that washington needs to cure its debt addiction also as we just mentioned in that interview with max wolf the beijing has suggested a new stable reserve currency saying it's needed instead of the dollar will concerns also rising in asia largest economy india where the finance minister called the situation grave and reports now from new guinea. markets are tumbling they were tumbling on friday obviously we don't know what's going to happen on monday in specific reaction to this news but many analysts many financial analysts here predict that business especially after the u.s. debt ceiling debate that will go along and in many ways is what people are saying led to these. lower approval rating thank us you could say so the markets have tumbled here people are losing confidence in the american economy obviously there are things that soaring there is think a lot of decisions not specifically being made when it comes to that two point four trillion dollars in cuts a lot of people are wondering if the top of the u.s. this along to come so it's just to raise the debt ceiling how much longer could

really really cripple what's already seems to be a worsening recession here in the united states max wolf a senior analyst at green cross capital believes that this may just be the beginning of more serious trouble for the u.s. economy. it sets up an environment in which symbolically politically and economically the united states' leadership of the global economy has another kind of strike against it does reduce people's confidence people get scared they run away from riskier assets i think the bigger risk is to that we're going to market with a very fragile situation in u.s. housing as well as student loans car loans credit conditions generally and i would remind people too that ason pete didn't just downgrade the united states they put us on further downgrade watch so they're suggesting that this downgrade may be big to be in in the process and not the end i do think that the leadership of the united states and therefore the dollar has come in for increasing question over the last few years we know the direction that this is heading in more or less down the problem we have is that there

but the damage was already done as the political haggling undermined investors' trust economists max wolf says brace yourself for a stock market where costar on. monday. i do think that sunday night local time here in new york or monday morning for asia when the markets open in new zealand australia and then quickly thereafter in north east asia we're going to see some of the dislocation that we had all here i was we kind of headed into this disaster over the last month or two complicated which is actually mentioned in the press release complicated by the complete dysfunction of the u.s. congress we're going to see another shockwave hit into a global economy and global financial markets have spent the last week fall down a flight of stairs so i think we're at a very sensitive vironment here and while there's no good time to be downgraded the timing of this s. and p. downgrade of the u.s. from aaa to double a plus could not be workers it sets up an environment in which symbolically politically and economically the united states leadership the global economy has another kind of strike again

and max wolf a senior analyst at green crest capital says this is just the beginning of more serious trouble for america it sets up an environment in which symbolically politically and economically the united states leadership of the global economy has another kind of strike against it does reduce people's confidence people get scared they run away from riskier assets right and bigger risk is to the words market good very fragile situation and u.s. housing as well as car loans. credit conditions generally and i would remind people today the s. and p. didn't just downgrade the united states they put us on further downgrade watch there suggesting that this downgrade may be big it beginning of a process and not be am i do think that the leadership of the united states therefore the dollar has come in very creasing question over the last few years we know the direction that this is heading in or last down the problem we have is that there is no other currency presently position to fill the shoes of the u.s. dollar i mean the euro normally mentioned as a possible replacement is in the sha

like with tea party republicans steering the ship of state hostage taking politics i'm joined by max fraud wolf economist at the new school university graduate program in international affairs and of imposed blogger max welcome to the program. thanks pleasure to join you it's great having you with us everyone keeps blaming europe for american troubles this seems to be the main name in the main stream media is it the other way around as a possibility the way around that european markets are crashing both because they see the u.s. economy in its death throes and because of of the damage done a couple of years ago by american bankers. well i mean certainly there's a feedback loop so weakness in europe and japan always reverberate in the united states and american weakness reverberates elsewhere clearly the financial crisis of zero eight zero nine started inside the united states and is intimately entangled with mortgage financing here the debt load of the u.s. consumer and some rather unfortunate financial practices not exclusively emanating from the u.s. but in many ways disproportionately from t

i mean while economics expert max frog wolf says the compromise achieved by u.s. legislators really changes the speed of that growth without solving the bigger problem. this whole crisis started as an opportunity of political theater these guys couldn't even choreograph success out of their fake crisis and so now we have a huge international failure which has already gone possibly lasting and certainly serious damage to the standing and reputation of the united states of america how hasn't much been mentioned that not a single plan out there reduces the national debt they just change the speed by which it grows all the showdown all this fanfare is about changing the exact forecast ten years speed of debt growth none of these plans make real efforts to reduce the long term problem of insufficient revenue and these plans do reduce spending in ways that will be painful and for many communities in the united states transformative but that will only reshift focus on to the more important long term issues of the absolute in sustainability of being committed which we are

happens next when it comes the economy let's see if my next guest could help us figure that out max red wolf is a professor of economics at the new school and joins us now from new york welcome back to the program max so how do you really do the fed tea leaves here i mean are bringing his hands actually tied or is there more that the fed could and should be doing. i think there are a few more things the fed could do it should be fair ben bernanke is starting to see the fed b.s. politicize this fiscal policy from the obama administration has been for several years in addition to which the fed has done quite a bit and has continued to do quite a bit from historically low interest rates kept now for several years august ninth decision to keep them very low those interest rates at least through two thousand and thirteen rather year and a half or so i've normally large and sustained interventions from the bad that we've seen this sort of fiscal policy response be muted it passed them to some extent but we're doing in fiscal policy adjustments to our tax level and our spending is actually contract