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Lew Lehrman: U.S. Economy is on the Cusp of Recession

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    Lehrman Institute Chairman Lew Lehrman on the outlook for the U.S. economy.

  • Duration 5:05
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Well joining me now Wall Street legend American historians will -- former Morgan Stanley partner chairman of alarm and institute.

Did you -- indices and we're looking at all this news right now a new report from the OECD talking about the fiscal live.

I love -- The Euro the Euro centrist are worried about our our prospects as they are suffering you know right now.

Your thoughts on that fiscal -- the probability that'll be averted.

I I would bet.

A considerable sum that it -- -- will be averted and indeed I don't think fiscal cliff is a big problem for either of the two parties to solvent and insolvent.

When where the other other before the election or immediately after whoever's elected.

Sorry you're going to you're discounting the Fiske report -- -- -- so much melodramatic protection why not only discount and I disagree with those who say that the economy -- to.

Is that is sluggish now because of the uncertainty caused by.

And the doubts about the fiscal.

Consumer confidence.

Dropping again.

Any.

We're what is the the driver relationship there.

When the big news on the consumer.

Sentiment index is that first it's always a coincident indicator and not a leading indicator.

So that that one shouldn't assume too much but the big consequences of -- Of a consumer sentiment this low and so much lower than expectations.

Is that people are repaying their debt that.

Rather than spending money in the retail store.

Do you find it -- -- -- many.

The same time being prudent fiscal storing.

Is -- and against uncertainty.

-- just as our major corporations small businesses.

Because they're doing precisely the same thing uncertain.

And a very ambiguous horizon.

That consumers are being rational here within -- while.

The majority of consumers are it's great scandal of our politics and even of our economic advice.

And that consumers should be told to go out and spend money.

In order to revive the economy so that they can go broke.

And the government can bail out the banks and this is certainly not the way.

Business and this is a fiction of the brain of the -- -- political established that's quite that's quite a circle from the consumer to the government to the banks.

-- lending to the -- Well and of course the banks aren't lending to consumers because finally they're being brought to account.

-- assets cannot be sold at values which would enable them to redeem their depositors in -- panic.

The market.

GDP growth that we we've got all sorts of indicators coming at us.

Give us your assessment of where this economy is right now because where everyone is pick your attention is being.

Diverted.

Across the Atlantic suddenly everyone is fixated -- as we've said Cyprus where we're fixated on Spain.

Which comprise fractions of car power come.

-- the US economy is that not only sluggish but it's on the he is on the cusp of recession.

And when you get a general.

Agreement among the establishment economists and politicians.

That were on the cusp of recession either.

It it's either one of two things is either not that bad or gonna be much worse.

And -- -- breaking the tie.

Sentence.

I -- you know -- -- even worse it's gonna get worse not much worse but it's gonna continue to decline in the second half is going to be slower than.

And expectations and even forecast.

And the Federal Reserve System meeting on July 31 is going to be confront an island with -- European crisis.

But -- decline in the Chinese economy but they're going to be they're going to be confronted with any a crisis of the dollar this time not a million dollar declining.

But the rise and rise of the dollar.

The strengthening dollar -- something that many of us have.

Well look forward to -- it's it's here it's seems to be here at least and now it's going to have.

It's going to impinge on our prospects.

While the dollar is not rising because of the great prospects for the American economy.

The dollar is rising because of the panic demand for the dollar and all the insolvent sovereign countries in Europe.

And in Asia and in several also nightmare.

And and we're that we're gonna have to wrap but I do want to point open European Union -- taken place this week.

-- has just what are.

-- them all -- to the July 31.

Fed meeting which tells me you think that's a heck of a lot more important than the -- some.

The Federal Reserve meeting isn't meeting I think that the Europeans.

Are counting on they're looking for you federal -- reserve system dollar swaps.

In the I think of the hundreds of billions of dollars because the scarcity in Europe.

Is not the Euro the scarcity is dollar scarcity with which to meet debt payments and carry out there contractual obligations.

We -- -- has always pretend to be here thank you --

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