Product Description

Tough times are ahead and Talbott argues that the coming recession will be on a global scale, affecting economies across the world. We have had no real growth in GDP for the last ten years if purchases with government and personal debt are excluded. In effect, government borrowing and spending on the war and healthcare and Social Security and corporate give-aways combined with dramatic increases in personal spending funded by credit card and mortgage debt have funded unsustainable levels of personal and government consumption. The world's banks are threatened with insolvency due to bad mortgage loans and will not be making new loans for any purposes for a very long time. Consumption, by definition, has to decline. Our financial markets worldwide are in chaos with the inability of any financial house or big hedge fund going bankrupt without pulling down the whole $400 trillion derivatives market and the global financial markets at the same time. With this as a backdrop, Talbott offers practical suggestions as to how homeowners and investors can best weather the coming storm with specific advice on where to invest by type of investment and geographic location. Stocks, bonds, TIPS, commodities, real estate, housing and currencies will all be examined.

Product Details

• Amazon Sales Rank: #63005 in Books
• Published on: 2008-12-31
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 272 pages

Features

• ISBN13: 9780470442210
• Condition: NEW
• Notes: Brand New from Publisher. No Remainder Mark.
• Click here to view our Condition Guide and Shipping Prices

From the Inside Flap

During these turbulent economic times, with what could be the deepest global recession we've ever seen bearing down on us, the one thing you don't need is another book describing how we've gotten to this point. What you do need are insights into what will happen going forward and how you can use this information to protect what really matters—including the value of your home and portfolio as well as the security of your job and way of life. If that is your goal, this book is a must-read.

While the concepts surrounding our current situation may be complicated, you don't need to be an economic expert to understand what's going on and what may happen next. But you do need to be prepared, and the analysis offered here can help both anxious individuals who are just starting to realize the magnitude of this event as well as those more familiar with finance get through the difficult times ahead.

Over the course of the last decade, bestselling author and former investment banker John Talbott's string of accurate predictions regarding the bursting of the Internet stock and housing bubbles, the mortgage mess, and downturns in the general economy have been well documented in his numerous books including Slave Wages, The Coming Crash in the Housing Market, and Sell Now!: The End of the Housing Bubble.

Now, with Contagion, he puts his reputation on the line again and boldy predicts how the current global economic crisis may change our lives for much longer than politicians care to admit.

Using a much broader definition of the term "contagion"—to include financial, governmental, and societal matters—this timely book offers essential insights that investors, business executives, and concerned citizens must be aware of in order to protect themselves and their assets, companies, and lives from a prolonged and deep global recession.

Page by page, Talbott explains the history behind our present economic condition and, more importantly, helps us understand where we go from here. He explains the severity of the financial and economic problems plaguing us and the reasons behind them.

Talbott's analysis of the current financial crisis and its root causes extends far beyond simple subprime mortgage lending. He explains that all types of lending will be threatened in the brave new world and that the economy won't recover until banks, businesses, government, and consumers all deleverage and learn to live with less debt and less consumption. But, Talbott does not stop there. He blames deregulation for allowing the banks to do this to us, but also blames our government representatives who took campaign contributions in exchange for a laissez faire approach to market regulation. Finally, he asks each of us to reflect on the importance of materialism and consumption in trying to define and live a full and rich life.

From the Back Cover
For more than a decade, bestselling author and former investment banker John Talbott has accurately called many of the major financial crises we have faced long before they occurred. In 2003, he predicted the housing market collapse in his bestselling book, The Coming Crash of the Housing Market. In 2006, he foretold the peak in housing prices and wisely explained Sell Now!, in a timely sequel to his bestseller. Most recently, he insightfully probed the bottom-up economic policies that would guide Barack Obama to the White House in his book Obamanomics.

Past is always prologue for Talbott, and his economic reasoning and free-thinking forecasts about the future have captured people's attention. In his latest book, Contagion, he again warns about what once seemed implausible and impossible—the deepest global recession the world has ever seen, one that will forever shake the economic foundations and social fabric of our lives.

"Talbott is the author of two books that more or less foretold the pain homeowners are now experiencing. . . . So far many of John Talbott's predictions have been spot-on. But as the housing bust continues, homeowners in my neighborhood and beyond have every reason to hope his prescience proves short-lived."
—Daniel McGinn, national correspondent, Newsweek, and author of Home Lust: America's Obsession with Our Homes

"When John Talbott's controversial book, The Coming Crash in the Housing Market, hit store shelves in 2003, the real estate industry—and everyone else who stood to profit from the dizzying rise in U.S. home prices—gave it a hostile reception. So, with subprime mortgage loses and credit woes now the no. 1 topic in the markets, what does the former Goldman Sachs investment banker see next?"
—Toronto Globe & Mail (September 14, 2007)

With the worldwide financial crisis and economic contagion mutating in ways that foreshadow global economic meltdown, Talbott explores the necessary government actions and reforms—and strategies that investors can use—to weather one of the worst financial crises in history. Never have Talbott's predictions been as bold, or his advice about what to do in the future more timely.

About the Author
John R. Talbott is a bestselling author, a former investment banker for Goldman Sachs, and previously a visiting scholar at UCLA's Anderson School of Management.
For the last decade he has been writing full-time as an author, publishing six books and numerous peer-reviewed academic journal articles on economics and politics. His book titles include SlaveWages, The Coming Crash in the Housing Market, Where America Went Wrong: And How to Regain Her Democratic Ideals, Sell Now!: The End of the Housing Bubble, and Obamanomics. Talbott has served as an economic adviser to a number of developing countries, including Jordan and Russia.
He has appeared live on CNN, Fox News, CNNfn, CNBC, MSNBC, and CBS, and has published articles in the Wall Street Journal, Boston Globe, Philadelphia Examiner, San Francisco Chronicle, and Financial Times.

Customer Reviews

I hope he is wrong just this one time!
In 2003, I read my first John Talbott's book, The Coming Crash in the Housing Market. He was simply ahead of his time with his prediction of the housing market, Fannie Mae, Freddic Mac, etc. In 2006, I read Sell Now, and this was right before THE PEAK, and this time he was simply spot on. Of course, he wrote Obamanomics, when everybody thought Hillary was going to win. This is how good this author is.

Naturally, I devourved his latest book, Contagion. This book has no charts, no tables, but the message is clear: this time the recession is gonna be deep and long, and no countries can escape it, and there are only a few things you can do: cash, TIPS, gold, and if you must, only one other country to invest in. He has another message, that our country has been hijacked, and this mess is not an accident, and we need reforms.

Regarding his prediction about this recession, I just hope that he is wrong just this one time. But given the case he laid out, I think that's just wishful thinking.

Background on The Mess We're In
The current market crisis could not have been accomplished without significant deregulation. This occurred through lobbying - a study concluded that business lobbying provides a 400:1 payback in just tax benefits, with more benefits from blocking competition, aid with union-busting, etc. Senator Shumer's top 10 contributors are the biggest financial institutions he's supposed to regulate on the Senate Banking Committee.

Hedge funds, some of the biggest lobbyists, have no reporting requirements and no supervision; meanwhile, they grew the CDS market from $140 billion ten years ago to $65 trillion today.

Losses due to current market crash are in the trillions ($8 trillion in residential real estate, $2 trillion in commercial real estate, and $6 trillion in the stock market - not easily absorbed or ignored in a $14 trillion economy and when the federal government already is in debt $55 trillion, with an additional $1 trillion/year trade deficit as well.

Bear Stearns had $190 billion of external debt, and there was close to $2 trillion of CDS to guarantee it. Talbott uses this to substantiate his conclusion that massive gambling is going on - most likely via hedge funds writing lots of bogus swap insurance.

Talbott becomes confused when covering property tax yields - unless there's a limit on tax rates, declining assessed values do not limit tax revenues as the rates simply increase proportionately. Also his point that GDP is not an adequate measure of economic activity misses the point that it counts $1 of "Made in China" the same as "Made in the U.S.A."

Talbott sees Paulson's plan as creating greater moral hazard for the future (What else has the Federal Reserve and the Treasury been doing for the last 50 years besides bailing out the market?), and not helping balance sheets. Citibank was leveraged at 29:1, 60:1 if off-balance sheet entities are included.

Talbott's recommendations include reducing housing volatility by requiring 20% down payment (the real culprit was Greenspan's low rates), reducing allowable bank leverage to 10:1 and banning off-sheet liabilities, regulating CDS, limiting their total volume, and setting up a clearing house to ensure they are in balance (aka a Las Vegas sports book).

What Went Wrong and How to Make It Right
This book goes beyond the simple "Sub-Prime Mortgage," expose' to explain the root causes of the recent financial meltdown in an interesting and understandable way. While sub-prime lending may have been the first shoe to drop, the fundamental problem was one of greed and complicity among all of the bad actors from appraisers and mortgage brokers to investment bankers and members of Congress who took their money and turned a blind eye to what was about to happen.
Sadly, the means of protecting yourself from this catastrophe are limited since the vast majority of "investments," are still heading down, but the author does point out that cash, TIPS and gold might hold value in the long run, along with judicious investments in China. In the final analysis, we need to cut our national leaders off their lobbyist habits and allow the marketplace and bankruptcy courts to clean up the garbage that has been created.
I found this book to be extremely engaging and enlightening. While I usually read 4 or 5 books at the same time, I couldn't put this one down and finished it in just a day or so. Although the elements of this financial disaster change on a daily basis, the general course of the author's predictions remains true and his observations continue to have merit, even though Treasury's TARP program as described by the author has morphed into a no strings attached Wall Street Giveaway.