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Peter Schiff Was Wrong
Topic Started: 1 Nov 2014, 07:06 PM (4,029 Views)
Glenn Stevens
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3 Nov 2014, 09:34 AM
Why has immigration and therefore population growth not stopped their house prices and economy declining ?
To invert your question, we could ask why have Australian dwelling prices kept rising? I think it’s certainly to do with the way we, as a community, have decided to configure the marginal supply. I think we’ve taken decisions as a community to concentrate our population near the city centres in high density. I think there are also preference changes with the younger generation today being more inclined to want to live quite close to where they work and enjoy the various aspects of inner city life in a way that perhaps my generation didn’t have such a strong preference for when we were starting in housing. Investors are playing a part as well: it’s true that the investor approvals are rising quite quickly right now and so are those for repeat buyers.
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A Lurker
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3 Nov 2014, 09:34 AM

Why has immigration and therefore population growth not stopped their house prices and economy declining ?

How could house prices in California be 20% cheaper than in 2004 with all these people ?

It blows the immigration argument out of the water.
It has. House prices are now rising in the US. Unemployment is falling. They are fixing their demographic issues by importing working age people.

There was overbuilding in California and they suffered from the GFC. Prices are temporarily lower than they were at some point in the past. This will pass. San Fran is at new highs, which are even higher than Sydney.

Immigration works. But there are limits. You have to keep it below a certain level otherwise you get a backlash from door slammers (i.e. people that have been there slightly before the new immigrants). Also, we are approaching (although it's a little way off yet) where there will be competition from countries to take on working age immigrants as more and more countries reach stable or declining natural increase levels.
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Shadow
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Evil Mouzealot Specufestor

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3 Nov 2014, 08:41 AM
Since he has been telling people to buy gold, it is up 500% in vaule and was closer to being up 1000% at one stage.
When Gold was at $1800, Schiff predicted it would rise to $5000. Instead it has crashed below $1400...

Posted Image

So he didn't even get the direction right.

Quote:
 
He told people the decline would last years or decades, over six years later and rates still at zero, it aint working anymore. Right again.
House prices are rising in the USA, Ireland, UK, Australia and most of the world. In most countries, house prices are at a record high. So the decline didn't last for decades. It ended after a few years and was followed by a recovery.
Edited by Shadow, 3 Nov 2014, 01:28 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Veritas
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Shadow
3 Nov 2014, 01:28 PM
When Gold was at $1800, Schiff predicted it would rise to $5000. Instead it has crashed below $1400...

Posted Image

So he didn't even get the direction right.


House prices are rising in the USA, Ireland, UK, Australia and most of the world. In most countries, house prices are at a record high. So the decline didn't last for decades. It ended after a few years and was followed by a recovery.
I actually agree with the basic premise of your thread Shadow.

But the story in relation to property markets is still playing out.

Your "all part of the cycle" meme conveniently ignores the highly volatile economic models underpinning much of the so called "recovery"

Again, it will be very interesting to see what happens in the post QE world.

It wont be business as usual.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Suckpoppet
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Peter Schiff Was Wrong

There are numerous YouTube videos, articles, and references to Peter Schiff being "right" rapidly circulating the globe. While Schiff was indeed correct about the US imploding, most of the praise heaped on Schiff is simply unwarranted, and I can prove it.

First, let's start with a look at the claim being made. Peter Schiff concludes many of his articles, books, etc. with the following statement.

Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly.

I would like to see some proof of that statement. Specifically I would like to see the average returns posted by EuroPacific clients for 2008.

I have talked with many who claim they have invested with Schiff and are down anywhere from 40% to 70% in 2008. There are many other such claims on the internet. They are entirely believable for the simple reason Schiff's investment thesis was flat out wrong.

I have an actual portfolio statement from one of Schiff's clients at the end to discuss, for now let's discuss the main points of Schiff's thesis.

Schiff's Overall Thesis

US Equity Markets Will Crash.
US Dollar Will Go To Zero (Hyperinflation).
Decoupling (The rest of the world would be immune to a US slowdown.
Buy foreign equities and commodities and hold them with no exit strategy.

Schiff was correct about point number 1 above. The US equity markets crashed. That was a very good call. Unfortunately, his investment thesis centered on shorting the dollar in a hyperinflation bet, and buying foreign equities rather than shorting US equities.

Furthermore, Schiff made no allowances for being wrong and had no exit strategy whatsoever.

What happened in 2008 was that foreign equities sold off much harder than US equities, and a strengthening US dollar compounded the situation.

In other words, Schiff failed where it matters most: Peter Schiff did not protect his client's assets. Let's take a look how, and more importantly why, starting with charts of various foreign indices.

http://globaleconomicanalysis.blogspot.com.au/2009/01/peter-schiff-was-wrong.html
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