1 00:00:02,400 --> 00:00:06,280 Speaker 1: Global business news twenty four hours a day, Bloomberg dot Com, 2 00:00:06,480 --> 00:00:09,239 Speaker 1: the Radio plus mobile last and on your radio, this 3 00:00:09,760 --> 00:00:13,040 Speaker 1: is a Bloomberg Business flash and I'm teren moscown there. 4 00:00:13,160 --> 00:00:16,520 Speaker 1: Updates brought to you by National Realty Returns on cash 5 00:00:16,520 --> 00:00:18,520 Speaker 1: and rented real Estate fund them at n r I 6 00:00:18,640 --> 00:00:22,080 Speaker 1: a dot net US DOCK index futures are following oil 7 00:00:22,120 --> 00:00:26,000 Speaker 1: prices lower with investors shunning risk worldwide as Asian markets 8 00:00:26,000 --> 00:00:28,040 Speaker 1: reopened to join a global sell off. We checked the 9 00:00:28,120 --> 00:00:31,240 Speaker 1: markets every fifteen minutes throughout the trading day on Bloomberg 10 00:00:31,680 --> 00:00:34,599 Speaker 1: SNP E mini futures down thirty nine points, DOWIE Mini 11 00:00:34,680 --> 00:00:38,400 Speaker 1: futures down three hundred, twenty six, nasdac Emuni futures down 12 00:00:38,479 --> 00:00:41,479 Speaker 1: ninety three. That's down two point three percent. DACKS in 13 00:00:41,479 --> 00:00:44,120 Speaker 1: Germany's down two point nine percent, CAC in Paris down 14 00:00:44,159 --> 00:00:47,320 Speaker 1: four percent, FT one hundred down two point four percent. 15 00:00:47,560 --> 00:00:49,919 Speaker 1: Ten Your Treasury up thirty thirty seconds, the yeld one 16 00:00:49,960 --> 00:00:53,120 Speaker 1: point five six percent. Nimex screwed oil down four and 17 00:00:53,159 --> 00:00:55,720 Speaker 1: a quarter percent. Out of dollar seventeen to twenty six 18 00:00:55,760 --> 00:00:58,440 Speaker 1: dollars twenty eight cents of barrel. Comax gold up three 19 00:00:58,480 --> 00:01:00,800 Speaker 1: and a half percent or forty two dollars ten cents 20 00:01:00,800 --> 00:01:03,760 Speaker 1: at twelve thirty six seventy ounce the euro A dollar 21 00:01:03,920 --> 00:01:07,679 Speaker 1: thirteen forty two, the yen one eleven point three eight. 22 00:01:07,680 --> 00:01:10,600 Speaker 1: And that's a Bloomberg business flash, Tom and Mike Karen, 23 00:01:10,920 --> 00:01:13,400 Speaker 1: thanks so much. I just sent out UniCredit and Deutsche 24 00:01:13,440 --> 00:01:16,880 Speaker 1: Bank charts, both banks as a proxy for European banking 25 00:01:16,959 --> 00:01:21,399 Speaker 1: breaking down a un credit very close to new lows. 26 00:01:21,840 --> 00:01:25,200 Speaker 1: Deutsche Bank not quite there yet, thirteen point three five 27 00:01:25,680 --> 00:01:29,360 Speaker 1: euros on the European quote with the inter day thirteen 28 00:01:29,400 --> 00:01:32,160 Speaker 1: point oh three, but uh, you know, there we are. 29 00:01:32,240 --> 00:01:34,360 Speaker 1: We just heard Stephen Major will be with us tomorrow 30 00:01:34,400 --> 00:01:38,520 Speaker 1: from hs BC with a yield one point five. William 31 00:01:38,600 --> 00:01:41,240 Speaker 1: Lee with us working with Villain Bowder. It's City Group, 32 00:01:41,280 --> 00:01:44,319 Speaker 1: and he has such a story career at the I 33 00:01:44,520 --> 00:01:47,160 Speaker 1: m F uh that I think I want to digress 34 00:01:47,200 --> 00:01:49,680 Speaker 1: here and talk about Leguard's new mediocre. She looks like 35 00:01:49,720 --> 00:01:53,080 Speaker 1: a genius, or I should say she and Blanchard in 36 00:01:53,120 --> 00:01:58,040 Speaker 1: the piece. Yeah, well there's that too. But the idea 37 00:01:58,160 --> 00:02:00,520 Speaker 1: of a new mediocre, how do you feel through that 38 00:02:00,840 --> 00:02:03,480 Speaker 1: with your I m F experience? You know, it used 39 00:02:03,480 --> 00:02:06,000 Speaker 1: to be that the IMF were considered the stormtroopers. They 40 00:02:06,000 --> 00:02:08,480 Speaker 1: were the ones who went around enforcing what was supposed 41 00:02:08,480 --> 00:02:11,280 Speaker 1: to be the right policy. The new mediocre also plays 42 00:02:11,320 --> 00:02:13,080 Speaker 1: the I m F. I'm sorry, I'm sad to say. 43 00:02:13,320 --> 00:02:15,040 Speaker 1: As much as the genius says, I think the world 44 00:02:15,040 --> 00:02:18,560 Speaker 1: thinks le Guard and Blanchard were um, they have also 45 00:02:19,000 --> 00:02:21,840 Speaker 1: lowered the standards by which policy makers are joke, they 46 00:02:21,919 --> 00:02:24,440 Speaker 1: gotta be tougher. They gotta be tougher because they're they're 47 00:02:24,480 --> 00:02:27,880 Speaker 1: allowing too many concessions, especially in the your area. What 48 00:02:27,960 --> 00:02:32,000 Speaker 1: was the problem was it was structural and they and 49 00:02:32,160 --> 00:02:35,359 Speaker 1: the standard IMF program is you put in structural reforms 50 00:02:35,400 --> 00:02:37,840 Speaker 1: and everyone knows that the IMF it takes five to 51 00:02:37,880 --> 00:02:41,280 Speaker 1: ten years before those structural programs take hold. Meanwhile, Montre 52 00:02:41,320 --> 00:02:44,040 Speaker 1: Paul is supposed to fill in the gap. Instead, Montrey 53 00:02:44,040 --> 00:02:47,320 Speaker 1: policy has now become the primary tool and structural forms 54 00:02:47,320 --> 00:02:49,320 Speaker 1: of being put in the in the background. Every time 55 00:02:49,400 --> 00:02:51,480 Speaker 1: Dragon makes a speech, he says, I'm waiting for you 56 00:02:51,520 --> 00:02:53,720 Speaker 1: guys to use the time on buying you. He needs 57 00:02:53,720 --> 00:02:56,320 Speaker 1: the IMF to get us back, and he's got to 58 00:02:56,360 --> 00:02:57,880 Speaker 1: get the I m F back there and say he 59 00:02:57,960 --> 00:03:00,919 Speaker 1: got to do the structural reforms and instead the IMF says, oh, 60 00:03:01,160 --> 00:03:03,480 Speaker 1: take your time, we understand it is a hard thing 61 00:03:03,480 --> 00:03:05,360 Speaker 1: to do. You can have a lot of unemployment and 62 00:03:05,400 --> 00:03:07,480 Speaker 1: guess why you're gonna have a lot of political unrest. Well, 63 00:03:07,600 --> 00:03:10,040 Speaker 1: that's exactly why it is that you put in these 64 00:03:10,040 --> 00:03:12,120 Speaker 1: reforms at a time when you try to get the 65 00:03:12,120 --> 00:03:16,919 Speaker 1: economy to be more efficient. But everybody loves Madame Lagarde, 66 00:03:17,919 --> 00:03:21,880 Speaker 1: but nobody in Italy, nobody in France is listening to her. 67 00:03:22,080 --> 00:03:24,280 Speaker 1: They're not gonna make policy based and you can get 68 00:03:24,320 --> 00:03:26,120 Speaker 1: the i m F in there, but it's not gonna 69 00:03:26,200 --> 00:03:28,520 Speaker 1: change anything. You might change it for Greece because they 70 00:03:28,560 --> 00:03:29,880 Speaker 1: need the I m S money, but if you're not 71 00:03:29,919 --> 00:03:31,960 Speaker 1: going to the i m F tomorrow, you're not gonna 72 00:03:32,000 --> 00:03:34,400 Speaker 1: follow their prescriptions. And that's why when I was on 73 00:03:34,440 --> 00:03:35,960 Speaker 1: the US that's at the at the i m F, 74 00:03:36,000 --> 00:03:38,120 Speaker 1: it was considered the most prestigious job in the IMF 75 00:03:38,200 --> 00:03:40,040 Speaker 1: because you were dealing with the topic columns in the world. 76 00:03:40,080 --> 00:03:42,040 Speaker 1: But it's also the most useless job because the IMF says, 77 00:03:42,080 --> 00:03:46,000 Speaker 1: thank you very much, goodbye. But you know what did 78 00:03:46,040 --> 00:03:47,720 Speaker 1: the IMF to do there in the Asian crisis, They 79 00:03:47,760 --> 00:03:50,840 Speaker 1: actually put in reforms. They said, look, you can't have 80 00:03:50,880 --> 00:03:53,200 Speaker 1: fixed exchange of regimes. You have to start floating, and 81 00:03:53,320 --> 00:03:55,880 Speaker 1: that really did the world a tremendous service. What are 82 00:03:55,920 --> 00:03:58,200 Speaker 1: they telling the world now? You gotta put in structural 83 00:03:58,320 --> 00:04:00,360 Speaker 1: forms and what's the world telling them? Do it? Like 84 00:04:01,520 --> 00:04:04,960 Speaker 1: floating exchange rate? A managed float is one of Rogoff's 85 00:04:04,960 --> 00:04:08,200 Speaker 1: fourteen flavors of floating. It can't be afloat until you 86 00:04:08,240 --> 00:04:10,800 Speaker 1: get the financial reforms in place. You can't have a 87 00:04:10,800 --> 00:04:14,400 Speaker 1: float unless you have convertibility. Unless you have is that 88 00:04:14,640 --> 00:04:18,279 Speaker 1: critical now for stability within the global system for China 89 00:04:18,600 --> 00:04:21,640 Speaker 1: to do their part because Domini Constant Mike is really 90 00:04:21,640 --> 00:04:25,400 Speaker 1: big on this thing discovery where the where the renby 91 00:04:25,440 --> 00:04:28,360 Speaker 1: should be the equilibrium price is something you can't do 92 00:04:28,560 --> 00:04:31,400 Speaker 1: with administrators, and that's where the markets come in. But 93 00:04:31,480 --> 00:04:33,760 Speaker 1: you can't allow the markets to work unless you've got 94 00:04:33,760 --> 00:04:36,440 Speaker 1: the infrastructure in place. Because right now, if you allowed 95 00:04:37,320 --> 00:04:40,479 Speaker 1: then the float, and with all these capital controls you 96 00:04:40,560 --> 00:04:42,120 Speaker 1: have them to clue what you're doing. You don't know 97 00:04:42,160 --> 00:04:44,240 Speaker 1: where the float is going through. It's probably going to 98 00:04:44,320 --> 00:04:47,599 Speaker 1: be to a distorted price. Do we have any idea 99 00:04:47,640 --> 00:04:53,560 Speaker 1: of h how tied to the macro economy of China 100 00:04:53,800 --> 00:04:57,159 Speaker 1: is the That's that's a great point. Like, that's a 101 00:04:57,160 --> 00:04:59,839 Speaker 1: great point. Hold on a minute. He's had three great 102 00:05:00,000 --> 00:05:04,280 Speaker 1: weeks today and I've a squad. I'm getting warmed. I've 103 00:05:04,279 --> 00:05:07,839 Speaker 1: been talking you on TV. But but, but the connection 104 00:05:07,920 --> 00:05:11,200 Speaker 1: between the financial sector and the real economy, it normally 105 00:05:11,240 --> 00:05:13,840 Speaker 1: is tied together through the markets. But guess what, China 106 00:05:13,920 --> 00:05:16,479 Speaker 1: has no markets. They're trying to create the markets, and 107 00:05:16,520 --> 00:05:20,960 Speaker 1: instead they have administered um banking and a minister banking 108 00:05:21,000 --> 00:05:23,479 Speaker 1: means directed lending, and that's what got them in the 109 00:05:23,480 --> 00:05:25,840 Speaker 1: trouble for and right now they're trying to cut back 110 00:05:25,839 --> 00:05:27,640 Speaker 1: on that, and at the same time they need to 111 00:05:27,680 --> 00:05:30,680 Speaker 1: do fiscal policy. How do you cut back on directed lending, 112 00:05:30,800 --> 00:05:32,520 Speaker 1: which is the wrong thing to do, and at the 113 00:05:32,560 --> 00:05:36,800 Speaker 1: same time encourage somehow people to start spending money. That's 114 00:05:36,800 --> 00:05:38,600 Speaker 1: a hard thing. You hope you have a decent economy 115 00:05:38,600 --> 00:05:41,719 Speaker 1: and a quiet, calm market environment to do it in. 116 00:05:41,760 --> 00:05:43,760 Speaker 1: But they don't now, so they're not gonna They're not 117 00:05:43,800 --> 00:05:45,080 Speaker 1: gonna do it, are they They're gonna come to the 118 00:05:45,120 --> 00:05:47,280 Speaker 1: rescue of these companies. They're gonna prop everything up for 119 00:05:47,360 --> 00:05:49,760 Speaker 1: the moment. The hope and prayer for China right now 120 00:05:49,839 --> 00:05:52,240 Speaker 1: are these structural reforms they're putting in place, many shifting 121 00:05:52,240 --> 00:05:55,279 Speaker 1: towards the private sector, shifting towards consumption. Trouble is there's 122 00:05:55,279 --> 00:05:58,440 Speaker 1: no transparency there. We haven't a clue how strong that 123 00:05:58,520 --> 00:06:00,800 Speaker 1: sector is. And the lack of data, the lack of 124 00:06:00,839 --> 00:06:03,640 Speaker 1: transparency into China is at the heart of not only 125 00:06:03,720 --> 00:06:06,320 Speaker 1: China's crisis, but the global crisis. I'm want to go 126 00:06:06,360 --> 00:06:11,240 Speaker 1: back to your wonderful thoughts on mercantile and zero some world. 127 00:06:11,880 --> 00:06:15,640 Speaker 1: If it's a zero some world, the take the I 128 00:06:15,680 --> 00:06:18,680 Speaker 1: got to the language, right, The take within it is 129 00:06:18,680 --> 00:06:21,760 Speaker 1: the United States. They're gonna take our growth, They're gonna 130 00:06:21,800 --> 00:06:26,719 Speaker 1: take our marginals. Yeah, I am, but I used I 131 00:06:26,800 --> 00:06:29,239 Speaker 1: used that benefit because I want to be provocative and 132 00:06:28,960 --> 00:06:31,960 Speaker 1: and but it's true when the only transmission channel, of 133 00:06:32,040 --> 00:06:34,160 Speaker 1: the main channel is through the exchange rate and not 134 00:06:34,240 --> 00:06:37,839 Speaker 1: through ley taking from the from the appreciating currency, and 135 00:06:37,960 --> 00:06:40,400 Speaker 1: right now, the only appreciating currency that matters is the US. 136 00:06:40,800 --> 00:06:42,919 Speaker 1: That means you've got to grab the US growth. We 137 00:06:42,960 --> 00:06:45,120 Speaker 1: don't have much to grab right We've got to two 138 00:06:45,120 --> 00:06:48,280 Speaker 1: percent GDP growth, maybe three percent domestic demand. But for 139 00:06:48,320 --> 00:06:50,920 Speaker 1: the for for a small but economy like Sweden. That's 140 00:06:50,960 --> 00:06:52,839 Speaker 1: a lot quickly, Michael harton and over a bank of 141 00:06:52,880 --> 00:06:55,760 Speaker 1: American marrilige making a lot of waves on some form 142 00:06:55,880 --> 00:06:59,800 Speaker 1: of new collegial agreement called a new Plaza accord. Where 143 00:06:59,800 --> 00:07:02,560 Speaker 1: are you and Bowder on this? Absolutely not, absolutely not. 144 00:07:02,800 --> 00:07:04,240 Speaker 1: I think the worst thing you can do is to 145 00:07:04,320 --> 00:07:08,839 Speaker 1: have policymakers coordinate exchange rates. Policymakers should do what they're 146 00:07:08,839 --> 00:07:12,680 Speaker 1: supposed to do best policy for their own economies. The 147 00:07:12,800 --> 00:07:16,480 Speaker 1: markets will determine where the equlim exchangers will be. I 148 00:07:16,480 --> 00:07:19,200 Speaker 1: don't think there's any instance besides one with a plausive 149 00:07:19,200 --> 00:07:21,880 Speaker 1: type of grievance work. Okay, well, we could go on 150 00:07:21,960 --> 00:07:25,320 Speaker 1: for one another three hours with William Lee City Group. 151 00:07:25,360 --> 00:07:28,280 Speaker 1: There's so much going on, and yes we're efforting select 152 00:07:28,320 --> 00:07:32,800 Speaker 1: guests on this select market move. Futures improve a little 153 00:07:32,800 --> 00:07:35,960 Speaker 1: bit off of the carnage of twenty minutes ago negative 154 00:07:35,960 --> 00:07:39,320 Speaker 1: thirty four down. Futures were negative three hundred down, negative 155 00:07:39,360 --> 00:07:47,000 Speaker 1: two eight two. Stay with US worldwide Bloomberg Surveillance. Bloomberg 156 00:07:47,000 --> 00:07:48,840 Speaker 1: Surveillance is brought to you by the Breaker's Palm Beach. 157 00:07:48,880 --> 00:07:50,800 Speaker 1: This winter. The Breaker's Palm Beach is better than ever. 158 00:07:50,840 --> 00:07:53,920 Speaker 1: Come see why, visit the breakers dot com called Breakers, 159 00:07:54,000 --> 00:07:55,600 Speaker 1: or contact your travel professional