Friday, February 20, 2009

Coming Economic Collapse

http://en.wikipedia.org/wiki/Peter_Schiff


"In his January 14, 2009 radio show, [Peter]Schiff discussed moving out of cities in anticipation of rising crime rates, food shortages, fuel shortages, and rolling blackouts. He also mentioned the need for families to stock up on guns and ammunition as a part of what he expects. This quasi-survivalist stance demonstrates how serious he expects the unfolding economic downturn will be.[15]


[edit] Writings
Schiff is the author of two books:

Crash Proof: How to Profit from the Coming Economic Collapse, 2007, ISBN 978-0470043608
The Little Book of Bull Moves in Bear Market, 2008, ISBN 978-0470383780

[edit] Criticism

[edit] Predictions
This article may contain original research or unverified claims. Please improve the article by adding references. See the talk page for details. (February 2009)

Not all of Schiff's predictions made in Crash Proof or in publicly available transcripts and statements before July 2007 have held out to be true as of January 2009.

Schiff's prediction that the US Dollar would collapse along with the housing bubble has so far not come to pass, with the US Dollar Index rising from 80 points in July 2007 to 83 points in January 2009, a climb which actually accelerated as the US financial crisis became more acute in September 2008.

Similarly, Schiff's prediction that the US financial crisis would cause a greater fall in US equity prices than in non-US equity prices has so far been inaccurate as in 2007-2008 most international equity markets fell further than the US markets. Using the broadest available measures, the MSCI US Broad Market Index was down 34.83% in 2008, while the MSCI All Country Ex-US Index was down 42.86%. [16].

Gold and precious metals during this period have performed significantly better than equity prices, with gold losing only 3.77% and silver 5.38% of their USD values in 2008. Yet with gold under $1,000 per oz, and silver under $20 per oz, precious metal prices have not seen the dramatic run up Schiff has been predicting.

Schiff acknowledges the short-term failure of these particular predictions, but says that the US financial crisis is just beginning to unfold and it is merely a matter of time before the global economy rebalances and his further predictions take form.

On October 28 2008, Schiff stated in an interview on Bloomberg TV[citation needed] that the investment strategies outlined in both books currently "are not working" due to the collapse of foreign currencies, foreign stocks and the failure of gold prices to go up significantly as most of the world entered an economic recession and foreign investors flee to cash. However, he maintained that this was a very temporary phenomenon, "due to deleveraging", and that he expects gold to shoot up to $2,000 per ounce as the dollar soon "drops like a stone." Overall, Schiff remained optimistic on his theories and stated this was a good opportunity to buy foreign stocks trading at yearly lows.

In January 2009 financial blogger Mike Shedlock claimed that Peter Schiff's investment strategies have resulted in some of his Euro Pacific Capital account holders losing 60% to 70% of their value in 2008[17]. Peter Schiff responded to this claim by stating, "to examine the effectiveness of my investment strategy immediately following a major correction by looking only at those accounts who adopted the strategy at the previous peak is unfair and distortive" and claims that losses were most heavily felt by recent clients and not by his long time investors[18].

In an interview on Yahoo Tech Ticker on February 6th, Schiff conceded that the value of his investors' portfolios had dropped as much as 50%, while avoiding the interviewer's question about how much the value of his own accounts had fallen. These returns stood in sharp contrast to the 2008 returns of other investors who shared his views including George Soros (up 10% in 2008) and Nassim Nicholas Taleb (up between 55% and 110% in 2008)."



Born Peter David Schiff

Residence Darien, Connecticut
Occupation Stock broker, investment adviser, author, economist.
Employer Euro Pacific Capital
Website
www.europac.net
Peter Schiff (born 1964)[1] is an American economic commentator, author and licensed stock broker who currently serves as president of Euro Pacific Capital Inc., a fully accredited brokerage firm based in Darien, Connecticut.[2]

Schiff is best known for his bearish views on the United States economy and he claims to have predicted the economic crisis of 2008.[3] He has risen to media prominence following the publication of his book Crash Proof: How to Profit From the Coming Economic Collapse.

Aside from his writings, Schiff maintains a significant media presence, often appearing on US financial news programs on networks such as CNBC, CNN, CNN International, Fox News, Bloomberg TV and Fox Business where he is generally booked to provide a bearish counterpoint to more bullish commentators.

Schiff also hosts a live Internet/shortwave radio show called "Wall Street Unspun, which is available in podcast format."[4]

Schiff is a supporter of the Austrian School of Economics and the Ludwig von Mises Institute[5], and was an economic adviser for Ron Paul's campaign in the 2008 Republican Party primaries, through which Schiff also expressed support for sound money, limited government, and free market capitalism.

Contents [hide]
1 Personal life
2 Career
3 Economic views
4 Writings
5 Criticism
5.1 Predictions
6 Political activity
7 Footnotes
8 External links



[edit] Personal life
Peter Schiff was born in New Haven, Connecticut and was raised in Manhattan and Miami. He graduated from the University of California, Berkeley in 1987 with a degree in finance and accounting.[6] During a discussion in his radio show 'Wall Street Unspun' on January 14, 2009 Peter commented that he had a six year old son and was divorced from his wife.[7]

His father is the well-known tax protester Irwin Schiff.


[edit] Career
Schiff began his career in financial consulting with Shearson Lehman Brothers.[8] He launched Euro Pacific Capital in 1996 when he bought a broker-dealer in Florida without clients or revenues and then reincorporated the business in California. In 2005, Schiff relocated to Darien, Connecticut in order to find brokers "who think like him" according to an article in The Advocate of Stamford, Connecticut. The New York Metropolitan Area, he said, has the biggest concentration of brokers in the country, making it easier to recruit them.[4]

The company retains an office in Newport Beach, California as well as in Phoenix and Medford, Oregon. Schiff said in August 2006 that he planned to open offices eventually in Manhattan and somewhere in the Midwest.[4]

Euro Pacific Capital typically recommends an investment strategy which accords with Schiff's pessimistic view of the US economy, focusing heavily on non-US stocks and precious metals.

Euro Pacific Capital holds the exclusive rights to broker certain Perth Mint products in the United States.


[edit] Economic views
In an August 2006 interview Schiff generated much controversy when he repeated his long-held investment thesis: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship ...I see a real financial crisis coming for the United States." On May 16, 2006 in debate on Fox News, Schiff accurately forecast that the U.S. housing market was a bubble that would soon burst.[9] On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry.[10] Following this observation, it was soon reported on December 23, 2007 by the Associated Press that "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP... At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission."[11]

Schiff also discusses the role of the US consumer in the world, saying that the US consumer thinks he's doing the world a favor by consuming what the rest of the world produces. He is quick to point out that this relationship will come to an end, in his view, much sooner than people imagine, and with negative consequences for the US. Schiff has been quoted as saying: "Consumption is its own reward for Production"—meaning that without production, the US cannot indefinitely sustain its ongoing consumption. Schiff, and other adherents of Austrian economics, promote savings and production as "the engine of economic growth -- not consumption".[citation needed]

Schiff has said on numerous occasions that the current economic crisis is not the problem; it is the solution. According to him, the transition from borrowing and spending to saving and producing cannot be accomplished without a severe recession, given the current imbalances of the US economy. But according to him, that transition needs to happen. He also thinks the government is doing no one a favor by trying to "ease the pain" with stimulus packages, bailouts and such. Schiff believes these actions will only make the situation worse and possibly result in hyperinflation if the government continues to "replace legitimate savings with a printing press."[12]

Schiff is a firm believer in reducing government regulation of the economy. Schiff worries that Barack Obama will increase such regulation.[13]

Schiff points to the low savings rate of the United States as its worst malady, citing the transformation from being the world's largest creditor nation in the 1970s to the largest debtor nation by the year 2000. His extremely bearish views on the U.S. Dollar, the United States stock market, bond market and the United States economy have earned him the nickname "Dr. Doom." [14]

In his January 14, 2009 radio show, Schiff discussed moving out of cities in anticipation of rising crime rates, food shortages, fuel shortages, and rolling blackouts. He also mentioned the need for families to stock up on guns and ammunition as a part of what he expects. This quasi-survivalist stance demonstrates how serious he expects the unfolding economic downturn will be.[15]


[edit] Writings
Schiff is the author of two books:

Crash Proof: How to Profit from the Coming Economic Collapse, 2007, ISBN 978-0470043608
The Little Book of Bull Moves in Bear Market, 2008, ISBN 978-0470383780

[edit] Criticism

[edit] Predictions
This article may contain original research or unverified claims. Please improve the article by adding references. See the talk page for details. (February 2009)

Not all of Schiff's predictions made in Crash Proof or in publicly available transcripts and statements before July 2007 have held out to be true as of January 2009.

Schiff's prediction that the US Dollar would collapse along with the housing bubble has so far not come to pass, with the US Dollar Index rising from 80 points in July 2007 to 83 points in January 2009, a climb which actually accelerated as the US financial crisis became more acute in September 2008.

Similarly, Schiff's prediction that the US financial crisis would cause a greater fall in US equity prices than in non-US equity prices has so far been inaccurate as in 2007-2008 most international equity markets fell further than the US markets. Using the broadest available measures, the MSCI US Broad Market Index was down 34.83% in 2008, while the MSCI All Country Ex-US Index was down 42.86%. [16].

Gold and precious metals during this period have performed significantly better than equity prices, with gold losing only 3.77% and silver 5.38% of their USD values in 2008. Yet with gold under $1,000 per oz, and silver under $20 per oz, precious metal prices have not seen the dramatic run up Schiff has been predicting.

Schiff acknowledges the short-term failure of these particular predictions, but says that the US financial crisis is just beginning to unfold and it is merely a matter of time before the global economy rebalances and his further predictions take form.

On October 28 2008, Schiff stated in an interview on Bloomberg TV[citation needed] that the investment strategies outlined in both books currently "are not working" due to the collapse of foreign currencies, foreign stocks and the failure of gold prices to go up significantly as most of the world entered an economic recession and foreign investors flee to cash. However, he maintained that this was a very temporary phenomenon, "due to deleveraging", and that he expects gold to shoot up to $2,000 per ounce as the dollar soon "drops like a stone." Overall, Schiff remained optimistic on his theories and stated this was a good opportunity to buy foreign stocks trading at yearly lows.

In January 2009 financial blogger Mike Shedlock claimed that Peter Schiff's investment strategies have resulted in some of his Euro Pacific Capital account holders losing 60% to 70% of their value in 2008[17]. Peter Schiff responded to this claim by stating, "to examine the effectiveness of my investment strategy immediately following a major correction by looking only at those accounts who adopted the strategy at the previous peak is unfair and distortive" and claims that losses were most heavily felt by recent clients and not by his long time investors[18].

In an interview on Yahoo Tech Ticker on February 6th, Schiff conceded that the value of his investors' portfolios had dropped as much as 50%, while avoiding the interviewer's question about how much the value of his own accounts had fallen. These returns stood in sharp contrast to the 2008 returns of other investors who shared his views including George Soros (up 10% in 2008) and Nassim Nicholas Taleb (up between 55% and 110% in 2008).

On February 13th, 2009, nationally syndicated newspaper columnist Eric Tyson analyzed Schiff's recommendations from a U.S. News & World Report magazine interview from May, 2008 as well as other Schiff recommendations[19]. The piece, which also include an interview of Schiff, also assessed how Schiff came to hold his economic views.


[edit] Political activity
Schiff was an economic adviser to Ron Paul's 2008 presidential campaign. Schiff made the following statement concerning Paul's economic revitalization plan.
"We need a plan that stimulates savings and production not more of the reckless borrowing and consumption that got us into this mess in the first place. Ron Paul's plan is the only one that amounts to a step in the right direction. If you want meaningful change - for the better that is - Ron Paul is the only candidate capable of delivering it."[20]

Schiff also endorsed Murray Sabrin for the US Senate seat in New Jersey.[21]

In December 2008, some fans of Schiff put up a website to encourage Schiff to challenge incumbent Connecticut Senator Christopher Dodd.[22] On January 23, 2009, yet another group of Schiff fans registered a domain, starting a new site with a new logo, to inspire Schiff for a possible run against Dodd. [23]


[edit] Footnotes
^ Peter Schiff on MySpace.com.
^ [http://brokercheck.finra.org/Individual/IndividualSummary.aspx?SearchGroup=Individual&FirmKey=-1&BrokerKey=1759484
^ The Man Who Called The Collapse
^ a b c "Prophet of Doom? Darien market bear says U.S. investors' ship is sinking," article by Julie Fishman-Lapin in The Advocate of Stamford, Business section, August 6, 2006, pp. F1, F6
^ Interview with Peter Schiff
^ http://www.europac.net/management.asp
^ http://www.youtube.com/watch?v=qumgxS8vXUc
^ [1]Official biographical sketch of Schiff at Euro Pacific Capital Inc. Web site, accessed August 20, 2006
^ [2] Peter Schiff's accurate forecast of the housing collapse
^ [3] Peter Schiff's accurate forecast of credit card market trouble
^ [4] December 2007 Associate Press Story on Credit Card Defaults validates Schiff's gloomy predictions
^ [5] Wall Street Unspun 11-05-08
^ [6] November 2008 The Reagan Counterrevolution
^ When Dr. Doom Speaks We Should Listen Reportonbusiness.com, July 29, 2008. Retrieved on 14 November 2008.
^ http://www.youtube.com/watch?v=qumgxS8vXUc&feature=related
^ http://www.mscibarra.com/products/indices/stdindex/performance.html
^ Europac accounts lose 60% to 70% in 2008
^ http://www.usnews.com/blogs/the-ticker/2009/01/30/peter-schiff-responds.html
^ [http://www.erictyson.com/articles/20090213 “...I Don't Think I've Been Wrong on Anything”
^ "Peter Schiff Named Economic Advisor to the Ron Paul 2008 Presidential Campaign". Reuters.com Online News (Reuters). 2008-01-25. http://www.reuters.com/article/pressRelease/idUS255917+25-Jan-2008+BW20080125. Retrieved on 2008-10-08.
^ "Paul stumps for Sabrin in Newark". PolitickerNJ.com. 2008-04-28. http://www.politickernj.com/matt-friedman/19118/paul-stumps-sabrin-newark. Retrieved on 2008-10-17.
^ Peter Schiff for Connecticut Senator 2010
^ http://voteschiff.com

[edit] External links
Euro Pacific Capital - Management Team Portrait of Peter Schiff at his company's web site
Peter Schiff Unofficial Site which includes videos, news, podcast shows, and more
Part 1 and Part 2 - Peter Schiff Interview On Southland Today (5 September 2002)
Peter Schiff predicts the financial sector crisis (in 2006)
Weekly essays by Schiff
Why Peter Schiff is being attacked, Karen DeCoster, CPA (February 2009)



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Carl Menger · Eugen von Böhm-Bawerk · Friedrich von Wieser · Frank Fetter · Ludwig von Mises · Joseph Schumpeter · Benjamin Anderson · Henry Hazlitt · Friedrich Hayek · Lionel Robbins · William Harold Hutt · Ludwig Lachmann · Hans Sennholz · Murray Rothbard · Israel Kirzner · George Reisman · Walter Block · Robert Higgs · Gene Callahan · Ralph Raico · Hans-Hermann Hoppe · Steven Horwitz · Yuri Maltsev · Joseph Salerno · Jeffrey Herbener · Thomas DiLorenzo · Jesús Huerta de Soto · Peter Boettke · Mark Thornton · David Prychitko · Jaroslav Romanchuk · Jörg Guido Hülsmann · Peter G. Klein · Peter Schiff · Robert P. Murphy

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