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Cato Institute Senior Fellow Dan Mitchell and Barron’s Online Stocks Editor Bob O’Brien on the impact on the U.S. economy of the economic woes in ...
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Stocks suffered the biggest decline of the year the Dow Jones industrials posting its first reported a loss found more than.
200 points the S&P down 21 the NASDAQ down forty.
Now to assess the sell off two of the best spokes I could think of joining us now.
Dan Mitchell senior follower of economist at the Cato Institute in Barron's online stocks senator Bob Hope gentlemen thanks for being here.
Good to -- -- -- happen well -- you know the remarkable thing -- that we manage through -- avoiding the contagion from Europe this long that we went.
Two months in 2012.
And basically ignored all the bad headlines coming out of Europe it was inevitable is going to catch up with us and that simply the case today I don't know why.
Today the market was sensitive where -- -- it's been resilient and it certainly was in case your thoughts there.
I never put too much stock in one -- performance I look at the long term trend and maybe the markets about the -- out I knew the exact details I'd be billionaire but the key thing I look at our the underlying real data in the economy right why is labor force participation so weak.
Why have we not had the normal GDP bounce back -- 456%.
Growth you normally get coming out of a downturn those -- things that in the long run.
I think will drive the market performance.
You agree with that -- I mean there's so much and secular there is so much external for the market.
Do you do you agree yeah I do and I think they you know the big question is.
Can we managed to insulate ourselves from what looks like an inevitable double dip we've stationed in Europe is that going to be exported around the globe.
And -- our shores and in fact going to start to show up so we'll look at these labor market reading -- -- -- eight point 4% unemployment not too bad.
And are we going to be looking at that.
You -- six months from now and saying wow that was really below.
The darn Greeks again -- I mean it turns out everything that people and saying about European socialists is absolutely true.
They are an utter pain and they have the ability to -- -- -- afflict us all around the globe.
What are we to do here.
The question is how much exposure to US banks had some of that European debt either directly through.
Ownership of government bonds or perhaps -- directly through credit default swaps and things like that.
Supposedly.
They've they've cut back on their exposure so maybe we won't be in danger of the only.
Thing that will suffer as maybe if there's a recession some of our exports will go down a little bit but of course there is a big lesson to be learned.
And it's not just Greece it's so match of the rest of Europe.
They have sort of permanent fiscal.
Crisis that they're never gonna get out of biggest.
They think the definition of austerity -- just raising taxes when the problem is really on the spending side.
Armour brand a quick last word.
The correction on one day and eruption and otherwise that is -- That in that has been a 2012 for investors well I -- you don't -- would shakes up just like we didn't 2011 a good start to the year.
Then we have -- -- ran into a headwind and it really kind of took the steam out of the market one thing I'm concerned about right now.
Look at the transport average.
Dell home for the year meaning -- Dow theory is that work it out and that's that's bad news if you believe in Dow theory all right Bob thanks very much and thank you very.
