1 00:00:05,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,319 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. I 5 00:00:27,360 --> 00:00:29,760 Speaker 1: grew up, you know, depression, baby parents and all that, 6 00:00:30,480 --> 00:00:34,000 Speaker 1: and John that the word depression has always been misused 7 00:00:34,000 --> 00:00:37,520 Speaker 1: by the media and frankly by academics as well. Guess 8 00:00:37,560 --> 00:00:40,880 Speaker 1: what the way you just used it is correct. Let's 9 00:00:40,920 --> 00:00:45,280 Speaker 1: discuss with Abraham rap Bowery City, Global head of FFX Analysis, 10 00:00:45,320 --> 00:00:47,879 Speaker 1: and he can win on the Club of Economy like anyone. 11 00:00:48,080 --> 00:00:51,120 Speaker 1: Abraham fantastic to catch up with his Let's just start 12 00:00:51,159 --> 00:00:54,440 Speaker 1: there with the labor market, some depressing statistics, and I 13 00:00:54,440 --> 00:00:56,240 Speaker 1: think we go back to the question we keep asking 14 00:00:56,280 --> 00:01:02,400 Speaker 1: on programs like this, how long will it take to heal? Hi? John, 15 00:01:02,440 --> 00:01:05,560 Speaker 1: great to be back and yes, key, key question. And 16 00:01:05,959 --> 00:01:07,959 Speaker 1: let me give you two sides of the spectrum. I 17 00:01:08,000 --> 00:01:10,720 Speaker 1: think the positive news is going to be I think 18 00:01:10,800 --> 00:01:13,920 Speaker 1: continuing claims they are going to start peaking quite soon. 19 00:01:14,640 --> 00:01:17,200 Speaker 1: So despite the numbers being you know, let's let's say 20 00:01:17,240 --> 00:01:20,520 Speaker 1: twenty five million or so as of today. I think 21 00:01:20,560 --> 00:01:23,479 Speaker 1: within within two three weeks, I think that number might 22 00:01:23,520 --> 00:01:25,880 Speaker 1: start to come down. And I think that's obviously a 23 00:01:26,000 --> 00:01:28,000 Speaker 1: tiny flicker of light at the end of the tunnel. 24 00:01:28,400 --> 00:01:30,600 Speaker 1: But when it comes to full healing and and Chap 25 00:01:30,640 --> 00:01:32,360 Speaker 1: Howell has touched on it, I think it will be 26 00:01:32,360 --> 00:01:34,400 Speaker 1: a long time. There's going to be a long debate 27 00:01:34,440 --> 00:01:36,679 Speaker 1: about this, but I think it will be years. So 28 00:01:36,760 --> 00:01:39,319 Speaker 1: we're looking at I think in an economy that's only 29 00:01:39,360 --> 00:01:41,520 Speaker 1: going to truly come out of recession, be back and 30 00:01:41,720 --> 00:01:45,480 Speaker 1: kind of where it was maybe in two Everham John 31 00:01:45,560 --> 00:01:48,280 Speaker 1: from Coventry just emailed in and noted how rude I 32 00:01:48,360 --> 00:01:52,000 Speaker 1: was to interrupt Lisa there on the recession of seventies 33 00:01:52,040 --> 00:01:57,240 Speaker 1: three seventy four. Even that was a manufacturing goods America 34 00:01:57,360 --> 00:02:02,720 Speaker 1: which is gone. This depression is a service sector depression. 35 00:02:03,200 --> 00:02:07,640 Speaker 1: How does City Group Economics feel we recover given so 36 00:02:07,680 --> 00:02:13,480 Speaker 1: many of these jobs are lower rage service sector. Yes, 37 00:02:13,760 --> 00:02:15,919 Speaker 1: so there, there are There are a couple of things 38 00:02:16,000 --> 00:02:18,320 Speaker 1: to note there, but the most important you're you already 39 00:02:18,400 --> 00:02:22,640 Speaker 1: highlighted that it's going to be very, very uneven across sectors. 40 00:02:22,639 --> 00:02:26,880 Speaker 1: But what is less unusual is that the lowest earners 41 00:02:26,919 --> 00:02:29,640 Speaker 1: are going to be hardest hit in recession. So even 42 00:02:29,680 --> 00:02:32,480 Speaker 1: even in those manufacturing recessions, maybe the wage levels were 43 00:02:32,560 --> 00:02:34,920 Speaker 1: somewhat different, but it was still the case that the 44 00:02:35,080 --> 00:02:38,720 Speaker 1: pain in the labor market would disproportionately fall on low 45 00:02:38,800 --> 00:02:42,880 Speaker 1: wage earners. This time around, I would argue, we actually 46 00:02:42,960 --> 00:02:46,760 Speaker 1: do have more assistant factor, a systant larger assistance for 47 00:02:46,880 --> 00:02:49,000 Speaker 1: some of these than we have had in the past. 48 00:02:49,639 --> 00:02:54,440 Speaker 1: And therefore, I think, even though the outlook looks very somber, 49 00:02:54,800 --> 00:02:57,760 Speaker 1: I think the the possibility that we can avoid greater 50 00:02:57,840 --> 00:03:00,240 Speaker 1: damage than we didn't in the past, it's probably about 51 00:03:00,280 --> 00:03:04,440 Speaker 1: the same as it wasn't in previously very deep recessions. 52 00:03:04,480 --> 00:03:08,120 Speaker 1: So I don't want to be excessively pessimistic at this point. 53 00:03:08,280 --> 00:03:10,880 Speaker 1: But this is not to dismiss this is husually challenging. 54 00:03:10,919 --> 00:03:13,560 Speaker 1: Times will lie ahead of us, and they may well have, 55 00:03:14,000 --> 00:03:15,800 Speaker 1: and this is the big debate. They might well have 56 00:03:15,919 --> 00:03:21,120 Speaker 1: broader implications for not least politics here. But here's what 57 00:03:21,160 --> 00:03:23,040 Speaker 1: I'm struggling with. People are saying that we're going to 58 00:03:23,160 --> 00:03:28,480 Speaker 1: see the unemployment rate drop sharply to as much as 59 00:03:28,480 --> 00:03:31,320 Speaker 1: others have even come out with higher estimates and then 60 00:03:31,320 --> 00:03:34,160 Speaker 1: it will come back to about ten percent by year end. 61 00:03:34,320 --> 00:03:36,440 Speaker 1: This is the estimate by Goldman, Sachs and a number 62 00:03:36,440 --> 00:03:39,400 Speaker 1: of others. And yet as we see from the United Kingdom, 63 00:03:39,480 --> 00:03:42,080 Speaker 1: they say everybody back to work, and nobody's coming, or 64 00:03:42,080 --> 00:03:44,240 Speaker 1: a very few people are coming because they don't feel 65 00:03:44,280 --> 00:03:47,240 Speaker 1: confident that they're not going to get sick. How much 66 00:03:47,480 --> 00:03:51,360 Speaker 1: is that headwind to these predictions of a rapidly falling 67 00:03:51,440 --> 00:03:55,600 Speaker 1: unemployment rate after it hits some of these peaks. Yes, 68 00:03:55,640 --> 00:03:58,320 Speaker 1: so I would I would say that at the margin, 69 00:03:58,600 --> 00:04:02,600 Speaker 1: I see more downside risk enough relative to these standard forecasts, 70 00:04:02,600 --> 00:04:06,440 Speaker 1: and that for some combination of reasons that the return 71 00:04:06,480 --> 00:04:09,200 Speaker 1: to work will be slower, that behavior will be more 72 00:04:09,320 --> 00:04:11,600 Speaker 1: more effective than we currently think, but also because we 73 00:04:11,640 --> 00:04:16,040 Speaker 1: could see setbacks on the health side. That being said, 74 00:04:16,880 --> 00:04:19,200 Speaker 1: we should keep in mind that this is a quote 75 00:04:19,279 --> 00:04:23,039 Speaker 1: unquote artificial recession to start with, so there was an 76 00:04:23,080 --> 00:04:27,760 Speaker 1: imposed arrest to activity, and what that means is, unlike 77 00:04:27,800 --> 00:04:31,000 Speaker 1: other recessions, we had some pent up demand coming out 78 00:04:31,000 --> 00:04:33,960 Speaker 1: of it. So that's very unusual in historical context. So 79 00:04:34,000 --> 00:04:36,400 Speaker 1: I think we should be highly confident that we will 80 00:04:36,440 --> 00:04:39,479 Speaker 1: see pretty sharp drops in unemployment over the next couple 81 00:04:39,480 --> 00:04:41,480 Speaker 1: of months. Whether that will take us back to ten 82 00:04:41,560 --> 00:04:44,039 Speaker 1: percent by year end or it will be somewhat higher. 83 00:04:44,080 --> 00:04:46,640 Speaker 1: I think that's an open question. But it should still 84 00:04:46,680 --> 00:04:49,160 Speaker 1: come down pretty sharply. So the momentum will be very 85 00:04:49,240 --> 00:04:52,440 Speaker 1: clear for unemployment to come down. But there are some 86 00:04:52,520 --> 00:04:54,560 Speaker 1: very big questions about certain sectors, and to meet the 87 00:04:54,560 --> 00:04:57,400 Speaker 1: most obvious one, it is commercial realistic how that sector 88 00:04:57,440 --> 00:05:00,000 Speaker 1: will will recover, for instance. I think there's a huge 89 00:05:00,160 --> 00:05:02,160 Speaker 1: question mark, and then obviously applies to a number of 90 00:05:02,200 --> 00:05:04,520 Speaker 1: other sectors that have been hearted in this recession as well. 91 00:05:04,640 --> 00:05:06,880 Speaker 1: There's a huge policy debate going on as well, Abraham, 92 00:05:06,920 --> 00:05:08,560 Speaker 1: that I think we should weigh in on. Two. There 93 00:05:08,600 --> 00:05:10,839 Speaker 1: is a division between the Federal Reserve Chairman and the 94 00:05:10,839 --> 00:05:13,000 Speaker 1: President of the United States. In the last twenty four hours, 95 00:05:13,120 --> 00:05:15,919 Speaker 1: Chairman Pal said more fiscal support could be costly, but 96 00:05:16,000 --> 00:05:19,120 Speaker 1: worth it. President Trump then called Speaker Pelosis stimulus bill 97 00:05:19,200 --> 00:05:22,440 Speaker 1: dead on arrival. Chairman Pal said negative rates aren't something 98 00:05:22,440 --> 00:05:24,920 Speaker 1: we're looking at. President Trump said he's a believer in 99 00:05:25,000 --> 00:05:28,239 Speaker 1: negative rates. We need to reconcile these differences and fast. 100 00:05:28,480 --> 00:05:31,680 Speaker 1: What do you think the next policy move is? Yes, 101 00:05:31,880 --> 00:05:34,400 Speaker 1: very very very interesting debate. So I think one thing 102 00:05:34,480 --> 00:05:37,000 Speaker 1: is very clear. We're not going to see negative policy 103 00:05:37,080 --> 00:05:39,440 Speaker 1: rates in the US for quite a while. I think CHAIRP. 104 00:05:39,440 --> 00:05:42,280 Speaker 1: Powell was very clear. I think the President has limited 105 00:05:42,320 --> 00:05:44,039 Speaker 1: means to put pressure on him, and I think he 106 00:05:44,160 --> 00:05:46,840 Speaker 1: is very isolated in his views on negative rates in 107 00:05:46,839 --> 00:05:49,320 Speaker 1: the US context right now. So the FED will continue 108 00:05:49,360 --> 00:05:52,000 Speaker 1: to use the tools it has and may well reinforce them, 109 00:05:52,000 --> 00:05:55,120 Speaker 1: but they will be heavily waited towards towards asset purchases. 110 00:05:55,480 --> 00:05:58,560 Speaker 1: But the physical equation is also very interesting because we've 111 00:05:58,600 --> 00:06:01,560 Speaker 1: all kind of got used to the recent US fiscal 112 00:06:01,600 --> 00:06:06,520 Speaker 1: playbook where by parties and differences or parties and differences 113 00:06:06,560 --> 00:06:10,240 Speaker 1: on the fiscal side have been effectively resolved by adopting 114 00:06:10,240 --> 00:06:12,760 Speaker 1: proposals from both sides of the aisle. So the end 115 00:06:12,800 --> 00:06:16,280 Speaker 1: result was just more fiscal stimulus, and that's I think 116 00:06:16,320 --> 00:06:20,160 Speaker 1: an argument in the US's favor for the recovery. And 117 00:06:20,360 --> 00:06:22,400 Speaker 1: right now, for the first time in a while, it's 118 00:06:22,440 --> 00:06:24,560 Speaker 1: possible that we go back to the old model where 119 00:06:24,560 --> 00:06:26,800 Speaker 1: you need to find an overlap between the two sides, 120 00:06:27,080 --> 00:06:29,760 Speaker 1: and that for the time being means somewhat later and 121 00:06:29,800 --> 00:06:32,320 Speaker 1: somewhat smaller stimulus. So I see a bit of a 122 00:06:32,320 --> 00:06:34,400 Speaker 1: bit of a risk on the fiscal side relative to 123 00:06:34,400 --> 00:06:37,160 Speaker 1: invest their expectations when it comes to so called Phase four, 124 00:06:37,520 --> 00:06:40,040 Speaker 1: Phase four and beyond. But I do think we will 125 00:06:40,040 --> 00:06:44,440 Speaker 1: get sizeable stimulus here. Still, everyone generalis out beautifully all 126 00:06:44,480 --> 00:06:48,800 Speaker 1: the beliefs and certitudes everyone has with all your experience you, 127 00:06:49,080 --> 00:06:52,159 Speaker 1: Catherine Man, the City Group team, can you these people 128 00:06:52,320 --> 00:06:56,040 Speaker 1: actually stay certain in their beliefs with the twenty two 129 00:06:56,400 --> 00:07:02,520 Speaker 1: or twenty five or unemployment rate. I think you make 130 00:07:02,560 --> 00:07:04,760 Speaker 1: a very good point, Tom. I think we have to 131 00:07:04,800 --> 00:07:08,760 Speaker 1: be very humble. These are unprecedented circumstances. We've already seen 132 00:07:09,080 --> 00:07:12,120 Speaker 1: a number of unprecedented policy responses as well. But you know, 133 00:07:12,200 --> 00:07:14,520 Speaker 1: some of the really big questions, they're very hard to resolve. 134 00:07:14,520 --> 00:07:16,800 Speaker 1: It just to give you a very simple list, is 135 00:07:16,800 --> 00:07:19,600 Speaker 1: obviously the future of the virus and how we're going 136 00:07:19,640 --> 00:07:23,880 Speaker 1: to address it. The future of capitalism coming out of 137 00:07:23,960 --> 00:07:27,840 Speaker 1: such a such an enormous event, future of globalization. There 138 00:07:27,880 --> 00:07:30,280 Speaker 1: are any number of sexual implications, and I think it 139 00:07:30,280 --> 00:07:33,080 Speaker 1: would be it would be daft to assume that we 140 00:07:33,080 --> 00:07:36,120 Speaker 1: we have a lot of visibility on these issues. And 141 00:07:36,160 --> 00:07:37,760 Speaker 1: that's why we also tell invest that you need to 142 00:07:37,760 --> 00:07:42,800 Speaker 1: be very agile and be be ready to change your 143 00:07:42,840 --> 00:07:46,120 Speaker 1: mind when the facts change. So we we certainly look 144 00:07:46,360 --> 00:07:49,840 Speaker 1: look at the next few months with an expectation that 145 00:07:49,920 --> 00:07:53,000 Speaker 1: a lot of surprises will will come our way, and 146 00:07:53,000 --> 00:07:55,800 Speaker 1: hopefully some of them are positive. Abraham FANTASTICA catch up 147 00:07:55,800 --> 00:08:02,840 Speaker 1: with you, even rap Bari there of City, which I'm 148 00:08:02,840 --> 00:08:05,240 Speaker 1: sure some of you in our audience will remember last 149 00:08:05,320 --> 00:08:08,800 Speaker 1: November the Bloomberg New Economy Forum, when the former Secretary 150 00:08:08,800 --> 00:08:11,080 Speaker 1: of State Henry Kissing had sold us that the U. 151 00:08:11,200 --> 00:08:13,760 Speaker 1: S and China in the foothills of a cold war, 152 00:08:14,240 --> 00:08:16,960 Speaker 1: but it was not too late to do something about it. 153 00:08:17,280 --> 00:08:20,040 Speaker 1: I wonder if it's too light now. It is such 154 00:08:20,080 --> 00:08:23,320 Speaker 1: a change with us now, folks, and without question or 155 00:08:23,440 --> 00:08:26,840 Speaker 1: conversation of the day on Asia and on China, this 156 00:08:26,920 --> 00:08:29,800 Speaker 1: is the conversation of surveillance. I wish President Trump could 157 00:08:29,800 --> 00:08:34,040 Speaker 1: listen to this morning. Is a must read book. A 158 00:08:34,200 --> 00:08:39,720 Speaker 1: rave review for George Magnus Red Flags. It is extraordinary, 159 00:08:40,040 --> 00:08:43,959 Speaker 1: It is short, exceptionally intense. It is a tour to 160 00:08:44,080 --> 00:08:47,720 Speaker 1: force from the Yale University Press. I'm gonna ask a big, 161 00:08:47,760 --> 00:08:50,520 Speaker 1: fancy question and then I want John to pick it 162 00:08:50,640 --> 00:08:53,720 Speaker 1: up with a really direct moment that we're in on China. 163 00:08:54,240 --> 00:08:58,120 Speaker 1: As we talked about before, George Magnus, You're right, the 164 00:08:58,200 --> 00:09:04,880 Speaker 1: Chinese nations years of shame. How does President Trump affect 165 00:09:05,480 --> 00:09:09,320 Speaker 1: the shame and the suffering that China faced for those 166 00:09:09,440 --> 00:09:14,240 Speaker 1: hundred years before and that sexties and seventies and eighties. 167 00:09:16,120 --> 00:09:21,320 Speaker 1: UM great question to start with, Tom Well. I mean, 168 00:09:21,440 --> 00:09:24,880 Speaker 1: the the what the Chinese call their Century of Humiliation, 169 00:09:25,400 --> 00:09:29,480 Speaker 1: which was when foreigner foreign countries basically carved up the 170 00:09:29,559 --> 00:09:34,600 Speaker 1: country in the nineteenth century. Um is basically lives on 171 00:09:34,840 --> 00:09:39,880 Speaker 1: very much in China's consciousness and in its leaders narrative. UM, 172 00:09:40,200 --> 00:09:46,560 Speaker 1: and they are determined. According to one Seasonings has framed 173 00:09:46,600 --> 00:09:50,000 Speaker 1: as the Chinese dream of the rejuvenile, rejuvenation of the 174 00:09:50,080 --> 00:09:53,280 Speaker 1: Chinese people, you know, not to allow this to happen 175 00:09:53,400 --> 00:09:55,719 Speaker 1: ever again, and for China to reclaim its role in 176 00:09:55,760 --> 00:09:59,199 Speaker 1: the world. So what that really means in the current 177 00:09:59,280 --> 00:10:04,120 Speaker 1: context of trade war, you know, virus war goodness, those 178 00:10:04,160 --> 00:10:07,560 Speaker 1: we want to kind of call it, is that every 179 00:10:07,600 --> 00:10:11,720 Speaker 1: time the Chinese feel that their foreigners, in this case 180 00:10:11,760 --> 00:10:15,320 Speaker 1: obviously the United States or the West are interfering or 181 00:10:15,400 --> 00:10:20,520 Speaker 1: pressuring China, UM, it basically gets their hackles up because 182 00:10:20,520 --> 00:10:23,920 Speaker 1: they fear and feel that this is kind of history 183 00:10:23,960 --> 00:10:27,680 Speaker 1: repeating itself, which they refuse to allow to happen. So 184 00:10:27,679 --> 00:10:30,600 Speaker 1: I'm trying to understand, George, how we should characterize this moment. 185 00:10:30,720 --> 00:10:33,920 Speaker 1: If a number of months ago the former Secretary of 186 00:10:33,960 --> 00:10:36,200 Speaker 1: State and Kissinger said that we're in the foothills of 187 00:10:36,200 --> 00:10:41,080 Speaker 1: the Cold War? Are we in one now? Well, I 188 00:10:41,120 --> 00:10:46,160 Speaker 1: mean it certainly has all the aura of developing that way, 189 00:10:46,280 --> 00:10:50,800 Speaker 1: right we are. You know, the relations between senior political 190 00:10:50,920 --> 00:10:57,320 Speaker 1: leaders are frosty to say at least actually um and um. 191 00:10:58,360 --> 00:11:01,080 Speaker 1: There are too many is where they used to be 192 00:11:01,200 --> 00:11:04,480 Speaker 1: dialogue between let's say, the United States and China, where 193 00:11:05,000 --> 00:11:10,600 Speaker 1: it's just basically stopped the accusations which are flying from 194 00:11:10,720 --> 00:11:14,360 Speaker 1: one side to the other and back again. Are you 195 00:11:14,720 --> 00:11:17,839 Speaker 1: not propitious? I mean, there is still obviously a very 196 00:11:17,920 --> 00:11:22,640 Speaker 1: high level of economic independence between the United States and China, 197 00:11:22,679 --> 00:11:27,360 Speaker 1: and China and other Western countries, but this interdependence is 198 00:11:27,480 --> 00:11:31,800 Speaker 1: being chipped away at through what a lot of Americans 199 00:11:31,920 --> 00:11:36,400 Speaker 1: called decoupling. The Chinese call itself reliance. It's basically, these 200 00:11:36,440 --> 00:11:40,920 Speaker 1: are other sides of the same coin. And yeah, we'd 201 00:11:40,920 --> 00:11:44,560 Speaker 1: have to be very nervous. I think that this is 202 00:11:44,600 --> 00:11:47,040 Speaker 1: going to kind of end up with not just a 203 00:11:47,120 --> 00:11:50,599 Speaker 1: kind of a frosty relationship, but one in which effectively, 204 00:11:50,640 --> 00:11:55,680 Speaker 1: you know, cooperative relationships breakdown completely. George, the measures that 205 00:11:55,679 --> 00:11:58,199 Speaker 1: have been taken so far, such as the US preventing 206 00:11:58,400 --> 00:12:02,680 Speaker 1: your government pension from investor in Chinese companies, have largely 207 00:12:02,760 --> 00:12:05,880 Speaker 1: been symbolic and not that effectual when it comes to 208 00:12:06,120 --> 00:12:10,679 Speaker 1: actual flows of capital. What's the red line from your perspective, 209 00:12:10,720 --> 00:12:14,240 Speaker 1: in which we've really entered into a true escalation that 210 00:12:14,280 --> 00:12:17,560 Speaker 1: will be very difficult to back down from. Well, this 211 00:12:18,360 --> 00:12:22,199 Speaker 1: movement by the President to stop the public pension fund 212 00:12:22,240 --> 00:12:27,240 Speaker 1: from purchasing China, or to warn the investments in Chinese companies, 213 00:12:27,640 --> 00:12:30,160 Speaker 1: you know, could backfire if some of these companies are 214 00:12:30,160 --> 00:12:33,840 Speaker 1: held to be liable or culpable in the kind of 215 00:12:33,880 --> 00:12:38,160 Speaker 1: coronavirus pandemic u is um. You know. It is again, 216 00:12:38,200 --> 00:12:40,840 Speaker 1: it's a it's a new twist in what is already 217 00:12:41,000 --> 00:12:46,880 Speaker 1: quite a worrying tale, really, because we already have a 218 00:12:46,920 --> 00:12:49,800 Speaker 1: war so called war going on in terms of trade 219 00:12:49,800 --> 00:12:52,960 Speaker 1: and tariffs. It's going on in technology, it's going on 220 00:12:53,040 --> 00:12:56,400 Speaker 1: in other areas that are kind of buried in the 221 00:12:56,480 --> 00:13:00,840 Speaker 1: kind of mantra of sort of national security financial a 222 00:13:00,920 --> 00:13:04,440 Speaker 1: financial war or what the Chinese cause smokeless financial war 223 00:13:05,160 --> 00:13:09,000 Speaker 1: um would be would be a big problem as well, 224 00:13:09,080 --> 00:13:13,160 Speaker 1: because actually, here the United States has a huge amount 225 00:13:13,240 --> 00:13:17,480 Speaker 1: of leverage because the Chinese need capital influence, they want them, 226 00:13:17,520 --> 00:13:22,640 Speaker 1: they want international investors, including the United States, to invest 227 00:13:22,800 --> 00:13:26,720 Speaker 1: in Chinese equity and bond markets. They need the dollars, 228 00:13:26,760 --> 00:13:31,160 Speaker 1: they need dollar financing and so um. In a way, 229 00:13:31,600 --> 00:13:33,800 Speaker 1: you might say, or some people might say that the 230 00:13:33,840 --> 00:13:36,920 Speaker 1: President is simply trying to exercise the leverage that he 231 00:13:37,000 --> 00:13:40,560 Speaker 1: has because the dollar and the US financial system is 232 00:13:40,600 --> 00:13:45,080 Speaker 1: so important in the global economy and for China. But 233 00:13:45,160 --> 00:13:48,240 Speaker 1: in another way, you know, it's one thing to base 234 00:13:48,600 --> 00:13:51,240 Speaker 1: My view is it's one thing to say we don't 235 00:13:51,280 --> 00:13:53,800 Speaker 1: you want you investing in these companies because they're not 236 00:13:53,840 --> 00:13:57,160 Speaker 1: transparent and they don't meet our accounting standards. It's quite 237 00:13:57,160 --> 00:13:59,560 Speaker 1: another thing to say, we don't want you investing in 238 00:13:59,600 --> 00:14:02,160 Speaker 1: these Panese because we think they might be couple and 239 00:14:02,240 --> 00:14:06,640 Speaker 1: the coronavirus pandemic, because that basically conveys something very very 240 00:14:06,679 --> 00:14:10,880 Speaker 1: different to Beijing and obviously upstay Ante in terms of tension. 241 00:14:11,520 --> 00:14:13,440 Speaker 1: George We've gotta get you back on because we need 242 00:14:13,480 --> 00:14:16,320 Speaker 1: a huge discussion on the best way forward to change 243 00:14:16,360 --> 00:14:18,640 Speaker 1: the behavior of the Chinese Communist Party. And I know 244 00:14:18,720 --> 00:14:21,240 Speaker 1: that we have two parties that both want to do that, 245 00:14:21,520 --> 00:14:23,800 Speaker 1: but I think have two different visions on how to 246 00:14:23,840 --> 00:14:26,360 Speaker 1: go about doing it, particularly in the United States. George 247 00:14:26,440 --> 00:14:29,080 Speaker 1: Magnus there of the University of Oxford, this is going 248 00:14:29,120 --> 00:14:31,120 Speaker 1: to be a critical issue. We've said it so many 249 00:14:31,120 --> 00:14:38,040 Speaker 1: times on this program. Let me ask a fancy question, John. 250 00:14:38,080 --> 00:14:40,480 Speaker 1: I think it's really important to shift to the fiscal debate. Now. 251 00:14:40,480 --> 00:14:44,160 Speaker 1: We can do that with Julia Carnado macroeconomic policy. She's 252 00:14:44,160 --> 00:14:46,760 Speaker 1: been wonderful not only on a monetary theory that's out 253 00:14:46,760 --> 00:14:50,480 Speaker 1: there and and such, but but also the shift from 254 00:14:50,480 --> 00:14:54,280 Speaker 1: monetary over to the other areas. Julia. The arch theory 255 00:14:54,320 --> 00:14:56,920 Speaker 1: here which many bring up, Dr Pos and I believe 256 00:14:56,960 --> 00:15:01,120 Speaker 1: brought it up with Chairman Paul yesterday, is Olivier Blanchard 257 00:15:01,200 --> 00:15:05,280 Speaker 1: and Lawrence Summers. And that is a strange word hysteresis, 258 00:15:05,920 --> 00:15:08,240 Speaker 1: which is about if you're out of a job, you 259 00:15:08,320 --> 00:15:10,360 Speaker 1: stay out of a job, it's even harder to get 260 00:15:10,360 --> 00:15:13,920 Speaker 1: back in. What's the hystoriesis meet around the United States 261 00:15:13,960 --> 00:15:19,480 Speaker 1: of America right now. This is a very dangerous territory 262 00:15:19,520 --> 00:15:22,840 Speaker 1: we're in um and there's This is exactly why Powell 263 00:15:22,880 --> 00:15:25,400 Speaker 1: came out and sort of issued his call to arms 264 00:15:25,560 --> 00:15:29,560 Speaker 1: for fiscal policymakers UM. To have this many millions and 265 00:15:29,600 --> 00:15:32,640 Speaker 1: millions of people, eight weeks of jobless claims that busted 266 00:15:32,680 --> 00:15:36,640 Speaker 1: through multiple times any prior record, in the deepest recessions 267 00:15:36,680 --> 00:15:39,240 Speaker 1: we've ever seen. We cannot take this lightly. We cannot 268 00:15:39,240 --> 00:15:43,760 Speaker 1: assume this will all just snap back to normal. Julia, 269 00:15:43,880 --> 00:15:48,200 Speaker 1: I'm struck by a statistical aberration in the data, and 270 00:15:48,280 --> 00:15:50,200 Speaker 1: not sorry to get geeky, but I think this is 271 00:15:50,240 --> 00:15:55,320 Speaker 1: important to really gauge whether people are actually receiving unemployment benefits. 272 00:15:55,360 --> 00:15:58,120 Speaker 1: We talk about thirty six and a half million people 273 00:15:58,120 --> 00:16:01,560 Speaker 1: who have filed initial jobless claimed and yet the continuing 274 00:16:01,600 --> 00:16:05,000 Speaker 1: claims is so far below that it came in far 275 00:16:05,120 --> 00:16:07,240 Speaker 1: below where people expected. This is the number of people 276 00:16:07,280 --> 00:16:11,200 Speaker 1: actually receiving benefits. What does this mean? Does it mean 277 00:16:11,280 --> 00:16:14,400 Speaker 1: that basically the gears in states and municipalities are not 278 00:16:14,440 --> 00:16:16,480 Speaker 1: moving quickly enough to get money to people who are 279 00:16:16,480 --> 00:16:20,680 Speaker 1: out of work. Yeah, exactly, so, we've seen we know 280 00:16:20,880 --> 00:16:24,520 Speaker 1: that many, many states are having problems processing these claims. 281 00:16:24,520 --> 00:16:27,720 Speaker 1: So even if you can file an initial claim, even 282 00:16:27,760 --> 00:16:30,920 Speaker 1: in states like New York, UM, people have been waiting 283 00:16:30,960 --> 00:16:34,960 Speaker 1: to be to receive benefits for weeks. People have filed 284 00:16:35,000 --> 00:16:39,120 Speaker 1: six eight weeks ago and still aren't receiving benefits. So 285 00:16:39,160 --> 00:16:43,400 Speaker 1: the benefit program was well designed, it was fairly generous, UM, 286 00:16:43,440 --> 00:16:45,840 Speaker 1: but we just don't have the technology in place to 287 00:16:45,880 --> 00:16:49,040 Speaker 1: get the money to people. Judy, let's talk about the 288 00:16:49,120 --> 00:16:52,760 Speaker 1: quere how long it takes to hail time alone is 289 00:16:52,800 --> 00:16:56,080 Speaker 1: not enough. What do we need today? We need to 290 00:16:56,120 --> 00:16:59,600 Speaker 1: bridge this gap. And what's what Powell's message was is 291 00:16:59,640 --> 00:17:02,200 Speaker 1: that this gap is going to be longer than we thought. 292 00:17:02,720 --> 00:17:05,919 Speaker 1: If this narrative about opening the economy up as a 293 00:17:05,960 --> 00:17:09,840 Speaker 1: false narrative. UM, as long as we have a rampant disease, 294 00:17:09,920 --> 00:17:12,359 Speaker 1: people aren't going to go back out and go about 295 00:17:12,400 --> 00:17:15,240 Speaker 1: business as normal, and businesses will still be struggling to 296 00:17:15,280 --> 00:17:18,480 Speaker 1: make ends meet. So this is about getting us through 297 00:17:18,480 --> 00:17:20,639 Speaker 1: this public health crisis that looks like it's going to 298 00:17:20,680 --> 00:17:23,520 Speaker 1: be a matter of many months, not just two or 299 00:17:23,560 --> 00:17:27,439 Speaker 1: three months. And so we need to get money to people, 300 00:17:27,800 --> 00:17:31,320 Speaker 1: businesses and consumers so that they can pay their rent, 301 00:17:31,400 --> 00:17:33,720 Speaker 1: so that they don't default so that we don't see 302 00:17:33,720 --> 00:17:36,920 Speaker 1: a wave of business failures which would start a snowball 303 00:17:36,960 --> 00:17:39,879 Speaker 1: effect of more job losses and more loss and confidence. 304 00:17:39,920 --> 00:17:42,720 Speaker 1: So time is really of the essence here, Jerny. And 305 00:17:42,880 --> 00:17:46,000 Speaker 1: how do you establish what is temporary just in terms 306 00:17:46,000 --> 00:17:50,080 Speaker 1: of damage and what might be more permanent. Well, I 307 00:17:50,080 --> 00:17:52,119 Speaker 1: still think we're in a phase where a lot of 308 00:17:52,160 --> 00:17:56,719 Speaker 1: this could be temporary. Uh, you know, the relationships between 309 00:17:56,720 --> 00:18:00,640 Speaker 1: employers and their workers hasn't been disrupted for that long. UM, 310 00:18:00,800 --> 00:18:03,480 Speaker 1: So it is, but we are seeing what's troubling, and 311 00:18:03,520 --> 00:18:06,320 Speaker 1: I think what Powell is hearing from his business contacts 312 00:18:06,600 --> 00:18:09,119 Speaker 1: is that more businesses are saying, you know, no, thanks 313 00:18:09,160 --> 00:18:12,199 Speaker 1: to these loan programs, UM, I'm just going to hunker 314 00:18:12,240 --> 00:18:16,280 Speaker 1: down and actually permanently reduce my operations. And that's exactly 315 00:18:16,320 --> 00:18:18,879 Speaker 1: the transition we don't want businesses to make. So in 316 00:18:19,040 --> 00:18:22,040 Speaker 1: that first wave, and we saw that in the employment report, right, 317 00:18:22,320 --> 00:18:25,439 Speaker 1: the vast majority of people are still characterized as on 318 00:18:25,600 --> 00:18:29,800 Speaker 1: temporary layoff UM. But those can become permanent very quickly. 319 00:18:30,440 --> 00:18:32,680 Speaker 1: So we don't know. There's not a lot of precision 320 00:18:32,720 --> 00:18:36,080 Speaker 1: in this UM, but we still have time. Like we're 321 00:18:36,080 --> 00:18:38,560 Speaker 1: still in a good spot. Excuse me, where we could 322 00:18:38,840 --> 00:18:41,560 Speaker 1: we could pull this off. We could pull this off. 323 00:18:41,840 --> 00:18:44,280 Speaker 1: When you look at what's being proposed in Washington, you 324 00:18:44,320 --> 00:18:46,840 Speaker 1: look at the timeline that's getting stretched out as an 325 00:18:46,840 --> 00:18:50,640 Speaker 1: increasing number of lawmakers say, we need to wait. When 326 00:18:50,960 --> 00:18:54,080 Speaker 1: is the latest that they can pass something in order 327 00:18:54,119 --> 00:18:57,080 Speaker 1: to rescue this market and prevent us from entering a depression. 328 00:18:59,280 --> 00:19:02,720 Speaker 1: We've got weeks, not months to do this. So if 329 00:19:02,760 --> 00:19:05,360 Speaker 1: you think about one example is state and local governments 330 00:19:05,359 --> 00:19:09,159 Speaker 1: horsing budget crises UM. Their budget year typically ends in 331 00:19:09,240 --> 00:19:13,000 Speaker 1: June UM, so they're having to make budgets for next 332 00:19:13,040 --> 00:19:15,920 Speaker 1: fiscal year, which starts in July. So if they don't 333 00:19:15,960 --> 00:19:18,919 Speaker 1: have money to plug that hole, many of them have 334 00:19:19,000 --> 00:19:22,160 Speaker 1: balanced budget requirements, they have to lay off staff and 335 00:19:22,200 --> 00:19:25,560 Speaker 1: cut back services. That's exactly the kind of second round 336 00:19:25,600 --> 00:19:28,520 Speaker 1: effect we want to avoid. So we have June to 337 00:19:28,600 --> 00:19:31,000 Speaker 1: get money to state and local governments so that they 338 00:19:31,040 --> 00:19:35,080 Speaker 1: don't go into a round of permanent layoff. Julie, the 339 00:19:35,200 --> 00:19:38,800 Speaker 1: key distinction here is it in America, we don't want 340 00:19:38,800 --> 00:19:42,119 Speaker 1: to provide direct aid individuals, we don't trust them, etcetera, etcetera. 341 00:19:42,359 --> 00:19:44,320 Speaker 1: I don't want to get into the cultural debate, folks, 342 00:19:44,400 --> 00:19:46,760 Speaker 1: But the fact is we don't. And in Europe they 343 00:19:46,800 --> 00:19:49,520 Speaker 1: provide direct subsidies so people can pay their rent as 344 00:19:49,560 --> 00:19:53,159 Speaker 1: you expect. You explained to help businesses and all that. 345 00:19:53,240 --> 00:19:55,680 Speaker 1: I get that theory. Do you see you have any 346 00:19:55,720 --> 00:19:59,200 Speaker 1: optimism that we can shift the ethos in America to 347 00:19:59,320 --> 00:20:04,480 Speaker 1: a more year European direct benefit tone. I think so. 348 00:20:04,600 --> 00:20:07,960 Speaker 1: I mean, we we are seeing, actually, although the administration 349 00:20:08,040 --> 00:20:10,560 Speaker 1: hasn't gotten on board, we're starting to see at least 350 00:20:10,600 --> 00:20:15,760 Speaker 1: some bipartisan support for for stronger, more lasting income support 351 00:20:15,800 --> 00:20:18,600 Speaker 1: to get us through this. Um it's early days. We 352 00:20:18,680 --> 00:20:21,440 Speaker 1: need more of it, but UM, I think it's quite possible. 353 00:20:21,440 --> 00:20:25,240 Speaker 1: Because these are their voters. UM, it should follow that 354 00:20:25,320 --> 00:20:29,159 Speaker 1: if there is a pandemic, this is nobody's folved, uh 355 00:20:29,240 --> 00:20:31,840 Speaker 1: to actually get money to people so that they don't 356 00:20:32,200 --> 00:20:37,720 Speaker 1: dessault or go hungry lose their homes. This is sort 357 00:20:37,760 --> 00:20:41,760 Speaker 1: of pretty easy, low hanging fruit for most politicians of 358 00:20:41,840 --> 00:20:44,480 Speaker 1: either party. So I'm optimistic we can start to see 359 00:20:44,520 --> 00:20:48,679 Speaker 1: that gel as the urgency starts to the message of 360 00:20:48,800 --> 00:20:53,199 Speaker 1: urgency gets received by the policy maker. Julia not to 361 00:20:53,200 --> 00:20:56,600 Speaker 1: catch up with you, Judia Karna, that of macroeconomic policy 362 00:21:02,280 --> 00:21:06,320 Speaker 1: here from our surveillance Central Park Office, I can look 363 00:21:06,400 --> 00:21:10,360 Speaker 1: over to Anglewood, New Jersey and see brilliant math students 364 00:21:10,480 --> 00:21:14,520 Speaker 1: all lined up on the palisades gazing out. And if 365 00:21:14,560 --> 00:21:16,760 Speaker 1: they're smart enough, they'll be lucky enough to go to 366 00:21:16,800 --> 00:21:20,879 Speaker 1: Brown University in Providence, or north to a smaller city 367 00:21:21,240 --> 00:21:24,560 Speaker 1: of Boston and Cambridge to Harvard and do better than 368 00:21:24,600 --> 00:21:27,520 Speaker 1: go to economics, and they can be like Randall Krosner, 369 00:21:27,600 --> 00:21:30,520 Speaker 1: the former governor of the Federal Reserve System and now 370 00:21:30,560 --> 00:21:33,480 Speaker 1: of course a force at the Booth School in Chicago. 371 00:21:33,520 --> 00:21:35,840 Speaker 1: Were thrilled to Governor Krosner could join us with all 372 00:21:35,880 --> 00:21:39,119 Speaker 1: this terrific news flow that we have. Brandy. The the 373 00:21:39,520 --> 00:21:42,440 Speaker 1: the path of the ten uere yield that we've seen, 374 00:21:42,520 --> 00:21:45,600 Speaker 1: and as John Taylor of Stanford would call it, the 375 00:21:45,640 --> 00:21:49,040 Speaker 1: great moderation that we have seen and we had for 376 00:21:49,080 --> 00:21:52,840 Speaker 1: a long time. I guess some stability and volatility is 377 00:21:52,880 --> 00:21:58,800 Speaker 1: the path of the tenure yield following economic things that 378 00:21:58,880 --> 00:22:03,920 Speaker 1: are out there, or are our economic our investment, our 379 00:22:04,040 --> 00:22:10,399 Speaker 1: financed stuff following the tenure yield. Which is it sh 380 00:22:11,000 --> 00:22:13,920 Speaker 1: It's a very interesting way to put it. I think 381 00:22:13,960 --> 00:22:19,879 Speaker 1: it's reflecting the the economic fundamentals and the forces that 382 00:22:19,960 --> 00:22:23,600 Speaker 1: are there, but it does have a broader psychological impact 383 00:22:23,640 --> 00:22:26,480 Speaker 1: that sort of there's a feedback mechanism of what you're 384 00:22:26,520 --> 00:22:28,800 Speaker 1: getting head on that It's a very interesting way of 385 00:22:28,800 --> 00:22:30,800 Speaker 1: putting it. So I think it makes a lot of 386 00:22:30,840 --> 00:22:34,560 Speaker 1: sense that the tenure yield has come down so much. 387 00:22:34,840 --> 00:22:38,880 Speaker 1: We're clearly in a very low inflation environment. We're clearly 388 00:22:39,480 --> 00:22:41,600 Speaker 1: no one is worried that, at least in the shortage 389 00:22:41,600 --> 00:22:44,600 Speaker 1: immediate run, that we're going to have ab inflation. I mean, 390 00:22:44,680 --> 00:22:48,000 Speaker 1: some people have been concerned about the increasing defense balance sheets, 391 00:22:48,040 --> 00:22:51,320 Speaker 1: but they've been concerned when I was there at the 392 00:22:51,400 --> 00:22:54,120 Speaker 1: global financial crisis that we would have this high inflation 393 00:22:54,119 --> 00:22:56,440 Speaker 1: of the next decade. We didn't have that. I don't 394 00:22:56,440 --> 00:22:59,200 Speaker 1: see that that coming now. But I also think it's 395 00:22:59,320 --> 00:23:03,760 Speaker 1: reflecting a you know, that low yield is also telling 396 00:23:03,840 --> 00:23:06,760 Speaker 1: us something about the uncertainty that people have, the concerns 397 00:23:06,840 --> 00:23:12,440 Speaker 1: that people have about the economic situation. Ran I'm gonna 398 00:23:12,440 --> 00:23:14,679 Speaker 1: be root here, Paul jump in on this question because 399 00:23:14,960 --> 00:23:18,320 Speaker 1: I don't want to go you know, uh, the mental 400 00:23:18,440 --> 00:23:21,400 Speaker 1: Black wonderful professor in New York University has done great, 401 00:23:21,400 --> 00:23:25,840 Speaker 1: great research on recurrence equations and feedback loops, Professor Crost 402 00:23:25,920 --> 00:23:30,280 Speaker 1: are real simple. Can economists and even well meaning chairman's 403 00:23:30,280 --> 00:23:33,880 Speaker 1: of the Federal Reserve be so presumptive as to believe 404 00:23:33,960 --> 00:23:39,080 Speaker 1: they can break the feedback loops? That's also another very 405 00:23:39,080 --> 00:23:42,240 Speaker 1: interesting question, because my last one for the quarter going 406 00:23:42,920 --> 00:23:46,320 Speaker 1: that no, no, no, no, they're more more coming the 407 00:23:47,359 --> 00:23:52,359 Speaker 1: because it's a very um challenging game when you're have 408 00:23:52,680 --> 00:23:56,960 Speaker 1: a megaphone like a FED chairman, because you want to 409 00:23:56,960 --> 00:24:00,480 Speaker 1: be realistic, like the chairman was yesterday, that you know 410 00:24:00,520 --> 00:24:02,480 Speaker 1: they're gonna be a lot of challenges. Head don't think 411 00:24:02,480 --> 00:24:04,600 Speaker 1: that this is just you know, we turn the lights off, 412 00:24:04,640 --> 00:24:06,560 Speaker 1: we're going to turn the lights back back on again. 413 00:24:07,000 --> 00:24:09,480 Speaker 1: But you also don't want to scare people because that 414 00:24:09,520 --> 00:24:12,320 Speaker 1: can make it more difficult to have the recovery. And 415 00:24:12,440 --> 00:24:16,960 Speaker 1: so you try to um talk in a way that 416 00:24:17,400 --> 00:24:21,960 Speaker 1: is realistic but gets to the direction that you want. 417 00:24:22,200 --> 00:24:24,680 Speaker 1: It's very very difficult. Look what happened to Alan Greenspan 418 00:24:24,720 --> 00:24:26,800 Speaker 1: when he was trying to be realistic that he social 419 00:24:26,840 --> 00:24:30,200 Speaker 1: irrational exuberants and the stock market shell by a very 420 00:24:30,200 --> 00:24:33,720 Speaker 1: significant amount. It's really something Paul I was rude. Their 421 00:24:34,160 --> 00:24:37,119 Speaker 1: Roman Freedman is the Giant at New York University has 422 00:24:37,280 --> 00:24:43,639 Speaker 1: really studied the recurrence equations, the feedback loops, the redos 423 00:24:43,760 --> 00:24:48,640 Speaker 1: that happened behaviorally within an economic system. Paul So, Professor. 424 00:24:48,960 --> 00:24:51,679 Speaker 1: We heard from a FED chairman pal yesterday. He seemed 425 00:24:51,680 --> 00:24:56,200 Speaker 1: to pooh pooh negative interest rates. Give us your thoughts 426 00:24:56,240 --> 00:24:59,679 Speaker 1: about how you think the FED thinks about kind of 427 00:24:59,760 --> 00:25:02,879 Speaker 1: ne injuries interest rates as a as a policy matter. 428 00:25:04,600 --> 00:25:07,439 Speaker 1: So I think it's um if not part of their DNA. 429 00:25:07,800 --> 00:25:11,240 Speaker 1: They really don't want to go there, but certainly in 430 00:25:11,280 --> 00:25:13,440 Speaker 1: an environment where we're in, you never want to say 431 00:25:13,480 --> 00:25:16,080 Speaker 1: never about anything. If we were to get into a 432 00:25:16,119 --> 00:25:19,119 Speaker 1: deflationary situation and sort of the price level is falling 433 00:25:19,160 --> 00:25:22,400 Speaker 1: by let's say two percent per year, if they refuse 434 00:25:22,520 --> 00:25:25,600 Speaker 1: to go below zero, that would mean that real interest 435 00:25:25,680 --> 00:25:27,960 Speaker 1: rates would be two percent, and that would be quite 436 00:25:28,040 --> 00:25:30,919 Speaker 1: high relative to what they've been over the last decade. 437 00:25:30,960 --> 00:25:33,600 Speaker 1: That would mean plite monetary policy. So they would have 438 00:25:33,720 --> 00:25:37,639 Speaker 1: to in extreme circumstances. I think we consider that, but 439 00:25:37,960 --> 00:25:40,520 Speaker 1: part of the I don't think it was an accident 440 00:25:40,600 --> 00:25:44,040 Speaker 1: to the chairman talked about his reluctance to go negative 441 00:25:44,280 --> 00:25:47,399 Speaker 1: and talked about the fiscal authorities doing more because the 442 00:25:47,400 --> 00:25:51,000 Speaker 1: fiscal authorities do more and do the right things. Um. 443 00:25:51,119 --> 00:25:54,280 Speaker 1: Then he feels that they're not going to be put 444 00:25:54,280 --> 00:25:57,640 Speaker 1: in that situation of a significant deflation where they might 445 00:25:57,640 --> 00:26:00,840 Speaker 1: have to consider that. So as we think about their 446 00:26:00,880 --> 00:26:05,359 Speaker 1: policy going forward, here is it? Is it really are 447 00:26:05,400 --> 00:26:07,600 Speaker 1: they trying to Is FED Chairman Pal and the rest 448 00:26:07,640 --> 00:26:10,280 Speaker 1: of the federal reserved really trying to put some pressure 449 00:26:10,920 --> 00:26:14,800 Speaker 1: on Congress to step up and do even more from 450 00:26:14,880 --> 00:26:19,920 Speaker 1: a fiscal stimulus perspective. Well, I think they worry that. Um. 451 00:26:20,440 --> 00:26:22,560 Speaker 1: I mean, I think they're they're quite delighted that we 452 00:26:22,560 --> 00:26:25,240 Speaker 1: were able to get bi partisan support for these very 453 00:26:25,320 --> 00:26:27,679 Speaker 1: large spending bills and get it through very quickly. I 454 00:26:27,680 --> 00:26:29,920 Speaker 1: don't think people would have anticipated that. I think it's 455 00:26:29,960 --> 00:26:32,640 Speaker 1: now clear that there's a lot more partisan wrangling that's 456 00:26:32,640 --> 00:26:34,600 Speaker 1: going on that's going to slow down the next steps. 457 00:26:35,200 --> 00:26:40,280 Speaker 1: And and I think, um fit share Powell really doesn't 458 00:26:40,400 --> 00:26:43,520 Speaker 1: want the burden to be put onto the FIT. You know, like, 459 00:26:43,560 --> 00:26:45,720 Speaker 1: if if everybody else can't act well, then the FED 460 00:26:45,800 --> 00:26:48,760 Speaker 1: will take care of it. The FED can't through the virus, said, 461 00:26:48,840 --> 00:26:52,919 Speaker 1: can't prepare broken supply chains, They can't get people comfortable 462 00:26:52,960 --> 00:26:57,040 Speaker 1: with going out to to consume. Other things have to happen. 463 00:26:57,480 --> 00:27:00,439 Speaker 1: And and that's effect that you know implicitly that was message, 464 00:27:00,640 --> 00:27:02,920 Speaker 1: don't put all the burden on us, Um, it's got 465 00:27:02,920 --> 00:27:05,760 Speaker 1: to be a shared burden. Randall crossing with his folks 466 00:27:06,240 --> 00:27:08,119 Speaker 1: from our governor of the Fellow Reserve System at the 467 00:27:08,119 --> 00:27:12,480 Speaker 1: Booth School of Chicago. And of course with prodigious math capabilities. 468 00:27:13,040 --> 00:27:17,320 Speaker 1: Randy was born in Englewood, New Jersey. I know that's 469 00:27:17,320 --> 00:27:19,800 Speaker 1: what it is. I mean, I can see it over there. 470 00:27:20,200 --> 00:27:22,840 Speaker 1: I see all sorts of square roots floating in the 471 00:27:22,920 --> 00:27:28,480 Speaker 1: atmosphere over Andwood, New Jersey. Right now, Professor Crossner, let 472 00:27:28,480 --> 00:27:31,760 Speaker 1: me ask you a Mathew question about a non Mathew concept. 473 00:27:31,800 --> 00:27:35,399 Speaker 1: And this comes from the economic lightweight, Olivier Blanchard of 474 00:27:35,560 --> 00:27:37,880 Speaker 1: M I T. And a guy named Summers from Harvard 475 00:27:38,280 --> 00:27:40,719 Speaker 1: as well. Folks, I'm kidding here, and that these are 476 00:27:40,720 --> 00:27:44,720 Speaker 1: all concept ideas that are particularly perceived by the media 477 00:27:44,880 --> 00:27:49,359 Speaker 1: as concept ideas. And Professor Crosner knows underlying Blanchard and 478 00:27:49,480 --> 00:27:54,879 Speaker 1: Summer's work on histories, this is prodigious math abilities. What's 479 00:27:54,960 --> 00:28:02,679 Speaker 1: the math of our unemployment? A professor, Um, that's a 480 00:28:02,720 --> 00:28:11,640 Speaker 1: big number. That's good. You get that yeah, yeah, no. 481 00:28:11,680 --> 00:28:14,720 Speaker 1: But the challenges when you get to numbers like this 482 00:28:14,840 --> 00:28:18,160 Speaker 1: and this persists, there's a scarring that goes on. That's 483 00:28:18,160 --> 00:28:20,440 Speaker 1: that sort of history assistance, sort of a fancy way 484 00:28:20,480 --> 00:28:23,560 Speaker 1: of just saying that this is not something that's temporary 485 00:28:23,640 --> 00:28:26,520 Speaker 1: but has long legs. This is scarring that that happens. 486 00:28:26,680 --> 00:28:28,359 Speaker 1: It's not just oh, someone thrown out of work and 487 00:28:29,200 --> 00:28:31,000 Speaker 1: the populations out of work and then they just find 488 00:28:31,000 --> 00:28:34,600 Speaker 1: a job again. It makes it very very difficult when 489 00:28:34,600 --> 00:28:36,800 Speaker 1: people are out of work for a long time to 490 00:28:37,000 --> 00:28:39,200 Speaker 1: be able to get back into the labor force. When 491 00:28:39,200 --> 00:28:41,760 Speaker 1: you have that many people out, that means that people 492 00:28:41,800 --> 00:28:45,520 Speaker 1: need dramatically different kinds of skills and it's very tough 493 00:28:45,600 --> 00:28:49,240 Speaker 1: to get them reskilled so so quickly, and it makes 494 00:28:49,280 --> 00:28:51,760 Speaker 1: it very difficult when you have those high employment rates 495 00:28:51,800 --> 00:28:54,040 Speaker 1: to be able to move move them down. And that's 496 00:28:54,040 --> 00:28:56,720 Speaker 1: why I think it's very important that policy think about 497 00:28:56,760 --> 00:28:59,360 Speaker 1: the transition that they're trying to think about. Well, can 498 00:28:59,360 --> 00:29:01,920 Speaker 1: we just get to February? I have you always gone 499 00:29:02,160 --> 00:29:06,720 Speaker 1: The meteor has hit, the dinosaurs have been been made extinct, 500 00:29:07,160 --> 00:29:09,600 Speaker 1: and there's no way we're going to bring them back. Okay, 501 00:29:09,600 --> 00:29:11,560 Speaker 1: but why can't we be Germany. I mean, this is 502 00:29:11,600 --> 00:29:14,840 Speaker 1: a really important question folks in terms of retraining the 503 00:29:14,880 --> 00:29:17,920 Speaker 1: Germans on the high ground on us, Professor cross Or 504 00:29:17,960 --> 00:29:21,960 Speaker 1: why can't we Retraine? And frankly Chicago in the Midwest 505 00:29:22,040 --> 00:29:26,280 Speaker 1: is like would be the nexus of this. So I 506 00:29:26,320 --> 00:29:29,680 Speaker 1: think I think there are two things. One is that 507 00:29:29,720 --> 00:29:34,040 Speaker 1: there is this long history of apprenticeship systems in in 508 00:29:34,160 --> 00:29:39,960 Speaker 1: Germany and so people building skills abroad a broad skill set. 509 00:29:40,200 --> 00:29:42,520 Speaker 1: We don't have that in the US. And also to 510 00:29:42,640 --> 00:29:46,920 Speaker 1: the culture, there's a cultural piece to it. In Germany, 511 00:29:46,920 --> 00:29:49,320 Speaker 1: when people grow up together, one person goes on to 512 00:29:49,400 --> 00:29:53,520 Speaker 1: become CEO of a company, another person becomes the someone 513 00:29:53,520 --> 00:29:57,200 Speaker 1: who works in um in metal work and becomes a welder. 514 00:29:57,640 --> 00:30:00,840 Speaker 1: They can they generally tend to stay friends and stay 515 00:30:00,840 --> 00:30:03,720 Speaker 1: in the same social circles. In the US, we don't 516 00:30:03,760 --> 00:30:06,200 Speaker 1: have that, And so I think it's a combination of 517 00:30:06,200 --> 00:30:10,800 Speaker 1: a cultural thing and the structures, the predecision structures. What 518 00:30:11,000 --> 00:30:14,160 Speaker 1: you just heard their folks are Randall Crosser tattooed to 519 00:30:14,200 --> 00:30:17,240 Speaker 1: your brain on Germany. And I'm pleased to say, Richard 520 00:30:17,280 --> 00:30:20,280 Speaker 1: Clara to the vice chairman is expert on this, as 521 00:30:20,320 --> 00:30:25,120 Speaker 1: is Adam Posen, who asked Chairman Powell the question yesterday, Randy, 522 00:30:25,160 --> 00:30:27,800 Speaker 1: that was so valuable, so brilliant, Thank you so much. 523 00:30:28,040 --> 00:30:30,720 Speaker 1: He is at the Boost School of Chicago Randall Crosser 524 00:30:30,760 --> 00:30:38,760 Speaker 1: as well. What Maijing discussion here a nursing on the 525 00:30:38,840 --> 00:30:42,760 Speaker 1: doctors they leave the hospital and the idea of what 526 00:30:42,840 --> 00:30:46,840 Speaker 1: that means when there is a pandemic. Here is Jason 527 00:30:46,880 --> 00:30:50,760 Speaker 1: Farley of Johns Hopkins University. Let's listen. Well, I think 528 00:30:50,960 --> 00:30:54,360 Speaker 1: you're seeing professionals who you know, as you would see 529 00:30:54,360 --> 00:30:57,440 Speaker 1: a soldier at war who can be relaxed between the battles. 530 00:30:58,240 --> 00:31:01,400 Speaker 1: You can see healthcare workers relacing in it in those battles. Um. 531 00:31:01,440 --> 00:31:04,800 Speaker 1: I don't think the public should take a sense of 532 00:31:05,360 --> 00:31:09,800 Speaker 1: you know, uh, lack of urgency in our response and 533 00:31:10,080 --> 00:31:13,360 Speaker 1: buy that urgency I mean continuing to be safer at home, 534 00:31:13,720 --> 00:31:17,720 Speaker 1: continuing to social distance, physical distance by no means are 535 00:31:17,720 --> 00:31:21,560 Speaker 1: we out of vote this more beautifully said. So with that, 536 00:31:21,760 --> 00:31:26,720 Speaker 1: there's this a huge tension between lockdown stay at home 537 00:31:26,800 --> 00:31:30,240 Speaker 1: the Wisconsin legislation that we've seen in the last uh 538 00:31:30,320 --> 00:31:34,720 Speaker 1: twenty four hours. How do you perceive the gray area 539 00:31:35,520 --> 00:31:40,200 Speaker 1: between a strict lockdown, stay at home and getting back 540 00:31:40,280 --> 00:31:43,880 Speaker 1: to normal well, I think you characterized it perfectly at 541 00:31:43,880 --> 00:31:48,200 Speaker 1: this sense of gray in which, um, you know, everyone 542 00:31:48,720 --> 00:31:51,680 Speaker 1: is opening up in a slightly different ways across the country, 543 00:31:52,240 --> 00:31:55,480 Speaker 1: across the world, um, and we really need to pay 544 00:31:55,840 --> 00:32:00,120 Speaker 1: very close attention and be vigilant to how that opening 545 00:32:00,200 --> 00:32:03,240 Speaker 1: up and how our change in our behavior. How are 546 00:32:03,400 --> 00:32:06,520 Speaker 1: you know, quite frankly, our our decrease in social and 547 00:32:06,560 --> 00:32:09,800 Speaker 1: physical distancing from one another. A return to work is 548 00:32:09,840 --> 00:32:13,920 Speaker 1: going to impact new cases. We we anticipate that it 549 00:32:13,960 --> 00:32:17,440 Speaker 1: will impact new cases. And yet there are some painful 550 00:32:17,480 --> 00:32:20,000 Speaker 1: decisions that have to be made in as you've mentioned 551 00:32:20,080 --> 00:32:26,000 Speaker 1: multiple times, the recession, preventing depression economically and in many cases, um, 552 00:32:26,120 --> 00:32:29,040 Speaker 1: you know, just saving businesses. So it is a delicate 553 00:32:29,080 --> 00:32:33,320 Speaker 1: balance between being able to open up expand the economic environment, 554 00:32:33,560 --> 00:32:37,840 Speaker 1: while you know, also being vigilant to prevent ongoing transmission. 555 00:32:38,720 --> 00:32:42,320 Speaker 1: Can we guestimate, Jason Farley, how many people so far 556 00:32:43,000 --> 00:32:47,040 Speaker 1: have had COVID and how many of those people are immune? 557 00:32:47,800 --> 00:32:50,760 Speaker 1: So the immune question is always very hard one. At 558 00:32:50,760 --> 00:32:54,160 Speaker 1: this point we are doing, you know, investigators across the 559 00:32:54,160 --> 00:32:57,600 Speaker 1: world are really struggling with uh, you know, coming to 560 00:32:57,680 --> 00:33:00,880 Speaker 1: grips with whether or not immunity will occur as a 561 00:33:00,920 --> 00:33:04,320 Speaker 1: results of infection for some people, we believe that it will. 562 00:33:04,320 --> 00:33:07,840 Speaker 1: But we are seeing cases of relapse reinfection, if you will. 563 00:33:08,360 --> 00:33:12,520 Speaker 1: And so what's critical to understand is in these patients 564 00:33:12,560 --> 00:33:16,480 Speaker 1: who have you know, a supposed relapse, were they truly 565 00:33:16,720 --> 00:33:20,920 Speaker 1: tested negative and repeatedly negative for the virus and and 566 00:33:21,000 --> 00:33:24,200 Speaker 1: basically became what we would call convalescents. So they recovered, 567 00:33:24,680 --> 00:33:28,800 Speaker 1: and we we can detect antibodies in those circumstances, and 568 00:33:28,800 --> 00:33:31,560 Speaker 1: then we follow those people over time to see if 569 00:33:31,600 --> 00:33:35,600 Speaker 1: reinfection occurs in those circumstances. We're actually launching a study 570 00:33:35,960 --> 00:33:39,040 Speaker 1: in June to do exactly that at John Hopkins to 571 00:33:39,120 --> 00:33:42,640 Speaker 1: really follow people longitudinally for at least twelve months and 572 00:33:42,640 --> 00:33:46,320 Speaker 1: a cohort of patients UH to see if what the prevalence, 573 00:33:46,320 --> 00:33:48,840 Speaker 1: what the incidence of the virus is in this twelve 574 00:33:48,840 --> 00:33:52,480 Speaker 1: month period, particularly if we begin to experience a second 575 00:33:52,600 --> 00:33:56,600 Speaker 1: or you know, forbid, you know, um a third wave 576 00:33:56,680 --> 00:33:59,840 Speaker 1: of this infection. And so we're really trying to be 577 00:34:00,040 --> 00:34:03,840 Speaker 1: vigilant in our understanding of the potential for reinfection, the 578 00:34:03,960 --> 00:34:07,280 Speaker 1: level of immunity that occurs, and what that ultimately helps 579 00:34:07,600 --> 00:34:12,760 Speaker 1: us to understand about the potential for this growing concern 580 00:34:12,800 --> 00:34:16,719 Speaker 1: of a second wave. Our country is working together to 581 00:34:16,800 --> 00:34:20,000 Speaker 1: try and figure this out, or is it everyone for themselves. 582 00:34:20,680 --> 00:34:25,239 Speaker 1: I think much of the global community is working together. Unfortunately, 583 00:34:25,320 --> 00:34:28,560 Speaker 1: I do believe that, you know, from a US perspective, 584 00:34:29,080 --> 00:34:32,600 Speaker 1: we have opted out of that global community in many ways, 585 00:34:33,280 --> 00:34:36,880 Speaker 1: not only the rhetoric from the White House about multiple 586 00:34:37,440 --> 00:34:41,200 Speaker 1: UH responses from other countries, specifically of course, the focus 587 00:34:41,239 --> 00:34:45,759 Speaker 1: on China, but also the global vaccine initiatives. The US 588 00:34:45,840 --> 00:34:49,040 Speaker 1: has decided that we're going to go it alone and 589 00:34:49,120 --> 00:34:52,959 Speaker 1: not participate in several of the global vaccine initiatives, which 590 00:34:53,320 --> 00:34:56,840 Speaker 1: UM is very nearsighted on our part. Um, I do believe, 591 00:34:57,120 --> 00:34:59,040 Speaker 1: you know, we have our first trial starting here in 592 00:34:59,040 --> 00:35:02,640 Speaker 1: the US very soon, UH, some ongoing trials, but John 593 00:35:02,640 --> 00:35:06,600 Speaker 1: Hopkins specifically in June, so in a few weeks we'll 594 00:35:06,640 --> 00:35:11,000 Speaker 1: have our verse vaccine trials going. And in addition, um, 595 00:35:11,040 --> 00:35:14,319 Speaker 1: you know, multiple different vaccine candidates, so it's not just 596 00:35:14,400 --> 00:35:18,200 Speaker 1: one vaccine. UM. While the rest of the world is 597 00:35:18,239 --> 00:35:20,239 Speaker 1: moving ahead, and we know that an Oxford and other 598 00:35:20,800 --> 00:35:23,040 Speaker 1: locations around the world, we have seen you know, the 599 00:35:23,080 --> 00:35:26,319 Speaker 1: vaccine initiatives really take off so I think we are 600 00:35:26,360 --> 00:35:29,880 Speaker 1: being nearsighted in the US response and not participating in 601 00:35:29,920 --> 00:35:34,680 Speaker 1: global efforts. Jason Farley, Johns Hopkins University, Nursing. Just a 602 00:35:34,760 --> 00:35:38,719 Speaker 1: very smart, holistic conversation there, folks on the trends right now. 603 00:35:39,160 --> 00:35:43,399 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 604 00:35:43,440 --> 00:35:48,759 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 605 00:35:48,800 --> 00:35:53,040 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 606 00:35:53,080 --> 00:35:56,920 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 607 00:35:57,000 --> 00:36:03,800 Speaker 1: Radio s