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American Morning

America's New War: Economist Survivor Gives Perspective on Economic Outlook

Aired September 17, 2001 - 10:06   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAUN, CNN ANCHOR: Joining me right now is Maria Ramirez who has had some insights into the 1/2 point rate cut today and what the markets might doing.

For starters, let's talk about the rate cut.

Lou Dobbs reported early this morning, it was expected, and he doesn't expect it to move the markets all that much today.

What do you think?

MARIA RAMIREZ, ECONOMIST SURVIVOR: I do think that, as of Friday, the 50-basis-point rate cut that the Fed just announced this morning was pretty much priced into the market. But I think that more than what the Fed has done is what the Fed is likely to do and what we're likely to get as a stimulus to the economy that might be more important than interest rate cuts.

ZAUN: And that would be what?

RAMIREZ: And that would be, I think, government spending, fiscal spending that you have, I think, locally and here at the federal level, because we know that the tax cut so far has not really done much. But I do think that the additional stimulus in spending, although it might be more located right here, certainly is going to help the economy to revive itself.

ZAUN: Can you even begin to imagine what kind of debate that will be on Capitol Hill? I mean, obviously, no one wants the United States to go in a recession, but at a time when there's a battle over the Social Security trust fund and the Medicare and Medicaid, you can imagine that is going to be -- there will be a lot of blood letting, no?

RAMIREZ: Well, I do think that all of those issues are on the back burner right now, because I think people are worrying more about the short-term. And I think that the cohesiveness that we have in Washington right now, I think throughout the nation, in terms of the spirit, it's very much unified. I think that the disagreement that they would have had a week ago, really, you know, sort of history right now because I think that the primary thing right now is to get things sort of upstarted and united in a united effort on all fronts. I do think that there's a pretty much a clear way, whatever needs to spent, it's going to be spent, and then we'll take care of that after -- other issues after.

ZAUN: I didn't get to say this in the introduction to you, but you are, of course, an economist, but you also happen to be a World Trade survivor. Where were you on the day of the attacks?

RAMIREZ: Well, at 8:30 in the morning I had a meeting at Two World Trade Center, visiting one of our clients on the 55th floor of Two World Trade Center, and, of course, as everybody stated, about ten-to I heard a loud thundering noise, I thought it was something on top of the building, but immediately there were things flying around on fire, like paper on fire and metal. So I made my way down to the 38th floor, walked through the staircase, but it wasn't moving very fast. So I took an elevator, something that you probably shouldn't do, but my gut instinct was that the elevators were probably working and there was an express elevator to the first floor.

I crossed the street, went into our building, which our office is on One Liberty. And as soon as walked into our building, then the other plane came, and of course the rest is pretty disastrous.

ZAUN: Basically, what you are saying, your life was saved by doing something that every investigator tells you not to do. If you hadn't gotten out at that point -- the collapse of the building didn't follow that far after?

RAMIREZ: The problem was that when I got to the first floor of the building, basically, security was saying that everything is safe in the building, which is was, because nobody knew what was going on, and to calm down. But my instinct was that you know, you shouldn't be calm, you should run away from a disaster. And I ran down to Pace (ph), actually, the school that I went to, and I stayed in the library. As soon as I walked into the building, then one of the buildings came down, of course; there was mass pandemonium and you couldn't see anything outside.

But I'm glad I followed my instinct. I think most of the people did, and I think that for those that had their instincts and couldn't get out, it's a horrendous, horrendous tragedy that I think will affect all of us, either if we were there or not, the rest of our lives.

ZAUN: You are one lucky woman. Come back to the psychic of folks in our massive audience who are investing today, they're looking at these numbers, the Dow now down 580 points, the Nasdaq down 103. What's the best piece of advice you can leave those investors with...

RAMIREZ: I think it should stay put. The market right now is in a freefall. I think the U.S. economy is resilient and I think that we'll come out of whatever problems we have. We still are the best place in the world, I think economically-speaking. So I think that even this is something that we'll come through OK. But I do think that the best thing to do is to stay put and not to panic because probably that's what people would like us to see on the other side of our enemies, basically.

ZAUN: What is your reaction to what Treasury Secretary Paul O'Neil told Lou Dobbs on the floor of the New York Stock Exchange, quote: "We will set records in the not-too-distant future." Some would say, and I've heard some of the experts out here this morning saying he's smoking something. Is he being overly optimistic?

RAMIREZ: Well, I think that it's good for us to be optimistic. I do think that...

ZAUN: But overly optimistic, is the prevailing word.

RAMIREZ: I think that the last time we went to a recession was two quarters and the financial system in the U.S. was really in bad shape. The financial system is good shape. I think U.S. companies are generally in good shape. The U.S. consumer, I think eve though we've seen some bad numbers, I think that we'll have not a long-drawn- out recession. I think we have a couple of quarters probably negative growth, and the second quarter might have been negative already. Third quarter doesn't look that great. But I don't think it's going to be a long malaise that we used to have in the old cycles with the recessions to be a lot steeper a lot longer.

ZAUN: Maria Ramirez, thank you very much for joining us this morning. We appreciate your perspective.

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