1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:48,960 Speaker 1: of course on the Bloomberg Great pleasure to have Peter 9 00:00:49,000 --> 00:00:51,400 Speaker 1: Hooper here with us in our Bloomberg eleven three our studios. 10 00:00:51,400 --> 00:00:54,800 Speaker 1: He's the chief economists, He's a Hall of Famer. He's 11 00:00:54,840 --> 00:00:57,040 Speaker 1: a Hall of Famer, back to back hall of Famer. 12 00:00:57,520 --> 00:01:00,360 Speaker 1: That was great yesterday with Jim Paul loves you. Yeah, 13 00:01:00,480 --> 00:01:03,360 Speaker 1: totally unexpected and really nice to talk to. It was 14 00:01:03,400 --> 00:01:08,240 Speaker 1: just wonderful. Good morning to everyonem Baltimore, Washington. What an 15 00:01:08,280 --> 00:01:10,520 Speaker 1: honor to speak to Jim Palmer and went back and 16 00:01:10,560 --> 00:01:14,920 Speaker 1: looked at his statistics. Wow, it was amazing what he 17 00:01:14,959 --> 00:01:17,360 Speaker 1: did in the early seventies. Now, friend of dougcast, we'll 18 00:01:17,400 --> 00:01:19,440 Speaker 1: have to look into that. It's amazing with Peter Hooper 19 00:01:19,480 --> 00:01:24,280 Speaker 1: did in the early seventies to ask about the batting average. Later, Feter, 20 00:01:24,520 --> 00:01:26,840 Speaker 1: let's start with what we learned yesterday. We got these 21 00:01:26,840 --> 00:01:30,000 Speaker 1: new economic forecasts. My sense is not a whole lot change. 22 00:01:30,040 --> 00:01:31,960 Speaker 1: What did you learn from them yesterday and square them 23 00:01:31,959 --> 00:01:33,840 Speaker 1: with what we've heard from the White House their their 24 00:01:33,840 --> 00:01:38,400 Speaker 1: expectations for economic growth. Well, David, the fet is still 25 00:01:38,600 --> 00:01:41,120 Speaker 1: very much in a wait and see mode. Um, As 26 00:01:41,200 --> 00:01:44,280 Speaker 1: as a chair noted in the press conference, they cannot 27 00:01:45,120 --> 00:01:48,960 Speaker 1: assume what's going to be happening on fiscal policy or uh, 28 00:01:49,120 --> 00:01:51,480 Speaker 1: the extent to which animal spirits, which have been lifted 29 00:01:51,520 --> 00:01:56,920 Speaker 1: impressively are going to be sustained and lift actual spending. UM. 30 00:01:56,960 --> 00:01:59,560 Speaker 1: So they've they've pretty much sat on their forecast of 31 00:01:59,800 --> 00:02:01,960 Speaker 1: two point one percent growth for the next year or 32 00:02:02,000 --> 00:02:06,200 Speaker 1: two UM. They did edge up the inflation forecast ever 33 00:02:06,280 --> 00:02:09,160 Speaker 1: so slightly, and I think an important change in the 34 00:02:09,200 --> 00:02:14,200 Speaker 1: wording of the statement that accompanied these forecasts is, uh, 35 00:02:14,760 --> 00:02:18,239 Speaker 1: they're they're not no longer forecasting inflation to rise to 36 00:02:18,400 --> 00:02:21,280 Speaker 1: its target, but saying it will remain where it is, 37 00:02:21,440 --> 00:02:24,480 Speaker 1: very near its target. So in a in essence, well, 38 00:02:24,560 --> 00:02:27,120 Speaker 1: this this was headline inflation has been driven up by 39 00:02:27,840 --> 00:02:31,200 Speaker 1: the rising oil prices over the last year. UM, it 40 00:02:31,360 --> 00:02:35,440 Speaker 1: is an acknowledgement that there, you know, they've achieved their 41 00:02:35,680 --> 00:02:39,960 Speaker 1: objective unemployment and they're they're at neighbor essentially on unemployment, 42 00:02:40,560 --> 00:02:43,320 Speaker 1: and they're very very close on inflation now too. The 43 00:02:43,400 --> 00:02:46,160 Speaker 1: target that they say or they emphasize is symmetric. How 44 00:02:46,200 --> 00:02:49,320 Speaker 1: important is that adjectival modifier in the statement, Well that 45 00:02:49,400 --> 00:02:54,960 Speaker 1: that that's very it is quite important. UH saying symmetrics says, Okay, 46 00:02:55,280 --> 00:02:59,520 Speaker 1: we recognize we are we may be currently even slightly 47 00:02:59,560 --> 00:03:02,120 Speaker 1: above to our gone on some of the measures. The 48 00:03:02,120 --> 00:03:08,200 Speaker 1: headline cp I you over year running at two point seven. Uh. 49 00:03:08,480 --> 00:03:12,200 Speaker 1: Their their target for pc is two percent. Translate that 50 00:03:12,280 --> 00:03:13,960 Speaker 1: to c p I and it would be something in 51 00:03:13,960 --> 00:03:18,000 Speaker 1: the neighborhood of two point three two point four. So, UH, 52 00:03:18,400 --> 00:03:22,280 Speaker 1: symmetry is is basically acknowledging that, Okay, there you know, 53 00:03:22,360 --> 00:03:25,640 Speaker 1: we've been aiming to get inflation back up from the 54 00:03:25,680 --> 00:03:28,440 Speaker 1: low side. The UH, we're going to accept a little 55 00:03:28,440 --> 00:03:30,360 Speaker 1: bit of when our shoot on the on the upside 56 00:03:30,400 --> 00:03:33,360 Speaker 1: as well, but eventually we do expect to inflation to 57 00:03:33,400 --> 00:03:35,840 Speaker 1: get back to target. But what do we hear from 58 00:03:35,840 --> 00:03:38,560 Speaker 1: the Fitch here yesterday about the soft data going into 59 00:03:38,600 --> 00:03:41,680 Speaker 1: this meeting sentiment seems so important. How did she address 60 00:03:41,720 --> 00:03:43,360 Speaker 1: that and how did she address how that devetails with 61 00:03:43,440 --> 00:03:48,280 Speaker 1: the hard data. Well, I mean, I think she got 62 00:03:48,320 --> 00:03:55,240 Speaker 1: into a discussion of GDP being UH volatile. UM. No, 63 00:03:55,440 --> 00:03:58,640 Speaker 1: no question that there is a lot of movement in 64 00:03:58,680 --> 00:04:01,360 Speaker 1: the data and the is a lot of disagreement about 65 00:04:01,400 --> 00:04:06,240 Speaker 1: where things lie right now. UM. The Atlanta Fed, UH, 66 00:04:06,440 --> 00:04:09,480 Speaker 1: I think you're uh. There was a question raised about 67 00:04:09,480 --> 00:04:12,840 Speaker 1: the low first quarter growth. Atlanta Fed sees it at 68 00:04:12,840 --> 00:04:15,880 Speaker 1: one less than one percent currently. UH. The New York 69 00:04:16,200 --> 00:04:20,520 Speaker 1: Fed sees growth in the current quarter at more than 70 00:04:20,560 --> 00:04:24,760 Speaker 1: three UH. They are driven more by the soft data. UH. 71 00:04:24,800 --> 00:04:27,320 Speaker 1: They see the survey data, the I S, M, ETCeteras 72 00:04:27,440 --> 00:04:31,599 Speaker 1: as being quite important in determining where we are currently. 73 00:04:32,120 --> 00:04:36,160 Speaker 1: But you know, on that point, I was interested that 74 00:04:36,240 --> 00:04:42,320 Speaker 1: the statement removed reference to UH the sentiment consumer and 75 00:04:42,360 --> 00:04:46,839 Speaker 1: business sentiment. UM. Maybe a slight d emphasis on that. 76 00:04:47,640 --> 00:04:51,000 Speaker 1: And maybe there'd been some expectation that perhaps they would 77 00:04:51,080 --> 00:04:55,120 Speaker 1: raise their growth forecast because of the very good soft 78 00:04:55,320 --> 00:04:58,600 Speaker 1: soft data. But I think they're d emphasizing it a 79 00:04:58,640 --> 00:05:01,000 Speaker 1: little bit for the time being. Marks of Deutsche Bank 80 00:05:01,040 --> 00:05:04,080 Speaker 1: research is a healthy understanding of history that comes from 81 00:05:04,080 --> 00:05:08,000 Speaker 1: you and from Dr Focus Lando is well, what is 82 00:05:08,080 --> 00:05:13,240 Speaker 1: the economic history of this balance between soft data use 83 00:05:13,640 --> 00:05:20,599 Speaker 1: and hard data use? You know, we're seeing an unusual split. Generally, 84 00:05:21,000 --> 00:05:25,080 Speaker 1: soft data is used as a as an advanced indicator 85 00:05:25,240 --> 00:05:31,760 Speaker 1: that informs a forecast. It does have some impact. Um agreed, 86 00:05:32,440 --> 00:05:37,480 Speaker 1: no question, but we're seeing an unusually wide split between 87 00:05:37,920 --> 00:05:40,760 Speaker 1: the hard data and soft data right now. So I 88 00:05:40,800 --> 00:05:43,560 Speaker 1: mean I actually went back yesterday to take a look 89 00:05:43,640 --> 00:05:47,040 Speaker 1: to see, uh, what's the last time we've seen this 90 00:05:47,120 --> 00:05:50,120 Speaker 1: kind of gap between the I s M uh and 91 00:05:50,120 --> 00:05:54,760 Speaker 1: and g d P. UM. You know, I can't identify 92 00:05:54,800 --> 00:05:57,279 Speaker 1: a time when it's been this. Steal that chart from you. 93 00:05:58,040 --> 00:06:00,040 Speaker 1: I'm going to be making that chart up on it 94 00:06:00,080 --> 00:06:05,200 Speaker 1: was gracious, is going to be making a NERD charge. 95 00:06:05,400 --> 00:06:07,839 Speaker 1: If you believe the correlation between GDP and the I 96 00:06:08,000 --> 00:06:10,240 Speaker 1: s M, the combined I s M, we are at 97 00:06:10,279 --> 00:06:13,359 Speaker 1: three plus. The only correlation I believe in now is 98 00:06:13,440 --> 00:06:16,760 Speaker 1: per due in unc I got a bracket do in 99 00:06:16,800 --> 00:06:20,320 Speaker 1: twelve hours? Continue, Mr Gura, Peter, help me understands that 100 00:06:20,320 --> 00:06:23,039 Speaker 1: they going back to the spring ahead of the Brexit vote. 101 00:06:23,560 --> 00:06:25,640 Speaker 1: All indications where the FED didn't want to raise rates 102 00:06:25,640 --> 00:06:28,839 Speaker 1: because of the uncertainty surrounding that particular vote. Help me 103 00:06:28,880 --> 00:06:31,479 Speaker 1: with the timing here the FED raising rates as we 104 00:06:31,480 --> 00:06:33,080 Speaker 1: look ahead to the French election. Of course we had 105 00:06:33,080 --> 00:06:36,440 Speaker 1: the Dutch election, yes to but the more important consensus election, 106 00:06:36,480 --> 00:06:39,400 Speaker 1: the French election coming up here. Why is their mood 107 00:06:39,400 --> 00:06:41,160 Speaker 1: towards that election different than the one that we had 108 00:06:41,160 --> 00:06:45,440 Speaker 1: in in June. Well, it's still a ways off. It's 109 00:06:45,520 --> 00:06:48,880 Speaker 1: it's not an issue immediate issue for the markets as 110 00:06:49,000 --> 00:06:53,600 Speaker 1: as the Brexit vote was. And I think at this 111 00:06:53,680 --> 00:06:59,640 Speaker 1: point the the risks around that election have seen to 112 00:06:59,680 --> 00:07:04,559 Speaker 1: have been receding. Certainly Yesterday's outcoming in the Netherlands helps. 113 00:07:04,640 --> 00:07:09,600 Speaker 1: I think, although there's some question about right wing population 114 00:07:09,880 --> 00:07:13,680 Speaker 1: versus left wing populism and how how close we are there, 115 00:07:13,720 --> 00:07:17,560 Speaker 1: But um, I think the main factor is you know, 116 00:07:18,320 --> 00:07:22,960 Speaker 1: in fact, David, it might have been the possibility of 117 00:07:22,960 --> 00:07:26,080 Speaker 1: of uncertainty around the French election is something that would 118 00:07:26,120 --> 00:07:29,040 Speaker 1: have made it more difficult to to raise rates as 119 00:07:29,080 --> 00:07:31,240 Speaker 1: that election drew closer. So it might have been a 120 00:07:31,280 --> 00:07:35,840 Speaker 1: factor very slightly in in the decision to move yesterday. 121 00:07:35,920 --> 00:07:38,920 Speaker 1: But I think the FAT is being driven here by 122 00:07:39,280 --> 00:07:43,760 Speaker 1: the progression in the real economy. The unemployment rate has 123 00:07:43,800 --> 00:07:48,480 Speaker 1: continued to drift lower. We are now at nehru they 124 00:07:48,640 --> 00:07:52,680 Speaker 1: although estimates and neighbor continue to climb a bit um 125 00:07:52,760 --> 00:07:56,560 Speaker 1: and we are even more importantly very close on on 126 00:07:56,640 --> 00:08:00,960 Speaker 1: inflation core and core inflation several tenths away. So um 127 00:08:01,320 --> 00:08:04,240 Speaker 1: I think that's that's the main The main factor is 128 00:08:04,440 --> 00:08:08,520 Speaker 1: uh uh developments. Developments in the US economy have been 129 00:08:08,520 --> 00:08:12,200 Speaker 1: moving along, making it easier for the FED to move 130 00:08:12,600 --> 00:08:15,280 Speaker 1: in the face of uncertainties abroad. We're gonna come back 131 00:08:15,280 --> 00:08:17,000 Speaker 1: on tem wants to ask you about that paper that 132 00:08:17,040 --> 00:08:20,120 Speaker 1: you author with Michael Faroli at Alan presented debb before 133 00:08:20,120 --> 00:08:21,800 Speaker 1: the Vice Chairman of the Fed Reserve a couple of 134 00:08:21,800 --> 00:08:23,400 Speaker 1: weeks ago here in New York. But let me ask 135 00:08:23,400 --> 00:08:25,240 Speaker 1: you quickly just about the dots and the movement that 136 00:08:25,280 --> 00:08:28,080 Speaker 1: we saw in the dots yesterday. Did you expect we'd 137 00:08:28,080 --> 00:08:30,440 Speaker 1: see more? There seems to be this disconnect between the 138 00:08:30,440 --> 00:08:33,120 Speaker 1: bond market and what we saw there. What were your 139 00:08:33,120 --> 00:08:36,000 Speaker 1: expectations going into the meeting? Uh I thought that they 140 00:08:36,000 --> 00:08:40,920 Speaker 1: would stay at three for twenty seventeen. Um I thought 141 00:08:40,960 --> 00:08:43,719 Speaker 1: there was a possibility we might get a move up 142 00:08:43,720 --> 00:08:46,600 Speaker 1: in the in the median dot foren or twenty nineteen. 143 00:08:46,640 --> 00:08:49,200 Speaker 1: We did get a slight move for twenty nineteen. I 144 00:08:49,240 --> 00:08:54,240 Speaker 1: think the market is maybe under appreciating the importance of 145 00:08:54,480 --> 00:08:59,000 Speaker 1: the move and the average dot if you will. I mean, 146 00:08:59,040 --> 00:09:02,959 Speaker 1: you did have four uh four people move up in 147 00:09:02,960 --> 00:09:06,640 Speaker 1: in from two to three rate hikes this year. You 148 00:09:06,640 --> 00:09:10,840 Speaker 1: you you you had for eighteen and twenty nineteen. And 149 00:09:10,880 --> 00:09:13,520 Speaker 1: the increase in the average out of almost ten basis 150 00:09:13,520 --> 00:09:17,920 Speaker 1: points um. That's something that's saying that there there was 151 00:09:17,960 --> 00:09:23,720 Speaker 1: some movement. It wasn't a a total freeze on on 152 00:09:23,760 --> 00:09:26,440 Speaker 1: the dots. We're gonna go away here with Dr Hooper. 153 00:09:26,480 --> 00:09:29,080 Speaker 1: I'm gonna make an incredible chart which Bloomberg Radio we'll 154 00:09:29,120 --> 00:09:31,920 Speaker 1: see first before anybody else. It's amazing how we do 155 00:09:32,000 --> 00:09:36,200 Speaker 1: that charts of the radio on Twitter started. But wonderful 156 00:09:36,240 --> 00:09:38,160 Speaker 1: to have Peter Hooper with us. With what you bring, 157 00:09:51,200 --> 00:09:54,199 Speaker 1: it is definitive on the chairman with his Sebastian uh 158 00:09:54,360 --> 00:09:58,720 Speaker 1: Mallaby and his wonderful book The Man Who Knew Um, 159 00:09:58,760 --> 00:10:01,440 Speaker 1: you have a wonderful knowledge of continental Europe and the 160 00:10:01,480 --> 00:10:04,559 Speaker 1: heritage of your family. With a tilt from England towards 161 00:10:04,640 --> 00:10:08,400 Speaker 1: Germany Chancellor Miracles decided not to go to Florida. She 162 00:10:08,440 --> 00:10:10,800 Speaker 1: will not go play golf in Florida. She will not 163 00:10:11,160 --> 00:10:15,000 Speaker 1: have a state dinner in Florida with members of the club. 164 00:10:15,120 --> 00:10:17,760 Speaker 1: I guess that's what you do with the winner White House. 165 00:10:17,840 --> 00:10:20,360 Speaker 1: How is the Chancellor doing? I would assume it's our 166 00:10:20,400 --> 00:10:24,800 Speaker 1: best morning in ages off of the Netherlands election. The 167 00:10:24,840 --> 00:10:28,400 Speaker 1: Netherlands election is an encouraging thing. Um, it's interesting that 168 00:10:28,440 --> 00:10:32,760 Speaker 1: the polls actually in this case overestimated the strength of 169 00:10:32,800 --> 00:10:35,800 Speaker 1: the populist head will does it was always the case 170 00:10:35,800 --> 00:10:37,240 Speaker 1: that the Netherlands was not going to go and be 171 00:10:37,360 --> 00:10:40,520 Speaker 1: governed by the populace because even on the kind of 172 00:10:40,800 --> 00:10:44,599 Speaker 1: more pessimistic projections, the establishment parties were still going to 173 00:10:44,720 --> 00:10:48,520 Speaker 1: have of the seats in the parliament. So but but, 174 00:10:48,520 --> 00:10:50,920 Speaker 1: but well does it even less well than projected? And 175 00:10:50,920 --> 00:10:52,480 Speaker 1: that's gonna be a good thing for anybody in the 176 00:10:52,480 --> 00:10:56,640 Speaker 1: center of European politics. You see Uncle Merkel and others 177 00:10:56,760 --> 00:10:59,560 Speaker 1: applauding the way the results turned out lasta what does 178 00:10:59,600 --> 00:11:01,480 Speaker 1: it porte and for what happens in France? Can you 179 00:11:01,559 --> 00:11:04,960 Speaker 1: draw a line between those two elections? Well, I think 180 00:11:05,000 --> 00:11:08,360 Speaker 1: it just rein reminds us that that we don't always 181 00:11:08,400 --> 00:11:11,480 Speaker 1: get surprised in a populous direction, that the Brexit vote 182 00:11:11,600 --> 00:11:14,719 Speaker 1: and the Trump phenomenon, you know, there can be counter examples. 183 00:11:15,080 --> 00:11:17,560 Speaker 1: I think in France, what you know, it seems pretty 184 00:11:17,559 --> 00:11:21,880 Speaker 1: clear is that Mary in Depen, the right wing nationalist, 185 00:11:22,120 --> 00:11:25,440 Speaker 1: gets through the first round clearly, and in the second 186 00:11:25,559 --> 00:11:29,560 Speaker 1: round well, in that round when there's the runoff, the 187 00:11:29,600 --> 00:11:33,280 Speaker 1: polls are pretty much solid and predicting that she will lose. So, 188 00:11:33,679 --> 00:11:38,079 Speaker 1: assuming it's Macon Emmanuel Maccon, the centrist, France ends up 189 00:11:38,120 --> 00:11:41,880 Speaker 1: actually in a more pro European, pro market reformist, promising 190 00:11:42,559 --> 00:11:44,760 Speaker 1: kind of place than it was before. So that's actually 191 00:11:45,200 --> 00:11:48,679 Speaker 1: could turn out quite well. How problematic is this for Paris, 192 00:11:48,679 --> 00:11:52,240 Speaker 1: for France trying to woo companies to move their operations 193 00:11:52,280 --> 00:11:55,800 Speaker 1: to France, the possibility here of Leepen victory and what 194 00:11:55,960 --> 00:11:59,319 Speaker 1: that might mean for stability for France continuing to be 195 00:11:59,360 --> 00:12:00,880 Speaker 1: a part of the europe Union if in fact Lapin 196 00:12:00,920 --> 00:12:03,600 Speaker 1: wins and there's a referendum. When I think if Lapen 197 00:12:03,760 --> 00:12:06,400 Speaker 1: did win, then trying to attract companies to France would 198 00:12:06,400 --> 00:12:08,560 Speaker 1: be impossible. Fools around here, absolutely, I mean that the 199 00:12:08,600 --> 00:12:12,199 Speaker 1: idea that France would leave the euro, rip up every 200 00:12:12,240 --> 00:12:16,240 Speaker 1: single commercial contract which is denominated in euros and go 201 00:12:16,400 --> 00:12:20,800 Speaker 1: through some traumatic referendum process. I think that would just 202 00:12:20,920 --> 00:12:23,440 Speaker 1: terrify people. The reality is that the way the French 203 00:12:23,559 --> 00:12:26,280 Speaker 1: law and the French Constitution is written, it's would be 204 00:12:26,400 --> 00:12:28,800 Speaker 1: very tough for Marrying the pen to get that done 205 00:12:28,840 --> 00:12:31,840 Speaker 1: because she would not have a majority in the Parliament 206 00:12:31,920 --> 00:12:33,760 Speaker 1: of the National Assembly, which is what she would need. 207 00:12:34,480 --> 00:12:37,520 Speaker 1: So I'm not sure, despite her threats that she would 208 00:12:37,559 --> 00:12:40,320 Speaker 1: do it, but I think the just the discussion around 209 00:12:40,320 --> 00:12:43,120 Speaker 1: it would be freezing for an investment. Help us with 210 00:12:43,160 --> 00:12:46,600 Speaker 1: the la Fair Hogg the Charlotte Hogg incident from from 211 00:12:46,679 --> 00:12:48,719 Speaker 1: this week we watched the headlines crossed here on the 212 00:12:48,720 --> 00:12:51,400 Speaker 1: Bloomberg and being here don't have a sense of the 213 00:12:51,559 --> 00:12:54,040 Speaker 1: import of that, a great sense of the import of that. 214 00:12:54,120 --> 00:12:56,880 Speaker 1: Give us a feel for the role that she was 215 00:12:56,920 --> 00:12:59,079 Speaker 1: playing at the b o E as we await the 216 00:12:59,120 --> 00:13:01,840 Speaker 1: rate decision from the governors who in this moment, and 217 00:13:01,840 --> 00:13:04,480 Speaker 1: and how significant it is that she tended her resignation, 218 00:13:04,520 --> 00:13:07,280 Speaker 1: that it was it was accepted. Well, there is a 219 00:13:07,320 --> 00:13:10,360 Speaker 1: lot of termulants right now in the Bank of England 220 00:13:10,840 --> 00:13:13,079 Speaker 1: kind of in the in the Policy Setting Committee. Because 221 00:13:13,080 --> 00:13:15,800 Speaker 1: you've had Charlotte hag as you say, resigning one of 222 00:13:15,840 --> 00:13:19,280 Speaker 1: the deputy governors. Another one is about to leave to 223 00:13:19,280 --> 00:13:21,199 Speaker 1: go and be the head of the London School of Economics. 224 00:13:21,720 --> 00:13:23,960 Speaker 1: Christin Forbes of m I T who was an external 225 00:13:24,000 --> 00:13:27,960 Speaker 1: member of the Monetary Policy Committee, is announcing that she's 226 00:13:28,080 --> 00:13:30,360 Speaker 1: going to be gone in the summer. So there's quite 227 00:13:30,360 --> 00:13:31,880 Speaker 1: a lot of chance. But I would say that the 228 00:13:31,880 --> 00:13:36,280 Speaker 1: thing about the Bank of England, it's become quite centralized 229 00:13:36,320 --> 00:13:38,840 Speaker 1: around the figure of Mark Kenney, who was a very 230 00:13:38,880 --> 00:13:42,440 Speaker 1: dominant person and who who dominates I think media attention, 231 00:13:43,000 --> 00:13:46,400 Speaker 1: and he's not going anywhere for now and the time 232 00:13:46,440 --> 00:13:49,599 Speaker 1: that we've got left. This is why we have submersion 233 00:13:49,640 --> 00:13:54,040 Speaker 1: and evidesis things so elegantly. I wouldn't. This is an 234 00:13:54,040 --> 00:14:00,520 Speaker 1: economic phrase from Subersian Malloby Cherry Yellen should spill some apples. 235 00:14:00,559 --> 00:14:03,160 Speaker 1: That's a beautiful phrase. I would never that. It sounds 236 00:14:03,160 --> 00:14:07,360 Speaker 1: British to me. Did did Cherry yelln spill some apples? Yesterday? 237 00:14:07,520 --> 00:14:10,040 Speaker 1: Know the opposite? That's that's my worry, you know, she 238 00:14:10,040 --> 00:14:13,880 Speaker 1: she she raises rates. It's been beautifully signaled before. Everybody's calm. 239 00:14:14,320 --> 00:14:16,160 Speaker 1: The market goes up, both the bond market and the 240 00:14:16,160 --> 00:14:18,360 Speaker 1: equities go up, and so people are saying, what a 241 00:14:18,360 --> 00:14:22,560 Speaker 1: beautifully executed thing she's she's tightening, she's tightening, but there's 242 00:14:22,560 --> 00:14:25,680 Speaker 1: no pain. And I'm saying that's not good. You actually 243 00:14:25,760 --> 00:14:28,600 Speaker 1: need to What does she need to do? I think 244 00:14:28,640 --> 00:14:31,680 Speaker 1: she should have just shocked people by hiking by fifty 245 00:14:31,720 --> 00:14:35,400 Speaker 1: basis points. Not Arthur Burns. I mean back, David, you're 246 00:14:35,440 --> 00:14:37,680 Speaker 1: too young to remember this. There's a point where they 247 00:14:37,720 --> 00:14:40,640 Speaker 1: actually moved yields. Well, I think you know, you go 248 00:14:40,680 --> 00:14:42,720 Speaker 1: back to You don't have to go back to the 249 00:14:42,720 --> 00:14:45,520 Speaker 1: seventies and Arthur bounds, but ninety four green span tighten 250 00:14:45,640 --> 00:14:50,120 Speaker 1: sometimes basis points, sometimes fifties, sometimes seventy, and a lot 251 00:14:50,160 --> 00:14:53,920 Speaker 1: of leverage people got blown up. And that's good occasionally, 252 00:14:53,920 --> 00:14:57,200 Speaker 1: because you've got to teach people, remind people that leverage 253 00:14:57,200 --> 00:14:59,760 Speaker 1: comes with a risk. Let's add any here. The politics 254 00:15:00,240 --> 00:15:04,440 Speaker 1: of your work is all of this tepid mumbo jumbo 255 00:15:04,760 --> 00:15:07,760 Speaker 1: and the ability better not spills. This is from Sebastian 256 00:15:07,800 --> 00:15:10,640 Speaker 1: Melody's Washington Post column of a few days ago. We 257 00:15:10,760 --> 00:15:14,640 Speaker 1: better not spill some apples? Is that leading to a 258 00:15:14,760 --> 00:15:19,760 Speaker 1: great distortion which is ultimately leading to the upset that 259 00:15:19,840 --> 00:15:23,160 Speaker 1: we see in Europe in our greater politics as well. Look, 260 00:15:23,200 --> 00:15:25,680 Speaker 1: I think the big picture here, Tom is that in 261 00:15:25,760 --> 00:15:28,080 Speaker 1: the post war era we had a bunch of recessions 262 00:15:28,080 --> 00:15:30,800 Speaker 1: that were caused by inflation spiking up. Then the Fed 263 00:15:30,880 --> 00:15:33,720 Speaker 1: titans to push inflation down, you get a recession. But 264 00:15:33,800 --> 00:15:36,720 Speaker 1: the last two cycles have been different. The last two 265 00:15:36,760 --> 00:15:40,080 Speaker 1: cycles have been a stock market bubble in the NASDAC 266 00:15:40,440 --> 00:15:43,000 Speaker 1: or in the subprime that bursts, and that trick is 267 00:15:43,000 --> 00:15:45,480 Speaker 1: a recession. So I think the Fed should be more 268 00:15:45,600 --> 00:15:49,480 Speaker 1: paranoid about asset prices over shooting than they appear to be. 269 00:15:49,520 --> 00:15:51,880 Speaker 1: So when they raise rates and the responses that the 270 00:15:51,880 --> 00:15:55,120 Speaker 1: equities go up not down, I think that's worrying, not good. 271 00:15:55,200 --> 00:15:57,400 Speaker 1: If you put anything into the in been of the 272 00:15:57,440 --> 00:16:00,600 Speaker 1: Council on Foreign Relations recently, are you writing, I mean, 273 00:16:00,600 --> 00:16:09,480 Speaker 1: are you doing anything joining us now Richard hass who 274 00:16:09,560 --> 00:16:13,680 Speaker 1: uh has resurrected the Council on Foreign Relations to the 275 00:16:13,760 --> 00:16:15,360 Speaker 1: value that is, in the short time that we have 276 00:16:15,400 --> 00:16:19,800 Speaker 1: with you this morning, Aventador, Congratulations on the definitive must 277 00:16:19,840 --> 00:16:23,360 Speaker 1: read on Russia that you published a week ago. Thank you, 278 00:16:23,600 --> 00:16:28,000 Speaker 1: um Ms Martin. Professor Martin with us from Barnard. Tell 279 00:16:28,080 --> 00:16:31,360 Speaker 1: us about that publication and why everyone listening, I'll put 280 00:16:31,400 --> 00:16:34,480 Speaker 1: it out on social folks, why that document on Mr 281 00:16:34,520 --> 00:16:38,000 Speaker 1: Putin in Russia is so important? Uh? The reason is 282 00:16:38,040 --> 00:16:40,360 Speaker 1: that she got right. Essentially, you canna argue about some 283 00:16:40,440 --> 00:16:42,720 Speaker 1: of the details, the basic balance that we need a 284 00:16:42,720 --> 00:16:45,080 Speaker 1: policy towards Russia at one and the same time that's 285 00:16:45,080 --> 00:16:48,000 Speaker 1: both tougher in terms of making some of our military 286 00:16:48,000 --> 00:16:50,520 Speaker 1: efforts in the region more robust. So Mr Putin, shall 287 00:16:50,560 --> 00:16:53,800 Speaker 1: we say, is not tempted, but also has some elements 288 00:16:53,800 --> 00:16:57,000 Speaker 1: of reassurance diplomatically, so it's not looking for an across 289 00:16:57,040 --> 00:17:00,000 Speaker 1: the board confrontation. It's not seeking to humiliate the Russia. 290 00:17:00,040 --> 00:17:03,280 Speaker 1: So I thought diplomatically it got it about about right 291 00:17:03,360 --> 00:17:07,119 Speaker 1: within the complexities of that longer than an essay thirty 292 00:17:07,119 --> 00:17:10,399 Speaker 1: page document. Is it enough of a brief for Secretary 293 00:17:10,440 --> 00:17:14,040 Speaker 1: Tillerson to do something or is he a Secretary of 294 00:17:14,080 --> 00:17:17,280 Speaker 1: State on the out and out look. Mr Tillison's had 295 00:17:17,320 --> 00:17:20,000 Speaker 1: a rough start. He doesn't have any staff, he doesn't 296 00:17:20,040 --> 00:17:22,600 Speaker 1: come into the job with a close personal relationship with 297 00:17:22,640 --> 00:17:27,119 Speaker 1: the President. He's his resources have just been whacked. Uh, 298 00:17:27,160 --> 00:17:30,040 Speaker 1: there's any number of independent decision making centers in the 299 00:17:30,040 --> 00:17:31,840 Speaker 1: White House. So this is this is the table is 300 00:17:31,880 --> 00:17:35,480 Speaker 1: not set for his being a successful Secretary of State. 301 00:17:35,480 --> 00:17:38,400 Speaker 1: He's off to a slow start. Look, I sincerely hope 302 00:17:38,440 --> 00:17:42,880 Speaker 1: he gains ground. We need a capable, strong, separate secretary State, 303 00:17:42,880 --> 00:17:45,960 Speaker 1: and when he speaks, the rest of the world essentially 304 00:17:45,960 --> 00:17:48,520 Speaker 1: takes him as speaking for the administration. To have a 305 00:17:48,560 --> 00:17:52,119 Speaker 1: Secretary of State who has not seen as authoritative undermines 306 00:17:52,200 --> 00:17:55,200 Speaker 1: I think the chances of your foreign policy. Mcmilvany calls 307 00:17:55,240 --> 00:17:59,000 Speaker 1: this budget that we needed a hard power budget cut 308 00:17:59,040 --> 00:18:01,240 Speaker 1: to the State Department. What foggy bottom look like with 309 00:18:01,280 --> 00:18:03,720 Speaker 1: a cut like that, Well, it's it's bad for foggy 310 00:18:03,720 --> 00:18:07,280 Speaker 1: bottom for the State Department's even worse for American national security. Uh. 311 00:18:07,400 --> 00:18:09,800 Speaker 1: National security has always got to be a balance between 312 00:18:09,840 --> 00:18:13,919 Speaker 1: hard and soft power. And the entire State Department budget 313 00:18:13,960 --> 00:18:18,040 Speaker 1: is one percent of the federal budget. To decimate that, uh, 314 00:18:18,160 --> 00:18:20,520 Speaker 1: you know, it just makes no sense. There's all sorts 315 00:18:20,560 --> 00:18:23,160 Speaker 1: of things that does preventively, there's all sorts of investments 316 00:18:23,200 --> 00:18:25,600 Speaker 1: that makes in stability around the world, which, by the way, 317 00:18:25,680 --> 00:18:29,200 Speaker 1: if the stability disappears, the military interventions that are then 318 00:18:29,240 --> 00:18:33,439 Speaker 1: required are incomparably more expensive. What's also missing from this budget. 319 00:18:33,440 --> 00:18:35,920 Speaker 1: I just don't understand it. It's why you have such 320 00:18:35,960 --> 00:18:39,040 Speaker 1: a narrow budget that looks at various forms of spending 321 00:18:39,240 --> 00:18:42,119 Speaker 1: and it doesn't even consider entitlements. At the end of 322 00:18:42,119 --> 00:18:44,320 Speaker 1: the day, that's what that's that's that's where you've got 323 00:18:44,320 --> 00:18:46,680 Speaker 1: to cut, and you've got to protect defense, and you've 324 00:18:46,720 --> 00:18:49,879 Speaker 1: got to protect domestic spending. That's that's our future. I 325 00:18:49,920 --> 00:18:51,760 Speaker 1: don't get it. You can you combine and stay a 326 00:18:51,800 --> 00:18:54,639 Speaker 1: shorter time next Yes, I think we can work that out. 327 00:18:54,680 --> 00:19:01,040 Speaker 1: I could have my age and speak thank you so much, 328 00:19:01,080 --> 00:19:05,240 Speaker 1: and I'll get out Professor Martin's say, Sebastian Meloby, thank 329 00:19:05,280 --> 00:19:09,400 Speaker 1: you so much. The root entry of investors. So Sebastia 330 00:19:09,440 --> 00:19:12,440 Speaker 1: Melby has a book out on Alan Greenspan. I suggest 331 00:19:12,640 --> 00:19:23,760 Speaker 1: you read it. Brought you by Bank of America Mary Lynch, 332 00:19:23,880 --> 00:19:28,120 Speaker 1: dedicated to bringing our clients insights and solutions to meet 333 00:19:28,160 --> 00:19:31,639 Speaker 1: the challenges of a transforming world. That's the power of 334 00:19:31,680 --> 00:19:37,480 Speaker 1: global connections, Mary Lynch, Pierce Fennerin Smith Incorporated, Member s 335 00:19:37,560 --> 00:19:43,680 Speaker 1: I p C. This is a great trade. After Cherry 336 00:19:43,720 --> 00:19:48,000 Speaker 1: Yellen's press conference yesterday, joining us now. Jason Furman is 337 00:19:48,000 --> 00:19:51,520 Speaker 1: a former chairman of the President President Obama's Council of 338 00:19:51,560 --> 00:19:56,240 Speaker 1: Economic Advisers, now at the Peterson Institute for International Economics. 339 00:19:56,320 --> 00:20:00,439 Speaker 1: Dr ferman I thought it was extraordinary yesterday in the 340 00:20:00,480 --> 00:20:05,919 Speaker 1: comments on GDP being noisy and the delicate ballet and 341 00:20:06,040 --> 00:20:10,119 Speaker 1: almost an original theory. Is this a central bank trying 342 00:20:10,119 --> 00:20:13,560 Speaker 1: to get out front of the debate or like every 343 00:20:13,600 --> 00:20:17,760 Speaker 1: other bank since time began, will they deal with rates 344 00:20:17,920 --> 00:20:22,520 Speaker 1: after the fact? Which can it be? You know, Terry 345 00:20:22,560 --> 00:20:25,320 Speaker 1: Yellen said the economy was doing nicely. That is a 346 00:20:25,359 --> 00:20:29,119 Speaker 1: technical term you learn in very advanced economics, and I 347 00:20:29,119 --> 00:20:34,239 Speaker 1: think it captures exactly, um, where we are right now. Um, 348 00:20:34,320 --> 00:20:36,480 Speaker 1: first quarter g DP is looking like it's going to 349 00:20:36,640 --> 00:20:42,919 Speaker 1: come in a lot lower than where it was, um, 350 00:20:42,920 --> 00:20:45,720 Speaker 1: you know, in the fourth quarter of last year. But 351 00:20:46,080 --> 00:20:50,720 Speaker 1: you know first quarters have always been down. Um, there's 352 00:20:50,880 --> 00:20:53,640 Speaker 1: a lot of noise in the GDP data. I think 353 00:20:53,640 --> 00:20:57,919 Speaker 1: you're always much better off placing about your weight on 354 00:20:58,000 --> 00:21:00,960 Speaker 1: the jobs data. And the jobs data has been consistent 355 00:21:01,080 --> 00:21:04,400 Speaker 1: and have been strong. What is the job's data correlated 356 00:21:04,480 --> 00:21:06,920 Speaker 1: with a good news on g DP? Down the road? 357 00:21:07,000 --> 00:21:11,239 Speaker 1: Can you make that linkage there's a little bit of 358 00:21:11,280 --> 00:21:14,879 Speaker 1: a leg structure there, but it's it's more that the 359 00:21:14,960 --> 00:21:18,560 Speaker 1: jobs numbers are just better measured than the GDP numbers. 360 00:21:18,600 --> 00:21:20,200 Speaker 1: We did a study when I was at the Council 361 00:21:20,240 --> 00:21:23,400 Speaker 1: of Economic Advisors. You can find it on our archive website, 362 00:21:24,119 --> 00:21:26,040 Speaker 1: and what we found is if you just did the 363 00:21:26,119 --> 00:21:30,800 Speaker 1: signal extraction problem, you have two noisy um signals and 364 00:21:30,840 --> 00:21:33,480 Speaker 1: you're trying to extract the signal from them, you would 365 00:21:33,480 --> 00:21:36,080 Speaker 1: place most of your weight on the jobs numbers, just 366 00:21:36,160 --> 00:21:40,320 Speaker 1: by virtue of um the better data that underlies them. 367 00:21:40,359 --> 00:21:43,600 Speaker 1: A lot of these initial estimates of GDP are meat up, 368 00:21:43,600 --> 00:21:46,280 Speaker 1: and I'm not you know, I'm not insulting the statisticians. 369 00:21:46,560 --> 00:21:48,639 Speaker 1: They just don't have source data and they have to 370 00:21:49,320 --> 00:21:53,080 Speaker 1: pencil in an awful lot of guesses. Dr Firman, take 371 00:21:53,119 --> 00:21:54,920 Speaker 1: a memo, now that you left the White House, you 372 00:21:54,960 --> 00:22:00,480 Speaker 1: can insult the status. You can't. Ja. Lets give out 373 00:22:00,480 --> 00:22:02,000 Speaker 1: this skinny budget that we got to. We can dig 374 00:22:02,040 --> 00:22:03,680 Speaker 1: into the detail of it here in just a moment, 375 00:22:03,680 --> 00:22:06,119 Speaker 1: as much as there there is detail. But these did 376 00:22:06,119 --> 00:22:08,960 Speaker 1: a good thing. Generally that we're returning to some semblance 377 00:22:08,960 --> 00:22:12,120 Speaker 1: of regular order. You live through continuing resolution after continuing resolution. 378 00:22:12,160 --> 00:22:14,000 Speaker 1: Of course, we see the dead ceiling coming back into 379 00:22:14,000 --> 00:22:17,280 Speaker 1: effect today, but can you applaud the fact that at 380 00:22:17,320 --> 00:22:19,280 Speaker 1: least we're seeing this process play out the way that 381 00:22:19,320 --> 00:22:22,480 Speaker 1: it had before these last few years. I mean, this 382 00:22:22,560 --> 00:22:28,200 Speaker 1: is you know, this budget is extraordinarily skinny and it's late. 383 00:22:28,760 --> 00:22:33,000 Speaker 1: You look at every president from Carter through Obama in 384 00:22:33,040 --> 00:22:37,320 Speaker 1: their first year in office, by February, they had delivered 385 00:22:37,320 --> 00:22:40,520 Speaker 1: a budget blueprint, and their budget blueprint for every one 386 00:22:40,560 --> 00:22:43,920 Speaker 1: of those previous presidents included five or ten ure numbers, 387 00:22:43,960 --> 00:22:48,440 Speaker 1: included an economic forecast, included a deficit path, included their 388 00:22:48,480 --> 00:22:52,680 Speaker 1: major economic plans. None of that U is in this budget. 389 00:22:52,720 --> 00:22:57,200 Speaker 1: I mean this is borderline, you know, incompetent way to 390 00:22:57,520 --> 00:23:01,400 Speaker 1: get done what they're trying to get done. Uh, when 391 00:23:01,440 --> 00:23:03,920 Speaker 1: you look at what's being proposed here, this huge shift 392 00:23:03,920 --> 00:23:06,439 Speaker 1: towards more security spending. Was talking about the diminishment of 393 00:23:06,480 --> 00:23:09,480 Speaker 1: the State Department budget, the e p A budget cuts 394 00:23:09,480 --> 00:23:12,680 Speaker 1: to to agg as well. What's the message this White 395 00:23:12,680 --> 00:23:15,320 Speaker 1: House is trying to send it? Are you optimistic here 396 00:23:15,359 --> 00:23:17,280 Speaker 1: that this is going to get hashed out on on 397 00:23:17,320 --> 00:23:19,720 Speaker 1: the hill when this thing moves to Capitol? Hilm Yeah, 398 00:23:19,720 --> 00:23:22,040 Speaker 1: I mean, this was not a credible proposal. This is 399 00:23:22,040 --> 00:23:25,520 Speaker 1: not something Republicans and Congresses want to do, or Democrats 400 00:23:25,520 --> 00:23:28,560 Speaker 1: in Congress had wanted to go out and find out 401 00:23:28,600 --> 00:23:31,439 Speaker 1: how many members of Congress of either party want to 402 00:23:31,440 --> 00:23:35,720 Speaker 1: do an eight cut to n I H. That's something 403 00:23:35,760 --> 00:23:40,119 Speaker 1: that both parties have generally supported increasing in the past. 404 00:23:40,320 --> 00:23:44,040 Speaker 1: That's you know, if it happened, would be terrible. In reality, 405 00:23:44,040 --> 00:23:47,240 Speaker 1: it's more phony budgeting in the time that we've got today, 406 00:23:47,320 --> 00:23:51,320 Speaker 1: Dr Fermani. And this is critical forget about or cutter 407 00:23:51,400 --> 00:23:55,120 Speaker 1: this or eliminating this, eliminate that. If you're sitting at 408 00:23:55,160 --> 00:23:57,920 Speaker 1: C E A or O MB Peter ORZAGA OMB just 409 00:23:58,040 --> 00:24:00,600 Speaker 1: to pick a name, and somebody it says to you, 410 00:24:00,640 --> 00:24:04,159 Speaker 1: a politician says to you, flatline the budget so that 411 00:24:04,200 --> 00:24:07,800 Speaker 1: you don't even have an inflation increase in a given 412 00:24:07,840 --> 00:24:11,679 Speaker 1: department's budget. What does it do to that department? Just 413 00:24:11,800 --> 00:24:15,280 Speaker 1: to use the phrase flatline, let alone the Deaconian drops 414 00:24:15,280 --> 00:24:18,520 Speaker 1: are talking about. Yeah, now this is coming on top 415 00:24:18,560 --> 00:24:24,960 Speaker 1: of cuts that we've done in recent years to the budget. No, 416 00:24:25,320 --> 00:24:27,920 Speaker 1: I'm sure there's some fraud, wasted abuse here and there, 417 00:24:27,960 --> 00:24:31,080 Speaker 1: but you don't do um cuts of this magnitude or 418 00:24:31,119 --> 00:24:36,399 Speaker 1: even flatlining without getting rid of some stuff that the 419 00:24:36,440 --> 00:24:40,119 Speaker 1: government does. And maybe that stuff is worth doing, maybe 420 00:24:40,119 --> 00:24:44,119 Speaker 1: that stuff is not worth doing. UM. I personally think 421 00:24:44,760 --> 00:24:47,720 Speaker 1: it is worth doing medical research, it is worth doing 422 00:24:47,760 --> 00:24:52,639 Speaker 1: climate science, it is worth investing UM and infrastructure. But flatlining, 423 00:24:53,359 --> 00:24:55,680 Speaker 1: you know, is a cut, and it's coming on top 424 00:24:55,760 --> 00:25:01,160 Speaker 1: of what goes, what goes travel, what goes people? What, what 425 00:25:00,960 --> 00:25:03,560 Speaker 1: what carpet? What do you mean you've been in the 426 00:25:03,600 --> 00:25:07,600 Speaker 1: crosshairs on this. If you flatline a given department, what 427 00:25:07,920 --> 00:25:11,240 Speaker 1: goes a lot of these departments, A lot of what 428 00:25:11,280 --> 00:25:15,520 Speaker 1: they do is grants, and so they're just going to 429 00:25:15,600 --> 00:25:19,200 Speaker 1: pass those costs on maybe two money they were giving 430 00:25:19,200 --> 00:25:23,480 Speaker 1: to states to help them with clean water, things like 431 00:25:23,520 --> 00:25:26,159 Speaker 1: the travel budget. There's just not enough money there and 432 00:25:26,200 --> 00:25:29,240 Speaker 1: it's been squeezed quite a lot um in other departments 433 00:25:29,240 --> 00:25:32,320 Speaker 1: as personnel. The e p A cut is you know, 434 00:25:32,359 --> 00:25:37,520 Speaker 1: a couple of thousand EPA employees, people charged with enforcing 435 00:25:37,560 --> 00:25:41,120 Speaker 1: the laws that Congress passed dr Form not enough time? 436 00:25:41,160 --> 00:25:42,879 Speaker 1: Do they thank you so much? Jason Furman as a 437 00:25:42,920 --> 00:26:01,080 Speaker 1: former chairman the President Council of Economic Advisor This Villain Battery, 438 00:26:01,080 --> 00:26:03,359 Speaker 1: Global chief economist at City we threatened to have a 439 00:26:03,440 --> 00:26:05,879 Speaker 1: back here after the election in the year in the 440 00:26:05,920 --> 00:26:09,560 Speaker 1: Netherlands yesterday indeed he joins us again villain and had 441 00:26:09,600 --> 00:26:14,000 Speaker 1: dather talking about this schism, this rural urban divide, was 442 00:26:14,080 --> 00:26:16,840 Speaker 1: that at play in the Netherlands yesterday. No, no, there 443 00:26:16,920 --> 00:26:19,040 Speaker 1: is no rule divided in the nine de lives because 444 00:26:19,040 --> 00:26:22,760 Speaker 1: there's no countryside right at UH. In the Netherlands, we 445 00:26:22,880 --> 00:26:28,320 Speaker 1: had a very sort of traditional UH move of the 446 00:26:28,440 --> 00:26:32,240 Speaker 1: voters over the last few weeks towards the center, while 447 00:26:32,600 --> 00:26:36,480 Speaker 1: both parties of government, the current coalition lost and in 448 00:26:36,600 --> 00:26:41,680 Speaker 1: fact the socialist the Social Democrats got annihilated. Um, it's 449 00:26:41,760 --> 00:26:47,000 Speaker 1: it's still clear that we're going to have a center left, 450 00:26:47,200 --> 00:26:51,760 Speaker 1: center right coalition of four to five parties and the populist, 451 00:26:51,760 --> 00:26:56,960 Speaker 1: the hard time populisty anti Islam, anti immigrant, anti EU, 452 00:26:57,119 --> 00:27:02,960 Speaker 1: anti globalization crowd. While they won relative to UH the 453 00:27:03,080 --> 00:27:06,399 Speaker 1: last lecture up to twenty seats out of the fifteenth 454 00:27:06,480 --> 00:27:11,520 Speaker 1: parliament up from fifteen, they really underperformed relators to expectations 455 00:27:11,560 --> 00:27:16,000 Speaker 1: where they were shown until quite recently in the polls 456 00:27:16,720 --> 00:27:20,440 Speaker 1: to be leading the popular votes and in fact the 457 00:27:20,880 --> 00:27:24,879 Speaker 1: liberal part of the all style Conservatives. While they lost 458 00:27:24,920 --> 00:27:27,760 Speaker 1: eight seats with thirty three seats, they came out with 459 00:27:28,000 --> 00:27:32,600 Speaker 1: twenty plus of the vote. The heart right has been 460 00:27:32,640 --> 00:27:37,520 Speaker 1: the populists only got thirteen once three percent of the vote. 461 00:27:37,760 --> 00:27:41,040 Speaker 1: So it is in many ways a personal punch in 462 00:27:41,080 --> 00:27:45,880 Speaker 1: the nose for Mr. Builders. Is this another referendum on polling? 463 00:27:46,440 --> 00:27:49,360 Speaker 1: Did the polls get it wrong? This time? They got 464 00:27:49,400 --> 00:27:52,760 Speaker 1: it wrong, but not as massively editent past polls. There 465 00:27:52,840 --> 00:27:55,840 Speaker 1: is a track record in the Netherlands of the so 466 00:27:55,960 --> 00:28:00,600 Speaker 1: called Freedom Party the Populist doing worse in the actual 467 00:28:00,680 --> 00:28:04,080 Speaker 1: vote then in in the polls. That was too here 468 00:28:04,119 --> 00:28:08,119 Speaker 1: again but yes, even on March fourteens a day before 469 00:28:08,119 --> 00:28:14,760 Speaker 1: the elections, Uh, the vote of the of the traditional 470 00:28:15,119 --> 00:28:18,760 Speaker 1: right the Liberals was underrepresented by up to four seats. 471 00:28:18,760 --> 00:28:20,639 Speaker 1: There were I think at twenty nine of there are 472 00:28:20,680 --> 00:28:26,119 Speaker 1: twenty seven even and they ended up thirty three. And uh, 473 00:28:25,320 --> 00:28:30,320 Speaker 1: the Populist for you know somewhere uh in the in 474 00:28:30,359 --> 00:28:32,800 Speaker 1: the low to mid twenties, well the twenties ends up 475 00:28:32,800 --> 00:28:35,960 Speaker 1: with So yes, the polls, Uh, not quite a black eye, 476 00:28:36,080 --> 00:28:41,560 Speaker 1: but a minor blue shiner. Professor Powder, does your Netherlands 477 00:28:41,600 --> 00:28:44,840 Speaker 1: do they have too many parties to make parliamentary government? 478 00:28:44,880 --> 00:28:48,720 Speaker 1: Work well, and they have strict proportionality in the fifty 479 00:28:48,760 --> 00:28:50,560 Speaker 1: seats in the lower house, the one that matter single 480 00:28:50,600 --> 00:28:52,640 Speaker 1: out of elections, if you have two thirds of percent 481 00:28:52,720 --> 00:28:55,040 Speaker 1: of the vote to in parliament, which is why we 482 00:28:55,120 --> 00:29:00,320 Speaker 1: have an Animal Lovers Party which currently has five seats. 483 00:29:00,320 --> 00:29:04,360 Speaker 1: We have a fifty plus the old Salts Party the 484 00:29:04,640 --> 00:29:10,640 Speaker 1: four seats now and we have a Turkish ethnic the 485 00:29:10,720 --> 00:29:14,560 Speaker 1: Community based the Officers Labor Party of three seats. So yes, 486 00:29:14,840 --> 00:29:18,120 Speaker 1: we have I think thirteen parties again in the parliament, 487 00:29:18,160 --> 00:29:21,880 Speaker 1: one three, which means that we always have a coalition government. 488 00:29:21,920 --> 00:29:26,280 Speaker 1: But it's not necessarily a bad thing since not a 489 00:29:26,320 --> 00:29:30,000 Speaker 1: single time has a single party ever come close to 490 00:29:30,080 --> 00:29:33,120 Speaker 1: get hu majority. So coalitions are what the nets is 491 00:29:33,160 --> 00:29:36,640 Speaker 1: all about. Neither are the bigger coalition now than before. 492 00:29:36,680 --> 00:29:40,880 Speaker 1: Two parties won't do for probably villam last question here 493 00:29:40,920 --> 00:29:43,440 Speaker 1: you mentioned coalition building. Do you see a path forward here, 494 00:29:43,480 --> 00:29:50,800 Speaker 1: an easy path forward here for the victors? Well, uh, 495 00:29:50,840 --> 00:29:52,960 Speaker 1: there are no two victors, right, I said, of course 496 00:29:53,320 --> 00:29:55,720 Speaker 1: parts of government got lost. Yes, but I think it 497 00:29:55,760 --> 00:29:57,920 Speaker 1: would take a few months. It's always does an anevalance, 498 00:29:58,600 --> 00:30:02,440 Speaker 1: the current cap and the bill stay on until new 499 00:30:02,480 --> 00:30:06,480 Speaker 1: governments formed. Yes, we all get probably the Liberals the 500 00:30:06,560 --> 00:30:09,920 Speaker 1: DVD with the current Prime minister. They'll get the CD eight, 501 00:30:10,040 --> 00:30:15,920 Speaker 1: Christian Democrats, possibly the sort of center left D sixty six, 502 00:30:16,000 --> 00:30:19,520 Speaker 1: or Liberal Democrats, or for Europeans right even get the 503 00:30:19,600 --> 00:30:23,160 Speaker 1: socialists back in Green Left might make it. It is 504 00:30:23,160 --> 00:30:28,680 Speaker 1: going to be traditional Dutch coalition hotspots. Uh. The one 505 00:30:28,840 --> 00:30:31,400 Speaker 1: lesson I think that should not be forgotten though, is 506 00:30:31,440 --> 00:30:37,680 Speaker 1: that the reason that the incumbent governments leadership the v 507 00:30:37,800 --> 00:30:40,560 Speaker 1: V day did as well as they did whilst they 508 00:30:40,560 --> 00:30:45,800 Speaker 1: adopted many of the positions and rhetoric of the populist 509 00:30:45,840 --> 00:30:50,480 Speaker 1: so indirectly the populists scored thest This is great perspective, 510 00:30:50,520 --> 00:30:54,360 Speaker 1: Professor Patter. We're using on economics and his holland thank 511 00:30:54,400 --> 00:30:56,880 Speaker 1: you so much, so greatly appreciated, villain daughter. Of course 512 00:30:57,600 --> 00:31:12,240 Speaker 1: with Sydney group, it's okay, it is March and there's 513 00:31:12,320 --> 00:31:14,320 Speaker 1: snow on the ground, but how about we get out 514 00:31:14,400 --> 00:31:16,800 Speaker 1: front of my book of the summer Here it is 515 00:31:17,200 --> 00:31:20,880 Speaker 1: I hate this book, The Death of Expertise. Tom Nichols, 516 00:31:21,200 --> 00:31:23,120 Speaker 1: you need to know the following. He's one of our 517 00:31:23,200 --> 00:31:28,640 Speaker 1: leading sovietologists. He's our leader on expertise analysis. Ian Bremer 518 00:31:28,760 --> 00:31:31,240 Speaker 1: loves this guy. But what you need to know is 519 00:31:31,320 --> 00:31:33,760 Speaker 1: he's done better than good at the thing I'm terrible at, 520 00:31:34,280 --> 00:31:37,720 Speaker 1: which is jeopardy. So let's do a jeopardy question right now. 521 00:31:38,160 --> 00:31:42,240 Speaker 1: Who is Tom's worst nightmare? Tom kings worst nightmare is 522 00:31:42,280 --> 00:31:44,959 Speaker 1: Tom Nichols And he joins us now with Alan Ruskin 523 00:31:45,120 --> 00:31:47,680 Speaker 1: of Deutscha Been. Congratulations on my book of the summer, 524 00:31:48,000 --> 00:31:51,320 Speaker 1: way too early, short, brief, gorgeous. How do we lose 525 00:31:51,560 --> 00:31:54,400 Speaker 1: our belief and experts like all the people we have 526 00:31:54,480 --> 00:31:58,200 Speaker 1: on surveillance, Well, we didn't lose our faith and experts 527 00:31:58,240 --> 00:32:01,360 Speaker 1: so much as we rejected it. We decided somehow as 528 00:32:01,360 --> 00:32:03,800 Speaker 1: a society we didn't need it. We decided we don't 529 00:32:03,800 --> 00:32:06,800 Speaker 1: need Allen Ruskin. We don't need Alan Ruskin. We don't 530 00:32:06,880 --> 00:32:10,640 Speaker 1: need our doctors, we don't need engineers, we don't need diplomats, 531 00:32:11,120 --> 00:32:13,680 Speaker 1: we don't need anybody who knows anything more than the 532 00:32:13,800 --> 00:32:16,800 Speaker 1: average person, because the average person thinks they know more 533 00:32:16,880 --> 00:32:20,640 Speaker 1: than enough to manage all of those complicated questions. This 534 00:32:20,840 --> 00:32:23,880 Speaker 1: is anathema to you, It's an athema of France scene. 535 00:32:23,920 --> 00:32:25,960 Speaker 1: It's an athem to me. It's an ethnic a dr 536 00:32:26,040 --> 00:32:28,960 Speaker 1: Bremer in on and on, Are we talking about the 537 00:32:29,040 --> 00:32:32,240 Speaker 1: death of expertise? Are we talking about a further divide 538 00:32:32,280 --> 00:32:36,120 Speaker 1: in society those that believe in the traditional expertise and 539 00:32:36,200 --> 00:32:38,560 Speaker 1: those that have just given up. Well, there's always gonna 540 00:32:38,560 --> 00:32:40,560 Speaker 1: be expertise. If you cut your leg, you're always going 541 00:32:40,600 --> 00:32:43,560 Speaker 1: to go to a doctor. Uh. If you get sued, 542 00:32:43,640 --> 00:32:45,640 Speaker 1: you're going to go to a lawyer. The problem is 543 00:32:46,120 --> 00:32:50,680 Speaker 1: taking the advice of experts beyond simply technical advice. And 544 00:32:50,840 --> 00:32:54,760 Speaker 1: that's what's really dying, This notion that somehow people who 545 00:32:54,960 --> 00:32:58,520 Speaker 1: know things about a lot of issues as opposed to 546 00:32:58,600 --> 00:33:01,680 Speaker 1: the average lay person. Uh, that's the thing that's staying. 547 00:33:01,680 --> 00:33:04,720 Speaker 1: It's more like the death of the ideal of expertise 548 00:33:05,200 --> 00:33:08,760 Speaker 1: among lay people in the United States, Europe, Canada seems 549 00:33:08,760 --> 00:33:12,800 Speaker 1: to be becoming a global phenomenon. Unfortunately, is this link 550 00:33:12,840 --> 00:33:15,800 Speaker 1: to populism? And when did this start having? Is it 551 00:33:15,840 --> 00:33:19,640 Speaker 1: because people are confusing experts or academics with the elite? 552 00:33:20,200 --> 00:33:22,840 Speaker 1: There's no doubt about that. People. When people hear the 553 00:33:22,880 --> 00:33:26,760 Speaker 1: word expert, they think elite, even though those two groups 554 00:33:26,800 --> 00:33:29,600 Speaker 1: aren't always the same. The people who advise the elites 555 00:33:29,720 --> 00:33:33,040 Speaker 1: are not always the elites themselves. Uh. I think part 556 00:33:33,120 --> 00:33:35,320 Speaker 1: of The problem is that there's a resentment in the 557 00:33:35,400 --> 00:33:40,080 Speaker 1: information economy between people who have done well in an 558 00:33:40,120 --> 00:33:43,520 Speaker 1: information economy and people who feel left behind by it 559 00:33:43,640 --> 00:33:47,640 Speaker 1: and are somewhat resentful about that. Even if that that 560 00:33:47,800 --> 00:33:50,560 Speaker 1: information economy really in the end ends up benefiting them, 561 00:33:50,600 --> 00:33:53,480 Speaker 1: there's still nonetheless a certain amount of social resentment that 562 00:33:53,640 --> 00:33:57,920 Speaker 1: leads to an almost automatic or reflexive rejection of expertise. 563 00:33:58,000 --> 00:33:59,920 Speaker 1: That again, it's very dangerous not just to your how 564 00:34:00,600 --> 00:34:04,120 Speaker 1: but to the functioning of an effective republic or an 565 00:34:04,160 --> 00:34:07,720 Speaker 1: effective democracy, right because because when you're an expert, it 566 00:34:07,760 --> 00:34:09,840 Speaker 1: means you're the best in your field, or that was 567 00:34:10,160 --> 00:34:12,440 Speaker 1: what it was meant to be. So what needs to 568 00:34:12,560 --> 00:34:14,640 Speaker 1: happen is it a cycle? What needs to happen to 569 00:34:14,760 --> 00:34:19,080 Speaker 1: go back to us trusting experts. I'm hoping that we 570 00:34:19,200 --> 00:34:22,600 Speaker 1: can do that and return to trusting to experts without 571 00:34:22,680 --> 00:34:25,719 Speaker 1: the kind of event that usually requires it, which is 572 00:34:25,920 --> 00:34:30,200 Speaker 1: some kind of disaster, a war, a recession, a depression, 573 00:34:30,400 --> 00:34:34,480 Speaker 1: a pandemic. As I often say, people are very willing 574 00:34:34,560 --> 00:34:37,600 Speaker 1: to question their doctors and reject medical expertise until their 575 00:34:37,600 --> 00:34:40,040 Speaker 1: fever hits about a hundred and two, and suddenly doctors 576 00:34:40,080 --> 00:34:43,080 Speaker 1: are okay. Again, I'm hoping that we can get back 577 00:34:43,160 --> 00:34:46,640 Speaker 1: to a better relationship between experts and lay people before 578 00:34:46,800 --> 00:34:49,040 Speaker 1: something like that has to happen. You beautifully frame this 579 00:34:49,160 --> 00:34:52,040 Speaker 1: between the distribution and certitude of a Google search, like 580 00:34:52,120 --> 00:34:54,120 Speaker 1: I could search for Allen Ruskin's world and go what 581 00:34:54,200 --> 00:34:56,560 Speaker 1: do I do about the dollar? And I'll pretend I 582 00:34:56,640 --> 00:34:59,200 Speaker 1: know more than Allen Ruskin, which is not the case, 583 00:34:59,560 --> 00:35:01,600 Speaker 1: and then you nail in your book this is from 584 00:35:02,040 --> 00:35:04,160 Speaker 1: the Spio came in from the cold. I saw Tinker 585 00:35:04,200 --> 00:35:07,000 Speaker 1: Taylor soldier spy last night for the fifth time. I 586 00:35:07,160 --> 00:35:10,560 Speaker 1: reserved the right to be ignorant. That's the surveillance way 587 00:35:10,600 --> 00:35:12,799 Speaker 1: of a life. And I'm kidding, I reserve the right 588 00:35:12,840 --> 00:35:15,800 Speaker 1: to be ignorant. That's the Western way of life. That 589 00:35:15,920 --> 00:35:18,440 Speaker 1: really sums it up from another time and place. It 590 00:35:18,560 --> 00:35:21,760 Speaker 1: does that that came all the way back from ninetive 591 00:35:21,800 --> 00:35:24,839 Speaker 1: and yet it's something that people adhere to almost now 592 00:35:24,920 --> 00:35:27,880 Speaker 1: as a virtue. Do you see this on Wall Street? 593 00:35:28,000 --> 00:35:30,000 Speaker 1: Do you see this? I mean guys like you Wallson 594 00:35:30,239 --> 00:35:33,280 Speaker 1: or everything that David Fulkers Landau has built a Deutsche 595 00:35:33,320 --> 00:35:36,040 Speaker 1: Bank seems to be crumbling because we don't need Allen 596 00:35:36,120 --> 00:35:40,200 Speaker 1: Ruskin or dominique constant anymore? Do we in the political sphere? 597 00:35:40,239 --> 00:35:43,120 Speaker 1: I'd say that I think in the currency world, unfortunately, 598 00:35:43,120 --> 00:35:45,640 Speaker 1: people have been quite skeptical of currency forecost thing for 599 00:35:45,760 --> 00:35:49,279 Speaker 1: quite some time in a sense. But you know, I 600 00:35:49,320 --> 00:35:52,520 Speaker 1: think to the point that was expressed earlier, the big 601 00:35:52,640 --> 00:35:54,960 Speaker 1: question is is this a cycle? Really? You know, do 602 00:35:55,120 --> 00:35:57,880 Speaker 1: we have a sense here that this is gonna eventually 603 00:35:57,960 --> 00:36:00,200 Speaker 1: come full circle and we're gonna come back in an 604 00:36:00,400 --> 00:36:04,520 Speaker 1: arch critic of Trump economics, Trump political theory and such, 605 00:36:04,800 --> 00:36:08,360 Speaker 1: what do you observe in seven weeks? And are you 606 00:36:08,520 --> 00:36:11,960 Speaker 1: confirmed or is it advantageous to have the uproar in 607 00:36:12,080 --> 00:36:15,239 Speaker 1: Washington that we have. I don't think it's advantageous at all, 608 00:36:15,280 --> 00:36:17,400 Speaker 1: And I think it's important to point out I started 609 00:36:17,440 --> 00:36:20,320 Speaker 1: writing the book long before Donald Trump came on the scene. 610 00:36:21,200 --> 00:36:23,960 Speaker 1: I think that the President and his campaign caught this 611 00:36:24,200 --> 00:36:27,879 Speaker 1: wave rather than creating it. They surfed it rather than 612 00:36:28,000 --> 00:36:31,640 Speaker 1: generating it. But they've certainly encouraged it, just as the 613 00:36:31,719 --> 00:36:35,239 Speaker 1: Bragsiteers did in Britain and other other parts of the world. 614 00:36:42,600 --> 00:36:46,800 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 615 00:36:47,040 --> 00:36:52,080 Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform 616 00:36:52,200 --> 00:36:55,719 Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David 617 00:36:55,800 --> 00:36:59,440 Speaker 1: Gura is at David Gura. Before the podcast, you can 618 00:36:59,560 --> 00:37:15,799 Speaker 1: always catch us worldwide on Bloomberg Radio, brought you by 619 00:37:16,080 --> 00:37:19,760 Speaker 1: Bank of America. Mary Lynch. Dedicated to bringing our clients 620 00:37:19,880 --> 00:37:24,000 Speaker 1: insights and solutions to meet the challenges of a transforming world. 621 00:37:24,520 --> 00:37:28,240 Speaker 1: That's the power of global connections. Mary Lynch, Pierce, Fenner 622 00:37:28,320 --> 00:37:31,800 Speaker 1: and Smith Incorporated, Member s I p C.