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Mesirow Financial Chief Economist Diane Swonk discusses whether the economy is headed for another economic downturn.
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That was Diane -- she's chief -- of -- Mazur a financial one of the top US forecasters.
In the United States this is -- me this is according to Wall Street Journal and they really know their stuff but to see it Diane thanks for coming in appreciate to see it -- So Marty Feldstein was on yes of course He is a Republican He was working with a Reagan administration -- he's he's a pretty sensible guy working as an economist for harbor.
He said if indeed we do go into recession this one is going to be a long one.
It will last beyond that the 2012 election He said it could go in to 2014.
Do you agree.
That certainly is a possibility you know Marty well in fact I think we're distinctly related Marty and I are is joke about that -- -- down.
I think the real issue here is that if we go -- term recession again I mean this is really more of a depression now.
We're talking about another downturn in an RD growth recession scenario where the economy's growing but not enough to hold on unemployment.
And they're really aren't any easy triggers to get the economy going again until housing -- and that is many years down the road so.
You know that there really is important even to preserve the status quo of a growth recession rather than another actual contraction in growth because there's not much to stop it from being very long.
And much more painful.
Well I am for -- much a more attractive than market that's the first thing I wanna -- you today it's great to see also the hello younger than Marty tell I.
And you bring you believe that we still could get QE3 and that's been one of the biggest the hottest debates happening over the last six months among them Bernanke didn't really give us QE3 and a little disappointed investors -- -- they're crying like babies.
You still think we to get QE3.
Not necessarily share but I think we cut I think there is a real sense out there that.
It the economy is gay and thin -- and although I have a little more hope for Europe today that goes yeah by the day -- hope enough -- And I think the important thing as you know anything in Europe could spur other players purchased through the eyes we also have our own political instability here -- paralysis here.
That you know what we have a crisis of confidence in the US so when you're on such than -- it's easier follow through when you don't have confidence I think.
These are very important things and QE3 did inspire some content QE2 -- inspires incompetence and equity markets.
And I it is undeniable that we did see a surgeon IPOs in the wake of QE2 and I think some people forget the debt some of the only time we saw really.
Over 200000 in terms of employment gains every march April.
Of last year those are the three months that actually look like we were made regained some momentum out there and the unemployment rate came down for awhile.
That was something that was I think a residual on -- -- as it was on you know every little bit counts in a marginal economy well -- As depressing as all this stuff is let's look for the moment on the bright side effect -- we've got -- belt tightening.
Like really never before in my lifetime the big -- -- Have cut down to the -- -- the small companies are ready to grow they haven't because they're afraid of all -- New regulations maybe Obama -- a lot of things.
But aren't we -- when you look at how.
How forties we are for growth the big companies a small companies if we do get the right economic policies in place do you think we could have a boom.
On.
No actually I wish I could say we do -- liberal economists working through the housing market crisis we have a a per trillion reasons for stainless large corporate balance sheets we've got over trillion dollars in cash.
Being -- pilot -- and large corporate -- she's.
But the political Malays and everything from the debt ceiling debacle to the inability -- the budget before that I call -- a bipartisan problem.
Both parties have blood on -- hands the downgrade by S&P which I didn't think was appropriate but nonetheless did occur in the ongoing instability in Europe it delegated these large companies holding money on their balance sheet.
And that's the last thing you want to do because that's where on the margin confidence matters having -- in less confidence and less vision about our ability to.
Get -- November -- get through the super committee and yet another one point two trillion in cuts let alone the longer term austerity programs that we need.
And it may be even have some room to stimulate and all that.
That's just not on on the plate right now and I think that's one of the real problems you know regulation all these things they're important but all the stuff wouldn't mean as much if the economy -- nor nor -- normal recovery recession phase but there's nothing normal about what we're.
And things were at we're at the things Begin to stabilize in Europe that of course would help everybody is -- Diana's great to have you on the show -- want thank yeah.
