Speaker 1: This is Bloomberg Surveillance. Volatility is going to be one
Speaker 1: of the few constants in this environment, and that's because
Speaker 1: there are all of these structural changes that are hard
Speaker 1: to understand. All the signs are and all the trend
Speaker 1: lines indicate that inflation is more likely to accelerate. We've
Speaker 1: got to go back to to find capital levels in
Speaker 1: the banking industry as high as they are today, and
Speaker 1: that affects the r E. Bloomberg Surveillance your link to
Speaker 1: the world of economics, finance, and investment on Bloomberg Radio.
Speaker 1: Good morning everyone, Michael McKee and Tom King, we said
Speaker 1: good morning worldwide. In this hour, George Friedman joins US
Speaker 1: geopolitical futures on maybe the advice taken by Secretary Clinton
Speaker 1: and Mr Trump is the United States looks at its
Speaker 1: international projection. Also George Friedman on Germany as well. We
Speaker 1: will look to that in this our right now. We
Speaker 1: will look to futures a negative six down, futures negative
Speaker 1: fifty four, a deterioration of modest deterioration but nevertheless persistent
Speaker 1: in the equity markets. The fore x brief and for
Speaker 1: an exchange stronger dollar brought you by Interactive Broker's winner
Speaker 1: of f X Weeks two thousand fifteen award for the
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Speaker 1: b k R dot Com Slash four X Dollar Stronger
Speaker 1: d X Y make a dash to nine five Not
Speaker 1: there yen one oh ninety three Euro Weaker Weaker Weaker
Speaker 1: one twelve seventy four Sterling makes a jump off a
Speaker 1: pole in England, which suggested that they will remain in
Speaker 1: the Euro one four out to a solid fifty three
Speaker 1: right now. Um, I guess that's about it. R Mindby
Speaker 1: has been grinding weaker over the last number of days.
Speaker 1: Brazilian Real weaker this morning three point five five as well, Michael,
Speaker 1: you wonder what would happen if our two presidential candidates
Speaker 1: were locked in a room with George Friedman of Geopolitical Futures.
Speaker 1: That would be interesting. At least one of them would
Speaker 1: learn something we we would we would see from that
Speaker 1: George Friedman with us, What would you do with Secretary
Speaker 1: Clinton or Mr Trump? What advice would you give them? Um?
Speaker 1: I've give him very little advice because in fact, what
Speaker 1: they want to do is not what's going to happen.
Speaker 1: Look at all our presidents. Uh, George W. Bush never
Speaker 1: thought his presidency was with a bout a war in
Speaker 1: Afghanistan and Iraq. Obama really thought he was going to
Speaker 1: leave them at least. Um. Presidents don't make history. Uh.
Speaker 1: History makes presidents, especially in the American system, with that
Speaker 1: it is incredibly weak. Has to deal with Congress, has
Speaker 1: to deal with Supreme Court, has to deal with face.
Speaker 1: We would just make too much love the presidency? How
Speaker 1: did that? Usually with a little technical difficult there will
Speaker 1: keep going and see if we can fix it. George Friedman,
Speaker 1: how does it change the budget forward? With the Pentagon?
Speaker 1: I'm assuming Secretary Clinton has some experience there. Do you
Speaker 1: do you say at night? Within geopolitical futures and worry
Speaker 1: about the budgeting of our defense or for that matter,
Speaker 1: our offense. We actually spend a lot of time worrying
Speaker 1: not about the budget itself, but how it's spent. There
Speaker 1: are a lot of very old weapons systems, aircraft carriers, tanks, uh,
Speaker 1: that we spend a lot of money on and that
Speaker 1: are highly vulnerable. There are new weapons coming out like
Speaker 1: interconmental hypersonic missiles that can reach targets and fifteen minutes
Speaker 1: that we should be spending money on. We are spending
Speaker 1: with some money on, but there's a technological revolution taking
Speaker 1: place in warfare, and to great extent the military is
Speaker 1: staying with the old game. So I'm less concerned about
Speaker 1: how much we spend than how we're spending it. Yeah, um,
Speaker 1: let's go back to the missile gap. What is the
Speaker 1: gap militarily between us and the rest of the world.
Speaker 1: Aren't we so far ahead that you know we can
Speaker 1: survive this? It's it's it's uh not going to cost
Speaker 1: us so much to not spend for the newest, latest,
Speaker 1: greatest toy. Well, the latest greatest toy usually is the
Speaker 1: one that's going to save you. We didn't spend money
Speaker 1: in aircraft carriers before World War Two, so they're not
Speaker 1: toys there is. We have a huge lead on conventional forces,
Speaker 1: so we certainly are very powerful in relationship to the Russians.
Speaker 1: Our problems with logistics getting our forces there to fight
Speaker 1: them if we ever have to. Uh. So we spend
Speaker 1: a great deal of money one generation of aircraft not unimportant,
Speaker 1: but when we look at the kind of wars we're
Speaker 1: going to fight, we're not spending enough money on nuts
Speaker 1: and bol non glamorous things that we have to spend
Speaker 1: our money on, and we have never mastered uh what's
Speaker 1: called asymmetric warfare. We know how to defeat an enemy's army,
Speaker 1: we don't have the ability to occupy an enemy's country,
Speaker 1: as we learned Afghanistan, Iraq, Olivia. So there are huge
Speaker 1: gaps in what we do, and we keep doing what
Speaker 1: we did before because it's easier to do that. So
Speaker 1: the budget itself is a small fraction of the American GDP.
Speaker 1: It can be reduced somewhat, but it's not going to
Speaker 1: make any great difference to the United States. It's how
Speaker 1: we spend it in what kind of wars we expect
Speaker 1: that we really have to focus on, Well, what what
Speaker 1: do we expect? And uh, what is being done to
Speaker 1: address that? I mean, are we learning the lessons we
Speaker 1: need to learn? No, we always assume that the weapon
Speaker 1: system of the last war, in this case World War
Speaker 1: to believe it or not, in the aircraft carrier, the
Speaker 1: tank to the man bomber are going to be the
Speaker 1: one in the future. Uh. It's very difficult to change
Speaker 1: a culture of anything, but certainly a military culture is
Speaker 1: difficult to change. We transformed ourselves after World War Two
Speaker 1: and the advent of nuclear weapons. To be all about
Speaker 1: nuclear weapons, well, that really isn't the key element today.
Speaker 1: So I mean what really drives UH military change? Unfortunately
Speaker 1: its defeat and Pearl Harbor transforms everything. But the thing
Speaker 1: we have to remember is that every century has its
Speaker 1: major period of peer war. The twentieth century had it,
Speaker 1: the nineteen had it. Within the probiotic wars, it always happens.
Speaker 1: The twenty one century is not going to be the
Speaker 1: first century about it. Within that is the idea of Europe.
Speaker 1: You've written recently on Germany's invisible crisis. Let me start
Speaker 1: with what Mike of and I've noticed an interviewed the interview,
Speaker 1: which is this new polarity and I'll call it populous
Speaker 1: slash right wing success in Europe? Have you been writing
Speaker 1: about her thinking about fascism at all? I mean, is
Speaker 1: that a global risk, a certitude among a more right
Speaker 1: wing a government nation to nation to nation in the
Speaker 1: coming years. I'm not sure what right wing means. What
Speaker 1: is happening, however, is the European Union is failing, and
Speaker 1: that means the only effective institutions in Europe are the
Speaker 1: nations and so you're getting in Poland and Hungary and
Speaker 1: in other countries governments that are far less interested in
Speaker 1: what Europe is going to do and far more interested
Speaker 1: in what they're going to do. Uh. They're accused of
Speaker 1: being fascist, that you McCarthyism. Everybody you didn't like was
Speaker 1: a communist. Now they're a fascist. But what they really
Speaker 1: are as nationalist or what SWEE mean the world, including
Speaker 1: the United States, which is what Donald Trump ultimately represents,
Speaker 1: is a belief that the national system, this idea of globalism,
Speaker 1: of integration that are all in the same boat, just
Speaker 1: isn't working. What is happening in Europe is happening around
Speaker 1: the world. Uh, the idea that the nation state is
Speaker 1: the only thing that really works. We're going to have
Speaker 1: to uh have relations with other countries. Uh, we will
Speaker 1: happen selectively. But the reflective idea that we must go
Speaker 1: to an international institution to function, that's going by the
Speaker 1: but by the boards, not only in Europe but really
Speaker 1: around the world. Well, do you see anybody, and I'm
Speaker 1: not talking political candidates, I'm talking think think kind of
Speaker 1: people or anything like that, who's come up with a
Speaker 1: new framework. Where's the George Kennon of two thousand and
Speaker 1: six Week Questions. Well, and I'm not George Kennon by
Speaker 1: any means, but my view is this, which is that
Speaker 1: the NATO, the I m F, all of these emerged
Speaker 1: from the Cold War. The Cold War ended twenty five
Speaker 1: years ago. We're still using Cold War institutions to try
Speaker 1: to drive the system. NATO, for example, simply doesn't work. Uh,
Speaker 1: Europe has a population that's two million larger than ours
Speaker 1: and a g d P that's larger. They taste small
Speaker 1: fraction for defense. The idea to the United States is
Speaker 1: going to continue to guarantee NATO twenty five years after
Speaker 1: the Cold War while the Europeans spent very little. It
Speaker 1: just doesn't work. Nevertheless, there's a kind of commitment to NATO.
Speaker 1: The new policy has to be that we are prepared
Speaker 1: to have bilateral relations with any number of countries that
Speaker 1: are interest by. The automatic commitment to all of Europe
Speaker 1: all the time is both beyond our capacity and really unfair.
Speaker 1: The Europeans can send themselves I M S. What does
Speaker 1: it do, really, what does it really solve problem? That's
Speaker 1: the issue. Well, George, thank you so much. George Friedman,
Speaker 1: as always geopolitical futures. We could go on and on
Speaker 1: with some of his thoughts, always controversial thoughts about the
Speaker 1: positioning of the United States within uh global geopolitics as well.
Speaker 1: Futures deteriorate negative eight down futures negative seventy twenty minutes one,
Speaker 1: or rather nineteen minutes to the market opening. The vixed
Speaker 1: trades down before the market. A little bit of angst,
Speaker 1: but nothing like what we're seeing on the actual tape.
Speaker 1: Fifteen point six five on the Vicks, Brent Crude made
Speaker 1: a dash for fifty, did not get there. Forty eight
Speaker 1: thirty two cents West Texas eleven a barrel. Let's check
Speaker 1: it with Mikael bar and get the latest world of
Speaker 1: National head Mike Tom, Thank you very much. Bernie Sanders
Speaker 1: won the Oregon Democratic primary. Unders told supporters he's going
Speaker 1: to stay in the race until the end. Front Runner
Speaker 1: Hillary Clinton claimed victory in Kentucky, where she leads Sanders
Speaker 1: buy less than one half of one. Clinton is still
Speaker 1: way ahead of Sanders in delegates. You know he needs
Speaker 1: ninety two from the nomination. The Senate voted to advance
Speaker 1: one point one billion dollars of emergency funding to fight
Speaker 1: the Zeke of virus. It is less than the one
Speaker 1: point nine billion dollars President Obama requested, but more than
Speaker 1: the house version of six hundred twenty two million dollars.
Speaker 1: Rescuers are looking for about two hundred families in central
Speaker 1: Sri Lanka after a landslide engulfed three villages following heavy rains.
Speaker 1: Global News twenty four hours a day, powered by our
Speaker 1: twenty four hundred journalists and more than a hundred fifty
Speaker 1: news bureaus around the world. Now Michael bar nighttime, and Michael,
Speaker 1: thanks so much again. The futures negative seventh, futures negative
Speaker 1: sixty eight. They're Greenham the screen two hours ago and
Speaker 1: I've rolled over modestly. The euro one twelve eighty three
Speaker 1: week or sterling advances at the two. This is Bloomberg's
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