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Aftershock

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Aftershock

Protect Yourself and Profit in the Next Global Financial Meltdown

Wiley,

15 min read
10 take-aways
Text available

What's inside?

This detailed, depressing future scenario says bubbles persist in the US economy. And bubbles always pop.

Editorial Rating

6

Qualities

  • Eye Opening
  • Visionary

Recommendation

Since ripples from the 2008 recession continue to affect investment planning, this gloomy treatise by consultants David Wiedemer, Robert A. Wiedemer and Cindy Spitzer may have special appeal for those preparing for worse times ahead. The authors’ analysis says that lingering aftereffects of the economic crisis – mostly due to the collapse in value of overinflated assets – mean investors still have not seen the bottom of price declines. The book contends that the bottom is not even in sight since the US still has a “multibubble economy.” But be forewarned: The authors’ predictions are pretty bleak. In fact, since they believe the US will default on its debt, you could find their take beyond pessimistic. While the book can be slow, repetitive reading, it offers an iconoclastic presentation with pertinent charts and advice to help investors defend their portfolios. But readers also have to trudge through some promotion for the authors’ investment counseling services and some hearty self-congratulations for their previous book’s predictions. Nonetheless, getAbstract suggests this detailed, depressing scenario to those looking for an alternative view on the postbubble economy. [Editors’ note: getAbstract does not offer or endorse investing advice.]

Summary

Interconnected Bubbles

When the Dow reached a record high of 14,164 on October 9, 2007, the US economy seemed strong. Home prices were rising, unemployment was low and banks were financially stable. But these strengths belied the fundamental problem of inflated values for assets in crucial sectors. When the interconnected bubbles in housing, consumer spending, credit and the stock market burst, they set off the first wave of a global financial cascade. The decline of this “multibubble economy” is very different from past economic downturns and their subsequent recoveries. The bubble “Aftershock” will eventually lead the US to default on its debt.

Popping Bubbles

Bubbles are temporary, large increases in an asset’s price that have less to do with the asset’s basic economic value than with investors’ perceptions. When the US government began consistently incurring deficits in the early 1980s, these six interrelated bubbles began to form and grow, and the US economy grew with them:

  1. “The real estate bubble” – Home prices increased 80% from 2000 to 2006, while individuals’ incomes only rose 2% during the same period. It was this unsustainable imbalance...

About the Authors

David Wiedemer, PhD, is the chief economist for Absolute Investment Management, where Robert A. Wiedemer is a managing director. Cindy Spitzer is president of Aftershock Consultants.

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    K. M. 1 decade ago
    "....because the government did not collect enough in taxes to pay for its programs." Yup. no bias here.....no mention that there is another option: QUIT SPENDING and reduce government bloat.
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      1 decade ago
      Hi Keith - Thanks for your comment. I want to note for the sake of clarity that the opinions in our summaries are those of the books' authors, not of getAbstract, which is completely politically neutral. We cover respectable books across the spectrum. Our statements of opinion are limited to the recommendation and to how a particular book may serve our readers. Thanks for your comment and interaction with us. E. Rauzin, Managing Editor, getAbstract