Financial Armageddon: Protecting Your Future From Four Impending Catastrophes

FINANCIAL ARMAGEDDON: Protecting Your Future from Four Impending Catastrophes By Michael J. Panzner Financial Armageddon.indb i 1/2/07 4:52:21 PM This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that neither the author 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 reflect 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 Seventh Ave., 22nd Floor, New York, NY, 10106. Frontmatter.indd ii 1/5/07 2:41:41 PM C o n t e n t s Acknowledgments vii Preface ix Introduction xi PA RT O N E T H R E AT S 1. Debt 3 2. The Retirement System 15 3. Government Guarantees 25 4. Derivatives 35 PA RT T WO RISKS 5. Economic Malaise 53 6. Systemic Crisis 65 7. Depression 77 8. Hyperinflation 87 i iii Financial Armageddon.indb iii 1/2/07 4:52:22 PM iv Contents PA RT T H R E E FA L L O U T 9. Economic 99 10. Financial 109 11. Social 119 12. Geopolitical 129 PA RT FOUR DEFENSES 13. Planning 141 14. Investments 151 15. Relationships 165 16. Lifestyle 177 References and Resources 187 Index 233 Financial Armageddon.indb iv 1/2/07 4:52:22 PM DEDICATION To Catherine, for all you do and everything you are Financial Armageddon.indb v 1/2/07 4:52:22 PM Financial Armageddon.indb vi 1/2/07 4:52:22 PM 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 editing 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 first 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, Sophie, Emily, Mollie, and Nellie, and my wife, Catherine, who really do make it all worthwhile.