Trader Panzner Foresees Wealth Destruction, Rising Crime, Guns

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  1. Trader Panzner Foresees Wealth Destruction, Rising Crime, Guns

    Review by James Pressley

    Feb. 18 (Bloomberg) --
    Abandon hope, all ye who open this book. Michael J. Panzner, author of “Financial Armageddon,” is back with a new jeremiad on our cracked and out-of-joint times.

    His outlook is grim. We stand on the cusp of what hedge- fund manager Barton Biggs would call “an episode of great wealth destruction,” Panzner writes in “When Giants Fall: An Economic Roadmap for the End of the American Era.” Things are already bad for Americans and they are going to get worse.

    Working hours will rise and pay will fall, forcing many people to take two or even three jobs, he asserts. We’ll be traveling on foot -- or by bicycle or boat. More and more of us will live in extended-family households, three generations under one roof. We’ll recycle rainwater, draw heat from the sun and eat food grown in our own gardens.

    Tax revenue will slump, unraveling safety nets like Social Security and Medicare. Hospitals will shut. Police budgets will be slashed, crime will surge, more people will pack guns. The dollar and modern payment mechanisms may give way to “barter arrangements, alternative financial instruments and collective support networks,” he says.

    “Like the other great spasms in our history, the one that now seems to be unfolding is unlikely to be narrow in scope, shallow in depth, or short-lived in duration,” he writes.

    And so this book goes, with page after dystopian page outlining the decline of the U.S. and the splintering of the planet into brutish nation states fighting over dwindling stores of commodities, energy and water.

    Bleak Collage

    Panzner, a veteran trader who has worked for banks including HSBC Holdings Plc and JPMorgan Chase & Co., has read widely. The text bristles with references to historians such as Paul Kennedy and Niall Ferguson. He quotes Chalmers Johnson here, Richard Haass there. Pat Buchanan and Naomi Klein pop up in between.

    The result is a bleak collage of quotations describing a U.S. adrift in a dangerous world: Americans have overspent, lost their prestige and gone soft. Oil production may be peaking, poor populations are exploding, and the planet is being befouled. China’s foreign reserves have surged to $1.95 trillion.

    Sound familiar? It should.

    The spectrum of books on America’s shifting place in the world is now wide. At the bright end of the scale, Fareed Zakaria’s “The Post-American World” stresses “the rise of the rest,” not the decline of the U.S. George Friedman’s new book, “The Next 100 Years,” goes further. Far from fading, he says, the U.S. has “just begun its ascent.”

    Sensible Primers

    Toward the middle of the doom-and-gloom gradation, we have sensible primers such as Charles R. Morris’s “The Trillion Dollar Meltdown”; Robert J. Shiller’s “The Subprime Solution”; and Mohamed El-Erian’s “When Markets Collide.”

    And then there are books like Panzner’s. They argue that we’re plunging into a new Dark Age.

    Now, I’m not one to ignore a wake-up call. I listened when Shiller began measuring the girth of the U.S. housing bubble. I paid heed when Morris predicted the bust would result in at least $1 trillion in bank write downs.

    What disturbs me about Panzner is his hectoring tone and the depth of his gloom. Even the Statue of Liberty is upside down on the cover, an image sure to make Osama bin Laden smirk.

    Yes, America’s place in the world has changed, as Panzner says. Things are not as they were when the Berlin Wall fell two decades ago. That doesn’t mean the U.S. is going the way of Rome.

    Keynes’s Portfolio

    As I read this apocalyptic book, I was reminded of a story about John Maynard Keynes that Liaquat Ahamed recounts in his superb history, “Lords of Finance.” In the depths of the Great Depression, the economist turned to long-term investing, Ahamed writes. Convinced that Franklin D. Roosevelt would resuscitate the economy, Keynes put together a portfolio of U.K. and U.S. equities and leveraged it by as much as 2-to-1.

    “By 1936, his net worth was close to $2.5 million -- the equivalent today of $30 million,” Ahamed notes.

    Though America’s troubles weren’t over, the country eventually pulled out of its funk and flourished once more.

    “When Giants Fall” is from Wiley (264 pages, $27.95, 17.99 pounds, 21.50 euros).

    (James Pressley writes for Bloomberg News. The opinions expressed are his own.)

    To contact the writer on the story: James Pressley in Brussels at
    Last Updated: February 17, 2009 19:00 EST