Posted on 12/06/2008 10:34:37 AM PST by rabscuttle385
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.
(Excerpt) Read more at forbes.com ...
Well, this is the $64 Trillion question. We are either going to see a deflationary depression or we are going to see double-digit inflation. The only difference between those scenarios is whether the government’s massive upcoming printing campaign (which has NOT been started yet, despite some people thinking it has) will be swamped and overwhelmed by continuing deflation.
If the deflation is unstoppable, then Schiff is wrong. If the deflation is stoppable, which Bernanke believes it is if you drop enough money from enough helicopters, then the bounce back will be heavily inflationary, and Schiff is right, although I still think he is too extreme in his prediction.
I am finding absolutely NO consensus still on this $64 Trillion question — does deflation or inflation ultimately win. Again, guys like Peter Schiff and Eric Jantzsen are convinced we inflate, while guys like Mike Shedlock and Nouriel Roubini are convinced we deflate.
NO CONSENSUS. NONE.
Welcome to the black voodoo art of economics.
I predict deflation to near ruin, followed by a whipsaw into hyperinflation.
*And* continued instability in the Middle East.
(Timeframe: who knows?)
Kyrie Eleison!
“His take on tens of millions being out of work while crude prices rise and inflation rises rapidly is something that doesn’t make economic sense.”
I don’t see oil prices going anywhere but down for quite some time. Oil producers trying to maintain their cash flow will force the price down as they pump more and more. They can set all the quotas they want. Some will cheat and the price will keep on dropping in the face of huge drops in demand. The ridiculous high oil price was caused by manipulation not demand.
I’m waiting for reports of companies laying up tankers just like container ship owners have done.
You're right, of course. I just thought for a moment that these liberals were thinking ahead for their own sakes and Americans would actually get a break. However, what will happen is what always happens with the Dems: they will point the finger of blame at conservatives amidst the crisis and hope to get away with it.
Recession happen every ten years. Sell after 6 or 7 years of boom. Yawn.
You commit some kind of grievous sin by explaining to the general public EXACTLY what you see coming down the road ... if it is the slightest bit depressing, or if it makes the politicians look bad.
The last they want to gently tell the voters that there is a 65-75% chance of a depression next summer and that you should start stocking up on groceries just in case you lose your job. I can understand this because it will tend to make people keep a tighter grip on their extra cash, which will slow down the economy.
It seems as though they would rather see you lose your home and be on stuck welfare than prepare ahead of time for an economic crisis. So they encourage all of the newspapers and television media people to lie about what is already on the track for us. Disgusting bunch of schmucks!
My understanding of that is that the unions could kill any deal by unofficially suggesting to the employees to slow down. So they have to be included into the plan ahead of time and then they have to get it across to their members just how bad things really are. Explaining to somebody that they have lost 50% of their retirement benefits isn’t an easy thing to do, especially when you have never mentioned such a possibility in the 30 years they were paying dues to you.
There was a table I looked at last week on the great depression.
Every country that devalued their currency turned around in a couple of years .
What was notable the US was the last to do so which is one reason why the US depression lasted longer than other countries.
The theory I favor is that when we are through with the unwind they will re inflate Ala Greenspan model after the dot.com crash.
They have to get all these underwater assets/debt solvent and the best way in their minds is to inflate the problem away.
The dollar gets devalued 75% - oil goes to $200 - Debt holders pay off the debt - day to day expenses ensures we are all peasants ready to go into hock again to enjoy some standard of living. Savings are wiped out for the next 20 years
I suppose that we could all live 4 to 6 in a trailer sharing expenses with our combined SS when we retire in ten years and with our “free” means tested (rationed) health care.
I am holding 25% Gold and the rest foreign Cash in my portfolio ready to jump into commodities.
The GD spring rally cleaned many people out of their remaining cash so I am cautious here.
If the economy takes off I may be out 20% or I may even make a little money taking this position. If it crashes I may with any luck at all come out relatively unhurt. Defensive is the only way to go at this point I am into wealth preservation.
Oil always goes down and then it goes back up. Iran or the terrorists get a little feisty, the speculators jump on $100 dollars no problem. Devalue the dollar 50-75% and you are at $200.
Schiff’s other strategy is overseas stocks with high dividend yields. The Flaw there I think is why ride that pony down? and many companies in that environment will/are suspending dividends.
I saw a list of performance on 25 investment guru’s in my web surfing and all were down with an avg. of -20% for the year gold was only down 8%. Where to go when all asset classes are declining and are polluted with toxic debt in every nook and cranny of the markets? The dollar is the last bubble.
I am defensive and saying prayers for my family, prayers for those retired on fixed income, prayers for those 40 years and older who may not see the market (recover to current levels) come back till they are in their 60”s
I have heard Shedlock and Schiff speak. I've seen Schiff speak too
Maybe it's tied in with their personalities
Roubini looks dour and depressive on TV. So he says it will be deflation. He's an Iranian Jew by the way
Schiff is hyper, bug eyed and fast talking. Also has electric hair. So he says hyper inflation. His father was Irwin who took on the IRS. He said don't pay your taxes
Eric Jantzen was in the swimwear business??? Hhahah
Mish Shedlock is chubby and laid back. Also does gardening (MichaelShedlock.com) so he says deflation
http://www.michaelshedlock.com/BestImages/index.html
My favorite is Mish on Coast to Coast. I always try to listen to him there live or in podcast
“””It seems as though they would rather see you lose your home and be on stuck welfare than prepare ahead of time for an economic crisis. So they encourage all of the newspapers and television media people to lie about what is already on the track for us. Disgusting bunch of schmucks!”””
There is a crazy man flying the plane and I want to get off!
They(government and the financial Harvard elites) got us into this mess, are making it worse, do not have a clue how to fix it and are going to lie to us with their last dying breath as they descend into the final circle of hell.
Republicans and democrats failed us and mid terms will it be time to clean house. I am totally disgusted.
Gold is defensive for a deflation and offensive in hyper inflation. It will do much better in hyper inflation. But in deflation defends you against massive widespread defaults on bonds, money market funds and bank runs. PHYSICAL GOLD as in COINS
I am defensive and saying prayers for my family, prayers for those retired on fixed income, prayers for those 40 years and older who may not see the market (recover to current levels) come back till they are in their 60”s
Glenn Beck read letter from a guy who had totally screewed up financially. But then he looked at his family and realized he was actually a millionaire
http://www.glennbeck.com/content/articles/article/198/18898/
I've been so encouraged -- let me read the letter to you. I have been so encouraged by the letters I'm getting. I'm getting thousands of them. "Glenn, my name is"... blank. "I put that authenticate myself. I don't want to just be Joe the plumber. Last week I tried to hang myself in my closet. The shelf broke and here I am. I'm ashamed of myself, but it feels good to tell you and to thank you for my life. After it broke, I just laid there in my closet. I got up. I went out to my truck and I just drove. You were on the radio telling us about your past and the sweater. I have two daughters. I'm happily married. Just the same old story. I lost everything. You made me realize I actually had it all. Thanks." Now, this is a guy that gets it.
Republicans and democrats failed us and mid terms will it be time to clean house. I am totally disgusted.
The liberal Democrats who run Wall St firms got us into this mess. Many are Harvard and Ivy League. Rush Limbaugh knows uber-wealthy people who told him liberals run Wall ST.
They created 90% of this mess with derivatives and credit default swaps
We have an eight trillion dollar bailout going on to clean up the derivatives mess. Wall St made billions cooking up these derivatives
Silly to go long oil / nat gas when demand is dropping a TON world wide with more pain to come. If you are worried about the $ dropping its a lot safer to pile into silver and gold than to get into oil/nat gas. Plus, you can keep a lot in possession in case TSHTF—not possible with oil/nat gas.
“I think Schiff is making a heavy bet on oil. That’s why he’s humping $140.00 a barrel crude.
His take on tens of millions being out of work while crude prices rise and inflation rises rapidly is something that doesn’t make economic sense.” ~ em2vn
Read this:
http://www.freerepublic.com/focus/news/2144094/posts?page=11#11
A well-prepared, self-sufficient, informed electorate does not need these people and has no reason to give them additional money or power.
What fun would that be?
The biggest risk in lying to the American public about an expected deep recession, is that it can cause a panic. That is, when you state continuously that things aren’t bad, keep spending, subprime is contained, subprime won’t impact the greater economy, housing won’t go down very much... when you say all this, you create an expectation for Joe Sixpack and Suzi Soccermom.
Then they don’t believe you when things get much worse than this, and you are still saying “things are OK, or have bottomed, or will soon get better,”.
Then people panic, because they realize they have been lied to, they have nobody to turn to or an accurate description of their financial condition and future, and they panic and pull way in. Then getting them to open up the wallet again is very difficult, because Joe & Suzi are going to want INCONTROVERTIBLE PROOF things are getting better.
Lies usually backfire. The lies they kept telling before and during this liquidity crisis will just add to the length and depth of pain before we get out of it. People will over-react because they are now completely suspicious after having been lied to for so many years.
Lies backfire.
I don’t know the power of the unions. I only know that a bankruptcy judge can renegotiate the formal UAW labor union contracts that are being used to hold a gun to the domestic automakers. At least if the new owners is shown a business model that on paper doesn’t GUARANTEE financial losses every year, he might be willing to buy and potiential buyers will be more confident buying cars with an assurance of a “compentent” buyer.
As it is, the automakers are screwed. The $15 billion they just got won’t go far at all. No way they can last out this deep recession with their existing capital reserves. No way. My point is, auto manufacturing still has a good potential for profit if you can just reduce the UAW legacy costs. I would think a person like Buffet or Gates would see the potential there if they were guaranteed that a bankruptcy judge would throw out the existing UAW contracts.
Maybe they all know that the Democratic senators and congressmen will never allow the breakup of the UAW and therefore, it’s pointless.
Maybe the only thing left it so let the Big 2 1/2 go belly up bankrupt and clean up the mess way down the road. I just thought it would be more efficient to do that now in an organized way than to wait until the Big 2 1/2 are in pain and their suppliers are in chaos.
Very Good Post!
>if they were guaranteed that a bankruptcy judge would throw out the existing UAW contracts.<
There’s the problem. No guarantees about anything in our legal system, not even preservation of the Constitution.
I don’t think we have reached a bottom in gas and oil but it is coming.
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