Yesterday I posted a part 1 review of the book ‘Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown’, in which the authors purport to predict the next economic meltdown. In part 1 of the review I covered how the authors state that they were able to accurately predict the current meltdown and therefore, are now able to predict the next economic calamity.
The bottom line of the next meltdown is that our government will be unable to pay off the massive debt we are accumulating. They add to this prediction that our dollar will fall in value like a rock. When this happens stocks will also fall in price, the price of imported goods will increase [they state a Toyota Camry could cost us $100,000], and we as a nation will have to return to the basics of life, that being food, shelter, energy and other basic needs.
The authors go on to state that after the two bubbles, government spending/borrowing and the dollar, both pop we are in for a long period of declines. I originally thought that the authors were not recommending buying gold. However, the authors do recommend buying gold for profit, but where I was originally mistaken, is I thought that gold would also decline in value. Which is correct, but this will happen a long time down the road.
Which brings up another point. The authors are very explicit in that they can not predict exactly when the value of the dollar will erode or when the government will be unable to sub-stain their rate of borrowing money. Their guess is this may happen sometime between 2011 to 2014 or beyond. So how should you prepare for this catastrophic economic depression?
Do not buy stocks or bonds. Stay away from real estate. Buy precious metals such as gold as an investment. But keep in mind that the gold bubble will burst as well, so selling at the right time is critical.
A finally the scary stuff that if it happens is going to kick us all right in the ass. With the dollar devalued gas prices will soar to $15 a gallon. With the government not able to borrow anymore money, social security will be curtailed and only those with no assets will qualify. Medicare will only be available for the people also without assets, and payments will be reduced to hospitals and doctors. Unemployment will be higher than the great depression which topped 25%. Yipes!
The book ends with this….. ‘say good-bye to the age of excess’. No longer will we have investment bankers and corporate executives make horrible mistakes that destroyed companies but made them a ton of cash. Even main street America got to play by have a line of credit from their ever increasing home prices which turned into a bank and credit cards galore. No longer will be able to run down and buy a car just because we want to have something new. In 2008 there were 35 million more cars than registered drivers.
The government owing some 10 Trillion dollars will seem like a drop in the bucket. Prepare yourself for Trillions more being thrown at the economy with little or no results.
Is the book worth reading? I believe it is. But one must also keep things in perspective. I would consider putting about 10% of my assets in precious metals. But I also believe that I’ll wait until the 4th quarter of 2010 or 1st quarter of 2011 before making that commitment. By that time we should know which direction the government is heading. If those in congress continue to spend money like a drunken sailor in a whore house, we may wish make a move towards precious metals.
What do you think?