WEBVTT - Bloomberg Wall Street Week: Sachs, Clayton & Panetta 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.880 economy continues to send mixed signals. The financial stories that 0:00:10.000 --> 0:00:13.560 cheap our world, fed action to con concerns over dollar liquidity, 0:00:13.640 --> 0:00:16.599 and encouraging China data. The five hundred wealthiest people in 0:00:16.640 --> 0:00:19.560 the world. Through the eyes of the most influential voices 0:00:19.880 --> 0:00:22.880 Larry Summers, the former Treasury Secretary, star Ward CEO, Kevin 0:00:22.960 --> 0:00:26.640 Johnson sec Chairman J Clayton. Bloomberg wool Street Week with 0:00:26.760 --> 0:00:31.240 David Weston from Bloomberg Radio. A nation recoils in horror 0:00:31.440 --> 0:00:33.919 and the markets look the other way on hopes of 0:00:33.920 --> 0:00:37.599 a brighter tomorrow. This is Bloomberg Wall Street Week. I'm 0:00:37.680 --> 0:00:41.040 David Weston. Just when you thought it couldn't get any worse, 0:00:41.400 --> 0:00:45.200 it did. On top of a pandemic and a cratering economy, 0:00:45.479 --> 0:00:48.640 we faced a week of demonstrations and riots as people 0:00:48.680 --> 0:00:51.360 took to the streets to protest the brutal killing of 0:00:51.360 --> 0:00:55.320 a black man in Minneapolis, and President Trump he said 0:00:55.400 --> 0:00:58.600 he would send in federal troops to quell the disturbances. 0:00:58.880 --> 0:01:01.880 We asked Columbia Economy Jeffrey Sachs about the causes of 0:01:01.880 --> 0:01:04.880 this chronic inequality and what could be done about it. 0:01:05.160 --> 0:01:08.640 I think digitization has played a big role in both 0:01:08.880 --> 0:01:13.640 raising overall output but shifting it to a smaller and 0:01:13.720 --> 0:01:19.640 smaller part of society, and the COVID epidemic is probably 0:01:20.840 --> 0:01:25.440 going to result in a dramatic increased concentration of wealth. 0:01:25.880 --> 0:01:31.520 Think about it. Jeffrey Dizos, owner of Amazon, founder of Amazon, 0:01:33.240 --> 0:01:40.000 has increased his wealth by an estimated thirty five billion 0:01:40.080 --> 0:01:43.479 dollars since the start of this year, at a time 0:01:43.520 --> 0:01:49.440 that we have mass unemployment. We have the greatest unemployment, 0:01:49.960 --> 0:01:55.080 the largest loss of jobs since the Great Depression, rivaling 0:01:55.120 --> 0:01:58.800 the Great Depression. And yet the stock market is up 0:01:59.640 --> 0:02:07.480 and uh some of the big tech UH Titans are 0:02:07.800 --> 0:02:11.000 booming in their wealth. So what's happening, I think, is 0:02:11.080 --> 0:02:15.280 that we're seeing this dramatic wiping out of a large 0:02:15.360 --> 0:02:19.360 part of our economy, the brick and mortar sector, a 0:02:19.480 --> 0:02:23.280 huge amount of shifting online, and that is part of 0:02:23.320 --> 0:02:27.120 this digital trend that already has been leading to the 0:02:27.160 --> 0:02:30.480 concentration of income and wealth. When the dust settles, I'm 0:02:30.520 --> 0:02:35.399 afraid we're gonna probably have the greatest increase of inequality 0:02:35.480 --> 0:02:37.800 that we've ever had in a short period of time, 0:02:39.600 --> 0:02:42.240 which is saying a good deal because going into this 0:02:42.280 --> 0:02:44.400 before the pandemic, we were not in great shape, and 0:02:44.400 --> 0:02:46.920 inequality it was growing to a substantial degree. There are 0:02:46.919 --> 0:02:50.120 remarkable statistics. I know you've seen that. For example, back 0:02:50.120 --> 0:02:54.640 in seventeen, the net worth of the media and African 0:02:54.639 --> 0:02:58.600 American family was ten percent that of the median white family. 0:02:58.639 --> 0:03:00.120 So we had a problem going in and then, as 0:03:00.160 --> 0:03:01.880 you point out, if you look at the COVID loss 0:03:01.919 --> 0:03:05.680 of jobs, it was greatly disproportionate on Hispanics and on blacks. 0:03:06.320 --> 0:03:08.840 What can we do to remedy that at this point 0:03:08.840 --> 0:03:10.560 because what we're seeing right now I think it is 0:03:10.600 --> 0:03:14.800 certainly about police brutality, but it's about much more. It's 0:03:14.880 --> 0:03:18.680 probably the case that when the calculations are made carefully, 0:03:18.760 --> 0:03:23.519 that the richest twenty Americans or so all white I 0:03:24.000 --> 0:03:28.320 believe to be the case, have more net worth than 0:03:28.480 --> 0:03:32.800 all the financial wealth of the African American forty million 0:03:33.120 --> 0:03:37.800 people in American society. Don't. I don't guarantee the number. 0:03:37.880 --> 0:03:40.040 I say this has to be looked at. But these 0:03:40.040 --> 0:03:45.320 are the relative orders of magnitude that we're talking about 0:03:44.480 --> 0:03:48.640 the top billionaires. If you take the top twenty thirty, 0:03:49.160 --> 0:03:53.040 I have well over a trillion dollars of net worth. 0:03:53.720 --> 0:03:57.520 That's something like the financial wealth in the African American 0:03:57.560 --> 0:04:01.480 community of forty million people. It's unning what is happening 0:04:01.480 --> 0:04:07.520 in terms of the shocking, unbelievable, unprecedented wealth at the 0:04:07.680 --> 0:04:13.040 very very top. He's himself with a hundred fifty billion 0:04:13.120 --> 0:04:16.960 dollars of net worth, something we cannot get our heads around. 0:04:17.600 --> 0:04:21.240 And then people losing jobs by the tens of millions, 0:04:21.279 --> 0:04:27.200 with absolutely a disproportionate burden being felt by minority communities. 0:04:27.240 --> 0:04:30.320 This is desperate. What do we have to do about it? 0:04:30.360 --> 0:04:34.080 We have to become a decent society where everybody has 0:04:34.120 --> 0:04:39.320 access to healthcare, everybody has access to education. Uh, you 0:04:39.360 --> 0:04:42.760 don't have a generation of the students with one and 0:04:42.760 --> 0:04:47.279 a half trillion dollars of debt now completely unpayable because 0:04:47.279 --> 0:04:52.320 the prospects have worsened dramatically, But it was unpayable beforehand. 0:04:52.760 --> 0:04:57.200 And that requires companies like Amazon to pay some taxes, 0:04:57.600 --> 0:05:00.400 not to ask for tax breaks from around the country, 0:05:00.400 --> 0:05:03.320 but to pay their taxes. It requires the richest people 0:05:03.320 --> 0:05:06.760 to pay taxes. It requires, in my view of tax 0:05:06.839 --> 0:05:11.039 on wealth, which is so concentrated right now, that we're 0:05:11.040 --> 0:05:14.320 going to wake up. In fact, we're not even waking up. 0:05:14.360 --> 0:05:17.080 We know it, we see it. We're awake right now 0:05:17.160 --> 0:05:22.400 that the budget deficit will be some of GDP perhaps, 0:05:23.080 --> 0:05:27.279 and then we're going to be told by the Conservatives 0:05:27.360 --> 0:05:30.760 representing the voices of the richest people, Oh, we can't 0:05:30.760 --> 0:05:34.720 do anymore. We're gonna have to cut benefits to the 0:05:34.760 --> 0:05:39.800 poor because of the large budget deficits. So it's an 0:05:39.880 --> 0:05:44.640 extraordinary time by any standard, David. And the concentration of 0:05:44.720 --> 0:05:51.599 wealth not a deliberate part of this epidemic, but it 0:05:51.680 --> 0:05:56.040 seems to be the fallout of the epidemic is extraordinary. 0:05:56.240 --> 0:06:00.160 One more point I would add on this. The FED has, 0:06:00.200 --> 0:06:05.440 of course issue the trillions of dollars of new credits, 0:06:05.440 --> 0:06:08.240 but the way our system works, it's not credits for 0:06:08.720 --> 0:06:13.880 broad society. It's credits that go through the already large 0:06:13.960 --> 0:06:17.960 concentrations of wealth and allow them to buy up even 0:06:18.000 --> 0:06:22.480 more of the assets on a fire sale basis so easy. 0:06:22.560 --> 0:06:25.880 FED credits after two thousand and eight was part of 0:06:26.520 --> 0:06:30.479 the increased concentration of wealth after two thousand eight. Now 0:06:30.560 --> 0:06:34.680 we're seeing it again in two thousand twenty that what 0:06:34.839 --> 0:06:38.120 the FEDS doing to keep the economy from collapsing is 0:06:38.200 --> 0:06:44.080 also going to have an effect on increasing the already 0:06:44.120 --> 0:06:48.560 almost unimaginable inequality of wealth. That was Professor Jeffrey Sachs 0:06:48.560 --> 0:06:51.279 of Columbia. Coming up, we hear from the Chairman of 0:06:51.279 --> 0:06:54.760 the SEC, J Clayton, about how the markets are working 0:06:54.880 --> 0:06:58.560 despite all the bad news and the volatility. That's next 0:06:58.600 --> 0:07:07.640 on Wall Street Week on bloom Board. This is Bloomberg 0:07:07.640 --> 0:07:11.680 Will Street Week with David Weston from Bloomberg Radio. The 0:07:11.720 --> 0:07:14.400 markets have been put through their paces this year so far, 0:07:14.800 --> 0:07:18.239 from a pandemic to an academic collapse to civil unrest, 0:07:18.640 --> 0:07:21.640 but through it all, the man responsible for overseeing those markets, 0:07:21.760 --> 0:07:24.960 SEC Chairman Jay Clayton says that they have held up well. 0:07:25.600 --> 0:07:30.600 The bedrock of our system is good financial information UM 0:07:30.640 --> 0:07:33.080 and this this asymmetry, you can call it, an on 0:07:33.200 --> 0:07:37.960 level playing field with Chinese listed companies versus other companies 0:07:38.440 --> 0:07:42.000 from non US jurisdictions listed, has gone on for too 0:07:42.040 --> 0:07:47.120 long and first step, let's make sure investors understand it. 0:07:47.880 --> 0:07:51.320 Second step, and the administration is now looking at this. 0:07:52.000 --> 0:07:54.760 UH Senator Kennedy and Van hollend have a bill that 0:07:54.840 --> 0:07:57.680 has a very sensible approach to this, which is give 0:07:57.760 --> 0:08:04.920 people time to level that asymmetric or on level playing field. Uh, 0:08:05.200 --> 0:08:06.960 now we know about it. Now we gotta figure out 0:08:07.000 --> 0:08:09.800 what we're gonna do about it. Well, it is disclosure 0:08:09.920 --> 0:08:11.960 enough in this situation as a practical letter. I mean 0:08:12.080 --> 0:08:14.160 there there are now proposals up on the hill as 0:08:14.160 --> 0:08:16.040 you know, the Senate has passed it would say if 0:08:16.040 --> 0:08:17.680 a company, I think it's the rules. If you don't 0:08:17.800 --> 0:08:20.440 allow access to the audit papers for three concent of years, 0:08:20.440 --> 0:08:23.840 you get delisted. Do you need that kind of power? Well, 0:08:24.200 --> 0:08:27.480 first step disclosure. But I but I do think that 0:08:28.040 --> 0:08:31.880 consider whether more to level the playing field. And I 0:08:31.920 --> 0:08:34.680 think the bill you mentioned that, the Kennedy van Hollenville, 0:08:34.760 --> 0:08:36.719 it's very sensible way to look at this if you're 0:08:36.720 --> 0:08:38.800 going to do more, because it gives people a period 0:08:38.800 --> 0:08:41.920 of time, uh to level the playing field before you 0:08:41.920 --> 0:08:44.000 would take any action. Uh. You know, I'm not a 0:08:44.000 --> 0:08:47.080 guy who wants to take like precipitous Uh, you know, 0:08:47.240 --> 0:08:49.160 hit the nail on the head with the hammer tomorrow. 0:08:49.679 --> 0:08:52.800 But you know, I like the way they've approached it 0:08:52.840 --> 0:08:54.600 and that there's a period of time to come into 0:08:54.600 --> 0:08:57.640 compliance and if you don't, then it's time to um 0:08:58.120 --> 0:09:02.440 take take measures beyond us disclosed j from You're having 0:09:02.440 --> 0:09:04.920 watched this over some period of time. Uh, And I 0:09:04.920 --> 0:09:06.920 know you don't want to name any individual companies, so 0:09:07.000 --> 0:09:09.520 I won't name any individual companies. But is it across 0:09:09.559 --> 0:09:12.040 the board with Chinese public trading companies or is it 0:09:12.080 --> 0:09:14.160 more problem with some of the smaller or maybe up 0:09:14.200 --> 0:09:15.920 and coming ones as opposed to some of the really 0:09:15.960 --> 0:09:19.040 big megacap companies that we all know the names of 0:09:19.440 --> 0:09:22.679 that have been publicly traded for a while. Well, well, David, 0:09:22.720 --> 0:09:24.760 you you you bring up a good question. Uh, but 0:09:25.520 --> 0:09:30.040 a point that applies in every market. Financial controls, audit 0:09:30.080 --> 0:09:32.800 procedures and the like. They're different for larger companies than 0:09:32.840 --> 0:09:36.720 they are for smaller companies. And uh, there are a 0:09:36.760 --> 0:09:41.120 lot of smaller companies from that have operations in China 0:09:41.160 --> 0:09:43.839 that are listed on our markets, and investors might look 0:09:43.880 --> 0:09:46.720 at those differently from the multi caaps or or from 0:09:46.800 --> 0:09:50.199 state owned enterprises. And uh, I'm not I'm not an 0:09:50.240 --> 0:09:53.360 expert on international investing, but I but I do know 0:09:53.520 --> 0:09:55.720 enough to know that you shouldn't look at a particular 0:09:55.800 --> 0:09:59.000 jurisdiction in a monolithic way. Uh, you shouldn't. You should 0:09:59.040 --> 0:10:01.040 look at that as to whether you're looking at a 0:10:01.040 --> 0:10:05.120 smaller company, Uh, an international company that derives a lot 0:10:05.120 --> 0:10:07.760 of its revenues from outside of that jurisdiction, or a 0:10:07.800 --> 0:10:14.000 state of enterprises which has its own risks and reward profiles. Jay, 0:10:14.559 --> 0:10:17.520 do you talk with your counterparts who are security regulars 0:10:17.640 --> 0:10:20.680 in Beijing? In China? I mean, there have been times 0:10:20.679 --> 0:10:22.640 when the Chinese government said, we really want to try 0:10:22.640 --> 0:10:25.360 to coordinate, we want to harmonize, we want to open 0:10:25.440 --> 0:10:28.880 up our markets, our securities markets. Is there any prospect 0:10:28.920 --> 0:10:32.800 of actually some of that harmonization coming about? Uh? Look, 0:10:32.800 --> 0:10:36.160 we do talk. UM talked to my my counterparts around 0:10:36.160 --> 0:10:39.640 the world. Um. There's nothing that I have said to 0:10:39.679 --> 0:10:41.480 you that I that I haven't said to them, and 0:10:41.480 --> 0:10:44.599 that this is a problem that I believe needs to 0:10:44.640 --> 0:10:48.480 be addressed. Um, And Uh, I hope it can be. 0:10:50.320 --> 0:10:53.880 Are you hopeful do you think it will be? I'm look, 0:10:53.880 --> 0:10:56.839 I'm an optimistic guy, but I'm but I'm optimistic because 0:10:56.840 --> 0:10:58.920 I know that at some point, Uh. You know, I 0:10:59.120 --> 0:11:00.880 hope is not a strato of ge You gotta you 0:11:00.960 --> 0:11:03.480 gotta do other things as well. So you said the 0:11:03.520 --> 0:11:06.520 legislations pending has been passed in the Senate. Uh sense, 0:11:06.760 --> 0:11:08.960 I think you said, sensible way of approaching it? Is 0:11:09.000 --> 0:11:10.800 it doable? Is it's something as you look at the 0:11:10.840 --> 0:11:14.960 SEC could enforce without too much difficulty? Oh? Oh yes, 0:11:15.080 --> 0:11:17.000 Now it's a it's a it's a sensible piece of 0:11:17.080 --> 0:11:20.679 legislation and it and it uh captures the issue in 0:11:20.720 --> 0:11:23.600 a way like I I try very hard not to 0:11:23.880 --> 0:11:26.679 uh to tell Congress what to do. It's the other 0:11:26.720 --> 0:11:29.400 way around, they tell what to do. Um. But this 0:11:29.480 --> 0:11:31.560 is a this is a very sensible way to approach 0:11:31.840 --> 0:11:35.360 a parliament's been around for a while. What about some 0:11:35.440 --> 0:11:38.280 of the issues you're working on before the pandemic came up, 0:11:38.400 --> 0:11:41.800 talk about like reviving revisions to proxy rules. Do those 0:11:41.840 --> 0:11:43.400 continue a pace or do you have to put those 0:11:43.400 --> 0:11:46.839 to one side? Now? We we have not put our 0:11:47.120 --> 0:11:50.280 policy making agenda to the side. Um. We are we 0:11:50.360 --> 0:11:54.160 are a very when you talk about organizations um being 0:11:54.160 --> 0:11:58.360 affected in different ways by the operational constraints of social 0:11:58.400 --> 0:12:03.720 distancing and uh uh the health and safety uh structures 0:12:03.760 --> 0:12:06.960 that we live by. We're a very lucky organization where 0:12:07.000 --> 0:12:11.560 we're we can operate fairly effectively UM in a remote 0:12:11.840 --> 0:12:16.880 UH capacity, and we've been doing so. And look the 0:12:17.440 --> 0:12:21.480 women and men in those policy making divisions. UH, they're 0:12:21.480 --> 0:12:25.400 committed to improving our markets and modernizing our markets. I'm 0:12:25.440 --> 0:12:27.120 not going to put that on hold unless i have to. 0:12:28.280 --> 0:12:30.000 And so, for example, the proxy rules, where do they 0:12:30.040 --> 0:12:34.080 stand now? We're in there are are there are our 0:12:34.120 --> 0:12:36.720 agenda to be finished in this fiscal year, and I 0:12:36.800 --> 0:12:41.360 expect to haven't finished in this fiscal year. UH. I'm 0:12:41.440 --> 0:12:44.680 so pleased with the rigor that our staff has applied 0:12:45.080 --> 0:12:47.720 to all the comments we've received, and I think we're 0:12:47.720 --> 0:12:53.120 on schedule to finish them UH during the fiscal year. UM. 0:12:53.640 --> 0:12:57.160 People don't know about the SEC fifical year, so by 0:12:57.200 --> 0:12:59.080 the end of this by the end of this period. 0:12:59.840 --> 0:13:01.760 And how do you feel about bringing people back to 0:13:01.760 --> 0:13:03.559 work at the SEC. I think you said at least 0:13:03.640 --> 0:13:08.720 until July fifteen. Do you think that that's realistic? Well, David, 0:13:09.040 --> 0:13:12.880 I do think it's UM. It is realistic because we 0:13:12.920 --> 0:13:16.199 are able to function. Every organization is different, and I'm 0:13:16.200 --> 0:13:20.959 not making choices for other organizations, but this organization functions 0:13:21.080 --> 0:13:24.880 very well in a virtual environment. There are a number 0:13:24.920 --> 0:13:28.719 of functions that we have that would improve UM with 0:13:28.760 --> 0:13:31.040 people on site. There are some functions where you do 0:13:31.160 --> 0:13:33.640 need people inside. Look, we live in a we live 0:13:33.679 --> 0:13:37.040 in a country where due process is important, and we 0:13:37.120 --> 0:13:41.439 have people whom we're bringing actions against, and if they 0:13:41.520 --> 0:13:46.679 want the benefit of being interviewed face to face or 0:13:47.679 --> 0:13:51.559 being able to in as virtual face to face environment 0:13:51.559 --> 0:13:53.360 as possible, we need to provide that to him. We're 0:13:53.760 --> 0:13:56.120 you know, we believe in due process. So those types 0:13:56.120 --> 0:13:59.880 of things, UM, we have to do. But by and law, 0:14:00.280 --> 0:14:03.600 we can operate very effectively remotely. And what I want 0:14:03.600 --> 0:14:07.720 to do is as as things get back to normal, 0:14:07.800 --> 0:14:10.439 I hope they do. I hope they do bring bring 0:14:10.480 --> 0:14:14.240 people back in those areas that are most acutely affected 0:14:14.280 --> 0:14:19.200 by remote working, and then go from there. UM, keeping 0:14:19.200 --> 0:14:23.000 health and safety front of mind at all times. So 0:14:23.920 --> 0:14:26.520 I have the luxury of that given the way we work. 0:14:26.720 --> 0:14:31.040 I know others others don't, UM, but That's how I'm 0:14:31.040 --> 0:14:34.680 looking at it. Here that was SEC Chairman Jay Clayton 0:14:35.280 --> 0:14:38.920 coming up. We ask Washington veteran former Defense Secretary Leon 0:14:39.000 --> 0:14:42.239 Panetta what the government needs to do to address a pandemic, 0:14:42.680 --> 0:14:46.200 a steep economic downturn and still unrest coming all at 0:14:46.240 --> 0:14:49.000 the same time. That's next on Wall Street Weekend on 0:14:49.200 --> 0:15:02.280 Bloomberger This is Bloomberg Willis week with David Weston from 0:15:02.400 --> 0:15:05.280 Bloomberg Radio. For the first time in history, the United 0:15:05.280 --> 0:15:09.040 States faces a pandemic, an economic downturn, and civil unrest 0:15:09.080 --> 0:15:12.320 all at the same time. Leon Panetta faced his share 0:15:12.320 --> 0:15:14.720 of crisis when he served in government, including as chief 0:15:14.720 --> 0:15:17.760 of Staff to President Clinton when Jesse Jackson was giving 0:15:17.760 --> 0:15:20.560 those remarks on the Mall. He went on to serve 0:15:20.600 --> 0:15:23.360 as the Director of the CIA and the Secretary of Defense, 0:15:23.600 --> 0:15:26.680 and his experience taught him how an administration deals with 0:15:26.720 --> 0:15:30.400 a series of crises that come all at the same time. Well, 0:15:30.440 --> 0:15:34.440 I I always found, uh, chief of Staff and then 0:15:34.520 --> 0:15:39.000 later at CIA Director and Secretary of Defense, that when 0:15:39.040 --> 0:15:43.080 facing a crisis, and when facing a series of crisis 0:15:43.120 --> 0:15:47.560 as we are now, the best approaches to gather the 0:15:47.640 --> 0:15:51.840 National Security Council together UH and determine what the best 0:15:51.880 --> 0:15:56.160 strategy is to deal with each of these crises UH, 0:15:56.240 --> 0:16:00.000 and to develop auctions obviously to present to the President, 0:16:00.520 --> 0:16:04.160 but to try to develop at least a common strategy 0:16:04.720 --> 0:16:07.840 that everybody can support and and that is in the 0:16:07.920 --> 0:16:11.480 best interests of the country in terms of dealing with 0:16:11.520 --> 0:16:14.480 that crisis. So I think this is a moment when 0:16:14.480 --> 0:16:18.160 the president needs to listen to the advice of his 0:16:18.240 --> 0:16:23.280 most experienced advisers. That's critically important at a time when 0:16:23.280 --> 0:16:27.560 you're facing this kind of serious threat to the country. Well, 0:16:27.640 --> 0:16:29.720 we heard from one senior advisor to day in a 0:16:29.800 --> 0:16:32.840 Secretary Defense, but it was public, it wasn't behind closed doors. 0:16:33.480 --> 0:16:35.640 Is there any doubt that the president has the authority 0:16:35.640 --> 0:16:37.800 of the authority to send in photo troops if he 0:16:37.840 --> 0:16:41.120 so chooses. There is this Insurrection Act, Well, look, I 0:16:41.200 --> 0:16:44.640 think it's it's clear that the president could assert the 0:16:44.680 --> 0:16:51.200 Insurrection Act. But again, uh, this country has recognized that 0:16:51.480 --> 0:16:54.960 the purpose of our military is to be trained to 0:16:55.080 --> 0:16:59.760 confront foreign adversaries in combat, not to be used for 0:17:00.080 --> 0:17:04.560 a control or law enforcement. A posse Commentatis Act was 0:17:04.640 --> 0:17:07.760 passed in the eighteen hundreds for the purpose of making 0:17:07.840 --> 0:17:10.800 clear that the US military ought not to take the 0:17:10.840 --> 0:17:14.880 place of of law enforcement. And so for that reason, 0:17:15.200 --> 0:17:19.159 I commend Secretary of the Secretary of Defense esper Or 0:17:19.240 --> 0:17:24.080 taking the position that he took, because military leaders almost 0:17:24.119 --> 0:17:28.360 in unison, UH, do not believe that our military ought 0:17:28.400 --> 0:17:32.080 to be used, uh to to fight our own people. 0:17:32.160 --> 0:17:34.719 It ought to be used to fight foreign enemies. Our 0:17:34.800 --> 0:17:37.200 federal troops even trained to do this. I mean to 0:17:37.200 --> 0:17:40.200 pick up on your point. Are they trained to deal 0:17:40.240 --> 0:17:42.159 with crowd control and things like that? Because we have, 0:17:42.280 --> 0:17:45.640 sadly in our history seen instances where some military brunn 0:17:45.640 --> 0:17:47.520 and who are not properly trained and we had some 0:17:47.720 --> 0:17:50.800 tragic results such as can't stay You know the military, well, 0:17:51.320 --> 0:17:53.400 the federal troops. Are some of the federal troops trained 0:17:53.440 --> 0:17:55.720 to really be effective in this situation? Is this the 0:17:55.760 --> 0:17:58.320 best tool in the tool kit? I don't believe it is, 0:17:58.400 --> 0:18:04.119 because what why we train our military is to engage 0:18:04.119 --> 0:18:07.159 in combat with a foreign adversary. That's what they're trained 0:18:07.200 --> 0:18:10.679 to do. They're not trained on riot control, They're not 0:18:10.760 --> 0:18:14.920 trained on crowd control, they're not trained on law enforcement. 0:18:15.080 --> 0:18:17.160 At the same time, we have a difficult problem here 0:18:17.160 --> 0:18:19.359 that I'm know I'm sure you appreciate, which is we 0:18:19.480 --> 0:18:22.240 have I think the vast majority of protesters who are 0:18:22.320 --> 0:18:25.480 peaceful are exercising their first Amment rights to petition for 0:18:25.520 --> 0:18:28.760 redressing agreevances. But there are clearly some bad actors in 0:18:28.800 --> 0:18:31.080 some of these demonstrations who are prone to violence and 0:18:31.160 --> 0:18:35.000 trying to instigate something. But put aside the federal military 0:18:35.080 --> 0:18:37.440 as a tool, what is the best way for the government, 0:18:37.440 --> 0:18:40.160 the federal government, state governed to sort those two things out, 0:18:40.240 --> 0:18:43.840 so we maintain law and order, we protect people and property, 0:18:44.080 --> 0:18:46.400 but we also preserve the rights of those who want 0:18:46.400 --> 0:18:50.800 to peacefully protest that horrific instance out in Minneapolis. Well, 0:18:51.160 --> 0:18:54.000 I think it would be preferable rather than the president 0:18:54.359 --> 0:18:58.000 asserting that somehow he'll take control of the situation if 0:18:58.000 --> 0:19:00.680 others don't, I think the president ought to be offering 0:19:01.160 --> 0:19:06.160 law enforcement assistance to states and local communities so that 0:19:06.240 --> 0:19:08.840 they can in fact determine whether or not there are 0:19:08.960 --> 0:19:13.439 criminal elements that are trying to take advantage of these protests. 0:19:13.480 --> 0:19:17.440 That's a law enforcement issue, that's an FBI issue, that's 0:19:17.440 --> 0:19:21.680 an intelligence issue. Frankly, Uh, the federal government gets good 0:19:21.680 --> 0:19:25.879 intelligence on those that are trying to conduct those kinds 0:19:25.920 --> 0:19:28.959 of criminal activities, and so that ought to be shared 0:19:29.040 --> 0:19:33.240 with with state and local law enforcement so that they 0:19:33.280 --> 0:19:37.280 can play the primary role in trying to maintain order 0:19:37.600 --> 0:19:40.679 in their communities and in their states. Mrs Secretary, what 0:19:40.720 --> 0:19:43.320 could we as a country learn from the military on 0:19:43.359 --> 0:19:46.280 the subject of race, put aside their active involvement in 0:19:46.320 --> 0:19:49.119 any peace commum missions. But but the the U. S. 0:19:49.160 --> 0:19:52.440 Military was there ahead of allow of the rest of 0:19:51.800 --> 0:19:54.320 the of the society, going back to the days of 0:19:54.359 --> 0:19:57.280 Harry S. Truman when he was president, in integrating the military, 0:19:57.359 --> 0:19:59.560 you have a much more integrated, I think military than 0:19:59.640 --> 0:20:02.560 most companies do across the country. What have you learned 0:20:02.560 --> 0:20:05.160 from that? What could you teach society? Because goodness knows, 0:20:05.480 --> 0:20:08.040 pas we need to learn some things fast. I think 0:20:08.040 --> 0:20:10.800 the military is a is a good example for the 0:20:10.840 --> 0:20:17.520 rest of the country in terms of allowing allowing minorities, 0:20:17.720 --> 0:20:21.720 allowing others to be able to serve their country. Uh, 0:20:21.760 --> 0:20:27.320 and to be part of a unit working together to 0:20:27.440 --> 0:20:33.480 accomplish a common mission. UH. My experiences that you know, 0:20:33.560 --> 0:20:37.159 whether you're whether you're black, or whether you're brown, or 0:20:37.160 --> 0:20:40.960 whether you're a woman. Uh, that you should have the 0:20:41.040 --> 0:20:44.840 opportunity to serve this country. That was former Secretary of 0:20:44.840 --> 0:20:48.280 Defense Leon Poeta. Coming up, We wrap up the week 0:20:48.320 --> 0:20:52.080 with our special contributor Larry Summers. This is Wall Street 0:20:52.119 --> 0:21:01.359 Read on Bloomberg. This is Bloomberg Wall Street Week with 0:21:01.480 --> 0:21:05.080 David Weston from Bloomberg Radio. We wrap up our week 0:21:05.160 --> 0:21:07.840 with Harvard's Larry Summers, who, of course was Second of 0:21:07.880 --> 0:21:10.879 the Treasury and our is our very own special contributor 0:21:10.920 --> 0:21:12.800 here on Wall Street Week. So, Larry, this has been 0:21:12.800 --> 0:21:15.399 a tumultuous week. I think it's very to say. Every 0:21:15.480 --> 0:21:18.439 day we've seen the video of demonstrations and yes riots 0:21:18.440 --> 0:21:21.600 and yes looting across the country in response that tragic 0:21:21.600 --> 0:21:24.040 instance in Minneapolis. At the same time, the equity mark 0:21:24.040 --> 0:21:26.560 has just kept climbing higher and higher and higher. Why 0:21:26.600 --> 0:21:32.119 don't the markets pay any attention to the evening news? Look, 0:21:33.359 --> 0:21:38.760 it's as extraordinary a week as I've ever uh seen. 0:21:39.560 --> 0:21:45.920 Someone said that we're living through the pandemic, the nine 0:21:46.000 --> 0:21:51.919 economic collapse, the nineteen sixty eight civil unrest across America, 0:21:52.680 --> 0:21:57.760 and the Andrew Jackson presidency all at once. I haven't 0:21:57.800 --> 0:22:03.679 seen anything, lie kid. And before we talk about markets, 0:22:04.080 --> 0:22:10.920 I think we have to acknowledge that the racial injustice 0:22:11.040 --> 0:22:16.600 that has been pointed up uh by the dramatic events 0:22:16.800 --> 0:22:22.840 now almost two weeks uh old, is something that our 0:22:22.840 --> 0:22:25.320 country has been wrestling with for a long time and 0:22:25.440 --> 0:22:28.520 is going to be wrestling with for a very long 0:22:28.960 --> 0:22:34.520 uh time, uh to come. What happened on the streets 0:22:34.560 --> 0:22:41.360 of Minneapolis just can't keep happening, and there's just been 0:22:41.440 --> 0:22:49.639 a huge outpouring of anger and upset. And the critical 0:22:49.760 --> 0:22:55.480 question for our democracy is going to be whether all 0:22:55.520 --> 0:23:02.080 of that anguish and anger is channeled to instructively UH 0:23:02.280 --> 0:23:10.080 into positive change or doesn't bring about that kind of progress, 0:23:10.200 --> 0:23:13.879 in which case the cleavages in our society are only 0:23:13.960 --> 0:23:19.399 going UH to get worse. The market really doesn't seem 0:23:19.440 --> 0:23:24.120 like a very big thing relative to all of that. 0:23:24.400 --> 0:23:27.959 The market's job is to make a judgment about the 0:23:28.000 --> 0:23:33.760 profits that companies UH will learn, and in approximate sense 0:23:34.000 --> 0:23:38.000 is cosmically important. As these events are, they probably don't 0:23:38.080 --> 0:23:41.840 change UM what those earnings are going to be over 0:23:41.960 --> 0:23:46.960 some interval. But I would caution that over long time 0:23:47.000 --> 0:23:51.680 periods this kind of thing makes a very big difference. 0:23:52.440 --> 0:23:58.480 If you think back, the country almost unraveled in UH 0:23:58.840 --> 0:24:03.800 the late nineteen sixties behind the because of cleavage is 0:24:03.880 --> 0:24:10.240 associated with the Vietnam War, because of strife over issues 0:24:10.440 --> 0:24:15.240 of racial justice, and not immediately you know, if you 0:24:15.320 --> 0:24:17.800 look at what happened to the level of stock prices 0:24:17.920 --> 0:24:23.160 relative to other prices, the real sn p UH five hundred, 0:24:23.560 --> 0:24:28.320 it had its worst long decade UM in the last 0:24:28.359 --> 0:24:33.000 six or seven decades. In the decade that followed what 0:24:33.119 --> 0:24:37.240 happened in nineteen sixty eight, you saw a huge drop 0:24:37.760 --> 0:24:44.120 into seventy four or five with the Walster Watergate episode, 0:24:44.359 --> 0:24:47.960 the oil shocks, all that, and then you saw further, 0:24:49.119 --> 0:24:56.920 very steep UH decline UH into UH two. And so 0:24:57.880 --> 0:25:01.960 how America deals with all this is going to be 0:25:02.480 --> 0:25:08.320 profoundly important, I believe for America's health, and I don't 0:25:08.359 --> 0:25:12.200 think America's corporations can be healthy if America is not 0:25:12.880 --> 0:25:17.280 UM healthy. And I think enlightened business leaders have recognized that. 0:25:17.480 --> 0:25:23.199 You've seen many many CEOs UH making that point UH 0:25:23.359 --> 0:25:29.000 this week. UH. So the markets are optimistic, and I 0:25:29.040 --> 0:25:32.600 hope the markets are right in their optimism about COVID. 0:25:32.720 --> 0:25:37.320 I hope the markets are right in their optimism about 0:25:37.359 --> 0:25:43.360 the society UH coming together. UM. I'm not sure they 0:25:43.359 --> 0:25:47.120 are UH right. It seems to me there's a lot 0:25:47.240 --> 0:25:52.399 of optimism right now, and I worry that people who 0:25:52.480 --> 0:25:58.200