The great depression of debt: Warren Brussee

Book review

Atim Kabra, Hardnews

I hope the author, Mr. Brussee, is wrong. In fact, I hope is dead wrong. For if he is right then the immediate future looks look bleak and the time beyond that looks bleaker still. Lending weight to the bleak scenario is the author's track record. He called it right in 2004 when in his previous book ( The second great depression ) he correctly predicted not only the foreclosure crisis haunting us now but also the crisis engulfing Detroit that has left the American car makers gasping for survival.

In a way the book is refreshingly different as it is shorn of jargon. Mr. Brussee has spent his career implementing six stigma at GE plants in Hungary, China and USA. I guess he mixes his skills for numbers with a common sense approach of someone watching the markets from the sidelines, away from the day to day pressures of traders and market men and away from the daily tumult which can hide and blind the judgement of the best. The first few chapters establish the inevitability of the current crisis and establishes the propensity to live beyond one's income as the root cause.

Mr.Brussee's crystal ball for the markets predicts continuing turmoil, with depression bottoming out by 2012 or 2013 and he expects USA to fully recover only by 2020 though there will be several apparent recoveries as the depression marches down its path. You would have read by now the reasons elsewhere too for the pessimistic version of how the world events could pan out going forward. Mr. Brussee predicts massive government downsizing, fall in birth rates, increase in retirement age, pressure to cap obscene managerial remuneration, drop in dollar value, inflation and much more.  Though it might be a bit hard today to agree with many of the scenarios which he attempts to paint for the next few years, Mr. Brussee insists that these are realistic predictions and he goes on to paint even more dire scenarios of how things can go even more wrong. He also tries to define a remedial action plan in a chapter which he says was most satisfying to write. He lays great store on increasing spending on renewable and clean energy sources.  However, I would have been more satisfied if he had dwelt a bit deeper into the rationale behind the futuristic scenario building exercise.. Similarly, the chapter on remedial prescription left me wanting more insight into the details which would need to be put in place to operationalise his action plan.

This book should be regarded as two books rolled into one. The first book covers what I have described above: The reasons for the mess which exists today, future scenario building exercise and a prescription of medicines that need to be delivered to recover from the era of past excesses. The author thereafter moves into a completely different arena. He attempts to define an investment strategy focused on inflation protection and a depression survival guide complete with retirement savings charts. I would leave it to the reader to figure out their sweet spot of investing but would seriously recommend this book as a practical guide towards understanding the gravity of the depression threatening to engulf us and preparing to face it head on. Proper planning and preparation is half the battle won.

The author is based in Singapore and runs two private equity funds. Views expressed here in are his own.