Jun
12
Submitted by Jeffrey on Sat, 2010-06-12 17:35
Doesn't that title sound selfish, cruel, opportunist, or even Machiavellian? I first heard of it referred to as an alternative viewpoint to main-stream media's take on our economy. The commentator stated that John Downes was the "ultimate pessimist" about our economy. I felt that this was a promising viewpoint to the lopsided reports I was getting.
Before I committed to read it, I skimmed a few pages here and there. It seemed level-headed enough and certainly not mean-spirited. So I checked it out from the library and proceeded to renew it for five months, determined to finish t!
I'm glad I read Crash Proof. It took forever because of work and family commitments. Even then, it was easy to take up and put down in fits and starts. Every few pages I would find some claim or another to evaluate further. It was certainly food for thought!
John Downes writes like a typical business book author. I could imagine men and women traveling with this book in hand, travel weary, but determined to find out how to beat the odds in the coming crash!
Well, I agree with most of his premises. He misses some causal facts for the economic crash, over-blaming government regulation and taxation. But he hits the nail on the head blaming speculation and consumer debt for being a major contributor to our predicament!
He makes another an important point that, "Bright futures are not built on debt and consumption, but on savings and production." p. 157 He talks about many of the industries that have left American soil for cheaper labor (and little-to-no regulation) in foreign lands. This deprives American's of the diverse "prosperity engines" (my term) we require for lasting wealth and economic stability.
This is one of his primary messages, and it rings true! In fact, I was already onto this principle. One of the other books that I have on my reading list is "Work, Consumption & Culture; Affluence and Social Change in the Twenty-First Century", by Paul Ransome. From what I've read so far, Ransome is exploring the thesis that America has changed it's fundamental values from honoring production to honoring consumption. If this is true, then we have already begun our downward side of the prosperity cycle (Hel 12:2).
Part of Crash Proof details the weaknesses of our economy and how it will crash (Downes states that a crash is inevitable, now). The latter part shares particular strategies to weather the crash and then to lead the rebuilding efforts. For the most part, these tips are helpful. He did promote his own company, a lot! Here are a few other suggestions that I didn't feel right about.
One, Downes suggests leveraging debt in US currency to finance over-seas investments. Once the dollar's value falls from its hyper-inflated position against other currencies, that debt could be paid back with pennies on the dollar with plenty of profit to spare.
This is just irresponsible! Not only do we not know when the dollar will collapse, borrowing American capital to finance foreign growth is a double cut; Americans needing to borrow capital will be further locked out and future competition from foreign companies would be enhanced. Both accelerate and accentuate the eventual collapse. I feel it is ethically wrong.
Two, he suggests investing in foreign companies based in countries that the US is addicted to, especially China, because they are the next rising economies that will power the world in the future (once they adjust to the loss of America's consumerism, their internal demand will skyrocket). Maybe—likely even. But that feels short-sighted and ditching the US entirely virtually ensures that America's re-adjustment would be extra brutal and permanently debilitating. That doesn't sit well with me!
I could understand the use of diversifying with foreign investments, or temporarily sheltering capital in foreign companies. And herein is one of the book's strengths. John Downes emphasizes that America's strength and stability lies in production and innovation. Long-term recovery from the coming collapse will require extensive re-building of our national infrastructures, manufacturing, farming, mining, etc. This will require a great deal of capital investment. Those with the capital will own the recovery.
That, I do agree with!
So who do we want owning our recovery? Americans, citizens of their own economy. Why? It's the only stable solution to long-term prosperity. And, ironically, it's exactly the opposite of what we've been doing abroad! We have leveraged our artificially strong dollar against foreign currencies to overwhelm weak economies, commandeering them in the name of prosperity—mercy even!
But that's another topic, apart from this book.
I would recommend reading this book, if only to understand why and how an economic and financial crash could happen. While some economists call this work utter nonsense, these are often the same that believe we could perpetuate this hollow prosperity cycle indefinitely. I'm sorry, but most Americans are locked out of true prosperity now, participating only through credit, debt they are now learning costs far more than any amount of consumer goods they could fancy!
