1 00:00:06,840 --> 00:00:09,920 Speaker 1: Kiyota. I'm Chelsea Daniels and this is the Front Page, 2 00:00:10,400 --> 00:00:17,080 Speaker 1: a daily podcast presented by the New Zealand Herald. As 3 00:00:17,200 --> 00:00:20,520 Speaker 1: votes continue to be counted in the US, President elector 4 00:00:20,600 --> 00:00:25,560 Speaker 1: Donald Trump has swept all seven battleground states, confirming his 5 00:00:25,800 --> 00:00:30,280 Speaker 1: dominant performance in the country's election. While many were shocked 6 00:00:30,320 --> 00:00:32,960 Speaker 1: that the US would return to Trump after four years, 7 00:00:33,360 --> 00:00:36,199 Speaker 1: many voters have made it clear their feelings about high 8 00:00:36,280 --> 00:00:39,839 Speaker 1: inflation and the cost of living under the Biden administration 9 00:00:40,320 --> 00:00:45,680 Speaker 1: swayed them towards the Republicans. It's a similar sentiment that 10 00:00:45,760 --> 00:00:48,960 Speaker 1: helped National Act and New Zealand first descend to power 11 00:00:49,240 --> 00:00:54,200 Speaker 1: in our election last year. But in a global economic environment, 12 00:00:54,520 --> 00:00:58,440 Speaker 1: how much sway does one political leader have over how 13 00:00:58,520 --> 00:01:04,200 Speaker 1: much you're paying for grocery and petrol? Today on the 14 00:01:04,200 --> 00:01:08,400 Speaker 1: Front Page, we discussed this with NSID Herald Business editor 15 00:01:08,400 --> 00:01:15,880 Speaker 1: at Large, Liam Dan. Liam, are you surprised at all 16 00:01:15,880 --> 00:01:18,920 Speaker 1: that economic concerns were enough for swing voters to back 17 00:01:18,959 --> 00:01:20,399 Speaker 1: Trump in their millions? 18 00:01:21,080 --> 00:01:23,160 Speaker 2: Well, I guess I wasn't surprised. I picked it in 19 00:01:23,160 --> 00:01:26,360 Speaker 2: a column in advance, which is I wasn't rocket science. 20 00:01:26,440 --> 00:01:29,480 Speaker 2: But the reason I was reasonably comfortable with the prediction 21 00:01:29,640 --> 00:01:32,640 Speaker 2: was because I was following financial markets and betting markets 22 00:01:32,640 --> 00:01:35,839 Speaker 2: so closely, and the financial markets really thought that Trump 23 00:01:35,880 --> 00:01:38,600 Speaker 2: was going to win. The economy in the US sort 24 00:01:38,640 --> 00:01:41,640 Speaker 2: of looks good on paper. Inflation is officially back in 25 00:01:41,680 --> 00:01:44,000 Speaker 2: its box, but if you think about it, it's still 26 00:01:44,240 --> 00:01:47,160 Speaker 2: kind of peak inflation because we're still waiting for wages 27 00:01:47,200 --> 00:01:50,360 Speaker 2: to catch up. All the inflation is cumulative, even though 28 00:01:50,360 --> 00:01:53,040 Speaker 2: it's now only rising at two percent. Over the last 29 00:01:53,040 --> 00:01:55,440 Speaker 2: few years, people have just felt like their worse off. 30 00:01:55,480 --> 00:01:57,360 Speaker 2: So I think that's one of the reasons why the 31 00:01:57,400 --> 00:01:58,520 Speaker 2: Democrats got punished. 32 00:01:58,720 --> 00:02:00,840 Speaker 1: What has been the state of the u US economy 33 00:02:00,960 --> 00:02:03,960 Speaker 1: in the last year. Have they seen much improvement there? 34 00:02:04,200 --> 00:02:06,120 Speaker 2: Yeah, I mean they were one of the They haven't 35 00:02:06,120 --> 00:02:08,760 Speaker 2: had a recession, so it's called a soft landing. Given 36 00:02:08,800 --> 00:02:10,480 Speaker 2: what we're all going through, and we've been through in 37 00:02:10,520 --> 00:02:13,800 Speaker 2: New Zealand, all the stimulus for COVID created the inflation. 38 00:02:13,919 --> 00:02:16,640 Speaker 2: Then you've got to take the inflation out by constricting 39 00:02:16,680 --> 00:02:19,600 Speaker 2: the money supply, and that in New Zealand's case, has 40 00:02:19,639 --> 00:02:22,280 Speaker 2: been such an extreme whip saw sort of thing that 41 00:02:22,440 --> 00:02:25,200 Speaker 2: we've gone into recession two or three times and we've 42 00:02:25,200 --> 00:02:27,800 Speaker 2: been in this per capita recession some time, so it 43 00:02:27,840 --> 00:02:30,000 Speaker 2: hasn't been a soft landing here. It's been rough getting 44 00:02:30,000 --> 00:02:33,200 Speaker 2: inflation down. The US managed to do it much better, so, 45 00:02:33,320 --> 00:02:37,519 Speaker 2: you know, I guess there's plenty of commentators and economists thinking, well, 46 00:02:37,600 --> 00:02:40,200 Speaker 2: Biden's done a good job here, and the US Federal 47 00:02:40,240 --> 00:02:42,560 Speaker 2: Reserve done a good job here. They've managed to get 48 00:02:42,600 --> 00:02:46,119 Speaker 2: inflation back down to normal levels without a recession. It's 49 00:02:46,200 --> 00:02:48,960 Speaker 2: quite rare to get that kind of so called soft landing. 50 00:02:49,680 --> 00:02:51,880 Speaker 2: You could make the case that the US economy wasn't 51 00:02:51,880 --> 00:02:54,280 Speaker 2: a good spot or isn't a great spot. Their stock 52 00:02:54,320 --> 00:02:56,880 Speaker 2: markets have actually been good right through the Biden era, 53 00:02:57,200 --> 00:02:59,760 Speaker 2: you know, so it was all good on paper. But 54 00:02:59,760 --> 00:03:01,240 Speaker 2: I think I think that was one of the issues 55 00:03:01,360 --> 00:03:04,839 Speaker 2: was that Americans, and actually you see it around the world, 56 00:03:04,919 --> 00:03:07,360 Speaker 2: people were sick of being told that the economy was 57 00:03:07,360 --> 00:03:09,600 Speaker 2: good because it was good on paper. They didn't feel 58 00:03:09,600 --> 00:03:11,679 Speaker 2: like it was good, so it wasn't good. And that's 59 00:03:11,880 --> 00:03:14,720 Speaker 2: you know that the media, the commentators, the economists, and 60 00:03:14,760 --> 00:03:17,720 Speaker 2: the politicians telling them that. There certainly a sort of 61 00:03:17,720 --> 00:03:18,960 Speaker 2: a backlash against that. 62 00:03:21,520 --> 00:03:23,800 Speaker 3: So the total back in March of twenty twenty for 63 00:03:23,880 --> 00:03:26,320 Speaker 3: this basket of goods yes, I'm an economist. Basket of 64 00:03:26,360 --> 00:03:28,840 Speaker 3: goods was one hundred and seventeen dollars and one cent, 65 00:03:28,919 --> 00:03:31,440 Speaker 3: and today the same basket of goods would cost you 66 00:03:31,480 --> 00:03:34,120 Speaker 3: one hundred and fifty one dollars and ninety nine cents. 67 00:03:34,280 --> 00:03:36,840 Speaker 3: That's an increase of a whopping twenty nine point eight 68 00:03:36,920 --> 00:03:40,080 Speaker 3: nine percent. That's a solid chunk of change. 69 00:03:41,960 --> 00:03:45,960 Speaker 1: Well, the US has the same issues as US, particularly 70 00:03:46,040 --> 00:03:50,880 Speaker 1: with food and energy being more expensive. How much influence 71 00:03:51,000 --> 00:03:53,680 Speaker 1: does the person sitting in the White House or at 72 00:03:53,720 --> 00:03:56,040 Speaker 1: ten Downing Street or on the ninth floor of the 73 00:03:56,080 --> 00:03:59,760 Speaker 1: beehive actually have over those specific costs. 74 00:04:00,160 --> 00:04:03,920 Speaker 2: The cycle economic cycle has been very similar all over 75 00:04:03,960 --> 00:04:07,800 Speaker 2: the western world, so you can understand why some people 76 00:04:07,840 --> 00:04:11,240 Speaker 2: would say, Look, you're getting obsessed with blaming individual politicians. 77 00:04:11,240 --> 00:04:15,600 Speaker 2: It seems to be whoever was in power through the 78 00:04:15,600 --> 00:04:18,000 Speaker 2: worst of that spike has been thrown out, and you know, 79 00:04:18,160 --> 00:04:22,040 Speaker 2: voters have punished the incumbents generally. There are some areas 80 00:04:22,040 --> 00:04:24,960 Speaker 2: of control you could have applied fiscal restraint during that 81 00:04:25,040 --> 00:04:28,839 Speaker 2: period would have limited the amount of inflation. So there's 82 00:04:28,880 --> 00:04:30,600 Speaker 2: all those big tradeoffs, and I don't want to get 83 00:04:30,640 --> 00:04:33,000 Speaker 2: back into that big argument again about how much we 84 00:04:33,040 --> 00:04:35,440 Speaker 2: should have done through COVID. There are arguments about the 85 00:04:35,480 --> 00:04:38,040 Speaker 2: trade offf the health tradeoff and how much we close 86 00:04:38,120 --> 00:04:40,919 Speaker 2: down the borders and how long we're in lockdown all 87 00:04:40,960 --> 00:04:43,320 Speaker 2: that sort of stuff because that cost money. And then actually, 88 00:04:43,400 --> 00:04:45,800 Speaker 2: you know, in this country there's been arguments about how 89 00:04:46,080 --> 00:04:49,160 Speaker 2: tightly the money was held or used and where money's 90 00:04:49,200 --> 00:04:52,400 Speaker 2: gone from the COVID budget to other things, and so yeah, 91 00:04:52,440 --> 00:04:56,000 Speaker 2: I mean, I think there's definitely you can make arguments 92 00:04:56,600 --> 00:04:59,919 Speaker 2: for and against various politicians and political regimes doing better 93 00:05:00,080 --> 00:05:02,960 Speaker 2: than others. But I think the general trend over the 94 00:05:03,040 --> 00:05:06,280 Speaker 2: last five years since COVID, you can see, really didn't 95 00:05:06,279 --> 00:05:08,680 Speaker 2: matter whether you had the Tories and power in the 96 00:05:08,760 --> 00:05:11,640 Speaker 2: UK or labor and power in New Zealand. Those broad 97 00:05:11,680 --> 00:05:13,360 Speaker 2: trends were pretty universal. 98 00:05:13,440 --> 00:05:16,840 Speaker 1: So it's pretty rare that someone say on the campaign 99 00:05:16,960 --> 00:05:20,200 Speaker 1: trial promises to fix the economy being able to actually 100 00:05:20,240 --> 00:05:22,440 Speaker 1: fix the economy when push comes to shove. 101 00:05:22,440 --> 00:05:25,920 Speaker 2: Well, it's about fixing the economy overnight. In the end, 102 00:05:26,160 --> 00:05:29,320 Speaker 2: really fixing the economy means getting the settings right for 103 00:05:29,400 --> 00:05:32,160 Speaker 2: people to sort of create wealth, and that might go 104 00:05:32,240 --> 00:05:34,440 Speaker 2: all the way back to having to deal with a 105 00:05:34,440 --> 00:05:37,160 Speaker 2: better education system, and it you know, a lot of 106 00:05:37,200 --> 00:05:40,719 Speaker 2: people argue it does or some really fundamental settings dealing 107 00:05:40,760 --> 00:05:43,280 Speaker 2: with that. The flip side would be dealing with social 108 00:05:43,360 --> 00:05:47,000 Speaker 2: inequality because that's slowing our economy because people aren't productive. 109 00:05:47,080 --> 00:05:49,520 Speaker 2: But regardless of which political way you look at it, 110 00:05:49,839 --> 00:05:51,960 Speaker 2: there are some really fundamental things you need to do. 111 00:05:52,000 --> 00:05:55,400 Speaker 2: There are some short term things I guess governments can do. 112 00:05:55,480 --> 00:05:58,560 Speaker 2: Depending on their political stripes, you can effectively what the 113 00:05:58,600 --> 00:06:03,320 Speaker 2: governments can do, and what central banks also do is 114 00:06:03,480 --> 00:06:05,960 Speaker 2: just pump more money into the economy or take more 115 00:06:06,000 --> 00:06:08,920 Speaker 2: money out. Any government can pump money into the economy, 116 00:06:09,000 --> 00:06:11,560 Speaker 2: central banks can pump money into the economy. But as 117 00:06:11,600 --> 00:06:13,919 Speaker 2: we've seen, you know that if you just pump money 118 00:06:13,920 --> 00:06:17,520 Speaker 2: in without it being underpinned by real wealth creation and 119 00:06:17,600 --> 00:06:20,839 Speaker 2: basically productivity, which by which we mean you know, people 120 00:06:21,520 --> 00:06:23,880 Speaker 2: making more stuff or doing more stuff to earn money 121 00:06:23,880 --> 00:06:26,719 Speaker 2: for the country from elsewhere in the world, then you're 122 00:06:26,720 --> 00:06:29,240 Speaker 2: just creating inflation. So that's one of the things that 123 00:06:29,279 --> 00:06:33,800 Speaker 2: government's come up against, is just the ability to really 124 00:06:34,120 --> 00:06:37,520 Speaker 2: create long term wealth and to create long term benefits 125 00:06:37,520 --> 00:06:41,280 Speaker 2: for the economy. And that's unfortunately the political system's got 126 00:06:41,279 --> 00:06:45,159 Speaker 2: this short cycle, so it's easy for politicians to think 127 00:06:45,200 --> 00:06:47,240 Speaker 2: short terms, so hopefully they will tend to think a 128 00:06:47,240 --> 00:06:49,440 Speaker 2: bit longer term things like infrastructure as well. You know, 129 00:06:50,080 --> 00:06:52,400 Speaker 2: you just can't turn on and turn off infrastructure. You've 130 00:06:52,440 --> 00:06:54,839 Speaker 2: got to get the planning going over a number of years. 131 00:06:55,080 --> 00:06:57,960 Speaker 2: And that's another big key to our economic success. 132 00:07:08,360 --> 00:07:11,480 Speaker 1: Well, the coalition government here has taken credit for positive 133 00:07:11,640 --> 00:07:15,080 Speaker 1: economic news throughout this year. But how much of that 134 00:07:15,200 --> 00:07:18,760 Speaker 1: is actually because of this government versus the previous government 135 00:07:18,800 --> 00:07:21,840 Speaker 1: and versus I guess global economic movements. 136 00:07:22,080 --> 00:07:24,440 Speaker 2: Yeah, that's interesting one. And some of it, you know, 137 00:07:24,960 --> 00:07:28,360 Speaker 2: it's the central banks, you know. So inflation has come 138 00:07:28,440 --> 00:07:29,920 Speaker 2: right again. I mean, you know, when you look at 139 00:07:29,960 --> 00:07:32,680 Speaker 2: the economy and how much stress people are under, I 140 00:07:32,720 --> 00:07:35,520 Speaker 2: don't know quite what they'd be taking credit for. Yet again, 141 00:07:35,560 --> 00:07:39,080 Speaker 2: it's that thing that the inflation is beaten on paper. 142 00:07:39,240 --> 00:07:41,960 Speaker 2: I don't think the public necessarily feels that good about it. 143 00:07:42,160 --> 00:07:44,360 Speaker 2: And now, of course you've got because of the higher 144 00:07:44,440 --> 00:07:48,040 Speaker 2: interest rates, you've got companies' earnings down and we're in 145 00:07:48,040 --> 00:07:51,040 Speaker 2: this recession. So you know, you've got to be cautious 146 00:07:51,080 --> 00:07:53,360 Speaker 2: what you take credit for at this point. I think 147 00:07:53,400 --> 00:07:56,880 Speaker 2: the government's taking credit for the direction shifting. It was 148 00:07:56,920 --> 00:08:00,360 Speaker 2: going to shift anyway, there's no question about that. Question 149 00:08:00,480 --> 00:08:04,040 Speaker 2: is how quickly and how efficiently, And I guess National 150 00:08:04,040 --> 00:08:06,240 Speaker 2: would argue that the Coalition would argue that it's been 151 00:08:06,680 --> 00:08:09,680 Speaker 2: quicker and more efficient under their regime, and that if 152 00:08:10,040 --> 00:08:12,480 Speaker 2: labor had come in, maybe the spending would have kept 153 00:08:12,480 --> 00:08:15,160 Speaker 2: going and we'd have had inflation for longer and so on. 154 00:08:15,200 --> 00:08:16,680 Speaker 2: But a couple of things there. One is that in 155 00:08:16,720 --> 00:08:19,920 Speaker 2: actual fact, the last proposed budget under Grant Robertson was 156 00:08:19,960 --> 00:08:22,800 Speaker 2: also taking a lot of money out of the economy. 157 00:08:22,840 --> 00:08:25,520 Speaker 2: They were tightening up as well. Whether you believe that 158 00:08:25,520 --> 00:08:27,760 Speaker 2: they would have would have done that or not, that's political. 159 00:08:27,960 --> 00:08:30,520 Speaker 2: So I guess that would have happened. But if even 160 00:08:30,520 --> 00:08:34,560 Speaker 2: if labor was looser and inflation lasted longer, you might 161 00:08:34,559 --> 00:08:38,680 Speaker 2: have seen the economy roll on a bit stronger. So 162 00:08:38,720 --> 00:08:41,320 Speaker 2: it's more of a shorter sharp shock when you have 163 00:08:41,440 --> 00:08:43,560 Speaker 2: both the central bank pushing up interest rates and a 164 00:08:43,600 --> 00:08:46,400 Speaker 2: government cutting spending. And look, I think they probably have 165 00:08:46,440 --> 00:08:49,400 Speaker 2: got it going in the right direction efficiently, you know, 166 00:08:49,600 --> 00:08:52,959 Speaker 2: in good time. But how much of the general direction 167 00:08:53,160 --> 00:08:54,679 Speaker 2: they can take credit for, I'm not sure. 168 00:08:55,000 --> 00:08:58,520 Speaker 1: When it comes to the US, Trump's big on cutting 169 00:08:58,559 --> 00:09:02,839 Speaker 1: regulation and giving people tax cuts. Is that going to 170 00:09:02,880 --> 00:09:06,040 Speaker 1: help with the costs on the average American household? 171 00:09:06,240 --> 00:09:09,600 Speaker 2: The tax cuts and the deregulation. They would boost corporate 172 00:09:09,640 --> 00:09:12,559 Speaker 2: earnings because he's talking about tax cuts for the corporations 173 00:09:12,600 --> 00:09:14,560 Speaker 2: first and foremost, so that the view would be that 174 00:09:14,600 --> 00:09:17,599 Speaker 2: they would then be hiring more, can pay more. The 175 00:09:17,640 --> 00:09:21,200 Speaker 2: economies booming because America's business is booming. There was talk 176 00:09:21,240 --> 00:09:24,520 Speaker 2: of some other tax cuts or tax credits for return 177 00:09:24,679 --> 00:09:27,559 Speaker 2: service people, first responder's, all sorts of stuff. There was 178 00:09:27,559 --> 00:09:30,720 Speaker 2: a lot promised on the campaign trail, so that could 179 00:09:30,760 --> 00:09:34,200 Speaker 2: pump the economy. Their question is can they actually afford it, 180 00:09:34,280 --> 00:09:39,080 Speaker 2: because they already have a giant deficit in their government spending. 181 00:09:39,160 --> 00:09:41,400 Speaker 2: They don't take enough revenue for all the government spending, 182 00:09:41,480 --> 00:09:44,840 Speaker 2: so they have to borrow. And the US government borrows 183 00:09:45,559 --> 00:09:48,559 Speaker 2: his borrow trillions, and that means that, you know, they 184 00:09:48,600 --> 00:09:50,720 Speaker 2: have to be sensitive to what happens to interest rates 185 00:09:51,160 --> 00:09:53,240 Speaker 2: and their ability to borrow further. And some people have 186 00:09:53,280 --> 00:09:56,160 Speaker 2: suggested that if Trump was to do all the tax cuts, 187 00:09:56,240 --> 00:09:59,680 Speaker 2: then it really would blow out the national debt quite 188 00:09:59,720 --> 00:10:02,000 Speaker 2: bad and push interest rates up very high. 189 00:10:02,040 --> 00:10:05,880 Speaker 1: What happens then, if the US was to borrow even 190 00:10:05,960 --> 00:10:06,680 Speaker 1: more than it does. 191 00:10:06,720 --> 00:10:07,800 Speaker 3: So now, yeah, I. 192 00:10:07,800 --> 00:10:10,400 Speaker 2: Mean I should say Trump says that his tariffs are 193 00:10:10,400 --> 00:10:12,559 Speaker 2: going to pay for all this, right, None of the 194 00:10:12,600 --> 00:10:15,719 Speaker 2: economists believe that that's possible. But you know, it may 195 00:10:15,760 --> 00:10:17,959 Speaker 2: come down to how big the tariffs are and how 196 00:10:18,000 --> 00:10:20,280 Speaker 2: big the tax cuts are in the end. But if 197 00:10:20,320 --> 00:10:23,800 Speaker 2: he did the most extreme outer edge stuff, then it 198 00:10:23,880 --> 00:10:26,400 Speaker 2: kind of doesn't add up in an orthodox economic way. 199 00:10:26,520 --> 00:10:29,720 Speaker 2: It becomes a very big experiment. It's an experiment because 200 00:10:30,040 --> 00:10:32,400 Speaker 2: America has never done this before. We've seen other countries 201 00:10:32,400 --> 00:10:34,880 Speaker 2: around the world try to do this where governments, you know, 202 00:10:34,960 --> 00:10:38,600 Speaker 2: like a socialist government comes in in Venezuela, or we've 203 00:10:38,640 --> 00:10:42,199 Speaker 2: seen it in Greece after the GFC, where they've tried 204 00:10:42,200 --> 00:10:46,440 Speaker 2: to implement policies that the world's financial markets, the ratings agencies, 205 00:10:46,480 --> 00:10:48,400 Speaker 2: and the bond markets have just gone, oh no, that 206 00:10:48,440 --> 00:10:51,480 Speaker 2: looks terrible. And you know, they just trade the price 207 00:10:51,520 --> 00:10:54,920 Speaker 2: of borrowing up for these nations until they can't borrow anymore, 208 00:10:55,160 --> 00:10:56,960 Speaker 2: so that they basically see you as a high risk 209 00:10:57,040 --> 00:11:00,240 Speaker 2: and then they say yield, but your interest rates on 210 00:11:00,320 --> 00:11:03,240 Speaker 2: those bonds goes through the roof. Sometimes some countries it's 211 00:11:03,240 --> 00:11:05,079 Speaker 2: like I think in Greece, it went up by thirty 212 00:11:05,080 --> 00:11:07,800 Speaker 2: percent overnight and they just could not borrow anymore. So 213 00:11:07,840 --> 00:11:10,120 Speaker 2: they were sunk because they couldn't get any more money, 214 00:11:10,120 --> 00:11:12,440 Speaker 2: so they had to go to Europe for bailouts, and 215 00:11:12,559 --> 00:11:15,600 Speaker 2: it made a special case. So you know, most countries 216 00:11:15,640 --> 00:11:18,120 Speaker 2: in the world come up against bond markets, which is 217 00:11:18,120 --> 00:11:20,640 Speaker 2: really just the world's debt market. I loved the idea 218 00:11:20,640 --> 00:11:23,240 Speaker 2: that it's the most powerful thing in the world, like 219 00:11:23,400 --> 00:11:26,679 Speaker 2: literally the most powerful thing. There's armies, But even armies 220 00:11:26,720 --> 00:11:30,080 Speaker 2: need money to run, right, And so without the support 221 00:11:30,120 --> 00:11:32,480 Speaker 2: of bond markets, you know, you can't borrow. And the 222 00:11:32,480 --> 00:11:35,520 Speaker 2: whole world runs on debt, Like the whole world's economy 223 00:11:35,600 --> 00:11:38,920 Speaker 2: is debt fueled. And if you come up against these 224 00:11:38,960 --> 00:11:41,560 Speaker 2: bond markets and they say no and you can't get money, 225 00:11:41,760 --> 00:11:44,640 Speaker 2: you're really sunk, very very quickly. So there's a famous 226 00:11:44,679 --> 00:11:49,360 Speaker 2: line from Bill Clinton's strategist James Carvill, this guy who 227 00:11:49,360 --> 00:11:52,000 Speaker 2: once came up with it's the economy stupid. But he 228 00:11:52,040 --> 00:11:54,719 Speaker 2: also once said that if reincarnations real, I used to 229 00:11:54,760 --> 00:11:57,000 Speaker 2: want to come back as a president or a pope, 230 00:11:57,000 --> 00:11:58,520 Speaker 2: but now I want to come back as the bond 231 00:11:58,559 --> 00:12:01,000 Speaker 2: markets because they intimidate every one, and it was a 232 00:12:01,040 --> 00:12:04,240 Speaker 2: reminder that no one's bigger than those bond markets in 233 00:12:04,280 --> 00:12:07,600 Speaker 2: the world. Now, the US might be a special case. 234 00:12:07,640 --> 00:12:10,000 Speaker 2: It's hard to know how far they can go. Because 235 00:12:10,040 --> 00:12:13,640 Speaker 2: the US is so big and so powerful, and its 236 00:12:14,000 --> 00:12:17,800 Speaker 2: currency is the world's reserve currency. It will be interesting 237 00:12:17,840 --> 00:12:20,240 Speaker 2: to see how far Donald Trump can push it. 238 00:12:20,360 --> 00:12:23,880 Speaker 1: Well. Stocks on Wall Street closed on record highs the 239 00:12:24,000 --> 00:12:27,480 Speaker 1: day after Trump's victory, largely due to confidence in how 240 00:12:27,520 --> 00:12:30,800 Speaker 1: his policies will benefit them. 241 00:12:31,200 --> 00:12:33,280 Speaker 4: This is what happens when there's a lot of uncertainty. 242 00:12:33,360 --> 00:12:35,200 Speaker 4: People breeze for the worst and then they breathe a 243 00:12:35,200 --> 00:12:37,200 Speaker 4: sigh of relief. I mean, the S and P's up 244 00:12:37,200 --> 00:12:39,800 Speaker 4: about two point three percent today, which would be the 245 00:12:39,840 --> 00:12:44,079 Speaker 4: strongest post election reaction post election d reaction we've seen 246 00:12:44,400 --> 00:12:47,960 Speaker 4: since my data started in nineteen fifty. You know, people 247 00:12:48,000 --> 00:12:52,280 Speaker 4: are definitely reacting, maybe celebrating, maybe breacing for more. 248 00:12:55,000 --> 00:12:58,280 Speaker 1: That's obviously a vote of confidence for Trump, but he 249 00:12:58,320 --> 00:13:02,760 Speaker 1: can't really control if the markets react positively or negatively, right, 250 00:13:02,800 --> 00:13:05,400 Speaker 1: and then how the public read that? Can he? 251 00:13:05,760 --> 00:13:08,480 Speaker 2: No, that's right. So the big, big short term bump 252 00:13:08,720 --> 00:13:11,000 Speaker 2: for Trump the Trump bump. So there's a few things there. 253 00:13:11,040 --> 00:13:13,640 Speaker 2: One was that it was a certain election. There was 254 00:13:13,679 --> 00:13:16,200 Speaker 2: no going to court and worrying and having no leadership 255 00:13:16,240 --> 00:13:18,400 Speaker 2: in the US, So that was removed so that that 256 00:13:18,440 --> 00:13:20,880 Speaker 2: the market's very happy to have that certainty. They were 257 00:13:20,880 --> 00:13:24,760 Speaker 2: happy that they didn't get Kamala Harris's tax hikes, so 258 00:13:24,800 --> 00:13:27,480 Speaker 2: that was removed. And then in the short term they 259 00:13:27,520 --> 00:13:29,800 Speaker 2: see a lot of benefit from Trump coming in. Tech 260 00:13:29,840 --> 00:13:33,080 Speaker 2: stocks are really happy about this deregulation stuff. There'll be 261 00:13:33,120 --> 00:13:36,440 Speaker 2: deregulation around oil, around banking, so it'd be easier for 262 00:13:36,480 --> 00:13:38,920 Speaker 2: them to do business that reduces costs, and then if 263 00:13:38,920 --> 00:13:41,080 Speaker 2: they get a tax cut as well, they're basically going 264 00:13:41,160 --> 00:13:43,959 Speaker 2: to be more profitable. So that's the short term thing. 265 00:13:44,000 --> 00:13:46,120 Speaker 2: There are risks there there. I mean, you know, but 266 00:13:46,280 --> 00:13:49,880 Speaker 2: markets at this level aren't aren't trading that risk yet. 267 00:13:49,920 --> 00:13:52,280 Speaker 2: The risks are that in the longer term, because we've 268 00:13:52,520 --> 00:13:55,320 Speaker 2: seen bond yields rise all the way through. They picked 269 00:13:55,360 --> 00:13:58,240 Speaker 2: Trump coming in, so bond yields rose in the weeks 270 00:13:58,240 --> 00:14:00,559 Speaker 2: and I should just say interest rates basically rose in 271 00:14:00,600 --> 00:14:02,360 Speaker 2: the weeks ahead of Trump coming in, and then they've 272 00:14:02,360 --> 00:14:04,880 Speaker 2: continued to rise. And normally when interest rates are rising 273 00:14:05,000 --> 00:14:08,160 Speaker 2: on financial markets equities are going down, so that it's 274 00:14:08,160 --> 00:14:10,680 Speaker 2: a weird thing both going up at once and you know, 275 00:14:11,000 --> 00:14:14,440 Speaker 2: longer term, I guess the markets could turn against Trump, 276 00:14:14,520 --> 00:14:16,960 Speaker 2: and that to me when you look at how powerful 277 00:14:17,000 --> 00:14:18,920 Speaker 2: he is right now, Like he's got the Senate and 278 00:14:19,000 --> 00:14:21,440 Speaker 2: he's got such control of that Republican Party, and he's 279 00:14:21,480 --> 00:14:24,000 Speaker 2: probably going to get the rest of the House of Congress, 280 00:14:24,400 --> 00:14:27,440 Speaker 2: and so then he'd have the three branches. He's kind 281 00:14:27,440 --> 00:14:29,840 Speaker 2: of got the Supreme Court stacked as well, so that's 282 00:14:29,880 --> 00:14:33,480 Speaker 2: really the four branches of US power. So he's got 283 00:14:33,520 --> 00:14:37,280 Speaker 2: complete political control and that that really just leaves that 284 00:14:37,400 --> 00:14:41,840 Speaker 2: financial market, bond markets, equity markets, basically Wall Street as 285 00:14:41,920 --> 00:14:43,520 Speaker 2: the curb on his power. 286 00:14:54,800 --> 00:14:58,840 Speaker 1: We saw the opposite of that support in twenty twenty 287 00:14:58,880 --> 00:15:02,760 Speaker 1: two in the UK, wh Trust's short lived government announced 288 00:15:02,840 --> 00:15:07,680 Speaker 1: forty five billion pounds in tax cuts without properly funding them. 289 00:15:07,720 --> 00:15:11,840 Speaker 1: The markets reacted negatively and the country went into crisis 290 00:15:11,880 --> 00:15:15,120 Speaker 1: mode and Trust was gone as we know shortly after. 291 00:15:15,520 --> 00:15:19,080 Speaker 1: So do they have the real power here? Is that 292 00:15:19,120 --> 00:15:21,920 Speaker 1: getting a bit too much into tenfoil hat territory? 293 00:15:22,200 --> 00:15:22,280 Speaker 5: No? 294 00:15:22,840 --> 00:15:24,480 Speaker 2: I think they do. It's kind of weird, like for 295 00:15:24,480 --> 00:15:26,920 Speaker 2: people you know about ten foil hats. People talk about 296 00:15:26,960 --> 00:15:29,520 Speaker 2: the deep state. What is the deep state? What is 297 00:15:29,520 --> 00:15:31,520 Speaker 2: the establishment? What's the most powerful end of it? And 298 00:15:31,600 --> 00:15:33,800 Speaker 2: that's why I keep coming back to financial markets. There 299 00:15:33,840 --> 00:15:37,280 Speaker 2: is this kind of non political structure around global debt 300 00:15:37,320 --> 00:15:40,280 Speaker 2: markets and you know, and equity markets that is kind 301 00:15:40,280 --> 00:15:43,080 Speaker 2: of like a deep state. And yeah, like this Trust 302 00:15:43,120 --> 00:15:46,000 Speaker 2: wasn't in a powerful position to start with. The Tories 303 00:15:46,040 --> 00:15:49,560 Speaker 2: weren't in a powerful position. The UK was economically shaky 304 00:15:49,600 --> 00:15:51,960 Speaker 2: after Brexit, so she didn't have a lot of power 305 00:15:51,960 --> 00:15:54,840 Speaker 2: to push that through and it sure sunk her. Yeah, 306 00:15:54,880 --> 00:15:57,000 Speaker 2: as I mentioned earlier, we've seen it happen, and lots 307 00:15:57,000 --> 00:15:59,520 Speaker 2: of other countries around the world, smaller countries, New Zealand 308 00:15:59,520 --> 00:16:02,440 Speaker 2: would to do anything unorthodox again in the face of 309 00:16:02,480 --> 00:16:04,320 Speaker 2: financial markets, given how much debt we. 310 00:16:04,360 --> 00:16:11,280 Speaker 5: Have quote the current trajectory of debt is concerning. New 311 00:16:11,360 --> 00:16:14,400 Speaker 5: Zealand are currently running physical deficit about two point four 312 00:16:14,400 --> 00:16:17,840 Speaker 5: percent of GDP. It's structural, meaning it is not solely 313 00:16:17,880 --> 00:16:21,320 Speaker 5: the result of the current economic downturn. The Treasury estimates 314 00:16:21,480 --> 00:16:23,680 Speaker 5: that we would be in deficit even if the country 315 00:16:23,760 --> 00:16:26,160 Speaker 5: was a normal economic times rather than recession. 316 00:16:26,440 --> 00:16:28,680 Speaker 4: You're talking about two point four percent of GEPP. 317 00:16:29,120 --> 00:16:32,600 Speaker 2: That's tiny in comparison to our external debt, which is 318 00:16:32,640 --> 00:16:39,040 Speaker 2: currently I think running at forty to fifty percent. The US, 319 00:16:39,120 --> 00:16:42,000 Speaker 2: as I say, could be different or is more powerful. 320 00:16:42,120 --> 00:16:44,680 Speaker 2: I would say though, that Trump has kind of staked 321 00:16:44,680 --> 00:16:48,400 Speaker 2: his reputation on being the Wall Street guy, the big 322 00:16:48,520 --> 00:16:50,960 Speaker 2: market guy who knows how Wall Street works and has 323 00:16:50,960 --> 00:16:53,320 Speaker 2: got them on side. So he couldn't really afford to 324 00:16:53,360 --> 00:16:55,080 Speaker 2: get too far offside with them. And there are a 325 00:16:55,120 --> 00:16:58,480 Speaker 2: lot of powerful backers around him, as financial backers, Elon 326 00:16:58,600 --> 00:17:02,480 Speaker 2: Musk and those people that obviously don't want the whole 327 00:17:02,800 --> 00:17:05,800 Speaker 2: thing tanking. They don't want to see the US economy tank. 328 00:17:05,920 --> 00:17:07,400 Speaker 2: You know, as much as we might want to call 329 00:17:07,480 --> 00:17:12,880 Speaker 2: him autocratic or authoritarian, he's not likely to completely go 330 00:17:12,960 --> 00:17:15,800 Speaker 2: off script. I mean, it's not really something that he 331 00:17:15,840 --> 00:17:19,639 Speaker 2: could get away without. I imagine some quite powerful forces 332 00:17:19,680 --> 00:17:22,879 Speaker 2: around him, even in his close circle, sort of pulling 333 00:17:22,960 --> 00:17:26,119 Speaker 2: him back. And so I think, you know, he'll have 334 00:17:26,240 --> 00:17:28,760 Speaker 2: to deliver some form of tax cut, some form of deregulation. 335 00:17:28,880 --> 00:17:31,680 Speaker 2: He'll have to deliver some tariffs. Whether they are at 336 00:17:31,680 --> 00:17:34,359 Speaker 2: the extremes of what he promised over the campaign probably 337 00:17:34,359 --> 00:17:37,040 Speaker 2: doesn't matter. People probably forget the details of exactly what 338 00:17:37,080 --> 00:17:39,920 Speaker 2: he said. They seem to have short memories about most 339 00:17:40,080 --> 00:17:40,960 Speaker 2: most things, he says. 340 00:17:41,160 --> 00:17:45,399 Speaker 1: I recall when he was president last time, all he 341 00:17:45,400 --> 00:17:47,120 Speaker 1: would have to do is tweet something and it would 342 00:17:47,160 --> 00:17:50,040 Speaker 1: change the markets, right, And he does have a tendency 343 00:17:50,160 --> 00:17:54,960 Speaker 1: to say something quite crass or be quite reactive to things. 344 00:17:55,280 --> 00:17:58,879 Speaker 1: And also his relationships with other world leaders such as 345 00:17:58,960 --> 00:18:02,000 Speaker 1: Kem jong un and Aldamir Putin to name just a couple. 346 00:18:02,240 --> 00:18:05,560 Speaker 1: Could those things be his downfall when he's trying to 347 00:18:05,760 --> 00:18:10,840 Speaker 1: correct the US economy, those little things that perhaps could 348 00:18:11,000 --> 00:18:14,800 Speaker 1: reverse or slow down his ambition to do so. 349 00:18:15,560 --> 00:18:19,280 Speaker 2: I suppose the geopolitical thing is a big, big issue obviously, 350 00:18:19,359 --> 00:18:21,199 Speaker 2: just for the you know, the state of lay in 351 00:18:21,720 --> 00:18:24,080 Speaker 2: Ukraine and Middle East and all that sort of stuff, 352 00:18:24,080 --> 00:18:27,359 Speaker 2: and the relationship with China. But as to the little things, 353 00:18:27,520 --> 00:18:31,400 Speaker 2: I wonder if we've become a bit immune to his unpredictability, 354 00:18:31,480 --> 00:18:34,040 Speaker 2: Like it's so predictable that he's going to say these 355 00:18:34,119 --> 00:18:37,600 Speaker 2: random things. And I think that's probably was evident through 356 00:18:37,640 --> 00:18:39,760 Speaker 2: the campaign and the result in the election is that 357 00:18:39,800 --> 00:18:43,400 Speaker 2: people just aren't taking it literally, so they've all we've 358 00:18:43,440 --> 00:18:46,000 Speaker 2: brought into this idea that you don't worry too much 359 00:18:46,000 --> 00:18:48,240 Speaker 2: about what he sees. You just look at what he does, 360 00:18:48,440 --> 00:18:51,120 Speaker 2: even though that unfortunately doesn't give us any any foresight 361 00:18:51,200 --> 00:18:54,879 Speaker 2: into what might be coming. But already, you know, things 362 00:18:54,920 --> 00:18:58,840 Speaker 2: like the cryptocurrency and bitcoin are through the roof, So 363 00:18:59,720 --> 00:19:03,120 Speaker 2: that's stuff that reactive stuff's already just totally excited by 364 00:19:03,160 --> 00:19:06,840 Speaker 2: his return. You know, it could be if the markets 365 00:19:06,840 --> 00:19:09,400 Speaker 2: were jumping and he was to tweet something that suggested 366 00:19:09,680 --> 00:19:12,080 Speaker 2: he was going to do some sort of terriff or 367 00:19:12,119 --> 00:19:15,040 Speaker 2: something like that that would really hurt interest rates. Well, 368 00:19:15,080 --> 00:19:18,359 Speaker 2: that could happen, and it'll be I mean, it just 369 00:19:18,400 --> 00:19:21,080 Speaker 2: will be around those announcements. They'll have to, you know, 370 00:19:21,119 --> 00:19:22,800 Speaker 2: they have to think that through very carefully. He's going 371 00:19:22,840 --> 00:19:25,560 Speaker 2: to be expected to do some stuff he's promised, but 372 00:19:26,200 --> 00:19:28,960 Speaker 2: he can't do too much. It'll or blow back on him. 373 00:19:29,080 --> 00:19:31,879 Speaker 2: It'll be interesting to see how far as advisors let 374 00:19:31,960 --> 00:19:32,240 Speaker 2: him go. 375 00:19:32,720 --> 00:19:35,560 Speaker 1: If a political leader really wants to make things cheaper 376 00:19:35,680 --> 00:19:38,320 Speaker 1: for the people who voted for them and let them 377 00:19:38,400 --> 00:19:40,639 Speaker 1: keep more of the money that they make, what is 378 00:19:40,680 --> 00:19:43,679 Speaker 1: the best way of actually doing that? Is there a 379 00:19:43,760 --> 00:19:46,520 Speaker 1: key stat that they should be focused on improving? 380 00:19:47,080 --> 00:19:49,600 Speaker 2: Well, the only way to really make things cheaper is 381 00:19:49,640 --> 00:19:52,520 Speaker 2: to genuinely make people wealthier. You know, you've got to 382 00:19:52,560 --> 00:19:55,840 Speaker 2: have more more money. It's not more money, that's the 383 00:19:55,840 --> 00:19:58,200 Speaker 2: wrong term. It's more wealth. You know, if you legislated 384 00:19:58,240 --> 00:20:00,680 Speaker 2: a minimum wage up to thirty dollars in or something 385 00:20:00,760 --> 00:20:04,400 Speaker 2: like that, it doesn't translate to everybody suddenly having more 386 00:20:04,400 --> 00:20:07,120 Speaker 2: money because of the inflation. It creates the system sort 387 00:20:07,160 --> 00:20:10,159 Speaker 2: of got prices and wages intertwined, right. 388 00:20:10,040 --> 00:20:12,480 Speaker 1: So the system will know that you're getting paid more. 389 00:20:12,560 --> 00:20:13,720 Speaker 1: Thus cheese goes. 390 00:20:13,640 --> 00:20:16,359 Speaker 2: Up because there's a certain amount of money in the economy, 391 00:20:16,359 --> 00:20:20,119 Speaker 2: and you know, there's the financial institutions, the central banks, 392 00:20:20,160 --> 00:20:23,880 Speaker 2: the ratings agencies, everybody's keeping track of that. So it's 393 00:20:24,280 --> 00:20:26,520 Speaker 2: it's really I mean, it sounds boring because they go 394 00:20:26,600 --> 00:20:28,160 Speaker 2: on about this a lot, but it does come back 395 00:20:28,160 --> 00:20:33,520 Speaker 2: to productivity and actually generating more wealth per person, more 396 00:20:33,520 --> 00:20:38,280 Speaker 2: productivity per person ideally without working harder, working smarter, So 397 00:20:38,320 --> 00:20:41,879 Speaker 2: getting the whole nation working smarter, producing more and doing 398 00:20:41,880 --> 00:20:47,480 Speaker 2: more without having to work too hard, and generating more 399 00:20:47,520 --> 00:20:50,639 Speaker 2: wealth in people bag labor. But Grant Robertson got it too. 400 00:20:50,800 --> 00:20:53,800 Speaker 2: I mean, I haven't met many politicians that didn't talk 401 00:20:53,800 --> 00:20:56,760 Speaker 2: big about productivity. I just think that they bump up 402 00:20:56,760 --> 00:20:59,679 Speaker 2: against you know, there are some arguments that's some big 403 00:20:59,720 --> 00:21:02,119 Speaker 2: structural things need to be done to get to improve 404 00:21:02,119 --> 00:21:04,280 Speaker 2: productivity in this country, and they tend to bump up 405 00:21:04,280 --> 00:21:08,119 Speaker 2: against the day to day politics, and it sort of 406 00:21:08,119 --> 00:21:11,480 Speaker 2: means that they're reluctant to do big, bold things, you know. 407 00:21:11,520 --> 00:21:13,439 Speaker 2: And we don't have an upper House in New Zealand, 408 00:21:13,440 --> 00:21:15,720 Speaker 2: we don't have an executive branch, so you know, we've 409 00:21:15,720 --> 00:21:18,320 Speaker 2: got a governor general. But in theory, the US has 410 00:21:18,359 --> 00:21:22,000 Speaker 2: got two tiers of government of Parliament or whatever your 411 00:21:22,040 --> 00:21:24,320 Speaker 2: congress you'd call it, and an executive branch and a 412 00:21:24,400 --> 00:21:28,320 Speaker 2: judicial branch. So it's it's meant to keep power and check. 413 00:21:28,400 --> 00:21:30,520 Speaker 2: But it's a balance, you know, you say, vulnerable to 414 00:21:30,560 --> 00:21:34,199 Speaker 2: extreme power on the other side. I worry you. You 415 00:21:34,200 --> 00:21:36,080 Speaker 2: can go the other way. You can just be gridlocked 416 00:21:36,119 --> 00:21:38,720 Speaker 2: or on a stalemate around actually making big change, and 417 00:21:38,760 --> 00:21:39,280 Speaker 2: then we're. 418 00:21:39,119 --> 00:21:42,840 Speaker 1: Just stagnant waiting for a highways be built over forty years. 419 00:21:43,000 --> 00:21:45,240 Speaker 2: So you see these reactions from the public, like, after 420 00:21:45,280 --> 00:21:48,320 Speaker 2: a while of feeling like we're stagnating whatever, they might 421 00:21:48,640 --> 00:21:51,080 Speaker 2: throw power to someone and say, look, just get on 422 00:21:51,119 --> 00:21:53,879 Speaker 2: with it and throw a bit more absolute power. You 423 00:21:53,960 --> 00:21:57,160 Speaker 2: hope that they don't, you know, you hope they choose 424 00:21:57,160 --> 00:22:00,720 Speaker 2: someone who's of good moral care character for that, so 425 00:22:00,760 --> 00:22:04,280 Speaker 2: that we don't end up with dictators. So I'm you know, 426 00:22:03,840 --> 00:22:06,040 Speaker 2: I don't think I'll comment on with you. This is 427 00:22:06,080 --> 00:22:06,640 Speaker 2: landed there. 428 00:22:07,080 --> 00:22:08,440 Speaker 1: Thanks for joining us, Liam. 429 00:22:08,440 --> 00:22:09,360 Speaker 2: Thanks good to be here. 430 00:22:13,760 --> 00:22:16,760 Speaker 1: That's it for this episode of the Front Page. You 431 00:22:16,800 --> 00:22:20,639 Speaker 1: can read more about today's stories and extensive news coverage 432 00:22:20,720 --> 00:22:24,720 Speaker 1: at enziherld dot co dot enz. The Front Page is 433 00:22:24,760 --> 00:22:28,720 Speaker 1: produced by Ethan Seals Richard Martin as the sound engineer. 434 00:22:29,119 --> 00:22:33,760 Speaker 1: I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio 435 00:22:34,040 --> 00:22:37,600 Speaker 1: or wherever you get your podcasts, and tune in tomorrow 436 00:22:37,800 --> 00:22:39,960 Speaker 1: for another look behind the headlines.