|Peter Schiff's Biography from Wikipedia - August 2010
Peter David Schiff (Born March 23, 1963) is an American author, businessman, financial commentator, and was a 2010 Republican primary candidate for the United States Senate.
Schiff is president and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut. Schiff frequently appears as a guest on CNBC, Fox News, and Bloomberg Television and is often quoted in major financial publications and is a frequent guest on internet radio as well as host of the podcast Wall Street Unspun.
He is known for his bearish views on the United States stock market, bond market, the US dollar, and the United States economy in general, which have earned him the nickname "Dr. Doom."
Schiff began his career as a financial consultant at a Shearson Lehman Brothers brokerage. In 1996 Schiff and a partner acquired a small brokerage firm that had been founded in 1980, reincorporated it in California and renamed it Euro Pacific Capital. The company now reports thousands of clients and six offices nationwide, with its headquarters in Westport, Connecticut.
According to a 2005 article in The Advocate of Stamford, Connecticut Schiff relocated the firm to Darien, Connecticut to find brokers "who think like him". The New York Metropolitan Area, Schiff says, has the biggest concentration of brokers in the country, making it easier to recruit employees. The company has offices in Newport Beach, California as well as in Scottsdale, Arizona, Palm Beach, Florida, Los Angeles and New York. Euro Pacific Capital also holds the exclusive rights to broker some Perth Mint gold products in the United States.
Schiff attributes his economic forecasts to an understanding of the Austrian School, a school of economic thought generally categorized as heterodox (or non-mainstream). Schiff voices strong support for the Austrian School, and says it was first introduced to him by his father, Irwin Schiff. Schiff admits his economic views are not mainstream, and like the Austrian School, he makes judgments without a strict adherence to economic statistics.
U.S. bear market
In his 2007 book, Crash Proof, Schiff writes that the current United States economic policies are fundamentally unsound, and predicts that in the future the United States dollar will lose much of its value.
Schiff feels that the imbalance between the amount of goods the U.S. consumes and what it produces will eventually lead to problems for the U.S. economy. As a remedy Schiff favors increased personal savings and production which he says will stimulate economic growth. Schiff cites the U.S.'s low personal savings rate as one of the causes of the its transformation from the world's largest creditor nation in the 1970s to the largest debtor nation in the year 2000. Schiff attributes the low savings rate to higher inflation and the artificially low interest rates set by the Federal Reserve.
In a 2002 interview with Southland Today, Schiff predicted that the economic downtown triggered by the bursting of the stock market bubble would lead to a bear market likely to last "another 5 to 10 years." In November 2002, US stocks began a bull market uptrend which held steady for at least five years, until reversing course in 2008, when the Dow, NASDAQ, and S&P 500 began a decline to less than half of their peak 2008 values, followed in 2009 by the Dow climbing 61% from its low point over the following year.After interviewing Schiff in 2009, journalist and finance author Eric Tyson, referenced various Schiff predictions during the 2000s and stated that "On all of these counts, Schiff wasn't just wrong but ended up being hugely wrong." Schiff later released a video stating that, "When I gave that interview in 2002, I had no way of knowing how irresponsible the Fed was going to be ... But I recognized that early: back in 2003 and 2004 I changed my forecast ... if you look at what happened to the Dow in terms of gold [and not U.S. dollars], my forecast was extremely accurate."
In an August 2006 interview he said: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States." On December 31, 2006 in debate on Fox News, Schiff forecast that "what's going to happen in 2007" is that "real estate prices are going to come crashing back down to Earth".
As part of these exchanges on Fox News and his repeated appearances on financial news network CNBC, Schiff had mentioned factors such as speculators and "the absence of lending standards" which are now seen by many to indeed be contributing factors to the housing crisis of 2007-2009. On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry. Following this observation, it was soon reported on December 23, 2007 by the Associated Press that "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP... At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission."
Since 2007, Schiff has stated many times that if the government doesn't change course there will be hyperinflation in the US. Schiff is one of a minority of economists credited with accurately predicting the financial crisis of 2007–2010 while "nearly all [macroeconomists] failed to foresee the recession despite plenty of warning signs". In his book Crash Proof, he described several aspects of the U.S. economy that would lead to a recession.
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Schiff's notoriety for financial predictions increased when a You Tube video entitled "Peter Schiff was right" became popular in late 2008 and 2009. The video consists of a compilation of clips of his many appearances on various financial news programs from networks including CNBC, Fox News, MSNBC and Bloomberg, most of which took place from 2005 to 2007. In the segments Schiff explains specifically the fundamental problems he saw with the United States economy at that time. Schiff's warnings of a coming economic collapse earned him the moniker "Dr. Doom."
In late 2006, Schiff predicted the housing bubble and resulting subprime mortgage crisis, and in late 2008, he predicted the automotive industry crisis and the crisis in the banking and financial markets.
Despite predictions regarding the housing bubble and automotive industry difficulties coming to fruition, as early as 2009 Schiff was receiving criticism due to the performance of some of his client's accounts in 2008, as well as controversies over the predictions themselves. In January 2009, economic blogger and investment adviser Michael Shedlock reported, "I have talked with many who claim they have invested with Schiff and are down anywhere from 40% to 70% in 2008." Other criticisms followed, including the aforementioned Eric Tyson post as well as an article for the investment news site Seeking Alpha, published on the site two days after Shedlock's blog post. Later that week an article appeared in the Wall Street Journal reporting that Schiff's broker-dealer firm, Euro Pacific Capital Inc., "advised its clients to bet that the dollar would weaken significantly and that foreign stocks would outpace their U.S. peers" and that instead, the dollar advanced against most currencies, "magnifying the losses from foreign stocks Mr. Schiff steered his investors into."
The Director of Communications at Schiff's investment firm responded to the original Shedlock piece by saying, "While it is true, that our accounts have suffered badly in 2008, a fact that we have never disputed or ran from, [Shedlock's] estimates for the size our of typical client losses are exaggerated and unfair." Schiff personally responded to Shedlock's criticism by saying, "to examine the effectiveness of my investment strategy immediately following a major correction by looking only at those accounts who adopted the strategy at the previous peak is unfair and distortive" and called Shedlock's blog entry "nothing more than an overt advertisement (and a highly deceptive one at that) to use my popularity to advance his career," adding that losses were felt mostly by recent clients and not by others.
Schiff responded similarly to criticisms made by Wade Slome of Sidoxia Capital Management, LLC. in a September 2009 blog entry entitled, "The Emperor Schiff Has No Clothes." Schiff stated not only were the losses suffered by his clients in 2008 highly exaggerated, but also that most of those losses have already been recouped, stating that many who where down then are now up, and most long-term clients were never down at all, but merely temporarily lost some of the profits they had earned over the years.
The January 2009 Wall Street Journal article discussed the value of Schiff's predictions, and stated how deficiencies "made mincemeat of investors who took his advice in 2008." In an interview the following week Schiff likened himself to billionaire investor Warren Buffett saying they were both "buy and hold" long-term investors. Contrasting his negative press he compared claims about accounts managed under Schiff's firm to the stock market value of Warren Buffett's company, saying: "His approach is you buy stocks and you never sell them—you hope to never sell them—and Berkshire Hathaway is down 40% in the last thirteen months; I don't see the Wall Street Journal saying 'Warren Buffett made mincemeat out of his clients.'" The Wall Street Journal also published a letter written by Schiff in response to his critics saying: "My central investing premise, a weakening dollar and safety in gold, commodities and foreign stocks, didn't materialize in 2008. But all the ingredients were (and remain) present for those movements to occur. Over the past year, market reactions that I didn't foresee—massive global deleveraging, a knee-jerk 'flight to quality' into U.S. Treasuries and a sharp counter trend rally in the U.S. dollar—have kept the scenario from playing out."
In a November 2009 videoblog, Schiff said that five stocks he picked for Fortune Magazine in January 2009 had gained a total of 360%.
In a March 2009 speech Schiff said that it would be impossible for the U.S. debt to China to be repaid unless the U.S. dollar's value is substantially diluted through inflation.
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Schiff said that "I would not be surprised to see [gold] at $5,000 over the next several years" and that the 2009 stock market rally was a "bear market rally". In 2008 when asked about future prices of gold, Schiff stated, "I think it could be $2,000 an ounce sometime next year". This did not happen as the price of gold did not exceed $1,230 per ounce in 2009. In 2010, Schiff predicted that gold could "reach $5,000 to $10,000 in the next five to ten years".
Future predictions for the U.S. economy
In his 2009 book "Crash Proof 2.0," Schiff predicts that the U.S. housing crisis will continue to worsen for several years as more homeowners invariably default on their mortgages in spite of government assistance programs. The commercial real estate market will also enter into a steep decline, largely due to decreased consumer spending, leading real estate prices in both sectors to drop considerably and for foreclosures to increase.
Schiff also predicts that the U.S. dollar will experience massive depreciation relative to other currencies thanks to a variety of monetary policy factors. The dollar will become almost worthless, causing prices of imports like oil, many foods and the majority of consumer goods to skyrocket within the U.S. According to Schiff, the hyperinflation will create a situation in America comparable to what happened to Weimar Germany following WWI or Argentina during the 1999-2002 crisis. As such, Schiff encourages Americans to stock up on consumer goods (like clothing, shoes and batteries) now while they are still affordable. U.S. interest rates will also become exorbitant, making it almost impossible for people to get credit within a few years.
This will mark a major economic crash in the U.S. that will be even worse than the global recession. Along with hyperinflation and extremely tight credit, the country will be plagued with mass unemployment and increased homelessness, and government at all levels will have to cope with diminished revenues by making painful cuts to services. Schiff believes that the sudden decline in living standards could lead to civil violence and that the government might institute price controls on staple goods and even resort to confiscating private property and assets to pay public debts and placing capital controls to prevent money from being transferred out of the country. For these reasons, Schiff strongly recommends that Americans get their assets out of American markets now and instead invest overseas where the problems will not be so dire.
Schiff predicts that this economic calamity is inevitable within a few years, but that it will eventually end once the economy hits rock bottom and American consumers and the government make long overdue changes to their spending and saving habits. People will learn to make do with less, housing prices will return to affordable levels, the U.S. manufacturing and export sectors will become strong again, and incomes, living standards and national GDP will resume growth, albeit from a lower starting point than today. Unfortunately, the crisis will lead to a permanent global realignment of wealth as the U.S. dollar loses its reserve currency status and China becomes the world's most powerful economy.
Schiff was an economic adviser to Ron Paul's 2008 presidential campaign. In support of Paul's economic revitalization plan, he said: "We need a plan that stimulates savings and production, not more of the reckless borrowing and consumption that got us into this mess in the first place. Ron Paul's plan is the only one that amounts to a step in the right direction. If you want meaningful change—for the better that is—Ron Paul is the only candidate capable of delivering it."
In 2008, Schiff also endorsed Murray Sabrin for the U.S. Senate seat in New Jersey.
In an interview in February 2009, Schiff's position was summarized as a nonpartisan critique of American policymakers, comparing former presidents George W. Bush to Herbert Hoover and President Barack Obama to former president Franklin D. Roosevelt, with neither of the more recent incumbents comparing favorably to the earlier ones.
Schiff supports the reduction of government economic regulation, and is concerned that President Obama's administration may increase such regulation.
Schiff says that the current economic crisis provides an opportunity to transition from borrowing and spending, to saving and producing. Schiff is critical of the U.S. government's efforts to "ease the pain" with economic stimulus packages and bailouts. According to Schiff, the U.S. government's approach of replacing "legitimate savings with a printing press" could result in hyperinflation.
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2010 U.S. Senate campaign
In December 2008, Connecticut citizens created a website encouraging Schiff to campaign against the incumbent Senator Christopher Dodd. Approximately 5,000 people made campaign contributions using the web site. On February 21, 2009, a moneybomb raised over $20,000 for Schiff's campaign.
In a May 2009 video blog, Schiff said that he was seriously considering a run for the senate and when questioned by a Washington Post reporter, he said the chance of him entering politics was “better than 50-50".
In June 2009 Schiff commissioned a poll of likely voters which indicated that he trailed Dodd in popularity by four percentage points. On July 9, 2009, Schiff launched an exploratory committee and an official campaign website. He began accepting donations in an attempt to see if "people who really believe in freedom, liberty, sound money and the constitution are prepared to support that with an actual political contribution or to volunteer their services and work on this campaign." He received over 10,000 donations and many e-mails from around the world.
After giving some hints on The Daily Show Schiff officially announced his candidacy on September 17, 2009, during the MSNBC Morning Joe show. He is seeking the Republican nomination.
As of October 2009 Schiff had received more than 10,000 telephone calls and letters and raised over $1,960,000 (USD) in campaign contributions. Peter Schiff states, "I plan to bring my dedication and experience to the taxpayers of Connecticut. I may make mistakes in this campaign—but I will not make mistakes in representing you in the Senate. I look forward to an exciting race where I can share my vision with the people of Connecticut."
Democratic Party spokeswoman Colleen Flanagan said, "Despite his groupie-like following, Schiff actually has few qualifications to run for the Senate and has publicly admitted that he can't even remember the last time he voted". In response, Schiff said, "The fact that I haven't had experience ruining the country, that I haven't brought the banking system to its knees, that's my greatest attribute."
At the May 2010 Republican convention, Linda McMahon received the most delegate votes but not enough to prevent an August primary election. U.S. Rep. Rob Simmons, a Vietnam war veteran with two Bronze Stars, received more than the required 15 percent of the total votes necessary to force the primary.
In a video blog the following day, Schiff stated that in weeks prior to the convention, he had the 15 percent support he needed to be on a primary election ballot. According to Schiff, many delegates switched support as late as the week of the convention, due to disinformation spread by the Linda McMahon campaign, including the false notion that he was dropping out of the race. Schiff also stated that about 40 members of the McMahon campaign were present on the convention floor while votes were being cast, against convention rules, attempting to garner more support for McMahon. By the end of the first ballot and the round of vote switches, Schiff was left with only 3% of the vote, down from his high point of over 11% before the switch session occurred. Schiff stated that during that switch session, when it became clear that many delegates were switching from Schiff and Simmons to McMahon, Schiff instructed his remaining delegates to switch to Simmons "because I didn't think [McMahon] was playing fair." Schiff then collected the signatures necessary to earn a position on the August 2010 GOP primary ballot, submitting at least 400 signatures over the state requirement.
In July 2010, Schiff's campaign received endorsements from Steve Forbes and Ron Paul.
In the Republican primary, held on August 10, 2010, Schiff lost the nomination to Linda McMahon.
The results were:
- 49% Linda McMahon
- 28% Rob Simmons
- 23% Peter Schiff
For a complete and updated biography, check Wikipedia.org.