WEBVTT - Bloomberg Surveillance: Geopolitics in Focus 0:00:05.040 --> 0:00:08.639 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:08.680 --> 0:00:12.040 with Paul Sweeney. Join us each day for insight from 0:00:12.039 --> 0:00:16.240 the best in economics, finance, investment, and international relations. You 0:00:16.239 --> 0:00:19.599 can also watch the show live on YouTube. Visit the 0:00:19.600 --> 0:00:24.360 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:24.360 --> 0:00:27.400 mornings from seven to ten am Eastern from our global 0:00:27.440 --> 0:00:32.080 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:32.440 --> 0:00:36.000 or anywhere else you listen, and always i Bloomberg Radio, 0:00:36.200 --> 0:00:37.280 the Bloomberg. 0:00:36.880 --> 0:00:39.400 Terminal, and the Bloomberg Business App. 0:00:40.600 --> 0:00:44.199 Definitive on our international relations, Ian Bremmer, he is with 0:00:44.240 --> 0:00:48.440 Erasi Group. His top risks every year are beyond sobering, 0:00:48.920 --> 0:00:52.520 one because they make you think, and two he's really 0:00:52.720 --> 0:00:55.920 right a fair amount of the time, Ian Bremer. Should 0:00:55.960 --> 0:00:58.760 we be stressed that this is a different Republican Party 0:00:59.440 --> 0:01:02.280 than the report publican party of young John Bolton with 0:01:02.400 --> 0:01:03.120 Ronald Reagan. 0:01:05.040 --> 0:01:08.160 I'm not sure that that by itself is what drives 0:01:08.200 --> 0:01:14.080 my concern. I think the fact that Trump owns the 0:01:14.120 --> 0:01:18.160 Republican Party and so is a consequence he can put 0:01:18.160 --> 0:01:21.720 a thumb on the scale on major. 0:01:21.480 --> 0:01:22.520 Foreign policy issues. 0:01:22.560 --> 0:01:27.160 That's a pretty big deal, but also just generally the 0:01:27.840 --> 0:01:34.080 illegitimacy in perception of US institutions, the executive, the judiciary, 0:01:35.400 --> 0:01:38.960 the Congress, but also the public school system, the church, 0:01:39.400 --> 0:01:42.959 I mean, the media. When you look at how Americans 0:01:43.160 --> 0:01:46.920 feel about their institutions over the last twenty thirty years, 0:01:47.000 --> 0:01:48.440 it's just been getting. 0:01:48.080 --> 0:01:52.040 Worse and worse and worse. And that, to me is 0:01:52.080 --> 0:01:53.640 the structural underpinning here. 0:01:53.840 --> 0:01:56.400 The getting worse and worse and worse seems to be 0:01:56.440 --> 0:01:58.919 the heart of the matter, what anybody's politics is. Governor 0:01:58.960 --> 0:02:03.840 Haley cited out the statistics showing the pole tilt Ian Bremmer, 0:02:03.880 --> 0:02:07.920 who is forget about Spiro Agno, who is the American 0:02:08.000 --> 0:02:09.680 silent majority. 0:02:11.560 --> 0:02:14.520 I think they're people that feel like they're leaders have 0:02:14.639 --> 0:02:17.840 left them. They're people that no longer believe in the 0:02:17.880 --> 0:02:22.120 American dream. When you and I were kids, the United 0:02:22.160 --> 0:02:25.720 States had the greatest class mobility of any of the 0:02:25.760 --> 0:02:27.000 OECD nations. 0:02:27.040 --> 0:02:28.360 Today it has the least. 0:02:29.480 --> 0:02:32.920 And no matter how optimistic and individualistic you might be 0:02:33.160 --> 0:02:37.120 as a nation, eventually you get hit in the face 0:02:37.200 --> 0:02:40.680 enough and and you change your view. And I think 0:02:40.720 --> 0:02:43.400 that that's a big piece of I mean, the US 0:02:43.480 --> 0:02:47.560 still has incredible wealth and has all of this entrepreneurship, 0:02:48.160 --> 0:02:51.079 and you'd rather be the United States than any other 0:02:51.120 --> 0:02:53.359 country in the world in the aggregate. 0:02:53.919 --> 0:02:58.200 But people don't live in the aggregate, and that's what 0:02:58.240 --> 0:02:58.919 we're experiencing. 0:03:00.200 --> 0:03:02.400 So Ian, I'd love to get your views on how 0:03:02.440 --> 0:03:07.560 perhaps the US is viewed by I don't know, our allies, 0:03:07.919 --> 0:03:10.040 our foes. I mean, it seems like it's been an 0:03:10.120 --> 0:03:13.279 up and down, whether you know, with the Trump administration, 0:03:13.600 --> 0:03:17.240 their policy for NATO and just kind of foreign policy 0:03:17.320 --> 0:03:21.200 versus Biden trying to maybe get back to normalcy. How 0:03:21.240 --> 0:03:23.760 do you think the folks outside the US view. 0:03:23.639 --> 0:03:29.600 US incredibly inconsistent? I mean, not a country that you 0:03:29.600 --> 0:03:32.920 can as easily count on, and therefore a lot of 0:03:32.960 --> 0:03:37.760 hedging behavior going on, even though there aren't necessarily any 0:03:37.760 --> 0:03:38.560 good options. 0:03:39.360 --> 0:03:44.680 Look, I mean, I take the point that we should not. 0:03:44.760 --> 0:03:48.920 Be blackmailing our allies to pay or else we won't 0:03:48.920 --> 0:03:51.920 defend them. But on the other side of that argument, 0:03:52.840 --> 0:03:57.760 what are we if, for decades they refuse to actually 0:03:57.960 --> 0:03:59.880 make good on their defense commitments? 0:04:00.360 --> 0:04:02.520 Should there be no consequences at all? 0:04:02.560 --> 0:04:06.400 Because that appears to be the ex ante position, and 0:04:06.920 --> 0:04:08.280 that's not okay either. 0:04:08.360 --> 0:04:08.480 Right. 0:04:08.520 --> 0:04:12.040 That it's true that if Trump tells you we won't 0:04:12.040 --> 0:04:14.840 defend you, we'd like Russia to attack you. If you 0:04:14.880 --> 0:04:18.560 don't pay your two percent into GDP of defense, if 0:04:18.560 --> 0:04:22.960 you're not doing an adequate job defending yourself, that undermines NATO. 0:04:23.000 --> 0:04:24.760 And we've heard that from the Secretary General. 0:04:25.120 --> 0:04:28.800 But it's also true that if Canada and Germany and 0:04:28.880 --> 0:04:33.000 France and Italy and Spain, I mean, the biggest economies 0:04:33.080 --> 0:04:36.680 all consistently refuse to invest in their own defense. 0:04:36.800 --> 0:04:41.120 That also emboldens Putin. Right, That emboldens Putin too. 0:04:41.520 --> 0:04:46.320 So how is it that neither none of our leaders 0:04:46.640 --> 0:04:47.760 seem to get it right? 0:04:47.839 --> 0:04:51.760 We just bounce back and forth between these populist extremes 0:04:52.920 --> 0:04:56.680 and don't think long term about what makes for a 0:04:56.720 --> 0:04:57.600 strong alliance. 0:04:57.920 --> 0:05:02.680 So what do you believe is the realistic future of NATO, 0:05:02.920 --> 0:05:05.119 because boy, that is front and center now with what's 0:05:05.160 --> 0:05:06.400 going on in Ukraine. 0:05:07.920 --> 0:05:12.280 I think that peak NATO was last year. Putin made 0:05:12.279 --> 0:05:13.200 a huge mistake. 0:05:13.279 --> 0:05:17.680 You should never never ever interrupt your adversary when they're 0:05:17.720 --> 0:05:21.719 screwing up, and NATO was getting more divided and becoming 0:05:21.800 --> 0:05:25.320 less relevant. For many years, the Europeans just were I 0:05:25.320 --> 0:05:27.120 wouldn't say they were giving up on it, but they 0:05:27.160 --> 0:05:31.080 were certainly taking advantage of it. And that led to 0:05:31.600 --> 0:05:36.160 a backlash that you saw reflected with Trump's America first, 0:05:36.640 --> 0:05:37.880 and then Putin. 0:05:37.560 --> 0:05:39.200 Did the stupidest possible thing. 0:05:39.480 --> 0:05:43.320 He made NATO as desirable and relevant as humanly possible 0:05:43.680 --> 0:05:48.800 by trying to overthrow Zelenski and sends his troops storming 0:05:48.839 --> 0:05:52.839 toward Kiev. And not only did that make the Germans 0:05:52.839 --> 0:05:58.040 start spending money on their defense, but it also expanded NATO, 0:05:58.160 --> 0:06:01.360 made the Finns, made the Swedes wanted to join, made 0:06:01.440 --> 0:06:07.440 everybody realize that NATO was an indispensable alliance. Unfortunately, Putin 0:06:07.640 --> 0:06:10.880 understands that he cares a lot more about this issue 0:06:10.920 --> 0:06:14.520 than anybody else does, and he's willing to wait everybody out, 0:06:14.839 --> 0:06:18.799 and that now appears to be working in his favor 0:06:19.160 --> 0:06:20.200 after two years of it. 0:06:20.320 --> 0:06:21.560 Not Ian Bremer. 0:06:21.640 --> 0:06:24.040 One of my favorite people is a hockey player from 0:06:24.120 --> 0:06:27.880 Finland named Alex Stubb. He's young, he's vigorous. I'm not 0:06:27.920 --> 0:06:32.440 sure that politics in a closely contested Finnish election explain 0:06:32.520 --> 0:06:35.680 to our American audience the importance of Finland and that 0:06:35.839 --> 0:06:37.120 heritage with Russia. 0:06:38.240 --> 0:06:41.200 Well it does have, of now, of all of our 0:06:41.279 --> 0:06:47.320 NATO allies, the longest border with Russia. And while they 0:06:47.360 --> 0:06:52.880 had had a comparatively independent policy and were very unwilling, 0:06:53.000 --> 0:06:57.719 very controversial join NATO, that flipped the entire population overnight 0:06:58.080 --> 0:07:03.800 when the Russians invaded Ukraine in February twenty twenty two. Interestingly, 0:07:04.240 --> 0:07:08.479 that wasn't the position despite the invasion in southeast Ukraine 0:07:08.839 --> 0:07:12.240 with the Little Green Men and the illegal annexation of Crimea, 0:07:12.360 --> 0:07:16.320 but all the Tanks after the denials the ball face 0:07:16.440 --> 0:07:19.680 lies from Putin to the Germans, the French, the Americans 0:07:19.680 --> 0:07:22.200 over the months and then willing to try to engage 0:07:22.200 --> 0:07:25.000 in full regime change of a country of over fifty 0:07:25.040 --> 0:07:30.360 million people. That that proved enough. And Steube, who's a 0:07:30.400 --> 0:07:32.360 good friend, I've known him for a long time. 0:07:33.040 --> 0:07:33.840 I mean, he is. 0:07:34.000 --> 0:07:38.600 A very very staunch opponent of mister Putin. 0:07:39.440 --> 0:07:42.080 And there's no question that. 0:07:43.840 --> 0:07:48.160 The election was not determined by how you view NATO 0:07:48.240 --> 0:07:51.600 or Russia. In fact, both of the both of the 0:07:51.640 --> 0:07:55.360 opponents of each other, were very consistent in terms of policy. 0:07:55.400 --> 0:07:58.160 There's very different personalities, but there wasn't a lot of 0:07:58.200 --> 0:08:00.400 substance in this. 0:08:00.880 --> 0:08:02.680 There is substance in Jakarta. 0:08:03.000 --> 0:08:05.560 It is on the other side, as Patrick O'Brien said, 0:08:05.600 --> 0:08:06.640 the far side. 0:08:06.400 --> 0:08:07.000 Of the world. 0:08:07.400 --> 0:08:13.000 You feature the Indonesian election briefest quickly on that, doctor Bremmer. 0:08:15.080 --> 0:08:20.840 It's another large country after India, big democracy, no one 0:08:21.000 --> 0:08:27.360 questioning the legitimacy of the process. Joco the existing president, 0:08:27.640 --> 0:08:32.920 has been quite popular, and his preferred successor, mister Praboo, 0:08:33.160 --> 0:08:37.880 a former military general, is likely to win, though probably 0:08:37.960 --> 0:08:41.680 not in the first round, and his vice presidential running 0:08:41.679 --> 0:08:46.040 mate is Jocobe. The president his son, so I mean 0:08:46.400 --> 0:08:52.640 definitely will be more state enterprise oriented, will probably be 0:08:52.679 --> 0:08:56.640 a little more populist in policy, but very consistent in 0:08:56.640 --> 0:09:01.920 international orientation, including very good relations with the US in Japan. 0:09:02.800 --> 0:09:06.160 Rightfully, so, most folks attention is focused on Ukraine, has 0:09:06.200 --> 0:09:08.720 focused on the Middle East, but of course we can't 0:09:08.720 --> 0:09:11.760 forget about what's happening with China, with Taiwan, that. 0:09:11.760 --> 0:09:13.319 Whole part of the world. 0:09:14.120 --> 0:09:17.199 How do you view China's view of the world over 0:09:17.240 --> 0:09:18.160 the next year or two. 0:09:19.520 --> 0:09:27.760 Their geopolitical position has been really undermined by an economy 0:09:27.760 --> 0:09:33.400 that's not doing well and then overly assertive sort of 0:09:33.440 --> 0:09:36.319 political footprint, and so you look at them. Of course, 0:09:36.360 --> 0:09:40.440 India has a much much stronger relationship with the US 0:09:40.600 --> 0:09:45.600 and much more contentious and combative engagement with the Chinese, 0:09:45.640 --> 0:09:50.200 including over their contested border. The Quad has been a 0:09:50.240 --> 0:09:54.800 strong effort of US architecture building that is a counterbalance 0:09:54.880 --> 0:09:58.680 to China's Belt and Road. You've got the South Korea 0:09:59.040 --> 0:10:02.720 Japan break through, probably the most important diplomatic success that 0:10:02.760 --> 0:10:06.760 Biden has had over his three plus years. Also problematic 0:10:06.800 --> 0:10:10.920 for the Chinese. We just mentioned Indonesia they're till, but 0:10:10.960 --> 0:10:14.680 also the Philippines now offering the US eight military bases 0:10:15.320 --> 0:10:17.440 after what had been a close up policy with China. 0:10:17.840 --> 0:10:20.880 If you're China going forward right now, part of the 0:10:20.880 --> 0:10:23.040 reason for this charm offensive, it's not just that the 0:10:23.040 --> 0:10:25.719 economy is going badly. It's that they recognize that they've 0:10:25.720 --> 0:10:27.920 bitten off more than they can chew, and they need 0:10:27.920 --> 0:10:29.880 countries to not feel like China is a big, bad 0:10:29.920 --> 0:10:33.880 boogeyman in their backyard. So this has been a better 0:10:33.880 --> 0:10:36.840 managed policy by the Americans than what we're seeing right 0:10:36.880 --> 0:10:39.160 now in Ukraine and what we're seeing right now in Gaza. 0:10:39.240 --> 0:10:43.560 All right, so I guess let's just start with Ukraine, 0:10:44.080 --> 0:10:45.680 where do we go from here. I mean, we're getting 0:10:45.720 --> 0:10:48.240 into year three here, and I think both sides are 0:10:48.240 --> 0:10:49.520 probably getting a little tired. 0:10:50.520 --> 0:10:53.840 The Russians are much are waiting them out. I would 0:10:53.920 --> 0:10:58.040 say the troops are tired. But Putin feels emboldened. And 0:10:58.400 --> 0:11:01.319 you saw that with his two hours plus a history 0:11:01.400 --> 0:11:03.120 lesson with Tucker Carlson a few days. 0:11:03.200 --> 0:11:05.160 Should Tucker Carlson have done that interview? 0:11:06.840 --> 0:11:09.400 Someone should have done that interview. But I mean, I'd 0:11:09.440 --> 0:11:11.760 rather be a real journalist, you know. I mean, Tucker 0:11:11.880 --> 0:11:14.280 is not that, and the fact that he is a 0:11:14.320 --> 0:11:20.680 fabulous who supports Putin's position has been publicly sympathetic to it. 0:11:20.840 --> 0:11:22.160 I don't think does this any. 0:11:21.920 --> 0:11:25.240 Favors, but it's useful for the Americans to hear directly 0:11:25.280 --> 0:11:27.400 from Putin what he has to say. 0:11:27.480 --> 0:11:29.400 I didn't mind the fact that the interview happened. 0:11:29.840 --> 0:11:33.080 I do think that the ability of the United States, 0:11:33.120 --> 0:11:36.800 the willingness to continue to provide military support is utterly 0:11:36.920 --> 0:11:42.480 essential for Ukrainians to hold their defensive lines. That's getting 0:11:42.640 --> 0:11:46.560 a lot harder to count on going forward, and we 0:11:46.600 --> 0:11:48.720 could easily see Ukraine start falling apart. 0:11:48.840 --> 0:11:51.719 Doctor Bremer in ninety seconds, and this has just been 0:11:51.760 --> 0:11:54.560 fabulous to go from Governor Haley to doctor Bolton that 0:11:54.600 --> 0:11:57.680 Ian Bremer is the way to do this, folks Ian Bremer. 0:11:57.720 --> 0:12:00.480 There seems to be a new Pacific Rim after the 0:12:00.559 --> 0:12:03.960 TPP blow up and everybody anti China and all that, 0:12:04.559 --> 0:12:07.080 And that is a projection of the United States across 0:12:07.120 --> 0:12:10.920 four military bases, not up to Taiwan, but across the 0:12:11.040 --> 0:12:14.360 arc of the western Philippines. Right now you got Marco 0:12:14.400 --> 0:12:17.440 and do Terte going at it again. People talk in 0:12:17.520 --> 0:12:20.960 Manila about a coup. Are we more in the Pacific 0:12:21.040 --> 0:12:23.360 Rim than we were two three years ago? Is there 0:12:23.400 --> 0:12:25.079 a new US projection? 0:12:26.400 --> 0:12:28.680 There's no coup coming. 0:12:28.760 --> 0:12:33.600 This is a former President du Terte losing influence and 0:12:33.720 --> 0:12:37.200 lashing out as a consequence. But the United States remains 0:12:37.240 --> 0:12:39.439 the only country in the world that can project its 0:12:39.480 --> 0:12:45.080 military power globally. And China's a regional power militarily, and 0:12:45.120 --> 0:12:47.720 their economy is not doing so well right now. And 0:12:47.840 --> 0:12:51.640 that makes the US much more relevant for every country 0:12:51.880 --> 0:12:54.720 who's in Asia or may have China as their lead 0:12:54.760 --> 0:12:57.720 trade partner but doesn't want to become a supplicant from Besia. 0:12:57.920 --> 0:13:01.080 It is a g Bremmer world. It's a new she's 0:13:01.120 --> 0:13:03.040 zero or Chief Bremmer. We'll get a new book out 0:13:03.040 --> 0:13:05.880 of him at some point here Ian Bremmer, and just fabulous, 0:13:05.880 --> 0:13:09.000 And thank you doctor Bremmer for the top risks from 0:13:09.040 --> 0:13:09.760 your Rasier. 0:13:09.520 --> 0:13:18.600 Group that we see. 0:13:20.960 --> 0:13:25.160 We continue strong with another former UN ambassador. He is 0:13:25.280 --> 0:13:29.520 John Bolton, of course, united States National Security advisor with 0:13:29.600 --> 0:13:35.400 the Trump administration, a critic of President Trump, and Ambassador 0:13:35.400 --> 0:13:38.440 Bolton joins us this morning. Ambassador Bolton, you wrote an 0:13:38.559 --> 0:13:41.480 essay in the FT a year or so ago. 0:13:41.760 --> 0:13:42.679 What happened to the. 0:13:42.640 --> 0:13:46.880 Party of your Ronald Reagan? Is Nicky Hayley the last 0:13:47.000 --> 0:13:49.920 Ronald Reagan acolyte standing. 0:13:50.760 --> 0:13:54.200 Well, she's the last one still running for the presidential nomination. 0:13:54.360 --> 0:13:58.040 But I think the party at its roots is still Reagan. 0:13:58.320 --> 0:14:03.360 I think Trump as an aberration. Obviously he's been able 0:14:03.360 --> 0:14:05.880 to capture a significant part of the party, but I 0:14:05.920 --> 0:14:09.600 think that you know, one day he will pass, hopefully 0:14:09.640 --> 0:14:12.840 without doing too much more damage, and we can get 0:14:12.880 --> 0:14:15.800 back to where we should be. His comments about NATO 0:14:15.920 --> 0:14:20.320 and allowing Russia to attack countries not spending enough on 0:14:20.360 --> 0:14:22.840 their defense really ought to be a wake up call. 0:14:23.160 --> 0:14:26.600 Yeah. Paul Sweeney emailed me this weekend, and he said, 0:14:26.600 --> 0:14:29.440 gets Trevitas, And of course they get James Travitas, the 0:14:29.480 --> 0:14:32.680 Supreme Commander of NATO would be lovely. We don't have 0:14:32.760 --> 0:14:35.400 them today, folks, but we do have John Bolton. What 0:14:35.480 --> 0:14:39.200 are the ramifications to Europe to Alex Stubb winning that 0:14:39.280 --> 0:14:43.480 election in Finland? What's the ramifications to Europe if we 0:14:43.520 --> 0:14:45.840 get a Trump foreign policy. 0:14:46.480 --> 0:14:48.960 Well, it would be disasters. It'd be disastrous for the 0:14:49.080 --> 0:14:52.280 United States, but it would be worse for Europe. You know, 0:14:52.400 --> 0:14:56.040 the Europeans can talk about an EU style defense all 0:14:56.080 --> 0:14:58.520 they want. Really, they're going to be led by Germany 0:14:58.560 --> 0:15:01.920 and France. You know, good luck with that. The problem 0:15:02.000 --> 0:15:05.400 is in the United States, for too long, political leaders 0:15:05.400 --> 0:15:08.000 have failed to make the case that we're in alliances 0:15:08.080 --> 0:15:12.000 like NATO and bilateral alliances with Japan and South Korea 0:15:12.760 --> 0:15:15.480 around the world, not out as an active charity. We're 0:15:15.520 --> 0:15:18.240 just not being nice to the Europeans by being in NATO. 0:15:18.560 --> 0:15:22.440 We're protecting vital American interest, we're protecting European interest too, 0:15:22.480 --> 0:15:26.640 but we're doing it for ourselves primarily. And the Europeans 0:15:26.680 --> 0:15:30.720 have not done what they should have done in terms 0:15:30.760 --> 0:15:34.520 of their own defense expenditures. You know, maybe this will 0:15:34.640 --> 0:15:37.880 a further wake up call to increase, but nobody should 0:15:37.880 --> 0:15:41.120 be under operate under any illusions here. Trump is not 0:15:41.240 --> 0:15:45.440 trying to strengthen NATO. Trump is beginning the case if 0:15:45.520 --> 0:15:48.280 he's elected, why he's going to withdraw from NATO. 0:15:48.880 --> 0:15:52.280 And Ambassador Bolton, I mean, obviously front lines there in 0:15:52.280 --> 0:15:55.520 today's news is just you know, Ukraine, Russia. What is 0:15:55.560 --> 0:15:59.000 your latest thinking on how this is developing here and 0:15:59.120 --> 0:16:03.320 continues to develop in I guess the second year well, I. 0:16:03.320 --> 0:16:08.040 Think Putin, taking advantage of his conversation with Tucker Carlson, 0:16:08.120 --> 0:16:11.040 made it plain he's ready to negotiate, and I've been 0:16:11.080 --> 0:16:13.440 worried about that for a long time. I think Biden 0:16:13.920 --> 0:16:16.160 wants to put the wars that are going on now 0:16:16.240 --> 0:16:19.840 behind him for purposes of the November election. He's in deep, 0:16:19.920 --> 0:16:24.200 deep trouble, and stopping the war in Ukraine, I think 0:16:24.240 --> 0:16:28.200 he will see that his political advantage. Unfortunately, and there 0:16:28.200 --> 0:16:30.200 are plenty of countries in Europe that would like to 0:16:30.240 --> 0:16:33.800 turn the page on Russia's invasion in twenty twenty two 0:16:33.840 --> 0:16:35.960 and before that in twenty fourteen and go back to 0:16:36.080 --> 0:16:39.120 business as usual. So I think Putin is playing to 0:16:39.200 --> 0:16:42.720 a weakness in the Western Alliance here transatlantically to get 0:16:42.760 --> 0:16:43.760 a ceasefire. 0:16:43.680 --> 0:16:44.200 John Bolden. 0:16:44.720 --> 0:16:46.400 Just because of time here I have to turn to 0:16:46.440 --> 0:16:51.960 the Eastern Mediterranean. And over the weekend, the entire zeitgeist 0:16:51.960 --> 0:16:56.760 to me of Democrats, of those uncommitted of Republicans, has 0:16:56.840 --> 0:17:02.920 been wither net in Yahoo trued on domestic Israeli politics 0:17:03.560 --> 0:17:06.520 or is that something distant and remote that the Israelis 0:17:06.640 --> 0:17:07.359 have to solve? 0:17:08.760 --> 0:17:11.480 Well, look, I agree with net Yahu's view that he 0:17:11.800 --> 0:17:14.439 should he should be allowed to pursue the objective of 0:17:14.520 --> 0:17:17.639 destroying hamas he calls a total victory. And in World 0:17:17.680 --> 0:17:22.600 War Two, Franklin Roosevelt set the terms for German and 0:17:23.160 --> 0:17:27.320 Japan to end World War Two? Is unconditional surrender? Get 0:17:27.359 --> 0:17:30.679 given the October seven attack? Why isn't Israel entitled to 0:17:30.720 --> 0:17:33.280 do that? I tell you, if Biden breaks with Netan Yahu, 0:17:33.640 --> 0:17:36.320 he can kiss the twenty twenty four elections goodbye. 0:17:37.200 --> 0:17:41.520 So I mean, to what end, Ambassador, do you think 0:17:41.520 --> 0:17:45.720 that Netnahu and the Israeli objectives which a lot of 0:17:45.760 --> 0:17:48.120 folks feel like, I'm not even sure how you even 0:17:48.760 --> 0:17:52.359 measure whether they're achieved? How can you destroy a terrorist organization. 0:17:52.840 --> 0:17:56.840 From your perspective, what would you recommend to mister net Yahu. 0:17:57.920 --> 0:18:01.040 Well, how did we destroy Nazism in Germany? We killed 0:18:01.040 --> 0:18:03.760 an awful lot of Nazis. You're not going to kill everyone. 0:18:04.600 --> 0:18:06.679 And it's true, you don't kill the idea. But if 0:18:06.800 --> 0:18:10.000 enough of its adherents are killed, and the Israelis claim 0:18:10.040 --> 0:18:14.639 they've destroyed eight of the twelve Hamas fighting battalions, you 0:18:14.680 --> 0:18:16.359 can go a long way toward that goal. 0:18:16.840 --> 0:18:19.520 But I think John Bolton, this is so important. 0:18:19.520 --> 0:18:23.400 There's a huge body of Americans, including Democrats, who do 0:18:23.480 --> 0:18:27.560 not agree that we should support mister Netanyahu. Given that 0:18:28.080 --> 0:18:33.119 American domestic tension, how do we prosecute a foreign policy 0:18:33.160 --> 0:18:35.399 in the Eastern Mediterranean. 0:18:35.720 --> 0:18:38.960 By having leaders who can articulate the reasons why it's 0:18:39.119 --> 0:18:43.320 of an American interest that these terrorists be defeated. This 0:18:43.359 --> 0:18:46.119 is not an Israeli war against Hamas. This is not 0:18:46.200 --> 0:18:50.000 an Arab Israeli war. This is an Iranian war against Israel. 0:18:50.600 --> 0:18:54.280 Through its terrorist proxies. They are aiming to destroy the 0:18:54.320 --> 0:18:58.399 little Satan Israel. They're aiming to gain hegemony in the 0:18:58.400 --> 0:19:01.480 Middle East as a whole over the city Arab. Their 0:19:01.520 --> 0:19:05.119 Sony Arab adversaries, and ultimately their sites are in the 0:19:05.119 --> 0:19:06.840 Great Satan and we're sitting. 0:19:06.560 --> 0:19:07.399 In the John. 0:19:07.600 --> 0:19:15.639 Thank you, Ambassador Bolton. Priam Misery joins us now with 0:19:15.760 --> 0:19:19.800 JP Morgan. She's a portfolio manager, which barely describes her 0:19:19.960 --> 0:19:25.240 arch call, which is lower rates and particularly the inflation 0:19:25.359 --> 0:19:26.240 adjusted yield. 0:19:26.280 --> 0:19:27.240 It's a residual. 0:19:27.760 --> 0:19:31.440 You take the nominal yield, you subtract some measurement of inflation. 0:19:31.960 --> 0:19:33.200 Only Bob Michael. 0:19:32.920 --> 0:19:35.160 Knows that measure it's a secret sauce, and. 0:19:35.119 --> 0:19:38.320 You end up with a residual, which is the real yield. 0:19:38.359 --> 0:19:42.879 Priam Misery, you suggest the real yield will plunge lower. 0:19:42.920 --> 0:19:44.200 What will be the catalyst? 0:19:45.840 --> 0:19:49.479 So I think the catalyst is either the economy slowing 0:19:49.520 --> 0:19:53.000 down much more than what's priced in, or the Fed 0:19:53.119 --> 0:19:55.840 now some combination of the two, or the Fed that's 0:19:55.840 --> 0:19:59.560 actually trying to lower rates to you know, keep that 0:19:59.600 --> 0:20:02.480 softly life. I mean, I think the big debate is 0:20:02.520 --> 0:20:06.640 what is neutral interest rate, real interest rate, our star 0:20:06.760 --> 0:20:09.960 what economists call our star. The FED thinks it's fifty 0:20:09.960 --> 0:20:13.920 basis points. There's some debate, you know. President Kashkari suggested 0:20:13.960 --> 0:20:16.920 maybe it's a little higher. Maybe it's one percent and 0:20:17.359 --> 0:20:19.359 ten year real rates, and I would look at the 0:20:19.920 --> 0:20:21.880 ten year part of the curve that most of us 0:20:21.920 --> 0:20:24.959 borrow households, corporates grow. In that five to ten year 0:20:25.000 --> 0:20:27.399 part of the curve, it's running close to two percent. 0:20:27.880 --> 0:20:31.480 So I would think as inflation comes down, the FED 0:20:31.520 --> 0:20:35.119 gets more confidence, as Jail said that they can start 0:20:35.119 --> 0:20:37.800 to normalize those real rates start to come down, and 0:20:37.840 --> 0:20:39.480 at least they can get to one percent, which is 0:20:39.520 --> 0:20:40.639 I think closer to neutral. 0:20:40.800 --> 0:20:44.679 The gentleman from Yale, edjar Denny, suggests productivity started in 0:20:44.680 --> 0:20:47.679 two thousand and five. Paul Sweeney pointed out to me, 0:20:47.720 --> 0:20:51.560 there's a giant pause during COVID of our more productive, 0:20:51.640 --> 0:20:56.440 more efficient America, and then we've reinvigorated productivity. 0:20:56.480 --> 0:20:56.680 Here. 0:20:56.800 --> 0:21:01.200 Priya Misra does a new American productivity that Michael Faroli 0:21:01.240 --> 0:21:04.800 and Bruce Casmin see. Does that change your call on 0:21:04.880 --> 0:21:05.720 interest rates? 0:21:06.880 --> 0:21:06.960 So? 0:21:07.080 --> 0:21:08.879 I think that would be it will go back to 0:21:08.920 --> 0:21:12.800 what is real equilibrium interest rates, and I think the 0:21:12.840 --> 0:21:15.440 Fed's been in the zero to fifty basis point range. 0:21:15.480 --> 0:21:18.200 If there is an increase in productivity, maybe that gets 0:21:18.240 --> 0:21:20.879 us closer to one percent. But here's the offset to 0:21:20.920 --> 0:21:23.960 productivity you know, there's a lot of talk about generative 0:21:24.000 --> 0:21:28.120 AI and technology and how that's improving productivity. It takes 0:21:28.160 --> 0:21:31.159 a while for that to get adopted within the business sector, 0:21:31.240 --> 0:21:33.480 within the labor market, it takes a while. So I 0:21:33.520 --> 0:21:37.040 would say it's not clear to us that we're there yet. Secondly, 0:21:37.080 --> 0:21:39.720 we've got demographics that go the other way. We have 0:21:39.760 --> 0:21:42.960 an aging population, and so I would say it's productivity 0:21:43.080 --> 0:21:47.840 and demographics or and population growth that would imply you know, 0:21:47.880 --> 0:21:52.439 that would have implications for real neutral rate, and you know, 0:21:53.040 --> 0:21:55.960 at least the demographics site is going the other way. 0:21:56.320 --> 0:21:58.439 So maybe there's a move a little bit higher. And 0:21:58.440 --> 0:22:01.119 that's why I'm arguing could as high as one percent 0:22:01.240 --> 0:22:04.320 real rate, but I struggle to see much higher than that, 0:22:04.600 --> 0:22:07.719 given how much time it takes and the fact that 0:22:07.720 --> 0:22:09.200 demographics are going the other way. 0:22:09.400 --> 0:22:11.280 All I a free We're going to have. The question, 0:22:11.320 --> 0:22:13.080 I think for the marketplace right now is what is 0:22:13.119 --> 0:22:14.840 the FED going to do? Not so much what are 0:22:14.840 --> 0:22:16.720 they going to do, but when are they going to 0:22:16.760 --> 0:22:19.399 do it in terms of maybe pulling back on rates? 0:22:19.440 --> 0:22:22.159 And obviously the FED was pretty consistent with our language 0:22:22.200 --> 0:22:24.760 that it's not going to be in March now there's 0:22:24.760 --> 0:22:26.840 some question in the marketplace will they cut in May 0:22:27.359 --> 0:22:28.240 or perhaps. 0:22:27.840 --> 0:22:28.480 Way to June. 0:22:28.520 --> 0:22:30.760 What do you think they will do? What do you 0:22:30.760 --> 0:22:32.040 think that maybe they should do? 0:22:34.000 --> 0:22:36.680 So I like that question because we have to constantly 0:22:36.680 --> 0:22:39.760 think about what they should do, which is driving the 0:22:39.800 --> 0:22:42.480 economic outlook and asset prices, and then what we think 0:22:42.480 --> 0:22:44.520 they will do. I think in terms of they want 0:22:44.560 --> 0:22:47.320 more confidence, which is why they took March off the table. 0:22:47.520 --> 0:22:49.359 I think they want to see at least three four 0:22:49.400 --> 0:22:52.359