U.S. Adept at Inflicting Sanction Pain: Matus

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July 25 (Bloomberg) -- Drew Matus, deputy chief U.S. economist at UBS, discusses the impact of trade sanctions against Russia. He speaks with Alix Steel on “In The Loop.”

Can talk all they want about how they don't care about the sanctions, they are not concerned, but clearly it is having an impact on their economy.

And you always have to look at what people are doing, not what they are saying.

If you say something is not going to have an impact and then you raise rates, you are not being up front.

Of coarse sanctions are going to have an impact.

The u.s. is -- we are very adept at figuring out where the pressure points are an very good at pressing on them.

We've had a lot of practice over the last 20 years.

We had iraq and iran sanctions, north korean sanctions.

We know how to do sanctions in this country.

We do them pretty well.

I suspect that we will start inflicting more and more pain as time goes on.

The u.s. exports so far are still up 60% year on year in 2014. it seems like the sanctions threat is not factored in at all.

There is a huge risk that hasn't been discovered yet.

It is 60% on a relatively small number if you compare it -- our biggest trading partners are canada and mexico, and they are are not -- i don't think there are going to be sanctions on either one of those anytime soon.

It's not exactly the lowest country on the totem pole.

But it's not the highest.

It's not going to make a huge difference.

We export a lot of food and capital equipment.

Those are pretty sticky items.

If you made the order for the capital equipment, you probably want order the -- the capital equipment.

And food, especially if you need to eat.

It is not like we are selling a lot of consumer goods into that country.

We talk a lot about the european ties are financially and economically to russia.

What he pointed out was that the underwriting in russia, most of it is done by european banks, by a staggering amount, 63%. how can they do business if we see much more material financial sanctions going forward?

It will depend on the nature.

If you've been watching some of the press conferences from the state department and the like, they have gone out of their way to not impede that kind of activity.

It seems like at some point europe will have to make that kind of call.

It is not entirely clear what direction we are heading in.

This -- the downing of the airliner, was that the worst it is going to get, or is it going to progress beyond that point?

The real risk for the u.s. lies in financial markets, our equity market response to these kinds of events, to the geopolitical events.

If that ends up being relatively contained, then the impact on the u.s. does not have to be that significant.

A comment on twitter about sanctions, basically saying that it is likely and details will be worked out.

Perhaps it would be improved -- approved by july 29. some sanction -- some countries will want more sanctions because they are more threatened by a bigger russia.

When we look at their russian economy -- what does the european economy look like?

Europe is growing slowly.

They have a lot of risk out there.

This isn't going to help.

Not everything has been cleaned up.

You have this disinflation issue, which draghi is saying might require quantitative easing.

We are not sure what form that could take.

You wonder if that rhetoric will step up more if we see sanctions against russia.

You need to have something behind the rhetoric.

Draghi -- nothing happened with the -- but there was a great market response.

One of my colleagues likes to call him the central banker of the decade.

Everything he says everyone listens to.

There is deceleration in activity coupled with disinflation.

The mechanism for qe could come into question.

There better be something behind it.

Listen to what i do, not what i say.

Thank you so much for joining me.

Kids often get jobs working in fast food, but not as ceo.

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

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