WEBVTT - IMF's Lagarde Says Protectionism Is a Global Threat 0:00:00.120 --> 0:00:02.920 Brought you by Bank of America, Mary Lynch. Investing in 0:00:03.000 --> 0:00:07.840 local communities, economies and a sustainable future. That's the power 0:00:08.080 --> 0:00:12.360 of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated 0:00:12.760 --> 0:00:27.400 Member s i p C. Welcome to the Bloomberg Surveillance Podcast. 0:00:27.800 --> 0:00:31.520 I'm Tom Keene with David Gura. Daily we bring you 0:00:31.560 --> 0:00:36.600 insight from the best in economics, finance, investment, and international relations. 0:00:37.000 --> 0:00:41.600 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 0:00:41.680 --> 0:00:49.479 of course, on the Bloomberg. A little earlier today, our 0:00:49.520 --> 0:00:52.280 colleague Francine Locke sat down with the Managing Director of 0:00:52.280 --> 0:00:55.440 the International Monetary Fund at Christine Legarde in Brussels. She 0:00:55.480 --> 0:00:57.520 had given a speech there on some of the risks 0:00:57.520 --> 0:00:59.520 that the I m F is focusing on, among them 0:00:59.520 --> 0:01:03.400 protect is M and political uncertainty. Let's take a listen 0:01:03.440 --> 0:01:06.240 to what she had to say. Protection is M is 0:01:06.400 --> 0:01:10.800 clearly a threat and one that if it was to 0:01:10.880 --> 0:01:15.600 be realized, would would really be a break on growth, 0:01:15.959 --> 0:01:19.200 would be a break on productivity, would be a break 0:01:19.360 --> 0:01:25.840 on investment, because we are seeing that both innovation and 0:01:25.920 --> 0:01:31.480 trade are conducive to productivity. Productivity is the engine for 0:01:31.520 --> 0:01:35.759 growth and better allocation of resources. So, you know, as 0:01:35.800 --> 0:01:39.720 part of the risks that we see clearly protectionism is one. 0:01:40.600 --> 0:01:44.119 The political uncertainty that we see around the world, particularly 0:01:44.160 --> 0:01:49.560 in the European region is also high on our agenda 0:01:49.600 --> 0:01:54.080 of risks. And you know, the potential for capital flows 0:01:54.720 --> 0:01:58.320 moving from emerging market economies to advanced economies as a 0:01:58.360 --> 0:02:01.440 result of the reinforcement of a dollar and a rise 0:02:01.480 --> 0:02:04.200 of interest rates is a third one. Those are the 0:02:04.240 --> 0:02:08.800 sort of three rieks risks um that apply to a 0:02:08.840 --> 0:02:13.239 situation which you know is quite positive at the moment. 0:02:13.600 --> 0:02:15.919 Do you believe that the Trump administration, though, could be 0:02:16.000 --> 0:02:19.720 less protection is that we feared just at the early 0:02:19.720 --> 0:02:24.560 in the beginning of January. You know, as as always, 0:02:25.120 --> 0:02:32.480 I don't think that any economy would actually um prescribe 0:02:33.200 --> 0:02:40.320 limited growth, limited productivity, limited investment, limited innovation. So if 0:02:40.360 --> 0:02:48.120 if policymakers, including the US policymakers, want better growth, more investment, 0:02:48.400 --> 0:02:52.720 more innovation and productivity, trade is part of the solution. Now, 0:02:52.760 --> 0:02:55.400 then you go into the question of what kind of trade. 0:02:56.120 --> 0:02:59.960 Is it trade with restriction, is it trade with distort 0:03:00.000 --> 0:03:02.760 if measures, and I think everybody, I hope I would 0:03:02.800 --> 0:03:06.120 agree that we do not want distortions. We do not 0:03:06.320 --> 0:03:10.480 want restrictions. We want a trade that is open, that 0:03:10.720 --> 0:03:26.720 is fair and inclusive in order to facilitate opportunities. Great 0:03:26.720 --> 0:03:28.320 to have with us. Mark Chandler had of f X 0:03:28.360 --> 0:03:30.760 at Brown Brothers hereman here in our Bloomberg eleven three 0:03:30.800 --> 0:03:33.079 oh studios. Since I was doing that day to check Mark, 0:03:33.120 --> 0:03:35.520 I was remiss and not mentioning euro yen right now 0:03:35.640 --> 0:03:40.760 one you've been paying particularly close attention to that pair. Why, yeah, sure. 0:03:40.920 --> 0:03:43.960 I think that that euro yen parents captures the axis 0:03:44.040 --> 0:03:46.160 and which you can capture a lot of the driving 0:03:46.200 --> 0:03:50.840 forces right now between the geopolitical concerns in Syria and 0:03:50.920 --> 0:03:54.080 in Korea peninsula as well as the French elections. And 0:03:54.120 --> 0:03:57.240 so that euro yen cross has been moving against the 0:03:57.280 --> 0:04:00.840 Euro for eleven days in a row through yesterday, and 0:04:00.880 --> 0:04:03.520 that's the longest losing streak the euro has had against 0:04:03.560 --> 0:04:06.400 the Japanese yen since the advent of the euro back 0:04:06.400 --> 0:04:09.120 in the late nineties. Does it does it reflect entirely 0:04:09.160 --> 0:04:11.320 geopolitics or is there something else to play when you 0:04:11.320 --> 0:04:14.600 look at the Japanese economy sign well, the Japanese economy 0:04:14.640 --> 0:04:16.600 and the euros on economy is growing. It looks like 0:04:16.640 --> 0:04:20.400 above trend here in Q one as the as both 0:04:20.440 --> 0:04:23.279 economies seem to be catching a good uh sort of 0:04:23.320 --> 0:04:27.080 good traction here. But I think that the you're the 0:04:27.160 --> 0:04:29.880 dollar yen itself. I think it's a relationship that's really 0:04:29.960 --> 0:04:32.279 driven right now by the ten year US yield. And 0:04:32.320 --> 0:04:34.200 so even though a lot of people talked about the 0:04:34.279 --> 0:04:37.400 yen strength yesterday at safe Haven, I don't only see 0:04:37.440 --> 0:04:39.600 that so much. I see short covering of the end, 0:04:39.800 --> 0:04:42.000 but I think it's really being driven by the drop 0:04:42.000 --> 0:04:44.400 in US yields. You know, we were trading roughly to 0:04:44.640 --> 0:04:47.719 thirty two sixty on the tenure UH for several months, 0:04:47.960 --> 0:04:49.880 and we broke through the downside of that and find 0:04:49.920 --> 0:04:52.400 it difficult to get back into that old range, you know, 0:04:52.440 --> 0:04:54.119 Mark chand Are. One of the things I was looking 0:04:54.120 --> 0:04:56.640 at is I was comparing equity markets and going back 0:04:56.680 --> 0:05:00.320 about thirty days, I was checking on the Japanese equity market, 0:05:00.360 --> 0:05:02.520 taking a look also at the SMP five. It looks 0:05:02.520 --> 0:05:04.640 like we've done a round turn. That's so we've just 0:05:04.720 --> 0:05:07.760 come and sort of lapped ourselves almost. Is there any 0:05:08.480 --> 0:05:11.960 context that you can help us understand why this is happening. 0:05:11.960 --> 0:05:14.640 Why we seem to have this uh sort of On 0:05:14.680 --> 0:05:17.200 the one hand, you know, people get bullish, they wait 0:05:17.240 --> 0:05:20.160 for earnings to come out, then everybody sells. Is it 0:05:20.320 --> 0:05:22.279 just really you know, by the news, sell the room 0:05:23.320 --> 0:05:25.479 the otherwise, sell the news by the room or sell 0:05:25.520 --> 0:05:27.599 the news. Yeah, I think that, you know, Brown Brothers, 0:05:27.720 --> 0:05:30.240 we really help our clients through value investing in the problem. 0:05:30.360 --> 0:05:32.480 Right now, there's not a lot of value with stock markets. 0:05:32.839 --> 0:05:35.719 The US stock marketing record highs, many other stock markets 0:05:35.720 --> 0:05:37.960 that had big rallies. Emerging markets have been a real 0:05:38.000 --> 0:05:40.120 surprise in the first quarter up I want to say 0:05:40.160 --> 0:05:43.039 about eight percent or so. The Japanese stock market is 0:05:43.040 --> 0:05:45.040 really making new loads for the year I think yesterday 0:05:45.080 --> 0:05:47.599 or today, and this I think is really reflection of 0:05:47.800 --> 0:05:50.919 the value that we have before, but also the young strength. 0:05:51.279 --> 0:05:53.840 You know, foreigners have been big sellers of Japanese stocks 0:05:53.880 --> 0:05:57.040 most of this year. Very end of March they turned buyers. 0:05:57.279 --> 0:05:59.400 And I suspect that the new fiscal year begins, we'll 0:05:59.400 --> 0:06:02.600 see Japanese capital outflows resume and we'll see foreigners again 0:06:02.720 --> 0:06:07.560 looking at Japanese stocks. As far as the political situation 0:06:07.600 --> 0:06:10.599 goes in in Asia and North Korea. I'm sure that's 0:06:10.640 --> 0:06:13.040 something that you didn't go to school to learn how 0:06:13.080 --> 0:06:15.479 to write about or even think about a factor into 0:06:15.560 --> 0:06:19.160 your analysis. But how do you do that? Yeah? So 0:06:19.600 --> 0:06:21.200 how do people like me look at a couple of things. 0:06:21.200 --> 0:06:23.719 One is we try to understand what's happening, and we 0:06:23.720 --> 0:06:26.320 try to make scenarios about what's going to happen. And 0:06:26.360 --> 0:06:28.560 I think that, you know, the Korean Peninsula is one 0:06:28.560 --> 0:06:31.720 of the left the last of the Cold War sort 0:06:31.720 --> 0:06:35.119 of challenges, and I think that there's you know, it's 0:06:35.400 --> 0:06:38.120 what's really challenging about it is when East when West 0:06:38.160 --> 0:06:40.840 Germany had that leveraged biout of East Germany after the 0:06:40.880 --> 0:06:43.599 Berlin Wall fell, Germany decided to do it on zone 0:06:44.240 --> 0:06:48.240 finance the takeover. But South Korea is not rich enough 0:06:48.480 --> 0:06:51.280 it will do that for North Korea. So it's much 0:06:51.279 --> 0:06:53.480 more of an internationally. And East Germany did not have 0:06:53.560 --> 0:06:56.520 nuclear weapons. East Joreman did have nuclear weapons. But the 0:06:56.600 --> 0:07:00.040 idea is that how can how could the create to 0:07:00.240 --> 0:07:02.880 be united? Is that anybody's interest to really put this 0:07:03.040 --> 0:07:05.560 conflict to rest? And I don't think China would like 0:07:05.600 --> 0:07:09.560 the Korean Peninsula dominated by South Korea US interest. I 0:07:09.600 --> 0:07:12.600 don't think Japan would like a United Korean peninsula where 0:07:12.600 --> 0:07:15.480 it would be a real rival to the Japanese economic 0:07:15.760 --> 0:07:18.960 UH power in in East Asia as well. So I'm 0:07:18.960 --> 0:07:20.840 not sure that anybody has It's sort of like the 0:07:20.840 --> 0:07:23.840 Middle East. Everybody complains about it, and I see that. 0:07:23.920 --> 0:07:25.480 Of course, people try to do things about it, but 0:07:25.480 --> 0:07:26.760 at the end of the day, it might not be 0:07:26.800 --> 0:07:29.600 in the collective interest to really resolve these conflicts, which 0:07:29.640 --> 0:07:31.920 is why they're not resolved. Help us understand how you 0:07:32.000 --> 0:07:35.600 weigh the political risk versus the fundamentals. UH is political 0:07:35.720 --> 0:07:38.840 risk taking precedence at this point, and that's a good question. 0:07:38.840 --> 0:07:40.720 I think that, you know, I start of think of 0:07:40.720 --> 0:07:43.640 it like this, that's it's like a radio actually the markets, 0:07:43.680 --> 0:07:45.960 and I think that sometimes there's noise and sometimes there's 0:07:45.960 --> 0:07:49.000 a signal. And I think that people like myself, our 0:07:49.120 --> 0:07:52.240 job is trying to help investors distinguish between the noise 0:07:52.240 --> 0:07:55.280 and the signal. And I think that the underlying macroeconomic 0:07:55.320 --> 0:07:59.720 fundamentals are the ultimate signal, and the geopolitics is noise, 0:07:59.800 --> 0:08:02.400 though important noise around that signal. And so I think 0:08:02.400 --> 0:08:04.480 it's sort of a bit of a disruption. But I 0:08:04.520 --> 0:08:07.560 think that the geopolitical situation is not something that can 0:08:07.560 --> 0:08:09.640 be sustained. A high level of tension like this cannot 0:08:09.640 --> 0:08:11.760 be sustained. Something has to give, and I think that 0:08:11.800 --> 0:08:14.480 we go back into a more stable situation as we 0:08:14.520 --> 0:08:17.960 get past this this coming weekend. How cognizant is this administration? 0:08:17.960 --> 0:08:20.080 Do you think about what the markets are thinking? We 0:08:20.120 --> 0:08:21.920 can ask about this in the context of the FED 0:08:21.920 --> 0:08:24.280 as well, and you certainly heard from some FED speakers 0:08:24.280 --> 0:08:26.800 that they are aware of or interested in what the 0:08:26.800 --> 0:08:28.680 markets are are doing. But for a guy like you 0:08:28.800 --> 0:08:32.360 trying to find out what administration's policies are, uh, you know, 0:08:32.520 --> 0:08:35.120 do you think there's some sympathy for people the markets, 0:08:35.160 --> 0:08:37.400 for people that's just generally here trying to figure out 0:08:37.440 --> 0:08:39.199 what the heck is going on? I think that's really 0:08:39.200 --> 0:08:41.360 the challenge. I just come back from a long business 0:08:41.400 --> 0:08:43.080 trip in Asia, and I think this is the key 0:08:43.160 --> 0:08:47.800 question everybody has, is the Trump administration unknown quantity. I 0:08:47.840 --> 0:08:51.120 know that there's some experienced people there in the in 0:08:51.160 --> 0:08:53.120 the cabinet, but there's a lot of people with little 0:08:53.120 --> 0:08:57.360 political experience, with little knowledge experience in foreign policy. And 0:08:57.400 --> 0:09:00.319 I think that the communication style all this adds to 0:09:00.480 --> 0:09:04.440 uncertainties signals that are being sent inadvertedly, and so I 0:09:04.440 --> 0:09:07.120 think this is what makes the investment climate all the 0:09:07.160 --> 0:09:11.520 more difficult, uncertainty of policy, untested quantities out there. So 0:09:11.600 --> 0:09:13.679 I think there's a real challenge. But what we try 0:09:13.720 --> 0:09:16.000 to do is still focus on the underlying signal, and 0:09:16.040 --> 0:09:18.880 that's going to be reversion back to macroeconomics, and they're 0:09:18.920 --> 0:09:22.520 the key issue is FED policy, tightening of FED policy, 0:09:23.160 --> 0:09:25.800 balance sheet and what other central banks will do. Bank 0:09:25.840 --> 0:09:28.760 of Japan is still easing policy, e c B is 0:09:28.800 --> 0:09:31.760 still expanding its balance sheet. So I think that the 0:09:31.880 --> 0:09:35.760 divergence still underpins a large, a long dollar position in 0:09:35.800 --> 0:09:37.440 the long run, but we got this noise in the 0:09:37.440 --> 0:09:41.360 short run. Tell us about China and the Chinese you want, 0:09:41.600 --> 0:09:45.240 and I know that Stephen Schwarzman, the head of Black 0:09:45.640 --> 0:09:49.599 black Stone, yesterday was speaking on Bloomberg Television with the 0:09:49.679 --> 0:09:54.360 David Weston in which he spoke about China as a 0:09:54.480 --> 0:09:57.400 currency manipulator, and the point that he made, I believe 0:09:57.520 --> 0:09:59.800 was that he doesn't think that that's going to be 0:09:59.840 --> 0:10:02.720 a label that will get put on the Chinese. Yeah, 0:10:02.720 --> 0:10:05.439 that's my view as well. I think that oftentimes in 0:10:05.520 --> 0:10:09.640 campaigns I think Bush, Obama, Romney all talked about China 0:10:09.679 --> 0:10:12.280 manipulating the currency. It may have in the past, but 0:10:12.360 --> 0:10:15.679 the Treasury Department has come up with a criteria and 0:10:15.800 --> 0:10:18.600 China just doesn't make the criteria. For example, one of 0:10:18.600 --> 0:10:21.720 the criteria is that that a country has a large 0:10:21.960 --> 0:10:25.440 by that they mean more than three percent current account surplus. 0:10:26.280 --> 0:10:28.520 China is close to half of that. I think last 0:10:28.600 --> 0:10:32.000 year is about one point eight percent. Another criteria is 0:10:32.040 --> 0:10:36.160 a country that has increasing currency reserves as they intervene 0:10:36.200 --> 0:10:38.400 in the foreign exchange market. And as we know, over 0:10:38.400 --> 0:10:41.480 the last eighteen months or so, China's reserves have fallen 0:10:41.520 --> 0:10:44.559 by a trillion dollars. A trillion dollars there's more reserves 0:10:44.559 --> 0:10:49.040 in the US Canada have combined. And so again China 0:10:49.040 --> 0:10:50.880 dosn't meet this criteria. And I think this is we 0:10:50.920 --> 0:10:54.880 have to make a distinction between operational policy and declaratory policy. 0:10:54.960 --> 0:10:57.040 How how is that shown up in the market. In 0:10:57.080 --> 0:10:59.280 other words, if if some one didn't tell you that 0:10:59.320 --> 0:11:02.920 the Chinese uh this trillion dollars hadn't flooded out, where 0:11:02.920 --> 0:11:06.000 would you go to see it and understand where it 0:11:06.080 --> 0:11:08.480 ended up going? Yeah, well, this gets a little bit tricky. 0:11:08.520 --> 0:11:09.599 I don't think you can really just look at the 0:11:09.600 --> 0:11:12.280 foreign exchange market because the currency, the R and B, 0:11:12.520 --> 0:11:14.880 is very steady against the dollar. I don't think you 0:11:14.880 --> 0:11:16.880 can look at the Chinese stock market. It's being driven 0:11:16.880 --> 0:11:19.080 by other things. What I would be looking at is 0:11:19.120 --> 0:11:22.319 really is the Chinese companies that borrowed dollars that are 0:11:22.320 --> 0:11:24.800 paying them back, and that the i i f TO 0:11:24.880 --> 0:11:27.959 Institute for the National Finance said that about two thirds 0:11:28.040 --> 0:11:31.559 or those capital outflows from China are really Chinese companies 0:11:31.559 --> 0:11:34.800 who borrowed dollars paying them back. So I'd be looking 0:11:34.800 --> 0:11:36.920 at those kind of below the surface things that are 0:11:36.840 --> 0:11:39.520 a bit bit more difficult, too difficult to find. But 0:11:39.559 --> 0:11:43.959 are there, nonetheless those Chinese companies that are in debt 0:11:44.400 --> 0:11:46.520 and they're paying back in US dollars they borrow the 0:11:46.559 --> 0:11:48.520 dollars and when the dollars and index for that or 0:11:48.559 --> 0:11:50.440 something I mean is there. You just gotta go company 0:11:50.440 --> 0:11:52.160 by company by company and you have to look at 0:11:52.160 --> 0:11:54.440 really what's behind the capital flows. I think a lot 0:11:54.480 --> 0:11:56.360 of us look at the trade flows, but I really 0:11:56.360 --> 0:11:58.000 think that behind the trade flows that was a sort 0:11:58.040 --> 0:12:00.360 of our parents generation. But I think now it's the 0:12:00.400 --> 0:12:02.640 capital market that drives the trade flows, not the other 0:12:02.679 --> 0:12:05.440 way around. David Grew with Pim Fox today, Tom keene 0:12:05.480 --> 0:12:07.840 Off this week, Mark Chandler with us from Brown Brothers. 0:12:07.840 --> 0:12:09.560 Hariman and Mark and I were listening to the interview 0:12:09.600 --> 0:12:12.199 that Francine Lockwood did with Christine Lagard just a few 0:12:12.200 --> 0:12:15.360 minutes ago. She was enumerating risks Mark. She said, it's protectionism, 0:12:15.720 --> 0:12:18.800 political uncertainty. We've talked about both those in some detail. 0:12:18.880 --> 0:12:21.679 That she said, potential for capital flows moving, How does 0:12:21.720 --> 0:12:23.800 that play out in an economy that she says is 0:12:24.320 --> 0:12:26.800 quote quite positive at the moment. Yeah. I think when 0:12:26.840 --> 0:12:29.920 she was getting at David was that typically you'd want 0:12:29.920 --> 0:12:33.680 to see the developed world lend money and invest in 0:12:33.720 --> 0:12:37.880 emerging markets. But really characterized really the pre crisis era, 0:12:38.240 --> 0:12:41.560 pre crisis phase at least was capital flows going from 0:12:41.559 --> 0:12:44.680 emerging markets back to the developed world. And I think 0:12:44.720 --> 0:12:47.000 that the stabilized and the other issue I think that 0:12:47.080 --> 0:12:49.480 the capital flow issue raises is what Pim and I 0:12:49.520 --> 0:12:51.760 had talked about before, and that is that many countries 0:12:51.800 --> 0:12:54.719 and companies borrowed dollars when U S interrust rates were 0:12:54.720 --> 0:12:57.359 low and the dollar was cheap. And now that that 0:12:57.360 --> 0:13:00.400 that cycle is reversing. It looks like there's some dollar 0:13:00.520 --> 0:13:04.600 imbalances out there still, and that becomes also a destabilizing element. 0:13:05.040 --> 0:13:08.119 Francy asked her about China being labeled the currency manipulator, 0:13:08.160 --> 0:13:11.120 the prospect for that happening, and she demurred. Talking about 0:13:11.120 --> 0:13:12.559 the report the I m F is going to release 0:13:12.600 --> 0:13:14.040 here in a couple of months. I noticed the same 0:13:14.080 --> 0:13:17.080 thing happening now within the Trump administration, Stephen Nutan saying 0:13:17.120 --> 0:13:19.000 we're gonna get this forex report, this twice a year 0:13:19.320 --> 0:13:21.960 FX report soon and uh, you know, not not having 0:13:21.960 --> 0:13:24.840 the hot rhetoric that we saw on the campaign trail. Certainly, 0:13:25.360 --> 0:13:26.920 are you ruling that out at this point in light 0:13:26.920 --> 0:13:29.400 of what we're hearing from from the US the U S. Government, 0:13:29.400 --> 0:13:31.120 Do you think it's unlikely that we'll see that that 0:13:31.200 --> 0:13:33.800 labeling happen? In some ways, I think it's unlikely. But 0:13:33.840 --> 0:13:36.120 on the other hand, look at what happened when Japanese 0:13:36.120 --> 0:13:39.319 Prime Minister Abbe visited the US. UH the U S 0:13:39.400 --> 0:13:42.280 and Japan agreed to a high level between the Vice 0:13:42.320 --> 0:13:44.960 President and the Japanese Finance minister to having to have 0:13:45.040 --> 0:13:48.680 trade talks. And now after President she visited the United States, 0:13:48.679 --> 0:13:50.680 the US and China are going to be a hundred 0:13:50.720 --> 0:13:54.320 day crash negotiations on a cabinet level. And it turns 0:13:54.360 --> 0:13:57.120 out that if a country is found guilty of manipulation 0:13:57.160 --> 0:13:59.320 by the U S Tradure Department, the first thing that 0:13:59.360 --> 0:14:02.520 has to happen bilateral trade talks. So I think that 0:14:02.640 --> 0:14:05.080 for me, it's the reason that China doesn't get sady. 0:14:05.080 --> 0:14:07.760 The currency manipulated is one that doesn't meet the criteria. 0:14:07.880 --> 0:14:11.400 And secondly, because there's already these trade talks in place. 0:14:11.679 --> 0:14:14.599 And I think this is really partly the Trump negotiating 0:14:14.600 --> 0:14:18.160 type strategy. Make these outlandish claims and then get the 0:14:18.200 --> 0:14:21.440 other side to uh, to compromise, to make some concessions, 0:14:21.480 --> 0:14:22.960 and then you can pull back, that is, the US 0:14:22.960 --> 0:14:25.840 can pull back from some extreme operation excuse me, some 0:14:26.120 --> 0:14:29.920 extreme declaratory policy, Mark Chandler, Can I just ask you? 0:14:29.960 --> 0:14:32.080 And I know I'm putting in a tough position because 0:14:32.440 --> 0:14:35.600 talking about other people's credibility is always a fool's errand 0:14:35.640 --> 0:14:38.080 but um, you know, we are how many years into 0:14:38.160 --> 0:14:43.200 the Greek crisis eight years? Uh, you have um a 0:14:43.280 --> 0:14:46.840 situation now where a fifth of the Greek population is 0:14:46.840 --> 0:14:51.320 currently unemployed, and that's being generous with the statistics. Uh, 0:14:51.360 --> 0:14:54.760 you're talking about a hundred and eighty percent debt to 0:14:54.920 --> 0:14:58.960 GDP plus about two and a half billion euros has 0:14:59.040 --> 0:15:02.359 just gone out of Greek banks in January and February 0:15:02.360 --> 0:15:05.920 of this year. If you can't solve a problem like Greece, 0:15:05.960 --> 0:15:09.160 which I understand is about the economy, the size of Philadelphia, 0:15:09.880 --> 0:15:12.640 what credibility do you have to talk about all the 0:15:12.720 --> 0:15:16.080 other efforts that are going on around the world. And 0:15:16.400 --> 0:15:17.880 I think that you know, I think that him. This 0:15:17.920 --> 0:15:20.480 is I think a issue that people haven't focused on yet. 0:15:20.920 --> 0:15:22.440 It's coming up. It's gonna coming to a head in 0:15:22.440 --> 0:15:24.400 the next couple of months. And here's what the issue is. 0:15:24.920 --> 0:15:27.400 The German parliament and the Dutch parliaments say the only 0:15:27.400 --> 0:15:30.280 way that they'll give more money to for the grease bailout, 0:15:30.480 --> 0:15:33.320 so called bailout, is if the I m F contributes money. 0:15:33.880 --> 0:15:36.520 The US is not sure that it wants to okay 0:15:36.600 --> 0:15:38.920 the I m F to contribute even more money to Greece. 0:15:39.760 --> 0:15:41.480 Isn't this a problem? I think you the point that 0:15:41.600 --> 0:15:43.560 I hear you raising. Isn't this a problem that europe 0:15:43.560 --> 0:15:46.280 can solve themselves? Do they need you? If Tillerson says, 0:15:46.280 --> 0:15:49.080 what do US taxpayers have an interest in Ukraine? Surely 0:15:49.200 --> 0:15:52.200 U S taxpayers don't have an interest in bailing out griefs. 0:15:52.640 --> 0:15:55.200 And so I could conceive of a situation where the 0:15:55.320 --> 0:15:58.080 I m F board rejects that is, with the US 0:15:58.160 --> 0:16:00.360 veto tells the I m F it cannot lend more 0:16:00.400 --> 0:16:02.680 money to degrees, and there causes a bit of a 0:16:02.720 --> 0:16:05.120 crisis in Europe, because then what can the Germans do 0:16:05.480 --> 0:16:07.800 a few months ahead of their national elections? Couldn't you 0:16:07.840 --> 0:16:10.880 foresee a similar conversation where somebody off handedly says, why 0:16:10.920 --> 0:16:14.120 do US taxpayers care about the IMV? Yeah? I think 0:16:14.160 --> 0:16:16.360 you know. This is an important point I think is 0:16:16.400 --> 0:16:19.480 that that is that the the American first rhetoric of 0:16:19.560 --> 0:16:21.840 Trump's is not hearkened back to World War Two, but 0:16:22.000 --> 0:16:25.240 World War One. And remember what happens after Woodrow Wilson 0:16:25.400 --> 0:16:28.360 proposes the League of Nations. The Senate says, no, you don't. 0:16:29.160 --> 0:16:31.000 And what the US was launching then, even though a 0:16:31.000 --> 0:16:32.880 lot of people call it an isolationist phase, it was 0:16:32.920 --> 0:16:36.480 really unilateralist. And I think this is the issue the 0:16:36.560 --> 0:16:38.480 under the Trump administration. I think the idea is that 0:16:38.520 --> 0:16:43.040 these multi lateral institutions may prevent the US from articulating 0:16:43.120 --> 0:16:45.800 or expressing its national interest, but I think that at 0:16:45.800 --> 0:16:48.000 the end of the day, uh, the US will be 0:16:48.000 --> 0:16:50.680 hesitant to break from these, even though it might perhaps, 0:16:50.760 --> 0:16:52.880 as they've hinted, not necessarily listen to the all the 0:16:53.080 --> 0:16:56.640 w t O declarations UH where they where they try 0:16:56.640 --> 0:17:00.680 to exert their influence stronger within these multi lavel institutions 0:17:01.000 --> 0:17:04.520 and enforced more vigorously some of the trade agreements. So 0:17:04.560 --> 0:17:07.840 I think that this is a risk that the protectionist, nationalist, 0:17:08.080 --> 0:17:11.480 scorched earth wing of the Trump administration wins out. But 0:17:11.640 --> 0:17:14.919 right now I'd say it looks like, uh, maybe a 0:17:15.000 --> 0:17:19.320 tilt the other way with that Kushner Bannon reproache mais 0:17:19.400 --> 0:17:21.639 that seemed to be in place as of last weekend. 0:17:21.680 --> 0:17:23.520 Our Mark Channel with Brown Brothers Harriman, thanks for being 0:17:23.520 --> 0:17:34.720 with us. Appreciated. Brought you by Bank of America, Mary Lynch. 0:17:34.840 --> 0:17:39.080 Dedicated to bringing our clients insights and solutions to meet 0:17:39.119 --> 0:17:42.600 the challenges of a transforming world. That's the power of 0:17:42.640 --> 0:17:48.479 global connections. Mary Lynch, Pierce Federin Smith Incorporated, Member s 0:17:48.520 --> 0:17:54.760 I p C. Turning out a foreign policy he had 0:17:54.760 --> 0:17:56.679 a four year tour of duty in Brussels is the 0:17:56.680 --> 0:17:59.720 Supreme Allied Commander, Admiral James Debritus is now doing the 0:17:59.720 --> 0:18:02.000 flex A School the Toughts University. He's anost is great 0:18:02.000 --> 0:18:03.679 to talk with you, is always, especially on this day 0:18:03.720 --> 0:18:05.960 when the NATO Secretary General is in Washington, d c. 0:18:06.440 --> 0:18:08.160 For a series of meetings at the White House. Will 0:18:08.200 --> 0:18:11.000 he'll hear from him later this afternoon when he and 0:18:11.040 --> 0:18:13.600 the President have a press conference at the White House. 0:18:14.040 --> 0:18:15.760 How confident are you that we're going to move beyond 0:18:15.760 --> 0:18:19.040 the conversation about funding with these two leaders today. It's 0:18:19.080 --> 0:18:21.400 something that the President is very keen to talk about. 0:18:21.440 --> 0:18:23.960 He has been keen to talk about. Has he has 0:18:24.000 --> 0:18:26.000 he made his voice heard on that issue enough? Do 0:18:26.000 --> 0:18:28.560 you think we can move past it? I think he has. 0:18:28.600 --> 0:18:31.119 And you know, there's a business show. If a NATO 0:18:31.280 --> 0:18:33.440 or a stock I would say now is a pretty 0:18:33.480 --> 0:18:35.520 good time to buy some more of it. Um. It 0:18:35.680 --> 0:18:40.040 is going to be a good conversation about the challenges 0:18:40.119 --> 0:18:43.600 that Russia poses to the Alliance, about the possibility for 0:18:44.160 --> 0:18:48.119 additional NATO resources devoted to the fight against Syria, and 0:18:48.200 --> 0:18:50.760 hopefully a little bit about cybersecurity and how we can 0:18:50.760 --> 0:18:54.280 work together on that. So yes, I think message received 0:18:54.320 --> 0:18:57.040 at NATO on the funding and we are going to 0:18:57.080 --> 0:18:59.399 be able to move beyond it. Uh, it's gonna be 0:18:59.480 --> 0:19:03.280 an awkward conversation to have about the one sentence offhand 0:19:03.320 --> 0:19:06.359 remarks seemingly the Secretary of State Rex Tillerson made yesterday 0:19:06.400 --> 0:19:09.480 about about the Ukraine. He said, well, why should US 0:19:09.520 --> 0:19:12.000 taxpayers care about Ukraine? If you, if you had a 0:19:12.000 --> 0:19:13.800 few minutes with the Secretary, what would you say in 0:19:13.840 --> 0:19:17.480 response to that? I would say that any time we 0:19:17.720 --> 0:19:22.240 allow a big nation like Russia to invade a relatively 0:19:22.280 --> 0:19:25.639 small nation like Ukraine and carve off a significant chunk 0:19:25.680 --> 0:19:29.080 of its territory, in this case the CRIMEA, if we, 0:19:29.400 --> 0:19:32.320 as an international community, and as the United States as 0:19:32.359 --> 0:19:36.240 a leading nation, allow that to happen, we are all 0:19:36.320 --> 0:19:40.120 at risk. And therefore I would say to the American 0:19:40.160 --> 0:19:42.720 taxpayers that we don't have to send a couple of 0:19:42.800 --> 0:19:45.639 hundred thousand troops to Ukraine, but we ought to be 0:19:45.680 --> 0:19:49.240 in the game helping arm their military and pushing back 0:19:49.280 --> 0:19:52.560 against this kind of Russian aggression. It's in our global 0:19:52.680 --> 0:19:55.960 interest to do so. Admiralstravitas, I wonder if you could 0:19:56.000 --> 0:19:59.560 share just a bit of your personal history to demonstrate 0:19:59.600 --> 0:20:02.760 how tractable some of these conflicts can be. And I'm 0:20:02.800 --> 0:20:06.399 thinking of your grandfather and Turkey and then your return 0:20:06.480 --> 0:20:12.080 to Turkey. I can. In nine two my grandparents became refugees. 0:20:12.240 --> 0:20:15.240 They were of Greek descent, but they were citizens of 0:20:15.280 --> 0:20:18.280 the Ottoman Empire, living in western Turkey in a town 0:20:18.359 --> 0:20:22.760 then called Smyrna today it's known as Zazmir. The Turks Uh, 0:20:23.080 --> 0:20:26.720 to put it politely, invited them to leave. They became refugees. 0:20:26.760 --> 0:20:29.360 The city was burned, they were rescued by Greek fishermen 0:20:29.960 --> 0:20:33.560 and therefore came to Ellis Island. So my family story 0:20:33.640 --> 0:20:36.919 is born out of these kind of refugee challenges. Now 0:20:37.160 --> 0:20:39.520 the question would be for someone like me who has 0:20:39.560 --> 0:20:43.520 a shall we say, complicated family history with Turkey, can 0:20:43.600 --> 0:20:46.960 I rise above that? And the answer is yes. And 0:20:47.080 --> 0:20:49.800 when I was NATO Commander, the first city I visited 0:20:49.920 --> 0:20:54.080 as the Supreme Alley Commander was Anca, Turkey. And after 0:20:54.760 --> 0:20:59.120 four years as the commander, when I left, the Turkish 0:20:59.320 --> 0:21:03.439 Foreign Minister h later the Prime Minister, Ahmed Davitt, who 0:21:03.520 --> 0:21:07.359 presented me with a book of vintage postcards made of 0:21:07.400 --> 0:21:11.560 the Greek community in Smyrna in the nineteen twenties, and 0:21:11.600 --> 0:21:15.120 he said, Admiral, you have helped us see that we 0:21:15.760 --> 0:21:19.320