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

Why is financial prudence referred to as austerity in the press? I wouldn't even call this a "liberal bias", it's more of a "stupidity bias".

Americans as a whole are financially illeraterate and are unable to understand their economic problems. They tend to blame others for their problems. Until they understand their financial plight, they will choose to ignore their problems and this will lead to the demise of America.

Look....the corporations are going to be just fine...they are smartly and wisely flush with cash and aggressively establishing their monoplolies in emerging markets.

But I find it just incredible how little attention is given to the housing situation....which is by all accounts worse than the depression now....and the ultimate total writedowns amount for the banks has not even hit yet. Everyone has this idea we are just going to have a recovery and just leave housing out of the equation like it doesn't exist.

I last read the number is now over 2 million.....2 million homeowners have not made a payment in a year. If the payment is 1500/month (low). 2 mill X 1500 X 12 = 3.6 billion that did not go to the morgage holders over the last year.....and all of it or most of it probably went to consumer spending instead.....inflating that true number.

When the real number for the housing ciris which started in 2007 is finally totalled and written off ........it will wipe out the banking system.

The Fed's only hope is that with enough time......the banks can recapitalize enough to survive the writedowns.

Any now I will say again for the umpteenth time......dollar destruction through the coming mass default writedown will make the greenback stronger as the number of dollars on the actual books of the world disappears.

Depression with a strong dollar.
It is different this time.

There is no way China and Japan and the world's reserve total of 4.5 trillion in foreign holdings of treasuries is going to be allowed to crash in value.....regardless of the FED moves.

A change in reserve currency must be negotiated and meditated by the world powers. Now Soros would like to speed that up....but China is not going to allow their 1.2 trillion in exposure to just vaporaize into thin air.

No crash in the dollar in the forseeable future. It is a mathematical fact........everyone is hoarding dollars.......trusting in dollars......and that will make it easy for the Treasury to borrow at ridiculous rates.

Wish someone, somewhere in the press would realize that cutting federal spending is not going to hurt the economy, if enough is cut it will help. Getting rid of repressive layers of bureaucracy smothering small business will help the economy in ways big government advocates will find shocking and will henceforth have to repress.

What will the Fed conclude in Jackson Hole? Let the markets be. We need deflation in order to survive. Gas 2.00, oil at $60 and homes selling for 40% less.

Wall Street's the only one that needs the chest compressions. Main Street is ready to see the house that J.P. Morgan built fall to the ground. Everyone knows the game is rigged and the jig is soon up.

Flash crash and flash mobs. That's my forecast. Total civil unrest across the globe. I'm ready for it.

Having the government tell me that the only way to solve the debt problem is to issue more debt, and to give them more of my money in taxes, does not make me trust them more. The first thing they have to do is control SPENDING. Show me that you can prioritize spending for medical care, Social Security, defense, and not waste my money on another ���Bridge to Nowhere���, Senate gymnasium, or foreign aid. Only then will I WILLINGLY give you more money. The budget is supposed to be based on how much revenue (taxes) are collected. The budget should NOT be based on the CREDIT LIMIT of the country. Throwing more money at problems is like setting a pile of $100 bills on fire and then trying to smother it by dropping a bigger pile on top. The only thing that happens is all the money is burned. STOP spending beyond our means.

You should actually say that if we choose an austerity budget we will become irrelevant.

How many times must we try the IMF formula of austerity budget, economic collapse, political upheaval, resurrection be tried before we realize that we can go directly to political upheaval and resurrection and bypass the steps of austerity budget and economic collapse?

Don't any of you investing experts ever read recent history?

You are wrong. The US can make the wealthy pay their fair share.

This guy Schatz is not so bright. To continue on with the medical analogy, survival rates in surgeries and more kinds of surgeries were made possible with the advent of painkillers and anesthesiology. Thus does fiscal stimulus and easy money play the role in this crisis. Is he volunteering to skip the Novocain on his next visit to the dentist? I bet he never has. I bet this guy sucks down painkillers if he hits his thumb with a hammer.

I love the comment Nesto said in the clip: Stock Pullback, Is Bull Market Over?
He retorts to the typical head full of ego @#$% financial guy that says the market is always going to go up even if we're falling off a cliff with saying, "What about the realist side, not pessimism. Maybe people have finally just gotten real about what's going on in the world and economy in terms of what has propped up the market in the last two plus years."
I completely agree!!!

Macke and Nesto are more interesting than I thought. I apologize for dissing them earlier. But to be fare, I think they have grown on me because they changed their format to a more big picture show instead of day trading garbage. Macke says some witty, dark humored and true lines, but I still think he talks weird and sometimes it is not comfortable to my ears to try to listen to him.

Wouldn't the Patriotic thing to do be for the rich (and perhaps the quasi-rich) to volunteer for higher taxes? All this pompous talk of patriotism, and yet, no personal sacrifice from those who can MOST afford it.

Not that I want to tilt us more into a welfare state...quite the opposite. There too, some more altruistic behaviour by our leaders and prominent (rich) citizens might be the answer. Sure you can ship your manufacturing to China or your IT to India, but should you?

I'll listen to any rational argument on how the government needs to change so that its a more fair playing field, but corporate welfare is not the answer.

And you know what? TARP & QE ARE Corporate Welfare. Those recipients should be the first in line to help out, instead of hoarding their cash they borrowed at 0%, waiting for (while at the same time forcing) the fire-sale of America.

Have these people ever been in Europe? Is the euro zone really in MORE debt than the US ? Until this question is answered my bet goes the other way.

Austerity is painful, but Milton Friedman economics does not work. This is a statistician approach to finance and does not take into account "Human Action". The computers will never really run everything automatically, we still to do things for ourselves. Using computer model is what caused our latest messes.

Never got a Business degree, but I have read parts of the L. Von Mises thesis and I believe wholeheartedly that this a better understanding of how 'house-holds' work and is the most accurate measure the broader effect of the financial world on everything else.