Nariman Behravesh, Chief Economist at IHS, on the Spain Rescue Plan

Stephen Ames curry is the winner of our gas card today June and it looks like stocks have turned slightly negative. They have the Dow is now down fifteen points S&P 500 down one NASDAQ down five. Well up six cents the -- US and one point 623 down tiny bit. You've got gold down four dollars to 1587. We got rid of the -- situation and now I guess everybody's worried about Greece Ari that's next guest. Our guest is -- -- of -- He's from IHS capabilities you may have seen him on Bloomberg television in CNBC in the past were honored to have -- against merriment welcome to the show are you today. Thank you very much and I'm fine how about you. Well we're doing great but we're trying to figure out the European problem I know you've got some expertise in this. Help us understand. Last night -- on come on follow in the futures the markets way up. Then this morning -- come in and then not so much you'd given it all back with what's going on why why isn't. Why isn't the market responding in a more positive fashion what's going on in Spain. Well I think the way to look at it is that clearly is some good news but it is of the Spanish government ask for help -- got it from the European Union but I think what's needed -- for the for the Spanish government at the clean up the banks they really need a that is a lot of toxic. Loans in their mostly related to real estate so the next step is they've got to clean up their banks and I think the markets -- little worried about. But the fact that they haven't done that so far and that they'll continue not to you're going to forwards. I think that's what's going on them and -- you've got as you were saying earlier that the -- elections looming this weekend and so I think everybody's sort of quite worried and every area in quite jittery. Normandy the -- has the European banking crisis hit its peak yet and the reason masking his. You know we kind of hit our peak of the crisis in the fall of 2008. And it's almost four years later and we're still in recovery I'm not sure you're -- at the bottom. I completely agree review amid notes can't you first question. The European banking crisis has not hit its peak I think we still -- -- a -- as. And you're absolutely right that assuming that gets all the way that hours -- more the last. That it will take years scorer from growth to recover so unfortunately. Even in the best case scenario we're looking at a total loss decades for Europe. Is that lost decades permeate throughout the rest of the world -- -- do you is that going to impact is that gonna slow down. Our economic recovery here is -- a slowdown Australia South America. Africa would like to develop and I wonder what it would impact it has on the world -- economy of course Chinese have to considers well. Yeah it would have been impacted abuses for the US we only export about. 2% -- GDP to -- Europe compare that -- in effect the consumer spending is seventy. Percent of GDP so in that sense the vulnerabilities not huge. But from other countries China you mentioned as it vulnerability quite a bit higher. China much more export dependent we are. So and that's -- China's particularly vulnerable and they slowed down as Europe has gone into recession and yet there are round. Protection. Why is China putting pressure on Europe to try to resolve their banking crisis they seem rather quiet. Well the Chinese style -- to do it in private rather than in public the way we sometimes -- itself. They're putting pressure on the Europeans but it's done very quietly and behind closed doors. What was your impression of Barack Obama president Barack Obama's. Press conference rather impromptu press conference on Friday. Well in -- I think UB US is worried to some extent. But I think it would business started to play a little bit in two. The US presidential election in the sense that the economy still. Fragile in the US and we're growing by the via growth this fragile. And I think the Obama administration -- very worried that if things get worse in your. That could hurt growth here and I could hurt their election. The at the Euro this morning I I see -- trading at about 125 relative to the US dollar. Does that come down further from word is now chairman. Our view is that assuming Greek. -- does accept sometime in the next year which has. Now a lot of them better than 5050 chance the Greece will -- leave the Euro zone and that's an area we would he be your blog about 110 against. 110 and -- what is your prediction for Portugal and perhaps Ireland. Our view is the Portugal and Ireland will remain in the eurozone and Andy -- Greek -- if that happens will be a wakeup call and will galvanize. The Germans and others to do more. In terms of preserving via the -- we do not think. You're gonna break up yet yes we think the greens will leave. We altered the rest of your -- What about probable. -- I've been advising clients to really be cautious as it relates to investing in Europe. Because one their economy slowing down but I'm very fearful that currency declined that you referenced down to a dollar ten. In my giving good advice and inaccurate -- that he or should -- is this a buying opportunity for European stocks they oversold. I would say right now is not the buying opportunity I would advise clients to wait. We're not as you said earlier we're not done with this crisis yet it's still have a ways to Iran we've still got other potential shocks including agreed to expert even though. It's anticipated I think it's still will have ramifications -- no I would say pulled off. Look at how much longer does the European crisis gain all the headlines. All of -- my -- that is gonna go on for a couple more years that leave. Part of problem is that the politicians really happen. Don't witness in the decisive way yep -- that just hope took time also to appeal and it out. The European leaders he would you know we have a socialist now that's the president of France. How do they feel about Mitt Romney when -- when when they're looking at their situation their saint who would we rather do business with over across the pond they have a preference of Barack Obama over Mitt Romney. It's a little hard to say at this point that obviously they're trying very hard to stay out of the US. Elections in terms of any statements they make it mean certainly leftist government as in the case of France. Would feel more so that tomb -- mr. Obama met with mr. Romney. Whereas the rightist government station in Germany -- I'd write this is too strong toward the center right governments. In Germany and and staying with would feel a little more so into and mr. Romney at recess at this point they're trying to stay out of the US presidential election. Probably a good idea and there -- On the arm and thank you very much for your time I sure appreciate your insight about my. That's now are meant -- joining us today from my HS capital insights what a great resource to make available to our listeners here in England.