WEBVTT - NYC Mayor Eric Adams Indicted on Bribery Fraud Charges 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.280 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:17.040 Eastern on Effocarplay and Android Auto with the Bloomberg Business app. 0:00:17.079 --> 0:00:20.279 Listen on demand wherever you get your podcasts, or watch 0:00:20.360 --> 0:00:22.800 us live on YouTube. 0:00:23.480 --> 0:00:26.400 It was a bombshelf that happened in the last twenty 0:00:26.440 --> 0:00:30.080 four hours, and that is New York City Mayor Eric 0:00:30.120 --> 0:00:35.199 Adams indicted after federal corruption probe. Are there's video and 0:00:35.320 --> 0:00:40.440 pictures of officers rating Gracie Mansion, where the mayor lives. 0:00:40.840 --> 0:00:43.879 It's something. It is definitely a moment here in New 0:00:43.920 --> 0:00:47.280 York political history. So we wanted to talk to Scott Stringer, 0:00:47.360 --> 0:00:49.879 former New York City Comptroller, on. 0:00:49.800 --> 0:00:50.280 All of this. 0:00:50.479 --> 0:00:53.479 Scott, the latest that we've heard is that Mayor Adams 0:00:53.520 --> 0:00:56.040 is going to fight this. He definitely doesn't look like 0:00:56.080 --> 0:00:57.920 he's resigning. What is your take on that? 0:00:59.120 --> 0:01:02.800 Look, he should and must fight it. This is his 0:01:02.880 --> 0:01:06.040 life and he has to have full focus on a 0:01:06.160 --> 0:01:09.920 very serious federal indictment. But that is what he has 0:01:10.000 --> 0:01:14.240 to do for himself. Unfortunately, you can't govern the city 0:01:14.680 --> 0:01:16.840 and fight the indictment. And that is why he should 0:01:16.880 --> 0:01:19.720 step aside for the good of the city. I presume 0:01:19.959 --> 0:01:22.920 no guilt or no innocence. That's for the courts to decide, 0:01:23.160 --> 0:01:25.480 But I do think we have to be laser focused 0:01:25.520 --> 0:01:29.880 on the city. Look, the business community in particular has 0:01:29.959 --> 0:01:33.360 invested billions of dollars in the financial capital of the 0:01:33.360 --> 0:01:37.199 world called New York City. We have citizens, middle class 0:01:37.200 --> 0:01:40.080 people who are struggling to pay their rent, struggling to 0:01:40.160 --> 0:01:43.160 get their kids through school. The job of mayor is 0:01:43.200 --> 0:01:47.160 to be that person who works every single day laser focused. 0:01:47.480 --> 0:01:51.320 That cannot happen anymore in an administration where not only 0:01:51.480 --> 0:01:55.120 is the mayor indicted, but almost the entire leadership team 0:01:55.200 --> 0:01:59.120 is under some indictment or federal investigation. So, with great 0:01:59.160 --> 0:02:03.080 respect to the man, recognizing innocent until proven guilty, it 0:02:03.200 --> 0:02:06.960 is time to step aside. We've got to govern this 0:02:07.080 --> 0:02:09.679 town in a way that's never been governed before, and 0:02:09.720 --> 0:02:11.919 I think he's got to just step back and Scott. 0:02:11.960 --> 0:02:14.600 If he doesn't do that, how what's your view on 0:02:14.639 --> 0:02:16.680 the timeline of how these events can unfold? Because I 0:02:16.680 --> 0:02:20.200 just think back to last November when the FBI agents 0:02:20.280 --> 0:02:22.760 rated the home of an Adams campaign fundraiser that's really 0:02:22.800 --> 0:02:26.000 what kickstarted that, and that's ten months in the rearview mirror. 0:02:27.760 --> 0:02:30.320 Well, look, at the end of the day, that's what 0:02:30.400 --> 0:02:33.840 investigations are for. I mean, the federal government has obviously 0:02:33.960 --> 0:02:37.480 taken time to look at all of this. They're announcing 0:02:37.600 --> 0:02:43.320 charges probably as we speak. And my concern as a citizen, 0:02:43.520 --> 0:02:46.720 as a public school parent, as somebody who's managed the 0:02:46.760 --> 0:02:49.480 finances of this city for eight years. You know, this 0:02:49.560 --> 0:02:53.079 is a tender moment for New York. We have to 0:02:53.120 --> 0:02:56.560 send a signal internationally that we are open and ready 0:02:56.600 --> 0:03:00.840 for business. We cannot play the you know, the political 0:03:00.880 --> 0:03:04.080 game back and forth. We need strong leadership now. We 0:03:04.120 --> 0:03:07.560 need leadership and finance. We need leadership to actually get 0:03:07.600 --> 0:03:10.200 things done. Look, I love this city. This is a 0:03:10.200 --> 0:03:13.600 sad day for me, but I've seen corruption scandals over 0:03:13.639 --> 0:03:17.280 the years. I fought corruption my entire life, and it's 0:03:17.280 --> 0:03:19.400 a very sad moment at this point that we have 0:03:19.480 --> 0:03:20.200 to be going through this. 0:03:21.120 --> 0:03:23.680 So there's a couple of things to unpack to that 0:03:23.720 --> 0:03:25.519 with me. So as a parent of a child in 0:03:25.560 --> 0:03:28.640 public school, I totally hear you on that. In terms 0:03:28.680 --> 0:03:31.760 of a business or CEO making an investment in New 0:03:31.840 --> 0:03:34.840 York City. I'm struggling to see how this really moves 0:03:34.840 --> 0:03:37.040 the needle in that a lot of us are now 0:03:37.080 --> 0:03:41.080 desensitized to these kind of indictments and scandals, rightly or wrongly. 0:03:41.120 --> 0:03:44.800 When you have a former president also accused and convicted 0:03:44.840 --> 0:03:48.080 of crimes, everyone here is like, yeah, okay, and then 0:03:48.120 --> 0:03:50.120 let's move on. So is it really going to impact 0:03:50.160 --> 0:03:52.760 it in the way that maybe twenty years ago we 0:03:52.840 --> 0:03:53.640 would or should have. 0:03:55.120 --> 0:03:57.600 Well, I'm not going to give up on the sensibilities 0:03:57.720 --> 0:04:02.560 of both the American public and certainly New York City residents. 0:04:02.560 --> 0:04:05.240 First of all, we New Yorkers, we get this stuff. 0:04:05.320 --> 0:04:09.400 We are savvy, We've seen it all. So I don't 0:04:09.400 --> 0:04:11.240 think this is going to sit well with the public. 0:04:11.280 --> 0:04:13.240 I don't think people are going to shrug their shoulders 0:04:13.240 --> 0:04:16.400 walking to work today saying it doesn't matter. I don't 0:04:16.400 --> 0:04:19.640 think Trump's getting re elected in part because he's had 0:04:19.760 --> 0:04:24.359 criminal conduct. I think people want stable leadership. I mean, 0:04:24.440 --> 0:04:26.800 let's talk about the public schools. We have kids who 0:04:26.800 --> 0:04:30.760 are still struggling with COVID. I see, I see the 0:04:30.800 --> 0:04:34.040 difference between parents who have some resources and parents that don't. 0:04:34.360 --> 0:04:37.839 The whole public housing developments are collapsing. We're not building 0:04:38.040 --> 0:04:42.480 affordable housing fast enough. And look, the job mayor is 0:04:42.520 --> 0:04:47.039 to reach out and get to those entrepreneurs, the tech entrepreneurs, 0:04:47.440 --> 0:04:52.120 the communities that we reliant, jumpstart and pump up our economy. 0:04:52.800 --> 0:04:55.839 We want business leaders to say, you know what, we 0:04:55.880 --> 0:04:59.080 want that old New York City Compact back. We will 0:04:59.120 --> 0:05:02.200 attract the best writers to our workforce. But the job 0:05:02.240 --> 0:05:05.760 of mayor is to provide open space, public space, safety 0:05:05.800 --> 0:05:08.559 in the streets, safety in the subways, a real mental 0:05:08.560 --> 0:05:11.640 health initiative to help with homelessness. But also we've got 0:05:11.680 --> 0:05:15.240 to make sure that rather than tout a robot called 0:05:15.360 --> 0:05:19.279 K five to do policing, we actually need a policing 0:05:19.360 --> 0:05:23.320 strategy that's fair but strong, and we have to make 0:05:23.360 --> 0:05:27.320 these challenges. This mayor cannot focus on it because rightfully, 0:05:27.800 --> 0:05:30.080 he's got to focus on a major federal indictment. And 0:05:30.160 --> 0:05:31.880 I don't blame him for doing that at all. 0:05:31.960 --> 0:05:33.760 All right, Scott, we appreciate it. Thank you very much 0:05:33.800 --> 0:05:36.960 for that insight. Satstringer, former New York City Comptroller. 0:05:37.080 --> 0:05:42.080 Joining us there, you're listening to the Bloomberg Intelligence Podcast. 0:05:42.320 --> 0:05:45.560 Catch us live weekdays at ten am Eastern on applecar 0:05:45.680 --> 0:05:48.680 Play and Android Auto with the Bloomberg Business App. You 0:05:48.720 --> 0:05:51.960 can also listen live on Amazon Alexa from our flagship 0:05:52.000 --> 0:05:55.760 New York station. Just say Alexa play Bloomberg eleven. 0:05:55.560 --> 0:05:59.719 Thirty and I want to get more with Doctor Basil Smigel, 0:06:00.080 --> 0:06:03.200 Professor of Practice at Columbia University School at Professional Studies. 0:06:03.240 --> 0:06:05.960 He's also former executive director of the New York State 0:06:06.120 --> 0:06:09.440 Democratic Party. He's been a political strategist and policy advisor 0:06:09.520 --> 0:06:14.159 for almost twenty years with local, international, and national experience. 0:06:14.200 --> 0:06:18.039 This is quite a bombshell here, doctor, What do you 0:06:18.240 --> 0:06:22.360 think this means? How does this unfold? Can Eric Adams 0:06:22.800 --> 0:06:23.960 keep a seat? 0:06:24.600 --> 0:06:27.640 Well, you know, to the point that June just made. 0:06:27.640 --> 0:06:30.159 I mean, this wouldn't have happened had it not gone 0:06:30.240 --> 0:06:33.080 to the highest levels of the Department of Justice. So 0:06:33.200 --> 0:06:36.080 this is serious. It's serious as a lifelong in New Yorker. 0:06:36.160 --> 0:06:39.040 This is serious for me just as a voter and 0:06:39.320 --> 0:06:41.359 you know, with care and concern for my city. But 0:06:41.440 --> 0:06:44.120 if he saw his press conference earlier, he had a 0:06:44.160 --> 0:06:47.680 lot of supporters with him, and I think that's really 0:06:47.760 --> 0:06:51.880 what his future hinges on, not just the charges themselves, 0:06:51.880 --> 0:06:56.680 but politically, you know, will his base stick with him? 0:06:57.839 --> 0:07:01.560 And we saw, you know, some prominent democratic leaders, particularly 0:07:01.560 --> 0:07:06.480 African American leaders, standing behind him. So until we start 0:07:06.480 --> 0:07:12.000 to see more, if we ever see more prominent African Americans, 0:07:12.040 --> 0:07:14.720 particularly from some of the communities that he did did 0:07:14.920 --> 0:07:17.640 very well in in his election, if they sit down 0:07:17.720 --> 0:07:20.760 and saying that he needs to step down he's unable 0:07:20.800 --> 0:07:24.120 to fulfill his duties, then I think you'll see the 0:07:24.120 --> 0:07:26.960 hastening of that decision. But for now, it sounds like 0:07:27.000 --> 0:07:30.080 he's doug its heels it in and to this point, 0:07:30.600 --> 0:07:33.480 I don't really see this sort of watershed moment that 0:07:33.640 --> 0:07:35.200 would get him to step down. 0:07:35.320 --> 0:07:38.760 Doctor. What is the governor's role at Governor Hochel's role 0:07:38.880 --> 0:07:42.000 in all this? Can she essentially fire him? Would she? 0:07:42.280 --> 0:07:44.440 If it comes to that. I mean, you mentioned sort 0:07:44.480 --> 0:07:50.000 of the political delicacy of it all, given his support 0:07:50.280 --> 0:07:53.560 within the African community and elsewhere, and. 0:07:53.560 --> 0:07:55.880 I think it does come down to that she does 0:07:55.960 --> 0:07:58.400 have a role there is that there is a scenario 0:07:58.480 --> 0:08:02.920 where the governor can can take him, take him out 0:08:02.960 --> 0:08:06.920 of his seat. There's another sort of opportunity for that 0:08:07.000 --> 0:08:10.240 to happen by a separate committee should that get formed. 0:08:10.600 --> 0:08:14.840 There's a long explanation about that, but the but yes, 0:08:14.920 --> 0:08:17.600 the governor can step in and take and take him 0:08:17.600 --> 0:08:20.360 out of office at some point. But given the fact 0:08:20.480 --> 0:08:24.440 that you know, the governor has always had you know, 0:08:24.520 --> 0:08:27.360 has had a tricky election just a couple of years 0:08:27.360 --> 0:08:30.000 ago where it was a lot closer than people expected. 0:08:30.400 --> 0:08:35.200 She relies heavily on the same base that Eric Adams 0:08:35.200 --> 0:08:38.319 has in New York City, and I don't know that 0:08:38.360 --> 0:08:45.080 she would make a decision to to a very drastic 0:08:45.120 --> 0:08:48.480 decision like that without really checking with a lot of 0:08:48.520 --> 0:08:51.520 the a lot of the key leaders in those communities 0:08:51.920 --> 0:08:54.800 across the city. Because if she would do that sort 0:08:54.800 --> 0:08:58.320 of unilaterally, I think the blowback would be it would 0:08:58.360 --> 0:09:01.160 be really significant and she would feel it when she's 0:09:01.240 --> 0:09:01.880 up for re election. 0:09:02.920 --> 0:09:05.600 When you take a look at the indictment, what we 0:09:05.720 --> 0:09:10.280 heard from District Attorney Damien Williams, and then excuse me, 0:09:10.360 --> 0:09:13.880 yes you Attorney Damian Williams, when we also heard from 0:09:14.000 --> 0:09:16.480 New York City Mayor Eric Adams as well his defense, 0:09:18.880 --> 0:09:21.920 what stacks up for you? Like if you were with 0:09:22.200 --> 0:09:24.400 Eric Adams, like what would you be saying, like how 0:09:24.440 --> 0:09:26.840 does the defense work? Like We're going to keep fighting. 0:09:27.559 --> 0:09:29.080 I'm going to keep fighting I'm going to keep my 0:09:29.160 --> 0:09:31.920 day job. This isn't true. They're just kind of stalking 0:09:31.960 --> 0:09:34.480 me like all all of that. Does that hold real water? 0:09:35.800 --> 0:09:38.559 You know? This is I So the short answer for 0:09:38.720 --> 0:09:42.400 me is no, because you know him. You know, for 0:09:42.520 --> 0:09:48.000 him to say that this has been he's being targeted 0:09:48.080 --> 0:09:51.400 by the Justice Department, I would remind him that the 0:09:51.440 --> 0:09:55.480 president's own son, Hunter Biden, has been indicted. So I 0:09:55.520 --> 0:09:58.560 don't think he's I don't think that that holds a 0:09:58.559 --> 0:10:01.720 lot of water. Number One one. He's also said that 0:10:01.800 --> 0:10:05.280 this is a retribution for his challenging of the Biden 0:10:05.320 --> 0:10:08.720 administration on his handling of migrants, and I would I 0:10:08.720 --> 0:10:12.920 would also say that I don't think that given everything 0:10:12.960 --> 0:10:15.800 that's happening in our national politics right now, I don't 0:10:15.840 --> 0:10:19.960 think that the Biden administration nor the Democrats nationally have 0:10:20.080 --> 0:10:23.840 the kind of time to specifically be targeting him in 0:10:23.880 --> 0:10:26.280 this way. They've just got a lot of other things 0:10:26.280 --> 0:10:29.240 to do. He's also said that you know this is 0:10:30.360 --> 0:10:33.520 that that cut. The ways in which you've been targeted 0:10:33.559 --> 0:10:37.040 are similar to what David Dinkins, the first African American 0:10:37.480 --> 0:10:39.480 mayor of the City of New York, was similar to 0:10:39.520 --> 0:10:42.400 what he went through, and I actually that bothers me 0:10:42.480 --> 0:10:46.200 a bit too, because number one, David Dinkins is not indicted, 0:10:46.559 --> 0:10:50.559 and number two, you know, he also had an antagonist 0:10:50.760 --> 0:10:53.839 in Rudi Giuliani for the entire four years that he 0:10:53.960 --> 0:10:57.200 was mayor, and there was a tremendous racial undertone and 0:10:57.280 --> 0:11:02.200 overtone to that tension, which is not present here. But 0:11:02.320 --> 0:11:05.000 I will say that it is it is true that 0:11:05.200 --> 0:11:07.920 for a lot of African American voters there is a 0:11:08.000 --> 0:11:14.080 significant amount of apprehension and concern around the ways that 0:11:14.120 --> 0:11:17.040 the community is being treated has been treated by the 0:11:17.080 --> 0:11:20.240 media and by law enforcement. That is that it is 0:11:20.280 --> 0:11:23.000 something that has been well documented over the years. But 0:11:23.120 --> 0:11:26.360 I'm also very mindful as an African American myself, I'm 0:11:26.400 --> 0:11:30.400 also mindful of how that is be how that is used, 0:11:30.400 --> 0:11:33.280 and how that's leveraged in situations like this. So I 0:11:33.320 --> 0:11:36.880 would suggest that he stay away from those kinds of 0:11:36.920 --> 0:11:40.280 those defensive tactics in that narrative and kind of just 0:11:40.480 --> 0:11:43.760 focus on saying that he still can run the city, 0:11:43.800 --> 0:11:47.640 and he's still in charge, and this is the future 0:11:47.640 --> 0:11:50.559 and envision he has for the upcoming weeks. So I 0:11:50.600 --> 0:11:51.480 would stick to that. 0:11:51.800 --> 0:11:55.440 Can a city as complex as New York City continue 0:11:55.480 --> 0:11:59.160 to operate with a mayor who's distracted by this, and 0:11:59.240 --> 0:12:03.280 with any of other department leaders in New York City 0:12:03.280 --> 0:12:04.360 who just aren't there. 0:12:05.760 --> 0:12:08.760 Well, I mean, that's one of the key concerns because 0:12:08.800 --> 0:12:12.160 if you think about the biggest agencies, the most prominent 0:12:12.200 --> 0:12:16.120 agencies in New York Fire, Police, Department of Health, and Education, 0:12:16.440 --> 0:12:19.920 and you know, for full disclosure, the former school's chancellor. 0:12:19.920 --> 0:12:22.360 The school chancellor who said he's resigning the end of 0:12:22.400 --> 0:12:26.000 the year, I've known for twenty five years and he's 0:12:26.000 --> 0:12:28.520 wanted that job but pretty much his entire career, So 0:12:28.600 --> 0:12:32.720 for him to take that step fairly significant. You know, 0:12:32.800 --> 0:12:38.880 the rating of the current Police Commissioner's House, who himself 0:12:38.920 --> 0:12:41.640 is acting because the previous one stepped down because of 0:12:41.679 --> 0:12:45.440 the investigation. All of these challenges to running the city 0:12:45.920 --> 0:12:48.480 will be on the minds of voters in the next 0:12:48.520 --> 0:12:51.360 couple of weeks. My guess, however, is that there's to 0:12:51.480 --> 0:12:53.640 go out and be so much focused on the presidential 0:12:53.720 --> 0:12:58.600 that it'll be mitigated by that. But just after and unless, 0:12:59.040 --> 0:13:01.480 of course, if something happens tragically, and I hope that 0:13:01.480 --> 0:13:04.640 doesn't happen, there will be more attention on his leadership. 0:13:04.679 --> 0:13:07.360 But what he has to wonder right now and hope 0:13:07.400 --> 0:13:09.680 for is that a lot of voters are going to 0:13:09.679 --> 0:13:12.400 be focused on more on the presidential than on him. 0:13:12.400 --> 0:13:15.240 But once that happened, all eyes quickly turned back to 0:13:15.320 --> 0:13:19.559 him because the male primaries in June, it's really right 0:13:20.280 --> 0:13:23.880 upon us and just very quickly. There is a succession plan, 0:13:23.960 --> 0:13:27.760 and I think everybody should understand that that the state 0:13:27.880 --> 0:13:32.160 and the state constitution, city charter have a succession plan 0:13:32.240 --> 0:13:34.720 built in. If you work stut Down, the New York 0:13:34.760 --> 0:13:37.160 City Public Advocate becomes the acting mayor. 0:13:37.840 --> 0:13:40.680 All right, doctor, we really appreciate it. That was extraordinarily helpful, 0:13:40.720 --> 0:13:44.160 Doctor basilsmikel Professor of Practice and Columbia University School of 0:13:44.240 --> 0:13:47.280 Professional Studies, also former executive director of the New York 0:13:47.360 --> 0:13:49.800 State Democratic Party. 0:13:50.200 --> 0:13:54.080 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:54.160 --> 0:13:57.480 weekdays at ten am Eastern on FOCAR playing Android outo 0:13:57.600 --> 0:14:00.480 with the Bloomberg Business app. Listen on demand wherever you 0:14:00.600 --> 0:14:03.560 get your podcasts, or watch us live on YouTube. 0:14:05.600 --> 0:14:08.000 So let's continue the story. Tom or Lake as Bloomberg 0:14:08.040 --> 0:14:10.920 Economics Chief Economists, and he joins us now now Tom 0:14:11.040 --> 0:14:13.079 had lived in Beision for a very long time. He 0:14:13.320 --> 0:14:16.120 was the chief China economics correspondent over the Wall Street Journal. 0:14:16.320 --> 0:14:20.120 He also headed Bloomberg economics coverage in China, Japan, and Korea, 0:14:20.680 --> 0:14:23.040 and now he joins US from DC. But he has 0:14:23.080 --> 0:14:25.240 a long history of looking at these kind of interventions 0:14:25.760 --> 0:14:28.880 from the government as well as monetary authority. I hate Tom, 0:14:29.360 --> 0:14:30.080 Is this the end? 0:14:32.080 --> 0:14:33.920 So I think we need to break it down into 0:14:34.240 --> 0:14:38.320 two different problems. So the first problem is the cycle. 0:14:39.520 --> 0:14:43.200 And if we think about the cycle, well, growth was 0:14:43.320 --> 0:14:48.440 very weak, deflation was coming, markets were slumping, and this 0:14:48.680 --> 0:14:52.320 intervention by China's Central Bank and now the Pollit Bureau, 0:14:52.800 --> 0:14:57.440 well it looks pretty decisive. The equity market has broad 0:14:57.600 --> 0:15:02.920 back higher, the Chinese yuan has strengthened, bond yields have 0:15:03.040 --> 0:15:06.680 ticked up, and expectations for growth out to the end 0:15:06.720 --> 0:15:09.600 of twenty twenty four and into twenty twenty five, well 0:15:09.800 --> 0:15:12.520 they're a little bit stronger. So on the cycle, this 0:15:12.680 --> 0:15:16.360 is certainly a positive moment, maybe a decisive moment. The 0:15:16.480 --> 0:15:20.040 second set of issues, though, is around structure, right, and 0:15:20.160 --> 0:15:23.560 that's where we have to worry about the massive overhang 0:15:23.920 --> 0:15:32.120 of property supply. The shrinking workforce, the increasingly fractious relations 0:15:32.200 --> 0:15:35.120 with the United States. These are the factors which are 0:15:35.160 --> 0:15:37.840 going to be weighing on China's growth, not just in 0:15:37.920 --> 0:15:40.560 twenty twenty four, twenty twenty five, but out into the 0:15:40.600 --> 0:15:44.680 next decade. And on those well, nothing we've seen in 0:15:44.720 --> 0:15:47.040 the last few days really changes the picture. 0:15:47.720 --> 0:15:50.359 Yeah, Tom, With that in mind, we're seeing a tremendous 0:15:50.520 --> 0:15:53.560 rally across assets, especially in China. Just looking at the 0:15:53.560 --> 0:15:57.000 Shanghai composite up more than nine percent in the last 0:15:57.040 --> 0:16:00.560 three days. Does this have sticking power? It feels like 0:16:00.680 --> 0:16:03.040 in the past we've seen these moments were stimulus is 0:16:03.120 --> 0:16:06.160 kind of drummed up in China, talks about injecting money 0:16:06.200 --> 0:16:08.720 into the economy, and then those moments are relatively fleeting. 0:16:10.520 --> 0:16:14.480 So the last couple of years has seen what you 0:16:14.600 --> 0:16:17.320 might call a kind of steady drip drip of micro 0:16:17.520 --> 0:16:22.520 policy moves. The PBOC cuts interest rates by ten basis 0:16:22.600 --> 0:16:26.600 points or twenty basis points. The PBOC frees up a 0:16:26.680 --> 0:16:30.680 bit more funds for China's banks to lend. The Ministry 0:16:30.720 --> 0:16:33.200 of Finance puts a bit more money in the pockets 0:16:33.280 --> 0:16:36.560 of local governments. What we've seen in the last few 0:16:36.640 --> 0:16:40.880 days is a kind of a package of more powerful 0:16:40.960 --> 0:16:46.080 measures rolled out at the same moment, and the Pollit Bureau, 0:16:47.360 --> 0:16:50.480 the twenty four men who kind of call the shots 0:16:50.560 --> 0:16:54.760 on China's economy, coming out with some pretty sort of 0:16:54.880 --> 0:16:58.480 firm statements about how they want to turn the cycle round. 0:16:58.960 --> 0:17:03.720 Hold the decline in property, give equities a boost. Right, So, 0:17:04.280 --> 0:17:08.600 if we think about markets, if we think about growth 0:17:08.720 --> 0:17:11.440 for the next few months, maybe even into early twenty 0:17:11.520 --> 0:17:16.720 twenty five, this is a pretty important move. If we 0:17:16.800 --> 0:17:20.480 think about those bigger structural problems, if we think about 0:17:20.880 --> 0:17:23.840 the millions and millions of empty homes in China, we 0:17:23.960 --> 0:17:28.240 think about the shrinking working age population. No, nothing which 0:17:28.240 --> 0:17:30.480 has happened so far is going to move the dial 0:17:30.560 --> 0:17:31.920 on those big structural problems. 0:17:32.400 --> 0:17:34.560 And here's the question we've all been waiting for, right 0:17:34.720 --> 0:17:37.200 when when is China going to cut checks to people? 0:17:37.359 --> 0:17:38.960 I mean, they already mentioned that they're going to do 0:17:39.000 --> 0:17:41.240 it for their low incomes, just to one off, but 0:17:41.359 --> 0:17:43.640 that's literally what needs to happen. No, So like, when 0:17:43.640 --> 0:17:44.280 are they going to do that? 0:17:45.520 --> 0:17:49.600 So it's a great question, Alex so that I'm sure 0:17:49.640 --> 0:17:51.920 we're all familiar with the term pushing on a piece 0:17:51.960 --> 0:17:55.360 of string. Right, At some point, there's just too much 0:17:55.520 --> 0:17:59.440 debt in the economy. And when you cut interest rates, well, 0:17:59.680 --> 0:18:03.119 because debt is already so high, no one rushes to 0:18:03.200 --> 0:18:06.520 borrow more, no one rushes to invest more, right, And 0:18:06.640 --> 0:18:10.800 I think that's almost where China is, right. Debt's really high, 0:18:11.520 --> 0:18:14.840 so rate cuts they help a little bit, But there's 0:18:14.920 --> 0:18:18.440 certainly that pushing on a piece of string aspect to it. 0:18:19.160 --> 0:18:22.280 So if you really want to accelerate China's growth, what 0:18:22.400 --> 0:18:24.399 do you have to do? Well, the government has to 0:18:24.480 --> 0:18:29.600 open its checkbook and put money in household's pockets. Now 0:18:30.040 --> 0:18:33.920 we've seen the Polyt Bureau say they're going to amp 0:18:34.040 --> 0:18:38.159 up fiscal stimulus, so it seems like the checkbook, the 0:18:38.400 --> 0:18:43.200 government wallet is starting to creak open. The question is, well, 0:18:43.440 --> 0:18:45.240 how much money are they going to put to work 0:18:46.040 --> 0:18:47.600 and where are they going to put it to work. 0:18:47.920 --> 0:18:50.360 Is it going to be a kind of traditional infrastructure 0:18:50.400 --> 0:18:54.600 style stimulus, let's build some more bridges, or is it 0:18:54.680 --> 0:18:57.440 going to be the consumer stimulus, let's put money in 0:18:57.520 --> 0:19:01.840 household's pockets so they can upgrade their Electroney baby switch 0:19:01.880 --> 0:19:02.879 to electric vehicle? 0:19:03.359 --> 0:19:05.320 All right, Tom, we appreciate that. Thank you very much, 0:19:05.359 --> 0:19:08.280 Tom or like Bloomberg Economics chief economists joining us on 0:19:08.600 --> 0:19:09.600 the China Latest. 0:19:11.160 --> 0:19:15.000 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:19:15.119 --> 0:19:18.640 weekdays at ten am Eastern on applecar Play and Android 0:19:18.680 --> 0:19:21.440 Auto with the Bloomberg Business App. You can also listen 0:19:21.560 --> 0:19:24.640 live on Amazon Alexa from our flagship New York station, 0:19:25.040 --> 0:19:27.760 Just say Alexa Play Bloomberg eleven thirty. 0:19:29.480 --> 0:19:31.520 We bring you all the tough news and business economics 0:19:31.560 --> 0:19:33.800 and finance through a lens of our Bloomberg Intelligence folks. 0:19:33.840 --> 0:19:35.800 They cover two thousand companies and one hundred and thirty 0:19:35.840 --> 0:19:40.000 industries worldwide. The news that broke yesterday is that open 0:19:40.160 --> 0:19:43.520 ai is going to transition from being a nonprofit organization 0:19:43.640 --> 0:19:46.159 to a for profit company. I have no idea what 0:19:46.280 --> 0:19:48.280 that means, but the goal of the company was supposed 0:19:48.320 --> 0:19:51.240 to quote benefit humanity as a whole, unconstrained by a 0:19:51.320 --> 0:19:53.879 need to generate financial return. If that changes, what does 0:19:53.920 --> 0:19:56.040 that due to the actual company? Joining us now, as 0:19:56.080 --> 0:20:01.000 Man Deep Sing, Bloomberg Intelligence senior tech industry analyst joins, now, Okay, 0:20:01.200 --> 0:20:02.439 I don't get it. What does it mean? 0:20:03.000 --> 0:20:05.960 Well, I mean they've been looking to do that for 0:20:06.119 --> 0:20:12.359 a while in terms of becoming a profitable company similar 0:20:12.480 --> 0:20:16.480 to other tech companies that are out there. And I 0:20:16.560 --> 0:20:20.480 guess we had hints all along because they never open 0:20:20.560 --> 0:20:23.200 source their model. You know, they are the leaders when 0:20:23.240 --> 0:20:26.720 it comes to generative AI, and there are two approaches 0:20:26.840 --> 0:20:31.040 right now with companies keeping their model proprietary versus open source, 0:20:31.119 --> 0:20:34.320 and they are one of those who have kept it proprietary. 0:20:34.440 --> 0:20:37.040 So it's not a surprise that they wanted to convert 0:20:37.080 --> 0:20:41.680 to a profit structure. Given all this has happened, I 0:20:41.760 --> 0:20:45.480 think the bigger thing here is the CTO Mira Murrati 0:20:45.600 --> 0:20:48.080 leaving and pretty much all the co founders of the 0:20:48.160 --> 0:20:52.360 company leaving at this point, with Altmann being the only 0:20:52.440 --> 0:20:54.920 one there. So that's to me the bigger news. 0:20:55.440 --> 0:21:00.359 Capitalism strikes again. But real question though, if it's valued 0:21:00.359 --> 0:21:03.040 around one hundred and fifty billion dollars and you mentioned 0:21:03.520 --> 0:21:07.200 CTO Mira Muradi resigning, does she keep her stock like 0:21:07.320 --> 0:21:10.520 is she leaving the company with a nest egg worth 0:21:10.560 --> 0:21:11.520 a few billion dollars? 0:21:12.280 --> 0:21:16.480 Well, again, I think once the entity changes, there are 0:21:16.600 --> 0:21:20.480 a lot more things that will happen subsequently in terms 0:21:20.560 --> 0:21:23.480 of you know, the new profitable structure, what sort of 0:21:23.800 --> 0:21:27.200 equity sam Altman would have. So in terms of the 0:21:27.359 --> 0:21:32.119 prior structure, they already had a subsidiary which was profitable. 0:21:32.240 --> 0:21:36.080 So it's a pretty convoluted structure. So when the November 0:21:36.240 --> 0:21:39.600 thing happened, number twenty twenty three, when sam Altman was 0:21:40.440 --> 0:21:42.880 asked to leave and then he came back, at that time, 0:21:43.000 --> 0:21:47.399 they changed the board composition and they created a profitable subsidiary. 0:21:47.960 --> 0:21:51.760 Now this is like converting the full company to a 0:21:51.840 --> 0:21:55.760 profitable entity, and there will be changes that will come along. 0:21:55.880 --> 0:21:59.560 So hard to say exactly who keeps what at this 0:21:59.640 --> 0:22:02.720 point of time, but suffice to say that you know, 0:22:03.240 --> 0:22:06.520 the Microsoft relationship would come into play as well. I mean, 0:22:06.600 --> 0:22:09.679 they are one of the biggest stakeholders in the company, 0:22:09.760 --> 0:22:14.600 and all the signs are they want more investors in 0:22:14.680 --> 0:22:17.680 the company. So sam Altman is trying to raise more 0:22:17.760 --> 0:22:21.720 money and it will be at a higher valuation one 0:22:21.800 --> 0:22:25.280 hundred and fifty billion dollars. That's expected, and at some 0:22:25.400 --> 0:22:27.240 point I think they will go public as well. 0:22:27.760 --> 0:22:31.480 When you brought up the CTO leaving, wasn't that also expected? 0:22:31.520 --> 0:22:35.240 Hasn't she stayed on longer than everyone had anticipated because 0:22:35.280 --> 0:22:37.320 she covered for Sam Welt when he was out, so 0:22:37.520 --> 0:22:40.040 it was understood that she was leaving once he came back. 0:22:40.760 --> 0:22:42.800 Well, I mean, I look at it this week again, 0:22:43.119 --> 0:22:45.960 it's from the outside. I obviously I am not privy 0:22:46.040 --> 0:22:48.680 to anything that's going on inside the company, but there 0:22:48.840 --> 0:22:52.240 is clearly some tension. Whether it's tied to the you know, 0:22:52.440 --> 0:22:56.920 the profitable or non profitable aspect, or any other risks 0:22:57.000 --> 0:23:01.000 related to large language models, whether it's come down to 0:23:01.119 --> 0:23:05.200