Secure your financial future before the next big bubble bursts Aftershock provides a definitive look at the economic climate still ahead in 2015 and beyond and details the steps you can take now to secure your financial future. Written by the authors who accurately predicted the financial crisis of 2008 and 2009, this book serves as both a warning and a game plan for investors looking to avoid catastrophic loss. This updated fourth edition has been expanded with new actionable insights about protection and profits in an increasingly confusing investment environment, and includes the latest data, updated charts and tables, and brand new coverage of monetary stimulus. With a look back at the domino fall of the conjoined real estate, stock, and private debt bubbles that triggered the last major crisis, this book paints a vivid picture of what to expect the next time the world's economy pops. You'll learn how to protect your assets before and during the coming fall, and how to capitalize on the opportunities everyone else is missing. The housing bubble has popped, toppling banks and sending shockwaves of stock market misery around the world. It may seem like the worst is over. It's not. This book shows you what's still to come, and how to ride the crest instead of being sucked under. * Learn when, why, and how the global bubble will burst * Understand the repercussions that will reach into your accounts * Get up to date on the data, with expert analysis and insight * Start protecting yourself now with a few smart investment moves The stock market, real estate, consumer spending, private debt, dollar, and government debt bubbles will burst, driving up unemployment, devaluing the dollar, and causing deep global recession. Aftershock helps you fortify your assets before the wave so you can enjoy clear skies after the storm.
Executive Summary xiii Acknowledgments xv Preface xvii Introduction: Your Guide to the Fourth Edition of Aftershock xxi Part I: The Coming Aftershock 1 Chapter 1: This Recovery Is 100 Percent Fake Why the Aftershock Has Not Been Canceled 3 Isn t a Fake Recovery Better than No Recovery at All? 5 If the Aftershock Has Not Been Canceled, Why Hasn t It Happened Yet? 7 Still Not Convinced This Recovery Is 100 Percent Fake? 17 Don t Believe the Stimulus Has to Eventually End? 25 Please Prepare Now 30 Chapter 2: America s Bubble Economy Understanding How We Accurately Predicted the Financial Crisis of 2008 Is Key to Understanding Why Our Latest Predictions Are Also Correct 33 Because Our Earlier Books Were Right, Now You Can Be Right, Too 38 Didn t Other Bearish Analysts Get It Right, Too? 41 How the Experts Got It So Wrong 43 Predictions from Ben Bernanke and Henry Paulson We Trust These Officials with Our Economy 48 Where We Have Been Wrong 49 Chapter 3: Phase 1: The Bubbles Begin to Burst Pop Go the Housing, Stock, Private Debt, and Spending Bubbles 55 Bubbles R Us: A Quick Review of America s Bubble Economy 56 From Boom to Bust: The Virtuous Upward Spiral Becomes a Vicious Downward Spiral 62 Pop Goes the Real Estate Bubble 64 Pop Goes the Stock Market Bubble 70 Pop Goes the Private Debt Bubble 74 Pop Goes the Discretionary Spending Bubble 77 The Biggest, Baddest, Bad Loan of Them All 80 Chapter 4: The Market Cliff Not Your Father s Down Cycle 83 The Market Cliff Won t Be Just a Down Cycle 84 Hitting the Market Cliff 89 The Last Resort: A Stock Market Holiday 93 When Is the Best Time to Get Out of the Stock Market? 95 Chapter 5: Massive Money Printing Will Eventually Cause Dangerous Inflation So Why Hasn t It Happened Yet? 97 What Is Inflation? 98 What Exactly Is Money Printing? 99 How Does Money Printing Cause Inflation? 101 Central Banks Gone Wild: The World Is Printing Money 103 Where Is Inflation Hiding? 107 The Arguments against Future Inflation Simply Don t Hold Up 113 This Is Not a Plan It s a Panic! 120 The Real Problem with Rising Future Inflation: High Interest Rates 121 The Fed s Big Blind Spot: They Don t Understand Where Growth Comes From (Hint: It Doesn t Come from Rising Bubbles or Massive Money Printing to Support the Bubbles) 125 When Will Inflation Begin? When Group Psychology Turns Negative after the Market Cliff 129 The Inflation Deniers Are Liars! 133 Chapter 6: Phase 2: The Aftershock Pop Go the Dollar and Government Debt Bubbles 137 The Dollar Bubble: Hard to See without Bubble ]Vision Glasses 138 The Government Debt Bubble Pops 158 The Aftershock 165 The Six Psychological Stages of Denial 166 Is There Any Scenario for a Soft Landing? 170 Chapter 7: Global Mega-Money Meltdown It s Not Just America s Bubble Economy It s the World s Bubble Economy 173 The United States Will Suffer the Least 174 Think of the World s Bubble Economy in Two Categories: Manufacturing and Resource Extraction 175 How the Bursting Bubbles Will Impact the World 179 If the World s Bubble Economy Is Hit Harder than the U.S. Bubble Economy, Won t That Be Good for the Dollar? 188 If the Rest of the World Is Collapsing, Won t That Be Good for Gold? 188 International Investment Recommendations 190 Chapter 8: You re No Fun What I Hear Traveling Across Our United States 193 By Aftershock Co-author Robert Wiedemer Florida: You re No Fun 193 Philadelphia: Wharton Meets Wall Street 197 Green Bay, Wisconsin: I Can Be a Cheerleader, Too in the Right Places 199 North Carolina: People Know in Their Gut that What I m Saying May Be Correct 201 New York City: The Turkeys Were Living the Good Life Until 202 New York City Again: When You Abolish Failure, You Institutionalize Stupidity 203 One Last New York Story: Is He Really Smart or Really Stupid? 204 A State of Extreme Denial Exists in Parts of the United States 205 What s the Smart Money Doing Now? Just What They Did Before the 2008 Financial Crisis! Same Denial Now as Before 207 The Sun Will Shine after Every Storm (From My Hotel Room in North Carolina) 209 Part II: Aftershock Dangers and Profits 213 Chapter 9: Covering Your Assets How Not to Lose Money 215 The Three Rules for Not Losing Money 215 These Rules Are Simple but Not Easy! 216 Long Term versus Short Term 218 Rule 1: Exit Stocks Well Before the Market Cliff 221 Rule 2: Stay Away from Real Estate Until after All the Bubbles Pop 228 Rule 3: Avoid Bonds and Most Fixed ]Rate Investments as Interest Rates Rise 241 Where s the Best Place to Stash Cash? 243 How Long Must We Follow These Three Rules? 243 Letting Go Is Hard to Do 244 What Else Can I Do to Protect Myself? 247 Remember, Your Net Worth Is Not Your Self ]Worth 249 Chapter 10: Cashing In on Chaos Best Aftershock Investments 251 Plenty of Profit Opportunities, but They Will Feel Quite Uncomfortable, Even Scary at Times 251 This Economy Is Evolving; Your Investments Should Evolve, Too 252 Three Goals of an Evolving Aftershock Investment Portfolio 254 Reducing Risk with a New Kind of Diversification 256 Two Other Aftershock Investments after the Bubbles Pop: Foreign Currencies and Foreign Bonds 272 Timing Is Everything before the Bubbles Pop, but Your Timing Won t Be Perfect 274 Putting It All Together 275 Chapter 11: Aftershock Jobs and Businesses 279 The Rising Bubble Economy Created Huge Job Growth; Now the Falling Bubble Economy Means Fewer Jobs 280 Conventional Wisdom about Future Job Growth Is Based on Faith that the Future Will Be Like the Past 281 Why Conventional Wisdom on Jobs Is Wrong 283 What s a Savvy Aftershock Job Seeker to Do? 284 The Falling Bubbles Will Have Varying Impacts on Three Broad Economic Sectors 286 Should I Go to College? 296 Opportunities after the Bubbles Pop: Cashing In on Distressed Assets 297 Dig Your Well before You Are Thirsty 298 Chapter 12: Understanding Our Problems Is the First Step Toward Solving Our Problems 299 If You Don t Understand Why an Economy Grows, You Can t Understand Why It Doesn t Grow 300 You Need to See the Big Picture before You Start to Focus 301 Key Breakthroughs in the History of Economic Thought 302 Economics Needs a Breakthrough Big ]Picture Idea like Geology Needed Continental Drift 309 So Why Aren t We Getting an Alfred Wegener wor a Breakthrough Idea like Continental Drift? 311 Economists Have Become Academia s Version of Financial Cheerleaders 311 The Demands to Get Tenure and the Rewards of the Good Life after Tenure Have Delivered a One ]Two Punch to Creative Economic Thought 312 Where to Now? Answer: Economics Needs to Move from Being a Collection of Competing Philosophies to Being a Unified Science 315 Four Key Elements for Making Economics More of a Science 317 Where Do We Stand Today in Making This Transition? 321 The Economics Profession Does Not Want to Make This Transition 322 The Solution to the Lack of Interest in Making Important Changes in Economics: The Coming Aftershock 324 Chapter 13: Our Predictions Have Mostly Been Accurate, So Why Do Some People Still Dislike Them? 327 It s Not a Cheerleading Book 329 It s Not a Complex Book (Although It Is Based on Complex Analysis) 330 It s Not a Crazy Book 333 It s Not an Academic Book 333 It s Not Suggesting Armageddon 334 It s Not a Reality ]Denying Book 335 Us versus the Comforters: How Aftershock Stacks Up against Other Bearish Books 335 Appendix: Are the Bond, Stock, and Gold Markets Manipulated? 343 Bond Market Manipulation 343 Stock Market Manipulation 344 Gold Market Manipulation 351 Market Manipulation Summary 354 Investment Impact 355 Bibliography 357 Epilogue: Say Good-Bye to the Age of Excess 363 Index 367
