November 22, 2017

Book Review | Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown by Wiedemer, Wiedemer, and Spitzer

I can’t recall who exactly recommended this to me when I first picked this up back in 2010 or 2011, but I do recall the cautionary note that they took as they described it and the author’s conclusions.

AftershockThe global recession had begun four years earlier, since which time I had just barely been able to sell a house (seriously–I closed the sale of the house the same week that Bear Sterns ceased to be), had graduated from law school at perhaps the worst time for new attorneys to be entering the work force, and had managed to find a good, but not great paying, job at a local company. Financially speaking, the future seemed bleak, and I was not sanguine about my prospects for future income. Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown seemed like a warning voice against future economic calamity, so I picked it up and gave it a read.

Unfortunately, I was, largely, disappointed. Falling into that category of financial reading that seems to best be described as “fear mongering,” I found it full of doom and gloom, threatening prognostications, and warnings about the future. I suspect that authors David and Robert Wiedemer, and Cindy Spitzer have made better money of the sale, and subsequent editions of, the book than most readers have from the advice they give.

This isn’t to say that there may not be substance to their arguments. Looking at a succession of financial bubbles, including both the dotcom bubble and the more recent housing bubble, they posit that the bubbles have led the Federal Reserve to engage in reckless market manipulation that is going to result in 50% unemployment, a 90% stock market crash, and 100% annual inflation, starting in 2012.

Their advice? Sell your home, cash out your stocks, and convert your assets into gold and inflation pegged securities.

That’s a stark transition, and from a set of authors who are perhaps inflating their own expertise in economic prophesy a bit further than their resumes merit.

Meanwhile, we find ourselves in 2014, the economy on the mend, and the catastrophic events predicted by Aftershock as yet unrealized. I suppose that there is still time, and I don’t want to give the impression that everything is smelling of roses, but perhaps the take away is that the success of Aftershock is more about marketing for its authors than about economic prediction relevant to readers.

About Daniel Burton

Daniel Burton lives in Salt Lake County, Utah, where he practices law by day and everything else by night. You can follow him on his blog PubliusOnline.com where he muses on politics, the law, books and ideas. He is active on social media, Republican politics, and has been named to PoliticIt’s list of the “Top-50 Utah Political Opinion Leaders” on Twitter. You can reach him directly at dan.burton@gmail.com

  • Judi

    I’m not an economist, but I was sleeping in 2007 and now I am awake. While you suggest that Aftershock is a fear mongering scam, I’ll play the devils advocate, since there must be caveats that accompany their advice and they have some important things right. I agree a more conservative approach is needed. I disagree with the government bailouts and I do think the debt accumulation by the government is going to drop us into a black hole. Anyone who has tried to pay off their personal debt knows it does not go away and multiplies when only minimum payments are made. It’s simple math, to decease debt you A) decrease spending and or B) increase your income to pay off debt before it grows. There are are couple of ways to increase your income A) higher paying job (which we know are fewer and fewer) or investing to grow your money (which people who are in debt will have a difficult time implementing since they already can’t pay their bills). This is a binary problem with binary solutions all along the decision path-analysis. Incomes have decreased. To earn more money, you will need the right type of skill to land the higher paying job. For many, going back to school is the answer, and for others because of age, finances, competing demands, it is not an option. Further, many of these jobs cater to specific industries or market sectors for which only a limited minority percent of the population has both aptitude and credentials to perform those job responsibilities; there might from 100 to 300 applicants for each available job (this was told to me by a headhunter). This extreme example is to make the point. The majority of the population is endowed with non-specific, but average training and education and scrambling to find a job as a Barista while paying off college debt ,unless you attend Brigham Young University in Provo or just to pay the bills (inflation is already here). The value this culture assigns to other occupations is minimized and devalued as reflected in the salaries and yet, there is great value these occupations can contribute in making this society more livable and civilized. But civilized behavior is nearly extinct. Creative thinking is almost dead thanks to linear logic and formulaic procedures and processes. Exploration and discovery are prevented because of increasingly regulated governmental control. Granted much of which was put into place because of flagrant white collar antisocial behavior. All of this tempts mediocrity and stifles innovation. Innovators need freedom, something that is now lost in America. But this is a good thing for people in power who want to retain their wealth and power. They are the story tellers of economic recovery. We have a cognitive split in this culture that grows stronger because of the absence of political transparency. The absolute expertise of politicians and the wealth keepers to cognitively reframe our economic poverty into promise of recovery and opportunity in the guise of democracy is laughable. Yet they have been successful in creating a society of donkeys to perpetuate their social and economic dominance at the expense of society as a whole. Floor wages need to increase while ceiling costs decrease creating a more livable society. It’s of little use to increase wages if inflation grows. Employment makes this relevant.

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