Financial Reckoning Day: Surviving the Soft Depression of the 21st Century

by William Bonner and Addison Wiggin

Book Overview

"History shows that people who save and invest grow and prosper, and the others deteriorate and collapse. As Financial Reckoning Day demonstrates, artificially low interest rates and rapid credit creation policies set by Alan Greenspan and the Federal Reserve caused the bubble in U.S. stocks of the late '90s. . . . Now, policies being pursued at the Fed are making the bubble worse. They are changing it from a stock market bubble to a consumption and...

• Format: Hardcover
• Language: English
• ISBN: 0471449733
• ISBN13: 9780471449737
• Release Date: September 2003
• Publisher: John Wiley & Sons
• Length: 306 Pages
• Weight: 1.30 lbs.
• Dimensions: 1.1" x 6.3" x 9.4"

Customer Reviews

There are no shortcuts to prosperity

One more book that warns us about the weakness of the US economy and the possible collapse of the dollar in the short term. What sets this book apart is the approach to the topic through the route of financial history, sociology and of course a good grasp of macro-economics. History, the authors argue, has taught us many lessons, only to be quickly forgotten. Two important lessons from the past are that paper money cannot make paupers rich and empire building through military might has ultimately brought misery to mankind. However, nations have consistently repeated these mistakes and lamented when it was too late. No prizes for guessing who the latest adventurer is. This book is a brilliant expose of the "new economy", the irrational behavior of crowds and its malaise of overvalued stock and asset prices that cannot be sustained. Even the Nobel prize winning theory of efficient markets fails to describe the phenomenon in US markets during the last decade of the twentieth century. Irrational exuberance cannot be explained by rational theories. The book opens with an analysis of the new economy driven by Information technology, and blasts the myth of the new found prosperity. The new economy was supposed to signal the end of history by shortsighted economists during the days of irrational exuberance. The internet in fact amplified the behavior of crowds across continents and created bubbles that were larger than ever. Companies without any revenue, leave alone profits, were busy making money through IPOs and engaged in the most innovative forms of financial engineering to drive their stock prices north. Who cares as long as it makes us rich. But then, history has taught us that reality will catch up and so it did. There was a time in the seventeenth century when the infamous John Law ( he was mostly on the opposite side of his second name) created the concept of paper money and central banking that ultimately brought his country on its knees. Using this example, the book attacks monetarists for the unbridled expansion of liquidity in a system that temporarily believes that paper money is real. Modern day economists tend to treat the economy as a machine that can be manipulated by driving some screws and made to run a little faster. The problem , the authors feel, is that soon they will be left with no screws and also run the risk of tampering with the wrong ones. Printing more money at regular intervals, is considered a panacea for all economic ills by these pundits of prosperity. Economic lessons from Japan are described in a separate chapter and quoted in most other chapters of the book. The chapter devoted to "The Hard Math of Demography" is excellent and the topic of an aging America and its economic implications is discussed with accurate statistics and analysis to back the conclusions.Finally one gets the big picture of the big bubble. Americans are spending and the Fed is encouraging them to spend borrowed money. To make things easier, the

Great History Book, Slim on advice

I really enjoyed reading the "history" and "Political Science" aspects of this book. Unfortunately, I was emotionally damaged when the author added no valuable conclusions on where things are going and what to do about it. Now I am kidding about the emotionally damaged part, but was disappointed with the lack of conclusion. Lastly, I would *highly* suggest this book for anyone wanting a deep understand of "why we are where we are" and why the future is going downhill. If you are expecting a "what to do book", this is not it.1929-1946 - 17 year BEAR market1946-1965 - 19 year BULL market1965-1982 - 17 year BEAR market1982-2000 - 18 year BULL market2000-2017? - 17 year BEAR market?Cheers, Brian

American Dream is evaporating

May be I am reading too much into this gloom and doom, being an a Finance Major from one of the top Finance Business Schools in the USA. After graduating about 10 years ago I started my research on the following premise that, "How Long Can a Nation Continue to Live on Debt", and over the years read books titled:- "Creating an Interest and Inflation-free Economy, that is good for ordinary citizens and the environment" by Margritte Kennedy, Professor of Urban Planning at University of Hanover, Germany- "The Problem with Interest", by Tarek El-Diwany, Kreatoc, 2003- "Islam and The Economic Challenge", by Dr. Umer Chapra, Former Chief Economist as Saudi Arabian Monetary Agency (SAMA), The Islamic Foundation, UK 1995- The Dollar Crisis, Richard Duncan, World Bank Consultant, John Wiley, 2003- The Greatest Depression in the History of US & UK, Daniel Arnold- Dangerous Market - Managing in a Financial Crisis, McKinsey Consultants, John Wiley, 2003- Global Finance at Risk, Professors from the New School, 2001- Capital Flows and Crises, by Dr. Barry Eichengreen, UC Berkeley, 2003- The Coming Crash in the Housing Market, John Talbott, UCLA Research Scholar- and lastly, the "Financial Reckoning Day" caps all the above research, and exposes this fake projection of economic growthAll these books allude to the same thing. This Dollar-driven credit/liquidity creation is losing steam as an engine of growth, and causing the de-leveraging of American. There is only so much that lowering of interest rates can do to boost the economy. Combine this with the demographic bomb, and we have a disaster at our hand which will unfold in the next couple of years. Most of us are sleeping, and thinking that our nominated and elected officials will have our interest in mind. Unfortunately, we will wake up from our hallucination one day, and see our networth evaporate just as it has happened many times in history.

"A fool and his money..."

LOL at the one star reviews. Go ahead, buy the NASDAQ, someone has to. Ain't going to be me.Books like this do a tremendous service for people who are willing to turn off CNBC and consider for a moment that most of the stuff we are bombarded with day in and day out may not be accurate. Kudlow and Cramer are fun to watch, but come on, so are the Dallas Cowboy Cheerleaders.Judging by what has been happening (again) in the stock market, it seems that not only have we not learned John Law's lesson, we havn't even learned the NASDAQ lesson yet. Alan Greenspan is still supposedly leading us to the promised land? Ignore this book at your own peril.

The Heart of the Controversy

First point: buy and read this book. What you will find is a book that goes to the heart of the controversy between Mises and Keynes. Does imbalance lead to correction or can it be managed? Does "managing" imbalances lead to more imbalance and bigger problems, or does it make any correction easier than it would have been? Comprehending this debate is central to understanding the ebb and flow of economies and markets. Bonner and Wiggin lay out the case for the problems associated with imbalance. The book should only be considered gloom and doom if your future retirement is inextricably tied to a 10% forever compounding of the S & P 500. The correction of imbalance leads to other significant opportunities, as all great macro traders know.Long time readers of Bonner can see the clear contributions to this work Addison Wiggin makes. That being said, I have been reading Bill for many years, and his thoughtful personal writing style is all over this book. That is a very good thing. Bonner makes me think, and he will make you think, too. Do I agree with every word? No, but if you only read people who think like you, you will soon find you do not do much thinking. It is in the arena of ideas that the blade of the mind gets sharpened. Bonner is a writer's writer, one of the best crafter of words I know, and simply a pleasure to read, even if his words are sobering. I have told Bill that there are times when I read his prose and feel like a housepainter in front of a Rembrandt. He is that good. The last chapter alone is worth the price of admission. Second point: buy and read this book and then recommend your friends do as well.