scootie2008

The Shedlock-Schiff Affair: A Chronicle

Schiff called the collapse but what happens after is still open for debate. Even if he is proven right in the future if his timing is wrong he won't profit. "The Market Can Stay Irrational Longer Than You Can Stay Solvent"


Also in response to:

"Look at it this way.

Two businesses went out of business:

Asia (who has money in the bank, savings, burgeoning industry)

Western Civ (who has debt at every level, no savings, collapsed industry)
How does this end up?"

Look at it this way, we exported pieces of paper, and they exported pieces of plastic. Do you really think that excess TVs and Pokemon action figures or other lead painted toys constitute 'value'? The excess crap that the leveraged borrowers were buying was non essential and in a down time it will be worth less or worthless.

An Economic Nightmare Before Christmas

Mr Schiff seems to imply that somehow the US is irresponsible and the rest of the world is more rational and conservative. I think this is the fundamental problem with the argument. If the US ship sinks, the global economy goes with it. The FED is the defacto world lender of last resort.

Inflate, Deflate or Default

"It is hard to lay much blame at the feet of the investment bankers and traders. They are, after all, private market participants whose only objective should be to maximize their personal gain. "????

I'm not blaming them, but they should now experience the downside of their risk. That is what a "free" market demands.

So much capital has been wasted and credit destroyed, the fed cannot print that much money that fast. The hyperinflation that some are hyper about would essentially save all the indebted Americans since the value of the debt would evaporate in that scenario. America's creditors [the holders of cash] would not stand for that and the USD "system" would collapse before hyperinflation took hold.

It would be a shame for the US to destroy their 2 great gifts to the world [as described by James Grant] a robust financial system and a reserve currency.