1 00:00:00,880 --> 00:00:04,320 Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch us 2 00:00:04,400 --> 00:00:07,560 Speaker 1: live weekdays at one Eastern on Bloomberg dot com, the 3 00:00:07,640 --> 00:00:10,719 Speaker 1: iHeartRadio app and the Bloomberg Business App, or listening on 4 00:00:10,800 --> 00:00:12,960 Speaker 1: demand wherever you get your podcasts. 5 00:00:13,320 --> 00:00:16,239 Speaker 2: Well, welcome to Bloomberg Sound On. We're live from Washington 6 00:00:16,280 --> 00:00:19,360 Speaker 2: here as President Biden arrives in Japan for the g 7 00:00:19,480 --> 00:00:21,840 Speaker 2: seventh Summit. That's where he is right now, kicking off 8 00:00:21,880 --> 00:00:25,560 Speaker 2: a bilateral meeting with Japan's Prime Minister with a message 9 00:00:25,680 --> 00:00:26,320 Speaker 2: on Ukraine. 10 00:00:26,400 --> 00:00:30,200 Speaker 3: We stand up for the shared values, including supporting the 11 00:00:30,200 --> 00:00:33,480 Speaker 3: brave people of Ukraine as they defend their sovereign territory 12 00:00:34,440 --> 00:00:37,000 Speaker 3: and holding Russia accountable for his peudal aggression. 13 00:00:37,240 --> 00:00:40,519 Speaker 2: Meantime, in Kiev, the capital coming under another round of 14 00:00:40,520 --> 00:00:46,040 Speaker 2: blistering aerial attacks from Russia. Sound of Ukrainian air defense 15 00:00:46,080 --> 00:00:49,680 Speaker 2: systems working as Kiev takes aim now at Russia's AMMO 16 00:00:49,760 --> 00:00:53,199 Speaker 2: and supply depots ahead of the spring offensive that we 17 00:00:53,280 --> 00:00:55,480 Speaker 2: have all been talking about for months. This is where 18 00:00:55,480 --> 00:00:58,400 Speaker 2: we begin today with James Jeffries, share of the Middle 19 00:00:58,440 --> 00:01:01,560 Speaker 2: East Program at the Wilson Center, former Ambassador to Iraq 20 00:01:01,600 --> 00:01:04,920 Speaker 2: and Turkey and Special Envoy to the global coalition to 21 00:01:04,920 --> 00:01:07,720 Speaker 2: defeat isis mister ambassador, it's great to have you back here. 22 00:01:07,800 --> 00:01:10,760 Speaker 2: Is this in fact the beginning stages of the Spring 23 00:01:10,800 --> 00:01:14,759 Speaker 2: offensive that we were anticipating it is. 24 00:01:15,120 --> 00:01:18,679 Speaker 4: The two issues are do they have enough time to 25 00:01:18,720 --> 00:01:22,640 Speaker 4: incorporate all of the new Western military equipment, particularly main 26 00:01:22,720 --> 00:01:27,279 Speaker 4: battle tanks and the terrain. It is often very muddy 27 00:01:27,280 --> 00:01:29,800 Speaker 4: in Ukraine in the spring and they need dry, hot 28 00:01:29,880 --> 00:01:32,679 Speaker 4: terrain to operate off road. But it looks like we're 29 00:01:32,680 --> 00:01:35,040 Speaker 4: moving closer to it. What we're seeing now in these 30 00:01:35,080 --> 00:01:38,440 Speaker 4: strikes in the hinterlands behind the Russian lines, is what 31 00:01:38,480 --> 00:01:43,120 Speaker 4: we call preparing the battlefield. Yes, that's the expected strategic 32 00:01:43,280 --> 00:01:46,280 Speaker 4: step that they would take. The next step will be 33 00:01:46,400 --> 00:01:49,480 Speaker 4: on the ground. Let me emphasize to your viewers, as 34 00:01:49,560 --> 00:01:53,000 Speaker 4: President Biden said, this isn't just Ukraine's fight. This is 35 00:01:53,120 --> 00:01:55,360 Speaker 4: all of our fight to maintain the world that we 36 00:01:55,480 --> 00:01:58,320 Speaker 4: put together during and after World War Two, and now 37 00:01:58,440 --> 00:02:03,200 Speaker 4: challenged by Russia indirectly across the globe by China. It's very, 38 00:02:03,280 --> 00:02:08,800 Speaker 4: very important that the Ukrainians win. They are facing high odds, 39 00:02:09,160 --> 00:02:12,040 Speaker 4: dug in Russian troops more numerous than they normally. You 40 00:02:12,120 --> 00:02:15,000 Speaker 4: need a three to one advantage at least to go 41 00:02:15,080 --> 00:02:18,560 Speaker 4: on the offensive. But what the Ukrainians have is high morale, 42 00:02:18,960 --> 00:02:22,840 Speaker 4: superb training, and they're facing a Russian army that keeps failing. 43 00:02:22,919 --> 00:02:27,800 Speaker 4: Most recently, their hypersynic missile barajohn Kiev was shot down 44 00:02:27,840 --> 00:02:31,640 Speaker 4: by our thirty year old Patriot missiles, updated but still 45 00:02:31,680 --> 00:02:35,200 Speaker 4: thirty years old that the Russians didn't think would happen. 46 00:02:35,280 --> 00:02:38,600 Speaker 4: This is yet another slap in the face to Russia's ambitions. 47 00:02:38,840 --> 00:02:41,440 Speaker 4: They have yet to take bak Mut, despite throwing in 48 00:02:41,520 --> 00:02:45,560 Speaker 4: hundreds of thousands of troops. They are failing across the board, 49 00:02:45,720 --> 00:02:48,600 Speaker 4: and that can have a psychological effect that the Ukrainians 50 00:02:48,600 --> 00:02:49,200 Speaker 4: can exploit. 51 00:02:49,800 --> 00:02:52,519 Speaker 2: Ambassador the Wall Street journalist calling it the offensive before 52 00:02:52,520 --> 00:02:56,720 Speaker 2: the offensive, reporting four drones attacked a Russian oil refinery 53 00:02:56,800 --> 00:02:59,959 Speaker 2: almost three hundred miles from Ukraine. And to your point, 54 00:03:00,280 --> 00:03:04,040 Speaker 2: stepping up attacks on positions well inside Russian held territory, 55 00:03:04,080 --> 00:03:06,760 Speaker 2: they call it shaping operations. How long might this take? 56 00:03:08,000 --> 00:03:11,560 Speaker 4: Shaping operations determined by two things. First of all, your 57 00:03:11,560 --> 00:03:15,080 Speaker 4: readiness to launch a full scale offensive, and as I said, 58 00:03:15,280 --> 00:03:20,040 Speaker 4: that depends on logistics, delivery and training with equipment and 59 00:03:20,120 --> 00:03:22,560 Speaker 4: the state of the weather. But secondly, it depends on 60 00:03:22,600 --> 00:03:27,639 Speaker 4: the success of the shaping operations. Now, even our operations, 61 00:03:27,680 --> 00:03:30,880 Speaker 4: far more massive in Normandy before D Day didn't cut 62 00:03:30,919 --> 00:03:35,480 Speaker 4: off entirely the German ability to resupply. What's important is 63 00:03:35,640 --> 00:03:39,520 Speaker 4: this is diverting Russian resources and Russian attention at the time. 64 00:03:39,560 --> 00:03:41,760 Speaker 4: They should be focused on preparing for the attack, and 65 00:03:41,800 --> 00:03:43,640 Speaker 4: that's the intention of the Ukrainians. 66 00:03:43,920 --> 00:03:48,400 Speaker 2: I suspect that really speaks to the precision that's required 67 00:03:48,640 --> 00:03:53,480 Speaker 2: by Ukraine's military. Russia has the scale. Can Ukraine cripple 68 00:03:53,880 --> 00:03:55,200 Speaker 2: that effort with precision? 69 00:03:56,320 --> 00:03:58,920 Speaker 4: This is what we train for. When I was in 70 00:03:58,960 --> 00:04:01,880 Speaker 4: the army in the nineteen seventies in Europe, it was 71 00:04:01,920 --> 00:04:05,240 Speaker 4: called ill end battle, fight, out numbered and win. It 72 00:04:05,360 --> 00:04:08,120 Speaker 4: worked for us in one hundred hours against Hoddan's army. 73 00:04:08,160 --> 00:04:11,600 Speaker 4: It's working with the Ukrainian army against the Russians. The 74 00:04:11,680 --> 00:04:15,800 Speaker 4: Russians are bigger, but they're immobilized, they're not creative, they 75 00:04:15,840 --> 00:04:20,400 Speaker 4: don't delegate authority. They have central and slow moving command, 76 00:04:20,600 --> 00:04:23,240 Speaker 4: and the Ukrainians can take advantage in hor of all 77 00:04:23,279 --> 00:04:26,239 Speaker 4: of this. That's what counts on the battlefield, not counting 78 00:04:26,520 --> 00:04:28,919 Speaker 4: each side's artillery pieces. 79 00:04:29,000 --> 00:04:31,960 Speaker 2: Ned price was briefing just a couple of days ago 80 00:04:32,000 --> 00:04:35,840 Speaker 2: from the Pentagon State Department. Rather the State Department spokesman 81 00:04:36,279 --> 00:04:41,600 Speaker 2: talking about the weapons that were not still willing to 82 00:04:41,680 --> 00:04:44,560 Speaker 2: send in terms of long range missiles, never mind the 83 00:04:44,560 --> 00:04:49,240 Speaker 2: conversation about fighter jets, even as some European nations deliver 84 00:04:49,440 --> 00:04:52,960 Speaker 2: that very thing. I wonder your thoughts on this. Says 85 00:04:53,040 --> 00:04:55,840 Speaker 2: the UK sends hundreds of air defense missiles and long 86 00:04:55,960 --> 00:04:58,800 Speaker 2: range attack drones. Should the US be doing the same. 87 00:04:59,640 --> 00:05:03,000 Speaker 4: Exactly, specifically, what's called the attack of missile that you 88 00:05:03,080 --> 00:05:06,599 Speaker 4: can fire from the Himas rocket system. We've long since 89 00:05:06,640 --> 00:05:12,280 Speaker 4: given the Ukrainians. This is Washington gazing at its own navel. 90 00:05:12,360 --> 00:05:14,679 Speaker 4: And I've seen it in every war we've been involved 91 00:05:14,720 --> 00:05:17,080 Speaker 4: in it, and I've been involved in most of them since Vietnam. 92 00:05:17,520 --> 00:05:23,120 Speaker 4: We constantly self deter ourselves by worrying about tiny little steps. 93 00:05:23,400 --> 00:05:26,200 Speaker 4: The Ukrainian shouldn't be given weapons that will allow them, 94 00:05:26,240 --> 00:05:28,720 Speaker 4: with our help, to be striking deep into Russia. That's 95 00:05:28,760 --> 00:05:31,240 Speaker 4: a deal I think we have behind the scenes with Moscow. 96 00:05:31,600 --> 00:05:34,239 Speaker 4: But they certainly should be allowed to have any weapon 97 00:05:34,360 --> 00:05:38,280 Speaker 4: under the SunShot of nuclear to strike Russians in Ukraine. 98 00:05:38,320 --> 00:05:40,919 Speaker 4: And why we're not doing. This is beyond me. You 99 00:05:41,000 --> 00:05:43,120 Speaker 4: remember the foss about the Abrams tanks. 100 00:05:43,360 --> 00:05:44,320 Speaker 5: We wouldn't. 101 00:05:44,360 --> 00:05:46,880 Speaker 6: We wouldn't until we would brig it. 102 00:05:46,960 --> 00:05:49,919 Speaker 2: Your General pat Ryder, speaking at the Pentagon, talked about. 103 00:05:49,839 --> 00:05:50,320 Speaker 6: This as well. 104 00:05:50,320 --> 00:05:52,760 Speaker 2: He was asked if the US would provide similar missiles 105 00:05:53,200 --> 00:05:55,120 Speaker 2: that the UK is providing very quickly. 106 00:05:55,160 --> 00:05:55,800 Speaker 6: Here's what he said. 107 00:05:55,880 --> 00:05:59,560 Speaker 7: We have provided a wide variety of capabilities to include 108 00:06:00,360 --> 00:06:05,159 Speaker 7: things like artillery, air defense, armor, ammunition, and we'll continue 109 00:06:05,160 --> 00:06:06,440 Speaker 7: to do that going forward. 110 00:06:06,160 --> 00:06:08,359 Speaker 2: But apparently nothing new on the list. Ambassador, was that 111 00:06:08,400 --> 00:06:09,040 Speaker 2: the wrong answer? 112 00:06:09,040 --> 00:06:14,080 Speaker 4: Then it's like you've got a misbehaving child and you say, 113 00:06:14,360 --> 00:06:16,839 Speaker 4: why didn't you eat your porridge? Well, I did my 114 00:06:16,960 --> 00:06:21,680 Speaker 4: homework last night, and I am engaged in a process 115 00:06:21,760 --> 00:06:26,760 Speaker 4: of evaluating whether I'll eat my porridge tomorrow. But right now, 116 00:06:26,880 --> 00:06:30,320 Speaker 4: let's shift the topic. This is typical when you don't 117 00:06:30,320 --> 00:06:31,760 Speaker 4: have a good answer to say that. 118 00:06:32,160 --> 00:06:37,159 Speaker 2: President Biden is in Japan today, Ambassador, along with many 119 00:06:37,240 --> 00:06:41,080 Speaker 2: of his national security advisors, and Ukraine is in the air. 120 00:06:41,120 --> 00:06:44,400 Speaker 2: As he sat down at an important bilateral meeting with 121 00:06:44,480 --> 00:06:46,880 Speaker 2: the Prime Minister of Japan. It was Ukraine that he 122 00:06:46,960 --> 00:06:49,800 Speaker 2: pointed to us. We noted at the top of our 123 00:06:49,880 --> 00:06:53,280 Speaker 2: conversation here. How important of a topic. 124 00:06:52,960 --> 00:06:54,719 Speaker 6: Will this be for the next two days. 125 00:06:55,640 --> 00:06:59,479 Speaker 4: Very important, not only for the defense of Ukraine and 126 00:06:59,480 --> 00:07:03,640 Speaker 4: the defense NATO, but the defense of Japan, in Korea, 127 00:07:04,279 --> 00:07:07,520 Speaker 4: in Taiwan and all of East Asia. When you have 128 00:07:07,600 --> 00:07:11,200 Speaker 4: a collective security global system, as we've had since the 129 00:07:11,280 --> 00:07:15,160 Speaker 4: nineteen forties, you have to defend everywhere. If you want 130 00:07:15,200 --> 00:07:20,160 Speaker 4: to defend anywhere that Chinese are watching, we are, more 131 00:07:20,360 --> 00:07:24,360 Speaker 4: specifically Celenski. With our help wins in Ukraine, You're going 132 00:07:24,440 --> 00:07:27,080 Speaker 4: to see a much more reluctant China to take on 133 00:07:27,240 --> 00:07:29,640 Speaker 4: us and all of our partners, because we've shown we 134 00:07:29,720 --> 00:07:31,200 Speaker 4: can rain hell on these guys. 135 00:07:31,400 --> 00:07:34,480 Speaker 2: Yeah right, there's news that a deal allowing Ukraine to 136 00:07:34,520 --> 00:07:37,600 Speaker 2: export crops from ports in the Black Sea is to 137 00:07:37,680 --> 00:07:40,400 Speaker 2: be extended. Russia is agreeing to stay in the pact 138 00:07:40,400 --> 00:07:43,280 Speaker 2: for now. According to Turkey or the former ambassador to Turkey, 139 00:07:43,320 --> 00:07:45,200 Speaker 2: are they a trusted actor in this conversation? 140 00:07:46,160 --> 00:07:48,680 Speaker 4: Absolutely, this is Turkey has been very helpful in a 141 00:07:48,680 --> 00:07:53,240 Speaker 4: lot of ways on Ukraine, shutting off Russian naval reinforcements, 142 00:07:54,760 --> 00:07:57,280 Speaker 4: signal giving the green light for Finland to come in, 143 00:07:57,480 --> 00:08:05,560 Speaker 4: massively complicating Russia's strategic outlook. Now Turkey maintains in some 144 00:08:05,640 --> 00:08:09,040 Speaker 4: respects good relations with Putin even as they contain Putin 145 00:08:09,080 --> 00:08:12,680 Speaker 4: all around their perimeter. That's simply the way the country ticks. 146 00:08:13,080 --> 00:08:15,800 Speaker 2: Well, how important will the outcome of elections here be 147 00:08:16,560 --> 00:08:19,080 Speaker 2: for the future of this agreement in Turkey's help in 148 00:08:19,120 --> 00:08:19,760 Speaker 2: the war effort. 149 00:08:21,280 --> 00:08:26,160 Speaker 4: In terms of domestic politics, given President Duwan's authoritarian tendencies 150 00:08:26,240 --> 00:08:29,440 Speaker 4: in his likelihood to stay on, it's not going to 151 00:08:29,480 --> 00:08:33,240 Speaker 4: be a good day for a division of power and 152 00:08:33,360 --> 00:08:38,120 Speaker 4: liberal democracy. In terms of foreign policy, it was highly unlikely, 153 00:08:38,160 --> 00:08:40,360 Speaker 4: and I was just in Turkey talking to people close 154 00:08:40,440 --> 00:08:45,320 Speaker 4: to his main opponent, Kamal Kilich Darlow. It was very 155 00:08:45,400 --> 00:08:49,160 Speaker 4: unlikely that they would change the basic tenets of Turkish 156 00:08:49,200 --> 00:08:51,760 Speaker 4: forum policy and what they call the Near abroad, because 157 00:08:51,760 --> 00:08:56,920 Speaker 4: those are national interests. They're essential for Turkey's security, including 158 00:08:57,200 --> 00:09:00,920 Speaker 4: containing Russia and Iran but also not breaking relations with them, 159 00:09:01,160 --> 00:09:03,280 Speaker 4: and they would have continued no matter who's in charge 160 00:09:03,280 --> 00:09:03,840 Speaker 4: and will. 161 00:09:04,080 --> 00:09:06,920 Speaker 2: We're spending some time with former Ambassador James Jeffries here 162 00:09:06,960 --> 00:09:07,959 Speaker 2: on Bloomberg Radio. 163 00:09:08,280 --> 00:09:09,679 Speaker 6: I'm Joe Matthew and Washington. 164 00:09:09,720 --> 00:09:12,760 Speaker 2: The president decided to cut half of this trip short, 165 00:09:12,800 --> 00:09:14,920 Speaker 2: maybe even more of that, actually, the back half that 166 00:09:14,960 --> 00:09:17,720 Speaker 2: would have included a stop in Papua New Guinea and 167 00:09:17,760 --> 00:09:22,320 Speaker 2: Australia the Quad meeting. How important are those conversations that 168 00:09:22,400 --> 00:09:24,440 Speaker 2: this president's about to miss. Did he make the right call? 169 00:09:25,240 --> 00:09:28,080 Speaker 4: He did make the right call, obviously as a diplomat, 170 00:09:28,160 --> 00:09:32,440 Speaker 4: My recommendation is, Boss, find us a lot someplace in 171 00:09:32,520 --> 00:09:37,000 Speaker 4: August to do this. But for the moment, the whole 172 00:09:37,679 --> 00:09:42,040 Speaker 4: collective security system is based not just on American military, Mike, 173 00:09:42,120 --> 00:09:44,680 Speaker 4: but the health of our economy, and that is being 174 00:09:44,800 --> 00:09:47,280 Speaker 4: risked if we don't find a way to deal with 175 00:09:47,320 --> 00:09:49,959 Speaker 4: the debt limit. And that is job one, job two, 176 00:09:50,000 --> 00:09:52,880 Speaker 4: and job three for this or any other American president. 177 00:09:52,960 --> 00:09:53,960 Speaker 4: He made the right decision. 178 00:09:54,360 --> 00:09:54,560 Speaker 5: You know. 179 00:09:54,640 --> 00:09:56,760 Speaker 2: You mentioned it, of course, and I have to ask 180 00:09:56,800 --> 00:09:59,200 Speaker 2: you about it because it's the big story in Washington. 181 00:09:59,600 --> 00:10:00,920 Speaker 2: Not that I I want to point you to the 182 00:10:00,960 --> 00:10:04,560 Speaker 2: politics around the debt ceiling, but Lloyd Austin, our Defense secretary, 183 00:10:04,840 --> 00:10:08,400 Speaker 2: Anthony Blincoln, our secretary of State, even Gina Romando, our 184 00:10:08,440 --> 00:10:13,400 Speaker 2: Commerce secretary, testified just a few days ago about appropriations. 185 00:10:13,440 --> 00:10:16,040 Speaker 2: They were asked about this, and all three delivered a 186 00:10:16,040 --> 00:10:19,040 Speaker 2: warning that draconian cuts as they put it, and I 187 00:10:19,080 --> 00:10:21,480 Speaker 2: realized they're part of the Biden administration, could cripple our 188 00:10:21,559 --> 00:10:25,320 Speaker 2: national security effort. How concerned are you about defense spending 189 00:10:25,320 --> 00:10:26,720 Speaker 2: coming out of the other end of this debate. 190 00:10:27,559 --> 00:10:30,480 Speaker 4: Well, I'm concerned about not just defense but all spending. 191 00:10:31,040 --> 00:10:32,880 Speaker 4: There has to be a compromise. 192 00:10:32,960 --> 00:10:33,120 Speaker 5: Now. 193 00:10:33,160 --> 00:10:36,560 Speaker 4: What we're hearing from both McCarthy and from the White 194 00:10:36,559 --> 00:10:40,240 Speaker 4: House is that they're moving closer to it. The Democrats 195 00:10:40,280 --> 00:10:42,160 Speaker 4: are not going to be able to hold onto everything 196 00:10:42,200 --> 00:10:44,319 Speaker 4: that they've passed from the last year and a half, 197 00:10:44,440 --> 00:10:47,320 Speaker 4: and the Republicans are going to have to make big compromises. 198 00:10:47,559 --> 00:10:49,600 Speaker 4: But I'm willing to bet at the end of the day, 199 00:10:50,120 --> 00:10:52,080 Speaker 4: we're dealing with patriots and they're going to do the 200 00:10:52,120 --> 00:10:54,040 Speaker 4: right thing, but it's going to be painful for all 201 00:10:54,080 --> 00:10:55,840 Speaker 4: of them. You're going to hear a lot of screaming. 202 00:10:56,240 --> 00:10:59,199 Speaker 2: God knows it, who says an ambassador can't talk politics 203 00:10:59,200 --> 00:11:02,079 Speaker 2: on the air. I love that there was an important 204 00:11:02,080 --> 00:11:05,720 Speaker 2: hearing last evening House Select Committee on the Chinese Communist Party. 205 00:11:05,720 --> 00:11:08,160 Speaker 2: You've probably seen some of this. Of course, this is 206 00:11:08,160 --> 00:11:11,800 Speaker 2: a bipartisan effort to try to build some consensus. 207 00:11:11,080 --> 00:11:13,560 Speaker 6: On the threat to the US posed by Beijing. 208 00:11:13,679 --> 00:11:16,960 Speaker 2: The title of the hearing ambassador was how to counter 209 00:11:17,120 --> 00:11:22,400 Speaker 2: the Chinese Communist Party's economic aggression? We heard from the chairman, 210 00:11:22,559 --> 00:11:23,920 Speaker 2: Congressman Mike Gallagher. 211 00:11:23,960 --> 00:11:27,640 Speaker 8: The CCP's economic warfare uses any and all available leverage 212 00:11:27,679 --> 00:11:30,520 Speaker 8: to coerce us and our allies, and it's time that 213 00:11:30,559 --> 00:11:32,280 Speaker 8: we defend ourselves in the free world. 214 00:11:32,440 --> 00:11:34,040 Speaker 6: Is this committee on the right track. 215 00:11:35,360 --> 00:11:38,920 Speaker 4: The committee's research and possibly findings will be on the 216 00:11:39,000 --> 00:11:45,079 Speaker 4: right track, but it's rhetoric is on the wrong track. 217 00:11:46,000 --> 00:11:48,600 Speaker 4: Our official policy, and it's a policy that all of 218 00:11:48,640 --> 00:11:52,120 Speaker 4: US Americans enjoyed because it's critical to our economic wellbeing 219 00:11:52,480 --> 00:11:57,280 Speaker 4: is to cooperate in some areas with China and contest 220 00:11:58,320 --> 00:12:02,640 Speaker 4: and compete with China. Is that's the right policy. It 221 00:12:02,679 --> 00:12:05,800 Speaker 4: doesn't help it to talk about Chinese communist aggression and 222 00:12:05,840 --> 00:12:08,600 Speaker 4: all of this stuff from the nineteen fifties. Rather, let's 223 00:12:08,600 --> 00:12:11,320 Speaker 4: figure out how they can hurt us, stop that while 224 00:12:11,400 --> 00:12:13,440 Speaker 4: keeping channels open, you know, while we're. 225 00:12:13,280 --> 00:12:16,200 Speaker 2: Talking about communication and messaging. Here, here's the ranking member, 226 00:12:16,240 --> 00:12:18,760 Speaker 2: the Democrat here, Congressman Rajah Krista Morphine. 227 00:12:18,800 --> 00:12:20,640 Speaker 9: It may seem like that we can wait for a 228 00:12:20,679 --> 00:12:26,120 Speaker 9: whole of government approach to tackle AI and quantum and biotechnologies, 229 00:12:26,480 --> 00:12:29,640 Speaker 9: but we cannot. The moment to act is not in 230 00:12:29,760 --> 00:12:33,400 Speaker 9: ten years or five years or next year, it's now. 231 00:12:33,600 --> 00:12:37,360 Speaker 2: And that's the Democrat talking ambassador. How concerned should we 232 00:12:37,440 --> 00:12:42,240 Speaker 2: be about AI when we have this conversation surrounding limitations 233 00:12:42,280 --> 00:12:44,160 Speaker 2: on technology to Beijing? 234 00:12:45,120 --> 00:12:47,520 Speaker 4: Well, first of all, AI in and of itself is 235 00:12:47,559 --> 00:12:50,280 Speaker 4: something we need to know a lot more about before 236 00:12:50,320 --> 00:12:52,160 Speaker 4: we simply give it the kind of green light we 237 00:12:52,200 --> 00:12:57,679 Speaker 4: gave to the Internet and microprocessing decades ago. But secondly, 238 00:12:58,160 --> 00:13:02,080 Speaker 4: AI in the hands of a nuclear armed adversary is 239 00:13:02,200 --> 00:13:07,440 Speaker 4: extremely dangerous because they could place on an automatic pilot, 240 00:13:07,480 --> 00:13:10,600 Speaker 4: if you will, a nuclear response in any kind of 241 00:13:10,800 --> 00:13:15,480 Speaker 4: ambiguous situation. We've had that before, but humans, mainly Russian humans, 242 00:13:15,520 --> 00:13:18,880 Speaker 4: intervene to ensure that we didn't have catastrophe. But I'm 243 00:13:18,960 --> 00:13:24,080 Speaker 4: very worried about the combination of AI and national nuclear systems. 244 00:13:24,520 --> 00:13:27,080 Speaker 2: Get back to where we started here, the Spring offensive 245 00:13:27,160 --> 00:13:30,400 Speaker 2: in Ukraine. When does the real action begin? Will it 246 00:13:30,440 --> 00:13:34,079 Speaker 2: be dictated by the weather, or by strategy, or of 247 00:13:34,160 --> 00:13:35,560 Speaker 2: the ammunition that's available? 248 00:13:36,760 --> 00:13:39,520 Speaker 4: As I said all of them, but my gut feeling 249 00:13:39,640 --> 00:13:42,000 Speaker 4: having been in that area before is that the weather 250 00:13:42,200 --> 00:13:45,600 Speaker 4: is going to, if not already break towards What you 251 00:13:45,679 --> 00:13:50,680 Speaker 4: need is the ground hot enough to run, not armored 252 00:13:50,800 --> 00:13:54,040 Speaker 4: vehicles on because they can handle a fair amount of mud, 253 00:13:54,200 --> 00:13:56,840 Speaker 4: but it's the wheeled vehicles that bring the fuel in 254 00:13:56,920 --> 00:13:59,559 Speaker 4: the ammunition, in the food that you need to be 255 00:13:59,600 --> 00:14:02,200 Speaker 4: able to go across country. So we'll have to see 256 00:14:02,280 --> 00:14:06,360 Speaker 4: if the terrain enables that. When that is in the 257 00:14:06,679 --> 00:14:11,360 Speaker 4: Ukrainian military commanders, our experience at all levels, they'll know 258 00:14:11,440 --> 00:14:13,160 Speaker 4: when the right time is. Trust them. 259 00:14:13,400 --> 00:14:17,240 Speaker 2: It's seventy three degrees in Ukraine right now. As a 260 00:14:17,240 --> 00:14:20,600 Speaker 2: matter of fact, what does that tell us about the 261 00:14:20,640 --> 00:14:21,960 Speaker 2: state of affairs. 262 00:14:22,640 --> 00:14:25,800 Speaker 4: Less than whether it's raining or sunny. That's what you need, 263 00:14:26,040 --> 00:14:27,840 Speaker 4: is the sun baking that dirt. 264 00:14:27,880 --> 00:14:31,280 Speaker 6: Okay, yes, right, that would be fahrenheit of course. 265 00:14:31,280 --> 00:14:33,560 Speaker 2: Ambassador, great to talk to you. Thank you so much 266 00:14:33,600 --> 00:14:36,920 Speaker 2: for covering the waterfront with us. James Jeffries's Chair of 267 00:14:36,920 --> 00:14:39,560 Speaker 2: the Middle East Program at the Wilson Center, former Ambassador 268 00:14:39,840 --> 00:14:43,200 Speaker 2: to Iraq and Turkey, special Envoid the Global Coalition to 269 00:14:43,200 --> 00:14:48,040 Speaker 2: Defeat isis. 270 00:14:48,280 --> 00:14:51,680 Speaker 1: You're listening to The Bloomberg sound on podcast. Catch the 271 00:14:51,680 --> 00:14:55,560 Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the 272 00:14:55,640 --> 00:14:58,960 Speaker 1: tune in apt, Bloomberg dot Com, and the Bloomberg Business App. 273 00:14:59,120 --> 00:15:01,960 Speaker 1: You can also listen live on Amazon Alexa from our 274 00:15:02,000 --> 00:15:06,800 Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 275 00:15:07,800 --> 00:15:09,680 Speaker 2: As we assemble the panel with a lot to talk 276 00:15:09,680 --> 00:15:12,240 Speaker 2: about here in the initial stages of a spring offensive 277 00:15:12,640 --> 00:15:15,160 Speaker 2: in Ukraine and a president of the United States now 278 00:15:15,160 --> 00:15:18,400 Speaker 2: at the G seven despite the debt ceiling fiasco here 279 00:15:18,480 --> 00:15:20,680 Speaker 2: in Washington. It's just not a seat that we were 280 00:15:20,680 --> 00:15:24,120 Speaker 2: comfortable leaving empty. Rick Davis and Genie Shanzeno are with 281 00:15:24,200 --> 00:15:27,240 Speaker 2: us Bloomberg Politics contributors. Rick, we covered a lot of 282 00:15:27,280 --> 00:15:29,280 Speaker 2: ground with James Jefferies, and I'd like to start with 283 00:15:29,320 --> 00:15:32,520 Speaker 2: you on what's happening here in Ukraine, because it does 284 00:15:32,560 --> 00:15:35,560 Speaker 2: seem that Kiev is going for it. Reports in the 285 00:15:35,600 --> 00:15:40,680 Speaker 2: Wall Street Journal today really pretty remarkable, stretching three hundred 286 00:15:40,720 --> 00:15:45,240 Speaker 2: miles into Russian territory to strike a Russian oil refinery, 287 00:15:45,280 --> 00:15:48,320 Speaker 2: going after ammunition stores, caches of other supplies. 288 00:15:48,760 --> 00:15:51,320 Speaker 6: This is the initial phase, isn't it. 289 00:15:51,320 --> 00:15:53,640 Speaker 10: It sure looks like there's something going on that's different 290 00:15:53,680 --> 00:15:56,280 Speaker 10: than what they've been doing before. And his Ambassador Jeffrey says, 291 00:15:56,640 --> 00:15:59,480 Speaker 10: this is the softening up process. You know, get behind 292 00:15:59,600 --> 00:16:04,200 Speaker 10: enemy and soften them up, disrupt their supply chain, destroy 293 00:16:04,440 --> 00:16:10,280 Speaker 10: munition supplies and diesel. So sure looks that way, but look, 294 00:16:10,360 --> 00:16:12,800 Speaker 10: I mean, at the end of the day, we knew 295 00:16:12,880 --> 00:16:14,960 Speaker 10: something was going to be happening around this time of year. 296 00:16:15,120 --> 00:16:20,280 Speaker 10: Ukraine made no secret of their intention to mount a 297 00:16:20,320 --> 00:16:24,600 Speaker 10: counter offensive to the Russians Winter Offensive, and we may 298 00:16:24,640 --> 00:16:28,000 Speaker 10: be seeing that happen now. I wish them all luck 299 00:16:29,720 --> 00:16:32,760 Speaker 10: and we'll see what the outcomes are. But it's certainly 300 00:16:33,120 --> 00:16:35,440 Speaker 10: going to be a bad week for the Russians because 301 00:16:35,480 --> 00:16:38,480 Speaker 10: they only seem to be able to lob missiles, you know, 302 00:16:38,560 --> 00:16:42,920 Speaker 10: at apartment buildings in Kiev, is their only military strategy. 303 00:16:43,160 --> 00:16:45,880 Speaker 2: It's pretty sad, I will say. The Washington Post also 304 00:16:45,920 --> 00:16:48,840 Speaker 2: reporting that Ukrainian officials are rejecting claims from Russia that 305 00:16:48,840 --> 00:16:52,800 Speaker 2: had destroyed one of its prized Western donated Patriot air 306 00:16:52,840 --> 00:16:59,480 Speaker 2: defense systems. A US defense official talking to the operation 307 00:16:59,600 --> 00:17:03,680 Speaker 2: says that they did. The Patriot battery suffered an indirect hit, 308 00:17:04,160 --> 00:17:05,800 Speaker 2: but it's still operational. 309 00:17:06,800 --> 00:17:07,080 Speaker 6: Genie. 310 00:17:07,119 --> 00:17:09,840 Speaker 2: These are some of the most important items when you 311 00:17:09,880 --> 00:17:13,800 Speaker 2: consider the weaponry that we've provided these defensive missile systems, 312 00:17:13,840 --> 00:17:15,960 Speaker 2: some of the most important things that we've given Kiv 313 00:17:16,040 --> 00:17:16,400 Speaker 2: so far. 314 00:17:17,160 --> 00:17:19,600 Speaker 11: Yeah, I mean, of the thirty missiles launched, they said 315 00:17:19,600 --> 00:17:22,440 Speaker 11: twenty nine were brought down by Ukraine, and that is 316 00:17:22,480 --> 00:17:24,879 Speaker 11: a pretty good number. And you know, one of the 317 00:17:24,920 --> 00:17:26,800 Speaker 11: things that have been asking, is this a sign that 318 00:17:26,880 --> 00:17:29,879 Speaker 11: Russia isn't running out of those precision munitions that we 319 00:17:29,960 --> 00:17:33,520 Speaker 11: heard so much about. And the reality is what we're 320 00:17:33,520 --> 00:17:36,840 Speaker 11: hearing is that they are dipping into their high tech missiles. 321 00:17:36,880 --> 00:17:39,240 Speaker 11: And the problem for them right now is, of course, 322 00:17:39,800 --> 00:17:42,800 Speaker 11: because of the Western sanction, speaking of the G seven 323 00:17:42,800 --> 00:17:45,800 Speaker 11: and the good work they've done, that they don't have 324 00:17:45,920 --> 00:17:51,000 Speaker 11: the technology they need to keep refilling not just the 325 00:17:51,000 --> 00:17:54,000 Speaker 11: missiles but the tanks. And so this is a problem 326 00:17:54,080 --> 00:17:57,520 Speaker 11: for Russia as they continue to try to bombard Ukraine 327 00:17:57,840 --> 00:18:00,680 Speaker 11: in advance. Over on the cusp of this effect. 328 00:18:01,000 --> 00:18:03,840 Speaker 2: Rick, to what extent is the US involved here? Based 329 00:18:03,880 --> 00:18:07,040 Speaker 2: on what you're hearing from your sources in the Defense Department, 330 00:18:07,119 --> 00:18:10,840 Speaker 2: there was a real reluctance to be shown aiding in 331 00:18:11,240 --> 00:18:16,000 Speaker 2: offensive operations going into Russian territory as opposed to defensive operations, 332 00:18:16,000 --> 00:18:19,199 Speaker 2: which we're very proud to talk about here are they 333 00:18:19,240 --> 00:18:21,560 Speaker 2: still relying on American intelligence for this? 334 00:18:22,480 --> 00:18:25,600 Speaker 10: Well, certainly American intelligence is all in on the war 335 00:18:25,880 --> 00:18:29,400 Speaker 10: in the Ukraine, right and we've seen both evidence that 336 00:18:29,880 --> 00:18:33,000 Speaker 10: they've been helpful to the Ukrainian military supplying them with 337 00:18:33,280 --> 00:18:37,400 Speaker 10: battlefield intelligence, but we've also seen them using intelligence as 338 00:18:37,440 --> 00:18:41,600 Speaker 10: a way of exposing some of the activities, mostly nefarious 339 00:18:41,640 --> 00:18:44,520 Speaker 10: activities by the Russian starting from the initial build up 340 00:18:44,520 --> 00:18:48,000 Speaker 10: on the Russian border two years ago to what they're 341 00:18:48,000 --> 00:18:53,840 Speaker 10: doing with other things, including their mistreatment of children and 342 00:18:53,880 --> 00:18:58,119 Speaker 10: civilians in the battle. So I think that the intelligence 343 00:18:58,119 --> 00:19:00,960 Speaker 10: community is seeing sort of a heyday of of of 344 00:19:01,160 --> 00:19:03,679 Speaker 10: operational uses of their intelligence in a way that I 345 00:19:03,680 --> 00:19:06,320 Speaker 10: think nobody really thought they were capable of doing anymore. 346 00:19:06,400 --> 00:19:09,520 Speaker 10: So kudos to them for being in the fight. Yeah, 347 00:19:09,600 --> 00:19:13,520 Speaker 10: but I would say, you know, as Ambassador Jeffrey said, uh, 348 00:19:13,560 --> 00:19:16,000 Speaker 10: you know, the ability for Ukraine to strike deep into 349 00:19:16,080 --> 00:19:19,440 Speaker 10: Russian territory right now is essential. The idea that we 350 00:19:19,600 --> 00:19:22,320 Speaker 10: are still holding out things like attack ems that you know, 351 00:19:22,920 --> 00:19:28,880 Speaker 10: go three hundred kilometers into into the Russian battlefield, especially 352 00:19:28,880 --> 00:19:31,600 Speaker 10: compared to the uk that have given uh you know, 353 00:19:31,680 --> 00:19:34,720 Speaker 10: these kinds of cruise missiles to the Ukrainians, it makes 354 00:19:34,760 --> 00:19:35,120 Speaker 10: no sense. 355 00:19:36,320 --> 00:19:36,720 Speaker 6: Yeah right. 356 00:19:36,960 --> 00:19:38,840 Speaker 2: I mean, look, it seems to me that if you're 357 00:19:38,840 --> 00:19:40,560 Speaker 2: going to win this thing, it's instead of just an 358 00:19:40,560 --> 00:19:43,520 Speaker 2: analyst war of attrition, it's going to be essential. At 359 00:19:43,520 --> 00:19:46,640 Speaker 2: some point here in China looms large with all of this. 360 00:19:46,920 --> 00:19:51,800 Speaker 2: The Chinese ambassador met with President Zelenski this week as 361 00:19:51,840 --> 00:19:56,000 Speaker 2: Beijing follows this European tour at apparently brokering peace. 362 00:19:56,200 --> 00:19:56,520 Speaker 6: Genie. 363 00:19:56,560 --> 00:19:59,360 Speaker 2: They're not giving up on this effort, despite great skepticism 364 00:19:59,400 --> 00:19:59,879 Speaker 2: in the West. 365 00:20:00,440 --> 00:20:03,200 Speaker 11: They are not. And Zelensky and the Ukrainians have been 366 00:20:03,240 --> 00:20:05,520 Speaker 11: open to it. And I think the US has to 367 00:20:05,560 --> 00:20:09,080 Speaker 11: a certain extent as well. If they could broker some 368 00:20:09,240 --> 00:20:11,600 Speaker 11: kind of piece, you know, all the power to them. 369 00:20:11,600 --> 00:20:14,880 Speaker 11: But it's gonna be hard fought. And let's not forget 370 00:20:14,920 --> 00:20:16,800 Speaker 11: you know. One of the things the Ukrainians have said 371 00:20:16,840 --> 00:20:19,280 Speaker 11: over and over about this offensive that is coming or 372 00:20:19,760 --> 00:20:22,520 Speaker 11: they have just started, is that they are hoping to 373 00:20:22,640 --> 00:20:25,000 Speaker 11: change the minds in the Kremlin. They want to have 374 00:20:25,080 --> 00:20:27,920 Speaker 11: this what they call a cognitive effect on Putin where 375 00:20:27,920 --> 00:20:30,840 Speaker 11: they convince him that they can't just take this wait 376 00:20:30,880 --> 00:20:33,719 Speaker 11: and see attitude anymore. He can't just wait for the 377 00:20:33,720 --> 00:20:36,120 Speaker 11: West to give up, or for the US to get 378 00:20:36,160 --> 00:20:38,479 Speaker 11: Trump in there if he's elected in twenty four and 379 00:20:38,560 --> 00:20:41,000 Speaker 11: end this thing in twenty four hours by giving Putin 380 00:20:41,080 --> 00:20:43,639 Speaker 11: what he wants or waiting for you know, Europe to 381 00:20:43,680 --> 00:20:46,399 Speaker 11: decide it can't afford this anymore. So this is a 382 00:20:46,640 --> 00:20:50,040 Speaker 11: very important moment as we think about can they actually 383 00:20:50,160 --> 00:20:53,480 Speaker 11: achieve that? And of course China would be a big 384 00:20:53,560 --> 00:20:56,600 Speaker 11: part of changing Putin's mind if it is at all possible, 385 00:20:56,600 --> 00:20:58,400 Speaker 11: which is a big if the. 386 00:20:58,359 --> 00:21:01,480 Speaker 2: G seven's underway, Rick, I'd love your thoughts on this. Obviously, 387 00:21:01,760 --> 00:21:04,000 Speaker 2: Ukraine is very much top of mind for President Biden, 388 00:21:04,040 --> 00:21:06,520 Speaker 2: as he talked about it at the opening of a 389 00:21:06,520 --> 00:21:08,480 Speaker 2: bilateral meeting with Japan's Prime minister. 390 00:21:08,640 --> 00:21:12,480 Speaker 3: Stand up for the shared values, including supporting the grave 391 00:21:12,560 --> 00:21:17,000 Speaker 3: people Ukraine as they defend their sovereign territory and holding 392 00:21:17,080 --> 00:21:19,000 Speaker 3: Russia accountable for his brutal aggression. 393 00:21:20,359 --> 00:21:23,600 Speaker 2: How much time will they spend talking about this conflict? 394 00:21:23,720 --> 00:21:26,760 Speaker 2: And I suspect China's involvement in it is top of 395 00:21:26,800 --> 00:21:27,440 Speaker 2: mind as well. 396 00:21:27,680 --> 00:21:31,520 Speaker 10: Yeah, I definitely think they'll balance the discussion around Russia 397 00:21:31,640 --> 00:21:34,920 Speaker 10: and its interest in the invasion in Ukraine and the 398 00:21:35,000 --> 00:21:37,480 Speaker 10: impact on Europe and after all, the G seven is 399 00:21:37,680 --> 00:21:44,440 Speaker 10: a European dominated entity, but they also have other countries Australia, Brazil, Indonesia, 400 00:21:44,600 --> 00:21:47,960 Speaker 10: South Korea, all of whom are like guests at this event, 401 00:21:48,800 --> 00:21:52,520 Speaker 10: anxious to talk about China and the impact that they 402 00:21:52,520 --> 00:21:54,919 Speaker 10: have in the region. And the fact that this is 403 00:21:55,119 --> 00:22:01,800 Speaker 10: in Japan and under the specter of Chinese dominance in 404 00:22:01,840 --> 00:22:04,919 Speaker 10: that region is going to definitely be a hot topic 405 00:22:04,920 --> 00:22:08,320 Speaker 10: when they're there this week, and it has been in 406 00:22:08,359 --> 00:22:11,600 Speaker 10: the follow up to the actual Principles meeting that's happening now. 407 00:22:12,480 --> 00:22:17,239 Speaker 10: It's been actively debated of their proper role and what 408 00:22:17,280 --> 00:22:20,000 Speaker 10: can be done about their pernicious interests in the region. 409 00:22:20,320 --> 00:22:22,440 Speaker 2: I think you both agree the president had to go 410 00:22:23,200 --> 00:22:25,320 Speaker 2: as opposed to leaving an empty seat to deal with 411 00:22:25,359 --> 00:22:27,080 Speaker 2: the debt limit. Was it the right thing to cut 412 00:22:27,119 --> 00:22:30,359 Speaker 2: off the second and third parts of this trip, Jennie. 413 00:22:30,920 --> 00:22:32,879 Speaker 11: I think it was, and I really think it was 414 00:22:32,920 --> 00:22:36,000 Speaker 11: a very hard call because, as Rick just mentions, confronting 415 00:22:36,119 --> 00:22:38,680 Speaker 11: China is a big part of this discussion that's going 416 00:22:38,720 --> 00:22:41,639 Speaker 11: to go on there, critically important, and that's why the 417 00:22:41,680 --> 00:22:43,680 Speaker 11: President was going to go to the Sydney Opera House 418 00:22:43,680 --> 00:22:45,600 Speaker 11: and meet with the Quad that's why he was going 419 00:22:45,640 --> 00:22:47,840 Speaker 11: to make, I believe, the first trip of a sitting 420 00:22:48,000 --> 00:22:51,160 Speaker 11: US president to Papa New Guinea, which of course has 421 00:22:51,160 --> 00:22:55,360 Speaker 11: increasingly close ties to China, has withdrawn its ties to Taiwan. 422 00:22:55,440 --> 00:22:58,359 Speaker 11: That was all part of this effort to confront China 423 00:22:58,760 --> 00:23:01,520 Speaker 11: because of this manufact actored crisis in d C. He's 424 00:23:01,560 --> 00:23:04,000 Speaker 11: not got to cut that short and come back. So 425 00:23:04,080 --> 00:23:06,399 Speaker 11: it is a big loss for the United States. You know, 426 00:23:06,440 --> 00:23:08,560 Speaker 11: hopefully they'll be able to make it up going forward. 427 00:23:08,880 --> 00:23:11,040 Speaker 11: That said, I think he did have to do that 428 00:23:11,119 --> 00:23:13,959 Speaker 11: to show that his number one focus, as the ambassador mentioned, 429 00:23:14,359 --> 00:23:17,359 Speaker 11: is on the US and the US economy. We cannot default, 430 00:23:17,440 --> 00:23:19,840 Speaker 11: so he's got to be here and he will on Sunday. 431 00:23:20,520 --> 00:23:23,880 Speaker 10: You agree on that one, Rick, Yeah, I'm glad he's there. 432 00:23:24,760 --> 00:23:28,840 Speaker 10: I've got impression at the meeting that he had at 433 00:23:28,840 --> 00:23:33,359 Speaker 10: the White House with Speaker McCarthy was enough progress was 434 00:23:33,400 --> 00:23:36,359 Speaker 10: made and certainly indicated by Speaker McCarthy afterwards that he 435 00:23:36,480 --> 00:23:38,960 Speaker 10: was comfortable to take this trip and let the negotiators 436 00:23:39,520 --> 00:23:43,200 Speaker 10: finish their job. And it sounds like even Speaker McCarthy's 437 00:23:43,200 --> 00:23:45,439 Speaker 10: comments today that you know, he thinks they might be 438 00:23:45,520 --> 00:23:48,480 Speaker 10: voting early next week on a bill to raise the 439 00:23:48,520 --> 00:23:52,320 Speaker 10: debt ceiling and cut government spending. Is it means it's. 440 00:23:52,240 --> 00:23:52,840 Speaker 6: All on track. 441 00:23:52,960 --> 00:23:55,520 Speaker 10: So you know, well done to get over the hump 442 00:23:55,560 --> 00:23:58,359 Speaker 10: and now, you know, do what we can to unify 443 00:23:58,400 --> 00:23:58,960 Speaker 10: our allies. 444 00:23:59,119 --> 00:24:01,040 Speaker 2: It does seem like the stars are aligning here a 445 00:24:01,040 --> 00:24:03,000 Speaker 2: little bit. We don't want to go too far with this, genie, 446 00:24:03,000 --> 00:24:05,520 Speaker 2: but we'll dig into this a little bit more coming 447 00:24:05,600 --> 00:24:07,720 Speaker 2: up this hour, and we'll talk to Billy House. But 448 00:24:07,760 --> 00:24:10,760 Speaker 2: the President has called a news conference for Sunday night, 449 00:24:11,119 --> 00:24:14,560 Speaker 2: that's after he gets back. I suspect there's not going 450 00:24:14,640 --> 00:24:17,480 Speaker 2: to be much of any interest in talking about this 451 00:24:17,640 --> 00:24:19,080 Speaker 2: G seven by then, right. 452 00:24:19,240 --> 00:24:21,840 Speaker 11: Yeah, you'd expect the President didn't call him meetings or 453 00:24:22,040 --> 00:24:24,800 Speaker 11: press conference rather so that he could discuss what happened 454 00:24:25,119 --> 00:24:28,000 Speaker 11: in Hiroshima. So you know, you imagine that it's got 455 00:24:28,040 --> 00:24:30,359 Speaker 11: to be about the debt ceilings toss and that is 456 00:24:30,520 --> 00:24:33,920 Speaker 11: probably a positive sign at least fingers crossed, we hope. 457 00:24:33,960 --> 00:24:36,080 Speaker 11: So don't want to get ahead of ourselves though, because 458 00:24:36,080 --> 00:24:37,719 Speaker 11: there's still a ways to go on this. 459 00:24:38,000 --> 00:24:40,800 Speaker 2: Yeah, and he'll do that of course on his way 460 00:24:40,840 --> 00:24:46,119 Speaker 2: out of Japan. Following these two days of conversations. 461 00:24:46,080 --> 00:24:49,600 Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us 462 00:24:49,640 --> 00:24:52,800 Speaker 1: Live weekdays at one Eastern on Bloomberg dot com, the 463 00:24:52,880 --> 00:24:55,960 Speaker 1: iHeartRadio app and the Bloomberg Business app, or listen on 464 00:24:56,040 --> 00:24:58,000 Speaker 1: demand wherever you get your podcasts. 465 00:24:59,320 --> 00:25:01,040 Speaker 2: So, the other story we want to hit this hour 466 00:25:01,600 --> 00:25:04,320 Speaker 2: talked a lot about a TikTok ban here in Washington, 467 00:25:04,359 --> 00:25:04,720 Speaker 2: and then. 468 00:25:04,640 --> 00:25:06,240 Speaker 6: It got really quiet. 469 00:25:06,680 --> 00:25:07,000 Speaker 7: Yeah. 470 00:25:07,080 --> 00:25:11,120 Speaker 2: Some might even suggest that so many lobbyists are being 471 00:25:11,119 --> 00:25:14,440 Speaker 2: paid so much money that they really got it. They 472 00:25:14,560 --> 00:25:17,160 Speaker 2: took it out of the news. Not so much in Montana, 473 00:25:17,200 --> 00:25:20,800 Speaker 2: where TikTok's now facing its first statewide ban, the governor 474 00:25:20,840 --> 00:25:23,800 Speaker 2: there signing a measure to prohibit its download by the 475 00:25:23,840 --> 00:25:25,200 Speaker 2: general public starting next year. 476 00:25:25,240 --> 00:25:26,560 Speaker 6: What does that mean for people already have it on 477 00:25:26,600 --> 00:25:27,240 Speaker 6: their phones? 478 00:25:27,320 --> 00:25:29,840 Speaker 12: Well, that's my question. Right, you're going to find the 479 00:25:29,920 --> 00:25:32,600 Speaker 12: app stores for offering it to be downloaded in the 480 00:25:32,640 --> 00:25:36,879 Speaker 12: state ten thousand dollars up to Yet, doesn't everybody already 481 00:25:36,880 --> 00:25:38,439 Speaker 12: have the app? Or if they know that this is 482 00:25:38,480 --> 00:25:41,160 Speaker 12: going to become the rule on January first, twenty twenty four, 483 00:25:41,240 --> 00:25:44,480 Speaker 12: you're going to download it before then. I mean, the 484 00:25:44,520 --> 00:25:47,680 Speaker 12: logistics of this, let alone, the legal questions are very 485 00:25:48,080 --> 00:25:48,800 Speaker 12: puzzling to me. 486 00:25:49,040 --> 00:25:52,320 Speaker 2: We thought Markensburg would have a take on this former 487 00:25:52,359 --> 00:25:56,320 Speaker 2: ambassador to Morocco and founder and president in his new 488 00:25:56,359 --> 00:25:59,359 Speaker 2: life of the Coalition for a Safer Web. Mister ambassador, 489 00:25:59,400 --> 00:26:01,600 Speaker 2: it's great to have you back. But looking forward to 490 00:26:01,680 --> 00:26:05,080 Speaker 2: the conversation here is is this a Montana issue or 491 00:26:05,119 --> 00:26:07,760 Speaker 2: the beginning of what could end up being a national ban? 492 00:26:09,359 --> 00:26:12,199 Speaker 5: Well, to say it will be national is hard to 493 00:26:12,520 --> 00:26:15,480 Speaker 5: I don't think i'd go that far. I mean, Montana 494 00:26:15,560 --> 00:26:17,640 Speaker 5: is probably going to join a lot of other red 495 00:26:17,720 --> 00:26:22,840 Speaker 5: states that are going to pass similar legislation. And of 496 00:26:22,880 --> 00:26:26,960 Speaker 5: course this legislation raises a host of issues, as you've indicated, 497 00:26:27,760 --> 00:26:30,800 Speaker 5: But whether it's a national band doubtful. I don't see 498 00:26:30,800 --> 00:26:33,639 Speaker 5: a lot of other states passing similar laws that are 499 00:26:33,680 --> 00:26:36,520 Speaker 5: in what I would call the blue column. But at 500 00:26:36,520 --> 00:26:38,520 Speaker 5: the same time, the national government and a lot of 501 00:26:38,560 --> 00:26:43,639 Speaker 5: other foreign governments have banned TikTok from government owned devices. 502 00:26:43,760 --> 00:26:47,520 Speaker 5: And how you zigzag your way through this thicket is 503 00:26:47,560 --> 00:26:52,520 Speaker 5: really an interesting question because the law in Montana raises 504 00:26:52,600 --> 00:26:57,080 Speaker 5: a really interesting case involving the First Amendment. But the 505 00:26:57,119 --> 00:27:01,320 Speaker 5: government has a right to control the devices that it 506 00:27:01,480 --> 00:27:04,240 Speaker 5: issues as a government to its employees. 507 00:27:05,400 --> 00:27:08,720 Speaker 12: But for the rest of the American populaces, who are 508 00:27:09,200 --> 00:27:11,880 Speaker 12: just civilians, they don't work in the government sector. They're 509 00:27:11,920 --> 00:27:16,119 Speaker 12: not you know, handling any sensitive classified material or anything. 510 00:27:16,359 --> 00:27:18,920 Speaker 12: To come back to the First Amendment point, I think 511 00:27:19,040 --> 00:27:21,760 Speaker 12: often we think about people just scrolling on TikTok, you know, 512 00:27:21,920 --> 00:27:25,119 Speaker 12: viewing it being exposed to the algorithm. But there are 513 00:27:25,119 --> 00:27:28,440 Speaker 12: also millions of content creators out there, and this is 514 00:27:28,480 --> 00:27:31,199 Speaker 12: a method of expression. So how do you get around 515 00:27:31,280 --> 00:27:33,800 Speaker 12: that legal constitutional issue? 516 00:27:35,359 --> 00:27:37,439 Speaker 5: You know, if I knew the answer to that question, 517 00:27:37,560 --> 00:27:43,560 Speaker 5: you know, it's interesting. Coincidentally, today the Supreme Court issued 518 00:27:43,920 --> 00:27:49,440 Speaker 5: twin decisions by ruling that it will not an affect 519 00:27:50,320 --> 00:27:54,480 Speaker 5: take on the scope of the immunity granted to social 520 00:27:54,520 --> 00:27:58,720 Speaker 5: media platform Section two third, Section two thirty. It's just 521 00:27:58,840 --> 00:28:01,480 Speaker 5: interesting that Montana passing us all. At the same time 522 00:28:01,680 --> 00:28:05,080 Speaker 5: the Supreme Court is giving this huge reward to Silicon 523 00:28:05,200 --> 00:28:10,800 Speaker 5: Valley by basically saying, sorry, Charlie, we're not going to 524 00:28:10,840 --> 00:28:14,000 Speaker 5: get into this one. It's up to Congress. We're punting 525 00:28:14,000 --> 00:28:17,080 Speaker 5: it over. We're punting the hot potato over to Congress. 526 00:28:17,480 --> 00:28:22,240 Speaker 5: And so there is an intersection between what's happening with TikTok, 527 00:28:22,880 --> 00:28:27,760 Speaker 5: and whether or not TikTok is liable for content that 528 00:28:27,920 --> 00:28:32,280 Speaker 5: is on its platform that is an effect inserted by 529 00:28:32,440 --> 00:28:37,360 Speaker 5: third parties, or whether or not TikTok the issue evolving 530 00:28:37,400 --> 00:28:41,719 Speaker 5: TikTok involves byte Edance, its parent company, and the threat 531 00:28:42,120 --> 00:28:45,880 Speaker 5: of privacy violations rather than the content itself. 532 00:28:46,320 --> 00:28:49,280 Speaker 2: Yeah, so it's a cop out by the court, is 533 00:28:49,280 --> 00:28:49,840 Speaker 2: what you're saying. 534 00:28:49,880 --> 00:28:51,840 Speaker 5: Oh, it's a total cop out, total cop. 535 00:28:51,680 --> 00:28:54,640 Speaker 2: Out going to Of course, nobody can agree on this, right, 536 00:28:54,680 --> 00:28:57,760 Speaker 2: although I don't know what can Democrats or Republicans get 537 00:28:57,800 --> 00:28:59,960 Speaker 2: together with an angle on Section two thirty. 538 00:29:01,360 --> 00:29:05,320 Speaker 5: Listen, I'll tell you what. I'll buy you a model 539 00:29:05,360 --> 00:29:09,480 Speaker 5: of champagne, the most expensive champagne. If the courts can, 540 00:29:10,000 --> 00:29:12,200 Speaker 5: if the Congress can go want We just issued a 541 00:29:12,200 --> 00:29:15,760 Speaker 5: press release on this a few minutes ago, decline the 542 00:29:15,800 --> 00:29:19,160 Speaker 5: decision of the Supreme Court and basically saying Congress has 543 00:29:19,240 --> 00:29:24,520 Speaker 5: shown no proclivity to pass any restriction on Section two thirty, 544 00:29:24,800 --> 00:29:27,640 Speaker 5: other than the very narrow restriction that was passed several 545 00:29:27,720 --> 00:29:30,120 Speaker 5: years ago to prohibit sex trafficking. 546 00:29:31,560 --> 00:29:34,520 Speaker 2: Google held the decisions. You might be shocked to hear, Kayleye. 547 00:29:34,520 --> 00:29:37,760 Speaker 2: Countless companies This is really straight from the statement scholars, 548 00:29:37,800 --> 00:29:41,720 Speaker 2: content creators, civil society organizations you joined with us in 549 00:29:41,720 --> 00:29:45,440 Speaker 2: this case will be reassured by this result. And yes, 550 00:29:45,640 --> 00:29:47,240 Speaker 2: shares of alphabet are higher. 551 00:29:47,360 --> 00:29:50,320 Speaker 12: Now, yeah, I mean, this is exactly the outcome that 552 00:29:50,360 --> 00:29:53,520 Speaker 12: tech companies would have liked to have, right the idea 553 00:29:53,520 --> 00:29:57,000 Speaker 12: that you still maintained this kind of legal shield, if 554 00:29:57,040 --> 00:29:59,480 Speaker 12: you will. But there is the argument that they've been 555 00:29:59,720 --> 00:30:04,200 Speaker 12: making ambassador this idea that making them responsible for every 556 00:30:04,280 --> 00:30:07,640 Speaker 12: third party actor on their platform just opens up this 557 00:30:07,760 --> 00:30:10,920 Speaker 12: kind of Pandora's box of having to weigh through all 558 00:30:10,960 --> 00:30:13,600 Speaker 12: of these challenges and fight so many legal battles. I mean, 559 00:30:14,120 --> 00:30:18,120 Speaker 12: is is there a happy medium here where you aren't 560 00:30:18,560 --> 00:30:21,040 Speaker 12: opening tech to that kind of vulnerability, but you also 561 00:30:21,120 --> 00:30:25,160 Speaker 12: are kind of having the better content moderation and accountability. 562 00:30:25,960 --> 00:30:28,240 Speaker 5: Well, listen, they're trying to make this the matter of 563 00:30:28,280 --> 00:30:31,520 Speaker 5: life and death, which is a joke. It's a real charade. 564 00:30:31,960 --> 00:30:34,040 Speaker 5: The fact is they make the argument that this is 565 00:30:34,080 --> 00:30:38,200 Speaker 5: all third party content that's being uploaded that is not accurate. 566 00:30:38,800 --> 00:30:42,680 Speaker 5: Algorithms that are run and owned by these social media 567 00:30:42,680 --> 00:30:47,720 Speaker 5: platforms are producing their own content. That's why Section two 568 00:30:47,840 --> 00:30:51,920 Speaker 5: thirty should not absolve them of immunity. I can understand 569 00:30:52,400 --> 00:30:56,880 Speaker 5: them being absolved of immunity at least insofar as content 570 00:30:56,960 --> 00:31:00,680 Speaker 5: that shall we say, does not incite violence and is 571 00:31:00,800 --> 00:31:03,280 Speaker 5: just hate speech and the frolls within the First Amendment. 572 00:31:03,680 --> 00:31:07,080 Speaker 5: But why should they be absolved of content immunity? Why 573 00:31:07,080 --> 00:31:10,360 Speaker 5: should there be granted content immunity for content today? Their 574 00:31:10,400 --> 00:31:14,080 Speaker 5: own algorithms are creating and they're making money off. 575 00:31:13,960 --> 00:31:16,360 Speaker 2: Of So is there another way to get to this? 576 00:31:16,840 --> 00:31:18,480 Speaker 2: And I know you spend a lot of time on 577 00:31:18,520 --> 00:31:21,720 Speaker 2: this at the Coalition for a Safer Web ambassador, Should 578 00:31:21,760 --> 00:31:26,880 Speaker 2: we not be as concerned with banning or changing rules 579 00:31:26,960 --> 00:31:30,000 Speaker 2: like Section two thirty or banning TikTok? How about mandating 580 00:31:30,040 --> 00:31:33,000 Speaker 2: that these companies make their algorithms public? Is that like 581 00:31:33,080 --> 00:31:35,520 Speaker 2: asking Coke to reveal the recipe? 582 00:31:36,400 --> 00:31:36,440 Speaker 13: No? 583 00:31:36,640 --> 00:31:39,520 Speaker 5: In fact, we work right now for several companies helping 584 00:31:39,520 --> 00:31:45,120 Speaker 5: to educate their algorithms prevent the incitement of anti Semitic 585 00:31:45,240 --> 00:31:48,680 Speaker 5: violence as well as Isis and al Qada violence and 586 00:31:50,160 --> 00:31:53,120 Speaker 5: the sale of illegal drugs on their platforms. We know 587 00:31:53,160 --> 00:31:57,320 Speaker 5: what these algorithms are capable of doing, and I don't 588 00:31:57,320 --> 00:31:59,920 Speaker 5: think that they have to reveal their algorithms as much. 589 00:32:00,160 --> 00:32:05,000 Speaker 5: They have to be trained to intercept this content better, 590 00:32:05,520 --> 00:32:11,360 Speaker 5: and they need to have the content moderation investments that Frankly, 591 00:32:11,400 --> 00:32:15,040 Speaker 5: I'm afraid this court decision will they'll say, hey, why 592 00:32:15,080 --> 00:32:17,240 Speaker 5: don't should we spend money on content moderation of the 593 00:32:17,240 --> 00:32:19,480 Speaker 5: Court's never get intervene. 594 00:32:19,760 --> 00:32:22,240 Speaker 12: As we talk about algorithms, it brings me to this 595 00:32:22,360 --> 00:32:24,840 Speaker 12: idea that we know is very very hot right now, 596 00:32:25,520 --> 00:32:30,680 Speaker 12: artificial intelligence ambassar. How worried are you about the proliferation 597 00:32:30,840 --> 00:32:34,520 Speaker 12: of AI products language learning models that seem to be 598 00:32:34,560 --> 00:32:37,040 Speaker 12: like the hottest thing in society right now, and the 599 00:32:37,080 --> 00:32:40,880 Speaker 12: regulatory response to it moving about as slow as you 600 00:32:40,880 --> 00:32:41,479 Speaker 12: would expect. 601 00:32:42,920 --> 00:32:46,080 Speaker 5: Well, I think I think that all of them. In 602 00:32:46,120 --> 00:32:49,000 Speaker 5: his testimony before Commerce said that they let the genie 603 00:32:49,040 --> 00:32:52,400 Speaker 5: out of the bottle, And the question is how dangerous 604 00:32:52,440 --> 00:32:55,479 Speaker 5: will this be? I mean, my concern is that people 605 00:32:55,840 --> 00:32:59,360 Speaker 5: right now will be held accountable for putting content on 606 00:32:59,400 --> 00:33:03,680 Speaker 5: social media platforms by AI had nothing to do with it. 607 00:33:04,240 --> 00:33:06,960 Speaker 5: And that's all the more reason why algorithms have to 608 00:33:07,040 --> 00:33:12,600 Speaker 5: be educated and trained and created to understand how AI 609 00:33:13,040 --> 00:33:18,640 Speaker 5: may undermine their own algorithms and how these algorithms will 610 00:33:18,640 --> 00:33:23,239 Speaker 5: and affect interact with content that could be uploaded on 611 00:33:23,280 --> 00:33:26,960 Speaker 5: their platforms that could incite violence and then attributable to 612 00:33:27,040 --> 00:33:28,880 Speaker 5: individuals that had nothing to do with it. 613 00:33:29,520 --> 00:33:31,920 Speaker 2: There was a hearing last evening the House Select Committee 614 00:33:32,720 --> 00:33:37,080 Speaker 2: on the Chinese Communist Party. The chair Mike Gallagher, Republican 615 00:33:37,120 --> 00:33:40,840 Speaker 2: of course, speaking to you. The name of this hearing 616 00:33:41,240 --> 00:33:45,160 Speaker 2: was how to counter the Chinese Communist Party's economic aggression. 617 00:33:45,240 --> 00:33:46,880 Speaker 6: AI was part of this conversation. 618 00:33:46,920 --> 00:33:50,600 Speaker 8: The CCP's economic warfare uses any and all available leverage 619 00:33:50,640 --> 00:33:53,480 Speaker 8: to coerce US and our allies, and it's time that 620 00:33:53,520 --> 00:33:55,120 Speaker 8: we defend ourselves in the free world. 621 00:33:55,200 --> 00:33:59,480 Speaker 2: So, Ambassador, is it possible to shield China from technology? 622 00:33:59,520 --> 00:34:03,239 Speaker 2: I know they're doing so for chips, for instance, the 623 00:34:03,280 --> 00:34:06,760 Speaker 2: cards that are made by Nvidia, but this technology has 624 00:34:06,880 --> 00:34:08,040 Speaker 2: a lot of tentacles. 625 00:34:08,760 --> 00:34:11,440 Speaker 5: Well, listen, the Chinese didn't get to where the Chinese 626 00:34:11,480 --> 00:34:15,760 Speaker 5: are without stealing everything they could from the United States 627 00:34:16,320 --> 00:34:20,760 Speaker 5: or an effect. Requiring companies to turn over intellectual property 628 00:34:20,840 --> 00:34:24,439 Speaker 5: is a condition for working in China, and the Biden 629 00:34:24,440 --> 00:34:27,640 Speaker 5: administration has been doing quite a bit to try to 630 00:34:27,680 --> 00:34:32,759 Speaker 5: stem the flow of semiconductor chips and artificial intelligence. And 631 00:34:33,000 --> 00:34:36,560 Speaker 5: I was listening to Elon Musk's interview the other day, 632 00:34:36,680 --> 00:34:39,879 Speaker 5: and he said that from his perspective, China is way 633 00:34:40,000 --> 00:34:42,719 Speaker 5: behind the United States when it comes to AI. But 634 00:34:43,160 --> 00:34:49,920 Speaker 5: given the Chinese ability to penetrate company's cybersecurity here in 635 00:34:49,920 --> 00:34:54,560 Speaker 5: the United States, I'm just concerned about how effective our 636 00:34:54,600 --> 00:34:56,000 Speaker 5: prohibitions will be against it. 637 00:34:57,280 --> 00:34:59,760 Speaker 2: Ambassador, we thank you for the time. Don't be a stranger. 638 00:34:59,800 --> 00:35:03,200 Speaker 2: Mark Ginsburg, former Ambassador to Morocco. He's now president of 639 00:35:03,280 --> 00:35:05,720 Speaker 2: the Coalition for a Safer Web group that he founded. 640 00:35:11,040 --> 00:35:14,400 Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch the 641 00:35:14,440 --> 00:35:18,319 Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the 642 00:35:18,400 --> 00:35:21,720 Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 643 00:35:21,840 --> 00:35:24,719 Speaker 1: You can also listen live on Amazon Alexa from our 644 00:35:24,719 --> 00:35:29,200 Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 645 00:35:30,680 --> 00:35:33,759 Speaker 2: Another day of bank hearings here in Washington. That's been 646 00:35:33,840 --> 00:35:37,480 Speaker 2: quite the parade this week. Is the Senate Banking Committee 647 00:35:37,480 --> 00:35:40,120 Speaker 2: today right where Kaylee Lines was two days ago, but 648 00:35:40,160 --> 00:35:43,400 Speaker 2: instead of the former executives of the banks that failed Kaylee, 649 00:35:43,400 --> 00:35:48,400 Speaker 2: today they were talking to regulators, namely Michael Barr, the 650 00:35:48,480 --> 00:35:51,160 Speaker 2: vice chair of Supervision at the fed whose boy they 651 00:35:51,200 --> 00:35:53,880 Speaker 2: love Pilon on Michael Barr and that was the job today. 652 00:35:54,040 --> 00:35:57,080 Speaker 12: Yeah, I definitely don't envy his position. I didn't envy 653 00:35:57,080 --> 00:35:59,560 Speaker 12: it the first time around when he testified back back 654 00:35:59,560 --> 00:36:01,799 Speaker 12: in March, because this was his second appearance before the 655 00:36:01,800 --> 00:36:04,279 Speaker 12: committee on this bank failure's issue. Of course, this one 656 00:36:04,360 --> 00:36:08,760 Speaker 12: came after the report that he released several weeks ago. Really, 657 00:36:08,920 --> 00:36:11,560 Speaker 12: you know, the diagnostics of what exactly happened with the 658 00:36:11,600 --> 00:36:15,480 Speaker 12: supervision of Silicon Valley Bank, where they failed and why. 659 00:36:15,520 --> 00:36:18,440 Speaker 12: But it doesn't really seem like lawmakers were satisfied fully 660 00:36:18,480 --> 00:36:21,359 Speaker 12: with those explanations and decided they wanted to press him 661 00:36:21,360 --> 00:36:23,319 Speaker 12: on that particular issue further, as well as the other 662 00:36:23,400 --> 00:36:26,799 Speaker 12: regulators that were present. The fdi C chair was there 663 00:36:26,840 --> 00:36:29,959 Speaker 12: as well, the acting occ you know, all of these 664 00:36:30,680 --> 00:36:33,880 Speaker 12: part of the finger pointing at management a lot at 665 00:36:33,960 --> 00:36:36,879 Speaker 12: supervisors as to why this happened. But it's all really 666 00:36:36,920 --> 00:36:38,920 Speaker 12: backward looking. I just want to know what's going to 667 00:36:38,960 --> 00:36:40,560 Speaker 12: happen going forward, What do we do so it doesn't 668 00:36:40,560 --> 00:36:41,040 Speaker 12: happen again? 669 00:36:41,080 --> 00:36:41,200 Speaker 14: Right? 670 00:36:41,280 --> 00:36:41,480 Speaker 1: Yeah? 671 00:36:41,600 --> 00:36:41,759 Speaker 6: Right? 672 00:36:42,520 --> 00:36:44,160 Speaker 2: Kirsten Cinema, who are going to be talking to a 673 00:36:44,160 --> 00:36:46,200 Speaker 2: little bit later on this hour. The senator from Arizona 674 00:36:46,320 --> 00:36:49,600 Speaker 2: was even asking for a quarterly update. They want a 675 00:36:49,719 --> 00:36:52,640 Speaker 2: much tighter leash. It sounds like on the FED falling 676 00:36:52,680 --> 00:36:54,640 Speaker 2: what happened, particularly at SVB. 677 00:36:55,560 --> 00:36:57,959 Speaker 12: Yes, it does seem that way. And this comes back 678 00:36:57,960 --> 00:37:01,600 Speaker 12: to the idea of what needs to be done in 679 00:37:01,600 --> 00:37:04,600 Speaker 12: response to this, because in theory, there was regulatory authority 680 00:37:04,760 --> 00:37:08,960 Speaker 12: that the Federal Reserve Supervisors had that they weren't necessarily 681 00:37:09,000 --> 00:37:11,759 Speaker 12: exercising to the fullest extent for banks between one hundred 682 00:37:11,800 --> 00:37:13,680 Speaker 12: and two hundred and fifty billion dollars in asset. So 683 00:37:13,719 --> 00:37:15,400 Speaker 12: there is, you know, one side of the aisle that 684 00:37:15,520 --> 00:37:17,239 Speaker 12: argues they just need to do a better job of 685 00:37:17,280 --> 00:37:19,840 Speaker 12: doing what we already gave them, the authority that we 686 00:37:19,880 --> 00:37:21,759 Speaker 12: already gave them. The other side saying, no, we need 687 00:37:21,800 --> 00:37:25,759 Speaker 12: stricter regulation in its entirety. So I feel like we 688 00:37:25,760 --> 00:37:27,560 Speaker 12: should get another expert opinion. 689 00:37:27,320 --> 00:37:28,879 Speaker 6: On Yes, we know, we know one too. 690 00:37:29,239 --> 00:37:29,480 Speaker 5: We do. 691 00:37:29,560 --> 00:37:33,680 Speaker 12: Indeed, Keith Reika, I think is the correct pronunciation. Keith, 692 00:37:33,719 --> 00:37:35,960 Speaker 12: I apologize if I butchered that. Thank you for joining us. 693 00:37:36,000 --> 00:37:39,719 Speaker 12: From Epotomac Partners, he heads a their banking regulation view there, 694 00:37:39,719 --> 00:37:42,080 Speaker 12: and he of course is former Acting Comptroller of the 695 00:37:42,120 --> 00:37:44,600 Speaker 12: Currency so he has a real lens into this kind 696 00:37:44,640 --> 00:37:47,719 Speaker 12: of regulatory landscape. Keith, don't know how much attention you 697 00:37:47,760 --> 00:37:50,120 Speaker 12: paid today's hearing or the hearings we've had over the 698 00:37:50,120 --> 00:37:52,200 Speaker 12: course of this week, but did we really get anything 699 00:37:52,280 --> 00:37:57,040 Speaker 12: tangible other than lawmakers scolding regulators and bankers. 700 00:37:57,440 --> 00:38:00,480 Speaker 14: Well, thank you for having me on again. You know, 701 00:38:00,560 --> 00:38:02,600 Speaker 14: I think this is just part of the job, right, Like, 702 00:38:02,680 --> 00:38:05,799 Speaker 14: both for the regulators and for members of Congress. You've 703 00:38:05,840 --> 00:38:10,680 Speaker 14: had the largest bank failure and cost in history basically 704 00:38:10,840 --> 00:38:13,160 Speaker 14: bail out you know, if someone call that up the 705 00:38:13,560 --> 00:38:17,200 Speaker 14: uninsured depositors at Silicon Valley Banks. So so you know, 706 00:38:17,480 --> 00:38:21,120 Speaker 14: like to the extent that members of Congress are reflecting 707 00:38:21,200 --> 00:38:24,480 Speaker 14: the anger of their constituents. Their their right to do that, 708 00:38:25,200 --> 00:38:27,719 Speaker 14: and it's the regulator's job having sat in one of 709 00:38:27,800 --> 00:38:31,680 Speaker 14: these seats to you know, answer questions about why you know, 710 00:38:31,800 --> 00:38:35,520 Speaker 14: things were you know, maybe missed or the like, and 711 00:38:35,560 --> 00:38:38,759 Speaker 14: then what the process of the cleanup was, uh, to 712 00:38:38,840 --> 00:38:42,160 Speaker 14: try to minimize the losses. You know, there's there's a 713 00:38:42,160 --> 00:38:44,920 Speaker 14: lot of blame to go around for everyone, including you know, 714 00:38:44,960 --> 00:38:48,480 Speaker 14: the people sitting on the on the chairs asking the questions. 715 00:38:48,520 --> 00:38:50,439 Speaker 14: I mean, you know, again, one of the things I've 716 00:38:50,480 --> 00:38:55,560 Speaker 14: advocated for is more robust bank mergers and acquisitions. Uh, 717 00:38:55,640 --> 00:38:58,720 Speaker 14: you know, and you know Elizabeth Warren has been really 718 00:38:59,120 --> 00:39:02,400 Speaker 14: against that, and you know to the extent she's deterred 719 00:39:02,480 --> 00:39:04,680 Speaker 14: that a bank like First Republic would have been a 720 00:39:04,719 --> 00:39:07,880 Speaker 14: great sale a year or two ago, and probably no 721 00:39:07,960 --> 00:39:11,280 Speaker 14: one wanted to deal with the bankst of that, including 722 00:39:11,320 --> 00:39:14,799 Speaker 14: the regulators, right and yeah, so thirteen billion dollars later, 723 00:39:15,719 --> 00:39:18,440 Speaker 14: you know, she's yelling at the acting controller for selling 724 00:39:18,440 --> 00:39:19,680 Speaker 14: it to Morgan. 725 00:39:19,920 --> 00:39:20,160 Speaker 12: Keith. 726 00:39:20,160 --> 00:39:22,040 Speaker 14: I'm basically yeah, sorry, I'm. 727 00:39:21,880 --> 00:39:23,799 Speaker 12: Glad you're bringing this up because I wanted to talk 728 00:39:23,800 --> 00:39:25,400 Speaker 12: to you about this, and I cut that sound of 729 00:39:25,480 --> 00:39:29,759 Speaker 12: Senator Warren interacting with the occ take a listen. 730 00:39:29,480 --> 00:39:33,840 Speaker 10: To the controllers to your job, by law is to 731 00:39:33,920 --> 00:39:38,600 Speaker 10: determine risk to the system from making big banks even bigger. 732 00:39:40,160 --> 00:39:42,880 Speaker 12: So she's basically talking to him about how she's unhappy 733 00:39:42,920 --> 00:39:45,120 Speaker 12: with the fact that they allowed JP Morgan, already the 734 00:39:45,120 --> 00:39:48,319 Speaker 12: country's biggest bank, to grow even bigger and theory become 735 00:39:48,360 --> 00:39:51,839 Speaker 12: even riskier taking on First Republic rather than selling it 736 00:39:51,880 --> 00:39:54,440 Speaker 12: to another bank. That doesn't really sound to me like 737 00:39:54,480 --> 00:39:57,440 Speaker 12: a change in tune around the consolidation. If anything, it 738 00:39:57,520 --> 00:39:59,160 Speaker 12: sounds like a senator who does not want to see 739 00:39:59,160 --> 00:40:00,000 Speaker 12: any bank get bigger. 740 00:40:00,600 --> 00:40:03,600 Speaker 14: Well, she's she's left everyone with a lot of bad choices, right, 741 00:40:03,680 --> 00:40:07,319 Speaker 14: and so she's she's yelling at him for exercising his 742 00:40:07,480 --> 00:40:11,280 Speaker 14: least worst choice right, which is to let JP Morgan 743 00:40:11,360 --> 00:40:13,719 Speaker 14: by the bank. But by all accounts, you know, the 744 00:40:13,800 --> 00:40:16,600 Speaker 14: taxpayers would be out at least two billion dollars more 745 00:40:16,680 --> 00:40:19,360 Speaker 14: for the next bid had they not sold it to 746 00:40:19,600 --> 00:40:23,400 Speaker 14: JP Morgan. So, you know, again, not very good choices. 747 00:40:23,800 --> 00:40:25,920 Speaker 14: Probably the best thing would have been to have like 748 00:40:26,000 --> 00:40:29,239 Speaker 14: sort of a mid size, well run bank by it 749 00:40:29,360 --> 00:40:32,120 Speaker 14: about a year ago, you know, because my guess is 750 00:40:32,160 --> 00:40:36,000 Speaker 14: their franchise was very successful, but very narrow and probably 751 00:40:36,120 --> 00:40:38,560 Speaker 14: you know, some of these bank CEOs probably could see, 752 00:40:39,239 --> 00:40:43,319 Speaker 14: you know, the clouds forming on the horizon for the 753 00:40:43,360 --> 00:40:47,200 Speaker 14: securities part of First Horizons balance sheet, and they would say, hey, 754 00:40:47,280 --> 00:40:50,040 Speaker 14: let's make a deal now to cast you guys out 755 00:40:50,080 --> 00:40:53,080 Speaker 14: and get you know, your portfolio on you know, like 756 00:40:53,120 --> 00:40:57,040 Speaker 14: a again a very well run mid size bank balance sheet. 757 00:40:57,080 --> 00:40:59,200 Speaker 14: But all those banks like they didn't want to go through, 758 00:40:59,600 --> 00:41:02,799 Speaker 14: you knowing to deal with the process, and it would 759 00:41:02,840 --> 00:41:05,760 Speaker 14: be very long. And so this is the outcome again 760 00:41:06,000 --> 00:41:09,400 Speaker 14: a better outcome than Silicon Valley Bank, right, which was 761 00:41:09,560 --> 00:41:11,960 Speaker 14: like don't let anyone buy it. Like, if you're really 762 00:41:12,000 --> 00:41:14,000 Speaker 14: against M and A, then you're gonna have a lot 763 00:41:14,040 --> 00:41:16,720 Speaker 14: more solicon valley banks. And you know, do we really 764 00:41:16,760 --> 00:41:21,120 Speaker 14: want that? So again, not great choices at the moment, 765 00:41:21,239 --> 00:41:24,040 Speaker 14: but you know, we're kind of working through it at 766 00:41:24,120 --> 00:41:26,440 Speaker 14: some point. You know, the bank regulators need to be 767 00:41:26,920 --> 00:41:29,839 Speaker 14: like the fire department. And yeah, you can ask them 768 00:41:29,840 --> 00:41:33,440 Speaker 14: tough questions and you should, obviously, but you also need 769 00:41:33,480 --> 00:41:34,360 Speaker 14: the fire departments. 770 00:41:36,400 --> 00:41:39,279 Speaker 2: Kirsten Cinema, the Senator from Arizona in the Senate Banking 771 00:41:39,320 --> 00:41:43,480 Speaker 2: Committee hearing today, went after Michael Barr asking about the report, 772 00:41:43,520 --> 00:41:46,080 Speaker 2: remembering this is a couple of weeks ago, actually, right, Kelly, 773 00:41:46,239 --> 00:41:48,080 Speaker 2: my gosh, it's been several weeks by now, after that 774 00:41:48,120 --> 00:41:52,080 Speaker 2: internal report was released and recommendations were made, and as 775 00:41:52,120 --> 00:41:53,959 Speaker 2: I mentioned, they want to keep a pretty short leash 776 00:41:54,000 --> 00:41:54,399 Speaker 2: on the Fed. 777 00:41:54,480 --> 00:41:56,279 Speaker 6: Listen to the tone in this question. 778 00:41:56,120 --> 00:41:59,320 Speaker 2: With respect to cultural and operational changes at the Federal Reserve. 779 00:42:00,160 --> 00:42:03,160 Speaker 6: Defining success, I think. 780 00:42:03,040 --> 00:42:06,520 Speaker 13: We need to have a workforce that's agile, that acts 781 00:42:06,600 --> 00:42:09,880 Speaker 13: quickly and acts forcefully to prevent these kinds of problems 782 00:42:09,920 --> 00:42:12,160 Speaker 13: in the future and how fast will you achieve that? 783 00:42:13,320 --> 00:42:15,640 Speaker 13: I think it will take time. I think cultural change 784 00:42:15,640 --> 00:42:18,319 Speaker 13: is difficult, but I've started that work already and I'm 785 00:42:18,320 --> 00:42:21,200 Speaker 13: committed to getting it done. But you have no timeline. 786 00:42:21,760 --> 00:42:24,319 Speaker 13: I do not currently have a timeline where that's the 787 00:42:24,360 --> 00:42:28,160 Speaker 13: next step in the process after the sub report, the. 788 00:42:28,160 --> 00:42:31,760 Speaker 2: Keith, the Senators, lawmakers in fact, I'm in both chambers 789 00:42:31,800 --> 00:42:36,279 Speaker 2: want more, faster, more better from this FED. Can they 790 00:42:36,280 --> 00:42:37,439 Speaker 2: bring it well? 791 00:42:37,400 --> 00:42:40,759 Speaker 14: And they should? I mean, you know, FED, all these 792 00:42:40,800 --> 00:42:45,400 Speaker 14: banking agencies are independent agencies, having been in the OCC, 793 00:42:45,680 --> 00:42:49,600 Speaker 14: which is, you know, the same but different than the FED. 794 00:42:50,120 --> 00:42:53,040 Speaker 14: You know, like the OCC sort of would track banks 795 00:42:53,040 --> 00:42:56,600 Speaker 14: into higher supervision before they got to the relevant thresholds, 796 00:42:56,600 --> 00:42:58,400 Speaker 14: and you know I would have banks come and complain 797 00:42:58,440 --> 00:43:00,640 Speaker 14: to me about that. So that was a little bit 798 00:43:00,640 --> 00:43:03,000 Speaker 14: of a weird part of the bar report of you know, 799 00:43:03,040 --> 00:43:06,160 Speaker 14: this SVB, like you know, like a bullet train going 800 00:43:06,160 --> 00:43:09,360 Speaker 14: through the different groups and the FED not being ready 801 00:43:09,400 --> 00:43:11,640 Speaker 14: for it and being a delay. I think that is 802 00:43:11,680 --> 00:43:13,640 Speaker 14: a problem on the FED side, And if I were 803 00:43:13,680 --> 00:43:17,960 Speaker 14: a Senator, I would be pushing for that cultural change too, 804 00:43:18,120 --> 00:43:21,080 Speaker 14: right like that there shouldn't be like these fiefdoms inside 805 00:43:21,080 --> 00:43:24,040 Speaker 14: the agency. So she's right, I mean, that's her job. 806 00:43:24,719 --> 00:43:26,440 Speaker 12: On the subject of the FED. I also thought the 807 00:43:26,480 --> 00:43:29,640 Speaker 12: line of questioning from Republican Senator Bill Haggerty was interesting 808 00:43:29,680 --> 00:43:32,000 Speaker 12: because he was essentially asking if there is a conflict 809 00:43:32,000 --> 00:43:35,440 Speaker 12: with the FED having both this supervisory role and its 810 00:43:35,520 --> 00:43:38,640 Speaker 12: role in monetary policy raising interest rates, which arguably is 811 00:43:38,680 --> 00:43:41,080 Speaker 12: a contributor to, you know, the problems we are talking 812 00:43:41,080 --> 00:43:43,560 Speaker 12: about the failures of the banks to which we are referring. 813 00:43:43,600 --> 00:43:44,879 Speaker 12: What is your take on that, Keith? 814 00:43:45,160 --> 00:43:48,680 Speaker 14: So, look, I think the argument for keeping bank supervision, 815 00:43:48,760 --> 00:43:51,239 Speaker 14: especially if the largest banks at the FED, is that 816 00:43:51,280 --> 00:43:53,719 Speaker 14: they do both right, So they should be able to 817 00:43:53,760 --> 00:43:56,640 Speaker 14: integrate both. They should have knowledge of the effects of 818 00:43:56,760 --> 00:44:00,680 Speaker 14: rising interest rates or decreasing interest rates on banks balance sheet, 819 00:44:00,719 --> 00:44:03,160 Speaker 14: and be able to act as a seamless whole. I 820 00:44:03,160 --> 00:44:06,279 Speaker 14: think what we're seeing, at least in these instances is 821 00:44:06,360 --> 00:44:07,600 Speaker 14: that's not the way it works. 822 00:44:07,680 --> 00:44:07,839 Speaker 6: Right. 823 00:44:07,880 --> 00:44:10,640 Speaker 14: There are two very separate parts of the FED, and 824 00:44:10,760 --> 00:44:14,360 Speaker 14: so you know, then you question the wisdom of it. 825 00:44:14,440 --> 00:44:17,640 Speaker 14: Right where you have more specialized banking agencies like the 826 00:44:17,680 --> 00:44:21,000 Speaker 14: OCC and the FD, I see that are more laser focused. 827 00:44:21,080 --> 00:44:23,640 Speaker 14: So I think the jury is still out on that, 828 00:44:24,000 --> 00:44:28,520 Speaker 14: but like certainly you know anyone who would know the 829 00:44:28,680 --> 00:44:33,399 Speaker 14: effective monetary you know, policy tightening and the history of that, 830 00:44:33,560 --> 00:44:35,879 Speaker 14: and of all people, the people inside the fence should 831 00:44:35,920 --> 00:44:39,000 Speaker 14: know that, at least somebody should and not going to 832 00:44:39,080 --> 00:44:42,799 Speaker 14: talk to the supervisory people of like big red light 833 00:44:42,920 --> 00:44:47,520 Speaker 14: going off on the dashboard of interest rate risk affecting 834 00:44:47,560 --> 00:44:52,200 Speaker 14: bank portfolios. That that was a failure, right, Like that 835 00:44:52,320 --> 00:44:54,680 Speaker 14: was like the air traffic control not saying put down 836 00:44:54,719 --> 00:44:57,960 Speaker 14: the landing gear, you know, to to the plane in flight. 837 00:44:58,080 --> 00:45:00,400 Speaker 14: And so that needs to be figured it out. So 838 00:45:00,719 --> 00:45:03,600 Speaker 14: I think he's right again to question the wisdom. I 839 00:45:03,680 --> 00:45:06,680 Speaker 14: see the argument of what it, you know, why it's there, 840 00:45:06,800 --> 00:45:09,600 Speaker 14: and why they do it together. But it didn't work 841 00:45:09,719 --> 00:45:13,719 Speaker 14: the way that that the argument goes. So then you 842 00:45:13,760 --> 00:45:16,239 Speaker 14: have to question, you know, can you fix it or 843 00:45:16,719 --> 00:45:19,960 Speaker 14: should it be done separately? So a good question I 844 00:45:19,960 --> 00:45:21,120 Speaker 14: think for for debate. 845 00:45:21,600 --> 00:45:24,880 Speaker 2: Great insights from Keith Noraka, the former acting Control or 846 00:45:24,920 --> 00:45:28,080 Speaker 2: the Currency now at Potoma Global Partners. Keith, thanks for 847 00:45:28,120 --> 00:45:30,000 Speaker 2: being a reliable voice for us as we try to 848 00:45:30,000 --> 00:45:37,160 Speaker 2: figure all the salad. Thanks for listening to the sound 849 00:45:37,200 --> 00:45:39,800 Speaker 2: on podcast. Make sure to subscribe if you haven't already 850 00:45:39,880 --> 00:45:42,799 Speaker 2: at Apple, Spotify, and anywhere else you get your podcasts, 851 00:45:43,160 --> 00:45:45,800 Speaker 2: and you can find us live every weekday from Washington, 852 00:45:45,880 --> 00:45:48,799 Speaker 2: d C. At one pm Eastern Time at Bloomberg dot 853 00:45:48,800 --> 00:45:49,960 Speaker 2: com