Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. We
Speaker 1: begin there with the main event of the week for me.
Speaker 1: It's Chairman Powell, who took over, of course from Janet
Speaker 1: Yellen this month, speaking before the House Financial Services Committee tomorrow,
Speaker 1: then the Senate Banking Committee two days later in what's
Speaker 1: known as the Humphrey Hawkins Testimony, the first time since
Speaker 1: Powell was sworn in that we as market observers and
Speaker 1: you as market participants, get a chance to pass every
Speaker 1: single word from the new Chairman of the Federal Reserve,
Speaker 1: Johnny Us to discusses. Steve Ye City Private Bank Global
Speaker 1: Chief strategisticly joined us here in New York City. Good
Speaker 1: morning and happy Monday to you, Steve. Happy Monday. Did
Speaker 1: they exist on a note? Maybe they exist today it
Speaker 1: is let's get let's get up to Spain on what
Speaker 1: to expect Tuesday through to Thursday. What are we looking
Speaker 1: for from Shaman Pal Steve Well I think it's what
Speaker 1: we can't anticipate that's interesting. You know, we have the
Speaker 1: policy report to Congress, we have the new projections, we've
Speaker 1: had the last Fed minutes. If there is any nuance
Speaker 1: as to how the Chairman can talk to us about
Speaker 1: viewing the outlook differently, you know, to a certain extent,
Speaker 1: they feel more confident about the course that they are on.
Speaker 1: But how much more confident does it make them actually
Speaker 1: think about changing the policy view to one that's a
Speaker 1: little bit more robust. How do they want to fight inflation?
Speaker 1: To what extent? Are they really playing the old game,
Speaker 1: which is pushing down inflation at every time we see
Speaker 1: a chance to do it, or are we just satisfied
Speaker 1: to see it rise to the two and a half
Speaker 1: percent range? You know that they say is constitutes at
Speaker 1: least short term price stability. States to what extent should
Speaker 1: they be trying to find inflation at this point? Well,
Speaker 1: I think that most prudently, we have to care about
Speaker 1: what the next downturn will look like. And it's not
Speaker 1: to say that there's one immediately on the horizon, but
Speaker 1: if you are essentially avoiding any financial excesses, and you
Speaker 1: really think about what unwinding financial access is does to
Speaker 1: the future economic outlook and the inflation rate, then you
Speaker 1: don't want to have to fight a deep deflation later
Speaker 1: on in an economic downturn. So that's why you know
Speaker 1: this modest, mild policy snugging that we're doing here, which
Speaker 1: is really way below the standards of past cycles. It's
Speaker 1: half a historic tightening cycle. You know, it still matters
Speaker 1: to do this when inflation is low. And again we
Speaker 1: can talk about how the December CPI print was half
Speaker 1: a percent. I don't think we're going to see every
Speaker 1: single month is going to be, you know, annualizing at
Speaker 1: four and a half percent. I think one thing that
Speaker 1: a lot of paper of trying to get their heads
Speaker 1: around is how different sham and pound might be to
Speaker 1: form a chair yelling how do you expect to spread
Speaker 1: to widen? Is it going to narrow? How do we
Speaker 1: recon style the difference? Because right now I think overwhelmingly
Speaker 1: the consensus of the amount of people that I speak
Speaker 1: to is typically this is yelling two point out, that's
Speaker 1: Jerome Powell. It's not the way you see things, or
Speaker 1: do you see things differently well compared to the discussion
Speaker 1: um perhaps John Taylor or Kevin Walsh, you know, some
Speaker 1: of the people who were brought up in the process
Speaker 1: of vetting a new FED chair. Uh. You know, we
Speaker 1: did have policy comments from Jerome Pool in the past.
Speaker 1: You know, we've had him articulate the Fed's view of
Speaker 1: the economy and how monetary policy should unfold in the past,
Speaker 1: and so we wanted to understand, you know, to what
Speaker 1: extent that reflects respect for Yelling's views or is really
Speaker 1: going to break new ground going forward. But I certainly
Speaker 1: feel a lot more comfortable when I did at the
Speaker 1: time of the appointment that we are not having a
Speaker 1: massive regime change in policy making here. The fact is
Speaker 1: in is correct me from wrong Stephen John Wood? Um,
Speaker 1: the fact is we don't know j. Powell's monetary beliefs.
Speaker 1: We really haven't heard enough yet, have we. Well, look,
Speaker 1: we do have some specific monetary policy speeches. Maybe this
Speaker 1: is not what he spent his life wanting to do, perhaps,
Speaker 1: but we have seen like you know what that let
Speaker 1: me just jump in. I'm with Tom. This was the
Speaker 1: fight the quiet governor on the FED board. Yes, we've
Speaker 1: got a couple of speeches, but his whole modus operande
Speaker 1: was just to go out there and not annoy anyone.
Speaker 1: He was a follower of whoever was leading. He was
Speaker 1: not out there as the leader on the FED boar
Speaker 1: board making big speeches that would disrupt the flow of
Speaker 1: decision making, like say lele brain it. This guy was
Speaker 1: just the quiet governor of the president then, right, So
Speaker 1: you know we are all of the view, particularly after
Speaker 1: seeing minutes after seeing the policy report to Congress, you
Speaker 1: know that this is a FED that is right now
Speaker 1: steering in the same direction as the yell and Fed.
Speaker 1: And that's what can get interesting about this. If there's
Speaker 1: something that we don't know about the whole policy approach
Speaker 1: here now. Uh, certainly each chairman will have the deal
Speaker 1: with challenges in their own particular way. There might be
Speaker 1: some underlying philosophy, uh that we don't know yet, and
Speaker 1: whether any of that will come out in this testimony
Speaker 1: will be quite interesting. But that's what's what makes this interesting.
Speaker 1: This is a first you know, Humphrey Hawkins round for
Speaker 1: a new FED share and you're gotta should be all
Speaker 1: over it. How do we establish what the power put
Speaker 1: looks like. We've had the Greenspan put and Andy put,
Speaker 1: the yell and put three bond managers speaking to me
Speaker 1: on Friday, trying to work out whether we have a
Speaker 1: power put? Do we have a power put? Absolutely critical
Speaker 1: to sort of understand that in the sense that you know,
Speaker 1: what is their reaction function? How protective of this economic
Speaker 1: expansion do they want to be right now? And look,
Speaker 1: I think if you were taking a look from the outside,
Speaker 1: you would say the US economy has been head being
Speaker 1: fully towards its potential. There we're showing signs of compensation
Speaker 1: gains that are accelerating, but from such a low level
Speaker 1: and after such a deep downturn almost a decade ago,
Speaker 1: that we ought to let this run. Some one of
Speaker 1: your charms, Steve Whiting, is you actually pay attention to
Speaker 1: what corporations do. I mean, like what they say? What
Speaker 1: are they saying right now? Is you look confidence called
Speaker 1: the late uh John Farrow, the late Richard Yamaron of
Speaker 1: Bloomberg was expert at this. Just listen to what people
Speaker 1: say and do. What are they saying besides giving token
Speaker 1: thousand dollar raises to the troops and blathering about all
Speaker 1: the money they're gonna save is a gross stub off
Speaker 1: the text cut act. There's an underlying sense of optimism.
Speaker 1: If you just take a look at the various survey
Speaker 1: measures and you take a look. Okay, there are lots
Speaker 1: of cautious comments, as always, all the qualifiers that are
Speaker 1: needed for legal reasons around these things. But you take
Speaker 1: a look at any of these business confidence measures and
Speaker 1: you don't see something that is out of line. You
Speaker 1: know what you'll hear with earnings reports that they think
Speaker 1: times will be strong for two thousand eighteen and two
Speaker 1: thousand nineteen small businesses, large businesses, and the economy has
Speaker 1: not really stepped up to that level of confidence yet.
Speaker 1: But you know this again, as as you said on
Speaker 1: the television, there's probably someplace for it to meet in
Speaker 1: the middle, because some of these readings on confidence are
Speaker 1: way off the charts. Steve Winning, it's going to have
Speaker 1: you with us the City Private Bankalect Chief Strategy. The
Speaker 1: medium term was such an interesting concept, Carston Rescue with
Speaker 1: us with I n G. Right, Now, what's the medium
Speaker 1: term to you? It's like a European phrase. Nobody in
Speaker 1: America is looking at the the medium term. It's the
Speaker 1: a C B term, isn't it. It's a mont policy prodstability,
Speaker 1: a medium term. I was just thinking about on China
Speaker 1: in journey. We have Mrs Merkel, she's already heading off
Speaker 1: for the for the fourth term. Already is pretty much Chinese.
Speaker 1: The medium term, John is trying to get the Boston
Speaker 1: Red Socks the fourth of July. It is that, right,
Speaker 1: that's the medium term. We're gonna go and watch a
Speaker 1: game this this summer. I'm looking forward to that. Should
Speaker 1: I get you to the short term? The short term?
Speaker 1: What we're focusing on this week in Europe, the Italian
Speaker 1: election this weekend. Custom Breziski of of iron G used
Speaker 1: to help me work out what was going on in
Speaker 1: Greece on almost a daily basis when I was back
Speaker 1: in London, and now you've got to work out what's
Speaker 1: going on in Italy. Now it's an uncertain election in
Speaker 1: the minds of so many people. We had Italian bonds
Speaker 1: are pretty well bid and yields are lower by a
Speaker 1: considerable amount. Today we're coming again by about four or
Speaker 1: five basis points ahead of an at Tangan election that
Speaker 1: maybe brings someone that a number of years ago was
Speaker 1: incredibly anti European, anti euro into the into the mix. Carston,
Speaker 1: Should I be worried about this weekend? Because it doesn't
Speaker 1: see many people are I think you shouldn't. There are
Speaker 1: a couple of factors, and the Italian system is so
Speaker 1: complex and complicated. You know that they party reformed their
Speaker 1: electorate system um a strange combination between when when it
Speaker 1: takes at all and proportionate electorate system. But it simply
Speaker 1: means there will be no single party getting the absolute majority.
Speaker 1: So we're gonna we're gonna get some kind of a
Speaker 1: coalition at best. So let's be clear here for investors,
Speaker 1: what was a problem to many political analysts is that
Speaker 1: things can't get done in Italy is actually a benefit
Speaker 1: to the investor base because it doesn't matter who gets in,
Speaker 1: they won't get things done exactly. I think that right
Speaker 1: now is a benefit. Plus, there is no single party
Speaker 1: actually going for Italy leaving the year zone anymore. That
Speaker 1: is the fear that we had last year or a
Speaker 1: couple of years ago, to even this five Star Movement
Speaker 1: party actually is not arguing in favor of Italy leaving
Speaker 1: the year zone anymore. But part of the dynamic here
Speaker 1: of everyone including myself, being calmer about Italy is they're
Speaker 1: generating some form of economic growth. Is you look hardston
Speaker 1: country to country. Can you state that the United States
Speaker 1: of Europe has a better little g that the economic
Speaker 1: growth nation the nation is actually stable and stained and buoyant.
Speaker 1: It is, although when you look at Italy, Italy is
Speaker 1: still one of the legards and Italy is benefiting from
Speaker 1: the Eurozone cycle, but it's still legging behind. And I
Speaker 1: think that that is. You know, on the one it's
Speaker 1: positive for Italy right now because also as soon as
Speaker 1: you have a job, you're not voting against the EU anymore.
Speaker 1: So this also means there is less support for for
Speaker 1: anti euro parties in Italy, but at the same time,
Speaker 1: it doesn't mean that Italy is off the hook. Custom
Speaker 1: how fragile is this recovery across the continent? A huge
Speaker 1: amount of optimism around it. I'm just wondering how fragile
Speaker 1: actually is um. You know, I agree with you being
Speaker 1: a bit pessimistic, but I think it's not so fragile
Speaker 1: because it really it is broadening across sectors. We do
Speaker 1: have the export sector, which which is fine and which
Speaker 1: can even even digest as stronger era. We have investment
Speaker 1: picking up on the back of the ECB. The e
Speaker 1: c B is not going to change its policies anytime soon.
Speaker 1: We have consumption going on, so it's not so fragile.
Speaker 1: The perception of the e c B changing its policies
Speaker 1: may well changed quite radically. There's a really interesting piece
Speaker 1: in the Financial Times over the weekend. I'm sure many
Speaker 1: of our listeners read it. It was lunch with Jens
Speaker 1: Vitemin of the Bundesbank, Lunch with the ens vironment. In
Speaker 1: the minds of many people, it's Videman running for president
Speaker 1: of the e c B. Now of YenS Vidman the
Speaker 1: one individual that many people suspect, suspect disagreed with Mario
Speaker 1: Dragi over the whatever it takes speech, the one individual
Speaker 1: on the ECB Government Council that did that. If that
Speaker 1: individual then becomes the president of the e c B,
Speaker 1: what are we meant to think of that? Um? I
Speaker 1: think Vidman is extremely good and also playing his role.
Speaker 1: Let's also be honest, he's not as dogmatic as his
Speaker 1: predecessors were, like Mr Weber or Mr Jurgen Stark Um,
Speaker 1: So he's going to play his role. Even if he
Speaker 1: was to become the ECB president, I think he would
Speaker 1: then also immediately shift ats and and will become more
Speaker 1: pro European. But let's not forget he would only take
Speaker 1: off at the end of two thousand nineteen. Where they
Speaker 1: go to lunch the McDonald's by liverplaces. Forgot I forgot
Speaker 1: in the name of the restaurant, but it was in Frankfort.
Speaker 1: It was in Frankfurt. You should read the pace. It
Speaker 1: was quite interesting. The shortest lunch I've ever had in
Speaker 1: Frankfort was two and a half hours, really the shortest.
Speaker 1: Why did you go for lunch? I used to go
Speaker 1: there all the time. I usually struggle the plates to
Speaker 1: find a place to eat in Francs. That's true. No,
Speaker 1: that's very true, folks, that John's custom once is so
Speaker 1: difficult to find a place to eat in Frankfort because
Speaker 1: Germans are not into eating. So this is the this
Speaker 1: is they don't want to go out. This this is
Speaker 1: why we need Italy in the years ago. That would
Speaker 1: be true. I want to look at the polarity here
Speaker 1: and you can do that on the Bloomberg, Folks. The
Speaker 1: unemployment rate of Germany's five point four The unemployment rate
Speaker 1: of Italy is in the vicinity of eleven percent. At
Speaker 1: the end of the day. That's the tension. I mean,
Speaker 1: we have the same tension in the States, but it's
Speaker 1: just different. Isn't attention will go on? I think that's
Speaker 1: the whole thing. When you look at it again, I
Speaker 1: think it's at least not the big risk in the
Speaker 1: short term, not not for markets, but Italy economically, in
Speaker 1: economic policy wise, is an issue because we will get
Speaker 1: this discussion on whether Italy will be allowed to invest
Speaker 1: and to spend more. And when you look at it,
Speaker 1: a hundred per ratio, I think minus or two percent
Speaker 1: deficit ratio. So Italy will again bring this this very
Speaker 1: sensitive issue back on the table in Europe. Can we
Speaker 1: invest more? Can we have higher deficits to increase investment
Speaker 1: and spending? Well? Is it Macron's Europe or or Marco's Europe?
Speaker 1: And who gets on the green line? Um, it will
Speaker 1: be both. The interesting thing is that Mrs Merkel again
Speaker 1: is is renewing herself again? Um? So she she does yesterday.
Speaker 1: Ums she come up with whether take a couple of
Speaker 1: new posts, new young politicians coming up there? Um it
Speaker 1: will be a combination, will be in mccron mercal Europe.
Speaker 1: How is Mr Trump perceived now Europe? We've had very
Speaker 1: little of this analysis in the United States because they're
Speaker 1: so focused on domestic Trump and issues. But has there
Speaker 1: been a shift and now the president is perceived across
Speaker 1: your Europe? Honestly, no, I think if you really want
Speaker 1: to score high in media or with clients, you do
Speaker 1: some Trump bashing always always falls well in Europe. I
Speaker 1: think there is there, there are, and that's fascinating now
Speaker 1: now Here in the United States of America, the Trump
Speaker 1: bashing seems to play well with the mainstream media, the
Speaker 1: left wing media outlets. With investors. They don't care where
Speaker 1: you stand politically. Ultimately, they want to make money cast
Speaker 1: And now you use the word investors want to hear that.
Speaker 1: Why do investors want to hear that? Why do they
Speaker 1: want politically charged retric Because I think in in in
Speaker 1: Europe you see that this um divide between the US
Speaker 1: and Europe, as between economic policies between the US and
Speaker 1: in Europe is um um. So many people also investors.
Speaker 1: When you talk to continental European investors right now, they
Speaker 1: feel remind of economics. One of the themes that we
Speaker 1: have here, Carson, before let you go, is the idea
Speaker 1: of huge fiscal policy non austerity in the United States,
Speaker 1: which will lead to a diminished lower net export statistic.
Speaker 1: What did you learn about export import dynamics amid EU austerity?
Speaker 1: Did the trade dynamic actually assist the domestic economy? It
Speaker 1: does um in two ways actually extra euro so it
Speaker 1: really we see that all countries are benefiting from the
Speaker 1: weaker year that we had so far, it leads act
Speaker 1: one of the main beneficiaries. Italy is exporting more in
Speaker 1: absolute terms than friends does um and at the same time,
Speaker 1: at the same time, we also do see that the
Speaker 1: trade within the years on countries is improving. To repeat
Speaker 1: that again, that's so important Italy. What do you mean
Speaker 1: by apps in the units traits volume, volume volume. It's
Speaker 1: exporting law than France. I would even though theever you
Speaker 1: hear is fabulous, I would have never guessed at John Farrell,
Speaker 1: but I didn't have that. I thought, do you know
Speaker 1: that what tipped the needle? There was a Gucci store?
Speaker 1: Is that you? Is that you? I suspect they're not
Speaker 1: for you, but I imagine it might be. It might
Speaker 1: be your going to see me in the fur line
Speaker 1: Colin don't even start the twins wants me to try
Speaker 1: out sis. We've got to say thanks to Couston and
Speaker 1: then we can talk about the bill at the end
Speaker 1: of a month. For you, he is the Senator from Cincinnati.
Speaker 1: Rob Portman will always be from his Cincinnati, but now,
Speaker 1: of course his representation of all of his state of
Speaker 1: Ohio without question of vice presidential candidate and consideration. But
Speaker 1: he said, I need to stay in a Republican Senate.
Speaker 1: The Senator joins us here in our New York studios.
Speaker 1: You're in Cincinnati, Senator Portman, March second, five miles south
Speaker 1: of Michigan and Holland, Ohio. There will be a meeting
Speaker 1: of the friends of the n r A. Right now
Speaker 1: you're in the crosshairs of the n r A. You've
Speaker 1: been a big uh. They've given you a lot of
Speaker 1: money within the close contest of Ohio. You, Senator Governor
Speaker 1: Scott and Florida, everyone has to adjust. How will Rob
Speaker 1: Portman adjust to what we've seen in Florida. Well, we
Speaker 1: have I need to look at this in a very broadway.
Speaker 1: Let's let's face it. Um in Florida. To talk about
Speaker 1: the tragedy there uh so many missed signals unbelievable this
Speaker 1: morning hearing about more so was avoidable in the sense
Speaker 1: Tom that had law enforcement have been doing their job.
Speaker 1: You know, this particular young man would not have been
Speaker 1: in that position even the FBI was involved. So it
Speaker 1: wasn't it wasn't just local law enforcement. But the broader
Speaker 1: issues include mental health and we have people falling between
Speaker 1: the tracks, as you know, I do a lot of
Speaker 1: work in that area, and opioids, which is related with
Speaker 1: regard to background checks. We need to tighten them up.
Speaker 1: I am. I am actually sponsoring legislation to do that.
Speaker 1: I think Congress is likely to move towards something that
Speaker 1: says people who shouldn't get a gun need to be
Speaker 1: stopped through that process. And it's not happening now, partly
Speaker 1: because the information is not coming in. Senator, you represent
Speaker 1: the cultural divide of this debate, the toughest parts of Cleveland,
Speaker 1: the tough parts of Cincinnati, and yet the fabric of
Speaker 1: hunting America and Ohio once again provides that tapestry of America.
Speaker 1: How does this nation come to grips with the toughest
Speaker 1: parts of Cleveland and the fields of western Ohio. Yeah, well,
Speaker 1: you know, in in Ohio there are a lot of
Speaker 1: people feel very strong about the Second Amendment. I believe
Speaker 1: it's it's a right that we can preserve and at
Speaker 1: the same time find that balance with regard to background checks,
Speaker 1: let we go things like bump stocks, with regard to
Speaker 1: things where to look at the age. So I think
Speaker 1: there are things that that can and should be done.
Speaker 1: I will say that with regard to downtown Cleveland, because
Speaker 1: you mentioned that, downtown Cincinnati and downtown Columbus and so on,
Speaker 1: there is a lot of gun violence. It doesn't get
Speaker 1: nearly the exposure that these horrific school shootings get, but
Speaker 1: it's happening every day, and it tends to be as
Speaker 1: you know of. It probably is with a handgun, and
Speaker 1: it tends to be with drugs and crime related to gangs.
Speaker 1: I mean, that's that's primarily what I hear from law enforcement,
Speaker 1: and that's an issue that you know. Again, I spent
Speaker 1: a lot of time on this issue in terms of
Speaker 1: the drug side of it, which is driving a lot
Speaker 1: of this. We have to get to the bottom of
Speaker 1: all these things because unless you do that, you will
Speaker 1: continue to see this this violence perpetrated, and it's it
Speaker 1: is the biggest issue in terms of gun violence is
Speaker 1: the gangs and usually drug related and turf battles and
Speaker 1: so on. So when we focus on things like stopping
Speaker 1: this drug pandemic that has now hit my state, it
Speaker 1: does have an effect as well. Senator Holp, the guest
Speaker 1: of this country, understand how preserving the Second Amendment is
Speaker 1: compatible with allowing the sale of our a R fifteens
Speaker 1: to the general public. I'm sorry t help me understand,
Speaker 1: as a guest of this country, how preserving that amendment
Speaker 1: is compatible with allowing the sales of a R fifteens
Speaker 1: to member of the general public. Well, I think I
Speaker 1: think there are people who own those weapons would say
Speaker 1: it's it is compatible. But what I'm saying is there's
Speaker 1: a balance here, and so I all I can say is, um,
Speaker 1: you know, I think Congress ought to look at that issue.
Speaker 1: We had to look at the issue of of age,
Speaker 1: because at eighteen you can purchase a rifle, whereas it
Speaker 1: twenty one you can purchase a handgun. So there are
Speaker 1: there are things that can should be done. I think
Speaker 1: there you will see some of that. The bump stock
Speaker 1: issue is related to that. But the response I often
Speaker 1: here in this country is always more guns. More guns
Speaker 1: is the solution that you need more guns. Ultimately, the
Speaker 1: teachers now need to have guns that's an argument some
Speaker 1: people pursuing. When is the answer not more guns? You know,
Speaker 1: I didn't give that answer this morning, but I will
Speaker 1: say we need to harden our schools, There's no question
Speaker 1: about it. And again, looking at the tragic situation in Florida, UM,
Speaker 1: you know that that school, you know, should have had
Speaker 1: the ability to protect those students better. So that is
Speaker 1: part of the answer as well. In the time that
Speaker 1: we have left an update from Rob Portman and the
Speaker 1: President's initiatives or lack of initiatives to help you with
Speaker 1: the opioid crisis in Ohio, you and the woman from
Speaker 1: New Hampshire have provided national leadership on this. You're not
Speaker 1: getting help from the White House yet, are you. Well.
Speaker 1: We we have the presidents on legislation recently, for instance,
Speaker 1: to UM provide funding for additional UH monitors and screeners
Speaker 1: for fentin al coming into this country, and he has
Speaker 1: supported UM additional funding for prevention education as well as
Speaker 1: treatment and recovery in our budget bill that just passed.
Speaker 1: As you know, Tom, we got unprecedented amounts of funding
Speaker 1: for that purpose, three billion dollars this year and three
Speaker 1: billion next year. We are now working on additional legislator
Speaker 1: and to the Conference Addiction Recovery Act that I've co
Speaker 1: authored to ensure that funding is properly spent. In other words,
Speaker 1: we wanted to go to evidence space programs. I left
Speaker 1: one a couple of days ago in Ohio. That's very
Speaker 1: promising of some federal money. Uh, you know that that
Speaker 1: I support. It went into this project. It then helped
Speaker 1: to leverage a lot of private sector funding. And it
Speaker 1: is an emergency room where people that overdose are going
Speaker 1: to come to and there's the treatment center right there.
Speaker 1: The people would come to this emergence room in the
Speaker 1: last month and three people have gone into treatment. That's
Speaker 1: a key because that gap between getting someone into an
Speaker 1: emergency room saving their lives to this miracle drug, an
Speaker 1: arcan that reduces the reverses the effects of overdoses. Then
Speaker 1: people go back home, they don't get the help they need.
Speaker 1: So this is one of the things we should do.
Speaker 1: Center Apartment, thank you for the visit. We look forward
Speaker 1: to speaking again in our Washington studios. Rob Apartment from Ohio.
Speaker 1: It is a book that would be wildly anticipated at
Speaker 1: any moment. Ben Steele, of course smart writing for the
Speaker 1: consul in Foreign Relations, The Martial Plan dawn of the
Speaker 1: Cold War, but it has become particularly timely. Is all
Speaker 1: of each and every political persuasion. Look at the process
Speaker 1: of diplomacy, the process of the projection of the United
Speaker 1: States of America in two thousand eighteen. We revisit the
Speaker 1: starvation of Europe in nine. If you need a brief
Speaker 1: on this, all you need to know is Audrey Hepburn
Speaker 1: barely made it out of the Netherlands in this starvation.
Speaker 1: Ben Steel congratulation on a huge effect of the Martial Plan.
Speaker 1: Your book tell us about how bad it was in
Speaker 1: Europe when George Marshall and President Truman stepped in the
Speaker 1: New York Times, Tom referred to Europe as unquote, the
Speaker 1: dark Continent. In the early years after the war, things
Speaker 1: were truly savage. It wasn't just the physical destruction of
Speaker 1: the war. All the complex economic relations that we take
Speaker 1: for granted today between country and city, between businesses and consumers,
Speaker 1: between monetary authorities and the general public. Everything had broken down,
Speaker 1: and um, you know, there was a real desire among
Speaker 1: the populists for for big change, big changes in economic policy.
Speaker 1: We saw that in Britain with nationalization and the Communist parties,
Speaker 1: particularly in Italy and Flance, were getting very powerful. My
Speaker 1: window of George Marshall, who full disclosure, folks were severed
Speaker 1: in the keen household of General Marshall is from Edward
Speaker 1: Larabe and his magnificent book of thirty years ago on
Speaker 1: the various and sundry General's helping FDR. There's a scene
Speaker 1: in the Larabie book where Marshall decides the best way
Speaker 1: to help FDR is to be visible, but really out
Speaker 1: of the way until called upon. How did he go
Speaker 1: from that general in the war to a Secretary of
Speaker 1: State saying, let's go. This is This is martial at
Speaker 1: its at his best, tom Um. In the year before
Speaker 1: he became Secretary of State in nineteen forty six, he
Speaker 1: had planned to go into retirement and perhaps write his memoirs.
Speaker 1: He had been offered up to half a million dollars
Speaker 1: to to write his memoirs. You know that's a fortune
Speaker 1: in today's money, but he turned it down. With President
Speaker 1: Truman came to him and said, I want you to
Speaker 1: go to China uh and tried to find a way
Speaker 1: to make peace between the nationalists and the communists. That
Speaker 1: mission was a failure, Tom but he learned a lot
Speaker 1: from it, and when he became Secretary of State in
Speaker 1: nineteen forty seven, and when he saw that there was
Speaker 1: no prospect for getting a cooperative agreement going forward on
Speaker 1: Germany with the Soviets, he came home from Moscow in
Speaker 1: April of nineteen forty seven and said, the pay is sinking.
Speaker 1: While the doctors deliberate, we can no longer wait for
Speaker 1: the Soviets to come around. We have to fix this
Speaker 1: problem ourselves. Within the book is a different media, and
Speaker 1: without question, the center tendency of that study is Walter Lippmann.
Speaker 1: I'm going to suggest, Ben Steele, that a lot of
Speaker 1: our listening audience today doesn't know who Walter Lippmann is.
Speaker 1: Who is he? And is there a proxy in two
Speaker 1: thousand and eighteen America? You know there probably isn't today.
Speaker 1: Tom and Walter Lippman was an extremely influential journalist in
Speaker 1: the in the nineteen forties of the administration took him
Speaker 1: extremely seriously. George Kennon, who was the father of the
Speaker 1: new early Cold War policy of containment containing the Soviet Union,
Speaker 1: had long running disputes with with Lippmann. Um he was
Speaker 1: extremely influential and There's no doubt that he did push
Speaker 1: UH policy in the Truman administration in various directions throughout
Speaker 1: those early Cold War years, well within that and I
Speaker 1: guess this jumps of forward, folks, Ben Steel and with
Speaker 1: your expertise on modern diplomacy, Could the Martial Plan occur
Speaker 1: in today's media, Maelstrom, You know, I don't think so,
Speaker 1: tom Um. You know, one of the most remarkable legacies
Speaker 1: of the Martial Plan is the endless desire to repeat it.
Speaker 1: In the past five years alone, we've had proposals for
Speaker 1: martial plans in Ukraine, in Greece and Southern Europe and
Speaker 1: North Africa and Ghazin most recently UH in Syria, but
Speaker 1: nothing like it has ever taken hold. I should emphasize
Speaker 1: that we spent over two billion dollars tom on reconstruction
Speaker 1: aid in the Rock and Afghanistan, and that's about more
Speaker 1: than we spent in the totality of martial aid in
Speaker 1: current dollars, and we have so little to show for it.
Speaker 1: And that's really because one of the great successes of
Speaker 1: the Martial One was also providing physical security for Europe
Speaker 1: in the form of NATO, which we helped create. One
Speaker 1: of the big things we do here is try to
Speaker 1: throw books at younger people and say shut up and
Speaker 1: read it. And the Martial Plan Dawn of the Cold
Speaker 1: War is official, certified headbanger here weighing. It's some foreign
Speaker 1: in pages and it's a really an easy read of
Speaker 1: the time. How would you frame this to an intern
Speaker 1: at the Council on Foreign Relations? They've got seventy books. Uh,
Speaker 1: you know, Foreign Affairs Magazine is going to come out
Speaker 1: with another fifteen books this next issue that they have
Speaker 1: to read. How do you say to a young kids,
Speaker 1: shut up and read the Marshall Plan. What's the lesson
Speaker 1: year for young kids and international relations? I think young
Speaker 1: people today, Tom, are extremely interested in current affairs. They're
Speaker 1: certainly interested in politics in the United States now, which is,
Speaker 1: you know, a very unusual and an historical perspective. Um.
Speaker 1: And one of the things that comes across very clear
Speaker 1: early in this story, Tom, is that the early Cold
Speaker 1: War conflict between the United States and the Soviet Union
Speaker 1: was fun fundamentally about geography and not about ideology. It
Speaker 1: wasn't about Marxism versus capitalism. Stalin is trying to push
Speaker 1: territorial claims in the Iran and Turkey in N's trying
Speaker 1: to push into Western Germany and cement his buffer zone
Speaker 1: in eastern Europe. And really, Tom, that's the root of
Speaker 1: the conflict between the United States and Russia today in Europe.
Speaker 1: Russia is extremely concerned about the eastward expansion of NATO
Speaker 1: and the European Union, and we have grossly underestimated Russia's reaction. Well,
Speaker 1: this has been written up in your Foreign Affairs magazine. JEMR.
Speaker 1: Scheimer of the University of Chicago has made very clear
Speaker 1: that we underestimate this Eastern thrust. Was the martial plan
Speaker 1: with the planes historically flying into Berlin and all that
Speaker 1: Berlin Blockaden, that was that considered an Eastern th used
Speaker 1: by Stalin. Well, it's important to recognize, Tom, that Stalin
Speaker 1: in fact implemented the Berlin blockade to strangle Germany in
Speaker 1: fundamentally as a way to convince the Americans not to
Speaker 1: leave Berlin, although he very much would have liked that,
Speaker 1: but to stop trying to create a Western German state.
Speaker 1: He was extremely concerned about the threat of a democratic,
Speaker 1: capitalist Western Germany effectively under American control. He considered that
Speaker 1: a security threat to his new offer zone in Eastern
Speaker 1: Europe and to bring Marshall Plan forward. And you touch
Speaker 1: on this in your final chapter, the echoes of the
Speaker 1: Marshall Plan on is our multilateralism in our collegiality, is
Speaker 1: it just exhausted because on a calculus basis, we got
Speaker 1: to the best marginal effect of everyone being together. Did
Speaker 1: we just finally wear out that forty year trend that
Speaker 1: we had of GAT and the rest of it? I
Speaker 1: think you may have hit the crux of the problem, uh,
Speaker 1: tom In In the early post war years from ninety
Speaker 1: the United States created all of the major institutions of
Speaker 1: what we now call the post war liberal order, the
Speaker 1: United Nations, the i m F, the World Bank, NATO,
Speaker 1: the predecessor organizations to the European Union, and the World
Speaker 1: Trade Organization. Uh. These things were all created in this
Speaker 1: short span of four years after the Second World War,
Speaker 1: and I think we've taken them to for grant it
Speaker 1: perhaps too long. And now, of course we've got a
Speaker 1: transactional president who likes to do deals and thinks that
Speaker 1: he can do better deals, he can do better for
Speaker 1: the United States than the w t O and and NATO,
Speaker 1: and wants to renegotiate all these things, and I think
Speaker 1: what he's perhaps losing is the enormous influence we've had
Speaker 1: in the world, from our song power, from our ability
Speaker 1: to project values that we're seeing as being universally attractive.
Speaker 1: Ben Steel, thank you so much the Marshall Plan. Dawn
Speaker 1: of the Cold Word. Can't say enough about it, and
Speaker 1: the photos are extraordinary, and it is hugely appropriate that
Speaker 1: the final photo of the book is of at an
Speaker 1: hour of Germany. Ben Steel, with the constant fortulations the
Speaker 1: must read The Marshall Plan. Thanks for listening to the
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.