No Lessons Learned: Next Financial Crisis to be Much Worse with US Dollar Collapse – Peter Schiff

Meanwhile, as the Americas criticize and threaten Venezuela over its financial collapse, the USA itself is very vulnerable to financial meltdown.

© Dado Ruvic / Reuters

A decade after the global financial crisis, the world is facing another crash even bigger than the one in 2008, according to veteran stock broker Peter Schiff, CEO of Euro Pacific Capital.

“The too big to fail banks are now both bigger than ever, and more exposed than ever to rising rates and recession. So the systemic risks to the economy are greater now than they were in 2008,” said Schiff.

Such banks should have been allowed to fail a decade ago, he says. “The moral hazard associated with the government having made the mistake of bailing out banks that should have been allowed to fail. Unfortunately, no lessons were learned from the last crisis. We repeated, and expanded all the mistakes that caused the last crisis, ensuring the next one will be much worse,” he said.

According to the investor, all the problems that caused the 2008 financial crisis loom even larger now. “The even worse monetary and fiscal policy since the last crisis guarantees the next one will be much worse. The crisis will be similar in that government will be the cause, everyone will be caught by surprise, and capitalism will be the scapegoat, but it will be much different in that it will be much worse,” Schiff said.

However, the nature of the next crisis would be different, Schiff predicts. While the 2008 crisis was centered around mortgage debt, dollar rise and gold fall, the new one would be about the US Treasury debt crisis. “Treasury debt will be the focal point of the next crisis, and the dollar will collapse and gold prices will soar. The ensuing recession will be much worse as consumer prices will also rise sharply.”

America's spectacular debt leaves them vulnerable to countries that are not necessarily close friends. Saudi Arabia and China control considerable amounts of American debt. We treat the kingdom very well, but remember who was behind 911 - these people are not our friends. China is being bullied by the US, justifiably, perhaps, but there are also areas of potential serious military and political dispute. China is closer to Russia than it is the USA. What happens if those countries conspire to bring about rapid interest rate increases? Will America follow Venezuela's hyper-inflation pattern? It's a little disconcerting.

In Canada, the Liberal government is spending like a drunken sailor, rapidly increasing the national debt and leaving us far more vulnerable to financial collapse than we need to be. 

Jail Bankers Who Caused 2008 Financial Crisis, says ex-PM Gordon Brown

Gordon Brown has launched a scathing attack on bankers over the 2008 financial crisis

© Neil Hall / Reuters

Millionaire bankers responsible for the 2008 financial crisis should be stripped of their bonuses and sent to prison, former British Prime Minister Gordon Brown has said. He warned bankers have not learnt a thing and are still playing fast and loose.

The former Labour leader, who was Tony Blair’s chancellor before replacing him as PM in 2007, has torn into wealthy bankers and revealed he was preparing to quit Downing Street when the banking crisis was at its height.

The ex-PM, toppled in 2010 when David Cameron formed a Conservative-Liberal Democrat coalition, had called for tougher regulations at a special G20 summit in London. None have been implemented, however.

In an autobiography released next week – entitled My Life, Our Times – Brown says history will repeat itself if action is not taken.

“If bankers who act fraudulently are not put in jail with their bonuses returned, assets confiscated and banned from future practice, we will only give a green light to similar risk-laden behavior in new forms,” he writes.

“Little has changed since the promise in 2009 that we would bring finance to heel. The banks that were deemed ‘too big to fail’ are now even bigger than they were."

“Similarly... some regulators freely confess that risks have morphed and migrated out of the formal banking system and if the next crisis came they would still not know what is owed and by whom and to whom. 2009 has proved to be the turning point at which history failed to turn.”

The book details the time he, along with his chancellor Alistair Darling, arranged a rescue package for some UK banks.

In a revealing personal insight into the life of a prime minister, Brown writes about a time he instructed his family to pack their bags, convinced he would be forced to stand down if the rescue package failed and he had to quickly flee Downing Street.

At the time taxpayers’ money was invested in Royal Bank of Scotland (RBS), HBOS and Lloyds to save them from going under. Brown, 66, says foreign countries have been quick to prosecute bankers when they fail – but the UK has resisted.

Not sure which countries he's referring to, but it certainly isn't the USA. Canada had no bank failures because we have tough regulations governing our banks.

The former politician is especially scathing of Fred ‘the Shred’ Goodwin, the former chief executive of RBS, who Brown says drove the bank into the ground and gambled with the public’s cash while living a luxurious lifestyle.

He also attacks Barclays for what he says was a decision to seek a state bailout from Qatar and the UAE, while attacking rival banks who were helped by the public purse in Britain.

“In doing so, they [Barclays] made it far more difficult to explain to the British public that this was a widespread banking crisis and not just an emergency faced by one or two banks and, by not telling the full truth, they hampered our ability to persuade legislators around the world of the need for far-reaching reform.”

That was probably the idea all along.