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Moody’s Chief Economist John Lonski on the administration’s efforts to boost economic growth.
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Rising comments today from President Obama on the economy.
The private sector he says is doing just fine the president made the comments in -- hastily arranged news conference at the White House.
His remarks come after a week of bad economic news from jobs to growth here at home to the worsening economic situation in Europe.
Joining me now John Lonsky the chief economist for Moody's capital markets group that's always great to have you -- on the show.
I want to start with this sound from the president here's what he said.
Truth of the matter is that.
As I said we've created.
Four point three million jobs over the last 227.
Months.
Over 800000.
Just this year alone.
The private sector is doing fund.
We're we're seeing weaknesses and our economy.
Have to do with state and local government.
So -- a matter of bringing back state and local employment is that the problem with our economy.
The -- not.
Really you know we may have created four million jobs but -- -- kids.
Today we have five million jobs you -- then we did at the start of 2000 -- -- And that goes far -- explaining what ails the US economy consumers are still highly anxious about the future.
Businesses don't have much confidence in the long term outlook and is thus we are stuck with sub par economic growth.
The worst economic recovery since the 1930s.
What does -- tell you when the president diagnosis are problems and that way.
Well it's political I think it's it's politically motivated without question.
And I think why talking about how Europe is per caps wean on the performance of the US economy.
The president in a way is not playing that type of -- -- he's trying to.
Transfer responsibility.
For the US is chronically -- sluggish state to countries or policy makers over sounds I'm glad.
He worries about because we were talking about his comments regarding Europe it seems that.
He's blaming our economic woes on what's going on in Europe and it's true they're having big big problems but.
Luck our economy's problems pre date what's going on in Europe right.
That's so very true I mean my goodness we started the global us slump in 2008.
With problems in the mortgage market.
We have problems in the mortgage market in part because we could generate much business activity outside of residential real estate.
Well I and and the beat goes on you know.
What really struck me about the speech.
Was that he seem to be doubling down on old ideas he has no new ways of fixing this economy's problems.
I heard the same.
Ideas over and over and over again in fact.
He suggested that what we really need to do is put people to work Americans to work on roads bridges tunnels that are crumbling.
Now we've tried that before.
And it didn't really work what do you I don't -- -- did you know we.
Never before in human history.
Has so much money been spent.
More than 700 billion dollars we have so little to show -- Mike goodness that's got to be one of the greatest rip offs.
And world economic history what -- -- -- to this money I asked myself I think others ask themselves the same question.
It is a big -- Bob listen we've got that's down from the president now and we have -- something else he said earlier just as a point of contrast listen to this.
We've got a lot of deferred maintenance in this country we could be putting a lot of people back to work rebuilding our roads our bridges some more schools.
There's work to be done their workers to do it.
Let's put them back to work right.
Mountain.
Shovel ready was not -- And the -- already and we expect that.
So we've doubling down here John what do you say.
Well what I say to a what you need to do with perhaps generate more tax revenue through faster economic growth.
The president has got to read -- his regulatory reform program.
And make adjustments wherever necessary.
And order to help stoke business activity and of course this would perhaps call for a radical overall.
Of the approach of president has taken thus far -- it's not highly unlikely to happen.
Well you know -- -- we spoke earlier about Europe now reports that a Spain a bailout of Spain.
Could -- come soon possibly even this weekend big conversations going on in Europe what's your expectation.
Every little bit helps -- a -- a lot of Spanish banks will not be enough.
To resolve the European issues to the long term satisfaction of financial markets or -- the long term well being.
European economic performance a lot more has to be done.
They have to do more in terms of pursuing budgetary reforms labour market reforms well look the same time recognizing.
That they cannot be unduly harsh in their application of fiscal austerity.
What's it gonna take though I mean are we talking about a specific number they need to put on the table and in the report what you're talking about our long term reforms.
Yeah about but I think if the market is could.
Midst that policy makers in Europe have the wherewithal to follow through on these reforms this might stabilize the situation.
I mean one very important reform they may have to more seriously consider it involves -- pooling of European government debt.
Shared responsibility.
For European government debt and you know for a Germans that's very hard to swallow its longest all along with -- some other northern European countries but without that particular measure.
The markets will perhaps continual lead test.
You the soundness of European government debt.
But John I worry that if you do that -- -- the US is gonna have to get involved either through the IMF for straight up on their around with cash dollars.
I can't imagine how unpopular it would be to tell the American taxpayer that they gotta pony up -- to bail out these Greeks who spend money hand over fist.
Had given recent re election results in Wisconsin San Diego and San Jose such an action as you.
Noted is going to prompt a very negative response from the American electorate and let's not forget that that that this is an election year.
Well it sure is and it will be interesting to see if -- get -- -- done at all John -- thanks for coming on today just a pleasure to see you thank you so much my pleasure.
Thank you.
