It is no surprise to anyone that we have been in a deep and long lasting recession which is not recovering as well as some politicians would like us to believe. I recently read two excellent books (Aftershock and The Aftershock Investor by David and Robert Wiedemer) which provide some interesting insight regarding what may well be in store for the A/E/P profession in the next 2-4 years. Even if only part of what they project comes true, we are in for challenging economic times for which there is no historical precedent. In an earlier book, the Wiedemers correctly predicted the housing bubble collapse and the ensuing financial debacle in 2008 and 2009.
Their contention now is that we are creating huge bubbles that are only being masked and delayed, while growing, with Quantitative Easing and the Federal Reserve buying $85 billion in government bonds every month. The big bubbles they discuss are as follows:
- National debt
- Stock market- rising far faster than the fundamentals behind share prices
- Rapidly increasing housing prices (again)
- Private debt- spending faster than increases in income
- The dollar bubble
- Consumer spending bubble
For all the generations that didn’t live through high inflation and interest rates, this may be such new territory that conventional wisdom might create a belief that the normal
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business cycles happen and are to be expected. They also point out that one bubble bursting might well trigger a collapse of one or more of the other bubbles.
I chose not to read this in the context of gloom and doom but gaining a better understanding about how we might prepare to make the best of potential challenging times ahead. I believe that we may still be in the denial phase but it is important to develop strategies for A/E/P practices to not only survive another major recession but to prosper by being in the right markets in time to position our firm’s to take advantages of opportunities in a proactive manner. I strongly recommend both books even if one does so with a degree of skepticism.