Mike Stathis

Interview with Peter Schiff: Reflating the Bubble

Commenter "yellowhoard" knows the real deal. I find it amazing how the commenters are quoting guys like Roubini and Gross without realizing these guys are lost in the woods. Sure, for naive investors they may seem like they are ahead of the curve, but truly sophisticated investors don't pay attention to them. You all believe they should be listened to because the media has told you that you should. That's how they media makes money - more audience = higher ad revenues.

It's shocking how green people remain, even after the 2 biggest bubble implosions on earth in less than 10 years.

Here's the important rule you will ever learn so write it down: you will never receive any truly valuable investment guidance from a single person who is a "friend" of the mainstream media. The media would never allow such an expert to provide sufficient value to help you because they work for Wall Street.

Interview with Peter Schiff: Reflating the Bubble

Maybe the guy should have asked the question, how is it that the "chief investment strategist" of a brokerage firm can have a clue what's really going on if he is spending most of his time selling snake oil on TV and other marketing activities. That's okay, I already know the answer.

As the facts show, Schiff got too many things wrong. When oil was nearing $150, prices would not come down. He said China wouldn't get hit. etc.

In fact, Peter's rendition of this mess is not only one-dimensional, but lacks the comprehensiveness required to provide real value. Perhaps that is why his clients did so poorly last year. It's sad to see so many sheep out there.

Schiff isn't taken seriously by leading investors. I know this because I advise them. He is the "expert" for the sheep who go to CNBC and FBN for financial advice.

Anyone who has read my book (which was released before Schiff's) knows who the real expert is who truly predicted things.

Dow in Secular Bear Market When Priced in Ounces of Gold

My friend, the fact is that the US stock market has been in a secular bear market since 2001, without factoring in the price of gold. And it will remain in this corrective market for several more years.

Now, when adjusted for the price of gold or the dollar's slide, the market is much worse.

Investors Beware: Reporters Trying to Help

Anyone who works as a financial professional that says "inflation might be on the way" should be demoted, fired, or sued, depending on their position. WHAT A JOKE.

Thanks for the post Kevin. I rarely waste time reading print media, but now that I have seen this I am going to contact the Post and let them know how irresponsible they were for interviewing these agenda-minded clowns.

I'm so disgusted at the continued irresponsibility of the media. They only care to sale headlines like "Ways to Profit In A Declining Market" or downplaying the realities via orders from Washington. They should keep it simple and tell the truth - get out and stay out!

Investors need to understand these people with agendas will always steer you wrong to make a buck. Funds will try to keep you in a declining market by preaching "think long term" or "stay the course."

Diversification will not help you navigate this market. Everything will be taken down, including the 4 companies Trejos names. They may hold up longer than others (excluding GE and GS) but they will eventually join the rest of the pack. "It's the market stupid!"

I will tell you this as well..Goldman Sachs is going to get cut in half. No financial firm can escape the wrath of this correction; at best they can only delay the inevitable as BAC has for so long. But now we see BAC has gotten crushed and will soon be at $18. MER will soon join BAC.

The best advice for this market is cash. If you are a skilled trader wanting some excitement and willing to take your licks, you can play the momentum swings...get in and get out. Otherwise, stay completely out until the washout is complete (several years).

A global meltdown is on the way. I will be looking to get into Brazil after a correction and China after things bottom out.

Is the Equities Party Over?

In a May 5 article on SA, I advised investors to sell the market (Stay Clear of Traditional Asset Classes)

seekingalpha.com/artic...

At the time, the Dow was around 13,100.

Warning Signs of a Modern Depression: See 1990 Japan

Very nice article. One thing I'd like to point out, as a former employee of BSC is, although it's spoken of as the 5th largest investment bank, BSC has a much larger impact during the current crisis. One could argue that it has the largest impact of any other bank for the following reasons:

1) It's prime brokerage unit handles the largest amount of hedge fund assets of any bank. How will hedge funds deal with the uncertainty of its prime brokerage unit during a time when many funds have massive leverage?

2) It's clearing unit is the best in the world. Certainly it's not going to disappear, but integrating the unique culture of BSC employees into another bank with prove very challenging.

3) It's derivatives and collateralized securities business, which serves as a key player with institutions. The total derivatives oustanding is approaching $200 trillion, for a growth of around 500% since 2000. On a net basis we do not know what this exposure is. But we do know that over $30 trillion of this is in credit default swaps. Because of the loss of confidence in the financial system, institutions that have used CDS to hedge against interest rates cuts have gotten burned.

Down the road, it might actually improve the financial system to have butchered the one of the top players in derivative and MBS. But that will be a small concession for the devastation that will only continue to increase. The risk of a global financial meltdown due to derivatives alone is high and increasing by the day. At the very best of scenarios, the unwinding process is going to be destructive for many funds and financial institutions. The Fed is going to have to bail them all out. And of course that means the dollar will sink further.

There is no way out of this mess. The Fed can continue to print money and exchange it for worthless MBS debt as collateral (as announced during its meeting yesterday). But that will only hasten the dollar's decline. And while it is doubtful that banks will close their doors due to lack of dollars, at some point, our currency might not be worth the paper it's printed on. You should expect a further 20-30% decline in the dollar at minimum. Regardless, the dollar will remain quite low for many years.

And if you think the economy will get better in a few years, you will be wrong. Only the government's twisting of data will make things look better; the same charade we have witnessed since the Internet correction. What happened to all of the "experts" who were preaching how the economy was so strong? "Just look at the data-unemployment is under 5%, GDP is 3%" etc. These individuals should be holding their heads in shame. You know who they are-teh Fed, Washington officials, journalists, TV hosts. In fact, they should all resign and apologize to the people.

In my estimation, inflation and interest rates will reach double digits over the next few years. The real inflation numbers are already around 8% if they were calculated correctly.

Ask yourself these questions:

1) Why did the Fed stop reporting the most critical indicator of inflation last spring, M3?

2) Why won't Washington disclose more transperancy on the asusmptions it uses for hedonics?

3) Why did Washington shut down the website clearing house for economic data in March, economicindicators.gov?

4) Why is the FDIC increasing its staff and why have they increased FDIC insurance fees to banks?

At the end of the day, America needs good jobs, wage increases in excess of inflation and solid employee benefits. Only then will household savings materialize. This implies a restructuring of free trade policies and healthcare. This mandates a full understanding of the problems and leadership to execute change. The Fed can provide banks with liquidity, but that isn't a real solution. It's desperation. What is needed is more accountability and transparency in the financial system.