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Steps to Spurring Economic Growth

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    Euro Pacific Capital Senior Economic Consultant John Browne on what is needed to fix the economy.

  • Duration 5:55
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All -- data we've seen over the past few weeks has painted a very mixed picture on the economy in the good news while let's look at the good news.

Consumer sentiment is at the highest level since may construction spending is at a three year high.

And retail sales saw the biggest jump since fat boy but there's also -- course like I get the bad news here -- -- the unemployment rate did rise to eight point 3% GDP slowed to one and a half percent.

And you -- starts fell from before your highs so what's really going on here one economist of the problem.

Is that the economy is running on heroin John Browne senior economic consultant for Euro Pacific Capital -- -- -- other let us say whom.

I was I was I was calling it -- I'm assuming you're thinking about stimulus.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Dot now -- we we just -- we're telling our viewers that you say that the economy is running John on -- when the I like to use the word candy but I'm assuming you're talking about stimulus and quantitative using the Ben Bernanke type -- heroin that the traders have been -- Exactly exactly.

I'm there's lots of cash Iran we don't need anymore -- tons of it in fact people -- hoarding it.

And that borrowing is very low from banks and things like that so there's not any need ready for more cash the need is -- leadership.

And therefore creating -- -- But people -- -- have taxation over regulation.

The mortgages in the future.

And I know so.

Did tons of Obama -- these are all uncertainties we haven't even had a budget.

From the senate before -- -- are.

Great on Saturday and the apple Thea and therefore people hoarding cash and not spending it right.

And that's all the bad stop -- yeah.

We do how do we act how do we get ourselves out of this mess.

Our laps alerted -- -- -- to do the revise.

Basically.

To create certainty and -- full confidence.

And the onus is not just on the president there and has his own congress festival to establish a budget then to start creating seven -- over the cliff.

But no more taxation.

Over the policy to deregulate.

Personnel policy to reform more -- -- -- Obama cat.

And to create the certainty which will lead to competence and therefore then people would start did to dispense that cash and stock to spend it.

And that is the way to -- do it.

In my opinion okay John you know the one thing I didn't nearly mentioned here's the issue of jobs.

Were to get this economy back on -- -- consumer spending back on -- we need jobs created.

Is -- congress.

That's gonna creates jobs with close regulation was gonna inspire American companies to go back and create work.

Well you get hit right on it it's congress because it's congress it has created the -- -- that lack of budget.

And uncertainty over regulation taxation all the things I've enumerated it's congress it has got to re instill -- confidence.

By reinstating.

A certainty and that will make employer doesn't less concerned about -- -- it would encourage consumers to.

Dis hoard their cash and start to spend.

And companies when then more confident about hiring would just hold that cash they have.

Two trillion dollars of cash in banks of the moment so that will start to create jobs.

Congress itself can't create jobs except.

Wealth consuming jobs in the public sector but it can't create private sector jobs -- just have to encourage the private sector.

By.

Stopping uncertainty and creating confidence and therefore an encouragement to employ.

And done one of the other major areas of uncertainty forever -- out there aside from jobs is housing people are still very concerned.

About the value of their homes in this country according to the numbers in the data you look at every day.

First have we hit bottom.

-- and -- so I happen to agree with professor Shiller of Yale University day.

Who thinks that there's a -- of -- gained on fifteen or -- to dissent from half I think -- it be on track.

Wages since 2008.

The beginning of the recession stilled on three and a half percent.

Unemployment we've lost five million jobs net since 2008.

We've got 43 million Americans on food stamps and people are hoarding cash.

Mortgages -- more difficult to write downs -- is perhaps property -- impractical overshoot.

So -- I'm getting terribly depressed talking it but I don't part question and -- -- -- that would give Amazon a bit of a positive.

We have had some pretty decent housing data you're -- to the issue of the housing recovery.

Housing starts builder indexes everything looks to kind of be moving to the upside summer saying we bottomed out in the spring is -- possible.

This is possible.

But I doubt it very much in fact I think nod and his property -- to -- -- Asia as mr.

-- -- as a service says but I think -- over shoot his index probably is risen by 3% per annum.

Average over the last hundred years we were 50% of -- so I think -- -- overshoot in on the downside as most corrections do on the outside and the I think therefore it'll probably collapse by 25%.

Dialing got a pretty good apparently the -- as we've got to leave it there we have two seconds left is there anything positive you look at.

Yes that that that that there's the jobs that Obama will be defeated I don't -- stop to have reality.

And and that's and that -- fiscal cliff will be -- -- -- -- Adobe employment encouraged.

I don't confidence re instill and people stop hoarding cash John -- fattening conversation with it John thank you very much confidence always -- depressing.

And very resilient he did use some of those people have been drinking up up and giant -- let -- any smile all right Doug they.

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