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Citigroup Global Head of International Economics Nathan Sheets on the budget battle and the European economy’s impact on U.S. banks.
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Joining me is Nathan chief sees the global head of international economics at Citigroup -- -- it's great to have you with us from wanna turn it to be here but first I -- -- And disclosed here that I do own city's stock of our term audience and understands that.
And because of the budget I wanna turn first of the budget but we've got a new proposal from from Paul Ryan.
If if we still talked about a budget of the set.
Your thoughts about the Ryan plan how important to a budget discussion is -- have no effect this calendar year.
I think the absolute key in thinking about the US fiscal situation.
Is that we need increased clarity about where we're going we have some very significant challenges on the fiscal front.
Related to the aging of the population over the next five to ten years.
-- we need a clear plan from congress as to how we're going to attack those problems.
Frankly speaking purely as an economist it's it's it's not crucial that'd be some percent taxes vs some percent expenditures.
What we need to plan as to how we're gonna go forward well.
Over the course of ten years is for putting up on the screen right now these two plans would -- To the national debt -- one almost seven trillion the Obama budget.
And over three trillion the Ryan plan.
We're talking about not having any impact on the national to have -- to tell truth out.
Some forty.
This is this is the stuff of madness is -- not.
Well.
We're fortunate in the sense that -- the reserve currency where the safe haven currency in the markets are happy to continue to hold the debt.
But I think as you suggest there's an enormous -- that some day.
The something's gonna happen in the United States and these investors are going to be nervous about holding US treasuries.
And it got what you could see some sort of -- risk premium emerge in treasury.
He owns and -- would not be a very pretty scenario for anyone.
Is their -- and a place for a strong dollar any longer I -- I mean the idea that.
As we watch oil prices rise gasoline prices rise.
In any hope of a stronger dollar.
-- My gut tells me looking at the broad.
Performance of the US economy.
There were unlikely to see is significantly stronger dollar going forward.
It's possible that as -- -- covers that's gonna put some -- pressure.
But then you also have offsetting that a structural diversification.
Of reserve holders in -- elsewhere in other currencies.
Todd I bet on a stable dollar but not necessarily a stronger dollar I think a lot of us would sign up for that stable yes this came out today.
The idea that the Federal Reserve is going to reintroduce us to their concerns about contagion from Europe.
Tomorrow.
As Ben Bernanke.
Speaks to the issue your concerns word you do you believe we stamp -- the risk posed by your.
Well I think those risks are diminished significantly relative to three or four months ago.
ECB is acted very aggressively at spot some time it's addressed some of the problems as a result.
But even so.
There's still huge questions in Europe about debt sustainability about the banking system.
And about the growth outlook -- many of these economies and more needs to be done before we can.
Look at European situation where our rear view mirror since remains -- ask.
Very quickly were little a little over here but -- your outlook for the economy what our prospects you think this year.
On -- continue to expect to -- roughly 2% growth in the US economy I think the tone of the data recently have been a bit better.
But there's still a lot of headwinds.
-- restraining consumption.
There's still a lot of uncertainty about fiscal positions and taxation and regulation.
And that's weighing on the corporate sector on and on investment.
And there's still a lot of uncertainty about about oil prices and about Europe so in that environment -- say 2% is probably the best we can hope for -- it is growth and again we'll take it there yet -- -- -- thanks much for being with Michael.
