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Fed vs. Eurozone Worries

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    Weldon Financial CEO Greg Weldon on the Fed and the impact of European problems on the markets.

  • Duration 3:48
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-- Nicole thanks so much Federal Reserve hinting it's moving closer to action to spur economic growth.

But will be enough to counter problems from the eurozone.

Joining me now is Greg Weldon president and CEO of -- financial great thanks for joining us -- So does seem like the Fed is hinting they might do something more do you think they'll have an impact.

Well there's a lot of questions surrounding the Fed the first one of course is when can they act.

You know people are kind of targeting Jackson -- the marker -- a little bit of a rally on the wings of hope last week that the Fed can deliver another monetary miracle here.

Very difficult to think they can act before the election.

Don't like to -- political book I don't think we can debate the fact that this election is going to really have a significant impact in our fiscal future.

I think this is information that's critical to the Fed's decision in -- in terms of not only you know how they act but how aggressively they act so.

What would be a monetary -- -- I mean what else could they do at this point rates are as low as they can possibly be a mean you can get a thirty year for nothing money is like.

Practically laying on the ground everywhere we go it's not having huge impact.

This is -- call the monetary miracle 'cause it would take a miracle and what differentiates what's happening right now in 2012 from 200789.

Or 2002001.

Period.

This is purely a macro deflation you see -- in Europe.

You -- in the US it's deepening its really pretty bad already.

And addressing that -- conventional monetary policy really you can't conflicts that were pinned to zero fiscal policies frozen.

Quantitative easing does a better job -- -- markets than the economy right I think this is problematic for the Fed.

Yeah absolutely and that you know where to get but GDP report at the end of the week what you think it's gonna -- I think it's it's a growth is sluggish at best below -- B rate of inflation not generating jobs we know this not generating reflation in the housing market.

You really have no wealth reflation anywhere.

Except the equity market right and this is why the Fed is now so focused on equities this is why they're pursuing quantitative easing because it has.

What -- little impact that they can have left they can have in the -- -- market.

That's it and I mean -- great if you on stocks but.

Even after a -- doesn't the market wise up and get sick of this and say.

You know how much further can we -- says -- we have a GDP number on Friday that's 1% or below does the market really rallying on hopes of more.

Nonsense from defend.

I think at some point there's a disconnect between the you know the hope for action and the and the reality that we need action and not only do we need action.

We need aggressive action like what does that mean like what well frankly again running out of options and understand these are not the academically correct things to do that crime is well past us we're in the reality of avoiding the pain either pane of -- debt deflation or -- over reflation.

They would rather pursue reflation -- they feel they can deal with that if they facilitated.

The really the only thing left to do is to extend about should again buy more bonds depress the yield curve by you know outright monetization of debt.

That's not gonna be a -- an easy political thing to to fly it's not going to be easy internationally because it will cost commodity price reflation again.

And then even if they were to decide to do it.

How aggressively.

Because each time you do this you need a bigger dollar amount they have the same percentage increase of money supply are they gonna do more than 600 billion which was QE2.

Not likely -- I think the market set up for disappointment and meanwhile Europe continues to -- to -- -- a hand basket Europe's a mess.

You know.

We talk about Spain we talk about Italy we talk about France Francis of your core country they are now in their own little crisis here.

Not only you know from a sovereign debt perspective -- social politically to.

High unemployment rate 52%.

Youth unemployment in Spain.

It's fertile ground for social unrest there's no easy solution and with the ECB frozen with fiscal policy you know tightening.

And the meet the macro economy in Europe really careening through the Dallas -- this is a really kind of a scary situation wow let me go hide a bomb shelter -- thanks for.

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