Fed Taper Is Dead on Government Shutdown: Carnell

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Sept. 30 (Bloomberg) -- Robert Carnell, chief international economist at ING Bank, talks with Guy Johnson about the stalemate in Congress that would force a U.S. government shutdown and its possible economic impacts. He speaks on Bloomberg Television’s “The Pulse.”

Reward stop -- reward.

If you look at the situation in front of you and say what is most probable and weight that against the impact the various outcomes, how would you see landscape?

Read that.

-- pretty bad.

The copperheads the budget agreement, -- a comprehensive budget agreement, there is none.

Usually, when we talk about is 40 or 60. this is none.

You have as much chance of israel and iran reconciling.

They cannot agree that they cannot come up with a realistic budget agreement.

I hate the use the phrase of kicking the can, but, another year would be good.

You're taking the government out of the economy and taking all of the things that are baked in the cake come through.

It could be an outcome that would be good.

It would be stimulatory?

It would be stimulatory.

The fiscal drag is about one percent of gdp.

Get the lead out and let the economy do its thing.

What would gdp look like under that scenario?

Less than two percent.

A bit less than three percent next year.

Not too bad or not too shabby.

People will be happy.

I think that would be a good outcome.

Balaji was signed to a -- what would you assign to a e long dated government shutdown -- elongated government shutdown.

Fairly high.

You will not get a government shutdown done anytime soon.

This is -- obamacare is anathema to the republican party.

Watering it down is not enough.

It has to die.

Obama got voted back in on the basis of obamacare.

Republicans will have to cave on this aspect.

I think they have to.

In the end, what happens is a backlash neil after it.

-- from the electorate.

They not prepared to run this.

This will affect things terribly and the electorate will say, we will vote you out.

Obama is making, they're shooting themselves in the foot and i will let them play this game and stir them up.

Taper and debt.

He did a long time to say that this was a problem.

-- it took a long time to say that this is a problem.

The get taper -- debt taper, the economic impacts could linger with us and we will not know until early 2014. i was told i was barking up the wrong key with the fed.

He said that the fed is dammed if they do and dammed if they don't. if they do not taper and economy, that is bad.

How does the fed stack up credibility and economics?

The economic data has looked ok and would justify them tapering months ago.

They are not doing half of the qe that they have done.

Things will be a lot softer on the consumer spending side.

Confidence will be collapsing any markets will be full.

Stock market hates this environment.

This helps them.

Once you have this out-of-the- way, we are back to credibility affecting this issue.

Say this last for a couple of months and we get this out of the way, what do they do?

Does that speed the time on up?

-- the timeline up?

Trying to reconcile the labor market with what is pretreated -- pretty committecommitted.

We're getting close to the point where we should say that we are getting -- we should have cleaned -- can used to levi now -- finished she we by now -- quantity easing by now.

Does this, from a european perspective, does that mean that connie's job is easier?

The tightening that we're getting from united states becomes a little less than we thought it was going to be.

We are talking about draghi pulling the trigger.

Good question.

The european dynamic has as much to do with what is happening in europe.

A week ago, things looked ok.

Now, we have the political stuff coming back in the money market situation is not helpful.

I think it will be chatted about for some time.

Where the fed is not helping is by taking away the taper.

They are allowing the euro to stay strong.

The ecb, to some extent, is dammed if they do and dammed if they don't. thank you very much.

Joining us from ing.

Guy, we have played to talk about.

-- lucky to talk about -- plenty to talk about.

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


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