I’m delighted to have at least two things in common with Peter Schiff- same first name, very similar views!
Extremely Important!!! Read this and watch show
Agoracom Blog
Great Name, Excellent Commentary
Posted by
at 6:38 PM on Wednesday, January 7th, 2009
Hi Peter:
Do you or your readers know of any EFT’s or Mutual Funds that allow us to participate in non-us bonds and avoid this bubble? Compelling comments from Peter S.
As always…thanks for your help!!
Paul
Peter,
In your best estimation, how long do you feel that the US can keep this ponzi scheme going? Would the bubble bursting in the bond market signify the end of the US dollar? Every time people start to spell the end of the US, we somehow prove them wrong. I have a feeling the US could somehow drag this on for quite some time. What are your thoughts?
By the way, I very much enjoy the blog…… Keep up the great work.
To Paul:
In the Canadian market, you can short the 30-year-US bond by buying the Horizons Beta Pro Bond Bear Fund. The ticker symbol is HTD.
** FUTILE RE-RUNS… We failed 1/4 Century ago due to Congessional inaction and continued spending **
The Budget & Trade deficits are nothing new. They’ve been studied and fought for decades without success.
Let’s go back to Pres. Ronald Reagan, concerned with controlling higher prices and currency inflation. Volcker was the remedy to currency inflation and discipline. Soon after, the telephone company AT&T was split and decontrolled giving birth to the telecommunications & Internet boom. President Reagan wanted to downsize government and spending, but the cart came before the horse. He cut taxes and the economy stirred, but Congress would not go along with spending cuts especially on entitlements (Whatever they are). Does the Peter Grace foundation sound familiar? They studied the budget deficit and concluded that unless steps were taken now (In the mid1980’s) to reduce spending and the size of government, the deficits would run off into the Trillions and we would lose control of our Destiny sometime in the new Millenium. The film I.O.U.S.A. partially blames Ronald Reagan for the deficits, but he was powerless facing a stubborn Democratic Congress, Hell bent upon spending .
Jump ahead to the Clinton administration and it seems that he was the backbone of fiscal responsibility, according to the film IOUSA, but nothing could be further from the truth. For the first time in many decades, a Republican Congress & Senate were elected and under leadership of House Speaker, Newt Gingrich, ‘The Contract With America’ was crafted. Viciously demonized by the Press, Newt Gingrich met an untimely and early political death leaving the Republican party in the wilderness. So it seemed for a few short years that the budget was balanced, but there was ‘Smoke & Mirrors’ in the figures not limited to inclusion of Social Security surplus receipts as a part of revenues.
Now let’s think about Citizen Ross Perot for a minute in the 1992 Presidential elections, and his charts of the budget deficit showing the budget would briefly come into balance for a final time later in the decade and then huge deficits would occur beyond if Federal Spending did not curtail. Really, what briefly balanced the budget was fruition of the internet & technology boom along with a climbing stock market that padded government coffers due to decontrol of the telecommunication industry years before in Ronald Reagan’s term. A rare occurance and simply unsustainable.
By the time Pres. George ‘W’ came to office the technology / Internet boom had crested and the economy had been hollowed out after decades of ‘Deindustrialization’ all in the name of High Technology. America has a much narrower economy today than in recent decades, and he had no choice other than to step on the gas to propel the housing industry at a time when the cycle was ‘Long In Tooth’. For that effort (And he didn’t create the Community Re-Investment Act), we had a shallow prosperity centered around home construction which simply expired when they ran out of deadbeats willing to take the keys for new homes. With debt levels stretched and the quality of loans compromised, that brings up to here and the rest you know.
Such a disappointment that Pres. Bush failed miserably to contain Federal spending because he was saddled with a Democratic Congress. With the exception of a brief period in the 1990’s, it’s been decades upon decades of Democratic Congressional leadership that wants nothing to do with spending curtailment. The political system performs as designed, “Government For The People And By The People”, and this is what they want. We all know this, and interestingly the film IOUSA fails to mention this preferring to blame individual Presidents. That’s because they need the cooperation of Congress if there will be any progress so it’s better to blame individual Presidents rather than Congress which has the responsibility to approve spending.
Before the financial collapse, Citizen Ross Perot contacted people in his database last Summer wanting to make Federal Spending and the Budget Deficits a primary campaign issue and was seeking thoughts. This is what I told him with greetings and here’s the same advice for all – - –
It’s too far gone now to expect any improvement and long term benefit, especially with a Democratic Congress well entrenched. Expect Federal Budget Deficits for the Fiscal Year 2009 to exceed $1 Trillion and every year thereafter perhaps into eternity. The only thing that you can do is protect your interests.
Maybe instead of Peter Schiff try Jim Sinclair.
I would personally recommend a strong BUY with my personal student loan debt.
IMHO of course.
Peter, as the value of our shares is stated in dollars or other paper money, and if the dollar and other currencies collapse, what is the value of our shares ?
Info on crude prices where Gartman indicates Bloomberg is wrong on the impact of Contango on prices.
http://ftalphaville.ft.com/blog/2009/01/07/50869/energy-forward-curves-are-tricky-for-bloomberg/
Interesting article and analysis on gov. bonds including a referenced article that goes into more detail.
Peter, would be interested in your take on this as I believe it supports the analysis that Treasures will fall? Note that Germany could not sell all its bonds.
http://ftalphaville.ft.com/blog/2009/01/07/50888/a-fast-deflating-bond-bubble/
In response to Post number 4 from SGGroup, I would remind everyone that Ronald Reagan swept into office on a
3-plank platform:
1. Increase military performance, largely by increased spending thereon;
2. Reduce the National Debt; and,
3. Reduce taxes.
For those with short memories, or who were not around at the time, the National Debt at the time of Reagan’s ascendancy was slightly UNDER ONE TRILLION dollars. By the time of his departure, it was OVER THREE TRILLION dollars, with commitments in place to go higher.
It should take only a 3rd grade education (maybe less for a reasonably bright person) to ascertain the folly……
and that folly was the mother of today’s disaster.
Only when Americans demand that proposed expenditures be honestly estimated, and only when they are willing to pay taxes which will cover actual costs will this country find itself on a sound financial footing………….
AND THAT WOULD APPEAR TO BE AT LEAST A HUNDRED YEARS INTO THE FUTURE !!!!!
But, in the meantime, let’s be honest enough to admit that BOTH political parties have generously contributed to our dilemna: the Democrats in proposing programs, which even though sound and consistent with public opinion, are beyond the willingness of people to pay for; and the Republicans for looking out ONLY for the interests of business and the wealthy while simultaneously “rolling” the religious zealots who largely make up their populist “base”.
Frank – What’s most frustrating for me is how the financial community thinks this is just another recession. I may be proven wrong but I think being a live chicken versus a dead duck is the way to go for now. I truly believe i have less risk in being short long treasuries and long oil at $40 or under
challie – large sums in portfolios in u.s. assets would be wise to hedge through foreign currencies.
Susan – Sorry but I have little time for Mr. Gartman.
HI Peter and fellow readers
Can you tell me where i can learn more about treasuries, how they trade..?
am interested in tbt, question about the expense percentage on tbt, is this only in play if you hold the etf through one year to the next? how does that work?
Gotta love the effort you put into this blog