Michael Pento Brings A Much Overdue Smackdown Of CNBC's Imported Faux-Cheerleader Simon Hobbs
Nothing better then a CNBC Shill getting a needed public smack down. Pento, who called the crisis is just the guy to give it. Hat tip to zerohedge for the find here.
Pento: How can the Fed create demand? The consumer is still in full deleverage mode, the savings rate should go much, much higher. Companies are hording cash because the money markets got completely frozen in 2008.That's why they are hoarding cash and they are doing it because they believe they see another credit crisis down the road.
Hobbs: That's irrational.
Pento: It's very rational because the next credit crisis will be a sovereign credit crisis and will be about 3 years away.
Hobbs: I am not sure it is rational.
Pento: Ok, 30-50% of all federal tax revenue will go to pay interest on the debt in 2018. China is slowing, Europe is slowing, they have embraced austerity thank god. The US has yet to embrace austerity that's coming too down the road.
Hobbs: What is in the long-term interest of those companies?
Pento: You want them to spend money, hire people, buy capital goods when there is no final demand? Nominal household debt now stands at 92% of GDP. Households have a lot of deleveraging ahead of them, so they are not going to spend money if there is no final demand.
Hobbs: Do you not think the consumer will have turned tail in a year's time?
Hobbs: That's a very serious judgment.
Pento: Household debt will turn when they sell assets and pay down debt. That takes years.
Hobbs: Are you writing off the American economy for years?
Pento: I am
Hobbs: That's a huge thing to say.
Pento: We have bailed out the private sector by seriously endangering the public sector.
Hobbs: I think you are wrong. The AAA rating will always stay in this country.
Pento: The AAA rating held for Enron too and CDOs but they still collapsed.
Hobbs: But the American government can always tax people more. It can always pay its bills.
Pento: If you can raise taxes to 100% does that mean you are going to raise revenue.
Hobbs: Nonsense. That's a political view. America will always be able to pay its bills.
Pento: How do you know that? Because the bond vigilantes will always be sleeping?
Hobbs: You are just peddling the power of nightmares.
Pento: That's what people told me in 2006 about the housing market. The housing market can never decline... But it brought down the entire global economy, Mr. Hobbs.
All we can says is that the power is strong with the CNBC Goebbels crew. Full must watch clip: