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With the failure of the super committee to reach a DL.
The economic crisis in Europe and today.
Plunging market the economy seems to be skating on very thin ice sell want a -- mean for our financial future joining me now professor -- crops -- Former Federal Reserve governor welcome after the show -- great to CEO.
Greek thing you are right so I want to know what you make.
Of what's been going on in Europe and then the super committee today saying.
We cannot find common ground we are failing -- our mission what is more important for the economy.
Gosh I mean both are having negative impacts because you've got this incredible uncertainty.
People don't know businesses don't know what the level of taxes are gonna look like what the structure taxes are gonna look like.
Not only next year but in ten years so that make it very difficult to have a robust recovery in the US -- -- of the uncertainty coming in from Europe.
Because if they don't get their act together there could be -- major financial crisis in.
In Europe they have the tools to deal with it.
But I don't have the political will actually have try to prevent crisis from happening.
Well you you mentioned these deadlines coming up that domestically here take a look at these this -- There's an unemployment benefit extension on the table payroll tax cut extension on the table.
Medicare doctor payment fix the Alternative Minimum Tax is gonna bite millions of Americans.
That would be a horrible things to see analysts they've been -- the patch.
This is a government that just cannot get it together it is dysfunctional.
What happens if they don't close the loop on these very important issues.
-- and I think we're gonna see the same.
Very unpleasant dance that we saw this past summer.
In February -- march when it's likely that the debt ceiling is gonna be hit again.
You're gonna go through this same same rigmarole.
And I think that's likely to lead to some more downgrades which will not be good for.
For for Americans who are trying to just work save and -- and move their lives ahead.
Already -- -- -- for me the impact of the dead downgrade.
On the average American family what is it.
So it depends how the markets interpret things as as always.
So as you can see like today even -- the yen the super committee did not reach agreement.
Being -- treasury.
Able to sell debt today -- a low -- -- rate the tenure rate came down so that means the bond price went up.
So it doesn't necessarily mean.
-- -- a major.
But it just keeps uncertainty out there it could eventually lead to increases in interest rates.
Well I know a lot of people out there talking about the future of those tax cuts but I want to return for just a second to Europe.
Because I think it's something that Americans easily dismissed they say it's not our economy.
Doesn't really matter -- less so what -- having its problems.
Of course it's not just Greece it's Greece it's Italy now people worry that France will lose its triple A credit rating.
At the end of the day how -- what's going on there really impact our country.
Well hopefully hopefully we won't have to find out but unfortunately I think we and we may have to find out.
And so the banks and financial institutions -- a lot of the government debt.
Both the government doesn't make good on its payments that means that those banks here and the other from institutions a lot of trouble they're -- big losses.
When they have big losses they can't make payments out to to others on the debt that they EO they can't make good on other contracts that they have.
And of course it's a global financial system so there -- a lot of US financial institutions that have connections to to these institutions.
So something goes wrong there it does have an impact -- -- financial.
They're knitted together like fisherman's sweater -- they're so close it's really hard to tell the difference between them.
When you look at what's going on in and in France and Europe generally doesn't have the power to pushes into recession doesn't have the power to push the entire globe into recession.
I have my fingers crossed no but I I I certainly would never say never -- something like that.
They have the tools to to do similar to what we had done in the US to be able to make capital injections into the banks.
To try to buy some of the troubled troubled assets that could help to prevent the contagion from spreading to to widely.
So hopefully we won't have to to find that out.
I think it's likely that we have enough strength in the US economy that at least from a minor tremor from over there.
We can make it through but it's certainly not helpful I -- Europe is certainly a major trading partner the US -- if Europe is is contracting well that's just not good for X.
You know I read recently -- they're blaming us for their problems which I find astonishing but -- -- that there.
I can tell me you know -- we got a great not a great but a better GDP number we saw some better news on the housing front.
What is the one thing that needs to happen to really fire up this economy.
I think if we can resolve some of this uncertainty in the fiscal side both in the US and in Europe.
Is the consumers actually been pretty resilient we've seen the consumer.
Continued to spend in that in the third quarter we'll get some revised numbers tomorrow.
But we've been seeing businesses still willing to invest although -- short term investments -- long term because the long term uncertainty.
If we could resolve a little bit more of this uncertainty.
I think we have the fundamentals to move ahead.
But it's like this big black cloud hanging over the economy.
Are the lightning bolts gonna come down and and you know back hit the tree in and -- the treaty catch on fire we just don't know.
While I understand exactly what you mean there Randi thanks for coming on the show again it's great this really appreciate your time.
-- -- to see you.
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