Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
Speaker 1: SoundCloud and at Bloomberg dot com. I am thrilled to
Speaker 1: welcome Ambassador Michael Frohman to the show. He is a
Speaker 1: Distinguished Fellow at the Council of Foreign Relations and he
Speaker 1: was President Obama's principal advisor, negotiator, and spokesperson on international
Speaker 1: trade investment issues. He led the negotiations of the Trans
Speaker 1: Pacific Partnership and the Transatlantic Trade and Investment Partnership UH.
Speaker 1: Ambassador Frohman thrilled to have you. Right now, we're hearing
Speaker 1: a lot about how broken a lot of these trade
Speaker 1: agreements are. Is there one aspect of NAFTA and some
Speaker 1: of the other trade agreements that could be tweaked to
Speaker 1: sort of ameliorate some of the anger? And where do
Speaker 1: you think it's the anchor is really coming from? Well? Absolutely,
Speaker 1: I think NAFTA is now twenty three years old, and
Speaker 1: under President Obama, we sought to renegotiate NAFTA through the
Speaker 1: Trans Pacific Partnership. Canada and Mexico were members of TPP.
Speaker 1: Mexico agreed in the context of TPP to have binding
Speaker 1: and enforceable labor and environmental provisions, which they did not
Speaker 1: have in in NAFTA. They agreed to open up their
Speaker 1: energy sector to US participation. They agreed to put disciplines
Speaker 1: on their state owned companies, They agreed to a whole
Speaker 1: series of obligations around the digital economy. And similarly Canada.
Speaker 1: Canada had refused to open up its dairy and poultry
Speaker 1: markets to US exports in NAFTA, and through t PP,
Speaker 1: we were able to open up those markets. So there
Speaker 1: certainly is improvement to be to be had in in
Speaker 1: in NAFTA. We did that in t p P, and
Speaker 1: I think the question now is what does the Trump
Speaker 1: administration seek to do beyond what we did in t
Speaker 1: p P to to address this. I've heard Secretary Ross
Speaker 1: has mentioned he wants to talk about the digital economy,
Speaker 1: about raising UH living standards in Mexico. That's exactly what
Speaker 1: our labor chapter and our Digital Economy chapter did in TPP,
Speaker 1: and I think we're all waiting to see what else
Speaker 1: he wants to do and the administration wants to do
Speaker 1: that goes beyond that ambassador from and can you give
Speaker 1: us some details of the nitty gritty of where, when,
Speaker 1: and how these negotiations take place, and how are they
Speaker 1: prepared for some of the technical background information that would
Speaker 1: come with the bureaucracy and the new administration. So Congress
Speaker 1: passed a law in June of fifteen called Trade Promotion Authority,
Speaker 1: which lays out a whole series of processes that the
Speaker 1: administration has to go through before negotiating any trade agreement.
Speaker 1: And that involves deep consultations with Congress, I think for
Speaker 1: at least ninety days. It involves reaching out to stakeholders
Speaker 1: and having public hearings and getting input. And this is
Speaker 1: the normal process you go through when you negotiate in
Speaker 1: a trade agreement. So the Trumble administration seems to be
Speaker 1: beginning that process now, and I think UH Secretary Ross
Speaker 1: indicated earlier this week on an interview here on Bloomberg
Speaker 1: that it was going to take some number of months
Speaker 1: before they would get started actually in renegotiating NAFTA, primarily
Speaker 1: for that reason, and and that's uh, that's the first
Speaker 1: step that needs to be done. I think once you
Speaker 1: get beyond that, and you have a clear sense of
Speaker 1: what it is you want to put on the table,
Speaker 1: what the parameters of the negotiation will be. It that
Speaker 1: involves consultations with with our partners Canada and Mexico to
Speaker 1: determine whether they are willing to engage on that basis.
Speaker 1: And of course, as we reopen NAFTA, they may well
Speaker 1: have their own issues that they want to put on
Speaker 1: the table. Well, I want to pick up on that point.
Speaker 1: In particular, there was a story today about how Mexico's
Speaker 1: sugar industry, which is upset about the idea of possibly
Speaker 1: being blocked or tariffed taxed by importing sugar into the US,
Speaker 1: might block imports of American high fructose corn syrupe in retaliation.
Speaker 1: How concerned are you that relations between Mexico and the
Speaker 1: US will deteriorate before negotiations even begin and derail any
Speaker 1: potential to really come up with a beneficial plan. Well,
Speaker 1: these are there are some longstanding outstanding issues. Sugar with
Speaker 1: Mexico is one of them. The U s sugar industry
Speaker 1: brought some actions under our trade remedy laws UH that
Speaker 1: that kept Mexican sugar out of our market. We negotiate
Speaker 1: an agreement to settle that. That agreement has been uh
Speaker 1: fraying at the edges or there's been a lot of
Speaker 1: pressure on that agreement. And the comments you mentioned reflect
Speaker 1: the concerns the Mexican sugar producers have, and they've always
Speaker 1: threatened that if we keep sugar out of our mark
Speaker 1: their sugar out of our market, they'll keep our fructos
Speaker 1: out of out of their markets. And so they are
Speaker 1: a substitute for each other to a certain degree. All
Speaker 1: that puts a premium on making sure that you're using
Speaker 1: all the good will that you have with your neighbors,
Speaker 1: that you're making sure that you're addressing their concerns and
Speaker 1: it doesn't deteriorate into a trade war, because any of
Speaker 1: these issues can lead to sanctions and counter sanctions and
Speaker 1: that's not good for for for any of us. And so,
Speaker 1: whether it's trigger with Mexico or dairy issues with with Canada,
Speaker 1: we have outstanding trade issues that need to get addressed.
Speaker 1: Many of them were addressed in the context of of
Speaker 1: TPP and going forward, since the administration is determined that
Speaker 1: it doesn't want to move forward in it with its
Speaker 1: own participation in TVP. It's going to find it's going
Speaker 1: to need to find other ways of addressing these outstanding issues.
Speaker 1: Do you believe that there's any political connection between TPP
Speaker 1: trade and the rhetoric on trade and the desire for
Speaker 1: UH commerce Secretary Ross talked about those negotiations. Is there
Speaker 1: any connection between that and the border wall proposal? Well, look,
Speaker 1: I think there will be lots of uh PhD dissertations
Speaker 1: written on this last election and what was what went
Speaker 1: into the well, just give them your headline, give you
Speaker 1: about the fifteen seconds. So like, I think that notwithstanding
Speaker 1: the rather remarkable economic recovery of the last seven years,
Speaker 1: there are a lot of people who are angry and resentful,
Speaker 1: and they're seeing the impact on wages and jobs much now.
Speaker 1: Economists will tell us much of that impact, the vast
Speaker 1: majority of the impact comes from technology. Some of it
Speaker 1: comes from globalization. But you don't get to vote on technology,
Speaker 1: you don't get to vote on globalization. You get to
Speaker 1: vote on trade agreements, and you get to vote on immigration,
Speaker 1: and so UH taking action against whether it's foreign governments
Speaker 1: or foreign immigrants is a bit of a scapegoat for
Speaker 1: people's understandable economic and securities. They may be the wrong target,
Speaker 1: they may not be the cause of the problems, but
Speaker 1: they are a reflection of how angry and anxious people
Speaker 1: are about their economic well being in the country. Well,
Speaker 1: I gotta say that is a very diplomatic answer, and
Speaker 1: I wanted you're a diplomat. Ambassador Michael Frohman, Thank you
Speaker 1: very much, former US Trade Representative, currently a Distinguished Fellow
Speaker 1: at the Council on Foreign Relations. We've got the Axel Murk.
Speaker 1: He is the president and chief investment officer of Murk
Speaker 1: Investments and Axel. Maybe you could respond to this information
Speaker 1: and maybe explain how this fits into the context of
Speaker 1: what the e CBS attempting to do. Well, Yes, him
Speaker 1: highly Well. I think Mr drag is known to pivot um.
Speaker 1: Every six months he comes up with a completely new
Speaker 1: story and and every time he holds the meeting, he
Speaker 1: gives some positive negatives, and then half a year later
Speaker 1: he says, see, I told you. I was like, I
Speaker 1: mentioned all the policies, so I mentioned all the negatives,
Speaker 1: and so this time around the glass was harful. He
Speaker 1: said everything is working. Our apolicies are fantastic. And by
Speaker 1: the way, yep, we are attentive but not anxious about
Speaker 1: anything that's coming up. Meaning if if things do go
Speaker 1: bad with the upcoming elections, I'll bail you guys out.
Speaker 1: And so what I have been arguing, including on your program,
Speaker 1: is that we've reached the bottom of the interest rate
Speaker 1: title in Europe and that is not priced in. And
Speaker 1: we've seen it in the euro, especially last today, how
Speaker 1: it's been moving higher. And that's exactly that that they
Speaker 1: are looking at the way how they can get out
Speaker 1: of this this massive cit they're doing. And and sure
Speaker 1: enough everything is always too what's been priced in, and
Speaker 1: the Euro has been moving higher, and even on the
Speaker 1: back of a good job report. But all I've been
Speaker 1: weakening today Axcel To that point, what would the market
Speaker 1: effect be should the ECB start raising rates sooner than
Speaker 1: is currently being priced in. Well, that that's bound to
Speaker 1: happen because everything is pricing in that that look, and
Speaker 1: it's gonna win. That the Dutch is gonna be pulling,
Speaker 1: They're going to be out of the U or whatever
Speaker 1: it might be, and there's so much negative news price
Speaker 1: then there is a price then that that the rates
Speaker 1: are going to go forever lower, and and there's that
Speaker 1: they have been an effective not going to go lower.
Speaker 1: And so what's going to happen in my view is
Speaker 1: that that the euro is going to strengthen over time.
Speaker 1: Um and because we we've praked been all these wonderful
Speaker 1: rate heps in the US. But I think in the
Speaker 1: US we are far more behind the curvesin in Europe.
Speaker 1: So but hold on a second, because which assets specifically
Speaker 1: will sell off the most should the ECB say raise
Speaker 1: benchmark rates. I don't know before the end of this year,
Speaker 1: which assets. It's a good question. I mean, in the
Speaker 1: last two days the German bones have been significantly underperforming.
Speaker 1: If you're kind of on the micro level, yel freas
Speaker 1: have been narrowing partially on the backle of drug is
Speaker 1: saying everything is fine. But in the in the medium term,
Speaker 1: of course, the problem is that over years there are
Speaker 1: all all the single banks have been doing. If they've
Speaker 1: compressed with premium, that means all risk assets are EXPENSI
Speaker 1: and that means all risk asses may come down. And
Speaker 1: that is everything from from stocks to to jump bonds
Speaker 1: and then yes, even on the on the stafer bond set.
Speaker 1: So I I've been quoted by you guys and saying
Speaker 1: that I'm negative on both bonds and equities, and that's
Speaker 1: absolutely right. I just don't see unless we have this
Speaker 1: gigantic economic growth that we're going to get and get
Speaker 1: to a normalization without a very serious correction in the
Speaker 1: nasset prices. And and stocks might be more vulnerable um
Speaker 1: than than than some other securities are. But but I
Speaker 1: do think, yes, that both stocks and bondable up. So
Speaker 1: do you think we're in a credit bubble? Um bubble
Speaker 1: is a loaded term, but but by all means we
Speaker 1: have we have been. What what's difference on the credit
Speaker 1: bubble in two thousand seven is that if it if
Speaker 1: it were to burst, I don't see necessarily a disorderly
Speaker 1: collapse as there was a risk in two thousand seven.
Speaker 1: But that doesn't mean we're not in the bubble. It
Speaker 1: doesn't mean we cannot have a your correction, and so
Speaker 1: basically we cannot afford to have high rates. I once
Speaker 1: talked to a FET official. He has just retired from
Speaker 1: a regional fete, and I asked him kind of why
Speaker 1: why is the FET so scared of hiking rates um
Speaker 1: of of of kind of pushing out surprises down, stock
Speaker 1: market down, and so well they the FETE is never
Speaker 1: concerned about it unless they caused the bubble. And then
Speaker 1: then he paused, meaning that one of the reasons we
Speaker 1: can't high grade this because we've built this recovery and
Speaker 1: anceprise inflation. And so if we were to try to
Speaker 1: get ahead of the curve, we would not just tumble
Speaker 1: the stock market, but we could cause your economic calm.
Speaker 1: And that's the other problem we have. We we we
Speaker 1: we we. The set has become a slave of the market,
Speaker 1: and it's showing the market knows that. And this is
Speaker 1: taking the set for a right, so to speak. So
Speaker 1: Accel's move from Europe and moved to the U S
Speaker 1: where we just got this job's report. Uh, they gave
Speaker 1: the market exactly what it what it wanted. And you're
Speaker 1: seeing traders piled back into risk your assets from stocks
Speaker 1: to high and some of the assets that you were
Speaker 1: saying in Europe are inflated by low rate policies. Do
Speaker 1: you think that this sort of knee jerk Pavlovian response
Speaker 1: to this goldilocks environment is just simply setting up the
Speaker 1: market for a bigger fall. When the Fed eventually does
Speaker 1: start hiking rates faster, Well, it does every time, right,
Speaker 1: I mean the last time we have the goldilocks economy
Speaker 1: was in the mid two thousand's, right, that didn't end
Speaker 1: too well. Now again, I'm not suggesting we're gonna have
Speaker 1: a two thousand eight sort of collapse again. But but yes,
Speaker 1: when everything's got great, you should start planning for for
Speaker 1: the period thereafter, and and and and so that means
Speaker 1: you pick chips off the table, you're bound to portfolio
Speaker 1: and then tried to take food and steps, but Alex
Speaker 1: just to accel, just to sort of take the other
Speaker 1: side of that. I mean, everyone who has tried to
Speaker 1: take chips off the table has suffered, right, I Mean
Speaker 1: it's been and that's why, and that's all the more
Speaker 1: reasons to do it, right. I Mean, when the I'm
Speaker 1: one of the few folks who's who's cautioning, and and
Speaker 1: when when I shut up and stop being cautious about
Speaker 1: the markets, yes, then definitely sell your portfolio, right, I
Speaker 1: mean it's the anybody who has been cautious has on
Speaker 1: the perform You're, as they say, you're the last man
Speaker 1: in when you go in that's that. Then then we're done.
Speaker 1: For here. I just wanted when you stop calling me
Speaker 1: your stocks. There you go, but no here I want
Speaker 1: I want to before you go, I want you to
Speaker 1: tell us what do you think about the forget what
Speaker 1: you want, what we want, anybody wants. Tell me what
Speaker 1: you believe interest rates will be at the end of
Speaker 1: twenty seventeen, and go ahead. I'll give you a wild
Speaker 1: guest for the for any point in two thousand eighteen. Yeah, well,
Speaker 1: I'll give you the same answer I've given you before
Speaker 1: when you asked me this question. As whoever will be
Speaker 1: will be behind the curve. It doesn't matter when normal
Speaker 1: rightside matters where they are relative to inflation, and the
Speaker 1: set is should be two should be around two point
Speaker 1: one percent right now? Possibly possibly possibly that's what tis
Speaker 1: in but it is depending on the market. If the
Speaker 1: market is doing great, we'll get higher rates. If the
Speaker 1: market balls the fit, we're not going to get it.
Speaker 1: So the market isn't charged yet. If we're gonna have
Speaker 1: continued rallies in the stock market of bombs are going
Speaker 1: to behave will continue hiking rates. But if we see
Speaker 1: trouble because of anything U then you can blame the Chinese,
Speaker 1: you can blame the frenchise who or Trump whoever it
Speaker 1: might be. Um, then UM, then the DST expectations will
Speaker 1: come down. And so I know then exposession is going
Speaker 1: to come. I know the next PR market is going
Speaker 1: to come. The time is of course not known. But
Speaker 1: what we do know is that they said the reason
Speaker 1: they're there so so so extremely slow and raising rates
Speaker 1: it because they just don't want to unravel anything. And
Speaker 1: the problem is, of course in doing so, they're creating
Speaker 1: more bubbles, and at some point it's going to unravel.
Speaker 1: And we find that I tell you exactly when that
Speaker 1: will have happened, Well, we're gonna call you when it happens.
Speaker 1: Axel Merk, President, chief investment Officer Merk Investments, based in
Speaker 1: San Francisco, munis in focus with Joe my sec editor
Speaker 1: Bloomberg Brief Markets. You know, I gotta ask you, Joe.
Speaker 1: One of the things that we're always talking about is
Speaker 1: Puerto Rico. But I was noticing that there are a
Speaker 1: lot more problems in the MUNI market than just Puerto Rico.
Speaker 1: Can you give us sort of the bird's eye view
Speaker 1: of what's going on in Illinois and whether this demonstrates
Speaker 1: something larger than just finance's Illinois absolutely like, I'm not
Speaker 1: ever going to recover from this. No, Illinois could solve
Speaker 1: all its problems tomorrow if they had the political will
Speaker 1: to do it, which is exactly one of the one
Speaker 1: of the rating agencies brought up last week. They say, Wow,
Speaker 1: a state that goes three years without a budget, which
Speaker 1: is what we're heading into, Uh, is demonstrating lack of
Speaker 1: political will. But they could do it tomorrow. Or very
Speaker 1: wealthy state they're you know, the capital of the Midwest, right,
Speaker 1: everyone goes to Illinois. Everyone goes to Chicago. Just to
Speaker 1: put this into perspective, Uh, Joe mysa. Illinois revenue so
Speaker 1: a steep year over year drop last month, the commission said, Uh,
Speaker 1: this is I mean, according to a monthly report issued
Speaker 1: Tuesday by the PIE part partisan Commission on Government Forecasting
Speaker 1: and Accountability, UH significant downward adjustment to its estimates coming
Speaker 1: in March. Had overall base revenues that had to a shortfall,
Speaker 1: gross personal income tax everything is down, down, down, down down.
Speaker 1: So this is more than just simply coming up with
Speaker 1: a budget. I mean, they face pension issues, they pay,
Speaker 1: they face Uh, you know, revenue, tax revenue issues. It's
Speaker 1: really that easy. A lot of the a lot of
Speaker 1: that fall in revenue was because an income tax increased
Speaker 1: lapsed and uh you know that. So there's that um
Speaker 1: But of course there's also some people moving out of state. Yes,
Speaker 1: you're right there. Uh you know, Illinois is is a
Speaker 1: pin you brought up before, the sort of big picture.
Speaker 1: Illinois is sort of an outlier. It's the exception that
Speaker 1: proves the rule. Uh, the rule being, you know, municipalities
Speaker 1: take care of themselves. They're well run, they don't default
Speaker 1: on their debt. In Illinois, what you have is the
Speaker 1: lawmakers sort of driving the bus off the cliff. Remember
Speaker 1: the old headlines in the New York Times bus plunge kills.
Speaker 1: This is what it's like. Bus plunge in Illinois. Happy Friday. Uh,
Speaker 1: you know, I want to I want to ask though,
Speaker 1: about the bonds of Illinois. There was a great chart
Speaker 1: on the terminal this week by Martin Braun looking at
Speaker 1: how foreign money is flooding into municipal bonds in the
Speaker 1: United States, and I found this fascinating. I'm wondering, are
Speaker 1: they going to places like Illinois. Oh, of course they are,
Speaker 1: especially because uh, you know, by driving the bus off
Speaker 1: the cliff. For the last you know, two and a
Speaker 1: half three years, we've seen spreads over the benchmark municipal
Speaker 1: Uh it's almost children fifties sometimes of three basis points
Speaker 1: over what triple A municipalities borrow four. So you're getting
Speaker 1: a big yield premium. But of course for foreign investors
Speaker 1: who are getting sometimes zero percent, uh, US munies look terrific.
Speaker 1: They just have to kind of there is a learning
Speaker 1: curve to them. Just to put this into more into
Speaker 1: sharper focus. Uh. This was in January, right, the Attorney
Speaker 1: General of Illinois asked a judge to lift an order
Speaker 1: that required state workers to be paid during the state's
Speaker 1: record nineteen month as you said, the budget impass in
Speaker 1: hopes and so on, and they filed a motion in
Speaker 1: the Saint Clair County to dissolve the order that would
Speaker 1: have authorized the state controller to actually pay out the wages,
Speaker 1: so they don't have to pay out the wages. At
Speaker 1: what point does this just not come workable? Uh? Probably
Speaker 1: June one, Okay, that's when they really should have their
Speaker 1: next budget all set and ready to go. And you
Speaker 1: know what chances are they will because I really don't
Speaker 1: know municipalities except the ones that are in extremists that
Speaker 1: drive the bus off the cliff. So you think that
Speaker 1: somebody who goes into into Illinois bonds that are yielding
Speaker 1: three or four percentage points above where other where triple
Speaker 1: A meetings are yielding, that they're going to get their
Speaker 1: money back. That's money good. Sure, Illinois can't afford not
Speaker 1: to pay its debts, so they're not going. They're not going.
Speaker 1: You know, first of all, bankruptcy is in an option
Speaker 1: for states. But yeah, they're you know, Illinois going to
Speaker 1: be okay. Well, one area that might not be okay.
Speaker 1: We need to talk about putter Eco because this week
Speaker 1: there were some developments. The Fiscal Control Board rejected the
Speaker 1: governor's plan for financial plan going forward. Can you give
Speaker 1: us some color around this, what this means for bond
Speaker 1: holders and what this means in general for the for
Speaker 1: the island's financial health. Wow. We had a terrific piece
Speaker 1: on Bloomberg View today by Antonio Weiss, the ex Treasury
Speaker 1: official who helped out with the UH setting up the
Speaker 1: oversight board, and he said he advocates bankruptcy because he
Speaker 1: doesn't think the new governor is going far enough in
Speaker 1: adjusting the debt, so he is really advocating haircuts for all.
Speaker 1: You know, you still have some hedge funders out there
Speaker 1: who bought Puerto Rico geos or bought Puerto Rico sales
Speaker 1: tax geos are general obligation bonds. Go ahead, right Who
Speaker 1: who believe that it's geos at par I? Remember that
Speaker 1: was a rallying cry. Guess what, no g knows it
Speaker 1: par for you? It looks like hair cuts for all.
Speaker 1: And with this wife piece today, that was sort of
Speaker 1: really putting it on the table, telling the governor, who,
Speaker 1: by the way, is advocating cuts for everyone, but this
Speaker 1: wife's pieces, No, no, you're not going far enough. You've
Speaker 1: got to really reduced that no par for you. Will
Speaker 1: keep that in mind as we head towards lunchtime. Joe Mesa,
Speaker 1: thank you so much for joining us. As always, Joe Mesk,
Speaker 1: editor for Bloomberg Grief on municipal markets and expert on
Speaker 1: all things related to Muni's. Now we want to hear
Speaker 1: from Ian wish Art. He is a Bloomberg News reporter
Speaker 1: in Brussels, and he wrote a story today that I
Speaker 1: found fascinating about Theresa May who is the head of
Speaker 1: Britain and sort of the internal discussions that she's having
Speaker 1: with parliament in that country about what she may have
Speaker 1: to face as she engages in the Brexit process. Ian,
Speaker 1: thank you so much for joining us. Can you give
Speaker 1: us a little bit of color around some of the
Speaker 1: pessimistic paintbrush that the parliament parliamentary members are trying to
Speaker 1: give to Theresa May, to give her sort of a
Speaker 1: dose of reality. That's right, Hello from Brussels, where the
Speaker 1: summit has been going on between EU leaders and basically
Speaker 1: you're right. There's a lot of people in a lot
Speaker 1: of members of the Parliament of the UK who who
Speaker 1: aren't happy with the way that the Prime Minister Theresa
Speaker 1: May has gone about this. Some on one hand, want
Speaker 1: her to trigger what they call Article fifty, which is
Speaker 1: part of the e use Constitution which allows a country
Speaker 1: to leave the EU. They wanted to do that as
Speaker 1: soon as possible. Others want her to wait a lot
Speaker 1: longer to make sure she knows exactly what she wants,
Speaker 1: and she's trying to balance, really balance those two extremes
Speaker 1: of opinion um to please everybody at the same time
Speaker 1: in London. Before she comes back here to Brussels to
Speaker 1: the European Union to officially start the negotiations with the
Speaker 1: EU about Brexit. I'm wondering you if you could maybe
Speaker 1: just add to this some context regarding Northern Ireland and
Speaker 1: Scotland and what this kind of means not only for
Speaker 1: what becomes of Britain after the exit, but also what
Speaker 1: this means for the European Union itself. Yeah, there's a
Speaker 1: lot of confusion and a lot of complexity. Let's start
Speaker 1: with Scotland, where Scotland obviously part of the United Kingdom,
Speaker 1: so Scotland has to live with any decision that the
Speaker 1: rest of the UK that England makes Scotland. Actually, the
Speaker 1: people of Scotland actually didn't support Brexit, but the the
Speaker 1: UK as a whole did, So they're talking about holding
Speaker 1: a referendum of their own again in Scotland to break
Speaker 1: away from England, to break away from the UK because
Speaker 1: they don't like what from a Prime minister to reason
Speaker 1: May is doing in pulling out of the EU. So
Speaker 1: that's one story that might develop over the next year
Speaker 1: or so. Then you've got Northern Ireland, which again is
Speaker 1: part of the UK, but the Republic of Ireland isn't
Speaker 1: the Republic of Ireland in a separate country that belongs
Speaker 1: to the EU and will stay in the EU. So
Speaker 1: you've got a border between the Republic of Ireland and
Speaker 1: Northern Ireland. UM, and that's been subject to of violence
Speaker 1: and war over the sort of the last thirty forty years. UM.
Speaker 1: There was peace in the last ten years. But they're
Speaker 1: really worried that if that border becomes a border not
Speaker 1: just between Ireland and Britain, but between the whole of
Speaker 1: the European Union and Britain, then those troubles might come
Speaker 1: back again. So that's obviously on the minds of negotiators,
Speaker 1: both in London and in Dublin, and they want to
Speaker 1: avoid that in whatever deal they come up with. And
Speaker 1: you're right, there's also talk about the future of the
Speaker 1: EU and what that will look like after the UK leaves.
Speaker 1: And you said a while back that Parliament members were
Speaker 1: not happy with the approach that Theresa May has taken
Speaker 1: with respect to Brexit. What could she change that would
Speaker 1: bring them into the fold and make them more supportive
Speaker 1: of her plans? Um. It depends which ones you ask,
Speaker 1: but most of them will say we want some reassurances
Speaker 1: that you're going to protect our interests, that you're going
Speaker 1: to protect British interest that we're not going to be
Speaker 1: worse off after we leave the European unions, so um
Speaker 1: nationals are protected in where they can travel, where they
Speaker 1: can go and work in Europe. That the the UK
Speaker 1: is not paying into the European Union budget anymore. There's
Speaker 1: some speculation that it may have to pay sixty billion
Speaker 1: euros when it leaves of financial contributions, and they don't
Speaker 1: want that either because they say, why are we leaving
Speaker 1: the EU We still have to pay So all these
Speaker 1: reassurances need to be made. The trouble for the reason
Speaker 1: may if she can't really make those reassurances, because it's
Speaker 1: all depends on what sort of deal she gets with
Speaker 1: the EU over the next eight months or so. I
Speaker 1: want to thank you very much for joining us. Ian
Speaker 1: wish ARTI is our European government reporter. He is reporting
Speaker 1: from Brussels. Thanks for listening to the Bloomberg P and
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