1
00:00:03,400 --> 00:00:06,800
Speaker 1: Global business news twenty four hours a day at Bloomberg

2
00:00:06,840 --> 00:00:09,920
Speaker 1: dot com, the radio plus mobile lap and on your radio.

3
00:00:10,160 --> 00:00:14,320
Speaker 1: This is a Bloomberg Business flag from Bloomberg World Handquarters.

4
00:00:14,360 --> 00:00:17,759
Speaker 1: I'm Charlie Howett. Stocks are slipping from records, the DAL,

5
00:00:17,880 --> 00:00:21,880
Speaker 1: the SMP, NASTAC all declining this Thursday after European Central

6
00:00:21,880 --> 00:00:26,119
Speaker 1: Bank President Mario Draggy downplayed the need for more stimulus

7
00:00:26,120 --> 00:00:29,720
Speaker 1: measures to bolster growth. The SMP five hundred index down

8
00:00:29,840 --> 00:00:33,240
Speaker 1: six now to one seventy nine, a drop of three

9
00:00:33,280 --> 00:00:36,800
Speaker 1: tenths of one percent. Nastack is down six tenths of

10
00:00:36,880 --> 00:00:40,159
Speaker 1: one percent, down twenty nine points, fifty two fifty four

11
00:00:40,240 --> 00:00:43,880
Speaker 1: right now on NASDAC down industriels down sixty one points,

12
00:00:43,880 --> 00:00:46,559
Speaker 1: a drop there of three tenths of one percent. The

13
00:00:46,600 --> 00:00:49,600
Speaker 1: Tenure down twenty two thirty seconds yield one point six

14
00:00:49,680 --> 00:00:53,440
Speaker 1: one percent, Gold down eighty ounce the thirteen thirty seven

15
00:00:53,440 --> 00:00:56,000
Speaker 1: and drop also of six tenths of one percent, and

16
00:00:56,040 --> 00:00:59,320
Speaker 1: crude oil surging after the inventories report a four point

17
00:00:59,400 --> 00:01:03,960
Speaker 1: six percent. Now West Texas Intermediate rallying to a barrel

18
00:01:05,040 --> 00:01:08,880
Speaker 1: sixty one right now on w T I I'm Charlie Peloton.

19
00:01:09,000 --> 00:01:14,720
Speaker 1: That's a bloom Bird business flash. You're listening to Taking

20
00:01:14,800 --> 00:01:18,840
Speaker 1: Stock with Bim Box and Kathleen Hayes on Bluebird Radio.

21
00:01:19,560 --> 00:01:23,040
Speaker 1: As Charlie Peller just said, the European Central Bank leaving

22
00:01:23,120 --> 00:01:26,480
Speaker 1: all of its key interest rates unchanged, holding off on

23
00:01:26,560 --> 00:01:29,920
Speaker 1: shifting its main policy levers, even as inflation in the

24
00:01:30,040 --> 00:01:34,240
Speaker 1: nineteen country currency block remains stubbornly low. Here to tell

25
00:01:34,319 --> 00:01:37,520
Speaker 1: us more is Danny blanch Flower. He's professor of economics

26
00:01:37,760 --> 00:01:40,520
Speaker 1: at Dartmouth College and he can be followed on Twitter

27
00:01:40,640 --> 00:01:44,319
Speaker 1: at d underscore blanch Flower. Danny blanch Flower, thanks for

28
00:01:44,360 --> 00:01:48,160
Speaker 1: being with us. Sure, well, go ahead. Yeah, they didn't

29
00:01:48,200 --> 00:01:51,800
Speaker 1: really do anything. And the surprise is that, Um, Actually,

30
00:01:51,800 --> 00:01:55,760
Speaker 1: if your job is to get inflation back to target

31
00:01:56,400 --> 00:02:00,200
Speaker 1: and you forecast that over the time coming that you're

32
00:02:00,200 --> 00:02:01,720
Speaker 1: not going to be able to get it to target,

33
00:02:01,800 --> 00:02:06,840
Speaker 1: the obvious response ort to be that you should do something. Um.

34
00:02:06,920 --> 00:02:10,160
Speaker 1: So that doesn't really hang together. But I guess the

35
00:02:10,240 --> 00:02:15,200
Speaker 1: answer has to be later. Later more will be coming, um,

36
00:02:15,240 --> 00:02:18,960
Speaker 1: as they decide whether they can go more negative and

37
00:02:19,000 --> 00:02:20,959
Speaker 1: what else it is that they can buy, given they've

38
00:02:20,960 --> 00:02:23,920
Speaker 1: been buying everything that's out there. Well, I was going

39
00:02:23,960 --> 00:02:26,000
Speaker 1: to ask you that if you are not capable of

40
00:02:26,080 --> 00:02:28,520
Speaker 1: not you personally, but if you're running something and it

41
00:02:28,680 --> 00:02:31,560
Speaker 1: doesn't work for twenty four months, you know you have

42
00:02:31,639 --> 00:02:35,280
Speaker 1: an inflation forecast. Is there a possibility maybe someone else

43
00:02:35,320 --> 00:02:39,359
Speaker 1: with a different idea might be a good bet. Well, right,

44
00:02:39,440 --> 00:02:41,400
Speaker 1: I mean you know that. I mean, how can that

45
00:02:41,440 --> 00:02:44,679
Speaker 1: does not apply to central bankers? Well, they can only

46
00:02:44,720 --> 00:02:47,120
Speaker 1: do what they can do, I guess. I mean the

47
00:02:47,160 --> 00:02:50,359
Speaker 1: problem for central bankers is that, um, they have fiscal

48
00:02:50,400 --> 00:02:53,760
Speaker 1: authorities as well that should try and be and help

49
00:02:53,840 --> 00:02:55,960
Speaker 1: them out. But they've all been a well for a

50
00:02:56,000 --> 00:02:59,480
Speaker 1: really long time since they discovered Kane for nine months

51
00:02:59,480 --> 00:03:02,840
Speaker 1: in two than nine. Hence why you've seen authorities around

52
00:03:02,840 --> 00:03:06,240
Speaker 1: the world saying, um, you need to see the fiscal

53
00:03:06,280 --> 00:03:11,200
Speaker 1: authorities cutting taxes, putting in stimulus. Um, that's that's kind

54
00:03:11,240 --> 00:03:14,799
Speaker 1: of where we are. The central bank has not got

55
00:03:14,840 --> 00:03:18,560
Speaker 1: that much firepower sitting at the zero lower bound, and

56
00:03:18,600 --> 00:03:21,639
Speaker 1: obviously the worry is that you would like rates to

57
00:03:21,680 --> 00:03:24,600
Speaker 1: be up high so when the shock that inevitably comes

58
00:03:25,040 --> 00:03:27,799
Speaker 1: hits you, you can cut rates, and obviously you can

59
00:03:27,960 --> 00:03:30,200
Speaker 1: so I think in a way the u CB is

60
00:03:30,240 --> 00:03:34,800
Speaker 1: looking at what additional things can it do, particularly with

61
00:03:34,920 --> 00:03:37,760
Speaker 1: the Brexit shock. That's clearly we don't have bigger shock

62
00:03:37,800 --> 00:03:40,720
Speaker 1: it is, but it clearly represents a negative shock to

63
00:03:40,800 --> 00:03:44,520
Speaker 1: the euro Area and to the UK. So so essentially

64
00:03:44,800 --> 00:03:47,400
Speaker 1: drug has made it clear shocks are to the downs

65
00:03:47,440 --> 00:03:49,960
Speaker 1: that there's limited things that they can do, and what

66
00:03:50,080 --> 00:03:53,840
Speaker 1: do you do? Unemployments only ten per cent and inflation

67
00:03:53,920 --> 00:03:56,160
Speaker 1: is point two. But if that's as good as it

68
00:03:56,200 --> 00:04:00,320
Speaker 1: gets after eight years of recession, you're right, you maybe

69
00:04:00,360 --> 00:04:02,800
Speaker 1: should look at what the heck is going on? Well,

70
00:04:02,920 --> 00:04:05,320
Speaker 1: what would you suggest, is there anything that would be

71
00:04:05,360 --> 00:04:10,200
Speaker 1: an alternative to economic stimulus that comes from governments because

72
00:04:10,200 --> 00:04:14,440
Speaker 1: they seem to be recalcitrant and making they are recalcitrant.

73
00:04:14,440 --> 00:04:17,840
Speaker 1: I mean, in some sense, what we've learned is that

74
00:04:18,040 --> 00:04:22,440
Speaker 1: this is simply not enough. We are clearly in um

75
00:04:22,520 --> 00:04:27,240
Speaker 1: some some degree of a stagnation. We have not gone

76
00:04:27,240 --> 00:04:30,159
Speaker 1: back to pre two thousand and eight levels. But look

77
00:04:30,200 --> 00:04:35,320
Speaker 1: back at Japan. We worried about the Japanese lost decade.

78
00:04:35,400 --> 00:04:39,120
Speaker 1: Well we're eight years into that lost decade in the UK,

79
00:04:39,400 --> 00:04:42,599
Speaker 1: the US and Europe. But let's still be aware that

80
00:04:42,720 --> 00:04:45,799
Speaker 1: there are many countries in your two countries, especially in Europe,

81
00:04:45,800 --> 00:04:50,039
Speaker 1: with unemployment rates above Spain and Greece. And I'm just

82
00:04:50,080 --> 00:04:53,320
Speaker 1: looking at the graph here of inflation rates in July

83
00:04:53,440 --> 00:05:00,520
Speaker 1: sixteen account twelve twelve EU countries Bulgaria, Croatia, Slovenia, Spain, Netherlands,

84
00:05:00,520 --> 00:05:03,839
Speaker 1: Poland cycles and so it goes on. In Italy, all

85
00:05:04,000 --> 00:05:08,280
Speaker 1: still in deflation. So the answer is you're right, this

86
00:05:08,360 --> 00:05:10,240
Speaker 1: is eight years in and it's failed. Time to do

87
00:05:10,360 --> 00:05:12,960
Speaker 1: something different, but nothing different is really on the table.

88
00:05:13,320 --> 00:05:16,200
Speaker 1: So there's no obvious way out, and there's a shot coming,

89
00:05:17,000 --> 00:05:19,880
Speaker 1: a shock that would do what to the system. Well,

90
00:05:20,080 --> 00:05:22,000
Speaker 1: I mean, let's just think about I'm not saying there's

91
00:05:22,000 --> 00:05:24,520
Speaker 1: a shot coming tomorrow, but there is a thing called

92
00:05:24,520 --> 00:05:29,240
Speaker 1: the business cycle, and these the hasn't been repealed, right, No,

93
00:05:29,400 --> 00:05:32,600
Speaker 1: it's not been repealed. Just just checking, just checking the

94
00:05:32,720 --> 00:05:34,599
Speaker 1: last time I looked at having well, because I just

95
00:05:34,839 --> 00:05:36,599
Speaker 1: just to give you the sorry for the your side,

96
00:05:36,600 --> 00:05:39,760
Speaker 1: but you know THEO Dragi said today, for the time being,

97
00:05:39,880 --> 00:05:43,000
Speaker 1: the changes are not substantial enough to warrant a change

98
00:05:43,000 --> 00:05:45,839
Speaker 1: in policy. There is no question about the will to

99
00:05:45,960 --> 00:05:50,480
Speaker 1: act or the ability to do so. I understand that.

100
00:05:50,520 --> 00:05:53,000
Speaker 1: But I'm looking at point to a forecast, the point

101
00:05:54,040 --> 00:05:59,080
Speaker 1: inflation for sixteen one point six in seventeen, which looks unlikely,

102
00:05:59,400 --> 00:06:01,400
Speaker 1: and one at seven I think it is in in

103
00:06:01,640 --> 00:06:05,200
Speaker 1: in eighteen UM, and go back to the unemployment rate

104
00:06:05,320 --> 00:06:08,719
Speaker 1: of ten per cent. So this is great news, I

105
00:06:08,760 --> 00:06:12,960
Speaker 1: suspect not um. I mean, that's obviously a considerable worry.

106
00:06:13,240 --> 00:06:14,960
Speaker 1: You can go to the Euros that website and you

107
00:06:15,000 --> 00:06:17,200
Speaker 1: can look at these unemployment rates and we're looking at

108
00:06:17,480 --> 00:06:21,160
Speaker 1: you know, eleven points eleven points six in Italy, um

109
00:06:21,360 --> 00:06:25,240
Speaker 1: nine point nine in France, nineteen point nine in Spain,

110
00:06:25,279 --> 00:06:28,279
Speaker 1: twenty three point three in Greece, and then we're celebrating. Stand,

111
00:06:28,279 --> 00:06:32,520
Speaker 1: there's not much that we can do. Um. Not good,

112
00:06:32,720 --> 00:06:35,040
Speaker 1: all right, not good. Let's but let's say you get

113
00:06:35,040 --> 00:06:39,599
Speaker 1: the call from the Angela Merkel and she says, you know,

114
00:06:39,720 --> 00:06:43,440
Speaker 1: Danny Blanche Flower, You've got experience. You're on the policy

115
00:06:43,520 --> 00:06:46,359
Speaker 1: making committee of the Bank of England. You're also a

116
00:06:46,360 --> 00:06:49,880
Speaker 1: professor of economics at dartmin And you get one wish.

117
00:06:50,160 --> 00:06:54,120
Speaker 1: What would you wish that the European Central Bank would

118
00:06:54,160 --> 00:06:57,160
Speaker 1: do or that my government should do? Well? Your government

119
00:06:57,160 --> 00:06:59,840
Speaker 1: should start to do a very large fiscal stimulus. Go

120
00:07:00,080 --> 00:07:03,120
Speaker 1: and start to think about a trillion euros to start with.

121
00:07:03,760 --> 00:07:07,640
Speaker 1: Investing in the infrastructure and capital investment and so on

122
00:07:07,960 --> 00:07:10,080
Speaker 1: to help out the e c B. This is obviously

123
00:07:10,080 --> 00:07:13,360
Speaker 1: where we have to go. They've been reluctant to do that.

124
00:07:13,640 --> 00:07:15,800
Speaker 1: I mean, the worry came in a way, is that

125
00:07:15,840 --> 00:07:18,880
Speaker 1: if you can think back to the thirties, what caused

126
00:07:18,920 --> 00:07:21,760
Speaker 1: the Great Depression to go away? The answer was a

127
00:07:21,880 --> 00:07:27,080
Speaker 1: huge fiscal expansion in preparation or in actuality of a war.

128
00:07:27,480 --> 00:07:30,920
Speaker 1: That's what got the Great Depression over with a huge

129
00:07:31,000 --> 00:07:34,320
Speaker 1: fiscal expansion. Well, we'll have to wait and see whether

130
00:07:34,400 --> 00:07:37,800
Speaker 1: the Germans are willing to spend the money to help Europe.

131
00:07:37,840 --> 00:07:42,320
Speaker 1: Thanks very much, Danny Blancheflower, Professor Economics, Dartmouth College. This

132
00:07:42,480 --> 00:07:48,480
Speaker 1: is Bloomberg coming up on Bloomberg taking stock. Have you

133
00:07:48,520 --> 00:07:51,760
Speaker 1: ever wanted to create your own business? While one couple

134
00:07:51,840 --> 00:07:55,720
Speaker 1: has created an educational and plate tool that's composed of

135
00:07:55,840 --> 00:08:00,160
Speaker 1: bendable blocks, We've got details next