Speaker 1: This is Bloomberg Wall Street Week. What's the state of
Speaker 1: corporate governance? The deficit is a real issue. The US
Speaker 1: economy continues to send mixed signals. The financial stories that
Speaker 1: cheap our world fed action to con concerns over dollar
Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people
Speaker 1: in the world. Through the eyes of the most influential
Speaker 1: voices Larry Summers, the former Treasury Secretary, star Ward CEO,
Speaker 1: Kevin Johnson sec Chairman J Clayton. Bloomberg wool Street Week
Speaker 1: with David Weston from Bloomberg Radio. A light at the
Speaker 1: end of the tunnel, But how long is the tunnel?
Speaker 1: And what lies between us and the light? Welcome to
Speaker 1: Bloomberg Wall Street Week. I'm David Weston. New York went
Speaker 1: through what we thought was the worst of the coronavirus
Speaker 1: last spring, as hospital beds filled, intensive care units were overwhelmed,
Speaker 1: and the elderly died in nursing homes. Dr Stephen Corman
Speaker 1: was in the vanguard of trying to protect New Yorkers
Speaker 1: as President and CEO of New York Presbeterian Hospital, the
Speaker 1: leading medical center in the area. As difficult as it
Speaker 1: was in March and April. There are some ways in
Speaker 1: which this new wave maybe even worse. Last March and
Speaker 1: April you saw really it concentrated in the Northeast, and
Speaker 1: it was more sporadic. Now you're seeing this across the
Speaker 1: entire country, which is worrisome in terms of how stretched
Speaker 1: we're going to be, particularly on issues like staffing. Recall
Speaker 1: that when New York went through this crisis, we received
Speaker 1: help from around the country. Uh, staffing help from around
Speaker 1: the country. That's not gonna be available for many of
Speaker 1: the health systems now because we're seeing it across the
Speaker 1: entire country. Testing and testing re agents are going to
Speaker 1: be stretched as well. So I think that it's it's
Speaker 1: it's somewhat different now. Having said that, the demography is
Speaker 1: is more favorable. Younger people tend to do better than
Speaker 1: older people. The mortality is less, the number of people
Speaker 1: requiring ventilators throughout the country is less than when we
Speaker 1: first saw it, and at the March and April time frame, uh,
Speaker 1: and in the July August time frame in the in
Speaker 1: the Southwest, So those are somewhat comforting. I do think
Speaker 1: that despite all the rhetoric around mask wearing and so
Speaker 1: on the people paying attention to mask wearing. Social distancing
Speaker 1: has helped. So I think we're in somewhat better shape,
Speaker 1: but there are different challenges this go around. What kind
Speaker 1: of surgery are you seeing in your hospital center? As
Speaker 1: a practicmenter for hospitalizations, So at the at the Natier,
Speaker 1: we were at about two percent of our peak UH.
Speaker 1: Now we're at about ten to fifteen percent of our
Speaker 1: peak UH, and we expected to go up to about
Speaker 1: of the peak depending on exactly what happens over the
Speaker 1: Thanksgiving holiday and then of course Christmas time, so we
Speaker 1: are preparing for it. We do have adequate ventilators, we
Speaker 1: do have adequate masks, ppe, etcetera. We do worry about
Speaker 1: the number of re agents that we will have for
Speaker 1: adequate testing. But I feel that we're in better shape
Speaker 1: than March and April, and we're hopeful that it will
Speaker 1: be less strenuous than March and April for sure. And look,
Speaker 1: we have the the likelihood of the vaccines UH not
Speaker 1: only being approved but starting to be distributed at the
Speaker 1: end of December and January and then hopefully ramping up
Speaker 1: by the April May time frames. So you can see
Speaker 1: the goal line in sight. If we can just get
Speaker 1: through the next few months, well, okay, to follow that analogy,
Speaker 1: you see the goal line. The question is how do
Speaker 1: we not fumble the ball in the meantime because there's
Speaker 1: some people who feel tired about wearing those masks you
Speaker 1: set help and social distancing. How long do we have
Speaker 1: to keep that up in your estimation before we really
Speaker 1: have effective protection from the vaccine few months. I think
Speaker 1: you're looking at the rest of November, December, January into
Speaker 1: February hopefully, but in the February March time frame, you're
Speaker 1: starting to see widespread availability of the vaccine. And David,
Speaker 1: I can put a plug in. We must insist on
Speaker 1: mass vaccination. The pain that we've gone through as a country,
Speaker 1: the deaths that we've had, the effect on so many
Speaker 1: different industries and businesses, We've got to insist on mass vaccination.
Speaker 1: We've got to make sure that we educate our population
Speaker 1: about it. I tell you I would be the first
Speaker 1: in line for either the visor of the moderna vaccine.
Speaker 1: I think it's been a remarkable accomplishment, and with all
Speaker 1: of the negatives about how the administration has handled this,
Speaker 1: I think that Operation Warp Speed was a success. And
Speaker 1: the private sector really stepped up here in a major way.
Speaker 1: This is the shortest time to get a vaccine in
Speaker 1: the in the history of vaccines, and it is really
Speaker 1: a remarkable scientific accomplishment. So, dr the question now is
Speaker 1: how the baton will be passed from the Trump administration
Speaker 1: of what really everybody agrees is going to be the
Speaker 1: Biden administration. What would you hope to see from a
Speaker 1: Biden administration that might be from from what you've seen
Speaker 1: from a Trump administration. Well, the first thing is, I
Speaker 1: think this transition is critical. Uh. The initial distribution of
Speaker 1: the vaccine is let's say, going to be, uh, twenty
Speaker 1: million doses or thirty million doses. Uh, if you require
Speaker 1: two doses for vaccine, you're only talking about fifteen million
Speaker 1: Americans getting it. So the coordination between the outgoing administration
Speaker 1: and the Biden administration becomes critical so that everybody's on
Speaker 1: the same page. How is it going to get distributed?
Speaker 1: What is the I T system associated with this? What
Speaker 1: are the state allocations? Do the states have plans that
Speaker 1: makes sense? How do you prioritize this, how do you
Speaker 1: make it equitable? That should be being discussed right now. Uh,
Speaker 1: And I know that you spoke to the Congressman before. Yes,
Speaker 1: the election needs to be certified, but we there is
Speaker 1: a clear winner here, and at the very least there
Speaker 1: should be widespread support for sharing of information and allowing
Speaker 1: for an effective transition to happen. If it turns out
Speaker 1: that the president actually one which no one thinks is likely, okay,
Speaker 1: then there's no harm, no foul. But not doing this handoff,
Speaker 1: I think is is really critical. As you said, you
Speaker 1: don't want to fumble it when you're inside of the
Speaker 1: goal line, and we need an effective passing at the baton.
Speaker 1: That was Dr Stephen Corwin, President and CEO of New
Speaker 1: York Presbyterian Hospital, coming up, What it takes to put
Speaker 1: a White House together? From the woman who was President
Speaker 1: Obama's senior advisor through his eight years there, Valerie Jared.
Speaker 1: That's next on Wall Street Week on Bloomberg. This is
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: One of the biggest issues in Washington these days is
Speaker 1: how we're going to get for a President Trump to
Speaker 1: a President Biden. We have a president elect, but no
Speaker 1: transition has begun, at least not as of now, which
Speaker 1: means the income administration can't fully get up and running
Speaker 1: despite pressing issues such as the pandemic. I have no budget.
Speaker 1: I can't do any of this until I'm sworn in,
Speaker 1: or I could convince the President now to do things
Speaker 1: that should be being done already. I mean, there's hardly
Speaker 1: been a meeting that's taken place in the White House
Speaker 1: about any of this. We're welcome now someone who has
Speaker 1: run a presidential transition team before. Valery Jared served for
Speaker 1: eight years as senior advisor to President Obama. She was
Speaker 1: co chair of the Obama Transition Team into this Nate,
Speaker 1: all of which she wrote about in her book Finding
Speaker 1: My Voice. When the perfect Plan crumbles, the adventure begins.
Speaker 1: So M Jed, thank you so much for being back
Speaker 1: with us. Really appreciated. As I say, you've actually run
Speaker 1: one of these. You know what a gargent shuan task.
Speaker 1: This is. How much more difficult is it because we've
Speaker 1: been delayed at least sometime getting it started needlessly more Now?
Speaker 1: I will say, obviously his team is the president lex
Speaker 1: team has been assembled. They have been working diligently on
Speaker 1: policies and generating staffing recommendations for the President elect. Both
Speaker 1: in the White House, he's already named his chief of staff,
Speaker 1: and also in the cabinet. They go through a vetting
Speaker 1: process for that. But but in the midst of a pandemic,
Speaker 1: with millions of Americans losing their jobs, it is more
Speaker 1: important than ever that the agencies be available to the
Speaker 1: transition team. And I always say that one of the
Speaker 1: things that surprised me, but President of a Wellness Transition
Speaker 1: was the unbelievable degree of cooperation we received from President Bush.
Speaker 1: Now we may not have agreed with him on policies,
Speaker 1: but what President Bush believed is in the smooth and
Speaker 1: orderly transition of power. And when President Obabou was leaving office,
Speaker 1: we did the exact same thing in his direction for
Speaker 1: President Trump, because this isn't about politics. It's about keeping
Speaker 1: our country safe, keeping him healthy. And if you think
Speaker 1: about you know there's been a focus on the presidential
Speaker 1: daily briefing that the president elect is of getting. But
Speaker 1: we have sixteen different intelligence agencies, and the team that
Speaker 1: the President assembled should be in each of those agencies
Speaker 1: right now finding out the information that won't make it
Speaker 1: to the presidential grouping for another six months. But what
Speaker 1: we'll need to be acted upon on day one, and
Speaker 1: so we are at peril. It's totally irresponsible, it's putting
Speaker 1: us at risk. And what there's no need for this.
Speaker 1: The election has been called. And even if the president
Speaker 1: wanted to pursue his lawsuits that there is nothing that
Speaker 1: prevents him from, by the same token, going down a
Speaker 1: path for a transition. Well, well, sooner or later there
Speaker 1: will be a transition. I think it's uncomfortable saying, and
Speaker 1: we're here from some Republicans, they're starting to move in
Speaker 1: that direction that we're getting towards that time. Let's talk
Speaker 1: about that transition. And you refer to the team around
Speaker 1: the president. You helped President Obama really put together that team.
Speaker 1: You help pick those people. When you're putting together a
Speaker 1: team like that, what are you looking for? How do
Speaker 1: you get a team together that here it really consistent
Speaker 1: with your views, but at the same time brings a
Speaker 1: diversity of you points. Well, that's something that's very important
Speaker 1: to the president of life. He's made that clear that
Speaker 1: he wants a team that reflects the rich diversity of
Speaker 1: our country because he believes he will make better decisions
Speaker 1: if he's advised by people who don't just think like him.
Speaker 1: They share his values, that's important, but they have different
Speaker 1: life experiences and that began with the selection of his
Speaker 1: vices president. Obviously the vice president elect Harris qualified experienced
Speaker 1: track record of leadership, but she has a different life experience,
Speaker 1: and he wanted to make sure that the last person
Speaker 1: who talks to him is somebody who he trust. But
Speaker 1: it doesn't always see the world the same way that
Speaker 1: he does. I'm not sure, Vario, whether we've all fully
Speaker 1: absorbed the significancy, historic significance of that vice presidential pick.
Speaker 1: The first black vice president, the first Indian American vice president,
Speaker 1: first woman, as a matter of fact. So so what
Speaker 1: is that going to symbolize for the country, but also
Speaker 1: what effect might Kamala Harris have within the White House.
Speaker 1: I think she's gonna be a powerful voice, and that's
Speaker 1: what he said he wanted, which I think reflects not
Speaker 1: only well on her, but also well on him. She's
Speaker 1: shattering what very glass ceilings of all kinds. As you mentioned, David,
Speaker 1: She's will be a role model for people all across
Speaker 1: the country in the world about the way the new
Speaker 1: look of leadership. But she also is going to help
Speaker 1: him make really tough decisions and bring her life experiences
Speaker 1: to bear on that. And that's what he says he wants,
Speaker 1: not just as his vice president, but throughout the administration. Already,
Speaker 1: the transition team is majority women, is near majority people
Speaker 1: of color, and so he's off to a very good start.
Speaker 1: And I think that you can tell a lot about
Speaker 1: a person by who they surround themselves with. And since
Speaker 1: I know so many of the folks on the team, well,
Speaker 1: I am really impressed. I know that he will hit
Speaker 1: the ground running. But to return again, David, it would
Speaker 1: be so much easier if we have the full cooperation
Speaker 1: of the Trump administration, where I say we I'm in
Speaker 1: our country, because this is really about putting country first.
Speaker 1: Every new president comes in with a very full inbox.
Speaker 1: I think it's fair to say, but this president, in particular,
Speaker 1: the President Biden, when he takes office, is going to
Speaker 1: have the coronavirus. He's got economic issues. He has a
Speaker 1: lot of issues domestically before he gets the international issues.
Speaker 1: At the same time, there are pressing issues that you
Speaker 1: really took some ownership of when you were in the
Speaker 1: White House, things like racial justice, things like how we're
Speaker 1: dealing with working mothers who are particularly a hard hit
Speaker 1: right now. For example, here in New York City, as
Speaker 1: their kids are not in school, the working mothers have
Speaker 1: a very difficult time. What can the White House? What
Speaker 1: can the administration do without the cooperation of the Congress
Speaker 1: in those areas well? Tom starts at the top, and
Speaker 1: I think he's already signaled that his first priority is
Speaker 1: to get his arms around this COVID nineteen pandemic. He's
Speaker 1: already assembled a task force. It's hard work. We'll be
Speaker 1: making recommendations to him about steps to go forward to
Speaker 1: not only to contain it, but once we have the vaccine,
Speaker 1: to make sure that people actually get vaccinated in a
Speaker 1: fair and equitable way. He has always been an advocate
Speaker 1: for working family, and I think the pandemic has laid
Speaker 1: bare a challenges that have existed for a long time.
Speaker 1: Pay people, pay paid leave, paid sick days. We know
Speaker 1: that women are suffering disproportionately in this pandemic, and that's
Speaker 1: why he said, well, we build America back, we have
Speaker 1: to build it back better. So what are the levers
Speaker 1: we can turn as we craft a recovery package? And look,
Speaker 1: when he came in in two thousand and nine, President
Speaker 1: Obama asked is then vice president to be responsible for
Speaker 1: that eight hundred billion dollar Recovery Act and make sure
Speaker 1: that the resources were going where they were needed most.
Speaker 1: And so he is well prepared to do this again.
Speaker 1: And in fact, his cheapest staff that he just selected
Speaker 1: was the same person who was this cheapest staff at
Speaker 1: that time. So he has got to He said, the
Speaker 1: only way we're going to grow our economy is to
Speaker 1: get our arms around this pandemic. And I would say,
Speaker 1: sitting here watching it spiral out of control with no
Speaker 1: leadership coming from the White House day after day after day,
Speaker 1: with reaching to them to the fifty pound and people dead.
Speaker 1: Just think of those Thanksgiving tables where they're going to
Speaker 1: be so many empty seats in our country. And so
Speaker 1: again that's why this is a critical time as that
Speaker 1: virus is spiking. So yes, yes, to get on his
Speaker 1: arms around it. And to the point you've raised in
Speaker 1: terms of the racial healing and criminal justice reform, that's
Speaker 1: also priority for Here's a good news. One thing I
Speaker 1: know about President Left finds he can multitask and his
Speaker 1: policy shops will be working on all of the issues
Speaker 1: that he articulated in his campaign. To be true to
Speaker 1: his worth thanks to Valry Jared, former senior adviser to
Speaker 1: President Barack Obama. Coming up, the view from the FED
Speaker 1: on how the pandemic may be changing the very structure
Speaker 1: of our economy over the long term from Dallas FED
Speaker 1: President Robert Kaplan. That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio, and regret to say that we're in the
Speaker 1: worst economic mess since the Great Depression. Together, we must
Speaker 1: chart a different course. We must increase productivity. That means
Speaker 1: making it possible for industry to modernize and make use
Speaker 1: of the technology which we ourselves invented. That means putting
Speaker 1: Americans back to work, and that means, above all, bringing
Speaker 1: government spending back within government revenues. That was President Reagan
Speaker 1: talking about the economic crisis he faced back then. Now
Speaker 1: we're facing a new crisis, a crisis born not of
Speaker 1: runaway inflation and high oil prices, but of a pandemic
Speaker 1: that may have farther reaching consequences on the way we work,
Speaker 1: the way we learn, the way we live, all of
Speaker 1: which are very much on the mind of Dallas FED
Speaker 1: President Robert Kaplan. So so The irony is we think, UH,
Speaker 1: over the horizon is going to be a very strong
Speaker 1: year with GDP growth probably three and a percent or greater,
Speaker 1: although a lot of that growth will be in the
Speaker 1: back half of the year. That the challenges, as you mentioned,
Speaker 1: is getting through the next six months, and we're seeing
Speaker 1: resurgence intensify all through the country, and we're seeing mobility
Speaker 1: and engagement UH fall off in those places where the
Speaker 1: resurgence is affecting or threatening the health healthcare capacity, hospital capacity.
Speaker 1: If that continues, which it looks like it is continuing,
Speaker 1: you're going to see more and more cities UH fall
Speaker 1: off El Paso as an example, Wisconsin, Chicago, Utah, Colorado.
Speaker 1: We're all seeing that kind of mobility engagement fall off,
Speaker 1: which indicates growth will slow and so UH we'll we'll
Speaker 1: have to see what the fourth quarter looks like. We
Speaker 1: it is possible we could have negative growth if this
Speaker 1: resurgence gets bad enough and mobility falls off enough so
Speaker 1: that local officials, even though don't they don't want to
Speaker 1: do more restrictions, they don't have a choice. So the
Speaker 1: next couple of quarters is going to be very challenging.
Speaker 1: The good news is over the horizon, things will get better,
Speaker 1: but we've got to get through the next six months,
Speaker 1: and we've got to do more on masks, wearing, social distancing,
Speaker 1: because a vaccine will help us eventually, but it's not
Speaker 1: going to help us get through the next three months.
Speaker 1: So negative growth and for a couple of months that
Speaker 1: adds up to a recession is as I understand it.
Speaker 1: So you're you're not ruling out that possibility. I'm not
Speaker 1: ruling out If you had asked me a month ago,
Speaker 1: I would have said we're going to grow in the
Speaker 1: fourth quarter as much as four or five percent annualized.
Speaker 1: But I think with this resurgence, um, I think the
Speaker 1: risks are all the downside. The only good news if
Speaker 1: there is and if there is negative growth and the
Speaker 1: rebound stalls, we our own view as it will be temporary,
Speaker 1: it'll last for a quarter or two, but it's a
Speaker 1: possibility at this point. Might that prompt fed action? Could you,
Speaker 1: for example, increase your bond buying or is that just
Speaker 1: not the right response to the problem we're looking at.
Speaker 1: I don't I don't know if that's the right response.
Speaker 1: I do think it's critical that the thirteen three programs,
Speaker 1: these public market, backstock programs and programs like that support
Speaker 1: Main Street and the PPP that they continue beyond your end.
Speaker 1: I think that's very important. I would continue our bomb
Speaker 1: buying at the same pace that we're buying if we
Speaker 1: needed to. If this got bad enough, we could extend maturities.
Speaker 1: But I wouldn't increase the size. Uh, But I think
Speaker 1: there are tools we have and we're gonna have to
Speaker 1: watch this very very carefully. So you said maybe three
Speaker 1: and a half percent GP growth in back end loaded
Speaker 1: or better or better, fair enough or better, but back
Speaker 1: end loaded is that entirely contingent upon an effective vaccine
Speaker 1: sometime in the middle of the year. Yes, it is,
Speaker 1: And so what we're assuming is our base case is
Speaker 1: we'll we'll have a good vaccine or more than one
Speaker 1: vaccine by the end of this year. But the first
Speaker 1: order of business is going to be to immunize about
Speaker 1: twenty million healthcare worker in the United States. That could
Speaker 1: take up until say March or April, and then in
Speaker 1: March or April, our expectation is that you'll have broad
Speaker 1: dissemination that will take a number of months to get
Speaker 1: the population inoculated. So we're going to spend a good
Speaker 1: part of socially distancing mask wearing. But the back half
Speaker 1: of the year is going to be better and better
Speaker 1: times will be ahead again, but we've got to get through.
Speaker 1: We've got to get through a very difficult period first,
Speaker 1: and that's where our focus is right now. And then
Speaker 1: the news of these two or three promising vaccine candidates
Speaker 1: really encouraged I think all of us to believe what
Speaker 1: you just said, that we will get through it, although
Speaker 1: it's gonna be hard between here and there. When we
Speaker 1: get through it, what will be the long term changes
Speaker 1: do you think to the very structure of our economy
Speaker 1: from the pandemic or will they go away? So we're
Speaker 1: gonna have a number of issues that we're gonna we're
Speaker 1: gonna have to deal with. The number one, technology and
Speaker 1: technology and inable disruption was a fact of life pre pandemic,
Speaker 1: and the pandemic has accelerated it. People are now even
Speaker 1: more comfortable shopping remotely, working remotely, and just conducting their
Speaker 1: lives differently. Some of that will swing back, but I
Speaker 1: think some of it will not. You could see in
Speaker 1: the future less business travel, You'll see reconfigured office space,
Speaker 1: maybe less office space for some companies. That was Dallas
Speaker 1: FED President Robert Kaplan. Coming up, we wrap up the
Speaker 1: week with our special contributor Larry Summers. This is Wall
Speaker 1: Street Week on Bloomberg. This is Bloomberg Wall Street Week
Speaker 1: with David Weston from Bloomberg Radio. We're gonna wrap up
Speaker 1: the week. We welcome now our special contributor Larry Summers
Speaker 1: of Harvard. So, Larry, great to have you here, particularly
Speaker 1: because at the very end of the week we had
Speaker 1: a fair amount of secretaria treasury action there. One of
Speaker 1: your successors took some action. Secretary Manuchin wrote a letter
Speaker 1: to the head of the Fed, J. Pow, saying, please
Speaker 1: give us back that money we gave you for those
Speaker 1: emergency lending facilities. And you had something to say about that.
Speaker 1: In fact, you had a tweet in which you said
Speaker 1: Secretary Paulson talk, referring to Hank Paulson. Another predecessor understood
Speaker 1: in a transition it was his job to help the
Speaker 1: FED and the incoming administration established a basis for strong
Speaker 1: cooperative efforts to contain the crisis. Secretary Manuchin has done
Speaker 1: just the opposite. So drawing a contrast between these two secretaries,
Speaker 1: what is going on here? Larry and two Shepherd points one, Uh,
Speaker 1: every previous government. I mean, there was plenty of bitterness
Speaker 1: in the Bush Gore campaign, really there was. I mean,
Speaker 1: we all thought that election was stolen. But it didn't
Speaker 1: occur to me, or to anyone who worked with me,
Speaker 1: or to any other cabinet officer in the Clinton administration
Speaker 1: not to cooperate fully in helping the government be ready
Speaker 1: to do whatever our successors wanted to do. The last
Speaker 1: thing we envisioned doing was thwarting their ability to carry
Speaker 1: out their policies. What Steven nuchen uh did in writing
Speaker 1: uh that letter and making those demands and reducing the
Speaker 1: authorization was thwart what it's clear and incoming Biden administration
Speaker 1: wants to do. So that's just wrong on process terms.
Speaker 1: The second problem is it's just incredibly imprudent and reckless
Speaker 1: at a time when the pandemic is getting far worse,
Speaker 1: at a time when we don't really know where this
Speaker 1: pandemic is going to go before a vaccine, at a
Speaker 1: time when we don't have any basis for being confident
Speaker 1: that there's gonna be agreement on fiscal stimulus, to tie
Speaker 1: the fence hands in any way, to constrict their abilities
Speaker 1: to act in an emergency is the height of foolishness.
Speaker 1: Why would you throw away a potential insurance policy. Nobody's
Speaker 1: asking Secretary Manuchin to trigger anything, to pay any money,
Speaker 1: to authorize any checks that he doesn't want to, but
Speaker 1: preserving the capacity to ensure against financial arm. Again, it's
Speaker 1: elementary that that's the right thing to do. It's elementary
Speaker 1: that it's the right thing to do to facilitate the
Speaker 1: next administration being able to do what it thinks. Uh
Speaker 1: is uh is wise. Uh. I've been surprised by the
Speaker 1: secretary before war, but never more than this, which really
Speaker 1: does seem to me very much outside the tradition of
Speaker 1: the office he holds. So this is a transition that
Speaker 1: at some point presumably will be over. And then the
Speaker 1: same time, there are longer term issues at play here.
Speaker 1: And just this week Bloomberg had the New Economy form
Speaker 1: that you appeared on with Janny yell in the former
Speaker 1: Photo Reserve chair, and one of the subjects was actually,
Speaker 1: are we saving too much? And are we really in
Speaker 1: secular stagnations a term that you really revived some years ago,
Speaker 1: and she basically totally agree with you. This is part
Speaker 1: of what she had to say. Central banks need to
Speaker 1: do what they can, but then not overstate, um what
Speaker 1: it's possible for them to do well. I strongly believe
Speaker 1: central banks need to be independent and need to do
Speaker 1: everything they can. The changes they've made, they're not a
Speaker 1: game changer from the point of view of secular stagnation,
Speaker 1: and bottom line, I agree with Larry on what's what's required.
Speaker 1: So they you go, Larry, things have changed something the
Speaker 1: first time. I think that you issue that paper some
Speaker 1: years ago, when you're sort of an outlier I think
Speaker 1: on the subject. But that leads to the question, Okay,
Speaker 1: if central banks can't fix this and we're in secular stagnation,
Speaker 1: what do we do about? What does it mean for
Speaker 1: longer term economic policy? It means we're gonna have to
Speaker 1: rely on fiscal policy rather than monetary policy UH to
Speaker 1: stabilize the economy going forward when we have cyclical fluctuations,
Speaker 1: And it means more generally that an important part of
Speaker 1: the design of policy is going to have to be
Speaker 1: assuring that savings are fully absorbed, because when you have
Speaker 1: excess savings and there isn't investment that absorbs that saving,
Speaker 1: that's when you get interest rates on the floor. That's
Speaker 1: when you get the savings flowing into purchasing existing assets,
Speaker 1: leading to financial bubbles and leading to huge degree of leverage.
Speaker 1: That's when you get lack of lack of inflationary impulse
Speaker 1: and an inadequate uh inflation relative to the targets. And
Speaker 1: that's when you get the sluggish growth that leads millions
Speaker 1: of workers to be left behind. This isn't a phenomenon
Speaker 1: of the United States. It's a phenomenon throughout the industrial world.
Speaker 1: Nowhere are interest rates at anything like the levels that
Speaker 1: would have been regarded as normal. And nowhere is there
Speaker 1: any market judgment if you look at longer term interest rates,
Speaker 1: that they're going back to normal. And so we've got
Speaker 1: to move to a very different paradigm. That is not
Speaker 1: that an undisciplined central bank is going to create of inflation.
Speaker 1: It is not a deficit. Are gonna crowd out prompted
Speaker 1: investment and to have all the savings and get ex
Speaker 1: orbit and that is what central banks need to be saying.
Speaker 1: That's what political leaders need to be understanding. Kins talked
Speaker 1: about this time ago, both in substance and have to
Speaker 1: understand the basic economic forces to do the right thing,
Speaker 1: which leads us naturally to a quick lightning round of Summer. Says,
Speaker 1: because one of the questions is the stimulus. Are we
Speaker 1: going to get stimulus? On? How big does it need
Speaker 1: to be? It should be more than a trillion dollars,
Speaker 1: and it's odds off that will get it before the
Speaker 1: inauguration unfortunate, unfortunately because of transigence on both sides, So
Speaker 1: odds off that we're gonna get it should be more
Speaker 1: than a trillion dollars. Let me flip take the flip
Speaker 1: side of this argument for a second, which might surprise you.
Speaker 1: We've had some people like Martin Wolf from the Financial
Speaker 1: Times this week writing about the possible recurrence of inflation. Actually,
Speaker 1: if we get the vaccine and things bounce back, is
Speaker 1: there any chance that, in fact, we could have the
Speaker 1: reverse of your problem and actually have inflation by the
Speaker 1: end of course, by the end of one I think
Speaker 1: it's pretty unlikely, but anything's uh possible. But you know,
Speaker 1: mathematicians have a phrase this reduces to the previous case.
Speaker 1: If we found ourselves with an overheating economy and we
Speaker 1: had to raise the interest strates and the FED was
Speaker 1: important again, and it was no longer pushing on a string.
Speaker 1: That would be really good. That would be a much
Speaker 1: better situation than the kind of profound, long term sluggishness
Speaker 1: that has led to such disillusionment um around uh the world.
Speaker 1: One of the things that Martin Wolf was talking about
Speaker 1: actually is whether demographics might push us in that direction,
Speaker 1: because in fact we have a diminishing labor force in
Speaker 1: places like China as well as the United States in Europe,
Speaker 1: and might actually increase the pressure on wages, which goodness
Speaker 1: knows could be good. It could help address some of
Speaker 1: that inequality problem that we certainly facing in the United States,
Speaker 1: and that president like Biden, has committed himself to trying
Speaker 1: to address. Great to have special contributor Larry Summers with
Speaker 1: us as always. Finally, one more thought, one man's stimulus
Speaker 1: package for booksellers. Like all retailers, booksellers have not had
Speaker 1: an easy time of it since the pandemic hit last spring.
Speaker 1: But this week saw what could be a turnaround with
Speaker 1: the publication of President Obama's memoir A Promised Land, a
Speaker 1: seven hundred sixty eight page tome that is making a
Speaker 1: splash like few other books have ever made. With an
Speaker 1: initial printing of three point four million copies from North
Speaker 1: America alone, and nearly nine hundred thousand copies sold in
Speaker 1: the first twenty four hours. It may not be the
Speaker 1: first of its kind, We've come to expect these from
Speaker 1: our former presidents, but it may well be the most
Speaker 1: popular presidential memoir of all time, which can't come sooner off,
Speaker 1: particularly for the independent bookstores around the country, which the
Speaker 1: publisher says are reporting particularly strong sales. As much demand
Speaker 1: as there is for President Obama's memoir, it still has
Speaker 1: stiff competition in the eyes of critics, competition from the
Speaker 1: unlikely source of our eighteenth President, Ulysses S. Grant, who
Speaker 1: wrote what most historians degree is the gold standard for
Speaker 1: presidential autobiographies. Like President Obamas, President Grant's autobiography was immensely popular,
Speaker 1: helped no doubt by his publisher, Mark Twain's marketing genius
Speaker 1: in employing Civil War veterans to dress up in their
Speaker 1: uniforms and go door to door to sell it. Like
Speaker 1: President Obama, President Grant wrote his book out longhand fighting
Speaker 1: through his terminal cancer to finish it just before he died,
Speaker 1: and like President Obama's book, President Grants was a huge
Speaker 1: commercial success, earning the equivalent in today's dollars of thirteen million.
Speaker 1: And we can only hope the President Obama's autoiography bears
Speaker 1: one other similarity to that of President Grant. For Ulysses S.
Speaker 1: Grants two volume memoir was published in eighty five, during
Speaker 1: the third longest economic downturn in US history, But it
Speaker 1: was a recession that ended when the memoir was published.
Speaker 1: Even as we cross our fingers that our current economic
Speaker 1: recovery can continue despite all that we face. That does it.
Speaker 1: For this episode of Wall Street Week, I'm David Weston.
Speaker 1: This is Bloomberg. See you next week.