I have been making bullish noises of late, but I am fully cognizant of all the downside risks. So for the sake of presenting both sides to this argument, I want to highlight the ‘dark’ side in this post based on a book I have just read.
If you are an American investor or just an American citizen interested in where things are headed in this country, I recommend you read the book “When Giants Fall” by Michael Panzner, You are not going to find any of the bullish noises I have been making in it. Nevertheless, it is a must read if you want to be fully equipped to deal with the worst-case scenario for the American hegemon. By the way, if you’re looking for a feel-good story, this book is not the place to go.”
The narrative goes a bit like this: The United States has overreached and has been living beyond its means for at least a decade. This can no longer continue in the wake of a bubble and bust of epic proportions. As a result, Americans will need to accept a lower standard of living for the foreseeable future. Part of this somewhat apocalyptic view is predicated, not on the global markets but on the very real possibility that we are reaching a point where demand for available natural resources (oil, water, industrial commodities) outstrips supply. In Panzner’s view, this prospect will diminish America’s role on the global stage and usher in a chaotic multi-polar struggle made all the more dangerous by the presence of weapons of mass destruction.
I see this as a combination Peak Oil meets Jared Diamond/Collapse view. Now, if you asked Panzner about green shoots, he would probably laugh in your face.There are no room for green shoots in this book. My take on his thesis is two-fold. First, I agree with some of the larger themes about imperial overstretch, diminishing natural resources, and over-consumption. However, I am not of the view that there is anything inevitable about the course of events in the face of those challenges.
Give Panzner’s book a look. It is definitely food for thought, especially if you are considering downside scenarios and their implications. For now, I am taking the opposite view.