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So Schiff gets credit for being the broken clock, then you ignore the ensuing decade of incorrect predictions by Schiff of market crash, dollar crash, gold boom, hyperinflation, etc.
Why the bizarre filter where you assign him credibility for finally being right after so often being wrong, then ignore all the dumbass predictions he has made since that haven't panned out?
But it's not just him. There are numerous other economists or politicians also sounding the alarm bells. Ron Paul, Richard Wolff, and many others, to name a few. Stop focusing on Schiff. He's just one of many.
All the economic data also looked fabulous just before the 2008 crisis. No one saw what was coming.
Economists are not very good at predicting recessions.
One of the things that was particularly bad about the 2008 crisis was that it was financial. Financial firms are very different from manufacturing firms. When a manufacturing market segment goes south, it can take a company many quarters to go bankrupt, because they typically can stretch out their suppliers, sell assets, etc. In contrast, a financial firm can be just fine on Monday and out of business on Friday because of a lack of confidence that causes the proverbial "run on the bank." Overnight lenders in the "repo market" just stop lending to the financial institution, and at that point, it is all over. It all happens very, very fast.
Mircea, I usually love/agree with your posts, but I’m curious about how you can say recessions and depressions are not effected by the stock market and that they are “irrelevant”. The stock crashes certainly weren’t THE reason for the Great Depression or Great Recession, but they were definitely a part of the reason these events were so painful.
What came first -- The Chicken or the Egg?
Respectfully, I think you have it backwards. Depressions and recessions are a contraction in economic activity; the contraction in economic activity means the present value of the risk-adjusted stream of future corporate earnings is lower, and so investors in the stock market are not willing to pay for what they see as a too-lofty price per share. Share prices go down as a result. Depressions and recessions come first, followed by stock prices.
There is a secondary effect called the "wealth effect." When people see their net worth go up, they tend to spend; when people see their net worth decline, they tend to cocoon-up.
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Originally Posted by Thatsright19
For example, when company stock prices are tanking, Fortune 500s might start wide spread layoffs. They tend to put off cap ex.
Executives respond to business conditions. When a company's stock price tanks, it is because the market believes the present value of its risk-adjusted stream of earnings is contracting -- that is, current business conditions suck -- sales are way down, maybe new products have been delayed, and costs are going way up.
Executives do respond to the price of the stock, of course, by taking action including cost cutting, merger and acquisition. But the driver is usually business conditions.
So... as the old joke goes, What came first -- The Chicken or the Egg? Neither. It was the Rooster.
But it's not just him. There are numerous other economists or politicians also sounding the alarm bells. Ron Paul, Richard Wolff, and many others, to name a few. Stop focusing on Schiff. He's just one of many.
Okay, let's take Ron Paul.
For as long as I can remember he's been screaming about impending hyperinflation, dollar collapse, gold, economy collapse etc. just like Peter Schiff, when someone is so clearly wrong about what will happen with the economy why are you pointing at him as some beacon of wisdom? Have you ever seen where they profile investments of politicians, Ronny has been absolutely greased with his stupid investments in bear market and precious metal funds. He's absolutely clueless about the economy, yet you just ignore that and try to ride his reputation as a politician as if that means being wrong all the time means he was right.
I predicted the 2008 crisis as well, do I get credit? LOL.. it was pretty easy to predict it, the writing was all over. Those that were homeowners, realtors and mortgage professionals were the only ones saying all was fine due to their rose colored glasses perspective.
I predicted it in 2003. I dumped real estate other than my vacation home. I lightened up my portfolio. I left a lot of money on the table. Good thing, though. I was unemployed in 2008. I had no debt and low expenses.
For as long as I can remember he's been screaming about impending hyperinflation, dollar collapse, gold, economy collapse etc. just like Peter Schiff, when someone is so clearly wrong about what will happen with the economy why are you pointing at him as some beacon of wisdom? Have you ever seen where they profile investments of politicians, Ronny has been absolutely greased with his stupid investments in bear market and precious metal funds. He's absolutely clueless about the economy, yet you just ignore that and try to ride his reputation as a politician as if that means being wrong all the time means he was right.
So what? Even forgetting about these guys, I would say that we are in a massive bubble right now and a crash will happen soon. We're overdue for one. Looking at the history of this country, I don't even think we've ever gone 10-15 years without a recession. It will happen, regardless of what these guys say.
And maybe these guys are right, but it just hasn't happened YET.
The data looks fine until it doesn't. Then you are sitting 2 quarters or half a year into a recession when it is announced and everyone is like "oh yeah look at household debt (non housing) at record high levels here and you can see a spike in X loan defaults from 3% to 6.5% and oh we had a year trailing of demand lacking for vehicles etc"
The measures are imperfect. There is a lot of money and fat at the very top. Middle and bottom, virtually skin and bones. By the time the economy registers a recession the bottom 2/3 has been feeling tight for a year or more.
Under the surface, the American economy is in even worse shape today than it was before the 2008 recession. Corporations are more leveraged than ever. Housing bubbles have formed in major metropolitan areas throughout the country and wages have not kept up. The national debt is now up to $21 trillion and growing. The U.S. dollar had it's worst year ever in 2017. The stock market is now showing signs of volatility, which is indicative of a problem. Home lending standards are relaxing a bit, with some now offering "nonprime" mortgages and many lending with small down payments. Income inequality is at an all time high since the gilded age, with one in three Americans now unable to afford basic living necessities. Interest rates are now increasing. And the national debt to GDP ratio is higher than ever.
I predict that the bubble will burst within the next few years and the stock market will crash. Most experts such as Peter Schiff, Bill Gates, Robert Kyosaki, etc., say that the economy will crash much harder than it did in 2008, within the next couple of years...possibly even this year.
I just don't see how home values and stocks can just keep going up and up forever. That has never been the case.
What are your thoughts?
I think we're going to crash. But I don't know when. I've had that thought for at least 25 years. I'm surprised we've muddled along for this long.
I could quibble with some of your indicators and replace them with some of my own. But the writing is on the wall in so many ways. America and the Western World is in serious trouble on multiple fronts.
But I have absolutely no idea when said crash will happen.
So what? Even forgetting about these guys, I would say that we are in a massive bubble right now and a crash will happen soon. We're overdue for one. Looking at the history of this country, I don't even think we've ever gone 10-15 years without a recession. It will happen, regardless of what these guys say.
Of course there will be another recession, the economy has always been cyclical. Whether we are in a "massive bubble" is debatable, one could certainly make the case that stocks are overvalued.
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Originally Posted by nep321
And maybe these guys are right, but it just hasn't happened YET.
So let me get this straight... predictions about the economy have no timeline so they can never wrong since it could always happen years later? That is absurd. If Peter Schiff is saying in 2010 that we're going to have hyperinflation and market collapse, but here we are eight years later without it happening, he's actually right because someday it'll happen.
Okay then I go on record as predicting we'll have a recession. And a recovery. And a recession. And a recovery. LA Clippers will win the NBA championship. It will snow in Mumbai. Aliens will land on the White House Lawn. Weird Al will get a hair cut.
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