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The following is an excerpt of commentary from Peter Schiff, president
of Euro Pacific Capital and author of tCrash Proof
2.0 regarding, President Obama's announcement about the regulation of banks.
Once again, President Obama completely missed the mark on the causes
of and solutions to the financial crisis. In his speech this morning, the
President outlined a major initiative to increase regulation of banks. He
claims the financial crisis was caused by reckless speculation by greedy
bankers in search of quick profits. What he fails to acknowledge is that this
behavior was the direct result of the cheap credit supplied by the Federal
Reserve and the moral hazard supplied by government regulations and
subsidies.
In his efforts to prevent the next financial crisis, the President is
focused on the symptoms rather than the disease. Therefore, his attempt to
prevent future financial crises is doomed to failure, as the misguided
policies that led to the last crisis are preserved while even more damaging
policies are added. Current Fed policy is more reckless than before;
continued subsidies to the mortgage market and the bailouts for banks are
creating even bigger moral hazards; and, as a result, the economy is even
more leveraged and more vulnerable to rising interest rates than ever.
The only way to prevent another financial crisis would be to reverse
the fiscal and monetary policies that lead to the last crisis, and which now
threaten to bring on an ever larger one. However, this Administration seems
to lack the brains or the guts to do it.
Peter D. Schiff
President/Chief Global Strategist
Euro Pacific Capital, Inc.
20271 Acacia Street, #200 Newport Beach,
CA 92660
Toll-free: 888-377-3722 / Direct:
203-972-9300 Fax: 949-863-7100
www.europac.net
pschiff@europac.net
For a more in
depth analysis of the tenuous position of the American economy, the housing
and mortgage markets, and U.S. dollar denominated investments, read my new
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of Bull Moves in Bear Markets" (Wiley, 2008).
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