WEBVTT - Friedman: NATO simply doesn't work

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<v Speaker 1>This is Bloomberg Surveillance. Volatility is going to be one

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<v Speaker 1>of the few constants in this environment, and that's because

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<v Speaker 1>there are all of these structural changes that are hard

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<v Speaker 1>to understand. All the signs are and all the trend

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<v Speaker 1>lines indicate that inflation is more likely to accelerate. We've

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<v Speaker 1>got to go back to to find capital levels in

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<v Speaker 1>the banking industry as high as they are today, and

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<v Speaker 1>that affects the r E. Bloomberg Surveillance your link to

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<v Speaker 1>the world of economics, finance, and investment on Bloomberg Radio.

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<v Speaker 1>Good morning everyone, Michael McKee and Tom King, we said

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<v Speaker 1>good morning worldwide. In this hour, George Friedman joins US

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<v Speaker 1>geopolitical futures on maybe the advice taken by Secretary Clinton

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<v Speaker 1>and Mr Trump is the United States looks at its

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<v Speaker 1>international projection. Also George Friedman on Germany as well. We

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<v Speaker 1>will look to that in this our right now. We

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<v Speaker 1>will look to futures a negative six down, futures negative

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<v Speaker 1>fifty four, a deterioration of modest deterioration but nevertheless persistent

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<v Speaker 1>in the equity markets. The fore x brief and for

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<v Speaker 1>an exchange stronger dollar brought you by Interactive Broker's winner

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<v Speaker 1>of f X Weeks two thousand fifteen award for the

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<v Speaker 1>best Retail for X training platform visit ib at I

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<v Speaker 1>b k R dot Com Slash four X Dollar Stronger

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<v Speaker 1>d X Y make a dash to nine five Not

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<v Speaker 1>there yen one oh ninety three Euro Weaker Weaker Weaker

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<v Speaker 1>one twelve seventy four Sterling makes a jump off a

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<v Speaker 1>pole in England, which suggested that they will remain in

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<v Speaker 1>the Euro one four out to a solid fifty three

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<v Speaker 1>right now. Um, I guess that's about it. R Mindby

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<v Speaker 1>has been grinding weaker over the last number of days.

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<v Speaker 1>Brazilian Real weaker this morning three point five five as well, Michael,

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<v Speaker 1>you wonder what would happen if our two presidential candidates

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<v Speaker 1>were locked in a room with George Friedman of Geopolitical Futures.

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<v Speaker 1>That would be interesting. At least one of them would

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<v Speaker 1>learn something we we would we would see from that

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<v Speaker 1>George Friedman with us, What would you do with Secretary

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<v Speaker 1>Clinton or Mr Trump? What advice would you give them? Um?

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<v Speaker 1>I've give him very little advice because in fact, what

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<v Speaker 1>they want to do is not what's going to happen.

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<v Speaker 1>Look at all our presidents. Uh, George W. Bush never

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<v Speaker 1>thought his presidency was with a bout a war in

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<v Speaker 1>Afghanistan and Iraq. Obama really thought he was going to

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<v Speaker 1>leave them at least. Um. Presidents don't make history. Uh.

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<v Speaker 1>History makes presidents, especially in the American system, with that

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<v Speaker 1>it is incredibly weak. Has to deal with Congress, has

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<v Speaker 1>to deal with Supreme Court, has to deal with face.

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<v Speaker 1>We would just make too much love the presidency? How

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<v Speaker 1>did that? Usually with a little technical difficult there will

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<v Speaker 1>keep going and see if we can fix it. George Friedman,

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<v Speaker 1>how does it change the budget forward? With the Pentagon?

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<v Speaker 1>I'm assuming Secretary Clinton has some experience there. Do you

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<v Speaker 1>do you say at night? Within geopolitical futures and worry

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<v Speaker 1>about the budgeting of our defense or for that matter,

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<v Speaker 1>our offense. We actually spend a lot of time worrying

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<v Speaker 1>not about the budget itself, but how it's spent. There

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<v Speaker 1>are a lot of very old weapons systems, aircraft carriers, tanks, uh,

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<v Speaker 1>that we spend a lot of money on and that

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<v Speaker 1>are highly vulnerable. There are new weapons coming out like

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<v Speaker 1>interconmental hypersonic missiles that can reach targets and fifteen minutes

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<v Speaker 1>that we should be spending money on. We are spending

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<v Speaker 1>with some money on, but there's a technological revolution taking

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<v Speaker 1>place in warfare, and to great extent the military is

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<v Speaker 1>staying with the old game. So I'm less concerned about

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<v Speaker 1>how much we spend than how we're spending it. Yeah, um,

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<v Speaker 1>let's go back to the missile gap. What is the

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<v Speaker 1>gap militarily between us and the rest of the world.

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<v Speaker 1>Aren't we so far ahead that you know we can

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<v Speaker 1>survive this? It's it's it's uh not going to cost

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<v Speaker 1>us so much to not spend for the newest, latest,

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<v Speaker 1>greatest toy. Well, the latest greatest toy usually is the

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<v Speaker 1>one that's going to save you. We didn't spend money

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<v Speaker 1>in aircraft carriers before World War Two, so they're not

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<v Speaker 1>toys there is. We have a huge lead on conventional forces,

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<v Speaker 1>so we certainly are very powerful in relationship to the Russians.

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<v Speaker 1>Our problems with logistics getting our forces there to fight

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<v Speaker 1>them if we ever have to. Uh. So we spend

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<v Speaker 1>a great deal of money one generation of aircraft not unimportant,

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<v Speaker 1>but when we look at the kind of wars we're

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<v Speaker 1>going to fight, we're not spending enough money on nuts

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<v Speaker 1>and bol non glamorous things that we have to spend

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<v Speaker 1>our money on, and we have never mastered uh what's

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<v Speaker 1>called asymmetric warfare. We know how to defeat an enemy's army,

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<v Speaker 1>we don't have the ability to occupy an enemy's country,

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<v Speaker 1>as we learned Afghanistan, Iraq, Olivia. So there are huge

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<v Speaker 1>gaps in what we do, and we keep doing what

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<v Speaker 1>we did before because it's easier to do that. So

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<v Speaker 1>the budget itself is a small fraction of the American GDP.

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<v Speaker 1>It can be reduced somewhat, but it's not going to

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<v Speaker 1>make any great difference to the United States. It's how

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<v Speaker 1>we spend it in what kind of wars we expect

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<v Speaker 1>that we really have to focus on, Well, what what

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<v Speaker 1>do we expect? And uh, what is being done to

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<v Speaker 1>address that? I mean, are we learning the lessons we

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<v Speaker 1>need to learn? No, we always assume that the weapon

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<v Speaker 1>system of the last war, in this case World War

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<v Speaker 1>to believe it or not, in the aircraft carrier, the

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<v Speaker 1>tank to the man bomber are going to be the

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<v Speaker 1>one in the future. Uh. It's very difficult to change

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<v Speaker 1>a culture of anything, but certainly a military culture is

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<v Speaker 1>difficult to change. We transformed ourselves after World War Two

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<v Speaker 1>and the advent of nuclear weapons. To be all about

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<v Speaker 1>nuclear weapons, well, that really isn't the key element today.

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<v Speaker 1>So I mean what really drives UH military change? Unfortunately

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<v Speaker 1>its defeat and Pearl Harbor transforms everything. But the thing

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<v Speaker 1>we have to remember is that every century has its

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<v Speaker 1>major period of peer war. The twentieth century had it,

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<v Speaker 1>the nineteen had it. Within the probiotic wars, it always happens.

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<v Speaker 1>The twenty one century is not going to be the

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<v Speaker 1>first century about it. Within that is the idea of Europe.

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<v Speaker 1>You've written recently on Germany's invisible crisis. Let me start

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<v Speaker 1>with what Mike of and I've noticed an interviewed the interview,

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<v Speaker 1>which is this new polarity and I'll call it populous

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<v Speaker 1>slash right wing success in Europe? Have you been writing

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<v Speaker 1>about her thinking about fascism at all? I mean, is

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<v Speaker 1>that a global risk, a certitude among a more right

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<v Speaker 1>wing a government nation to nation to nation in the

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<v Speaker 1>coming years. I'm not sure what right wing means. What

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<v Speaker 1>is happening, however, is the European Union is failing, and

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<v Speaker 1>that means the only effective institutions in Europe are the

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<v Speaker 1>nations and so you're getting in Poland and Hungary and

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<v Speaker 1>in other countries governments that are far less interested in

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<v Speaker 1>what Europe is going to do and far more interested

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<v Speaker 1>in what they're going to do. Uh. They're accused of

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<v Speaker 1>being fascist, that you McCarthyism. Everybody you didn't like was

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<v Speaker 1>a communist. Now they're a fascist. But what they really

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<v Speaker 1>are as nationalist or what SWEE mean the world, including

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<v Speaker 1>the United States, which is what Donald Trump ultimately represents,

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<v Speaker 1>is a belief that the national system, this idea of globalism,

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<v Speaker 1>of integration that are all in the same boat, just

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<v Speaker 1>isn't working. What is happening in Europe is happening around

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<v Speaker 1>the world. Uh, the idea that the nation state is

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<v Speaker 1>the only thing that really works. We're going to have

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<v Speaker 1>to uh have relations with other countries. Uh, we will

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<v Speaker 1>happen selectively. But the reflective idea that we must go

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<v Speaker 1>to an international institution to function, that's going by the

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<v Speaker 1>but by the boards, not only in Europe but really

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<v Speaker 1>around the world. Well, do you see anybody, and I'm

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<v Speaker 1>not talking political candidates, I'm talking think think kind of

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<v Speaker 1>people or anything like that, who's come up with a

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<v Speaker 1>new framework. Where's the George Kennon of two thousand and

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<v Speaker 1>six Week Questions. Well, and I'm not George Kennon by

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<v Speaker 1>any means, but my view is this, which is that

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<v Speaker 1>the NATO, the I m F, all of these emerged

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<v Speaker 1>from the Cold War. The Cold War ended twenty five

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<v Speaker 1>years ago. We're still using Cold War institutions to try

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<v Speaker 1>to drive the system. NATO, for example, simply doesn't work. Uh,

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<v Speaker 1>Europe has a population that's two million larger than ours

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<v Speaker 1>and a g d P that's larger. They taste small

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<v Speaker 1>fraction for defense. The idea to the United States is

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<v Speaker 1>going to continue to guarantee NATO twenty five years after

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<v Speaker 1>the Cold War while the Europeans spent very little. It

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<v Speaker 1>just doesn't work. Nevertheless, there's a kind of commitment to NATO.

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<v Speaker 1>The new policy has to be that we are prepared

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<v Speaker 1>to have bilateral relations with any number of countries that

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<v Speaker 1>are interest by. The automatic commitment to all of Europe

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<v Speaker 1>all the time is both beyond our capacity and really unfair.

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<v Speaker 1>The Europeans can send themselves I M S. What does

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<v Speaker 1>it do, really, what does it really solve problem? That's

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<v Speaker 1>the issue. Well, George, thank you so much. George Friedman,

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<v Speaker 1>as always geopolitical futures. We could go on and on

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<v Speaker 1>with some of his thoughts, always controversial thoughts about the

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<v Speaker 1>positioning of the United States within uh global geopolitics as well.

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<v Speaker 1>Futures deteriorate negative eight down futures negative seventy twenty minutes one,

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<v Speaker 1>or rather nineteen minutes to the market opening. The vixed

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<v Speaker 1>trades down before the market. A little bit of angst,

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<v Speaker 1>but nothing like what we're seeing on the actual tape.

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<v Speaker 1>Fifteen point six five on the Vicks, Brent Crude made

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<v Speaker 1>a dash for fifty, did not get there. Forty eight

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<v Speaker 1>thirty two cents West Texas eleven a barrel. Let's check

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<v Speaker 1>it with Mikael bar and get the latest world of

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<v Speaker 1>National head Mike Tom, Thank you very much. Bernie Sanders

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<v Speaker 1>won the Oregon Democratic primary. Unders told supporters he's going

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<v Speaker 1>to stay in the race until the end. Front Runner

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<v Speaker 1>Hillary Clinton claimed victory in Kentucky, where she leads Sanders

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<v Speaker 1>buy less than one half of one. Clinton is still

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<v Speaker 1>way ahead of Sanders in delegates. You know he needs

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<v Speaker 1>ninety two from the nomination. The Senate voted to advance

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<v Speaker 1>one point one billion dollars of emergency funding to fight

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<v Speaker 1>the Zeke of virus. It is less than the one

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<v Speaker 1>point nine billion dollars President Obama requested, but more than

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<v Speaker 1>the house version of six hundred twenty two million dollars.

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<v Speaker 1>Rescuers are looking for about two hundred families in central

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<v Speaker 1>Sri Lanka after a landslide engulfed three villages following heavy rains.

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<v Speaker 1>Global News twenty four hours a day, powered by our

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<v Speaker 1>thanks so much again. The futures negative seventh, futures negative

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<v Speaker 1>sixty eight. They're Greenham the screen two hours ago and

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<v Speaker 1>I've rolled over modestly. The euro one twelve eighty three

0:11:58.040 --> 0:12:03.200
<v Speaker 1>week or sterling advances at the two. This is Bloomberg's

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