Mike Pento Sees Sovereign Debt Crisis 3 Years Away, Hobbs vs. Pento (CNBC Video)

Michael Pento, Chief Economist at Delta Global Advisors, appeared on CNBC on July 16 and debated with Simon Hobbs and Daniel Gross of Newsweek. As always Pento made some interesting points about the economy and unleashed some data. CNBC's Hobbs put up a good fight though, until maybe the AAA credit rating part, I'll come back to this post in 3 years. Pento still sees trouble on the horizon for the US economy and told Hobbs he was writing off the economy for years. This was a decent debate. Below are quotes and the CNBC video. The original topic was why S&P 500 companies are hoarding so much cash.
Michael Pento:

"Corporations will spend their cash when they believe final demand will be there"

"Consumer is still in full deleverage mode, their savings rate is about 4%, it should go much much higher"

"Companies are very afraid of having another Fall 2008 event, they are hoarding cash because the money markets got completely frozen in 2008....."

"It is very rational because the next credit crisis will be a sovereign debt crisis and it's about 3 years away"

"30 to 50% of all Federal tax revenue will go to pay the interest on the debt in 2015"

"Total household debt now stands at 92% of GDP, it's normally about 42% of GDP. Households have a lot of deleveraging ahead of them so they're not going to spend money if there's no final demand" (at all time record highs, consumers must reconcile balance sheet; sell assets and pay down debt)

"Our worst troubles are ahead of us because we bailed out the private sector by seriously endangering the public sector, and you can't do that"

Simon Hobbs:

"The AAA ratings will always stand in this country"

"American Government can always tax people more, it will always pay its bills".

Michael Pento:

"Well triple A ratings held up for Enron too and CDOs but they still collapsed"

Simon Hobbs:

"You are just peddling the power of nightmares!"

Recent: Michael Pento: Double Dip Recession Assured, US Never Healed (Debt/GDP 370% and Rising) http://www.distressedvolatility.com/2010/06/pento-double-dip-recession-assured-us.html

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