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 So One.
Speaker 1: Are the top stories overnight. Let's begin that the President
Speaker 1: walking out of his second summit with Kim john n
Speaker 1: after the two leaders could not agree on a deal
Speaker 1: to relieve North Korea of U S sanctions in exchange
Speaker 1: for giving up much of its nuclear weapons program. Here's
Speaker 1: the President of the United States. We had some options,
Speaker 1: and at this time we decided not to do any
Speaker 1: of the options. And we'll see where that goes. But
Speaker 1: it was it was a very interesting two days, and
Speaker 1: I think actually it was a very productive two days.
Speaker 1: But sometimes you have to walk, and this was just
Speaker 1: one of those times. Sometimes you have to walk, and
Speaker 1: this was just one of those times. Joining us now
Speaker 1: from Hanno with Vietnam. It's bloom Bug's chief Washington correspondent, Kevin, Sir, Really, Kevin,
Speaker 1: if it was productive, what exactly did we achieve? Well,
Speaker 1: I'm not sure that it was productive, and in fact,
Speaker 1: even the President himself at the press conference a couple
Speaker 1: of hours ago, said that he was disappointed that that
Speaker 1: these talks, which had been really trending rhetorically speaking, quite
Speaker 1: positively in the twenty four hours leading into this, but
Speaker 1: ultimately the day was cut short two hours worth. They
Speaker 1: were supposed to have, like a joint signing agreement. There
Speaker 1: was speculation there was going to be a formal ending
Speaker 1: of the Korean War following the ceasefire of nine three.
Speaker 1: But Jonathan, this was not the deal at all or
Speaker 1: the day rather that President Trump was hoping to have.
Speaker 1: And currently as we speak, he's flying aboard Air Force
Speaker 1: one back state side. And we all know the storyline
Speaker 1: there with Michael, So Kevin, let's talk about how typically
Speaker 1: these things play out. Typically, the outcome of summits like
Speaker 1: this a predetermined before the president even boards Air Force
Speaker 1: one at leaves the White House. This is a very
Speaker 1: different approach negotiations with foreign leaders, isn't it? It absolutely is.
Speaker 1: And and and even just in texting and emailing with
Speaker 1: analyst backstate side since the press conference, I mean, Jonathan,
Speaker 1: there's an ability, there's there's the level of unpredictability. That
Speaker 1: I remember President Trump, then Candidate Trump would talk about
Speaker 1: on the campaign trail, but he wanted to be unpredictable,
Speaker 1: and we've seen that play out virtually in real time
Speaker 1: here in Hanoi. But but these analysts are criticizing that
Speaker 1: same approach because now there's no step forward in terms
Speaker 1: of the nuclearization, in terms of defining the nuclearization, or
Speaker 1: in terms of bringing the Russians and the Chinese to
Speaker 1: the table to get folks to the nuclearize. Kevin, since
Speaker 1: I last spoke to you an hour and a half ago,
Speaker 1: I'm sure you've taken tea at the Metropole Hotel in
Speaker 1: Hanoi before you wander back to America. Vietnamese coffee, Vietnamese coffee.
Speaker 1: But you know there's a spin to this and all
Speaker 1: that everybody he's adapting and adjusting. The fact is, it
Speaker 1: is stunning the difference in two tweets from the one
Speaker 1: this morning by the President finessing the moment versus what
Speaker 1: I saw nineteen hours ago, maybe twenty hours ago, of
Speaker 1: a happy, happy, shaking hands pat on the shaking hands thing.
Speaker 1: I mean, those images are stark. How will the president
Speaker 1: massage that message when he lands at Andrew's Air Force Base.
Speaker 1: You know, it's it, that's that's the task ahead. I mean,
Speaker 1: there's this plant in North Korea, this nuclear plant called
Speaker 1: Young Young Young, which is a nuclear plant that that
Speaker 1: has really gotten a lot of attention for a nuclear
Speaker 1: development site. But the President in his press conference Tom
Speaker 1: also said that they displayed evidence of intelligence that there
Speaker 1: were other nuclearar sites in North Korea, and that caught
Speaker 1: the North Korean's, according to President Trump and Secretary Pompeo,
Speaker 1: a bit off guard. And so now, uh, the thirty
Speaker 1: five year old dictator from North Korea, he's gonna stick
Speaker 1: around here in Hanoi for he's supposed to at least
Speaker 1: for another twenty four hours or so. Uh and presumably
Speaker 1: is going to be meeting with the Chinese president. She
Speaker 1: has already dispatched his foreign minister to meet with the
Speaker 1: North Koreans. Mind you, the Chinese presence here in Hannoy
Speaker 1: was you felt it? Uh? And And and to Jonathan's
Speaker 1: earlier point, the summit that I covered in Singapore had
Speaker 1: a much different feel. I mean, what was difference between
Speaker 1: Singapore and Hannoi besides a hotel food? You know, I'll
Speaker 1: put it simple. I mean to use your lingo. They
Speaker 1: didn't rip up the script in Singapore, they stuck to
Speaker 1: the script. Here in Hanoi, they ripped up the script
Speaker 1: there was There wasn't even a script to rip up from.
Speaker 1: From the moment that Uh Kim Kim Jong un took
Speaker 1: that stepped off that sixty hour Chinese arranged train ride
Speaker 1: uh and arrived at the hotel and kicked out the
Speaker 1: White House press pool. You could tell this was a
Speaker 1: much different feel. Kevin, thank you so much, Kevin SURREALI
Speaker 1: he will be in Hannoy for his important effort tonight
Speaker 1: five pm nationwide soundown with Kevin Surreally driving before now. Yeah, well,
Speaker 1: you know it's Thursday and we're cutting near to the
Speaker 1: real you'd a tough way. I don't have anything to plug.
Speaker 1: But anyways, let's just really in Hannoy and he will
Speaker 1: give you unique perspective that you will see off the
Speaker 1: Washington studio. But nationwide, we've got a lot to talk
Speaker 1: about today. Let's bring in Chris Grassanti Show with Grossanti
Speaker 1: Capital Management CEO. There are some positives to the unpredictable
Speaker 1: nature of the President of the United States. You can
Speaker 1: get the Chinese to the table in a way that
Speaker 1: other people haven't been able to. Chris, there is the
Speaker 1: downside as well, as we mentioned previously. Typically these are
Speaker 1: predetermined summits. Before you get the outcome has already been decided.
Speaker 1: This is some of the downside from other night, isn't it. Yeah?
Speaker 1: Thanks so, Jonathan forgive me for being a little bit cynical.
Speaker 1: But as far as the President's concerned, we're sitting here
Speaker 1: talking about North Korea instead of talking about Cohen, right,
Speaker 1: so his little bit of drama at the summit is
Speaker 1: probably not so counterproductive as as we might think. Um,
Speaker 1: what I would say is China, as we we looked
Speaker 1: at the China trade dada this morning, when I talke
Speaker 1: about it's just a disaster, I mean it's really ugly.
Speaker 1: So but that that perversely maybe kind of good news
Speaker 1: because what that says is the Chinese need a trade deal.
Speaker 1: They needed badly. So for anyone that missed the data
Speaker 1: from overnight Chinese manufacturing, the p M I coming at
Speaker 1: a forty nine point too. I was going to wait
Speaker 1: this letter and we'll revamp this at five things you
Speaker 1: need to know, And thank you Interact of Brokers for
Speaker 1: that support. Chris John Ferrell absolutely nailed the slope, the
Speaker 1: gradient of this p m I X words out of China.
Speaker 1: I mean, it was extraordinary. What you did? What you
Speaker 1: what do you? No? Can I just say there is
Speaker 1: a silver lining in this very ugly p m The
Speaker 1: slope is a generous ur It's like a black diamonds.
Speaker 1: There is there is a there is a silver lining
Speaker 1: in this p m I. From overnight in China, the
Speaker 1: business activity expectation component was actually really positive for both
Speaker 1: the manufacturing p m I the non manufacturing p m I.
Speaker 1: The other piece of good news I have to say
Speaker 1: is that the input prices for this p m I
Speaker 1: as well is in positive territory. There was a concern
Speaker 1: that we'd have that twenty sixteen replay of exporting disinflation.
Speaker 1: But I've really got to look for this, Chris, You've
Speaker 1: really got to look hard to find some positivity. So
Speaker 1: so my real question for the rest of this year,
Speaker 1: and I think this is where it starts. February you
Speaker 1: had a big Chinese holiday. It's really really difficult to
Speaker 1: get a clear read on the Chinese economy. We go
Speaker 1: into March, we're gonna get some clean data, probably from China,
Speaker 1: from the United States as well, and big question for
Speaker 1: this year, and I think it holds the key to
Speaker 1: asset classes for can stimulus out of China bite? When
Speaker 1: does it bite? And how much support does it offer
Speaker 1: this economy because I'm not saying much of it right now,
Speaker 1: and I think you need a two barrel approach. You
Speaker 1: need the stimulus that has to work, and you need
Speaker 1: a trade resolution, at least a temporary one to get
Speaker 1: us through the summer. Until that is the value Man
Speaker 1: optimistic about financial markets because we have ripped through so far. Absolutely,
Speaker 1: I mean we have to be a lot more selective now.
Speaker 1: There were some terrific bargains the last week of the year,
Speaker 1: but you know we're up almost fifteen per cent since then.
Speaker 1: One place that does still seem to have value our
Speaker 1: financial stocks. They haven't risen because rates have been benign.
Speaker 1: If rates, as we think, will start to ease higher again,
Speaker 1: you could get us some bids in the banks. I
Speaker 1: mean in Europe, I mean one of the other changes
Speaker 1: John quickly here that we've seen as German tenure yield
Speaker 1: is finally lifted up, I mean a little bit off
Speaker 1: the mat in the last three days. Are you in
Speaker 1: Europe at all no, you know we we the opportunities
Speaker 1: in the United States is higher growth and less risk. Okay, Christmas, Chris,
Speaker 1: thank you so much. Morning, just extraordinary morning. This is
Speaker 1: a joy. This is what we like to do best.
Speaker 1: On surveillance. It may be on the markets. That may
Speaker 1: be on foreign exchange or bonds. It may be some
Speaker 1: fancy economists to define a definitive voice. Lisa Collins is extraordinary.
Speaker 1: She's out of Oberlin and is pieced together in a
Speaker 1: shockingly short amount of time definitive knowledge on their hermit kingdom.
Speaker 1: You know the photo. I think I saw it in
Speaker 1: the Boston Globe a million years ago of Asia lit
Speaker 1: up this photo from the satellites, and there was North
Speaker 1: to create Korea dark and black. She owns with Victor
Speaker 1: Cha the granularity of the economy and the political system
Speaker 1: of North Korea. And we welcome Lisa Collins with the
Speaker 1: Center for Strategic and International Studies. Lisa, if you could
Speaker 1: say to our audience the one thing about the stereotype
Speaker 1: of medieval North Korea, what do we most get wrong? Well,
Speaker 1: I think we get wrong that there are people inside
Speaker 1: the country who are trying to live their lives the
Speaker 1: best that they can there. You know, they are trying
Speaker 1: to UM use their own agency to create better lives
Speaker 1: and to create these markets that you've just talked about.
Speaker 1: UM And despite the repression that's happening inside the country,
Speaker 1: which Kim Jongan has tried very hard to keep the
Speaker 1: people from doing, UM is creating these markets. That is,
Speaker 1: they're living on their own terms and they're trying to
Speaker 1: survive the best that they can do. They want to
Speaker 1: go across the d m Z or go north across
Speaker 1: the river Peter Hessler and Oracle Bones riding that river
Speaker 1: years ago. Do they want to go north or south
Speaker 1: and escape? Some of them do. Some of them have
Speaker 1: tried multiple times to leave the country. They've either been
Speaker 1: captured and returned to the country and are being held
Speaker 1: in prison camps or in jail. UM and others are
Speaker 1: quite content to stay inside their country and try to
Speaker 1: profit from the markets, try to make again UM living
Speaker 1: for themselves and for their families outside of the reach
Speaker 1: of the government. Interpret forest. The outrage over, you know,
Speaker 1: the language is intense about the human rights violation of
Speaker 1: Chairman Kim and the rest of it all. Is it
Speaker 1: legitimate of the human rights people done their homework and
Speaker 1: they are looking at outrageous conditions. Certainly. I mean, this
Speaker 1: has been going on for sixty seventy years. It wasn't
Speaker 1: just something that happened under Kim jonga, and it's been
Speaker 1: happening under his grandfather and his father. Um, they built
Speaker 1: these prison camps, He's pulled prison camps when the nation
Speaker 1: was first founded. They are very much like the Russian
Speaker 1: gulags or the Soviet Union gulags, and some in some
Speaker 1: cases are probably worse. Um. There was a Special Commission
Speaker 1: of Inquiry that was formed by the United Nations in
Speaker 1: two thousand fourteen which did an extensive study on all
Speaker 1: of North Korea's human rights violations, came out with a
Speaker 1: great report at the end of two thousands, at the
Speaker 1: beginning of two thousand fourteen, and it basically lists all
Speaker 1: of these horrendous things that have been happening. If you're
Speaker 1: just joining us today, without question, my interview of the
Speaker 1: day on North Korea, Lisa Collins with this a fellow
Speaker 1: Korea chair at the Center for Strategic and International Studies.
Speaker 1: I put out on Twitter her website at c s
Speaker 1: i S and it's just absolutely definitive. Okay, the president
Speaker 1: with his work today, Lisa. The president yesterday with handshakes
Speaker 1: and that famous hand pad that he has with Chairman Kim,
Speaker 1: and the constant theme through it is the President believes
Speaker 1: there can be a tremendous capitalistic oppertu tunity in North Korea.
Speaker 1: Do you agree with the president or how would you
Speaker 1: modify his tone? Well, I think that there certainly is
Speaker 1: opportunity in the long term in North Korea. As has
Speaker 1: been mentioned by many analysts, not just President Trump, but
Speaker 1: North Korea sits at a very opportune location in the
Speaker 1: middle of Northeast Asia, surrounded by some of the greatest
Speaker 1: largest economies in all of Asia even the world. So
Speaker 1: if the country were to open up and were to
Speaker 1: um create a market economy, a regularized market economy, I mean,
Speaker 1: there could be tremendous opportunities, but that is only if
Speaker 1: there is radical political change to cut to the chase,
Speaker 1: and I did a per capita analysis of the communist
Speaker 1: countries of Asia. Can they become a Laos? I mean
Speaker 1: not can they become a Vietnam? But landlocked Laos is
Speaker 1: really struggling. Their goal is a medieval hermit kingdom, is
Speaker 1: to get to Laos. There's Lisa Collins think they can
Speaker 1: get laos forgetting about Vietnam, not not under the current regime. UM,
Speaker 1: and Kim Jong Uan himself would have to make a
Speaker 1: radical change in his strategy of control over the people
Speaker 1: and the markets and the country itself. UM. Under a
Speaker 1: different leader, this may be possible, and over a very
Speaker 1: long period of time, it could potentially be possible, but
Speaker 1: it it might take decades. UM and the South Koreans
Speaker 1: would probably have to help in that. They would have
Speaker 1: to invest a lot. The Chinese would probably want to
Speaker 1: invest more than they already do. UM and the other
Speaker 1: countries in the region, of course, would be involved in
Speaker 1: development as well, Lisa, have we determined that that is
Speaker 1: actually their goal. We we do know that Kim jongan
Speaker 1: is very anxious to develop his country, but on his terms,
Speaker 1: and he's very clearly stated that in all of his
Speaker 1: speeches and and his public statements UM going back for years.
Speaker 1: I think we don't know. What we don't know is
Speaker 1: whether he is willing to open up in the terms
Speaker 1: that the United States and the rest of the Western
Speaker 1: world will like to see North Korea do, and that
Speaker 1: is to follow the model of Vietnam, or even that
Speaker 1: of China where there's slow reform, economic reform, and some
Speaker 1: political opening. Um. Of course, we you know, as Americans,
Speaker 1: we would like to see the entire Korean peninsula become free, democratic,
Speaker 1: and market society. That is the ultimate goal eventually, but um,
Speaker 1: how that happens and whether it can happen under the
Speaker 1: current Crean leadership is is definitely a difficult question. At least,
Speaker 1: it's what degree does an existential threat validate the regime?
Speaker 1: It's a great help to validate their um the rationale
Speaker 1: for keeping control of their people. That's the ultimate reason.
Speaker 1: Which that's the question leads as to why the leader
Speaker 1: of North Korea would actually look for any kind of
Speaker 1: peace deal. Well, so, I think the reason might be
Speaker 1: that if he really is, Kim Jong un is really
Speaker 1: serious about opening up the country, but he's not exactly
Speaker 1: sure how to do it and in what um, you know,
Speaker 1: what steps he needs to take to do that. First,
Speaker 1: he has to change the propaganda within the country. He
Speaker 1: has to change the mindsets of the people, um, who
Speaker 1: have been basically brainwashed over decades. So he has to
Speaker 1: convince them that there's no longer a threat from the
Speaker 1: United States. And then he could probably UM engage in
Speaker 1: some opening diplomatic openings, people to people, more people to
Speaker 1: people exchanges, maybe again the market openings. But you know,
Speaker 1: changing the internal dynamics propaganda of the country is will
Speaker 1: be very difficult. Um. Changing the minds of the elites
Speaker 1: could be very difficult. And then also convincing UM others
Speaker 1: that he the threat from the United States is gone
Speaker 1: is something that he probably faces a large challenge on. So, Lisa,
Speaker 1: from what I'm hearing from you and from the research
Speaker 1: that's been put in front of me from this morning
Speaker 1: from from your team, is that we are a long
Speaker 1: long way away from any kind of final, fully verifiable
Speaker 1: denuclearization deal. Yes, I think there are experts who estimate
Speaker 1: that it could take from ten to fifteen years to
Speaker 1: completely denucarized North Korea all of its sites, even if
Speaker 1: they're being helpful UM and engaged in the process of
Speaker 1: dismantlement of vernicular weapons program. Of course, if they throw
Speaker 1: up roadblocks, walk out of talks, UM, you know, decide
Speaker 1: not to participate in in this process, then it could
Speaker 1: take much longer, if at all. UM. Yeah, so it's
Speaker 1: a very difficult situation. You imagine John and Ivy had
Speaker 1: the privilege of speaking to all sorts of Asia. Heavy
Speaker 1: wis just as one the giant Jonathan Spence of Yale University,
Speaker 1: Lisa Collins, what's it like working with Victor's Chaw? I mean,
Speaker 1: what what is it like working with the dean of
Speaker 1: all of Korea? I mean Dr Chaw's extraordinary right, Yes,
Speaker 1: he is an extraordinary analyst. He is very very well
Speaker 1: versed in Korean affairs. So what gets him upset? What's
Speaker 1: getting you? You and him are sitting around, uh, you know,
Speaker 1: talking up a Korea. What is the topic that the
Speaker 1: two of you get most upset about with in the
Speaker 1: mainstream media on North Korea? Well, I think what is
Speaker 1: upsetting to some degree as the lack of focus on
Speaker 1: human rights. And that's something that he does get him
Speaker 1: UM somewhat disturbed from time to time, and I think
Speaker 1: he tried to write about it in the run up
Speaker 1: to this summit. Is the lack of focus, the lack
Speaker 1: of attention that was being paid to human rights. And
Speaker 1: I think that's something that we hope that will continue
Speaker 1: to get attention um, despite what's going on on the
Speaker 1: demaimalization front or the negotiations. So we should not forget
Speaker 1: that North Korea is still a prison state. It's a
Speaker 1: state that U has to survive by repressing its own people,
Speaker 1: and that there should be movement and openness discussion with
Speaker 1: North Korea about making progress on those fronts at the
Speaker 1: same time that we're also trying to dismantle their nicular
Speaker 1: weapons programs. This is another one hour conversation and we'll
Speaker 1: do that with Lisa Collins that maybe with Dr Shaw
Speaker 1: as we can as well. Just extraordinary and somehow John,
Speaker 1: I think we'll continue with discussion on the Greater Korean
Speaker 1: UH Peninsula was c SIS, a Center for Strategic and
Speaker 1: International Studies. Were thrilled to bringing Lisa Collins. Not enough
Speaker 1: time right now with someone who's joined us before. Catherine
Speaker 1: Moon is at Brookings, but that barely describes her iconic
Speaker 1: position at a small school outside Boston known as Wellesley College.
Speaker 1: To bring up the speed folks. Wellesley College literally pioneered
Speaker 1: Asian studies a zillion years ago. Professor Moon thrilled to
Speaker 1: have you with us UH today if you were if
Speaker 1: you were lecturing freshman at Wellsley. They're so eager to
Speaker 1: get in front of the Asian studies program at Wellesley.
Speaker 1: What's the first thing you would show that that pushes
Speaker 1: against our common myths on Korea, commons against UH commentments
Speaker 1: on North Korea that we need to to unveil. I
Speaker 1: would say the first thing is it's a real country
Speaker 1: that plays hardball diplomatic strategies and has a domestic audience
Speaker 1: that it needs to pay attention to. Even though it's
Speaker 1: a dictatorship. Kim jongan does not run it alone and
Speaker 1: he needs to have the backing of especially the military
Speaker 1: and some members of the population help us with the
Speaker 1: president's constant theme as the summit fell apart in two
Speaker 1: days ago when there was happy handshakes, and the constant
Speaker 1: theme is his belief that North Korea can be a
Speaker 1: force of capitalism going forward. Can it do the Asian
Speaker 1: tiger thing? Can it be like Laos or Cambodia and
Speaker 1: move forward or is there a different equation that you
Speaker 1: see I think I think Donald Trump is doing the
Speaker 1: right rhetoric to try to raise the expectations of the
Speaker 1: North Korean people and its leadership to step up. And
Speaker 1: it is aligned with Kim Jong UN's own desire to
Speaker 1: develop his economy. That is sincere Um, many observers believe
Speaker 1: that but in terms of how the question is, are
Speaker 1: they capable of growing economically into another dragon or tiger?
Speaker 1: How fast and how fast and how stable is the question?
Speaker 1: And I think those are the two areas where I
Speaker 1: would take issue with Mr Trump. UM. One thing I
Speaker 1: want to mention is that you know, even though the
Speaker 1: news headlines say that this is a failed summit because
Speaker 1: Trump walked away with nothing and basically the negotiations broke down,
Speaker 1: I look at it a little differently. I think actually
Speaker 1: this was a good summit in the sense that it
Speaker 1: was constructive. We finally got to see that that Mr
Speaker 1: Kim Jong un can play real hardball and they have
Speaker 1: real clear um bars about what it takes to the
Speaker 1: US to absolutely work with North Korea towards the nuclearization,
Speaker 1: which is full listing of the sanctions UM. And I
Speaker 1: think that it's very good for Mr Trump to realize
Speaker 1: that his own personal charm offensive has its limits and
Speaker 1: that now you need to leave it to the people
Speaker 1: who are experts to really thrash this out, and it'll
Speaker 1: take a lot of time. So, Professor Moon, who do
Speaker 1: you think needs a deal more the US or North Korea? Here? Well,
Speaker 1: the US needs a deal and the question is is
Speaker 1: it Mr Trump needing a deal he wanted mostly uh,
Speaker 1: progress toward a Nobel prize for himself. That is not
Speaker 1: something that was hidden. UM. But also I think for
Speaker 1: the US government, if we are serious about UM preventing
Speaker 1: nuclear escalation, military escalation in East Asia and trying to
Speaker 1: bring some level of cooperation in peace on the peninsula
Speaker 1: after seventy plus years. Yes, it's very, very important, and
Speaker 1: it is considered North Korea is considered a major nuclear,
Speaker 1: major security threat to the United States. UM. But North
Speaker 1: Korea needs the US give because Kim has to have
Speaker 1: economic development in order to survive, and so both sides
Speaker 1: have a pretty loaded game here. Okay, I have to
Speaker 1: leave it there. We're just too short a time. We
Speaker 1: need to get you back on soon as we can.
Speaker 1: Catherine Moon, she is at Wellesley College and the Brookings
Speaker 1: Institute there on the Many Koreas is open. Faulse twoone
Speaker 1: and Tom Keane And we really look towards the longer
Speaker 1: days of spring, which means the i m F meetings,
Speaker 1: and we really kick off here our movement towards those
Speaker 1: important International Monetary Fund meetings that will see along in April.
Speaker 1: And we do that strong with the head of their
Speaker 1: Western him Sphere department, Alejander Werner, with us now the
Speaker 1: International Monetary Fund. I want to begin a discussion on
Speaker 1: Venezuela and Argentina, but I first have to pause and
Speaker 1: that you took your PhD at m I T with
Speaker 1: one of the giants, Rudy dornbush uh in economics. He
Speaker 1: was of a profound impact at i m F with
Speaker 1: Professor dorn Bush of years ago. Would he recognizes i
Speaker 1: m F today or is it a different institution. It's
Speaker 1: definitely a different institution, but that maintains the core of
Speaker 1: its mission. So I think he will recognize and I
Speaker 1: think he will salute the changes that have taken place
Speaker 1: given and that he was a person that really put
Speaker 1: together strong theory with policy implications and applications of that theory.
Speaker 1: We have the privilege and that was speaking literally the
Speaker 1: day of these changes in Venezuela with Ricardo Houseman of
Speaker 1: original Sin and a lot of other theory, and that
Speaker 1: as well. Should Ricardo Houseman and you and should An
Speaker 1: Blegard be optimistic now of a constructive solution to Professor
Speaker 1: Houseman's Venezuela. Well, that's more of a political question than economic.
Speaker 1: That's but I think, look, I think there's a strong
Speaker 1: will by Venezuelan society to start fixing things in their country.
Speaker 1: There's a strong will in the international arena to support
Speaker 1: Venezuela in this transition. So hopefully we will have a
Speaker 1: government in Venezuela that reaches out to the international community
Speaker 1: and and that puts in the policies to fix this.
Speaker 1: Can you apply what you did in Argentina to Venezuela
Speaker 1: or is it so broken the i m F has
Speaker 1: to use a different path. It's it's it's clearly a
Speaker 1: very different situation. It's a different path. It's one of
Speaker 1: the most complex crisis that we have seen. It combines
Speaker 1: a humanitarian crisis, they complete destruction of the productive network
Speaker 1: of the economy, hyper inflation, a dead crisis, and a
Speaker 1: migration crisis. So we have dealt with some of them
Speaker 1: in each of the cases that we go through, but
Speaker 1: the five of them together, it's a very complex situation
Speaker 1: that it will need the efforts of many institutions. But
Speaker 1: I mean, it can obviously be done, and a success story,
Speaker 1: certainly for the I m F was the Ukraine recently,
Speaker 1: where creditors received almost par on their bonds. But I
Speaker 1: think you know, even I it's probably unlikely that that
Speaker 1: would occur in Venezuela. So what what are the creditors?
Speaker 1: What do they expect in any type of restructuring here?
Speaker 1: What is they what? What do you think is kind
Speaker 1: of the how does supply out? I think what they
Speaker 1: what they expect, it's a a policy package that actually
Speaker 1: puts the country in so sustainable path. I think if
Speaker 1: you look at the pricing of the bonds today, obviously
Speaker 1: nobody is expecting a full recovery. But what they what
Speaker 1: they would expect, and that's why they're holding onto these
Speaker 1: bonds is basically that eventually a package will be put
Speaker 1: together that a country with the wealth that Venezuela has
Speaker 1: can laid out the policies to go back to a sustainable,
Speaker 1: inclusive growth process that eventually will give some value to
Speaker 1: those bonds and people will have some upside given the
Speaker 1: policies put together and given the growth path that they
Speaker 1: that the economy can get into. To what extent can
Speaker 1: the I m F B a part of that? What's
Speaker 1: the balantry that I am f How much can have
Speaker 1: come in and support whatever change takes place? Obviously, we
Speaker 1: we can, we can, and I think hopefully Venezuela will
Speaker 1: see in US an institution that can help us give
Speaker 1: them the international experience on many areas on how to
Speaker 1: put policies together, can give them the financial part of
Speaker 1: the financial support that they will need to grow themselves
Speaker 1: out of these problems. There will be a lot of
Speaker 1: needs for investment in the oil and non oil sector,
Speaker 1: but also needs to increase the consumption of the population
Speaker 1: that it's at very low, low level, generating very deep
Speaker 1: health problems. And as I said, we have the expertise
Speaker 1: and we do have an important balance sheet to help
Speaker 1: and finance this transition. What is the state of populism
Speaker 1: in South America? You do the Western hemisphere and that's
Speaker 1: a pretty broad mandate, but the state of political unrest
Speaker 1: in Europe or this you know the story in America
Speaker 1: as well. The state of populism that we see in
Speaker 1: South America and how it links in the prosperity If
Speaker 1: you don't work on this, yeah, it's it's it's a
Speaker 1: very interesting question because I mean Latin America in this
Speaker 1: let's call it populism cycle and defining populism. It's it's
Speaker 1: it's a fuzzy concept took place before what we're seeing
Speaker 1: in some advanced economies. At the end of the day,
Speaker 1: we saw a significant burst of regimes that tried to
Speaker 1: spend their way out of the deep social and economic
Speaker 1: problems that some Latin American nations have on the back
Speaker 1: of huge income coming from the commodity boom. So the
Speaker 1: Venezuela is the extreme. On the back on the of
Speaker 1: the oil boom, we saw a huge increasing government expenses,
Speaker 1: et cetera that when commodity prices collapses, then these regimes
Speaker 1: were unsustainable. So those are the changes that we have
Speaker 1: seen in Argentina and we're seeing now in Ecuador, and
Speaker 1: now we're seeing the deep problems in Venezuela. So we're
Speaker 1: seeing the last stages of the of that process. We
Speaker 1: have to leave it there, but look for the senior
Speaker 1: and looking forward to see you in the spring. Thank
Speaker 1: you so much is Western Hemisphere Department leader for the
Speaker 1: International Monetary Fund. Thanks for listening to The Bloomberg's ban
Speaker 1: Last 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.