Between the pages: One insightful book about weathering the economic storm, another about one of the richest men in the world
Between the pages: By Chuck Hinson
Special to the Turnagain Times
I think everyone would agree the U.S. economy has been in trouble for some time, but it seems to have been something to be avoided, not to be talked about. Now, there’s no doubt about it. Whether you live in New York or Washington or Anchorage or Girdwood, it’s hard to avoid the reality that the financial well being of the entire world has finally lost its step. We all know that in nearly every respect, the new U.S. president has his job cut out for him, but the economy is the one issue that has pushed itself center stage.
Several weeks ago, someone asked me to order a book called “Crash Proof: How to Profit from the Coming Economic Collapse,” by Peter Schiff. This book was published in 2007, by John Wiley and Sons, Inc. It could have been just another doom and gloom title, ignored in favor of a bullish view through rose-colored glasses, but it’s amazing how relevant it seems now. The title alone should be enough to get people thinking and planning for the future.
Schiff, described on the book jacket as a “Wall Street prognosticator,” is also known informally as “Dr. Doom” for his uniquely bearish outlook on the US economy, particularly when it comes to his view of the trade deficit.
Unlike many Wall Street analysts’ stance as they looked at the nation’s financial picture a year or so ago, he believed U.S. consumer spending and its service based economy to be detrimental to the country. He cited some support for his cause from a quote by Warren Buffet in a 2006 AP report: “The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil…right now, the rest of the world owns $3 trillion more of us than we own of them.”
In his book, Schiff attempts to shatter the myth that America can consume and borrow while the rest of the world saves and produces. He states that while his audience is the typical investor, he wants to appeal to a broader audience, one who wants to understand how staying on such a path might lead to deep trouble. This was over a year ago. Interesting to think about how that plays out now in the current world situation.
Another book of note, “The Snowball: Warren Buffett and the Business of Life,” was just released this fall. Written by Alice Schroeder, a protégé of Buffett, the book is a surprisingly personal account of the life of one of the richest and most respected men in America. His name has come up quite a bit these days, so I thought it might be good to know a little about the man.
It’s a great biography, written well. Schroeder manages to capture Buffett’s “homespun persona” over and over again by mixing details of his private life with his extraordinary financial insights. The book is 838 pages, with another 100 pages of notes. Interspersed throughout the account of a man’s life are direct quotes: from recollections, speeches and stories told to many over his seventy-two years, full of the humor and wisdom of a man unparalleled in his field. His family, his wife and companions, his best friends with familiar names like Gates, Dillon, Von Furstenberg, Keogh and Munger. He is a man who enjoys pleasing people. He’s a nice guy. In addressing faults, Buffett’s rule is “Praise by name, criticize by category.”
More than anything, the book showcases a brilliant thinker and some say, a financial genius. For example, not one to join the technological bandwagon in the 90’s, he says, “It’s much easier to promote an esoteric product, even particularly one with losses, because there’s no quantitative guideline…(and) you can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.”
As for a broad point of view on the stock market, he quotes the economist Keynes, by saying “There is a danger of expecting the results of the future to be predicted from the past.”
Basics, I’m sure. I don’t know what that means for all of us as we slip into a new year and a new presidency, but I’ll bet Warren Buffett has something worthwhile to offer. My guess is that he and Schiff are men worth knowing about and listening to. Whether we are “crashproof” or not is another story.
Chuck Hinson is the owner of Girdwood Books and News.