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tv   Cross Talk  RT  June 13, 2020 12:00am-12:31am EDT

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i want one black are they want one black famous person they want one black abyss and one black. hello and welcome to cross top where all things are considered and people about economics is called the dismal science for reason it is often imprecise and almost always open to seeing what you want to see in many ways economics remains in our however the economic situation sets us all now is much more than about our politics it's about the way we will live for this foreseeable future are we witnessing
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a recovery if so what kind of. discussing the economy and more i'm joined by my guest daniel what do you martino boogy is and doubtless she is the c.e.o. and chief strategist for well intelligence a research and she is also be author of an insider's take on why the federal reserve is bad for america as well as they call mr bloomberg view and in new york we cross to marshall is a research associate for the levy institute at our college a contributor to independent media institute as well as a member of america compass or a newly established name tank for him to restore an economic consensus into sizes the importance of family community and industry to the nation's lou. and prosperity
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crossed out rules in effect that means you can jump in if you don't want and i always appreciate ok let me go to our national 1st in new york last week we came out with a new job numbers and it was quite surprising for a lot of people that was a row of jobs growth approximately over 2000000 though there seems to be some all of the. interesting in itself. which gives people reason to believe that there is some kind of recovery and i would really would like in this program to be politicized and i don't want to talk about who whose advantage it is ok because that is turned into a political football and we need even with something that is the great depression so i think we have to take it very seriously so marshall i mean we in some kind of recovery or is it too early to same her recovery in some sectors and not others kind of you know unpack it for us without getting too political the look that the idea is if you if you go if you if you stop
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a car you know you're going 100 miles an hour then you stop the car and it goes to 0 and then you break celebrate and it goes 20 miles an hour of course you know the car is moving again and. so course that's progress but you are still far from seeing that automobile move operated at maximum efficiency so leaving aside this testicle ledge and there are there is about and i'm sure we'll get into that yes there's been some recovery but you are still dealing with some you've still got some profound long term structural issues which i think are far from big result in your opinion i mean it's one of the things that you know a situation like 2 very sudden because this was this was self-inflicted the kind of it was turned off it was a it was it a choice ok but as we come into this recovery if you know the word recovery is. the a trying to reveal some of the structural problems that were. in the economy in the
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1st place and i think that that's something that we need to look at his well because i've long lamented people talking about these really big macro economic numbers that doesn't really always tell you very much about the economy or like how the markets are in you know i mean you know you come out with you know these different various job reports and then the markets are are soaring and they seem so disconnected because it really doesn't have much to do with the average working family. you know that's exactly right and i think that the reason that the economy was kind of on a weak footing coming into this year is why we've had the rebound in the stock market that we have and that is that the federal reserve kept interest rates at artificially low levels for so many years that non-financial business debt in this country was allowed to double so it was an accident waiting to happen so to speak and once that accident did happen you know that the blackest of black swans then we
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saw a much faster underground filling in the corporate bond market and what would have been expected and that was just it was just a by product of them being as over levered as they were which prompted the fed to ride to the rescue and do things that it's never done such as get into the high yield bond market and rescue companies that have been downgraded which is set off what we call animal spirits the likes of which we've never seen now we have individual that there's this smallest of retail investors pumping up things like insolvent companies such as j.c. penney and hertz that have actually declared bankruptcy filed for chapter 11 and yet investors in general are so convinced that because of the fed's extraordinary actions to contain the outfall of the credit market the credit bubble bursting that the fed no matter what happens is going to have their back with i
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mean that's like the fed choosing winners i mean is that really helped me through the economy because it again that's kind of an evolution i mean that's a choice it's not really market forces as we're always told to worship here i find that really quite bewildering and what is the doing if you're buying corporate bonds i mean this is this is it's it's not creating an even playing field how do you explain what the current. what the fed is doing right now is credit allocation but what the end result is is the likes of price distortion the likes of which we've never seen it is almost impossible whether you're investing in a bond or a stock right now to say what its inherent underlying value is you've got 40 percent for example of the standard and poor's $500.00 it's hold guidance all earnings guidance for the year so if you're talking about the most traditional valuation metric the price to earnings ratio it's kind of undefined right now is so
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i mean we're an absolutely extraordinary times and yet we have the markets at all time highs that is what that policy is creating and the irony is that you know corporations have tacked on an additional trillion dollars of debt in very short order and this is just going to make them that much weaker than they were coming into the year if we don't have a true the shaped recovery and i mean full day shaped recovery this is going to leave that sector that much weaker and more to one of the things that's coming to my mind one thing of the financial reporting is that it's almost is if half the economy isn't necessary anywhere rob the people in the economy continue to move forward i find that really quite bewildering because again if you look at you know a lot of financial news you know people are upbeat you know and of course you know you know. these major corporations that were bailed out 1st you know house they
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were not so i mean it's like someone said to me rather disparagement there are back in the shower drinking wine good part of the country doesn't feel that i mean if you have even more beer on the street i think that's right and to your point about the fed so i think the winners and losers i don't even think it's winners and losers i think the fed is it's whether you're politically well connected to the extent of the bailouts really how it's a is a function of how well established craigs is doing. banking relationships where which is why the programs like p.p.p. have not worked out well because they're a small business that employs say 15 people you're not going to have the same kind of relationships with with j.p. morgan as a large multinational corporation will not that and that's no fault of. the banks percent i mean that's understandable but to your other point i mean i think been a long standing problem we've had a serious deterioration in the open all of who have jobs even as we were coming to
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full employment and i think that's been a long standing problem it's been brutally exposed the underlying. about it call me for a long period of time and as you point out this post pandemic response has actually exacerbated the problem it's we instead of fixing it we've actually made it worse you know then you know it's in when people talk about a recovery i think it's more germane to say recovery for home i mean that's really the question we have to ask because i think i know it's easily politicized i'm not i'm i'm deeply conservative person and i can easily politicize it myself but you know the the issue is here is that we need to have a recovery it are the right people to be on the on the receiving end. and that's exactly right you know right now the narrative in the media is that everything associated with any of the pain of the corona crisis is temporary in nature there will be no hermant the consequences of what we're seeing right now and yet we know
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that small businesses as they look to reopen. and so for a generation now we've had small businesses focused on an unvaried a low price labor at the expense of capital expenditures now and in a world where so many consumers are going to be going to headings i agree about social distancing now you're going to have an opposite trend of small businesses looking to invest in capital expenditures and automate to a aster extent and they have kind of like the medium and large sized companies in america have already certainly started that process but you're going to actually have even the small businesses that employ 47 percent of americans prior to the current of the current of our virus outbreak you're going to have an even smaller segment of the population that is brought into and under the small business umbrella and which is a
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a made huge foundation and source of innovation and entrepreneurship that is traditionally been a job creation engine so i'm truly concerned about what the aftermath of this is going to look like you know martially with with the jobs report that we got last week when we're inside is that the economy what sectors of the economy you think that these jobs came from because again there was a lot of people have occasion about these numbers and i i kind of think that was politically influence but i mean they gave economy small 'd businesses which trying to small businesses or is it like this amazon just got another 100000 well to your point about the problems with the numbers themselves if part of the difficulty ironically is the that we have these new programs like the government. programs whereby funding was extended to companies who kept on their payroll or
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sustain their payroll who duration of the crisis so when they they were in this anomalous position of being paid but they were doing anything and the. the b.l.s. at the end of its report indicated that these people were counted as employed of though they are the facto unemployed so and if you actually made adjustments haven't you had a 16 percent unemployment rate so so i but look even if we look at 13 percent that's still one of the highest numbers we've had since the great depression bit the growth came in a lot of instances simply from reopening the economy so that you know even if it's 50 percent you know you're hiring back some steps a work at restaurants again or other services that have been closed down i mean i am in new york and most of the economy still shut down here in new york city but in other places it's comparatively open so so clearly there's an impact map but you have to ask yourself whether a lot of these industries like retail leisure restaurants are ever going to recover
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from the prepared democrat levels at least for several years to come i mean you know restaurants will be operating at 50 percent capacity as an example could be considered are you making any money i mean i know one people work in the restaurant business when they have 100 percent capacity to make their job no that's right that's right i mean if i mean i'm as i said in new york there's a ton of small restaurants and a paper high rents they're not going to be able to make it and and that's not unique or on the company and of course some you know we're doing this on zoom lots of teleconferencing in telecommuting mean done zoom so that means less and less travel less airplanes boeing was having problems even before this latest crisis they'll probably make it as a sub. contract at the pentagon but there's a 1000000000 business could go straight down the tubes so there is there are some real problems going in regard to hysteresis you know any bailing out an airline somebody that doesn't make good airlines in america really who really really i'm
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going to we're going to go to a short break let your break you were discussion on the recovery stage. the.
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truth. what we're seeing is a utter divorce an utter split from the real economy and the financial lives the funny money fed driven casino that is now taken over the globe this is causing to think big overlord class are becoming fabulously wealthy and the peasants are revolting they've got a good old fashioned peasant revolt about america and learn that don't not sure. well the match across up were all things are considered peter lavelle to remind you we're discussing the state of the economy.
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and then you'll excuse me go to let's talk about what the government is doing and not doing you know you can call it a bailout you can call stimulus package we can talk about the timing of it all. what is this stop the freefall was it basically meaningless because they were bailing out people that have more money than god anyway and using that tax code i mean that's that's that's fine when you have high employment you can redistribute wealth or you have so many people on employed they're not paying payroll at all and we can talk about the derivative issue of health care if you don't have a job i mean it has the government done the right thing for the working people of america i'm not talking about the rich working people go well you know it's interesting you raise that issue because consumer confidence among the lowest quintile and the 2nd to lowest quintile has recovered at the fastest pace in fact
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we're seeing consumer confidence. among those who make between $7599000.00 a year continue to slump as layoffs begin to move into white collar industries my greatest concern about giving the lowest income earners and an additional 600 dollars a month out to the end of july and we'll see if that is extended or not. is that it's provided a false sense of security to an income cohort that will then be at the end of this stimulus period still facing the same traumatic financial consequences as they faced before and i refer to cop cars being repossessed or rental evictions and in fact you've seen more reticence just in the last few days among potential car buyers and one of their chief concerns is that there's going to be an expiration of the moratorium on rental evictions so the question is have you have you just bought
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a little bit of time while demand a structure is occurring in the background such that you're not just going to have people when we call a positions but also people at the lowest income runs out of work and will there be the political where with all to address what really needs to be addressed which is figuring out a way to secure jobs as opposed to keeping people on effective universal basic income which has which is really what has been created by congress and has resulted in a disproportionate number of you of u.s. workers being called back to work and saying no i'm collecting a lot more right now than i was before so the incentive system is just all catty wankers to use a very technical term and i worry about what's going to happen on the other side of this because the fate of so many millions of americans rests in congress right now yeah and. those funds that were sent out i would have no match in the great deal of
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it is just to pay off debts to if that's what people are using the money for it because they don't know i mean don't worry if you know if there's light at the end of the tunnel it's really going to be another train coming in their direction i think that's really the analogy here or should what do you think of how the government is responding to this because i must say this from a moralistic point of view you know the kind of wipe their hands they've been on big. ation you know i mean there are tens of millions of the emergencies out there in the country people losing their jobs. you know and i'm a you know as a conservative. i don't you know my 1st reaction is limited government i don't like people becoming dependent on the government i think that anything that the government should do should keep families together in people and work and then that's the derivative but in an emergency in the blocks want to bend like this i think that you know if you can't use the argument we don't have any money we have
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plenty of money for their friends and their special interests here but in the end you brings up this really important issue is that you know how much is the people good and creating or creating relief but without creating dependency because there is that issue people say why should we go back to that i'm getting a check i know we. are short answer to that is that you know come july 1st for now those checks won't be coming anymore which does raise the problem that. brought up and what happens afterwards if there is not a job to go back to look it's it's an unusual situation because you effectively have created it's been the government that has created this mass unemployment in order to deal with a public pandemic. they have put the economy into a deep freeze coma and to you we can i don't want to discuss whether that was the right of the wrong thing to do in terms of luck and the fact is you knew it
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instantaneously created mass unemployment but if you want to sustain political support for those relief efforts then you've got to make sure that you do it properly and i think the europeans have done a better job of that than than we have in the sense that many of them have just gone straight to a a nationalized payroll and that to me that would've been a more desirable way to go because you're it's less politicized you all you don't have to create a whole bunch of new bureaucracy to do it you you have the the. data within the the . the i.r.s. for exactly it's easy it's easy enough to to get those checks to those people from existing base if you think payroll and it would have taken out a lot of the government discretion and a lot of the political problems that you that you've raised so denmark norway did that even the conservative government of johnson says the tories covered about 80 percent of salaries up to $30000.00 pounds so that to me would have been a much better way to go of course as the economy recovers you do want to wean
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people off point is that if you are the one responsible for throwing people out of course then i think there is a moral obligation to make sure that they they are compensated for that and likewise in regard business as i say you don't want to create a profit windfall but there is a a constitutional clause in the us constitution that the takings provision which assumes that which mandates that you compensate. for any of the sustain which as a result of government action now i don't think you can get them when all profits but at the same time. they should be compensated for their fixed costs they've been they would have otherwise incurred i think that would have been a that's a fair way to sustain support a message and the consistent a constitutional provision that we have here and only only if i agree with it that would be the moral thing to do it's a common sense thing to do at the same time i mean if you you know you eternally
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economy on which i don't think in the history of ever this is ever been tried. ok and we all sort of ok. when you have the last right the most 929 we you you wonder what was happening i mean if you were money a market maker you want everything is coming to heart this is something that we didn't understand and we all kind of walked through to the. are what you wrote what's going on here it seems to me that not only was it would've been the morals this decision but if you wanted to switch back to her you would have time for a better chance of the moving parts you more or less the same as they were but now we're in a very different environment. we are and i won't take credit for this idea it was actually it was actually articulated 1st by mark cuban who said you know the i.r.s. has access to all of these bank accounts of all these small businesses why don't you just give them overdraft protection until the end entire national economy is
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ready to reopen and rather than this patchwork that we've seen where arizona opens quickly and now it's hospitals are becoming overwhelmed and texas is open very quickly and now we've got we've got record levels of of of current of ours cases so you've got this this this piecemeal approach to reopening because there is this need to get that you know through the business doors open so that we can get back to work i get that but had you had a much more who ward 8 it blanket national approach i think that there would have been a lot more calm among the small business owners of the country and more of that kind of a for lack of better word congeniality if you will nationwide as opposed to what we've ended up with which is a ton of divisiveness that we all know serves absolutely no purpose. marshaling then you know i always explain to the north americans about the virtues and then
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the downside of having the kind of country the united states has because we have states ok and i constantly telling my friends that governors can say no to the president i mean. they were elected in their state that's what the response to do and you know it's very very confusing but you know this is one of those downsides here and we all pretty much kept our promise not to politicize this but it was because of oh it's i don't think it was because of good public policy but it got in the way when we look at 8 because it wasn't a nation night or white response really it was very peaceful and he also said it was piecemeal but in fairness you know it's a it's a large country a large geography so you know it's not like new zealand where you know you're 7000 miles away from everything and you can easily shut everything down so it's very hard to construct a sensible national response which will meet the needs of new york in the same way that it will meet the needs of texas that is both a strength and a weakness a host country as you pointed out but i don't think it i think it does complicate
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the issue of federalism the once you can have call criteria which i think they tried to do but you know look new york had. more than half the cases so to suggest idaho should all exactly the same plans that new york as it's silly and i think that's a reality ok when you were well when people say the word recovery what does that mean in your mind what kind of recovery do you want to see him again i want to keep my focus on the little classes and working people what is a recovery for them. well i think recovery needs to be kind of as i was suggesting in a utopian manner the shutdown was coordinated i would like to think every would be even more coordinated such that there. we're certain structures dictate it so that when you do reopen you can reopen to the fullest and that is my greatest concern is
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that across the nation you have consumers and this is a consumer driven economy 70 percent consumption you have some consumers who see the local news and for example see people who are not wearing masks and say that's fine all throw up my hands and be reticent to return to my old consumption habits until i see that things are such that i am comfortable so you might my greatest hope for the recovery is that the people of individual communities and states and the country come together and say the more we can be much more aggressive at reopening if we approach this as many asian nations that have never shutdown have approached it and that is by making sure that you maximize reopening by maximizing the general comfort level of among all consumers so that we can get this engine
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started back up as opposed to going back to marshall's analogy of ok great we've turned the car back on but we're still driving as if we're in a school zone what we need more than anything else is certainty and we all have to agree about the rest victims and as as all the time we have i want to thank my guests in dallas and in new york i want to take our viewers for watching us iraq you see you next time remember. there was a period let's call it a unique problem you know period to be on the end of the cold war where the u.s. and nato countries and other people sort of wanted russia to become what they described as a normal country before they met by normal was a country that was democratic by west. it was capitalists now it was a member of u.s.
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led international rules. and i think a lot of people saw that as sort of criminal. system and i think it's pretty clear that russia in particular has been pushing back on the. no use to you. it's always ok it was. immediate.
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yes. yes well. max kaiser this is the report this is your cap and speaking. place fasten your seat while bruce. well i think you might be talking about our stock markets these days driven by fed liquidity and well whole bunch of people in america 100 over 100000000 got free money remember and free money what do you do you spend free money you go crazy with free money it's like walking into the casino and they give you some pretty drinks and free chips and they say go at it well not a single s. and p. 500 stock is down over the last 10 weeks today was a.

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