WEBVTT - Bloomberg Businessweek Weekend - November 18th, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week inside from the reporters and 0:00:05.600 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:13.160 global business finance and tech news as it happened. Bloomberg 0:00:13.240 --> 0:00:16.759 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:00:16.800 --> 0:00:20.560 Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the weekend 0:00:20.640 --> 0:00:23.239 edition of Bloomberg Business Week. This week a gathering up 0:00:23.239 --> 0:00:26.880 global leaders on the latest geopolitical events, better than expected 0:00:26.920 --> 0:00:30.080 inflation report, and another one that says we shoppers, yet 0:00:30.160 --> 0:00:33.320 we're still out shopping. And oh yeah, Tim, right, that 0:00:33.440 --> 0:00:36.640 crypto problem continuing to unwind thanks to the collapse of 0:00:36.760 --> 0:00:38.480 ft X welve. More than that in a moment, Yeah, 0:00:38.479 --> 0:00:42.040 that teeny little company that's just sending shockwaves throughout the industry. 0:00:42.240 --> 0:00:44.000 Coming up on the program, we get a pulse check 0:00:44.040 --> 0:00:46.400 on global trade conditions. We do that with former US 0:00:46.479 --> 0:00:49.600 Commerce Secretary Carlos Gutierrez. We'll also look at the state 0:00:49.600 --> 0:00:52.480 of US China relations after a meeting between President Joe 0:00:52.479 --> 0:00:55.200 Biden and China's Sejing paying at the G twenty, and 0:00:55.240 --> 0:00:57.320 we break down a key corner of the cloud software 0:00:57.360 --> 0:01:00.200 market with the CEO of Octa All of that to home. 0:01:00.240 --> 0:01:03.000 We begin with the cover story of a Bloomberg Business 0:01:03.000 --> 0:01:06.320 Week double issue. The cover is about the crypto saga 0:01:06.400 --> 0:01:08.520 and collapse of f t X and Sam bank Man 0:01:08.520 --> 0:01:11.039 Freed that has been unfolding over the past couple of 0:01:11.080 --> 0:01:14.320 weeks and which continues to evolve and deliver headlines as 0:01:14.360 --> 0:01:17.640 we speak. Bloomberg Newscrypto reporter Oga Kariffe has been falling 0:01:17.680 --> 0:01:20.920 this so closely. She co wrote the cover. She's here 0:01:20.959 --> 0:01:23.679 to explain the fallout across the digital asset business and 0:01:23.959 --> 0:01:26.559 well beyond. This has been, of course a huge shock 0:01:26.680 --> 0:01:30.120 for everybody who's been in the crypto community for a 0:01:30.120 --> 0:01:33.880 long time, and as well as new newer investors who 0:01:34.000 --> 0:01:36.039 came in in the last couple of years. You know, 0:01:36.080 --> 0:01:39.920 it's a complete shock because some Bankman Freed or Sbfest. 0:01:39.959 --> 0:01:43.440 He was known. He was sort of considered to be 0:01:43.520 --> 0:01:47.440 one of the most sort of trustworthy, if you will, 0:01:47.800 --> 0:01:51.160 people in crypto. He was testifying in Congress, he was 0:01:51.880 --> 0:01:55.480 meeting with regulators. He had a lot of respect and 0:01:55.560 --> 0:01:58.800 a lot of a lot of weight in this industry, 0:01:58.840 --> 0:02:01.520 and all of a sudden he company has come undone 0:02:02.000 --> 0:02:04.120 a lot of respect and a lot of influence magazine 0:02:04.120 --> 0:02:06.840 covers is even he alluded to. He said he became 0:02:07.080 --> 0:02:10.280 overconfident as a result of that. All but one thing 0:02:10.360 --> 0:02:12.920 that I'm having a really hard time reconciling is the 0:02:12.919 --> 0:02:16.600 prominent backers of the company and the really sloppy, leaked 0:02:16.600 --> 0:02:18.880 balance sheet that we saw. I mean, how does a 0:02:18.880 --> 0:02:23.240 company this big have such a lack of understanding of 0:02:23.280 --> 0:02:25.200 what it has on the balance sheet? Yeah, you know, 0:02:25.320 --> 0:02:29.760 it's it's incredibly surprising. And I think what this means 0:02:29.840 --> 0:02:32.919 that is that there wasn't enough oversight. There wasn't enough 0:02:33.000 --> 0:02:36.200 due diligence that you need for a company this size 0:02:36.360 --> 0:02:41.040 with such caliber of investors. Typically you wanna for a 0:02:41.080 --> 0:02:43.400 company this size, you would have a board and you 0:02:43.440 --> 0:02:47.080 would have all kinds of you know, auditing going on 0:02:47.200 --> 0:02:50.359 and committees and you know, plenty of people who will 0:02:50.400 --> 0:02:53.120 be looking through what's going on. And what we find 0:02:53.240 --> 0:02:56.200 is that for FTX, a lot of it has been 0:02:56.320 --> 0:03:01.360 just you know, Sam bankman freed overseas in the entire operation. 0:03:01.560 --> 0:03:03.520 You know, it's interesting, you know, you note to some 0:03:03.560 --> 0:03:05.760 of the other tweets that Sam bank Benfried has has 0:03:05.800 --> 0:03:08.799 done and talked about how he messed up different words 0:03:08.840 --> 0:03:12.080 that he used and blaming poor internal labeling of accounts. 0:03:13.560 --> 0:03:16.720 This is not someone who doesn't understand right how the 0:03:16.760 --> 0:03:21.639 sophisticated financial system works. If you look about his past experience, right, 0:03:21.680 --> 0:03:23.960 this is someone who should have known. Or do we 0:03:24.120 --> 0:03:29.000 give him some room for not having better systems in place? 0:03:29.040 --> 0:03:30.880 How are we supposed to look at this? So, on 0:03:31.040 --> 0:03:33.480 the one hand, he is only thirty years old, but 0:03:33.600 --> 0:03:35.880 on the other hand, during this thirty years he has 0:03:35.960 --> 0:03:39.600 managed to do a lot. He was a trader at 0:03:39.720 --> 0:03:43.920 James Street, of course, the very highly respected quantic idea 0:03:43.920 --> 0:03:47.360 of trading firm, which gave him Wall Street cred and 0:03:47.400 --> 0:03:53.360 then he also ran Alameda since Alamda Research was his 0:03:53.840 --> 0:03:58.240 trading firm. Initially he Alameda essentially made money off of 0:03:58.760 --> 0:04:02.240 price differences so on different crypto exchanges and made quite 0:04:02.240 --> 0:04:05.320 a lot of money that way. And then he branched 0:04:05.320 --> 0:04:09.680 out into actually running a crypto exchange in twenty nineteen, 0:04:10.320 --> 0:04:14.240 and so he had a lot of experience I would 0:04:14.240 --> 0:04:20.200 think with financial matters. So what repercussions could he face. 0:04:20.279 --> 0:04:21.880 He does keep tweeting over and over again that his 0:04:22.000 --> 0:04:25.160 number one priority is making it right with customers. We'll 0:04:25.160 --> 0:04:28.039 see if he's able to do that, what consequences could 0:04:28.040 --> 0:04:31.520 he face? So in terms of his tweets, they're getting 0:04:31.560 --> 0:04:37.560 a huge backlash online because people don't trust don't trust 0:04:37.640 --> 0:04:43.080 him anymore and essentially just almost wish that he didn't 0:04:43.120 --> 0:04:47.359 even say anything because instead of this empty promises, in 0:04:47.480 --> 0:04:52.520 terms of what could happen to him, it's still unclear. Uh. 0:04:52.560 --> 0:04:54.880 You know, ft X is still in the process of 0:04:54.960 --> 0:05:00.919 filing bankruptcy of all of requisite sort of finitial bankruptcy documents. 0:05:01.760 --> 0:05:04.600 I'm sure there will be an analysis of what exactly 0:05:04.640 --> 0:05:08.120 went drawing and who's to blame. Nobody has been charged 0:05:08.160 --> 0:05:11.440 with anything yet, so so I think it's going to 0:05:11.560 --> 0:05:14.400 be a pretty long and drawn out process. But but 0:05:14.440 --> 0:05:17.240 a lot of people are kind of convinced that somebody, 0:05:18.000 --> 0:05:20.719 you know, could face charges for this. Okay, it almost 0:05:20.720 --> 0:05:24.400 feels like an uber uber case of fomo. Right. You know, 0:05:24.600 --> 0:05:27.640 as soon as he got momentum, and you know, media 0:05:27.720 --> 0:05:31.520 coverage created some of that momentum. You know, you had 0:05:31.560 --> 0:05:34.680 certain venture capitalists or Silicon Valley investors getting in and 0:05:34.720 --> 0:05:36.599 I'm sure friends were talking about, way, what do you 0:05:36.600 --> 0:05:39.159 guys onto Like, it's just you think about how the 0:05:39.279 --> 0:05:43.040 momentum and velocity that was created by SPF not giving 0:05:43.120 --> 0:05:47.120 him a pass. But you realize this can happen, you know, 0:05:47.200 --> 0:05:50.760 when there are frenetic investments that are out there. Absolutely. 0:05:50.800 --> 0:05:54.760 I think we sort of until um this year, we 0:05:54.880 --> 0:05:58.359 were in this reaching crypto bull market where you know, 0:05:58.480 --> 0:06:02.080 prices were going up like easy. Everybody, all of the 0:06:02.160 --> 0:06:07.240 venture capitalists wanted to find the next unicorn and crypto. 0:06:07.600 --> 0:06:11.640 Uh and uh when when they saw you know this, 0:06:11.960 --> 0:06:17.920 very respected investors like Sequoia, you know, backing f t X. Uh. 0:06:18.200 --> 0:06:22.000 Perhaps some of them haven't done as much due diligence. Uh. 0:06:22.320 --> 0:06:25.279 It sounds like guess they should have just to check 0:06:25.400 --> 0:06:30.000 things out. There are sort of standard processes for due 0:06:30.000 --> 0:06:33.760 diligence in any industry, but I think some of them 0:06:33.839 --> 0:06:36.960 may have been forgotten in the rush to get in. 0:06:37.160 --> 0:06:39.440 That was Bloomberg News crypto reporter Olga Careif on this 0:06:39.440 --> 0:06:41.720 week's cover story, be sure to head to Bloomberg dot 0:06:41.760 --> 0:06:43.880 com or the Bloomberg Terminal. From more on ft X 0:06:43.880 --> 0:06:47.560 and Sam Bateman, Freed and the crypto contagion. It's unbelievable, alright, 0:06:47.600 --> 0:06:50.640 coming up renewed hope for etholen relations between the world's 0:06:50.640 --> 0:06:53.120 two superpowers. What the Biden, she meeting in the G 0:06:53.279 --> 0:06:56.200 twenty means for the global economy and for the prospects 0:06:56.200 --> 0:06:59.440 of avoiding future conflict. You're listening to Bloomberg Business Week. 0:06:59.760 --> 0:07:10.960 This is Bloomberg. This is Bloomberg Business Week with Carol 0:07:11.040 --> 0:07:15.239 Messer and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio. 0:07:17.040 --> 0:07:20.120 I'm absolutely believe there's need not be a new Cold War. 0:07:20.480 --> 0:07:23.440 I do not think there's any imminent attempt on the 0:07:23.520 --> 0:07:27.280 part of China to invade Taiwan, and I made it 0:07:27.320 --> 0:07:30.560 clear that our policy in Taiwan has not changed at all. 0:07:30.880 --> 0:07:33.320 That's President Joe Biden speaking at the G twenty Heads 0:07:33.360 --> 0:07:36.720 of State and Government Summit held this past week in Bali, Indonesia, 0:07:36.920 --> 0:07:40.040 about the U S. China relationship. He and Chinese President 0:07:40.120 --> 0:07:43.320 Jimping met for about three hours, greeting each other with 0:07:43.360 --> 0:07:46.800 a handshake and conciliatory remarks in which they both called 0:07:46.840 --> 0:07:49.800 for calming tensions. The two agreed to a series of 0:07:49.800 --> 0:07:52.760 goodwill gestures intended to improve ties after the first in 0:07:52.840 --> 0:07:54.840 person meeting between the leaders of the U S and 0:07:54.920 --> 0:07:57.840 China since the pandemic began. For more on where the 0:07:57.840 --> 0:08:00.160 two nations go From here, we turned to dex Or 0:08:00.160 --> 0:08:03.760 Tiff Roberts, Senior Fellow at the Atlantic Council's Agia Security 0:08:03.760 --> 0:08:07.400 Initiative and Mansfield Fellow at the University of Montana. Tiff 0:08:07.440 --> 0:08:09.800 is also the author of the Myth of Chinese Capitalism 0:08:09.880 --> 0:08:12.960 and former Bloomberg Business Week China bureau chief. We asked 0:08:13.040 --> 0:08:16.200 him what to make of President Biden's comments. Keep in mind, 0:08:16.320 --> 0:08:20.440 this comes after I think maybe seven separate statements by 0:08:20.520 --> 0:08:23.960 Biden that the US would come to the defense of 0:08:23.960 --> 0:08:28.160 Taiwan in the case of an invasion by Beijing, and 0:08:28.640 --> 0:08:33.199 uh so that not surprisingly has gotten Beijing very riled up. 0:08:33.640 --> 0:08:36.920 So Beijing, I think they would welcome this comment. On 0:08:36.960 --> 0:08:39.280 the other hand, Beijing has been saying for a while, 0:08:39.679 --> 0:08:42.440 you say one thing, you you the United States and 0:08:42.480 --> 0:08:45.640 Biden say one thing, but you you actually act in 0:08:45.640 --> 0:08:49.000 a different way, and they along with those other comments 0:08:49.000 --> 0:08:52.600 by Biden about supporting Taiwan in the military situation, there 0:08:52.640 --> 0:08:56.040 have been the repeated high level visits by various first 0:08:56.040 --> 0:08:59.160 by backing the Trump administration officials, and now those have 0:08:59.200 --> 0:09:03.480 continued to core, most recently with Pelosi's visit to Taiwan. 0:09:03.840 --> 0:09:06.640 You've written about China you know China really well, and 0:09:06.679 --> 0:09:09.080 we talked about your book The Myth of Chinese Capitalism, 0:09:09.120 --> 0:09:12.200 and I you know, about the divisive system that was 0:09:12.280 --> 0:09:17.240 there that ultimately would be very challenging to the country's 0:09:17.400 --> 0:09:20.200 development going forward. How do you see it? I mean, 0:09:20.280 --> 0:09:23.240 is is Chinese capitalism working or do you see this 0:09:23.360 --> 0:09:27.440 is a big undoing? I think they're unfortunately, you know, 0:09:27.520 --> 0:09:30.480 they have not made progress on getting the economy to 0:09:30.559 --> 0:09:34.480 work better, nor nor marketize it more. I mean, really 0:09:34.640 --> 0:09:38.160 we've seen the opposite under Sijm Ping for a number 0:09:38.160 --> 0:09:41.319 of years now, actually going back earlier, which is this 0:09:41.440 --> 0:09:46.280 increasing imposition of state control over the economy, continuing crackdown 0:09:46.600 --> 0:09:49.240 on the private sector. And you know today what they're 0:09:49.240 --> 0:09:53.120 really dealing with is, uh, they're sort of the economy 0:09:53.240 --> 0:09:56.600 is suffering under the twin weights of both the continuing 0:09:56.800 --> 0:09:59.920 COVID zero policy, which is you know, been good at 0:10:00.280 --> 0:10:03.839 preserving life in China, which is important, but it's been 0:10:03.880 --> 0:10:06.319 deadly for the for the economy, and then also the 0:10:06.360 --> 0:10:09.680 continuing property crackdown. So I would say, you know, you 0:10:09.840 --> 0:10:13.760 they continue to struggle with the economy and the policy 0:10:13.800 --> 0:10:16.160 really hasn't been going in the right direction. How are 0:10:16.200 --> 0:10:19.880 we as observers not in China. How are we as 0:10:19.960 --> 0:10:23.320 investors supposed to kind of read sometimes and move forward 0:10:23.400 --> 0:10:25.960 sometimes a step backward. Well, yeah, I think that's that's 0:10:25.960 --> 0:10:28.480 what you keep seeing, and maybe unfortunately it's too often 0:10:28.520 --> 0:10:31.480 one step forward and two steps back. And I think 0:10:31.520 --> 0:10:34.720 with the first with the COVID zero policy, I know, 0:10:34.840 --> 0:10:39.160 or the some signs of easing, obviously they're welcomed. People 0:10:40.120 --> 0:10:43.520 have referred to them as baby steps. And ultimately the 0:10:43.760 --> 0:10:47.199 challenge they face there is they announced the easy, the 0:10:47.400 --> 0:10:51.160 slight easings in COVID zero. You know, meanwhile, we've seen 0:10:51.520 --> 0:10:55.880 COVID surging across the country at Beijing, uh jung Joe, 0:10:56.000 --> 0:10:59.120 where the world's largest iPhone factory is, and down in 0:10:59.160 --> 0:11:02.680 guang Jo, and they simply can't ease up on these 0:11:02.679 --> 0:11:06.040 policies until, first of all, they have a much broader 0:11:06.280 --> 0:11:09.640 vaccination program across the country, particularly with elderly people who 0:11:09.720 --> 0:11:13.280 have a low level of vaccination there and uh and 0:11:13.280 --> 0:11:15.400 and and it's it's not gonna, you know, no matter 0:11:15.440 --> 0:11:18.400 what they say about easing, they're gonna have to pull 0:11:18.440 --> 0:11:21.680 back until they actually start to get COVID under control. 0:11:21.840 --> 0:11:23.800 What do you hear from people on the ground there 0:11:23.880 --> 0:11:26.160 right now people you're in touch with about what life 0:11:26.240 --> 0:11:28.760 is like and how things have shifted over the last 0:11:28.760 --> 0:11:31.120 couple of years. First of all, I think there is 0:11:31.400 --> 0:11:34.080 a concern, as that we were discussing about COVID zero, 0:11:34.640 --> 0:11:39.320 the rolling lockdowns of cities are continuing. I think there's 0:11:39.360 --> 0:11:42.160 growing frustration about that, even though there has been you know, 0:11:42.360 --> 0:11:45.960 there has been support earlier for for the government's efforts 0:11:45.960 --> 0:11:48.040 to try to keep people safe, but we're starting to 0:11:48.080 --> 0:11:51.520 see that, start to see fishers in that, if you will. 0:11:51.840 --> 0:11:54.600 I think the economy is a real worry about people, 0:11:54.960 --> 0:11:58.160 and there's also a growing concern about this politicization of 0:11:58.240 --> 0:12:00.880 the economy China and the US. How would you describe 0:12:00.880 --> 0:12:03.360 the relationship in the way forward? Is it a good one? Oh? 0:12:03.400 --> 0:12:07.440 I think it's actually a troubled relationship. Unfortunately, you know 0:12:08.040 --> 0:12:12.320 it's there. It's really a competitive relationship. They are both 0:12:12.360 --> 0:12:15.160 see each other very much as their number one rival 0:12:15.400 --> 0:12:19.440 for for global superpower status. So the Chinese economy, will 0:12:19.480 --> 0:12:21.200 it still be the end in the world, has relied 0:12:21.240 --> 0:12:24.120 on not not great news there. I think that, you know, 0:12:24.400 --> 0:12:27.600 because of some of the things we discussed earlier, COVID zero, 0:12:27.640 --> 0:12:30.079 policy at the crackdown on the property sector, but then 0:12:30.520 --> 0:12:34.160 larger structural issues. China is trying to make this transition 0:12:34.240 --> 0:12:37.600 from a you know, factory to the world model, which 0:12:37.679 --> 0:12:40.760 was investment in debt driven to a much more one 0:12:40.840 --> 0:12:43.640 driven by its own consumers, one driven by household consumption. 0:12:43.760 --> 0:12:46.840 And that's a really tough transition that is going to 0:12:46.920 --> 0:12:50.400 mean probably slowing growth for a number eight years to come. 0:12:50.559 --> 0:12:54.320 Are we seeing the world divided up US and its allies, 0:12:54.480 --> 0:12:56.400 China and its allies at this point? I mean I 0:12:56.400 --> 0:12:59.440 think that you know, it has been divided up. It's 0:12:59.480 --> 0:13:02.760 it's yeah, we're seeing it slide further in that direction. 0:13:02.880 --> 0:13:06.880 Two separate polls, I would say though that, uh, you know, 0:13:06.920 --> 0:13:09.520 the US has made some progress in in the last 0:13:09.600 --> 0:13:13.640 year two in terms of bringing more allies together, and 0:13:13.720 --> 0:13:16.800 you know, China has helped and in his own way 0:13:16.800 --> 0:13:20.360 on that as well. By just one example, its support 0:13:20.480 --> 0:13:24.480 for Russia related relative support for Russia related to the 0:13:24.520 --> 0:13:27.520 invasion of Ukraine has turned a lot of European countries 0:13:27.559 --> 0:13:30.080 away from China and made them feel that they have 0:13:30.120 --> 0:13:32.520 more in common with the US. So, given the answers 0:13:32.520 --> 0:13:35.080 to your rapid fire questions from Carol just now, Tiff, 0:13:35.480 --> 0:13:38.960 what does it mean for investors the stocks that traded 0:13:39.000 --> 0:13:40.599 here in the US, The A d R s of 0:13:40.679 --> 0:13:43.480 Chinese companies have really been getting beaten up over the 0:13:43.559 --> 0:13:45.280 last year and a half. What does it mean for 0:13:45.320 --> 0:13:48.160 investors who want to be in the space. Well, I'm 0:13:48.200 --> 0:13:50.720 afraid we're going to see more beating up of stocks. 0:13:50.720 --> 0:13:53.000 You know, Ali Baba for the first time ever, they 0:13:53.040 --> 0:13:55.600 just had their their massive singles Day, you know, are 0:13:55.960 --> 0:13:59.360 sort of our Black Friday of retail online retail sales, 0:13:59.600 --> 0:14:01.520 and this is the first time. Holli Baba did not 0:14:01.679 --> 0:14:05.400 announce what the figures were because they weren't very good apparently. 0:14:05.800 --> 0:14:08.559 Um I think that we're going to see, as I said, 0:14:09.320 --> 0:14:12.080 a continued slow down in the Chinese economy. We're gonna 0:14:12.280 --> 0:14:15.600 see pressures on big multinationals are already seen with companies 0:14:15.640 --> 0:14:19.880 like Apple to diversify their supply chain out of out 0:14:19.880 --> 0:14:23.240 of China. The latest you know, lockdowns in Jung Joe 0:14:24.040 --> 0:14:26.560 on the world's largest iPhone factory just show that. So 0:14:26.760 --> 0:14:28.880 I think we're gonna have to have to see sort 0:14:28.920 --> 0:14:33.840 of a rere reckoning with global portfolios and the realization 0:14:33.880 --> 0:14:36.160 that China won't be the growth driver that it has been. 0:14:36.520 --> 0:14:40.000 That was Tiff Roberts of the Atlantic Council's Agent Security Initiative. 0:14:40.120 --> 0:14:43.160 He's also Mansfield Fellow at the University of Montana, as 0:14:43.160 --> 0:14:46.280 well as former Bloomberg Business Week China Bureau chief. Morehead 0:14:46.320 --> 0:14:48.240 on the G twenty and why one former U. S 0:14:48.280 --> 0:14:52.880 Commerce secretary believes little was accomplished. That's coming up next. 0:14:53.280 --> 0:15:07.120 This is Bloomberg Broadcasting from the financial capital of the 0:15:07.120 --> 0:15:11.040 World Bloomberg eleven Rio in New York to Washington, d C. 0:15:11.240 --> 0:15:15.960 Bloomberg to Boston, Bloomberg one of six one to San Francisco, 0:15:16.000 --> 0:15:19.480 Bloomberg nine six, to the country Sirius XM Channel one 0:15:19.560 --> 0:15:23.240 ninety and around the globe the Bloomberg Business and Bloomberg 0:15:23.320 --> 0:15:27.440 Radio dot Com. This is Bloomberg Business Week with Carol 0:15:27.520 --> 0:15:33.800 Messer and Bloomberg Quick Takes Tim Stenovan on Bloomberg Radio. Well, 0:15:33.800 --> 0:15:35.640 the last few years have reminded us of how the 0:15:35.640 --> 0:15:38.000 world as we know it can be turned upside down 0:15:38.120 --> 0:15:40.960 in a moment, thanks to the global pandemic, the pushback 0:15:40.960 --> 0:15:45.200 against globalization, and rising in unexpected geopolitical tensions. We felt 0:15:45.200 --> 0:15:48.120 that again this past week. This was all the backdrop 0:15:48.240 --> 0:15:51.840 of G twenty as those leaders met in Poli last week. 0:15:52.080 --> 0:15:54.280 Here the way in on what was done, or perhaps 0:15:54.560 --> 0:15:57.280 what wasn't done, is former U S Secretary of Commerce 0:15:57.320 --> 0:16:00.880 Carlos Gutierrez, who served under President George W. Bush. He's 0:16:00.880 --> 0:16:03.360 also the co founder and executive chairman of EmPATH, it's 0:16:03.400 --> 0:16:06.960 a human resources consulting firm, and he was not impressed 0:16:07.000 --> 0:16:09.760 with the progress made on some key global issues at 0:16:09.800 --> 0:16:14.160 this year's summit. Very rarely do you get any concrete decisions. 0:16:14.480 --> 0:16:16.840 One thing that the G twenty did do is issue 0:16:16.840 --> 0:16:21.360 a statement against the war in Ukraine. Although it wasn't 0:16:21.440 --> 0:16:25.400 really unanimous, said there were a couple of there was 0:16:25.600 --> 0:16:30.800 language that tended to soften the demand, let's say, on 0:16:30.840 --> 0:16:35.400 the trade side. I found their statement to be very bland, 0:16:35.760 --> 0:16:39.520 very noncommittal. They talked about trade, but they talked about 0:16:39.640 --> 0:16:43.320 trade and relation to sustainability. So anytime you see the 0:16:43.320 --> 0:16:49.040 word trade, usually see sustainability. UM. Nothing about tariffs, nothing 0:16:49.040 --> 0:16:54.040 about protectionism, really nothing about globalization. So it was a 0:16:54.160 --> 0:16:57.800 very weak endorsement of trade. UM. I agree that w 0:16:57.960 --> 0:17:01.040 t O needs reform and that goes ahead. I wish 0:17:01.080 --> 0:17:03.960 we had a reformed and strengthened w t O when 0:17:03.960 --> 0:17:07.040 all the tariffs started, But it seems to me like 0:17:07.560 --> 0:17:10.120 it's going to continue to be the status quo. How 0:17:10.119 --> 0:17:13.119 would you have advised that by an administration to go 0:17:13.160 --> 0:17:16.000 into this G twenty Yeah, I would, especially now that 0:17:16.080 --> 0:17:18.720 the mid terms are over. I would have leaned forward 0:17:18.960 --> 0:17:22.080 a lot more on the importance of trade. Maybe the 0:17:22.119 --> 0:17:25.640 administration try to get a statement in there about trade 0:17:25.680 --> 0:17:30.160 and intellectual property and technology, but probably could not get 0:17:30.200 --> 0:17:33.560 the whole group to go with it. But yes, you know, 0:17:33.600 --> 0:17:38.719 the administration has really left some big value on the table. 0:17:39.440 --> 0:17:45.320 For example, the ct P p uh A trade agreement 0:17:45.400 --> 0:17:50.000 which will bring or open up a lot of countries 0:17:50.400 --> 0:17:54.600 in Asia for US manufacturers, US companies. That was an 0:17:54.600 --> 0:17:59.840 Obama era agreement and nothing has happened. I would have 0:18:00.000 --> 0:18:02.679 aught that President Trump took it out because he was 0:18:03.600 --> 0:18:08.480 following protectionist policies, and I would have expected President Biden 0:18:08.840 --> 0:18:11.480 to come back in because it's for the good of 0:18:11.520 --> 0:18:15.320 the US. It's actually it's hard to explain because we're 0:18:15.440 --> 0:18:19.240 giving Asia essentially to China. Uh, they have our step 0:18:19.320 --> 0:18:23.639 which would unify Asia under one agreement, and the US 0:18:23.720 --> 0:18:26.800 won't be part of it. So I think what's happening 0:18:26.880 --> 0:18:32.439 is that domestic politics are overshadowing and taking over any 0:18:32.800 --> 0:18:38.480 foreign policy. But you rarely hear any foreign policy strategy, 0:18:38.840 --> 0:18:43.199 um any doctrine of sorts. It really is behaving on 0:18:43.240 --> 0:18:46.880 the basis of what works domestically. Mr Secretary does feel 0:18:46.920 --> 0:18:48.960 like we've seen a lot of nations looking inward and 0:18:49.000 --> 0:18:51.040 maybe that's the result of the pandemic or they had 0:18:51.080 --> 0:18:52.760 to take care of their own even though it was 0:18:52.800 --> 0:18:57.520 a global pandemic. Do you feel like globalization and global 0:18:57.560 --> 0:19:01.040 supply chains that era is over. There's no question that 0:19:01.119 --> 0:19:04.760 it's taken a pause, and how long that pause will 0:19:04.840 --> 0:19:09.359 last is really something to see. But companies who bring 0:19:09.480 --> 0:19:13.360 manufacturing back, while that's very welcome from the standpoint of jobs, 0:19:14.200 --> 0:19:18.560 it does raise the cost. At some point they're going 0:19:18.600 --> 0:19:22.119 to have to address that will always have lower cost 0:19:22.560 --> 0:19:27.080 foreign competition. So yes, bringing manufacturing back is a great 0:19:27.119 --> 0:19:32.399 idea domestically, but it is going to increase the cost um. 0:19:32.920 --> 0:19:37.639 Different supply chains, Longer supply chains or even supply chains 0:19:37.720 --> 0:19:42.600 closer by they're not as efficient as they were, will 0:19:42.640 --> 0:19:46.200 also impact costs. I think it's really interesting right now 0:19:46.240 --> 0:19:50.120 and this is just anecdotally, but I am seeing more 0:19:50.200 --> 0:19:54.240 out of stocks than I remember seeing any time during COVID, 0:19:54.800 --> 0:19:59.080 and that what that tells me is where are you 0:19:59.080 --> 0:20:00.960 seeing that? What are you saying? I'm I'm seeing them 0:20:01.000 --> 0:20:06.359 at pharmacies and I'm seeing at grocery stores, basically the 0:20:06.359 --> 0:20:10.040 two places where I go. And uh, it's incredible. It's 0:20:10.040 --> 0:20:13.199 just hard to find things. And the out of slash 0:20:13.240 --> 0:20:16.399 go on for a week or two, and that just 0:20:16.560 --> 0:20:19.520 means that the supply, the new supply change or what 0:20:19.560 --> 0:20:24.320 are supply change are being constructed, aren't working. We're not 0:20:24.400 --> 0:20:26.679 getting the right product to the right place at the 0:20:26.760 --> 0:20:30.160 right time. That was former US Commerce Secretary Carlos S. Gutierrez. 0:20:30.359 --> 0:20:33.360 He's also co founder and executive chairman of EmPATH. You're 0:20:33.359 --> 0:20:36.439 listening to Bloomberg Business Week. Coming up next, revelations of 0:20:36.440 --> 0:20:39.600 a toxic workplace for women in the highest echelons of 0:20:39.640 --> 0:20:42.840 Wall Street's most prestigious firm. This is not just a 0:20:42.920 --> 0:20:47.560 Goldman Sachs problem. This is a chronic problem across Wall 0:20:47.600 --> 0:20:51.920 Street and has been for generations that are in Financial 0:20:52.000 --> 0:20:54.439 journalist Bill Cohen on a hush money cover up at 0:20:54.480 --> 0:20:58.000 Goldman Sachs and his new book on the complicated history 0:20:58.040 --> 0:21:02.520 of another iconic American company, General Electric. This is Bloomberg. 0:21:09.680 --> 0:21:13.199 You're listening to Bloomberg Business Week with Carol Masser and 0:21:13.280 --> 0:21:19.080 Bloomberg Quick Takes. Tim Stinovy from Bloomberg Radio. Wellow next 0:21:19.080 --> 0:21:21.560 guest has written about Goldman Sachs, the fall of Bear Stearns. 0:21:21.600 --> 0:21:24.040 He's written about the Duke Lacrosse scandal. He's written about 0:21:24.040 --> 0:21:27.159 his friends. His latest subject is General Electric. And it 0:21:27.240 --> 0:21:29.600 is so great to have with us in our Bloomberg Interreactor. 0:21:29.640 --> 0:21:32.480 Broker's studio, Bill Cohen, He's a former Wall Street m 0:21:32.480 --> 0:21:35.919 and a investment banker. I think for seventeen years seventeen 0:21:36.200 --> 0:21:39.840 longtime financial journalist. He's been writing for Who's Who, a 0:21:39.880 --> 0:21:42.600 business journalism and more, including Business Week. He's author of 0:21:42.640 --> 0:21:45.920 many books, several New York Times bestsellers, former Bloomberg contributor, 0:21:45.920 --> 0:21:47.560 and I think you and I even anchored together at 0:21:47.560 --> 0:21:52.879 one point. We did good old days. Anymore, I'll just 0:21:53.080 --> 0:21:56.080 see myself out in His latest book is Power Failure, 0:21:56.119 --> 0:21:58.560 The Rise and Fall of an American Icon. Really delighted 0:21:58.600 --> 0:22:00.479 to have you in studio. First of all, how are you? 0:22:00.880 --> 0:22:03.120 I'm great, Thank you, It's great to be here. Great 0:22:03.119 --> 0:22:05.639 to be back in this building. Honestly, it is really great. 0:22:05.920 --> 0:22:07.840 Right A long time ago, you've been busy tell us 0:22:07.880 --> 0:22:11.959 about this book. Well, Uh, there seems to be a 0:22:12.040 --> 0:22:15.560 strange pattern going on, Carol. Like you know, when I 0:22:15.600 --> 0:22:19.760 wrote about Bear Stearns, was sort of a metaphorical dead 0:22:19.800 --> 0:22:21.480 body on the ground, and I wanted to know how 0:22:21.560 --> 0:22:25.800 it got there. Same thing with the Duke Lacrosse scandal. Uh, 0:22:26.000 --> 0:22:29.560 even the Goldman, I wanted to know how it avoided death. Uh. 0:22:30.240 --> 0:22:33.440 And with GE, you know, Uh, to me, it felt 0:22:33.480 --> 0:22:35.879 like also there was a dead body on the ground 0:22:35.880 --> 0:22:37.400 and I wanted to know how it got there. It's 0:22:37.440 --> 0:22:39.960 sort of like a mystery that I wanted to solve, 0:22:40.000 --> 0:22:43.720 and I felt compelled to solve it. So some for 0:22:43.760 --> 0:22:46.200 some reason, I made the crazy decision to go back 0:22:46.240 --> 0:22:49.920 to the founding of the company and try to figure 0:22:49.960 --> 0:22:53.160 out what happened. And even from the outset, things aren't 0:22:53.200 --> 0:22:56.879 exactly the way they seem. People think that, you know, 0:22:56.960 --> 0:23:00.800 Thomas Edison was the great founder of GE, but in fact, 0:23:00.880 --> 0:23:04.760 by the time his company merged with another company, another 0:23:04.800 --> 0:23:08.280 electric company, Thomas Edison was already out of the picture. 0:23:08.280 --> 0:23:10.879 He was just a small shareholder of a company that 0:23:10.960 --> 0:23:14.320 was controlled by JP Morgan and Henry Villard, with Henry 0:23:14.440 --> 0:23:17.240 Vollard being the CEO, and then it merged with Charles 0:23:17.280 --> 0:23:21.000 Coffin's uh, you know, electric company to form General Electric, 0:23:21.040 --> 0:23:24.200 and Charles Coffin became the CEO of the combined company, 0:23:24.400 --> 0:23:27.119 with Edison not even knowing about the merger, not wanting 0:23:27.160 --> 0:23:30.399 the merger, and him just like floating off, you know, 0:23:30.480 --> 0:23:32.840 over to New Jersey to you know, create some sort 0:23:32.840 --> 0:23:36.120