Speaker 1: This is Bloomberg Wall Street Week.
Speaker 2: And we may not have an overall recession, we're having
Speaker 2: a rolling recession to kind of roll looks pretty strongly
Speaker 2: it is when it comes to jobs, the financial stories
Speaker 2: that shape our world. Three major regional bank failures send
Speaker 2: shockwaves through the banking system. We're all trying to figure
Speaker 2: out what to make of generative AI through the eyes
Speaker 2: of the most influential voices. Welcome down, Doctor Paul Krugman,
Speaker 2: Ryan moynihan, a Bank of America, deebro Lair of the
Speaker 2: Paulson Institute, well Then Hubbard of the Columbia Business School.
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 2: Christmas and New Year's come to much of the world,
Speaker 2: but war takes no holiday in the Middle East or
Speaker 2: in Eastern Europe. This is Bloomberg Wall Street Week. I'm
Speaker 2: David Weston, this week's special contributor to Larry Summers of
Speaker 2: Harvard on why we didn't get that recession we expected
Speaker 2: this year, but.
Speaker 3: I'm not terribly surprised that we haven't seen a recession
Speaker 3: in twenty twenty three.
Speaker 2: Very Lovely of the Peterson Institute on China's continuing economic
Speaker 2: struggle to rebound from the COVID lockdown, the Deeps and
Speaker 2: some Malays.
Speaker 4: We think still lies within the population and within people's
Speaker 4: expectations for the future.
Speaker 2: And Scott Bach of Greenhill on what's really going on
Speaker 2: in places like penn and Harvard.
Speaker 5: Dollars are absolutely free to give to whatever organizations they
Speaker 5: want or not to went to withhold for any reason
Speaker 5: they choose to, but they're not shareholders, so I don't
Speaker 5: think they should have a particularly loud voice, and how
Speaker 5: a university is a run.
Speaker 2: Most of global Wall Street spent the week celebrating the holidays,
Speaker 2: taking a break from earnings reports and the FED and
Speaker 2: the eco data, but there was no break for those
Speaker 2: waging war in Ukraine and in Gaza, as Ukrainian forces
Speaker 2: hit a Russian warship and shot down several fighter jets,
Speaker 2: and in the Middle East, Israeli forces continued to seek
Speaker 2: out Hamas militants and Huthi rebels hit targets in the
Speaker 2: Red Sea, disrupting shipping in the region. Huh we will
Speaker 2: contain a ship fleet now currently no longer going through
Speaker 2: the Red Seats. In the world of commerce, holiday shopping
Speaker 2: appeared to be holding up, showing the consumers still have
Speaker 2: some money to spend.
Speaker 6: Unlike the last couple of holiday shopping seasons, we had
Speaker 6: to wait until the very.
Speaker 3: Last minute to see those consumer dollars flow through well.
Speaker 2: Apple got a temporary reprieve of the ban on its
Speaker 2: watches as the Court of Appeals sorts out whether it
Speaker 2: infringe japan covering sensors to monitor blood oxygen levels.
Speaker 1: They have to stay until the US Customs makes a
Speaker 1: decision on a software fix that Apple submitted to the government.
Speaker 2: Equity markets eked out another up week despite a bit
Speaker 2: of a selloff on Friday, as SMP five hundred gained
Speaker 2: just over three tenths of one percent for the week,
Speaker 2: but that put it up a whopping twenty four percent
Speaker 2: for the year as a whole, ending at forty seven
Speaker 2: sixty nine. That's way above the median estimate of our
Speaker 2: Bloomberg els for this year and only a bit under
Speaker 2: the estimate of forty eight to thirty two for the
Speaker 2: end of next year. The NASDAC game just over one
Speaker 2: tenth percent this week, but was up over forty three
Speaker 2: percent for the year overall. It was a very different
Speaker 2: story for bonds, with the yield on the tenure all
Speaker 2: over the place in twenty twenty three, but it ended
Speaker 2: up just about where it started a year ago, just
Speaker 2: under three point nine percent. Take us through it all.
Speaker 2: Welcome now, Chris Ayleman, Chief Investment Officer counselor So, Chris, yeah,
Speaker 2: I have to say you've put me to shame here
Speaker 2: that dashing texedo, your black tie and your champagne boy.
Speaker 2: Happy new year to.
Speaker 7: You, well, apple slider, But that's okay, Happy new year
Speaker 7: to you, David. And it really the year that deserves
Speaker 7: the toast. I'm right there with Larry.
Speaker 8: I mean, I.
Speaker 7: Expected a recession, but we certainly didn't have one. And
Speaker 7: it's a spectacular year of twenty double digit, twenty percent,
Speaker 7: just amazing.
Speaker 2: So what about on the equity side of over twenty
Speaker 2: percent or even over forty percent on the NASDAK how
Speaker 2: much of that was just the anticipation of FED cuts.
Speaker 7: Well, you know, it all happened in the last quarter
Speaker 7: of the year, because really, when you look at the
Speaker 7: equally weighted SMP five hundred that was actually negative back
Speaker 7: at Halloween and then had a huge rally here at
Speaker 7: the end. It was really those seven magnificent socks and
Speaker 7: on the Nasdaq. That really shows up. Best year since
Speaker 7: ninety nine. Now that's a lot to celebrate. But wait
Speaker 7: a minute, think about nineteen ninety nine. For those of
Speaker 7: those that were in the market, you can't forget two
Speaker 7: thousand and one two, so it was a difficult time.
Speaker 7: We'll see how this carries through. But what an incredible
Speaker 7: year for equities. I was wrong. I predicted David that
Speaker 7: the markets would be down this year because well, gee,
Speaker 7: the Fed raised interest rates five hundred and twenty five percent.
Speaker 7: Should have had a rough market. And let's be clear,
Speaker 7: the Fed has an eased ras, but the bond market
Speaker 7: has done it for them, you pointed out, and sorry
Speaker 7: back for it started the year. But my goodness, the
Speaker 7: long bomb dropped almost one hundred basis points since the
Speaker 7: Fed pivot. That's amazing in such a short period of time.
Speaker 2: So what does that say to set up next year
Speaker 2: twenty twenty four? For you? You have a lot of money
Speaker 2: at work. How are you taking a look at twenty
Speaker 2: twenty four? How are you positioning yourself?
Speaker 7: Well, first, I'm celebrating because thanks to this market, all
Speaker 7: time record high for our fund three hundred and twenty
Speaker 7: seven billion dollars, but I have to tell you there
Speaker 7: are certainly dark clouds on the horizon. I think the
Speaker 7: FED has pulled off the soft landing, but we still
Speaker 7: have a lot of risks that we have to get through.
Speaker 7: And you know, hope does triumph over experience. I know
Speaker 7: Larry Summers likes to say that it shouldn't, but sometimes
Speaker 7: it does. And right now I'm hopeful. I think the
Speaker 7: Fed's pulled it off. But when you stepped back and
Speaker 7: look at this market, we've now created a double top
Speaker 7: in the S and P five hundred in December of
Speaker 7: twenty one and now in twenty three. As a as
Speaker 7: an old time technician, that makes me a bit worry.
Speaker 7: That doesn't mean we should have a bear market, but
Speaker 7: I think the president's election cycle we know in history
Speaker 7: is at best a low single digit return in the
Speaker 7: SMP five hundred, I would expect, like the elves, barely
Speaker 7: positive to some of our forecasts that we've looked at
Speaker 7: are slightly negative. So right now people's expectations are certainly
Speaker 7: damped down. In the next year, I hope the public
Speaker 7: and the private markets finally opened back up, because private
Speaker 7: equity and real estate really had a struggle last year.
Speaker 7: The markets were almost frozen. We're starting to see a
Speaker 7: few transactions, but certainly in the commercial office market values
Speaker 7: are going to reprice down dramatically. And then in private
Speaker 7: equity we're starting to see merger Monday here in December,
Speaker 7: every Monday, a few announcements. That's a good sign that
Speaker 7: maybe that market.
Speaker 8: Will open back up.
Speaker 2: So Chris, I'm going to let you get back to
Speaker 2: your celebrations. Really great to have you with us once again.
Speaker 2: Happy New Year, my friend. Great to have you with us.
Speaker 7: Happy New Year and toil walls three week. Thank you
Speaker 7: very much. David, good to see you.
Speaker 2: That's Chris Allen of Calsh's. Year ago, China was emerging
Speaker 2: from its COVID lockdown and just about everyone expected a
Speaker 2: sharp economic upturn. It didn't quite work out that way.
Speaker 2: To explain what happened and give us a sense of
Speaker 2: what's likely to come in the new year, we welcome
Speaker 2: back now Mary Lovely. She's a senior fellow at the
Speaker 2: Peterson Institute for International Economics. Mary, great to have you
Speaker 2: with you, a true China expert. So give us a sense,
Speaker 2: first of all, what went wrong for China economically in
Speaker 2: twenty twenty three because it didn't. It wasn't as good
Speaker 2: as people expected.
Speaker 4: Well, I mean, in some sense, it had things that
Speaker 4: went wrong and things that went right. I mean what
Speaker 4: went wrong, of course, is that one estimated one point
Speaker 4: four million people died from the quick spread of the
Speaker 4: virus through the economy through the population.
Speaker 7: On the other hand, it.
Speaker 4: Did go through the country at very rapid pace, and
Speaker 4: recovery began before I think many of.
Speaker 7: Us expected that it would.
Speaker 4: The second quarter was particularly tough, high levels of unemployment
Speaker 4: fall and industrial production falling consumption. But then by probably
Speaker 4: by the middle of summer, you know, they had basically
Speaker 4: hit the atom and we're beginning to bounce back. The
Speaker 4: bounce has been significant. They're on track to record about
Speaker 4: five or five point two percent GDP growth for twenty
Speaker 4: twenty three. But a deep sense of malaise, we think
Speaker 4: still lies within the population and within people's expectations for
Speaker 4: the future, and that looks ahead to twenty twenty four.
Speaker 2: Mary, you refer to a general malaise going on. What
Speaker 2: can the government, what can presidentation pin do to address
Speaker 2: that malaise.
Speaker 4: I think one of the main things that private businesses
Speaker 4: want is more clarity on how private businesses are going
Speaker 4: to be regulated and how the push toward economic securitization
Speaker 4: is going to impact their businesses. We saw the rollout
Speaker 4: of the counter espionage rule this year that gave a
Speaker 4: lot of businesses a pause.
Speaker 9: What kind of data.
Speaker 8: Could be transferred into.
Speaker 4: Whom It's very unclear what happens when one does transfer
Speaker 4: data that the government decides x posts should not have
Speaker 4: been transferred. I think the government has tried to clarify this,
Speaker 4: but part of the way Chinese legal system works is
Speaker 4: to allow for a significant amount of interpretation.
Speaker 8: And that means, from the point of view.
Speaker 4: Of businesses, vulnerabilities ambiguities that raise uncertainty for them that
Speaker 4: it has a chilling effect.
Speaker 2: What about the debt situation? We hear a lot about
Speaker 2: the debt born, particularly by local governments, and there's some
Speaker 2: move for the national government to take over some of
Speaker 2: the debt design understand it, but there's a lot of
Speaker 2: debt overhanging in China. Is that limit presidencies options in
Speaker 2: dealing with the Malays well, the.
Speaker 4: Central government has taken the unusual step of issuing bonds
Speaker 4: and then providing them to the local governments to spend
Speaker 4: so I think the central government recognizes that, you know,
Speaker 4: local government finances.
Speaker 9: Are quite fragile.
Speaker 4: They have moved also to ask state banks to provide
Speaker 4: more credit for property developers, particularly to complete units which
Speaker 4: have already been purchased.
Speaker 9: So what this does is it.
Speaker 4: Gives new cash to companies which may be unable to
Speaker 4: pay old loans, and it really begins to absorb that
Speaker 4: debt within the state banking system.
Speaker 2: Mary, thank you so very much, really great to have
Speaker 2: you with us. That is Mary Lovely, senior fellow at
Speaker 2: the Peterson Institute. And this is Walter's Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: This is Wall Street Week. I'm David Weston, and take
Speaker 2: us through this year that is now ending twenty twenty
Speaker 2: three and look forward to twenty twenty four. We welcome
Speaker 2: to our very special contributor here on wal Street. He's
Speaker 2: Larry Summers of Harvard. So Larry, thanks so much for
Speaker 2: being with us at the very end of the year.
Speaker 2: Here looking back at twenty twenty three, there was an
Speaker 2: issue about inflation, about how we can get on control
Speaker 2: what caused it, and team Transitory led perhaps by Paul
Speaker 2: Krugman said it really was a supply chain thing. You
Speaker 2: would go away. You were more concerned about exactly the
Speaker 2: demand side and what the FED needed to do. Looking
Speaker 2: back on it, which was right, what was wrong?
Speaker 9: I think there's some of both.
Speaker 3: Look to start with, we basically got an outcome that
Speaker 3: was closer to Team Transittories prediction. Inflation came down with policy.
Speaker 3: That is what their opponents were insisting on interest rates,
Speaker 3: far beyond what they were recommending, far beyond what the
Speaker 3: FED was predicting as of almost any date in the
Speaker 3: recent past.
Speaker 9: So the record's a bit ambiguous.
Speaker 3: Yes, absolutely, there have been important supply elements. I have
Speaker 3: always stressed that we never were an eight percent or
Speaker 3: a seven percent inflation country that because of bottlenecks, a
Speaker 3: variety of prices went up, adding to inflation, and they
Speaker 3: would then come down subtracting from inflation. I'm not sure
Speaker 3: we're really a two percent target inflation country in any
Speaker 3: durable sense. I look, for example, at the five point
Speaker 3: two percent wage increase the federal.
Speaker 9: Government just gave at strike activity.
Speaker 3: It's more than it's been in.
Speaker 9: A decade, at still tight labor.
Speaker 3: Markets, at potential geopolitical risks in commodity markets, at the
Speaker 3: fact that house prices have really started to turn back up,
Speaker 3: and I'm far.
Speaker 9: From sure where we're going to go on inflation.
Speaker 3: So to declare that proverbial soft landing to have taken
Speaker 3: place seems.
Speaker 9: To me to be premature.
Speaker 3: So I think we're still in an ambiguous situation. I've
Speaker 3: been saying, David on your show for close to a
Speaker 3: year now that there are three possibilities that the economy.
Speaker 9: Turns down quickly, that.
Speaker 3: The economy achieves the proverbial soft landing, and that in
Speaker 3: a sense, we don't ever achieve a secure landing, and
Speaker 3: inflation never really gets down to target and even reaccelerates. Obviously,
Speaker 3: we didn't see the hard landing in twenty twenty three.
Speaker 3: I was never as sure as many people were that
Speaker 3: that would come, because, as you also know, I've been
Speaker 3: arguing that neutral interest rates have gone up, so policies
Speaker 3: not as contractionary as many people expect, and that the
Speaker 3: impact of interest rates are lower than many people have expected.
Speaker 3: So I'm not terribly surprised that we haven't seen a
Speaker 3: recession in twenty twenty three, and I think there are
Speaker 3: risks looking at some of the credit figures for the
Speaker 3: next While we may achieve that soft landing, I'd certainly
Speaker 3: say it looks better and more likely that it did
Speaker 3: six or eight months ago. I always said that soft
Speaker 3: landings were the triumph of hope over experience, But occasionally
Speaker 3: hope may triumph over experience. And I think there's still
Speaker 3: a risk that the market is probably underestimating that we're
Speaker 3: not going to quite make as much progress on inflation.
Speaker 2: So Lariy, we look at these questions not only because
Speaker 2: they're interesting historically, but to give us some direction for
Speaker 2: the future where we should be had. And so as
Speaker 2: you look at the risk as you describe them, what
Speaker 2: about the symmetry of them, Because some people are concerned
Speaker 2: that we have a bigger risk of a recession if
Speaker 2: we keep type policy than we do of inflation running away.
Speaker 2: Where do you put the balance of the risk between
Speaker 2: recession by overly restrictive policy as opposed to letting inflation
Speaker 2: get ahead of us.
Speaker 9: I think they're both very real risks.
Speaker 3: I'm a little surprised by the view that puts primary
Speaker 3: emphasis on the recession risk, given what's happened to financial
Speaker 3: conditions in the last two months, the stock market's taken
Speaker 3: off again. House prices are now rising at a six
Speaker 3: or seven percent annual rate, long term interest rates and
Speaker 3: with them mortgage rates have come down substantially. I think
Speaker 3: that in a way we've already seen a substantial easy
Speaker 3: the financial conditions, and so I think we'd better be
Speaker 3: a bit careful with respect to the inflation prospect, and
Speaker 3: that continues to be a source of concern for me.
Speaker 2: And finally, Larry, twenty twenty three was a year of
Speaker 2: geopolitical strife. We started it with the war in Ukraine continuing.
Speaker 2: We added then the attack of Hamas on Israel and
Speaker 2: the difficulties that's raised in the Middle East for so
Speaker 2: many people. We have continued tension with China. As you
Speaker 2: look at the macroeconomics of twenty twenty four, how did
Speaker 2: geopolitics fit in.
Speaker 9: The post Cold War? Holiday from history is over.
Speaker 3: The world is once again a very dangerous place, with
Speaker 3: the prospect of war between major powers. The way and
Speaker 3: which which the United States has conceived itself in terms
Speaker 3: of national security.
Speaker 9: Is no longer viable.
Speaker 3: We are going to have to invest substantially more in
Speaker 3: all aspects of national security that ranges from increased defense
Speaker 3: spending well above current projections, to thinking about national security
Speaker 3: issues as we think about our educational system as we
Speaker 3: did after Sputnik, to thinking about our investment in connections
Speaker 3: all over the world.
Speaker 2: Larry, thank you so much for being with us here
Speaker 2: at the end of the year, but thank you for
Speaker 2: all your contributions on Wall Street throughout the year. That
Speaker 2: is Larry Summers, our special contributor. He is, of course
Speaker 2: from Harvard. Coming up the Hamas attack on Israel and
Speaker 2: October led to dramatic developments in the Middle East that
Speaker 2: spilled over on the college campuses in the United States.
Speaker 2: We'll talk with Scott Bock, the former chair of the
Speaker 2: University of Pennsylvania's Board of Trustees, about what happened at
Speaker 2: PENS and what we should learn from it.
Speaker 5: And I don't think trustee should overreact in this situation
Speaker 5: of what could be a short term crisis.
Speaker 2: That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: Unrest on college campuses in the aftermath of the Hamas
Speaker 2: attacks on Israel, American University has been thrust into a
Speaker 2: national fight over lines between healthy debate and destructive invective.
Speaker 2: We've had major donors condemned administrations for tolerating co where
Speaker 2: some students no longer feel safe.
Speaker 10: The underlying culture that permitted this to happen is just
Speaker 10: so strong, and until there is a moment of self
Speaker 10: reflection where we're not dealing with just anti Semitism, we're
Speaker 10: dealing with the culture that allowed this to happen, there
Speaker 10: really is going to be no progress, and to date
Speaker 10: there's been no progress. There's really not a question of
Speaker 10: free speech. This is a question of favored speech and
Speaker 10: disfavored speech, and an institutional psychology and an institutional culture.
Speaker 2: We've had college presidents called before Congress and asked to
Speaker 2: condemn calls for genocide.
Speaker 11: I am asking specifically calling for the genocide of Jews?
Speaker 11: Does that constitute bullying? Harassment?
Speaker 12: If it is directed and severer pervasive, it is harassment.
Speaker 11: So the answer is yes.
Speaker 2: It is a.
Speaker 13: Context dependent decision, Congresswoman, It's.
Speaker 11: A context dependent decision. That's your testimony today. Calling for
Speaker 11: the genocide of Jews is depending upon the context, that
Speaker 11: is not bullying or harassment.
Speaker 2: We've had former college presidents insists that there's been a
Speaker 2: basic breakdown in who's responsible for what's going on in
Speaker 2: our academic communities.
Speaker 14: I think for some years now they have been substantially
Speaker 14: a wall, a wall as the climate of hypersensitivity has developed,
Speaker 14: a wall as the relationship between the university and external
Speaker 14: communities has broken.
Speaker 2: Down, leaving us to yearn for a world where we
Speaker 2: can disagree, even strongly disagree, without deterring others from speaking out.
Speaker 15: I suspect something will happen, but I don't know that
Speaker 15: Congress will do anything. I think the university boards are
Speaker 15: probably going to be more sensitive to these issues. There
Speaker 15: is going to be more security for certain students there
Speaker 15: for sure, But I think there'll be more of a
Speaker 15: move towards a University of Cago approach where more people
Speaker 15: are allowed to say what they think without feeling that
Speaker 15: if they say something that's unpopular they'll be criticized or harmful, and.
Speaker 2: To take us through what some of these speechs look
Speaker 2: like from the inside. Welcome now, Scott back. He is
Speaker 2: chairman of Green Hill. Until recently he was chair of
Speaker 2: the Board of Trustees of the University of Pennsylvania. Welcome
Speaker 2: to Wall Street. WEEG really appreciate you being here, Scott,
Speaker 2: First of all, give us a sense from the insight,
Speaker 2: because yourself from the inside. What do you think is
Speaker 2: going on and what should we learn from the experience?
Speaker 5: Well, look, I think we've had a bit of a
Speaker 5: crisis on some of the leading elite universities in America
Speaker 5: in the last few months, and we haven't had one
Speaker 5: of a long time. It's really been a long period
Speaker 5: of quiet and progress at those schools. And so there
Speaker 5: are a number of questions that have been raised and
Speaker 5: haven't been raised.
Speaker 8: In quite a while.
Speaker 2: And what about the response to people a little rusty?
Speaker 2: I mean, I went to school back in the seventies
Speaker 2: when there was a lot of this going on. In fact,
Speaker 2: the administrations were used to dealing with demonstrations. Is part
Speaker 2: of the issues that, in fact the administrations haven't been
Speaker 2: used to this day is to have to get the
Speaker 2: rule book back out.
Speaker 8: I think that's exactly right.
Speaker 5: And frankly, trust these having given governance a thought in
Speaker 5: a very long period of time, you don't tend to
Speaker 5: think about governance where everything's going great. But when you
Speaker 5: have something that creates a controversy, suddenly people look back
Speaker 5: at that. And I think a lot of trustees. You know,
Speaker 5: maybe have forgotten that the way universities are governed, that's
Speaker 5: a combination of trustees, a president, and the administration, and
Speaker 5: also the faculty play an important role.
Speaker 2: Well, we'll talk about that for about governance specifically, because
Speaker 2: we've had for example at pen but also Harvard other places.
Speaker 2: Donors really speak out very forcefully, even make demands, as
Speaker 2: they would put it, about changes we made back when
Speaker 2: I was practicing law. I know you did as well.
Speaker 2: We talk about a bad volleyball team. Wherever he goes
Speaker 2: to the same position. What are the respective positions if
Speaker 2: it's done properly, of the trustees, the president, admistration, the faculty,
Speaker 2: and for that man are donors. What should those positions be?
Speaker 5: Look, I think to start with donors, I think donors
Speaker 5: are absolutely free to give to whatever organizations they want
Speaker 5: or not to, and to withhold for any reason they
Speaker 5: choose to.
Speaker 8: But they're not shareholders, so I don't think.
Speaker 5: They should have a particularly loud voice in how a
Speaker 5: university is run. There is a governance system that set
Speaker 5: in place for decades, if not centuries in many cases,
Speaker 5: and that involves really trustees, the administration of the faculty, Historically,
Speaker 5: trustees really focused on the financial viability of the organization.
Speaker 5: They did the budget, they did review the audit of
Speaker 5: the financials, they invested the endowment. They made sure that
Speaker 5: the entity was going to be viable for the long term,
Speaker 5: because these are meant to be perpetual institutions. Of course,
Speaker 5: the president in the administration really run the business of
Speaker 5: the university day today, and along with the faculty they
Speaker 5: run all the academic affairs. And it's really been very
Speaker 5: rare in my experience, really almost two decades on a
Speaker 5: board of the university where the trustees get it all
Speaker 5: involved in academics. So I think they need to be
Speaker 5: careful about how much they reach into that area, and
Speaker 5: I know faculty are very concerned that they not reach
Speaker 5: too far into that area.
Speaker 2: You mentioned two areas, academics on the one hand, finances
Speaker 2: any other. Obviously, you're a prime example of somebody who's
Speaker 2: really really knowledgeable and finance. It makes sense to have
Speaker 2: you on a board and indeed share of a board.
Speaker 2: There is a third area, though, which I would call
Speaker 2: reputational risk, I mean existential risk for the institution that
Speaker 2: maybe includes both academics and finances. But who should be
Speaker 2: responsible for that, and what sort of people do you
Speaker 2: need at the table making those decisions.
Speaker 5: Well, I think clearly if it's an existential sort of threat,
Speaker 5: I mean, everybody needs to be involved in that. I
Speaker 5: don't think trustees can sort of seize control, nor can
Speaker 5: the president do whatever the president wants to do or
Speaker 5: the faculty take charge either. Probably needs to be everybody
Speaker 5: involved in something like that. But I don't think trustees
Speaker 5: should overreact in the situation of what could be a
Speaker 5: short term crisis and take too much control. And still
Speaker 5: needs to be a collaborative effort, because that is the
Speaker 5: peculiar nature of governance in these institutions. They're not public companies,
Speaker 5: and they really aren't run by public companies historically.
Speaker 2: By the way, there's another player that's got involved here,
Speaker 2: and that's the United States Congress, because the president of
Speaker 2: Pennsylvania as well as Harvard MIT will call before Congress what,
Speaker 2: if anything, is the proper role of the government and
Speaker 2: try to influence the way this is handled on college campuses.
Speaker 5: Well, I think the government has a very big role,
Speaker 5: of course in public universities and a smaller role in
Speaker 5: private universities.
Speaker 8: But you know, governments get involved in.
Speaker 5: A lot of ways in any institution in American life,
Speaker 5: So you have to be ready to deal with congressional
Speaker 5: or other government inquiries when they come. And they they
Speaker 5: do provide financial support to even the most private of
Speaker 5: universities in the sense of research funding and things like that.
Speaker 5: So they're going to have their legitimate questions from time
Speaker 5: to time, and those need to be answered. But fundamentally,
Speaker 5: the institutions we're talking about are private and they're run
Speaker 5: fundamentally by the trustees, the administration of the university and
Speaker 5: the faculty, and that's worked.
Speaker 8: For a long time.
Speaker 5: I mean, I think it's important to remember, you know,
Speaker 5: elite universities in America are the envy of the world.
Speaker 5: I mean, people all over America go to great links
Speaker 5: to get into these places. People from all over the world.
Speaker 5: Do You don't see a lot of you know, kids
Speaker 5: from New York City trying to go to a foreign
Speaker 5: university to get to their degree. You see a lot
Speaker 5: of them in Europe and Asia, Latin America else who
Speaker 5: are trying to come to America to get a degree
Speaker 5: because they see real value to that.
Speaker 2: In the nineteen sixties and into the seventies, part of
Speaker 2: what we saw in college campus was a reflection more
Speaker 2: broadly what was going on in society. I wonder if
Speaker 2: that's part of what we're seeing now, because generally across
Speaker 2: socity there is more polarization. People are more outspoken, they're
Speaker 2: more actually of course with one another in the nature
Speaker 2: of the discourse. And if that's right, what can campuses do,
Speaker 2: what can colleges do maybe to help us more broad
Speaker 2: in society deal with some of these issues.
Speaker 8: Look, I think that's a major factor here.
Speaker 5: There we are in a more divide at society, and
Speaker 5: the divisions tend to be quite deep, and people tend
Speaker 5: to see things in a black or white way. There's
Speaker 5: a lot of the voices you hear are on the
Speaker 5: extreme right. You're the extreme right, the extreme lap. I
Speaker 5: do think it's important, and I've tried to convey in
Speaker 5: some of the comments I've made in recent days and
Speaker 5: weeks that you know, what you see in social media,
Speaker 5: what you see maybe in a newspaper quote, what you
Speaker 5: see in a clip on television is a very small
Speaker 5: part of what actually happens on campus. I mean, as
Speaker 5: with anything else in life, the noisiest people get the
Speaker 5: most attention.
Speaker 2: Why do you step down because you could still contribute
Speaker 2: to the solution, could you not?
Speaker 9: I could certainly.
Speaker 5: I mean, I felt like our board got particularly divided
Speaker 5: at one point, and I felt like, clearly there is
Speaker 5: a debate, and it's not just a pend, it's a
Speaker 5: number of schools across America about the role of trustees,
Speaker 5: faculty and administration and managing universities. I think that's a
Speaker 5: very important debate, and frankly, I felt like I could
Speaker 5: contribute more to that debate from the outside than the inside.
Speaker 5: You know, if you're the chair of an institution that has,
Speaker 5: in our case, almost fifty trustees, you have to speak
Speaker 5: for that whole group.
Speaker 9: You can't.
Speaker 5: You have to be very very careful what you say
Speaker 5: because you're speaking for the whole entity, a whole large
Speaker 5: group of trustees. If you're on the outside, you can
Speaker 5: speak more freely. And I think I have contributed, and
Speaker 5: hopefully even these comments here will help people understand that
Speaker 5: there's not.
Speaker 8: A huge crisis.
Speaker 5: It's a small percent, very very small percent of the
Speaker 5: students that are doing things that would be troubling for
Speaker 5: most people. Yes, there are things you can do about that,
Speaker 5: but we shouldn't fundamentally tear.
Speaker 8: Up a governance model that's worked for a very, very.
Speaker 5: Long time and made our universities the envy of the
Speaker 5: world because of a very short term crisis.
Speaker 2: Scott, you certainly have helped me a lot understand from
Speaker 2: a really useful perspective what's going on. Thank you so
Speaker 2: much to Scott Bach. He is chairman of Greenhill. Coming up,
Speaker 2: does crime have its own internal rate of return? That's
Speaker 2: next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Well Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: This is Wall Street Week. I'm David Weston. US markets
Speaker 2: are ending up the year on an up note, but
Speaker 2: there are at least some economists who are seeing some
Speaker 2: headwinds for the global economy overall. For her views on
Speaker 2: the economy in twenty twenty three and what we're expecting
Speaker 2: in twenty twenty four. Welcome back now, Jennis Everly, she's
Speaker 2: preferred of finance at the Northwestern Kellog School. Professor. Thanks
Speaker 2: so much for being back with us on Wall Street.
Speaker 2: We're good to have you here.
Speaker 12: It's my pleasure. It's good to see you.
Speaker 2: We spent a lot of twenty trees who it felt
Speaker 2: like fighting against inflation in the United States, but more broadly,
Speaker 2: have we largely put that behind us? Do you think
Speaker 2: as we're going to twenty twenty four.
Speaker 6: When we last spoke, we noted that that in some cases,
Speaker 6: the past is not a great guide to the present,
Speaker 6: and the last.
Speaker 12: Few years have really been outside the data that we're
Speaker 12: used to seeing, especially in the in recent history over
Speaker 12: the post tour period, and twenty twenty three is a
Speaker 12: great example of that history was not a good guide
Speaker 12: to twenty twenty three. Some things really were different this
Speaker 12: time around.
Speaker 2: What about supply chains when this comes to China, because
Speaker 2: it appears there's been some reformation of supply chains, maybe
Speaker 2: pulling back some from China and maybe going to some
Speaker 2: place like India or Southeast Asia or even Mexico. As
Speaker 2: we go into twenty twenty four, do you see potential
Speaker 2: for resurgence and growth in some of those areas.
Speaker 12: It's not as if China has moved out of the
Speaker 12: supply chain.
Speaker 9: They just maybe occupy.
Speaker 12: They've moved up and down the supply chain, in particular
Speaker 12: up the supply chain and to become suppliers to other manufacturers.
Speaker 12: So they still play a very important role which will
Speaker 12: help their economy, help them to remain stronger. And then
Speaker 12: you see this diversification moving down the supply chain which
Speaker 12: will help other countries in Southeast Asia in particular, but
Speaker 12: also in Mexico for example.
Speaker 2: Professor great to have you back on Wall Street. Weig,
Speaker 2: thank you very much, appreciate your being here. That is
Speaker 2: Professor Janie Everley of Northwestern's Kellogg School. Finally, one more thought.
Speaker 2: Back in eighteen sixty, the UK Law magazine wrote that
Speaker 2: crime does not pay, saying that the benefit of prison
Speaker 2: was providing time to reflect on that basic maxim and
Speaker 2: through much of history it seems to have been true.
Speaker 2: After all, Charles Ponzi did end up in prison for
Speaker 2: that scheme named after him, as did Jordan Belfort, the
Speaker 2: famous Wolf of Wall Street. Though Belfour did have a
Speaker 2: second act after prison, writing successful books about his experiences
Speaker 2: and giving motivational speeches. Bernie Madoff had no second act
Speaker 2: after being found guilty of masterminding the biggest financial fraud
Speaker 2: in history. He was sentenced to one hundred and fifty
Speaker 2: years in prison and spent the rest of his life there.
Speaker 13: If you did utilize the fictional statements that mister Madoff
Speaker 13: was creating you would be in effect reinforcing defraud, letting
Speaker 13: the fraudster decide the outcome, which certainly would be far
Speaker 13: from fair under any circumstances.
Speaker 2: But they say the exception proves the rule, And this
Speaker 2: week Global Wall Street got what appears to be a
Speaker 2: big exception to the rule about crime not paying. This
Speaker 2: was the year that Chung BEng Jao or cz as
Speaker 2: his friends going, pleaded guilty to a host of federal
Speaker 2: criminal charges for the way he ran and finance the
Speaker 2: largest crypto exchange in the world. The message here should
Speaker 2: be clear. Using new technology to break the law does
Speaker 2: not make you a disruptor, it makes you a criminal.
Speaker 2: Cz faces sentencing in the coming year. But now Bloomberg
Speaker 2: reports that despite his legal problems, mister Shao increases wealth
Speaker 2: this year by a cool twenty five billion dollars, which
Speaker 2: on its face looks like a pretty good return on
Speaker 2: some pretty bad behavior. And in the new year, we
Speaker 2: all may get to look at this crime paying question
Speaker 2: from a very different perspective. We've all heard repeatedly about
Speaker 2: the ninety one criminal accounts penning against former President Donald
Speaker 2: Trump in four different prosecutions. My message is simple, No
Speaker 2: matter how powerful you are, no matter how much money
Speaker 2: you think you may have.
Speaker 7: No one is above the law, and it is my
Speaker 7: responsibility and my duty and my job to enforce it.
Speaker 2: Under US law, we presume all defendants are innocent until
Speaker 2: proven guilty, and mister Trump is certainly no ext At
Speaker 2: this point, it's far from clear whether or when any
Speaker 2: of these accusations will even make it to a jury,
Speaker 2: and by that time he could well be president once again,
Speaker 2: thank you. But in the meantime, it appears that even
Speaker 2: the act of charging him with crimes may be paying off,
Speaker 2: at least when it comes to fundraising. That does it
Speaker 2: for this episode of Wall Street Week, I'm David Weston.
Speaker 2: This is Bloomberg. See you next week and next year.