WEBVTT - Bloomberg Wall Street Week: Yergin, Altman, Summers 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall st Week. What's the state of 0:00:03.400 --> 0:00:06.120 corporate government? So the deficit is a real issue. The 0:00:06.200 --> 0:00:09.800 US economy continues to send mixed signals, the financial stories 0:00:09.800 --> 0:00:12.680 that cheap our world fed action to con concerns over 0:00:12.760 --> 0:00:16.240 dollar liquidity and encouraging China data the five hundred wealthiest 0:00:16.239 --> 0:00:18.360 people in the world. Through the eyes of the most 0:00:18.480 --> 0:00:22.520 influential voices Larry Summers, the former Treasury Secretary, Start CEO, 0:00:22.640 --> 0:00:26.360 Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week 0:00:26.480 --> 0:00:30.880 with David Weston from Bloomberg Radio. An uncertain economy meets 0:00:30.920 --> 0:00:33.839 the promise of a vaccine, and markets pretty much take 0:00:33.920 --> 0:00:37.360 the over on that bet. Welcome to Bloomberg Wall Street Week. 0:00:37.479 --> 0:00:40.800 I'm David Weston. Twelve years ago, President Obama came to 0:00:40.880 --> 0:00:43.479 office with a struggling economy and fought to get a 0:00:43.520 --> 0:00:46.960 stimulus package despite the political hurdles. Austin Gouldsby was a 0:00:47.080 --> 0:00:50.320 key Obama economic advisor and saw from the inside what 0:00:50.520 --> 0:00:52.760 it took to get that done. He's now a professor 0:00:52.800 --> 0:00:56.520 of economics at Chicago's Booth School. There are some parallels 0:00:56.720 --> 0:00:58.960 in what we're seeing right now with a struggling economy, 0:00:59.000 --> 0:01:01.279 the need for stimulus. Every seems to agree on some 0:01:01.320 --> 0:01:04.120 political difficulty in getting it done. How can what advice 0:01:04.160 --> 0:01:07.360 would you give to the incoming administration about how to 0:01:07.440 --> 0:01:09.560 do that and how to do it effectively? Well, I 0:01:09.600 --> 0:01:13.200 do think there are some parallels. If only Mitch McConnell 0:01:13.280 --> 0:01:16.440 was a thorn in the side of both of those uh, 0:01:16.520 --> 0:01:21.240 And I think the the thought in two thousand nine, 0:01:21.280 --> 0:01:26.440 if you remember, was let's do some and if things 0:01:26.840 --> 0:01:31.480 remain bad, we'll just do more. But Mitch McConnell saw 0:01:31.560 --> 0:01:33.720 to it that that there would not be more. So 0:01:33.880 --> 0:01:36.840 I think if you look at the incoming Biden administration, 0:01:36.880 --> 0:01:40.920 they're probably gonna put some significant focus on try to 0:01:41.000 --> 0:01:45.639 get as much direct relief as you can, as early 0:01:45.720 --> 0:01:48.640 as you can, because the economy needs it now. One 0:01:48.760 --> 0:01:53.760 difference is in two thousand nine, that was traditional stimulus 0:01:54.440 --> 0:01:57.000 the U the U. S. Government's gonna spend money try 0:01:57.080 --> 0:02:01.440 to get growth jump started. This is different. I mean, 0:02:01.520 --> 0:02:06.080 this is a temporary wave that's spread over US and 0:02:06.120 --> 0:02:08.320 we basically need to figure out a way to hold 0:02:08.360 --> 0:02:12.040 our breath for six or eight months until the vaccine 0:02:12.080 --> 0:02:14.640 can be widely available and we can go back to 0:02:14.720 --> 0:02:17.160 doing what we were doing before. So we're trying. Our 0:02:17.200 --> 0:02:20.560 goal is to try to prevent permanent damage, which is 0:02:20.560 --> 0:02:24.040 a little different from stimulus. So I hope that they 0:02:24.040 --> 0:02:26.200 can agree to do something. I mean, we need the 0:02:26.200 --> 0:02:28.639 money right now. Well, and that goes to the question 0:02:28.720 --> 0:02:31.640 that's been pending, frankly since July thirty one. When we 0:02:31.760 --> 0:02:35.560 when the supplementary unemployment benefits, what a way? The question 0:02:35.600 --> 0:02:37.320 is do you hold on for the full loaf or 0:02:37.360 --> 0:02:39.480 take half a loaf? Thus, farther speak of the House, 0:02:39.560 --> 0:02:42.960 Nancy Pelosi, she's come down off over three point three trillion, 0:02:43.080 --> 0:02:46.280 but still she's insistent on a lot. Would you advise 0:02:46.440 --> 0:02:49.079 the incoming president say take what you can get during 0:02:49.080 --> 0:02:53.560 this lame duck session. I guess I disagree a little 0:02:53.600 --> 0:02:56.680 bit with the premise of that question. We need as 0:02:56.760 --> 0:02:58.799 much as we can get, as soon as we can 0:02:58.840 --> 0:03:03.400 get it. My perception of what's happening is not that 0:03:03.440 --> 0:03:07.720 the Democrats are holding out. It's that, once again, like 0:03:07.800 --> 0:03:10.840 in two thousand nine, Mitch McConnell has decided that a 0:03:10.960 --> 0:03:16.640 deal is not favorable to him before these Georgia runoff elections, 0:03:17.040 --> 0:03:20.720 and so it's not primarily a dispute about the size 0:03:20.800 --> 0:03:25.119 of the rescue. It's about one side not wanting there 0:03:25.120 --> 0:03:28.360 to be a bill at all. So I think if 0:03:28.440 --> 0:03:33.200 Minuan and Pelosi, we're the only two deciders, they would 0:03:33.200 --> 0:03:34.960 have been able to reach an agreement. I mean, they 0:03:34.960 --> 0:03:39.160 were close on on numbers and how long it would last. 0:03:39.840 --> 0:03:43.920 I just think the politics of this whole thing is 0:03:43.920 --> 0:03:46.760 is quite complicated in the lame Dock. Well, that that's 0:03:46.800 --> 0:03:49.120 sobering because, as you suggest, if it's a question of 0:03:49.120 --> 0:03:52.760 not giving the those side credit for something before those 0:03:52.840 --> 0:03:55.160 runoff elections, that suggest we're not gonna get anything until 0:03:55.200 --> 0:03:58.840 into the new year. And I've and I'm quite afraid 0:03:58.840 --> 0:04:02.160 of that because as you say, look, the unemployment money 0:04:02.280 --> 0:04:06.080 ran out, the cares agg money through the p p 0:04:06.080 --> 0:04:09.440 P program that was gonna help give a lifeline to 0:04:09.520 --> 0:04:14.320 small business, that money's run out, and the Treasury you 0:04:14.440 --> 0:04:18.480 saw last week said they're gonna withdraw the money for 0:04:18.600 --> 0:04:21.600 the Fed Main Street lending facility, so that money is 0:04:21.640 --> 0:04:24.600 not going to be there. So I think this issue 0:04:24.680 --> 0:04:29.200 that we are we are inches away from having permanent 0:04:29.279 --> 0:04:33.240 damage that we did not have to have. Um that 0:04:33.480 --> 0:04:37.120 that that I think everybody should find sobering. So Austin, 0:04:37.120 --> 0:04:39.520 talk about that permanent damage as you as you put it, 0:04:39.600 --> 0:04:43.120 because there's a great deal of hope that a vaccine 0:04:43.240 --> 0:04:45.640 is coming. It's not here yet, it'll probably be at 0:04:45.680 --> 0:04:47.640 least into the middle of next year before it really 0:04:47.680 --> 0:04:50.479 is widely disseminated. And so we need a bridge to 0:04:50.520 --> 0:04:53.400 get there. What kind of damage can happen in the meantime, 0:04:53.440 --> 0:04:55.440 because some people might say, well, let's just wait, we'll 0:04:55.440 --> 0:04:58.040 get the vaccine, will be okay in the long run. Yeah, 0:04:58.120 --> 0:05:01.680 but we need the bridge, like said, and the alternative 0:05:01.760 --> 0:05:05.640 is falling down in the water. And and there are 0:05:05.760 --> 0:05:09.880 literally millions of businesses around the country that I would 0:05:09.880 --> 0:05:12.799 say they're gonna go bankrupt, but as you know, something 0:05:12.839 --> 0:05:16.240 like nine of business closures never even they can't afford 0:05:16.279 --> 0:05:18.640 to go through bankruptcy. They just shut the doors and 0:05:18.680 --> 0:05:22.080 they're never heard from again. And that's a space that 0:05:22.160 --> 0:05:25.279 we absolutely don't want to have to go down. But 0:05:25.600 --> 0:05:29.400 right now we're on path to two. In all the 0:05:29.560 --> 0:05:33.480 states and pretty much all the major cities of the country. 0:05:33.600 --> 0:05:38.480 They're having revenue shortages like they've never seen, with expenses 0:05:38.560 --> 0:05:42.920 that are up dramatically because of the pandemic, and they're 0:05:42.960 --> 0:05:48.120 going to have to start laying off policemen, firefighters, teachers, 0:05:48.240 --> 0:05:52.400 and a whole bunch of state services that we kind 0:05:52.440 --> 0:05:55.680 of need at a moment like this. So I think 0:05:55.720 --> 0:05:59.279 those are the two big speed bumps, uh that I fear. 0:06:00.080 --> 0:06:04.000 And and then the third is underlying this whole thing. 0:06:04.040 --> 0:06:07.240 The virus is the boss. And if you cannot get 0:06:07.279 --> 0:06:10.480 control of the spread of this virus until the middle 0:06:10.520 --> 0:06:14.880 of next year when the vaccine comes, there's gonna be thousands. 0:06:14.920 --> 0:06:18.400 There will be thousands of people who die unnecessarily. There 0:06:18.400 --> 0:06:22.240 will be tens of thousands of people who are hospitalized 0:06:22.360 --> 0:06:27.920 or suffer permanent health damage permanently unnecessarily. So I really 0:06:27.960 --> 0:06:31.960 hope that Congress does as big a package of relief 0:06:32.080 --> 0:06:35.440 as they can, as rapidly as possible, so we don't 0:06:35.440 --> 0:06:38.160 get people evicted from their homes. I mean, millions of 0:06:38.200 --> 0:06:40.760 people are gonna get evicted. That was Austin gouls Be, 0:06:40.839 --> 0:06:44.640 a professor of economics at Chicago's Booth School. Coming up. Oh, 0:06:44.760 --> 0:06:47.880 PEC plus decides to ease off the brakes, but very 0:06:47.920 --> 0:06:51.240 gradually we talked with Daniel Jurgin about what difference it 0:06:51.320 --> 0:06:54.960 will really make. That's next on Wall Street Week on Bloomberg. 0:07:00.240 --> 0:07:04.159 This is Bloomberg Wall Street Week with David Weston from 0:07:04.320 --> 0:07:09.040 Bloomberg Radio. We think that energy prices are at equilibrium 0:07:09.080 --> 0:07:11.840 somewhere in the high team's low twenties. I also think 0:07:11.880 --> 0:07:13.840 it's a little bit of a hedge. We have seen 0:07:13.880 --> 0:07:16.760 a very short production in energy prices. By the way, 0:07:16.800 --> 0:07:19.960 that is stimulative to the economy, So thank you for that. 0:07:19.960 --> 0:07:22.720 That was Abby Joseph Cohen of Goldman Sachs on Wall 0:07:22.720 --> 0:07:25.920 Street Week back in two thousand two. Eighteen years later, 0:07:26.040 --> 0:07:28.440 the price of oil is double what it was back then, 0:07:28.640 --> 0:07:30.920 and we don't look at low oil prices so much 0:07:31.000 --> 0:07:33.320 for how they can stimulate the economy as for what 0:07:33.400 --> 0:07:36.600 they may say about the strength of global demand, particularly 0:07:36.640 --> 0:07:39.520 in the time of the pandemic. Daniel Jurgen of I 0:07:39.760 --> 0:07:42.080 H S Market wrote the book on oil, and we 0:07:42.120 --> 0:07:45.760 asked him whether this week's latest opeque plus agreement to 0:07:45.920 --> 0:07:49.240 gradually ease production curves is what the market needs. What 0:07:49.320 --> 0:07:51.200 it does is basically says that the deal is not 0:07:51.240 --> 0:07:53.679 going to break up. When you have twenty three nations 0:07:53.680 --> 0:07:57.080 that come together and looking at an abyss a negative 0:07:57.080 --> 0:08:00.160 oil prices, they make a deal. Everybody sticks together. Other 0:08:00.400 --> 0:08:02.640 as prices start going up, people start looking at their 0:08:02.640 --> 0:08:06.360 own interests. Saudi Arabia has one view, Russia another view, UH, 0:08:06.560 --> 0:08:09.800 the UAE another view. But I think that they could 0:08:09.840 --> 0:08:13.520 not afford to not have a deal, and there are 0:08:13.520 --> 0:08:16.640 a lot of digital bilaterals that had to happen to 0:08:16.680 --> 0:08:19.000 make this happen. But this kind of is a is 0:08:19.000 --> 0:08:22.480 a gradual one that does ultimately get to what they'd 0:08:22.480 --> 0:08:25.360 agreed to in terms of bringing production back. But it 0:08:25.480 --> 0:08:27.560 just shows you, David, how hard it is to bring 0:08:27.640 --> 0:08:30.440 seven and a half million barrels of oil over a 0:08:30.520 --> 0:08:34.000 year back into the market exactly, particularly given this market 0:08:34.040 --> 0:08:36.880 just one part of forgive the expression criminal knowledge here. 0:08:36.960 --> 0:08:39.320 I'm hearing some people say it was important that Russia 0:08:39.480 --> 0:08:41.880 was presiding they were chairing the meeting around the Saudi Arabia. 0:08:41.960 --> 0:08:44.439 Do you put any stock in that. I think so. 0:08:44.559 --> 0:08:48.760 I think Minister Novak was one of the architects of 0:08:48.800 --> 0:08:54.000 the whole deal, the Russian and UM, the Saudi coach share, UH, 0:08:54.280 --> 0:08:58.120 the petroleum minister Ulzi spend Salomon decided he didn't want 0:08:58.120 --> 0:09:00.240 to be in the chair, and so the your of 0:09:00.320 --> 0:09:03.960 stability was somebody who's not part of OPEC. But part 0:09:04.000 --> 0:09:06.400 of the non OPEC group, So it sends a message 0:09:06.440 --> 0:09:10.400 about the Russians focus on stability. So they had to 0:09:10.440 --> 0:09:13.079 delay the meeting because there was enough contention they couldn't 0:09:13.120 --> 0:09:15.720 really get to an agreement quite And the contention, as 0:09:15.720 --> 0:09:17.880 I understand it, came from a quarter that I didn't appreciate, 0:09:17.920 --> 0:09:19.920 which is Saudi Arabia and U a E. Usually I 0:09:19.920 --> 0:09:23.360 think it's Saudi Arabia and Russia. What was the bone 0:09:23.360 --> 0:09:26.840 of contention between Saudi Arabia and the United Arab Emirates. Yeah, 0:09:26.840 --> 0:09:29.520 they actually Saudi Arabia and Russia has been the basis 0:09:29.559 --> 0:09:32.800 of this whole agreement from the beginning. Uh. The U 0:09:32.880 --> 0:09:34.960 a E has said that they want to increase production. 0:09:35.000 --> 0:09:38.199 They didn't like the fact that other countries were cheating. Uh, 0:09:38.240 --> 0:09:42.000 they seemed to want to They've raised questions about what's 0:09:42.000 --> 0:09:45.240 the framework here. I think they want to monetize their oils. 0:09:45.240 --> 0:09:49.720 So there was a degree of tension between those two 0:09:49.720 --> 0:09:52.600 countries in terms of their point of view, which normally 0:09:52.640 --> 0:09:55.840 they're pretty much in locksteps. So that's the example of 0:09:55.880 --> 0:09:59.760 the divergence of interest that exists, particularly as prices start 0:09:59.760 --> 0:10:03.200 going up again in anticipation of vaccine. Well that and 0:10:03.240 --> 0:10:05.000 that's key. It seems to be as you say, the 0:10:05.000 --> 0:10:07.040 prices started going up again because I took a look 0:10:07.040 --> 0:10:08.439 at oil over a period of time of the course 0:10:08.480 --> 0:10:10.240 of the year, and it has been moving its way 0:10:10.280 --> 0:10:13.720 back up. Is that really triggering the dispute right now 0:10:13.720 --> 0:10:16.400 about whether it increased production? Yes, I could. I think 0:10:16.440 --> 0:10:18.960 when prices start going up the divergence of interests. I mean, 0:10:19.000 --> 0:10:21.080 the oil price has basically been stuck on what I 0:10:21.120 --> 0:10:24.400 call the virus alley, and like a lot of other 0:10:24.400 --> 0:10:27.240 parts of the economy, and in terms of getting out, 0:10:27.280 --> 0:10:30.920 it's been torn between the one hand, now vaccine optimism 0:10:30.920 --> 0:10:35.040 and the other hand virus pessimism. But as it's now 0:10:35.400 --> 0:10:38.920 basically looking towards the springtime, when it's possible that a 0:10:38.920 --> 0:10:41.720 lot of people in countries where you have had economic 0:10:41.760 --> 0:10:44.839 shutdown like the United States or Europe, will be back 0:10:44.920 --> 0:10:47.280 in motor cars and demand will be going up again. 0:10:47.679 --> 0:10:49.960 Then we spent almost every day looking at the equity markets, 0:10:50.000 --> 0:10:51.560 at least here in the United States and how they've 0:10:51.600 --> 0:10:54.000 been going up, and it's generally thought that's because we 0:10:54.040 --> 0:10:56.880 are anticipating a vaccine sometimes at least towards the middle 0:10:56.920 --> 0:10:59.120 of next year, does the all market work that way? 0:10:59.200 --> 0:11:01.320 I mean all this is being affected already by the 0:11:01.360 --> 0:11:03.800 prospect of a wider distributive vaccine by the middle of 0:11:05.040 --> 0:11:09.240 absolutely it's signaling it, and that that, uh, that's when 0:11:09.240 --> 0:11:11.600 you'll start to see demand going up. Of course, there's 0:11:11.640 --> 0:11:13.640 some things hanging out there. For instance, that the Biden 0:11:13.679 --> 0:11:17.160 administration starts to move to try and reopen the door 0:11:17.200 --> 0:11:19.400 with Iran, that could mean a lot of Iranian oil 0:11:19.440 --> 0:11:22.240 coming back into the market. So there's a whole geopolitical 0:11:22.320 --> 0:11:25.360 drama that's happening at the same time. But it's certainly 0:11:25.840 --> 0:11:29.600 expectations of a vaccine and kind of confidence and hope 0:11:29.640 --> 0:11:32.720 beyond what looks like a very difficult twelve weeks that 0:11:32.760 --> 0:11:34.480 we have a head from a health point of view. 0:11:34.679 --> 0:11:37.040 At the same time, we see China coming back faster. 0:11:37.080 --> 0:11:38.560 I think it's fair to say in the United States 0:11:38.640 --> 0:11:41.200 and Europe, is that helping drive the price of oil 0:11:41.240 --> 0:11:43.240 in and of itself right now? It gives a sense 0:11:43.240 --> 0:11:46.319 of what the China resurgence is doing. Yeah, it's uh 0:11:46.559 --> 0:11:51.080 sent a message that was not expected because people thought, 0:11:51.200 --> 0:11:53.959 you know, demand would be weak. Chinese oil demand now 0:11:54.320 --> 0:11:56.600 is higher than it was at this time last year. 0:11:57.120 --> 0:12:00.360 So I think that is figuring in that people see 0:12:00.400 --> 0:12:04.200 that you get recovery, and with recovery comes increased demand. 0:12:04.760 --> 0:12:07.360 And uh, you know, this is a market that has 0:12:07.400 --> 0:12:10.160 been very hard hit by the reduction in demand because 0:12:10.200 --> 0:12:12.320 of the free snymp of activity, and there seems to 0:12:12.320 --> 0:12:15.680 be indication that demand is is really back in India 0:12:15.720 --> 0:12:18.560 as well, and that's another signal that the market's looking at. 0:12:19.040 --> 0:12:21.880 Moving over to the supply side, you mentioned the possibility 0:12:21.920 --> 0:12:24.360 of Iran coming back online if in fact a Biden 0:12:24.360 --> 0:12:27.560 administration comes to terms of them. Libby already, as I understand, 0:12:27.559 --> 0:12:30.319 it is producing again more than it was before. How 0:12:30.440 --> 0:12:32.880 much oil is sitting out there that could come back 0:12:32.920 --> 0:12:35.720 in on the production side, Well, if you add what 0:12:35.960 --> 0:12:39.800 has been out because of the OPAQ plus deal at 0:12:39.800 --> 0:12:41.960 this point that's seven a half million barrels, then you 0:12:42.160 --> 0:12:44.880 have another that all won't come back at once. They're 0:12:44.880 --> 0:12:46.880 trying to have a structure for that, but you could 0:12:46.880 --> 0:12:49.600 have three million barrels a day of Iranian oil coming back, 0:12:50.200 --> 0:12:55.480 and possibly something with Venezuela too. So that is hanging 0:12:55.480 --> 0:12:58.320 out there, and it looks like the Trump administration is 0:12:58.360 --> 0:13:02.600 doing everything you can to put together an anti stronger, 0:13:02.640 --> 0:13:06.480 anti Iranian coalition to make things more difficult for a 0:13:06.520 --> 0:13:10.000 Biden administration. What is the effect at this point of 0:13:10.040 --> 0:13:12.200 the U S shale. I mean, it's been a huge effect. 0:13:12.240 --> 0:13:14.520 You you have it in the new Map, your new 0:13:14.559 --> 0:13:17.560 book about the effect of US shale. How is that 0:13:17.559 --> 0:13:21.520 affecting the oil market right now? Well, shale has come 0:13:21.600 --> 0:13:25.000 down a lot. We reached an incredible high point of 0:13:25.000 --> 0:13:28.200 thirteen million barrels a day in February, ahead of Saudi Arabia, 0:13:28.200 --> 0:13:30.720 ahead Russia. We're still out of Saudi Arabia in Russia 0:13:30.760 --> 0:13:33.360 because of their cutbacks, but it's down about two million 0:13:33.360 --> 0:13:35.240 barrels a day, and I don't think we'll see a 0:13:35.320 --> 0:13:38.640 recovery until the middle of next year, until you start 0:13:38.679 --> 0:13:42.640 to see a demand going up and prices getting really 0:13:42.640 --> 0:13:46.280 getting out of virus Alley Dan, As you suggest, the 0:13:46.280 --> 0:13:48.360 big issue I think it's for the world, but certainly 0:13:48.360 --> 0:13:50.760 for the oil industry, is what happens with the vaccine 0:13:50.760 --> 0:13:52.839 and the vaccine coming back on. We also have a 0:13:52.920 --> 0:13:55.240 change in administrations coming up here in the United States, 0:13:55.400 --> 0:13:57.480 and we have what looks to be quite a different 0:13:57.480 --> 0:14:00.400 approach to energy coming in from a President Leiden when 0:14:00.440 --> 0:14:03.040 he takes office January twenty. How big a factor is 0:14:03.080 --> 0:14:05.480 that likely to be? Well, well, I think in a way. 0:14:05.480 --> 0:14:07.480 I think the way obviously listening to your previous interview 0:14:07.480 --> 0:14:10.280 and thinking that really the presidential election really isn't over 0:14:10.400 --> 0:14:13.680 until January five, and we know the outcome of Georgia, 0:14:14.000 --> 0:14:16.720 because that will affect what the Biden administration can and 0:14:16.760 --> 0:14:19.000 can't do it on climate. But it is said that 0:14:19.080 --> 0:14:21.840 climate is one of its four priorities. John Kerry has 0:14:21.880 --> 0:14:25.920 been appointed as Climate Envoy. Every Cabinet secretary will have 0:14:25.960 --> 0:14:29.240 a climate objective so and the United States will re 0:14:29.320 --> 0:14:33.400 engage with the Global Climate Paris Consensus. So it will 0:14:33.440 --> 0:14:36.480 be a pretty big change, I think. But he's also 0:14:36.520 --> 0:14:39.120 made clear that there's no ban on fracking, that there'll 0:14:39.160 --> 0:14:42.080 be more regulation. That was Daniel Jurgen, author of the 0:14:42.160 --> 0:14:47.000 New Map Energy, Climate and the Clash of Nations. Coming up, 0:14:47.120 --> 0:14:50.880 We're down to the wire on Brexit. Bloomberg Senior executivetor 0:14:50.880 --> 0:14:54.760 for Economics Stephanie Flanders on what's at stake that's next 0:14:54.800 --> 0:15:03.960 on Wall Street Week on Bloomberg. This is Bloomberg Wall 0:15:04.000 --> 0:15:08.120 Street Week with David Weston from Bloomberg Radio Less than 0:15:08.160 --> 0:15:11.440 a month ago until the United Kingdom leaves the European 0:15:11.520 --> 0:15:15.320 Union with or without a deal. After years of back 0:15:15.400 --> 0:15:17.400 and forth, it's hard to see how the parties have 0:15:17.480 --> 0:15:22.160 truly narrowed their differences over harmonizing regulations over the Irish 0:15:22.200 --> 0:15:25.880 border or over those fish. As Wall Street Week contributor 0:15:25.920 --> 0:15:29.320 and Bloomberg Senior executive editor for Economic Stephanie Flanders says, 0:15:29.640 --> 0:15:32.600 it's time to make some decisions. Well, and of course 0:15:32.640 --> 0:15:34.960 it's those kind of phrases that have been used over 0:15:34.960 --> 0:15:37.760 the last few weeks as we've had increasingly felt that 0:15:37.800 --> 0:15:40.720 we were just on the edge of an agreement, and 0:15:40.800 --> 0:15:43.320 that was true last week, and we know that it 0:15:43.400 --> 0:15:48.600 was delayed. Any any final furlough was was delayed by 0:15:48.640 --> 0:15:52.200 the fact that one of the negotiators actually was exposed 0:15:52.200 --> 0:15:55.240 to COVID and everyone had to go into quarantine for 0:15:56.040 --> 0:16:00.080 some period of time. But every day now we've all 0:16:00.160 --> 0:16:03.360 to our reporters and the world on the street, we 0:16:03.440 --> 0:16:06.000 are hearing that it's about to come a deal. I 0:16:06.040 --> 0:16:07.760 have to say, the move music the last few days 0:16:07.800 --> 0:16:10.560 has actually been less positive, and I think that's partly 0:16:10.600 --> 0:16:12.360 the feeling that hang on a minute, we thought we 0:16:12.440 --> 0:16:15.600 knew what needed to happen. You mentioned those three deals. 0:16:15.840 --> 0:16:18.600 You know the general perception is, but on those three 0:16:18.640 --> 0:16:24.120 sticking points, it's Britain, probably Boris Johnson himself, who will 0:16:24.160 --> 0:16:26.400 need to give a little bit on this language around 0:16:26.400 --> 0:16:28.720 a level playing field where Britain sort of promises that 0:16:28.760 --> 0:16:31.320 it's not going to try and use its new freedom 0:16:31.480 --> 0:16:36.320 to get an enormous competitive advantage against Europe in return 0:16:36.440 --> 0:16:39.520 for the Europeans then asking for what the British would 0:16:39.560 --> 0:16:43.320 say was a more reasonable amount of access to British waters. 0:16:43.560 --> 0:16:47.280 It's amazing how important this not point one percent of 0:16:47.320 --> 0:16:51.720 the economy, the fishing has become in this negotiation, and 0:16:51.720 --> 0:16:54.600 of course many in the financial sector. The city is 0:16:54.640 --> 0:16:56.880 so important. I would say, hang on a minute. We 0:16:56.880 --> 0:16:59.120 were sold down the river years ago and you're still 0:16:59.400 --> 0:17:01.720 the fish fishermen are still in their battling away for 0:17:01.760 --> 0:17:04.840 their rights. It does seem like a very topsy turvy negotiations. 0:17:05.080 --> 0:17:07.520 As we would say, them's politics, it's a practical matter. 0:17:07.600 --> 0:17:09.399 But we have the British on the one side, and 0:17:09.680 --> 0:17:11.800 I think it's pretty to say the British position is 0:17:11.880 --> 0:17:14.400 not always been perfectly consistent. But on the other hand, 0:17:14.440 --> 0:17:17.080 are we having dissension over the European side because now 0:17:17.080 --> 0:17:19.400 there are reports that maybe they don't think Michelle Barnier 0:17:19.480 --> 0:17:21.440 is really including them in and what the terms are. 0:17:21.640 --> 0:17:24.280 There was even a Bloomberg report saying that in fact, 0:17:24.359 --> 0:17:27.480 France might be threatened to vita whatever Mr Barnier negotiate. 0:17:28.160 --> 0:17:30.040 You know, the Friends have always had a very have 0:17:30.119 --> 0:17:33.080 been the sort of the muscular side of the negotiations 0:17:33.080 --> 0:17:38.320 and certainly have had more muscular rhetoric feisty rhetoric throughout 0:17:38.400 --> 0:17:43.000 this process. We know they've quite actively talked about taking 0:17:43.040 --> 0:17:47.240 advantages for paris Is financial sector for this for sure, 0:17:48.160 --> 0:17:51.840 but also about Britain being you know, being absolutely sure 0:17:51.880 --> 0:17:54.200 that Britain doesn't get a deal that any other country 0:17:54.320 --> 0:17:56.040 might look at and say, oh, I'd like I want 0:17:56.040 --> 0:18:00.280 one like that. Whether that's sort of classic, not to 0:18:00.359 --> 0:18:02.160 play to too many stereotypes, but is it the sort 0:18:02.160 --> 0:18:05.840 of you know, gallic desire to sound to sound matcho 0:18:06.119 --> 0:18:09.159 or whether there's something more fundamental They're a real disagreement. 0:18:09.880 --> 0:18:12.600 I'm not so sure. And what has been really striking 0:18:12.640 --> 0:18:15.720 throughout you pointed to the inconsistency on the British side 0:18:15.880 --> 0:18:18.520 in general the Europeans. This is a lot of countries 0:18:18.520 --> 0:18:21.119 with a lot of different interests in this negotiation have 0:18:21.280 --> 0:18:25.199 been remarkably of one voice throughout, and I suspect that 0:18:25.240 --> 0:18:27.920 will continue even if you get a little muttering around 0:18:27.920 --> 0:18:30.240 the edges. What is the real deadline? I mean, there 0:18:30.280 --> 0:18:32.879 are so many deadlines now I'm hearing like December eighteen, 0:18:32.960 --> 0:18:35.679 because they do have to get ratification right after they 0:18:35.680 --> 0:18:38.240 get a deal done. Yeah, And it's been interesting because 0:18:38.240 --> 0:18:40.399 that the British said the deadline of October, middle of 0:18:40.440 --> 0:18:42.480 October a while ago, so that was the sort of 0:18:42.600 --> 0:18:45.680 drop dead date. Um the Europeans were always a bit 0:18:45.720 --> 0:18:47.960 sort of po pooed that. Then it went through November. 0:18:48.000 --> 0:18:50.840 I interviewed the Irish Prime Minister a few weeks ago 0:18:50.920 --> 0:18:53.920 for the Bloomberg New Economy Forum. He thought the deadline 0:18:53.920 --> 0:18:56.160 could slip into the middle of December. Now they are 0:18:56.240 --> 0:18:58.919 talking about a bit later. I think the idea is, 0:18:58.920 --> 0:19:01.760 once you get into that un of territory, everything would 0:19:01.800 --> 0:19:04.080 be provisional. You wouldn't be able to get ratification in 0:19:04.080 --> 0:19:06.040 the European Parliament, and in the sense you would be 0:19:06.080 --> 0:19:09.720 prolonging the agony because you would you would still be 0:19:09.800 --> 0:19:12.159 having to go back and finalize this deal that you 0:19:12.240 --> 0:19:15.520 did already in the final hour. So I think people 0:19:15.520 --> 0:19:18.560 are hoping that we won't be pushing those further deadlines, 0:19:19.160 --> 0:19:21.320 not least because that the new vaccine that Britain has 0:19:21.400 --> 0:19:23.879 just confirmed has to we haven't got it from but 0:19:23.920 --> 0:19:26.200 Belgium yet, and we certainly don't want to get shipments 0:19:26.200 --> 0:19:29.879 to be interfered with come January. So we're all going 0:19:29.920 --> 0:19:32.239 to need to be watching this very very closely over 0:19:32.280 --> 0:19:34.159 the coming days and weeks. By the way, if they 0:19:34.160 --> 0:19:36.239 don't get a deal done by by December thirty one, 0:19:36.240 --> 0:19:38.520 can they just keep negotiating into new year? I understand 0:19:38.600 --> 0:19:41.000 w t R restrictions will come into effect, but why 0:19:41.000 --> 0:19:42.760 couldn't they deal want to do a deal on January 0:19:42.800 --> 0:19:46.520 fifteen or January You know, we've we found that before 0:19:46.600 --> 0:19:48.679 that these things can be can be more flexible. I 0:19:48.680 --> 0:19:52.680 think that the problem is that the potential of extending 0:19:52.720 --> 0:19:55.959 the transition period was absolutely ruled out after the summer. 0:19:56.440 --> 0:19:58.720 There was a deadline. I think it was in August 0:19:59.160 --> 0:20:02.280 where the British to apply for an extension and they said, 0:20:02.400 --> 0:20:04.840 despite COVID, despite everything else, the government was adamant it 0:20:04.840 --> 0:20:08.119 wouldn't have an extension. So legally, you're right that the 0:20:08.320 --> 0:20:11.560 change has to happen on January one. Whether you'd have 0:20:11.760 --> 0:20:15.280 enough goodwill, enough desire to negotiate with the same kind 0:20:15.320 --> 0:20:18.840 of pace and energy when you've already crashed through that 0:20:19.200 --> 0:20:22.520 crucial legal deadline, I'm not so sure. But yet technically 0:20:22.600 --> 0:20:25.680 they could carry on talking. That was Stephanie Flanders, Bloomberg 0:20:25.800 --> 0:20:29.520 Senior Executive editor for Economics. Coming up, we wrap up 0:20:29.520 --> 0:20:32.479 the week with our special contributor Larry Summers of Harvard. 0:20:33.160 --> 0:20:41.560 That's next on Wall Street Week on Bloomberg. This is 0:20:41.600 --> 0:20:46.000 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:20:46.400 --> 0:20:48.840 Every week we ran things up with our special contribute 0:20:48.920 --> 0:20:52.040 Larry Summers, Harvard. So Larry, welcome. I must say this 0:20:52.080 --> 0:20:54.360 week instructs me. It strikes me that the big developments 0:20:54.359 --> 0:20:56.480 were on the fiscal side rather than the monetary side. 0:20:56.520 --> 0:20:58.240 We did hear from j Pale said there are some 0:20:58.320 --> 0:21:01.639 uncertain about the economy, but it was really apparent progress 0:21:01.680 --> 0:21:04.239 to a compromise on some fiscal stimus were on that 0:21:04.320 --> 0:21:08.080 nine hundred eight billion dollar proposal from some Democrats and 0:21:08.119 --> 0:21:11.160 some Republicans in the Senate. Is it possible that in fact, 0:21:11.160 --> 0:21:13.119 the Republicans have been right all around long, and then 0:21:13.160 --> 0:21:16.040 we shouldn't have done the three point three trillion last spring, 0:21:16.080 --> 0:21:18.840 and it was right to wait, because nine eight billion 0:21:18.920 --> 0:21:21.480