Customer Reviews

The Great Bust Ahead: The Greatest Depression in American and UK History is Just Several Short Years Away. This is your Concise Reference Guide to Understanding Why and How Best to Survive It

5 star:		(19)
4 star:		(15)
3 star:		(16)
2 star:		(4)
1 star:		(5)

 

 

This book, written specifically for citizens of the US and the UK, is one of the most sobering I have ever read. To the layman at least, it appears to be argued logically enough, the basic idea being that in the western economies the spending of individuals constitute the lion's share of GDP. In the next few years some 100m baby boomers in the US will start to leave the highest spending age group (45-54). As people nearing retirement tend to reduce their spending and start to withdraw their savings from more risky investments such as the stock market, this will cause a depression even deeper than the 1930s and stock markets to dive. The book forecasts that some 30m may become unemployed in the US alone. (A similar picture emerges in Japan though the age band is lower.) Almost every major stock market move in the last century or so can be accounted for by such demographics. These apocalyptic events are forecast to happen any time from 2009-2013 and it is recommended people be out of the stock markets by 2010 at the latest. The depression may last to the mid 2020s.
I just wonder how globalisation may affect the situation, both in terms of increased exposure of western companies to Asian markets and the vast numbers of increasingly wealthy Asian middle class who might invest some of their spare cash (and there may be an awful lot of it) in foreign markets. It must have been somewhat difficult for western individuals to invest directly in Asian markets, and vice versa, even in 1987 but in 1929 it must have been all but impossible.
I cannot agree either with some of the steps recommended to protect oneself either. If currencies weaken then treasury bonds may not quite be the saviour they are portrayed. The traditional safe havens in times of turmoil - precious metals such as gold and silver - are not even mentioned. This may be because they are traditionally associated with inflation. However, they also come into their own in times of currency crises and "funny money" i.e. when the money supply threatens hyper-inflation. Investing in foreign stock markets such as India and China, nations which should continue to grow strongly for the foreseeable future surely should also be considered. With such strong growth in Asia, I find it difficult to believe another of the book's predictions which is that the oil price may possibly fall as low as $5 a barrel!
I consider this book - and others like it - to be a warning as to what might happen rather than what will. Nevertheless, if it prompts individuals to review their investments and to diversify accordingly it will be no bad thing. I just fear so many people may be so indebted for years to come that they won't be able to.

Mr. Arnold's title attracted my attention because I, like many financial observers, do see a depression on the horizon. His use of the 45-54 year old baby boomer demographic is interesting and echos certain ideas of Elliott Wave Theory and Socionomics.

The author's conclusions, formed using a relationship between U.S. population growth and the Dow Jones Industrial Average, support a coming financial crisis of tsunami proportions, but his optimism that things will not erupt until the beginning of the next decade and his investment recommendations for the immediate future are arguable.

A purchaser of this hour-long read would be advised to immerse himself in Robert Prechter's, Conquer the Crash and Fiancial Reckoning Day by Bonner and Wiggin. These books better illustrate the world as it is, bringing together the influence of world money supplies, gold, interest rates, world politics and, very importantly, social mood.

Where Daniel Arnold sees the correlation of the population and the Dow Jones, Prechter documents the predictive value of the Dow in measuring social mood. I would allow that Mr. Arnold has accurately pegged the 45-54 year olds as the alpha group that leads the population's mood, or herd mentality, as a result of its purchasing and investing power.

Read this book. Look at the charts. Just don't make any immediate investment decisions without considering that our world is on the verge of a massive "asset devaluation" that will transcend stocks, bonds, real estate, and for a time, precious metals. The looming possibility of a world-wide liquidity crisis triggering liquidation of assets to cover the costs of mounting debt, should be of greater concern.

Arnold issues several warnings, should his predictions come true, and offers a number of actions individuals may take. Most notably, he supports why personal property most likely will be at risk to theft or destruction in an environment of rising unemployment and rising crime, but on page 51 advocates, "even if you would not support gun-control during healthy times, consider supporting gun control legislation to help take the dangerous edge off the crime wave that will hit during the depression." Libertarians and 2nd Amendment supporters will have a real hard time with that one.

Like most reviewers, I found this brief book to be a highly believable warning of the coming huge depression. How can you argue with a thesis that accounts for the US economy's ups and downs in detail for nearly a century!! Unlike the few, (like Special K below), who completely miss the key message, IT IS DEMOGRAPHICS that controls everything. Any economist will tell you that 70% of GDP is simply us (we are the demographics) spending our paychecks and, as Arnold points out, it's more like 90% when we add the government's spending of our taxes which they take from our paychecks. Arnold's thesis is a better developed version of noted economist Dent's theory that specific demographics always control where the economy is going. It's not really theory anymore - it's plain commonsense, which is what comes out in Arnold's book. Dent also predicts a massive "Mother of all Depressions" starting around 2010. Special K and his ilk, who are quite happy I'm sure to (correctly) attribute the coming Social Security crisis solely to demographics but want to insist that the economy in general cannot possibly be, are the ones that are going to lose everything in what's coming. Go read Arnold to understand (concisely WITHOUT 200 extra pages of added irrelevant "fluff") that demographics is really all that counts - and why. My God, he even shows how the Japanese near depression from 1990 to 2003 was caused by exactly the same demographic data within Japan. What more do you want? Read it.

I have only read reviews and small portions of this book, however I thought to offer some thoughts as I felt a few reviewers were overly critical.

The 'demographics' argument is a key factor in economic health, and surely cannot be omitted when writing a comprehensive analysis of futue economic health. One of the first books I ever read was written by Kenneth Dyschtwald (sp)- "Age Wave"- a comprehensive analysis of the political, social and economic ramifications of the largest demographic mass of people in the history of the world. While it was publised in 1990, many of the tenets of this book have come to fruition-- as well as the consequences of the aging of the boomers, and the 'birth dearth' that followed. It should come as no coincidence that our growing immigration problems have likely been orchestrated at the gov't level, to 'beef up' population statistics, and (it is hoped) will offer a 'cushion' to the monstrous shortfalls in Social Security, Medicare and other un-funded programs that will soon be needed as the boomers age.

While it is true that our aging population may be following a similiar trajectory with respect to Japan's well known economic crisis, it is worth pointing out that similiar circumstances (crash of Nikkei, mismanaged currency), may have precipitated-- or at least acted in symphony with (aging) demographics, these events as well. Whether demographics was a causal or casual relationship is anyone's guess. In my humble opinion, a crash is coming that will likely be the consequence of a number of intersecting underlying reasons (weakening dollar, monstrous deficits, promiscuous federal reserve- cheap credit and weak underwriting standards, peak oil, growth of Asian countries like China and India AND demographics) that will all lay the foundation for this correction/depression.

Finally, the idea that this book was not written by a PhD or an ecnomics professor makes it FAR more appealing to me. It's refreshing to see someone with a view of their own rather than parroting the mangled gov't statistics, or media housing/stock market bubble cheerleaders.

The author is actually bullish on the markets from 2003-2011. He then foresees a massive crash bigger and longer than what we experienced in the 1930s, as the demographic makeup of the West also collapses.

But like so many prognosticators, this one makes a big, tenuous assumption: that investors have NOT priced in the alleged precipitating event (demographics) and won't until it's too late. It could be that the market already knows that our coming demographic decline and huge debt load will eventually constrain stock market returns. That information might be discounted in current and future stock prices, and they therefore may never reach the heights the author forecasts they will before the Great Bust ensues.

While I do expect a major bust within the next decade, it may not be as severe as the author thinks, precisely because people will be anticipating the trends he lays out. In other words, while the Dow does seem likely to crash to 5,000, it may be from a top of around 15,000 rather than 30,000. And instead of crashing after the precise demographic top in 2012, it might begin crashing much earlier, as our huge debts prematurely "age" the population and hamper our spending power, and investors begin to see the writing on the wall. (I plan on turning bearish in 2008, when the first wave of Baby Boomers begin to retire.)

You'd be taking a huge gamble by piling in to stocks now and planning to time your exit point based on this book or your expectation of a "bubble boom" to occur within some other author's time-frame. If the stock market will ultimately be much lower than it is now, you'd be wise to build cash and accumulate gold coins now. If you're more aggressive-minded and long-term oriented, use major market rallies as opportunities to ease your way into bear funds.

Very Short, (55 pages), and to the point, yet, with all of the information packed into the book, it should still take a couple of nights to read if you can put it down. Mr. Arnold has a message to get out, and he gets it said.

It's a really good wake-up call for the Boomer Generation.

Grab your hi-liter or your note pad, he tells you what to do to plan, what to do when the economic crash arrives in 3 years, and what to do if you didn't plan.

It's like the Scout Manual for the Depression.

It is hard to rate this book. At only 54 pages, it is little more than a pamphlet really. Still, this is all the space the author needed to make his point - and a very interesting point at that. It is hard to deny that his arguments have the ring of truth. In his book, the author does not plug any financial services or related books or anything like that. In fact, much of what is in the book is free of charge on his website (http://www.thegreatbustahead.com/).

I worry about his prediction that we will emerge from this depression around 2025. With the peak oil situation, I wonder if we will EVER emerge again into a familiar world. One way or another, the future is going to be tough, folks. Books like this only ask you to be prepared. Well worth reading.

Daniel Arnold illustrates here how the stock market has performed over the last 80 years, and why it has, and he also extrapolates it's performance out to about 2035, with a very bad economic depression starting sometime around 2012. Arnold uses demographics to come to his conclusions and he presents a very solid case indeed. He rightly criticizes stock market analysts for their short term forecasts, and also Alan Greenspan for faulty work also. This is a short, concise, and to the point book, I found it fascinating. About the only possible flaw I saw in this book is that Arnold believes that during the coming depression oil prices may hit [$$] a barrel. But if you read HUBBERT'S PEAK: THE IMPENDING WORLD OIL SHORTAGE by Kenneth Deffeyes, a picture of oil shortages emerges instead, which would exacerbate the economic decline. It will be interesting to see which force wins out here. On a personal note, I remember everyone buying those Nasdaq stocks in a frenzy back in the late 1990's, most of those companies were losing money right and left and their shares were selling for [$$-$$]dollars, or more! I thought it was a good example of "you scratch my back and I'll scratch yours." Of course everyone knows that bubble burst. Japan's stock market bubble burst about 10 years ago, due in large part by an older generation spending less. The United States is headed the way of Japan, the massive post-war generation soon retiring and putting a damper big time on the economy. Arnold uses many graphs in this book, he clearly shows that the next handful of years may be okay, but watch out afterwards, the party may be over in a big way. The final few pages gives advice on what can be done on a personal basis to survive in the tough times ahead. Another interesting book to read, older by a few years is THE RETIREMENT MYTH by Craig Karpel.

The author basically has only one theory to discuss in this [short book], and once presented in the most simplistic of terms, he does not feel the need to discuss it further. His theory is that the DJIA can be predicted based on the numbers of 45-54 year olds - "big spenders" as he calls them. When the numbers of this age group goes down, so will the economy. The rest of the book describes in overly dramatic terms (complete with excessive exclamation points and bold print) just how bad the depression will be when the numbers of this age group declines. The author predicts the worst depression in history will occur sometime after 2010 (when the numbers of "big spenders" will decrease significantly.) Then he throws in a paragraph or two about what to do before the depression (invest in stocks) and just prior to the depression (sell your house by 2010 and invest in Treasury bonds.) That's it.

If you are into reading economic doom and gloom books, this will provide some interesting reading. The Coming Generational Storm, The Party's Over, and The Dollar Crisis are all recommended if that is your cup of tea.

The book pretty much maps a graph of the number of 49-year-olds over the years with the performance of the stock market. The graphs do correlate well and suggest a good stock market until 2010-2012 when the market will crash. There, I just told you the entire contents of the book. It makes no mention about the dollar crisis, the energy crisis, or the generational crisis.