1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,520 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. North 7 00:00:32,600 --> 00:00:36,760 Speaker 1: Korea and potential negotiations with the US, we do to 8 00:00:36,800 --> 00:00:41,559 Speaker 1: find out that top representatives of nately CIA Director UH 9 00:00:41,640 --> 00:00:46,000 Speaker 1: Mike Pompeio, did meet with Kim Jong un, the leader 10 00:00:46,080 --> 00:00:49,400 Speaker 1: of North Korea, in recent weeks. Joining us now to 11 00:00:49,400 --> 00:00:52,480 Speaker 1: discuss I'm very pleased to say is Admiral James Servriti 12 00:00:52,600 --> 00:00:56,720 Speaker 1: is retired US General U S. Navy Admiral and former 13 00:00:56,760 --> 00:00:59,520 Speaker 1: military commander of NATO. He is a current Dean of 14 00:00:59,560 --> 00:01:02,520 Speaker 1: the Flesh Your School at Tufts University and a Bloomberg 15 00:01:02,640 --> 00:01:06,160 Speaker 1: View contributor. Admiral stefridis thank you so much for being 16 00:01:06,360 --> 00:01:11,399 Speaker 1: with us. Are we being played with these negotiations? I 17 00:01:11,440 --> 00:01:14,479 Speaker 1: would say it's too soon to tell. Um. There is 18 00:01:14,520 --> 00:01:19,120 Speaker 1: a possibility that there is a sincerity here, uh driven 19 00:01:19,200 --> 00:01:23,720 Speaker 1: Let's face it. By financial exigencies in North Korea, UH 20 00:01:23,760 --> 00:01:27,759 Speaker 1: and the fact that he really has nuclear weapons now, 21 00:01:28,280 --> 00:01:31,720 Speaker 1: so he may feel, in all honesty that this is 22 00:01:31,760 --> 00:01:33,920 Speaker 1: a good point for him to negotiate. I think we 23 00:01:33,959 --> 00:01:36,960 Speaker 1: are being played if we think that he's going to 24 00:01:37,040 --> 00:01:39,640 Speaker 1: give up those nuclear weapons. I do not think he will. 25 00:01:40,880 --> 00:01:46,520 Speaker 1: Admiral Stefrida's Japanese Prime Minister Shinzo Abe meeting with President 26 00:01:46,560 --> 00:01:50,320 Speaker 1: Donald Trump in Florida and Mara Lago. What do you 27 00:01:50,320 --> 00:01:53,160 Speaker 1: think the position of the Japanese is visa VI what 28 00:01:53,360 --> 00:01:57,520 Speaker 1: is seemingly a bilateral negotiation between the United States and 29 00:01:57,600 --> 00:02:01,800 Speaker 1: North Korea. I think they will push very hard to 30 00:02:01,840 --> 00:02:05,920 Speaker 1: expand these talks rapidly. The next step should be to 31 00:02:06,000 --> 00:02:10,320 Speaker 1: go from bilateral, as you correctly point out US North Korea, 32 00:02:10,400 --> 00:02:14,280 Speaker 1: to four party talks to bring in South Korea and China. 33 00:02:14,400 --> 00:02:18,800 Speaker 1: We will never solve this problem without fully integrating China 34 00:02:18,919 --> 00:02:23,560 Speaker 1: into the discussion. Once we make some serious progress, hopefully 35 00:02:23,639 --> 00:02:26,560 Speaker 1: through four party talks, then I think you have to 36 00:02:26,600 --> 00:02:30,160 Speaker 1: go to six party talks. That's when Japan and Russia 37 00:02:30,200 --> 00:02:33,160 Speaker 1: come into the equation. This is the work of a 38 00:02:33,320 --> 00:02:36,440 Speaker 1: year or two, and if President Trump thinks he's going 39 00:02:36,480 --> 00:02:39,440 Speaker 1: to sit down across the table from Kim Jong on 40 00:02:39,680 --> 00:02:42,120 Speaker 1: and walk out with the Nobel Peace Prize. That is 41 00:02:42,160 --> 00:02:44,320 Speaker 1: not going to happen. This is going to be the 42 00:02:44,360 --> 00:02:48,000 Speaker 1: work of at least a year of solid negotiation building 43 00:02:48,080 --> 00:02:51,760 Speaker 1: toward inclusion of our Japanese allies. Given the work that 44 00:02:51,880 --> 00:02:57,240 Speaker 1: lies ahead, is this meeting premature? I don't think so. 45 00:02:57,440 --> 00:03:00,720 Speaker 1: I think that this is a reason all time to 46 00:03:00,880 --> 00:03:05,960 Speaker 1: try a kind of uh, dramatic gesture that might crack 47 00:03:06,120 --> 00:03:08,680 Speaker 1: this thing open and move it in a positive direction. 48 00:03:09,040 --> 00:03:11,600 Speaker 1: Another way to put it is compared to where we 49 00:03:11,600 --> 00:03:14,600 Speaker 1: were four months ago before the Olympics, when we had 50 00:03:14,960 --> 00:03:19,000 Speaker 1: nuclear detonations and ballistic missiles flying over Japan and headed 51 00:03:19,040 --> 00:03:22,080 Speaker 1: towards Guam, this is a better place to be in. 52 00:03:22,440 --> 00:03:26,160 Speaker 1: But we should not be overly euphoric about what's ahead 53 00:03:26,520 --> 00:03:30,280 Speaker 1: and where to understand that this is hard work negotiations 54 00:03:30,280 --> 00:03:34,200 Speaker 1: and diplomacy or time consuming and difficult, especially with someone 55 00:03:34,240 --> 00:03:37,040 Speaker 1: like Kim Jong un. Admiral Strafridi's I want to get 56 00:03:37,080 --> 00:03:40,640 Speaker 1: your view on CIA Director Mike Pompeio, since he was 57 00:03:40,840 --> 00:03:42,960 Speaker 1: the one who traveled to North Korea last week to 58 00:03:43,000 --> 00:03:46,320 Speaker 1: meet with the North Korean leader. Uh, what do you 59 00:03:46,360 --> 00:03:50,240 Speaker 1: think of him as sort of the initial UH spokesperson 60 00:03:50,360 --> 00:03:53,560 Speaker 1: for the US. I think it would have been a 61 00:03:53,680 --> 00:03:57,280 Speaker 1: very odd choice, except for the fact that he is 62 00:03:57,880 --> 00:04:00,720 Speaker 1: nominated and I think has a better then even chance 63 00:04:00,840 --> 00:04:04,680 Speaker 1: of being confirmed as the next Secretary of State. Given that, 64 00:04:05,200 --> 00:04:08,840 Speaker 1: it makes sense if if he had been planned to 65 00:04:09,000 --> 00:04:11,640 Speaker 1: stay at the CIA for the next three or four years, 66 00:04:11,840 --> 00:04:13,840 Speaker 1: I think it would have been a very strange choice. 67 00:04:14,360 --> 00:04:18,479 Speaker 1: Leaving that kind of structural answer. Aside as a person, 68 00:04:19,000 --> 00:04:22,080 Speaker 1: I think he's a very good choice. He Iss high 69 00:04:22,120 --> 00:04:27,479 Speaker 1: emotional intelligence, UM, He's academically very well prepared West Point 70 00:04:27,480 --> 00:04:30,719 Speaker 1: grad first in his class there UM coming out of 71 00:04:30,760 --> 00:04:35,440 Speaker 1: the CIA. He has a depth now in intelligence. Former congressman, 72 00:04:35,520 --> 00:04:37,760 Speaker 1: so he gets the political piece of this. I think 73 00:04:37,760 --> 00:04:41,080 Speaker 1: he's a very reasonable choice, given that he is on 74 00:04:41,240 --> 00:04:45,880 Speaker 1: tap to become Secretary of State. Admiral Stevids just quickly. 75 00:04:46,240 --> 00:04:50,479 Speaker 1: John Balton, national Security Advisor reaching out to Egypt and 76 00:04:50,680 --> 00:04:53,400 Speaker 1: other Arab nations in order to replace the U S 77 00:04:53,400 --> 00:04:56,440 Speaker 1: and Syria. Is that kind of work. I think it's 78 00:04:56,560 --> 00:05:00,160 Speaker 1: unlikely that we are going to wholesale replace the u US. 79 00:05:00,200 --> 00:05:02,719 Speaker 1: The idea that we're going to just step away in 80 00:05:03,320 --> 00:05:06,880 Speaker 1: our son of friends are going to step in is unrealistic. 81 00:05:06,960 --> 00:05:10,920 Speaker 1: But I think the idea of building a coalition that 82 00:05:11,000 --> 00:05:15,360 Speaker 1: includes significant Sunni Arab states to include Jordan's Saudi Arabia, 83 00:05:15,440 --> 00:05:18,200 Speaker 1: Gulf states as well as Egypt, I think makes sense. 84 00:05:18,279 --> 00:05:20,400 Speaker 1: It will require U S boots on the ground. We're 85 00:05:20,440 --> 00:05:22,120 Speaker 1: not going to be able to just leave the region. 86 00:05:22,680 --> 00:05:24,840 Speaker 1: I'm trying to get a sense of what the U. S. 87 00:05:25,080 --> 00:05:28,320 Speaker 1: Relationship is at this point with its allies, with grappling 88 00:05:28,920 --> 00:05:32,040 Speaker 1: with Syria in particular, do you get a sense of 89 00:05:32,040 --> 00:05:35,360 Speaker 1: how much more the US is working with its allies 90 00:05:35,400 --> 00:05:39,120 Speaker 1: in light of what happened there. We will continue to 91 00:05:39,200 --> 00:05:43,640 Speaker 1: try and build the coalition in preparation for the possibility 92 00:05:43,680 --> 00:05:47,200 Speaker 1: of another round of strikes. Let's face it, um we 93 00:05:47,279 --> 00:05:52,160 Speaker 1: have now struck twice, but in the interim between those 94 00:05:52,200 --> 00:05:56,760 Speaker 1: two strikes, we've seen Assad continue to use chemical weapons 95 00:05:56,800 --> 00:06:00,080 Speaker 1: with impunity. I am unconvinced that he's going to have 96 00:06:00,080 --> 00:06:02,760 Speaker 1: a sudden epiphany like St. Paul on the road to 97 00:06:02,839 --> 00:06:07,320 Speaker 1: Damascus and stop using those weapons. So we better be 98 00:06:07,400 --> 00:06:10,520 Speaker 1: prepared for another strike, and that means getting our allies, 99 00:06:10,600 --> 00:06:13,200 Speaker 1: partners and friends on board. The reason why I asked 100 00:06:13,200 --> 00:06:16,080 Speaker 1: that Admiral Strafrides is because there's been so much tension 101 00:06:16,160 --> 00:06:18,599 Speaker 1: with respect to trade and a lot of harsh words 102 00:06:18,640 --> 00:06:20,680 Speaker 1: back and forth between the US and allies, and I'm 103 00:06:20,720 --> 00:06:23,760 Speaker 1: wondering how much that plays into some of these military 104 00:06:23,800 --> 00:06:28,520 Speaker 1: relationships that are required for conflicts like this. It absolutely does, 105 00:06:28,720 --> 00:06:34,800 Speaker 1: and one of the very strong arguments for UH maintaining 106 00:06:34,960 --> 00:06:38,840 Speaker 1: balanced global relationships is that in times of trouble, you 107 00:06:38,880 --> 00:06:43,440 Speaker 1: need friends and you can't surge trust. Um. You've got 108 00:06:43,440 --> 00:06:45,479 Speaker 1: to build it a brick at a time, and when 109 00:06:45,480 --> 00:06:50,839 Speaker 1: you knock it down with a series of bad choices, economically, 110 00:06:51,440 --> 00:06:56,039 Speaker 1: it does bleed over into your day to day military 111 00:06:56,080 --> 00:07:01,359 Speaker 1: intelligence and operational relationships. Admiralst of Vitas, what is the 112 00:07:01,480 --> 00:07:05,360 Speaker 1: U s strategic reason for being in Syria. I'll give 113 00:07:05,400 --> 00:07:09,600 Speaker 1: you four reasons, and I think these will call that 114 00:07:10,080 --> 00:07:14,600 Speaker 1: we need to remain in Syria. The first is quite straightforward, 115 00:07:14,600 --> 00:07:17,560 Speaker 1: and that is continuing to destroy the Islamic State. The 116 00:07:17,600 --> 00:07:20,920 Speaker 1: second is we have a shared interest with the global 117 00:07:20,960 --> 00:07:23,840 Speaker 1: community and stopping the use of chemical weapons, which appears 118 00:07:23,880 --> 00:07:30,640 Speaker 1: to be continuing forthwith. Thirdly, um, we have a strategic 119 00:07:30,840 --> 00:07:35,800 Speaker 1: challenge with Iran in that region. Who threatens Israel, Saudi Arabia, 120 00:07:36,040 --> 00:07:40,240 Speaker 1: Jordan's and other Sunni states. And fourth and finally, um, 121 00:07:40,280 --> 00:07:43,480 Speaker 1: there's an enormous humanitarian crisis sin Syrian. I think we 122 00:07:43,520 --> 00:07:46,840 Speaker 1: have a moral obligation to be part of resolving that. 123 00:07:46,920 --> 00:07:49,280 Speaker 1: To do that, you have to create security in the region. 124 00:07:49,320 --> 00:07:52,200 Speaker 1: So I'll give you those four reasons, and most reads, 125 00:07:52,240 --> 00:07:56,480 Speaker 1: they're all legitimate reasons. One thing that is also at play, though, 126 00:07:56,680 --> 00:08:00,280 Speaker 1: is President Trump's support from his base. There was a 127 00:08:00,280 --> 00:08:03,800 Speaker 1: lot of pushback after these strikes in Syria, with people saying, 128 00:08:04,200 --> 00:08:06,560 Speaker 1: President Trump, you said that you wanted to pull troops 129 00:08:06,600 --> 00:08:09,680 Speaker 1: out of the US, out of Syria. Rather, why should 130 00:08:09,840 --> 00:08:13,200 Speaker 1: those conflicts be our cost? We should just turn our 131 00:08:13,240 --> 00:08:16,640 Speaker 1: focus on ourselves. How much does that factor into the 132 00:08:16,680 --> 00:08:19,840 Speaker 1: debate and the strategy of the US. I think it 133 00:08:19,920 --> 00:08:23,320 Speaker 1: will play a significant role, and it should. Um. We 134 00:08:23,560 --> 00:08:27,320 Speaker 1: these are national decisions and that's what leaders do. They 135 00:08:27,320 --> 00:08:30,280 Speaker 1: ought to step up and explain why they need to 136 00:08:31,200 --> 00:08:35,360 Speaker 1: continue to take the hard right choice, not the easy 137 00:08:35,640 --> 00:08:38,960 Speaker 1: wrong choice. And I think that the fact that President 138 00:08:39,000 --> 00:08:43,439 Speaker 1: Trump essentially reversed his position UH several days later is 139 00:08:43,480 --> 00:08:47,439 Speaker 1: a good indicator that people like Secretary of Defense Gimattis 140 00:08:47,559 --> 00:08:52,040 Speaker 1: and CIA Director Pompeio and others convinced him to do so. 141 00:08:52,040 --> 00:08:55,480 Speaker 1: So I don't think we're gonna leave Syria anytime soon. 142 00:08:55,800 --> 00:08:59,680 Speaker 1: Point one and point two. Uh, the level of engagement 143 00:08:59,760 --> 00:09:02,600 Speaker 1: is very different here than the hundred and fifty thousand 144 00:09:02,600 --> 00:09:05,360 Speaker 1: troops that we had in Iraq or the hundred and 145 00:09:05,360 --> 00:09:09,000 Speaker 1: sixty thousand troops that I commanded in Afghanistan when I 146 00:09:09,040 --> 00:09:14,000 Speaker 1: was NATO commander. We're talking to three five thousand troops. Um, 147 00:09:14,040 --> 00:09:17,120 Speaker 1: this is a very sustainable commitment for the United States, 148 00:09:17,160 --> 00:09:20,160 Speaker 1: and I think good leaders will recognize that and seek 149 00:09:20,240 --> 00:09:22,400 Speaker 1: to explain it to the American public. Just to wrap 150 00:09:22,480 --> 00:09:25,920 Speaker 1: up here, Admiral Staffridi's given the fact that you are 151 00:09:26,040 --> 00:09:29,000 Speaker 1: the author of Seapower, the History and geopolitics of the 152 00:09:29,000 --> 00:09:32,360 Speaker 1: world's Oceans, the fact that you were formerly U. S. 153 00:09:32,559 --> 00:09:36,280 Speaker 1: Navy admiral, former military commander of NATO, given your vast 154 00:09:36,320 --> 00:09:41,319 Speaker 1: experience with the international relations on the military front, are 155 00:09:41,360 --> 00:09:45,439 Speaker 1: you more optimistic about the sort of global outlook right 156 00:09:45,440 --> 00:09:49,600 Speaker 1: now than you worked two months ago. I am cautiously, 157 00:09:50,280 --> 00:09:55,120 Speaker 1: very cautiously optimistic. On North Korea. I think there's a 158 00:09:55,240 --> 00:09:59,120 Speaker 1: real possibility of negotiating our way out of what two 159 00:09:59,200 --> 00:10:02,280 Speaker 1: or three months ago pre Olympics looked very, very dangerous 160 00:10:02,800 --> 00:10:06,920 Speaker 1: in terms of the Middle East. I am more pessimistic 161 00:10:07,080 --> 00:10:11,200 Speaker 1: because I uh don't see a strategic plan being laid 162 00:10:11,200 --> 00:10:15,600 Speaker 1: out by the administration. In simply lobbying Tomahawk missiles is 163 00:10:15,640 --> 00:10:17,800 Speaker 1: not going to get us where we need to go there. 164 00:10:18,160 --> 00:10:23,720 Speaker 1: So it's a mixed picture. But overall, um, I am 165 00:10:23,840 --> 00:10:29,520 Speaker 1: very concerned, uh finally about great power politics and the 166 00:10:29,600 --> 00:10:33,360 Speaker 1: dynamics of our relationship with both Russia and China had 167 00:10:33,440 --> 00:10:36,640 Speaker 1: degraded over the last three or four months. So running 168 00:10:36,679 --> 00:10:39,480 Speaker 1: it all together, i'd say we're on a down trend 169 00:10:39,600 --> 00:10:42,320 Speaker 1: right now and we've got some work to do. I 170 00:10:42,320 --> 00:10:44,200 Speaker 1: want to thank you very much for spending time with us. 171 00:10:44,240 --> 00:10:47,160 Speaker 1: Admiral James Stefridis is the Dean of the Fletcher School 172 00:10:47,240 --> 00:10:51,359 Speaker 1: of Law and Diplomacy at Tufts University. Also a Bloomberg 173 00:10:51,400 --> 00:10:54,600 Speaker 1: of you Calmnists joining us from Boston Home to Bloomberg 174 00:10:54,600 --> 00:10:57,640 Speaker 1: one six on Boston, New Report in thirty in Metro West, 175 00:10:57,640 --> 00:11:00,640 Speaker 1: in the South Sure and Admiral's to read This is 176 00:11:00,640 --> 00:11:04,840 Speaker 1: the author of Seapower, The History and Geopolitics of the 177 00:11:04,880 --> 00:11:23,840 Speaker 1: World's Oceans, The use of cryptocurrencies not only is gaining 178 00:11:23,880 --> 00:11:28,480 Speaker 1: popularity when it comes to international transactions for businesses, but 179 00:11:29,000 --> 00:11:33,760 Speaker 1: also being used by people for retail transactions on which 180 00:11:33,800 --> 00:11:37,760 Speaker 1: they would like to maintain their privacy. And the premier 181 00:11:37,840 --> 00:11:41,760 Speaker 1: online destination for adult entertainment it's called porn Hub, has 182 00:11:41,800 --> 00:11:46,800 Speaker 1: announced that it is now accepting anonymity focused cryptocurrency Verge, 183 00:11:47,320 --> 00:11:49,600 Speaker 1: in order to keep current with what it describes as 184 00:11:49,640 --> 00:11:53,480 Speaker 1: its communities, payment preferences. And here to tell us more 185 00:11:53,520 --> 00:11:57,360 Speaker 1: about Verge and cryptocurrencies is Justin Velo. He is the 186 00:11:57,360 --> 00:12:00,959 Speaker 1: founder and the CEO of Verge Austin. Thanks very much 187 00:12:00,960 --> 00:12:04,120 Speaker 1: for coming in. Can you first tell us what is Verge. 188 00:12:05,040 --> 00:12:08,079 Speaker 1: Verge is a cryptocurrency. It's very similar to the Bitcoin 189 00:12:08,120 --> 00:12:12,319 Speaker 1: blockchain UM, but it's also modified. It has much faster 190 00:12:12,360 --> 00:12:15,920 Speaker 1: transaction time. Bitcoin has about a ten minute transaction time 191 00:12:15,960 --> 00:12:18,920 Speaker 1: for for a confirmation of a transaction hours is about 192 00:12:18,920 --> 00:12:22,760 Speaker 1: thirty seconds UM. And we have a much higher supply 193 00:12:23,080 --> 00:12:25,920 Speaker 1: because we believe that it's better for distribution. The more 194 00:12:25,960 --> 00:12:28,640 Speaker 1: the more coins we have, the better. So Bitcoin has 195 00:12:28,679 --> 00:12:31,559 Speaker 1: minted or will mint in its lifetime, twenty one million coins, 196 00:12:31,800 --> 00:12:35,760 Speaker 1: whereas we will be minting sixteen point five billion, So 197 00:12:36,120 --> 00:12:39,160 Speaker 1: you know, we're we're uh, you know, we're what we 198 00:12:39,200 --> 00:12:42,160 Speaker 1: see as a more fair currency. Okay, So just to 199 00:12:42,160 --> 00:12:45,920 Speaker 1: give some perspective, the cryptocurrency has about oh one billion 200 00:12:45,960 --> 00:12:48,760 Speaker 1: dollar market cap, and it has increased quite a bit 201 00:12:49,160 --> 00:12:52,600 Speaker 1: over the past few months. You know. Uh, we're talking 202 00:12:52,640 --> 00:12:55,520 Speaker 1: about pornography, which is sort of interesting because we stay 203 00:12:55,520 --> 00:12:58,240 Speaker 1: away from it. But it's a huge business and porn 204 00:12:58,280 --> 00:13:01,520 Speaker 1: hub has nearly a hundred million daily users. And people 205 00:13:01,559 --> 00:13:04,040 Speaker 1: don't want other people to see that they're buying pornography, 206 00:13:04,520 --> 00:13:07,160 Speaker 1: which is why there must be some interest in a 207 00:13:07,240 --> 00:13:12,000 Speaker 1: secret way of delivering payment. Who approached to with this transaction? Um, 208 00:13:12,040 --> 00:13:14,400 Speaker 1: it was sort of a mutual approach. Um. I believe 209 00:13:14,440 --> 00:13:16,720 Speaker 1: that people from we have a very very big community 210 00:13:16,920 --> 00:13:18,760 Speaker 1: of you know, people that are very interested in the 211 00:13:18,800 --> 00:13:21,520 Speaker 1: coin and very excited about the project itself. Uh. So 212 00:13:21,559 --> 00:13:23,640 Speaker 1: I believe that, you know, people from our community. We're 213 00:13:23,640 --> 00:13:26,000 Speaker 1: talking about hundreds of thousands of people. Uh. And I 214 00:13:26,000 --> 00:13:29,200 Speaker 1: believe that they started initiating contact with them, probably through 215 00:13:29,240 --> 00:13:32,320 Speaker 1: their website, you know, saying hey, we would really like 216 00:13:32,360 --> 00:13:36,040 Speaker 1: you guys to start supporting cryptocurrencies. Okay. I'm wondering though, 217 00:13:36,080 --> 00:13:38,959 Speaker 1: what this does for the reputation of cryptocurrencies that people 218 00:13:39,040 --> 00:13:42,000 Speaker 1: kind of want to cloak their actions and are looking 219 00:13:42,040 --> 00:13:44,920 Speaker 1: for ways of doing so. And you know, pornography is 220 00:13:45,080 --> 00:13:47,880 Speaker 1: uh some people might you know, shake their head at it, 221 00:13:47,920 --> 00:13:50,320 Speaker 1: but it's not you know, a terrorist activity, but somebody 222 00:13:50,320 --> 00:13:53,760 Speaker 1: could potentially use it for that. Absolutely, Um, people deserve privacy, 223 00:13:53,840 --> 00:13:56,760 Speaker 1: especially in that aspect of their life. Um. And you 224 00:13:56,800 --> 00:14:00,000 Speaker 1: mentioned the hundred million visitors a day uh statistic, which 225 00:14:00,080 --> 00:14:01,880 Speaker 1: is interesting, But what I find more interesting is that 226 00:14:01,920 --> 00:14:04,880 Speaker 1: it's actually over a billion unique visitors a year, which 227 00:14:04,880 --> 00:14:07,439 Speaker 1: is actually a double digit percentage of our population on Earth. 228 00:14:08,360 --> 00:14:10,880 Speaker 1: So I think that that's uh, you know a little 229 00:14:10,880 --> 00:14:13,560 Speaker 1: bit more important to look at. It's it's a very 230 00:14:13,600 --> 00:14:16,280 Speaker 1: common thing. And uh, you know there's still some stigma 231 00:14:16,920 --> 00:14:21,080 Speaker 1: around sexual preferences, uh, you know, fetishes, things like that. 232 00:14:21,680 --> 00:14:23,840 Speaker 1: But you know these things, you know, if we all 233 00:14:23,880 --> 00:14:25,360 Speaker 1: love and respect to one another, this is none of 234 00:14:25,360 --> 00:14:27,320 Speaker 1: our business and we shouldn't judge each other by it. 235 00:14:27,520 --> 00:14:29,320 Speaker 1: But we live in in a time and age still 236 00:14:29,400 --> 00:14:32,200 Speaker 1: where people do so it's you know, it's very important 237 00:14:32,200 --> 00:14:35,160 Speaker 1: that people have privacy, and especially online. And wonder if 238 00:14:35,200 --> 00:14:39,120 Speaker 1: you could just describe for our listeners, how do you 239 00:14:39,240 --> 00:14:44,200 Speaker 1: raise the money in order to have all of these coins, 240 00:14:44,240 --> 00:14:47,560 Speaker 1: these these artificial tokens. Okay, Well, see a lot of 241 00:14:47,560 --> 00:14:49,360 Speaker 1: projects that launch do what's called an i c O, 242 00:14:49,440 --> 00:14:52,960 Speaker 1: which is obviously very similar to an ipal coin offering. Yes, um, 243 00:14:53,000 --> 00:14:54,520 Speaker 1: and then there's all you do one of those No, 244 00:14:54,640 --> 00:14:57,200 Speaker 1: we did not. How did you raise the money? Uh? 245 00:14:57,560 --> 00:15:01,120 Speaker 1: Through the community? So you used online source like a 246 00:15:01,160 --> 00:15:03,720 Speaker 1: crowdfunding site and what to do? So? Yes, and it's 247 00:15:03,720 --> 00:15:07,560 Speaker 1: and it's voluntary. Okay. So what has been your response 248 00:15:07,640 --> 00:15:11,800 Speaker 1: to people that say that the coins that were created 249 00:15:11,840 --> 00:15:15,360 Speaker 1: as a result of that fundraising effort, that many of 250 00:15:15,400 --> 00:15:19,280 Speaker 1: those coins either disappeared or that the money that they 251 00:15:19,320 --> 00:15:24,520 Speaker 1: then used to purchase these digital coins has been locked 252 00:15:24,560 --> 00:15:28,360 Speaker 1: and they cannot get it out of their wallets. That 253 00:15:28,480 --> 00:15:30,920 Speaker 1: that's not how it goes. It's basically like throwing your 254 00:15:30,920 --> 00:15:33,880 Speaker 1: money into a pot. Um. What what we've done is 255 00:15:33,920 --> 00:15:36,760 Speaker 1: we've given some a lot of these funds for integration 256 00:15:36,880 --> 00:15:40,360 Speaker 1: of Verge into the actual platform, the software platform behind 257 00:15:40,400 --> 00:15:42,920 Speaker 1: porn hub UM. But then we've also had other goals 258 00:15:42,960 --> 00:15:45,560 Speaker 1: like we're building an iOS wallet, um. You know, we're 259 00:15:45,600 --> 00:15:49,040 Speaker 1: looking to get integrated into a hardware device for even 260 00:15:49,080 --> 00:15:52,640 Speaker 1: stronger storage of but I understand. But but my question 261 00:15:52,760 --> 00:15:56,320 Speaker 1: is that if if there is this fundraising that went on, 262 00:15:57,120 --> 00:16:00,920 Speaker 1: there's publicly available information that says it over eighteen million 263 00:16:01,000 --> 00:16:04,720 Speaker 1: of these well no, they were simply moved, were right. 264 00:16:04,800 --> 00:16:07,840 Speaker 1: But were they moved with the knowledge of the people 265 00:16:07,880 --> 00:16:10,840 Speaker 1: who had invested? Oh? Yeah, absolutely. I think everybody knew 266 00:16:10,840 --> 00:16:13,520 Speaker 1: going in that these funds were allocated for specific things 267 00:16:13,800 --> 00:16:17,680 Speaker 1: and that's what they're being used for. Oh, I'm just wondering, Uh, 268 00:16:17,760 --> 00:16:20,000 Speaker 1: what else have you thought of partnering with, I mean, 269 00:16:20,040 --> 00:16:22,800 Speaker 1: any cannabis companies or other types of things like that. 270 00:16:22,800 --> 00:16:24,800 Speaker 1: That that's absolutely another one, Like you know, a medical 271 00:16:24,840 --> 00:16:27,360 Speaker 1: marijuana industry is another one where um, you know, there's 272 00:16:27,360 --> 00:16:29,120 Speaker 1: a stigma to it where you don't you may not 273 00:16:29,160 --> 00:16:32,040 Speaker 1: want your employer or some of your even friends, you know, 274 00:16:32,080 --> 00:16:33,880 Speaker 1: to know that that's part of your lifestyle, you know. 275 00:16:33,920 --> 00:16:35,480 Speaker 1: And this is something that I was trying to get 276 00:16:35,480 --> 00:16:37,360 Speaker 1: out earlier. I mean, it's one thing for there to 277 00:16:37,400 --> 00:16:41,360 Speaker 1: be a stigma around sexual preferences. There's another thing to 278 00:16:41,480 --> 00:16:45,560 Speaker 1: sort of have money laundering or financing terrorist activities. How 279 00:16:45,560 --> 00:16:49,280 Speaker 1: do you prevent that type of use from this coin? Well, 280 00:16:49,320 --> 00:16:51,320 Speaker 1: I mean, at the moment, I would say that most 281 00:16:51,360 --> 00:16:54,800 Speaker 1: of those nefarious things that happened with currencies probably stemmed 282 00:16:54,800 --> 00:16:57,400 Speaker 1: from the US dollar. Um. I mean, when's the last time, 283 00:16:57,560 --> 00:16:59,800 Speaker 1: you know, you heard a story about US going into 284 00:16:59,800 --> 00:17:02,960 Speaker 1: its horrist location and uncovering palettes of cryptocurrency or finding 285 00:17:03,000 --> 00:17:05,439 Speaker 1: hard drives with bitcoins. We don't we find palettes of 286 00:17:05,560 --> 00:17:08,399 Speaker 1: you know, shrink craft hundred dollar bills. So well, one 287 00:17:08,400 --> 00:17:11,480 Speaker 1: of the biggest owners of bitcoin is the US government 288 00:17:11,600 --> 00:17:15,199 Speaker 1: from actually seizing Yeah, so so there is there is 289 00:17:15,240 --> 00:17:19,359 Speaker 1: that activity, and basically this is a designed cryptocurrency to 290 00:17:19,680 --> 00:17:22,280 Speaker 1: cloak activities. You have to wonder that's going to be 291 00:17:22,320 --> 00:17:24,840 Speaker 1: a motivation for people to use it. Sure, but I 292 00:17:24,880 --> 00:17:27,359 Speaker 1: think that we can see. Um, I'm similar to the 293 00:17:27,359 --> 00:17:30,600 Speaker 1: tour project, which is a open source piece of software 294 00:17:30,600 --> 00:17:33,080 Speaker 1: that helps hide your IP address that was actually originally 295 00:17:33,119 --> 00:17:35,320 Speaker 1: developed by the US government. So I mean I think 296 00:17:35,359 --> 00:17:38,399 Speaker 1: that's to some degree. Uh, you know, privacy is important 297 00:17:38,440 --> 00:17:41,760 Speaker 1: in the US government recognizes that too. So interesting having 298 00:17:41,800 --> 00:17:43,560 Speaker 1: you on. Thank you so much for being with us. 299 00:17:43,720 --> 00:17:48,760 Speaker 1: Justin Vellow, founder and chief executive officer of Verge Cryptocurrency, 300 00:17:48,960 --> 00:17:52,639 Speaker 1: just announcing that it is partnering with porn Hub to 301 00:17:52,800 --> 00:17:56,439 Speaker 1: allow people to pay for their pornography consumption with a 302 00:17:56,520 --> 00:18:15,720 Speaker 1: cloaked identity through the crypto asset. That's discussion. He is 303 00:18:15,800 --> 00:18:20,640 Speaker 1: the Finance Minister of a Luxembourg. Pierre Gramina joins us now. 304 00:18:20,800 --> 00:18:23,639 Speaker 1: And just to give some context, many people may not 305 00:18:23,800 --> 00:18:27,360 Speaker 1: know that Luxembourg City is one of the three official 306 00:18:27,440 --> 00:18:30,880 Speaker 1: capitals of the European Union. Indeed, it is the seat 307 00:18:30,880 --> 00:18:34,880 Speaker 1: of the European Court of Justice. And from that perspective, 308 00:18:35,280 --> 00:18:39,280 Speaker 1: he has an interesting look into the role of trade 309 00:18:39,440 --> 00:18:42,000 Speaker 1: and taxes and a variety of other issues in the 310 00:18:42,000 --> 00:18:44,119 Speaker 1: European Union. And he joins us here in our eleven 311 00:18:44,160 --> 00:18:46,560 Speaker 1: three oh studios. Minister, thank you very much for beating 312 00:18:46,560 --> 00:18:51,560 Speaker 1: with us. Appreciate it. Maybe just set for our listeners 313 00:18:51,560 --> 00:18:55,720 Speaker 1: a little bit about Luxembourg, your role and the role 314 00:18:55,720 --> 00:19:00,480 Speaker 1: of Luxembourg which belies its size in the European Union 315 00:19:00,600 --> 00:19:04,640 Speaker 1: because it has served as a nation that has tried 316 00:19:04,720 --> 00:19:09,200 Speaker 1: to mediate and to help integrate Europe since the creation 317 00:19:09,280 --> 00:19:13,400 Speaker 1: of the EU. Eure absolutely right, Luxembourg is a founding 318 00:19:13,440 --> 00:19:16,760 Speaker 1: member of the European Union. It was the smallest one 319 00:19:16,800 --> 00:19:20,600 Speaker 1: of the six founding members that is today the second 320 00:19:20,640 --> 00:19:25,080 Speaker 1: smallest one, but being at the heart of the European 321 00:19:25,160 --> 00:19:30,760 Speaker 1: continent between Germany and France, and having been also the 322 00:19:30,960 --> 00:19:34,560 Speaker 1: victim of two world wars, we're probably the most staunch 323 00:19:34,720 --> 00:19:40,000 Speaker 1: advocate for European reconciliation, and the European Union has achieved 324 00:19:40,040 --> 00:19:42,840 Speaker 1: that goal. We haven't had any war in Europe since 325 00:19:42,920 --> 00:19:46,639 Speaker 1: the setting up of the European Combinate Steel in fifty 326 00:19:46,680 --> 00:19:50,320 Speaker 1: two and the European Community in nineteen fifty eight, and 327 00:19:50,359 --> 00:19:53,520 Speaker 1: that's often forgotten, and we continue to keep that on 328 00:19:53,560 --> 00:19:56,960 Speaker 1: our mind and act as a mediator as a neutual 329 00:19:57,640 --> 00:20:01,320 Speaker 1: partner to find solutions. U. You are a neutral partner 330 00:20:01,640 --> 00:20:06,199 Speaker 1: also to asset managers and other investment companies that have 331 00:20:06,440 --> 00:20:09,919 Speaker 1: put their headquarters in Luxembourg. A lot of corporations have 332 00:20:10,000 --> 00:20:13,720 Speaker 1: as well, in part because of beneficial tax treatment that 333 00:20:13,760 --> 00:20:16,760 Speaker 1: they get for going to Luxembourg. How much pressure are 334 00:20:16,800 --> 00:20:21,159 Speaker 1: you getting right now from other European countries, given the 335 00:20:21,240 --> 00:20:24,040 Speaker 1: need to raise money and given the need to sort 336 00:20:24,040 --> 00:20:26,480 Speaker 1: of prevent a race to the bottom with respect weakening 337 00:20:26,520 --> 00:20:32,280 Speaker 1: tax rules. While we've had a rough ride in the 338 00:20:32,400 --> 00:20:36,000 Speaker 1: past on these issues of taxation, but since two thousand 339 00:20:36,119 --> 00:20:40,560 Speaker 1: fourteen the present government has changed its root in this matter. 340 00:20:40,680 --> 00:20:44,119 Speaker 1: We have given up the bank secrecy laws. That was 341 00:20:44,400 --> 00:20:48,679 Speaker 1: one of the criticisms that we were receiving. It was 342 00:20:48,760 --> 00:20:51,919 Speaker 1: something that was not any more accepted. It was an 343 00:20:51,920 --> 00:20:54,680 Speaker 1: old tradition in many countries, not only in hours. We've 344 00:20:54,760 --> 00:20:59,359 Speaker 1: decided to part with that and to embrace tax transparency 345 00:20:59,800 --> 00:21:02,680 Speaker 1: and since then, obviously the pressure is far less. We 346 00:21:02,760 --> 00:21:06,560 Speaker 1: have obviously attractive tax rates, but if you look at 347 00:21:06,600 --> 00:21:10,880 Speaker 1: the average of taxes of Luxembourg in the O City, 348 00:21:11,080 --> 00:21:14,000 Speaker 1: we're just in the middle field. Now. I get pressure 349 00:21:14,040 --> 00:21:16,160 Speaker 1: in my country very often that we should have lower 350 00:21:16,160 --> 00:21:18,800 Speaker 1: taxes than what we have now. Yes, I mean we 351 00:21:18,880 --> 00:21:22,119 Speaker 1: have a corporate tax rate of eighteen percent. If you 352 00:21:22,240 --> 00:21:26,000 Speaker 1: add municipal taxes you get at twenty six percent, So 353 00:21:26,280 --> 00:21:29,040 Speaker 1: I think this is a decent amount. Have any companies 354 00:21:29,160 --> 00:21:33,639 Speaker 1: or are fund managers removed their premises for remove their 355 00:21:33,640 --> 00:21:37,720 Speaker 1: headquarters from Luxembourg as a result. No, because the reason 356 00:21:37,800 --> 00:21:41,160 Speaker 1: why we were successful was not based solely on taxation. 357 00:21:41,280 --> 00:21:43,879 Speaker 1: I think if you look at what happened in the 358 00:21:43,960 --> 00:21:48,960 Speaker 1: Brexit context, we are one of the winners short term 359 00:21:48,960 --> 00:21:51,480 Speaker 1: in the sense that quite a few players in London 360 00:21:51,560 --> 00:21:55,160 Speaker 1: had to find a place on continental Europe because they 361 00:21:55,160 --> 00:21:59,080 Speaker 1: are losing the passport for financial services into the EU 362 00:21:59,160 --> 00:22:02,560 Speaker 1: Single Market, and many chose Luxembourg. I mean, I think 363 00:22:02,560 --> 00:22:07,000 Speaker 1: of American banks who have decided to beef up their 364 00:22:07,640 --> 00:22:11,840 Speaker 1: private bankings hub in Luxembourg. They could have chosen other places. 365 00:22:12,160 --> 00:22:15,679 Speaker 1: I think of asset management firms that have taken the 366 00:22:15,720 --> 00:22:18,920 Speaker 1: same decision. I think of insurance company. It shows that 367 00:22:19,440 --> 00:22:23,119 Speaker 1: the general framework of Luxembour's attractive. We are one of 368 00:22:23,160 --> 00:22:25,600 Speaker 1: the ten countries left in the world that have a 369 00:22:25,680 --> 00:22:29,080 Speaker 1: triple A rating Financially. This is important when you're an 370 00:22:29,080 --> 00:22:33,359 Speaker 1: international financial center. We've been able to attract Chinese banks 371 00:22:33,400 --> 00:22:36,560 Speaker 1: to Luxembourg. Seven largest Chinese banks are in Luxembourg. Some 372 00:22:36,680 --> 00:22:41,120 Speaker 1: have come more recently. So it shows that fortunately what 373 00:22:41,200 --> 00:22:44,840 Speaker 1: we were pretending that it is a full international ecosystem 374 00:22:44,920 --> 00:22:47,880 Speaker 1: that we have that explains why we've been successful. It's 375 00:22:47,880 --> 00:22:53,600 Speaker 1: not only about taxes, Minister. Before you were the finance minister, 376 00:22:53,680 --> 00:22:57,520 Speaker 1: you also served as the country's ambassador to Japan and 377 00:22:57,640 --> 00:23:02,080 Speaker 1: South Korea, also the consul general and director of the 378 00:23:02,080 --> 00:23:05,399 Speaker 1: Board of Economic Development in San Francisco, so you have 379 00:23:05,560 --> 00:23:10,400 Speaker 1: a global perspective about how companies and countries uh integrate 380 00:23:10,440 --> 00:23:15,520 Speaker 1: in order to do business. Recently, the United States has 381 00:23:15,560 --> 00:23:20,439 Speaker 1: taken the position that certain types of optical component technology 382 00:23:20,600 --> 00:23:25,360 Speaker 1: cannot be sold to certain Chinese companies. Is a company 383 00:23:26,160 --> 00:23:31,399 Speaker 1: in Boston, Acacia and also in uh San Francisco, O 384 00:23:31,560 --> 00:23:35,680 Speaker 1: Clara optical component technology not to be sold to companies 385 00:23:35,720 --> 00:23:39,680 Speaker 1: like z t E. What is the position of Luxembourg? 386 00:23:39,680 --> 00:23:41,520 Speaker 1: Does it feel as if it's between a rock and 387 00:23:41,560 --> 00:23:45,399 Speaker 1: a hard place, because a lot of times these rules 388 00:23:45,400 --> 00:23:49,200 Speaker 1: and regulations will make it more difficult for country companies 389 00:23:49,240 --> 00:23:52,720 Speaker 1: all over the world to do business with other companies. Yes, 390 00:23:52,760 --> 00:23:56,439 Speaker 1: I think there's a few issues that need to be 391 00:23:56,480 --> 00:23:59,840 Speaker 1: covered here about your question, which is a very legitimate 392 00:24:00,000 --> 00:24:03,399 Speaker 1: and obviously a country like mine is for open trade 393 00:24:03,440 --> 00:24:09,000 Speaker 1: as far as possible, bringing down trade barriers and other obstacles, 394 00:24:09,080 --> 00:24:11,560 Speaker 1: and and also making sure that the EU s such 395 00:24:11,640 --> 00:24:14,960 Speaker 1: doesn't build fences and and go to protection is to 396 00:24:15,160 --> 00:24:18,159 Speaker 1: So that's the general principle. Having been a diplomat I 397 00:24:18,720 --> 00:24:21,760 Speaker 1: for twenty years, I very well know that some strategic 398 00:24:21,840 --> 00:24:25,120 Speaker 1: material cannot be sold to other countries, So I think 399 00:24:25,800 --> 00:24:28,600 Speaker 1: you have to put this in parallel. Open trade is 400 00:24:28,640 --> 00:24:32,439 Speaker 1: one thing, strategic issues is another. We're a member of NATO, 401 00:24:32,520 --> 00:24:36,360 Speaker 1: We're going to complay comply with NATO rules obviously, and 402 00:24:36,440 --> 00:24:39,080 Speaker 1: we need to abide by those sorts. You know, as 403 00:24:39,119 --> 00:24:41,359 Speaker 1: we talk about trade concerns, and know the ECB members 404 00:24:41,359 --> 00:24:44,600 Speaker 1: have been raising the issue that any trade skirmish could 405 00:24:44,600 --> 00:24:47,840 Speaker 1: potentially slow growth. We are getting some disappointing numbers out 406 00:24:47,880 --> 00:24:52,680 Speaker 1: of the European region today. We saw slowing inflation throughout. 407 00:24:53,080 --> 00:24:54,640 Speaker 1: What do you make of this? Are we seeing sort 408 00:24:54,680 --> 00:24:59,000 Speaker 1: of the peak of of the growth cycle in Europe? Oh? 409 00:24:59,080 --> 00:25:01,399 Speaker 1: I think it's a really a little bit earlier or 410 00:25:01,400 --> 00:25:06,080 Speaker 1: hasty to draw that conclusion based on a few weekly 411 00:25:06,160 --> 00:25:09,840 Speaker 1: or monthly figures. I mean, the i m F came 412 00:25:09,880 --> 00:25:13,200 Speaker 1: out with new figures of growth for Europe yesterday. I'm 413 00:25:13,280 --> 00:25:16,440 Speaker 1: going to tend the spring meeting of the IMF tomorrow 414 00:25:16,560 --> 00:25:20,119 Speaker 1: in Washington, and for Europe the growth is forecast to 415 00:25:20,160 --> 00:25:25,080 Speaker 1: be three point sorry two point four percent this year, 416 00:25:25,680 --> 00:25:28,439 Speaker 1: slightly higher than anticipate it. And it's going to be 417 00:25:28,520 --> 00:25:31,840 Speaker 1: three point eight percent worldwide, do mostly to a pick 418 00:25:31,920 --> 00:25:35,120 Speaker 1: up in international trade and a pickup of investment. And 419 00:25:35,320 --> 00:25:38,640 Speaker 1: if I look at Europe, growth has only been back 420 00:25:38,800 --> 00:25:41,160 Speaker 1: since one year one year and a half, so our 421 00:25:41,200 --> 00:25:45,360 Speaker 1: economic cycle is younger than the one in the United 422 00:25:45,400 --> 00:25:48,560 Speaker 1: States and then I must say, with the very accommodative 423 00:25:48,880 --> 00:25:52,000 Speaker 1: monetary policies that we have in the United States and Europe, 424 00:25:52,119 --> 00:25:56,480 Speaker 1: this is obviously underpinning growth and international trade in the future. 425 00:25:56,520 --> 00:26:00,399 Speaker 1: So I'm more optimistic, fabulous Pierre Gravenia, thank you so 426 00:26:00,480 --> 00:26:04,760 Speaker 1: much for being here. Pierre Grams, Minister of Finance for Luxembourg, 427 00:26:05,280 --> 00:26:08,040 Speaker 1: joining us on his way to the I m F meeting, 428 00:26:08,160 --> 00:26:10,439 Speaker 1: where no doubt they will be speaking about all of 429 00:26:10,480 --> 00:26:14,680 Speaker 1: these issues growth, trade, headwinds the like will be hearing more, 430 00:26:14,760 --> 00:26:32,119 Speaker 1: I'm sure as they meet. It has become something of 431 00:26:32,200 --> 00:26:36,480 Speaker 1: a playground brawl that has entered the upper echelons of 432 00:26:36,560 --> 00:26:40,879 Speaker 1: major Wall Street firms. I'm talking about Blackstone and Goldman Sachs, 433 00:26:40,960 --> 00:26:43,199 Speaker 1: and I'm talking about a deal having to do with 434 00:26:43,240 --> 00:26:47,040 Speaker 1: credit fault swaps related to have Nanni in New Jersey's 435 00:26:47,080 --> 00:26:50,320 Speaker 1: biggest home builder here to talk about. The latest in 436 00:26:50,520 --> 00:26:54,200 Speaker 1: this saga is Shradaratarajan, who has been covering this amazingly 437 00:26:54,600 --> 00:26:56,800 Speaker 1: uh and joins us now he covers all things having 438 00:26:56,800 --> 00:27:00,480 Speaker 1: to do with credit for Bloomberg. So shri this out 439 00:27:00,480 --> 00:27:04,040 Speaker 1: for us with respect to a particular lunch that recently 440 00:27:04,040 --> 00:27:07,000 Speaker 1: took place right and I think we've discussed this a 441 00:27:07,000 --> 00:27:09,439 Speaker 1: little bit a little bit before, but really what this 442 00:27:09,520 --> 00:27:13,480 Speaker 1: goes back to is this sneaky, knotty trade that Blackstone 443 00:27:13,480 --> 00:27:15,679 Speaker 1: struck up at the end of last deal with a 444 00:27:15,680 --> 00:27:18,840 Speaker 1: almost bankrupt company where they get paid out on some 445 00:27:18,880 --> 00:27:22,159 Speaker 1: insurance like derivatives. The only problem Goldman is on the 446 00:27:22,160 --> 00:27:25,240 Speaker 1: other side of the trade and they're not quite fans 447 00:27:25,280 --> 00:27:27,920 Speaker 1: of this trade. We've already seen lawsuits lapped on this case. 448 00:27:27,960 --> 00:27:30,639 Speaker 1: Blackstone has been accused of fraud in manipulation. But at 449 00:27:30,640 --> 00:27:32,359 Speaker 1: the same time, those guys on the other end who 450 00:27:32,440 --> 00:27:35,560 Speaker 1: might have to make big payouts to Blackstone want to 451 00:27:35,600 --> 00:27:38,879 Speaker 1: make sure they can avert that outcome. So when Lloyd 452 00:27:38,920 --> 00:27:42,679 Speaker 1: blankfind met John Gray, the next head of Blackstone, and 453 00:27:42,720 --> 00:27:46,320 Speaker 1: I'm assuming it was a regular relationship builder meeting just 454 00:27:46,359 --> 00:27:48,800 Speaker 1: to talk about all things under the sun, how they 455 00:27:48,800 --> 00:27:52,080 Speaker 1: could do a little more business together, this little deal 456 00:27:52,200 --> 00:27:54,600 Speaker 1: came up and as you can imagine, it probably got 457 00:27:54,600 --> 00:27:57,000 Speaker 1: a little awkward. What kind of money are we talking 458 00:27:57,000 --> 00:28:00,280 Speaker 1: about here? And that's the amazing thing here. That company 459 00:28:00,320 --> 00:28:02,440 Speaker 1: that we're talking about as a market gap of on 460 00:28:02,560 --> 00:28:06,000 Speaker 1: the three million what's at stake for Blackstone and Goldman 461 00:28:06,600 --> 00:28:08,920 Speaker 1: is a decent amount of money. For Blackstone, this could 462 00:28:08,960 --> 00:28:12,080 Speaker 1: be hundreds of million dollars and pay out for Goldman 463 00:28:12,119 --> 00:28:14,520 Speaker 1: the losses could be would likely be south of a 464 00:28:14,600 --> 00:28:17,800 Speaker 1: hundred millions, if at all. But but what's weird is 465 00:28:17,840 --> 00:28:19,919 Speaker 1: no one wants to back down. And I guess, uh, 466 00:28:20,440 --> 00:28:22,760 Speaker 1: when you think you're right, when you think the other 467 00:28:22,760 --> 00:28:25,719 Speaker 1: party is wrong, why back down? And the takeaway from 468 00:28:25,800 --> 00:28:28,480 Speaker 1: me is when elephants go to fight, it's the eagles 469 00:28:28,560 --> 00:28:30,440 Speaker 1: that get trampled. Well, yeah, that's what That's what I 470 00:28:30,480 --> 00:28:31,679 Speaker 1: was going to ask you. I mean, how much is 471 00:28:31,720 --> 00:28:35,600 Speaker 1: this just a chess game among people who are brilliant 472 00:28:35,680 --> 00:28:39,080 Speaker 1: as children at chess and are still brilliant at chess, 473 00:28:39,200 --> 00:28:41,600 Speaker 1: and they want to outsmart one another and the stakes 474 00:28:41,600 --> 00:28:43,880 Speaker 1: are just going up and up? How much is that 475 00:28:43,960 --> 00:28:47,040 Speaker 1: really what we're watching here? That's what it truly feels 476 00:28:47,040 --> 00:28:50,400 Speaker 1: to me, Like, clearly Blackstone did something which is not 477 00:28:50,720 --> 00:28:54,160 Speaker 1: a ordinary trade. But they did they do something that 478 00:28:54,200 --> 00:28:57,680 Speaker 1: falls outside of the playbox. These guys get to play, 479 00:28:58,120 --> 00:29:01,000 Speaker 1: probably not at least the judges. So far, the legal 480 00:29:01,040 --> 00:29:03,640 Speaker 1: argument doesn't seem to indicate that. And we will see 481 00:29:03,640 --> 00:29:06,080 Speaker 1: how this spanard over the next couple of months. But 482 00:29:06,560 --> 00:29:09,400 Speaker 1: it does feel like a bit of I've been outsmarted. 483 00:29:09,440 --> 00:29:11,720 Speaker 1: I need to head back, but just sort of to 484 00:29:11,720 --> 00:29:13,760 Speaker 1: to follow onto what you're saying. The stakes seem to 485 00:29:13,800 --> 00:29:18,960 Speaker 1: be raised increasingly. They're already has been some withdrawal from 486 00:29:19,560 --> 00:29:21,800 Speaker 1: from government sacks on the part of Blackstone, correct. I 487 00:29:21,840 --> 00:29:23,760 Speaker 1: mean they've already reduced some of their business as a 488 00:29:23,760 --> 00:29:27,040 Speaker 1: result of this trade, right we we've certainly seen that GSO, 489 00:29:27,120 --> 00:29:29,280 Speaker 1: which is the credit on of Blackstone and is the 490 00:29:29,320 --> 00:29:31,440 Speaker 1: principle on the opposite side of government on the trade, 491 00:29:31,440 --> 00:29:33,520 Speaker 1: has already cut back on some of its trading with 492 00:29:33,600 --> 00:29:38,320 Speaker 1: Goldman sax And. And remember Blackstone is a large, massive, 493 00:29:38,480 --> 00:29:41,480 Speaker 1: important client for all of the banks, and there are 494 00:29:41,520 --> 00:29:43,680 Speaker 1: some people within government who are nervous that if this 495 00:29:43,760 --> 00:29:47,040 Speaker 1: situation escalates further, you could see a further pullback in 496 00:29:47,080 --> 00:29:50,560 Speaker 1: the business from them. What was the actual business that 497 00:29:50,640 --> 00:29:55,040 Speaker 1: went wrong with her Nanian? Yeah, it's a home builder 498 00:29:55,080 --> 00:29:57,520 Speaker 1: in two thousand and like most other companies, too much 499 00:29:57,560 --> 00:30:00,440 Speaker 1: dead recession that got them into a lot of trouble 500 00:30:00,480 --> 00:30:03,840 Speaker 1: back then. Through that period, Blackstone had previously done financing 501 00:30:03,880 --> 00:30:06,719 Speaker 1: for them, But ten years on, this is more not 502 00:30:06,840 --> 00:30:08,880 Speaker 1: so much more about what's wrong with the business. It's 503 00:30:08,960 --> 00:30:11,520 Speaker 1: about how we can help you. But first we want 504 00:30:11,520 --> 00:30:14,240 Speaker 1: to make sure we can make a good amount of 505 00:30:14,280 --> 00:30:17,000 Speaker 1: money on side bets that we have on the company. 506 00:30:17,080 --> 00:30:19,200 Speaker 1: When is this whole affair going to get wrapped up? 507 00:30:20,240 --> 00:30:22,520 Speaker 1: I would like to think fairly soon. But that's what 508 00:30:22,560 --> 00:30:27,400 Speaker 1: I thought my life. We we have some interesting day 509 00:30:27,480 --> 00:30:30,760 Speaker 1: key dates coming up. May first is when the company, 510 00:30:30,800 --> 00:30:34,120 Speaker 1: you know, defaults on a bond payment, which is critical 511 00:30:34,200 --> 00:30:37,440 Speaker 1: to the deal that black Stone struck up with this company. 512 00:30:37,480 --> 00:30:39,560 Speaker 1: After that you have a thirty day period. This then 513 00:30:39,640 --> 00:30:43,000 Speaker 1: goes through a trade group and the body determines who 514 00:30:43,000 --> 00:30:46,120 Speaker 1: who owes whom how much. And that's when this will 515 00:30:46,120 --> 00:30:48,600 Speaker 1: pan out. And I think it's going to get It's 516 00:30:48,600 --> 00:30:50,720 Speaker 1: going to get a little bit uglier. What about some 517 00:30:50,760 --> 00:30:53,200 Speaker 1: of the other companies that are involved here, the hedge 518 00:30:53,200 --> 00:30:57,600 Speaker 1: funds and such? Have they pulled back from Goldman? Are 519 00:30:57,640 --> 00:30:59,360 Speaker 1: there on the same side as gold Man? Well, some 520 00:30:59,440 --> 00:31:01,160 Speaker 1: of them are on the same side as Goldman. There 521 00:31:01,200 --> 00:31:03,680 Speaker 1: are some folks who have even jump sides in the 522 00:31:03,760 --> 00:31:05,760 Speaker 1: last four or five months. Again, like you saidly so 523 00:31:05,880 --> 00:31:08,680 Speaker 1: this is this is as much as people want to 524 00:31:08,720 --> 00:31:12,600 Speaker 1: get indignant about how right is it? Is it fair 525 00:31:12,800 --> 00:31:15,000 Speaker 1: people also want to make money, and if they were 526 00:31:15,000 --> 00:31:16,520 Speaker 1: on one side of the trade, they have jumped to 527 00:31:16,520 --> 00:31:18,520 Speaker 1: the other side as long as they've spotted an opportunity 528 00:31:18,560 --> 00:31:24,280 Speaker 1: to make money. Fair Okay, I think we'll just fair. 529 00:31:24,400 --> 00:31:26,160 Speaker 1: I guess it's really about what you can prove and 530 00:31:26,840 --> 00:31:28,360 Speaker 1: what you can do when you when you go to 531 00:31:28,400 --> 00:31:30,280 Speaker 1: court with the lawyers, and they'll all make some money. 532 00:31:30,280 --> 00:31:32,840 Speaker 1: Thanks very much. A Street not Rag, and he is 533 00:31:32,880 --> 00:31:36,440 Speaker 1: our high yield debt and syndicated loan reporter. It's sort 534 00:31:36,440 --> 00:31:38,080 Speaker 1: of like writing a soap op right in a way. 535 00:31:38,080 --> 00:31:44,000 Speaker 1: I much appreciated the great story on the Bloomberg. Thanks 536 00:31:44,000 --> 00:31:46,600 Speaker 1: for listening to the Bloomberg P and L podcast. You 537 00:31:46,640 --> 00:31:50,440 Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 538 00:31:50,560 --> 00:31:54,000 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 539 00:31:54,040 --> 00:31:58,080 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 540 00:31:58,160 --> 00:32:00,800 Speaker 1: It's one before the podcast. You can always catch us 541 00:32:00,800 --> 00:32:02,360 Speaker 1: worldwide on Bloomberg Radio.