Fin - Breakout - US

U.S. Must Choose Austerity or Irrelevance: Fund Manager

Jeff Macke
Breakout

The U.S. government can choose one of two economic paths: Austerity or irrelevance. Our debt burden and money-happy efforts to avoid the icky parts of an economic crisis have left an economy virtually immune to stimulus yet devoid of actual growth in jobs or GDP.

On the other hand, clamping down on stimulus in a world of 9% unemployment is the equivalent of shooting a man with a sucking chest wound in the foot to increase his ability to recover from trauma.

"Pick your pain" says Paul Schatz of Heritage Capital.

Despite facing what Schatz says is the most divided Fed of his lifetime "and maybe even all of our lifetimes," Bernanke & Co. are still "sitting on top of the financial food chain for the entire world." What's more, he says the "dollar is putting together a secular bull market."

By arguing for a sustained dollar rally Schatz is taking the opposite side of recent Breakout guest Jim Rogers; a man bullish on the dollar for a trade and Apocalyptic on the greenback long-term. "Too much has been made of the dollar's decline," Schatz claims. It's an idea which gives little solace for American ex-pats paying $20 for a newspaper in France (albeit a nice idea for all of Americans in the very long term).

Schatz is selling the Euro into rallies, thinks Germany is the "800-pound gorilla" (or 363 kilogram leibwachten) of the EU, and he's counting on Europe being even more screwed up than the U.S..

"We're number one for the time being and mostly by default!" isn't the most inspiring rally cry but Schatz seems to think it's good enough for now.

As always, we want to know what you think! Comment below or send an email to BreakoutCrew@Yahoo.com.

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