Vigilant Investor

If you read our archives, you’ll find our comments on housing bubbles much in agreement with Peter Schiff long before the December 2006 interview above. What we hope you take from this post is an understanding of the incredulity our camp was exposed to from high profile analysts and pundits all the way down to mainstream opinion makers. It is the same dismissive attitude many applied to warnings about the credit situation prior to the breakup this past summer.Below is a second, later example from mid-August.

Consider Schiff’s comment — that the real problems of the credit crisis were still hidden, and that the economy would eventually pay in terms of real economic consequences — and how he’s dismissed:

We, too, were thinking the credit crisis had barely reared its head — and still think it has a long way to go given all the dislocations massive liquidity injections both enable and encourage. Today, this headline[Merrill Loss Baffles Even Wall Street's Pessimistic Analysts ] affirms we’re not off the mark.

(NOTE / Disclaimer: Our reasons for providing the second video is not to imply approval of of any of the panelists’ recommendations, but rather to illustrate how the misunderstanding of economic issues is prevalent among some of Wall Street’s most prominent commentators. Economics is about the allocation of resources, which in our opinion are dislocated from reality, and this condemnation of sober opinion is all too common.

Today’s news tells us that Merrill suffered massive (unexpected to most pundits) losses in the credit markets, revealing the economic consequences of the giant credit bubble-induced dislocations are only beginning to hit the economy in earnest.

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