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Companies feeling pain of global slowdown

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    Fears of another recession

  • Duration 8:11
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Still think what's happened here.

There is staying over there well think again hi everybody I'm Liz MacDonald filling -- for David Asman and welcome to -- on fox.

And just this week to more big American companies warning that things in Europe -- -- down sales.

-- -- -- applied materials joining a list of names quickly piling up.

Now -- major American companies are taking a hit from Europe.

Is America's entire economy next let's go into focus with -- -- -- in the science Barrett -- Unger mark techy.

-- -- -- and bill ball than my Cassini what do you think -- There's I think the United States is already in a recession as are many major European countries.

All for the same reason too much government that its soft money out of the private sector which is why businesses aren't expanding entrepreneurs are starting new businesses and unemployment is very high.

Victoria what do you think.

Well I agree with Mike that we've got issues here but I don't think Europe is gonna put us further deeper in the -- immediately.

Exports to Europe make up only 2% of America's GDP.

Not a huge number the larger risk is financial contagion if you see US banks start to pull back on lending.

That's when we're gonna have a real recession that's when we'll have real big problems.

Yeah we're not really seen that rich card or to victorious point I think Canada and then China the next go to pet and then -- -- more.

To the US economy what do you think.

Well you're absolutely right -- -- numbers they matter a lot more but you know what I think that we were so burned by the 2008 meltdown which many people didn't see.

The now we over rate every threat that comes over the horizon.

So victorious right I mean this this takes.

You know couple tenths of a point off our potential GDP we are perilously close to a recession already that's true but I don't think this is a big event.

All right Rick -- you know the CBO the Federal Reserve is worried about this so called fiscal cliff.

We do have a capital strike going on in this country where now we've got US -- of US companies saying.

Look we're parking 50%.

Of our cash and short term debt and cash in US banks.

What do you think is going on there isn't that more of a problem.

Yeah.

Yeah I think we have to be careful look you know we hear all this bad news going on over there and it makes us all very nervous but.

Victoria did -- this this this fact right on the -- she -- 2% of our GDP.

Comes from Marseilles over there this slowdown yes recession highly unlikely I will tell you what does worry me.

I think that our US banks have far more exposure.

In the European front then -- were being told this does trouble me because we can see a credit crunch that we can certainly do without.

-- -- -- -- I think Mike hasn't heard the news yet but the US housing market -- on Tuesday.

-- okay well wait a minute now there's more good news I think.

Because costs are low in the US rolled to a broad.

We're bringing manufacturing back on -- witnessed that Chilean plant which is being dismantled and moved to Louisiana.

And there's one -- good thing on the horizon there's a 5050 chance that -- repeal obamacare.

That's interesting you know chants -- here's a deal I mean Greece's about the size of Connecticut may be it won't affect it -- -- country.

If our banks have taken that time too -- their balance sheets do you think though that -- matters more is Washington DC policy.

Yes and no.

I think that -- would be you know who's gonna be elected president's gonna matter a lot and what's gonna happen with congress.

In 8 January in terms of the tax situation is is a big is a big wild -- here.

-- Europe I'm not -- word about Europe I'm more worried about China I agree with bill I think I think -- out of the woods I think the economy's slow but it's actually improving.

And I think China is a bigger question if China goes into the tank or Chinese inflation that could -- our -- You know Micah -- -- here's a deal we've got to jobless right now in this decade that's gonna beat that bad 1980s.

In terms of joblessness.

And -- effectively begun have to -- to the end of the decade together jobless rate the low seven does that present at the rate that we're going.

Do you think that's more of an issue I mean this US's you know we've got people in Washington DC that thinks that raising taxes -- some count got to create jobs.

There are three problems -- Mac number one is people don't understand how an economy grows they -- -- just give consumers money.

But that doesn't create jobs because people that run businesses say -- the -- -- more money out the Fed's printing more money than I can expand businesses because they know that's temporary which you need is an environment something -- like Bill Clinton did in 1997.

Lowered the capital gains tax rate.

He lowered it by seven percentage points from Ronald Reagan.

That spurred a big boom in the economy and the stock -- You know you're out there in California Victoria I mean a -- spend with some way to go of them wouldn't fix talent for any California as an -- or at what percent.

Oh yes I've said this before -- California's -- -- When -- -- should not be where it is especially considering the growth that I'm seeing right here in Silicon Valley it makes no sense I think it is because.

We for decades have had this tax and spend.

-- last -- tax and spend mentality.

Boom bust reality you know I think -- it's important to look at Europe and I think Americans are looking at Europe right now and saying is that our future.

Are we going down that right half maybe not next year but 510 years down the road.

That's the significance of Europe to -- -- -- it raises some really important question about you know Rick -- we've got McDonald's and crafts they're the once with the big -- big -- exposure.

T your up and we've -- as you put out earlier US banks we don't really know what their exposures to Europe how were you.

Well as I said I.

I'm a little bit concerned about the banks but I do wanna go back to something you guys were just talking about a repeat -- you've heard me say win more times than you would like.

If lowering taxes was the answer to jobs.

We'd all be off for -- but as we just saw the figures that came out this week taxes are at a thirty year low and sadly so are.

John all right -- -- ticket on.

You don't that that just a false way of looking at it -- on you know that's the taxes might get a thirty year low but that's because they're very very low.

For half the population that pays no taxes at all.

What you should be looking at his taxes on the people who create jobs and those are the people Liz used the word capital strike.

Capital is on a strike and that's why.

Small businesses aren't investing in the future in aren't hiring people at the rate they should be.

Baldwin is just -- ball is this why you know companies in the US are basically afraid of what's happening here in Washington DC.

And they see any experience in Europe and what's going on in Europe.

I think what they see in Europe is not a loss of sales so much as a dismal end of the US we go down the Greek passed exactly so it's very easily what -- said was right on target.

This is actually -- of -- we take a lesson from it we can see what happens to well first date when it goes off a cliff.

-- but you know march hagee are US economy is restructuring I think that's what's gets lost -- all the media coverage.

Of what's going on in Europe we've got a great acts economy where rich and Victoria out there in California we've got health services -- -- services.

Even legal services even though some would say it too many lawyers don't we diversifying restructuring time and again is this is this being IE up there in the media.

I I think I agree with the with that exactly you Mac we -- we're going through this.

-- change it's been a very painful change it we're going through -- -- here in the midwest where you don't see that -- removing away from a manufacturing yes we're a service economy.

But there's new types of manufacturing green manufacturing coming in there's there are small business -- are actually growing and and prospering but we're not hearing of.

-- -- luck sorry about you know to read to martek is point.

Also next -- is a big blooming industry thanks to Gerald Ford and Jimmy Carter what do you think of that.

Yeah ideas in the car's sound you know Pennsylvania and Ohio and and states like that are really benefiting from -- -- wanna point out.

-- mark -- Indiana is doing well and you know why because they have a really fiscally prudent.

Governor Mitch Daniels and he's the reason -- are doing well in some areas not at all our America we have to -- -- Erica highs but it's Larry is next.

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