Monday, December 22, 2008

The Financial Prophet Calls it (Peter Schiff)

Back in 2006 Peter Schiff predicted a huge recession in 2007 or 2008 . The consumer, he said, will have to stop consumer spending and instead save his money and pay off debts after being over leveraged, as his phony assets drop in value. This recession is a natural process that must happen to get healthy again, the sooner the better. Unfortunately this late in the bubble will cause a crash of the speculative values because the entire US economy is now based on consumption and debt. He explained that all our so called wealth is just the increased paper values of our stocks and real estate based on over leveraged foreign debt. Watch the other expert investment advisors back in 2007 predict a continuing growing economy and laughing at Schiff when he predicts the coming crash. His message is , "American is a country of real estate agents and stock brokers (ie the self service sector) creating nothing but increased paper values based on foreign debt, printed money, and consumption of foreign products. " We need to start saving and producing again.

October 2008 Schiff predicts that Obama will win in a landslide and that Obama's change is 'change for the worst', as with Bush, pumping more and more money into the system trying to get americans to borrow and spend again. He says government must allow the markets to rebalance the economy, we need consumers to save.

The following debate with Peter Sciff on CNN 11/20/08 is a classic. He argues that government intervention/bailouts specifically GM with borrowed money will in the long run stop creation of more jobs than it saves. That is because the government creates nothing and has no money, it has to take it away from the productive sectors to give to companies the government selects.

Our President elect Barrack Obama has promised to 'put money in our pockets' with income tax cuts for those that pay no income taxes. This he promised (during campaign) will create immediate jobs as these voters run out and spend the money. Add the Bush/Paulson/Pelosi 700B bailout plan that democrat congress passed in Fall 2008. Fred Thompson has a few words about how we got to where we are and the federal governments ability to manage the economy by more borrowing and spending.

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