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Speaker 1: Welcome back to another episode of the Chuck Podcast. My

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Speaker 1: guest today is the chief economist at Moody's Analytics. It

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Speaker 1: is Marcus Zandy. He is somebody I have known for

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Speaker 1: frankly over a decade. I got to know him during

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Speaker 1: the Great Recession as sort of one of the go

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Speaker 1: to guys when it comes to understanding the global economy,

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Speaker 1: understanding which countries have good debt and bad debt, and

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Speaker 1: things like that. When there was a threat to the

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Speaker 1: United States' credit rating, he was somebody that was on

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Speaker 1: the front lines of sort of explaining and how this works.

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Speaker 1: And I have him today because I think he will

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Speaker 1: do a good job of explaining sort of you're going

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Speaker 1: to hear. You've been hearing a lot of things about

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Speaker 1: the economy, the tariffs, the impact of the tariffs and

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Speaker 1: the markets, and how this could have this long lasting

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Speaker 1: impact on America's sort of economic standing the world, the

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Speaker 1: value of the dollar, the value of US Treasury bonds

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Speaker 1: aka our debt, right financing our debt, getting essentially the

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Speaker 1: globe to help us finance our debt, which we use

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Speaker 1: to borrow for all sorts of things these days, including

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Speaker 1: whether it's funding the Pentagon funding social Security. Yes, we

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Speaker 1: have these lock boxes that claim but as we all know,

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Speaker 1: money is fungible, so I think he does. I think

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Speaker 1: what's helpful here is that he doesn't speak economics, he

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Speaker 1: speaks American and trying to explain it where it's fairly

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Speaker 1: easy to digest. But it also I'm not gonna lie

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Speaker 1: to you.

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Speaker 2: Know.

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Speaker 1: This isn't gonna This isn't This is an interview that

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Speaker 1: should make you feel better about the direction of the

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Speaker 1: global economy or better about what is a man made,

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Speaker 1: potentially potential economic disaster on our hands. And we're in

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Speaker 1: the middle of yet another many firestorm on the economy

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Speaker 1: as President Trump is trying to blame other people for

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Speaker 1: his decisions. Right his decisions on tariffs have caused essentially

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Speaker 1: a global economic freak out. Is probably the best way

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Speaker 1: to I want to be careful using the words calamity,

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Speaker 1: although I think we are in a situation that isn't

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Speaker 1: good and could end up in a calamity. Hopefully cooler

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Speaker 1: heads would prevail before it became a total disaster. But

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Speaker 1: there is not a lot of daylight in sight here

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Speaker 1: of how this gets better. At best, we may be

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Speaker 1: living in an era of high inflation, high interest rates,

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Speaker 1: which would just be probably an era of high unemployment

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Speaker 1: as well, and that is something else. So he really

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Speaker 1: helps give a sixty what I would call a sixty

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Speaker 1: day guide to what to expect. But I'll tell you this,

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Speaker 1: the more President Trump tries to blame the FED Chair J.

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Speaker 1: Powell for this problem, the more you know he's desperately

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Speaker 1: hoping that somehow lower interest rates would buy off the markets,

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Speaker 1: all right, to put in you know, that quick low

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Speaker 1: interest rates would get people feeling good about throwing some

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Speaker 1: money back into the market, getting some cash that way,

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Speaker 1: and it would soften the blow that his tariffs have

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Speaker 1: delivered to the global economy. But that's only you know,

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Speaker 1: there's there's no evidence that that's a good idea. And

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Speaker 1: if anything, if you look back at the seventies when

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Speaker 1: Nixon browbeat a Federal Reserve chair to do this, it

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Speaker 1: was a disaster. And I will tell you and you'll

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Speaker 1: hear a story that I that I tell Mark Xandy

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Speaker 1: about the infamous Arthur Burns, who was the FED chair

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Speaker 1: that Nixon browbeat at the time. Look, President Trump's going

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Speaker 1: to get an opportunity to replace J. Powell if he

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Speaker 1: chooses to when his term expires in May of twenty

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Speaker 1: twenty six. But if he spends then next essentially year,

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Speaker 1: threatening on and off to fire him, you're going to

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Speaker 1: get more troubling days like you saw Monday in the markets.

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Speaker 1: There'll be more of this. Already, there is concern about

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Speaker 1: whether the US dollar is a safe haven, there's concern

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Speaker 1: about whether US treasuries are a safe haven. The more

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Speaker 1: the independence of our economic system is threatened, we're already

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Speaker 1: threatening the independence of the rule of law. That's pretty clear.

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Speaker 1: He has decided to take over the Justice Department. His

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Speaker 1: way is the highway. If he does this with the economy,

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Speaker 1: there's gonna be a lot of people who take their

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Speaker 1: money and run. They are going to flee because you cannot.

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Speaker 1: You cannot sit here and assume everything is stable here.

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Speaker 1: So look, I think this is a more of an

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Speaker 1: alarming situation than folks realize. And I understand that we

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Speaker 1: have all sorts of things to get concerned about. Right

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Speaker 1: he has made a decision that this is Donald Trump

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Speaker 1: is going to He wants to reshape everything about government

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Speaker 1: and culture in America period, and he's going to try

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Speaker 1: to do this a million ways. I mean he's trying

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Speaker 1: to figure out ways to convince people to have more

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Speaker 1: babies to solve a demographic problem that we're running on,

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Speaker 1: rather than do what America has done for basically two

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Speaker 1: hundred and fifty years, which is invite people to emigrate

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Speaker 1: to this country. Because what is I sort of I'm sorry,

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Speaker 1: folks see this as a negative when you you know,

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Speaker 1: just look at the Olympics every two years. Now, you

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Speaker 1: know why America does so well in the Olympics because

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Speaker 1: we're not we haven't pigeonholed ourselves into one ethnicity or

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Speaker 1: one demographic group, because that's how our country's organized. Our

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Speaker 1: country is organized as an idea, not based on a

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Speaker 1: religious group or an ethnic group, or demographic group or

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Speaker 1: some sort of identity. That way, our identity is an idea,

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Speaker 1: the idea of America. So what does that mean? Americans

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Speaker 1: come in all shapes and sizes. And because Americans come

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Speaker 1: in all shapes and sizes, we're able to actually compete

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Speaker 1: in every single Olympic sport there possibly is. And so

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Speaker 1: you want to know why we do so well in

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Speaker 1: these metal counts is because we have such a diversity

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Speaker 1: of who's an American who becomes an American who competes

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Speaker 1: for America. And I know that seems like a simplistic

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Speaker 1: way to look at it, but this is among the

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Speaker 1: reasons why we've had been so successful. And that's the

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Speaker 1: hardest part of watching this man made destruction of America's

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Speaker 1: role as the leader of the global economy is that

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Speaker 1: we've been pretty good stewards of this. There's been a

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Speaker 1: heck of a lot worse stewards in the history of civilization,

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Speaker 1: and it's gone pretty well. We went a good sixty

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Speaker 1: seventy years without major wars and major essentially catastrophic things

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Speaker 1: for humankind, and that was during our role as leader

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Speaker 1: of the free world. So to think we need to

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Speaker 1: upend all of this because we've had some people, I mean,

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Speaker 1: and that's the thing. We're a diverse country in so

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Speaker 1: many different ways. So what is hurt some parts of

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Speaker 1: the country with trade deals absolutely as hurtier Ohios and Iowa's.

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Speaker 1: It has helped the South Carolinas and the Tennessees so

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Speaker 1: and overall it has helped all of America essentially have

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Speaker 1: a higher standard of living than anywhere else on this planet.

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Speaker 1: And we are at risk of doing something setting ourselves

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Speaker 1: back a generation or more, which just seems, you know,

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Speaker 1: it's frustrating when it's being done based on bad data,

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Speaker 1: based on gut, rather than any sort of plan, any

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Speaker 1: sort of idea. And that's been you know, that's been

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Speaker 1: at the center of my critiques lately, is that nothing

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Speaker 1: that the Trump administration is done beyond throwing doing all

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Speaker 1: of this at once, other than that that was a plan.

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Speaker 1: And there's certainly you know, I can knock down my

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Speaker 1: house with a sledgehammer pretty quickly, but it's going to

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Speaker 1: take me months to rebuild it after I do that.

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Speaker 1: So he has been able to use a sledgehammer to government,

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Speaker 1: use a sledgehammer to the terror regimes around the world.

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Speaker 1: He's been able to do that, But rebuilding is going

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Speaker 1: to take at best months and more likely years. And

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Speaker 1: what are we rebuilding? Are we going to be rebuilding

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Speaker 1: in a weaker position? Are we going to have inadvertently

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Speaker 1: strengthened our chief adversary China? It certainly looks as if

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Speaker 1: that we've possibly done this. And so, you know, I

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Speaker 1: said it earlier and I'll say it again. I think

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Speaker 1: if there is a common denominator here when it comes

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Speaker 1: to the Trump administration, It really is not a well

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Speaker 1: run administration. This presidency is a mess. The Pentagon is

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Speaker 1: a mess. The Justice Department is a mess. While they've

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Speaker 1: had some success at the border, clearly they're not following

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Speaker 1: the law when it comes to who gets deported. There's

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Speaker 1: a rush to judgment there. There's been a rush to

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Speaker 1: do what they've done at DOGE, and so there really

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Speaker 1: is I'd say the through line here is that this

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Speaker 1: is the gang that can't shoot straight. I think there's

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Speaker 1: some of their ideas or good ideas. Let's figure out

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Speaker 1: how to make government more efficient, Let's figure out how

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Speaker 1: to encourage manufacturing to come back. But let's be realistic

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Speaker 1: about it. Let's be twenty first century about it. We're

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Speaker 1: not trying to recreate the manufacturing of the nineteen fifties,

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Speaker 1: which is what Donald Trump seems to be trying to do.

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Speaker 1: We're trying to figure out how America continues to push

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Speaker 1: forward and continues to be the leader in different industries.

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Speaker 1: And if the industry is changing to a more digital

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Speaker 1: economy and more service driven, tech driven economy, we want

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Speaker 1: to be in the cutting edge of that. Do we

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Speaker 1: still want to be making widgets? If widgets are certainly

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Speaker 1: something that people will buy, but enough of them. It

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Speaker 1: really is sort of a head scratcher. And I think

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Speaker 1: this is I understand there's an entire group of people

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Speaker 1: who think we don't want any experts, but I'll tell you,

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Speaker 1: we're now seeing what happens when you have an administration

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Speaker 1: put together by people who have a lot of inexperience,

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Speaker 1: have never run large organizations. I mean, clearly that's what

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Speaker 1: we're seeing with Pete Heggs at the Pentagon. This is

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Speaker 1: a guy just way in over his head on so

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Speaker 1: many levels, not understanding exactly why these protocols exist in

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Speaker 1: the first place. You know, you can't just put any

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Speaker 1: soldier in charge of the Pentagon. You need to have

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Speaker 1: some skills set there in leading people, some skill set

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Speaker 1: in running a massive I mean, this is the largest

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Speaker 1: entity in the federal government. The fact that you're picking

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Speaker 1: somebody that I don't know if he's been the seat

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Speaker 1: of his own checking account is again another one of

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Speaker 1: those head scratchers. So look, this conversation with Mark Zandy,

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Speaker 1: like I said, I think it's going to help you

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Speaker 1: understand why what you need to pay attention to in

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Speaker 1: the bond market. This isn't about the one percenters. This

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Speaker 1: is about whether you're going to be able to afford

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Speaker 1: to buy a house. You whether you're going to be

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Speaker 1: able to afford to sell your house and make a

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Speaker 1: couple of dollars in downsize, or whatever it is you're

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Speaker 1: trying to do. But I can tell you right now

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Speaker 1: our economy has been paralyzed by these decisions. And I

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Speaker 1: do think this conversation with Mark Sandy will at least

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Speaker 1: help you understand what to watch for in the next

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Speaker 1: three to six months, and then what to watch for

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Speaker 1: in the next two to three years, so that you

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Speaker 1: can figure out what's what's in your best interest going forward.

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Speaker 1: So with that, I'm going to sneak in a quick

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Speaker 1: break and when we come back my conversation with the

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Speaker 1: chief economists of Moody's Analytics, Mark Sandy, and joining me

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Speaker 1: now is the chief of aonymous at Moody's Analytics. It's

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Speaker 1: somebody that I if you watched me at NBC Over

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Speaker 1: the years, I leaned heavily on this gentleman, Mark Zandy,

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Speaker 1: particularly during the Great Recession. That's when we got to

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Speaker 1: know each other. And it's good to have him here

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Speaker 1: now to try to what I'm hoping is to sort of,

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Speaker 1: as I say, when it comes to economists, speak American

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Speaker 1: and help people navigate. You know, they hear things about

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Speaker 1: the bond market and the dollar if it weakens, and

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Speaker 1: I think there's a lot of people that think they

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Speaker 1: know what that stuff means, but they really don't and

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Speaker 1: they're afraid to ask. And so in some ways I'm

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Speaker 1: hoping Mark that you can help help people get smarter

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Speaker 1: about this. But before before we get started on sort

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Speaker 1: of what's happening with the current economy, because frankly, it's

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Speaker 1: actually really difficult sometimes. You know, everything's moving so fast.

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Speaker 1: We're taping on a on a Monday late morning, you'll

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Speaker 1: be shocked to know the markets aren't doing well. But

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Speaker 1: who knows, maybe that changes. But what is what do

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Speaker 1: you tell people Moody's analytics is what's the elevator explanation

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Speaker 1: of Moody's analytics.

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Speaker 2: Yeah. Well, and Chuck, it's so good to be with you.

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Speaker 2: I do remember I was going to say, use the

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Speaker 2: word finally back to the financial crisis.

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Speaker 1: But it is a tough word to use. Yes, yes, yes,

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Speaker 1: but it was you were one of the good things

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Speaker 1: to come out of it. Getting to know you and

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Speaker 1: your expertise.

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Speaker 2: Well, you had a great team too that I still

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Speaker 2: talk with a few, like Charlie Herman. Do you remember

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Speaker 2: Charlie Herman? I think he yeah, yeah. Anyway, So Moody's

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Speaker 2: Analytics were a a financial service analytics firm. We've got

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Speaker 2: a lot of centered around managing risk, all kinds of risks.

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Speaker 2: So my part of the world obviously is macro economic

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Speaker 2: risk and that's you know, front and center right now

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Speaker 2: with the trade war. So I'm getting a lotting a

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Speaker 2: lot of attention internally. Everybody wants to chat. So that's

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Speaker 2: a good thing. I think, you know, a employees and economists. Uh,

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Speaker 2: but uh, we uh have folks that work on everything

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Speaker 2: from climate risk to related risks that the insurance companies face,

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Speaker 2: to risk that the banking system has regarded capital and liquidity, uh,

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Speaker 2: you know, enterprise risks, cyber risk. We're we provide all

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Speaker 2: that information to manage risks.

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Speaker 1: Who would hire you a company or a country or

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Speaker 1: both all of the above.

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Speaker 2: Right The federal government US government is a large client.

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Speaker 2: UH has been uh you know to try to understand uh,

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Speaker 2: you know, who they're dealing with. We helped understand help

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Speaker 2: them understand that when they have different kind of counterparties

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Speaker 2: for different types of activities, uh, defense related or the

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Speaker 2: tax related.

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Speaker 1: Uh I.

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Speaker 2: My group does a lot of work with Fanime Freddie

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Speaker 2: mactiv f h ADS the mortgage lenders and we help

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Speaker 2: them with mortgage credit at risk, but large corporations, global

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Speaker 2: financial institutions. It's a it's a big company. I think

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Speaker 2: I think it's eight billion dollars in total now Moody's

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Speaker 2: in total.

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Speaker 1: So it's become and you're the rating service also helps

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Speaker 1: companies and countries borrow money, right, yeah, yeah, depending on

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Speaker 1: how well they're rated, the interest rate goes up or down.

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Speaker 2: Yeah, and understand the risk of investing in the debt

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Speaker 2: of a government like the US Treasury bonds. You know,

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Speaker 2: the In fact, Moody's is still the I think at

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Speaker 2: this time I'm a man that's wrong, but I think

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Speaker 2: we're the only major rating agency that still has a

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Speaker 2: so called triple A on US Treasury debt, which is,

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Speaker 2: you know, something that may come to the four here soon.

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Speaker 2: You know, businesses issue bonds and debt and we rate

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Speaker 2: that and help investors with that risk.

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Speaker 1: So yeah, when you do your assessment, you're the chief

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Speaker 1: economist for Moody. You can't just rely on data and

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Speaker 1: economic history because political decision making has an impact on

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Speaker 1: the economic outcomes. So how do you factor a country's

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Speaker 1: political system into an economic assessment? And because this feels

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Speaker 1: like of all the things you do, I'm guessing this

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Speaker 1: is the most subjective, right, it's the least amount of

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Speaker 1: data that you're relying on to make an assessment because

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Speaker 1: political risk is just that, it is subjective.

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Speaker 2: Yeah, And you know, you're right, political risk is in

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Speaker 2: all times. You know, what's going on with policy, fiscal policy,

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Speaker 2: tax spending policy, regulatory policy, monetary policy, what the reserve does.

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Speaker 2: You know, that's critical to understanding how the economy is

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Speaker 2: going to perform, and so we have to have a

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Speaker 2: sense of that and have a view on that and

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Speaker 2: provide an assessment on that. But you know, in the

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Speaker 2: current context, you know, I keep going back to the

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Speaker 2: trade work because that's front and center here. That's particularly

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Speaker 2: difficult because it's all over the map, right, I mean,

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Speaker 2: the tariffs are changing, you know, hourly, and to handle

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Speaker 2: that we also do what I call what I think

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Speaker 2: or should be called scenarios. We consider different.

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Speaker 1: Of war gaming. You know, is exactly war games. So

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Speaker 1: you're doing in some ways you're trying at least in

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Speaker 1: order to figure out what could happen. Well, let's see

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Speaker 1: if the US cuts a deal with the UK but

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Speaker 1: never the EU, could it look like this, things like

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Speaker 1: that exactly.

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Speaker 2: So in the case of the trade war, there's like

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Speaker 2: three three or four key assumptions. One is, you know,

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Speaker 2: how high are the tariffs going to go and how

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Speaker 2: long will they stay there? And how will they get

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Speaker 2: back down if they if they are going to get

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Speaker 2: back down, how The other is how do other countries respond?

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Speaker 2: You know, what's China going to do? What's the European

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Speaker 2: Union going to do? And then the third is, and

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Speaker 2: this is particularly difficult, you know, kind of how sentiment

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Speaker 2: is going to behave you know how because at the end.

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Speaker 1: Of the day, Boy, we get that wrong all the time.

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Speaker 1: Oh yeah, that's a time figuring out how the consumer

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Speaker 1: is going to behave where investors are business payroll the

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Speaker 1: payroll tax cut, Oh, people will spend it. Nope, they

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Speaker 1: saved it, like you know right. It was just one

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Speaker 1: of those you just talk about. It was a whift

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Speaker 1: during the Obama are they thought, oh, for sure, they'll

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Speaker 1: they'll put it right back into the into the market,

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Speaker 1: to the consumer market. Nope. Yeah, saving it.

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Speaker 2: And of course sentiment right now is really key because

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Speaker 2: people are very very rightually so very nervous about how

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Speaker 2: this is all going to play out. With the trade.

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Speaker 1: You do a lot of public opinion surveying in order

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Speaker 1: to layer over the economic data.

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Speaker 2: No, I rely on others to do that.

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Speaker 1: The Michigan Consumer Index.

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Speaker 2: They It's gotten a little trickier because surveys, as you know,

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Speaker 2: are just given.

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Speaker 1: I get nervous about them.

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Speaker 2: Yeah, yeah, especially to get out. You just need to

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Speaker 2: know what you're You have to understand the limitations of

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Speaker 2: the surveys that you're using and what's going on. Some

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Speaker 2: surveys are better than others. Some are more biased by

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Speaker 2: political kind of perspectives than others, and you just have

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Speaker 2: to be aware of that. So that's We're not in

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Speaker 2: the business of doing those surveys, but I do rely

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Speaker 2: heavily on those surveys.

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Speaker 1: Yes, So let's talk about the current economic climate and

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Speaker 1: and sort of how you let me ask it this way.

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Speaker 1: Why didn't the markets price in the tear for what

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Speaker 1: did they not see? What did they not hear? In

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Speaker 1: the Camp Patrop because one of the things that is

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Speaker 1: surprising to me is how markets wi this. I mean,

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Speaker 1: it yeah seem and that's look at any of us

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Speaker 1: consider and say it looks obvious now. But given I

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Speaker 1: do think a lot of people made assumptions about Trump

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Speaker 1: and this is across the board of through the lens

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Speaker 1: of Trump one point zero and I think that's turned

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Speaker 1: out to be a mistake. But how would you assess

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Speaker 1: why markets miss this?

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Speaker 2: Yeah, you're you're right. I think that maybe a couple things,

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Speaker 2: uh just won the scale and the scope, right, I mean,

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Speaker 2: it's hard to imagine we the president would have done this, right,

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Speaker 2: I mean.

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Speaker 1: Failure of imagination is something like I mean the terrat when

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Speaker 1: it comes to Trump by the way.

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Speaker 2: Right, I mean yeah, even if you and I did

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Speaker 2: we thought oh yeah, there there they're gonna be terriffs.

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Speaker 2: But really, you.

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Speaker 1: Really thought it was going to be very China focused,

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Speaker 1: didn't you.

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Speaker 2: Well, and even on China one hundred and forty five

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Speaker 2: percent teriff on Chinese products. You know, if you told

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Speaker 2: me that, I say, well, you're smoking something. I don't

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Speaker 2: know what you're smoking. That's not where he's going. I

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Speaker 2: just can't imagine that, because that would be catastrophic. And

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Speaker 2: we'll find out that that's going to be catastrophic if

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Speaker 2: he continues, if we continue down that path and then

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Speaker 2: across every country. I mean even you know, you can

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Speaker 2: see these memes. You know, they're they're taxing penguins in

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Speaker 2: some island in Antarctica, terriff, I mean really, I mean,

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Speaker 2: and the way they've done it. I mean, you know,

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Speaker 2: you saw the formula they're using to assess the so

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Speaker 2: called reciprocal TERFs. It's Mickey Mouse, you know, who would

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Speaker 2: have thunk you know that that would.

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Speaker 1: But here we are. I mean, how do you now

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Speaker 1: you have to factor that into your risk assessment?

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Speaker 2: Yeah? Uh? And this gets to you know, the scenarios,

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Speaker 2: what what what are the scenarios? And you know, my

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Speaker 2: sense is, and of course I am an economist and

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Speaker 2: I am slave to history, and I keep going back

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Speaker 2: to what's happened historically, and so Trump one, oh, is

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Speaker 2: still in my mind a reasonable good, reasonably good guide path.

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Speaker 2: You know, it's it's obviously not you know enough, but

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Speaker 2: it's helpful. And in that scenario, once it became back

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Speaker 2: in Trump one, and once it became the de terror war,

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Speaker 2: which was primarily with China. Once it became clear that

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Speaker 2: was doing real damage to the economy, you know, manufacturing

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Speaker 2: was in recession, agriculture was in recession. You may remember

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Speaker 2: President Trump was cutting checks to the farmers back in

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Speaker 2: his retrum to compensate for the loss of exports to China. So, uh,

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Speaker 2: you know, once that becomes clear, Uh, then he uh

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Speaker 2: struck a deal with the chain was largely performative. It

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Speaker 2: really didn't change anything, but he was able to declare

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Speaker 2: victory and we moved on. By the way, Chuck, my

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Speaker 2: sense is, if not for the pandemic, we still would

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Speaker 2: have had a tough economy in twenty twenty. We just

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Speaker 2: don't know it because of the pandemic because there was that.

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Speaker 1: Just obscurity just altered everything, right, just altered everything. So

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Speaker 1: we don't know we through right, you know.

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Speaker 2: But so I think I think he's still going to react.

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Speaker 2: And that's the other reason why markets have been asked

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Speaker 2: why haven't dereacted more? Why were they surprised? I think

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Speaker 2: they felt like they would be the president would would

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Speaker 2: be more sensitive to a fifteen percent decline the stock

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Speaker 2: market to sell off. In the bond market, you know,

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Speaker 2: a weaker economy, and so far at least he's shown

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Speaker 2: some give there. I mean, he when the bomb markets

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Speaker 2: sold off after so called Liberation Day, he did pull

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Speaker 2: back on the reciprocal terrorists. You know, we now have

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Speaker 2: a more they've been suspended through early July. So he's

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Speaker 2: showing some sensitivity. But I think there was a sense

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Speaker 2: that those things would be stronger guardrails than they have been,

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Speaker 2: at least so far.

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Speaker 1: So let's talk about when the impacts of this on

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Speaker 1: the American consumers are going to be a bit lagging,

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Speaker 1: And I guess you know, is it a couple of months.

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Speaker 1: I assume a lot of American businesses have stocked up

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Speaker 1: on inventory, right, some prepared for these tariffs. Yeah, there

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Speaker 1: was enough time perhaps to stock up. So when do

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Speaker 1: you start to expect to see the true impact of

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Speaker 1: the tariff for in your data that you used to

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Speaker 1: analyze the health of the American economy.

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Speaker 2: I think it starts showing up in the next few weeks.

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Speaker 2: You know, for certain items like perishable items food you

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Speaker 2: know that we bring across the border, you know, may.

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Speaker 1: Start lot of produce in particular, right.

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Speaker 2: Produce, right, I mean, there's been some exemptions for that

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Speaker 2: kind of trade with Mexico and Canada. So you know,

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Speaker 2: it's been a bit muted, but that's going to show

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Speaker 2: up first, and then I think by Memorial Day we'll

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Speaker 2: all kind of sense it, and by July fourth, it'll

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Speaker 2: be in our face. I mean, if you want to

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Speaker 2: go buy a car, you know, for you'll have to

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Speaker 2: pay more for that car at that point, consumer electronics,

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Speaker 2: furniture of clothing. So it's not it's not like this.

434
00:24:10,800 --> 00:24:12,520
Speaker 2: Uh you know, one day you wake up and in

435
00:24:12,680 --> 00:24:16,200
Speaker 2: all the price you'll see all the inflation and price increases.

436
00:24:16,240 --> 00:24:18,919
Speaker 2: It will it will take time, but I think cumulatively,

437
00:24:19,000 --> 00:24:22,520
Speaker 2: by July fourth, everyone will be you know, uh well

438
00:24:22,560 --> 00:24:24,879
Speaker 2: aware of that they're paying higher prices for lots of

439
00:24:24,920 --> 00:24:25,679
Speaker 2: important goods.

440
00:24:26,520 --> 00:24:29,400
Speaker 1: Is there do you see any evidence yet that companies

441
00:24:29,440 --> 00:24:34,200
Speaker 1: are saying, okay, it's I'm going to move some manufacturing

442
00:24:34,280 --> 00:24:36,159
Speaker 1: here to the United States or is there still a

443
00:24:36,160 --> 00:24:37,320
Speaker 1: lot more and wait and see that.

444
00:24:38,520 --> 00:24:42,960
Speaker 2: No, I mean you hear announcements. Uh, Hyundai announced some

445
00:24:42,960 --> 00:24:46,639
Speaker 2: something for an investment in South Carolina. In Nvidia, the

446
00:24:46,640 --> 00:24:50,439
Speaker 2: big chip AI chip company announced they're going to make

447
00:24:50,440 --> 00:24:54,560
Speaker 2: big investments here. But uh, if history is any guide. Uh,

448
00:24:54,680 --> 00:24:57,720
Speaker 2: those are just announcements of things that would have happened anyway.

449
00:24:58,680 --> 00:24:59,240
Speaker 1: Uh.

450
00:24:59,280 --> 00:25:01,520
Speaker 2: And even if they do make an announcement and it's

451
00:25:01,560 --> 00:25:04,000
Speaker 2: not clear they'll follow through. Do you remember fox Con

452
00:25:04,080 --> 00:25:07,760
Speaker 2: that was a big tech manufacturer ten million dollars deal?

453
00:25:08,560 --> 00:25:12,359
Speaker 2: Remember that in Trump won and they never followed through.

454
00:25:12,480 --> 00:25:15,040
Speaker 2: I mean, there's something there now, but it's it's right

455
00:25:15,280 --> 00:25:16,679
Speaker 2: shadow of what it was. And in the state of

456
00:25:16,680 --> 00:25:20,200
Speaker 2: Wisconsin actually came up with tax benefits as well. So no,

457
00:25:20,520 --> 00:25:23,440
Speaker 2: and that it doesn't make sense that they would, right,

458
00:25:23,480 --> 00:25:26,359
Speaker 2: I mean, if you're a CEO of a major global manufacturer,

459
00:25:26,800 --> 00:25:29,480
Speaker 2: how can you make a decision about making an investment

460
00:25:29,520 --> 00:25:33,800
Speaker 2: here that will come to fruition, say two, three, four, five, six,

461
00:25:33,880 --> 00:25:35,480
Speaker 2: seven years from because it takes a long time to

462
00:25:35,520 --> 00:25:37,119
Speaker 2: build and expand fees.

463
00:25:37,240 --> 00:25:39,600
Speaker 1: An administration, you don't know what the right I mean

464
00:25:40,000 --> 00:25:40,800
Speaker 1: the issue.

465
00:25:40,560 --> 00:25:42,320
Speaker 2: Yeah, yeah, I mean what's the terriff going to be?

466
00:25:42,400 --> 00:25:45,159
Speaker 2: I mean, these are done under executive order. They can

467
00:25:45,200 --> 00:25:46,800
Speaker 2: be changed with the stroke of the pen, and they

468
00:25:46,840 --> 00:25:51,480
Speaker 2: are being changed. It's not in legislation. So you're sitting

469
00:25:51,520 --> 00:25:53,320
Speaker 2: there you go, wow, I don't have any idea. And

470
00:25:53,320 --> 00:25:55,919
Speaker 2: then there's all there's no transparency around all the exemptions

471
00:25:55,960 --> 00:25:58,080
Speaker 2: and carve outs, who's getting a deal, who's not getting

472
00:25:58,080 --> 00:26:00,959
Speaker 2: a deal, So you have no sense of where you

473
00:26:01,000 --> 00:26:04,359
Speaker 2: stand relative to your competition or others. You're just not

474
00:26:04,440 --> 00:26:07,880
Speaker 2: going to act on that. So I'd be very surprised,

475
00:26:09,359 --> 00:26:12,280
Speaker 2: dumbfounded if we saw any significant pickup of investment here.

476
00:26:12,640 --> 00:26:16,400
Speaker 1: How many companies do you think have decided, you know, look,

477
00:26:16,400 --> 00:26:19,280
Speaker 1: this is no way to run a global economy. But

478
00:26:20,359 --> 00:26:24,600
Speaker 1: how many companies are going to behave in Darwinistic fashion?

479
00:26:24,760 --> 00:26:27,919
Speaker 1: Meaning well, I'm going to go get mine. I'm going

480
00:26:28,000 --> 00:26:29,760
Speaker 1: to do what it takes to get my exemption. I'm

481
00:26:29,760 --> 00:26:32,399
Speaker 1: going to save my business. What do I got to

482
00:26:32,440 --> 00:26:34,600
Speaker 1: do? Do I gotta write a check to his inaugural committee,

483
00:26:34,640 --> 00:26:39,400
Speaker 1: to this library fund? What you know, what's your expectation?

484
00:26:39,560 --> 00:26:42,080
Speaker 1: And I guess how do you how do you price

485
00:26:42,160 --> 00:26:43,520
Speaker 1: that into your analysis?

486
00:26:43,720 --> 00:26:47,639
Speaker 2: Yeah? Well, I mean it's not even nefarious. It's you know,

487
00:26:47,720 --> 00:26:49,960
Speaker 2: that's the Oh, it's got me open, Yeah, I mean

488
00:26:50,000 --> 00:26:54,000
Speaker 2: it Well, it's it's the fiduciary. The CEO will argue,

489
00:26:54,040 --> 00:26:56,480
Speaker 2: it's my fiduciary responsibility. I you know, I got to play.

490
00:26:56,720 --> 00:26:59,640
Speaker 1: I just don't get me started on that it's a

491
00:26:59,280 --> 00:27:02,880
Speaker 1: it's a number on journalism these days. Anyway, I digress,

492
00:27:02,920 --> 00:27:03,800
Speaker 1: but you hear you know.

493
00:27:03,800 --> 00:27:07,240
Speaker 2: I'm a publicly traded company. I have shareholders, and my

494
00:27:07,320 --> 00:27:11,359
Speaker 2: obligation is to maximize the profits of the company for

495
00:27:11,400 --> 00:27:13,720
Speaker 2: that shareholder. What am I supposed to do in the

496
00:27:13,720 --> 00:27:16,119
Speaker 2: context that I'm in, in the world that I'm living in.

497
00:27:16,240 --> 00:27:18,360
Speaker 1: Oh, and shareholders will sue if you don't. I mean

498
00:27:18,400 --> 00:27:21,399
Speaker 1: that is a truth, right that we're not just saying it.

499
00:27:21,440 --> 00:27:22,479
Speaker 1: There is some truth to us.

500
00:27:22,800 --> 00:27:27,640
Speaker 2: Yeah, But I do think companies this affects behavior. I mean,

501
00:27:28,040 --> 00:27:30,040
Speaker 2: right now, what's happening is companies are sitting on their

502
00:27:30,080 --> 00:27:31,360
Speaker 2: hands because they have no idea.

503
00:27:31,880 --> 00:27:34,239
Speaker 1: You know, we're consumers. I mean, look, you know it's

504
00:27:34,280 --> 00:27:37,000
Speaker 1: all anecdotal, but just in my own neighborhood, I know

505
00:27:37,080 --> 00:27:39,920
Speaker 1: of people that have decided not to put their house

506
00:27:39,960 --> 00:27:42,760
Speaker 1: on the market. They will retiring. You know, you're just

507
00:27:42,800 --> 00:27:47,159
Speaker 1: sort of everybody's cautious. So individuals are cautious about what

508
00:27:47,200 --> 00:27:50,160
Speaker 1: are considered big purchases in their life. I assume every

509
00:27:50,160 --> 00:27:52,399
Speaker 1: corporation in the world is cautious.

510
00:27:52,040 --> 00:27:55,440
Speaker 2: In the moment. Absolutely, And it's not like they're cutting yet,

511
00:27:56,160 --> 00:27:58,800
Speaker 2: It's not that Oh, it's wait and see, right, wait

512
00:27:58,840 --> 00:28:00,919
Speaker 2: and see. I mean they're not hiring. If you look

513
00:28:00,960 --> 00:28:03,360
Speaker 2: at hiring rates, they're way down. So that's the first

514
00:28:03,400 --> 00:28:06,639
Speaker 2: thing you do if your business, you stop hiring people, and.

515
00:28:07,240 --> 00:28:09,600
Speaker 1: Heads right empty, heads stay empty for a while.

516
00:28:09,880 --> 00:28:11,719
Speaker 2: And then you cut hours and we've seen some of that,

517
00:28:11,840 --> 00:28:13,920
Speaker 2: and you stop using temp help and you've seen a

518
00:28:13,960 --> 00:28:17,159
Speaker 2: lot of that. The next thing that happens is layoffs.

519
00:28:17,720 --> 00:28:20,320
Speaker 2: And if that happens, then we're in recession, you know,

520
00:28:20,320 --> 00:28:24,679
Speaker 2: because that puts scared consumers into the bunker. They stop spending.

521
00:28:24,880 --> 00:28:26,919
Speaker 2: We're in self reinforcing negative cycle.

522
00:28:27,960 --> 00:28:30,800
Speaker 1: Well, and we already have the government cuts which are

523
00:28:31,280 --> 00:28:34,480
Speaker 1: really attacking the middle class. Yeah, you know, I mean

524
00:28:34,480 --> 00:28:36,520
Speaker 1: that seems to be the real damage this could do

525
00:28:36,600 --> 00:28:40,600
Speaker 1: to the economy is that government work has been the

526
00:28:40,640 --> 00:28:43,480
Speaker 1: path to the middle class for so many and to

527
00:28:43,800 --> 00:28:47,600
Speaker 1: just gut that feels a bit self defeating to our economy.

528
00:28:47,960 --> 00:28:51,680
Speaker 2: Oh yeah, I mean, I mean, if you look at

529
00:28:51,720 --> 00:28:54,840
Speaker 2: the numbers, I mean, the dose cuts have really been

530
00:28:54,920 --> 00:29:01,800
Speaker 2: quite small, modest, I mean far so far. But you're right,

531
00:29:03,120 --> 00:29:06,000
Speaker 2: certainly government is no longer a place to go if

532
00:29:06,040 --> 00:29:09,480
Speaker 2: you want a job. You know, you're losing jobs.

533
00:29:09,280 --> 00:29:12,920
Speaker 1: In the security because government has always security. You traded

534
00:29:13,000 --> 00:29:17,520
Speaker 1: the ability to make a huge salary with instead public

535
00:29:17,560 --> 00:29:20,600
Speaker 1: service and a more secure retirement.

536
00:29:21,120 --> 00:29:24,280
Speaker 2: Right. And perhaps even the more important thing from a

537
00:29:24,320 --> 00:29:28,239
Speaker 2: broader economic perspective is these folks do real things that

538
00:29:28,320 --> 00:29:31,600
Speaker 2: really matter, you know, like tell me where the hurricane's

539
00:29:31,600 --> 00:29:35,040
Speaker 2: going to hit, or is the air traffic system safe?

540
00:29:35,200 --> 00:29:37,560
Speaker 2: Or is there going to be an equal I break

541
00:29:37,600 --> 00:29:39,080
Speaker 2: out and what should I do about it in the

542
00:29:39,200 --> 00:29:41,120
Speaker 2: Measles and Texas. I mean, you know, on and on

543
00:29:41,160 --> 00:29:45,680
Speaker 2: and on. Of course, yeah, and those things are critical

544
00:29:45,720 --> 00:29:49,480
Speaker 2: to a well fund you know, to a happy American population,

545
00:29:49,560 --> 00:29:52,440
Speaker 2: but also to a well functioning economy. So I you know,

546
00:29:52,640 --> 00:29:56,200
Speaker 2: those are the things that are you just can't you

547
00:29:56,240 --> 00:29:59,160
Speaker 2: can't calculate that, you don't know, but does feel like

548
00:30:00,120 --> 00:30:02,320
Speaker 2: the path we're on something is going to break. That

549
00:30:02,440 --> 00:30:04,280
Speaker 2: is a real consequence out there that's going to have

550
00:30:04,320 --> 00:30:05,520
Speaker 2: real meaning to the economy.

551
00:30:05,840 --> 00:30:08,000
Speaker 1: I want to focus on China second, because if the

552
00:30:08,040 --> 00:30:13,960
Speaker 1: goal was to weaken China, we had done that over

553
00:30:14,000 --> 00:30:17,000
Speaker 1: the last decade. I'd argue it seems as if when

554
00:30:17,040 --> 00:30:18,960
Speaker 1: I when you look at what had what he was

555
00:30:19,000 --> 00:30:21,880
Speaker 1: dealing with with his middle class, what he was dealing

556
00:30:21,920 --> 00:30:27,160
Speaker 1: with with his the housing market in China, And there's

557
00:30:27,200 --> 00:30:30,000
Speaker 1: a part of me, just geopolitical terms, feels as if

558
00:30:30,800 --> 00:30:34,600
Speaker 1: Trump weirdly has handed she a lifeline, a political lifeline

559
00:30:34,640 --> 00:30:38,040
Speaker 1: at least, because now he can tell his domestic audience

560
00:30:38,200 --> 00:30:41,080
Speaker 1: that it's America's fault that this economy is weak right now,

561
00:30:41,200 --> 00:30:43,760
Speaker 1: because it's been a week economy in China for what

562
00:30:43,800 --> 00:30:48,280
Speaker 1: they were used to for some time, and he's actually

563
00:30:48,280 --> 00:30:50,640
Speaker 1: going to be right, Like it's not just an excuse,

564
00:30:50,760 --> 00:30:54,640
Speaker 1: Like it's like, what was the state of the Chinese

565
00:30:54,720 --> 00:31:01,160
Speaker 1: economy domestically, how fragile had it become? And is this

566
00:31:01,280 --> 00:31:04,000
Speaker 1: going to do more harm or does he get this

567
00:31:04,120 --> 00:31:06,160
Speaker 1: political stability from what Trump's doing.

568
00:31:06,440 --> 00:31:10,080
Speaker 2: Yeah, the Chinese e commomy clearly was struggling. It was

569
00:31:10,360 --> 00:31:13,479
Speaker 2: a very weak growth. Unemployment is up, all kinds of

570
00:31:13,560 --> 00:31:17,440
Speaker 2: kind of more persistent structural problems in the property markets.

571
00:31:17,440 --> 00:31:21,840
Speaker 2: Real estate housing values are falling. They have big demographic issues.

572
00:31:21,880 --> 00:31:24,680
Speaker 2: The population is declining. Of course, they don't get many immigrants.

573
00:31:25,000 --> 00:31:29,320
Speaker 2: If any you know, in a autocratic government isn't really

574
00:31:29,560 --> 00:31:31,960
Speaker 2: at all conducive to a well functioning market economy. I

575
00:31:31,960 --> 00:31:34,240
Speaker 2: think they were figuring that out he had put a

576
00:31:34,320 --> 00:31:37,360
Speaker 2: chill over a lot of the tech companies and others

577
00:31:37,400 --> 00:31:40,360
Speaker 2: that are key to innovation and long term economic growth.

578
00:31:40,880 --> 00:31:43,480
Speaker 2: So there's a lot of things just kind of going

579
00:31:43,520 --> 00:31:45,800
Speaker 2: off the rails, and it looked like the Chinese economy

580
00:31:45,880 --> 00:31:50,160
Speaker 2: was being diminished. But I agree. I do think this

581
00:31:50,240 --> 00:31:57,440
Speaker 2: trade war, particularly with China, is reinvigorating that she's standing.

582
00:31:57,520 --> 00:31:59,680
Speaker 2: I mean, I think people are, like in many other

583
00:31:59,720 --> 00:32:03,800
Speaker 2: parts the world, rallying around their their flag, you know,

584
00:32:03,920 --> 00:32:06,000
Speaker 2: and saying we're being attacked and this is a war.

585
00:32:06,920 --> 00:32:09,320
Speaker 2: Uh and uh, you know, they're rallying around the flag.

586
00:32:09,400 --> 00:32:11,280
Speaker 2: So uh. And you know, at the end of the day,

587
00:32:11,280 --> 00:32:13,960
Speaker 2: I think the Chinese I think that the President Trump

588
00:32:14,000 --> 00:32:16,600
Speaker 2: is underestimating the leverage the Chinese have here. I mean,

589
00:32:16,600 --> 00:32:19,840
Speaker 2: his his thought was that because the US runs this

590
00:32:19,920 --> 00:32:22,280
Speaker 2: trade deficit and we stop buying, that's going to kill

591
00:32:22,680 --> 00:32:25,960
Speaker 2: their manufacturing and their economy. But you know, the Chinese

592
00:32:26,000 --> 00:32:27,680
Speaker 2: have a lot of other things going on, and they

593
00:32:27,720 --> 00:32:30,840
Speaker 2: can redivert that trade. You know, they can buy soybeans

594
00:32:30,880 --> 00:32:33,240
Speaker 2: from Brazil, and they can send their machine tools to

595
00:32:33,240 --> 00:32:37,400
Speaker 2: to to Germany. So they and they have more fiscal

596
00:32:37,400 --> 00:32:40,840
Speaker 2: and monetary resources than we do. Because their fiscal situation

597
00:32:40,920 --> 00:32:42,720
Speaker 2: is a lot better than ours. And they have the

598
00:32:42,760 --> 00:32:44,800
Speaker 2: Fed's not going to cut interest rates here that they're cutting,

599
00:32:44,880 --> 00:32:47,040
Speaker 2: the pbo C, the Central Bank there's cutting right. So

600
00:32:47,080 --> 00:32:49,160
Speaker 2: there's there's a they have a lot of leverage here

601
00:32:49,200 --> 00:32:51,360
Speaker 2: and they're going to use it. Uh and so this

602
00:32:51,400 --> 00:32:56,720
Speaker 2: is this, this may actually reinvigorate China, make them more

603
00:32:56,760 --> 00:33:00,600
Speaker 2: of a problem a long run for the US. Then,

604
00:33:00,840 --> 00:33:03,200
Speaker 2: you know, if we hadn't gone down gone down this path.

605
00:33:03,280 --> 00:33:05,680
Speaker 1: Look and I look at the you know, the situation

606
00:33:05,880 --> 00:33:09,320
Speaker 1: with with NATO in Europe. Right if you're you're if

607
00:33:09,320 --> 00:33:11,120
Speaker 1: you're a member of the EU and you're a member

608
00:33:11,160 --> 00:33:14,600
Speaker 1: of NATO, you're sitting there going, boy, how reliable is

609
00:33:14,600 --> 00:33:18,440
Speaker 1: the United States? And if and if NATO which was

610
00:33:18,560 --> 00:33:22,480
Speaker 1: still a very stable and and you know something, you know,

611
00:33:23,040 --> 00:33:27,720
Speaker 1: I always wonder imagine how more how willing our European

612
00:33:27,760 --> 00:33:30,280
Speaker 1: partners might be to take a hit ors on trade

613
00:33:31,120 --> 00:33:35,120
Speaker 1: if we were still truly providing the security umbrella. Right

614
00:33:35,120 --> 00:33:38,760
Speaker 1: now that we're questioning the security umbrella, you have a

615
00:33:38,760 --> 00:33:40,800
Speaker 1: EU going, well, maybe we need to cut our own

616
00:33:40,880 --> 00:33:43,080
Speaker 1: deal with China that's different and not have to worry

617
00:33:43,080 --> 00:33:45,920
Speaker 1: about this is no longer about the West. And you know,

618
00:33:46,680 --> 00:33:49,280
Speaker 1: the irony is that in the first Trump administration, the

619
00:33:49,280 --> 00:33:52,480
Speaker 1: stuff with Wawei, and there seemed to be a plan

620
00:33:52,720 --> 00:33:56,760
Speaker 1: and maybe Lighthouser ran a better shop than this current administration,

621
00:33:57,720 --> 00:34:01,000
Speaker 1: but there was, and we got the Western allies to

622
00:34:01,040 --> 00:34:04,680
Speaker 1: distance themselves from Chinese tech. Right, Canada did a lot

623
00:34:04,680 --> 00:34:07,320
Speaker 1: of members that you did. I don't see any incentive

624
00:34:07,320 --> 00:34:08,440
Speaker 1: for them to do that this time.

625
00:34:09,360 --> 00:34:11,279
Speaker 2: Yeah, you know, and this might be a too fine

626
00:34:11,280 --> 00:34:15,680
Speaker 2: a point, but I'd even go back to prior to

627
00:34:15,760 --> 00:34:19,000
Speaker 2: President Trump to Obama. I mean, there's you know, it's

628
00:34:19,080 --> 00:34:22,279
Speaker 2: clear the Chinese oh my god, yeah, TPP, right, the

629
00:34:22,320 --> 00:34:23,400
Speaker 2: trans Partnership.

630
00:34:23,480 --> 00:34:25,799
Speaker 1: I mean that's not like this is where I have

631
00:34:26,080 --> 00:34:30,640
Speaker 1: you lose respect for political leaders because you know, they

632
00:34:30,760 --> 00:34:32,640
Speaker 1: both parties do this was the right thing to do,

633
00:34:32,760 --> 00:34:36,239
Speaker 1: and then they both panicked when when they're political each

634
00:34:36,280 --> 00:34:38,279
Speaker 1: political base right in the East side and the R

635
00:34:38,360 --> 00:34:42,000
Speaker 1: side exploded over it, and it was weaponized and miss

636
00:34:42,640 --> 00:34:46,399
Speaker 1: mischaracterized on all of this. But I mean, you know

637
00:34:46,560 --> 00:34:48,879
Speaker 1: this is to me, any all those leaders that backed

638
00:34:48,920 --> 00:34:51,680
Speaker 1: away from the TPP, I don't want them in charge anymore.

639
00:34:52,080 --> 00:34:54,560
Speaker 2: Yeah, I mean, because no one would disagree. I think

640
00:34:54,600 --> 00:34:58,000
Speaker 2: there's a widespread view, consensus view that Chinese don't play fair.

641
00:34:58,080 --> 00:34:59,800
Speaker 2: The question is how do you make them play fair?

642
00:35:00,640 --> 00:35:04,080
Speaker 2: And the Trump's strategies just don't play at all, and

643
00:35:04,120 --> 00:35:06,920
Speaker 2: it hurts everybody, and that's what we're going to see.

644
00:35:07,040 --> 00:35:10,680
Speaker 2: The other strategy was, you know, let's get a free

645
00:35:10,719 --> 00:35:12,920
Speaker 2: trade deal with the rest of the Pacific RIM nations,

646
00:35:13,000 --> 00:35:14,759
Speaker 2: the fast growing part of the world, and not let

647
00:35:14,840 --> 00:35:17,759
Speaker 2: China until they played fair, and thus you know they

648
00:35:17,760 --> 00:35:21,279
Speaker 2: would ultimately come in. But as you point out, got

649
00:35:21,280 --> 00:35:22,759
Speaker 2: blown in part by politics at the end of the

650
00:35:22,840 --> 00:35:25,080
Speaker 2: Obama administration. I think that was the second first or

651
00:35:25,120 --> 00:35:27,719
Speaker 2: second after the Paris Accord, maybe the second executive order

652
00:35:27,760 --> 00:35:31,160
Speaker 2: that prison Trump signing his first term getting just nixing

653
00:35:31,200 --> 00:35:33,319
Speaker 2: the TPP huge error in my view.

654
00:35:33,520 --> 00:35:36,879
Speaker 1: Will now know, we we won't know what we don't

655
00:35:36,920 --> 00:35:44,799
Speaker 1: know on that front when it comes to this is

656
00:35:44,800 --> 00:35:48,680
Speaker 1: where I think people get lost in the concern about

657
00:35:48,680 --> 00:35:52,480
Speaker 1: where this economy is headed. The bond market seems to

658
00:35:52,520 --> 00:35:56,080
Speaker 1: have some impact on Donald Trump right when it and

659
00:35:56,280 --> 00:35:59,759
Speaker 1: obviously this is how we finance our debt, right so

660
00:36:00,160 --> 00:36:02,960
Speaker 1: how vulnerable? What are you looking for in the bond

661
00:36:03,000 --> 00:36:06,719
Speaker 1: market to tell us about the health of our economy

662
00:36:06,800 --> 00:36:11,120
Speaker 1: and frankly, the health of our ability to still be

663
00:36:11,239 --> 00:36:15,600
Speaker 1: the reserve currency and the sort of the economic engine

664
00:36:15,640 --> 00:36:16,280
Speaker 1: of the globe.

665
00:36:16,640 --> 00:36:19,239
Speaker 2: It's just interest rates, you know. The bond market determines rates,

666
00:36:19,600 --> 00:36:21,839
Speaker 2: the mark of the bond market for treasury bonds, the

667
00:36:21,880 --> 00:36:25,280
Speaker 2: debt the US government issues to finance itself. Those treasury

668
00:36:25,280 --> 00:36:28,839
Speaker 2: bonds are historically deemed to be risk free. I mean money, good.

669
00:36:28,840 --> 00:36:30,200
Speaker 2: If you buy that bond.

670
00:36:30,120 --> 00:36:32,680
Speaker 1: You're gonna get as good as gold, literally, right, yet

671
00:36:32,800 --> 00:36:34,680
Speaker 1: good as better.

672
00:36:34,040 --> 00:36:36,520
Speaker 2: Because it's more liquid. I mean gold. You know, you

673
00:36:36,560 --> 00:36:38,839
Speaker 2: gotta what do you do with that liquid? My mother

674
00:36:38,880 --> 00:36:41,880
Speaker 2: in law is gold, and I go. Now. I was

675
00:36:42,000 --> 00:36:44,680
Speaker 2: always say, hey, mom, you should sell that goal, But

676
00:36:44,719 --> 00:36:45,600
Speaker 2: now I'm glad she did.

677
00:36:45,800 --> 00:36:46,000
Speaker 1: Yeah.

678
00:36:46,120 --> 00:36:46,239
Speaker 2: Right.

679
00:36:46,280 --> 00:36:48,440
Speaker 1: I was just going to say, it's it's the equivalent

680
00:36:48,440 --> 00:36:49,800
Speaker 1: of keeping money in your mattress.

681
00:36:49,800 --> 00:36:52,880
Speaker 2: But I remember some really bad times. You remember the depression,

682
00:36:52,960 --> 00:36:54,640
Speaker 2: you know, so when you when you go live through

683
00:36:54,640 --> 00:36:56,920
Speaker 2: those things, you you know you behave differently, and she

684
00:36:57,040 --> 00:37:00,600
Speaker 2: did so. But it's about the interest And you know,

685
00:37:00,640 --> 00:37:04,759
Speaker 2: in times like these and the crisis, what market participants,

686
00:37:04,880 --> 00:37:08,960
Speaker 2: investors would say a risk off environment. People are scared.

687
00:37:09,000 --> 00:37:12,239
Speaker 2: They don't want to take any risk. They historically would

688
00:37:12,239 --> 00:37:15,439
Speaker 2: buy a treasury bond it's risk free, and that would

689
00:37:15,440 --> 00:37:17,440
Speaker 2: send down the interest rate, the price would go up,

690
00:37:17,480 --> 00:37:20,719
Speaker 2: the interest rate would go down. But in the current situation,

691
00:37:21,000 --> 00:37:23,319
Speaker 2: and I care characterize what we're in now as now

692
00:37:23,440 --> 00:37:27,160
Speaker 2: as a crisis, we're seeing just the opposite the tenure yield.

693
00:37:27,239 --> 00:37:29,920
Speaker 2: The people are selling the bonds where they're not buying them.

694
00:37:29,920 --> 00:37:32,640
Speaker 2: The yield is going up, the price is going down,

695
00:37:33,080 --> 00:37:35,560
Speaker 2: and that's just very counter to anything that we've seen before.

696
00:37:35,640 --> 00:37:38,520
Speaker 2: It is very and at the same time, the value

697
00:37:38,520 --> 00:37:40,520
Speaker 2: of the dollar is falling against lots of currency. So

698
00:37:40,600 --> 00:37:44,239
Speaker 2: what these things suggest, you know, if you've kind of

699
00:37:44,239 --> 00:37:49,000
Speaker 2: added all up, is that investors overseas are nervous about

700
00:37:49,040 --> 00:37:51,800
Speaker 2: putting their money here that you know, we're losing.

701
00:37:52,239 --> 00:37:54,319
Speaker 1: Where where will they put their money?

702
00:37:54,400 --> 00:37:57,240
Speaker 2: Instead, They're going to the uero, they're going to the pound,

703
00:37:57,400 --> 00:38:00,560
Speaker 2: they're going to the end you know, they're they're not

704
00:38:00,600 --> 00:38:03,440
Speaker 2: going into the Chinese currency because they can't and that,

705
00:38:03,719 --> 00:38:07,880
Speaker 2: but everywhere else that they can they're going. But not that.

706
00:38:07,960 --> 00:38:10,400
Speaker 1: What does this mean to the cost of our financing

707
00:38:10,400 --> 00:38:14,080
Speaker 1: our debt? I mean, yeah, I assume it's only going

708
00:38:14,120 --> 00:38:16,160
Speaker 1: to rate. I mean, if interest rates are going up

709
00:38:16,160 --> 00:38:19,960
Speaker 1: in the bond market, I assume financing our debt suddenly

710
00:38:20,000 --> 00:38:22,279
Speaker 1: becomes that much more expensive.

711
00:38:22,640 --> 00:38:25,400
Speaker 2: Well, the cost of all debt goes up. So yes,

712
00:38:25,520 --> 00:38:28,360
Speaker 2: the government's debt now is more costly. So our interest

713
00:38:28,360 --> 00:38:31,280
Speaker 2: payments on that debt will rise, and that's already been rising,

714
00:38:31,400 --> 00:38:34,200
Speaker 2: you know, right now, we're going this in the coming year.

715
00:38:34,239 --> 00:38:36,439
Speaker 2: We're going to spend more on interest on the debt

716
00:38:36,480 --> 00:38:38,080
Speaker 2: than we are on our own defense for the first

717
00:38:38,080 --> 00:38:41,279
Speaker 2: time in history. And the trend lines here look, you know,

718
00:38:41,280 --> 00:38:43,960
Speaker 2: pretty ugly. But it also means higher mortgage rates. You know,

719
00:38:44,239 --> 00:38:47,920
Speaker 2: think about all those thirty forty something trying to get

720
00:38:47,960 --> 00:38:49,880
Speaker 2: in a home. They haven't been able to do it

721
00:38:49,920 --> 00:38:52,719
Speaker 2: because of the lack of affordability. That's just going to

722
00:38:52,719 --> 00:38:54,759
Speaker 2: get worse. Auto loan rates are going to go up.

723
00:38:54,840 --> 00:38:57,799
Speaker 2: And in businesses they borrow money to go out and

724
00:38:57,840 --> 00:39:02,840
Speaker 2: invest in their to expand and to make their activities

725
00:39:02,880 --> 00:39:06,560
Speaker 2: more productive, they can't do that at least not as cheaply,

726
00:39:06,680 --> 00:39:08,160
Speaker 2: and so it's golled more costly.

727
00:39:08,600 --> 00:39:11,799
Speaker 1: What would it take to stabilize the bond market right now?

728
00:39:13,200 --> 00:39:17,080
Speaker 2: Well, if the president tomorrow's found an off ramp on

729
00:39:17,120 --> 00:39:19,759
Speaker 2: the trade war, stood down kind of sort of what

730
00:39:19,800 --> 00:39:21,479
Speaker 2: he did back in his first term. Say hey, look,

731
00:39:21,920 --> 00:39:24,560
Speaker 2: I just cut a deal with pick a country, and

732
00:39:24,760 --> 00:39:27,319
Speaker 2: it's a great deal, and you know, it's great for

733
00:39:27,320 --> 00:39:30,200
Speaker 2: the United States of America. Declare victory would be the

734
00:39:30,200 --> 00:39:33,360
Speaker 2: best outcome. But having said that, I'm not sure you

735
00:39:33,360 --> 00:39:36,359
Speaker 2: can put this, this genie back in the bottle. I mean,

736
00:39:36,480 --> 00:39:37,759
Speaker 2: the the this you know.

737
00:39:37,760 --> 00:39:39,560
Speaker 1: This doesn't get turned around out a term, does it.

738
00:39:39,680 --> 00:39:43,040
Speaker 2: No, to your point, you know, can the rest of

739
00:39:43,040 --> 00:39:45,640
Speaker 2: the world trust the United States? You know, I mean

740
00:39:45,960 --> 00:39:49,360
Speaker 2: the president can change his mind next, next tomorrow, next week,

741
00:39:49,920 --> 00:39:50,759
Speaker 2: a year from now.

742
00:39:52,680 --> 00:39:55,920
Speaker 1: If he fired J Powell. What would happen to the

743
00:39:55,960 --> 00:40:00,560
Speaker 1: markets and the world's trust and and and art treasuries.

744
00:40:01,239 --> 00:40:05,760
Speaker 2: Yeah, well, I'd break out that nice bottle of whiskey downstairs,

745
00:40:06,760 --> 00:40:08,960
Speaker 2: sit down for a while with that. That would be

746
00:40:10,120 --> 00:40:13,400
Speaker 2: I just you know, I think bond investors would throw

747
00:40:13,560 --> 00:40:16,799
Speaker 2: up all over that and say, oh my gosh.

748
00:40:17,200 --> 00:40:19,200
Speaker 1: You know, you know, because it's very hard to read

749
00:40:19,200 --> 00:40:22,960
Speaker 1: the mind of markets. But I assume Monday's early morning crash.

750
00:40:23,040 --> 00:40:25,480
Speaker 1: And I say that because you never know, the sts

751
00:40:25,520 --> 00:40:28,000
Speaker 1: can recover. But you know, as you and I are talking.

752
00:40:28,040 --> 00:40:30,959
Speaker 1: When we began talking, it was nearly a thousand points down.

753
00:40:31,080 --> 00:40:33,879
Speaker 1: I assume that's due to the threats of firing power.

754
00:40:34,040 --> 00:40:37,000
Speaker 2: Yeah, I think you can draw the connect those dots.

755
00:40:37,080 --> 00:40:42,520
Speaker 2: I mean, you know, it's very simple. The the if

756
00:40:42,760 --> 00:40:46,440
Speaker 2: interest rates, if the Fed's monetary policy is set based

757
00:40:46,480 --> 00:40:50,239
Speaker 2: on politics as opposed to based on the economy's performance,

758
00:40:50,760 --> 00:40:54,719
Speaker 2: we got a problem because ultimately the politics is going

759
00:40:54,760 --> 00:40:57,400
Speaker 2: to drive interest rates lower and drive inflation up. And

760
00:40:57,400 --> 00:41:00,040
Speaker 2: that's the long history of this. I mean, have you

761
00:41:00,120 --> 00:41:02,319
Speaker 2: had a great example here in the US. Go back

762
00:41:02,320 --> 00:41:05,400
Speaker 2: to Nixon. Arthur Burns, who is the head of the

763
00:41:05,480 --> 00:41:07,840
Speaker 2: of the FED during Nixon's trum a friend of Nixon.

764
00:41:08,280 --> 00:41:10,280
Speaker 2: This is leading up to the nineteen seventy two election.

765
00:41:10,440 --> 00:41:12,359
Speaker 2: Nixon put pressure on Authorm and you can go back

766
00:41:12,360 --> 00:41:14,360
Speaker 2: to the tapes. This is in the public records, so

767
00:41:14,360 --> 00:41:16,799
Speaker 2: I'm not making this up. Said to put a lot

768
00:41:16,800 --> 00:41:19,160
Speaker 2: of pressure on Burns not to raise raids and kept

769
00:41:19,440 --> 00:41:22,279
Speaker 2: Burns kept them low. It juiced up the economy, helped

770
00:41:22,320 --> 00:41:25,680
Speaker 2: Nixon win with a landslide. But look at the inflation

771
00:41:25,760 --> 00:41:27,520
Speaker 2: that followed in the seventies and eighties.

772
00:41:27,800 --> 00:41:31,200
Speaker 1: So I had a I'm gonna. I had a lunch

773
00:41:31,239 --> 00:41:33,399
Speaker 1: with j Powell probably eighteen months ago.

774
00:41:33,640 --> 00:41:35,440
Speaker 2: No, now you're bragging, Now you're brad.

775
00:41:35,320 --> 00:41:36,880
Speaker 1: No, no, no, totally. It was one of those use

776
00:41:36,960 --> 00:41:38,719
Speaker 1: trying to get him to come on Sunday shows. He's

777
00:41:38,719 --> 00:41:40,960
Speaker 1: still not ready to do that, uh huh. But he

778
00:41:41,040 --> 00:41:44,200
Speaker 1: really was more open to speaking to non economic journalists

779
00:41:44,239 --> 00:41:47,759
Speaker 1: to try to frankly to you know, and I'll so

780
00:41:48,080 --> 00:41:49,680
Speaker 1: he when we were in his office, he took me

781
00:41:49,880 --> 00:41:52,839
Speaker 1: down the wall of FED chair pictures of this part

782
00:41:52,880 --> 00:41:55,759
Speaker 1: I feel comfortable revealing, and he just simply said, he

783
00:41:55,800 --> 00:41:58,560
Speaker 1: points to Arthur Burns and he said, yeah, every FED

784
00:41:58,640 --> 00:41:59,759
Speaker 1: chair doesn't want to be him.

785
00:42:00,360 --> 00:42:00,960
Speaker 2: Is that what you did?

786
00:42:01,000 --> 00:42:03,000
Speaker 1: It was yeah, I mean it was just sort of

787
00:42:03,040 --> 00:42:04,200
Speaker 1: like it was interesting.

788
00:42:04,360 --> 00:42:04,879
Speaker 2: It's interest.

789
00:42:04,920 --> 00:42:07,680
Speaker 1: It was because like those like when you look back,

790
00:42:07,719 --> 00:42:09,920
Speaker 1: how did we get the inflationary? How did the seventies

791
00:42:10,200 --> 00:42:12,960
Speaker 1: so bad? Like you know, he points to that right

792
00:42:13,080 --> 00:42:17,480
Speaker 1: as an example, which pretty reassuring to me. Yeah, I

793
00:42:17,520 --> 00:42:20,080
Speaker 1: thought that was interesting, but like it gives you a

794
00:42:20,120 --> 00:42:22,360
Speaker 1: little insight in that I think how all those guys

795
00:42:22,360 --> 00:42:22,800
Speaker 1: are thinking.

796
00:42:23,239 --> 00:42:27,359
Speaker 2: Yeah, I mean it's FED independence is now in the

797
00:42:27,480 --> 00:42:31,160
Speaker 2: DNA of FED officials and they're going to fight to

798
00:42:31,200 --> 00:42:33,960
Speaker 2: the end. But you know his term is up May

799
00:42:34,000 --> 00:42:37,200
Speaker 2: twenty twenty six, right, so a year from now, and

800
00:42:37,239 --> 00:42:38,960
Speaker 2: it's going to be a real tell as to what

801
00:42:39,000 --> 00:42:42,000
Speaker 2: President Trump does with that appointment. How does he who

802
00:42:42,000 --> 00:42:43,760
Speaker 2: he puts in that spot. It's gonna be really key.

803
00:42:44,120 --> 00:42:48,920
Speaker 1: No, so you expect a rise of economic nationalism. I mean,

804
00:42:48,960 --> 00:42:50,799
Speaker 1: do you do you look at you said, you're you're

805
00:42:50,840 --> 00:42:53,200
Speaker 1: sort of your your I do the same thing with politics.

806
00:42:53,239 --> 00:42:55,320
Speaker 1: I'm always in fact, what makes me feel better is

807
00:42:55,360 --> 00:42:58,560
Speaker 1: when I find historical parallels because then I say, well,

808
00:42:58,920 --> 00:43:00,680
Speaker 1: we got out of it, then we'll get out of it.

809
00:43:00,719 --> 00:43:04,280
Speaker 1: You know, it means there's a path out. How similar

810
00:43:04,360 --> 00:43:09,600
Speaker 1: is this to the nineteen twenties and thirties, Well, there's a.

811
00:43:09,600 --> 00:43:15,240
Speaker 2: Lot of similarities. I mean smooth Hawley, which was nineteen thirty.

812
00:43:15,280 --> 00:43:18,920
Speaker 2: That was legislation that led to high tariffs in that period. Actually,

813
00:43:18,920 --> 00:43:23,520
Speaker 2: the effective terif rate in nineteen thirty is just is

814
00:43:23,560 --> 00:43:25,520
Speaker 2: a little bit lower than the effective terraf rate.

815
00:43:25,480 --> 00:43:26,480
Speaker 1: Is actually higher now.

816
00:43:26,520 --> 00:43:30,440
Speaker 2: It's the highest, actually higher now if Thiersan actually implemented.

817
00:43:29,920 --> 00:43:32,480
Speaker 1: It, higher than anything McKinley did, even right in the.

818
00:43:32,520 --> 00:43:33,640
Speaker 2: Yeah, I think you have to go back into the

819
00:43:33,680 --> 00:43:38,560
Speaker 2: early nineteen hundreds, you know, find a time, and interestingly enough,

820
00:43:38,800 --> 00:43:40,920
Speaker 2: we kind of go down this tariff path at every

821
00:43:40,920 --> 00:43:44,160
Speaker 2: one hundred years. Nineteen thirty and going back to eighteen

822
00:43:44,200 --> 00:43:45,879
Speaker 2: twenty eight was Jackson did the same thing.

823
00:43:46,080 --> 00:43:48,360
Speaker 1: Well, it's when our economy. I mean, it seems to me,

824
00:43:48,640 --> 00:43:50,680
Speaker 1: you know, I look at it in this macro it's

825
00:43:50,719 --> 00:43:53,960
Speaker 1: like whenever we have a technological change that's impacting the

826
00:43:54,000 --> 00:43:56,600
Speaker 1: economy and we have a shift, right, Yeah, you know,

827
00:43:56,680 --> 00:44:00,800
Speaker 1: we were moving from a grarian too industrial and everybody

828
00:44:00,840 --> 00:44:03,359
Speaker 1: was trying to protect their thing right in that moment,

829
00:44:03,440 --> 00:44:05,640
Speaker 1: and there's this fear and I sort of understand that,

830
00:44:06,200 --> 00:44:09,600
Speaker 1: and you know, we've been we've been basically going through

831
00:44:09,640 --> 00:44:13,520
Speaker 1: a thirty year transition starting in the nineties, right. NAFTA

832
00:44:13,560 --> 00:44:15,520
Speaker 1: in some ways was the first line, and this was

833
00:44:15,520 --> 00:44:18,319
Speaker 1: the first first trade deal under this circumstance where we

834
00:44:18,320 --> 00:44:23,040
Speaker 1: were shifting from a from a nationalist economy in general,

835
00:44:23,120 --> 00:44:27,640
Speaker 1: like every country for themselves, to a more multilateral global

836
00:44:27,640 --> 00:44:30,480
Speaker 1: economy because we were moving from an industrial to a

837
00:44:30,520 --> 00:44:33,120
Speaker 1: service or digital or frankly, I don't know if we've

838
00:44:33,120 --> 00:44:37,239
Speaker 1: even named this economy. Yeah, but what this what we

839
00:44:37,280 --> 00:44:39,160
Speaker 1: are in is not industrial. We know that.

840
00:44:39,800 --> 00:44:41,960
Speaker 2: Yeah, yeah, that's a good point. I was going to

841
00:44:42,000 --> 00:44:44,720
Speaker 2: explain it by we all everyone's dead in one hundred

842
00:44:44,760 --> 00:44:50,840
Speaker 2: year or so. The collective memory just forget much more simple.

843
00:44:50,920 --> 00:44:53,520
Speaker 1: You know, this is my history rhymes right. It's not

844
00:44:53,640 --> 00:44:56,040
Speaker 1: quite repeats itself, but it's pretty close. Yeah.

845
00:44:56,120 --> 00:44:59,799
Speaker 2: Yeah, so there are similar The big difference between now

846
00:44:59,840 --> 00:45:04,759
Speaker 2: and then, though, is back then, ma, trade, manufacturing, agriculture

847
00:45:04,760 --> 00:45:06,839
Speaker 2: were much more important to the economy. You know, now

848
00:45:06,840 --> 00:45:08,000
Speaker 2: they're much less important.

849
00:45:08,239 --> 00:45:11,279
Speaker 1: Well, I actually understand then. You know, it's funny like

850
00:45:12,239 --> 00:45:16,040
Speaker 1: Republicans being anti free trade in the twenties and thirties

851
00:45:17,040 --> 00:45:19,120
Speaker 1: when you think if they were the party of Business, Well,

852
00:45:19,200 --> 00:45:22,120
Speaker 1: all those businesses were very domestic oriented. They didn't really

853
00:45:22,120 --> 00:45:24,839
Speaker 1: have much trade, right, so it made sense that they

854
00:45:24,840 --> 00:45:28,400
Speaker 1: were constantly nervous about losing their status wanted protection.

855
00:45:28,640 --> 00:45:34,040
Speaker 2: Does that how Yeah, for sure. But I guess my

856
00:45:34,080 --> 00:45:37,000
Speaker 2: point is in terms of the question is this is,

857
00:45:37,080 --> 00:45:40,520
Speaker 2: you know, what's the similarities or differences with the thirties

858
00:45:40,520 --> 00:45:43,120
Speaker 2: the depression. That's a big one, and then the other thing,

859
00:45:43,160 --> 00:45:44,879
Speaker 2: and this is really important to how this trade war

860
00:45:44,920 --> 00:45:50,960
Speaker 2: will play out. In the thirties, other countries retaliated against

861
00:45:50,960 --> 00:45:53,319
Speaker 2: the United States. They didn't the US didn't have the

862
00:45:53,320 --> 00:45:56,920
Speaker 2: same kind of central role militarily. It was important, but

863
00:45:56,960 --> 00:46:00,680
Speaker 2: not as important. And other countries pushed back and said,

864
00:46:00,719 --> 00:46:02,600
Speaker 2: you can't do this, you do some and they did

865
00:46:03,200 --> 00:46:05,319
Speaker 2: and pose their own tariffs, and we got into a

866
00:46:05,360 --> 00:46:07,879
Speaker 2: tit for tat so called tit for tat trade war

867
00:46:08,320 --> 00:46:11,239
Speaker 2: this go around. So far, it's only China that is

868
00:46:12,000 --> 00:46:14,040
Speaker 2: stuck to their guns, and it feels like they will.

869
00:46:14,480 --> 00:46:17,920
Speaker 2: So it's really how this plays out may actually revolve around,

870
00:46:18,640 --> 00:46:22,480
Speaker 2: you know, other like the European Union or Japan, other

871
00:46:22,600 --> 00:46:25,560
Speaker 2: other trading partners, how they respond. If they they kind

872
00:46:25,560 --> 00:46:28,920
Speaker 2: of go along with it, then uh, you know, we

873
00:46:29,000 --> 00:46:31,479
Speaker 2: may be in for higher terrors for a long time

874
00:46:31,520 --> 00:46:32,640
Speaker 2: and we're not going to get out of this and

875
00:46:33,200 --> 00:46:36,080
Speaker 2: be a darker economy. In my view, if they push

876
00:46:36,239 --> 00:46:39,759
Speaker 2: back then and put more pressure on President Trump, then

877
00:46:39,760 --> 00:46:41,239
Speaker 2: there's more likely he'll do what he did in his

878
00:46:41,239 --> 00:46:43,640
Speaker 2: first termon. You'll figure out a way to just stand down.

879
00:46:44,239 --> 00:46:47,680
Speaker 1: We're the handful of countries that are the most vulnerable

880
00:46:47,680 --> 00:46:50,080
Speaker 1: to our trade war right now where they're and I

881
00:46:50,120 --> 00:46:52,279
Speaker 1: look at it this way, it's I have this great

882
00:46:52,320 --> 00:46:54,880
Speaker 1: fear that we're just creating more people to hate us.

883
00:46:55,200 --> 00:46:58,000
Speaker 1: Oh right, and we're going to like kill some you know,

884
00:46:58,400 --> 00:47:00,680
Speaker 1: We're going to find out one day that some terrorist

885
00:47:00,680 --> 00:47:04,560
Speaker 1: attack is by the sun of somebody's small business that

886
00:47:04,640 --> 00:47:07,760
Speaker 1: got totally wiped out by the American tariffs of twenty

887
00:47:07,800 --> 00:47:10,719
Speaker 1: twenty five, right like, like I you know, I do

888
00:47:10,760 --> 00:47:14,640
Speaker 1: feel you know, this stuff takes sometimes years for it

889
00:47:14,680 --> 00:47:18,440
Speaker 1: to better. But are there certain regions or certain countries

890
00:47:19,080 --> 00:47:23,240
Speaker 1: that you know, sort of are just starting to enjoy

891
00:47:23,320 --> 00:47:26,440
Speaker 1: the fruits of a global economy that this is just

892
00:47:26,560 --> 00:47:31,480
Speaker 1: going to utterly gut that it really has you concerned?

893
00:47:32,040 --> 00:47:34,279
Speaker 2: Well, I was going to say the countries that are

894
00:47:34,320 --> 00:47:36,080
Speaker 2: going to get nailed the hardest or the ones that

895
00:47:36,120 --> 00:47:38,680
Speaker 2: are north and south of US Canada and Mexico. I mean,

896
00:47:38,680 --> 00:47:42,040
Speaker 2: Mexico's already in recession for other reasons, the political cnycle,

897
00:47:42,080 --> 00:47:43,520
Speaker 2: but this is going to hurt them. And Canada is

898
00:47:43,560 --> 00:47:46,719
Speaker 2: going into recession here pretty quickly because you know, just

899
00:47:46,760 --> 00:47:50,239
Speaker 2: a stat and I'm making this up so someone can

900
00:47:50,239 --> 00:47:53,279
Speaker 2: shat cheepy to it, but fifteen to twenty percent of

901
00:47:53,400 --> 00:47:56,920
Speaker 2: Canadian GDP, that's the valuable the things they produce is

902
00:47:56,920 --> 00:47:59,759
Speaker 2: is just you experts to the United States, and in

903
00:47:59,760 --> 00:48:02,080
Speaker 2: the case of Mexico it's twenty five to thirty percent.

904
00:48:02,120 --> 00:48:04,200
Speaker 2: So that just gives you a sense of how vulnerable

905
00:48:04,200 --> 00:48:07,600
Speaker 2: they are. Japan is also very vulnerable. They they you know,

906
00:48:07,719 --> 00:48:10,160
Speaker 2: both in terms of an econom From an economic perspective,

907
00:48:10,640 --> 00:48:12,600
Speaker 2: they sell all their autos, you know, a lot of

908
00:48:12,600 --> 00:48:14,319
Speaker 2: their autos to US, and they get a lot of

909
00:48:14,520 --> 00:48:19,040
Speaker 2: commodities you know, coming from US. And also militarily they

910
00:48:19,080 --> 00:48:22,280
Speaker 2: rely much more heavily on the US for their security,

911
00:48:22,320 --> 00:48:24,879
Speaker 2: and they're obviously very nervous about kind of the geopolitical

912
00:48:24,880 --> 00:48:28,040
Speaker 2: situation in the Pacific RIM. So those countries are big,

913
00:48:28,480 --> 00:48:31,840
Speaker 2: you know, interestingly em economies. When I say EM, I

914
00:48:31,840 --> 00:48:34,960
Speaker 2: mean emerging margin markets kind of the smaller ones. It's

915
00:48:35,080 --> 00:48:37,799
Speaker 2: very mixed because it depends, but some of them will

916
00:48:37,840 --> 00:48:41,720
Speaker 2: actually benefit, may even benefit. So like Brazil could benefit

917
00:48:41,800 --> 00:48:44,960
Speaker 2: because instead of the Chinese buying our soy beans, they're

918
00:48:44,960 --> 00:48:48,719
Speaker 2: going to buy Brazilian soy beans. And a lot of

919
00:48:48,719 --> 00:48:53,920
Speaker 2: other economies that you know that might benefit from you know,

920
00:48:54,040 --> 00:48:56,799
Speaker 2: more trade with China, let and move away from US,

921
00:48:56,800 --> 00:48:59,200
Speaker 2: and they'll benefit as that trade gets diverted to them.

922
00:48:59,719 --> 00:49:03,040
Speaker 2: But I'll have to say, Chuck, you know, broadly speaking,

923
00:49:03,440 --> 00:49:06,160
Speaker 2: this is a lose lose for pretty much everyone everywhere.

924
00:49:06,400 --> 00:49:08,640
Speaker 2: You know, I don't know if not everyone's going to

925
00:49:08,680 --> 00:49:10,880
Speaker 2: get gutted, as you say, but you know everyone's going

926
00:49:10,960 --> 00:49:12,839
Speaker 2: to feel the pain here. I just really don't see

927
00:49:12,840 --> 00:49:14,120
Speaker 2: any winners at all.

928
00:49:14,400 --> 00:49:16,680
Speaker 1: I just wanted like a Vietnam was like really going

929
00:49:16,680 --> 00:49:18,160
Speaker 1: to get head harder than most.

930
00:49:19,800 --> 00:49:23,319
Speaker 2: Perhaps because you know, one thing could happen. Depends again

931
00:49:23,400 --> 00:49:26,360
Speaker 2: how people respond, you know, how the world responds. But

932
00:49:26,440 --> 00:49:28,960
Speaker 2: you're right, I mean, the Vediemans were the poster child

933
00:49:28,960 --> 00:49:32,360
Speaker 2: for the trade diversion from China after the first trade

934
00:49:32,440 --> 00:49:35,400
Speaker 2: war back in the first term, all the Chinese production

935
00:49:35,480 --> 00:49:37,560
Speaker 2: went into Vietnam, and if that gets shut down, then

936
00:49:37,640 --> 00:49:40,440
Speaker 2: Vietnam gets hurt. But it's hard to know how this will,

937
00:49:40,520 --> 00:49:42,600
Speaker 2: you know, will play out. I'm not sure I.

938
00:49:42,560 --> 00:49:44,239
Speaker 1: Want to get you out of here on this. And

939
00:49:44,280 --> 00:49:48,239
Speaker 1: it's more of a macro economic question for you, and

940
00:49:49,680 --> 00:49:52,279
Speaker 1: maybe it's a maybe it's something that belongs as an

941
00:49:52,360 --> 00:49:56,480
Speaker 1: assignment for future economists. But I think about the Great Recession,

942
00:49:57,080 --> 00:50:01,640
Speaker 1: the pandemic and then the Great Recession. The government response,

943
00:50:01,719 --> 00:50:05,640
Speaker 1: I think collectively we've all decided was underwhelming, should have

944
00:50:05,640 --> 00:50:10,440
Speaker 1: been more, and we ended up in a recession, right,

945
00:50:10,520 --> 00:50:13,920
Speaker 1: and it was a really damaging recession with the pandemic.

946
00:50:15,200 --> 00:50:17,640
Speaker 1: I always looked at the reaction of the government and

947
00:50:17,719 --> 00:50:22,080
Speaker 1: saw it as a lesson learned from the Great Recession.

948
00:50:22,719 --> 00:50:25,719
Speaker 1: And they threw a lot of money, right, we threw

949
00:50:25,800 --> 00:50:28,359
Speaker 1: a ton of money at it. And it seems as

950
00:50:28,400 --> 00:50:32,080
Speaker 1: if he's to be very I'm going to be armchair

951
00:50:34,120 --> 00:50:38,279
Speaker 1: economists here that basically, in a situation, in an emergency

952
00:50:38,400 --> 00:50:41,680
Speaker 1: like that, whether it's the Great Recession or the pandemic,

953
00:50:41,960 --> 00:50:46,960
Speaker 1: you have two choices, a recession or inflation. Is it

954
00:50:47,040 --> 00:50:50,160
Speaker 1: that simplistic and essentially and I'll take and I think

955
00:50:50,160 --> 00:50:54,000
Speaker 1: I'll take inflation every time, because recession puts people out

956
00:50:54,000 --> 00:50:56,759
Speaker 1: of work. Like I'd rather people have money in their

957
00:50:56,800 --> 00:50:59,480
Speaker 1: pockets and complaining about the price of things than not

958
00:50:59,520 --> 00:51:01,960
Speaker 1: having any money in their pockets in order to buy anything.

959
00:51:03,080 --> 00:51:07,080
Speaker 1: But is that a is that the lesson to draw

960
00:51:07,239 --> 00:51:11,560
Speaker 1: from pandemic and Great Recession? Or am I being you know,

961
00:51:12,120 --> 00:51:14,080
Speaker 1: don't play armchair economists?

962
00:51:14,120 --> 00:51:16,919
Speaker 2: Well, no, I mean I do think in the case

963
00:51:16,960 --> 00:51:23,600
Speaker 2: of the pandemic, the inflation was the result of things

964
00:51:23,640 --> 00:51:26,320
Speaker 2: out of the government's control.

965
00:51:26,760 --> 00:51:29,160
Speaker 1: But we didn't give money. We gave pipel a lot

966
00:51:29,200 --> 00:51:29,880
Speaker 1: of extra cash.

967
00:51:30,280 --> 00:51:32,760
Speaker 2: But I yes, and this is a matter of great debate,

968
00:51:32,840 --> 00:51:36,560
Speaker 2: but my view is that the amount of support the

969
00:51:36,560 --> 00:51:40,600
Speaker 2: government gave was calibrated reasonably well to the need and

970
00:51:40,600 --> 00:51:43,080
Speaker 2: would not have generated the inflation that we suffered, at

971
00:51:43,160 --> 00:51:47,839
Speaker 2: least the inflation that got everyone so upset, if not

972
00:51:47,880 --> 00:51:50,160
Speaker 2: for the Russian War in Ukraine, which came out of nowhere.

973
00:51:50,320 --> 00:51:52,799
Speaker 2: I mean, you know, we were sitting there in late

974
00:51:52,840 --> 00:51:55,440
Speaker 2: twenty twenty one coming out of the pandemic, looked like

975
00:51:55,480 --> 00:51:59,120
Speaker 2: everything was this goes back to the transitory inflation. It

976
00:51:59,239 --> 00:51:59,920
Speaker 2: was transitory.

977
00:52:01,360 --> 00:52:04,120
Speaker 1: Really was a supply chain was going to work itself out.

978
00:52:04,239 --> 00:52:06,839
Speaker 1: It was, and it wasn't mean to get self out right.

979
00:52:07,160 --> 00:52:09,680
Speaker 2: And actually back at that time people don't recall, but

980
00:52:09,800 --> 00:52:13,760
Speaker 2: inflation was high, but that was deemed to be positive

981
00:52:13,760 --> 00:52:17,000
Speaker 2: because we've been through this period of suboptimal inflation. So

982
00:52:17,160 --> 00:52:20,880
Speaker 2: I think the calibration was actually extraordinarily well done. It

983
00:52:20,960 --> 00:52:24,640
Speaker 2: just got blindsided by you know, Russia invading and oil

984
00:52:24,640 --> 00:52:27,120
Speaker 2: prices going skyward and US paying five bucks for a

985
00:52:27,120 --> 00:52:30,160
Speaker 2: gallon of regular unleaded. By June of twenty twenty two,

986
00:52:30,560 --> 00:52:33,600
Speaker 2: what are you going to do with that? I mean, no,

987
00:52:33,600 --> 00:52:35,200
Speaker 2: no kind of policy was going to be able to

988
00:52:35,200 --> 00:52:37,520
Speaker 2: respond to that. So we got we got unlucky, you know,

989
00:52:37,560 --> 00:52:40,759
Speaker 2: we got very unluckily unlucky around that. But I do

990
00:52:40,800 --> 00:52:43,440
Speaker 2: think you make a great point that we do have

991
00:52:43,480 --> 00:52:46,280
Speaker 2: these two case studies on how government responds to crises,

992
00:52:46,400 --> 00:52:50,400
Speaker 2: and I think it's very clear that in the financial crisis,

993
00:52:50,440 --> 00:52:53,880
Speaker 2: the Great Recession, it was underwhelming, it was insufficient, and

994
00:52:53,960 --> 00:52:55,440
Speaker 2: that's why it took us ten years to kind of

995
00:52:55,440 --> 00:52:58,279
Speaker 2: get back on our feet on the pandemic. You know,

996
00:52:58,480 --> 00:53:01,120
Speaker 2: we're having this argument. I think it got it roughly right.

997
00:53:01,160 --> 00:53:03,440
Speaker 2: But the point was that the government response was much

998
00:53:03,440 --> 00:53:05,439
Speaker 2: more fulsome and I think history will suggest that that's

999
00:53:05,480 --> 00:53:08,280
Speaker 2: the right response. You know, the government needs to respond,

1000
00:53:08,560 --> 00:53:12,000
Speaker 2: but in this case, the current crisis is caused by government.

1001
00:53:12,200 --> 00:53:14,120
Speaker 2: It's caused by.

1002
00:53:13,520 --> 00:53:15,799
Speaker 1: This is one of those where you can't put on

1003
00:53:15,880 --> 00:53:19,719
Speaker 1: anything else other than the wits of one person. Well,

1004
00:53:19,800 --> 00:53:22,040
Speaker 1: if you enjoyed this conversation with Mark, go find this

1005
00:53:22,120 --> 00:53:25,360
Speaker 1: podcast subscribe away. All right, misters Andy, always a pleasure,

1006
00:53:25,600 --> 00:53:34,440
Speaker 1: take care of Chuck. Well, I hope you enjoyed that

1007
00:53:34,640 --> 00:53:38,239
Speaker 1: conversation with Mark Zandy as you can see that there

1008
00:53:38,320 --> 00:53:41,359
Speaker 1: is a core I think there's a core competency to him.

1009
00:53:41,360 --> 00:53:45,040
Speaker 1: So whether you're an R or a D, I think

1010
00:53:45,080 --> 00:53:47,759
Speaker 1: you can respect this guy's coming at this data driven

1011
00:53:47,960 --> 00:53:51,680
Speaker 1: and I'll tell you you're the the ending part of that conversation.

1012
00:53:51,840 --> 00:53:56,239
Speaker 1: I am really nervous about because government produced data is

1013
00:53:56,280 --> 00:53:59,480
Speaker 1: really important for so many economists. So I really hope

1014
00:53:59,560 --> 00:54:02,480
Speaker 1: that with all the mess of mister changsaw over there

1015
00:54:02,520 --> 00:54:05,840
Speaker 1: at X, I hope he does respect the need not

1016
00:54:05,960 --> 00:54:09,040
Speaker 1: to mess with the data collectors when it comes to

1017
00:54:09,080 --> 00:54:11,160
Speaker 1: the fera of labor statistics and a lot of the

1018
00:54:11,200 --> 00:54:13,640
Speaker 1: other key economic figures we get the census, et cetera.

1019
00:54:14,080 --> 00:54:20,719
Speaker 1: This stuff is essential for being able to build a

1020
00:54:20,719 --> 00:54:24,520
Speaker 1: better country and run a better business. All Right, I'm

1021
00:54:24,520 --> 00:54:27,080
Speaker 1: gonna sneak in a couple questions here. It's time for

1022
00:54:27,120 --> 00:54:34,759
Speaker 1: a little lass Chuck as Chuck enjoy the music there.

1023
00:54:34,880 --> 00:54:37,239
Speaker 1: As a high school teacher of international business, I am

1024
00:54:37,280 --> 00:54:40,680
Speaker 1: concerned Trump doesn't understand how terrorists really work. So writes,

1025
00:54:40,719 --> 00:54:43,640
Speaker 1: this is miss Laurie from Deerfield Beach, Florida. I know

1026
00:54:43,719 --> 00:54:46,760
Speaker 1: exactly where you are in North Broward County. It seems

1027
00:54:46,800 --> 00:54:49,480
Speaker 1: my students know, but Trump does not. His actions sure

1028
00:54:49,520 --> 00:54:51,680
Speaker 1: make it hard to apply the US historical practices of

1029
00:54:51,680 --> 00:54:53,839
Speaker 1: global trade to what is happening today. Do you think

1030
00:54:53,880 --> 00:54:55,600
Speaker 1: this will be the new normal for the United States

1031
00:54:55,680 --> 00:54:58,920
Speaker 1: or just a Trump phase? You know, it's interesting you

1032
00:54:58,960 --> 00:55:02,000
Speaker 1: do worry how much? And I know it's going to

1033
00:55:02,040 --> 00:55:04,760
Speaker 1: soundly lead us in scenovius. How much have we dumbed

1034
00:55:04,760 --> 00:55:06,840
Speaker 1: down things for America? Like, there's a part of me

1035
00:55:06,920 --> 00:55:11,319
Speaker 1: that is glad more people are engaged. You know, Joe

1036
00:55:11,320 --> 00:55:14,600
Speaker 1: Biden announces new tariffs and nobody's talking about it. So

1037
00:55:14,640 --> 00:55:17,239
Speaker 1: there's a part of me that actually appreciates the fact that,

1038
00:55:17,280 --> 00:55:20,600
Speaker 1: all right, Donald Trump shares these ias, so he sort

1039
00:55:20,640 --> 00:55:23,640
Speaker 1: of forces us to talk about it. So in theory,

1040
00:55:23,760 --> 00:55:26,560
Speaker 1: I hope we can serve as educators here and in

1041
00:55:26,560 --> 00:55:29,080
Speaker 1: fact you actually are are picking at something that I

1042
00:55:29,120 --> 00:55:31,319
Speaker 1: think we all in the journalism space need to do

1043
00:55:31,320 --> 00:55:33,680
Speaker 1: a better job of, which is, let's not assume anybody

1044
00:55:33,719 --> 00:55:35,839
Speaker 1: knows these things. This isn't what a lot of people

1045
00:55:35,920 --> 00:55:38,319
Speaker 1: do for a full time job. You're a teacher, you

1046
00:55:38,360 --> 00:55:40,759
Speaker 1: have an opportunity to teach your class these things. Use

1047
00:55:40,760 --> 00:55:43,600
Speaker 1: the real news to explain things, And I think we

1048
00:55:43,680 --> 00:55:46,040
Speaker 1: as journalists need to do a better job of educating

1049
00:55:46,080 --> 00:55:49,520
Speaker 1: people of how of what tariffs are. I mean, one

1050
00:55:49,560 --> 00:55:52,040
Speaker 1: of the better explanations I saw came from Jim Fallows,

1051
00:55:53,000 --> 00:55:56,400
Speaker 1: longtime journalists still I think has an association with the Atlantic.

1052
00:55:56,400 --> 00:55:59,719
Speaker 1: He sort of semi retired, but he talked about in

1053
00:55:59,760 --> 00:56:03,840
Speaker 1: his stack. He referred to tariffs as essentially it's like

1054
00:56:04,600 --> 00:56:07,560
Speaker 1: tariffs are a tool. You know. It's just like, you know,

1055
00:56:07,640 --> 00:56:10,799
Speaker 1: the police have a lot of tools that if you know,

1056
00:56:12,000 --> 00:56:15,959
Speaker 1: you know, what hits the fan, they're prepared, but most

1057
00:56:16,000 --> 00:56:18,279
Speaker 1: of the tools they have they're never going to use

1058
00:56:18,480 --> 00:56:21,920
Speaker 1: or they hope to rarely use. And that tariffs are

1059
00:56:22,040 --> 00:56:26,120
Speaker 1: essentially that there's something that you have. Every country can

1060
00:56:26,280 --> 00:56:29,880
Speaker 1: use it if you need to protect an economic interest

1061
00:56:30,080 --> 00:56:33,400
Speaker 1: or a private interest in your country and your nationality,

1062
00:56:33,440 --> 00:56:36,680
Speaker 1: there's this is a tool potentially for it. Now, I

1063
00:56:36,719 --> 00:56:41,560
Speaker 1: think that history shows tariffs are bad long term policy,

1064
00:56:42,120 --> 00:56:44,719
Speaker 1: but they can help you short term negotiate. You know,

1065
00:56:44,800 --> 00:56:48,640
Speaker 1: perhaps it's a way to open up a market with

1066
00:56:48,400 --> 00:56:51,280
Speaker 1: a market that's closed. Right. Imagine if the United States

1067
00:56:51,280 --> 00:56:55,040
Speaker 1: were in the trans Specific Partnership trade agreement that Barack

1068
00:56:55,040 --> 00:56:58,040
Speaker 1: Obama and Hillary Clinton, We're going to negotiate until Bernie

1069
00:56:58,040 --> 00:57:01,640
Speaker 1: Sanders told Democrats it was a bad eye idea. Actually

1070
00:57:01,640 --> 00:57:03,520
Speaker 1: a lot of Republicans are for it too, Paul Ryan

1071
00:57:03,520 --> 00:57:05,920
Speaker 1: and met Romney, until Donald Trump told his supporters it

1072
00:57:05,920 --> 00:57:08,799
Speaker 1: was a bad idea. But the whole point of it

1073
00:57:09,239 --> 00:57:11,800
Speaker 1: was not creating a new economic free trade agreement. The

1074
00:57:11,840 --> 00:57:13,160
Speaker 1: whole point of it was to put a check on

1075
00:57:13,239 --> 00:57:20,080
Speaker 1: China and essentially unite Asia together, the the the sort

1076
00:57:20,120 --> 00:57:23,480
Speaker 1: of the the the Asian economies that are that are

1077
00:57:23,480 --> 00:57:28,040
Speaker 1: not China any and band together to frankly coerce China

1078
00:57:28,080 --> 00:57:33,440
Speaker 1: into behaving ethically because they they don't really practice ethical

1079
00:57:34,040 --> 00:57:40,640
Speaker 1: economic behavior. So you know, it's it's I think the

1080
00:57:40,640 --> 00:57:42,800
Speaker 1: the whole idea of a tariff. Look, I I have

1081
00:57:42,920 --> 00:57:46,280
Speaker 1: this thesis that he that what Donald Trump's real goal

1082
00:57:46,360 --> 00:57:49,480
Speaker 1: with this, and including with those that are around him,

1083
00:57:49,680 --> 00:57:54,600
Speaker 1: is that they eventually want to replace income tax money

1084
00:57:54,760 --> 00:57:58,360
Speaker 1: with essentially trying to get it this way using some

1085
00:57:58,440 --> 00:58:01,280
Speaker 1: combination of tariffs and our own version of a value

1086
00:58:01,320 --> 00:58:04,720
Speaker 1: added tax, some sort of that tax. This is you

1087
00:58:04,720 --> 00:58:08,000
Speaker 1: could argue that kind of at the heart there's always

1088
00:58:08,000 --> 00:58:10,800
Speaker 1: been this sort of fantasy amongst some on the right

1089
00:58:10,840 --> 00:58:13,800
Speaker 1: of a so called fair tax, where a flat tax,

1090
00:58:13,800 --> 00:58:16,840
Speaker 1: everybody pays the same thing. In some ways, this is

1091
00:58:16,840 --> 00:58:19,720
Speaker 1: a derivative of that, you know, but it wouldn't you know,

1092
00:58:19,760 --> 00:58:24,600
Speaker 1: maybe it's only on consumption. Essentially, move all taxation to

1093
00:58:24,680 --> 00:58:29,760
Speaker 1: consumption taxation. No income at all need not apply. So

1094
00:58:30,960 --> 00:58:32,800
Speaker 1: I think there's a part there's a part of this

1095
00:58:32,960 --> 00:58:35,520
Speaker 1: that is trying to see to you. That's why the

1096
00:58:35,640 --> 00:58:37,840
Speaker 1: ten percent baseline, I believe is so important to them.

1097
00:58:37,840 --> 00:58:40,640
Speaker 1: He also wants to use that revenue as a way

1098
00:58:40,680 --> 00:58:43,440
Speaker 1: to quote unquote pay for his tax cuts. When the

1099
00:58:43,440 --> 00:58:46,560
Speaker 1: tax cuts come and the Congressional Budget Office starts assessing,

1100
00:58:46,800 --> 00:58:49,120
Speaker 1: what's the real damage to our debt, what's the real

1101
00:58:49,200 --> 00:58:53,000
Speaker 1: damage to the annual deficit. So I think there's a

1102
00:58:53,040 --> 00:58:56,080
Speaker 1: few things at play here that haven't fully been reported

1103
00:58:56,120 --> 00:58:57,720
Speaker 1: out or baked out. But on the issue of tarish

1104
00:58:57,760 --> 00:59:01,200
Speaker 1: you're right. I think I think Donald Trump only sees

1105
00:59:01,200 --> 00:59:04,520
Speaker 1: it as a as a you know, essentially a nail

1106
00:59:04,520 --> 00:59:07,480
Speaker 1: and he's the hammer, right, And that's what you use

1107
00:59:07,480 --> 00:59:09,600
Speaker 1: a tariff for. When there are a lot of other

1108
00:59:09,640 --> 00:59:13,280
Speaker 1: ways that you might use tariffs. But the real goal

1109
00:59:13,400 --> 00:59:15,720
Speaker 1: is not to have them right. The real goal is

1110
00:59:15,760 --> 00:59:18,880
Speaker 1: that trade policy is so fair you don't need tariffs, right.

1111
00:59:19,160 --> 00:59:25,560
Speaker 1: The real goal with somebody that decides to use their

1112
00:59:25,560 --> 00:59:28,240
Speaker 1: Second Amendment rights to buy a firearm in their house

1113
00:59:28,320 --> 00:59:32,160
Speaker 1: is never to use one. And I you know, at

1114
00:59:32,240 --> 00:59:34,480
Speaker 1: least the responsible gun owners, I know their goal is

1115
00:59:34,520 --> 00:59:36,960
Speaker 1: to never actually having to fire it, beyond going to

1116
00:59:37,120 --> 00:59:38,640
Speaker 1: arrange to make sure they know how to do it.

1117
00:59:39,720 --> 00:59:42,200
Speaker 1: And that's the way, probably to me, the best way

1118
00:59:42,240 --> 00:59:46,840
Speaker 1: we should be looking at tariffs. All right, Lourie, good luck.

1119
00:59:47,160 --> 00:59:50,040
Speaker 1: In some ways, I think it's good that we have

1120
00:59:50,120 --> 00:59:53,800
Speaker 1: this real world example for you to teach from, But

1121
00:59:53,920 --> 00:59:57,320
Speaker 1: I take your point not easy. Our next question comes

1122
00:59:57,320 --> 01:00:00,840
Speaker 1: from a Michael Hammond, and he asks this, over the years,

1123
01:00:00,880 --> 01:00:04,080
Speaker 1: we have seen increasing partisanship and dysfunction in American politics

1124
01:00:04,080 --> 01:00:06,560
Speaker 1: and the journalism that covers it. What can ordinary citizens

1125
01:00:06,600 --> 01:00:09,000
Speaker 1: who consume political news do to be part of the

1126
01:00:09,000 --> 01:00:12,000
Speaker 1: solution and not part of the problem of hyperpartisanship in

1127
01:00:12,080 --> 01:00:16,120
Speaker 1: the media and politics. Well, I mean, you know, to me,

1128
01:00:16,240 --> 01:00:18,160
Speaker 1: the best way is to try to have a diverse

1129
01:00:18,800 --> 01:00:21,400
Speaker 1: media diet. You know, I don't like the fact that

1130
01:00:21,480 --> 01:00:23,960
Speaker 1: you have to do the work right. I wish that

1131
01:00:24,120 --> 01:00:26,880
Speaker 1: you could trust a media outlet to provide a balanced

1132
01:00:27,240 --> 01:00:29,880
Speaker 1: diet for you that, you know, I think there really,

1133
01:00:29,920 --> 01:00:32,919
Speaker 1: unfortunately is that one news organization that I used to say,

1134
01:00:32,920 --> 01:00:35,560
Speaker 1: the Washington Post that kind of if you combine the

1135
01:00:35,600 --> 01:00:38,200
Speaker 1: Washington Post on the Wall Street Journal that you get,

1136
01:00:38,600 --> 01:00:41,280
Speaker 1: you'd get a pretty decent balance, particularly on the opinion

1137
01:00:41,320 --> 01:00:45,280
Speaker 1: and analysis side of things. You'd have really good solid reporting.

1138
01:00:45,320 --> 01:00:48,160
Speaker 1: Throwing the New York Times for international right. I could

1139
01:00:48,200 --> 01:00:49,880
Speaker 1: make a case that you could take a piece of

1140
01:00:49,920 --> 01:00:52,560
Speaker 1: all three of those papers and be extraordinary well informed.

1141
01:00:52,760 --> 01:00:55,800
Speaker 1: The editorial boards you really have, I think very liberal

1142
01:00:56,000 --> 01:01:00,880
Speaker 1: with the Times. I would say more of the pre

1143
01:01:01,000 --> 01:01:05,680
Speaker 1: Trump conservatism with the Journal. And then you have the

1144
01:01:05,760 --> 01:01:08,280
Speaker 1: Washington Post, which is sort of, you know, probably a

1145
01:01:08,280 --> 01:01:10,960
Speaker 1: soft lean to the left, but tries to be I

1146
01:01:10,960 --> 01:01:14,840
Speaker 1: think has a editorial page even before Jeff Bezos started

1147
01:01:14,840 --> 01:01:17,320
Speaker 1: messing around with it that actually was known as not

1148
01:01:17,440 --> 01:01:22,200
Speaker 1: being totally on one side or the other. But it's

1149
01:01:22,240 --> 01:01:25,680
Speaker 1: all about diversing your diet of news. You know. I

1150
01:01:25,720 --> 01:01:29,720
Speaker 1: grew up my father got us both a National Review

1151
01:01:29,720 --> 01:01:31,560
Speaker 1: and a Newer Public, plus we got the three new

1152
01:01:31,840 --> 01:01:36,200
Speaker 1: news magazines, and I think even had the Insight magazine,

1153
01:01:36,200 --> 01:01:39,560
Speaker 1: which was an up and coming conservative magazine back in

1154
01:01:39,600 --> 01:01:42,560
Speaker 1: the day. He always wanted a lot of different I

1155
01:01:42,600 --> 01:01:44,160
Speaker 1: think we got the nation at one point too. He

1156
01:01:44,200 --> 01:01:46,520
Speaker 1: always wanted different points of view coming into the house,

1157
01:01:47,400 --> 01:01:50,520
Speaker 1: and that's about the best thing we can hope for,

1158
01:01:50,680 --> 01:01:52,520
Speaker 1: you know, I hope you You know, I look at

1159
01:01:52,520 --> 01:01:54,840
Speaker 1: different things on the right, you know, the places that

1160
01:01:54,920 --> 01:01:57,320
Speaker 1: I feel that I make sure I don't miss, or

1161
01:01:57,400 --> 01:02:01,200
Speaker 1: National Review and The Dispatch in particular. I'm always curious

1162
01:02:01,200 --> 01:02:03,800
Speaker 1: what Eric Erickson has to say, you know, I follow

1163
01:02:03,840 --> 01:02:07,439
Speaker 1: his feed pretty closely. And then you know, I also

1164
01:02:07,520 --> 01:02:09,240
Speaker 1: want to know what Charlie Kirk's up to, because I

1165
01:02:09,240 --> 01:02:12,280
Speaker 1: think in some ways Charlie Cook is channeling the what

1166
01:02:12,320 --> 01:02:14,920
Speaker 1: the Trump White House communication shop is putting out. So

1167
01:02:15,280 --> 01:02:17,480
Speaker 1: to me, you've got to diversify yourself. I want to

1168
01:02:17,480 --> 01:02:19,440
Speaker 1: know what Megan Kelly is up to. On the left.

1169
01:02:19,760 --> 01:02:22,320
Speaker 1: I'm always curious what the Pod Save America guys are

1170
01:02:22,400 --> 01:02:26,000
Speaker 1: up to, and at the same time, what MSNBC is

1171
01:02:26,640 --> 01:02:29,720
Speaker 1: focused on, what Rachel Mandow's focused on, and things like that.

1172
01:02:29,880 --> 01:02:33,640
Speaker 1: So I just think that a balanced diet of information

1173
01:02:35,520 --> 01:02:40,000
Speaker 1: can make you a better citizen and probably will calm

1174
01:02:40,080 --> 01:02:42,920
Speaker 1: your nerves a little bit, because if you have a

1175
01:02:42,960 --> 01:02:47,600
Speaker 1: balanced diet of information. You know, hopefully you're subscribing to

1176
01:02:47,640 --> 01:02:49,840
Speaker 1: me in this podcast, because I'd like to think I'm

1177
01:02:49,840 --> 01:02:52,840
Speaker 1: trying to give you what I call rational left and

1178
01:02:52,960 --> 01:02:57,080
Speaker 1: rational right. I will this is going to sound like

1179
01:02:57,080 --> 01:02:59,360
Speaker 1: a name drop, because it is. But Bono once called

1180
01:02:59,400 --> 01:03:01,400
Speaker 1: me a radical interest. I was in and off the

1181
01:03:01,400 --> 01:03:03,960
Speaker 1: record dinner with him in his own only the way

1182
01:03:03,960 --> 01:03:05,800
Speaker 1: he could do it. It's one of those moments that

1183
01:03:06,120 --> 01:03:07,760
Speaker 1: kind of wish, like, boy, I wish I could record you.

1184
01:03:07,960 --> 01:03:12,400
Speaker 1: Who else has Bono politically identifying? It's like, you're a

1185
01:03:12,480 --> 01:03:15,400
Speaker 1: rational centrist, a radical centrist, he called me. And I'm like,

1186
01:03:15,400 --> 01:03:18,160
Speaker 1: what is a radical centrist? And you know what I

1187
01:03:18,200 --> 01:03:20,200
Speaker 1: always have said about that is, actually I'm not a

1188
01:03:20,200 --> 01:03:23,880
Speaker 1: centrist per se. I have different views on different issues.

1189
01:03:23,960 --> 01:03:28,160
Speaker 1: I'm an eclectic. My political views are like my music taste,

1190
01:03:28,160 --> 01:03:30,800
Speaker 1: it's all over the place. But I am a believer

1191
01:03:30,920 --> 01:03:33,480
Speaker 1: that you solve problems from the middle out when you're

1192
01:03:33,640 --> 01:03:36,440
Speaker 1: a country this diverse and this large, So I'm always

1193
01:03:36,520 --> 01:03:41,400
Speaker 1: seeking news and information from sources that I know live

1194
01:03:41,440 --> 01:03:44,320
Speaker 1: in that world. That doesn't mean they're all left, or

1195
01:03:44,320 --> 01:03:47,320
Speaker 1: they're all right, or they're all centrist, but it means

1196
01:03:47,520 --> 01:03:52,160
Speaker 1: do they all live in the rational logical world, and

1197
01:03:52,520 --> 01:03:55,000
Speaker 1: that's sort of where I go. So I wish I

1198
01:03:55,000 --> 01:03:56,880
Speaker 1: could give you a better answer. There's no one place,

1199
01:03:56,920 --> 01:03:58,920
Speaker 1: but I will promise you this. I think if we

1200
01:03:58,960 --> 01:04:04,080
Speaker 1: rebuild a local information ecosystem that people trust again locally,

1201
01:04:04,600 --> 01:04:08,560
Speaker 1: that over time it only is going to make the

1202
01:04:08,680 --> 01:04:12,680
Speaker 1: new information ecosystem more trustworthy, even all the way up top.

1203
01:04:12,680 --> 01:04:15,160
Speaker 1: But we're not going to fix the national perception of

1204
01:04:15,280 --> 01:04:20,959
Speaker 1: national journalists by you know, starting more substacks or going

1205
01:04:20,960 --> 01:04:23,600
Speaker 1: more independent. I think it really does start with local.

1206
01:04:23,920 --> 01:04:26,240
Speaker 1: All right, last question for this one, and then I'm

1207
01:04:26,280 --> 01:04:29,800
Speaker 1: going to let you guys go. I have no real rants,

1208
01:04:29,800 --> 01:04:31,800
Speaker 1: although I am preparing for the NFL Draft, which is

1209
01:04:31,800 --> 01:04:34,640
Speaker 1: being hosted in Green Bay. My Packers. I know you

1210
01:04:34,720 --> 01:04:36,560
Speaker 1: guys are all going. You have such a weird you know,

1211
01:04:36,560 --> 01:04:39,320
Speaker 1: people love to say my weird sports states, the Nats,

1212
01:04:39,360 --> 01:04:43,200
Speaker 1: the Packers, the Hurricanes. I'm all over the map. See

1213
01:04:43,240 --> 01:04:44,400
Speaker 1: it's just like my politics.

1214
01:04:44,560 --> 01:04:44,840
Speaker 2: All right.

1215
01:04:44,920 --> 01:04:49,160
Speaker 1: Last question. This comes from John s and he writes,

1216
01:04:49,200 --> 01:04:51,920
Speaker 1: love the new podcast, thank you Ding Ding, by the way,

1217
01:04:52,080 --> 01:04:53,919
Speaker 1: like and subscribe? Have you liked it? And subscribe lately

1218
01:04:53,960 --> 01:04:56,919
Speaker 1: and told five friends to like and subscribe here's the question.

1219
01:04:57,000 --> 01:04:59,880
Speaker 1: Assuming that President Trump's new tariff policies cause a recession

1220
01:05:00,040 --> 01:05:02,480
Speaker 1: the United States, could the President use an executive order

1221
01:05:02,480 --> 01:05:04,920
Speaker 1: to postpone the midterm elections in order for the Republicans

1222
01:05:04,960 --> 01:05:07,120
Speaker 1: to maintain a majority of the House and Senate. Here's

1223
01:05:07,120 --> 01:05:09,240
Speaker 1: his background. I was a support of Trump during the

1224
01:05:09,240 --> 01:05:11,160
Speaker 1: first term. I've been a support of Ukraine and have

1225
01:05:11,160 --> 01:05:13,600
Speaker 1: followed the conflict the past three years. What I've heard

1226
01:05:13,640 --> 01:05:16,000
Speaker 1: from the presidents say about Ukraine has opened my eyes.

1227
01:05:16,480 --> 01:05:19,360
Speaker 1: I know a lot about current past dictators. So he's

1228
01:05:19,400 --> 01:05:21,800
Speaker 1: getting worried about the US going down the wrong path.

1229
01:05:21,920 --> 01:05:26,560
Speaker 1: Look when I think about all these democracy questions, right,

1230
01:05:26,720 --> 01:05:28,560
Speaker 1: could he do this? Could he serve a third term?

1231
01:05:28,600 --> 01:05:30,080
Speaker 1: Could he the answerest?

1232
01:05:30,160 --> 01:05:30,200
Speaker 2: No?

1233
01:05:30,960 --> 01:05:33,880
Speaker 1: This is where I think our democracy do I think?

1234
01:05:34,280 --> 01:05:36,640
Speaker 1: And you're going to hear a conversation later this week

1235
01:05:36,840 --> 01:05:42,040
Speaker 1: with a really smart person about what is a kleptocracy

1236
01:05:42,280 --> 01:05:46,840
Speaker 1: and are we about to become one? There are certainly

1237
01:05:46,880 --> 01:05:52,160
Speaker 1: some corrupt practices that Donald Trump appears to be green

1238
01:05:52,240 --> 01:05:55,600
Speaker 1: lighting when it comes to access to the federal government. Right,

1239
01:05:55,720 --> 01:05:58,400
Speaker 1: We've already seen it with Elon Musk and his relationship.

1240
01:05:58,440 --> 01:06:03,040
Speaker 1: There's clearly, you know, where suddenly his businesses are getting

1241
01:06:03,080 --> 01:06:09,080
Speaker 1: early access. So but you know, yeah, it's our democracies

1242
01:06:09,960 --> 01:06:14,240
Speaker 1: is very intertwined, very local too. So I just the

1243
01:06:14,280 --> 01:06:17,520
Speaker 1: ability to just waive that magic Wand I'm not saying

1244
01:06:17,720 --> 01:06:21,440
Speaker 1: that there aren't methods if we were somehow in a

1245
01:06:21,520 --> 01:06:25,920
Speaker 1: hot war, right, Ukraine had to cancel it. Speaking of Ukraine,

1246
01:06:26,200 --> 01:06:29,440
Speaker 1: Ukraine did postpone it's presidential election because they got they

1247
01:06:29,440 --> 01:06:34,320
Speaker 1: got evade it, so you know, but my goodness, we

1248
01:06:34,360 --> 01:06:35,600
Speaker 1: were in the middle of the Civil War and we

1249
01:06:35,640 --> 01:06:41,320
Speaker 1: had a presidential election. So I can't imagine any president

1250
01:06:41,440 --> 01:06:46,000
Speaker 1: thinking they could get away with that without with it.

1251
01:06:47,680 --> 01:06:50,800
Speaker 1: If Congress didn't intervene, then then when would this Republican

1252
01:06:50,800 --> 01:06:55,440
Speaker 1: Congress ever intervene? But I'm on that one. I know

1253
01:06:55,640 --> 01:06:58,479
Speaker 1: that I have a friend of mine in my ears

1254
01:06:58,560 --> 01:07:02,080
Speaker 1: saying failure of imagining, failure of imagination, You never know.

1255
01:07:03,040 --> 01:07:07,600
Speaker 1: I understand that you never know. And perhaps you know

1256
01:07:07,640 --> 01:07:10,800
Speaker 1: the biggest jump in odds or from zero to one,

1257
01:07:11,600 --> 01:07:14,160
Speaker 1: so I guess you could say it isn't zero. I

1258
01:07:14,280 --> 01:07:19,440
Speaker 1: just don't believe there's any rational scenario where he could

1259
01:07:19,440 --> 01:07:22,760
Speaker 1: try it. But I actually think there's just no way.

1260
01:07:23,600 --> 01:07:26,680
Speaker 1: I'd like to think our democracy is mature enough that

1261
01:07:26,720 --> 01:07:30,000
Speaker 1: there would be such a uproar and rejection of it

1262
01:07:30,040 --> 01:07:33,320
Speaker 1: that it was not something that was even possible to do.

1263
01:07:33,520 --> 01:07:37,480
Speaker 1: So I'm going to leave you on that up lifting note.

1264
01:07:37,520 --> 01:07:40,960
Speaker 1: I hope you're enjoying the NBA playoffs. I am, but

1265
01:07:41,040 --> 01:07:44,800
Speaker 1: if Oklahoma City ends up winning the whole thing as

1266
01:07:44,840 --> 01:07:47,880
Speaker 1: easily as they won their first game, we may look

1267
01:07:47,920 --> 01:07:50,200
Speaker 1: back and say, no matter how cool all these Western

1268
01:07:50,200 --> 01:07:53,880
Speaker 1: Conference matchups were, it didn't matter because nobody was touching Okac.

1269
01:07:54,000 --> 01:07:55,560
Speaker 1: It was like what happened when I was growing up

1270
01:07:55,560 --> 01:07:58,000
Speaker 1: in the Lakers. Every year the Lakers ended up the

1271
01:07:58,000 --> 01:08:01,680
Speaker 1: Western Conference champs. But boy, there was some series sometimes

1272
01:08:01,680 --> 01:08:04,400
Speaker 1: that were competitive and interesting and he thought, oh that

1273
01:08:04,440 --> 01:08:07,000
Speaker 1: guy's interesting, Oh that guy's interesting, and then they went

1274
01:08:07,120 --> 01:08:11,880
Speaker 1: up against the juggernaut that was the Lakers. It's possible

1275
01:08:11,920 --> 01:08:13,840
Speaker 1: that's what we're seeing with Okac. But hey, guess what,

1276
01:08:14,280 --> 01:08:18,240
Speaker 1: Until they win something, we get to fantasize and dream,

1277
01:08:18,240 --> 01:08:21,759
Speaker 1: and right now these NBA Playoffs might actually be something

1278
01:08:21,920 --> 01:08:25,920
Speaker 1: worth watching. So with that, I'm going to probably see

1279
01:08:25,960 --> 01:08:27,920
Speaker 1: you on this feed in another twenty four hours. So

1280
01:08:28,080 --> 01:08:31,240
Speaker 1: enjoy this and realize there is more to come. Until

1281
01:08:31,240 --> 01:08:31,920
Speaker 1: we upload again,