Saturday, January 24, 2009

Interesting Article About Peter Schiff

CNN Money and Fortune Magazine has a really interesting article about Peter Schiff that I recommend you to read.

8 Comments:

Blogger novid said...

Good Article. Stefan, I wanted to ask you a question in regards to your previous posts about the Yen looking to be overvalued due to Toyota's actions etc.

I know timing predictions are always difficult even for Schiff, but given the fact that Japan's exports have fallen 35% in Dec 2008 vs Dec 2007 and that their 2008 trade surplus fell 80% vs 2007(which seems very high), how high can the Yen possibly go?

I mean at this point if it continues to go much higher it is going to absolutely crush the entire Japanese economy and I think it has topped out at these levels. If it continues to rally I believe we could very well see Japan intervene(although they say they will not).

I just wanted to get your thoughts on the Yen to see if you agree with me, if not, how high do you think it could possibly go and why?

12:40 AM  
Blogger stefankarlsson said...

Novid, you got my position right. I do think that the yen is significantly overvalued at this point, but that does not mean it won't become even more overvalued before it reaches its peak. The yen has a tendency to rise whenever global stock markets fall and as I think stock markets will fall more, the yen has probably not reached its peak. It is difficult to say exactly how high it could go, but it could easily go beyond its old 1995 peak of 85 against the USD, and it could perhaps even rise so that a dollar will cost less than 80 yen. Beyond that, however, the overvaluation will become too absurd, and so I think we can rule out the forecasts of 50 to 60 that some have argued for.

Large scale interventions by the Bank of Japan could perhaps prevent further yen appreciation, but it remains to be seen whether they will actually dare do it. On the one hand, the overvaluation clearly hurts the Japanese economy, and many top Japanese officials therefore favors interventions. But they might refrain from doing so because of the negative reactions from the U.S. and the EU that this could create.

11:11 AM  
Blogger marc.van.den.bosch said...

Mish also has an article about Petre Schiff. The part with which I really agree is that however right you are and however how intelligent your insights are, you should be willing to alter your opinion if the markets prove you wrong. Or it's going to cost you money...

http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html

5:01 PM  
Blogger Ke said...

Stefan, how can you praise Peter Schiff when he has lost his clients a ton of money and have been completely wrong about China, foreign stocks, gold, and the U.S. dollar?

7:51 PM  
Anonymous rich t said...

however right you are... you should be willing to alter your opinion if the markets prove you wrong

So which are you -- wrong or right?

7:56 PM  
Anonymous Smack MacDougal said...

Yes, Mike Shedlock wrote a rant about Peter Schiff.

Yet, Mike mishes up the concept of deflation, where he confuses the concepts of falling prices, recession, debt default, credit and decline.

Mish does this because he does not get how any unbacked paper currency scheme works.

Unlike metals-based money where the people can withdraw their metal from banks, melt it and hoard it, Mish fails to account for the lack of any mechanism that can withdraw already minted paper notes and nominal coins.

Thus, his false claims of deflation are about as relevant as Schiff's wrong bets on the value of the USD relative to other paper currencies.

10:41 PM  
Blogger stefankarlsson said...

Ke, First of all, I didn't praise Schiff, I simply tipped about an article which discussed him. I don't always agree with him (I for example have never believed that non-American stock markets would rally at the same time that the U.S. stock market would sell off) and that article wasn't entirely uncritical of him either, but the story was nevertheless interesting.

Secondly, I don't trust Mish's unsubstantiated assertions about Schiff's return one bit. He isn't exactly known for his intellectual honesty as is illustrated in the rant post about Schiff where he uses a graph about monetary base growth which suggests something like 25-30% growth, when in reality it has risen to over 100%.

Schiff may not have publicly switched his positions after certain relevant facts changed like I did, but he may have done it for his clients, and while he probably lost some money on his foreign stock market bets he has long recommended gold which contrary to your assertion has performed well.

8:51 AM  
Blogger Ke said...

Stefan, I agree that gold has performed well, but Peter Schiff made the prediction that gold and the Dow would meet around 5000 and that the U.S. economy would end up like Zimbabwe, which I find to be totally ludicrous.

7:37 PM  

Post a Comment

<< Home