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Euro Pacific Capital CEO Peter Schiff and RBC Global Asset Management Chief Economist Eric Lascelles debate the outlook for the economy.
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-- very much for rising jobless claims and weaker than expected housing data released today.
Threatening to bring the sluggish economic recovery to a screeching halt such as it is are we headed for another recession are we.
Really asking them.
Question again and again for the past three years time -- -- street -- Before the polls we've got Eric -- cells RBC global asset management chief economist.
And for the bears we've -- Peter Schiff Euro Pacific Capital CEO.
Eric I will start with you look we've got it's certainly a bullish picture.
The past three days when it comes to equities but let's talk specifically about dipping into that recession hit once again.
Why don't you see that happening particularly considering the data continue to slow down and at some point this trend looks like a grinding halt.
Well let let's start by acknowledging that bad news absolutely date is getting worse absolutely it's been disappointing and we frankly anticipated that.
The debate is whether or not leads all the way to recession and I can say with a fair degree of confidence hasn't gotten us there yet we're still growing -- wonderfully but growing.
We -- a lot of recession models and as much as there is a risk out there it's not a risk that seems all that big even with all those stated -- deterioration is.
That you mentioned the risks don't seem to be as big as they were last fall last fall.
Ultimately was averted we've got the classic policymakers response now -- Operation Twist extended -- rate cuts in.
China Brazil South Africa Korea out of Europe and so want.
That effort is being made and ultimately it seems to me that while we shouldn't expect a whole lot of growth.
We can probably expect some sort of growth and if you look at financial markets they seem to agree the stock market has not fallen out of bed despite all -- gone wrong well.
Here are some sort of growth is very different from a recession you actually think that not only is this slowdown gonna continue but it will lead into negative.
Growing at what -- -- I think we've been in depression since the end of 2007.
I think that.
The depression -- been punctuated.
By -- spending -- of borrowing binge I was define depression by well I think it's as serious law extended period of time of negatives that growth or sluggish economy.
Still -- -- we -- we didn't always have negative GDP GDP during the 1930s there were periods within GDP went up but we still considered it to be a depression.
I think what happened is because of this the stimulus that we got we dug ourselves of the deeper hole we went spent a lot of Obama's stimulus and monetary right we spent a lot of money we didn't have we bought things we -- move couldn't afford we ran up a huge debt you know and as the stimulus high is wearing off it that -- that the hangover sets in we're back into recession we realize that all the fundamental imbalances that caused the initial downturn.
Are now actually worse because the Fed prevented the economy from correcting all those problems now we have even more problems so I think the next leg -- -- Is actually going to be a deeper -- down than what we had in 2000 and.
Eight OK so air what do you say to that I mean it as you look at that -- -- -- we we haven't been deemed that were in that depression let alone a recession yet but.
When Peter says that he's who has seen this trajectory what do you say.
Well you to begin with the not technically in a recession right now I don't see how we're in a depression which to me by every standard it is worse but let's just say this I think it's important sometimes to step back from the day to day even from the mob the -- and recognize.
The healing that's actually going on the things that we're fundamentally broken in the US over the past few years with -- housing market.
The credit market and the job market none of those things are going.
Gangbusters right now but the housing market seems at least to meet a very clearly a bottom that is.
Arguably working its way cautiously higher the credit market is patchy is not great for mortgages but we -- seeing lending in the US growing the fastest rate we've seen since the crunch began.
And the job market again we're disappointed as much as everyone else with the recent pace of creation but we're getting jobs created we're getting unemployment rates.
Down a lot of subtle -- indicators suggest there's some healing going on and I don't think we're back to scratch what yeah.
Are we we will be we have an election coming up it may change economic policy significantly we don't know but if it does is -- -- way to avoid recession your now and I don't think it's.
Significantly but first the fall you know more people have gone on disability that have found jobs we don't have a healthy labor market and if you talk about the housing market of the banking sector.
It has not healed dissent has both on life support sub 0% interest rates.
The minute interest rates start to rise the housing market's gonna implode again and all the big banks that we bailed out are gonna fail again and the federal government is not debilitating interest on the national debt let alone the -- We'll hear you're a Smart guy you always know how to invest no matter what you've -- the way to go where you putting your money in the past it's been.
Chinese toll road operators are Zimbabwe platinum but where are you putting your money is in equities is.
That -- I've been putting -- Goldsmith for ten years and I'm still doing that and yes I'm still looking abroad emerging market opportunities stocks foreign bonds look at some of the other currencies the Euro has been weak.
But look at the Australian dollar today I think it's -- -- 52 week -- look at all time record highs I think in corn.
In in in -- -- a look at some of the agriculture and classic way you're -- -- the Australian dollar exactly to what we're a lot of people say it's gonna fall because China is not going to be using as much of their product well that let the thousand dollars -- I guess what 30% in the last five years against the -- it's -- slow steady climb the Japanese yen is up 50% against the dollar during that 200 people are just looking at the Euro.
But I think when the dollar really tanks against some of these southeast Asian currencies which will happen.
When they stop supporting our treasuries I think Australia's gonna sell a lot more to China when the R&B is stronger then when the R&B is being -- is used to prop of the dot they have nobody to sell their goods -- -- -- -- -- -- -- -- -- -- -- And they haven't stopped buying our treasuries yet Peter Schiff Eric -- -- thank you both so much for the street -- good to see about thanks.
