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Moody’s Chief Economist John Lonski on the impact on coal industry of regulations, the slowing of China’s economy and the U.S.’s sluggish econom...
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You rolling this summer.
Well joining us now John Lonsky chief economist at Moody's capital markets -- about that issue -- I -- is and this is a really tough on coal is very abundant here in the US this is a real assault on the industry.
All -- yes it is and it brings attention to how there is this conflict between blue collar and Green collar.
And this is a big issue in the Democratic Party -- the war the Democrats try to free up these the environmentalists the more they tend to anger blue collar voters.
One of their main states this also holds for the XL pipeline situation.
Yeah that's true I mean it really is creating a huge division at the same time in calling it a great point before goal -- being pressured by natural gas as well that's right -- so cheap it's cheap it's abundant.
And that's making it less economical to run coal fired -- power plants yes an eight it's a big industry employs a lot of people generates a lot of income this is not a time probably that we need to -- another industry in and of course it always brings attention to the fact that this country -- house abundant supplies -- untapped.
Reserves of energy.
-- it really does.
Turning more to markets in the economy -- China huge news today.
I mean saying that there it economic growth slowed to only eight point 1% -- we would die for the right but it really the market really took this hard.
At the -- I wondered you trust any of the numbers that come out of China.
It into what I find the odd is that equity markets in Asia were actually up.
Despite this news -- remember equity our -- that.
Up I I think that -- -- perhaps.
Came to -- -- conclusion that because of slower growth in China People's Bank of China will do more to stimulate.
The Chinese economy by way of additional monetary easing.
They are perhaps of the opinion that the Chinese Government has the Pollard to prevent this particular slump from getting out of control.
At the same time we see our own consumer confidence following the -- -- -- you surveyed felt to its lowest level in four or six months -- forget the exact number.
Why do you think this is I mean does this have to do with lackluster job creation and we think it's all about.
Well of course it's jobs it's also sluggish wages.
Costlier gasoline.
As well last persistent home price deflation.
It's hard to believe that if you had bought a home.
Since the spring of 2003.
Through the spring of 2011.
On -- -- the price of that home is lower today off.
So painful.
Yeah it really is it what do you think economy overall right now -- I mean is this gonna be one of those springs where we see the Green shoots amendments of false spring doesn't really come to.
Or do you think that where on the path to things getting a little bit better here.
Well we might have some Green shoots but those Green shoots are probably gonna end up resembling weeds that -- more -- tall strong trees that might you know -- the basis for.
Recurring growth.
I don't think we're at the you know close to wait for recession right now.
But I believe that the pace of economic growth is going to be slow enough.
Two basically reinforce expectations of slower profits growth in 2012.
That's gonna be a struggle.
For financial markets and eventually for businesses.
I don't have -- -- Ben Bernanke at the Princeton club today talking about the economy.
A professor stood up and asked him about yes it hurt a student of -- was right that the senior thesis on how.
Alan Greenspan had basically cause you know the financial crisis everyone there -- is of course.
You know Ben Bernanke can't say that's true but he went on to say you know we thought it was this factor and that factor and it wasn't a loose money brings a sort of a series.
Point out what does in both get what we have this policy just easy easy money is this going to be a problem -- line.
Up off -- -- no but of course it will become a problem.
If the Fed can -- adheres to monetary stimulus when we have.
Payrolls growing by 25300000.
Jobs from a but I'm not gonna be holding my breath waiting for that that type of jobs growth.
Keep -- Ryan wage growth there right now wages are relatively stagnant growing by 2% annually wages need to grow by 3% annually.
Before we can take serious.
These accusations.
That the Fed is being too liberal with monetary policy.
I don't -- -- counting on them to be sensitive enough to step and the break at the right moment I am glad you have a lot of really -- I don't know not a party not not -- regarding the financial crisis well despite Alan Greenspan and I I would argue they've sparked many of us.
We're too complacent.
About the too big to fail principal.
Too many companies will -- you take on too much leverage under the assumption of things went wrong they would be bailed out that's a great point John -- thanks so much for joining us coming up now.
