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Archive for December 6th, 2008

One can’t help but think after watching this video:

1. Has Ben Bernake really been that wrong for several months or even years? 

2. Is the United States really in that bad a situation?

3. Jim Rogers seems to agree with Peter Schiff in the idea that no bailout should be done so that the United States should rebuild from scratch and embrace the recession and not fight it.

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Some effects of the ongoing global financial crisis may surprise you.

First is crashing oil prices have begun to hurt sentiment supporting research into biofuels.

Although falling oil has generally benefitted consumers due to falling fuel and electricity prices, the moral hazard here is that research into alternative fuels is disincentivized. In a post we featured earlier: in the case of fuels like ethanol, the amount of fossil fuels needed to process and transport it are roughly equal to the amount produced, so as oil becomes cheaper, pursuing alternatives makes less economic sense. As Abigail Ho writes for the Inquirer:

It might be better for countries to place their biofuels projects on the backburner at this time, as oil prices were expected to remain relatively low over the next two to four years, Jorge Montepeque, Platts global director for market reports, said at a forum.

Instead of pulling energy prices down, the use of biofuels might do just the opposite, he said.

“I think biofuels in most markets consume more energy than they produce, so they tend to be energy negative,” Montepeque said. “Most efforts in biofuels actually lead to higher energy prices. We expect some of these projects to be rolled back or cancelled as energy prices come down.”

Second, the implosion of investment portfolios with the meltdown in markets has had many a fund manager tightening their belts, bereft of their money machines. This has affected not just the confidence of the former market wizards but also the spending habits of their gold-digging trophy wives. Tara Wilson writes for the Telegraph:

‘You loser!” screamed Katie, aiming a vase at her husband. “You’ve destroyed my life,” she continued, hurling it. “Just look at my hair, look at my nails! You loser, you jerk, you nobody.”

Katie’s husband, Jack, whose property portfolio disintegrated in the financial crash, had just told his wife that she would have to cut back on her thrice-weekly visits to Nicky Clarke, the nail salon in Harvey Nichols, and the oxygen facials, chemical peels and seaweed wraps at Space NK.

Such was the aggression and verbal and physical abuse that followed that Jack was left with cut lips and blood streaming from a broken nose.

In this time of crisis, some things like oil head back to earth while some other things will remain forever out there in wild space.

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Out of all the videos of Peter Schiff, this set as of now seems to be the most informative for me. The videos show how Peter Schiff figured out the idea of the financial crisis in the U.S. several years ago. He also explains what he thinks the U.S. government will do and what they should do. 

Right now as I’m writing this, I’m listening half way through the video, goodness, this guy is so specific. He should run for office. 

I have talked with a number of people in the banking economy and have gotten different opinions on a variety of issues. 

1. Should a recesssion actually be embraced as opposed to be fixed so that the economy will not shrink. Peter Schiff explains that one should have a recession in order to have bubbles dissappear and have a real economy, as opposed to  a fake economy. 

2. Should bailouts actually be given? Peter Schiff is against bailouts, he wants the businesses to fail, even at the expense of thousands of people losing jobs. 

3. Exactly what are bailouts?  Taxpayers will definitely pay for bailouts through their taxes, but when a company is bailed out, will the same management run the company after the bailout? When a company is not a bailout and it fails, exactly what will happen to the company, will it be up for purchase or what?

4. The United States is supposedely capitalistic. Are bailouts against capitalism?

5. Peter Schiff has predicted the housing bubble and its crash. Peter Schiff has also predicted a rise of gold and a crash of the dollar which currently isn’t happening. He claims that the dollar is currently going up due to deleveraging. In short, americans and american businesses are selling their assets abroad and of course getting foreign currencies for it. After this they will replace their foreign currencies with dollars. This purchase of dollars is raising the price of dollars. Once the foreign assets have been sold, and the foreign currencies exchanged to american dollars, the dollar will start to crash.

(more…)

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