WEBVTT - Leaks and Backstabbing Pushed Loyalty to Forefront, Carson Says 0:00:00.240 --> 0:00:04.040 Runt You by Bank of America Mary Lynch. With virtual reality, 0:00:04.320 --> 0:00:09.719 virtually everything will change. Discover opportunities in a transforming world. 0:00:10.119 --> 0:00:14.440 Be of a mL dot Com, slash VR, Mary Lynch, 0:00:14.520 --> 0:00:29.240 Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 0:00:29.280 --> 0:00:32.760 I'm Tom Keene with David Gura. Daily we bring you 0:00:32.840 --> 0:00:37.640 insight from the best of economics, finance, investment, and international relations. 0:00:38.080 --> 0:00:43.640 Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 0:00:43.640 --> 0:00:50.879 and of course on the Bloomberg Getting Rose joining us 0:00:50.880 --> 0:00:52.800 now in our Bloomberg eleven three oh studios. He's the 0:00:52.880 --> 0:00:55.080 editor of Foreign Affairs and the Peter G. Peterson Chair 0:00:55.400 --> 0:00:58.160 at the Council on Foreign Relations, and I hold Gideon's 0:00:58.200 --> 0:01:01.319 Bible here the latest issue of for Affairs magazine and Time. 0:01:01.440 --> 0:01:04.399 What now Trump's next steps and let's let's take stock 0:01:04.440 --> 0:01:07.039 here Now four or five months into the presidency, do 0:01:07.040 --> 0:01:10.920 you have a clearer sense of what Trump's foreign policy prescriptions, 0:01:10.959 --> 0:01:14.080 what his what his foreign policy is given? Actually, no, 0:01:14.240 --> 0:01:17.800 I don't think we do. Um. He came into office 0:01:18.000 --> 0:01:22.240 with a very strong agenda, with a lot of both 0:01:22.240 --> 0:01:26.200 contradictory but also somewhat radical proposals, and what has been 0:01:26.240 --> 0:01:29.800 notable has been backing off of many of those, but 0:01:29.959 --> 0:01:32.839 not all of them, but not putting in its place 0:01:32.920 --> 0:01:37.039 any kind of new framework that uh explains and justifies 0:01:37.120 --> 0:01:39.679 which parts of the campaign agenda he's kept in which 0:01:39.720 --> 0:01:42.360 parts he hasn't. So right now, basically you just have 0:01:42.440 --> 0:01:47.360 a sort of mostly an inertial mishmash that is continuing 0:01:47.800 --> 0:01:52.160 on autopilot for general American foreign policy, with occasional reactions 0:01:52.200 --> 0:01:55.400 coming out of DC on particular events and issues. Let 0:01:55.400 --> 0:01:57.320 me ask you what we learned from from the speech 0:01:57.320 --> 0:01:59.440 that the President gave in Brussels when he was there 0:01:59.440 --> 0:02:02.360 for the NATOS. Since then, Susan Glasser, who's at Political 0:02:02.400 --> 0:02:04.920 Magazine has written about how I think twenty five words 0:02:04.960 --> 0:02:07.720 were stricken from the speech that he ended up reading. 0:02:07.720 --> 0:02:09.760 Those were the ones in which he would have affirmed, uh, 0:02:09.840 --> 0:02:12.359 the importance of Article five part of NATO. What do 0:02:12.400 --> 0:02:15.320 we learned from that that speech in Brussels and what happened? 0:02:15.840 --> 0:02:18.360 I think we learned a couple of things, UH. One 0:02:18.480 --> 0:02:21.880 is that the president really doesn't like NATO. Second that 0:02:22.800 --> 0:02:27.799 the responsible quote unquote adults in the administration don't necessarily 0:02:27.880 --> 0:02:32.240 get their way when it comes to the president's words. 0:02:32.840 --> 0:02:35.680 Whether it comes to actual policies is a different question. 0:02:35.800 --> 0:02:37.600 So one of the interesting things that happens, I mean, 0:02:37.720 --> 0:02:39.919 think about the question of the president's tweets, uh, and 0:02:39.960 --> 0:02:44.280 everyone's debating are the president's tweets official reflections of US policy? 0:02:44.400 --> 0:02:48.360 Increasingly the president's tweets, everybody seems to agree are the 0:02:48.360 --> 0:02:51.560 president's tweets and not actual reflections of US policy. So 0:02:51.600 --> 0:02:54.480 figuring out at this point when the president is speaking 0:02:54.560 --> 0:02:56.639 as Donald J. Trump, and when he's speaking as the 0:02:56.639 --> 0:03:00.280 authoritative commander in chief of US forces, and uh, the 0:03:00.320 --> 0:03:02.600 expression of U S foreign policy is a really kind 0:03:02.600 --> 0:03:05.880 of odd We don't know. So people, I would say, 0:03:06.240 --> 0:03:08.480 foreigners and most people should watch what the United States 0:03:08.520 --> 0:03:10.200 does and not listen to any of the words coming 0:03:10.240 --> 0:03:12.720 out of Washington, because it's not clear who at these 0:03:13.000 --> 0:03:16.359 these days is authoritatively speaking for the country. Kideon Rose, 0:03:16.400 --> 0:03:18.200 there are teen things up perfectly for me to read 0:03:18.240 --> 0:03:20.240 the latest tweet from the president now just a few 0:03:20.240 --> 0:03:23.400 minutes ago, writing well, as predicted, the Ninth Circuit did 0:03:23.400 --> 0:03:25.680 it again ruled against the travel band at such a 0:03:25.760 --> 0:03:29.120 dangerous time in the history of our country. S C. 0:03:29.360 --> 0:03:32.200 Which stands for Supreme Court. I assume where do they 0:03:32.280 --> 0:03:34.920 stand with this trass should be South Carolina on the 0:03:35.000 --> 0:03:37.560 hills of rereading Clemson at the White House. Indeed, our 0:03:37.640 --> 0:03:40.640 national champions there on the south lawn of the White House. 0:03:40.960 --> 0:03:43.480 Getting what what? What changes now that we have this 0:03:43.560 --> 0:03:45.760 Ninth Circuit decision? How much closer are we to seeing 0:03:45.760 --> 0:03:48.400 this case being argued before the Supreme Court? You know, 0:03:50.120 --> 0:03:51.920 you have to get a legal expert to talk about 0:03:51.920 --> 0:03:53.920 the specifics of the thing that The fact is, this 0:03:54.000 --> 0:03:55.560 whole thing is a bit of a joke in the 0:03:55.600 --> 0:03:58.920 sense that there wasn't actually a real problem. The solution 0:03:59.000 --> 0:04:02.400 was a fake solution, and it was driven by an 0:04:02.440 --> 0:04:05.000 agenda other than a rational policy making, which is why 0:04:05.040 --> 0:04:08.440 it has been undermined in the courts. So what really 0:04:08.480 --> 0:04:10.760 should happen is they should get the entire point of 0:04:10.760 --> 0:04:13.840 this was supposedly a temporary band of which the period 0:04:13.880 --> 0:04:16.640 now is almost over, and there was no actual real 0:04:16.680 --> 0:04:18.640 problem with betting in the first place. So it's not 0:04:18.680 --> 0:04:22.160 clear to me that other than politics and stubbornness, that 0:04:22.200 --> 0:04:24.360 there's any reason for this to go any further whatsoever. 0:04:25.080 --> 0:04:29.039 The question of immigration policy and protecting yourself from counter terrorism. UH, 0:04:29.320 --> 0:04:31.640 threats is a real and terrorist threats is a real 0:04:31.680 --> 0:04:34.120 and major issue. But the idea that that's actually what's 0:04:34.120 --> 0:04:36.400 going on in this discussion about travel band is silly. 0:04:36.440 --> 0:04:38.560 You've been complaining all morning. What do you want from 0:04:38.560 --> 0:04:44.240 Secretary Tillerson? Secretary Tillerson is a very interesting character. I mean, 0:04:44.240 --> 0:04:48.120 he's gonna go to CFR concept formulations is going to 0:04:48.200 --> 0:04:51.360 greet him. You're gonna do a foreign affairs interview. We 0:04:51.400 --> 0:04:54.719 would love to interview. We we have standing offers to 0:04:54.760 --> 0:04:56.520 interview ton of people. We would love to it. What's 0:04:56.520 --> 0:05:00.600 your first question? You know, it's really hard to where 0:05:00.680 --> 0:05:02.640 what is okay? What is the grand strategy of the 0:05:02.680 --> 0:05:05.840 Trump administration? I don't think he'd answer that. UH. And 0:05:05.920 --> 0:05:08.920 Totson has not exactly been a large public voice in 0:05:08.960 --> 0:05:12.760 American farm policy recently. UM. The what I've heard, however, 0:05:12.839 --> 0:05:15.200 is that indeed he has been working closely with Mattis 0:05:15.360 --> 0:05:21.680 and uh McMaster uh to to help guide things in 0:05:21.720 --> 0:05:25.599 ways that the people at State would feel are are responsible, 0:05:25.600 --> 0:05:28.320 in which we should be very thankful for. So. I 0:05:29.040 --> 0:05:32.039 the question of what is actually going on inside the 0:05:32.080 --> 0:05:35.760 Trump farm policy and national security apparatus is a very 0:05:35.800 --> 0:05:38.520 interesting question that for all the reporting that goes on 0:05:38.560 --> 0:05:41.000 about the White House itself and the soap opera and 0:05:41.040 --> 0:05:43.719 the melodrama of all the key characters, there's very little 0:05:43.760 --> 0:05:48.440 reportage about the details of foreign policy making and how 0:05:48.520 --> 0:05:52.480 decisions and strategic process actually plan. There's a really fascinating 0:05:52.520 --> 0:05:54.720 piece in New York Magazine this week by Jessica Pressler 0:05:54.760 --> 0:05:57.520 looking at Gary Cone, the chairman of the National Economic Council, 0:05:57.720 --> 0:05:59.560 and and she sort of looks at him as a 0:05:59.560 --> 0:06:01.480 long stay ending number two. He was the number two 0:06:01.520 --> 0:06:04.279 to to Lloyd Blank find at Goldman Saxon's with What 0:06:04.320 --> 0:06:06.159 the piece posits is why is he putting up with 0:06:06.160 --> 0:06:07.680 with all of this? And I wonder if you can 0:06:07.920 --> 0:06:11.120 extrapolate that to to Rex Tillerson as well. I'm reminded 0:06:11.120 --> 0:06:13.279 of the statement that he gave on Friday about Cutter 0:06:13.360 --> 0:06:15.920 that was immediately reversed by the President in the Rose 0:06:15.920 --> 0:06:19.360 Garden at press conference shortly thereafter. Does this president want 0:06:19.440 --> 0:06:22.080 his cabinet secretaries to have any degree of autonomy? Do 0:06:22.080 --> 0:06:25.560 you think? Uh? The answer to that last question probably 0:06:25.640 --> 0:06:27.800 is no. I mean, if we all will y'all watch 0:06:27.880 --> 0:06:30.599 that meeting yesterday and it doesn't look like this is 0:06:30.680 --> 0:06:32.400 somebody a boss who wants to have a lot of 0:06:32.440 --> 0:06:35.839 delegated authority to freelancing underlings who are Pierre players. This 0:06:35.920 --> 0:06:39.560 is more like a court than it is a cabinet um. 0:06:39.600 --> 0:06:42.240 With regard to what Tillerson's thinking, I don't know. I 0:06:42.279 --> 0:06:44.880 can't get inside Tillerson's head. I don't know the man, 0:06:45.240 --> 0:06:48.400 and it's not clear what the mindset he's bringing to 0:06:48.440 --> 0:06:51.359 diplomacy is. After an entire career spent in corporate management. 0:06:51.720 --> 0:06:57.440 What Tillerson, sorry, what McMaster the General's McMaster and Mattis 0:06:57.760 --> 0:07:00.120 are thinking, and what many of the professionals around out 0:07:00.120 --> 0:07:02.200 of thinking is, Look, the United States is the leader 0:07:02.279 --> 0:07:06.320 of the world. We are running a very important set 0:07:06.320 --> 0:07:09.440 of policies globally on a whole bunch of areas, and 0:07:09.480 --> 0:07:11.560 we need to keep the ship on track. And they're 0:07:11.560 --> 0:07:14.200 basically spending their time trying to run the world and 0:07:14.200 --> 0:07:16.960 doing a decent job of it. Anthony from New Jersey 0:07:17.000 --> 0:07:20.679 emailed in and he said, you know, very succinctly, what's 0:07:20.680 --> 0:07:23.720 going to happen next. We had Ambassador Burns with us yesterday, 0:07:23.760 --> 0:07:27.400 Nicholas Burns of Kennedy in here. Those guys aren't in 0:07:27.720 --> 0:07:32.280 a Republican government. Maybe guys like Has, guys like Ambassador 0:07:32.320 --> 0:07:36.200 Burns and such. What needs to happen to get the 0:07:36.280 --> 0:07:43.239 normal apparatus of our Republican foreign policy into the Republican Senate, 0:07:43.280 --> 0:07:46.720 Republican House, Republican White House. That's what Anthony from New 0:07:46.760 --> 0:07:50.440 Jersey wanted to know. I think that is a great question. 0:07:51.240 --> 0:07:53.240 I didn't come up with it, Anthony from New Jersey, 0:07:53.360 --> 0:07:55.400 and I think I think that that is the kind 0:07:55.440 --> 0:07:59.600 of question that many of us are asking. UM. The 0:08:00.040 --> 0:08:02.720 it's easier to ask the question than to answer it, 0:08:03.320 --> 0:08:07.280 because what we've seen increasingly is that everything we thought 0:08:07.320 --> 0:08:12.960 we knew about US farm policy and government operations does 0:08:13.000 --> 0:08:15.920 not seem to apply in the short term, at least, 0:08:16.600 --> 0:08:19.120 whether that will be true over a medium term or 0:08:19.160 --> 0:08:22.120 longer term. I cannot see how this is sustainable. I 0:08:22.160 --> 0:08:24.880 cannot see how what we've seen over the last few 0:08:24.920 --> 0:08:29.040 months goes on for too much longer, many more months longer, 0:08:29.200 --> 0:08:32.000 without something. We've been so incredibly lucky that there's been 0:08:32.000 --> 0:08:36.520 no actual crisis abroad. UM, we've posentially been stalled in 0:08:36.559 --> 0:08:40.640 the water. US farm policy is stalled in the water. UM, 0:08:40.800 --> 0:08:43.720 nothing bad has happened. No pirates have come along to 0:08:43.800 --> 0:08:46.720 attack us. No, uh, No giant whale has come to 0:08:46.800 --> 0:08:49.320 rock the boat. Uh. You didn't see the new Johnny 0:08:49.320 --> 0:08:53.320 Depp movie. What will actually happen? You know? Every month 0:08:53.400 --> 0:08:56.360 that goes by, we're running out of time when we 0:08:56.400 --> 0:08:59.079 can expect our luck to hold with no crisis. Want 0:08:59.080 --> 0:09:00.920 to come back and talk about the new Foreign Affairs 0:09:00.960 --> 0:09:03.800 magazine And this is always controversial and very balanced. There's 0:09:03.840 --> 0:09:08.319 some different views across it. What now the President's next steps? 0:09:08.559 --> 0:09:12.320 Getting rose with this Foreign Affairs magazine? The new issue? 0:09:12.360 --> 0:09:14.880 What now Trump's next SIPs? How do you make an issue? 0:09:15.320 --> 0:09:17.120 Is it like? Is it like a war? Is it 0:09:17.240 --> 0:09:20.480 like you know the bunker room there at the White House, 0:09:20.559 --> 0:09:22.600 it's like six you get in the room and screaming 0:09:22.640 --> 0:09:24.880 to each other for with the Tom King Grand strategy? 0:09:24.880 --> 0:09:26.280 When do we get that piece? And so we have 0:09:26.400 --> 0:09:28.720 to we have to two tracks. We have a daily 0:09:28.920 --> 0:09:32.160 website where we put out several pieces a day, and 0:09:32.160 --> 0:09:34.840 that's the constant production of stuff. That's like a lot 0:09:34.840 --> 0:09:38.880 of other organizations trying to add real value to contemporary 0:09:38.920 --> 0:09:41.760 commentary on breaking events. We also have a bi monthly 0:09:41.800 --> 0:09:44.280 print issue which is sort of like the carriers of 0:09:44.320 --> 0:09:46.880 the battle Fleet and the sort of you deploy them 0:09:47.120 --> 0:09:49.960 on long deployments on major subjects. What we try and 0:09:50.000 --> 0:09:53.840 do is have a steady run of articles on regular important, 0:09:53.840 --> 0:09:56.280 big topics, but we also have a lead package each issue, 0:09:56.280 --> 0:09:58.000 and we try to shape that a couple of months 0:09:58.040 --> 0:10:00.439 out so what we think will be on the news 0:10:00.480 --> 0:10:02.240 of the day. And so when we were putting this 0:10:02.280 --> 0:10:05.040 one together, we're putting it together in April, sending it 0:10:05.120 --> 0:10:07.200 to Bed in May to appear in June and July. 0:10:07.679 --> 0:10:11.120 The idea was that, Okay, after all the craziness of 0:10:11.160 --> 0:10:14.400 the first few months, it'll get It's gonna get commerce. 0:10:14.400 --> 0:10:16.920 So let's talk about actual policy stuff, right. So we 0:10:17.000 --> 0:10:21.080 had suggestions for foreign policy, suggestions for healthcare reform, suggestions 0:10:21.080 --> 0:10:24.920 for tax reform, projection for economic policy internationally. The idea 0:10:24.960 --> 0:10:27.240 being that at some point there are some people who 0:10:27.280 --> 0:10:30.480 should go about trying to govern um. Whether that is 0:10:30.520 --> 0:10:32.720 actually in sync with what's happening in d C, you 0:10:32.800 --> 0:10:35.400 never know, but those discussions should be had no matter 0:10:35.400 --> 0:10:38.160 what you mentioned. Carriers and battleships right now, they're off 0:10:38.240 --> 0:10:41.440 North Korea at Moalstavidas told us from Fletcher one of 0:10:41.480 --> 0:10:44.920 your sponsors in Foreign Affairs magazine h the idea of 0:10:45.160 --> 0:10:47.600 there's an a model off of North Korea. What is 0:10:47.679 --> 0:10:51.959 the Foreign affairs take on our risks in North Korea? So, uh, 0:10:52.200 --> 0:10:54.720 North Korea. Look at General Mattis said just the other day, 0:10:54.760 --> 0:10:57.199 that's the sort of probably the single most important or 0:10:57.280 --> 0:11:01.679 urgent immediate national security threat that people are focusing on, 0:11:01.760 --> 0:11:05.120 even more so than Russia and cyber stuff. Uh, it's dangerous. 0:11:05.320 --> 0:11:07.600 On the other hand, it's always kind of been dangerous. 0:11:07.760 --> 0:11:10.560 We've been having a Korea standoff for sixty years, So 0:11:10.679 --> 0:11:14.440 I'm not as freaked as other people are. But that 0:11:14.520 --> 0:11:16.920 doesn't mean you don't have to handle this very carefully 0:11:16.960 --> 0:11:19.520 and very securely. Probably the thing to do that makes 0:11:19.520 --> 0:11:22.200 sense is not and this is something that Richard Hass 0:11:22.280 --> 0:11:24.439 says in his piece, is not assumed that you can 0:11:24.440 --> 0:11:26.800 solve the North Korea problem. We're not going to solve 0:11:26.800 --> 0:11:29.040 the North Korea problem. So what you should be looking 0:11:29.080 --> 0:11:32.520 for is not some fundamental resolution to the issue, but 0:11:32.720 --> 0:11:36.440 some sort of interim agreement that can pause things, keep 0:11:36.480 --> 0:11:40.040 them from escalating further, and jolly things along and kick 0:11:40.080 --> 0:11:41.720 the can down the road. We've been doing that with 0:11:41.760 --> 0:11:44.920 North Korea for six decades, nobody has any better ideas. 0:11:45.120 --> 0:11:48.000 We should keep doing it now, and you want responsible 0:11:48.040 --> 0:11:50.960 adults managing that to make sure that it doesn't actually 0:11:51.080 --> 0:11:53.280 erupt to escalate into a giant war. Yeah, that's a 0:11:53.280 --> 0:11:55.319 big part of Ambassador hass Is piece where to go 0:11:55.400 --> 0:11:57.880 from here? Rebooting American foreign policy at the front of 0:11:58.080 --> 0:12:00.000 the latest issue of Foreign aferous let me ask you 0:12:00.040 --> 0:12:02.200 about Russian hacking. You mentioned that just a moment to go. 0:12:02.240 --> 0:12:06.000 Bloomberg News reporting this morning that the hacking during the 0:12:06.000 --> 0:12:09.120 election much wider than was initially thought. Hackers hit systems 0:12:09.120 --> 0:12:11.680 in a total of thirty nine states here. This is 0:12:11.960 --> 0:12:15.800 ostensibly the focus of the Senate Intelligence Committees investigation, and 0:12:15.840 --> 0:12:17.960 we heard from James Comey on this subject last week. 0:12:18.360 --> 0:12:20.320 Are we at risk of of of not seeing the 0:12:20.360 --> 0:12:22.679 forest through the trees, focusing too much here on the 0:12:22.920 --> 0:12:26.120 interpersonal conflict and not on this larger issue where we 0:12:26.280 --> 0:12:28.120 at risk of losing sight of the larger issue here, 0:12:28.160 --> 0:12:30.679 that being um, the cyber attacks that Russian made during 0:12:30.679 --> 0:12:33.640 the during the campaign I think are absolutely correct. Um. 0:12:33.679 --> 0:12:37.360 So essentially there's a bunch of different issues here, all 0:12:37.440 --> 0:12:40.800 of which are worth talking about investigating. Discussing, addressing, and 0:12:40.800 --> 0:12:44.120 so forth, but which cannon should follow separate tracks. So 0:12:44.280 --> 0:12:48.079 whatever happened on the legal front or or the whatever 0:12:48.160 --> 0:12:49.959 is going on in the investigative front, that's issue. That's 0:12:50.000 --> 0:12:52.200 one set of issues. Whatever happened between the Trump campaign 0:12:52.240 --> 0:12:56.360 and Russia's another issue. But what the Russians did and 0:12:56.440 --> 0:12:59.760 are continuing to do, and what they've they've done in 0:12:59.840 --> 0:13:05.200 other countries as well, is use cyber attacks and as 0:13:05.240 --> 0:13:10.480 part of a broader diplomatic UH and economic and UH 0:13:10.600 --> 0:13:17.400 political strategy for challenging American dominance and and overall turning 0:13:17.960 --> 0:13:20.880 various American policies they don't like. And so the this 0:13:20.960 --> 0:13:24.480 should be a major object of investigation and a major 0:13:24.840 --> 0:13:27.400 UH challenge to deal with, no matter who's in the 0:13:27.400 --> 0:13:30.319 White House. And the fact that this has gotten somehow 0:13:30.800 --> 0:13:34.560 tied up in and suck connected to the partisan split 0:13:34.640 --> 0:13:38.439 going on in Washington, in which it shouldn't matter what 0:13:38.600 --> 0:13:43.080 party affiliation you have to just determine what your stance 0:13:43.080 --> 0:13:46.240 should be on our Russian cyber attack against American democracy. 0:13:46.480 --> 0:13:48.600 And yet unfortunately it seems to be getting trapped in 0:13:48.640 --> 0:13:50.320 that as if the people who care about the Russia 0:13:50.360 --> 0:13:54.440 leaks and the Russian investigation are seemingly doing it for 0:13:54.480 --> 0:13:56.240 partisan reasons and the people on the other side are 0:13:56.360 --> 0:13:58.760 hosing them. Thank you so much for coming in. Oh, 0:13:58.800 --> 0:14:01.599 it's hugely valuable. Get here this you know, this is 0:14:01.600 --> 0:14:03.960 what the show is about. We do economics and the 0:14:04.000 --> 0:14:06.760 Fed and finance and investment, and we have to link 0:14:06.800 --> 0:14:10.520 it into the politics at the moment is well, Gideon Rose, 0:14:10.520 --> 0:14:13.000 Thank you so much. Foreign Affairs at magazine. What now 0:14:13.240 --> 0:14:29.400 Trump's next steps? We are advantaged. Um Bromberg is doing 0:14:29.400 --> 0:14:31.040 a big deal in Germany today and we've got a 0:14:31.080 --> 0:14:34.800 lot of German news coming out, including important comments by 0:14:34.840 --> 0:14:37.560 their finance minister. It would be good to have a 0:14:37.600 --> 0:14:40.520 German expert in the house. That would not be John 0:14:40.560 --> 0:14:46.120 Tucker or Tom Keane, but David Gurri, Carston Brasilski with us, 0:14:46.360 --> 0:14:49.760 with I n G. Germany. Uh, usually in Frankfurt, US 0:14:50.120 --> 0:14:55.960 Frankfort right in Berlin born, Berlin born, and good, wonderful 0:14:56.040 --> 0:14:58.640 day have you here. Let's start with something we usually 0:14:58.640 --> 0:15:01.240 don't ask. What I'm gonna ask it. Who's Mr Schreibler. 0:15:01.480 --> 0:15:05.160 How is Mr Schreibla the finance minister perceived by the 0:15:05.200 --> 0:15:08.800 German people a bit like Mr Bismarck back hundred hundred 0:15:08.800 --> 0:15:10.920 twenty years ago. I think he's the the iron He's 0:15:10.960 --> 0:15:13.520 not the iron lady. He's the iron man and the 0:15:13.840 --> 0:15:17.840 standing for a fiscal discipline and what the Germans called 0:15:17.840 --> 0:15:21.920 the black zero, so more or less balanced budgets. What 0:15:21.920 --> 0:15:24.120 what did you hear last week? We were paying attention 0:15:24.160 --> 0:15:28.120 to Admirio Druggi was saying in Estonia after the rate 0:15:28.160 --> 0:15:30.960 decision last week? What changed in terms of language last week? 0:15:30.960 --> 0:15:33.240 What stood out to you? Obviously we are the other 0:15:33.320 --> 0:15:36.000 ones on they they cut down the the easing bias, 0:15:36.120 --> 0:15:38.960 so no not interstise, will no longer could no longer 0:15:39.000 --> 0:15:42.240 be even lower than is. And also the expected thing 0:15:42.280 --> 0:15:44.800 that the drug it changed the balance of the economic 0:15:44.840 --> 0:15:46.960 out look to the balanced um. I think that that 0:15:47.120 --> 0:15:50.160 was the new thing as expected. Now the next steps 0:15:50.200 --> 0:15:53.440 will be will he gradually prepare a tapering announcement? What 0:15:53.480 --> 0:15:56.680 we're talking about personality here? What's the relationship like between 0:15:56.760 --> 0:15:59.320 Mr Scheibler and Mr Drug? Is there much of one 0:16:00.240 --> 0:16:01.680 one of Whether there is, I would call it a 0:16:01.680 --> 0:16:06.760 professional relationship because mrs as you know, Mr Schi likes 0:16:06.840 --> 0:16:09.240 to to do some some e CB bashing once in 0:16:09.280 --> 0:16:12.080 a while out of out of public um created the 0:16:12.080 --> 0:16:14.960 ECB does not like it because the journe public is 0:16:15.040 --> 0:16:17.400 very critical about the ECB. UM. So I think it's 0:16:17.400 --> 0:16:20.360 a professional relationship. But I wonder whether it goes beyond 0:16:20.360 --> 0:16:23.480 that dovetail. For is, if you would what's going on 0:16:23.520 --> 0:16:24.760 with the e c B and what we expect to 0:16:24.760 --> 0:16:27.600 see the FED due today? How cognizant is the the 0:16:27.640 --> 0:16:29.280 e c B of what the Fed is is doing 0:16:29.360 --> 0:16:33.280 or may do today tomorrow. I think what wasn't Tree share, 0:16:33.320 --> 0:16:35.880 the former SCB president who always talked about some some 0:16:36.000 --> 0:16:39.840 mutual brotherhood of central bankers. Um, Obviously they're watching what 0:16:40.160 --> 0:16:42.720 the FED is doing and and the impact on the currency. 0:16:42.720 --> 0:16:45.200 I think that that's what what's most interesting, because if 0:16:45.200 --> 0:16:48.200 the FED would not hike interest rates, if and if 0:16:48.240 --> 0:16:51.080 the ECB would continue going towards tapering, this argus in 0:16:51.120 --> 0:16:54.160 favor of a stronger euro. But for the ECB, the 0:16:54.160 --> 0:16:56.280 Euro should not get too strong because otherwise it would 0:16:56.280 --> 0:16:59.560 on the mine exports. We have a deadline coming up 0:16:59.560 --> 0:17:01.720 here for for Greece on Friday, I gather another meeting 0:17:01.760 --> 0:17:04.560 on on on Friday. Have we seen Mr choy bliss 0:17:04.560 --> 0:17:06.000 offt in his tone at all when it comes to 0:17:06.200 --> 0:17:09.760 the situation in Greece. Has has that story changed markedly? No, 0:17:09.880 --> 0:17:12.639 it has not. The only change is that hardly anyone 0:17:12.720 --> 0:17:15.240 is interested in what Chilable thinks about about the Greek 0:17:15.800 --> 0:17:18.280 because it will be muddling through, because I think we 0:17:18.520 --> 0:17:20.960 know that no one really is interested in the escalation 0:17:20.960 --> 0:17:23.840 of the situation, neither the Germans a couple of months 0:17:24.040 --> 0:17:27.439 before their own elections, nor the Greek um. So therefore 0:17:27.480 --> 0:17:29.959 we will get some muddling through and this will Morris 0:17:30.000 --> 0:17:33.159 go off the RADA screen. I mentioned he's watching the 0:17:33.320 --> 0:17:36.360 the US two year What are you watching mostly these day? 0:17:36.400 --> 0:17:38.199 What were the indicators that you pay the most attention 0:17:38.200 --> 0:17:40.240 to As we have these ECB meetings, in the FED 0:17:40.280 --> 0:17:41.800 meeting of bo J meeting on the heels of the 0:17:41.840 --> 0:17:45.600 FED meeting later this week. Obviously it is bondy heels, 0:17:45.640 --> 0:17:48.000 it's it's ten year, it's it's two year year rates, 0:17:48.080 --> 0:17:50.040 and it's a bit of the exchange. And I think, 0:17:50.320 --> 0:17:52.360 especially when you look at the the U S situation, 0:17:52.400 --> 0:17:56.639 it's also overshadowed by politics. When when I look at this, 0:17:56.760 --> 0:17:59.120 and I did this chart the other day, not only 0:17:59.240 --> 0:18:02.360 is there a yield of virgins between the negative two 0:18:02.440 --> 0:18:06.919 year in Germany and the US two year. But the 0:18:06.960 --> 0:18:12.359 first derivative, the widening divergence is tangible. That's always a symmetric. 0:18:12.520 --> 0:18:16.080 Is a divergence widening a bigger deal for the United 0:18:16.160 --> 0:18:19.000 States or is it a bigger deal for Germany? It's 0:18:19.080 --> 0:18:20.800 a it's a it's a bigger deal for the for 0:18:20.800 --> 0:18:22.720 the U S because it are always argues in favor 0:18:22.760 --> 0:18:25.400 of of a stronger of a stronger US dollar um. 0:18:25.400 --> 0:18:28.439 But it's it's also distorted by by by the fact 0:18:28.480 --> 0:18:32.320 that you have so many institutional investors who actually have 0:18:32.480 --> 0:18:35.920 to invest in shorter short materiality droan paper. And this 0:18:36.000 --> 0:18:38.720 is not just the e c B. It's the explain 0:18:38.800 --> 0:18:41.840 that because because banks actually they they could deposit the 0:18:41.880 --> 0:18:44.439 liquidity at the ECB at minds opened four. But if 0:18:44.480 --> 0:18:46.440 you look at where where one year or two year 0:18:46.960 --> 0:18:50.359 German bundyal standard is are a far lower, which means 0:18:50.359 --> 0:18:53.520 you have institutional investors which cannot dump their liquidity at 0:18:53.560 --> 0:18:55.600 the ECB, they have to buy that they are they 0:18:55.640 --> 0:18:58.160 are forced to buy German paper. And this is what 0:18:58.160 --> 0:19:02.719 what distorts the market. You can't tell me that is 0:19:03.320 --> 0:19:07.240 functional for the people of Germany. We talked to you know, 0:19:07.320 --> 0:19:11.119 Bill Gross of Janice um Henderson about this about the 0:19:11.119 --> 0:19:15.200 financial repression. What is the financial repression of one third 0:19:15.240 --> 0:19:18.960 of Germany who are savers um there? It's each one 0:19:19.359 --> 0:19:21.480 because if if if you are a savor you don't 0:19:21.480 --> 0:19:23.719 get any any any interest rates any longer on your 0:19:23.720 --> 0:19:27.520 saving accounts, it's college you can't eat well there they 0:19:27.600 --> 0:19:29.760 still have enough to eat um, but maybe they won't 0:19:29.760 --> 0:19:31.760 have enough to eat in twenty or thirty years from now. 0:19:31.840 --> 0:19:33.560 Plus the same as if when you look at the 0:19:33.640 --> 0:19:36.199 pension system in Germany, it's pay as you go, so 0:19:36.240 --> 0:19:38.959 it's also dependent on on the on the current interest rate. 0:19:39.000 --> 0:19:42.600 So it's it's not another start. This is an unfair question, 0:19:42.600 --> 0:19:46.719 but it's unfair Tuesday, right, Okay, what's the actual assumption 0:19:46.960 --> 0:19:49.719 of a German pension plan? Here? It was eight percent 0:19:49.840 --> 0:19:52.440 and maybe it's six percent for Illinois. We don't even 0:19:52.440 --> 0:19:55.440 know they're blowing up. Thanks the Bank of American zero 0:19:55.440 --> 0:19:58.440 heads for a great article that that. What's the actual 0:19:58.480 --> 0:20:01.359 assumption of a German pension pl? I think, honestly, I 0:20:01.359 --> 0:20:03.200 think it's around four percent. Of course it's not as 0:20:03.240 --> 0:20:05.280 up to missus L and I, but it's between three 0:20:05.320 --> 0:20:08.840 and four percent. Wow, I've never heard that, David. What 0:20:08.960 --> 0:20:12.320 that means cf A level seven. Wait, there's Larry the Cat. 0:20:12.640 --> 0:20:14.960 We have a we have wired in here all sorts 0:20:14.960 --> 0:20:17.919 of videos and we just have a cat siding that 0:20:18.080 --> 0:20:20.840 is like the white smoke outside the chimney. The Prime 0:20:20.880 --> 0:20:24.439 Minister will make it. Okay, back on this. This is 0:20:24.440 --> 0:20:28.000 really David. This is important because the lower the actual 0:20:28.160 --> 0:20:32.000 Taylor Riggs told me this, the lower the actuarial assumption, 0:20:32.520 --> 0:20:35.480 the more of cash you have to impute into your 0:20:35.520 --> 0:20:40.080 pension system. So Germany has got to put trillions, trillions, 0:20:40.160 --> 0:20:43.320 I say, into their system. Is that happening, Um, it's 0:20:43.320 --> 0:20:46.119 not happening. What are people doing. People are investing in 0:20:46.000 --> 0:20:48.200 in bricks and modeling, so that this is this is 0:20:48.200 --> 0:20:50.480 why we have this construction housing boom in Germany because 0:20:50.520 --> 0:20:53.120 because people do invest in housing, whether it's the best 0:20:53.200 --> 0:20:55.960 investment for the future, it meant to be seen. Um. 0:20:56.000 --> 0:20:58.399 But of course your foot ride nominally you would have 0:20:58.520 --> 0:21:01.960 you would expect that people put in more cash. It's 0:21:01.960 --> 0:21:03.640 not happening. I think I looked at the numbers. It's 0:21:03.640 --> 0:21:06.000 only two to three percent of the people actually say 0:21:06.240 --> 0:21:09.040