on June 29, 2010
I do a LOT of reading on finance and geopolitics, and as such appreciate it when an author gets right down to business, lays out the facts and/or history behind their argument and then makes their own arguments based on their understanding of what they just presented. Two excellent examples of this type of book are The Ascent of Money by Niall Ferguson and This Time Its Different by Carmen M. Reinhart and Kenneth Rogoff.
This book was recommended to me by a friend who is pretty financially savvy, and as such I had high hopes. Unfortunately, about 7/10ths of this book is spent by the authors trying to convince you a) they have been right in the past, and therefore you should listen to them now, b) other authors have gotten it wrong for (insert reason here), and c) alll the *really* useful information, is available on our (paid) website. In other words, it's like reading an infomercial, where they occasionally throw you a useful tidbit to keep you interested.
With this in mind, here are the are five basic concepts from the book that seem worth noting, most of which are covered in the last three chapters:
1. In modern societies, advancements tend to follow a "STEP" trajectory (Science -> Technology -> Economics -> Politics), which is a useful framework to keep in mind when you are thinking about where a given technology is in terms of both political systems and investment cycles.
2. Several governments around the world are on a trajectory with their debt that will result in widescale sovereign debt defaults, currency crises, significantly higher taxes and drastically lower government spending. (Think military spending cut in half or more, reduced government pensions and reduced benefits and means testing for programs such as social security and medicare here in the US.)
3. The world will take a long time, perhaps 20 years, to find it's new economic equilibrium. While there will be widescale social unrest as the system resets, with massive losses in stocks, bonds and real estate, day-to-day existence for most will not drop to the subsitence level known during the great depression in the US, simply because we are starting with a higher standard of living. Things may not be as rosy in developing countries, however.
4. Gold is currently in the beginning stages of a speculative bubble, just like tech stocks, housing, and real estate were. While gold remains an excellent hedge, it's important not to not get caught up in the frenzy and go "all in at the top," and get beat up when the bubble bursts.
5. The stage is being set for a global (electronic) currency, though the authors don't specify what it will be backed by or based on, other than it won't be gold.
Now, truth be told, these are pretty good ideas. But just as I can lay them out in five paragraphs, a skillful editor could have pared the information down to say 30-40 pages in book format, and saved readers a bunch of time in the process. In this day and age, I find that kind of editing disrespectful of a reader's time and as such can't rate this book higher than two stars.
on May 9, 2011
Let me save you the $13 that I wasted on this fraudulent and deceptive book:
This book is a scam.
It only serves two purposes:
1. To purchase more investment products from the authors on their website. They interrupt the book every 2 chapters to insert a half-page ad for their investment services.
2. To convince you to buy gold through the highly dishonorable and fraudulent sources that they recommend, probably because they get a kickback for referring you. For example, their book refers you to a page on their website that highly recommends buying gold through a gold depository company called Monex in Newport Beach (California), yet this company has stolen millions of dollars from its customers, is rated D- by the Better Business Bureau, and is the subject of countless lawsuits!! Go ahead and do a Google search yourself for "Monex Fraud" and you will see that I am telling the truth. They also have similar recommendations about deceptive gold ETFs who are the subject of fraudulent investigations, and they even lie themselves in the book by saying that if you invest in an ETF, you can request the gold to be shipped to you. This is not true... ETFs never have and never will ship gold directly to the public. Why in the world would these authors be pushing people towards all these fraudulent companies??
There are many other problems in this book as well, including links to third-party web pages that have never existed, and questionable "facts" about past events. These authors love to twist past events into tales that nicely fit their book's premise.
Be very careful about believing anything that is said in this book... This book may lead you down the path the financial destruction sooner than they predict, and it will all be because of them trying to make a quick buck for themselves.
I am going to contact amazon.com to see if I can get a refund on this shameful book.
on May 1, 2010
The book starts with the premise that there are six major "bubbles" that will combine to create great stress in the economy. OK, I'll buy that, but what I was looking for was helpful investing tactics to get through the bubble bursts ok. Written in mid 2009, the book failed miserably in providing tactical investment advice. For example:
o They suggest shorting the market with inverse ETFs. That strategy would have been a disaster in the year after March 2009 when the stock market soared.
o They write that the Euro community will be much more solid than the US dollar in the near term. Now we see the Euro in collapse with the US dollar doing fine.
Also, I find it extremely annoying that the authors constantly point to their previous book and say "We got those predictions right, so you should look carefully at what we have to say now." Such hubris usually leads to unfulfilled predictions.
Particularly with this constant pointing to their previous clairvoyance, I was really disappointed that there was nothing in this book (other than "buy gold"--surely not a new idea) that I found helpful in my investing tactics. I was disappointed in myself for wasting time reading most of the book.
"That's right. The bank and corporate bailout money is not coming from our taxes. Instead we're just borrowing it from foreign investors. We're also printing some of it...Of course, we will never, ever have to pay it all back, because even if we tried (and we won't), we never could." That is why the U.S. Government will eventually be unable to borrow money and the nation will have to start living within it's means. That will be the beginning of the brave new world of life in America. This book is how we are speeding toward this "Bubblequake" and its "Aftershock." Although somewhat depressing (like all bad news is), this book also tells people what they can do to survive this worldwide depression and how to actually be able to make money during the painful readjustment of the world's economies. While this is a scary book because of what is happening all around us, it is also a hopeful book. The nation will survive after the country stops ignoring the basic laws of economics. The three authors are optimistic (maybe overly so) that the American people will be able to make the adjustments needed to achieve economic survival without having to become survivalists who have to grow their own food and defend their homes from roving mobs with guns. They feel that even dictators will be unable rise from the chaos because Americans will be changing its government officials as soon as it's obvious their policies don't work. There will be frequent changes in elected officials.
The nation will survive because basically the country is wealthy and will still be so after the economic bubbles have all popped and forced everyone and their government to live within their means.
These authors "are not bulls or bears or gold bugs, stock boosters or detractors, currency pushers, or doom-and-gloom crusaders," and "have no particular political ideology to endorse, and no dogmatic future to promote."
The goal of this book is "to tell you more details about the next round of bubbles to fall while there's still time to protect your assets and position yourself to survive and thrive in this dangerous, yet potentially highly profitable new environment...Although much of what we predicted in our first book that hasn't happened yet because most of the impact of the multi-bubble collapse is still to come. This is good news because it means you still have time to get prepared."
It's impossible to do justice to this book's message in a short review. The review copy I worked from is now practically destroyed by so many dog-eared pages and underline and highlighted passages. The three authors share a theory of the economy having being boosted by six economic co-linked bubbles. They are: The real estate bubble, the stock market bubble, the private debt bubble, the discretionary spending bubble, the dollar bubble and the government debt bubble. Four of those bubbles have already burst or are still in the process of collapsing. With the collapse of each bubble it puts more pressure on the remaining bubbles, and the two most important bubbles are in dire danger. The dollar bubble and government debt bubble collapses will change the face of America and the world. America will be bankrupt.
In their first book, "America's Bubble Economy" the authors accurately predicted the economic chaos of 2008 and 2009. This book picks up developments in 2010 and the following years and predicts the next economic bubbles that will pop. In the coming much worst economy, the book shows readers the best ways to protect, their jobs, businesses and assets. It explains how the housing crisis isn't "a sub prime mortgage problem whose contagion spread to other mortgages; it is a `housing price collapse.'" The number of home owners with mortgages that are underwater has risen from 14.3% in Q3 2008 to 33% in Q2 of 2009." Since 70% of the American Economy is based on consumer spending, the bubbles that have already popped or are still in the process of deflating won't be able to re-inflate. When the dollar loses it's value and the government can no longer pay its loans, and therefore won't be able to get any credit. America's golden age will be over.
Inflation, resorted to by the desperate government, will rack the nation bankrupting most businesses. "40 to 60%" unemployment may become the norm. There will be so many people seeking jobs that wages will tank. Everyone will be on Medicaid, not Medicare, and all the unemployed will be on welfare. The rich will have left the USA or be broke and all the government's taxes will come from the working people--the middle class. Since as much income as possible will be hidden, there will be national sales taxes and Value Added Taxes on every product or service. Family members will return home to live together with their extended families in order to control housing expenses.
After I finished this book I went home and made some of the changes suggested by this book. They include such obvious things as selling real estate if a buyer can be found and getting rid of variable rate mortgages if you can't sell the real estate. Variable rate mortgages are absolute poison. Selling off stocks is another suggestion. It doesn't have to be done all at once, it can be done over the next couple of years, but most stocks should be sold because the dollar bubble collapse will destroy stock market values. Collectables and art will be non-liquid and will drastically drop in value (90%) for the long term. Gold, and silver to a lesser extent, will retain its position as a hedge against inflation as well as a protection against the dollar bubble collapse. The authors also list the types of jobs that will be in demand during the coming perilous times. As one might expect some job categories will boom while the unnecessary ones will disappear. For example construction workers may want to start looking for jobs that repair existing structures rather than build new buildings. You'll have to read this book to get the answers to many of the questions that reading this volume will provoke.
The thing this reviewer liked the best about this book was the carefully explained logic of it's predictions. It provides a much better overview of the current economy. The readers will discover lots of new information that they've probably never heard or read before, but that the reader's gut instinct and personal experience will tell him or her is obviously true. While the authors may be wrong on some of their predictions, most of them will probably prove all too accurate. At the end of each chapter the authors list a website where more current information on that chapter's point can be gleaned before the next volume of this continuing series is published. This is a page turner, but it will be slow reading from the standpoint of having to constantly stop and make notes in the margin or pause to see how a particular point directly effects the reader's own situation. Reading this book will make you aware of economics like you've never previously been aware. Depending on your age, you may well recall your parents or grandparents advice that they'd learned during the Great Depression of 1929. The coming bubble bursts are going to be a more society-changing depression than the one 1929, although "few will suffer like they did in the Great Depression." The safety net will allow everyone to survive at a low standard of living. While the book didn't make this comparison, while reading it, I could easily visualize the United States as a colder, slightly wealthier version of Cuba. As I read it I also saw some visions of the movie "Dr. Zhivago" pop into my mind.
on November 21, 2010
Basically, the predictions made by the authors of this book are, as follows:
1. Because the national debt is so huge (currently at $14 trillion), the government has reached a point where it is no longer able to borrow all the money it needs. Therefore, the government is now resorting to printing massive amounts of money. Doing this inevitably results in price inflation because it dilutes the value of all existing currency. When the investors who purchase our Treasury bonds (be they private investors or foreign governments) precieve that the rate of inflation is greater than the interest paid by the bond, they will be unwilling to purchase additional bonds. In response, the government will be forced to increase the amount of interest it pays on these bonds. However, this will further increase the government's expenses and need to print more money, and an inflationary spiral is created. Ultimately, the government will be unable to sell it's bonds (i.e.: borrow money) and will resort to simply printing additional currency to compensate. This, of course, will result in hyperinflation and the ultimate collapse of our monetary system.
2. The only thing you can do to protect yourself against the massive inflation we will be facing is to buy gold.
3. Unemployment will range from 40% to 60%. The only jobs that will continue to exist will be government jobs involving essential services (e.g.: police, fire), and jobs in the health care sector. These jobs will pay much less than they do now. The unemployed will not starve because the government will provide various forms of welfare. However, the nation will be impoverished.
4. The authors predict that eventually, the nation (and, the world) will repair the economic destruction by adopting an international currency and cashless society.
The authors attempt to present their conclusions as though they are great revelations. However, with the exception of prediction 4 (which is largely unsupported and is merely the authors' speculation) everything else (although largely ignored by the mass media) is common knowledge to anyone who understands how the economy works.
With the exception of prediction 4 (which, I hope is wrong), the predictions of the authors are, in my opinion, a fair presentation of the worst case scenario for what will happen. On the other hand, the best case scenario (please forgive this personal opinion) is to expect double digit inflation for the next decade. And, anyone who remembers the late 70's and early 80's knows that this isn't a pretty picture.
My problem with this book, and the reason I gave it only one star, is that the authors do nothing to educate the reader. Basically, they ask the reader to trust and believe their prognostications because the predictions made in their prior book established their economic clairvoyance. I suppose that if someone is completely unaware of the predictions outlined above, there is some value in a book that makes someone aware of what is actually going on with the economy. However, until this previously clueless person has the tools to come to his own conclusions, he will not know whether to take the advice of these "experts" or some other "expert" offering different advice. And, there is never a shortage of various "experts" offering conflicting advice.
If someone is interested in learning enough about how our economy works so that they will not need gurus to tell them what to expect, there is an excellent book entitled "Guide To Investing In Gold And Silver" by Michael Maloney. This book makes a compelling case for why the purchase of gold and silver offers the best protection against the coming inflation. However, in doing so, the author presents a detailed and extremely interesting explanation of how the economy works. After reading this book, the reader will have the tools to be able come to his own conclusions and will not need gurus or experts to tell him what to do or what to expect.
Another outstanding book is The Crash Course by Chris Martenson. You can also view the 3 1/2 hour video that preceded this book if you go to the authors website, ChrisMartenson.com. I guarentee that if you watch the video you will buy the book.
on February 27, 2010
Although I don't particularly like the way this book is written and disagree with most of the irrelevant asides offered in support of the analyses: I find this to be the most complete and comprehensive analysis of America's ongoing economic problems that I have thus far encountered. In addition: the reasoned deductions which the authors draw from their analyses are far ranging and logical; and, for the most part, the conclusions which they reach are well justified and difficult to dispute. So, if you are looking for a book that will give you some valuable insight into what is happening to the U.S. economy today, and why; which explains how the ultimate collapse of that economy and the U.S. dollar will take place; and which forecasts what the United States and the world at large will be like following that calamity, then this is certainly a book which you should read.
I won't attempt to outline the book since other reviewers have probably done that already; and besides that might spoil the fun for you, the reader. But I would like to point out some of the seemingly gratuitous "asides" [not pertaining directly to the analyses] with which I disagree.
On page 170, the authors praise Franklin Delano Roosevelt (FDR) for freeing the U.S. from the requirement to back its currency with gold, instead backing in by "the full faith and credit of the United States government." In my view, no praise is warranted, since FDR's actions helped set the U.S. on the path toward to its own economic destruction. Also on page 170, the authors state that in 1973 the United States went off the International Gold Standard [stopped redeeming foreign-held U.S. dollars for gold in accordance with the Bretton Woods Agreement signed in 1944] because that was the only way we could continue to buy foreign goods. In reality, the U.S. was forced to stop redeeming foreign-held dollars for gold because by 1973 we had inflated our currency to such an extent that France and Great Britain began to question the safety of our currency and there was a run on our gold reserves. On page 188, the authors once again praise FDR for crossing over political boundaries to push through his New Deal policies. It is fairly common knowledge nowadays, however, that FDR's policies helped propel what is thought to have been a probable recession into a thirteen year depression ended only by America's entry into World War II. On page 195, the authors use the example of an independent physicist who, following the Challenger Accident in 1986, performed a simple experiment to show NASA why the accident occurred. In reality, Thiokol engineers pleaded with NASA not to launch STS-51L because the O-rings were colder than 53 degrees Fahrenheit. The decision to launch was made for political reasons not out of ignorance. On page 196, the authors praise the book "Silent Spring." That book, of course, misrepresented the science concerning DDT leading to its being banned and resulting in several million deaths worldwide due to malaria and other diseases. On page 200-201, the authors contend that gold is not a good store of value since its price fluctuates. In reality, the price of gold doesn't fluctuate. The price of various nation's currencies fluctuate relative to gold. To illustrate: The oil cartel members (OPEC) routinely adjust the price of oil, in terms of U.S. dollars, such that their return remains fairly constant in terms of gold. (Are they smarter than us, or what?) And, last but not least, on page 217, the authors praise Barack Obama for trying "to contain the growing blaze" [of uncontrolled government spending]. As we all know: Nothing could be farther from the truth.
But, one last thing: On page 187, the authors theorize that, at some far distant future date, some international assemblage will devise an international monetary system, independent of gold or any other metal, that "will be inflation-free because the system that controls the supply of IMUs [International Monetary Units] will be set up to avoid it." In all of man's history, gold is the only standard which has ever met that requirement! And human nature being what it is: How naïve can you get?
Regardless of all this: I can't help but offer my thanks and praise to the authors of this book for their in-depth assessment of America's troubles, particularly at this unique point in America's and the world's history. One can only hope that their work and this book will help bring more Americans to their senses and encourage them to take whatever steps they can to protect themselves and their families. Bottom line: This is a truly outstanding book in the field of economics, but outside that field, as demonstrated by the above noted "asides," it leaves much to be desired.
on April 23, 2010
I purchased and enjoyed reading this book, but I do have a few reservations. The author repeatedly makes the argument (coming from a number of different directions): "I was right on in my first book about what happened to the economy/stock market/real estate, so if you ignore what I am saying is going to happen next, you do so at your peril." I commend the author for being right the first go around, but, excuse me, if I had $10 for every "guru" that got it right once and not again, I wouldn't have to worry about investing in the stock market, or anywhere else. The fact of the matter is that even at present, the writer has been wrong because it is clear from his prognostications that he did not even remotely expect at the time he was writing this book that the stock market would come roaring out its depths as it has done over the past year. This whole scenario is just further confirmation to me of something I have observed for more years than I care to remember: No one, and I do mean no one, really has a clue about what is going to happen to the economy, the stock market, real estate, or any other similar endeavors. Those who present themselves as having such an understanding, as is the case with this author, seem to inevitably end up being humbled. I'm happy to read someone's analysis as to what they "think" might happen, but when they start sounding like they're sharing gospel, I see red flags. A bit of a further turn-off is the fact that the author appears to be trying to over-capitalize on his first prediction success in that he is offering an Internet investment "advisory" service for a mere $49 per month.
Again, I enjoyed reading this book, and I think there is good food for thought, and some excellent insight. Having said that, however, let's keep everything in perspective.
on May 7, 2010
There's little more I could add to Charles Martin's May 1st post and the same goes for the Inquiring reader's May 6th post.
My primary dissapointment is the authors failure to put any content in the several web page URL links that they provide in the book. All are 4 months behind the promised time and continue to give LAME excuses for no content.
Don't let them rip you off. DON'T WASTE YOUR MONEY.
on July 29, 2011
There are quite a few books emerging on the subject of potential US financial collapse. While the premise of the book has some merit, this book utilizes flawed economics in order to argue the demise. For instance, the authors presuppose that there will be massive inflation, with no mention of what is more likely, that of low to moderate inflation and price shifts. Banks and the fed maintain large reserves, but access to credit and reserve funds are very limited and there is not a mechanism that will present itself to provide the broad based disemination of these funds to consumers, a prerequisite for the kind of inflation they are subscribing to. The authors also used flawed math in their arguments, like comparing the stock market growth against domestic GDP. The US stock market is accessible to non domestic funding, so the comparisons become flawed as a means to explain the stock bubble. In addition, high unemployment for the foreseeable future most likely will limit wage increases, meaning wages will most likely continue to deflate creating price shifting rather than inflation. The authors discuss a likely scenerio of massive mortgage defaults. The argument provided as support to the discussion of massive inflation and high interest rates. Actually, if we truly entered a phase of massive inflation, it would be advantageous to most mortgage holders as they own fixed income debt obligations, and they would be repaying these large fixed loans with highly inflated dollars, so why would they then default? While certainly you could make economic arguments for what could happen, there are alot this book presupposes that is contrary to what very well could happen. Overall its a subject we should all be contemplating. In the authors next book, maybe they should try to stop patting themselves on the back, as they were not the only ones who predited the 2007 bubble burst, as there were many economists who predicted it. It also detracts from the professionalism most economist purport when discussing the science. There are many economists today that predict difficult times ahead. Read other books, there are many of them out there. Many are done much better than this and give you a broader sense of the structural problems we need to fix rather than the self interested approach this book purports, which is most likely what got us here to begin with.
on October 18, 2010
This is advertising you have to pay for. Some of the promised features of the book have been "cancelled." They want you to subscribe to an expensive newsletter instead.
They may be right about what's going to happen (US meltdown), but I don't think you should pay them for the privilege of selling to you.