Peter Schiff: This Is a Financial Crisis
A lot of people in the mainstream still insist this isn’t a financial crisis like we saw in 2008. They say this is just a self-inflicted shutdown of the economy. Since we decided to shut it down, we can decide to start it back up again. Peter Schiff begs to differ. In his podcast, he explains that this is absolutely a financial crisis and it’s going to be worse than 2008.
Stocks fell yesterday (April 15) on dour economic news and the financials led the plunge. In fact, even during the stock market rally on Monday, the financials lagged. Peter called them the Achilles Heel in that Monday surge.
This is significant because the financial sector is the key to the US economy.
They shouldn’t be, but they are, because we have a bubble economy. We have an economy based on credit, based on debt. So, not people spending the money they earned, but spending the money they didn’t earn but they borrowed.”
This becomes clear when you look at the consumer debt numbers. Americans were already leveraged up to their eyeballs before coronavirus spurred a government lockdown of the economy.
What is at the heart of the bubble, other than the Federal Reserve which is pumping all the blood through the body of the economy, but it’s pumping it through the heart of the banking sector. So, when you’re seeing this cardiac arrest in the banking sector, this is a sign that there’s trouble brewing here when the banks are having so much trouble.”
Why are banks in trouble? Because people are defaulting on their loans. In fact, there was already trouble in the subprime markets before COVID-19. Both subprime credit card and auto loan defaults were rising. That will only increase with millions of people suddenly unemployed.
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