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Speaker 1: This is Bloomberg Surveillance. The fear is that policymakers move

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Speaker 1: inward in reverse globalization in the next few years for

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Speaker 1: short term gain at long term pain with the FED

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Speaker 1: worre to high grates much too quickly or by too

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Speaker 1: much um that could raise off any recovery. The FED

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Speaker 1: is usually in a situation where they're kind of suggesting

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Speaker 1: to the market we'd like to raise rates, We'd like

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Speaker 1: to not raise raids, and then if the market agrees

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Speaker 1: with them, they do. At Bloomberg Surveillance your link to

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Speaker 1: the world of economics, finance and investment on Bloomberg Radio.

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Speaker 1: Happy New Year, David Grew and Tom Keen in New

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Speaker 1: York on List the third of January two thousand seventeen.

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Speaker 1: Out of the studio today at Eurasia Group's headquarters. Eurasia

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Speaker 1: Group having just released its top risks for two thousand

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Speaker 1: seventeen this morning, Ian Bremer joins us for the hour

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Speaker 1: to walk us through it and the report will underpin

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Speaker 1: important conversations with former Treasury Secretary Lawrence Summers. Now Charles

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Speaker 1: Eliot University Professor at Harvard, Neal Rubini, Professor of Economics

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Speaker 1: in the National Business at the Student School of n

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Speaker 1: y U and Dominique Barton, global managing partner at mckinns

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Speaker 1: and Company, will also speak with Roger and Roger on

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Speaker 1: the University of Chicago is Booth School, of course, the

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Speaker 1: former governor of the Reserve Bank of India. It is

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Speaker 1: a heck of a way to kick off year and

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Speaker 1: join us now, Ian Bremer Pounder in President of the

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Speaker 1: Eurisia Group here this morning. Ian, you've written and talked

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Speaker 1: a lot about a G zero world UH, and indeed

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Speaker 1: you herald its arrival with this report. First definitionly, what

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Speaker 1: is it and what does that mean for the world. Well,

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Speaker 1: it's a world without leadership, and this year, in particular,

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Speaker 1: it's a year where the United States formally renounces um

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Speaker 1: it's responsibilities and obligations UH from the rest of the world,

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Speaker 1: both in terms of the alliances which it believes needs

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Speaker 1: to be reset or restructured, as well as its commitments

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Speaker 1: to multilateral institutions that the Americans itself set up, both

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Speaker 1: financial institutions, security institutions, big architecture like the u N

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Speaker 1: That's happening in a world where the Middle East is imploding,

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Speaker 1: where European leadership is very weak, and where the countries

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Speaker 1: that have stronger leadership these days, Countries like Turkey, countries

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Speaker 1: like Russia, countries like China do not share American values,

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Speaker 1: particularly in terms of how politics and economics should be

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Speaker 1: set up. You think about what that means for the

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Speaker 1: global environment. It's the United States this year that actually

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Speaker 1: drives global political or is something that for the last

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Speaker 1: couple of decades was just unimaginable. Right, the Middle East

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Speaker 1: is the place that's unstable. Okay, maybe the Europeans don't

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Speaker 1: have their act together, but the United States you can

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Speaker 1: count on. Well, we've seen a lot of countries over

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Speaker 1: the past year saying we're not so sure we can

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Speaker 1: count on the US. Think about failed wars in Iraq

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Speaker 1: and Afghanistan, think about Obama's failures on Russia or after

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Speaker 1: the Arab Spring. But with the inauguration of President Trump

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Speaker 1: and in America First Policy, which is saying these geopolitical

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Speaker 1: problems they're not America's problems. You know, we've got a

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Speaker 1: couple of big oceans. We've got Mexico and Canada. Let's

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Speaker 1: build a wall, let's stop the immigration, let's not take

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Speaker 1: on those obligations. That drives a tremendous amount of geopolitical

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Speaker 1: risk in twenty seven Team Wonderful, Stetted guests coming up

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Speaker 1: again and Dr Bremer with a wide set of top

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Speaker 1: risk and very different than what we saw twelve months

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Speaker 1: ago from Eurasia Group led by Independent America. Something to

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Speaker 1: talk about as we were seventeen days away from the

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Speaker 1: the inauguration. I want to look at the data right now.

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Speaker 1: Futures improve up fourteen now up nineteen DAL futures up

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Speaker 1: a hundred and fifty six not near doubt twenty thousand,

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Speaker 1: nineteen eight seven six. With that big pop in the Dow,

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Speaker 1: futures yields up a solid six basis points on the

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Speaker 1: tenure two point five percent in the currency market Jarney

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Speaker 1: this morning, Dollar stronger, Bloomberg surveillance March by Investco. Investing

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Speaker 1: isn't about a cheating average, It's about a cheating goals.

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Speaker 1: Explore high Conviction Investing with Investco at investco dot com.

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Speaker 1: Slash high Conviction David Gura, why don't you jump in

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Speaker 1: with Charles Elott, University professor at Harpart University, of course,

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Speaker 1: former Secretary of the Treasury joining us now by phone

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Speaker 1: own uh Lauren Simmers let me ask you essential to

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Speaker 1: this report at the number one risk in date is

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Speaker 1: independent America. What are the economic ramifications of that? As

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Speaker 1: you see in look. We used to think that financial

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Speaker 1: crises were things that happened in other countries, and then

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Speaker 1: two thousand and eight happened, and financial crisis were something

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Speaker 1: that happened in the United States. Then we thought that

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Speaker 1: political risk was something that was a feature of other countries,

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Speaker 1: and now two thousands sixteen has happened, and the United

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Speaker 1: States is a source of political risk. The uncertainty premium

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Speaker 1: on everything UH should go up. You know, historians and

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Speaker 1: political economists have written for a long time about the

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Speaker 1: idea of a populist policy cycle. That populist policies can

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Speaker 1: generate good results for an interval. You stimulate demand carns,

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Speaker 1: these appreciate oldbound of prices, and everything looks good. But

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Speaker 1: the other side of the populist policy cycle is that

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Speaker 1: the high doesn't tend to last UH too on, and

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Speaker 1: just like repeated dieters, it gets harder and harder to

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Speaker 1: generate growth. So I think the risks here are a

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Speaker 1: slowing global economy, are a US economy that enjoys a

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Speaker 1: brief sugar high, a further diminution in US productivity, UH performance,

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Speaker 1: and above all, a huge increase in uncertainty that leads

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Speaker 1: to a repricing of all sorts of assets. Remember, I'm

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Speaker 1: gonna ask you about a distinction you draw on this

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Speaker 1: report between isolationism and independence. Help us understand the distinction

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Speaker 1: at the when you look at the direction of policy

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Speaker 1: under a president Donald Trump. Well, look, I mean, I think,

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Speaker 1: first of all, he himself has rejected the idea that

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Speaker 1: he's an isolationist. Uh. And I think when you look

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Speaker 1: at some of the national security issues, you look at

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Speaker 1: the way he says We're going to blow the hell

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Speaker 1: out of isis um. You know, I I certainly see

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Speaker 1: Trump as someone who is prepared to intervene and intervene

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Speaker 1: strongly when he thinks American national interests are in play,

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Speaker 1: and then play directly. Uh. He's much more transactional in

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Speaker 1: terms of foreign policy. But his willingness to develop in

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Speaker 1: a relationship that could even be an alliance, certainly strategic

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Speaker 1: alignment with Putin in the near term doesn't smack of isolationism.

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Speaker 1: What it smacks of his unilateralism. In many ways, it's

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Speaker 1: a more traditional Chinese foreign policy, which is a hey,

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Speaker 1: don't tell me about your obligations and responsibilities. I want

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Speaker 1: to do a win win that works for you, works

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Speaker 1: for me and everyone else, be damned. And you know

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Speaker 1: Trump's willingness to think about terrorism, to think about the

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Speaker 1: global marketplace in ways that is purely and trans actually defined,

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Speaker 1: very narrow, very short term. I think, first of all,

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Speaker 1: it's very close to what Larry's concerns on the global economy,

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Speaker 1: and one that again the markets really don't appreciate Professor Summers,

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Speaker 1: and the time that we've got left to you, that

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Speaker 1: we have not addressed the central banks, which are part

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Speaker 1: of Dr Bremer's study here for his top risks of

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Speaker 1: this year. Help us here with the independence of the

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Speaker 1: American Central Bank, cher Yelling will face challenges this year.

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Speaker 1: What would be your counsel on how the FED maintains independence?

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Speaker 1: But I think there are issues with respect to the Fed,

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Speaker 1: but they're frankly second order compared to the farm policy issues.

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Speaker 1: Ian is exactly right that it is a mistake to

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Speaker 1: confuse isolationism and truculent nationalism. What is on offer for

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Speaker 1: the United States now appears to be a truculent nationalism

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Speaker 1: that not just will fail to undergird the system, but

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Speaker 1: runs the real risk of provoking actions and a cycle

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Speaker 1: of escalation with other major actors in the international system. Look,

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Speaker 1: I think the I think there's considerable confusion in Trump

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Speaker 1: world about the FED. They know they're not enormously respectful

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Speaker 1: of its independence, but they're not sure whether they share

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Speaker 1: the traditional Republican preference for tighter money and higher interest

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Speaker 1: rates for whether they're going to need the lower interest

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Speaker 1: rates are more inflationary policies in order to finance UH

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Speaker 1: the rather large tax cutting and defense build up kinds

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Speaker 1: of plans UH that they have. So I think it's

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Speaker 1: going to be a very tricky world for the FED

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Speaker 1: to navigate. I also think UH that the risks of

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Speaker 1: another financial crisis within the next few years have gone

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Speaker 1: way up, not just because of the changes in the

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Speaker 1: economic environment, but because of the very clear signal being

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Speaker 1: sent that the regulatory UH impulse, which was obviously much

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Speaker 1: necessary after two thousand and eight UM is under UH wheel,

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Speaker 1: is under real threat, and that brushing of financial regulation,

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Speaker 1: which clearly is the intention of both the Republican Congress

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Speaker 1: and UH the new administration, also poses risks and by

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Speaker 1: the way, poses risks not just to the US financial system,

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Speaker 1: but to the financial system UH globally. And so my

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Speaker 1: hope is that the Federal Reserve will remain very strong

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Speaker 1: in support not of every detail, not of every jot

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Speaker 1: you sent all. There's certainly, particularly what community banks are involved,

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Speaker 1: corrections that need to be made, but will be very

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Speaker 1: supportive of the basic thrust of the Dodd Frank legislation

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Speaker 1: around consumer protection and around the UH protection of the

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Speaker 1: capital aquidity position. Let's let's leave it there, Professor Summers,

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Speaker 1: thank you so much for joining us. We will continue

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Speaker 1: with IAN worldwide. This is Bloomberg check Out with National

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Speaker 1: World headlines with Michael barn like if you good the morning,

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Speaker 1: they think the morning Tom. Turkey state run news agency

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Speaker 1: says a total of fourteen people are being questioned in

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Speaker 1: the shooting attack against New Year's Revelers and anistand Bold nightclub.

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Speaker 1: Police are getting numerous reports of sightings or tips from

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Speaker 1: people following the release of photos of the alleged gunman.

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Speaker 1: President elect Donald Trump has made it official and picked

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Speaker 1: lawyer Robert Lightheizer's who had the U S Trade Representative office.

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Speaker 1: Nowhere yet on what caused the outage with US Customs

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Speaker 1: computers at airports across the nation yesterday. The agency says

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Speaker 1: officers had to use alternative procedures to screen arriving international

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Speaker 1: travelers until the system came back online. Lines at some

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Speaker 1: airports stretched for as long as six hours. Global News

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Speaker 1: twenty four hours a day, powered by more than twenty

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Speaker 1: hundred journalists and analysts more than a hundred, twenty countries.

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Speaker 1: Michael Barr, this is Bloomberg, David Tom Michael Burr, thank

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Speaker 1: you so much. We look at equal response. Currencies, commodities,

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Speaker 1: risk on futures up eighteen, Dow futures up a hundred

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Speaker 1: and fifty four with the yield up solid six basis points,

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Speaker 1: two dollars stronger with Euro one oh three eighty nine.

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Speaker 1: David Gurr, Tom Keane, Worldwide, Coast to coast, This is Bloomberg,

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Speaker 1: coming up on Bloomberg, Surveillance, more and Eurige. Your group's

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Speaker 1: top risks two thousand and seventeen, The geopolitical Recession. Don

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Speaker 1: Barton and the gold Managing partner McKenzie and Company joins us,

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Speaker 1: along with Neuriel Rubini, co founder and former chairman of

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Speaker 1: Rabini Global Economics,