Suppose that all the conventional financial wisdom you've ever heard was written onto a large chalkboard -- and then someone gave you an eraser, a box of chalk, and the knowledge of how financial markets Really work.
That may be the kind of vision you'd have after reading Bob Prechter’s best selling book “Conquer The Crash.” As the saying goes, you'll never think about the social, financial, or political world in the same way again.
When Bob sat down to write “Conquer” in 2002, the notion that the United States would be nearing a period of what one March 13, 2009news source calls economic “Armageddon” was unheard of. (AP)
Flashing back, the major blue-chip averages were rebounding off a historic bottom, the notorious dot.com bust was making way for a powerful housing boom, Fannie Mae’s chief executive was named “the most confident CEO in America,” then President George W. Bush was enjoying a 60%-plus approval rating, Gulf War II hadn’t begun yet, and when it did, a “quick and easy victory” was supposed to follow.
Regarding the roaring real estate market in particular, one 2003-news source exclaimed: “No End In Sight For Housing Boom… the U.S. is poised for another strong decade.” The less optimistic were still quite encouraging: “Activity should wind down gradually from record levels, rather than ending in a bust.” (Reuters)
Now, six years later, a boom-to-gloom about face has been had. The U.S. housing market has endured its worst downturn since the Great Depression; Fannie Mae’s CEO has long since been ousted out of office amidst a mortgage crises of incalculable damage; and the 43rd President’s approval rating stood at a record low of 25% upon his leaving office.
Anticipating these and other “shocks” to the global system is the unparalleled achievement of “Conquer The Crash.” Here, the following excerpts from the book put any doubt to rest:
Housing: “What screams bubble – giant historic bubble – in real estate is the system-wide extension of massive amount of credit.” And -- “Home equity loans are brewing a terrible disaster.”
Bonds: “The unprecedented mass of vulnerable bonds extant today is on the verge of a waterfall of downgrading.”
Fannie Mae & Freddie Mac: “Investors in these companies’ stocks and bonds will be just as surprised when the stock prices and bond ratings collapse.”
Politics: “Look for nations and states to split and shrink.” And -- “The Middle East should be a complete disaster.”
Credit Expansion Schemes “have always ended in a bust.” And -- “Like the discomfort of drug addiction withdrawal, the discomfort of credit addiction withdrawal cannot be avoided.”
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.”
If the tools in Bob Prechter’s analytical toolbox, namely Elliott Wave analysis and socionomic science, enabled him to foresee the “sea changes” underway in the current economic, social, and political landscape -- the only question is: What else do the pages of “Conquer The Crash” reveal?