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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg for investors.

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Speaker 1: Firmly focused on d C with a big question, what

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Speaker 1: does it mean for the US economy? A one off

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Speaker 1: sugar high or the beginning of a sustainable improvement in

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Speaker 1: US growth? Johnny gus now to discusses Chris rob Key,

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Speaker 1: MUFG Union Bank chief financial economist. Chris, is it the

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Speaker 1: former or one off sugar high or the latter the

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Speaker 1: beginning of something more sustainable? Well, I guess the problem

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Speaker 1: was starting in two thousand and twenty, they think the

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Speaker 1: tax reform is going to lead to three percent GDP

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Speaker 1: every single year for those finals seven years or so.

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Speaker 1: That seems a bit of a stretch. I mean, one

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Speaker 1: of the things we're struggling with here, and you know,

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Speaker 1: this fiscal stimulus. It's not convinced the Fed at all, right,

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Speaker 1: They're keeping their GDP call like two in two thousand

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Speaker 1: and twenty. Um. Yeah, I mean it's just gonna be

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Speaker 1: very difficult to achieve. One of the things that we're

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Speaker 1: running into is that the unemployment unemployment rate is so low.

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Speaker 1: Who are we going to employ to make the economy

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Speaker 1: run faster? There's no workers. This is the first time,

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Speaker 1: really an economic history, modern economic history since the seventies,

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Speaker 1: that we're going to test can the economy grow without

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Speaker 1: having a good labor supply? CHRISTI touch on something important.

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Speaker 1: Most economists would say that any improvement growth is just

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Speaker 1: a function of one of two things, or perhaps both,

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Speaker 1: an increasing productivity or an increase in the size of

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Speaker 1: the population. Are we going to get either? Yeah, I

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Speaker 1: mean we don't really get the population is slowing or

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Speaker 1: at least the Baby Boom generation. Uh, you know, it's

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Speaker 1: a twenty year wave of people. The first one retired

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Speaker 1: in two thousand and eleven. You know, people who retired

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Speaker 1: don't spend as much. That's the theory. Uh, you wouldn't

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Speaker 1: think that the economy has as much spending power based

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Speaker 1: on demographic headwinds. I think that's why the Federal Reserve

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Speaker 1: has two percent growth and not three percent like the administration.

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Speaker 1: Productivity it's trickier. I mean, when when whenever I hear

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Speaker 1: the word productivity, you really want to look at our

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Speaker 1: consumer spending as investment, and you know consumers are spending

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Speaker 1: enough right now despite all the claims that graphics are

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Speaker 1: going to hurt. I got excited. Christa heard Tom King

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Speaker 1: clear his throat, and I thought maybe he'd be joining

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Speaker 1: us Wednesday. Decide should I start my Christmas shopping Wednesday

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Speaker 1: or Thursday. I know what I want, it's a very

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Speaker 1: very your tax cut a tax cut, well, I don't know.

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Speaker 1: We'll see. There's been some interesting early analysis on that.

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Speaker 1: We'll touch you. I'll wrap up the script and we'll

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Speaker 1: do that here in a moment. Plumberg Surveillance this morning

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Speaker 1: with Chris Rockki. Thrilled he's with us, brought you by Investco.

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Speaker 1: Learned how investcos pure focus on investing, diversity of thought,

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Speaker 1: and passion to exceed can help you get more out

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Speaker 1: of life. Visit investco dot com slash more out of life.

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Speaker 1: He is with m U f G. Chris Rupki. Chris,

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Speaker 1: people read your note because they know on the first

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Speaker 1: page they're gonna get a payoff of the linkage of

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Speaker 1: the fixed income market into what's going on in economics.

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Speaker 1: William Hoagland was with us yesterday. He was brilliant, and

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Speaker 1: he put out a tweet yesterday. I should point out

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Speaker 1: Mr Hoagland, John is not some young Twitter type. He's like,

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Speaker 1: you know, relatively ancient. And he said, in twenty four months,

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Speaker 1: we're gonna have a one point one trillion dollar US deficit.

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Speaker 1: How I'm sorry, John dine underd billion is a lot, lot,

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Speaker 1: lot less than one trilliont How will your world react,

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Speaker 1: Chris Rupki when we start to frame a what is

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Speaker 1: that nine figures three six, nine, twelve figure deficit? Yeah,

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Speaker 1: I don't know. I mean I'm looking for anything to

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Speaker 1: push up tenure treasury yields, economy. We got it yesterday,

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Speaker 1: Yes we did. Where did that come from? I think

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Speaker 1: it was just technical. I don't know where that came from,

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Speaker 1: although it could have been partly the the idea of

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Speaker 1: greater deficits out there from the tax reform um. You know,

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Speaker 1: we had trillion dollar deficits during the Obama years, four

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Speaker 1: years of it ending two thousand and twelve I think

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Speaker 1: it was, and tenure treasury yields never went up. I

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Speaker 1: would like to think that, you know, one point one

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Speaker 1: trillion dollar deficit could push up tenure treasury yields, get

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Speaker 1: some more auctions of treasuries, maybe there'll be no one

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Speaker 1: to buy them. Uh, maybe yields would go up. But

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Speaker 1: I don't know. It's a it's a major question mark. Chris.

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Speaker 1: You think yesterday's I'm one if that flatten it going

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Speaker 1: into your end was just purely exactly that unwinding position

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Speaker 1: the markets feel. I'm on the high achiever train every

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Speaker 1: day from the suburbs. People don't talk on the train,

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Speaker 1: and it doesn't feel like anyone's in. You know, the

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Speaker 1: market seem to be very thin right now. There's no

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Speaker 1: corporate bond issuance. I don't trust the upward move in

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Speaker 1: movement in yields, even though I want it, but I

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Speaker 1: don't know if it's gonna stick. We did some FED

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Speaker 1: talk this morning. Let us continue that right now. And

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Speaker 1: and you are clearly in the camp of four rate increases.

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Speaker 1: That's a non linear market in behavioral event. The next

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Speaker 1: rate increase, I'm gonna suggest there is no big deal.

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Speaker 1: But when does the not the pain click in? But

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Speaker 1: when does the market impact click in of the second

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Speaker 1: or the third or the fourth unit increase? Yeah, I

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Speaker 1: mean we always I mean, remember, we haven't really had

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Speaker 1: a major bond market sell off higher soaring yields for

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Speaker 1: a long time. And it's really what we need to

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Speaker 1: see is the Fed got consistently to start scaring people

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Speaker 1: on the raid out look a little, so they have

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Speaker 1: to go March, June, September. Maybe if we get to

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Speaker 1: December they go four in a row, or we're thinking

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Speaker 1: they go four in a row, then maybe ten year

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Speaker 1: yields break out above three. But you got to really

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Speaker 1: awake the market up. Okay, better said, when do we wait? John?

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Speaker 1: This is important? When do we wake the market up?

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Speaker 1: Beautifully said? At this time of year? I say it's

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Speaker 1: just months away, and then yes, exactly, and then I'm

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Speaker 1: bitterly disappointed by the summer when China arises and brings

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Speaker 1: down all the works. You're holding talking about a deficit

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Speaker 1: which have choked that a kingdom. You know, I don't

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Speaker 1: know what the deficit the g d P numbers on

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Speaker 1: that CBO can inform us here in a couple of months.

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Speaker 1: Do you just assume the price of this tax legislation

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Speaker 1: is deficits that you and I talked about when we

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Speaker 1: had no gray hair. Uh Um, yeah, I'm just assuming

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Speaker 1: that we'll get through the one trillion, although that you're right,

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Speaker 1: it is a big number. I think part of the

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Speaker 1: problem is we don't realize that right now the deficits

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Speaker 1: running about seven hundred billion and six D sixty six billion. Yeah,

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Speaker 1: and the auction schedule isn't enough to really push up

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Speaker 1: yields on an extra three hundred billion. I don't know

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Speaker 1: if that's enough to John Ferrell doesn't know who there's

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Speaker 1: some real forces of our listening audience. Michael Bardie, you

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Speaker 1: know who ever dirks and is I was sick that day.

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Speaker 1: How much coffee if you had this morning? To King distinguished,

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Speaker 1: I am fired. I'll tell you a minute. On the

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Speaker 1: Wednesday before Chris extinguished, senator from Illinois, Ever Dickson, who

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Speaker 1: said a billionaire, a billionaire or whatever, Yeah, what doesn't matter.

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Speaker 1: That was Senator Dirkson as well. Chris Rupki. Thank you

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Speaker 1: so much with m U John Farrowe and Tom Keane

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Speaker 1: with you, and now we are thrilled to bring you

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Speaker 1: John Lieber with p w C, who has been wonderfully,

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Speaker 1: wonderfully correct about this process of tax reformed, tax cuts

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Speaker 1: and deficit expansion. John, you have the privilege of working

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Speaker 1: with Alan Meltzer years ago at a EI and I

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Speaker 1: went back and I looked, it seems like yesterday a

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Speaker 1: wonderful discussion on at the time a burgeoning deficit of

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Speaker 1: Alan Meltzer, led by Gordon Theesen. And this is with

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Speaker 1: Larry Ball and others. In the title of it is great.

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Speaker 1: What do budget deficits do? William Hoblin's suggests we are

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Speaker 1: going to have a larger budget deficit, even out to

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Speaker 1: one trillion plus US in a matter of twenty four months.

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Speaker 1: John Lever, what the budget deficits do? And the Senators

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Speaker 1: and congressmen and women do they care? Well, it's hard

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Speaker 1: to really pass judgment of what a budget deficit does

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Speaker 1: in a vacuum. I mean the real question is can

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Speaker 1: UH sovereign fund and finance the budget deficit? Are there

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Speaker 1: outsiders willing to lend money? What will the monetary authorities do?

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Speaker 1: How fast is the rate of growth? I mean, all

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Speaker 1: of these questions are important when evaluating what a budget

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Speaker 1: deficit does. There's been a lot of panic about the

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Speaker 1: budget deficit over the last eight or ten years after

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Speaker 1: financial crisis, and that's really calmed down. The politics of

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Speaker 1: that have really changed recently, especially with the election of

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Speaker 1: President Trump. So I think that you know, the Republicans

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Speaker 1: voting for this bill today are hoping that not only

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Speaker 1: will this deficit not do anything, but will be much

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Speaker 1: smaller than is projected because of the growth they're going

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Speaker 1: to get from the text bill. John talked to me

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Speaker 1: about the effects that this is going to have going

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Speaker 1: forward in terms of who this is actually for. There's

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Speaker 1: a narrative out there and this is just for corporate America.

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Speaker 1: This does not help the middle class. Can you punch

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Speaker 1: your any holes in that narrative? Yeah, Look, I mean

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Speaker 1: of taxpayers are getting a cut next year, that's courting

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Speaker 1: to j C. T. You're going to see an immediate

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Speaker 1: increase uh decrease in withholding, which means that paychecks are

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Speaker 1: going to grow starting in February. And that's a huge effect.

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Speaker 1: That's going to be important to folks now that dollars

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Speaker 1: for a lot of people are small because the reality

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Speaker 1: is a lot of lower income in middle class taxpayers

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Speaker 1: don't play a lot in tax so it's really hard

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Speaker 1: to cut their taxes. But you're doubling the standard deduction,

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Speaker 1: you're increasing the child tax credit, you're doing things that

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Speaker 1: will be meaningful to people who are on the bottom

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Speaker 1: half of the income spectrum, and the loser's jump. Well,

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Speaker 1: you've got you know, high income people living in high

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Speaker 1: tax states with high talk to livings like in Silicon

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Speaker 1: Valley Manhattan, who are going to pay probably more because

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Speaker 1: they're gonna lose the state and local tax deduction. Um.

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Speaker 1: You've got you know, the real estate industry is and

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Speaker 1: thrilled with this bill because the increase in the standard

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Speaker 1: deduction means fewer people will take the mortgages your deduction um.

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Speaker 1: But the reality is, you know, looking across the income spectrum,

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Speaker 1: most individual Americans are going to get a tax cut

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Speaker 1: next year. Will that be overwhelmed by higher interest rates

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Speaker 1: as we moved to a back of the envelope five

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Speaker 1: and a half percent deficit to GDP. It's possible. I mean,

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Speaker 1: if you look at the CBO, the j c T projections,

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Speaker 1: you've got you know, higher financing costs due to the deficit.

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Speaker 1: But you don't see a lot of the government forecasters

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Speaker 1: saying that this bill is going to either crash the

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Speaker 1: economy or overwhelming That's a really important distinction, John Lieber,

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Speaker 1: It's not a question of crashing the economy. It is

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Speaker 1: the weight of new deficit worries upon the Washington and

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Speaker 1: frankly the national debate. Is that what we voted in

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Speaker 1: last night a new dampening or a new initiation, I

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Speaker 1: should say, of deficit analysis and angst. Um, I think

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Speaker 1: I would argue, Know, I think we're kind of an

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Speaker 1: give an era than we were even five years ago,

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Speaker 1: where the deficit has just become a second tier of

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Speaker 1: political consideration. Um, You've got first these tax cuts one

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Speaker 1: point five trillion dollars to the deficit before any economic growth.

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Speaker 1: And now you've got a lot of new spending that's

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Speaker 1: coming down the pike in the next month or so.

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Speaker 1: You've got disaster funding, you've got increased military spending. These

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Speaker 1: are all priorities of the Trump administration, and politically, UM,

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Speaker 1: I don't think the Democrats are going to score a

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Speaker 1: lot of points going after the deficit. They've got a

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Speaker 1: lot of other things that they're John wants to jump

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Speaker 1: in here, but I got to ask one obvious question

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Speaker 1: Trump in any way like Ronald Reagan? Uh, he's in

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Speaker 1: some sense he's a you know, Republican leader of his party.

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Speaker 1: So I guess you give him credit for that. Um,

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Speaker 1: I'm not really sure. I'm qualified to give you a

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Speaker 1: much more uh detailed analysis, and that I'm going to get.

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Speaker 1: John talked to me about what an accomplishment this actually

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Speaker 1: is to get it done in such a short period

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Speaker 1: of time, given its directly it's taken years, not months. Yeah,

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Speaker 1: I think the key thing, I mean, again getting back

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Speaker 1: to the deficits, The key thing here is that Republicans

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Speaker 1: about three months ago said that they're there. They kind

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Speaker 1: of decided to hold hands together, jump off the devaicity cliff,

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Speaker 1: and that was really key to unlocking getting this bill done.

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Speaker 1: Tax reform has been a long standing goal for the

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Speaker 1: Republican Party. UM. And you know, in particular, lowering the

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Speaker 1: corporate tax rate is considered a very essential pro growth,

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Speaker 1: pro u S policy, And knowing that they didn't manage

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Speaker 1: to get it done under Obama, it wasn't really on

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Speaker 1: the table under President Bush, and a year in the

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Speaker 1: Trump administration, they've achieved this major reform that's going to

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Speaker 1: have lasting effects for decades on both on the US

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Speaker 1: and around the world. As other countries raced to keep

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Speaker 1: up with where the US corporate tax rate is going, John,

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Speaker 1: most economists would say that this is not the time

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Speaker 1: for fiscal stimulus, that they should engage in counter cyclical

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Speaker 1: fiscal stimulus, which is a countersygnical fiscal policy, which would

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Speaker 1: mean on a downturn, expand the deficit and when things

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Speaker 1: are good, tighten things up. That's not what's happening, Kia.

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Speaker 1: But what I find strange, even stranger than that, is

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Speaker 1: this renewed worry about the deficit and the debt pile.

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Speaker 1: Why are we're worrying about this now? We've had years

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Speaker 1: to worry about this. The debtload has been trillions and

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Speaker 1: trillions and trillions, and we've added to it in multiples

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Speaker 1: over the last ten years. So why is now the

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Speaker 1: time to worry about it? Well, I think the political

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Speaker 1: opportunism is a good reason for that. I'd love to

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Speaker 1: hear what these critics were saying if this were going

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Speaker 1: to be a deficit finance infrastructure bill, where there's a

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Speaker 1: lot more bipartisan buy in for an infrastructure bill than

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Speaker 1: there is for tax cuts. I mean, the US has

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Speaker 1: not had any trouble financing its deficits in recent years,

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Speaker 1: and you know, depending on who you talk to, that

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Speaker 1: doesn't seem like it's going to get acutely worse in

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Speaker 1: the near term. It just strikes me as odd that

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Speaker 1: we're always, in fact, maybe it's not at all, Tom,

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Speaker 1: We seem to be politicizing the deficit. It seems to

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Speaker 1: be a story that's not going away anytime soon. When

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Speaker 1: the Republicans were out of power, of course, they politicized

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Speaker 1: the deficit, and now the Democrats seem to be doing

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Speaker 1: the same thing. To Mr Leever's point, though, the conversation

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Speaker 1: is nothing like it was in the early nineteen nineties really,

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Speaker 1: or the so called Clinton surplus. And on we go

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Speaker 1: from there. What will you watch for in the next

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Speaker 1: two or three weeks in the budget debate to come? John, Um?

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Speaker 1: You know, I think there's there's a non zero chance

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Speaker 1: of a government shutdown coming up, you know, as earlier

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Speaker 1: this week. Um, both chambers have to pass a bill

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Speaker 1: to keep the government funded. I think they probably will

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Speaker 1: at least through mid January. And there's a lot of

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Speaker 1: issues on the table that are going to be you know,

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Speaker 1: where there's bipartisan support war that are gonna keep kind

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Speaker 1: of hard to do. Um. Increasing the discretionary spending, caps

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Speaker 1: on descents, and mess expending. I'm looking out for that.

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Speaker 1: That could be a significant boost to government spending next year,

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Speaker 1: which would also be a significant fiscal stimulus because it's

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Speaker 1: all going to be added on the debt. I think

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Speaker 1: there's you know, a couple of help. What's gonna happen

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Speaker 1: to the insurance industry, whether or not the federal government's

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Speaker 1: offering support for insurers who are selling into the exchanges

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Speaker 1: and losing money there um something like that could be

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Speaker 1: coming down the pike. And then you've got a host

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Speaker 1: of other like non fiscal issues, such as what to

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Speaker 1: do with the children of immigrants, legal immigrants that were

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Speaker 1: brought here, or what to do with surveillance authority. There's

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Speaker 1: a lot of things going on that have to be

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Speaker 1: resolved in Congress in the next fo a week and

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Speaker 1: is going to come come to head the next three days.

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Speaker 1: John Lieber, thank you so much. He's with p WC

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Speaker 1: and gave us wonderful perspective and timeline wisdom on all

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Speaker 1: of this text cut effort. As well. We digress away

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Speaker 1: from economics, finance, investment, we do international relations, we do politics,

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Speaker 1: and maybe they all implode into what Secretary Kissing you're

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Speaker 1: called me. Dr Kissinger called told me was without question

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Speaker 1: the issue of the moment, not only for you Germany,

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Speaker 1: not only for Europe, for the United Kingdom, but frankly

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Speaker 1: for all. And this is the idea of refugees and migrants.

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Speaker 1: We can avoid it. We're a transatlantic ocean away. David

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Speaker 1: Milliban would suggest, no, we can't. You know the name.

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Speaker 1: It is a political family within the United Kingdom. He's

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Speaker 1: confused on a daily basis with his brother. He has

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Speaker 1: written a brilliant monograph, Rescue Refugees in the political crisis

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Speaker 1: of our time. He's dedicated himself to this issue. Dr

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Speaker 1: Kissingers said to me, without question, this is the most

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Speaker 1: important issue in Europe going back hundreds of years. Where's

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Speaker 1: the dynamic as we end two thousand seventeen. Well, the

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Speaker 1: dynamic today, thank you very much for having me on.

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Speaker 1: The dynamic today, is that the refugee crisis is a

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Speaker 1: trend and not a blip. The forces driving record numbers

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Speaker 1: of people from their homes around the world, across the

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Speaker 1: Middle East, across Africa, but also most recently the Rhinga

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Speaker 1: who have been driven from Me and mar those forces

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Speaker 1: are EAP, that to do with weak states that don't

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Speaker 1: share political power, that to do with a weak and

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Speaker 1: divided international system, that to do with tumult within the

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Speaker 1: Islamic world. Those are not going away. And so not

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Speaker 1: just for Europe but for the US too. There are

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Speaker 1: fundamental questions of geopolitics, which is I guess why Dr

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Speaker 1: Kissinger was interested in it, but also of personal commitment

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Speaker 1: and what the West stands for, because the West is

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Speaker 1: a political idea, not just a geographic one, and it's

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Speaker 1: under assault. You're you have a hundred and twenty pages here.

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Speaker 1: It's brought out the Ted people. This is the Ted

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Speaker 1: speaking people. But this is a heavyweight hundred and twenty

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Speaker 1: pages about a massively adult topic. Let's go back to

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Speaker 1: the Europe of nineteen twelve where everything was stable and

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Speaker 1: then it became instable. Uh, there was an instability out

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Speaker 1: of Saraevo and then aren't we go to World War

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Speaker 1: one and all that? Can the refugee crisis have a

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Speaker 1: tendencies towards a Saria Avo where it generates real instability.

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Speaker 1: There's a massive difference because the refugee crisis of the

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Speaker 1: twin year century, certainly the first half of the twentieth

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Speaker 1: century with a result of wars between states. There are

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Speaker 1: no wars between states today. There's no hot wars between

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Speaker 1: two countries. What we have are so called civil wars.

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Speaker 1: In fact, they're very uncivil in various ways. Civil wars

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Speaker 1: are producing record numbers of people fleeing for their lives,

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Speaker 1: and that is because states are collapsing. They're not able

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Speaker 1: to protect their own citizens. Sometimes they're all suiting their

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Speaker 1: own citizens, as in the case of Syria, and sometimes

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Speaker 1: you've got proxy wars being fought. So there's a massive

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Speaker 1: difference today in terms of the origin of these refugee crisis.

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Speaker 1: Second big difference. The Second World War seemed like a

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Speaker 1: long war in the twentieth centuries, six years for America,

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Speaker 1: anything over five years exactly. So the wars in Congo,

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Speaker 1: in Somalia and Afghanistan their thirty year wars. The civil

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Speaker 1: wars that are taking place today are longer and more

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Speaker 1: numerous than at any time in the nineteen or twentie centuries.

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Speaker 1: Third big change. Third and final big change, refugees don't

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Speaker 1: live in camps anymore. Of the world's refugees are in

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Speaker 1: urban areas. It's a phenomenon of globalization that people are urbanizing.

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Speaker 1: That's true of refugee populations as well. So the humanitarian

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Speaker 1: aid model, which was about keep people in camps, give

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Speaker 1: them food and water and healthcare and then they'll go home. Now, well,

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Speaker 1: Turkey's an interesting example. Turkey has built but some of

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Speaker 1: the best refugee camps in the world for two hundred

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Speaker 1: thousand Syrians who they thought would flee as a result

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Speaker 1: of the war. How many fled to Turkey two point

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Speaker 1: seven million. So if you go to a stan bull

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Speaker 1: a thousand kilometers from the Syrian border, it's full of refugees.

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Speaker 1: How should our listeners coast to coast respond and forget

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Speaker 1: about the comfort of the Atlantic and Pacific Ocean in

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Speaker 1: our good relationships with Mexico in Canada, how do we

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Speaker 1: respond to the ageless emotion? Just shut the borders down?

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Speaker 1: I mean, I mean the conservatives are gonna say, oh

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Speaker 1: that Miller Bay and there goes with his lefty tailed again,

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Speaker 1: bring in more people. And then the liberals are going

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Speaker 1: to say, no, we have to bring in more and

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Speaker 1: more and more, and then you have the immediate social

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Speaker 1: Actually it's credit responded. I respond to that by saying

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Speaker 1: the number who come here are very small compared to

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Speaker 1: the numbers. So the US has the global economy and

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Speaker 1: one percent of the world's refugees, and by arguing that

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Speaker 1: the administration could should keep up the historic nine average,

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Speaker 1: we're arguing that that should continue to be a relatively

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Speaker 1: small number. But these are the most vulnerable people who

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Speaker 1: need a new start in life. Secondly, it's vital that

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Speaker 1: countries like Jordan, who are after all, your second closest

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Speaker 1: ally in the Middle East, get the kind of support

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Speaker 1: that allows them to sustain their own administ They're not

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Speaker 1: because neither from the Trump administration nor from the pre administration.

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Speaker 1: They're on a drip feed of short term aid. The

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Speaker 1: Saudis cut off all their aid actually two years ago,

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Speaker 1: and so a country like Jordan, Look, don't take it

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Speaker 1: from me. The King of Jordan says, these countries are boiling.

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Speaker 1: They've got six hundred thousand refugees. So my point is

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Speaker 1: that America's geo strategic interest, as well as the moral

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Speaker 1: interest symbolized by the lady on a plinth in the

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Speaker 1: middle of the water a couple of um that the

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Speaker 1: moral interest is not the only argument. I'm like, I'm

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Speaker 1: not here saying America should just have a big heart.

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Speaker 1: I'm saying here, should have a smart head, which is

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Speaker 1: that if you don't address these problems, it's so causes

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Speaker 1: your interest to suffer, not just your morals. David Bimbad

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Speaker 1: where this is the book is Rescue Refugees in the

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Speaker 1: political crisis of our time. I think of it as

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Speaker 1: something much like what Alan Krueger Princeton would do, which

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Speaker 1: is a short, heated book on the topic. Whether you

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Speaker 1: agree or disagree, it gets you thinking about these issues. Okay,

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Speaker 1: if that's the case, and I want to go to

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Speaker 1: Jordan again. Here is the King of Jordan's he is

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Speaker 1: is Americanized. I mean i I've I've heard him speak

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Speaker 1: at a major independent school within the United States. He's

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Speaker 1: he's as ally as we can describe the refugees in Jordan.

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Speaker 1: Right now, forget about the sanitized view. What's actually there.

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Speaker 1: Jordan's a country of seven in people. It's got six

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Speaker 1: hundred and thirty five thousand registered Syrian refugees, their sunny Muslims.

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Speaker 1: About a hundred thousands of them are living in camps,

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Speaker 1: so five hundred thousand plus are living in towns and

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Speaker 1: cities around Jordan's take Mafrac, which is a small town

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Speaker 1: of about hundred thousand people in northern Jordan's it's population

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Speaker 1: doubled five years ago with the arrival of Syrian refugees.

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Speaker 1: Half of the refugees are kids, and so immediately you've

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Speaker 1: got pressure on housing services, healthcare. Is there a Jordan

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Speaker 1: constituency saying much as in the United States, get them

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Speaker 1: out of a Jordan constituency saying how much longer is

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Speaker 1: this going to go on? Because this looks like a

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Speaker 1: long term problem. They're they're not building a wall, and

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Speaker 1: they are trying to cope with the people who are there.

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Speaker 1: What they are desperate for is some international understanding of

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Speaker 1: their situation beyond short term made. So they're on a

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Speaker 1: just to go into Jordan from minute, they're on a

427
00:23:56,119 --> 00:23:58,879
Speaker 1: dollar peg. They've got an I m F program and

428
00:23:58,880 --> 00:24:02,720
Speaker 1: their debt has basically able to GDP since the refugee

429
00:24:02,720 --> 00:24:04,639
Speaker 1: crisis started, and they're saying there needs to be a

430
00:24:04,640 --> 00:24:07,960
Speaker 1: strategic approach. And my book says employment for adults is

431
00:24:07,960 --> 00:24:10,800
Speaker 1: only gonna be possible if countries like Jordan get macroeconomic help.

432
00:24:11,080 --> 00:24:13,680
Speaker 1: Half the refugees are kids, So it's crazy that two

433
00:24:13,680 --> 00:24:16,760
Speaker 1: percent of the world's humanitarian aid budget goes on education

434
00:24:16,880 --> 00:24:19,919
Speaker 1: that must be increased. Thirdly, these people don't need food intents,

435
00:24:19,960 --> 00:24:21,480
Speaker 1: they need cash because they need to be part of

436
00:24:21,480 --> 00:24:24,680
Speaker 1: the part of the Jordanian economy. There's one other thing

437
00:24:24,720 --> 00:24:27,240
Speaker 1: they need, which is that for the King of Jordan.

438
00:24:27,320 --> 00:24:30,879
Speaker 1: The politics in Jordan's are five times more difficult when

439
00:24:31,280 --> 00:24:33,080
Speaker 1: it looks like the US is saying we're not going

440
00:24:33,119 --> 00:24:35,399
Speaker 1: to let these people come into here because there Muslim.

441
00:24:35,440 --> 00:24:38,200
Speaker 1: That's a political problem, not just a problem for the

442
00:24:38,200 --> 00:24:40,080
Speaker 1: individual refuge And in the time we have left and

443
00:24:40,119 --> 00:24:42,800
Speaker 1: look at eighteen topics to talk about, including why someone

444
00:24:42,840 --> 00:24:46,919
Speaker 1: should go to your Massachusetts Institute of Technology, Let me

445
00:24:47,000 --> 00:24:50,000
Speaker 1: go here. You were the wonder child of the Gordon

446
00:24:50,040 --> 00:24:53,639
Speaker 1: Brown era? Were you like thirty seven or three? But

447
00:24:53,880 --> 00:24:56,119
Speaker 1: I wish I was forty two when I became two. Okay,

448
00:24:56,119 --> 00:25:00,840
Speaker 1: you were young. You've now had the courage now and

449
00:25:00,960 --> 00:25:03,920
Speaker 1: you you've you've left and you've been out working on

450
00:25:03,920 --> 00:25:06,879
Speaker 1: this project and doing other things. Do you want to

451
00:25:06,920 --> 00:25:11,359
Speaker 1: get back into the public swirl within a completely fractured

452
00:25:11,440 --> 00:25:14,080
Speaker 1: United Kingdom? Well, I think that I feel I'm in

453
00:25:14,119 --> 00:25:17,000
Speaker 1: the public swirl in a way. I have much less

454
00:25:17,000 --> 00:25:19,560
Speaker 1: power as an en GEO leader than as a government minister.

455
00:25:19,800 --> 00:25:22,280
Speaker 1: But there are also fewer obstacles to me doing what

456
00:25:22,359 --> 00:25:24,280
Speaker 1: I want to do. I always say to people, look,

457
00:25:24,320 --> 00:25:27,919
Speaker 1: I'll choose where I put myself professionally by how much

458
00:25:27,960 --> 00:25:29,840
Speaker 1: difference I can make. And four years ago I felt

459
00:25:29,840 --> 00:25:32,040
Speaker 1: I could make more difference running an NGO in New

460
00:25:32,119 --> 00:25:35,480
Speaker 1: York than I could in as a politician on the

461
00:25:35,480 --> 00:25:38,199
Speaker 1: back benches of the UK Parliament. And that's why I'm

462
00:25:38,240 --> 00:25:41,080
Speaker 1: doing what I'm doing. We've published this bookcause I think

463
00:25:41,080 --> 00:25:44,840
Speaker 1: this is a symptom of the crisis of globalization that

464
00:25:45,040 --> 00:25:48,040
Speaker 1: is roiling countries like this one and countries across Europe

465
00:25:48,119 --> 00:25:53,280
Speaker 1: in distigle. It's acclaim book, Globalization and its Discontents. Where

466
00:25:53,359 --> 00:25:57,359
Speaker 1: is this discontent of refugees and migrants in five years?

467
00:25:57,960 --> 00:26:01,000
Speaker 1: I think the trends are that it will be a

468
00:26:01,000 --> 00:26:04,240
Speaker 1: source of more instability because and I say that for

469
00:26:04,240 --> 00:26:06,960
Speaker 1: two reasons. One, there's a crisis of diplomacy. Your State

470
00:26:07,000 --> 00:26:11,439
Speaker 1: Department is being shrunk. Yeah, there's no there's no sign

471
00:26:11,640 --> 00:26:14,560
Speaker 1: of the kind of active diplomacy that will get to

472
00:26:14,560 --> 00:26:16,760
Speaker 1: the roots of these problems. I mean, the crisis in

473
00:26:16,840 --> 00:26:20,560
Speaker 1: Yemen is mushrooming not going away. Um. But secondly, there

474
00:26:20,720 --> 00:26:23,560
Speaker 1: is a feeling that you have to tackle your problems

475
00:26:23,600 --> 00:26:25,760
Speaker 1: on the home front rather than the global problems. And

476
00:26:25,800 --> 00:26:29,159
Speaker 1: my argument is, in the modern interconnected world, if you

477
00:26:29,160 --> 00:26:30,960
Speaker 1: don't solve the world's problems, and you're gonna have bigger

478
00:26:30,960 --> 00:26:33,320
Speaker 1: problems at home. David, don't be a stranger. Thank you

479
00:26:33,359 --> 00:26:36,119
Speaker 1: so much. The monitory effort. It's a lovely short brief

480
00:26:36,560 --> 00:26:57,000
Speaker 1: must read rescue and refugees and migrantes. Jim Bianco with

481
00:26:57,119 --> 00:27:01,520
Speaker 1: US out of Bianco Research, Chicago. A few years ago.

482
00:27:01,600 --> 00:27:07,160
Speaker 1: He worked for firms called First Boston and Sheerson Lehman Brothers.

483
00:27:07,440 --> 00:27:09,440
Speaker 1: For those of you younger, you have no idea who

484
00:27:09,440 --> 00:27:12,720
Speaker 1: those firms are. That's how old we're getting, Jim. When

485
00:27:12,720 --> 00:27:14,880
Speaker 1: we look at this, we look as you looked at

486
00:27:14,880 --> 00:27:19,480
Speaker 1: First Boston and Cherson Lehman Ubs and other firms. It's support.

487
00:27:20,720 --> 00:27:25,800
Speaker 1: Is there a support on bitcoin? Oh, that's a good question.

488
00:27:25,880 --> 00:27:28,159
Speaker 1: And boy, you're to bring me back into memories with

489
00:27:28,200 --> 00:27:32,080
Speaker 1: those firm names. I there, Well, I'm not sure what

490
00:27:32,160 --> 00:27:35,080
Speaker 1: you mean by support. Let me ask you. If I'm

491
00:27:35,160 --> 00:27:39,119
Speaker 1: running an arithmetic it's clearly log hyperbolic. It's clearly hyperbolic.

492
00:27:39,480 --> 00:27:42,159
Speaker 1: But even now with a log arrhythmic y axis showing

493
00:27:42,200 --> 00:27:47,080
Speaker 1: percent change, it's bordering on allusions to a hyperbolic move

494
00:27:47,280 --> 00:27:50,919
Speaker 1: up like you get with the Zimbabwe dollar or whatever. Okay,

495
00:27:51,000 --> 00:27:54,560
Speaker 1: so I got a moon shot up in bitcoin. How

496
00:27:54,600 --> 00:28:00,560
Speaker 1: does a technician of your acclaim fine support on a

497
00:28:00,640 --> 00:28:05,160
Speaker 1: moon shot? Oh? You you can and you can't. I mean,

498
00:28:05,280 --> 00:28:07,840
Speaker 1: if you use your traditional tools, what you wind up

499
00:28:07,840 --> 00:28:11,040
Speaker 1: saying is you buy it, but support where you'd want

500
00:28:11,080 --> 00:28:14,840
Speaker 1: to consider selling it is a thirty or drop you

501
00:28:14,560 --> 00:28:17,919
Speaker 1: at your money? Yeah, so it becomes it becomes a

502
00:28:18,040 --> 00:28:21,440
Speaker 1: very difficult market from a technical standpoint and even from

503
00:28:21,480 --> 00:28:25,240
Speaker 1: a practical standpoint just watching it going, you know, straight

504
00:28:25,320 --> 00:28:28,800
Speaker 1: up through the through the sky. Uh So it is

505
00:28:28,920 --> 00:28:32,520
Speaker 1: something that you have to look at. Accordingly, anybody who

506
00:28:32,560 --> 00:28:35,399
Speaker 1: invest in it should be investing a very small amount

507
00:28:35,400 --> 00:28:37,520
Speaker 1: of money because you can wake up and half your

508
00:28:37,560 --> 00:28:40,080
Speaker 1: money is gone and you don't want to leap over that.

509
00:28:40,200 --> 00:28:41,920
Speaker 1: And the key sentence there, folks, And you know, I

510
00:28:41,960 --> 00:28:44,600
Speaker 1: know where Jim is going on this support is you know,

511
00:28:44,720 --> 00:28:48,760
Speaker 1: twelve thousand, it's like five six eight thousand, uh dollars

512
00:28:48,760 --> 00:28:51,240
Speaker 1: below and a bitcoin pim do you have anything wise

513
00:28:51,280 --> 00:28:53,600
Speaker 1: to say? Over here. You're just know, I'm just well,

514
00:28:53,640 --> 00:28:55,280
Speaker 1: I thinking about bitcoin. Let me just give you the

515
00:28:55,360 --> 00:28:58,760
Speaker 1: actual change, the actual figures here. The of course you can.

516
00:28:59,360 --> 00:29:02,120
Speaker 1: It's a three a difference in the bid ask right now,

517
00:29:02,200 --> 00:29:06,720
Speaker 1: I think, and we're hey, Jim, you know when Tom

518
00:29:06,760 --> 00:29:10,560
Speaker 1: brings up this idea of a bitcoin um the fact

519
00:29:10,600 --> 00:29:13,080
Speaker 1: that there may be this sort of you know, an

520
00:29:13,080 --> 00:29:15,680
Speaker 1: ability to sell it. I mean, you very rarely hear

521
00:29:15,680 --> 00:29:17,880
Speaker 1: people coming out and saying sell you you know, when

522
00:29:17,920 --> 00:29:20,200
Speaker 1: to sell a stock. So you know, it's not like

523
00:29:20,200 --> 00:29:22,200
Speaker 1: he got a lot of advice on that side. Either

524
00:29:22,280 --> 00:29:24,400
Speaker 1: you try to dump a million shares or something. I mean,

525
00:29:24,440 --> 00:29:28,160
Speaker 1: you're going to affect the price, that's right. And see

526
00:29:28,200 --> 00:29:32,800
Speaker 1: the benefit bitcoin has right now is it only has buyers.

527
00:29:33,280 --> 00:29:36,320
Speaker 1: And you know who sells bitcoin is somebody who's already

528
00:29:36,320 --> 00:29:39,960
Speaker 1: bought it and is trying to liquidate a existing position,

529
00:29:40,280 --> 00:29:42,440
Speaker 1: probably at a profit because of the big rally that

530
00:29:42,480 --> 00:29:45,360
Speaker 1: it's had. You can't spend them. You technically can, but

531
00:29:45,480 --> 00:29:48,320
Speaker 1: not in any numbers that matter. You can't short it.

532
00:29:48,840 --> 00:29:52,360
Speaker 1: So what would get the price of bitcoin basically to

533
00:29:52,880 --> 00:29:56,280
Speaker 1: crash like some people have predicted, is you'd have to

534
00:29:56,480 --> 00:30:00,840
Speaker 1: scare all of the longholders out. Probably a act or

535
00:30:00,840 --> 00:30:03,560
Speaker 1: a change of technology or something like that would make

536
00:30:03,560 --> 00:30:05,960
Speaker 1: everybody afraid of the money that they have in their

537
00:30:06,000 --> 00:30:08,960
Speaker 1: electronic wallet and seek to close it real fast, sell

538
00:30:09,000 --> 00:30:11,719
Speaker 1: everything they've gotten get out. But that hasn't happened. So

539
00:30:11,800 --> 00:30:13,880
Speaker 1: that's one of the biggest supports that this thing has

540
00:30:13,920 --> 00:30:16,760
Speaker 1: going is it's just money coming in all the time,

541
00:30:17,160 --> 00:30:19,800
Speaker 1: and the only selling you get it's down a little bit,

542
00:30:20,080 --> 00:30:23,200
Speaker 1: you know, relative to its folatility, is those are existing

543
00:30:23,240 --> 00:30:26,160
Speaker 1: people taking profits. That's the only person that is selling

544
00:30:26,160 --> 00:30:28,360
Speaker 1: it right now, which is why it relentlessly goes up

545
00:30:28,400 --> 00:30:31,200
Speaker 1: because more money keeps coming in all the time. If

546
00:30:31,200 --> 00:30:32,680
Speaker 1: we come back in a year, do you think that

547
00:30:32,720 --> 00:30:35,320
Speaker 1: bitcoin is going to be more legitimate or another of

548
00:30:35,360 --> 00:30:39,840
Speaker 1: these uh sort of coin offerings. No, I'm a I'm

549
00:30:39,840 --> 00:30:42,600
Speaker 1: a big believer in the long term of the cryptocurrencies.

550
00:30:42,880 --> 00:30:45,800
Speaker 1: I think that they have a real promise to fulfill

551
00:30:45,880 --> 00:30:49,200
Speaker 1: a need that the world doesn't have right now, and

552
00:30:49,280 --> 00:30:52,440
Speaker 1: simply that is, we have no way to transfer money

553
00:30:52,560 --> 00:30:55,480
Speaker 1: free because we have to have like a credit card

554
00:30:55,480 --> 00:30:58,080
Speaker 1: company or bank stand in the middle as an intermediary,

555
00:30:58,120 --> 00:31:00,480
Speaker 1: and we have no way to do micro payments, you know,

556
00:31:00,560 --> 00:31:03,360
Speaker 1: finished listening to this interview. For five cents or something

557
00:31:03,440 --> 00:31:05,960
Speaker 1: like that. Bloomberg can't put that on that too rich.

558
00:31:06,040 --> 00:31:08,760
Speaker 1: We couldn't do that, yeah, okay, or even a tenth

559
00:31:08,760 --> 00:31:12,560
Speaker 1: of a penny. We could go stoppenny because it's been suggests.

560
00:31:12,640 --> 00:31:15,840
Speaker 1: Keep talking, Jim, Yeah, right. But the point is the

561
00:31:15,880 --> 00:31:19,240
Speaker 1: meter is ticking, you know. The New New York Times

562
00:31:19,280 --> 00:31:22,440
Speaker 1: finished reading this article. For five cents, that's what bigcoin

563
00:31:22,560 --> 00:31:25,880
Speaker 1: can offer, A free way to transfer very small sums

564
00:31:25,960 --> 00:31:30,880
Speaker 1: of money without an intermediary making any prohibitive cost. The intermediaries,

565
00:31:30,920 --> 00:31:33,160
Speaker 1: the banks don't offer that right now. That's why I'm

566
00:31:33,200 --> 00:31:35,600
Speaker 1: such a big believer in it. We hear uh, Pim

567
00:31:35,680 --> 00:31:40,239
Speaker 1: Fox and Jim Bianco that the President's uh signing of

568
00:31:40,320 --> 00:31:43,600
Speaker 1: the bill passage. They're calling it a bill passage event

569
00:31:44,240 --> 00:31:48,480
Speaker 1: shifts from one pm to the vicinity of three pm

570
00:31:48,480 --> 00:31:52,600
Speaker 1: three pm this afternoon. Uh, And it's really I'm not

571
00:31:52,720 --> 00:31:55,480
Speaker 1: sure if there'll be Q and eight. It was earlier

572
00:31:55,520 --> 00:31:58,320
Speaker 1: believed there would be a chance to discuss this with

573
00:31:58,360 --> 00:32:00,840
Speaker 1: the President the United States. We're not sure. But the

574
00:32:01,240 --> 00:32:04,000
Speaker 1: key point there is for those a two to one pm,

575
00:32:04,000 --> 00:32:08,160
Speaker 1: we're shifting to three pm with the president today as well,

576
00:32:08,240 --> 00:32:11,040
Speaker 1: Jim Bianco. One of the great things, and again within

577
00:32:11,080 --> 00:32:15,160
Speaker 1: Bianco synthesis, is everybody said it's a single digit world,

578
00:32:15,560 --> 00:32:19,560
Speaker 1: and yet we keep getting double digit stock market returns.

579
00:32:20,280 --> 00:32:23,480
Speaker 1: When do we get back to the actual assumption of

580
00:32:23,520 --> 00:32:27,400
Speaker 1: a single digit world. It could be as early as

581
00:32:27,440 --> 00:32:30,760
Speaker 1: next year, I mean right now. The big benefit that

582
00:32:30,840 --> 00:32:33,680
Speaker 1: the market has had throughout the second half of two

583
00:32:33,680 --> 00:32:37,760
Speaker 1: thousand and eighteen is there has been a relentless move,

584
00:32:38,160 --> 00:32:40,920
Speaker 1: you know, to use Wall Street parlance of money towards

585
00:32:41,040 --> 00:32:45,160
Speaker 1: risk on money keeps coming into either e tfs or

586
00:32:45,240 --> 00:32:49,240
Speaker 1: funds every day that invest in stocks, invest in credit,

587
00:32:49,240 --> 00:32:52,400
Speaker 1: and invest in what we refer to as risk on assets.

588
00:32:52,560 --> 00:32:55,120
Speaker 1: In the last couple of weeks, that's been waning a

589
00:32:55,200 --> 00:32:58,200
Speaker 1: little bit. Uh, you know, it's still coming, but not

590
00:32:58,240 --> 00:33:00,840
Speaker 1: as much as it was a three months ago. And

591
00:33:00,880 --> 00:33:03,760
Speaker 1: if it was to reverse into the beginning of the year,

592
00:33:04,280 --> 00:33:06,800
Speaker 1: we could finally start being a correction or maybe some

593
00:33:06,920 --> 00:33:10,360
Speaker 1: turbulent in the market. But right now that it's just

594
00:33:10,440 --> 00:33:13,440
Speaker 1: theoretical park, we're not quite there yet. Jim Byako, thank

595
00:33:13,440 --> 00:33:15,640
Speaker 1: you so much, greatly appreciate it. Bianco Research with a

596
00:33:15,760 --> 00:33:25,840
Speaker 1: nice uptake. Thanks for listening to the Bloomberg Surveillance Podcast.

597
00:33:26,200 --> 00:33:31,160
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

598
00:33:31,320 --> 00:33:35,600
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

599
00:33:35,720 --> 00:33:39,600
Speaker 1: Keane before the podcast. You can always catch us worldwide.

600
00:33:40,040 --> 00:33:41,120
Speaker 1: I'm Bloomberg Radio