haven, and real estate prices will continue to reflect those facts.
To bracket Australia with Ireland is ridiculous. The property market in Ireland ( part of a small island off the coast of Europe, in a Euro straightjacket), bears no resemblance to that of a whole Continent with a freely floating currency.
The authors call Australia's market a house of cards. I'd say they have dealt Australia a very bad hand indeed!
In summary, the book was a disappointment but at least it stimulated my critical faculties and showed yet again that with the right statistics one can prove almost any case!
65 of 78 people found the following review helpful
5.0 out of 5 stars Required Reading for Our Political Elite,
This is an amazing book. Mauldin's best yet. And, it's IMPORTANT. Anyone who cares about their own financial future, beyond the usual 2-3 year (or shorter!) investment horizon that seems to drive most investors, MUST read this book.
We have a developed world that's addicted to debt-financed consumption. That pattern works ... until it doesn't. When it doesn't we get Greece, Iceland, Ireland and all-too-soon others, some far larger. The US is far from exempt. Our debt burden - without Washington's accounting games - is already well past the point of no return, as is Japan, and much of the Euro-zone.
In late 2009, I wrote a short white paper entitled "The 3-D Hurricane," which explored how deficits, debt and demographics combine to create a "perfect storm," unless we plan ahead and get debt and deficits under control. It's the height of lunacy to expect the economy to keep merrily growing, with a debt overhang and demographic headwinds. John systematically takes us through the consequences of this hurricane and helps us construct a life-boat to survive this storm.
The geoeconomic challenges we face in the years ahead will be the most important in generations. The geopolitical challenges may very well be similarly daunting. After all, blaming others for our own mistakes is part of human nature and is especially embedded in the psyche of politicians all over the world.
The picture that John paints is ugly. But, he's merely presenting the truth. Forewarned is forearmed.
If you have an investment portfolio, a pension, or even ill-defined and underfunded plans for your long-term future, you'd be nuts not to read this. Read it carefully, thoughtfully, and with an open mind.
John, you dedicate this book to Peter Bernstein, a big-hearted soul, a dear friend and a deep thinker who introduced the two of us. If he's somewhere looking down on our crazy world, he'd be proud of your latest magnum opus. Congratulations on a truly brilliant book.
24 of 27 people found the following review helpful
2.0 out of 5 stars A sloppy, rushed production. Very disappointing,
I've been reading author John Mauldin's free email newletters for a few months now & following his occasional interviews on business TV. Having read & enjoyed Reinhart & Rogoff's instant modern classic "This Time is Different" when it was published in 2009, I was really looking forward to "Endgame" as an updated treatment of the same theme.
What a disappointment! Between John, his co-writer Jonathan Tepper, & his editors at Wiley, no one apparently had the time to carefully proofread the text & the charts. Let me give one outrageous example in Chapter 1..
On page 24, the third paragraph reads as follows: "Figure 1.7 is one of the most important charts you will see in this book. It is the passing of the baton from the private sector to the public sector. It is the transition from Act I to Act II. The debt supercycle gives way to endgame."
The authors clarify further two paragraphs later: "Debt is moving from consumer & household balance sheets to the government."
Unfortunately, when you look at the chart in Figure 1.7 (at the top of page 24), it doesn't make sense. They accidentally reversed the chart legend! Oops! Instead of showing, from mid-year 2007 on, "falling" private sector debt & "rising" public sector debt, as the quoted text suggests, the chart makes the opposite point!
I'm sorry, this is really inexcusable from a supposed expert on the significance of economic details. As they said: "one of the most important charts you will see in this book", but they botched the chart. Maybe you might give the guys a break if this were a term paper in college, but not when they're asking $35 list price.
My advice: wait for the revised edition & decide then if it's still timely enough for you.
I no longer recommend considering this book, revised or not. There is a much superior book out now, "Currency Wars" by James Rickards. A few points of comparison between these two books:
1) CW has a very strong narrative flow, paragraph to paragraph, page to page, chapter to chapter. It reads like a multi-generational novel, with much greater emphasis on description & interpretation, rather than just quoting fact after fact, as Endgame tends to do.
2) Endgame reads very much like a much-longer version of an economic blog posting, whether the author's or anyone else's. The basic template / routine is : (a) quote a long passage from someone else's work, or reprint someone else's up-to-the-minute (as of publication data) chart, then (b) discuss the importance or current interpretation of the quoted information.
This makes for a really short "shelf-life" or relevance. As of this review data, there are at least a dozen very high-quality free economics blogs, not to mention additional paid-subscription sites, which offer exactly the same cut & paste & comment format as Endgame, but have the advantage of fresher quotations / data.
3) I bought one copy of Endgame, which I now regret. Since I discovered CW in late December 2011, I've so far sent five copies of Currency Wars as gifts. I'm planning to lead at least one book-discussion session in the near future.
I would also no longer recommend the author's blog, as I find it too much focused on referring the reader to John's "good friends", who are selling something or another..
16 of 17 people found the following review helpful
2.0 out of 5 stars Mishmash,
If you are looking for a tightly reasoned and well evidenced explanation of the sovereign debt problem and its likely outcomes, you will be disappointed. Mauldin has many charts and graphs, and he reaches many conclusions, including that we will have hyperinflation (or we won't) and that we will have massive deflation (or we won't). But I defy anyone to flowchart Mauldin's logic. Even where I agree with him (and I do on many important points), the book meanders, jumping from point to point, rather than tracing a clear, logical argument.
22 of 25 people found the following review helpful
3.0 out of 5 stars You don't buy this book for content alone. You also must like the author's extreme writing style,
I have no issue with the content of the book. The West is building up a mountain of debt. I am writing this review because you must also like the book's style.
Where I have an issue is the style of the book. It is written by a journalist and has an extremely informal style. A lot of "I" and almost a stream of the author's thought process. The author writes as it is a story and he throws in a fair amount of charts. Since the content is in no way novel, you must like this style of writing to enjoy the book. I really recommend you to check out the preview of this book here on amazon.
A book that covers similar ground is Fault Lines: How Hidden Fractures Still Threaten the World Economy. That book has similar, but not identical content. It is written by an academic but it is well written. For those of you who wants a more serious and measured book, that is what I would recommend.
So this book is only 2 stars for me. If you like the style, it is probably 4-5 stars. So I give it 3 stars.
39 of 47 people found the following review helpful
4.0 out of 5 stars Good book, but something's missing: The 4th option to the Debt Crisis,
I just finished reading "Endgame." I think some of the reviews and comments posted here are a bit off target.
Mauldin never implies anywhere that the transfer of debt from the private to the public sector is "an equitable deal." Nor does he somehow lure people into "trusting" the government. Those are typical partisan comments that have no basis in the text of the book itself.
BOOK SUMMARY AND MAIN MESSAGE: The credit crisis that began in 2007 had its roots in 60+ years of unsustainable and often dishonest lending practices -- both on the borrower side and the lender side. While the immediate "panic" period is over, we are just beginning to experience a painful 10-15 year adjustment period. Large public deficits cannot continue much longer. Governments will be forced to address them by the bond markets, probably sooner than later. The response can be: 1) Utter chaos leading to default. 2) Purposeful devaluation of the underlying currency. 3) Significant price inflation. Or some combination of the above. The U.S. has some significant advantages over other countries (bonds in our own currency, large GDP, etc.) but we also have serious disadvantages (size of the national debt, history of political gridlock on the issue, etc.)
PROS: The book is written for an educated audience but you don't need a Ph.D. in economics to understand it. It's replete with supporting evidence, charts, trend graphs, etc. The writing is usually clear, with a few exceptions. Historical data going back to the 1820s is particularly helpful, as are the many country-by-country examples of what went wrong. Predictions of who "melts down" next are just that -- predictions.
CONS (MISSING PIECES): The short chapter of investment advice for individuals near the end is miniscule and not particularly helpful. If you're the type of reader who enjoys these books, you already know the answers provided. What's more, there's little discussion of a fourth option: "Coordinated debt revaluation" instead of outright default. We know that many large corporations have taken this route rather than go into bankruptcy court. There's no INHERENT reason why the U.S. couldn't renegotiate its debt with bondholders -- if the bondholders see that the alternative is much worse.
The BIG MISSING PIECE of this book is the history of economic "resets" since the early 20th century -- major revisions of both national and global financial systems, such as happened at Bretton Woods following World War II. Yes, these rational resets are indeed possible, if rare. Ultimately, money is an agreed-upon fiction used to store and represent actual value. Because it is really an "idea," it is subject to new ways of thinking. The long-awaited crisis in confidence can be either avoided or minimized through a coordinated "rest process." Maybe not in small countries like Greece, but almost certainly on a global level.
A SMALL RETORT: The agenda of the far right often seems to be: "Make massive cuts OUR WAY or everything will implode leading to a complete breakdown of modern society." These are the folks who keep insisting you need "guns, canned food, gold, etc." The Tea Party activists on the lawn of the Capitol building this week were shouting: "Cut it down or shut it down." (Cut the budget -- our way -- or shut down the government by refusing to increase the debt ceiling.) This may make for good headlines, but it's pretty darn immature from a practical perspective.
What they forget is that 7 billion people on the planet have a strong vested interest in keeping society viable -- in "muddling through" a crisis rather than resorting to survivalism tactics. That's one of the great stabilizing forces of ownership: When you own your home, have investments, have kids and dreams and a minimum level of living quality, you have STRONG INCENTIVES to support non-chaotic solutions to big problems.
Yes, the budget needs cutting. Yes, revenue must be increased. There's no easy way out...but there is a way out, given time, through the process of coordinated debt revaluation. Screaming and shouting never works. Instead of panicking, let's get to work.
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Endgame: The End of the Debt Supercycle and How It Changes Everything by John Mauldin (Hardcover - March 8, 2011)