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From the PublisherWORRIED ABOUT THE HOUSING BUBBLE? You should be, but don't let itmonopolize your agita. There are four other bubbles alsodeserving of attention, according to America's BubbleEconomy: a stock-market bubble, aforeigner-supported-dollar bubble, a consumer-debt bubble and aU.S.-debt bubble. When the five collide in a "bubblequake," thebook's authors predict, the air will rush out of the pumped-up U.S.economy, deflating the average American's assets and standard ofliving.
But not to panic. America's Bubble Economy has asubtitle: Profit When It Pops. Eric Janszen, one of its fourauthors, suggests keeping 10%-15% of your assets in gold, which hesees rising "to a peak price of $2,500 to $3,000'' an ounce.Janszen et al. also recommend eurobonds and euro-denominatedexchange-traded funds, because most of Europe isn't as indebted asthe U.S. and its main currency should outperform the dollar.
A former venture capitalist and founder of the financial WebsiteiTulip, Janszen says the U.S. is repeating errors of the Nixon era,including massive government deficits, under-funded entitlementsand an unpopular war the government can't fund with higher taxes orspecial bonds. Throw in today's growing global demand forcommodities, and "... all roads still lead to inflation, whetherdue to energy costs, unfunded deficits or dollar-currency risks,"he says.
Janszen, who was rightly skeptical of the Internet craze early-on,tells Barron's that the current stock-market bubble is "areflection of monetary inflation" rather than future earnings. Amore normal trendline, he says, would put the Dow at about half itspresent level, or 6,000. Now, that's something to worryabout.
—Susan Witty (Barron's, November 13, 2006)
Chosen by Kiplinger’s as one of the 30 Best BusinessBooks of 2007
Paul Farrell, Senior Columnist at Dow Jones MarketWatch said onFebruary 12, 2008, "In short, America's Bubble Economy'sprediction, though ignored, was accurate."