1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferroll and Lisa Brownwitz. Daily we bring you 3 00:00:13,280 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 5 00:00:23,920 --> 00:00:31,720 Speaker 1: and of course on the Bloomberg terminal. Karakus Mistakas he 6 00:00:31,840 --> 00:00:34,879 Speaker 1: is Greek Prime Minister and far more importantly has the 7 00:00:34,880 --> 00:00:38,720 Speaker 1: most original path through childhood to the height of politics 8 00:00:38,760 --> 00:00:43,000 Speaker 1: of anyone I know. My life was transformed in nine 9 00:00:43,280 --> 00:00:46,680 Speaker 1: by the movie Z except I watched the movie The 10 00:00:46,760 --> 00:00:49,440 Speaker 1: Prime Minister lived at It was a tumutuous time for 11 00:00:49,479 --> 00:00:51,800 Speaker 1: his Greece and he and others of the modern age 12 00:00:51,800 --> 00:00:56,320 Speaker 1: of great prosperity. Congratulations first to you and all within 13 00:00:56,440 --> 00:00:59,440 Speaker 1: your politics and even the opposition in Greece to this 14 00:00:59,680 --> 00:01:03,440 Speaker 1: most stunning recovery of Greece. What did you think at 15 00:01:03,440 --> 00:01:07,440 Speaker 1: the low point of the Greek economic tobacco? What were 16 00:01:07,480 --> 00:01:11,480 Speaker 1: you thinking about to make grease recover as it has alltime. 17 00:01:11,520 --> 00:01:14,039 Speaker 1: We took over in July two thousand nineteen with a 18 00:01:14,120 --> 00:01:16,520 Speaker 1: very clear mandate to make the economy grow again. We 19 00:01:16,520 --> 00:01:19,160 Speaker 1: were hit by the pandemic, but we still managed to 20 00:01:19,200 --> 00:01:23,800 Speaker 1: implement very significant reforms, and I think we used the 21 00:01:23,800 --> 00:01:28,480 Speaker 1: fiscal room that was available to us to support the 22 00:01:28,520 --> 00:01:31,399 Speaker 1: real economy. We're very encouraged by the recent data. The 23 00:01:31,440 --> 00:01:34,399 Speaker 1: economy grew sixteen point two percent in the second quarter 24 00:01:35,200 --> 00:01:38,640 Speaker 1: of this year. We revised our forecast upwoard to five 25 00:01:38,680 --> 00:01:41,759 Speaker 1: point nine percent, and this may be a pessimistic um 26 00:01:41,959 --> 00:01:45,400 Speaker 1: forecast for two thousand one. We see lots of interests 27 00:01:45,440 --> 00:01:49,440 Speaker 1: for foreign direct investment by American companies European companies. We're 28 00:01:49,480 --> 00:01:52,440 Speaker 1: making big progress in digitizing the state. We have a 29 00:01:52,480 --> 00:01:55,800 Speaker 1: very ambitious green Transition plan, and overall, I think the 30 00:01:55,840 --> 00:01:57,920 Speaker 1: mood in the country, in the country after ten years 31 00:01:57,920 --> 00:02:01,560 Speaker 1: of crisis has a signal efficantly changed. I just want 32 00:02:01,560 --> 00:02:03,200 Speaker 1: to point out to you the needle moved on a 33 00:02:03,280 --> 00:02:05,680 Speaker 1: Greek g d P is everyone but John Faroe and 34 00:02:05,680 --> 00:02:08,240 Speaker 1: I have the surveillance team have visited Greece in the 35 00:02:08,320 --> 00:02:11,200 Speaker 1: last six months. I just want to make there's an 36 00:02:11,200 --> 00:02:13,760 Speaker 1: additional reason for you to come and see what's really happening. 37 00:02:13,840 --> 00:02:18,120 Speaker 1: People talk climate change. The American forest fires are time 38 00:02:18,240 --> 00:02:22,240 Speaker 1: zones away. You have a fire recently thirteen miles eighteen 39 00:02:22,240 --> 00:02:26,360 Speaker 1: miles from Athens. You are living fires, you are living 40 00:02:26,480 --> 00:02:28,760 Speaker 1: record of heat. What do you need from Europe? What 41 00:02:28,800 --> 00:02:31,240 Speaker 1: do you need from world leaders to jump start the 42 00:02:31,240 --> 00:02:33,800 Speaker 1: climate change debate? First of all, this is really happening 43 00:02:34,480 --> 00:02:37,000 Speaker 1: climate I'm not talking about climate change. I'm not talking 44 00:02:37,000 --> 00:02:40,639 Speaker 1: about the real climate crisis and the energy that is 45 00:02:40,720 --> 00:02:45,920 Speaker 1: that is hitting especially the Mediterranean, very very hard. Now, 46 00:02:45,960 --> 00:02:49,080 Speaker 1: we've put in place a very ambitious plan to decompronize 47 00:02:49,200 --> 00:02:52,200 Speaker 1: very quickly, and Europe is at the forefront of this effort. 48 00:02:52,200 --> 00:02:54,400 Speaker 1: As you know, we have a commitment to be climate 49 00:02:54,440 --> 00:02:58,119 Speaker 1: neutral as a continent by and to reduce our greenhouse 50 00:02:58,160 --> 00:03:02,079 Speaker 1: gases by by thirty What are we doing in Greece. 51 00:03:02,280 --> 00:03:04,560 Speaker 1: First of all, we're shutting down all our coal fired 52 00:03:04,639 --> 00:03:08,200 Speaker 1: electricity plants. We said we would do it by I 53 00:03:08,240 --> 00:03:11,520 Speaker 1: think it will be possible to do it by So 54 00:03:11,639 --> 00:03:16,959 Speaker 1: we are significantly contributing towards decarbonizing by changing our energy mix. 55 00:03:17,200 --> 00:03:20,960 Speaker 1: Obviously we're adding renewables and in the interim we are 56 00:03:21,000 --> 00:03:24,200 Speaker 1: going to be dependent on natural gas. We're retrofitting our 57 00:03:24,639 --> 00:03:28,519 Speaker 1: our buildings at are very rapid pace. We are putting 58 00:03:28,520 --> 00:03:31,280 Speaker 1: in place a very ambitious plan to encourage people to 59 00:03:31,360 --> 00:03:37,400 Speaker 1: purchase electric vehicles and all that is supported by European funds. 60 00:03:37,800 --> 00:03:40,680 Speaker 1: As you know, we agreed last July UM to what 61 00:03:40,760 --> 00:03:43,840 Speaker 1: we call the Next Generation EU Package. We're talking about 62 00:03:43,880 --> 00:03:48,080 Speaker 1: thirty two billion euros of grants and loans available to 63 00:03:48,240 --> 00:03:52,520 Speaker 1: Greece for the next UM six years. A significant amount 64 00:03:52,560 --> 00:03:55,840 Speaker 1: of those will be directed towards green invests. A lot 65 00:03:55,880 --> 00:03:58,360 Speaker 1: of this is incredibly important, Prime Minister. However, there's also 66 00:03:58,440 --> 00:04:01,200 Speaker 1: this very pressing and imminent conser learned about rising gas 67 00:04:01,200 --> 00:04:04,880 Speaker 1: prices throughout the European region. What would you like to 68 00:04:04,920 --> 00:04:07,600 Speaker 1: see some of your peers, some of your member states 69 00:04:07,960 --> 00:04:10,760 Speaker 1: do with respect to countering some of the price pressures 70 00:04:10,760 --> 00:04:13,200 Speaker 1: It seemed to only be growing well. First of all, 71 00:04:13,280 --> 00:04:17,640 Speaker 1: at LISTA, we have made a commitment to support um 72 00:04:17,960 --> 00:04:22,760 Speaker 1: electricity users in Greece, and we're doing it by providing 73 00:04:22,920 --> 00:04:28,359 Speaker 1: state funding but also encouraging our electricity producers to absorb 74 00:04:28,400 --> 00:04:31,040 Speaker 1: a part of the cost increase, so we expect that 75 00:04:31,080 --> 00:04:34,599 Speaker 1: we will see no significant increase in electricity bills for 76 00:04:34,640 --> 00:04:37,800 Speaker 1: the next three to six months. We have also tabled 77 00:04:37,880 --> 00:04:42,120 Speaker 1: a proposal at the European level to find a European 78 00:04:42,160 --> 00:04:45,040 Speaker 1: solution to what we considered is a short term phenomenon, 79 00:04:45,120 --> 00:04:48,760 Speaker 1: but this is a real problem for for Europe and 80 00:04:48,839 --> 00:04:50,960 Speaker 1: I think it needs a European response that will go 81 00:04:51,040 --> 00:04:55,000 Speaker 1: beyond what member states are doing at their level. Prime 82 00:04:55,000 --> 00:04:57,440 Speaker 1: Minister as Thomas Mentioning, I was one of the members 83 00:04:57,440 --> 00:05:00,880 Speaker 1: supporting the read economy by going UH and visit over 84 00:05:00,920 --> 00:05:03,640 Speaker 1: the summer. It was fantastic. I also noticed that it 85 00:05:03,680 --> 00:05:06,200 Speaker 1: closed down in terms of tourism in the open borders 86 00:05:06,400 --> 00:05:10,320 Speaker 1: shortly thereafter as the number of cases increased. How much 87 00:05:10,360 --> 00:05:14,320 Speaker 1: are you concerned about reviving a tourist industry where stores 88 00:05:14,360 --> 00:05:17,280 Speaker 1: were closed down, A lot of the infrastructure was seriously 89 00:05:17,360 --> 00:05:21,640 Speaker 1: hampered by this prolonged period without tourists. Well, first of all, Lisa, 90 00:05:21,680 --> 00:05:23,440 Speaker 1: let me point out that we did support our tourism 91 00:05:23,520 --> 00:05:27,200 Speaker 1: sector UH and we managed to protect jobs. Not only that, 92 00:05:27,279 --> 00:05:30,080 Speaker 1: if you look at unemployment numbers, we're doing better this 93 00:05:30,160 --> 00:05:32,320 Speaker 1: year than we did last year. We had a very 94 00:05:32,320 --> 00:05:36,760 Speaker 1: good tourism season, much better than we had anticipated. As 95 00:05:36,760 --> 00:05:40,039 Speaker 1: you probably know, Greece was at the forefront this January 96 00:05:40,360 --> 00:05:43,400 Speaker 1: January of this year in terms of introducing the Digital 97 00:05:43,480 --> 00:05:48,400 Speaker 1: EU Certificate, which made travel much easier in Europe during 98 00:05:48,680 --> 00:05:52,120 Speaker 1: the summer. UH and We're quite encouraged by the performance 99 00:05:52,120 --> 00:05:55,160 Speaker 1: of our tourism industry. I think we've managed, we're managing 100 00:05:55,200 --> 00:05:57,520 Speaker 1: to move our product up market. So we had a 101 00:05:57,600 --> 00:06:00,640 Speaker 1: higher spending per capita this year than we had last year, 102 00:06:00,720 --> 00:06:03,240 Speaker 1: which is our intention. And of course we have a 103 00:06:03,279 --> 00:06:05,360 Speaker 1: long term plan to make sure that we grow our 104 00:06:05,400 --> 00:06:09,920 Speaker 1: tourist industry in a sustainable manner. We have particularly sensitive ecosystems, 105 00:06:09,960 --> 00:06:12,520 Speaker 1: as you know in Greece, especially our islands. We need 106 00:06:12,560 --> 00:06:15,200 Speaker 1: to protect them, we need to make them green um 107 00:06:15,360 --> 00:06:17,159 Speaker 1: at a very very fast pace. And at the end 108 00:06:17,200 --> 00:06:19,640 Speaker 1: of the day, people who come to Greece want a 109 00:06:19,720 --> 00:06:23,719 Speaker 1: unique experience and they do care about sustainable tourism. So 110 00:06:23,839 --> 00:06:27,440 Speaker 1: I'm very encouraged by what we managed to achieve this summer, 111 00:06:28,000 --> 00:06:31,600 Speaker 1: and I expect hopefully next year there won't be any 112 00:06:31,760 --> 00:06:34,680 Speaker 1: any real COVID concerns. I expect to really be a 113 00:06:34,680 --> 00:06:37,359 Speaker 1: bumper year for Greek tourism. We welcome all of you 114 00:06:37,400 --> 00:06:40,760 Speaker 1: on Bloomberg Radio and Bloomberg Television. The Prime Minister of Greece, 115 00:06:40,839 --> 00:06:44,719 Speaker 1: curiacosmis Attackers is with us right now. I am the 116 00:06:44,839 --> 00:06:47,480 Speaker 1: ugly American. I'm sorry to tell you this. My complete 117 00:06:47,480 --> 00:06:50,920 Speaker 1: Greek knowledge comes from Marial Loyd in our acclaimed restaurant 118 00:06:51,160 --> 00:06:54,560 Speaker 1: at fifty eight straight. And Maria always circles back to 119 00:06:54,720 --> 00:06:56,800 Speaker 1: the need to go live a go be at, but 120 00:06:57,000 --> 00:07:00,719 Speaker 1: also to the ancient tension with Turkey. Give us update, 121 00:07:01,000 --> 00:07:03,640 Speaker 1: and now you and your government are dealing with the 122 00:07:03,720 --> 00:07:07,560 Speaker 1: unique Turkish experiment of developed not a devaluation, but nevertheless 123 00:07:07,560 --> 00:07:11,080 Speaker 1: a much weaker Turkish learra today and interest rate policy. 124 00:07:11,400 --> 00:07:15,400 Speaker 1: Give us an update and your relationship with Mr Arijuan, Well, 125 00:07:15,960 --> 00:07:19,120 Speaker 1: it hasn't always been easy, as you can imagine. We 126 00:07:19,160 --> 00:07:22,040 Speaker 1: had a lot of tension last year. Things are better 127 00:07:22,040 --> 00:07:26,640 Speaker 1: this year. I've always um been very open and frank 128 00:07:26,680 --> 00:07:29,640 Speaker 1: in terms of my relationship with Turkey. We have complicated issues, 129 00:07:30,640 --> 00:07:34,720 Speaker 1: very difficult legal issues regarding the delimitation of our maritime zones. 130 00:07:35,160 --> 00:07:38,320 Speaker 1: There is only one rule book, and that is adherence 131 00:07:38,360 --> 00:07:41,360 Speaker 1: to international law. We had similar problems with Italy. We 132 00:07:41,400 --> 00:07:44,520 Speaker 1: had similar problems with Egypt. We signed the limitation agreements 133 00:07:44,520 --> 00:07:47,480 Speaker 1: with both. I think we all made the necessary compromises. 134 00:07:47,680 --> 00:07:49,720 Speaker 1: So we are indicating to Turkey that there is a 135 00:07:49,760 --> 00:07:56,080 Speaker 1: way to resolve this without having to um use very 136 00:07:56,480 --> 00:08:00,520 Speaker 1: bellicose rhetoric or unnecessary tension in the Gene and the 137 00:08:00,560 --> 00:08:04,680 Speaker 1: Eastern Mediterranean UH, and of course we can also and 138 00:08:04,720 --> 00:08:07,720 Speaker 1: we need to work with Turkey when it comes to migration. 139 00:08:08,120 --> 00:08:11,160 Speaker 1: I think what Europe will not tolerate is a repeat 140 00:08:11,200 --> 00:08:15,520 Speaker 1: of what we saw in two thousand fifteen, uncontrolled migratory 141 00:08:15,600 --> 00:08:18,560 Speaker 1: pressure that a risk from Afghanistan. I think it's less 142 00:08:18,560 --> 00:08:21,240 Speaker 1: of a risk UH this UH this year than it 143 00:08:21,280 --> 00:08:23,720 Speaker 1: was in two thousand fifteen. I have committed, and I've 144 00:08:23,760 --> 00:08:27,480 Speaker 1: been very unapologetic that we will protect our borders. We're 145 00:08:27,480 --> 00:08:30,120 Speaker 1: doing it in a very humane manner. We're saving people 146 00:08:30,160 --> 00:08:35,880 Speaker 1: at see every day we're granting refugee um status to 147 00:08:35,960 --> 00:08:40,199 Speaker 1: tens of thousands of people who make Greece the permanent home. 148 00:08:40,320 --> 00:08:42,880 Speaker 1: At the same time, we send a very clear signal 149 00:08:42,960 --> 00:08:46,199 Speaker 1: to everyone we want to break down the smugglers networks 150 00:08:46,240 --> 00:08:49,520 Speaker 1: in the Aegean. We have successfully done so if you 151 00:08:49,520 --> 00:08:52,760 Speaker 1: look at the flows they are done by compared to 152 00:08:52,840 --> 00:08:55,720 Speaker 1: thousands and and nineteen. And we do want to work 153 00:08:55,720 --> 00:08:59,400 Speaker 1: with Turkey in addressing the migration issue and make sure 154 00:08:59,440 --> 00:09:02,480 Speaker 1: that these people are kept closer to Afghanistan and don't 155 00:09:02,480 --> 00:09:05,880 Speaker 1: move to Iran, to Turkey too and then to Europe. 156 00:09:06,200 --> 00:09:09,160 Speaker 1: Minister from your vantage point, do you think that President 157 00:09:09,240 --> 00:09:12,440 Speaker 1: Biden is significantly different than President Trump when it comes 158 00:09:12,440 --> 00:09:15,080 Speaker 1: to his actions with respect to the European Union, with 159 00:09:15,120 --> 00:09:18,440 Speaker 1: respect to Afghanistan and Turkey, and how that all does 160 00:09:18,600 --> 00:09:22,560 Speaker 1: trickle down to you well though, certain uh, you know, 161 00:09:22,600 --> 00:09:25,680 Speaker 1: big policy issues where we're really looking to the US 162 00:09:26,240 --> 00:09:29,040 Speaker 1: in terms of leadership, and of course climate change is 163 00:09:29,440 --> 00:09:32,040 Speaker 1: one of them. We will be meeting in Glasgow in 164 00:09:32,120 --> 00:09:34,760 Speaker 1: five weeks from now, and I think it's it's probably 165 00:09:34,840 --> 00:09:37,360 Speaker 1: time to move from the you know, the nice, flowery 166 00:09:37,400 --> 00:09:39,800 Speaker 1: rhetoric that you always hear at the U N tow 167 00:09:40,000 --> 00:09:43,600 Speaker 1: very concrete actions. We as Greece, where medium sized country, 168 00:09:43,600 --> 00:09:46,000 Speaker 1: we're trying um to do our part, and of course 169 00:09:46,040 --> 00:09:48,720 Speaker 1: we will also be looking to engage with the US 170 00:09:48,800 --> 00:09:52,400 Speaker 1: to strengthen the Transatlantic alliance. At the same time, I've 171 00:09:52,440 --> 00:09:55,080 Speaker 1: always been a very proponent of strong proponent of the 172 00:09:55,120 --> 00:09:59,319 Speaker 1: idea of europe strategic autonomy, because there are issues, especially 173 00:09:59,360 --> 00:10:03,080 Speaker 1: in our region, in the Eastern Mediterranean, in the Middle East, 174 00:10:03,080 --> 00:10:06,120 Speaker 1: in the in the Hell where Europe needs a presence, 175 00:10:06,160 --> 00:10:09,640 Speaker 1: and if Europe gets stronger militarily, if we cooperate more, 176 00:10:10,240 --> 00:10:12,480 Speaker 1: I think this is to the benefit of the alliance 177 00:10:12,520 --> 00:10:14,560 Speaker 1: and to the benefit of NATO. I say this with 178 00:10:14,640 --> 00:10:17,560 Speaker 1: immense respect for your father in all of Greece, of 179 00:10:17,640 --> 00:10:19,880 Speaker 1: another time and place. You're the only one I can 180 00:10:19,920 --> 00:10:24,840 Speaker 1: say this too. What's it like to be a refugee? 181 00:10:26,000 --> 00:10:29,400 Speaker 1: It's uh, you know, it is very difficult. And when 182 00:10:29,440 --> 00:10:34,679 Speaker 1: we when we meet you know, the people um, especially children, 183 00:10:34,760 --> 00:10:38,240 Speaker 1: unaccompanied miners, it's shocking when you hear those stories, and 184 00:10:38,280 --> 00:10:40,600 Speaker 1: I can tell you you are one of those kids. Well, 185 00:10:40,640 --> 00:10:43,520 Speaker 1: we left, but not in the same situation. Um. You know. 186 00:10:43,559 --> 00:10:45,800 Speaker 1: We we we had to flee the junta uh in 187 00:10:47,280 --> 00:10:50,800 Speaker 1: uh and we we lived in Paris fall. But there's 188 00:10:50,800 --> 00:10:54,040 Speaker 1: no comparison between the stories that we that we hear 189 00:10:54,320 --> 00:10:58,640 Speaker 1: and what we really did very successfully, Tom was to 190 00:10:58,679 --> 00:11:01,560 Speaker 1: address the issue of the unaccompany minors. When we came 191 00:11:01,559 --> 00:11:04,439 Speaker 1: into power. It was a shocking reality. You had these 192 00:11:04,559 --> 00:11:10,120 Speaker 1: these kids as teenagers in these camps um completely completely vulnerable. 193 00:11:10,200 --> 00:11:12,960 Speaker 1: We've addressed this issue. There's not a single person in 194 00:11:13,000 --> 00:11:17,240 Speaker 1: a camp. They're all um uh in uh in places 195 00:11:17,240 --> 00:11:20,200 Speaker 1: where they can feel safe and where they can thrive. 196 00:11:20,240 --> 00:11:21,600 Speaker 1: And I can tell you, you know, there are times 197 00:11:21,600 --> 00:11:23,920 Speaker 1: when I see and this is a country that has 198 00:11:23,960 --> 00:11:28,880 Speaker 1: traditionally been open um to two refugees. Uh. And you 199 00:11:28,920 --> 00:11:31,560 Speaker 1: know something, there is a great success story just took 200 00:11:31,559 --> 00:11:36,720 Speaker 1: at the NBA. Um he's Greek from Nigeria. It's true, 201 00:11:36,840 --> 00:11:41,760 Speaker 1: it's true. He's he's he's totally, he's totally, he's totally Greek. Um, 202 00:11:41,920 --> 00:11:43,880 Speaker 1: he's you know, he used to sell he's on the 203 00:11:43,880 --> 00:11:49,079 Speaker 1: streets and he's a great example of he's he's vamptire. 204 00:11:50,040 --> 00:11:51,640 Speaker 1: He just wanted to fit in some that the best 205 00:11:51,640 --> 00:12:01,600 Speaker 1: basketball in the world right now is great now joining us. 206 00:12:01,640 --> 00:12:03,080 Speaker 1: We are thrilled to bring you this week of the 207 00:12:03,120 --> 00:12:06,640 Speaker 1: United Nations Ian Bremer of Eurasia Group. It's the United 208 00:12:06,720 --> 00:12:10,120 Speaker 1: Nations World. It's also a j zero world. Thrilled Dr 209 00:12:10,160 --> 00:12:14,480 Speaker 1: Bremer could join us. Dr Bremer. The Greece Modern experiment 210 00:12:14,920 --> 00:12:19,319 Speaker 1: is a success. What does Greece do when there's another 211 00:12:19,440 --> 00:12:24,320 Speaker 1: European crisis? How coalesced? Is Greece right as Europe rather? 212 00:12:24,559 --> 00:12:29,680 Speaker 1: Right now? Well much more so, you know, Tom. In 213 00:12:29,720 --> 00:12:34,319 Speaker 1: an environment where the Americans and Chinese aren't really talking 214 00:12:34,360 --> 00:12:39,160 Speaker 1: to each other, the Europeans are taking the lead on 215 00:12:39,360 --> 00:12:45,280 Speaker 1: on climate regulations. Um their rules and rags on privacy 216 00:12:45,320 --> 00:12:48,000 Speaker 1: on data are the most advanced in the world and 217 00:12:48,000 --> 00:12:50,840 Speaker 1: increasingly being taken up by other countries because they're out 218 00:12:50,840 --> 00:12:53,360 Speaker 1: in front. That's not to say that their economies are 219 00:12:53,360 --> 00:12:57,320 Speaker 1: all performing incredibly well. But you know, the lessons taken 220 00:12:57,760 --> 00:13:02,240 Speaker 1: from the near death experience of Brexit and from the 221 00:13:02,400 --> 00:13:07,000 Speaker 1: disaster that was the Brexit negotiations and has had a 222 00:13:07,080 --> 00:13:10,000 Speaker 1: much bigger impact on the UK than the EU. I 223 00:13:10,040 --> 00:13:13,080 Speaker 1: think has helped to bring the EU together, and the 224 00:13:13,120 --> 00:13:17,640 Speaker 1: Europeans ended up responding to COVID in a much more 225 00:13:18,120 --> 00:13:21,599 Speaker 1: coherent and cohesive way, both in terms of the vaccines 226 00:13:21,640 --> 00:13:25,960 Speaker 1: as well as economic restructuring and rebuilding. All of that 227 00:13:26,000 --> 00:13:28,440 Speaker 1: means they're in better position these days. You speak of 228 00:13:28,480 --> 00:13:33,360 Speaker 1: a misjudgment of President Biden in America, whether it's China 229 00:13:33,520 --> 00:13:36,560 Speaker 1: or Europe. What is the prison that they look through 230 00:13:36,600 --> 00:13:42,679 Speaker 1: now when they observe this president. Um. I think they 231 00:13:42,720 --> 00:13:48,280 Speaker 1: recognize that even though they like Biden much more. Certainly 232 00:13:48,320 --> 00:13:50,680 Speaker 1: the Europeans, with the exception of Victor orbon and he 233 00:13:50,760 --> 00:13:53,679 Speaker 1: is the exception that proves the rule from Hungary, they 234 00:13:53,720 --> 00:13:57,839 Speaker 1: all prefer Biden by a long mile. Um. And and 235 00:13:57,920 --> 00:14:01,520 Speaker 1: yet um, they see that the United States now has 236 00:14:01,559 --> 00:14:05,400 Speaker 1: two presidents in a row who are much more taken 237 00:14:05,440 --> 00:14:10,400 Speaker 1: with domestic affairs than their interest in the continued strength 238 00:14:11,040 --> 00:14:15,400 Speaker 1: of the Transatlantic Alliance. On top of that, there is 239 00:14:15,600 --> 00:14:20,120 Speaker 1: an ongoing pivot towards Asia that the Europeans are generally 240 00:14:20,200 --> 00:14:23,360 Speaker 1: not considered either very aligned for or much of a 241 00:14:23,440 --> 00:14:27,520 Speaker 1: priority for. And so I mean, frankly, even though Trump 242 00:14:27,600 --> 00:14:32,120 Speaker 1: and Biden could not be more different as leaders, as individuals, 243 00:14:32,400 --> 00:14:36,120 Speaker 1: the Europeans seemore continuity and and they don't like it. 244 00:14:36,600 --> 00:14:39,600 Speaker 1: Um doesn't mean that they have good alternatives at this 245 00:14:39,640 --> 00:14:44,680 Speaker 1: point because absent the UK, absent Angela Merkel in short order, 246 00:14:45,200 --> 00:14:47,840 Speaker 1: and you know, with the French president facing his own 247 00:14:47,880 --> 00:14:50,920 Speaker 1: difficult elections in the next six months, it's not like 248 00:14:50,960 --> 00:14:55,640 Speaker 1: the Europeans are replete with individual strong national leaders. Kiriakos 249 00:14:56,040 --> 00:14:58,840 Speaker 1: Um and Draggy are probably two of the few you'd 250 00:14:58,880 --> 00:15:01,640 Speaker 1: point to right now. And and when we look forward, 251 00:15:01,720 --> 00:15:04,640 Speaker 1: particularly with respect this alliance to deal with China, how 252 00:15:04,720 --> 00:15:07,360 Speaker 1: much is the European Union getting left out of an 253 00:15:07,360 --> 00:15:10,280 Speaker 1: alliance that increasingly looks like the United States, Australia, the 254 00:15:10,360 --> 00:15:14,720 Speaker 1: United Kingdom. Well, you know, the United States has the 255 00:15:14,840 --> 00:15:20,000 Speaker 1: quad UH, the United States has this new Aucus agreement 256 00:15:20,040 --> 00:15:22,800 Speaker 1: which has been described to me privately as five eyes 257 00:15:23,360 --> 00:15:28,200 Speaker 1: plus so intelligence sharing technology and some national security. Well, 258 00:15:28,240 --> 00:15:30,920 Speaker 1: the fact is that when the United States looks at China, 259 00:15:31,280 --> 00:15:35,600 Speaker 1: we see China principally as a government through a national 260 00:15:35,680 --> 00:15:40,720 Speaker 1: security lens. With the sole exception of France, none of 261 00:15:40,760 --> 00:15:44,360 Speaker 1: the Europeans do. They are much more transactional. And part 262 00:15:44,400 --> 00:15:47,200 Speaker 1: of the dust up between the United States and France 263 00:15:47,320 --> 00:15:50,320 Speaker 1: around all of this is that on the one hand, 264 00:15:50,680 --> 00:15:53,600 Speaker 1: the French of the third largest military exporters in the 265 00:15:53,640 --> 00:15:56,400 Speaker 1: world after the US and Russia, so they're competing with 266 00:15:56,440 --> 00:15:59,560 Speaker 1: the US and they lost out on the Australians ripping 267 00:15:59,640 --> 00:16:02,800 Speaker 1: up their contract. On the other the French have been 268 00:16:02,840 --> 00:16:08,680 Speaker 1: trying to convince the Europeans to have more focus on security, 269 00:16:09,000 --> 00:16:13,280 Speaker 1: more focused on building up European defense capacity, and more 270 00:16:13,320 --> 00:16:18,400 Speaker 1: of a pro active indo pack strategy. Very few countries 271 00:16:18,480 --> 00:16:21,840 Speaker 1: in Europe are interested in supporting that. So Macron is 272 00:16:22,160 --> 00:16:25,640 Speaker 1: kind of neither fish nor foul at this point. The 273 00:16:25,720 --> 00:16:29,360 Speaker 1: law just to finish up here, if you're talking about 274 00:16:29,360 --> 00:16:32,760 Speaker 1: evergrand all morning and the systemic risk, not necessarily financially, 275 00:16:32,800 --> 00:16:35,920 Speaker 1: but with respect to a housing market in China that 276 00:16:36,040 --> 00:16:39,320 Speaker 1: is cooling dramatically and and frankly, the fact the policymakers 277 00:16:39,360 --> 00:16:42,560 Speaker 1: are going to allow this, how does that dovetail into 278 00:16:42,560 --> 00:16:45,400 Speaker 1: the rising tensions between the China and the Western world 279 00:16:45,480 --> 00:16:49,320 Speaker 1: if at all? Um Well, as I said, the United 280 00:16:49,400 --> 00:16:52,240 Speaker 1: States as the president to presidents now that have been 281 00:16:52,320 --> 00:16:55,240 Speaker 1: much more focused on domestic policy America first and a 282 00:16:55,360 --> 00:16:58,960 Speaker 1: u S foreign policy for the American middle class, Chinese 283 00:16:58,960 --> 00:17:02,080 Speaker 1: are focused much more inward as well. Let's remember that, 284 00:17:02,160 --> 00:17:04,720 Speaker 1: you know, belt and road investments have fallen off a 285 00:17:04,760 --> 00:17:07,240 Speaker 1: cliff over the last five years. China is much more 286 00:17:07,280 --> 00:17:11,600 Speaker 1: focused on their own dual circulation policy, commit to the 287 00:17:11,800 --> 00:17:17,240 Speaker 1: domestic economic, consumer and supply chain with ever grand I mean, 288 00:17:17,320 --> 00:17:20,879 Speaker 1: of course, this is a really big financial crisis for 289 00:17:21,040 --> 00:17:23,080 Speaker 1: the Chinese. And what was their announcement at the u 290 00:17:23,160 --> 00:17:25,760 Speaker 1: N this week, We're not going to be building any 291 00:17:25,800 --> 00:17:28,880 Speaker 1: more coal fired plants outside of China. Yeah, because they're 292 00:17:28,880 --> 00:17:31,800 Speaker 1: not going to be building much more anything outside of 293 00:17:31,880 --> 00:17:34,560 Speaker 1: China going forward. That's the real shift. And when I 294 00:17:34,600 --> 00:17:38,920 Speaker 1: talk to policymakers in Washington, they're still thinking about aggressive 295 00:17:39,000 --> 00:17:42,399 Speaker 1: Cold war mentality with the China that is trying to 296 00:17:42,440 --> 00:17:45,560 Speaker 1: take over the world. Increasingly, China's problems and domestic two. 297 00:17:45,600 --> 00:17:47,280 Speaker 1: I'm not gonna mince wordsy and I'd love to get 298 00:17:47,280 --> 00:17:49,440 Speaker 1: you and Robert D. Kappan on on the South China 299 00:17:49,520 --> 00:17:51,879 Speaker 1: see here as we can in the coming months. As 300 00:17:52,600 --> 00:18:01,720 Speaker 1: Dr Bremer, would you raise your group. This is a 301 00:18:01,800 --> 00:18:04,959 Speaker 1: treat after what we observed yesterday in the most different 302 00:18:05,000 --> 00:18:08,680 Speaker 1: press conference. David blanche Flower joins at Dartboth College, a 303 00:18:08,720 --> 00:18:12,480 Speaker 1: former Bank of England Monety Policy Committee member and of 304 00:18:12,520 --> 00:18:17,280 Speaker 1: course definitive on America's past present in future wage curb. 305 00:18:17,520 --> 00:18:19,480 Speaker 1: Danny blackch try, I want to talk to you about 306 00:18:19,480 --> 00:18:23,800 Speaker 1: the new social FED. They are also sensitive about labor. 307 00:18:24,320 --> 00:18:27,160 Speaker 1: Can that be codified or is that a one off 308 00:18:27,200 --> 00:18:30,040 Speaker 1: for the moment. The idea that Powell and the Fed 309 00:18:30,440 --> 00:18:36,439 Speaker 1: can manage a new wage curve to better equality, we 310 00:18:36,440 --> 00:18:38,880 Speaker 1: we will see. I mean, it's I'm thankful that they're 311 00:18:38,880 --> 00:18:42,560 Speaker 1: actually really starting to try and understand the labor market. Um, 312 00:18:42,600 --> 00:18:45,640 Speaker 1: not least because between two thousand and fifteen and two 313 00:18:45,720 --> 00:18:48,680 Speaker 1: thousand and eighteen they clearly didn't and Kaw had to 314 00:18:48,720 --> 00:18:52,120 Speaker 1: do a mere culpa. It's pretty hard to understand exactly 315 00:18:52,160 --> 00:18:54,680 Speaker 1: what's going on in the labor market now, not least 316 00:18:54,720 --> 00:18:57,800 Speaker 1: because wage wage growth just does not give you a 317 00:18:57,840 --> 00:19:01,560 Speaker 1: good steer. So we're in and a adjustment mode. I mean, 318 00:19:01,600 --> 00:19:04,200 Speaker 1: I like to think of this, Thomas. You know, a 319 00:19:04,280 --> 00:19:08,120 Speaker 1: hurricane hits an island and the price of plumbers rises 320 00:19:08,160 --> 00:19:11,560 Speaker 1: for a while, and roofers and carpenters, then there will 321 00:19:11,640 --> 00:19:15,680 Speaker 1: be an adjustment. So these economies are adjusting. I think 322 00:19:15,720 --> 00:19:18,720 Speaker 1: the sense that I got out yesterday was that looking 323 00:19:18,760 --> 00:19:21,159 Speaker 1: at the dot plots, it was as if the it 324 00:19:21,240 --> 00:19:24,680 Speaker 1: was as if the members of the Fed and really 325 00:19:24,680 --> 00:19:27,560 Speaker 1: felt they knew what was coming. They have no history, 326 00:19:27,920 --> 00:19:30,520 Speaker 1: We have no clue about how the virus and the 327 00:19:30,840 --> 00:19:34,440 Speaker 1: and the vaccine will go, and especially long run changes 328 00:19:34,480 --> 00:19:36,800 Speaker 1: in behavior, and these are all going to have very 329 00:19:36,840 --> 00:19:39,959 Speaker 1: big impacts on living standards and on the labor market. 330 00:19:40,160 --> 00:19:42,800 Speaker 1: We don't know what proportion of people have retired. We 331 00:19:42,880 --> 00:19:45,119 Speaker 1: don't know how people are there new in terms of 332 00:19:45,160 --> 00:19:47,160 Speaker 1: their remode working. So I think it was a lot 333 00:19:47,160 --> 00:19:49,800 Speaker 1: of wishful thinking that I thought that you just said 334 00:19:49,800 --> 00:19:52,160 Speaker 1: it pretty well. I thought the slight move to being 335 00:19:52,520 --> 00:19:56,160 Speaker 1: rather more hawkish was not really based on really evident 336 00:19:56,280 --> 00:19:59,000 Speaker 1: Especially we're talking about about China today. We don't know 337 00:19:59,000 --> 00:20:01,520 Speaker 1: how the that's spread, So I think this is a 338 00:20:01,960 --> 00:20:03,919 Speaker 1: little bit of a world of you know, we know 339 00:20:04,040 --> 00:20:06,280 Speaker 1: more than we really do. I mean, let's talk Ellen 340 00:20:06,320 --> 00:20:08,679 Speaker 1: Blinder David blanche Flower here, and I'm going to suggest 341 00:20:08,760 --> 00:20:12,480 Speaker 1: both of you are less Harkish than many. What textbook, 342 00:20:12,960 --> 00:20:18,240 Speaker 1: what Bible are the Harkish crew preaching from? Well, they 343 00:20:18,240 --> 00:20:22,159 Speaker 1: are preaching from nine. I mean, remember, I guess with 344 00:20:22,280 --> 00:20:25,400 Speaker 1: you guys, I've probably over the last ten years spent 345 00:20:25,480 --> 00:20:27,960 Speaker 1: an awful long time trying to talk to people about 346 00:20:28,280 --> 00:20:32,440 Speaker 1: whether inflation was coming. Um, I don't really know what 347 00:20:32,440 --> 00:20:36,560 Speaker 1: what book they're reading from. This looks awfully temporary to me. 348 00:20:37,000 --> 00:20:39,000 Speaker 1: It looks that I mean, in the UK we've in 349 00:20:39,119 --> 00:20:43,240 Speaker 1: two successive months we saw last month UM inflation fell 350 00:20:43,359 --> 00:20:46,160 Speaker 1: from two point five to two, and then this month 351 00:20:46,280 --> 00:20:49,760 Speaker 1: it rose to three point two, driven by all these 352 00:20:49,800 --> 00:20:52,080 Speaker 1: base effects, and it looks awful like when you look 353 00:20:52,119 --> 00:20:54,439 Speaker 1: at the data that in it, As far as I 354 00:20:54,480 --> 00:20:57,879 Speaker 1: can see, within eighteen months or so, the evidence is 355 00:20:57,920 --> 00:21:00,160 Speaker 1: that inflation is going to be below the target as 356 00:21:00,160 --> 00:21:02,640 Speaker 1: this stuff drops out. So I don't really know where 357 00:21:02,680 --> 00:21:05,480 Speaker 1: they're really I'm back to your original question. The assumption 358 00:21:05,560 --> 00:21:07,760 Speaker 1: is suddenly that workers are going to be able to 359 00:21:07,800 --> 00:21:10,439 Speaker 1: push for huge wage increases but go back to my 360 00:21:10,560 --> 00:21:13,520 Speaker 1: island analogy. You know, when the roots come off, the 361 00:21:13,840 --> 00:21:16,840 Speaker 1: people who repair routs, their wages rise. But once the 362 00:21:16,920 --> 00:21:19,000 Speaker 1: roots that have been repaired, their wages go back to 363 00:21:19,080 --> 00:21:21,119 Speaker 1: what they were normally. So this is a this is 364 00:21:21,160 --> 00:21:23,520 Speaker 1: a sort of disequilibrium shot. So I have no idea 365 00:21:23,560 --> 00:21:26,240 Speaker 1: where they're reading from. It makes no sense to me 366 00:21:26,320 --> 00:21:28,080 Speaker 1: that he said it for a whole ten year period 367 00:21:28,160 --> 00:21:30,760 Speaker 1: and none of that ever happened, So I think they're 368 00:21:30,800 --> 00:21:33,119 Speaker 1: just in a in a dream world, Danny. I'm just 369 00:21:33,119 --> 00:21:36,439 Speaker 1: looking at their inflation projections from the December twenty meeting. 370 00:21:37,000 --> 00:21:39,840 Speaker 1: They were looking at twenty two at two percent, basically 371 00:21:40,480 --> 00:21:44,440 Speaker 1: twenty three two percent basically likewise for twenty one, they 372 00:21:44,480 --> 00:21:46,520 Speaker 1: missed this in a big way, Danny. And I'm looking 373 00:21:46,560 --> 00:21:49,600 Speaker 1: at their projections for next year, but two point three 374 00:21:49,680 --> 00:21:53,080 Speaker 1: next year, two point two in twenty three. Go back 375 00:21:53,119 --> 00:21:56,200 Speaker 1: to two thousand and eight. Back think about in July, 376 00:21:56,480 --> 00:21:59,159 Speaker 1: wads markets were thinking of interest rates are going to 377 00:21:59,240 --> 00:22:02,679 Speaker 1: be five percent the next three years. The expectation was, 378 00:22:02,800 --> 00:22:05,639 Speaker 1: you know, interest rates we're going to remain where they 379 00:22:05,680 --> 00:22:07,719 Speaker 1: were there and an inflation was going to remain at 380 00:22:07,720 --> 00:22:10,359 Speaker 1: five and a half percent. So when you have a shock, 381 00:22:10,560 --> 00:22:13,080 Speaker 1: a shock comes. The other's are temporary rising things, But 382 00:22:13,440 --> 00:22:17,280 Speaker 1: inflation is does it nothing more than twelve monthly changes? 383 00:22:17,640 --> 00:22:20,000 Speaker 1: You drop one, you add one, and then as time 384 00:22:20,040 --> 00:22:21,720 Speaker 1: goes on, if you have a big shock, that thing 385 00:22:21,800 --> 00:22:25,560 Speaker 1: drops out. So the crucial question is are these temporary 386 00:22:25,600 --> 00:22:28,520 Speaker 1: things and order the end? Do they? Secondly, do they 387 00:22:28,600 --> 00:22:32,119 Speaker 1: permanently change your view about what's coming in eighteen months? 388 00:22:32,119 --> 00:22:34,639 Speaker 1: Policymakers like me, I always just think, what's going to 389 00:22:34,680 --> 00:22:37,280 Speaker 1: happen to inflation in eighteen months? Is there anything here 390 00:22:37,560 --> 00:22:40,280 Speaker 1: to tell me that inflation in eighteen months is going 391 00:22:40,320 --> 00:22:42,440 Speaker 1: to be higher than two? And the answer is zero? 392 00:22:42,640 --> 00:22:44,280 Speaker 1: So Danny, you and I can argue about whether the 393 00:22:44,280 --> 00:22:46,040 Speaker 1: forecasts are right or not. I'm not sure how much 394 00:22:46,119 --> 00:22:48,440 Speaker 1: value there is in that. Ultimately, I think it comes 395 00:22:48,440 --> 00:22:51,320 Speaker 1: down to reaction function. They told us there an outcome 396 00:22:51,359 --> 00:22:54,439 Speaker 1: base FED. Is there anything in the reaction function that 397 00:22:54,520 --> 00:22:59,399 Speaker 1: you disagree with? Well, I mean these are not normal times, John, 398 00:22:59,680 --> 00:23:02,760 Speaker 1: So if if you're seeing a steady and regular rise 399 00:23:02,800 --> 00:23:05,440 Speaker 1: in inflation and you respond to that, I think that 400 00:23:05,480 --> 00:23:08,359 Speaker 1: would be one thing. I think we have such such 401 00:23:08,840 --> 00:23:13,399 Speaker 1: such a complicated adjustment path that the sensible thing for 402 00:23:13,440 --> 00:23:15,240 Speaker 1: a for a FED and for the Bank of England 403 00:23:15,280 --> 00:23:18,680 Speaker 1: to do is sit and wait and watch um and 404 00:23:18,680 --> 00:23:21,120 Speaker 1: and you know, an act then. But it's I think 405 00:23:21,160 --> 00:23:22,720 Speaker 1: the way you should do it is to say, under 406 00:23:22,720 --> 00:23:25,520 Speaker 1: scenario one will do this and the scenario too will 407 00:23:25,560 --> 00:23:27,800 Speaker 1: do this. How likely of each of the two scenarios, 408 00:23:27,920 --> 00:23:30,000 Speaker 1: I don't really know, and I think that's really the 409 00:23:30,000 --> 00:23:32,520 Speaker 1: way to go because we're not in normal times, Dannie, 410 00:23:32,520 --> 00:23:35,000 Speaker 1: are we talking about rate hikes here? Are also with tapering? 411 00:23:35,040 --> 00:23:36,679 Speaker 1: I mean, do you think that it's a mistake for 412 00:23:36,680 --> 00:23:39,880 Speaker 1: the Federal Reserve to start tapering the billion dollars bond 413 00:23:39,880 --> 00:23:43,520 Speaker 1: purchases in November? Well, based on the evidence, I think 414 00:23:43,560 --> 00:23:45,359 Speaker 1: the answer is yes. I think they should be waiting 415 00:23:45,400 --> 00:23:46,879 Speaker 1: and seeing. I mean, if they do it by a 416 00:23:46,920 --> 00:23:49,520 Speaker 1: little bit, well, okay, the the signal is there. The 417 00:23:49,600 --> 00:23:51,760 Speaker 1: likelihood is that, you know, in six months time they 418 00:23:51,800 --> 00:23:53,320 Speaker 1: might have to go in the other direction. I mean, 419 00:23:53,320 --> 00:23:55,600 Speaker 1: the question is are they prepared to reverse themselves? That's 420 00:23:55,640 --> 00:23:58,359 Speaker 1: the question. What's the evidence to say that you should 421 00:23:58,400 --> 00:24:00,640 Speaker 1: do that? You've got this risk from China. We're looking 422 00:24:00,640 --> 00:24:02,399 Speaker 1: today and we're going to talk about the Bank of England. 423 00:24:02,440 --> 00:24:04,879 Speaker 1: I mean, what we see saw today is growth slowing. 424 00:24:04,920 --> 00:24:06,399 Speaker 1: We've seen the p m I is coming out this 425 00:24:06,440 --> 00:24:09,720 Speaker 1: morning in England, in the UK and France, in Germany 426 00:24:09,760 --> 00:24:13,159 Speaker 1: and the euro Area growth is not taken off. I 427 00:24:13,160 --> 00:24:17,200 Speaker 1: mean in the UK, we we're seeing actions by fiscal authorities. 428 00:24:17,200 --> 00:24:20,320 Speaker 1: They're cutting they're cutting benefits to people, they're taking off 429 00:24:21,160 --> 00:24:24,800 Speaker 1: helped people have been furloughed, and they're and they're about 430 00:24:24,840 --> 00:24:27,960 Speaker 1: to raise taxes. So remember that central banks have to 431 00:24:28,000 --> 00:24:31,080 Speaker 1: compensate for what fiscal authorities are doing. So the Bank 432 00:24:31,119 --> 00:24:34,199 Speaker 1: of England sitting in a situation where fiscal policy is 433 00:24:34,240 --> 00:24:37,760 Speaker 1: now tightening, so that's nothing relevant to their decisions. So 434 00:24:37,800 --> 00:24:40,879 Speaker 1: a lot of it depends on the fiscal authority. Danny 435 00:24:41,000 --> 00:24:42,760 Speaker 1: this to me, though, there is not a lot of 436 00:24:42,880 --> 00:24:45,520 Speaker 1: evidence that frankly, the hundred and twenty billion dollars in 437 00:24:45,560 --> 00:24:49,880 Speaker 1: bond purchases is materially helping the labor market is actually 438 00:24:49,920 --> 00:24:53,400 Speaker 1: getting people higher wages. Do you see a clearer connection 439 00:24:53,400 --> 00:24:57,639 Speaker 1: than other economists who've come on the show. Well, the 440 00:24:57,760 --> 00:25:01,600 Speaker 1: story is obviously, the question is what's the counter factual 441 00:25:02,240 --> 00:25:05,080 Speaker 1: that you're comparing to. So people say, as you just said, oh, 442 00:25:05,119 --> 00:25:07,800 Speaker 1: it's not clear that it's doing things well, it's pretty 443 00:25:07,800 --> 00:25:10,560 Speaker 1: hard to measure that we're in an adjustment path, which 444 00:25:10,560 --> 00:25:14,320 Speaker 1: is which is continuing from a virus that hit the economy. 445 00:25:14,400 --> 00:25:17,680 Speaker 1: HiT's fast and it hit it deep. And so we're 446 00:25:17,760 --> 00:25:20,879 Speaker 1: so we've we learned from two thousand and eight and 447 00:25:20,920 --> 00:25:23,280 Speaker 1: if we look back, we did too little stimulus that 448 00:25:23,400 --> 00:25:25,639 Speaker 1: forced things on the central bank. So I think the 449 00:25:25,680 --> 00:25:28,879 Speaker 1: answer is you have to allow an economy to adjust. 450 00:25:29,160 --> 00:25:31,159 Speaker 1: And so if you look at wages, wage growth, and 451 00:25:31,920 --> 00:25:35,680 Speaker 1: good example again in the UK today the National Office 452 00:25:35,680 --> 00:25:38,840 Speaker 1: of National Statistics says wage growth is seven percent. I 453 00:25:38,920 --> 00:25:41,400 Speaker 1: don't believe that. They come out this morning and there's 454 00:25:41,520 --> 00:25:44,120 Speaker 1: estimates on what a wage settlements look like and that's 455 00:25:44,160 --> 00:25:46,639 Speaker 1: too So what we're seeing is there's this issue of 456 00:25:46,680 --> 00:25:50,400 Speaker 1: base effects, composition effects and people coming out of furlough. 457 00:25:50,560 --> 00:25:53,159 Speaker 1: We've never seen anything like this. The job of a 458 00:25:53,200 --> 00:25:56,280 Speaker 1: central bank is to allow the economy to recover and 459 00:25:56,320 --> 00:25:59,240 Speaker 1: try and get back to normal. All the errors are 460 00:25:59,280 --> 00:26:01,840 Speaker 1: on the down side, and the errors that the FED 461 00:26:01,920 --> 00:26:04,920 Speaker 1: made in two thousand and fifteen was to tighten too soon. 462 00:26:05,200 --> 00:26:07,880 Speaker 1: The same error made by the ECB and the Bank 463 00:26:07,920 --> 00:26:10,440 Speaker 1: of England tighten too soon and then had to reverse itself. 464 00:26:10,600 --> 00:26:13,720 Speaker 1: So as long as they're prepared to reverse themselves, then fine. 465 00:26:13,800 --> 00:26:15,240 Speaker 1: But it looks to me like you should sit and 466 00:26:15,280 --> 00:26:18,240 Speaker 1: wait and watch and allow the economy over the next 467 00:26:18,280 --> 00:26:20,119 Speaker 1: six months or so to adjust and then see what. 468 00:26:20,640 --> 00:26:22,800 Speaker 1: Dony gonna have you back. I'm gonna have you back 469 00:26:22,840 --> 00:26:26,359 Speaker 1: up a dumbouth teach in person as well. Does that 470 00:26:26,400 --> 00:26:29,360 Speaker 1: feel good teaching in person? It's great. I just said 471 00:26:29,359 --> 00:26:31,159 Speaker 1: to you one of my one of the stories. I 472 00:26:31,200 --> 00:26:34,200 Speaker 1: always think it's great to see all these smiling eyebrows again. 473 00:26:34,600 --> 00:26:37,400 Speaker 1: You know, everyone's masked, we all got vaccinations. But it's 474 00:26:37,400 --> 00:26:39,760 Speaker 1: great to be back with the students, to see real 475 00:26:39,840 --> 00:26:43,480 Speaker 1: life people, and it's great. Do you do you still 476 00:26:43,520 --> 00:26:47,720 Speaker 1: throw a chalk at them when they're wrong? Like vaccinated shark? 477 00:26:47,760 --> 00:26:51,199 Speaker 1: How's that work? We don't do chalk anymore. You know, 478 00:26:51,240 --> 00:26:53,800 Speaker 1: we've got these We actually zoom the class as well 479 00:26:53,800 --> 00:26:58,159 Speaker 1: in case people can't throw chalker. It's I'm too exhausted 480 00:26:58,200 --> 00:26:59,880 Speaker 1: trying to speak for two hours of them on any 481 00:27:00,520 --> 00:27:02,960 Speaker 1: remotely hawkish. Danny and I have the Danny blanch John 482 00:27:03,119 --> 00:27:06,040 Speaker 1: class works Tom. They're educating the dups of the future. 483 00:27:06,720 --> 00:27:11,040 Speaker 1: Essential bank dumps. I've had is that the educated people 484 00:27:11,080 --> 00:27:14,800 Speaker 1: to be right. Is that right, Danny, John, I've had 485 00:27:14,800 --> 00:27:18,240 Speaker 1: the honor of lecturing with Professor blanch Flower. They're sitting 486 00:27:18,320 --> 00:27:21,760 Speaker 1: in the aisles for the words of Danny blanch Danny, 487 00:27:21,800 --> 00:27:32,240 Speaker 1: thank you, Danny blanch Flaback. The drama will be this weekend. 488 00:27:32,800 --> 00:27:35,480 Speaker 1: It will be when the Arkansas Razorbacks move eighty eight 489 00:27:35,480 --> 00:27:38,240 Speaker 1: miles from their big victory over Texas the other day 490 00:27:38,480 --> 00:27:41,960 Speaker 1: down to College Station, Texas. Texas A and M Razorbacks 491 00:27:42,000 --> 00:27:46,040 Speaker 1: always a massive issue for seventy five thousand people assembled 492 00:27:46,480 --> 00:27:49,159 Speaker 1: in Arkansas. John, you are up to speed on this 493 00:27:50,200 --> 00:27:54,320 Speaker 1: watching Tots Arsenal. You're gonna be watching Art Razorbacks because 494 00:27:54,359 --> 00:27:56,480 Speaker 1: you watched him with Texas the other day. I watched 495 00:27:56,520 --> 00:27:58,959 Speaker 1: Loton Cohen's race and facts accoumpanaway Kensic out to Tom 496 00:27:59,080 --> 00:28:02,080 Speaker 1: and it was phenomenal to see that path stadium. Phenomenal. 497 00:28:02,119 --> 00:28:04,879 Speaker 1: And I'm happy to say the Republican Congressman French Hill 498 00:28:04,920 --> 00:28:08,440 Speaker 1: of Arkansas joint US right now. Congressman, you were there. 499 00:28:08,760 --> 00:28:10,800 Speaker 1: Did you run onto the field at the end. I 500 00:28:10,800 --> 00:28:14,000 Speaker 1: saw that little pitch invasion. I did not all my 501 00:28:14,040 --> 00:28:17,040 Speaker 1: congressional salary. I didn't have the extra hundred thousand dollars 502 00:28:17,080 --> 00:28:20,240 Speaker 1: to play the fine but it was a raucous, amazing 503 00:28:20,359 --> 00:28:23,159 Speaker 1: victory over the Longhorns. And this weekend they go to 504 00:28:23,240 --> 00:28:26,840 Speaker 1: Dallas to Jerry World and Dallas Cowboys Stadium to play 505 00:28:27,000 --> 00:28:29,840 Speaker 1: the Texas Sieties and sort will be a two top 506 00:28:29,880 --> 00:28:33,480 Speaker 1: twenty team game. Important game for both teams. I'm looking 507 00:28:33,560 --> 00:28:35,760 Speaker 1: forward to it, sir. That's the sport taken care of. 508 00:28:36,040 --> 00:28:38,200 Speaker 1: Let's get to the sport. At this moment in this market, 509 00:28:38,240 --> 00:28:40,800 Speaker 1: there's been a massive focus on a Chinese company called 510 00:28:40,840 --> 00:28:44,080 Speaker 1: Evergrand this week's It's been building up over the last 511 00:28:44,120 --> 00:28:46,720 Speaker 1: couple of months, and there isn't much transparency on what 512 00:28:46,840 --> 00:28:49,240 Speaker 1: happens with these Chinese companies. A lot of them come 513 00:28:49,280 --> 00:28:51,600 Speaker 1: over to the United States. They list here. What I 514 00:28:51,680 --> 00:28:55,440 Speaker 1: found really interesting is it's the Chinese authorities pulling back 515 00:28:55,440 --> 00:28:57,080 Speaker 1: on their ability to list do and it hasn't been 516 00:28:57,120 --> 00:29:00,440 Speaker 1: the US authorities that have got enough done. Congress. Why 517 00:29:00,560 --> 00:29:03,400 Speaker 1: is that? Well, I think the Chinese are concerned about 518 00:29:03,480 --> 00:29:06,920 Speaker 1: national security. They say every public company and every private 519 00:29:06,920 --> 00:29:09,480 Speaker 1: company has an obligation to them the c c P, 520 00:29:09,680 --> 00:29:14,240 Speaker 1: the Chinese state for intelligence coverage and for national security. 521 00:29:14,280 --> 00:29:16,720 Speaker 1: So it's very difficult for them to ever agree to 522 00:29:16,760 --> 00:29:20,560 Speaker 1: comply with p C a o B accounting auditing standards. 523 00:29:20,600 --> 00:29:23,480 Speaker 1: So that's problem. One problem too is China wants to 524 00:29:23,520 --> 00:29:26,640 Speaker 1: create their own parallel capital market, and so I think 525 00:29:26,640 --> 00:29:29,920 Speaker 1: they're becoming ambivalent about listing in London and New York 526 00:29:29,960 --> 00:29:34,320 Speaker 1: for some reason. I find that concerning. Thirdly, transparency, They're 527 00:29:34,320 --> 00:29:37,840 Speaker 1: not transparent as a creditor in the country, the world's 528 00:29:37,920 --> 00:29:40,560 Speaker 1: largest creditor in the world. They're not transparent about that. 529 00:29:41,040 --> 00:29:45,120 Speaker 1: And they're not transparent with their statistics in China, and 530 00:29:45,160 --> 00:29:48,040 Speaker 1: that's why I'm concerned about the systemic risk of bad 531 00:29:48,120 --> 00:29:52,120 Speaker 1: economic data and company data out of China. Curse Hill. 532 00:29:52,160 --> 00:29:54,960 Speaker 1: You got a legit life experience in this with banking 533 00:29:55,080 --> 00:29:57,400 Speaker 1: in Little Rock, and I want to translate this right 534 00:29:57,440 --> 00:30:00,960 Speaker 1: over to New York City. The may your banks that 535 00:30:01,080 --> 00:30:04,480 Speaker 1: we speak to every day on Bloomberg Surveillance, are they 536 00:30:04,520 --> 00:30:08,480 Speaker 1: aware of this lack of transparency and are they hindering 537 00:30:08,560 --> 00:30:12,880 Speaker 1: your demand for more openness or do they aggressively agree 538 00:30:12,920 --> 00:30:16,520 Speaker 1: with you that we need to see more Chinese transparency. 539 00:30:18,120 --> 00:30:21,040 Speaker 1: I think they agree for more Chinese transparency. On the 540 00:30:21,120 --> 00:30:24,040 Speaker 1: debt side, global debt side, China needs to be a 541 00:30:24,080 --> 00:30:26,800 Speaker 1: member of the Paris Club, China needs to come out 542 00:30:26,880 --> 00:30:30,520 Speaker 1: and come out cleanly on the lending terms and conditions 543 00:30:30,520 --> 00:30:34,200 Speaker 1: they're putting on. I don't mean to interrupt, but this 544 00:30:34,240 --> 00:30:37,239 Speaker 1: is so important your thought here. Would you suggest we 545 00:30:37,520 --> 00:30:41,400 Speaker 1: demand that they become part of a Paris Club structure. 546 00:30:42,520 --> 00:30:45,240 Speaker 1: I have demanded that. I've urged Janet Yelling to demand it. 547 00:30:45,320 --> 00:30:48,120 Speaker 1: I asked the G seven to do that before they 548 00:30:48,160 --> 00:30:50,440 Speaker 1: agreed to do the six hundred and fifty billion dollar 549 00:30:50,560 --> 00:30:54,120 Speaker 1: issuance of special drawing rights. They didn't. I think that 550 00:30:54,200 --> 00:30:57,040 Speaker 1: was a mistake by the G seven finance ministers. Talking 551 00:30:57,040 --> 00:30:59,040 Speaker 1: about Janet Yellen, you're gonna be speaking with her as 552 00:30:59,040 --> 00:31:01,080 Speaker 1: well as FED Chared J. Powell next week and in 553 00:31:01,120 --> 00:31:05,440 Speaker 1: a series of testimonies where they discuss their plans going forward. 554 00:31:05,520 --> 00:31:07,200 Speaker 1: What do you think is going to be the hottest 555 00:31:07,240 --> 00:31:10,040 Speaker 1: topic at a time when FED chair J. Powell may 556 00:31:10,040 --> 00:31:14,680 Speaker 1: not be up for renomination according to some Well, I 557 00:31:14,680 --> 00:31:18,080 Speaker 1: think their assessment of inflation, in the impact of that 558 00:31:18,200 --> 00:31:21,800 Speaker 1: thief on working families and how they can justify saying 559 00:31:21,800 --> 00:31:24,960 Speaker 1: that it's transitory, looking at the statistics that we're seeing, 560 00:31:25,560 --> 00:31:28,480 Speaker 1: looking at the plans of corporate America for employment and 561 00:31:28,560 --> 00:31:31,040 Speaker 1: wages looking out into the next year. That's a key 562 00:31:31,080 --> 00:31:34,080 Speaker 1: point I think they'll talk about. And secondly, for Janet Yellen, 563 00:31:34,600 --> 00:31:37,320 Speaker 1: while there's been a failure by the Biden administration to 564 00:31:37,400 --> 00:31:42,560 Speaker 1: properly get this eviction rental assistance money out across the country, 565 00:31:42,640 --> 00:31:45,800 Speaker 1: it's a crisis in many, many markets, particularly up in 566 00:31:45,800 --> 00:31:49,000 Speaker 1: the northeast. Congressmen, were you satisfied with a Fed chair J. 567 00:31:49,080 --> 00:31:52,440 Speaker 1: Powell whose tone actually indicated that he was concerned about 568 00:31:52,440 --> 00:31:56,600 Speaker 1: some of the inflationary pressures that you mentioned. I'm glad. 569 00:31:56,720 --> 00:31:59,360 Speaker 1: I think he's hearing from his regional bank presidence. I 570 00:31:59,400 --> 00:32:01,920 Speaker 1: think he's looked at the data. I've been talking about 571 00:32:02,000 --> 00:32:04,400 Speaker 1: this since last February, so I'm glad to see the 572 00:32:04,440 --> 00:32:07,720 Speaker 1: chairman taking it seriously. The key has been for J. 573 00:32:07,880 --> 00:32:11,440 Speaker 1: Pale is it transitory or not? Because he knows perniciously 574 00:32:11,560 --> 00:32:14,280 Speaker 1: how bad it would be if it's not transitory. So 575 00:32:14,320 --> 00:32:16,440 Speaker 1: I think that was a key part of their meeting yesterday. 576 00:32:16,520 --> 00:32:18,640 Speaker 1: A congressman, that issue and final issue, if we can 577 00:32:18,720 --> 00:32:21,440 Speaker 1: get that the debt seating debate, let me ask a 578 00:32:21,480 --> 00:32:24,320 Speaker 1: Delica question, does they start to get a bit embarrassing 579 00:32:24,640 --> 00:32:29,280 Speaker 1: for this country? Well, since nineteen seventeen, we've had this 580 00:32:29,360 --> 00:32:32,720 Speaker 1: dead ceiling. We always turns into this political football. But 581 00:32:32,800 --> 00:32:36,480 Speaker 1: here's the bottom line. Now Democrats control the Presidency, the House, 582 00:32:36,520 --> 00:32:39,800 Speaker 1: and Senate. They've put forward these budget ideas, and so 583 00:32:39,840 --> 00:32:41,600 Speaker 1: they ought to be able to put forward the plan 584 00:32:41,720 --> 00:32:45,040 Speaker 1: for a continuing resolution and a debt ceiling proposal that 585 00:32:45,120 --> 00:32:51,840 Speaker 1: can continue to allow bipartisan negotiations on spending. For Congressman 586 00:32:52,240 --> 00:32:54,960 Speaker 1: and No, this is so important, Johnny when I need 587 00:32:54,960 --> 00:32:58,680 Speaker 1: a quick answer. Congressman, you're a bank guy, are you 588 00:32:58,800 --> 00:33:02,040 Speaker 1: trading bonds in your account? I mean, we've got this 589 00:33:02,080 --> 00:33:05,640 Speaker 1: issue with the feed of two presidents trading in their account. 590 00:33:05,960 --> 00:33:08,440 Speaker 1: Is French show on the phone moving E T F 591 00:33:08,560 --> 00:33:13,440 Speaker 1: s around? Uh? No time, my my. Uh. I'd say 592 00:33:13,480 --> 00:33:16,640 Speaker 1: my financial position has been pretty sound and the stame 593 00:33:16,760 --> 00:33:19,560 Speaker 1: way it's been for about seven years, So no material 594 00:33:20,160 --> 00:33:22,680 Speaker 1: differences there. It's really just the way it was when 595 00:33:22,680 --> 00:33:26,160 Speaker 1: I came into Congress, and it's grown accordingly. But but 596 00:33:26,280 --> 00:33:28,360 Speaker 1: I'm not active out there doing that. I think j 597 00:33:28,520 --> 00:33:31,720 Speaker 1: Pal addressed that yesterday, and I think, look, people have 598 00:33:31,800 --> 00:33:35,200 Speaker 1: to have a balance and a transparency. We have strict 599 00:33:35,280 --> 00:33:38,200 Speaker 1: rules about that reporting in the US House of Representatives 600 00:33:38,200 --> 00:33:40,640 Speaker 1: and John, what's great as French show walked into Congress 601 00:33:40,680 --> 00:33:43,520 Speaker 1: with two hundred thousand shares of Apple, so he's feeling great. 602 00:33:43,600 --> 00:33:46,479 Speaker 1: It wasn't trading them something. And the news conference yesterday 603 00:33:46,480 --> 00:33:49,160 Speaker 1: it seems Congressman, thank you, thank you very much, said 604 00:33:49,200 --> 00:33:53,080 Speaker 1: the Republican congressman that French Hill of on Konsil. This 605 00:33:53,120 --> 00:33:56,920 Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us 606 00:33:57,000 --> 00:34:00,720 Speaker 1: live weekdays from seven to ten AMI Eastern on Bloomberg 607 00:34:00,840 --> 00:34:04,680 Speaker 1: Radio and on Bloomberg Television each day from six to 608 00:34:04,800 --> 00:34:09,440 Speaker 1: nine a m. For insight from the best in economics, finance, investment, 609 00:34:09,600 --> 00:34:14,600 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 610 00:34:14,680 --> 00:34:18,520 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 611 00:34:18,640 --> 00:34:22,799 Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg