Aftershock 2nd edition is written by David Weidemer, Robert A. Weidemer and Cindy S. Spitzer. These authors had written a book called America’s Bubble Economy in 2006 in which they predicted about the coming global financial crisis.
They had predicted the collapse of real estate, the fall of stock market, the decline in consumer spending, the bust of dollar bubble and government debt which are still to come. In 2006 most of the people didn’t believe their predictions but two years later their predictions started coming true.
What will You Learn From This Book?
By reading this book, you can understand why we are stuck in this global financial crisis. The authors have done a great study on different investment options. You can come to know which jobs, careers and businesses are safe in the current financial crisis.
Financial crisis like 2008 offers a great opportunity to become richer If you know in which investments you should invest your money. You can protect your assets and make a decent profit rather than loosing money if you have enough financial education.
The Dollar and Government Debt Bubbles
In this chapter the authors have shown a lot of statistics that will make you understand how they predicted about the financial crisis in 2006 and why you should believe their future predictions that are based on the sound data to protect yourself in the coming financial disaster.
Aftershock is the situation after the bust of the dollar bubble and government debt bubble. In the 2007 the annual deficit of the American government was $260 billion and in 2011 this deficit has reached the level of $1.5 trillion. It has increased by almost 550%. The money supply has also increased dramatically from $800 billion in 2008 to more than $2.4 trillion today. The government is pumping up the bubbles of dollar and Government’s debt.
The Fed is borrowing money and printing a lot of money to get the U.S. out of the financial crisis. With this increased money supply the government has postponed the aftershock but by printing more money, they are inflating the dollar and debt bubbles that will eventually bust in the next 2 to 4 years.
How the Authors Predicted the Financial Crisis
In 2006, It was hard to predict the financial crisis of 2008 when the economy was booming. The prices of real estate and the stock market were at all time. The prices of real estate are usually driven higher by a growing population and the growing income of homebuyers. But in the America the population and the income of home buyers were not growing.
From 2001 to 2006 the average income grew only by 2% instead the housing prices grew by more than 80%. From 1928 to 1982 (54 years) the stock market rose 300% due to massive growth of American economy but from 1982 to 2006 the stock market has risen more then 1200% without much growth in the company earnings or the GDP.
In 1950 the U.S. government’s debt was about $19 billion, in 2011 the total government debt has reached the level of $15 trillion. The U.S. government is near at the stage where no other country would like to lend any money to U.S. The U.S. government is not able to pay off his debt. The Government is simply bankrupt. They are borrowing some time by printing a lot of money that will cause a lot of inflation in America.
Are we out of Recession?
In the last few months of 2010 the stock market recovered dramatically and everyone was assuming that now we are out of the recession. But if you look carefully the data you will understand that this increase in the stock market was driven up by the massive money printing not by the growth in GDP or job creation.
Now in the mid of 2011 the stock market is falling again because we are not creating any jobs and the prices of houses are going down. Now everyone is looking at the Fed to pass another stimulus plan (Print more money). Double the Government Debt and triple the money supply again and no doubt that the stock market and the prices of houses will increase dramatically. But the consequences of these actions will be worse than the financial crisis of 2008.
The Inflation is coming ?
When no other country will lend any money to U.S. and the foreign investors would start investing their money in their own countries instead of investing in the U.S. assets that are declining in the value. China is the Biggest lender of U.S. Government Debt. China has accumulated more than 1 trillion dollar and when the S&P downgraded the U.S. Government bonds in the summer of 2011.
The China announced that in the future they are thinking about investing their money in some other much safer investments than investing in U.S. government bonds. In this case the U.S. Government will have just one option left and that is to print more money. The U.S. inflation will be on the roof and the dollar will be crashing faster and deeper because the foreign capital will be going out of the America.
How can you protect yourself in this financial disaster?
If the economies of U.S. and China slow down, the rest of world will be equally effected. The massive decline in economic activity will drive down the prices of oil due to less demand. If the value of dollar and global economy is collapsing it will be good to invest in Gold. The demand for Gold is exploding in the countries like China and India due to high inflation. Gold is the favorite investment for the people in the Asia.
Invest in Gold and Foreign Currencies
According to this book the value of American Dollars will fall significantly so you should invest your money in Gold and some growing currencies such as Canadian dollars, Swiss Francs, Norwegians Krone and some money also in Euros.
Stay Out of Stock Market
You should remain out of the stock market. This is not a down market cycle and don’t assume that the stock market will rise soon as it did in the previous stock market crashes. This time scenario is different. In the short-term the stock market may rise if the Fed pass another stimulus plan (Print Money). In 2010 the stock market would have finished 15% down but due to the massive money printing by Fed, the stock market finished up 11%.
Don’t invest in Real Estate
Stay away from Real-Estate investing, It is not a good time to buy any property even if the house prices and interest rates are at all time Low. Do not think that property prices will rise soon as they did in pervious market cycles. The real estate prices will continue going down till the dollar bubble pops. If you have money at that time, you will be able to buy a lot of properties at very, very cheap prices.
Final Thoughts on This Book
If you want to protect your assets and want to know about the best opportunities available in the current financial crisis then this is the best book you should read. You will feel more secure and richer just by reading this book as it provides o lot of rich information that will make you rich. Buy it and learn from this book to make profit rather than losing what you have in the coming financial disaster.