Speaker 1: Welcome to the Bloomberg's Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple, podcast, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course, on the Bloomberg Terminal. Let's get a
Speaker 1: quick word from Margie Bitta and the City of potfolio
Speaker 1: manager at all Spring Global Investments. Margie, I want to
Speaker 1: start here with just the real yield turning positive. Briefly,
Speaker 1: how much of the game change to risk that when
Speaker 1: it comes to big investments in say big tech. Uh? Well,
Speaker 1: I think one thing is shows you is maybe the
Speaker 1: FED maybe nearing a pause as far as the aggressive
Speaker 1: rate increases people were looking for. And I think that's
Speaker 1: why the market rallied yesterday saying well the economy looks
Speaker 1: pretty good. But on the other hand, maybe the Fed
Speaker 1: isn't going to be as aggressive because the market, having
Speaker 1: moved up, has done a law of their work for them.
Speaker 1: I look, Margaine, where we are now, and we all
Speaker 1: have to readjust can you buy bills, notes and bonds now?
Speaker 1: As Bank of America suggests this morning, can you actually
Speaker 1: go in with confidence and acquire fixed income? Uh? Well,
Speaker 1: I think treasuries is more of a trading opportunity. But
Speaker 1: when you look at high yield, I think that actually
Speaker 1: looks pretty attractive for the income only oriented investor. The
Speaker 1: average yields are between five and a half and seven percent,
Speaker 1: and prices are now at a discount about on the dollar,
Speaker 1: so you have room for capital appreciation if yield spread
Speaker 1: as a narrowed And also, most importantly, defaults are only
Speaker 1: going to be under one percent this year and next
Speaker 1: year according to the rating agencies, so that means you'll
Speaker 1: get to keep all that extra yield. So that looks
Speaker 1: like a good risk reward bargain to me. Monkey, Based
Speaker 1: on what we've priced at the front end, do you
Speaker 1: sense things are fully priced? I think the longer part
Speaker 1: of the curve looks pretty appropriate. I think we can
Speaker 1: expect the FED to try to move up the short end. Again.
Speaker 1: I think they're going to be talking more aggressively than
Speaker 1: what they actually do. But I think the FED it
Speaker 1: isn't like the FED as a precision machine, and they
Speaker 1: know what's going to happen with each change of the dial.
Speaker 1: And change in rate. So I think they'll be cautious
Speaker 1: and we'll see a small increase and it won't have
Speaker 1: a much of a negative effect on the markets. Okay,
Speaker 1: thank you, that's always market there of old sprint Global Investments.
Speaker 1: Jump to Steven Roach with us now of Yale University
Speaker 1: and the Jackson Institute of Global Affairs, and of course
Speaker 1: Accidental Conflict is a new effort out by Dr Roach.
Speaker 1: Steve Roach, I want to celebrate right now. How you,
Speaker 1: more than anyone I know, was out front on a
Speaker 1: FED that looks at interest rates, a FED that looks
Speaker 1: at employment, and you said, this is a FED that
Speaker 1: has to look at the asset build up within the
Speaker 1: American economic experiment. I believe we're now where we're trying
Speaker 1: to shrink the asset build up. Do we have any history,
Speaker 1: model or theory that explains to us what quantitative tightening
Speaker 1: in whatever formula is, will be. Well, Tom, you know,
Speaker 1: the FED is clearly in uncharted territory both in terms
Speaker 1: of providing stimulus at the zero bound for an interminably
Speaker 1: long period of time, and it's you know, promised to
Speaker 1: get us away from that. But so far we've seen
Speaker 1: basis points of that promise. UH, and the tapering you
Speaker 1: allude to is coming off again UH an extraordinarily high level.
Speaker 1: And UH. You know, every time they've tried to do
Speaker 1: that in the past, the markets have had a tantrum
Speaker 1: or some other adverse reaction, and it sets the FED
Speaker 1: up for having a very difficult time UH in ween
Speaker 1: the U S economy and the financial off of frothy
Speaker 1: asset markets that they have created. And that's that's a
Speaker 1: big challenge. You're right. The world economic all lookout yesterday
Speaker 1: really points out the history here of taper tantrum and
Speaker 1: the testing of yield dynamics, and that I want to
Speaker 1: go Steve to what you weaned at Morgan Stanley, which is,
Speaker 1: let's not forget the back end of the GDP equation,
Speaker 1: which is trade growth. I m F says trade growth
Speaker 1: is slowing for any number of reasons, including tourism, but
Speaker 1: twenty one three it is diminishing. Are we anywhere near
Speaker 1: global recession? No, we're not there now. But you know
Speaker 1: the dynamic of a of a recession in the face
Speaker 1: of UH central bank normalization. UM, this inflation shock that
Speaker 1: everybody is convinced, I mean, Jonathan just uh decided some
Speaker 1: bank report that is absolutely convinced that inflation is and
Speaker 1: vanished into thin air. By the end of the year.
Speaker 1: Maybe it will, but the odds are probably won't. And
Speaker 1: then you add to that, you know the geo strategic
Speaker 1: shocks that are playing out on our screens real time.
Speaker 1: You know, the world economy is facing some real serious challenges,
Speaker 1: and you know it comes in with a strong post
Speaker 1: COVID rebound cushion. But you know, as we're seeing in China,
Speaker 1: that cushion can disappear very quickly. Stephen, have you've been
Speaker 1: surprised by this dollar strength? Yeah, putting it mildly. I mean,
Speaker 1: you know, this is one of those great great lessons.
Speaker 1: I should have gathered this when I first ventured the
Speaker 1: idea that the dollar would fall, that you should never
Speaker 1: make a currency forecast. Alan Greenspan advised me of that
Speaker 1: decades ago, and he was entirely right. So I'm prepared
Speaker 1: to as much crow as you guys want to feed me. Stephen.
Speaker 1: It wasn't the intent of the question. Really. The question
Speaker 1: that I'm having is how do you can come up
Speaker 1: with a forecast? How does the FED even operate in
Speaker 1: an environment set by not only really unique circumstances on
Speaker 1: the fiscal side, but also these conflicts that you're writing
Speaker 1: about with this book that's coming up, this idea of
Speaker 1: how does a FED sort of arrange itself and its
Speaker 1: forecasts around conflicts that have unexpected impacts on inflation? Well,
Speaker 1: which it's a it's a classic risk management exercise for forecasters,
Speaker 1: you know, way the balance or risks UH, and UH,
Speaker 1: assign some probabilities to it and then try to be objective. UH.
Speaker 1: And we reading through that, and remember what your mandate is.
Speaker 1: Your mandate is UH, you know, price stability and full employment.
Speaker 1: The FED does not have to worry about the labor
Speaker 1: market at this point in May at some point in
Speaker 1: the future. But it's behind the curve on inflation in
Speaker 1: a way that it's never been before. And I've looked
Speaker 1: at the you know, the real Federal funds rate, which
Speaker 1: are just the benchmark policy rate for inflation or deeper
Speaker 1: in negative territory right now by conventional measures than ever
Speaker 1: at any point in history, including the early seventies, UH
Speaker 1: and the the early eighties, which of course bookend the
Speaker 1: Great Inflation. So you know, the FED has miles to
Speaker 1: go on. UH. Normalization let alone putting some restraint into
Speaker 1: its policy if it needs to do that to to
Speaker 1: cool off inflation even more. Well, but seven, a lot
Speaker 1: of people are saying Bank of America included that if
Speaker 1: the FED is aggressive and they're getting more aggressive, that
Speaker 1: will end up in the same scenario before we started
Speaker 1: the pandemic. That basically the dynamic of the demographic getting
Speaker 1: older and not necessarily as much productivity will lead inflation
Speaker 1: to go back to where it was. Why do you
Speaker 1: push back on that and how high do you think
Speaker 1: that rates really are going to go? If you do
Speaker 1: disagree with this call of Bank of Americas, it's Bank
Speaker 1: of America one of my favorite banks. UM. Look, I am.
Speaker 1: I think that the inflation dynamic right now is one
Speaker 1: that has far surpassed UH FED expectations, most market expectations
Speaker 1: UH and UH and and certainly mine, even though I
Speaker 1: was very negative on inflation a couple of years ago.
Speaker 1: But the idea that UH, the forward looking FED can
Speaker 1: count on a return two pre COVID UH sub two
Speaker 1: percent inflation and the face of supply chain disruptions geostrategic
Speaker 1: uncertainty dynamic that has now afflicted UH wage and labor
Speaker 1: cause pressure. It's possible, but do you want to count
Speaker 1: on that is your best case? Steve, you invented fractious economics.
Speaker 1: You literally invented it out of thin air. You're the
Speaker 1: first guy I know that ever used a PDF file
Speaker 1: to do economic So you and Dick Burner set up
Speaker 1: at the wonderful Galbraith and All and Morgan Stanley set
Speaker 1: up this raging debate. And there's no one you're raged
Speaker 1: more with than Stephen Yen in the dollar call. You
Speaker 1: have been calling for a week dollar. It hasn't happened.
Speaker 1: When does it happen? Well, it may never happen. Yeah,
Speaker 1: I mean, you know, Stephen jen my old currency strategist colleague,
Speaker 1: had this great image of the dollar smile. And you know,
Speaker 1: I'm sure he's smiling at me right now and trying
Speaker 1: to weasel my way out of here. Steven, I don't
Speaker 1: mean to interrupt. This is really really important. We've had
Speaker 1: a resilient dollar. Most of the street has gotten this wrong.
Speaker 1: At some point the dollar breaks. What will be the
Speaker 1: events that we need to watch for where we will
Speaker 1: see dollar break? I personally tell him I think the
Speaker 1: dynamic is still there in terms of the current account
Speaker 1: the domestic savings rate. They're all pointing the dollar weakness.
Speaker 1: They haven't played out in a period of geo strategic uncertainty.
Speaker 1: And my guess is, if we ever get through this war, uh,
Speaker 1: you know, once we're on the other side of geo
Speaker 1: strategic uncertainty, the dollars fundamentals will reassert themselves. It won't
Speaker 1: be the end of the world, not the demise of
Speaker 1: the dollars status of the reserve currency. But you know,
Speaker 1: the dollars had three major corrections since the early nineteen seventies,
Speaker 1: and these are big ones. They average close to on
Speaker 1: a trade weighted basis, and each time they've been triggered
Speaker 1: by uh, you know, either inflation, geostrategic uncertainty, or the
Speaker 1: you know, some other type of financial event that uh
Speaker 1: afflicts the world. But the US a little bit worse
Speaker 1: than the rest of the world, and you know, there
Speaker 1: is that possibility, and I wouldn't rule it out. We're
Speaker 1: setting ourselves up for dollar weakness. They're that's set up.
Speaker 1: Actually gets triggered remains to be seen. Stephen Grants to
Speaker 1: catch up to head from you as a white Stephen
Speaker 1: Rush University. For someone that writes a wonderful research. No,
Speaker 1: James Bianco joins us out. Jim Bianco, president of founder
Speaker 1: of Bianco Research. Jim, I love, love, love, love love
Speaker 1: your chart where you say, would everybody stand up, wake
Speaker 1: up and understand that weak Japanese yen matters to American investors.
Speaker 1: Why the Japanese are the largest owner of treasury, largest
Speaker 1: country owner of treasury securities. They own more than China
Speaker 1: does right now one point three trillion dollars. As they
Speaker 1: try to hold the Japanese government bond yield at twenty
Speaker 1: five basis points when every other yield in the world
Speaker 1: is going up, they're increasing their spread to the rest
Speaker 1: of the world that they're making their currency unattractive. If
Speaker 1: they keep doing it and yen is twelve percent in
Speaker 1: a month, it's going to have big implications for their
Speaker 1: financial markets and economy. And they're a major country and
Speaker 1: we're gonna gonna feel it. Jim, what's so important here?
Speaker 1: And this begins our coverage. I'm gonna say, ninety days ago,
Speaker 1: if David focus Landau at Deutsche Bank making real clear
Speaker 1: his number one concern is devaluation of currencies against an
Speaker 1: ever stronger resilient dollar. At what point does yen tip
Speaker 1: into some form of devaluation panic where Japan has to act.
Speaker 1: They're very close to it right now. I mean, as
Speaker 1: I said, they've moved up twelve or lost twelve percent
Speaker 1: of their value in the last month. They approached one
Speaker 1: thirty on the yen overnight, and I guess the b
Speaker 1: f J has got a difficult question they got to answer.
Speaker 1: They can continue to hold their yield curve control PEG
Speaker 1: at twenty five basis points in the tenure yield or
Speaker 1: and let the currency go. Or they can let the
Speaker 1: PEG go and defend the currency. But they can't do
Speaker 1: both at the same time. And I think we're getting
Speaker 1: close to the point where they're going to have to
Speaker 1: start thinking more about their currency than they are about
Speaker 1: their yield curve PEG. Jim, do you think that people
Speaker 1: ought to be paying more attention to the consequence of
Speaker 1: Japanese policy monetary policy on the US treasury market, considering
Speaker 1: the fact that the Japanese investor owns more treasuries and
Speaker 1: even China more than any other external investor. Yeah, they should,
Speaker 1: because as their currency goes and as their interest rates go,
Speaker 1: that's gonna maintain its relative attractiveness of the U S
Speaker 1: treasury market. Should they let the PEG go and interest
Speaker 1: rates rise a lot in Japan? And we saw that
Speaker 1: last fall when Australia abandoned yield curve control and it
Speaker 1: rose a lot. A lot of those investors that are
Speaker 1: buying treasury securities again one point three trillion might find
Speaker 1: detractive yields in Japan for the first time in a generation,
Speaker 1: and that will lessen the demand for treasuries at a
Speaker 1: time that the Fed is leading the market and other
Speaker 1: people that are saying that the treasury market or interest
Speaker 1: rates of the bond market are uninvestable because of the
Speaker 1: higher rates, you're gonna lose another major player and you're
Speaker 1: just gonna compound the problems in the bond market. What
Speaker 1: does that translate into in terms of how much higher
Speaker 1: yields can go? You know, when you see yields do
Speaker 1: what they've done so far this year and on a
Speaker 1: total return basis, when you caf actor in the yield
Speaker 1: and the price, this has been the worst year in
Speaker 1: the history of statistics. The Bloomberg Global Aggregate Index goes
Speaker 1: back in mid seventies. It's down ten percent for the year.
Speaker 1: That is an extraordinarily large move for the bond market.
Speaker 1: And it's only the middle of April. As we continue
Speaker 1: to see this happen, you have to start to worry.
Speaker 1: And I am that there's going to be knock on effects,
Speaker 1: are unintended consequences. The bond market, the banking system, the
Speaker 1: financial system is not really designed to have the entire
Speaker 1: bond market lose ten percent of its value in four months.
Speaker 1: Every other time we've seen this, it's always run We've
Speaker 1: always run into problems now that same we have problems
Speaker 1: now and it might be a while off. And we've
Speaker 1: also seen when you see extraordinary moves like this, I
Speaker 1: hate to say it, but they continue to go until
Speaker 1: something breaks. That's what happened in That's what happened in
Speaker 1: That's what happened in eighty seven when you had huge
Speaker 1: rises in yield. They kept going and going, and everybody
Speaker 1: kept saying it's over, it's over, and it wasn't over
Speaker 1: until something broke. And that's what I'm afraid of now
Speaker 1: because this move is getting into that kind of territory. Him.
Speaker 1: Conversations with you were always foundab always got about sixty
Speaker 1: seconds left when you say something might break. What have
Speaker 1: you got in mind? At the moment you all either
Speaker 1: that the stock market wakes up to higher interest rates
Speaker 1: all eighty seven. I'm not talking about crash. I'm talking
Speaker 1: about that they just recognize that higher rates are bad,
Speaker 1: or that higher rates that translating the mortgages and borrowing
Speaker 1: costs really shut the economy down fast, or some kind
Speaker 1: of a plumbing problem like we saw in September of
Speaker 1: two thousand nineteen with the repall market. This stuff is
Speaker 1: very complicated, and when you see extraordinary moves like this,
Speaker 1: you never know what kind of impact they're gonna have
Speaker 1: on it. Jim super smell as always that kind shops soon.
Speaker 1: Jim Bianco, that of Bianco Research. Brian Weezer is legendary
Speaker 1: for his courage on Facebook when it was launched years
Speaker 1: ago at Pivotal at the time. He's now a group
Speaker 1: president for Business Intelligence Group m where away from by
Speaker 1: Hold Cell. He really really thinks about the trends in
Speaker 1: the industry. A definitive and constructive note on Netflix this morning, Brian,
Speaker 1: thank you for joining. I'm gonna cut to the chase.
Speaker 1: Can read Hastings do a Brian Roberts, can read Hastings
Speaker 1: move to a cash flow driven company? Ola what Comcast
Speaker 1: did years ago. I think it is already. I mean,
Speaker 1: if you look at the most mature market, the company
Speaker 1: is already very probable. This is one of the things
Speaker 1: I think many people, certainly in the industry ignored think
Speaker 1: about the company produces. A lot of guys were already well.
Speaker 1: The point here is the industry zeitgeist is he is
Speaker 1: no Brian Roberts, And you're saying, wait a minute, lose
Speaker 1: the caution. Can you only shares here given the collapse
Speaker 1: and your enthusiasm over their development of free cash flow? Well,
Speaker 1: I would pretty this way. I think that the expectations
Speaker 1: for the company were way out of whack, way out
Speaker 1: of whack. I think that the company that the investors
Speaker 1: were trying to make up business mall they misled is
Speaker 1: too important, Brian stopped. Were they misled by Netflix? I
Speaker 1: think investors found a way to jumpify the stock price.
Speaker 1: That's not uncommon, right, both momenting driving stocks. Do you
Speaker 1: see that with any stock will call over value? So
Speaker 1: that happens, So, Brian, how do you assess what the
Speaker 1: actual value is at a time? But we don't even
Speaker 1: know what the real problem was. I mean, you actually
Speaker 1: throw some cold water on this theory that consumers were
Speaker 1: cutting Netflix subscriptions because of the rising commodity costs and
Speaker 1: the rising costs. More broadly, Yeah, exactly. I know that
Speaker 1: there's a narrative out there, a RAND in place of
Speaker 1: being issued, but you wouldn't CEP and G a ten
Speaker 1: percent organic growth or loreal with double digit organic growth
Speaker 1: that treats are spending with the problem here? Um, I
Speaker 1: think the issues. Think about it this way. Spending on
Speaker 1: streaming services in the United States and about thirty billion
Speaker 1: dollars last year. There's about a hundred billion dollars of
Speaker 1: spending on traditional pay TV services, traditional cable. There is
Speaker 1: an awful lot of room to go in to echo
Speaker 1: Tim Nolan's points earlier, just bang on when he talked
Speaker 1: about competitive issue. That's the issue. There's just more streaming
Speaker 1: out there. So, Brian, who's going to be the winner?
Speaker 1: A lot of people thought that Netflix would be the
Speaker 1: clear winner. Can you come out now and say it's
Speaker 1: a lot less clear the Netflix will be one of
Speaker 1: the winners of the streaming wars. I think there's a
Speaker 1: very direct relationship between share spend on content and share viewing.
Speaker 1: If you spend twenty billion dollars in the global industry
Speaker 1: with three billion dollars, let's say, of spending on content,
Speaker 1: you'll get about six percent share of total viewing. It's
Speaker 1: actually pretty simple. The algorithm isn't that complicated. If you
Speaker 1: spend thirty billion dollars in the three billion dollar industry,
Speaker 1: you'll get more of doing. It's as simple as that. Brian,
Speaker 1: I got to talk about the new mating that we
Speaker 1: have of Warner Discovery, Hulu, Animal Planet, and forty seven
Speaker 1: other things including CNN. They have fifteen billion large of debt.
Speaker 1: I believe it's fifty of their balance sheet as well.
Speaker 1: Can Zev left pull this off? Can he actually do
Speaker 1: the entertainment and news artistry of it and the financial
Speaker 1: is well and bring synergies to that new shop. I
Speaker 1: think it's absolutely possible, of course. I mean I think
Speaker 1: we're sometimes looking at this acquisition come back in the
Speaker 1: long way. This is really a Warner Brothers takeover of Discovery,
Speaker 1: but inserting Discovery management on top of Warner. At least
Speaker 1: that's what it looks like based on the ecouagement started
Speaker 1: to announce so far to the extent that the company
Speaker 1: was really well position by Jason Kyler for a long
Speaker 1: future ahead to They said that David Gussa keeps focused
Speaker 1: on that and doesn't focus on a short term built
Speaker 1: think very well for themselves. I think the risk is
Speaker 1: that they start to focus more on short term metrics,
Speaker 1: but they try to focus on making the quarter work. Um,
Speaker 1: I'll cultivate a shareholder base and they won't want that
Speaker 1: will lead to less optimoil comes. I think the course
Speaker 1: and he didn't work for Netflix, that's for sure. From
Speaker 1: ways to recruit fam thank you, sir, fantastic to catch
Speaker 1: up one. David Malpass joins as the President of the
Speaker 1: World Bank, truly in time of crisis. David, I want
Speaker 1: to cut to one of the quiet stories here, and
Speaker 1: it does have to do with Russia selling an awful
Speaker 1: lot a fertilizer to the United States of America. Your
Speaker 1: shop has led on building the supply a fertilizer critical
Speaker 1: to this humanitarian crisis. How are you doing. I'm happy,
Speaker 1: happy to see more fertilizer is critical in this planting season.
Speaker 1: Countries are really at the moment where they need to
Speaker 1: get the cross in the ground and they need fertilizers.
Speaker 1: So that's good that Russia is doing that. I saw yesterday,
Speaker 1: India was selling some wheat to Egypt. My view is
Speaker 1: that there really is a lot of supply in the world,
Speaker 1: if it can be guided or if it can be
Speaker 1: allowed to find the best use. What can your institution
Speaker 1: do to get us away from five six seven standard
Speaker 1: deviation jumps in agricultural products. We can help with data,
Speaker 1: We can help with the supply change themselves. We can
Speaker 1: provide trade finance, which is important in moving goods around UH,
Speaker 1: and we can also encourage countries to find new sources
Speaker 1: to to realize that that they need to move quickly
Speaker 1: in order to increase supply. And importantly, tom we can
Speaker 1: encourage the advanced economies to do all they can to
Speaker 1: lease access stocks UH and to make more more products.
Speaker 1: They have huge production capacity and I think if they
Speaker 1: communicate that that will help with the world pricing levels.
Speaker 1: David time has become incredibly important when we're talking about
Speaker 1: issues of hunger, especially for places where the averages half
Speaker 1: of the income of every household goes to spending for food.
Speaker 1: Sri Lanka stopped paying debt payments as a result of
Speaker 1: their need to buy food and fuel. How much do
Speaker 1: you see this as becoming a routine issue with debt,
Speaker 1: with debt defaults at a time when Sri Lanka says
Speaker 1: the I m F eight is going to take six months,
Speaker 1: which is going to be tough for them, High Lisa.
Speaker 1: Different countries are in different positions. Sri Lanka had waited
Speaker 1: in order to begin to tackle its debt problem, and
Speaker 1: there they continued making payments on heavy debt burns, including
Speaker 1: those to China, and so that drains resources. Other countries
Speaker 1: are have faced different bums, each one of a unique
Speaker 1: I was in Romania and Poland last week. They're facing
Speaker 1: the changes in the energy supplies within Europe. I'm sorry
Speaker 1: I miss Tom when he was in Washington, d C.
Speaker 1: Last week. But the point is that the world needs
Speaker 1: to have a resolution process for debt that's more robust
Speaker 1: than than we have right now and starts earlier. At
Speaker 1: a meeting this morning, there was a call for China
Speaker 1: to convene a creditors committee for Zambia. I think that
Speaker 1: would be a very helpful step because Zambia, like Zambia,
Speaker 1: stopped paying its creditors more than a year ago and
Speaker 1: still doesn't have a pathway to a debt resolution. I
Speaker 1: think the world needs to work hard to provide that path,
Speaker 1: and that would be a good step forward. David, as
Speaker 1: we try to understand what the obligations are of some
Speaker 1: of the developing world, do we have a sense of
Speaker 1: how much is owed to China in terms of loans
Speaker 1: and other types of debt. There's substantial data. It's not
Speaker 1: all transparent as far as what the amounts are, so
Speaker 1: we the World Bank puts out numbers on that. You know,
Speaker 1: there's different ways to cut it, and so you have
Speaker 1: to be careful. The official debt China is now some
Speaker 1: of the of the total creditor the amount owed to
Speaker 1: creditors of the official credits that means government to government
Speaker 1: UH credits. So that's a that's a type of data.
Speaker 1: Another type is that the poorest countries are expected to
Speaker 1: pay out thirty five billion dollars of debt service this
Speaker 1: year alone, which is bigger than the than the foreign
Speaker 1: aid that comes in. And so there really needs to
Speaker 1: be a change. That was discussed heavily already this morning
Speaker 1: at the at I MFC meetings. David, here's a distrust
Speaker 1: and by no means am I casting an aspersion to
Speaker 1: you or your great institution or Christopher Ansy and his
Speaker 1: team are really looking at the basic flows of a
Speaker 1: The World Bank is always first to write the check
Speaker 1: their acclaim for that. Are you writing a check to
Speaker 1: a given beleaguered nation and they're turning around and taking
Speaker 1: part or all of that check and rolling it right
Speaker 1: over FedExing it out to Beijing. We hope not, and
Speaker 1: we're working to avoid that. But the system has been
Speaker 1: one where that you know, that has allowed transparency to
Speaker 1: to go down and down and so in in uh
Speaker 1: in many cases there are non disclosure clauses in the
Speaker 1: debt contracts that leave leave it unclear where, where, who, why,
Speaker 1: why the payments are being made to the creditor, oftentimes
Speaker 1: to China. I think there can be big improvements, and
Speaker 1: it's also in China's interest to do that. And so
Speaker 1: because China is a big part of the world economy
Speaker 1: and can benefit from healthy countries and healthy development in
Speaker 1: the developing world. That's what I hope. Okay, you hope
Speaker 1: for the hope. So when we're gonna get us so far,
Speaker 1: Mr mel Pass, is there any indication China wants greater transparency?
Speaker 1: So the check you're writing is not going to Beijing?
Speaker 1: I mean, do they want transparency. Yes, they're fully participating.
Speaker 1: The then the devil is in the details thom As
Speaker 1: you know, and they've they've been complained that they're willing
Speaker 1: to be more active in these debt resolutions if they
Speaker 1: can actually play a formal role the the and you know,
Speaker 1: people are discussing this concretely that the world was set
Speaker 1: up under the old debt composition in which China wasn't
Speaker 1: a big player, so that China is not a member
Speaker 1: of the Paris Club. It's been the central institution to
Speaker 1: restructure debts um there. The G twenty is trying to
Speaker 1: broaden that, and I think they're making some programs. David
Speaker 1: mel Fest, thank you so much. The spring meetings of
Speaker 1: the World Bank and the International Monetary Funding as President
Speaker 1: of the World Bank. This is the Bloomberg Surveillance Podcast.
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