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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: with David Gura. Daily we bring you insight from the

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Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg

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Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,

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Speaker 1: on the Bloomberg The Morning on a Friday, the thirteenth

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Speaker 1: of October, This is Bloomberg Surveillance on Bloomberg Radio. David

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Speaker 1: Gura in New York, Tom Keene in Washington in our

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Speaker 1: Bloomberg Studios Lucky on this Friday to have another great

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Speaker 1: lineup of guests from the annual meetings of the International

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Speaker 1: Monetary Fund and the World Bank. New Under Secretary of

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Speaker 1: the Treasury for International Affairs, David mal Pass is going

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Speaker 1: to join us. Steril Roubini will be here as well,

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Speaker 1: along with David Rubinstein, and we're gonna have an interview

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Speaker 1: in just a couple of minutes with the President and

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Speaker 1: CEO of the Fete Reserve Bank of Boston, Eric Rosen.

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Speaker 1: Green is gonna sit down with our Michael McKean. Now

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Speaker 1: we go to Boston, our colleague Michael mcke international Economics

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Speaker 1: and Policy correspondence there with a big interview. Here's Mike.

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Speaker 1: We know the what we know how you're thinking about

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Speaker 1: monetary policy going forward, but I want to ask about

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Speaker 1: the why you said that December move is justified and

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Speaker 1: three maybe next year, but can you tell us why

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Speaker 1: what justifies that kind of policy. So the unemployment rate

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Speaker 1: is now at four point two percent by historical standards,

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Speaker 1: that's a pretty low unemployment rate. Inflation is lower than

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Speaker 1: we might have expected at the stage. We're well belower

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Speaker 1: two percent inflation target. But my expectation is that that's

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Speaker 1: a temporary transition. And if you look both at surveys

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Speaker 1: that the Summary of Economic Projections the participants in dafones

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Speaker 1: C provide as well as private forecasters, they're expecting inflation

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Speaker 1: to be much closer to two percent next year. So

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Speaker 1: my worry is that we get to a place that

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Speaker 1: is unsustainable and can be reflected either in wages and

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Speaker 1: prices starting to go up too quickly, or it can

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Speaker 1: be reflected and asset prices going up too quickly. What

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Speaker 1: we want is a sustainable recovery, and that would imply

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Speaker 1: keeping the unemployment rate fairly close to what we expect

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Speaker 1: full employment to be. But a year ago Eric rosen

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Speaker 1: Grid to Bloomberg News said that we'll presumably be very

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Speaker 1: close to our two percent, if not our two percent

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Speaker 1: inflation target by the end of two thousand seventeen. And

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Speaker 1: I'm picking on you, but that's the kind of forecast

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Speaker 1: that has drawn h some questions, shall we say on

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Speaker 1: Global Wall Street right, Well, if you look back to March,

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Speaker 1: we still were expecting to percent inflation, and one of

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Speaker 1: the temporary things that occurred at that time was the

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Speaker 1: wireless pricing change that actually had a big impact on

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Speaker 1: the current numbers. What we're trying to get is the

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Speaker 1: underlying trend in prices, and so there can be relative

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Speaker 1: prices that can change a lot. That's one reason why

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Speaker 1: we focus on core inflation rather than total inflation, because

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Speaker 1: sometimes we get big spikes up in oil that are

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Speaker 1: not predicted. Sometimes oil prices go way down and that's

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Speaker 1: not predicted as well. So we're not trying to address

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Speaker 1: all the relative price changes that occur in the economy.

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Speaker 1: We're trying to get that underlying rate. And so the

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Speaker 1: reported inflation for right now is quite low, but I

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Speaker 1: think it's partly the reflection of temporary factors. We're about

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Speaker 1: to have more temporary factors. The hurricane is likely to

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Speaker 1: have had temporary effects on inflation as well. So oil

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Speaker 1: prices are a bit higher because the refineries have been

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Speaker 1: shut down, and places in Texas that were affected by

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Speaker 1: the hurricane, and some kinds of housing supplies and other

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Speaker 1: things maybe a little bit elevated as a result of

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Speaker 1: the rebuilding that's going to go on. That's not something

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Speaker 1: we should react to either. So we can have periods

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Speaker 1: where we get relative prices that go down or up.

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Speaker 1: We want to get that underlying inflation rate. My expectation

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Speaker 1: is we will get an underlying inflation rate that will

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Speaker 1: be relatively close to two percent over the course of

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Speaker 1: next year. Well, the idea that there's the temporary iosyncratic

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Speaker 1: reasons for inflation being low on the domestic front is

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Speaker 1: one thing, but inflation is low around the world. Have

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Speaker 1: inflation dynamics changed, So it's certainly a possibility that inflation

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Speaker 1: dynamics have changed. I think it's too soon to make

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Speaker 1: that prediction. One of the reasons why inflation has been

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Speaker 1: low around the world as we've had a long, slow

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Speaker 1: recovery from very serious financial conditions both in here, Japan, Europe,

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Speaker 1: all experience very significant recessions, very elevated on employment rates,

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Speaker 1: which meant that inflation was much lower than it would

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Speaker 1: have been if we had stayed at a more sustainable pace.

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Speaker 1: For the economies around the world. We're now getting to

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Speaker 1: a different stage of that cycle, where at least in

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Speaker 1: the United States were already beyond what my estimate of

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Speaker 1: full employment is. In Japan they're close to full employment

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Speaker 1: as well. Europe still has a way to go, but

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Speaker 1: I would say that the labor markets are improving around

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Speaker 1: the world, and that's one of the reasons why I'm

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Speaker 1: expecting inflation very pressures to get us back up to

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Speaker 1: two percent over the course of the next year. Well,

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Speaker 1: you see un employment is below your measure of full employment. Uh,

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Speaker 1: the inflation arry doesn't respond, though, Do you question yourself?

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Speaker 1: Do you say, maybe I don't understand what's going on

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Speaker 1: with inflation anymore? So we certainly have to ask ourselves

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Speaker 1: whether there's been a more permanent shift in inflation dynamics

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Speaker 1: that we don't understand. I think at this point it's

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Speaker 1: too early to make that kind of judgment. Wages and

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Speaker 1: salaries are slowly going up, there's still at a level

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Speaker 1: that's relatively low by historical standards, but we're definitely seeing

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Speaker 1: wage growth, we're definitely seeing the employment cost index go up,

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Speaker 1: and those are indications of a tight labor market. And

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Speaker 1: we should remember it's only the last couple of quarters

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Speaker 1: where we've had an unemployment rate that would be below

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Speaker 1: my four point seven full employment. So you still believe

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Speaker 1: in the Phillips curve model. I believe that if labor

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Speaker 1: markets get tight enough that you'll start seeing wage and

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Speaker 1: price pressures over time. Does the you fed have an

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Speaker 1: alternative explanation? Uh? If you If that model doesn't come through,

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Speaker 1: if we don't see inflation start to rise again, then

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Speaker 1: what do you do? Well, we'd have to try to

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Speaker 1: understand what the reasons for that are. There certainly have

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Speaker 1: been a variety of explanations that have been thrown out.

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Speaker 1: One would be greater globalization as a possibility. If you

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Speaker 1: look at the imports that we have in the United States,

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Speaker 1: it's not dramatically different than ten years ago. So I'm

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Speaker 1: not sure globalization actually does a very good job of

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Speaker 1: explaining why inflation would be persistently low when we had

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Speaker 1: very tight labor markets. But that's something we'd have to

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Speaker 1: continue to look at People talk about structural changes in

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Speaker 1: the economy, but for a persistent change in prices, you

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Speaker 1: need that structural change to keep continuing going forward. So

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Speaker 1: the important thing is we're trying to get at that

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Speaker 1: underlying rate of wages and prices. And it would be

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Speaker 1: very unusual if we got very very tight labor markets

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Speaker 1: and there was no response. It would basically be saying

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Speaker 1: labor demand and supply no longer works, or that corporations,

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Speaker 1: as they start facing higher wages, are willing to continue

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Speaker 1: to shrink their price margins. And my expectation is we

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Speaker 1: will see as labor markets titan wages go up, and

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Speaker 1: we'll see that firms want to maintain their profit margins,

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Speaker 1: and so with a lag you'll start seeing prices move

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Speaker 1: up as well. You talk to CEOs all the time

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Speaker 1: in your district. What are they telling you about their

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Speaker 1: pricing power? Uh, they're actually telling me that things are

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Speaker 1: changing now that they are seeing much more wage pressures.

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Speaker 1: They're finding it more difficult to find employees now in

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Speaker 1: a much wider range of job categories than it was previously.

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Speaker 1: So before it would be people in the computer industry

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Speaker 1: that we're worried about cybersecurity and pretty isolated areas. Now

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Speaker 1: you're hearing stories that are much more general about difficulty

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Speaker 1: and getting bank tellers, difficulties and getting bakers. These aren't

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Speaker 1: jobs that you'd normally expect to be in or its supply.

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Speaker 1: So I think those are examples where we're starting to

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Speaker 1: see the labor market heat up, and you're seeing it

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Speaker 1: in wage increases in those places where labor markets are

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Speaker 1: quite tight. CPI today retail sales, you've mentioned that the

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Speaker 1: numbers are going to be distorted for a while because

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Speaker 1: of the hurricanes. So how are you going to look

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Speaker 1: at the data in December if the data aren't necessarily

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Speaker 1: giving you an accurate picture of what's happening in the

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Speaker 1: economy between now and then. Certain data series are more

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Speaker 1: or less affected by the weather, so we'll have to

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Speaker 1: factor that in good examples the employment report, so the

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Speaker 1: payroll employment number was quite low. UM. The reason it

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Speaker 1: was quite low is definitely hurricane related. It was particularly

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Speaker 1: in leisure and hospitality areas where there were less employment,

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Speaker 1: and that reflected the fact that for the employment report, UM,

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Speaker 1: if you're not paid in that week, you're not included

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Speaker 1: it as employed for the employment report. On the payroll side,

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Speaker 1: but on the survey, even if you didn't get paid

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Speaker 1: that week, you're still included as being employed. So the

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Speaker 1: unemployment rate actually went from four point four to four

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Speaker 1: point two percent unemployment. So between those two, the series

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Speaker 1: that I would think to be less distorted would be

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Speaker 1: the unemployment rate, which is from a survey that's not

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Speaker 1: going to be as affected as the payroll survey, where

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Speaker 1: it's UH surveying firms. So that's an example that we're

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Speaker 1: just going to have to look through the data and

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Speaker 1: try to figure out which data is most affected by

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Speaker 1: the kinds of shocks that we've gotten from the series

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Speaker 1: of hurricanes that have hit the United States and obviously

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Speaker 1: devastated those areas, but also made a lot of our

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Speaker 1: data less reliable. We are talking with Boston FED President

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Speaker 1: Eric Rosen gred worldwide on Bloomberg Television and radio. You

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Speaker 1: raise rates in December. Maybe UH, is the current level

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Speaker 1: of interest rates another rate rise inhibiting growth in any

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Speaker 1: way or keeping otherwise qualified people maybe from getting jobs,

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Speaker 1: as some of your colleagues has suggested, might be the case.

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Speaker 1: But we're expecting growth in the second half this year,

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Speaker 1: at least at the Boston FED to be roughly two

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Speaker 1: and a half percent, So that's faster than we think

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Speaker 1: potential is in the economy, and that would imply that

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Speaker 1: the unemployment rate would keep going down. So we want

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Speaker 1: to make sure that we don't get to a place

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Speaker 1: where we don't have a sustainable, continuing recovery. And so

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Speaker 1: that's why I think gradually increasing rates does make sense.

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Speaker 1: We're going to be at a point where potentially we

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Speaker 1: get an unemployment rate below four That is an area

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Speaker 1: where I would expect to see more obvious trends in

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Speaker 1: the wage and salary data, and we'll see if that

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Speaker 1: actually um does happen. Claudio Barrio, he's the chief economist

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Speaker 1: at the Bank for International Settlement, says, are you the

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Speaker 1: only thing that low rates are doing these days? He's

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Speaker 1: leading to an unsustainable build up of debt, which will

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Speaker 1: have its own problems down the road. Do you agree

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Speaker 1: with that? I mean, one of my concerns with low

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Speaker 1: rates for a long period of time is that people

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Speaker 1: do try to reach for yield, and that can be

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Speaker 1: both households and firms. That if you're or a household

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Speaker 1: and saving for retirement, it is a problem if you're

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Speaker 1: keeping your money in a short term CD that's paying

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Speaker 1: a very low interest rate, and you start taking more

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Speaker 1: risk than you otherwise would do. Firms have that same

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Speaker 1: kind of behavior, so I do worry that you end

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Speaker 1: One consequence of very low interest rates for a long

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Speaker 1: period of time is that people take on more risk,

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Speaker 1: and then when something does happen in the economy a

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Speaker 1: negative shock occurs, that they're less prepared to be able

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Speaker 1: to handle that. So that's one reason to want to

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Speaker 1: normalize interest rates. When we get to a point where

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Speaker 1: we think the economy is likely to get back to

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Speaker 1: two percent inflation, and where we're already very close, if

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Speaker 1: not beyond full employment, do you think there's any danger

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Speaker 1: that the economy moves towards contraction in the next few years.

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Speaker 1: When would you see this business cycle coming to an end?

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Speaker 1: So economists are fond of saying that UH recoveries don't

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Speaker 1: die of old age, which is that is not particularly

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Speaker 1: time dependent. It really is a reflection of either policy

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Speaker 1: mistakes that occur with fiscal or monetary policy, or mistakes

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Speaker 1: that occur somewhere else in the world that generate results

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Speaker 1: that we don't anticipate. So recessions are really hard to predict,

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Speaker 1: and if you look at most private forecasters, they almost

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Speaker 1: never predict them. So those unanticipated events by their very

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Speaker 1: nature difficult to predict. I'm not expecting a recession in

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Speaker 1: That's certainly possible. There are job interviews underway in Washington.

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Speaker 1: I know you're not going to comment on prospective FED

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Speaker 1: chairs individually, but let me ask you this, how much

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Speaker 1: sway does a new chairman have? UH. Some people have

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Speaker 1: to change the way we do policy. It is a committee,

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Speaker 1: So leadership matters, and who the chair is UH does

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Speaker 1: make a difference to how monetary policy evolves over time,

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Speaker 1: but they do have to work with a committee. UM.

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Speaker 1: Frequently there's a lot of influence that occurs from staff

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Speaker 1: lot of the briefing documents. So the change may occur,

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Speaker 1: but it probably evolves relatively slowly. You normally don't see

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Speaker 1: the people that are presidents are we're here before and

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Speaker 1: we'll be hereafter. How much influenced does the President of

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Speaker 1: has the influence through the who they appoint and right now,

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Speaker 1: to have a central bank that's independent of politics, and

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Speaker 1: so there is some involvement in the appointment process, but

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Speaker 1: after that, hopefully whoever's picked as primarily focused on getting

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Speaker 1: the right outcome for the American people. Let me ask

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Speaker 1: you a question for our radio listeners here in Boston

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Speaker 1: and one or six point one. You've talked about equity

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Speaker 1: prices and the possibility that asset prices get distorted E

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Speaker 1: t f s long only mutual funds. Is there any

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Speaker 1: So one of the areas that I've raised concerns in

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Speaker 1: that's an example where um I would certainly be a

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Speaker 1: little bit more conservative and worried that those valuations may

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Speaker 1: not be sustainable over a longer time period. So I

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Speaker 1: with the valuations. But you're good with the Boston economy

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Speaker 1: right now. The Boston economy is doing quite well. But

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Speaker 1: I would say that we're seeing a lot of commercial

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Speaker 1: rate that's getting quite low. So some of the things

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Speaker 1: long run are reflected and how well the Boston economy

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Speaker 1: is doing. David Gray here in New York in our

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Speaker 1: Bloomberg eleven three oh studios Tom Keene this week in Washington,

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Speaker 1: International Monetary Fund and the World Bank at that was

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Speaker 1: taking place at i m F headquarters at in Foggy

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Speaker 1: Bottom in Washington, d C. And a host of great

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Speaker 1: interviews to come throughout the morning. Real Beanie is going

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Speaker 1: to join us in a bit. We go now to

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Speaker 1: i m F headquarters. Here he is welcome Bloomberg Television,

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Speaker 1: in Bloomberg Radio worldwide. Good morning for another conversation, our

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Speaker 1: first conversation of the day here at the meetings of

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Speaker 1: the International Monetary Phone. There's no one better to do

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Speaker 1: that with David Lipton. He is the American representative, if

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Speaker 1: you will, to the IMF. Think of John Lipsky of

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Speaker 1: a number of years ago, but far more than that.

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Speaker 1: He is one of our front line international economists. Working

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Speaker 1: with Jeffrey Sachs and Russia seems a lifetime alone and

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Speaker 1: of course with his service to the i m F

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Speaker 1: and to America along the route you wrote a Wesleyan

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Speaker 1: and Harvard is anything out of your textbooks at Wesleyan

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Speaker 1: and Harvard appropriate today. Are you're working with the new

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Speaker 1: economics at the International Monetary Phone. Well, I think it's

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Speaker 1: interesting that so many old problems came back after the

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Speaker 1: global financial crisis. We're applying some very basic economic concepts

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Speaker 1: and uh in terms of fiscal policy and monetary policy.

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Speaker 1: I think a lot that we learned in school is

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Speaker 1: actually very useful. Some of that is the challenge on

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Speaker 1: the fiscal side. Katherine Manive o ECD brought this up

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Speaker 1: in a conversation this morning. I think of your G

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Speaker 1: twenty dinner last night. Okay, Secretary minutions in their room,

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Speaker 1: Madam Leguard's in the room, but they're not sitting together.

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Speaker 1: I get that. But the tension is there about the

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Speaker 1: appropriate use of tax policy and tax reform. What have

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Speaker 1: you learned in the last twenty four hours about this

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Speaker 1: raging debate between Trump administration criticism and the mandate of

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Speaker 1: Article four of the I m F of First. I

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Speaker 1: think the US economy recovering is very important. It's part

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Speaker 1: of a strong global recovery. I think we have a

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Speaker 1: lot that we view in common about the state of

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Speaker 1: the world. Um as far as tax policy, is concerned.

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Speaker 1: Let me just say the I m F has favored

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Speaker 1: tax reform in the United States for a very long time.

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Speaker 1: We think that the tax system could be much more

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Speaker 1: supportive of investment. It could provide a stronger position for workers,

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Speaker 1: for middle class Americans, and by strengthening the revenue base,

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Speaker 1: it could set the stage for keeping debt from rising

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Speaker 1: further and being in a better position to be able

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Speaker 1: to deal with the expenses in the entitlement system that

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Speaker 1: are coming up. But the most important part of tax

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Speaker 1: reform is to broaden them, to broaden the base, to

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Speaker 1: be able to eliminate tax loopholes, lower rates, and uh

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Speaker 1: create a stronger foundation. And across the work that you lead,

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Speaker 1: and that Maurice sobs Felt leads here from Adam M.

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Speaker 1: Guard there's the blue book, the Red book, the Green book,

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Speaker 1: and they're all intertwined and intermingled. You know this from

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Speaker 1: your fabulous work at City Group on risk years ago.

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Speaker 1: The bottom line is tax reform is about fiscal responsibility.

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Speaker 1: Is the I m F worried about fiscal responsibility but America.

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Speaker 1: But fiscal responsibility has two sides. It's of course tending

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Speaker 1: to the books of the government, but it's also making

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Speaker 1: sure that the economy growth is robust enough and the

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Speaker 1: tax based broad enough to be able to make sure

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Speaker 1: that there will be fiscal sustainability over time. So I

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Speaker 1: think that that one can have both. And what makes

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Speaker 1: sense is a well designed tax system, one that will

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Speaker 1: help the middle class, one that will help incentivize investment.

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Speaker 1: I think that could be good for America and it

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Speaker 1: could be good for the world. What's fascinating here is

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Speaker 1: a debate over wage growth, the mystery of rage growth

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Speaker 1: of calls many of the countries of the International Monetary

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Speaker 1: Fund are Michael McKee with an important conversation with President

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Speaker 1: Rosen Grin of the Boston Fed today and he basically

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Speaker 1: did econ one on one on labor supply and labor demand.

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Speaker 1: Is wage growth dynamics different now across countries because of

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Speaker 1: new technology and a new supply function. We're we're looking

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Speaker 1: at that and one of our books uh Obs Felts

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Speaker 1: World Economic Outlook has an important finding that goes a

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Speaker 1: bit beyond what we learned in school, which is that

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Speaker 1: you know, we look at how the unemployment rate uh

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Speaker 1: is the measure of slack, and that will tell you

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Speaker 1: how we're sponsive wages are going to be. But we're

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Speaker 1: learning a new thing, which is that when there's a

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Speaker 1: lot of involuntary part time unemployment, when people are working

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Speaker 1: part time who would really like to be working full time,

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Speaker 1: that's additional information. In fact, the countries where that's the

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Speaker 1: case tend to have more sluggish wage growth, and that

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Speaker 1: I think is the case in the United States, and

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Speaker 1: it's part of the picture. This is so important, folks.

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Speaker 1: We're going to rip up the script here on this.

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Speaker 1: I read uh a paper once out of Austria on

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Speaker 1: the uniqueness of part time employment in Europe. I'm sure

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Speaker 1: that our American viewers and listeners are unaware of the

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Speaker 1: nuances country to country of the cultural structure of part

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Speaker 1: time versus full That's a good point. Now, it's a

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Speaker 1: good point, but I want to make a distinction. That's important.

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Speaker 1: If people want to work part time, that's good. They

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Speaker 1: work part time rather than not at all. It's good

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Speaker 1: for them and it's a contribution to the economy. What

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Speaker 1: I'm talking about is people who want to work full

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Speaker 1: time but they're part time. That's a a measure of

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Speaker 1: slack and it may explain why wage growth is sluggish.

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Speaker 1: It may also, in a sense be good news because

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Speaker 1: it means there can be some more growth without inflation.

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Speaker 1: Would that be more aggressively debated at the key central

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Speaker 1: banks and particularly among the federal I think they're looking

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Speaker 1: at people. I think people are looking at this, and uh,

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Speaker 1: it's going to be part of the story that determines

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Speaker 1: the ultimate pace of normalization, both in the United States

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Speaker 1: and elsewhere. I want to go back to your historic

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Speaker 1: work with Jef Sex. I spoke with Professor Sex the

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Speaker 1: other day of Columbia, folks, and this goes back to

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Speaker 1: the frontier economies and the emerging markets of another time

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Speaker 1: and place. Indeed, how is the Russian economy? How is

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Speaker 1: Eastern Europe doing right now with a tumult of sanctions

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Speaker 1: in GEO? Well, I was just in Russia and in Ukraine,

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Speaker 1: and their situations are both the pertinent. You know, Russia

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Speaker 1: has gone through a very tough decade with the global

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Speaker 1: financial crisis, the oil shock, and the sanctions. They've come

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Speaker 1: out of recession. I mean, the truth is that their

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Speaker 1: policy makers endled this very well. In earlier times they

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Speaker 1: might not have done so well. Now their challenges how

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Speaker 1: to grow our projections for Russia are that they'll grow

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Speaker 1: it maybe one point one and a half one point

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Speaker 1: seven that's the same growth as Europe, So there'll be

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Speaker 1: no more convergence, no more UH Russian living standards rising

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Speaker 1: to UH to European levels, which you know, before the

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Speaker 1: global financial crisis, they were on a tear and they

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Speaker 1: were catching up. So Russia really needs to find a

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Speaker 1: way to free up their economy from the heavy footprint

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Speaker 1: of the state and to try to be dynamic and

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Speaker 1: and get in on the technological revolution that you were

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Speaker 1: talking about earlier with your huge remit. I was irresponsible

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Speaker 1: to not mention China. They have important political meetings coming up.

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Speaker 1: Don't Every interview we have is these are key meetings.

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Speaker 1: They are, and UH we'll be you know, we don't

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Speaker 1: know much about the political to the political process in China,

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Speaker 1: but we'll be looking to see what comes from these meetings.

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Speaker 1: In terms of economic policy and reform thrust. China's managed

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Speaker 1: its economy well, but there are growing vulnerabilities and there's

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Speaker 1: the continuing need to rebalance the economy further towards being

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Speaker 1: a service oriented, household income based UH driven growth driven model.

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Speaker 1: I hope that they want to go in that direction.

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Speaker 1: David Lipton, thank you so much. He's, of course with

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Speaker 1: the International Monetary Fund, Tom keen My and Bloombergsurveillance co anchry.

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Speaker 1: They're talking with David Lipton, the first Managing Director of

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Speaker 1: the International Monetary Fund, from the annual meetings of the

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Speaker 1: I m F and World Bank in Washington, d CE

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Speaker 1: a wide ranging conversation there given the breadth of his

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Speaker 1: his remit as Tom was just mentioning a moment ago,

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Speaker 1: Tom asking him about whether or not the text books

434
00:23:43,800 --> 00:23:46,080
Speaker 1: that we have in economics classes today tell us enough

435
00:23:46,119 --> 00:23:48,359
Speaker 1: about the world we're living in today. And Tom I

436
00:23:48,400 --> 00:23:50,640
Speaker 1: was particularly struck by what he had to say about

437
00:23:50,680 --> 00:23:52,840
Speaker 1: one of our books, as he put it, Mori sabs

438
00:23:52,840 --> 00:23:54,720
Speaker 1: Felts World Economic Outlook, and what it had to say

439
00:23:54,760 --> 00:23:57,480
Speaker 1: about a technology. And it strikes me that he and others,

440
00:23:57,480 --> 00:24:00,480
Speaker 1: including Fedcher, Janet Yeller now a reckoning more fully or

441
00:24:00,560 --> 00:24:03,280
Speaker 1: more publicly with the the issue the role that technology

442
00:24:03,320 --> 00:24:07,240
Speaker 1: is playing in the labor market in particularly. Yeah, these

443
00:24:07,240 --> 00:24:10,919
Speaker 1: are extremely valuable books. I've already stolen three a copy

444
00:24:11,000 --> 00:24:12,800
Speaker 1: the Blue Book, the Red Book, the Green Book from

445
00:24:12,800 --> 00:24:15,520
Speaker 1: Michael McKee, David Gerrow. My goal is to get you

446
00:24:15,720 --> 00:24:18,560
Speaker 1: a brace of these books today. I'll see if I

447
00:24:18,600 --> 00:24:22,000
Speaker 1: can abscond from the I m F with those. But

448
00:24:22,119 --> 00:24:25,960
Speaker 1: the technology issue is a huge deal. The technology issue

449
00:24:26,320 --> 00:24:29,359
Speaker 1: within all three of those, including Off Sales blue Book,

450
00:24:29,359 --> 00:24:33,919
Speaker 1: the World Economic Outlook. There's an extreme mystery here in David.

451
00:24:33,960 --> 00:24:37,400
Speaker 1: This goes to productivity. I think that David Lipton would

452
00:24:37,400 --> 00:24:41,080
Speaker 1: agree with Jacob Frankel, would agree with Sir Howard Davies

453
00:24:41,280 --> 00:24:46,040
Speaker 1: that the basic idea is to boost productivity, except you

454
00:24:46,080 --> 00:24:48,879
Speaker 1: don't know where you're going or how you're going until

455
00:24:48,920 --> 00:24:51,480
Speaker 1: you're five or even ten years down the road. That's

456
00:24:51,520 --> 00:24:54,919
Speaker 1: the huge guestimate, if you will, of what we do

457
00:24:54,960 --> 00:24:58,240
Speaker 1: in international economics. A touchstone in each of your interviews

458
00:24:58,280 --> 00:25:00,879
Speaker 1: has been this debate over tax If just remind us

459
00:25:00,880 --> 00:25:02,719
Speaker 1: of the back story there the I m F weighing

460
00:25:02,760 --> 00:25:05,840
Speaker 1: in on on tax reform, Wallly in Washington, d C.

461
00:25:06,040 --> 00:25:07,919
Speaker 1: Give us a sense of what what the argument is like.

462
00:25:09,720 --> 00:25:12,359
Speaker 1: And now it's days of our lives, the gossip of

463
00:25:12,440 --> 00:25:16,360
Speaker 1: invational economics. So, David, what happened was Sam Fleming over

464
00:25:16,359 --> 00:25:18,119
Speaker 1: at the F two with Chris Giles wrote up an

465
00:25:18,200 --> 00:25:22,760
Speaker 1: article that basically said the Trump administration was furious over

466
00:25:22,800 --> 00:25:26,119
Speaker 1: how the i m F was meddling in US tax reform.

467
00:25:26,160 --> 00:25:28,480
Speaker 1: The i m F pointed out that under Article for

468
00:25:28,760 --> 00:25:31,440
Speaker 1: they have every right to do that. There's no question

469
00:25:31,840 --> 00:25:34,679
Speaker 1: about that, they have every right to review tax reform

470
00:25:34,720 --> 00:25:37,280
Speaker 1: of any country. And they did that, and they did

471
00:25:37,320 --> 00:25:41,760
Speaker 1: it over a longer timeline than what the Trump administration

472
00:25:41,880 --> 00:25:44,600
Speaker 1: is critical of. This is a heated debate. I think

473
00:25:44,600 --> 00:25:47,480
Speaker 1: it's been amended over the last few days, but all

474
00:25:47,520 --> 00:25:50,119
Speaker 1: in all, it comes down to how will the tax

475
00:25:50,280 --> 00:25:55,560
Speaker 1: reform advance through the legislative process on Capitol Hill like

476
00:25:55,640 --> 00:25:57,960
Speaker 1: sands through an hour glass. Tom Kane in our bloom

477
00:25:57,960 --> 00:26:00,159
Speaker 1: regard surveillance set up there at the IMF World headcore there,

478
00:26:00,160 --> 00:26:02,240
Speaker 1: he said in watch DC more companies throughout the morning

479
00:26:02,240 --> 00:26:17,879
Speaker 1: here on Bloomberg Surveillance on Bloomberg Radio, and we welcome

480
00:26:17,920 --> 00:26:21,040
Speaker 1: all of you on Bloomberg Radio, Bloomberg Television worldwide. The

481
00:26:21,119 --> 00:26:23,600
Speaker 1: second day here of the meetings of the International Monetary

482
00:26:23,640 --> 00:26:27,280
Speaker 1: Fund and the World Bank at eclectic set of guests,

483
00:26:27,480 --> 00:26:29,199
Speaker 1: and what they all have in common is a real

484
00:26:29,320 --> 00:26:32,679
Speaker 1: love of international economics. That would be David mel Pass,

485
00:26:32,960 --> 00:26:36,280
Speaker 1: iconic at bear Stearns. I have clearly stated over the

486
00:26:36,359 --> 00:26:39,639
Speaker 1: years that he is the clearest writer of economics I know,

487
00:26:40,200 --> 00:26:43,399
Speaker 1: and he owns the word fast f A. S. T.

488
00:26:44,000 --> 00:26:48,480
Speaker 1: Mail pass economics has always been impatient economics, and he

489
00:26:48,600 --> 00:26:51,560
Speaker 1: brings it to public service. For President Trump is Under

490
00:26:51,600 --> 00:26:54,920
Speaker 1: Secretary of Treasury for International Affairs. I want to digress here.

491
00:26:54,960 --> 00:26:57,120
Speaker 1: That's the job John Taylor had a few years ago.

492
00:26:57,440 --> 00:26:59,760
Speaker 1: Exactly right, Tom, It's good to be on, very nice

493
00:26:59,840 --> 00:27:02,320
Speaker 1: to Would John Taylor make a good FED chairman? I

494
00:27:02,359 --> 00:27:06,600
Speaker 1: mean he's got the international experience that you have. Now, yes,

495
00:27:06,680 --> 00:27:09,920
Speaker 1: he would, and others are. There are other candidates. And

496
00:27:10,320 --> 00:27:12,720
Speaker 1: the important thing is for there to be more growth.

497
00:27:12,880 --> 00:27:15,080
Speaker 1: You know, as you think about the FED is going

498
00:27:15,440 --> 00:27:18,639
Speaker 1: gone through a giant transformation of its balance sheets. So

499
00:27:19,000 --> 00:27:22,080
Speaker 1: one of the hardest challenges going forward is how do

500
00:27:22,160 --> 00:27:25,120
Speaker 1: you find a way through that that creates and allows

501
00:27:25,240 --> 00:27:28,080
Speaker 1: more growth, small business growth? Can I get that in

502
00:27:28,280 --> 00:27:30,880
Speaker 1: right at the top? What would it be a male

503
00:27:30,920 --> 00:27:33,600
Speaker 1: passing interview if we didn't get in there right at

504
00:27:33,600 --> 00:27:37,240
Speaker 1: the top right now? At these meetings, the theme is Okay,

505
00:27:37,920 --> 00:27:42,080
Speaker 1: things are better, but in every dinner, every lunch, it's

506
00:27:42,240 --> 00:27:45,040
Speaker 1: but to move growth forward. What's the butt for you

507
00:27:45,240 --> 00:27:50,040
Speaker 1: and the Trump administration? To move global growth forward. Secretary

508
00:27:50,119 --> 00:27:52,600
Speaker 1: Manuchin is the head of our delegation here. He sat

509
00:27:52,720 --> 00:27:56,119
Speaker 1: last night with Janet Yellen at the at the dinner,

510
00:27:56,400 --> 00:27:59,920
Speaker 1: and Secretary Manuchen has been emphasizing tax reform as a

511
00:28:00,080 --> 00:28:05,240
Speaker 1: critical spot for US growth to to push forward regulatory reforms,

512
00:28:05,520 --> 00:28:08,200
Speaker 1: and then we're taking that message to the world really

513
00:28:08,280 --> 00:28:12,080
Speaker 1: and making the point that it benefits us if everyone grows.

514
00:28:12,240 --> 00:28:15,119
Speaker 1: And while there is an acceleration of the world. Christine

515
00:28:15,200 --> 00:28:18,520
Speaker 1: Legard talked about that last night. Uh, it's not enough yet.

516
00:28:18,680 --> 00:28:21,160
Speaker 1: We'd like to see more growth, both in the US

517
00:28:21,320 --> 00:28:24,800
Speaker 1: and abroad. Mario Draggy talked about the breadth of growth

518
00:28:24,880 --> 00:28:27,280
Speaker 1: in Europe and how do you keep that sustained, how

519
00:28:27,320 --> 00:28:30,639
Speaker 1: do you make that go forward. Minister Jately of India

520
00:28:31,000 --> 00:28:33,280
Speaker 1: made the point that India has gone through two very

521
00:28:33,359 --> 00:28:38,080
Speaker 1: difficult structural reforms, their demonetization and their their g st

522
00:28:38,320 --> 00:28:41,000
Speaker 1: at tax change that they've done, and now they get

523
00:28:41,120 --> 00:28:44,680
Speaker 1: some benefits from those structural reforms. That's that dinner last night.

524
00:28:44,800 --> 00:28:48,560
Speaker 1: I believe they had Secretary Monution sit separately from Adam Legard,

525
00:28:48,640 --> 00:28:51,880
Speaker 1: and of course there's this this uproar over tax reform

526
00:28:52,000 --> 00:28:53,840
Speaker 1: and what the I m F should be. Sam Fleming

527
00:28:53,880 --> 00:28:56,640
Speaker 1: had this in the in the f T give us

528
00:28:56,760 --> 00:29:00,800
Speaker 1: new insight on what the Trumpet Mints ration would like

529
00:29:01,080 --> 00:29:03,160
Speaker 1: from the I m F. Where the I m F

530
00:29:03,280 --> 00:29:07,080
Speaker 1: has a responsibility to look at tax reform under Article four.

531
00:29:08,000 --> 00:29:11,400
Speaker 1: You know, this really is an economist against economist kind

532
00:29:11,480 --> 00:29:14,880
Speaker 1: of a debate. So there is and has been for decades,

533
00:29:15,280 --> 00:29:18,320
Speaker 1: the issue that some economists think that higher tax rates

534
00:29:18,960 --> 00:29:22,320
Speaker 1: is good for the world because you because you you,

535
00:29:22,760 --> 00:29:26,840
Speaker 1: you're able to distribute money to people through that mechanism,

536
00:29:26,920 --> 00:29:28,920
Speaker 1: and others think, wait a minute, we ought to have

537
00:29:29,000 --> 00:29:31,200
Speaker 1: a low rate on a broad base and that's going

538
00:29:31,280 --> 00:29:33,840
Speaker 1: to allow the private sector to do well. So that

539
00:29:34,040 --> 00:29:36,560
Speaker 1: confrontation goes on in the I m F as it

540
00:29:36,680 --> 00:29:40,440
Speaker 1: goes into foreign countries. It's often putting I think too

541
00:29:40,560 --> 00:29:44,640
Speaker 1: much emphasis on the on on on more taxes than

542
00:29:44,720 --> 00:29:47,440
Speaker 1: to follow on. And this goes to your wonderful analysis

543
00:29:47,520 --> 00:29:50,440
Speaker 1: of debt and deficit over the decades of your your Stearns.

544
00:29:50,880 --> 00:29:54,720
Speaker 1: The distinction here is you move from tax reform to

545
00:29:54,920 --> 00:29:59,160
Speaker 1: fiscal policy. Douglass Holds ECN told us on Bloomberg Surveillance

546
00:29:59,200 --> 00:30:01,400
Speaker 1: formerhead of the Sea d O and I would suggest

547
00:30:01,480 --> 00:30:05,200
Speaker 1: someone sympathetic to male past economics. Dr Holtz Eakin said,

548
00:30:05,520 --> 00:30:08,560
Speaker 1: we have a vector of deficit to GDP that could

549
00:30:08,560 --> 00:30:12,640
Speaker 1: be five or six percent or heaven forbid, he said seven.

550
00:30:13,600 --> 00:30:16,080
Speaker 1: We can't allow that to happen. How can we have

551
00:30:16,200 --> 00:30:20,080
Speaker 1: Trump tax reform and fiscal responsibility at the same time.

552
00:30:20,240 --> 00:30:23,120
Speaker 1: I don't think that's exactly the right question. The question

553
00:30:23,160 --> 00:30:26,040
Speaker 1: should be our current tax code doesn't work. It's simply

554
00:30:26,120 --> 00:30:29,520
Speaker 1: blocks growth, so that has to be fixed. And then

555
00:30:29,800 --> 00:30:33,480
Speaker 1: separately you can say, but in our spending policies really

556
00:30:33,600 --> 00:30:36,240
Speaker 1: need to be reformed from from the ground up. There

557
00:30:36,280 --> 00:30:38,400
Speaker 1: needs to be a budget process that works, a debt

558
00:30:38,480 --> 00:30:42,240
Speaker 1: limit that works. There needs to be restraint by by politicians,

559
00:30:42,360 --> 00:30:44,480
Speaker 1: and on and on down the line. And that's something

560
00:30:44,520 --> 00:30:47,440
Speaker 1: that Trump administration can work on. But the the that

561
00:30:47,880 --> 00:30:51,920
Speaker 1: don't don't put that together with the tax reform that

562
00:30:52,280 --> 00:30:55,400
Speaker 1: they don't want to combine a tax reform analysis with

563
00:30:55,520 --> 00:30:58,600
Speaker 1: a fiscal policy analysis. I think the critical thing is

564
00:30:58,640 --> 00:31:01,440
Speaker 1: to get the tax reformed done done early so that

565
00:31:01,520 --> 00:31:05,959
Speaker 1: people can begin investing and hiring. The critical goal, remember

566
00:31:06,000 --> 00:31:08,560
Speaker 1: from the beginning of the Trump campaign, was how do

567
00:31:08,600 --> 00:31:11,520
Speaker 1: you get more people employed? The participation rate to go

568
00:31:11,720 --> 00:31:14,720
Speaker 1: higher and get average wages to go up. So every

569
00:31:14,800 --> 00:31:17,760
Speaker 1: time people are talking about policy, that's the context. You

570
00:31:17,920 --> 00:31:20,920
Speaker 1: and Kevin Hassett are frontline economists. Do you have a

571
00:31:21,040 --> 00:31:24,200
Speaker 1: voice within the administration? Are you spending your time jetting

572
00:31:24,240 --> 00:31:27,400
Speaker 1: around the world. I hope not on private jets. You're

573
00:31:27,440 --> 00:31:31,160
Speaker 1: on something we're cost affordable, unlike these other secretaries. But

574
00:31:31,320 --> 00:31:34,120
Speaker 1: are you jetting around internationally or do you enhas have

575
00:31:34,200 --> 00:31:36,640
Speaker 1: a voice within the administration. So you know, I'm going

576
00:31:36,680 --> 00:31:39,720
Speaker 1: to Asia and I'll be flying back economy class, and

577
00:31:39,800 --> 00:31:46,840
Speaker 1: so tell my doctor that I'll tell the secretary minution

578
00:31:47,000 --> 00:31:49,920
Speaker 1: you are too tall to go. You know, we're we're,

579
00:31:50,040 --> 00:31:52,760
Speaker 1: for one, trying to save money wherever we can, trying

580
00:31:52,800 --> 00:31:55,760
Speaker 1: to be restrained in our own view of what the

581
00:31:55,840 --> 00:31:58,480
Speaker 1: world can of what governments can do within the world.

582
00:31:58,560 --> 00:32:02,120
Speaker 1: The liberating the private actor is the highest priority, and

583
00:32:02,240 --> 00:32:04,920
Speaker 1: that means downsizing a lot of the work streams. So

584
00:32:05,000 --> 00:32:07,360
Speaker 1: I made two trips so far, but mostly I'm working

585
00:32:07,480 --> 00:32:10,719
Speaker 1: in the administration to find a way to have UH

586
00:32:11,760 --> 00:32:16,440
Speaker 1: to have policies oriented toward American workers. That's the And

587
00:32:16,560 --> 00:32:19,640
Speaker 1: I know that sounds that sounds cliche, except that actually

588
00:32:19,800 --> 00:32:21,600
Speaker 1: is what's going on every day in the government. You

589
00:32:21,840 --> 00:32:24,320
Speaker 1: have one of the most important jobs in economics in

590
00:32:24,400 --> 00:32:27,560
Speaker 1: the world is Under Secretary of Treasury for International Affairs.

591
00:32:27,600 --> 00:32:30,520
Speaker 1: You and I know the courage and exhaustion John Taylor

592
00:32:30,600 --> 00:32:34,120
Speaker 1: faced after September eleven with his public service on these

593
00:32:34,120 --> 00:32:37,240
Speaker 1: important issues. Maybe it's not as urgent now, but the

594
00:32:37,360 --> 00:32:39,920
Speaker 1: fact is, you've got to worry about Sweden and India

595
00:32:40,360 --> 00:32:43,920
Speaker 1: and cashless societies, and you have to worry about illegal

596
00:32:44,040 --> 00:32:47,880
Speaker 1: corruption and crime in our treasury flows. What have you

597
00:32:48,040 --> 00:32:52,360
Speaker 1: learned about what we're doing, first of all about cyber security,

598
00:32:52,680 --> 00:32:56,600
Speaker 1: corruption and crime in our finance system. Those were talked

599
00:32:56,640 --> 00:33:01,120
Speaker 1: about substantially yesterday. Christine Lagard quoted John F. Kennedy saying,

600
00:33:01,200 --> 00:33:03,520
Speaker 1: when you're when it's not raining, fix your roof. And

601
00:33:03,640 --> 00:33:05,920
Speaker 1: so there was a lot of that going on. People

602
00:33:05,960 --> 00:33:07,960
Speaker 1: are trying to reach around and there was a private

603
00:33:08,080 --> 00:33:13,040
Speaker 1: There were private sector people involved yesterday, uh financial institutions

604
00:33:13,600 --> 00:33:17,800
Speaker 1: talking about their cybersecurity programs and how the US, how

605
00:33:17,920 --> 00:33:21,160
Speaker 1: the world, how governments around the world could help with

606
00:33:21,400 --> 00:33:24,920
Speaker 1: that effort to stop the both the corruption, the crime,

607
00:33:25,040 --> 00:33:29,160
Speaker 1: the terrorism. And you know, Treasury has a big secretary.

608
00:33:29,200 --> 00:33:32,720
Speaker 1: Manuchan pointed out yesterday, He's spending a large portion of

609
00:33:32,800 --> 00:33:38,400
Speaker 1: his time on the counter terrorism efforts, the sanctions efforts

610
00:33:38,640 --> 00:33:43,120
Speaker 1: to One of the discussions yesterday was about Venezuela, where

611
00:33:43,160 --> 00:33:46,560
Speaker 1: the people aren't free and where the and so there's

612
00:33:46,800 --> 00:33:49,200
Speaker 1: a big world effort to say how do we get

613
00:33:49,280 --> 00:33:51,840
Speaker 1: everyone growing better. My book of the year last year,

614
00:33:51,920 --> 00:33:54,720
Speaker 1: Ken Roll go off on cash and on corruption in cash.

615
00:33:55,040 --> 00:33:58,160
Speaker 1: Sweden is providing leadership on this issue. India has had

616
00:33:58,200 --> 00:34:01,640
Speaker 1: the courage under huge, huge uproar, India has a courage

617
00:34:01,680 --> 00:34:04,880
Speaker 1: to address this. Does a Trump administration have the courage

618
00:34:04,920 --> 00:34:09,520
Speaker 1: to to go after cash and suitcases? There's huge courage

619
00:34:09,600 --> 00:34:13,839
Speaker 1: and yes, absolutely cash in's who cases meaning illicit funds. Uh,

620
00:34:13,880 --> 00:34:17,720
Speaker 1: there's there is a giant I would say, all fronts

621
00:34:17,840 --> 00:34:21,080
Speaker 1: effort within the government to stop that because of the

622
00:34:21,200 --> 00:34:25,040
Speaker 1: security of Americans. Uh, that's the highest priority along with

623
00:34:25,200 --> 00:34:28,400
Speaker 1: jobs and so Uh you can do that by applying

624
00:34:28,480 --> 00:34:32,719
Speaker 1: people by I'm having meetings all day yesterday, today and

625
00:34:32,800 --> 00:34:36,960
Speaker 1: tomorrow on that that touch on. Uh. Well, the G

626
00:34:37,120 --> 00:34:40,120
Speaker 1: seven meeting yesterday, which is the group of seven finance

627
00:34:40,200 --> 00:34:44,680
Speaker 1: ministers and central bankheads from the major from seven major economies,

628
00:34:45,120 --> 00:34:48,640
Speaker 1: had a long session both on cybersecurity and on sanctions

629
00:34:48,719 --> 00:34:51,640
Speaker 1: North Korea is an obvious, big challenge that people are

630
00:34:51,719 --> 00:34:55,200
Speaker 1: talking about at these meetings today and tomorrow. David Melfist,

631
00:34:55,280 --> 00:34:59,000
Speaker 1: thank you so much, under Secretary of Treasury for International Affairs.

632
00:34:59,560 --> 00:35:02,920
Speaker 1: Sporting conversation there between Tom Keene and David Malpass formerly

633
00:35:02,960 --> 00:35:05,960
Speaker 1: even SEEMA Global, now the Undersecretary the Treasury for International Affairs,

634
00:35:06,000 --> 00:35:09,160
Speaker 1: particularly liked Tom choked about whether or not he's traveling

635
00:35:09,200 --> 00:35:10,840
Speaker 1: around the world. I certainly hope that wouldn't be on

636
00:35:10,920 --> 00:35:13,680
Speaker 1: a private jet. Secretary of mouth Pass, Undersecretary of Moutpass

637
00:35:13,719 --> 00:35:15,680
Speaker 1: saying that he is off to Asia next week and

638
00:35:15,719 --> 00:35:32,520
Speaker 1: intends to fly back in economy A classman, did I

639
00:35:32,560 --> 00:35:34,840
Speaker 1: go back to Washington now, Tom Keene with a special interview,

640
00:35:34,840 --> 00:35:36,800
Speaker 1: as I said, with an eminent professor from the n

641
00:35:36,920 --> 00:35:41,239
Speaker 1: y U Stern School of Business, Tom David Girth, thank

642
00:35:41,280 --> 00:35:43,360
Speaker 1: you so much, and I hope you can participate in

643
00:35:43,440 --> 00:35:47,160
Speaker 1: this interview as well. He is Nora Rubini, and it's

644
00:35:47,239 --> 00:35:51,160
Speaker 1: most interesting the author of crisis economics and someone as

645
00:35:51,239 --> 00:35:55,320
Speaker 1: we all did maybe miss the amplitude of the financial crisis,

646
00:35:55,920 --> 00:35:59,719
Speaker 1: but was really out front on a regression to the mean.

647
00:36:00,040 --> 00:36:02,200
Speaker 1: It was a mean mean, wasn't it. I mean it

648
00:36:02,360 --> 00:36:05,719
Speaker 1: was something in two thousand eight, in two thousand nine.

649
00:36:06,239 --> 00:36:09,840
Speaker 1: Right now in reel, there's a lot of people talking bubbles.

650
00:36:09,920 --> 00:36:13,640
Speaker 1: They talk Schiller bubbles, and they talk Quei bubbles, and

651
00:36:13,760 --> 00:36:16,879
Speaker 1: that are we anywhere off the mean like we were

652
00:36:17,000 --> 00:36:20,600
Speaker 1: in July and June of two thousand and seven. No,

653
00:36:20,880 --> 00:36:23,239
Speaker 1: we're not yet there. And there has been a bit

654
00:36:23,320 --> 00:36:27,399
Speaker 1: of a releveraging in the financial sector, especially among non

655
00:36:27,440 --> 00:36:32,000
Speaker 1: bank financial institutions. There's been some releveraging of the corporate sector.

656
00:36:32,440 --> 00:36:34,080
Speaker 1: But I would say that while in two thousand and

657
00:36:34,160 --> 00:36:36,160
Speaker 1: six and seven we're in the eighteen ing of that

658
00:36:36,920 --> 00:36:41,239
Speaker 1: credit cycle, in terms of fraudness and bubble, right now

659
00:36:41,440 --> 00:36:43,600
Speaker 1: we might be in the fourteening. I mean, there is

660
00:36:44,040 --> 00:36:47,840
Speaker 1: some evidence of fraudness, but were not the extreme evaluations

661
00:36:48,000 --> 00:36:51,719
Speaker 1: or excesses that would cause an the financial crisis in

662
00:36:51,760 --> 00:36:54,560
Speaker 1: the next twelve months. You have written repeatively in your

663
00:36:54,600 --> 00:36:59,000
Speaker 1: associated with Democratic Party economics and the idea of working

664
00:36:59,080 --> 00:37:03,520
Speaker 1: with President years ago, what are the ramifications not so

665
00:37:03,680 --> 00:37:08,880
Speaker 1: much of Trump theory or Trump belief, but what are

666
00:37:08,920 --> 00:37:13,520
Speaker 1: the ramifications of the rhetoric and methodology are the White

667
00:37:13,600 --> 00:37:16,960
Speaker 1: House on a day to day basis, well, it creates

668
00:37:17,040 --> 00:37:23,160
Speaker 1: a huge amount of uncertainty policy political, evan geopolitical. So

669
00:37:23,360 --> 00:37:26,720
Speaker 1: far it has not really affected the markets. The market

670
00:37:27,080 --> 00:37:31,320
Speaker 1: have discounted that uncertainty because they believe that maybe is

671
00:37:31,440 --> 00:37:34,400
Speaker 1: on main economic and other advisors are guard railing him

672
00:37:34,440 --> 00:37:37,759
Speaker 1: and they're going to prevent radical action, whether a war

673
00:37:37,920 --> 00:37:41,040
Speaker 1: with North Korea as opposed to extreme protection is more

674
00:37:41,080 --> 00:37:44,680
Speaker 1: restriction to migration from occurring. But I would say it's

675
00:37:44,719 --> 00:37:47,920
Speaker 1: not a positive for economic growth. And while the president

676
00:37:48,120 --> 00:37:51,120
Speaker 1: was elected on a populist program of time to help

677
00:37:51,600 --> 00:37:55,960
Speaker 1: lower class white blue colors, has been behaving as a plutocrat.

678
00:37:56,160 --> 00:37:58,759
Speaker 1: So to me, it's more like a bluetop populist because

679
00:37:58,800 --> 00:38:01,160
Speaker 1: it talks as if it's a pop police but for example,

680
00:38:01,200 --> 00:38:04,120
Speaker 1: its populous. Is that the title of your next sport?

681
00:38:04,840 --> 00:38:08,240
Speaker 1: But babe, it should be because it's a plutographic predencively

682
00:38:08,239 --> 00:38:10,440
Speaker 1: a populish. If you take for something, tax plan of

683
00:38:10,520 --> 00:38:14,799
Speaker 1: the administration, as independent study suggests that the they're going

684
00:38:14,840 --> 00:38:17,440
Speaker 1: to go to the top one percent, this is not populism.

685
00:38:17,520 --> 00:38:19,480
Speaker 1: This is nothing for the midia class. So they talk

686
00:38:19,520 --> 00:38:22,879
Speaker 1: about the tax for the media class, but it's just talk.

687
00:38:23,120 --> 00:38:27,480
Speaker 1: Let me bring it in our Pluto populus, your Bloomer surveillance. David, David,

688
00:38:27,800 --> 00:38:29,680
Speaker 1: the real great to speak with you once again. I

689
00:38:29,760 --> 00:38:32,720
Speaker 1: want to ask you about the new mediocre now old

690
00:38:32,920 --> 00:38:35,520
Speaker 1: are we still seeing signs of anything with regard to

691
00:38:35,560 --> 00:38:38,720
Speaker 1: new mediocre in Washington at these meetings and generally speaking

692
00:38:41,160 --> 00:38:43,520
Speaker 1: well on one side there, m F and everybody has

693
00:38:43,640 --> 00:38:47,080
Speaker 1: upgraded their economic outlook. There is a global expansion that

694
00:38:47,200 --> 00:38:49,919
Speaker 1: started about a year ago, so there is less talk

695
00:38:50,000 --> 00:38:52,839
Speaker 1: of a new mediocre in the short run. But as

696
00:38:52,880 --> 00:38:56,239
Speaker 1: the IMF has pointed out, a short term outlook looks good.

697
00:38:56,560 --> 00:39:01,240
Speaker 1: But unless significant reforms are undertaken in the US, in Europe,

698
00:39:01,320 --> 00:39:04,960
Speaker 1: in Japan, in China and emerging market, potential growth in

699
00:39:05,040 --> 00:39:08,600
Speaker 1: both advanced economies. Emerging market has fallen. And while the

700
00:39:08,719 --> 00:39:11,680
Speaker 1: cicling art suing can continue for a while, once you

701
00:39:11,800 --> 00:39:15,399
Speaker 1: hit the bottleneck of supply constraints, then you might get

702
00:39:15,520 --> 00:39:18,520
Speaker 1: either inflation or if there is easy policy, asset and

703
00:39:18,600 --> 00:39:22,040
Speaker 1: credit bubbles, and therefore you still need to work to

704
00:39:22,160 --> 00:39:24,880
Speaker 1: increase potential growth. Otherwise we're gonna go back to the

705
00:39:24,960 --> 00:39:29,839
Speaker 1: new mediocre after this temporary cyclical upswing. You two are

706
00:39:29,880 --> 00:39:32,480
Speaker 1: in the the I m F atrium surrounded by devotes

707
00:39:32,560 --> 00:39:35,160
Speaker 1: to multilateralism, people who are proponents of it and think

708
00:39:35,200 --> 00:39:38,920
Speaker 1: it's the way forward. What does multilateralism look like if

709
00:39:38,960 --> 00:39:41,399
Speaker 1: the US is is sitting on the sidelines. In other words,

710
00:39:41,800 --> 00:39:44,279
Speaker 1: how much are you writing the obituary for multilateralism at

711
00:39:44,320 --> 00:39:49,080
Speaker 1: this point? And from the U S perspective, well, certainly

712
00:39:49,120 --> 00:39:52,359
Speaker 1: the US is key for multilateralism. But if the US

713
00:39:52,480 --> 00:39:56,880
Speaker 1: is going to decide to effectively abandon multilateralism and support

714
00:39:56,960 --> 00:40:00,279
Speaker 1: for I m F for Bank, other International Institute, Sean,

715
00:40:00,600 --> 00:40:02,640
Speaker 1: I think there is a chance that other parts of

716
00:40:02,680 --> 00:40:06,040
Speaker 1: the world they're gonna go ahead and strike free trade

717
00:40:06,080 --> 00:40:09,960
Speaker 1: deals Europe with China and Asia, Japan with Europe, and

718
00:40:10,160 --> 00:40:12,560
Speaker 1: so on and so on. So the reason for the

719
00:40:12,680 --> 00:40:16,239
Speaker 1: United States is that you withdraw yourself from globalization, but

720
00:40:16,400 --> 00:40:18,760
Speaker 1: other parts of the world are not going to withdraw themselves,

721
00:40:19,080 --> 00:40:21,040
Speaker 1: and you're gonna end up in a situation is worse

722
00:40:21,120 --> 00:40:25,160
Speaker 1: for you because beneficial, for example, trade, the opportunities they

723
00:40:25,200 --> 00:40:27,959
Speaker 1: would have had in Asia with TPP are not gonna

724
00:40:28,000 --> 00:40:30,279
Speaker 1: be there. And now China's gonna take a leader and

725
00:40:30,360 --> 00:40:34,080
Speaker 1: proposed to their TPP country and alternative trade arrangement. So

726
00:40:34,440 --> 00:40:36,680
Speaker 1: I think it's a major mistake. It is gonna be

727
00:40:36,800 --> 00:40:40,719
Speaker 1: having negative effects on us potential growth over time. One

728
00:40:40,760 --> 00:40:43,040
Speaker 1: thing that people don't know about you is you actually

729
00:40:43,120 --> 00:40:44,719
Speaker 1: have had the piece of chalk in your hand in

730
00:40:44,760 --> 00:40:47,799
Speaker 1: the classroom teaching people at Yale and at New York

731
00:40:47,920 --> 00:40:51,439
Speaker 1: University Stern School of Business. When you have a piece

732
00:40:51,480 --> 00:40:55,120
Speaker 1: of chalk in your hand, can you teach the tax reform,

733
00:40:55,480 --> 00:41:00,759
Speaker 1: tax cuts, deficit expansion leads to growth. Can you teach her?

734
00:41:00,880 --> 00:41:04,759
Speaker 1: Olivia Blanchard was heated the other day. He can't teach them.

735
00:41:05,520 --> 00:41:08,560
Speaker 1: I cannot teach it either. Because we know that if

736
00:41:08,800 --> 00:41:12,200
Speaker 1: deficits and deaths are high, and you pile another trillion

737
00:41:12,239 --> 00:41:15,799
Speaker 1: to two trillion of that to the existing stock, eventually

738
00:41:15,800 --> 00:41:19,080
Speaker 1: you're gonna actually crowd out economic growth. Long term interest

739
00:41:19,160 --> 00:41:22,080
Speaker 1: rates might go higher, the dollars gonna go higher, and

740
00:41:22,160 --> 00:41:24,480
Speaker 1: the jobs and income of the white collars voted for

741
00:41:24,560 --> 00:41:27,839
Speaker 1: Trump are gonna disappear. So those policies actually to market

742
00:41:27,920 --> 00:41:31,240
Speaker 1: discipline gonna have a negative effect on economic growth. Professor Rubili,

743
00:41:31,320 --> 00:41:35,440
Speaker 1: would you suggest that we're seeing a Republican tax wish

744
00:41:36,000 --> 00:41:39,880
Speaker 1: or hope that is basically a nostalgia for Ronald Reagan

745
00:41:40,440 --> 00:41:43,520
Speaker 1: except we don't have the Reagan debtload. We have a

746
00:41:43,600 --> 00:41:46,600
Speaker 1: much higher debtload now. Is it as simple as that? Well,

747
00:41:47,080 --> 00:41:51,200
Speaker 1: both Reagan and George W. Bush the tax carts at

748
00:41:51,239 --> 00:41:54,880
Speaker 1: that time, however, the deficits were lower, the public that

749
00:41:55,040 --> 00:41:59,520
Speaker 1: were lower GDP GDP. Now we're on the version of

750
00:41:59,600 --> 00:42:02,840
Speaker 1: doing other two to three trillion dollars, maybe more tax cuts,

751
00:42:03,160 --> 00:42:05,880
Speaker 1: an increase in public debt at the time where our

752
00:42:05,920 --> 00:42:08,720
Speaker 1: public death is more like three quarters of GDP, something

753
00:42:08,800 --> 00:42:11,560
Speaker 1: we cannot afford, and the markets are on that impost

754
00:42:11,600 --> 00:42:15,120
Speaker 1: discipline by crowding out of that recovery. That's why they

755
00:42:15,239 --> 00:42:18,200
Speaker 1: talked about the revenue neutral tax plan. But this is

756
00:42:18,280 --> 00:42:20,600
Speaker 1: not the revenue neutral tax plan. You could blow the

757
00:42:20,680 --> 00:42:23,320
Speaker 1: deficit and the debt by up to three trillion dollars

758
00:42:23,400 --> 00:42:26,040
Speaker 1: over the next ten years. Professor Ebidy, let me cast

759
00:42:26,080 --> 00:42:28,239
Speaker 1: our eyes to Europe if if we could, and I

760
00:42:28,560 --> 00:42:30,920
Speaker 1: of course was watching is Michelle Barnier were speaking yesterday

761
00:42:30,960 --> 00:42:33,640
Speaker 1: and talking about how the conversations with with the United

762
00:42:33,719 --> 00:42:37,040
Speaker 1: Kingdom are deadlocked. And I wonder if if Brexit has

763
00:42:37,080 --> 00:42:39,880
Speaker 1: been something of a curative here for eurosclerosis, do we

764
00:42:39,920 --> 00:42:44,919
Speaker 1: see a stronger Europe now in the wake of of Brexit. Yeah,

765
00:42:44,920 --> 00:42:47,239
Speaker 1: there was some concern that after Brexit this will be

766
00:42:47,280 --> 00:42:51,040
Speaker 1: the beginning of disintegration of Europe, and instead the European

767
00:42:51,080 --> 00:42:54,640
Speaker 1: have reacted by saying we're committed to the European Union,

768
00:42:54,719 --> 00:42:57,640
Speaker 1: were committed to the Eurozone. And actually there is a

769
00:42:57,760 --> 00:43:01,600
Speaker 1: signal pickup in economic growth also in Europe. That is positive,

770
00:43:01,960 --> 00:43:06,320
Speaker 1: but there are still plenty of political risks involved in Europe.

771
00:43:06,560 --> 00:43:09,839
Speaker 1: The situation in Spain with Catalonia is a serious one,

772
00:43:10,320 --> 00:43:13,760
Speaker 1: and if there was independence, other regions of other parts

773
00:43:13,800 --> 00:43:16,279
Speaker 1: of the Eurozone and Europe might say I also want

774
00:43:16,320 --> 00:43:19,759
Speaker 1: to break away. In the UK, the Braxit negotiation lead

775
00:43:19,800 --> 00:43:22,239
Speaker 1: to a heart Braxit, you could have essentially break up

776
00:43:22,280 --> 00:43:25,280
Speaker 1: of the United Kingdom, with Scotland and all the island

777
00:43:25,360 --> 00:43:28,160
Speaker 1: leaving the United Kingdom. There are other parts of Europe

778
00:43:28,200 --> 00:43:32,000
Speaker 1: where there are regional movements one either autonomy or independence.

779
00:43:32,040 --> 00:43:35,320
Speaker 1: So the response so far of Europe has been positive,

780
00:43:35,760 --> 00:43:38,800
Speaker 1: let's try to integrate more. But there's still a significant

781
00:43:38,840 --> 00:43:42,839
Speaker 1: disagreement on what integrating more means and therefore we should

782
00:43:42,880 --> 00:43:45,520
Speaker 1: not take that one as obvious. There are still meaningful

783
00:43:45,960 --> 00:43:49,360
Speaker 1: risk over time, not in the short run of forced

784
00:43:49,480 --> 00:43:52,600
Speaker 1: lead to disintegration of the European Union. Can we have

785
00:43:52,680 --> 00:43:56,320
Speaker 1: a recovery in investment? Can we have a very quickly,

786
00:43:56,360 --> 00:43:59,640
Speaker 1: her professor, Can we have a recovery and investment Given

787
00:43:59,719 --> 00:44:02,680
Speaker 1: the pities in the fixed income market, don't we need

788
00:44:02,760 --> 00:44:06,759
Speaker 1: a normal rate structure to get the confidence there in

789
00:44:06,800 --> 00:44:12,640
Speaker 1: a boost investment. Well, certainly the structure of fixing income

790
00:44:12,680 --> 00:44:17,000
Speaker 1: markets and the rates matter. The paradox, however, today is

791
00:44:17,160 --> 00:44:20,120
Speaker 1: long term rates are very low, the term premium actually

792
00:44:20,200 --> 00:44:23,759
Speaker 1: still negative. Short rates are still very low, so the

793
00:44:23,880 --> 00:44:28,319
Speaker 1: cost of borrowing is extremely low, and financial and institutional

794
00:44:28,480 --> 00:44:31,400
Speaker 1: corporates are doing a lot of financial engineering because it's

795
00:44:31,520 --> 00:44:35,320
Speaker 1: very cheap to borrow, like buying back shares or you

796
00:44:35,480 --> 00:44:37,880
Speaker 1: name it. But what they're not doing is capax. So

797
00:44:38,000 --> 00:44:40,520
Speaker 1: the paradox is that we don't need lower interest rate

798
00:44:40,560 --> 00:44:43,799
Speaker 1: to have higher capax because they are already low. Why

799
00:44:43,920 --> 00:44:46,600
Speaker 1: firms are not investing and they're not investing because there

800
00:44:46,680 --> 00:44:49,399
Speaker 1: is not enough probably growth because there has been such

801
00:44:49,440 --> 00:44:53,040
Speaker 1: an increasing inequality that there is anemic consumption growth and

802
00:44:53,080 --> 00:44:54,840
Speaker 1: they're still slack in the econom We're gonna have to

803
00:44:54,880 --> 00:44:56,680
Speaker 1: live with their ner beaning. Thank you so much for

804
00:44:56,800 --> 00:44:59,320
Speaker 1: this visit at the meeting of the I m F

805
00:44:59,480 --> 00:45:02,120
Speaker 1: and World David and much more coverage throughout the morning.

806
00:45:02,120 --> 00:45:03,880
Speaker 1: Tom Keene there at the annual meetings of the IMF

807
00:45:03,920 --> 00:45:05,279
Speaker 1: and the World Bank. You can get that right here

808
00:45:05,320 --> 00:45:20,480
Speaker 1: on Bloomberg Surveillance on Bloomberg Radio. I'm gonna go back

809
00:45:20,520 --> 00:45:23,160
Speaker 1: to Washington now. My colleague Tom Keene is in Washington,

810
00:45:23,280 --> 00:45:25,000
Speaker 1: d C. This week for the annual meetings of the

811
00:45:25,080 --> 00:45:26,920
Speaker 1: I m F and the World Bank. We've been having

812
00:45:26,960 --> 00:45:30,040
Speaker 1: conversations about Europe throughout the morning. We're going to continue

813
00:45:30,080 --> 00:45:31,920
Speaker 1: that now. Tom has seated in the atrium with a

814
00:45:31,960 --> 00:45:35,239
Speaker 1: special guest. Here's Tom. What is so important to me

815
00:45:35,640 --> 00:45:39,600
Speaker 1: is the generational change in the labor dynamic of Europe.

816
00:45:40,040 --> 00:45:44,160
Speaker 1: You have been front center in France on the dialogue

817
00:45:44,320 --> 00:45:48,560
Speaker 1: between a distrustful labor and a distrustful elite in Paris.

818
00:45:48,880 --> 00:45:51,719
Speaker 1: Let's start with France. Where does that stand right now?

819
00:45:51,880 --> 00:45:57,200
Speaker 1: That interesting history of socialism, labor and the elite. I

820
00:45:57,280 --> 00:45:59,640
Speaker 1: think frances is a probably in the country which is

821
00:45:59,760 --> 00:46:03,960
Speaker 1: the doubtful about its elites about itself. I think that

822
00:46:04,080 --> 00:46:06,920
Speaker 1: French suffers from the image that it was at the

823
00:46:06,960 --> 00:46:10,360
Speaker 1: center of Europe before reunification, and that now it's somewhere

824
00:46:10,400 --> 00:46:14,280
Speaker 1: in the fringe, and this country could have chosen populism,

825
00:46:14,400 --> 00:46:16,680
Speaker 1: and the strange thing and the positive thing is that

826
00:46:17,239 --> 00:46:19,959
Speaker 1: finally it stuck to its value and chose to elect

827
00:46:20,040 --> 00:46:23,200
Speaker 1: a young president Manuel back home with a very pro

828
00:46:23,360 --> 00:46:28,840
Speaker 1: European language. And the French are not unable to be reformed.

829
00:46:29,239 --> 00:46:32,000
Speaker 1: That there are people who are at the same time

830
00:46:32,080 --> 00:46:35,279
Speaker 1: worried and generous, and I think that now it's high

831
00:46:35,320 --> 00:46:37,920
Speaker 1: time for this country to reform. That the French is

832
00:46:38,000 --> 00:46:41,160
Speaker 1: also in recovery. And it's clear that we need also

833
00:46:41,239 --> 00:46:46,479
Speaker 1: to find a compromise between labor and wealth. And that's

834
00:46:46,600 --> 00:46:51,239
Speaker 1: probably what the difficulty is today to to find a

835
00:46:51,320 --> 00:46:54,480
Speaker 1: strong social dialogue in a lot to have economic reforms.

836
00:46:54,680 --> 00:47:00,520
Speaker 1: That social dialogue wraps around an interesting European capitalist. Is

837
00:47:00,560 --> 00:47:03,960
Speaker 1: there a generational shift going now after the election of

838
00:47:04,040 --> 00:47:07,719
Speaker 1: Bakro and certainly the stunning results in Germany where the

839
00:47:07,840 --> 00:47:12,160
Speaker 1: far right re enters the Bundestag, Is there a generational

840
00:47:12,400 --> 00:47:17,759
Speaker 1: shift in the European social contract? First, there could be

841
00:47:17,840 --> 00:47:20,480
Speaker 1: a contradiction between my kuwan if D, because that that's

842
00:47:20,520 --> 00:47:24,960
Speaker 1: two opposite moves. But I would say that populism in

843
00:47:25,040 --> 00:47:27,440
Speaker 1: Europe and one must be conscious of that their election

844
00:47:27,480 --> 00:47:30,640
Speaker 1: in Austria this Sunday, and the extreme right will be strong.

845
00:47:31,160 --> 00:47:36,160
Speaker 1: Strong right will be high. Populism has lots some battles,

846
00:47:36,280 --> 00:47:39,040
Speaker 1: especially in France. But Depen was not elected and I

847
00:47:39,160 --> 00:47:42,080
Speaker 1: had a poor result. But populism has not plus the war,

848
00:47:42,440 --> 00:47:46,719
Speaker 1: there is this feeling that people are dissatisfied with their

849
00:47:46,719 --> 00:47:50,160
Speaker 1: own elads. It's maybe stronger than the general strong effect,

850
00:47:50,400 --> 00:47:55,480
Speaker 1: even if uh sometimes it takes uh the figure of youngsters.

851
00:47:55,560 --> 00:47:57,680
Speaker 1: It was a casey in France. It could be the

852
00:47:57,760 --> 00:48:02,520
Speaker 1: case in Austria. So we need to be maybe more

853
00:48:02,600 --> 00:48:05,400
Speaker 1: careful about that. Even if in France it's clear that

854
00:48:05,520 --> 00:48:08,640
Speaker 1: the whole political system you're talking about the mainstream parties,

855
00:48:08,760 --> 00:48:12,480
Speaker 1: my party, Socialist Party now we've threatened to disappear, and

856
00:48:13,160 --> 00:48:17,040
Speaker 1: will we need to fight to recover it can because

857
00:48:17,080 --> 00:48:20,120
Speaker 1: there is still Will you provide leadership for that? I

858
00:48:20,160 --> 00:48:22,120
Speaker 1: make a grip of the scripture. This is so important.

859
00:48:22,200 --> 00:48:26,920
Speaker 1: We've got domestic French politics newly the way. I've got

860
00:48:27,000 --> 00:48:30,160
Speaker 1: a bit of things to do here in Washington and

861
00:48:30,280 --> 00:48:33,800
Speaker 1: especially in Europe. But I will try to provide ideas

862
00:48:33,840 --> 00:48:38,160
Speaker 1: because I think that my generation is not so ancient

863
00:48:38,640 --> 00:48:41,839
Speaker 1: that we cannot deliver messages. Well, I try to read,

864
00:48:42,200 --> 00:48:45,720
Speaker 1: to think, to express my myself. Leadership is another question,

865
00:48:46,360 --> 00:48:49,480
Speaker 1: but of course the next actions being European elections, I

866
00:48:49,520 --> 00:48:52,319
Speaker 1: will have a close look at it. But well, let's

867
00:48:52,360 --> 00:48:56,319
Speaker 1: go back to the essential. Uh. It's clear that those

868
00:48:56,400 --> 00:48:59,520
Speaker 1: parties as well My party, Socialist Party and the rightist

869
00:48:59,600 --> 00:49:03,120
Speaker 1: Party Republicans suffered a lot and so there is a

870
00:49:03,160 --> 00:49:06,920
Speaker 1: new generation. Is it definitive? Can there be a comeback?

871
00:49:08,880 --> 00:49:10,719
Speaker 1: It's it's it's one of the challenges in the years.

872
00:49:10,800 --> 00:49:12,920
Speaker 1: Just because of time. I've got to go to Brexit.

873
00:49:13,040 --> 00:49:15,640
Speaker 1: I think of the ancient geography of Calais and the

874
00:49:16,120 --> 00:49:21,520
Speaker 1: distrust intention signified by Clay between France and the United Kingdom,

875
00:49:21,560 --> 00:49:24,160
Speaker 1: and now we see Brexit as well. What do you

876
00:49:24,320 --> 00:49:26,959
Speaker 1: need from Mr Hammond? What do you need from Prime

877
00:49:27,000 --> 00:49:31,080
Speaker 1: Minister May right now to jump start the Brexit debate

878
00:49:31,200 --> 00:49:35,920
Speaker 1: to a constructive thousand eight Our position is very clear

879
00:49:36,200 --> 00:49:39,280
Speaker 1: and it's very for It's a divorce. It's a divorce

880
00:49:39,360 --> 00:49:42,839
Speaker 1: that needs to be a good divorce with a strong

881
00:49:42,880 --> 00:49:46,680
Speaker 1: relationship after the divorce. But to discuss about the future

882
00:49:46,719 --> 00:49:50,680
Speaker 1: relationship between EU and UK, and UK will be European country,

883
00:49:50,840 --> 00:49:54,560
Speaker 1: even if not inside the EU. We need first to

884
00:49:54,760 --> 00:49:56,759
Speaker 1: to to solve the issues that are on the table,

885
00:49:56,960 --> 00:49:59,440
Speaker 1: and the first thing is that we need to under

886
00:49:59,520 --> 00:50:05,239
Speaker 1: straw precise and definite discussion about the financial settlements and

887
00:50:05,320 --> 00:50:10,200
Speaker 1: also about citizens rights. So first things first. In the future,

888
00:50:10,480 --> 00:50:12,800
Speaker 1: of course, we will be closed criticles. You use the

889
00:50:12,880 --> 00:50:15,360
Speaker 1: divorce model, do you need a more you need a

890
00:50:15,400 --> 00:50:20,440
Speaker 1: more structured dialogue all a court process in divorce or

891
00:50:20,520 --> 00:50:24,160
Speaker 1: something squishy like American arbitration and divorce. What do you

892
00:50:24,239 --> 00:50:27,160
Speaker 1: need from the British Do you need more precision, more

893
00:50:27,239 --> 00:50:30,120
Speaker 1: and more acute dialogue from them? A few weeks ago,

894
00:50:30,239 --> 00:50:32,640
Speaker 1: but I may deliver the speech in Florence which was

895
00:50:33,360 --> 00:50:37,719
Speaker 1: and everybody appreciated it the progress because they she took

896
00:50:37,760 --> 00:50:41,120
Speaker 1: into consideration the idea of transition, etcetera. And the reaction

897
00:50:41,480 --> 00:50:45,239
Speaker 1: by all youth stakeholders was yes, it's getting better. But

898
00:50:45,840 --> 00:50:48,120
Speaker 1: everybody said that this time we need to move from

899
00:50:48,200 --> 00:50:53,040
Speaker 1: this speech which is good, to precise proposals and we

900
00:50:53,120 --> 00:50:56,080
Speaker 1: are still waiting for them. And this is why yesterday

901
00:50:56,160 --> 00:50:58,800
Speaker 1: we had to say that they will not sufficient progress

902
00:50:58,840 --> 00:51:01,560
Speaker 1: to move forward. But let's not be too pessimistic. In

903
00:51:01,600 --> 00:51:04,320
Speaker 1: the two months to come, and that's what a negotiator,

904
00:51:04,360 --> 00:51:08,200
Speaker 1: Michelle said. Progress is possible, and progress has to happen,

905
00:51:08,239 --> 00:51:10,719
Speaker 1: and they can be decided outside the courtroom as well.

906
00:51:10,800 --> 00:51:13,719
Speaker 1: Who's gonna drive this dialog for Europe? You represent Mr

907
00:51:14,120 --> 00:51:17,160
Speaker 1: Younker in the voice of the European Commission, the European

908
00:51:17,360 --> 00:51:20,360
Speaker 1: Union or will it be driven by the state leader's

909
00:51:20,440 --> 00:51:23,480
Speaker 1: Chancellor Miracle, Mr McCray and the others. That We've got

910
00:51:23,520 --> 00:51:26,680
Speaker 1: a very precise organization and British friends are aware of that.

911
00:51:27,040 --> 00:51:31,560
Speaker 1: We have a single unique negotiator of Michelle Banner. He's

912
00:51:31,560 --> 00:51:33,920
Speaker 1: a director General in the Commission. He acts in the

913
00:51:34,040 --> 00:51:36,560
Speaker 1: name of the Commission. All the Commission you spoke about

914
00:51:36,600 --> 00:51:38,719
Speaker 1: Phil Hammond, I discussed with him. He is a friend,

915
00:51:39,080 --> 00:51:41,920
Speaker 1: but I'm not negotiating with Phil Hammond, and no commissioner

916
00:51:42,040 --> 00:51:45,200
Speaker 1: is negotiating with his counterpart. But Mischellion does not only

917
00:51:45,320 --> 00:51:48,719
Speaker 1: represent the Commission. He has a key ammended by the

918
00:51:48,760 --> 00:51:51,680
Speaker 1: European Council and reports to the European Council each times

919
00:51:51,719 --> 00:51:55,560
Speaker 1: it meets. So the British side must know and it

920
00:51:55,680 --> 00:51:59,000
Speaker 1: knows that the Seven at a very clear position and

921
00:51:59,080 --> 00:52:01,480
Speaker 1: that they are totally united and they will stay so

922
00:52:01,920 --> 00:52:04,279
Speaker 1: goodness for you. We see Bank of America decide they're

923
00:52:04,280 --> 00:52:07,280
Speaker 1: gonna move bodies from London to Paris. Everybody knows everybody

924
00:52:07,320 --> 00:52:09,480
Speaker 1: wants to live in Paris. We've known that for years.

925
00:52:09,520 --> 00:52:11,880
Speaker 1: Are we going to see more people in London in

926
00:52:12,000 --> 00:52:17,240
Speaker 1: the city make the choice of Moscow dcase Parish today?

927
00:52:17,239 --> 00:52:19,640
Speaker 1: I mean, Russell is not in Paris, but Paris is

928
00:52:19,719 --> 00:52:23,680
Speaker 1: of course fantastic city. What is clear is that through

929
00:52:23,760 --> 00:52:27,000
Speaker 1: these shifts, and it's not the only one, there is

930
00:52:27,040 --> 00:52:29,320
Speaker 1: Paris there in front for the Amsterdam, there is Berlin,

931
00:52:29,360 --> 00:52:33,680
Speaker 1: the other centers, also Spain. You can see how necessary

932
00:52:33,680 --> 00:52:35,920
Speaker 1: it is for these banks and to have a very

933
00:52:35,960 --> 00:52:40,120
Speaker 1: strong foot inside the Eurozone. And this is why I'm

934
00:52:40,120 --> 00:52:42,520
Speaker 1: a very strong advocate of the Eurozone. And I think

935
00:52:42,560 --> 00:52:45,439
Speaker 1: that after the Brexit euro will be eighty five percent

936
00:52:45,520 --> 00:52:47,600
Speaker 1: of the GP of the Europe as the whole, and

937
00:52:47,719 --> 00:52:50,279
Speaker 1: we need to deepen our Eurozone. Are my heirmas bow

938
00:52:50,320 --> 00:52:52,480
Speaker 1: tie is going to be more expensive because of Brexit?

939
00:52:52,600 --> 00:52:55,040
Speaker 1: Do we know that? Don't worry, no worry, there we

940
00:52:55,120 --> 00:53:06,640
Speaker 1: go DC. Thank you so much. Thanks for listening to

941
00:53:06,680 --> 00:53:11,400
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

942
00:53:11,600 --> 00:53:17,160
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

943
00:53:17,239 --> 00:53:20,800
Speaker 1: on Twitter at Tom Keene. David Gura is at David Gura.

944
00:53:21,440 --> 00:53:24,919
Speaker 1: Before the podcast, you could always catch US World one.

945
00:53:25,200 --> 00:53:26,239
Speaker 1: I'm Bloomberg Radio