8 of 8 people found the following review helpful:
2.0 out of 5 stars
Vital Topic, Disappointing Book, June 13, 2011
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The title and byline suggest that you will learn something about the huge "Leverage" (debt) problem, how it will unwind, and how to position yourself for the impending carnage.
Sadly, the first 230 pages are just a walk through the decades pointing out all kinds of true stuff that's widely known. Lots of graphs, but very little "ah-hah!". Then comes the book's title chapter, a short medley of platitudes like:
"This deleveraging process would be helped greatly by an acceleration of economic growth. History does not provide much hope..."
"Services are expected to remain a significant part of the economy..."
"Eventually, policies will need to be put in place to allow the private sector to grow faster than the public sector..."
"While we cannot know the future, the next two chapters present some tools and rules to help you navigate [the difficult road ahead]."
The first 250 pages would be forgivable if it related to some thoughtful "Investing Strategies for the Future."
No, the book wraps up with astonishingly elementary and generic advice:
1. Know your financial self
2. Build a personal balance sheet
3. Understand your risk appetite
4. Develop a savings discipline
5. Preserve principal
6. Develop a spending discipline
7. Diversify your investments
8. Observe some basic investing discipline
9. Identify the nature of the market: structural bull or structural bear
10. Develop a sell discipline
11. Continue your education
12. Beat your financial benchmark
Other strangeness:
1. Lots of time-series graphs to give you some perspective, but many of them stop at 1990 or 1999 or 2007, for example. Why? Wouldn't be nice to see recent numbers in historical context?
2. Many chart data sources are stated, but not specific. For example, Exhibit 1-20 Source: Flow of Funds, authors. ["Because I said so" is a source?]
3. Comparative advantage is mis-defined on page 157: "Comparative advantage, a centuries old concept, states that each country has an advantage in something, be it oil, labor, favorable climate, and so forth." [This obscures a central idea of comparative advantage...that even if a country has NO such advantages, it still benefits by specializing in areas where it has the smallest disadvantage.]
Summary: The book should be titled: "The Great Deleveraging: It's Going to Be Bad, but We Have No Idea What it Will Look Like, or How to Play It."
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12 of 14 people found the following review helpful:
4.0 out of 5 stars
Unique Information, September 27, 2010
Customer review from the Amazon Vine™ Program (What's this?)
This book has three features that set it apart for other finance / stock market books.
First, it divides the huge increase in debt in the United States over the last thirty years into categories that shed additional light on to the subject.
Debt Buildup subsections:
- The sources of this debt expansion
- Changes in tax policy
- Changes in housing policy
- Changes in regulation
- Contribution of inflation to debt levels
- Government Deficit spending
- Successful use of debt to increase profits in the previous years
- Declining interest rates
- Contribution of energy prices (oil) to debt levels
Each of the above sections explains how the debt expansion in this subsection contributed to economic growth. The only other book I have seen that illustrates how debt expansion contributes to economic growth is
Being Right or Making Money
Second, this book examines the conditions for real economic growth in particular focusing on how concentration, dispersion and diversification effect economic growth. This is an important section. Over the last thirty years the United States has begun to reverse it historical course and to support concentration of power in government and industry. This section gives clear examples of the problems concentration brings.
Third, chapter three examines the last ninety years of the United States economy. I found this section very interesting. Why? because you can compare stock market returns over the decade with the factors that defined each decade.
Finally, chapters five and eleven provide a set of economic instruments that have proven to be accurate indicators of past problems. They suggest monitoring these instruments carefully in order to understand when the economy might be in for turbulence.
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6 of 7 people found the following review helpful:
2.0 out of 5 stars
Backwards looking discussion of U.S. economic cycles, pitched at a high school level, December 14, 2010
Customer review from the Amazon Vine™ Program (What's this?)
This book has no thesis and makes no useful predictions. The organization seems random. We get an introduction to the danger of letting the government squeeze out private sector growth, then a review of asset returns since the early 20th century, organized not by economic cycle but by decade. Then we get a review of recent economic developments in China, India, and Israel. Finally, the authors' overview of what deleveraging in the United States might look like, if it follows the paths of previous cycles, and a weird "news you can use"-like chapter on managing personal financing and investing in companies with low P/E ratios.
The early chapters of the book felt ideological -- Democrats bad, Republicans good, Reagan best. The explosion in national debt/GDP and the rapid drop in savings rates in the Reagan administration are basically ignored. But after the first couple of chapters, the book seems less ideological and just boring. It's all backwards looking; there are no models here, no explanations, just lists of things that happened. And so much padding. Take for example the list of GIC codes that starts on page 213. "6081 - Branches and Agencies of Foreign Banks. 6082 -- Foreign Trade and International Banking Institutions." etc, for three and a half pages.
The authors are fond of simple sentences with one fact or opinion in each. Some of the graphs and charts they've included seem pretty bad. Check out Exhibit 1-18, "Relative Five-Year Growth Rate of U.S. Debt" Relative to what? It's not explained.
I can't imagine anybody sophisticated about finance or economics finding value in this book.
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