What to do if it really happens
Readers of this blog, who have read more than just a couple of the last entries, know my opinion on predictions and forecasting – it is a very unreliable business. That’s why I refrain from playing oracle myself, but I always look for those rare occasions when someone somehow gets a glimpse into the future.
Now everybody is talking about this coming Tuesday (Aug 2nd) when the US government is expected to default on its debt – there is not enough money in the treasury to pay all the bills. It is not only Americans, who are on their toes, but other governments, financial institutions and investors worldwide are following the political drama in Washington with a great sense of nervousness. If US defaults indeed, nothing good is expected to follow, but what exactly will happen, nobody seems to know.
With the exception of these three people: David Wiedemer, PhD, Robert A. Wiedemer, and Cindy Spitzer. They have penned a book, called “Aftershock: Protect yourself and profit in next global financial meltdown”. The book was published last year, got some good reviews, but did not seem to grab the attention of the big media. Perhaps it is too scary to read, it paints too pessimistic future and nobody wants to dwell on such predictions. The authors claim that they do not have any hidden agenda.
We are not gold bugs, stock boosters or detractors, currency pushers, or doom – and – gloom crusaders. We have no particular political ideology to endorse, and no dogmatic future to promote. We are simply intensely interested in patterns, big evolving changes over broad sweeps of time.
They have done it once already – in 2006 they accurately predicted the real estate collapse and the global financial crises of 2007-2009 in their first book “America’s bubble economy”. What we saw happening over the last few years adds huge amount of credibility to the authors – after all they have seen the coming catastrophe more than two years before it unfolded. We naturally want to listen to people who have been right in the past.
In their new book the trio says that four of the six bubbles formed in the US since the early 80s have been popped or in a process of popping, but the biggest danger to all of us is still ahead, when the last two bubbles unravel: the US dollar bubble and the US debt bubble. They say, get ready for this:
Beginning in 2010 and continuing forward, we see movement toward what we call the “ triple double – digit ” economy. By that we mean:
Double – digit unemployment
Double – digit inflation
Double – digit interest rates
With the dollar and government debt bubbles fully popped, interest rates will skyrocket, infl ation will be very high, unemployment will soar, the U.S. stock market will crash but still be open, the real estate market will crash, consumer discretionary spending will dry up, and the number of banks will be greatly reduced. The dollar will be worth a fraction of its peak value relative to the euro, and gold will be a stellar investment for many years.
In terms of timing “Aftershock” gives the following prediction:
… timing when the dollar and government debt bubbles will pop is hard to nail down and will not likely happen in 2009. It could occur as early as 2011 or 2012 but more likely in 2013 or 2014.
We are right here, in the middle of 2011, the US dollar is going down (Canadian dollar up) and the US debt issue is more acute than any other time before. Are these three authors going to be right one more time? If they are, you should know what they thing investors should do to survive and maybe profit? Here is their simple advice:
Rule #1: Stay away from stocks and real estate until after the dollar bubble pops.
Rule #2: Stay away from long – term bonds and all fixed – rate investments (including whole life insurance).
When you wake up Tuesday morning, the US politicians may have already done the impossible to avoid the default… and US will not default. But don’t get distracted by the loud voices of politicians and media – the problem, described in Aftershock would not go away – it will be postponed and … become even bigger.
For more information on the authors or to order the book, visit their website www.aftershockeconomy.com