It was about 3 weeks ago that my wife suggested picking up a copy of the book ‘Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown’. At first I balked since I normally do not believe in all of the smoke and mirror predictions that some so called experts make. But just out of curiosity I decided to take a look at the book and see what others were saying about it. After reading the reviews I ordered myself a copy.
The authors of this book, Aftershock… ‘ had previously written the book, ‘America’s Bubble Economy: Profit When It Pops’ back in 2006. I had not read the original book the authors wrote, but apparently these people were right on the money. They subscribe to the theory of a ‘Bubble Economy’, which they claim has six separate parts. The bubble parts are housing, stock-market, foreigner supported dollar, consumer debt, U.S. debt and consumer discretionary spending.
In housing, the theory was that housing would never stop increasing in price. With this in mind loans were given to people who should of not been loaned money. We have all heared of the so called sub-prime loans and the effect it had on the housing market. But some of what we didn’t know is explained in ‘Aftershock…..’ What I found interesting was the way that some borrows were provided three options each month on how they wished to repay their loan. They could pay both principal + interest, or interest only, or just a portion of the interest. This last option would add the unpaid interest back onto the original loan up to a maximum of 125% of the original amount borrowed. That is creative financing at its best! LOL
The authors claim they “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 authors present how they predicted the housing bubble crash and how in turn it caused the stock market, consumer debt and consumer discretionary spending bubbles to burst as well.
So what’s left? The two bubbles foreigner supported dollar and U.S. Debt. The authors are now predicting that these bubbles are the next to fail over the next few years. They justify their opinion in a way that makes complete sense. The U.S. is borrowing so much money that it will become apparent that we will be unable to pay off the debt. When this happens foreign support of the dollar will wane.
There was a word of caution which I especially liked. The authors state that there will not be a depression like the 20’s and 30’s, but instead will force the U.S. to only spend what it takes in without borrowing. The countries that will be in trouble are the countries that reply on exports. The authors also state that we in the U.S. will not be left out in the streets, since we are to wealthy of a nation for this to happen.
I finished last evening reading the chapter about buying gold. Before reading the chapter I thought gold would be the recommendation to protect our personal wealth. The authors believe that gold will rise, possibly up to $2,500 or more per ounce, but that bubble will pop as well. So what’s left? I don’t know, but I am looking forward to reading the second half of the book to see what strategy the authors may suggest.
Stay tuned for part#2.