You're watching...
Harris Private Bank CIO Jack Ablin on Spain’s debt crisis and how it and the overall European economy will affect the U.S.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
G-7 finance ministers including Treasury Secretary Tim Geithner holding an emergency conference call today on fresh concerns over Spain.
And the overall European debt crisis a big question.
Many people are asking today has -- now become too big to fail and what does it all mean for your investment dollars Jack Kaplan is -- chief investment officer of Harris private bank in Chicago Jack welcome to the show great to have you here.
-- this -- a big headline this morning this meeting and now it is fizzled.
But the concerns about Spain have not should we be worried that the -- eleventh largest economy is gonna go bust.
Well -- certainly a valid concern I think keep in mind.
We have to avoid putting Spain and Greece into the same little pocket.
Greece and turn be a European Union under false pretense that is.
And really is insolvent and has no ability that I can see.
To pay back their debts stain on the other hand certainly much larger.
But you know is still within -- manageable situation so the question then is he okay and the Euro -- print enough money.
And perhaps insulate.
The the rest of the world from the and from the Spanish banking system more prop up the Spanish banking system.
And that's that's going to be it's hard to tell you know.
It's funny -- really two solutions here there's the monetary solution but ultimately.
There has to be a policy fiscal solution and that was going to be the hard when -- well.
And we'd you know can't see -- he all the warnings out there about what happens when your debt is too high.
That -- this interesting point though about these being too different nations.
These two countries are very very different their histories different I think that spot on I think you've really got your arms around something there but we still worry.
Europe Spain whether -- Spain or Greece or whoever it is is is contagious for the US is this gonna impact our economy and our investment dollars.
-- I think you know when it comes to.
If that issue -- over to the US.
I think the best probably way I would describe it.
Could be you know similar to say the Asian contagion in 199798.
Where kind of win win the some of these -- Asian economies lost a lot of value of their currency and you know all of the market's kind of went down it wants at least and an acute period of time.
But ultimately once the dust settle it once investors were able to really ascertain what -- -- -- the losers were the winners were and how things sorted out.
If your call US and other -- Non.
Impacted markets rallied back and slowly the affected economies -- move forward but.
I think that's probably how we're gonna play this that I was a little surprised how correlated we RD Europe because I do think we're pretty well insulated.
But the market is the -- -- unfortunately.
-- -- -- -- or bumping along the ground as it is with their GDP get bored we it's harder to grow slower than we are right now.
It seems like any thing could push us into a recession.
You say there are things insulating us from this though what are the.
Sure so in fact -- I wrote an editorial this morning.
That -- actually a lot of the bad news.
On the European economy translates to good news for the US.
Take manufacturing for example in fact over the last ten years it is now about 40% cheaper.
To higher US manufacturing worker than it is to hire say a Spanish or.
Portuguese worker.
Doing roughly the same work and so what we're seeing some a lot of job losses in Europe.
Rather than wringing our hands as saying -- economy's coming to an end it turns out those jobs are coming back to the United States.
The other reason that you know we're seeing the slowdown in in Europe.
And and that's causing eight -- -- lack of demand offer for oil.
That's actually gonna help our market because now we're seeing gasoline prices come down.
And the last secret gap or -- let I didn't finish at the last secret ingredient.
Is natural gas we have an abundance of natural gas.
Two dollars and MC after Europe is paying eight or nine dollars and MC out.
So another reason why let's bring production away from you Germany France Spain and Italy and bring it back out.
-- -- -- -- You know if there's one thing though that could really.
Fire -- this economy like a booster rocket what would -- be you know everything seems to be on hold until the election.
Is there anything you're looking to this fall that might help out.
I the only thing it was funny the only thing we are kind of hobbling around this morning looking for you know what would be that catalyst.
And -- the only thing out there -- could potentially be.
If this -- That develops that you know it turns out Barack Obama is the Jimmy Carter of the American economy and that.
Perhaps Americans.
Decide at the polls to get rid of all the in common it's and and bring in a whole new set of players.
May -- that offers some kind of fresh hope that you know 2000 at thirteen is going to be different.
But beyond that.
You know we have to remember.
You can't you lose the period between 2000 and -- -- Four and 2007.
As your benchmark it would that was a period where we were supplementing our income with debt and spending it and created it.
What you know -- turned out to be an illusory economy so that's not the benchmark the very well -- unfortunately.
Is lower than that well I.
I certainly hope that we do not revisit those times and I appreciate your coming on tonight Jack Jack -- -- thanks for joining us appreciate your time.
Thank you.
