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Game Over: How You Can Prosper in a Shattered Economy

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The Game Leeb writes about is whether or not alternative energy systems can be developed before there is painful economic collapse. "Game Over" refers to a world where the easily extractable energy and mineral resources are gone (peak commodities) and we haven't developed the alternative technologies to maintain our society in the absence of low cost oil. Leeb outlines how energy and other resource limitations have come to dominate global economics. He explains the familiar concept of peak oil, and introduces the concept of absolute peak oil, the point where the energy cost of oil production just matches the energy extracted. Further Leeb goes on to describe how the extraction of minerals, water and even food are coupled to energy production. Leeb is concerned with the problems of building out of the most common alternative energy systems to a large scale.

Much of this book is recycled material found in Leeb's earlier work
The Oil Factor: Protect Yourself and Profit from the Coming Energy Crisis which made a more technical presentation of most of the economic ideas in the first few chapters. As in the The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel this book is written for a more general audience, but unlike his other books which are mainly directed at individual investors, the first three sections of Game Over are directed to the broader questions of how our complex and technological society can deal with resource limitations, which have been magnified by rapid economic development of Asia. Only the last section of the book is directed to investment choices for individuals.

One weak spot in the book is a chapter on the costs of complexity, which comes off as a bit of a political rant against the costs of having bad regulations and archaic ownership systems that make it difficult to move to solutions to the Energy supply problems. He might have added some material about how the demand for safety, adds to energy costs over time, as in pollution controls and automotive safety features making cars less efficient.

For a book emphasising alternatives to oil, Leeb says surprisingly little about global warming. He seems to underestimate the size of US coal reserves and so doesn't discuss the CO2 production problem. My suspicion is that when things get tough, concerns about our ecological commons will be swamped by immediate and local economic concerns. Another item almost entirely left out of the discussion is population control. In a world where change is driven by the billions in the third world expanding their consumption patterns, it seems Leeb is implying its already too late to do anything about overpopulation.

Leeb's investment advice has been fantastic. My interpretation of his oil price indicator was a market sell signal in late 2007. A big question right now is how long will the deflationary fears and trends last. This book's advice is based on the premise that the pain of deflation is so threatening to government revenues that inflation will be manufactured to keep the housing market from collapsing. His advice is premised on the view that the stimulation needed to solve the short term problems(thanks George) will flip us into a world of inflation that will make the 70's look like a cakewalk. Leeb paints a very nasty and depressing picture of our economic future. The rapid consumer growth in Asia has pushed up the Malthusian day of reckoning that much closer. Leeb's depressing picture may well prove prophetic unless we see some tremendously clever improvements in our industrial, land use, trade and energy policies combined with some timely technical advances in energy development.

Ignore Leeb's warnings at your own peril.

Over the past 5 years I've read well over a hundred books on peak oil, the state of the world's resources, and how the world's financial systems work. As I came to understand the staggering broader implications of our resource predicament, I began looking for a single book I could give to my friends that would provide a self-contained, straightforward explanation of our dilemma. Many of the earlier books are excellent, but some of those are also very technical, others engage in wishful thinking, and still others just didn't present the information in the way I would have wished for various reasons.

"Game Over" thoroughly explains the fundamental problems facing us while sparing the reader details about oil extraction technology and similar topics. For me, the fact that it is also an investment book is secondary, although many readers may also find that useful.

I am a geophysicist with long exposure to resource-related issues. As it happens, I started studying geophysics around the same time (1970) that US oil extraction (the common euphemism is "production," as if they're actually making the stuff) peaked, just as was predicted in a 1956 technical paper by a brilliant physicist/petroleum engineer who was ridiculed for many years for that prediction - until it happened. US extraction, once the highest in the world, has been declining for nearly 40 years since then. This irreversible decline came in spite of periods of vigorous exploration for new fields and impressive advances in exploration and extraction technology. Simply put: if it's not available, you can't have it.

In the 70s following the US peak, we speculated about what might happen when world oil extraction began to decline but it was all theoretical and far in the future and just an intriguing idea. Now the evidence strongly suggests that the world peak is at last near; there is some evidence we are there now, in spite of the recently crashing oil price. The US extraction decline only became obvious in retrospect and the same will be true for world decline.

I cannot overstate the importance of this issue. There are excellent reasons to believe that the peak in oil extraction will also mean the peak in food production, a frightening thought in a world with a huge and growing population, many already living with the specter of starvation. Also, the irreversible decline in the extraction of oil and other critical resources will likely bring an end to capitalism as we know it because a positive sum game will have become a negative sum game. Getting from that realization to a system that is sustainable on a finite and damaged world will be a very tough slog. "Game Over" provides the background to understand these things.

Leeb is well qualified to explain these issues; he has degrees in economics, mathematics, and psychology; he is rational, understands markets, and understands why people are psychologically resistant to acknowledging the approaching disaster let alone dealing with it, and he presents all of that clearly in this book. This is at least his third book in the series following "The Oil Factor," then "The Coming Economic Collapse." You can see a trend in the titles and the predictions he made in those earlier books have pretty much become reality.

I know there are a thousand disaster scenarios circulating through the blogosphere so it's easy to dismiss this as just one more. Before doing that, please look into it carefully. Remember the simple rule: if it's not available you can't have it.

One fact worth noting: discussion of this issue has reached the point where even most of the economists and oil company executives who ridiculed the whole idea of peak oil five years ago now admit it is real, so the argument now is more often about the shape of the peak and whether we've already reached it or not.

By the way, a great video of an easily understood explanation of how we got here by a physicist, Dr. Albert Bartlett, is available on the web at globalpublicmedia. If you're new to these concepts I urge you to gain strength through knowledge. View the video, read "Game Over" and you'll have a good understanding of the background and some thoughts about what can be done to prepare individually and as a society.

Stephen Leeb has a knack for boiling complex issues down in a concise, easy-to-understand manner for the layman. More importantly, he has an uncanny record of spotting major trends well ahead of the crowd. Investors who ignore Leeb's sage comments do so to the detriment of their wealth. The list of trends he has been out in front of over the years are numerous, but let me just touch on two of them.

A decade ago when oil prices were below $20 a barrel and inflation was less than 2 percent, Leeb had this to say about where oil and food prices were headed in his book Defying the Market:

Strong economic growth, particularly in developing countries, will create a tremendous appetite not just for energy buy for food as well, as populations move up the food chain and demand greater quantities of more protein-rich nourishment. Technological and natural limits will curtail our ability to expand the supply of food and process will rise. A variety of food-related companies will see both profits and share prices soar.

We all know what followed. Prior to the collapse in commodities in 2008 (as a result of the global financial crisis), oil prices were approaching $150 a barrel and the cost of food was going through the roof thanks in large part to strong demand from emerging economies like China and India. Oil stocks were big winners during the period and fertilizer stocks, like Mosaic and Potash of Saskatchewan, rose 15- to 20-fold while the Dow and S&P went essentially nowhere.

But Dr. Leeb's keen insights haven't stopped there. Here's a quote from his last book, The Coming Economic Collapse pertinent to where were find ourselves today:

With home prices, stock prices, and the economy all slumping, all feeding on one another, it would indeed be a vicious circle. Record levels of unemployment would likely. Could the policy-makers rescue such a situation? Clearly, it would be a far greater challenge than rescuing the economy in the wake of the tech bubble. It would take massive amounts of money. Interest rates would likely fall to zero. Government spending would need to reach unimaginably high levels. In other words, if the economy survived, it would emerge with much higher debt levels then before. Moreover, we would still face the same hideous inflationary problem, a shortage of energy, and the prospect of sharply rising oil prices.

Sound familiar? Keep in mind that this book was published four years ago, well before the housing crisis was front-page news. Today, short-term interest rates are at essentially zero and the government is throwing a $1 trillion at the economy in a Herculean effort to get the economy going again. Raging inflation hasn't taken hold yet, but it sure looks like that will be the next act. And I, for one, am investing accordingly.

If even the best-case scenario he outlines in his newest book comes to pass it will make the terrible 1970s look like a picnic for investors.

I was very disappointed with this book. I like Stephen Leeb alot, and agree with him almost all the time. However, this book was a rehash of his writings over the last two years, and thus was not an up to date analysis of the current market and where we are going. Often the analysis and material presented was dated material.

Over the past two years, we have been on quite a financial roller-coaster. Stocks went from a bull market to a massive sell-off. Oil prices spiked to over $140 and then plummeted briefly to under $40. Ditto for most other commodities. T-bill yields fell so low they became money-losing investments. Gold, which many thought was a dead asset, has outperformed the S&P 500 (though it too has been volatile).

I wish I could say the chaos and uncertainty was over, but I can't. If anything, the economic and financial drama will only get worse.

However, I believe what is stated in Game Over: How You Can Prosper in a Shattered Economy, Dr. Leeb laid out for me crucial information about what lies ahead of us for the next five years, including ...How to safeguard wealth and build a substantial nest egg even as the current crisis worsens. Why today's global campaign to save the economy will only hasten an approaching catastrophe. The unstoppable forces that will fundamentally alter the fabric of human civilization.

Last fall, we saw what can happen when the economy tips just a little way onto the side of recession. It was the greatest financial meltdown since the early 1930s. A devastating event for most investors that created worldwide shockwaves. The entire investment banking industry disappeared almost overnight. Banks around the world either went bankrupt or were forced to beg for government bailouts. The U.S. government was forced to essentially take over Fannie Mae and Freddie Mac to prevent mortgages from becoming unavailable to the majority of Americans.

Now governments around the world are desperately taking extreme measures to pull us out of that recession before it gets any worse. Money is being created at a rate even greater than during World War II. Nearly $8 trillion have been coughed up by the government and the Federal Reserve in order to jumpstart the financial system. Indeed, this is a war - a war to prevent economic collapse and a much greater meltdown of asset values. Fortunately, while the volatility will be great in the months ahead, I believe it's a war we will easily win.

In fact, the real threat to our long-term financial security lies on the other side of that razor's edge. As terrible as the market crash was, it was just a bump in the road compared to what Dr. Leeb says is coming. And that's why we need to prepare ourselves for the next big crisis today.

Game Over: How You Can Prosper In A Shattered Economy, helped me select specific investments now that will protect my savings when we encounter further recessionary bouts, like the one last fall. More importantly, I believe it will help me prosper as the extreme money creation fuels the fires of double-digit inflation and sends commodity prices soaring to even greater heights than we saw in the Spring of 2008. It showed me which investments are set to produce the bulk of the profits for the next five to ten years, and which to avoid if you value your security. And it provided me with a clear roadmap of what is to come.

Let's hope that Stephen Leeb's doomsday scenarios don't play out very soon. The problem with this book is that he says they will, but he doesn't make his case with facts and figures.

Leeb's basic point is that the world is running out of its finite natural resources more quickly than we think, not in small part because of the tremendous growth coming out of the emerging markets. This may well be true, but the reader will have a very difficult time deciding for himself or herself based on the evidence presented - because there just isn't much. As I read the book, I felt like I was sitting at a dinner table with smart, well-read people who had thought through these issues but were just bantering back and forth about how things might turn out. "Imagine if this happened... no, but what if this happened... yeah and then this would happen..." So those things may be true, but at the dinner table, they weren't able to produce the evidence for their arguments.

I found it a bit odd that Leeb uses his own newsletter as the source for many of the charts and figures that he did present. Somehow, that doesn't seem kosher to me. If he edits the newsletter, where did the newsletter get the data?

Leeb doesn't have crazy ideas. Everything he said may well be right on. That our finite resources will become very scarce and expensive is logical. That the growth of China and India is contributing dramatically to that problem makes plenty of sense; I just wish that he had presented his concerns with more data to allow the reader to judge the accuracy of his scenarios.

I read the last section of the book, titled "Investments for a Chaotic World," with great interest, and I felt that he did this section very well. Here, Leeb presents his investment recommendations (gold being his top choice). They seem well thought out, and he presents some very specific choices , including specific stocks, ETFs, and commodities.

I found the book interesting and easy to read. If you're looking for investment ideas with respect to resource shortages, I recommend the book. Overall, however, I'm only giving the book two stars because of the lack of support in his presentation. For someone to take any of his investment recommendations based on only the issues as presented in the book would take a huge leap of faith.

I've been an avid reader of Stephen Leeb for years, both through his books and his investment newsletter. Leeb's economic predictions have consistently been dead-on accurate, and well ahead of the curve. In the late 90's he predicted the collapse of tech shares, when others on Wall Street refused to believe it was possible; in the early 2000's when oil was at $50/barrel he predicted oil prices rising to $100/barrel and beyond by the end of the decade; and in his last book The Coming Economic Collapse, written in 2006, he predicted the disastrous consequences of falling housing prices, which we're seeing played out right now. At the same time, Leeb's investment recommendations have outperformed the market year after year, making people like me who've followed his advice a sizable fortune even while most stocks on the S&P have crashed and burned.
Now in his latest book Game Over, Leeb offers another economic forecast, and with such a track record, investors and policymakers should read this one closely. Leeb claims that even if/when we get out of this current financial crisis, our problems will be far from over. As soon as the economy picks up steam again, it will put unsustainable demand on the earth's diminishing natural resources -- fossil fuels, precious metals, etc. -- driving up the price of everything and creating massive inflation that will wipe out the savings of millions. With the developing world consuming more and more every day and the world's oil fields running dry, it's only a matter of time before we reach what Leeb dubs the Absolute Peak in the earth's resources, when it takes more energy to extract new energy than we would gain from the extraction. In other words, for every barrel of oil as yet untapped, it would require more than a barrel of oil to get it out. If we reach this state, it is indeed Game Over for world civilization as we know it, since it would be effectively impossible to bring new energy sources online.
Leeb outlines policy proposals, discussing the pros and cons of various alternative energy sources, viewed in terms of the demand that using them would place on other resources. One of Leeb's most brilliant insights in this book is describing the complex array of interconnections among the earth's resources; for instance, extracting more oil will strain the earth's freshwater supply, but to increase freshwater we will need more energy, and so on. Leeb calls for a vast research committee of engineers, economists, and the like to unravel these complex relationships and come up with a plan for building alternative energy infrastructure as fast as possible. And, as always, Leeb offers specific investment recommendations to survive the chaos. Leeb's recommendations consist mostly of hard assets, such as precious and industrial metals and some plays on alternative energies. The big one is gold, which, as Leeb points out, is a store of value that people turn to in inflationary times, but is also a great hedge against deflation.
If policymakers had followed Leeb's policy proposals he gave in The Oil Factor and The Coming Economic Collapse, we probably could have avoided the mess we're in today. Let's hope they listen this time around.

This is a time to take full advantage of opportunities
to make money. People have losses in their portfolios;
however, there is still investment money around as
evidenced by nearly 1000 point upswings.

The money on the sidelines can be placed in any number
of areas; such as,

o gold and gold etfs, GLD, GDX , Barrick Gold, Kinross-KGC
o oil and oil etfs
o materials and energy like EWZ of Brazil, RSX of Russia,
EWA of Australia, BHP largest commodity firm in the world,
EWC of Canada
o Veola of France leads in water infrastructure
o FLR is the most diversified infrastructure

As an investment , gold was popular from 1931-1934,
1969-1980 and 2001 onward. The price has climbed to
nearly $1, 000 per ounce. Geothermal energy is coming
of age. Iceland draws nearly 50% of its energy needs from
geothermal harnessing. Approximately 700,000 wind turbines
are needed right now. The wind-Hydrogen and auto
with hydrogen based fuel cell technology is in the ascendancy.

There are plenty of ways to make money out there. Investors
must do their homework to take full advantage of the
opportunities. Acquiring and reading this book will help
in this process.

Dr. Joseph S. Maresca

Dr. Leeb provides us with a dose of cold, hard analysis at a time when everyone else seems to be losing his head and placing hope on something called "infrastructure stimulus." The morning after that stimulus lifeline may produce an amazing hangover for every investor unless we take heed.

Leeb's message is that unless we embark on a massive research agenda on resource interdependency and bring alternative energies on line quickly, we will be back to square one once growth is restored. We will have a global economy once again characterized by the resource shortages and higher commodity prices that marked the period right before the crash. This time, though, we will have also printed hundreds of billions of dollars. Leeb's investment recommendations led by gold more than pay for the price of admission. His foresight in his last book on oil at $200 per barrel was remarkable. Now we have another gem.

One reviewer's voice crying in the wind gave a critique that Leeb's analysis is old news. If that's so the new Administration and the rest of the world better re-read Leeb pronto because that's where our historic moment of change is headed. We can't turn back the clock so we better make investment adjustments now.

Dr. Leeb has once again summarized current economic conditions in coherent and understandable language.

I had no trouble using his well-conceived ideas to re-evaluate and reallocate my portfolio.

This man has made me money with each of his books. Read...and profit.