WEBVTT - Surveillance: Trump Is a Populist, Not Fascist, Ferguson Says 0:00:00.320 --> 0:00:04.160 Who you put your trust in matters. Investors have put 0:00:04.200 --> 0:00:07.640 their trust in independent registered investment advisors to the tune 0:00:07.640 --> 0:00:12.240 of four trillion dollars. Why learn more and find your 0:00:12.240 --> 0:00:27.960 independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 0:00:28.360 --> 0:00:32.040 I'm Tom Keene with David Gura. Daily we bring you 0:00:32.120 --> 0:00:37.120 insight from the best in economics, finance, investment, and international relations. 0:00:37.560 --> 0:00:42.120 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 0:00:42.200 --> 0:00:49.640 of course, on the Bloomberg Good Morning David Gura with 0:00:49.720 --> 0:00:52.800 Tom Keene on Bloomberg Surveillance from Bloomberg Radio. It's Friday, 0:00:53.120 --> 0:00:56.680 Finally Friday, Veterans Day, eleventh of November, the day after 0:00:57.400 --> 0:01:00.600 Mr Trump went to Washington a meeting between the President 0:01:00.640 --> 0:01:02.680 and the President elect. A meeting that was scheduled to 0:01:02.760 --> 0:01:05.720 last ten minutes went on for ninety and the Dow 0:01:05.800 --> 0:01:08.320 hit records is. Donald Trump made his way down Pennsylvania 0:01:08.360 --> 0:01:11.640 Avenue up Capitol Hill, where lunch was served. Donald Trump 0:01:11.640 --> 0:01:14.039 and the next Vice president broke bread with Paul Ryan 0:01:14.200 --> 0:01:16.560 from the House Speaker's balcony. They surveyed the city and 0:01:16.560 --> 0:01:19.959 then they hammered out plans with Majority leader Mitch McConnell, 0:01:20.000 --> 0:01:22.360 and all the while the president elect transition team worked 0:01:22.400 --> 0:01:25.039 to allay uncertainty new reports of who's being considered for 0:01:25.080 --> 0:01:28.480 Treasury Secretary David Malpass reportedly heading up the search for 0:01:28.480 --> 0:01:31.319 the economic team, Tom Barrack reportedly handling plans for the 0:01:31.319 --> 0:01:35.000 next inauguration, and a post on Great Again dot gov 0:01:35.080 --> 0:01:38.480 the transition team's website. The closest closest thing to a 0:01:38.480 --> 0:01:41.080 policy pronouncement we've gotten since election day that's still to 0:01:41.120 --> 0:01:45.200 be named Financial Services Policy Implementation Team. Quote. We'll be 0:01:45.240 --> 0:01:47.760 working to dismantle the Dot Frank Act and replace it 0:01:47.800 --> 0:01:52.240 with new policies to encourage growth and job David, But 0:01:52.320 --> 0:01:55.000 I'm glad you did that introduction, and may we do 0:01:55.080 --> 0:01:57.720 a Friday shoutout to our team, please do that. We 0:01:57.760 --> 0:02:00.960 had both Mr mal Pass and Mr in this week 0:02:01.160 --> 0:02:04.080 to give perspective before they got that where they got 0:02:04.120 --> 0:02:06.200 that we don't do this. I mean, David does all 0:02:06.240 --> 0:02:08.120 the work. I just sort of show up and have 0:02:08.200 --> 0:02:11.000 a cup of coffeens. But our team just killed it 0:02:11.080 --> 0:02:15.280 this week. David absolutely just killed The guests affiliated with 0:02:15.280 --> 0:02:18.639 both campaigns and the outside perspective as well has just 0:02:18.680 --> 0:02:21.760 been tremendous all through the week term it is two 0:02:21.760 --> 0:02:24.880 thousand sixteen, the year of the improbable. According to our 0:02:24.919 --> 0:02:28.160 first guest, know Ferguson, renowned award winning historian, senior fellow 0:02:28.160 --> 0:02:30.840 at the Hoover Institution at Stanford, kind enough to join 0:02:30.919 --> 0:02:33.160 us today from London. Good to have you with us. 0:02:33.440 --> 0:02:35.359 Donald Trump saying that this was going to be Brexit 0:02:35.440 --> 0:02:37.840 times ten a couple of days out. Now give your 0:02:37.840 --> 0:02:40.799 reaction to what we've seen here, and if the context 0:02:41.000 --> 0:02:44.359 it give us, if that assessment was valid. Well, unlike 0:02:44.360 --> 0:02:47.799 the vast majority of of people who were writing and 0:02:47.880 --> 0:02:51.160 talking about the selection, I took that seriously and that 0:02:51.160 --> 0:02:53.560 that was I think because I was suffering from post 0:02:53.560 --> 0:02:57.440 Brexit traumatic stress disorder, having been on the wrong side 0:02:57.440 --> 0:03:01.320 of the Brexit campaign in the UK uh and having 0:03:02.040 --> 0:03:06.679 working up to the most almighty shock, I recognized very 0:03:06.720 --> 0:03:10.120 familiar symptoms in the United States in the run up 0:03:10.200 --> 0:03:12.959 to the election, and I said in my column and 0:03:13.000 --> 0:03:16.080 The Boston Globe on Monday that I thought Trump was 0:03:16.480 --> 0:03:20.760 likely to prove the pundits wrong by winning from very 0:03:20.880 --> 0:03:23.800 many of the same reasons that that breaks. It happened. 0:03:23.880 --> 0:03:27.239 It's it's an interesting thing populism because although it's quite 0:03:27.320 --> 0:03:30.160 nationalistic in its tone, it's kind of a global phenomenon 0:03:30.200 --> 0:03:32.960 that you see in multiple countries right now, and it's 0:03:33.000 --> 0:03:37.040 a backlash against globalization in some ways, because obviously Trump 0:03:37.160 --> 0:03:42.240 was playing the cards of protectionism, talking about tariffs, restricting immigration. 0:03:43.080 --> 0:03:46.360 He was beating up on the corrupt political establishment that 0:03:46.440 --> 0:03:50.360 he's clearly eager to distance himself from. But I think 0:03:50.360 --> 0:03:53.400 the other interesting thing about populism is it's cultural dimension. 0:03:54.240 --> 0:03:59.680 It is a backlash against political correctness, feminism, it's a 0:03:59.720 --> 0:04:03.960 back lash against affirmative action, black lives matter, it's a 0:04:04.200 --> 0:04:06.800 it's a backlash against the whole range of cultural and 0:04:06.880 --> 0:04:11.160 social things, which I think explains it's it's potency. It 0:04:11.240 --> 0:04:13.480 was a wonderful column which you alluded to Thomas Wolfe 0:04:13.480 --> 0:04:16.320 talking about the every four year confluence of the election 0:04:16.360 --> 0:04:19.440 in the World Series. You called Donald Trump the Maverick picture. 0:04:20.080 --> 0:04:22.880 How did he pitch a perfect game? Yeah? I love 0:04:23.000 --> 0:04:25.479 that passage. When I came across it. I'm a Thomas 0:04:25.480 --> 0:04:29.040 wolf enthusiast, and I remembered this passage where he says, 0:04:29.440 --> 0:04:33.240 there's something about the way Americans watched the World Series 0:04:33.279 --> 0:04:37.440 and watch the the presidential election. That's similar. They kind 0:04:37.440 --> 0:04:41.840 of love getting into the contest, but at the end 0:04:41.880 --> 0:04:45.040 of it, they kind of peacefully leave, as it were 0:04:45.040 --> 0:04:47.640 at the stadium. And I think on the whole, that 0:04:47.760 --> 0:04:51.080 is how Americans are reacting to Trump's victory, just as 0:04:51.120 --> 0:04:53.320 they reacted to the Chicago Cubs victory. It's only a 0:04:53.320 --> 0:04:58.120 tiny minority of people who are engaging in these ludicrous protests. 0:04:58.680 --> 0:05:01.239 So I think the analogy is a good one because 0:05:01.279 --> 0:05:04.760 what Trump did, apart from sticking at it. Remember, the 0:05:04.839 --> 0:05:06.800 stamina was the thing that gave the Cubs of the 0:05:06.839 --> 0:05:09.080 World Series. They just hung on in there to the 0:05:09.160 --> 0:05:11.800 very last inning. They never gave up, and Trump never 0:05:11.839 --> 0:05:14.560 gave up. I was impressed by his stamina. He always 0:05:14.600 --> 0:05:19.000 seemed relaxed on the stump. He never really lost his 0:05:19.000 --> 0:05:22.880 his self confidence in on the campaign trail. The only 0:05:22.960 --> 0:05:25.120 times I thought he really was losing it, we're in 0:05:25.160 --> 0:05:27.960 the three debates with Hillary Clinton, and I prematurely wrote 0:05:28.000 --> 0:05:30.839 him off after Debate three, and then realized that actually, 0:05:30.960 --> 0:05:34.280 two people in Middle America, these debates had had counted 0:05:34.279 --> 0:05:36.320 for almost nothing because they were much more interested in 0:05:36.600 --> 0:05:39.200 you guessed at the World Series. Ferguson with us and 0:05:39.320 --> 0:05:42.719 Villan Bouder to come on here in a moment, Professor Ferguson, 0:05:43.160 --> 0:05:46.080 I do want to move forward to the forming of 0:05:46.080 --> 0:05:50.080 a cabinet. We talked of this earlier. You're Wonderful one volume. 0:05:50.680 --> 0:05:54.680 Dr Kissinger, where he was, he was known, and he 0:05:54.800 --> 0:05:59.039 was a celebrity. But it was unimaginable that a Rockefeller 0:05:59.320 --> 0:06:03.800 republic and or adviser, I should say, would join the 0:06:03.880 --> 0:06:08.400 gentleman from Woodrior, California. Help me here with cabinet formation 0:06:08.520 --> 0:06:12.200 from Mr Trump in the lessons you learned in researching 0:06:12.360 --> 0:06:17.880 Henry Kissinger, Well, I think one lesson, certainly from night 0:06:18.400 --> 0:06:22.839 is that you don't get a job in the administration 0:06:22.960 --> 0:06:26.280 just because you were a faithful servant on the campaign trail. 0:06:26.360 --> 0:06:29.719 And many people are, i think, making the erroneous assumption 0:06:29.720 --> 0:06:31.839 that Donald Trump is simply going to hand out the 0:06:31.880 --> 0:06:34.479 big jobs to the people who were with him through 0:06:34.520 --> 0:06:37.440 thick and thin. I'm not sure that's necessarily the case, 0:06:37.520 --> 0:06:39.920 and indeed, I think it would be a mistake because 0:06:39.960 --> 0:06:42.600 he has the opportunity to do what Richard Nixon did 0:06:42.600 --> 0:06:45.200 in sixty eight, which is to reach out to his opponents. 0:06:45.560 --> 0:06:51.040 Kissinger had repeatedly criticized Nixon. He was a Rockefeller loyalist. 0:06:51.120 --> 0:06:55.400 He'd been on Rockefeller's side through three unsuccessful bids for 0:06:55.400 --> 0:06:59.600 the Republican nomination, and he was astonished when Nixon offered 0:06:59.680 --> 0:07:02.039 him the bob of National Security Advisor. In fact, he 0:07:02.040 --> 0:07:04.360 was so surprised he didn't realize he'd been offered the job. 0:07:04.720 --> 0:07:06.600 He went to Rockefeller and said, what should I do? 0:07:06.680 --> 0:07:08.960 And Rockefeller said, are you crazy? It's the President of 0:07:09.000 --> 0:07:11.840 the United States who's or the President elect of the 0:07:11.960 --> 0:07:14.120 United States who has just offered you this job. You 0:07:14.320 --> 0:07:16.680 have to serve. And I think Trump should play that 0:07:16.800 --> 0:07:18.720 card in order to make sure that he is the 0:07:18.760 --> 0:07:23.400 strongest possible team on national security and on economic policy. 0:07:23.400 --> 0:07:25.360 Those are the things by which he is going to 0:07:25.440 --> 0:07:27.720 be judged, and I think if he relies only on 0:07:27.960 --> 0:07:32.120 Rudy Giuliani, Chris Christie new ging Rich and so forth, 0:07:32.400 --> 0:07:34.920 then I don't think the team, with all due respect 0:07:34.960 --> 0:07:38.120 to those gentlemen, will be strong enough. Remember, it's a 0:07:38.200 --> 0:07:42.760 huge challenge if you're a political outsider who's antagonized large 0:07:42.840 --> 0:07:48.080 sections of the Republican Party to staff an administration. Trump's 0:07:48.080 --> 0:07:52.080 biggest challenge right now will be persuading people that he 0:07:52.240 --> 0:07:55.640 is going to be a respectable president, somebody that they 0:07:55.680 --> 0:07:57.400 will be proud to have worked for. I think he's 0:07:57.400 --> 0:07:59.040 going to be able to do it, but he should 0:07:59.080 --> 0:08:02.560 take full opportunity, busy of this chance to reach out 0:08:02.600 --> 0:08:04.840 to people who criticized him, and I've seen him do that. 0:08:05.000 --> 0:08:09.040 I've actually been very struck by his magnanimous tone, the 0:08:09.160 --> 0:08:13.880 almost humble way in which he interacted with President Obama. 0:08:14.800 --> 0:08:20.600 I'm I'm relatively optimistic that the administration that emerges in 0:08:20.640 --> 0:08:24.520 the coming days will be a lot more mainstream, uh 0:08:24.800 --> 0:08:29.800 than the critics of the Trump campaign were predicting. There 0:08:29.920 --> 0:08:33.160 was this never Trump letter. There were letters from emissions 0:08:33.200 --> 0:08:35.800 and foreign policy experts and did you signed it as well? How? How? 0:08:35.880 --> 0:08:38.200 How never is never here? When you talk to folks 0:08:38.200 --> 0:08:40.080 who have signed that letter, you talked about bringing opponents 0:08:40.080 --> 0:08:42.719 on on board? Here one one time opponents on board? Here? 0:08:42.880 --> 0:08:44.600 Are they willing to bend? Are they willing to to 0:08:44.640 --> 0:08:46.840 backtrack on that? Would they be willing to serve in 0:08:46.880 --> 0:08:50.520 a Donald Trump administration? Well? I can't speak for other 0:08:50.600 --> 0:08:55.360 signatories of that letter. UM. I do recollect a recent 0:08:55.400 --> 0:09:02.400 conversation I had with some eminence military n and they 0:09:02.679 --> 0:09:07.000 were men who had distanced themselves or at least declined 0:09:07.200 --> 0:09:12.280 to be involved in the Trump campaign, but their view 0:09:12.480 --> 0:09:15.960 was that if called upon to serve by our president 0:09:16.000 --> 0:09:19.680 elect Trump, that was a different thing. Because when the 0:09:19.679 --> 0:09:22.400 President of the United States calls on you to serve, 0:09:23.040 --> 0:09:26.360 you don't really have a choice. It's your duty. And 0:09:26.400 --> 0:09:30.760 I suspect that there will be people civilians with experience 0:09:30.800 --> 0:09:32.959 of government who will take the same view that the 0:09:33.080 --> 0:09:37.280 never Trump letter back in March reflected. I think grave 0:09:37.360 --> 0:09:40.959 concern on the part of many foreign policy experts that 0:09:41.040 --> 0:09:46.280 things that Trump was saying, we're just crazy, dangerous and response. 0:09:46.320 --> 0:09:48.880 So let's do this. Let's come back and continue with 0:09:48.920 --> 0:09:53.079 Professor Ferguson, Professor Powder will join us in a moment worldwide, 0:09:53.080 --> 0:09:56.520 this is Bloomberg, David gerin time, keen with us, Neil Ferguson, 0:09:56.640 --> 0:10:00.000 and we just can continue on here after the most 0:10:00.120 --> 0:10:02.559 historic week. But you know, I really think for our 0:10:02.600 --> 0:10:06.360 audience worldwide, we need to drive forward to the winter 0:10:07.040 --> 0:10:10.800 in the spring of Europe. We have seen Brexit. You 0:10:10.880 --> 0:10:14.360 have been remarkably open and naked about how you got 0:10:14.360 --> 0:10:18.040 it wrong. We have seen the history of this America 0:10:18.280 --> 0:10:23.559 and now thinkers staggered Italy, they staggered to France. I 0:10:23.559 --> 0:10:25.400 don't know where else they stagger. I can't get up 0:10:25.480 --> 0:10:30.800 with the Netherlands. Help us here, neil is free. Zakaria 0:10:30.840 --> 0:10:35.160 beautifully put in foreign affairs with a cultural revolution of 0:10:35.200 --> 0:10:40.920 our populism. Well, I'm not sure cultural revolutions quite the 0:10:41.040 --> 0:10:45.120 right analogy. That was Mao's attempt to turn China's society 0:10:45.160 --> 0:10:51.400 upside down by unleashing the youth against uh, the establishment. 0:10:51.880 --> 0:10:55.280 This is something different because, of course, young voters were 0:10:55.360 --> 0:11:01.560 decisively defeated in both breaks Is and the US election. Uh. 0:11:01.600 --> 0:11:04.400 You know that the trouble about most of the instant 0:11:05.040 --> 0:11:12.040 after game analysis is that it misses key points. By emphasizing, 0:11:12.040 --> 0:11:15.240 for example, the role of of race in the election, 0:11:15.280 --> 0:11:17.920 a lot of commentators are missing the importance of class. 0:11:18.200 --> 0:11:20.960 They're also missing the importance of age. The thing that 0:11:21.000 --> 0:11:22.920 didn't matter too much, by the way, was gender. It 0:11:22.960 --> 0:11:25.320 didn't really matter that Hillary Clinton was a woman, because 0:11:25.679 --> 0:11:29.240 in fact she didn't win a majority of white female votes, 0:11:29.360 --> 0:11:34.080 but age mattered. In Europe, you have similar phenomena where 0:11:34.120 --> 0:11:40.800 older voters, more working class voters, male voters are looking 0:11:40.840 --> 0:11:46.439 at the world of globalization and multiculturalism and saying enough already. 0:11:46.480 --> 0:11:49.840 They have had enough of large scale migration, they have 0:11:49.920 --> 0:11:53.000 had enough of free trade, they have had enough of 0:11:53.160 --> 0:11:56.199 very free capital flows so on economics. They are ready 0:11:56.240 --> 0:12:00.200 for a backlash against globalization. At the same time, all 0:12:00.200 --> 0:12:04.040 over the Northern hemisphere they have had enough with multiculturalism. 0:12:04.080 --> 0:12:07.200 They're actually rather sick of feminism. There's a backlash going 0:12:07.200 --> 0:12:09.360 on here that is also cultural, but it's not a 0:12:09.400 --> 0:12:11.640 cultural revolution of the sort we saw in China in 0:12:11.679 --> 0:12:14.320 the nineties, sixties and seventies. This is actually a cultural 0:12:14.360 --> 0:12:19.720 revolution by older demographics against the fashions that appeal to 0:12:19.760 --> 0:12:23.040 the young. The lunacies that you see on American campuses 0:12:23.120 --> 0:12:27.160 these days that trigger warnings and safe havens, strike the 0:12:27.240 --> 0:12:30.800 people in main street in Middle America and their equivalents 0:12:30.840 --> 0:12:33.960 in Europe, but simply bonkers. And I think that's a 0:12:34.120 --> 0:12:37.359 very important part of what's going on in the populist 0:12:37.600 --> 0:12:40.040 wave we're seeing. It's a it's a populist ties and 0:12:40.080 --> 0:12:43.440 in each country you have a different wave. Noticed I 0:12:43.440 --> 0:12:47.040 said Northern Hemisphere, didn't I that's because populism is a 0:12:47.120 --> 0:12:50.280 spent force in the Southern hemisphere, especially in Latin America, 0:12:50.320 --> 0:12:53.400 where it's been tried and found not to work. A 0:12:53.400 --> 0:12:55.920 few people I can think of have wrestled with, reckoned 0:12:55.920 --> 0:12:59.000 with globalization as much as you have. What does globalization 0:12:59.640 --> 0:13:04.439 look like after January seventeen? Is it? Is it notionally different? 0:13:05.200 --> 0:13:07.360 After what we've seen in the UK, what we've seen 0:13:07.400 --> 0:13:09.800 here in the U S. Well, globalization has been in 0:13:09.880 --> 0:13:13.280 measurable declined since the financial crisis. I mean, if you 0:13:13.360 --> 0:13:15.880 just look at volumes of trade, if you look at 0:13:16.440 --> 0:13:20.959 capital flows, it really is it's past, it's its peak. 0:13:21.480 --> 0:13:24.160 And the question I guess we have to ask is 0:13:24.559 --> 0:13:27.560 just how much deglobalization is they're going to be? In 0:13:27.600 --> 0:13:31.120 other words, are we going to see a return to protectionism? 0:13:31.280 --> 0:13:35.960 Is Trump serious about tariffs some Chinese imports? How much 0:13:36.000 --> 0:13:39.040 is immigration going to be restricted? Those are the questions 0:13:39.080 --> 0:13:41.680 we need to ask. And I think it's helpful here 0:13:41.720 --> 0:13:44.000 to know some history. The world is full of people 0:13:44.000 --> 0:13:46.440 who only seem to know one period of history, and 0:13:46.480 --> 0:13:49.560 it's the nineteen thirties. So whatever happens, it's the nineteen thirties. 0:13:49.559 --> 0:13:52.320 They see a dictator, it's the nineteen thirties. There's stock 0:13:52.360 --> 0:13:54.920 market crash, it's the nineteen thirties. And this is not 0:13:55.040 --> 0:13:58.240 the nineteen thirties. In the nineteen thirties, unemployment rates got 0:13:58.320 --> 0:14:01.079 up into the twenty percent to thirty percent range and 0:14:01.200 --> 0:14:05.720 stayed there for years. We have practically full employment in 0:14:05.760 --> 0:14:08.000 the United States, which makes it kind of odd to 0:14:08.040 --> 0:14:12.680 talk about massive infrastructure investment. But hey, European economies have 0:14:12.720 --> 0:14:15.720 recovered from the crisis much more slowly. But the only 0:14:15.760 --> 0:14:19.400 country that really had a great depression type experience was Greece. 0:14:20.120 --> 0:14:22.400 Ain't no great depression going on in Germany, I can 0:14:22.440 --> 0:14:25.720 assure you. So let's stop drawing silly analogies with the 0:14:25.800 --> 0:14:30.040 nineteen thirties. Let's stop comparing the populace to Hitler and Mussolini. Please, 0:14:30.080 --> 0:14:33.400 I beg you don't do it, because it's the wrong analogy. 0:14:33.560 --> 0:14:36.920 The right analogy is with the last time globalization. Here 0:14:36.960 --> 0:14:39.400 to speed bump, which was in the late nineteenth century 0:14:39.440 --> 0:14:43.040 after the seventy three financial crisis, when all over the 0:14:43.040 --> 0:14:46.760 Northern hemisphere, populist movements sprang up that were against free 0:14:46.760 --> 0:14:49.560 trade and were against free migration, and they achieved quite 0:14:49.600 --> 0:14:52.160 a lot. They raised tariffs in the United States, they 0:14:52.200 --> 0:14:56.320 restricted immigration pretty drastically. Think of the eight two Exclusion Act, 0:14:56.360 --> 0:14:59.760 which ended Chinese immigration to the United States, and the 0:15:00.000 --> 0:15:03.320 populist wave lasted for somewhere in the region of ten 0:15:03.400 --> 0:15:05.640 or twenty years, and then it gave way to a 0:15:05.680 --> 0:15:09.440 progressive wave. And I think that's a much more illuminating analogy. 0:15:09.520 --> 0:15:11.720 I've said this ad nauseum. I want to say it 0:15:11.760 --> 0:15:14.760 to your listeners. Donald Trump is not a fascist. He 0:15:14.920 --> 0:15:19.600 is a populist. Fascists invade countries, they do war. Populists 0:15:19.600 --> 0:15:22.760 do drug wars. They build walls, that's what they do. 0:15:22.840 --> 0:15:25.040 We are out of time, you know. Ferguson, thank you 0:15:25.120 --> 0:15:27.160 so much, most generous of you this morning to be 0:15:27.240 --> 0:15:31.160 with us from our London studios. David Gern, Tom Keane 0:15:31.680 --> 0:15:34.880 a Friday to regroup and get to the weekend into 0:15:34.920 --> 0:15:50.680 Monday morning. Stay with us worldwide. This is Bloomberg. Can 0:15:50.760 --> 0:15:53.560 we say, David, thank you to our guests led by 0:15:53.600 --> 0:15:59.080 Professor for repeated visits and lengthy visits. They have things 0:15:59.120 --> 0:16:02.520 to do during the more not really and we're who 0:16:02.600 --> 0:16:08.040 You're honored the villa here, David, why don't you start 0:16:08.120 --> 0:16:10.640 with the lan powder this morning? Well, let me get 0:16:10.680 --> 0:16:12.360 your reaction. First of all, we were talking a few 0:16:12.400 --> 0:16:14.920 days ago ahead of this election and the scenarios that 0:16:14.960 --> 0:16:16.960 most were predicting here were different from the one that 0:16:17.000 --> 0:16:19.240 we we saw coming to play on on Tuesday night. 0:16:19.280 --> 0:16:21.480 Your reaction here to to what we've seen, maybe not 0:16:21.560 --> 0:16:26.640 from the political perspective, but well, in addition to UH 0:16:27.120 --> 0:16:30.040 Trump as president, the Republicans have control of both so 0:16:30.080 --> 0:16:33.120 they will be able, they should be able to pass 0:16:33.520 --> 0:16:37.720 some kind of stimulus fiscal stimulus at some point, UH 0:16:37.840 --> 0:16:40.600 if you'll have the mind effects, ganging effects, and hopefully 0:16:40.680 --> 0:16:43.760 if it's targeted well, will help attential output a bit 0:16:43.800 --> 0:16:49.200 as well. This means higher interest rates uh uput sloping 0:16:49.880 --> 0:16:53.760 Yold curve effects on equity and principle and vegas because 0:16:53.800 --> 0:16:56.640 the fiscal stimulages in the future, so brates go up, 0:16:57.360 --> 0:16:59.280 but of course profits go up in the future as well, 0:16:59.360 --> 0:17:03.160 so the markets have decided that the stimulus outweighs the 0:17:03.320 --> 0:17:07.040 rate effects, so the stock market has gone whoop. See 0:17:07.800 --> 0:17:13.119 also partly driven by expectation of deregulation in key industries 0:17:13.160 --> 0:17:18.440 like energy, environmental angle here and financial sector and possibly 0:17:18.440 --> 0:17:21.720 some others. So all that seems to be drowning out 0:17:22.160 --> 0:17:25.600 the uncertainty that we're still feeling at the moment about 0:17:25.680 --> 0:17:31.040 both the the team and the politics which is negative 0:17:31.280 --> 0:17:35.200 for for demand, and of course the fear of protectionism, 0:17:35.240 --> 0:17:40.240 trade wars, and aggressive and immigrant policies which are all negatives. 0:17:40.280 --> 0:17:43.879 But no doubt that on balance the future looks higher 0:17:43.920 --> 0:17:49.000 interest uh so, higher inflationary pressures and most likely also 0:17:49.920 --> 0:17:53.439 higher levels of GP grows in the short run because 0:17:53.480 --> 0:17:56.679 of the anticipated fiscal stimulus if and when it happens. 0:17:56.720 --> 0:17:59.480 You're navigating that ambiguity. Investors are navigating at the Fed 0:17:59.560 --> 0:18:02.639 Reserve navigating as well as as as you said, what 0:18:02.680 --> 0:18:05.880 does this mean for for the rate hike timetable here 0:18:05.920 --> 0:18:08.439 as policymakers wait to see what in fact will come 0:18:08.440 --> 0:18:11.280 out of Capitol Hill, I don't think it make most difference. UM. 0:18:11.800 --> 0:18:16.080 Clearly UM. There is addition uncertainty, which is the only 0:18:16.119 --> 0:18:20.000 thing that we observe immediately. But there also is the 0:18:20.040 --> 0:18:25.040 expectation that this is not enough to send the economy 0:18:25.840 --> 0:18:29.840 into a downturn, and we can anticipate the fiscal stimulus 0:18:30.400 --> 0:18:33.600 coming online beginning with the tax cut sometime next year, 0:18:33.680 --> 0:18:37.120 followed by UM infrastructure spending. So I think the fact 0:18:37.119 --> 0:18:38.840 will just go ahead and do what it was planning 0:18:38.840 --> 0:18:41.200 to do and raising in December and a couple more 0:18:41.200 --> 0:18:45.240 times next year or more if the fiscal stimulus should 0:18:45.240 --> 0:18:48.359 be earlier and larger than expected. The scize matter, this 0:18:48.480 --> 0:18:52.720 composition matter when it comes to that infrastructure package. Absolutely um. 0:18:52.840 --> 0:18:56.719 The size of course matter because that's a demand effect immediately. 0:18:57.520 --> 0:18:59.719 Timing also matters. I mean that I don't know how 0:18:59.720 --> 0:19:02.840 many shop of any projects there are, and the composition 0:19:03.480 --> 0:19:07.080 was well, it's possible to select infrastructure project, especially in 0:19:07.080 --> 0:19:09.760 the country that has been staffed the infrastructure investment for 0:19:09.800 --> 0:19:12.440 the last forty years and has the worst infrastructure in 0:19:12.440 --> 0:19:16.360 the advanced economy. The returns can be enormous and they 0:19:16.400 --> 0:19:19.399 could pay for themselves unfortuately. In practice, a lot of 0:19:19.440 --> 0:19:22.920 infrastructure is wasted because it has to go through political filters. 0:19:23.119 --> 0:19:25.399 It's often done at the state and local level with 0:19:25.560 --> 0:19:28.159 federal files. There is another good news. I got a 0:19:28.160 --> 0:19:32.560 memo from John Tucker about two am this morning. He said, 0:19:32.560 --> 0:19:35.040 thrilled the villain powders on time. Can you be sure 0:19:35.080 --> 0:19:40.480 to expand further your Hicksie and SLM discussion of last week? Yeah, 0:19:40.480 --> 0:19:45.159 because I didn't think enough people were listening. One of 0:19:45.160 --> 0:19:48.359 the high points last week with Professor Powder was to 0:19:48.359 --> 0:19:52.600 look at the geometry. The professionals like Mr Bowder look 0:19:52.640 --> 0:19:57.000 at two try to describe the linkage of policy with 0:19:57.160 --> 0:20:02.520 his economics professor powder to and slate. President elect Trump 0:20:02.680 --> 0:20:05.960 is going to an effect the stimulus, some would, let say, 0:20:06.240 --> 0:20:09.280 much like what President elect Clinton would have done and 0:20:09.440 --> 0:20:12.280 shift the I S curve to the right in a 0:20:12.400 --> 0:20:17.960 desperate move for greater economic growth and greater output. When 0:20:18.000 --> 0:20:21.760 that occurs, the I S curve moves and the other curve, 0:20:21.920 --> 0:20:26.240 the money curve, the L M curve move and things happen. 0:20:26.440 --> 0:20:30.720 And as you know, there's a massive uncertainty and ambiguity 0:20:30.960 --> 0:20:34.000 to what will happen down the road. What does he 0:20:34.040 --> 0:20:37.280 need to do to do stimulus and get us to 0:20:37.400 --> 0:20:41.000 a better outcome to three and four years down the road? 0:20:41.040 --> 0:20:51.679 John Tucker nodding, well, from a capacitilization perspective, only a 0:20:51.760 --> 0:20:55.880 modest stimulus best is needed in the US. Unlike all 0:20:55.880 --> 0:20:57.880 the parts of the world, the US is very near 0:20:58.720 --> 0:21:03.640 full employment and uh for capacitilization, there's still some room. 0:21:04.240 --> 0:21:09.480 But a modest and intelligently designed fiscal stimulus with the 0:21:09.640 --> 0:21:12.960 tax cuts targeted and those actually like it is spended. 0:21:13.200 --> 0:21:15.760 It means low income groups, which is also distribution ly, 0:21:16.359 --> 0:21:19.800 I think more attractive, and then infrastructure spending in one 0:21:19.800 --> 0:21:23.280 of the many areas where the US needs its capacity 0:21:24.880 --> 0:21:30.000 to become stronger. But of course potential output grows labor 0:21:30.040 --> 0:21:34.840 fourth grows proactivity growth that is very unlikely to be 0:21:34.920 --> 0:21:40.400 affected in a material way unless in addition to much 0:21:40.480 --> 0:21:44.200 larger increase in infrastructure spending, which could even be uh 0:21:44.880 --> 0:21:48.439 tax finance. Because it's potential output we're looking at. Um, 0:21:48.480 --> 0:21:50.760 there has to be an improvement in the quality of 0:21:50.880 --> 0:21:55.520 labor and in in private cap First. Krugman, who has 0:21:55.600 --> 0:22:01.280 written numerous times on John Hicks in a model nine, 0:22:01.840 --> 0:22:04.800 would suggest go back to basic models. You and others 0:22:04.800 --> 0:22:08.600 have said the world's changed. If the world has changed, 0:22:08.600 --> 0:22:13.240 for President elect Trump, how does he take Washington policy 0:22:13.880 --> 0:22:17.760 and make for a better America When, as you mentioned, 0:22:17.800 --> 0:22:23.720 productivity is not there. Um the demand management it is 0:22:23.840 --> 0:22:27.440 not the primary concerns for the US economy. Right. Yes, 0:22:27.560 --> 0:22:29.600 we can do as a bit of a fiscal stimulus 0:22:29.720 --> 0:22:35.000 multi policy basically from a bit but from a demand perspective, 0:22:35.240 --> 0:22:39.000 From a supply perspective, we need a lot of infrastructure spending. 0:22:39.040 --> 0:22:42.800 We need intelligence, taxual structuring, we need intelligence design, de regulation, 0:22:43.119 --> 0:22:46.720 and we need an open immigration policy that brings the 0:22:47.760 --> 0:22:52.520 talent that America cannot produce in time domestically available. And 0:22:52.560 --> 0:22:56.119 we need of course great emphasis and education occasional training. 0:22:56.320 --> 0:22:59.080 These are also by side measures. They take time and 0:22:59.119 --> 0:23:03.880 they don't come out of you across the board. Price 0:23:04.200 --> 0:23:06.320 of this in FOLKUS has been a lot of great 0:23:06.359 --> 0:23:09.280 research on this recently. An Ambrose Evans Bridget as usual, 0:23:09.600 --> 0:23:13.320 summed it up beautifully yesterday in the Telegraph. The outcome 0:23:13.359 --> 0:23:16.359 of this has to be strong dollar. Right when you 0:23:16.400 --> 0:23:19.520 talk to Steve Englander, I'm sorry, it's a dollar up 0:23:19.920 --> 0:23:24.600 is a dollar big, which diminishes the advantages the Republicans 0:23:24.640 --> 0:23:29.119 could give us. Inevitably, when you have a fiscal stimulus 0:23:29.359 --> 0:23:34.440 which puts up for pressure on capacitalization and on inflation, 0:23:34.840 --> 0:23:37.320 if you also allow them for the likely response of 0:23:37.359 --> 0:23:40.040 the Fed to this, the higher rate, you're going to 0:23:40.119 --> 0:23:43.239 get stronger dollar out of that. And that is one 0:23:43.280 --> 0:23:48.359 of the ways in which actual demand is reconciled with 0:23:48.560 --> 0:23:54.120 limited potential output right, because it will discourage external demand 0:23:54.760 --> 0:23:56.960 through the through the stans of the dollar, which will 0:23:57.000 --> 0:24:01.159 offset a part of the fiscal statements. That's away economies 0:24:01.200 --> 0:24:05.359 equilibrate um. If there was massive unemployment in the US 0:24:05.680 --> 0:24:09.560 very low compaculilization, then you could have a serious stimulus 0:24:10.200 --> 0:24:14.680 without necessarily any any crowding because the FED would not respond, 0:24:15.080 --> 0:24:18.200 and effect on long term rates would also be momodels 0:24:18.320 --> 0:24:20.359 on the exchange trade. But we're not there. The US 0:24:20.840 --> 0:24:23.600 is not an economy that suffers from a big changent 0:24:23.600 --> 0:24:26.760 problem at the moment. It suffers from a lousy supply side. 0:24:27.200 --> 0:24:29.840 When you think about in forecast would effect a stimulus 0:24:29.840 --> 0:24:33.479 package like this might have. How do you weigh what 0:24:33.560 --> 0:24:35.800 Donald Trump has said about trade, what he might do 0:24:35.840 --> 0:24:41.320