WEBVTT - Fannie, Freddie $30 Billion IPO Being Weighed for This Year 0:00:02.560 --> 0:00:10.799 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.800 --> 0:00:14.600 Week Daily reporting from the magazine that helps global leaders 0:00:14.680 --> 0:00:18.560 stay ahead with insight on the people, companies, and trends 0:00:18.640 --> 0:00:23.239 shaping today's complex economy, plus global business, finance and tech 0:00:23.280 --> 0:00:27.240 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.520 --> 0:00:31.600 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.159 --> 0:00:34.640 I don't know if you checked out shares a Fannie 0:00:34.640 --> 0:00:35.600 May and Freddie mac. 0:00:35.680 --> 0:00:38.960 I mean just say, soaring, soaring off the charts. 0:00:39.040 --> 0:00:42.159 It's incredible too, and just given the where they've come 0:00:42.200 --> 0:00:44.319 and gone and being in that consumership since the height 0:00:44.360 --> 0:00:45.640 of the global financial crisis. 0:00:45.680 --> 0:00:46.840 Yeah, it's a really good point. 0:00:46.840 --> 0:00:48.400 And it feels like we need a little bit of 0:00:48.440 --> 0:00:51.520 a history lesson the news that's got the movie, We've got. 0:00:52.520 --> 0:00:55.080 We've got Fanny May. It's up about twenty percent. I'm 0:00:55.120 --> 0:00:57.400 looking at Freddie Mack up about twenty two percent. And 0:00:57.440 --> 0:01:01.520 this is after the administration is said to be preparing 0:01:01.600 --> 0:01:04.160 to sell shares in an offering that could start as 0:01:04.160 --> 0:01:06.800 early as this year. Again according to that senior administration 0:01:06.880 --> 0:01:09.560 official with the latest on that, and kind of as 0:01:09.600 --> 0:01:11.920 I said, A history lesson blue Er TV and Radio, 0:01:11.959 --> 0:01:14.240 International Economics and Policy correspondent Michael. 0:01:14.040 --> 0:01:16.039 M bringing the old guys for thea. 0:01:17.040 --> 0:01:18.160 The old guy. 0:01:19.640 --> 0:01:21.720 Like a fine line, Mike, you just get better and better. 0:01:22.319 --> 0:01:25.480 But no, like there is history behind these two in 0:01:25.520 --> 0:01:25.960 a big way. 0:01:26.120 --> 0:01:28.959 Especially you look at Fanny May was chartered in nineteen 0:01:29.000 --> 0:01:31.680 thirty eight. It's been around for a long time. Freddy 0:01:31.720 --> 0:01:34.760 Mack came along in nineteen seventy. Stepping back for just 0:01:34.760 --> 0:01:38.640 a second, here's what they do. They basically buy mortgages 0:01:38.680 --> 0:01:42.480 from banks and mortgage lenders and package them into securities 0:01:42.480 --> 0:01:45.440 and sell them to investors. And that way the banks 0:01:45.480 --> 0:01:48.520 have more space on their balance sheets to make loans. 0:01:48.960 --> 0:01:52.000 And because Fannie Mae and Freddie Mack have sold these 0:01:52.000 --> 0:01:56.560 off to investors who are anxious to get the yield 0:01:56.600 --> 0:02:00.920 on them, they can predict essentially what they're mortgage costs 0:02:00.920 --> 0:02:04.000 are going to be, and so they can keep mortgage 0:02:04.080 --> 0:02:08.519 rates generally fairly stable. Along the way, from the time 0:02:08.600 --> 0:02:12.359 Fanny May was created, they created the thirty year mortgage, 0:02:12.639 --> 0:02:16.120 which is we're the only country that has something like that. 0:02:16.400 --> 0:02:19.560 But then of course they bought a lot of really 0:02:19.800 --> 0:02:23.200 bad mortgages and the run up to the Great Financial 0:02:23.240 --> 0:02:26.560 Crisis and basically went bankrupt and the government had to 0:02:26.560 --> 0:02:30.040 bail them out, and they did and have put them 0:02:30.040 --> 0:02:34.920 into conservatorship is what they did. But the way they 0:02:34.919 --> 0:02:37.960 did it was they still left shares outstanding, and so 0:02:38.120 --> 0:02:40.919 a lot of people who a lot of hedge funds 0:02:41.240 --> 0:02:44.239 got into the business of buying up Fanny and Freddy 0:02:44.360 --> 0:02:47.040 shares at pennies on the dollar and have been sitting 0:02:47.120 --> 0:02:52.000 on them for seventeen years now. And the Biden administration 0:02:52.400 --> 0:02:55.919 and the Obama administration had no desire to bring them 0:02:55.919 --> 0:02:59.400 out of conservatorship. But the Trump administration seems bound and 0:02:59.440 --> 0:03:01.519 determined to do that. They've been talking about it since 0:03:01.520 --> 0:03:05.800 he came back to office. It's complicated, it will be difficult. 0:03:06.800 --> 0:03:09.720 But boy, if you were Bill Ackman or John Paulson 0:03:10.800 --> 0:03:12.919 pretty happy today, you're pretty happy today. 0:03:13.000 --> 0:03:13.560 Yeah. 0:03:14.040 --> 0:03:14.320 Well. 0:03:14.639 --> 0:03:18.520 Trump also met with the CEOs of Bank of America 0:03:18.600 --> 0:03:20.560 City Group earlier this week, and then last week Bloomberg 0:03:20.600 --> 0:03:22.560 News had a reported that he met with Jamie Diamond 0:03:22.600 --> 0:03:25.120 and David Salman over at Goldman Sachs Group. So I'm 0:03:25.120 --> 0:03:27.880 wondering how difficult will it be to pull off a 0:03:27.880 --> 0:03:30.480 potential feet here when we're talking about an IPO. 0:03:30.960 --> 0:03:33.760 Well, it's not so much the selling the shares, although 0:03:33.760 --> 0:03:36.120 it has to be designed in a sort of specific way, 0:03:36.160 --> 0:03:38.600 because the government owns eighty percent of the shares right now. 0:03:39.040 --> 0:03:41.880 And one of the big questions is are you going 0:03:41.960 --> 0:03:46.240 to put the companies into receivership and basically bankrupt all 0:03:46.280 --> 0:03:49.240 the existing shareholders, which is what you normally do with 0:03:49.360 --> 0:03:52.800 a company that's going to come out of bankruptcy, or 0:03:52.880 --> 0:03:59.840 do you leave them with equity in the new company 0:03:59.880 --> 0:04:04.040 and then they make a huge profit. But the biggest 0:04:04.080 --> 0:04:09.000 problem is that because they have been owned by the government, 0:04:09.040 --> 0:04:12.840 and before that there was an implicit guarantee by the government, 0:04:13.360 --> 0:04:18.720 rates were low. You didn't demand an extra premium because 0:04:18.839 --> 0:04:21.320 you knew that they were insured and they were gonna 0:04:21.600 --> 0:04:24.040 get paid. You were going to get paid either way 0:04:24.040 --> 0:04:26.600 because the government would step in. And so if the 0:04:26.839 --> 0:04:31.160 government steps out and lets this be a private company, 0:04:31.200 --> 0:04:35.000 then maybe mortgage rates are going to go up, and 0:04:35.080 --> 0:04:37.680 things like the mortgage rate lock when you lock in 0:04:37.680 --> 0:04:41.000 a mortgage that could go away. So there are a 0:04:41.000 --> 0:04:43.680 lot of questions about how this would be handled, and 0:04:43.720 --> 0:04:46.760 that's one of the reasons it's very complex. Jesse we're 0:04:46.760 --> 0:04:49.560 talking about the bank's meeting with the president. They're looking 0:04:49.600 --> 0:04:52.800 apparently for a lead underwriter. Now, this is going to 0:04:52.880 --> 0:04:56.440 be a huge sale, so they would, I'm sure, have 0:04:56.520 --> 0:04:59.039 a consort, but somebody's got to be the lead, and 0:04:59.480 --> 0:05:01.839 you know, not pauls and act and are going to make. 0:05:01.800 --> 0:05:03.760 Mike I feel like so many things this year we 0:05:03.920 --> 0:05:07.400 are saying are complicated. But I do wonder that it 0:05:07.400 --> 0:05:10.200 would be a very different entity. Both of them would 0:05:10.200 --> 0:05:13.120 be different entities if they are publicly held and it's 0:05:13.160 --> 0:05:15.880 not that quasi public private that we've seen. 0:05:16.120 --> 0:05:16.560 Correct. 0:05:16.720 --> 0:05:19.560 Yeah, and nobody quite knows how this will play out 0:05:19.640 --> 0:05:23.880 because you you would worry that rates will go up 0:05:23.960 --> 0:05:26.240 if they don't have a government guarantee. But does the 0:05:26.279 --> 0:05:29.480 government want to stay in the guarantee business if it's 0:05:29.520 --> 0:05:34.640 a private company and we're basically subsidizing their low rates 0:05:34.680 --> 0:05:38.320 and their profits. So it's a tough call the administration. 0:05:38.400 --> 0:05:41.040 This administration is very much a free market, you know, 0:05:41.320 --> 0:05:44.360 get the government out of business stuff. So they're in 0:05:44.400 --> 0:05:48.520 favor of this, as are some of Donald Trump's biggest 0:05:48.880 --> 0:05:53.800 campaign downers. But it's not going to be easy to 0:05:54.320 --> 0:05:55.680 put it all together, and a lot of people in 0:05:55.680 --> 0:05:57.960 the mortgage industries have been concerned about it. I don't 0:05:57.960 --> 0:06:00.160 wan say they're worried, but they are concerned because, as 0:06:00.160 --> 0:06:02.760 they know, it's a complex issue. 0:06:02.440 --> 0:06:05.400 Complex and so not a given that this ultimately plays out. 0:06:05.480 --> 0:06:08.560 Mike McKee, thank you, thank you, and not all just smart. 0:06:09.480 --> 0:06:10.839 That's what we love to have them on. 0:06:11.560 --> 0:06:15.520 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:06:15.640 --> 0:06:19.080 live weekday afternoons from two to five pm Eastern Listen 0:06:19.120 --> 0:06:22.640 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:06:22.800 --> 0:06:24.600 or watch us live on YouTube. 0:06:25.560 --> 0:06:28.400 All right, we're going to continue on the geopolitical because 0:06:28.400 --> 0:06:31.279 it really seems to be a major theme when we 0:06:31.320 --> 0:06:32.599 look at what's going on today. 0:06:32.680 --> 0:06:33.960 Joining us now is Wendy. 0:06:33.760 --> 0:06:37.560 Cutler, vice president of Asia Society Policy Institute. She joins 0:06:37.640 --> 0:06:40.320 us from San Diego. Wendy, is so good to have 0:06:40.400 --> 0:06:43.080 you here. We just did kind of a rundown from 0:06:43.080 --> 0:06:45.440 our genda LOOI in terms of all the stuff that 0:06:45.520 --> 0:06:49.719 is going on. You know, I want that whiteboard US, China, India, 0:06:49.800 --> 0:06:53.320 Russia around. Talk to us a little bit about the 0:06:53.360 --> 0:06:58.280 news coming out of the news flow, about geopolitics and 0:06:58.360 --> 0:07:00.040 the US role and what they're trying to do. So, 0:07:00.080 --> 0:07:02.840 maybe we start with Russia because it is curious whether 0:07:02.920 --> 0:07:06.480 or not something will ultimately get done to end this war, 0:07:06.520 --> 0:07:08.359 because it does seem like President Putin is going to 0:07:08.400 --> 0:07:12.080 stand pretty pat when it comes to his demands. 0:07:13.880 --> 0:07:16.320 Look, it's unclear how this is all going to. 0:07:18.240 --> 0:07:21.520 Develop, but it's clear that the President is very determined 0:07:21.880 --> 0:07:26.119 to use his office to try and broker a cease fire. 0:07:26.680 --> 0:07:29.560 What I'm watching on the trade front, however, is how 0:07:29.600 --> 0:07:34.200 this may impact our relations with India right now, because 0:07:34.240 --> 0:07:36.840 we are in a twenty one day period where the 0:07:36.880 --> 0:07:41.520 President has threatened to increase India's tariffs by an additional 0:07:41.600 --> 0:07:45.520 twenty five percent, taking them to fifty percent, due to 0:07:45.640 --> 0:07:50.320 their purchases of Russian oil. But perhaps if indeed there's 0:07:50.360 --> 0:07:54.040 some progress made with Russia that will provide an opening 0:07:54.360 --> 0:07:58.120 to remove this threat and impending terrif hike. 0:07:58.680 --> 0:08:01.080 Talk to us more about this would mean for say 0:08:01.120 --> 0:08:04.320 India's relationship with Russia, or maybe even China's relationship when 0:08:04.360 --> 0:08:06.760 it comes to Russia as well. 0:08:06.920 --> 0:08:10.280 Yeah, so for India in particular. Look, we've spent twenty 0:08:10.320 --> 0:08:14.000 odd years trying to strengthen our relations with India. The 0:08:14.080 --> 0:08:19.960 past two weeks. The relationship has been spiraling downward and 0:08:20.600 --> 0:08:22.800 it's going to be hard to rebuild. And I think 0:08:22.840 --> 0:08:27.920 in many respects India is going to gravitate, you know, 0:08:28.000 --> 0:08:31.200 not in a major way, but gradually more towards China 0:08:31.240 --> 0:08:34.640 and Russia, viewing US as an unreliable partner. 0:08:35.360 --> 0:08:36.600 So that's what I want to ask you. 0:08:36.760 --> 0:08:39.680 I mean, I like to remind or have someone remind 0:08:39.760 --> 0:08:43.559 us about why it is so important that the US 0:08:43.600 --> 0:08:48.760 continue to have positive relations in a positive relationship with India. 0:08:49.280 --> 0:08:52.440 Remind us about that and what be at risk if 0:08:52.480 --> 0:08:54.920 India is much more aligned. 0:08:54.679 --> 0:08:57.400 With China rather than the United States. 0:08:58.240 --> 0:09:02.160 Well, we have looked to India as the counterweight to China, 0:09:02.200 --> 0:09:05.280 both on the strategic front but also on the economic front. 0:09:05.679 --> 0:09:09.640 On the economic front, we have been encouraging our companies to, 0:09:10.600 --> 0:09:15.199 you know, to leave China, and one of the destinations 0:09:15.200 --> 0:09:19.360 they've been gravitating towards is India. So many US companies 0:09:19.400 --> 0:09:24.320 now are expanding their operations in India. And you know, 0:09:24.360 --> 0:09:27.800 if relations start going south, this is all kind of 0:09:28.240 --> 0:09:30.080 you know, throws things up in the air. And the 0:09:30.160 --> 0:09:33.120 last thing the US business community needs right now is 0:09:33.200 --> 0:09:37.080 more uncertainty. There's enough uncertainty with all of these tariff 0:09:37.120 --> 0:09:40.680 announcements coming out on a daily basis. 0:09:40.640 --> 0:09:43.360 Do you think there's been long term damage with that 0:09:43.440 --> 0:09:44.800 bilateral relationship? 0:09:46.320 --> 0:09:47.040 Absolutely? 0:09:47.240 --> 0:09:50.360 Again, you know, you could you spend years and years 0:09:50.440 --> 0:09:54.280 building a relationship, building trust, but it can take just 0:09:54.320 --> 0:09:56.559 a matter of hours or days. 0:09:56.600 --> 0:09:58.040 To to break. 0:09:57.760 --> 0:10:00.640 That trust and so rebuilding it is not going to 0:10:00.679 --> 0:10:03.400 happen in a matter of hours or days. And we're 0:10:03.440 --> 0:10:05.840 not just seeing this with India. I'm just back from 0:10:05.920 --> 0:10:08.880 Japan and I'm kind of hearing the same thing that 0:10:09.320 --> 0:10:12.000 you know, the Japanese have been a very strong ally 0:10:12.160 --> 0:10:14.400 or looking at the past couple of months and how 0:10:14.440 --> 0:10:17.080 they've been, in their view, kind of jerked around in 0:10:17.120 --> 0:10:21.400 these trade negotiations and are also talking about like developing 0:10:21.440 --> 0:10:24.600 some kind of Plan B where they become less reliant 0:10:24.720 --> 0:10:28.680 on the United States. So this is long term implications 0:10:28.720 --> 0:10:32.720 and again hard to rebuild trust, you know, in a 0:10:32.760 --> 0:10:33.880 short period of time. 0:10:34.240 --> 0:10:36.520 You know what has happened here because when the President 0:10:36.600 --> 0:10:38.520 came back to the White House earlier this year, he 0:10:38.600 --> 0:10:41.800 did look set to build upon kind of the warm 0:10:41.840 --> 0:10:44.920 ties he had with Prime Minister Mody during his first term. 0:10:45.600 --> 0:10:48.280 He had called the relationship the best it's ever been 0:10:48.320 --> 0:10:51.840 between two leaders of the two countries, and the Prime 0:10:51.840 --> 0:10:55.200 Minister called President Trump my dear friend. Is this just 0:10:56.080 --> 0:10:59.880 I don't know, gamesmanship. I try to kind of understand, 0:11:00.000 --> 0:11:03.199 and you know, what we hear, what we see sometimes 0:11:03.280 --> 0:11:05.960 and then what's you know, a new set of headlines 0:11:05.960 --> 0:11:09.480 that show something very different. So should we take this 0:11:09.760 --> 0:11:13.200 at face value that the relationship really is breaking down 0:11:13.320 --> 0:11:17.160 or is it just the negotiating process between leaders of 0:11:17.240 --> 0:11:18.600 two really important countries. 0:11:19.600 --> 0:11:20.520 Well, look, a few. 0:11:20.360 --> 0:11:23.640 Weeks ago everyone was saying we were on the verge 0:11:23.640 --> 0:11:26.520 of an early trade deal with India, and there was 0:11:26.600 --> 0:11:30.199 a lot of optimism about that, and somehow the trade 0:11:30.200 --> 0:11:33.360 deal got derailed. It could be that the US was 0:11:33.400 --> 0:11:36.920 asking for more but a combination of India couldn't make 0:11:36.960 --> 0:11:39.840 those couldn't meet our last few requests, particularly in the 0:11:39.880 --> 0:11:44.240 agriculture sector, which is very sensitive for them. But I 0:11:44.240 --> 0:11:48.199 don't think that's the whole picture. Obviously something happened that 0:11:48.720 --> 0:11:52.320 made the President extremely frustrated. Maybe he got the numbers 0:11:52.480 --> 0:11:56.400 of how much oil India continues to buy from Russia 0:11:56.760 --> 0:12:02.160 and that you know, somehow rubbed him wrong way. But again, 0:12:02.520 --> 0:12:05.520 the words he's been using towards India. I don't think 0:12:05.559 --> 0:12:09.480 this is something that you just turn around overnight. It's 0:12:09.600 --> 0:12:13.160 pretty deep right now, and if you talk to the 0:12:13.360 --> 0:12:19.280 Indian officials or the Indian public, I think that there 0:12:19.440 --> 0:12:24.080 is a lot of deep seated anger and frankly, you know, 0:12:24.120 --> 0:12:27.880 they don't really understand how this spiral down so quickly either. 0:12:28.400 --> 0:12:30.000 What are your eyes on next? When it comes to 0:12:30.080 --> 0:12:32.600 a timetable, I know August twelfth, that's that deadline for 0:12:33.200 --> 0:12:36.600 the decision on Chinese tariffs coming up soon. 0:12:37.800 --> 0:12:42.320 Exactly next Tuesday is key, I would I'm counting on 0:12:42.559 --> 0:12:45.920 that we will roll over the tariff truce that we 0:12:46.000 --> 0:12:50.640 achieved with China ninety days ago, and then I think 0:12:50.800 --> 0:12:54.080 we are going to see a continuation of negotiations with 0:12:54.240 --> 0:12:57.000 China to try and see if we can do some 0:12:57.080 --> 0:12:59.520 kind of deal with them in the lead up to 0:12:59.600 --> 0:13:04.000 a possible meeting or visit by the President to China 0:13:04.120 --> 0:13:07.239 around the Korea APEC meeting in late October. 0:13:08.960 --> 0:13:11.880 What I wanted to ask you is just to kind 0:13:11.880 --> 0:13:15.160 of wrap up here, Wendy, and again devils in the details. 0:13:15.160 --> 0:13:18.439 We'll see what ultimately happens and whether or not they 0:13:18.440 --> 0:13:21.520 come back to the table and they become friends again. 0:13:22.280 --> 0:13:26.040 But I guess if there is a broken relationship, which 0:13:26.080 --> 0:13:29.280 is how it seems right now, and that lasts longer term, 0:13:29.800 --> 0:13:33.479 what's the cost to the United States with India. 0:13:33.600 --> 0:13:37.880 Yeah, yeah, look, the cost is, you know, we we 0:13:39.040 --> 0:13:43.640 have damaged a relationship with an extremely important partner that 0:13:43.760 --> 0:13:48.040 is only becoming more important on the global stage, and 0:13:48.120 --> 0:13:52.600 particularly at a time when we want to diversify away 0:13:52.640 --> 0:13:53.400 from China. 0:13:54.280 --> 0:13:59.040 This does present serious concerns. How much is China watching 0:13:59.080 --> 0:13:59.960 this in your view? 0:14:00.960 --> 0:14:04.520 Oh, very very closely, And I would expect that China 0:14:04.720 --> 0:14:08.560 is going to make overtures to India right now in 0:14:08.600 --> 0:14:11.960 an effort to bring India more in their camp. Now 0:14:12.040 --> 0:14:15.520 let's form Let's keep in mind though China India relations 0:14:15.600 --> 0:14:19.680 historically have never been good, and so I don't expect 0:14:19.680 --> 0:14:22.640 India to move to the China camp. But again, I 0:14:22.680 --> 0:14:25.560 think they're going to hedge their bets and view the 0:14:25.680 --> 0:14:30.720 US as less reliable and gravitate both towards Russia and China. 0:14:30.760 --> 0:14:34.360 Franklin, and even that they could possibly talk, or that 0:14:34.400 --> 0:14:37.200 we're even talking about them possibly talking, is just shows 0:14:37.200 --> 0:14:39.560 that things could possibly be shifting. 0:14:40.120 --> 0:14:41.600 Wendy so Glad we could get. 0:14:41.520 --> 0:14:43.920 Some time with you on this Friday, a very very 0:14:43.960 --> 0:14:46.800 busy friday, certainly when it comes to geopolitics. Wendy Cutler 0:14:46.840 --> 0:14:49.360 back with us. She is vice president of Asia Society 0:14:49.360 --> 0:14:50.680 Policy Institute. 0:14:50.320 --> 0:14:52.600 Joining us from San Diego. Wendy, thank you again. 0:14:54.120 --> 0:14:57.960 This is the Bloomberg Business Week Daily Podcast. Listen live 0:14:58.080 --> 0:15:01.640 each weekday starting at two pm ST on Applecarplay and 0:15:01.640 --> 0:15:04.520 Android Auto with the Bloomberg Business App. You can also 0:15:04.640 --> 0:15:07.680 listen live on Amazon Alexa from our flagship New York 0:15:07.720 --> 0:15:11.560 station Just Say Alexa played Bloomberg eleven thirty. 0:15:11.840 --> 0:15:14.280 We're going to go back to geopolitics, although this really 0:15:14.320 --> 0:15:17.280 plays into geopolitics as well. We're going to get to 0:15:17.520 --> 0:15:19.880 Israel saying it will take control of Gaza City. It's 0:15:19.880 --> 0:15:22.800 a move that could displace one million Palestinians leaving there. 0:15:23.440 --> 0:15:26.160 Let's get to the latest on what we are seeing, 0:15:26.160 --> 0:15:29.280 what we are hearing. Bloomberg News Jerusalem journalist Dan Williams 0:15:29.320 --> 0:15:32.240 is in Jerusalem. So Dan, what are you hearing about 0:15:32.280 --> 0:15:34.720 new moves to take control of Gaza? What are you 0:15:34.760 --> 0:15:36.040 seeing in and around? 0:15:36.120 --> 0:15:40.600 Also right now, it's declarative, as you will have read 0:15:41.120 --> 0:15:45.000 on Bloomberg and elsewhere the Israeli security Cabinet that's really 0:15:45.000 --> 0:15:48.720 the top decision making form of the country, the war Cabinet, 0:15:48.720 --> 0:15:52.080 if you like, decided, after a night long debate ten 0:15:52.120 --> 0:15:56.520 hours behind closed doors a four am resolution that they 0:15:56.520 --> 0:16:00.760 would order the storming of Gaza City as part of 0:16:00.840 --> 0:16:03.520 Israel's efforts to end this war with what it would 0:16:03.520 --> 0:16:06.840 define as a victory against Hamas. Now, Gaza City is 0:16:06.880 --> 0:16:09.400 part of the twenty five percent of the Gaza Strip 0:16:09.480 --> 0:16:13.480 yet to be overrun by Israeli tanks and troops, yet 0:16:13.520 --> 0:16:16.840 to be under full control of the Israeli army, and 0:16:16.960 --> 0:16:20.320 moving against it would be a long process, weeks or 0:16:20.400 --> 0:16:23.520 months in the making. It would involve the evacuation, the 0:16:23.560 --> 0:16:27.640 forcible evacuation potentially hundreds of thousand civilians, and then presumably 0:16:27.720 --> 0:16:31.560 laying siege to the Hamas holdouts who are there in 0:16:31.640 --> 0:16:35.320 the thousands. We're told of Hamas fighters, and also potentially 0:16:35.320 --> 0:16:38.360 hostages which they're holding. It's worth remembering Hamas still has 0:16:38.400 --> 0:16:41.480 fifty hostages, most of them from the October seventh attack 0:16:41.520 --> 0:16:44.120 in twenty twenty three that sparked this war. Twenty of 0:16:44.120 --> 0:16:47.320 them are believed to be alive. Previously, these ralies avoided 0:16:47.760 --> 0:16:49.600 entering these areas of the Gaza Strip for fear of 0:16:49.680 --> 0:16:52.640 endangering those hostages. It appears now the gloves are off. 0:16:52.680 --> 0:16:55.440 But with that said, this will not happen immediately on 0:16:55.480 --> 0:16:58.200 the ground. It will require apparently a doubling of these 0:16:58.280 --> 0:17:01.640 RAREI forces deployed that will take potentially a week or 0:17:01.680 --> 0:17:05.600 two to muster in terms of reinforcements, call ups of reservists, 0:17:05.840 --> 0:17:08.480 and that does actually leave a window for Hamas to 0:17:08.560 --> 0:17:12.080 think again about whether its tack in negotiated efforts to 0:17:12.119 --> 0:17:16.560 achieve a ceasefire, perhaps negotiated enter this war needs to change. 0:17:16.920 --> 0:17:17.640 So we will see. 0:17:17.640 --> 0:17:20.639 There are indications that Hamas is sending out feelers that 0:17:20.720 --> 0:17:24.480 it wants to renegotiate or review those negotiations. So until 0:17:24.480 --> 0:17:27.359 we see the tanks and troops moving, all bets are off. 0:17:27.760 --> 0:17:30.320 Hey Dan, how's that Trump administration responded? 0:17:31.880 --> 0:17:35.880 The Trump administration has been openly, openly supportive. We interview 0:17:36.000 --> 0:17:40.040 the US ambassador to Israel just a few days ago, 0:17:40.440 --> 0:17:45.800 and the ambassador made clear that Trump, as he put it, 0:17:45.840 --> 0:17:48.080 is fed up. He actually said, has run out of 0:17:48.119 --> 0:17:51.639 patients with Hamas. With Hamas stonewalling, as Israel and the 0:17:51.680 --> 0:17:54.880 US have described it, in those negotiations, and the US 0:17:54.920 --> 0:17:58.920 wants to see Israel end this war. Now, for the 0:17:59.000 --> 0:18:02.000 Nittanel government in Israel, ending the war means winning it 0:18:02.119 --> 0:18:05.680 through force and the absence of negotiations. However, many Israelis, 0:18:05.720 --> 0:18:07.720 to judge by Poles, would prefer to see this will 0:18:07.880 --> 0:18:12.359 ended by a review of Israel's objectives, basically abandoning the 0:18:12.359 --> 0:18:17.399 objective destroying mass of returning all those hostages in a 0:18:17.480 --> 0:18:21.600 negotiated deal that would keep Amass in power. And basically 0:18:21.600 --> 0:18:23.840 what we have now is a government that's out of 0:18:23.880 --> 0:18:26.840 sync with its people, to judge by the polls, but 0:18:26.920 --> 0:18:29.480 insists that this is what the country needs to guarantee 0:18:29.480 --> 0:18:30.640 its long term security. 0:18:30.760 --> 0:18:33.080 Is it also a government that's out of sync with 0:18:33.200 --> 0:18:35.600 the region and I just think about that, and also 0:18:35.600 --> 0:18:37.919 out of sync with the Abraham Accords right, which we 0:18:37.960 --> 0:18:42.480 know set a series of diplomatic agreements normalizing relations between 0:18:42.880 --> 0:18:49.159 Israel and several Arab nations broken by the US the first. 0:18:49.040 --> 0:18:50.640 Trump administration the first term. 0:18:50.680 --> 0:18:55.600 So are they out of touch to with their partners 0:18:55.680 --> 0:18:58.120 and other Arab nations in terms of what they want 0:18:58.160 --> 0:18:59.920 to see done with Gaza? 0:19:01.080 --> 0:19:05.560 Well, to judge by open statements, absolutely the Palestinian civilian 0:19:05.680 --> 0:19:09.639 suffering in the Gaza strip has become intolerable to many viewers, 0:19:09.640 --> 0:19:12.000 certainly in this part of the world, where it's become 0:19:12.480 --> 0:19:16.920 especially combustible in terms of public opinion. However, oftentimes what's 0:19:16.960 --> 0:19:19.080 said behind the scenes isn't the same and it's the 0:19:19.119 --> 0:19:21.560 same as what's said in public. I'd remind you that 0:19:22.160 --> 0:19:25.320 some ten twelve years ago, WikiLeaks revealed that what was 0:19:25.320 --> 0:19:29.680 being said between US aligned Arab powers and Israel behind 0:19:29.680 --> 0:19:32.239 the scenes to US diplomats was very different to what 0:19:32.320 --> 0:19:34.160 was being said in public. In public, there was talk 0:19:34.160 --> 0:19:37.160 of Palestinians behind the scenes, behind closed doors, the real 0:19:37.200 --> 0:19:40.520 focus of the discussions was Iran. It's also worth remembering that, 0:19:40.840 --> 0:19:44.440 to most assessments, Hamas triggered this war in part because 0:19:44.440 --> 0:19:48.399 it wanted to scuttle those Abram accords Israel and Saudi 0:19:48.400 --> 0:19:51.600 Arabia on the verge of establishing a peace deal. So 0:19:52.240 --> 0:19:54.879 there is that worth remembering. I think everyone would like 0:19:54.880 --> 0:19:57.280 to put this in their rearview mirror. The argument of 0:19:57.280 --> 0:19:59.880 the Hawks in this equation is that the best way 0:19:59.880 --> 0:20:02.680 to do that is to defeat ha mass militarily, even 0:20:02.720 --> 0:20:05.760 if that requires weeks or a few months of intense 0:20:05.800 --> 0:20:07.840 pain all around in the very near future. 0:20:07.960 --> 0:20:10.800 You know, sometimes we forget, you know, war. But as 0:20:10.840 --> 0:20:13.720 you said, there are still hostages Israelis who are held 0:20:13.720 --> 0:20:17.480 hostages hostage by Hamas. There's also Palestinians who don't have 0:20:17.520 --> 0:20:18.520 any homes anymore. 0:20:18.800 --> 0:20:22.240 I mean, where are the residents of Gaza City supposed 0:20:22.280 --> 0:20:22.600 to go? 0:20:24.560 --> 0:20:27.880 They will be evacuated, to judge by the previous course 0:20:27.920 --> 0:20:30.679 of action taken by the Israelis, over several rounds of 0:20:30.720 --> 0:20:33.760 these moves into population centers. They'll be evacuated to an 0:20:33.800 --> 0:20:37.480 air called Al Muwassi that's on the southwestern coast of 0:20:37.520 --> 0:20:40.480 the Gaza Strip. It's a large area of sand dudes 0:20:40.480 --> 0:20:43.439 where the Israelis are convinced Hamas was not able to 0:20:43.560 --> 0:20:47.680 establish bunkers underground tunnel systems and therefore there's no direct 0:20:47.760 --> 0:20:51.840 military threat to concentrating people there. Effectively a very large 0:20:51.880 --> 0:20:55.520 tense city at DP camp if you like. Conditions there 0:20:55.560 --> 0:20:58.240 are not easy at all. It's worth remembering that the 0:20:58.280 --> 0:21:01.480 Americans are now saying that they to quadruple in the 0:21:01.520 --> 0:21:03.159 coming two months, and I think in the coming two 0:21:03.240 --> 0:21:06.200 months that's a timeframe that's meant to work in tandem 0:21:06.520 --> 0:21:09.240 with the Israeli the new is raeally move against Garza City. 0:21:09.520 --> 0:21:14.280 They intend to quadruple the GHF, the Gazi Humanitarian Foundation that, 0:21:14.359 --> 0:21:17.840 as you'll be aware, is a substitute a distribution system 0:21:17.920 --> 0:21:20.320 set up by the Americans and the Israelis in hope 0:21:20.320 --> 0:21:24.639 of sidelining UN agencies, the traditional humanitarian network that their 0:21:24.680 --> 0:21:27.639 accused of being too close to Hamas, effectively propping up 0:21:27.640 --> 0:21:30.919 a mass rules going back, rule going back are years. 0:21:31.359 --> 0:21:35.679 So if the Americans managed to quadruple that GHF operating volume, 0:21:35.920 --> 0:21:38.080 it will go quite a long way to dealing with 0:21:38.119 --> 0:21:39.480 the immediate needs. 0:21:39.400 --> 0:21:40.560 Of those displaced people. 0:21:40.600 --> 0:21:43.680 But obviously, living indefinitely in a camps, in a camp 0:21:43.680 --> 0:21:46.800 that's composed of tents, knowing your house has been destroyed 0:21:47.119 --> 0:21:48.640 not a pleasant prospect for anyone. 0:21:49.040 --> 0:21:51.879 Dan. What's next and what's the window for her ma 0:21:51.880 --> 0:21:53.320 ask to achieve cease fire? 0:21:55.040 --> 0:21:57.680 A ceasefire talks stalled a month ago, and I think 0:21:57.760 --> 0:22:00.640 these rallies and the Americans have made clear that if 0:22:00.680 --> 0:22:03.960 they resume, the terms would be very different what we 0:22:04.080 --> 0:22:06.840