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Peter Schiff – The coming 2013 – 2014 U.S. crash will be worse than 2008


By HousingBoom   Follow   Wed, 21 Nov 2012, 10:15am PST   21,079 views   242 comments
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http://riehlworldview.com/2012/07/video-peter-schiff-the-coming-2013-2014-us-crash-will-be-worse-than-2008-and-europe.html

If you listen to Schiff and buy what's he's saying, the policies of the Obama administration are making an already bad situation much worse, setting us up for calamity and the coming crash, whether in 2013 or 2014, or a bit further out, will be beyond anything we've seen recently.

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Bellingham Bill   Sun, 25 Nov 2012, 4:50am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 123

Goran_K says

I'm not sure how that helps your point.

the 95%'s economy needs velocity (spending).

old people need more paid labor, which results in wage income. Every dollar of pension income -- and medicare-paid expenses -- just get passed right into the private economy.

This is going to be a TWO TRILLION PLUS flow into the private economy by 2030.

This dynamic is also why I'm not terribly bearish on Japan. They don't have much of a boomer population (compared to us) but their support burden is going to rise a lot as their working age population declines.

But this "support burden" actually translates into a much tighter job market.

Bellingham Bill   Sun, 25 Nov 2012, 4:54am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 124

Kevin says

SS taxes at present just take dollars from people who need them (those making under $115k/year or thereabouts) and gives them to people who need them slightly more.

I agree with your other point (that the top 10% needs to kick in the money that's paying down the SSTF) but this wealth-transfer aspect of SSA is sheer elegance.

Payroll taxes are a great way to sequester income for necessities so that we don't use all our disposable incomes to bid up rents and home values.

Regressive taxes come out of rents!

At any rate, the less we tax the masses the more the landlords can jack up their rents, and the more we all just bid up the cost of housing.

I *really* wish I had understood this back in 2001 as the Bush tax cuts were going down, sigh.

Goran_K   Sun, 25 Nov 2012, 5:03am PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 125

Bellingham Bill says

This is going to be a TWO TRILLION PLUS flow into the private economy by 2030.

This dynamic is also why I'm not terribly bearish on Japan. They don't have much of a boomer population (compared to us) but their support burden is going to rise a lot as their working age population declines.

But this "support burden" actually translates into a much tighter job market.

Yes $2T in SSA payments, but many times that lost since many of the boomer population will no longer be working, or very productive. Yes the support structure for those industries may experience some growth, but I don't see how that will stabilize the economy in the theory you have put forth.

Bellingham Bill   Sun, 25 Nov 2012, 5:43am PST   Share   Quote   Permalink   Like   Dislike (3)     Comment 126

Goran_K says

but many times that lost since many of the boomer population will no longer be working,

this is a good thing since Gen Y is just now moving into working age.

If Gen Y is 1982 to 2000 they are aged 12 to 20 right now and they will take over from their parents wrt jobs.

Goran_K says

but I don't see how that will stabilize the economy in the theory you have put forth.

I'm just saying the boomer retirement has some under-appreciated upsides.

If taxes are raised on the lower 95% to cover the rising cost of the boomer support, then, no, it won't be all that hot.

But the top 10% cleared $3.3T in AGI in 2010 and paid $610B in taxes. If we doubled taxes on corporations ($300B) and doubled taxes on the top 10% ($600B) and redirected $300B of our defense outlays into health expansion, we'd have a balanced budget and a much more symmetrical wealth distribution arrangement.

Or we can just print it, LOL. That's the most likely outcome I think. Who needs pain when you've got a printer.

eoulim   Sun, 25 Nov 2012, 6:28am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 127

We are not definitely Japan.

But, last 5 years or so, we have been Japan who did not really reckon with problems for last 2 decades. They did it with 90% domestic debt.
So in fact, Japan could do it quite well without foreign debts.
We did it Japan style (not Gangnam Style), only worse is with foreign debts.

It's time now. Are we going to finally reckon with the problem that are worsened last 5 years ?

Are we really NOT Japan ?

Bellingham Bill   Sun, 25 Nov 2012, 7:01am PST   Share   Quote   Permalink   Like   Dislike     Comment 128

Darrell In Phoenix says

Housing demand is at 16 year lows.... and falling.

what a bizarre assertion to make when the baby boom echo peaked exactly 20 years ago!

Population growth overall is slowing -- the population aged 25 to 64 grew ~20% in the 1980s but only 11% in the 2000s and will "only" grow 6% in this decade, but that's still growth, LOL.

Here in my Realtor Reality™ the population of age 25-34 yos grew 14% in the 1980s, actually fell 8% in the 1990s, grew 5% in the 2000s, and is going to grow 9% this decade, 2% in the 2020s, and 8-9% (per-decade) again in the 2030-2050 period.

SubOink   Sun, 25 Nov 2012, 7:30am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 129

Listening to Schiff?

LOL

David Losh   Sun, 25 Nov 2012, 7:39am PST   Share   Quote   Permalink   Like   Dislike     Comment 130

Darrell In Phoenix says

Housing Demand is at 16 year lows

Do you have a link for that?

David Losh   Sun, 25 Nov 2012, 8:19am PST   Share   Quote   Permalink   Like   Dislike     Comment 131

Darrell In Phoenix says

Wait a second.

Your my pet project, why ignore you.

Link, please.

David Losh   Sun, 25 Nov 2012, 8:42am PST   Share   Quote   Permalink   Like   Dislike     Comment 132

Darrell In Phoenix says

little troll

Link.

You either have a link to support your absurd assertion, or go away.

You've once again mirepresented what I've said, so I'll probably want a link for that also.

The Professor   Sun, 25 Nov 2012, 9:51am PST   Share   Quote   Permalink   Like   Dislike     Comment 133

David

I seem to remember you writing interesting posts.

Your feud with Darell is tedious. It takes at least two to argue.

Ignore him or ignore him.

Thanks

David Losh   Sun, 25 Nov 2012, 10:18am PST   Share   Quote   Permalink   Like   Dislike     Comment 134

The Professor says

Ignore him or ignore him.

Oh, alrighty.

SubOink   Sun, 25 Nov 2012, 12:47pm PST   Share   Quote   Permalink   Like   Dislike     Comment 135

David Losh says

Darrell In Phoenix says

Housing Demand is at 16 year lows

Do you have a link for that?

Darrel doesn't do links - he just says.

Goran_K   Sun, 25 Nov 2012, 3:11pm PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 136

Bellingham Bill says

this is a good thing since Gen Y is just now moving into working age.

If Gen Y is 1982 to 2000 they are aged 12 to 20 right now and they will take over from their parents wrt jobs.

I'm sorry but that theory doesn't make any sense. The retiring boomers are leaving behind mid-level to senior positions, Gen Y isn't going to be able to just walk into these jobs and take over. They are trying to get entry level positions, unfortunately, many of these jobs (if you keep up with hiring forecast) simply aren't there. Either more experienced mid-level types in their 30s and 40s are taking them, or the positions don't even exist anymore as many of them have been shipped over seas. It's one of the biggest worries for new grads these days, and more and more of them are simply not entering the job market and either 1) going back to school, or 2) moving back home and taking partial employment.

I do agree that the boomer retirement saga will have many upsides (as they die off, we can finally have some form of austerity instead of hegemonic cold war era entitlement), but SSA checks bolstering the economy just seems like a huge stretch to me.

Bellingham Bill   Sun, 25 Nov 2012, 3:31pm PST   Share   Quote   Permalink   Like   Dislike     Comment 137

Goran_K says

The retiring boomers are leaving behind mid-level to senior positions, Gen Y isn't going to be able to just walk into these jobs and take over.

of course not, but every hole at the top will leave a hole at the bottom as people move up.

Goran_K says

or the positions don't even exist anymore as many of them have been shipped over seas

sure, that's a problem, but that's orthogonal to the baby boom retiring en masse as they are starting to now. There were 4 MILLION boomers born every year during the boom years of 1952-1964.

http://www.infoplease.com/ipa/A0005067.html

Goran_K says

but SSA checks bolstering the economy just seems like a huge stretch to me.

it's going to be a nice tailwind, that's all. Kinda like "helicopter money". The boomers have been allegedly saving for decades, and now they finally get to spend their money!

The more this spending is being funded from the top 5-10%, the better net stimulus it will be. Hell, we can probably even print some of it if we need to. . .

Goran_K   Sun, 25 Nov 2012, 3:41pm PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 138

Bellingham Bill says

The more this spending is being funded from the top 5-10%, the better net stimulus it will be. Hell, we can probably even print some of it if we need to. . .

It's just not going to happen. Printing money to support a SS short fall with a little socialism thrown in for flavor? I honestly hope you're not being serious.

maxweber21   Sun, 25 Nov 2012, 10:33pm PST   Share   Quote   Permalink   Like   Dislike     Comment 139

IDK about you all but I think we are not looking at a "crash" as much as a continued reditribution of wealth from those who work to those who own. That's what the QE's have been all about and the bailouts also. We were looking at a crash in 2007 but the governing monied class took a housing market problem and turned it into a national change of direction. I don't see how this ends well unless American workers - those "in the arena" to refer to Roosevelt - start taking the country back. I didn't watch the video because I really don't have time to sit through videos when I can read the article in a minute or two. But, some points from the discussion:
1. government lowered the flourine amounts in water last year so reproduction should increase
2. no reason to replace a retiree with someone at the same pay band. In my generation, 40-somethings, I commonly see people doing the same job as their predecessor for significantly less pay.
3. We could have a crash but what we will see is a change. E.g. my neighbors in our middle class $80K household income neighborhood regularly shop at GoodWill, DollarGeneral, Aldi, and the Farmer's Market. Going and gone are the days of Sharper Image, Restoration Hardware, and Whole Foods. Maybe some people can afford them. Plus lots of sells/trades with neighbors including formal things ranging from neighborhood-wide yard sales to mother's club sales and such.
4. The retirees I personally know are NOT at all sitting on a cash pile. They are living on nearly the tightest budgets the ever have.

Bigsby   Sun, 25 Nov 2012, 10:48pm PST   Share   Quote   Permalink   Like   Dislike     Comment 140

maxweber21 says

...$180K household income neighborhood regularly shop at GoodWill, DollarGeneral, Aldi, and the Farmer's Market.

Spot the odd one out.

maxweber21   Sun, 25 Nov 2012, 10:49pm PST   Share   Quote   Permalink   Like   Dislike     Comment 141

Bigsby says

maxweber21 says



...$180K household income neighborhood regularly shop at GoodWill, DollarGeneral, Aldi, and the Farmer's Market.


Spot the odd one out.

Thanks!. Yep, was supposed to be $80K. typo. fixed. Thanks.

http://www.usa.com/28278-nc-income-and-careers.htm

Bigsby   Sun, 25 Nov 2012, 10:55pm PST   Share   Quote   Permalink   Like   Dislike     Comment 142

maxweber21 says

Bigsby says

maxweber21 says

...$180K household income neighborhood regularly shop at GoodWill, DollarGeneral, Aldi, and the Farmer's Market.

Spot the odd one out.

Thanks!. Yep, was supposed to be $80K. typo. fixed. Thanks.

http://www.usa.com/28278-nc-income-and-careers.htm

That wasn't actually what I was referring to.

CaptainShuddup   Sun, 25 Nov 2012, 11:12pm PST   Share   Quote   Permalink   Like   Dislike     Comment 143

Everything we think we know about the economy right now. Is only a symptom of bad economic policy from the FED. Change one, changes the other.

maxweber21   Sun, 25 Nov 2012, 11:18pm PST   Share   Quote   Permalink   Like   Dislike     Comment 144

Bigsby says

maxweber21 says



Bigsby says



maxweber21 says



...$180K household income neighborhood regularly shop at GoodWill, DollarGeneral, Aldi, and the Farmer's Market.


Spot the odd one out.



Thanks!. Yep, was supposed to be $80K. typo. fixed. Thanks.


http://www.usa.com/28278-nc-income-and-careers.htm


That wasn't actually what I was referring to.

Oh. Not sure I know which one is odd. Which one? The Farmer's Market here is price competitive. By no means is it a clear price winner unless you are trying to buy grassfed beef or other healthy products. For those, it slaughters the price of WholeFoods or Earth Fare. Aldi has best prices for some boxed goods. Dollar General has best prices for some clothes (e.g. socks), some foods (DollarTree is even better), paper products (paper towels, toilet paper), etc. You can spend up to twice as much on your weekly food bill. (I know, if times were really tough then people would use rags instead of paper towels. Of course times are not tough for most Americans yet. They are trending that way though.)
$84K agerage HH income as of 2010: http://www.zipdatamaps.com/28278

Bigsby   Sun, 25 Nov 2012, 11:24pm PST   Share   Quote   Permalink   Like   Dislike     Comment 145

Well, there's nothing bargain basement about the farmers' markets in the Monterey area.

Goran_K   Sun, 25 Nov 2012, 11:37pm PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 146

maxweber21 says

The retirees I personally know are NOT at all sitting on a cash pile. They are living on nearly the tightest budgets the ever have.

This is true. 60% of boomers think they will have to work past the age of 70!!! Incredible, really.

iwog   Sun, 25 Nov 2012, 11:47pm PST   Share   Quote   Permalink   Like   Dislike (2)     Comment 147

Goran_K says

This is true. 60% of boomers think they will have to work past the age of 70!!! Incredible, really.

Electing Republicans has consequences.

Goran_K   Mon, 26 Nov 2012, 12:05am PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 148

Also, considering that the as far back as 1994, the Clinton/Greenspan combo staunchly and successfully opposed tougher regulation on derivatives which effectively proved to be a great catalyst for the housing bubble, I'd say stupidity crosses party lines.

mell   Mon, 26 Nov 2012, 12:15am PST   Share   Quote   Permalink   Like   Dislike     Comment 149

underwaterman says

've followed Schiff since 2009 and come to realize the guy is just an arrogant businessman. I called in 2010 into his business looking to put IRA money into gold. The person wouldn't talk to me unless I had 250k.

250K is often a standard minimum limit for hedge funds. Also 250K is really not that much considering it gets you a garage in the bay area and people have no problems bidding up their "dream home" into the millions because house prices can only go up.

iwog   Mon, 26 Nov 2012, 12:33am PST   Share   Quote   Permalink   Like   Dislike     Comment 150

Truthfully your opinion that real estate is at massively inflated prices is dead wrong.

mell   Mon, 26 Nov 2012, 12:57am PST   Share   Quote   Permalink   Like   Dislike     Comment 151

iwog says

Truthfully your opinion that real estate is at massively inflated prices is dead wrong.

The amount of new house owners defaulting does not seem to go well with that graph. You could argue that those are still ripple effects from the crisis, but I"m not buying it. While defaults have gone down, they will keep happening at a significant rate and could pick up again dramatically if rates rise.

bgamall4   Mon, 26 Nov 2012, 1:01am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 152

Schiff is an idiot as far as his solutions are concerned. But it is obvious that the wealthy are buying houses and creating a bubble. Private equity is in on this. Schiff brags about being in the 1 percent, yet his 1 percent cronies are ruining America.

House prices must decline to keep track with wages. Unless private equity wants to be in the landlord business for years and years, they are going to want to sell as house prices appreciate. They are creating the churn, instead of the no doc people, this time. They are driving up the prices this time.

But the no doc folks were used by the wealthy last time. This time it is the rich club driving up house prices like they drive up oil prices in the futures market with speculation.

Will Rogers said there should be a law against these people and speculation. That was 80 years ago and we are still waiting for the law.

RentingForHalfTheCost   Mon, 26 Nov 2012, 1:01am PST   Share   Quote   Permalink   Like   Dislike     Comment 153

mell says

if rates rise.

You mean "when rates rise". Momma only has so much free money in that purse. Even in today's shell game economics, there will be accountability. Wait for it...

mell   Mon, 26 Nov 2012, 1:06am PST   Share   Quote   Permalink   Like   Dislike     Comment 154

bgamall4 says

Schiff brags about being in the 1 percent, yet his 1 percent cronies are ruining America.

It takes two to to tango. If you look at last election, almost 100% voted for either Obama or Romney which is basically a continuation of the cheap credit policies benefiting those who already have huge leverage. The lambs keep bringing themselves to the slaughterhouse.

Goran_K   Mon, 26 Nov 2012, 1:07am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 155

bgamall4 says

House prices must decline to keep track with wages. Unless private equity wants to be in the landlord business for years and years

This is one of the things I am most interested in. How long will these major firms be willing to be "landlords" renting out shelter in low-end neighborhoods in the Sacramento burbs. I've already seen smaller firms exit the market, but maybe these major firms have more metal to keep going (aka cash).

bgamall4   Mon, 26 Nov 2012, 1:14am PST   Share   Quote   Permalink   Like   Dislike     Comment 156

mell says

It takes two to to tango. If you look at last election, almost 100% voted for either Obama or Romney which is basically a continuation of the cheap credit policies benefiting those who already have huge leverage. The lambs keep bringing themselves to the slaughterhouse.

But, Obama supports Dodd-Frank, which will slow the easy money no money down loans to the masses. Yes, there are the 3 percent loans. But Romney wanted the fetters taken off completely. And Romney wanted a massive housing bubble, and so did Ryan if you read up on him.

Obama=lesser of two evils. Nothing more.

Romney wanted a new cold war with Russia. Obama doesn't. Big difference there.

iwog   Mon, 26 Nov 2012, 1:16am PST   Share   Quote   Permalink   Like   Dislike     Comment 157

mell says

The amount of new house owners defaulting does not seem to go well with that graph. You could argue that those are still ripple effects from the crisis, but I"m not buying it. While defaults have gone down, they will keep happening at a significant rate and could pick up again dramatically if rates rise.

Yup I argue those are ripple effects of the crisis. Lots of people are still upside down in homes they refuse to give up. My bankruptcy practice is right in the middle of this as I get people who come in every day who are willing to sacrifice almost everything to keep a home they are $100,000 upside down on. Then there are those who would love to refinance but they are still in credit jail from a bankruptcy or foreclosure or just irresponsible borrowing.

Our bubble was bush league anyway. If you want to see what might be in store for us, look at Canada:

iwog   Mon, 26 Nov 2012, 1:19am PST   Share   Quote   Permalink   Like   Dislike     Comment 158

There's nothing wrong with the housing affordability index. There is nothing involved with the calculation of this index that relies on NAR data other than price information that is confirmed independently by many other sources.

Anyone who wants to challenge it as inaccurate should probably give a reason why. (like that's gonna happen)

Goran_K   Mon, 26 Nov 2012, 1:21am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 159

bgamall4 says

Obama=lesser of two evils. Nothing more.

He still doesn't have a clue though. Obama is still operating under the misguided principal that home prices must rise (probably the same mentality that made him a bubble buyer in 2005).

So he may be the 'lesser' of two evils, but his underlying policy is still totally misguided, and completely wrong for fixing the housing market.

Ron Paul had the best strategy for fixing the economy in recent memory, and early polls showed that he had the best chance of beating Obama (conversely, Romney has always been shown to be a loser against Obama in any opinion poll).

It's a shame that Ron Paul was basically silenced by the media and swept aside. He was the only one who had a clue during the national debates.

bgamall4   Mon, 26 Nov 2012, 1:32am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 160

Goran_K says

It's a shame that Ron Paul was basically silenced by the media and swept aside. He was the only one who had a clue during the national debates.

Ron Paul has some good ideas mixed in with some dreadful ideas. Libertarians believe in two failed ideas. One is they want racism to be a civil right, and some are just racist. Second, they believe the invisible hand of self interest will help society more than regulation. Turns out that in the housing bubble and crash that was proven false. Even Max Keiser thinks his libertarian friends are nuts for not wanting banking regulation.

Goran_K   Mon, 26 Nov 2012, 1:40am PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 161

bgamall4 says

Ron Paul has some good ideas mixed in with some dreadful ideas. Libertarians believe in two failed ideas. One is they want racism to be a civil right, and some are just racist. Second, they believe the invisible hand of self interest will help society more than regulation. Turns out that in the housing bubble and crash that was proven false. Even Max Keiser thinks his libertarian friends are nuts for not wanting banking regulation.

Not sure why you believe libertarians are racist.

On the second note, if the Banks had been forced to eat their own medicine, then the idea actually would have worked in practice. Just like any private sector business, if you build losses, there is a natural free market reaction to your actions; you go out of business. Unfortunately, Obama gave them a safety net, so of course they can operate like criminals in a deregulated environment.

Goran_K   Mon, 26 Nov 2012, 1:43am PST   Share   Quote   Permalink   Like (3)   Dislike (1)     Comment 162

underwaterman says

I think it is safe to assume version 2 where they now swoop in to buy the very foreclosed homes they caused in version 1 will not end well either, especially for the neighborhoods where they are concentrating like phoenix and atlanta. What happens when those homes depreciate and the rents fall? One guess. They are not going to stick around like a homeowner and try and make it work. They are going to dump the houses or abandon them and their shell LLCs just like they are doing now in foreclosures and blight communities.

That's actually what I am waiting for. Housing is so volatile right now that in one year you can have a 5% YOY gain, and the next a 7% YOY loss. These major firms are very performance oriented (I used to work directly face-to-face with them). If the market forces any sort of correction downward, I could see them exiting the market very quickly, and leaving the mom-and-pop speculators with the highest losses.

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