1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. The use 3 00:00:06,400 --> 00:00:09,760 Speaker 1: economy continues to send mixed signals to the financial stories 4 00:00:09,800 --> 00:00:12,680 Speaker 1: that cheap our world fed action to con concerns over 5 00:00:12,760 --> 00:00:16,240 Speaker 1: dollar liquidity and encouraging China data. The five hundred wealthiest 6 00:00:16,239 --> 00:00:18,360 Speaker 1: people in the world. Through the eyes of the most 7 00:00:18,480 --> 00:00:22,520 Speaker 1: influential voices Larry Summers, the former Treasury Secretary, Start CEO, 8 00:00:22,640 --> 00:00:26,360 Speaker 1: Kevin Johnson sec Chairman J Clayton. Bloomberg wool Street Week 9 00:00:26,480 --> 00:00:30,680 Speaker 1: with David Weston from Bloomberg Radio. The virus may be 10 00:00:30,840 --> 00:00:33,239 Speaker 1: reaching its peak and the markets get their hopes up, 11 00:00:33,280 --> 00:00:36,040 Speaker 1: at least for a day or two. This is Bloomberg 12 00:00:36,040 --> 00:00:39,720 Speaker 1: Wall Street Week. I'm David Weston. Welcome back. Another week 13 00:00:39,920 --> 00:00:43,600 Speaker 1: of the coronavirus, and the disease continues to spread as 14 00:00:43,600 --> 00:00:46,000 Speaker 1: the death toll mounts. But there was this week a 15 00:00:46,040 --> 00:00:48,920 Speaker 1: glimmer of hope as numbers started to come down in 16 00:00:49,000 --> 00:00:52,000 Speaker 1: Italy and Spain and even here in New York, the epicenter. 17 00:00:52,320 --> 00:00:55,040 Speaker 1: We saw what maybe a plateau ng of the numbers. 18 00:00:55,320 --> 00:00:57,600 Speaker 1: There's also a lot of economic pain being felt by 19 00:00:57,600 --> 00:01:01,360 Speaker 1: individuals and businesses but again some hope because Congress is 20 00:01:01,360 --> 00:01:06,000 Speaker 1: appropriated to trillion dollars to help the U. S economy. Nonetheless, 21 00:01:06,160 --> 00:01:09,480 Speaker 1: former Secretary of Treasury Jack lou warrens that the economic 22 00:01:09,560 --> 00:01:12,720 Speaker 1: damage United States will last long past the time we 23 00:01:12,800 --> 00:01:16,240 Speaker 1: turned the corner on the health crisis. I think it's 24 00:01:16,319 --> 00:01:19,640 Speaker 1: quite clear that the economy is taking a very very 25 00:01:19,640 --> 00:01:22,520 Speaker 1: serious hit from this health crisis. UM. And I think 26 00:01:22,560 --> 00:01:25,440 Speaker 1: one of the things we know is that the economic 27 00:01:25,520 --> 00:01:28,720 Speaker 1: impact will linger even after we turn the corner on 28 00:01:28,800 --> 00:01:31,560 Speaker 1: the health crisis. UM. You know, it's going to take 29 00:01:31,600 --> 00:01:34,080 Speaker 1: a while at best to turn the lights back on, 30 00:01:34,480 --> 00:01:38,480 Speaker 1: and the government response really needs to be geared at 31 00:01:38,760 --> 00:01:42,640 Speaker 1: maximizing the chance that we can restart in a smooth way, 32 00:01:42,680 --> 00:01:46,240 Speaker 1: and that means making sure that people and businesses have 33 00:01:46,400 --> 00:01:49,480 Speaker 1: what they need during the health crisis, but frankly making 34 00:01:49,520 --> 00:01:53,560 Speaker 1: sure that the assistance doesn't stop the minute we go out. UM. 35 00:01:53,880 --> 00:01:56,480 Speaker 1: Business is going to need money to pay its payroll. 36 00:01:56,720 --> 00:01:59,360 Speaker 1: People aren't all going to go back to work. I 37 00:01:59,400 --> 00:02:02,120 Speaker 1: think that, you know, when you look at extending the 38 00:02:02,160 --> 00:02:05,800 Speaker 1: benefits for businesses, UH, it's very important to put more money. 39 00:02:05,840 --> 00:02:08,880 Speaker 1: And during the health crisis, it's also already time to 40 00:02:08,919 --> 00:02:12,720 Speaker 1: start thinking about making sure that when they reopen, they 41 00:02:12,760 --> 00:02:15,320 Speaker 1: still have the cash flow to support it. You know, 42 00:02:15,360 --> 00:02:18,000 Speaker 1: for state and local governments, they're going to lose revenue 43 00:02:18,080 --> 00:02:21,280 Speaker 1: going into next year and even the year beyond, and 44 00:02:21,320 --> 00:02:24,080 Speaker 1: the whole is far deeper than was filled the last 45 00:02:24,080 --> 00:02:28,280 Speaker 1: time around. They need more stabilization money, and they need 46 00:02:28,400 --> 00:02:33,359 Speaker 1: more matching money and medicate more f MAP individuals are 47 00:02:33,400 --> 00:02:36,200 Speaker 1: going to need some more assistance, and frankly, we're going 48 00:02:36,240 --> 00:02:38,960 Speaker 1: to have to do a better job getting automatic payments 49 00:02:38,960 --> 00:02:41,440 Speaker 1: to people who are left out the first time. You know, 50 00:02:41,480 --> 00:02:46,320 Speaker 1: people who are on SSI, people who don't file taxes. Uh, 51 00:02:46,320 --> 00:02:50,520 Speaker 1: the legal children, American citizens, children of non citizens. A 52 00:02:50,560 --> 00:02:52,720 Speaker 1: lot of people were left out. We need to close 53 00:02:52,800 --> 00:02:55,679 Speaker 1: those gaps. And we need to increase food stamp benefits 54 00:02:55,720 --> 00:02:57,760 Speaker 1: because that's going to make it possible for people to 55 00:02:57,800 --> 00:03:00,800 Speaker 1: put food on the table. On top of that, we 56 00:03:00,919 --> 00:03:04,320 Speaker 1: really need to worry about the rising problem of homelessness. 57 00:03:04,360 --> 00:03:06,840 Speaker 1: People at the worst possible time are going to have 58 00:03:06,919 --> 00:03:10,080 Speaker 1: no place to live, and there needs to be emergency assistance. 59 00:03:10,840 --> 00:03:13,040 Speaker 1: On the business side, it's going to take a lot 60 00:03:13,080 --> 00:03:16,400 Speaker 1: more money. It's also going to require that we find 61 00:03:16,440 --> 00:03:19,800 Speaker 1: more ways to get flexibility into the program so that 62 00:03:19,840 --> 00:03:22,560 Speaker 1: we lend to businesses that have not traditionally borrowed money 63 00:03:22,680 --> 00:03:25,600 Speaker 1: from banks. That's very hard to do if you hold 64 00:03:25,639 --> 00:03:28,560 Speaker 1: the bank to standards that apply in normal times. But 65 00:03:28,639 --> 00:03:31,680 Speaker 1: these are not normal times. Jack talked to us about 66 00:03:31,680 --> 00:03:34,480 Speaker 1: the efforts to really support small business. Right now we 67 00:03:34,480 --> 00:03:36,360 Speaker 1: have this three and fifty billion dollars. There are reports 68 00:03:36,400 --> 00:03:38,440 Speaker 1: that there's hard it's hard for some banks to loan 69 00:03:38,520 --> 00:03:42,760 Speaker 1: the money because of some anti money laundering provisions, some restrictions. 70 00:03:43,000 --> 00:03:45,000 Speaker 1: Does it make sense to ease those up some? Is 71 00:03:45,040 --> 00:03:47,360 Speaker 1: that a legitimate reason some banks are saying we can't 72 00:03:47,440 --> 00:03:49,880 Speaker 1: deal with small business if we don't know them. It's 73 00:03:49,920 --> 00:03:53,080 Speaker 1: to know your customer rule. There have been multiple levels 74 00:03:53,120 --> 00:03:57,520 Speaker 1: at which the normal rules have to be modified or suspended. 75 00:03:57,960 --> 00:04:01,560 Speaker 1: So with the federal guarantee, there's no credit risk to 76 00:04:01,600 --> 00:04:05,560 Speaker 1: the banks, but they still have underwriting risk potentially, and 77 00:04:05,600 --> 00:04:09,760 Speaker 1: they still have exposure on things like money laundering enforcement 78 00:04:10,360 --> 00:04:13,440 Speaker 1: on the underwriting side. If there's any kind of a 79 00:04:13,480 --> 00:04:16,800 Speaker 1: false statement, that burden has to fall on the business 80 00:04:16,839 --> 00:04:19,039 Speaker 1: that makes the false statement, and it can't be that 81 00:04:19,080 --> 00:04:22,359 Speaker 1: the bank is facing after the fact oversight on that. 82 00:04:22,400 --> 00:04:25,560 Speaker 1: If we're asking them to rely on certifications. We are 83 00:04:25,560 --> 00:04:28,640 Speaker 1: not giving them the time to look behind the certifications 84 00:04:28,680 --> 00:04:32,240 Speaker 1: that the businesses make on the A m L side, 85 00:04:31,960 --> 00:04:34,599 Speaker 1: I think that they need to be creative and find 86 00:04:34,600 --> 00:04:37,600 Speaker 1: a solution. Every business that has a bank account has 87 00:04:37,640 --> 00:04:42,040 Speaker 1: gone through some kind of know your customer process. We 88 00:04:42,080 --> 00:04:45,520 Speaker 1: need to make sure that any business that has a 89 00:04:45,560 --> 00:04:50,279 Speaker 1: banking account can use the process they went through, whether 90 00:04:50,279 --> 00:04:52,880 Speaker 1: it's at the bank they're borrowing from or not, to 91 00:04:53,160 --> 00:04:57,760 Speaker 1: satisfy those k y C requirements. Um, we what we 92 00:04:57,839 --> 00:05:00,160 Speaker 1: can't afford is we can't afford, at the end to 93 00:05:00,279 --> 00:05:03,880 Speaker 1: this to have failed to loan money to the smallest 94 00:05:03,920 --> 00:05:07,839 Speaker 1: and most vulnerable businesses, the main street businesses that don't 95 00:05:07,880 --> 00:05:10,440 Speaker 1: have a history of bank credit. So in the major 96 00:05:10,480 --> 00:05:12,920 Speaker 1: banks and even the community banks say we're only going 97 00:05:12,960 --> 00:05:15,400 Speaker 1: to lend to a business that we've already lent to. 98 00:05:16,000 --> 00:05:19,880 Speaker 1: That rules out the businesses that are most likely to fail. 99 00:05:20,440 --> 00:05:24,200 Speaker 1: And I believe deeply in enforcing things like anti money 100 00:05:24,279 --> 00:05:27,720 Speaker 1: laundering rules, so I'm not somebody who's ever been casual 101 00:05:27,880 --> 00:05:29,919 Speaker 1: on this. I think we have to be creative to 102 00:05:30,000 --> 00:05:32,480 Speaker 1: find a way to get through that hurdle jack. And 103 00:05:32,520 --> 00:05:34,520 Speaker 1: there's talk about whether we need to top this up, 104 00:05:34,520 --> 00:05:36,760 Speaker 1: so to speak, the small business maybe another two or 105 00:05:36,960 --> 00:05:39,200 Speaker 1: fifty billion dollars. Is it time to do that right 106 00:05:39,200 --> 00:05:40,680 Speaker 1: now and keep the money going out the door, or 107 00:05:40,720 --> 00:05:43,520 Speaker 1: should we wait and see how it's proceeding, whether it's 108 00:05:43,520 --> 00:05:46,480 Speaker 1: having an effect in the economy. Well, I have to 109 00:05:46,480 --> 00:05:51,760 Speaker 1: say that the whole need for response here is immediate 110 00:05:51,880 --> 00:05:55,120 Speaker 1: in the sense that we shut the economy down, we 111 00:05:55,200 --> 00:05:58,800 Speaker 1: need to make sure that these businesses are there when 112 00:05:58,800 --> 00:06:02,159 Speaker 1: we open it back up. And if we take too 113 00:06:02,240 --> 00:06:04,880 Speaker 1: much time to try to get things perfect, which is 114 00:06:04,920 --> 00:06:07,560 Speaker 1: always my preference, I'd love to be able to say 115 00:06:07,600 --> 00:06:11,360 Speaker 1: every I was dotted, every team was crossed, we will 116 00:06:11,400 --> 00:06:13,919 Speaker 1: look back and regret it because there will be so 117 00:06:14,000 --> 00:06:18,120 Speaker 1: many business failures that the length of the recovery has extended, 118 00:06:18,160 --> 00:06:20,960 Speaker 1: the depth of the recession is deepened, and the number 119 00:06:21,000 --> 00:06:24,560 Speaker 1: of people unemployed lingers at a very high level. Half 120 00:06:24,600 --> 00:06:27,679 Speaker 1: of the American workers are working in small businesses, and 121 00:06:27,880 --> 00:06:29,400 Speaker 1: we need them to be able to go back to 122 00:06:29,440 --> 00:06:32,680 Speaker 1: work when the health conditions per minute. So I think 123 00:06:32,720 --> 00:06:35,560 Speaker 1: time is of the essence. I thought that the funds 124 00:06:35,640 --> 00:06:38,240 Speaker 1: that were put in the Third Bill were very helpful, 125 00:06:38,560 --> 00:06:40,480 Speaker 1: but I didn't think it was adequate at the time 126 00:06:40,480 --> 00:06:42,400 Speaker 1: when you just look at the number of businesses that 127 00:06:42,440 --> 00:06:45,120 Speaker 1: are going to need help. So I'm not surprised that 128 00:06:45,200 --> 00:06:49,200 Speaker 1: they're looking at providing some more assistance. That was former 129 00:06:49,240 --> 00:06:53,360 Speaker 1: Treasury Secretary Jack lou coming up. She's the woman working 130 00:06:53,440 --> 00:06:56,120 Speaker 1: side by side with Governor Andrew Cuomo in the battle 131 00:06:56,160 --> 00:06:59,400 Speaker 1: at the epicenter of the crisis. We talked with Kathy Hokel, 132 00:06:59,520 --> 00:07:02,960 Speaker 1: Lieutenant governor for the state of New York. That's next 133 00:07:03,040 --> 00:07:11,440 Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall 134 00:07:11,560 --> 00:07:15,800 Speaker 1: Street Week with David Weston from Bloomberg Radio. New York 135 00:07:15,840 --> 00:07:18,400 Speaker 1: has the highest number of cases and the highest number 136 00:07:18,400 --> 00:07:21,880 Speaker 1: of deaths from the coronavirus, but this week there were 137 00:07:21,920 --> 00:07:24,080 Speaker 1: some day to coming in that indicated it may be 138 00:07:24,360 --> 00:07:28,680 Speaker 1: plateau ng. We asked Lieutenant Governor for New York, Kathy Hockle, whether, 139 00:07:28,720 --> 00:07:32,120 Speaker 1: in fact, this may be a trend. Well, that's exactly right, 140 00:07:32,160 --> 00:07:34,720 Speaker 1: and you look at trends totally. One day does not 141 00:07:34,800 --> 00:07:36,680 Speaker 1: make a trend. We've seen the rate of hospital you 142 00:07:36,880 --> 00:07:39,160 Speaker 1: can go down, and that is something we've been looking 143 00:07:39,200 --> 00:07:41,840 Speaker 1: forward to for a while because what that says to 144 00:07:41,960 --> 00:07:43,400 Speaker 1: us is some of these people may have been in 145 00:07:43,440 --> 00:07:46,680 Speaker 1: the hospital on ventilators for some time, and if we 146 00:07:46,720 --> 00:07:49,680 Speaker 1: have fewer people entering the hospital system, you are going 147 00:07:49,680 --> 00:07:52,040 Speaker 1: into the ice. Us that this could be a break 148 00:07:52,120 --> 00:07:54,720 Speaker 1: that we've been looking for, but it is far too 149 00:07:54,720 --> 00:07:57,720 Speaker 1: early for us to change anything we've been doing, because 150 00:07:57,720 --> 00:08:00,200 Speaker 1: we believe that the social distancing that we've it in 151 00:08:00,240 --> 00:08:03,280 Speaker 1: place aggressively in New York is the reason that these 152 00:08:03,360 --> 00:08:06,320 Speaker 1: numbers aren't dramatically higher. That seems to be a broad 153 00:08:06,320 --> 00:08:09,440 Speaker 1: consensus actually among public health officials. Do we have any 154 00:08:09,440 --> 00:08:11,440 Speaker 1: sense of whether people may be starting to back off 155 00:08:11,480 --> 00:08:14,240 Speaker 1: the social distancing as they hear it's plateaued if it 156 00:08:14,240 --> 00:08:16,960 Speaker 1: hasn't gone down well, platowing at a high level is 157 00:08:17,080 --> 00:08:19,480 Speaker 1: not something to you know, give a high five over. 158 00:08:19,560 --> 00:08:22,600 Speaker 1: Maybe's just still very high numbers of people that are 159 00:08:22,600 --> 00:08:25,239 Speaker 1: testing positive. We have a hundred thirty eight thousand people 160 00:08:25,320 --> 00:08:27,720 Speaker 1: up from a hundred thirty thousand. So I don't think 161 00:08:27,760 --> 00:08:31,520 Speaker 1: anyone should let down their guard or become complacent, because 162 00:08:31,560 --> 00:08:34,080 Speaker 1: we don't actually end up right back when we started 163 00:08:34,400 --> 00:08:37,720 Speaker 1: and have to institute this all these measures once again 164 00:08:38,040 --> 00:08:40,760 Speaker 1: and delay our recovery, which is something we're also anxious 165 00:08:40,800 --> 00:08:44,000 Speaker 1: to get started. So anyone who thinks that plateauing at 166 00:08:44,000 --> 00:08:47,679 Speaker 1: a high level is declaring success is wrong and they're 167 00:08:47,720 --> 00:08:50,280 Speaker 1: not listening to the Governor and myself as we found 168 00:08:50,280 --> 00:08:53,360 Speaker 1: the alarmment. As the weather gets nice and we're approaching 169 00:08:53,400 --> 00:08:58,000 Speaker 1: the holiday season to pass over the Stader's Easter funding, 170 00:08:58,280 --> 00:09:00,920 Speaker 1: there will be tremendous temptations in to say, well, we 171 00:09:00,960 --> 00:09:03,400 Speaker 1: haven't seen Graham in a month, let's go visit our family, 172 00:09:03,440 --> 00:09:06,520 Speaker 1: and don't do it. Don't take our foot off the pedal. 173 00:09:06,600 --> 00:09:09,439 Speaker 1: As we're heading into the final stretch here, because this 174 00:09:09,520 --> 00:09:12,240 Speaker 1: is what is saving us, and if we back off now, 175 00:09:12,480 --> 00:09:14,719 Speaker 1: this will all has been in vain. We'll try to 176 00:09:14,720 --> 00:09:16,760 Speaker 1: cover all give us a sense of how the health 177 00:09:16,760 --> 00:09:19,400 Speaker 1: care system is holding up the hospitals, but all accounts 178 00:09:19,440 --> 00:09:22,480 Speaker 1: are at or even beyond their maximum capacity. How long 179 00:09:22,640 --> 00:09:25,200 Speaker 1: can they keep up this pace? Well, this has been 180 00:09:25,200 --> 00:09:27,840 Speaker 1: a problem. The governor has addressed it in three dynamics. 181 00:09:27,880 --> 00:09:30,520 Speaker 1: There one is how many hospital beds, And we went 182 00:09:30,559 --> 00:09:34,439 Speaker 1: from fifty three thousand hospital beds when this crisis started 183 00:09:34,760 --> 00:09:38,160 Speaker 1: to because of the Governor's aggressive efforts to increase capacity 184 00:09:38,200 --> 00:09:40,600 Speaker 1: and get assistance in the federal government, we now have 185 00:09:40,760 --> 00:09:44,080 Speaker 1: ninety thousand beds. Available, but those beds don't mean anything 186 00:09:44,120 --> 00:09:47,200 Speaker 1: if you don't have enough staff and supplies on the 187 00:09:47,280 --> 00:09:52,840 Speaker 1: staff in front, as predicted our superhero frontline individuals who 188 00:09:52,840 --> 00:09:55,160 Speaker 1: are in there taking care of the sick and people 189 00:09:55,160 --> 00:09:58,119 Speaker 1: in the ic US in particular, they are also succumbing. 190 00:09:58,160 --> 00:09:59,880 Speaker 1: Many of them are becoming ill, and they've been a 191 00:10:00,120 --> 00:10:02,480 Speaker 1: from their families for a long time, and and there's 192 00:10:02,520 --> 00:10:05,160 Speaker 1: a probably high burnout, but they don't keep getting at it, 193 00:10:05,280 --> 00:10:07,600 Speaker 1: going in and once and again and again and again. 194 00:10:07,960 --> 00:10:10,600 Speaker 1: But now we have a reserve of seven thousand people 195 00:10:10,640 --> 00:10:14,199 Speaker 1: who have been hired from the incredible outpouring of volunteers 196 00:10:14,200 --> 00:10:16,800 Speaker 1: from all over this country. Seven thousand people have been 197 00:10:16,880 --> 00:10:19,520 Speaker 1: hired by hospitals recently because they stepped up. Many of 198 00:10:19,559 --> 00:10:21,679 Speaker 1: them have been retired, and people from all of America. 199 00:10:22,120 --> 00:10:25,040 Speaker 1: So we feel good about that part. The supplies. The 200 00:10:25,120 --> 00:10:28,880 Speaker 1: governor would say that we have the no hospital is 201 00:10:28,920 --> 00:10:31,520 Speaker 1: going for one for a ventilator, which is feel important, 202 00:10:31,640 --> 00:10:35,200 Speaker 1: But that's also concern of ours because any spike in 203 00:10:35,200 --> 00:10:38,920 Speaker 1: a particular region could require even a higher, intensely intense 204 00:10:39,040 --> 00:10:41,920 Speaker 1: number of ventilators. Look at what's happening in Suffolk County, 205 00:10:42,000 --> 00:10:45,319 Speaker 1: for example, on longdownd Or Nassau County. They need ventilators 206 00:10:45,320 --> 00:10:46,840 Speaker 1: more than they did even a week ago, and so 207 00:10:46,920 --> 00:10:51,599 Speaker 1: we're constantly redeploying resources to make sure that the hospitals 208 00:10:51,640 --> 00:10:54,400 Speaker 1: can handle the surge in their area and leaving no 209 00:10:54,520 --> 00:10:58,120 Speaker 1: area unprotected. That's been our goal all along. So, Lieutenant 210 00:10:58,120 --> 00:11:00,880 Speaker 1: Governor Hoco, we are we hope at or nearing at 211 00:11:00,960 --> 00:11:03,000 Speaker 1: least the APEX, and so we're very much in the 212 00:11:03,000 --> 00:11:05,120 Speaker 1: crisis and we don't know, as Governor Quota said, what's 213 00:11:05,160 --> 00:11:06,760 Speaker 1: on the other side of that, And so we don't 214 00:11:06,760 --> 00:11:08,360 Speaker 1: want to get ahead ourselves. As you said, we don't 215 00:11:08,360 --> 00:11:10,280 Speaker 1: want to encourage people to really go out and do 216 00:11:10,360 --> 00:11:12,760 Speaker 1: away with social distancing. But it's not too soon for 217 00:11:12,800 --> 00:11:14,880 Speaker 1: the government to start thinking about when and how we 218 00:11:14,960 --> 00:11:18,000 Speaker 1: even think about starting to get back to work. Are 219 00:11:18,040 --> 00:11:20,480 Speaker 1: you working on what that plan looks like? How we 220 00:11:20,559 --> 00:11:22,440 Speaker 1: obviously we're not gonna just let everybody go. It has 221 00:11:22,480 --> 00:11:25,080 Speaker 1: to be staged. Is there a plan being developed for 222 00:11:25,080 --> 00:11:28,840 Speaker 1: New York? Absolutely, And with the Governor and I agree 223 00:11:28,880 --> 00:11:32,040 Speaker 1: with is that it also comes down to testing. We 224 00:11:32,120 --> 00:11:34,400 Speaker 1: don't want to declare that it's safe for people to 225 00:11:34,400 --> 00:11:37,560 Speaker 1: go back to work unless we can test and find out. 226 00:11:37,880 --> 00:11:39,720 Speaker 1: Certainly the first way that people would be people who 227 00:11:39,760 --> 00:11:42,880 Speaker 1: have already had the coronavirus and overcame it and are 228 00:11:42,920 --> 00:11:46,400 Speaker 1: now healthy again, and people who developed the antibodies. So 229 00:11:46,440 --> 00:11:48,320 Speaker 1: we're only going to know for sure if we can 230 00:11:48,400 --> 00:11:52,280 Speaker 1: have widespread testing, which because of a number of issues 231 00:11:52,280 --> 00:11:54,480 Speaker 1: with the federal government early on and a lack of 232 00:11:54,760 --> 00:11:57,920 Speaker 1: testing capacity as well as just the basic supply the 233 00:11:58,800 --> 00:12:01,760 Speaker 1: swabs you need, be re agents you need, we've had 234 00:12:01,800 --> 00:12:03,559 Speaker 1: a shortage of those. But if we can get the 235 00:12:03,640 --> 00:12:07,920 Speaker 1: subtle government to ramp up production of these necessary supplies 236 00:12:08,160 --> 00:12:10,440 Speaker 1: so we can have rapid testing, I mean there is 237 00:12:10,520 --> 00:12:13,160 Speaker 1: there are opportunities for us to have a result literally 238 00:12:13,200 --> 00:12:15,920 Speaker 1: in a doctor's office in five minutes, fifteen minutes, a 239 00:12:15,920 --> 00:12:18,360 Speaker 1: half an hour, depending on the type of the chills used. 240 00:12:18,640 --> 00:12:20,800 Speaker 1: But we have to get to that point in order 241 00:12:20,840 --> 00:12:23,800 Speaker 1: for us to feel confident that we're just not having 242 00:12:24,120 --> 00:12:27,320 Speaker 1: a downward trend that's going to spike up again as 243 00:12:27,320 --> 00:12:30,760 Speaker 1: has happened when we study past pandemics, sincerely, the nineteen 244 00:12:30,840 --> 00:12:32,840 Speaker 1: eighteen Spanish food we don't want to end up with 245 00:12:32,880 --> 00:12:36,480 Speaker 1: a six month phenomenon, which is what happened there and 246 00:12:36,520 --> 00:12:40,599 Speaker 1: we lost sixty thousand Yorkers. We have been very proactive 247 00:12:40,640 --> 00:12:43,720 Speaker 1: and preventing that scenario because of the steps Governor Cuomo 248 00:12:43,800 --> 00:12:47,240 Speaker 1: has taken and other states have following our leading. Are 249 00:12:47,240 --> 00:12:49,400 Speaker 1: proud of that, but we also have to talk about 250 00:12:49,440 --> 00:12:52,200 Speaker 1: what it's going to take to get individual industries back. 251 00:12:52,640 --> 00:12:55,240 Speaker 1: But in addition to that, David I have been focused 252 00:12:55,280 --> 00:12:58,440 Speaker 1: as share of all the state regional Economic Development Councils 253 00:12:58,480 --> 00:13:03,080 Speaker 1: overseeing economic Eltman. I've already been in contact with these 254 00:13:03,120 --> 00:13:08,840 Speaker 1: statewide Chambers of commerce, regional representatives from the industry is manufacturing, 255 00:13:08,880 --> 00:13:12,920 Speaker 1: and others talking about how we jump start economy once 256 00:13:12,960 --> 00:13:16,199 Speaker 1: we start going going full steam ahead, because there'll be 257 00:13:16,240 --> 00:13:18,920 Speaker 1: a lot of businesses, a lot of small businesses in particular, 258 00:13:19,120 --> 00:13:21,480 Speaker 1: that just may not make it if they can't get 259 00:13:21,520 --> 00:13:24,440 Speaker 1: the assistance they need from the Settle government. They need 260 00:13:24,480 --> 00:13:27,600 Speaker 1: a lifeline now or they're they're gone forever. And all 261 00:13:27,640 --> 00:13:30,400 Speaker 1: the work that we've done in the state to reduce unemployment, 262 00:13:30,600 --> 00:13:33,880 Speaker 1: to increase jobs, to have more investments in economic government, 263 00:13:34,200 --> 00:13:36,480 Speaker 1: we don't want to lose where we've gone. So I'm 264 00:13:36,480 --> 00:13:39,199 Speaker 1: already thinking about that and having the conversations literally as 265 00:13:39,200 --> 00:13:44,080 Speaker 1: we speak, critically important. One last question specifically and testing. 266 00:13:44,120 --> 00:13:45,839 Speaker 1: Do you have a sense of how far we are 267 00:13:45,880 --> 00:13:49,040 Speaker 1: away in terms of time to have the required testing 268 00:13:49,080 --> 00:13:51,880 Speaker 1: to really make the move to start opening up. No, 269 00:13:52,000 --> 00:13:53,800 Speaker 1: we just don't have the capacity yet. And if we 270 00:13:53,800 --> 00:13:56,760 Speaker 1: could get the federal government to invoke the Defense Production 271 00:13:56,800 --> 00:14:01,360 Speaker 1: Act and has widespread testing materials rated, we could would 272 00:14:01,400 --> 00:14:03,640 Speaker 1: be in a much better place. So the Governor has 273 00:14:03,679 --> 00:14:07,120 Speaker 1: in the absence of that action being taken, the governor 274 00:14:07,200 --> 00:14:10,280 Speaker 1: has working is working with the governor itself as our 275 00:14:10,320 --> 00:14:14,680 Speaker 1: regional um tri state area New Jersey and Connecticut to 276 00:14:14,800 --> 00:14:19,080 Speaker 1: talk about incentivizing businesses to really lamp up production. Because 277 00:14:19,400 --> 00:14:22,160 Speaker 1: these three states are really interconnected. I mean, they're all 278 00:14:22,280 --> 00:14:25,080 Speaker 1: basically subgroups of each other, and New York is at 279 00:14:25,080 --> 00:14:28,160 Speaker 1: the epicenter of all that. And so it doesn't even 280 00:14:28,160 --> 00:14:30,400 Speaker 1: matter for us in New York City to say we 281 00:14:30,440 --> 00:14:32,920 Speaker 1: have a policy, but if workers are coming from Connecticut 282 00:14:32,960 --> 00:14:35,000 Speaker 1: who haven't been tested or coming in from New Jersey, 283 00:14:35,400 --> 00:14:36,880 Speaker 1: then we're not going to get ahead of this. So 284 00:14:37,360 --> 00:14:39,080 Speaker 1: we're not there yet, but we know what we need 285 00:14:39,120 --> 00:14:40,800 Speaker 1: to do to get to that place. That was New 286 00:14:40,880 --> 00:14:44,800 Speaker 1: York Lieutenant Governor Kathy Pocle coming up. He runs the 287 00:14:44,880 --> 00:14:47,960 Speaker 1: hospital system at the center of the New York City crisis. 288 00:14:48,280 --> 00:14:52,440 Speaker 1: We talked with Dr Steve Corwin, CEO of New York Presbyteria. 289 00:14:52,880 --> 00:15:02,800 Speaker 1: That's next on Wall Street Week on bloom Bord. This 290 00:15:03,280 --> 00:15:07,800 Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 291 00:15:08,080 --> 00:15:10,880 Speaker 1: New York Presbyterian is more than just a huge hospital 292 00:15:11,000 --> 00:15:13,920 Speaker 1: on the Upper East Side of Manhattan. It actually incorporates 293 00:15:14,040 --> 00:15:17,160 Speaker 1: ten different hospitals and over two hundred clinics in the 294 00:15:17,200 --> 00:15:20,400 Speaker 1: Greater New York area. We talked with the CEO is 295 00:15:20,560 --> 00:15:23,720 Speaker 1: Dr Steve Corwin, about exactly where we are in this 296 00:15:23,760 --> 00:15:27,240 Speaker 1: epidemic right now. You know, I have to tell you 297 00:15:27,280 --> 00:15:31,120 Speaker 1: that our staff has just been remarkable. We've redeployed two 298 00:15:31,160 --> 00:15:37,000 Speaker 1: thousand physicians, a thousand nurses, uh five hundred general workers. 299 00:15:37,880 --> 00:15:41,560 Speaker 1: We've gotten two thousand people to volunteer. We have people. 300 00:15:41,720 --> 00:15:46,000 Speaker 1: We have pediatric nurses delivering I se U care. We 301 00:15:46,080 --> 00:15:50,240 Speaker 1: have our Chief of Dermatology functioning in the in the 302 00:15:50,280 --> 00:15:54,800 Speaker 1: emergency room. We have our Chief of cardiothoratic Surgery function 303 00:15:54,880 --> 00:15:57,560 Speaker 1: as an I see you DOT. People are just going 304 00:15:57,800 --> 00:16:02,680 Speaker 1: to extraordinary lengths. It's it's really remarkable. How sustainable is 305 00:16:02,720 --> 00:16:06,360 Speaker 1: it over the long haul. It's not, but we think 306 00:16:06,400 --> 00:16:08,560 Speaker 1: we can pull through this crisis and that we're not 307 00:16:08,600 --> 00:16:11,560 Speaker 1: going to break well. That's very encouraging. Noise. When you 308 00:16:11,640 --> 00:16:14,440 Speaker 1: talked at about redeploying people, I think you're talking within 309 00:16:14,520 --> 00:16:17,000 Speaker 1: New York Presbyterian. We also hear from Governor Cuomo a 310 00:16:17,000 --> 00:16:21,240 Speaker 1: lot about redeploying physicians and nurses and other healthcare professionals 311 00:16:21,280 --> 00:16:24,440 Speaker 1: among different hospitals as they re exposed a signed is 312 00:16:24,440 --> 00:16:26,600 Speaker 1: that working well? Are you giving people to other people? 313 00:16:26,640 --> 00:16:28,760 Speaker 1: Are they giving them to you? I'll give you a 314 00:16:28,760 --> 00:16:33,840 Speaker 1: perfect example. Are one of our affiliated institutions, Hospital for 315 00:16:33,880 --> 00:16:37,600 Speaker 1: Special Surgery, they stopped all their elected surgery, a lot 316 00:16:37,680 --> 00:16:40,280 Speaker 1: of the They've assigned a lot of their nurses and 317 00:16:40,360 --> 00:16:44,280 Speaker 1: physicians to us. So that's an example of volunteerism. You've 318 00:16:44,320 --> 00:16:47,360 Speaker 1: had people from around the country volunteer. We're on the 319 00:16:47,360 --> 00:16:51,920 Speaker 1: phone with Mark Larrett from University California, San Francisco. He's 320 00:16:51,960 --> 00:16:55,000 Speaker 1: putting a team together for us. So the response around 321 00:16:55,000 --> 00:16:59,120 Speaker 1: the country, the American spirit has really been remarkable and 322 00:16:59,280 --> 00:17:01,520 Speaker 1: very heartwarm for me. And do you have a sense 323 00:17:01,520 --> 00:17:03,320 Speaker 1: of how it's going in New Jersey? For example, are 324 00:17:03,480 --> 00:17:05,639 Speaker 1: Jason State here? They seem to be really still on 325 00:17:05,680 --> 00:17:08,240 Speaker 1: their way up. Are they asking for help as well? 326 00:17:08,440 --> 00:17:11,200 Speaker 1: You know, David, I don't know the specifics in New Jersey. 327 00:17:11,320 --> 00:17:13,359 Speaker 1: I know that Governor Murphy said that they were on 328 00:17:13,400 --> 00:17:17,480 Speaker 1: the way up. What I hope is that no state 329 00:17:18,040 --> 00:17:21,160 Speaker 1: goes through what New York City and and it's surrounding 330 00:17:21,200 --> 00:17:24,000 Speaker 1: counties are going through now. And I would just urge 331 00:17:24,040 --> 00:17:28,760 Speaker 1: everybody to to recognize that the social isolation and stay 332 00:17:28,800 --> 00:17:32,760 Speaker 1: at home orders have been effective. I know in California 333 00:17:33,119 --> 00:17:36,040 Speaker 1: they've seen much less in the way of this than us, 334 00:17:36,680 --> 00:17:38,800 Speaker 1: uh here in New York City, and I think part 335 00:17:38,800 --> 00:17:41,280 Speaker 1: of that may have been an earlier application of the 336 00:17:41,320 --> 00:17:44,080 Speaker 1: stay at home that Governor Newsom did, and I'm hoping 337 00:17:44,119 --> 00:17:46,840 Speaker 1: other states follow suit on that. So see, that really 338 00:17:46,920 --> 00:17:49,000 Speaker 1: leads us naturally to the next question. And we want 339 00:17:49,000 --> 00:17:50,600 Speaker 1: to be careful of this question because we don't want 340 00:17:50,600 --> 00:17:52,840 Speaker 1: it a clear victory too soon and go back to 341 00:17:52,960 --> 00:17:55,680 Speaker 1: a bad old situation. But we are starting to talk 342 00:17:55,720 --> 00:17:57,760 Speaker 1: about now a plan at some point in the right 343 00:17:57,800 --> 00:18:01,359 Speaker 1: situation to start reopening some of the economy. How do 344 00:18:01,400 --> 00:18:03,720 Speaker 1: we develop that plan, How do we make sure that 345 00:18:03,760 --> 00:18:06,399 Speaker 1: we don't revert at the same time as we have 346 00:18:06,480 --> 00:18:09,840 Speaker 1: to go forward. What's a million dollar question. I think 347 00:18:09,920 --> 00:18:12,560 Speaker 1: that the worst thing we could do would be to 348 00:18:12,640 --> 00:18:15,840 Speaker 1: start prematurely and then lose the confidence of the American 349 00:18:15,880 --> 00:18:18,080 Speaker 1: people and have and have to go back to where 350 00:18:18,119 --> 00:18:22,719 Speaker 1: we where we are, and believe me, I recognize, uh, 351 00:18:23,000 --> 00:18:27,560 Speaker 1: the millions of jobs, the recession that we most assuredly 352 00:18:27,600 --> 00:18:31,800 Speaker 1: will enter in whole industries being uh being stopped. Um, 353 00:18:32,000 --> 00:18:38,000 Speaker 1: the economy basically being stopped as a whole. I think that, um, 354 00:18:38,040 --> 00:18:42,639 Speaker 1: you know, my expectation around this is that uh, you know, 355 00:18:42,760 --> 00:18:46,000 Speaker 1: on or around in the junior July time frame, we're 356 00:18:46,040 --> 00:18:49,520 Speaker 1: probably gonna probably gonna do some of that. Um. The 357 00:18:49,560 --> 00:18:52,000 Speaker 1: way that I would look at it from the personal 358 00:18:52,040 --> 00:18:55,439 Speaker 1: situation in New York City is when I start seeing 359 00:18:55,880 --> 00:18:59,320 Speaker 1: the decline and the return more towards normality, we're gonna 360 00:18:59,320 --> 00:19:02,760 Speaker 1: be in sort of phase two. Phase one being the upswing. 361 00:19:02,880 --> 00:19:05,439 Speaker 1: Phase two being we're still living with the virus, but 362 00:19:05,520 --> 00:19:08,120 Speaker 1: it is more controllable than what it was and they 363 00:19:08,280 --> 00:19:12,040 Speaker 1: and then phase three probably you know, the third fourth quarter, 364 00:19:12,160 --> 00:19:14,920 Speaker 1: we're talking about can we get back to a more 365 00:19:15,000 --> 00:19:18,680 Speaker 1: normal situation. As we talked to experts about the possible 366 00:19:18,680 --> 00:19:21,120 Speaker 1: of reopening and the thing we hear again and again 367 00:19:21,160 --> 00:19:24,320 Speaker 1: again is testing. We have to know whether we really 368 00:19:24,400 --> 00:19:27,119 Speaker 1: are controlling it sufficiently. Where are we in testing? It 369 00:19:27,119 --> 00:19:29,600 Speaker 1: appears we are not to the level we need yet 370 00:19:29,800 --> 00:19:32,920 Speaker 1: of broad testing across the population to really come back safely. 371 00:19:33,160 --> 00:19:36,080 Speaker 1: I don't think we're We certainly have enough testing in 372 00:19:36,119 --> 00:19:38,720 Speaker 1: my hospital system. We have enough testing to test everybody 373 00:19:38,760 --> 00:19:41,680 Speaker 1: that needs to be tested, but we're not at mass 374 00:19:41,760 --> 00:19:46,360 Speaker 1: population screening. That's that's with the PCR test. That's one 375 00:19:46,400 --> 00:19:48,960 Speaker 1: type of testing, And the second type of testing that 376 00:19:48,960 --> 00:19:52,720 Speaker 1: everyone's working on is the serologic testing or the antibody testing. 377 00:19:53,200 --> 00:19:57,160 Speaker 1: Were you infected with it? And does that confer UH 378 00:19:57,440 --> 00:20:01,560 Speaker 1: immunity on you? You know, you're still looking at UH 379 00:20:02,359 --> 00:20:04,760 Speaker 1: of the population that probably has not been affected by 380 00:20:04,800 --> 00:20:07,960 Speaker 1: it UM, So the question starts to become, uh, do 381 00:20:08,040 --> 00:20:10,960 Speaker 1: you get some herd immunity? Do we have evidence of that? 382 00:20:11,440 --> 00:20:13,600 Speaker 1: Are we sure that if you've been infected and have 383 00:20:13,720 --> 00:20:15,880 Speaker 1: you have you have the antibodies, if you're not gonna 384 00:20:15,880 --> 00:20:18,840 Speaker 1: get reinfected with it? These are still scientific questions to 385 00:20:18,920 --> 00:20:22,480 Speaker 1: be determined. But I think to your question, we need 386 00:20:22,560 --> 00:20:25,200 Speaker 1: more testing. The PCR testing. Do you have the virus 387 00:20:25,280 --> 00:20:27,360 Speaker 1: or don't you have the virus and we're gonna need 388 00:20:27,400 --> 00:20:31,199 Speaker 1: to apply the stereologic testing to determine what percentage of 389 00:20:31,200 --> 00:20:34,679 Speaker 1: the population actually was infected by it and are we 390 00:20:34,720 --> 00:20:38,560 Speaker 1: starting to develop herd immunity as a country. That was 391 00:20:38,680 --> 00:20:42,359 Speaker 1: Dr Steve Corwen of New York presbyteriat Hospital. Coming up 392 00:20:42,359 --> 00:20:44,520 Speaker 1: on Wall Street Week. We wrap up the week with 393 00:20:44,560 --> 00:20:48,040 Speaker 1: our special contributor Larry Summers. This is Wall Street Week 394 00:20:48,560 --> 00:20:57,720 Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David 395 00:20:57,760 --> 00:21:00,840 Speaker 1: Weston from Bloomberg Radio. One of the big events of 396 00:21:00,880 --> 00:21:02,560 Speaker 1: the week, maybe the big event of the week, was 397 00:21:02,600 --> 00:21:06,359 Speaker 1: that massive infusion from the Federal Reserve as they touched 398 00:21:06,400 --> 00:21:09,480 Speaker 1: upon almost every aspect of the economy and markets. We 399 00:21:09,560 --> 00:21:12,199 Speaker 1: talked with Rick Reader from black Rock where he is 400 00:21:12,240 --> 00:21:14,680 Speaker 1: the global c i O for fixed income as well 401 00:21:14,720 --> 00:21:17,440 Speaker 1: as head of CROSSSS at Allocation. We talked to Rick Reader. 402 00:21:17,520 --> 00:21:20,080 Speaker 1: We asked him whether the markets were actually overreacting to 403 00:21:20,160 --> 00:21:21,560 Speaker 1: what the Fed had to do. This is what Rick 404 00:21:21,600 --> 00:21:24,720 Speaker 1: had to say. You know, markets tend to overshoot um. 405 00:21:24,760 --> 00:21:27,320 Speaker 1: But you know, I think when you when this is 406 00:21:27,359 --> 00:21:30,280 Speaker 1: a very very unique circumstance, it's different than O a 407 00:21:31,440 --> 00:21:33,879 Speaker 1: different than maybe any other crisis and that we do 408 00:21:33,960 --> 00:21:37,680 Speaker 1: think the economy is gonna rebound, and we do think listen, 409 00:21:37,720 --> 00:21:39,919 Speaker 1: we think you could have a second quarter that is 410 00:21:39,960 --> 00:21:44,360 Speaker 1: something like an annualized run rate of decline in the economy. 411 00:21:44,400 --> 00:21:47,640 Speaker 1: But we think third quarter twelve percent up. Fourth quarter 412 00:21:47,640 --> 00:21:50,159 Speaker 1: you get eight percent up. And then next year, you know, 413 00:21:50,160 --> 00:21:52,119 Speaker 1: we're gonna have the stimulus will still be working through 414 00:21:52,119 --> 00:21:54,119 Speaker 1: the system. You'll have a pretty good GDP number. We 415 00:21:54,119 --> 00:21:57,080 Speaker 1: think go over five percent the year after. So so 416 00:21:57,160 --> 00:21:59,360 Speaker 1: I think the markets are right were the market shouldn't 417 00:21:59,359 --> 00:22:01,680 Speaker 1: go back to where they were, but by getting you're 418 00:22:01,680 --> 00:22:05,160 Speaker 1: getting closer to factoring in the you know, what's happened 419 00:22:05,240 --> 00:22:08,439 Speaker 1: and this immense amount of stimulus, and I think is uh. 420 00:22:08,640 --> 00:22:12,160 Speaker 1: I think the markets are rightfully adjusting to So Rick, 421 00:22:12,480 --> 00:22:15,080 Speaker 1: how is the way you put money to work different 422 00:22:15,119 --> 00:22:17,280 Speaker 1: there was yesterday. Given what the Fed's done, It's a 423 00:22:17,320 --> 00:22:19,720 Speaker 1: big It's a big deal. I mean, you were the 424 00:22:19,720 --> 00:22:22,080 Speaker 1: way you thought about you know, if you were a 425 00:22:22,119 --> 00:22:24,320 Speaker 1: triple A asset because the FED was getting at that. 426 00:22:24,440 --> 00:22:26,320 Speaker 1: If you were a high court that you were in 427 00:22:26,320 --> 00:22:30,119 Speaker 1: good shape. If you are investment grade bottom holder, credit holder, 428 00:22:30,160 --> 00:22:31,840 Speaker 1: you were in pretty good shape because the FED was 429 00:22:31,840 --> 00:22:36,040 Speaker 1: there certainly in mortgages, but you've now extended this and 430 00:22:36,680 --> 00:22:39,560 Speaker 1: that you know, the high yield market. It's definitely supportive 431 00:22:39,560 --> 00:22:42,399 Speaker 1: of companies, not just the high yield market. A lot 432 00:22:42,440 --> 00:22:44,040 Speaker 1: of the triple B companies that are going to go 433 00:22:44,119 --> 00:22:47,760 Speaker 1: into high yield, but those actually become a lot safer 434 00:22:47,920 --> 00:22:51,159 Speaker 1: the CLO market of the loan market generally, you know, 435 00:22:51,200 --> 00:22:54,159 Speaker 1: with the FED providing what is functionally you know, not 436 00:22:54,240 --> 00:22:57,840 Speaker 1: to get too technical around what's happened, but the FED 437 00:22:57,880 --> 00:22:59,840 Speaker 1: going into that clo market, the triple A part of 438 00:22:59,840 --> 00:23:03,000 Speaker 1: the little market lifts a lot of what was blockage 439 00:23:03,000 --> 00:23:05,680 Speaker 1: in the system around loans, so that gives you a 440 00:23:05,760 --> 00:23:08,440 Speaker 1: lot more comfort. And you know, quite frankly, you know, 441 00:23:08,480 --> 00:23:11,200 Speaker 1: I think the equity market reacts to what it's stable 442 00:23:11,240 --> 00:23:16,000 Speaker 1: financial conditions and a bridge from here to there and 443 00:23:16,080 --> 00:23:19,119 Speaker 1: sort of take on some some more equity risk. I 444 00:23:19,160 --> 00:23:21,199 Speaker 1: think is uh, you know, makes some sense. And you 445 00:23:21,240 --> 00:23:22,760 Speaker 1: know we're doing I think, like a lot of people, 446 00:23:22,760 --> 00:23:25,359 Speaker 1: we've been running high levels of cash and our portfolios 447 00:23:26,359 --> 00:23:29,200 Speaker 1: because the uncertaintly was so great. Given how much stimulus 448 00:23:29,200 --> 00:23:31,879 Speaker 1: is coming in from FISCO as well as the monetary side, 449 00:23:32,200 --> 00:23:33,760 Speaker 1: you can take a little bit of that catch. You 450 00:23:33,760 --> 00:23:36,560 Speaker 1: still should run high levels of cash, but you can 451 00:23:36,600 --> 00:23:39,679 Speaker 1: spend some of that money. That was Rick Reader of 452 00:23:39,800 --> 00:23:41,800 Speaker 1: Black Crack. And now we wrap up our week, as 453 00:23:41,800 --> 00:23:43,920 Speaker 1: we do every week, with our very special Wall Street 454 00:23:43,920 --> 00:23:46,560 Speaker 1: Week contributor Larry Summers of Harvard and of course he 455 00:23:46,680 --> 00:23:49,520 Speaker 1: was a former Secretary of the Treasury. Welcome back, Larry. 456 00:23:49,880 --> 00:23:52,040 Speaker 1: Let's get a sense of exactly where we are, not 457 00:23:52,119 --> 00:23:54,160 Speaker 1: just today, but look around the corner a little bit. 458 00:23:54,160 --> 00:23:56,879 Speaker 1: What are the next turns in this crisis? As far 459 00:23:56,920 --> 00:23:58,880 Speaker 1: as we can discern them. We hear the Fed did 460 00:23:58,920 --> 00:24:01,000 Speaker 1: something really good for them markets. At the same time, 461 00:24:01,119 --> 00:24:04,040 Speaker 1: we also heard this week so many tenants, for example, 462 00:24:04,280 --> 00:24:06,880 Speaker 1: not being able to pay their April rent. I think 463 00:24:08,080 --> 00:24:13,760 Speaker 1: what the Fed did is surely right for the short run. 464 00:24:14,760 --> 00:24:18,520 Speaker 1: I think it's a mistake always to think that the 465 00:24:18,600 --> 00:24:26,199 Speaker 1: provision of liquidity can override fundamentals and that lending money 466 00:24:26,920 --> 00:24:35,119 Speaker 1: can fill fundamental gaps. We are having no revenue effectively 467 00:24:35,640 --> 00:24:40,520 Speaker 1: for a large number of retail establishments. We're having no 468 00:24:40,720 --> 00:24:48,159 Speaker 1: revenue for many landlords, residential uh landlords. We don't know 469 00:24:48,200 --> 00:24:51,159 Speaker 1: how this is going to play out. Tenants aren't going 470 00:24:51,200 --> 00:24:56,080 Speaker 1: to pay landlords in many cases Staples, for example, said 471 00:24:56,080 --> 00:24:59,960 Speaker 1: I'm not going to pay landlords at all. What about landlord? 472 00:25:00,720 --> 00:25:04,840 Speaker 1: Landlords are all levered way up? Are they going to 473 00:25:04,920 --> 00:25:09,720 Speaker 1: pay banks? If they don't pay banks, our our bank 474 00:25:09,840 --> 00:25:13,680 Speaker 1: is going to be able to meet their liabilities given 475 00:25:13,720 --> 00:25:18,760 Speaker 1: the depletion of their capital. How is that going to end? 476 00:25:19,880 --> 00:25:23,120 Speaker 1: The FED can make a lot of loans, and then 477 00:25:23,160 --> 00:25:26,600 Speaker 1: it can if somebody can decide where the seniority of 478 00:25:26,680 --> 00:25:32,280 Speaker 1: those loans is relative to other claims. But a substantial 479 00:25:32,359 --> 00:25:34,880 Speaker 1: part of this is surely going to end up back 480 00:25:34,960 --> 00:25:40,840 Speaker 1: on taxpayers, and there may well be some very substantial 481 00:25:40,920 --> 00:25:45,520 Speaker 1: uncertainties along the way. So I don't think this is 482 00:25:45,600 --> 00:25:51,640 Speaker 1: resolving problems. This is postponing uh problems, and we're gonna 483 00:25:51,680 --> 00:25:55,879 Speaker 1: see how they get dealt with over time. I'm not 484 00:25:55,920 --> 00:25:57,760 Speaker 1: sure what the answer is going to be as a 485 00:25:57,760 --> 00:25:59,959 Speaker 1: practical matter. Do we have to have a massive bankruptcy 486 00:26:00,000 --> 00:26:02,159 Speaker 1: across the country. I mean, already bankruptcy lawyers are being 487 00:26:02,200 --> 00:26:04,639 Speaker 1: called up, left, right and center because this is going 488 00:26:04,680 --> 00:26:06,760 Speaker 1: to go through pretty much the entire economy. It feels 489 00:26:06,760 --> 00:26:10,320 Speaker 1: like we're gonna need a large amount of restructuring of debts. 490 00:26:10,840 --> 00:26:14,240 Speaker 1: Whether that's going to take place through bankruptcy, whether that's 491 00:26:14,280 --> 00:26:18,080 Speaker 1: going to take place through negotiations in the shadow of 492 00:26:18,160 --> 00:26:22,800 Speaker 1: possible bankruptcy, whether that's going to take place by the 493 00:26:22,880 --> 00:26:27,040 Speaker 1: government taking on the debts and then and then forbearing 494 00:26:27,520 --> 00:26:32,520 Speaker 1: on collection indefinitely. I don't know how that's going to 495 00:26:32,800 --> 00:26:36,919 Speaker 1: work out, but there's gonna need to be the mother 496 00:26:37,560 --> 00:26:40,760 Speaker 1: of all debt workouts, the kind of thing that we 497 00:26:40,840 --> 00:26:44,639 Speaker 1: saw in the financial sector in two thousand and eight, 498 00:26:45,119 --> 00:26:47,600 Speaker 1: we're going to be seeing over very large parts of 499 00:26:47,640 --> 00:26:51,160 Speaker 1: the real economy, and that's going to bounce back into 500 00:26:52,200 --> 00:26:57,320 Speaker 1: the financial sector. So this mother of all workouts is 501 00:26:57,400 --> 00:27:01,800 Speaker 1: going to play out for a stential period of time, 502 00:27:02,359 --> 00:27:05,919 Speaker 1: even if the recovery is as rapid as Rick Greater hopes. 503 00:27:06,600 --> 00:27:10,040 Speaker 1: And I'm not sure that's going to actually playoff. And Larry, 504 00:27:10,040 --> 00:27:12,800 Speaker 1: what about the virus itself and our fight against the virus. 505 00:27:12,840 --> 00:27:16,040 Speaker 1: So we've had some encouraging signs, some initial encouraging signs. 506 00:27:16,240 --> 00:27:18,280 Speaker 1: At the same time people are really talking already about 507 00:27:18,280 --> 00:27:20,359 Speaker 1: getting back to work. What is that process going to 508 00:27:20,480 --> 00:27:23,080 Speaker 1: look like from your point of view? Look, I think 509 00:27:23,160 --> 00:27:30,040 Speaker 1: the gristly metaphor that's right for this is physical isolation 510 00:27:30,960 --> 00:27:38,199 Speaker 1: is chemotherapy, and uh, the goal is remission, and you 511 00:27:38,240 --> 00:27:42,480 Speaker 1: can apply chemotherapy and you can achieve remission. The problem 512 00:27:42,560 --> 00:27:47,720 Speaker 1: is that chemotherapy is toxic and increasingly toxic over time, 513 00:27:48,400 --> 00:27:52,160 Speaker 1: and when you let up on the chemotherapy, you can 514 00:27:52,280 --> 00:27:57,399 Speaker 1: lose the remission. The hope is that we're going to 515 00:27:57,480 --> 00:28:02,960 Speaker 1: be able to let up on physical isolation, and when 516 00:28:03,000 --> 00:28:06,040 Speaker 1: we do that, we're going to have we're gonna put 517 00:28:06,080 --> 00:28:10,600 Speaker 1: in some testing and some tracing of contacts, and then 518 00:28:10,640 --> 00:28:13,000 Speaker 1: we're all going to be able to live in a 519 00:28:13,040 --> 00:28:18,679 Speaker 1: pretty normal way. I hope that's the story prior to 520 00:28:18,720 --> 00:28:24,000 Speaker 1: a vaccine, and that a vaccine comes fast. But I 521 00:28:24,040 --> 00:28:27,360 Speaker 1: think we'll be doing very well if it's a year 522 00:28:27,400 --> 00:28:30,280 Speaker 1: from now when we've got everybody vaccinated, and I think 523 00:28:30,280 --> 00:28:34,880 Speaker 1: it's more likely to be eighteen months from now, though 524 00:28:34,920 --> 00:28:39,200 Speaker 1: I hope i'm wrong, and I think that if you 525 00:28:39,320 --> 00:28:44,400 Speaker 1: look at the Asian success stories, they are a little 526 00:28:44,480 --> 00:28:51,040 Speaker 1: less optimistic when probed closely. UH Singapore has already lost 527 00:28:51,080 --> 00:28:56,080 Speaker 1: its remission and had to go to lockdown. No one 528 00:28:56,160 --> 00:29:01,680 Speaker 1: really knows what the situation would be if you had 529 00:29:02,000 --> 00:29:08,280 Speaker 1: externally observed and collected data in UH China, in Taiwan, 530 00:29:08,480 --> 00:29:13,520 Speaker 1: which has been a success so far, they seem to 531 00:29:13,600 --> 00:29:18,960 Speaker 1: have essentially total remission. Every time you walk into an 532 00:29:19,000 --> 00:29:23,240 Speaker 1: office building, they make you take your temperature, and they 533 00:29:23,280 --> 00:29:27,880 Speaker 1: make you apply hand sanitizer. The government's able to track 534 00:29:28,600 --> 00:29:33,200 Speaker 1: every everybody's movements, so that if a week ago you 535 00:29:33,240 --> 00:29:35,680 Speaker 1: were in a restaurant at the same time that somebody 536 00:29:35,680 --> 00:29:40,160 Speaker 1: who came down with UM the virus, you can be 537 00:29:40,800 --> 00:29:46,560 Speaker 1: UH moved into quarantine immediately. Those are gonna be challenging 538 00:29:46,640 --> 00:29:51,400 Speaker 1: things UH to do UH in our country, And if 539 00:29:51,440 --> 00:29:56,240 Speaker 1: we fall short UM, then we're at much more risk 540 00:29:57,080 --> 00:30:03,160 Speaker 1: of UH relapse. So my guess is that it's gonna 541 00:30:03,200 --> 00:30:06,480 Speaker 1: be a little less freed up and back to normal 542 00:30:07,040 --> 00:30:11,320 Speaker 1: when this current wave ends than people think, and that 543 00:30:11,400 --> 00:30:15,680 Speaker 1: there's gonna be a greater risk of rebound and back 544 00:30:15,720 --> 00:30:19,960 Speaker 1: to lockdown and a kind of accordion dynamic until we 545 00:30:20,120 --> 00:30:25,760 Speaker 1: get to the point where a vaccine or cure UH 546 00:30:25,800 --> 00:30:29,160 Speaker 1: comes along. I hope I'm wrong, and it's certainly possible 547 00:30:29,760 --> 00:30:34,080 Speaker 1: UH that I that I will be h Earlier, I 548 00:30:34,200 --> 00:30:38,600 Speaker 1: thought that if the health situation was under control, you 549 00:30:38,600 --> 00:30:43,400 Speaker 1: could have a fairly rapid recovery of the kind that 550 00:30:43,480 --> 00:30:49,360 Speaker 1: you have UM when a resort town comes back for 551 00:30:49,440 --> 00:30:52,880 Speaker 1: the summer, and I still think that's right. I just 552 00:30:52,920 --> 00:30:57,400 Speaker 1: don't think it's relevant because I think the virus is 553 00:30:57,440 --> 00:31:01,280 Speaker 1: going to be a very substantial overhang until we get 554 00:31:01,320 --> 00:31:06,080 Speaker 1: to UH the point where we have a vaccine, and 555 00:31:06,160 --> 00:31:12,080 Speaker 1: so the question is going to be this remission chemotherapy dynamic, 556 00:31:12,200 --> 00:31:15,479 Speaker 1: and we're gonna be managing it at least for the 557 00:31:15,520 --> 00:31:18,120 Speaker 1: next at least for the next year. And it puts 558 00:31:18,120 --> 00:31:20,200 Speaker 1: a lot of pressure on the competence question. And you've 559 00:31:20,280 --> 00:31:22,600 Speaker 1: raised before the question is whether it really are competent 560 00:31:22,680 --> 00:31:26,320 Speaker 1: to do that. It certainly does. It certainly does, David, 561 00:31:26,600 --> 00:31:32,240 Speaker 1: And there's a lot of very good, very energetic, very 562 00:31:32,320 --> 00:31:37,080 Speaker 1: capable work being done at the micro level on the 563 00:31:37,120 --> 00:31:43,800 Speaker 1: ground in hospitals and communities all across UH the country. Um, 564 00:31:43,960 --> 00:31:48,840 Speaker 1: whether there is that level of competence in the overall 565 00:31:49,280 --> 00:31:54,920 Speaker 1: strategic planning, whether there could be given the way we've 566 00:31:54,960 --> 00:31:58,920 Speaker 1: allowed our public institutions to atrophies, is I think a 567 00:31:59,040 --> 00:32:03,800 Speaker 1: very real h question. Great, great question. Thank you so 568 00:32:03,880 --> 00:32:06,040 Speaker 1: much for Larry Summers, our Wall Street Week contributor that 569 00:32:06,080 --> 00:32:07,680 Speaker 1: does it for Wall Street Week. For this week, I'm 570 00:32:07,760 --> 00:32:10,160 Speaker 1: David Weston. We hope you'll join us next week. This 571 00:32:10,360 --> 00:32:11,400 Speaker 1: is Bloomberg