WEBVTT - Single Best Idea with Tom Keene: Dr. Paul Krugman & Libby Cantrill

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news single best idea it

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<v Speaker 1>could be a twenty thirty forty minute podcast today. What

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<v Speaker 1>a set of insights now as we move on days

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<v Speaker 1>from announcements in the Rose Garden a bombshell announcement. You know,

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<v Speaker 1>you look at home. You're at home, and I'm in

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<v Speaker 1>the coffee table that builds on my lap, and the

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<v Speaker 1>phone's on the coffee table and I don't want to

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<v Speaker 1>pick it up because they don't know what the news

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<v Speaker 1>will be. So of course, well Kennel Field was on

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<v Speaker 1>my lap last night and I picked it up at

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<v Speaker 1>nine point fifteen and there was China saying no, we're

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<v Speaker 1>not going to play, and the market's girad and the

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<v Speaker 1>emerging markets went off in Japan went up. You know,

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<v Speaker 1>you know the story. But then we get a real

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<v Speaker 1>lift this morning, and there's still great uncertainty out there. Really,

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<v Speaker 1>thanks to all of Bloomberg for letting us go commercial

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<v Speaker 1>free in the nine o'clock hour. It makes a big,

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<v Speaker 1>big difference to get the market open. We started strong

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<v Speaker 1>with the Nobel Laureate Paul Krugman, always controversial YouTube Live

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<v Speaker 1>Jat lit up like a candle. Thanks for those constructive

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<v Speaker 1>comments pro and con. Paul Kruman on what he won

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<v Speaker 1>the Nobel Prize for and what it's about is nonlinear tariffs.

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<v Speaker 2>Let's listen, the damage done by tariffs is not proportional

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<v Speaker 2>to the tariff, is proportional to the square of the tariff.

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<v Speaker 2>So you know, a twenty percent tariff is something like

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<v Speaker 2>four times as bad as a ten percent tariff. Now

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<v Speaker 2>putting numbers to it, I mean long run, it's finding

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<v Speaker 2>the long run impact of these terraffs is probably look,

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<v Speaker 2>it's going to be worse than Brexit. So in Brexit

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<v Speaker 2>we tend to think it was three or four percent

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<v Speaker 2>of British GDP. Maybe this could easily be more than that.

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<v Speaker 2>Though there's a limit to it deep it's hard to get.

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<v Speaker 2>It's not you know, in itself, it's a serious hit

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<v Speaker 2>to the economy. But the funny thing is the short

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<v Speaker 2>run it can be worse. And the reason it can

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<v Speaker 2>be worse is that is the extreme uncertainty that we're creating.

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<v Speaker 2>And so you know, once you know, even with these

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<v Speaker 2>high tariffs will settle down, eventually, business will find ways

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<v Speaker 2>to cope. Costs will be higher, GDP will be lower,

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<v Speaker 2>But that's you know we'll make that transition.

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<v Speaker 1>Paul Krugman, of course, on his substack, can't say enough

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<v Speaker 1>about it. Subscribe to Paul Krugman substack. He's writing, if anything,

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<v Speaker 1>more often than when he was with the New York Times,

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<v Speaker 1>and it's on fire. Whatever your political beliefs, We've really

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<v Speaker 1>enjoyed the academic debate of this. We really think all

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<v Speaker 1>of the different heavyweights worldwide, worldwide, who weighed in. Jason Furman,

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<v Speaker 1>writing in the Financial Times today was heated. A major

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<v Speaker 1>shout out to Lamond in Paris, who, in Lamond English

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<v Speaker 1>had the two economists that Peter Navarro of the White

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<v Speaker 1>House mentioned. They wrote an essay I don't have their

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<v Speaker 1>names in front of me. One's out of Berkeley, one's

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<v Speaker 1>out of Mit, and they were absolutely scathing and being

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<v Speaker 1>quoted by Navarro. Look to Lemonde in English. It's really

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<v Speaker 1>worthwhile to get a snapshot of what's going on in France.

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<v Speaker 1>Thank you Adam Too's fear interest in Bloomberg. I'm surveillance

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<v Speaker 1>and always thank you to Professor Blanchard and at the

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<v Speaker 1>Peterson Institute. Great to hear from you as well. It

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<v Speaker 1>was great to hear from Libby Cantrell. She's a pimpco

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<v Speaker 1>she's a great student of the parties. In the Ballet

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<v Speaker 1>in Washington, Libby Cantrell, I'm Trump and his Republicans.

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<v Speaker 3>This speaks to the fact that this party is the

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<v Speaker 3>party of Trump, and many folks in the House have

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<v Speaker 3>the President to thank for even being there in the

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<v Speaker 3>first place. And so this is why I think there's

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<v Speaker 3>been a real reluctance to push back in public. Again,

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<v Speaker 3>there is some private push back, but again, I think

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<v Speaker 3>this is a worldview that President Trump has had for

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<v Speaker 3>forty years. This is what we keep telling our clients,

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<v Speaker 3>and he ran on this. He believes he has a

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<v Speaker 3>mandate to fulfill this. He believes that there's a lot

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<v Speaker 3>of unfinished business from the first administration. And I think

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<v Speaker 3>that the market obviously wants to maybe see through this

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<v Speaker 3>or hope that there is something this will result in

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<v Speaker 3>a different outcome. But our view is teriff rates are

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<v Speaker 3>going to be going up and that will have a

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<v Speaker 3>headwind on you know, growth and likely have implications for inflation.

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<v Speaker 3>To the degree is going to depend on the stickiness

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<v Speaker 3>of all this, obviously, but I think there it is

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<v Speaker 3>naive to think that we are not going to see

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<v Speaker 3>probably significantly higher terrorf levels.

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<v Speaker 1>Lebby Controller of Pimkell. We talked to her as well

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<v Speaker 1>about the path down the road, and with Mia mcguinnis

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<v Speaker 1>yesterday as well on the budget, on the fiscal plan

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<v Speaker 1>and of text. Lebby Control was somewhat optimistic that they

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<v Speaker 1>could actually get through text legislation this year. We'll have

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<v Speaker 1>to wait and see on that. We're deep into two

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<v Speaker 1>this so he's like, you know, it's like November, second

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<v Speaker 1>week of the year. What a long year. We're deep

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<v Speaker 1>into April in this fractious two thousand and twenty five.

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<v Speaker 1>Thanks for listening on your commute across America on YouTube,

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<v Speaker 1>Subscribe to Bloomberg podcasts and out on YouTube podcasts. This

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<v Speaker 1>is a single best idea