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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg P and L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. He

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Speaker 1: has been at Princeton since the early nineteen seventies. Alan

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Speaker 1: Blinder is an economist. He's a former vice chair of

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Speaker 1: the Federal Reserve. He is currently the Gordon Renschler Memorial

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Speaker 1: Professor of Economics at Princeton University, and he is the

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Speaker 1: author of a new book is that It is entitled

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Speaker 1: Advice and Dissent Why America's Suffers When Economics and Politics Collide.

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Speaker 1: Alan Blinder, thank you very much for being with us.

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Speaker 1: I want to jump right into which you describe. You

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Speaker 1: have an interesting phrase in the book. I believe it's

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Speaker 1: it's a new world have you And I'm wondering if

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Speaker 1: you could sort of describe where you came up with that,

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Speaker 1: and maybe just also tell us how do you define

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Speaker 1: political logic? All right, let me try to do those uh,

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Speaker 1: The phrase was at the end of an anecdote that

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Speaker 1: I was relating from when I, way back in the

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Speaker 1: nineties migrated temporarily from the academic world to the political

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Speaker 1: world and experienced at the table with Bill Clinton, who

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Speaker 1: was then President elect, my first photo op. If you're

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Speaker 1: an academic, you don't do a lot of photo ops.

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Speaker 1: In fact, you don't do any But if you're a politician,

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Speaker 1: you do. And Bill Clinton, as the photographers rushed in,

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Speaker 1: said to me, um Alan, You're now supposed to say

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Speaker 1: nothing and look profound. And I retorted, as funny, because

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Speaker 1: of my previous jobs, I was supposed to say profound

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Speaker 1: things that look like nothing. Uh So it was indeed

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Speaker 1: a new world for me. Um Your question about political

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Speaker 1: logic goes to a number of things that informal logic,

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Speaker 1: or what I call in the book Aristotelian logic, kind

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Speaker 1: of things we teach in universities are very different. I'll

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Speaker 1: give you an example that's really arithmetic, which is a

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Speaker 1: form of logic. If you take a policy, and by

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Speaker 1: the way, many details of trade policies and tax policies

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Speaker 1: are like this. That gives a very large um gift

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Speaker 1: to a relatively small number of people and uh and

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Speaker 1: also disadvantages, but by small amounts, many, many millions of people.

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Speaker 1: Economic logic would likely say that's a bad idea. You

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Speaker 1: added up over the millions of people, and that's a

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Speaker 1: bad idea. Political logic says, this is a great idea

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Speaker 1: because the millions of people that lose, you know, I

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Speaker 1: make up a number two dollars a year are not

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Speaker 1: going to notice it that I won't understand that even

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Speaker 1: if they do, two dollars does not move them to

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Speaker 1: political action. But if other people are gaining millions, that will.

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Speaker 1: Professor Blinder, I'm struck by an implicit assumption in this

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Speaker 1: idea that you shouldn't mix economics and politics. Um, are

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Speaker 1: we really worse than we ever have been before? Because

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Speaker 1: this has always been the issue, from the foundation of

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Speaker 1: the Federal Reserve, in the U. S. Treasury Department, it

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Speaker 1: has always been the issue. I think we're worse than

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Speaker 1: ever before, and presumably this is a temporary condition because

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Speaker 1: of Donald Trump's general rejection of expertise in every domain.

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Speaker 1: This is not just the economics that he does this

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Speaker 1: and I can't remember another I don't think we ever

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Speaker 1: had another president that had that kind of atitude towards expertise,

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Speaker 1: which is not to say, and this is your point, really,

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Speaker 1: that they've always followed the advice of expert technicians. No,

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Speaker 1: they haven't. In fact, more often than not they rejected it.

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Speaker 1: And that's okay, because, um, we live in a democracy

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Speaker 1: and we elect politicians, not technocrats to make decisions. Yeah,

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Speaker 1: Professor Blinder. One area of the government that typically has

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Speaker 1: tried to remain at least the veneer of being somewhat

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Speaker 1: independent from the sort of political regime is the Federal Reserve.

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Speaker 1: There are a lot of vacancies on the Federal Reserve.

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Speaker 1: One that has got garnered some attention is the rumor

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Speaker 1: that John Williams will be the next New York Fed

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Speaker 1: president selection. I'm wondering what is your feeling about that,

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Speaker 1: and just generally about sort of the composition of the

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Speaker 1: Fed right now. Yeah. So, uh, you know, there there

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Speaker 1: has been a clamor for some time for diversity, and

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Speaker 1: I'm very sympathetic to that. I think other things that well,

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Speaker 1: it's better to have diversity. Um, we had a woman

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Speaker 1: chairman of the Faith, which was great, and she was

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Speaker 1: a great chair of the Fed, Janet Ellen. I think

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Speaker 1: John Williams is an excellent selection for the presidency of

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Speaker 1: the New York Fed. That's not, by the way, a

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Speaker 1: political appointment, unlike the governor. Know you mentioned the vacancies.

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Speaker 1: There lots of vacancies exists on the Board of Governors,

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Speaker 1: and for that we need nominees from President Trump that

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Speaker 1: get confirmed by the Senate. John Williams at the New

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Speaker 1: York Fed or any of the bank presidents of the

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Speaker 1: twelve federal reserve banks are not political appointees. Why do

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Speaker 1: you what do you want people to take away from

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Speaker 1: the book Advice and dissent. Yeah, it's a good question.

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Speaker 1: I'd like people to take away the stark contrast between

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Speaker 1: the advice that's given by a lot of economists, and

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Speaker 1: of course it's not all the same, although I do

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Speaker 1: emphasize in the book there's a lot more agreement among

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Speaker 1: economists and people commonly think, and the way that it

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Speaker 1: is ignored or distorted or so on by politicians. I

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Speaker 1: don't want people thinking that I believe that technocrats should

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Speaker 1: be making all these decisions. I don't. But what I

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Speaker 1: think we could do a better job of is, like

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Speaker 1: I used the phrase in the book, moving the needle

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Speaker 1: a little bit away from where it is now, where

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Speaker 1: decisions are just so so political with very little technocratic

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Speaker 1: input that actually matters, and just move it a bit

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Speaker 1: away from that. I think we could get better economic

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Speaker 1: policies if we did that. Do you get the sense

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Speaker 1: that sort of career government workers are still head down

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Speaker 1: doing their job making the country run, or do you

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Speaker 1: think that the current administration has changed that aspect of government.

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Speaker 1: I think they are there with their heads found. Who

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Speaker 1: have there john some of them hiding under their dead

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Speaker 1: waiting for the storm to pass. But here's the thing. Uh,

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Speaker 1: let's druk sharp contrast between our system and say, the

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Speaker 1: British system. In the British system, a new government comes in,

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Speaker 1: the minister gets replaced, everybody else stays on the job.

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Speaker 1: In our system, the political appointees come in and they

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Speaker 1: take about the five top levels of the bureaucracy over

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Speaker 1: and then the technocrats start below that. The these uh

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Speaker 1: people that Steve Mannon called the deep state. Uh, except

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Speaker 1: that the State Department, which has been almost denuded, it

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Speaker 1: seems a lot of the deep state people are still

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Speaker 1: there and they're trying to ride out this storm. The

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Speaker 1: e p A is another place where they're having a

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Speaker 1: very very hard uh, very very hard time. But so

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Speaker 1: it's not just the cabinet member that changes. It's quite

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Speaker 1: a few people, uh, in any in any cabinet department.

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Speaker 1: Alan Blinder, thank you so much for being with us.

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Speaker 1: He is the Gordon Renchler Memorial Professor of Economics at

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Speaker 1: Princeton University, also former FED Vice chair uh and he

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Speaker 1: has a new book, Advice and Dissent, Why America Suffers

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Speaker 1: when Economics and Politics collide. Sinclair Broadcast Group is the

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Speaker 1: biggest US broadcaster. It is trying to tie up loose

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Speaker 1: ends as the FEC decides whether it can buy Tribune Media,

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Speaker 1: and now it's generating a new controversy. Here to tell

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Speaker 1: us more about that, I'm so happy to bring in

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Speaker 1: Jordan's Holman, who covers all things related to wages, salaries, compensation,

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Speaker 1: personnel issues. Jordan's just, first of all, can you set

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Speaker 1: the stage. What is the controversy here with Sinclair? So

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Speaker 1: over the weekend, uh, the Sinclair anchors across the country

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Speaker 1: they were giving, you know, a blanket speech. I was saying,

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Speaker 1: we decry false news and dead spend put together a

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Speaker 1: video of all these anchors saying the same words, and

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Speaker 1: some people in the media and people watching felt like

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Speaker 1: it was a shot at the integrity of the news media. Okay,

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Speaker 1: so why is this now causing some angst among the

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Speaker 1: nearly two hundred stations that Sinclair runs. So a lot

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Speaker 1: of the journalists I spoke to who work at Sinclair,

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Speaker 1: they didn't like that their company was in the spotlight

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Speaker 1: in that negative way, that it looked like they were

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Speaker 1: talking negatively about other media companies. And so the question

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Speaker 1: started to come up, well, why don't you just quit?

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Speaker 1: Why don't you leave and go somewhere else? And people

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Speaker 1: said that in their contract they would have to pay

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Speaker 1: up to their annual compensate shin if they wanted to

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Speaker 1: leave before their contract was over, which is a steep

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Speaker 1: price if they broke their contracts. Yeah, so that's that's

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Speaker 1: my question. I mean, is this normal to have, say,

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Speaker 1: a two year contract, especially in broadcast, uh, that has

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Speaker 1: a penalty should you choose to quit. So on broadcast,

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Speaker 1: is normal to have a contract that you ask someone

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Speaker 1: to stay two or three years. But what's not normal

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Speaker 1: that some lawyers said who I spoke to, is that

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Speaker 1: you have the steep penalty that you have to give

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Speaker 1: your compensation if you leave beforehand, and that if it

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Speaker 1: usually applies to orang air talent, but at Sinclair, some

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Speaker 1: people who never appeared on TV had to sign that

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Speaker 1: clause and maybe just also offer up what the response

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Speaker 1: was from Sinclair and the various UH maybe TV stations

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Speaker 1: or broadcast networks that you were able to contact in

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Speaker 1: regards to the story. So Sinclair's vice president of news

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Speaker 1: he sent out a memo to all the employees UH

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Speaker 1: yesterday on Monday, saying that critics were ubsite at their

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Speaker 1: just is and to have the anchors read this false

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Speaker 1: news statement but that context was missing and perspective was

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Speaker 1: missing missing, and that employees would be proud of where

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Speaker 1: they work. Sinclair hasn't directly um spoken to Bloomberg about it,

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Speaker 1: but some employees still didn't feel like that was enough. Okay,

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Speaker 1: to be very clear, the lines that we're talking about

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Speaker 1: here are the sharing of biased and false news has

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Speaker 1: become all too common on social media. Some members of

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Speaker 1: the media use their platforms to push their own personal bias.

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Speaker 1: I have to say, you know, there are a lot

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Speaker 1: of people who probably believe this, and you know, you

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Speaker 1: might even have some journalists who do feel like this

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Speaker 1: is the case who work for Sinclair. Why is this different, right,

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Speaker 1: Why is this different from just a number of people

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Speaker 1: saying something sort of decrying and ambiguous, uh sort of concept. Well,

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Speaker 1: when you go back to the idea of what's the

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Speaker 1: context around Sinclair, they are the largest broadcaster in the US.

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Speaker 1: They reached about thirty eight percent of households in the US.

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Speaker 1: So when they're you know, broadcasting this to all markets

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Speaker 1: across the country, some people don't agree with that, you know,

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Speaker 1: they it seems like you're taking shots within the industry. Well,

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Speaker 1: but this is this is the key question. Is it

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Speaker 1: the content of what that said? Or is it the

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Speaker 1: fact that journalists who are supposed to be coming at

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Speaker 1: something from a sort of impartial perspective or given a

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Speaker 1: script to read. I mean, how unusual is that aspect

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Speaker 1: of this, Right, It's definitely something you don't see every day.

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Speaker 1: That's why I think that video really resonated when it

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Speaker 1: was like all these journalists from all these differ cities

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Speaker 1: are saying the exact same thing. So it kind of

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Speaker 1: seems like, well, we're Sinclair saying we're being impartial and

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Speaker 1: we're the real journalists. But they're still providing a script

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Speaker 1: which doesn't always add up. And so you know, the

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Speaker 1: journalist I spoke to at Sinclair said that that rubbed

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Speaker 1: them wrong. They did not like that, and that they

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Speaker 1: even if they wanted away out, it just seemed too expensive. Um,

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Speaker 1: there's a case right now, former employee who works in

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Speaker 1: Florida who suit the or who got sued by the

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Speaker 1: company for leaving early, for breaking his contract act. And

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Speaker 1: now he's facing that in court and he has a

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Speaker 1: lawyer and assistant. Expensive process to want to leave if

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Speaker 1: you want to. And and also just to add to this, uh,

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Speaker 1: Sinclair is described as the country's largest broadcaster right it

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Speaker 1: has about it has a hundred and ninety three television stations,

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Speaker 1: and it is seeking to purchase Tribune Media for three

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Speaker 1: point nine billion dollars and regulators are looking over that

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Speaker 1: potential acquisition because of any trust concerns. Right, Yeah, it

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Speaker 1: would make it even huger broadcaster, reaching even more Americans.

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Speaker 1: But President Trump supports that. Yes, So yesterday, um, he

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Speaker 1: tweeted that Sinclair was a far superior network compared to

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Speaker 1: NBC or CNN, and so he did definitely you know,

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Speaker 1: throw his hat behind like them as a broadcast institution. Well,

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Speaker 1: I guess this is a story that's going to keep

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Speaker 1: on developing, and we thank you very much for sharing

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Speaker 1: it with us and giving us this detail. Jordan's Holman

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Speaker 1: of Bloomberg News about Sinclair employees uh AS, saying that

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Speaker 1: contracts make it too expensive for them to quit the company.

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Speaker 1: One area that we really need to address is in Britain.

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Speaker 1: We are dealing with less than a year now before

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Speaker 1: Brexit day countdown has begun. There are some crucial issues

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Speaker 1: to be decided. It's unclear whether there is much progress

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Speaker 1: being made on them. Here to join us is Baroness

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Speaker 1: Helena Kennedy, a Labor Party member of the House of Lords,

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Speaker 1: coming to us here in our eleven three studios in

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Speaker 1: New York, even though she's normally based in London. Thank

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Speaker 1: you so much for being here. I want to want

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Speaker 1: I want to ask about momentum, because I think in

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Speaker 1: the US, for example, a lot of times when you

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Speaker 1: mentioned Brexit, people's eyes glaze over. Oh, that's still going

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Speaker 1: on again. Aren't they just going to come to some

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Speaker 1: kind of resolution and everything's going to move on the

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Speaker 1: way it was. Do you think that people are not

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Speaker 1: paying enough attention to the potential ramifications of what's going

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Speaker 1: to have to happen in the next year. It's taken

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Speaker 1: a long time to get to this point. I mean,

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Speaker 1: we've wasted such a lot of time, um really dealing

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Speaker 1: with the complexity which people hadn't fully understood. And so

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Speaker 1: I think that slowly there is a realization actually economically

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Speaker 1: in terms of peace and Ireland, in terms of the

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Speaker 1: immigration issues, that actually this is not going to be

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Speaker 1: the solution to many of the problems that people felt

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Speaker 1: very strongly about. And so I think that that's slowly

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Speaker 1: filtering through, but it's getting late in the day further

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Speaker 1: to be any kind of real comeback on that. I mean,

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Speaker 1: we've the deadline now is October. We've been told by

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Speaker 1: our the negotiators in Europe. Um I met with Barnier,

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Speaker 1: who is leading the European Union negotiations. Um I met

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Speaker 1: with him a month ago and he said October is

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Speaker 1: the deadline because it has to go in front of

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Speaker 1: all the European and the European Parliament has to go

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Speaker 1: in front of our parliament. To October is a deadline

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Speaker 1: for exactly what this Brexit deal would look like. What

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Speaker 1: the deal would look like and so and so we've

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Speaker 1: really got a very small window of time in which

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Speaker 1: to nail this down. And that's the real anxiety, because

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Speaker 1: already there's been an agreement which is causing a lot

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Speaker 1: of unhappiness, which is the transition deal, a recognition that

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Speaker 1: by March of next year, a year from now exactly,

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Speaker 1: we will not be in a place to actually say

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Speaker 1: it's done and dusted. There has to be we will not.

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Speaker 1: There's going to be a period of transition which will

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Speaker 1: not end until December two thousand and twenty. And during

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Speaker 1: that period things will carry on much the same as

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Speaker 1: they are as a lot of people who are saying,

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Speaker 1: but we voted to leave, we thought it was going

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Speaker 1: to be a pretty swift deal and we'd get out

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Speaker 1: and start treading with the rest of the world on

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Speaker 1: our own, not with the rest of Europe and uh,

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Speaker 1: and that's not going to be happening. And it's become

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Speaker 1: clear because for example, business does not want to drop

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Speaker 1: off a cliff cliff age, and so they want to transition.

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Speaker 1: And there was a lot of pressure being put on government,

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Speaker 1: by by business and by the city to say, look,

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Speaker 1: we need to have serious transition, slow, slowly, safely surely,

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Speaker 1: rather than somehow dropping off the edge and not knowing

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Speaker 1: where we're going. Uncertainty, of course is bad for business,

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Speaker 1: but it's bad for everybody and bad for individuals inside

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Speaker 1: our society too. Baroness Kennedy, if if Brexit and the

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Speaker 1: referendum process, uh, we're to have appeared before blind justice.

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Speaker 1: And you know why I'm mentioning this because maybe you

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Speaker 1: can offer people a little bit of your personal background.

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Speaker 1: What do you think would be revealed about the actual

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Speaker 1: referendum process and what people knew at the time of

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Speaker 1: the referendum and what we are learning now about potential

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Speaker 1: foreign interference uh in the referendum to leave or stay

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Speaker 1: inside the European Union. Well, it is interesting. I mean,

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Speaker 1: the problem with with a referendum is always that the

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Speaker 1: question is simple, do you want to stay in Europe?

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Speaker 1: What do you want to get out? And for many

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Speaker 1: people the answer to that is actually more complicated. I'd

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Speaker 1: like to leave these aspects of it and I don't

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Speaker 1: want to leave those aspects of it or um. And

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Speaker 1: so for many people it was the answer was much

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Speaker 1: more nuanced than just saying out or in um. And

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Speaker 1: so that's the problem always with our referendum um the

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Speaker 1: fact that we now know that there's a real likelihood,

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Speaker 1: a real possibility that there was interference, and that Cambridge

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Speaker 1: Analytica that possibly the Russian Russian money, that there was

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Speaker 1: interference in different ways in the outcomes and the ways

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Speaker 1: in which people were influenced to making that decision. I'm

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Speaker 1: not sure that if you said to many of the

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Speaker 1: people now, would you have changed your vote, that they

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Speaker 1: would say that they would have done. The people like

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Speaker 1: to imagine that they made it on their own beliefs

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Speaker 1: and they were not deeply influenced by the opinions of

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Speaker 1: others or the ways in which they were receiving information.

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Speaker 1: So I don't know whether that would make the difference.

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Speaker 1: But what people are realizing is that economically it's not

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Speaker 1: going to be it's not going to be the day

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Speaker 1: in the country that they were given to understand the story,

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Speaker 1: the lie in fact, and it was a lie was

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Speaker 1: told where where buses traveled through our cities with the

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Speaker 1: message on the side saying in every week, fifty million

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Speaker 1: pounds more will be spent on the national health service

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Speaker 1: if we're out of Europe, because instead of paying money

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Speaker 1: into the contributory schemes of Europe. We will have this

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Speaker 1: money available to spend on the national health service. In fact,

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Speaker 1: when it was hammered down, it wasn't true that that

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Speaker 1: that piece of information was a completely phony and if

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Speaker 1: we're talking about fake news, where that was seriously fake news.

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Speaker 1: So and people are realizing that the economic story is

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Speaker 1: not going to be so good. And already people are

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Speaker 1: feeling the pinch. They're feeling that the pound in their

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Speaker 1: pocket is not worth as much. There's been a devaluation.

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Speaker 1: There's a sense in which they're they're realizing that food

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Speaker 1: is going to become much more expensive. Um. There's also

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Speaker 1: there's a worry that a certainly food coming from Europe

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Speaker 1: because of we won't have the benefits of the of

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Speaker 1: the Single market or of the Customs Union where we

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Speaker 1: don't pay customs duties. There's also the an issue I

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Speaker 1: have to see it about the United States is that

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Speaker 1: we had imagined that there would be great deals to

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Speaker 1: be done with the United States for us alone, because

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Speaker 1: we are special, we have a special relationship with you guys,

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Speaker 1: you're our cousins and so and people are now suddenly

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Speaker 1: getting a bit worried because they're hearing your president talking

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Speaker 1: about in much more protectionist terms and about the possibility

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Speaker 1: of tarrifsms on. So they're much more worried about what

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Speaker 1: will that look like and will we get the deals

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Speaker 1: with you or China or India that we imagined, and

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Speaker 1: will they follow fast on our leaving Europe or will

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Speaker 1: it take a hell of a long time before it

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Speaker 1: happens with Within Parliament, when you have private conversations with, say,

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Speaker 1: Brexit hardliners, do you get the sense that any of

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Speaker 1: them are softening their position at all? Not at all.

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Speaker 1: The hardliners are not shifting one jot, but a lot

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Speaker 1: of the people that the room mainers are very on

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Speaker 1: the Conservative ventures. The remainders have the problem that they

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Speaker 1: there's a loyalty they feel settling in the House of Lords.

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Speaker 1: Many of the people who were appointed huge numbers are

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Speaker 1: appointed by David Cameron, many of them remainers like David

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Speaker 1: Cameron himself. UM, But they do feel a loyalty to

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Speaker 1: party and I think that the it would only be

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Speaker 1: if they really feel that the deal, the ultimate deal

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Speaker 1: is is catastrophic UM, that they will they will vote

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Speaker 1: against because there will be a debate in Parliament in

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Speaker 1: October when the crunge comes, and then there's the issue

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Speaker 1: of Labor and what will Labor's position be, which has

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Speaker 1: also been constructive. Ambiguity was how it was being described,

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Speaker 1: you know, saying that they're not happy with the way

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Speaker 1: that the negotiations are going, that they would want to

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Speaker 1: have much greater and closer connection to Europe in the

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Speaker 1: in the you know, as we go forward. Um but

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Speaker 1: but Corbin has been very clear in saying that he's

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Speaker 1: not in favor of staying in the Single Market. So

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Speaker 1: may and of course that the vast majority of politicians

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Speaker 1: in Labor do to stay. So it's all rather macy

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Speaker 1: at the moment. So where we're going, I still don't know.

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Speaker 1: All right, Well, we look to you to help us

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Speaker 1: understand what's come back and give you the inside skinny.

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Speaker 1: We appreciate it and we look forward to it. Baroness

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Speaker 1: Helena Kennedy, Labor Party member of the House of Lords,

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Speaker 1: are joining us here in our eleven three oh studios.

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Speaker 1: You're listening to Bloomberg Markets. I'm pim Fox my co

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Speaker 1: host Lisa abram Witz. This is Bloomberg. In other news,

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Speaker 1: Astronomers using the Hubble space telescope found the farthest star

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Speaker 1: ever observed, a bright dot nine billion light years away.

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Speaker 1: I can't wait to go home and talk about this

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Speaker 1: with Anyone who owns a home in Manhattan should be

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Speaker 1: watching this figure. The number of sales plunged the most

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Speaker 1: since the recession. What does this mean for the road forward?

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Speaker 1: Joining us now? Jonathan Miller, President and chief executive officer

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Speaker 1: of Miller Samuel in New York. Jonathan explained, how concern

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Speaker 1: should people be about this? Well, I think it's less

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Speaker 1: about concern and more just about awareness. The reason why

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Speaker 1: we saw the sales volume drop, there's really twofold one

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Speaker 1: is we've seen a real drop in UM the closings

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Speaker 1: of what I call legacy contracts UH New Development. That's

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Speaker 1: all those super luxury buildings that contracts are signed several

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Speaker 1: years ago that UH had could close until the buildings

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Speaker 1: are completed, and those have largely UM. The buildings have

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Speaker 1: largely been completed, so we've seen a real fall off

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Speaker 1: in their closing volume. And that's skewed top level prices

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Speaker 1: down for the market. And also UH contributed to part

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Speaker 1: of this decline in sales. The other big part UH,

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Speaker 1: and I think probably two thirds of that UH is

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Speaker 1: really related to the uncertainty. And you know the word

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Speaker 1: location three times is the trite real estate uh phrase

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Speaker 1: of our lives. Uh. Really, now, it's uncertainty and and

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Speaker 1: and it's really has to do with the federal tax

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Speaker 1: law and its impact on high cost housing markets. It's

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Speaker 1: not that the actual items in the tax law are

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Speaker 1: impacting the market, to call the slow slowdown, it's essentially

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Speaker 1: the uncertainty of it is causing participants to take a

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Speaker 1: little bit longer to make decisions. So you know, overall

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Speaker 1: prices actually trended up, uh if you remove UM the

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Speaker 1: new development component to it. So it's really a market

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Speaker 1: where uh, you know, I think we're looking at over

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Speaker 1: the next year, buyers and sellers are going to dance

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Speaker 1: around what the new equilibrium is between them and UM,

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Speaker 1: and we're probably going to see some software prices going forward. Jonathan,

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Speaker 1: Then what do you say whenever you hear people respond

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Speaker 1: to the question about state and local tax deductions for

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Speaker 1: property tax in that cap of ten thousand and basically

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Speaker 1: it gets waved off as not relevant to the actual

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Speaker 1: transaction in a high cost area such as New York

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Speaker 1: or even in places like California. Do you believe it.

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Speaker 1: Oh no, not at all. I think it absolutely has

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Speaker 1: an impact. I think the reason why it was waved

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Speaker 1: off is there was this idea that that those additional

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Speaker 1: costs would be offset by a tax cut. Um. But

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Speaker 1: I don't think people, when they have a collection of assets,

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Speaker 1: are going to be willing to overpay for one asset

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Speaker 1: while saving on another. Um. They really look at each

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Speaker 1: asset individually, and I think, um, you know, there's also

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Speaker 1: a lot of hyperbole about this, but I think the

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Speaker 1: general rule of thumb is the higher the property rice generally,

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Speaker 1: the higher the impact of the new tax all will

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Speaker 1: be on the property. But it really comes down to

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Speaker 1: the individual tax situations of the of you know, of

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Speaker 1: the homeowner more than ever before. Well, this you raise

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Speaker 1: a really good point. I think a lot of people

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Speaker 1: dismissed the effects of the tax law on sort of

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Speaker 1: the mortgage deduction being kepped at rather than a million

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Speaker 1: dollars as not having that big of an effect. What

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Speaker 1: about that piece of it? Does that have an effect?

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Speaker 1: Or is this mostly just the overlap between state and

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Speaker 1: federal taxes? I think sault Satan local taxes is the

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Speaker 1: deduction is much more important to focus on than the

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Speaker 1: mortgage interest deduction. Uh that I think is has less

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Speaker 1: of much less of an impact, if any, It's much

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Speaker 1: more about all the deductions. The way to look at

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Speaker 1: this is the way I look at it, is that

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Speaker 1: this is really the process of the federal government extracting

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Speaker 1: itself them the home ownership promotion business. And they're hoping

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Speaker 1: that by doubling standard deductions for single and married will

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Speaker 1: provide um, you know, some offset to this and and

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Speaker 1: and that is certainly true. It just becomes more problematic

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Speaker 1: as you shift into higher cross housing markets, which are

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Speaker 1: generally on the East and West coast. Jonathan, give you

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Speaker 1: about thirty seconds. Maintenance fees and the percentage of taxes

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Speaker 1: that are included in maintenance fees. Is that going to

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Speaker 1: go up? I think. I think the reduction of of

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Speaker 1: the lack of ability to deduct those um is going

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Speaker 1: to make maintenance feel a lot more expensive than it

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Speaker 1: currently is. I want to thank you very much, Jonathan Millery,

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Speaker 1: President and the chief executive officer of Miller Samuel, offering

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Speaker 1: some insight into the Manhattan home market. Thanks for listening

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Speaker 1: to the Bloomberg P and L podcast. You can subscribe

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00:27:59,520 --> 00:28:03,119
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever

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Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter

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Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits one.

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Speaker 1: Before the podcast, you can always catch us worldwide on

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Speaker 1: Bloomberg Radio