1 00:00:10,680 --> 00:00:14,360 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:14,400 --> 00:00:17,960 Speaker 1: I'm Joe wi Isn't All and I'm Tracy Allaway. Tracy 3 00:00:18,200 --> 00:00:21,880 Speaker 1: obviously on the podcast lately, I would say we've been 4 00:00:21,920 --> 00:00:28,000 Speaker 1: talking about events in this crisis that are extremely fast moving, 5 00:00:28,200 --> 00:00:31,000 Speaker 1: and we've kind of been joking around that perhaps in 6 00:00:31,040 --> 00:00:34,240 Speaker 1: some cases by the time people actually listen to the episode, 7 00:00:34,680 --> 00:00:38,080 Speaker 1: it'll become it'll be irrelevant or extremely out of date 8 00:00:38,120 --> 00:00:41,120 Speaker 1: by by the time it actually gets out. Yeah, I'm 9 00:00:41,159 --> 00:00:44,280 Speaker 1: not even sure it's a joke really, because there have 10 00:00:44,400 --> 00:00:47,080 Speaker 1: been a few episodes that have been sort of superseded 11 00:00:47,360 --> 00:00:51,200 Speaker 1: by events. It's been a struggle. So in light of that, 12 00:00:51,360 --> 00:00:54,280 Speaker 1: I think today's episode might be a little bit risky, 13 00:00:54,400 --> 00:00:59,600 Speaker 1: like even riskier than our normal one. Oh boy. Why. Well, 14 00:00:59,640 --> 00:01:02,320 Speaker 1: the reason I say it is because we're going to try, 15 00:01:02,440 --> 00:01:04,440 Speaker 1: and I don't know if we'll be successful, but we're 16 00:01:04,440 --> 00:01:07,640 Speaker 1: going to try and look a little bit big picture 17 00:01:07,760 --> 00:01:11,520 Speaker 1: and sort of bigger lessons, bigger themes that we can 18 00:01:11,560 --> 00:01:13,800 Speaker 1: take away from all the events that we've seen over 19 00:01:13,920 --> 00:01:19,080 Speaker 1: the last couple of months. And I think almost everyone 20 00:01:19,200 --> 00:01:21,679 Speaker 1: who tries to project forward on what it all means 21 00:01:21,720 --> 00:01:25,080 Speaker 1: will probably be looking a little bit foolish in some respect, 22 00:01:25,560 --> 00:01:28,680 Speaker 1: but that's kind of what we're gonna attempt to do today. 23 00:01:28,760 --> 00:01:31,840 Speaker 1: I mean, it's what everyone is interested in at the moment. 24 00:01:31,959 --> 00:01:35,600 Speaker 1: But as you say, forecasting this is hard because, as 25 00:01:35,640 --> 00:01:39,000 Speaker 1: we have discussed, a sort of ad nauseum at this point, 26 00:01:39,040 --> 00:01:42,280 Speaker 1: everything has the potential to change with the current crisis, 27 00:01:42,319 --> 00:01:46,080 Speaker 1: and we really are in uncharted territory in many ways. 28 00:01:46,160 --> 00:01:49,600 Speaker 1: So yeah, sympathy for the forecasters at this point. It's 29 00:01:49,680 --> 00:01:52,080 Speaker 1: it's a tough call of putting your neck out there 30 00:01:52,120 --> 00:01:55,960 Speaker 1: for something completely unknown, right, So fortunately, I don't think 31 00:01:55,960 --> 00:01:59,000 Speaker 1: we're going to make our guests today forecast the future, 32 00:01:59,160 --> 00:02:04,200 Speaker 1: which is, as you say, extremely difficult even in normal times. 33 00:02:04,240 --> 00:02:08,120 Speaker 1: But our guest today is someone who has a sort 34 00:02:08,120 --> 00:02:12,640 Speaker 1: of very good ability to sum up the big themes 35 00:02:12,680 --> 00:02:17,120 Speaker 1: of the moment and identify what, at essence, what what 36 00:02:17,240 --> 00:02:20,840 Speaker 1: a crisis is really all about. Who are we speaking to? 37 00:02:21,320 --> 00:02:25,120 Speaker 1: So today we're going to be speaking to Adam Two's uh. 38 00:02:25,160 --> 00:02:27,600 Speaker 1: A lot of people will know him as the author 39 00:02:27,720 --> 00:02:31,080 Speaker 1: of the book Crashed, which was the sort of magnificent 40 00:02:31,280 --> 00:02:34,680 Speaker 1: overview of the last financial crisis, and he is also 41 00:02:34,800 --> 00:02:38,560 Speaker 1: the Catherine and Shelby Colin Davis, Professor of History at 42 00:02:38,639 --> 00:02:42,720 Speaker 1: Columbia University. And for those who don't know who didn't 43 00:02:42,720 --> 00:02:45,720 Speaker 1: read it, Crashed was. You know, there were a lot 44 00:02:45,720 --> 00:02:49,120 Speaker 1: of crisis books, but Crashed really sort of identified the 45 00:02:49,160 --> 00:02:52,680 Speaker 1: tensions that emerge from the sort of global dollar system 46 00:02:52,680 --> 00:02:55,440 Speaker 1: and how that really sort of played a huge part 47 00:02:55,480 --> 00:02:58,280 Speaker 1: in the coming undone of the economy just over a 48 00:02:58,320 --> 00:03:02,120 Speaker 1: decade ago. And we'll talk to Adam about what he 49 00:03:02,240 --> 00:03:07,000 Speaker 1: sees as potentially this is the equivalent stresses that he's 50 00:03:07,000 --> 00:03:10,000 Speaker 1: seeing in the system today. So Adam, thank you very 51 00:03:10,040 --> 00:03:12,120 Speaker 1: much for joining us. God, it's a pleasure to be here. 52 00:03:12,200 --> 00:03:15,720 Speaker 1: Thanks for having me on your your book, Crashed was. 53 00:03:16,200 --> 00:03:19,280 Speaker 1: I think it came out in a summer of eighteen. 54 00:03:19,840 --> 00:03:23,520 Speaker 1: Actually did read the whole thing during a week vacation 55 00:03:24,000 --> 00:03:26,160 Speaker 1: that I had on the beach. I was a big 56 00:03:26,160 --> 00:03:28,639 Speaker 1: fan of it. But for those who don't know, I 57 00:03:28,840 --> 00:03:31,720 Speaker 1: I sort of gave a half a sentence summary. But 58 00:03:32,200 --> 00:03:35,280 Speaker 1: it came out on so basically eight years after the crisis. 59 00:03:35,840 --> 00:03:38,840 Speaker 1: What was it about that crisis that took so long 60 00:03:38,920 --> 00:03:42,800 Speaker 1: for you to sort of really tied together the big 61 00:03:42,840 --> 00:03:45,240 Speaker 1: themes and to sort of put it all together in 62 00:03:45,320 --> 00:03:48,360 Speaker 1: such a such a big work. Well, I think, I mean, 63 00:03:48,440 --> 00:03:53,600 Speaker 1: I'm I'm somewhat accidental tourists, if you like, in century 64 00:03:53,640 --> 00:03:56,360 Speaker 1: financial history, and I now found myself in the room 65 00:03:56,440 --> 00:03:59,560 Speaker 1: and stuck on this particular island. But I came to 66 00:03:59,640 --> 00:04:01,720 Speaker 1: it some bliquely, I have to say, I mean, I 67 00:04:01,800 --> 00:04:05,400 Speaker 1: came to the topic through the history of the Eurozone crisis, 68 00:04:06,200 --> 00:04:09,760 Speaker 1: which concerned me deeply as as somebody who's deeply passionately 69 00:04:09,800 --> 00:04:12,040 Speaker 1: identified with the EU as a result of my upbring 70 00:04:13,000 --> 00:04:15,560 Speaker 1: and then thinking hard about what sort of a crisis 71 00:04:15,600 --> 00:04:20,119 Speaker 1: that was following the track back to the story really 72 00:04:20,160 --> 00:04:22,719 Speaker 1: about the bank based crisis as opposed to the sovereign 73 00:04:22,720 --> 00:04:26,560 Speaker 1: debt crisis as being a kernel really of the disruption. Um, 74 00:04:26,560 --> 00:04:30,840 Speaker 1: setting aside the immediate Greek issue, thinking about the instability 75 00:04:30,880 --> 00:04:33,640 Speaker 1: of the European banking system that echoes through from two 76 00:04:33,640 --> 00:04:37,240 Speaker 1: thousand and eight, and then basically stumbling across the b 77 00:04:37,360 --> 00:04:40,440 Speaker 1: I S papers um, you know, the work of Shin 78 00:04:40,600 --> 00:04:45,080 Speaker 1: and Boreo and others that matt this vary in some 79 00:04:45,120 --> 00:04:48,279 Speaker 1: sense sort of counterintuitive story of the world before two 80 00:04:48,279 --> 00:04:50,800 Speaker 1: thousand and eight, not as a world of you know, 81 00:04:50,880 --> 00:04:55,080 Speaker 1: driven essentially by current encountering the current accounting balances, trade deficits, 82 00:04:55,080 --> 00:04:59,080 Speaker 1: and surfaces, but thinking through the flows of money through 83 00:04:59,680 --> 00:05:03,840 Speaker 1: the the global dollar system and understanding that as one 84 00:05:03,920 --> 00:05:08,600 Speaker 1: of the ways in which the supposedly American subcrime crisis 85 00:05:08,640 --> 00:05:11,240 Speaker 1: of two thousand and eight in fact entangled all of 86 00:05:11,279 --> 00:05:14,480 Speaker 1: the European banks. And it was really that that set 87 00:05:14,560 --> 00:05:17,360 Speaker 1: me going, and I did then have I've always heard 88 00:05:17,400 --> 00:05:19,960 Speaker 1: I've had a longstanding preoccupation with the question of American 89 00:05:20,000 --> 00:05:22,240 Speaker 1: and Germany American power, which goes all the way back 90 00:05:22,279 --> 00:05:25,800 Speaker 1: to the beginning unit to World War One, and recognizing 91 00:05:25,839 --> 00:05:27,520 Speaker 1: all of a sudden that looking at this twenty first 92 00:05:27,560 --> 00:05:30,359 Speaker 1: century crisis two thousand and eight, I was actually looking 93 00:05:30,400 --> 00:05:33,480 Speaker 1: at because it were the latest chapter, then the latest 94 00:05:33,560 --> 00:05:37,600 Speaker 1: chapter of the fed's role as the pivot, the anchor 95 00:05:37,680 --> 00:05:40,680 Speaker 1: of the global dollar system, which is a story that 96 00:05:40,720 --> 00:05:43,560 Speaker 1: goes back to the very origins of the FED just 97 00:05:43,680 --> 00:05:46,640 Speaker 1: before World War One and then critically from nine onwards. 98 00:05:46,680 --> 00:05:48,640 Speaker 1: So that's how I ended up engaging with it, and 99 00:05:48,680 --> 00:05:51,680 Speaker 1: then the public keep publishing opportunity of the anniversary, the 100 00:05:51,680 --> 00:05:54,680 Speaker 1: tenure anniversary came along, and that's how the sort of 101 00:05:54,720 --> 00:05:57,320 Speaker 1: the book came to be released. When it was there 102 00:05:57,400 --> 00:05:59,760 Speaker 1: is I think if you go back to and subsequent 103 00:05:59,839 --> 00:06:02,440 Speaker 1: like a strand of analysis, and you think of the 104 00:06:02,520 --> 00:06:04,440 Speaker 1: likes Assault and Post are perimodil, and all of the 105 00:06:04,440 --> 00:06:07,279 Speaker 1: people you've had on your show who have been had 106 00:06:07,360 --> 00:06:10,560 Speaker 1: been in real time teasing away at the problem from 107 00:06:10,560 --> 00:06:13,680 Speaker 1: that side. And really what Crash tried to do was 108 00:06:13,760 --> 00:06:18,760 Speaker 1: to connect that rather technical literature on the dollar system, 109 00:06:18,920 --> 00:06:22,640 Speaker 1: on the financing, the market based financing of the global 110 00:06:22,680 --> 00:06:25,599 Speaker 1: banking system, connect that to a grand narrative which had 111 00:06:25,600 --> 00:06:29,520 Speaker 1: previously really revolved around current account deficits, the standard story 112 00:06:29,600 --> 00:06:32,120 Speaker 1: of you know, the nightmare of the Chinese treasury sell off, 113 00:06:32,160 --> 00:06:35,560 Speaker 1: that entire fantasy with support is not what actually happened. 114 00:06:36,000 --> 00:06:37,719 Speaker 1: So that was really the wager of that book was 115 00:06:37,760 --> 00:06:40,719 Speaker 1: that you could take this technical analysis which in some 116 00:06:40,839 --> 00:06:42,719 Speaker 1: you know, some people will refer to as the plumbing 117 00:06:42,720 --> 00:06:48,960 Speaker 1: of the system, and connected to broader issues of political economy, 118 00:06:49,000 --> 00:06:51,320 Speaker 1: which is now of course very much the dumb thing. 119 00:06:51,400 --> 00:06:55,720 Speaker 1: This is really the analysis where where you guys obviously pioneers, 120 00:06:55,760 --> 00:06:59,600 Speaker 1: but you could also think of Alphabill Perry to Assault 121 00:06:59,640 --> 00:07:02,719 Speaker 1: and Post, Daniel Legarbor. There's an entire genre of macro 122 00:07:02,839 --> 00:07:06,599 Speaker 1: finance really now as critical political economy of which crashed. 123 00:07:06,640 --> 00:07:08,680 Speaker 1: I would I would take, just to be one example. 124 00:07:09,760 --> 00:07:12,560 Speaker 1: I was about to ask, just on that note, how 125 00:07:12,640 --> 00:07:15,560 Speaker 1: much of that sort of dollar dominance of the financial 126 00:07:15,560 --> 00:07:20,400 Speaker 1: system slash US hegemony would you say exists today, because 127 00:07:20,720 --> 00:07:22,920 Speaker 1: people we certainly talk to you you seem to suggest that, 128 00:07:22,960 --> 00:07:26,640 Speaker 1: if anything, it's become more entrenched than it was pretty 129 00:07:26,640 --> 00:07:30,200 Speaker 1: two thousands. Yeah, I mean, I think pross Had's idea 130 00:07:30,240 --> 00:07:33,640 Speaker 1: of the dollar trap is a is a quite compelling idea, right, because, 131 00:07:33,680 --> 00:07:38,679 Speaker 1: after all, the the reliance on global commerce, on global finance, 132 00:07:38,720 --> 00:07:43,080 Speaker 1: on the dollar is is not is not simply reducible 133 00:07:43,160 --> 00:07:46,000 Speaker 1: to politics or geopolitics, right, and so therefore is not 134 00:07:46,080 --> 00:07:48,640 Speaker 1: vulnerable to the shenanigans in Washington, or the character of 135 00:07:48,680 --> 00:07:51,080 Speaker 1: Donald Trump, or any of these other sorts of things. 136 00:07:51,480 --> 00:07:56,040 Speaker 1: I mean, it's an incredibly powerful entrenched system which originated 137 00:07:56,120 --> 00:07:58,720 Speaker 1: in power political shifts in the early twentieth century and 138 00:07:58,800 --> 00:08:01,000 Speaker 1: the rise of the United States economy and their eyes 139 00:08:01,000 --> 00:08:04,160 Speaker 1: of Wall Street and Wall Street based banks, and now 140 00:08:04,200 --> 00:08:07,240 Speaker 1: of course it's sustained my massive network effects. So you know, 141 00:08:07,320 --> 00:08:09,640 Speaker 1: if you have major commodities being traded in this way, 142 00:08:09,680 --> 00:08:13,280 Speaker 1: if you have major sources of trade finance being organized 143 00:08:13,280 --> 00:08:15,480 Speaker 1: around the dollar. If you have the depth and sophistication 144 00:08:15,520 --> 00:08:19,720 Speaker 1: of America's financial institutions, then all sorts of actors around 145 00:08:19,760 --> 00:08:21,880 Speaker 1: the world will begin to coordinate, will begin to use 146 00:08:21,920 --> 00:08:25,400 Speaker 1: the dollar as their basic vehicle. And you're absolutely right. 147 00:08:25,440 --> 00:08:29,120 Speaker 1: I mean the drift of the emerging market world, I mean, 148 00:08:29,200 --> 00:08:30,800 Speaker 1: which is a sort of you know, a monika, which 149 00:08:30,840 --> 00:08:32,960 Speaker 1: is becoming less and less helpful because if you never remember, 150 00:08:32,960 --> 00:08:36,840 Speaker 1: it used to include countries like South Korea, highly sophisticated 151 00:08:37,120 --> 00:08:41,520 Speaker 1: twenty one century players in a multipolar globalization. Those countries 152 00:08:41,559 --> 00:08:44,520 Speaker 1: are also piggybacking on the dollar. We know that private 153 00:08:44,520 --> 00:08:48,079 Speaker 1: borrowers and China even heavily rely on the dollar for funding, 154 00:08:48,559 --> 00:08:53,000 Speaker 1: so so that indeed does tend to create a sort 155 00:08:53,000 --> 00:08:56,920 Speaker 1: of a bandwagon, a snowballing dependence on the dollar, which 156 00:08:57,040 --> 00:09:01,800 Speaker 1: is very pervasive. So I remember when I read Crashed, 157 00:09:01,800 --> 00:09:05,640 Speaker 1: and you focused a lot of attention on the necessity 158 00:09:05,840 --> 00:09:09,160 Speaker 1: of these UH dollar swap lines or swap lines that 159 00:09:09,240 --> 00:09:12,400 Speaker 1: the Federal Reserve set up with central banks around the 160 00:09:12,400 --> 00:09:15,240 Speaker 1: world so that domestic borrowers and other countries could get 161 00:09:15,280 --> 00:09:18,240 Speaker 1: access to dollar liquidity. Since there was the central problem, 162 00:09:18,240 --> 00:09:20,640 Speaker 1: and I remember thinking at the time, man, if they 163 00:09:20,679 --> 00:09:22,960 Speaker 1: ever had to do this again, this would probably be 164 00:09:23,040 --> 00:09:26,600 Speaker 1: very politically controversial. Maybe people weren't as aware at the 165 00:09:26,679 --> 00:09:30,160 Speaker 1: time of that, But now here we are and they've 166 00:09:30,200 --> 00:09:32,720 Speaker 1: done it again, and yet there's about a million other 167 00:09:32,840 --> 00:09:35,319 Speaker 1: things that people are focused on, so it actually has 168 00:09:35,360 --> 00:09:39,840 Speaker 1: not gotten that much attention. In a sense. The issue 169 00:09:39,880 --> 00:09:44,600 Speaker 1: that you identified is as central then is just like 170 00:09:44,880 --> 00:09:47,880 Speaker 1: it almost feels like a minor chapter in a sense 171 00:09:48,280 --> 00:09:52,240 Speaker 1: of the given the enormity of this crisis. Well, I mean, 172 00:09:52,480 --> 00:09:54,600 Speaker 1: I think from the point of view if the recipients 173 00:09:54,640 --> 00:09:56,760 Speaker 1: of the swap lines in the current moment, it's been 174 00:09:56,800 --> 00:10:01,000 Speaker 1: pretty important and um in oh a, it was critical 175 00:10:01,200 --> 00:10:03,840 Speaker 1: because the people on the other end of the swap 176 00:10:03,880 --> 00:10:08,040 Speaker 1: lines were essentially the big financial centers in in Europe, right, 177 00:10:08,080 --> 00:10:10,040 Speaker 1: So if you look at the flow of funds through 178 00:10:10,120 --> 00:10:13,800 Speaker 1: the swap line system in twenty it's completely different from 179 00:10:13,800 --> 00:10:15,719 Speaker 1: the flow of funds through the swap line system in 180 00:10:16,679 --> 00:10:19,400 Speaker 1: I mean, the biggest recipients, you know, eight were basically 181 00:10:19,400 --> 00:10:22,640 Speaker 1: the CP and that was because we had these gigantic, 182 00:10:22,760 --> 00:10:28,520 Speaker 1: monolithic European banks which were engaged in deeply entangled in 183 00:10:28,559 --> 00:10:32,720 Speaker 1: the American mortgage boom and the financial engineering of the 184 00:10:32,720 --> 00:10:35,480 Speaker 1: early two thousands and were in serious and the serious 185 00:10:35,480 --> 00:10:38,120 Speaker 1: funding stress, and the FED was doing its best to 186 00:10:38,120 --> 00:10:39,959 Speaker 1: support them in Wall Street. And when they ran out 187 00:10:39,960 --> 00:10:43,280 Speaker 1: of good dollar collateral, that needed roundabout mechanisms for supporting them. 188 00:10:43,320 --> 00:10:45,960 Speaker 1: And that's why at that moment the swap lines were 189 00:10:45,960 --> 00:10:48,680 Speaker 1: absolutely critical. They already then rolled them out to a 190 00:10:48,720 --> 00:10:50,760 Speaker 1: select group of emerging markets. But if you look at 191 00:10:50,800 --> 00:10:53,680 Speaker 1: the flow of funds through the system, it's overwhelmingly to 192 00:10:53,720 --> 00:10:56,480 Speaker 1: the e CP this time around. You know, a lot 193 00:10:56,520 --> 00:10:59,720 Speaker 1: of folks are monomiting, monitoring this in very closely in 194 00:10:59,760 --> 00:11:01,800 Speaker 1: real time, and it's pretty obvious. I think that this 195 00:11:01,920 --> 00:11:05,480 Speaker 1: time around the main flow of funds in absolute size 196 00:11:05,520 --> 00:11:09,000 Speaker 1: and also proportionally it is to a bubble bank of Japan, 197 00:11:10,000 --> 00:11:14,600 Speaker 1: another borrowers in Asia, where we think various types of 198 00:11:15,480 --> 00:11:18,800 Speaker 1: currency mismatch exists, or shall we say, on the balance sheets, 199 00:11:19,000 --> 00:11:21,880 Speaker 1: if not even necessarily banks, but some non bank actors 200 00:11:21,920 --> 00:11:25,200 Speaker 1: in in Asia. So in a sense I agree that 201 00:11:25,640 --> 00:11:29,599 Speaker 1: the swap lines are as it were less quantitatively significant 202 00:11:29,600 --> 00:11:31,280 Speaker 1: than they were. But then this is also a very 203 00:11:31,280 --> 00:11:35,440 Speaker 1: different type of financial crisis. Um. The one thing that 204 00:11:35,640 --> 00:11:37,760 Speaker 1: is very telling is that They were rolled out almost 205 00:11:37,800 --> 00:11:41,040 Speaker 1: immediately as part of the first big spontaneous action by 206 00:11:41,040 --> 00:11:42,800 Speaker 1: the well, the first big action by the FED on 207 00:11:43,480 --> 00:11:47,360 Speaker 1: the weekend of March fift so swap lines were immediately 208 00:11:47,400 --> 00:11:49,600 Speaker 1: part of the package. The Fed wanted to eliminate the 209 00:11:49,600 --> 00:11:52,920 Speaker 1: possibility really of distressed selling I think, or stressed selling 210 00:11:52,960 --> 00:11:55,760 Speaker 1: of treasuries, which they saw some of I think um 211 00:11:56,080 --> 00:11:58,840 Speaker 1: in the second and third week of of March, and 212 00:11:58,880 --> 00:12:01,760 Speaker 1: that of course would have been profoundly destabilizing. So that's 213 00:12:01,760 --> 00:12:04,920 Speaker 1: what they wanted to eliminate. Then here is a very 214 00:12:04,960 --> 00:12:06,720 Speaker 1: good news from the Treasury's point of view. This is 215 00:12:06,720 --> 00:12:09,160 Speaker 1: a bit of the system which seems to be working 216 00:12:09,240 --> 00:12:11,440 Speaker 1: quite well. And then I think it's also quite telling 217 00:12:11,440 --> 00:12:16,480 Speaker 1: that they created this new innovative mechanism through which, at 218 00:12:16,559 --> 00:12:18,400 Speaker 1: least notionally, are the central banks are going to be 219 00:12:18,440 --> 00:12:22,719 Speaker 1: able to repot treasury is. Again I think basically devised 220 00:12:22,760 --> 00:12:24,680 Speaker 1: as a mechanism, it was something that Brad Sets at 221 00:12:24,679 --> 00:12:27,760 Speaker 1: the CFR was arguing for as a way of allowing 222 00:12:28,200 --> 00:12:31,240 Speaker 1: central banks in the emerging market world to gain dollar 223 00:12:31,320 --> 00:12:34,440 Speaker 1: liquidity without actually having to sell off any parts of 224 00:12:34,480 --> 00:12:40,720 Speaker 1: their treasury portfolios. I've been trying to sort of get 225 00:12:40,760 --> 00:12:43,880 Speaker 1: this idea straight in my head. But two thousand eight 226 00:12:43,960 --> 00:12:49,920 Speaker 1: feels to me like a very very financial crisis, like 227 00:12:50,320 --> 00:12:52,880 Speaker 1: all the problems were sort of isolated in the financial 228 00:12:52,920 --> 00:12:56,480 Speaker 1: system and then that's spilled over into the economy, Whereas 229 00:12:56,520 --> 00:13:00,560 Speaker 1: what we're experiencing now is arguably a very very big 230 00:13:00,640 --> 00:13:04,240 Speaker 1: economic crisis and it doesn't feel like the problems are 231 00:13:04,400 --> 00:13:07,839 Speaker 1: as serious in the financial system. Is that the right 232 00:13:07,880 --> 00:13:10,800 Speaker 1: way of looking at it, or what would you say 233 00:13:10,880 --> 00:13:15,040 Speaker 1: is actually different about now versus two thousand eight. I 234 00:13:15,080 --> 00:13:17,280 Speaker 1: think that question is going to preoccupy all of us 235 00:13:17,400 --> 00:13:20,120 Speaker 1: till Kingdom come. I mean, historians will be trying to 236 00:13:20,280 --> 00:13:25,160 Speaker 1: pinpoint quite apart from the absurd ninety degree pivots in 237 00:13:25,200 --> 00:13:29,160 Speaker 1: several of our major indicators. You know, the contrasting headlines 238 00:13:29,200 --> 00:13:31,040 Speaker 1: of the Financial Times. I think this morning with the 239 00:13:31,040 --> 00:13:33,920 Speaker 1: oil gag in the negative and unemployment number in New 240 00:13:34,000 --> 00:13:36,880 Speaker 1: York Times cover Yes, clearly this is a very different event. 241 00:13:36,920 --> 00:13:40,480 Speaker 1: I think two and eight in retrospect, looks like an 242 00:13:40,520 --> 00:13:46,319 Speaker 1: absolutely massive transnational version of a of a classic boom 243 00:13:46,320 --> 00:13:49,720 Speaker 1: bust cycle, driven by the classic driver, which is the 244 00:13:49,800 --> 00:13:53,959 Speaker 1: harnessing together of real and financial in the real estate 245 00:13:54,040 --> 00:13:57,960 Speaker 1: construction mortgage finance sector, and then various other things spinning 246 00:13:58,000 --> 00:14:00,880 Speaker 1: off from that. But that's kind of what that christ is. Increasingly, 247 00:14:00,960 --> 00:14:04,400 Speaker 1: I think it looks like very very enormous so quantity 248 00:14:04,400 --> 00:14:06,920 Speaker 1: into quality. At some point when a when a classic 249 00:14:06,960 --> 00:14:10,040 Speaker 1: crisis gets that big, it changes nature because all of 250 00:14:10,040 --> 00:14:14,040 Speaker 1: a sudden, you know, the American mortgage finance system enrolled 251 00:14:14,120 --> 00:14:16,840 Speaker 1: basically all of European high finance too, never had to 252 00:14:16,880 --> 00:14:19,560 Speaker 1: manage a crisis quite like that before. But I agree 253 00:14:19,600 --> 00:14:21,520 Speaker 1: that has a kind of classic feel, and it's a 254 00:14:21,560 --> 00:14:25,440 Speaker 1: classic cycle also in that that it's it's tail wagging dog. 255 00:14:25,480 --> 00:14:29,200 Speaker 1: In other words, you have some small, dynamic over leverage 256 00:14:29,320 --> 00:14:34,480 Speaker 1: cyclically sensitive sector which then causes a ripple effect systemic 257 00:14:34,480 --> 00:14:37,680 Speaker 1: shock to the rest of the economy. The truly unusual 258 00:14:37,720 --> 00:14:40,400 Speaker 1: thing about this crisis is that we were just full 259 00:14:40,440 --> 00:14:43,360 Speaker 1: body checked, if you like, the largest slice of the 260 00:14:43,400 --> 00:14:47,119 Speaker 1: modern economy, which is the service sector and household consumption. 261 00:14:47,600 --> 00:14:50,120 Speaker 1: We're just stop dead or not, if not stop dead, 262 00:14:50,160 --> 00:14:53,680 Speaker 1: then subject to an absolutely massive shop So there isn't 263 00:14:53,720 --> 00:14:56,240 Speaker 1: the tail wagging the dog quality. In fact, it feels 264 00:14:56,240 --> 00:15:00,320 Speaker 1: a little bit more as though anticipating that because it 265 00:15:00,360 --> 00:15:02,680 Speaker 1: hadn't the shock hadn't even really quite arrived yet, let 266 00:15:02,720 --> 00:15:07,120 Speaker 1: alone the virus itself. In March. Financial markets then really 267 00:15:07,160 --> 00:15:09,480 Speaker 1: began to panic. And that is in a sense where 268 00:15:09,600 --> 00:15:12,920 Speaker 1: we suddenly get the very close analogies between or at 269 00:15:13,000 --> 00:15:19,160 Speaker 1: least some similarities between March and two thousand and seven eight. 270 00:15:19,320 --> 00:15:21,760 Speaker 1: It's in that moment, in a sense, when the financial 271 00:15:21,800 --> 00:15:25,400 Speaker 1: markets realize, oh my god, something utterly unprecedented is coming 272 00:15:25,400 --> 00:15:28,640 Speaker 1: our way in let's call it the real economy, that 273 00:15:28,680 --> 00:15:32,720 Speaker 1: you begin to get, as it were, anxiety around the 274 00:15:32,760 --> 00:15:35,400 Speaker 1: whole range of products and the whole range of credit 275 00:15:35,480 --> 00:15:38,600 Speaker 1: markets that the FED also found itself intervening in oh 276 00:15:38,640 --> 00:15:40,800 Speaker 1: seven or eight, that I agree to a very different 277 00:15:41,000 --> 00:15:45,000 Speaker 1: The causation is is radically different. And and we of 278 00:15:45,040 --> 00:15:49,000 Speaker 1: course also don't know what our system looks like under 279 00:15:49,040 --> 00:15:52,200 Speaker 1: the sorts of stresses that we might be headed into 280 00:15:52,240 --> 00:15:54,000 Speaker 1: at the pace we're heading into them, and we don't 281 00:15:54,000 --> 00:15:56,800 Speaker 1: I'm not sure that we really know what the world 282 00:15:56,800 --> 00:16:00,240 Speaker 1: economy or the American national economy, how it functions, its 283 00:16:00,240 --> 00:16:02,160 Speaker 1: subject to the kind of hits we're going to be 284 00:16:02,240 --> 00:16:05,840 Speaker 1: absorbing over the next two or three months. So is 285 00:16:05,920 --> 00:16:08,360 Speaker 1: the difference this time around, are one of the differences 286 00:16:08,680 --> 00:16:12,520 Speaker 1: the speed of the regulatory response, maybe because the Federal 287 00:16:12,560 --> 00:16:15,840 Speaker 1: Reserve sort of have the experience of two thousand eads 288 00:16:15,960 --> 00:16:20,360 Speaker 1: and had tools ready to go in some sense, such 289 00:16:20,400 --> 00:16:23,360 Speaker 1: as the dollar swaplines and a few other programs that 290 00:16:23,800 --> 00:16:27,800 Speaker 1: were quickly revived. Yeah, I mean asset purchasing. You know, 291 00:16:27,840 --> 00:16:29,920 Speaker 1: you've got people like low Logan and so on at 292 00:16:29,920 --> 00:16:33,440 Speaker 1: the FED who just really know how to buy if 293 00:16:33,480 --> 00:16:37,520 Speaker 1: they have to epic quantities of assets incredibly quickly. They 294 00:16:37,560 --> 00:16:39,600 Speaker 1: know what the legal instruments have got to be, they 295 00:16:39,640 --> 00:16:42,080 Speaker 1: know who their partners are in the market, and so 296 00:16:42,160 --> 00:16:44,840 Speaker 1: they can just do this. Again, we have to recognize 297 00:16:44,840 --> 00:16:48,080 Speaker 1: the novelty of what they're doing because it is asset purchasing, 298 00:16:48,640 --> 00:16:50,720 Speaker 1: but it's asset purchasing or or eight. Yeah, and you 299 00:16:50,760 --> 00:16:54,320 Speaker 1: know the numbers like a million dollars a second, ninety 300 00:16:54,360 --> 00:16:57,520 Speaker 1: billion a day. That's the sort of rate and business 301 00:16:57,520 --> 00:17:00,520 Speaker 1: that the FED was doing once a month under the Nankee, 302 00:17:00,520 --> 00:17:02,360 Speaker 1: and they're doing it on a day by day basis, 303 00:17:02,360 --> 00:17:04,159 Speaker 1: and they're doing it day after day after day. I mean, 304 00:17:04,200 --> 00:17:06,000 Speaker 1: we're down to forty five billion a day now, but 305 00:17:06,040 --> 00:17:09,000 Speaker 1: it's still absolutely astonishing in its scale. And for that, 306 00:17:09,080 --> 00:17:12,080 Speaker 1: you need teams of people, you know, who know what 307 00:17:12,119 --> 00:17:14,119 Speaker 1: they're doing and for whom it's not just a completely 308 00:17:14,359 --> 00:17:17,080 Speaker 1: crazy request. Um, so yes, they had all of those 309 00:17:17,119 --> 00:17:19,760 Speaker 1: instruments in place. I do think again, we're going to 310 00:17:19,800 --> 00:17:21,320 Speaker 1: be historians and for a long time we're gonna be 311 00:17:21,320 --> 00:17:23,880 Speaker 1: puzzling over, you know, the makeup of the FED, in fact, 312 00:17:23,920 --> 00:17:25,760 Speaker 1: the ECB at this moment. I did a post last 313 00:17:25,840 --> 00:17:29,120 Speaker 1: night just trying to pull together the input from all 314 00:17:29,119 --> 00:17:31,600 Speaker 1: of the journalist teams around the world who've been doing 315 00:17:31,640 --> 00:17:34,480 Speaker 1: these stories on who are these central bankers? Because we've 316 00:17:34,600 --> 00:17:36,040 Speaker 1: been Nankee, we kind of had it, you know, we 317 00:17:36,160 --> 00:17:38,240 Speaker 1: felt and at least as an academic, I felt I 318 00:17:38,240 --> 00:17:40,159 Speaker 1: had some kind of red on the Nankee because he 319 00:17:40,240 --> 00:17:43,239 Speaker 1: was after economic historian. We know that he was a 320 00:17:43,240 --> 00:17:46,120 Speaker 1: student of you know, Freedman and Schwartz as that famous 321 00:17:46,160 --> 00:17:49,119 Speaker 1: birthday address where you know, he speaks to Milton Friedman 322 00:17:49,160 --> 00:17:51,440 Speaker 1: and Anna Schwartz and says, you know, you were right, 323 00:17:51,600 --> 00:17:53,639 Speaker 1: We the FED were wrong in the nineteen thirties, and 324 00:17:53,640 --> 00:17:55,439 Speaker 1: thanks to you, we won't do it again. So we 325 00:17:55,520 --> 00:17:57,720 Speaker 1: kind of had a sense that this was a man 326 00:17:57,880 --> 00:18:00,479 Speaker 1: who had met his moment in history and were acting 327 00:18:00,520 --> 00:18:03,439 Speaker 1: that script with Powell, I think most people's read was 328 00:18:03,480 --> 00:18:05,639 Speaker 1: that he was a bit of a blank somehow, and 329 00:18:05,640 --> 00:18:07,800 Speaker 1: then now he's ended up as you know, he's going 330 00:18:07,840 --> 00:18:09,920 Speaker 1: to go down in history as the most activist FED 331 00:18:10,000 --> 00:18:13,080 Speaker 1: chairman we've ever seen. And furthermore, breaching all sorts of 332 00:18:13,080 --> 00:18:15,520 Speaker 1: boundaries in terms of the sort of assets they're buying 333 00:18:15,720 --> 00:18:19,120 Speaker 1: and in an incredibly close relationship. It's making me want 334 00:18:19,160 --> 00:18:22,119 Speaker 1: to revisit, like what I think this conventional story is 335 00:18:22,160 --> 00:18:24,320 Speaker 1: on the FED and the Treasury in oh nine, I'm 336 00:18:24,359 --> 00:18:26,880 Speaker 1: not sure that it is as it was then as 337 00:18:26,920 --> 00:18:29,560 Speaker 1: close as it appears to be between Treasury and FED 338 00:18:29,600 --> 00:18:32,719 Speaker 1: with new can and and POAL because the that's one 339 00:18:32,800 --> 00:18:34,920 Speaker 1: of the innovative things about what they're doing is how 340 00:18:34,920 --> 00:18:52,280 Speaker 1: closely coupled is. So there's another dimension to this crisis 341 00:18:52,320 --> 00:18:56,240 Speaker 1: that we haven't talked about. So obviously, of course there's 342 00:18:56,320 --> 00:19:01,160 Speaker 1: the financial dimension. There's the extraordinary political ash, the virtual 343 00:19:01,200 --> 00:19:04,119 Speaker 1: complete halt of much aspect of the services sector and 344 00:19:04,160 --> 00:19:08,800 Speaker 1: household consumption, and then I'm wondering, and then of course 345 00:19:09,080 --> 00:19:12,719 Speaker 1: there's this just enormous stress tests that we're seeing of 346 00:19:12,840 --> 00:19:16,280 Speaker 1: state capacity all over the world, and the fundamental questions 347 00:19:16,359 --> 00:19:20,679 Speaker 1: of can governments simply do what's necessary, not on the 348 00:19:20,720 --> 00:19:23,919 Speaker 1: spending side, not on the regulatory side, but on the 349 00:19:23,960 --> 00:19:27,400 Speaker 1: basic question of can they get their act together on testing? 350 00:19:27,760 --> 00:19:32,280 Speaker 1: Can they implement a public health strategy that involves quarantines 351 00:19:32,359 --> 00:19:36,680 Speaker 1: or lockdowns in the sustainable way while maintaining the underpinnings 352 00:19:36,720 --> 00:19:41,880 Speaker 1: of a civil society. And I'm curious, you know, as 353 00:19:41,960 --> 00:19:46,359 Speaker 1: your I assume in your mind um percolating your ideas 354 00:19:46,359 --> 00:19:48,760 Speaker 1: for whatever the next crashed is going to be. Maybe 355 00:19:48,760 --> 00:19:51,880 Speaker 1: it'll come out into hearty hopefully for readers it will 356 00:19:51,920 --> 00:19:56,359 Speaker 1: be sooner. How much that is an important dimension to 357 00:19:56,400 --> 00:19:58,520 Speaker 1: you of what the story will be. Yeah, I mean, 358 00:19:58,560 --> 00:20:00,520 Speaker 1: this guy's back to this point. Jo, think we sort 359 00:20:00,520 --> 00:20:02,600 Speaker 1: of slipped away that you had earlier on where you 360 00:20:02,640 --> 00:20:04,240 Speaker 1: were saying. A lot of us when we were thinking 361 00:20:04,240 --> 00:20:07,520 Speaker 1: about the swap lines, you know, going forward, we felt 362 00:20:07,600 --> 00:20:10,080 Speaker 1: that there was a real problem here because the swap 363 00:20:10,119 --> 00:20:13,920 Speaker 1: lines in O A O nine were kind of fed internationalism, 364 00:20:13,920 --> 00:20:16,640 Speaker 1: if you like, and fed cosmopolitanism. The FED was providing 365 00:20:16,640 --> 00:20:19,760 Speaker 1: liquidity to the entire world, and surely in an era 366 00:20:19,800 --> 00:20:22,199 Speaker 1: of Donald Trump, this wouldn't be possible. There will be 367 00:20:22,280 --> 00:20:25,680 Speaker 1: some difficulties with the Trump administration or someone in Congress, 368 00:20:25,720 --> 00:20:28,199 Speaker 1: one of the you know, one of the hawkish or 369 00:20:28,280 --> 00:20:31,440 Speaker 1: more slightly bad elements of the GOP would stick a 370 00:20:31,520 --> 00:20:35,160 Speaker 1: spanner in the works and would trip up the world economy. 371 00:20:35,200 --> 00:20:37,919 Speaker 1: And this wasn't just us. I mean, I've had conversations 372 00:20:37,920 --> 00:20:40,880 Speaker 1: with extremely seniors people in the I m F who 373 00:20:40,920 --> 00:20:43,159 Speaker 1: wanted to ask me that question specifically. And you know, 374 00:20:43,160 --> 00:20:45,360 Speaker 1: I don't have any better read on Congress than later 375 00:20:45,440 --> 00:20:47,240 Speaker 1: in fact, and clearly they're better informed, but that is 376 00:20:47,280 --> 00:20:50,080 Speaker 1: what they wanted to talk about. So if that kind 377 00:20:50,080 --> 00:20:52,400 Speaker 1: of fed lender of last resort thing was as crucial 378 00:20:52,440 --> 00:20:54,840 Speaker 1: as it is, will we be able to do that again? 379 00:20:54,880 --> 00:20:57,080 Speaker 1: And as you pointed out, the answer turns out to 380 00:20:57,119 --> 00:20:59,119 Speaker 1: be that if you've got power the mutition and a 381 00:20:59,240 --> 00:21:03,000 Speaker 1: Republican in the White House, which I think is probably 382 00:21:03,000 --> 00:21:05,879 Speaker 1: the absolutely crucial thing here, there are a lot of 383 00:21:05,880 --> 00:21:08,600 Speaker 1: people in the GOP and Congress who really want to 384 00:21:08,600 --> 00:21:11,720 Speaker 1: make trouble. Though. I actually think in the Spring Week 385 00:21:11,760 --> 00:21:14,760 Speaker 1: meetings last week it was probably a constraint on what 386 00:21:14,920 --> 00:21:17,399 Speaker 1: Nucian thought he could do for the I m F. 387 00:21:17,520 --> 00:21:21,120 Speaker 1: I mean, because everyone wanted you know, new sdr issuance. 388 00:21:21,160 --> 00:21:23,919 Speaker 1: It didn't happen. I think it's a reasonable hypothesis that 389 00:21:24,000 --> 00:21:26,280 Speaker 1: Nucien really thought it was a bad idea to stir 390 00:21:26,480 --> 00:21:29,320 Speaker 1: up the sleeping dogs in Congress over that issue, because 391 00:21:29,359 --> 00:21:31,920 Speaker 1: you know, said Cruis and people like that had had 392 00:21:31,920 --> 00:21:35,680 Speaker 1: played up very badly under the Abama administration on precisely 393 00:21:35,720 --> 00:21:39,480 Speaker 1: that issue. So that constraint didn't arrive or hasn't arrived, 394 00:21:39,720 --> 00:21:42,320 Speaker 1: and instead something else did blind us cide us, which 395 00:21:42,359 --> 00:21:46,000 Speaker 1: is just simply this issue of state malfunction. It wasn't 396 00:21:46,040 --> 00:21:49,800 Speaker 1: It wasn't as it were, the manifest at times to 397 00:21:49,920 --> 00:21:52,639 Speaker 1: most people, I think, sort of craziness of the GOP 398 00:21:52,880 --> 00:21:55,119 Speaker 1: that turned out to be the issue. It was, in 399 00:21:55,160 --> 00:22:00,320 Speaker 1: fact structural capacities, and to some extent also obviously the 400 00:22:00,320 --> 00:22:04,640 Speaker 1: the negligence of the Trump administration which allowed this crisis 401 00:22:04,640 --> 00:22:07,680 Speaker 1: in the United States to become a really profound shock. 402 00:22:08,040 --> 00:22:10,280 Speaker 1: And of course you could say that's far from coincidental, 403 00:22:10,320 --> 00:22:13,080 Speaker 1: because where would you expect that but the American health system, 404 00:22:13,119 --> 00:22:16,399 Speaker 1: except of course, America's public health, It's pandemic preparedness is 405 00:22:16,440 --> 00:22:20,080 Speaker 1: in fact, you know, world class. So there are other 406 00:22:21,000 --> 00:22:22,960 Speaker 1: series of you know, there are a series of other 407 00:22:23,040 --> 00:22:26,320 Speaker 1: links which snapped in a in an unpredictable way. It 408 00:22:26,400 --> 00:22:29,640 Speaker 1: did turn out that, as it were, this linkage between 409 00:22:30,240 --> 00:22:34,679 Speaker 1: global financial management governance on the one hand and domestic 410 00:22:35,560 --> 00:22:39,320 Speaker 1: governance on the other was critical, but not critical in 411 00:22:39,320 --> 00:22:44,000 Speaker 1: the way we expected. It wasn't the simple nationalist populism interrupts, 412 00:22:44,320 --> 00:22:48,199 Speaker 1: you know, benign hegemonic functioning kind of model that was 413 00:22:48,280 --> 00:22:51,520 Speaker 1: the problem. It was just simply that several both European 414 00:22:51,720 --> 00:22:55,480 Speaker 1: and the European states and the US turn out just 415 00:22:55,560 --> 00:22:58,560 Speaker 1: simply to have failed to have managed this problem competently. 416 00:22:58,720 --> 00:23:02,000 Speaker 1: That then did landless in a position where all of 417 00:23:02,040 --> 00:23:04,320 Speaker 1: the trade offs are terrible, your economic choices and your 418 00:23:04,320 --> 00:23:07,640 Speaker 1: public health options are both bad, and that then caused 419 00:23:07,720 --> 00:23:10,879 Speaker 1: a panic in the financial system, which the FED and 420 00:23:10,920 --> 00:23:13,120 Speaker 1: the other central banks have had to react with absolute 421 00:23:13,119 --> 00:23:15,760 Speaker 1: massive force too. But I think that for me is 422 00:23:15,840 --> 00:23:18,560 Speaker 1: where you know, we kind of we do come back 423 00:23:18,600 --> 00:23:21,160 Speaker 1: to that story. In other words, how does national state 424 00:23:21,200 --> 00:23:25,560 Speaker 1: capacity linked or not link to global governance capacity. It 425 00:23:25,680 --> 00:23:30,480 Speaker 1: just wasn't on the axis that we necessarily anticipated. M M. Yeah, 426 00:23:30,560 --> 00:23:33,600 Speaker 1: it feels like there's a big divergence between I guess 427 00:23:34,080 --> 00:23:38,280 Speaker 1: the authorities in the US who are managing the financial 428 00:23:38,320 --> 00:23:42,159 Speaker 1: aspects um like the FED and the authorities who are 429 00:23:42,200 --> 00:23:46,760 Speaker 1: managing the public health aspects at the moment. Yeah, no 430 00:23:46,840 --> 00:23:48,679 Speaker 1: links at all. It seems to me it's really strange 431 00:23:48,680 --> 00:23:50,920 Speaker 1: if you think about what was hooked up, right, So 432 00:23:51,040 --> 00:23:54,600 Speaker 1: last year, trade policy and the FED were in a 433 00:23:54,760 --> 00:23:59,639 Speaker 1: really bad clinch. Right, every time the Trump people and 434 00:24:00,359 --> 00:24:05,200 Speaker 1: hawkish security people raised the temperature on China, it would 435 00:24:05,200 --> 00:24:09,240 Speaker 1: send panic signals. And we did get after all, remarkable 436 00:24:09,280 --> 00:24:13,880 Speaker 1: reversals in central bank policy last year, broadly motivated by 437 00:24:13,920 --> 00:24:16,720 Speaker 1: the sense that globalization and the world economy were in trouble. 438 00:24:16,800 --> 00:24:20,680 Speaker 1: Expectations were really uncertain, there was risk of deflation, new 439 00:24:20,680 --> 00:24:23,719 Speaker 1: pleasure building up. There was massive radical uncertainty, and so 440 00:24:23,840 --> 00:24:26,520 Speaker 1: with monetary policy needed to ease right. So there there was. 441 00:24:26,640 --> 00:24:29,159 Speaker 1: It wasn't a functional relationship, but at least there was 442 00:24:29,200 --> 00:24:32,000 Speaker 1: a connection. And the other area that folks like me 443 00:24:32,040 --> 00:24:35,399 Speaker 1: were very interested in building out the relationships and the 444 00:24:35,400 --> 00:24:38,040 Speaker 1: connections was climate policy. I mean, as people began to 445 00:24:38,080 --> 00:24:40,919 Speaker 1: get serious about climate you have folks like Mark Karney 446 00:24:40,960 --> 00:24:44,000 Speaker 1: speaking up and saying, well, could we have a climate 447 00:24:44,080 --> 00:24:47,240 Speaker 1: Minsky moment? Right? Could we be facing a really serious 448 00:24:47,320 --> 00:24:51,080 Speaker 1: disruption to the financial system from stranded assets? We need 449 00:24:51,119 --> 00:24:54,320 Speaker 1: to be thinking about this hypothetical. But at least there 450 00:24:54,359 --> 00:24:58,800 Speaker 1: you've seen a joined up connectionship between a kind of, 451 00:24:59,080 --> 00:25:01,720 Speaker 1: as it were, the client that field of policy and 452 00:25:01,920 --> 00:25:05,720 Speaker 1: financial regulation and monetary policy management. But exactly you're saying, 453 00:25:05,760 --> 00:25:08,639 Speaker 1: I'm tracy. There was clearly there were people in the 454 00:25:08,640 --> 00:25:11,560 Speaker 1: pandemic world and the national security world who knew the 455 00:25:11,800 --> 00:25:14,280 Speaker 1: risks there. But it's not clear to me that it 456 00:25:14,320 --> 00:25:17,000 Speaker 1: would be easy to point to anyone on the financial 457 00:25:17,040 --> 00:25:21,200 Speaker 1: governance side who could really say they had thought through 458 00:25:21,320 --> 00:25:23,600 Speaker 1: what the central banks would have to do in the 459 00:25:23,640 --> 00:25:26,600 Speaker 1: event of a global shutdown as a result of our 460 00:25:26,720 --> 00:25:30,119 Speaker 1: failure to contain a pandemic. I think that's just a 461 00:25:30,160 --> 00:25:32,520 Speaker 1: connection which I don't think it ever been. Now there 462 00:25:32,560 --> 00:25:34,600 Speaker 1: is a paper by Larry Summers, it should be said, 463 00:25:35,080 --> 00:25:39,119 Speaker 1: on Pandemic flu from I think twenty six, but he 464 00:25:39,160 --> 00:25:41,960 Speaker 1: doesn't look at financial stress. It's just a standard matter 465 00:25:42,040 --> 00:25:46,520 Speaker 1: economic modeling exercise based off stars and saying like how 466 00:25:46,560 --> 00:25:49,320 Speaker 1: big would the shop be? And it's very big, and 467 00:25:49,400 --> 00:25:52,760 Speaker 1: that the losses all come from the containment policy. But 468 00:25:52,880 --> 00:25:55,520 Speaker 1: I don't the paper doesn't look at the financial stability 469 00:25:55,520 --> 00:26:01,320 Speaker 1: implications of that diagnosis. Adam, you wrote an essay a 470 00:26:01,359 --> 00:26:04,119 Speaker 1: couple of weeks ago, I think for the London Review 471 00:26:04,160 --> 00:26:06,320 Speaker 1: of Books, and you sort of talk about all the 472 00:26:06,440 --> 00:26:11,280 Speaker 1: different structural flaws that this particular crisis has exposed, and 473 00:26:11,320 --> 00:26:14,399 Speaker 1: I think three that you identified, at least on the 474 00:26:14,400 --> 00:26:18,600 Speaker 1: political front or sort of domestic US politics, um, the 475 00:26:18,720 --> 00:26:22,440 Speaker 1: sort of incompleteness of the European project and we see 476 00:26:22,480 --> 00:26:25,320 Speaker 1: that with a lot of the tension building up about 477 00:26:25,359 --> 00:26:30,200 Speaker 1: euro bonds and fiscal sharing and so forth. And then China, 478 00:26:30,400 --> 00:26:35,000 Speaker 1: China's own over indebted domestic economy. No one is doing 479 00:26:35,080 --> 00:26:38,600 Speaker 1: great when you look at the sort of regions and 480 00:26:38,680 --> 00:26:41,000 Speaker 1: each one of them having to do, uh, you know, 481 00:26:41,160 --> 00:26:44,040 Speaker 1: sort of make pretty huge steps in a short period 482 00:26:44,080 --> 00:26:46,720 Speaker 1: of time to address this. Who do you think has 483 00:26:46,760 --> 00:26:50,439 Speaker 1: sort of the best shot of emerging? I don't know 484 00:26:50,480 --> 00:26:53,679 Speaker 1: if it's better from this, but at where there is 485 00:26:53,720 --> 00:26:57,960 Speaker 1: the will or the capacity to meaningfully address some of 486 00:26:58,000 --> 00:27:02,720 Speaker 1: the structural problem that they finished going into this, well, 487 00:27:02,760 --> 00:27:05,760 Speaker 1: I mean it's I mean, I wrote that piece in 488 00:27:05,800 --> 00:27:07,720 Speaker 1: a very gloomy mood. I mean, as you were saying 489 00:27:07,760 --> 00:27:09,800 Speaker 1: earlier on and I'm completely agreed with you. I mean, 490 00:27:09,840 --> 00:27:12,360 Speaker 1: I've done several podcasts recently where we've had to add 491 00:27:12,400 --> 00:27:15,480 Speaker 1: a tender late at night the morning. I mean, I 492 00:27:15,520 --> 00:27:18,679 Speaker 1: wrote that piece, you know, in full max gloom moment, 493 00:27:18,760 --> 00:27:21,320 Speaker 1: I would say, and I know, broadly speaking, still think 494 00:27:21,359 --> 00:27:24,159 Speaker 1: it stands up and clearly parts of you know, from 495 00:27:24,200 --> 00:27:26,680 Speaker 1: the perspective of a kind of you know, left liberal, 496 00:27:26,760 --> 00:27:29,600 Speaker 1: kind of Westerner. I mean, one of the things which 497 00:27:29,600 --> 00:27:32,560 Speaker 1: I think is should make us feel gloomy is that 498 00:27:33,119 --> 00:27:36,639 Speaker 1: it's difficult to avoid the conclusion that our governance regimes 499 00:27:36,640 --> 00:27:41,639 Speaker 1: of which we're proud and failed this test. And you know, 500 00:27:41,760 --> 00:27:44,960 Speaker 1: either short answer to your question, and I think it's tempting, 501 00:27:45,000 --> 00:27:47,280 Speaker 1: and I think it's difficult to risk. Is it that 502 00:27:47,359 --> 00:27:49,720 Speaker 1: it's triba that looks as though it's going to emerge 503 00:27:49,720 --> 00:27:54,680 Speaker 1: from this strengthened in relative terms, because apart from anything 504 00:27:54,680 --> 00:27:59,640 Speaker 1: else they're authoritarianism gives them an ability to sculpt the narrative, 505 00:27:59,800 --> 00:28:04,040 Speaker 1: to put it euphemistically, very brutally if necessary, and as 506 00:28:04,080 --> 00:28:08,120 Speaker 1: it were, maintained a degree of control over the storyline, 507 00:28:08,320 --> 00:28:12,000 Speaker 1: which is not something that Europeans or the Americans are 508 00:28:12,200 --> 00:28:16,119 Speaker 1: papable of or if you like, have a very convincing 509 00:28:16,160 --> 00:28:18,159 Speaker 1: story to tell. I mean, you know, the Germans and 510 00:28:18,160 --> 00:28:20,320 Speaker 1: the South Koreans come out of this looking not bad 511 00:28:20,359 --> 00:28:24,080 Speaker 1: at all. That in Abrial the case, it's clearly dispiriting. 512 00:28:24,320 --> 00:28:27,840 Speaker 1: And for all of the kudos I think the Germans 513 00:28:27,880 --> 00:28:30,520 Speaker 1: will rightly earn for their domestic management of the public 514 00:28:30,520 --> 00:28:33,840 Speaker 1: health problem, their contribution to the resolution of the constructive 515 00:28:33,840 --> 00:28:38,040 Speaker 1: resolution of the Eurozone crisis is not is rather different, 516 00:28:38,120 --> 00:28:40,560 Speaker 1: shall we say so? Yes, it's difficult, I think to 517 00:28:40,600 --> 00:28:43,240 Speaker 1: avoid the conclusion that the China's coming out of this 518 00:28:43,360 --> 00:28:46,480 Speaker 1: first it has at least contained the first wave. If 519 00:28:46,520 --> 00:28:50,440 Speaker 1: you I was scanning the other day just the the 520 00:28:50,480 --> 00:28:53,479 Speaker 1: inside story of the global auto industry, because you know, 521 00:28:53,520 --> 00:28:56,720 Speaker 1: it's very fascinated by how the shutdown actually happened, and 522 00:28:56,800 --> 00:29:00,480 Speaker 1: it's an extraordinarily interesting case study. And and again and 523 00:29:00,520 --> 00:29:04,480 Speaker 1: again you read like v W currently only has plants 524 00:29:04,520 --> 00:29:09,080 Speaker 1: operating and selling cars in China. So that shift in 525 00:29:09,120 --> 00:29:11,520 Speaker 1: the balance of the global economy that has been looming 526 00:29:11,520 --> 00:29:14,920 Speaker 1: on the horizon for over a decade, now you know, 527 00:29:15,000 --> 00:29:17,760 Speaker 1: it's radically real. I believe the only Apple stores in 528 00:29:17,800 --> 00:29:20,160 Speaker 1: the world that are opened up also those in China, 529 00:29:20,200 --> 00:29:22,720 Speaker 1: though there maybe some others in Asia. Now like that 530 00:29:22,720 --> 00:29:26,719 Speaker 1: that sense of a really quite fundamental shift in the balance, 531 00:29:26,720 --> 00:29:29,680 Speaker 1: and a quite sudden shift in the balance. Is it's 532 00:29:29,680 --> 00:29:32,400 Speaker 1: difficult to escape that. There will be, of course answers 533 00:29:32,400 --> 00:29:35,080 Speaker 1: and responses that we can make, and I'm sure that 534 00:29:35,200 --> 00:29:37,840 Speaker 1: you know, the story of china success will be chipped 535 00:29:37,840 --> 00:29:40,120 Speaker 1: away out because it's clear that they have things that 536 00:29:40,160 --> 00:29:43,280 Speaker 1: they are hiding and there are clearly costs to it. 537 00:29:43,320 --> 00:29:47,440 Speaker 1: After all, this was an extraordinary mobilization of Maoist kind 538 00:29:47,480 --> 00:29:51,640 Speaker 1: of discipline within the party and this extraordinary repressive system 539 00:29:51,680 --> 00:29:54,160 Speaker 1: of lockdown that they operated for a few weeks there. 540 00:29:54,680 --> 00:29:57,840 Speaker 1: But nevertheless, the outcome in terms of their ability to 541 00:29:57,920 --> 00:30:00,320 Speaker 1: essentially contain it to one big province the size of 542 00:30:00,360 --> 00:30:04,840 Speaker 1: Italy is remarkable. We are actually talking about some really 543 00:30:04,840 --> 00:30:08,959 Speaker 1: big picture stuff. But how do those different political systems 544 00:30:09,000 --> 00:30:14,600 Speaker 1: exist alongside each other going forward, especially given the sort 545 00:30:14,640 --> 00:30:17,960 Speaker 1: of economic relationship that you described earlier with the dominance 546 00:30:18,440 --> 00:30:21,720 Speaker 1: the dollar. How do you square those two things? Well, 547 00:30:21,720 --> 00:30:23,320 Speaker 1: I mean, this is is how I would I would 548 00:30:23,360 --> 00:30:26,200 Speaker 1: I completely agree and is it is sort of jaw dropping, 549 00:30:26,320 --> 00:30:29,240 Speaker 1: isn't it. Um? You know, and last year we were 550 00:30:29,400 --> 00:30:32,959 Speaker 1: getting quite panicky about the fact that we were realizing 551 00:30:33,200 --> 00:30:36,160 Speaker 1: just how serious the gulf between China and the United 552 00:30:36,200 --> 00:30:38,760 Speaker 1: states might become. You know, we were getting quite panicky 553 00:30:38,800 --> 00:30:42,920 Speaker 1: about Huawei and Apple and decoupling and all of those 554 00:30:43,040 --> 00:30:45,200 Speaker 1: kind of memes, and there was a lot of talk 555 00:30:45,240 --> 00:30:47,440 Speaker 1: about whether markets had really priced all of that in. 556 00:30:47,640 --> 00:30:50,440 Speaker 1: And that is to reiterate why the central banks, you know, 557 00:30:50,480 --> 00:30:53,160 Speaker 1: it was extremely costly for them to perform the pivots 558 00:30:53,200 --> 00:30:55,600 Speaker 1: that they did last year, both Pale and Druggi even 559 00:30:55,640 --> 00:30:58,720 Speaker 1: more in Europe took huge flak, and all of it 560 00:30:58,760 --> 00:31:01,840 Speaker 1: pales by compare with the reality that we confront today. 561 00:31:01,840 --> 00:31:04,680 Speaker 1: I mean, it's just quite our concerns for radical you know, 562 00:31:04,800 --> 00:31:07,920 Speaker 1: remember that meme of like everyone's smarting finances talking about 563 00:31:08,000 --> 00:31:11,560 Speaker 1: radical uncertainty. Well, this is what we're experiencing right now. 564 00:31:11,600 --> 00:31:14,560 Speaker 1: It's actual radical and you know, none of us can 565 00:31:14,600 --> 00:31:17,320 Speaker 1: really in any reasonable and confident way predict what we're 566 00:31:17,320 --> 00:31:22,440 Speaker 1: going to be doing this for um and that's level 567 00:31:22,480 --> 00:31:27,800 Speaker 1: of existential uncertainty, which which is just novel in that form, 568 00:31:28,120 --> 00:31:31,920 Speaker 1: and and it does expose really quite fundamental differences in 569 00:31:31,920 --> 00:31:35,600 Speaker 1: our in our in our political systems and their ability 570 00:31:35,720 --> 00:31:38,959 Speaker 1: to frame authoritatively frame, And I mean that in a 571 00:31:39,000 --> 00:31:41,800 Speaker 1: general sense, not just in an authoritarian fashion, but just 572 00:31:41,880 --> 00:31:46,680 Speaker 1: in a convincing way frame an outlook, and without that, 573 00:31:46,800 --> 00:31:49,880 Speaker 1: how do you do long term investment? Um what is 574 00:31:49,920 --> 00:31:52,280 Speaker 1: the horizon against which you invest now? And we could 575 00:31:52,320 --> 00:31:54,640 Speaker 1: make some wild gambles as you were saying, that tech 576 00:31:54,720 --> 00:31:58,040 Speaker 1: comes out of this looking pretty good, But beyond that, 577 00:31:58,120 --> 00:32:00,840 Speaker 1: what is our sense of how these things fit together? 578 00:32:00,960 --> 00:32:04,840 Speaker 1: Given how stock these differences are, it isn't a matter 579 00:32:04,920 --> 00:32:08,440 Speaker 1: simply a political regime and constitution and the rule of law. 580 00:32:08,640 --> 00:32:12,760 Speaker 1: It's also quite fundamental issues just simply about government's capacity. 581 00:32:12,960 --> 00:32:15,440 Speaker 1: Whose quarantine system do you trust, who can do the 582 00:32:15,480 --> 00:32:18,080 Speaker 1: tracking that you really need, whose tests are going to 583 00:32:18,120 --> 00:32:20,920 Speaker 1: be tests that you think are actually reliable. Those kind 584 00:32:20,960 --> 00:32:24,160 Speaker 1: of questions are going to become key to just basic 585 00:32:24,240 --> 00:32:26,600 Speaker 1: questions of whether Americans can travel to Europe anymore, and 586 00:32:26,720 --> 00:32:31,400 Speaker 1: vice versa. So I joked earlier about you know, your 587 00:32:31,440 --> 00:32:33,640 Speaker 1: sequel to crash, which will probably come out into your 588 00:32:34,440 --> 00:32:37,320 Speaker 1: which prized not a joke because I suspect you will 589 00:32:37,360 --> 00:32:39,440 Speaker 1: write another book on this, But I am just curious 590 00:32:39,440 --> 00:32:42,680 Speaker 1: started from a personal perspective after you've finished the last 591 00:32:42,720 --> 00:32:45,240 Speaker 1: book in your mind, where you're like, okay, well that 592 00:32:45,320 --> 00:32:48,200 Speaker 1: was sort of the one big financial crisis I would 593 00:32:48,240 --> 00:32:50,800 Speaker 1: see in my career, and now I can go back 594 00:32:50,840 --> 00:32:54,800 Speaker 1: to being a you know, a non well known academic, like, 595 00:32:54,880 --> 00:32:57,800 Speaker 1: how surprised are you to see so many of these 596 00:32:57,840 --> 00:33:00,440 Speaker 1: things erupt yet again in such a short period of time, 597 00:33:00,480 --> 00:33:03,160 Speaker 1: based done where where you were headed. Well, I would 598 00:33:03,160 --> 00:33:05,200 Speaker 1: go back to trace this point, you know, a while back, 599 00:33:05,240 --> 00:33:09,320 Speaker 1: to say this isn't a financial crisis, like what it 600 00:33:09,560 --> 00:33:14,360 Speaker 1: is is an absolutely epic, unprecedented economic crisis. And it 601 00:33:14,520 --> 00:33:17,560 Speaker 1: is also and to pick up President Macross rather more 602 00:33:17,640 --> 00:33:21,360 Speaker 1: kind of optimistic typically sort of broad gage reading. It's 603 00:33:21,360 --> 00:33:24,600 Speaker 1: a sort of anthropological shock in the sense that I mean, 604 00:33:24,600 --> 00:33:26,280 Speaker 1: I don't know whether you see this I low number, 605 00:33:26,280 --> 00:33:28,440 Speaker 1: but the I l O estimates that two point seven 606 00:33:28,560 --> 00:33:32,200 Speaker 1: billion of the global workforce at three point three billion 607 00:33:32,240 --> 00:33:35,320 Speaker 1: people are currently under one or other form of lockdown 608 00:33:35,480 --> 00:33:40,160 Speaker 1: or exiting a lockdown. That's one of the total global workforce. Well, 609 00:33:40,160 --> 00:33:43,040 Speaker 1: they think one point three billion kids and young people 610 00:33:43,040 --> 00:33:46,920 Speaker 1: have been furtherough from education, like now the entire planets 611 00:33:46,960 --> 00:33:51,520 Speaker 1: doing it at once. I mean, it's a completely unprecedented events. 612 00:33:51,560 --> 00:33:54,520 Speaker 1: On the one hand, it's totally shocking. On on the 613 00:33:54,520 --> 00:33:56,640 Speaker 1: other hand, for those of us who are interested in 614 00:33:56,760 --> 00:33:59,840 Speaker 1: late twentieth and early twenty one century history as being 615 00:33:59,880 --> 00:34:03,280 Speaker 1: the history of a kind of global interconnection and global interaction, 616 00:34:03,760 --> 00:34:07,280 Speaker 1: a sort of strange synchronization of our activities, of which 617 00:34:07,480 --> 00:34:10,520 Speaker 1: the global dollar is one very powerful and important expression. 618 00:34:10,560 --> 00:34:13,239 Speaker 1: But just one this is you know, this is this 619 00:34:13,320 --> 00:34:16,920 Speaker 1: is the most mind blowing confirmation of that of that premise. 620 00:34:17,160 --> 00:34:20,799 Speaker 1: Think back a hundred years to the worst pandemic of 621 00:34:20,880 --> 00:34:24,680 Speaker 1: the Spanish flu. No one's talking about shutting India down. 622 00:34:24,719 --> 00:34:28,319 Speaker 1: The British Imperial administration doesn't really get to grips with 623 00:34:28,360 --> 00:34:30,680 Speaker 1: the problem at all. And now you could argue the 624 00:34:30,719 --> 00:34:34,359 Speaker 1: toss about whether or not Moody's strategy was right, but nevertheless, 625 00:34:34,520 --> 00:34:39,480 Speaker 1: the government in Delhi felt it completely incumbent to respond, 626 00:34:39,760 --> 00:34:42,040 Speaker 1: as a powerful global state, as a member of the 627 00:34:42,080 --> 00:34:46,120 Speaker 1: G twenty, to roll out a crisis response package, and 628 00:34:46,160 --> 00:34:48,759 Speaker 1: to do it, you know, at warp speed in a 629 00:34:48,840 --> 00:34:52,120 Speaker 1: society with the limited resources of of India. So that 630 00:34:52,200 --> 00:34:55,000 Speaker 1: in and of itself is an absolutely sort of dramatic 631 00:34:55,960 --> 00:34:59,520 Speaker 1: confirmation if you like, the fact that we're in the multipolarity, 632 00:34:59,560 --> 00:35:01,239 Speaker 1: which was one of the big themes of crash. So 633 00:35:01,320 --> 00:35:03,880 Speaker 1: I will absolutely, you know, hands up to saying I 634 00:35:03,920 --> 00:35:05,759 Speaker 1: don't and I still don't think we're going to see 635 00:35:05,800 --> 00:35:09,560 Speaker 1: a bank centered crisis like oh eight, that doesn't be 636 00:35:09,600 --> 00:35:12,120 Speaker 1: our prospect at all. But I'm, on the other hand, 637 00:35:12,160 --> 00:35:15,800 Speaker 1: not surprised that we're seeing this escalating series of prices, 638 00:35:16,040 --> 00:35:17,719 Speaker 1: because I will, on the other hand, like most people 639 00:35:17,760 --> 00:35:19,520 Speaker 1: also agree that you know that that I was. I 640 00:35:19,560 --> 00:35:21,000 Speaker 1: was very much for the book I was writing at 641 00:35:21,040 --> 00:35:23,560 Speaker 1: the beginning of this year was Political Economy and Climate Church, 642 00:35:23,600 --> 00:35:25,840 Speaker 1: because I was I still am commitsd that you know 643 00:35:25,960 --> 00:35:29,839 Speaker 1: is the biggest structural challenge facing us. But pandemics fit 644 00:35:30,040 --> 00:35:32,359 Speaker 1: within that in the sense that they are, you know, 645 00:35:32,600 --> 00:35:36,480 Speaker 1: as it were, this symptom of our unbalanced relationship with 646 00:35:36,640 --> 00:35:39,120 Speaker 1: nature and the extraordinary risk that we run through the 647 00:35:39,160 --> 00:35:43,560 Speaker 1: interconnections of the global system, and our struggle in a 648 00:35:43,680 --> 00:35:46,799 Speaker 1: very uneven but interrelated way to grasp that. So at 649 00:35:46,800 --> 00:35:50,000 Speaker 1: that level, it fits the molds neatly. It is, however, 650 00:35:50,160 --> 00:35:53,319 Speaker 1: specifically not a shock that I had spent any time 651 00:35:53,360 --> 00:35:58,080 Speaker 1: in Adam. It was so great to finally have you on. 652 00:35:58,200 --> 00:36:00,560 Speaker 1: I feel like you're one of the guests that definitely 653 00:36:00,800 --> 00:36:02,319 Speaker 1: a lot of people have wanted to hear, and in 654 00:36:02,400 --> 00:36:04,200 Speaker 1: our minds is like we gotta have Adam on. We 655 00:36:04,280 --> 00:36:07,480 Speaker 1: gotta have Adam on, and finally we had the right 656 00:36:07,560 --> 00:36:10,920 Speaker 1: moment on it. So I really appreciate you joining us. Well, 657 00:36:10,960 --> 00:36:13,200 Speaker 1: thank you for having me on. It's been good, great, 658 00:36:13,320 --> 00:36:35,080 Speaker 1: so much. Thanks Adam. That's awesome. So Tracy, I do 659 00:36:35,160 --> 00:36:37,440 Speaker 1: think it was a little bit risky too in the 660 00:36:37,480 --> 00:36:40,680 Speaker 1: middle of this, like right at the peak, start talking 661 00:36:40,719 --> 00:36:43,200 Speaker 1: big picture and long term. But I do think uh 662 00:36:43,640 --> 00:36:48,800 Speaker 1: Adam is particularly skilled at tying really big themes together. 663 00:36:49,719 --> 00:36:51,840 Speaker 1: I totally agree, but I have to ask, have we 664 00:36:52,000 --> 00:36:55,720 Speaker 1: done our standard disclaimer about when we are actually recording 665 00:36:55,760 --> 00:37:00,000 Speaker 1: this podcast? We have it so for those who are curious, 666 00:37:00,080 --> 00:37:02,840 Speaker 1: so because the world could change by the time you 667 00:37:02,880 --> 00:37:08,200 Speaker 1: hear it. It is Tuesday, April, and right now it's 668 00:37:08,239 --> 00:37:13,040 Speaker 1: at New York Times, So you know, if the world 669 00:37:13,160 --> 00:37:15,160 Speaker 1: changes by the time you're hearing this, or if this 670 00:37:15,360 --> 00:37:19,600 Speaker 1: entire conversation sounds completely out of date. That's why I'm 671 00:37:19,600 --> 00:37:22,680 Speaker 1: trying to think of those big picture topics that we 672 00:37:22,800 --> 00:37:25,400 Speaker 1: just discussed, which one of them is most vulnerable to 673 00:37:25,480 --> 00:37:28,640 Speaker 1: sort of changing or flipping in the near term. I mean, 674 00:37:28,719 --> 00:37:32,640 Speaker 1: we're talking about international political economy type stuff. It's hard 675 00:37:32,680 --> 00:37:36,239 Speaker 1: to see an entire political model really flipping in the 676 00:37:36,280 --> 00:37:40,200 Speaker 1: next week. But in this environment you never know. The 677 00:37:40,280 --> 00:37:46,319 Speaker 1: only one that could modestly change, to my mind, is 678 00:37:46,480 --> 00:37:49,439 Speaker 1: probably Europe in the sense that in theory you could 679 00:37:49,480 --> 00:37:53,120 Speaker 1: have you know, China isn't going to change its economic 680 00:37:53,200 --> 00:37:56,319 Speaker 1: model overnight, the US is not going to change its 681 00:37:56,320 --> 00:38:00,759 Speaker 1: political structure overnight. You could in theory, have you know 682 00:38:00,800 --> 00:38:05,600 Speaker 1: the leaders of Austria and Germany in the Netherlands come 683 00:38:05,600 --> 00:38:08,480 Speaker 1: out tomorrow and say, okay, we we we uh, we 684 00:38:08,520 --> 00:38:12,320 Speaker 1: support some form of debt mutualization. It probably would not happen, 685 00:38:12,480 --> 00:38:16,359 Speaker 1: and it seems very unlikely, but like in terms of well, 686 00:38:16,440 --> 00:38:18,960 Speaker 1: like a few people could change their minds on something 687 00:38:19,320 --> 00:38:22,400 Speaker 1: that she was plausibly it. But honestly, I mean, who knows, 688 00:38:22,560 --> 00:38:26,160 Speaker 1: are you making a forecast too? No, not understand. I 689 00:38:26,320 --> 00:38:29,520 Speaker 1: just think, like in theory, what what's the the thing 690 00:38:29,560 --> 00:38:34,759 Speaker 1: actually that I think was really uh, sort of striking about. 691 00:38:34,800 --> 00:38:36,480 Speaker 1: I mean, he made a lot of good points, but 692 00:38:36,560 --> 00:38:39,759 Speaker 1: this sort of cliche of radical uncertainty and everyone talks 693 00:38:39,760 --> 00:38:42,360 Speaker 1: about it and the good times and the normal times, 694 00:38:42,400 --> 00:38:44,680 Speaker 1: how we don't know the future. But I do think, 695 00:38:44,719 --> 00:38:46,480 Speaker 1: like I've been thinking about this a lot, like as 696 00:38:46,480 --> 00:38:48,320 Speaker 1: he said, like We don't really know what life is 697 00:38:48,480 --> 00:38:50,160 Speaker 1: going to be like in the US and the fall 698 00:38:50,280 --> 00:38:52,200 Speaker 1: right now. We just don't. I mean, we might have 699 00:38:52,239 --> 00:38:55,280 Speaker 1: some guesses of some different ways things could be structured, 700 00:38:55,320 --> 00:38:58,000 Speaker 1: but no one can really get I can't remember ever 701 00:38:58,080 --> 00:39:02,080 Speaker 1: a time, anytime recent lee in which not only was 702 00:39:02,120 --> 00:39:04,960 Speaker 1: the future so uncertain, but the future was so uncertain 703 00:39:04,960 --> 00:39:09,600 Speaker 1: about a few months from now. Yeah. Absolutely. It's also 704 00:39:09,719 --> 00:39:13,239 Speaker 1: one thing that strikes me is all these uncertainties sort 705 00:39:13,280 --> 00:39:15,480 Speaker 1: of you know, last year, when we had the trade 706 00:39:15,480 --> 00:39:19,280 Speaker 1: war between the US and China, we were thinking about 707 00:39:19,320 --> 00:39:22,400 Speaker 1: a lot of these uncertainties, like the clash of political 708 00:39:22,440 --> 00:39:25,839 Speaker 1: systems and economic systems between the US and China, but 709 00:39:25,880 --> 00:39:28,080 Speaker 1: we were thinking about it at a sort of low 710 00:39:28,280 --> 00:39:33,360 Speaker 1: level of concern. And now with the coronavirus, basically everything 711 00:39:33,400 --> 00:39:35,959 Speaker 1: that we worried about with the trade war has gone 712 00:39:35,960 --> 00:39:40,520 Speaker 1: into complete overdrive. So the dominance of the US dollar 713 00:39:40,719 --> 00:39:46,360 Speaker 1: in trade financing, uh, the clash of social and political 714 00:39:46,360 --> 00:39:49,920 Speaker 1: systems between the US and China, like big picture stuff 715 00:39:49,920 --> 00:39:54,120 Speaker 1: has just gone into really overdrive. Yeah, it's all at once. 716 00:39:54,440 --> 00:39:57,319 Speaker 1: Is really is just everything happening at once? Is really 717 00:39:57,320 --> 00:40:00,799 Speaker 1: how it feels. Is this sort of defined and characteristic 718 00:40:00,840 --> 00:40:03,640 Speaker 1: of this crisis. Yeah. Yeah, it's a good way to 719 00:40:03,719 --> 00:40:07,520 Speaker 1: put it, putting it everything crisis, all right. Uh well, 720 00:40:07,520 --> 00:40:10,239 Speaker 1: on that note, this has been another episode of the 721 00:40:10,280 --> 00:40:13,239 Speaker 1: All Thoughts podcast. I'm Tracy Alloway. You can follow me 722 00:40:13,440 --> 00:40:17,680 Speaker 1: on Twitter at Tracy Alloway and I'm Joe wi Isn't all. 723 00:40:17,760 --> 00:40:20,600 Speaker 1: You could follow me on Twitter at the Stalwart, and 724 00:40:20,680 --> 00:40:22,880 Speaker 1: you should be sure to follow our guest on Twitter, 725 00:40:23,000 --> 00:40:26,680 Speaker 1: Adam Two's. He's at Adam Two's. Be sure to follow 726 00:40:26,719 --> 00:40:30,640 Speaker 1: our producer on Twitter, Laura Carlson. She's at Laura M. Carlson, 727 00:40:30,960 --> 00:40:34,760 Speaker 1: The Bloomberg head of podcast Francesca Levie at Francesca Today, 728 00:40:34,880 --> 00:40:38,080 Speaker 1: and check out all of our podcasts under the handle 729 00:40:38,480 --> 00:41:01,719 Speaker 1: at podcasts. Thanks for listening. A