Sept. 19 (Bloomberg) -- George Soros, Barton Biggs and Robert J. Shiller have all published books in recent months that ponder what to do when U.S. financial institutions stagger.

So as market turmoil lashed American International Group Inc., I thumbed back through these and other finance books to glean 10 easy tips for fixing the mess and weathering the storm. The recommendations range from the apocalyptic (stockpile food) to the abstract (dump the Efficient Market Hypothesis).

1. Be Bold

Americans should face the scale of the mess and take a one- time $1 trillion asset writedown, advises former banker and financial writer Charles R. Morris in his primer, ``The Trillion Dollar Meltdown'' (PublicAffairs).

So far, banks worldwide have written off about half that amount, $518 billion. Brace for more pain.

Though $1 trillion stunned some readers when Morris's book came out in March, the figure has since been cited by bond-fund manager Bill Gross at Pacific Investment Management Co.

2. Be Afraid

During Alan Greenspan's tenure as chairman of the U.S. Federal Reserve, ``the creative destruction component of capitalism was routinely suppressed,'' writes William A. Fleckenstein in ``Greenspan's Bubbles'' (McGraw-Hill).

The upshot: Bankers became fearless and ``lost respect for the idea that they might lose money,'' says the president of Fleckenstein Capital Inc. in Seattle.

Risk isn't risk-free, as Lehman Brothers Holdings Inc. learned after becoming the largest underwriter of mortgage bonds.

3. Listen to Your Kids

Paul Muolo, executive editor of National Mortgage News, recalls in ``Chain of Blame'' (Wiley) how teenagers started using ``subprime'' as a verb.

``I'd better not subprime that test,'' his 13-year-old daughter Sherry observed one day.

Things could be worse: She might have Greenspaned her final.

4. Embrace Inefficiency

George Soros has long disputed the theory that markets always move toward equilibrium. The current meltdown -- which he calls the worst financial crisis since the Great Depression -- proves his point, he writes in ``The New Paradigm for Financial Markets'' (PublicAffairs).

The billionaire investor brainstorms through solutions that range from abandoning some financial instruments to creating a clearing house or exchange for credit-default swaps.

Yet this is mostly a plea to reject the belief in efficient markets that has led Ph.D.s armed with PCs to concoct ever more exotic investing strategies and instruments.

5. Heed Your Inner Cockroach

Simplify financial instruments, cut leverage and act like a cockroach, writes Richard Bookstaber, a former Moore Capital Management Inc. risk manager, in ``A Demon of Our Own Design'' (Wiley), which came out in 2007.

Unlike today's tightly coupled, complicated markets, the cockroach excels at responding to unanticipated risks. Armed with a crude defense mechanism, it moves away from any puff of air that ``might signal an approaching predator,'' he says.

``Simpler financial instruments and less leverage will create a market that is more robust and survivable,'' he says.

6. Innovate

Yale economist Robert J. Shiller, the dot-com and housing- bubble Cassandra, remains a contrarian now that events have proved him right. In a market blasted by what Warren Buffett termed ``weapons of financial mass destruction,'' Shiller calls for more financial innovation, not less, in ``The Subprime Solution'' (Princeton).

We should expand ownership among low-income people by creating such things as ``continuous-workout mortgages,'' in which a homeowner's payments would be adjusted to reflect his or her ability to pay and trends in the housing market, he says.

Sounds like a full-employment plan for mortgage lenders.

7. Become Swiss

Former Republican strategist Kevin Phillips slams politicians in ``Bad Money'' (Viking) for allowing Wall Street to hijack the U.S. economy.

Like Hapsburg Spain, the maritime Dutch Republic and imperial Britain, America as chosen to ``luxuriate in finance at the expense of harvesting, manufacturing, or transporting things,'' he writes.

What can be done? He advises the U.S. to focus on high- value-added manufacturing -- as Switzerland does.

8. Come Together

Markets often crash when powerful forces collide -- like the weather systems in Sebastian Junger's ``The Perfect Storm.'' Calming the maelstrom is rarely easy, as Robert F. Bruner and Sean D. Carr show in their case study, ``The Panic of 1907.''

J. Pierpont Morgan Sr.'s struggle to tame that crisis illustrates how ``collective action by leaders can arrest the spiral, though the speed and effectiveness with which they act ultimately determine the length and severity of the crisis,'' the authors say.

9. Rethink Tax Deductions

Martin Fridson's ``Unwarranted Intrusions'' (Wiley) came out when U.S. housing prices were peaking in 2006. The former Merrill Lynch & Co. junk-bond strategist raised a point many now make about the dangers of the U.S. tax deduction given on interest on home mortgages: The real benefactors of this break include builders and real-estate agents who enjoy an increased demand for housing, he writes.

10. Head for the Hills

Mankind endures ``an episode of great wealth destruction'' at least once a century, says Barton Biggs, of hedge fund Traxis Partners LLC, in ``Wealth, War and Wisdom'' (Wiley).

His advice: Diversify your investments and prepare for the worst. Buy yourself a farm that's off the beaten track yet easy to reach and stock it with seed, fertilizer, medicine and guns.

``Think Swiss Family Robinson,'' he says.

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: James Pressley in Brussels at jpressley@bloomberg.net.

Last Updated: September 18, 2008 21:47 EDT