An Economic Update

" in light of that sort of via. Global panic that seems to be at taking place in all the marketplaces around the world we ought to be good times to up to Demetrius -- ROC of course is in economics professor at University of Hartford and somebody we call upon a lot during this crisis. And good morning professor Harry due in today."

" Good morning I -- there -- no. I I I could say okay -- who really get excellent they -- what's happening around the globe."

" the Dow was at a five year low yesterday and I didn't give a good start to any of the foreign markets."

" And -- are all like that and yet this is another reason why. And we said all along that you must intervene very promptly rapidly. Than play politics in Washington this is they were played. And for ten days. No we have without Bernanke has called in his own studies Bernanke the chairman of the I think. The accelerate a model taking over. -- going from bad to worse because of the the fear effective adding that in."

" I was -- label -- part of it is I guess in the one of the of traders on Wall Street I've got to read it somewhere last night was saying towards the end -- they just couldn't find buyers and is the problem because. Nobody can find -- rice and others we don't know what anything is worth right now."

" Yeah yeah exactly that's partly two in the also the simply people like them when they. When they see their leaders. Kind of frozen in place and the and -- that the banking system is stuck. They become. Panicky themselves and the reason they don't take the actions that they should think that -- in fact. There are -- could bargains out there right now as we speak."

" We don't know -- but we don't know if it is that's the problem in this business that Demetrius Gian -- or cast these over the university art for. If -- eat how much does housing play in this business and housing and a sense. The bedrock pricing structure in other words if you know what houses are worth spending at least have some idea to be able to go from there. Is these a lot of this will be is still coming from the housing crisis."

" It is definitely the cause of the crisis and if we can somehow move as fast as possible and get. Washington to use the the authority that being given by as the congress. To -- he backed temporarily. These bad loans. At some reasonable market price and that's going to be how to -- itself. But -- we got to accept the crisis level that we can't afford to take a risk -- not to perhaps even caused some damage to the taxpayer at this point because. It is that the damage to the economy could be unprecedented in some respects."

" Why didn't he. Bill that was passed last week in India congress why hasn't that set fears. Back of it why is there's clear widest panic seem to be building -- when GM is selling for its lowest price since 1950. And -- what that has to do with the housing market but that's not good for the rest of it."

" Yet because well once. People stop buying cars. What happens is GM's. Profit decline in their ability to make no payments becomes difficult not that the of them and so it it has that. Negative effect on the overall economy and GM is an example of company that is impacted."

" The car companies can survive this."

" You would probably look at some consolidation at the end of the cycle and that we haven't seen before."

" But the price -- let me ask you -- brought this up I think it's good point they're down to where they were 1950. Realistically. Is that really is that a fair price."

" I -- to be frankly I have not been. Specifically that he non Jews and and their value. But my hunch is that people who you know running away from. Like studio oriented that companies because they know people the public is not going to buy at this point. And therefore they probably going to be lower. The point that it should make though is that. Up problem is that banking system and their inability at this point psychological or otherwise to land them. Two other banks and to lend to individuals the stock market drop. But eventually they come back but. If we don't have the banking system working properly it that it damaged to the the overall economy and that's more important the stock market stock market for example. Eight in 2001 went down as low as 7500. Approximately. And then he doubled. The next seven years after and so it can happen again eventually and they didn't it really it's a matter of time I get. But we have to focus on the banking system the financial system that borrows in my hands they don't want that I actually the lifeline of the economy."

" So is the government going -- to federalized the banks in order to make that happen I mean against the banks are afraid to loan to each other. How do you turn around this you know confidence. Crisis."

" Well you know there's a country one country in the world that actually took over all the banks that Iceland."

" And you went crazy over it."

" Yeah and you know I don't think that's what we need to do at this point and make create even more not panic. And but the government definitely has to step in and provide more liquidity. And I'd give some degree of comfort to the banking system. And I think we should own that it takes as in whatever we give them that is owned part of the bank at large stock holding public. The public stock holdings -- some some banks him."

" The president is supposed to make a speech this morning what could he possibly say that could start to correct this."

" Well that in addition the said that long ago frankly that we got in charts. And even though we -- great difficulty. We will do everything and anything possible. -- that coordinate efforts at coordinated effort around the globe to turn this thing around and we will have to be very very firm positive. At this point we have to -- stopped about. You know the potential of getting back to the 1930s and all of that we have to create a more positive psychological environment for people to calm down. And then. The president. In Prime Ministers around the globe and a lot of influence and other public reacts. And I think I'm. Either you know -- is I don't want to be political about this but our president could have done better when he got on TV a couple of times last."

" And part of the problem is doctor -- is I guess because it is elects a collection near this kind of exacerbates the problem does not."

" Well absolutely because I'm a uses some political maneuvering there that that does not make sense given the crisis --"

" And finally the I think it is the last resort I think I do agree with you on this I think a lot of people would -- a lot of experts to. But if it was a public private partnership as in Fannie Mae and and and Freddie Mac. In a sense these kind of GSE secession would turn the banks and those are as well are we not make him political creatures in part."

" Well one can say that you know I I again I don't have evidence right now that they've become a political entity. It since they were taken over. But there were mistakes made in the past Wednesday they were not giving them enough incentives to really avoid taking on bad. Debts mortgages that could never have been could have a -- we paid because of the inability of the people who borrow to pay them back. But there were some incentives in the system. To take the profit. And have the government liable for the lost its --"

" Exactly. -- DeGeneres is always great to talk to you tonight I'm sure we will again rights are. And we will provide thank you very much a hypocrite here are some 27."