FINANCIAL ARMAGEDDON

257 Pages·2011·0.88 MB·English

FINANCIAL ARMAGEDDON:
Protecting Your Future from
Four Impending Catastrophes
By Michael J. Panzner

FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb ii 11//22//0077 44::5522::2211 PPMM
This publication is designed to provide accurate and authoritative information in re-
gard to the subject matter covered. It is sold with the understanding that neither the au-
thor nor the publisher is engaged in rendering legal, accounting, or other professional
service. If legal advice or other expert assistance is required, the services of a competent
professional should be sought. The opinions expressed are those of the author and do
not necessarily refl ect the views of any other individual or organization.
Executive Editor: Jennifer Farthing
Development Editor: Joshua Martino
Production Editor: Karen Goodfriend
Production Artist: John Christensen
Cover Designer: Jody Billert, Design Literate
© 2007 by Michael J. Panzner

Published by Kaplan Publishing, a division of Kaplan, Inc.
888 Seventh Ave.
New York, NY 10106
All rights reserved. The text of this publication, or any part thereof, may not
be reproduced in any manner whatsoever without written permission from the
publisher.
Printed in the United States of America
07 08 09 10 9 8 7 6 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
Panzner, Michael J.
Financial armageddon : protecting your future from four impending catastrophes /
Michael J. Panzner.
p. cm.
ISBN-13: 978-1-4195-9608-7
ISBN-10: 1-4195-9608-X
1. Finance, Personal. 2. Investments. I. Title.
HG179.P196 2007
332.024--dc22
2006034506
For information about ordering Kaplan Publishing books at special quantity
discounts, please call 1-800-KAP-ITEM or write to Kaplan Publishing, 888 Sev-
enth Ave., 22nd Floor, New York, NY, 10106.
FFrroonnttmmaatttteerr..iinndddd iiii 11//55//0077 22::4411::4411 PPMM
C o n t e n t s
Acknowledgments vii
Preface ix
Introduction xi
PA R T O N E
THREATS
1. Debt 3
2. The Retirement System 15
3. Government Guarantees 25
4. Derivatives 35
PART TWO
RISKS
5. Economic Malaise 53
6. Systemic Crisis 65
7. Depression 77
8. Hyperinfl ation 87
iiii
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb iiiiii 11//22//0077 44::5522::2222 PPMM
iv Contents
PART THREE
FALLOUT
9. Economic 99
10. Financial 109
11. Social 119
12. Geopolitical 129
PART FOUR
DEFENSES
13. Planning 141
14. Investments 151
15. Relationships 165
16. Lifestyle 177
References and Resources 187
Index 233
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb iivv 11//22//0077 44::5522::2222 PPMM
DEDICATION
To Catherine,
for all you do
and everything you are
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb vv 11//22//0077 44::5522::2222 PPMM
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb vvii 11//22//0077 44::5522::2222 PPMM
A c k n o w l e d g m e n t s
W
riting is something of a
paradox; it is a solitary passion, yet its success invariably depends
on the insights, support, hard work, and enthusiasm of other
people. In that regard, I’d especially like to thank the following
individuals: Bill Siegel for his enduring friendship, valuable ed-
iting assistance, and unwavering support for all these years; my
brother Max for his creative energies, cutting-edge perspective,
and questions that always force me to think; my sister Paige for her
inspiring visions of success and infectious enthusiasm; my agent,
John Willig, for his persistent belief in the project—and in me;
Cynthia Zigmund, one of the fi rst to see what needed to be heard;
and Maureen McMahon, Jennifer Farthing, Joshua Martino, and
Karen Goodfriend of Kaplan, who helped turn a rough vision into
a polished reality.
Once again, I could not have gotten through this effort at all
without the love, support, and understanding of my children, So-
phie, Emily, Mollie, and Nellie, and my wife, Catherine, who really
do make it all worthwhile.
vii
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb vviiii 11//22//0077 44::5522::2222 PPMM
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb vviiiiii 11//22//0077 44::5522::2222 PPMM
P r e f a c e
O
ur world is a riskier place
than it used to be. Whether from escalating confl ict in the Mid-
east, rogue nations brandishing nuclear weapons, random attacks
against innocent civilians, ruinous natural disasters, the emer-
gence of global pandemics, or the fallout from volatile energy
prices, we are increasingly vulnerable to a host of threats. Most
Americans seem aware of these dangers, if only cursorily. We are
familiar with war, diseases, and earthquakes. We understand that
certain groups seek to subjugate others militarily or economically.
We recognize that many individuals despise our country and wish
to destroy everything for which we stand.
We know enough to be concerned about these risks and re-
main on the lookout for any signs of danger. We also realize that
we may one day need to take action to protect ourselves and our
loved ones.
But that is not the case with the devastating economic cata-
clysm that lies ahead.
Lacking the most primitive early-warning signal available to
miners, we have no “canary in the coal mine” to raise the alarm
over the broad-scale dangers of a toxic confl uence of debt, deriva-
tives, government guarantees, and unfunded retirement obliga-
tions.
There have indeed been voices in the wilderness warning of
the dangers, but most have only highlighted certain aspects of
this disturbingly vast labyrinth. The majority of Americans have
blithely assumed that with rules, regulations, and capital cushions
in place, as well as our long history of muddling through diffi cult
times, there is no real cause for concern. Yet when it all starts to go
wrong, and the supposedly unimaginable evolves into a horrifying
ix
FFiinnaanncciiaall AArrmmaaggeeddddoonn..iinnddbb iixx 11//22//0077 44::5522::2222 PPMM