WEBVTT - Facebook, Twitter and Google Under Senate Microscope on Russia, De Vynck Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:31.000 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:31.000 --> 0:00:34.559 Now for more details about how technology companies have been 0:00:34.600 --> 0:00:38.440 embroiled in the Russian meddling in the US election, I 0:00:38.479 --> 0:00:42.040 want to bring in Garrett. Garrett Davincy is our technology 0:00:42.080 --> 0:00:45.599 reporter in Washington, d C. Today, Uh joining us now. 0:00:45.680 --> 0:00:49.519 You can follow Garrett on Twitter at Garrett d h 0:00:49.760 --> 0:00:54.480 Garrett mentioning Twitter. Let's begin their Twitter has identified and 0:00:54.560 --> 0:00:58.720 removed about accounts that were linked to something called the 0:00:58.760 --> 0:01:03.240 Internet Research Agency. Uh. Maybe just use that as a 0:01:03.320 --> 0:01:07.080 jumping off point to explain what is it that's being 0:01:07.200 --> 0:01:10.600 investigated and what do we know so far about social 0:01:10.600 --> 0:01:16.480 media and collusion with Russian actors and um, the U 0:01:16.560 --> 0:01:20.200 S election in November. So yeah, we have three hearings 0:01:20.200 --> 0:01:23.080 over the next two days, one today to tomorrow, and 0:01:23.160 --> 0:01:26.120 in all three of them, representatives of Twitter, Google, and 0:01:26.200 --> 0:01:29.360 Facebook will face questions from lawmakers. You mentioned Twitter, You 0:01:29.400 --> 0:01:32.640 mentioned the ira A, the Internet Research Agency, So that 0:01:32.760 --> 0:01:35.160 is the shadowy organization that has been linked to the 0:01:35.240 --> 0:01:37.800 Kremlin that you know, the public has known about for 0:01:37.840 --> 0:01:41.280 several years now, you know, dating back to even but 0:01:41.600 --> 0:01:44.680 all this information that the tech companies have disclosed, they 0:01:44.720 --> 0:01:47.160 disclosed the whole new raft of information last night Twitter 0:01:47.400 --> 0:01:51.600 mentioning those accounts. As you mentioned Facebook talking about UM 0:01:51.680 --> 0:01:55.760 on six million Americans may have seen content that was 0:01:56.000 --> 0:02:00.160 generated or shared by Russian linked actors. Now those numbers 0:02:00.160 --> 0:02:02.600 are both bigger than what had been disclosed up into 0:02:02.680 --> 0:02:05.720 this point. And we just saw Senator Mark Warner, who 0:02:05.800 --> 0:02:09.080 is the top Democrat Democrat on the Senate Intelligence Committee 0:02:09.080 --> 0:02:13.880 who will be interviewing these UM companies tomorrow, saying, you know, 0:02:13.919 --> 0:02:16.720 in the scrum to reporters at Congress, just now that 0:02:16.880 --> 0:02:19.080 you know, all this information that's been released kind of 0:02:19.080 --> 0:02:20.840 shows to him that maybe the story is going to 0:02:21.040 --> 0:02:23.520 keep getting bigger than what we know right now. He said, 0:02:23.800 --> 0:02:26.840 you know, they disclosed a certain amount earlier, and now 0:02:26.880 --> 0:02:30.160 they're disclosing more. He called um you know, the attempts 0:02:30.160 --> 0:02:31.760 by the tech companies that kind of get ahead of 0:02:31.760 --> 0:02:34.880 the story is just incremental changes. So you know, the 0:02:34.880 --> 0:02:36.920 tech companies are really up for for sort of a 0:02:36.960 --> 0:02:39.760 real grilling from lawmakers today and tomorrow. Garrett. You know, 0:02:39.800 --> 0:02:44.320 we think about President Trump's administration as being anti regulation 0:02:44.400 --> 0:02:48.520 or at least pro deregulation. What's the appetite right now 0:02:48.680 --> 0:02:53.200 to increase regulation around the tech companies? Relating to uh, 0:02:53.320 --> 0:02:56.240 some of this investigation into Russia's interference in the election. 0:02:56.680 --> 0:02:59.800 I mean you're seeing, you know, the Democrats, in part 0:02:59.800 --> 0:03:03.079 to Killer have a put forward a bill sponsored by 0:03:03.120 --> 0:03:06.800 two Democrats as well as Republican Senator John McCain. So 0:03:06.840 --> 0:03:10.079 there is some bipartisan efforting there to sort of regulate 0:03:10.120 --> 0:03:14.560 the advertising on online um, you know, social networks such 0:03:14.600 --> 0:03:16.400 as these, and kind of bring the standards that we 0:03:16.440 --> 0:03:19.000 have for radio and television up to the level on 0:03:19.120 --> 0:03:21.040 you know, the online up to the level we have 0:03:21.120 --> 0:03:23.880 for these other mediums. A lot of other senators and 0:03:24.000 --> 0:03:26.320 congress people have sort of expressed, you know, they're not 0:03:26.360 --> 0:03:28.720 so sure. They they want to kind of see how 0:03:28.760 --> 0:03:31.280 these hearings go before they take a stand, and that's 0:03:31.280 --> 0:03:34.239 really one of the things that that's up for debate here. 0:03:34.280 --> 0:03:36.440 We have some people in Congress saying, you know, this 0:03:36.480 --> 0:03:40.200 is the bill that we need to regulate advertising on 0:03:40.320 --> 0:03:42.960 these systems, make sure that um users of the social 0:03:43.000 --> 0:03:46.119 networks know when something is political, when it's and who 0:03:46.160 --> 0:03:49.240 it's been funded by and other people. Not so sure yet? 0:03:49.720 --> 0:03:52.920 What's the cost benefit analysis is something like this, Garrett, 0:03:52.960 --> 0:03:57.000 not to the companies, but to the nefarious agents that 0:03:57.240 --> 0:04:01.040 were placing these ads. I mean, it's relative the inexpensive 0:04:01.560 --> 0:04:06.080 to put these ads and this kind of content up online. Correct. 0:04:06.240 --> 0:04:08.800 It's another question that we will be you know, hearing 0:04:08.800 --> 0:04:10.840 a lot of people talking about and debating in the 0:04:10.880 --> 0:04:12.600 next couple of days, which is, if you have a 0:04:12.640 --> 0:04:15.800 small amount of money and you know, a consorted, concerted 0:04:15.840 --> 0:04:19.400 group of people trying to use that money to buy 0:04:19.440 --> 0:04:22.920 advertisements and then sharing it organically as well, how much 0:04:23.120 --> 0:04:25.640 impact can you really have? I mean, the amount of 0:04:25.680 --> 0:04:28.840 money that was involved one hundred thousand dollars that Facebook 0:04:28.880 --> 0:04:31.120 has been able to find. You know, we were not 0:04:31.160 --> 0:04:33.680 sure there could be more but one dollars. I mean, 0:04:33.720 --> 0:04:36.200 this is a drop in the bucket for the amount 0:04:36.240 --> 0:04:38.360 of money that has spent on these platforms every day. 0:04:38.440 --> 0:04:41.160 On Google it was significantly even less than that, So 0:04:41.720 --> 0:04:44.320 you know, it's hard to know exactly how much of 0:04:44.360 --> 0:04:47.960 an impact these Russian trolls so to speak, actually had 0:04:47.960 --> 0:04:51.080 on the election. Garrett, I'm sure you've read through the testimony, 0:04:51.160 --> 0:04:55.440 because these big tech giants have released pre released some 0:04:55.520 --> 0:04:57.039 of what they're going to say. Can you give us 0:04:57.080 --> 0:05:00.760 a flavor of the approach that they're taking. The approach 0:05:00.760 --> 0:05:02.640 that they're taking is to kind of, you know, try 0:05:02.680 --> 0:05:05.080 to show that they're being transparent and say, you know, 0:05:05.200 --> 0:05:08.960 their Facebook's general counsel, who will be testifying, you know, 0:05:09.360 --> 0:05:11.320 use very strong language. He said it was, you know, 0:05:11.360 --> 0:05:14.040 an affront to democracy that this kind of thing has happened, 0:05:14.040 --> 0:05:16.400 that they're very upset about it, that they really want 0:05:16.400 --> 0:05:19.360 to work with lawmakers to change it. But what they 0:05:19.400 --> 0:05:21.360 also want to do is make sure that, you know, 0:05:21.440 --> 0:05:24.479 the regulations aren't too strict and don't go too far 0:05:24.640 --> 0:05:27.960 for them that may inhibit them to actually do their business. 0:05:27.960 --> 0:05:30.159 You know, one thing that came out this morning, the 0:05:30.200 --> 0:05:34.640 Internet Um lobbying group that represents these these three companies 0:05:34.640 --> 0:05:37.040 and a few other ones, said, you know, we need 0:05:37.120 --> 0:05:39.880 these laws if they are to come forward, to apply generally, 0:05:39.920 --> 0:05:42.599 not to just carve out our three companies because we're 0:05:42.600 --> 0:05:45.479 the biggest names in this fight. Garrett Devinc, thank you 0:05:45.520 --> 0:05:47.760 so much for joining us. Garrett Devinc is a technology 0:05:47.839 --> 0:05:51.839 reporter for Bloomberg News. He's in Washington, d C. Today 0:05:51.839 --> 0:05:55.040 because that is where the action is at, with Facebook, Twitter, 0:05:55.600 --> 0:05:58.680 and Google all heading to Congress to talk about what 0:05:58.720 --> 0:06:03.240 they're doing, uh to counter false news, fake news, as 0:06:03.240 --> 0:06:07.720 well as UH perhaps uh international agents trying to interfere 0:06:07.760 --> 0:06:11.560 with US elections. Will be following that throughout the day. 0:06:11.640 --> 0:06:14.159 The testimony is in the afternoon, and we will bring 0:06:14.200 --> 0:06:29.680 that live to you on Bloomberg Television. Now, want to 0:06:29.760 --> 0:06:33.400 visit with the Noah Felmanoah is the Felix Frankfurt Professor 0:06:33.400 --> 0:06:36.120 of Law of Harvard University. Is also a Bloomberg of 0:06:36.160 --> 0:06:39.600 You columnist, and he is also the author of a 0:06:39.640 --> 0:06:43.120 new book on James Madison, on the president of the 0:06:43.200 --> 0:06:45.839 Presidency of James Madison. The book is entitled The Three 0:06:46.040 --> 0:06:50.960 Lives of James Madison, Genius, Partisan and President. No thank 0:06:50.960 --> 0:06:53.520 you very much for being with us. Um. You know, 0:06:53.800 --> 0:06:56.200 before we get into James Madison, let's talk about just 0:06:56.240 --> 0:06:59.520 something a little bit more, uh, sort of immediate, and 0:06:59.600 --> 0:07:03.200 this is the indictments that were handed down by Robert 0:07:03.279 --> 0:07:09.360 Mueller on yesterday for Paul Manafort and Mr Gates and 0:07:09.360 --> 0:07:13.760 and just the ongoing investigation. What do you make of this? 0:07:13.800 --> 0:07:15.920 Where do you think this all leads? And and why 0:07:16.040 --> 0:07:19.800 is this is starting with an indictment of Manafort. It's 0:07:19.800 --> 0:07:23.840 started with Manaphort because he is vulnerable if the allegations 0:07:24.200 --> 0:07:26.920 in the indictment are true. He's exposed himself to up 0:07:26.920 --> 0:07:30.760 to eighty years in prison by essentially lobbying for foreign governments, 0:07:30.800 --> 0:07:33.960 not telling anybody about it, keeping the money overseas, not 0:07:33.960 --> 0:07:36.240 paying taxes on it, and then laundering it to pay 0:07:36.280 --> 0:07:39.600 for things like renovations on his Hampton's house. So he's 0:07:39.600 --> 0:07:41.560 a weak link. And since he was for some period 0:07:41.600 --> 0:07:43.800 of time, for some months, charement of the campaign, it's 0:07:43.800 --> 0:07:46.280 a logical thing from a prosecutor's perspective. You start with 0:07:46.280 --> 0:07:49.480 the weak link. Where it's going. We still don't know 0:07:49.600 --> 0:07:53.040 enough to be certain. It's very clear that the Russians 0:07:53.040 --> 0:07:55.720 were trying to make contacts all over the Trump campaign, 0:07:55.840 --> 0:07:59.760 and the guilty plea of George Papadopoulos offers ample evidence 0:07:59.800 --> 0:08:02.520 of that. U The question is was there collusion back? 0:08:02.760 --> 0:08:04.600 You know, did the Trump campaign do anything going back, 0:08:04.600 --> 0:08:06.760 and it's really much too soon to know that. We 0:08:06.840 --> 0:08:10.440 don't yet have direct evidence that that did happen, um, 0:08:10.480 --> 0:08:12.400 And that's what the investigation is going to turn on. 0:08:12.440 --> 0:08:14.080 If they can find that, it will look like a 0:08:14.120 --> 0:08:16.120 success from Aller, and if not, like a success for 0:08:16.160 --> 0:08:18.000 the president. You know, No, I want to pick up 0:08:18.000 --> 0:08:20.360 on that point because you really highlighted that in your 0:08:20.440 --> 0:08:24.440 column that certainly President Trump seems to view this as 0:08:24.480 --> 0:08:29.239 a who wins and who loses type of UH investigation 0:08:29.520 --> 0:08:32.400 were as arguably Robert Muller views this as trying to 0:08:32.440 --> 0:08:35.120 find out what happened and the truth. And I'm wondering 0:08:35.120 --> 0:08:37.560 how important is it to sort of see it through 0:08:37.640 --> 0:08:40.440 President Trump's lens in in order to figure out whether 0:08:40.440 --> 0:08:43.400 this will be effective? And even if Trump is impeached, 0:08:43.640 --> 0:08:45.320 a lot of people think that he will not get 0:08:45.600 --> 0:08:49.840 expelled from office because the Senate won't convict him. You know, 0:08:50.520 --> 0:08:52.880 like anything where there are two perspectives, it's really important 0:08:52.920 --> 0:08:55.760 to see it from both directions. And so from from 0:08:55.800 --> 0:08:58.600 mother's perspective, you know, his career as a public servant 0:08:59.000 --> 0:09:02.000 comes to fruition whether he gets the president or not. 0:09:02.320 --> 0:09:04.280 You know, he is going to try to find out 0:09:04.320 --> 0:09:07.559 what actually happened and provide evidence. And that's how prosecutors 0:09:07.600 --> 0:09:10.360 typically are are brought up to see things. But from 0:09:10.360 --> 0:09:12.959 the president's perspective, and really this is the perspective it's 0:09:13.000 --> 0:09:16.120 most relevant to our polity as a nation. The question 0:09:16.200 --> 0:09:17.840 is does he go down or not? You know, does 0:09:17.880 --> 0:09:21.040 he end up in history as as Nixon, or did 0:09:21.040 --> 0:09:23.240 the end up in history as Bill Clinton bruised and 0:09:23.280 --> 0:09:26.120 battered but nevertheless acquitted by the Senate. And so I 0:09:26.160 --> 0:09:28.440 think it's hard, you know, for an elected official not 0:09:28.520 --> 0:09:32.280 to see things in those terms. No, as far as 0:09:32.960 --> 0:09:38.480 the role of the special prosecutor goes in this, is 0:09:38.520 --> 0:09:41.679 there any possibility that the prosecutor will be wrong in 0:09:42.000 --> 0:09:44.960 going after certain people in the sense that we focus 0:09:45.040 --> 0:09:48.200 on the president, but maybe it had nothing to do 0:09:48.280 --> 0:09:52.920 with decisions made by Donald Trump. You know, prosecutors are 0:09:52.960 --> 0:09:55.200 a human believe it or not, and they make mistakes too. 0:09:55.400 --> 0:09:58.160 In the case of Manaford, assuming that the allegations are 0:09:58.280 --> 0:10:00.120 are true, and there's no reason really to doubt that 0:10:00.200 --> 0:10:02.760 at this stage, the prosecu will will pick up some 0:10:02.840 --> 0:10:05.679 scalps of people who are criminals and have done things 0:10:05.720 --> 0:10:08.880 wrong um and should probably be punished for that, but 0:10:08.960 --> 0:10:11.719 who may not ultimately lead back to the big investigation, 0:10:11.720 --> 0:10:13.600 and that for the prosecut that's the kind of mistake 0:10:13.640 --> 0:10:15.600 that you're talking about. I think it's where you go 0:10:15.640 --> 0:10:17.360 after somebody, you try to flip them and they've done 0:10:17.400 --> 0:10:19.440 nothing to tell and that may be true, and that 0:10:19.480 --> 0:10:22.800 happens to prosecutors um and then you know, the bad 0:10:22.880 --> 0:10:24.599 luck is to the people who committed the crimes in 0:10:24.600 --> 0:10:26.840 the first place and made themselves vulnerable to being charged 0:10:26.880 --> 0:10:29.040 and might otherwise never have been charged. Do you think 0:10:29.080 --> 0:10:33.400 the Attorney General Jeff Sessions is at risk here? I 0:10:33.400 --> 0:10:38.320 haven't heard anything thus far suggesting that he is personally 0:10:38.360 --> 0:10:44.200 at risk, especially because the key meeting in which the 0:10:44.240 --> 0:10:50.600 President apparently pushed Comey was one in which Sessions wasn't present. So, 0:10:50.760 --> 0:10:53.000 you know, I think Sessions looks bad around this, but 0:10:53.120 --> 0:10:55.840 I don't yet have any indication that he himself is 0:10:55.840 --> 0:10:58.040 directly in the line fire. You know. I just also 0:10:58.080 --> 0:11:00.520 want to follow up in this whole winner versus loser 0:11:00.840 --> 0:11:03.480 kind of way that President Trump seems to be viewing this. 0:11:03.600 --> 0:11:05.440 I mean, there is another aspect to this. We're gonna 0:11:05.440 --> 0:11:08.760 get elections midterm elections next year, and there is a 0:11:08.800 --> 0:11:12.280 good chance that should this escalate based on the popularity 0:11:12.360 --> 0:11:16.520 rankings of President Trump yesterday, that this could definitely impede 0:11:16.600 --> 0:11:21.640 the Republican's position in Senate, in Congress more broadly. What 0:11:21.640 --> 0:11:25.040 what do you? What do you? What's your take on that? Well, 0:11:25.080 --> 0:11:28.040 you're absolutely right that in principle, if the President's popularity 0:11:28.120 --> 0:11:30.800 goes down even further, that should have a gravitational pull 0:11:30.800 --> 0:11:33.800 on other Republican candidates. It is, however, really important to 0:11:33.800 --> 0:11:38.680 remember that the first midterm elections in any presidential term 0:11:39.360 --> 0:11:42.199 almost always result in a significant loss of seats for 0:11:42.240 --> 0:11:44.480 the president's party. You know what happened to build Contentent, 0:11:44.559 --> 0:11:47.800 happened to Barack Obama. It's it's quite normal, and so 0:11:47.880 --> 0:11:50.880 there's going to be some pull regardless. Um, the question 0:11:50.920 --> 0:11:53.559 is will that be very disproportionate? And if you look 0:11:53.600 --> 0:11:56.080 at the way the districts are designed, it's not certain 0:11:56.760 --> 0:12:00.760 that Trump's unpopularity will pull down repub into that much 0:12:00.800 --> 0:12:03.840 further in many House races, because many House districts are 0:12:03.920 --> 0:12:07.720 gerrymandered such that they're overwhelmingly Democrats or overwhelmingly Republican, and 0:12:08.080 --> 0:12:11.120 the base may not care. No, just quickly and in 0:12:11.160 --> 0:12:14.880 your book, The Three Lives of James Madison, Genius, Partisan 0:12:14.880 --> 0:12:17.720 and President. Would you say that James Madison is one 0:12:17.720 --> 0:12:20.360 of the first presidents to really understand the power public 0:12:20.400 --> 0:12:24.760 opinion and what was then the media. Yeah. Absolutely, It 0:12:24.920 --> 0:12:28.840 was in um It was in John Adams's presidency that 0:12:29.280 --> 0:12:32.040 he and Jefferson decided they needed to start a newspaper 0:12:32.120 --> 0:12:35.720 of their own, essentially a republican newspaper to go against 0:12:35.760 --> 0:12:38.440 the federalist newspaper that was being run by Alexander Hamilton's 0:12:38.440 --> 0:12:40.800 and they wrote very explicitly about this. In fact, Madison 0:12:40.800 --> 0:12:43.560 wrote a very famous essay called public Opinion where he 0:12:43.559 --> 0:12:45.440 basically said, you know, we didn't think it was going 0:12:45.480 --> 0:12:47.360 to work this way under the Constitution. We thought that, 0:12:47.720 --> 0:12:49.440 you know, everyone would do his own research. But now 0:12:49.480 --> 0:12:52.080 we understand that the media affects the way people think, 0:12:52.200 --> 0:12:54.480 and so if you want to actually ensure that the 0:12:54.520 --> 0:12:56.840 Constitution is followed, it's not enough to rely on the 0:12:56.840 --> 0:13:00.320 government officials. He was thinking of the Adams administration actually 0:13:00.360 --> 0:13:02.880 have to rely on the media to inform the people. 0:13:03.320 --> 0:13:07.360 Sounds fascinating. A new book, The Three Lives of James Madison, Genious, Partisan, 0:13:07.440 --> 0:13:10.920 and President, by Noah Feldman, who just joined us. Felix Frankfurter, 0:13:11.000 --> 0:13:15.160 professor of law at Harvard University, also able recue columnist. 0:13:15.320 --> 0:13:31.160 This is Bloomberg. Just last week, more than voters in Lombardy, 0:13:31.320 --> 0:13:34.920 that's the home to Italy's financial capital Milan, and the 0:13:35.000 --> 0:13:38.880 Veneto region around Venice, they voted yes in a non 0:13:38.920 --> 0:13:44.720 binding referendum to somehow access more autonomy from the state 0:13:44.880 --> 0:13:47.480 of Italy. Here to help us understand exactly what's going 0:13:47.559 --> 0:13:51.160 on is Roberto Maroni. He is the president of the 0:13:51.160 --> 0:13:54.800 region of Lombardy and he is also a former Interior 0:13:54.840 --> 0:13:58.880 Minister of the Italian Republic in the Roberta Lomoni, President, 0:13:58.880 --> 0:14:01.160 thank you very much for being with us. What can 0:14:01.240 --> 0:14:04.640 you describe for people the difference between the referendum that 0:14:04.800 --> 0:14:08.719 was held in Italy about autonomy in these two regions 0:14:08.800 --> 0:14:12.599 and the referendum the balloting that went on in Catalonia. 0:14:13.440 --> 0:14:17.880 It's a very simple. The referendum in Catalonia was something 0:14:18.000 --> 0:14:24.520 against the Spanish constitution. What we did in Lombardi and 0:14:24.600 --> 0:14:30.080 Vnito is something too uh to make the Italian constitutes 0:14:30.120 --> 0:14:34.080 to apply the Italian constitution, in particular reform of the 0:14:34.160 --> 0:14:39.280 constitution which took place sixteen years ago. The reform was 0:14:40.560 --> 0:14:46.040 we the regions can ask for more powers, more competences 0:14:46.080 --> 0:14:50.400 and more money. In these last sixteen years, no regions 0:14:51.000 --> 0:14:55.960 got new competencens, new powers. Why because the Italian government 0:14:56.120 --> 0:15:01.240 was always against giving money and competency. That's why we 0:15:01.520 --> 0:15:05.920 did the referendum. It's a non binding referendum, yes, but 0:15:06.120 --> 0:15:12.160 from a political viewpoint, this gave me power. More than 0:15:12.280 --> 0:15:16.920 three million Lomber people went to vote, and this is 0:15:16.960 --> 0:15:21.720 the difference in any negotiating, tough negotiation with the government. 0:15:22.040 --> 0:15:25.960 President Maroni, can you just take a step back and explain, 0:15:26.120 --> 0:15:29.960 is it a coincidence that we're seeing these independence or 0:15:30.160 --> 0:15:35.440 autonomy movements in the economic capitals of a number of 0:15:35.640 --> 0:15:39.680 European regions, Because the Catalonia region is also the economic 0:15:39.760 --> 0:15:44.320 capital of Spain, much like Lombardy. I don't think it's 0:15:44.320 --> 0:15:47.800 a coincidence. The problem is that Europe is not working. 0:15:49.160 --> 0:15:53.200 The governance of Europe from a political viewpoint, is not working. 0:15:53.320 --> 0:15:57.240 It's a sum of individual member states. Each of them 0:15:57.400 --> 0:16:01.960 is working as individual member states. We have nothing such 0:16:02.000 --> 0:16:07.360 as the US system federal system, and this uh is 0:16:08.320 --> 0:16:12.920 means that many important regions such as Catalonia Lombardi and 0:16:13.040 --> 0:16:17.320 Ventito want Europe to change. I think, I hope that 0:16:17.480 --> 0:16:23.680 what is happening in Europe is hurt by the European Union, 0:16:23.720 --> 0:16:27.280 the European commissioned, the European Parliament, because we need to 0:16:27.440 --> 0:16:32.640 change the governance of Europe from a europe from a 0:16:32.680 --> 0:16:37.600 political viewpoint. This is the signal I think people has 0:16:38.200 --> 0:16:42.480 done with our referendum and also in Catalonia. What would 0:16:42.480 --> 0:16:45.480 you like to see changed? Because I believe that one 0:16:45.480 --> 0:16:48.680 of the points during the referendum was that the two 0:16:48.720 --> 0:16:52.400 regions account for about thirty percent of the economic output 0:16:52.680 --> 0:16:57.320 of Italy, that includes industrial, agricultural services, finance and so on. 0:16:58.040 --> 0:17:00.280 Do you want more of the tax money to day 0:17:00.360 --> 0:17:04.719 in northern Italy rather than go to places in southern 0:17:04.760 --> 0:17:10.480 Italy and Sicily, Yes, exactly. We pay a lot of taxes. Uh. 0:17:10.600 --> 0:17:14.760 If you the difference between what we pay in taxes 0:17:14.800 --> 0:17:17.560 and what we get back from the state from the 0:17:17.600 --> 0:17:24.520 government is a huge amount of taxes is fifty four 0:17:24.560 --> 0:17:29.080 billion euros per year. The difference I want at least 0:17:29.200 --> 0:17:33.400 half of this amount, twenty seven billion euros. So we'll 0:17:33.480 --> 0:17:38.240 let me to lower the level of taxation for companies, 0:17:39.080 --> 0:17:43.359 to increase investments from abroad and to put Lombardy on 0:17:43.400 --> 0:17:47.520 the top of the regions in Europe. I'm trying to understand. 0:17:47.760 --> 0:17:51.120 You were saying Europe is not working. The European Union 0:17:51.200 --> 0:17:54.600 is not working, and so that's why the economic powerhouses 0:17:54.800 --> 0:17:58.480 in Europe are sort of putting their foot down. What 0:17:58.600 --> 0:18:01.920 would you like to see on a European Union level 0:18:02.320 --> 0:18:06.640 that would make it work? What we call the Europe 0:18:06.680 --> 0:18:11.320 of the Regions, not of twenty eight twenty nine eight 0:18:11.440 --> 0:18:16.080 member states. We have ten million people. We would be 0:18:16.240 --> 0:18:23.280 the sixth country in Europe um, but we don't count. 0:18:23.600 --> 0:18:28.399 We as Lombardy region don't have any power to interfere 0:18:28.440 --> 0:18:33.119 with European decisions. That's why we want to Europe to 0:18:33.440 --> 0:18:38.760 move from what is now twenty eight member states into 0:18:38.840 --> 0:18:43.760 the Europe of the Region's taken into account, then Lombardy, 0:18:43.960 --> 0:18:50.840 Catalonia and regions are something special. That's our our vision, 0:18:51.119 --> 0:18:54.439 President Modony, and that that's highly radical. That's basically saying, 0:18:54.520 --> 0:18:57.800 break up Italy, break up Spain. It's not about them, 0:18:58.000 --> 0:19:01.560 it's Lombardy and it's got a lot. Is that you're 0:19:01.560 --> 0:19:07.680 asking for We are asking in uh uh were What 0:19:07.800 --> 0:19:10.919 we want is that Lombardi event of the regions, the 0:19:11.040 --> 0:19:17.960 power the powerful regions in Europe can be taken into 0:19:18.000 --> 0:19:22.800 account more than what is now. We don't have nothing 0:19:22.880 --> 0:19:29.199 against Italy. Of course, our ferendum was inside the nation 0:19:29.359 --> 0:19:32.520 Italian nation. But I think that it will be useful 0:19:32.800 --> 0:19:35.800 or so for Italy and the regions in the South. 0:19:36.640 --> 0:19:42.480 If if Lombardi is more has more money and more 0:19:42.520 --> 0:19:45.960 competencence and power have So it seems to be that 0:19:46.000 --> 0:19:48.760 there's this conflict between the political unity, let's say of 0:19:48.800 --> 0:19:53.280 Italy or even in Spain, with the economic and financial reality, 0:19:53.359 --> 0:19:56.879 which is this is all about money. Right, your rich region, 0:19:57.160 --> 0:19:59.159 you don't want that money to go to regions that 0:19:59.280 --> 0:20:01.840 have less money. Yet I don't want money to go 0:20:01.920 --> 0:20:05.280 to the Italian government because they don't use our money 0:20:05.359 --> 0:20:08.919 the right way. I am willing to give money to 0:20:09.000 --> 0:20:12.520 the regions directly to the regions of the South in 0:20:12.560 --> 0:20:16.760 a bit to be relationship. This is what is useful 0:20:17.200 --> 0:20:21.359 for the South. This is my vision. And now we 0:20:21.400 --> 0:20:27.000 are trying to uh with the government to find a solution, 0:20:27.119 --> 0:20:31.560 a common solution, not against the government, not against Italy, 0:20:32.000 --> 0:20:34.720 but for the help of the original of the South. 0:20:35.400 --> 0:20:38.159 Robert to Maroni thank you so much for being with us. 0:20:38.240 --> 0:20:42.600 President of the Region of Lombardy, which is his presidency 0:20:42.640 --> 0:20:45.439 is based in Milan in Italy, but he's joining us 0:20:45.440 --> 0:21:00.520 in our Bloomberg eleven three studios in New York focused 0:21:00.560 --> 0:21:03.200 on fixed income is brought to by PIMCO for investors 0:21:03.200 --> 0:21:06.320 who demand more than the markets deliver. All investments contain 0:21:06.440 --> 0:21:10.679 risk and may lose value. Consult your investment professional before investing, 0:21:10.720 --> 0:21:12.560 well before we do anything where we go on, check 0:21:12.560 --> 0:21:15.280 in with Simon Ballard. Here's our global credit strategist for 0:21:15.320 --> 0:21:18.359 Bloomberg News based in London. Simon, always a pleasure. I'm 0:21:18.359 --> 0:21:20.280 going to give you a choice here. This is, you know, 0:21:20.359 --> 0:21:23.879 the trifecta. You get to talk either about inflation or 0:21:23.920 --> 0:21:28.320 deflation in the Eurozone, Italy and what the effects of 0:21:28.640 --> 0:21:32.120 quantitative easing have had on the economy or not. And 0:21:32.440 --> 0:21:36.080 the alternative for Germany, the Nationalist party that won seats 0:21:36.080 --> 0:21:41.240 in the Bundestag calling for a lawsuit to question quantitative 0:21:41.240 --> 0:21:43.720 eything from the ECB. Which one of those, uh, do 0:21:43.760 --> 0:21:46.120 you want to kick off? Whichever one we pick, we're 0:21:46.119 --> 0:21:49.240 all gonna We're gonna come back to inflation. I think, indeed, 0:21:49.280 --> 0:21:52.080 go for it the all the lack of inflation, and 0:21:52.119 --> 0:21:53.440 the and and the fact that the you know, the 0:21:53.480 --> 0:21:55.440 e c B. Here we are four years into into 0:21:55.520 --> 0:21:58.400 quantitative easing and they're still trying to chase that two 0:21:58.440 --> 0:22:03.000 percent close to target that that they're wanting. So um, 0:22:03.040 --> 0:22:05.679 you know, be it bit directly in Germany, Beard in Italy. 0:22:06.080 --> 0:22:08.520 You know, the lack of inflation is what's keeping monetary 0:22:08.520 --> 0:22:11.280 policy accommodative um at these sort of levels, which is 0:22:11.280 --> 0:22:15.360 continuing to fuel equities higher and risk assets generally sort 0:22:15.359 --> 0:22:18.359 of keeping the keeping the flames going. Simon, when you 0:22:18.440 --> 0:22:21.679 talk to band fund managers, are they basically asleep? Are 0:22:21.720 --> 0:22:23.280 they basically I don't care, just put it on an 0:22:23.280 --> 0:22:26.000 autopilot by everything. I don't care. There's nothing that could 0:22:26.000 --> 0:22:29.040 shake this until they see a catalyst, until they feel 0:22:29.040 --> 0:22:31.879 there's a catalyst for change. Then yes, to a certain extent, 0:22:31.920 --> 0:22:34.840 there is that, although you do sense that they're becoming 0:22:34.880 --> 0:22:36.200 a little bit more how should I put it, a 0:22:36.200 --> 0:22:38.280 little bit more discerning in their approach to risk. And 0:22:38.280 --> 0:22:40.800 we've seen you know, a couple of high yield deals recently, 0:22:40.840 --> 0:22:44.439 sub investment grade deals having a little bit more of 0:22:44.480 --> 0:22:48.040 investor push back. There was a deal from from Shop Direct. 0:22:48.119 --> 0:22:51.440 Last week, um It had an fr entranch. Investors came 0:22:51.480 --> 0:22:54.040 back said the risks, the covenants associated with the name 0:22:54.280 --> 0:22:57.440 were a little bit too much for them to stomach, 0:22:57.800 --> 0:22:59.879 so they pulled back and they cut the fr entranch 0:23:00.480 --> 0:23:03.240 end floating floating rate notes, right, I apologize as a 0:23:03.240 --> 0:23:05.200 floating rate notes. So they went with a fixed rate 0:23:05.280 --> 0:23:08.680 coupon trance. The yield on that was had had to 0:23:08.720 --> 0:23:10.680 be pushed back from seven to seven and three quarter 0:23:10.760 --> 0:23:12.520 percent may not seem a huge amount, but in the 0:23:12.560 --> 0:23:15.639 context of a have a multi hundred billion dollar hundred 0:23:15.720 --> 0:23:19.439 hundred billion pounds transaction, it is. It just shows that 0:23:19.480 --> 0:23:21.359 investors have become a little bit more concerned about the 0:23:21.440 --> 0:23:24.040 underlying credit fundamental So they're not just chasing yield in 0:23:24.040 --> 0:23:26.200 this environment. They are looking at the you know, the 0:23:26.359 --> 0:23:29.199 the risk reward that they potentially will be left holding 0:23:29.480 --> 0:23:32.080 if and when inflation starts pick up, if and when 0:23:32.359 --> 0:23:36.200 yields start to to to rise more significantly. Simon, is 0:23:36.240 --> 0:23:39.560 there any clear understanding as to why it would cost 0:23:39.600 --> 0:23:43.320 twice as much to borrow money from the UH from 0:23:43.320 --> 0:23:45.680 the markets in France and it does in Germany? Looking 0:23:45.720 --> 0:23:48.720 at ten year yields. I mean basically there you're just 0:23:48.760 --> 0:23:51.440