Peter Schiff: Sometimes the bears are right and wrong

November 25, 2008 8:56 AM

Peter Schiff (b.1964) is a financial bear who is currently very popular; he consistently called the current troubles years in advance on Faux News (YT; hilarious); his books are #1 and #2 on Amazon's "Investing" top list (as of posting); his website is popular enough that it is intermittently down (first link) and he even has YT "tribute" videos. His essays can be read here with heartwarming titles: The Reagan Counterrevolution, The Truth About Bailouts, Not Your Grandfathers Depression, Last Gasp of a Doomed Currency, ... His advice? Buy foreign stocks and commodities. He has been Hugely Right.. and Enormously Wrong.

Peter Schiff - Hugely Right, Enormously Wrong:

The big thing Schiff missed [was he] invested as if the US would crash and that everything else would be fine. The decoupling theory never made much sense. To believe in decoupling is to believe the tail wags the dog. What happened was that although the US stock market collapsed, China, India, Iceland, Japan, the UK, and numerous other places collapsed more. So when the dollar rallied on top of that, investments in those places got mercilessly hammered. Even though the US dollar index fell from 120 to 70, Schiff was still looking for a collapse of the dollar. It had already collapsed. Schiff ignores ignoring monetary printing in China, huge bank bailouts in Europe, housing bubbles in Australia, Canada, Spain, and the UK, all bigger than in the US. The stock market bubbles outside the US were even bigger than the stock market bubble here. Furthermore, there has been more monetary printing in China this year than in the US. And as noted above China just announced the same reckless measures the US did in trying to stimulate the economy. The UK and ECB are doing the same thing (bailing out banks), and the UK is arguably in much worse shape than the US overall.

However Peter says these things are temporary, the next major economic crisis will be when the dollar "falls like a stone": The Man Who Called the Collapse (Nov 20th)

posted by stbalbach (20 comments total)

The demeanor of the two interviewees in the Fox News link is hilarious - it looks like it was casted. The mean, cranky, pale old guy with dark features who's going to be shown up by the levelheaded, more attractive younger guy.

That said, can we keep a semblance of balance here? Calling Fox News "Faux News", especially when the focus of the post is not to criticize its methods, just looks bad. This isn't the Daily Kos, thank goodness.
posted by Earl the Polliwog at 9:14 AM on November 25, 2008 [1 favorite]

Previously
posted by burnmp3s at 9:23 AM on November 25, 2008 [1 favorite]

I saw one of those videos a while ago. There was one hilarious bit where Ben Stine was telling people to buy Goldman Sachs and WaMu, saying they were way underpriced. Schiff said they were 'worthless' and since those financial companies have completly tanked.
posted by delmoi at 9:26 AM on November 25, 2008

That said, can we keep a semblance of balance here? Calling Fox News "Faux News", especially when the focus of the post is not to criticize its methods, just looks bad.

Fox news is a joke and needs to be denigrated and mocked as much as possible.
posted by delmoi at 9:27 AM on November 25, 2008 [5 favorites]

I thought "Faux News" was widely accepted by anyone except Ann Coulter worshippers.
posted by fusinski at 9:28 AM on November 25, 2008 [1 favorite]

He has been Hugely Right.. and Enormously Wrong.

Which nets out to meh.
posted by stupidsexyFlanders at 9:28 AM on November 25, 2008 [1 favorite]

Meta post about how terrible it is for people to mock FOX news in three ... two ... one ...
posted by Astro Zombie at 9:30 AM on November 25, 2008

The dollars going to fall? AWESOME! Because what the US needs now, more than ever, is a weak dollar to drive job creation. Plus there are plently of markets growing faster outside of the US where US companies would love to improve their position. Bring on 2 dollars to the Euro.
posted by GuyZero at 9:34 AM on November 25, 2008

All sports stadiums in the USA currently named for banks, insurance companies, or financial institutions will have to be renamed Federal Reserve Park.
posted by netbros at 9:42 AM on November 25, 2008 [1 favorite]

Bring on 2 dollars to the Euro.

Noooooooo.

Ahem. That is I'm involved in importing European goods and the dollar has been creating a difficult environment for us for quite awhile. I don't expect the dollar to remain strong (that we call 1.30ish "strong" is a study on how weak the dollar is, even now,) but I am enjoying the respite.

That said, if you like cheap gasoline then you like a strong dollar.
posted by elwoodwiles at 9:42 AM on November 25, 2008

"That said, if you like cheap gasoline then you like a strong dollar."

Huh? Gas is cheaper in the States than it's been in years and the USD sure ain't that strong, in relative terms.

Me, I'm invested entirely in magic beans these days.
posted by bardic at 9:52 AM on November 25, 2008

I'll stop calling them Faux News when they've earned the right to be called real news.
posted by Mikey-San at 9:57 AM on November 25, 2008

RE: Peter Schiff - Hugely Right, Enormously Wrong:

Schiff ignores ... housing bubbles in Australia, Canada, Spain, and the UK, all bigger than in the US

Canada has had a real-estate bump, sure, mostly in the oil-rich west and in the major urban centers (both of them ;) ), but nothing like the US bubble, and we don't have the big volume of defaulting sub-prime mortgages that have kicked the struts from under the US real-estate and financial markets. Canadian banks aren't failing (yet..touch maple...)

For once, our stodgy, cautious, risk-averse national character has worked to our advantage.

Just sayin'

So, g' day, eh?
posted by Artful Codger at 9:57 AM on November 25, 2008

The service sector must shrink and manufacturing must expand to fill the void. The dollar must fall, wages in America must be brought down to a competitive level, and hopefully government spending and burdensome regulation can be reduced.

This transformation will not be fun, but it is necessary. Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base.

I absolutely agree that the service sector has got to shrink, and manufacturing must recover. I do not think he is going to sell a single person on "competitive" wages though.

The biggest historical flaw I've seen with "Free" markets, (IANAE), is that nobody ever competes with slavery. You can't do it. I'm going to resist channeling Karl Marx as much as possible, but nobody except the .005% wants to live in that society. Nobody. You really want competitive wages? No healthcare for anybody? Lets knock the infant mortality up a notch too. Hey, that education thing? I've got an idea. Lets not pay people who use public education enough so that their taxes can fund it! I'm sure the top earners will keep everything running for us, even though we won't retain the powers to participate in our governments without education, while we're working 20 hour shifts in the brand new American sweat shops.

These Union hating, competitive wage desiring, Monopoly man stereotypes need to call this what is it. The Return of Feudalism. You want a solution? How about the extreme other side? Why not global unionization? How about you tell anybody who wants to ship a job overseas that they're going to have to pay every single nickel they'd have to pay educating and caring for an American laborer for anyone they pick anywhere in the world? How about we make Liberty and Justice for all legally include those we deal with internationally? Why don't we see what happens then you greedy jackasses?

Sharpen up my guillotine Mr. Robespierre, we need to show these people what wealth redistribution actually looks like.
posted by SomeOneElse at 10:04 AM on November 25, 2008 [3 favorites]

he consistently called the current troubles years in advance on Faux News

That makes him wrong, not right. You can't call something "years" in advance unless you attached a date to your prediction, which he didn't. You are especially wrong if you've been crying sell for years as the market went up. The person who is actually right is the one who cried 'sell' only once, when the market was at its peak.

I officially predict that the S&P 500 will hit 1200 at some point in the next few years.
I predict that we will have a nationalized healthcare in some form in the next few years, and that many many years after that we will deregulate or re-privatize part of it in the name of efficiency.
I predict that oil will hit $100 in some non-specified number of years.

Try it, it's fun!
posted by Pastabagel at 10:15 AM on November 25, 2008 [1 favorite]

That is I'm involved in importing European goods and the dollar has been creating a difficult environment for us for quite awhile.

No offence, but tough shit. Keep the strong dollar and in a few more years you'll have a lot less people who want to buy your imported European goods. Bring on a weak dollar and a strong manufacturing sector. The US needs more exports, not more imports.
posted by GuyZero at 10:20 AM on November 25, 2008

Oh, and...

That said, if you like cheap gasoline then you like a strong dollar.

I set my budget around $4/gal gas. Plus, I'd gladly pay more for gas if it meant that the unemployment rate was going to go down (i.e. a strong dollar)
posted by GuyZero at 10:24 AM on November 25, 2008

Crud, I meant a weak dollar. Sheesh.
posted by GuyZero at 10:24 AM on November 25, 2008

This isn't the Daily Kos, thank goodness.

Don't worry, you can keep your Serious Leftist credentials even without bashing Daily Kos, Mr Lieberman.
posted by DU at 10:28 AM on November 25, 2008

The biggest historical flaw I've seen with "Free" markets, (IANAE), is that nobody ever competes with slavery.

Oh, wow, so people really did vote in hopes of a great socialist era. People compete with slavery all the time. Ever hear of the cotton gin? It's called productivity. How to make a unit of labor produce drastically more than it had in the past.

The reason it is impossible to manufacture anything on a large scale here in the US is because of the unions. They bear nearly all the responsibility. Auto workers want to be paid as much as skilled laborers like electricians or plumbers who are independent contractors, but have the job security of full time employees. Thanks to unions, there is no such thing as reduce pay for all workers. Instead, we lay off a lot of workers so the remainder keep full pay. The union is okay with this is because it maximizes the dues the union collects.

Manufacturing labor is unskilled labor. Any idiot can do it, precisely because the jobs are designed so that idiot can do them. All of the skilled work in factories is automated and mechanized.

By contrast, idiots can't become electricians, plumbers or carpenters. You actually have to know what the hell you're doing so you don't kill someone or destroy something. That's why those jobs command a high and well deserved premium.
posted by Pastabagel at 10:29 AM on November 25, 2008