Now that a bear market and a crashing economy are sinking everyone's personal finances, many people would like to know what they should do to survive -- and maybe even prosper -- in a deflationary depression. One smart thing to do would be to read Bob Prechter's New York Times best-selling book, Conquer the Crash. The second half of the book includes chapters with titles such as these: Should You Invest in Bonds?; Should You Invest in Collectibles?; How To Find a Safe Bank; and What You Should Do If You Run a Business. Here are 16 brief excerpts that cover topics from bailouts to short selling to give you a sense of the kind of useful information you get in Conquer the Crash.

Bailout Schemes

Banks

“Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal, and mortgage-backed bonds] will dry up.”… One expert advises, ‘The larger, more diversified banks at this point are the safer place to be.' That assertion will surely be severely tested….” Chapter 19

Banking and Insurance Stocks

“We will see stocks going down 90 percent and more … [and] bank and insurance company failures….” Chapter 14

Collateralized Securities

"Banks and mortgage companies … have issued $6 trillion worth of [securitized loans]…. In a major economic downturn, this credit structure will implode." Chapter 19

Confidence

“Confidence has probably reached its limit. A multi-decade deceleration in the U.S. economy … will soon stress debtors’ ability to pay…. Total credit will contract, so bank deposits will contract, so the supply of money will contract….” Chapter 11

Credit Deflation

"Usually the culprit behind [simultaneous stock and real estate] declines is a credit deflation. If there were ever a time we were poised for such a decline, it is now." Chapter 16

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How Can You Survive – and Prosper – in the Current Economy? Bob Prechter wrote a book on that very topic in 2002, called Conquer the Crash. It was timely advice then – and it's even MORE TIMELY now. He has also added a CD-ROM to update it for 2009. Here's how to get your own copy of Conquer the Crash.

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Derivatives

“Leveraged derivatives pose one of the greatest risks to banks….” Chapter 19

Fannie Mae and Freddie Mac

“Investors in these companies’ stocks and bonds will be just as surprised when [Fannie and Freddie's] stock prices and bond ratings collapse.” Chapter 25

Insurance Companies

“The values of insurance company holdings, from stocks to bonds to real estate (and probably including junk bonds as well), will be falling precipitously…. As the values of most investments fall, the value of insurance companies’ portfolios will fall…. When insurance companies implode, they file for bankruptcy…." Chapters 15, 24

Mortgage-Backed Securities

"Major financial institutions actually invest in huge packages of … mortgages, an investment that they and their clients (which may include you) will surely regret…. Chapter 16

Political Leaders

“A leader does not control his country’s economy, but the economy mightily controls his image.” Chapter 27

Psychological Change

“When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation....” Chapter 9

Rating Services

“Most rating services will not see it coming.” Chapter 25

Real Estate

-- "What screams 'bubble' – giant, historic bubble – in real estate today is the system-wide extension of massive amounts of credit to finance property purchases…. [People] have been taking out home equity loans so they can buy stocks and TVs and cars…. This widespread practice is brewing a terrible disaster.” Chapter 16

-- “The worst thing about real estate is its lack of liquidity during a bear market…. In time, there is a massive glut of real estate…. If you have a huge mortgage on a McMansion or condo that you cannot afford unless your current income maintains, sell it and move into something more reasonable….” Chapter 16

Short-Selling Ban

“In a bear market, bullish investors always come to believe that short sellers are 'driving the market down'…. Sometimes authorities outlaw short selling. In doing so, they remove the one class of investors that must buy.” Chapter 20

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How Can You Survive – and Prosper – in the Current Economy? Bob Prechter wrote a book on that very topic in 2002, called Conquer the Crash. It was timely advice then – and it's even MORE TIMELY now. He has also added a CD-ROM to update it for 2009. Here's how to get your own copy of Conquer the Crash.

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