Debt Ceiling Fight Risks a U.S. Recession: Clarida

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Sept. 27 (Bloomberg) -- Richard Clarida, global strategic advisor at Pimco and Duff McDonald, author of “The Firm,” discuss the possible economic implications of a government shutdown and Jamie Dimon’s visit to the Justice Department to try to reach a settlement on investigations of the bank. They speak on Bloomberg Television’s “Bloomberg Surveillance.”

-- let's talk about your policy over the fiscal.

If they screw it up mama there are two chances to do that with the continuing resolution next week and then a couple of weeks -- you say october 17. that is the debt ceiling.

The baseline case and optimistic thinking as we will avoid a train wreck and go to the last second like the last two deals did.

But there is that left tail risk.

If we were to go over the line on the borrowing limit, that would be a disaster for the economy as well.

Why are we having this discussion of every expert tells us the vectors of our debt dilemma are improving?

How can we improve our deficit and yet have this discussion?

I think it tells you there is an agenda other than fiscal policy year between the congress and the white house.

I think this is perceived to be the bargaining leverage the republicans have is every year to have the debt ceiling and appropriations come up, and that is why there's a lot of talk about loading this as another measure into the bill.

There's talk of doomsday and catastrophic scenarios here.

Three days until the government could shut down.

A few weeks until we could default and no sign of progress.

What would it take to spook the markets?

The shutdown is different from the desolate.

-- from the debt ceiling and shutdown are different.

October 17. "the firm" and eight other books as well, and one is on jamie dimon.

Are you know him fairly well.

When your reports of them going in to negotiate with eric holder, is it with his tail between his legs and giving up more than he bargained for?

I don't see jamie dimon negotiating with the tail between his legs at all.

The guy is a pragmatic.

I think he realized he had to get a deal done.

The uncertainty of yet another investigation, another fine.

This is a pretty bold move to try to get it done and wants.

I know you're here to talk about mckinsey consulting, is 11 billion dollars enough?

Does jpmorgan see that as a one- off expense or does jamie dimon rationalize that across quarters and years?

I couldn't tell you what they think, but the whole idea of the money machine that is jpmorgan -- we all say, well, that is a huge number.

But it's not.

Not for these guys.

Jim cramer wrote a column yesterday that said this is about as cheap a deal as he could pull off if it removes uncertainty.

Almost look at it as a net present volume races as well.

How does he go as a favorite to anchor washington, obama's favor banker, to where he is on the cover every single day with a fine or penalty or some type of bad behavior?

This is the price you pay for being number one, for starters.

You're the biggest target out there.

On the other hand, his aggressive demeanor certainly endeared him to no one in d.c. over the last several years.

Duff mcdonald with us as well as richard clarida.

Lots to talk about putting his superb expertise on germany.

This text has been automatically generated. It may not be 100% accurate.


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