Housing

Peter Schiff Predicts Future Fed Moves

Peter Schiff of Euro Pacific Capital released a new entry Monday on The Schiff Report YouTube vlog. The “crash prophet” talked about a number of financial topics, including future activity by the U.S. central bank. Schiff predicted:

I think that with the weakening in the stock market, the softness we’re seeing now in the real estate market- with the fact that we’re going to be getting weaker jobs numbers in the spring that cannot be rationalized away based on the weather- the Fed is going to have come forward at some point and acknowledge which should have already been obvious. That they were mistaken. They were overly-optimistic on their assessment of the economy. That for whatever reason they’ll come up with an excuse to save face- they can blame it on some external factor- but the Fed is going to have to come out and they’re going to have to halt the tapering process, and ultimately reverse it.

How much time there will be between the pause and the reversal?

I don’t know. I don’t think it will be more than a couple of meetings, at best. But that’s what’s coming….

Schiff, who correctly-called the U.S. housing bubble and subsequent burst along with the 2008 global economic crisis, went on to speculate what all this might mean for gold and stocks.


“Warmer Weather’s Failure to Stoke Jobs Chills Stocks”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: 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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Record Net Worth Result Of Fed Blowing Bubbles In Housing, Stocks?

I was surfing the Internet last night when I read something about Americans’ net worth making a comeback. Neil Shah reported on The Wall Street Journal website Thursday:

Americans’ wealth hit the highest level ever last year, according to data released Thursday, reflecting a surge in the value of stocks and homes that has boosted the most affluent U.S. households.

The net worth of U.S. households and nonprofit organizations rose 14% last year, or almost $10 trillion, to $80.7 trillion, the highest on record, according to a Federal Reserve report released Thursday. Even adjusted for inflation using the Fed’s preferred gauge of prices, U.S. household net worth—the value of homes, stocks and other assets minus debts and other liabilities—hit a fresh record…

(Editor’s note: Italics added for emphasis)

I can’t say I’m surprised to hear of this rebound in net worth. After all, Euro Pacific Capital’s Peter Schiff has been warning for a couple of years now that the Federal Reserve is inflating new asset bubbles via tremendous amounts of stimulus (quantitative easing) to spark some sort of economic recovery in the wake of the bursting of the housing bubble and global financial crisis that reared its head in the fall of 2008. I blogged back on September 18, 2012:

In his September 14 entry on the The Schiff Report YouTube video blog, Schiff, who correctly-predicted the bursting of the U.S. housing bubble and 2008 global economic crisis, explained to viewers what QE3 was really about:

This is the plan that Ben Bernanke has. Ben Bernanke’s plan to revive the U.S. economy, and create jobs, is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy, that the Fed wants an encore…

How is another housing bubble going to solve anything. Now one thing that Ben Bernanke hasn’t figured out yet- it ain’t gonna work. No matter how much he tries, no matter how much air he blows in to that housing market, he’s not going to reflate that bubble. There are simply too many holes in it, and there is no precedent for relating a busted bubble. More likely, all that cheap money is going to go someplace else…

Schiff asserted the Federal Reserve was trying to inflate another housing bubble.

Instead, there’s suggestions both housing and the stock market look “frothy” these days.

Suppose the Fed did in fact want to inflate new asset bubbles. If the central bank aimed to spread the wealth around in an attempt to jump-start the economy, it doesn’t seem to be happening. Shah noted in that WSJ article:

But the rebound, while powerful, has been tilted in a way that limits the upside for the broader U.S. economy and is increasingly leaving behind many middle- and lower-income Americans…

That means that even as wealth increases, it’s increasingly going to the affluent.

In addition to the affluent, much of the wealth surge is going to older Americans. Both groups are less likely to spend their gains and more likely to save, Mr. Emmons said. Meanwhile, sheer demographics—the retirement of the baby boomers and America’s aging population—are increasing the ranks of the nation’s savers.

The upshot: While American households overall are getting wealthier, the benefits for the economy may prove limited until such improvements reach more people.

(Editor’s note: Italics added for emphasis)

“The benefits for the economy may prove limited until such improvements reach more people.”

I fear another financial crisis will have paid us a visit before such prosperity is achieved.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Shah, Neil “U.S. Household Net Worth Hits Record High.” The Wall Street Journal. 6 Mar. 2014. (link). 7 Mar. 2014.

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Free Online Survival Training Summit Starts January 20

Speaking of survival instruction tonight, what do you have planned next week? You see, I got an e-mail last week from someone involved with The Survival Summit, billed as a “FREE, five-day, online training summit where 25 of the world’s most sought-after experts on Survival and Self Reliance will be teaching online classes.” The online event is scheduled to take place starting next Monday, January 20, and continues until January 26. From the Summit’s website:

Join Us For The SURVIVAL Summit?

January 20-26th, 2014

This January, the founders of The Prepper Project will be hosting an exclusive online event that we’re calling ‘The Survival Summit’:

It’s going to be a FREE, five-day, online training summit where 25 of the world’s most sought-after experts on Survival and Self Reliance will be teaching online classes, giving you 5 solid days and over 24 hours of training and strategies with the single focus of keeping your family alive, safe, and fed during a triggered societal collapse.

Topics we’ll be covering during this 5-day event will include:

• How to develop a STRONG ‘Protection Triad’ with detailed Property Security & Threat Planning… Water, Energy, & Fuel Systems… and Self-Reliant Food Production & Storage.
• How to grow your own food supply, without fertilizers, pesticides, or even irrigation. Even if you live in an arid climate.
• How to spot the ideal homestead or survival retreat locations.
• Building concepts for hiding your home in the wilderness.
• Blueprints for setting up your property with its own off-grid water and energy supply.
• Trapping secrets for protecting crops like corn from being stolen by Raccoons, or potatoes from being ravaged by voles.
• How to feed & clothe your family by trapping like the settlers.
• How to protect your loved ones in a world where the police are no longer coming to your rescue.
• Different strategies for defending a suburban versus rural home or property from looters or armed gangs.
• How to fortify your home from being breached. And the skills you need to know to escape from an unlawful restraint or kidnapping.
• Off-grid medical techniques, herbal remedies for fighting potential flu pandemics, how to legally create your own renewable fuels, and much, much more.

And that’s really just the beginning!

Sign up to attend The Survival Summit that kicks off on Monday, January 20th by entering your email address in the form below now, and we’ll send you more details about our speaker lineup in the weeks ahead.

Again, this event is completely FREE to attend!

And you can watch all 25 of the presenters completely online from your home computer, provided you have a secure high speed Internet connection.

So there’s no traveling to a central location; your privacy and identity remain protected.

But again, we want to emphasize, only those who register in advance by entering their names and emails addresses will be told how and where to attend this event.

We won’t be publicly broadcasting these details across the Internet.

So if you know of someone who could benefit from joining this conversation with us, please direct them to this page to register as well.

We Hope You’ll Join Us For The Week of January 20th.


“The Survival Summit”
YouTube Video

I took a quick look at the list of preparedness-related experts booked for the Summit. I’m familiar with the work of a number of them, and I’m impressed they’ll be a part of this project. So much so I might have to schedule my blogging and other activities around viewing the Summit presentations next week.

Now, if you’re like me, when someone uses the word “free” in a pitch, a red flag is raised. How can all this online instruction be free? From the website’s FAQ page:

Each day, a couple of presentations will be posted on the summit website and will be available during the day for people to watch absolutely free. It’s much like if you were attending a regular convention. After the day is over the presentations will no longer be available to watch for free but will be available for purchase as part of the summit upgrade package.

(Editor’s note: Italics added for emphasis)

A summit upgrade package. That’s how The Survival Summit can offer this material for free.

If the “online classes” are as good as I and others hope they are (which wouldn’t be much of a stretch consider the experts involved in the Summit), I can see those packages selling rather well as a resource to refer back to down the road.

Next Monday, January 20, The Survival Summit begins. Register now to book a place at this special online event.

Click on the following banner ad to go to the Summit’s website. If you register for the event via this link and eventually purchase a summit upgrade package, I receive a commission from the sale.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Peter Schiff Bashes QE, Taper Lite, Gold Bears

“Gold Set for Worst Annual Tumble Since ‘81”

-FOX Business website headline, December 23, 2013

“Gold’s safe-haven role is over: strategist”

-MarketWatch.com headline, December 23, 2013

“I wouldn’t buy gold with my worst enemy’s cash: Strategist”

-CNBC.com headline, December 22, 2013

Not only have I been waiting to hear Euro Pacific Capital CEO Peter Schiff’s take on last week’s “taper” of the Federal Reserve’s quantitative easing program, but also his opinion on the latest bout of gold selling.

Schiff, who correctly called the recent housing crash and 2008 global economic crisis, just uploaded a new entry to The Schiff Report, his YouTube video blog. Schiff told viewers on December 20:

We have never had more stimulus- both monetary and fiscal- than we have right now. This is record-breaking, Keynesian stimulus. And it’s barely working. Yes, it’s inflating a stock market bubble. It’s inflating a real estate bubble. But it’s not creating genuine economic growth. And it never will. It is not raising living standards for the vast majority of Americans. And it isn’t creating productive, high-paying jobs. And it never will. And Ben Bernanke doesn’t understand that.

Like fellow “crash prophet” Marc Faber, Schiff believes the Federal Reserve will eventually pursue more, not less, bond-buying in the future. He explained:

Why did gold sell off? “Because everything is great.” “Because the Fed has done the impossible.” “It’s tapered and it hasn’t hurt anything.” This is what everybody believes. That the Fed has accomplished its goal. It hasn’t done anything. It’s talked about doing a tiny bit. But again, as far as I’m concerned, monetary policy is even easier now than it was before they announced this trivial taper lite. And the rest of the taper is probably never going to happen because the Fed is going to have to buy more bonds, not fewer bonds, to keep this whole house of cards from imploding.

Now, is gold going to continue to fall? I don’t know. My gut is that it’s probably still finding a bottom around 1,200. There is plenty of legitimate support for gold all around the world. Yes, all the speculators who are convinced that everything is great. The same people that thought it was great in 2007. Or it was great in 1999. That crowd, completely clueless about actual economics, is convinced that there is no reason to own gold. And so, they’re going to sell it, they’re going to short it. But there is a larger community around the world, particularly I think a lot of the emerging markets, central banks, China in particular, that see it differently. And they’re using this opportunity to buy as much gold as they can so that when the speculators and the investors figure out how wrong they’ve got it, and they realize that they need to be buying gold not selling it, there won’t be any gold left to buy because they would have already sold it. And the people who bought it from them aren’t going to sell it back. The gold that China bought- they’re never going to sell it. I don’t care how high the price of gold goes. They want that gold as reserves for their currency because they know the dollars that they have in reserve are eventually going to be Monopoly money. It’s going to be confetti. So they need something real to back up their own currency, and they want gold.

And so, I think that we need to be taking advantage of this opportunity. And don’t be worried about all the negativity that’s out there and all the professionals who are writing gold’s obituary. They’ve written it before, they’ll write it again. But I still think that the bull market has a long way to go. Ultimately, we are still heading for a currency crisis.


“Taper Lite: Bernanke Tightens Monetary Policy by Easing it!”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(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 Predicts Effect On Consumers When Bond, Stock, And Real Estate Bubbles Pop

Anyone catch Euro Pacific Capital’s CEO and Chief Global Strategist Peter Schiff on FOX Business Network’s The Willis Report back on November 27?

I just saw it for the first time the other day. Host Gerri Willis began the segment by talking about recent upbeat economic reports, to which Schiff replied:

You know, Alan Greenspan actually came out today and proclaimed that there was no bubble in the stock market. And he ought to know, right? Because he’s 0 for 2 when it comes to spotting bubbles. I think it’s 3 strikes and he’s out.

Ouch. A close second for my earlier “Quote For The Week” post.

The “crash prophet” added:

Because not only is there a bubble in the stock market. But the Fed has managed to make bubbles in the stock market, the bond market, and the real estate market simultaneously. That’s a lot of bubbles for the Fed to juggle.

Later on in the segment, Schiff, who correctly predicted the recent housing market crash and 2008 economic crisis, told Willis the U.S. dollar “is eventually going to get hit hard.” The host asked:

What will I feel as a consumer?

Schiff answered:

When the Fed is ultimately forced to raise interest rates- yes, we’ll have a big drop in the stock market, a big drop in the real estate market, we’ll be back in a severe recession, and it’s going to be tough. Prices are also going to go up for consumer goods, because a weak dollar means consumer goods are more expensive, But ultimately if the Fed has to protect the weak dollar with rate hikes, then your assets go down in value. But the price of everything you need to buy goes up.

Not a pretty scenario at all for American consumers if Schiff is correct once again.


“Holding the Dollar Could be Riskier Than Stocks”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(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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Robert Shiller: ‘I Am Most Worried About The Boom In The U.S. Stock Market’

I’ve been following Yale economics professor, co-creator of the S&P/Case-Shiller Home Price Indices, and 2013 Nobel Prize winner Robert Shiller for a number of years now.

While his academic and professional achievements are impressive, I like the fact that this “crash prophet” correctly called the late 90s dot-com bubble and housing bubble of a few years ago.

These days, Dr. Shiller is worried about U.S. stocks once more. Madeline Chambers reported on Reuters.com this morning:

An American who won this year’s Nobel Prize for economics believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly, he told a German magazine.

Robert Shiller, who won the esteemed award with two other Americans for research into market prices and asset bubbles, pinpointed the U.S. stock market and Brazilian property market as areas of concern.

“I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets,” Shiller told Sunday’s Der Spiegel magazine. “That could end badly,” he said.

“I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable,” he said, describing the financial and technology sectors as overvalued.

(Editor’s note: Italics added for emphasis)

“Our economy is still weak and vulnerable.”

My thoughts exactly- though I wish it weren’t so.

While Dr. Shiller doesn’t say U.S. stocks are in a bubble, I wonder if he wouldn’t consider them relatively “frothy”?

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(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.)

Source:

Chambers, Madeline. “Nobel Prize economist warns of U.S. stock market bubble.” Reuters. 1 Dec. 2013. (http://www.reuters.com/article/2013/12/01/us-economy-shiller-idUSBRE9B009620131201). 1 Dec. 2013.

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Quote- No, Headlines- For The Week

Something different for readers this week. Instead of a quote, here’s two news headlines which made my eyes roll upon spotting them this weekend…

“Dow 20,000 here we come: It’s different this time”

-MarketWatch.com, November 22, 2013

“It’s different this time.”

I’ve lost count how many times I’ve heard this phrase uttered over the years as some asset bubble was being inflated.

It’s not just me either.

From Michael Kling on the Moneynews website back on May 23, 2013:

Time and again, as stock prices continue rising to unsustainable heights, stock enthusiasts have preached, “This time is different.”

And it’s not just stocks either.

From Charles Hugh Smith on LewRockwell.com this past Halloween:

Defenders of current real estate valuations can draw upon an array of justifications, but they boil down to the same one used to justify valuations in every asset bubble: this time it’s different.

As for my two cents? Like I commented on a Chicago Tribune article last week, it’s my belief that after the economic crisis reared it’s ugly head in the fall of 2008, home prices nose-dived, and the “Great Recession” took hold, Washington and the Fed only managed to paper over the situation and monetary policy was designed to inflate a new asset bubble (or two, what the hell) to “save” the U.S. economy and larger financial system. Subsequently, we find ourselves immersed in QE Infinity and what some of those who correctly-predicted the “Panic of ’08″ and housing crash see as new bubbles forming in residential real estate and equities.

I don’t envision this ending well.

Speaking of the Tribune, here’s another headline that made me cackle in disbelief.

“Breakthrough deal curbs Iran’s nuclear activity”

-Chicago Tribune website, November 24, 2013

All I can say about this hopium-infused headline is that I expect one of two scenarios down the road:

1. Downtown Tehran packed to the gills as the Islamic Republic of Iran parades its first nuclear weapon for the entire world to see. Those in the know understand state actors in this region of the world can only salivate over the prospect of having a nuke in their arsenal- Iran included. Realpolitik, people.

2. A mushroom cloud over an Israeli or U.S. city. If the technology/opportunity presents itself, an electromagnetic pulse originating from a nuclear device detonated in the atmosphere over one of these countries (more bang for the buck).

Of course, all bets are off over these two scenarios taking place if some one (the Israelis?) take out Iran’s growing nuclear capabilities with military force.

Question is, is that even possible anymore given the time Iran has had?

Again, there’s others who think the claim that the interim pact reached betwen Iran and China, France, Germany, Great Britain, Russia, and the United States “curbs Iran’s nuclear activity” is one big joke.

Enter Saudi Arabia’s Prince Alwaleed bin Talal, “the world’s foremost value investor” with a net worth of $20 billion as of March 2013 according to Forbes magazine. Here’s what the Saudi royal had to say about a potential deal with Iran. From Jeffrey Goldberg on Bloomberg.com Friday night:

“There’s no confidence in the Obama administration doing the right thing with Iran,” he told me, with a directness that would make Benjamin Netanyahu blush. “We’re really concerned — Israel, Saudi Arabia, the Middle East countries — about this.”

It is quite something for a Saudi royal to state baldly that his country is part of a tacit alliance with Israel, but Saudi leaders, like Israel’s leaders, are frantic with worry that an overeager Obama will accede to Iran’s desire to become a threshold state, one whose nuclear program is so advanced that it would only need several weeks to assemble a deliverable weapon. Alwaleed, like Netanyahu, the Israeli prime minister, believes that Iran, in its ongoing negotiations with the world’s major powers, will pocket whatever sanctions relief it gets without committing to ending its nuclear program. “Why are they offering relief?” he asked. “Keep the pressure on. Sanctions are what brought about the negotiations to begin with! Why not keep the pressure up?”

Obama, Alwaleed says, is a man who is in desperate political straits and needs a victory — any victory — to right his presidency. “Obama is in so much of a rush to have a deal with Iran,” he said. “He wants anything. He’s so wounded. It’s very scary. Look, the 2014 elections are going to begin. Within two stamonths they’re going to start campaigning. Thirty-nine members of his own party in the House have already moved away from him on Obamacare. That’s scary for him.”

(Editor’s note: Italics added for emphasis)

Note Goldberg’s headline for his Bloomberg piece:

“Iran Is Playing Obama, Says Saavy Saudi Prince”

Iran is “playing” Obama and many others, judging by the buzz being reported in the mainstream media this Sunday.

Not me. I just can’t see Dow 20,000 being sustained just yet or Iran’s nuclear aspirations being curbed through diplomacy any time soon.

Sources:

Kling, Michael. “New Yorker: No Stock Bubble- This Time Is Different.” Moneynews.com. 23 May 2013. (http://www.moneynews.com/InvestingAnalysis/stock-market-bubble-different/2013/05/23/id/506002). 24 May 2013.

Smith, Charles Hugh. “What Real Estate Bubble? Oh, You Mean the One That’s Bigger Than the 2007 Bubble?” LewRockwell.com. 31 Oct. 2013. (http://www.lewrockwell.com/2013/10/charles-hugh-smith/what-real-estate-bubble/). 24 Nov. 2013.

Goldberg, Jeffrey. “Iran Is Playing Obama, Says Savvy Saudi Prince.” Bloomberg.com. 22 Nov. 2013. (http://www.bloomberg.com/news/2013-11-22/iran-is-playing-obama-says-savvy-saudi-prince.html). 24 Nov. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(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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‘Mancow’ Moves Family Out Of ‘Unlivable’ Chicago

In the late 90s-early 2000s, I used to drive 30 miles each way to and from work during the business week (thankfully, gas was relatively cheap at that time). Therefore, I had plenty of time to kill during the commute. Back then, I used to tune into Mancow’s Morning Madhouse, a radio show hosted by Chicago-based “shock jock” Erich “Mancow” Muller once in a while. Mancow is going strong in 2013 with a presence on both the radio and television, and still manages to make headlines. Bob Goldsborough reported on the Chicago Tribune website this morning:

Calling his decision to leave the city “heartbreaking,” radio host and reality TV star Erich “Mancow” Muller has sold his Lincoln Park condominium and decamped to a house in Wilmette.

Muller, who is a married father of twin school-aged daughters, told Elite Street he’d had enough with city living.

“The schools are awful. I guess I could have had (my daughters) go to public schools, but I don’t want them to be stupid. I drove past Lincoln Park High School every day, and the kids are cursing and yelling and have their hands down each other’s pants,” he said. “And then, I was spending $45,000 a year for the (private) British School of Chicago. It was killing me.”

Mancow also said there were always homeless people outside his door and street parking he often used was raised from a quarter an hour to $13 an hour.

“I think they’ve done a good job of making the city unlivable for families. I’m so sick of feeding the broken government in Chicago,” he said.

“The schools are awful.” “I’m so sick of feeding the broken government in Chicago.”

Leave it to a shock jock to “candy-coat” his displeasure with the Chicago Public Schools and the Democratically-controlled City of Chicago.

Maybe I should start listening to Mancow on the radio again?

In all seriousness, it sucks that the Muller family feels things have gotten to the point in Chicago where they need to leave.

I wonder how many other Chicagoans feel the same way?

While some may think Mancow’s gripes are just “signs of the time” or consequences of “city living,” regular readers know my girlfriend and I just split Chicago recently after concluding we weren’t comfortable either with the direction the Midwest metropolis seems to be heading. Our “beef” has more to do with financial mismanagement and public safety- or lack thereof- however.

Unfortunately, barring a major financial crisis, “The Machine” and “business as usual” looks to be firmly established in Chicago for now.

From where I stand, however, it certainly looks like storms clouds are gathering on the horizon.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Goldsborough, Bob. “Calling city ‘unlivable,’ Mancow sells Lincoln Park condo.” Chicago Tribune. 18 Nov. 2013. (http://www.chicagotribune.com/business/breaking/chi-mancow-leaves-city-elite-street,0,3188814.story). 18 Nov. 2013.g/chi-mancow-leaves-city-elite-street,0,3188814.story). 18 Nov. 2013.

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Peter Schiff: If Fed Starts Tapering, U.S. Will Be Back In Recession

Time to talk money this morning. Only one “crash prophet” had anything notable to say in the past couple of days. The CEO and Chief Global Strategist of Euro Pacific Capital, Peter Schiff, appeared on CNBC’s Closing Bell last Friday. Schiff, who is credited with predicting the U.S. housing bust and economic crisis that reared its ugly head late in 2008, told viewers:

If the Fed begins to taper- which I don’t think it’s going to do- we’ll be back in recession. It’s not going to be good for stocks. The whole rally is based on QE. That’s why the Fed’s going to keep the monetary spigots open. Because they want to keep the phony recovery, and they want to keep inflating these asset bubbles in the stock market and in the real estate market. But the problem for the market is, the more the Fed succeeds in pushing up the market now with QE, the further it’s going to fall once the QE stops. Because it has to end eventually, otherwise the dollar is going to collapse, and it’s not going to matter what your stock portfolio is worth, because you’re not going to be able to buy anything.

When asked about the Fed not planning to start tapering until the economy is fundamentally better, Schiff replied:

It will never get better fundamentally until they stop QE. QE is preventing the economy from fundamentally recovering from the damage. So the Fed is going to keep doing it. Again, it’s like a drug. The QE keeps us high, but if we lose the drug then we go through withdrawal. We’re never going to have a genuine recovery until the Fed lets us have a real recession. So when they take away the QE, then we’re going to go right back into recession. It’s even going to be bigger than the one in ’08 and ’09, because a lot of damage has been done structurally to our economy, because the Fed has interfered with the recovery with all the QE.


“Fed Taper Will Trigger Recession”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(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: ‘An Economy That Lives By QE Dies By QE’

“The Federal Reserve decided Wednesday to hold monetary policy steady, saying that conditions remained too weak to pull back from its bond-buying program.

By a vote of 9 to 1, the Fed decided to maintain the pace of its $85 billion-per-month asset purchase plan.”

-MarketWatch.com, October 30, 2013

Another Federal Open Market Committee meeting has come and gone, and with it, the decision by the U.S. central bank to reduce, or “taper,” its $85 billion-per-month stimulus program.

Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, appeared on Canada’s only all-business and financial news television channel BNN last Friday, and correctly-predicted once again that the Federal Reserve wouldn’t start tapering its quantitative easing just yet. Schiff told Business News Network viewers:

My view has been consistent since the beginning. I said when the Fed first launched QE1 that it was a mistake. That they had checked into the equivalent of the monetary roach motel. That they had no exit strategy. That QE would continue indefinitely. That we would have increasing doses of this monetary heroin. And, eventually it’s going to come to an end. Not because the Fed tapers. The Fed’s actually going to do the opposite of tapering- they’re going to up the dosage. It’s going to end when there’s a currency crisis. When the dollar collapses, and then that morphs into a sovereign debt crisis. That’s going to force the Fed’s hand. But until then, it’s just going to pretend that there’s an exit. It’s going to pretend that there’s tapering. But it can’t do it, because it can’t remove the QE without removing the recovery and putting the economy back into a worse recession than before the Fed began this experiment.

When asked about the possibility of a “beginning to the reduction of bond purchases,” Schiff replied:

No. Because when they even talked about it last time- when the Fed talked about the possibility of maybe reducing QE- interest rates went way up, and that threatened to unravel the housing recovery, the bull market in stocks, and so the Fed had to back off. The Fed is saying that it’s only going to take away the punch bowl if the party keeps going. But the party’s going to stop if it takes away the punch bowl. That is the predicament that it’s in. You know, an economy that lives by QE dies by QE.

Schiff talked of bubbles in housing and stocks, and warned viewers:

But ultimately, those bubbles are going to burst. If the Fed eventually does the right thing, and lets interest rates rise, we’ll have a worse financial crisis than 2008. If it does the wrong thing, and doesn’t let interest rates rise, but keeps printing money instead, then we’re going to have runaway inflation and a much bigger financial disaster than what would happen if the Fed just let rates rise.


“Fed Will Do The Opposite Of Tapering- And Print More Money!”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(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: ‘We Are In A Gigantic Asset Bubble Around The World’

Time to talk money. Dr. Marc Faber appeared on CNBC’s Squawk Box this morning and touched on financial topics including the Federal Reserve’s Quantitative Easing program and asset bubbles.

On QE, where the Fed currently puchases $85 billion of longer-term Treasury and agency mortgage-backed securities each month, he Swiss-born investment advisor and money manager told viewers:

Every government program that is introduced under urgency and as a temporary measure is always permanent. And, in my view, the Fed has boxed themselves into position where there’s no exit strategy. The question is not tapering. The question is at what point will they increase the asset purchases to say 150, 200, a trillion dollars a month. That is the question.

Shakespeare couldn’t have put it better.

The publisher of the monthly investment newsletter The Gloom Boom & Doom Report also chimed in on asset bubbles. Dr. Faber warned:

You said earlier on there is no inflation. Inflation can be in consumer prices. It can be in commodities. It can be in wages. It can also be in assets. And we are in a gigantic asset bubble around the world…

So I think that one day, this asset inflation will lead to a deflationary collapse, one way or the other. We don’t know yet what will cause it.


“The world is in ‘gigantic asset bubble’: Faber”
CNBC Video
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By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(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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Moody’s Analytics: All U.S. States Except Delaware Have Escaped Recession Risk

Just when I thought I had read/seen it all today comes this from Lisa Lambert on the Reuters website late this afternoon:

All U.S. states except for Delaware have escaped the possibility of falling back into recession, as they reap the rewards of strong private-sector employment and a burgeoning energy sector, according to an analysis released on Tuesday.

Moody’s Analytics, which tracks state and metropolitan economies, added Illinois, Wisconsin and Alabama to its list of states in recovery. That left Delaware alone in its “at risk of recession” category.

Moody’s Analytics, a unit of Moody’s evaluates economics and financial risk around the world. A separate unit, the credit ratings agency Moody’s Investors Service, recently said the outlook for states is now stable, after five years of being negative.

With the U.S. economy being kept afloat by massive federal government intervention, trillion dollar budget deficits, an almost zero percent federal funds rate, attempted reinflating of the housing and financial markets, $85 billion worth of long-term bonds being purchased by the Fed each and every month, job creation dominated by part-time positions, and highly-questionable government reporting of economic data to boot, one could easily argue another recession- measured using “official” figures- is a real and constant threat to the United States.

After I read that recession assessment by Moody’s Analytics, the following sarcastic line from “Gunny” Highway (actor Clint Eastwood) in the 1986 film Heartbreak Ridge came to mind:

Well, I’ll sleep a lot better at night knowing that sir.

Have a good evening everyone.

Source:

Lambert, Lisa. “Recession risk gone in all U.S. states but 1: Moody’s Analytics.” Reuters. 10 Sep. 2013. (http://www.reuters.com/article/2013/09/10/us-usa-states-economies-idUSBRE9891BG20130910). 10 Sep. 2013.

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Doubts About Sustainable Housing ‘Recovery’ Linger

My doubts about the U.S. economy being in any sort of sustainable recovery able to stand on its own without government and central bank intervention spill over to the housing sector.

As it concerns real estate, a lot of that pessimism stems from the following that I’ve heard being discussed (albeit, somewhat quietly) for some days now but which popped up in my Sunday paper this weekend. From one of my favorite real estate reporters, Mary Umberger, over at the Chicago Tribune:

Halfsies. If you’re among those who think we’re in the midst of some kind of “normalization” of the real estate market, I offer you the conclusions of Goldman Sachs investment banking firm, which estimates that more than half of all recent real estate transactions nationwide have been all-cash deals, without mortgages.

Its report found that all-cash deals hit 57 percent in the first quarter of 2013, compared with 19 percent in the first quarter of 2005.

Such sales appear to be concentrated at the lower end of the price scale, Goldman Sachs said, and reflect the efforts of investors who are buying more modest homes to rent out.

(Editor’s note: Italics added for emphasis)

57 percent all-cash deals? During the housing bubble’s heyday, I seem to recall hearing of individuals who couldn’t even afford to buy a new TV somehow getting mortgages for new McMansions.

I just can’t see your typical homebuyer plunking down all cash for a home. So if investors are fueling this housing “recovery,” well, let’s just say my doubts concerning a sustainable residential real estate comeback continue to linger. Especially if mortgage rates continue to climb higher.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Umberger, Mary. “From remodeling lows to Florida highs.” Chicago Tribune. 30 Aug. 2013. (http://www.chicagotribune.com/classified/realestate/sc-cons-0829-umberger-20130830,0,6086796.column). 9 Sep. 2013.

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Monday, September 9th, 2013 Business, Housing, Recovery No Comments

Over 35 Percent Of Chicago-Area Homeowners With Mortgages Still ‘Underwater’ Last Quarter

Back when the U.S. housing bubble was rapidly-inflating in the early- to mid- 2000s, a number of my “contemporaries” here in the Chicagoland area decided to take the plunge and buy homes.

They just didn’t expect that plunge to also include local housing prices.

Many of these individuals took out mortgages, and as the values of their single-family residences plummeted in the subsequent years, they soon went “underwater,” meaning they owed more on their loans than their properties were worth.

Well, the “Underwater People” (not to be confused with the album by The Samples or local band by the same name who I used to go watch in the 90s) are still here, contributing to a depressed Chicago-area housing market in which single-family home prices were down in June about 28 percent from their peak in September 2006 (S&P/Case-Shiller data), according to ChicagoRealEstateDaily.com on August 27.

This past Sunday, I spotted the following about underwater mortgages in my Chicago Tribune. Mary Ellen Podmolik wrote:

A lack of inventory is frustrating potential Chicago-area homebuyers, and a report last week from Zillow explains why some homeowners might like to sell their properties but can’t. Despite improving home values, 35.4 percent of Chicago-area homeowners with a mortgage were underwater at the end of June, meaning they owed more on their loan than the home was worth, Zillow said. That means those homeowners would have to sell their properties through a bank-approved short sale.

I took a look at the Zillow data this morning, and the picture it painted of the Chicago-area housing market isn’t very pretty as it concerns negative equity. From their August 29 press release for the just-published Second Quarter Zillow Negative Equity Report:

• Percent of homeowners with mortgages in negative equity in Q2 2013= 35.4% (Podmolik already noted)
• “Effective” negative equity rate, including homeowners with 20 percent or less equity in Q2 2013= 50.7%
• Forecasted negative equity rate in Q2 2014= 33.2%

A little improvement being predicted for next year.

One more glimmer of hope for Chicago’s “Underwater People” that I spotted in that press release:

Minimum number of homeowners expected to be freed from negative equity by Q2 2014= 38,268

Of course, these projections assume Fed funny money keeps flowing and blowing up the prices of real estate and paper assets.

You can read that entire press release from Seatlle-based Zillow- which discussed the negative equity rate nationwide- on their website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

“Home prices up for 8th straight month.” ChicagoRealEstateDaily.com. 27 Aug. 2013. (http://www.chicagorealestatedaily.com/article/20130827/CRED0701/130829853/home-prices-up-for-8th-straight-month). 4 Sep. 2013.

Podmolik, Mary Ellen. “Problems still rampant in mortgage servicing industry.” Chicago Tribune. 30 Aug. 2013. (http://www.chicagotribune.com/classified/realestate/ct-mre-0901-podmolik-homefront-20130830,0,7902179.column). 4 Sep. 2013.

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Peter Schiff: Fed ‘Bluffing’ With Talk Of Tapering QE

You may have noticed the numerous comments being made by Federal Reserve officials recently about “tapering” back quantitative easing.

Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, doesn’t buy it.

Schiff, who correctly-predicted the U.S. housing bust and “Panic of ’08,” appeared on CNBC’s Closing Bell back on June 11. He told viewers:

I do expect the Fed to taper back the tapering talk. Remember- for years, they were talking about an exit strategy. And I always said that they were bluffing- they have no exit strategy. They still don’t. Now, they don’t even talk about exit. They just talk about tapering. But ultimately, they’re not going to do that. They’re going to increase the size of their monthly QE. That’s the only way to stop the bond market from imploding. And they will do that until they can’t do it anymore…

You know, I said the Fed is just bluffing with all the talk of tapering, because they know we have a phony recovery. And the minute they take away the monetary stimulus the whole recovery illusion is going to fade. But they have to maintain this posture. But, we do get a meaningful pullback in the bond market, which brings down the stock market, and the housing market starts to roll over again. The Fed is going to have to come clean and start talking about expanding its monthly QE. And that’s what the market is going to need to go higher again. But again, it’s an inflationary illusion. The underlying fundamentals beneath the economy and the stock market are getting worse- not better.

Schiff proceeded to recommend foreign stocks, silver, and gold- especially gold stocks- as possible investments.


“To Big To Fail Banks Will Fail Again”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(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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