February 10, 2010
– Comments (5)
Hey kdakota, another good one. Thanks for sharing!
No problem, binve.
Yes, kdakota, thank you! - Peter Schiff's reports seem to offer better info for business professionals than most, plus the benefit of insightful analysis by someone with an understanding of (again) business professionals interests...truthfully, I haven't viewed all of these posts (yet) or specifically sought out a consolidated resource of this particular information - but, I'm glad I stumbled upon your blog(s).
All politics aside...
IF you have a sec...just curious (I really have no defined agenda besides full-time schooling/research to support current/emerging opportunities in the global marketplace) if you would mnd also sharing what your motivation was in following this source; what alternatives YOU consider equally/as valuable to retain (assuming the informaion Schiff shares is target), and if there is another formal portal/site/service that shares these video briefs other than YouTube?
Thanks again! ...and for the record, I am neutral on Schiffs political agenda, but am inclined to think that he has a great deal to offer the American people when business and domestic job creation are major issues...
Peter Schiff's final point about the Fed not taking TARP-related losses because they have not sold any meaningful amount of the underlying assets is spot on. What he doesn't point out is that the Fed is taking steps to delay that day of reckoning.
The Fed absolutely knows the recovery, if it exists beyond stimulus at all, is not powerful enough to reinflate real estate anytime soon. As announced, the Fed with use term deposits, tri-party repurchase agreements, and asset sales to match good, real dollars to the otherwise lousy investments it holds.
As Bernanke pointed out in his presentation, he has no intention of taking good, real dollars from the large banks. His approach to funneling liquidity is represented by a true funnel - liquidity goes in the big end and gets drained from the little end.
Using generally accepted rules, the Fed would need to take large write-offs upon sale or transfer, so they have been working on a series of rule changes that will allow troubled assets to be matched dollar-for-dollar to money market funds and other available sources of dollars. The rule changes are needed to bypass write-downs that would be required of any business that performed a similar transaction in the marketplace.
As noted in Connect the Dots Before Financial Decompression, SEC rule change 22e-3(a) allows money market funds to suspend redemptions if net asset value is threatened to fall below one dollar, or "break the buck". This rule may have several applications, but I believe the timing of the change was mainly because it removes the strongest argument a money market fund manager has against buying a reverse repo agreement - tying up customers' dollars that they might need in a severe market downturn. At the very least, this rule change shifts power away from the retail customer to financial institutions. A more cynical view is that it is little more than a sales counter-argument tool.
The other proposed rule change is even more eggregious. It would allow reverse repo dealers to legally opt out of recording Fed-backed reverse repurchase assets on their balance sheets. Details are understandably spotty on this proposal.
New layers of TARP offshoot programs and rule changes will continue to be invented until the Fed can claim success. If all goes well, only those at the little end of the funnel will ever feel the pressure.
Originally I found this website from reading one of the Motley Fool books, and I think it also got me into watching some of the financial shows on TV. From there, I'm not sure if it was from TV or someone else (likely abitare) posting Peter's video blogs, but he always just made total sense to me. Either way, eventually I read his book (Crash Proof) in the middle of most of his predictions coming true. Not all did and he's admitted that. Mostly I've been following him just because of his credibility over the last few years being remarkably accurate while looking at the big picture.
As for other sources I find credible and watch regularly are anything by Jim Rogers (although I do find him somewhat repetitive), Peter Grandich more recently who I've found to be quite accurate over the past year or so, as well as The Daily Reckoning. DR sends out a daily newsletter which is usually a lot of reading, but it's informative and entertaining at the same time. Those would be my main ones. I also like Marc Faber, Nouriel Roubini, Meredith Whitney, Jonathan Hoenig (Capitalist Pig) and a few others whose names I can't remember at the moment.