April 28, 2009

Videolog - Market Update



Topics on the April 27, 2009 Market Update:
- The ideal interest rates in the US is a negative 5% says a group of economists
- Ideal for who? Surely not for the lenders
- We need higher interest rates not lower!
- Federal Reserve will create inflation
- With Inflation nobody will lend, people are not stupid
- THe FED will destroy private sector lending and savings, that will not create economic growth, that will create hyperinflation

April 27, 2009

Video "The End of The Federal Reserve"

Peter Schiff Video Live in Manhattan, NY, at City Hall Park. April 25, 2009



Speech about "The End of the Federal Reserve"

Schiff says "abolishing the Fed".

April 26, 2009

Live on Fox Business



The Federal Reserve is not up to its original mission.

The Federal Reserve is the responsible for all the mess we are in. We need to abolish the FED.

They kept interest rates too low. They got us all drunk.

Bernanke and Paulson abused power in the Bank of America - Merrill Lynch Deal.

(April 24, 2009)

April 23, 2009

Live on CNN

Peter Schiff Live on CNN "Follow the Money" Show.

Schiff discusses the wasted dollars on Bailouts.

April 22, 2009

Financials Are Insolvent

Companies like Bank of America are basically insolvent. I don`t care what they earn this quarter or what they pretend to earn. The losses are enormous and are buried in their balance sheets.

The companies are insolvent, anyone who`s buying stocks in any of these financials should have their head examined. They are going to lose a lot of money.

(Originally on Peter Schiff`s Videolog)

April 21, 2009

Run, Don’t Walk, From the Dollar

"By pumping in trillions of dollars to prop up the current economy, the Obama administration is creating an even bigger problem that will cause hyperinflation and drive down the value of the dollar. As a nation, we go deeper into debt. What we need to do is get out of debt. We need to let the phony economy contract."

Mr. Schiff is a YouTube hero. In 2006, while analysts were blithely saying that the economy was strong, he warned about the real estate bubble and the overleveraged state of the economy.

Having called it right once, he now foresees a period of intensifying inflation as the Chinese and other creditors begin to lose confidence in the dollar and sell their dollar reserves.

“They’re not going to be the bankers for all this stuff. Four years from now we could end up owing them $3 trillion. So, for them its better to take a loss on $1 trillion than to take $3 trillion. You can hear the rumblings.”

April 20, 2009

Peter Schiff: Gold Report Interview (Part 2)

TGR: In your talks, you’ve said that printing money will cause massive inflation and the collapse of the U.S. dollar. Can you speak to that?

PS: People think you just create money and use it to spend. But when you create money you don’t create purchasing power. So, what happens is you have to pay more money; you create inflation. The way you get increased purchasing power is through increased production, and simply printing money doesn’t cause factories to appear. It doesn’t cause consumer goods to appear.

In order to have real increased consumption, we need to produce more, which means we need more savings and investment—and the government is discouraging that with its policy, not promoting it.

TGR: Will the government bailouts help increase production and ultimately purchasing power?

PS: No, no, the bailouts are destructive to the economy because the government is bailing out industries and companies that should be failing. They’re keeping nonproductive companies in business, which ultimately undermines the competitiveness and the productivity of our economy.

Bankruptcy is like when a body has an infection. It fights it off, and that’s what the free market is doing by trying to kill off noncompetitive companies. Bankruptcy is a positive force in an economy. Maybe it’s not positive for the entity going bankrupt, but it is positive for the economy as a whole because it’s purging from the body of the economy nonviable companies that are squandering our resources.
We need companies to fail so that more prosperous companies can succeed. By keeping certain businesses around, the government is preventing others from coming into existence that would have been more productive.

TGR: So, if the government would step back and let the free market systems work, how much sooner would they be able to make the turnaround, rather than having the government do it?

PS: We’re not going to turn around at all as a result of what the government is doing. We’d turn around a lot sooner if they would let free market systems work, but it wouldn’t be instantaneous. We’ve got to dismantle the phony economy before we can rebuild the viable economy. We’re going to have this transitionary pain. We have to get over all the damage that has already been done in response to the government and bad monetary fiscal policy. We had a bubble economy; we had an economy based on Americans spending money they didn’t have and buying products they couldn’t afford or that they didn’t make. We had an economy built on debt, consumer debt, and financial engineering, and our companies were generating profits from accounting rather than from production. And the whole thing was phony; the prosperity was phony. We need to address those problems, and get back on the road to economic viability.

TGR: Is this a U.S. phenomenon or is this worldwide?

PS: Well, it exists to lesser degrees in other countries, and certainly other countries are affected because they’re producing the goods that we’re consuming and they’re lending us the money to pay for it and, ultimately, we can’t pay them back. And so their economies are going to suffer as a result of all the wealth that has been squandered and all the resources that have been wasted on production for American consumers because we can’t afford to pay.

TGR: The government is printing money. What is going to be the impact of all that money coming into the economy?

PS: Well, it’s going to force up prices. Eventually real estate prices will start to rise, stock prices will start to rise; but Americans aren’t going to be richer because the cost of living is going to rise a lot faster. The price of food and the price of energy are going to rise much faster than the price of stocks or real estate.´

TGR: Do you see a pending collapse in the U.S. dollar?

PS: I do see a collapse in the dollar. The dollar is already been losing value, but I think it’s going to lose a lot more.

TGR: What should investors be looking at as a safe haven for the money that they have now?

PS: Well, they should be looking at the traditional safe havens like gold and silver; they should also be looking at other commodities and at investments outside the United States. There are a lot of opportunities around the world. There are a lot of stocks that are extremely inexpensive, in my opinion, particularly in the Asian markets and the natural resource space.

Peter Schiff: Gold Report Interview (Part 1)

Amid an “inflationary depression” in the U.S., Peter Schiff, president and chief global strategist of Euro Pacific Capital, sees opportunities in the maelstrom. Facing a massive redistribution of wealth, he advises investors to act quickly and “divest U.S. dollar assets into physical precious metals, other currencies and equities outside the United States.” In this exclusive interview with The Gold Report, the widely-quoted expert on money, economic theory and international investing discusses what led up to our current “phony economy” and how investors can actually profit from the crisis.

The Gold Report: Peter, you were one of few people to predict financial crisis that the U.S. and the world is now in the midst of. At a recent conference, you called the conditions that we’re facing “an inflationary depression.” Can you describe what you mean by that?

Peter Schiff: Well, basically, that is the condition that the government is creating here in the United States, and an inflationary depression is going to be a protracted period of economic decline accompanied by rapid increases in consumer prices. So, it’s going to be something like the stagflation of the 1970s, only much more stagnation, or outright contraction of the economy, with the cost of living increasing even more rapidly than it did then.

TGR: As we look at some of the things that Obama’s trying to put into place, is there anything the government could do now to avoid this?

PS: There’s nothing the government can do to avoid some serious short-term pain. The country is in a lot of trouble because of all of the monetary mismanagement of the past, the reckless government spending and the money creation that led to the phony economy.

We’ve spent a long time squandering wealth in this country. We’ve borrowed a lot of money and foolishly used it to consume. We’ve allowed our industrial base to disintegrate, and it’s going to be difficult to rebuild a viable economy. But we’re never going to rebuild one if the government stands in the way. What the government is doing now with their polices is trying to reflate the bubble; they’re trying to get Americans to borrow and spend even more money when we’re broke from the money that we shouldn’t have borrowed and spent in the first place. And the government is trying to get itself bigger. The government is trying to grow its size at a time when it needs to contract because we’re really too broke to afford a bloated government.
It was bad in the past—it was making us less competitive, but at least we could afford it; now we clearly can’t.

So, we need less government. We need sound monetary policy. We need higher interest rates. We need to allow businesses to fail. We need to allow companies to go out of business or bankrupt. We need to allow foreclosures to take place. We need to allow people to lose certain jobs. We can’t try and interfere with that. And to the extent that we do, we’re going to create this depression; and if we keep printing money, we’re going to have massive inflation on top of it.

April 19, 2009

Latest TV Interview

Watch Peter Schiff`s latest TV appearance in this video.

Schiff was on CNBC with Larry Kudlow in a segment called "Is America Turning the Corner?".



These were Schiff`s comments live on CNBC:

"Bernanke has never been right. Why should he start being right now?"

"Stocks are going up because people don`t want cash, they are figuring out that cash is going to be trash"

April 18, 2009

In 2006 Peter Schiff Warned a Collapse Was Coming

People laughed in 2006 when Peter said a collapse was coming. These were his words:


"Most of the profits that people have in real estate are going to vanish. Just like the profits from the dot-com bust back in 2000. It's a fantasy."

And now Peter Schiff warns,


"If history's any guide, you do get the civil unrest, you do get the riots and the looting."


Peter Schiff will be speaking in a few days at the CFA Institute Annual Conference 2009, Disney's Contemporary Resort, Orlando, Florida between April 26 and April 29, 2009.

April 15, 2009

Latest Videolog

Latest Videolog with a market update from Peter Schiff. (April 14, 2008)



Topics Discussed in the video:
- Economic Data and Retail Sales
- Bear Market Rally
- US Economy

April 14, 2009

It Will Be Difficult to Rebuild a Viable Economy

We've spent a long time squandering wealth in this country. We've borrowed a lot of money and foolishly used it to consume.

We've allowed our industrial base to disintegrate, and it's going to be difficult to rebuild a viable economy.

But we're never going to rebuild one if the government stands in the way. What the government is doing now with their polices is trying to reflate the bubble; they're trying to get Americans to borrow and spend even more money when we're broke from the money that we shouldn't have borrowed and spent in the first place. And the government is trying to get itself bigger.

The government is trying to grow its size at a time when it needs to contract because we're really too broke to afford a bloated government.

Market Update - Videolog

Video Log market update, April 13, 2009.

Topics:
- Banking Sector Earnings
- Wells Fargo, Goldman Sachs earnings
- Goldman Sachs and TARP money
- Don`t Buy Goldman Sachs stocks
- Dollar breaking down
- Australian Dollar strong, multi year high



Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital.

Interview to The Gold Report: Reflating the Bubble

Amid an "inflationary depression" in the U.S., Peter Schiff, president and chief global strategist of Euro Pacific Capital, sees opportunities in the maelstrom. Facing a massive redistribution of wealth, he advises investors to act quickly and "divest U.S. dollar assets into physical precious metals, other currencies and equities outside the United States." In this exclusive interview with The Gold Report, the widely-quoted expert on money, economic theory and international investing discusses what led up to our current "phony economy" and how investors can actually profit from the crisis.


The Gold Report: Peter, you were one of few people to predict financial crisis that the U.S. and the world is now in the midst of. At a recent conference, you called the conditions that we're facing "an inflationary depression." Can you describe what you mean by that?


Peter Schiff: Well, basically, that is the condition that the government is creating here in the United States, and an inflationary depression is going to be a protracted period of economic decline accompanied by rapid increases in consumer prices. So, it's going to be something like the stagflation of the 1970s, only much more stagnation, or outright contraction of the economy, with the cost of living increasing even more rapidly than it did then.


TGR: As we look at some of the things that Obama's trying to put into place, is there anything the government could do now to avoid this?


PS: There's nothing the government can do to avoid some serious short-term pain. The country is in a lot of trouble because of all of the monetary mismanagement of the past, the reckless government spending and the money creation that led to the phony economy.


We've spent a long time squandering wealth in this country. We've borrowed a lot of money and foolishly used it to consume. We've allowed our industrial base to disintegrate, and it's going to be difficult to rebuild a viable economy. But we're never going to rebuild one if the government stands in the way. What the government is doing now with their polices is trying to reflate the bubble; they're trying to get Americans to borrow and spend even more money when we're broke from the money that we shouldn't have borrowed and spent in the first place. And the government is trying to get itself bigger. The government is trying to grow its size at a time when it needs to contract because we're really too broke to afford a bloated government.


It was bad in the past - it was making us less competitive, but at least we could afford it; now we clearly can't. So, we need less government. We need sound monetary policy. We need higher interest rates. We need to allow businesses to fail. We need to allow companies to go out of business or bankrupt. We need to allow foreclosures to take place. We need to allow people to lose certain jobs. We can't try and interfere with that. And to the extent that we do, we're going to create this depression; and if we keep printing money, we're going to have massive inflation on top of it.


TGR: In your talks, you've said that printing money will cause massive inflation and the collapse of the U.S. dollar. Can you speak to that?


PS: People think you just create money and use it to spend. But when you create money you don't create purchasing power. So, what happens is you have to pay more money; you create inflation. The way you get increased purchasing power is through increased production, and simply printing money doesn't cause factories to appear. It doesn't cause consumer goods to appear.


In order to have real increased consumption, we need to produce more, which means we need more savings and investment - and the government is discouraging that with its policy, not promoting it.


TGR: Will the government bailouts help increase production and ultimately purchasing power?


PS: No, no, the bailouts are destructive to the economy because the government is bailing out industries and companies that should be failing. They're keeping nonproductive companies in business, which ultimately undermines the competitiveness and the productivity of our economy.


Bankruptcy is like when a body has an infection. It fights it off, and that's what the free market is doing by trying to kill off noncompetitive companies. Bankruptcy is a positive force in an economy. Maybe it's not positive for the entity going bankrupt, but it is positive for the economy as a whole because it's purging from the body of the economy nonviable companies that are squandering our resources.


We need companies to fail so that more prosperous companies can succeed. By keeping certain businesses around, the government is preventing others from coming into existence that would have been more productive.


TGR: So, if the government would step back and let the free market systems work, how much sooner would they be able to make the turnaround, rather than having the government do it?


PS: We're not going to turn around at all as a result of what the government is doing. We'd turn around a lot sooner if they would let free market systems work, but it wouldn't be instantaneous. We've got to dismantle the phony economy before we can rebuild the viable economy. We're going to have this transitionary pain. We have to get over all the damage that has already been done in response to the government and bad monetary fiscal policy. We had a bubble economy; we had an economy based on Americans spending money they didn't have and buying products they couldn't afford or that they didn't make. We had an economy built on debt, consumer debt, and financial engineering, and our companies were generating profits from accounting rather than from production. And the whole thing was phony; the prosperity was phony. We need to address those problems, and get back on the road to economic viability.


TGR: Is this a U.S. phenomenon or is this worldwide?


PS: Well, it exists to lesser degrees in other countries, and certainly other countries are affected because they're producing the goods that we're consuming and they're lending us the money to pay for it and, ultimately, we can't pay them back. And so their economies are going to suffer as a result of all the wealth that has been squandered and all the resources that have been wasted on production for American consumers because we can't afford to pay.


TGR: The government is printing money. What is going to be the impact of all that money coming into the economy?


PS: Well, it's going to force up prices. Eventually real estate prices will start to rise, stock prices will start to rise; but Americans aren't going to be richer because the cost of living is going to rise a lot faster. The price of food and the price of energy are going to rise much faster than the price of stocks or real estate.


TGR: Do you see a pending collapse in the U.S. dollar?


PS: I do see a collapse in the dollar. The dollar is already been losing value, but I think it's going to lose a lot more.


TGR: What should investors be looking at as a safe haven for the money that they have now?


PS: Well, they should be looking at the traditional safe havens like gold and silver; they should also be looking at other commodities and at investments outside the United States. There are a lot of opportunities around the world. There are a lot of stocks that are extremely inexpensive, in my opinion, particularly in the Asian markets and the natural resource space.


There are a lot of stocks trading at valuations I have never seen; there's a lot of pessimism built into the global markets right now, and there are fire sale prices. The world has overreacted to our problems and the way our problems have affected their economies. And in this market environment of de-leveraging and asset liquidation, prudent investors who do have cash can find tremendous bargains around the world. They can preserve their wealth and actually profit from what's going on.


TGR: Can you share with us some sectors people might consider?


PS: In general, the productive sectors of the economy have companies that are manufacturing products and have good balance sheets, companies that operate within a resource sector that has tremendous reserves - whether it's mining reserves or energy reserves - or companies that operate in various forms of agriculture. There are great opportunities there. Stocks are trading for very low, single-digit multiples off of depressed earnings. And you have a lot of companies offering dividend yields north of 10%, and these are real dividends paid from earnings. But, as an investor, you have to do your homework to find them. Bond rates are so low we can get incredible yields on equities, and this is a great opportunity, especially if those yields are going to be paid to us in currencies that I expect to strengthen significantly against the U.S. dollar.


TGR: What countries and currencies do you see emerging first from the recession?


PS: Well, ultimately, a lot of the currencies that are currently pegged to the U.S. dollar will be very strong, a lot of the Asian currencies. We already see a lot of the resource currencies starting to move back. We have seen rather substantial strength in the Australian and the New Zealand dollars in the past few weeks. I do think you're going to see strength also in the Euro, as the Euro seems to be a good alternative to the dollar as far as a reserve-type currency. And the Europeans' monetary policy is not nearly as bad as ours, so more of that type money will be attracted to the Euro and will probably benefit other Euro-zone type currencies - Scandinavian currencies, the Swiss Franc - those currencies will benefit, as well.


TGR: China and Russia and some other OPEC nations are calling for the IMF to come in with an international currency. I think they're calling it special drawing rights.


PS: Yes, China was talking about trying to look for alternative reserve currencies to the dollar, and they're floating a balloon of special drawing rights issued by the IMF. I don't think that's a good idea. Ultimately, China does indeed need to convince the world to look for another standard. China needs to find another reserve on its own and it can do that. The Chinese should start divesting U.S. dollars now. They can choose any currency they want as their reserve currency. When they do start divesting dollars it will impact the value of the dollar.


TGR: Will we see a return to a gold standard?


PS: Currencies need to have value and paper is not value. No fiat currency in history has ever survived. Everyone says this one is going fine but we've only been off the gold standard since 1971 - it's too soon to tell, but it's sure not looking good.


TGR: Will you see a return to the gold standard in your lifetime?


PS: Yes, I will - it has to happen.


TGR: What investment advice do you have for our readers?


PS: Investors need to act quickly and take charge of their financial destiny. We're facing the largest redistribution of wealth through inflation.


The hardest hit will be the savers and investors who will see their savings wiped out if they are kept in U.S. dollars. Dollars will be stolen from the savers to pay for these huge government-spending policies - for health care, education and the bailout.


I would divest U.S. dollar assets into physical precious metals, other currencies and equities outside the United States, and focus on companies that own real things that have a demand.

This is Peter Schiff`s latest interview to the Gold Report. Follow all of Peter Schiff`s comments on the economy and financial markets here on the Peter Schiff Blog.

April 13, 2009

Latest Article: Be Careful What You Wish For

Apart from the obvious financial distress that the current economic crisis has inflicted on most Americans, perhaps one of the more irksome byproducts of the meltdown has been the inescapability of clueless economic blather. It’s bad enough when so-called economists serve up the same Keynesian nonsense that has led us down the current cul-de-sac in the first place. At least those people have some incidental knowledge, however deeply flawed, of basic economic concepts. It’s far worse when political pundits, whose understanding of economics typically comes from Treasury Department talking points, hold forth as if they really know what is going on.

Last weekend I happened to watch the McLaughlin Group, a mainstay of Sunday morning political programs, which included a discussion that typified the lack of economic common sense that is so pervasive in our country. The program’s anchor John McLaughlin, undoubtedly an expert in political maneuvering and Washington horse-trading, offered viewers his assessment of the global economic landscape. McLaughlin identified China, Germany, and Japan as being prime offenders in the global economic meltdown. Their “offense” was that they ran persistent trade surpluses, had savings rates that were “far too high” and consumption rates that were “far too low”. McLaughlin identified these sins as responsible for the global economic imbalances. He urged the governments of those countries to adopt policies that would encourage their consumers to borrow and spend more. Exactly which school of economic thought informed his assessment is not entirely clear.

In the first place, if the creditor nations of the world actually follow Mr. McLaughlin’s advice and become borrowers themselves, from just where does Mr. McLaughlin believe the money will come? These countries already lend to America. Does he think that they also have enough leftover to lend to themselves? Does he believe that America, which is tens of trillions of dollars in debt, has enough excess savings to lend? Perhaps he’s eyeing the Martians’ accumulated savings? The point is: the entire world cannot borrow at the same time. Someone has to do the lending. The only reason Americans are able to borrow so much is that those “offending nations” are loaning us the money.

Mr. McLaughlin apparently believes that if those countries simply adopted policies to encourage more consumption, America would then be able to export more products. Just what American-made products does he expect the Chinese to buy? If China did spend more, which they ultimately will, they would simply buy more of their own products that they currently ship to us. After all, if Americans are not buying American-made products, why would the Chinese? In most cases, it’s not that consumers do not want to buy American products it’s just that there are so few American-made products that are competitive in the global marketplace.

One guest on the panel did try to correct Mr. McLaughlin by suggesting that Americans needed to save more and spend less, but he was quickly shot down. Why should we spend less, McLaughlin snapped, when they could shoulder some of the burden by spending more? The inference here is that we are doing our part by lugging home shopping carts full of consumer goods, while they are getting off easy by spending their days in muggy factories making the goods!

What he fails to understand is that nothing can be bought that is not first produced. We cannot all just decide to spend our troubles away. It is only because the “offending nations” are producing surplus goods (meaning more goods than they are themselves consuming) that those goods are available to Americans. In McLaughlin’s America, and indeed Obama’s, we would all be standing around empty shelves with wheelbarrows full of worthless cash.

If the creditor countries are indeed the offenders, it is only in the sense that they have enabled us to live beyond our means and have facilitated the growth of our phony economy. However if they do as Mr. McLaughlin suggests, the immediate impact on the American economy will be much different than what he expects: the dollar will collapse, both consumer prices and interest rates will rise sharply, and the current recession will deepen. Rather than holding us back, foreign creditors have actually been propping us up. As for Mr. McLaughlin, he should stick to his strong suit: the dissection of political posturing. To presume a level of economic understanding by listening to self-interested politicians and academics is to invite catastrophe.

Wall Street Unspan Segment - April 09

Peter Schiff`s Wall Street Unspan, Radio Show, April 2009.

Topics:
- US Dollar
- Asian Currencies Fund
- Market Regulation



Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 9, 2009

Videolog- Market Update - April 09

Topics:
- Wells Fargo Earnings
- Bear Market Rally
- Hong Kong Stock Market Rally
- Trade Deficit and the US Dollar



Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 8, 2009

Dollar Will Continue to Drop

I think the dollar will continue to drop. Based on what we've done, it could lose 70 to 80 percent of its value over the next five to 10 years.

The dollar is no longer as good as gold. It's no longer better than any other currency.

(in Forbes Magazine, April 2009)

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 7, 2009

CNBC with Larry Kudlow

Peter Schiff on CNBC with Art Hogan, Bob Dole and Larry Kudlow, April 06.

Topics:
- Economic Recovery
- Inflationary Depression
- Will GDP grow again this year?
- Are copper prices signaling a bottom in the economy?
- Is a 2% inflation scenario good or bad?


Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 6, 2009

American Standard of Living Will Decline

Unfortunately, average Americans are going to see a decline in their standard of living. We have simply squandered our wealth. We've been living beyond our means for years and borrowing to do it and now we can't pay the bills.

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 5, 2009

Latest Article: Let’s Play Pretend!

When elementary school kids want to escape the confines of their circumstances they pretend to be pirates, princesses, and Jedi knights. Now, with the relaxation of “mark to market” valuation rules announced yesterday by the accounting trade’s self-regulatory body, our bankrupt financial institutions can escape their own reality by pretending to be solvent. The unraveling of our fairytale economy over the last few months has not yet convinced us that the time has come to put away childish things. The applause that greeted the news yesterday on Wall Street is a clear sign that we still have some growing up to do.

The imaginative conceit that lies behind the accounting change is that the toxic assets polluting bank balance sheets are not really toxic at all. They are in fact highly valuable assets that for some irrational reason no one wants to buy.

Using the “mark to market” accounting method, mortgage-backed securities were valued relative to the latest prices fetched by the sale of similar assets on the open market. Currently, those bonds are being sold at deep discounts to their original value. By “marking” their unsold bonds down to those prices, the insolvency of our financial institutions had been laid bare. The new accounting changes will allow the nervous owners to assign more “appropriate” (i.e. higher) values. Problem solved.

It is important to note that the Financial Accounting Standards Board made their rule modifications only after intense pressure had been applied by Washington and Wall Street. In their heart of hearts, I can’t imagine that there are too many bean counters happy with the outcome.

The banks and the government have argued that the assets should be valued based solely on current cash flow. Most mortgages, after all, are not delinquent. Therefore, a few bad apples should not spoil the whole cart, and those that are not yet delinquent should be valued at par. This method assumes we have no ability to look into the future and make assumptions about what is likely to happen, which is presumably what the market is already doing by valuing the assets lower than the banks wish.

All kinds of bonds (corporate, government and municipal, etc.) that are not in default frequently trade at discounts. In fact, the reason that agencies such as Moody’s and Standard and Poor’s rate bonds is to assess the probability of default. The higher that probability, the lower the value placed on the bonds, regardless of their current cash flow.

For example, GM bonds that mature 10 years from now currently trade for only 8 to 10 cents on the dollar, despite the fact that GM is current on all interest payments. The 90% discount reflects investor awareness that GM will likely default long before the bonds mature. By the new logic, financial institutions with GM bonds on their balance sheets should be able to ignore the market and value these bonds at par.

Some argue that the comparison is invalid because GM’s bonds are liquid while mortgage-backed securities are not. However, if sellers of GM bonds were holding out for 70 or 80 cents on the dollar, those bonds would be illiquid too. The reason GM bonds are trading is that sellers are realistic.

The same should apply to bonds backed by mortgages. To assume that a 30-year, $500,000 mortgage on a house that has declined in value to $300,000 has a high probability of remaining current to maturity is ridiculous. The borrower could lose his job, his ARM might reset higher, or he may simply tire of paying an expensive mortgage for a house that is unlikely to be sold at a profit. Any bond investor with half a brain will factor in these probabilities and look for deep discounts. The only way to accurately assess a real present value is to let the market discover the price.

Despite the pleas from bankers and politicians, mortgages are not plagued by a lack of liquidity but a lack of value. If sellers would be more negotiable, there would be plenty of liquidity. Who knows, at the right price I might even buy a few. The problem is that putting a market price on these assets would render most financial institutions insolvent, which is precisely why they do not want to let that happen.

Simply pretending that all these mortgages will be repaid does not solve the underlying problems. It may keep some banks alive longer, but when they ultimately do fail, the losses will be that much greater. In the meantime, solvent institutions are deprived of capital as more funds are funneled into insolvent “too big to fail” institutions – hiding their toxic assets behind rosy assumptions and phony marks.

Going from the sublime to the completely ridiculous, in a speech at the just-concluded G20 summit in London, President Obama urged Americans not to let their fears crimp their spending. It would be unwise, he argued, for Americans to let the fear of job loss, lack of savings, unpaid bills, credit card debt or student loans deter them from making major purchases. According to the president, “we must spend now as an investment for the future.” So in this land of imagination (where subprime mortgages are valued at par), instead of saving for the future, we must spend for the future.

I guess Ben Franklin had it wrong too – apparently a penny spent is a penny earned.

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

(April 03, 2009, originally posted on Europac website)

CBS Evening News - April 2009

Topics:
- The economic rise of China
- China is still booming
- China also has problems that may affect its growth
- 30 million chinese are unemployed



Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 4, 2009

Peter Schiff Market Update - April 3

Peter Schiff`s outlook on the stock market and on the US economy.



Topics:
- Schiff`s comments on the jobs report;
- Official unemployment rate highest in 25 years;
- Real unemployment even higher;
- We need jobs in the private sector and not in the government;
- dollar keeps drifting lower;
- G20 meeting;

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 3, 2009

America is De-Industrializing

More Americans now work for government than in manufacturing. Most other Americans are employed in retailing, financial and other professional services, healthcare, and education. What we used to produce ourselves we now import. We "pay" for those imports with dollars yet we lack the industrial capacity to ever redeem them with genuine goods.

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

Market Update - April 02

Peter Schiff`s market update on his Videolog, April 02.

Topics:
- G20 meeting and how politicians always do the same thing;
- Chinese won`t cooperate with the United States;
- Mark to Market accounting and its impact;
- Mortgages need to be marked down because there is a higher probability of default;



Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 2, 2009

Live on Fox Nation - April 2009

President Obama is now in Europe with his hat on his hand trying to convince the world to keep lending us money so that we don`t have to print quite as much.

But hopefully the world will have the good sense to stop lending us money. Because the solution to the problem is not to lend America more money, the last thing America needs right now is to get deeper into debt.


Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

Videolog (April 1 - Market Update)

Market update from Peter Schiff`s April 1 videolog.

Topics discussed:
- G20 meeting in London;
- The world is in trouble because they have loaned us to much money;
- We are trying to convince Russia and China not to move away from the dollar as a reserve currency;
- I am against bailing out Gm, AIG and also against the world bailing out the United States;
- Government considering GM bankruptcy;
- Government wants us to buy cars right now with the tax deductions;




Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

April 1, 2009

Schiff Interviewed Marc Faber

Peter Schiff interviewed Marc Faber recently. Great interview from Dr. Doom on the stock market, economy and commodities. Here is the LINK.

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

Economies Don`t Run on Credit

In truth, not all economies run on credit. In a legitimate economy, it is not credit that fuels spending and investment, but simply income and savings.

Peter Schiff is the President and Chief Global Strategist of Euro Pacific Capital. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.

He has been quoted in many financial TV channels like CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V.. In Peter Schiff`s blog you can track all his investment and trading ideas for 2009 as well as all his public appearances on TV, video or in the press.

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