Speaker 1: Runt you by Bank of America Mary Lynch. With virtual reality,
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Speaker 1: Be of a, mL dot Com, slash VR, Mary Lynch,
Speaker 1: Pierced Fenner and Smith Incorporated. Ye, Welcome to the Bloomberg
Speaker 1: Surveillance Podcast. I'm Tom Keene with David Gura. Daily we
Speaker 1: bring you insight from the best of economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. A
Speaker 1: pleasure to have with us here in our Bloomberg eleven
Speaker 1: three Ust to Stephen Roach. Stephen Roach, of course, said
Speaker 1: the former chairman of Morgan Stanley AGIA, former chief economist
Speaker 1: at Morgan Stanley, now senior lecturer at the Jackson Institute
Speaker 1: of Global Affairs at the Else School of Management. Uh,
Speaker 1: we get this budget today, they'll be talk again of
Speaker 1: growth expectations here in the US. You've been given some
Speaker 1: thought to the expectations for growth more globally. Can we
Speaker 1: start domestically and just to talk about what we've heard
Speaker 1: from mcmulvanny, the Office of Management Budget Director. He spoke
Speaker 1: yesterday saying the days of being content with one point
Speaker 1: nine percent growth have to be put behind us. All
Speaker 1: well and good that he says that, is there any
Speaker 1: likelihood of that happening here in the near term in
Speaker 1: the US, Well, David, there's there's always a likelihood of
Speaker 1: anything happening. But I think to push the button and
Speaker 1: go from two to three UH in a period where
Speaker 1: productivity growth is still under pressure, where um you're not
Speaker 1: going to get any uplift from growth in the labor force,
Speaker 1: is going to be very, very difficult to achieve. So
Speaker 1: I think any realistic assessment of the budget or the
Speaker 1: debt trajectory over the next ten years, which one has
Speaker 1: to go through to try to make some sense out
Speaker 1: of this or any other president's budget proposal, is quite problematic.
Speaker 1: We'll have a foreign policy expert on and ask him
Speaker 1: or her what we know about the Trump doctrine, the
Speaker 1: nascent Trump doctrine. I suppose in the realm of economics
Speaker 1: we have trump anomics, and I wonder if we're any
Speaker 1: closer to getting a clear definition of of what that is. Again,
Speaker 1: mcmilvanny spoke yesterday and he said his definition is principally
Speaker 1: that it's an effort to get sustained three percent economic
Speaker 1: growth in this country. Again a very aspirational, golden aspirational definition.
Speaker 1: Do you speaking debate all this um, but but you know,
Speaker 1: I think we we have to be analytical and assessing,
Speaker 1: UH where this budget deficit, how it fits into the
Speaker 1: mosaic of of the U S economy. And I think
Speaker 1: there's a real Achilles heel here, and that is that, UH,
Speaker 1: the US right now has an extraordinarily low national savings rate.
Speaker 1: That's the sum total of personal business and UH saving
Speaker 1: plus the government budget deficits. And when you run a
Speaker 1: low savings rate and you want to grow, you import
Speaker 1: surplus savings from abroad, you run massive current account and
Speaker 1: trade deficits to attract the capital. The Trump proposals, in
Speaker 1: my view of realistic assessment, is they're not gonna be balanced.
Speaker 1: You're gonna get budget deficits, so that will push the
Speaker 1: national savings rate lower and make the current account deficit
Speaker 1: wider and our trade deficits become more problematic in the
Speaker 1: years ahead. So here's the catch, David, is that with
Speaker 1: with budget deficits UH and trade deficits likely to expand,
Speaker 1: Tom will be running these charts on the twin deficits.
Speaker 1: Once again. Uh, You've got a president then, who wants
Speaker 1: to turn protectionist against many of our trading partners. How
Speaker 1: does that add up, Tom? How does it add up
Speaker 1: to U to go protectionists at a time when your
Speaker 1: trade defficences are getting bigger? This is vintage Stephen Roach.
Speaker 1: I'm serious, David, this is this goes to the heart
Speaker 1: of what I call balance sheet analysis. Let's stop the
Speaker 1: show and explain to us that some savings rate which
Speaker 1: includes the government deficit, what's it mean for the person
Speaker 1: listening to Bloomberg surveillance? It means that the United States
Speaker 1: is growing beyond its means. Tom. We we we teach
Speaker 1: um students when they take their very first economics course,
Speaker 1: and I'm sure you remember this, tom Um, that the
Speaker 1: savings must always equal investment. It's an accounting identity. So
Speaker 1: when we don't save at home, uh, we then borrow
Speaker 1: savings from abroad and we run these big current account
Speaker 1: balance of payments deficits and trade deficits to attract the capital.
Speaker 1: And so the idea that we can uh now single
Speaker 1: out our trading partners, whether they're in Germany, Japan. Of course,
Speaker 1: China or Korea and others as being villains in what
Speaker 1: they're doing to punish American middle class workers. This is
Speaker 1: the most important point, is that we need these trade
Speaker 1: deficits to square uh the saving investment identity United States
Speaker 1: and David, what's so important about this and Dr Roach's
Speaker 1: analysis is dead on is when I mentioned this in
Speaker 1: speeches or discussions, often citing Stephen Roach, people are just
Speaker 1: in disbelief. They're like, no, that's not true, disbelief because
Speaker 1: my name or because you know, but but but Stephen,
Speaker 1: this is important. Essentially every month by accounting identities, somebody's
Speaker 1: got a right to check there's a flow. There's a
Speaker 1: flow here every month. You know, I, I know, I'm
Speaker 1: a broken record on on this tim We've gotten away
Speaker 1: with it because where the world's reserve currency and um
Speaker 1: you know a lot of countries, including most recently China,
Speaker 1: have tied their currencies to the dollar, and so they
Speaker 1: have to buy a lot of dollar based assets to
Speaker 1: maintain that relationship. But you know, the day is coming
Speaker 1: um uh, and we we never know when when the
Speaker 1: world starts finding other places uh to um uh put
Speaker 1: its um uh savings rather than a low return uh
Speaker 1: US economy and then it becomes tougher for us to
Speaker 1: fund are the circus savings we borrow on terms that
Speaker 1: have been extremely attracted to us for a long long time.
Speaker 1: It would be good to speak to someone with experience
Speaker 1: on going with extended trips of leaders. That would be
Speaker 1: Michael McKee, wh or a few years ago used to
Speaker 1: be on the White House uh A circuit here as well.
Speaker 1: I I look, Michael McKee at the exhaustion of the trip.
Speaker 1: Is it real? Is that come with absolutely? I mean,
Speaker 1: the hours are very long, you fly all night, you
Speaker 1: get to where you're going, the Middle East in this case,
Speaker 1: and you've got to start functioning immediately. The president has
Speaker 1: a bed, but nobody else. Nobody else has a bed.
Speaker 1: Your your jet lagged, You're tired, and the days are long.
Speaker 1: David Girl, I believe we have a headline out crossing
Speaker 1: the Bloomberg are Islamic state claiming responsibility for the attack
Speaker 1: in Manchester last night that came at the end of
Speaker 1: a concert by Ariana Grande. We've been following this throughout
Speaker 1: the morning. We'll bring you updates throughout the morning here
Speaker 1: on Bloomberg surveillance. This is according to site, and that's
Speaker 1: a website of professionals who monitor social media chatter web
Speaker 1: chatter about terrorist groups. We welcome all of you worldwide.
Speaker 1: This is Bloomberg Surveillance on Bloomberg Radio coast to coast.
Speaker 1: So we say good morning to Bloomberg Boston FM in
Speaker 1: Washington early morning and San Francisco in the Bay Area
Speaker 1: over a special good morning to all of you, uh
Speaker 1: in Europe and in the United Kingdom as well. On
Speaker 1: London Radio, Michael McKee is here, uh, you know, to
Speaker 1: talk about the president's trip and offer go to Rome.
Speaker 1: But much more, Michael McKee about the budget. You've got
Speaker 1: detailed notes. What was the thing that stuck out for
Speaker 1: you in your note taking on this political document of
Speaker 1: the president? Well, from the perspective I bring to it
Speaker 1: of an economist, the Rosie scenario that the administration assumes
Speaker 1: three growth from with no credible way of getting there.
Speaker 1: Not only that they assume three percent growth and unemployment
Speaker 1: goes up, uh, so much for the Phillips curve. So
Speaker 1: at this point, uh, it's kind of hard to take seriously.
Speaker 1: Larry Summers out with an interesting moments ago, uh, noting
Speaker 1: that they double count the tax savings that the tax
Speaker 1: cuts they propose will create a lot of growth and
Speaker 1: at the same time will fill in the budget hole
Speaker 1: caused by the tax cuts. And he called that ludicrous.
Speaker 1: With within this in Stan Calendar writing in Forbes has
Speaker 1: been a good friend of the show. Was made very
Speaker 1: clear this is just simply undoable in your experience when
Speaker 1: you try to quote unquote make budget cuts and operational government,
Speaker 1: not entitlements. How much is a painful cut? How much?
Speaker 1: Somebody asked me this last night. What's to the bone
Speaker 1: in the fiscal world? Is it? Two? Is that the
Speaker 1: cuts we're talking about, you have to take it program
Speaker 1: by program. Uh. The way Washington works normally, what you
Speaker 1: talk about when you talk about a cut is a
Speaker 1: reduction in the rate of increase. Uh. The government continues
Speaker 1: to spend more money because the United States continues to
Speaker 1: get bigger, more and more people involved, and of course
Speaker 1: the bureaucratic comparative to continually raise their own budgets. Uh.
Speaker 1: So if you're talking about actual reductions that would probably
Speaker 1: be painful, then you have to get into the question
Speaker 1: of whether a program is worthwhile or working. And that's
Speaker 1: much of the argument from this Office of Management and
Speaker 1: budget that a lot of these programs don't work and
Speaker 1: aren't worth funding. We've talked about assumptions. Just a moment
Speaker 1: ago strikes me that the director of the OMBA mcmilvany,
Speaker 1: is making a huge one here when he expects the
Speaker 1: House version of the Republican healthcare bill to get through.
Speaker 1: He's really counting on that for this to work. Absolutely.
Speaker 1: The budget assumes eight hundred and sixty billion dollars in
Speaker 1: Medicaid cuts. The budget assumes that there will be the
Speaker 1: rollback of the Obama Care taxes that were imposed on
Speaker 1: the wealthy. So yes, he's he This all assumes both
Speaker 1: that they will pass the rollback of Obamacare, pass trump Care,
Speaker 1: if you want to call it that, and cut taxes
Speaker 1: h to the levels that the administration is has proposed
Speaker 1: to bring Congressman Jan Chikowski, she represents the ninth district
Speaker 1: in Illinois, Democratic congressman on the House budget me, you're
Speaker 1: not being accurate. The congresswoman represents my mother's heist there
Speaker 1: Trier High School, when that Illinois. That's the correct specificity
Speaker 1: is key here, odd surveillance. Jeensickowski joining us on our
Speaker 1: phone line is great to have you with us. You're
Speaker 1: out with this statement here in advance of the budget
Speaker 1: release this morning, I say you will resist this outrageous
Speaker 1: proposal every step of the way. I I assume you're
Speaker 1: regarding this budget is dead on arrival. Well, I hope
Speaker 1: it's dead on arrival. I certainly do. I mean, this
Speaker 1: is a budget of broken promises and then new promises
Speaker 1: that he can't keep. Like these massive tax cuts that
Speaker 1: go for the wealthiest are actually going to create economic growth.
Speaker 1: We've been there, done that hasn't hasn't worked. And meantime,
Speaker 1: it's going to be on the backs of people who
Speaker 1: need their Social Security and their Medicare and their Medicaid.
Speaker 1: It's it's really remarkable. It's going to uh, you know,
Speaker 1: the very people that he promised to UH to help
Speaker 1: um and to to make life better for and make
Speaker 1: America great for a great again are the ones that
Speaker 1: are actually going to be hurt the most. Something that
Speaker 1: Director mulvanny said yesterday and his briefing with reporters is
Speaker 1: a real problem here is the efficacy of a lot
Speaker 1: of these programs. Why should a taxpayer be paying money
Speaker 1: toward a program that's only I think he's had six
Speaker 1: percent effective. How does Congress, how do you and others
Speaker 1: look and improve the efficacy of of programs? I gather
Speaker 1: you probably don't have a lot of sympathy with the
Speaker 1: argument that he that he's making there, But how about
Speaker 1: the broader point here that there are programs that could
Speaker 1: be working better? Well? First of all, when he talked
Speaker 1: about about a month ago about meals on wheels that
Speaker 1: there's no proof that those programs work, you ask the
Speaker 1: people who are waiting in their homes every day I've
Speaker 1: delivered those meals on wheels two people. Um, those programs
Speaker 1: keep people out of nursing homes, which are more expensive.
Speaker 1: He said that nutrition programs for children at at school
Speaker 1: that there's no evidence that they really helped to increase learning.
Speaker 1: Are you kidding me? So? First of all, as a
Speaker 1: Democrat who believes that government programs work, yes, I want
Speaker 1: to make sure that they are effective, and I'm willing
Speaker 1: to look at that. But really, I mean that those
Speaker 1: kinds of cons and believe me, in newchur Township or
Speaker 1: New Tour High School is there are people who are
Speaker 1: waiting for those meals right now? I would suggest congresswoman
Speaker 1: out of Sullivan High School and with the Illinois blood
Speaker 1: that you have, that the redrawn ninth district has people
Speaker 1: that support a Republican ethos, a conservative ethos, even though
Speaker 1: it is a very liberal district. What permeates the Trump theology,
Speaker 1: if you will, is we've got to figure out how
Speaker 1: to get these people back on jobs, particularly with his
Speaker 1: food stamps. What is the reality you've seen about the
Speaker 1: snap program, the food stamp program, and the idea that
Speaker 1: we need to get people back on jobs. How do
Speaker 1: you dove tail that when you're on the opposite side
Speaker 1: of the debate. Well, first of all, the about half
Speaker 1: the people that that get nutrition assistance through the food
Speaker 1: stamp program, the stamp program are children, and so certainly
Speaker 1: if parents are going to be able to um, have
Speaker 1: a raise of family and have a little bit of
Speaker 1: help to put food on the table while they're looking
Speaker 1: for their job or trying to get job training, which
Speaker 1: by the way, is also caught in this budget, I
Speaker 1: think it's pretty hard to explain to them that, you know,
Speaker 1: a key element of this budget plan will be huge
Speaker 1: tax breaks, mostly that go to the wealthiest Americans. Um.
Speaker 1: You know, as they said this, this kind of idea
Speaker 1: of trickled down is something that has been tried over
Speaker 1: and over and over again. And when you cut the
Speaker 1: state tax, which goes to just a few people, really
Speaker 1: I think I think feeding helping to to make sure
Speaker 1: that there's food on the table. And by the way,
Speaker 1: those programs most people stay on them for a year
Speaker 1: or left. It's kind of a bridge over troubled waters.
Speaker 1: Let's do this. We are out of time today with
Speaker 1: the horrific news flow we see here, particularly with a
Speaker 1: tragedy in Manchester, United Kingdom. Cox Cocaswoman Chikowski, we look
Speaker 1: forward to speaking to you again on the shores of
Speaker 1: Lake Michigan, the Ninth District north of Chicago, and then
Speaker 1: off to the west as well. Just seeing the footage
Speaker 1: here at Eva Gerner Studios of the two Air Force ones,
Speaker 1: that's how many people are on the trip in I
Speaker 1: believe in tel Aviv. I may be wrong on that.
Speaker 1: I can't tell where it is Jerusalem or Tel Aviv,
Speaker 1: but they're both out waiting there to fly the President, David,
Speaker 1: why don't you bring in the ambassador who is a
Speaker 1: unique distinction of being ambassador to Israel in Egypt decade now,
Speaker 1: a lecturer and professor at the Woodrow Wilson School of
Speaker 1: Public International Fairs at Princeton Universe. That's Ambassador Daniel Kurtzer,
Speaker 1: who joins us on our phone line. Since ambassad Kurz
Speaker 1: to this was a quick trip, much has been made
Speaker 1: of that, the brevity of some of these visits the President.
Speaker 1: The President made in Israel today, What do we learn
Speaker 1: about his attitude towards the Middle East peace process from
Speaker 1: this visit to Israel, his meeting with the President of
Speaker 1: Boss Palton Authority as well well. He reaffirmed during his
Speaker 1: speech he just gave very strong commitment to try to
Speaker 1: reach peace, indicated that in his conversations with President of
Speaker 1: Boston Prime Minister Nataniello, both of them were ready to
Speaker 1: reach forward. But he provided a very few details of
Speaker 1: those discussions. That may be a good thing. The longer
Speaker 1: he can continue to the dialogue in in quiet, rather
Speaker 1: than try to publicly broadcast different issues, he may be
Speaker 1: able to make incremental progress. But we really don't know
Speaker 1: very much about either the President's view of how to
Speaker 1: make peace. Well, what's the two sides hold him? What's
Speaker 1: your sense of how the speech he made in Saudi
Speaker 1: Arabia over the weekend rang out through Israel. That speech
Speaker 1: in which he called for suiting nations largely to rally
Speaker 1: together to fight against Iran and to purge themselves of
Speaker 1: terrorist entities within within their populations. How do you think
Speaker 1: that played in Israel? Well, I think it was music
Speaker 1: to the Israeli ears because he associated himself and the
Speaker 1: United States with all of the same enemies that Israel
Speaker 1: has identified Iran terrorists, countries that support terrorists, and uh,
Speaker 1: there's really no distance between the United States and Israel
Speaker 1: on those issues. What made the speech interesting is that
Speaker 1: he did it in front of forty or fifty Arab
Speaker 1: and Muslim leaders and in a sense conveyed the idea
Speaker 1: that we now have a larger group of countries, not
Speaker 1: just the US and Israel, that are ready to act
Speaker 1: affirmatively against terrorism. And I think that was the key
Speaker 1: takeaway from that speech. Where do we go from from here?
Speaker 1: You mentioned that the speeches that he delivered were largely
Speaker 1: short on specific I know the Secretary of State Rex
Speaker 1: Tillerson was asked if there might be a trilateral meeting
Speaker 1: here with the President of palacting authority at the Israeli
Speaker 1: Prime Minister and the President of the United States, and
Speaker 1: in the future. He demurred. He didn't answer that question.
Speaker 1: How do you go from the rosie rhetoric we heard
Speaker 1: from the president to action here after what several years now,
Speaker 1: if they're being very little process on peace. Well, Frankly,
Speaker 1: I'm actually buoyed by the fact that the administration did
Speaker 1: not seek some kind of the media takeaway. I mean,
Speaker 1: there's always just tendency to look for a deliverable, you know,
Speaker 1: what can what we announce as some big outcome of visit.
Speaker 1: And I think there was a lot of speculation before
Speaker 1: the visit that the president would want to announce a
Speaker 1: trilateral meeting or some it of some sort involving the
Speaker 1: Arab States, and that didn't happen. Now, it's possible it
Speaker 1: didn't happen because she tried and failed, But it's also
Speaker 1: possible because he realized that this is a very complicated
Speaker 1: set of issues and you can't go for short term gains.
Speaker 1: You really have to be in it for the long haul.
Speaker 1: So we'll see over the next period of what the
Speaker 1: next steps are. He'll probably send out his envoy, Jason Greenblatt.
Speaker 1: We now have an ambassador in place in Israel who
Speaker 1: can move this issue on a day to day basis
Speaker 1: uh and if those next steps indicate a continuation of
Speaker 1: the dialogue, then I think because we have some reason
Speaker 1: to believe that this will go on for a while.
Speaker 1: Ambassador to thank you so much. Daniel Kurtzer with us
Speaker 1: from the Woodrow Wilson School as well the former Ambassador
Speaker 1: of the United States to Israel, David what a more.
Speaker 1: The news flow is just an extraordinary, incredible beginning with
Speaker 1: that a terrorist attack. We've been covering their threat, the
Speaker 1: point that took place that last evening, and of course
Speaker 1: the presence visit to Israel apping up. Now he's back
Speaker 1: at the King David Hotel. He will leave for Rome.
Speaker 1: I believe in about an hour's a time. He'll head there,
Speaker 1: have an audience with with the Pope, and then he
Speaker 1: presses onward to two major summit, the first being the
Speaker 1: NATO Summit in Brussels and then the seven Summit in Italy.
Speaker 1: Is still a long way for this present to go
Speaker 1: before he makes his way back to Washington or Kevin
Speaker 1: Cirelli in Jerusalem. Touching on the domestic challenges of Washington
Speaker 1: as well. Brunt You by Bank of America Mary Lynch
Speaker 1: with virtual reality virtually everything will change. Discover opportunities in
Speaker 1: a transforming world. VI of a mL dot Com slash vr,
Speaker 1: Mary Lynch, Pierced Fenner and Smith Incorporated. There's something new
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Speaker 1: Com slash Lens. I've been waiting for this interview David
Speaker 1: Gura sent the moment I heard that Mr Fields was out.
Speaker 1: My opinion doesn't matter on this, but we do have
Speaker 1: the considered opinion of the cars are. If you're going
Speaker 1: to Google and type up cars are you get the
Speaker 1: Wikipedia for one, s rat and Steve Rattner, of course,
Speaker 1: appears often with us. He has a wonderful journalist integrity
Speaker 1: along with his financial knowledge, and was selected at one
Speaker 1: point to save Detroit. You didn't have to save Ford
Speaker 1: when you were in the trenches of being a czar,
Speaker 1: which is a phrase you and I hate. How distinctive
Speaker 1: was dear Born? How different was Bill Ford, the family
Speaker 1: and the company. It's something that fascinated me because you
Speaker 1: had these companies that were essentially identical in every respect
Speaker 1: in terms of their customers, their footprint, all these things.
Speaker 1: But yet Ford did not need our help, and the
Speaker 1: others did, and it was simply a question of management.
Speaker 1: Ford had better management. They anticipated the crisis, they put
Speaker 1: money in the bank, and of course, famously for Bill,
Speaker 1: Ford reached out to Alan Mollallely, who, other than owning
Speaker 1: a car, probably knew nothing more about cars than that,
Speaker 1: and he turned out to be one of the great
Speaker 1: CEOs of our generation. We'll talk a bit more about that,
Speaker 1: the shadow into which Mark Fields stabbed aln Milelly of
Speaker 1: of Boeing Vintage. Coming to to Dearborn, what did he
Speaker 1: do well? For Ford? He changed the culture? What what
Speaker 1: Bill Ford always felt was that Detroit was way too insular,
Speaker 1: that it was industry people talking, industry people playing golf
Speaker 1: of the industry people, and he wanted to shake Ford up,
Speaker 1: and he wanted an outsider who would bring a fresh
Speaker 1: perspective and a whole different management approach. And I think
Speaker 1: you see that courage being demonstrated yet again here where
Speaker 1: he's reached out to another non traditional auto executive and said,
Speaker 1: this industry is in the bigger in the midst of
Speaker 1: actually a much bigger transformation than even what we dealt
Speaker 1: with in two thousand and nine, and he just wanted
Speaker 1: to have fresh leadership to do that. You mentioned that
Speaker 1: the perceptiveness anticipating the financial crisis to come. Are we
Speaker 1: seeing that here as well? Is is forward making a
Speaker 1: calculated smart step in your estimation looking to driverless cars
Speaker 1: to self driving vehicles, it's not. Yes, I think they are,
Speaker 1: but remember it's not just driverless cars. There are three
Speaker 1: things happening that are going to transform this industry. Driverless
Speaker 1: cars are one, Electrification is a second, but probably the
Speaker 1: biggest one is ride sharing. The average cars only used
Speaker 1: four percent of the time. It's most family's second biggest
Speaker 1: capital asset. The rest of the time it sits in
Speaker 1: the garage. You're gonna see. I think a dramatic reduction
Speaker 1: in the number of cars Americans need to buy, and
Speaker 1: Detroit is going to have to reposition itself for that reality.
Speaker 1: Can you quantify that from eighteen million seventeen million the
Speaker 1: run rate is sixty million? Where Steve Rattner's new sixteen million.
Speaker 1: I honestly don't know, Tom it's fair, but it's a
Speaker 1: very fair question. I think it could be twelve. I
Speaker 1: think it could be eleven. It could be something like that.
Speaker 1: I want to go back, and we can do this
Speaker 1: with Ratner, folks, because he was Honors Economics at Brown,
Speaker 1: So it's somebody that actually moved the pencil. One of
Speaker 1: the great unspoken is in corporate America is slick guys
Speaker 1: versus the grind. And time after time after time, I
Speaker 1: see companies with an engineering and economics ethos within the
Speaker 1: C class officers go to marketing guys, go to the
Speaker 1: smooth guys, and then they have to reverse. I saw
Speaker 1: the Google. There was a tangential move at Google. Eastman
Speaker 1: Kodak I lived in. Is that what we saw here?
Speaker 1: I mean within the happy talk of the center from
Speaker 1: the University of Michigan football team, blah blah blah, is
Speaker 1: just really about an engineering ethos like Mallally that took
Speaker 1: a sidestep with Mark Fields and wants to go back
Speaker 1: to somebody that understands how to code or understands how
Speaker 1: to read a slide rule. I suspect there's some truth
Speaker 1: to remember. One of the oddities of the situation is
Speaker 1: that these guys worked together for twenty five years. It's
Speaker 1: not like Bill Ford met Mark Fields three weeks exactly
Speaker 1: and so. And it's a little bit like the Disney
Speaker 1: situation where you had a guy, Tom Staggs, who had
Speaker 1: worked with Bob Iger for twenty years and then discovered
Speaker 1: he wasn't see material. It's very unusual when that happens.
Speaker 1: But I do think it is a move away from
Speaker 1: you called marketing or whatever towards a transformational leader. I think,
Speaker 1: more even than engineering economics, I think Bill Ford wanted
Speaker 1: another transformational leader. What did Mary Burro get right, Well,
Speaker 1: we don't know yet. When Mary barn has gotten right.
Speaker 1: Mary bar has done a good job of calming the waters.
Speaker 1: She's I think made some smart moves and getting out
Speaker 1: of a lot of these margins. Getting out, getting out
Speaker 1: of the marginal mark. Getting out is what this is about. Yeah,
Speaker 1: but you know again, when I was doing cars, there
Speaker 1: was a view that to be a global car maker,
Speaker 1: you need to be a global carmaker. And now the
Speaker 1: view has changed. We'll find out if she's right or not.
Speaker 1: But that's certainly her view. Um. But but again this
Speaker 1: is this is this race is going to be defined, uh,
Speaker 1: not by whether you make cars an India or not.
Speaker 1: It's going to be defined by the three factors that
Speaker 1: I mentioned earlier. How hard is it to affect cultural
Speaker 1: change at these companies? They've been around for a long time,
Speaker 1: they're huge, they have such legacies to them. Obviously, you
Speaker 1: can make changes when you're under financial pressure to do so,
Speaker 1: but to to embark on a radical change in culture,
Speaker 1: how hard. It's It's less hard than you would think.
Speaker 1: And throughout my career I have been struck by the
Speaker 1: ability of great leaders to make cultural change and institutions
Speaker 1: that I thought were impervious best. One of the best
Speaker 1: examples is Luke Gersoner going to IBM when it was
Speaker 1: in trouble and he and he affected huge cultural change.
Speaker 1: Steve Jobs going back to Apple, I mean, you can
Speaker 1: go on. The list is fairly long. It's not it's
Speaker 1: it's not impossible when you look at the relations I
Speaker 1: want to ask you just about the relationship these companies
Speaker 1: have had recently with with the White House. What's that
Speaker 1: meant in your in your estimation, You've had Mary Barr,
Speaker 1: You've had Mark Fields going to the White House with
Speaker 1: great frequency for a time early on in this administration
Speaker 1: to meet with with the president. What's the strength of
Speaker 1: that connection, that that conduit between the greater Detroit area
Speaker 1: and Washington. Right now? Trump is a manufacturing guy, and
Speaker 1: he and and and when you go to Silicon Valley,
Speaker 1: where I was a couple of weeks ago, they feel
Speaker 1: a little unloved by this administration. Uh. In contrast, if
Speaker 1: you make something, you feel very loved. For the point
Speaker 1: of view the company is, if the president invites you,
Speaker 1: of course you go because it can't be bad for
Speaker 1: your business and may be good for your business. And
Speaker 1: obviously presidents very focused on auto jobs and auto plants
Speaker 1: and where they're built and where they're not built and
Speaker 1: all that sort of stuff. So if I were the
Speaker 1: CEO of an auto company, I would try to stay
Speaker 1: close to the White House as well. Boston yesterday at
Speaker 1: this TMT conference that JP Morgan arranged there. Steve may
Speaker 1: not know that cost there's a city to the northeast
Speaker 1: were the baseball team one game above five. You may
Speaker 1: not know. I went to Good morning to all of
Speaker 1: you on route this morning. Continuous. A point that somebody
Speaker 1: made there is you're looking at who's buying tech companies
Speaker 1: investing in tech companies. That's a lot of traditional manufactories,
Speaker 1: traditional companies. You talk about the the uneasy relationship perhaps
Speaker 1: between Washington of today in Silicon Valley. How difficult is
Speaker 1: it for a traditional company like Ford to marry with
Speaker 1: or do work with tech companies. How how difficult is
Speaker 1: the the marrying of those two things. It's hard, and
Speaker 1: some are more successful than others. I think the good
Speaker 1: news is they're all trying. All the auto companies now
Speaker 1: have a footprint of some sort. Obviously GM did that
Speaker 1: large acquisition, Forward did this kind of joint ventury thing
Speaker 1: with BlackBerry of ball things, which has an operating system.
Speaker 1: They all know that they have to do this, but
Speaker 1: it is hard. It's not in their DNA, and we'll
Speaker 1: have to see how it i'n false. Steve Retner, thank
Speaker 1: you so much. Thank you for having guys today, probably
Speaker 1: mostly on the Ford Motor Company of Dearborn at Michigan,
Speaker 1: David Guru, I am on the vintage where I am
Speaker 1: still in lawe of these seven forty seven there are
Speaker 1: seven forty seven's and then there's one and it is
Speaker 1: air Force one taxiing Dave had been a great airport.
Speaker 1: It is just there's just it's generational. I'm sure there's
Speaker 1: something else to be in awe of, but it is
Speaker 1: something to see that plane get out there in text.
Speaker 1: I don't think there's a wait. I don't think I
Speaker 1: don't think he's got a time on the well. But
Speaker 1: I don't know if you know I've mentioned this on
Speaker 1: air folks, but I had a modest waited Reagan a
Speaker 1: month ago with our producer Kieran Buchanan Rita Gupta. I
Speaker 1: believe that was a four hour wait. Surveillance correction coming here,
Speaker 1: Michael Midtown East writing in noting that I was mistaken
Speaker 1: when I said that that flight that President Trump took
Speaker 1: from Saudi Arabia to Druthan flying child, you rather flying
Speaker 1: that route was a pioneering flight Glenn Kessler of the
Speaker 1: Washington Post, noting that in two thousand and eight, President
Speaker 1: George W. Bush made a similar direct flight, but in
Speaker 1: the reverse order, going between Israel Landing and Saudio. Anyway,
Speaker 1: thank you to Michael in Midtown East. We value our
Speaker 1: listeners who are always wiser than we are. We've learned that.
Speaker 1: No excuse me, let me not speak for you, David,
Speaker 1: I've learned that more often than now. What I've learned
Speaker 1: is it Spenno O'Donnell has a unique respective on the
Speaker 1: United Kingdom. She is our reporter in Parliament. In there's
Speaker 1: just something I think Spenya. Being a reporter in Parliament
Speaker 1: is more romantic than being a reporter on Capitol Hill.
Speaker 1: What's it like? Actually being a reporter in Parliament is
Speaker 1: is luxurious, as I would think. I don't know about
Speaker 1: the cruise. I don't think the culpets have been changed. Um,
Speaker 1: it's certainly. I mean, you're in a beautiful historic building
Speaker 1: and and it's a it's a very strange and quirky institution.
Speaker 1: Um in a way sort of fulfills every every cliche
Speaker 1: you've had about probably English public schools, because it very
Speaker 1: much feels like being in one um at the same
Speaker 1: time you're in the you know you're in the corridors
Speaker 1: of power um and you know you're It gives you
Speaker 1: a very very unique perspective, but also in a way
Speaker 1: you've got to be careful not to have a narrow
Speaker 1: one from that because it is a it is a
Speaker 1: very closed world, the unfortunate reality. And we make jokes
Speaker 1: about Parliament in spanness Christian job. But there is terror
Speaker 1: on the River Thames and there's terror in Manchester. How
Speaker 1: will the United Kingdom link those two acts of violence? Well,
Speaker 1: I think the Manchester attack is emerging is something quite different.
Speaker 1: There have been arrest made, the police have made several
Speaker 1: raids since last night. It's looking less and less like
Speaker 1: a learned world attack. We've had several commentators saying that
Speaker 1: I think for the UK broadly, it's something that people
Speaker 1: have been expecting for some time. And compared to France,
Speaker 1: which is which has suffered a few attacks in the
Speaker 1: last year, there's so far been the security services seemed
Speaker 1: to have managed to keep quite a few out in
Speaker 1: the UK, but the UK has certainly been a target
Speaker 1: for a while. Where are we in terms of the
Speaker 1: investigation The Prime Minister Against speaking this morning outside ten
Speaker 1: Downing Street, said that Tim she's confident that the Security
Speaker 1: Service knows the identity of the perpetrator of this attack.
Speaker 1: The investigation is ongoing. What's your sense of where things
Speaker 1: are and where they're heading. Well, I think they're going
Speaker 1: to be very very careful into releasing any further details
Speaker 1: because it's looking increasingly like they may have suspected that
Speaker 1: there were more than one person involved in several people
Speaker 1: at play, whether that was just people who didn't denounce
Speaker 1: a potential attack or some more sinister planning going on.
Speaker 1: So for security reasons, I think that's probably all were
Speaker 1: likely to hear for some time. What's emerging so heartbreaking
Speaker 1: Lee in the last hour is details on some of
Speaker 1: the victims. The youngest victim is an eight year old
Speaker 1: girl who was at the concert with her family, and
Speaker 1: it's that kind of detail, unfortunately, that we're likely to
Speaker 1: get more clarity on as as the day unfolds. How
Speaker 1: about the the identification of victims? Are we are we
Speaker 1: getting any identifications thus far? Is that something that's being
Speaker 1: closely held as well? Well? We've only had two victims identified,
Speaker 1: one an eighteen year old girl in one of the
Speaker 1: eight year old girl I just mentioned, uh time mentioned
Speaker 1: the attack on Parliament just a couple of weeks weeks ago.
Speaker 1: Is there response to these events uniform? In other words,
Speaker 1: are we are we seeing what's happening here mirror what
Speaker 1: happened after that that event as well. But I think
Speaker 1: there's more of a sense today of police really stepping
Speaker 1: up to the mark, and that sort of tells you
Speaker 1: that they're treating this a little bit differently. The Westminster
Speaker 1: attack was horrible, but you know, it was a man
Speaker 1: in a car. It very much looked it had all
Speaker 1: the hallmarks of a of a lone wolf attack. This
Speaker 1: is a suicide bomber that requires a level of planning.
Speaker 1: They've evacuated a shopping center earlier today, they've made several
Speaker 1: raids and houses in South Manchester that arrested someone in connection.
Speaker 1: So this seems to have all the hallmarks of a
Speaker 1: planned attack. I drove by the terms the other day
Speaker 1: and I believe it was the new Scotland Yard building.
Speaker 1: Tell us about intelligence in the United Kingdom. Identify the
Speaker 1: m I or this or that in Scotland Yard and
Speaker 1: how they fit in to the protection of the United Kingdom. Well,
Speaker 1: what's been interesting is it's had a bit of a
Speaker 1: checkered history in recent years because there have been cutbacks
Speaker 1: to security services, to police forces. But in the last
Speaker 1: couple of years they've really beefed up sections such as
Speaker 1: the sort of online data internet surveillance where a lot
Speaker 1: of these terrorist activities are tracked. Of course, you know,
Speaker 1: these cells are often formed on kind of special sites
Speaker 1: and that's one thing that they've really sort of stepped up.
Speaker 1: I think. However, but this incident is really going to
Speaker 1: highlight is that security is going to be very much
Speaker 1: part of the dialogue again, and inevitably the fact that
Speaker 1: there have been cutbacks in the last ten years is
Speaker 1: going to become a matter of discussion. Sonya Donald, thank
Speaker 1: you so much for prospective this morning. She is a
Speaker 1: bloomberg news in our parliament reporter. Let me ask you,
Speaker 1: Director wils if I could just how you reacted to
Speaker 1: the reports in the post in the Times of the
Speaker 1: President in that meeting with the kisley At, the Russian
Speaker 1: ambassador to the US and the Russian Foreign Minister Sergey
Speaker 1: Lavrov evidently reportedly sharing closely held information with them, declaring
Speaker 1: afterward that that is that within his mandate, he's able
Speaker 1: to do it. How did you, as somebody who's spent
Speaker 1: a career in the intelligence side of things, react to
Speaker 1: what happened there? Well, the president is the ultimate authority
Speaker 1: of classificified material, and if he says something is classified,
Speaker 1: unless you want to impeach him, Uh, it's classified. So
Speaker 1: there's no real dispute about it. Uh. In terms of
Speaker 1: his responsibility, it's clear. And the president is the ultimate
Speaker 1: authority on this. And so people who think he has
Speaker 1: been misusing that authority are in a great difficulty because
Speaker 1: they can't factually cite individual words, documents, sentences, numbers, or whatever. Uh.
Speaker 1: You can recite something that somebody said, somebody said, somebody said,
Speaker 1: But uh, if you can't prove your case, Uh, there's
Speaker 1: really only one answer, which is that it is the
Speaker 1: president's authority. Now, if you ask, hypothetically, would it be
Speaker 1: a good idea to share with Russian establishment at the top? Um?
Speaker 1: And this is a KGB state we're talking about for
Speaker 1: all practical purposes um Uh, any information that might lead
Speaker 1: to they're figuring out how we were getting important intelligence.
Speaker 1: That would be a very bad choice. But people make
Speaker 1: choices in those jobs. For different reasons. I was faced
Speaker 1: one time with the question, uh, whether or not to
Speaker 1: go to a major media owner and explained to him
Speaker 1: in terms that he could understand, but which also disclosed
Speaker 1: some extremely sensitive intelligence, UH, whether or not I would
Speaker 1: do that or just sit there and let them publish
Speaker 1: without knowing something that could well give away an agent.
Speaker 1: And I decided to go to the executive and explain
Speaker 1: to him exactly what was going on. And he said, okay,
Speaker 1: we won't we won't use the number in the story,
Speaker 1: thank you. And I said, that's that's the way it's
Speaker 1: supposed to work. But but you can't really do that
Speaker 1: with uh, you know, a Russian uh intelligence officer masquerading
Speaker 1: as a diplomat. If I be interrupt, this is important.
Speaker 1: The president has a unique relationship with Mr Putin and
Speaker 1: with Russia. You you supported the president, you were part
Speaker 1: of his campaign, and you abruptly walked away. Does President
Speaker 1: Trump understand James Woolsey's Russia? I don't know. UM, I'm
Speaker 1: I didn't really walk away. I just told them I
Speaker 1: wanted to recognize that I was not advising the transition.
Speaker 1: Might advise the campaign, but they weren't asking me for
Speaker 1: advice on the transition. I was still out uh doing
Speaker 1: press interviews and so forth, but I just didn't want
Speaker 1: to fly under false colors. UM. I I think that Russia,
Speaker 1: even though it's ideology, Soviet ideology, is dead. Um really
Speaker 1: has historically except for the reign of the wonderful Alexander
Speaker 1: the Second. I wish they had more of him. Uh.
Speaker 1: Russia is a bit like the old farmer that Abraham
Speaker 1: Lincoln used to say lived on the farm next to
Speaker 1: his parents when he was growing up. The old boy
Speaker 1: used to say, I don't need much land, just what
Speaker 1: it joins mine. That's kind of Russia. Uh. You know,
Speaker 1: if if you've got uh one country, region or area,
Speaker 1: then it's pretty good chance that maybe be a good
Speaker 1: idea to take the next one. And that they've always
Speaker 1: been like that. It's it's not any thing particularly related
Speaker 1: to to their recent communist passed, but they're My experience
Speaker 1: with them in for negotiations, three of them were really
Speaker 1: really tough, and we made modest progress. One I headed
Speaker 1: up the conventional force in Europe negotiations and uh Vienna,
Speaker 1: uh and uh. Right after the Berlin Wall went down,
Speaker 1: you have never seen such friendly Russians. Let me tell
Speaker 1: you we were popular guys. Oh yes, this is critical.
Speaker 1: Dexter Filkins wrote yesterday on Jim Maddis General Madis in
Speaker 1: the New Yorker magazine. David Gerr and I interviewed the interview.
Speaker 1: Everyone's saying, what a Secretary Tiller is going to do?
Speaker 1: What is Secretary Maddis going to do to instruct this president?
Speaker 1: Do you agree with that that they're the adults in
Speaker 1: the room and that they've got to somehow mold inform
Speaker 1: this unique president. Well, Uh, they've got a lot to
Speaker 1: do because President has a lot of experience negotiating and
Speaker 1: some experience uh with Russians, although not a great deal, um,
Speaker 1: but that isn't all you need in order to be
Speaker 1: able to deal with the Russians. And I think that
Speaker 1: he started out with a somewhat friendlier uh stance than
Speaker 1: has now evolved over the course of the last several weeks.
Speaker 1: Even good a question. Let me ask you just go
Speaker 1: going back to intelligence sharing. I think that you know,
Speaker 1: we're looking at the Brexit process play out obviously that
Speaker 1: that could have grave consequences for how much intelligence has
Speaker 1: shared with and by the United Kingdom. We saw what
Speaker 1: happened reportedly in the Oval Office as well. Certainly this
Speaker 1: is going to be something I think that will come
Speaker 1: up at the NATO summit that next week. What's the
Speaker 1: state of the way that we share intelligence right now?
Speaker 1: Are we doing it effectively? Is at being done in
Speaker 1: in the most effective white there's not a single UH approach.
Speaker 1: Sometimes you're working on something jointly with a country that
Speaker 1: you're very friendly with, that you've worked with many times
Speaker 1: in the past. Let's say Britain UH, and UM, you
Speaker 1: actually develop an asset or a technique with the two
Speaker 1: of you making a contribution. In those circumstances, even if
Speaker 1: the United States does most of the collecting of the intelligence, UM,
Speaker 1: you wouldn't be able to operate jointly and effectively for
Speaker 1: very long. If you said to the British okay, bye,
Speaker 1: bye bye, thank you for the help. We'll just sit
Speaker 1: on this now ourselves. We don't do that. We we
Speaker 1: work closely with with friends and allies, and sometimes that
Speaker 1: doesn't go well, but lots of the time it doesn't.
Speaker 1: Multiplies are are effectiveness. We'd like you to come back
Speaker 1: and just as the beginning idea to talk about the
Speaker 1: state of our Navy. A lot to talk about there
Speaker 1: there is. I'm I'm worried about carriers survivability, especially if
Speaker 1: it's true that the Russians have this two plus moel
Speaker 1: per hour torpedo that they've provided to the Iranians. That's
Speaker 1: a deadly idea, and particularly within the close confines of
Speaker 1: the Persian golfer just outside of James Wilsey, thank you
Speaker 1: so much. He has the sixteenth Director of the Central
Speaker 1: Intelligence Agency and we're thrilled to have him in today.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keene. David
Speaker 1: Gura is at David Gura. Before the podcast, you can
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