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Speaker 2: On Friday, we had this pronouncement from the President on
Speaker 2: social media saying he was going in and would be
Speaker 2: making this decision. He went into the meeting, came out
Speaker 2: of the meeting, and there still was not an agreement.
Speaker 2: So Axios is reporting today that the President during that
Speaker 2: meeting asked for several amendments to the deal negotiated between
Speaker 2: his envoy and the Iranians.
Speaker 3: In particular, he wants to strengthen the sections around around's
Speaker 3: nuclear material, including details on how the US gets that
Speaker 3: material and when. Here's what he told his daughter in
Speaker 3: law Laura Trump on Fox News last night. This is
Speaker 3: really a win.
Speaker 5: Already, we've defeated the military, essentially defeated their military. I
Speaker 5: would rather get a deal because we can open the
Speaker 5: strait immediately upon signing. The one guarantee that I have
Speaker 5: to have is that there will be no nuclear weapons.
Speaker 5: They've agreed to that, and it was very interesting. They
Speaker 5: originally said we will not develop a nuclear weapon. I said, well,
Speaker 5: what happens if you buy a nuclear weapon? So now
Speaker 5: it says we will not develop or in any way
Speaker 5: purchase a military weapon. That's a big difference. So we're
Speaker 5: getting what we want slowly, very tough negotiators. It takes
Speaker 5: a long time.
Speaker 2: I'm in no hurry.
Speaker 5: I'd like to say I'm in a hurry because you
Speaker 5: know what, ghasoline prices are going to come dumbly down.
Speaker 5: But if you're going to be in a hurry, you're
Speaker 5: not going to make a good deal.
Speaker 3: We're getting what we want. According to the President of
Speaker 3: the United States, is now as ambassor John Bolton. He
Speaker 3: served as the former US Ambassador of the UN and
Speaker 3: also as National Security advisor to President Trump during the
Speaker 3: first term. Mister ambassador, great to have you with us
Speaker 3: once again. Let me start with that line that I
Speaker 3: repeated there coming out of that quotation from the President.
Speaker 3: We are getting what we want at this juncture as
Speaker 3: we live through this weekend after weekend, the President indicating
Speaker 3: he's close to a deal, and then silence or no
Speaker 3: codified deal at the end of a weekend. Do you
Speaker 3: feel like the US is getting what it wants out
Speaker 3: of these negotiations they're taking place between the US and
Speaker 3: Iran via the pakistanis.
Speaker 6: Well, I think Trump is getting what he wants. This
Speaker 6: is a deal about gasoline prices at the pump in
Speaker 6: the United States. Trump worries obviously about the price levels
Speaker 6: people are paying. He's worried about the effect on inflation.
Speaker 6: He's worried about the effect on the elections in November.
Speaker 6: But this is not a deal that really ends the
Speaker 6: war in a satisfactory way for the United States. There's
Speaker 6: no doubt about it. If the Iranian regime is allowed
Speaker 6: to survive, which it looks like Trump is prepared to acknowledge,
Speaker 6: they will simply benefit from the reopening of the strait
Speaker 6: to sell more oil, gain more revenue, and entrench themselves
Speaker 6: in power, giving them time rebuild their nuclear program, rebuild
Speaker 6: their military, rebuild their terrorist proxies an x period of
Speaker 6: time will be right back where we started from.
Speaker 2: Given that, do you think the US was in a
Speaker 2: safer bet with Iran in the JCPOA than they will
Speaker 2: be after this is worked out?
Speaker 7: Not at all.
Speaker 6: The twenty fifteen obomba in nuclear deal was a failure
Speaker 6: on many levels. It didn't at all deal with Iran's
Speaker 6: plutonium route to nuclear weapons in the form of the
Speaker 6: spent fuel at the nuclear reactor at Bouscher, just completely
Speaker 6: left that unattended, and the estimates of the amount of
Speaker 6: spent fuel there that Iran has by nuclear proliferation experts
Speaker 6: say they could make between two hundred and four hundred
Speaker 6: nuclear weapons just from the plutonium route to bombs, not
Speaker 6: the Range and Richmond route. It's a complicated issue, but
Speaker 6: the fact is that the JCPOA was allsory and Iran's
Speaker 6: strategic determination to get nuclear weapons has never changed.
Speaker 2: But all those technical issues that you just points it out,
Speaker 2: are you confident that given this negotiating team we were
Speaker 2: just talking with our Jeff Mason, our White House correspondent,
Speaker 2: was saying, the negotiating team is essentially Jared Kushner and
Speaker 2: Steve Whitcoff they don't have a lot of technical experts.
Speaker 2: Do you have any level of confidence that any of
Speaker 2: those issues with the previous deal are going to be
Speaker 2: fixed this time around, given how they are doing this diplomacy.
Speaker 6: Well, none, whatever. Look, the Iranians are clearly trying to
Speaker 6: buy time. I mean, they like to sell oil, but
Speaker 6: this is a contest really of perseverance and determination. They
Speaker 6: think Trump is closer to buckling than they are. They
Speaker 6: don't care about the welfare of their people, they care
Speaker 6: about preserving the regime. And so we're going through this
Speaker 6: ropidope of these talks about talks. The Economists this week
Speaker 6: has a great cartoon. It's a bunch of iatolas speaking
Speaker 6: to two of the Pakistani mediators, and one Pakistani mediator
Speaker 6: says to the other one tell the Americans they are
Speaker 6: offering a framework for negotiation of the establishment of a proposal,
Speaker 6: exploring preliminary talks about the tentative prospect of conversations, and
Speaker 6: the other mediator says, a great plan of action. That's
Speaker 6: what we're going through.
Speaker 7: Now.
Speaker 3: We're going to have you read New Yorker cartoons the
Speaker 3: next time you're on the show. I think that Ambassadbulm
Speaker 3: what is your prescription for what needs to happen next
Speaker 3: we hear the President continue to threaten that something will
Speaker 3: happen if they can come to an agreement. Of course,
Speaker 3: what's on the table, as we understand it is more
Speaker 3: kinetic action, more military action. Are you of the camp
Speaker 3: as one might expect that that's something the US should
Speaker 3: be pursuing right now. Indeed, what do you see as
Speaker 3: the path forward here? If all that we get out
Speaker 3: of this is a one page document with fourteen points
Speaker 3: on it, or an agreement that isn't satisfactory.
Speaker 6: Well, I think there are two broad options. One is
Speaker 6: just to junk the cease fire, which I think has
Speaker 6: been a gift from God to the Iranian regime and
Speaker 6: go back to full scale military activity. If Trump's not
Speaker 6: willing to do that, I think the minimal that he
Speaker 6: should do and that we can do is open the
Speaker 6: Gulf Arab side of the Strait of Hormuz to get
Speaker 6: their oil and gas out into international markets. Keep the
Speaker 6: blockade we've got in effect against Iranian exports, but using
Speaker 6: military force I think that will be necessary help ensure
Speaker 6: that exports from the Arab oil producing countries can get out.
Speaker 6: We know from reporting in various publications. I won't name that.
Speaker 6: This week, the US has been helping carriers get out.
Speaker 6: They've not been attacked. They're turning their transponders off, going
Speaker 6: at night, kind of sneaking through. That's not a lot
Speaker 6: of traffic, to be sure, but I think it shows
Speaker 6: that the Iranian threat here may be more hollow than
Speaker 6: people think. And to alleviate the pressure on the international economy,
Speaker 6: I think it's worth using force to open the strait.
Speaker 6: I think it helps re establish the terns to prevent
Speaker 6: ron from trying to turn the Straight on and off
Speaker 6: like a light switch in the future.
Speaker 2: So that's interesting. So one of the criticisms of how
Speaker 2: this is going is that there's a sequencing issue. People
Speaker 2: are saying that the US shouldn't give up its hold
Speaker 2: on the Straight, they should keep the Straight kind of
Speaker 2: locked down, and so they can use that on the
Speaker 2: nuclear leverage side. You don't see the sequencing issue as
Speaker 2: a problem here with the way this is being negotiated.
Speaker 2: Youusally they should open the strait and then tackle the
Speaker 2: nuclear issue.
Speaker 6: Well, I think we should keep the blockade against Iran
Speaker 6: and exports. So no, I don't I will understand apologies definitely, yeah, no,
Speaker 6: But I will say whenever diplomats start talking about sequencing
Speaker 6: as being the only problem, hold on to your wallet,
Speaker 6: because it means there's really a bigger problem they're trying
Speaker 6: to obscure.
Speaker 3: I want to ask you about what's happened here is
Speaker 3: a weapon for Iran in the future. We've talked about
Speaker 3: this over the course of the morning as well. We're
Speaker 3: talking about the prospects of extending this kind of squishy
Speaker 3: ceasefire that's been in place now for a few weeks
Speaker 3: to sixty days. It occurs to me that it's not
Speaker 3: going to prevent Ron from doing this again in the future. Indeed,
Speaker 3: as we look back on this conflict, I think what's
Speaker 3: perhaps most valuable to Iran is putting this in practice
Speaker 3: and seeing the habit that they can reak by closing
Speaker 3: this straight to ships from all over the world, the
Speaker 3: impact that that's had on the global economy. Do you
Speaker 3: have any confidence here that them having done that this
Speaker 3: will be a one and done thing, that Iron won't
Speaker 3: return to this or try to do this again in
Speaker 3: the future. And indeed, how does the US put in
Speaker 3: place any sort of procedure that would keep that from
Speaker 3: happening again.
Speaker 6: Well, I think you bloody them badly militarily to show
Speaker 6: they cannot close the strait of hormones cost free. Look,
Speaker 6: anybody who reads a map can tell that the strait
Speaker 6: was a potential problem here, So it is known in
Speaker 6: Trump's first term. I think history will record that his
Speaker 6: unwillingness or inability to see that and not to prepare
Speaker 6: for it in advance, was one of the big mistakes
Speaker 6: of the operation. We knew, for example, we had to
Speaker 6: destroy as many of Iran's missiles as we could to
Speaker 6: prevent them from attacking our bases, Israel, our golf ballies,
Speaker 6: but we were late in the game and making sure
Speaker 6: that they couldn't close the Straight of Hormuz. If they
Speaker 6: get out of the current situation simply by diplomacy, I
Speaker 6: think it will lock in in their minds that they
Speaker 6: can close the straight again by diplomacy and not suffer
Speaker 6: any real consequences. So I think re establishing de terms
Speaker 6: here means defeating the concept that they can just, on
Speaker 6: their say so, act as if they're master of the strait.
Speaker 3: Just to put a fine point out, are you suggesting
Speaker 3: to hear the commander in chief is cartographically challenged that
Speaker 3: he didn't think this through or didn't really understand the
Speaker 3: gravity of this when he entered into this conflict.
Speaker 6: Look in the first term, I tried to persuade him
Speaker 6: to adopt regime change as our objective in Iran, unsuccessfully obviously,
Speaker 6: and we had discussions of it. Plenty of people participated.
Speaker 6: Closing the Straight of Hormuz is always one option that
Speaker 6: was available to Iran. I mean, we should consider that
Speaker 6: for decades oil prices have had an implicit subsidy because
Speaker 6: nobody did try and close the Straight of Hormoz. Now
Speaker 6: that play has been made, nobody can ever be doubtful
Speaker 6: that they would try and use it again in the future,
Speaker 6: unless they thought it was just too dangerous for them
Speaker 6: to do it, which is all that this regime in
Speaker 6: Tehran today understands that they'd be met by force and
Speaker 6: they'd be defeated.
Speaker 2: I want to ask you about that regime because at
Speaker 2: the onset of this war, the president was saying that
Speaker 2: it was time for Iranians to rise up and overthrow
Speaker 2: the regime and courage that to do exactly use that
Speaker 2: as one of the justifications for taking military action. I
Speaker 2: have several Iranian friends, some with families still in Tehran.
Speaker 2: They've suffered under this regime. They hate this regime, but
Speaker 2: they have also suffered under this conflict, and they do
Speaker 2: not seem to have the capacity or at this point
Speaker 2: the will, given what's going on, to even attempt such
Speaker 2: a thing. Is the current regime more less the same
Speaker 2: level of extreme as the last regime? And do you
Speaker 2: think the president should have taken your advice and either
Speaker 2: not done it or gone all the way through and
Speaker 2: try to enact regime change in Iran.
Speaker 7: Yeah.
Speaker 6: Mistake that the administration made before the start of the wars.
Speaker 6: They didn't contact opponents of the regime inside Iran, with
Speaker 6: a few very minor exceptions. If Trump was determined not
Speaker 6: to use boots on the ground, then you need all
Speaker 6: the more to be coordinating with people inside who want
Speaker 6: to try and bring the regime down. It doesn't mean
Speaker 6: the people going out on the streets on the first
Speaker 6: day of the war. This regime massacred them. In January,
Speaker 6: they'd massacred them again. That tells you how the regime
Speaker 6: feels about its own people. But given the destruction of
Speaker 6: the instruments of Iranian state power that our attacks represented
Speaker 6: by working with the opposition inside. I think we could
Speaker 6: have gone a long way to bringing the regime down,
Speaker 6: but we didn't consult with them. We didn't say, how
Speaker 6: can we help you organize? What resources do you need?
Speaker 6: You need, communications, money, weapons, What do you need That
Speaker 6: requires planning? It probably requires time. We just didn't do anything,
Speaker 6: and I think we're on the verge of throwing away
Speaker 6: a great opportunity for more peace and security for us,
Speaker 6: for the Middle East, and God knows, for the people
Speaker 6: of Iran.
Speaker 3: We got a minute left. I want to ask you
Speaker 3: what confidence you have in those who advising the president
Speaker 3: right now. I imagine you know some of the principles here.
Speaker 3: B that's Steve Whitcoffort. You're at Kushtra, You've interacted with
Speaker 3: them in the past. Are you confident that they have
Speaker 3: the kind of strategic Nohower's sense to improve the situation
Speaker 3: that exists right now?
Speaker 6: I don't think they understand the kinds of trade offs
Speaker 6: they're making. For example, one of the most controversial aspects
Speaker 6: that's still very murky in this deal is whether the
Speaker 6: United States is going to unfreeze frozen Iranate assets and
Speaker 6: make available to them other resources. I think that would
Speaker 6: be a huge mistake. It's one thing to providefrozen assets
Speaker 6: to a real government in Iran that represents the people.
Speaker 6: If we provide this government frozen assets, it will entrench
Speaker 6: itself still further. And I don't think real estate brokers
Speaker 6: understand that that's what's at stake here. It's not about
Speaker 6: economic development in Iran for that money, It's about re
Speaker 6: entrenching and enabling the regime to stay in power. That
Speaker 6: will be very bad politically for Trump if that's what
Speaker 6: works out.
Speaker 3: Always good to get your perspective of Master John Bolton,
Speaker 3: the former National Security advisor for President Trump during the
Speaker 3: first term, former US Ambassador to the United Nations as well.
Speaker 3: Thank you for your time on this Sunday.
Speaker 2: And New Yorker cartoon Efficiacy.
Speaker 8: I did enjoy that.
Speaker 2: Thank you, sir.
Speaker 3: Stay with us for more on Bloomberg this weekend. Right
Speaker 3: after this, Ethlan Lost joins us now from Bunia, the
Speaker 3: capital of the Attree Province in the Democratic Republic of Congo,
Speaker 3: which is the epicenter of the Cibola outbreak. It's great
Speaker 3: to speak with you, Declan. Thank you very much for
Speaker 3: being here. We see you in that video, you're wearing
Speaker 3: a TAIVEK suit you have PPE. It's clear that those
Speaker 3: visiting patients in that medical facility do not have taie
Speaker 3: x suits or PPE. Can you just talk about the
Speaker 3: capacity of this hospital to deal with what is still
Speaker 3: a nascent outbreak in the DRC.
Speaker 7: That particular hospital was I would say, completely overwhelmed when
Speaker 7: we arrived. It's just it's the main public hospital in
Speaker 7: a town, a gold mining town called Mungualu that's about
Speaker 7: fifty miles north of here. That's where this outbreak is
Speaker 7: believed to have started and as long as two months ago,
Speaker 7: and when we arrived there, frankly, the public health facilities
Speaker 7: appeared to be in crisis. As you see, there was
Speaker 7: only protective equipment for medical staff like doctors, but otherwise
Speaker 7: those wards were not secured. There was very minimal care
Speaker 7: being given to patients, and then you had relatives and
Speaker 7: other folk just walking in and out, and they seem
Speaker 7: to be entirely unprotected, and of course that was putting
Speaker 7: them at great risk and of course increasing the possibility
Speaker 7: that the hospital itself would be a source of transmission
Speaker 7: back out into the community.
Speaker 2: Yeah, it looks I mean, it makes sense. Now that
Speaker 2: you're saying that's the general hospital, because it looks to
Speaker 2: me like TV wards I've been in places. It doesn't
Speaker 2: look like a purpose built facility, which I guess is
Speaker 2: part of the problem. I do want to ask you
Speaker 2: briefly how you got there, And then David was pointing
Speaker 2: out to me earlier this morning that you said that
Speaker 2: you hadn't really planned on going in to this extent.
Speaker 2: Why did you change your mind once you were on
Speaker 2: the ground.
Speaker 7: We were there for several days. We'd spoken with the
Speaker 7: with the medical staff, got their permission, we got the
Speaker 7: permission from the patients to enter that ward, and you know,
Speaker 7: I just felt it was very important to witness firsthand
Speaker 7: and to show the reality of care in the Congo,
Speaker 7: particularly in this frontline area here in the main city. Bunye,
Speaker 7: the head of the who has been here the last
Speaker 7: couple of days, Doctor tedros gabiesis there. You know, AID
Speaker 7: agencies are present here. There's certainly some supplies coming in now.
Speaker 7: Is that the opening of a new isolation ward in
Speaker 7: the city this morning? But up there in those rural
Speaker 7: areas where the greatest number of cases are found, for
Speaker 7: a whole combination of factors. It's extremely very little aid
Speaker 7: has reached there so far, and you know they're in
Speaker 7: a crisis situation, which of course is bad, terrible news
Speaker 7: for the people who are already sick, but it also
Speaker 7: means that the spread of this virus is frankly unknown
Speaker 7: and probably still uncontained.
Speaker 3: Dechlan something we've spoken about with Jeremy Connandyke, public health
Speaker 3: official from the US, with Tom Frieden, former head of
Speaker 3: the CDC, as well as just about the cultural difficulties
Speaker 3: here conveying to the population the seriousness of this outbreak,
Speaker 3: and you point to something very worrisome in your piece.
Speaker 3: You say many refuse to accept the virus was real.
Speaker 3: You continue, Some said the outbreak was a money making
Speaker 3: plot concocted by Congolese doctors and Ford aid workers. Others
Speaker 3: call it a curse. As we talk about the deficit
Speaker 3: in the health response to this crisis, how acute is
Speaker 3: this problem in particular just conveying to the population how
Speaker 3: dangerous this is, and trying to explain in light of
Speaker 3: those the sense of what's happening here that that in
Speaker 3: fact is not the case. This is a very serious virus.
Speaker 7: It's an absolutely crucial point when you speak to aid workers. Second,
Speaker 7: the first thing they'll tell you is they need equipment.
Speaker 7: The second thing they'll say they need is education and
Speaker 7: engagement with these communities. Some of these communities are extremely
Speaker 7: hostile to the virus. It's not just sorry to the
Speaker 7: idea of the virus. It's not just that they don't
Speaker 7: believe it exists. They have carried out attacks against hospitals.
Speaker 7: The hospital that I visited had an isolation ward that
Speaker 7: was under construction burned down. It came under attack the
Speaker 7: first night we were there from a group of over
Speaker 7: one hundred people who wanted to retrieve the body of
Speaker 7: a local spiritual leader who had just died of abola.
Speaker 7: And what that all gets to is the whole practice
Speaker 7: of funerals. I think, as you noted, you know, the
Speaker 7: body of a person. A person is most contagious at
Speaker 7: the last stages of the disease and after they have died,
Speaker 7: So how the dead or buried is absolutely crucial. Otherwise
Speaker 7: funerals can turn into super spreader events. So you see
Speaker 7: these really courageous local health workers and Red Cross officials
Speaker 7: who are doing their best to educate people to try
Speaker 7: and carry out safe burials of bodies, but because frankly,
Speaker 7: the effort is so far behind the curve. As I said,
Speaker 7: this outbreak is thought to have started probably six weeks
Speaker 7: maybe two months ago, but was only declared discovered and
Speaker 7: declared two weeks ago. So the entire effort is far
Speaker 7: behind the curve, which means there's very little reliable data
Speaker 7: about how much it has spread, and that's only feeding
Speaker 7: into this suspicion among local communities who, as far as
Speaker 7: they're concerned, to see people going into hospitals just to die.
Speaker 2: Deethan, I also want to ask you, I want to
Speaker 2: focus on something you talk about, because you report that
Speaker 2: the hospital has no food or water to give to
Speaker 2: ailing patients. This is consistently an issue with health care
Speaker 2: in places like this. I know when you're giving HIV medication,
Speaker 2: when you're giving tuberculos and the medication, when you're giving
Speaker 2: supportive care. That supportive care can't work if your patient
Speaker 2: is malnourished or you don't have clean water, And it's
Speaker 2: often the part of the response that it seems to
Speaker 2: get lost in the shuffle. Are there any efforts being
Speaker 2: made to address that piece of this? What is needed
Speaker 2: and where do you think it should be coming from.
Speaker 7: Look very I mean, certainly the World Food Program have
Speaker 7: mobilized in this area. They're mounting feeding programs and so on.
Speaker 7: But you know, there are two issues with that. Firstly,
Speaker 7: as you say, you know, in a hospital like this,
Speaker 7: they just don't generally for normal treatment to provide food
Speaker 7: or water.
Speaker 2: The families are generally responsible for bringing food.
Speaker 3: To family.
Speaker 7: They come in, they provide the food. Now that is
Speaker 7: providing a biosecurity hazard in this environment because family members
Speaker 7: come in unprotected to provide food to people and run
Speaker 7: a high risk of being contaminated themselves. The other issue
Speaker 7: is in terms of people's ability to fight this virus.
Speaker 7: Because this virus is a it's a rare virus that
Speaker 7: as yet has no vaccine and no cure. The only
Speaker 7: way to treat it really is to bolster the defenses
Speaker 7: of a person who is sick in order that their
Speaker 7: own body can fight that virus. And obviously, food, water,
Speaker 7: IV drips, all of these very basic you know, not
Speaker 7: even medical treatments, but certainly basic things to bolster their
Speaker 7: immune system are key. And that's why if the medical
Speaker 7: authorities are going to successfully start to push back this
Speaker 7: wave of infections, they're going to have to get those
Speaker 7: pieces in places as well. Becha.
Speaker 3: Let me ask you lastly, just about what you heard
Speaker 3: from that Condolese doctor with whom you spent the most time.
Speaker 3: And I think in circumstances like this, past outbreaks, the
Speaker 3: frustration and exhaust are palpable among the medical staff were
Speaker 3: in facilities like this one. How would you assess his
Speaker 3: level of optimism that this is going to get under control,
Speaker 3: and indeed, what does he need or what does he
Speaker 3: say that he needs going forward.
Speaker 7: I think firstly he just wanted protective equipment for the staff. Secondly,
Speaker 7: he wanted to be able to secure that hospital so
Speaker 7: that they could work in a safe environment. You know,
Speaker 7: when I met that man in the war, the young doctor,
Speaker 7: you know, he was just not just exhausted. He'd just
Speaker 7: come off a night shift where someone had died during
Speaker 7: the night, a lady fell into a coma and died.
Speaker 7: But you know, he really felt like he was at
Speaker 7: the end of his tether. He said, we were almost
Speaker 7: two weeks into this crisis and this is all we have.
Speaker 7: How is it possible that both my own government but
Speaker 7: also this international system that has you know, deployed to
Speaker 7: so many of these abula emergencies. He was basically saying,
Speaker 7: why is that not here? And that kind of frustration
Speaker 7: is palpable among many of the health profession and healthcare
Speaker 7: professionals you meet in some of these frontline areas.
Speaker 2: Declan Walsh, New York Times Chief Africa Correspondent, joining us
Speaker 2: from the DARC, thank you so much for taking the time.
Speaker 2: Thank you to you and your crew, and frankly, whatever
Speaker 2: editor is signed off and allows you to do this
Speaker 2: on the ground reporting, which we know is getting harder
Speaker 2: and harder to do. So thank you, truly, thank you
Speaker 2: to all of you this morning. Stay with us for
Speaker 2: more on Bloomberg this weekend right after this. There are
Speaker 2: goals in the tech sector, and as more companies incorporate
Speaker 2: AI into their day to day work, some of them
Speaker 2: are coming to realize that those goals, if using AI
Speaker 2: to pursue them, come at a bit of a price.
Speaker 2: Microsoft cancels most of its cloud code licenses, and Uber
Speaker 2: Coeo said AI costs, excuse me, are getting quote harder
Speaker 2: to justify that.
Speaker 3: Scott Amconda Wrights Innovation doesn't only need the technology but
Speaker 3: also the physical infant structure to support the product. It
Speaker 3: as a calumnist for Bloomberg Opinion and a lecturer at the
Speaker 3: Ale School of Management. He joins us now on set
Speaker 3: here in New York. Wonderful to see you. Let's talk
Speaker 3: about this, the effervescence, the enthusiasm surrounding a I meeting
Speaker 3: the reality of having to pay for it. And there
Speaker 3: are extreme things that I think of the amount of money,
Speaker 3: for instance, that Meta has poured into this. Let's begun
Speaker 3: to retrench some of that here. How widely spread is that?
Speaker 3: Are a lot of companies kind of reckoning with what
Speaker 3: is this going to be and is it worth the
Speaker 3: investment at this point in time?
Speaker 9: So great to be here, so yes, but there's a
Speaker 9: nuance here, right. So the company there's a company I
Speaker 9: was talking to the CEO yesterday. He said, if Claude
Speaker 9: charged us ten times what it does right now, he said,
Speaker 9: I would pay it and I wouldn't hesitate.
Speaker 8: He's like, I wouldn't even think twice.
Speaker 2: So what kind of company is that? And what is
Speaker 2: the application?
Speaker 6: Right?
Speaker 8: It's a small healthcare company.
Speaker 9: So like so there's there's that's there's a big difference
Speaker 9: when you have ten thousand engineers who are running you know,
Speaker 9: two thousand dollars per head if you go ten x, right,
Speaker 9: things change when you're at that scale. But I think
Speaker 9: what which really what driving this is it's really interesting
Speaker 9: that the debate on AI is kind of missing something
Speaker 9: pretty big, right, and that that, I think is what
Speaker 9: this cost thing is starting to drive us towards. Because
Speaker 9: you see they're the boosters and you know, I used
Speaker 9: to code. The ability to talk to my computer and
Speaker 9: have it do something without is genuinely it feels miraculous.
Speaker 8: It's astonishing.
Speaker 9: And then there are people, some of them people, people
Speaker 9: with enormous scientific and technical credibility, who say this is
Speaker 9: not going to come together the way you think, like
Speaker 9: this technology doesn't have the potential you think there's height.
Speaker 8: Those are also serious people you shouldn't dismiss the.
Speaker 3: Humorous per se, but skeptics of this.
Speaker 9: Yeah, there's a third scenario which it just strikes me
Speaker 9: no one talks about, which is you can have a revolutionary,
Speaker 9: world changing, astonishing technology that doesn't end up making anyone
Speaker 9: any money. And this is the thing that people I
Speaker 9: don't see people talking about.
Speaker 8: I don't give you two examples. The airline. No one
Speaker 8: would deny that the airline industry, right, just change the world. Right,
Speaker 8: you can go anywhere, perfect safety and ep nuts on
Speaker 8: the way. Just remarkable, more.
Speaker 2: Of a Pretzel's gown myself. But I'm going to continue.
Speaker 9: But you know, Warren Buffett famously said that the airlines
Speaker 9: were such a machine for incinerating capital that if you know,
Speaker 9: if an enterprising if an enterprising capitalist had been at
Speaker 9: Kitty Hawk when Orville took his flight, he should have
Speaker 9: shot the thing down, right, Like, No, you can change
Speaker 9: the world and not make money. In biotech, you saw
Speaker 9: sort of, you know, the biotech revolution starting nineteen seventy five.
Speaker 9: So from nineteen seventy five to two thousand and four,
Speaker 9: Gary Pizano at Harvard Business School showed that the biotech
Speaker 9: industry might maybe have made money in one year, right,
Speaker 9: and for that entire time it was essentially just a
Speaker 9: furnace for money. You poured money in, and you know,
Speaker 9: drugs came out, live, came save, but people didn't make money. Right,
Speaker 9: And you've got huge capital investments, lots of uncertainty, long
Speaker 9: delays of before payoff, enormous costs.
Speaker 8: Oh and the.
Speaker 9: Problem that you know that AI is dealing with that
Speaker 9: biotech didn't is the open Weights labs out of China
Speaker 9: and the last benchmarks are four to eight months behind.
Speaker 8: Wow, that's not much of a mote, it's right. Yeah.
Speaker 2: I also want to ask you talk a lot about
Speaker 2: the physical end of this and the scarcity of compute
Speaker 2: and these data centers that have to go in and
Speaker 2: you make a comparison to Edison when they were starting.
Speaker 9: Please explain that, right, So, when Edison built the light bulb,
Speaker 9: you know, this is so iconic that we have a
Speaker 9: bright idea cartoonist sketches a light bulb over our head.
Speaker 2: David gets more of those than I.
Speaker 8: It's fine, so fantastic.
Speaker 9: You know, my wife says that minds are very mind
Speaker 9: or very dim, but that's fine, Like.
Speaker 2: Yeah, you know what, it's there and that's what matters.
Speaker 8: That's the key. But he did.
Speaker 9: When the first Edison generator plant rolled out in New
Speaker 9: York City and I started, they were serving something like
Speaker 9: four hundred light bulbs. Right, So you can have an
Speaker 9: astonishing technology, but you need a network and ecosystem of
Speaker 9: other enabling technologies that have to build up to do that.
Speaker 9: In his case, it was generators and wiring and you know,
Speaker 9: everything involved in a power transmission system for AI. So
Speaker 9: we are used to and I think a lot of
Speaker 9: the sort of especially the vcs who went into AI,
Speaker 9: is so heavy. They're kind of used to investing in
Speaker 9: SaaS companies, right, where scaling costs zero and the marginal
Speaker 9: cost are production is zero. But AI is profoundly quite different,
Speaker 9: right because you don't see as users go up the
Speaker 9: marginal cost going down that much.
Speaker 8: Almostly it says the same, but it doesn't drop.
Speaker 9: It isn't a zero, right, Like just these things are
Speaker 9: really expensive to run, and so the scaling of this
Speaker 9: involves capital expenditures and physical construction and you know, simple
Speaker 9: stuff pouring concrete, wiring buildings.
Speaker 8: Those things are hard, right, They're.
Speaker 9: Not like dumping code onto the Internet, and you need
Speaker 9: plumbers and electricians. And you know, my joke about it was,
Speaker 9: it's the return of the jocks, right, it's the the
Speaker 9: guys who actually and the women who do physical labor
Speaker 9: are becoming constraint here. That is unlike most things that
Speaker 9: the software you know that this world has seen before.
Speaker 2: And a lot of those trades are understaffed as well
Speaker 2: at the moment.
Speaker 3: Yeah, let me look at the other side of that. Coin,
Speaker 3: and I think you're talking about how this might not
Speaker 3: make money, might not lead to the kind of changes
Speaker 3: a lot of proponents are talking about here. It does
Speaker 3: strike me the fact that this does have this whole
Speaker 3: complementary infrastructure component to it may make us less willing
Speaker 3: to see the fact that it might not make money,
Speaker 3: that this is seen as not just something that's going
Speaker 3: to improve the economy of information technology financial services, but
Speaker 3: could have this wider spread effect on the US economy.
Speaker 3: Do you think that's true? Is it clouding our sense?
Speaker 3: Are we willing to pony up and pay for all
Speaker 3: of this fiscal construction because it seems like it's providing
Speaker 3: these wider benefits to the country.
Speaker 9: So I think that cuts both ways, right, So it
Speaker 9: is you know, if you are an electrician, right now,
Speaker 9: this is awesome, Like, this is fantastic. This is the
Speaker 9: best thing that's happened to you in a long time.
Speaker 9: And since the Nited States a sort of apparently decided
Speaker 9: as a matter of national policy, we're not going to
Speaker 9: build housing and at least we're.
Speaker 3: Building real data center.
Speaker 8: At least we'll build something that's great.
Speaker 9: But of course the flip side of that is data
Speaker 9: centers are incredibly unpopular or they cause political pushback everywhere
Speaker 9: they go. Large portions of Silicon Valley appear to opted
Speaker 9: the pr strategy of James Bond villains, and there is
Speaker 9: this kind of I think, you know, in some cases,
Speaker 9: I'm not sure this is about the data center as
Speaker 9: much as just an incohate rage of pushback and this
Speaker 9: is a thing we can we can go after, right
Speaker 9: And so when you're building this kind of infrastructure, you
Speaker 9: need the people there to say yes. And right now, America,
Speaker 9: despite all these benefits, and I mean Louden County, Virginia,
Speaker 9: oh my gosh just said.
Speaker 3: That they're telling with stone without hitting a data center.
Speaker 9: I grew up in Rockville, Maryland, so this is like
Speaker 9: home for me. Right, Sixty percent of their tax revenues
Speaker 9: are going to be coming from data centers, So you
Speaker 9: would think this would be great, and yet instead you're
Speaker 9: seeing this huge pushback. I think this is another case
Speaker 9: where the industry's norms that it's that have evolved over
Speaker 9: the last generation kind of need to yield to the
Speaker 9: fact that saying having a public relations campaign where we're
Speaker 9: going to take away your.
Speaker 8: Job and possibly end there's end of humanity.
Speaker 2: Yeah, there's another PRL meant that you highlight in your
Speaker 2: latest column, and I wasn't even that aware of this,
Speaker 2: And that's you talk about where they're choosing to put
Speaker 2: some of this infrastructure, and it's in places that feels
Speaker 2: a bit exploitive, like especially there's this colossus one is
Speaker 2: going in largely without air permits, in a largely black
Speaker 2: neighborhood of Memphis. You talk about, So talk us through
Speaker 2: why those places and what that's doing.
Speaker 9: I mean, those places have less political power to push
Speaker 9: back when the pollution gets so bad. Right, and so
Speaker 9: if you are an under enormous pressure to scale up
Speaker 9: your compute and you decide that the way to do
Speaker 9: that is to cut corners, and given all the obstacles
Speaker 9: that we've just talked about, you can see why the
Speaker 9: way you might decide to do that is to cut corners.
Speaker 9: It's easiest to do it in places where people have
Speaker 9: the least power to complain. If you do that in
Speaker 9: you know, Malibu, it's.
Speaker 8: Not going to go down with.
Speaker 7: Mali.
Speaker 2: We also had a lot of time even in Laden County,
Speaker 2: Fladden County didn't want those data centers. You can bet
Speaker 2: they wouldn't be going in there, that's right.
Speaker 3: I would ask, how are you thinking about the effect
Speaker 3: this is having on the labor market? So you mentioned
Speaker 3: that Pitch is going to take away all the judge
Speaker 3: opened up my computer on Friday, Touriston Slock of Apollo
Speaker 3: had this note, there is no negative effect on the
Speaker 3: labor market because of AI. We're not seeing jobs lost
Speaker 3: as a result of it. Yet, how are you thinking
Speaker 3: about that? Putting aside again all of the kind of
Speaker 3: ideological perspectives on where this might lead to eventually, do
Speaker 3: you think it is having an effect? Is it changing
Speaker 3: how companies, the CEOs of whom you talk regularly, the
Speaker 3: way that they hire, the way that they fire, the
Speaker 3: way that they staff their companies?
Speaker 7: Yet?
Speaker 9: Yeah, but it's what I'd say, is what it's showing
Speaker 9: up in is it's two ways.
Speaker 3: Right.
Speaker 9: It's less firing, although we're seeing some of that, and
Speaker 9: a lot of the firing that is happening is less.
Speaker 9: I think about AI enabling productivity and more people kind
Speaker 9: of scrambling for cash to sort of try and chip
Speaker 9: away at these dragantic capital expertures. But it's making it less.
Speaker 9: I think people are becoming a more reluctant to hire
Speaker 9: just because of the uncertainty. But I think the deeper
Speaker 9: and more profound effect is about fear. Right. You saw,
Speaker 9: especially during COVID, you saw the balance of power between
Speaker 9: companies and developers and people who have these skill sets
Speaker 9: swung really hard yes in.
Speaker 8: Favor of labor.
Speaker 9: What this does is give is it creates fear even
Speaker 9: if I'm not being replaced, I might be replaced, which
Speaker 9: makes me a lot more reluctant to ask for a
Speaker 9: raise or say I should have a say in the
Speaker 9: way the companies are governed. And I think a lot
Speaker 9: of CEOs, especially founder CEOs, for whom their company is
Speaker 9: their identity, like, I'm not sure I want to give
Speaker 9: these people a say.
Speaker 2: And how We've only got about a minute left, and
Speaker 2: I'm going to ask the question that I always ask.
Speaker 2: I'm a bit of a skeptic about all this. One
Speaker 2: of the reasons is you talk about all this building,
Speaker 2: all this infrastructure, and a lot of that is being
Speaker 2: funded by credit and a lot of credit and a
Speaker 2: lot of circular credit. And for millennials who've lived through
Speaker 2: multiple crashes, I just feel like this is deja vu
Speaker 2: all over again. What is your take Is this a bubble?
Speaker 2: Is this sustainable? Is it durable? Is it rippling? If
Speaker 2: not popping?
Speaker 9: Where are we You can have a bubble and still
Speaker 9: have a real technology, And that I think is.
Speaker 8: That's sort of to go back to where we were.
Speaker 8: That's the point that people are missing.
Speaker 7: Right.
Speaker 9: You can say these valuations are in You can look
Speaker 9: at I mean SpaceX, which is apparently now an AI company.
Speaker 7: And say.
Speaker 9: You're one point seventy five trillion dollars for these financials
Speaker 9: and say, if that's not a bubble, I don't you know,
Speaker 9: I don't know what is. I don't know what the
Speaker 9: GDP of Mars is going to be.
Speaker 2: No, we've been talking about there's a meme going around
Speaker 2: that Navidia is worth more than all the arable land
Speaker 2: in Australia, right, I mean at some point that just
Speaker 2: seems ridiculous.
Speaker 9: Yeah, and so, but at the same time you can
Speaker 9: say that twenty thirty years from now, this was a bubble,
Speaker 9: but something came out of it that was really a powerful,
Speaker 9: powerful That won't be a lot of consolation if you
Speaker 9: lose your shirt on debth On.
Speaker 8: In the meantime, we.
Speaker 3: Will leave it there. On that note, kind of Thank
Speaker 3: you very much. Great to see you lecture at the
Speaker 3: Old School of Management, of course, columnist from Bloomberg Opinion.
Speaker 4: Stay with us for more on Bloomberg this weekend right
Speaker 4: after this.
Speaker 2: All right, so, right now, the alcohol industry is taking
Speaker 2: a hit, with beer, wine and spirit makers losing a
Speaker 2: combined eight hundred and thirty billion in market share from
Speaker 2: twenty twenty one to twenty twenty five.
Speaker 4: Yeah, and it turns out gen z ers they're actually
Speaker 4: looking to barbells over barstools.
Speaker 2: Get it's okay for.
Speaker 4: Their social for their social outlets. Bloomberg pursuits journalist Sam
Speaker 4: rap Arks. You talked to me about it a few
Speaker 4: days ago.
Speaker 10: It's both the health decision and they're also looking for
Speaker 10: a community and places that they can't find at the
Speaker 10: bar because more and more young people don't drink. So
Speaker 10: it's not just a health choice. It's a health choice
Speaker 10: and a choice to please try and find more friends
Speaker 10: outside the office or the bar.
Speaker 4: Really, all right, I want to dig into that community
Speaker 4: aspect in just a bit, But I have to ask,
Speaker 4: because we're talking gen z and millennials, what about the
Speaker 4: gen xers and boomers? Where do we stand?
Speaker 3: Well?
Speaker 10: The reacharch shows that there's still we're still going to
Speaker 10: the bar, They're still going to dinner. Maybe they're having
Speaker 10: dinner parties or house parties, owning homes. For the gen
Speaker 10: z who went to college perhaps in the pandemic and
Speaker 10: they had to you know, work out from home with
Speaker 10: YouTube videos, they had to go to class on zoom,
Speaker 10: they really want to go work out with other people.
Speaker 10: They're really into finding a community in a place that
Speaker 10: they can't because they maybe started their career remotely, so
Speaker 10: they want to They're spending all this money in classes
Speaker 10: to find a community that they didn't have at their
Speaker 10: graduating college.
Speaker 4: So you talk about community, So is it more you know, socializing,
Speaker 4: Like can they just go out and go on like
Speaker 4: a dating app? But no, they want to go and
Speaker 4: be where the people are. I guess it is what
Speaker 4: you're leading to, Yes, exactly.
Speaker 10: I spoke to a technology consultant who said she met
Speaker 10: her boyfriend at her run club, not at a dating app,
Speaker 10: not at a bar, but at her run club, and
Speaker 10: she made friends at pilates. She goes to the same
Speaker 10: class every day. She compared it to school. She's like
Speaker 10: said it was like sitting next to the same person
Speaker 10: week after a week in a class was like was
Speaker 10: like being in college. And if you have something that
Speaker 10: if you need us something to talk about, there's always
Speaker 10: the class, right, So it's like it needs the icebreaker
Speaker 10: and a sense of familiarity and community that you just
Speaker 10: don't get elsewhere for them.
Speaker 4: And aside from that, they're drawing, they're throwing parties there,
Speaker 4: like bachelorette parties, like this is the thing.
Speaker 10: Now, I didn't have my bachelorette party. Applate me neither,
Speaker 10: I do something else. But yeah, they're telling me that
Speaker 10: they're hiring out the whole studios, spending thousands of dollars
Speaker 10: to rent out the equipment, have a teacher in, have mocktails.
Speaker 10: Instead of going to the bar, they'll bring their girlfriends
Speaker 10: to a plates class, which.
Speaker 7: Is kind of wholesome. I think.
Speaker 4: All right, so you mentioned money. So how much are
Speaker 4: these Gen Z and millennials. How much are they spending
Speaker 4: on memberships, on classes, on things like that.
Speaker 7: I spoke to.
Speaker 10: One person whose budget was eight hundred bucks a month
Speaker 10: on fitness, which is which.
Speaker 7: Is quite a lot of money.
Speaker 10: But they're out spending proportionally millennials and Gen X and
Speaker 10: boomers proportionally to their income on fitness and spending more
Speaker 10: than last year in a mental survey as well.
Speaker 7: So it's growing.
Speaker 10: The trends thing to be NonStop. But part of it
Speaker 10: is that they can say that they feel better afterwards.
Speaker 10: Unlike going to a bar. There's no hangovers, there's no
Speaker 10: wearable like an or ring or whoop telling you your
Speaker 10: readiness score is lower the next day. They just feel
Speaker 10: better after a gym class.
Speaker 4: Okay, it's good to feel that way. You don't want
Speaker 4: to have the hangover all the time. But they're doing
Speaker 4: all this, and they're spending all this money when you
Speaker 4: know rents are higher, when they're dealing with student debt, Like,
Speaker 4: how are they making this work?
Speaker 10: I think it's a sort of like zero sum game
Speaker 10: in their heads, as if maybe I can never afford
Speaker 10: a house, but I can put maybe a two or
Speaker 10: two hundred dollars membership on a credit card. Right, So
Speaker 10: if they don't see long term prospects, there's the risk
Speaker 10: of ai for their future, they might as well do
Speaker 10: something that makes them feel good in the short term.
Speaker 10: And I think Jim spending is a big part of that.
Speaker 4: It is now in the article you mentioned one thing
Speaker 4: that I want to point out. You talk about how
Speaker 4: wellness has become a full fledged identity. Now I know
Speaker 4: my social media feed, it's filled with you know, people
Speaker 4: working out, it's you know what am I meal prepping
Speaker 4: for the week, like all these different things. I mean,
Speaker 4: does social media have a lot to do with it too,
Speaker 4: about more people going or these younger generations going to
Speaker 4: the gym.
Speaker 10: Yeah, I do think there is a performative aspect with
Speaker 10: like the hashtag plotis on TikTok, the clean girl asthetic
Speaker 10: or people wearying and their matching two hundred dollars plot
Speaker 10: sets and wanting to look the part. I think that
Speaker 10: is a really big part. I spoke to a content
Speaker 10: creator in Atlanta who's twenty three, and she documents all
Speaker 10: of her gym sessions. She's made friends at the gym,
Speaker 10: but she's also made it her business online like her
Speaker 10: content creation arm. So I think the lifestyle aspect and
Speaker 10: the way that social media has really driven that wanting
Speaker 10: to look a certain way and perform a certain way
Speaker 10: online is huge.
Speaker 2: Okay, go back to me the clean girl. What is
Speaker 2: it explain that one?
Speaker 10: To me, the clean girl look is is like ath
Speaker 10: leisure and we're wearing less.
Speaker 7: Obviously, Okay, yeah, sort of a.
Speaker 10: As opposed to the millennial I would say, like Kesha aesthetic,
Speaker 10: if that makes sense to you. It's a different one.
Speaker 10: Wanting to look wanting to look, yeah, more like wellness
Speaker 10: oriented as if instead of you just got back from
Speaker 10: the bar.
Speaker 2: Okay, got it?
Speaker 4: And last question, does do GLP ones Does that have
Speaker 4: anything to do with this as well? Does that play
Speaker 4: into the picture?
Speaker 10: I think it does. That doesn't come up so much
Speaker 10: in the research, but people who are on JLP ones
Speaker 10: are told to strength train as part of that regimen,
Speaker 10: So I think that could be as more younger people
Speaker 10: get on JLP one this it becomes more mainstream and
Speaker 10: wanting the strains trained to keep up that as part
Speaker 10: of the medicine. I think that'll be a really big
Speaker 10: ongoing part of this trend to keep it going into
Speaker 10: the future.
Speaker 4: All Right, I work out in my basement now, I
Speaker 4: don't even go to the gym. So this seems like, yeah,
Speaker 4: it's a big social thing, but are people still going
Speaker 4: to the bars?
Speaker 2: Like how are bars and restaurants doing?
Speaker 10: Bars and restaurants are making menus that cope with people
Speaker 10: who are on jlp ones some more small plates, smaller portions,
Speaker 10: mocktail options. I've seen a lot of more creative mocktails
Speaker 10: now for people who aren't drinking. So I think there,
Speaker 10: of course is a space for bars and restaurants. I
Speaker 10: for one, enjoy a nice bar dinner out. But I
Speaker 10: think that hospitality, especially like hotel lias and business owners
Speaker 10: need to find a way to make a community in
Speaker 10: the way that the gyms are killing it at to
Speaker 10: really get really get that gen z spend.
Speaker 4: At the moment, I got it, I'll meet chat Happy
Speaker 4: Hour Sarah Sarah Rapp join your.
Speaker 8: Song right.
Speaker 2: Totally Bloomberg Pursuits.
Speaker 4: Thank you so much, So David Christina, if I decided
Speaker 4: that we're going to go, yes, yeah, are you going
Speaker 4: to join it?
Speaker 3: I know I'll have a cocktail and skip the PILATEUS plus,
Speaker 3: but I hope you guys have a great time. Whenever
Speaker 3: that transpires. AM eager to hear about it.
Speaker 2: It'll be great. You don't know, I come and hang
Speaker 2: out and do some you know, hundreds with us.
Speaker 3: No, thanks for.
Speaker 2: Joining us on today's Bloomberg This Weekend podcast. Don't forget
Speaker 2: to tune in live for the show every Saturday and
Speaker 2: Sunday morning, starting at seven am Eastern, We're
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