Speaker 1: I think the deep problem, the deep macro economic problem
Speaker 1: that the world has today is that savings are exceeding
Speaker 1: the natural level of private investment, leading to sluggish growth
Speaker 1: and lack of inflation. That is the world's fundamental problem,
Speaker 1: and it is not a problem that central banks can
Speaker 1: on their own resolve. Hello, Welcome to Stephanomics, the podcast
Speaker 1: that brings the global economy to you. And that was
Speaker 1: the economist, sometime Biden advisor and former U. S. Treasury
Speaker 1: Secretary Larry Sumrs. We have a world of economic wisdom
Speaker 1: and experience on the podcast this week courtesy of the
Speaker 1: Bloomberg New Economy Forum, which has just been held virtually
Speaker 1: over four days and multiple time zones. You'll get a
Speaker 1: sense of just how star studded it was when I
Speaker 1: tell you the head of the European Central Bank, Christine Laguard,
Speaker 1: spoke on the second day, and she was and even
Speaker 1: the headline act top of the bill was the Indian
Speaker 1: President Narindra Moody. On day three, it was the President
Speaker 1: of the European Commission. And after that Bill Gate, I
Speaker 1: didn't talk to any of them, but I did get
Speaker 1: to talk to the Irish Prime Minister or t Shock
Speaker 1: Mihal Martin about Brexit, the future of global trade, and
Speaker 1: where Joe Biden's Irish grandparents came from. You can hear
Speaker 1: some of that later, but we're going to devote most
Speaker 1: of the program to a debate about central banks with
Speaker 1: not one, not too but three former central bank governors.
Speaker 1: The ex Federal Reserve Chair Janet Yellen, the economist and
Speaker 1: former head of the Indian Central Bank, Ra Gram Rajan,
Speaker 1: and Lord Mervin King, governor of the Bank of England
Speaker 1: from two thousand and three until Oh yes, and Larry Summers.
Speaker 1: If you don't want to hear those four economic rock
Speaker 1: stars talk about the economic response to COVID and how
Speaker 1: central banks might do a better job of serving the
Speaker 1: whole economy, not just Wall Street. You should we really
Speaker 1: turn off now, but the rest of you sit back
Speaker 1: and enjoy the show. I want to spend a few
Speaker 1: minutes very briefly thinking about how central banks have responded
Speaker 1: to the pandemic, what's gone right, and maybe what needs
Speaker 1: to change. Janet Yellen, well, I think central banks of
Speaker 1: the developed countries have done a very good job of
Speaker 1: responding to the crisis. There could have been a financial
Speaker 1: market meltdown there was an overwhelming rush to the safety
Speaker 1: of cash in March. It threatened massive asset fire sales,
Speaker 1: which could have caused credit to dry up in the economy,
Speaker 1: and the FED and other central banks erected emergency liquidity
Speaker 1: and lending facilities that have really worked and kept credit
Speaker 1: of owing in the economy. Monetary policy in all the
Speaker 1: major central banks also became far more accommodative, lower policy rates,
Speaker 1: expanded asset purchases, forward guidence. In the US, both long
Speaker 1: and short term interest rates are near historic lows, and
Speaker 1: they worked to boost intrasensitive sectors. And even here you
Speaker 1: can see stronger housing in auto sales. But monetary policy
Speaker 1: has its limits, and the notion that the FED can
Speaker 1: do all that is required at this point to support
Speaker 1: the economy um is just wrong, and the FED is
Speaker 1: really pleading for fiscal relief. I believe it's essential. Lord King,
Speaker 1: I know you've been You've echoed some of what done
Speaker 1: it yet and has said in repeatedly saying central banks
Speaker 1: can't do everything. Do you think they've they've played the
Speaker 1: expectations game well in this in responding to the crisis,
Speaker 1: or have they set them too high? So I share
Speaker 1: much of what Janet has said, but I think to
Speaker 1: explain what's going wrong, I don't think central banks have
Speaker 1: explained clearly why expanding the money supply is the right
Speaker 1: sort of response to a shutdown of the economy created
Speaker 1: by governments different levels of governments in order to prevent
Speaker 1: the spread of COVID nineteen. This isn't a conventional recession,
Speaker 1: and as Janets said, the most important thing for central
Speaker 1: banks to do now is to say that this is
Speaker 1: a difficulty, a challenge which needs government response, not central
Speaker 1: bank response. And I don't think it's government response in
Speaker 1: the sense of general fiscal easy. I think it's a
Speaker 1: response that's required to support businesses until we get through
Speaker 1: this COVID nineteen episode, at which point we can then
Speaker 1: let the market econ and be discided which businesses will
Speaker 1: thrive and which will fail, which I don't think we
Speaker 1: can do at present. And I think that although the
Speaker 1: actions taken in March were clearly very important and central
Speaker 1: banks acted very promptly, does beg the question that, since
Speaker 1: markets have now calmed down, why that very significant liquidity
Speaker 1: injection hasn't been withdrawn. And I think what's needed as
Speaker 1: a proper narrative now to explain why these circumstances merit
Speaker 1: particular central bank responses. I think we have to get
Speaker 1: away from the idea that if anything goes wrong then
Speaker 1: central banks have to step in and throw money at
Speaker 1: the problem, right if you want to respond to what
Speaker 1: what Lord King has said. But I'm also wondering how
Speaker 1: emerging market central banks, you would say, have responded and
Speaker 1: matched that that challenge that that Mervin is outlined well.
Speaker 1: Janet talked about the advanced country central banks have done
Speaker 1: having done a fantasty job, and I think this did
Speaker 1: help many emerging markets which were subject to the same
Speaker 1: kind of stress that you saw in the beginning of
Speaker 1: the crisis in March, and the accommodative policies of the
Speaker 1: Federal Reserve the ECP Bank of Japan helped alleviate some
Speaker 1: of that e M stress. Also, emerging markets have adopted
Speaker 1: some of the tools from the Industrial country center bank
Speaker 1: toolkit to help their governments do the spending which has
Speaker 1: Merman said is extremely important to ensure the real economy
Speaker 1: doesn't collapse. That you you maintain the body economic by
Speaker 1: helping small and medium enterprises and helping households. That requires
Speaker 1: spending and central banks in Indonesia, Poland across the emerging
Speaker 1: world have supported their governments. The key question now, of course,
Speaker 1: is how do you sort of ensure that that bridge
Speaker 1: which was built to the end of the virus, it
Speaker 1: actually the extents that far and there are fears in
Speaker 1: industrial countries it may be too short. And emerging markets
Speaker 1: didn't build a pretty strong bit breach in the first
Speaker 1: place because they had very limited resources, and that means
Speaker 1: that there is far more stress which has built up
Speaker 1: within the system, which has been hidden by moratoria by
Speaker 1: payment sort of postponements, and that stress has to be
Speaker 1: dealt with. This is not a central bank problem. There's
Speaker 1: a problem of fixing the judicial system so that it
Speaker 1: can alleviate stress, fixing the you know, debt renegotiation system.
Speaker 1: And again I landed by saying, so far it's been
Speaker 1: very good. But whenever you get into these kinds of policies,
Speaker 1: exit is often a great issue. How do we exit
Speaker 1: without tanking the system? Once again, and it's too early
Speaker 1: to start thinking about about it, but it is a
Speaker 1: question which will face us down the line. Larice I was,
Speaker 1: let's take it just but if we take from the
Speaker 1: other three speakers, old has gone right in the major
Speaker 1: central banks response, But what would you have done differently?
Speaker 1: The big thing was preventing a financial collapse. The central
Speaker 1: banks acted definitively to do that. That's all that was
Speaker 1: ultimately historically important. The mistake is for them to vastly
Speaker 1: exaggerate their continuing relevance. They lack, starting at the zero
Speaker 1: bound where we are, the capacity to provide meaningful impetus
Speaker 1: to their economies in any way that is consistent with
Speaker 1: any concept of central bank functioning. They do not have
Speaker 1: the capacity to meaningfully affect the degree of inequality. They
Speaker 1: do not have the capacity to vaccinate people. They do
Speaker 1: not have the capacity to fight uh climate change, and
Speaker 1: they need to acknowledge the limitations of their influence in
Speaker 1: a clear your way, so there can be no pretending
Speaker 1: about what they're going to do, and that the authorities
Speaker 1: have the responsibilities they do. The central banks have also,
Speaker 1: in my view, not put adequate emphasis on the global
Speaker 1: dimensions of this problem. A striking feature of the contrast
Speaker 1: between this crisis and the last crisis is that the
Speaker 1: last crisis had a major response from the I m
Speaker 1: F issue in sevesdrs, big increases in lending from the
Speaker 1: World Bank that was driven by the global community. There
Speaker 1: has been no baldness at the global level comparable to
Speaker 1: the boldness at the national level, and that could get
Speaker 1: us in real trouble uh down the road, as ragou
Speaker 1: Uh points out, And frankly, the central bankers, because they
Speaker 1: want to curry domestic political favor in each country, have
Speaker 1: not had enough to say about that. Just to come
Speaker 1: back on Uh, you talk about a lack of boldness,
Speaker 1: I mean there's time. As you've proposed as one of
Speaker 1: the things that could happen to support the global system,
Speaker 1: a big new issuance of IMF Special drawing rights SDRs.
Speaker 1: We have to ask you, have you persuaded incoming President
Speaker 1: Joe Biden of back yet. I'll speak for themselves. I'm
Speaker 1: optimistic that the the US will not be the kind
Speaker 1: of block on that proposal that it has been before.
Speaker 1: And of course it's possible to do substantial things issuances
Speaker 1: of five billion dollars without congressional approval, So I'm optimistic
Speaker 1: that we'll see progress on that. But I think that
Speaker 1: unlike the central bankers of an earlier era, you have
Speaker 1: seen much less discussion in the Central banking uh community
Speaker 1: of the global imperative, particularly the challenges necessary if emerging
Speaker 1: markets are to avoid a wave of financial crises going forward,
Speaker 1: the issues associated with debt relief, and I think that's
Speaker 1: been unfortunate, and I have to say, I think it's
Speaker 1: been because the central banks have been excessively focused with
Speaker 1: their domestic politics, which leads them to talk about subjects
Speaker 1: like small business, like the environment, which are really not
Speaker 1: basically within their proper remit. John, Yeah, do you agree
Speaker 1: that that maybe Defense shouldn't be talking about needing to
Speaker 1: target the difference between black and white unemployment rates, for example,
Speaker 1: as it did in this summer, and shouldn't be engaging
Speaker 1: on this broader agenda's climate change. So the FIT is
Speaker 1: always operated under a dual mandate. It's inflation and maximum employment.
Speaker 1: And in this environment of very low inflation to low inflation,
Speaker 1: there's really no conflict whatever between these two goals. And
Speaker 1: the FED is really focused on trying to create a
Speaker 1: very strong job market, and I think that they have
Speaker 1: made that clear. I'm not sure everyone in the public
Speaker 1: on main street understands that, but full employment is a
Speaker 1: goal that they order to pursue. Um I agree with
Speaker 1: Larry that the effective lower bound. There's a big constraint.
Speaker 1: At this point, they're doing almost all they can do.
Speaker 1: They need fiscal policy to help, but UM, when they
Speaker 1: talk about inequality and the disproportionate burdens on minority workers,
Speaker 1: what they can do is to try to pursue the
Speaker 1: strongest possible job market, because when they're successful at that,
Speaker 1: as they were prior to the pandemic with unemployment, it
Speaker 1: a fifty year lower three and a half percent that
Speaker 1: brings benefits, particularly to less skilled and minority workers. When
Speaker 1: job markets are really tight, we saw wages rising most
Speaker 1: rapidly at the bottom of the wage distribution, UM workers
Speaker 1: being pulled off to this off from the sidelines. Coming
Speaker 1: back into the labor market, firms finding it incredibly difficult
Speaker 1: to hire lowering qualifications, engaging in their own training to
Speaker 1: bring people up to speed, UM willing to hire people
Speaker 1: that with a weak labor market, their resumes would have ended,
Speaker 1: wouldn't have been looked at it all. And the FED
Speaker 1: has recently revised its framework UM for conducting monetary policy
Speaker 1: and emphasized that full employment is a broadened inclusive goal,
Speaker 1: and they've changed their operating strategy to and because of
Speaker 1: the importance of the effective lower band to pursue that
Speaker 1: with vigor and I think that's appropriate, and I think
Speaker 1: it's the strongest contribution that central banks can make to
Speaker 1: UM trying to deal within equality. They don't have other tools.
Speaker 1: Can I just see whether we're in agreement? I am
Speaker 1: pent in agree with the agreement with you on the
Speaker 1: absolute importance of maximizing employment in the current context when
Speaker 1: there's no real danger of getting inflation to an excessive level.
Speaker 1: I am in a hundred agreement with you that maximizing
Speaker 1: employment is the best social program of all and confers
Speaker 1: all sorts of benefits. But don't we think that central
Speaker 1: banks really need to be careful about holding out the
Speaker 1: idea that they are relevant to sectoral issues involving differentials
Speaker 1: between one sector and another, or structural issues like environmental protection.
Speaker 1: Would you agree, for example, that any idea that the
Speaker 1: BED should make special efforts to buy green bonds is
Speaker 1: a confusion? So UM, I don't think. I've never heard
Speaker 1: the FIT say that they're trying to target the unemployment
Speaker 1: rates or situations of any particular group in the tight
Speaker 1: labor market. The gaps I think between UM, for example,
Speaker 1: the unemployment rates of minorities and white skins to narrow.
Speaker 1: I don't think there's anything they can do on that
Speaker 1: front beyond a generally strong labor market. So it would
Speaker 1: be a mistake, I think, to say we're targeting the
Speaker 1: unemployment rate of any particular groups. And on sustainable UM goals,
Speaker 1: I think it does make sense for in supervision to
Speaker 1: be taking the risks from climate change, both climate related
Speaker 1: risks and the risks of changes and prices um and
Speaker 1: stranded assets as countries adopt meaningful climate policy, to consider
Speaker 1: that as a risk to banking organizations, and to do
Speaker 1: stress tests to look at that. But of course we
Speaker 1: need public policy oriented toward making a big difference on
Speaker 1: climate change, and I agree with you that is not
Speaker 1: something central banks can be asked to accomplish. Not the Kate.
Speaker 1: We remember the title of this is about main Street
Speaker 1: or Wall Street. Given what what Larry has said, do
Speaker 1: you think that central Banks or the Bank of England
Speaker 1: or other central banks have done enough to show that
Speaker 1: they're supporting main Street not just Wall Street. Do you
Speaker 1: worry about the fact that they are perceived to be
Speaker 1: propping up asset prices as a main tool of policy
Speaker 1: at the moment. Well, I am concerned that the fact
Speaker 1: that the narrative about why monetary using has been so
Speaker 1: strong in these particular circumstances, that narrative hasn't been made clear.
Speaker 1: So it's not surprising that some people have gone away
Speaker 1: with the impression that the objective of central banks is
Speaker 1: to support asset prices. I don't think that is their objective,
Speaker 1: but I think I can see why some people might
Speaker 1: think it. I think Chaney is very compelling in arguing
Speaker 1: that the dual mandate for the FED allows the FED
Speaker 1: to pursue strategies that will maximize employment. And it's reasonable
Speaker 1: to argue you and to explain why that strategy will
Speaker 1: have benefits, for why the constituencies in the country, not
Speaker 1: just the aggregate, but individual groups would benefit. To Larry Summers,
Speaker 1: in the response to this great need, the popular need
Speaker 1: to show that the policy is more inclusive, that globalization
Speaker 1: could be more inclusive, and to the long list of
Speaker 1: things that you said that central banks are impotent about,
Speaker 1: could be just to say central bank's main role now
Speaker 1: is just to make large scale fiscal action affordable, just
Speaker 1: as they effectively have this year by keeping rates low,
Speaker 1: making it possible for governments to borrow. Should they just
Speaker 1: recognize that that is their main role at this point.
Speaker 1: I wouldn't put it that way. I would put it
Speaker 1: that their main role is to support stable, non inflationary
Speaker 1: economic growth, and I think for the foreseeable future that's
Speaker 1: likely to involve keeping interest rates at very low levels.
Speaker 1: I think the deep problem, the deep macroeconomic problem that
Speaker 1: the world has today is that savings are exceeding the
Speaker 1: natural level of private investment, putting downwards pressure on interest
Speaker 1: rates to near zero real interest rate or below UH
Speaker 1: levels and leading to sluggish growth and lack of inflation.
Speaker 1: And that is the world's fundamental problem. And it is
Speaker 1: not a problem that central banks can on their own resolve.
Speaker 1: It is a problem that central banks can acknowledge. Is
Speaker 1: Janet certainly has in her period in the period after
Speaker 1: she left office in very strong and clear ways as
Speaker 1: the evidence has become UH clearer. But they need to
Speaker 1: point up this as a problem, recognize that it has
Speaker 1: important implications for fiscal policy, that it has important implications
Speaker 1: for the ways in which governments manage their debts, and
Speaker 1: that they are prepared UH to UH do their part.
Speaker 1: Doesn't necessarily mean explosions in debt, but it does mean
Speaker 1: careful thought about a range of fiscal and structural policies.
Speaker 1: But we do need to recognize that Whereas from the
Speaker 1: period from the late nineteen seventies until the early two thousands,
Speaker 1: the central macroeconomic problems were the temptation to inflate and
Speaker 1: the crowding out of private investment by budget deficits, today
Speaker 1: the central problem is absorbing all the savings in a
Speaker 1: healthy way so that we have strong economic growth and
Speaker 1: we don't have huge leverage and huge financial bubbles. And
Speaker 1: that is a fundamentally different macro economic problem. The calls
Speaker 1: for fundamentally different macro economic strategies, of which there may
Speaker 1: be a role for inflation targeting, but it is largely
Speaker 1: beside the point in a world where the real problem
Speaker 1: is insufficient price inflation and excessive asset price inflation, and
Speaker 1: we need to adjust central banks paradigm to take account
Speaker 1: of uh those realities. Look, if I can say one
Speaker 1: more thing, the world's financial leaders said after Dodd Frank
Speaker 1: was passed, after the Financial Stavility Forum did all its things,
Speaker 1: that we now had a much healthier financial system that
Speaker 1: could continue to function without large scale bailouts less than
Speaker 1: five years after that was definitively proclaimed. We've had the
Speaker 1: biggest set of actions directed at propping up the financial
Speaker 1: system in UH global history. And while it's looking okay
Speaker 1: right now, as Ragou said, we're not sure that even
Speaker 1: what we've done is going to be enough to hold.
Speaker 1: That suggests the need for a great, all a fundamental rethinking.
Speaker 1: John Yellen, what's your response to what what Larry was
Speaker 1: just saying? Well, I agree very much with Larry. I
Speaker 1: think he gave an excellent description of what the core
Speaker 1: problem is that the developed world faces. That there is
Speaker 1: a glood of saving and a shortage of investment. And
Speaker 1: that's why the effect of lower bound is such an
Speaker 1: important constraint. And it's what really means that we have
Speaker 1: to have fiscal policy, structural policy, and things other than
Speaker 1: just relying on central banks UM to UH keep healthy
Speaker 1: growth with low inflation UM. I think central banks need
Speaker 1: to do what they can, but then not overstate UM
Speaker 1: what it's possible for them to do UH to FED
Speaker 1: his recently concluded its strategic policy review and made adjustments
Speaker 1: to UM its monetary policy strategy, adopting a system called
Speaker 1: flexible average inflation targeting. I think this is an appropriate change.
Speaker 1: It somewhat improves the scope for monetary policy to support
Speaker 1: the economy when short term interest rates are often constrained
Speaker 1: by the effect of lower bound I think it's helpful
Speaker 1: in preventing a cycle of falling inflation feeding falling inflation expectations.
Speaker 1: But well, I strongly believe central banks need to be
Speaker 1: independent and need to do everything they can. The changes
Speaker 1: they've made, they're not a game changer from the point
Speaker 1: of view of secular stagnation and bottom line, I agree
Speaker 1: with Ring on which which required it's a lot about
Speaker 1: the importance of fiscal policy at this moment. I have
Speaker 1: to ask you, would you like to be more closely
Speaker 1: involved in that as a treasury Treasury secretary for the
Speaker 1: new administration. I don't have anything for you, and that
Speaker 1: I'm sorry you don't think you'd be a good Treasury secretary?
Speaker 1: Could I ask you that? I could probably ask the
Speaker 1: rest of the panel that for other people to decide.
Speaker 1: I think, yeah, she would be a great Treasury secretary.
Speaker 1: But let let me talk about another issue, which is
Speaker 1: related to Larry's secular stagnation idea. I mean, in some sense,
Speaker 1: the hope for the world was that fast growing emerging
Speaker 1: markets and developing countries would provide that demand, which sorely
Speaker 1: seems lacking at the aggregate level. One of the big
Speaker 1: concerns we should have with this pandemic is how much
Speaker 1: scarring has gone on in those economies because they haven't
Speaker 1: had the ability to provide the kind of fiscal as
Speaker 1: well as credit support and industrial countries have. So my
Speaker 1: worry is, apart from the North Asian economies which seem
Speaker 1: to have come out quite well from this crisis, many
Speaker 1: countries in Latin America, Africa, South Asia are going to
Speaker 1: suffer some diminishing in growth potential going forward, coupled with
Speaker 1: some of the impediments to create that we see. I
Speaker 1: think this is a cause for concern for the global economy.
Speaker 1: It's something that we should very much work very hard
Speaker 1: over the next few years to try and reverse. And
Speaker 1: that's where Larry's called for global sort of leadership I
Speaker 1: think makes a huge is a huge importance. We all
Speaker 1: talk about cooperating with China on the most important global issues,
Speaker 1: there needs to be cooperation with China on the whole
Speaker 1: set of issues around support for emerging markets. If central
Speaker 1: banks could explain, not that they can do it, but
Speaker 1: that ultimately the financial stability of all the institutions they're
Speaker 1: responsible for, the financial stability of their economies depends much
Speaker 1: more urgently on achieving successful global cooperation than it does
Speaker 1: on anything else. If they could make that case, they
Speaker 1: would be making a much greater contribution to the current
Speaker 1: global moment than they currently are. I agree with Mervin,
Speaker 1: but I think the world looks to the central banking
Speaker 1: community two explain the nature of the macro economic challenges
Speaker 1: before it, even if the central banks themselves lack the
Speaker 1: tools to deal with it. And if the central banking
Speaker 1: community can explain, as Janet uh just is is. I
Speaker 1: tried to um a little bit in talking about the
Speaker 1: absorption of saving problem. If that problem can be laid
Speaker 1: out clearly, that is the first step. It's not doesn't
Speaker 1: solve it to lay it out clearly, but it's a
Speaker 1: crucial step towards the whole range of measures. And you're
Speaker 1: absolutely right, Mervin, that it involves a million different things
Speaker 1: that are necessary to resolve it. But first we need
Speaker 1: to to find that problem, and that's something central banks
Speaker 1: can surely do. Lord Mervin King Ragan, Janet Yellen and
Speaker 1: Larry Summers. Thank you very much. We could end the
Speaker 1: podcast there, but I wanted to give you a short
Speaker 1: taste of my conversation with the Irish tea shop or
Speaker 1: Prime Minister Mihal Martin. He'd recently had a warm phone
Speaker 1: conversation with President elect Joe Biden and I couldn't resist
Speaker 1: asking him about that. But come January one, the UK
Speaker 1: will no longer be trading on the rules it had
Speaker 1: while it was inside the European Union. It will be
Speaker 1: fully out and with six weeks to go, we still
Speaker 1: don't know what comes next. We do know that Ireland
Speaker 1: is stuck in the middle and has a huge stake
Speaker 1: in what happens. I started by asking him whether he
Speaker 1: thought these last minute negotiations we're going to produce a deal.
Speaker 1: I would still hope there will be a comprehensive trade deal,
Speaker 1: but it will be challenging my sense of if there's
Speaker 1: a political will in the United Kingdom to get a
Speaker 1: Brexit deal done, then it will happen. I think the
Speaker 1: European Union want a deal of that. I'm clear not
Speaker 1: an advanced but it's our view and it's Ireland's as
Speaker 1: a member state that is in the interests of our
Speaker 1: citizens and respect of economies to get a deal that
Speaker 1: makes sense, and no deal would be very damaging to
Speaker 1: our respective economies. Logic dictates we should we do. We
Speaker 1: should do everything we pass we can to get a deal.
Speaker 1: It's a responsible thing as politicians to do in behalf
Speaker 1: of the citizens that we represent. We now have an
Speaker 1: incoming US president who has made very clear his views
Speaker 1: on the Good Friday Agreement and the importance of their
Speaker 1: not being a hard border between Northern Ireland and Ireland.
Speaker 1: Do you think that changes the calculus? Do you think
Speaker 1: that makes it more likely that Boris Johnson would compromise
Speaker 1: with the EU? I think it's it's held when I
Speaker 1: spoke to Joe Biden during the week, very warm, clearly
Speaker 1: very proud of his Irish heritage, and it makes no
Speaker 1: secret of that, and we're looking forward to his presidency
Speaker 1: to be frank from that perspective. But in the more
Speaker 1: broader issue is the prospects of a Biden presidency being
Speaker 1: more multilateral in its trust in it and its impulse.
Speaker 1: That was careful my conversation with the President elect that
Speaker 1: he was going to engage with Europe now that could
Speaker 1: That's probably more significant in terms of the impact on
Speaker 1: the UK's response, because it seems to me that the
Speaker 1: United Kingdom values its relationship with the United States and
Speaker 1: vice versa. I think President Biden would too, and so
Speaker 1: therefore I think the US the new presidency would prefer
Speaker 1: a deal between Europe in the UK. I think UK
Speaker 1: is conscious of that, and the president of Lex three
Speaker 1: climate change, I think Boris Johnson would like him in
Speaker 1: Gasgow for example, for the cops. So I can see
Speaker 1: an alignment of of interests here sparked by the President's
Speaker 1: commitment to montinaturalism and to resetting. If you like the
Speaker 1: sets of relationships between the US and Europe that might
Speaker 1: be better, that are wight enhanced, the prospects of a deal,
Speaker 1: weld broaden it out of it. I mean, you say, itself,
Speaker 1: it's going to be a shock when we even if
Speaker 1: you had a deal, it's a big change from what
Speaker 1: we have before. And the deal itself is not like
Speaker 1: it is likely to be quite thin compared to what
Speaker 1: might have been expected. If we're thinking about global cooperation
Speaker 1: and inspiring more negotiation on trade globally, I mean, are
Speaker 1: there any positive lessons from this negotiation for the rest
Speaker 1: of the world or all Are they all negative? I
Speaker 1: think the the important lesson is I don't engage in
Speaker 1: any sort of knee jerk reactions to anything, and don't
Speaker 1: start announcing things or doing things without adequate preparation in advance.
Speaker 1: I mean, these are very very weighty issues. They're complex,
Speaker 1: they have a lot of unintended consequences um and they
Speaker 1: affect people's lives and livelihoods fairly significant as we know. Well.
Speaker 1: I would hope but that the election of President Biden
Speaker 1: as well as that we would move to a more
Speaker 1: open trading prospective. And I think, you know, we're all
Speaker 1: perplexed at times as to what UK would decide to
Speaker 1: leave one of the largest trading blots in the world,
Speaker 1: which has brought about significant economic advancement for all of
Speaker 1: our economies in Europe. So I think our lessons to
Speaker 1: be learned in terms of the basic principles that that
Speaker 1: really power in economy, and I think we need to
Speaker 1: be very conscious of that and reverse any move towards
Speaker 1: protectionism and move towards an open trading environment. Obviously, we've
Speaker 1: had a second wave of COVID coming a US Europe
Speaker 1: in the last couple of months are in high frequency
Speaker 1: indicators of the economy show that that is causing a
Speaker 1: double dick in many economies in terms of activity. How
Speaker 1: hopeful are you that we can have a faster recovery
Speaker 1: this time around and maybe even still see that v
Speaker 1: shape recovery that people have talked about. I think the
Speaker 1: success or otherwise of vaccines is going to be a
Speaker 1: very important story from two dozen twenty one um and
Speaker 1: from the Irish perspective, we we we moved early on
Speaker 1: the second wave, so we're I think the second lowest
Speaker 1: incidents in Europe. Now we're doing very well in terms
Speaker 1: of a downward trajectory of cases, downward in numbers in
Speaker 1: hospital and I see you. I think in the early
Speaker 1: part of the tournament twenty one, depending on the efficacy
Speaker 1: of vaccines as the marriage, I think the by the
Speaker 1: middle of two dozen twenty one, it could be better
Speaker 1: than we might have anticipated. And but I think we're
Speaker 1: we're learning a lot more about the virus that will
Speaker 1: inform how we exit this level five of restrictions and
Speaker 1: how long we can protect livelihoods as well as lives,
Speaker 1: and that's important and to get people back working again
Speaker 1: in certain sectors travel, tourism, aviation, hospitality. Those are the
Speaker 1: sectors that I mean that that have been hardest hit.
Speaker 1: We believe all those sectors can come back much more strongly,
Speaker 1: more quickly. And finally, just to go back to President Biden,
Speaker 1: you said yourself, he's one of the presidents who American
Speaker 1: presidents who is long boasted of his Irish roots. Do
Speaker 1: you think it's impossible that the Irish, the special relationship
Speaker 1: that America has with the European country will be with
Speaker 1: Ireland under President Biden, not the UK. Well, I think
Speaker 1: he values his relationship with the UK, but there's no
Speaker 1: question for my conversation last week, he loves Ireland. He's
Speaker 1: very proud of his Irish heritage. Even in our conversation
Speaker 1: we spoke about his his great grandparents and his grandparents
Speaker 1: home in County leve and in in Mail and I
Speaker 1: said to him, look, we'd like to see you an
Speaker 1: aranand and he said, you're not going to be able
Speaker 1: to start me from coming. El Martin, thank you very much,
Speaker 1: You're very welcome. Indeed, thanks for listening to Stephanomics. We'll
Speaker 1: be back next week with more on the ground reporting
Speaker 1: and analysis on anything we think you might want to
Speaker 1: hear about. Remember you can always find us on the
Speaker 1: Bloomberg Terminal, website, app, or wherever you get your podcasts.
Speaker 1: And for more news and analysis from Bloomberg Economics, you
Speaker 1: should follow at Economics on Twitter. This episode was produced
Speaker 1: by Magnus Hendrickson, with special thanks to t Shop, Michael Martin,
Speaker 1: Larry Summers, rum Rajan Janet Yellen, Lord, Mervin King, and
Speaker 1: Cat Glass. Lucy Meekin is the executive producer of Stephanomics
Speaker 1: and the head of Bloomberg Podcast is Francesca Levi. Four
Speaker 1: th