1 00:00:00,240 --> 00:00:02,640 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,480 --> 00:00:04,400 Speaker 2: And we may not have an overall recession, we're having 3 00:00:04,400 --> 00:00:06,720 Speaker 2: a rolling recession to kind of roll looks pretty strongly 4 00:00:06,720 --> 00:00:08,879 Speaker 2: it is when it comes to jobs, the financial stories 5 00:00:08,920 --> 00:00:11,960 Speaker 2: that shape our world. Three major regional bank failures send 6 00:00:12,000 --> 00:00:14,680 Speaker 2: shockwaves through the banking system. We're all trying to figure 7 00:00:14,680 --> 00:00:17,600 Speaker 2: out what to make of generative AI through the eyes 8 00:00:17,680 --> 00:00:20,800 Speaker 2: of the most influential voices. Welcome down, Doctor Paul Krugman, 9 00:00:20,920 --> 00:00:23,600 Speaker 2: Ryan moynihan, a Bank of America, deebro Lair of the 10 00:00:23,640 --> 00:00:26,280 Speaker 2: Paulson Institute, well Then Hubbard of the Columbia Business School. 11 00:00:26,280 --> 00:00:30,120 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 12 00:00:30,320 --> 00:00:33,120 Speaker 2: Christmas and New Year's come to much of the world, 13 00:00:33,200 --> 00:00:36,360 Speaker 2: but war takes no holiday in the Middle East or 14 00:00:36,400 --> 00:00:39,199 Speaker 2: in Eastern Europe. This is Bloomberg Wall Street Week. I'm 15 00:00:39,280 --> 00:00:42,839 Speaker 2: David Weston, this week's special contributor to Larry Summers of 16 00:00:42,880 --> 00:00:45,839 Speaker 2: Harvard on why we didn't get that recession we expected 17 00:00:45,880 --> 00:00:46,680 Speaker 2: this year, but. 18 00:00:46,760 --> 00:00:51,000 Speaker 3: I'm not terribly surprised that we haven't seen a recession 19 00:00:51,280 --> 00:00:53,120 Speaker 3: in twenty twenty three. 20 00:00:53,560 --> 00:00:56,920 Speaker 2: Very Lovely of the Peterson Institute on China's continuing economic 21 00:00:57,000 --> 00:01:00,120 Speaker 2: struggle to rebound from the COVID lockdown, the Deeps and 22 00:01:00,200 --> 00:01:00,840 Speaker 2: some Malays. 23 00:01:00,880 --> 00:01:04,520 Speaker 4: We think still lies within the population and within people's 24 00:01:04,560 --> 00:01:05,880 Speaker 4: expectations for the future. 25 00:01:06,120 --> 00:01:08,760 Speaker 2: And Scott Bach of Greenhill on what's really going on 26 00:01:08,880 --> 00:01:10,760 Speaker 2: in places like penn and Harvard. 27 00:01:11,000 --> 00:01:14,520 Speaker 5: Dollars are absolutely free to give to whatever organizations they 28 00:01:14,560 --> 00:01:16,679 Speaker 5: want or not to went to withhold for any reason 29 00:01:16,760 --> 00:01:18,960 Speaker 5: they choose to, but they're not shareholders, so I don't 30 00:01:19,000 --> 00:01:21,440 Speaker 5: think they should have a particularly loud voice, and how 31 00:01:21,440 --> 00:01:33,440 Speaker 5: a university is a run. 32 00:01:35,319 --> 00:01:38,319 Speaker 2: Most of global Wall Street spent the week celebrating the holidays, 33 00:01:38,360 --> 00:01:40,959 Speaker 2: taking a break from earnings reports and the FED and 34 00:01:41,040 --> 00:01:43,760 Speaker 2: the eco data, but there was no break for those 35 00:01:43,800 --> 00:01:47,320 Speaker 2: waging war in Ukraine and in Gaza, as Ukrainian forces 36 00:01:47,400 --> 00:01:50,279 Speaker 2: hit a Russian warship and shot down several fighter jets, 37 00:01:50,480 --> 00:01:53,160 Speaker 2: and in the Middle East, Israeli forces continued to seek 38 00:01:53,160 --> 00:01:56,440 Speaker 2: out Hamas militants and Huthi rebels hit targets in the 39 00:01:56,440 --> 00:02:00,200 Speaker 2: Red Sea, disrupting shipping in the region. Huh we will 40 00:02:00,240 --> 00:02:04,000 Speaker 2: contain a ship fleet now currently no longer going through 41 00:02:04,040 --> 00:02:06,919 Speaker 2: the Red Seats. In the world of commerce, holiday shopping 42 00:02:07,000 --> 00:02:09,840 Speaker 2: appeared to be holding up, showing the consumers still have 43 00:02:10,040 --> 00:02:11,120 Speaker 2: some money to spend. 44 00:02:11,639 --> 00:02:15,200 Speaker 6: Unlike the last couple of holiday shopping seasons, we had 45 00:02:15,240 --> 00:02:16,440 Speaker 6: to wait until the very. 46 00:02:16,360 --> 00:02:19,519 Speaker 3: Last minute to see those consumer dollars flow through well. 47 00:02:19,600 --> 00:02:22,679 Speaker 2: Apple got a temporary reprieve of the ban on its 48 00:02:22,680 --> 00:02:25,040 Speaker 2: watches as the Court of Appeals sorts out whether it 49 00:02:25,120 --> 00:02:29,080 Speaker 2: infringe japan covering sensors to monitor blood oxygen levels. 50 00:02:29,320 --> 00:02:32,040 Speaker 1: They have to stay until the US Customs makes a 51 00:02:32,080 --> 00:02:36,840 Speaker 1: decision on a software fix that Apple submitted to the government. 52 00:02:38,639 --> 00:02:41,600 Speaker 2: Equity markets eked out another up week despite a bit 53 00:02:41,600 --> 00:02:44,280 Speaker 2: of a selloff on Friday, as SMP five hundred gained 54 00:02:44,400 --> 00:02:46,320 Speaker 2: just over three tenths of one percent for the week, 55 00:02:46,400 --> 00:02:49,280 Speaker 2: but that put it up a whopping twenty four percent 56 00:02:49,320 --> 00:02:51,440 Speaker 2: for the year as a whole, ending at forty seven 57 00:02:51,600 --> 00:02:54,280 Speaker 2: sixty nine. That's way above the median estimate of our 58 00:02:54,320 --> 00:02:56,880 Speaker 2: Bloomberg els for this year and only a bit under 59 00:02:56,880 --> 00:02:58,480 Speaker 2: the estimate of forty eight to thirty two for the 60 00:02:58,600 --> 00:03:01,520 Speaker 2: end of next year. The NASDAC game just over one 61 00:03:01,600 --> 00:03:04,200 Speaker 2: tenth percent this week, but was up over forty three 62 00:03:04,240 --> 00:03:06,720 Speaker 2: percent for the year overall. It was a very different 63 00:03:06,760 --> 00:03:09,640 Speaker 2: story for bonds, with the yield on the tenure all 64 00:03:09,720 --> 00:03:12,600 Speaker 2: over the place in twenty twenty three, but it ended 65 00:03:12,639 --> 00:03:14,920 Speaker 2: up just about where it started a year ago, just 66 00:03:15,200 --> 00:03:17,760 Speaker 2: under three point nine percent. Take us through it all. 67 00:03:17,880 --> 00:03:21,519 Speaker 2: Welcome now, Chris Ayleman, Chief Investment Officer counselor So, Chris, yeah, 68 00:03:21,520 --> 00:03:23,400 Speaker 2: I have to say you've put me to shame here 69 00:03:23,520 --> 00:03:26,720 Speaker 2: that dashing texedo, your black tie and your champagne boy. 70 00:03:26,800 --> 00:03:27,680 Speaker 2: Happy new year to. 71 00:03:27,639 --> 00:03:31,960 Speaker 7: You, well, apple slider, But that's okay, Happy new year 72 00:03:32,000 --> 00:03:34,480 Speaker 7: to you, David. And it really the year that deserves 73 00:03:34,480 --> 00:03:36,640 Speaker 7: the toast. I'm right there with Larry. 74 00:03:36,680 --> 00:03:37,560 Speaker 8: I mean, I. 75 00:03:37,480 --> 00:03:40,760 Speaker 7: Expected a recession, but we certainly didn't have one. And 76 00:03:40,800 --> 00:03:44,280 Speaker 7: it's a spectacular year of twenty double digit, twenty percent, 77 00:03:44,720 --> 00:03:45,320 Speaker 7: just amazing. 78 00:03:45,600 --> 00:03:48,080 Speaker 2: So what about on the equity side of over twenty 79 00:03:48,120 --> 00:03:51,600 Speaker 2: percent or even over forty percent on the NASDAK how 80 00:03:51,680 --> 00:03:53,920 Speaker 2: much of that was just the anticipation of FED cuts. 81 00:03:55,040 --> 00:03:58,320 Speaker 7: Well, you know, it all happened in the last quarter 82 00:03:58,400 --> 00:04:00,720 Speaker 7: of the year, because really, when you look at the 83 00:04:00,760 --> 00:04:04,440 Speaker 7: equally weighted SMP five hundred that was actually negative back 84 00:04:04,440 --> 00:04:07,160 Speaker 7: at Halloween and then had a huge rally here at 85 00:04:07,200 --> 00:04:10,840 Speaker 7: the end. It was really those seven magnificent socks and 86 00:04:10,880 --> 00:04:14,160 Speaker 7: on the Nasdaq. That really shows up. Best year since 87 00:04:14,240 --> 00:04:16,800 Speaker 7: ninety nine. Now that's a lot to celebrate. But wait 88 00:04:16,839 --> 00:04:19,240 Speaker 7: a minute, think about nineteen ninety nine. For those of 89 00:04:19,279 --> 00:04:21,800 Speaker 7: those that were in the market, you can't forget two 90 00:04:21,800 --> 00:04:25,400 Speaker 7: thousand and one two, so it was a difficult time. 91 00:04:25,480 --> 00:04:28,920 Speaker 7: We'll see how this carries through. But what an incredible 92 00:04:29,000 --> 00:04:32,279 Speaker 7: year for equities. I was wrong. I predicted David that 93 00:04:32,360 --> 00:04:35,080 Speaker 7: the markets would be down this year because well, gee, 94 00:04:35,080 --> 00:04:38,160 Speaker 7: the Fed raised interest rates five hundred and twenty five percent. 95 00:04:38,520 --> 00:04:41,000 Speaker 7: Should have had a rough market. And let's be clear, 96 00:04:41,279 --> 00:04:44,040 Speaker 7: the Fed has an eased ras, but the bond market 97 00:04:44,080 --> 00:04:46,600 Speaker 7: has done it for them, you pointed out, and sorry 98 00:04:46,640 --> 00:04:49,200 Speaker 7: back for it started the year. But my goodness, the 99 00:04:49,279 --> 00:04:52,320 Speaker 7: long bomb dropped almost one hundred basis points since the 100 00:04:52,360 --> 00:04:56,160 Speaker 7: Fed pivot. That's amazing in such a short period of time. 101 00:04:56,480 --> 00:04:58,440 Speaker 2: So what does that say to set up next year 102 00:04:58,520 --> 00:05:00,479 Speaker 2: twenty twenty four? For you? You have a lot of money 103 00:05:00,480 --> 00:05:02,600 Speaker 2: at work. How are you taking a look at twenty 104 00:05:02,600 --> 00:05:04,200 Speaker 2: twenty four? How are you positioning yourself? 105 00:05:05,160 --> 00:05:08,480 Speaker 7: Well, first, I'm celebrating because thanks to this market, all 106 00:05:08,560 --> 00:05:11,040 Speaker 7: time record high for our fund three hundred and twenty 107 00:05:11,080 --> 00:05:14,120 Speaker 7: seven billion dollars, but I have to tell you there 108 00:05:14,120 --> 00:05:17,320 Speaker 7: are certainly dark clouds on the horizon. I think the 109 00:05:17,360 --> 00:05:20,720 Speaker 7: FED has pulled off the soft landing, but we still 110 00:05:20,720 --> 00:05:22,599 Speaker 7: have a lot of risks that we have to get through. 111 00:05:22,680 --> 00:05:26,400 Speaker 7: And you know, hope does triumph over experience. I know 112 00:05:27,600 --> 00:05:30,240 Speaker 7: Larry Summers likes to say that it shouldn't, but sometimes 113 00:05:30,240 --> 00:05:32,800 Speaker 7: it does. And right now I'm hopeful. I think the 114 00:05:32,839 --> 00:05:35,240 Speaker 7: Fed's pulled it off. But when you stepped back and 115 00:05:35,240 --> 00:05:38,040 Speaker 7: look at this market, we've now created a double top 116 00:05:38,080 --> 00:05:40,279 Speaker 7: in the S and P five hundred in December of 117 00:05:40,360 --> 00:05:44,360 Speaker 7: twenty one and now in twenty three. As a as 118 00:05:44,400 --> 00:05:46,680 Speaker 7: an old time technician, that makes me a bit worry. 119 00:05:47,400 --> 00:05:49,520 Speaker 7: That doesn't mean we should have a bear market, but 120 00:05:49,640 --> 00:05:53,800 Speaker 7: I think the president's election cycle we know in history 121 00:05:53,960 --> 00:05:57,160 Speaker 7: is at best a low single digit return in the 122 00:05:57,240 --> 00:06:02,000 Speaker 7: SMP five hundred, I would expect, like the elves, barely 123 00:06:02,120 --> 00:06:05,920 Speaker 7: positive to some of our forecasts that we've looked at 124 00:06:05,960 --> 00:06:10,040 Speaker 7: are slightly negative. So right now people's expectations are certainly 125 00:06:10,120 --> 00:06:13,760 Speaker 7: damped down. In the next year, I hope the public 126 00:06:13,960 --> 00:06:17,760 Speaker 7: and the private markets finally opened back up, because private 127 00:06:17,800 --> 00:06:21,039 Speaker 7: equity and real estate really had a struggle last year. 128 00:06:21,200 --> 00:06:24,560 Speaker 7: The markets were almost frozen. We're starting to see a 129 00:06:24,600 --> 00:06:30,200 Speaker 7: few transactions, but certainly in the commercial office market values 130 00:06:30,320 --> 00:06:34,240 Speaker 7: are going to reprice down dramatically. And then in private 131 00:06:34,240 --> 00:06:37,159 Speaker 7: equity we're starting to see merger Monday here in December, 132 00:06:37,200 --> 00:06:40,000 Speaker 7: every Monday, a few announcements. That's a good sign that 133 00:06:40,040 --> 00:06:40,920 Speaker 7: maybe that market. 134 00:06:40,720 --> 00:06:41,560 Speaker 8: Will open back up. 135 00:06:41,800 --> 00:06:43,120 Speaker 2: So Chris, I'm going to let you get back to 136 00:06:43,120 --> 00:06:45,160 Speaker 2: your celebrations. Really great to have you with us once again. 137 00:06:45,200 --> 00:06:47,560 Speaker 2: Happy New Year, my friend. Great to have you with us. 138 00:06:48,240 --> 00:06:50,640 Speaker 7: Happy New Year and toil walls three week. Thank you 139 00:06:50,720 --> 00:06:52,040 Speaker 7: very much. David, good to see you. 140 00:06:52,160 --> 00:06:55,760 Speaker 2: That's Chris Allen of Calsh's. Year ago, China was emerging 141 00:06:55,760 --> 00:06:58,600 Speaker 2: from its COVID lockdown and just about everyone expected a 142 00:06:58,600 --> 00:07:01,960 Speaker 2: sharp economic upturn. It didn't quite work out that way. 143 00:07:02,200 --> 00:07:04,080 Speaker 2: To explain what happened and give us a sense of 144 00:07:04,120 --> 00:07:06,400 Speaker 2: what's likely to come in the new year, we welcome 145 00:07:06,440 --> 00:07:08,920 Speaker 2: back now Mary Lovely. She's a senior fellow at the 146 00:07:08,960 --> 00:07:12,120 Speaker 2: Peterson Institute for International Economics. Mary, great to have you 147 00:07:12,160 --> 00:07:15,560 Speaker 2: with you, a true China expert. So give us a sense, 148 00:07:15,600 --> 00:07:18,200 Speaker 2: first of all, what went wrong for China economically in 149 00:07:18,240 --> 00:07:20,240 Speaker 2: twenty twenty three because it didn't. It wasn't as good 150 00:07:20,240 --> 00:07:21,040 Speaker 2: as people expected. 151 00:07:21,920 --> 00:07:24,480 Speaker 4: Well, I mean, in some sense, it had things that 152 00:07:24,520 --> 00:07:26,400 Speaker 4: went wrong and things that went right. I mean what 153 00:07:26,480 --> 00:07:29,440 Speaker 4: went wrong, of course, is that one estimated one point 154 00:07:29,480 --> 00:07:31,640 Speaker 4: four million people died from the quick spread of the 155 00:07:32,400 --> 00:07:34,960 Speaker 4: virus through the economy through the population. 156 00:07:36,200 --> 00:07:37,280 Speaker 7: On the other hand, it. 157 00:07:37,200 --> 00:07:41,360 Speaker 4: Did go through the country at very rapid pace, and 158 00:07:41,600 --> 00:07:44,000 Speaker 4: recovery began before I think many of. 159 00:07:44,000 --> 00:07:45,680 Speaker 7: Us expected that it would. 160 00:07:46,400 --> 00:07:50,760 Speaker 4: The second quarter was particularly tough, high levels of unemployment 161 00:07:51,280 --> 00:07:56,640 Speaker 4: fall and industrial production falling consumption. But then by probably 162 00:07:56,680 --> 00:07:59,440 Speaker 4: by the middle of summer, you know, they had basically 163 00:07:59,520 --> 00:08:03,600 Speaker 4: hit the atom and we're beginning to bounce back. The 164 00:08:03,720 --> 00:08:08,520 Speaker 4: bounce has been significant. They're on track to record about 165 00:08:08,680 --> 00:08:12,160 Speaker 4: five or five point two percent GDP growth for twenty 166 00:08:12,200 --> 00:08:15,560 Speaker 4: twenty three. But a deep sense of malaise, we think 167 00:08:15,640 --> 00:08:19,640 Speaker 4: still lies within the population and within people's expectations for 168 00:08:19,720 --> 00:08:22,880 Speaker 4: the future, and that looks ahead to twenty twenty four. 169 00:08:23,440 --> 00:08:26,320 Speaker 2: Mary, you refer to a general malaise going on. What 170 00:08:26,360 --> 00:08:29,400 Speaker 2: can the government, what can presidentation pin do to address 171 00:08:29,440 --> 00:08:30,080 Speaker 2: that malaise. 172 00:08:31,160 --> 00:08:34,400 Speaker 4: I think one of the main things that private businesses 173 00:08:34,520 --> 00:08:38,200 Speaker 4: want is more clarity on how private businesses are going 174 00:08:38,280 --> 00:08:42,319 Speaker 4: to be regulated and how the push toward economic securitization 175 00:08:43,000 --> 00:08:46,600 Speaker 4: is going to impact their businesses. We saw the rollout 176 00:08:46,760 --> 00:08:50,640 Speaker 4: of the counter espionage rule this year that gave a 177 00:08:50,679 --> 00:08:53,600 Speaker 4: lot of businesses a pause. 178 00:08:54,120 --> 00:08:55,880 Speaker 9: What kind of data. 179 00:08:55,559 --> 00:08:57,240 Speaker 8: Could be transferred into. 180 00:08:57,040 --> 00:09:03,520 Speaker 4: Whom It's very unclear what happens when one does transfer 181 00:09:03,679 --> 00:09:07,080 Speaker 4: data that the government decides x posts should not have 182 00:09:07,160 --> 00:09:11,760 Speaker 4: been transferred. I think the government has tried to clarify this, 183 00:09:11,960 --> 00:09:15,600 Speaker 4: but part of the way Chinese legal system works is 184 00:09:15,640 --> 00:09:19,120 Speaker 4: to allow for a significant amount of interpretation. 185 00:09:19,520 --> 00:09:21,800 Speaker 8: And that means, from the point of view. 186 00:09:21,640 --> 00:09:29,240 Speaker 4: Of businesses, vulnerabilities ambiguities that raise uncertainty for them that 187 00:09:29,600 --> 00:09:30,800 Speaker 4: it has a chilling effect. 188 00:09:31,280 --> 00:09:34,240 Speaker 2: What about the debt situation? We hear a lot about 189 00:09:34,240 --> 00:09:38,160 Speaker 2: the debt born, particularly by local governments, and there's some 190 00:09:38,240 --> 00:09:40,640 Speaker 2: move for the national government to take over some of 191 00:09:40,640 --> 00:09:42,680 Speaker 2: the debt design understand it, but there's a lot of 192 00:09:42,720 --> 00:09:47,520 Speaker 2: debt overhanging in China. Is that limit presidencies options in 193 00:09:47,600 --> 00:09:49,959 Speaker 2: dealing with the Malays well, the. 194 00:09:49,760 --> 00:09:52,840 Speaker 4: Central government has taken the unusual step of issuing bonds 195 00:09:52,880 --> 00:09:55,680 Speaker 4: and then providing them to the local governments to spend 196 00:09:56,800 --> 00:10:00,920 Speaker 4: so I think the central government recognizes that, you know, 197 00:10:00,960 --> 00:10:03,079 Speaker 4: local government finances. 198 00:10:02,480 --> 00:10:03,600 Speaker 9: Are quite fragile. 199 00:10:04,400 --> 00:10:10,320 Speaker 4: They have moved also to ask state banks to provide 200 00:10:10,400 --> 00:10:17,240 Speaker 4: more credit for property developers, particularly to complete units which 201 00:10:17,280 --> 00:10:18,559 Speaker 4: have already been purchased. 202 00:10:19,760 --> 00:10:23,000 Speaker 9: So what this does is it. 203 00:10:22,559 --> 00:10:26,040 Speaker 4: Gives new cash to companies which may be unable to 204 00:10:26,080 --> 00:10:30,200 Speaker 4: pay old loans, and it really begins to absorb that 205 00:10:30,360 --> 00:10:32,640 Speaker 4: debt within the state banking system. 206 00:10:32,640 --> 00:10:34,320 Speaker 2: Mary, thank you so very much, really great to have 207 00:10:34,360 --> 00:10:37,160 Speaker 2: you with us. That is Mary Lovely, senior fellow at 208 00:10:37,160 --> 00:10:41,400 Speaker 2: the Peterson Institute. And this is Walter's Week on Bloomberg. 209 00:10:44,880 --> 00:10:49,120 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 210 00:10:49,240 --> 00:10:50,160 Speaker 1: Bloomberg Radio. 211 00:10:56,880 --> 00:10:59,040 Speaker 2: This is Wall Street Week. I'm David Weston, and take 212 00:10:59,120 --> 00:11:01,720 Speaker 2: us through this year that is now ending twenty twenty 213 00:11:01,760 --> 00:11:03,640 Speaker 2: three and look forward to twenty twenty four. We welcome 214 00:11:03,640 --> 00:11:06,160 Speaker 2: to our very special contributor here on wal Street. He's 215 00:11:06,240 --> 00:11:08,560 Speaker 2: Larry Summers of Harvard. So Larry, thanks so much for 216 00:11:08,600 --> 00:11:10,040 Speaker 2: being with us at the very end of the year. 217 00:11:10,120 --> 00:11:13,480 Speaker 2: Here looking back at twenty twenty three, there was an 218 00:11:13,559 --> 00:11:16,520 Speaker 2: issue about inflation, about how we can get on control 219 00:11:16,559 --> 00:11:19,680 Speaker 2: what caused it, and team Transitory led perhaps by Paul 220 00:11:19,760 --> 00:11:22,000 Speaker 2: Krugman said it really was a supply chain thing. You 221 00:11:22,040 --> 00:11:25,520 Speaker 2: would go away. You were more concerned about exactly the 222 00:11:25,600 --> 00:11:28,640 Speaker 2: demand side and what the FED needed to do. Looking 223 00:11:28,720 --> 00:11:30,720 Speaker 2: back on it, which was right, what was wrong? 224 00:11:31,720 --> 00:11:33,000 Speaker 9: I think there's some of both. 225 00:11:33,960 --> 00:11:37,640 Speaker 3: Look to start with, we basically got an outcome that 226 00:11:37,800 --> 00:11:44,000 Speaker 3: was closer to Team Transittories prediction. Inflation came down with policy. 227 00:11:44,720 --> 00:11:48,800 Speaker 3: That is what their opponents were insisting on interest rates, 228 00:11:48,840 --> 00:11:52,839 Speaker 3: far beyond what they were recommending, far beyond what the 229 00:11:52,880 --> 00:11:57,360 Speaker 3: FED was predicting as of almost any date in the 230 00:11:57,440 --> 00:11:58,280 Speaker 3: recent past. 231 00:11:58,880 --> 00:12:00,960 Speaker 9: So the record's a bit ambiguous. 232 00:12:01,640 --> 00:12:07,400 Speaker 3: Yes, absolutely, there have been important supply elements. I have 233 00:12:07,559 --> 00:12:11,199 Speaker 3: always stressed that we never were an eight percent or 234 00:12:11,240 --> 00:12:15,839 Speaker 3: a seven percent inflation country that because of bottlenecks, a 235 00:12:15,920 --> 00:12:20,480 Speaker 3: variety of prices went up, adding to inflation, and they 236 00:12:20,520 --> 00:12:26,000 Speaker 3: would then come down subtracting from inflation. I'm not sure 237 00:12:26,040 --> 00:12:30,160 Speaker 3: we're really a two percent target inflation country in any 238 00:12:30,280 --> 00:12:33,880 Speaker 3: durable sense. I look, for example, at the five point 239 00:12:33,960 --> 00:12:36,559 Speaker 3: two percent wage increase the federal. 240 00:12:36,200 --> 00:12:39,480 Speaker 9: Government just gave at strike activity. 241 00:12:39,600 --> 00:12:42,520 Speaker 3: It's more than it's been in. 242 00:12:42,400 --> 00:12:46,720 Speaker 9: A decade, at still tight labor. 243 00:12:46,520 --> 00:12:51,840 Speaker 3: Markets, at potential geopolitical risks in commodity markets, at the 244 00:12:51,880 --> 00:12:57,000 Speaker 3: fact that house prices have really started to turn back up, 245 00:12:57,120 --> 00:12:58,640 Speaker 3: and I'm far. 246 00:12:58,400 --> 00:13:02,160 Speaker 9: From sure where we're going to go on inflation. 247 00:13:02,520 --> 00:13:07,480 Speaker 3: So to declare that proverbial soft landing to have taken 248 00:13:07,600 --> 00:13:09,800 Speaker 3: place seems. 249 00:13:09,480 --> 00:13:12,480 Speaker 9: To me to be premature. 250 00:13:13,160 --> 00:13:17,560 Speaker 3: So I think we're still in an ambiguous situation. I've 251 00:13:17,600 --> 00:13:21,800 Speaker 3: been saying, David on your show for close to a 252 00:13:21,920 --> 00:13:26,960 Speaker 3: year now that there are three possibilities that the economy. 253 00:13:26,800 --> 00:13:30,199 Speaker 9: Turns down quickly, that. 254 00:13:30,240 --> 00:13:34,920 Speaker 3: The economy achieves the proverbial soft landing, and that in 255 00:13:34,960 --> 00:13:38,800 Speaker 3: a sense, we don't ever achieve a secure landing, and 256 00:13:38,880 --> 00:13:44,640 Speaker 3: inflation never really gets down to target and even reaccelerates. Obviously, 257 00:13:44,679 --> 00:13:48,760 Speaker 3: we didn't see the hard landing in twenty twenty three. 258 00:13:49,320 --> 00:13:52,160 Speaker 3: I was never as sure as many people were that 259 00:13:52,160 --> 00:13:55,760 Speaker 3: that would come, because, as you also know, I've been 260 00:13:55,880 --> 00:14:00,920 Speaker 3: arguing that neutral interest rates have gone up, so policies 261 00:14:01,000 --> 00:14:05,120 Speaker 3: not as contractionary as many people expect, and that the 262 00:14:05,280 --> 00:14:09,880 Speaker 3: impact of interest rates are lower than many people have expected. 263 00:14:09,960 --> 00:14:14,040 Speaker 3: So I'm not terribly surprised that we haven't seen a 264 00:14:14,120 --> 00:14:20,120 Speaker 3: recession in twenty twenty three, and I think there are 265 00:14:20,840 --> 00:14:23,600 Speaker 3: risks looking at some of the credit figures for the 266 00:14:23,640 --> 00:14:28,680 Speaker 3: next While we may achieve that soft landing, I'd certainly 267 00:14:28,720 --> 00:14:32,560 Speaker 3: say it looks better and more likely that it did 268 00:14:32,800 --> 00:14:36,600 Speaker 3: six or eight months ago. I always said that soft 269 00:14:36,720 --> 00:14:40,760 Speaker 3: landings were the triumph of hope over experience, But occasionally 270 00:14:41,400 --> 00:14:45,280 Speaker 3: hope may triumph over experience. And I think there's still 271 00:14:45,280 --> 00:14:50,560 Speaker 3: a risk that the market is probably underestimating that we're 272 00:14:50,600 --> 00:14:53,440 Speaker 3: not going to quite make as much progress on inflation. 273 00:14:54,120 --> 00:14:56,040 Speaker 2: So Lariy, we look at these questions not only because 274 00:14:56,040 --> 00:14:58,640 Speaker 2: they're interesting historically, but to give us some direction for 275 00:14:58,680 --> 00:15:01,040 Speaker 2: the future where we should be had. And so as 276 00:15:01,080 --> 00:15:03,040 Speaker 2: you look at the risk as you describe them, what 277 00:15:03,080 --> 00:15:05,160 Speaker 2: about the symmetry of them, Because some people are concerned 278 00:15:05,160 --> 00:15:06,800 Speaker 2: that we have a bigger risk of a recession if 279 00:15:06,800 --> 00:15:10,200 Speaker 2: we keep type policy than we do of inflation running away. 280 00:15:10,400 --> 00:15:12,520 Speaker 2: Where do you put the balance of the risk between 281 00:15:12,800 --> 00:15:17,160 Speaker 2: recession by overly restrictive policy as opposed to letting inflation 282 00:15:17,200 --> 00:15:18,000 Speaker 2: get ahead of us. 283 00:15:20,440 --> 00:15:22,520 Speaker 9: I think they're both very real risks. 284 00:15:22,640 --> 00:15:26,119 Speaker 3: I'm a little surprised by the view that puts primary 285 00:15:26,160 --> 00:15:32,200 Speaker 3: emphasis on the recession risk, given what's happened to financial 286 00:15:32,240 --> 00:15:37,200 Speaker 3: conditions in the last two months, the stock market's taken 287 00:15:37,240 --> 00:15:42,360 Speaker 3: off again. House prices are now rising at a six 288 00:15:42,480 --> 00:15:49,360 Speaker 3: or seven percent annual rate, long term interest rates and 289 00:15:49,480 --> 00:15:55,040 Speaker 3: with them mortgage rates have come down substantially. I think 290 00:15:55,120 --> 00:15:59,880 Speaker 3: that in a way we've already seen a substantial easy 291 00:16:00,120 --> 00:16:04,000 Speaker 3: the financial conditions, and so I think we'd better be 292 00:16:04,080 --> 00:16:11,880 Speaker 3: a bit careful with respect to the inflation prospect, and 293 00:16:11,920 --> 00:16:16,560 Speaker 3: that continues to be a source of concern for me. 294 00:16:17,080 --> 00:16:19,760 Speaker 2: And finally, Larry, twenty twenty three was a year of 295 00:16:19,800 --> 00:16:23,480 Speaker 2: geopolitical strife. We started it with the war in Ukraine continuing. 296 00:16:23,720 --> 00:16:26,680 Speaker 2: We added then the attack of Hamas on Israel and 297 00:16:26,720 --> 00:16:29,080 Speaker 2: the difficulties that's raised in the Middle East for so 298 00:16:29,160 --> 00:16:32,000 Speaker 2: many people. We have continued tension with China. As you 299 00:16:32,040 --> 00:16:35,480 Speaker 2: look at the macroeconomics of twenty twenty four, how did 300 00:16:35,520 --> 00:16:36,760 Speaker 2: geopolitics fit in. 301 00:16:40,200 --> 00:16:45,560 Speaker 9: The post Cold War? Holiday from history is over. 302 00:16:46,720 --> 00:16:51,960 Speaker 3: The world is once again a very dangerous place, with 303 00:16:52,080 --> 00:16:59,680 Speaker 3: the prospect of war between major powers. The way and 304 00:16:59,720 --> 00:17:06,280 Speaker 3: which which the United States has conceived itself in terms 305 00:17:06,359 --> 00:17:09,560 Speaker 3: of national security. 306 00:17:09,160 --> 00:17:11,160 Speaker 9: Is no longer viable. 307 00:17:11,960 --> 00:17:16,680 Speaker 3: We are going to have to invest substantially more in 308 00:17:16,800 --> 00:17:24,720 Speaker 3: all aspects of national security that ranges from increased defense 309 00:17:24,800 --> 00:17:32,640 Speaker 3: spending well above current projections, to thinking about national security 310 00:17:32,680 --> 00:17:39,000 Speaker 3: issues as we think about our educational system as we 311 00:17:39,119 --> 00:17:50,440 Speaker 3: did after Sputnik, to thinking about our investment in connections 312 00:17:50,480 --> 00:17:53,280 Speaker 3: all over the world. 313 00:17:53,840 --> 00:17:55,399 Speaker 2: Larry, thank you so much for being with us here 314 00:17:55,400 --> 00:17:56,520 Speaker 2: at the end of the year, but thank you for 315 00:17:56,560 --> 00:17:59,119 Speaker 2: all your contributions on Wall Street throughout the year. That 316 00:17:59,240 --> 00:18:01,640 Speaker 2: is Larry Summers, our special contributor. He is, of course 317 00:18:01,680 --> 00:18:06,480 Speaker 2: from Harvard. Coming up the Hamas attack on Israel and 318 00:18:06,520 --> 00:18:09,480 Speaker 2: October led to dramatic developments in the Middle East that 319 00:18:09,640 --> 00:18:12,840 Speaker 2: spilled over on the college campuses in the United States. 320 00:18:13,080 --> 00:18:15,159 Speaker 2: We'll talk with Scott Bock, the former chair of the 321 00:18:15,280 --> 00:18:18,440 Speaker 2: University of Pennsylvania's Board of Trustees, about what happened at 322 00:18:18,440 --> 00:18:20,280 Speaker 2: PENS and what we should learn from it. 323 00:18:20,720 --> 00:18:24,320 Speaker 5: And I don't think trustee should overreact in this situation 324 00:18:24,400 --> 00:18:26,720 Speaker 5: of what could be a short term crisis. 325 00:18:27,880 --> 00:18:30,119 Speaker 2: That's next on Wall Street Week on Bloomberg. 326 00:18:32,080 --> 00:18:36,320 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 327 00:18:36,400 --> 00:18:37,359 Speaker 1: Bloomberg Radio. 328 00:18:44,200 --> 00:18:47,719 Speaker 2: Unrest on college campuses in the aftermath of the Hamas 329 00:18:47,760 --> 00:18:51,320 Speaker 2: attacks on Israel, American University has been thrust into a 330 00:18:51,440 --> 00:18:55,960 Speaker 2: national fight over lines between healthy debate and destructive invective. 331 00:18:56,560 --> 00:19:00,520 Speaker 2: We've had major donors condemned administrations for tolerating co where 332 00:19:00,560 --> 00:19:02,879 Speaker 2: some students no longer feel safe. 333 00:19:03,160 --> 00:19:06,879 Speaker 10: The underlying culture that permitted this to happen is just 334 00:19:06,920 --> 00:19:09,600 Speaker 10: so strong, and until there is a moment of self 335 00:19:09,600 --> 00:19:12,720 Speaker 10: reflection where we're not dealing with just anti Semitism, we're 336 00:19:12,760 --> 00:19:15,360 Speaker 10: dealing with the culture that allowed this to happen, there 337 00:19:15,400 --> 00:19:17,359 Speaker 10: really is going to be no progress, and to date 338 00:19:17,760 --> 00:19:19,919 Speaker 10: there's been no progress. There's really not a question of 339 00:19:19,960 --> 00:19:23,679 Speaker 10: free speech. This is a question of favored speech and 340 00:19:23,720 --> 00:19:28,199 Speaker 10: disfavored speech, and an institutional psychology and an institutional culture. 341 00:19:28,400 --> 00:19:31,639 Speaker 2: We've had college presidents called before Congress and asked to 342 00:19:31,680 --> 00:19:33,880 Speaker 2: condemn calls for genocide. 343 00:19:34,119 --> 00:19:38,120 Speaker 11: I am asking specifically calling for the genocide of Jews? 344 00:19:38,720 --> 00:19:41,320 Speaker 11: Does that constitute bullying? Harassment? 345 00:19:41,920 --> 00:19:45,200 Speaker 12: If it is directed and severer pervasive, it is harassment. 346 00:19:45,720 --> 00:19:46,800 Speaker 11: So the answer is yes. 347 00:19:47,720 --> 00:19:48,160 Speaker 2: It is a. 348 00:19:48,119 --> 00:19:50,720 Speaker 13: Context dependent decision, Congresswoman, It's. 349 00:19:50,560 --> 00:19:54,040 Speaker 11: A context dependent decision. That's your testimony today. Calling for 350 00:19:54,080 --> 00:19:57,719 Speaker 11: the genocide of Jews is depending upon the context, that 351 00:19:57,840 --> 00:19:59,320 Speaker 11: is not bullying or harassment. 352 00:20:00,160 --> 00:20:02,840 Speaker 2: We've had former college presidents insists that there's been a 353 00:20:02,880 --> 00:20:06,600 Speaker 2: basic breakdown in who's responsible for what's going on in 354 00:20:06,640 --> 00:20:08,280 Speaker 2: our academic communities. 355 00:20:08,520 --> 00:20:14,119 Speaker 14: I think for some years now they have been substantially 356 00:20:14,720 --> 00:20:21,600 Speaker 14: a wall, a wall as the climate of hypersensitivity has developed, 357 00:20:22,560 --> 00:20:27,679 Speaker 14: a wall as the relationship between the university and external 358 00:20:27,720 --> 00:20:31,600 Speaker 14: communities has broken. 359 00:20:31,200 --> 00:20:34,240 Speaker 2: Down, leaving us to yearn for a world where we 360 00:20:34,240 --> 00:20:39,360 Speaker 2: can disagree, even strongly disagree, without deterring others from speaking out. 361 00:20:39,840 --> 00:20:42,159 Speaker 15: I suspect something will happen, but I don't know that 362 00:20:42,280 --> 00:20:45,000 Speaker 15: Congress will do anything. I think the university boards are 363 00:20:45,040 --> 00:20:47,440 Speaker 15: probably going to be more sensitive to these issues. There 364 00:20:47,520 --> 00:20:49,480 Speaker 15: is going to be more security for certain students there 365 00:20:49,520 --> 00:20:51,240 Speaker 15: for sure, But I think there'll be more of a 366 00:20:51,560 --> 00:20:54,280 Speaker 15: move towards a University of Cago approach where more people 367 00:20:54,320 --> 00:20:56,719 Speaker 15: are allowed to say what they think without feeling that 368 00:20:56,760 --> 00:21:03,520 Speaker 15: if they say something that's unpopular they'll be criticized or harmful, and. 369 00:21:03,520 --> 00:21:05,520 Speaker 2: To take us through what some of these speechs look 370 00:21:05,560 --> 00:21:07,960 Speaker 2: like from the inside. Welcome now, Scott back. He is 371 00:21:08,080 --> 00:21:11,280 Speaker 2: chairman of Green Hill. Until recently he was chair of 372 00:21:11,320 --> 00:21:14,439 Speaker 2: the Board of Trustees of the University of Pennsylvania. Welcome 373 00:21:14,440 --> 00:21:16,639 Speaker 2: to Wall Street. WEEG really appreciate you being here, Scott, 374 00:21:16,960 --> 00:21:18,400 Speaker 2: First of all, give us a sense from the insight, 375 00:21:18,440 --> 00:21:20,000 Speaker 2: because yourself from the inside. What do you think is 376 00:21:20,080 --> 00:21:22,719 Speaker 2: going on and what should we learn from the experience? 377 00:21:24,040 --> 00:21:25,679 Speaker 5: Well, look, I think we've had a bit of a 378 00:21:25,720 --> 00:21:29,000 Speaker 5: crisis on some of the leading elite universities in America 379 00:21:29,160 --> 00:21:31,479 Speaker 5: in the last few months, and we haven't had one 380 00:21:31,520 --> 00:21:33,840 Speaker 5: of a long time. It's really been a long period 381 00:21:33,880 --> 00:21:37,360 Speaker 5: of quiet and progress at those schools. And so there 382 00:21:37,359 --> 00:21:39,200 Speaker 5: are a number of questions that have been raised and 383 00:21:39,240 --> 00:21:39,960 Speaker 5: haven't been raised. 384 00:21:39,840 --> 00:21:40,480 Speaker 8: In quite a while. 385 00:21:41,480 --> 00:21:44,399 Speaker 2: And what about the response to people a little rusty? 386 00:21:44,440 --> 00:21:46,440 Speaker 2: I mean, I went to school back in the seventies 387 00:21:46,440 --> 00:21:49,000 Speaker 2: when there was a lot of this going on. In fact, 388 00:21:49,119 --> 00:21:52,120 Speaker 2: the administrations were used to dealing with demonstrations. Is part 389 00:21:52,119 --> 00:21:54,520 Speaker 2: of the issues that, in fact the administrations haven't been 390 00:21:54,560 --> 00:21:55,879 Speaker 2: used to this day is to have to get the 391 00:21:55,920 --> 00:21:56,760 Speaker 2: rule book back out. 392 00:21:58,000 --> 00:21:59,200 Speaker 8: I think that's exactly right. 393 00:21:59,240 --> 00:22:02,320 Speaker 5: And frankly, trust these having given governance a thought in 394 00:22:02,359 --> 00:22:03,920 Speaker 5: a very long period of time, you don't tend to 395 00:22:03,960 --> 00:22:06,280 Speaker 5: think about governance where everything's going great. But when you 396 00:22:06,359 --> 00:22:09,880 Speaker 5: have something that creates a controversy, suddenly people look back 397 00:22:09,920 --> 00:22:12,040 Speaker 5: at that. And I think a lot of trustees. You know, 398 00:22:12,160 --> 00:22:15,120 Speaker 5: maybe have forgotten that the way universities are governed, that's 399 00:22:15,160 --> 00:22:18,959 Speaker 5: a combination of trustees, a president, and the administration, and 400 00:22:19,000 --> 00:22:20,920 Speaker 5: also the faculty play an important role. 401 00:22:21,440 --> 00:22:24,359 Speaker 2: Well, we'll talk about that for about governance specifically, because 402 00:22:24,400 --> 00:22:27,160 Speaker 2: we've had for example at pen but also Harvard other places. 403 00:22:27,520 --> 00:22:30,679 Speaker 2: Donors really speak out very forcefully, even make demands, as 404 00:22:30,720 --> 00:22:33,399 Speaker 2: they would put it, about changes we made back when 405 00:22:33,440 --> 00:22:35,160 Speaker 2: I was practicing law. I know you did as well. 406 00:22:35,160 --> 00:22:37,200 Speaker 2: We talk about a bad volleyball team. Wherever he goes 407 00:22:37,200 --> 00:22:40,119 Speaker 2: to the same position. What are the respective positions if 408 00:22:40,119 --> 00:22:44,440 Speaker 2: it's done properly, of the trustees, the president, admistration, the faculty, 409 00:22:44,520 --> 00:22:47,359 Speaker 2: and for that man are donors. What should those positions be? 410 00:22:49,040 --> 00:22:51,560 Speaker 5: Look, I think to start with donors, I think donors 411 00:22:51,600 --> 00:22:54,920 Speaker 5: are absolutely free to give to whatever organizations they want 412 00:22:55,040 --> 00:22:57,040 Speaker 5: or not to, and to withhold for any reason they 413 00:22:57,080 --> 00:22:57,480 Speaker 5: choose to. 414 00:22:57,600 --> 00:22:59,520 Speaker 8: But they're not shareholders, so I don't think. 415 00:22:59,320 --> 00:23:01,840 Speaker 5: They should have a particularly loud voice in how a 416 00:23:01,920 --> 00:23:04,360 Speaker 5: university is run. There is a governance system that set 417 00:23:04,400 --> 00:23:07,600 Speaker 5: in place for decades, if not centuries in many cases, 418 00:23:07,640 --> 00:23:12,080 Speaker 5: and that involves really trustees, the administration of the faculty, Historically, 419 00:23:12,080 --> 00:23:15,919 Speaker 5: trustees really focused on the financial viability of the organization. 420 00:23:16,080 --> 00:23:19,000 Speaker 5: They did the budget, they did review the audit of 421 00:23:19,040 --> 00:23:22,160 Speaker 5: the financials, they invested the endowment. They made sure that 422 00:23:22,200 --> 00:23:24,840 Speaker 5: the entity was going to be viable for the long term, 423 00:23:24,840 --> 00:23:27,680 Speaker 5: because these are meant to be perpetual institutions. Of course, 424 00:23:28,480 --> 00:23:32,199 Speaker 5: the president in the administration really run the business of 425 00:23:32,240 --> 00:23:35,159 Speaker 5: the university day today, and along with the faculty they 426 00:23:35,240 --> 00:23:37,920 Speaker 5: run all the academic affairs. And it's really been very 427 00:23:38,000 --> 00:23:41,240 Speaker 5: rare in my experience, really almost two decades on a 428 00:23:41,280 --> 00:23:44,400 Speaker 5: board of the university where the trustees get it all 429 00:23:44,440 --> 00:23:46,399 Speaker 5: involved in academics. So I think they need to be 430 00:23:46,440 --> 00:23:49,399 Speaker 5: careful about how much they reach into that area, and 431 00:23:49,440 --> 00:23:52,080 Speaker 5: I know faculty are very concerned that they not reach 432 00:23:52,160 --> 00:23:53,320 Speaker 5: too far into that area. 433 00:23:53,480 --> 00:23:56,200 Speaker 2: You mentioned two areas, academics on the one hand, finances 434 00:23:56,240 --> 00:23:58,680 Speaker 2: any other. Obviously, you're a prime example of somebody who's 435 00:23:58,760 --> 00:24:01,720 Speaker 2: really really knowledgeable and finance. It makes sense to have 436 00:24:01,800 --> 00:24:03,920 Speaker 2: you on a board and indeed share of a board. 437 00:24:04,280 --> 00:24:06,280 Speaker 2: There is a third area, though, which I would call 438 00:24:06,359 --> 00:24:09,720 Speaker 2: reputational risk, I mean existential risk for the institution that 439 00:24:09,800 --> 00:24:13,520 Speaker 2: maybe includes both academics and finances. But who should be 440 00:24:13,520 --> 00:24:15,840 Speaker 2: responsible for that, and what sort of people do you 441 00:24:15,960 --> 00:24:18,399 Speaker 2: need at the table making those decisions. 442 00:24:19,600 --> 00:24:22,480 Speaker 5: Well, I think clearly if it's an existential sort of threat, 443 00:24:22,520 --> 00:24:24,240 Speaker 5: I mean, everybody needs to be involved in that. I 444 00:24:24,320 --> 00:24:26,920 Speaker 5: don't think trustees can sort of seize control, nor can 445 00:24:26,960 --> 00:24:29,280 Speaker 5: the president do whatever the president wants to do or 446 00:24:29,280 --> 00:24:32,520 Speaker 5: the faculty take charge either. Probably needs to be everybody 447 00:24:32,560 --> 00:24:35,040 Speaker 5: involved in something like that. But I don't think trustees 448 00:24:35,040 --> 00:24:38,720 Speaker 5: should overreact in the situation of what could be a 449 00:24:38,760 --> 00:24:41,920 Speaker 5: short term crisis and take too much control. And still 450 00:24:41,960 --> 00:24:44,879 Speaker 5: needs to be a collaborative effort, because that is the 451 00:24:44,880 --> 00:24:49,000 Speaker 5: peculiar nature of governance in these institutions. They're not public companies, 452 00:24:49,000 --> 00:24:51,800 Speaker 5: and they really aren't run by public companies historically. 453 00:24:52,080 --> 00:24:54,199 Speaker 2: By the way, there's another player that's got involved here, 454 00:24:54,240 --> 00:24:57,040 Speaker 2: and that's the United States Congress, because the president of 455 00:24:57,080 --> 00:25:00,720 Speaker 2: Pennsylvania as well as Harvard MIT will call before Congress what, 456 00:25:00,840 --> 00:25:04,040 Speaker 2: if anything, is the proper role of the government and 457 00:25:04,119 --> 00:25:07,040 Speaker 2: try to influence the way this is handled on college campuses. 458 00:25:08,400 --> 00:25:10,400 Speaker 5: Well, I think the government has a very big role, 459 00:25:10,400 --> 00:25:12,920 Speaker 5: of course in public universities and a smaller role in 460 00:25:13,000 --> 00:25:14,040 Speaker 5: private universities. 461 00:25:14,080 --> 00:25:15,879 Speaker 8: But you know, governments get involved in. 462 00:25:16,400 --> 00:25:18,520 Speaker 5: A lot of ways in any institution in American life, 463 00:25:18,520 --> 00:25:20,520 Speaker 5: So you have to be ready to deal with congressional 464 00:25:20,600 --> 00:25:23,920 Speaker 5: or other government inquiries when they come. And they they 465 00:25:23,920 --> 00:25:27,000 Speaker 5: do provide financial support to even the most private of 466 00:25:27,119 --> 00:25:29,560 Speaker 5: universities in the sense of research funding and things like that. 467 00:25:29,720 --> 00:25:32,440 Speaker 5: So they're going to have their legitimate questions from time 468 00:25:32,480 --> 00:25:36,360 Speaker 5: to time, and those need to be answered. But fundamentally, 469 00:25:36,520 --> 00:25:39,640 Speaker 5: the institutions we're talking about are private and they're run 470 00:25:39,680 --> 00:25:43,320 Speaker 5: fundamentally by the trustees, the administration of the university and 471 00:25:43,359 --> 00:25:45,520 Speaker 5: the faculty, and that's worked. 472 00:25:45,240 --> 00:25:45,880 Speaker 8: For a long time. 473 00:25:45,920 --> 00:25:47,879 Speaker 5: I mean, I think it's important to remember, you know, 474 00:25:48,000 --> 00:25:50,720 Speaker 5: elite universities in America are the envy of the world. 475 00:25:50,840 --> 00:25:53,920 Speaker 5: I mean, people all over America go to great links 476 00:25:53,920 --> 00:25:56,080 Speaker 5: to get into these places. People from all over the world. 477 00:25:56,119 --> 00:25:58,080 Speaker 5: Do You don't see a lot of you know, kids 478 00:25:58,080 --> 00:26:00,760 Speaker 5: from New York City trying to go to a foreign 479 00:26:00,840 --> 00:26:02,600 Speaker 5: university to get to their degree. You see a lot 480 00:26:02,680 --> 00:26:05,280 Speaker 5: of them in Europe and Asia, Latin America else who 481 00:26:05,280 --> 00:26:07,200 Speaker 5: are trying to come to America to get a degree 482 00:26:07,240 --> 00:26:08,720 Speaker 5: because they see real value to that. 483 00:26:09,320 --> 00:26:11,639 Speaker 2: In the nineteen sixties and into the seventies, part of 484 00:26:11,680 --> 00:26:13,560 Speaker 2: what we saw in college campus was a reflection more 485 00:26:13,600 --> 00:26:15,840 Speaker 2: broadly what was going on in society. I wonder if 486 00:26:15,880 --> 00:26:18,879 Speaker 2: that's part of what we're seeing now, because generally across 487 00:26:18,920 --> 00:26:22,760 Speaker 2: socity there is more polarization. People are more outspoken, they're 488 00:26:22,800 --> 00:26:25,800 Speaker 2: more actually of course with one another in the nature 489 00:26:25,800 --> 00:26:29,840 Speaker 2: of the discourse. And if that's right, what can campuses do, 490 00:26:29,920 --> 00:26:32,359 Speaker 2: what can colleges do maybe to help us more broad 491 00:26:32,400 --> 00:26:34,280 Speaker 2: in society deal with some of these issues. 492 00:26:35,560 --> 00:26:37,560 Speaker 8: Look, I think that's a major factor here. 493 00:26:37,600 --> 00:26:39,600 Speaker 5: There we are in a more divide at society, and 494 00:26:39,960 --> 00:26:42,240 Speaker 5: the divisions tend to be quite deep, and people tend 495 00:26:42,240 --> 00:26:44,040 Speaker 5: to see things in a black or white way. There's 496 00:26:44,080 --> 00:26:46,679 Speaker 5: a lot of the voices you hear are on the 497 00:26:46,720 --> 00:26:50,000 Speaker 5: extreme right. You're the extreme right, the extreme lap. I 498 00:26:50,040 --> 00:26:52,119 Speaker 5: do think it's important, and I've tried to convey in 499 00:26:52,200 --> 00:26:54,560 Speaker 5: some of the comments I've made in recent days and 500 00:26:54,680 --> 00:26:57,679 Speaker 5: weeks that you know, what you see in social media, 501 00:26:57,760 --> 00:27:00,199 Speaker 5: what you see maybe in a newspaper quote, what you 502 00:27:00,240 --> 00:27:03,040 Speaker 5: see in a clip on television is a very small 503 00:27:03,080 --> 00:27:05,600 Speaker 5: part of what actually happens on campus. I mean, as 504 00:27:05,680 --> 00:27:08,439 Speaker 5: with anything else in life, the noisiest people get the 505 00:27:08,480 --> 00:27:09,160 Speaker 5: most attention. 506 00:27:09,600 --> 00:27:12,240 Speaker 2: Why do you step down because you could still contribute 507 00:27:12,280 --> 00:27:13,760 Speaker 2: to the solution, could you not? 508 00:27:14,280 --> 00:27:15,280 Speaker 9: I could certainly. 509 00:27:15,359 --> 00:27:17,720 Speaker 5: I mean, I felt like our board got particularly divided 510 00:27:17,720 --> 00:27:20,000 Speaker 5: at one point, and I felt like, clearly there is 511 00:27:20,040 --> 00:27:21,879 Speaker 5: a debate, and it's not just a pend, it's a 512 00:27:21,920 --> 00:27:25,600 Speaker 5: number of schools across America about the role of trustees, 513 00:27:25,640 --> 00:27:28,399 Speaker 5: faculty and administration and managing universities. I think that's a 514 00:27:28,480 --> 00:27:31,040 Speaker 5: very important debate, and frankly, I felt like I could 515 00:27:31,080 --> 00:27:33,920 Speaker 5: contribute more to that debate from the outside than the inside. 516 00:27:34,000 --> 00:27:36,120 Speaker 5: You know, if you're the chair of an institution that has, 517 00:27:36,320 --> 00:27:38,720 Speaker 5: in our case, almost fifty trustees, you have to speak 518 00:27:38,760 --> 00:27:39,600 Speaker 5: for that whole group. 519 00:27:39,680 --> 00:27:40,080 Speaker 9: You can't. 520 00:27:40,200 --> 00:27:41,920 Speaker 5: You have to be very very careful what you say 521 00:27:41,920 --> 00:27:44,359 Speaker 5: because you're speaking for the whole entity, a whole large 522 00:27:44,359 --> 00:27:47,000 Speaker 5: group of trustees. If you're on the outside, you can 523 00:27:47,000 --> 00:27:49,840 Speaker 5: speak more freely. And I think I have contributed, and 524 00:27:49,840 --> 00:27:53,560 Speaker 5: hopefully even these comments here will help people understand that 525 00:27:53,080 --> 00:27:54,000 Speaker 5: there's not. 526 00:27:54,000 --> 00:27:55,000 Speaker 8: A huge crisis. 527 00:27:55,040 --> 00:27:58,320 Speaker 5: It's a small percent, very very small percent of the 528 00:27:58,320 --> 00:28:00,480 Speaker 5: students that are doing things that would be troubling for 529 00:28:00,560 --> 00:28:03,440 Speaker 5: most people. Yes, there are things you can do about that, 530 00:28:03,680 --> 00:28:05,760 Speaker 5: but we shouldn't fundamentally tear. 531 00:28:05,600 --> 00:28:08,240 Speaker 8: Up a governance model that's worked for a very, very. 532 00:28:08,119 --> 00:28:10,760 Speaker 5: Long time and made our universities the envy of the 533 00:28:10,760 --> 00:28:13,200 Speaker 5: world because of a very short term crisis. 534 00:28:13,440 --> 00:28:15,920 Speaker 2: Scott, you certainly have helped me a lot understand from 535 00:28:15,920 --> 00:28:18,280 Speaker 2: a really useful perspective what's going on. Thank you so 536 00:28:18,359 --> 00:28:23,320 Speaker 2: much to Scott Bach. He is chairman of Greenhill. Coming up, 537 00:28:23,400 --> 00:28:28,760 Speaker 2: does crime have its own internal rate of return? That's 538 00:28:28,840 --> 00:28:30,960 Speaker 2: next on Wall Street Week on Bloomberg. 539 00:28:32,200 --> 00:28:36,360 Speaker 1: This is Bloomberg Well Street Week with David Weston from 540 00:28:36,520 --> 00:28:37,480 Speaker 1: Bloomberg Radio. 541 00:28:44,240 --> 00:28:46,719 Speaker 2: This is Wall Street Week. I'm David Weston. US markets 542 00:28:46,720 --> 00:28:49,200 Speaker 2: are ending up the year on an up note, but 543 00:28:49,200 --> 00:28:51,000 Speaker 2: there are at least some economists who are seeing some 544 00:28:51,080 --> 00:28:54,440 Speaker 2: headwinds for the global economy overall. For her views on 545 00:28:54,560 --> 00:28:57,000 Speaker 2: the economy in twenty twenty three and what we're expecting 546 00:28:57,000 --> 00:28:59,760 Speaker 2: in twenty twenty four. Welcome back now, Jennis Everly, she's 547 00:28:59,760 --> 00:29:03,160 Speaker 2: preferred of finance at the Northwestern Kellog School. Professor. Thanks 548 00:29:03,200 --> 00:29:05,360 Speaker 2: so much for being back with us on Wall Street. 549 00:29:05,400 --> 00:29:06,360 Speaker 2: We're good to have you here. 550 00:29:06,440 --> 00:29:08,120 Speaker 12: It's my pleasure. It's good to see you. 551 00:29:08,320 --> 00:29:09,840 Speaker 2: We spent a lot of twenty trees who it felt 552 00:29:09,880 --> 00:29:12,920 Speaker 2: like fighting against inflation in the United States, but more broadly, 553 00:29:13,280 --> 00:29:15,120 Speaker 2: have we largely put that behind us? Do you think 554 00:29:15,120 --> 00:29:16,320 Speaker 2: as we're going to twenty twenty four. 555 00:29:16,960 --> 00:29:22,840 Speaker 6: When we last spoke, we noted that that in some cases, 556 00:29:23,680 --> 00:29:27,000 Speaker 6: the past is not a great guide to the present, 557 00:29:27,320 --> 00:29:28,600 Speaker 6: and the last. 558 00:29:28,320 --> 00:29:33,040 Speaker 12: Few years have really been outside the data that we're 559 00:29:33,120 --> 00:29:37,160 Speaker 12: used to seeing, especially in the in recent history over 560 00:29:37,520 --> 00:29:40,920 Speaker 12: the post tour period, and twenty twenty three is a 561 00:29:40,960 --> 00:29:43,760 Speaker 12: great example of that history was not a good guide 562 00:29:43,800 --> 00:29:47,960 Speaker 12: to twenty twenty three. Some things really were different this 563 00:29:48,120 --> 00:29:48,719 Speaker 12: time around. 564 00:29:49,040 --> 00:29:51,520 Speaker 2: What about supply chains when this comes to China, because 565 00:29:51,520 --> 00:29:54,840 Speaker 2: it appears there's been some reformation of supply chains, maybe 566 00:29:54,880 --> 00:29:57,320 Speaker 2: pulling back some from China and maybe going to some 567 00:29:57,320 --> 00:30:01,840 Speaker 2: place like India or Southeast Asia or even Mexico. As 568 00:30:01,840 --> 00:30:04,360 Speaker 2: we go into twenty twenty four, do you see potential 569 00:30:04,400 --> 00:30:07,680 Speaker 2: for resurgence and growth in some of those areas. 570 00:30:08,040 --> 00:30:11,320 Speaker 12: It's not as if China has moved out of the 571 00:30:11,400 --> 00:30:12,120 Speaker 12: supply chain. 572 00:30:12,160 --> 00:30:14,600 Speaker 9: They just maybe occupy. 573 00:30:15,080 --> 00:30:17,840 Speaker 12: They've moved up and down the supply chain, in particular 574 00:30:17,960 --> 00:30:22,720 Speaker 12: up the supply chain and to become suppliers to other manufacturers. 575 00:30:23,320 --> 00:30:26,560 Speaker 12: So they still play a very important role which will 576 00:30:26,640 --> 00:30:30,400 Speaker 12: help their economy, help them to remain stronger. And then 577 00:30:30,440 --> 00:30:34,760 Speaker 12: you see this diversification moving down the supply chain which 578 00:30:34,800 --> 00:30:39,920 Speaker 12: will help other countries in Southeast Asia in particular, but 579 00:30:40,000 --> 00:30:41,560 Speaker 12: also in Mexico for example. 580 00:30:42,120 --> 00:30:44,120 Speaker 2: Professor great to have you back on Wall Street. Weig, 581 00:30:44,160 --> 00:30:46,400 Speaker 2: thank you very much, appreciate your being here. That is 582 00:30:46,440 --> 00:30:51,720 Speaker 2: Professor Janie Everley of Northwestern's Kellogg School. Finally, one more thought. 583 00:30:52,120 --> 00:30:55,000 Speaker 2: Back in eighteen sixty, the UK Law magazine wrote that 584 00:30:55,160 --> 00:30:58,400 Speaker 2: crime does not pay, saying that the benefit of prison 585 00:30:58,480 --> 00:31:01,440 Speaker 2: was providing time to reflect on that basic maxim and 586 00:31:01,480 --> 00:31:03,680 Speaker 2: through much of history it seems to have been true. 587 00:31:04,000 --> 00:31:06,720 Speaker 2: After all, Charles Ponzi did end up in prison for 588 00:31:06,760 --> 00:31:10,400 Speaker 2: that scheme named after him, as did Jordan Belfort, the 589 00:31:10,440 --> 00:31:13,480 Speaker 2: famous Wolf of Wall Street. Though Belfour did have a 590 00:31:13,480 --> 00:31:17,280 Speaker 2: second act after prison, writing successful books about his experiences 591 00:31:17,360 --> 00:31:21,120 Speaker 2: and giving motivational speeches. Bernie Madoff had no second act 592 00:31:21,360 --> 00:31:24,440 Speaker 2: after being found guilty of masterminding the biggest financial fraud 593 00:31:24,480 --> 00:31:27,000 Speaker 2: in history. He was sentenced to one hundred and fifty 594 00:31:27,080 --> 00:31:29,920 Speaker 2: years in prison and spent the rest of his life there. 595 00:31:30,520 --> 00:31:33,920 Speaker 13: If you did utilize the fictional statements that mister Madoff 596 00:31:34,000 --> 00:31:38,200 Speaker 13: was creating you would be in effect reinforcing defraud, letting 597 00:31:38,240 --> 00:31:41,360 Speaker 13: the fraudster decide the outcome, which certainly would be far 598 00:31:41,360 --> 00:31:43,480 Speaker 13: from fair under any circumstances. 599 00:31:43,880 --> 00:31:46,800 Speaker 2: But they say the exception proves the rule, And this 600 00:31:46,880 --> 00:31:49,120 Speaker 2: week Global Wall Street got what appears to be a 601 00:31:49,120 --> 00:31:52,240 Speaker 2: big exception to the rule about crime not paying. This 602 00:31:52,440 --> 00:31:55,240 Speaker 2: was the year that Chung BEng Jao or cz as 603 00:31:55,240 --> 00:31:58,280 Speaker 2: his friends going, pleaded guilty to a host of federal 604 00:31:58,360 --> 00:32:01,040 Speaker 2: criminal charges for the way he ran and finance the 605 00:32:01,160 --> 00:32:04,600 Speaker 2: largest crypto exchange in the world. The message here should 606 00:32:04,640 --> 00:32:09,360 Speaker 2: be clear. Using new technology to break the law does 607 00:32:09,440 --> 00:32:12,560 Speaker 2: not make you a disruptor, it makes you a criminal. 608 00:32:13,120 --> 00:32:16,160 Speaker 2: Cz faces sentencing in the coming year. But now Bloomberg 609 00:32:16,200 --> 00:32:20,160 Speaker 2: reports that despite his legal problems, mister Shao increases wealth 610 00:32:20,200 --> 00:32:23,960 Speaker 2: this year by a cool twenty five billion dollars, which 611 00:32:24,040 --> 00:32:26,280 Speaker 2: on its face looks like a pretty good return on 612 00:32:26,360 --> 00:32:29,040 Speaker 2: some pretty bad behavior. And in the new year, we 613 00:32:29,080 --> 00:32:31,520 Speaker 2: all may get to look at this crime paying question 614 00:32:31,560 --> 00:32:34,960 Speaker 2: from a very different perspective. We've all heard repeatedly about 615 00:32:35,000 --> 00:32:38,160 Speaker 2: the ninety one criminal accounts penning against former President Donald 616 00:32:38,160 --> 00:32:43,000 Speaker 2: Trump in four different prosecutions. My message is simple, No 617 00:32:43,040 --> 00:32:46,160 Speaker 2: matter how powerful you are, no matter how much money 618 00:32:46,160 --> 00:32:47,240 Speaker 2: you think you may have. 619 00:32:48,040 --> 00:32:50,680 Speaker 7: No one is above the law, and it is my 620 00:32:50,760 --> 00:32:53,720 Speaker 7: responsibility and my duty and my job to enforce it. 621 00:32:54,240 --> 00:32:57,520 Speaker 2: Under US law, we presume all defendants are innocent until 622 00:32:57,560 --> 00:33:00,800 Speaker 2: proven guilty, and mister Trump is certainly no ext At 623 00:33:00,840 --> 00:33:03,360 Speaker 2: this point, it's far from clear whether or when any 624 00:33:03,400 --> 00:33:06,000 Speaker 2: of these accusations will even make it to a jury, 625 00:33:06,240 --> 00:33:08,760 Speaker 2: and by that time he could well be president once again, 626 00:33:08,960 --> 00:33:12,120 Speaker 2: thank you. But in the meantime, it appears that even 627 00:33:12,160 --> 00:33:14,880 Speaker 2: the act of charging him with crimes may be paying off, 628 00:33:15,240 --> 00:33:18,480 Speaker 2: at least when it comes to fundraising. That does it 629 00:33:18,520 --> 00:33:20,840 Speaker 2: for this episode of Wall Street Week, I'm David Weston. 630 00:33:20,960 --> 00:33:23,880 Speaker 2: This is Bloomberg. See you next week and next year.