You'll love this interview HP'ers. Peter Schiff is the man, and while David Lereah, Nicholas Retsinas, Alan Greenspan, George Bush, Kendra Todd and millions of REIC on commission were out saying "it's different this time" and "bubbles are for bathtubs", Schiff was one of the lonely voices in the wilderness saying "hey, hold on, this sucker's gonna blow".
And as we all know now, Schiff was right and all those cheerleaders were wrong, and now the world pays the price.
Please join me in thanking Schiff for not shutting up when housing was skyrocketing, for not backing down to the REIC, and for being a cool dude and interviewing on HP.
Here's Schiff, and for A.D.D. HP'ers I bolded the good stuff.
HP: You nailed the housing bubble and crash. When the masses were still listening to David Lereah and Nicholas Retsinas in the mainstream press, a few people who looked harder heard your message, sold their homes and rented. Do you feel vindicated, and do you think the MSM has housing crash blood on their hands today?
Schiff: I do not necessarily feel vindicated as I have always known I had this one right. However, as was the case with the internet mania, my early diagnoses of the problem caused many arguments over the years.
However, even now most of my critics still do not give me the proper credit for having laid it out so correctly years in advance. I would recommended reading some of the commentary I posted on my web site over the years to get an idea of accurate my forecasts were.
Also, my book “Crash Proof” has an entire chapter devote to the real estate bubble. Those who have not read it yet can order a copy here
However, not all of my predictions on real estate have come true. Prices have not yet collapsed to the extent that I expect they will and we are not yet in the serious recession I predict will follow the bursting of this bubble. However, I am confident that I will be 100% vindicated on every prediction I made on the real estate market, the economy, the dollar, commodity prices, etc.
HP: If I handed you $500,000 today, what would you do with it?
Schiff: My advice would be to convert your dollars to foreign assets, mostly quality, high yielding stocks, as well as some physical precious metals and mining and energy stocks.
Under no circumstances should anything be left in U.S. dollars. The biggest casualty of the real estate bubble, and any attempted government bailout, will be the value of our currency.
HP: You've heard the rumblings for some sort of government bailout, led by the Democratic Congress and Bush. What do you think about this idea, and is a bailout even feasible?
Schiff: No bailout is possible as just about every American with a mortgage is going to need one. The moral hazards of any “bailout” will only exacerbate the problem, and anything that prevents real estate prices from returning to normal levels simply guarantees an even bigger “bailout” being required in the future.
Of course, contrary to the political rhetoric, it is the lenders, not the borrowers, that need the bailout. Most borrowers either put nothing down, or extracted any original down payment with home equity loans. For most homeowners, all the losses will be mental, as the illusions of paper real estate gains fade.
However, the lenders will loss real money, as they funded the bubble. Even if some government bailout results in lenders get their money back, the dollars they receive will have very little purchasing power. No matter what, the lenders will be the biggest losers.
HP: In order, who/what were the top five causes of the Great Housing Ponzi Scheme?
1. Greenspan and the Federal Reserve
2. Wall Street Investment banks
3. Lenders (banks, originators, etc)
4. Freddie Mac & Fannie Mae
5. Congress & Pres. Bush
7. Rating agencies
8. Individual home buyers and speculators
10. The media.
I guess I did not want to leave anyone out...
HP: You bump into Alan Greenspan in an elevator, what do you say to him?
Schiff: I’d ask him if he had read my book. If he had not I would give him a copy. If I thought he would give me honest answers there would be a number of questions I would ask him as to why he did what he did, but I doubt that he would be forthright.
I just hope he lives long enough to see the full results of his incompetence.