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Sunday, February 12, 2012

Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Can Happen Again by Kevin Freeman

Exposes the vulnerable state of the American (and the world) economy

Published in 2012 by Regnery Publishing, Inc.

When I was reading this book I was tempted to make a sort of smart-aleck introduction about the complex nature of Kevin Freeman's warning about the dangers we face by way of economic terrorism. After all, Paul Revere just rode through the streets yelling, "The British are coming! The British are coming!" and that was enough. But, after a little thought I realized that Freeman can't just yell, "The economic terrorists are coming! The economic terrorists are coming!" It has to be explained and that explanation is long and can be full of statistics and new terminologies.

I am a licensed high school economics teacher and I can honestly say that I knew just enough about finance, the real nitty-gritty of the to and fro of the markets, to say that this book is downright scary. It is the proverbial "firebell in the night" that screams out that we have some serious weaknesses in the way we do business in America (and the rest of the free world as well). Some of this information was completely new to me (I am an econ teacher, but let's face it, high school economics is pretty basic stuff - I consider myself an informed entry level amateur in the world of finance - I know enough to know that I don't know much).

Freeman lays out evidence that we may have already been hit by economic terrorists - and more than once. Someone may have gotten quite wealthy on 9/11 due to foreknowledge of the attacks and we may have been hit again in 2008. On page 177 he has an interesting section called "A Failure of Imagination." To me, this section was a microcosm of the whole book. It seems that no one in authority has imagined that someone might be willing to risk a fortune to derail our economy because of the basic rule of economics that states that people tend to act in an economically rational way (this is the kind of stuff high school econ teachers like me stress).  But, if someone is willing to die to crash a plane in a building or to blow up a crowded street market, why not risk a few billion to bring the entire Western economy to its knees?
Freeman's message? Wall Street needs to watch out
for economic terrorism. Will they?
That remains to be seen.

I do not know if we have actually been victimized already, but the combination of massive government debt loads, dependence of foreign oil, lack of market transparency and tolerance of naked short selling and credit default swaps leaves us open to these sorts of attacks. Our financial front door is wide open and our economy is subject to manipulation by any number of foreign powers.

So, despite the jargon, Freeman's message came through loud and clear: We are at risk. Now, if only we could come up with some sort of catchy phrase like "The British are coming!" Perhaps, "Credit default swaps leave the entire market at risk of foreign manipulation and should be highly scrutinized by an independent agency!"

Nope. It just doesn't have the same ring, does it?

Nonetheless, I hope Freeman continues to shout it out to anyone who will listen.

This book can be found on Amazon.com here: Secret Weapon.

I rate this book 4 stars out of 5.

Reviewed on February 12, 2012.

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