WEBVTT - Citizens Bank CEO Says Fed Should 'Step it Up' 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.479 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 0:00:23.480 --> 0:00:25.439 can also listen to our radio show at two pm 0:00:25.480 --> 0:00:28.400 Eastern Time on Bloomberg Radio, or watch us on YouTube 0:00:28.400 --> 0:00:32.280 search Bloomberg clovel News. We've been watching bank stocks in 0:00:32.320 --> 0:00:33.879 a big way this week due to the move up 0:00:33.880 --> 0:00:36.000 in rates, or the volatility and rates, if you will, 0:00:36.040 --> 0:00:38.800 all the Fed talk about monetary policy as a whole. 0:00:38.800 --> 0:00:41.239 Bank stocks st roughly about two percent year to day, 0:00:41.240 --> 0:00:43.159 compared with a nearly six percent drop in the S 0:00:43.159 --> 0:00:45.720 and P five hundred. Citizens Financial Group they're temp up 0:00:45.760 --> 0:00:48.280 around three percent so far this year. Joining us now 0:00:48.360 --> 0:00:51.159 is the chairman and CEO of Citizens Financial Group of 0:00:51.200 --> 0:00:53.559 Bruce van Son. He's with us in the Bloomberg Interactive 0:00:53.560 --> 0:00:58.080 Broker studio. Bruce how are you good, good, good? Um, Bruce, 0:00:58.440 --> 0:01:00.680 I just wanted are you really with every thing going on? 0:01:01.000 --> 0:01:03.280 Tell me how great? How crazy? Is it? Right? Well, 0:01:03.320 --> 0:01:06.040 it's a really interesting time to be in banking. Uh 0:01:06.200 --> 0:01:08.319 So there's a lot of things happening in the macro 0:01:08.600 --> 0:01:12.839 economic environment. But then just the level of competition, the 0:01:12.880 --> 0:01:17.120 technology changes of everything moving digital. It's just lots of challenges, 0:01:17.160 --> 0:01:20.760 which makes things fun to me. Okay, So when we 0:01:21.040 --> 0:01:24.480 you know, we have been trying to figure out what 0:01:24.560 --> 0:01:27.080 happens next. And you know, just when we thought the 0:01:27.200 --> 0:01:28.679 end of last year, we thought we had a good 0:01:28.680 --> 0:01:32.160 handle on things. Of course, then you have the Ukraine war, um, 0:01:32.280 --> 0:01:34.080 and we know the costs and we talked about the 0:01:34.160 --> 0:01:36.920 humanitarian costs, which you know there is no excuse for, 0:01:37.080 --> 0:01:38.920 but we're trying to figure out kind of where it 0:01:38.920 --> 0:01:40.680 all goes. Do you feel like you have good visibility 0:01:40.800 --> 0:01:44.960 because you play into individuals, small businesses, institutional What are 0:01:44.959 --> 0:01:46.760 you seeing from them when you I'd say that the 0:01:46.800 --> 0:01:50.440 economy is still on a very solid footing. Uh. You know, 0:01:50.560 --> 0:01:54.960 the major worry at the moment is inflation. That inflation 0:01:55.800 --> 0:01:59.919 is very harmful. Uh. It affects businesses, it affects individuals, 0:02:00.320 --> 0:02:06.040 particularly those at the lower end of the economic means. UH, 0:02:06.080 --> 0:02:10.119 and so getting inflation back under control is a very 0:02:10.320 --> 0:02:13.920 urgent task, and I think the FED now is on it. UH. 0:02:14.000 --> 0:02:16.600 They've made the first hike, and I think they've talked 0:02:16.600 --> 0:02:19.520 about being aggressive to this is. Job one is to 0:02:19.600 --> 0:02:24.320 bring this down. So UM, I think they'll hopefully engineer 0:02:24.360 --> 0:02:27.600 a soft landing. That's that's you know what what would 0:02:27.600 --> 0:02:31.960 be the desired outcome. But I think the economy has 0:02:32.080 --> 0:02:33.919 enough power that if they go about it the right 0:02:33.919 --> 0:02:36.799 way and they're measured and UH, they start to bring 0:02:36.800 --> 0:02:39.880 inflation down, this could be a very good year for 0:02:40.120 --> 0:02:43.880 the US economy for stocks ultimately could kind of bounce back. 0:02:43.919 --> 0:02:46.880 If you get some kind of stalemate or resolution in 0:02:46.919 --> 0:02:49.600 the Ukraine, UH, and the Fed does its job, it 0:02:49.639 --> 0:02:52.440 can still be quite a positive year. What what does 0:02:52.440 --> 0:02:55.280 it mean to you in terms of of, you know, 0:02:55.280 --> 0:02:57.480 how the Fed actually can pull this off. Does that 0:02:57.520 --> 0:02:59.919 mean a fifty basis point? Yeah, I think they probably 0:03:00.000 --> 0:03:02.680 should should step it up a little bit for the 0:03:02.760 --> 0:03:05.000 next meeting or two, and then kind of they can 0:03:05.040 --> 0:03:07.400 sit back and digest. If they start to see the 0:03:07.480 --> 0:03:10.760 numbers coming back down, then they could kind of go 0:03:10.960 --> 0:03:13.960 drop back to twenty five and just again take the 0:03:14.040 --> 0:03:18.520 data in and uh and even uh pause after a 0:03:18.560 --> 0:03:21.640 certain time. But you know, right now the market is 0:03:21.680 --> 0:03:25.600 projecting that the short rates go up to maybe two 0:03:25.639 --> 0:03:28.600 and a half by the end of the year. Historically speaking, 0:03:28.720 --> 0:03:32.919 that's still relatively low from an absolute standpoint, So I 0:03:32.960 --> 0:03:36.200 don't think it chokes off economic activity. It doesn't choke 0:03:36.240 --> 0:03:38.880 off all the private equity money going to work trying 0:03:38.880 --> 0:03:41.280 to get deals done. The pipelines for deals are still 0:03:42.080 --> 0:03:45.520 very strong, and people see that. The FEDS telegraphed what's happening. 0:03:45.680 --> 0:03:48.520 But what's the biggest part of your business deposits loans? 0:03:48.640 --> 0:03:53.200 Individual loans business, Well, the kind of overall mix of 0:03:53.240 --> 0:03:56.400 our loan book is about fifty four percent consumer and 0:03:56.480 --> 0:03:59.920 forty six percent commercials, so we're pretty well balanced between 0:04:00.040 --> 0:04:03.920 serving individuals. I'd put small businesses in with individuals, and 0:04:03.960 --> 0:04:08.560 then the commercial side. We we cover companies, middle market 0:04:08.560 --> 0:04:11.600 companies from twenty five million up to mid corporate companies 0:04:11.640 --> 0:04:15.400 with three billion in revenues, So that's that's been our focus. 0:04:15.560 --> 0:04:18.760 What's demand among those two sides of the business in 0:04:18.880 --> 0:04:22.080 terms of just business overall loan demand or and I'm 0:04:22.120 --> 0:04:25.520 also curious about deposits, especially among individuals. Are they higher 0:04:25.560 --> 0:04:29.120 than normal or yeah, deposits are still elevated given all 0:04:29.160 --> 0:04:31.800 the liquidity that the FED pumped into the system and 0:04:31.800 --> 0:04:37.040 that the government pushed out into into the economy. So um, 0:04:37.080 --> 0:04:39.800 I think. You know, most banks are sitting with relatively 0:04:39.960 --> 0:04:43.599 low loan to deposit ratios and we're been waiting for 0:04:43.680 --> 0:04:47.080 loan demand to pick up. We are seeing that our 0:04:47.160 --> 0:04:49.919 rates to be able to charge to make more money 0:04:49.920 --> 0:04:52.520 with the higher rates. So it looked going into the 0:04:52.600 --> 0:04:54.839 year that all that was lined up very well because 0:04:54.880 --> 0:04:57.160 the loan growth and fourth quarter was quite high, both 0:04:57.160 --> 0:04:59.800 on the consumer side and on the commercial side. Companies 0:05:00.080 --> 0:05:02.480 starting to draw down on their lines again so they 0:05:02.480 --> 0:05:07.200 could make investments in inventories and plant and equipment to 0:05:07.320 --> 0:05:10.080 meet the higher demand that they saw coming. So those 0:05:10.080 --> 0:05:13.120 were all good signs. We haven't really seen an interruption 0:05:13.160 --> 0:05:15.920 in that yet, so the first quarter it's still held 0:05:15.960 --> 0:05:19.839 in pretty good. But again back to the macro, the 0:05:19.960 --> 0:05:23.200 fear is if the Fed uh moves more aggressively or 0:05:23.240 --> 0:05:25.360 if people start to pull back and say, well, I 0:05:25.360 --> 0:05:28.040 don't know what's going to happen, that could cool that off. 0:05:28.080 --> 0:05:30.280 A little bit, but at this point I'm going to 0:05:30.400 --> 0:05:33.800 stay optimistic and say that won't happen. Bruce. I want 0:05:33.839 --> 0:05:35.160 to go back to something that you said a little 0:05:35.160 --> 0:05:38.080 earlier at the start of our discussion, talking about inflation 0:05:38.080 --> 0:05:40.919 and hurting the consumer at the lower end of the 0:05:41.120 --> 0:05:44.600 income spectrum. What do you hear from small businesses, from 0:05:44.800 --> 0:05:47.919 medium sized businesses, middle market businesses about inflation and the 0:05:47.920 --> 0:05:51.240 effect that it's having on their costs. It depends on 0:05:51.400 --> 0:05:55.320 the nature of the business. Um. I think many companies 0:05:55.360 --> 0:05:58.520 have been able to pass through the inflation, so they're 0:05:58.560 --> 0:06:02.560 maintaining their margins. Uh. And you know, I'd say the 0:06:02.600 --> 0:06:06.280 bigger the company, maybe the bigger capacity to do that. 0:06:06.680 --> 0:06:09.720 Maybe not always as easy for smaller businesses, but even 0:06:09.760 --> 0:06:13.480 small businesses like restaurants. What what's the Have you been 0:06:13.520 --> 0:06:16.040 out and had a stake lately? Yeah, exactly. I mean 0:06:16.880 --> 0:06:21.279 there's the higher costs for for labor and for the supplies, 0:06:21.400 --> 0:06:25.280 the meat and other ingredients has gone up, so so 0:06:25.560 --> 0:06:29.000 many people are able to pass that through at this point, 0:06:29.040 --> 0:06:32.320 What about for you and in your firm are you 0:06:32.480 --> 0:06:35.560 are you seeing higher costs? So we've had to take 0:06:35.640 --> 0:06:39.320 people more. One of the nice things as an offset 0:06:39.480 --> 0:06:41.960 is those higher rates mean we're going to start repricing 0:06:42.000 --> 0:06:46.159 our loans faster than we repriced deposits, and so that 0:06:46.400 --> 0:06:50.000 additional income allows us to cover some of that higher 0:06:50.160 --> 0:06:53.240 cost of our people. At this point. The other thing 0:06:53.279 --> 0:06:56.719 that we constantly are seeking to do is to look 0:06:56.760 --> 0:06:59.160 for ways to run the bank more efficiently, and so 0:06:59.200 --> 0:07:03.240 we're trying to substitute capital. Can you use artificial intelligence 0:07:03.360 --> 0:07:07.560 or can you use bots to automate some tasks that 0:07:07.680 --> 0:07:13.200 used to require people that we're probably less uh enriching 0:07:13.280 --> 0:07:15.920 from a from a kind of growth standpoint, the jobs 0:07:15.920 --> 0:07:18.080 that menial things that that get in the way of 0:07:18.120 --> 0:07:21.640 people enjoying their careers. Can we can we kind of 0:07:21.680 --> 0:07:23.800 take those off the table and allow people to do 0:07:23.880 --> 0:07:26.040 some of the more higher value add stuff. We're talking 0:07:26.040 --> 0:07:28.720 with Bruce beans On, chairman and CEO of Citizens Financial Group. 0:07:28.880 --> 0:07:32.200 What what is the importance of still having branches like 0:07:32.280 --> 0:07:34.160 k I'm amazed. I'll even walk in like the city 0:07:34.160 --> 0:07:36.280 branch in the corner and it's like it's probab We 0:07:36.360 --> 0:07:39.440 just we just uh you know, made a big play 0:07:39.440 --> 0:07:43.320 to get into New York metro by buying HSBC's East 0:07:43.320 --> 0:07:47.880 Coast branches and then buying Investors Bank, which is we 0:07:47.960 --> 0:07:50.280 just got approval on this week from the FED, so 0:07:50.360 --> 0:07:53.000 that'll close shortly, but that'll give us a combined two 0:07:53.440 --> 0:07:57.160 branches in the New York metro area, top ten deposit 0:07:57.200 --> 0:08:00.720 market share, a million new customers. People say, I'm saying 0:08:00.720 --> 0:08:02.480 you're all in on branches. All right, We're still in 0:08:02.520 --> 0:08:04.160 on branches. So you say, well, Bruce, you know you 0:08:04.200 --> 0:08:06.800 also launched a digital bank, so you have citizens access, 0:08:06.920 --> 0:08:11.120 is doing business in fifty states. Why do you need branches? Uh? Interestingly, 0:08:11.560 --> 0:08:15.920 are most satisfied customers value all our distribution channels. So 0:08:15.960 --> 0:08:19.600 if you have a branch network where you can offer advice, 0:08:20.360 --> 0:08:23.320 you have a digital channel where you can people use 0:08:23.360 --> 0:08:25.320 their phone and bank on their phone and make check 0:08:25.400 --> 0:08:28.920 deposits and check balances. So it's convenience. You're offering convenience. 0:08:29.240 --> 0:08:31.280 And then on the weekend that branches aren't open and 0:08:31.320 --> 0:08:33.680 you have a question, you can call the contact center. 0:08:34.040 --> 0:08:36.880 If you have all those channels working at a high level, 0:08:36.960 --> 0:08:40.800 seamlessly together, that's when you have a really satisfied customer. 0:08:40.920 --> 0:08:43.280 So it's help me channel like retail. Yes exactly, that's 0:08:43.280 --> 0:08:46.199 what's happening. Yeah. I just interviewed earlier today Jason Wilk, 0:08:46.360 --> 0:08:49.839 the CEO of Dave, it's three billion dollar market cap 0:08:49.880 --> 0:08:53.080 fintech startup. But the idea is to displace banks the 0:08:53.080 --> 0:08:55.800 same way that Chime is looking to do that. How 0:08:55.840 --> 0:08:57.920 do you make sure that these you know, digital first 0:08:58.000 --> 0:09:02.359 fin techs don't take customers from you? Well, I think, um, 0:09:02.440 --> 0:09:06.959 there's lots of examples you mentioned those. There's uh the 0:09:07.200 --> 0:09:11.080 payments companies are trying to take revenue streams away from banks. 0:09:11.080 --> 0:09:15.600 I think what banks have is a full products set 0:09:15.760 --> 0:09:20.920 and an ability to be an individual's trusted advisor on 0:09:20.960 --> 0:09:24.280 their life's journey. So that's where we're trying to position 0:09:24.320 --> 0:09:28.880 ourselves that you should open your bank account at Citizens 0:09:29.080 --> 0:09:31.360 and uh, look at all the great things we can 0:09:31.400 --> 0:09:33.280 do for you. We can give you wealth advice, we 0:09:33.280 --> 0:09:36.160 can figure out how to refinance your student loans. We 0:09:36.200 --> 0:09:39.360 can help you buy your first house. We can give 0:09:39.400 --> 0:09:41.200 you a home equity line of credit when that's an 0:09:41.200 --> 0:09:45.080 advantageous way to borrow. So uh so banks that can 0:09:45.200 --> 0:09:48.400 give you that advice to make you more successful on 0:09:48.440 --> 0:09:52.040 your financial journey. I think that's hard for some of 0:09:52.040 --> 0:09:55.480 these uh startups to compete against. And and they can 0:09:55.520 --> 0:09:58.679 go in and uh, they can offer since they're they're 0:09:58.760 --> 0:10:02.000 kind of a lot of times the profit motive is relaxed, 0:10:02.040 --> 0:10:07.120 so they can uh offer services at below cost to 0:10:07.200 --> 0:10:11.080 try to gain customers. But ultimately can they really deepen 0:10:11.160 --> 0:10:15.360 that customer relation and turn those into profitable relationships is 0:10:15.360 --> 0:10:18.480 still an open question. So the market is valuing them 0:10:18.559 --> 0:10:21.200 on their growth rates, and so they're all pushing really 0:10:21.240 --> 0:10:25.319 hard to just acquire customers. Many of these companies aren't profitable, 0:10:25.360 --> 0:10:29.520 and the question is what what's the ultimate outcome for them? 0:10:29.679 --> 0:10:31.440 But ultimate outcomes you want to make sure you're bringing 0:10:31.480 --> 0:10:33.640 in younger customers right that you hold on grab them 0:10:33.679 --> 0:10:37.320 young and do and and we are. So one of 0:10:37.320 --> 0:10:41.160 the things we're focused on mass affluent young professionals. One 0:10:41.160 --> 0:10:44.920 of our lead hook products there is student loan financing 0:10:44.960 --> 0:10:49.080 for those people listening. If you're carrying some high costs 0:10:49.480 --> 0:10:55.839 student debt many are. Unfortunately, there's opportunities to consolidate that 0:10:55.920 --> 0:10:58.480 into a single loan at a lower interest rate and 0:10:58.480 --> 0:11:01.559 we put money back in your pocket. Uh and so 0:11:01.559 --> 0:11:03.959 so that's allowed us to gain a lot of market 0:11:04.000 --> 0:11:07.640 share and get younger in our customer base. Quick question 0:11:07.720 --> 0:11:11.200 Home buying is it happening slowing down just quickly? Home 0:11:11.240 --> 0:11:15.280 buying is still uh in good shape. There's people who 0:11:15.520 --> 0:11:17.839 are kind of figuring out the next phase of their 0:11:17.880 --> 0:11:20.800 life and they're moving around a bit, and so I 0:11:20.840 --> 0:11:22.960 think the purchase market's going to stay strong this year. 0:11:23.480 --> 0:11:26.040 Thank you so much, great interview, and thanks so much 0:11:26.040 --> 0:11:27.839 for giving us a bunch of time. Bruce Fanson, He's 0:11:27.880 --> 0:11:30.560 chairman and chief executive officer of Citizens Financial Group. Here 0:11:30.760 --> 0:11:35.000 in our Interactive Broker Studio, you're listening to Bloomberg Business 0:11:35.040 --> 0:11:38.880 Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic 0:11:39.320 --> 0:11:42.520 on Bloomberg Radio. So a story online of Bloomberg Business 0:11:42.559 --> 0:11:44.640 Week on the Bloomberg terminals, but Hong Kong and how 0:11:44.679 --> 0:11:46.880 it went from COVID zero to one of the world's 0:11:46.920 --> 0:11:49.920 deadliest outbreaks. To him, how did this happen? Well? Joel 0:11:49.920 --> 0:11:52.080 Webber is editor at Bloomberg Business Week. Keep with us 0:11:52.120 --> 0:11:55.120 in the Bloomberg Interactor Broker Studio. Ian Marlow is Asia 0:11:55.160 --> 0:11:57.600 Government senior reporter for Bloomberg News. He joins us on 0:11:57.600 --> 0:12:00.120 the phone from Canada. The story by Ian Marlow and 0:12:00.280 --> 0:12:02.720 surely Jao you can read in story on the Bloomberg 0:12:02.760 --> 0:12:05.120 terminal and at Bloomberg dot com slash business Week, Joel, 0:12:05.400 --> 0:12:07.560 when we think about Hong Kong and during the course 0:12:07.559 --> 0:12:10.000 of the pandemic, oftentimes we think about how good of 0:12:10.000 --> 0:12:13.360 a job it has done in controlling the spread of 0:12:13.400 --> 0:12:16.239 the outbreak. It was all well and good until omicron 0:12:17.000 --> 0:12:20.720 COVID zero worked really really well for a long time 0:12:21.000 --> 0:12:23.280 in Hong Kong, and then all of a sudden it didn't. 0:12:23.440 --> 0:12:27.440 And what's really surprising about Ian's reporting in this story 0:12:27.600 --> 0:12:31.760 is it shows you know, just how contagious something like 0:12:31.800 --> 0:12:35.000 omicron can be. They had some mechanisms in place, and 0:12:35.040 --> 0:12:39.160 they basically were overwhelmed by them because the virus um 0:12:39.400 --> 0:12:43.520 spread so quickly and became incredibly lethal. Because there was 0:12:43.559 --> 0:12:47.160 also some lackadaisical qualities that I think we're bred and 0:12:47.160 --> 0:12:50.559 while a lot of people never got vaccinated, there's distrust 0:12:50.600 --> 0:12:55.559 between citizens and state. Um that or you probably unique 0:12:55.600 --> 0:12:59.120 to Hong Kong. Um. And you know Ian from the 0:12:59.160 --> 0:13:02.080 outside looking and um, you know you you live in 0:13:02.160 --> 0:13:05.960 Hong Kong, You're you're stuck in Toronto, can't get back yet, um. 0:13:06.320 --> 0:13:09.359 And yet this, you know, it has been a devastating 0:13:09.480 --> 0:13:12.679 impact on especially the elderly community in Hong Kong. What 0:13:13.040 --> 0:13:15.640 have you? What did you learned outside looking in during 0:13:15.640 --> 0:13:20.480 the course of reporting the story. Yeah, I think the 0:13:20.520 --> 0:13:23.840 one thing that that really struck me was just how 0:13:24.000 --> 0:13:28.600 little the government had done to prepare for what, to 0:13:28.679 --> 0:13:31.600 the rest of us seemed like the inevitable, the fact 0:13:31.640 --> 0:13:34.880 that the virus was going to come in. It looked 0:13:34.920 --> 0:13:39.040 like they were basically overconfident that there was a case 0:13:39.120 --> 0:13:41.800 of hubris. And we had seen this kind of play 0:13:41.840 --> 0:13:45.920 out across a couple of different so COVID zero or 0:13:45.960 --> 0:13:50.560 elimination uh places like in Taiwan, and in New Zealand, 0:13:50.880 --> 0:13:52.679 uh and and in the mainland right now, which is 0:13:52.720 --> 0:13:56.280 also facing a big outbreak. Uh. But I think everyone 0:13:56.400 --> 0:13:59.480 sort of assumed that at least the government might have 0:13:59.520 --> 0:14:05.000 been doing something ramping up isolation facilities for example, or 0:14:05.679 --> 0:14:10.520 uh you know, having some kind of contingency plan in place, uh, 0:14:10.559 --> 0:14:14.319 you know, for once cases started rising beyond the capacity 0:14:14.360 --> 0:14:18.280 of these really owners travel restrictions and contact tracing regimes 0:14:18.320 --> 0:14:20.560 that had kept the virus out for so long, because 0:14:20.600 --> 0:14:23.880 of course they had these contingency plans in place in 0:14:23.920 --> 0:14:27.560 general for pandemics, because of their experience with stars about 0:14:27.560 --> 0:14:30.800 twenty years ago. So it was pretty shocking I think 0:14:30.880 --> 0:14:33.200 for for the city to go from a place that 0:14:33.280 --> 0:14:36.800 was totally calm, had spent two years basically dodging the 0:14:36.840 --> 0:14:39.720 worst of the pandemic uh to then end up in 0:14:39.720 --> 0:14:46.280 a style outbreak UHO when there's vaccines that are you know, 0:14:46.320 --> 0:14:48.480 fully available for everyone. So I think that was that 0:14:48.560 --> 0:14:50.520 was shocking, I think for people in Hong Kong, and 0:14:50.560 --> 0:14:52.560 can you explain what's like there for people who haven't 0:14:52.560 --> 0:14:54.480 been to Hong Kong, For people haven't spent time. They're 0:14:54.640 --> 0:14:57.080 very densely populated. A lot of people live in really 0:14:57.120 --> 0:15:00.000 really small homes. And I mean when I say small, 0:15:00.040 --> 0:15:01.680 I mean the way you write about them, as you 0:15:01.680 --> 0:15:07.480 describe them as coffins. Yeah, exactly. I mean in Hong 0:15:07.560 --> 0:15:11.520 Kong the government refers to them UH as subdivided housing units, 0:15:11.520 --> 0:15:14.280 but really we're talking about a bed with some stuff 0:15:14.320 --> 0:15:17.359 strung up around it. There's a lot of uh inequality 0:15:17.360 --> 0:15:20.040 in Hong Kong. It's obviously the one of the most 0:15:20.040 --> 0:15:22.760 expensive housing markets in the world. A lot of people 0:15:23.160 --> 0:15:25.800 in a lot of the poorest neighborhoods are crammed into 0:15:25.840 --> 0:15:31.040 places that just will not work with a mainland China 0:15:31.120 --> 0:15:33.880 style lockdown, and so that was one of the reasons 0:15:33.920 --> 0:15:37.320 why the government from the beginning was kind of reluctant 0:15:37.400 --> 0:15:41.120 to really impose the kind of harsh measures that everyone 0:15:41.200 --> 0:15:44.720 is familiar with from Wuhan and and other Chinese cities. 0:15:44.760 --> 0:15:48.080 But but once on the cron got in, Uh, this 0:15:48.160 --> 0:15:50.640 isn't a place really where you can even really isolate 0:15:50.680 --> 0:15:53.160 at home. I mean, uh, you know, the high rises 0:15:53.200 --> 0:15:55.480 of New York and other American cities are one thing, 0:15:55.560 --> 0:15:58.160 but I mean Hong Kong, everyone is sort of packed 0:15:58.160 --> 0:16:00.360 into ten percent of the land maps one of the 0:16:00.440 --> 0:16:03.280 densest cities on Earth, and so there was a lot 0:16:03.320 --> 0:16:06.200 of what they called, you know, in epidemologicals, are in 0:16:06.560 --> 0:16:10.640 vertical transmission. People were infecting their neighbors up and down. Uh. 0:16:10.720 --> 0:16:14.440 There were you know, a bathroom and kitchen exhaust fans 0:16:14.560 --> 0:16:16.960 that were kicking the virus all around these really densely 0:16:17.000 --> 0:16:20.760 populated high rises. And once on the cron got in, Uh, 0:16:20.960 --> 0:16:23.760 it really raced like wildfire through the city and there 0:16:23.840 --> 0:16:28.200 was a race kind of whackable locking down all these 0:16:28.520 --> 0:16:30.880 high rise towers. At one point early on in the 0:16:31.720 --> 0:16:35.480 in the pandemic, my building was locked down entirely because 0:16:35.680 --> 0:16:38.800 there was a single COVID case UH in one of 0:16:38.880 --> 0:16:41.800 the two towers UH and the cops pulled up outside 0:16:41.880 --> 0:16:45.360 lost everyone in until everyone had been tested and everyone 0:16:45.440 --> 0:16:47.960 tested negative. So this is a city that really took 0:16:48.000 --> 0:16:51.200 everything very seriously. But once the cases started, you know, 0:16:51.320 --> 0:16:54.920 going from a handful to you know, tens of thousands 0:16:54.960 --> 0:16:56.360 a day. At one point it was well over fifty 0:16:56.400 --> 0:16:58.400 thousand a day in a city that had spent most 0:16:58.440 --> 0:17:01.360 of the last year at zero hate to day. There 0:17:01.400 --> 0:17:04.479 are measures just could not keep up with what was happening, 0:17:04.880 --> 0:17:08.320 and healthcare system just utterly and totally collapsed. And how 0:17:08.400 --> 0:17:10.480 much of a problem too, is I mean, obviously sounds 0:17:10.480 --> 0:17:12.760 like a policy failure. We talked about you right about 0:17:12.760 --> 0:17:15.480 the government enforcement of the new National Security Law and 0:17:15.520 --> 0:17:18.600 how that has effectively banned political opposition. And I think 0:17:18.640 --> 0:17:21.440 about you know, lack of access to maybe you know, 0:17:21.560 --> 0:17:25.439 more global media to really understand this global pandemic. How 0:17:25.520 --> 0:17:30.000 much of that is also to blame. Yeah, I think 0:17:30.080 --> 0:17:34.840 there's a large element of this preventable outbreak that was political. 0:17:35.480 --> 0:17:42.000 Hong Kong has adopted a mainland style COVID zero approach 0:17:42.160 --> 0:17:45.840 to total elimination of the virus, So there was no 0:17:46.040 --> 0:17:50.239 tolerance for any cases whatsoever, even when vaccines were uh 0:17:50.359 --> 0:17:53.200 you know, being administered throughout the city. So this was 0:17:53.600 --> 0:17:57.280 a problem from the very beginning that had uh you know, 0:17:57.359 --> 0:18:00.600 political routs. The last two years of the pandemic had 0:18:00.720 --> 0:18:05.640 basically been two years of Beijing taking unprecedented political control 0:18:05.920 --> 0:18:09.840 over over Hong Kong in the in the wake of 0:18:09.920 --> 0:18:13.760 those democracy protests that everyone saw in twenty nineteen, which 0:18:13.840 --> 0:18:17.560 only really dissipated once social distancing measures came down because 0:18:17.600 --> 0:18:21.239 of the pandemic. So even at the city was uh 0:18:21.520 --> 0:18:24.720 you know, preparing for this, uh you know, preparing for 0:18:24.760 --> 0:18:27.399 the pandemic and putting in all these measures, Beijing was 0:18:27.440 --> 0:18:30.560 taking more control, and what was generally considered a very 0:18:31.000 --> 0:18:36.399 efficient technocratic, uh you know, free market government just became 0:18:36.520 --> 0:18:39.760 more and more under this way of China. All Right, 0:18:39.920 --> 0:18:42.159 we gotta run. Hey, listen, great stuff, Ian, Thank you 0:18:42.240 --> 0:18:45.080 so much. Ian Marlowe of course at Bloomberg News until Webber, 0:18:45.240 --> 0:18:48.760 editor of Bloomberg Business Week. This is Bloomberg Business Week 0:18:48.960 --> 0:18:52.840 with Carol Measure and Bloomberg Quick Takes. Tim Stinovic on 0:18:53.080 --> 0:18:56.000 Bloomberg Radio. We did have a bunch of headlines coming 0:18:56.080 --> 0:18:57.879 out of Europe. I feel like, Tim, I I can 0:18:57.920 --> 0:19:00.440 barely keep up, you know, I can't even there. And 0:19:00.680 --> 0:19:02.480 it doesn't just have to do with the war, but 0:19:02.600 --> 0:19:05.000 it also has to do with the rising COVID cases 0:19:05.040 --> 0:19:07.560 in some parts of the world. Uh. And of course 0:19:07.760 --> 0:19:10.320 much of the West focused on there as President Biden 0:19:10.400 --> 0:19:13.679 continues to make his way across the across the continent. Right. 0:19:13.720 --> 0:19:15.080 And you know, I've talked about just like one of 0:19:15.119 --> 0:19:16.960 the headlines out of Europe that have really caught us 0:19:17.080 --> 0:19:19.520 is about the possible use by Russia of weapons of 0:19:19.600 --> 0:19:22.080 mass destruction and nuclear weapons. So we kind of have 0:19:22.400 --> 0:19:24.200 I feel like a perfect guest to tackle it all. 0:19:24.600 --> 0:19:27.280 And so let's bring in Crystal Watson, Senior scholar at 0:19:27.320 --> 0:19:29.760 the Johns Hopkins Center for Health Security at the Bloomberg 0:19:29.800 --> 0:19:32.320 School of Public Health, the Johns Hopkins Bloomberg School of 0:19:32.320 --> 0:19:35.040 Public Health that is supported by Michael or Bloomberg, the 0:19:35.160 --> 0:19:38.680 founder of Bloomberg LP and Bloomberg Philanthropies. Dr Watson, really 0:19:38.760 --> 0:19:40.040 good to have you with us. I do want to 0:19:40.080 --> 0:19:42.160 get to COVID in just a few minutes, but uh, 0:19:43.000 --> 0:19:45.639 a little earlier in our program. Um, Carol and I 0:19:45.760 --> 0:19:50.040 were talking about Yen Stoltenberg of NATO and what he 0:19:50.200 --> 0:19:53.359 said with regard to chemical and biological weapons. And this 0:19:53.520 --> 0:19:56.720 is part of your specialty at the Johns Hopkins Center 0:19:56.760 --> 0:19:59.399 for Health Security at the Bloomberg School of Public Health. UM, 0:20:00.080 --> 0:20:03.200 explain what's at risk here if Russia were to use 0:20:03.359 --> 0:20:10.040 chemical weapons. Yeah, thanks for having me on. I think, um, 0:20:10.200 --> 0:20:14.359 we have seen the devastation that chemical weapons can cause, 0:20:14.520 --> 0:20:18.159 and and most of the world has committed to not 0:20:18.400 --> 0:20:22.600 using chemical weapons to via international treaty. UM. So I 0:20:23.080 --> 0:20:25.000 think that it will put a lot of things up 0:20:25.000 --> 0:20:27.679 in the air if Russia did choose to use chemical 0:20:27.760 --> 0:20:34.040 weapons UM against the Ukrainian people, because they're they're definitely 0:20:34.760 --> 0:20:39.080 their norms against this, their heart prohibitions against the use 0:20:39.119 --> 0:20:42.960 of chemical weapons. UM. But we also have the complicated 0:20:43.040 --> 0:20:46.080 history of with what history, with what's happened in Syria 0:20:46.800 --> 0:20:50.360 and the lack of our in terms of a red 0:20:50.400 --> 0:20:55.000 line for Syria. I think that the response will be complicated. Well, 0:20:55.080 --> 0:20:57.560 can you can you define biological and chemical weapons for 0:20:57.760 --> 0:21:01.280 our audience and help us just understand what they are 0:21:01.359 --> 0:21:06.439 and what they do. Yeah, So, biological and chemical weapons 0:21:06.480 --> 0:21:11.679 are two separate categories. Of unconventional weapons UM that are 0:21:11.760 --> 0:21:15.880 both banned by international treaty and have signatories from most 0:21:15.920 --> 0:21:20.240 countries around the world. UM Biological Both of these weapons 0:21:20.359 --> 0:21:24.520 would be UM the use of a biological agents or 0:21:24.680 --> 0:21:28.520 chemical agents in a way that is intended to harm 0:21:28.760 --> 0:21:33.240 individuals or use on a larger scale potentially as well. 0:21:33.960 --> 0:21:38.399 And so UM any any chemical or biological agent that 0:21:38.600 --> 0:21:42.080 is used in that way can be considered UM banned 0:21:42.280 --> 0:21:47.240 under the Biological Weapons Convention or the Chemical Weapons Convention. 0:21:48.080 --> 0:21:50.560 So what do like, where are we in terms of 0:21:50.680 --> 0:21:56.400 like I understand, you know, weapons to counteract missile attacks 0:21:56.480 --> 0:21:59.600 and so and so forth. You know what realistically, like 0:22:00.080 --> 0:22:02.320 do you guys talk about it? John's Hopkins when it 0:22:02.400 --> 0:22:05.560 comes to what we might not need to do if 0:22:05.600 --> 0:22:07.840 there is some kind of attack, or what can we 0:22:08.000 --> 0:22:10.920 do ahead of time to kind of protect ourselves. What 0:22:11.040 --> 0:22:13.040 are what are the smart conversations we need to be 0:22:13.119 --> 0:22:18.119