Crash Proof discusses the current US economy and predicts what will happen in the coming years. I find the author emphasized on the flaws and concluded on the extremes with naïve logic.

The book discussed the follow topics: our trade deficit, the stock market, the housing bubble, consumer debt and proposed solutions. One thing great about the book is that the author used very easy to understand analogies to explain our current situation. The author talked about many things in his book, I am just highlighting a few that I felt important.

Author discussed the current trade deficit and concluded that soon everyone will abundant dollar as the default currency because it is to all other countries’ interest in the long run. Hence more dollars will coming back to the US and cause hyper inflation. I believe the dollar will certainly further decline in value but it is not clear that this process will be very sudden. In fact I believe the process will be slow for everyone’s interest.

Next the author talked about the stock market. He pointed out a lot of short comings of our stock market. For example, mutual fund managers are evaluated on quarterly performance rather than long term performance and major banks underwrite IPOs that they also help sell. I believe just because the stock market has some flaws, it does not mean that it is beyond hope and will crash the next day. Sophisticated investors are should be aware of those flaws and take them into consideration before they invest.

Then the author talked about the housing bubble and the sub prime crisis. He gave a lot of detailed of what caused recent housing price increase, what drove the housing demand. He then predicts that when people realized what just happened, they will also realize the housing market is so inflated and stop paying the high price. Banks will also clean up their mess, making it hard to loan money and reduce housing demands. As a result, a sharp drop in housing price. What he said are true and it is already happening. However, people just don’t stop buying houses. Laws are now passed to help fore closure owners, freeze ARM rates. Fed just reduced the interested rate to the lowest level ever. A lot of first time home buyers are now on the marketing shopping for houses. Because the drop in dollar value, people in other countries start to be interested in buying houses in the US. It is not clear to me that housing market will drop 30%.

Last, the author talked about consumer credit. He talked about how we spend money beyond our means and the ability to borrow money against future earning is not helping. Besides his conclusion being pessimistic, I don’t have other comments on this topic.

Finally, the author gives us some advices on how to prevent everything bad to happen. Basically, if you can, convert your money to a different currency and invest in foreign companies only. I found his advice been very generic. I felt the author wrote the book in order to vent his dissatisfaction with our current economy instead of giving valuable advice. However, the facts and problems the author quoted in the book are true. So it is a good book to read for informational purposes. I just don’t agree with his conclusion.

Get the book Crash Proof: How to Profit From the Coming Economic Collapse (Lynn Sonberg Books)