Interesting video from Russia Today with Peter Schiff. Please note that you may need to turn your volume up and the sound quality improves after the opening segway! I have never seen this website and it is interesting for its “strong views” on various matters (read no PC!). After all if you are a fan of Putin with his shirt off you have to go somewhere Huh?
Discussions started around the one year anniversary of the Lehman collapse where Schiff said that allowing the collapse was the one thing that they did right when the crises was occurring. It was a trial balloon of sorts as they were probably starting to realize at the time the moral hazard they were creating. They allowed the company to collapse and where scared at the resulting uproar—so moral hazard be dammed!
It basically showed how weak and indecisive the Treasury and Fed have become—they were allowing proper cleansing to occur and at the first sign of trouble or criticism they reverse course. Everyone blames the AIG collapse on Lehman and they are probably right—what should be noted is that AIG thought they were writing credit default swaps with a huge profit margin and it turns out that they were underpricing them by a HUGE margin. When a crisis hit they should have been/were wiped out. The moral hazard here is that there are will not be a huge number of ex AIG employees sprinkled around wall street for the next 30 years who will remind all the young hotshots in their 20’s about the dangers of mispricing assets. These same battlehardened veterans also won’t probably be in the positions of influence required as well—because they are all still at AIG! Moral hazard problem still NOT solved and probably going to get worse.
My advice on the latter—wait for the next stupidity to build on Wall Street and get ready to practice your shorting skills. George Soros basically talks around this issue (ad nauseum) but he at least addresses it. Remember he made another Billion in the market collapse last year off this crap!
Peter Schiff also addressed the fake unemployment numbers in the US. There own numbers show 16% plus unemployment but their numbers for public consumption is 10%. The 10% number doesn’t include people who want to work but have given up as well as those who are engineers but are working at minimum wage jobs to pay the rent. The latter want a real job—but don’t want to be homeless.
The numbers could be worse actually given that a large number of workers in America are actually independent contractors versus actual employees. Companies have trended toward this because of onerous state and federal regulations.
These contractors actually don’t stop working they just stop earning money! They include insurance brokers, real estate brokers, stock brokers etc. NOT included in unemployment figures.