Thursday, April 29, 2010

Peter Schiff : The last thing we need is more regulations

Peter Schiff on Fox Business Network 4/23/10: Financial Reform

Peter Schiff " we got into this mess because of an excess of government regulations because of artificially low interest rates by the Federal Reserve , because of the moral hazards created by Fannie and Freddie and this regulation (Chris Dodd proposed regulation) does nothing to adress those problems , the FED is actually given more power instead of having power taken away from it , Fannie and Freddie are doing more of that damage now insuring even more mortgages now than they were before , they are untouched by this , all this is window dressing it is going to do nothing to prevent the next economic crisis , in fact has this bill existed in its entirety four or five years ago we still would have the problem "
"You can either have free market regulations or government regulations , I prefer market regulations , but you have to have some regulation when it comes to Freddie and Fannie since the government practically guarantees all their debt they removed all the free market regulations , nobody cares how risky their portfolio is , everybody knows that they are good for their debt no matter what they do because the government stands behind them therefore here is a case when we need government regulation to undo the damage of the moral hazard of the government subsidy , but they do nothing , you know we have done nothing , interest rates are lower now than they were when they inflated the bubble , the FED is doing more damage to our economy than they were doing before and we are rewarding them with more power , and the more power they have the more damage they gonna have , meantime this financial regulation I am sure it is going to impact little firms like mine Europacific Capital it is going to cost me more money not because I am doing anything wrong but now I am gonna have to spend even more money to comply with worthless rules and regulations that are going to be written in pursuance of this bill , it is going to run off my costs ...may be I can survive hopefully i can stay in business but smaller firms might go under , this is all music to the ears of these too big to fail firms "
"Government regulations , Government Laws normally achieve the opposite effect of their stated purpose , and in fact I am sure this is going to be the case , market regulation works great remember there is fear and greed ...what's prevents me from lending money to somebody is the fear that I am not going to be paid back because I am worried about that then I do my due deligence I make sure that the borrower can pay me back , but when the government comes in and says do not worry about the losses we got you covered we are gonna guarantee it that's when the free market does not work because the government comes in there , or when you have a Greenspan put , when you have Wall street thinking that no matter what goes wrong the government is gonna bail them out and this bill actually makes that moral hazard even worse and of course when the government is subsidizing debt and encouraging debt by keeping interest rates so low by making borrowing so enticing a lot of people get lured into the trap but the government set the trap not the free market " "I think this bill will pass unfortunately I mean count n congress to do the wrong thing" Peter Schiff added

Peter David Schiff, president of Euro-Pacific Capital, is a Connecticut-based brokerage firm have correctly predicted the U.S. stock-market collapse , the home mortgage meltdown and the credit crunch .
Peter Schiff discusses politics, world economies, and investment strategies and is now running for a Senate Seat in his native Connecticut , Peter Schiff is Author of the Best Seller Crash Proof How to Profit From the Coming Economic Collapse

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