While
many of the talking heads and pundits on TV have been providing calming words
of reassurance about proposed federal intervention in the financial system,
analyst Peter Schiff of Euro Pacific Capital has been accurately warning for
years about a financial meltdown and says that the worst, if Congress
eventually passes the “bailout” bill, is yet to come.

Asked
for comment on current media coverage of the financial meltdown, he told
Accuracy in Media, “Absent when they have me on, it’s pretty bad.”

Many
commentators, Schiff said, are telling people that if the bailout doesn’t go
forward, there will be an economic crisis. However, “if we do it, there will be
a bigger crisis,” he predicts.

“The politicians want to make believe we can
avoid paying the piper if we pass these bailouts,” he said. “It’s just not
true. It’s going to collapse the currency. It’s going to make a worse economic
crisis because the money they’re printing is not going to buy anything.”

While
he continues to make a number of media appearances, he says that the CNBC cable
network won’t have him on the air. “I predicted all this stuff, and they
laughed at me,” he said. “So maybe they’re embarrassed.”

Schiff,
who labels the proposed government takeover of the financial sector as
socialism and refers to the Federal Reserve Board chairman as “Comrade
Bernanke,” told AIM, “The government doesn’t have the authority to do any of
this stuff. This whole bailout bill is illegal. They don’t have the authority
to buy up mortgages. Nothing in the Constitution says they can do this.” 

“Who
needs Bolsheviks when you have the Fed?” he has written.

The
author of “Crash Proof: How to
Profit from the Coming Economic Collapse,” Schiff  said that “The government doesn’t solve
problems. It makes them bigger. So if we’re broke, which is the reality―that’s
why these mortgages are not worth much because Americans can’t afford to pay
the money back that they borrowed―the bottom line is we’ve borrowed and spent
ourselves into bankruptcy following the government’s advice. They’re the ones
that encouraged all this reckless borrowing and spending.”

Interviewed
by AIM before the House of Representatives on Monday afternoon voted down the
“bailout” scheme, at a time when it looked like the plan would actually pass,
Schiff had shocking advice for ordinary Americans.

“The
first thing you do if you have a mortgage is you stop making the payments,” he
said. “That’s the number one thing for people who have mortgages based on this
plan. And use that money to buy gold or stock up on food. You’re going to need
it. Meanwhile, no one is going to kick you out of your house. You’re going to
be able to live in your house for probably a year or two before the government
calls you up to give you a lower mortgage because nobody is going to foreclose
on you right now. Why would you foreclose? You sell the loan to the government.
This plan is a huge moral hazard and it’s going to lead to a surge in mortgage
delinquencies.”

While
media reports and opinion polls demonstrated that the overwhelming majority of
Americans were opposed to a socialist takeover of a major sector of the U.S. economy,
many voices in the media were urging passage of the takeover plan.

In
an article on his website, Schiff had praised House
conservatives for trying to preserve American-style capitalism by resisting the
scheme.

One
of those conservatives, Republican Rep. Thaddeus McCotter of Michigan, who had referred to the plan as
“dung,” declared that the bill’s “cosmetic changes” were not enough and that it
should go down to defeat. The plan “is
a socialist solution,” he said, “one that, by threatening hardworking
Americans’ prosperity, unconscionably ransoms hardworking Americans’ money and
reduces their liberty. As such, it is a generational threat to Americans’
liberty and prosperity.” 

He explained, “Congress cannot re-inflate the
bubble to save the American economy. The only responsible course is to
incentivize private sector recapitalization so Wall Street pays to clean up its
own mess; and provide―as an absolutely last resort―an appropriate insurance backstop that first
and foremost protects the innocent American workers, consumers and taxpayers.”

On the Senate side, Republican Senator David Vitter of Louisiana said he would
not support the plan, calling it “an unprecedented government bailout that will
almost certainly pave the way” for even more federal involvement in the
economy.

He
explained that the plan “requires people at Treasury to make tens of thousands
of judgment calls about what they buy and for how much.” He said a real
solution would include major reforms, such as breaking up government mortgage
companies Fannie Mae and Freddie Mac, and demanding real cash down for all home
purchases.

Share This

• 
• 
• 
• 
• 
• 
• 
• 
• 

About the author