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PETER SCHIFF: We Are Sailing Right Into The Perfect Storm
TBI ^ | 8-9-2012 | Sam Ro

Posted on 08/09/2012 7:15:56 AM PDT by blam

PETER SCHIFF: We Are Sailing Right Into The Perfect Storm

Sam Ro
Aug. 9, 2012, 9:26 AM

Peter Schiff of Europacific Capital continues to sound the alarm on the risks of the government's mounting debt load and the Federal Reserve's low interest rate policy.

Like Roubini and some other doomsayer, he employs the "perfect storm imagery."

From a piece in King World News:

The perfect storm is the real fiscal cliff that we’re going to go over. The real fiscal cliff is when we can’t borrow any more money because our creditors wake up to the fact that we’re no good for the debt and interest rates start to rise.

They (interest rates) rise sharply and then we have to choose between default and collapse, or runaway inflation. That’s really the perfect storm and unfortunately we are sailing right in to it.

Indeed, should interest rates rise, it will become increasingly difficult to finance the debt. However, Treasury market bears have been calling for interest rates to rise for nearly a decade, yet rates only continue to tumble.

Click Here To See 21 People Who Have Said 'Rates Have Nowhere To Go But Up'

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: economy; finance; hyperinflation; inflation; interestrates; schiff
"They (interest rates) rise sharply and then we have to choose between default and collapse, or runaway inflation."

We'll end up inflating, IMO.

1 posted on 08/09/2012 7:16:01 AM PDT by blam
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To: blam

If interest rates go up, the interest on the national debt alone will bankrupt us

it will be bigger than the actual deficits of the past (pre-Obambi $Trillion-dollar deficits)


2 posted on 08/09/2012 7:18:36 AM PDT by Mr. K ("The spread of evil is the symptom of a vacuum [of good]")
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To: Kartographer
14 Questions People Ask About How To Prepare For The Collapse Of The Economy
3 posted on 08/09/2012 7:21:16 AM PDT by blam
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To: All


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4 posted on 08/09/2012 7:26:20 AM PDT by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: blam

If and when the reasonable assumption comes to pass that we are facing a massive, international depression, instead of fussing and fretting about it, since it likely cannot be staved off, the logical thing to do is come up with ideas to extricate us from it once it happens.

Some ideas:

Renouncing the US national debt.

Why is this regarded as such a bad idea? To start with it means a lot of the scoundrels responsible for starting this mess in the first place get some real bad haircuts, instead of getting insurance for their mischief at taxpayer expense.

How disastrous will it be for the rest of us if “billionaire’s gambling” like derivatives markets and hedge funds take it in the shorts? Do we really need to protect parasitic scoundrels like George Soros and Warren Buffett, who create nothing and destroy healthy businesses?

And how about villains like the Chinese government and many of the Middle East tyrant’s sovereign wealth funds? Many tears shed for them no longer being able to create trouble in the world?

On the home front, it means that America has to stop both outsourcing jobs and industry, because if nobody makes it here, we have to buy it, and if nobody will extend the USG credit, we *have* to make it here.

So suddenly we need a whole lot more employment. Not a bad thing.

Likewise, if the USG can’t get “free money” to spend, it *has no choice* but to have a balanced budget. And if it tries to “print money”, it will cause Weimar style hyperinflation. So sorry, Mr. Federal Government, you can no longer fudge your way to overspending.

It also means an end to most federal largess. No more welfare, social security, medicare or medicaid. They never should have existed in the first place, so adios.


5 posted on 08/09/2012 7:42:44 AM PDT by yefragetuwrabrumuy
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To: blam
We'll end up inflating, IMO.

Collapse. The freeloaders will be marching in the streets demanding their free handouts. "We want our entitlements!"

U.S. money will be worthless. Right now, we're already borrowing half of everything we spend on entitlements. We can't keep borrowing forever.

Because of Obomanomics, people have no jobs. No jobs mean no tax revenue, so things are getting even worse. Where will Washington get the money to pay back our loans AND maintain the entitlements? They'll have to keep printing money to maintain the illusion, but each time they do our money becomes even more worthless.

6 posted on 08/09/2012 7:47:54 AM PDT by concerned about politics ("Get thee behind me, Liberal")
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To: yefragetuwrabrumuy
On the home front, it means that America has to stop both outsourcing jobs and industry, because if nobody makes it here, we have to buy it, and if nobody will extend the USG credit, we *have* to make it here.

Industry can't afford the union labor here, and the citizens can't afford the cost of union goods. That's why we've become a service industry nation rather than an industrial nation, and why the industries that survived are robotic.
The only way to get business back, is to do something about labor, government regulation, and oppressive taxation. (I'll never understand why a floor sweeper is worth $24 an hour.)

7 posted on 08/09/2012 7:56:26 AM PDT by concerned about politics ("Get thee behind me, Liberal")
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To: blam

Lenders who haven’t figured out that we won’t pay them back, deserve to be robbed. But wait, we are the lenders, or our kids and grandkids and future generations, and there is no one who can say stop that the borrowers will listen to.


8 posted on 08/09/2012 8:15:36 AM PDT by pallis
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To: Mr. K

Do we sell variable rate bonds?

Wouldn’t it kill us only if we kept borrowing?


9 posted on 08/09/2012 8:20:05 AM PDT by listenhillary (Courts, law enforcement, roads and national defense should be the extent of government)
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To: listenhillary
Do we sell variable rate bonds? No.

Wouldn’t it kill us only if we kept borrowing?

Well right now we are borrowing 40 cents of every dollar we spend federally and if we balanced the budget tomorrow we'd still have to borrow to roll over the existing debt as it comes due and its average maturity is 3 years.

10 posted on 08/09/2012 8:24:55 AM PDT by NeoCaveman ("If I had a son he'd look like B.O.'s lunch" - Rin Tin Tin)
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To: blam

—default and collapse, or runaway inflation.”

We’ll end up inflating, IMO.—

You know I believe this, but I’ll say it anyway: No matter what they try, it will fail, and that will leave the last arrow in the quiver: Monetize the debt. Inflate. And they will get that money out there any way they can, even if it means increasing the minimum wage to $100 an hour.


11 posted on 08/09/2012 8:30:36 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: blam

Any rate increase would be the equivalent of taking a hunting knife to an inflatable boat that is already taking on water.

It ain’t gonna happen.


12 posted on 08/09/2012 8:31:54 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: concerned about politics
What union labor? Private sector unionization hasn't been lower in years.

However, the Feds are filled with unionization.

Companies can simply move their industries to the South if they are concerned about a union workforce.

But, that is not the main problem.

It's the global wage arbitrage that hits across all sectors. Americans will all be working longer for less wages. That's the point of globalization, a leveling of the playing field.

13 posted on 08/09/2012 8:32:04 AM PDT by Theoria (Rush Limbaugh: Ron Paul sounds like an Islamic terrorist)
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To: concerned about politics
We have a lot of problems. We export jobs because liberal politicians prefer us to outsource pollution to "brown" countries ( Look Look ) along with the high priced labor US compliance costs demand. In effect we have labor and environmental arbitrage going on.

At the same time, as around 90% of the world's trade travels over the seas, the US has the main role as protectorate of international shipping. That includes keeping all the shipping lanes free from incident, particularly for energy products. Yet while the American taxpayer has borne the preponderance of this cost, we have received no offer of cost sharing from any exporting country.

We've also entered into alliances with Europe, for example which guarantees our involvement in a war protecting member countries from aggressor nations. That guarantee has allowed much of Europe to hollow out their military contingents to rely, again, on the American taxpayer. That defense "savings" has allowed many of those countries to establish socialist welfare transfer programs that serve as a model for US leftists to point to (forgetting that there is no bigger Uncle Sucker upon whom we can rely).

Further, regarding our pharma companies. The rest of the world strikes alliances with our manufacturers to buy prescription medicines at artificially low rates in exchange for continuing to protect their worldwide patents. No low pricing, welcome generic competition. That leaves the US taxpayer (again) to shoulder the world's costs of development, testing and manufacture of prescription medicines at high prices to offset the international extortion.

And, of course, we take most of the world's legal immigrants and the liberals want us to throw open the borders and just take everybody who shows up. And they should bring their families too (including their aged parents). WTF, we're rich.

14 posted on 08/09/2012 8:38:55 AM PDT by Sgt_Schultze (A half-truth is a complete lie)
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To: NeoCaveman

What if we just said we’re not going to roll over existing debt?

We’re broke. Broke nations don’t borrow money. Sorry your politicians lied to you for 60 years, but you and your parents kept voting them in office.


15 posted on 08/09/2012 8:41:06 AM PDT by listenhillary (Courts, law enforcement, roads and national defense should be the extent of government)
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To: listenhillary
What if we just said we’re not going to roll over existing debt?

Formal default and debt repudiation?

I'm all for it but no one is going to mention it in polite company. Ron Paul came kind of close to it, but even with him you had to read between the lines.

16 posted on 08/09/2012 8:45:13 AM PDT by NeoCaveman ("If I had a son he'd look like B.O.'s lunch" - Rin Tin Tin)
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To: blam

It’s time to revoke not just ObamaCare, but the New Deal, the Great Society, and every other unconstitutional program and agency, before we are swallowed up.


17 posted on 08/09/2012 8:49:13 AM PDT by EternalVigilance (The saving of America starts the day conservatives stop supporting what they say they hate.)
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To: concerned about politics
"The freeloaders will be marching in the streets demanding their free handouts. "We want our entitlements!"

That's right. The politicians won't be able to do anything but hand out money that is becoming more and more worthless as everything will cost more each day/week/month.

18 posted on 08/09/2012 8:59:25 AM PDT by blam
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To: listenhillary

I dont think so but as Perot pointed out we are financing long term debt with short term borrowing and when these get rolled over...oh boy


19 posted on 08/09/2012 9:02:48 AM PDT by Mr. K ("The spread of evil is the symptom of a vacuum [of good]")
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To: blam

Thought you might find this interesting.

http://www.bloomberg.com/news/2012-08-09/goldman-sachs-leads-split-with-obama-as-ge-jilts-him-too.html


20 posted on 08/09/2012 9:04:34 AM PDT by GOPJ (..convinced if you put a compass in the hands of a liberal, it will point south -Fr Neveronmywatch)
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To: GOPJ
Thanks.

That is amazing, a Romney landslide?

“A switch in party preference of this magnitude is virtually unheard of among major companies with an established presence in Washington,” said Rogan Kersh, provost at Wake Forest University in Winston-Salem, North Carolina. "

21 posted on 08/09/2012 9:38:47 AM PDT by blam
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To: blam
GARY SHILLING: Bonds Are Great, Stocks Are About To Plunge 40%
22 posted on 08/09/2012 10:04:09 AM PDT by blam
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To: Mr. K
If interest rates go up, the interest on the national debt alone will bankrupt us

If they go up, it will implode what is left of the economy.

23 posted on 08/09/2012 10:06:48 AM PDT by dragnet2 (Diversion and evasion or tools of deceit)
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To: listenhillary
Sorry your politicians lied to you for 60 years, but you and your parents kept voting them in office.

Absolutely, but then again, they were all lied to, as those in D.C. put on a great show for those who actually trusted government.

24 posted on 08/09/2012 10:10:02 AM PDT by dragnet2 (Diversion and evasion or tools of deceit)
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To: yefragetuwrabrumuy

Agreed.


25 posted on 08/09/2012 10:26:22 AM PDT by fortheDeclaration (Pr 14:34 Righteousness exalteth a nation:but sin is a reproach to any people)
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To: blam

The Fed is “feigning solvency” by keeping interest rates at historic lows. This means we can pay the ‘teaser rate’ interest, but once interest rates rise, we’re screwed. The Fed can try to keep them low indefinitely, but that will destroy the dollar.

Part of the reason we’re getting away with it is because of the problems in Europe and the distraction they offer. Once resolved, the attention will once again return here, and investors won’t like what they see. The euro crisis is a godsend, in a way, but it won’t last, we’re actually much worse off than them.


26 posted on 08/09/2012 10:43:17 AM PDT by wolfman
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