You're watching...
Allen Sinai, Decision Economics chief global economist, on how to fix the disconnect between corporations and individuals.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Gold is seen fifteen minutes.
Thanks to our next guest says he low interest rate environment is helping companies boost their balance sheets but the -- met invest there is is being shut out.
Joining us now on Sinai chief global economist and president of decision economics.
-- and this is not news we known for a -- -- -- right we can't refinance even if we want to we can't get a home equity loan if you wanna do work on your house.
Corporate profits on the other hand -- through the -- we -- that's how we fix this.
You know it there's just a matter of time and hopefully eventually the housing market recovers.
So the value of properties will go up.
And households who care in get jobs could refinance and then gets -- refinancing because their houses will be underwater.
-- assessments.
Real estate appraisals are very tough.
Because banks are reluctant to put money out.
They'd rather earn money in other ways that would get stuck with -- nothing to Washington.
Is really gonna change that much point.
So even if we do get QE3 because the it.
Like I said earlier you talked to three people only get three different answers on whether again QE3 this week I know you're in the camp that we are not but presuming we get some money into this market do you think that.
-- -- They'll help -- another way let's let's suppose which we think the Fed does.
An extension of Operation Twist which provides more liquidity what the Federal Reserve is -- now because interest rates are doing it.
And -- talking about why one of the reasons credit isn't being put up by the banks we're talking about that in terms of housing as well.
But what does happen when the Fed eases up is we get a lower dollar noticed today we have a lower dollar.
That helps exports.
That helps -- prices.
We get.
Higher stock prices notice that's what's happening today.
And we can even get lower long term rates -- with Operation Twist can do and those asset prices help the economy and they do help households.
So that over time.
If it -- -- -- and I hope they duties as we needed while we will get more help Brussels and eventually the housing market will recover.
I don't know if we need more stimulus to this economy acting we have to -- to figure this out on -- on but don't -- part of the problem is the uncertainty in the market.
Sure companies are lean -- -- profits are at all time highs earnings are up sales or even up but they're not hiring they're not building new plants they're not doing the things that makes.
This country great and as a result that is hurting -- street.
Yeah that's right that's establishment America.
Keep those profits up keep the cash flow good to keep those fortress balance sheets with suit with they really have.
-- -- -- Technology for people.
I don't think we can change in mentality of the CEOs who -- American business we can't change -- and -- hope.
Now that is back then use those profits to eventually hire more people.
Great but I think I -- in terms of hiring people.
I certainly can't really blame corporations for this I mean not only we could turn around and say its core its corporate America's -- that main street is suffering corporate America's hands -- justice died.
It's a way they run their businesses.
You and I -- all of the benefits that come around us are expensive.
From the point of view of COs who run companies to maximize shareholder value.
And you know thank god we have been replaced by machines -- -- -- but that's the track thereof and that means that headcount.
Gains or lower.
That helps the profits and productivity that helps them have terrific balance sheets to take advantage of low interest rates to restructure the balance sheets they get better.
And they're starting now to pay out more dividends that's helpful but -- -- tremendous cash.
I don't think there's much we can do to change.
Mean I did think that if we allow entrepreneur -- -- to be entrepreneurs this country will be great again but until we get rid of the uncertainty in a lot better pending.
Taxes that are pending no one wants to do anything Allen Sinai at decision economics thank you very much.
Thank you.
