Recession

Peter Schiff: When Stock Bubble Pops, Trump ‘Going To Have To Take The Blame’

As I mentioned in that last post, the U.S. economic expansion is now the third-longest since World War Two.

And if the next recession hits on President Trump’s watch, a number of Americans will blame him for it.

The same goes for a stock market crash.

Peter Schiff, the CEO of Euro Pacific Capital, touched on this in a recent interview with the folks over at Financial Argument, “a daily show that will cover issues surrounding the economic collapse.” From their exchange posted on YouTube.com on November 26:

FA: I wanted to start off with the stock market. I mean, we’re seeing it continually move up. And before Trump was President, he was out there saying that there’s bubbles in the stock market, there’s bubbles in housing, there’s bubbles everywhere. Now that he’s President, he really doesn’t say this anymore. And he’s saying that the stock market’s going up because of me, and it’s fantastic. When you look at the stock market, does it make any sense whatsoever, and can actually Trump take credit for this?
SCHIFF: Well, first of all, there was a bubble before Trump was elected. Clearly. And Trump pointed that out himself. That was one of his talking points on his stump speeches. There was a big, fat ugly bubble in the stock market. And if Trump wants to take credit for the bubble getting bigger, I would agree. I think there has been a lot of optimism, a lot of enthusiasm, among investors. And that has resulted in higher stock prices. But I think where Trump is getting into trouble is by claiming that the stock market going up is no longer a bubble. That now this is just a real bull market that reflects the improvement of the fundamentals since he’s been elected. That’s not the case. This is simply more air into the same bubble. And this bubble is going to burst, and I think unfortunately now that Trump has branded it- just like it was one of his buildings, he’s put the big “Trump” marker on it- when this thing pops, he’s going to have to take the blame.

(Editor’s note: Bold added for emphasis)


“PETER SCHIFF- Worst Stock Market Crash of a Lifetime Ahead of Us 2017-2018”
YouTube Video

Schiff, who correctly-called the housing bust and economic crisis last decade, speculated on the Federal Reserve’s future moves and a coming recession. From the discussion:

FA: The Fed is keeping everything steady as she goes right now. They’re not raising interest rates. They’re slowly unwinding their balance sheet. Are they backed into a corner?
SCHIFF: They’re not slowing unwinding their balance sheet. They talked about slowly unwinding the balance sheet. But the balance sheet hasn’t unwound at all. It’s as high as it’s ever been. I think this is all a bunch of talk. There’s no way they’re going to be able to shrink that balance sheet in any significant way because it would drive interest rates up and weaken the economy and affect asset prices. In fact, I think the next major move in the Fed’s balance sheet is another big leg up when they have to launch the next round of quantitative easing. Obviously, the U.S. economy is going to go back into recession. I think we’d already be in recession had Trump not won the election. And I do think that the enthusiasm surrounding his victory and the optimism, I think, probably postponed the recession for a year or two. But, it’s going to hit, and then, how is the Fed going to respond? Well, we know. In fact, Donald Trump has appointed a new Fed chairman to follow Janet Yellen that he’s confident will do exactly what she did. Or exactly what Bernanke did. Which is slash interest rates, and print more money, and buy government bonds, and buy mortgages, or buy whatever they have to buy to keep everything from imploding.

Here’s what Schiff had to say about a potential economic crisis in 2018:

I do think we’re going to see a downturn. We could see a crisis, but chances are the crisis itself will happen later.

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is 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 on the site.)

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James Rickards: Fed Preparing For Next Recession

James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, shared what he thinks the Federal Reserve is up to these days during a recent interview on “The Bottom Line with Henry Blodget.” Rickards, who wrote national-bestseller The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis last year, informed viewers:

Here’s what the Fed is trying to do. They need to normalize the balance sheet, meaning get the balance sheet down to maybe $2 trillion. Right now it’s over four. It’s coming down a little bit. It’s a long way between $4 trillion and $2 trillion, bearing in mind that in 2008 it was $800 billion. And they need to normalize interest rates, which means getting from 1% to 3-3.25%. But the question is how do you get there? So the Fed is trying to raise interest rates 25 basis points, four times a year every March, June, September, and December through 2019 to get to 3.5% or so and bring down the balance sheet. They’re going to be reducing it by the end of next year by $50 billion a month, which is a lot. And there are some estimates that the impact of that is the equivalent of a 1 percentage point rate hike, because it is a form of tightening- you’re reducing the money supply. You’re reducing base money. The question is, why are they doing it? Why are they doing it in kind of a relatively weak economy? The answer is they’re preparing for the next recession. They want to run the playbook again, which is cut rates and then go to QE4 and QE5. How do you prepare for the next recession without causing the recession you’re preparing to cure? That’s the finesse, that’s the problem, and I don’t think they can do it.

(Editor’s note: Bold added for emphasis)

The current U.S. economic expansion is now the third-longest since World War Two.


“The Fed is trying to prepare for the next recession without causing it”
YouTube Video

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is 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 on the site.)

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List Of Individuals Credited With Publicly Predicting The 2008 Global Economic Crisis

“Vice President Dick Cheney says that his boss, President George W. Bush, has no need to apologize to the American people for not doing more to head off the financial calamity, saying no one saw the crisis coming.

During an interview Thursday with The Associated Press in his West Wing office, Cheney defended the administration’s performance on an economy that is growing weaker daily and which recently collapsed in spectacular fashion. Cheney said that ‘nobody anywhere was smart enough to figure it out.’

-Associated Press, January 8, 2009

I always chuckle when I read what Dick Cheney said about the 2008 global economic crisis. Particularly that bit about “nobody anywhere was smart enough to figure it out.”

As a matter of fact, there were a bunch of “smart” people around warning about the coming carnage, in addition to the “crash prophets” I’ve been blogging about these past few days.

Gary Karz, creator/host of InvestorHome.com, cataloged these soothsayers in “Who Predicted The Global Financial Crisis?” He wrote:

In the years since the Global Financial Crisis exploded on the scene, there have been a number of articles and initiatives documenting the individuals that publicly predicted the crisis and arguably deserve credit for having sounded the alarm. This page summarizes those efforts and links to those sources (and I expect to update it over time as more information and research becomes available). While plenty of foreign leaders and professional doomsayers have long predicted the collapse of the US economy, to the extent possible it should be useful to differentiate them from those that legitimately warned about a financial crisis or critical elements of it based on some logical analysis that appears to have merit after the fact. I believe a large percentage of investors and home buyers were exposed to at least some credible warnings about a housing bubble, but clearly many people chose to ignore those warnings or dismiss the predictions of a coming housing crash and/or crisis as unlikely to come true. Separately, I was interested in hearing what these individuals prescribe…

(Editor’s note: Bold added for emphasis)

Separately, I am interested in hearing what these individuals have to say these days about the next global financial crisis.

Karz put together a comprehensive list of 2008’s “doomsayers,” which you can view here on his Investor Home website.

On a side note, VP Cheney was (still is?) a client of “Crash Prophet” Jeremy Grantham (on the Karz list), who said in a pre-crisis letter to his company’s shareholders we are now witnessing the first global bubble in history, covering all asset classes. “From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips; it’s bubble time!”

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is 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 on the site.)

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Thursday, November 30th, 2017 Bubbles, Crash Prophets, Housing, Investing, Recession 2 Comments

Bix Weir Predicts 2017 Derivatives Implosion, Trump To Crash System Then Rebuild

“Donald Trump’s prediction that the U.S. economy was on the verge of a ‘very massive recession’ hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations…

‘I think we’re sitting on an economic bubble. A financial bubble,’ he said.”

-Reuters.com, April 3, 2016

Precious metals and financial expert Bix Weir recently appeared on former network/investigative correspondent Greg Hunter’s latest project, Greg Hunter’s USAWatchdog.com (“Analyzing the News to Give You A Clear Picture of What’s Really Going On”). In an interview published Tuesday, Weir warned of a coming derivatives implosion and dropped a bombshell when he predicted U.S. President Donald Trump would crash the system, then rebuild. From the exchange between Hunter and Weir:

HUNTER: Isn’t this the year we get the derivatives implosion?
WEIR: Oh definitively. People keep saying, “Well, if Greece leaves the EU, it’s not going to affect the rest of Europe.” Yes it will. It will destroy all the debt based on Greek bonds. It will destroy all the banks- Deutsche Bank, great example. If Deutshce Bank goes, J.P. Morgan goes, Citbank goes, all the banks go. And then the derivative implosion happens. And that’s alway been kind of the home-built nuclear bomb in the financial system is the derivative market- the hundreds of trillions, quadrillions, in derivatives that are so dependent upon third-parties staying in business. Because they are the counter-party to Deutsche Bank, and Citibank, and J.P. Morgan. Once one large derivative holder goes, they all go. We almost saw it in 2008. I think we’re real close to it again. I think Trump is going to push that ticket…
HUNTER: Do you think that we’re close to this derivatives explosion, this implosion, right now? Do you think it’s this year?
WEIR: I do think it’s this year. I think it can happen at any moment. I think Trump has long said that we’re in some huge bubbles and they’ve got to pop. He doesn’t want them popping after he’s fixed half the things in America. So, I would assume he’s going to pop them very soon, in the first few months of his administration. And we’re into that now. There are certain people that I know he needs to get in place. Because the popping of this bubble- this is the big mother of all bubbles.
HUNTER: So he is rushing to get his people in place so he can execute his plan. You’re saying he has a grand plan. That things aren’t just going to happen willy-nilly. You’re saying he’s going to get his people in place and he’s going to force the collapse, the reorganization.
WEIR: Yes. But it’s not his grand plan. This is the plan of the “good guys” that I’ve been talking about…
HUNTER: So why do you think we’re close to an economic reset, an implosion, a derivatives problem, the whole system resetting, changing, whatever. Why do you think we are close?
WEIR: Well, I know that Donald Trump is in charge of the exchange stabilization fund. So it’s basically he has the keys to ending this market rigging game. And once you end the market rigging game, then you can’t support the stock market. And everything has to go to its true fair market value, with real trades, no more derivatives. So Trump can do it. The question is, “Does he want to?” And it’s not just Trump. It’s the people who are behind Trump. I call them the “good guys.”
HUNTER: The Pentagon.
WEIR: Well, there’s people at the Pentagon. Within the military. Patriots. Going back since the sixties a lot of these guys are looking for a little retribution on the “bad guys” taking out Kennedy. But all this goes back to- what does Trump want to do? Trump and his people. Do they want to fix things? Go down that road to starting to fix things with the bubbles still there, with the Fed still printing money. Or, does he really want to fix them. Which means you crash the system first, and then you rebuild. I think it’s the latter. I think he’s trying to get people in place, and then he will crash the system and rebuild.


“Bix Weir-Trump Will Crash System Then Rebuild”
YouTube Video

Weir, who has a presence on the Web at RoadtoRoota.com, recommends selling “anything that has a third-party between you and your hard asset” like stocks and bonds, and buying Bitcoin (“get it out of the system”), gold, and silver- particularly silver. He concluded:

If you’re looking to make money, silver and Bitcoin- you can’t go wrong.

(Editor’s note: Bold added for emphasis)

I’d heard of Bix Weir before, but never read/listened to anything by him before. Very interesting, to say the least.

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is 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 contained herein.)

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James Rickards: ‘Fed Will Have To Go Dovish’ And Bonds, Gold Will Rally

Back on December 27, James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author appeared on CNBC TV’s Squawk Box (Asia) and made this prediction about Trump’s first term in the Oval Office:

I definitely see a stock market correction, perhaps a disorderly one… I’m not sure the Fed is ready to cut rates yet. But I expect it will raise rates in March. I think that’s on track. But beyond that, we’re going to go into a recession or the stock market is going to have a very severe correction. Either one of those will cause the Fed to back-pedal.

On January 12, James Rickards elaborated on this forecast on The Daily Reckoning website. He informed readers of “Be Prepared for a Violent Fed Reversal”:

My short-term expectation is the Fed will raise rates in March. My intermediate-term expectation is that the market is going to be disappointed with the stimulus, the Fed tightening is going to be at the wrong time, the stock market’s going to “fall out of bed,” the economy’s going to slow down, and the Fed will have to go dovish.

At that point you’re going to see rallies in bonds, rallies in gold, and a decline in the stock market…

(Editor’s note: Bold added for emphasis)

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is 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 contained herein.)

Source:

Rickards, James. “Be Prepared for a Violent Fed Reversal.” The Daily Reckoning. 12 Jan. 2017. (https://dailyreckoning.com/be-prepared-violent-fed-reversal/). 23 Jan. 2017.

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Ron Paul: ‘We’ll Have A Downturn And Then That Will Be A Real Challenge For The New Administration’

Former Texas congressman and two-time Republican presidential candidate Ron Paul was on the CNBC TV show Futures Now last week speculating about the economy under the new Trump administration. Here’s what Paul thought about President Trump’s plans for the beginning of his term:

Well, it’s hard to dissect as many people have discovered because some days I hear one message and other days I hear a different message. But what I think comes through generally speaking is that there’s going to be a lot more spending. It doesn’t sound like he’s bashful about spending. He doesn’t seem to be very concerned about the deficit. And with this massive increase in infrastructure as well as the military, I think there’s going to be a lot more spending. I think the debt is going to be much bigger. I think that it will put more pressure on the Fed. I think there will be more monetizing of debt. And everybody has to think about what generally comes about when the economy is manipulated by the Federal Reserve- you have good times, and then you have to have bad times to compensate for the artificially good time. So we’ll have a downturn and then that will be a real challenge for the new administration.

(Editor’s note: Bold added for emphasis)


“Ron Paul: A ‘downturn’ will happen under Trump”
CNBC Video

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is 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 contained herein.)

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Jim Rickards: ‘We’re Going To Go Into A Recession Or The Stock Market Is Going To Have A Very Severe Correction’

Marc Faber isn’t the only “crash prophet” who realizes the financial environment U.S. President-elect Donald Trump could inherit is significantly different than what Ronald Reagan encountered in 1981. Back on December 5 I blogged about James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, who was on RTÉ Radio 1 (Ireland) the prior week informing listeners of the following:

Less regulation, lower taxes, and a lot more infrastructure spending. This was Ronald Reagan’s playbook. This is what Ronald Reagan did in 1981 with a lot of success. But there are big differences, reasons to believe Trump will not be as successful. Namely because when Reagan came in, the U.S. debt-to-GDP ratio- the amount of debt relative to our economy- was 35 percent. Today it’s almost 105 percent. Reagan had inflation of 20 percent. Trump has it close to zero. In other words, Reagan had a lot of tailwinds– inflation had to come down, interest rates had to come down, he had fiscal space to run up the debt. Trump has headwinds

(Editor’s note: Bold added for emphasis)

Last Tuesday, Rickards appeared on CNBC TV’s Squawk Box (Asia) and made this prediction about Trump’s first term in the Oval Office:

I definitely see a stock market correction, perhaps a disorderly one Martin. I’m not sure the Fed is ready to cut rates yet. But I expect it will raise rates in March. I think that’s on track. But beyond that, we’re going to go into a recession or the stock market is going to have a very severe correction. Either one of those will cause the Fed to back-pedal.

(Editor’s note: Bold added for emphasis)

CNBC anchor Martin Soong asked his guest, “What is it going to take to cause these two outcomes- what’s the trigger going to be?” Rickards replied:

First of all, it’s already happening. There’s basically a head-long collision coming between perception and reality. So what’s the perception? The market’s rising on the Trump reflation trade. So, Trump wants to cut taxes. Steve Bannon’s talking to his advisors about a trillion dollars of infrastructure spending, cutting regulations. So all these things are viewed to be highly stimulative. So that’s why the market’s going up… But with the Fed, they’re thinking of two things. Number one, they believe in the Phillips Curve… With unemployment at 4.6 percent and that kind of stimulus coming, they know monetary policy acts with a lag- they want to get out ahead of inflation. So they’re on track to raise rates. By the way, they want to raise them anyway independent of this because they’ve got to raise them so they can cut them in the next recession. So the Fed’s on track to raise. The market expects stimulus. But here’s the point. The stimulus is not going to come. Congress has already said tax cuts have to be revenue neutral- that’s going to take away the stimulative effect. They’re going to balk at more spending. We have $20 trillion of debt. A 104 percent debt-to-GDP ratio. So we’re not going to get this trillion dollars of spending. And we’re in the eighth year of an expansion Martin. Keynesian stimulus- if it works at all, it works at the beginning of an expansion or in a recession. Not after 8 years. You don’t get much bang for the buck.


“Fed to reverse course by year-end: Expert”
CNBC Video

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

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is 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 contained herein.)

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