peter schiff on the economy

All we’re doing now is postponing it, and making it worse,” economist Peter Schiff told Reason magazine’s television show. “So there is no recovery anywhere in sight.” Schiff expects “a substantial downshift in the American standard of living” over the next few years, and he’s in a position to know. Schiff, who is considering a campaign for U.S.

There may well be reasons not to get too excited about this week's numbers, but a Peter Schiff rant isn't one of them. He's quite entertaining, but he's also a nut. If you start from a perspective that positive data is to be dismissed on sight, and you want support for that prejudice, there must be more credible sources than Schiff.

I'm gonna be the Gov of Conn and I'm going to return manufacturing to Conn.

Yeah Right!

Maybe the manufacturing of blond hair but that's about it.

As to his comments on how we are f*cking the future...on the money.

Floyd Norris says, it's just getting worse more slowly...

http://norris.blogs.nytimes.com/

till, it is clear that things are getting worse slowly. Fewer people are losing their jobs. But long-term unemployment is higher than ever.

The number of unemployed people who have been unemployed for 14 weeks or less was 6.79 million in July, the lowest figure for that group since December. But the number unemployed for 15 weeks or more was 7.88 million, up 74 percent since December and the highest figure ever.

For the first time ever — or at least since the government started counting the figures in 1948 — more than a third of the unemployed have been out of work for at least 27 weeks. The average unemployed person had been jobless for less than 20 weeks at the end of last year. Now the figure is over 25 weeks.

Is it good news that fewer people are losing their jobs? Yes. Is it bad news that the number of long-term unemployed is rising? Yes.

Peter Schiff is starting to sound like a broken record. All he keeps saying is "The worst is yet to come" or some form of it. I actually know what he is about to say before I read him or see him on tv since his gloom and doom message has yet to change.

Peter Schiff is starting to sound like a broken record.
Have the facts changed to support a change? Structurally the economy has not changed. In the past year other than a few band aids and putting Wall Street on life support it's pretty much business as usual. I admire the consistency.

Peter Schiff is starting to sound like a broken record.

Of course here's a guy that changes his reccomendations more often...
http://upsidedowncharts.com/wp-content/uploads/2009/05/jimcramer.jpg

"Have the facts changed to support a change?"

I don't know. You tell me. Didn't Schiff completely miss the uptck in the value of the USD?

http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

The screen shot of the Schiff portfolio are truly shocking. Those are some losses.

Didn't Schiff completely miss the uptck in the value of the USD?

http://www.ft.com/cms/s/0/c0065c8a-8335-11de-a24e-00144feabdc0.html

The dollar dropped to its lowest level in 10 months this week as optimism that the global economy would emerge from the current slowdown sooner than previously thought weighed on the US currency.

that still doesn't excuse Schiff for the devestating losses his clients took.

the thing is, the extremes that were called for, either depression or hyperinflation, were just very wrong. done. time will tell what the negative consequences of this episode of debt deflation brings, both:

1) in the negatives that comes with debt deflation
2) in the unintended consequences that comes with actions taken to stem the debt deflationary spiral on our banking system

for now, clearly the markets have reacted to stimulus and a natural bounce after an overshoot on fears of systemic collapse.

There are several conclusions to what this might bring. None are good..
http://www.brillig.com/debt_clock/inflation.gif

people over-analyze the national debt. Do you really think were going to pay it off? Of course not! A debt that is never going to be paid off is not worth the paper it is written on.

you think the chinese are on to that yet, alpie? or the various other investors in government debt?

http://www.google.com/hostednews/ap/article/ALeqM5hcXwqSsXjL_b7Di4Dc0iYjeXjYkQD99HLE080
WASHINGTON — Timothy Geithner, architect of bank, auto and economic rescue plans, has another high-stakes job these days: traveling bond salesman.

The recession, financial crisis and two wars have pushed the federal deficit above $1 trillion, a record level that makes the Treasury secretary's role as chief marketer of U.S. debt tougher than any of his recent predecessors'.

Geithner, who traveled last week to the Middle East and Europe, has to convince foreign investors to keep buying Treasury bills, notes and bonds; they hold nearly half of the government's roughly $7 trillion in publicly traded debt.

http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aaVGe5smuZAU

july 28 (Bloomberg) -- Treasury Secretary Timothy Geithner pledged to rein in the U.S. deficit as China underscored concern about preserving the value of its $801.5 billion of Treasury holdings.

BUT THE CHINESE ARE CHANGING THEIR BUYING PATTERNS...
http://www.nytimes.com/2009/05/21/business/global/21reserves.html
hina has also changed which Treasuries it buys. It has done so in ways calculated to reduce its exposure to inflation or other problems in the United States. As recently as a year ago, China actively bought long-dated bonds, seeking the extra yield they could bring compared to Treasury securities with short maturities, of which China bought virtually none.

But in each month since November, China has been buying more Treasury bills, with a maturity of a year or less, than Treasuries with longer maturities. This gives China the option of cashing out its positions in a hurry, by not rolling over its investments into new Treasury bills as they come due should inflation in the United States start rising and make Treasury securities less attractive.

http://seekingalpha.com/article/153526-treasury-more-borrowing-less-short-term

As you can see, Treasury has relied heavily on very short-term maturities to finance the recent burst of borrowing. Most notably, the fraction of debt that matures within 12 months (the blue line) reversed its decline and rose to levels not seen since the mid-1980s.

Students of financial crises, past and present, will recall that over-reliance on short-term debt is a classic precursor of financial distress. Think, for example, of the major financial firms that had to roll over significant fractions of their financing every week … or even every day.

people over-analyze the national debt. Do you really think were going to pay it off

Irrelevant! The issue is not whether we will pay if off but the cost of carrying that debt.

yet another ticking bomb that we are all busy ignoring.

who in their right mind would go long on treasuries at current interest rates? answer appears to be less and less. at current levels, a modest increase in actual rates can easily be double the current rate---and that just drives the deficit ever higher with no way to control that piece.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aV5j5C_r6VdQ

July 6 (Bloomberg) -- The dollar and U.S. Treasuries are both likely to slide as soaring government debt in the world’s biggest economy undermines confidence in its assets, according to Jim Rogers, chairman of Rogers Holdings.

“The government is printing lots of money and borrowing even more; that’s not the basis for a sound currency,” he said in a telephone interview today from Singapore. “The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me.”

This week has been full of positive results -- in my mind companies beating low earnings estimates -- financial institutions making money because the market gave them incredible opportunity -- consumers willing to give them money at no interest.

I am wondering if climmbing out at 950 was too cautious -- but I think there is much bad news to come -- in real estate specifically, both commercial real estate and the bid ask of rent levels versus home ownership.

I like Peter Schiff's comments -- but do not buy EVERYTHING. Some of it makes great sense to me.

The_President

people over-analyze the national debt. Do you really think were going to pay it off? Of course not! A debt that is never going to be paid off is not worth the paper it is written on.

______________

Are you implicitly saying that the US is bankrupt? Or that we are in for an inflation ride like none before in this country?

http://online.wsj.com/article/SB123780272456212885.html

Chinese officials are frustrated at their financial dependence on the U.S., with Premier Wen Jiabao this month publicly expressing "worries" over China's significant holdings of U.S. government bonds. The size of those holdings means the value of the national rainy-day fund is mainly driven by factors China has little control over, such as fluctuations in the value of the dollar and changes in U.S. economic policies. While Chinese banks have weathered the global downturn and continue to lend, the collapse in demand for the nation's exports has shuttered factories and left millions jobless.

John Lipsky, the IMF's deputy managing director, said the Chinese proposal should be treated seriously. "It reflects officials' concerns about improving the stability of the financial system," he said. "It's interesting because of China's unique position, and because the governor put it in a measured and considered way."

Mr. Zhou isn't the first to make that argument. "The dollar reserve system is part of the problem," Joseph Stiglitz, the Columbia University economist, said in a speech in Shanghai last week, because it meant so much of the world's cash was funneled into the U.S. "We need a global reserve system," he said in the speech.

"global reserve system" - back to the gold standard! hee hee!

doh, I am giving away my age ... I mean: LOL!

The US IS bankrupt. It's only a matter of time before that fact is "revealed." Problem is that no one can predict when that revelation will take place. In my more delusional moments I like to pretend we can kick the can down the line past the end of my lifetime. In my rational moments I doubt it.

are you under 75?

http://www.npr.org/templates/story/story.php?storyId=99927343

There are some negative effects of government debt, to be sure. Government bonds compete with corporate bonds for investors' money, which pushes up interest rates for everyone. And if the government is absorbing a larger proportion of the capital available, there is less for the private sector.

But debt is not necessarily all bad; as with households and companies, it depends on what you are doing with the money you borrow. For example, it can make sense for you to borrow money to pay for college or professional school, because higher education increases your lifetime earning potential. For many people, the increase in expected earnings more than compensates for the cost of the debt.

The same logic explains why companies take on debt. If you want to build a new factory for your faster-than-light hovercraft, you don't want to have to wait 20 years until you've accumulated enough profits from your sub-light hovercraft to pay for it; you want to borrow the money now, build the factory, and use the gigantic profits from the faster-than-light hovercraft to pay back the debt.

Whenever you hear someone say, "The government should be run like a company: Your revenues have to exceed the amount you spend," you should stop listening, because that's not how companies are run. On the other hand, government makes no distinction between expenditures that are productive investments bound to grow the tax base — roads, bridges, schools, school loans, basic research, etc. — and expenditures like entitlement programs.

how about borrowing for beer money? that's what we're doing now.

not to mention...if you want to borrow for beer money....i want a lot of interest....a lot.

http://www.markfiore.com/buy_america_0

Columbia, I assume that was directed at me.

Yes, way under 75, less than half that.

sorry...not sure we'lll be able to kick the can ( as you so appropriately put it) long enough for you. (or me)

Me neither. But there's not a whole hell of a lot I can do about it.

"Me neither. But there's not a whole hell of a lot I can do about it."

agree, playing defense might be the only good option for us (young ones).

as riversider points out, it's debt servicing that will shortly grab us by the shorts. we have decreasing revenues and increasing debt servicing. only one way for taxes to go, and while i'm not against taxes returning to the levels of the Clinton years, doing so when the economy is this anemic is troublesome at best.

admin, playing defense might be the only good option for anyone who is under 60 and doesn't have a closet full of krugerands. the boomers aren't doing so hot, particularly the latter portion, and many people in their 40s, 50s and 60s now find themselves unemployed or underemployed with shrinking or no savings, and greatly reduced assets.

At least the young now has some time to plan. And if housing prices continue to decline they won't get caught in the trap that ruined, at least temporarily, so many people's lives these last 5-6 years. It hasn't been easy for many, many people, of all ages.

A.R.
Three scenarios
1) U.S. get's religion and cuts spending
2) U.S. raises taxes
3) Treasury prints more dollars

Personally I rate the odds of #1 happening at less than 1% and #2 happening at about 25%. In my view the scenario that will generate the least public outcry at least in the short run is printing more dollars. Of course We could get a combination of the above with an allocation probably in line with the probabilities I just listed.. What do you think?

I think three is, to a greater or lesser extent, inevitable. Two will begin next year for those who are "wealthy," i.e., somewhere in the middle-class to upper-middle-class range in the prime metro areas and above, and wealthy elsewhere. I don't think Federal taxes will increase more broadly until after the mid-term elections, and then whether they do and the extent depends on the result of those elections.

But taxes are being raised everywhere on the state and local level. I was at an outlet mall in the Berkshires yesterday, there was a sign at Subway saying that as of 08/01 taxes were raised from 5% to 6.25%. That's not a small hike. Because of the states' budget structures they pretty much have no choice but to raise use taxes, even if they hugely reduce spending (which most states are, not NY of course).

The amount of printing and/or attempts at increased debt issuance depends on the amounts raised by increasing taxes, to the extent that occurs. The US is in a bind, we can't really cut spending right now without sending the economy into a tailspin, so printing in the short term may be the only "palatable" option. The real question is whether the powers that be can wake up at the right moment and say, gee, this might be a good time to reduce spending in non-productive areas, and to the extent that we are spending, make sure that we are encouraging long-term growth. We also really do need to do something about health care costs. Sadly, i'm not sanguine.

I'm down right pessimistic regarding the odds that Fed & Treasury will pull the breaks in time. Congress will surely apply pressure to keep the foot on the gas peddle. Look what they did with regards to TARP

http://thehill.com/leading-the-news/members-sought-tarp-cash-for-banks-back-home-2009-04-02.html

Several prominent lawmakers have pressed one of the nation’s top bank regulators to rescue financial institutions in their home states with money Congress allocated for government bailouts.

In letters, e-mails and faxes to the Federal Deposit Insurance Corporation (FDIC), senior senators, including Senate Majority Leader Harry Reid (D-Nev.), wrote to agency Chairwoman Sheila Bair and others at the FDIC about applications by constituent banks for bailout funds under the Troubled Asset Relief Program (TARP).

AND THE AUTO DEALERS...
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/14/AR2009071403187.html

Now that the Obama administration has spent billions of dollars on the bailouts of General Motors and Chrysler, Congress is considering making its first major management decision at the automakers.

Under legislation that has rapidly gained support, GM and Chrysler would have to reinstate more than 2,000 dealerships that the companies had slated for closure.

The automakers say the ranks of their dealers must be thinned in order to match the fallen demand for cars. But some of the rejected dealers and their Capitol Hill supporters argue that the process of selecting dealerships for closure was arbitrary and went too far.

and i should have clarified. i think tax hikes are inevitable after the next general election, if they don't occur in any substantial manner prior to that, regardless of which party wins.

the banks are a time bomb, all of them but currently the regional banks are closer to the edge, a total cluster. the auto industry is just a bomb. hopefully they will mothball plants or retool them rather than demolishing them, as has been done for so many plants, so that if in the future we finally get our f'ng act together and start designing and producing goods for the 21st century they can be utilized.

http://www.youtube.com/watch?v=gJxkFVoYp5o

What a crappy interview. MSNBC should be ashamed!!

Who is Ed?

http://www.poligazette.com/2009/08/09/lawrence-o%E2%80%99donnell-interviews-peter-schiff/comment-page-1/

The third and final reason is that MSNBC’s O’Donnell behaved like President Barack Obama’s attack dog. He didn’t let Schiff finish one single sentence, he kept harassing him and constantly put words into his mouth. Schiff became increasingly frustrated, but there was little he could do. The bully O’Donnell, pretending to be a journalist, refused to give Schiff the time he needed to explain what he would if he were a senator.

Schiff should have walked out on O’Donnell but, being the gentleman he is, he did not give up. He tried to answer O’Donnell’s questions and deal with his ludicrous and mostly rhetorical questions.

And O’Donnell? He looked like a high school bully all too happy with himself.

A pathetic ‘interview’ which had nothing whatsoever to do with journalism.