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Harvard University Economics Professor Martin Feldstein on what is needed to boost the U.S. economy.
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Quarter and joining me now tonight's market master chief economic advisor to President Reagan.
One of the country's most distinguished economist Harvard University professor of economics.
Mark Feldstein today and who do we -- -- it is fascinating to me to watch the markets today rally in the face of spoke much adversity.
-- negativity.
And leave leave everyone on the sidelines scratching their heads -- -- -- you.
What's going -- Well I don't know what -- driving the market over other than.
Thought that the Fed is gonna.
Keep throwing more money into the system.
Driving down long term interest rates and they've succeeded in doing that but as far as I can see without really helping.
Actual economic activity.
If you understand the Fed and this economy of ours.
Is well.
Better than 99%.
Of I can't tell -- that 1% is in this instance.
So tell us what can the Fed really do here to change our economic.
Forties at this point I don't think there's anything they can.
I think that the Fed did some very useful things when the crisis hit you know -- no nine.
But I think since then they've helped the stock market may have helped the bond market but they really haven't done anything to make the economy stronger.
So when they're not moving housing they're not moving business investment.
I think.
I know that you you have a partisan view.
The outcome you would it desire.
In a written and I understand that but stepping back from us.
Is there any other possible choice if we want to reverse the direction of this economy then to make a different choice repressed.
Oh and change leadership.
Because this is just not working.
-- I as you know I really view about that I have been a supporter of governor Romney.
And I think that if we are going to -- start moving the economy it's not gonna come from the Fed it's gonna come from changing incentives and changing attitudes.
That are currently causing businesses and individuals.
To hold back.
Those some of those individuals holding back -- very large corporations with trillions of dollars.
To be invested to be spent to drive this economy and they have significant sums of money that could.
-- -- expected payrolls Roberts from.
Research and development building plan run by equipment.
I mean they could move.
This this economy of -- -- -- in blahs what was sixteen trillion dollar they're not sure what the tax environment is going to be in here we holder in the regulatory.
Can we -- I don't answer totally trivial -- slow Holtz C I don't think holding hands is what's needed I think what's needed is some fundamental tax reform.
-- that people know -- environment -- How we can definitely everyone listening to you watching you right -- thinking award.
Please note tax reform in the final months of this election year god knows what kind of Rube Goldberg Goldberg contraption would I don't think.
-- danger of that I think that nothing's gonna happen before the election think the big question is how we get rid of this so called fiscal cliff.
That would be triggered on January 1.
If something doesn't happen you know that -- according to Congressional Budget Office take some 4% of GDP.
That would push the economy into a serious recession in the danger is that any businessman.
Who's thinking now about investing today has to thing -- -- to invest today if we could have that kind of an outcome in 2013.
What what in your judgment will it take to get housing moving.
To to start.
Create good paying middle class jobs in this country and not simply put people back on a job that paying 30% less -- the one that lost.
But to really restore the middle class in this country.
Well those are two separate issues your housing -- getting the economy moving although there into related I think.
Housing has.
Maybe bottomed out in the last few months and I'm not sure.
Certainly.
House prices judge.
By -- -- case Shiller numbers not continue to fall but we still have a big overhang of large numbers of people.
Who are underwater -- more -- there.
Mortgages in their homes are worth -- until that gets cleared up more.
It's going to be hard to get house prices really moving up but it create jobs.
That's gonna happen when businesses.
Are confident.
That they can invest.
-- profits and not be over taxed on those profit.
And the folks going to the polls in Greece.
Country -- up eleven million folks seemingly holding markets and economies worldwide hostage if they.
How important is that election do you think to the stability of the markets.
Well -- there.
You know in my judgment I've been saying this I think to you for a couple of years Greece is really a basket case.
There is no way -- which.
Greece by itself can turn around its conditions because it's locked into the Euro -- cannot do value cannot become more competitive.
So they either leave.
The value.
And start rebuilding their economy or they become wards.
Of Germany in which Germany -- -- out money to them year after year your preference.
I think they should lead.
-- fell silent thanks for being here.
We appreciate it.
-- let's talk turned to see how all our all comes together or -- wines and Europe in the days and weeks ahead thanks a very good good good news.
