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Debt, Deficits, and the Demise of the American Economy Hardcover – May 3, 2011
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From the Inside Flap
"The problem we now face is the most extraordinary financial crisis that I have ever seen or read about." Former Federal Reserve chairman, Alan Greenspan (August 7, 2010, interview in the New York Times)
So begins this extraordinary book that takes the reader through a logical and linear progression toward what is likely to become the worst financial disaster in American history. The financial Armageddon will begin with the collapse of the so-called PIIGS nationsfirst Greece, then Irelandleading to a crisis of confidence in European banks and a sharp devaluation of the euro. Speculation about the fate of the EU will spark a trading frenzy in world equities markets, and the rising uncertainty will bring a rapid decline in world stock markets. The bond markets will all but shut down, and interest rates will spike. In short order, the focus will shift from Europe to the United States and its monumental debt and out-of-control deficit spending. The U.S. Treasury will shift its printing presses into high gear as it churns out additional billions to cover its debts, but America's deteriorating financial condition will cause a spike in interest rates as buyers of U.S. Treasuries lose confidence. Several states will default on their municipal debt; in many cases, retirement checks to former state employees will cease. From there, events inexorably will lead to soaring inflation of an order not seen since the 1970s.
If this grim scenario seems far-fetched to you now, it won't by the time you're done reading this harrowing account of the current state of the world financial system.
Authors Peter Tanous and Jeff Cox brush aside the "blue skies" propaganda coming out of Washington and the New York Fed to offer a cold-eyed assessment of the facts. Step by painful step, they delineate the events that have led us to the current state of affairs until they arrive at the inescapable conclusion that decades of profligate spending by government and reckless speculation in the financial markets have taken us too far down the path of destruction for us to entertain any ideas of turning back. Global economic collapse may be inevitable. The only question remaining now is what you can do to protect your assets until the crisis blows over.
In answer to that question, Tanous and Cox explain why Modern Portfolio Theory and the traditional 60/40 portfolio structure no longer apply. In their place, the authors offer a set of inflation-busting asset allocation strategies that include a substantial investment of real assetsincluding oil, gold, timber, and even farmlandas well as inflation-protected bonds.
A storm is coming. How soon, exactly, it will arrive, no one can say for sure. If you want to know how it will shake out and what you can do to shield your hard-earned assets from the worst of it, read Debt, Deficits, and the Demise of the American Economy.
From the Back Cover
Praise for DEBT, DEFICITS, AND THE DEMISE OF THE AMERICAN ECONOMY
"Before reading this book, I was concerned. Now I am scared. Hopefully, this admirable message will provide material to those legislators fighting for more robust, low-debt, deficit-free systems. I thank the authors for fighting for economic safety." NASSIM Nicholas TALEB, Distinguished Professor of Risk Engineering, NYU, and author of The Black Swan
"Tanous and Cox brilliantly explain how the United States got into the financial hole. But better yet, they explain how we can get out of it. Here is the sure path to renewed prosperity if we will only follow it." SAM DONALDSON, ABC News Correspondent
"An important business book about how we've ended up at this desperate juncture for our economy. Tanous and Cox don't merely chart the path to our demise, they construct an effective road map back to prosperity that all policymakers should heed." Dr. ARTHUR LAFFER, Chairman, Laffer Associates
"A chilling account of what will happen if our political leaders do not take immediate steps to resolve the number-one threat to our great nation: massive federal budget deficits that are growing exponentially with no end in sight. Must reading." WILLIAM M. ISAAC, former chairman, FDIC, and author of Senseless Panic: How Washington Failed America
"Debt, Deficits and the Demise of the American Economy is a sobering and frightful account of the nation's financial challenges that should be read and understood by all Americans, whether they agree with the authors' conclusions or not." Steve Liesman, Senior Economics Reporter, CNBC
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Top Customer Reviews
More detailed version: As of 2010, US public debt to GDP (defined to exclude internal borrowings from the Social Security Trust fund, etc.) was 63%, and even given optimistic economic forecasts of five percent annual growth the Congressional Budget Office (CBO) has it near 100% by 2020. Given that growth will very likely be less than that, the US will hit the magical number earlier. The authors note that defaults by some heavily-indebted EU countries will not destroy the value of the Euro - they simply make it less attractive in the short-term due to volatility - and so once Europe works through its crisis by getting rid of the sicklings, investors will demand higher rates from the US as compensation for the Fed's attempts to monetize the debt by printing money, interest payments on debt will surge from less than $300 billion to close to $1 trillion, and the debt crisis will have arrived, with government at last forced into intense austerity. While I disagree with some of the subsidiary arguments, and think it will take longer than they suggest, unfortunately I think some version of this is very likely.Read more ›
Authors Peter Tanous and Jeff Cox ("T&C") make their principle points immediately, right in the "Introduction", as follows:
The US is heading towards financial catastrophe that will paralyze the country and lead to severe inflation plus a stock market crash of perhaps 2000 to 3000 points on the Dow. The root causes are debt, deficits, and inflation, specifically the rising and unsustainable debt in Europe, and the rising deficits in the US.
Moreover, according to T&C, it is too late for any practical initiative to prevent this upcoming financial catastrophe.
But, according to T&C, the US never will technically default on its debt, because we always can create new money ("print money"), thereby permitting the debt to be paid in cheaper (inflation ravaged) dollars.
Then, what's all this (as in the book's title) about "Demise of the American Economy"? We've had major stock market crashes before, about 27% on 10/27/87, but we rebounded nicely, and there was no "demise of the American economy". Ditto for severe inflation, which reached 14.76% during the Carter years. But here it is the book's title, not its content, that gets the grade of "F".
The analysis of inflation in chapter 4 is highly informative. Ask your neighbor to define inflation, and he'll say: widespread increases in wages and prices. But actually, increased wages and prices are the effects of inflation, not inflation itself, which is defined as an increase in (ie, inflation of) the money supply.Read more ›
Most Recent Customer Reviews
I cannot believe that Nassim Taleb recommended this hackneyed excuse for original writing... I have known Monsieur Taleb and of him since London in the 80's... Read morePublished on August 22, 2011 by Jonc
The book is a realist objective book which gives you an look into what is facing the worldwide economies of the world and how it is intertwined into our american economy and how it... Read morePublished on July 9, 2011 by Mark
This is a must read for anyone concerned about the direction government continues taking toward financial ruin. Read morePublished on July 3, 2011 by Tom
This book is a "must read" for anyone who has an interest in the world's economy (which would be just about everybody). Read morePublished on June 2, 2011 by paulymak
Pity this book wasn't published a few years ago . . . . the Greek & Irish economies may have avoided the situation they currently find themselves! Read morePublished on May 12, 2011 by Marysue K. Shore
I extensively read on investments, economics and finance. There is no book I completely agree with, and though this book is not an exception it comes very close to being one. Read morePublished on May 11, 2011 by Amazon Customer