Peter Schiff Predicts ‘A Horrendous Christmas,’ ‘The Dow Is Going To Rally From Here,’ And ‘Gold Stocks Are Going To Take Off’

Euro Pacific Capital CEO Peter Schiff just added a new entry to The Schiff Report YouTube vlog Friday. Schiff, who correctly-called the housing bust and economic crisis last decade, shared some forecasts with viewers. From the video:

I think that given the lousy jobs number that we just got, given the revision to the previous numbers making them worse, given now today’s factory orders and the economic data that we’re likely to get next week, I think before long- or it’s not going to be too long- before the Atlanta Fed GDP now reflects a negative print, a negative number, for third quarter GDP. Now, if we get a negative number for third quarter GDP, I bet we get another negative number that’s even bigger for the fourth quarter. Because if you look at the trend over the last six years or so, the fourth quarter is always weaker than the third. The third quarter is a stronger quarter. And if that quarter is weak, what does that tell you about the second quarter? It’s going to be even weaker. So if we get a negative third quarter, and then we get a negative fourth quarter, well, that’s a recession. Right? Technically that’s a recession. What the Fed going to do?

This is going to be a horrendous Christmas, that’s my forecast, as far as what the retailers are expecting and what they’re going to get. This is probably going to be the worst Christmas shopping season of the recovery. And I think next year a lot more layoffs are coming…

The Dow was down as much as 250 points or so early in the morning. But then the buyers came in because they realized, “Hey wait a minute! If the Fed isn’t going to raise rates, then this party can continue for a while longer.” And the Dow finished up 200 points. That’s a 450 point move. We were almost down at the Black Monday lows. I think this was a pretty significant reversal. My guess is that the Dow is going to rally from here. I don’t know if it’s going to rally to new highs- that would be a stretch. But I think right now, given the weakness of this report, I think that you can see some strength in the U.S. stock market…

This time, if the dollar rises based on an anticipation of rate hikes, and the hikes don’t even come, can you imagine how much selling there’s going to be on that fact, when you don’t even get the event that everybody’s been waiting for? That’s going to work in reverse for gold. People have been selling gold for the same reason. “Oh, the Fed’s going to raise rates- that’s going to be bad for gold.” You know, when the Fed raised rates last time, it was great for gold, because gold rose the whole time. But imagine how good it’s going to be for gold when everybody expects a rate hike, and instead we get QE 4. I think this is going to be the biggest up-leg of the gold bull market, which means the gold stocks are going to take off if I am right, because gold stocks today are cheaper than they were when the last bull market began when gold was under $300 an ounce. They’re cheaper now with gold at $1,130 than they were when gold was $270…

“Sept. Jobs Report Confirms Weakening Labor Market”
YouTube Video

Christopher E. Hill
Survival And Prosperity (

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Canada Enters Recession

There had been talk about a Canadian recession for some time now, but now it’s “official.” Tamsin McMahon reported on The Globe and Mail (Canada) website Tuesday:

Canada’s economy shrank for a second straight quarter, the weakest six-month period since the Great Recession, sending the country into a technical recession even as strong growth in June suggests the pain may be short-lived.

Statistics Canada reported Tuesday that the country’s gross domestic product contracted by an annualized rate of 0.5 per cent between April and June, driven by a continuing slump in the oil and gas sector. That followed a 0.8-per-cent drop in the first three months of the year, which Statistics Canada revised downward from 0.6 per cent…

(Editor’s note: Bold added for emphasis)

Canada is the United States’ largest trading partner, and it’s economy is closely linked to ours.

Hat tip to Bank of America Merrill Lynch economist Emanuella Enenajor for correctly-calling this downturn. From a July 4, 2015, Bloomberg News piece:

Sapped by the oil slide, Canada’s economy appears headed toward recession, economists warn — and one says we’re already there.

Emanuella Enenajor of Bank of America Merrill Lynch says the Canadian economy appears to have shrunk by 0.6 per cent in the second quarter after a drop of the same amount in the first, “suggesting a recession.”

Enenajor also predicts the Canadian dollar will tumble to under 77 cents U.S. by the end of the year.

Other analysts are being more cautious…

(Editor’s note: Bold added for emphasis)

The Globe and Mail reported the Canadian dollar ended Tuesday down 38 cents to 75.63 cents (U.S.).

Christopher E. Hill
Survival And Prosperity (


McMahon, Tamsin. “Economy enters technical recession despite strong figures in June.” The Globe and Mail. 1 Sep. 2015. ( 1 Sep. 2015.

“Canada in recession, heading to sub-77¢ dollar: analyst.” Bloomberg News. 4 July 2015. ( 1 Sep. 2015.

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Tuesday, September 1st, 2015 Currencies, GDP, North America, Recession 2 Comments

Jeremy Grantham Identifies 10 ‘Potential Threats To Our Well-Being’

Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (oversees $117 billion in client assets as of June 30, 2015), just released his latest investment letter on the GMO website. Writing about the second quarter of 2015, Grantham, whose individual clients have included current Secretary of State John Kerry and former Vice President Dick Cheney, focused on ten “potential threats to our well-being” (echoing a Morningstar piece I blogged about on July 14). These threats are (in his own words):

1. Pressure on GDP growth in the U.S. and the balance of the developed world: count on 1.5% U.S. growth, not the old 3%
2. The age of plentiful, cheap resources is gone forever
3. Oil
4. Climate problems
5. Global food shortages
6. Income inequality
7. Trying to understand deficiencies in democracy and capitalism
8. Deficiencies in the Fed
9. Investment bubbles in a world that is, this time, interestingly different
10. Limitations of homo sapiens

Grantham talked about each threat in detail. I’ll be focusing on those items I think would interest Survival And Prosperity readers.

Regarding pressure on U.S./developed world GDP growth, Grantham wrote:

Factors potentially slowing long-term growth:
a) Slowing growth rate of the working population
b) Aging of the working population
c) Resource constraints, especially the lack of cheap $20/barrel oil
d) Rising income inequality
e) Disappointing and sub-average capital spending, notably in the U.S.
f) Loss of low-hanging fruit: Facebook is not the new steam engine
g) Steadily increasing climate difficulties
h) Partially dysfunctional government, particularly in economic matters that fail to maximize growth opportunities, especially in the E.U. and the U.S…

On “plentiful, cheap resources” being gone:

All in all I am still very confident, unfortunately, that the old regime of irregularly falling commodity prices is gone forever…

On oil:

Oil has been king and still is. For a while longer… Now, as we are running out of oil that is cheap to recover, the economic system is becoming stressed and growth is slowing…

Grantham added:

The good news is that with slower global growth and more emphasis on energy efficiency and a probability of some carbon tax increases, global oil demand may settle down to around 1% a year for the next 10 to 15 years. At that level of increase in demand, even modest continued increases in recovery rates will keep us in oil even if no new oil is found for the next 15 years.

Beyond 15 years, the resource and environmental news gets better because cheaper electric vehicles and changes in environmental policy will enable steady decreases in oil demand…

On global food shortages, Grantham referred to some recent research. He wrote:

I was completely gruntled by a report last month from the Global Sustainability Institute of Anglia Ruskin University in the U.K. This unit is backed by Lloyds of London, the U.K. Foreign Office, the Institute of Actuaries, and the Development Banks of both Africa and Asia – a grouping with a very serious interest in the topic of food scarcity and societal disruptions to say the least. The team of scientists used system dynamic modeling, which uses feedbacks and delays, to run the business-as-usual world forward 25 years. Without any new and improved responses from us, the results are dismaying: Prices of wheat, corn, soybeans, and rice were all predicted to be at least four times the levels of 2000. (They are currently about double.) The team concluded, “The results show that based on plausible climate trends and a total failure to change course, the global food supply system would face catastrophic losses and an unprecedented epidemic of food riots. In this scenario, global society essentially collapses as food production falls permanently short of consumption.” And you thought my argument on food problems of the last three years was way over the top!

Grantham is still not impressed with the Federal Reserve. He predicted:

And what of the current Fed regime – the Greenspan-Bernanke-Yellen Regime – that promotes higher asset prices and lower borrowing costs, which facilitate stock buybacks amongst other speculative forces? Well, this regime, too, will change. Regression of regime, if ou will. Painfully, politicians, the public, businessmen, and possibly even some economists will recognize the current regime as a failed experiment.

And on the “limitations of homo sapiens”? Grantham observed:

Not only does our species have a strong predisposition to be optimistic (or bullish) – it is probably a useful survival characteristic – but we are particularly good at listening to agreeable data and avoiding unpleasant data that does not jibe with our beliefs or philosophies. Facts, whether backed by 97% of scientists as is the case with man-made climate change, or 99.9% as is the case with evolution, do not count for nearly as much as we used to believe. For that matter, we do a terrible job of planning for the long term, particularly in postponing gratification, and we are wickedly bad at dealing with the implications of compound math. All of this makes it easy for us to forget about the previously painful market busts; facilitates our pushing stocks and markets on occasion to levels that make no mathematical sense; and allows us, regrettably, to ignore the logic of finite resources and a deteriorating climate until the consequences are pushed up our short-term noses.

The take-away from all of the above?

• Grantham forecasts U.S./developed world GDP growth to slow to 1.5 percent
• Investment opportunities may exist in commodities, agriculture, and other things food-related
• The outcome of the Fed’s current monetary policies will be painful
• Human nature- in particular, our unbridled optimism and focus on short-term gratification- will continue to result in asset bubbles and longer-term problems outside of the financial markets/economy/larger financial system

You can read Grantham’s latest investment newsletter on the GMO site here.

Christopher E. Hill
Survival And Prosperity (

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Jeremy Grantham: Fed Hell-Bent On Stimulating Asset Prices Until ‘Fully-Fledged Bubble’ Forms

Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (oversees $118 billion in client assets as of March 31, 2015), has just released his latest investment letter on the GMO website. Writing about the first quarter of 2015, Grantham, whose individual clients have included current Secretary of State John Kerry and former Vice President Dick Cheney, focused on U.S. economic growth and the bubble-blowing Federal Reserve. Regarding growth, Grantham wrote:

I am still just about certain about three things: first, our secular growth rate in the U.S. is indeed about 1.5% (at least as stated in traditional GDP accounting, wherein expensive barrels of oil increase GDP; perhaps closer to 1% in real life); second, economists move their estimates slowly and carefully in order to stay near the pack and minimize career risk (despite the recent IMF heroics); and third, that we do not like to give or receive bad news and, when in doubt, we tend to be optimistic…

On the Federal Reserve and asset bubbles, Grantham noted:

In the Greenspan/ Bernanke/Yellen Era, the Fed historically did not stop its asset price pushing until fully-fledged bubbles had occurred, as they did in U.S. growth stocks in 2000 and in U.S. housing in 2006. Both of these were in fact stunning three-sigma events, by far the biggest equity bubble and housing bubble in U.S. history. Yellen, like both of her predecessors, has bragged about the Fed’s role in pushing up asset prices in order to get a wealth effect. Thus far, she seems to also share their view on feeling no responsibility to interfere with any asset bubble that may form. For me, recognizing the power of the Fed to move assets (although desperately limited power to boost the economy), it seems logical to assume that absent a major international economic accident, the current Fed is bound and determined to continue stimulating asset prices until we once again have a fully-fledged bubble. And we are not there yet

To remind you, we at GMO still believe that bubble territory for the S&P 500 is about 2250…

(Editor’s note: Bold added for emphasis)

The S&P 500 finished up today at 2,114.

Back on August 4, 2014, I blogged about Grantham’s second quarter 2014 letter, in which he predicted:

I am still a believer that the Fed will engineer a fully-fledged bubble (S&P 500 over 2250) before a very serious decline…

Grantham’s other forecasts in his latest letter on the GMO website included:

• U.S. Economic Cycle- “Still seems only middle-aged, despite its measured long duration”

• U.S. Housing Market- “In terms of houses built is still way below the old average, and house prices are only around long-term fair value; there is room for improvement in both in the next two years.”

• U.S. Stock Market Correction- “We could easily, of course, have a normal, modest bear market, down 10-20%, given all of the global troubles we have. If we do, then the odds of this super-cycle bull market lasting until the election would go from pretty good to even better.”

As I’ve highlighted on the “Crash Prophets” page, Jeremy Grantham has an incredible knack for identifying changes in the direction of the stock market. He also nailed the economic crisis late last decade. However, I don’t know how what kind of track record he has with correctly-calling the economic and housing cycles. I guess I’ll just have to see how these two pan out.

An update to the “7-Year Asset Class Real Return Forecasts” chart was also provided in “Are We the Stranded Asset?”, which can be viewed in its entirety on the GMO website here (.pdf format; starts p. 7).

Christopher E. Hill
Survival And Prosperity (

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff Says Stock, Housing Markets Down If QE 4 Not Launched In 2015

“The U.S. economy entered 2015 on the most robust streak of consumer spending in years, yet when the first growth figures for 2014 came out Friday they underscored the lack of vigor in the current expansion.

Gross domestic product, the broadest measure of goods and services produced across the U.S., notched an annual growth rate of 2.4% for 2014, the government said Friday, just a touch better than the sluggish average of the nearly six-year-old recovery—and far from the 4% growth of the late 1990s. Fourth-quarter GDP was 2.6%, roughly half the summer’s blowout 5% pace, which was aided in part by a spree of military purchases that wasn’t repeated.

The report offered both hope and red flags for the world’s largest economy…”

The Wall Street Journal website, January 30, 2015

Euro Pacific Capital CEO Peter Schiff discussed the latest U.S. GDP numbers in his January 30, 2015, entry on The Schiff Report vlog on Schiff told viewers:

Ultimately, what I think has to happen- and it hasn’t happened yet- is that people are going to have to connect these dots, and get their arms around the fact that the U.S. economy is not nearly as prosperous. That this recovery is not legitimate, and that it cannot sustain itself. I mean, how can anybody believe- if you believed that the stimulus worked, if you believe that quantitative easing and zero-percent interest rates stimulated the economy, then how can you take away the stimulus and have the economy perform better without the stimulus than it did with the stimulus? You would have to acknowledge that if you took away the stimulus, you’re going to get less growth. And that’s what’s going to happen. Yet everybody expects more growth…

The only question in my mind is- how long is the Federal Reserve going to maintain the pretense of economic growth and pretend that it stands ready to raise interest rates at some point, when it really is planning on launching QE 4 that will be larger than what they’re doing in Europe. If they don’t launch QE 4 this year, I think the stock market will be down. And not only will the stock market be down, the real estate market will be down. And remember, both the stock market and the housing market are the twin pillars upon which this phony recovery was built. And for those people who think that we’re going to have more economic growth in 2015- 3 percent economic growth which I think is still the consensus in 2015- how is that going to happen? Without any quantitative easing. With rate hikes later in the year. With a falling stock market. With a falling real estate market. You’re going to have the wealth effect working in reverse. In fact, they announced today that the homeownership rate just hit a brand-new 20-year low. And the Fed hasn’t even started to raise rates yet. How is this phony bubble economy going to grow faster under those conditions, than it did last year under the ideal monetary conditions? It can’t. And that is the dichotomy, the inconsistency, that nobody seems to be able to grasp.

“GDP Growth Slows Sharply in 4th Quarter: 2015 to be Worse”
YouTube Video

Christopher E. Hill
Survival And Prosperity (

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff: Layoffs, Falling GDP, And More QE Coming

I just got done reading a December 9 commentary piece by Euro Pacific Capital CEO Peter Schiff. Schiff, who correctly-called the U.S. housing bust and financial crisis last decade, pointed out that while the latest rosy jobs and GDP reports were gladly disseminated by the mainstream media, not-so-good news wasn’t shared. He observed:

In the weeks leading up to, and the days after, the recent GDP and jobs reports, a torrent of data releases came in that were almost universally awful. However, in our current era of journalistic lethargy, these reports have received almost no attention at all…

“Lethargy?” Some might argue “censorship” is a better fit, to support a particular agenda.

Anyway, Schiff went on to give a brief overview of the dismal economic data that wasn’t talked about by the MSM.

Upon completing this task, the “crash prophet” issued the following warning:

There is much in both the GDP and the Jobs Report that is dependent on forward-looking expectations. I believe that both reports are showing improvement because businesses are building inventory and hiring staff in anticipation of an economy that they believe will continue to improve. It’s like the Field of Dreams recovery, prepare for it and it will come. But I think businesses are following the false narrative, and ignoring, or rationalizing, the bad data as thoroughly as does the media. When they realize they were fooled by the hype, jobs will be lost, and GDP will fall.

Furthermore, the GDP and jobs data would certainly be far weaker if the Federal Reserve were not providing so much monetary support. Sure, they have discontinued the vast majority of the QE, but interest rates are still at zero percent. What would GDP or job growth look like if consumers, businesses, and the federal government were forced to pay anything that approaches the historically normal interest rates on our much greater than normal level of debt? My guess is that it will be awhile before we find out, as I believe that as the bloom comes off the recovery rose, the Fed will launch another round of QE before it gets around to raising interest rates.

(Editor’s note: Bold added for emphasis)

Layoffs, falling GDP, and more QE. Quite a different tune than what the “talking heads” on the financial news networks are singing these days.

You can read Schiff’s entire commentary on the Euro Pacific Capital website here.

By Christopher E. Hill
Survival And Prosperity (

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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2.9 Percent GDP Contraction Casts Doubt On Sustainability Of Economic ‘Recovery’

Remember that U.S. GDP “hiccup” from the first quarter?

It’s been revised. And let me just tell you, barf-o-rama baby. Barf-o-rama.

From a Reuters piece on the CNBC website earlier today:

The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.

The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month.

While the economy’s woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather

(Editor’s note: Bold added for emphasis)

Wow, did I just read that last part right? Usually the MSM plays along with that oft-used weather excuse as bad government economic reports are concerned.

The general feeling I’m getting tonight from mainstream media outlets is one of “don’t worry, be happy.” Of course, damage control is in overdrive. Jeffry Bartash reported on the MarketWatch website:

The revised GDP report briefly stunned Wall Street and clearly unsettled the White House. President Obama’s chief economic adviser, Jason Furman, cast doubt on the report and argued the economy is much stronger than the first-quarter contraction implied.

Investors, for their part, shrugged off the backward-looking report. The economy appears to have rebounded in the second quarter and economists polled by MarketWatch predict growth will turn positive again, with a 3.8% increase…

(Editor’s note: Bold added for emphasis)

3.8 percent increase in GDP in the second quarter? After revisions? It will be interesting to see if they’re right.

Personally, I feel that abysmal first quarter GDP report is a worrisome sign the sustained economic “recovery” we keep being told about is getting long in the tooth.

“Taper” to go full reverse soon, like “crash prophet” Peter Schiff has been predicting?

By Christopher E. Hill
Survival And Prosperity (


“Bad to worse: US economy shrank more than expected in Q1.” Reuters. 25 June 2014. ( 25 June 2014.

Bartash, Jeffry. “Economy’s stumble in first quarter historic.” MarketWatch. 25 June 2014. ( 25 June 2014.

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Peter Schiff: ‘We Have An Entire Economy That Is Supported On A Foundation Of Bubbles’

Tonight I watched Peter Schiff’s presentation at the MoneyShow Las Vegas back on May 12, 2014. The CEO and Chief Global Strategist of Euro Pacific Capital shared his current assessment of the U.S. financial landscape in “Too Big to Bail: Why the Next Financial Crisis Will Be Worse Than the Last”- as well as where he thinks we’re heading. Schiff warned attendees:

There is no economic recovery in the United States at all. There is no evidence of an economic recovery. The U.S. economy is in far worse shape than it was on the eve of the 2008 financial crisis. We have never been in as worse shape as we are right now. But they say, “Whoa! But the stock market went up.” Yeah, of course the stock market went up. You print enough money, you can make the stock market go up. Yes, the Federal Reserve succeeded in reflating the stock market bubble. But that’s all that it did. That isn’t evidence of a strong economy. Stock prices went up from 2002 to 2007. Does that mean we had a sound economy? No. We were on the verge of a complete implosion. The main difference though between the stock market bubble that we have today and the one that blew up, let’s say, in 2000, is that fewer individuals are participating. This is the bubble for the 1 percent. This is for the hedge funds, the private equity guys… The overwhelming concentration of buyers are very wealthy people. The average American is not participating in the stock market to the extent that he was in the 1990s. And so the Fed is not getting the boost to consumption that you would normally have from the wealth effect because a lot of people aren’t feeling the effects of the wealth because they don’t own stocks.

The same thing is happening in the real estate bubble, which the Fed has managed to reflate. The difference again between the real estate bubble we have now and the real estate bubble that popped in 2007 is again- the average American isn’t participating. Home ownership rates are at 19-year lows. You have hedge funds and private equity companies that are buying up real estate. Last month, I think 43 percent of all the properties purchased in America were purchased for cash. These are not typical Americans buying houses to live in. These are investors buying houses to flip, buying houses to rent out. This is not a healthy market. It is an extremely speculative real estate market thanks to the Federal Reserve.

So the Federal Reserve has managed to reflate two bubbles simultaneously.

And of course, the biggest bubble of them all is the bubble in the bond market.

So we have an entire economy that is supported on a foundation of bubbles…

“Peter Schiff at Las Vegas Moneyshow 2014”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Peter Schiff: U.S. GDP Fell From 2.8 Percent In 2012 To 1.9 Percent In 2013

“Investor Warren Buffett says the economy continues the steady improvement that began in fall of 2009 and he remains optimistic despite Russia’s advance into Ukraine.

Buffett appeared on the business cable channel CNBC Monday morning after releasing an upbeat annual letter to his Berkshire Hathaway Inc. shareholders over the weekend. Buffett is chairman and CEO of the Omaha, Neb., conglomerate.

Buffett said the reports he gets from Berkshire’s 80-odd subsidiaries in a variety of industries show that the economy is growing at a moderate rate, despite swings in investors’ mood.

“The American economy for five years has been moving at a fairly steady rate upwards —not as fast as people would like — but I think that absolutely continues now,” he said…”

-Associated Press, March 3, 2014

Well-known stock investor Warren Buffett has been bullish on the U.S. economy for some time now. Not so for a number of the “crash prophets,” including Peter Schiff. The Euro Pacific Capital CEO and Chief Global Strategist added a new entry Friday on his YouTube video blog The Schiff Report where he pointed out that U.S. GDP numbers for the past two years tell a different tale than the one Buffett shared with CNBC viewers this morning. Schiff observed:

The GDP numbers that were released today for the fourth quarter the government came back and revised down. It was a downward revision to fourth quarter GDP. They originally told us the economy grew by 3.2 percent in the fourth quarter. And today, they revised that down to just 2.4 percent. 2.4 percent.

Now, if you look at the entire year of 2013, the GDP grew by 1.9 percent. For the year.

In 2012- the prior year- the GDP grew by 2.8 percent.

Now, wait a minute. President Obama said in his many speeches in late 2013 that this is the year the recovery became real. That we finally have the real recovery that he’s been promising.

Well wait a minute. If GDP in 2013 was up by 1.9 percent, but it was up by 2.8 percent in the year before when the recovery wasn’t real- how is the recovery more real when the economy is growing more slowly now than it was before?

“Recovery Fantasy Persists Despite Contrary Data”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (

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Monday, March 3rd, 2014 Crash Prophets, GDP, Recovery No Comments

Updated Pandemic Flu Model: Around 95 Million Americans Ill, 2.4 Million Dead

“Autumn is the hush before winter.”

-French proverb

In case you weren’t aware, autumn began today, September 22, at 4:44 ET. Fall is my favorite season of the year, when I try to get outdoors as much as I can. The next month or so will also be a time when I’ll be working hard getting prepared for my first winter in the new house- including stocking up on items to fend off/address a cold or the flu.

Speaking of influenza, the LiveScience website ran a piece this last week which served as a reminder of what could be in store for us one of these winters- a time when people are indoors and in closer proximity to each other, making catching the flu a whole lot easier. Tia Ghose wrote on Tuesday:

A recently declassified U.S. government plan for how to react in the face of a pandemic flu has some scary, but realistic predictions.

According to a 2009 Department of Defense plan, if a flu pandemic strikes, about 30 percent of the U.S. population could fall ill, with 3 million hospitalizations and 2 million deaths. Basic services, such as medical care or essential supply deliveries, will probably be disrupted.

In the plan, the government also says it assumes that a vaccine against a completely new flu strain wouldn’t become available for several months. Even after that, production will ramp up slowly.

(Editor’s note: Italics added for emphasis)

According to Ghose, a flu expert at St. Jude Children’s Research Hospital out in Memphis, Tennessee, backed-up those DOD projections.


Back in March 2007, the non-profit, non-partisan Trust for America’s Health (TFAH) released a well-known report on the matter entitled Pandemic Flu and Potential for U.S. Economic Recession in which they said:

According to analyses by 3 major financial and economic research institutions, during a severe pandemic flu outbreak, the U.S. Gross Domestic Product (GDP) could drop between 4.25 and 6 percent. A “severe” outbreak is based on the 1918 pandemic, when 30 percent of the population became ill and 2.5 percent of those who became ill died. In modern times, this would translate into approximately 90 million Americans becoming ill and roughly 2.25 million deaths. An outbreak of this severity would almost certainly lead to a major economic recession.

(Editor’s note: Italics added for emphasis)

The Washington, D.C.-based organization added:

The CBO, the ANU/Lowy Institute, and BMO Nesbitt Burns developed national assumptions about what would constitute a “severe” or “ultra” pandemic outbreak, using estimates of a 30 percent attack rate and 2.5 percent case-fatality rate under “severe” and “ultra” scenarios. In 2005, the national population was nearly 300 million people. With these estimates, approximately 90 million people would get ill, and of those 90 million, roughly 2.25 million would die.

As I type this, the U.S. Census “Population Clock” says the national population is 316,736,690 persons. Updating the above model using the more recent 2010 Census data would show around 95 million Americans possibly falling ill from pandemic flu, with 2.4 million of those stricken potentially dying.

You can read that 2009 Department of Defense plan, “USNORTHCOM CONPLAN 3551-09, Concept Plan to Synchronize DOD Pandemic Influenza Planning, 13 Aug 2009,” via the LiveScience website here (.pdf format).

In addition, you can read the March 2007 TFAH report on their website here (.pdf format).

By Christopher E. Hill, Editor
Survival And Prosperity (


Ghose, Tia. “Pandemic Flu Plan Predicts 30% of US Could Fall Ill.” LiveScience. 17 Sep. 2013. ( 22 Sep. 2013.

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Peter Schiff Calls ‘New’ GDP ‘Propaganda’

“GDP Increased at 1.7 Percent Annual Rate, Higher Than Expectations”
-ABC News website, July 31, 2013

“US Economy: GDP Surprises, And Hiring Rises In July”
-NPR website, Jul 31, 2013

“Economy expands at brisk pace in 2nd quarter, defying gloom”
-NBC News website, July 31, 2013

I wouldn’t have expected anything less from NBC these days with their headline about the latest “National Income and Product Accounts, Gross Domestic Product, second quarter 2013 (advance estimate)” report.

In other words, the GDP report that was released on July 31.

From the U.S. Department of Commerce, Bureau of Economic Analysis:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 1.7 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent (revised).

2nd quarter GDP grew at an annual rate of 1.7 percent. Check.

1st quarter GDP revised down to 1.1 percent. Check.

(Editor’s note: Is it me, or is GDP routinely getting revised downward?)

But what’s this about a “Comprehensive Revision: 1929 through 1st quarter 2013” I saw in the report headline?

A little farther down the page there’s this:

Comprehensive Revision of the National Income and Product Accounts

The estimates released today reflect the results of the 14th comprehensive (or benchmark) revision of the national income and product accounts (NIPAs) in conjunction with the second quarter 2013 “advance” estimate. More information on the revision is available on BEA’s Web site at

(Editor’s note: Italics added for emphasis)

A “revision.” I’d heard talk about this revision to how U.S. gross domestic product would be calculated starting in the 2nd quarter and going forward.

Not all of it positive.

Enter Peter Schiff. The “crash prophet” spent a good deal of time discussing this revision in his latest entry on his YouTube video blog, The Schiff Report. The CEO and Chief Global Strategist of Euro Pacific Capital said last Friday:

If you’re going to believe in GDP, what we have now- what the government is now reporting- is not GDP. It’s something brand new that the government just made up. But they’re going to pretend it’s GDP… they have changed the methodology of calculating GDP, to produce a bigger number. Why does the government want a bigger number? To make the economy look like it’s bigger. Therefore, if you take a look at all of our debt, relative to our GDP, it looks like the debt is now a smaller portion of the GDP, because we’ve magically made the GDP bigger.

Also, I think there’s another reason. The entertainment industry- movies, television, records (Editor’s note: records, Peter?)- all of this intellectual stuff. This is certainly part of the U.S. economy that is growing. And I think what the U.S. government wants to do is magnify the impact on the GDP on the parts that it likes, while minimizing the impact of other parts, like legitimate manufacturing and investment.

So what’s going to happen, is now, I believe, that the GDP, because of these changes, will grow faster than it would have had they not made these changes. It’s kind of like they hedonically-adjusted the GDP.

Schiff added later in the video blog entry:

This is all propaganda. None of this is real. But for some reason, the financial community, academia- they just accept it without question. And if anyone like me points to these figures and says they’re not honest, then “I’m a conspiracy nut.”

“Jobs, GDP, and the Fed: Propaganda Disguised as Information”
YouTube Video

You can read the latest GDP report in its entirety on the BEA website here.

By Christopher E. Hill, Editor
Survival And Prosperity (

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Peter Schiff Recommends This Much Hated Investment

This week, we’ve already heard from “crash prophets” Dr. Marc Faber and Jim Rogers. I musn’t forget the CEO of Euro Pacific Capital, Peter Schiff, who appeared on CTV’s Canada AM yesterday. Discussing the Commerce Department’s report that the U.S. economy grew by 1.7% in the 2nd quarter and the popular notion that we’re in a recovery, Schiff pointed out:

If you look at the fundamentals, if you look at the contracting labor force, the declining use of energy, the explosion of poverty in America and income inequality, all the record number of people on food stamps and on disability, all the part-time jobs that are replacing the full-time jobs that we’ve lost. All of this is consistent with a shrinking economy. But the government won’t admit it.

Meanwhile, the cost of living is rising rapidly in America, and we pretend that there’s not enough inflation. And Ben Bernanke is out there trying to lay the foundation for more QE, because he knows he can never taper. He’s just bluffing. He can’t tell the market the truth that the U.S. economy is completely addicted to his monetary heroin. And the moment he takes it away, it’s going to be a complete economic withdrawal.

It’s a familiar message from Schiff. However, he also warned whoever would listen about the housing bubble and economic crisis that roared its ugly head in the fall of 2008 until he was blue in the face… and it eventually happened.

And here’s what the author of The Real Crash: America’s Coming Bankruptcy—How to Save Yourself and Your Country icon is recommending Americans do to protect themselves before the next leg of the financial crisis commences:

Buy precious metals.

Okay. He’s been saying that for a while too.

But in an interview with Greg Hunter of that was published on on July 28, Schiff, who’s also the CEO of Euro Pacific Precious Metals, tells viewers about one precious metals-related investment opportunity in particular that he’s incredibly-bullish on, even though others despise it right now. From the exchange:

I think right now you’ve got the best buying opportunity of the entire bull market in gold mining stocks- gold and silver stocks. That’s why, for the first time ever, I just launched on Friday of last week my first gold mutual fund. The Euro Pacific Gold Fund [EuroPac Gold Fund] invests almost entirely in gold and silver mining companies. You know, I started my mutual fund company about 3 years ago. But at the time, gold stocks were near their highs, they had a big run. So from a timing perspective, I didn’t want to come out with a fund right after a big run. I wanted to wait for a decent pullback, so we can start the fund at a relatively low point. And then have a nice track record.

You know, most people in the financial industry, when they launch a fund, they want to sell what’s hot. Because it’s easy. It would have been easy for me to launch a gold fund 3 years ago because everybody wanted to buy gold stocks. But now is a better time as an investor. It might be a harder sell, because everybody hates gold stocks right now. But that’s when you buy in cheap- when everybody hates it. But I’m willing to educate people so that they know what they should do. I don’t want to sell people what I think they want. I want to educated people and convince them to buy what I know they need. So it might be a harder sell, but this is a great time, I think, to be investing.

You know, they say on Wall Street, it’s easy to make money, all you got to do is buy low and sell high. Well, it’s easier said than done. Because you can’t sell high until you buy low. And I’m convinced, we are buying really low right now by buying the mining stocks. So people can buy themselves or check out some information on my brand new mutual fund that came out on Friday.

“Peter Schiff: Buy Gold and Silver Now, Money Printing Until We Have A Currency Crisis & More”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: ‘One Day, This Financial Bubble Will Have To Adjust On The Downside’

I can’t believe it’s been almost an entire month since I last updated Survival And Prosperity’s “Crash Prophets” page.

Actually, I can, it’s been that hectic.

At least the blog’s off-and-running again.

Now, don’t expect too much from “crash prophet” Jeremy Grantham any time soon, as he’s off playing hooky from GMO’s Quarterly Letter, but there will be plenty on the latest investment activities and recommendations from Dr. Marc Faber, Jim Rogers, and Peter Schiff.

Speaking of “Doctor Doom,” as the financial media like to call him (along with Nouriel Roubini and Peter Schiff), Faber was recently interviewed by Hong Kong-based media, research, and consulting group The Prospect Group about the global economy (hat tip Trade The Newsroom website). Like myself, the Swiss-born investment advisor and fund manager has been consistent in his warnings of a coming financial crash. The publisher of the monthly investment newsletter The Gloom Boom & Doom Report warned viewers:

In general, if you look at the world, say compared to the 1950s, 1960s, and even 70s, it’s very clear that financial markets- official and less official- have grown disproportionately compared to the real economy. In other words, you have, say, a global GDP of- I don’t know what it is- $60 trillion or whatever it is. And you have financial markets that turn $60 trillion around in a week or less.

And I believe that one day, this financial bubble will have to adjust on the downside. Either it will adjust on the downside because we have an inflationary burst, or we have a collapse of the system.

We don’t know exactly how the end game will be played.

“Marc Faber on shadow banking, market psychology, & the global impact of American monetary policy”
YouTube Video

“We don’t know exactly how the end game will be played.”

I know one thing for sure.

The unwinding will be real painful.

Especially for those who never saw it coming, or did see it but didn’t do anything to prepare.

By Christopher E. Hill, Editor
Survival And Prosperity (

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Peter Schiff On GDP Calculation ‘Makeover,’ Delaying Our ‘Day Of Reckoning,’ And Gold Speculators

Lots of catching up going on around here today. I just got finished watching Peter Schiff’s latest entry on The Schiff Report YouTube video blog. The CEO/Chief Global Strategist of Euro Pacific Capital zeroed-in on the “makeover” in calculating U.S. gross domestic product, delaying our “financial reckoning day,” and the situation small speculators may find themselves in after helping fuel gold’s price drop the other week. Regarding GDP, Schiff pointed out the following in yesterday’s video blog post:

When the government gets around to delivering the news for the second quarter, the U.S. economy is going to be quite a bit larger than it was during the fourth quarter. Now, it’s not going to be because we’re actually more productive, it’s because the government is going to launch a brand new methodology for computing the GDP. They’re going to change the way they’ve been doing it all these years. And they’re going to start to include a bunch of things that in the past, they never included. They’re going to include things that no other country includes when they calculate their GDP. And as a result of this makeover, these brand new additions, I think instantaneously the U.S. economy is going to be 3 percent larger. That’s a big number. It’s like 4 or 500 billion dollars of GDP is going to be conjured out of thin air just based on the change in the methodology for computating GDP.

You know, this is what the government does. They change the way they compute statistics. Unemployment’s too high? Okay, we’ll calculate it another way. Now it’s not as high. Inflation’s too high? Wait a minute, let’s find another way to calculate the inflation rate. Oh look, we’ve solved the inflation problem- there’s not that much inflation.

Now, the government wants the economy to appear bigger. Why? Well, because it makes the debt-to-GDP look smaller. A lot of people are talking about debt-to-GDP now. Well, if they can make the GDP larger by figuring out another way to calculate it, well now they can make that ratio appear better.

Also, people are talking about government spending as a share of GDP. Okay, let’s make the GDP larger, and that means that government spending has now come down as a share of this larger number.

Schiff, who correctly predicted the U.S. housing bust and “Panic of ’08,” had this to say about the coming U.S. financial crash:

The fact of the matter is, governments are borrowing too much, they’re printing too much, they’re spending too much, and it’s all in a vain attempt to try to artificially stimulate an economy that’s been overstimulated, and to delay the “day of reckoning.” And the problem is, the longer they delay it, the more we have to reckon with. And, ultimately, we’ve going to have to pay a huge price for the fact that we didn’t deal with these problems sooner, rather than later.

“Slow ‘growth’,GDP makeover, Keynesians demand more debt and inflation”
YouTube Video

Finally, Schiff, who’s also the CEO of Euro Pacific Precious Metals, talked about gold’s recent price drop, who he thought was behind it, and what may be in store for them. From the video post:

I think the major selling in the metals market has come from the small speculator that trades on the futures market, that trades on the ETF. That’s where all the selling has been. The small speculators. I don’t think the larger investors have cashed in. They’re probably holding on. And the real buyers, the buyers in the physical market- who are not just trying to jump on a moving train to try and catch a small move because they want to get in on something that’s going up- the physical demand has been ongoing and consistent for years. But you have had some of the “Johnny Come Lately” hot money among smaller speculators. They’ve jumped on, they’re the ones that have sold, they cashed out. In fact, I think you have a lot of small speculators that are now short gold, that sold into the lows, and that are holding onto these positions with losses. And we’ll see how long they can hold those losses as the price moves higher and we turn up the heat. I think a lot of those people that were quick to short the market are going to end up covering at much higher prices.

Good insights as usual from this “crash prophet.”

By Christopher E. Hill, Editor
Survival And Prosperity (

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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U.S. Economy Grew Only 0.1 Percent Last Quarter

Since the following economic news wasn’t being talked about too much in the mainstream media Thursday, I thought I’d share it here. From the U.S. Department of Commerce, Bureau of Economic Analysis website:

National Income and Product Accounts
Gross Domestic Product, 4th quarter and annual 2012 (second estimate)

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, real GDP declined 0.1 percent. The upward revision to the percent change in real GDP is smaller than the average revision from the advance to second estimate of 0.5 percentage point. While today’s release has revised the direction of change in real GDP, the general picture of the economy for the fourth quarter remains largely the same as what was presented last month (for more information, see “Revisions” on page 3).

All that government intervention, all that stimulus, all that new debt. To which I say:

“Keepin’ your head above water…”

You can read the entire news release on the BEA webpage here.

By Christopher E. Hill, Editor
Survival And Prosperity (

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