WEBVTT - China is Broadening Out, Roach Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jailey. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.519 Bloomberg dot Com, and of course on the Bloomberg A 0:00:33.600 --> 0:00:37.120 Lisa Martin Newsy or Ahead of You Banking for Bloomberg 0:00:37.680 --> 0:00:41.200 Lisa will Will. The World Cup game caused Deutsche Bank 0:00:41.240 --> 0:00:45.199 to go under eight euros per share. I don't see 0:00:45.280 --> 0:00:50.960 much of a collation, then, I think, I guess what 0:00:51.000 --> 0:00:54.600 we're seeing today? Um, yeah, there's another set off. The 0:00:54.600 --> 0:00:57.760 stalk has hit a new record low and intraday low. 0:00:58.280 --> 0:01:02.760 I mean it's it's reflective of concerns that investors continue 0:01:02.800 --> 0:01:06.080 to have about the potential for for a turnaround at 0:01:06.080 --> 0:01:09.959 the farm. And you also see potential concerns this week 0:01:10.400 --> 0:01:14.039 stemming from the qualitative part of the U S Truss 0:01:14.040 --> 0:01:16.760 tests that are due and tomorrow. Well, you bring up 0:01:16.760 --> 0:01:19.400 a really important point and it's not just Deutsche Bank 0:01:19.480 --> 0:01:24.560 this morning. Tom twelve days of losses for financials on 0:01:24.600 --> 0:01:28.320 the SMP five DRED doesn't amount to a massive, massive move, 0:01:28.440 --> 0:01:30.720 but it's the longest daily ing street and I did 0:01:30.760 --> 0:01:33.160 what Liza would have done. I compared BMP Perry bout 0:01:33.160 --> 0:01:35.160 a Deutsche Bank, and to be fair to Deutsche Bank, 0:01:35.240 --> 0:01:37.399 BMP Perry bar is not doing much better. Yes, So 0:01:37.600 --> 0:01:39.800 so I just wonder what's going on with global financials 0:01:39.840 --> 0:01:43.720 at the moment and what underpins the overall concerns. But 0:01:43.760 --> 0:01:46.160 I think in Europe in particular, there's concerns of that 0:01:46.280 --> 0:01:50.200 interest rate wise that was expected at some point is 0:01:50.320 --> 0:01:53.680 being seen as further out into the future. And of 0:01:53.720 --> 0:01:57.440 course that means that you know that the margins remain very, 0:01:57.560 --> 0:02:02.120 very very thin in this region for for the seseeable future. Um. 0:02:02.440 --> 0:02:05.120 But you also have investors today saying that they think 0:02:05.160 --> 0:02:08.320 that even at these levels, these shares are overvalued, which 0:02:08.480 --> 0:02:11.400 you know is somewhat surprising given to those significantly below 0:02:11.400 --> 0:02:14.320 what they were a decade ago. ELSA in the institutional 0:02:14.360 --> 0:02:17.400 America there's something about ten dollars a share and then 0:02:17.520 --> 0:02:20.720 five dollars a share in terms of ownership. Does that 0:02:20.760 --> 0:02:24.360 seem constraint face Deuts your bank in Euros in Europe? 0:02:24.400 --> 0:02:27.400 Is there a trip point where all this matters? No, 0:02:27.520 --> 0:02:29.400 I don't think so. We've seen the bank, you know, 0:02:29.440 --> 0:02:33.000 across the nine year a mark before and then bounced back. 0:02:33.280 --> 0:02:36.239 So I don't think that's the case, but clearly the 0:02:36.400 --> 0:02:40.720 sustained lack of confidence m is husting the bank and 0:02:40.760 --> 0:02:43.320 will see more of that potentially with second quarter, where 0:02:43.360 --> 0:02:45.600 you know, everybody's going to be focused on just how 0:02:45.680 --> 0:02:47.760 much of that revenue the bank can hang on to 0:02:48.400 --> 0:02:51.840 as it shrinks in in certain selected areas. And alastin 0:02:51.880 --> 0:02:55.120 banking question that came up earlier this morning in a Lisa, 0:02:55.200 --> 0:02:59.320 you've lived this in Europe, which is negative interest rates 0:02:59.440 --> 0:03:03.280 in the Angels system is part of this banking angst. 0:03:03.440 --> 0:03:09.120 Just the chronic negative rates that Europe has enjoyed. Well, 0:03:09.160 --> 0:03:11.359 I think that's obviously playing playing a role here. I 0:03:11.440 --> 0:03:14.560 think you know the economic the you know the economic 0:03:14.600 --> 0:03:18.760 prospects here, aren't you know that they're not looking as 0:03:18.800 --> 0:03:20.880 prosperous as they would have been? And I guess with 0:03:21.320 --> 0:03:26.000 the potential hits from trade wars, um cloud in the future, 0:03:26.120 --> 0:03:28.959 cloud in the outlook even further, of course, these banks 0:03:29.000 --> 0:03:31.840 need those economies to be growing, which raises the question 0:03:32.440 --> 0:03:35.520 why the ECB doesn't respond to what these banks ultimately 0:03:35.520 --> 0:03:38.160 would like to see net net is the ECB just 0:03:38.240 --> 0:03:41.680 made the decision at least that ultimately the negative rates 0:03:41.680 --> 0:03:44.000 are what's best for the consonant overall, even if it 0:03:44.040 --> 0:03:47.240 does hurt the banks. I guess so. And I think 0:03:47.240 --> 0:03:49.560 one other that has come out recently, as you know, 0:03:49.600 --> 0:03:53.440 the regulators here are pushing for um, you know, greater consolidation, 0:03:53.520 --> 0:03:55.960 and it's not clear that they have as much um 0:03:56.200 --> 0:03:58.880 you know, as much direct influence on the banks through 0:03:59.040 --> 0:04:03.920 you know, because such a thinly spread market. Just to 0:04:03.920 --> 0:04:05.760 get a final question to you on the stress test 0:04:05.800 --> 0:04:09.640 results later this week, looking for the results, try and 0:04:09.640 --> 0:04:11.600 to gauge the ability of some of these big banks, 0:04:11.640 --> 0:04:13.800 how much they can pay out, how big the dividends 0:04:13.840 --> 0:04:17.640 will be. Are these stress tests stressful for these lenders 0:04:17.760 --> 0:04:21.040 or have they worked their way around things? Well? I think, 0:04:21.080 --> 0:04:24.839 you know, the experience has shown that the qualitative qualitatives 0:04:24.960 --> 0:04:27.000 parts of these tasks, which is what we're going to 0:04:27.040 --> 0:04:30.120 be hearing about tomorrow, do have an impact. And you know, 0:04:30.640 --> 0:04:32.920 for the European banks, the focus will very much be 0:04:33.000 --> 0:04:36.680 on Deutsche Bank. Lisa, thank you so much, greatly appreciate it, 0:04:36.800 --> 0:04:39.920 very valuable this morning. Lisa marn't Newsy for years just 0:04:40.800 --> 0:04:44.279 out front on the Italian banking crisis, and of course 0:04:44.320 --> 0:05:02.320 what we see across all of um European banking. One 0:05:02.360 --> 0:05:05.000 of our great joys our privileges in Bloomberg Surveillance is 0:05:05.040 --> 0:05:08.159 to talk to people of different opinions. That we particularly 0:05:08.920 --> 0:05:13.080 enjoy talking to people that can holistically bring parts together, 0:05:13.200 --> 0:05:17.719 like finance, like politics, and like the geography and history 0:05:18.160 --> 0:05:19.840 that we all speak of. And one of those would 0:05:19.839 --> 0:05:22.760 be Stephen Roach. Of course some would consider the inventor 0:05:22.839 --> 0:05:26.080 of modern market economics. He single handedly did that in 0:05:26.120 --> 0:05:29.479 the digital space at Morgan Stanley years ago, author of 0:05:29.520 --> 0:05:32.880 The Next Asia, and of course at Yale University. Steven Roach, 0:05:32.920 --> 0:05:37.479 Good morning, President. She has to respond if Liz Economy 0:05:37.560 --> 0:05:41.279 tells me this is a new leadership in Beijing, what 0:05:41.440 --> 0:05:48.640 does President Trump underestimate or misjudge about President She? Well, Um, 0:05:48.680 --> 0:05:52.400 what what the Trump administration is looking for by all 0:05:52.440 --> 0:05:57.719 these pressures on China, whether it's on UH, tariffs, intellectual property, 0:05:58.000 --> 0:06:02.559 or investments, is for she to capitulate on his core 0:06:02.680 --> 0:06:11.320 strategy of innovation industrial policy uh and um PAN regional 0:06:12.520 --> 0:06:15.920 leadership uh and and she is not going to capitulate 0:06:15.960 --> 0:06:20.160 on those core principles, so uh, you know they're they're 0:06:20.200 --> 0:06:22.800 really at a at a standoff here, and I think 0:06:23.520 --> 0:06:26.880 while while China certainly does not want a trade war, 0:06:27.000 --> 0:06:31.320 they are not about capitulation UM in any sense of 0:06:31.320 --> 0:06:34.560 the word tone. How do you judge the moderates of 0:06:34.600 --> 0:06:38.320 the Trump administration. I would assume the announcement this morning 0:06:38.320 --> 0:06:42.120 on investment restrictions was a victory for Secretary Minution, of 0:06:42.240 --> 0:06:45.640 victory for their former advisor Gary Cohene, of course for 0:06:45.760 --> 0:06:50.200 years with Golden Sachs. But is he getting an articulate 0:06:50.640 --> 0:06:56.160 moderate advice stream at the White House? Not even close. 0:06:56.279 --> 0:07:00.440 I mean, you know, it's it's just a shading different 0:07:00.440 --> 0:07:06.000 degrees of of China bashing. Some are more extreme than others. 0:07:06.920 --> 0:07:10.360 Navarro and Lightheiser obviously at one end of the spectrum, 0:07:10.360 --> 0:07:13.920 but you know, not too far behind are the UH 0:07:14.080 --> 0:07:19.120 sort of the the ones that would have UM embraced 0:07:19.160 --> 0:07:22.360 this view as well, from from cut Low to um 0:07:22.640 --> 0:07:25.320 Um Manuchin. They just don't don't want to go quite 0:07:25.400 --> 0:07:29.120 to the extent that the extremists do. But they're certainly 0:07:29.160 --> 0:07:32.800 not UM an effective counterweight in this. And by the way, 0:07:33.480 --> 0:07:36.240 you know, all the markets are sort of encouraged over 0:07:36.280 --> 0:07:44.040 the UH, the apparent UM backing off on extreme measures 0:07:44.040 --> 0:07:47.960 on Chinese investment. I think there's still a clear desire 0:07:48.040 --> 0:07:52.320 to use Zippi as far more aggressively in restricting Chinese 0:07:52.320 --> 0:07:57.160 investment into the US in anything even close to resembling 0:07:57.200 --> 0:08:01.800 their made in China in austrial policy. And Stephen, doesn't 0:08:01.800 --> 0:08:05.280 that approach make a whole lot of sense. I don't 0:08:05.280 --> 0:08:10.200 think it makes any sense at all, because the first 0:08:10.240 --> 0:08:14.600 of all, China is very effective now in developing its 0:08:14.600 --> 0:08:19.320 own indigenous uh technology. Is the idea that they steal 0:08:19.680 --> 0:08:23.720 blatantly from Us than the Varro story is hopelessly um 0:08:24.000 --> 0:08:27.280 um out of date. And you know, and certainly there 0:08:27.320 --> 0:08:31.120 were some transgressions in the past, but I think since 0:08:31.160 --> 0:08:33.480 the sunny Land Summit of two thousand fifteen, in the 0:08:33.520 --> 0:08:38.200 reduction of Chinese state sponsored cyber hacking, which is um 0:08:38.360 --> 0:08:42.760 there's clear evidence of that. I think the Chinese are 0:08:43.760 --> 0:08:50.960 now far more um uh temperate in their exercise of 0:08:51.200 --> 0:08:55.960 technology transfer. The whole concept of force technology transfer through 0:08:56.080 --> 0:08:58.920 joint ventures was ludicrous from the start. I mean, this 0:08:59.040 --> 0:09:02.640 is you know, light higher fiction to justify the three 0:09:02.640 --> 0:09:06.120 oh one tariffs. Joint ventures. I was a partner of 0:09:06.120 --> 0:09:08.760 a joint venture with the Chinese. You know, these are 0:09:09.240 --> 0:09:19.000 commercial uh efforts legally protected two partners collectively working together 0:09:19.160 --> 0:09:23.199 to build a business. Of course, they share systems, they 0:09:23.200 --> 0:09:28.000 share people, UH, they share technologies. Never once in my 0:09:28.120 --> 0:09:30.679 fifteen years experience and a joint venture with China was 0:09:30.720 --> 0:09:34.280 I forced to turn over anything to my Chinese partners. 0:09:34.320 --> 0:09:36.000 But Stephen, I guess the argument is that if you 0:09:36.000 --> 0:09:37.880 want to operate in China, you are forced to go 0:09:37.920 --> 0:09:41.080 into a joint venture in many sectors and in many 0:09:41.120 --> 0:09:43.280 goals of these foreign companies. And I guess you know, 0:09:43.320 --> 0:09:45.120 if you don't like, if you don't like, you know, 0:09:46.040 --> 0:09:48.199 the requirements of the joint venture, which by the way 0:09:48.200 --> 0:09:50.320 of being relaxed, then maybe you don't have to operate 0:09:50.320 --> 0:09:52.560 in China. I mean, you know, no one is forcing you. 0:09:52.679 --> 0:09:55.040 It isn't that the argument, Stephen from the U S side, 0:09:55.120 --> 0:09:57.199 that if that's the rules of the games in China, 0:09:57.240 --> 0:09:58.720 why shouldn't that be the rule of the game in 0:09:58.720 --> 0:10:02.040 the United States. Well, that's not the rules that the 0:10:02.120 --> 0:10:05.040 United States is imposing on China in any way whatsoever. 0:10:05.880 --> 0:10:09.720 I mean, the the US is now going to um 0:10:09.760 --> 0:10:14.079 depending on how they they enforce this new strength and 0:10:14.160 --> 0:10:18.360 Cifius action. The US is simply gonna deny China the 0:10:18.559 --> 0:10:21.840 right to participate in any type of venture, joint or 0:10:21.880 --> 0:10:25.960 otherwise in the United States. And and what China says, 0:10:26.240 --> 0:10:28.439 come on in. We want you to as partners, but 0:10:28.520 --> 0:10:30.320 we want you to do it within our legal and 0:10:30.320 --> 0:10:33.440 commercial structure. It's a very different concept. Well, Stephen, it's 0:10:33.440 --> 0:10:36.400 a very different approach. I struggled to understand whether the 0:10:36.440 --> 0:10:39.440 concept is different. The approach might be different. The United 0:10:39.480 --> 0:10:41.520 States making it a little bit more difficult to a 0:10:41.720 --> 0:10:44.360 little bit, wait, hold on, hold on a little bit 0:10:44.520 --> 0:10:47.800 is not the right way to describe an actual Well, 0:10:47.880 --> 0:10:51.040 let me finish my sent Just let me finish my sentence. 0:10:51.120 --> 0:10:54.120 Pushing it through Cyphius in a more stringent way makes 0:10:54.160 --> 0:10:56.640 it somewhat more difficult. We can have an argument about 0:10:56.679 --> 0:10:58.440 the degree. I don't think that's an adequate use of 0:10:58.440 --> 0:11:01.200 our time this morning. But I just think that the 0:11:01.240 --> 0:11:04.000 United States is possibly doing the right thing. And some 0:11:04.040 --> 0:11:07.080 people might agree with that that if China wants to 0:11:07.160 --> 0:11:09.280 upgrade the way it is, then the United States is 0:11:09.320 --> 0:11:12.760 sending a message open up even more. Otherwise we'll make 0:11:12.800 --> 0:11:15.640 it more difficult for you to invest in our economy. 0:11:15.800 --> 0:11:20.720 But here's the inconsistency of of what you're seeing. The 0:11:20.720 --> 0:11:25.280 the real hope for US China UH to resolve their 0:11:25.280 --> 0:11:29.160 differences is precisely the point you're making, and that's market access. 0:11:30.559 --> 0:11:33.440 The Chinese one access to our markets because we're the 0:11:33.480 --> 0:11:39.440 world's richest and deepest um markets, but we also need 0:11:39.520 --> 0:11:42.040 access to their markets because they're going to grow their 0:11:42.040 --> 0:11:46.640 consumer economy UH in a way that no nation has 0:11:46.679 --> 0:11:50.920 ever done in modern history. I've estimated in a in 0:11:50.960 --> 0:11:53.560 a in a book I wrote a few years ago 0:11:53.720 --> 0:11:58.720 on balance that the tradeable portion of Chinese services is 0:11:58.760 --> 0:12:01.880 going to expand by four to six trillion dollars between 0:12:01.920 --> 0:12:07.440 now and we have the most competitive, strongest services sector 0:12:07.480 --> 0:12:09.920 in the world. There's a shame on us, and we 0:12:09.960 --> 0:12:12.240 don't get a piece of that. So the answer is 0:12:12.280 --> 0:12:16.000 not restriction. The answer is opening up market access through 0:12:16.000 --> 0:12:19.559 a bi lateral investment treaty, which the US and China 0:12:19.600 --> 0:12:22.880 have failed to agree on for ten years. We're going 0:12:22.960 --> 0:12:27.320 exactly the opposite way to your recommendation. Makes absolutely no sense, 0:12:28.000 --> 0:12:31.520 Steve Roach. If you're just joining US folks, Steve Roushevale University, 0:12:31.520 --> 0:12:34.079 and the time we've got left, Dr Roach, I want 0:12:34.120 --> 0:12:38.120 to talk about the Chinese strategy here tip for tat 0:12:38.200 --> 0:12:42.760 is the media interpretation of this take us to Avanage 0:12:42.840 --> 0:12:46.160 Dixon in the art of strategy? What is the art 0:12:46.240 --> 0:12:49.480 of strategy? For President she? What does does he just 0:12:49.600 --> 0:12:53.560 weigh us out? Is that his number one factor? I 0:12:53.600 --> 0:12:58.440 think I think the the the artist strategy is having 0:12:58.480 --> 0:13:04.280 a diversified portfolio of foreign interests. So UM, the US 0:13:04.360 --> 0:13:09.160 and China have been embraced in a very strong codependent relationship. 0:13:09.200 --> 0:13:11.080 I've talked to you about this for a long time time, 0:13:12.600 --> 0:13:17.120 and the Chinese have probably put too many eggs in 0:13:17.160 --> 0:13:20.640 the American basket and they don't have a lot of 0:13:20.720 --> 0:13:23.720 natural allies in in in the in the region, so 0:13:23.800 --> 0:13:29.319 they have UM really embraced a much broader external strategy. 0:13:29.440 --> 0:13:34.040 So the Belt and Road initiative connecting China through UM 0:13:34.400 --> 0:13:38.040 foreign direct investment into sixty four other countries in the region. 0:13:39.520 --> 0:13:42.880 It is important building a new financial architecture through the 0:13:42.920 --> 0:13:48.560 Asian Infrastructure Investment Bank, the New Bricks Development Bank. UM. 0:13:48.760 --> 0:13:55.959 China is broadening out uh it's management of geo strategic relationships, 0:13:55.960 --> 0:13:59.960 so that the strategy, so if the US UM continue 0:14:00.080 --> 0:14:03.240 is to try to contain China, which has been you know, 0:14:03.280 --> 0:14:06.520 an ongoing feature since the Great Asian pivot of the 0:14:06.520 --> 0:14:11.080 Obama administration, then China's other options. Dr Roach, thank you 0:14:11.160 --> 0:14:14.080 so much, Stephen Roach at Yale University, is wonderful book 0:14:14.080 --> 0:14:29.600 of a few years ago, the next Asia for that question, 0:14:29.640 --> 0:14:32.880 whatever your politics is across this nation, this is the 0:14:32.920 --> 0:14:35.520 interview of the day. We will feature this on our 0:14:35.560 --> 0:14:38.960 podcast out of the Apple Podcasts and Spotify, and we 0:14:39.040 --> 0:14:42.600 do this with Noah Feldman of Harvard. His book of 0:14:42.680 --> 0:14:46.280 eight years ago, Scorpions, is nothing but outstanding. It is 0:14:46.320 --> 0:14:50.480 the battles and triumphs of FDR's great Supreme Court justices. 0:14:50.520 --> 0:14:55.320 And we are thrilled that Professor Feldman writes for Bloomberg Opinion, Um, 0:14:55.400 --> 0:14:59.760 you brought FDR into the title, uh, Noah, of your essay, 0:15:00.480 --> 0:15:03.720 A decision that will live in infamy, and that goes 0:15:03.840 --> 0:15:08.680 right back to December seven, and we had to decide 0:15:08.720 --> 0:15:11.160 what to do with the Japanese. What do we get 0:15:11.240 --> 0:15:15.880 so wrong in incarcerating Japanese if we thought they were spies? 0:15:17.360 --> 0:15:20.480 What we got wrong is that we got carried away 0:15:20.640 --> 0:15:24.960 in the very justifiable need to fight our enemy in 0:15:25.000 --> 0:15:30.720 the war, and then we projected that onto Japanese Americans 0:15:30.840 --> 0:15:33.720 who were in fact loyal to the United States and 0:15:33.800 --> 0:15:37.440 not to Japan. And then we in turned Japanese Americans 0:15:37.520 --> 0:15:41.280 and the Supreme Court to its shame upheld that decision 0:15:41.320 --> 0:15:44.320 really out of loyalty to President Roosevelt, and in the 0:15:44.400 --> 0:15:47.360 belief and the staken belief that because the interment was 0:15:47.400 --> 0:15:49.960 any way coming to an end, no one would really 0:15:50.000 --> 0:15:52.680 remember it going forward. And instead we think of the 0:15:52.680 --> 0:15:55.240 Supreme Court's decision there is one of the worst decisions 0:15:55.240 --> 0:15:58.080 of the Court has ever made. Let's bring it forward 0:15:58.160 --> 0:16:02.040 then to the rationalization of Chief Justice Roberts and the 0:16:02.080 --> 0:16:07.120 deciding vote of Justice Kennedy. And what they did was say, yes, 0:16:07.360 --> 0:16:11.160 that was terrible in the forties, but this is different. 0:16:11.800 --> 0:16:17.800 Noah Feldman and Justice Sodamayer disagree. Chief Justice Roberts went 0:16:17.800 --> 0:16:20.000 out of his way to say, oh, Karamatta was terrible, 0:16:20.160 --> 0:16:24.160 but the travel ban is different, he said, because here 0:16:24.920 --> 0:16:29.400 on the surface of the ban, there's no reference to 0:16:29.600 --> 0:16:33.080 people of Muslim origin, just to a bunch of Muslim 0:16:33.080 --> 0:16:35.280 countries and not where he said, I'm not going to 0:16:35.400 --> 0:16:38.560 take very seriously. The background to the band in which 0:16:39.320 --> 0:16:42.880 the President and his advisors spoke about the goal of 0:16:42.920 --> 0:16:46.680 banning Muslims immigrants from the United States, and so as 0:16:46.720 --> 0:16:50.520 a result, he was able to avoid actually looking at 0:16:50.560 --> 0:16:55.040 the evidence that the lower courts did consider. And Justice Kennedy, 0:16:55.160 --> 0:16:59.240 who has, what is unusual circumstances, an admirable history of 0:16:59.640 --> 0:17:02.400 looking very closely at what government officials mean to do 0:17:02.600 --> 0:17:06.760 to see whether they're motivated by by animous in this case, 0:17:07.320 --> 0:17:09.840 was willing to join that opinion and basically close his 0:17:10.040 --> 0:17:12.919 eyes to it. And I think that will be a 0:17:12.960 --> 0:17:16.919 real deviation from his record and a stain on his reputation. 0:17:17.200 --> 0:17:20.600 Just just Stephen Brier in descent went to that idea 0:17:20.640 --> 0:17:25.520 of your phrase, professor of mean to do? Operationally? How 0:17:25.520 --> 0:17:31.000 will this affect the administration? And operationally can people push 0:17:31.119 --> 0:17:35.920 against the arching theme of Trump the Hawaii It really 0:17:35.920 --> 0:17:39.680 depends on whether the executive branch uses the system of 0:17:39.720 --> 0:17:42.600 exemptions that it has in place to make lots of 0:17:42.640 --> 0:17:45.919 case by case determination. Ordinary people are fine. And if 0:17:45.960 --> 0:17:48.480 they are and they do that, Justice Brier said, well, 0:17:48.520 --> 0:17:51.639 then this may not look all that discriminatory. But if 0:17:51.680 --> 0:17:53.760 they don't, if the government just sort of said, look, 0:17:53.800 --> 0:17:56.440 if you're from one of these countries, you're excluded, then 0:17:56.480 --> 0:17:58.480 Justice Brier said, the whole thing looks a lot more like. 0:17:58.640 --> 0:18:03.719 And what happens if the Trump administration says anybody from 0:18:03.800 --> 0:18:07.760 country ABC can't come in? What did you learn yesterday 0:18:07.880 --> 0:18:10.840 if that statement is made by the administration, Well, we 0:18:10.960 --> 0:18:13.639 learned yesterday that the court said that the administration can 0:18:13.680 --> 0:18:15.960 get away with it as long as they provide really 0:18:16.080 --> 0:18:19.480 a very minimal justification. That says, because we think their 0:18:19.560 --> 0:18:22.000 national security concerns, and even if the way they justified 0:18:22.119 --> 0:18:26.280 is pretty unconvincing to most reasonable observers, the government will 0:18:26.280 --> 0:18:28.720 be allowed to get away with that. And in that sense, 0:18:29.160 --> 0:18:30.920 this is a win for the Trump administration. It's a 0:18:30.960 --> 0:18:33.240 validation for the for the Trump administration, and it's a 0:18:33.320 --> 0:18:36.639 defeat for anybody who thinks that the Constitution is supposed 0:18:36.640 --> 0:18:38.959 to stand up and block discrimination. So does this go 0:18:39.000 --> 0:18:41.840 on forever? I mean, I mean, as you said, Karamatsu 0:18:42.440 --> 0:18:44.560 was going to disappear after the war and all that. 0:18:44.680 --> 0:18:48.200 And does this get amended down the road if if 0:18:48.240 --> 0:18:51.480 the Democrats win three administrations in a row and all 0:18:51.480 --> 0:18:53.320 of a sudden it's a liberal court again, does it 0:18:53.359 --> 0:18:55.639 get changed or is it a lot? Is it? Is 0:18:55.640 --> 0:18:59.280 it chiseling granted as of yesterday? Well, this scenario is 0:18:59.280 --> 0:19:02.960 probably pretty unlikely to repeat itself. And so what you get. 0:19:03.040 --> 0:19:05.159 And this is what happened after Cormato is the scenario 0:19:05.280 --> 0:19:09.520 wasn't repeated, but the President sat there as as Justice 0:19:09.600 --> 0:19:12.160 Jackson actually said in his descent in the Coromanto case, 0:19:12.520 --> 0:19:15.760 the principle sits about like a loaded weapon. It could 0:19:15.760 --> 0:19:18.399 always be used under circumstances of Christ. And that's exactly 0:19:18.480 --> 0:19:20.840 what's going to happen here. This decision will sit there 0:19:20.880 --> 0:19:23.359 like a loaded gun, and it may not be used, 0:19:23.400 --> 0:19:25.359 but it's always possible that it will. And a liberal 0:19:25.359 --> 0:19:28.560 Supreme Court eventually would probably say exactly what today's court 0:19:28.600 --> 0:19:31.080 said about Cormato. Oh that was terrible, it was wrong. 0:19:31.480 --> 0:19:33.320 We were so confused, and now we should never We 0:19:33.320 --> 0:19:34.880 should never have done that. This isn't who we are. 0:19:35.040 --> 0:19:37.320 If you're just joining us from Harvard. Noah Felben, he 0:19:37.320 --> 0:19:39.080 took us a lot degree at a school that serves 0:19:39.080 --> 0:19:42.880 good pizza in New Haven, Connecticut. But Noah Felman with us. 0:19:42.920 --> 0:19:45.800 And I can't say enough folks about his book Scorpions 0:19:45.800 --> 0:19:49.680 and Battles and Triumphs of FDR Court that the whole 0:19:49.720 --> 0:19:52.480 thing of the thirties forties was it was a stacked court, 0:19:52.520 --> 0:19:56.200 that FDR overtly stacked the court. Is that what we're 0:19:56.200 --> 0:20:00.240 seeing right now with this president. We're not quite at 0:20:00.240 --> 0:20:02.280 that point yet. You know, by the end Roosevelts had 0:20:02.280 --> 0:20:06.000 appointed eight justices and the Chief Justice because he was 0:20:06.040 --> 0:20:09.040 president for so long. So far, Donald Trump has just 0:20:09.080 --> 0:20:13.040 gotten one justice. The question is will he add more? 0:20:13.240 --> 0:20:17.320 And I think it's entirely possible. If Justice Kennedy resigns 0:20:17.359 --> 0:20:20.520 this summer, and if the President is able to nominate 0:20:20.560 --> 0:20:23.080 somebody in the Senate confirmed them before the midterms, we 0:20:23.200 --> 0:20:25.960 may well see an extremely conservative court for at least 0:20:25.960 --> 0:20:28.680 a generation. On the other hand, if that doesn't happen, 0:20:28.920 --> 0:20:32.760 or if the Democrat when the Senate, it seems entirely 0:20:32.800 --> 0:20:34.920 probably they will do just what the Republicans didn't block 0:20:34.960 --> 0:20:37.120 any of Donald Trump's nominees, and then all bets are 0:20:37.119 --> 0:20:40.720 off place Trump the Hawaii in the phrases that our 0:20:40.760 --> 0:20:43.800 audience knows, I think a Row view weight, sere, and 0:20:43.920 --> 0:20:47.840 Brown in the fifties. I mean, where does this case 0:20:47.960 --> 0:20:53.800 fit in in Noah Felban's history of the judiciary. Those 0:20:53.840 --> 0:20:57.679 are cases that were controversial when they were decided, and 0:20:57.720 --> 0:21:00.200 in the case of Brown against Board, of education. Over time, 0:21:00.200 --> 0:21:02.879 everyone came to accept the outcome. In the case of Worldviewade, 0:21:02.960 --> 0:21:05.320 everyone didn't come to accept the outcome, and they became 0:21:05.359 --> 0:21:08.280 the basis for long term social controversy. This is the 0:21:08.320 --> 0:21:11.560 worst decision in a in a serious way, because it 0:21:11.640 --> 0:21:15.119 sends a message that it's open season to discriminate. But 0:21:15.440 --> 0:21:17.879 it's also unlikely to cause the same kind of long 0:21:18.040 --> 0:21:23.159 term arguments because unlike segregation or abortion, which were long 0:21:23.280 --> 0:21:26.560 term social issues, this is a case that's really restricted 0:21:26.600 --> 0:21:30.359 to this unique restriction on immigrants from from five Muslim countries. 0:21:30.600 --> 0:21:34.600 One final question, if I could tell us about Justice Roberts. 0:21:34.640 --> 0:21:37.879 Chief Justice Roberts, he had an acclaimed decision where he 0:21:38.000 --> 0:21:41.960 went against the republic in our right side tide a 0:21:42.080 --> 0:21:45.399 number of years ago. But but Chief Justice Roberts, he 0:21:45.440 --> 0:21:49.080 wrote the majority opinion. He went against the World War 0:21:49.160 --> 0:21:52.880 two ruling. But what did you learn about Chief Justice 0:21:53.040 --> 0:21:57.960 John Roberts yesterday? Justice Roberts. Chief Justice Roberts wants to 0:21:58.000 --> 0:22:01.159 follow the principle of judicial restraint. He wants to avoid 0:22:01.280 --> 0:22:05.200 judicial activism, but when it's convenient, he will also go 0:22:05.200 --> 0:22:07.280 go the other way. What he did here is I 0:22:07.280 --> 0:22:09.960 think he was really trying to preserve the reputation of 0:22:09.960 --> 0:22:12.560 the Court and try to avoid the Court dirtying its 0:22:12.560 --> 0:22:15.359 hands by dealing with the travel ban. And I just 0:22:15.400 --> 0:22:17.679 think he miscalculated. I mean, I think his heart, I 0:22:17.680 --> 0:22:18.960 don't want to want to speak about his heart, but 0:22:19.000 --> 0:22:21.480 I think his intention is to keep the Court from 0:22:21.480 --> 0:22:23.840 getting caught up in very great controversies. But I think 0:22:23.840 --> 0:22:26.159 he made a mistake here and he did get in 0:22:26.560 --> 0:22:29.200 I've got to ask one to find a question. Professor Feldman, 0:22:29.280 --> 0:22:32.639 you're truly one of the nation's experts on Islamic thought. 0:22:32.680 --> 0:22:35.480 You study in Europe as a Rhodes scholar, and you've 0:22:35.480 --> 0:22:39.000 taken many hours to study Muslim When you see the 0:22:39.040 --> 0:22:43.680 phrases in your essay anti Muslim bias, what does that 0:22:43.800 --> 0:22:46.880 part of America that feels that, what do they get 0:22:46.880 --> 0:22:52.680 wrong in their legitimate fears of Islamic extremism. It's that 0:22:53.000 --> 0:22:57.520 there are absolutely some Muslims who have extreme views and 0:22:57.560 --> 0:23:00.560 who take extreme actions, but that's not the case with 0:23:00.640 --> 0:23:04.439 a great overwhelming majority of Muslims. And as is the 0:23:04.480 --> 0:23:07.399 case with any form of discrimination, the mistake is to 0:23:07.680 --> 0:23:10.960 stereotype and think that everybody who belongs twit certain category 0:23:11.359 --> 0:23:14.240 is like the most extreme versions of that category, and 0:23:14.240 --> 0:23:16.600 that's just not the case for Muslims, and it's certainly 0:23:16.640 --> 0:23:18.720 not the case for Muslims you want emigrate to United States. 0:23:19.000 --> 0:23:21.159 Noah Felban, thank you. We adore that you're right for 0:23:21.200 --> 0:23:24.440 Bloomberg Opinion. I'd also point out that not only is 0:23:24.480 --> 0:23:28.800 Professor Feldman written on Trump the Hawaii, but Kess Sunstein 0:23:28.880 --> 0:23:30.959 has written as well. I'll get both of those essays 0:23:30.960 --> 0:23:35.000 out in a busy morning here on social media. Exceptionally 0:23:35.040 --> 0:23:38.360 strong day for Bloomberg Opinion, and l move that out 0:23:38.400 --> 0:23:55.800 on Twitter as well. Noah Felban is with Harvard much. 0:23:55.880 --> 0:23:58.119 We are advantage of Bloomberg to have with us one 0:23:58.119 --> 0:24:01.199 of the jewels of the legal racket store store. He 0:24:01.280 --> 0:24:04.440 is Bloomberg Supreme Court at reporter. Far more than that, 0:24:04.480 --> 0:24:07.280 he clerked for Judge Kaufman out of Baltimore, and it's 0:24:07.480 --> 0:24:10.480 spent time at Harvard Law School as well. Gregg, wonderful 0:24:10.520 --> 0:24:13.239 to have you with us this most historic day. I 0:24:13.280 --> 0:24:15.800 want to go right to what went zeitgeist across this 0:24:15.920 --> 0:24:21.040 nation yesterday, Professor Feldman's Bloomberg opinion column, which summed up 0:24:21.080 --> 0:24:23.199 some of the emotion. We'll get the cast Sunsteen in 0:24:23.200 --> 0:24:27.320 a moment the worst decision since the infamous Corey Matsu case, 0:24:27.680 --> 0:24:30.720 when the Court upheld the interment of Japanese Americans during 0:24:30.720 --> 0:24:33.520 World War Two. These efforts are far too little to 0:24:33.520 --> 0:24:37.119 save the Court or Justice Kennedy from the judgment of history, 0:24:37.160 --> 0:24:40.399