Bonner, William and Addison Wiggin. 2003 Financial Term Paper

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Bonner, William and Addison Wiggin. (2003) Financial Reckoning Day.

The idea of a 'soft depression' may seem oxymoronic to the reader's eye, much like 'jumbo shrimp' or 'a sure return' on your investment. A soft depression, however, is not another economic term a downturn in the economy less onerous upon the population than a 'hard depression.' Rather a soft depression is a depression that is based in a multitude of historical and demographic as well as economic factors that can cause a growing instability in the economy over time, rather than a quick, harsh decent into economy misery.

In fact, a soft depression, quite unlike a 'soft fall' is often much worse in terms of its ramifications than a short, sharp shock of a quick depression, much like drowning rather than a death by a firing squad, to use the type of metaphorical language so beloved by the authors William Bonner and Addison Wiggin of Financial Reckoning Day: Surviving the Soft Depression of the 21st Century.

Furthermore, the two authors stress, soft depressions have occurred before and will occur again, so investors and historians alike must expect and prepare for them. It is tempting to view one's own nation and one's own financial situation as historically unique. However, this book attempts to personalize the business cycle in a way that is easy and understandable for readers looking for investment advice, yet also to place the economic data of the moment in a world-wide historical and economic context, showing that 21st century America is part of a larger history and world environment that individual Americans -- and their financial advisors -- are often unaware of, willfully or not.

Bonner and Wiggin are noted as investment advice mavericks, rather than advocates of conventional wisdom, one of the things that make this book so interesting. They attempt to reconfigure and recenter the reader's understanding of the business cycle's recessions and depressions in such a fashion that the reader and potential investor does not view the recent shifts in technology and the globalization of the world's markets, as occurred during the 1990's and first part of the 21st century as permanently altering the nature of the business cycle, which they stress still remains unchanged in terms of the factors that affect its development.

The first chapter of the book is entirely devoted to an analysis of the recent Internet bubble and burst, which Bonner and Wiggin blame partly on the financial media industry generated by the World Wide Web, causing mob speculation and heady, overly zealous investment advice from so-called financial professionals with specious credentials -- all factors that they parallel with 1929's dissemination of hysterically optimistic investment predictions and advice. Although the author's language is peppered with many cliches, such as "the world never works as people thinks it does," the two men paint a fairly accurate picture of how things were during the height of Internet commerce. (3)

At the time, attitudes were so hubristic all common sense was forgotten. The authors take particular delight in taking shots at George Gilder a kind of guru of the new, technologically wealthy elite famous, whom became famous during the bubble and lost all of his money in the bust. Gilder's ignorance of price economics, say the authors, were the source of all his troubles. They use Gilder and Alan Greenspan both as cautionary tales of what cannot reoccur again, lest a similar boom and bust afflict the national economy.

The authors also take particular delight in deflating hubristic 'uni-theories' of history that is theories that attempt to explain all of history and all of human behavior with…

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