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Peter Schiff
Old 03-29-2009, 06:52 PM   #1
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Peter Schiff



Good video about the real story behind our financial crisis.

He talks in long term implication which I agree will happen - especially the US$ (at the end of the video)
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Old 03-29-2009, 08:06 PM   #2
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His prescription . . . reduce government spending and raise interest rates? Um, OK.
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Old 03-29-2009, 10:04 PM   #3
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Originally Posted by . . . Yrs to Go View Post
His prescription . . . reduce government spending and raise interest rates? Um, OK.
Well, a little more than that. I heard:
1) Have the government stop encouraging nonproductive use of capital (consumer consumption, betting on the financials) so that it will naturally go to where it produces more capital and true growth in wealth (investment in production).
2) Allow businesses to fail. (A take on Schumpeter's "Creative Destruction")
3) Stop the spending and stimulus. Excess government boosting of spending (esp through artificially low interest rates) is precisely how we got into this mess. The debt we are piling up to encourage yet more ill-advised consumption will make the real recovery much harder

There's a lot of sense here, and nobody in DC wants to hear it, and certainly no one has the backbone to implement it.
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Old 03-29-2009, 10:31 PM   #4
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Well, a little more than that. I heard:
1) Have the government stop encouraging nonproductive use of capital (consumer consumption, betting on the financials) so that it will naturally go to where it produces more capital and true growth in wealth (investment in production).
2) Allow businesses to fail. (A take on Schumpeter's "Creative Destruction")
3) Stop the spending and stimulus. Excess government boosting of spending (esp through artificially low interest rates) is precisely how we got into this mess. The debt we are piling up to encourage yet more ill-advised consumption will make the real recovery much harder

There's a lot of sense here, and nobody in DC wants to hear it, and certainly no one has the backbone to implement it.
And the populace would not want to swallow that medicine.

DD
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Old 03-29-2009, 10:45 PM   #5
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The summary is from here:
Best video interview ever done by Morning JOE - Traders-Talk.com
The points he makes:
1) Shrink government now.
2) Get them the heck out of interferring with our markets
3) Stop flooding economy with cheap dollars
4) Stop stimulating
5) RAISE INTEREST rates (which is what I have been saying for over 3 years here on this board) to increase savings
6) Get people to save more money, get out of debt, decrease spending - not encourage more of the same that got us here

7) and the last point he makes wil come true - if they keep spending, and keep easing and keep printing dollars, EVENTUALLY our currency will completely collapse, (just like Argentina, Iceland, Wiemar Germany) and then we will finally have no choice but to do the right thing. As painful as this may seem to do now, to do all of the things above that are the opposite of whats being done now, as many people are unemployed now, and as many people feel that this is bad out there now, it will all pale in comparison to how really absolutely disasteris this is all gonna get if we stay on this untenable course. What happens from here and the direction it takes, is hard to predict in terms of the gyrations we might go through, but suffice it to say that in the end, it will all end so badly, that our current predicament will look like we were in wonderland.
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Old 03-30-2009, 12:04 PM   #6
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Pretty discouraging for those of us who try to plan for the long term in a short term society. I totally agree with Mr. Schiff and don't understand why more aren't speaking out. I've suggested to DH that we position ourselves to be as independent as possible to prepare for the next shoe to drop. Beyond being debt-free, and dramactically simplifying our lifestyle are there any other suggestions out there?
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Old 03-30-2009, 12:39 PM   #7
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Has anyone read his book crash proof? Would you recommend it?
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Old 03-30-2009, 12:58 PM   #8
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Pretty discouraging for those of us who try to plan for the long term in a short term society. I totally agree with Mr. Schiff and don't understand why more aren't speaking out. I've suggested to DH that we position ourselves to be as independent as possible to prepare for the next shoe to drop. Beyond being debt-free, and dramactically simplifying our lifestyle are there any other suggestions out there?
That's what we're doing. We've spent the last few years configuring our lives to be able to live as minimalist as possible in the worst case.

I believe part of the problem is exactly as this piece mentioned -- we want there to be relatively painless solutions and I just don't see any. So because the people won't accept that pain (and demand that government "do something") and because elected and appointed officials are primarily interested in adding more chewing gum and duct tape to keep the house of cards mostly standing as long as they remain in office, we simply apply "pain killers" -- make things feel like they hurt less, but do nothing to cure the underlying condition which could be getting worse and worse.

That to me is the discouraging thing.

And lookie -- down 308 points as I conclude this missive...
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Old 03-30-2009, 01:04 PM   #9
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I've suggested to DH that we position ourselves to be as independent as possible to prepare for the next shoe to drop. Beyond being debt-free, and dramactically simplifying our lifestyle are there any other suggestions out there?
1) Write your elected representatives.
2) Join and contribute to organizations putting pressure on the political system to stop the madness.

Regarding steps 1 and 2: I think doing things to help prevent the disaster are much preferred over steps to minimize personal impact once it happens.

3) I'm not sure being out of debt is a good thing. In countries where there has been very high inflation (or even hyperinflation) it is much better to be a debtor than a lender. Paying off that loan in increasingly worthless greenbacks is what you want.

4) I'm not sure TIPS or I-Bonds offer much protection against really bad inflation. At that point there will be a crisis in confidence regarding US Government promises, and it's very likely TIPS would become less valuable on the secondary market. Given everything else that will be happening, the government will be sorely tempted (and probably encouraged by the public) to engage in some shenanigans regarding the computation of the inflation component of I-Bonds and TIPS. a tsunami of

5) The usual survivalist/"sky is falling" stuff. (Physical gold, food, ammo, some fuel, a barterable skill/goods, etc). I'm fairly sure it won't come to this.

I don't know if any foreign currencies would help much if the US dollar really hit the skids. Who is going to take your Swiss francs in exchange for groceries? I could be wrong, and maybe there are economies that will come out of this smelling like a rose--I'd think it would be best to own stock (unhedged) in companies doing business in these countries. And they'd have to have a business that didn't depend on exports to the US. But the countries would also have to have political systems that are rock solid and able to say "no" where the US politicians have been unable to do so. Ironically, Europe is being much more responsibe regarding govt stimuliii and government involvement in the private sector than is the US right now. Probably because they've been down this road and know where it leads.
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Old 03-30-2009, 03:18 PM   #10
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3) I'm not sure being out of debt is a good thing. In countries where there has been very high inflation (or even hyperinflation) it is much better to be a debtor than a lender. Paying off that loan in increasingly worthless greenbacks is what you want.
This is only true if the worker or company has the pricing power to keep up with inflation. Don't forget about variable interest rates, timing and taxes; all of which make it almost impossible to stay even with inflation.

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I don't know if any foreign currencies would help much if the US dollar really hit the skids. Who is going to take your Swiss francs in exchange for groceries?
Think about this a bit more.
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Old 03-30-2009, 04:31 PM   #11
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This is only true if the worker or company has the pricing power to keep up with inflation. Don't forget about variable interest rates, timing and taxes; all of which make it almost impossible to stay even with inflation.
I'm thinking about the simple case of a mortgage with a fixed rate. It wouldn't be bad to pay back a 30 year loan with money that is worth 15% less every year. Likewise for income real estate--if the loan was a fixed rate but you had market conditions which allowed you to raise rents with inflation, this might be okay.


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Think about this a bit more.
Hey, I'm (semi)-retired! I can barely concentrate long enough to remember where I put my car keys!
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Old 03-30-2009, 05:43 PM   #12
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There is danger too in taking highly pro-cyclical actions in the middle of a severe recession (like now). What may be good in the long run, is not necessarily wise in the short-term (you wouldn't advise someone to jog five miles for exercise the day after heart surgery). And this seems to apply to most of Mr. Schiff's recommendations. While I'll agree that recessions are needed to cleanse out excesses, too severe of a downturn risks destroying good businesses along with the bad. Especially now when the entire financial system is essentially insolvent. Letting it fail will take down a whole host of otherwise solvent enterprises and we'll all be poorer for it. I've yet to hear someone supporting this kind of "tough love" approach actually walk though the process to its logical conclusion. At the end is blind faith that "the market will work it out". Maybe. But maybe not. It took WWII to bring us out of the last depression, and then only after 15 years. Dare we hope for another World War?
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Old 03-30-2009, 07:46 PM   #13
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Peter Schiff was dead on correct on on many of his calls regarding the 2008 crash. The US had a big bubble, but there was no decoupling of the US market from the rest of the world markets. The dollar strengthened.
Unfortunately, his portfolio recommendations resulted in ~50% losses for his clients (gold, commodities, foreign stocks).
He maintains that he will be proven right on his investment recommendations.
BTW, interestingly his father is the well-known American tax protestor Irwin Schiff.
In his January 14, 2009 radio show, Schiff discussed moving out of cities in anticipation of rising crime rates, food shortages, fuel shortages, and rolling blackouts. He also mentioned the need for families to stock up on guns and ammunition as a part of what he expects.- Wiki
Interesting persona.
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Old 03-30-2009, 09:02 PM   #14
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Peter Schiff has been right about some things, but he has been very wrong as well. He did very poorly for those investing with him in 2008. He was short the dollar for one thing. Mike “Mish” Shedlock wrote a scathing piece on Mr. Schiff in his Jan 25, 09 edition. If you google “Peter Schiff, Mike Shedlock” you will see the article. I would be very interested in hearing from his supporters what they think after they read that.
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