Speaker 1: This is Bloomberg Wall Street Week. What's the state of
Speaker 1: corporate governments? The deficit is a real issue. The US
Speaker 1: economy continues to send mixed signals to the financial stories
Speaker 1: that cheap our world fed action to con concerns over
Speaker 1: dollar liquidity and encouraging China data. The five hundred wealthiest
Speaker 1: people in the world. Through the eyes of the most
Speaker 1: influential voices Larry Summers, the former Treasury Secretary, Start CEO,
Speaker 1: Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week
Speaker 1: with David Weston from Bloomberg Radio. The American economy starts
Speaker 1: to open its doors, but are consumers ready to come back?
Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. Every
Speaker 1: state in the Union opened its doors this week, at
Speaker 1: least a little bit, and the markets held their breath
Speaker 1: to see whether the consumers felt comfortable off to come
Speaker 1: back outside. The numbers of cases were down, testing was up,
Speaker 1: and there was even talk of a possible vaccine. But
Speaker 1: is this an indication of a true pivot toward recovery
Speaker 1: or are we just wishing ourselves to success us One
Speaker 1: thing that everyone could agree on, the answer the question
Speaker 1: lies with the consumer, and so in the end, it's
Speaker 1: not an economic question at all. It's a question of
Speaker 1: public health and whether people feel safe enough to re
Speaker 1: enter the marketplace. Former Goldman Sachs chairman and CEO Lloyd
Speaker 1: blank Find has spent a career assessing and managing risk,
Speaker 1: and he says that there is health risk to be
Speaker 1: incurred whenever we open the economy. It's not whether it's when, Well,
Speaker 1: there's a there's a lot that's unknown and unknowable, and moreover,
Speaker 1: I know that no one knows, and so that's a
Speaker 1: that's an aspect of this because you can dig and
Speaker 1: dig and dig. But basically, I think with this current moment,
Speaker 1: we're not so much in the realm of forecasting. I
Speaker 1: think we're in the realm of contingency planning. And I
Speaker 1: think one of those contingentis you have to plan for, is,
Speaker 1: you know, the surprise. Most of the time in my
Speaker 1: in my former life, surprises were almost always bad surprises.
Speaker 1: Something would go wrong, and of course we were so
Speaker 1: big and extensive. There's nothing that could go wrong anywhere
Speaker 1: in the world that wouldn't affect us um. But I
Speaker 1: would say, in this particular moment, it was seeing a
Speaker 1: little bit of that today. Uh, the tail i e.
Speaker 1: The possibility of something highly improbable happening, Uh, could actually
Speaker 1: be good for the market. So somebody announces they're making
Speaker 1: progress with a vaccine. So it's a funny situation where
Speaker 1: something flat. I was watching the news and something flashed
Speaker 1: on and there was some surprise coming. I'm actually looking
Speaker 1: forward to hear it, hearing it, whereas before it was
Speaker 1: almost always going to be negative. One of the aspects
Speaker 1: we're seeing in this is what appears to be a
Speaker 1: very difficult choice between the one hand public health, safety,
Speaker 1: well being, lives and the other hand the economy. Do
Speaker 1: you think that we're striking that balance more or less
Speaker 1: the right way. Well, just to question the predicate of that,
Speaker 1: I think that's a real you know, that juxtaposition is
Speaker 1: it's sometimes a bit off. I think there's health issues
Speaker 1: on both sides, obviously, and a lot has been talked
Speaker 1: about this now wherein you know, you know, extreme poverty obviously,
Speaker 1: you know is a is a health risk and all
Speaker 1: the things that proceed from it, and also you know, depression, uh,
Speaker 1: drug addiction, UM, I mean suicide had an extreme but
Speaker 1: basically life expectancy UH comes from uh, you know, a
Speaker 1: fall off, a collapse in GDP, and this is unprecedented,
Speaker 1: so this would be off any of those charts. So
Speaker 1: I think it's not just health versus economy. It's health.
Speaker 1: It's economy on both sides. And by the way, the
Speaker 1: health issues maybe more neutral in some people think, you know,
Speaker 1: once the curve is you know, the original intent to
Speaker 1: flatten the curve was just to stretch out the exposures
Speaker 1: that people would have so it didn't overwhelm the health
Speaker 1: care system. But the fact of the matter is, I
Speaker 1: think unless we're going to hunker down until a vaccine
Speaker 1: comes up or until the virus is obliterated from the
Speaker 1: face of the earth, which I think is too long
Speaker 1: to keep the whole country unwelfare, eventually people are gonna
Speaker 1: go back, and when they come back, the infection rate
Speaker 1: is going to go up. So I think we're just
Speaker 1: postponing the exposures and the infections. Well, that's actually one
Speaker 1: of my questions, which is whether it's on the health
Speaker 1: front or for them on the economic fund. Extraordinary efforts
Speaker 1: are being made. Are we postponing what happens? We're actually
Speaker 1: changing what happens. This is a timing matter only well
Speaker 1: to some degree. Look if d s X makin a
Speaker 1: vaccine appears, and I know there was some positive news today,
Speaker 1: but just think it has to go through trials for
Speaker 1: you know, we have to make sure it doesn't kill people,
Speaker 1: make sure it's effective, it has to be manufactured. Just
Speaker 1: stre that's really the country can't be unwelfare even that long.
Speaker 1: Even if there was you know that was uh, something
Speaker 1: that was magical. We are postponing it. But that doesn't
Speaker 1: mean it's without help. They're learning things about treating viruses.
Speaker 1: Even if there's not a vaccine, there are treatments that
Speaker 1: people are aware of, so there is some benefit to it,
Speaker 1: but not as huge as if there were an ultimate
Speaker 1: vaccine that would make people comfortable. So too, I think
Speaker 1: to a greater extent, we're postponing people's fosure to it,
Speaker 1: and to some extent, uh, you know, we're eliminating the
Speaker 1: diarist of risk that would happen if the health care
Speaker 1: system was overwhelmed while people had it. But I think
Speaker 1: in the long run, you know, we have to contemplate
Speaker 1: that people will go back to work, what kind of
Speaker 1: economy will have face and no matter when you do it.
Speaker 1: Look what happened some of these Asian countries where they
Speaker 1: almost they were high fiving because they the virus, the
Speaker 1: new exposures were way way down, and notwithstanding that, the
Speaker 1: second to go back to work, they spike up again.
Speaker 1: So that's gonna be an expectation no matter when you
Speaker 1: do it. I think when we go forward and look
Speaker 1: back at this from sometime in the future, if we're
Speaker 1: gonna go through that anyway, people will be very critical
Speaker 1: if the official sector UH sacrificed more of the economy
Speaker 1: than they needed to, even because at the end of
Speaker 1: the day, I think the exposures are going to be,
Speaker 1: you know, almost the same. We've heard a fair amount
Speaker 1: of both President Trump and the Federal Reserve, particularly j
Speaker 1: Pal the chair recently, and it seems from the Chair
Speaker 1: how we're hearing two things. One is the Fed will
Speaker 1: do pretty much whatever it can, whatever it needs to
Speaker 1: to really support the economy as best it can. But
Speaker 1: on the other hand, a lot of caution that this
Speaker 1: may take longer than we think, it may be, more
Speaker 1: difficulty think and even the possibly of long term damage.
Speaker 1: How do you assess the possible damage to the U
Speaker 1: S economy over the longer term. Well, obviously it depends
Speaker 1: on how long this goes on. And you know, you
Speaker 1: could see it's easy to see what damage would be.
Speaker 1: You know, you have rest certain businesses that come into
Speaker 1: contact with the public that are going to go away
Speaker 1: that we're operating at tight margins anyway, Uh, that won't,
Speaker 1: so that won't that can't afford to wait until they reopen,
Speaker 1: and some businesses that will reopen at such a reduced
Speaker 1: level that they won't be profitable, so they won't reopen.
Speaker 1: That was former chairman and CEO of Goldman Sachs Lloyd
Speaker 1: blank find coming up. The head of Bank of America,
Speaker 1: Brian Wynihan says that government efforts to cushion the blow
Speaker 1: to the economy are working. The question is how people
Speaker 1: will react as we start the economy back up. That's
Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg
Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. We
Speaker 1: aren't seeing the kinds of stress of the credit markets
Speaker 1: we might have expected, and that's because the massive fiscal
Speaker 1: and monetary support is having at least some effect. But
Speaker 1: Bank of America chairman and CEO Brian moynihan says that
Speaker 1: the real test will come as we start the economy
Speaker 1: back up and we discover whether the consumer is willing
Speaker 1: to become fully engaged. Our view hasn't changed, but it
Speaker 1: comes back to what I said before. This is a
Speaker 1: healthcare crisis. And as you're starting to see the healthcare
Speaker 1: crisis be mitigated not solved yet, you're starting to see
Speaker 1: the economy start to recover. And we can talk about that.
Speaker 1: But the approach to winning UH, the war against the
Speaker 1: crisis UH for us has been a customer centric, community centric,
Speaker 1: employee centric move and so you know, we've been out
Speaker 1: there driving. We've been supporting our clients and trying to
Speaker 1: make sure they have the credit and capital to UH
Speaker 1: to do what they need to do and help them
Speaker 1: through this trough of activity in the second quarter. And
Speaker 1: you can see that in a loan balance and extended
Speaker 1: the P P P loans and how the things we've done.
Speaker 1: We've helped our consumer clients through waivers so they have
Speaker 1: the ability to have better cash flow in the house.
Speaker 1: We helped our teammates by saying no layoffs so they
Speaker 1: know their job is secure, and then getting them safe
Speaker 1: and working from home. And then we've helped our communities
Speaker 1: by contributions and a hundred million dollars and c d
Speaker 1: f I investments which are community development financial institutions at
Speaker 1: two fifty million dollars of which about a D seventy
Speaker 1: millions already out. So all that is offsetting the impacts
Speaker 1: of the current second quarter down drafted you've seen with
Speaker 1: the unemployment numbers, and we don't see it much differently,
Speaker 1: It's just that we're starting to see us come out
Speaker 1: the other side of this. Frankly. So we have heard
Speaker 1: from the Federal Reserve and they've expressed some concern at
Speaker 1: least that as this pandemic continues, there may be some
Speaker 1: threat to the overall system and specifically talks for example
Speaker 1: about commercial real estate. Are you seeing some parts of
Speaker 1: the market that are particularly vulnerable on the credit side.
Speaker 1: Remember that the US economy is going to be depended
Speaker 1: on the activity the consumer base, and and so yeah,
Speaker 1: I always have to start there when you talk about
Speaker 1: the US. So even though we have this year from
Speaker 1: the Bank American research team, which is the best in
Speaker 1: the world, you know, being minus five percent five and
Speaker 1: a half percent this year and plus five percent next year,
Speaker 1: the real question will be how to consumers behave, and
Speaker 1: in what we've seen since the low point in the
Speaker 1: second couple first couple weeks of April, in terms of
Speaker 1: everything in terms of their spending because of the stay
Speaker 1: at home edicts, in terms of their borrowing activity, UH,
Speaker 1: in terms of the transfer of money. UM, you saw
Speaker 1: all that fall to a lowest level, and obviously things
Speaker 1: like travel and hotels and things were most affected. But
Speaker 1: as you've seen steadily as you went through the third
Speaker 1: week April then on into the first part of May,
Speaker 1: you're seeing their activities pick up, even in the states
Speaker 1: that are still under stay from home, and you're seeing
Speaker 1: the activity pick up much quicker in the places they're
Speaker 1: going back to work. And so for the month of May,
Speaker 1: we're seeing it down about you know, two or three
Speaker 1: or four percent verst was last year UH for the
Speaker 1: year today, it's down a couple of percent. And that's
Speaker 1: the question. The length of this is going to be
Speaker 1: how the consumers behave given the high levels unemployment that
Speaker 1: you've seen published when people get back to work, jobs
Speaker 1: coming back in the stimulus payments which are all hitting
Speaker 1: the street of the last few weeks, and how all
Speaker 1: works together to see if the consumer's behavior changed. And
Speaker 1: when I hear when you hear Government Chair Pale and others,
Speaker 1: the concern I have is have we changed consumer behavior
Speaker 1: as we look out across the next you know, four
Speaker 1: or five, six quarters. Well, that is a key question,
Speaker 1: maybe the key question, Brian, clearly when it comes to
Speaker 1: the consumer. I know you've already taken about four point
Speaker 1: eight billion dollar reserve against credit possible losses given the
Speaker 1: level unemployment, which is really quite stunning. Do you think
Speaker 1: that's gonna be enough? Well, what you've seen so far
Speaker 1: is with the consumer help, we've we've granted about a
Speaker 1: million a half payment deferrals. But if you look at
Speaker 1: the actual interesting statistics about thirty or five or the
Speaker 1: people ask for a credit card payment deferral when I
Speaker 1: had made the payment. And if you go and a
Speaker 1: look at those consumers, what you see is because of
Speaker 1: the UH leave aside the issue of where the money
Speaker 1: is coming from, you're seeing higher balance in our account.
Speaker 1: And that's because the stimulus between you know, the I
Speaker 1: P payments, between the enhanced unemployment, these measures taken by
Speaker 1: Congress and by the administration, by the FED have worked
Speaker 1: offset the unfortunate aspects of very high unemployment, and so
Speaker 1: so far you're not seeing the delinquent seas and things
Speaker 1: rise vs. You've seen payment deferrals UH increase, but you're
Speaker 1: seeing them start to level off and come down in
Speaker 1: our book, and so we we expect to see you
Speaker 1: charge offs coming later on as as as this thing
Speaker 1: goes on. But the reality is right now you're not
Speaker 1: seeing the kind of credit damage that you'd expect to
Speaker 1: see with this amount of down draft and activity. The
Speaker 1: question is what happens next, and that's we're all watching.
Speaker 1: And to that very point you said in the past,
Speaker 1: China to some extent may give us some indication. We've
Speaker 1: seen numbers coming out at China, Brian and indicate the
Speaker 1: industrial production has come back pretty quickly. All consumption is
Speaker 1: coming back as well. But on the other hand, consumer
Speaker 1: maybe not so much with the retail sales. Does that
Speaker 1: give you cause for concern back here in the United States, Well,
Speaker 1: it does because the question is how did you change behavior?
Speaker 1: So when you saw Chinese UH, you know, they went
Speaker 1: into this earlier, they locked down earlier, they came out earlier,
Speaker 1: and you know, we're back in our offices in China
Speaker 1: moving from people back towards so you're starting to see
Speaker 1: normalization of activity and in the questions what's the underlying
Speaker 1: activity and restaurants and shopping and things like that. And
Speaker 1: so you saw an immediate burst of activity as they
Speaker 1: open back up and the say it fall back down.
Speaker 1: And that's what we have to watch in the United
Speaker 1: States is there will be a burst of activity in
Speaker 1: some of these places as people who have been do
Speaker 1: in their homes for six, five, six sevent eight weeks
Speaker 1: go back out and do things, and then will let
Speaker 1: sustain And that's where you need to look more fundamentally
Speaker 1: on things like car purchases and things like house purchases
Speaker 1: and see where they start to end up over time.
Speaker 1: But remember the baseline projection for most people is the
Speaker 1: economy doesn't get back to its current size until you
Speaker 1: get to sort of the end of next year. That's
Speaker 1: the definition of recovery. So but each quarter from this
Speaker 1: quarter forward is increased economic activity. In what we have
Speaker 1: to make sure and all the policies and stimulus have
Speaker 1: been put in place or making sure is that despite
Speaker 1: the very hig unemployment, despite the issues of who's unemployed,
Speaker 1: despite the issues getting that we need to get people
Speaker 1: back to work in the human toll of all that
Speaker 1: these stimulus is off setting. It is an attempt off
Speaker 1: set that and you have to see that play out
Speaker 1: of our time, Brian, you have something like a hundred
Speaker 1: eighty thousand I think people working from home right now.
Speaker 1: You talked about what you're doing over in Asia. When
Speaker 1: do you expect him to come back? And how and
Speaker 1: by the way, how many will they all come back? Well?
Speaker 1: That the ideas we have. We've always had people who
Speaker 1: worked outside the standard office setting, and that's something we do. Um.
Speaker 1: There's a great debate you know, with us change forever
Speaker 1: the workforce in America and where they want to work.
Speaker 1: We'll see that play out. But that is that is
Speaker 1: further out there. And then your term. We have we
Speaker 1: have been open every day. We have not shut down
Speaker 1: except for the branches we closed out of concerns to
Speaker 1: keep our teammates safe in those in those branches. Um,
Speaker 1: we which is about the branches. Everything else has been open.
Speaker 1: We've been functioning every day and we're beginning to open
Speaker 1: those branches, especially in the States, are reopening slowly but surely.
Speaker 1: So we have the ability to operate very well, very
Speaker 1: much under control. Our technops team under Kathy Bisson's leadership,
Speaker 1: to the fablished job of putting us a position to
Speaker 1: have a hundred and eighty thousand people work from home
Speaker 1: so we can operate this way. So we have the
Speaker 1: luxury to go back slowly and with social distancing requirements,
Speaker 1: with temperature taking while all the policies that all employers
Speaker 1: want to put in place, you know, the the ability
Speaker 1: of the luxury putting people back in place carefully also
Speaker 1: takes the burden off of the communities we operate in,
Speaker 1: not to have high level of cases or perfections and
Speaker 1: having people move around and creating pressure on the community.
Speaker 1: So we will go back slowly. We haven't said any
Speaker 1: plans yet. We have a top talent team working on
Speaker 1: the re entry back to the office. It's not back
Speaker 1: to work, We're working every day. It's back to the office.
Speaker 1: That was Brian moynihan, Bank of America Chairman and CEO.
Speaker 1: Coming up. Speaker Nancy Pelosi thinks she knows what the
Speaker 1: public needs to feel confident, and it's going to require
Speaker 1: some more help from the federal government. That's next on
Speaker 1: Wall Street Week on Bloomberg. This is Bloomberg Wall Street
Speaker 1: Week with David Weston from Bloomberg Radio. Congress has already
Speaker 1: appropriated trillions of dollars to show up the economy, but
Speaker 1: Speaker of the House Nancy Pelosi says more needs to
Speaker 1: be done to help those tens of millions of Americans
Speaker 1: who are out of work and to protect hundreds of
Speaker 1: millions of Americans across the country as they return to
Speaker 1: the marketplace. Yes, it, indeed, we want the economy to
Speaker 1: open up, and the science is the path to that. Testing, tracing, treating, isolating.
Speaker 1: It has to be a scientific answer, and of course
Speaker 1: we hope and pray for vaccine and and some therapies,
Speaker 1: but in the meantime, we have testing and that's what
Speaker 1: we need to use to get the handle on the
Speaker 1: side of the challenge. We have uh to trace it
Speaker 1: and to treat so that we have fewer deaths. That
Speaker 1: is the answer now. In addition to that, and we
Speaker 1: have that a strategic plan and our heroes at a
Speaker 1: strategic plan to do that with. As you do in business,
Speaker 1: have a goal, have a timetable, had milestones, have benchmarks.
Speaker 1: That's exactly what we have in addition to that, in
Speaker 1: order to support the economy. We honor our heroes by
Speaker 1: keeping state, local, territorial, and tribal governments functioning. Uh. These people,
Speaker 1: many of them on the front line of risking their
Speaker 1: lives to save other people's lives, now fear losing their jobs.
Speaker 1: All of these services that are rendered are not only jobs,
Speaker 1: but they are they meet the needs of the American people.
Speaker 1: That helps the economy. And then third, putting money into
Speaker 1: the pockets of the American people. We all know that
Speaker 1: issues like unemployment, insurance, food stamps and the rest really
Speaker 1: are provide stimulus to the economy, and we have to
Speaker 1: do that. Uh. And we said we think in our package,
Speaker 1: the Heroes Act, that we do just exactly that, a
Speaker 1: scientific path to open the economy safely, safely and soon,
Speaker 1: supporting our heroes, to keep those jobs in place, which
Speaker 1: is important, which are important to the economy, and again
Speaker 1: the stimulus that money in the pockets of the American
Speaker 1: people provides. Of course, the question on everyone's mind is
Speaker 1: the prospects of passage of the Heroes Act or something
Speaker 1: like it, and when it might happen. We've heard from
Speaker 1: Secretary Minution that he talked to you at least last
Speaker 1: week about something he agrees something needs to be done.
Speaker 1: I'm not sure how quickly. President Trump said he's working
Speaker 1: with Mitch McConnell as a majority leader on some sort
Speaker 1: of package. Are you in active negotiations? How much hope
Speaker 1: do you have the will have something relatively soon? Well,
Speaker 1: I'm optimistic because American people fully support what we are
Speaker 1: doing two to one already just it's just newly passed. Uh.
Speaker 1: They support the provisions of our bill and oppose the
Speaker 1: Senate obstructing it. So I have confidence in public opinion
Speaker 1: also when it's by partisan across the country, we have
Speaker 1: less than a trillion dollars that goes to states, localities, tribes,
Speaker 1: and territorial governments that provide jobs for people across the country.
Speaker 1: So we have democratic and Republican mayors, governors, county executives
Speaker 1: and the rest very enthusiastic about the legislation and making
Speaker 1: their voices known, uh to the members of the United
Speaker 1: States Senate. This is very unusual that we have such
Speaker 1: a strong bipartisan advocacy for legislation of this kind, which
Speaker 1: is meeting resistance in the Senate. But I don't think
Speaker 1: for long because what we have in the bill is disciplined,
Speaker 1: it's focused, its own necessary, and it has brought bipartisan
Speaker 1: support in the country. It's just a matter of time.
Speaker 1: They want to pause. But as I've said here before,
Speaker 1: hunger doesn't take a pause, Losing your job doesn't take
Speaker 1: a pause. All of the paying the rent doesn't take
Speaker 1: a pause. We really need to meet the needs of
Speaker 1: the American people and at the same time provide stimulus
Speaker 1: to the economy. You mentioned minuting, but also the head
Speaker 1: of the FED, the Chairman of the Fed, Powell has
Speaker 1: said that is responsibility of elected representatives to use the
Speaker 1: tax and spend responsibilities that we have in a way
Speaker 1: that helps the economy, and he has indicated that there's
Speaker 1: need for more. Just one quick thought about China, because
Speaker 1: another thing that pious to have bipartisan support right now
Speaker 1: the Capitol Hill is the legislation including possibly delistings some
Speaker 1: Chinese company. Is that going to make it. It's been
Speaker 1: through the Senate, is it gonna make it through the House,
Speaker 1: and might have ramifications for the markets overall I have
Speaker 1: this is something we just learned of past uh with
Speaker 1: unanimous consent, so it isn't much debate or uh, we
Speaker 1: don't know who voted if unanimous consent, so we'll review
Speaker 1: it in the House. I've asked my committees to take
Speaker 1: a look at what that is. I take second place
Speaker 1: to No. One UH in the Congress, House or Senate,
Speaker 1: and my criticisms of China's UH trade policies visit the
Speaker 1: United States over decades, or human rights policies, or proliferation
Speaker 1: of weapons of mass destruction right now, whether it's the
Speaker 1: weed ares, the people of Hong Kong to bet, you
Speaker 1: name it. They have been very oppressive and even more so.
Speaker 1: But the fact is that we have to judge every
Speaker 1: We have to have a relationship with China, and we
Speaker 1: judge every action as to what it means to us
Speaker 1: as well as what it means to them. So I
Speaker 1: look forward to seeing that. It's interesting that it had
Speaker 1: such unanimous support, though in the center that was speed
Speaker 1: of the House. Nancy Pelosi coming up. We wrap up
Speaker 1: the week with Larry Summers. This is Wall Street Read
Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David
Speaker 1: Weston from Bloomberg Radio. We wrap up the week this
Speaker 1: week we do every week with our very special contributor
Speaker 1: Larry Summers of Harvard so, Larry, we had some experience
Speaker 1: this week with some economies starting to open up. We
Speaker 1: had Georgia start to open up first. We also have
Speaker 1: Sweden that never really closed very much. What are we
Speaker 1: learning from that is it doesn't do the consumers come
Speaker 1: bouncing right back. I think we're learning something um that
Speaker 1: was quite surprising to me, though perhaps it should not
Speaker 1: have been. Uh. Lockdown is actually less the issue than
Speaker 1: people's fear. If you look at what's happened to consumer spending,
Speaker 1: it's come back some in Georgia, but it's also come down.
Speaker 1: It's also come back in New York and to just
Speaker 1: about exactly the same extent. If you look at Sweden,
Speaker 1: which never closed down, and Denmark, which closed down pretty rigorously.
Speaker 1: Many more people have died in Sweden, but there hasn't
Speaker 1: been much difference in what's happened to consumer spending or
Speaker 1: the economy. The Swedish economies dipped eighty percent as much
Speaker 1: as the Danish economy has the reality is that what
Speaker 1: this is more about is not the lockdown, but the
Speaker 1: virus and people's degree of confidence. And if you think
Speaker 1: about it, that makes sense. If they opened up all
Speaker 1: the restaurants to go sit in one. I wouldn't go
Speaker 1: sit in restaurant now, even though I like UH restaurants,
Speaker 1: I think most of us are more constrained by our
Speaker 1: desire to be prudent about our health and prudent about
Speaker 1: the health of people we might pass a virus onto.
Speaker 1: Then we are constrained by some law that some governor decrees.
Speaker 1: That just underscores what I've been saying for some weeks
Speaker 1: that ultimately the most important economic policies are the health policies,
Speaker 1: whether it's testing or therapy or vaccination that or contact tracing,
Speaker 1: that can put this problem in the rear view mirror.
Speaker 1: And until we do that, I don't think we're really
Speaker 1: gonna fix the fundamental economic concern. And when we do that,
Speaker 1: we've got a prospect of a reasonably rapid UH recovery.
Speaker 1: But I think we have learned something important that this
Speaker 1: great debate about lockdowns is actually less of a debate
Speaker 1: than we have all thought about it as being, because
Speaker 1: people who don't believe in the lockdown in the United
Speaker 1: States don't respect it and honor it, and people who
Speaker 1: are are scared don't go out even if the lockdown
Speaker 1: is UH removed. I saw that one of the prominent
Speaker 1: Washington think tanks. UM has announced that it's not going
Speaker 1: to have any visitors until the end of the year,
Speaker 1: and it's not gonna have anybody back in their offices
Speaker 1: until September at the earliest. Well, you know, they're not
Speaker 1: waiting to see what gets decreed by the president or
Speaker 1: by the mayor of Washington, d C. And you're seeing
Speaker 1: a lot of that kind of thing. This is going
Speaker 1: to be based more on decentralized decision making of people
Speaker 1: who assess risks to themselves. Uh. Is I think what
Speaker 1: we've learned here. Yeah, as you say, Larry, consumers are
Speaker 1: gonna vote with their feet is a practical matter. But
Speaker 1: you've been a staunch advocate for a much ramped up
Speaker 1: testing and contact tracing program. Is it possible that could
Speaker 1: be enough to restore the confidence to the consumer, to
Speaker 1: the worker or we really have to wait to a
Speaker 1: vaccine as a practical practical matter. Look, I don't think
Speaker 1: this is going to be behind us until we have
Speaker 1: a vaccine or a convincing and highly credible, uh, highly
Speaker 1: credible kind of therapy. I do think that if we
Speaker 1: did the right things with testing, that all kinds of
Speaker 1: private ways of employers testing their employees before they come
Speaker 1: back and retesting them on a periodic basis. Universities UH
Speaker 1: opening to at least some extent based on the fact
Speaker 1: that they were going to test each student with UH
Speaker 1: some period some periodicity. UM. I think these kinds of
Speaker 1: things will start to happen if we have testing, and
Speaker 1: they'll be a further multiplier from UH testing UH if
Speaker 1: we can UH do it more more pervasively. So I
Speaker 1: do think that ramping up testing should be a very
Speaker 1: great priority. I suspect the utility of testing will come
Speaker 1: in a more decentralized way then I probably would have
Speaker 1: imagined a few weeks ago. It'll be employers, it will
Speaker 1: be airlines um, not wanting to have anybody with the
Speaker 1: virus on their planes. It will be similar things for
Speaker 1: entering into various kinds of activities, right right, So the Larry,
Speaker 1: if the markets didn't have enough to worry about with
Speaker 1: the virus, we also injected growing conflict with China US
Speaker 1: China UH, and we have of course the People's Congress
Speaker 1: meeting and taking various actions. We have up on the
Speaker 1: hill move to delist some Chinese companies passed the Senate
Speaker 1: it's depending before the House. And the meantime, we had
Speaker 1: the Secretary of State Pompeios that we're gonna review the
Speaker 1: special trade stays for Hong Kong because Hong Kong actually
Speaker 1: sort of a victim perhaps of Beijing saying we're having
Speaker 1: new security law. Does that make sense right now given
Speaker 1: what's going on with the global economy and the U
Speaker 1: S economy. I don't get it. UM, Hong Kong's a victim,
Speaker 1: so why punish. I don't think you're gonna do any
Speaker 1: important damage to China by fooling around with Hong Kong's
Speaker 1: trade status, But you're gonna hurt the people of Hong
Speaker 1: Kong even worse are than UH. They're hurting UH now,
Speaker 1: So I don't really see UH the logic. I sympathize I,
Speaker 1: and I feel for the fact that the warnings that
Speaker 1: were given at the time when UH I was in
Speaker 1: I was in government at the time and went to
Speaker 1: Hong Kong and spoke about the importance of one country,
Speaker 1: two systems as really a test of China's UH credibility,
Speaker 1: and China doesn't appear to be meeting that test. And
Speaker 1: it's tragic, but it seems like to the extent we
Speaker 1: want to be taking any action, it should be towards
Speaker 1: UH China, not towards the victim, which is Hong Kong.
Speaker 1: I don't really understand why preventing Americans preventing Chinese companies
Speaker 1: from listing on the American stock market when they meet
Speaker 1: the relevant capital market requirements is going to serve American interests.
Speaker 1: Seems to me that it's going to reduce our degree
Speaker 1: of influence and leverage over those companies and over China.
Speaker 1: It's gonna make it harder for Americans to make investments.
Speaker 1: It's not going to really impact on those countries ability
Speaker 1: to access capital. It's going to be a great gift
Speaker 1: UH to stock exchanges in Singapore, to stock exchanges UH
Speaker 1: in London. Ironically, it may be a big gift to
Speaker 1: the Hong Kong Stock Exchange. At the same time, other
Speaker 1: people in the administration are trying to damage UH the
Speaker 1: Hong Kong economy. So I don't think we have a
Speaker 1: policy that's defined by its UH coherence. I think a
Speaker 1: mature policy would recognize that at this point we are
Speaker 1: not friends with China and probably not going to be
Speaker 1: friends or allies or partners in the foreseeable future. We
Speaker 1: are uh, two very strong individuals in a small lifeboat
Speaker 1: in a turbulent let's see, a long way from the shore.
Speaker 1: We don't need to like each other, but we do
Speaker 1: need to cooperate with each other. And pursuing tip for
Speaker 1: tat acts of revenge, even if we're right in some
Speaker 1: abstract sense that we can anger hers and alienate them,
Speaker 1: is not going to serve our objective of getting to
Speaker 1: uh the shore. So we need to find a way
Speaker 1: of elevating this relationship past at um the adulthood, Yeah,
Speaker 1: which will be particularly challenge in a presidential election year.
Speaker 1: I did dare say thank you so much Larry Summers,
Speaker 1: our special contributor, of course, former Secretary of Treasury that
Speaker 1: does it for Wall Street Week. I'm David Weston is Bloomberg.
Speaker 1: I hopefully see you next week.