Pros: Credible background, supported with facts and charts, complicated concepts understandable.
Cons: Shills investment services, stops short on investment options, redundant at times.
I am not quite ready to build a bunker for Armageddon. I am sick and tired of listening to G. Gordon Liddy hawk gold. My 401(k) has limited investment options and represents my primary retirement income source. I am a home owner with enough equity that it is not likely I will end up "upside down" in my home. I have a fixed rate mortgage and do not have to fear the consequences of an ARM (Adjustable Rate Mortgage) when inflation hits. In a nutshell, Aftershock offers very little in the way of bright prospects for my future.
Aftershock is not an apocalyptic book. Quite the opposite. The authors (David and Robert Wiedemer along with Cindy Spitzer) seem to indicate that we are not in a simple recession, market cycle or market correction. They see the current crisis as part of the evolution of our monetary system. Although they predict dire consequences to world currencies and markets, they indicate that wealth can be protected (and even grown) during the coming years and that ultimately, a new currency will replace the old system. This new currency will be an International Monetary Unit that changes our system to an electronic-based single currency unit system.
I am not one to stick my head in the sand when I don't like what I hear (read). However, this book requires a great deal of credibility to accept the complexity and comprehensive nature of the analysis. I will give the authors credit, their previous book titled America's Bubble Economy accurately predicted the collapse of the housing market and the subsequent failure of banks as a result of the collapse. Aftershock is an extension of that book that examines the further collapse of world markets. The book opines that there are six interconnected bubbles that have been behind incredible growth in wealth without tracking an equal growth in production.
These bubbles, which are individually examined in the book, include real estate, stock market, private debt, discretionary spending, the dollar and government debt. The authors view the United States economy as capable of supporting between 15 and 25 Trillion dollars in debt before our ability to borrow money ceases to exist. They also examine inflation and the way printing money is going to drive up inflation, which will be tracked by interest rates. In an interconnected economy, the increasing interest rates will continue to put downward pressure on housing. ARM loans and decreasing values caused by a greater supply of unoccupied housing will cause even more defaults. In short, the bubbles are not done popping.
So how does one protect oneself? This is where I got off track with Aftershock. First of all, I am not willing to go "all in" on any proposition that I don't fully comprehend. This book is not written as well as it could be. The concepts are laid out in a way to make them somewhat easy to understand...at least in broad strokes. But I do not have a strong background in economics to fully grasp the concepts put forward. The book is also redundant, reinforcing the terminology created by the authors ad nauseum. I did not want to kep reading the same stuff rehashed over and over again. I wanted comprehensive analysis that will help track market trends and be able to determine for myself whether the book has enough credibility to affect my investment practices.
Aftershock actually addresses the latter concern. The authors understand that it will be unlikely that investors (other than "gold bugs") are going to put their eggs in one basket based on a book. This is addressed by suggesting a tiered approach that suggests moving money as markets drop a pre-determined amount. I sort of like that concept and will probably follow that advice even though it is reactive. If the authors are correct, then reactive investment will result in greater loss of value for my investments...but will still protect some of my wealth. If they are wrong, I have not lost anything by investing in a faulty concept.
The concern that is not fully addressed is the investment options for anyone who buys into this economic point of view. This book is supported by facts, which offers some credibility. Some of the concepts are also corroborated by outside sources. For instance, I have read several books and articles lately that project double-digit inflation because the Fed has been increasing the money supply. There is no doubt in my mind that inflation is coming. Gold is certainly a good hedge against inflation and something that interests me in spite of the already high cost of gold. Gold values are inflated, making them seem like an equally risky investment. On the other hand, I would like to buy in before it rises even higher as inflation sets in.
If the markets trend downward and I decide to move more money into lower risk investments, I don't want to stick everything into gold. It just doesn't seem prudent. The book suggests other options...like coal...which I like. Coal is simple enough for me to understand. Where I get lost is with the stock shorting, which will create a lot of wealth for those betting against market recovery, and small cap stocks. I have never invested in small caps but am going to begin. But not all small caps are created equal and the book doesn't examine which areas of small capitalization are going to be smart investments. Instead, the book seems to be shilling for business. There are advertisements in the book for investment opportunities. I understand that investment is something that needs to be tailored to the investor...but it gives the book a "snake oil salesman" quality that nagged at me.
Aftershock is not a book to make you feel good about the economy. Quite the opposite. The news is bleak and appears to be well supported by facts. The broad evaluation of world markets seems to be a bit self-aggrandizing, which would completely put me off if not for the accurate evaluations in their previous book. While other market analysts were touting market cycles, America's Bubble Economy said the sky was falling. They were right. That scares the hell out of me. So I am on the fence with this book. It provides some sweeping concepts regarding investment while warning of the continual demise of our current economic system. The book also suggests that wealth can be protected and survive the evolution of our monetary system with proper investment knowledge. However, much of this knowledge is withheld. The book does offer website links ofr updates on the chapters as the predicted events unfold. Those updates are still pending as of this writing. I definitely believe that inflation is coming and will create a lot of pain. It is the government's way of stealing accumulated wealth from the responsible citizens who have saved for their retirement. Aftershock is an enlightening book that will get you thinking about your investment strategy while stopping short of providing comprehensive guidance for that process. Three stars.