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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with

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Speaker 1: David Gura. Daily we bring you insight from the best

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Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance

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Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course

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Speaker 1: on the Bloomberg. We thought we could started with the

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Speaker 1: equity markets. We're gonna again have an eclectic show that

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Speaker 1: sporting Douglas cast joins us, who's always interest in interesting

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Speaker 1: because Mr cass Uh follows the markets looking long term

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Speaker 1: but also more of a short term perspective, and there

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Speaker 1: he has been very uh, very uh cautious. Is I

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Speaker 1: guess how I would put it, Doug, good morning. We'll

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Speaker 1: say the Yankees for the X Blot because I don't

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Speaker 1: want you to hang up the phone on me. If

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Speaker 1: I look at the markets, have you covered your shorts?

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Speaker 1: Have you reaffirmed your shorts? Essentially trade around my core

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Speaker 1: short positions almost on a weekly basis. Um that said,

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Speaker 1: I'm probably at my well, probably at my highest net

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Speaker 1: short exposure in two or three years. Why is that dramatic?

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Speaker 1: It's dramatic. Why is it? Well? I think everything in

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Speaker 1: the market gets overdone um um with the S and

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Speaker 1: P and even the fangs, and the SMP price rise

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Speaker 1: over the last couple of years has outpaced the prosperity

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Speaker 1: on main street. It's time for the markets to fall

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Speaker 1: back in line with what is actually happening in the

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Speaker 1: domestic economy. And how severe the decline will be can

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Speaker 1: be debated, but many, like myself look at most valuation

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Speaker 1: metrics that lie in the decile. We look at the

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Speaker 1: historically wide difference between gap and non gap earnings, with

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Speaker 1: gap at eighteen or nineteen times and nine gap non

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Speaker 1: gap in excessive times. We look at the dangerously high

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Speaker 1: equity cap to GDP ratio, which is warm Buffet's favorite evaluation,

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Speaker 1: and we say the market is overvalued within that has

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Speaker 1: been a leadership, and that we've had a number of

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Speaker 1: stocks out front, and the bulls would say that frankly,

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Speaker 1: there's been a real lack of leadership. How do you

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Speaker 1: cut that? Do you want to acquire shares in the

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Speaker 1: laggards or are they a signal of the angst to come.

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Speaker 1: I tend to look at my both my longs and

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Speaker 1: my shorts on the bottoms up basis um um. You

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Speaker 1: know I'm showing a number of popular stocks like Amazon

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Speaker 1: and Disney the ladder, whose growth rate is probably whose

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Speaker 1: secular growth rate is probably under ten percent compared to

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Speaker 1: eighteen percent historically at thirteen and four in consensus on

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Speaker 1: the south side of Wall Street. And that's how I

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Speaker 1: do my business. I don't look at and I look

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Speaker 1: at I don't look at price targets. I look at probabilities,

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Speaker 1: and I look at the just generally speaking, I look

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Speaker 1: at the dysfunction that this organization in the White House

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Speaker 1: and the animus not only between the Dems and the Republicans,

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Speaker 1: but within the GOP itself. And I recognize as a guest,

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Speaker 1: I think a professor at Columbia, in an early segment

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Speaker 1: of yours, said, it's highly unlikely that we're going to

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Speaker 1: see the implementation of the administration's tax reform of infrastructure plans,

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Speaker 1: so that we're we're probably stuck in barely a two

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Speaker 1: real GDP growth rate for the US as far as

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Speaker 1: the eyes can see. How do you respond to the

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Speaker 1: bulls that say we need a recession to really slip

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Speaker 1: into a duncass kind of market. I don't think that's

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Speaker 1: true empirically, um, you know, I think that the market

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Speaker 1: is more governed by uncertainty. And I'll say what I

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Speaker 1: said before on Bloombrook surveillance, I'll say it again. Donald

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Speaker 1: Trump is going to make market volatility and economic uncertainty

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Speaker 1: of outcomes great again. So I think that the incremental

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Speaker 1: eight or ten dollars of SNP earnings from the administration's

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Speaker 1: initiatives UM is likely in in let's say an SMP

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Speaker 1: earnings terms for next year, is likely a pype train.

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Speaker 1: I mean within this Doug is the idea of being

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Speaker 1: completely short, being not hedged, but saying you can have

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Speaker 1: some enthusiasm. No, I'll get to Twitter in our next section.

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Speaker 1: But is there any part of a broader, large camp

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Speaker 1: market where you can hide or is it so grim

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Speaker 1: that you can't own utilities? You can't on this well, I,

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Speaker 1: as I said, I do a bottom up kind of analysis,

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Speaker 1: and I have actually a number of long positions, but

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Speaker 1: on the net basis, I am that short. But these

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Speaker 1: are specific ideas that meet my criteria for investment in

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Speaker 1: very few stocks meet Mike's material investment. But there are

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Speaker 1: some companies like Hartford Financial up in Connecticut, UM, Campbell, Soup, Twitter,

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Speaker 1: et cetera. I'm even long a couple of retail stocks.

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Speaker 1: Now what would they be? I mean, we we covered J. C.

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Speaker 1: Penney on Friday. I meant to your listened to you

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Speaker 1: listen to us? Of course I always do my We're

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Speaker 1: colin up to fourteen listeners. That's just unbelten that's unreal.

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Speaker 1: To the game. I can listen to the game list now,

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Speaker 1: we'll do that in the next section. You want to

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Speaker 1: come back, I'm gonna beat you to death. But you know, Doug,

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Speaker 1: I I look at Amazon as a short. I mean,

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Speaker 1: how do you short Jeff Bezos? That's like mom, Dad,

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Speaker 1: apple Pie and the rest of it. I'm short Amazon

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Speaker 1: Bass And this is clearly a contrarian view, which is

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Speaker 1: typical of many of my popular shorts like Starbucks and Disney,

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Speaker 1: and in this case, Amazon and I'm short of come

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Speaker 1: based principally on the existential threat that antitrust issues and

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Speaker 1: political viewpoints and initiatives may hold over the company. The

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Speaker 1: company is finally attracting some media and political tension for

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Speaker 1: its business practice. It's disrupting order parts, appliances, and its

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Speaker 1: plans for food retailing through Whole Foods acquisition. It may

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Speaker 1: very well have too many opportunities. Perhaps it's creating a

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Speaker 1: massive smoke screen to mask business problems with profit generation,

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Speaker 1: but that the core of my concern is whether Amazon

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Speaker 1: is growing too big and that the disruptive impact of

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Speaker 1: Amazon's growth and plans could lead to government restrictions that growth.

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Speaker 1: Let's do Twitter right here. We've had a couple of

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Speaker 1: minutes left here, and am I right in that You're

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Speaker 1: a long, long, long and Twitter? Is that just a

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Speaker 1: takeout idea on really long Twitter? I think that the

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Speaker 1: market is paying nothing for um takeover option ality, a

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Speaker 1: merger optionality. I think Twitter by this time next year

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Speaker 1: will be part of a much larger company and its

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Speaker 1: basic core businesses is fine despite you know the recent

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Speaker 1: drop in the stock crisis. Well, but you need a

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Speaker 1: lower stock trice stock price to affect a transaction. I

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Speaker 1: think that the stock will probably be taken out in

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Speaker 1: the neighbor, let's come back with Doug casts. We've got

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Speaker 1: lots to talk about, including a picture and his family

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Speaker 1: from the Los Angeles Dodgers of a few years ago.

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Speaker 1: Mr cass is with Sea Breeze Partners. Doug Cass of

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Speaker 1: Sea Breeze Partners will weigh in on the Fed. Now

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Speaker 1: he's going to weigh in on the Browns, the Liechtenstein's,

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Speaker 1: and the co Faxes. Sanford Brown, who is eighty one

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Speaker 1: years old, Doug, I refuse to believe that Sandy Kofax

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Speaker 1: is eighty one years old. We have had a lacious weekend,

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Speaker 1: including images from Charlottesville that we're just extraordinary about Jews

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Speaker 1: and about a lot of other elements of hatred in

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Speaker 1: this country. Take us back to nineteen sixty five. I

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Speaker 1: remember the firestorm of debate when Mr Colfax said, no,

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Speaker 1: I will not pitch Um. It was actually excuse me, well, Sandy, Um,

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Speaker 1: you know it's I would say that Tom baseball is

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Speaker 1: a lot like investing, you know, as the dude said

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Speaker 1: in The Big Lebowski, strikes and gutters, ups and downs.

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Speaker 1: And Sandy in the mid sixties developed that authortic shoulder.

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Speaker 1: And I remember sitting with him and my grandmother, Jean Kofax,

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Speaker 1: in which he said to my grandfather, Harry Kofax, if

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Speaker 1: he continued, and this is actually in late sixty five,

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Speaker 1: if he continue baseball, he might lose his army. Um,

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Speaker 1: you know. And I don't know if it was a

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Speaker 1: function of medicine, the absence of medical advances at that time.

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Speaker 1: I suspect he would have had surgery, yeah, Tommy seventeen.

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Speaker 1: But um, it was. It was kind of catastrophic as

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Speaker 1: a Dodger fan and as his cousin. I mean, within

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Speaker 1: it is growing up in benson Hurst and you know,

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Speaker 1: on Long Island in that time. It's realm. We moved

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Speaker 1: to my hometown, Rockville Center, Long Island on the South Show. Briefly. Yeah,

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Speaker 1: they were, you know, in Rockville Center, and uh, he

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Speaker 1: was essentially folks a walk on at Cincinnati and basketball,

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Speaker 1: and uh, I guess he was a walk on. He

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Speaker 1: had like three tryouts in the majors before branch Rickey

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Speaker 1: decided he could bring the He was a basketball player

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Speaker 1: at Lafayette High School and his best friend was Wilpon,

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Speaker 1: who owned New York Mets, and Wilpon was a picture

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Speaker 1: and he wanted to hang out with Fred Wilpon, So

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Speaker 1: he decided to try out for the baseball team and

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Speaker 1: place bas at Lafayette High School. Doug, Within, you you're

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Speaker 1: being part of this family, the greater Cofax family. Do

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Speaker 1: you tec detect the difference in Charlottesville? This weekend versus

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Speaker 1: the debates of N sixty six over religion and the

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Speaker 1: importance of yan Kapoor is it? Is it a different

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Speaker 1: discussion now than it was back then. I think that

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Speaker 1: the same prejudice is unfortunately existed then um as they

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Speaker 1: do now. And I hate to say that um as

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Speaker 1: Mayor Bloomberg once said, I'm a New Yorker and I

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Speaker 1: know a con when I see it. And unfortunately the

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Speaker 1: President disavowed the action on Friday, but didn't disavow the actors.

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Speaker 1: And I think that's extremely disappointing, and that was expressed

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Speaker 1: by many of his Republican beyers. We should mention that

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Speaker 1: Mr Bloomberg, the former mayor, is a principal owner of

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Speaker 1: Bloomberg LP. And this ation, Doug, we've just got a

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Speaker 1: minute left, which is all you need to describe. Uh,

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Speaker 1: not the collapse, but the desire I think of everyone

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Speaker 1: for the Yankees to make a go of it, um

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Speaker 1: for our global audience. Their relief pitching failed in two

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Speaker 1: of three games. What's to do? Mr Cass, Mr Cofax

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Speaker 1: can't do it? Right now? I'll tell you who are

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Speaker 1: doing it? To Los Angeles Dodgers. They haven't lost the

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Speaker 1: series since early June. The winning percentage I think is

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Speaker 1: that we're seve. Is it just about money? I mean,

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Speaker 1: come on, they bought the team. It's more money. It's

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Speaker 1: more money than thank you. They need you know what

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Speaker 1: they need. They need sandy on the mound and they

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Speaker 1: need this thirteen year old Little League World Series kid

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Speaker 1: um Jace Blaylock plays for Georgia, who hit a three

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Speaker 1: seventy five years old in the trees left. I would

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Speaker 1: suggest I would suggest suggestion Doug. I was just in

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Speaker 1: Mr Drysdale to put it under somebody's chin. Doug cast

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Speaker 1: thank you so much, UH this morning on the equity markets.

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Speaker 1: Mr Cass's caution on the markets, and also of course

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Speaker 1: a snapshot there of Benson Nurst and Rockville Center from

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Speaker 1: another time. UH and plays what they did in Washington

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Speaker 1: a number of years ago. A great UH financial supporter

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Speaker 1: and fundraiser for President Obama was UH Fred hackber And

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Speaker 1: and he got his job because he gets up early

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Speaker 1: in the morning, which is what you do with the

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Speaker 1: Small Business Administration and the Export Import Bank as well,

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Speaker 1: and joining Center studios and well timed. I mean, we

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Speaker 1: could talk I think for at least two hours here

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Speaker 1: about your family's heritage, and and you know one of

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Speaker 1: your uncles I believe was killed at Normandy, and you

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Speaker 1: know all the emotion of the weekend that we saw.

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Speaker 1: But let me start with business. Is it? Is it?

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Speaker 1: You're retired as the head of the Export Import Bank?

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Speaker 1: Wrapped up my time? There? I don't consider you're wrapped

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Speaker 1: up your time. Here's the door. What's your hurry? What's

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Speaker 1: the state of the Export Import Bank under President Trump? Well,

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Speaker 1: it's a little vague, to be honest with you. He

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Speaker 1: has indicated more of late that he's supportive. Uh. He

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Speaker 1: has indicated his nominee for the chairman is someone who's

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Speaker 1: been and ultimately opposed to the bank, part of the

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Speaker 1: leadership against the bank. So it's hard to read those

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Speaker 1: tea leaves. But he still has an empty board. They're

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Speaker 1: just two acting members. You need three for a quorum,

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Speaker 1: but there's no quorum. Bank has been essentially lapsed for

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Speaker 1: two over two years for any major transactions, and it's

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Speaker 1: hurts our competitiveness and hurts job creation. You have been

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Speaker 1: more than visible in some of the themes that seemed

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Speaker 1: to anger the people that were so angry in Charlottesville.

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Speaker 1: This weekend. There's any number of ways to take this,

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Speaker 1: beginning with your support for President Obama, your support for

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Speaker 1: LGBT rights, and and critically your support of your family,

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Speaker 1: the Lillian Vernon people, and and uh the the heritage

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Speaker 1: of your family. What was it like for Fred Hackburg

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Speaker 1: to see the signs I put out on Twitter direct

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Speaker 1: hatred for Jews? How did you process that and did

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Speaker 1: you bring it back to the president. Well, what is

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Speaker 1: so shocking? And when you think about terrorism, and many

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Speaker 1: have called this domestic terrorism, terrorism is about fear. It's

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Speaker 1: about creating a sense of anxiety and people, not just

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Speaker 1: for the people in Charlottesville, but for people throughout the

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Speaker 1: United States. It says, be careful, be watchful. You're not safe,

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Speaker 1: You're not in a secure place. And so what's frightening

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Speaker 1: I think about the weekend is this is about striking

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Speaker 1: fear and and putting a damper on people's sense of

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Speaker 1: being an American, being grateful to be here and ask

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Speaker 1: in saying you should really be very careful and not

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Speaker 1: sure of yourself. And so that was what so was

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Speaker 1: frightening I thought about this weekend. Hi, I just want

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Speaker 1: to jump in here and ask a question sort of

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Speaker 1: back to you know, Charlottesville and the issue of, um,

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Speaker 1: the Export empower Bank. But can you make the best

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Speaker 1: argument to let's call them the global skeptics that um,

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Speaker 1: I think you know, we're behind the Trump movement for

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Speaker 1: why we need the Export Import Bank. Now, I mean

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Speaker 1: the argument is that it's kind of a chrony capitalism,

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Speaker 1: and uh, it doesn't really benefit most Americans and so forth.

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Speaker 1: What is the counterpoint to that when you're trying to

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Speaker 1: sort of address those concerns. Well, first of all, if

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Speaker 1: you're a global skeptic and you believe in sort of

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Speaker 1: America first, American manufacturing in America economic prowess, then you

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Speaker 1: need to believe in the x in bank. We're not

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Speaker 1: gonna be able to sell overseas and I'm not gonna

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Speaker 1: be able to compete and go hoe to toe with

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Speaker 1: the Chinese, the Koreans, the Germans, if we don't have

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Speaker 1: a financial institution just like they do. There are nineties

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Speaker 1: export credit agencies around the world, each one slugging it

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Speaker 1: out to create jobs in their country. So for us

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Speaker 1: to try and go into go to that fight with

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Speaker 1: one hand tied behind our back is simply crazy. I look,

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Speaker 1: I look at this friend and just in the brief

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Speaker 1: time that we we have for you. And as Eli

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Speaker 1: mentions globalists, how did we become a nation of globalists?

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Speaker 1: What does what does globalists mean? That's a great question.

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Speaker 1: First of all, I think we became a nation because

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Speaker 1: we're a nation of immigrants. As you mentioned, my family

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Speaker 1: came here uh in the lead up to World War two,

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Speaker 1: where a nation were the most diverse nation in the world.

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Speaker 1: So people in our country have connections to every country

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Speaker 1: around the world, not so if you're if you're German

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Speaker 1: or French or British in the same way. So I

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Speaker 1: think there's a realization that we are five percent of

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Speaker 1: the world's cup population is out there. So we want

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Speaker 1: to have a strong economy, creating a lot of jobs,

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Speaker 1: having a great simularity. We need to sell to them. Okay,

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Speaker 1: you raise money, you raise big money for the president.

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Speaker 1: Greg Vllier mentioned this morning, note the disarray of the

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Speaker 1: Democratic Party. Do the Democrats have to migrate away from

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Speaker 1: a coastal progressive tone and refine scoop and refined scoop

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Speaker 1: Jackson's Democrats? Are they out there? Or is that a

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Speaker 1: wasted task? I think the future of the Democratic party

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Speaker 1: is going to be with young people, with millennials, with

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Speaker 1: urban people. Um, we don't want to write anybody off,

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Speaker 1: but clearly we have to understand who our appeal is.

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Speaker 1: And I think one of the appeals we have to

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Speaker 1: do is for people who don't get a fair shake

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Speaker 1: in this society. And that has to do with workers, minorities, women, uh, immigrants,

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Speaker 1: and so we can't forget that and that has to

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Speaker 1: be front and center as we pursue a policy. Washington,

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Speaker 1: first time I've ever asked this question out here. I'm gonna,

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Speaker 1: I'm honored to ask it with you. When does President

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Speaker 1: Obama decided to run again? Well, the the constitution will

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Speaker 1: prohibit that, so he can't do they can't do that again.

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Speaker 1: To that, Fred Hawkford, thank you so much, greatly appreciated,

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Speaker 1: former head of the Export Import Bankers. Well, Eli, you

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Speaker 1: gotta write a column on that. President Obama, even if

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Speaker 1: he waits out at Grover Cleveland term can't run again.

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Speaker 1: I mean that's the law, right right. Yeah, Well, I

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Speaker 1: mean I know that there are a lot of people.

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Speaker 1: I mean I think I feel like he's one of

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Speaker 1: those figures right now who's left that can unify us

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Speaker 1: and it would be nice of the President Trump would

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Speaker 1: sort of recognize that this is one of those moments

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Speaker 1: of crisis where he needs to sort of be bigger

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Speaker 1: than his base, even though I I maintain that this

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Speaker 1: is not these these these clansmen are not his base.

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Speaker 1: I mean, these are fringe haters. He is the go

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Speaker 1: to guy for so many about perspective of our navy

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Speaker 1: and where it fits in. He grew up a most

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Speaker 1: interesting life in UH Los Angeles, UH, to say the least,

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Speaker 1: and then on to a service for the nation in

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Speaker 1: the United States. UH Navy Admiral Moan UH this morning, Admiral,

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Speaker 1: what is your update on the state of our navy

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Speaker 1: off the shores of Korea? Well, and I know it's

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Speaker 1: gonna be one of high level of readiness. UM. We

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Speaker 1: have for years put our most technically advanced ships UH

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Speaker 1: and UH air wing. If you we have an air

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Speaker 1: wing of plus about seventy five airplanes there plus a

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Speaker 1: nuclear aircraft carrier which is homeported in Japan. So they'll

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Speaker 1: be not just technically advanced, but UH, they're readiness level.

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Speaker 1: It will be exceptionally high. I mean it is normally

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Speaker 1: and then it will be that much more so. Just

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Speaker 1: because of the recent attentions, I know ELI has got

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Speaker 1: a lot of questions. Let me ask one question. This

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Speaker 1: is a question I got at least three times this weekend,

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Speaker 1: including from one child as well. Can we shoot Korean

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Speaker 1: missiles out of the air? How do we do that?

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Speaker 1: Is that a secret? Or do people actually know how

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Speaker 1: we do that if they were ever to fire a

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Speaker 1: missile with a dangerous vector. Well, you've seen actually in

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Speaker 1: recent weeks these missile tests which have gotten uh a

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Speaker 1: lot of publicity. And so the short answer to question is,

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Speaker 1: yes we can. It is the way I've described it

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Speaker 1: and others as well. It's hitting a bullet with a bullet.

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Speaker 1: The speeds are several mock if you will, coming at

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Speaker 1: each other. Um. But we've developed that technology over many,

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Speaker 1: many years, actually decades, so that we have that capability

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Speaker 1: as we speak, Admiral Millen thinks so much for for

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Speaker 1: doing this. Let me ask you this, Um. We we

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Speaker 1: learned last week, UM that there is a Defense Intelligence

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Speaker 1: Agency estimate that North Korea has the technology or capability

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Speaker 1: to miniaturize a nuclear device for a warhead. But um,

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Speaker 1: you know, as I reported in and others have reported,

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Speaker 1: this has been kind of floating around, you know, in

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Speaker 1: in the intelligence community for a while. How much of

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Speaker 1: a shock is that really to the US, uh, you

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Speaker 1: know military at this point? Um, And when do you

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Speaker 1: think we really learned that? Is that recent or is

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Speaker 1: that is or have we known it for a while?

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Speaker 1: I think I think the shock the shock is not

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Speaker 1: that uh he's either developed or he's very close. I

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Speaker 1: think the shock is that he's done it as quickly

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Speaker 1: as he can. While we've talked about it for years.

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Speaker 1: There's one thing, at least to me very clear, uh

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Speaker 1: watching Kim Jong un, is he is on a very

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Speaker 1: rapid pace to develop this system, the missiles, the nuclear technology,

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Speaker 1: and to make them and have that capability, much more

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Speaker 1: so than his father was in many ways. The number

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Speaker 1: of tests that he has conducted. UM. And this, to me,

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Speaker 1: this is his number one goal. Uh, And he is

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Speaker 1: he is significantly outpacing anything that's happened there in the past.

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Speaker 1: So I think if there is a shock, is that

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Speaker 1: that he's there. If he is so quickly, let me

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Speaker 1: let me follow up with something and that you know,

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Speaker 1: for those of us who've watched the North Korea crisis

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Speaker 1: unfold over the years, one thing that we've noticed that

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Speaker 1: the North Koreans really do not negotiate in good faith.

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Speaker 1: I think the best example of that is during the

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Speaker 1: George W. Bush administration, when we began administration negotiations by

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Speaker 1: lifting sanctions and taking them off the state sponsor list.

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Speaker 1: You know, they were secretly working with the Syrians to

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Speaker 1: develop a nuclear site UM, sending their technicians and so

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Speaker 1: forth over there. What is the formula and the argument

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Speaker 1: for how we could negotiate them down, uh in terms

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Speaker 1: of the nuclear program this time when it hasn't worked

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Speaker 1: for nearly twenty five years. Well, I think, and I

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Speaker 1: think you make a good point, Eli, and I think

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Speaker 1: the likelihood should we get into direct negotiations with the

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Speaker 1: North that the behavior in that regard would change is

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Speaker 1: pretty small, So we would we should expect more of

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Speaker 1: the same. That said, what what hasn't happened in the past,

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Speaker 1: and what I believe is the only path now is

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Speaker 1: through Beijing. We've always said that Beijing has always been

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Speaker 1: very reluctant to take the lead UM, and yet I

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Speaker 1: just don't see a peaceful resolution of this crisis without

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Speaker 1: Beijing really stepping up. And that doesn't mean alone, because

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Speaker 1: we should We should support them. We should do everything

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Speaker 1: we can to allay China's concerns about what would happen

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Speaker 1: with the United States being very active there, to include

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Speaker 1: the instability in the North UH, the the the worry

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Speaker 1: that there would be a regime change UH and that

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Speaker 1: we'd have unification UH, the financial impact of that to

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Speaker 1: certainly the region and China. So I think we can

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Speaker 1: go a long way to allaying and guaranteeing China that

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Speaker 1: their interests are best served by doing this as well,

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Speaker 1: without undermining other things that they worry about, including us

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Speaker 1: back up at the Yalu. So that's the path I

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Speaker 1: think that has to that has to be taken now

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Speaker 1: in light of that, and I think most people, I

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Speaker 1: mean agree with you. I think that's a strong argument.

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Speaker 1: I mean, is there an is there a case to

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Speaker 1: be made that Trump's UH kind of somewhat reckless rhetoric

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Speaker 1: UH in the last week on North Korea could potentially

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Speaker 1: change the calculation for China to make them realize that

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Speaker 1: they need to do this or they need they may

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Speaker 1: they may they we may be getting a war from

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Speaker 1: the U. S side, and that this is another calculation. Well,

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Speaker 1: I just think it's a very high risk path right now. Uh,

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Speaker 1: this is a very very tough, complex situation. And UH,

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Speaker 1: clearly the President has has made it very clear to

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Speaker 1: China that that he has expectations along these lines. The

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Speaker 1: problem is the rhetoric has been so hot that I

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Speaker 1: don't think he's left himself that that means the president

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Speaker 1: much maneuver room if China doesn't choose to do this.

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Speaker 1: So it really is high stakes poker right now. And

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Speaker 1: the outcomes are you know, are possible solution which would

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Speaker 1: be terrific. Uh. And then the other side of that,

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Speaker 1: which is exceptionally high risk, is that there would be

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Speaker 1: some kind of combat or conflict breakout. Um. And well,

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Speaker 1: I want to speak of your wife, Deborah, who's in

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Speaker 1: charge of cultural military policy for the Mulan household. And

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Speaker 1: James Travidis is fabulous the Leader's book Shelf, which is

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Speaker 1: my book of the summer, folks, I can't say enough

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Speaker 1: about it. Admiral Mullen turned to Deborah Mollin and said,

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Speaker 1: I think we need to read Tom Friedman's From Beirut

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Speaker 1: to Jerusalem, and so much of that is about a

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Speaker 1: culture that we miss in America. How does the president

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Speaker 1: bone up on the intricacies of Northern Asia. What what

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Speaker 1: is the Mullen path for anyone and particularly the present

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Speaker 1: to become smarter of a smarter about the cultural delicacies here. Well,

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Speaker 1: I think the assumption um that all of us UH

428
00:26:53,760 --> 00:26:57,480
Speaker 1: should focus on is that we are not very good

429
00:26:57,600 --> 00:27:01,159
Speaker 1: in cultures other other culture was around the world, and

430
00:27:01,160 --> 00:27:04,639
Speaker 1: that we don't understand them. And I have always tried,

431
00:27:05,760 --> 00:27:09,480
Speaker 1: particularly um in the senior jobs that I had to,

432
00:27:09,880 --> 00:27:15,240
Speaker 1: I've tried to see the view from the others, the

433
00:27:15,280 --> 00:27:19,320
Speaker 1: other individual's eyes, or the other individuals country, how they

434
00:27:19,400 --> 00:27:22,000
Speaker 1: see the world, how is they they see the issue,

435
00:27:22,520 --> 00:27:25,000
Speaker 1: and and you really have to work hard at that.

436
00:27:25,160 --> 00:27:28,920
Speaker 1: So there are experts that you can consult with. There

437
00:27:29,080 --> 00:27:35,560
Speaker 1: certainly are are. There's a rich literature on the culture

438
00:27:35,640 --> 00:27:37,840
Speaker 1: of that region in the world, as there is actually

439
00:27:37,880 --> 00:27:40,159
Speaker 1: in most regions of the world. And I just couldn't

440
00:27:40,160 --> 00:27:45,160
Speaker 1: emphasize enough the need two focus on that in terms

441
00:27:45,240 --> 00:27:48,600
Speaker 1: of understanding how the Chinese will react, or the South

442
00:27:48,720 --> 00:27:52,680
Speaker 1: Koreans will react, or the Japanese and the North Koreans specifically,

443
00:27:52,760 --> 00:27:54,639
Speaker 1: let's come back everyone and with us, of course, the

444
00:27:54,680 --> 00:27:57,680
Speaker 1: former Chairman of the Joint Chiefs of Staff, he is

445
00:27:57,720 --> 00:28:01,600
Speaker 1: with Eli Lake wash Ington's Studios. We say good morning

446
00:28:01,600 --> 00:28:04,600
Speaker 1: to all of you in Washington and our studios, Eli

447
00:28:04,720 --> 00:28:09,080
Speaker 1: Lake in Washington Studios in Washington. Of course, Mr Lake

448
00:28:09,119 --> 00:28:12,800
Speaker 1: writing for Bloomberg View often on national security and our

449
00:28:12,880 --> 00:28:16,800
Speaker 1: most interesting and fractured American politics. And he is joined

450
00:28:16,800 --> 00:28:20,520
Speaker 1: by UH Mike Mullen. He's the former Admiral of A

451
00:28:21,000 --> 00:28:24,800
Speaker 1: Chairman of the Joint Chiefs of Staff, Admiral Mullan. There

452
00:28:24,840 --> 00:28:27,680
Speaker 1: was a boat, I'm speaking as an amateur, not a ship,

453
00:28:27,720 --> 00:28:34,400
Speaker 1: a boat that wandered through the nineteen fifties, saw significant

454
00:28:34,400 --> 00:28:36,600
Speaker 1: action in the Western Pacific, and then it was a

455
00:28:36,640 --> 00:28:42,240
Speaker 1: refitted or something. And in seventy three a lieutenant climbed

456
00:28:42,240 --> 00:28:45,160
Speaker 1: on board the Knox Sube and I guess it was

457
00:28:45,160 --> 00:28:48,360
Speaker 1: your first command. What was it like the first day

458
00:28:48,480 --> 00:28:53,640
Speaker 1: when you took over the Nasubi? It was it was awesome. UM.

459
00:28:54,000 --> 00:28:57,040
Speaker 1: One of the reasons that I really loved the Navy

460
00:28:57,160 --> 00:29:00,800
Speaker 1: and wanted to stay in was to command ships. And

461
00:29:00,880 --> 00:29:03,360
Speaker 1: that was my first one, and I was all of

462
00:29:03,400 --> 00:29:07,880
Speaker 1: twenty six years old. My own my own crew deployed

463
00:29:07,920 --> 00:29:12,400
Speaker 1: twice to the Mediterranean UH in the early seventies. It

464
00:29:12,520 --> 00:29:15,000
Speaker 1: was an extraordinary experience. And the reason I bring it

465
00:29:15,120 --> 00:29:17,800
Speaker 1: up is is as if we've talked to James Travitas,

466
00:29:17,840 --> 00:29:21,680
Speaker 1: the idea here that on a ship things get clarified.

467
00:29:22,040 --> 00:29:24,920
Speaker 1: Did you ever, when you were in command of ships

468
00:29:25,520 --> 00:29:29,840
Speaker 1: half the deal with sailors or for that matter, officers

469
00:29:30,480 --> 00:29:34,480
Speaker 1: who had the hatreds that we witnessed in Charlottesville? What

470
00:29:34,560 --> 00:29:37,680
Speaker 1: do you do when a white nationalist or a white

471
00:29:37,720 --> 00:29:43,360
Speaker 1: supremacist shows up in uniform? How did Edwald Mullen handle that? Well?

472
00:29:43,440 --> 00:29:46,200
Speaker 1: I can honestly say, I really two thoughts. One is

473
00:29:47,200 --> 00:29:50,880
Speaker 1: a brief answer to your question is no, not not

474
00:29:51,000 --> 00:29:53,720
Speaker 1: that I can ever recall. That said, we in the

475
00:29:53,800 --> 00:29:56,080
Speaker 1: Navy in the sixties and seventies, we went through some

476
00:29:56,480 --> 00:30:00,560
Speaker 1: pretty tough times. We had riots on race, riots on

477
00:30:00,680 --> 00:30:04,280
Speaker 1: ships in ways, just a reflection of what was going

478
00:30:04,320 --> 00:30:06,520
Speaker 1: on in the in the country at the time. And

479
00:30:06,560 --> 00:30:09,240
Speaker 1: when people ask me about what's going on now, and

480
00:30:09,280 --> 00:30:11,480
Speaker 1: there are a lot of people who are very very

481
00:30:11,560 --> 00:30:14,960
Speaker 1: nervous and and and anxious, you know, one of my

482
00:30:15,040 --> 00:30:17,480
Speaker 1: responses is, we went through some pretty tough times in

483
00:30:17,520 --> 00:30:20,320
Speaker 1: the sixties and seventies, and we got through them. They

484
00:30:20,320 --> 00:30:23,880
Speaker 1: were they were difficult. I think we're gonna get through this.

485
00:30:24,400 --> 00:30:30,040
Speaker 1: That said, there's absolutely no place for the neo Nazi

486
00:30:30,440 --> 00:30:35,800
Speaker 1: klu klux Kland. You know, white supremacists in this country,

487
00:30:35,880 --> 00:30:39,480
Speaker 1: quite frankly, and what happened there in the last couple

488
00:30:39,520 --> 00:30:45,280
Speaker 1: of days is just tragic. It also represents a very

489
00:30:45,400 --> 00:30:49,280
Speaker 1: visible aspect of the divide in this country, and I

490
00:30:49,320 --> 00:30:53,720
Speaker 1: think leaders across the country at every level, local to national,

491
00:30:54,200 --> 00:30:56,240
Speaker 1: have to figure out a way to start to unify

492
00:30:56,360 --> 00:31:00,960
Speaker 1: the country and not let this divide continue. Thank you

493
00:31:01,040 --> 00:31:03,400
Speaker 1: so much. I want to sort of all on those lines.

494
00:31:03,400 --> 00:31:06,880
Speaker 1: I want to ask you about something, UM, I think, uh,

495
00:31:06,920 --> 00:31:09,960
Speaker 1: you know, when historians write about you as the Chairman

496
00:31:09,960 --> 00:31:12,560
Speaker 1: of the Joint Chiefs, one thing that I think you

497
00:31:12,600 --> 00:31:16,560
Speaker 1: will really be remembered well for is your role as

498
00:31:16,600 --> 00:31:19,640
Speaker 1: a leader in breaking the taboo on gays in the military.

499
00:31:20,160 --> 00:31:22,440
Speaker 1: And I don't think President Obama would be able to

500
00:31:22,920 --> 00:31:26,120
Speaker 1: um repeal don't ask, don't tell if it wasn't for you.

501
00:31:26,520 --> 00:31:28,600
Speaker 1: I say that someone who covered at the time, and

502
00:31:28,640 --> 00:31:31,520
Speaker 1: that brings us to the current moment with the issue

503
00:31:31,560 --> 00:31:36,520
Speaker 1: of transgenders, uh, transgender people in the military. UM, do

504
00:31:36,600 --> 00:31:38,680
Speaker 1: you feel that this is a similar kind of point

505
00:31:38,760 --> 00:31:40,840
Speaker 1: as gays in the military, and it's a question of

506
00:31:40,880 --> 00:31:44,280
Speaker 1: basic equality or are there sort of special considerations in

507
00:31:44,280 --> 00:31:46,960
Speaker 1: the military that you have to consider, you know, given

508
00:31:47,200 --> 00:31:50,720
Speaker 1: questions about whether there should be you know, subsidized transitioning

509
00:31:50,760 --> 00:31:54,360
Speaker 1: surgery and things like that. This this should be uh.

510
00:31:54,480 --> 00:31:58,800
Speaker 1: This is an issue of equality. It is as it

511
00:31:59,000 --> 00:32:02,640
Speaker 1: was for as in the military. Uh. It is those

512
00:32:02,680 --> 00:32:05,880
Speaker 1: young men and women who raise their right hand and

513
00:32:06,160 --> 00:32:09,560
Speaker 1: want to serve our country or are serving our country,

514
00:32:10,200 --> 00:32:17,040
Speaker 1: who who are transgenders, um, and that we should certainly

515
00:32:17,760 --> 00:32:22,560
Speaker 1: uh support them. It's very very similar to the gays

516
00:32:22,560 --> 00:32:25,120
Speaker 1: in the military issue. That doesn't mean that they're that

517
00:32:25,200 --> 00:32:28,760
Speaker 1: we shouldn't figure out a way to to uh support

518
00:32:28,760 --> 00:32:31,720
Speaker 1: them medically. I think it's been widely reported that it's

519
00:32:31,760 --> 00:32:34,400
Speaker 1: really not very much money to do that. The other

520
00:32:34,440 --> 00:32:39,360
Speaker 1: thing that about the transgender issue is the lack of

521
00:32:39,560 --> 00:32:43,040
Speaker 1: knowledge about what that's really all about. And I think

522
00:32:43,080 --> 00:32:46,840
Speaker 1: that lack of knowledge oftentimes scares people off. UM. I've

523
00:32:46,840 --> 00:32:50,440
Speaker 1: actually talked to the current chairman, General Joe Dunford about this,

524
00:32:51,400 --> 00:32:56,840
Speaker 1: who uh similar to the don't ask, don't tell uh

525
00:32:56,920 --> 00:33:00,680
Speaker 1: you know, his position is everybody who is able ought

526
00:33:00,720 --> 00:33:03,720
Speaker 1: to be able to serve and and our interests shouldn't

527
00:33:03,720 --> 00:33:08,960
Speaker 1: focus on that aspect of an individual's life. We have

528
00:33:09,080 --> 00:33:11,160
Speaker 1: run out of time. Edward Mollan, thank you so much

529
00:33:11,200 --> 00:33:15,240
Speaker 1: on the support and Monday greatly appreciate your attendency is

530
00:33:15,320 --> 00:33:32,239
Speaker 1: the former chairman of our Joint Chiefs of Steph. This

531
00:33:32,320 --> 00:33:34,719
Speaker 1: is gonna be a great conversation made greater because I'm

532
00:33:34,760 --> 00:33:36,600
Speaker 1: gonna really try to get out of the way. And

533
00:33:36,960 --> 00:33:39,840
Speaker 1: Eli Lake on National security talked to one of our

534
00:33:39,880 --> 00:33:42,040
Speaker 1: great pros. I'll bring him in. Ask one question and

535
00:33:42,200 --> 00:33:45,840
Speaker 1: Eli tom Rix is all yours. Mr ris Uh, you

536
00:33:45,920 --> 00:33:50,280
Speaker 1: were very visible this weekend as we all try to

537
00:33:50,400 --> 00:33:54,760
Speaker 1: digest Charlottesville. And what is so important is it brings

538
00:33:54,840 --> 00:33:59,120
Speaker 1: us back, as Joshua Rothman of Alabama said to the nineties.

539
00:33:59,200 --> 00:34:03,680
Speaker 1: You've just written on Churchill and Orwell in the nineteen thirties.

540
00:34:03,720 --> 00:34:07,880
Speaker 1: Do you see similarities between Charlottesville in the nineteen thirties.

541
00:34:09,000 --> 00:34:12,279
Speaker 1: I do, and it worries me. I think Saturday was

542
00:34:12,320 --> 00:34:16,080
Speaker 1: a very bad day for this country. Somebody said it

543
00:34:16,120 --> 00:34:19,080
Speaker 1: was the worst day of the Trump presidency, and I agree.

544
00:34:19,800 --> 00:34:23,800
Speaker 1: I think we're seeing increasing political violence in the streets

545
00:34:23,960 --> 00:34:28,160
Speaker 1: and increasing acceptance of political violence, and both those things

546
00:34:28,200 --> 00:34:32,320
Speaker 1: worry me. I think that political violence has no place

547
00:34:32,320 --> 00:34:35,040
Speaker 1: in America, that it's getting legitimate, and it worries me

548
00:34:35,040 --> 00:34:36,799
Speaker 1: when I see both the right and the left kind

549
00:34:36,800 --> 00:34:40,319
Speaker 1: of applauding these attacks. Wow, that is a that's a

550
00:34:40,400 --> 00:34:42,640
Speaker 1: very good point. But let me push back a little

551
00:34:42,640 --> 00:34:45,120
Speaker 1: bit because I think I disagree with you on the

552
00:34:45,239 --> 00:34:47,520
Speaker 1: question of whether this is similar to Europe in the

553
00:34:47,560 --> 00:34:50,719
Speaker 1: nineteen thirties. Can you talk about I mean, do you

554
00:34:51,080 --> 00:34:53,920
Speaker 1: don't you think that one major difference at this point

555
00:34:54,120 --> 00:34:57,759
Speaker 1: is that in the nineteen twenties and nineteen thirties, fascism

556
00:34:57,800 --> 00:35:01,480
Speaker 1: is an idea was accepted among many eat political, economic,

557
00:35:01,520 --> 00:35:04,759
Speaker 1: and cultural elites as a totally legitimate way to organize societies.

558
00:35:05,440 --> 00:35:08,799
Speaker 1: That is not necessarily the case today. Do you think

559
00:35:08,800 --> 00:35:11,840
Speaker 1: that we really are in danger of a Republican Party

560
00:35:11,960 --> 00:35:15,560
Speaker 1: or an element of American politics to bring back these

561
00:35:15,600 --> 00:35:18,600
Speaker 1: odious and hateful ideas of white supremacy and so forth

562
00:35:18,600 --> 00:35:24,440
Speaker 1: and so on. I think that we're seeing white supremacy

563
00:35:24,440 --> 00:35:29,160
Speaker 1: granted a place at the American political table that I

564
00:35:29,239 --> 00:35:32,279
Speaker 1: had been assumed, as I think many of us did,

565
00:35:32,600 --> 00:35:35,360
Speaker 1: would no longer be there. Um, I'm not saying that

566
00:35:35,440 --> 00:35:39,520
Speaker 1: fascism is necessarily the answer. I do think that reactionary

567
00:35:39,640 --> 00:35:45,240
Speaker 1: politics are um in the middle of the American political mainstream.

568
00:35:45,320 --> 00:35:48,560
Speaker 1: Right now, we have perhaps the most reactionary president in

569
00:35:48,600 --> 00:35:53,200
Speaker 1: American history, someone who does not explicitly reject the support

570
00:35:53,239 --> 00:35:56,640
Speaker 1: of fascist, white supremacists and other right wingers. I don't

571
00:35:56,680 --> 00:35:58,880
Speaker 1: know where this is all going to go, obviously. What

572
00:35:59,000 --> 00:36:03,240
Speaker 1: I'm saying, though, is the certainty. The political turmoil remind

573
00:36:03,320 --> 00:36:07,440
Speaker 1: me of the nineteen thirties, especially when we see opinion

574
00:36:08,440 --> 00:36:11,759
Speaker 1: given privilege over fact, where people say I don't care

575
00:36:11,800 --> 00:36:14,840
Speaker 1: what the facts are, I have my opinions. That reminds

576
00:36:14,880 --> 00:36:18,080
Speaker 1: me of in the nineteen thirties when people said, well,

577
00:36:18,280 --> 00:36:22,040
Speaker 1: communism is good, so anything that helps communism is good.

578
00:36:22,400 --> 00:36:25,680
Speaker 1: So lying it's good if it helps communism. And this

579
00:36:25,719 --> 00:36:29,080
Speaker 1: is what George Orwell so vigorously opposed when he got

580
00:36:29,120 --> 00:36:31,840
Speaker 1: up and said, look, I'm a leftist, I'm a dedicated socialist,

581
00:36:32,200 --> 00:36:36,239
Speaker 1: but I will not lie to help my cause. And

582
00:36:36,360 --> 00:36:39,880
Speaker 1: for this he was roundly denounced, as was went in

583
00:36:40,000 --> 00:36:43,160
Speaker 1: Churchill on the right when he got up and said,

584
00:36:43,680 --> 00:36:47,600
Speaker 1: Naziism is wrong. You cannot compromise with it. And all

585
00:36:47,680 --> 00:36:50,880
Speaker 1: you were doing with the policy of appeasement, which was

586
00:36:50,880 --> 00:36:54,040
Speaker 1: the official British policy in nineen thirties. All you do

587
00:36:54,080 --> 00:36:57,400
Speaker 1: is make it more likely that we're going to have

588
00:36:57,440 --> 00:37:01,680
Speaker 1: a big, violent war. What does the president do? What

589
00:37:01,840 --> 00:37:04,800
Speaker 1: does general this general that, the other eight generals in

590
00:37:04,840 --> 00:37:07,680
Speaker 1: the administration? What do they do with the so called

591
00:37:07,840 --> 00:37:11,440
Speaker 1: nationalists in the White House? Do they just fester? Is

592
00:37:11,480 --> 00:37:16,440
Speaker 1: that the prescription we all look forward to. Um? I

593
00:37:16,480 --> 00:37:19,560
Speaker 1: actually have changed my mind about that's. Initially UM, I

594
00:37:19,719 --> 00:37:22,239
Speaker 1: was a supporter of the idea that it was good

595
00:37:22,239 --> 00:37:24,880
Speaker 1: to have adults in the room. And so when friends

596
00:37:24,880 --> 00:37:28,040
Speaker 1: of mine said to me, Hey, Tom, you know, I

597
00:37:28,080 --> 00:37:30,359
Speaker 1: think I might go into the administration. I know you're

598
00:37:30,400 --> 00:37:33,280
Speaker 1: anti Trump. What do you think My response was looked,

599
00:37:33,360 --> 00:37:35,880
Speaker 1: it's good to have good people in the US government.

600
00:37:36,840 --> 00:37:39,040
Speaker 1: I've changed that to the extent that I think it's

601
00:37:39,080 --> 00:37:42,399
Speaker 1: bad to have competent people right around Trump. All they

602
00:37:42,440 --> 00:37:46,839
Speaker 1: do is make him more effective. UM. I want good

603
00:37:46,880 --> 00:37:49,480
Speaker 1: people and the rest of the government Defense Department, State Department.

604
00:37:49,719 --> 00:37:53,120
Speaker 1: But I think Trump is so incompetent that we should

605
00:37:53,200 --> 00:37:57,480
Speaker 1: let that be our is saving grace. Just let the

606
00:37:57,520 --> 00:38:01,040
Speaker 1: White House be a sinkhole of incompetence. And so I

607
00:38:01,080 --> 00:38:04,000
Speaker 1: think the Master is a competent guy. Have you better

608
00:38:04,040 --> 00:38:07,200
Speaker 1: for him to leave and just have one of Trump's

609
00:38:07,280 --> 00:38:11,120
Speaker 1: um no, not leave the National Security adviser, thank you

610
00:38:11,200 --> 00:38:14,239
Speaker 1: so much? On short notice today the author Thomas Rix.

611
00:38:14,320 --> 00:38:16,640
Speaker 1: Of course, he's taken home a few prizes, starting with

612
00:38:16,719 --> 00:38:20,040
Speaker 1: Pete along the way Churchill and orwell the Fight for Freedom?

613
00:38:20,719 --> 00:38:23,160
Speaker 1: Is it wonderful? Yes, Eli, I read it. It's one

614
00:38:23,160 --> 00:38:25,040
Speaker 1: of my favorite books of the years, saying, just a

615
00:38:25,280 --> 00:38:28,280
Speaker 1: just a wonderful window into the thirties. It takes away

616
00:38:28,320 --> 00:38:31,480
Speaker 1: the World War two romance, if you will, of Churchill

617
00:38:31,520 --> 00:38:34,919
Speaker 1: and talks about the realities of where Churchill wasn't then.

618
00:38:35,480 --> 00:38:40,200
Speaker 1: Or well, following on, Eli, it's amazing the different emotions

619
00:38:40,280 --> 00:38:42,319
Speaker 1: or what do you think we will hear? Quickly, Eli like,

620
00:38:42,680 --> 00:38:46,080
Speaker 1: what will you hear from the president of three PM? Well,

621
00:38:46,120 --> 00:38:48,560
Speaker 1: I continue what I hope to hear, which is a

622
00:38:48,680 --> 00:38:56,399
Speaker 1: robust and full throated um denunciation of these white supremacists. Um.

623
00:38:56,600 --> 00:38:59,160
Speaker 1: I realize I'm in the minority, I guess among the

624
00:38:59,160 --> 00:39:02,960
Speaker 1: guests who been on the show today. But I don't.

625
00:39:03,080 --> 00:39:06,760
Speaker 1: I think there's a difference between people who have um

626
00:39:06,800 --> 00:39:08,560
Speaker 1: of you that I should say I don't agree with

627
00:39:08,600 --> 00:39:12,640
Speaker 1: On immigration or free trade, which I also don't agree with,

628
00:39:12,680 --> 00:39:15,560
Speaker 1: and then people who are truly interested in I guess

629
00:39:15,600 --> 00:39:20,400
Speaker 1: restoring uh kind of Jim Crow era America. It's attention,

630
00:39:20,719 --> 00:39:31,239
Speaker 1: to say the least. Thanks for listening to the Bloomberg

631
00:39:31,239 --> 00:39:37,600
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

632
00:39:37,920 --> 00:39:41,759
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

633
00:39:41,800 --> 00:39:46,480
Speaker 1: Tom Keene David Gura. Is that David Gura before the podcast?

634
00:39:46,800 --> 00:40:00,320
Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio