Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
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Speaker 1: the Federal Reserve, then the White House announcing plans to
Speaker 1: nominate Pimco's Rich Clarada as the vice chair of the
Speaker 1: Federal Reserve, and filling the final piece in the feeds
Speaker 1: three most powerful spots Yelling Fisher and Dudley Outs and
Speaker 1: pal Clarada Williams In After all the concerns and conversations
Speaker 1: about the changes the new administration would make to the
Speaker 1: US Central Bank, the new Fed looks a whole lot
Speaker 1: like the old Fed. Arm band holds any credit chief
Speaker 1: US economists Joy and just Now and Harm It was
Speaker 1: a concern about a year ago about what this Federal
Speaker 1: Reserve would look like, and you'd have to say, not
Speaker 1: much change. Yeah, I totally agree. I think it's we
Speaker 1: have seen pretty pretty good choices. There has been a
Speaker 1: year ago there was a concern that the whole FET
Speaker 1: maybe totally revemped. After after several comments from the administration. UM.
Speaker 1: Then the next concern was we have a new FET
Speaker 1: chair who lacks this formal economics degree. But I think
Speaker 1: these concerns have been addressed by adding two very strong,
Speaker 1: you know, vice chairs with with John Williams and Rich Clarada.
Speaker 1: So I think this new inner circle of the FAT
Speaker 1: um is a pretty solid group. They're fine choices, not
Speaker 1: quite the heavyweights of Janet Yellen and Stanley Fisher, but
Speaker 1: really fine choices. And it's testament to the institution, isn't
Speaker 1: it that this administration has taken these picks so seriously
Speaker 1: harm there's already quite good picks. I I totally, I
Speaker 1: totally agree, yes, and and and the market, I mean,
Speaker 1: there was not much market reaction yesterday to Rich Clarada's
Speaker 1: um intended to the intended nomination of Rich Clara, I
Speaker 1: don't think it has formally happened yet, but um, I mean,
Speaker 1: first of all, he was he was a front runner
Speaker 1: for the position for some time. He was rumored to
Speaker 1: be the front runner. But but yeah, as I said, also,
Speaker 1: over the last several months, the market has the notion
Speaker 1: in the market has settled that that the FAT will
Speaker 1: remain the fat and will continue to do what it
Speaker 1: did under the previous leadership. So harm no policy shift,
Speaker 1: at least not imminently. As the Federal Reserve, the old
Speaker 1: guard hands it over to the new guard. Has the
Speaker 1: reaction function of this Federal Reserve with these new names?
Speaker 1: Has that shifted in any way, shape or form as
Speaker 1: far as you're concerned, Um, well, the reaction function has
Speaker 1: shifted it a little bit over the last several years,
Speaker 1: I would say, most importantly, because there's a view that
Speaker 1: the equilibrium exchange rate, the infamous sorry equilibrium interest rate,
Speaker 1: the the R star is lower, right, that that change
Speaker 1: has happened over the last several years. John Williams was
Speaker 1: one of the main architects, intellectual architects behind that shift,
Speaker 1: and Rich Clarata he totally agrees with that view, So
Speaker 1: that very helpful to There's no additional change on top
Speaker 1: of the change that we've seen over the last several years,
Speaker 1: So that means more consistently steady as she goes lower
Speaker 1: long term interest rates. Are you prepared for the central
Speaker 1: bank independence to be tested? That was another remainting question
Speaker 1: coming into this new administration, and bear in mind it
Speaker 1: wasn't so long ago we were really talking about radical
Speaker 1: changes to the Federal Reserve, and so far these are
Speaker 1: really quite consensual kind of replacements for the for the
Speaker 1: spots that were available on the Federal Reserve. But do
Speaker 1: you see at some point the independence of this institution
Speaker 1: being tested? No? I well, you should never say never,
Speaker 1: but but I think it was a big lip mus
Speaker 1: test how this reshuffling off the Federal with all these
Speaker 1: empty seats will play out. And I think we should,
Speaker 1: everybody should be encouraged by by these picks, and I
Speaker 1: think it's a testament to the independence, to the strong
Speaker 1: institution that the fad is we will determine the certitude
Speaker 1: of three or four rateex whether it becomes three, becomes four,
Speaker 1: they become five, which very few people are talking about,
Speaker 1: or they cut back from four to three, etcetera, etcetera.
Speaker 1: What what's the thing the distinction that will make that
Speaker 1: decision happen. Well, I think it's a usual suspect. Big
Speaker 1: drops in the stock market on the negative side, would
Speaker 1: you know, would mean tighter financial conditions, and the FAT
Speaker 1: has in the past reacted and I think the new
Speaker 1: leadership will do the same, so that would mean less
Speaker 1: rate hikes. Um much slower growth than anticipated, meaning even
Speaker 1: an even smaller multiplier from all the fiscal stimulus. May
Speaker 1: also mean that we're ending up with two or three
Speaker 1: rather than three or four. And on the upside um
Speaker 1: maybe and overshoot on the inflation side may bring us
Speaker 1: to four or five. That's said, I think the threshold
Speaker 1: to change the outlook for three or four hikes on
Speaker 1: both sides, on the upside and on the downside is
Speaker 1: pretty high. And and and frankly, I mean, while I
Speaker 1: have four rate hikes in our forecast for this year,
Speaker 1: eyes have a very hard time to see the FED
Speaker 1: going to five almost Okay, it's it's it's very hard
Speaker 1: to imagine this scenario where the FED would go five types.
Speaker 1: I just brought that up for conversation on Tuesday. But
Speaker 1: the basic the basic idea here as does that marginal second,
Speaker 1: then third, then fourth rate hike did they begin to
Speaker 1: really impinge on business process? Or is it all overwhelmed
Speaker 1: by Make America Great again? G d P. Well, certainly
Speaker 1: the there has been talking about the libel rate right
Speaker 1: which which which has gone up. My people say this
Speaker 1: is the equivalent of another rate hike. But overall, I
Speaker 1: think that what the FAT is looking at. How the
Speaker 1: FAT sees things is they raise rates and then they
Speaker 1: look at how financial conditions change, because that is how
Speaker 1: short term monetary policy affect the real economy, right, and
Speaker 1: that is through credit spreaders, longer term interest rates, maybe
Speaker 1: the exchange rate, maybe stalks, and that is all relatively easy.
Speaker 1: What did you make it this weight from yesterday from
Speaker 1: the President on foreign exchange restaurant China playing the characters
Speaker 1: as the us ks rising interest rates not acceptable? What
Speaker 1: did you make of that harm? Who was the aimed at?
Speaker 1: Who's the audience? Um? Um? Serious question. I'm wondering whether
Speaker 1: it's aimed at the Federal reserve, the effects market, or
Speaker 1: putting the effects market unnoticed A dollar? No, I think
Speaker 1: I think the audience is always the same, right, it's
Speaker 1: the people he's addressing with the president's addressing with most
Speaker 1: of his tweets. I mean, on a serious note, we
Speaker 1: know that China is not manipulating its currency I don't
Speaker 1: want to say at all anymore, but much less than
Speaker 1: it did and the latest PBOC actions over the last year,
Speaker 1: so it was actually to prevent a weakening of its
Speaker 1: own currency, you know. So that and if you look
Speaker 1: at the Chinese overall current account balance, Yeah they have
Speaker 1: a surplus, but it's not huge. So bottom line is
Speaker 1: the Chinese currency is not that much um out of
Speaker 1: think um with with where it should be. So I
Speaker 1: think it's totally misplaced. And I think it also it
Speaker 1: doesn't disservice to him to the Fisher line of argumentation
Speaker 1: from the administration, because the focus should not be on
Speaker 1: exchange rates or anything monetary, if you want, it should
Speaker 1: be on this non terrible barriers to trade, including intellectual property. Right,
Speaker 1: I think that should be the focus. I think it's
Speaker 1: a legitimate concern um. But now bringing back to exchange
Speaker 1: rate or something, I think it's a totally wrong direction.
Speaker 1: Ar Binals, thank you so much, greatly appreciate it this morning.
Speaker 1: You've heard me say it before, I'll say it again.
Speaker 1: It is a price of to Martinis for an annual
Speaker 1: prescription subscription. And it is Foreign Affairs Magazine. The font
Speaker 1: is large for those site impaired like myself, but far
Speaker 1: more importantly, it is smart, smart, smart, well timed. Here
Speaker 1: is democracy dying? A global report. We are advantage by
Speaker 1: having Get and Rose with us of Foreign Affairs Magazine.
Speaker 1: Why that cover why is democracy dying? Because right now
Speaker 1: there clearly is a resurgence of authoritarianism in lots of
Speaker 1: parts of the world China, Uh, Saudi Arabia, elsewhere. And
Speaker 1: there are also lots of problems in the major advanced
Speaker 1: industrial democracies in Europe, in America. And so we did
Speaker 1: a survey essentially of just how bad things are, and
Speaker 1: the answer is pretty darn bad. There's no question this
Speaker 1: is the worst period for democracy in decades. UH. And
Speaker 1: people disagree, Legitimate serious scholars and analysts of all stripes
Speaker 1: disagree about whether this is sort of a permanent shift
Speaker 1: against democracy down the road, or whether it's something that's
Speaker 1: just a temporary lull before things can right themselves and
Speaker 1: get back on track. It's a global report, Elizabeth, Economy
Speaker 1: in China, You've got a wonderful chapter on the Crown
Speaker 1: Princess charm offensive with Saudi Arabian such which chapter sticks
Speaker 1: out to Gideon rose Um. You know, there's a Uh,
Speaker 1: I'm really worried about out what's happening in Eastern Europe
Speaker 1: because I don't understand and hungary, and and and and
Speaker 1: not just hungry, basically countries that should be embracing their
Speaker 1: new European identity and the virtues of being part of
Speaker 1: the eu UH and the opportunity they've been given, like
Speaker 1: Poland have sort of and even the ones like Poland
Speaker 1: that have made their best foot forward in the new
Speaker 1: situation are rejecting the transplant to the modernity in the West,
Speaker 1: taking things they want and leaving the rest behind and
Speaker 1: and not moving forward in the way that we thought
Speaker 1: liberal democracy and international cooperation should work, and so that
Speaker 1: scares me. But but basically, you know, the optimistic side
Speaker 1: of things, we have a whole package on Crisper and
Speaker 1: gene editing with Bill Gates and Jennifer DOWDNA who might
Speaker 1: win a Nobel Prize for this down the road, and others.
Speaker 1: And although there are dangers and worries about regulation, they're
Speaker 1: also upsides of the wonderful advances in medical technolog gy
Speaker 1: and agricultural technology they're gonna happen. And so while all
Speaker 1: this political turbulence is swirling around us um, there's also
Speaker 1: this world of science and technology and development that's going
Speaker 1: on as well. And so the challenge right now is
Speaker 1: how to keep your intellectual and practical and financial grounding
Speaker 1: in what the Chinese called interesting times. So giddon, let
Speaker 1: me just be clear about something. Do you think democracy
Speaker 1: is dying or you were just unhappy with the outcomes
Speaker 1: of democracy? No, the the it's not just a question
Speaker 1: of the outcomes. What you're seeing in places like the
Speaker 1: United States right now are classic signs of what we
Speaker 1: call democratic regression. Centralization of power in the executive, politicization
Speaker 1: of the judiciary, using it to go after your political opponents. Um.
Speaker 1: Attacks on an independent media, not because of what they
Speaker 1: the factual truth what they say, but because of the
Speaker 1: political valence of it. UM. Things like that use of
Speaker 1: public office for private games. These are very common in
Speaker 1: a lot of places around the world. For Zakaria has
Speaker 1: called them illiberal democracies. Um. We just didn't think that
Speaker 1: was gonna be true in places like the United States.
Speaker 1: And what you see right now is a Latin American
Speaker 1: friend put it to me. UM. The sad thing about
Speaker 1: this is we've seen this movie before, just never in English. UM.
Speaker 1: And so the real question now is is this a
Speaker 1: temporary regression or is it going to go back to
Speaker 1: uh two normal? Are Are things going to get better
Speaker 1: when people realize just how low they've gotten well. Getting
Speaker 1: there all valiant, valid concerns, but they are outcomes of democracy.
Speaker 1: And I assume that the next time is an election,
Speaker 1: that the electorate gets the chance to put it right
Speaker 1: if they want to. We hope, hope. Isn't that democracy? Yes?
Speaker 1: And that is in fact exactly right. And the real
Speaker 1: question now is will we get through? Then? For three
Speaker 1: United States, there's an absolutely no question in my mind
Speaker 1: that the major question is will you get through the
Speaker 1: next seven months in which the legal and political processes
Speaker 1: of democratic institutions are allowed to take their natural course?
Speaker 1: And I think they will, and I think in the
Speaker 1: long one will sort of like, uh, basically say ha
Speaker 1: ha ha ha, who are you about that? But but
Speaker 1: we'll know that in seven months, because there's a real
Speaker 1: chance you could have a domestic constitutional crisis or an
Speaker 1: international security crisis specifically designed simply to derail the otherwise
Speaker 1: legitimate playing out of those institutional processes. And that's what
Speaker 1: scares me the most. You start with the optimism of
Speaker 1: Walter Russell Meade, how American democracy fails its way to success.
Speaker 1: It's a wonderful issue. I really can't say enough about
Speaker 1: foreign affairs. Is democracy dying Gideon Rose with this today
Speaker 1: with a wonderful set of essays, including on China. The
Speaker 1: must rad on China Neil Shearing. These are the capital economics,
Speaker 1: looking at the economics of um and their interdependencies, the
Speaker 1: interdependencies of a Chinese US tip for tat, what's it
Speaker 1: mean to Indonesia, What's it mean for the Czech Republic.
Speaker 1: That's a that's a key question that we need to
Speaker 1: think about, because what happened in the global economy over
Speaker 1: the past twenty years has been that China has become
Speaker 1: this manufacturing hub with spokes spreading out all over East
Speaker 1: Asia and all the way into Europe. Even so, if
Speaker 1: there's a straight spat between the U S and China,
Speaker 1: that's going to trickle down through supply chains and hit
Speaker 1: other em so particularly Taiwan, also Korea, mainly in East Asia,
Speaker 1: but as you say, it goes but beyond that as well,
Speaker 1: looking at the the story within China at the moment, Neil,
Speaker 1: the economy seems to be this tug of war between
Speaker 1: the old economy and the new economy. And you see
Speaker 1: that in the data this morning, retail sales versus say,
Speaker 1: industrial production. How are they managing that transition from the
Speaker 1: old engines of growth to the new engines of growth. Neil,
Speaker 1: it's a difficult transition, and it's one that's going to
Speaker 1: take place over a matter of years, in decades, rather
Speaker 1: than months and quarters. I think what we see in
Speaker 1: the data today, I mean, you take the official data
Speaker 1: at face value, the economy is remarkably stable. Actually, in
Speaker 1: our view, the economy is already slowing. We have our
Speaker 1: own activity proxy that puts growth at about four point
Speaker 1: eight percent, not six point eight percent. Four point eight percent,
Speaker 1: so substantially lower than than the official data, and it's
Speaker 1: on a declining trend. And a part of that is
Speaker 1: industrial weakness, the effect of pollution controls that were put
Speaker 1: in place over the winter. But as also, as you say,
Speaker 1: there's more fundamental weakness in fixed investment that reflects that
Speaker 1: the deeper transition that needs to happen over the next
Speaker 1: decade or so. And Neil on the on the triple
Speaker 1: R rate at the Chinese Central Bank, the reserve requirement
Speaker 1: ratio a full one percentage point one hundred basis point
Speaker 1: cut to that this morning, Nol. What are they trying
Speaker 1: to address with that kind of action, and how are
Speaker 1: they easy in that transition by doing it, I think
Speaker 1: there's several things that are trying to do here. They're
Speaker 1: paying a very for called balancing game, balancing out the
Speaker 1: Chinese People's Bank. On the one hand, they've put one
Speaker 1: eye on the currency defens tightening. They're they're raising that
Speaker 1: one of the policy rates will be at one that
Speaker 1: doesn't necessarily have any impact on on monetary conditions. On
Speaker 1: the other hand, they have a kind of one eye
Speaker 1: on the fact that credit conditions in the real economy
Speaker 1: of tightening, and that's what this reserve ratio cut this
Speaker 1: morning is aimed at trying to ease back on some
Speaker 1: of the um ease credit conditions in the real economy,
Speaker 1: trying and get some of those engines of growth going again.
Speaker 1: So this is it's percolating, uh, certainly in the last
Speaker 1: oh five six eight weeks, which is about slow down.
Speaker 1: I mean, I guess we had nascent boom and a
Speaker 1: pretty good, you know, better than good global economy. Is
Speaker 1: the is the shock of the world economic outlookout today
Speaker 1: by the IMF going to be a little bit of
Speaker 1: that recession or gloom or depression, but just slow down
Speaker 1: in the too good to be true global economy. I
Speaker 1: think that's right. I mean, I've been in this game
Speaker 1: for long enough now that when you get almost unanimity
Speaker 1: amongst economists at the turn of the year that we
Speaker 1: were in the synchronized global upswing, you knew it was
Speaker 1: too good to be true. And to my mind that
Speaker 1: signaled that the peak of growth in this cycle. Um now,
Speaker 1: I think that's un even at this stage, as I say,
Speaker 1: growth in the e M world at least the extent
Speaker 1: that's been a slow down that's been led by China,
Speaker 1: and growth elsewhere in lastin America still seems to be
Speaker 1: picking up, for example. The real shock in all of
Speaker 1: this is that the European economy seems to have lost
Speaker 1: some steam over the last couple of months or so.
Speaker 1: And that was the part of the world that was
Speaker 1: much earlier in the growth recovery. Wouldn't be that much
Speaker 1: for shocks here. The U s loan right now, but
Speaker 1: Europe slowing right now, I think is a surprise. And
Speaker 1: and Jian Ferrell, Ambrose, Evans Pritchard and the Telegraph for
Speaker 1: the very cogent essay were the our word and Germany
Speaker 1: recession not predicting it now predicting it is, Neil says, Uh,
Speaker 1: some of the precursors are there real slowdown in Europe
Speaker 1: and the backdrop to all of this, Neil at the
Speaker 1: moment is trade concerns, tension between China and the United States,
Speaker 1: and the President injecting some concern around the effects market
Speaker 1: as well. Not the first time he's done it, referring
Speaker 1: to China and Russia is playing the devaluation game. The
Speaker 1: Treasury Secretary Steve Manuch in an interview with CNBC earlier
Speaker 1: this morning, saying that the president's currency comment was a
Speaker 1: warning shot to Russia and China. What's your read on that, Neil,
Speaker 1: And how difficult is it to read what the ornament
Speaker 1: policy of this White House is When just a couple
Speaker 1: of days ago the Treasury said that China was not
Speaker 1: a currency manipulator, then a couple of days later the
Speaker 1: President says they are, well, exactly, It's extremely difficult and
Speaker 1: it's extremely difficult for market practitioners to to get their
Speaker 1: head around what's going on. I think there's a particular
Speaker 1: irony in the case of singling out Russia because, of
Speaker 1: course the reason the ruble has weakened um the devaluation
Speaker 1: that the President talks about that is because the US
Speaker 1: has plays sanctions on the country to Actually, this is
Speaker 1: not about the Moscow intervening in the phone exchange market.
Speaker 1: This is about the effect of sanctions and then the
Speaker 1: impact that's something the currency. But look at the Treasury
Speaker 1: report that came out earlier at the back end of
Speaker 1: last week. I think actually it was a bit more
Speaker 1: timid than than certainly I had expected, and some people
Speaker 1: in the market had expected. They could have made a
Speaker 1: plausible case for singling out countries like for Thailand, Taiwan,
Speaker 1: and they stepped back a bit from doing that. What
Speaker 1: do you say about a headline from Mr Manuian's interview,
Speaker 1: Trump only considers re entering t p P on better terms.
Speaker 1: Why should any Asian e m that you look at
Speaker 1: Neil go to the United States quote unquote and better terms.
Speaker 1: I find it illogical. It's the short point is it
Speaker 1: won't and that won't happen. Now, there might be some
Speaker 1: cosmetic changes that can be um that can be made
Speaker 1: to coax the US back in as it were, But
Speaker 1: I think what's happened in the U S at least
Speaker 1: for the US part at least, is that this realization
Speaker 1: actually the TPP, the bedrock of the TPP, that's kind
Speaker 1: of ideals. The idea of the TPV was to kind
Speaker 1: of almost form a ball walk against China in trade terms,
Speaker 1: you know, get get allied countries like Japan career and
Speaker 1: the Pacific nations on board put pressed back against China.
Speaker 1: I think only now has there been a gradual realization
Speaker 1: that that that was the aim, and hence that perhaps
Speaker 1: the reappraisal in Washington. So is this a stick for
Speaker 1: the Chinese, that the threat of joining TPP, if it
Speaker 1: is a threat, Neil, could it be and could it
Speaker 1: be a stick to say to the Chinese, look, playball,
Speaker 1: give us a better deal, or we're going to revisit
Speaker 1: t p P and put a strong foot foothold in
Speaker 1: that region economically speaking, It could be. I mean, I
Speaker 1: think that the US has other ways in which it
Speaker 1: can push back and will continue to push back the
Speaker 1: use of Section three or one, the US Section two
Speaker 1: to three that your national defense arguments. I think that
Speaker 1: there's as a wide range despite the fact that Congress
Speaker 1: has at least call into the constitution um responsibility for
Speaker 1: regulating commerce with foreign partners, there's a wide range of
Speaker 1: powers the president control upon So I don't think it
Speaker 1: necessarily needs to Washington needs to fall back on the
Speaker 1: threat of t p P. But it's certainly everything's going
Speaker 1: into the mix now. And I think at the moment
Speaker 1: that the big question is is just a photo war
Speaker 1: that we're seeing At the moment, all we've seen as
Speaker 1: a list of tarists potential tarists, nothing is actually really
Speaker 1: changed or will both sides follow through? And if they do,
Speaker 1: then game. But but the news just very quickly, or
Speaker 1: the news out of their Chinese technology company, that's not
Speaker 1: a phony war. A US company can't deal with this
Speaker 1: tech savvy telecom company out of China anywhere in the world.
Speaker 1: I believe that's what I read. It's not obviously that
Speaker 1: that has ramifications for that that that company and in
Speaker 1: any company that deals with it. But in a macroeconomic sense,
Speaker 1: when you're dealing with the two large the enemies in
Speaker 1: the world, commerce between trades between those countries totaling hundreds
Speaker 1: of billions of dollars each year, that is a drop
Speaker 1: in the ocean. So it's to my mind, it's do
Speaker 1: we see you if we start to see taris on
Speaker 1: a hundred fifty billion dollars worth of Chinese exports to
Speaker 1: the US. They're not so much bigger deal, no sharing
Speaker 1: capfull economics, chief Emerging markets economists. What a joy this is.
Speaker 1: You have Tim O'Brien with us doing all of our
Speaker 1: good work at Bloomberg View, Bloomber Gadfly, with a lot
Speaker 1: of good announcements coming up as they move forward. Uh
Speaker 1: at Bloomberg, Tim O'Brien, now for a lengthy discussion and
Speaker 1: many themes, and yes, we'll do all this stuff going
Speaker 1: on with Washington, Timm. It is tax day. President Trump
Speaker 1: short tweets today employment is up, taxes down, Enjoy, talks
Speaker 1: about Mr Abe, talks about Mr Brown and the border.
Speaker 1: Governor Brown and the border. So many people are seeing
Speaker 1: the benefits of the tax cut bill. Everyone is talking.
Speaker 1: Really nice to see. Do we know yet, Tim O'Brien,
Speaker 1: how many Americans have their taxes go up do a
Speaker 1: year from now? I I think there's still a long
Speaker 1: lag time in a lot of this, you know. I
Speaker 1: think one of the tricky things now with assessing any
Speaker 1: of this macro stuff is, to a certain extent, President
Speaker 1: Trump is laying claim to a job market that that
Speaker 1: preceded him, that was already healing before he came into office,
Speaker 1: So I think he needs a couple more years in
Speaker 1: office before he can lay full claim uh to to
Speaker 1: a rebound or to order a Trump effect on the
Speaker 1: job market. But certainly, at least what we're seeing already
Speaker 1: in the data on tax cuts is a big portion
Speaker 1: of it right now is accruing to stock buybacks. It's
Speaker 1: not going into I think two key things that are
Speaker 1: a publicans need to sell at the mid terms, which
Speaker 1: is long term wage growth from middle income workers and
Speaker 1: real investments and plant equipment like corporations. When when we
Speaker 1: look at this and you know, I give credit, I'll
Speaker 1: say to the New York Times and the graphics of
Speaker 1: the number of people that would benefit from a tax cut,
Speaker 1: everybody's taking a collective victory lap on it. It seems
Speaker 1: like right now, do you in in the study, particularly
Speaker 1: Bloomer get Flight in in the think tanks in Washington,
Speaker 1: do we know when those benefits end the text cut? Obviously,
Speaker 1: there's gonna be a good feeling for a bunch of
Speaker 1: hitters full disclosure, including myself, for twelve months, But when
Speaker 1: when does it? When's the benefit? When's the free lunch?
Speaker 1: There is no free lunch. So there it is. There
Speaker 1: is never a free lunch where the math ultimately on
Speaker 1: this isn't complicated. At the end of the day, it
Speaker 1: says the government collect enough revenue to balance its books
Speaker 1: and just pay its bills. And I think, you know,
Speaker 1: we've recently had a big Sea Do study out that
Speaker 1: the deficits gonna hit one trillion dollars. What do we
Speaker 1: do when that? When that rolls around, what happens to
Speaker 1: the bond market when that rolls around? What's going to
Speaker 1: happen to inflation rates? When that rolls around? There's a
Speaker 1: certain amount of I think concern here that this tax
Speaker 1: cut is gonna have a nice effervescent champagne like now
Speaker 1: term pop and and everybody's gonna have a hangover later.
Speaker 1: And the CBO report buried you last week, and all
Speaker 1: the news that you follow so much with with your
Speaker 1: classic book, Trump Nation, and all that you went through
Speaker 1: off of that book. How is that book aged in
Speaker 1: the last year when you go back and look at
Speaker 1: the citizen Trump versus what we've seen, how is the
Speaker 1: book aged? I you know, I think the book. One
Speaker 1: of the magical things about President Trump is that he
Speaker 1: is uh predictable in his unpredictable nous. And he really
Speaker 1: hasn't changed much since he was about twenty. You know,
Speaker 1: he really is who he is. He is who you
Speaker 1: see the thing. He's a survivor. You can really understand
Speaker 1: him to two lenses, either self preservation or self aggrandizement.
Speaker 1: That really hasn't changed for a very long time. My
Speaker 1: book came out in two thousand and five. Um, I
Speaker 1: think the portrait of him that that is in that
Speaker 1: book is pretty accurate. Within that is the phrase it's
Speaker 1: in the zeitgeist right now that you know, person A,
Speaker 1: person B, person C is going to have their day
Speaker 1: at quarter Justice is going to be had, and all
Speaker 1: the focus now again is on kimber Wood, who's one
Speaker 1: of our federal judges. Ald Motto is the one that
Speaker 1: recommended her uh to President Reagan, to the bench, and
Speaker 1: kimber Wood, for me, will forever be younger. And she's,
Speaker 1: you know, a senior judge now out of Connecticut College,
Speaker 1: out of Harvard Law, with some notorious cases along the way.
Speaker 1: She really took charge yesterday in that room. I think people,
Speaker 1: the sophisticates seemed to be surprised by that as well,
Speaker 1: right she had two things she had to look at,
Speaker 1: which was both the White House and UH. Michael Cohen's
Speaker 1: lawyers said that the documents that the FBA got FBI
Speaker 1: got when they rated Mr Cohn's office he's Trump's personal attorney,
Speaker 1: should be subject to a review before prosecutors could do
Speaker 1: anything with them. Uh. That's an interesting issue, because prosecutors
Speaker 1: didn't go into Cohn's office Uh through a subpoena. They
Speaker 1: issued a search warrant and went in there and took
Speaker 1: the documents they wanted because they believed they may not
Speaker 1: get them otherwise. Uh. And they asked a court for
Speaker 1: the right to do that, which meant the court believed
Speaker 1: they had good reason to go in there. Kimball Wood
Speaker 1: had to say, okay, ex post facto, are does the
Speaker 1: court need to look at this again and intercede? And
Speaker 1: what she said was prosecutors can go ahead and take
Speaker 1: a look at these, but she's considering putting a special
Speaker 1: master in who will review the documents on behalf of
Speaker 1: both sides to make sure the processes fair. The second
Speaker 1: and I think seminal thing that happened, of course, is
Speaker 1: that Um, she said that the White House couldn't intervene.
Speaker 1: You're thrust in all this is the media is focused
Speaker 1: on the sensationalism. We saw that with the camera horde
Speaker 1: yesterday at the court. If that's not the case, what
Speaker 1: is Tim O'Brien focused on, Well, I think, you know,
Speaker 1: on our best days, we should say focused on the
Speaker 1: fact pattern. I think there's a lot of wish fulfillment
Speaker 1: um on both sides, a partisan wish fulfillment around how
Speaker 1: Trump has looked at and covered and I think particularly
Speaker 1: when it pertains that the Mueller investigation, Trump's critics, I
Speaker 1: think are prone to see every break in the case
Speaker 1: as the the final moments, right and and and Trump
Speaker 1: supporters will see every moment of the Muller investigation as
Speaker 1: prosecutorial overreach. I think all we need to do on
Speaker 1: a day to day basis is hugh to the facts.
Speaker 1: I think, you know, I wrote recently around some of
Speaker 1: the writing about Michael Cohen certainly had this notion that
Speaker 1: he was the man in the Trump organization making most
Speaker 1: of the legal decisions and with knowledge of every single
Speaker 1: deal Trump has done, that could get him in trouble
Speaker 1: with Mueller. And that's just not the case. You know,
Speaker 1: mccoon was a hanger on. He certainly is presents a
Speaker 1: vulnerability to Trump, and he knows about a lot of deals.
Speaker 1: But there were other people in the Trump organization where
Speaker 1: they're much longer who no more. Would we have had
Speaker 1: the events yesterday in front of Judge Wood if we
Speaker 1: didn't have a president tweeting so much, that's a great question, Tom.
Speaker 1: I think it's independent of the tweets. I think we
Speaker 1: would have had this in front of in front of
Speaker 1: Wood because the president's personal attorney appears who have engaged
Speaker 1: in a number of frauds, that prosecutors are interesting in probing,
Speaker 1: interested in probing. I think that stands apart from the meats.
Speaker 1: But there's no question also that going back to the
Speaker 1: to the election, the president incentive the judiciary. I think
Speaker 1: to look closely at his actions because he took on
Speaker 1: judges and and he routinely criticized the courts. Tell us
Speaker 1: about the prosecutors. I read about Mr Kazami. I believe
Speaker 1: it is with an SEC background, and do you remember
Speaker 1: him from from the O eight crisis. Yeah? Yeah, And
Speaker 1: these guys are are grizzled, grizzled. I mean, it's it's
Speaker 1: in the FBI book the threat matrix as well. The
Speaker 1: Southern District is a really serious set of prosecutors using
Speaker 1: that word very narrowly, aren't they And and they're highly
Speaker 1: independent and they meaning that they don't see themselves as
Speaker 1: having to take guidance from the Justice Department in Washington.
Speaker 1: How do they get away with it because they're in
Speaker 1: the financial capital of the world. They believe they bring
Speaker 1: an extra layer of financialists and they're allowed to and
Speaker 1: they're allowed to. It's you know, we know this immediate.
Speaker 1: There's always these Washington bureaus that are very independent from
Speaker 1: the mother ships for the same you didn't know about
Speaker 1: that the other thing in the Southern District cause I
Speaker 1: had a little bit of personal experience in here because
Speaker 1: Kazami and some of the other people they're worked for
Speaker 1: Mary Joe White when she ran the U. S. Attorney's
Speaker 1: Office for the Southern District, and Mary Joe White represented
Speaker 1: me in my litigation with with Trump and um Mark
Speaker 1: Casswitz represented Trump at the time, and Mary Joe and
Speaker 1: her team completely stripped the bark off these folks. And
Speaker 1: I think it's in part because they come out of
Speaker 1: that strong Southern District tradition. Are we going into a
Speaker 1: stripping of the bark Yes stage here Yes discussed that
Speaker 1: seconds Trump has not appointed a new head of his
Speaker 1: own legal team, so he's at sea legally, and he
Speaker 1: is surrounded by the most well healed and talented group
Speaker 1: of federal prosecutors under Bob Muller that's ever taken a
Speaker 1: look at the White House. And he's now got another
Speaker 1: foot in New York which he can't control in any way,
Speaker 1: with the Southern district he's got. It's a princer. This
Speaker 1: is gonna be wonderful. Tim O'Brien able to be with
Speaker 1: us today for a generous amount of time. When you
Speaker 1: come back, pim Fox and really dive into this and
Speaker 1: also not look forward maybe to Tim O'Brien's thoughts on
Speaker 1: the new media as well as he is part of
Speaker 1: that with Bloomberg View, to Bloomberg cad Fly and Bloomberg Opinion.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane Before
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg
Speaker 1: Radio