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Peter Schiff, on the looming economic calamity

Nov 15, 2012|

Peter Schiff is an American investment broker, author and financial commentator. He tells Jeff about the troubles ahead in the economic world.

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

We're now joined by Peter Schiff. Peter Schiff is the CEO and chief. Global strategist of the Euro Pacific Capital. And host of his own radio show at shift. SCH I FF. Radio dot com Peter thanks so much for coming on the corner report. Very -- Peter. About half an hour ago we were playing a couple of clips. -- viewed downing New Orleans. Interviewing people with college degrees. Who were now working as strippers and bartenders -- strip clubs. And these are people who racked up what I hundreds of thousands of dollars in debt. Well collectively not individually have to let. Collectively and this is what they're getting now for their education welcome to Obama's economy. Well that's not just Obama as the economy -- mean we don't need all these college graduate we have too many people basic government subsidies who go to college people who go to college. That would be much better off actually learning a marketable skill or trade. But instead they are encouraged by the government to go to college. They borrowed tens of thousands of dollars. They major in liberal art and they know nothing and could probably tell everybody goes to college so a college degree just work clothes. But it took -- cost a fortune because the government subsidies because of all the guaranteed in direct loans. The government subsidizes college the government gives students money or loan them money to bid up tuitions and so -- it says sky high. And the educational establishment is bloated and everybody is overpaid. And distilled and end up with a workbook agreed -- -- portrait. And the play that video it is so people getting a college degree doesn't mean that you're gonna get a good job and and so a lot of people can stop. Peter -- member Rick Santorum. Went out when he made something very similar watchers sank. A fact here's the cut right. Now cause Obama once said said. He wants everybody in America to go to copped. What is now. -- -- And he was savaged for it. Yeah that was telling the truth that's what happens in politics meanwhile you know there are millions of jobs right now good paying jobs. They're going unfilled because employers can't find the workers and have the skills for these jobs. Instead they have college degrees and so they end up being dormant strip clubs if they didn't go to college they actually could have acquired real skills and they can have decent job right now. And Peter. Speaking of the job situation. With the reelection of President Obama. With the negotiations. An -- over the coming supposedly fiscal cliff. Are raising taxes on the wealthy maybe my massive budget defense cuts in the in the budget especially come and defense. What do you think the economy is going to be like in the next three to six months are we heading towards a double dip recession. Well first of all the -- massive cuts in government spending even if we go over the so called fiscal quest. They cut spending by about a hundred billion which is there's been the ocean and in fact that's a cut in the rate of increase is not a real caught the way you know I would talk about -- so. It's all tax increases. And the reason people -- large topic upper -- -- this clip is because taxes are gonna go off. We can't avoid this so called fiscal left by raising taxes. I'm hiring some people raising taxes on dividends and capital gains and that's why the stock market going down. You know there were a lot of people actually thought Mitt Romney might of won. And and it it was a surprise to -- on Wall Street that he lost since those stocks are gonna be marked down considerably. Because it beat it attacks on corporations what -- directly at the corporate level or indirectly by taxing the shareholders who own the corporation's. You're gonna reduce the value of corporations substantially so they're going down but the real disaster is not its fiscal -- If the next one and remember this fiscal cliff is the result. Congress kicking the can down the road about a year ago when they pushed off any spending cuts -- tax increases into the future where are we finally arrived at the -- And now I wanna -- again. But the real problem is if we go over this fiscal cliff we go over a much bigger fiscal cliff because we have a one point two trillion dollar. Budget deficit every year we've got to bring the budget into surplus. We have to obliterate government spending we let the slash government spending and that they they would start to tackle the national debt. It even if we cut one point two trillion in spending right now and every single year we still would have done anything about that sixteen -- our national let. Always we do is stop the bleeding but we still have to go -- and deal it is enormous that. And the only reason that we can handle it right now is because the Fed got interest rates to zero. What happens when interest rates go back to normal and worst anyone that controlling a year. Just -- interest on the debt. Even look at that stopped going. We're talking to Peter Schiff she's the CEO and chief global strategist. Of the Euro Pacific Capital he's also the host of his own radio show a shift radio dot com. I'm appear the president held a press conference yesterday. And he basically gave his talking points that he said jury the campaign and that many liberals have been repeating now for months which is this and I wanna get your take. That why don't we just have the wealthy pay a little bit more. Like they did jury the Clinton years. How of them -- quote their fair share. To contribute in terms of bringing down the deficit a quote balanced approach and combine that with some cuts and some entitlement reforms. What do you say to that argument why shouldn't the rich quote to pay their fair share. Well I mean first of all the rich are already paying more than their fair share so if you wanted to rich to pay their fair share you got to give the big tax cut but. Also I think more importantly you have to understand what high income earners do. -- they're discretionary income. If you can't get -- -- somebody who's making 50070000. -- 100000 a year chances are the money he pays in taxes. If you get less money he would've spent so maybe he doesn't take a vacation maybe he doesn't -- utility and a new television -- steady -- taxes. I think that that that doesn't hurt the economy can -- transfer spending from the for the private sector to think that the government. But it could accept I -- comer he's got -- and not -- television or not take a vacation he's got enough money to do those things. What he's gonna do if you're gonna have less money available for savings and investment. So that means we have a slower economy because businesses can't get credit they can't get loans they can't make capital investment they can't be more productive they can't hire more people. So when you raise the marginal rate of income tax on the hiring the murders. You destroyed savings and investment and that's what we eat. We need to invest and grow our way out of this recession needed to produce more we have more jobs. But -- -- if you tax the people who create those jobs and produce the growth you're gonna -- but it's so it's the worst way to. Is that tax income at the marginal rate the best way to actively have to pay for these deficits. Without spending cuts. The best thing we do a beer consumption tax and we're not gonna enact that. And we have to raise income taxes on the middle class and the working -- now Obama does a lot of knowledge that because he got elected promising to steal money. From the people who didn't vote for him and give it the people who get to the people voted for Obama are expecting Obama to steal money from the rich and give it to them. But they don't understand that all that free money from the government comes with a lot of strain and the strings are you lose your job you get prices go up and you're actually worse off. In fact Peter that's exactly what Mitt Romney said in that conference call. Who is donors. When they civil why did you lose and he said pretty much reviews said. Why I think I think it probably maybe watch my YouTube video I did a week ago right -- that I said that's what election -- is that it's an advanced auction on ourselves stolen goods. And he -- that we promised to give more brief stop Mitt Romney did and that's why you want because people vote for free stuff. Free birth Ctrl+Alt you know that free health care alzheimer's the appropriate. It is therefore Obama doesn't understand how expensive Paulette -- bit. Peter you were ahead of the curve on the financial crisis you're ahead of the curve on the housing bubble. You were I mean you were great prognosticator or a predictor of those things. Injuring the in the two thousands. What are you seeing now over the next three to six months. -- -- What were you were a lot of trouble but whether or not it hit that bad -- next three to six months it's impossible to know but in the next couple years for sure. I think we're gonna go over there real fiscal left and what that's what that's gonna be is when the Federal Reserve can no longer hold interest rates at zero. Because the dollar is under pressure and prices are rising and it's obvious to everybody that inflation isn't much higher then what would be acceptable in fact. There was a presidential poll taken about a month and a half ago Mike Fox News. And it was a lot of all registered voters and they asked the voters what is your number one economic concerns and by the overwhelming margin almost -- want. It was an unemployment it was and how he wasn't taxes it was inflation. So the average voter is already struggling with -- inflation it's gonna get much worse if that is going to be forced to raise interest rates. When they do. All the big banks that we bailed out the -- will fail again the housing market will tank and will be in a worst recession that we weren't 2008. Now if the Federal Reserve realize is that they say oh we can't raise interest rates we can't crappy economy. Then they let the dollar crash and then prices skyrocket. And so people you think gasoline is expensive. -- -- -- a gallon when it beat tent with his feet quite -- -- and it can't get gasoline if food. It's all basic necessities so this economy is gone over a massive clip that -- the -- that is collapsed. Or you know or ordered banks. And and and the real estate market the one way or another it's gonna be a bigger disaster than 2008 and -- getting bailed out. Because the government could be developed back. It under the first scenario where does that raise interest rates the government have to default on -- out -- last -- -- after the popular products. Think government can happen at all until security obligations cause I I thought I it it's actually. When your bank -- When if you have an account like Bank of America and the bank -- guess what there's no money the FBI I think -- usually you know as a -- your technique out. That that's what's coming. I'm believe. So I -- Arab -- so we're becoming the united states of Argentina. Pretty much of an odd that you can redraw you don't forget about. Whether America or South America doesn't stop and Mexico and they -- always upbeat Canada knows where it's -- American League is that the Canadian border yeah. -- really don't appear right out of vacuumed Peter Schiff. The CEO and chief global strategist of Euro Pacific Capital he's the host of his radio show which shift radio dot com. Peter thank you so much for coming on the -- report. Thanks money. But I will be right back Steve sire from the Boston Globe next here on the corner report. You're from Boston. Thirty plus years of talk radio week.