Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Learning from Money Supply of the 1980s: The Power and Irony of “MDuh” - 20th Nov 17
Trump’s Asia Strategy, Goals and Realities - 20th Nov 17
Crude Oil – General Market Link - 20th Nov 17
Bitcoin Price Blasts Through $8,000… In Zimbabwe Tops $13,500 As Mugabe Regime Crumbles - 20th Nov 17
Stock Market More Correction Ahead? - 19th Nov 17
Universal Credits Christmas Scrooge Nightmare for Weekly Pay Recipients - 18th Nov 17
Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom - 18th Nov 17
Facebook Traders: Tech Giant + Technical Analysis = Thumbs Up - 18th Nov 17
Games Betting System For NCAA Basketball Sports Betting - Know Your Betting Limits - 18th Nov 17
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17
Does Stripping Streets of ALL of their Trees Impact House Prices (Sheffield Example)? - 15th Nov 17
The Trump Administration’s IP Battle Against China - 15th Nov 17
5 Ways Bitcoin can Improve its Odds of Becoming the Future of Money - 15th Nov 17
These Headlines Say Gold is Building a Base for Something Big - 15th Nov 17
Protect Your Savings With Gold: ECB Propose End To Deposit Protection - 14th Nov 17
Gold on the Ledge, Trend Forecast - 14th Nov 17
The Unbearable Slowness Of Fourth Turnings - 14th Nov 17
Silver Sign’s Confirmation & More - 14th Nov 17
Could This Be The End for Tesla? - 14th Nov 17
Harry Dent’s Fourth Cycle: More Evidence of Stock Market Downturn - 14th Nov 17
Why Having Good Credit Is Important If You Want to Invest - 14th Nov 17

Market Oracle FREE Newsletter

Traders Workshop

Fiscal Cliff Threatens U.S. With Recession, Politicans Lack Ability to Find Solution

Politics / US Economy Oct 16, 2012 - 02:32 AM GMT

By: Bloomberg

Politics

Best Financial Markets Analysis ArticleBloomberg Television's Trish Regan sits down with four CEOs for a special edition of "Street Smart" focused on fixing the country's debt. Tune in to hear from BlackRock CEO Larry Fink, NASDAQ CEO Bob Greifeld, UPS CEO Scott Davis and Honeywell CEO David Cote, who are all part of the Fix the Debt campaign.

The CEOs agree: It's Washington's fault we're not hiring and not spending. Honeywell's Cote says, "If we were playing with fire in the debt ceiling, we'll be playing with nitroglycerine now when it comes to the fiscal cliff."


BlackRock's Fink says, "We need to speak out as CEOs...Politicians generally address things when their back's against the wall...We have the threat of going into a recession in the first quarter...This is a very uncertain moment."

Highlights below and full transcript available upon request.

Fink on QE3:

"Quantitative easing is probably the right thing to do at this moment. I believe because consumers are pulling back, CEOs are pulling back. I think we have a threat right now of going into a recession in the first quarter. The Federal Reserve in QE3 is trying to keep the economy afloat while we go through this transition. My expectation would be, if we had a grand bargain, the Federal Reserve would cease QE3 quite rapidly... And so, to me, this is a very uncertain moment."

Cote on why Bernanke is right to enact QE:

"Somebody is acting as an adult and buying some time for people to actually do the fiscal work that they need to do."

Cote on the fiscal cliff:

"And one of the concerns that we have as CEOs is that if you take a look at the way the debt ceiling was addressed in the U.S. a few months ago, it's interesting. I've talked to politicians that say, where was the business community? You know, why weren't you guys in there and saying something and pounding on our desk? And my response has generally been, we thought this was just the normal political baloney you guys went through. We never thought you could be this reckless or irresponsible with the country's finances. And the response back is generally, well, now you know. So when you think about it that way, if we were playing with fire in the debt ceiling, we'll be playing with nitroglycerine now when it comes to the fiscal cliff."

Fink on why he's buying stock instead of hiring and investing:

"We're buying back huge amounts of our own equity. We are helping our shareholders because we can't feel comfortable, at the moment, in terms of hiring more or reinvesting, especially plants and equipment, which have a five-ish-year breakeven. So you're not going to jump in and invest until you feel more comfortable."

Fink on why the debt needs to be addressed now: "Ultimately the marketplace is going to rebel on this large amount of debt. And we most probably will see higher interest rates. Obviously, that's a big impact in my business. If you see much higher interest rates, ultimately that will be a drag on equities. We need to address the fiscal deficit before we begin to see higher interest rates."

Fink on the lack of ability to address fiscal cliff in Washington:

"We need to speak out as CEOs. We need to address this with politicians. Politicians generally address things when their back's against the wall. I think their back's against the wall for the last two years, and they just haven't felt it."

Davis on the impact of Washington gridlock on investing:

"Our millions of customers have to know what the rules of the road are, what policy is for the next four or five years, to make those [hiring and spending] decisions. If they want to stock inventories, if they want to hire people, if they want to invest in equipment, you have to know the rules of the road more than three or four months out. The small- and medium-sized businesses, really are the backbone of UPS's customer base, are sitting on their hands. You know, they're not going to start spending money, hiring people until they have an idea - a decision to be made."

Cote on Washington lawmakers:

"They're a pretty odd bunch, all in all. You listen to Republicans say there won't be a revenue increase unless there's entitlement reform. And you listen to the Democrats say there won't be entitlement reform unless there's a revenue increase. Now, most of us as businesspeople would say, well, that sounds like a deal, actually. But for some reason, they have the ability to complexify everything. If you got a couple of businesspeople together and said, OK, we understand, now we just need to discuss numbers, for some reason, they turn it into this unbelievable problem."

Fink on what's holding up the economy right now:

"Corporations are sitting with $1.7 trillion in cash. The amount of money that's sitting in money market funds and bank deposits and low-duration bonds, if we felt that there is a fix, and if this fix is tangible, understandable, and most importantly credible, I believe confidence would be renewed and we would have a new renaissance."

Greifeld on low treasury rates:

"We have 1.6 percent interest rate on 10-year Treasuries. There's nothing the U.S. government has done in the noble past to deserve that low of a rate, in my mind."

bloomberg.com

Copyright © 2012 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife