1 00:00:00,280 --> 00:00:02,599 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,680 --> 00:00:07,040 Speaker 2: The global push into infrastructure, breaking the IPO logjam in text. 3 00:00:07,160 --> 00:00:09,120 Speaker 3: The financial stories that sheep. 4 00:00:08,880 --> 00:00:12,000 Speaker 2: Are work cutting inflation without losing jobs. Do we need 5 00:00:12,119 --> 00:00:14,560 Speaker 2: rate cuts and if so, how many? Investing in the 6 00:00:14,560 --> 00:00:16,120 Speaker 2: time of geopolitical turmoil? 7 00:00:16,200 --> 00:00:18,560 Speaker 1: Through the eyes of the most influential voices. 8 00:00:18,720 --> 00:00:22,520 Speaker 2: Tim Roguoff Economists of Harvard, former FDIC had Shila bet 9 00:00:22,640 --> 00:00:27,360 Speaker 2: Ge CEO, Larry Coulp, San Francisco FED President Mary Daily Bloomberg. 10 00:00:26,840 --> 00:00:30,160 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. 11 00:00:30,280 --> 00:00:34,040 Speaker 2: More tragedy in the Middle East, more promises from presidential candidates, 12 00:00:34,200 --> 00:00:37,199 Speaker 2: and more hopes for FED rate cuts. This is Bloomberg 13 00:00:37,240 --> 00:00:41,240 Speaker 2: Wall Street Week. I'm David Weston this week. Former IBM 14 00:00:41,320 --> 00:00:44,720 Speaker 2: had Sam Palmisano on what went wrong at Intel. 15 00:00:45,080 --> 00:00:47,160 Speaker 3: Intel is behind in the technology. 16 00:00:47,479 --> 00:00:51,320 Speaker 4: They're no longer driving the innovation cycles. 17 00:00:51,520 --> 00:00:54,680 Speaker 2: Scott Reckler of rx R on the state of commercial 18 00:00:54,720 --> 00:00:55,280 Speaker 2: real estate. 19 00:00:55,760 --> 00:00:59,800 Speaker 5: Commercial real estate is facing sort of this new paradigm. 20 00:01:00,000 --> 00:01:02,280 Speaker 2: Aaron Walker on his tenure as head of the Ford 21 00:01:02,280 --> 00:01:06,560 Speaker 2: Foundation leading to the new field of public interests technology. 22 00:01:07,040 --> 00:01:09,760 Speaker 6: Because there are so many ways in which we need 23 00:01:10,520 --> 00:01:19,040 Speaker 6: a more public minded technology sector. 24 00:01:27,520 --> 00:01:30,120 Speaker 2: We start with US jobs numbers out on Friday and 25 00:01:30,160 --> 00:01:31,840 Speaker 2: what they tell us about the state of the US 26 00:01:31,840 --> 00:01:35,199 Speaker 2: economy with our special contributor Larry Summers of Harvard. So, Larry, 27 00:01:35,200 --> 00:01:36,880 Speaker 2: thanks so much for being back with this sort of 28 00:01:36,880 --> 00:01:39,240 Speaker 2: a mixed bag. I would say, in the jobs numbers, 29 00:01:39,280 --> 00:01:40,360 Speaker 2: what do you take away from them? 30 00:01:40,440 --> 00:01:42,280 Speaker 7: Not only it was a green light or a red 31 00:01:42,360 --> 00:01:45,119 Speaker 7: light for the FED. 32 00:01:45,800 --> 00:01:50,360 Speaker 8: The numbers certainly didn't show hugely pronounced weakness, But if 33 00:01:50,400 --> 00:01:53,640 Speaker 8: you were concerned by the recent trend in the statistics, 34 00:01:54,040 --> 00:01:57,040 Speaker 8: they certainly didn't give you a clean bill of health 35 00:01:58,120 --> 00:02:02,360 Speaker 8: for the economy. So I think because of the weakness, 36 00:02:02,440 --> 00:02:06,040 Speaker 8: it's looking like a closer call for twenty five verses 37 00:02:06,080 --> 00:02:11,720 Speaker 8: fifty in September than was my guess a month, a 38 00:02:11,800 --> 00:02:18,240 Speaker 8: month or two ago. I don't think it's ultimately very important. 39 00:02:18,440 --> 00:02:19,919 Speaker 2: Or One of the things that's been in the news 40 00:02:20,000 --> 00:02:23,120 Speaker 2: a lot this week has been the transaction, the proposed 41 00:02:23,120 --> 00:02:26,480 Speaker 2: transaction of Nippon Steel buying US steal. We have both 42 00:02:26,520 --> 00:02:28,600 Speaker 2: candidates speaking on as Kamala Harris has come out very 43 00:02:28,600 --> 00:02:32,320 Speaker 2: strong in this week. Something you've addressed before. In the law, 44 00:02:32,360 --> 00:02:35,040 Speaker 2: we talk about hard cases making bad law. Is this 45 00:02:35,400 --> 00:02:38,200 Speaker 2: hard politics potentially making bad trade policy. 46 00:02:38,600 --> 00:02:43,720 Speaker 7: Hard cases have to make bad law. Easy cases should 47 00:02:43,800 --> 00:02:49,520 Speaker 7: not make bad law and should not set terrible presence. 48 00:02:51,000 --> 00:02:54,880 Speaker 7: This is not something that should be brought to final 49 00:02:55,000 --> 00:03:01,560 Speaker 7: resolution in a heated political climate. Of course, there's going 50 00:03:01,600 --> 00:03:07,000 Speaker 7: to be skirmishing between the different parties, the union, potential acquirer, 51 00:03:07,320 --> 00:03:13,640 Speaker 7: the incumbent company about just what the terms of any 52 00:03:13,760 --> 00:03:19,560 Speaker 7: deal are going to be. That's what happens in these things. 53 00:03:20,320 --> 00:03:23,840 Speaker 7: But there is, on the basis of everything I know, 54 00:03:25,280 --> 00:03:35,880 Speaker 7: no legitimate national security or reasonable economic rationale for the. 55 00:03:34,560 --> 00:03:37,360 Speaker 3: Prevention of this deal. 56 00:03:38,240 --> 00:03:43,520 Speaker 7: Indeed, I believe that this deal will strengthen our national 57 00:03:43,600 --> 00:03:48,960 Speaker 7: security by generating a far larger infusion of capital into 58 00:03:49,080 --> 00:03:54,080 Speaker 7: the US steel industry than would otherwise be possible. I 59 00:03:54,160 --> 00:04:01,040 Speaker 7: believe that it will favor broad US competitiveness by providing 60 00:04:01,160 --> 00:04:06,320 Speaker 7: for lower cost steel as an input to key American 61 00:04:06,560 --> 00:04:14,760 Speaker 7: industries like automobiles, with the whole automobile industry favoring this deal, 62 00:04:15,400 --> 00:04:22,200 Speaker 7: and they have a huge stake in reliable, inexpensive steel 63 00:04:22,640 --> 00:04:27,560 Speaker 7: as an input. And I believe strengthening our connections with 64 00:04:28,920 --> 00:04:37,680 Speaker 7: Japan and with a major Japanese company is also strengthening 65 00:04:37,720 --> 00:04:42,800 Speaker 7: our broad national position and the position of American corporations 66 00:04:43,040 --> 00:04:48,159 Speaker 7: in the world. But to stop this, or to embrace 67 00:04:48,279 --> 00:04:54,440 Speaker 7: the principle that somehow these specific steel companies need to 68 00:04:54,600 --> 00:04:59,120 Speaker 7: have an American owner, would be to make a grave 69 00:04:59,320 --> 00:05:04,320 Speaker 7: error and throw out large amounts of US tradition. 70 00:05:05,279 --> 00:05:10,360 Speaker 3: And the irony is that I, as. 71 00:05:10,320 --> 00:05:16,560 Speaker 7: Someone who grew up in Pennsylvania, have pretty high confidence. 72 00:05:16,640 --> 00:05:20,800 Speaker 7: There are no certainties, but pretty high confidence that the 73 00:05:20,839 --> 00:05:27,239 Speaker 7: state of Pennsylvania will be prosperous and with more employment opportunities. 74 00:05:27,880 --> 00:05:33,760 Speaker 7: If that cash is infused into US steel, then if 75 00:05:33,760 --> 00:05:35,360 Speaker 7: this steal is. 76 00:05:36,920 --> 00:05:40,760 Speaker 2: Blocked, Larry, it wasn't just about Nippon Steel that we 77 00:05:40,800 --> 00:05:42,520 Speaker 2: heard from the candidates this week. We also heard a 78 00:05:42,560 --> 00:05:44,840 Speaker 2: fair amount an economic policy. We heard more from Vice 79 00:05:44,839 --> 00:05:47,880 Speaker 2: President Kamala Harris. We also had the former president Donald 80 00:05:47,880 --> 00:05:50,159 Speaker 2: Trump come to the Economic Club in New York and 81 00:05:50,440 --> 00:05:53,159 Speaker 2: set out a lot of different ideas. Start with Donald Trump. 82 00:05:53,160 --> 00:05:56,200 Speaker 2: You haven't always been supportive of his economic policies. Did 83 00:05:56,200 --> 00:05:57,760 Speaker 2: you hear anything you sort of liked? 84 00:05:58,560 --> 00:06:04,159 Speaker 7: Look, I think his instinct that there are places where 85 00:06:04,200 --> 00:06:08,839 Speaker 7: we have excessive regulation and where we need to be 86 00:06:08,880 --> 00:06:12,920 Speaker 7: able to do things faster and more vigorously. I think 87 00:06:13,000 --> 00:06:18,680 Speaker 7: that's a legitimate instinct, and I think that's important. It's 88 00:06:18,720 --> 00:06:22,400 Speaker 7: something that's longstanding. Bill Clinton and Al Gore used to 89 00:06:22,440 --> 00:06:29,840 Speaker 7: talk about reinventing government. Do I think that having Elon 90 00:06:30,080 --> 00:06:36,240 Speaker 7: Musk advise on reforming government procedures is likely to be 91 00:06:36,320 --> 00:06:41,280 Speaker 7: an effective strategy or a strategy that's free of all 92 00:06:41,360 --> 00:06:45,680 Speaker 7: sorts of conflicts of interest. I think that's pretty unlikely 93 00:06:46,480 --> 00:06:48,000 Speaker 7: to work out very well. 94 00:06:48,839 --> 00:06:49,960 Speaker 3: Okay, Larry, thank you so much. 95 00:06:50,000 --> 00:06:51,880 Speaker 2: Always great to have you with us. That's our special 96 00:06:51,880 --> 00:06:55,039 Speaker 2: contributor here on Wall Street Week is Larry Summers of Harvard. 97 00:06:55,520 --> 00:06:58,720 Speaker 2: The Biden administration made chip production a hallmark of its 98 00:06:58,760 --> 00:07:02,920 Speaker 2: economic strategy. One of its main beneficiaries. Intel is struggling 99 00:07:03,000 --> 00:07:05,840 Speaker 2: with its plans to move back into chip manufacturing, with 100 00:07:06,000 --> 00:07:08,720 Speaker 2: reports that it's weigh its options to take us through 101 00:07:08,800 --> 00:07:11,240 Speaker 2: the strategy of both Intel and the US government. We 102 00:07:11,360 --> 00:07:14,080 Speaker 2: welcome back now our very special friend here on Wall 103 00:07:14,080 --> 00:07:16,480 Speaker 2: Street Week. Here's mister Sam palmas On, a former CEO 104 00:07:16,520 --> 00:07:19,120 Speaker 2: of IBM. Sam, great to see you, so give us 105 00:07:19,160 --> 00:07:23,280 Speaker 2: your perspective on Intel strategy. Here, what they're trying to do. 106 00:07:23,560 --> 00:07:26,440 Speaker 2: They once were really bestride the earth. They were the leaders. 107 00:07:26,640 --> 00:07:28,320 Speaker 2: Then they lost that they're trying to get it back. 108 00:07:28,640 --> 00:07:30,920 Speaker 4: Yes, well, David, thank you for having me as always, 109 00:07:30,920 --> 00:07:33,280 Speaker 4: and kind of it's interesting if you think back in time. 110 00:07:33,360 --> 00:07:35,720 Speaker 4: You mentioned the point they were the leaders when they 111 00:07:35,760 --> 00:07:38,520 Speaker 4: had an integrated business, I mean design and fabrication and 112 00:07:38,640 --> 00:07:43,480 Speaker 4: manufacturing R and D manufacturing design, they controlled the RIP 113 00:07:44,120 --> 00:07:46,320 Speaker 4: and the thing was called the X eighty six architecture, 114 00:07:46,360 --> 00:07:49,160 Speaker 4: which is really the PC class over here. And in 115 00:07:49,240 --> 00:07:52,360 Speaker 4: collaboration with Microsoft, they drove the innovation cycles. 116 00:07:52,560 --> 00:07:55,400 Speaker 3: Those guys led in the drove. Well, it's no longer the. 117 00:07:55,320 --> 00:07:59,440 Speaker 4: Case Intel is behind in the technology. They're no longer 118 00:08:00,080 --> 00:08:05,360 Speaker 4: driving the innovation cycles. And the bringing back the fabricators 119 00:08:05,440 --> 00:08:08,080 Speaker 4: or the production side of the company is very very 120 00:08:08,120 --> 00:08:11,600 Speaker 4: capital intents, but it requires large amounts as well as 121 00:08:11,640 --> 00:08:14,720 Speaker 4: patient capital, which, as you know and Wall Street Week, 122 00:08:15,040 --> 00:08:17,840 Speaker 4: most of our investors today in the public markets aren't 123 00:08:17,880 --> 00:08:20,000 Speaker 4: really keen on the strategy of patient capital. 124 00:08:20,880 --> 00:08:23,360 Speaker 2: So one are the prospects of Pat Gelsinger, who came 125 00:08:23,400 --> 00:08:26,520 Speaker 2: back to Intel, had a grand plan to restore rebuild 126 00:08:26,520 --> 00:08:29,120 Speaker 2: the original great Intel. What are the prospects of really 127 00:08:29,120 --> 00:08:31,000 Speaker 2: being able to do the design as well as the 128 00:08:31,040 --> 00:08:32,640 Speaker 2: manufacturer the way it once did. 129 00:08:33,160 --> 00:08:34,480 Speaker 3: I mean it's plausible. 130 00:08:34,840 --> 00:08:38,280 Speaker 4: The problem associated's the industry is shifted, and you have 131 00:08:38,360 --> 00:08:41,959 Speaker 4: focused companies like ARMED who are focused on design and 132 00:08:42,080 --> 00:08:43,880 Speaker 4: we're very, very advanced and do a lot of the 133 00:08:43,920 --> 00:08:47,080 Speaker 4: work for companies as a Qualcomm and those kinds of folks. 134 00:08:47,120 --> 00:08:50,199 Speaker 4: So at the same time, you have massive capacity in 135 00:08:50,280 --> 00:08:52,320 Speaker 4: the fabrication of the production side of the house school 136 00:08:52,480 --> 00:08:55,600 Speaker 4: with TSMC and Samsung and the others. So if you 137 00:08:55,640 --> 00:08:58,679 Speaker 4: think about it, you need basically very deep technical R 138 00:08:58,720 --> 00:09:02,079 Speaker 4: and D skills and the designs you quite honestly need 139 00:09:02,120 --> 00:09:04,559 Speaker 4: great skills as far as production moving down. They called 140 00:09:04,520 --> 00:09:07,960 Speaker 4: the natometer curve to suffer choice self atomic at this 141 00:09:08,000 --> 00:09:11,520 Speaker 4: point in time, and that requires massive capital. One tool 142 00:09:11,600 --> 00:09:14,120 Speaker 4: loan is of one hundred million dollars to ASML, so 143 00:09:14,160 --> 00:09:17,120 Speaker 4: you can imagine the expense associated with doing both of 144 00:09:17,160 --> 00:09:21,000 Speaker 4: these at the same time. So it's hard technically, it's 145 00:09:21,040 --> 00:09:24,160 Speaker 4: also difficult operationally, and I think in many ways that 146 00:09:24,480 --> 00:09:26,599 Speaker 4: the skill set that would required at one point in 147 00:09:26,640 --> 00:09:30,000 Speaker 4: time that run integrated business has now changed because people 148 00:09:30,080 --> 00:09:33,319 Speaker 4: now seeing opportunities both either in design or in manufacturing 149 00:09:33,400 --> 00:09:33,840 Speaker 4: or production. 150 00:09:34,559 --> 00:09:37,400 Speaker 2: Now the US government has thought it could perhaps prime 151 00:09:37,440 --> 00:09:40,120 Speaker 2: the pump here a bit with the Chips and Science Act, 152 00:09:40,840 --> 00:09:43,120 Speaker 2: among other things. Intel stand to benefit something in a 153 00:09:43,200 --> 00:09:45,640 Speaker 2: tune of eight point five billion dollars in various forms 154 00:09:45,679 --> 00:09:47,880 Speaker 2: of financing. As you say, that's not enough to get 155 00:09:47,920 --> 00:09:50,080 Speaker 2: you there, But how much of a help is that 156 00:09:50,080 --> 00:09:51,560 Speaker 2: to sort of get you ahead in the right direction. 157 00:09:52,160 --> 00:09:53,840 Speaker 4: Well, you remember you have the US and you also 158 00:09:53,840 --> 00:09:57,959 Speaker 4: have the EU both of giving a providing funds investment 159 00:09:58,000 --> 00:09:58,840 Speaker 4: funds to Intel. 160 00:09:59,240 --> 00:10:00,720 Speaker 3: So it is a large amount of money. 161 00:10:01,200 --> 00:10:03,719 Speaker 4: But to move a fab or build a fab, we're 162 00:10:03,760 --> 00:10:07,000 Speaker 4: talking about somewhere between ten or fifteen billion dollars today. 163 00:10:07,040 --> 00:10:08,240 Speaker 3: So I mean it's. 164 00:10:08,120 --> 00:10:10,880 Speaker 4: Good to have a partnership in the capital model, needless 165 00:10:10,880 --> 00:10:13,280 Speaker 4: to say, with true up the balance sheet of any company, 166 00:10:13,600 --> 00:10:15,000 Speaker 4: even when as large as Intel. 167 00:10:15,280 --> 00:10:18,160 Speaker 3: But fundamentally it'll add capacity. 168 00:10:18,200 --> 00:10:20,000 Speaker 4: But I don't know if it's going to have enough 169 00:10:20,000 --> 00:10:24,160 Speaker 4: capacity to differentiate Intel versus the large fabricators that exist 170 00:10:24,200 --> 00:10:27,920 Speaker 4: already today. So therefore I mean they serve I think 171 00:10:27,920 --> 00:10:30,720 Speaker 4: a strategic purpose for the US around national security, which 172 00:10:30,760 --> 00:10:33,920 Speaker 4: is employing I mean securing the supply chain of these 173 00:10:34,000 --> 00:10:37,560 Speaker 4: key important technologies around chips, and today it's the graphics chips, 174 00:10:37,559 --> 00:10:40,480 Speaker 4: not only the traditional chips. 175 00:10:40,280 --> 00:10:42,559 Speaker 3: Of the past, that's very, very important. 176 00:10:43,240 --> 00:10:45,360 Speaker 4: But the question is, you know, how much of that 177 00:10:45,400 --> 00:10:48,040 Speaker 4: capacity can my company really provide to the US. 178 00:10:47,920 --> 00:10:50,120 Speaker 2: Government associaly in a return if you were here at 179 00:10:50,120 --> 00:10:53,200 Speaker 2: the end to Intel, what should Patkelsenery. 180 00:10:52,480 --> 00:10:53,440 Speaker 3: Focus on at this point? 181 00:10:53,600 --> 00:10:56,000 Speaker 4: Well, I think, quite honestly, I really do think he 182 00:10:56,120 --> 00:10:58,800 Speaker 4: needs to and I believe he's doing that, is revisit 183 00:10:58,880 --> 00:11:01,760 Speaker 4: the strategy that they've left out, and then based upon 184 00:11:01,880 --> 00:11:05,839 Speaker 4: that strategy, can they go it on their own? It 185 00:11:06,320 --> 00:11:08,920 Speaker 4: appears I don't have the details, David to be a 186 00:11:09,000 --> 00:11:11,440 Speaker 4: fair to Pat, but it doesn't appear that that's a 187 00:11:11,559 --> 00:11:13,760 Speaker 4: significant challenge at this point in time to go it 188 00:11:13,800 --> 00:11:17,080 Speaker 4: on their own. So therefore, either you change your strategy, 189 00:11:17,120 --> 00:11:18,959 Speaker 4: which is go back to the industry model, which is 190 00:11:19,000 --> 00:11:22,440 Speaker 4: separate design from the fabrication or production, and that will 191 00:11:22,440 --> 00:11:25,520 Speaker 4: appeal to investors because it's less capital intens even less risk. 192 00:11:26,080 --> 00:11:28,720 Speaker 4: Or you form a partnership with companies that can help 193 00:11:28,720 --> 00:11:31,240 Speaker 4: you do that. The challenge with that for a company 194 00:11:31,280 --> 00:11:33,440 Speaker 4: like an Intel or an IBM. Have you been through 195 00:11:33,440 --> 00:11:35,760 Speaker 4: it when lou Gerster came in and I replaced Little 196 00:11:36,200 --> 00:11:39,320 Speaker 4: is the culture. It's the management system. People were number one, 197 00:11:39,400 --> 00:11:41,600 Speaker 4: They were the leaders IBM was the leader of its day. 198 00:11:42,080 --> 00:11:42,880 Speaker 3: Intel is the leader. 199 00:11:42,920 --> 00:11:46,400 Speaker 4: Vistay get back to the Microsoft before they made the transitions, they. 200 00:11:46,280 --> 00:11:47,000 Speaker 3: Were all the leaders. 201 00:11:47,040 --> 00:11:49,560 Speaker 4: So you have a management system and a culture that's very, 202 00:11:49,720 --> 00:11:53,000 Speaker 4: very insular, and that's what you have to break down. 203 00:11:53,040 --> 00:11:55,560 Speaker 4: So it's not only just the technology and the capital 204 00:11:55,640 --> 00:11:58,400 Speaker 4: structures in your balance sheet, it's also you have to 205 00:11:58,480 --> 00:12:00,400 Speaker 4: deal with the culture of the management system. 206 00:12:00,720 --> 00:12:01,640 Speaker 3: And that's hard. 207 00:12:01,840 --> 00:12:04,520 Speaker 4: Now Pat knows that because he grew up at Intel 208 00:12:04,600 --> 00:12:06,040 Speaker 4: with Andy Grow and those guys. 209 00:12:05,800 --> 00:12:07,160 Speaker 3: So he certainly understands it. 210 00:12:07,600 --> 00:12:09,920 Speaker 4: But even understanding it as I grew up at IBM, 211 00:12:10,040 --> 00:12:12,880 Speaker 4: even to understand that, it is a very difficult challenge 212 00:12:13,120 --> 00:12:15,160 Speaker 4: to get all those people to get to make this 213 00:12:15,280 --> 00:12:17,280 Speaker 4: change in the buy end of the change and help 214 00:12:17,320 --> 00:12:19,199 Speaker 4: you execute it and get it done successfully. 215 00:12:19,640 --> 00:12:21,199 Speaker 2: Sam, it's always such a treat to have you with 216 00:12:21,280 --> 00:12:23,280 Speaker 2: us on Wall Street Week. That is Sam Pomasuno. He 217 00:12:23,360 --> 00:12:28,160 Speaker 2: is chairman of the Center for Global Enterprise, coming up 218 00:12:28,200 --> 00:12:31,120 Speaker 2: the outlook for commercial real estate his investors look for 219 00:12:31,200 --> 00:12:33,959 Speaker 2: FED rate cuts. In September, we talked with Scott Reckler 220 00:12:34,080 --> 00:12:35,079 Speaker 2: of our x R. 221 00:12:35,520 --> 00:12:37,840 Speaker 5: There was this period of time whereas the real estate 222 00:12:37,880 --> 00:12:41,280 Speaker 5: industry where we're really being hurt by higher for longer, 223 00:12:41,400 --> 00:12:43,000 Speaker 5: and I think now we got to get used to 224 00:12:43,040 --> 00:12:45,079 Speaker 5: the fact that it's going to be higher. Is the 225 00:12:45,160 --> 00:12:45,680 Speaker 5: new normal. 226 00:12:47,520 --> 00:12:49,880 Speaker 2: That's next on Wall Street Week on Bloomberg. 227 00:12:51,240 --> 00:12:55,440 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 228 00:12:55,559 --> 00:13:02,200 Speaker 1: Bloomberg Radio. 229 00:13:03,160 --> 00:13:04,040 Speaker 2: This is Wall Street Week. 230 00:13:04,120 --> 00:13:04,960 Speaker 3: I'm David Weston. 231 00:13:05,000 --> 00:13:07,960 Speaker 2: Commercial real estate has been on investors' minds ever since 232 00:13:07,960 --> 00:13:11,200 Speaker 2: the FED started hiking rates, with a particular focus on 233 00:13:11,320 --> 00:13:13,480 Speaker 2: office space and a handful of big cities. 234 00:13:13,720 --> 00:13:14,320 Speaker 3: For a read on. 235 00:13:14,400 --> 00:13:16,920 Speaker 2: Where we are today, Welcome back now, Scott Reckler. He 236 00:13:17,040 --> 00:13:20,600 Speaker 2: is chairman and CEO of our XR, So welcome back, Scott. 237 00:13:20,640 --> 00:13:21,960 Speaker 3: Great to have you here. David, it's great to be her. 238 00:13:22,040 --> 00:13:24,199 Speaker 2: Thanks. So we all focus on offices and we'll talk 239 00:13:24,200 --> 00:13:27,199 Speaker 2: about offices, but are there other parts of commercial state 240 00:13:27,240 --> 00:13:28,360 Speaker 2: we should have been paying attention to. 241 00:13:28,600 --> 00:13:29,440 Speaker 3: Yeah? Absolutely. 242 00:13:29,559 --> 00:13:32,520 Speaker 5: First, I would say across the spectrum, right, commercial real 243 00:13:32,600 --> 00:13:35,719 Speaker 5: estate is facing sort of this new paradigm as to 244 00:13:35,760 --> 00:13:37,760 Speaker 5: where interest rates are. Right, And we went through this 245 00:13:37,880 --> 00:13:40,480 Speaker 5: period where we lived in a world where interest rates 246 00:13:40,480 --> 00:13:43,640 Speaker 5: were near zero or low for decade plus, which was 247 00:13:43,640 --> 00:13:45,760 Speaker 5: not normal, right, and then we went through this big 248 00:13:45,760 --> 00:13:50,719 Speaker 5: spike and that you know, really basically impacted values of 249 00:13:50,760 --> 00:13:53,560 Speaker 5: every commercial real estate sector and anything that was financed 250 00:13:53,840 --> 00:13:56,160 Speaker 5: when interest rates were low and now to be refinanced 251 00:13:56,160 --> 00:13:59,319 Speaker 5: when interest rates are higher is becoming a challenge. And 252 00:13:59,559 --> 00:14:02,760 Speaker 5: you look at particular sectors like multifamily is an example 253 00:14:03,120 --> 00:14:06,920 Speaker 5: where there was tremendous transaction activity in twenty twenty and 254 00:14:06,960 --> 00:14:09,920 Speaker 5: twenty one when rates were low and people expected rents 255 00:14:09,920 --> 00:14:12,840 Speaker 5: to continue to go higher, and the inverses happened, which 256 00:14:12,880 --> 00:14:15,800 Speaker 5: is that rates went higher and rents stayed low, and 257 00:14:15,880 --> 00:14:19,480 Speaker 5: so a lot of those capital structures are broken. And 258 00:14:19,560 --> 00:14:23,320 Speaker 5: to exacerbate the problem, there was also a record level 259 00:14:23,320 --> 00:14:27,080 Speaker 5: of new development of multifamily happening in the sun Belt 260 00:14:27,080 --> 00:14:28,920 Speaker 5: regions that are all coming online. So you have now 261 00:14:29,040 --> 00:14:32,040 Speaker 5: new supply at the same time that you have these 262 00:14:32,080 --> 00:14:37,280 Speaker 5: refinancing issues. So this immense re equitization that needs to 263 00:14:37,320 --> 00:14:40,800 Speaker 5: take place in commercial real estate and particularly on the 264 00:14:40,920 --> 00:14:44,560 Speaker 5: multifamily space that have good fundamentals, but it's going to 265 00:14:44,720 --> 00:14:51,000 Speaker 5: require ultimately write downs and have equity injections to reset 266 00:14:51,080 --> 00:14:53,120 Speaker 5: those balance sheets. And that's why I think when you 267 00:14:53,120 --> 00:14:56,360 Speaker 5: think about commercial real estate today, this is much less 268 00:14:56,680 --> 00:14:58,960 Speaker 5: like two thousand and eight in the Great Financial Crisis 269 00:14:58,960 --> 00:15:01,680 Speaker 5: where we had this distress and then you know, the 270 00:15:01,760 --> 00:15:04,400 Speaker 5: FED was able to inject capital and values came back up, 271 00:15:04,440 --> 00:15:09,040 Speaker 5: and it was a relatively quick a solution to this problem. 272 00:15:09,120 --> 00:15:11,480 Speaker 5: This is much more like the early nineties, where there's 273 00:15:11,520 --> 00:15:15,800 Speaker 5: going to be waves of loans that mature that then 274 00:15:15,880 --> 00:15:19,360 Speaker 5: need to be recapitalized restructured. That's going to be a 275 00:15:19,400 --> 00:15:21,440 Speaker 5: multi year process to work our way through. 276 00:15:22,000 --> 00:15:23,960 Speaker 2: Some people might be surprised to hear there may be 277 00:15:24,000 --> 00:15:27,040 Speaker 2: too many multifamily homes in some places, because on the 278 00:15:27,120 --> 00:15:29,720 Speaker 2: national levels we hear a lot about the cost of housing. 279 00:15:29,920 --> 00:15:32,680 Speaker 2: We have Kamala Harris, for example, having some pretty dramatic 280 00:15:32,720 --> 00:15:35,600 Speaker 2: proposals about how to really have more housing because I 281 00:15:35,600 --> 00:15:37,720 Speaker 2: don't have enough. So how does that work out? Do 282 00:15:37,760 --> 00:15:38,920 Speaker 2: we have too much or too little? 283 00:15:39,280 --> 00:15:40,040 Speaker 3: That's a great question. 284 00:15:40,200 --> 00:15:42,240 Speaker 5: And that's what makes this so interesting from an investment 285 00:15:42,280 --> 00:15:45,320 Speaker 5: thesis is that in the short term you have this 286 00:15:45,400 --> 00:15:48,760 Speaker 5: dislocation because if you have this surge of multi family 287 00:15:48,840 --> 00:15:51,640 Speaker 5: that was developed you know in the last few years 288 00:15:51,680 --> 00:15:55,800 Speaker 5: as coming online, but as that burns off, you're going 289 00:15:55,840 --> 00:15:58,760 Speaker 5: to have a drop in supply. It's already down seventy 290 00:15:58,760 --> 00:16:01,680 Speaker 5: percent and as interest rates have continued to rise. That's 291 00:16:02,000 --> 00:16:05,720 Speaker 5: curtailed more supply. So coming out of this cycle in 292 00:16:05,760 --> 00:16:09,400 Speaker 5: twenty twenty six, you're going to have more demand than 293 00:16:09,440 --> 00:16:12,600 Speaker 5: there is supply available. But the next two years you're 294 00:16:12,600 --> 00:16:14,520 Speaker 5: going to have a situation where you can actually have 295 00:16:14,680 --> 00:16:19,840 Speaker 5: entry points to buy multifamily at dislocated prices because they need. 296 00:16:19,640 --> 00:16:20,400 Speaker 3: To be recapitalized. 297 00:16:20,400 --> 00:16:23,520 Speaker 2: They've broken capital structures today, Scott, you mentioned interest rates 298 00:16:23,520 --> 00:16:26,520 Speaker 2: a couple of times. Everyone's anticipating some cuts coming from 299 00:16:26,520 --> 00:16:29,160 Speaker 2: the Federal Reserve. What difference will that make or maybe 300 00:16:29,200 --> 00:16:31,480 Speaker 2: more to the point, how much does the Fed needed 301 00:16:31,480 --> 00:16:33,040 Speaker 2: to cut before it really affects your business. 302 00:16:34,080 --> 00:16:36,320 Speaker 5: I think you have to think about interest rates a 303 00:16:36,360 --> 00:16:38,640 Speaker 5: little bit different. Right when you think about interest rates, 304 00:16:38,960 --> 00:16:41,320 Speaker 5: there was this period of time whereas the real estate 305 00:16:41,320 --> 00:16:44,640 Speaker 5: industry where we're really being hurt by higher for longer, 306 00:16:44,840 --> 00:16:46,480 Speaker 5: and I think now we've got to get used to 307 00:16:46,480 --> 00:16:47,600 Speaker 5: the fact that it's. 308 00:16:47,480 --> 00:16:49,880 Speaker 3: Going to be higher. Is the new normal, meaning. 309 00:16:49,640 --> 00:16:52,040 Speaker 5: That what we live through the last decade and a 310 00:16:52,040 --> 00:16:55,280 Speaker 5: half plus of near zero rates wasn't normal. So the 311 00:16:55,280 --> 00:16:57,720 Speaker 5: Fed's going to normalize rates. Does that mean, you know, 312 00:16:57,800 --> 00:17:00,640 Speaker 5: three percent to four percent is the rain? But not 313 00:17:00,800 --> 00:17:04,000 Speaker 5: zero to two percent that existed for a period of time. 314 00:17:04,119 --> 00:17:06,000 Speaker 3: So that still is going to require us. 315 00:17:05,840 --> 00:17:10,639 Speaker 5: To recalibrate values, recalibrate capital structures. 316 00:17:10,720 --> 00:17:11,440 Speaker 2: Along the way. 317 00:17:11,560 --> 00:17:15,400 Speaker 5: But the more that the industry has clarity that rates 318 00:17:15,400 --> 00:17:18,640 Speaker 5: are coming down, then you'll start seeing transaction activity happening, 319 00:17:18,840 --> 00:17:22,840 Speaker 5: which creates price discovery and then crystallizes values, which and 320 00:17:22,840 --> 00:17:25,800 Speaker 5: then I think will create a increase of more transactions. 321 00:17:25,960 --> 00:17:28,480 Speaker 2: We talked about the people who are providing the capital. 322 00:17:28,560 --> 00:17:30,879 Speaker 2: We've heard a lot about regional banks, possible challenges for 323 00:17:30,880 --> 00:17:32,720 Speaker 2: them in commercial real estate, a lot to talk about 324 00:17:32,720 --> 00:17:35,919 Speaker 2: private credit. Who's providing the capital right now in the 325 00:17:35,920 --> 00:17:36,640 Speaker 2: housing industry. 326 00:17:36,720 --> 00:17:40,320 Speaker 5: Yeah, so I would think the bank industry in general 327 00:17:40,359 --> 00:17:43,720 Speaker 5: has really pulled back from providing capital to real estate. 328 00:17:43,960 --> 00:17:45,960 Speaker 5: They're under a lot of pressure from the regulators to 329 00:17:46,000 --> 00:17:49,080 Speaker 5: reduce their commercial real estate exposure. The commercial real estate 330 00:17:49,119 --> 00:17:50,680 Speaker 5: loans they have in the books, and many of these 331 00:17:50,720 --> 00:17:53,639 Speaker 5: regional banks have fifty sixty percent of their loans or 332 00:17:53,640 --> 00:17:56,640 Speaker 5: commercial real estate loans. A lot of them multifamily can't 333 00:17:56,680 --> 00:18:01,520 Speaker 5: be refinanced because the plumbing is clogged, and so that's 334 00:18:01,560 --> 00:18:03,919 Speaker 5: where the challenges and I think where you're seeing step 335 00:18:03,920 --> 00:18:08,520 Speaker 5: in are the non bank lenders that are coming in 336 00:18:08,560 --> 00:18:12,480 Speaker 5: and actually providing those financings. We do it ourselves more, 337 00:18:12,480 --> 00:18:14,640 Speaker 5: i would say, on the on the higher yield side 338 00:18:14,680 --> 00:18:17,679 Speaker 5: of that equation, but the big private equity shops. And 339 00:18:17,800 --> 00:18:21,040 Speaker 5: you know, when you think about this cycle, just like 340 00:18:21,080 --> 00:18:22,600 Speaker 5: we saw in the nineties and we saw get in 341 00:18:22,680 --> 00:18:26,040 Speaker 5: O eight, when you have these moments of turmoil, it 342 00:18:26,119 --> 00:18:29,600 Speaker 5: tends that the non bank lender in the sector becomes 343 00:18:29,720 --> 00:18:32,359 Speaker 5: much more of the future infrastructure. We had that with 344 00:18:32,400 --> 00:18:35,199 Speaker 5: CMBs in the early nineties, we had it with the 345 00:18:35,600 --> 00:18:38,639 Speaker 5: private equity coming out of the eight oh nine, and 346 00:18:38,640 --> 00:18:39,679 Speaker 5: I think this is going to be more of a 347 00:18:39,720 --> 00:18:42,400 Speaker 5: permanent fixture that banks are going to be more conduit 348 00:18:42,440 --> 00:18:45,480 Speaker 5: to customers. They're going to focus on more investment grade 349 00:18:45,640 --> 00:18:49,040 Speaker 5: rated type paper, but they're going to rely on non 350 00:18:49,080 --> 00:18:52,960 Speaker 5: bank lenders that have longer derated capital that matches those loans, 351 00:18:53,000 --> 00:18:55,040 Speaker 5: which you know makes sense, right if the posits can 352 00:18:55,080 --> 00:18:58,040 Speaker 5: be pulled every day, if you have longer term capital 353 00:18:58,359 --> 00:19:00,960 Speaker 5: that you can actually match to the terminal, that is 354 00:19:01,000 --> 00:19:04,679 Speaker 5: something that is I think more balanced than could be 355 00:19:04,720 --> 00:19:07,440 Speaker 5: more resilient in challenging times. 356 00:19:08,040 --> 00:19:09,880 Speaker 2: Scott's always so great to have you on weils Ervig. 357 00:19:09,880 --> 00:19:13,240 Speaker 2: Thank you for being here, Scott Reckler of our XR. 358 00:19:14,240 --> 00:19:16,840 Speaker 2: Darren Walker has announced his plan to step down from 359 00:19:16,840 --> 00:19:18,639 Speaker 2: the helm of the Ford Foundation at the end of 360 00:19:18,720 --> 00:19:21,680 Speaker 2: next year, a tenure marked by his taking a premier 361 00:19:21,920 --> 00:19:25,240 Speaker 2: US philanthropy in a different direction. We sat down with 362 00:19:25,320 --> 00:19:27,760 Speaker 2: him and began with his thoughts on what he tried 363 00:19:27,880 --> 00:19:28,640 Speaker 2: to accomplish. 364 00:19:29,200 --> 00:19:29,440 Speaker 9: Well. 365 00:19:29,480 --> 00:19:35,760 Speaker 6: I hope that we accomplished several things. First, elevating the 366 00:19:36,000 --> 00:19:42,840 Speaker 6: challenge of inequality. We were among the first philanthropies to 367 00:19:43,000 --> 00:19:48,159 Speaker 6: articulate any quality as a problem for our society, for 368 00:19:48,280 --> 00:19:53,840 Speaker 6: our democracy. That was very important. Secondly, to elevate the 369 00:19:53,880 --> 00:20:01,560 Speaker 6: issue of technology and its potential impacts both positively and negatively, 370 00:20:01,840 --> 00:20:06,479 Speaker 6: particularly on people who are poor, who are disadvantaged, who 371 00:20:06,560 --> 00:20:12,200 Speaker 6: have historically been marginalized in American society. And Thirdly, to 372 00:20:12,320 --> 00:20:18,440 Speaker 6: introduce the idea of social justice philanthropy, which is different 373 00:20:18,840 --> 00:20:23,080 Speaker 6: from normal philanthropy as we've thought of it, going back 374 00:20:23,119 --> 00:20:27,359 Speaker 6: to Andrew Karnak, those are three things I think we've 375 00:20:27,400 --> 00:20:29,399 Speaker 6: accomplished and that I'm very proud of. 376 00:20:30,280 --> 00:20:33,199 Speaker 2: You've changed the direction of Ford Foundation. When you came in, 377 00:20:33,680 --> 00:20:35,840 Speaker 2: there was a lot of talk about a lot of coverage, 378 00:20:36,080 --> 00:20:39,199 Speaker 2: specifically with respect to justice. Focusing on justice as well 379 00:20:39,240 --> 00:20:44,280 Speaker 2: as inequality. One cannot change without meeting resistance. Where did 380 00:20:44,320 --> 00:20:45,080 Speaker 2: you meet resistance? 381 00:20:45,680 --> 00:20:50,160 Speaker 6: I think there are entrenched interests in the status quo 382 00:20:50,600 --> 00:20:55,000 Speaker 6: in any legacy organization, whether it's a major fourteen five 383 00:20:55,119 --> 00:20:59,720 Speaker 6: hundred legacy company or a major foundation like the Ford Foundation. 384 00:21:00,000 --> 00:21:04,880 Speaker 6: What you have to do is take on those entrenched 385 00:21:04,960 --> 00:21:10,280 Speaker 6: interests and name the problem, name the barrier that they 386 00:21:10,359 --> 00:21:15,840 Speaker 6: have erected to progress to forward movement, and really take 387 00:21:15,880 --> 00:21:16,919 Speaker 6: it on head on. 388 00:21:17,880 --> 00:21:19,680 Speaker 2: But importantly, you've. 389 00:21:19,480 --> 00:21:24,879 Speaker 6: Got to have your board, your board of trustees in alignment. 390 00:21:24,920 --> 00:21:29,679 Speaker 6: There is nothing more important in an enterprise, whether public 391 00:21:29,800 --> 00:21:35,080 Speaker 6: or private, than alignment between the chief executive and the 392 00:21:35,080 --> 00:21:37,520 Speaker 6: board of directors. And I was very lucky from the 393 00:21:37,640 --> 00:21:42,919 Speaker 6: very beginning to have had a board who I share values, 394 00:21:43,200 --> 00:21:47,600 Speaker 6: who appointed me, I think because my vision they were 395 00:21:47,600 --> 00:21:50,040 Speaker 6: inspired by and wanted to support. 396 00:21:50,880 --> 00:21:52,840 Speaker 2: How do you measure your success? 397 00:21:53,200 --> 00:21:57,000 Speaker 6: That's a great question for a foundation like the Forward Foundation. 398 00:21:57,320 --> 00:22:03,040 Speaker 6: We're not gates or science based foundation, so we don't 399 00:22:03,080 --> 00:22:10,640 Speaker 6: invest in disease eradication or agricultural science where you can 400 00:22:10,680 --> 00:22:17,080 Speaker 6: have randomized control trials to indicate progress. We invest in justice. 401 00:22:17,119 --> 00:22:21,560 Speaker 6: So how does one measure justice? Because it's hard at 402 00:22:21,640 --> 00:22:26,280 Speaker 6: any one time, like with a disease or eradication, to 403 00:22:26,359 --> 00:22:29,040 Speaker 6: declare victory. How do you declare victory? We could have 404 00:22:29,119 --> 00:22:35,639 Speaker 6: declared victory on the progress around reproductive health for women 405 00:22:36,000 --> 00:22:41,919 Speaker 6: many years ago, but here we are again at a 406 00:22:41,960 --> 00:22:50,240 Speaker 6: seminal moment of retreat on access to abortion and reproductive justice. 407 00:22:50,560 --> 00:22:55,199 Speaker 6: And so we measure impact by the strength of the 408 00:22:55,320 --> 00:23:01,720 Speaker 6: institutions who we invest in, and they're preparedness and resilience 409 00:23:02,400 --> 00:23:06,400 Speaker 6: to continue in the face of resistance. So for us, 410 00:23:06,520 --> 00:23:10,160 Speaker 6: progress looks like in the area of reproductive justice, a 411 00:23:10,200 --> 00:23:17,080 Speaker 6: strong planned parenthood and other organizations who are litigating, advocating, 412 00:23:18,320 --> 00:23:24,119 Speaker 6: developing policy response to ensure that ultimately we do live 413 00:23:24,440 --> 00:23:30,439 Speaker 6: in a society where the idea of reproductive freedom is 414 00:23:30,560 --> 00:23:32,840 Speaker 6: normalized and is the law of the land. 415 00:23:33,920 --> 00:23:37,920 Speaker 2: Justice is a big idea, It's been around since ancient times. 416 00:23:38,040 --> 00:23:41,879 Speaker 2: The quest for justice. Can even the Ford Foundation as 417 00:23:41,880 --> 00:23:43,679 Speaker 2: big as it is, and who shows is can it 418 00:23:43,760 --> 00:23:46,840 Speaker 2: actually move the needle on justice in our society? 419 00:23:47,119 --> 00:23:49,920 Speaker 6: Well, I think we in philanthropy have to approach our 420 00:23:49,960 --> 00:23:54,400 Speaker 6: work with great humility. No, the answer is the Ford 421 00:23:54,440 --> 00:23:59,000 Speaker 6: Foundation alone doesn't move the needle. The Ford Foundation, hopefully, 422 00:23:59,040 --> 00:24:05,240 Speaker 6: in collaboration and supporting and in partnership, can make some progress. 423 00:24:05,800 --> 00:24:12,000 Speaker 6: But we philanthropists sometimes approach our work with a degree 424 00:24:12,200 --> 00:24:19,679 Speaker 6: of self satisfaction or a degree that we're right, and 425 00:24:19,960 --> 00:24:26,240 Speaker 6: it's a trap. The rural villages of Africa are littered 426 00:24:26,320 --> 00:24:32,080 Speaker 6: with the carcasses of development projects funded by philanthropists who 427 00:24:32,119 --> 00:24:37,280 Speaker 6: didn't understand that the people closest to the problems should 428 00:24:37,359 --> 00:24:43,560 Speaker 6: be in charge. The design of strategies and approaches is 429 00:24:43,600 --> 00:24:46,359 Speaker 6: not only to be left to the experts and the 430 00:24:46,440 --> 00:24:51,160 Speaker 6: credentialed PhDs, but to people who are in these communities 431 00:24:51,920 --> 00:24:57,080 Speaker 6: and in partnership with them, developing the responses to the 432 00:24:57,119 --> 00:25:01,320 Speaker 6: problems that they identify as their priorities. 433 00:25:03,040 --> 00:25:05,280 Speaker 2: When we come back, we explore with Darren Walker the 434 00:25:05,320 --> 00:25:08,520 Speaker 2: new realm of public interest technology. Something he sees is 435 00:25:08,560 --> 00:25:11,520 Speaker 2: the logical next step on the path begun with public 436 00:25:11,520 --> 00:25:16,080 Speaker 2: interest law. That's next on Wall Street Week on Bloomberg. 437 00:25:17,680 --> 00:25:21,920 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 438 00:25:22,040 --> 00:25:22,960 Speaker 1: Bloomberg Radio. 439 00:25:29,680 --> 00:25:32,399 Speaker 2: This is Wall Street Week. I'm David Weston. Public Interest 440 00:25:32,520 --> 00:25:34,919 Speaker 2: law came into being in response to the social and 441 00:25:34,960 --> 00:25:38,600 Speaker 2: political upheaval of the nineteen sixties, bringing the energy and 442 00:25:38,640 --> 00:25:42,240 Speaker 2: discipline of lawyers to the social problems of the era. Now, 443 00:25:42,400 --> 00:25:45,800 Speaker 2: many of the cutting issues in society arise from technology 444 00:25:46,040 --> 00:25:48,600 Speaker 2: rather than the law, and Darren Walker of the Ford 445 00:25:48,640 --> 00:25:51,240 Speaker 2: Foundation thinks we need to develop a sense of directing 446 00:25:51,240 --> 00:25:54,720 Speaker 2: technology to serve the public interest the way we directed 447 00:25:54,800 --> 00:25:58,359 Speaker 2: law a generation ago. On the question of technology, you 448 00:25:58,560 --> 00:26:02,399 Speaker 2: have really espouse something called public interest technology, as I 449 00:26:02,480 --> 00:26:05,000 Speaker 2: understand it here at the Ford Foundation. Explain what that is. 450 00:26:05,400 --> 00:26:05,720 Speaker 7: Well, in the. 451 00:26:05,760 --> 00:26:09,440 Speaker 6: Nineteen sixties, the Ford Foundation helped to create the field 452 00:26:09,960 --> 00:26:13,399 Speaker 6: of public interest law. You and I were both trained 453 00:26:13,400 --> 00:26:17,399 Speaker 6: in law, went to law school. There were public law 454 00:26:17,440 --> 00:26:21,480 Speaker 6: clinics when we went to law school, and those law 455 00:26:21,520 --> 00:26:27,480 Speaker 6: clinics were about providing legal services for the poor, the disadvantaged, 456 00:26:28,080 --> 00:26:32,440 Speaker 6: working to protect the environment. These ideas came out of 457 00:26:32,520 --> 00:26:35,600 Speaker 6: a body of work that Ford and others invested in 458 00:26:35,720 --> 00:26:40,240 Speaker 6: the nineteen sixties because lawyers were critical to the progress 459 00:26:40,359 --> 00:26:46,560 Speaker 6: of society. Well, today technologists are critical and within the 460 00:26:46,600 --> 00:26:52,160 Speaker 6: field of the industry and the Academy of computer science, 461 00:26:53,000 --> 00:26:58,480 Speaker 6: computational math and the systems that build our AI and 462 00:26:58,800 --> 00:27:01,520 Speaker 6: all of this digital world that we now are living in. 463 00:27:02,119 --> 00:27:07,520 Speaker 6: There is no UH sector, There is no within UH 464 00:27:08,680 --> 00:27:13,639 Speaker 6: the the space of technology. A public interest identified. The 465 00:27:13,680 --> 00:27:17,920 Speaker 6: public interest is what the private sector has told us 466 00:27:17,960 --> 00:27:23,840 Speaker 6: it is. And so we need UH computer scientists, technologists 467 00:27:24,320 --> 00:27:28,480 Speaker 6: trained who might go into private industry to say, we're 468 00:27:28,480 --> 00:27:33,320 Speaker 6: gonna use these skills in the public interests to support 469 00:27:33,960 --> 00:27:39,439 Speaker 6: uh I issues of UH environmental rights, UH, protecting UH 470 00:27:39,480 --> 00:27:44,040 Speaker 6: the rights of of women, UH of UH people UH 471 00:27:44,119 --> 00:27:47,520 Speaker 6: in in vulnerable s circumstances. There are so many ways 472 00:27:47,520 --> 00:27:52,200 Speaker 6: in which we need uh a more public minded uh 473 00:27:52,320 --> 00:27:55,240 Speaker 6: UH technology sector. When you look at UH some of 474 00:27:55,280 --> 00:28:01,199 Speaker 6: those early hearings in Congress, the lack of preparation to 475 00:28:01,359 --> 00:28:04,960 Speaker 6: engage on the part of our elected officials was a 476 00:28:05,000 --> 00:28:10,480 Speaker 6: reflection of the lack of capacity within the offices of 477 00:28:10,640 --> 00:28:14,280 Speaker 6: our congress people. There are very few people you can 478 00:28:14,280 --> 00:28:18,320 Speaker 6: count on two hands with Masters of PhDs in computer 479 00:28:18,480 --> 00:28:23,880 Speaker 6: science on the hill. If any other industry or sector 480 00:28:24,080 --> 00:28:29,040 Speaker 6: financial services, healthcare, a group of CEOs of peers before 481 00:28:29,359 --> 00:28:34,880 Speaker 6: a congressional hearing sitting behind those congress people are smart, 482 00:28:36,240 --> 00:28:42,880 Speaker 6: credentialed experts who are their eyes and ears on the issue. 483 00:28:43,040 --> 00:28:45,520 Speaker 3: We don't have that widespread. 484 00:28:45,560 --> 00:28:48,880 Speaker 6: It's just now taking off with the work of organizations 485 00:28:49,640 --> 00:28:55,400 Speaker 6: like Tech Congress and organizations working, many of whom we support, 486 00:28:55,760 --> 00:29:01,640 Speaker 6: to provide more technology, more technologists to work for the 487 00:29:01,680 --> 00:29:03,000 Speaker 6: public interest, for. 488 00:29:03,000 --> 00:29:06,280 Speaker 2: Public interests technology. How do you move the needle as 489 00:29:06,280 --> 00:29:08,360 Speaker 2: it were? I mean, looking back when we talk about 490 00:29:08,360 --> 00:29:10,440 Speaker 2: clinical law, both of us know about from law school, 491 00:29:10,520 --> 00:29:13,440 Speaker 2: as I recall, Ford Fund actuation actually funded the original 492 00:29:13,440 --> 00:29:16,040 Speaker 2: clinical law programs in the United States. Do you do 493 00:29:16,080 --> 00:29:19,920 Speaker 2: this in the universities to try to expose young computer sciences, 494 00:29:20,040 --> 00:29:22,520 Speaker 2: as it were, to the ideas of public interests technology? 495 00:29:22,680 --> 00:29:24,840 Speaker 2: Do you do it in private corporations? It is in 496 00:29:24,880 --> 00:29:26,840 Speaker 2: the government? Is it up on Capitol Hill? Where do 497 00:29:26,920 --> 00:29:27,960 Speaker 2: you try to get into this? 498 00:29:28,360 --> 00:29:33,800 Speaker 6: So it is a multiprong approach. One we need within 499 00:29:34,880 --> 00:29:42,400 Speaker 6: the academy to impact the curricula of what computer science 500 00:29:42,600 --> 00:29:47,600 Speaker 6: students are taught needs to be broader, not just ethics. 501 00:29:47,800 --> 00:29:50,360 Speaker 6: But we're going to solve these problems when we have 502 00:29:50,480 --> 00:29:57,520 Speaker 6: a technologist, a political scientist, a policy researcher in the 503 00:29:57,600 --> 00:30:01,720 Speaker 6: room together. So we need affect the curriculum. 504 00:30:02,080 --> 00:30:02,720 Speaker 3: We need to. 505 00:30:02,840 --> 00:30:10,240 Speaker 6: Create pathways from the university through internships, and then ultimately 506 00:30:10,280 --> 00:30:12,760 Speaker 6: we need pro bono programs. The same way we have 507 00:30:12,880 --> 00:30:15,040 Speaker 6: in the law, where you have some of the best 508 00:30:15,080 --> 00:30:20,120 Speaker 6: and brightest law students who choose initially or maybe never 509 00:30:20,240 --> 00:30:22,800 Speaker 6: to go into private industry. But to say I'm going 510 00:30:22,840 --> 00:30:25,800 Speaker 6: to work for a nonprofit, I'm going to work for 511 00:30:25,840 --> 00:30:30,320 Speaker 6: the government, as opposed to working in private industry, or 512 00:30:30,640 --> 00:30:32,760 Speaker 6: just as we have in the law, you work in 513 00:30:32,800 --> 00:30:37,320 Speaker 6: private industry where you have an allocation of hours in 514 00:30:37,360 --> 00:30:40,760 Speaker 6: a year that you can devote to a public interest 515 00:30:40,840 --> 00:30:42,040 Speaker 6: technology issues. 516 00:30:42,280 --> 00:30:44,520 Speaker 2: This is a big idea and it's early going. I 517 00:30:44,560 --> 00:30:47,400 Speaker 2: dare say, do you think it's taken route? Will it 518 00:30:47,440 --> 00:30:49,080 Speaker 2: continue and grow? Do you believe? 519 00:30:49,640 --> 00:30:54,720 Speaker 6: Well, recently there was a congressional hearing on technology issues, 520 00:30:55,000 --> 00:31:00,200 Speaker 6: and one of the organizations we support how to list 521 00:31:00,400 --> 00:31:07,080 Speaker 6: of all of the staffers who were helping support the 522 00:31:07,400 --> 00:31:11,520 Speaker 6: congressmen and women on that committee with research and policy 523 00:31:12,680 --> 00:31:15,320 Speaker 6: and the evidence they need to be able to engage 524 00:31:15,480 --> 00:31:19,880 Speaker 6: on behalf of the public. So, yes, it is small 525 00:31:19,920 --> 00:31:24,520 Speaker 6: and incremental, and I wish it moved faster. But at 526 00:31:24,520 --> 00:31:26,800 Speaker 6: the end of the day, we're seeing progress and we 527 00:31:26,840 --> 00:31:28,120 Speaker 6: should be very encouraged. 528 00:31:28,960 --> 00:31:32,200 Speaker 2: As you look toward not that, but toward the time 529 00:31:32,200 --> 00:31:34,280 Speaker 2: you stepped down and forward. What's the biggest thing you 530 00:31:34,280 --> 00:31:37,959 Speaker 2: didn't get a chance to get to. I would say 531 00:31:39,200 --> 00:31:46,840 Speaker 2: we haven't done enough for rural America. I feel we have. 532 00:31:48,400 --> 00:31:53,880 Speaker 6: Through our programming there made progress in elevating some of 533 00:31:53,920 --> 00:31:58,040 Speaker 6: the challenges, but we need to do more in this 534 00:31:58,160 --> 00:32:03,400 Speaker 6: country to understand the plight of people in rural communities. 535 00:32:04,720 --> 00:32:09,920 Speaker 6: The degree of devastation as a result of the opioid epidemic, 536 00:32:10,000 --> 00:32:14,080 Speaker 6: for example, is something that we were late to the game, 537 00:32:15,800 --> 00:32:21,040 Speaker 6: and all candor believe we're now working on these issues 538 00:32:21,400 --> 00:32:28,760 Speaker 6: in rural America. But I think our politics today in 539 00:32:28,880 --> 00:32:33,120 Speaker 6: part reflect that too many people feel left behind and 540 00:32:33,240 --> 00:32:35,920 Speaker 6: left out, not only in rural America and many parts 541 00:32:35,920 --> 00:32:39,080 Speaker 6: of this country, but we particularly those of us who 542 00:32:39,080 --> 00:32:44,320 Speaker 6: live in places like New York City, need to understand 543 00:32:44,320 --> 00:32:49,400 Speaker 6: what is happening in our country and the degree to 544 00:32:49,480 --> 00:32:55,040 Speaker 6: which some people some communities feel marginalized, feel left out 545 00:32:55,080 --> 00:32:56,040 Speaker 6: and left behind. 546 00:32:56,280 --> 00:33:00,400 Speaker 2: When you talk about inequality, we've seen growing inequality economic 547 00:33:00,480 --> 00:33:03,520 Speaker 2: inequality in our society in recent years for all sorts 548 00:33:03,520 --> 00:33:06,320 Speaker 2: of reasons that we know in trying to address that, 549 00:33:06,920 --> 00:33:09,520 Speaker 2: one of the issues is how much money is going 550 00:33:09,560 --> 00:33:13,160 Speaker 2: to capital as opposed to labor. It's really shifted over 551 00:33:13,280 --> 00:33:15,440 Speaker 2: a lot more of what we generate now goes to 552 00:33:16,080 --> 00:33:19,600 Speaker 2: people and capital versus labor. What can be done to 553 00:33:19,760 --> 00:33:23,360 Speaker 2: actually even that back out, to redirect some of the 554 00:33:23,440 --> 00:33:25,240 Speaker 2: assets back toward labor. 555 00:33:25,600 --> 00:33:25,800 Speaker 9: Well. 556 00:33:25,960 --> 00:33:27,920 Speaker 6: One of the things that can be done is to 557 00:33:28,080 --> 00:33:36,040 Speaker 6: demonstrate how we can address and reduce economic inequality through policy, 558 00:33:36,440 --> 00:33:42,840 Speaker 6: through private sector prioritization, for example, the idea of ownership. 559 00:33:43,280 --> 00:33:47,480 Speaker 6: My grandfather was semi literary at a third grade education. 560 00:33:48,040 --> 00:33:52,800 Speaker 6: He was a porter for an oil company in Texas, 561 00:33:53,160 --> 00:33:58,560 Speaker 6: but he benefited from an old fashioned profit sharing program. 562 00:33:58,560 --> 00:34:02,960 Speaker 6: When the oil company made money, some of that was 563 00:34:03,040 --> 00:34:08,840 Speaker 6: shared with every employee who participated in that program. Those 564 00:34:09,239 --> 00:34:12,840 Speaker 6: programs have gone away. Why can't we bring more of 565 00:34:12,920 --> 00:34:17,520 Speaker 6: them back? Why can't we, as we are doing with 566 00:34:18,000 --> 00:34:26,200 Speaker 6: KKR and ownership works, create programs within companies to ensure 567 00:34:26,239 --> 00:34:29,960 Speaker 6: that employees are indeed shareholders. 568 00:34:30,640 --> 00:34:33,640 Speaker 2: Many thanks to Darren Walker, CEO of the Ford Foundation. 569 00:34:34,480 --> 00:34:37,960 Speaker 2: Handlingway wrote that the first panacea for a mismanaged nation 570 00:34:38,239 --> 00:34:41,200 Speaker 2: is inflation of the currency. The world has seen a 571 00:34:41,200 --> 00:34:43,439 Speaker 2: fair amount of inflation over the past few years, whether 572 00:34:43,520 --> 00:34:47,160 Speaker 2: from mismanagement or otherwise. Turkey this week could brag that 573 00:34:47,200 --> 00:34:49,840 Speaker 2: it had made great strides in its fight against inflation, 574 00:34:49,880 --> 00:34:52,320 Speaker 2: getting the rate down to a mere fifty two percent, 575 00:34:52,680 --> 00:34:54,880 Speaker 2: which is certainly better than the sixty two percent of 576 00:34:54,960 --> 00:34:58,680 Speaker 2: the months before. Thanks to interest rates of fifty percent, by. 577 00:34:58,560 --> 00:35:01,560 Speaker 9: The end of next series, inflation to come down to 578 00:35:01,600 --> 00:35:05,360 Speaker 9: around thirty three percent. That's still higher than the central 579 00:35:05,400 --> 00:35:09,200 Speaker 9: Bank's forecast of fourteen percent by the end of next year. 580 00:35:09,719 --> 00:35:12,480 Speaker 9: If the central Bank is going to be sincere in 581 00:35:12,560 --> 00:35:16,560 Speaker 9: achieving the fourteen percent year end goal by the end 582 00:35:16,600 --> 00:35:19,919 Speaker 9: of twenty twenty five, there needs to be a more 583 00:35:20,000 --> 00:35:23,360 Speaker 9: significant deceleration and this inflation program. 584 00:35:23,400 --> 00:35:26,440 Speaker 2: For years now, Japan has been struggling with the opposite problem, 585 00:35:26,560 --> 00:35:29,400 Speaker 2: a yen that hasn't been inflated enough, leading to hyper 586 00:35:29,440 --> 00:35:32,200 Speaker 2: low interest rates that the central bank is just starting 587 00:35:32,239 --> 00:35:35,560 Speaker 2: to raise, throwing the markets into a different sort of turmoil. 588 00:35:35,880 --> 00:35:38,400 Speaker 10: The yen has been particularly weak and inflation has actually 589 00:35:38,440 --> 00:35:41,200 Speaker 10: been pretty strong in Japan itself. So I think the 590 00:35:41,280 --> 00:35:43,960 Speaker 10: new incoming Prome Minister, whoever he is, will actually be 591 00:35:44,120 --> 00:35:45,880 Speaker 10: very very cognizant of the fact that you know, you 592 00:35:45,920 --> 00:35:48,720 Speaker 10: can't have the end to week and might actually shift, 593 00:35:49,120 --> 00:35:51,080 Speaker 10: might actually lead to a shift where the policy of 594 00:35:51,080 --> 00:35:52,560 Speaker 10: the Japanese is concerned so. 595 00:35:52,600 --> 00:35:56,000 Speaker 2: Governor Uaita says he'll stay the course if prices keep 596 00:35:56,040 --> 00:35:56,480 Speaker 2: going up. 597 00:35:56,719 --> 00:36:00,000 Speaker 11: Kim tosts you out, if we are nunable to confirm 598 00:36:00,200 --> 00:36:03,759 Speaker 11: a rising certainty that the economy and prices will stay 599 00:36:03,800 --> 00:36:07,040 Speaker 11: in line with forecasts, then there's no change to our 600 00:36:07,120 --> 00:36:10,400 Speaker 11: stands and will continue to adjust the degree of easing. 601 00:36:10,560 --> 00:36:13,560 Speaker 2: Great Britain has certainly put its pounds sterling the test, 602 00:36:13,680 --> 00:36:16,680 Speaker 2: first with Brexit hitting growth prospects, and then with Liz 603 00:36:16,719 --> 00:36:19,319 Speaker 2: Trust proposing a budget that sent bond markets into a 604 00:36:19,360 --> 00:36:19,879 Speaker 2: tail spin. 605 00:36:20,120 --> 00:36:23,120 Speaker 12: We saw it happen in the UK when Liz Trust 606 00:36:23,239 --> 00:36:27,440 Speaker 12: announced her mini budget and then people worried about sustainability. 607 00:36:27,600 --> 00:36:31,680 Speaker 12: Suddenly interest rate spiked and you couldn't adjust that. 608 00:36:32,080 --> 00:36:35,160 Speaker 2: But Kuerstarmer's new labor government was rewarded this week with 609 00:36:35,239 --> 00:36:38,440 Speaker 2: demand for his bonds that matched the record and brought 610 00:36:38,440 --> 00:36:41,560 Speaker 2: in one hundred and ten billion pounds. And of course 611 00:36:41,600 --> 00:36:43,960 Speaker 2: in the United States we saw that spike in inflation 612 00:36:44,000 --> 00:36:46,480 Speaker 2: in twenty twenty two, which led to a rapid and 613 00:36:46,560 --> 00:36:48,040 Speaker 2: dramatic hike in interest rates. 614 00:36:48,080 --> 00:36:51,120 Speaker 4: They have to have slowly economy down sufficiently to generate 615 00:36:51,239 --> 00:36:54,080 Speaker 4: enough slack in the layer market, so wage trends come 616 00:36:54,120 --> 00:36:56,760 Speaker 4: down to be consistent with two percent inflation. 617 00:36:56,880 --> 00:36:59,640 Speaker 2: That drove the dollar higher, though that may be turning 618 00:36:59,680 --> 00:37:01,880 Speaker 2: around even as inflation comes down. 619 00:37:01,880 --> 00:37:04,239 Speaker 13: The dollar has clearly weakened in the last five weeks 620 00:37:04,280 --> 00:37:06,360 Speaker 13: against the majors. One of the reasons this has happened 621 00:37:06,440 --> 00:37:09,239 Speaker 13: is because the Fed has moved in a much more 622 00:37:09,320 --> 00:37:11,839 Speaker 13: dubvish towards a much more dubbish narrative in the last 623 00:37:12,480 --> 00:37:13,080 Speaker 13: few weeks. 624 00:37:13,360 --> 00:37:16,360 Speaker 2: But of all policies that have driven currencies up, down, 625 00:37:16,480 --> 00:37:20,560 Speaker 2: and all around, the most dramatic probably is found as before, 626 00:37:20,719 --> 00:37:25,240 Speaker 2: in Argentina, President Javier Milay promised to get runaway inflation 627 00:37:25,280 --> 00:37:28,359 Speaker 2: back under control, inflation that had peaked as high as 628 00:37:28,400 --> 00:37:31,560 Speaker 2: two hundred and ninety percent a year, cutting the value 629 00:37:31,600 --> 00:37:35,040 Speaker 2: of the peso to fourteen hundred to the dollar. In 630 00:37:35,080 --> 00:37:38,760 Speaker 2: his battle with ever higher prices, President Malay cut subsidies 631 00:37:38,800 --> 00:37:42,040 Speaker 2: to the provinces, leading one of them, La Rioja, simply 632 00:37:42,080 --> 00:37:44,960 Speaker 2: to run out of money. So the governor took things 633 00:37:44,960 --> 00:37:47,799 Speaker 2: into his own hands. He decided to issue a new 634 00:37:47,840 --> 00:37:51,800 Speaker 2: currency to replace the peso, dubbed the chacho, and began 635 00:37:51,920 --> 00:37:54,280 Speaker 2: handing it out to government employees who make up about 636 00:37:54,280 --> 00:37:57,359 Speaker 2: two thirds of the province's workforce. No word yet on 637 00:37:57,360 --> 00:38:00,040 Speaker 2: what President Malay thinks of the chacho, but it it 638 00:38:00,040 --> 00:38:01,960 Speaker 2: didn't seem like what he had in mind when he 639 00:38:02,040 --> 00:38:04,880 Speaker 2: talked with our editor in chief John Michelswaite back in April. 640 00:38:05,440 --> 00:38:08,640 Speaker 14: But when you also ask around for the word that 641 00:38:08,719 --> 00:38:11,160 Speaker 14: reflects the sentiment of argentis now you know what it is. 642 00:38:11,400 --> 00:38:11,720 Speaker 8: Hoax. 643 00:38:12,040 --> 00:38:15,239 Speaker 14: Even though we are undertaking the largest adjustment in the 644 00:38:15,320 --> 00:38:18,320 Speaker 14: history of humanity, my approval ratings are on the rise 645 00:38:18,640 --> 00:38:20,640 Speaker 14: because people know that I'm telling them the truth. 646 00:38:20,920 --> 00:38:24,560 Speaker 2: Let's see whether that truth includes the chacho that does it. 647 00:38:24,560 --> 00:38:26,680 Speaker 2: For this episode of Wall Street Week, I'm David Weston. 648 00:38:26,800 --> 00:38:28,719 Speaker 2: This is Bloomberg. See you next week.