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World Markets Brace for Greece Elections on Sunday
Todd Schoenberger: I gotta tell you this vote is not going to go the way that we, Wall Street, Main Street, anybody around the globe wants to hear. This is going to be a horrific moment not just for the United States economy but for the overall global economy. Everybody in Main Street, right here, USA has to be vitally concerned with what takes place in Greece tomorrow.
Gary Smith: Zero. I hate to burst Todd's bubble but we have had a million of these horrible Greek moments over the past two years-three years as far as I know. Look, Jamie Dimon said that the impact of a Greek default, if it goes that way, the impact on our financial system would be zero. I take his word for it-but even closer to home the people lets say the elect this government, they pull out of the Euro, all the worst things that could happen. Are people going to buy less iPads? Are they going to stop going to McDonalds? Heck, they are going to keep going to McDonalds in Greece, only they are going to pay with Drachmas or something like that. It is nothing to worry about.
Susan Ochs: It is important to keep it in perspective. I'm actually with Gary. The US economy is not driven by exports. GDP only contributes to 10 percent are of exports. We really need to be sure to know how much is really attributable to exports versus other domestic consumption-driven demand. When you think about the percentage of our exports that come from Europe, including Great Britain, it is only like 2 percent.
Jonas Max Ferris: These are all great points if people were rational but in a real panic they don't care about how our exports are to Greece because the last collapse we had of a country with Russia defaulting on a little bit of debt that was a big deal in the financial markets and the economy. I believe it started when a taxi company defaulted on some debt. It doesn't take a lot to cause worldwide panic but we have written off Greece at this point and it would have to spread into the other countries. The US economy is still weak right now. Its not in a recession but it is weak. We can't take the entire European euro area going into a deep recession as opposed to the mild recession they are in now. It could get a lot worse and could hurt America.
Tobin Smith: Sure, not only just sentiment but behavior. We saw sales down 2/10ths of 1 percent and annual that was down 2 percent. We saw Starbucks coming out and companies that have European exposure over there having serious problems. We are having a bank run in Greece. I mean that is clear-that is a panic. The next thing that is going to happen is that there is going to be a panic I guess. My friend Todd here is a soothsayer and and says it is going to go against Europe-but let's just assume Todd the Soothsayer is wrong. The vote doesn't solve any of the problems. What Americans are seeing is there level of uncertainty compounded by this other sort of country called Europe that they understand is going to have real problems. They are sitting on their hands more and the behaviors they were doing, that was a psychological point and we are seeing it right now. You can't deny that these numbers are bad.
New White House Immigration Plan Raises Concern Amid High Unemployment
Tobin Smith: I'm not going to get into the fairness, I am going to get into the economics. Obviously the economics are these people were scheduled to be deported. These are 800,000 jobs for these younger people. Clearly in some areas we have 30 percent unemployment for young people. I mean I hate to be the bad guy here, but come on. I don't know whether it is fair or not there are still American citizens who are American citizens who are out of jobs. Let's do the right things and make sure that they get the jobs.
Gary Smith: Yeah, I guess this is my day to be on the side of the left I suppose. Look, first of all there is no link between immigration and unemployment at any level. In fact, immigration has been declining for the last few years while our unemployment rate has been going up. There is no link and the reason is that immigrants take jobs that basically we don't want. They have a high work ethic and actually because the average age of the immigrant is about 28, they are helping to keep our social security afloat by paying into it while our elderly take out. So, immigration is good. If you believe in free trade, this is the same side of the coin. It lowers labor costs, it is really a good thing.
Todd Schoenberger: First of all these are younger people. Let's face facts. Going forward it is just great that they will be able to live freely-this is obviously not the path to citizenship- however going forward it is only going to help them. You need people who are going to be living in houses. This can actually help the housing sector, it is a great move for the economy.
Susan Ochs: Absolutely, these people are already working in the economy right now. They were brought here under means that were not their own. One of the big advocates for this move have been Jose Antonio Vargas, he is absolutely contributing. The more you think that people can come out of the shadows and can get certified and skills training. They can earn more, work more, it is absolutely a win.
Jonas Max Ferris: Look, lets get away from the citizenship. The main issue is if you radically increase the supply of labor by executive decree overnight, you are going to raise the unemployment rate, there is no way around that. Long haul, is it good for corporate profits? Yes. Lower wages? Sure. In the short run with unemployment rates you are going to see it go higher. The faster you increase the supply of labor, it is pure economics.
Big Labor pushing to unionize unemployed Americans
Tobin Smith: The great Milton Freeman, I will quote him said says "Therefore, much union activities concern with rationing the available jobs among job seekers." In other words, union members get higher pay because they allow fewer jobs to exist. Now, that is what a cartel does. That is the whole idea here. So, by definition, it would not help jobs. Ok, don't take it from me. Take it from Miltie.
Jonas Max Ferris: The illegal immigrants are the ultimate employee because they are the anti-union employee. In general, the one thing that the unemployed have going for them is the relatively low cost compared to union labor. If an employer could hire someone and replace a union laborer with a part time worker it would actually lead to them getting hired. It will make them harder to hire, in fact if there is more unionization in the unemployed then they may get hired even faster than already.
Gary Smith: Lori, with all due respect to you, doesn't this sound like some sort of Monty Python skit or something? I mean it should be on Saturday Night Live! We are unionizing the unemployed and as a threat we are not gonna work. Toby had it right, every economist, even Larry Summers who worked in the Obama Administration said that unionization leads to higher unemployment rates.
Susan Ochs: Well, I think you have to look at what this group is actually doing. What they are really looking to do is to mobilize political movements to get people to push to get congress to pass jobs legislation. They want sort of a new WPA program to get more construction jobs and more infrastructure building which is not a bad thing for the economy. So, in that sense, helping people to organize to push for more jobs is a good thing. What I think would be really interesting for a group like this is to find a way to provide people with healthcare. If they could figure out a way to provide people with healthcare that is the thing that unemployed people need the most. You run off Cobra what do you do?
Todd Schoenberger: The unemployed, 99 weeks of extended benefits. Food stamps, in some states you can even get cash and healthcare. Look, we are giving these people enough as it is. If you want to teach new skills, I can get behind that kind of thing. A union or a club but unemployed networking with other unemployed is not going to get you a job anywhere.