1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,080 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Joining 5 00:00:32,120 --> 00:00:33,760 Speaker 1: us in New York, We've got a great guest as well, 6 00:00:33,880 --> 00:00:37,959 Speaker 1: joining us from our studios Interactive Brokers Studios at Bloomberg. 7 00:00:38,040 --> 00:00:41,680 Speaker 1: Jeff Curry Goldman Sacks, Global head of Commodities Research and partner. 8 00:00:41,760 --> 00:00:44,080 Speaker 1: Joining us now, Jeff, good morning to you, and let's 9 00:00:44,120 --> 00:00:46,040 Speaker 1: get to the news that just crossed the wires, shall 10 00:00:46,159 --> 00:00:48,879 Speaker 1: we crossing the Bloomberg? That China's getting ready to cut 11 00:00:48,920 --> 00:00:52,120 Speaker 1: imports terrorists on some goods from November. Is this a 12 00:00:52,200 --> 00:00:56,520 Speaker 1: white flag? What is this? Well, they were already experiencing 13 00:00:56,560 --> 00:01:00,440 Speaker 1: inflationary parishures. And one thing we've argued about these hereoffs 14 00:01:00,600 --> 00:01:02,320 Speaker 1: is there not unlikely to have that big of an 15 00:01:02,360 --> 00:01:05,000 Speaker 1: impact on demand or supply chains, but have a much 16 00:01:05,080 --> 00:01:09,440 Speaker 1: larger impact on inflationary pressures. So by cutting them, it's 17 00:01:09,480 --> 00:01:14,759 Speaker 1: actually easing an inflationary environment which was exacerbated by swine 18 00:01:14,760 --> 00:01:18,080 Speaker 1: flu and other domestic problems. What's been fascinating about the 19 00:01:18,080 --> 00:01:21,639 Speaker 1: commodity market through so far. If I said to you, Jeff, 20 00:01:21,680 --> 00:01:23,280 Speaker 1: that we were going to have a big trade dispute 21 00:01:23,319 --> 00:01:26,080 Speaker 1: between the United States and China. If I said we'd 22 00:01:26,080 --> 00:01:29,800 Speaker 1: have big concerns over emerging markets and a stronger dollar 23 00:01:29,880 --> 00:01:33,920 Speaker 1: story emerged through and then said guess where commodities are, 24 00:01:34,120 --> 00:01:39,280 Speaker 1: would you have guests? Correctly, there one fly in the ointment. 25 00:01:39,360 --> 00:01:42,759 Speaker 1: There really is the dollar, which is what put downward 26 00:01:42,760 --> 00:01:45,640 Speaker 1: pressure on the metals complex. When we look at energy, 27 00:01:45,720 --> 00:01:49,360 Speaker 1: it's a very different story. Oil is where it would 28 00:01:49,360 --> 00:01:51,560 Speaker 1: be with or without the dollar. I like to say 29 00:01:51,600 --> 00:01:55,400 Speaker 1: that oil causes the dollar, the dollar causes non energy. 30 00:01:55,560 --> 00:01:58,320 Speaker 1: So the big difference here really is in the metal side, 31 00:01:58,360 --> 00:02:00,920 Speaker 1: that copper sitting far lower than we would have expected. 32 00:02:01,320 --> 00:02:05,480 Speaker 1: Jeff Curry, Good morning from the Plaza Hotel. Jeff, I, 33 00:02:05,480 --> 00:02:09,520 Speaker 1: I'm fascinated by the supply dynamic into the next Vienna meeting. 34 00:02:09,560 --> 00:02:13,440 Speaker 1: I understand there's a marginal issue with this given country 35 00:02:13,480 --> 00:02:18,440 Speaker 1: that given country, but what will be the supply elasticities 36 00:02:18,480 --> 00:02:22,480 Speaker 1: that they confront in Vienna. Well, I think the big 37 00:02:22,480 --> 00:02:26,280 Speaker 1: concern is does Saudi and the core OPEC have additional 38 00:02:26,320 --> 00:02:30,160 Speaker 1: capacity to deal with the Iranian outage UM, they're making 39 00:02:30,280 --> 00:02:33,240 Speaker 1: large scale investments. Right now, rig counts in Saudi Arabia 40 00:02:33,320 --> 00:02:37,359 Speaker 1: are up. The neutral zone has three hundred thousand barrels 41 00:02:37,360 --> 00:02:41,040 Speaker 1: per day of additional capacity. Russia has two hundred. So yeah, 42 00:02:41,160 --> 00:02:43,760 Speaker 1: right now it's a concerning issue. But as we look 43 00:02:43,800 --> 00:02:47,079 Speaker 1: out forward six months and beyond UM, it becomes less 44 00:02:47,080 --> 00:02:50,320 Speaker 1: of an issue. What is your target on print crude UM? 45 00:02:50,400 --> 00:02:52,040 Speaker 1: We are seventy five at the end of this year. 46 00:02:52,080 --> 00:02:54,239 Speaker 1: We think it will hover in that UM low eight 47 00:02:54,480 --> 00:02:57,519 Speaker 1: high high seventy range. I think the key here is 48 00:02:57,560 --> 00:03:00,560 Speaker 1: from an investment perspective, oils backward it it has a 49 00:03:00,600 --> 00:03:03,600 Speaker 1: ten percent carry. Even though that we're not bullish on prices, 50 00:03:03,760 --> 00:03:06,919 Speaker 1: were bullish on owning oil because of that carry. Let's 51 00:03:06,919 --> 00:03:08,280 Speaker 1: talk about that a little bit deeper. And if we 52 00:03:08,320 --> 00:03:09,919 Speaker 1: can strip away the jog and Jeff, when you say 53 00:03:09,960 --> 00:03:11,880 Speaker 1: the oil is banquidated, what do you mean by that 54 00:03:11,960 --> 00:03:15,000 Speaker 1: and why is it significant? It means inventories are low, 55 00:03:15,280 --> 00:03:19,480 Speaker 1: so spot prices sit above forward, so you buy forward 56 00:03:19,560 --> 00:03:22,080 Speaker 1: at a discount and roll up that curve. Think about 57 00:03:22,120 --> 00:03:24,880 Speaker 1: it is like the interest rate on a bond um 58 00:03:25,040 --> 00:03:28,280 Speaker 1: and in the current environment that dividend or whatever you 59 00:03:28,280 --> 00:03:32,080 Speaker 1: want to call it for oil is paying ten fascinating 60 00:03:32,280 --> 00:03:35,000 Speaker 1: and the president pushing back against pack Your thoughts on that, Jeff, 61 00:03:35,040 --> 00:03:37,560 Speaker 1: because I'd love to hear what you think the willingness 62 00:03:37,600 --> 00:03:41,040 Speaker 1: the president's questioning the willingness of OPEC to push back 63 00:03:41,520 --> 00:03:44,840 Speaker 1: with more supply to meet high crude prices. Does the 64 00:03:44,880 --> 00:03:49,040 Speaker 1: ability exist before we actually actually question the willingness Jeff? Well, 65 00:03:49,120 --> 00:03:51,800 Speaker 1: in terms of looking at the willingness, they pumped a 66 00:03:51,840 --> 00:03:54,040 Speaker 1: lot of oil on this market back in August, and 67 00:03:54,080 --> 00:03:57,760 Speaker 1: look what it did to Brent prices in Brent term structure. Um, 68 00:03:57,800 --> 00:04:00,440 Speaker 1: they backed up, inventories, came back down on and oil 69 00:04:00,480 --> 00:04:04,120 Speaker 1: prices went right back up. So clearly, um, they do have, 70 00:04:04,320 --> 00:04:07,200 Speaker 1: at least in the immediate term, enough a capacity to 71 00:04:07,240 --> 00:04:09,360 Speaker 1: start to keep you know, keep this market balance and 72 00:04:09,400 --> 00:04:11,880 Speaker 1: push it slightly into a curclus. I like to emphasize 73 00:04:12,080 --> 00:04:16,000 Speaker 1: historically they never pushed this market into a surplus voluntarily. 74 00:04:16,000 --> 00:04:18,240 Speaker 1: They did a little bit in August and then backed off. 75 00:04:18,480 --> 00:04:21,800 Speaker 1: The big question is Tom asked, is you know what's 76 00:04:21,800 --> 00:04:24,560 Speaker 1: their capacity coming from here? The highest we've ever seen 77 00:04:24,560 --> 00:04:27,400 Speaker 1: Saudi hit was ten point six. They're producing ten point 78 00:04:27,800 --> 00:04:29,720 Speaker 1: but they're making investments. Jeff, you know, let me ask 79 00:04:29,760 --> 00:04:31,360 Speaker 1: you the question, and you know you're one of the 80 00:04:31,760 --> 00:04:36,800 Speaker 1: grades of petroleum economics and petroleum discourse in the world. 81 00:04:36,839 --> 00:04:40,560 Speaker 1: When you hear the president lecture Saudi Arabia, how does 82 00:04:40,600 --> 00:04:44,280 Speaker 1: a pro like you respond to that. I like to 83 00:04:44,720 --> 00:04:47,920 Speaker 1: use the example of soybeans. What did we learn this summer? 84 00:04:48,560 --> 00:04:52,640 Speaker 1: Um that the administration is willing to use all the 85 00:04:52,680 --> 00:04:56,120 Speaker 1: tools at his disposal to be able to keep prices 86 00:04:56,160 --> 00:04:59,680 Speaker 1: of commodities um and a manageable range um. It was 87 00:04:59,720 --> 00:05:03,400 Speaker 1: that Arip'll see a you know, obscure nineteen thirty depression 88 00:05:03,440 --> 00:05:05,800 Speaker 1: era law that they were able to use to be 89 00:05:05,880 --> 00:05:09,200 Speaker 1: able to subsidize farmers. I think what we learn from 90 00:05:09,240 --> 00:05:12,560 Speaker 1: that is there's a willingness by this administration to do 91 00:05:12,640 --> 00:05:15,400 Speaker 1: whatever it takes to keep prices in manageable. Okay, that's 92 00:05:15,480 --> 00:05:18,040 Speaker 1: very nostalgic. I'm sitting in the palm court, John Ferrell 93 00:05:18,040 --> 00:05:21,839 Speaker 1: word Conrad Hilton bailed out the hotel in about nine four. 94 00:05:22,200 --> 00:05:25,880 Speaker 1: That's all great. Let's move forward to can the President 95 00:05:26,000 --> 00:05:32,480 Speaker 1: provide discourse on oil into to keep the price down. 96 00:05:32,920 --> 00:05:35,120 Speaker 1: I don't have an interview Jeff Curry that believes he 97 00:05:35,200 --> 00:05:39,160 Speaker 1: can succeed at that. When you get into five it 98 00:05:39,160 --> 00:05:41,039 Speaker 1: starts to become an issue. But when you look out 99 00:05:41,160 --> 00:05:44,680 Speaker 1: that you've got huge pipe capacity coming online in the Permian. 100 00:05:45,000 --> 00:05:46,839 Speaker 1: You know that's the pipe to get the oil out 101 00:05:46,839 --> 00:05:48,640 Speaker 1: of the Mid continent the US down to the Gulf 102 00:05:48,640 --> 00:05:51,960 Speaker 1: coast um coming online in September this year. So your 103 00:05:52,040 --> 00:05:55,560 Speaker 1: wind of tightness really is between now and let's say 104 00:05:55,680 --> 00:05:59,480 Speaker 1: third quarter of next year. John, John Permian, you can 105 00:05:59,520 --> 00:06:03,240 Speaker 1: translate it is Texas. Thank you, Tom, thank you, thank you. 106 00:06:04,080 --> 00:06:06,159 Speaker 1: I am just shocked by Tom's knowledge of the Planza 107 00:06:06,240 --> 00:06:08,800 Speaker 1: Hotel in New York. I'm guessing you frequent this bar 108 00:06:09,040 --> 00:06:11,640 Speaker 1: quite often. To this bar was redesigned about four or 109 00:06:11,680 --> 00:06:15,520 Speaker 1: five years ago and designed beverage of my choice. At 110 00:06:15,520 --> 00:06:17,520 Speaker 1: what did they redesign in terms of the beverage of 111 00:06:17,560 --> 00:06:22,400 Speaker 1: your price? Jeff Curry of Goldman Sacks. I now we've 112 00:06:22,400 --> 00:06:24,159 Speaker 1: got to let you go to get back to the 113 00:06:24,160 --> 00:06:27,160 Speaker 1: trading flaws of government downtown. So thank you very much 114 00:06:27,160 --> 00:06:29,839 Speaker 1: for giving us your time this morning. Jeff Goldman Sacks 115 00:06:29,839 --> 00:06:44,880 Speaker 1: Global ahead of Commodity's research and partner John Ferrell from 116 00:06:44,880 --> 00:06:48,520 Speaker 1: our studios Queen Victoria Street in London, I'm Tom Keane 117 00:06:48,920 --> 00:06:52,080 Speaker 1: at the Bloomberg Global Forum here in the palm court 118 00:06:52,120 --> 00:06:57,160 Speaker 1: of the Fame Plaza Hotel. For important conversation and thinking forward, 119 00:06:57,240 --> 00:07:01,640 Speaker 1: we begin our coverage. Was someone important a day ago 120 00:07:01,880 --> 00:07:06,200 Speaker 1: and ever more important right now, Werner Hoyer of Germany, 121 00:07:06,240 --> 00:07:09,080 Speaker 1: President of the European Investment Bank, and we welcome in 122 00:07:09,200 --> 00:07:12,320 Speaker 1: this morning. Is wonderful to speak to you. But my phrase, 123 00:07:12,560 --> 00:07:14,800 Speaker 1: Mr Hoyer is a rip up the script, and I 124 00:07:14,880 --> 00:07:17,640 Speaker 1: must rip up the script this morning. We saw the 125 00:07:17,680 --> 00:07:21,320 Speaker 1: President speak yesterday at the United Nations, and I thought 126 00:07:21,400 --> 00:07:28,160 Speaker 1: American media singled out the German UH Party for the quality, 127 00:07:28,320 --> 00:07:32,080 Speaker 1: the tone, the moments of laughter. Is the president spoke? 128 00:07:32,560 --> 00:07:36,840 Speaker 1: Speak right now with your your domestic politics experience of Germany, 129 00:07:37,280 --> 00:07:42,600 Speaker 1: about the German view of President Trump and of Chancellor 130 00:07:42,640 --> 00:07:46,840 Speaker 1: A Miracle's government's view of President Trump. What is the 131 00:07:46,960 --> 00:07:50,880 Speaker 1: distinctive characteristic to you? Well, I think I'm not alleged 132 00:07:50,920 --> 00:07:58,640 Speaker 1: biased to talk about President Trump because I am representing 133 00:07:58,640 --> 00:08:01,160 Speaker 1: the European Union from their years of experience in my 134 00:08:01,240 --> 00:08:03,000 Speaker 1: own country. We are a little bit puzzled, you know, 135 00:08:03,600 --> 00:08:05,920 Speaker 1: the United States of America has always been the big 136 00:08:05,920 --> 00:08:08,800 Speaker 1: example for Germans. The Americans were the ones who got 137 00:08:08,800 --> 00:08:10,960 Speaker 1: out out of the misery and our own crimes of 138 00:08:11,000 --> 00:08:14,000 Speaker 1: World War two and the Holocaust. So we owe a 139 00:08:14,040 --> 00:08:16,400 Speaker 1: lot to America, not only for that, but also for 140 00:08:16,880 --> 00:08:19,480 Speaker 1: help to shape happening us, to shape our constitution. Are 141 00:08:19,480 --> 00:08:23,160 Speaker 1: a real political, democratic life. So seeing America going in 142 00:08:23,200 --> 00:08:26,840 Speaker 1: a completely different direction from what they taught us decades ago, 143 00:08:26,920 --> 00:08:30,640 Speaker 1: this is irritating, but of course the American people must 144 00:08:30,680 --> 00:08:33,640 Speaker 1: make their own choices. Bloomberg spoke to Actual vor this 145 00:08:33,760 --> 00:08:36,920 Speaker 1: morning in Zurich and it came up as well, do 146 00:08:37,040 --> 00:08:39,960 Speaker 1: you detect and again this goes to your abilities at 147 00:08:39,960 --> 00:08:43,400 Speaker 1: the European doesn't be like a pan European view. Do 148 00:08:43,520 --> 00:08:46,360 Speaker 1: you detect that they look at President Trump in his 149 00:08:46,720 --> 00:08:50,119 Speaker 1: sense of globalism, is a one awful moment for America? 150 00:08:50,679 --> 00:08:54,040 Speaker 1: Or is there a new permanence here to America being 151 00:08:54,160 --> 00:08:57,320 Speaker 1: less multi labal. Well, when I talk about America, I 152 00:08:57,320 --> 00:08:59,560 Speaker 1: do not necessarily talk about President Trump. So I see 153 00:08:59,600 --> 00:09:01,720 Speaker 1: that the prod them too is legitimized to take his 154 00:09:01,800 --> 00:09:05,720 Speaker 1: positions and represent the United States takes these positions. However, 155 00:09:06,240 --> 00:09:09,320 Speaker 1: I am very encouraged what I see on issues like globalization, 156 00:09:09,440 --> 00:09:13,360 Speaker 1: on issues like climate or so by American society, American 157 00:09:13,400 --> 00:09:16,520 Speaker 1: industry by many states, the global Covenant of Mayors and 158 00:09:16,600 --> 00:09:19,240 Speaker 1: all these developments which are very encouraging. So I don't 159 00:09:19,240 --> 00:09:22,280 Speaker 1: give America lost. Let us turn to the European investment 160 00:09:22,280 --> 00:09:25,240 Speaker 1: things tell us about the state of investment public in 161 00:09:25,280 --> 00:09:28,920 Speaker 1: private in Europe. Is there a forward momentum or is 162 00:09:28,960 --> 00:09:31,720 Speaker 1: it going quarter to quarter. I'm very critical of that. 163 00:09:31,840 --> 00:09:34,800 Speaker 1: I believe that Europe is behind an investment. There is 164 00:09:34,800 --> 00:09:37,600 Speaker 1: a huge gap, in particular when it comes to innovation 165 00:09:37,640 --> 00:09:44,920 Speaker 1: and when it comes to infrastructure, both new infrastructure Rhodes communication, energy, 166 00:09:44,920 --> 00:09:49,959 Speaker 1: transmission parts rail in particular, but also when it comes 167 00:09:50,000 --> 00:09:53,120 Speaker 1: to to innovation. I think we we invest much too little, 168 00:09:53,200 --> 00:09:57,200 Speaker 1: both industry and the states into the future of the 169 00:09:57,280 --> 00:09:59,960 Speaker 1: of the European Union when it is right to speak 170 00:10:00,040 --> 00:10:03,199 Speaker 1: used Jonathan Farr, joining from the City of Larning on 171 00:10:03,360 --> 00:10:06,199 Speaker 1: investment in Europe, is actually quite fascinating that there is 172 00:10:06,200 --> 00:10:09,200 Speaker 1: a reluctance from the Germans, who run a very balanced 173 00:10:09,200 --> 00:10:12,280 Speaker 1: budget to invest in their own country in infrastructure. That 174 00:10:12,320 --> 00:10:14,720 Speaker 1: has been a case for a long long time. How 175 00:10:14,720 --> 00:10:17,160 Speaker 1: do we address those issues, How do we convince the 176 00:10:17,200 --> 00:10:19,559 Speaker 1: German government that is good for them and good for 177 00:10:19,600 --> 00:10:23,160 Speaker 1: the continent as well. I think there is so far 178 00:10:23,200 --> 00:10:26,680 Speaker 1: a lack of awareness how the bad situation of the 179 00:10:26,720 --> 00:10:30,320 Speaker 1: infrastructure in Germany hurts the future of the country. I 180 00:10:30,400 --> 00:10:33,800 Speaker 1: believe that a rebalancing of the budget is possible without 181 00:10:33,840 --> 00:10:37,920 Speaker 1: getting or without losing sight of the objective of balanced budgets, 182 00:10:37,960 --> 00:10:39,959 Speaker 1: which is what the Germans have achieved that was a 183 00:10:40,040 --> 00:10:43,200 Speaker 1: huge success and which they want to maintain, which I 184 00:10:43,280 --> 00:10:47,280 Speaker 1: perfectly understand. But I think it's doable by some reshifting 185 00:10:47,280 --> 00:10:50,360 Speaker 1: in the budget and giving more attention to the quality 186 00:10:50,440 --> 00:10:54,600 Speaker 1: and restoration and rehabilitation of infrastructure, just as well as 187 00:10:54,640 --> 00:10:58,200 Speaker 1: to much more, much more innovation, research, technology, and the 188 00:10:58,200 --> 00:11:01,040 Speaker 1: whole thing begins with education. Do you think it's possible 189 00:11:01,080 --> 00:11:02,800 Speaker 1: that in ten years time we could look back on 190 00:11:02,880 --> 00:11:05,520 Speaker 1: Chancellor Michael's leadership in Germany and actually view it as 191 00:11:05,520 --> 00:11:09,120 Speaker 1: I squander a decade, Not at all. This lady has 192 00:11:09,160 --> 00:11:12,720 Speaker 1: achieved so much for Germany. It's reputation and it's competitiveness 193 00:11:12,760 --> 00:11:14,679 Speaker 1: in the world that I think whatever happens to her 194 00:11:14,720 --> 00:11:17,400 Speaker 1: in the next many years, she will really might be 195 00:11:17,400 --> 00:11:19,920 Speaker 1: a remaining as one of the key leaders of Germany 196 00:11:19,920 --> 00:11:22,400 Speaker 1: after World War Two. If you're just joining US worldwide 197 00:11:22,480 --> 00:11:26,320 Speaker 1: Verner Hoyer with us. He's president of the European Investment Bank. 198 00:11:26,360 --> 00:11:30,400 Speaker 1: Here at the Bloomberg Global Business Forum. UH in the 199 00:11:30,520 --> 00:11:34,079 Speaker 1: thrilled that you're all with us coast to coast across America. 200 00:11:34,720 --> 00:11:36,880 Speaker 1: Mr Royer. When we look at at you mentioned the 201 00:11:37,240 --> 00:11:42,160 Speaker 1: lag and infrastructure within UH Europe, most Americans would kill 202 00:11:42,320 --> 00:11:45,679 Speaker 1: for Swiss trains or German trains or even the tube 203 00:11:45,679 --> 00:11:48,200 Speaker 1: in London. I mean would be UH the state of it. 204 00:11:48,320 --> 00:11:51,840 Speaker 1: And part of that is the logistics in what Mr 205 00:11:51,880 --> 00:11:56,120 Speaker 1: Truche has always told me is the challenges of crossing borders. 206 00:11:56,600 --> 00:11:59,520 Speaker 1: Is it going to be a more connected Europe? I 207 00:11:59,520 --> 00:12:03,280 Speaker 1: mean ten and twenty years on from these historic moments, 208 00:12:03,640 --> 00:12:07,440 Speaker 1: will it be an interconnected Europe? And air in rail 209 00:12:07,800 --> 00:12:11,520 Speaker 1: in our road we have already very much advanced. They're 210 00:12:11,600 --> 00:12:14,920 Speaker 1: still improvements are possible in particularly in some parts of Europe, 211 00:12:14,960 --> 00:12:17,920 Speaker 1: like Eastern Europe. We must invest more into Eastern Europe, 212 00:12:17,920 --> 00:12:20,320 Speaker 1: there is, there is no question about that. But I'm 213 00:12:20,360 --> 00:12:23,360 Speaker 1: I'm less concerned that we might not make enough progress. 214 00:12:23,400 --> 00:12:26,040 Speaker 1: I'm concerned we might go back, We might make going 215 00:12:26,120 --> 00:12:29,920 Speaker 1: to a recess or a regress, because what is happening presently, 216 00:12:30,080 --> 00:12:33,920 Speaker 1: the longing for borders and border controls and everything that 217 00:12:34,120 --> 00:12:37,120 Speaker 1: is very, very difficult and dangerous for logistics. This is 218 00:12:37,160 --> 00:12:40,640 Speaker 1: coming back, and I'm really surprised that this came back, 219 00:12:40,679 --> 00:12:43,600 Speaker 1: and I'm really surprised that this is getting so much momentum. 220 00:12:43,800 --> 00:12:45,560 Speaker 1: There's a history to all of this, and if I 221 00:12:45,559 --> 00:12:49,560 Speaker 1: could just take Germany and Italy as one example, it's 222 00:12:49,559 --> 00:12:53,240 Speaker 1: a new capitalism in Europe. We here interview, the interview, 223 00:12:53,320 --> 00:12:56,479 Speaker 1: some people saying no, we don't want to be Anglo American, 224 00:12:56,880 --> 00:12:59,880 Speaker 1: others saying we need to nudge towards a more Anglo 225 00:13:00,080 --> 00:13:05,640 Speaker 1: American capitalism. You sense a new capitalism in continental Europe. 226 00:13:05,640 --> 00:13:07,840 Speaker 1: Where as it's steady as you goes well. I think 227 00:13:07,880 --> 00:13:10,600 Speaker 1: as long as we remind ourselves that the social market 228 00:13:10,640 --> 00:13:14,440 Speaker 1: economy was the recipe for progress, not only in Germany 229 00:13:14,480 --> 00:13:17,720 Speaker 1: but practically in many parts of Europe, and wherever this 230 00:13:17,880 --> 00:13:22,000 Speaker 1: path was not taken, it didn't go so well. As 231 00:13:22,040 --> 00:13:24,319 Speaker 1: long as we remember what we owe to the social 232 00:13:24,320 --> 00:13:28,319 Speaker 1: market it kind of the balancing between the investments, the 233 00:13:29,200 --> 00:13:33,320 Speaker 1: social dimensions and and the the private ownership, then we 234 00:13:33,400 --> 00:13:36,120 Speaker 1: can still consider continue to make progress also in Europe, 235 00:13:36,520 --> 00:13:38,880 Speaker 1: when in countries like Italy they feel constrained, and they 236 00:13:38,880 --> 00:13:41,920 Speaker 1: feel constrained by rules that are said at the EU level, 237 00:13:42,040 --> 00:13:45,080 Speaker 1: often by unelected officials. What do you say to the 238 00:13:45,080 --> 00:13:48,040 Speaker 1: Italian government right now, who are ultimately trying to bend 239 00:13:48,040 --> 00:13:50,400 Speaker 1: the rules. In some people's minds, the rules currently as 240 00:13:50,400 --> 00:13:52,880 Speaker 1: they stand is to limit the budget deficit to three 241 00:13:52,880 --> 00:13:55,400 Speaker 1: percent of GDP and sure that your debt to GDP 242 00:13:55,600 --> 00:13:58,440 Speaker 1: is moving in the right direction. Italy is trying to 243 00:13:58,480 --> 00:14:01,320 Speaker 1: tear up the script. What's your message them today, Well, 244 00:14:01,320 --> 00:14:03,640 Speaker 1: we have a new situation in Italy that's legitimate to 245 00:14:03,760 --> 00:14:09,079 Speaker 1: to to explore your feels, more boundaries and more new paths. 246 00:14:09,160 --> 00:14:12,400 Speaker 1: On the other hand, Italy and and many other European 247 00:14:12,400 --> 00:14:16,560 Speaker 1: countries were just about to implode because of the oversized deficit. 248 00:14:17,200 --> 00:14:19,880 Speaker 1: They have been very successful in reducing that considerably over 249 00:14:19,920 --> 00:14:22,280 Speaker 1: the last couple of years. Deviating from that path now, 250 00:14:22,720 --> 00:14:26,480 Speaker 1: which was not prescribed by unelected officials, that was a 251 00:14:26,480 --> 00:14:30,480 Speaker 1: political decision at that time by elected politicians, would be 252 00:14:30,520 --> 00:14:33,440 Speaker 1: big mistake. But do you think that the budget deficits 253 00:14:33,600 --> 00:14:36,200 Speaker 1: in Europe have perhaps overstated and that the actual problem 254 00:14:36,200 --> 00:14:38,400 Speaker 1: with an impotent central bank that just refused to act 255 00:14:38,440 --> 00:14:40,760 Speaker 1: like other central banks for a long long time. Under 256 00:14:40,800 --> 00:14:44,960 Speaker 1: Jean plautrichia All, the European Central Bank has done a 257 00:14:45,000 --> 00:14:49,920 Speaker 1: marvelous job when going for the protection of the currency 258 00:14:49,960 --> 00:14:51,920 Speaker 1: and the stability in Europe a couple of years ago 259 00:14:52,520 --> 00:14:55,760 Speaker 1: with a very clear position to do whatever it takes. However, 260 00:14:55,920 --> 00:14:58,200 Speaker 1: this is a position that kind of be maintained forever 261 00:14:58,240 --> 00:15:00,640 Speaker 1: as we continue the United States. When it comes to 262 00:15:00,680 --> 00:15:03,000 Speaker 1: monetary policy, the United States is always a couple of 263 00:15:03,080 --> 00:15:05,120 Speaker 1: years ahead, so we're not in the process of seeing 264 00:15:05,520 --> 00:15:10,560 Speaker 1: that that zero right interest rates will will disappear very soon, 265 00:15:10,880 --> 00:15:15,080 Speaker 1: hopefully gradually and without any any damage to the companies 266 00:15:15,160 --> 00:15:19,640 Speaker 1: that need to to to adjust to slowly arising interest rates. 267 00:15:19,760 --> 00:15:22,600 Speaker 1: Werner Joyer, where this President of the European Investment Bank 268 00:15:22,640 --> 00:15:26,600 Speaker 1: here at the Bloomberg Global Business Forum is We have 269 00:15:26,680 --> 00:15:29,720 Speaker 1: many important speeches today, but this is a wonderful focus 270 00:15:29,800 --> 00:15:32,560 Speaker 1: on the dynamics of Europe. The word of the moment 271 00:15:33,000 --> 00:15:36,720 Speaker 1: Burner in every NBA program in America scale scale, scale, 272 00:15:37,040 --> 00:15:40,600 Speaker 1: We're looking for scale, scale, scale. Europe has a complete 273 00:15:41,840 --> 00:15:46,800 Speaker 1: disinterpretation or reinterpretation that word from America. Are we going 274 00:15:46,880 --> 00:15:51,800 Speaker 1: to see scale in corporate America's from mergers, combinations and 275 00:15:51,880 --> 00:15:55,000 Speaker 1: transactions are we going to go out and buy revenue 276 00:15:55,320 --> 00:15:58,720 Speaker 1: instead of build revenue across Europe. That could be and 277 00:15:58,840 --> 00:16:01,400 Speaker 1: I think it would not be very helpful. I believe 278 00:16:01,480 --> 00:16:04,680 Speaker 1: that we have to make sure that whatever we develop 279 00:16:04,760 --> 00:16:08,280 Speaker 1: in the technological field and new and further develop will 280 00:16:08,320 --> 00:16:11,560 Speaker 1: fit into a system, that is, that is in the 281 00:16:11,680 --> 00:16:15,160 Speaker 1: within the limits and constraints of competition law. And sometimes 282 00:16:15,720 --> 00:16:18,720 Speaker 1: I missed that, and we see the little dimension in 283 00:16:18,800 --> 00:16:22,200 Speaker 1: some some sectors where America is definitely leading. We admire 284 00:16:22,240 --> 00:16:24,960 Speaker 1: that a lot, but this is on the long run 285 00:16:25,520 --> 00:16:28,560 Speaker 1: not compatible with the rules of competition. I mean your 286 00:16:28,600 --> 00:16:32,240 Speaker 1: your dissertation years ago theoretical approaches to the role of 287 00:16:32,320 --> 00:16:35,680 Speaker 1: money as a capital property. This goes back to a 288 00:16:35,840 --> 00:16:39,880 Speaker 1: huge theme in academics in America, which is monopoly businesses, 289 00:16:40,160 --> 00:16:44,720 Speaker 1: but also the strange word monopsony, which weakens labor. Europe 290 00:16:44,720 --> 00:16:48,480 Speaker 1: has always been far more sensitive to that than America. 291 00:16:48,760 --> 00:16:51,600 Speaker 1: How will that change in the coming years or does 292 00:16:51,720 --> 00:16:54,840 Speaker 1: labor maintain power in Europe or do they does it 293 00:16:54,880 --> 00:16:59,560 Speaker 1: fade away? I think it it maintains power because everybody, 294 00:17:00,080 --> 00:17:03,800 Speaker 1: even among the employers, but in particular on the political side, 295 00:17:03,840 --> 00:17:07,920 Speaker 1: are pretty much aware of the of the value of 296 00:17:07,960 --> 00:17:12,880 Speaker 1: having stable social label relations. And this has been achieved 297 00:17:12,880 --> 00:17:15,080 Speaker 1: in Europe more or less over the last two decades. 298 00:17:15,160 --> 00:17:17,919 Speaker 1: And I think everybody is interested in preserving that, but 299 00:17:17,960 --> 00:17:20,640 Speaker 1: otherwise it might lead to disruptions which can be very detrimental. 300 00:17:20,680 --> 00:17:23,640 Speaker 1: And John Farrell this was unique in two thousand, eight, 301 00:17:23,720 --> 00:17:28,320 Speaker 1: nine ten, where Germany adapt their labor force far better 302 00:17:28,400 --> 00:17:32,760 Speaker 1: to financial melt down than other countries, including the United States, 303 00:17:32,840 --> 00:17:35,520 Speaker 1: and arguingly they started doing that a good ten years 304 00:17:35,560 --> 00:17:39,480 Speaker 1: before the financial crisis. Actually, here the reality Vernos, you know, 305 00:17:40,320 --> 00:17:44,840 Speaker 1: is terrifically high unemployment in places like Spain, Italy, Greece. 306 00:17:44,960 --> 00:17:48,359 Speaker 1: At the youth level, the picture is even more ugly. 307 00:17:49,000 --> 00:17:51,200 Speaker 1: What's the solution to that? What's the remedy? What would 308 00:17:51,240 --> 00:17:55,280 Speaker 1: you prescribe? At the moment, I believe we should overcome 309 00:17:55,400 --> 00:17:59,679 Speaker 1: the division of labor where innovation modern technologies for the 310 00:17:59,720 --> 00:18:03,359 Speaker 1: development of those takes place in the successful country of 311 00:18:03,359 --> 00:18:07,040 Speaker 1: the north, and in the south we observe second rank 312 00:18:07,320 --> 00:18:10,960 Speaker 1: industries or something like that. We must bring innovation your technologies. 313 00:18:11,280 --> 00:18:14,080 Speaker 1: We must bring climate change activities into the countries of 314 00:18:14,160 --> 00:18:17,000 Speaker 1: the South which are so far trailing. We must overcome 315 00:18:17,040 --> 00:18:22,359 Speaker 1: the division between innovation and uh and the development innovation 316 00:18:22,400 --> 00:18:26,320 Speaker 1: and climate innovation and education. All this belongs together. We 317 00:18:26,359 --> 00:18:28,560 Speaker 1: need a much more holistic view. And when it comes 318 00:18:28,560 --> 00:18:30,840 Speaker 1: to Spain, you can see how successful they have been 319 00:18:30,880 --> 00:18:33,440 Speaker 1: over the last couple of years, and if they pursue 320 00:18:33,480 --> 00:18:35,840 Speaker 1: that course also in the future with a sense for 321 00:18:35,960 --> 00:18:39,359 Speaker 1: social balance, I think that Spain will be at par 322 00:18:39,520 --> 00:18:42,280 Speaker 1: with Germany very soon. Vernon Horror, thank you so much. 323 00:18:42,320 --> 00:18:45,280 Speaker 1: He's President of the European Investment Bank. Here at the 324 00:18:45,320 --> 00:18:59,840 Speaker 1: Bloomberg Global Business Forum, Welcome to our audience from Bloomberg 325 00:18:59,840 --> 00:19:01,760 Speaker 1: Tell Vision as well as Bloomberg Radio. Because we are 326 00:19:01,840 --> 00:19:04,360 Speaker 1: joined by Michael R. Bloomberg, former Mayor of the City 327 00:19:04,359 --> 00:19:06,600 Speaker 1: of New York and of course the founder and majority 328 00:19:06,640 --> 00:19:10,200 Speaker 1: shareholder of Bloomberg LP, the parent company of Bloomberg News. 329 00:19:10,240 --> 00:19:12,240 Speaker 1: We call him our boss. He's also the founder of 330 00:19:12,240 --> 00:19:15,480 Speaker 1: Bloomberg Philanthropies and is the U N Secretary General's Special 331 00:19:15,600 --> 00:19:18,560 Speaker 1: Envoy for Climate Actions. That's a lot I can outrage 332 00:19:18,600 --> 00:19:21,760 Speaker 1: if you named everything after yourself, really with me as 333 00:19:21,840 --> 00:19:23,520 Speaker 1: the Trump does that too. She write a book and 334 00:19:23,560 --> 00:19:27,160 Speaker 1: called Bloomberg. Okay, so we're here at the second annual 335 00:19:27,280 --> 00:19:30,440 Speaker 1: Blobal Business Form. Like what's changed since the first, in 336 00:19:30,520 --> 00:19:33,800 Speaker 1: terms of global business. Is it better is it worse? Well, 337 00:19:33,840 --> 00:19:36,680 Speaker 1: I would prefer that the world laughed with us then 338 00:19:36,760 --> 00:19:41,400 Speaker 1: laughed at us. But yeah, things have changed. The tariff 339 00:19:41,440 --> 00:19:46,280 Speaker 1: for is starting hard to see how it doesn't continue 340 00:19:46,600 --> 00:19:50,159 Speaker 1: or even grow worse. Uh, didn't have happen. Wasn't there 341 00:19:50,200 --> 00:19:53,399 Speaker 1: a year ago? But I think the fundamental things of 342 00:19:53,440 --> 00:19:57,600 Speaker 1: the public worrying about technology taking away their jobs, not 343 00:19:57,760 --> 00:20:02,400 Speaker 1: understanding the environmental challenges we have. Uh, those kinds of 344 00:20:02,400 --> 00:20:04,400 Speaker 1: things were there a year ago. They were there two 345 00:20:04,480 --> 00:20:07,760 Speaker 1: or three years ago. They influenced the last presidential election. 346 00:20:07,840 --> 00:20:12,679 Speaker 1: They'll influence this mid term election. They'll influence the election. 347 00:20:12,800 --> 00:20:15,280 Speaker 1: As you suggest that we had climate, we have technology. 348 00:20:15,359 --> 00:20:17,880 Speaker 1: But really what has changed to some of grates trade? 349 00:20:17,920 --> 00:20:19,800 Speaker 1: We saw that yesterday in the nations. A lot of 350 00:20:19,840 --> 00:20:22,240 Speaker 1: talk about trade, a lot of restrictions, whether it's China, 351 00:20:22,240 --> 00:20:25,120 Speaker 1: whether it's sanctioning as a RAN or whatever. How much 352 00:20:25,160 --> 00:20:27,520 Speaker 1: are the Unitate's hurting itself? There's a new requorter. The 353 00:20:27,520 --> 00:20:30,119 Speaker 1: ECB says, actually noted states will hurt the most right now. 354 00:20:30,200 --> 00:20:32,920 Speaker 1: I think the United States will get hurt. And you 355 00:20:33,000 --> 00:20:36,040 Speaker 1: have to understand China is so big that anything you 356 00:20:36,080 --> 00:20:39,280 Speaker 1: do to China has a minimal impact on the country 357 00:20:39,320 --> 00:20:42,160 Speaker 1: and only on a long term basis, And an awful 358 00:20:42,160 --> 00:20:44,800 Speaker 1: lot of people in China that don't buy American products. 359 00:20:44,880 --> 00:20:47,760 Speaker 1: Is five hundred million people in China that is still 360 00:20:47,840 --> 00:20:50,720 Speaker 1: haven't come out of poverty, and they're not affected by 361 00:20:50,720 --> 00:20:54,800 Speaker 1: any of this. Government social programs actually do better in 362 00:20:54,920 --> 00:20:58,639 Speaker 1: down markets and downtimes because they don't get cut, whereas 363 00:20:58,720 --> 00:21:01,560 Speaker 1: anything that you have in the private sector may go 364 00:21:01,640 --> 00:21:05,359 Speaker 1: down in value and your pension fans puttings maybe less 365 00:21:05,440 --> 00:21:07,679 Speaker 1: and because you have investments and they don't have that. 366 00:21:08,240 --> 00:21:12,200 Speaker 1: So I think it is fundamentally different. It is very much, 367 00:21:12,760 --> 00:21:17,399 Speaker 1: very worrisome, and regardless of whether you Republican or a Democrat, 368 00:21:17,880 --> 00:21:21,080 Speaker 1: this is just a failure of our government and maybe 369 00:21:21,119 --> 00:21:23,320 Speaker 1: we should look in the mirror. It's a failure of 370 00:21:23,320 --> 00:21:27,119 Speaker 1: ourselves to not demand more from our elected officials. And 371 00:21:27,200 --> 00:21:29,080 Speaker 1: yet does the Trump adminstration to have a point when 372 00:21:29,080 --> 00:21:31,639 Speaker 1: it comes to China. China has been restrictive in trade, 373 00:21:31,840 --> 00:21:34,440 Speaker 1: they have. Everybody agrees that China has done a lot 374 00:21:34,480 --> 00:21:38,120 Speaker 1: of things that aren't fair, and administrations going back, both 375 00:21:38,119 --> 00:21:41,400 Speaker 1: Republican and Democrat, have not done anything about it. It's 376 00:21:41,440 --> 00:21:43,879 Speaker 1: not that Donald Trump is wrong and fighting it. It 377 00:21:44,080 --> 00:21:47,280 Speaker 1: is the ways he's fighting it, because number one, it 378 00:21:47,320 --> 00:21:49,760 Speaker 1: doesn't work. He puts people on the other side in 379 00:21:49,800 --> 00:21:52,760 Speaker 1: a situation where they can't cave. They have their domestic 380 00:21:52,960 --> 00:21:57,600 Speaker 1: and familihoods to worry about um. And the second thing is, uh, 381 00:21:57,840 --> 00:22:01,280 Speaker 1: he's just going after the wrong things there are. We 382 00:22:01,359 --> 00:22:03,639 Speaker 1: need to have access to their markets. We need to 383 00:22:03,680 --> 00:22:06,520 Speaker 1: be able to go over and open companies and compete. 384 00:22:07,040 --> 00:22:09,560 Speaker 1: We don't need to stop them from selling us products. 385 00:22:09,640 --> 00:22:12,200 Speaker 1: Quite the contrary. If they want to sell us products 386 00:22:12,400 --> 00:22:16,280 Speaker 1: at a lower price than we can produce ourselves, our 387 00:22:16,520 --> 00:22:20,160 Speaker 1: consumers benefit from that. But we've got to make sure 388 00:22:20,200 --> 00:22:22,400 Speaker 1: that our workers don't get hurt by that, and they 389 00:22:22,400 --> 00:22:25,400 Speaker 1: don't get hurt if you create other jobs and other 390 00:22:25,440 --> 00:22:28,960 Speaker 1: markets for us to sell our goods into. And so 391 00:22:29,000 --> 00:22:31,080 Speaker 1: if you block one thing, they're going to block the other. 392 00:22:31,280 --> 00:22:33,760 Speaker 1: And no matter which where you work, you're gonna get hurt. 393 00:22:33,960 --> 00:22:36,280 Speaker 1: So how long can this go on? Particularly dispute with 394 00:22:36,359 --> 00:22:39,640 Speaker 1: China before permanent changes are vague, Whether it's companies changing 395 00:22:39,680 --> 00:22:41,959 Speaker 1: their supply lines or whether it's to them that are 396 00:22:42,040 --> 00:22:44,240 Speaker 1: China reaching out to Asia and other trading partners and 397 00:22:44,240 --> 00:22:47,840 Speaker 1: there'll be permanent damage. Well, companies are very flexible. They're 398 00:22:47,880 --> 00:22:51,679 Speaker 1: already opening UH plants and offices and other countries that 399 00:22:51,680 --> 00:22:56,080 Speaker 1: are outside of the American Chinese battle. UH, They're already 400 00:22:57,200 --> 00:23:01,040 Speaker 1: readjusting their pricing and how they manifest facture. The supply 401 00:23:01,240 --> 00:23:04,200 Speaker 1: chains can change. Literally in the middle of the night, 402 00:23:04,240 --> 00:23:06,320 Speaker 1: they send a message to the ship, go here rather 403 00:23:06,359 --> 00:23:08,199 Speaker 1: than go there with the parts that you've got that 404 00:23:08,240 --> 00:23:10,960 Speaker 1: we need him in a different plant. Um. It's much 405 00:23:11,000 --> 00:23:14,280 Speaker 1: harder for us to change what you do when you 406 00:23:14,440 --> 00:23:18,200 Speaker 1: annoy people, when you antagonize people, when you make enemies 407 00:23:18,600 --> 00:23:21,840 Speaker 1: where it's hard to one day say they're bad and 408 00:23:21,880 --> 00:23:24,840 Speaker 1: the next day say they're good. Given the problems that 409 00:23:24,880 --> 00:23:26,800 Speaker 1: we face, the challenges, let me put it that way, 410 00:23:26,800 --> 00:23:29,600 Speaker 1: we face. Is it time for another business leader? I 411 00:23:29,600 --> 00:23:31,199 Speaker 1: mean we have one in the White doest now. But 412 00:23:31,520 --> 00:23:33,240 Speaker 1: you recently said that you were not going to decide 413 00:23:33,240 --> 00:23:35,040 Speaker 1: about President la after the mid terms. I assume that 414 00:23:35,080 --> 00:23:37,840 Speaker 1: as you have a business leader now. Donald Trump is 415 00:23:37,880 --> 00:23:42,119 Speaker 1: a real estate promoter, and I don't know whether he's 416 00:23:42,160 --> 00:23:44,160 Speaker 1: good or bad. He built a lot of real estate 417 00:23:44,320 --> 00:23:45,840 Speaker 1: or owns a lot of real estate, a lot of 418 00:23:45,840 --> 00:23:49,600 Speaker 1: golf courses. Um, but he's not a businessman in the 419 00:23:49,640 --> 00:23:54,000 Speaker 1: sense that he has run a big organization. How you 420 00:23:54,080 --> 00:23:59,840 Speaker 1: work together, how you attract good people, how you adjudicate disagreements, um, 421 00:24:00,000 --> 00:24:03,040 Speaker 1: how you deal with other companies, in this case other governments. 422 00:24:03,240 --> 00:24:07,080 Speaker 1: And it shows and maybe Clinton and a little bit 423 00:24:07,119 --> 00:24:09,639 Speaker 1: Bush they had some management experience. But you've got to 424 00:24:09,760 --> 00:24:12,679 Speaker 1: understand that all of these the top jobs, these are 425 00:24:12,720 --> 00:24:16,600 Speaker 1: executive jobs. They're not about policy. We keep asking about policy, 426 00:24:16,640 --> 00:24:18,679 Speaker 1: but policy is going to be set by advisors they 427 00:24:18,720 --> 00:24:21,040 Speaker 1: bring in because nobody can be an expert on all 428 00:24:21,080 --> 00:24:24,320 Speaker 1: of these things. The job is to manage, in Trump's case, 429 00:24:24,600 --> 00:24:28,840 Speaker 1: for million people who work for the federal government, and 430 00:24:28,880 --> 00:24:32,480 Speaker 1: that's not his expertise. Okay, many thanks to Michael R. 431 00:24:32,480 --> 00:24:36,440 Speaker 1: Bloomberg coincidentally coming from the Bloomberg Clo Business Forum to 432 00:24:36,520 --> 00:24:39,920 Speaker 1: have David Western there alongside Michael Bloomberg as we kick 433 00:24:39,960 --> 00:24:43,359 Speaker 1: off the Bloomberg Global Business Forum in New York. A 434 00:24:43,480 --> 00:24:45,439 Speaker 1: speech with Prime Minister to reason may coming up a 435 00:24:45,440 --> 00:24:48,880 Speaker 1: little bit later, and some debates still Overtrade. And as 436 00:24:48,960 --> 00:24:51,159 Speaker 1: my points out, and I think most people agree, the 437 00:24:51,160 --> 00:24:53,439 Speaker 1: problem is very much China and has been for a 438 00:24:53,440 --> 00:24:55,920 Speaker 1: long long time, and it's been a consequence of the 439 00:24:56,000 --> 00:24:58,760 Speaker 1: utter failure of previous administrations to address the issue. I 440 00:24:58,800 --> 00:25:01,760 Speaker 1: think the real debate still is the best line of 441 00:25:01,800 --> 00:25:04,840 Speaker 1: attack to get the Chinese to do what's right and 442 00:25:04,920 --> 00:25:07,520 Speaker 1: open up a whole lot quicker than a half big well. 443 00:25:07,560 --> 00:25:09,280 Speaker 1: That seems to be the debate at the moment. As 444 00:25:09,320 --> 00:25:11,639 Speaker 1: you say, it's been the debate for decades, but the 445 00:25:11,720 --> 00:25:26,600 Speaker 1: immediacy of it and the tone is radically changed. John 446 00:25:26,640 --> 00:25:30,040 Speaker 1: Farrow in London and our Queen Victoria Street studios next 447 00:25:30,040 --> 00:25:32,240 Speaker 1: to Mansion House, and I am Tom Keene, not at 448 00:25:32,240 --> 00:25:35,720 Speaker 1: our World headquarters, but rather at the Plaza Hotel, the 449 00:25:35,720 --> 00:25:39,800 Speaker 1: Bloomberg Global Business Forum, and is a decidedly special Bloomberg 450 00:25:39,840 --> 00:25:42,879 Speaker 1: surveillance this morning, not only because of the event and 451 00:25:42,920 --> 00:25:45,720 Speaker 1: the people involved. Of course, Prime Minister may speaking later 452 00:25:46,080 --> 00:25:49,439 Speaker 1: among high points Madame Legarde as well, But what is 453 00:25:49,440 --> 00:25:52,600 Speaker 1: so fascinating is the news flow. And we need to 454 00:25:52,600 --> 00:25:55,600 Speaker 1: become expert right now on one of those themes, which 455 00:25:55,640 --> 00:25:57,600 Speaker 1: is the trade we've been talking about and with us 456 00:25:57,840 --> 00:26:00,320 Speaker 1: on El Guria. He is, of course the fifth Secondary 457 00:26:00,359 --> 00:26:05,159 Speaker 1: General of the Organization for Economic Cooperation and Development, and 458 00:26:05,200 --> 00:26:08,440 Speaker 1: in this non cooperative world, it is the O e. 459 00:26:08,480 --> 00:26:12,600 Speaker 1: C d buried on your website. You're wonderful informative website. 460 00:26:13,000 --> 00:26:17,720 Speaker 1: Is an important video which Jack des Bugwaddy of Columbia University, 461 00:26:17,880 --> 00:26:20,639 Speaker 1: who has been has made a religion. Professor bug Waddy 462 00:26:20,640 --> 00:26:23,560 Speaker 1: has made a religion about the value of growth in 463 00:26:23,680 --> 00:26:29,080 Speaker 1: free trade. Is Bugwatty's world at risk? It is crucial 464 00:26:29,840 --> 00:26:36,040 Speaker 1: that trade continues to drive growth. Typically, we had a 465 00:26:36,160 --> 00:26:40,440 Speaker 1: rate of growth of trade which was doubled the rate 466 00:26:40,480 --> 00:26:44,520 Speaker 1: of growth of the world GDP. That means the trade 467 00:26:44,600 --> 00:26:48,199 Speaker 1: was driving the growth, you know, and that was Today 468 00:26:48,320 --> 00:26:51,440 Speaker 1: the rate of growth of trade is below the rate 469 00:26:51,440 --> 00:26:54,800 Speaker 1: of growth of the world GDP. It it was flat 470 00:26:54,880 --> 00:26:57,680 Speaker 1: for some time, it was very weak, and now it's 471 00:26:57,680 --> 00:27:00,720 Speaker 1: still about three percent, whereas the rate of growth the 472 00:27:00,760 --> 00:27:03,520 Speaker 1: expected rate of growth of the world's economies about three 473 00:27:03,520 --> 00:27:08,119 Speaker 1: point seven. So, uh, you know, trade is not helping. 474 00:27:08,160 --> 00:27:10,960 Speaker 1: And of course the trade wars, that trade tensions, that tarists, 475 00:27:11,000 --> 00:27:13,639 Speaker 1: et cetera, clearly are not helping. You are one of 476 00:27:13,680 --> 00:27:17,160 Speaker 1: the most important voices in the world on these matters. 477 00:27:17,160 --> 00:27:19,359 Speaker 1: And it's not only that, but it's your economics and 478 00:27:19,520 --> 00:27:24,120 Speaker 1: understanding of Mexico. Just as one part of the trade debate, 479 00:27:24,560 --> 00:27:28,560 Speaker 1: how its threat is NAFTA. When Richard has has a 480 00:27:28,600 --> 00:27:33,000 Speaker 1: Canadian delegation up at CFR. I believe it was yesterday, 481 00:27:33,359 --> 00:27:37,520 Speaker 1: and we may have a bilateral Mexico United States with 482 00:27:37,640 --> 00:27:41,119 Speaker 1: Canada removed. I mean, these are tensions we've never witnessed. 483 00:27:41,640 --> 00:27:46,640 Speaker 1: I was one of the negotiators of the original NAFTA, 484 00:27:46,920 --> 00:27:51,000 Speaker 1: so it's your fault. And and I have to say 485 00:27:51,600 --> 00:27:56,440 Speaker 1: it was born as a trilateral agreement, and it will 486 00:27:56,520 --> 00:28:01,120 Speaker 1: be a trilateral agreement. We all benefit from having Canada, 487 00:28:01,320 --> 00:28:04,800 Speaker 1: Mexico and the United States in the mix. The three 488 00:28:04,840 --> 00:28:11,640 Speaker 1: countries benefit, the region benefits were collectively more competitive, more productive. 489 00:28:11,880 --> 00:28:15,280 Speaker 1: So it's a win wind wind proposition. Mr Secretary, let 490 00:28:15,280 --> 00:28:17,560 Speaker 1: me bring in my colleague in London, John Farrell. Good 491 00:28:17,560 --> 00:28:19,920 Speaker 1: morning John, Good morning to Song, Good morning to you, Angert. 492 00:28:19,960 --> 00:28:22,240 Speaker 1: Always great to get your inside. What do you do 493 00:28:22,760 --> 00:28:26,040 Speaker 1: when one country doesn't play by the rules, and that 494 00:28:26,119 --> 00:28:29,119 Speaker 1: one country just tremendously well for a significant period of 495 00:28:29,160 --> 00:28:31,679 Speaker 1: time by not playing by the rules, and that one 496 00:28:31,720 --> 00:28:35,400 Speaker 1: country is China, what do you do? What is happening 497 00:28:35,440 --> 00:28:39,640 Speaker 1: now is that more and more China is becoming incorporated 498 00:28:39,760 --> 00:28:44,360 Speaker 1: into all the big flows, not only of information and 499 00:28:44,440 --> 00:28:47,560 Speaker 1: trade and finance, but also in terms of the disciplines. 500 00:28:48,400 --> 00:28:51,560 Speaker 1: For example, they were very active in the Steel over 501 00:28:51,680 --> 00:28:55,360 Speaker 1: Capacity Global Forum that we created in the G twenty 502 00:28:55,400 --> 00:28:57,680 Speaker 1: in order to deal with the substance of the steel 503 00:28:57,720 --> 00:29:01,760 Speaker 1: over capacity, one of the origins of the very recent 504 00:29:01,880 --> 00:29:04,480 Speaker 1: trade tensions, as you know, because that's what started, that's 505 00:29:04,480 --> 00:29:07,240 Speaker 1: what sparked the whole thing, and China has been very 506 00:29:07,360 --> 00:29:12,120 Speaker 1: active in their giving information and trying to see what 507 00:29:12,160 --> 00:29:15,080 Speaker 1: we're going to be doing about dismantling some of the capacity. 508 00:29:15,160 --> 00:29:18,160 Speaker 1: So it's a very good example of how they're moving in. 509 00:29:18,640 --> 00:29:22,760 Speaker 1: I think they are very convinced that it's it's the 510 00:29:22,800 --> 00:29:26,080 Speaker 1: only way in which they are going to avoid further 511 00:29:26,160 --> 00:29:29,240 Speaker 1: tensions like the ones we're teen today. Well, the sound 512 00:29:29,240 --> 00:29:33,760 Speaker 1: convinced that's enough. Are you convinced? The problem with multilateralism 513 00:29:33,840 --> 00:29:36,560 Speaker 1: as you can say anything about it. It's wonderful, it's great, 514 00:29:36,800 --> 00:29:40,520 Speaker 1: but it's not fast. But it tends to stick better, 515 00:29:40,800 --> 00:29:44,640 Speaker 1: the ownership is more diversified, and it tends it has 516 00:29:44,680 --> 00:29:48,280 Speaker 1: more staying power than when you go unilateral. So this 517 00:29:48,400 --> 00:29:52,200 Speaker 1: is why we should persevere with multilateralism, but we also 518 00:29:52,520 --> 00:29:55,560 Speaker 1: have to get it to function better because sometimes it's 519 00:29:55,640 --> 00:29:59,080 Speaker 1: just too slow, and we persevere in this, just postponing 520 00:29:59,080 --> 00:30:01,880 Speaker 1: and postponing the decision. But that's the problem. You have 521 00:30:01,880 --> 00:30:04,320 Speaker 1: a political issue with the electorate if you're the leader 522 00:30:04,360 --> 00:30:07,000 Speaker 1: of a respective country, and in this case, the example 523 00:30:07,040 --> 00:30:09,800 Speaker 1: is the United States. How do you convince the electorate 524 00:30:10,160 --> 00:30:13,160 Speaker 1: that the multilateral approach of the last several decades that 525 00:30:13,200 --> 00:30:15,880 Speaker 1: has yielded next to nothing to get Shotte to open 526 00:30:16,000 --> 00:30:19,160 Speaker 1: up more aggressively and much more quickly, it's going to 527 00:30:19,240 --> 00:30:21,720 Speaker 1: start yielding results in the near future. How do you 528 00:30:21,760 --> 00:30:26,800 Speaker 1: convince the electorate of that. These are two different aspects 529 00:30:27,240 --> 00:30:31,240 Speaker 1: of the same problem, but they're dealt with differently. They 530 00:30:31,240 --> 00:30:34,880 Speaker 1: have two different channels. One is the pressure that is 531 00:30:34,920 --> 00:30:38,880 Speaker 1: exercised by one party on the other with the tariffs. 532 00:30:38,920 --> 00:30:41,840 Speaker 1: But the only way in which we're going to reduce 533 00:30:42,000 --> 00:30:46,200 Speaker 1: capacity is precisely through the negotiation in the global forum. 534 00:30:46,360 --> 00:30:49,080 Speaker 1: Otherwise we're going to be seeing a revival of these 535 00:30:49,120 --> 00:30:51,920 Speaker 1: tariff issues in the next five, ten, fifteen years. We 536 00:30:52,000 --> 00:30:54,920 Speaker 1: have to deal with a substance with the underlying problem. 537 00:30:55,040 --> 00:30:57,800 Speaker 1: Is there a permanence to a Trump lateral policy? Is 538 00:30:57,800 --> 00:31:00,600 Speaker 1: there a permanence to my way or the highway? Is 539 00:31:00,640 --> 00:31:04,640 Speaker 1: the president defines his globalism. The question is whether it 540 00:31:04,800 --> 00:31:09,560 Speaker 1: is a negotiating strategy or whether it is a permanent 541 00:31:09,640 --> 00:31:14,320 Speaker 1: way of looking at the world. Why, because we built 542 00:31:14,840 --> 00:31:17,760 Speaker 1: you know that this multilateral world over the last six years, 543 00:31:17,800 --> 00:31:21,360 Speaker 1: and the US have been absolutely crucial in this building 544 00:31:21,840 --> 00:31:25,040 Speaker 1: of this world that we have today, including institutions like 545 00:31:25,080 --> 00:31:27,480 Speaker 1: the OE c D which were born around the you know, 546 00:31:27,600 --> 00:31:31,520 Speaker 1: the the recovery of Europe UH and then UH have 547 00:31:31,560 --> 00:31:34,920 Speaker 1: gone around these convergence of policies. So we have to 548 00:31:35,040 --> 00:31:37,880 Speaker 1: keep at it. We just have to keep proving multilateral 549 00:31:38,000 --> 00:31:40,040 Speaker 1: is a better way. One final question, what's in the 550 00:31:40,080 --> 00:31:42,560 Speaker 1: pixie dust in Paris? Is in Paris? Is that you 551 00:31:42,560 --> 00:31:46,640 Speaker 1: have Catherine Man wanted from Brandeis University over to Paris, 552 00:31:46,680 --> 00:31:49,040 Speaker 1: and now you have Laurence Boone I was so excited 553 00:31:49,240 --> 00:31:51,320 Speaker 1: to see that she would take over. Is what is 554 00:31:51,320 --> 00:31:55,160 Speaker 1: the what is the curia pixie dust? These brilliant economists 555 00:31:55,200 --> 00:31:58,000 Speaker 1: to go to Paris has nothing to do with Paris? 556 00:31:58,200 --> 00:32:00,680 Speaker 1: Right The choice? Well, for to all the food is 557 00:32:00,720 --> 00:32:03,240 Speaker 1: still good, or so they say. But then but then 558 00:32:03,320 --> 00:32:07,720 Speaker 1: tom uh. The most important thing is all these crucial 559 00:32:07,800 --> 00:32:11,920 Speaker 1: jobs are chosen exclusively by merit. And in both cases 560 00:32:12,200 --> 00:32:16,720 Speaker 1: these two ladies have been fantastic. Of course Cathy left 561 00:32:16,720 --> 00:32:19,000 Speaker 1: it to go to become a chief Economy City Bank. 562 00:32:19,560 --> 00:32:22,480 Speaker 1: And now Laurens Boon what we stole her from ASA, 563 00:32:23,000 --> 00:32:25,560 Speaker 1: and now she's going to be dedicating herself to a 564 00:32:25,560 --> 00:32:28,840 Speaker 1: little bit more of uh, you know, of civil service again. 565 00:32:29,000 --> 00:32:31,440 Speaker 1: They'll always be Paris. Thank you so much, and Gloria 566 00:32:31,560 --> 00:32:35,520 Speaker 1: greatly appreciated, of course, Fifth Secretary General of the Seed. 567 00:32:35,640 --> 00:32:48,760 Speaker 1: Wonderful to you. That's on your go to your if 568 00:32:48,760 --> 00:32:51,840 Speaker 1: you're just joining us Bloomberg Surveillance Worldwide from London and 569 00:32:51,880 --> 00:32:54,480 Speaker 1: from New York at the Bloomberg Global Business Forum and 570 00:32:54,560 --> 00:32:59,680 Speaker 1: with us Roger Ferguson Uh, Roger, I I look at 571 00:32:59,840 --> 00:33:02,400 Speaker 1: the FED in the Challenge forward and if we go 572 00:33:02,480 --> 00:33:05,200 Speaker 1: back to chair yelling and your introductions of chair yelling 573 00:33:05,480 --> 00:33:07,520 Speaker 1: at the Economic Club of New York, it was about 574 00:33:07,640 --> 00:33:11,960 Speaker 1: labor slack. The mystery here are rising wages? You deal 575 00:33:11,960 --> 00:33:15,080 Speaker 1: with this every day and t I a a teachers 576 00:33:15,080 --> 00:33:19,400 Speaker 1: flat on their backs in terms of real wage compensation. Wages? 577 00:33:19,440 --> 00:33:23,960 Speaker 1: Are wages are rising? And my mail says Tom, no, 578 00:33:24,120 --> 00:33:27,200 Speaker 1: they're not. How does that dovetail in a gilded age? 579 00:33:27,360 --> 00:33:29,400 Speaker 1: So one of two or three things that received. There 580 00:33:29,440 --> 00:33:32,479 Speaker 1: are some pockets where this clearly labor shortage and wages 581 00:33:32,520 --> 00:33:36,600 Speaker 1: are clearly risings. So one can think about truckers, for example, 582 00:33:37,160 --> 00:33:39,400 Speaker 1: as an area of wages are clearly rising. So you've 583 00:33:39,400 --> 00:33:43,719 Speaker 1: got the scarce skill population. The second population you have 584 00:33:43,760 --> 00:33:47,080 Speaker 1: are those where technology is changing and let's say, disrupting 585 00:33:47,560 --> 00:33:51,280 Speaker 1: UH and increasing productivity, and I think their wages should 586 00:33:51,280 --> 00:33:53,320 Speaker 1: be rising maybe a little more quickly than they are, 587 00:33:53,440 --> 00:33:56,040 Speaker 1: but they haven't really risen very much. And the third 588 00:33:56,080 --> 00:33:58,840 Speaker 1: group is i'd say the unskilled, where you know the 589 00:33:59,160 --> 00:34:03,040 Speaker 1: labor demand is not outstripping supply. And so what you've 590 00:34:03,040 --> 00:34:05,760 Speaker 1: seen in this economy is it has many different labor 591 00:34:05,800 --> 00:34:08,319 Speaker 1: markets and you put them all together and you end 592 00:34:08,400 --> 00:34:12,640 Speaker 1: up getting relatively slow wage growth overall, some pockets hot 593 00:34:12,760 --> 00:34:16,600 Speaker 1: or some colder Roger. It's Jonathan Farah here in London. 594 00:34:16,640 --> 00:34:18,840 Speaker 1: Fantastic to hear your insight on a day where we 595 00:34:18,880 --> 00:34:20,759 Speaker 1: do get a Federal reserved decision. Let's pick up on 596 00:34:20,800 --> 00:34:23,160 Speaker 1: that about how difficult it is to read the labor 597 00:34:23,200 --> 00:34:25,839 Speaker 1: market and put it together with your assertion and other 598 00:34:25,880 --> 00:34:28,440 Speaker 1: people's too, that the Federal Reserve is dying to engineer 599 00:34:28,680 --> 00:34:31,200 Speaker 1: a soft landing. Just how difficult will that be? And 600 00:34:31,239 --> 00:34:34,600 Speaker 1: it's there any historical comparison that you reflect on to 601 00:34:34,640 --> 00:34:37,880 Speaker 1: say that it can be done. Um, one is optimistic 602 00:34:37,880 --> 00:34:40,799 Speaker 1: that it can be done. The true reality is that 603 00:34:40,880 --> 00:34:44,400 Speaker 1: it's rarely been done. Uh. And I think this time 604 00:34:44,520 --> 00:34:47,480 Speaker 1: they're dealing with a number of things that may make 605 00:34:47,520 --> 00:34:51,200 Speaker 1: it even more difficult. One Tom's already alluded to, which 606 00:34:51,239 --> 00:34:54,960 Speaker 1: is fiscal policies also quite stimulative. That's not gonna last forever, 607 00:34:55,040 --> 00:34:57,120 Speaker 1: but we've had a major tax cut here last year 608 00:34:57,160 --> 00:35:00,560 Speaker 1: that's still playing through. The second I think that they're 609 00:35:00,600 --> 00:35:04,640 Speaker 1: dealing with is there are some geopolitical uncertainties uh, though 610 00:35:04,640 --> 00:35:07,520 Speaker 1: it yet has not yet become a major force in 611 00:35:07,560 --> 00:35:11,040 Speaker 1: the U. S economy, the rising trade tensions some might 612 00:35:11,040 --> 00:35:15,040 Speaker 1: call it maybe looming trade war may create some headwinds 613 00:35:15,360 --> 00:35:19,279 Speaker 1: in the near future. And the third, obviously, is the 614 00:35:19,360 --> 00:35:24,600 Speaker 1: state of financial markets themselves. UM valuations relatively high across 615 00:35:24,680 --> 00:35:27,840 Speaker 1: almost any asset class. And so I think, you know, 616 00:35:28,000 --> 00:35:30,480 Speaker 1: this is going to be a very interesting and I 617 00:35:30,480 --> 00:35:34,080 Speaker 1: would have to say relatively challenging charing trying to try 618 00:35:34,080 --> 00:35:38,719 Speaker 1: to uh engineer the soft landing against all of that backdrop. Roger, 619 00:35:38,800 --> 00:35:41,680 Speaker 1: it's interesting that whenever we hear from FED chair J. Powell, 620 00:35:41,960 --> 00:35:43,879 Speaker 1: he reflected, and we've heard this a couple of times, 621 00:35:43,880 --> 00:35:47,040 Speaker 1: he reflects on previous financial crisis and it reflects on 622 00:35:47,040 --> 00:35:49,480 Speaker 1: previous economic downturns, and he says that over the last 623 00:35:49,520 --> 00:35:52,120 Speaker 1: couple of decades they haven't been caused by inflation. The 624 00:35:52,160 --> 00:35:56,040 Speaker 1: most important aspect is to be handling the financial aspect 625 00:35:56,080 --> 00:35:59,080 Speaker 1: a lot more effectively. Do you think that's where the 626 00:35:59,080 --> 00:36:01,360 Speaker 1: focus is right now on the core of the f 627 00:36:01,440 --> 00:36:04,640 Speaker 1: O m C to to really try and manage the 628 00:36:04,760 --> 00:36:07,680 Speaker 1: potential for financial excess is to be just around the corner. 629 00:36:07,920 --> 00:36:09,759 Speaker 1: I think the FIT is trying to manage both right, 630 00:36:09,800 --> 00:36:12,680 Speaker 1: because I recognize that they are also looking at an 631 00:36:12,719 --> 00:36:16,440 Speaker 1: unemployment rate that is historically low, um, you know, measures 632 00:36:16,480 --> 00:36:19,960 Speaker 1: that suggest very very little, if any slack left in 633 00:36:20,000 --> 00:36:24,040 Speaker 1: the labor markets. Um. They're looking at an inflation picture 634 00:36:24,520 --> 00:36:28,600 Speaker 1: that is starting to move to uh their two percent target, 635 00:36:29,160 --> 00:36:31,760 Speaker 1: And so they've got to keep one eye firmly planted 636 00:36:31,800 --> 00:36:35,120 Speaker 1: on the real economy because that is really the essence 637 00:36:35,160 --> 00:36:38,240 Speaker 1: of their dual mandate. But you're right, at the same time, 638 00:36:38,440 --> 00:36:41,680 Speaker 1: they have to ask questions about how much debt has 639 00:36:41,719 --> 00:36:43,960 Speaker 1: been built up in the system and is there a 640 00:36:44,400 --> 00:36:47,000 Speaker 1: leverage that's somewhere, And so they have to be cautious 641 00:36:47,360 --> 00:36:51,560 Speaker 1: about changing the FED funds rate and implications across the 642 00:36:51,600 --> 00:36:55,600 Speaker 1: YO curve because of the possibility, not likelihood, the possibility 643 00:36:55,640 --> 00:36:59,960 Speaker 1: of financial instability starting to emerge from their gradual movement 644 00:37:00,040 --> 00:37:02,320 Speaker 1: of interest rates. We welcome all of you worldwide on 645 00:37:02,400 --> 00:37:06,040 Speaker 1: Bloomberg Surveillance from New York. Roger Ferguson with us, a 646 00:37:06,120 --> 00:37:09,320 Speaker 1: former vice chairman of the Fellow Reserve and now senior 647 00:37:09,400 --> 00:37:13,040 Speaker 1: vice president in charge of America's failure in retirement. You 648 00:37:13,080 --> 00:37:16,440 Speaker 1: are at t I a A. It's your fault and 649 00:37:16,520 --> 00:37:20,839 Speaker 1: that would be ARISA of nineteen seventy four has been 650 00:37:21,320 --> 00:37:25,040 Speaker 1: a failure. What you live this every day at t 651 00:37:25,280 --> 00:37:28,960 Speaker 1: I A A with teachers trying to assault it away, 652 00:37:28,960 --> 00:37:32,800 Speaker 1: trying to get the retirement and as a nation we've failed. 653 00:37:33,320 --> 00:37:36,320 Speaker 1: What are we gonna do to turn around the failure 654 00:37:36,440 --> 00:37:40,760 Speaker 1: of the defined contribution system? So let me um rephrase 655 00:37:40,800 --> 00:37:42,640 Speaker 1: your question a little bit and describe what it is 656 00:37:42,680 --> 00:37:45,480 Speaker 1: that we do. Um So, we at t I A A, 657 00:37:45,640 --> 00:37:48,440 Speaker 1: teachers at Shots Annuity Association have been around for a 658 00:37:48,520 --> 00:37:52,040 Speaker 1: hundred years. Uh for that hundred years we've meant creating 659 00:37:52,120 --> 00:37:56,640 Speaker 1: retirement security and more broadly, financial security for literally millions 660 00:37:56,640 --> 00:37:59,480 Speaker 1: of Americans. We think we've got a model that actually 661 00:37:59,520 --> 00:38:03,000 Speaker 1: has been working very very well UM and indeed UH 662 00:38:03,080 --> 00:38:06,520 Speaker 1: our participants have retired safely and have a high degree 663 00:38:06,520 --> 00:38:08,799 Speaker 1: of confident, but a huge body of America does not 664 00:38:08,880 --> 00:38:10,600 Speaker 1: have the luxury of four or three B and the 665 00:38:10,600 --> 00:38:13,200 Speaker 1: rest exactly right. So that takes me to the next point, 666 00:38:13,280 --> 00:38:16,440 Speaker 1: which is, Okay, what can I say America learned from 667 00:38:16,480 --> 00:38:18,879 Speaker 1: the successes of T I, A A over the last 668 00:38:18,960 --> 00:38:22,120 Speaker 1: hundred years, And I think there are a number of lessons. First, 669 00:38:22,239 --> 00:38:26,720 Speaker 1: you have to have a good defined hybrid dB DC, 670 00:38:27,600 --> 00:38:31,200 Speaker 1: defined contribution define benefit plan. The way we do that 671 00:38:31,320 --> 00:38:34,359 Speaker 1: is we have individuals saving UH starting from their first 672 00:38:34,440 --> 00:38:38,040 Speaker 1: day at work. But most importantly, they're saving towards getting 673 00:38:38,080 --> 00:38:42,160 Speaker 1: guaranteed income for life in the form of an annuity. 674 00:38:42,239 --> 00:38:45,440 Speaker 1: So the way we have created financial security in retirement 675 00:38:45,480 --> 00:38:48,400 Speaker 1: has been by having people saved and then having the 676 00:38:48,400 --> 00:38:51,360 Speaker 1: option to annuitize. This is brilliant. It's the most important 677 00:38:51,360 --> 00:38:54,440 Speaker 1: conversation I've had on retirement in two, three or four years. 678 00:38:54,760 --> 00:38:58,719 Speaker 1: Roger Ferguson No. One in Washington is listening. How do 679 00:38:58,800 --> 00:39:01,600 Speaker 1: we get a p h d. From Harvard to explain 680 00:39:01,640 --> 00:39:05,879 Speaker 1: to a bunch of politicians that define contribution, the variability, 681 00:39:06,160 --> 00:39:10,880 Speaker 1: take care of the lock in individualism of America. It's failed. 682 00:39:11,120 --> 00:39:13,839 Speaker 1: How do we get back to the retirement plan? It's 683 00:39:13,880 --> 00:39:16,720 Speaker 1: a hybrid with what our parents knew well the actual 684 00:39:17,360 --> 00:39:19,160 Speaker 1: There are some good news in Washington that there have 685 00:39:19,239 --> 00:39:21,920 Speaker 1: been a number of bills that have been proposed and 686 00:39:21,960 --> 00:39:24,239 Speaker 1: a gradually working the way through. So there's actually a 687 00:39:24,280 --> 00:39:27,160 Speaker 1: small group of Martin's listening closely. And the reason that 688 00:39:27,200 --> 00:39:29,399 Speaker 1: they're listening is the point that you're making, Tom, which 689 00:39:29,440 --> 00:39:33,799 Speaker 1: is that fight retirement security may well be one of, 690 00:39:34,000 --> 00:39:37,000 Speaker 1: if not the defining political economy issues of the twenty 691 00:39:37,000 --> 00:39:40,520 Speaker 1: first century. And so what I'm observing is retirement security 692 00:39:40,640 --> 00:39:45,440 Speaker 1: or insecurity is rising, and mainly slowly on the legislative 693 00:39:45,440 --> 00:39:48,759 Speaker 1: agenda through acts such as the uh VISA, R E 694 00:39:48,920 --> 00:39:51,920 Speaker 1: s A Act and others. So I see the emerging 695 00:39:52,120 --> 00:39:54,759 Speaker 1: of a of a real interest in this. Do we 696 00:39:54,840 --> 00:39:57,359 Speaker 1: get back to the success of the British system? I mean, 697 00:39:57,440 --> 00:40:00,239 Speaker 1: John Ferrell's in London, living fat and happy. He's he's 698 00:40:00,239 --> 00:40:02,719 Speaker 1: got his retirement slotted in. When he was twenty five 699 00:40:03,239 --> 00:40:06,480 Speaker 1: years old in London, But can't we get best practices 700 00:40:06,560 --> 00:40:09,600 Speaker 1: some other nations without being socialistic. Look, I think the 701 00:40:09,640 --> 00:40:11,879 Speaker 1: reality is we're working hard to do that, and so 702 00:40:12,360 --> 00:40:15,719 Speaker 1: society is looking for the models we recorgate. I hear 703 00:40:15,920 --> 00:40:18,759 Speaker 1: that a pure DC plan hasn't worked, and so a 704 00:40:18,760 --> 00:40:20,920 Speaker 1: bunch of us are saying, and it's now being heard, 705 00:40:21,440 --> 00:40:24,360 Speaker 1: you need a hybrid plan. But you have to recognize 706 00:40:24,360 --> 00:40:26,520 Speaker 1: that it's going to take some time because we move 707 00:40:27,320 --> 00:40:31,840 Speaker 1: dramatically from defined benefit divine contribution in the private sector 708 00:40:31,920 --> 00:40:34,279 Speaker 1: and now trying to turn that ship is something that's 709 00:40:34,280 --> 00:40:37,280 Speaker 1: gonna take some time. Do you look at the moment 710 00:40:37,600 --> 00:40:40,040 Speaker 1: we're in in the report that I know you stayed 711 00:40:40,040 --> 00:40:42,680 Speaker 1: out of politics. I give you great credit for that, 712 00:40:43,120 --> 00:40:46,040 Speaker 1: But do you look at the moment that Washington's in 713 00:40:46,280 --> 00:40:49,759 Speaker 1: right now? Is a one off? Or is there a 714 00:40:49,800 --> 00:40:54,560 Speaker 1: permanence to this anger within parts of America? Look, let's 715 00:40:54,600 --> 00:40:57,080 Speaker 1: hope there's not a permanence to the anger. I think 716 00:40:57,120 --> 00:40:59,560 Speaker 1: what we have to now understand is, well, what are 717 00:40:59,600 --> 00:41:02,839 Speaker 1: the airline causes that's driving this? And I think one 718 00:41:02,840 --> 00:41:04,799 Speaker 1: of the big underlying causes is the thing we just 719 00:41:04,800 --> 00:41:07,439 Speaker 1: started talking about a little bit which is wage inequality. 720 00:41:07,960 --> 00:41:11,240 Speaker 1: There's a sense that some folks are doing really well, 721 00:41:11,280 --> 00:41:14,439 Speaker 1: particularly in the last ten years of recovery, and many 722 00:41:14,480 --> 00:41:16,840 Speaker 1: have been left behind. Uh And so I think we 723 00:41:16,880 --> 00:41:19,880 Speaker 1: do need to rally around the observation that we have 724 00:41:20,440 --> 00:41:24,560 Speaker 1: the emergence of two unequal societies and policies. Got to 725 00:41:24,600 --> 00:41:27,640 Speaker 1: figure out how to bring those back together again, to 726 00:41:27,800 --> 00:41:31,719 Speaker 1: overcome the resentment that some folks are feeling and recognize 727 00:41:31,760 --> 00:41:33,799 Speaker 1: that the upper round that maybe you know, they have 728 00:41:33,920 --> 00:41:37,160 Speaker 1: benefited um a lot more than maybe other thing they deserve. 729 00:41:37,400 --> 00:41:39,560 Speaker 1: Roger first, and thank you so much for your time today, 730 00:41:39,600 --> 00:41:41,880 Speaker 1: the former vice Chairman of the Federal Reserve System, and 731 00:41:41,920 --> 00:41:50,680 Speaker 1: of course with t I A. Thanks for listening to 732 00:41:50,719 --> 00:41:55,279 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 733 00:41:55,320 --> 00:42:01,160 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 734 00:42:01,200 --> 00:42:04,480 Speaker 1: on Twitter at Tom Keane before the podcast. You can 735 00:42:04,560 --> 00:42:07,720 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.