They laughed at Peter Schiff

November 14, 2008 1:20 PM

The laughed at him. Foretelling the doom and gloom of the mortgage crisis as a pundit in these 2006-2007 interviews, Peter Schiff held to a grim economic outlook. Recently in the Washington Post, Schiff writes: "Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets."
posted by thisisdrew (33 comments total)

and you are laughing at me, because I can't spell.
posted by thisisdrew at 1:21 PM on November 14, 2008

Google "economic adviser for Ron Paul's 2008 presidential campaign"!
posted by Nahum Tate at 1:30 PM on November 14, 2008

Even a stopped clock tells the right time twice a day.
posted by KokuRyu at 1:30 PM on November 14, 2008 [2 favorites]

He's "fun at parties."
posted by Xurando at 1:36 PM on November 14, 2008 [1 favorite]

They laughed at Nouriel Roubini too.
posted by BlueMetal at 1:37 PM on November 14, 2008

Even a stopped clock tells the right time twice a day.

Even an introductory familiarity with the theory of Relativity would tell you this is not true.
posted by Astro Zombie at 1:38 PM on November 14, 2008 [1 favorite]

Okay, so maybe this guy was right. However, he works for a company with "Euro" in its name, which means he wants America to fail. Maybe if called his company "Freedom Pacific" I'd take his arguments more seriously. JOKING.

Also, I got an email from my dad the other day in which he told me his financial advisers are telling all of their clients to buy, buy, buy! Now is the time to buy!

I reminded him that this is what financial advisers always say, and is, in fact, what his financial advisers told him when the Dow was at 13,000, 12,000, 11,000, 10,000 and so on. He told me I was being pessimistic.
posted by billysumday at 1:42 PM on November 14, 2008

As long as the stopped clock is in my local metric, we're good.
posted by adipocere at 1:43 PM on November 14, 2008 [1 favorite]

Yeah it is great to see those cheerleaders sputter politicized nonsense that became so INSTANTLY falsified. But that doesn't mean he's right about everything.
posted by Potomac Avenue at 1:47 PM on November 14, 2008

His whole theory was based on the faulty assumption that the crash would lead to big gains in foreign stocks and sharply higher commodity prices. Given the massive beating that oil, commodities, gold, and foreign companies have taken over the past year, I'd say his track record is not too impressive so far.
posted by burnmp3s at 1:53 PM on November 14, 2008 [3 favorites]

The Schiff WaPo op-ed you call "recent" is already a month old, which feels like an eternity given how much has happened in the ongoing economic meltdown (a meltdown that is much, much larger than just the subprime mortgage lending crisis it began as).

While the housing market slump continues unabated, and retail sales drop to all-time lows, pressing questions regarding the regulation the CDS market, the failure of auto industry, and the changing nature of the bailout plan itself suggest that all "I told you so" arguments and ideological axe-grinding are sadly now beside the point. There is a lot of blame to go around; what's really needed is decisive action on the part of Obama come January 20th.
posted by ornate insect at 2:14 PM on November 14, 2008 [1 favorite]

Peter Schiff is reliable only relative to the -- and it is impossible to overstate this upcoming description -- the total fucking clowns CNBC et al put on the air regularly.

I saw this thing coming only after Casey Serin's pattern of crime came to my attention in late 2006.

Before then I did not understand how fully "suicidal" lending standards had fallen since 2001-2002 when I was last looking at buying.

Qualifying borrowers on the 3% teaser rate instead of 6% fully-amortizing instantly inflates a $200,000 property into a $300,000 property based on borrower purchasing power ($1000/mo debt service in either case).

Families got a $200/mo tax cut or so in the 2001-2003 tax cut program. That turned the $300,000 property into a $400,000 property ($1200/mo debt service).

Interest-only and negative-am games then took that $400,000 property up to $600,000.

That's where the wheels came off and all this phantom wealth creation began to unwind and that $600,000 property will begin falling back down to its $300,000 valuation that it was at before all this got started.

The hidden story here is thanks to globalization -- the rise of China's manufacturing capability and oil prices going from ~$20 to ~$60 -- M-3 has gone from $7T in 2001 to $14T today.

Wealth may be destroyed by stupidity, but dollars can only be destroyed by lighting them afire.
I wonder where all this money is right now, since with the S&P under 900 again they don't seem to be chasing yield in the stock market.
posted by troy at 2:18 PM on November 14, 2008 [3 favorites]

Peter Schiff is reliable only relative to the -- and it is impossible to overstate this upcoming description -- the total fucking clowns CNBC et al put on the air regularly.

They are nothing but professionals over there.
posted by ALongDecember at 2:24 PM on November 14, 2008

Given the massive beating that oil, commodities, gold, and foreign companies have taken over the past year, I'd say his track record is not too impressive so far.

You could have done a lot worse than investing in gold when he made his recommendation in the video.
posted by designbot at 2:25 PM on November 14, 2008

Our leaders spent all their damn money on promotional blimps.
posted by Damn That Television at 2:28 PM on November 14, 2008

his financial advisers told him when the Dow was at 13,000, 12,000, 11,000, 10,000 and so on

When the DOW hits 6000 his advisers will probably be right. Stopped clock and all that.
posted by ryoshu at 2:47 PM on November 14, 2008

I propose that an independent agency be established to record all predictions made by "financial experts" and then follow up to see how many turn out to be accurate.

This agency would assign each expert a PPAR (Pundit Prediction Accuracy Rating), ranging from 0% to 100%, which would be displayed prominently after their name onscreen.

The agency would also partner with a primate research facility, and ask a chimpanzee to make daily predictions by banging on colored lights.

Any time a panel of experts appeared on television whose collective PPAR was lower than 50%, the broadcaster would be required to give equal time to the chimpanzee.
posted by designbot at 2:55 PM on November 14, 2008 [13 favorites]

"After being chastised endlessly about mis-calling the DOW in 2006 (I said 4000), I have learned my lesson about making numerical predictions for the stock markets. So let's just say there is no fucking way that the DOW, the NASDAQ, and the S & P will not end the year 2008 absolutely on their asses. The charade of permanent prosperity based on getting something for nothing is over. That sound you hear out there is reality knocking on the door. It has been standing out in the cold for a long time and it is not happy with us."

I wish I had the investment courage of my convictions, or rather those of Kunstler, whose blog I've been following for several years. He may come off as a crackpot occasionally, but even a cracked pot sometimes holds water, or words to that effect.

I propose that an independent agency be established to record all predictions made by "financial experts" and then follow up to see how many turn out to be accurate.

Here's who I nominate.
posted by stargell at 3:24 PM on November 14, 2008

Well, I certainly suck at predictions. Off by 100% in just 5 months!!!!
posted by troy at 3:46 PM on November 14, 2008

Schiff is actually crazy. I think he is overly pessimistic. He is right about gold, though. nobody ever went poor investing in gold.
posted by subaruwrx at 4:16 PM on November 14, 2008

It was nice not having to rent Expelled to see Ben Stein completely wrong on TV.
posted by Midnight Rambler at 4:29 PM on November 14, 2008 [2 favorites]

@designbot

Silly monkey economy
posted by The Power Nap at 4:51 PM on November 14, 2008

I wonder where all this money is right now.

I believe it was the asking of this Question Which Must Never Be Asked that caused the current meltdown.

Never ask that question!
posted by rokusan at 4:52 PM on November 14, 2008

He is right about gold, though. nobody ever went poor investing in gold.

Gold has broken more people than any other investment in the history of civilization. People think that it is money, when in fact it is just a commodity. It is subject to all the price swings of every other commodity. We have to accept that money is just an abstract thing we made up to facilitate trade. Gold currency was no more stable than our current scheme; just ask the Spanish. Debates about gold backed currency will one day be looked back at like the debates about the number zero.
posted by humanfont at 5:24 PM on November 14, 2008 [1 favorite]

Debates about gold backed currency will one day be looked back at like the debates about the number zero.

Funny, because that's what my portfolio is rapidly approaching.
posted by stargell at 5:30 PM on November 14, 2008 [1 favorite]

What a genius. Jim Rogers has been screaming about this for years. That's why the used car salesmen at CNBC booted him off the network.
posted by Zambrano at 5:57 PM on November 14, 2008

Maybe I played too much AD&D, but if we're going precious metals I want pp, since they are worth 5X gp but are at near parity with gold right now. Heck, you'd should be a thief character class to buy at these prices!
posted by troy at 5:58 PM on November 14, 2008

You could have done a lot worse than investing in gold when he made his recommendation in the video.

You certainly could have done worse, I mean The stock Ben Stine recommended at, what was it, $69 or so was at $13 today. But GLD lost 25% of it's value. It did horribly. You would have been much better off just holding cash.

Schiff is actually crazy. I think he is overly pessimistic. He is right about gold, though. nobody ever went poor investing in gold.

Again, anyone who invested in gold earlier this year got hosed. It did worse then, for example.

Gold's value doesn't come from some innate awesomeness. It was useful as a currency because it was rare and it was the heaviest known element, so if you mixed it with anything, that could be easily detected. But today it gets mined and eventually sold as jewelry. If demand for Jewelry goes down, as you would expect in an economic downturn, the value of gold will also go down.
posted by delmoi at 9:12 PM on November 14, 2008

(oops, I didn't come up with an example of a stock that did better then GLD. Heh. But you would have been better off holding cash, or U.S. treasuries, or selling short)
posted by delmoi at 9:56 PM on November 14, 2008

Schiff is actually crazy.

You know this because he doesn't have a stamp on his hand that says 'not insane'?

However, he works for a company with "Euro" in its name, which means he wants America to fail.

His old man is Irwin Schiff - a known tax protester. Why didn't you use that argument?
posted by rough ashlar at 4:59 AM on November 15, 2008

To hear Peter Schiff speak, you get the sense this was and is all tremendously obvious to him.
"Too much consumption and borrowing and not enough production and savings".

Since he seems to have been correct, how did the majority of analysts miss it, if it really is that simple an observation? Was everyone else using a faulty model, or wishful thinking? I find it hard to believe that the legions of first rate academic economists out there would fail to predict this, but this hedge fund guy with his two sentence explanation nails it.

Perhaps economics is too inexact and complex to make sensible predictions. In which case Schiff was really just speculating, since common sense reasoning doesn't usually work applied to sufficiently complex systems, and we are only talking about his predictions because he happened to get it right. Or I suppose it's possible that economists in academia actually knew what was going to happen but just didn't go on talk shows spouting about it.
posted by snoktruix at 8:51 AM on November 15, 2008

how did the majority of analysts miss it, if it really is that simple an observation? Was everyone else using a faulty model, or wishful thinking

whistling by the graveyard, I think. Consumer sentiment can feed on itself, either good or negative.

Back in 2007 if you wanted the incumbent to retain the White House you also wanted the economy to stay out of recession. That explains Laffer and Stein being SO FUCKING WRONG last year, if in fact they are not actual idiots but just playing ones on TV.
posted by troy at 12:42 PM on November 15, 2008

Just because these economists/pundits have long letters after their names, it doesn't make them any more knowledgeable. Peter predicted our current day economic crash to the t, not now, but two year ago in his book Crash Proof. He isn't preaching anything that we don't already know. We just don't want think for ourselves and admit that part of the responsibilities lie upon us. Government can't take care of us. Government is not there to take care of us. TV economists need to be tested for their common senses.
posted by watercressprincess at 2:38 PM on November 15, 2008