Approximate word count: 65-70,000 words
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“Jaime ‘Jim’ Mosquera was born in Panama City, Panama. He spent his formative years in Panama City and St. Louis, Missouri. He graduated near the top of his class from the University of Missouri-Columbia with Master’s and Bachelor’s degrees in Industrial Engineering. His Master's thesis focused on Operations Research and computer simulation of real-world systems ranging from vehicular traffic to hospitals.
After his graduation from college, he yearned for something more. In 1987, he began a comprehensive study of economics and the markets. He began trading futures that year and was highly successful during the stock market crash of 1987. He furthered his education by successfully completing the requirements for a Series 3 license (Commodity Trading Advisor). Mr. Mosquera also developed proprietary software programs used in options and futures trading.
In the late 1990s, he realized that something was amiss in the stock market. Many people were successfully making money without having any meaningful experience in the markets. His employment in technology led him to recognize a ‘bubble’ forming in companies related to the Internet. He warned those that he knew to remove their money from the stock market since it appeared a large, speculative bubble was about to pop. It did, in the year 2000.
Over the next several years, he acquired more knowledge that ultimately led to the creation of a financial publication, The Sentinel Financial Report. This publication inspired the creation of a book on the financial crisis of 2007-2008 called E$caping Oz: Protecting Your Wealth During the Financial Crisis. For many people, the financial crisis was a temporary interruption on the way to greater stock market gains. For him, something more sinister lurks.”
“One day people woke up to find themselves in an unfamiliar land – a Financial Land of Oz. This land was filled with corporate bankruptcies, home foreclosures, shrunken investment portfolios, and a great deal of economic uncertainty. Government Wizards stepped forward with stimulus plans, unfamiliar terms like TARP, and in general, massive amounts of spending. The Federal Reserve Wizards were not to be outdone. They did everything but throw money out of helicopters to rescue the banking system and the economy.
Can the Wizards push buttons and pull levers to help us escape from Oz? We didn’t get to the Financial Land of Oz on the back of a tornado. Our journey here was long and slow, but we had our eyes closed the entire time. We won’t be able to click our heels to get back home. Our journey home will require us to take a road we have traveled before but one we long ago forgot.
The economic malaise we encountered was serious but it is only the beginning. Reliance on the Wizards will only make our country's journey more painful. Ultimately, we have to trust ourselves. Once we pull back the curtain, we will realize we can get back home without the Wizard’s help.”
This purpose of this book is encapsulated in the subtitle, Protecting Your Wealth During the Financial Crisis. Although a global problem, the book is US-centric, mostly focusing on the US economy, looking at other countries mainly as points of comparison. That doesn’t mean someone outside the US couldn’t glean anything from the book, but, assuming someone from outside the US buys into the overall premise of what Mosquera outlines here, I believe they would have to make adaptations to his advice for their situation.
E$caping Oz gets its name from an analogy the author makes between our financial system and the Wizard of Oz, equating those who we have historically expected to insure stability of the system, primarily government and quasi-government entities, with “the wizard,” who isn’t as magic or in control as we perceive. The book is split into three sections: “The Journey,” which gives a crash course in basic economics and some specific economic theories Mosquera uses in making his diagnosis, “The Crisis,” which evaluates why the crisis happened and how he sees the future, and “Preparing Our Escape,” in which he gives advice based on the direction he thinks we’re headed. I’ll ignore the last section because its value rests almost entirely on the first two sections. If you believe Mosquera’s prognosis in the second section is correct, there isn’t much room for argument with the third. If you don’t, the question is moot.
Much of the first section’s crash course in economics is basic and there isn’t much room for argument. For example, the cause of inflation. His post mortem of the causes of the recent financial crash mostly parrots what you’ve probably read elsewhere. Most credible experts would agree with a large part of Mosquera’s analysis.
There were two reasons that I didn’t buy into Mosquera’s analysis of where the economy is going. I’m not an economist (nor is Mosquera, although he certainly has studied these things more than I and his work in stock trading systems may have provided some relevant expertise). I may be deluding myself because the picture he paints isn’t one I want to believe. You’ll need to read E$caping Oz yourself if you want to decide.
My first reason for taking Mosquera’s predictions with a grain of salt is that I’ve been reading these same predictions of doom and gloom for at least forty years, predicting an eminent and total collapse of the financial system due to the US going off the gold standard in the nineteen thirties. These predictions, while appearing to make a good case for why this is going to happen, and happen soon, have lost credibility with me. I equate them with John Birch Society conspiracy theories and predictions of The Rapture happening next week (or ever). The prognosticators have cried wolf too often for me to take them at face value.
My second concern is Mosquera’s use of various theories about the cyclic nature of human behavior to predict the how the market is going to behave. It isn’t that I discard the possibility that these cycles exist. Some probably do. Think of the cycles of fashion, with certain kinds of dressing going in and out of favor and then back again, which could be reflective of a human behavioral cycle and herding instincts, as Mosquera contends. However, some of the cycles used are too long (one a thousand years) for me to believe that, even if the theory has some validity, we can predict its effects.
It also felt as though Mosquera was at times stretching to provide examples of anticipated behavior as evidence to support his interpretations of the effects of the behavioral cycles. For example, he points to the Tea Party movement as an example of “political activism” and “public anger” which would be anticipated during the place where he thinks we are currently in the cycles, with this activism pushing for less government involvement. That these were “spontaneous” rather than organized under the auspices of a formal organization is a large part of his proof, yet, since Mosquera wrote this book, the Tea Party “movement” has been shown to have not been spontaneous or grassroots at all, but what is called “astroturf,” a movement initiated by the billionaire Koch brothers masquerading as grassroots. To be fair, whatever the origins, this movement may have tapped into feelings that were already there and has possibly gone beyond its shady origins. The Occupy Wall Street movement might actually be a better example of spontaneous uprising, except it is arguing for a direction that is opposite from what Mosquera’s predictions would anticipate, with the movement looking for government to become more involved in regulating what is and isn’t acceptable corporate behavior.
Another hallmark supposedly indicative of where we are in one of the cycles is what Mosquera describes as “fallen heroes.” He gives several examples of people “formerly occupying the pantheon of their respective fields” who have fallen from favor. His examples fit, yet the reason the people have fallen out of favor is obvious. George W. Bush and Bernie Madoff are two examples. I would also contend that examples just as good could be found in virtually any period.
Although I’m not buying into Mosquera’s prognosis for the future or much of his logic in making those predictions, E$caping Oz was valuable for getting different perspectives on how some people view our current economic situation.
No significant issues
Rating: *** Three stars