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Barack Obama’s policies will unleash a greater economic crisis than the world is now facing, believes US financial forecaster, Peter Schiff.
Added: 07 January 2009
– Beware the next bubble – bonds
– Peter Schiff: US Dollar is on the verge of collapse; This is hyperinflation; This is Zimbabwe (12/17/2008)
– Peter Schiff: Our economy is broken and there is nothing the government can do…
– Interview: Peter Schiff still grim on future
– Peter Schiff Was Right 2006 – 2007 (2nd Edition)
– Peter Schiff: The Economic Crisis Is Only Just Beginning (Nov. 24, 2008)
– Peter Schiff: The Truth About Bailouts
– CNN’s Glenn Beck and Peter Schiff: Inflation Nation and Martial Law
“Even if somebody wants to say we’re going to have low inflation for the next year or two, can anybody really say that [with] this most inflationary monetary policy in the history of this country, that people are going to be able to buy a bond for 30 years and clip a 3-per-cent coupon [and come out ahead]?” Mr. Schiff asks. “Does anybody believe that?”
“I think what we should know by now is that we can’t put any faith in what happens in the short run. Internet stocks went way up. Does that validate anything? No. They collapsed to zero,” says Mr. Schiff. When it comes to U.S. Treasuries, “nobody is intending to hold to maturity. Everybody thinks they’re going to get out the door in time.” That’s the greater fool theory at work, and it’s the very definition of a bubble. Beware, all those who would seek shelter in supposedly ultra-safe bonds.
In the beginning, there was a Nasdaq bubble. When the air went rushing out of it, a housing bubble formed, a symptom of a much larger bubble in credit, which in turn helped inflate (arguably) new bubbles in the emerging markets, in oil, and in other commodities.
Pop, pop, pop, pop. Can there possibly be any bubbles left after Meltdown 2008? Only one, maybe: Government debt. In 2009, it could be swept away, too.
“The bond market’s going to collapse,” warns Peter Schiff, president of Euro Pacific Capital, a brokerage firm based in Connecticut. He’s one of a small number of financial pros who called the plunge in U.S. real estate prices before it happened; now he’s forecasting the same for U.S. Treasuries. “It’s the biggest bubble yet to burst. It is a complete fantasy.”
That’s the sort of cheery New Year’s forecast you might expect from a man nicknamed Dr. Doom. But Mr. Schiff has important company in the bearish camp. Pimco, the Newport Beach, Calif., giant that manages some $800-billion (U.S.) in bonds, has also grown negative on U.S. government debt, especially long-term debt. With 30-year Treasuries yielding barely 3 per cent, the rewards hardly seem worth the risk, Pimco’s managers are saying – unless you believe U.S. inflation will be close to nil over the next three decades. Not too likely.
Peter Schiff: “I am a 100% convinced that anybody who has their wealth in US Dollars will be just as broke as the people who had their money with Madoff.”
(All 6 parts are a must-see.)
Part 1 of 6
As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits, one searches in vain for debate worthy of the moment. Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug.
With faith in the free markets now taking a back seat to fear and expediency, nearly the entire political spectrum agrees that the federal government must spend whatever amount is necessary to stabilize the housing market, bail out financial firms, liquefy the credit markets, create jobs and make the recession as shallow and brief as possible. The few who maintain free-market views have been largely marginalized.
Taking the theories of economist John Maynard Keynes as gospel, our most highly respected contemporary economists imagine a complex world in which economics at the personal, corporate and municipal levels are governed by laws far different from those in effect at the national level.
“Tens of millions of people unemployed, inflation spiraling out of control, the government instituting price controls that result in shortages and blackouts and long lines for things. I think things are going to get very bad.”
“From an investment point of view, investors need to stay clear, because they need to realize that it’s not just U.S. stocks and real estate that are going to lose value, but U.S. bonds. This is the last bubble yet to burst. I think we’re going to see a collapse of the bond market sometime during Obama’s first term, and interest rates are going to spiral out of control, and the dollar is going to just be destroyed.”
People aren’t laughing any more at the way-out-there predictions of Peter Schiff, whose long-standing pessimism about the economy and stock market has been largely borne out.
Schiff heads Euro Pacific Capital, a brokerage in Darien, Conn. with more than $1 billion in assets under management. He has silenced critics because he predicted the collapse of the housing market, the subprime crisis and the soaring of oil prices in his market commentaries before they came to pass.
A YouTube video called “Peter Schiff Was Right” shows him being repeatedly mocked when he went on TV stock shows to make those ultimately correct calls in 2006 and 2007, including forecasting a recession 2 1/2 years ago.
Now, in the midst of what’s already the biggest financial crisis in decades, the prominent purveyor of gloom and doom still sees far tougher times ahead – including a depression and a bear market he thinks will last another five years or more.
Peter Schiff will also be right on Inflation and Gold.
The dollar is not strong because it is ‘the reserve currency’, it is strong because of all the liquidation going on and people are just sitting on cash waiting for better times to come.
What we see now is not deflation, it is the force of liquidation. M3 is over 18%! We will see inflation, even hyperinflation in the US.
Peter Schiff and Ron Paul will be so damn right about the economy.
Today UN economists warn that dollar is in for a hard landing next year:
“The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.”
2. November 2008
As the Federal bailout bonanza prepares to spread beyond the mortgage and financial sectors to fill Detroit’s depleted coffers, few economic or policy analysts have spared a thought for the destitution of the U.S. government itself.
Put simply, our government doesn’t have enough spare cash to bail out a lemonade stand let alone a bloated and failing industry that is losing tens of billions of dollars per month.
Washington can only offer funds that it has borrowed from abroad or printed. Unfortunately, the nation is in the grips of a delusion that money derived from these sources has the power to heal. But history has clearly shown that borrowed or printed money only has the power to destroy.
The argument that energizes the pro-Detroit camp is that the government should extend the same courtesy to the rank and file auto workers that it lavished upon the fat cats of Wall Street.
While two wrongs certainly do not make a right, the fact remains that the Wall Street firms are still floundering despite the bailouts. What’s worse, the money spent was either printed or borrowed from abroad. Both options are destructive to America.
When it comes to bailouts, the real discussions are not centered in Washington but rather in Beijing, Tokyo, and Riyadh. With no money of our own, our ability to bailout our own citizens is completely dependent on the world’s willingness to foot the bill.
This is important. Watch it. Peter Schiff has been right, is right and will be right in the future.
Forget about deflation that is nonsense, that is like Bush or Paulson telling us that ‘the economy is sound’.