WEBVTT - Surveillance: Economic Recovery with Greek PM 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferroll and Lisa Brownwitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:31.720 and of course on the Bloomberg terminal. Karakus Mistakas he 0:00:31.840 --> 0:00:34.879 is Greek Prime Minister and far more importantly has the 0:00:34.880 --> 0:00:38.720 most original path through childhood to the height of politics 0:00:38.760 --> 0:00:43.000 of anyone I know. My life was transformed in nine 0:00:43.280 --> 0:00:46.680 by the movie Z except I watched the movie The 0:00:46.760 --> 0:00:49.440 Prime Minister lived at It was a tumutuous time for 0:00:49.479 --> 0:00:51.800 his Greece and he and others of the modern age 0:00:51.800 --> 0:00:56.320 of great prosperity. Congratulations first to you and all within 0:00:56.440 --> 0:00:59.440 your politics and even the opposition in Greece to this 0:00:59.680 --> 0:01:03.440 most stunning recovery of Greece. What did you think at 0:01:03.440 --> 0:01:07.440 the low point of the Greek economic tobacco? What were 0:01:07.480 --> 0:01:11.480 you thinking about to make grease recover as it has alltime. 0:01:11.520 --> 0:01:14.039 We took over in July two thousand nineteen with a 0:01:14.120 --> 0:01:16.520 very clear mandate to make the economy grow again. We 0:01:16.520 --> 0:01:19.160 were hit by the pandemic, but we still managed to 0:01:19.200 --> 0:01:23.800 implement very significant reforms, and I think we used the 0:01:23.800 --> 0:01:28.480 fiscal room that was available to us to support the 0:01:28.520 --> 0:01:31.399 real economy. We're very encouraged by the recent data. The 0:01:31.440 --> 0:01:34.399 economy grew sixteen point two percent in the second quarter 0:01:35.200 --> 0:01:38.640 of this year. We revised our forecast upwoard to five 0:01:38.680 --> 0:01:41.759 point nine percent, and this may be a pessimistic um 0:01:41.959 --> 0:01:45.400 forecast for two thousand one. We see lots of interests 0:01:45.440 --> 0:01:49.440 for foreign direct investment by American companies European companies. We're 0:01:49.480 --> 0:01:52.440 making big progress in digitizing the state. We have a 0:01:52.480 --> 0:01:55.800 very ambitious green Transition plan, and overall, I think the 0:01:55.840 --> 0:01:57.920 mood in the country, in the country after ten years 0:01:57.920 --> 0:02:01.560 of crisis has a signal efficantly changed. I just want 0:02:01.560 --> 0:02:03.200 to point out to you the needle moved on a 0:02:03.280 --> 0:02:05.680 Greek g d P is everyone but John Faroe and 0:02:05.680 --> 0:02:08.240 I have the surveillance team have visited Greece in the 0:02:08.320 --> 0:02:11.200 last six months. I just want to make there's an 0:02:11.200 --> 0:02:13.760 additional reason for you to come and see what's really happening. 0:02:13.840 --> 0:02:18.120 People talk climate change. The American forest fires are time 0:02:18.240 --> 0:02:22.240 zones away. You have a fire recently thirteen miles eighteen 0:02:22.240 --> 0:02:26.360 miles from Athens. You are living fires, you are living 0:02:26.480 --> 0:02:28.760 record of heat. What do you need from Europe? What 0:02:28.800 --> 0:02:31.240 do you need from world leaders to jump start the 0:02:31.240 --> 0:02:33.800 climate change debate? First of all, this is really happening 0:02:34.480 --> 0:02:37.000 climate I'm not talking about climate change. I'm not talking 0:02:37.000 --> 0:02:40.639 about the real climate crisis and the energy that is 0:02:40.720 --> 0:02:45.920 that is hitting especially the Mediterranean, very very hard. Now, 0:02:45.960 --> 0:02:49.080 we've put in place a very ambitious plan to decompronize 0:02:49.200 --> 0:02:52.200 very quickly, and Europe is at the forefront of this effort. 0:02:52.200 --> 0:02:54.400 As you know, we have a commitment to be climate 0:02:54.440 --> 0:02:58.119 neutral as a continent by and to reduce our greenhouse 0:02:58.160 --> 0:03:02.079 gases by by thirty What are we doing in Greece. 0:03:02.280 --> 0:03:04.560 First of all, we're shutting down all our coal fired 0:03:04.639 --> 0:03:08.200 electricity plants. We said we would do it by I 0:03:08.240 --> 0:03:11.520 think it will be possible to do it by So 0:03:11.639 --> 0:03:16.959 we are significantly contributing towards decarbonizing by changing our energy mix. 0:03:17.200 --> 0:03:20.960 Obviously we're adding renewables and in the interim we are 0:03:21.000 --> 0:03:24.200 going to be dependent on natural gas. We're retrofitting our 0:03:24.639 --> 0:03:28.519 our buildings at are very rapid pace. We are putting 0:03:28.520 --> 0:03:31.280 in place a very ambitious plan to encourage people to 0:03:31.360 --> 0:03:37.400 purchase electric vehicles and all that is supported by European funds. 0:03:37.800 --> 0:03:40.680 As you know, we agreed last July UM to what 0:03:40.760 --> 0:03:43.840 we call the Next Generation EU Package. We're talking about 0:03:43.880 --> 0:03:48.080 thirty two billion euros of grants and loans available to 0:03:48.240 --> 0:03:52.520 Greece for the next UM six years. A significant amount 0:03:52.560 --> 0:03:55.840 of those will be directed towards green invests. A lot 0:03:55.880 --> 0:03:58.360 of this is incredibly important, Prime Minister. However, there's also 0:03:58.440 --> 0:04:01.200 this very pressing and imminent conser learned about rising gas 0:04:01.200 --> 0:04:04.880 prices throughout the European region. What would you like to 0:04:04.920 --> 0:04:07.600 see some of your peers, some of your member states 0:04:07.960 --> 0:04:10.760 do with respect to countering some of the price pressures 0:04:10.760 --> 0:04:13.200 It seemed to only be growing well. First of all, 0:04:13.280 --> 0:04:17.640 at LISTA, we have made a commitment to support um 0:04:17.960 --> 0:04:22.760 electricity users in Greece, and we're doing it by providing 0:04:22.920 --> 0:04:28.359 state funding but also encouraging our electricity producers to absorb 0:04:28.400 --> 0:04:31.040 a part of the cost increase, so we expect that 0:04:31.080 --> 0:04:34.599 we will see no significant increase in electricity bills for 0:04:34.640 --> 0:04:37.800 the next three to six months. We have also tabled 0:04:37.880 --> 0:04:42.120 a proposal at the European level to find a European 0:04:42.160 --> 0:04:45.040 solution to what we considered is a short term phenomenon, 0:04:45.120 --> 0:04:48.760 but this is a real problem for for Europe and 0:04:48.839 --> 0:04:50.960 I think it needs a European response that will go 0:04:51.040 --> 0:04:55.000 beyond what member states are doing at their level. Prime 0:04:55.000 --> 0:04:57.440 Minister as Thomas Mentioning, I was one of the members 0:04:57.440 --> 0:05:00.880 supporting the read economy by going UH and visit over 0:05:00.920 --> 0:05:03.640 the summer. It was fantastic. I also noticed that it 0:05:03.680 --> 0:05:06.200 closed down in terms of tourism in the open borders 0:05:06.400 --> 0:05:10.320 shortly thereafter as the number of cases increased. How much 0:05:10.360 --> 0:05:14.320 are you concerned about reviving a tourist industry where stores 0:05:14.360 --> 0:05:17.280 were closed down, A lot of the infrastructure was seriously 0:05:17.360 --> 0:05:21.640 hampered by this prolonged period without tourists. Well, first of all, Lisa, 0:05:21.680 --> 0:05:23.440 let me point out that we did support our tourism 0:05:23.520 --> 0:05:27.200 sector UH and we managed to protect jobs. Not only that, 0:05:27.279 --> 0:05:30.080 if you look at unemployment numbers, we're doing better this 0:05:30.160 --> 0:05:32.320 year than we did last year. We had a very 0:05:32.320 --> 0:05:36.760 good tourism season, much better than we had anticipated. As 0:05:36.760 --> 0:05:40.039 you probably know, Greece was at the forefront this January 0:05:40.360 --> 0:05:43.400 January of this year in terms of introducing the Digital 0:05:43.480 --> 0:05:48.400 EU Certificate, which made travel much easier in Europe during 0:05:48.680 --> 0:05:52.120 the summer. UH and We're quite encouraged by the performance 0:05:52.120 --> 0:05:55.160 of our tourism industry. I think we've managed, we're managing 0:05:55.200 --> 0:05:57.520 to move our product up market. So we had a 0:05:57.600 --> 0:06:00.640 higher spending per capita this year than we had last year, 0:06:00.720 --> 0:06:03.240 which is our intention. And of course we have a 0:06:03.279 --> 0:06:05.360 long term plan to make sure that we grow our 0:06:05.400 --> 0:06:09.920 tourist industry in a sustainable manner. We have particularly sensitive ecosystems, 0:06:09.960 --> 0:06:12.520 as you know in Greece, especially our islands. We need 0:06:12.560 --> 0:06:15.200 to protect them, we need to make them green um 0:06:15.360 --> 0:06:17.159 at a very very fast pace. And at the end 0:06:17.200 --> 0:06:19.640 of the day, people who come to Greece want a 0:06:19.720 --> 0:06:23.719 unique experience and they do care about sustainable tourism. So 0:06:23.839 --> 0:06:27.440 I'm very encouraged by what we managed to achieve this summer, 0:06:28.000 --> 0:06:31.600 and I expect hopefully next year there won't be any 0:06:31.760 --> 0:06:34.680 any real COVID concerns. I expect to really be a 0:06:34.680 --> 0:06:37.359 bumper year for Greek tourism. We welcome all of you 0:06:37.400 --> 0:06:40.760 on Bloomberg Radio and Bloomberg Television. The Prime Minister of Greece, 0:06:40.839 --> 0:06:44.719 curiacosmis Attackers is with us right now. I am the 0:06:44.839 --> 0:06:47.480 ugly American. I'm sorry to tell you this. My complete 0:06:47.480 --> 0:06:50.920 Greek knowledge comes from Marial Loyd in our acclaimed restaurant 0:06:51.160 --> 0:06:54.560 at fifty eight straight. And Maria always circles back to 0:06:54.720 --> 0:06:56.800 the need to go live a go be at, but 0:06:57.000 --> 0:07:00.719 also to the ancient tension with Turkey. Give us update, 0:07:01.000 --> 0:07:03.640 and now you and your government are dealing with the 0:07:03.720 --> 0:07:07.560 unique Turkish experiment of developed not a devaluation, but nevertheless 0:07:07.560 --> 0:07:11.080 a much weaker Turkish learra today and interest rate policy. 0:07:11.400 --> 0:07:15.400 Give us an update and your relationship with Mr Arijuan, Well, 0:07:15.960 --> 0:07:19.120 it hasn't always been easy, as you can imagine. We 0:07:19.160 --> 0:07:22.040 had a lot of tension last year. Things are better 0:07:22.040 --> 0:07:26.640 this year. I've always um been very open and frank 0:07:26.680 --> 0:07:29.640 in terms of my relationship with Turkey. We have complicated issues, 0:07:30.640 --> 0:07:34.720 very difficult legal issues regarding the delimitation of our maritime zones. 0:07:35.160 --> 0:07:38.320 There is only one rule book, and that is adherence 0:07:38.360 --> 0:07:41.360 to international law. We had similar problems with Italy. We 0:07:41.400 --> 0:07:44.520 had similar problems with Egypt. We signed the limitation agreements 0:07:44.520 --> 0:07:47.480 with both. I think we all made the necessary compromises. 0:07:47.680 --> 0:07:49.720 So we are indicating to Turkey that there is a 0:07:49.760 --> 0:07:56.080 way to resolve this without having to um use very 0:07:56.480 --> 0:08:00.520 bellicose rhetoric or unnecessary tension in the Gene and the 0:08:00.560 --> 0:08:04.680 Eastern Mediterranean UH, and of course we can also and 0:08:04.720 --> 0:08:07.720 we need to work with Turkey when it comes to migration. 0:08:08.120 --> 0:08:11.160 I think what Europe will not tolerate is a repeat 0:08:11.200 --> 0:08:15.520 of what we saw in two thousand fifteen, uncontrolled migratory 0:08:15.600 --> 0:08:18.560 pressure that a risk from Afghanistan. I think it's less 0:08:18.560 --> 0:08:21.240 of a risk UH this UH this year than it 0:08:21.280 --> 0:08:23.720 was in two thousand fifteen. I have committed, and I've 0:08:23.760 --> 0:08:27.480 been very unapologetic that we will protect our borders. We're 0:08:27.480 --> 0:08:30.120 doing it in a very humane manner. We're saving people 0:08:30.160 --> 0:08:35.880 at see every day we're granting refugee um status to 0:08:35.960 --> 0:08:40.199 tens of thousands of people who make Greece the permanent home. 0:08:40.320 --> 0:08:42.880 At the same time, we send a very clear signal 0:08:42.960 --> 0:08:46.199 to everyone we want to break down the smugglers networks 0:08:46.240 --> 0:08:49.520 in the Aegean. We have successfully done so if you 0:08:49.520 --> 0:08:52.760 look at the flows they are done by compared to 0:08:52.840 --> 0:08:55.720 thousands and and nineteen. And we do want to work 0:08:55.720 --> 0:08:59.400 with Turkey in addressing the migration issue and make sure 0:08:59.440 --> 0:09:02.480 that these people are kept closer to Afghanistan and don't 0:09:02.480 --> 0:09:05.880 move to Iran, to Turkey too and then to Europe. 0:09:06.200 --> 0:09:09.160 Minister from your vantage point, do you think that President 0:09:09.240 --> 0:09:12.440 Biden is significantly different than President Trump when it comes 0:09:12.440 --> 0:09:15.080 to his actions with respect to the European Union, with 0:09:15.120 --> 0:09:18.440 respect to Afghanistan and Turkey, and how that all does 0:09:18.600 --> 0:09:22.560 trickle down to you well though, certain uh, you know, 0:09:22.600 --> 0:09:25.680 big policy issues where we're really looking to the US 0:09:26.240 --> 0:09:29.040 in terms of leadership, and of course climate change is 0:09:29.440 --> 0:09:32.040 one of them. We will be meeting in Glasgow in 0:09:32.120 --> 0:09:34.760 five weeks from now, and I think it's it's probably 0:09:34.840 --> 0:09:37.360 time to move from the you know, the nice, flowery 0:09:37.400 --> 0:09:39.800 rhetoric that you always hear at the U N tow 0:09:40.000 --> 0:09:43.600 very concrete actions. We as Greece, where medium sized country, 0:09:43.600 --> 0:09:46.000 we're trying um to do our part, and of course 0:09:46.040 --> 0:09:48.720 we will also be looking to engage with the US 0:09:48.800 --> 0:09:52.400 to strengthen the Transatlantic alliance. At the same time, I've 0:09:52.440 --> 0:09:55.080 always been a very proponent of strong proponent of the 0:09:55.120 --> 0:09:59.319 idea of europe strategic autonomy, because there are issues, especially 0:09:59.360 --> 0:10:03.080 in our region, in the Eastern Mediterranean, in the Middle East, 0:10:03.080 --> 0:10:06.120 in the in the Hell where Europe needs a presence, 0:10:06.160 --> 0:10:09.640 and if Europe gets stronger militarily, if we cooperate more, 0:10:10.240 --> 0:10:12.480 I think this is to the benefit of the alliance 0:10:12.520 --> 0:10:14.560 and to the benefit of NATO. I say this with 0:10:14.640 --> 0:10:17.560 immense respect for your father in all of Greece, of 0:10:17.640 --> 0:10:19.880 another time and place. You're the only one I can 0:10:19.920 --> 0:10:24.840 say this too. What's it like to be a refugee? 0:10:26.000 --> 0:10:29.400 It's uh, you know, it is very difficult. And when 0:10:29.440 --> 0:10:34.679 we when we meet you know, the people um, especially children, 0:10:34.760 --> 0:10:38.240 unaccompanied miners, it's shocking when you hear those stories, and 0:10:38.280 --> 0:10:40.600 I can tell you you are one of those kids. Well, 0:10:40.640 --> 0:10:43.520 we left, but not in the same situation. Um. You know. 0:10:43.559 --> 0:10:45.800 We we we had to flee the junta uh in 0:10:47.280 --> 0:10:50.800 uh and we we lived in Paris fall. But there's 0:10:50.800 --> 0:10:54.040 no comparison between the stories that we that we hear 0:10:54.320 --> 0:10:58.640 and what we really did very successfully, Tom was to 0:10:58.679 --> 0:11:01.560 address the issue of the unaccompany minors. When we came 0:11:01.559 --> 0:11:04.439 into power. It was a shocking reality. You had these 0:11:04.559 --> 0:11:10.120 these kids as teenagers in these camps um completely completely vulnerable. 0:11:10.200 --> 0:11:12.960 We've addressed this issue. There's not a single person in 0:11:13.000 --> 0:11:17.240 a camp. They're all um uh in uh in places 0:11:17.240 --> 0:11:20.200 where they can feel safe and where they can thrive. 0:11:20.240 --> 0:11:21.600 And I can tell you, you know, there are times 0:11:21.600 --> 0:11:23.920 when I see and this is a country that has 0:11:23.960 --> 0:11:28.880 traditionally been open um to two refugees. Uh. And you 0:11:28.920 --> 0:11:31.560 know something, there is a great success story just took 0:11:31.559 --> 0:11:36.720 at the NBA. Um he's Greek from Nigeria. It's true, 0:11:36.840 --> 0:11:41.760 it's true. He's he's he's totally, he's totally, he's totally Greek. Um, 0:11:41.920 --> 0:11:43.880 he's you know, he used to sell he's on the 0:11:43.880 --> 0:11:49.079 streets and he's a great example of he's he's vamptire. 0:11:50.040 --> 0:11:51.640 He just wanted to fit in some that the best 0:11:51.640 --> 0:12:01.600 basketball in the world right now is great now joining us. 0:12:01.640 --> 0:12:03.080 We are thrilled to bring you this week of the 0:12:03.120 --> 0:12:06.640 United Nations Ian Bremer of Eurasia Group. It's the United 0:12:06.720 --> 0:12:10.120 Nations World. It's also a j zero world. Thrilled Dr 0:12:10.160 --> 0:12:14.480 Bremer could join us. Dr Bremer. The Greece Modern experiment 0:12:14.920 --> 0:12:19.319 is a success. What does Greece do when there's another 0:12:19.440 --> 0:12:24.320 European crisis? How coalesced? Is Greece right as Europe rather? 0:12:24.559 --> 0:12:29.680 Right now? Well much more so, you know, Tom. In 0:12:29.720 --> 0:12:34.319 an environment where the Americans and Chinese aren't really talking 0:12:34.360 --> 0:12:39.160 to each other, the Europeans are taking the lead on 0:12:39.360 --> 0:12:45.280 on climate regulations. Um their rules and rags on privacy 0:12:45.320 --> 0:12:48.000 on data are the most advanced in the world and 0:12:48.000 --> 0:12:50.840 increasingly being taken up by other countries because they're out 0:12:50.840 --> 0:12:53.360 in front. That's not to say that their economies are 0:12:53.360 --> 0:12:57.320 all performing incredibly well. But you know, the lessons taken 0:12:57.760 --> 0:13:02.240 from the near death experience of Brexit and from the 0:13:02.400 --> 0:13:07.000 disaster that was the Brexit negotiations and has had a 0:13:07.080 --> 0:13:10.000 much bigger impact on the UK than the EU. I 0:13:10.040 --> 0:13:13.080 think has helped to bring the EU together, and the 0:13:13.120 --> 0:13:17.640 Europeans ended up responding to COVID in a much more 0:13:18.120 --> 0:13:21.599 coherent and cohesive way, both in terms of the vaccines 0:13:21.640 --> 0:13:25.960 as well as economic restructuring and rebuilding. All of that 0:13:26.000 --> 0:13:28.440 means they're in better position these days. You speak of 0:13:28.480 --> 0:13:33.360 a misjudgment of President Biden in America, whether it's China 0:13:33.520 --> 0:13:36.560 or Europe. What is the prison that they look through 0:13:36.600 --> 0:13:42.679 now when they observe this president. Um. I think they 0:13:42.720 --> 0:13:48.280 recognize that even though they like Biden much more. Certainly 0:13:48.320 --> 0:13:50.680 the Europeans, with the exception of Victor orbon and he 0:13:50.760 --> 0:13:53.679 is the exception that proves the rule from Hungary, they 0:13:53.720 --> 0:13:57.839 all prefer Biden by a long mile. Um. And and 0:13:57.920 --> 0:14:01.520 yet um, they see that the United States now has 0:14:01.559 --> 0:14:05.400 two presidents in a row who are much more taken 0:14:05.440 --> 0:14:10.400 with domestic affairs than their interest in the continued strength 0:14:11.040 --> 0:14:15.400 of the Transatlantic Alliance. On top of that, there is 0:14:15.600 --> 0:14:20.120 an ongoing pivot towards Asia that the Europeans are generally 0:14:20.200 --> 0:14:23.360 not considered either very aligned for or much of a 0:14:23.440 --> 0:14:27.520 priority for. And so I mean, frankly, even though Trump 0:14:27.600 --> 0:14:32.120 and Biden could not be more different as leaders, as individuals, 0:14:32.400 --> 0:14:36.120 the Europeans seemore continuity and and they don't like it. 0:14:36.600 --> 0:14:39.600 Um doesn't mean that they have good alternatives at this 0:14:39.640 --> 0:14:44.680 point because absent the UK, absent Angela Merkel in short order, 0:14:45.200 --> 0:14:47.840 and you know, with the French president facing his own 0:14:47.880 --> 0:14:50.920 difficult elections in the next six months, it's not like 0:14:50.960 --> 0:14:55.640 the Europeans are replete with individual strong national leaders. Kiriakos 0:14:56.040 --> 0:14:58.840 Um and Draggy are probably two of the few you'd 0:14:58.880 --> 0:15:01.640 point to right now. And and when we look forward, 0:15:01.720 --> 0:15:04.640 particularly with respect this alliance to deal with China, how 0:15:04.720 --> 0:15:07.360 much is the European Union getting left out of an 0:15:07.360 --> 0:15:10.280 alliance that increasingly looks like the United States, Australia, the 0:15:10.360 --> 0:15:14.720 United Kingdom. Well, you know, the United States has the 0:15:14.840 --> 0:15:20.000 quad UH, the United States has this new Aucus agreement 0:15:20.040 --> 0:15:22.800 which has been described to me privately as five eyes 0:15:23.360 --> 0:15:28.200 plus so intelligence sharing technology and some national security. Well, 0:15:28.240 --> 0:15:30.920 the fact is that when the United States looks at China, 0:15:31.280 --> 0:15:35.600 we see China principally as a government through a national 0:15:35.680 --> 0:15:40.720 security lens. With the sole exception of France, none of 0:15:40.760 --> 0:15:44.360 the Europeans do. They are much more transactional. And part 0:15:44.400 --> 0:15:47.200 of the dust up between the United States and France 0:15:47.320 --> 0:15:50.320 around all of this is that on the one hand, 0:15:50.680 --> 0:15:53.600 the French of the third largest military exporters in the 0:15:53.640 --> 0:15:56.400 world after the US and Russia, so they're competing with 0:15:56.440 --> 0:15:59.560 the US and they lost out on the Australians ripping 0:15:59.640 --> 0:16:02.800 up their contract. On the other the French have been 0:16:02.840 --> 0:16:08.680 trying to convince the Europeans to have more focus on security, 0:16:09.000 --> 0:16:13.280 more focused on building up European defense capacity, and more 0:16:13.320 --> 0:16:18.400 of a pro active indo pack strategy. Very few countries 0:16:18.480 --> 0:16:21.840 in Europe are interested in supporting that. So Macron is 0:16:22.160 --> 0:16:25.640 kind of neither fish nor foul at this point. The 0:16:25.720 --> 0:16:29.360 law just to finish up here, if you're talking about 0:16:29.360 --> 0:16:32.760 evergrand all morning and the systemic risk, not necessarily financially, 0:16:32.800 --> 0:16:35.920 but with respect to a housing market in China that 0:16:36.040 --> 0:16:39.320 is cooling dramatically and and frankly, the fact the policymakers 0:16:39.360 --> 0:16:42.560 are going to allow this, how does that dovetail into 0:16:42.560 --> 0:16:45.400 the rising tensions between the China and the Western world 0:16:45.480 --> 0:16:49.320 if at all? Um Well, as I said, the United 0:16:49.400 --> 0:16:52.240 States as the president to presidents now that have been 0:16:52.320 --> 0:16:55.240 much more focused on domestic policy America first and a 0:16:55.360 --> 0:16:58.960 u S foreign policy for the American middle class, Chinese 0:16:58.960 --> 0:17:02.080 are focused much more inward as well. Let's remember that, 0:17:02.160 --> 0:17:04.720 you know, belt and road investments have fallen off a 0:17:04.760 --> 0:17:07.240 cliff over the last five years. China is much more 0:17:07.280 --> 0:17:11.600 focused on their own dual circulation policy, commit to the 0:17:11.800 --> 0:17:17.240 domestic economic, consumer and supply chain with ever grand I mean, 0:17:17.320 --> 0:17:20.879 of course, this is a really big financial crisis for 0:17:21.040 --> 0:17:23.080 the Chinese. And what was their announcement at the u 0:17:23.160 --> 0:17:25.760 N this week, We're not going to be building any 0:17:25.800 --> 0:17:28.880 more coal fired plants outside of China. Yeah, because they're 0:17:28.880 --> 0:17:31.800 not going to be building much more anything outside of 0:17:31.880 --> 0:17:34.560 China going forward. That's the real shift. And when I 0:17:34.600 --> 0:17:38.920 talk to policymakers in Washington, they're still thinking about aggressive 0:17:39.000 --> 0:17:42.399 Cold war mentality with the China that is trying to 0:17:42.440 --> 0:17:45.560 take over the world. Increasingly, China's problems and domestic two. 0:17:45.600 --> 0:17:47.280 I'm not gonna mince wordsy and I'd love to get 0:17:47.280 --> 0:17:49.440 you and Robert D. Kappan on on the South China 0:17:49.520 --> 0:17:51.879 see here as we can in the coming months. As 0:17:52.600 --> 0:18:01.720 Dr Bremer, would you raise your group. This is a 0:18:01.800 --> 0:18:04.959 treat after what we observed yesterday in the most different 0:18:05.000 --> 0:18:08.680 press conference. David blanche Flower joins at Dartboth College, a 0:18:08.720 --> 0:18:12.480 former Bank of England Monety Policy Committee member and of 0:18:12.520 --> 0:18:17.280 course definitive on America's past present in future wage curb. 0:18:17.520 --> 0:18:19.480 Danny blackch try, I want to talk to you about 0:18:19.480 --> 0:18:23.800 the new social FED. They are also sensitive about labor. 0:18:24.320 --> 0:18:27.160 Can that be codified or is that a one off 0:18:27.200 --> 0:18:30.040 for the moment. The idea that Powell and the Fed 0:18:30.440 --> 0:18:36.439 can manage a new wage curve to better equality, we 0:18:36.440 --> 0:18:38.880 we will see. I mean, it's I'm thankful that they're 0:18:38.880 --> 0:18:42.560 actually really starting to try and understand the labor market. Um, 0:18:42.600 --> 0:18:45.640 not least because between two thousand and fifteen and two 0:18:45.720 --> 0:18:48.680 thousand and eighteen they clearly didn't and Kaw had to 0:18:48.720 --> 0:18:52.120 do a mere culpa. It's pretty hard to understand exactly 0:18:52.160 --> 0:18:54.680 what's going on in the labor market now, not least 0:18:54.720 --> 0:18:57.800 because wage wage growth just does not give you a 0:18:57.840 --> 0:19:01.560 good steer. So we're in and a adjustment mode. I mean, 0:19:01.600 --> 0:19:04.200 I like to think of this, Thomas. You know, a 0:19:04.280 --> 0:19:08.120 hurricane hits an island and the price of plumbers rises 0:19:08.160 --> 0:19:11.560 for a while, and roofers and carpenters, then there will 0:19:11.640 --> 0:19:15.680 be an adjustment. So these economies are adjusting. I think 0:19:15.720 --> 0:19:18.720 the sense that I got out yesterday was that looking 0:19:18.760 --> 0:19:21.159 at the dot plots, it was as if the it 0:19:21.240 --> 0:19:24.680 was as if the members of the Fed and really 0:19:24.680 --> 0:19:27.560 felt they knew what was coming. They have no history, 0:19:27.920 --> 0:19:30.520 We have no clue about how the virus and the 0:19:30.840 --> 0:19:34.440 and the vaccine will go, and especially long run changes 0:19:34.480 --> 0:19:36.800 in behavior, and these are all going to have very 0:19:36.840 --> 0:19:39.959 big impacts on living standards and on the labor market. 0:19:40.160 --> 0:19:42.800 We don't know what proportion of people have retired. We 0:19:42.880 --> 0:19:45.119 don't know how people are there new in terms of 0:19:45.160 --> 0:19:47.160 their remode working. So I think it was a lot 0:19:47.160 --> 0:19:49.800 of wishful thinking that I thought that you just said 0:19:49.800 --> 0:19:52.160 it pretty well. I thought the slight move to being 0:19:52.520 --> 0:19:56.160 rather more hawkish was not really based on really evident 0:19:56.280 --> 0:19:59.000 Especially we're talking about about China today. We don't know 0:19:59.000 --> 0:20:01.520 how the that's spread, So I think this is a 0:20:01.960 --> 0:20:03.919 little bit of a world of you know, we know 0:20:04.040 --> 0:20:06.280 more than we really do. I mean, let's talk Ellen 0:20:06.320 --> 0:20:08.679 Blinder David blanche Flower here, and I'm going to suggest 0:20:08.760 --> 0:20:12.480 both of you are less Harkish than many. What textbook, 0:20:12.960 --> 0:20:18.240 what Bible are the Harkish crew preaching from? Well, they 0:20:18.240 --> 0:20:22.159 are preaching from nine. I mean, remember, I guess with 0:20:22.280 --> 0:20:25.400 you guys, I've probably over the last ten years spent 0:20:25.480 --> 0:20:27.960 an awful long time trying to talk to people about 0:20:28.280 --> 0:20:32.440 whether inflation was coming. Um, I don't really know what 0:20:32.440 --> 0:20:36.560 what book they're reading from. This looks awfully temporary to me. 0:20:37.000 --> 0:20:39.000 It looks that I mean, in the UK we've in 0:20:39.119 --> 0:20:43.240 two successive months we saw last month UM inflation fell 0:20:43.359 --> 0:20:46.160 from two point five to two, and then this month 0:20:46.280 --> 0:20:49.760 it rose to three point two, driven by all these 0:20:49.800 --> 0:20:52.080 base effects, and it looks awful like when you look 0:20:52.119 --> 0:20:54.439 at the data that in it, As far as I 0:20:54.480 --> 0:20:57.879 can see, within eighteen months or so, the evidence is 0:20:57.920 --> 0:21:00.160 that inflation is going to be below the target as 0:21:00.160 --> 0:21:02.640 this stuff drops out. So I don't really know where 0:21:02.680 --> 0:21:05.480 they're really I'm back to your original question. The assumption 0:21:05.560 --> 0:21:07.760 is suddenly that workers are going to be able to 0:21:07.800 --> 0:21:10.439 push for huge wage increases but go back to my 0:21:10.560 --> 0:21:13.520 island analogy. You know, when the roots come off, the 0:21:13.840 --> 0:21:16.840 people who repair routs, their wages rise. But once the 0:21:16.920 --> 0:21:19.000 roots that have been repaired, their wages go back to 0:21:19.080 --> 0:21:21.119 what they were normally. So this is a this is 0:21:21.160 --> 0:21:23.520 a sort of disequilibrium shot. So I have no idea 0:21:23.560 --> 0:21:26.240 where they're reading from. It makes no sense to me 0:21:26.320 --> 0:21:28.080 that he said it for a whole ten year period 0:21:28.160 --> 0:21:30.760 and none of that ever happened, So I think they're 0:21:30.800 --> 0:21:33.119 just in a in a dream world, Danny. I'm just 0:21:33.119 --> 0:21:36.439 looking at their inflation projections from the December twenty meeting. 0:21:37.000 --> 0:21:39.840 They were looking at twenty two at two percent, basically 0:21:40.480 --> 0:21:44.440 twenty three two percent basically likewise for twenty one, they 0:21:44.480 --> 0:21:46.520 missed this in a big way, Danny. And I'm looking 0:21:46.560 --> 0:21:49.600 at their projections for next year, but two point three 0:21:49.680 --> 0:21:53.080 next year, two point two in twenty three. Go back 0:21:53.119 --> 0:21:56.200 to two thousand and eight. Back think about in July, 0:21:56.480 --> 0:21:59.159 wads markets were thinking of interest rates are going to 0:21:59.240 --> 0:22:02.679 be five percent the next three years. The expectation was, 0:22:02.800 --> 0:22:05.639 you know, interest rates we're going to remain where they 0:22:05.680 --> 0:22:07.719 were there and an inflation was going to remain at 0:22:07.720 --> 0:22:10.359 five and a half percent. So when you have a shock, 0:22:10.560 --> 0:22:13.080 a shock comes. The other's are temporary rising things, But 0:22:13.440 --> 0:22:17.280 inflation is does it nothing more than twelve monthly changes? 0:22:17.640 --> 0:22:20.000 You drop one, you add one, and then as time 0:22:20.040 --> 0:22:21.720 goes on, if you have a big shock, that thing 0:22:21.800 --> 0:22:25.560 drops out. So the crucial question is are these temporary 0:22:25.600 --> 0:22:28.520 things and order the end? Do they? Secondly, do they 0:22:28.600 --> 0:22:32.119 permanently change your view about what's coming in eighteen months? 0:22:32.119 --> 0:22:34.639 Policymakers like me, I always just think, what's going to 0:22:34.680 --> 0:22:37.280 happen to inflation in eighteen months? Is there anything here 0:22:37.560 --> 0:22:40.280 to tell me that inflation in eighteen months is going 0:22:40.320 --> 0:22:42.440 to be higher than two? And the answer is zero? 0:22:42.640 --> 0:22:44.280 So Danny, you and I can argue about whether the 0:22:44.280 --> 0:22:46.040 forecasts are right or not. I'm not sure how much 0:22:46.119 --> 0:22:48.440 value there is in that. Ultimately, I think it comes 0:22:48.440 --> 0:22:51.320 down to reaction function. They told us there an outcome 0:22:51.359 --> 0:22:54.439 base FED. Is there anything in the reaction function that 0:22:54.520 --> 0:22:59.399 you disagree with? Well, I mean these are not normal times, John, 0:22:59.680 --> 0:23:02.760 So if if you're seeing a steady and regular rise 0:23:02.800 --> 0:23:05.440 in inflation and you respond to that, I think that 0:23:05.480 --> 0:23:08.359 would be one thing. I think we have such such 0:23:08.840 --> 0:23:13.399