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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
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Speaker 1: of course, on the Bloomberg Princie The Quad in London.
Speaker 1: I'm Tom Keene in New York and listening now. We
Speaker 1: know are so much of Asia, and particularly the people
Speaker 1: of India. Kenneth Rogoff of Harvard University wrote A Little
Speaker 1: Look a year or so ago about cash, about corruption,
Speaker 1: about the underworld, about suitcases of cash going to no good.
Speaker 1: It is my book of the year. It is without question,
Speaker 1: the most controversial book of economics in decades. Professor Rogoff
Speaker 1: joins us now on India. Let's first start with what
Speaker 1: Mr Modi is trying to do. What was his change
Speaker 1: in policy for India. Well, on the same day that
Speaker 1: we were electing President Trump, the Prime Minister went on
Speaker 1: the air and said the two largest notes in India,
Speaker 1: the five thousand rupea note four hours from now will
Speaker 1: be no longer youthful boom and you have fifty days
Speaker 1: to turn it in for other cash. That is radically
Speaker 1: different than the policy I propose, which is doing it
Speaker 1: over say five to seven years, trying to avoid collateral damage.
Speaker 1: Within the collateral damage. What would be your advice to
Speaker 1: the Prime Minister now to move forward after this announcement,
Speaker 1: I mean away from the debate about cash. What's ken
Speaker 1: rogos to do list for India this morning? Well, that's
Speaker 1: a tough question. I mean, the Prime Minister cites a
Speaker 1: lot of the reasons, all the reasons that I've given
Speaker 1: the book of why cash is pernicious, uh, you know, corruption, crime,
Speaker 1: tax of Asian terrorism. But on the other hand, I
Speaker 1: mentioned as tactics are very different. And by the way,
Speaker 1: my book states again and again very carefully, if you're
Speaker 1: a developing economy, don't try this at home. You need
Speaker 1: financial inclusion. He's done a lot of things. I think
Speaker 1: India's reached a point where implementation is very important. There
Speaker 1: could be long run beneficial effects, but it really involves,
Speaker 1: you know, doing things to assure people that in the
Speaker 1: long run, we're fighting crime, we're fighting corruption, which is
Speaker 1: a huge problem in India. In many ways I have learned,
Speaker 1: and this goes back to one of your great mentors, Jagnaguadi,
Speaker 1: that India is, in each and every case, always about
Speaker 1: domestic politics. What would the RBI, their central bank do,
Speaker 1: and could rob and rog and their former leader at
Speaker 1: the Bank of the Boot School Chicago, could ragu have
Speaker 1: stopped this tough po is bad pos well. I suspect
Speaker 1: they were overridden. Initially, when I heard about this, it
Speaker 1: seemed that the rb I was behind it, a joint
Speaker 1: you know push. But I think as time went on,
Speaker 1: we didn't see Governor Patel. The governor replaced where John
Speaker 1: speak for a couple of weeks, which kind of made
Speaker 1: it clear that they weren't um It doesn't mean that
Speaker 1: they don't agree with the broad idea, but they might
Speaker 1: not have agreed with the tactics. They might have wanted
Speaker 1: to do it slowly and gradually, as others, say myself
Speaker 1: would suggest. And by the way, India doesn't have a
Speaker 1: large note. Their largest notes fifteen dollars. To introduced a
Speaker 1: bigger one in this to replace the old ones, which
Speaker 1: again is a hundred eighty degrees opposite to what I
Speaker 1: would advise for advanced economies. If we focus on the
Speaker 1: news right that we have had overlast to two weeks,
Speaker 1: we had a record load from repee extreme volatility will
Speaker 1: dis continue well. I think the thinking is eventually they
Speaker 1: will come out of this. They hadn't printed enough currency.
Speaker 1: We just don't know all the considerations why this was
Speaker 1: so sudden. Evidently word leaked that they were going to
Speaker 1: do it. I suspect that will all settle down. And
Speaker 1: you know, it's surprising how many Indian economists people think
Speaker 1: in the long run making this statement against corruption, which
Speaker 1: of course as India's number one problem, will have you know,
Speaker 1: good effects, but they have to get there. There have
Speaker 1: been really a lot of problems, really poor planning implementation,
Speaker 1: uh in the short run. But I think that will
Speaker 1: probably sort out. But it isn't done yet. And I
Speaker 1: know the RBI, for example, put some limits on withdrawals
Speaker 1: from no frill bank accounts. I mean, is it always
Speaker 1: a bad idea it can to limit withdrawals. Yeah, I
Speaker 1: mean they were very awkward position that they hadn't printed
Speaker 1: enough currency. It's actually not that easy to print currency.
Speaker 1: It could take a year. I kind of wonder why
Speaker 1: they didn't do maneuver like the Greeks had considered a
Speaker 1: stamp the old currency to create the new currency temporarily.
Speaker 1: I just don't know what the planning was. They haven't
Speaker 1: really described it. It's clear what the goals were, which
Speaker 1: I think are laudable, but the implementation and execution, they
Speaker 1: haven't really explained why they did it this way. There
Speaker 1: are people who recommended sudden currency moves. There was an
Speaker 1: economist in the mid seventies, James Henry, who said, let's
Speaker 1: do a sneak attack on the criminals and the drug dealers.
Speaker 1: I think the collateral damage is just too great. In
Speaker 1: the case of the U S, it looks too much
Speaker 1: like a default. Again, what is the you know, the
Speaker 1: lessons learned. We've seen you know, panics or volatility of
Speaker 1: whatever you want to call it in other countries, and
Speaker 1: as long as there's one or two lessons that you
Speaker 1: don't repeat, then the country will be Okay. What's it
Speaker 1: in this case, Well, it's about implementation and planning and
Speaker 1: again and developing economies. The issue of financial inclusion is huge. Uh,
Speaker 1: you know in the US, it's very easy to cover that.
Speaker 1: My book explains how to do that. And Indie a
Speaker 1: Prime Minister Modi has taken a lot of steps. He's
Speaker 1: taken biometric data for almost a billion Indians and you
Speaker 1: can get a bank account if you have that, but
Speaker 1: they're way away from doing that. This was a very
Speaker 1: radical step to take. One of the strengths of your book,
Speaker 1: The Curse of Cash is you put out front your
Speaker 1: critics amersing on page seven, Lord Summers, you're calling at
Speaker 1: Harvard on page one two, the Greatest sing of Germany,
Speaker 1: the Great Summers of Cambridge. They pushed back against Ken
Speaker 1: Rogoff describe their caution about the curse of cash in
Speaker 1: your formula. Well, actually, Larry Summers has come around to
Speaker 1: be a big champion of getting rid of hundred and
Speaker 1: fifty dollar bills and that's been fantastic Admares saying, you know,
Speaker 1: sites of Dusty Jevsky and says, you know, money is
Speaker 1: coined freedom. Uh, but I think there's a big difference
Speaker 1: between you know, getting rid of big notes and getting
Speaker 1: rid of all cash. I am for less cash, not
Speaker 1: no cash. Is money a repress seditive of freedom. In Mr.
Speaker 1: Modi's India. Well, it's how a lot of the economy functions.
Speaker 1: It's transactions I think he would like, and many steps
Speaker 1: that officials are so corrupt. I had a colleague who
Speaker 1: told me about her father sold an apartment just recently
Speaker 1: in a rural India. He gets back the deed that
Speaker 1: list half the price that he paid because the official
Speaker 1: was paid off. This is routine business India. Modi wants
Speaker 1: to stamp it out. Francine, the Curse of cash and India.
Speaker 1: Of course, I'll put this out on social again today.
Speaker 1: Ken Rogoff joins US now cabinet Professor of Public Policy,
Speaker 1: professor of economics at Harvard, the author of Tom's Book
Speaker 1: of the Year, much Ballyhood book of the Year by Time,
Speaker 1: the Cursive Cash. We will talk about that in a
Speaker 1: little bit, but some news at first, Ken Rogoff, good
Speaker 1: to have you with us, Thanks for being thank you
Speaker 1: good to be here. I'm very curious and I've been
Speaker 1: asking a lot of people about this, the definition of
Speaker 1: Trump economics, what Trump and omics is, and and here
Speaker 1: a few weeks after the election, are you went it
Speaker 1: closer to to coming up with to having a definition
Speaker 1: of what it is? No, I'm not. I mean, also,
Speaker 1: bear in mind everybody's watching these appointments and saying, who
Speaker 1: is he going to point he isn't locked in. This
Speaker 1: is a guy who made his living by firing people.
Speaker 1: And it wasn't so long ago, back in the Jimmy
Speaker 1: Carter days, even you know Lynton Johnson, where they routinely
Speaker 1: fired people all the time. So what I'm expecting is
Speaker 1: not just have a parade of candidates. I'm expecting a
Speaker 1: parade of appointees. He'll have a meeting, He'll have the
Speaker 1: three guys you know shamefully lined there. He'll go you're fired,
Speaker 1: you know, or however he says that line. So I
Speaker 1: think he will recalibrate if he's not happy how things
Speaker 1: are going. I expect just as he recalibrates his comments,
Speaker 1: he'll recalibrate as appointees to looking for some some drama
Speaker 1: there in the appointments, at least not immediately down the line.
Speaker 1: What power does does a president? Does a Treasury secretary, say,
Speaker 1: have to to influence the trajectory of the the U.
Speaker 1: S economy right now? The Treasury secretary's power comes a
Speaker 1: lot from their ear having the ear of the president,
Speaker 1: and to the extent they do. Of course, they have
Speaker 1: a lot of influence over legislation, especially with the Republican
Speaker 1: controlled Congress. And I've got to say, there's a lot
Speaker 1: of talk about, well, Trump wants this, Congress wants this.
Speaker 1: He won't get his policies through. Yes, he will when
Speaker 1: he decides what they are. I think in the short
Speaker 1: run there will be a honeymoon with the Republican Congress.
Speaker 1: A lot of them opposed Trump or didn't support him.
Speaker 1: They'll support him here. They'll give him what he wants
Speaker 1: and you know, see how it goes. So I do
Speaker 1: think we'll see a pretty dramatic stimulus plan. I don't
Speaker 1: know if it'll be completely coherent, but I think we'll
Speaker 1: see something very dramatic. All this stuff about the Republicans
Speaker 1: won't go along with deficits, that's just nonsense. They wouldn't
Speaker 1: go along with deficits when they're spending it on what
Speaker 1: President Obama wanted. But if you talk, if President Obama
Speaker 1: had proposed tax cuts to get deficits, he would have
Speaker 1: got it passed in an afternoon. Also, So I'm but
Speaker 1: exactly what shaped this will take. I think, you know
Speaker 1: is constantly Morphing, There's no doubt about it. We're beginning
Speaker 1: to hear something of a debate here about the timing
Speaker 1: of those tax cuts or or an infrastructure spending plan,
Speaker 1: whether or not now is the time to do those things.
Speaker 1: Do you expect that to be a robust debate in Washington?
Speaker 1: You mentioned the support he'll likely have from the Republican Congress. Well,
Speaker 1: I think I really think he can do whatever he
Speaker 1: wants to do. We really haven't seen someone come in
Speaker 1: with this, you know, kind of support for a long time.
Speaker 1: I'm not you know, in terms of having Congress in
Speaker 1: the Senate. Uh, it's been a while, and I suspect
Speaker 1: he'll do what he wants to do. Yes, they'll be debate,
Speaker 1: they'll be bad articles, they'll be complaints, They'll people say
Speaker 1: that I voted for even though he didn't mean too.
Speaker 1: I think the infrastructure has bipartisan support. If he can't
Speaker 1: get the Republicans to support it, he'll get the Democrats
Speaker 1: to support it. Uh. That's something everyone agrees on. We'll
Speaker 1: finally get it done. The tax cuts are a whole
Speaker 1: another matter, and I don't even know what they're gonna be.
Speaker 1: I don't think it's the most effective form of stimulus,
Speaker 1: but it's been you know, red meat for the Republican Party.
Speaker 1: He's going to give it to them, maybe to get
Speaker 1: support in other areas. Ken roll Off with us of
Speaker 1: Harvard University will speak of India and the curse of
Speaker 1: cash his book and my book of the year, I
Speaker 1: might point out, we'll do that here in a bit. Ken,
Speaker 1: You're in the class, you're you know, manque's got a headache,
Speaker 1: you've gotta teach at ten are in the basic undergraduate
Speaker 1: class teaching at Harvard, and somebody says to you, Vice
Speaker 1: Chairman Fisher, he's of a college down the road. M
Speaker 1: I T. Vice Chairman Fisher says, we're almost fully employed.
Speaker 1: Donald Trump got elected because we're not fully employed. Is
Speaker 1: it to America's? And do we do our macro economics
Speaker 1: just chair yelling, do our macroeconomics as one America one
Speaker 1: mathematical distribution? Or do we need to always consider that
Speaker 1: there's two America's in every discussion. Well, first of all,
Speaker 1: you're not gonna get me sharply agreeing with Stan Fisher,
Speaker 1: who's you know, a great a great man, and I
Speaker 1: think you know, really understands the data. But it's sort
Speaker 1: of a definition of what it doesn't mean to be employed.
Speaker 1: And I think the quality of jobs, the quality of
Speaker 1: life for many people hasn't improved at the rate that
Speaker 1: they thought, and I think Trump got elected on the
Speaker 1: back of that. That's the core of the populism with
Speaker 1: the middle class. But the policies to fix that are
Speaker 1: really much more about improving education. They're conceivably infrastructure, things
Speaker 1: you can do with the tax system. One area where
Speaker 1: I think maybe there's cause for some optimism is that
Speaker 1: business investment has just been awful all across the world.
Speaker 1: And if there is a coherent policy, almost any coherent
Speaker 1: policy going forward, I think we could see a big
Speaker 1: pick up in business investment. That's the key. If you
Speaker 1: don't see that it's not going to be great for
Speaker 1: long from your reading of history. Can we migrate policy
Speaker 1: to create incentives for domestic investment? Can we do tax
Speaker 1: credits to make Jeff Emil invest in David gur Is
Speaker 1: Ithaca versus Malaysia. I love Ithaca. I grew up in
Speaker 1: Rochester like you, Tom, but I think they're much more important.
Speaker 1: Much more important in Trump's policies are the how he
Speaker 1: handles regulation because there's, you know, a lot of needed regulation,
Speaker 1: but at the same time, there there's a lot of
Speaker 1: it's hard to interpret. I certainly know some of the
Speaker 1: regulation that's come on universities has been dramatic changes, difficult
Speaker 1: to interpret. If it's been in other industries like that,
Speaker 1: it's hard to function and where there's confidence, where there's
Speaker 1: optimisms coming from that. More than anything, I get the
Speaker 1: sense that, you know, when when Congress takes up a
Speaker 1: tax plan, it's a tax plan that's on the shelf.
Speaker 1: Republicans have been talking about tax cuts and reforming the
Speaker 1: tax code for for a long time. With regulation, I
Speaker 1: lived in Washington for a long time. I heard Republicans
Speaker 1: mostly decrying Dodd Frank for years and years and years.
Speaker 1: But it was all about removing that law, not replacing it.
Speaker 1: How nuanced do you think the conversation is going to
Speaker 1: be about about what regulation looks like here under the
Speaker 1: new prison We're seeing anything but nuanced conversation and the
Speaker 1: debate in America today. But I mean, Dodd Frank has
Speaker 1: a lot of problems. I think Dodd Frank uh does
Speaker 1: need to be fixed. Uh they've known that. President Obama
Speaker 1: knew that, but they couldn't get anything through Congress. Usually
Speaker 1: when you pass a law, there's a whole sequence of
Speaker 1: fixes that you do, little technical fixes. They couldn't do
Speaker 1: it because there was so much difficulty. So at a
Speaker 1: minimum they're going to do that. I think we need
Speaker 1: to make the path for small and medium sized businesses
Speaker 1: to get loans much better than it's been. They are
Speaker 1: the core of productivity in this economy. I think the
Speaker 1: that's where we've slowed down, particularly the businesses that eventually
Speaker 1: get big. Obviously, and you know, improving innovation, improving investment
Speaker 1: and Dodd Frank you know, stopped us from having the
Speaker 1: financial crisis of two thousand and forty, but didn't necessarily
Speaker 1: generate the recovery we needed just to going overseas here
Speaker 1: for a bid. Looking at Europe, we had the President
Speaker 1: of the Eurogroup this morning saying that the UK would
Speaker 1: likely get access to internal markets in the European univer
Speaker 1: We saw sterling strength and on that news, what do
Speaker 1: you make of how this has played out, how indeed
Speaker 1: this is playing out, this Brexit process, and and what
Speaker 1: it what it what it portends here for the UK economy.
Speaker 1: I'm very leary about the longer term they want it.
Speaker 1: There's no precedent for this of having this tightly net
Speaker 1: trade deal and pulling out short of a war, civil war,
Speaker 1: revolution or something. It's not that easy to do. And
Speaker 1: by the way, negotiating the new treaties is not that
Speaker 1: easy to do. Usually a trade agreement takes five years
Speaker 1: to negotiate, five years to implement, and that's fast track.
Speaker 1: And here they're trying. They haven't only two years to
Speaker 1: negotiate it, then you know, three years for implementation. There's
Speaker 1: going to be a long period of accodus from the
Speaker 1: UK economy of people, firms. Uh, they face a very
Speaker 1: difficult road ahead. I think the Braxitters seem to have
Speaker 1: no idea what they're doing. I had been assuming they
Speaker 1: would back down. I've been assuming there was going to
Speaker 1: be a soft Braxit, but at least term, you know,
Speaker 1: won't brook that it could all change. I really would
Speaker 1: hold the possibility that they'll just you know, pull out
Speaker 1: at the last minute, though the French chemed to be
Speaker 1: pushing them out the door. Ken Rogoff with us because
Speaker 1: we got we could go with the Professor Rogoff here
Speaker 1: for five or six hours, maybe get to the Italian
Speaker 1: referendum by ten am Wall Street time this morning. We
Speaker 1: will not do that. Coming up, what many of you
Speaker 1: been waiting for, particularly our listeners in Asia in India.
Speaker 1: Ken Rogoff on the history making effort by Mr Mody
Speaker 1: to limit cash in Indian society. Coming up, Ken Rogoff
Speaker 1: on the curse of cash, the curse of cash. What
Speaker 1: did Mr Modi get wrong in India? He tried to
Speaker 1: apply Rogolf one oh one, and you made clear you
Speaker 1: can't do that in an emerging market. What did he
Speaker 1: get wrong? Well, I mean the first thing, I don't
Speaker 1: know if he got it wrong because I don't know
Speaker 1: all that it tail. But I view the right way
Speaker 1: to do phasing out large bills is very slowly to
Speaker 1: void collateral damage. It's not technically easy to do there.
Speaker 1: You know a lot of people that you heard in
Speaker 1: addition to the tax of aiders and criminals. He did
Speaker 1: it overnight. Uh. He really wanted to lash out. He's
Speaker 1: very angry about corruption. And of course India didn't have
Speaker 1: any big bills. Their biggest bill was about fifteen dollars,
Speaker 1: which is you know, basically where I'm hoping to end
Speaker 1: up with countries like the United States, and the euros
Speaker 1: twenty or thirty years and now, by the way, no
Speaker 1: time soon. And he was taking away these bills that
Speaker 1: the particularly five rupe notes seven dollars and fifty cents
Speaker 1: that ordinary Indians use. One more question is what can
Speaker 1: we learn from Sweden? In your book you drop in
Speaker 1: these nations that are affecting your plan. What can the
Speaker 1: United States learn from Sweden? Again, my book is really
Speaker 1: about the issues with cash and what surrounds it. And
Speaker 1: there's more than one way to skin a cat. I
Speaker 1: try to propose something very simple. Sweden does it on
Speaker 1: many dimensions. You can't easily find an a t M
Speaker 1: machine in Sweden. Their places in all of the Nordic
Speaker 1: countries where you might have to go a hundred kilometers
Speaker 1: to find ATM machines. Well, they were very worried about crime.
Speaker 1: They stripped cash out of a lot of the banks
Speaker 1: that had a lot of violent crime. There's a lot
Speaker 1: of support in society. They also have very very good
Speaker 1: mobile person to person apt way more sophisticated than ours.
Speaker 1: We need to rip up the script and David Gurry,
Speaker 1: you're going to help her with this. You gave that
Speaker 1: you had the ceremonial first move at the Chess Championships,
Speaker 1: and then Mr Teal Peter Teal did the same thing.
Speaker 1: I believe yesterday we have a newly minted chess champion veteran.
Speaker 1: Is he as good as you were? Is he different?
Speaker 1: Is it like tennis where we don't even know what
Speaker 1: the game was? First of all, Carlson is was the
Speaker 1: champion and defended it. He's just turned twenty six years old.
Speaker 1: As good as I was, he's so much better than
Speaker 1: I was. I mean, I couldn't like a handle to him.
Speaker 1: He's an incredible player. His Russian opponent put up a
Speaker 1: big fight. Putin followed very closely. They weren't couldn't do
Speaker 1: the Olympics, of course, so they were very excited about
Speaker 1: the chess match. This opponent played great. But I have
Speaker 1: to say when I made the first move, uh, you know,
Speaker 1: I shook both their hands. Carlson was smiling and relaxed.
Speaker 1: Karyakin looked like he was about to be fed to
Speaker 1: the wolves. Here Professor of Public Policy, Economic international grandmaster
Speaker 1: as well. David ger and I played chess. Was embarrassing.
Speaker 1: He beat me in seven moves, David. When you watch it,
Speaker 1: when you watch matches likely when somebody who is skilled
Speaker 1: at chess, who's played chess for a long time watches,
Speaker 1: is it for pure enjoyment or is is he or
Speaker 1: she learning new new opens, learning new moves? How does
Speaker 1: one watch a match like this? I mean watching Carlson
Speaker 1: is just such a pleasure. Um. He manages to press
Speaker 1: in these creative ways. He wins positions where Bobby Fisher,
Speaker 1: who arguably might have been the greatest player of all
Speaker 1: time until be cast prov in Carlson. I mean, Bobby
Speaker 1: Fisher would have given me a draw. Where's Carlson's just
Speaker 1: starting to go to work? Uh? And it's just beautiful.
Speaker 1: And his opponent, by the way, was incredibly creative. He
Speaker 1: defended positions where he looked like he was dead, and
Speaker 1: he did these risky, creative things. It was a really
Speaker 1: fantastic match. What's your sense of the health of the
Speaker 1: game these days? Down at the Full Market building in
Speaker 1: Lower Manhattan they had a V I P lounge. This
Speaker 1: was streamed worldwide. How do you gage the interest in chess? Right?
Speaker 1: I mean, the interest in this match was just phenomenal.
Speaker 1: You have to remember chess as an online game even
Speaker 1: more than say football, as a TV sports so they
Speaker 1: had you know, certainly millions of people just watching every
Speaker 1: move online paid subscribers, and then it was shown live
Speaker 1: on television in many countries of particularly Russia. You read
Speaker 1: square was just filled with people like it was New
Speaker 1: Year's Eve watching the games. It's still very very popular.
Speaker 1: It's interesting despite computers coming in, chess as as popular
Speaker 1: as ever and just very quickly. This lasted many weeks.
Speaker 1: How do these how are these matches structured? Well, I mean,
Speaker 1: I just say the physical components very very important. Carlson
Speaker 1: always has trained physically, and this was really the first
Speaker 1: time he came up against opponent who was in the
Speaker 1: kind of shape he was think of taking. If a
Speaker 1: six hour exam every day for several weeks in a row,
Speaker 1: it's gonna grind anybody down. Plus you gotta study for
Speaker 1: the exam, let's not forget. So there's a huge physical component.
Speaker 1: Carlson tip typically tears people up in the fifth and
Speaker 1: sixth hour, and this guy, karayak In was just right
Speaker 1: with him. We're going to leave it there. Thank you.
Speaker 1: The book my book of the year. Read it. It
Speaker 1: is controversial. The Curse of Cash Daniel Jurgen next. This
Speaker 1: is Bloomer. This is Bloomberg Surveillance on Bloomberg Radio. David
Speaker 1: Gurreau with Tom Keane. The news broke yesterday while we
Speaker 1: were on air. OPEC members had come to a deal
Speaker 1: at their meeting in Vienna, a production target of thirty
Speaker 1: two points seven million barrels a day, by all accounts,
Speaker 1: a pretty broad deal. I want to bring in perhaps
Speaker 1: the pre eminent expert on OPEC on the global energy market.
Speaker 1: That's Dan Jurgen, vice chairman of i h S, Founder
Speaker 1: of i h S Cambridge Energy Research Associates, author of
Speaker 1: course of the quest and the prize. Dan, You're gonna
Speaker 1: great to have you with us this morning. Thank you,
Speaker 1: Good morning. I mentioned that the relative broadness of that deal.
Speaker 1: Did it surprise you A that we got a deal?
Speaker 1: And be that it seems so broad? Well, going into
Speaker 1: the deal, I had about a seventy probability that they
Speaker 1: would do a deal. It was certainly as though a
Speaker 1: cliffhanger at the end, and where you had basically on
Speaker 1: the one hand, the specter of the onslaught of UH
Speaker 1: new waves of Saudi oil versus h Iranian UH negotiating talents.
Speaker 1: But at the end I think self interest prevailed among
Speaker 1: all these countries and there were enough wiggle room in
Speaker 1: the deal that everybody could claim a victory. We were
Speaker 1: talking about OPEC, of course, we were also talking about Russia,
Speaker 1: not a member of the cartel. Explain why Russia was
Speaker 1: playing such an outsized role here in these deliberations. Since
Speaker 1: the late nineties nineties, OPEC has tried to win it
Speaker 1: back then, to to bring Russia into a sort of
Speaker 1: solving the market problem at that point when there was
Speaker 1: a collapse in oil prices and Russia said they'd go along,
Speaker 1: but they didn't. But this time Russia was much more
Speaker 1: actively involved. UH. The Energy Minister Alexander Novak has been
Speaker 1: out front on this really since early in UH in
Speaker 1: twenty six and even President Putin at one point gathered
Speaker 1: all of the CEOs of the Russian oil industry in
Speaker 1: a room and said, this is earlier in the year,
Speaker 1: I'm in favor of a freeze. Are you all in
Speaker 1: favor of a freeze? And remarkably everybody was in favor
Speaker 1: of a freeze. So I think that the Russians, looking
Speaker 1: if you look at their budget, you look at their
Speaker 1: sovereign wealth funds, and where they were there, We're going
Speaker 1: to move into a situation of a lot more financial pressure.
Speaker 1: So I think they were eager to get a deal.
Speaker 1: The big thing was to get them to agree to
Speaker 1: a cut and not just a freeze. Daniel, you're gonna
Speaker 1: improving the prize. And you go back to in the
Speaker 1: sobering moment for the cartel. Are they at that point now?
Speaker 1: Is there a a psychological mindset of the cartel in
Speaker 1: Saudi Arabia that is equivalent or similar to the agony
Speaker 1: of well, I think that's you know, that's probably the
Speaker 1: best analogy to uh where the market has been for
Speaker 1: the last two years. And I think then too, there
Speaker 1: was a resistance to do anything, and finally, when everybody
Speaker 1: was looking at how far down prices would stay or
Speaker 1: might go, they finally were able to come together. And
Speaker 1: I think that was the same situation here because remember
Speaker 1: uh Tom two years ago, uh Opek resigned at quit
Speaker 1: it said we're out of the business of market management,
Speaker 1: and now they're back. And I think it's that they
Speaker 1: looked over the side of the abyss and so that's
Speaker 1: pretty down deep there, and if we get down there,
Speaker 1: we don't quite know how we get out of it.
Speaker 1: All of this is at the margin. What is the
Speaker 1: marginal dynamic you and uh your shop will look for
Speaker 1: in the coming weeks and months from the supposed cartel. Well,
Speaker 1: I think it will be, of course, a degree of compliance.
Speaker 1: And uh the so called secondary sources that monitor uh output,
Speaker 1: and I think we're one of them. Uh, everybody will
Speaker 1: look at those numbers. Uh, the countries will look at
Speaker 1: the numbers, and the other communities. That's really important. The
Speaker 1: traders will look at it, and also the hedge funds
Speaker 1: will look at it and and vote in effect in
Speaker 1: the market whether they think the deal will be there.
Speaker 1: Often when these things start off, they're shaky. There's a
Speaker 1: lot of skepticism. It's only a six month deal. What
Speaker 1: they're really trying to do is by time, get through
Speaker 1: the winter when inventories would normally build, try and prevent
Speaker 1: that from happening, and get to a more balanced market
Speaker 1: in the spring. That's with this. This is more like
Speaker 1: a sprint than a marathon. How is a producer in
Speaker 1: saying Oklahoma watching the goings on in Vienna? What's his
Speaker 1: sense of his sense? Or two things? One is a
Speaker 1: giant sigh of relief and the other is a rush
Speaker 1: of adrenaline. And I think we saw that the same
Speaker 1: thing in the in the stock markets yesterday. Uh. One
Speaker 1: guy actually said to me said, you know, we're holding
Speaker 1: our breath until until November, and they had to hold
Speaker 1: it for several days there until they got to an agreement.
Speaker 1: But I think this says that people will feel more
Speaker 1: confident they'll be investing. We'll see rick counts go up,
Speaker 1: and we think, you know, if the agreement roughly holds,
Speaker 1: and it's only going to roughly hold, it's not going
Speaker 1: to be a perfect agreement. Uh, then we'll see US
Speaker 1: production turning around and uh in increased by the by
Speaker 1: this time next year. We would be rude if we
Speaker 1: did not speak about the history making new administration we have.
Speaker 1: First of all, have you been called by the transition team?
Speaker 1: Would professor you're dr you're gon be part of a
Speaker 1: Trump administration? I don't think so. Uh. I mean, I
Speaker 1: think they're still organizing themselves in terms of what they
Speaker 1: want to do. Do we do we have a national
Speaker 1: energy policy? Then? Well, I think, um, I think we
Speaker 1: kind of summarize it at S market is uh more
Speaker 1: rigs less rags is what we're going to see I mean,
Speaker 1: you know, there'll be more activity. I think, you know,
Speaker 1: I think in the first instance, people think there will
Speaker 1: be this vast rolling back of regulations. I don't think
Speaker 1: that's the case, first of all, and a lot of
Speaker 1: much of oil production is governed by state regulations, not
Speaker 1: federal regulations. But I think what it does mean is
Speaker 1: that we're not going to see another wave of additional regulations.
Speaker 1: I think that's the kind of the the starting, the
Speaker 1: going in point. Let's leave it there, Daniel, You're gonna
Speaker 1: thank you so much. A short visit here. Really after
Speaker 1: history in uh Vienna, the Quest is his latest effort,
Speaker 1: and it's really remarkably good. I was surprised, David. I
Speaker 1: did not expect the drama out of the end. No,
Speaker 1: and I was taken by the drama leading up to
Speaker 1: it as well, and how quickly the meeting itself seemed
Speaker 1: seemed to go. But you know, we've been through this,
Speaker 1: as we mentioned time and time again over these last
Speaker 1: few meetings, there is talk of a deal and then
Speaker 1: no deal. So I think it will be waiting to
Speaker 1: see here how cohesive OPI looks going forward, how disciplined
Speaker 1: the Bartel is going to be going forward is a
Speaker 1: tries to win force this deal. Who you put your
Speaker 1: trust in matters. Investors have put their trust in independent
Speaker 1: registered investment advisors to the tune of four trillion dollars.
Speaker 1: Why they see their role is to serve, not sell.
Speaker 1: That's why Charles Schwab is committed to the success of
Speaker 1: over seven thousand independent financial advisors who passionately dedicate themselves
Speaker 1: to helping people achieve their financial goals. Learn more and
Speaker 1: find your independent advisor dot com. David, and to bringing
Speaker 1: our next guest. We've had Kenneth rog up to and
Speaker 1: and you're going to know another wonderful guest. But we
Speaker 1: need to frame this, David. We need to do this right.
Speaker 1: A little bit of foggy bottom game show. When only
Speaker 1: three or four candidates depending on the season, are left,
Speaker 1: they are interviewed. Rather than being assigned to task. Executives
Speaker 1: from various companies interview the finalists and report their assessments
Speaker 1: to the host. Based on the interviews, a boardroom meeting
Speaker 1: and firing takes place, leaving two candidates. I don't know
Speaker 1: if that's the apprentice has described in Wikipedia, or if
Speaker 1: that's our selection of the next Secretary State and many
Speaker 1: of us saw CNN correspondent Jim Acossa's photograph from John
Speaker 1: George the other night of Donald Trump sitting with one
Speaker 1: Mitt Romney, former governor of Massachusetts, former presidential candidate, as
Speaker 1: well Nicholas Burns here, a professor of the practice of
Speaker 1: diplomacy the Kennedy School of Government at Harvard University joined
Speaker 1: us here in New York. Is Mitt Romney the forerunner here?
Speaker 1: Who else is in the running here? Who else are
Speaker 1: the finalist? Well, he's certainly. Mit Romney's certainly one of
Speaker 1: the finalists. Um, You've also have David Portray as very
Speaker 1: very smart, experience general, and you have Senator Bob Corker,
Speaker 1: the chairman of the Form Relations Committee. All these three
Speaker 1: people have in depth international experience, especially General Portrays. All
Speaker 1: of them are mature people of even temperament. All of
Speaker 1: them have credibility both here and also overseas. And so
Speaker 1: I think that, Um, it's okay, that's that's the ambassador.
Speaker 1: We only let ambassadors have their phone on. That's exactly
Speaker 1: what it is. But if you think about it, Donald
Speaker 1: Trump is going to be the very first president in
Speaker 1: the history of the United States are with no prior
Speaker 1: public experience, political experience, military experience. He's gonna need a
Speaker 1: lot of help. He's a smart guy. He's obviously succeeded
Speaker 1: in New York and real estate, but international politics is
Speaker 1: a very different game. And so I think any one
Speaker 1: of these three would center him, give him the credibility
Speaker 1: he needs, and I think make up for some of
Speaker 1: the one dimensional nature of the current national security of Romans.
Speaker 1: General Flynn's a very smart cons a military officer who
Speaker 1: has been a counter terrorist person. You need someone who
Speaker 1: can thank broadly and act broadly globally. Is that message
Speaker 1: getting telegraphed to him? We saw his pick forree Treasury secretary,
Speaker 1: uh Steve semnuchen A, a loyalist, somebody who ran his
Speaker 1: campaign finance operation. Are you worried here that that message
Speaker 1: that he needs to pick somebody with a lot of
Speaker 1: experience in statecraft is not going to get the job.
Speaker 1: I'm not sure any of us know, because all that
Speaker 1: matters is what's in the kind of Donald Trump. But
Speaker 1: this this team of rivals thing, it wasn't just Barack
Speaker 1: Obama and Hillary Clinton. It was Lincoln of course. With
Speaker 1: the appointing Seward as Secretary of State. I think it
Speaker 1: makes sense for this government. I come from a world
Speaker 1: international politics and diplomacy were experience actually counts for a lot.
Speaker 1: You know, Trump's going to have to go up against
Speaker 1: Demir Putin j and ping. These are consequential, very tough piece.
Speaker 1: I want to tie two strands together here, Ambassador. The
Speaker 1: first one is Joseph Nye, who was just with us,
Speaker 1: the giant of international relations. Yes, my good friend of
Speaker 1: college an adamant Adam about a strong America, America exceptionalism,
Speaker 1: the negativity of America is unfounded. And then I want
Speaker 1: to tie you in the massive miscalculation of all to
Speaker 1: how weak Russia was when it collapsed. Our intelligence there
Speaker 1: really wasn't I believe that good. Is Mr Trump and
Speaker 1: his supporters misjudging the state of America within the international community.
Speaker 1: I think so. And what bothered me during the campaign
Speaker 1: was Donald Trump talking down American power, but also Bernie
Speaker 1: Sanders on the left talking down American power. I see
Speaker 1: a country, the United States. We are the strongest economy
Speaker 1: in the world. We're growing, maybe not a China's six
Speaker 1: or seven present, but we're growing. We have the knowledge economy,
Speaker 1: skill set, and I think dynamics to do well in
Speaker 1: the century. Strongest military, politically, the most influential Joe and
Speaker 1: I will tell you culturally, the greatest soft power, the
Speaker 1: greatest cultural attraction. We're at the top of our game.
Speaker 1: We're not weak, we're not failing, but we do need leadership.
Speaker 1: Is there an historical precedent for us being quote unquote
Speaker 1: at the top of our game? And what we observed
Speaker 1: in this election, which is not so much the walls,
Speaker 1: but boy, those oceans are comfortable to keep us away.
Speaker 1: I think the Internet. I think there is, and you
Speaker 1: and I are thinking alike. It's Woodrow Wilson. It's the
Speaker 1: our victory in the First World War, our buoyant economy
Speaker 1: in nineteen and twenty, and then we tossed it all
Speaker 1: away by going towards protectionism eventually and also thinking that
Speaker 1: we could withdraw from the rest of the world. We
Speaker 1: can't in a globalized Is there a mirrored hall where
Speaker 1: everyone can get together? Are we so away from the
Speaker 1: Westphalian system of the of the Palace of Versailles that
Speaker 1: Mr Trump is not going to have that tool? You know?
Speaker 1: I think hopefully he gets a team around him, and
Speaker 1: whether it's Jim General, Jim Madison Defense, or Mitt Romney
Speaker 1: or Bob Corker in state who who carefully kind of
Speaker 1: nudge him towards internationalism. That doesn't mean giving away the story.
Speaker 1: It means that American economic power and future depends on
Speaker 1: trade deals. If we walk away from the Trans Pacific
Speaker 1: Partnership that's Global GDP, the Chinese will move in with
Speaker 1: their own highly protectionist for China trade regime will be
Speaker 1: at a disadvantage for a generation. We have an opportunity
Speaker 1: for a free trade agreement with the European Union. It
Speaker 1: also bothered me that the left, Bernie Sanders and Donald
Speaker 1: Trump talked down trade. I think we're a free trade
Speaker 1: society and we ought to stick with that. We had
Speaker 1: the pleasure of speaking on on election night, thank you
Speaker 1: again for for coming in as those votes were being tabulate,
Speaker 1: and George Mitchell was on the show as well, and
Speaker 1: I was thinking, is there an opportunity here diplomatically for
Speaker 1: there to be someone like a special Envoid of Russia
Speaker 1: to bridge this relationship. Is there a need here to
Speaker 1: focus more doggedly on improving that relationship with somebody in
Speaker 1: a capacity like Senator Mitchell had in the past. Well,
Speaker 1: there's so many people you could choose for that, former
Speaker 1: Secretary James Baker, Condoleeza Rice, Robert Gates. But here's the deal.
Speaker 1: We don't want to just have a good relationship with Russia.
Speaker 1: We want to have the right relationship with Russia. And
Speaker 1: right now, the deal he wants to make with Donald
Speaker 1: Trump he us the sanctions lifted. These are the energy
Speaker 1: and financial sanctions that have been very difficult for the
Speaker 1: Russian economy. And we shouldn't give that up. Because when
Speaker 1: we give up the sanctions, these are European Union, Canadian,
Speaker 1: American sanctions. Then Putin his stealing crimea, his division of
Speaker 1: Ukraine is rewarded, and that's the bad signal to send.
Speaker 1: So if there's Trump should not be looking for a deal.
Speaker 1: I think that Putin responds to strength and conviction. He's
Speaker 1: that kind of a guy. He takes advantage of weakness.
Speaker 1: And so the right strategy for Trump in his new
Speaker 1: secretary state is tough minded, align yourself with Anglo Merkel,
Speaker 1: keep the sanctions on. The e will vote on this
Speaker 1: in the next ten days, and then wait for Putin
Speaker 1: to crack. So sometimes diplomacy is just not making deals,
Speaker 1: it's being strong and protecting your interests. Let's go back
Speaker 1: to Let's go back to Roosevelt. How does Nick Burns
Speaker 1: show the flag over the next four years this commune?
Speaker 1: I mean, first of all, I think we're gonna have
Speaker 1: all generals in the cabinet the way we're going. But
Speaker 1: are there are there too many generals being involved? How
Speaker 1: do we know? The flag is a nation to the
Speaker 1: rest of the world. So you know, obviously, if you
Speaker 1: can get someone like Jim Maddis to be Defense Secretary,
Speaker 1: that's a good thing for the United States. But you
Speaker 1: don't want to have a cabinet that is primarily in
Speaker 1: national security, military and nature of nature, because you do
Speaker 1: have civilian control. Is traditionally the United States over the
Speaker 1: military and people from civilian life, whether it's a diplomat
Speaker 1: like Condoleeza or Rice or a politician like Mitt Romney sec.
Speaker 1: This is too important. Should Condo Lisa Roy step forward
Speaker 1: to provide leadership? I want to get you in trouble here,
Speaker 1: and don't get she's a very close friend of mine,
Speaker 1: so don't get me in trouble. I think she's very
Speaker 1: happy where she is asked forward to provide leadership to America. Well,
Speaker 1: she is stepping forward in a lot of different ways
Speaker 1: to provide that leadership. But you know, the President of
Speaker 1: the United States is the one who has to call,
Speaker 1: and he's not going to call. He's already made it clear.
Speaker 1: There are four, as they say reality TV jargon finalists.
Speaker 1: I think this campaign this by the way, this selection
Speaker 1: process been too public. It's demeaning to the people who
Speaker 1: won't make it. We've never had this before in either
Speaker 1: Republican or Democratic administrations. Not the right thing. Thank you
Speaker 1: for visiting Nick Burns with a splasher investor de Greece
Speaker 1: one other services to America's international relations worldwide. This is Bloomberg.
Speaker 1: This is a great honor for David Gura and myself.
Speaker 1: We spoke with Kenneth Rogoff earlier on his economics and
Speaker 1: had what a privilege to speak to ken Rogoff about
Speaker 1: chess and his thoughts on the recent tournament. He is
Speaker 1: the US chess champion. Fabiana Karna who joins us. All
Speaker 1: right now, Fabiana, good morning, Well, it's wonderful to have
Speaker 1: you on. I want to go to David Gura's Park Slope, Brooklyn.
Speaker 1: You moved from Miami to Park Slope, Brooklyn years ago
Speaker 1: and you had the privilege of a giant of chess.
Speaker 1: Is your first coach at age five? Ever six, Bruce Pandelfini.
Speaker 1: All of us have read Bruce Pandelfinie What it was?
Speaker 1: What was it like as a child to work with
Speaker 1: Bruce Pandelfini? Well, just growing up in the chest in
Speaker 1: New York and working with Bruce was was great because
Speaker 1: there's so much history behind it. He's worked with a
Speaker 1: lot of fantastic players. He commented on the UH on
Speaker 1: the match between Bobby Fisher and Borspasky when when he
Speaker 1: was just you know, coming onto the scene. Um. And
Speaker 1: he has a very patient style, which is great for
Speaker 1: you know, a young up and coming chess player. He
Speaker 1: kind of nurtures talent, which which helped me a lot.
Speaker 1: And he's never harsh. I guess you've you've probably seen
Speaker 1: the the movie Searching for Bobby Fisher were um, where
Speaker 1: Bruce is portrayed by Ben Kingsley, And he's very different
Speaker 1: from how he was portrayed in that movie, although they
Speaker 1: did do a great job as well. Yeah, my daughter
Speaker 1: goes to school at the school where you had your
Speaker 1: first asked lessons, and I marvel at how young. The
Speaker 1: kids are there playing chess when I go to to
Speaker 1: pick her up. There's a sense here that there there
Speaker 1: is a gift for chess. There are chess prodigies, but
Speaker 1: this is hard work, and there there's a lot of practice,
Speaker 1: a lot of work that goes into becoming a great
Speaker 1: chess player. Ken Rogoff told us that this morning, talk
Speaker 1: a bit about how you made that jump from somebody
Speaker 1: who was interested in the game indeed good at the game,
Speaker 1: to one of the greatest in the world. I think
Speaker 1: in the United States you have an enormous amount of
Speaker 1: very talented young players starting chest at you know, age
Speaker 1: five six. Um. I started when I was five years old,
Speaker 1: and there was a large group of kids who were
Speaker 1: as talented as me, or more talented, and most of
Speaker 1: them became grandmasters, top players. But um, but I didn't
Speaker 1: stick with it, you know, moved into academics and and
Speaker 1: chose other paths. Well. I basically probably chess professionally from
Speaker 1: the like the age of fourteen, and UM, chess has
Speaker 1: always been like the main focus for me. So I
Speaker 1: think if you take a young player with some talent
Speaker 1: and put them in a strict chess environment of playing
Speaker 1: and studying chess constantly, then there's a good chance that
Speaker 1: they will you reach the top of chess. The chess playing.
Speaker 1: The chess following world has been focused on Lower Manhattan
Speaker 1: here over these last few weeks, Magnus Carlson winning the
Speaker 1: World Chess A Championship, there was a v I P room.
Speaker 1: There are a lot of people watching these games, these matches, indeed,
Speaker 1: from from from around around the world. You've played him before,
Speaker 1: tell us a bit about his style, what he's like
Speaker 1: as a player. Well, Magnus is a player who when
Speaker 1: he gets a better position, even a position where the
Speaker 1: advantage is maybe not visible to most people or extremely minuscule,
Speaker 1: he he tries to nurture that advantage and turn it slowly,
Speaker 1: turn it into something more, something which is more tangible
Speaker 1: and um enough for a win. And he does that
Speaker 1: over the course of many hours. Um he might play,
Speaker 1: you know, a seven hour game trying to turn um
Speaker 1: what looks like nothing thing into into something and eventually
Speaker 1: win the game. Like that, so it is very dangerous
Speaker 1: too to get a bad position against him, well against
Speaker 1: other players in the world. Um, even though obviously you
Speaker 1: don't want to get a bad position, you might have
Speaker 1: more hopes of of trying to salvage the game. Uh
Speaker 1: So against Mangnus, it's possible, it's possible to win. And
Speaker 1: he I mean even he lost a game in this
Speaker 1: last World Championship match. Um so I have I have
Speaker 1: beaten him several times. But it really requires that you
Speaker 1: go for the throat, that you don't be afraid of him,
Speaker 1: um and that you you know, you don't try to
Speaker 1: let's they go into a defensive mode when he might
Speaker 1: slowly strangle you and you you try to get from
Speaker 1: from move on. We are honored, Fabiana, thank you so much.
Speaker 1: He is the chess champion of the United States. And
Speaker 1: of course I urge you to look at all the
Speaker 1: different coverage of what we saw. What a great privilege
Speaker 1: of Keneral and Fabian a car on on Blueberk surveillance
Speaker 1: in the same day. Just that's what. That's what the
Speaker 1: youngest is, David. When we play chess at home, she goes,
Speaker 1: she is she's tough, she's she's known to move all
Speaker 1: of a sudden, you you know, you look away at
Speaker 1: the red Sox or whatever on TV and one of
Speaker 1: your bishops is gone ahead. She's taking no she's taking
Speaker 1: pieces off the board. Struck by what Fratianna said there
Speaker 1: and Ken Rogoff as well, just about how long these
Speaker 1: matches can be, six or seven hours in the physical
Speaker 1: rigor the strength required to play a match. That pretty's great.
Speaker 1: This is what this is why we do the show.
Speaker 1: The surprises folks of dealing with this and dealing with
Speaker 1: Bob Moon as well. You know chess champion of surveillance
Speaker 1: as well. He does that when he's not doing the
Speaker 1: STEM report, he's he's playing chess out with Michael Barr.
Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform
Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David
Speaker 1: Gura is at David Gura. Before the podcast, you can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio. Who you put
Speaker 1: your trust in? Matters? Investors have put their trust in
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