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Peter Schiff On The Phony US Economy
"Most of the forecasters out there can only see what's happening right now. That's why they are always so wrong. They could never connect the dots... Our phony economy is being propped up by the stimulus and artificially low interest rates, and all of that has to come to an end if we want to stop the dollar from collapsing."
Truer words have rarely been spoken.
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"Truer words have rarely been spoken"
Maybe not, but I keep getting stopped out, I'm packing some green shoots and washin' it down with some kool-aide, and I'm sidin' with Dennis Kneale, this recession is over.... untill it comes back... then I'll be on the short side, but all of this practicallity in the facts is killing my account...
phooey on pessimism, everything's f'n perfect, couldn't be f'n better, except if maybe if I actually had a F'N JOB!
I hate this market...
Amen, brother
DOD - It you can't beat 'em join 'em. Look at it this way, this may be the only time you can legally play on the side of the dealer with the rigged shoe. Take advantage of it while you can. They are not going to let the market fall until something "exterenal" and out of "their" control takes it away from them IMO.
http://www.ft.com/cms/s/0/b497f5b6-8060-11de-bf04-00144feabdc0.html
What exactly do you think was going through everybody's minds the day before the Asian tigers rolled over in the late 90s? I bet they were saying, "well, we KNOW sh*t is bad, but, i can get out before the music stops."
there is zero chance on earth i will go long. Baltics are rolling over hard and fast. slim chance their currency pegs hold. What do you think happens after that?
I wish there was a way to give comments a +1, 'cause you'd get mine.
I live in the Baltics (Estonia) and would gladly give him a +5.
There will come a day when the Baltics and rest of East Europe keel over, and this will get the big wave rolling.
Despite the local stock market being down -75% already, the ordinary people are only starting to really suffer. Empty retail space even in the middle of city starting to appear. Next winter will bring in true pain in every form imaginable.
Enjoy the happy warm summer days. They will not last for long.
i have been hearing and reading warnings about eastern europe for months now, but so far, no dice. what really surprises me, is how they can get away with what they have gotten away with for so long and how they seem to be able to control things and make them happen when they want them to happen. amazing power.
People in Eastern Europe might actually endure this crisis better than the rest of Europe. Many of us here do still remember poverty when living under influence/occupation of Soviet Empire and the hard times after its fall. Being used to lower living standars and less dependance on governments is a perk in this situation. I am not saying that Eastern Europes governments are better than western - they just cost less.
"Most of the forecasters out there can only see what's happening right now. That's why they are always so wrong." But I, a man named Schiff, am smarter than the rest of them, and of course I am right where they are all wrong. Why? Because if I ever stop saying this I'll have to shut my brokerage firm down and get a real job.
And in another bummer for market pessimists (in other words those in denial of what actually builds long-term wealth, instead choosing again to be fooled by white noise and short-term speculation/navel contemplation):
http://www.brightonhouseassociates.com/site/docs/research/2009-Q2.pdf
“The second quarter proved to be a positive one given all that has gone on in the past 12 months. Investors began to come out of their cash positions and take advantage of the many new opportunities that have arisen amidst the economic ash."
Only Hamlet's feel themselve's smarter than the market, especially with TD hard on the case of bringing it more and more transparency. Really, you gotta get beyond the confusion between brokers pitching their wares and valid sources of investing information. You're addicted, worse you're clueless to the sorry fact. Help does exist, here's to hoping more and more continue finding it sooner than later.
"But I, a man named Schiff, am smarter than the rest of them, and of course I am right where they are all wrong. Why?" Because it already happened once before, asshole. Peter Schiff WAS right and everyone else WAS wrong.
http://www.youtube.com/watch?v=2I0QN-FYkpw
Speaking of the Kneale-Miester, did any of you read this?
http://market-ticker.denninger.net/archives/1175-To-Dennis-Kneale-Youre-...
I like measured responses to flaming idiots.
Thanks for the Captcha; I missed it.
FAZ & SRS volume trending just flipped. Hmmmmm
Fetch, WOPR
ruh roh
Update: Now they're in a freaking free fall
Take that, reality!
I'm gonna buy some SRS if it drops below $2. I figure I can lose a couple more grand to it.
"Those shorting CRE and financials shall be hanged until dead"
by order of the NY Fed
FAZ down almost 50% since the reverse split.
Phony economy and now CNBC: CNBC parent General Electric was accused by the Securities and Exchange Commission of misleading investors in 2002 and 2003 by reporting "materially false and misleading results in its financial statements." I wonder if CNBC engages in misleading investors by cherry picking data from reports. There could be 9 out of 10 bad things in a report and CNBC will jump up in the air and point out the ONE good thing in a report when the other 9 completely counter their report. No small wonder CNBC is losing so many viewers...
-Silence Dogood
I love the $100 oil projections by energy energy traders (gee, wonder if they're still long?).
I love guys who think they know how markets work and who glibly set themselves up for total pwn@g3 with their faint disdain.
I am Chumbawamba.
Oh, $100 is a sure thing. However, it will pass through $40 a couple of times on the way
When a Govt is sitting on this much debt, who says they want the dollar to stop collapsing. Inflate your way out of the debt is a standard govt response. Expect the buck to go lower.
I'm an ordinary retail investor that is trying to play along here. I agree the dollar has to go lower.
But lower against what? I would assume the price of oil will continue to rise because of the dollar's devaluation. But other than that, if the claim the USD is still the safest currency, then why in dog's name would I exchange it for swiss francs? (or whatever currency)
What's are positions a plain-vanilla retail investor can take?
Gold is your friend.
I am Chumbawamba, and I am also your friend.
Dude all you ever talk about is gold. Stop spamming. It's just some lumpy stuff from the ground.
1/2 physical cash, 1/2 physical gold.
You are then covered whether there's runaway inflation or deflation.
That is the most conservative position.
Except for when the dollar collapses into a hyperinflationary holocaust.
Better: 1/2 physical gold, 1/2 physical silver.
THEN, you are covered.
I am Chumbawamba.
It actually doesn't work like that: http://ftalphaville.ft.com/blog/2009/08/04/65156/the-debt-inflation-myth...
Can I please have those 5 minutes of my life back again. Epic fail from UBS.
Exactly. The problem I have with Schiff is separating the anti-Americanism with what he believes. Meaning, if I was going into a depression, I would much rather be an importing nation with allot of debt than has reserve status than an exporting nation with surpluses. The Great Depression was a good example of this in that the UK just defaulted, while the US got crushed. (aka Great Slump versus Great Depression)
In short... The debt problem is no big issue as long as we just dilute our way out of it.
As far as jobs... I am a firm believer than high unemployment just means that the reality of what a persons skills are worth versus that they are will (and able) to take are misaligned. Meaning, if the government wants to help with unemployment, passing fast track bankruptcy laws would be a great first step...
Peter Schiff is not anti-American. He is anti-government and for good reason
Any time someone talks about the "collapse" of a country that has world reserve status, they need their head examined...
I agree with a gradual decline simply, but any talk of our currency collapsing assumes that the free market determines our fate. Good old Ben has clearly shown that this is not the case.... Meaning, if the USD "collapses" then a good part of the world will drop off the map simply due to its reserve status...
The Market makes fools of everyone. Even you.
I am Chumbawamba, and it's not nice to fool The Market.
Really? You are ignorant. Empires do collapse. The Roman Empire in particular collapsed largely due to hyperinflation and fiscal imbalances. I am not saying it is likely to occur (extremely unlikely), but you are an ignoramus if you state it has never happened and never will repeat itself
You need to become a much better student of history. they were warning iceland, argentina, etc. the crap happens almost overnight. You also have to understand that despite what fed says, all the policies point to same outcome. crap dollar and awful inflation. they just won't come out and tell the truth.
+3.14.
Agreed, he's not anti-American, he's anti-'big government'. There's nothing unAmerican about wanting to preserve your wealth, the value of the dollar or the liberties guarenteed to all individuals by the Constitution.
Debt IS the problem. Debt is the EXACT OPPOSITE of capitalism.
what? that was a rediculous comment. so the only way to prosper is to eliminate all debt...that's just dumb.
It's so hard to face the facts. Isn't it.
Tha US is a giant octopus with its tentacles wraped all around the globe and it blood funnel draining the most vluable resources so that 15 of americans or 0.000001% of the whole world can enjoy flights to private islands and cruises on vast yahts with multiple empty houses around.
It is also a literal blood funnel that drained so much blod starting from Africas slaves, trough indo-asian massacres, middle east permanent wars and corporate and drug enslavement of latin americas.
I know it felt good to be on top for a while but it is comming to the end.
Decoupling dollar from the world finances will sever that blood funnel, which Shiffer sees it comming. That octopus will retreat to its begining and do to its home layer as it did to the rest of the world for too long.
Enjoy
Dude ... perhaps a few too many blood funnels on your brain.
So according to your logic everything we enjoy here is stolen from the rest of the world? Chavista Economics in action?
Get back under the rock from whence you came, troll.
It hurts, doesn't it?
the truth is a bitch, isnt it
Schiff rocks. Its about time ZH showed him some love. Raise your hand if you are cool enough to get on Jon Stewart's show.
Oh yeah, that would be Schiff.
;)
being on a canuck show is like being on beaker's gay show. classic fail....
the truth hurts doesn't it?
Jon Stewart is now Canadian? Did I miss something?
back to $4 gas and price conditions of 2007, except this time unemployment is a 3x multiplier and many don't want credit even if approved.
pick your poison, civil unrest or war with our creditors because someone is gonna get screwed.
As near as i can tell forecasters don't forecast anymore than analysts, analyze or reporters, report. What they do is cheerleader. They all are all engaged in the conspiracy of optimism. Which leads to delusions of prosperity.
Seriously if loose monetary policy and rapid asset inflation were the route to economic prosperity, Argentina would be the richest country in the world by now.
YOU CAN'T HANDLE THE TRUTH!
You know they're thinking it, don't you wish Bernanke or Geithner would just come out and say it?
But if we stop the dollar collapsing then the Chinese asset bubble will burst (since they peg their currency to ours). The dollar will never go up as a result of deliberate government action intending that effect. We in too deep.
Blasphemous as this may seem, there is no Chinese bubble or any other "bubble", except the USD. It's just that the slow motion bursting of the USD bubble - the biggest bubble ever in the history of the world - is looking like a bubble in everything else.
Hm... I am going to call BS on that one..
The Chinese bubble is caused by a flood of forced loose private lending due to a massive government program. Most of the money has gone directly into their equities side which is fueling more lending. Meaning, the Chinese are in a classic musical chairs economic situation. As long as the Chinese government keeps turning up the volume of the music, they are fine, but once the Chinese government starts to level off the music (aka liquidity), you are going to see an exodus of capital like no one has ever seen before... And the Chinese government will massive hit because of it...
W-w-w-w-w-e b-b-believe in a s-s-s-strong d-d-d-dollar p-p-p-policy.
If there is one trade you just CANNOT LOSE out on, it's betting on the depreciation of paper money. It's just the nature of the beast. BTW, for all the crticism Peter has faced, if it were not for him many (including myself) would still be living in the MSM created wonderland.
Sure, if you invest in liquor and cigarettes. Not so sure about gold and silver, though: look at their dismal record from 1980 to 2001 while the CPI about tripled.
Next 20 years should be just a little different though. My thesis is a resumption of the fast deflationary sell-off by 2010 with a shocking fall in gold and all other commodities, followed by currency collapses around the world in the next decade.
"look at their dismal record from 1980 to 2001"
Which only means that the rally now ensuing will be even more spectacular.
"My thesis is a resumption of the fast deflationary sell-off by 2010 with a shocking fall in gold and all other commodities"
May your "thesis" rest in peace.
Please give us the thesis itself, to digest. A guest column would do.
You do not understand gold. Your foo is only the first three letters of foolish. Gold is a currency. Gold is what God issues. US Dollars are what Tim Geithner (i.e. not God) issues. Between God and Tim Geithner, whose currency do you trust more?
I am Chumbawamba. Hail Satan.
you are also most likely unemployed, and taking turns on the interweb between yahoo finance, ZH and free porn.
OMG. Have I been Back Orificed by you? You totally nailed me!
I am Chumbawamba. And you are not.
The depreciation of paper money is the closest thing you have to a universal truth in economics.
check out who peter schiff's father was....:)
what the fuck does the fact that Irwin Schiff is his father got to do with what Peter Schiff ha to say ... It is fairly retarded of you to draw an argument like that, an argument which has no value or merritt in this discussion ... Do not try to discredit someone just because his father ended up in jail for pointing out the blatant illegality of income tax ... and BTW, what the fuck does the fact that Irwin Schiff is his father, got to do with Peter Schiffs investment strategy or macro-economic view ...
man, Kneale can't get any more viewers so he feels the need to troll here. lame.
Bernanke and Gaynier are equivalent to John Law of France
From http://edupreneursvkleptobankers.wordpress.com/
"Canonical research findings suggest that American entrepreneurs who establish popular online markets for customized education will catalyze the creation of many good jobs in America, and will end the reign of America’s kleptobankers. Some of the researchers: Clayton Christensen, Paul Romer and Paul Krugman."
Yes... "Canonical Research" as in the shameless press release company right???
The dollar is not going to collapse until stimulus and bailouts are much greater than the amount of credit being destroyed. There's a ways to go yet.
dollar collpase is all relative. The controlled detonation being attempted by the Fed is at the pleasure of its owners. They not the Fed will determine when the charade ends.
No , you cant save a bad investment by creating money. It will make it worse.
agreed. they still need it around. so they will keep it around for a while longer.
I think there is much more sinister motive in the dollar slide. The motive is, our regulators are losing control over deflation. And as long as we have the deflation unemployment and consumer spending will be stagnant at the best.
Wait a minute, ppl. I post all sorts of negative stuff here, but I also think one can go overboard. Timmy, Ben and all of them are trying to make it all better. They are trying to get growth. They know they won't get back to where it was, but how would it advance their goal to say that? We are offended at their choice to be deceptively optimistic, but if your goal is to achieve growth and more important, keep rioters out of the street, you do not pursue a path of "let them fail" and have actual deaths occur in the streets. Instead, you do what is always done. You flood with liquidity. It will fail. But it will fail slower. That's their thinking. Hang on. Hang on. Maybe a miracle will occur.
Schiff is early. China will continue to go up and the dollar will weaken creating intense short interest. The government won't have to worry about propping it up, someone can buy into that weakness and corner the market. As the dollar recovers some strength it will cause China to burst. The foreign capital exodus from China's economic apocalypse will pour into reserve currencies, namely the dollar. Deflation and a drop in equity markets will occur this fall. Oil will touch $40, maybe the winter lows. The S&P is due to retest the March lows.
When that happens, the inflation trade is on full bore resulting in rising interest rates in 2nd half of '10, right when we are supposedly recovering in terms of unemployment.
schiff is a hack...as much as I enjoy reading this site, Austrian economics is terrible, and Schiff has made terrible macro-predictions. Listening to him now is pretty much confirmation bias at work.
Yeah, screw those Austrian economists, who are always right on just about everything!
I am Chumbawamba, and your comment didn't really merit a response, so consider this a gift.
I'm not sure how Schiff's poor investment timing warrants the knock on Austrian economics. How exactly is Austrian economic theory so much worse than the alternatives?
imho, schiff's buy and hold strategy has sucked up until now perhaps. one day, it will work, but who knows when that will be. who knows when the day will come when the things schiff talks about, will become reality? with all the FED intervention and manipulation, who knows how long they can continue this dog and poney show. to survive, you must be quck on your feet and nimble and watch your ass. or buy gold and silver bullion and sit back and enjoy the show......its all good.....
Schiffs been buying gold for years.
i can personally tell you that Schiffs fund us up 120% YTD ... and that is A FACT ... he might be bearish, but he is bearish on US equities and overall macro-economical picture ... so he put our money somewhere else ... those are THE FACTS, the rest all you anti-Schiff hacks are saying is pure garbage and speculation ..
YTD maybe. You say 120 pecent. I will take your word for it. But what about last year, when mish called him out about his sorry prognostications? what about last year? don't get me wrong. most people on here like peter, no doubt about it, but he can be wrong as we all can. Frankly his dollar call, cost a lot of people a lot of money, i am sure. Now over time, sure what he says may come to pass. but who knows. who really knows for sure. the last couple of years have taught me that just because i want something to happen, doesn't mean it will happen, even if it supposed to happen. frankly the moneychangers can make anything happen that they want to happen. in such climates, theories and charts mean nothing , and also short currency calls can cause you to lose your shirt. just a thought. never underestimate the cleverness of jewish bankers.......
i wasn't with EPC last year, i channeled my money to EPC in February, and plan to pull the money out in about a week or so; it just got to crazy and irrational, and i don't like that .. oh and responding to your last sentence ... i know i couple of WASP rich dudes who are, let say, pissed like hell about that ...
Are you serious right now? The only people that lost money that were with Schiff were the ones who cashed out. Which was against what Schiff was even saying. Those who stuck out, and are still sticking out his "LONG-TERM STRATEGY" are doing very very well. Maybe, for some reason in your mind you believe "long-term" means 3-6 months. Long-term as I've understood it will be in the YEARS. Thus Peter's LONG-TERM strategy is doing just fine. The only thing he was off on was the flood of cash to treasuries. As you can see, he is more right by the day, as we are at a new low for the year on the USD.
I thought Schiff only ran SMAs and not "fund" per se. Scondly, my fund is up over 80% investing in stocks like HBI, BARE, ANN, CBS, SHFL shorting some for profit stocks, what's your point. Can invest in anything and make a killing and I doubt Schiff is up 120% in a "fund" as Euro Pac is just a B/D and not a fund mgr
you have, apparently been living under a rock in the Gobi desert for the last 3 yrs. How does it feel to witness the fall of voodoo-dogmatic keynesian economy.
I am Cheeky Bastard and you deserve a bitch slap
You've confused your hacks. Lord Keynes was a hack. His piece of sh*t immoral economic theory has hacked away at the economic foundation of this country for decades. Arthur Burns was a hack, Clinton-Summers-Greenspan were hacks, Bush-Paulson were hacks, Bernanke-Summers-Geithner and Barry-O are hacks: all Keynsian by the way.
Rock on Chumley. Long time since we had a dose of Mises in gov't, we're due one of these decades...
As bad as Keynes was, even he supported a commodity-backed currency (look up the Bancor).
Decoupling is a joke. What you have is a debt fueled emerging market bubble that's going to end in a train wreck. Especially China. Their growth, to the extent there's actually been any in the past year, has been modeled after ours the past decade: Lend money to people who won't be able to pay you back and let them buy a bunch of sh*t and create some asset bubbles.
This is one of the most intelligent comments i've read in a while.
The problem with the devalue our way out argument is that it doesn't work without structural fiscal reform. If I was living $50k above my means for ten years and filed for bankruptcy, I have then live within my means because nobody's gonna lend me that $50k for quite some time. The US has a greater chance of perfecting nuclear fusion than it does of running surpluses in DC.
The US will never run a surplus or balance its budget for that matter as long as the Fed and its member institutions rely upon fractional banking. The corner stone of which is a federal government that will not operate without debt. Treasuries are the fuel that runs the system.
without debt, there will be no phoney growth. the growth will be real, and slow but good because it will be based upon real money. this is what we want. this is what we need. this is the way this country was supposed to be. debt is a lie and allows a small number of people to control a large number of people. i highly doubt that ron paul will be successful in his efforts to audit the FED but wouldn't it be nice to just see for a moment, just how this ponzi scheme really works?
The always have the trump card of bringing back mark to market. Nothing like a controlled asset devaluation to strengthen a panic ridden currency.
Hence the reasoning why FASB is looking to do just that and expand it to hold for investment and maturity. That combined with the FDIC pressing banks to mark home equity loans and there is a part of that pie.
Our USD exports are super-saturating the market.
The on going collapse of USG tax revenues gives the lie to proffered economic statistics.
California's U6 is over 20%... and note what is left out:
illegal immigrants
independent contractors ( the software army )
sole proprietors ( many a tradesman )
Hence California unemployment is already in the high twenties.
Dollar revulsion coupled to politically mandated spending is the formula for hyperinflation and political upheaval.
>Dollar revulsion coupled to politically mandated spending is the formula for hyperinflation and political upheaval.<
Good Point!
There is solid macroeconomic history there to prove your point. Somehow, "we Americans" seem to think we are above it all, and we're not!
Deflation running ahead of a currency devaluation is a nuke with a really sensitive detonator.
is it possible to have deflation and hyperinflation at the same time?
No.
Yes.
I am Chumbawamba.
i believe we will see this happen soon , if we are not already seeing it. strange as it may sound. i believe both can happen at the same time. it will be the ultimate left hook, to go with the right jab.
Sometimes. Depends. Maybe.
I am Chmbawamba's cousin, twice removed.
yes.
When I was a kid, I used to have a jigsaw puzzle map of the U.S. If you picked up a state, such as Iowa, there was a picture underneath that showed what was produced in that state. Under Iowa there was a picture of an ear of corn. Under the Florida piece, there was a picture of an orange.
In an updated map for today's world, if you pick up New York, you would see a symbol for Accounting Fictions. Pick up Washington, D.C. and you would find a symbol for Asset Bubbles.
what did you see when you picked up new jersey? :)
bubble-wives.
you know, the ones with the big fake blond hair, and the big, fake inflatable breasts.
they've got to come from somewhere, right?
the theory that asset bubbles are created by government (and not irrationality or plain stupidity) is about as fictional as those accounting standards you mentioned.
Fannie Mae, anyone?
Back to Huffington Post, minion
fannie mae originated far less sub-prime loans than the private sector, and had a better default rate... In fact back in 2004 when the sub-prime lending really ramped up the GSE's were losing market share.
Not to say they didn't have a role, but you're overplaying it.
Are you a jackass or just stupid? You must be both, seeing that you have an uncanny ability to confuse fact with theory.
We exported our inflation-bubbles via selling our UST debt (financed by the Federal Reserve created by the gov't) to the rest of the world - that is in the history books and is a fact. This pyramid scheme will end just like any other in history - toast.
Henceforth: deflate-devalue-deflate-devalue....
i actually agree with this guy. Fed is just the enabler of stupid actors. No one holds a gun to your head and bid up asset values in a mania...
...well, present equity market ramping excluded
The government manufactured the gun, loaded it and sent it out with instructions that you can only use it if you point it at yourself or another free market participant when firing.
Let's not forget that Gramm-Leach-Bliley was and still is the mother of all assult weapons: standard government issue. Watch GS use it, as they mow us all down!
schiff has been talking about this decoupling for years and as far as i know, he has had his ass handed to him on many occasions. imho, when the west sneezes , the world catches a cold. when the us consumer quits consuming (and he has) then who else is going to step up? who? europe? the europeans and the russians etc have for the longest time practiced abortion etc, and have killed many possible new members of their population and in their place they have allowed in illegal immigrants from poor countries who have numerous babies but always remain poor and are nothing but a drag on their respective societies. wealth is being concentrated in fewer and fewer oligarch types in europe, russia and the united states. i mean come on now. who is going to do all this buying? who? when the chinese were allowed to attain most favored nation status with the united states, then the river of crappy chinese slave labor made goods started pooring into this country destroying our own manufacturing abilities, such as they were. this allowed the chinks to build up large trade deficits which they used to purchase us government treasuries and bonds. now after all this time, we have this situation with them. they need us and we need them. it is sick and it didn't have to happen. this is what happens when some who call themselves americans start thinking in international terms instead of american only terms.
blahblahblah opinion opinion opinion
Why do I even bother with the comments on here?
Barack Obama is the ONLY answer to our problems folks....
which problem?
Erectile dysfunction.
I am Chumbawamba.
how is obama going to help out with that problem?
reach around.
Two popsicle sticks and duct tape.
in other words now you have a great opportunity to short the stock market
agreed.
hahahahaha....you are joking....right?
...about Obama/only answer....
Based on recent action, it appears that Larry Summers prefers a hyperinflationary collapse of the dollar.
Long live the republic!
We are clearly inundated with too many fundamentals. There are only two fundamentals that are of any significance; the rest are just noise. One of significance is infinite liquidity; the other is a host of Central Banks that will do anything and allow anything that ramps the market. Trade those two and you will make money, especially if you also short that POS formerly known as the dollar. Pay any attention to the other fundamentals, such as most of what is posted here (all great and all interesting), and you lose.
Every central bank in the world is led by someone who doesn't want to be in charge when the next Depression happens. It is all about their egos. Bernanke just has the biggest ego, hence the rapid decline of the dollar.
Marc Faber may well be right. Dow 50,000, and a cafe latte at Starbucks $200.
Absent an overthrow of the Fed and Geithner, which is impossible in a nation of wimps and sheeple (of which I am a card carrying member), this will just continue until the inevitable collapse "which nobody could have seen coming".
It's like that.
anon 24259
rodger that, loud and clear...
cheers...
gonna get GoldSak to quote me some 1yr 500% upside calls now. $200 stbx, whatever happened to $5 milkshakes!?!
Schiff is right about the US, but just can't understand that the whole world is in the same boat. The whole world has borrowed too much money. The EU has more debt per GDP that we do. We are screwed but so are they.
Americans don't take the global picture into account, we focus on ourselves far too much. This downturn is synchronized. Nobody can help anybody else. Foreign treasury purchases are drying up because everybody's broke, not because they are abandoning the US dollar. Everybody's going down. QE is order of the day, and governments need as much cash as they can get. So they stop buying treasuries, and try to reflate their economies at home.
I don't see how pulling the US consumer out of the global economy "frees" the rest of the world from a "drag". My guess is they shut down their manufacturing, because nobody else wants all that stuff, and at this point, nobody else can afford it either (not that we could).
The basic problem is that economists have been under the illusion that the Fed and other central banks control their economies. They don't. Banks create money at will and really don't care about their reserves. When they are in real trouble they stop lending, removing the multiplier from Fed printing rendering it impotent. In fact when credit implodes it does so at a rate the Fed cannot begin to deal with.
When large asset and credit bubbles pop, almost everybody finds debt service to be a suddenly onerous burden. Everybody stops borrowing and starts paying their debt down or defaulting. Banks stop lending because their collateral is evaporating. The Fed's interest rates and money printing are irrelevant.
We have indeed, lost control of deflation. But we never had control of it in the first place. Credit is evaporating from a credit based economy because it has to. As Mish says, deflation is the solution not the problem. Unfortunately our political system has come to believe that an over-heated economy is a necessity, and they are doing everything in their power to resurrect it. It won't work, but it will make things worse.
No , someone has to be the lender. China may have structural problems needing to reorganize a post US market. But they're not broke.
Wealth is never destroyed, only transfered.
So ask yourself, "Where did the wealth go?"
I am Chumbawamba.
what is wealth?
Where?
War destroys wealth.
China has structural problems to deal with in their economy for sure, but they have the means to alter those strutural flaws. China's lending is not a means of inflating a "Chinese Asset Bubble". They are simply going to use their surpluses to accelerate the rate of standard of living for it's people. What the average american forgets, is that the rest of the world might not mind refridgerators either.
Calling China a bubble economy now is like calling the US economy from 1950-65 a bubble. We're talking about a populace that is ready to start consuming. Once a single parent chinese family working a Wal-mart in Beijing buys a 2500 sq ft house for 650000, I'll say that China is over-consuming on a credit bubble.
PS Don't conflate Equity Markets and Economies, they are not the same thing.
ok fine, so the chinese stimulate their economy by creating jobs out of thin air by pumping in funds taken from their us treasury account for infrastructure etc. so where does it end? what is the purpose of this? why is it, they are having to do this in the first place?
who will buy their junk in the future as they continue to pay their slaves to work and turn out their junky products? who will buy them? other chinese peasant slaves? i think not. most chinese have never benefitted from this state run capitalist system. when it suffers a meltdown and it will, they will just return to doing whatever it was before all of this started, just trying to survive and living frugally.
Again, the Chinese manufacturing class was kept to near slavery-level for the purpose of the export model economy. You are merely promulgating the stereo-type that americans are MIS-educated about the world they live in. You think China's economy is based on exported plastic cutlery and tube socks. Well, reality is that Chinese manufacturing is diverse and integrated. There are more working Chinese people than Americans and they are a nation of savers.
The Chinese gov't will un-peg the red-back from the green-back and use the US T's to soften the blow on it's populace during the transition. Don't forget that China has invested heavily is it's social network (health care, education) for just this event. The US T's held to maturity are worthless anyway, they will cut their losses.
Again I reiterate. Saying that their is nobody to buy chinese products is like saying that about american products in the 50's and 60's.
The American Empire already collapsed. Just because they aren't american and white doesn't mean they can't have their turn at the wheel.
Again I reiterate. Saying that their is nobody to buy chinese products is like saying that about american products in the 50's and 60's.<<<<<
i am certainly not a economist and i don't play one on tv but i have to say, aren't you comparing apples and organges here? dont' forget, that we had gold and silver backed money back then.
also this
http://www.ritholtz.com/blog/2009/08/andy-xie-china-has-become-a-giant-p...
ok, would you care to comment on this post on big picture blog?
Peter Schiff had been expecting a market crash since like 2002 and when it finally came his clients underperformed the market. Guy is just a big windbag with his whack job followers.
yeh and now he wants to use his new found name recognition and the appearance of weakness for the present day senate scumbag in residence, (dodd) to try and make a run for the senate so he can be one of the boys and if he wins, he will fall in line like the rest of them and be outspoken perhaps but does it really matter. yep, when schiff plays zero intelligence, it can be a rough gig...ha ha ha
Kneale scrapping the bottom of the barrel. Man, he must be really hurtin' for viewers..
I read Schiff's book Crash Proof in 2007
does anyone have anyone numbers on how his euro pacific fund did over the years? Online reports have him down ~50% in '08, but up ~20% previous years, he claims '09 is his best year ever.
I'm not bashing Schiff, just trying to figure out if his fund is only a doomsday strategy?
http://online.wsj.com/article/SB123327685671031439.html
Google Peter Schiff was wrong and it will take you to Mish's website where he has actual account statemetns, etc. If you lose 50%, even a 100% up year has you at just breakeven so Schiff is peddling his crap to the morons that can't do basic math.
Mish can lick a fat, juicy one...
Inflation vs. deflation? Inflation will win out. It has to because it's the only way out for the U.S. government. We're already seeing this in the continuing falling value of the dollar. So much for deflation.
Look into my EYES!! Look into my EYES!!
Whatever dude. You can't hypnotize me.
10 minute talk with absolutely no data...Check
U.S. economy weaker than the ROW with no data...riiiiight
Sure, Iceland and the UK are so much stronger than the U.S. Can't believe this has been posted as legitimate.
even a broken clock is right twice a day
Think of his motivations before you act. In the face of a serious panic that may occur in the fall people will seek dollar assets. The European/Baltic subprime crisis will blow apart the Euro faster than anyone realizes. People will have to put their capital somewhere and for that time it will be USD assets until a better capital store is found.
Not saying the US is getting better. I am not saying it is getting only slightly worse. Rather the Euros are about to be blown apart as the US falls only less fast.
Go ahead, sell the Dollar Index as he (and maybe Tyler) buys.
Think about the flip side of every issue.
Not saying that Schiff is wrong either, but the next crisis will be elsewhere before the real US crisis hits. Don't sell the dollar index just yet. But have your finger on the trigger once it pops.