Signs the Economy is Turning Around

[Havakasha]

In his 2002 television interview I discussed earlier, Schiff similarly argued that the U.S. economy would crater because of the decline of our manufacturing base. Perhaps if Schiff had studied some basic economics, he would have learned that economies change and that's not a bad thing. If Schiff had lived 100 years ago, he would have been screaming over the decline of our farming industry. And, as I recently discussed in my review of Jeremy Siegel's classic book, Stocks for the Long Run, the changing composition of our industry base is not in and of itself concerning in our global economy. We actually have a highly diverse economy.

In my recent interview of Schiff, sounding a lot like he did back in 2002, he said, "The government is trying to fix the economy through intervention and will make the situation worse. We can't afford all of this government. The dollar is still rising and the world is still giving us more rope to hang ourselves. The dollar will plunge and that will cause rapid inflation and high interest rates." As for being wrong on commodity prices last year, Schiff maintains that prices will make new highs and the only reason that hasn't happened yet is because the dollar hasn't yet collapsed.

Why hasn't this yet happened and why did commodity prices collapse in late 2008 while investors worldwide bought U.S. Treasury bonds and bills? "I overestimated the intelligence of the world to see the coming inflation," Schiff told me.

In summary, Schiff reminds me very much of Douglas Casey who wrote the 1980 best-seller Crisis Investing: Opportunities and Profits in the Coming Great Depression. Casey predicted soaring inflation and commodity prices and a plunging U.S. dollar. Schiff has been singing this same song for many years. The vast majority of Schiff's market and

[SiriuslyLong]

On all of these counts, Schiff wasn't just wrong but ended up being hugely wrong.

Now, fast forward to May 30, 2008 and the U.S. News article, "Permabear Peter Schiff's Worst-Case Scenario." Let's review some of the key predictions he made in that piece As for his investing predictions he said, "I'm getting my clients' money outside of the United States as fast as they can send it to me...You've got to own resources and energy...I've been buying gold, silver, industrial metals, and all kinds of stocks. My main theme is the global economy will survive and the U.S. economy is a disaster. Everything is about how you benefit from the increased purchasing power and rising standard of living in the rest of the world."

This was wrong as commodity prices have plunged since this interview (see graph below). Foreign stocks actually declined more in 2008 than did U.S. stocks so Schiff was wrong on that count too.

You should be ashamed of yourself - citing a dip caused by recession as proof of him being wrong....... Look at the longer term graph and look any commodity RIGHT NOW and it will be up. Wow, a new low. Disheartening that you would try to pull one over like that. Says a lot about what great lengths you will go to to defend your rigid ideology.

Adding a graph since you don't read. Maybe you can understand a picture: http://www.indexmundi.com/commodities/

[Havakasha]

I did say embarassing didnt I? The truth hurts only when you arent able to admit it.

After all that he gets wrong he has the balls to say this. WOW.


“...I Don't Think I've Been Wrong on Anything” THIS IS A PETER SCHIFF QUOTE AS I SAID EARLIER. NOT ONLY DOES HE GET SO MANY OF HIS ECONOMIC PREDICTIONS WRONG BUT HE HAS NEVER ADMITTED ANY OF HIS WILDLY WRONG PREDICTIONS. FACTS DONT LIE and he is clearly a LIAR.

May 14, 2010

[Havakasha]

Schiff also said, "At a minimum, the dollar will lose another 40 to 50 percent of its value." Wrong, wrong again on this one! I wrote in December, 2009 about how Schiff and a plethora of pundits were predicting the demise of the U.S. dollar in my piece, An Examination of the "Dire Circumstance" of the U.S. Dollar. The dollar is almost exactly where it was in early 2009! And, funny how the Euro crisis is now center-stage and folks are no longer talking about how weak the U.S. dollar is anymore.

[Havakasha]

During the sharp and volatile stock market slide of 2008-09, Peter Schiff, who heads the brokerage firm, Euro Pacific Capital based in Darien, CT with five branch offices in California, Florida and Arizona, has frequently been on television, especially the cable channels including CNBC. Along with a growing chorus of others such as Nouriel Roubini, Barry Ritholtz, and Gary Shilling, Schiff is one of those guys now saying "I told you so" in reference to the recent economic and financial market problems.

Schiff's quote used for the headline of this article ("The reality is I don't think I've been wrong on anything") comes from an interview U.S. News & World Reports magazine did with Schiff in their May 30, 2008 issue. (In that piece, Schiff made a number of predictions I will get to in a moment.) The quote came from comments he made when discussing the supposed accuracy of his predictions over the past decade.

Peter Schiff began his career in the financial services world as a stockbroker, doing what I thought I wanted to do when I grew up. (I lost interest in the job once I learned about selling and working on commission). My dad used to take me to visit his broker at Merrill Lynch. Mind you, my dad was no high roller but he had begun handling some investments when he was laid off from his job as a mechanical engineer during the severe recession of 1973-74.

In watching and reading his interviews and in speaking with Schiff myself on February 12, 2009, I am struck by the forcefulness and certainty of his views and predictions. He doesn't hedge and as he did in the U.S News interview, he told me, "Pretty much everything is happening as I scripted it to happen with minor exceptions..."

[Havakasha]

When I asked Schiff what training and experiences he had to form his economic views and opinions, I asked if he was an economist or had any economics training. "I think I know more about economics than anyone with the title and I know more than anyone in government," he boasted, adding, "These other guys are witch doctors and I'm the real doctor."

As for when he developed his economic genius, Schiff told me, "I've always known this much -ever since I was a kid and my dad wrote a book called the Biggest Con: How the Government is Fleecing You, I understood capitalism and how it works. I read Ayn Rand and I read some of the Keynesian economics stuff and could see why those economists were all wrong."

Schiff's father, Irwin Schiff, is a long-term tax protestor who has written many books about the supposed illegality of the U.S. income tax system. Unfortunately the senior Irwin didn't read the section in my Taxes for Dummies about what happens to folks who refuse to pay their income taxes because they don't believe in the validity of our nation's tax laws. Sadly, Irwin Schiff, now in his 80s, has been convicted of numerous federal income tax crimes and is currently serving another lengthy prison term.

Interestingly, in the marketing copy for Irwin Schiff's book, The Biggest Con, it says of the book, "It will convince you that most American ‘economists' don't know what they are talking about - which is why this country is in such deep economic and financial trouble. It provides irrefutable proof of how the federal government has been continually undermining the American economy and forcing a lower standard of living on us all." This sounds a lot like the recent statements of his son Peter yet the father's book was published back in 1977! (You know the expression about the apple not falling far from the tree...)

[Havakasha]

http://www.cnbc.com/id/46641111

Does Rising Consumer Debt Show Strength or Stress?
Published: Wednesday, 7 Mar 2012 | 10:28 AM ET Text Size
By: Jennifer Leigh Parker
Writer, CNBC.com

The American consumer appears to be levering-up again. But ahead of Wednesday's consumer credit report, the big debate among economists is whether borrowing signals economic growth or economic strain.


According to the Federal Reserve's lastest report, total consumer borrowing reached $2.5 trillion in December of last year, nearly matching the pre-recession level.

January's report, which will be released later Wednesday, is forecast to add an additional $10.45 billion.

"For the first time since the recession, we're starting to see bank credit increase. That historically has been the catalyst for strong economic growth," said Paul Kasriel, chief economist at Northern Trust.

Banks constitute the largest proportion of total consumer credit lending, to which various finance companies, credit unions, savings institutions, and the government also contribute.

It follows, Kasriel said, that bank lending is the most important factor for economic growth. "It's what has been lacking up until recently in this economy."

Others are not so certain, and expect credit growth to taper off given two persistent drags on the economy: housing and unemployment.

"The consumer credit rebound is not sustainable," said Thomas Berner, an economist at UBS. While consensus estimates $10.45 billion will be added to the Fed's borrowing total, Berner is forecasting $6 billion.

"Consumer credit cannot grow as quickly as it did before because home equity was its major driver. Now a fourth of all mortgages outstanding are underwater," said Berner.

The latest industry reports show 1.1 million American borrowers are "underwater," meaning they owe more on their mortgages than their homes are currently worth.

Berner's lower estimate also hangs on the premise that the type of credit being borrowed — mostly non-revolving (auto and student loans) — is not as stimulative as short-term revolving credit card debt.

"Government-subsidized student loans are a huge part of consumer credit. And since state budgets continue to be strained, that will continue," said Berner.

On this point, economists agree: student loan debt inflates credit levels with little economic impact.

In total, the Federal Reserve's borrowing report covers auto loans, student loans and credit cards, and excludes real estate loans, such as mortgages and home equity loans.

Economist Peter Morici from the University of Maryland points out that high student debt levels are a factor of the unemployment rate — which is still 8.3 percent.

"People are going back to school because they can't find a job," he said. "Most consumer credit has been auto loans and higher education."

Even on the heels of Wednesday's ADP report, which showed private sector jobs rising by 216,000, Morici still contends that depressed income levels continue to hamper spending and growth.


Keep reading by clicking on link

[Havakasha]

Corporate CEOs Embrace Tax Hike Plans Rejected By Paul Ryan
Posted: 03/ 7/2012 7:03 pm


20
http://www.huffingtonpost.com/2012/0...n_1327844.html

WASHINGTON -- A powerful coalition of corporate executives on Wednesday praised a deficit reduction plan that has long been maligned by GOP leaders for raising taxes.

The Business Roundtable, a lobbying group of CEOs at companies from American Express to Xerox, released its own plan aimed at revitalizing the American economy. The report also commends the plan issued by the bipartisan Simpson-Bowles deficit reduction panel and a more tax-hike-focused plan developed by former Federal Reserve Vice Chairman Alice Rivlin and former Sen. Pete Domenici (R-N.M.).

The Simpson-Bowles and Rivlin-Domenici plans "represent thoughtful, nonpartisan approaches that include significant policy solutions for America's leaders to consider and take action upon," the Business Roundtable report states.

When it was first released in December 2010, the Simpson-Bowles plan was greeted with disdain from progressive economists, who viewed the proposed $3 in spending cuts for every $1 in tax increases as too hard on the poor and too easy on the rich. As more conservative budget plans emerged, however -- including a proposal from Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee Chairman, to eliminate Medicare -- progressives have come to view the Simpson-Bowles proposal with more favor.

The Simpson-Bowles commission was created by President Barack Obama and stacked with both Republicans and Democrats. One of the panelists was Ryan himself, who voted against the final plan because it sought deficit reduction by building upon Obama's health care reform legislation and raising taxes.

"Relative to a current policy baseline, the proposal would increase revenues by $2 trillion over 10 years," Ryan wrote in December 2010. "Increasing the government's take from the economy hinders growth, and it is doubtful these revenues would be used for deficit reduction: there is no guarantee that reductions in Federal spending would be achieved."

But now the very CEOs whom Ryan has repeatedly lionized as job creators are praising Simpson-Bowles, as well as Rivlin-Domenici, which actually proposes more in tax increases than Simpson-Bowles. The Rivlin-Domenici plan features roughly $1 in tax increases for every $1 in spending cuts, according to the Center on Budget and Policy Priorities.

[Havakasha]

Now imagine if the Republicans had allowed the Obama administration to pass an infrastructure bill etc.


U.S. gains 227,000 jobs in February
Best stretch of job growth since 2006; jobless rate remains at 8.3%

By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The U.S. created 227,000 jobs in February and more people found work in the prior two months than previously reported, suggesting the economy’s recent momentum is likely to continue, according to the latest government data.

The increase in nonfarm jobs topped 200,000 for the third straight month and reinforces the view of an economy gathering strength as 2012 unfolds. The past three months of full-time job growth is the fastest since the end of the 2007-2009 recession and marks the best performance since early 2006.

The unemployment rate, meanwhile, was unchanged at 8.3%, largely because nearly half-a-million workers reentered the labor force in search of jobs. That’s usually a good sign because it means people believe more work is available.

Economists surveyed by MarketWatch had predicted an increase of 213,000 jobs on a seasonally adjusted basis, with unemployment holding steady at 8.3%.

Adding to the picture of a resurgent economy were upward revisions in employment for January and December.

Job gains for January were revised up to 284,000 from 243,000 — the best month of job growth in six years — and net hiring in December was revised up to 223,000 from 203,000.

In premarket action, U.S. stock futures SPM2 +1.26% reacted positively, though news that a Greek debt swap was accepted also helped stocks.

The biggest increase in hiring took place in professional and business services. Companies in those fields added 82,000 jobs.

Also, the heath care sector hired 61,000 workers, leisure and hospitality companies boosted payrolls by 44,000 and manufacturers added 31,000 jobs. Surprisingly, construction was little changed despite unusually warm winter weather.

Subtracting another decline in government jobs, the private sector boosted payrolls by 233,000.

Average hourly earnings rose by 3 cents, or 0.1%, to $23.31 and hours worked was flat at 34.5. The MarketWatch survey expected a 0.2% increase in average hourly earnings.

While the acceleration in net hiring is welcome, the U.S. still has a long way to go to recoup all the jobs last in the last downturn. The economy has nearly 6 million fewer positions now than it did before the 2007-2009 recession started.

At the current rate of hiring, the U.S. would not return to precession levels of employment for at least four years. The jobless rate hovered around 5% to 6% before the recession.

[Havakasha]

Heidi Shierholz at the Economic Policy Institute spotlighted some additional positive news for the future of the nation's still rough labor situation Thursday. In short, average weekly work hours are approaching where they were when the Great Recession began.
In Dec. 2007, when the Great Recession began, the average number of hours worked per week in the private sector (including both full-time and part-time jobs) was 34.6. As employers cut hours, the length of the average workweek dropped to 33.8 by March 2009. While this drop in hours meant smaller paychecks and more hardship for workers, it also actually saved jobs. The 2.3 percent drop in average hours multiplied across the private sector workforce of more than 100 million workers means that if hours had not dropped, 2.5 million more jobs would have been lost. [...]
But the restoration of work hours is bad news as far as employment growth goes, because increasing hours absorbs work that could be done by new hires. In the current recovery, the restoration of hours has been a drag on employment growth ever since average hours began growing again in late 2009. Think of it this way: The drop in hours saved 2.5 million jobs on the way down, but it has delayed new employment growth to that same extent on the way back up.

The good news is that the restoration of average work hours is nearly complete, now just a tenth of an hour off their pre-recession level. Which should mean, all else being equal, stepped-up hiring as the "slack" can no longer be taken up by workers already on the job. The recent drop in the productivity level is another indicator that, on average, squeezing more from people already working may no longer be practicable.
Higher average hours up and increasing the number new hires is, of course, only one element needed to improve the labor market. Such acute problems presented by the Great Recession, or perhaps we should call it the Little Depression, have drawn most of the attention until recently. But America's chronic economic problems, some of which contributed to the immense pain of the downturn of the past 52 months, remain. Stagnant wages, for instance, were a problem long ago and have been with us through the past five recessions, with a slight, but only slight, improvement during the final years of Bill Clinton's presidency.

One very disturbing chronic problem is the plunge in entry-level wages for high school and college graduates, entry-level being defined as one to seven years experience:

From 2000 to 2011 [...] wages actually fell among every entry-level group regardless of education.Wage losses occurred for each group of entry-level workers between 2000 and 2007, as well as during the recessionary years between 2007 and 2011. This stands in sharp contrast to the extremely strong wage growth for each of these groups from 1995 to 2000. During this period of overall strong wage growth, wages rose roughly 10 percent for entry-level high school-educated men and women, and increased by 20.3 percent for entry-level college-educated men and 11.4 percent for entry-level college-educated women.
As the chart below shows, the long-term statistics include plenty of evidence that entry-level wages may keep dropping in both the private and public sectors. For instance, new hires in the auto industry are being paid far less than they were just five years ago. And new teachers in many public school districts face the same situation. Benefits, which are another form of compensation, are being steadily reduced, too, The wage drop just adds more pain to another problem, the fact that young people who do not get a job in their preferred career choice relatively soon after graduation are followed around for the rest of their lives by reduced earnings.
Resolving these chronic problems is essential if we really want a vibrant economy.