1 00:00:00,800 --> 00:00:04,360 Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us 2 00:00:04,360 --> 00:00:07,520 Speaker 1: live weekdays at one Eastern on Bloomberg dot com, the 3 00:00:07,640 --> 00:00:10,720 Speaker 1: iHeartRadio app, and the Bloomberg Business App. We're listening on 4 00:00:10,760 --> 00:00:15,280 Speaker 1: demand wherever you get your podcasts. Last Friday, there was 5 00:00:15,280 --> 00:00:19,959 Speaker 1: a feeling of well stability, maybe that the worst was over. 6 00:00:20,079 --> 00:00:23,960 Speaker 1: Then the weekend of credit sueez happened. Now Deutsche Bank 7 00:00:24,079 --> 00:00:27,240 Speaker 1: is in the headlines and Moodies this week warning that well, 8 00:00:27,280 --> 00:00:31,120 Speaker 1: this may not be over, with a risk that banking 9 00:00:31,160 --> 00:00:35,760 Speaker 1: system stress, says Moodies could spill over into other sectors, 10 00:00:35,840 --> 00:00:40,239 Speaker 1: quote unleashing greater financial and economic damage than anticipated. Ute. 11 00:00:42,080 --> 00:00:45,120 Speaker 1: So what's going to happen this weekend? I'm not sure 12 00:00:45,120 --> 00:00:47,080 Speaker 1: I want the answer, but let's bring in Congressman Jake 13 00:00:47,080 --> 00:00:49,159 Speaker 1: Aukin class. That's where we begin with the Democrat from 14 00:00:49,200 --> 00:00:51,720 Speaker 1: Massachusetts going to talk out a number of issues with 15 00:00:51,800 --> 00:00:54,000 Speaker 1: us here. Congressman, it's great to have you back. I'm 16 00:00:54,040 --> 00:00:57,760 Speaker 1: sure you're hearing from a constituents about their bank deposits. 17 00:00:57,760 --> 00:01:00,160 Speaker 1: You're probably hearing from banks in your district as well 18 00:01:00,240 --> 00:01:02,320 Speaker 1: in Massachusetts. Do you feel like we're through the worst 19 00:01:02,320 --> 00:01:06,399 Speaker 1: of this. We're still on the field. Definitely too early 20 00:01:06,440 --> 00:01:09,120 Speaker 1: to be watching the game film and a bank run 21 00:01:09,240 --> 00:01:11,200 Speaker 1: is certainly a time when, as a member of Congress 22 00:01:11,200 --> 00:01:13,200 Speaker 1: you realize how many people have your cell phone number. 23 00:01:13,240 --> 00:01:17,640 Speaker 1: That is no doubt about it. I believe that for sure. 24 00:01:17,680 --> 00:01:19,680 Speaker 1: And it's not just the startup economy, to be clear, 25 00:01:19,720 --> 00:01:21,840 Speaker 1: in Massachusetts, which it was a big part of that. 26 00:01:21,920 --> 00:01:25,600 Speaker 1: It's also affordable housing developers. It's nonprofit focused on early education. 27 00:01:26,200 --> 00:01:29,480 Speaker 1: Silicon Valley Bank had acquired Boston Private Bank two years 28 00:01:29,480 --> 00:01:34,280 Speaker 1: prior and thereby had a wide swath of the Massachusetts economy. 29 00:01:34,920 --> 00:01:36,880 Speaker 1: The FDIC in the FED, they did the right thing, 30 00:01:37,000 --> 00:01:39,120 Speaker 1: came in strong and clear on that Sunday night to 31 00:01:39,160 --> 00:01:43,520 Speaker 1: make sure that depositors were whole. But clearly we are 32 00:01:43,560 --> 00:01:48,440 Speaker 1: still seeing ripples of panic and repercussions throughout the financial system. 33 00:01:49,120 --> 00:01:51,560 Speaker 1: There's been a big question about FDIC insurance. I know 34 00:01:51,640 --> 00:01:54,840 Speaker 1: hearings haven't even begun on Capitol Hill, and my goodness, 35 00:01:54,880 --> 00:01:57,560 Speaker 1: this is moving so fast it's difficult to keep up 36 00:01:57,600 --> 00:02:01,320 Speaker 1: with unless you're really watching this stuff all day. Janet 37 00:02:01,400 --> 00:02:04,360 Speaker 1: Yellen made pretty clear yesterday that the Treasury is prepared 38 00:02:04,400 --> 00:02:07,920 Speaker 1: to backstop deposits, but Congress have been a lot of 39 00:02:08,000 --> 00:02:10,959 Speaker 1: questions about what the level should be. Should it be unlimited, 40 00:02:10,960 --> 00:02:13,680 Speaker 1: Should this be through the form of legislation? Do you 41 00:02:13,680 --> 00:02:17,840 Speaker 1: have an answer? Shouldn't be unlimited, at least not through 42 00:02:17,880 --> 00:02:20,919 Speaker 1: congressional statute. Obviously, with the exceptions that the seat of 43 00:02:21,040 --> 00:02:24,480 Speaker 1: FDC can make with a supermajority vote, they can do 44 00:02:24,480 --> 00:02:28,760 Speaker 1: that for stystemically important banks. But from congressional statute perspective, 45 00:02:28,800 --> 00:02:30,880 Speaker 1: we should raise the fdi C limit. I've been clear 46 00:02:30,880 --> 00:02:33,560 Speaker 1: about that. We should do it through an increased assessment 47 00:02:33,560 --> 00:02:35,920 Speaker 1: on the banks. Should not be unlimited. What the right 48 00:02:36,000 --> 00:02:39,160 Speaker 1: number is. We need a number of smart people around 49 00:02:39,200 --> 00:02:42,400 Speaker 1: the table to help us make that decision. Something's gonna 50 00:02:42,919 --> 00:02:45,920 Speaker 1: I suspect happen here, although you never know. With the 51 00:02:45,919 --> 00:02:49,760 Speaker 1: political climate right now, there's been talk about reinstating portions 52 00:02:49,760 --> 00:02:52,600 Speaker 1: of Dodd Frank to make sure that small to midsize 53 00:02:52,639 --> 00:02:56,280 Speaker 1: banks have more intense stress tests. That might be a 54 00:02:56,280 --> 00:02:58,840 Speaker 1: little bit further out. But it also doesn't seem like 55 00:02:58,840 --> 00:03:02,799 Speaker 1: Democrats and Republicans agree on deposit insurance either. How come 56 00:03:02,840 --> 00:03:08,080 Speaker 1: this is so hard? I think there's different diagnoses of 57 00:03:08,200 --> 00:03:12,120 Speaker 1: what went wrong here. You see the Republicans retreating to 58 00:03:12,160 --> 00:03:15,280 Speaker 1: their favorite talking points of you know, Biden causing this 59 00:03:15,320 --> 00:03:21,280 Speaker 1: with inflationary spending, whereas Democrats are looking much more carefully 60 00:03:21,280 --> 00:03:25,360 Speaker 1: at regulators and the job that they could have been doing. 61 00:03:25,680 --> 00:03:28,400 Speaker 1: And I'm particularly focused on the San Francisco FED in 62 00:03:28,400 --> 00:03:33,320 Speaker 1: regards the Silicon Valley Bank and why they're early warning 63 00:03:33,560 --> 00:03:36,280 Speaker 1: signs were going unheeded and why they didn't feel like 64 00:03:36,280 --> 00:03:38,240 Speaker 1: they had to raise that up to the next level 65 00:03:38,240 --> 00:03:41,400 Speaker 1: at the fedge. So it's a challenging issue. It was 66 00:03:41,440 --> 00:03:43,240 Speaker 1: a challenging issue fifteen years ago. It's going to be 67 00:03:43,240 --> 00:03:46,960 Speaker 1: a challenging issue again. One big concern for me, though, 68 00:03:47,400 --> 00:03:50,680 Speaker 1: is that we do not let our small and mid 69 00:03:50,720 --> 00:03:54,840 Speaker 1: sized regional banks suffer, because what happens after every single 70 00:03:54,880 --> 00:03:56,880 Speaker 1: bank run is the big banks get bigger because people 71 00:03:56,960 --> 00:03:59,200 Speaker 1: quite a safety and the problem there is that the 72 00:03:59,240 --> 00:04:03,040 Speaker 1: small and mediums, the ones lending to the home builders 73 00:04:03,040 --> 00:04:07,560 Speaker 1: and the ones lending to the small companies in this country, 74 00:04:07,760 --> 00:04:11,120 Speaker 1: they perform a real differentiated service and we have to 75 00:04:11,120 --> 00:04:13,720 Speaker 1: make sure that they can continue to bank main street. 76 00:04:15,280 --> 00:04:18,440 Speaker 1: There's been some concern that raising deposit insurance might also 77 00:04:18,480 --> 00:04:22,360 Speaker 1: encourage more risky behavior. There seemed to be a lot 78 00:04:22,360 --> 00:04:24,440 Speaker 1: of worries about what this might lead to. But the 79 00:04:24,480 --> 00:04:27,560 Speaker 1: note that I mentioned from Moody's is a bit startling. 80 00:04:27,880 --> 00:04:29,800 Speaker 1: As soon as you start to think you're getting around 81 00:04:29,800 --> 00:04:34,080 Speaker 1: this thing, the risk of banking system stress spilling over 82 00:04:34,120 --> 00:04:37,760 Speaker 1: into other sectors, warning of greater financial and economic damage 83 00:04:37,760 --> 00:04:41,400 Speaker 1: than anticipated. Congressmen, they're already pointing to a possible recession 84 00:04:41,440 --> 00:04:43,520 Speaker 1: at the end of the year. Should the fence start 85 00:04:43,560 --> 00:04:48,000 Speaker 1: cutting rates at this point? No, And contagion is a 86 00:04:48,000 --> 00:04:51,400 Speaker 1: bigger concern than moral hazard. I've always been uncompelled by 87 00:04:51,480 --> 00:04:55,040 Speaker 1: this moral hazard argument that if made for near term actions, 88 00:04:55,360 --> 00:04:58,120 Speaker 1: is any banker right now looking at Greg Becker and saying, yep, 89 00:04:58,279 --> 00:05:02,680 Speaker 1: that signed me up for that. I mean, the equity 90 00:05:02,839 --> 00:05:06,160 Speaker 1: shareholders get wiped out, the bondholders get wiped out. Nobody 91 00:05:06,480 --> 00:05:08,360 Speaker 1: does well when a bank has a run on it, 92 00:05:08,400 --> 00:05:11,200 Speaker 1: even if the FDIIC steps up and makes the positors whole. 93 00:05:11,279 --> 00:05:15,119 Speaker 1: So this ball hazard argument, maybe in the very long 94 00:05:15,200 --> 00:05:17,919 Speaker 1: term you might see indications of it, But in the 95 00:05:17,960 --> 00:05:21,760 Speaker 1: short run contagion is a bigger issue here. We cannot 96 00:05:21,800 --> 00:05:24,960 Speaker 1: threaten a strong economic recovery. And that's what it has 97 00:05:25,000 --> 00:05:27,360 Speaker 1: been since the nader of the pandemic two years ago. 98 00:05:27,800 --> 00:05:30,240 Speaker 1: With a financial crisis, because you, gentlemen know as well 99 00:05:30,240 --> 00:05:33,640 Speaker 1: as I do financial panics they spread fast, they hurt deep, 100 00:05:33,720 --> 00:05:36,279 Speaker 1: and they still over and every other sector of the economy. 101 00:05:36,600 --> 00:05:39,279 Speaker 1: What's your biggest concern? When you look at the Massachusetts economy, 102 00:05:39,320 --> 00:05:43,159 Speaker 1: You've got a pronounced biotech corridor there, and as you said, 103 00:05:43,200 --> 00:05:46,400 Speaker 1: a number of smaller innovators that need that kind of 104 00:05:46,400 --> 00:05:50,400 Speaker 1: banking assistance to grow. My biggest concern actually is not 105 00:05:50,480 --> 00:05:52,320 Speaker 1: to do with the banking sector, to do with housing, 106 00:05:52,320 --> 00:05:56,159 Speaker 1: which obviously very sensitive to interest rate conditions, into financial 107 00:05:56,160 --> 00:06:00,160 Speaker 1: services and credit availability. But in my home state, if 108 00:06:00,200 --> 00:06:01,960 Speaker 1: we don't build the housing that we need to build, 109 00:06:02,000 --> 00:06:03,800 Speaker 1: and I mean hundreds of thousands of units over the 110 00:06:03,800 --> 00:06:06,640 Speaker 1: next decade, we're going to assistiate our economy because young 111 00:06:06,680 --> 00:06:08,920 Speaker 1: families can't afford to live here. I mean, the cost 112 00:06:08,960 --> 00:06:12,440 Speaker 1: of living is crowding at our talent. Yeah, I've got 113 00:06:12,440 --> 00:06:13,960 Speaker 1: to ask you about a couple of other things while 114 00:06:14,000 --> 00:06:16,760 Speaker 1: you while we have you. Of course, the fact that 115 00:06:16,800 --> 00:06:20,880 Speaker 1: we've seen this meeting overseas between President She and President Putin. 116 00:06:21,240 --> 00:06:23,840 Speaker 1: She's back home now. I'm trying to figure out, Congressman, 117 00:06:23,880 --> 00:06:26,800 Speaker 1: if this was a meeting that kind of moved the 118 00:06:26,839 --> 00:06:29,840 Speaker 1: needle on this story. We asked John Kirby yesterday if 119 00:06:29,839 --> 00:06:32,880 Speaker 1: there was any knowledge of an agreement to provide lethal weapons. 120 00:06:32,880 --> 00:06:36,120 Speaker 1: There apparently is not. How concerned are you about this 121 00:06:36,600 --> 00:06:40,640 Speaker 1: axis as some call it, between Russia and China? And 122 00:06:40,760 --> 00:06:42,800 Speaker 1: there's the old proverb tell me who you walk with, 123 00:06:42,839 --> 00:06:44,880 Speaker 1: and I'll tell you who you are, And Jing King 124 00:06:45,040 --> 00:06:47,960 Speaker 1: is telling us all who he is. He has exclaiming 125 00:06:48,040 --> 00:06:51,640 Speaker 1: his friendship with a internationally wanted war criminal who is 126 00:06:51,680 --> 00:06:54,760 Speaker 1: marching Ukrainian children out of their homes and into concentration 127 00:06:54,800 --> 00:06:59,000 Speaker 1: camps in Russia. Whether or not he explicitly agrees to 128 00:06:59,080 --> 00:07:02,839 Speaker 1: overtly ship weapons, the US intelligence community needs to be 129 00:07:02,920 --> 00:07:07,880 Speaker 1: monitoring carefully for covert arms sales to Russia through third parties, 130 00:07:07,920 --> 00:07:10,480 Speaker 1: potentially because China has a long track record of doing that, 131 00:07:10,680 --> 00:07:12,120 Speaker 1: and if they do so, it needs to be met 132 00:07:12,160 --> 00:07:15,680 Speaker 1: with international condemnation and with sanctions. And we also need 133 00:07:15,720 --> 00:07:20,480 Speaker 1: to step up our response to the crimes against humanity 134 00:07:20,520 --> 00:07:24,040 Speaker 1: being committed in Sinjana providence against the weaker people. Last night, 135 00:07:24,120 --> 00:07:26,080 Speaker 1: we had a hearing on a China Select committee where 136 00:07:26,080 --> 00:07:30,920 Speaker 1: we heard from two survivors about forced sterilizations, rape, internment, 137 00:07:31,520 --> 00:07:34,760 Speaker 1: slave labor and really an open air prison that he 138 00:07:34,800 --> 00:07:40,880 Speaker 1: has created using a dystopian techno driven Orwellian states that 139 00:07:41,040 --> 00:07:45,160 Speaker 1: is monitoring people twenty four seven inside or outdoors. I'm 140 00:07:45,160 --> 00:07:47,600 Speaker 1: sure you're learning things on the Select Committee on China 141 00:07:47,680 --> 00:07:52,840 Speaker 1: that a lot of Americans don't know about. Yes, it's 142 00:07:53,040 --> 00:07:57,320 Speaker 1: eye opening, because you know, twenty years ago the United States, 143 00:07:57,360 --> 00:07:59,880 Speaker 1: and this was bipartisan, decided that we were going to 144 00:08:00,040 --> 00:08:02,679 Speaker 1: let the Chinese into the World Trade Organization that would 145 00:08:02,720 --> 00:08:05,280 Speaker 1: put them on a glide path to good global citizenship. 146 00:08:05,480 --> 00:08:08,160 Speaker 1: And that may have been made with the best of intentions. 147 00:08:08,200 --> 00:08:12,200 Speaker 1: But two decades later, after getting distracted for twenty years 148 00:08:12,200 --> 00:08:14,880 Speaker 1: and forever wars in the Middle East, we look around 149 00:08:14,880 --> 00:08:17,400 Speaker 1: and we realize that it didn't work. They are not 150 00:08:17,560 --> 00:08:21,520 Speaker 1: good global citizens. The CCP is terrorizing its own people. 151 00:08:21,880 --> 00:08:25,920 Speaker 1: It is increasingly aggressive in the South China Sea, in 152 00:08:25,960 --> 00:08:28,320 Speaker 1: the Indo Pacific and Africa, and Latin American in our 153 00:08:28,360 --> 00:08:32,640 Speaker 1: own backyard, and we have got to stand tall and 154 00:08:33,520 --> 00:08:37,360 Speaker 1: one get tougher on the Chinese directly, but two and 155 00:08:37,360 --> 00:08:42,400 Speaker 1: I would argue, more importantly, narrate a positive economic vision 156 00:08:42,520 --> 00:08:44,839 Speaker 1: for the rising countries of the Global South about why 157 00:08:44,880 --> 00:08:48,720 Speaker 1: they want to join in a US centered, rules based 158 00:08:48,720 --> 00:08:53,640 Speaker 1: international order in the twenty first century. I'll ask you lastly, Congressman, 159 00:08:53,640 --> 00:08:56,040 Speaker 1: I think you need to run about ending the authorization 160 00:08:56,120 --> 00:08:59,800 Speaker 1: for the use of military force in Iraq. Twenty years later, 161 00:09:00,320 --> 00:09:03,000 Speaker 1: your colleague SETH Molton spoke passionately with us about it 162 00:09:03,040 --> 00:09:05,000 Speaker 1: on the twentieth anniversary. I wonder if you see that 163 00:09:05,040 --> 00:09:10,480 Speaker 1: actually happening in the House. I do think it'll happen 164 00:09:10,520 --> 00:09:13,640 Speaker 1: in the House. I think there'll be an unfortunate drop 165 00:09:13,679 --> 00:09:16,200 Speaker 1: off in GOP support in the House from the Senate, though. 166 00:09:16,520 --> 00:09:18,760 Speaker 1: I mean, listen, this thing comes twenty years too late. 167 00:09:18,760 --> 00:09:20,640 Speaker 1: We should never have thought this war in the first place. 168 00:09:21,000 --> 00:09:25,319 Speaker 1: The repercussions from it, I think are difficult, even with 169 00:09:25,840 --> 00:09:28,960 Speaker 1: two decades of hindsight to qualify. It costs US moral 170 00:09:28,960 --> 00:09:31,880 Speaker 1: credibility on the world stage. It's damaged US trust and 171 00:09:31,960 --> 00:09:36,680 Speaker 1: institutions domestically. It has been a disastrous foreign policy decision 172 00:09:36,760 --> 00:09:40,800 Speaker 1: for US, but we do not have to be weighed 173 00:09:40,800 --> 00:09:43,679 Speaker 1: down by it perennially. Going forward, we can make better 174 00:09:43,720 --> 00:09:48,040 Speaker 1: foreign policy decisions, and under this president, we are seeing 175 00:09:48,120 --> 00:09:51,040 Speaker 1: that we're doing that in Ukraine, where we are standing 176 00:09:51,280 --> 00:09:55,600 Speaker 1: for freedom and democracy, where we are supporting a people's 177 00:09:55,679 --> 00:09:59,800 Speaker 1: right to self determine against an unjust and unprovoked invasion. 178 00:10:00,440 --> 00:10:03,079 Speaker 1: Should we keep that authorization for the war on terror 179 00:10:03,120 --> 00:10:05,640 Speaker 1: that preceded it? Following nine to eleven? Is that a 180 00:10:05,679 --> 00:10:10,959 Speaker 1: different story, potentially more narrowly scalped. The President does need 181 00:10:11,000 --> 00:10:16,800 Speaker 1: the latitude to strike terrorist outputs with the imminent capability 182 00:10:16,920 --> 00:10:19,679 Speaker 1: to threaten the United States. That is a legitimate commander 183 00:10:19,679 --> 00:10:22,040 Speaker 1: in chief capability that he needs to have at his disposal. 184 00:10:22,559 --> 00:10:24,880 Speaker 1: But we do need to review it and, if necessary, 185 00:10:24,920 --> 00:10:28,680 Speaker 1: more tightly scope it. I appreciate your spending some time 186 00:10:28,679 --> 00:10:31,440 Speaker 1: with this Congressman. Our greetings to Newton, mass and I 187 00:10:31,440 --> 00:10:33,720 Speaker 1: hope you come back soon. Jake Aukin closed, the Democrat 188 00:10:33,760 --> 00:10:36,600 Speaker 1: from Massachusetts, with us here on the fastest show in politics. Hey, 189 00:10:36,679 --> 00:10:39,319 Speaker 1: let's assemble the panel. It's Friday. We've got Jeanie Shanzana 190 00:10:39,360 --> 00:10:43,080 Speaker 1: with us Bloomberg Politics contributor, joined today by John Cidliti's 191 00:10:43,120 --> 00:10:46,240 Speaker 1: geopolitical strategist at Trilogy Advisors. John, I'm going to start 192 00:10:46,240 --> 00:10:49,000 Speaker 1: with you on this because you've spent time advising the 193 00:10:49,040 --> 00:10:52,080 Speaker 1: State Department, and I wonder your thoughts on the authorization 194 00:10:52,200 --> 00:10:55,200 Speaker 1: for the use of military force in Iraq twenty years later, 195 00:10:55,679 --> 00:10:58,160 Speaker 1: not coming as easily as some thought to end it 196 00:10:58,320 --> 00:11:01,439 Speaker 1: in Congress. But there are, as I friends, two authorizations. 197 00:11:01,480 --> 00:11:04,240 Speaker 1: One followed nine to eleven. That's for the war on Terror. 198 00:11:04,280 --> 00:11:07,920 Speaker 1: The other came later to precede the war in Iraq. 199 00:11:08,440 --> 00:11:12,000 Speaker 1: Will Congress do away with this twenty years after the fact, John, 200 00:11:13,800 --> 00:11:15,640 Speaker 1: I don't know what the final outcome is going to 201 00:11:15,679 --> 00:11:18,080 Speaker 1: be here, Joe, but it's certainly going to be a 202 00:11:18,160 --> 00:11:22,360 Speaker 1: robust debate and one that is long overdue, especially after 203 00:11:22,400 --> 00:11:26,480 Speaker 1: the precipitous withdrawal from Iraq in twenty twenty one. The 204 00:11:26,720 --> 00:11:31,199 Speaker 1: concern about possible catastrophic terrorism against the United States has 205 00:11:31,280 --> 00:11:34,440 Speaker 1: not completely abated, but we have done a thorough job 206 00:11:34,480 --> 00:11:38,679 Speaker 1: dealing with Al Qaida, Islamic State, and other major terrorist organizations. 207 00:11:38,720 --> 00:11:41,560 Speaker 1: But my sense is that many lawmakers are afraid that 208 00:11:41,600 --> 00:11:44,920 Speaker 1: if they vote to end the authorization, and god forbid, 209 00:11:44,960 --> 00:11:47,040 Speaker 1: there is some type of a terror attack, maybe not 210 00:11:47,120 --> 00:11:51,000 Speaker 1: against the homeland, but against major US interests abroad, that 211 00:11:51,120 --> 00:11:54,240 Speaker 1: they're afraid they'll take tremendous heat from their constituents and 212 00:11:54,480 --> 00:11:57,679 Speaker 1: other influential parties. And so the question is, how do 213 00:11:57,760 --> 00:12:01,640 Speaker 1: we balance the need to maintain a counter terrorism capability, 214 00:12:02,480 --> 00:12:06,040 Speaker 1: protect the country and our assets around the world, but 215 00:12:06,200 --> 00:12:08,960 Speaker 1: also really deal with the much more serious threat, the 216 00:12:09,000 --> 00:12:11,720 Speaker 1: strategic threat to the United States, both in terms of 217 00:12:11,720 --> 00:12:15,680 Speaker 1: our security and our global position of leadership, dealing with 218 00:12:15,720 --> 00:12:19,160 Speaker 1: the Chinese Communist Party and the decades ahead. Even while 219 00:12:19,160 --> 00:12:22,680 Speaker 1: we have this serious problem of the Russian invasion of Ukraine, 220 00:12:23,280 --> 00:12:28,120 Speaker 1: we have potential Iranian malign activity flourishing in the Middle East, 221 00:12:28,360 --> 00:12:30,120 Speaker 1: and we still haven't been able to deal with the 222 00:12:30,160 --> 00:12:34,080 Speaker 1: North Korea nuclear weapons problem. So we're dealing with many 223 00:12:34,240 --> 00:12:38,480 Speaker 1: problems on a multiple level here, multiple series of levels shoe. 224 00:12:38,880 --> 00:12:40,440 Speaker 1: But we have to make sure that we do not 225 00:12:40,760 --> 00:12:45,040 Speaker 1: lose our sights on the Chinese Communist parties, threats to 226 00:12:45,160 --> 00:12:48,520 Speaker 1: the United States and the international trading system. So gen 227 00:12:49,040 --> 00:12:51,959 Speaker 1: is John explaining why it's more likely that that I 228 00:12:52,040 --> 00:12:55,600 Speaker 1: ROCK authorization goes away and the war on Terror so 229 00:12:55,679 --> 00:13:00,440 Speaker 1: called authorization stays in place. Yeah, I think that's right. 230 00:13:00,840 --> 00:13:02,960 Speaker 1: You know. The fact is is that there is a 231 00:13:03,000 --> 00:13:07,120 Speaker 1: lot of support for moving forward on the AUMF, but 232 00:13:07,240 --> 00:13:09,800 Speaker 1: there is a concern because every day we are being 233 00:13:09,840 --> 00:13:12,800 Speaker 1: told that we are in a potential Cold war, a 234 00:13:12,880 --> 00:13:15,560 Speaker 1: new Cold war with China and our government has to 235 00:13:15,600 --> 00:13:19,080 Speaker 1: have the ability to respond to that. Well, we'll see 236 00:13:19,080 --> 00:13:20,680 Speaker 1: if it happens. There's a chance, by the way, that 237 00:13:20,720 --> 00:13:23,080 Speaker 1: it doesn't. I mean, it appears that a number of 238 00:13:23,240 --> 00:13:26,440 Speaker 1: particularly Republicans in the House, John are not comfortable with 239 00:13:26,559 --> 00:13:28,760 Speaker 1: doing away with this. They want to have every authorization 240 00:13:28,840 --> 00:13:30,920 Speaker 1: they can get. Is there a chance this has a 241 00:13:30,960 --> 00:13:36,760 Speaker 1: fortieth anniversary? I don't know. I don't know. I'd like 242 00:13:36,800 --> 00:13:38,960 Speaker 1: to say I can look ahead twenty more years, Joe, 243 00:13:39,120 --> 00:13:42,440 Speaker 1: and I cannot. It was a totally unfair question. I 244 00:13:42,480 --> 00:13:45,520 Speaker 1: had to set you up on that. That's perfectly fine. 245 00:13:45,559 --> 00:13:47,520 Speaker 1: That's why we're here to deal with the tough issues. 246 00:13:48,120 --> 00:13:50,600 Speaker 1: But you know, I don't know if the authorization will 247 00:13:50,640 --> 00:13:53,120 Speaker 1: remain in place. But I think it's very important to 248 00:13:53,120 --> 00:13:57,120 Speaker 1: have this larger debate about where America stands in the 249 00:13:57,160 --> 00:14:00,520 Speaker 1: war on terrorism, to what extent we can continue to 250 00:14:00,559 --> 00:14:04,200 Speaker 1: bring in conditions or issues or problems that are not 251 00:14:04,280 --> 00:14:08,760 Speaker 1: directly related to the counter terrorism war into this orbit 252 00:14:08,960 --> 00:14:13,800 Speaker 1: and to misuse this legislation that was specifically enacted to 253 00:14:13,840 --> 00:14:18,160 Speaker 1: deal with Afghanistan, Iraq and the threat of radical Islamist 254 00:14:18,240 --> 00:14:21,320 Speaker 1: terrorism twenty years ago, and extended to areas that have 255 00:14:21,440 --> 00:14:23,880 Speaker 1: nothing to do with those issues. And Jos the Ladies 256 00:14:23,920 --> 00:14:27,160 Speaker 1: and Jeanie Schanzano, we'll finish that thought straight ahead as 257 00:14:27,200 --> 00:14:29,880 Speaker 1: we stay with the panel. I'm Joe Matthew. This is Bloomberg. 258 00:14:31,080 --> 00:14:34,520 Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch the 259 00:14:34,520 --> 00:14:38,360 Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the 260 00:14:38,480 --> 00:14:41,760 Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 261 00:14:41,960 --> 00:14:44,800 Speaker 1: You can also listen live on Amazon Alexa from our 262 00:14:44,840 --> 00:14:50,600 Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 263 00:14:51,040 --> 00:14:54,800 Speaker 1: The banking crisis is of course occupied our attention for 264 00:14:54,840 --> 00:14:56,560 Speaker 1: the balance of the week. Thanks for being with us. 265 00:14:56,560 --> 00:14:59,560 Speaker 1: I'm Joe Matthew and Washington Bloomberg Sound On as we 266 00:14:59,680 --> 00:15:01,840 Speaker 1: re assemble our panel for their take on a lot 267 00:15:01,840 --> 00:15:03,920 Speaker 1: of the issues and a lot of the questions that 268 00:15:04,040 --> 00:15:06,120 Speaker 1: need to be answered around this whole thing. We heard 269 00:15:06,200 --> 00:15:09,280 Speaker 1: Jake Auchinclaus the Congress from from Massachusetts way in now. 270 00:15:09,360 --> 00:15:13,840 Speaker 1: Genie Chanzano, Bloomberg Politics contributor, and John Sidliti's geopolitical strategist 271 00:15:13,840 --> 00:15:17,320 Speaker 1: at Trilogy Advisors, join us here ahead of what could 272 00:15:17,320 --> 00:15:20,720 Speaker 1: be but I don't know, another difficult weekend, we were 273 00:15:20,720 --> 00:15:22,920 Speaker 1: starting to feel, Genie, like last Friday we had some 274 00:15:22,920 --> 00:15:26,160 Speaker 1: stability here. Then credit sweez happened. Now we're looking at 275 00:15:26,160 --> 00:15:28,720 Speaker 1: Deutsche Bank. We're still having figured out first Republic at 276 00:15:28,760 --> 00:15:30,560 Speaker 1: least that last check. And there could be a name 277 00:15:30,840 --> 00:15:33,240 Speaker 1: that we haven't even heard yet. As Moody's warns US 278 00:15:33,240 --> 00:15:37,280 Speaker 1: of greater financial and economic damage if the banking system 279 00:15:37,400 --> 00:15:41,200 Speaker 1: stress spills over. So it really seems, Genie, and you 280 00:15:41,840 --> 00:15:44,640 Speaker 1: can give me your take on this, that it's really 281 00:15:44,680 --> 00:15:50,000 Speaker 1: crystallized around FDIC insurance deposit insurance, and Larry Summers talked 282 00:15:50,000 --> 00:15:52,200 Speaker 1: to David Weston about that very issue. Today you can 283 00:15:52,200 --> 00:15:56,680 Speaker 1: read about it on the terminal, generating some headlines because 284 00:15:56,720 --> 00:15:59,920 Speaker 1: nobody can agree on this. Republicans and Democrats disagree. Any 285 00:16:00,320 --> 00:16:04,520 Speaker 1: within the parties, there's disagreement. Summers urging regulators to pledge 286 00:16:04,520 --> 00:16:08,400 Speaker 1: to back deposits if US banks failure. He is there 287 00:16:08,440 --> 00:16:13,440 Speaker 1: needs to be clarity on the situation regarding deposits. Authorities 288 00:16:13,480 --> 00:16:17,400 Speaker 1: do not have the authority to say that there's going 289 00:16:17,440 --> 00:16:22,000 Speaker 1: to be some kind of universal guarantee on deposits. That's important. 290 00:16:22,040 --> 00:16:27,520 Speaker 1: What they do have is the essentially equivalent power to 291 00:16:27,560 --> 00:16:33,120 Speaker 1: declare that in the event of a bank's failure, they 292 00:16:33,240 --> 00:16:39,520 Speaker 1: will use the systematic risk exemption in order to assure 293 00:16:39,680 --> 00:16:43,239 Speaker 1: that depositors are paid off in full. And that's essentially 294 00:16:43,280 --> 00:16:47,320 Speaker 1: what's happened so far, Genie, But deregulators, does Janet Yellens 295 00:16:47,400 --> 00:16:50,120 Speaker 1: the President need to actually articulate it the way Larry 296 00:16:50,120 --> 00:16:54,680 Speaker 1: Summers just did. They absolutely do, because it is the 297 00:16:54,800 --> 00:16:58,360 Speaker 1: lack of clarity that is giving people a real sense 298 00:16:58,400 --> 00:17:02,400 Speaker 1: of uneasiness. And if they want to head off people saying, 299 00:17:02,440 --> 00:17:05,120 Speaker 1: you know what, I don't think I can trust this system. 300 00:17:05,160 --> 00:17:07,800 Speaker 1: I think I need to go make some changes and 301 00:17:07,880 --> 00:17:10,880 Speaker 1: move to the big banks, they need to assure people 302 00:17:10,920 --> 00:17:13,680 Speaker 1: of exactly what Larry Summers just said, that we are 303 00:17:13,760 --> 00:17:16,800 Speaker 1: continuing down this steady road, that we will use the 304 00:17:16,880 --> 00:17:21,040 Speaker 1: exception and we will pledge to cover deposits. Because the 305 00:17:21,119 --> 00:17:24,120 Speaker 1: reality is clarity is going to give assurance in these 306 00:17:24,240 --> 00:17:27,360 Speaker 1: really uncertain times, and that is what the White House 307 00:17:27,400 --> 00:17:31,040 Speaker 1: and what the administration should be trying to do. Unfortunately, 308 00:17:31,080 --> 00:17:33,720 Speaker 1: as you've talked about and we've seen over the last 309 00:17:33,760 --> 00:17:38,560 Speaker 1: couple of weeks, particularly Janet Yellen, we have heard multiple 310 00:17:38,720 --> 00:17:41,600 Speaker 1: statements from almost all sides of these issues and that 311 00:17:41,640 --> 00:17:46,679 Speaker 1: makes people feel that the administration isn't in charge of 312 00:17:46,720 --> 00:17:50,040 Speaker 1: this and isn't leading anywhere except from behind. And that's 313 00:17:50,040 --> 00:17:53,800 Speaker 1: a problem. This is technically what Larry Summers is describing, technically, 314 00:17:53,840 --> 00:17:55,880 Speaker 1: not a change in policy. And John, I know you're 315 00:17:55,920 --> 00:17:58,119 Speaker 1: not a banker, but you are an expert in projecting 316 00:17:58,680 --> 00:18:02,800 Speaker 1: confidence or it's geopolitics or domestic politics. Why doesn't the 317 00:18:02,800 --> 00:18:05,480 Speaker 1: administration just frame it the way Larry Summers is saying. 318 00:18:07,160 --> 00:18:09,720 Speaker 1: I wish I had a precise answer for you there, Joe. 319 00:18:09,760 --> 00:18:13,480 Speaker 1: I can't read the president's mind or Treasury Secretary Yellen's mind. 320 00:18:13,560 --> 00:18:15,960 Speaker 1: But here's I think the larger concern here. I think 321 00:18:15,960 --> 00:18:20,679 Speaker 1: they are grappling with several conflicting objectives. One obviously is 322 00:18:20,760 --> 00:18:24,160 Speaker 1: to assure depositors that there is stability and they should 323 00:18:24,200 --> 00:18:27,480 Speaker 1: have confidence in the banking system. But my concern is 324 00:18:27,480 --> 00:18:29,560 Speaker 1: that they may be taking directions that are going to 325 00:18:29,600 --> 00:18:33,360 Speaker 1: have long term delatario as effects where the exception becomes 326 00:18:33,400 --> 00:18:36,800 Speaker 1: the rule. And until ten days ago or two weeks ago, 327 00:18:37,119 --> 00:18:40,000 Speaker 1: depositors up to two hundred and fifty thousand dollars knew 328 00:18:40,040 --> 00:18:42,560 Speaker 1: their deposits were insured and above that they were not, 329 00:18:43,200 --> 00:18:46,240 Speaker 1: and Treasury Secretary Yellen seems to be indicating that all 330 00:18:46,359 --> 00:18:50,439 Speaker 1: deposits at whatever level will not be insured, something that 331 00:18:50,480 --> 00:18:53,160 Speaker 1: the US government simply cannot afford to protect if we're 332 00:18:53,200 --> 00:18:56,000 Speaker 1: honest about this. And I think also we're seeing what's 333 00:18:56,040 --> 00:18:58,120 Speaker 1: happening with George Bank and with banks and other parts 334 00:18:58,119 --> 00:19:01,840 Speaker 1: of the world that are grappling with US policies that 335 00:19:02,160 --> 00:19:05,720 Speaker 1: rapidly increased inflation over the last two years and now 336 00:19:05,720 --> 00:19:09,240 Speaker 1: a rapidly increase interest rates to try to tame inflation. 337 00:19:09,720 --> 00:19:13,080 Speaker 1: And so we have distortion in banking investments, in their 338 00:19:13,119 --> 00:19:17,920 Speaker 1: relationships with their depositors, and there's still significant confusion. This 339 00:19:17,960 --> 00:19:21,200 Speaker 1: may take weeks, if not months, to fully play out. Joe, 340 00:19:21,480 --> 00:19:25,439 Speaker 1: are you worried Geanie about the weekend ahead? Yeah, I 341 00:19:25,480 --> 00:19:27,640 Speaker 1: wish I could say I wasn't, But I think last 342 00:19:27,680 --> 00:19:30,440 Speaker 1: weekend I was feeling right when we talked on Friday. Oh, 343 00:19:30,560 --> 00:19:36,840 Speaker 1: things are looking better. I think, you know, things are studying. Yeah, exactly, 344 00:19:36,840 --> 00:19:38,440 Speaker 1: And so I feel like I should be a little 345 00:19:38,480 --> 00:19:41,479 Speaker 1: more cautious this weekend and say I'm not particularly and 346 00:19:41,520 --> 00:19:43,800 Speaker 1: I would tell you, you know, talking to young people, 347 00:19:43,840 --> 00:19:46,760 Speaker 1: it has been very interesting to talk to them. They 348 00:19:46,760 --> 00:19:49,200 Speaker 1: don't remember for the most part freshman in college. You 349 00:19:49,280 --> 00:19:52,520 Speaker 1: know what happened in O eight. Certainly they don't remember 350 00:19:52,520 --> 00:19:55,439 Speaker 1: the savings and loans crisis, but they do get this 351 00:19:55,640 --> 00:20:00,320 Speaker 1: wide sense of uneasiness in the financial system, in the markets, 352 00:20:00,400 --> 00:20:02,560 Speaker 1: they're going to face going out on the job market, 353 00:20:02,640 --> 00:20:05,800 Speaker 1: interest rates, the cost of everything. They've lived through a pandemic, 354 00:20:06,080 --> 00:20:08,000 Speaker 1: So you know, you put all these things in perspective. 355 00:20:08,040 --> 00:20:11,000 Speaker 1: And we're also talking about confronting China and the autocratic 356 00:20:11,040 --> 00:20:13,680 Speaker 1: nations of the world. They're starting to feel a little 357 00:20:13,800 --> 00:20:17,199 Speaker 1: less confident in the United States and our government. And 358 00:20:17,240 --> 00:20:19,639 Speaker 1: so this is what I think they really need to 359 00:20:19,720 --> 00:20:22,720 Speaker 1: be focused on in the administrative level, is they need 360 00:20:22,720 --> 00:20:26,080 Speaker 1: to ensure confidence as much as they can, beginning with 361 00:20:26,119 --> 00:20:29,200 Speaker 1: the markets this weekend, spending time with our panel Genie 362 00:20:29,240 --> 00:20:32,840 Speaker 1: Chanzeno and John Cialitis here on Bloomberg's Sound on our 363 00:20:32,920 --> 00:20:36,159 Speaker 1: Friday edition with banking in the Air and geopolitics. A 364 00:20:36,200 --> 00:20:38,480 Speaker 1: lot of us woke up this morning to the headliner. 365 00:20:38,520 --> 00:20:40,080 Speaker 1: If you're like me, you woke up at two in 366 00:20:40,080 --> 00:20:42,520 Speaker 1: the morning and checked your phone to learn of the 367 00:20:42,600 --> 00:20:46,000 Speaker 1: US military carried out air strikes in Syria. This is 368 00:20:46,040 --> 00:20:49,359 Speaker 1: after an American contractor was killed five of our service 369 00:20:49,440 --> 00:20:53,159 Speaker 1: members were wounded when a drone of Iranian origin crashed 370 00:20:53,160 --> 00:20:55,200 Speaker 1: into a coalition base. This is not the kind of 371 00:20:55,240 --> 00:20:57,880 Speaker 1: headline you want to see, particularly with what's already going 372 00:20:57,880 --> 00:21:02,159 Speaker 1: on involving China, Russia, Ukraine. And I just wonder what 373 00:21:02,280 --> 00:21:07,200 Speaker 1: went through your mind, John, beyond the word escalation when 374 00:21:07,240 --> 00:21:09,719 Speaker 1: you heard this, How concerned are you about Iran and 375 00:21:09,840 --> 00:21:15,040 Speaker 1: Syria and the potential of adding a new theater significantly 376 00:21:15,080 --> 00:21:18,960 Speaker 1: concerned Joe. And what I fear is that, especially in 377 00:21:18,960 --> 00:21:24,240 Speaker 1: the wake of Chinese President's Hijinping's visit to Moscow last 378 00:21:24,280 --> 00:21:28,160 Speaker 1: week and sort of this broadening and deepening of the 379 00:21:28,280 --> 00:21:32,240 Speaker 1: Chinese Russian partnership against what we would call the US 380 00:21:32,320 --> 00:21:37,280 Speaker 1: a Western led international trading system. Iran and Saudi Arabia, 381 00:21:37,320 --> 00:21:40,639 Speaker 1: of course, are now potentially coming closer as rivals in 382 00:21:40,680 --> 00:21:44,560 Speaker 1: the Middle East thanks to Chinese diplomacy announced several weeks ago, 383 00:21:44,960 --> 00:21:49,800 Speaker 1: and now Saudi Arabia announced it's going to be establishing 384 00:21:49,840 --> 00:21:52,879 Speaker 1: closer ties with Syria, which is going to be a 385 00:21:52,880 --> 00:21:56,360 Speaker 1: problem for United States objectives in the area. And Iran 386 00:21:56,720 --> 00:22:00,800 Speaker 1: is aligned with China with Russia against the United States, 387 00:22:01,359 --> 00:22:04,640 Speaker 1: and it now I think since is a weakness on 388 00:22:04,760 --> 00:22:08,399 Speaker 1: America's part in the Middle East, and I believe that 389 00:22:08,440 --> 00:22:11,320 Speaker 1: we're going to have a ratcheting up of tensions as 390 00:22:11,320 --> 00:22:14,840 Speaker 1: Iron Fields more emboldened, especially now that it has less 391 00:22:14,880 --> 00:22:18,879 Speaker 1: to worry about regarding Saudi Arabia thanks to China's diplomacy. 392 00:22:19,320 --> 00:22:21,919 Speaker 1: Did the administration do the right thing by responding with 393 00:22:22,000 --> 00:22:25,680 Speaker 1: air strikes, Gene? I think they did. I think they 394 00:22:25,760 --> 00:22:29,439 Speaker 1: had to respond after the American contractor was killed. I 395 00:22:29,480 --> 00:22:32,480 Speaker 1: think they tried to keep the damage, certainly as it 396 00:22:32,520 --> 00:22:35,800 Speaker 1: pertains to human life, to a minimum, and they were 397 00:22:35,840 --> 00:22:38,840 Speaker 1: able to do that, thank goodness. But they had to respond. 398 00:22:39,160 --> 00:22:42,160 Speaker 1: But the reality is they wanted to head this off 399 00:22:42,160 --> 00:22:45,040 Speaker 1: at the past by exactly what John is talking about, 400 00:22:45,080 --> 00:22:47,560 Speaker 1: being more engaged in what is going on in the 401 00:22:47,600 --> 00:22:50,600 Speaker 1: Middle East. And as our attention has turned to China, 402 00:22:50,680 --> 00:22:53,679 Speaker 1: certainly has turned to what's going on in Ukraine, this 403 00:22:53,760 --> 00:22:57,080 Speaker 1: administration has not really taken a hands on approach in 404 00:22:57,119 --> 00:22:59,400 Speaker 1: the Middle East. And who did well, jes and Pink 405 00:22:59,440 --> 00:23:03,000 Speaker 1: swept right in there and negotiated this agreement between Saudi 406 00:23:03,000 --> 00:23:06,920 Speaker 1: Arabia and Iran, and so once again they are seeming 407 00:23:06,960 --> 00:23:09,199 Speaker 1: like they are on the world political stage in a 408 00:23:09,240 --> 00:23:11,840 Speaker 1: way they won't say a decade ago, and the United 409 00:23:11,880 --> 00:23:14,960 Speaker 1: States is falling off a bit. The Biden administration needs 410 00:23:15,000 --> 00:23:17,359 Speaker 1: to reassert itself in the Middle East, and this is 411 00:23:17,400 --> 00:23:19,960 Speaker 1: a clear indication that they have to do that. You know, 412 00:23:20,040 --> 00:23:23,239 Speaker 1: it's not something I think most Americans are aware of that. 413 00:23:23,280 --> 00:23:25,280 Speaker 1: We heard from General Mark Milly, the Chair of the 414 00:23:25,320 --> 00:23:28,560 Speaker 1: Joint Chiefs of Staff and testimony yesterday, just yesterday said 415 00:23:28,600 --> 00:23:32,720 Speaker 1: the US now has almost a thousand troops in Syria 416 00:23:32,760 --> 00:23:35,240 Speaker 1: and they are occasionally coming under attack. This was an 417 00:23:35,240 --> 00:23:38,000 Speaker 1: extreme example of that. But a thousand troops, John, where's 418 00:23:38,040 --> 00:23:42,800 Speaker 1: this going? Yeah, it's very concerning, Joe. It's not only 419 00:23:42,840 --> 00:23:45,520 Speaker 1: that we have between nine hundred and a thousand troops 420 00:23:45,520 --> 00:23:48,880 Speaker 1: in Syria, but they've been under attacked by Iranian proxies 421 00:23:49,080 --> 00:23:52,440 Speaker 1: on average of once every ten days for the last 422 00:23:52,480 --> 00:23:55,280 Speaker 1: several years. Wow. And for the most part this has 423 00:23:55,280 --> 00:23:58,400 Speaker 1: been an underreported story. Certainly for the latter year, almost 424 00:23:58,440 --> 00:24:01,720 Speaker 1: all of the media oxygen has been consumed by Russia's 425 00:24:01,720 --> 00:24:05,560 Speaker 1: invasion of Ukraine, and increasingly we see the Chinese threats 426 00:24:05,560 --> 00:24:08,439 Speaker 1: against Taiwan. And there may be a limit to how 427 00:24:08,520 --> 00:24:11,919 Speaker 1: much bandwidth is available for both the American people and 428 00:24:12,080 --> 00:24:16,080 Speaker 1: especially our lawmakers to be able to concentrate on crises 429 00:24:16,160 --> 00:24:18,960 Speaker 1: large and small in so many parts of the world. 430 00:24:19,359 --> 00:24:22,240 Speaker 1: A thousand troops in Syria, Genie, as we talk about 431 00:24:22,240 --> 00:24:26,000 Speaker 1: bringing down the authorization for Iraq, what are young people 432 00:24:26,040 --> 00:24:30,280 Speaker 1: telling you about that or are they even aware? They 433 00:24:30,359 --> 00:24:32,800 Speaker 1: are aware? And you know, I do think they think 434 00:24:32,840 --> 00:24:36,399 Speaker 1: the authorization should come down, but they also have you know, 435 00:24:36,640 --> 00:24:38,840 Speaker 1: you hear from both sides. On the one hand, they say, 436 00:24:39,080 --> 00:24:42,359 Speaker 1: why are we so involved in so many places extended 437 00:24:42,359 --> 00:24:44,840 Speaker 1: around the world when there's sharp problems at home and 438 00:24:44,880 --> 00:24:47,919 Speaker 1: they have been feeling those intimately, and others who say, 439 00:24:48,040 --> 00:24:51,480 Speaker 1: we really have to be more engaged in other parts 440 00:24:51,480 --> 00:24:53,520 Speaker 1: of the world. So there's a big divide, and you know, 441 00:24:53,600 --> 00:24:57,359 Speaker 1: that's the political reality that the administration is going to 442 00:24:57,400 --> 00:24:59,760 Speaker 1: have to deal with, particularly as we march into twenty 443 00:24:59,760 --> 00:25:03,080 Speaker 1: four is answering these types of questions on both sides 444 00:25:03,080 --> 00:25:05,400 Speaker 1: of the political aisle, and they are real and of course, 445 00:25:05,480 --> 00:25:08,840 Speaker 1: most importantly keeping the United States safe and secure, as 446 00:25:08,840 --> 00:25:11,040 Speaker 1: well as people from the US who are living abroad. 447 00:25:11,240 --> 00:25:14,920 Speaker 1: As this contractor was in Syria. Great conversation with our panel, Genie. 448 00:25:14,920 --> 00:25:18,400 Speaker 1: Thank you, Genie Chanzano Bloomberg Politics contributor and John Sidilidis 449 00:25:18,480 --> 00:25:22,280 Speaker 1: of Trilogy Advisors. We've appreciate it. As always, you're listening 450 00:25:22,280 --> 00:25:26,040 Speaker 1: to the Bloomberg Sound on podcast. Catch us live weekdays 451 00:25:26,040 --> 00:25:28,800 Speaker 1: at one Eastern on Bloomberg dot com, the I Heart 452 00:25:28,880 --> 00:25:31,520 Speaker 1: Radio app, and the Bloomberg Business App. We're listening on 453 00:25:31,600 --> 00:25:36,080 Speaker 1: demand wherever you get your podcast. Some pretty scary headlines 454 00:25:36,119 --> 00:25:38,120 Speaker 1: coming out of Syria overnight. A lot of folks saw 455 00:25:38,119 --> 00:25:40,160 Speaker 1: this as they woke up this morning, the military carrying 456 00:25:40,160 --> 00:25:44,160 Speaker 1: out air strikes in Syria after an American contractor was killed. 457 00:25:44,200 --> 00:25:47,560 Speaker 1: Five American service members were wounded when an Iranian drone 458 00:25:48,200 --> 00:25:50,840 Speaker 1: crashed into a coalition base there. As we discussed last 459 00:25:50,840 --> 00:25:53,240 Speaker 1: hour with John Sidilidis, Kayley, this is nothing new. They're 460 00:25:53,240 --> 00:25:57,439 Speaker 1: getting attacks something like every ten days on average in general. 461 00:25:57,480 --> 00:26:00,280 Speaker 1: Mark Millie, I have to admit this is not something 462 00:26:00,280 --> 00:26:04,439 Speaker 1: that I expected to hear tells Congress and testimony yesterday, 463 00:26:04,440 --> 00:26:06,320 Speaker 1: the Chairman of the Joint Chiefs we have a thousand, 464 00:26:06,320 --> 00:26:10,040 Speaker 1: nearly one thousand American troops on the ground now in Syria, 465 00:26:10,119 --> 00:26:12,320 Speaker 1: so a lot of questions about what the mission is 466 00:26:12,800 --> 00:26:16,240 Speaker 1: and we're attending well, especially because he said those thousand 467 00:26:16,240 --> 00:26:19,240 Speaker 1: troops have occasionally come under attack. To your point that 468 00:26:19,280 --> 00:26:23,239 Speaker 1: this is happening with a certain degree of frequency, and 469 00:26:23,280 --> 00:26:25,440 Speaker 1: when we have been so domestically focused on a number 470 00:26:25,520 --> 00:26:27,920 Speaker 1: of issues, the banking crisis capturing all of our attention, 471 00:26:27,920 --> 00:26:30,760 Speaker 1: a lot of oxygen on Capitol Hill and really just 472 00:26:30,800 --> 00:26:33,760 Speaker 1: in the public discourse, it is a reminder that we 473 00:26:33,800 --> 00:26:38,119 Speaker 1: are still involved in many geopolitically situations around the world, 474 00:26:38,160 --> 00:26:40,720 Speaker 1: and Syria coming once again to the four, of course, 475 00:26:40,760 --> 00:26:43,320 Speaker 1: after a week that also saw a visit between President 476 00:26:43,359 --> 00:26:45,960 Speaker 1: she and Putin related to Ukraine. I mean, a lot 477 00:26:45,960 --> 00:26:48,360 Speaker 1: of these geopolitical issues that had been at the forefront 478 00:26:48,359 --> 00:26:51,320 Speaker 1: of thought seem like they've been put on the back burner, 479 00:26:51,359 --> 00:26:53,800 Speaker 1: and yet headlines like this force us to pay attention. 480 00:26:53,840 --> 00:26:56,560 Speaker 1: Americans only have so much attention to pay rights. I'm 481 00:26:56,600 --> 00:26:58,480 Speaker 1: really curious to hear what Mark Esper has to think about, 482 00:26:58,520 --> 00:27:01,119 Speaker 1: and he's kind of join us, the former Secretary of 483 00:27:01,160 --> 00:27:05,040 Speaker 1: Defense with us back on Bloomberg. Mister Secretary, welcome, It's 484 00:27:05,040 --> 00:27:07,320 Speaker 1: great to have you back your thoughts on this matter 485 00:27:07,400 --> 00:27:10,240 Speaker 1: in Syria. This is very serious business and it's not 486 00:27:10,320 --> 00:27:14,200 Speaker 1: getting an enormous amount of attention. As Kaylee suggested, it's 487 00:27:14,240 --> 00:27:16,359 Speaker 1: behind Ukraine, it's behind Shine, It's behind a lot of 488 00:27:16,359 --> 00:27:19,520 Speaker 1: stories right now. But this has the potential to escalate quickly, 489 00:27:19,520 --> 00:27:22,760 Speaker 1: doesn't it. Yeah, sure does, Joan. First of all, great 490 00:27:22,800 --> 00:27:24,600 Speaker 1: to be back with you again. Look, let me say 491 00:27:24,640 --> 00:27:28,159 Speaker 1: this much the threat from Iran and Iranian proxies in 492 00:27:28,200 --> 00:27:31,360 Speaker 1: the Middle East has been persistent and enduring for some 493 00:27:31,440 --> 00:27:33,480 Speaker 1: time now. And I know you remarked up front about 494 00:27:33,880 --> 00:27:37,160 Speaker 1: General Millie saying we have nearly a thousand troops. Yeah, 495 00:27:37,200 --> 00:27:40,520 Speaker 1: in Syria, that's unchanged since my tenure as well. Their 496 00:27:40,520 --> 00:27:44,119 Speaker 1: purpose there is to really support our allies, our partners 497 00:27:44,160 --> 00:27:47,920 Speaker 1: on the ground, and continue to go after ISIS as 498 00:27:47,920 --> 00:27:49,840 Speaker 1: it rises up. And then we have some other missions 499 00:27:49,840 --> 00:27:51,720 Speaker 1: there as well. But needless to say, the Iranians do 500 00:27:51,800 --> 00:27:53,879 Speaker 1: not like our presence there for any number of reasons. 501 00:27:53,880 --> 00:27:57,320 Speaker 1: And that's why, as you mentioned upfront, we tend to 502 00:27:57,320 --> 00:28:00,760 Speaker 1: be attacked by Iranian proxies every ten days to two weeks. 503 00:28:00,800 --> 00:28:04,760 Speaker 1: It's over seventy strikes now since January twenty twenty one. 504 00:28:05,160 --> 00:28:08,679 Speaker 1: Is what the military is reporting, and are the what 505 00:28:08,920 --> 00:28:14,160 Speaker 1: is the likelihood or what are the options for de escalation? Well, 506 00:28:14,200 --> 00:28:17,120 Speaker 1: you know this part of the world. When you're dealing 507 00:28:17,200 --> 00:28:20,120 Speaker 1: with an autocracy like Iran, you have to do exactly 508 00:28:20,119 --> 00:28:24,040 Speaker 1: what we did during my tenure and what the Pentagon 509 00:28:24,080 --> 00:28:26,120 Speaker 1: didn't last twenty four hours. You have to strike back 510 00:28:26,160 --> 00:28:28,920 Speaker 1: forcefully with resolve, and you have to show them that 511 00:28:28,960 --> 00:28:30,800 Speaker 1: you're not going to put up with this nonsense. Otherwise 512 00:28:30,800 --> 00:28:33,760 Speaker 1: it escalates. And so of course Dood is always ready 513 00:28:33,800 --> 00:28:35,920 Speaker 1: to take these actions. But you know this is coming 514 00:28:35,960 --> 00:28:38,760 Speaker 1: from a regime to HRN that has been, you know, 515 00:28:38,800 --> 00:28:42,320 Speaker 1: causing misschiff in the region now for over forty years. 516 00:28:42,720 --> 00:28:45,080 Speaker 1: And we are sitting astride one of their major supply 517 00:28:45,200 --> 00:28:49,360 Speaker 1: routes through Syria into Lebanon to supply Hezbollah and to 518 00:28:49,560 --> 00:28:52,240 Speaker 1: support other terrorist groups in the region. So again they 519 00:28:52,280 --> 00:28:55,040 Speaker 1: do not like our presence there and and I have 520 00:28:55,080 --> 00:28:57,720 Speaker 1: every expectation that this will continue as long as this 521 00:28:57,760 --> 00:29:01,160 Speaker 1: regime remains in power. Is that why so many think 522 00:29:01,200 --> 00:29:03,640 Speaker 1: we need to maintain the authorization for the use of 523 00:29:03,680 --> 00:29:07,680 Speaker 1: military force, not for Iraq mark but for the war 524 00:29:07,760 --> 00:29:12,280 Speaker 1: on terror, so called the one that followed nine to eleven. Yes, 525 00:29:12,600 --> 00:29:15,080 Speaker 1: I don't know if that is the justification that the 526 00:29:15,120 --> 00:29:18,360 Speaker 1: administration is using, but some may make that point. We 527 00:29:18,400 --> 00:29:21,080 Speaker 1: do need to have the permission to do that. Congress 528 00:29:21,120 --> 00:29:23,280 Speaker 1: has been fully aware of this mission for at least 529 00:29:23,320 --> 00:29:25,440 Speaker 1: since my tenure at least, so we need to have 530 00:29:25,480 --> 00:29:27,959 Speaker 1: the ability to continue to again work with our partners 531 00:29:27,960 --> 00:29:30,000 Speaker 1: on the ground to make sure ISIS doesn't rise up 532 00:29:30,040 --> 00:29:32,280 Speaker 1: again and threaten us or our partners, but at the 533 00:29:32,320 --> 00:29:34,960 Speaker 1: same time have the means to defend ourselves, and that 534 00:29:35,360 --> 00:29:39,560 Speaker 1: comes naturally under Article two of the Constitution. The President 535 00:29:39,600 --> 00:29:42,840 Speaker 1: can cite that authority for self protection self defense. So 536 00:29:43,920 --> 00:29:46,000 Speaker 1: we'd have to dig into the particular authorities that they're 537 00:29:46,040 --> 00:29:49,320 Speaker 1: using them to answer that question specifically. How does Russia 538 00:29:49,440 --> 00:29:51,720 Speaker 1: factor in here as well? I mean, we were recording 539 00:29:51,920 --> 00:29:54,760 Speaker 1: just last week about Vladimir Putin talking with a sad 540 00:29:54,800 --> 00:29:58,320 Speaker 1: in Moscow. Yeah, you know, this is the interesting part 541 00:29:58,320 --> 00:30:00,520 Speaker 1: of the Middle East. It's very complex. So one hand, 542 00:30:00,560 --> 00:30:04,760 Speaker 1: we see Russia and Iran cooperating with regard to Ukraine. Right, so, 543 00:30:05,200 --> 00:30:08,920 Speaker 1: Iran is providing Shahid one thirty six drones to Russia 544 00:30:08,960 --> 00:30:13,760 Speaker 1: to help conduct strikes against Ukrainian civilians in Ukraine. In exchange, 545 00:30:13,800 --> 00:30:17,600 Speaker 1: Russia now appears to be possibly selling them at modern 546 00:30:17,640 --> 00:30:21,760 Speaker 1: fighter jets. On the other hand, Russia is backing up 547 00:30:22,120 --> 00:30:27,680 Speaker 1: the Assad regime in Syria providing support to it. The 548 00:30:27,680 --> 00:30:30,360 Speaker 1: ASAD regime is also a client state of Iran. So 549 00:30:30,560 --> 00:30:32,480 Speaker 1: here's a place in the Middle East where once again 550 00:30:32,600 --> 00:30:36,200 Speaker 1: Syria and Iran, I'm sorry, Russia and Iran are cooperating 551 00:30:36,800 --> 00:30:41,720 Speaker 1: and pushing things against US, our allies against Israelis against 552 00:30:41,760 --> 00:30:44,120 Speaker 1: Turkey as well. So it's it's a very, you know, 553 00:30:44,240 --> 00:30:47,400 Speaker 1: complicated situation both in the Middle East and in Europe. Mark, 554 00:30:47,400 --> 00:30:50,280 Speaker 1: what are your thoughts, speaking of complicated situation of following 555 00:30:50,320 --> 00:30:54,040 Speaker 1: this three day meeting between President she and Putin She 556 00:30:54,240 --> 00:30:56,880 Speaker 1: in Moscow for three days and they talked about their 557 00:30:56,960 --> 00:31:02,360 Speaker 1: limitless strategic relationship and obviously great concerns here in the 558 00:31:02,440 --> 00:31:06,400 Speaker 1: US about the potential for China to be funding essentially 559 00:31:06,440 --> 00:31:09,800 Speaker 1: Russia's invasion of Ukraine, although John Kirby told us yesterday 560 00:31:09,800 --> 00:31:12,160 Speaker 1: that they had no reason to believe there was a 561 00:31:12,200 --> 00:31:16,080 Speaker 1: deal on providing lethal weapons, just the optics though, and 562 00:31:16,440 --> 00:31:19,800 Speaker 1: the idea that this is happening while this war rages 563 00:31:19,880 --> 00:31:22,520 Speaker 1: on has upset a lot of people in Washington. What 564 00:31:22,520 --> 00:31:26,000 Speaker 1: does it mean for our relationship? Yeah, Look, I think 565 00:31:26,000 --> 00:31:28,520 Speaker 1: this should disabuse anybody of the notion that for some 566 00:31:28,600 --> 00:31:32,280 Speaker 1: reason Jijimping may be moving away from Vladimir Putin in 567 00:31:32,320 --> 00:31:35,560 Speaker 1: the wake of this strategic failure called the Ukrainian invasion. 568 00:31:36,080 --> 00:31:40,200 Speaker 1: Just the opposite, his first foreign visit after being given 569 00:31:40,240 --> 00:31:43,440 Speaker 1: an unprecedented third term as head of the Chinese Communist Party, 570 00:31:43,600 --> 00:31:46,480 Speaker 1: he goes to Moscow, and that's not unusual because he's 571 00:31:46,520 --> 00:31:49,520 Speaker 1: made over thirty trips to Moscow now during his tenure. 572 00:31:50,040 --> 00:31:53,040 Speaker 1: And what we do know is they talked about strength, 573 00:31:53,480 --> 00:31:56,720 Speaker 1: strengthening their economic cooperation. And look, let's not be fooled. 574 00:31:57,400 --> 00:31:59,880 Speaker 1: China is supporting Russia right now in this conflict. There 575 00:32:00,200 --> 00:32:04,000 Speaker 1: their energy, they're providing technical support, They're providing dual use 576 00:32:04,080 --> 00:32:07,719 Speaker 1: items that Russia can use in the conflicts, such as drones. 577 00:32:08,000 --> 00:32:09,880 Speaker 1: And we start we're starting to see some evidence that 578 00:32:10,120 --> 00:32:13,960 Speaker 1: they may have found Chinese munitions on the ground in Ukraine. 579 00:32:14,080 --> 00:32:18,680 Speaker 1: And look, if it's proven demonstrated that China is providing 580 00:32:18,800 --> 00:32:22,040 Speaker 1: lethal military aid to Russia, that will be a game 581 00:32:22,120 --> 00:32:25,160 Speaker 1: changer in many ways for Russia with regard to the conflict, 582 00:32:25,320 --> 00:32:28,840 Speaker 1: but probably more importantly, it'll be a game changer strategically 583 00:32:29,120 --> 00:32:31,480 Speaker 1: with regards to the relationship between the United States and 584 00:32:31,520 --> 00:32:35,720 Speaker 1: its Western parties and China, and what would the appropriate 585 00:32:35,760 --> 00:32:38,560 Speaker 1: response be from the United States, who is also engaged 586 00:32:38,600 --> 00:32:42,480 Speaker 1: obviously intense back and forth with China over the issue 587 00:32:42,520 --> 00:32:44,920 Speaker 1: of Taiwan as well. I mean, this just seems like 588 00:32:44,960 --> 00:32:49,920 Speaker 1: the relationship between these two powerful economic heavyweights is growing 589 00:32:50,200 --> 00:32:52,520 Speaker 1: more and more tense. I mean, you could also use 590 00:32:52,560 --> 00:32:55,200 Speaker 1: TikTok as case in point as an example. Just the 591 00:32:55,320 --> 00:32:58,320 Speaker 1: US and China relationships seems like it is growing more 592 00:32:58,360 --> 00:33:01,959 Speaker 1: and more fractured. Well clearly at this point. I mean, 593 00:33:02,040 --> 00:33:05,040 Speaker 1: Russia is the junior partners. It's becoming a vassal state 594 00:33:05,040 --> 00:33:07,360 Speaker 1: of you will, if you will, of China. But just 595 00:33:07,400 --> 00:33:10,320 Speaker 1: the same China needs Russian technology, whether it's air defense 596 00:33:10,360 --> 00:33:14,040 Speaker 1: systems or submarine technology, and certainly energy because China, as 597 00:33:14,080 --> 00:33:16,400 Speaker 1: you and your listeners know, is a net energy importer. 598 00:33:17,000 --> 00:33:19,480 Speaker 1: That said, if it is discovered learned that China is 599 00:33:19,520 --> 00:33:21,880 Speaker 1: providing lethal aid to Ukraine, then I think the White 600 00:33:21,880 --> 00:33:25,640 Speaker 1: House has to deliver on what it said would be 601 00:33:25,680 --> 00:33:28,720 Speaker 1: serious consequences. In my view, that would be financial and 602 00:33:28,760 --> 00:33:32,680 Speaker 1: economic sanctions, diplomatic sanctions as well. But the critical part 603 00:33:32,680 --> 00:33:35,160 Speaker 1: will be getting our European and other Western allies on 604 00:33:35,200 --> 00:33:38,200 Speaker 1: board to do that, because if not if we turn 605 00:33:38,240 --> 00:33:41,600 Speaker 1: a blind eye, or if if we are not forceful, 606 00:33:42,080 --> 00:33:44,720 Speaker 1: all China will do is expand its support to Russia. 607 00:33:44,840 --> 00:33:47,240 Speaker 1: It will allow Russia to continue the war in Ukraine, 608 00:33:47,240 --> 00:33:49,600 Speaker 1: and this will drag on for years. Having had a 609 00:33:49,720 --> 00:33:52,920 Speaker 1: chance to talk since the drone incident over the Black Sea, 610 00:33:53,240 --> 00:33:56,360 Speaker 1: now that the Pentagon has declassified the video, we saw 611 00:33:56,360 --> 00:33:59,760 Speaker 1: the Su twenty seven dump and fuel and suddenly crashing 612 00:33:59,760 --> 00:34:03,040 Speaker 1: into this thing. What happens next time we have a 613 00:34:03,080 --> 00:34:06,600 Speaker 1: close encounter? Mark? Does that adjust our policy? And I 614 00:34:06,640 --> 00:34:09,920 Speaker 1: say that knowing that you endured and many secretaries have 615 00:34:10,040 --> 00:34:13,720 Speaker 1: endured a series a long history of these close encounter 616 00:34:13,800 --> 00:34:17,080 Speaker 1: interceptions with Russian aircraft over the years, going back to 617 00:34:17,120 --> 00:34:20,400 Speaker 1: the Cold War. Yeah, this is not new behavior. This 618 00:34:20,560 --> 00:34:22,720 Speaker 1: is continued bad behavior. We see it from the Chinese 619 00:34:22,760 --> 00:34:25,000 Speaker 1: as well in the Indo Pacific, specifically in the South 620 00:34:25,080 --> 00:34:28,160 Speaker 1: China Sea area. Yeah, and look, I've said that we 621 00:34:28,200 --> 00:34:30,320 Speaker 1: need to We've got to stand up for our rights, 622 00:34:30,360 --> 00:34:34,000 Speaker 1: our legal right to fly and sell anywhere where it's legal. 623 00:34:34,800 --> 00:34:39,560 Speaker 1: What they did was not only unprofessional, but really illegal, unlawful, 624 00:34:39,600 --> 00:34:43,680 Speaker 1: and so I think we should again reinstate our surveillance flights. 625 00:34:43,680 --> 00:34:46,160 Speaker 1: I understand we already have, and if necessary, I've argued 626 00:34:46,160 --> 00:34:48,400 Speaker 1: we should put a combat air patrol up there, and 627 00:34:48,440 --> 00:34:50,880 Speaker 1: if Russian aircraft trying to approach it once again and 628 00:34:51,600 --> 00:34:54,399 Speaker 1: play Shenanigans with our drone, then we should be able 629 00:34:54,440 --> 00:34:56,840 Speaker 1: to move our aircraft into position to defend that drone. 630 00:34:57,120 --> 00:34:59,200 Speaker 1: We can't allow ourselves to be bullied around by the 631 00:34:59,239 --> 00:35:02,319 Speaker 1: Russians because otherwise they'll keep doing it. What they want 632 00:35:02,320 --> 00:35:04,640 Speaker 1: to do is push our surveillance aircraft out of the 633 00:35:04,680 --> 00:35:07,319 Speaker 1: Black Sea area, because we know they know we are 634 00:35:07,360 --> 00:35:11,760 Speaker 1: providing strategic and operational information to the Ukrainians. The Ukrainians 635 00:35:11,800 --> 00:35:14,800 Speaker 1: can prosecute their war against them. But if you're suggesting 636 00:35:14,840 --> 00:35:17,640 Speaker 1: that the US become more forceful in a way when 637 00:35:17,640 --> 00:35:20,880 Speaker 1: the US has said repeatedly they don't want to escalate 638 00:35:21,760 --> 00:35:26,719 Speaker 1: anything further, how do you walk that line? Well, I 639 00:35:26,719 --> 00:35:28,520 Speaker 1: think you just have to. You have to follow your 640 00:35:28,560 --> 00:35:31,560 Speaker 1: standard procedures, and you have to follow the International Lawn 641 00:35:31,760 --> 00:35:34,600 Speaker 1: and their protocols that we had set forward. I also 642 00:35:34,640 --> 00:35:37,439 Speaker 1: believe Russia does not want to escalate, so for some reason, 643 00:35:37,520 --> 00:35:39,359 Speaker 1: they go up and they see American drone and they 644 00:35:39,360 --> 00:35:41,200 Speaker 1: think they want to play games with it again, and 645 00:35:41,280 --> 00:35:44,040 Speaker 1: all of a sudden, two American fighters appear. I don't 646 00:35:44,080 --> 00:35:46,160 Speaker 1: I think they're just going to go away. That's been 647 00:35:46,160 --> 00:35:47,960 Speaker 1: their behavior in the past. They're not going to take 648 00:35:48,040 --> 00:35:50,520 Speaker 1: us on. Nobody wants to fight. We shouldn't want to 649 00:35:50,520 --> 00:35:53,480 Speaker 1: fight either, but we can't again allow ourselves to be bullied. 650 00:35:54,080 --> 00:35:57,480 Speaker 1: Seeing something similar happen in the South China Sea, of course, 651 00:35:58,160 --> 00:36:00,960 Speaker 1: with our seventh Fleet a day after China said that 652 00:36:01,000 --> 00:36:04,360 Speaker 1: it drove a navy destroyer away from what they claim 653 00:36:04,560 --> 00:36:09,480 Speaker 1: where their waters, We're going back in and steaming right 654 00:36:09,520 --> 00:36:13,200 Speaker 1: through that area. It's that force projection showing presence more 655 00:36:13,239 --> 00:36:17,200 Speaker 1: than shooting back that you're talking about. Mark, Yeah, absolutely, 656 00:36:17,200 --> 00:36:19,279 Speaker 1: I mean it's again you have to assert your rights, 657 00:36:19,320 --> 00:36:22,200 Speaker 1: you have to defend your rights, and that's Chinese propaganda 658 00:36:22,239 --> 00:36:24,680 Speaker 1: that they pushed us out. What we do our freedom 659 00:36:24,680 --> 00:36:27,279 Speaker 1: of navigation operations, We do them in the South China See, 660 00:36:27,320 --> 00:36:28,920 Speaker 1: we do them in the Persian Gulf, we do them 661 00:36:28,920 --> 00:36:31,040 Speaker 1: all around the world to us to certain not just 662 00:36:31,120 --> 00:36:34,200 Speaker 1: our rights, but global rights to these waters. And China's 663 00:36:34,239 --> 00:36:36,600 Speaker 1: claims to the South China See it's embodied in their 664 00:36:36,600 --> 00:36:40,799 Speaker 1: so called nine dash line concept are extraordinarily excessive, so 665 00:36:40,920 --> 00:36:42,880 Speaker 1: much so that I think the Philippines took them to 666 00:36:42,920 --> 00:36:46,319 Speaker 1: the international courts a few years ago and the Philippines 667 00:36:46,600 --> 00:36:50,719 Speaker 1: won a ruling. But nonetheless, China ignores global rules and norms. 668 00:36:50,760 --> 00:36:53,160 Speaker 1: This is what we're fighting against. We're fighting against two 669 00:36:53,160 --> 00:36:55,719 Speaker 1: autocracies that think that they don't have to play by 670 00:36:55,760 --> 00:36:58,600 Speaker 1: the rules, that they can invade their neighbors, they can 671 00:36:58,640 --> 00:37:02,440 Speaker 1: threaten their partners, are their neighbors like Taiwan or Ukraine, 672 00:37:02,440 --> 00:37:04,080 Speaker 1: and get away with it. And that's not the world 673 00:37:04,120 --> 00:37:06,920 Speaker 1: we want to live in. You just said the phrase 674 00:37:07,000 --> 00:37:09,520 Speaker 1: Chinese propaganda, which brings me to another issue we've all 675 00:37:09,560 --> 00:37:13,040 Speaker 1: been following very closely over the last say forty eight 676 00:37:13,080 --> 00:37:16,320 Speaker 1: hours here in Washington, when TikTok CEO was on Capitol 677 00:37:16,400 --> 00:37:21,240 Speaker 1: Hill getting absolutely grilled by a bipartisan committee in Congress, 678 00:37:21,320 --> 00:37:24,120 Speaker 1: all of which pretty much all of the members expressing 679 00:37:24,239 --> 00:37:29,120 Speaker 1: concern about the risk TikTok poses to national security. Can 680 00:37:29,160 --> 00:37:32,760 Speaker 1: you just give us your assessment as a former Defense 681 00:37:32,760 --> 00:37:36,000 Speaker 1: secretary of what exactly that risk looks like and how 682 00:37:36,000 --> 00:37:39,880 Speaker 1: significant it would be for China to have access to 683 00:37:40,080 --> 00:37:44,040 Speaker 1: the kind of data that we are understood they have 684 00:37:44,280 --> 00:37:48,520 Speaker 1: on one hundred and fifty million Americans or could access sure. 685 00:37:48,560 --> 00:37:50,160 Speaker 1: You know, first of all, I've only caught snippets of 686 00:37:50,160 --> 00:37:54,000 Speaker 1: the hearing. I'm actually dialing in from Lithuania Key Natiday 687 00:37:54,440 --> 00:37:56,719 Speaker 1: Baltic Military conference here, and I've been meeting with our 688 00:37:56,760 --> 00:38:02,279 Speaker 1: allies and the Prime Minister and others wine in Russia. Yeah. 689 00:38:02,320 --> 00:38:04,800 Speaker 1: So look, you know, first of all, with any social 690 00:38:04,840 --> 00:38:08,000 Speaker 1: media site, you're surrending, surrendering a degree of privacy. People 691 00:38:08,239 --> 00:38:10,640 Speaker 1: will know what you're doing and be able to kind 692 00:38:10,640 --> 00:38:13,400 Speaker 1: of know you better than you know you, so to speak. 693 00:38:13,560 --> 00:38:16,839 Speaker 1: The concerns again, of course, with TikTok, which has well 694 00:38:16,840 --> 00:38:19,319 Speaker 1: over one hundred million users in the United States, is 695 00:38:19,600 --> 00:38:23,080 Speaker 1: can they somehow aggregate that data it cannot be used 696 00:38:23,800 --> 00:38:27,160 Speaker 1: either against you if you are somehow in a position 697 00:38:27,160 --> 00:38:30,280 Speaker 1: of power, or can they aggregate it to either understand 698 00:38:30,320 --> 00:38:34,440 Speaker 1: what's happening in America? Or can they send certain messages 699 00:38:34,480 --> 00:38:37,840 Speaker 1: either pro China messages or let's say, anti NATO messages 700 00:38:38,560 --> 00:38:41,960 Speaker 1: using the TikTok network. And one thing that we're very 701 00:38:41,960 --> 00:38:45,280 Speaker 1: concerned about, of course, is any Chinese company is bound 702 00:38:45,360 --> 00:38:48,440 Speaker 1: under Chinese law to surrender data any other type of 703 00:38:48,719 --> 00:38:51,320 Speaker 1: information or be subject to you know, the rule of 704 00:38:51,400 --> 00:38:53,480 Speaker 1: law and China as it exists. It's a police state, 705 00:38:53,800 --> 00:38:56,280 Speaker 1: and so there are a lot of concerns about Chinese governance, 706 00:38:56,280 --> 00:39:00,560 Speaker 1: about how the Chinese very cleverly and strategically use data. 707 00:39:00,640 --> 00:39:03,839 Speaker 1: And I think it is of utmost concerned to obviously lawmakers, 708 00:39:04,200 --> 00:39:07,040 Speaker 1: and you know importantly I a few weeks ago there 709 00:39:07,080 --> 00:39:09,040 Speaker 1: was a hearing on Capitol Hill or the Director of 710 00:39:09,120 --> 00:39:12,240 Speaker 1: National Intelligence, the director of the NSA, and others spoke 711 00:39:12,280 --> 00:39:14,239 Speaker 1: about this, and I really trusted their views on this, 712 00:39:14,320 --> 00:39:16,960 Speaker 1: and each of them expressed concerns, to include the FBI 713 00:39:17,000 --> 00:39:21,399 Speaker 1: director Chris Ray about TikTok and how data collected by 714 00:39:21,480 --> 00:39:25,279 Speaker 1: TikTok and then used aggregating could be used against America 715 00:39:25,400 --> 00:39:28,680 Speaker 1: and see if it ends up being banned. Mark, congratulations. 716 00:39:28,719 --> 00:39:30,719 Speaker 1: By the way, not only are you in Lithuania, I'm 717 00:39:30,760 --> 00:39:34,799 Speaker 1: looking at the Lithuanian embassy here on Twitter with great 718 00:39:34,800 --> 00:39:37,120 Speaker 1: photos of you receiving a state award from a president 719 00:39:37,200 --> 00:39:40,040 Speaker 1: himself for your contribution to regional security. So I know 720 00:39:40,080 --> 00:39:42,600 Speaker 1: you're being celebrated over there, and we salute you from 721 00:39:42,600 --> 00:39:45,680 Speaker 1: the other side of the ocean. Well, thank you very much. 722 00:39:45,760 --> 00:39:48,640 Speaker 1: It's look, these are great allies over here, and here's 723 00:39:48,640 --> 00:39:52,760 Speaker 1: a country Lithuania that just got out underneath the Soviet 724 00:39:53,040 --> 00:39:56,000 Speaker 1: subjugation a little over thirty years ago, and they see 725 00:39:56,160 --> 00:39:59,080 Speaker 1: very clear eyed what's coming out of Moscow, are very 726 00:39:59,080 --> 00:40:01,800 Speaker 1: concerned about what's happen in Ukraine's There's a very different 727 00:40:01,840 --> 00:40:04,160 Speaker 1: view in Europe about the threat, or at least in 728 00:40:04,320 --> 00:40:06,759 Speaker 1: certain parts of Europe, than there is in parts from 729 00:40:06,760 --> 00:40:09,760 Speaker 1: the United States. I believe that get home safe. Mark Asper, 730 00:40:09,800 --> 00:40:12,799 Speaker 1: former Secretary of Defense, with us here on Bloomberg. I'm 731 00:40:12,880 --> 00:40:16,239 Speaker 1: Joe Matthew with Kaylee Lines on sound On. This is Bloomberg. 732 00:40:19,200 --> 00:40:21,480 Speaker 1: Thanks for listening to the sound On podcast. Make sure 733 00:40:21,520 --> 00:40:24,360 Speaker 1: to subscribe if you haven't already, at Apple, Spotify, and 734 00:40:24,440 --> 00:40:27,000 Speaker 1: anywhere else you get your podcasts. And you can find 735 00:40:27,080 --> 00:40:30,160 Speaker 1: us live every weekday from Washington, DC at one pm 736 00:40:30,200 --> 00:40:34,279 Speaker 1: Eastern Time at Bloomberg dot com.