WEBVTT - Surveillance: Multilateralism Is A Better Way, Gurria Says 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:32.080 Bloomberg dot Com, and of course on the Bloomberg. Joining 0:00:32.120 --> 0:00:33.760 us in New York, We've got a great guest as well, 0:00:33.880 --> 0:00:37.959 joining us from our studios Interactive Brokers Studios at Bloomberg. 0:00:38.040 --> 0:00:41.680 Jeff Curry Goldman Sacks, Global head of Commodities Research and partner. 0:00:41.760 --> 0:00:44.080 Joining us now, Jeff, good morning to you, and let's 0:00:44.120 --> 0:00:46.040 get to the news that just crossed the wires, shall 0:00:46.159 --> 0:00:48.879 we crossing the Bloomberg? That China's getting ready to cut 0:00:48.920 --> 0:00:52.120 imports terrorists on some goods from November. Is this a 0:00:52.200 --> 0:00:56.520 white flag? What is this? Well, they were already experiencing 0:00:56.560 --> 0:01:00.440 inflationary parishures. And one thing we've argued about these hereoffs 0:01:00.600 --> 0:01:02.320 is there not unlikely to have that big of an 0:01:02.360 --> 0:01:05.000 impact on demand or supply chains, but have a much 0:01:05.080 --> 0:01:09.440 larger impact on inflationary pressures. So by cutting them, it's 0:01:09.480 --> 0:01:14.759 actually easing an inflationary environment which was exacerbated by swine 0:01:14.760 --> 0:01:18.080 flu and other domestic problems. What's been fascinating about the 0:01:18.080 --> 0:01:21.639 commodity market through so far. If I said to you, Jeff, 0:01:21.680 --> 0:01:23.280 that we were going to have a big trade dispute 0:01:23.319 --> 0:01:26.080 between the United States and China. If I said we'd 0:01:26.080 --> 0:01:29.800 have big concerns over emerging markets and a stronger dollar 0:01:29.880 --> 0:01:33.920 story emerged through and then said guess where commodities are, 0:01:34.120 --> 0:01:39.280 would you have guests? Correctly, there one fly in the ointment. 0:01:39.360 --> 0:01:42.759 There really is the dollar, which is what put downward 0:01:42.760 --> 0:01:45.640 pressure on the metals complex. When we look at energy, 0:01:45.720 --> 0:01:49.360 it's a very different story. Oil is where it would 0:01:49.360 --> 0:01:51.560 be with or without the dollar. I like to say 0:01:51.600 --> 0:01:55.400 that oil causes the dollar, the dollar causes non energy. 0:01:55.560 --> 0:01:58.320 So the big difference here really is in the metal side, 0:01:58.360 --> 0:02:00.920 that copper sitting far lower than we would have expected. 0:02:01.320 --> 0:02:05.480 Jeff Curry, Good morning from the Plaza Hotel. Jeff, I, 0:02:05.480 --> 0:02:09.520 I'm fascinated by the supply dynamic into the next Vienna meeting. 0:02:09.560 --> 0:02:13.440 I understand there's a marginal issue with this given country 0:02:13.480 --> 0:02:18.440 that given country, but what will be the supply elasticities 0:02:18.480 --> 0:02:22.480 that they confront in Vienna. Well, I think the big 0:02:22.480 --> 0:02:26.280 concern is does Saudi and the core OPEC have additional 0:02:26.320 --> 0:02:30.160 capacity to deal with the Iranian outage UM, they're making 0:02:30.280 --> 0:02:33.240 large scale investments. Right now, rig counts in Saudi Arabia 0:02:33.320 --> 0:02:37.359 are up. The neutral zone has three hundred thousand barrels 0:02:37.360 --> 0:02:41.040 per day of additional capacity. Russia has two hundred. So yeah, 0:02:41.160 --> 0:02:43.760 right now it's a concerning issue. But as we look 0:02:43.800 --> 0:02:47.079 out forward six months and beyond UM, it becomes less 0:02:47.080 --> 0:02:50.320 of an issue. What is your target on print crude UM? 0:02:50.400 --> 0:02:52.040 We are seventy five at the end of this year. 0:02:52.080 --> 0:02:54.239 We think it will hover in that UM low eight 0:02:54.480 --> 0:02:57.519 high high seventy range. I think the key here is 0:02:57.560 --> 0:03:00.560 from an investment perspective, oils backward it it has a 0:03:00.600 --> 0:03:03.600 ten percent carry. Even though that we're not bullish on prices, 0:03:03.760 --> 0:03:06.919 were bullish on owning oil because of that carry. Let's 0:03:06.919 --> 0:03:08.280 talk about that a little bit deeper. And if we 0:03:08.320 --> 0:03:09.919 can strip away the jog and Jeff, when you say 0:03:09.960 --> 0:03:11.880 the oil is banquidated, what do you mean by that 0:03:11.960 --> 0:03:15.000 and why is it significant? It means inventories are low, 0:03:15.280 --> 0:03:19.480 so spot prices sit above forward, so you buy forward 0:03:19.560 --> 0:03:22.080 at a discount and roll up that curve. Think about 0:03:22.120 --> 0:03:24.880 it is like the interest rate on a bond um 0:03:25.040 --> 0:03:28.280 and in the current environment that dividend or whatever you 0:03:28.280 --> 0:03:32.080 want to call it for oil is paying ten fascinating 0:03:32.280 --> 0:03:35.000 and the president pushing back against pack Your thoughts on that, Jeff, 0:03:35.040 --> 0:03:37.560 because I'd love to hear what you think the willingness 0:03:37.600 --> 0:03:41.040 the president's questioning the willingness of OPEC to push back 0:03:41.520 --> 0:03:44.840 with more supply to meet high crude prices. Does the 0:03:44.880 --> 0:03:49.040 ability exist before we actually actually question the willingness Jeff? Well, 0:03:49.120 --> 0:03:51.800 in terms of looking at the willingness, they pumped a 0:03:51.840 --> 0:03:54.040 lot of oil on this market back in August, and 0:03:54.080 --> 0:03:57.760 look what it did to Brent prices in Brent term structure. Um, 0:03:57.800 --> 0:04:00.440 they backed up, inventories, came back down on and oil 0:04:00.480 --> 0:04:04.120 prices went right back up. So clearly, um, they do have, 0:04:04.320 --> 0:04:07.200 at least in the immediate term, enough a capacity to 0:04:07.240 --> 0:04:09.360 start to keep you know, keep this market balance and 0:04:09.400 --> 0:04:11.880 push it slightly into a curclus. I like to emphasize 0:04:12.080 --> 0:04:16.000 historically they never pushed this market into a surplus voluntarily. 0:04:16.000 --> 0:04:18.240 They did a little bit in August and then backed off. 0:04:18.480 --> 0:04:21.800 The big question is Tom asked, is you know what's 0:04:21.800 --> 0:04:24.560 their capacity coming from here? The highest we've ever seen 0:04:24.560 --> 0:04:27.400 Saudi hit was ten point six. They're producing ten point 0:04:27.800 --> 0:04:29.720 but they're making investments. Jeff, you know, let me ask 0:04:29.760 --> 0:04:31.360 you the question, and you know you're one of the 0:04:31.760 --> 0:04:36.800 grades of petroleum economics and petroleum discourse in the world. 0:04:36.839 --> 0:04:40.560 When you hear the president lecture Saudi Arabia, how does 0:04:40.600 --> 0:04:44.280 a pro like you respond to that. I like to 0:04:44.720 --> 0:04:47.920 use the example of soybeans. What did we learn this summer? 0:04:48.560 --> 0:04:52.640 Um that the administration is willing to use all the 0:04:52.680 --> 0:04:56.120 tools at his disposal to be able to keep prices 0:04:56.160 --> 0:04:59.680 of commodities um and a manageable range um. It was 0:04:59.720 --> 0:05:03.400 that Arip'll see a you know, obscure nineteen thirty depression 0:05:03.440 --> 0:05:05.800 era law that they were able to use to be 0:05:05.880 --> 0:05:09.200 able to subsidize farmers. I think what we learn from 0:05:09.240 --> 0:05:12.560 that is there's a willingness by this administration to do 0:05:12.640 --> 0:05:15.400 whatever it takes to keep prices in manageable. Okay, that's 0:05:15.480 --> 0:05:18.040 very nostalgic. I'm sitting in the palm court, John Ferrell 0:05:18.040 --> 0:05:21.839 word Conrad Hilton bailed out the hotel in about nine four. 0:05:22.200 --> 0:05:25.880 That's all great. Let's move forward to can the President 0:05:26.000 --> 0:05:32.480 provide discourse on oil into to keep the price down. 0:05:32.920 --> 0:05:35.120 I don't have an interview Jeff Curry that believes he 0:05:35.200 --> 0:05:39.160 can succeed at that. When you get into five it 0:05:39.160 --> 0:05:41.039 starts to become an issue. But when you look out 0:05:41.160 --> 0:05:44.680 that you've got huge pipe capacity coming online in the Permian. 0:05:45.000 --> 0:05:46.839 You know that's the pipe to get the oil out 0:05:46.839 --> 0:05:48.640 of the Mid continent the US down to the Gulf 0:05:48.640 --> 0:05:51.960 coast um coming online in September this year. So your 0:05:52.040 --> 0:05:55.560 wind of tightness really is between now and let's say 0:05:55.680 --> 0:05:59.480 third quarter of next year. John, John Permian, you can 0:05:59.520 --> 0:06:03.240 translate it is Texas. Thank you, Tom, thank you, thank you. 0:06:04.080 --> 0:06:06.159 I am just shocked by Tom's knowledge of the Planza 0:06:06.240 --> 0:06:08.800 Hotel in New York. I'm guessing you frequent this bar 0:06:09.040 --> 0:06:11.640 quite often. To this bar was redesigned about four or 0:06:11.680 --> 0:06:15.520 five years ago and designed beverage of my choice. At 0:06:15.520 --> 0:06:17.520 what did they redesign in terms of the beverage of 0:06:17.560 --> 0:06:22.400 your price? Jeff Curry of Goldman Sacks. I now we've 0:06:22.400 --> 0:06:24.159 got to let you go to get back to the 0:06:24.160 --> 0:06:27.160 trading flaws of government downtown. So thank you very much 0:06:27.160 --> 0:06:29.839 for giving us your time this morning. Jeff Goldman Sacks 0:06:29.839 --> 0:06:44.880 Global ahead of Commodity's research and partner John Ferrell from 0:06:44.880 --> 0:06:48.520 our studios Queen Victoria Street in London, I'm Tom Keane 0:06:48.920 --> 0:06:52.080 at the Bloomberg Global Forum here in the palm court 0:06:52.120 --> 0:06:57.160 of the Fame Plaza Hotel. For important conversation and thinking forward, 0:06:57.240 --> 0:07:01.640 we begin our coverage. Was someone important a day ago 0:07:01.880 --> 0:07:06.200 and ever more important right now, Werner Hoyer of Germany, 0:07:06.240 --> 0:07:09.080 President of the European Investment Bank, and we welcome in 0:07:09.200 --> 0:07:12.320 this morning. Is wonderful to speak to you. But my phrase, 0:07:12.560 --> 0:07:14.800 Mr Hoyer is a rip up the script, and I 0:07:14.880 --> 0:07:17.640 must rip up the script this morning. We saw the 0:07:17.680 --> 0:07:21.320 President speak yesterday at the United Nations, and I thought 0:07:21.400 --> 0:07:28.160 American media singled out the German UH Party for the quality, 0:07:28.320 --> 0:07:32.080 the tone, the moments of laughter. Is the president spoke? 0:07:32.560 --> 0:07:36.840 Speak right now with your your domestic politics experience of Germany, 0:07:37.280 --> 0:07:42.600 about the German view of President Trump and of Chancellor 0:07:42.640 --> 0:07:46.840 A Miracle's government's view of President Trump. What is the 0:07:46.960 --> 0:07:50.880 distinctive characteristic to you? Well, I think I'm not alleged 0:07:50.920 --> 0:07:58.640 biased to talk about President Trump because I am representing 0:07:58.640 --> 0:08:01.160 the European Union from their years of experience in my 0:08:01.240 --> 0:08:03.000 own country. We are a little bit puzzled, you know, 0:08:03.600 --> 0:08:05.920 the United States of America has always been the big 0:08:05.920 --> 0:08:08.800 example for Germans. The Americans were the ones who got 0:08:08.800 --> 0:08:10.960 out out of the misery and our own crimes of 0:08:11.000 --> 0:08:14.000 World War two and the Holocaust. So we owe a 0:08:14.040 --> 0:08:16.400 lot to America, not only for that, but also for 0:08:16.880 --> 0:08:19.480 help to shape happening us, to shape our constitution. Are 0:08:19.480 --> 0:08:23.160 a real political, democratic life. So seeing America going in 0:08:23.200 --> 0:08:26.840 a completely different direction from what they taught us decades ago, 0:08:26.920 --> 0:08:30.640 this is irritating, but of course the American people must 0:08:30.680 --> 0:08:33.640 make their own choices. Bloomberg spoke to Actual vor this 0:08:33.760 --> 0:08:36.920 morning in Zurich and it came up as well, do 0:08:37.040 --> 0:08:39.960 you detect and again this goes to your abilities at 0:08:39.960 --> 0:08:43.400 the European doesn't be like a pan European view. Do 0:08:43.520 --> 0:08:46.360 you detect that they look at President Trump in his 0:08:46.720 --> 0:08:50.119 sense of globalism, is a one awful moment for America? 0:08:50.679 --> 0:08:54.040 Or is there a new permanence here to America being 0:08:54.160 --> 0:08:57.320 less multi labal. Well, when I talk about America, I 0:08:57.320 --> 0:08:59.560 do not necessarily talk about President Trump. So I see 0:08:59.600 --> 0:09:01.720 that the prod them too is legitimized to take his 0:09:01.800 --> 0:09:05.720 positions and represent the United States takes these positions. However, 0:09:06.240 --> 0:09:09.320 I am very encouraged what I see on issues like globalization, 0:09:09.440 --> 0:09:13.360 on issues like climate or so by American society, American 0:09:13.400 --> 0:09:16.520 industry by many states, the global Covenant of Mayors and 0:09:16.600 --> 0:09:19.240 all these developments which are very encouraging. So I don't 0:09:19.240 --> 0:09:22.280 give America lost. Let us turn to the European investment 0:09:22.280 --> 0:09:25.240 things tell us about the state of investment public in 0:09:25.280 --> 0:09:28.920 private in Europe. Is there a forward momentum or is 0:09:28.960 --> 0:09:31.720 it going quarter to quarter. I'm very critical of that. 0:09:31.840 --> 0:09:34.800 I believe that Europe is behind an investment. There is 0:09:34.800 --> 0:09:37.600 a huge gap, in particular when it comes to innovation 0:09:37.640 --> 0:09:44.920 and when it comes to infrastructure, both new infrastructure Rhodes communication, energy, 0:09:44.920 --> 0:09:49.959 transmission parts rail in particular, but also when it comes 0:09:50.000 --> 0:09:53.120 to to innovation. I think we we invest much too little, 0:09:53.200 --> 0:09:57.200 both industry and the states into the future of the 0:09:57.280 --> 0:09:59.960 of the European Union when it is right to speak 0:10:00.040 --> 0:10:03.199 used Jonathan Farr, joining from the City of Larning on 0:10:03.360 --> 0:10:06.199 investment in Europe, is actually quite fascinating that there is 0:10:06.200 --> 0:10:09.200 a reluctance from the Germans, who run a very balanced 0:10:09.200 --> 0:10:12.280 budget to invest in their own country in infrastructure. That 0:10:12.320 --> 0:10:14.720 has been a case for a long long time. How 0:10:14.720 --> 0:10:17.160 do we address those issues, How do we convince the 0:10:17.200 --> 0:10:19.559 German government that is good for them and good for 0:10:19.600 --> 0:10:23.160 the continent as well. I think there is so far 0:10:23.200 --> 0:10:26.680 a lack of awareness how the bad situation of the 0:10:26.720 --> 0:10:30.320 infrastructure in Germany hurts the future of the country. I 0:10:30.400 --> 0:10:33.800 believe that a rebalancing of the budget is possible without 0:10:33.840 --> 0:10:37.920 getting or without losing sight of the objective of balanced budgets, 0:10:37.960 --> 0:10:39.959 which is what the Germans have achieved that was a 0:10:40.040 --> 0:10:43.200 huge success and which they want to maintain, which I 0:10:43.280 --> 0:10:47.280 perfectly understand. But I think it's doable by some reshifting 0:10:47.280 --> 0:10:50.360 in the budget and giving more attention to the quality 0:10:50.440 --> 0:10:54.600 and restoration and rehabilitation of infrastructure, just as well as 0:10:54.640 --> 0:10:58.200 to much more, much more innovation, research, technology, and the 0:10:58.200 --> 0:11:01.040 whole thing begins with education. Do you think it's possible 0:11:01.080 --> 0:11:02.800 that in ten years time we could look back on 0:11:02.880 --> 0:11:05.520 Chancellor Michael's leadership in Germany and actually view it as 0:11:05.520 --> 0:11:09.120 I squander a decade, Not at all. This lady has 0:11:09.160 --> 0:11:12.720 achieved so much for Germany. It's reputation and it's competitiveness 0:11:12.760 --> 0:11:14.679 in the world that I think whatever happens to her 0:11:14.720 --> 0:11:17.400 in the next many years, she will really might be 0:11:17.400 --> 0:11:19.920 a remaining as one of the key leaders of Germany 0:11:19.920 --> 0:11:22.400 after World War Two. If you're just joining US worldwide 0:11:22.480 --> 0:11:26.320 Verner Hoyer with us. He's president of the European Investment Bank. 0:11:26.360 --> 0:11:30.400 Here at the Bloomberg Global Business Forum. UH in the 0:11:30.520 --> 0:11:34.079 thrilled that you're all with us coast to coast across America. 0:11:34.720 --> 0:11:36.880 Mr Royer. When we look at at you mentioned the 0:11:37.240 --> 0:11:42.160 lag and infrastructure within UH Europe, most Americans would kill 0:11:42.320 --> 0:11:45.679 for Swiss trains or German trains or even the tube 0:11:45.679 --> 0:11:48.200 in London. I mean would be UH the state of it. 0:11:48.320 --> 0:11:51.840 And part of that is the logistics in what Mr 0:11:51.880 --> 0:11:56.120 Truche has always told me is the challenges of crossing borders. 0:11:56.600 --> 0:11:59.520 Is it going to be a more connected Europe? I 0:11:59.520 --> 0:12:03.280 mean ten and twenty years on from these historic moments, 0:12:03.640 --> 0:12:07.440 will it be an interconnected Europe? And air in rail 0:12:07.800 --> 0:12:11.520 in our road we have already very much advanced. They're 0:12:11.600 --> 0:12:14.920 still improvements are possible in particularly in some parts of Europe, 0:12:14.960 --> 0:12:17.920 like Eastern Europe. We must invest more into Eastern Europe, 0:12:17.920 --> 0:12:20.320 there is, there is no question about that. But I'm 0:12:20.360 --> 0:12:23.360 I'm less concerned that we might not make enough progress. 0:12:23.400 --> 0:12:26.040 I'm concerned we might go back, We might make going 0:12:26.120 --> 0:12:29.920 to a recess or a regress, because what is happening presently, 0:12:30.080 --> 0:12:33.920 the longing for borders and border controls and everything that 0:12:34.120 --> 0:12:37.120 is very, very difficult and dangerous for logistics. This is 0:12:37.160 --> 0:12:40.640 coming back, and I'm really surprised that this came back, 0:12:40.679 --> 0:12:43.600 and I'm really surprised that this is getting so much momentum. 0:12:43.800 --> 0:12:45.560 There's a history to all of this, and if I 0:12:45.559 --> 0:12:49.560 could just take Germany and Italy as one example, it's 0:12:49.559 --> 0:12:53.240 a new capitalism in Europe. We here interview, the interview, 0:12:53.320 --> 0:12:56.479 some people saying no, we don't want to be Anglo American, 0:12:56.880 --> 0:12:59.880 others saying we need to nudge towards a more Anglo 0:13:00.080 --> 0:13:05.640 American capitalism. You sense a new capitalism in continental Europe. 0:13:05.640 --> 0:13:07.840 Where as it's steady as you goes well. I think 0:13:07.880 --> 0:13:10.600 as long as we remind ourselves that the social market 0:13:10.640 --> 0:13:14.440 economy was the recipe for progress, not only in Germany 0:13:14.480 --> 0:13:17.720 but practically in many parts of Europe, and wherever this 0:13:17.880 --> 0:13:22.000 path was not taken, it didn't go so well. As 0:13:22.040 --> 0:13:24.319 long as we remember what we owe to the social 0:13:24.320 --> 0:13:28.319 market it kind of the balancing between the investments, the 0:13:29.200 --> 0:13:33.320 social dimensions and and the the private ownership, then we 0:13:33.400 --> 0:13:36.120 can still consider continue to make progress also in Europe, 0:13:36.520 --> 0:13:38.880 when in countries like Italy they feel constrained, and they 0:13:38.880 --> 0:13:41.920 feel constrained by rules that are said at the EU level, 0:13:42.040 --> 0:13:45.080 often by unelected officials. What do you say to the 0:13:45.080 --> 0:13:48.040 Italian government right now, who are ultimately trying to bend 0:13:48.040 --> 0:13:50.400 the rules. In some people's minds, the rules currently as 0:13:50.400 --> 0:13:52.880 they stand is to limit the budget deficit to three 0:13:52.880 --> 0:13:55.400 percent of GDP and sure that your debt to GDP 0:13:55.600 --> 0:13:58.440 is moving in the right direction. Italy is trying to 0:13:58.480 --> 0:14:01.320 tear up the script. What's your message them today, Well, 0:14:01.320 --> 0:14:03.640 we have a new situation in Italy that's legitimate to 0:14:03.760 --> 0:14:09.079 to to explore your feels, more boundaries and more new paths. 0:14:09.160 --> 0:14:12.400 On the other hand, Italy and and many other European 0:14:12.400 --> 0:14:16.560 countries were just about to implode because of the oversized deficit. 0:14:17.200 --> 0:14:19.880 They have been very successful in reducing that considerably over 0:14:19.920 --> 0:14:22.280 the last couple of years. Deviating from that path now, 0:14:22.720 --> 0:14:26.480 which was not prescribed by unelected officials, that was a 0:14:26.480 --> 0:14:30.480 political decision at that time by elected politicians, would be 0:14:30.520 --> 0:14:33.440 big mistake. But do you think that the budget deficits 0:14:33.600 --> 0:14:36.200 in Europe have perhaps overstated and that the actual problem 0:14:36.200 --> 0:14:38.400 with an impotent central bank that just refused to act 0:14:38.440 --> 0:14:40.760 like other central banks for a long long time. Under 0:14:40.800 --> 0:14:44.960 Jean plautrichia All, the European Central Bank has done a 0:14:45.000 --> 0:14:49.920 marvelous job when going for the protection of the currency 0:14:49.960 --> 0:14:51.920 and the stability in Europe a couple of years ago 0:14:52.520 --> 0:14:55.760 with a very clear position to do whatever it takes. However, 0:14:55.920 --> 0:14:58.200 this is a position that kind of be maintained forever 0:14:58.240 --> 0:15:00.640 as we continue the United States. When it comes to 0:15:00.680 --> 0:15:03.000 monetary policy, the United States is always a couple of 0:15:03.080 --> 0:15:05.120 years ahead, so we're not in the process of seeing 0:15:05.520 --> 0:15:10.560 that that zero right interest rates will will disappear very soon, 0:15:10.880 --> 0:15:15.080 hopefully gradually and without any any damage to the companies 0:15:15.160 --> 0:15:19.640 that need to to to adjust to slowly arising interest rates. 0:15:19.760 --> 0:15:22.600 Werner Joyer, where this President of the European Investment Bank 0:15:22.640 --> 0:15:26.600 here at the Bloomberg Global Business Forum is We have 0:15:26.680 --> 0:15:29.720 many important speeches today, but this is a wonderful focus 0:15:29.800 --> 0:15:32.560 on the dynamics of Europe. The word of the moment 0:15:33.000 --> 0:15:36.720 Burner in every NBA program in America scale scale, scale, 0:15:37.040 --> 0:15:40.600 We're looking for scale, scale, scale. Europe has a complete 0:15:41.840 --> 0:15:46.800 disinterpretation or reinterpretation that word from America. Are we going 0:15:46.880 --> 0:15:51.800 to see scale in corporate America's from mergers, combinations and 0:15:51.880 --> 0:15:55.000 transactions are we going to go out and buy revenue 0:15:55.320 --> 0:15:58.720 instead of build revenue across Europe. That could be and 0:15:58.840 --> 0:16:01.400 I think it would not be very helpful. I believe 0:16:01.480 --> 0:16:04.680 that we have to make sure that whatever we develop 0:16:04.760 --> 0:16:08.280 in the technological field and new and further develop will 0:16:08.320 --> 0:16:11.560 fit into a system, that is, that is in the 0:16:11.680 --> 0:16:15.160 within the limits and constraints of competition law. And sometimes 0:16:15.720 --> 0:16:18.720 I missed that, and we see the little dimension in 0:16:18.800 --> 0:16:22.200 some some sectors where America is definitely leading. We admire 0:16:22.240 --> 0:16:24.960 that a lot, but this is on the long run 0:16:25.520 --> 0:16:28.560 not compatible with the rules of competition. I mean your 0:16:28.600 --> 0:16:32.240 your dissertation years ago theoretical approaches to the role of 0:16:32.320 --> 0:16:35.680 money as a capital property. This goes back to a 0:16:35.840 --> 0:16:39.880 huge theme in academics in America, which is monopoly businesses, 0:16:40.160 --> 0:16:44.720 but also the strange word monopsony, which weakens labor. Europe 0:16:44.720 --> 0:16:48.480 has always been far more sensitive to that than America. 0:16:48.760 --> 0:16:51.600 How will that change in the coming years or does 0:16:51.720 --> 0:16:54.840 labor maintain power in Europe or do they does it 0:16:54.880 --> 0:16:59.560 fade away? I think it it maintains power because everybody, 0:17:00.080 --> 0:17:03.800 even among the employers, but in particular on the political side, 0:17:03.840 --> 0:17:07.920 are pretty much aware of the of the value of 0:17:07.960 --> 0:17:12.880 having stable social label relations. And this has been achieved 0:17:12.880 --> 0:17:15.080 in Europe more or less over the last two decades. 0:17:15.160 --> 0:17:17.919 And I think everybody is interested in preserving that, but 0:17:17.960 --> 0:17:20.640 otherwise it might lead to disruptions which can be very detrimental. 0:17:20.680 --> 0:17:23.640 And John Farrell this was unique in two thousand, eight, 0:17:23.720 --> 0:17:28.320 nine ten, where Germany adapt their labor force far better 0:17:28.400 --> 0:17:32.760 to financial melt down than other countries, including the United States, 0:17:32.840 --> 0:17:35.520 and arguingly they started doing that a good ten years 0:17:35.560 --> 0:17:39.480 before the financial crisis. Actually, here the reality Vernos, you know, 0:17:40.320 --> 0:17:44.840 is terrifically high unemployment in places like Spain, Italy, Greece. 0:17:44.960 --> 0:17:48.359 At the youth level, the picture is even more ugly. 0:17:49.000 --> 0:17:51.200 What's the solution to that? What's the remedy? What would 0:17:51.240 --> 0:17:55.280 you prescribe? At the moment, I believe we should overcome 0:17:55.400 --> 0:17:59.679 the division of labor where innovation modern technologies for the 0:17:59.720 --> 0:18:03.359 development of those takes place in the successful country of 0:18:03.359 --> 0:18:07.040 the north, and in the south we observe second rank 0:18:07.320 --> 0:18:10.960 industries or something like that. We must bring innovation your technologies. 0:18:11.280 --> 0:18:14.080 We must bring climate change activities into the countries of 0:18:14.160 --> 0:18:17.000 the South which are so far trailing. We must overcome 0:18:17.040 --> 0:18:22.359 the division between innovation and uh and the development innovation 0:18:22.400 --> 0:18:26.320 and climate innovation and education. All this belongs together. We 0:18:26.359 --> 0:18:28.560 need a much more holistic view. And when it comes 0:18:28.560 --> 0:18:30.840 to Spain, you can see how successful they have been 0:18:30.880 --> 0:18:33.440 over the last couple of years, and if they pursue 0:18:33.480 --> 0:18:35.840 that course also in the future with a sense for 0:18:35.960 --> 0:18:39.359 social balance, I think that Spain will be at par 0:18:39.520 --> 0:18:42.280 with Germany very soon. Vernon Horror, thank you so much. 0:18:42.320 --> 0:18:45.280 He's President of the European Investment Bank. Here at the 0:18:45.320 --> 0:18:59.840 Bloomberg Global Business Forum, Welcome to our audience from Bloomberg 0:18:59.840 --> 0:19:01.760 Tell Vision as well as Bloomberg Radio. Because we are 0:19:01.840 --> 0:19:04.360 joined by Michael R. Bloomberg, former Mayor of the City 0:19:04.359 --> 0:19:06.600 of New York and of course the founder and majority 0:19:06.640 --> 0:19:10.200 shareholder of Bloomberg LP, the parent company of Bloomberg News. 0:19:10.240 --> 0:19:12.240 We call him our boss. He's also the founder of 0:19:12.240 --> 0:19:15.480 Bloomberg Philanthropies and is the U N Secretary General's Special 0:19:15.600 --> 0:19:18.560 Envoy for Climate Actions. That's a lot I can outrage 0:19:18.600 --> 0:19:21.760 if you named everything after yourself, really with me as 0:19:21.840 --> 0:19:23.520 the Trump does that too. She write a book and 0:19:23.560 --> 0:19:27.160 called Bloomberg. Okay, so we're here at the second annual 0:19:27.280 --> 0:19:30.440 Blobal Business Form. Like what's changed since the first, in 0:19:30.520 --> 0:19:33.800 terms of global business. Is it better is it worse? Well, 0:19:33.840 --> 0:19:36.680 I would prefer that the world laughed with us then 0:19:36.760 --> 0:19:41.400 laughed at us. But yeah, things have changed. The tariff 0:19:41.440 --> 0:19:46.280 for is starting hard to see how it doesn't continue 0:19:46.600 --> 0:19:50.159 or even grow worse. Uh, didn't have happen. Wasn't there 0:19:50.200 --> 0:19:53.399 a year ago? But I think the fundamental things of 0:19:53.440 --> 0:19:57.600 the public worrying about technology taking away their jobs, not 0:19:57.760 --> 0:20:02.400 understanding the environmental challenges we have. Uh, those kinds of 0:20:02.400 --> 0:20:04.400 things were there a year ago. They were there two 0:20:04.480 --> 0:20:07.760 or three years ago. They influenced the last presidential election. 0:20:07.840 --> 0:20:12.679 They'll influence this mid term election. They'll influence the election. 0:20:12.800 --> 0:20:15.280 As you suggest that we had climate, we have technology. 0:20:15.359 --> 0:20:17.880 But really what has changed to some of grates trade? 0:20:17.920 --> 0:20:19.800 We saw that yesterday in the nations. A lot of 0:20:19.840 --> 0:20:22.240 talk about trade, a lot of restrictions, whether it's China, 0:20:22.240 --> 0:20:25.120 whether it's sanctioning as a RAN or whatever. How much 0:20:25.160 --> 0:20:27.520 are the Unitate's hurting itself? There's a new requorter. The 0:20:27.520 --> 0:20:30.119 ECB says, actually noted states will hurt the most right now. 0:20:30.200 --> 0:20:32.920 I think the United States will get hurt. And you 0:20:33.000 --> 0:20:36.040 have to understand China is so big that anything you 0:20:36.080 --> 0:20:39.280 do to China has a minimal impact on the country 0:20:39.320 --> 0:20:42.160 and only on a long term basis, And an awful 0:20:42.160 --> 0:20:44.800 lot of people in China that don't buy American products. 0:20:44.880 --> 0:20:47.760 Is five hundred million people in China that is still 0:20:47.840 --> 0:20:50.720 haven't come out of poverty, and they're not affected by 0:20:50.720 --> 0:20:54.800 any of this. Government social programs actually do better in 0:20:54.920 --> 0:20:58.639 down markets and downtimes because they don't get cut, whereas 0:20:58.720 --> 0:21:01.560 anything that you have in the private sector may go 0:21:01.640 --> 0:21:05.359 down in value and your pension fans puttings maybe less 0:21:05.440 --> 0:21:07.679 and because you have investments and they don't have that. 0:21:08.240 --> 0:21:12.200 So I think it is fundamentally different. It is very much, 0:21:12.760 --> 0:21:17.399 very worrisome, and regardless of whether you Republican or a Democrat, 0:21:17.880 --> 0:21:21.080 this is just a failure of our government and maybe 0:21:21.119 --> 0:21:23.320 we should look in the mirror. It's a failure of 0:21:23.320 --> 0:21:27.119 ourselves to not demand more from our elected officials. And 0:21:27.200 --> 0:21:29.080 yet does the Trump adminstration to have a point when 0:21:29.080 --> 0:21:31.639 it comes to China. China has been restrictive in trade, 0:21:31.840 --> 0:21:34.440 they have. Everybody agrees that China has done a lot 0:21:34.480 --> 0:21:38.120 of things that aren't fair, and administrations going back, both 0:21:38.119 --> 0:21:41.400 Republican and Democrat, have not done anything about it. It's 0:21:41.440 --> 0:21:43.879 not that Donald Trump is wrong and fighting it. It 0:21:44.080 --> 0:21:47.280 is the ways he's fighting it, because number one, it 0:21:47.320 --> 0:21:49.760 doesn't work. He puts people on the other side in 0:21:49.800 --> 0:21:52.760 a situation where they can't cave. They have their domestic 0:21:52.960 --> 0:21:57.600 and familihoods to worry about um. And the second thing is, uh, 0:21:57.840 --> 0:22:01.280 he's just going after the wrong things there are. We 0:22:01.359 --> 0:22:03.639 need to have access to their markets. We need to 0:22:03.680 --> 0:22:06.520 be able to go over and open companies and compete. 0:22:07.040 --> 0:22:09.560 We don't need to stop them from selling us products. 0:22:09.640 --> 0:22:12.200 Quite the contrary. If they want to sell us products 0:22:12.400 --> 0:22:16.280 at a lower price than we can produce ourselves, our 0:22:16.520 --> 0:22:20.160 consumers benefit from that. But we've got to make sure 0:22:20.200 --> 0:22:22.400 that our workers don't get hurt by that, and they 0:22:22.400 --> 0:22:25.400 don't get hurt if you create other jobs and other 0:22:25.440 --> 0:22:28.960 markets for us to sell our goods into. And so 0:22:29.000 --> 0:22:31.080 if you block one thing, they're going to block the other. 0:22:31.280 --> 0:22:33.760 And no matter which where you work, you're gonna get hurt. 0:22:33.960 --> 0:22:36.280 So how long can this go on? Particularly dispute with 0:22:36.359 --> 0:22:39.640 China before permanent changes are vague, Whether it's companies changing 0:22:39.680 --> 0:22:41.959 their supply lines or whether it's to them that are 0:22:42.040 --> 0:22:44.240 China reaching out to Asia and other trading partners and 0:22:44.240 --> 0:22:47.840 there'll be permanent damage. Well, companies are very flexible. They're 0:22:47.880 --> 0:22:51.679 already opening UH plants and offices and other countries that 0:22:51.680 --> 0:22:56.080 are outside of the American Chinese battle. UH, They're already 0:22:57.200 --> 0:23:01.040 readjusting their pricing and how they manifest facture. The supply 0:23:01.240 --> 0:23:04.200