Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find a Bloomberg Markets podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. All right, the news
Speaker 1: of the day, of course, list trust stepping down as
Speaker 1: Prime Minister of the UK. We need to get some
Speaker 1: perspective here of maybe some next steps, if we will.
Speaker 1: Marcus Ashworth, Bloomberg Opinion columnists. Uh joins us here, Marcus. Uh.
Speaker 1: It seems like every time we talk to you, there's
Speaker 1: some weird news coming out of the UK. It's going
Speaker 1: on over there with you guys. So I love I
Speaker 1: love speaking to you guys, but it would be nice
Speaker 1: to do it and something more measured way than uh.
Speaker 1: I mean, we're all sort of flabbergasted here because you
Speaker 1: may have heard that there is a chance it seems
Speaker 1: that Boris Johnson, remember him him? Sure he may. He
Speaker 1: may put his hat in the ring again out of
Speaker 1: the national interests, which is one way of looking at it. Anyways,
Speaker 1: Um yeah, absolutely, Um. Up to up to then, it
Speaker 1: was thinking, well, you know, maybe it doesn't matter quite
Speaker 1: so much that Truss has gone because she wasn't really empowered.
Speaker 1: Because the new chance of Jeremy Hunt, who is much
Speaker 1: more about physical stability and not quite the reversion to
Speaker 1: austerity perhaps that we've seen ten years ago under George Osborne,
Speaker 1: but certainly far less of this dash for growth which
Speaker 1: the previous Chancellor Quasi Kwarteng had obviously stumbled so badly,
Speaker 1: and we set off this whole guilt crisis. Um well,
Speaker 1: what seems years ago now, but it was only about
Speaker 1: three or four weeks ago. Um, so you know, trust going.
Speaker 1: And if Hunt stayed at least in in as Chancellor
Speaker 1: or possibly even as as as leader, would would have
Speaker 1: been you know, it's fine. Um, I think it was
Speaker 1: Richie Snak, It's fine, Ben Wallace. This is the other
Speaker 1: sort of possible one who's the Defense secretary. Sort of
Speaker 1: fine again, as long as Hunt stays in in number
Speaker 1: of having the chance of things, which apparently said he's
Speaker 1: not gonna run for leader. Looks you know, looks quite
Speaker 1: certain until um we get the Boris news. As ever,
Speaker 1: the wrecking ball so is that, you know, the programs
Speaker 1: that Jeremy Hunt has now shifted trust and am X too.
Speaker 1: Is that in line with what Rishi Sunac wanted to
Speaker 1: do in the first place. It's complicated, yes, but no,
Speaker 1: but maybe I mean largely largely year I'm gonna say yes, um,
Speaker 1: but I mean the way that the order in which
Speaker 1: you know, she said it was proposing to do it,
Speaker 1: uh is quite different. But then again, so much has changed.
Speaker 1: Would you imagine someone like Sanak and Hunt thinking pretty much,
Speaker 1: very closely in line, yes, you would, whereas the Trust
Speaker 1: Hunt relationship was clearly, you know, very much diametrically opposite
Speaker 1: in economic viewpoint, but they were going through the motions
Speaker 1: for it, you know, just to keep her alive. She's
Speaker 1: no longer there. But Marcus, would the I mean the
Speaker 1: would would the UK be in a much better place
Speaker 1: had they go was in soon act begin with oh
Speaker 1: oh yes, in a sense of Okay, if you don't
Speaker 1: want to risk premium into UK assets, the more the
Speaker 1: more on risk people exactly, if you want to keep
Speaker 1: the cost of borrowing down, and we need to borrow
Speaker 1: a lot more than optically, yes, Now you could argue
Speaker 1: that Richie Snack's view of of increasing taxes and into
Speaker 1: what like was certainly gonna be recession now, and you know,
Speaker 1: penalizing both employers employees and indeed corporates on the tax
Speaker 1: rate was was madness. I personally thought it was a
Speaker 1: very ill decided guided approach. Nonetheless, uh, you know, his
Speaker 1: his views and what happened under his trust seemed totally precient. Now,
Speaker 1: I mean, in that sense, he's a logical candidate to
Speaker 1: take over. I would think, all right, so Marcus, you
Speaker 1: have your finger on the pulse of the city of London,
Speaker 1: the markets. Well what do you think the markets quote
Speaker 1: unquote I would like to see over the next couple
Speaker 1: of days, a couple of weeks, and maybe a couple
Speaker 1: of years. That's that's he's I mean, that's you can
Speaker 1: see how guilt yields have dropped back again once Hunts
Speaker 1: in power, and that the fact that they barely reacted
Speaker 1: with trust going because they expect Hunter stay in number
Speaker 1: eleven as in Chancellor. Then you know that I think
Speaker 1: that shows you very clearly Sterling has you know, slightly
Speaker 1: risen on the news, never a good thing for an
Speaker 1: upgoing prime ministers. Know that the markets take their demise
Speaker 1: in as a bullish sign. So I think as long
Speaker 1: as we don't get you know, an unexpected result, I
Speaker 1: think markets you know, will will take this um as
Speaker 1: you know, look, the political side is so bad, as
Speaker 1: long as the economic management of the economy and the
Speaker 1: narrowing and the funding gap and the whole physical approach
Speaker 1: is back on on a level playing field, they'll take that. Obviously,
Speaker 1: longer term you could argue a more growth centric approach
Speaker 1: as opposed to purely fixating on on on certain sort
Speaker 1: of types of austerity or cutting back of tax cuts
Speaker 1: um you know, may not benefit the UK and a
Speaker 1: long one, but that depends on what you believe in
Speaker 1: capitalism mora or quas by socialism. So Marcus, if I
Speaker 1: were to walk the countryside of of England and stuff
Speaker 1: in you know, a pub every once in a while,
Speaker 1: what would the local folks tell me about the economy
Speaker 1: kind of their outlook here? How is it in the UK? Well,
Speaker 1: I mean, I think the Australians put it best is
Speaker 1: that the whining doesn't stop when the engines are turned
Speaker 1: off when a UK plane arrives in Sydney. So we
Speaker 1: are a bunch of windows. We talked about the weather.
Speaker 1: Where we we we we we have certain fixations like
Speaker 1: chewing and as you need usually saw with the queenseral
Speaker 1: um So, I think most people are focused obviously on
Speaker 1: the cost of living crisis. I think they see this
Speaker 1: as a shambles, which evidently is in number ten where
Speaker 1: you've got a twelve year long government, you know, which
Speaker 1: has been through several iterations, not able to choose amongst
Speaker 1: itself who should be leading on what their policy should be.
Speaker 1: And therefore, um I think there is a state of
Speaker 1: general disbelief that we are and everyone else's focus. We
Speaker 1: don't want to be where the heck is. David Cameron
Speaker 1: right now, you know he's I don't know. Marcus Ashworth,
Speaker 1: good stuff. As always, we really appreciate getting your perspective.
Speaker 1: There are Marcus Ashworth Bloomberg opinion columnists in London. I'm
Speaker 1: hoping he's gonna get out to a public later this evening,
Speaker 1: maybe you know, checking with the people, see how the
Speaker 1: local economy is going out there. Again, we need some
Speaker 1: smart voices here to give us some context here for
Speaker 1: what's going on in the UK at price. Principle of ERGO,
Speaker 1: which is a global intelligence and Analysis consultancy. Is also
Speaker 1: a nonresident senior fellow at some little college downtown New York.
Speaker 1: I think it's n y U or something like that.
Speaker 1: He's also a former British Trade officials, so that makes
Speaker 1: him sound kind of official. He's done a lot of
Speaker 1: stuff stuff, right, So, ed, what's going on with you
Speaker 1: guys over there? I mean, I we we look to
Speaker 1: the UK for stability to feel bad? What's going on
Speaker 1: over there? Right? I mean, you've introduced me as a
Speaker 1: smart person, but I'm like, have to disappoint you strike
Speaker 1: off the bat because again I don't know, and I
Speaker 1: don't think anyone knows. That's the nature of it. But
Speaker 1: you know, the headline is that the Prime Minister has
Speaker 1: resigned after twenty minutes, never a good look, and there
Speaker 1: will be a new prime minister within weeks, if not days.
Speaker 1: The immediate question, I think for your listeners is what's
Speaker 1: going to happen with that new fiscal budget that the
Speaker 1: Chancellor Hunt was talking about? Is he going to write
Speaker 1: that and then it's going to appear and be a
Speaker 1: fair company for the new prime minister. It's coming in
Speaker 1: twelve days that he is supposed to present that right
Speaker 1: at Cobra thirty one. I wonder and have been asking
Speaker 1: people would we be in a similar situation had Rishi
Speaker 1: Sunac been elected, or would we be in a much
Speaker 1: better situation, and therefore should the parliament now elect him
Speaker 1: as the new leader. Okay, so we would have been
Speaker 1: in a much better situation VISI V Markets visiby capital markets,
Speaker 1: I contend um, But it doesn't necessarily mean that now
Speaker 1: we can as a country get him in. Here's the problem.
Speaker 1: Rishi lost the popular election within the Conservative Party to
Speaker 1: List Trust. If we now turn around and say, just kidding,
Speaker 1: the popular candidate is not the prime minister, You've actually
Speaker 1: got the candidate that lost to that popular candidate. What
Speaker 1: does that say about Well, the popular candidate almost drove
Speaker 1: you into a situation where the I m F may
Speaker 1: have had to come in and bail you out. I mean,
Speaker 1: the popular candidate did things so bad. I can't remember
Speaker 1: the leader of a Western world making such a huge
Speaker 1: error in terms of the economy. So she's clearly gone.
Speaker 1: And I guess anyone except for those people in the
Speaker 1: Conservative Party that voted for Liz Trust Liz Trust should
Speaker 1: have a say and who the next leader is. Well,
Speaker 1: that you're talking about a general election, right. Essentially you're
Speaker 1: saying that if and I agree with you, if this
Speaker 1: disastrous piece of off road driving has ended, which it
Speaker 1: has right with a sort of triple slow motion role, Um,
Speaker 1: then you then you really do need to go back
Speaker 1: and ask people, well, what do you want? The problem
Speaker 1: is I think that we've kind of broken the seal
Speaker 1: on Sterling, right. We've now got people in markets thinking
Speaker 1: about parity, cable rate parity, which, by the way, is
Speaker 1: going to happen. If not, you know it will be broken.
Speaker 1: Oh yeah, oh boy. But then the question is, well,
Speaker 1: what exactly is a pound anyway? And what's it worth?
Speaker 1: What are the fundamentals? I think that we're going to
Speaker 1: be okay. I think that the democratic process has got
Speaker 1: rid of someone that clearly wasn't up to the job
Speaker 1: quite quickly. You can't do that in Russia. You can't
Speaker 1: do that in China, as we just saw. So I
Speaker 1: would say, I'm I'm medium long UK. I would say that, um,
Speaker 1: but we are talking about a general election, surely, all right.
Speaker 1: So if I talked to if I go into a
Speaker 1: local pub, which I tend to do when I'm in
Speaker 1: England and asked a local person. They're sitting on the
Speaker 1: bar stoll mining his or her own business. I would
Speaker 1: think they would say, we just want stability. Boris Johnson,
Speaker 1: I'm not sure would fit the bill for stability. What
Speaker 1: do you think the odds are that he actually comes
Speaker 1: back and represents the Conservative Party? Hi, I think he
Speaker 1: would quite like to do that. Um, and I think
Speaker 1: that he he said, has he not that he will?
Speaker 1: He will appear and take another girl at least standing.
Speaker 1: But then, but then define stability because on the one hand,
Speaker 1: we've always say the Brits want I want that s
Speaker 1: word want stability. That's almost the same saying it's the
Speaker 1: economy stupid. But on the other hand, we voted to
Speaker 1: exit the largest single market in the world, with all
Speaker 1: the volatility that yeah, well there's a question. Is there
Speaker 1: any possibility that that gets turned around or at least
Speaker 1: undone in some ways? Yes, I think the United Kingdom
Speaker 1: will join the euro within twenty years. Wow, that's what
Speaker 1: you both look shocked? Yes, Yes, well I am well.
Speaker 1: I I was certainly against Brexit because I'm an internationalist
Speaker 1: as it were, but and that's not really in vogue
Speaker 1: right now arguably, But I mean you're globalist. I'm just
Speaker 1: I'm so sad that Hong Kong. What's happening to Hong Kong,
Speaker 1: because that is a great global financial love hung was exactly,
Speaker 1: thank you very much, And that's sad what's happening there?
Speaker 1: So what are next steps here? I mean the markets
Speaker 1: are kind of calm here. I'm looking at st not
Speaker 1: out twenty years, next week, next week, next week. Yeah,
Speaker 1: the markets do look a bit calmer. I think guilt's
Speaker 1: armed down, um sterling calm down. I think it all
Speaker 1: depends now on the cadence and presentation of the new leaders.
Speaker 1: I think they will be watched in the manner of
Speaker 1: central bankers. I think Jeremy Hunt's actually doing quite a
Speaker 1: good job of, you know, presenting that stable, calm, rational
Speaker 1: face that you'd like to see from any chancellor. But
Speaker 1: it does depend, I think who the next leader is
Speaker 1: and how markets extrapolate the a physical capacity and b
Speaker 1: fisical behavior of the United Kingdom on the basis of
Speaker 1: who that leader will be. And markets are essentially calling
Speaker 1: the shot. Is that fair to say shots? Is that
Speaker 1: fair to say? Absolutely? You can't buck the markets, but
Speaker 1: the markets can buck you. Yeah, there you go, that's
Speaker 1: are back. That's a headline for our podcast. Did you
Speaker 1: coin that phrase? Because we could well, Margaret Thatcher coined
Speaker 1: the first half of that phrase. I think I just
Speaker 1: came up with the second. But now you know we
Speaker 1: have a podcast. I do know. I apparently I disappointed
Speaker 1: one listener to whom I've responded, Yes, that was very
Speaker 1: nice with landish comment that I made last week. But
Speaker 1: it's okay. Ed Price, thank you so much for joining
Speaker 1: us here in our Bloomberg Interactive Worker studio. At Prices,
Speaker 1: a principle at ERGO, a global intelligence and analysis consultancy,
Speaker 1: is also a nonresident senior fellow at NYU and a
Speaker 1: former British trade official. Uh you know, kind of walking
Speaker 1: around making the Maya colpus to some various media outlets. So,
Speaker 1: but which is it's not actually Adds fault just because
Speaker 1: he's British. Asked him to explain it to what's been
Speaker 1: going on here big news of course out of the
Speaker 1: UK or Liz Trust stepping down as Prime Minister. What
Speaker 1: we're trying to do this mornings. Just get some perspective, uh,
Speaker 1: some context? Uh so, I said one of the people
Speaker 1: we have to get in studio is John Author's Bloomberg
Speaker 1: Opinion calumnists. I mean when I think England, when I
Speaker 1: think proper England, when I think proper English, I think
Speaker 1: John Authors. I mean he went to this trade school
Speaker 1: over the Oxford. I think it's pretty good. I don't know.
Speaker 1: Um we think of we think of football a pint
Speaker 1: of Vale the Union, Jack and John Author. That's what
Speaker 1: we do. So I'm throwing beetles and Shakespeare while we're
Speaker 1: maybe they're maybe they're I'm throwing the blame it you,
Speaker 1: my friend. What's going on over there? That's kind of
Speaker 1: been my question of the morning. What are you guys
Speaker 1: doing over there? I guess she was a quit or
Speaker 1: not a fighter. H First of all, no, it's not
Speaker 1: my fault. We did it. We did a Twitter spaces
Speaker 1: conversation at the point in early in the summer when
Speaker 1: the fields to replace Boris Johnson had been narrowed down
Speaker 1: to two, which was Lizz Trust and pretty soon Neck
Speaker 1: And it was me and three other Bloomberg Opinion columnists,
Speaker 1: Marks Ashworth and Adrian Wildridge and Terry's Raphael. And it
Speaker 1: was a somewhat uninteresting conversation because all four of us
Speaker 1: did think soon it should win. And the reason or
Speaker 1: four of us thought that was that we just didn't
Speaker 1: believe that this trust was equal to the job, that
Speaker 1: you just wasn't good enough to take this on. Um.
Speaker 1: And we were completely right. It's not. It's not as
Speaker 1: though anybody not as though it was difficult to see
Speaker 1: this coming. Similarly, I and every other economic commentator, pretty
Speaker 1: much one or two sort of very ideological exceptions, was
Speaker 1: writing that, you know, the bond market isn't going to
Speaker 1: stand for it if you try to do what you
Speaker 1: wants to do. So so, I mean these are remarkable
Speaker 1: unforced errors. Um. Basically, I think, I think almost unprecedented, right.
Speaker 1: I mean, if you think it back to any other leader,
Speaker 1: world leader who has made such a huge economic own goal,
Speaker 1: it's difficult to I have been trying. I mean, there
Speaker 1: are there are examples of forced errors, you know, emerging
Speaker 1: market finance ministers who devalue and things cut out of control. UM,
Speaker 1: you know Nevill Chamberlain at Munich. UM. I mean you
Speaker 1: know that there are some awful mistakes out there, but
Speaker 1: none of them were forced. I'm sorry, all of them
Speaker 1: were forced. The idea of there was no pressure to
Speaker 1: do this, UM. I and that's quite such big unfunded
Speaker 1: tax cuts and give no detail at all of how
Speaker 1: you were going to favorite There was there was no
Speaker 1: pressure to do this apart from a pretty small group
Speaker 1: within the Conservative Party, and it was there's there's nothing
Speaker 1: ideological about this either, even if you do believe in
Speaker 1: a small states and lower taxes, which we let's due
Speaker 1: to an extent that this was not the time to
Speaker 1: try and making a big leap towards it. So so,
Speaker 1: and the other thing is um, this is obviously a
Speaker 1: very juicy story for journalists and in some ways it's
Speaker 1: fun and amusing. But for the British people this has
Speaker 1: been awful. I mean, they were already in a tough
Speaker 1: spot and the mistakes that she made, along with quasi
Speaker 1: quar tang um, have very likely ruined the lives of
Speaker 1: thousands of Britons right who need people who need to
Speaker 1: re mortgage and can't afford to do it. They're then
Speaker 1: forced to sell their homes at a lower price. The
Speaker 1: guilts market, moving into any conversation immediately gets a bit
Speaker 1: deader when you you say things like the guilt market.
Speaker 1: It is calming down, basically by Jeremy Hunt's coming in
Speaker 1: and as firmly as he did just say no, we're
Speaker 1: not doing any of that. Um. So it is possible that,
Speaker 1: you know, the shake up to confidence and the shock
Speaker 1: won't go away. So I'm sure it has done lasting damage. Um.
Speaker 1: It shouldn't be necessary for the property markets to seize
Speaker 1: up as totally as currently seems possible because mortgage rates,
Speaker 1: you know, at one point, at one point long daily
Speaker 1: guilts were yielding more than five percent. Now they're below four.
Speaker 1: That's a very big difference to how much actual inter
Speaker 1: people need to pay each month. Um. But but in
Speaker 1: broader terms, yes, I mean it makes us look silly.
Speaker 1: It happens immediately after, amazingly the co within days of
Speaker 1: the funeral of Elizabeth the Second, which I had a
Speaker 1: lot of people thinking quite hard about what was good
Speaker 1: and bad about recent British history. And yes, it's it's
Speaker 1: it's it's appalling. I actually feel sorry for plenty of
Speaker 1: small c conservative people who aren't particularly ideological did votes
Speaker 1: conservative and those are exactly the people who probably hurt
Speaker 1: most and let down the most. And that's a large
Speaker 1: junk of British society. All right, Johnny, if we fast
Speaker 1: forward two years is an a fair assumption that the
Speaker 1: Conservatives will not be in power when the next election comes.
Speaker 1: Is it that bad that it will just be swiped
Speaker 1: out across the book. I'll stick to the wording I
Speaker 1: used in my column last night, which is that I
Speaker 1: don't think it's possible for the Conservatives to win the
Speaker 1: next election up Moore, it is still possible for Labor
Speaker 1: to lose it. The big comparison here is with John
Speaker 1: Major in ninety two, took over from Margaret Thatcher in
Speaker 1: very messy circumstances, not of an awful lot more charismatic
Speaker 1: than than Liz trust Um, but he was a fairly
Speaker 1: safe pair of hands. And yes he is a decent man,
Speaker 1: and um I actually quite liked as a person the
Speaker 1: Labor leader Neil Kinnock who ran against him. But but
Speaker 1: you didn't look like a very credible prime minister. And
Speaker 1: in remarkable circumstances, very big turn up for the books
Speaker 1: major one. But it wasn't so much that major one.
Speaker 1: He just avoided making serious mistakes and gave Labor the
Speaker 1: space to lose it. That's I think that's less likely
Speaker 1: to happen this time because Keir Starmer is if not
Speaker 1: he's not the second coming Winston Churchill, but he's a
Speaker 1: perfectly credible by as far as I can see. And
Speaker 1: the Labor Party is really determined to you know, this
Speaker 1: is what happens in parties has been out of power
Speaker 1: for a long time. They get really determined not to
Speaker 1: mess up. John ed Brice was just in here and
Speaker 1: he said, now that markets have got the taste of it,
Speaker 1: the pound is bound for parody again. Do you agree?
Speaker 1: Probably the question. Probably one of the ways the British country,
Speaker 1: British economy moves forwards is by accepting the somewhat higher
Speaker 1: level of inflation and also therefore a somewhat lower level
Speaker 1: for the pound. It's one of the less painful options
Speaker 1: available to the country at this point. Parity, I'm not
Speaker 1: predicting it next week. Parities certainly very possible. Interesting, So
Speaker 1: travel plans are including the UK and Europe. My friend
Speaker 1: we get a number of American friends have been asking
Speaker 1: me advice some where by the country and bring it
Speaker 1: back in the souvenirs exactly. John Arthur's great stuff has
Speaker 1: always John, to his opinion calumnists for Bloomberg News, he
Speaker 1: is the pride of Great Britain and he is on
Speaker 1: our blue but somehow he's an Englishman in New York,
Speaker 1: he's a Red Sox fan. I don't get that. We
Speaker 1: have a situation in the UK. The Prime culture has
Speaker 1: resigned after forty four days in office. Liz trust becomes
Speaker 1: the shortest ruling prime minister in great British history, and
Speaker 1: as far as I can tell, um, her economic policy
Speaker 1: mistake is the worst own goal. Yeah. I like how
Speaker 1: you put that in recent memory. I can't think of anything. Um,
Speaker 1: you know, if you exclude like Latin America and dictatorships
Speaker 1: like Turkey, I can't imagine. I can't remember a situation
Speaker 1: that that was worse than this. Let's bring in our
Speaker 1: editor in chief, John michel Thwaite. UM two, help me
Speaker 1: remember if it? Do you think that's the case? John?
Speaker 1: Is this the worst um at an amic blunder in
Speaker 1: the surest amount of time that you can recall in
Speaker 1: the Western world? Yes, I can't. I can't immediately. I
Speaker 1: have some dim reminiscence of I mean, I was Italian.
Speaker 1: Italian governments have changed incredibly quickly, but that all, to
Speaker 1: be honest, that was just sort of internal politics going
Speaker 1: backwards and forwards. In this case, it's a very simple thing.
Speaker 1: There was an unbelievable own girl the extent it's like
Speaker 1: you and done so quickly. Sometimes again, to carry on
Speaker 1: the analogy, in soccer, people score an own goal because
Speaker 1: the other side is attacking and you do it. This
Speaker 1: was almost the opposite. It's like she started the match,
Speaker 1: turned round and hit it as hard as possible as
Speaker 1: our own goal. But almost you know, within the seconds
Speaker 1: of the kickoff that that and that alone is an
Speaker 1: act of kind of that. That is the first I've
Speaker 1: never seen that. Yeah, so, and we were talking with
Speaker 1: John Authur's who said, you know, maybe Lehman Brothers fail,
Speaker 1: but that was something where you know, people in high
Speaker 1: office is deliberated with each other for at least weeks,
Speaker 1: if not months. This, as far as we can see,
Speaker 1: is something that Liz Trust and Quasi Quartang kind of
Speaker 1: just did without telling anyone. Yeah, it is. I mean,
Speaker 1: basically I said earlier, it's possible, you know, it's possible
Speaker 1: to feel sorry for Trust. She's wanted to get this
Speaker 1: job all her life, She's done all that sort of thing.
Speaker 1: But the damage she has caused in that short time
Speaker 1: has been utterly extraordinary. I mean, to the country, most
Speaker 1: obviously to lots of people whose mortgage rates have now
Speaker 1: shut up, but also rather weirdly, you know, to the
Speaker 1: party that elected her. Um too. You know, in some
Speaker 1: ways it's also made life incredibly difficult for labor because
Speaker 1: whatever whoever comes in, and this applies to the people
Speaker 1: running for leadership as well, whoever comes in, there's now
Speaker 1: very narrow there's a very narrow room for maneuver. You
Speaker 1: can't do that much because the markets have lost confidence
Speaker 1: in us. John Baris Johnson, is there an option? Really?
Speaker 1: I know that's that's a question many people are asking themselves. Um.
Speaker 1: I think the simple answer is, in terms of stability,
Speaker 1: um stability and Boris are not words that go together,
Speaker 1: and indeed that has been the true all his life.
Speaker 1: It's like you'd rather sit on the back of that
Speaker 1: Miller's motorbike going high speed without a crash on it.
Speaker 1: You would be you would be better, you'd stand a
Speaker 1: better chance of getting through things. Boris has never been stable.
Speaker 1: That's that's he's inventive, he's clever, he's all those things.
Speaker 1: The one argument for him at all is that he
Speaker 1: is possibly the one person in the Conservative Party who's
Speaker 1: shown an ability to make the current coalition of the
Speaker 1: Conservative Party work that taking these what they call red
Speaker 1: walls seats from labor in the north, persuading working class
Speaker 1: Brexiteers that he was the answer, whilst at the same
Speaker 1: time hanging on to most of the normal kind suburban
Speaker 1: Tory heartlands as well. But but he did that by
Speaker 1: telling them both the same thing at the you know,
Speaker 1: the the opposite things at the same time, with a
Speaker 1: lot of charm. But I think everything went wrong. So
Speaker 1: I didn't and it certainly I was in Westminster last
Speaker 1: night and you did not get a lot of feelings
Speaker 1: of support for Boris. They got rid of Boris and
Speaker 1: and and he was I think people see him as
Speaker 1: a symptom of the chaos. He didn't do anything quite
Speaker 1: as terrible as Trusted, but he still made a mess
Speaker 1: of a lot of things quite quickly. Why isn't Rishie
Speaker 1: Sunac the obvious choice? I mean, I still can't understand
Speaker 1: why he lost versus Liz trust, But at this point
Speaker 1: you can see that she was the wrong choice. And um,
Speaker 1: Jeremy Hunt is running some rather Sunakian policy, so why
Speaker 1: not bring him in? Yes, I mean that the it's
Speaker 1: difficult basically that the argument for Sunac is very simple
Speaker 1: is you know I told do you so? Is that
Speaker 1: he was the choice of the MPs. He was the
Speaker 1: person who said this would happen, and it's happened. The
Speaker 1: difficulty this time around is that you have to get
Speaker 1: it sort of just through the MPs, and there there
Speaker 1: is a group of people who are still very cross
Speaker 1: from the right wing of the party about the idea
Speaker 1: that Sunac was somehow guilty of getting rid of Boris
Speaker 1: Johnson and Hunt. By contrast, there generally more well disposed
Speaker 1: to Hunt ran against Buck Johnson for the leadership a
Speaker 1: long time ago, but then he behaved sort of relatively
Speaker 1: well from then on, and people look at they don't
Speaker 1: have the same animous towards Hunt that they do towards Sunac.
Speaker 1: So from that point of view, actually, you know, Jeremy
Speaker 1: Hunter has played that yet another very clever candidate card
Speaker 1: by immediately announcing that he won't stand. You could imagine
Speaker 1: a situation that maybe in four or five days that
Speaker 1: will come back and not unlike Boris Johnson's heroes Cincinnatus,
Speaker 1: he gets dragged from the plow in the same way
Speaker 1: as people in this cool to run large editorial developments
Speaker 1: and be told to be told you know you're the
Speaker 1: only person who can do this right, and that that
Speaker 1: there may be a bit of that in it. And
Speaker 1: the conservative partly a party writ large over you know,
Speaker 1: two years from now, do they have a shot of
Speaker 1: keeping power here or is it just gotten beyond the
Speaker 1: pall Here They have a shot, but only in the
Speaker 1: sense of you're sitting there on the par three there
Speaker 1: is a chance of you getting a hole in one, um,
Speaker 1: but the odds are generally not in your favor. Yeah,
Speaker 1: they do. There is a narrow room whereby they go
Speaker 1: through the following things. Number one is they do elect
Speaker 1: probably either sac or Hunt. They elect someone who looks
Speaker 1: grown up and looks as if he knows what he's doing.
Speaker 1: Penny more than conceivably um if she had the other
Speaker 1: two next daughter. But they suddenly look much more stable,
Speaker 1: much more responsible. They somehow managed to keep the head
Speaker 1: bangers in order, and at the same token, the core
Speaker 1: bin Easta's inside the Labor Party goes slightly mad. And
Speaker 1: then finally some event happens that changes things, and that
Speaker 1: in the end it's almost like events as your hope.
Speaker 1: You look at British politics, like politics in several other countries,
Speaker 1: to be fair, at least in this way, it is
Speaker 1: astonishingly febrile. You know, things change unbelievably. It was only
Speaker 1: probably a year or so ago, a bit more than
Speaker 1: a year ago, that we were talking about Boris Johnson
Speaker 1: being you know, definitely instable and definitely out of control,
Speaker 1: but being totally unbeatable, where he was then got rid
Speaker 1: of because he parties and all that sort of stuff.
Speaker 1: So it's possible that something similar will happen, which makes
Speaker 1: whoever the incoming Prime minister is look very good and
Speaker 1: makes Starma look bad. But at the moment a people
Speaker 1: haven't seen a thirty point lead in British politics for
Speaker 1: a very very long time. John I might be old
Speaker 1: school here, but you know, when I look across the
Speaker 1: pond too, the you know, great Britain, I think of
Speaker 1: a world leader, stable, strong, uh you know, obviously a key, key,
Speaker 1: key partner for the United States. Is that feeling I mean?
Speaker 1: But then you know, the last several years, I've seen
Speaker 1: Brexit boy, and then I've seen you know, kind of this,
Speaker 1: the volatility we've seen in the political circles here and
Speaker 1: are is Great Britain concerned that they have lost are
Speaker 1: losing that type of reputation. Yeah, I think they are.
Speaker 1: I mean most obviously because you can see what the
Speaker 1: way the markets are treating, you know, treating the economy.
Speaker 1: We are looking to see what markets think of us
Speaker 1: in the same way as I can last remember that
Speaker 1: very kind of dimly obviously in the in the nineteen seventies.
Speaker 1: You know that was when you watched the British Chancellor
Speaker 1: going off to the I m F to see if
Speaker 1: they get some money. But more generally, you know, that
Speaker 1: was the type of thing that we imagined happened to
Speaker 1: countries like Italy. Um. And that's two points. That one
Speaker 1: one is actually and I'm not trying to sound defensively
Speaker 1: British about it, but there aren't There are a number
Speaker 1: of other places that could make the same kind of mistake.
Speaker 1: Italy is a per absolute prize example. You go, not
Speaker 1: only coming in with a somewhat truscy and style of
Speaker 1: doing things, well, you know, Italy has got even more debt.
Speaker 1: So that's that be careful. Britain has a long record
Speaker 1: in politics of being a harbinger of of what happens
Speaker 1: in other places. Well that there's a bit there, the
Speaker 1: bit which is different about Britain and which you mentioned
Speaker 1: the very beginning, that is Brexit. And the truth is
Speaker 1: that ever since Brexit it's got harder. And the part
Speaker 1: of the hardness is that you have a group of
Speaker 1: people in the Conservative Party who have exactly the same
Speaker 1: approach that people in the Labor Party. Some people in
Speaker 1: the Labor Party had in the nineteen seventies. Was the
Speaker 1: only reason why socialism didn't work was it hadn't been
Speaker 1: done properly. Well, there's a group of people within the
Speaker 1: Tory Party who's only you've you were Brexit, as you know,
Speaker 1: the only reason why it hasn't appeared to work because
Speaker 1: it hasn't been done properly, hasn't been as radical and
Speaker 1: extreme as they would like it to be. That's that
Speaker 1: was what Trust came in sort of sucking up to,
Speaker 1: and it didn't really help. But the underlying point is
Speaker 1: really simple. We we are a medium upper medium sized
Speaker 1: economy on the edge of an absolutely gigantic one in
Speaker 1: the shape of the European Union. And it's quite strong allies,
Speaker 1: as you pointed out to the you know, so it's
Speaker 1: strong historic links. But we trust Trust came in saying
Speaker 1: we are a big place. We can get away with this. Well,
Speaker 1: it's a bit like Sewers in the nineteen fifties. Is
Speaker 1: Britain is not as robust and independently as as it
Speaker 1: thought it was. I mean Britain. Of course, the Empire
Speaker 1: has shrunk dramatically over the last century, most most regretfully
Speaker 1: in North America. But but but my point was going
Speaker 1: to be, you're London is still a financial capital, I mean,
Speaker 1: a huge hub of trade. And the pound has managed
Speaker 1: to recover from big problems before. Look at you know
Speaker 1: how strong it got even after Soros. So I wonder,
Speaker 1: you know it does the pound recover from this or
Speaker 1: are we headed for parody now? Or does it? Does
Speaker 1: it recover? There seems to be again, if I knew
Speaker 1: how to gamble on the pound, I would be richer
Speaker 1: than I am. But that but basically I think the
Speaker 1: argument that we're in a kind of one ten to
Speaker 1: one fift against the dollar bit, which means that you know,
Speaker 1: there is there is definitely a cost of having had
Speaker 1: Liz Trust is that it's you know, the pound has
Speaker 1: gone down a slought. On the other hand, the idea
Speaker 1: that it's unlikely to get down further, largely because the
Speaker 1: government's the government in power can't do that much going forward.
Speaker 1: So we sort of know. One of the interesting things
Speaker 1: about the drum the British and pitched themselves into is
Speaker 1: that actually, if if you divided yourselves into one is
Speaker 1: labor Sweeney Labor Miller conservative, there's not a lot of
Speaker 1: difference between what you could do, um that that that
Speaker 1: one of you might want to borrow a bit more
Speaker 1: to spend a bit more in terms of um social
Speaker 1: equality and stuff, and the other one might be trying
Speaker 1: to be a bit more entrepreneurial. But there's not a
Speaker 1: big difference because there simply isn't much. There's not much
Speaker 1: money left and there's very little at the markets are
Speaker 1: going to let you do, and that people have just
Speaker 1: seen the cost of doing that. By any measure, Britain
Speaker 1: is going to have to borrow a lot of money
Speaker 1: next year anyway. Just start dealing with the problems. It's
Speaker 1: already paid for, alright. Great, great to get your time.
Speaker 1: You really appreciate your perspective. John Michael Waite, Bloombert News
Speaker 1: editor in Chief, reporting from London. Let's stay on the
Speaker 1: geopolitical track here, Mick mulroy, cofan of the Lobo Institute,
Speaker 1: joins us. Mike Weird, we've been focusing on the uk
Speaker 1: here that the potential of the coming pending change in
Speaker 1: leadership there. It just kind of helps us refocus, you know,
Speaker 1: the attention on Europe. I mean, it's it's started with
Speaker 1: Russia and the Ukraine and that is still front and center.
Speaker 1: So let's I'd love to just get your thoughts about
Speaker 1: where we are in Ukraine, how we should be thinking
Speaker 1: about it, and most importantly, how it might play out
Speaker 1: going forward. Yeah, so great to be with you guys.
Speaker 1: Um where we are in Ukraine right now. I think
Speaker 1: Russia has seen that they failed and they're objected to
Speaker 1: take the country. Now they're failing, and they're objective to
Speaker 1: maintain the terrain essentially that they've taken to The Ukrainian
Speaker 1: counterfest is still being successful and he is he being president.
Speaker 1: Putin has resorted to just terrorizing the civilian population through
Speaker 1: MRS strikes and now drown strikes, and now it looks
Speaker 1: like wholesale hostage taking of civilians in the Kirsan region,
Speaker 1: both to cover their with jaw and potentially to force
Speaker 1: into some kind of constricted service against our own country. So, uh,
Speaker 1: where we go from here? Where do they go from here? Um?
Speaker 1: You know without the US putting boots in the ground
Speaker 1: or apparently planes in the air. Um, does Ukraine have
Speaker 1: a chance? Yes? I think Ukraine has the initiative right
Speaker 1: now in the momentum I see them. Uh. It's gonna
Speaker 1: slow down in the winter, as you would expect due
Speaker 1: to the conditions, but they will continue to take terrain back. Uh.
Speaker 1: And it looks like the even the massive call up
Speaker 1: is not going to turn that around. So Ukraine will
Speaker 1: take incrementally take terrain back from the Russians throughout the winter,
Speaker 1: and then when the spring heads, I can see the
Speaker 1: counter offensive going in the full swing. The problem that
Speaker 1: everybody is most concerned about is what will President Putin
Speaker 1: do once he once he fully understands that he is
Speaker 1: not going to win this by the by staying within
Speaker 1: the bounds that he is right now, which is already uh,
Speaker 1: you know, essentially a series of war crimes that's masquerading
Speaker 1: as a military campaign. You know, Mike, you know you've
Speaker 1: got the perspective here, your former US Marine, former power
Speaker 1: military operations officer, at c I A. You know how
Speaker 1: these things can play out. My question is in Russia itself,
Speaker 1: is there any scenario where Putin loses popular support and
Speaker 1: there's a change at that level? You know, at first
Speaker 1: I did not think that, and I'm no Russian expert,
Speaker 1: but i do know Russian experts and I've talked to them,
Speaker 1: and it would appear that he is losing public support rapidly.
Speaker 1: Part of it is the fact that he's losing and
Speaker 1: you know, the citizens and uncertainly the elite. Uh, I
Speaker 1: don't want to see that. But also this massive called
Speaker 1: up turned everybody against the war. You know, before then, um,
Speaker 1: it was it was somebody else's war essentially for the
Speaker 1: average Russian. Now it's Russia's war. So in that might
Speaker 1: be why he's not only created this martial law situation
Speaker 1: and the four illegally annexed areas of Ukraine, but he's
Speaker 1: also uh setting a martial law in and around Moscow
Speaker 1: and other regions. So he might know that this is
Speaker 1: something that could cause him to be removed from power.
Speaker 1: And essentially dictators don't do well once they're removed from power.
Speaker 1: I mean, they usually have a very short lifespan. So this.
Speaker 1: This is something that's caused an issue back home. The
Speaker 1: biggest concern is that he'll he'll go up and and
Speaker 1: escalate this and potentially use uh tactic nuclear weapon or
Speaker 1: something like that. I am going to bring us back
Speaker 1: to the UK firm and in a way that maybe
Speaker 1: you wouldn't expect. But word has it. You've just come
Speaker 1: back from a philosophy conference in um in Athens, and Um,
Speaker 1: I've I've read your posed a case for a philosopher
Speaker 1: king on Modern Stoicism dot com. I was saying King
Speaker 1: um all day about how rough this must be for Liz. Trust. Yes,
Speaker 1: it's her own fault, she brought it on ourselves, but
Speaker 1: she has just gone through what must feel like the
Speaker 1: ultimate failure. You know, this is not like just failing
Speaker 1: at your business or you know, making a mistake getting
Speaker 1: fired at work. She's gone all the way up to
Speaker 1: prime minister and has now lost and become the shortest
Speaker 1: ruling prime minister in UK history. And Um kind of
Speaker 1: reminded me a bit of Marcus Aurelius when he was
Speaker 1: in a difficult situation. Um, how does a Stoic deal
Speaker 1: with this kind of horrific failure? With this kind of um,
Speaker 1: just humiliation. Well, first of all, thanks for reading my paper.
Speaker 1: Thank you, and my mom read that, so that's cool. Uh.
Speaker 1: And then I had a great time at the conference
Speaker 1: by the way, and not to get off topic, but
Speaker 1: they're about to escavate Plato's academy, which is currently right
Speaker 1: now park But it's super cool, very cool. So how
Speaker 1: does it? How does I mean? The one thing that
Speaker 1: I would say, UM, from the stoic perspective is failures
Speaker 1: in life are expected. Um, They're going to happen. Sometimes
Speaker 1: they're completely outside of your control. Not that this was um,
Speaker 1: but it's part of it. Is not is not that
Speaker 1: you try to avoid those failures. It's how you deal
Speaker 1: with the failure. Right. So you know, I used to
Speaker 1: be a boxing coach and I tell my boxers is
Speaker 1: not whether you're getting knocked down, it's whether you get
Speaker 1: back up, which I think is a very stoic way
Speaker 1: of looking at things. So she doesn't need advice from me,
Speaker 1: but I would you know, you know, the stiff upper
Speaker 1: lip and keep come and carry off. That's UK, that's
Speaker 1: the that's the UK saying, right, But it's also a
Speaker 1: very stoic I would just tell her to basically do that.
Speaker 1: Winston Churchill also had some significant failures in his life,
Speaker 1: and you know what, he's going to go down as
Speaker 1: the most one of the most significant leaders in history
Speaker 1: quite frankly. So I'm not, you know, don't know how
Speaker 1: it'll work out for her, but I would certainly I
Speaker 1: would certainly have a broader perspective, uh and and ask
Speaker 1: her to consider that the UK is a significant major
Speaker 1: ally in the So this is obviously concerned for us
Speaker 1: when it comes to not only the war in Ukraine
Speaker 1: but everything that we deal with internationally. Absolutely all right, Mick,
Speaker 1: thank you so much for taking a time to join us.
Speaker 1: We always appreciate getting your perspective. Mc mulroy, co founder
Speaker 1: of the Lobo Institute. Thanks for listening to the Bloomberg
Speaker 1: Markets podcast. You can subscribe and listen to interviews at
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
Speaker 1: I'm on Twitter at Matt Miller three. Pet On Ball
Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
Speaker 1: you can always catch us worldwide at Bloomberg Radio.