Friday, November 9, 2012

The Next Global Meltdown

In Aftershock authors David and Robert Wiedemer and Cindy Spitzer write about the next global meltdown. Despite the risk of sounding like "Chicken Little," here is their executive summary:

What is a bubble? An asset value that temporarily booms and eventually busts, based on changing investor psychology, rather than on underlying fundamental economic drivers that are sustainable over time.

What is a bubble economy? An economy that grows in a virtuous upward spiral of multiple rising bubbles (real estate, stocks, private debt, dollar, and government debt) that interact to drive each other up,a dn that will inevitably fall in a vicious downward spiral as each falling bubble puts downward pressure on the rest, eventually pulling the whole economy down.

What is the bubblequake? Phase I of the popping of the bubble economy, including he fall of the real estate bubble, private debt bubble, stock market bubble, and discretionary spending bubble.

What is the aftershock? Phase II of the popping of the bubble economy. Just when many people think the worst is over, then comes the Aftershock, when the dollar bubble and the government debt bubble will burst.

Here are some practical steps to take for those of us without the resources to invest in hedge funds or stock up on gold:
  • List all expenditures for a two-month period to see where the money is going.
  • Go through the list, item by item, and reduce what you can. Shop for a cheaper telephone, cell phone, TV, Internet, and other services.
  • Eat out less often (a big money drain for many people).
  • Cut down on entertainment shopping.
  • Think about creative, lower-cost vacations.
  • Rent out part of your home.
  • Don't look at it as a loss. Cutting spending is a positive step toward maximizing your future prosperity.
  • Hang onto your job. 
  • Consider making yourself more marketable in a safer job sector, or adding skills within your chosen field, or making yourself irreplaceable in your current job. 
  • If you decide to change jobs, don't quit your current employment before getting your next position lined up!

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