The Economic Contrast Between Europe and the U.S.

Published on
August 12th, 2019
33 minutes

The Economic Contrast Between Europe and the U.S.

The Expert View ·
Featuring Megan Greene

Published on: August 12th, 2019 • Duration: 33 minutes

Megan Greene, senior fellow at Harvard Kennedy School, gives a forward-looking view of the American and European economies. In the U.S., she is somewhat concerned about the manufacturing sector and the inverted yield curve. However, she says that Europe is where the real trouble lies. Filmed on August 2, 2019 in New York.



  • DS
    David S.
    13 August 2019 @ 20:19
    Italy cannot just pull out of the Euro as no one will buy its debt at such a reduced rate vis-a-vis full risk adjusted interest rates. It has the choice to stay in and having lower interest payments or bankruptcy. It is reasonable that they will stay in and get away with as much as possible. DLS
    • JM
      John M.
      18 August 2019 @ 20:07
      Haven't other countries have chosen bankruptcy? Isn't Argentina always going bankrupt? I thought they floated a 100 yr bond just a few years ago? (and it was fully subscribed?) BTY the bond is only worth roughly 50 cents on the dollar. Why can't Italy go bankrupt - They are bankrupt!
  • GF
    Gordon F.
    13 August 2019 @ 21:07
    Well worth listening to, but as I have asked RV many times before, could you PLEASE have a voice-over of the questions. I listen to these, rather than watching them (just a talking head, after all), but not being able to hear the questions makes it harder to follow the comments. It could be any of your very able interviewers, or even a text to speech robot. I just need to HEAR the questions. Thanks!
    • EM
      Edward M.
      14 August 2019 @ 19:47
      I agree.
    • JM
      John M.
      18 August 2019 @ 20:02
      Couldn't agree more, this has been mentioned before - so true! Why does it never happen?????
  • IP
    IDA P.
    12 August 2019 @ 20:53
    Europe: negative rates made savers feel that they have to save more to compensate the negative earnings on their savings..... please tell Draghi.....
    • IP
      IDA P.
      12 August 2019 @ 20:55
      The definition of insanity is doing the same thing over and over again and expecting a different result. These words are usually credited to the acclaimed genius Albert Einstein.23 mar 2017
    • WM
      Will M.
      18 August 2019 @ 14:41
      Draghi has done his damage and no longer counts (until he runs for some other political office). Christine Lagarde is now in their to manage the next big change at the ECB ..... I have read that she has said negative rates didn't go far enough, though don't have the reference to quote. If so though, -ve 3% here we come!
  • DS
    David S.
    12 August 2019 @ 19:35
    I would like to know Ms. Greene's outlook on defined pension plans in Europe and the US. Pensions were not mentioned in the monologue. She did address the bank problems with lower rates, but defined pension plans are in even worse shape. I agree that the consumer will keep us out of recession, so government pensions may be funded by higher taxes. Private pensions, however, are in deep kimchi. DLS
    • WM
      Will M.
      18 August 2019 @ 14:37
      Great comment DLS. So many European pensions are mandated to buy what are effectively loss making government bonds that the pension system philosophy of building balance through profitable investments is negated. The baby boomers are in for a huge shock as their pensions will likely be trashed/curtailed as a result.
  • OC
    Otto C.
    15 August 2019 @ 16:04
    I don't understand why some "experts" keep comparing current situation with 2011 or 2016; those were simply early and mid cycle corrections. We are at end-cycle.
  • PD
    Peter D.
    12 August 2019 @ 23:58
    Ms. Greene is wrong about everything. 1. We are not in a slowdown, but - using a properly adjusted GDP deflator and adjusting GDP for debt growth and growth in unfunded liabilities, - we are in synchronized global Depression. With a "D." 2. Like most of the Harvard team, Ms. Greene simply compute understand the implications of the long-term credit cycle. - which their borrow, print and spend team have been preaching for five decades - with no-one calling them on it. 3. For someone in the Kennedy School of Government not to understand that the previous Yuan-dollar peg was negotiated in the backrooms by Treasury officials on both sides (as was the de-peg) is stunning. Both Trump and Xi win this "War" as they both get to increase taxes (tariffs) - by blaming the other side - and to protect their favored industries, either through subsidies or compensatory exemptions. China gets compensated by the devaluation. 4. No systemic bubbles? How about TOTAL global debt (personal + business + government) as a percentage of GDP? Nothing to see there I guess....
    • PD
      Peter D.
      13 August 2019 @ 00:00
      Sorry, meant to say.... "Like most of the Harvard team, Ms. Greene simply CAN'T understand ...."
    • JN
      John N.
      13 August 2019 @ 07:09
      Thx for your 5 cents. I can't prove wrong any of you, but good to hear some other opinion.
    • JL
      James L.
      13 August 2019 @ 11:08
      I would happily bet that shes done waaaaaaaaay more analysis than you.
    • PD
      Peter D.
      13 August 2019 @ 19:45
      Yes James L. I am sure all of the Harvard team works hard. And I am sure that you can point to one recession (anywhere in the world) that Ms. Green, Larry Summers, or any other Harvard professor called one year in advance. Can't? Not surprised. Because consensus economics forecasters have never forecast a recession one year in advance. Ms. Greene and her ilk will thus - almost certainly - miss the next one too.
    • DS
      David S.
      14 August 2019 @ 23:10
      Peter D. - Is your problem with Ms. Greene, Harvard or just any economist? It is necessary to make up your own mind about the future before you invest. More points of view in your thinking the better chance that you will make good investments. I completely agree with you about the debt problems. It is reasonable that the world economy is slowing down; it might then go into a major recession. Timing can make both statements correct. Many investors make money by timing both. I am not that smart. That is why I own gold and waiting for the big one. DLS
    • PD
      Peter D.
      15 August 2019 @ 10:54
      David S. Thanks for your comments. I reviewed my initial post and two replies, and they continue to reflect my thinking. The economic models used by the top practitioners are broken; they have been for some time; and this is now apparent for non-professionals - who have the time to cut through the BS - to see. That said, you correctly identified that I have a "problem" with economists from the top universities, who should be speaking out about the lunacy of the tax-spend-borrow-print model that they enabled. Instead they act as if we are entering another standard "slowdown" and that with just a little more government spending and printing everything will be fine. As for gold, I invite readers to re-watch Ms. Greene and to decide whether they trust Harvard, or whether they'd like to hedge their bets.
  • CL
    Chris L.
    14 August 2019 @ 15:51
    OK, so lets bring back real vision circa 2015-16.
  • IH
    Iain H.
    14 August 2019 @ 06:28
    I my opinion, the real economic problem faced by almost all countries is that, mainstream economists see the solution to every slow down is supporting the existing infrastructure, effectively building in the problem that is working as a drag, things like over indebtedness, inequality, concentration of industry and financialisation of economies generally. That is how we get political volatility. Unfortunately only a real crises brings change, so called economist experts have not learnt how to say I was wrong we need different solutions than those we have applied in the past.
  • RI
    R I.
    14 August 2019 @ 00:37
  • SP
    Steve P.
    12 August 2019 @ 22:44
    This overview from a leading economist shows how the profession tends to miss the over riding problem the world now has - a totally maligned global monetary system based on the $US and a rapidly dwindling Eurodollar system. Megan tends to see a recession globally as another cyclical slowdown now overdue and It will be a short inconvenience to the USA. I'd suggest taking a much broader look at the absolutely insane state of global finances as they now stand. The probability of the whole financial system being totally upended in the next decade is rising daily. Listen to the growing chorus of the big money managers out there telling us how Central Bankers have dug the world into a deepening pit of unsustainable debt and the inevitable consequences. Global bond markets and the price of gold are strongly indicating the exact same premis - that we are headed for a structural over turn of the monetary system now in existence. That will be very different to a cyclical recession of a year or two's duration.
    • BM
      Beth M.
      13 August 2019 @ 22:08
      Very well said...I love reading the comments first so I don't waste my time. Thank you Steve P.
  • JD
    Jarod D.
    13 August 2019 @ 20:42
    Interesting perspectives. I like the idea of borrowing at negative rates and saving at positive rates. I'd like to take out a personal loan for $10 Trillion please. I promise I'll pay it all back, minus interest.
    • JD
      Jarod D.
      13 August 2019 @ 20:45
      In reality, I'm sure they would put restrictions on carry trades in this scenario. It would be interesting to see the creative ways people would find to get around those restrictions.
  • RM
    Russell M.
    13 August 2019 @ 19:37
    A very concise and interesting survey of global economic conditions and risks. I thought it was very helpful in understanding the global economic landscape and triggers.
  • FG
    Frederick G.
    13 August 2019 @ 18:14
    did anyone learn anything or was this the FT summary of consensus views?
  • RH
    Robert H.
    13 August 2019 @ 12:52
    Q: Is each major zone of the big 3 tangling with "policy" or "stimulus" by morons in the policy making offices who gave "stimulus" (tax payer cash) to prop up a financial hit 10 years ago that has killed the hope of grandparents' trip to Hawaii, raised taxes, and put a record amount of cash on the side doing shit, while govts are the largest debt holders? Seems the fridge is full and the kids moved out. I believe "policy" is toast. Q: Is there reason to believe currency brainiacs will come up with some "policy" as the USD assets keeps getting bought? Q: Are Europeans going to love a 90-cent Euro as much as Mexicans love their Peso? Q: Is the average investor going to believe that the ECB has the cajones to pay banks to borrow and it will work? That is some majorly fucked up math.
  • PJ
    Peter J.
    13 August 2019 @ 11:55
    Surprised that there was no mention of the euro$ in Megan's case. Surely, it is the key to how the whole global macro functions (or doesn't) and has a direct impact / influence on how and what each of the different economic blocs can do.
  • WM
    William M.
    13 August 2019 @ 06:33
    Megan covered a lot of ground efficiently, quickly and clearly, Very impressive presentation. To those who say it's just an overview, I'll bet she could readily go into much more detail if asked back, which I hope she will be....
  • DH
    Dabangg H.
    13 August 2019 @ 05:09
    Did not learn anything new from this talk....
  • SM
    Stephen M.
    12 August 2019 @ 20:11
    Interesting, however, surely the services sector is there to facilitate the manufacturing sector. Although manufacturing has become global, any slow down will have a knock on effect with services. After all, when everything is said and done, capitalism is still a system based on buying stuff and lots of it. Isn't it a case of value chain to some degree, with the trickle down not being felt straight away in services? More of a question than a statement.
    • DS
      David S.
      13 August 2019 @ 02:11
      You can buy services. DLS
    • SB
      Stephen B.
      13 August 2019 @ 03:30
      I think you are absolutely correct.
  • AL
    Adam L.
    12 August 2019 @ 18:38
    She doesn't come across as someone who has skin in the game her, i.e. holding positions. I may be wrong.
    • CT
      12 August 2019 @ 20:10
      Does not make her wrong. Point about skin in the game is grossly inflated
    • DS
      David S.
      13 August 2019 @ 02:14
      Skin in the game means more to me when it is on a trade. An overview is different. DLS
  • EK
    Edward K.
    12 August 2019 @ 22:02
    Interesting point about Europe raising interest rates as a stimulus. If credible why such a tone-deaf environment there? Next down turn crisis will require new thinking. Found this video to be a useful perspective. Italy seems to be the fulcrum point of the EU.
  • wj
    wiktor j.
    12 August 2019 @ 21:10
    ECB and europe will see hyperinflation if the banks start to borrow with negative interest rates. In Denmark yes there are risky mortgage loans with negative interest rates but institutions that offer that you pay a tax called Bidrags sats. So the consumer doesn't get negative interest rates.
  • MM
    Mike M.
    12 August 2019 @ 20:31
    Need a lot more of her.
  • IP
    IDA P.
    12 August 2019 @ 20:29
    very competent, and unbiased, thanks for this interview
  • CB
    C B.
    12 August 2019 @ 20:24
    Best global economic and policy overview on RV in quite a while. It would be nice to pair her insights with an investment strategist who could provide the corresponding outlook for assets in the various regions.
  • CW
    Christian W.
    12 August 2019 @ 19:34
    Factual error regarding reforms in Germany. Last wave of labor market reforms (so-called Hartz reforms due to the name of the respective economic advisor) were conducted in the early the 2000s (not 1990s). The political repercussions cost then-chancellor Schroeder his job and brought Angela Merkel into power in 2005.
  • MS
    Matthew S.
    12 August 2019 @ 17:55
    Good overview of completely consensus viewpoints...
    • CB
      C B.
      12 August 2019 @ 19:03
      Megan mentioned that the Fed saved a recession in '15-'16. However it was the other global central banks that were in full blow currency creation mode. Now that backdrop is different. Won't the CBs need to go back to injecting 'cocaine and heroin' in order to prevent the negative feedback loop that brings on recession?
    • TO
      Tal O.
      12 August 2019 @ 19:16
      Agreed. But its nice to know a lot of people are on the wrong side...
  • ag
    anthony g.
    12 August 2019 @ 18:24
    Enjoyed this one. Thanks to RV and Megan Greene.
  • DN
    Douglas N.
    12 August 2019 @ 16:16
    Very clear and concise overview. However, I must say I wince when I hear "the consumer is very strong" in such a matter of fact tone... that's like hearing the FED PhD's take on inflation!
  • JB
    Jon B.
    12 August 2019 @ 12:57
    depth and breadth hugely rewarding insight. Think I managed to appreciate all observations first pass without reaching for investopedia
  • DS
    David S.
    12 August 2019 @ 09:53
    Well done. DLS
  • MM
    M. M.
    12 August 2019 @ 09:36
    nice overview!