Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferroll and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. Karakus Mistakas he
Speaker 1: is Greek Prime Minister and far more importantly has the
Speaker 1: most original path through childhood to the height of politics
Speaker 1: of anyone I know. My life was transformed in nine
Speaker 1: by the movie Z except I watched the movie The
Speaker 1: Prime Minister lived at It was a tumutuous time for
Speaker 1: his Greece and he and others of the modern age
Speaker 1: of great prosperity. Congratulations first to you and all within
Speaker 1: your politics and even the opposition in Greece to this
Speaker 1: most stunning recovery of Greece. What did you think at
Speaker 1: the low point of the Greek economic tobacco? What were
Speaker 1: you thinking about to make grease recover as it has alltime.
Speaker 1: We took over in July two thousand nineteen with a
Speaker 1: very clear mandate to make the economy grow again. We
Speaker 1: were hit by the pandemic, but we still managed to
Speaker 1: implement very significant reforms, and I think we used the
Speaker 1: fiscal room that was available to us to support the
Speaker 1: real economy. We're very encouraged by the recent data. The
Speaker 1: economy grew sixteen point two percent in the second quarter
Speaker 1: of this year. We revised our forecast upwoard to five
Speaker 1: point nine percent, and this may be a pessimistic um
Speaker 1: forecast for two thousand one. We see lots of interests
Speaker 1: for foreign direct investment by American companies European companies. We're
Speaker 1: making big progress in digitizing the state. We have a
Speaker 1: very ambitious green Transition plan, and overall, I think the
Speaker 1: mood in the country, in the country after ten years
Speaker 1: of crisis has a signal efficantly changed. I just want
Speaker 1: to point out to you the needle moved on a
Speaker 1: Greek g d P is everyone but John Faroe and
Speaker 1: I have the surveillance team have visited Greece in the
Speaker 1: last six months. I just want to make there's an
Speaker 1: additional reason for you to come and see what's really happening.
Speaker 1: People talk climate change. The American forest fires are time
Speaker 1: zones away. You have a fire recently thirteen miles eighteen
Speaker 1: miles from Athens. You are living fires, you are living
Speaker 1: record of heat. What do you need from Europe? What
Speaker 1: do you need from world leaders to jump start the
Speaker 1: climate change debate? First of all, this is really happening
Speaker 1: climate I'm not talking about climate change. I'm not talking
Speaker 1: about the real climate crisis and the energy that is
Speaker 1: that is hitting especially the Mediterranean, very very hard. Now,
Speaker 1: we've put in place a very ambitious plan to decompronize
Speaker 1: very quickly, and Europe is at the forefront of this effort.
Speaker 1: As you know, we have a commitment to be climate
Speaker 1: neutral as a continent by and to reduce our greenhouse
Speaker 1: gases by by thirty What are we doing in Greece.
Speaker 1: First of all, we're shutting down all our coal fired
Speaker 1: electricity plants. We said we would do it by I
Speaker 1: think it will be possible to do it by So
Speaker 1: we are significantly contributing towards decarbonizing by changing our energy mix.
Speaker 1: Obviously we're adding renewables and in the interim we are
Speaker 1: going to be dependent on natural gas. We're retrofitting our
Speaker 1: our buildings at are very rapid pace. We are putting
Speaker 1: in place a very ambitious plan to encourage people to
Speaker 1: purchase electric vehicles and all that is supported by European funds.
Speaker 1: As you know, we agreed last July UM to what
Speaker 1: we call the Next Generation EU Package. We're talking about
Speaker 1: thirty two billion euros of grants and loans available to
Speaker 1: Greece for the next UM six years. A significant amount
Speaker 1: of those will be directed towards green invests. A lot
Speaker 1: of this is incredibly important, Prime Minister. However, there's also
Speaker 1: this very pressing and imminent conser learned about rising gas
Speaker 1: prices throughout the European region. What would you like to
Speaker 1: see some of your peers, some of your member states
Speaker 1: do with respect to countering some of the price pressures
Speaker 1: It seemed to only be growing well. First of all,
Speaker 1: at LISTA, we have made a commitment to support um
Speaker 1: electricity users in Greece, and we're doing it by providing
Speaker 1: state funding but also encouraging our electricity producers to absorb
Speaker 1: a part of the cost increase, so we expect that
Speaker 1: we will see no significant increase in electricity bills for
Speaker 1: the next three to six months. We have also tabled
Speaker 1: a proposal at the European level to find a European
Speaker 1: solution to what we considered is a short term phenomenon,
Speaker 1: but this is a real problem for for Europe and
Speaker 1: I think it needs a European response that will go
Speaker 1: beyond what member states are doing at their level. Prime
Speaker 1: Minister as Thomas Mentioning, I was one of the members
Speaker 1: supporting the read economy by going UH and visit over
Speaker 1: the summer. It was fantastic. I also noticed that it
Speaker 1: closed down in terms of tourism in the open borders
Speaker 1: shortly thereafter as the number of cases increased. How much
Speaker 1: are you concerned about reviving a tourist industry where stores
Speaker 1: were closed down, A lot of the infrastructure was seriously
Speaker 1: hampered by this prolonged period without tourists. Well, first of all, Lisa,
Speaker 1: let me point out that we did support our tourism
Speaker 1: sector UH and we managed to protect jobs. Not only that,
Speaker 1: if you look at unemployment numbers, we're doing better this
Speaker 1: year than we did last year. We had a very
Speaker 1: good tourism season, much better than we had anticipated. As
Speaker 1: you probably know, Greece was at the forefront this January
Speaker 1: January of this year in terms of introducing the Digital
Speaker 1: EU Certificate, which made travel much easier in Europe during
Speaker 1: the summer. UH and We're quite encouraged by the performance
Speaker 1: of our tourism industry. I think we've managed, we're managing
Speaker 1: to move our product up market. So we had a
Speaker 1: higher spending per capita this year than we had last year,
Speaker 1: which is our intention. And of course we have a
Speaker 1: long term plan to make sure that we grow our
Speaker 1: tourist industry in a sustainable manner. We have particularly sensitive ecosystems,
Speaker 1: as you know in Greece, especially our islands. We need
Speaker 1: to protect them, we need to make them green um
Speaker 1: at a very very fast pace. And at the end
Speaker 1: of the day, people who come to Greece want a
Speaker 1: unique experience and they do care about sustainable tourism. So
Speaker 1: I'm very encouraged by what we managed to achieve this summer,
Speaker 1: and I expect hopefully next year there won't be any
Speaker 1: any real COVID concerns. I expect to really be a
Speaker 1: bumper year for Greek tourism. We welcome all of you
Speaker 1: on Bloomberg Radio and Bloomberg Television. The Prime Minister of Greece,
Speaker 1: curiacosmis Attackers is with us right now. I am the
Speaker 1: ugly American. I'm sorry to tell you this. My complete
Speaker 1: Greek knowledge comes from Marial Loyd in our acclaimed restaurant
Speaker 1: at fifty eight straight. And Maria always circles back to
Speaker 1: the need to go live a go be at, but
Speaker 1: also to the ancient tension with Turkey. Give us update,
Speaker 1: and now you and your government are dealing with the
Speaker 1: unique Turkish experiment of developed not a devaluation, but nevertheless
Speaker 1: a much weaker Turkish learra today and interest rate policy.
Speaker 1: Give us an update and your relationship with Mr Arijuan, Well,
Speaker 1: it hasn't always been easy, as you can imagine. We
Speaker 1: had a lot of tension last year. Things are better
Speaker 1: this year. I've always um been very open and frank
Speaker 1: in terms of my relationship with Turkey. We have complicated issues,
Speaker 1: very difficult legal issues regarding the delimitation of our maritime zones.
Speaker 1: There is only one rule book, and that is adherence
Speaker 1: to international law. We had similar problems with Italy. We
Speaker 1: had similar problems with Egypt. We signed the limitation agreements
Speaker 1: with both. I think we all made the necessary compromises.
Speaker 1: So we are indicating to Turkey that there is a
Speaker 1: way to resolve this without having to um use very
Speaker 1: bellicose rhetoric or unnecessary tension in the Gene and the
Speaker 1: Eastern Mediterranean UH, and of course we can also and
Speaker 1: we need to work with Turkey when it comes to migration.
Speaker 1: I think what Europe will not tolerate is a repeat
Speaker 1: of what we saw in two thousand fifteen, uncontrolled migratory
Speaker 1: pressure that a risk from Afghanistan. I think it's less
Speaker 1: of a risk UH this UH this year than it
Speaker 1: was in two thousand fifteen. I have committed, and I've
Speaker 1: been very unapologetic that we will protect our borders. We're
Speaker 1: doing it in a very humane manner. We're saving people
Speaker 1: at see every day we're granting refugee um status to
Speaker 1: tens of thousands of people who make Greece the permanent home.
Speaker 1: At the same time, we send a very clear signal
Speaker 1: to everyone we want to break down the smugglers networks
Speaker 1: in the Aegean. We have successfully done so if you
Speaker 1: look at the flows they are done by compared to
Speaker 1: thousands and and nineteen. And we do want to work
Speaker 1: with Turkey in addressing the migration issue and make sure
Speaker 1: that these people are kept closer to Afghanistan and don't
Speaker 1: move to Iran, to Turkey too and then to Europe.
Speaker 1: Minister from your vantage point, do you think that President
Speaker 1: Biden is significantly different than President Trump when it comes
Speaker 1: to his actions with respect to the European Union, with
Speaker 1: respect to Afghanistan and Turkey, and how that all does
Speaker 1: trickle down to you well though, certain uh, you know,
Speaker 1: big policy issues where we're really looking to the US
Speaker 1: in terms of leadership, and of course climate change is
Speaker 1: one of them. We will be meeting in Glasgow in
Speaker 1: five weeks from now, and I think it's it's probably
Speaker 1: time to move from the you know, the nice, flowery
Speaker 1: rhetoric that you always hear at the U N tow
Speaker 1: very concrete actions. We as Greece, where medium sized country,
Speaker 1: we're trying um to do our part, and of course
Speaker 1: we will also be looking to engage with the US
Speaker 1: to strengthen the Transatlantic alliance. At the same time, I've
Speaker 1: always been a very proponent of strong proponent of the
Speaker 1: idea of europe strategic autonomy, because there are issues, especially
Speaker 1: in our region, in the Eastern Mediterranean, in the Middle East,
Speaker 1: in the in the Hell where Europe needs a presence,
Speaker 1: and if Europe gets stronger militarily, if we cooperate more,
Speaker 1: I think this is to the benefit of the alliance
Speaker 1: and to the benefit of NATO. I say this with
Speaker 1: immense respect for your father in all of Greece, of
Speaker 1: another time and place. You're the only one I can
Speaker 1: say this too. What's it like to be a refugee?
Speaker 1: It's uh, you know, it is very difficult. And when
Speaker 1: we when we meet you know, the people um, especially children,
Speaker 1: unaccompanied miners, it's shocking when you hear those stories, and
Speaker 1: I can tell you you are one of those kids. Well,
Speaker 1: we left, but not in the same situation. Um. You know.
Speaker 1: We we we had to flee the junta uh in
Speaker 1: uh and we we lived in Paris fall. But there's
Speaker 1: no comparison between the stories that we that we hear
Speaker 1: and what we really did very successfully, Tom was to
Speaker 1: address the issue of the unaccompany minors. When we came
Speaker 1: into power. It was a shocking reality. You had these
Speaker 1: these kids as teenagers in these camps um completely completely vulnerable.
Speaker 1: We've addressed this issue. There's not a single person in
Speaker 1: a camp. They're all um uh in uh in places
Speaker 1: where they can feel safe and where they can thrive.
Speaker 1: And I can tell you, you know, there are times
Speaker 1: when I see and this is a country that has
Speaker 1: traditionally been open um to two refugees. Uh. And you
Speaker 1: know something, there is a great success story just took
Speaker 1: at the NBA. Um he's Greek from Nigeria. It's true,
Speaker 1: it's true. He's he's he's totally, he's totally, he's totally Greek. Um,
Speaker 1: he's you know, he used to sell he's on the
Speaker 1: streets and he's a great example of he's he's vamptire.
Speaker 1: He just wanted to fit in some that the best
Speaker 1: basketball in the world right now is great now joining us.
Speaker 1: We are thrilled to bring you this week of the
Speaker 1: United Nations Ian Bremer of Eurasia Group. It's the United
Speaker 1: Nations World. It's also a j zero world. Thrilled Dr
Speaker 1: Bremer could join us. Dr Bremer. The Greece Modern experiment
Speaker 1: is a success. What does Greece do when there's another
Speaker 1: European crisis? How coalesced? Is Greece right as Europe rather?
Speaker 1: Right now? Well much more so, you know, Tom. In
Speaker 1: an environment where the Americans and Chinese aren't really talking
Speaker 1: to each other, the Europeans are taking the lead on
Speaker 1: on climate regulations. Um their rules and rags on privacy
Speaker 1: on data are the most advanced in the world and
Speaker 1: increasingly being taken up by other countries because they're out
Speaker 1: in front. That's not to say that their economies are
Speaker 1: all performing incredibly well. But you know, the lessons taken
Speaker 1: from the near death experience of Brexit and from the
Speaker 1: disaster that was the Brexit negotiations and has had a
Speaker 1: much bigger impact on the UK than the EU. I
Speaker 1: think has helped to bring the EU together, and the
Speaker 1: Europeans ended up responding to COVID in a much more
Speaker 1: coherent and cohesive way, both in terms of the vaccines
Speaker 1: as well as economic restructuring and rebuilding. All of that
Speaker 1: means they're in better position these days. You speak of
Speaker 1: a misjudgment of President Biden in America, whether it's China
Speaker 1: or Europe. What is the prison that they look through
Speaker 1: now when they observe this president. Um. I think they
Speaker 1: recognize that even though they like Biden much more. Certainly
Speaker 1: the Europeans, with the exception of Victor orbon and he
Speaker 1: is the exception that proves the rule from Hungary, they
Speaker 1: all prefer Biden by a long mile. Um. And and
Speaker 1: yet um, they see that the United States now has
Speaker 1: two presidents in a row who are much more taken
Speaker 1: with domestic affairs than their interest in the continued strength
Speaker 1: of the Transatlantic Alliance. On top of that, there is
Speaker 1: an ongoing pivot towards Asia that the Europeans are generally
Speaker 1: not considered either very aligned for or much of a
Speaker 1: priority for. And so I mean, frankly, even though Trump
Speaker 1: and Biden could not be more different as leaders, as individuals,
Speaker 1: the Europeans seemore continuity and and they don't like it.
Speaker 1: Um doesn't mean that they have good alternatives at this
Speaker 1: point because absent the UK, absent Angela Merkel in short order,
Speaker 1: and you know, with the French president facing his own
Speaker 1: difficult elections in the next six months, it's not like
Speaker 1: the Europeans are replete with individual strong national leaders. Kiriakos
Speaker 1: Um and Draggy are probably two of the few you'd
Speaker 1: point to right now. And and when we look forward,
Speaker 1: particularly with respect this alliance to deal with China, how
Speaker 1: much is the European Union getting left out of an
Speaker 1: alliance that increasingly looks like the United States, Australia, the
Speaker 1: United Kingdom. Well, you know, the United States has the
Speaker 1: quad UH, the United States has this new Aucus agreement
Speaker 1: which has been described to me privately as five eyes
Speaker 1: plus so intelligence sharing technology and some national security. Well,
Speaker 1: the fact is that when the United States looks at China,
Speaker 1: we see China principally as a government through a national
Speaker 1: security lens. With the sole exception of France, none of
Speaker 1: the Europeans do. They are much more transactional. And part
Speaker 1: of the dust up between the United States and France
Speaker 1: around all of this is that on the one hand,
Speaker 1: the French of the third largest military exporters in the
Speaker 1: world after the US and Russia, so they're competing with
Speaker 1: the US and they lost out on the Australians ripping
Speaker 1: up their contract. On the other the French have been
Speaker 1: trying to convince the Europeans to have more focus on security,
Speaker 1: more focused on building up European defense capacity, and more
Speaker 1: of a pro active indo pack strategy. Very few countries
Speaker 1: in Europe are interested in supporting that. So Macron is
Speaker 1: kind of neither fish nor foul at this point. The
Speaker 1: law just to finish up here, if you're talking about
Speaker 1: evergrand all morning and the systemic risk, not necessarily financially,
Speaker 1: but with respect to a housing market in China that
Speaker 1: is cooling dramatically and and frankly, the fact the policymakers
Speaker 1: are going to allow this, how does that dovetail into
Speaker 1: the rising tensions between the China and the Western world
Speaker 1: if at all? Um Well, as I said, the United
Speaker 1: States as the president to presidents now that have been
Speaker 1: much more focused on domestic policy America first and a
Speaker 1: u S foreign policy for the American middle class, Chinese
Speaker 1: are focused much more inward as well. Let's remember that,
Speaker 1: you know, belt and road investments have fallen off a
Speaker 1: cliff over the last five years. China is much more
Speaker 1: focused on their own dual circulation policy, commit to the
Speaker 1: domestic economic, consumer and supply chain with ever grand I mean,
Speaker 1: of course, this is a really big financial crisis for
Speaker 1: the Chinese. And what was their announcement at the u
Speaker 1: N this week, We're not going to be building any
Speaker 1: more coal fired plants outside of China. Yeah, because they're
Speaker 1: not going to be building much more anything outside of
Speaker 1: China going forward. That's the real shift. And when I
Speaker 1: talk to policymakers in Washington, they're still thinking about aggressive
Speaker 1: Cold war mentality with the China that is trying to
Speaker 1: take over the world. Increasingly, China's problems and domestic two.
Speaker 1: I'm not gonna mince wordsy and I'd love to get
Speaker 1: you and Robert D. Kappan on on the South China
Speaker 1: see here as we can in the coming months. As
Speaker 1: Dr Bremer, would you raise your group. This is a
Speaker 1: treat after what we observed yesterday in the most different
Speaker 1: press conference. David blanche Flower joins at Dartboth College, a
Speaker 1: former Bank of England Monety Policy Committee member and of
Speaker 1: course definitive on America's past present in future wage curb.
Speaker 1: Danny blackch try, I want to talk to you about
Speaker 1: the new social FED. They are also sensitive about labor.
Speaker 1: Can that be codified or is that a one off
Speaker 1: for the moment. The idea that Powell and the Fed
Speaker 1: can manage a new wage curve to better equality, we
Speaker 1: we will see. I mean, it's I'm thankful that they're
Speaker 1: actually really starting to try and understand the labor market. Um,
Speaker 1: not least because between two thousand and fifteen and two
Speaker 1: thousand and eighteen they clearly didn't and Kaw had to
Speaker 1: do a mere culpa. It's pretty hard to understand exactly
Speaker 1: what's going on in the labor market now, not least
Speaker 1: because wage wage growth just does not give you a
Speaker 1: good steer. So we're in and a adjustment mode. I mean,
Speaker 1: I like to think of this, Thomas. You know, a
Speaker 1: hurricane hits an island and the price of plumbers rises
Speaker 1: for a while, and roofers and carpenters, then there will
Speaker 1: be an adjustment. So these economies are adjusting. I think
Speaker 1: the sense that I got out yesterday was that looking
Speaker 1: at the dot plots, it was as if the it
Speaker 1: was as if the members of the Fed and really
Speaker 1: felt they knew what was coming. They have no history,
Speaker 1: We have no clue about how the virus and the
Speaker 1: and the vaccine will go, and especially long run changes
Speaker 1: in behavior, and these are all going to have very
Speaker 1: big impacts on living standards and on the labor market.
Speaker 1: We don't know what proportion of people have retired. We
Speaker 1: don't know how people are there new in terms of
Speaker 1: their remode working. So I think it was a lot
Speaker 1: of wishful thinking that I thought that you just said
Speaker 1: it pretty well. I thought the slight move to being
Speaker 1: rather more hawkish was not really based on really evident
Speaker 1: Especially we're talking about about China today. We don't know
Speaker 1: how the that's spread, So I think this is a
Speaker 1: little bit of a world of you know, we know
Speaker 1: more than we really do. I mean, let's talk Ellen
Speaker 1: Blinder David blanche Flower here, and I'm going to suggest
Speaker 1: both of you are less Harkish than many. What textbook,
Speaker 1: what Bible are the Harkish crew preaching from? Well, they
Speaker 1: are preaching from nine. I mean, remember, I guess with
Speaker 1: you guys, I've probably over the last ten years spent
Speaker 1: an awful long time trying to talk to people about
Speaker 1: whether inflation was coming. Um, I don't really know what
Speaker 1: what book they're reading from. This looks awfully temporary to me.
Speaker 1: It looks that I mean, in the UK we've in
Speaker 1: two successive months we saw last month UM inflation fell
Speaker 1: from two point five to two, and then this month
Speaker 1: it rose to three point two, driven by all these
Speaker 1: base effects, and it looks awful like when you look
Speaker 1: at the data that in it, As far as I
Speaker 1: can see, within eighteen months or so, the evidence is
Speaker 1: that inflation is going to be below the target as
Speaker 1: this stuff drops out. So I don't really know where
Speaker 1: they're really I'm back to your original question. The assumption
Speaker 1: is suddenly that workers are going to be able to
Speaker 1: push for huge wage increases but go back to my
Speaker 1: island analogy. You know, when the roots come off, the
Speaker 1: people who repair routs, their wages rise. But once the
Speaker 1: roots that have been repaired, their wages go back to
Speaker 1: what they were normally. So this is a this is
Speaker 1: a sort of disequilibrium shot. So I have no idea
Speaker 1: where they're reading from. It makes no sense to me
Speaker 1: that he said it for a whole ten year period
Speaker 1: and none of that ever happened, So I think they're
Speaker 1: just in a in a dream world, Danny. I'm just
Speaker 1: looking at their inflation projections from the December twenty meeting.
Speaker 1: They were looking at twenty two at two percent, basically
Speaker 1: twenty three two percent basically likewise for twenty one, they
Speaker 1: missed this in a big way, Danny. And I'm looking
Speaker 1: at their projections for next year, but two point three
Speaker 1: next year, two point two in twenty three. Go back
Speaker 1: to two thousand and eight. Back think about in July,
Speaker 1: wads markets were thinking of interest rates are going to
Speaker 1: be five percent the next three years. The expectation was,
Speaker 1: you know, interest rates we're going to remain where they
Speaker 1: were there and an inflation was going to remain at
Speaker 1: five and a half percent. So when you have a shock,
Speaker 1: a shock comes. The other's are temporary rising things, But
Speaker 1: inflation is does it nothing more than twelve monthly changes?
Speaker 1: You drop one, you add one, and then as time
Speaker 1: goes on, if you have a big shock, that thing
Speaker 1: drops out. So the crucial question is are these temporary
Speaker 1: things and order the end? Do they? Secondly, do they
Speaker 1: permanently change your view about what's coming in eighteen months?
Speaker 1: Policymakers like me, I always just think, what's going to
Speaker 1: happen to inflation in eighteen months? Is there anything here
Speaker 1: to tell me that inflation in eighteen months is going
Speaker 1: to be higher than two? And the answer is zero?
Speaker 1: So Danny, you and I can argue about whether the
Speaker 1: forecasts are right or not. I'm not sure how much
Speaker 1: value there is in that. Ultimately, I think it comes
Speaker 1: down to reaction function. They told us there an outcome
Speaker 1: base FED. Is there anything in the reaction function that
Speaker 1: you disagree with? Well, I mean these are not normal times, John,
Speaker 1: So if if you're seeing a steady and regular rise
Speaker 1: in inflation and you respond to that, I think that
Speaker 1: would be one thing. I think we have such such
Speaker 1: such a complicated adjustment path that the sensible thing for
Speaker 1: a for a FED and for the Bank of England
Speaker 1: to do is sit and wait and watch um and
Speaker 1: and you know, an act then. But it's I think
Speaker 1: the way you should do it is to say, under
Speaker 1: scenario one will do this and the scenario too will
Speaker 1: do this. How likely of each of the two scenarios,
Speaker 1: I don't really know, and I think that's really the
Speaker 1: way to go because we're not in normal times, Dannie,
Speaker 1: are we talking about rate hikes here? Are also with tapering?
Speaker 1: I mean, do you think that it's a mistake for
Speaker 1: the Federal Reserve to start tapering the billion dollars bond
Speaker 1: purchases in November? Well, based on the evidence, I think
Speaker 1: the answer is yes. I think they should be waiting
Speaker 1: and seeing. I mean, if they do it by a
Speaker 1: little bit, well, okay, the the signal is there. The
Speaker 1: likelihood is that, you know, in six months time they
Speaker 1: might have to go in the other direction. I mean,
Speaker 1: the question is are they prepared to reverse themselves? That's
Speaker 1: the question. What's the evidence to say that you should
Speaker 1: do that? You've got this risk from China. We're looking
Speaker 1: today and we're going to talk about the Bank of England.
Speaker 1: I mean, what we see saw today is growth slowing.
Speaker 1: We've seen the p m I is coming out this
Speaker 1: morning in England, in the UK and France, in Germany
Speaker 1: and the euro Area growth is not taken off. I
Speaker 1: mean in the UK, we we're seeing actions by fiscal authorities.
Speaker 1: They're cutting they're cutting benefits to people, they're taking off
Speaker 1: helped people have been furloughed, and they're and they're about
Speaker 1: to raise taxes. So remember that central banks have to
Speaker 1: compensate for what fiscal authorities are doing. So the Bank
Speaker 1: of England sitting in a situation where fiscal policy is
Speaker 1: now tightening, so that's nothing relevant to their decisions. So
Speaker 1: a lot of it depends on the fiscal authority. Danny
Speaker 1: this to me, though, there is not a lot of
Speaker 1: evidence that frankly, the hundred and twenty billion dollars in
Speaker 1: bond purchases is materially helping the labor market is actually
Speaker 1: getting people higher wages. Do you see a clearer connection
Speaker 1: than other economists who've come on the show. Well, the
Speaker 1: story is obviously, the question is what's the counter factual
Speaker 1: that you're comparing to. So people say, as you just said, oh,
Speaker 1: it's not clear that it's doing things well, it's pretty
Speaker 1: hard to measure that we're in an adjustment path, which
Speaker 1: is which is continuing from a virus that hit the economy.
Speaker 1: HiT's fast and it hit it deep. And so we're
Speaker 1: so we've we learned from two thousand and eight and
Speaker 1: if we look back, we did too little stimulus that
Speaker 1: forced things on the central bank. So I think the
Speaker 1: answer is you have to allow an economy to adjust.
Speaker 1: And so if you look at wages, wage growth, and
Speaker 1: good example again in the UK today the National Office
Speaker 1: of National Statistics says wage growth is seven percent. I
Speaker 1: don't believe that. They come out this morning and there's
Speaker 1: estimates on what a wage settlements look like and that's
Speaker 1: too So what we're seeing is there's this issue of
Speaker 1: base effects, composition effects and people coming out of furlough.
Speaker 1: We've never seen anything like this. The job of a
Speaker 1: central bank is to allow the economy to recover and
Speaker 1: try and get back to normal. All the errors are
Speaker 1: on the down side, and the errors that the FED
Speaker 1: made in two thousand and fifteen was to tighten too soon.
Speaker 1: The same error made by the ECB and the Bank
Speaker 1: of England tighten too soon and then had to reverse itself.
Speaker 1: So as long as they're prepared to reverse themselves, then fine.
Speaker 1: But it looks to me like you should sit and
Speaker 1: wait and watch and allow the economy over the next
Speaker 1: six months or so to adjust and then see what.
Speaker 1: Dony gonna have you back. I'm gonna have you back
Speaker 1: up a dumbouth teach in person as well. Does that
Speaker 1: feel good teaching in person? It's great. I just said
Speaker 1: to you one of my one of the stories. I
Speaker 1: always think it's great to see all these smiling eyebrows again.
Speaker 1: You know, everyone's masked, we all got vaccinations. But it's
Speaker 1: great to be back with the students, to see real
Speaker 1: life people, and it's great. Do you do you still
Speaker 1: throw a chalk at them when they're wrong? Like vaccinated shark?
Speaker 1: How's that work? We don't do chalk anymore. You know,
Speaker 1: we've got these We actually zoom the class as well
Speaker 1: in case people can't throw chalker. It's I'm too exhausted
Speaker 1: trying to speak for two hours of them on any
Speaker 1: remotely hawkish. Danny and I have the Danny blanch John
Speaker 1: class works Tom. They're educating the dups of the future.
Speaker 1: Essential bank dumps. I've had is that the educated people
Speaker 1: to be right. Is that right, Danny, John, I've had
Speaker 1: the honor of lecturing with Professor blanch Flower. They're sitting
Speaker 1: in the aisles for the words of Danny blanch Danny,
Speaker 1: thank you, Danny blanch Flaback. The drama will be this weekend.
Speaker 1: It will be when the Arkansas Razorbacks move eighty eight
Speaker 1: miles from their big victory over Texas the other day
Speaker 1: down to College Station, Texas. Texas A and M Razorbacks
Speaker 1: always a massive issue for seventy five thousand people assembled
Speaker 1: in Arkansas. John, you are up to speed on this
Speaker 1: watching Tots Arsenal. You're gonna be watching Art Razorbacks because
Speaker 1: you watched him with Texas the other day. I watched
Speaker 1: Loton Cohen's race and facts accoumpanaway Kensic out to Tom
Speaker 1: and it was phenomenal to see that path stadium. Phenomenal.
Speaker 1: And I'm happy to say the Republican Congressman French Hill
Speaker 1: of Arkansas joint US right now. Congressman, you were there.
Speaker 1: Did you run onto the field at the end. I
Speaker 1: saw that little pitch invasion. I did not all my
Speaker 1: congressional salary. I didn't have the extra hundred thousand dollars
Speaker 1: to play the fine but it was a raucous, amazing
Speaker 1: victory over the Longhorns. And this weekend they go to
Speaker 1: Dallas to Jerry World and Dallas Cowboys Stadium to play
Speaker 1: the Texas Sieties and sort will be a two top
Speaker 1: twenty team game. Important game for both teams. I'm looking
Speaker 1: forward to it, sir. That's the sport taken care of.
Speaker 1: Let's get to the sport. At this moment in this market,
Speaker 1: there's been a massive focus on a Chinese company called
Speaker 1: Evergrand this week's It's been building up over the last
Speaker 1: couple of months, and there isn't much transparency on what
Speaker 1: happens with these Chinese companies. A lot of them come
Speaker 1: over to the United States. They list here. What I
Speaker 1: found really interesting is it's the Chinese authorities pulling back
Speaker 1: on their ability to list do and it hasn't been
Speaker 1: the US authorities that have got enough done. Congress. Why
Speaker 1: is that? Well, I think the Chinese are concerned about
Speaker 1: national security. They say every public company and every private
Speaker 1: company has an obligation to them the c c P,
Speaker 1: the Chinese state for intelligence coverage and for national security.
Speaker 1: So it's very difficult for them to ever agree to
Speaker 1: comply with p C a o B accounting auditing standards.
Speaker 1: So that's problem. One problem too is China wants to
Speaker 1: create their own parallel capital market, and so I think
Speaker 1: they're becoming ambivalent about listing in London and New York
Speaker 1: for some reason. I find that concerning. Thirdly, transparency, They're
Speaker 1: not transparent as a creditor in the country, the world's
Speaker 1: largest creditor in the world. They're not transparent about that.
Speaker 1: And they're not transparent with their statistics in China, and
Speaker 1: that's why I'm concerned about the systemic risk of bad
Speaker 1: economic data and company data out of China. Curse Hill.
Speaker 1: You got a legit life experience in this with banking
Speaker 1: in Little Rock, and I want to translate this right
Speaker 1: over to New York City. The may your banks that
Speaker 1: we speak to every day on Bloomberg Surveillance, are they
Speaker 1: aware of this lack of transparency and are they hindering
Speaker 1: your demand for more openness or do they aggressively agree
Speaker 1: with you that we need to see more Chinese transparency.
Speaker 1: I think they agree for more Chinese transparency. On the
Speaker 1: debt side, global debt side, China needs to be a
Speaker 1: member of the Paris Club, China needs to come out
Speaker 1: and come out cleanly on the lending terms and conditions
Speaker 1: they're putting on. I don't mean to interrupt, but this
Speaker 1: is so important your thought here. Would you suggest we
Speaker 1: demand that they become part of a Paris Club structure.
Speaker 1: I have demanded that. I've urged Janet Yelling to demand it.
Speaker 1: I asked the G seven to do that before they
Speaker 1: agreed to do the six hundred and fifty billion dollar
Speaker 1: issuance of special drawing rights. They didn't. I think that
Speaker 1: was a mistake by the G seven finance ministers. Talking
Speaker 1: about Janet Yellen, you're gonna be speaking with her as
Speaker 1: well as FED Chared J. Powell next week and in
Speaker 1: a series of testimonies where they discuss their plans going forward.
Speaker 1: What do you think is going to be the hottest
Speaker 1: topic at a time when FED chair J. Powell may
Speaker 1: not be up for renomination according to some Well, I
Speaker 1: think their assessment of inflation, in the impact of that
Speaker 1: thief on working families and how they can justify saying
Speaker 1: that it's transitory, looking at the statistics that we're seeing,
Speaker 1: looking at the plans of corporate America for employment and
Speaker 1: wages looking out into the next year. That's a key
Speaker 1: point I think they'll talk about. And secondly, for Janet Yellen,
Speaker 1: while there's been a failure by the Biden administration to
Speaker 1: properly get this eviction rental assistance money out across the country,
Speaker 1: it's a crisis in many, many markets, particularly up in
Speaker 1: the northeast. Congressmen, were you satisfied with a Fed chair J.
Speaker 1: Powell whose tone actually indicated that he was concerned about
Speaker 1: some of the inflationary pressures that you mentioned. I'm glad.
Speaker 1: I think he's hearing from his regional bank presidence. I
Speaker 1: think he's looked at the data. I've been talking about
Speaker 1: this since last February, so I'm glad to see the
Speaker 1: chairman taking it seriously. The key has been for J.
Speaker 1: Pale is it transitory or not? Because he knows perniciously
Speaker 1: how bad it would be if it's not transitory. So
Speaker 1: I think that was a key part of their meeting yesterday.
Speaker 1: A congressman, that issue and final issue, if we can
Speaker 1: get that the debt seating debate, let me ask a
Speaker 1: Delica question, does they start to get a bit embarrassing
Speaker 1: for this country? Well, since nineteen seventeen, we've had this
Speaker 1: dead ceiling. We always turns into this political football. But
Speaker 1: here's the bottom line. Now Democrats control the Presidency, the House,
Speaker 1: and Senate. They've put forward these budget ideas, and so
Speaker 1: they ought to be able to put forward the plan
Speaker 1: for a continuing resolution and a debt ceiling proposal that
Speaker 1: can continue to allow bipartisan negotiations on spending. For Congressman
Speaker 1: and No, this is so important, Johnny when I need
Speaker 1: a quick answer. Congressman, you're a bank guy, are you
Speaker 1: trading bonds in your account? I mean, we've got this
Speaker 1: issue with the feed of two presidents trading in their account.
Speaker 1: Is French show on the phone moving E T F
Speaker 1: s around? Uh? No time, my my. Uh. I'd say
Speaker 1: my financial position has been pretty sound and the stame
Speaker 1: way it's been for about seven years, So no material
Speaker 1: differences there. It's really just the way it was when
Speaker 1: I came into Congress, and it's grown accordingly. But but
Speaker 1: I'm not active out there doing that. I think j
Speaker 1: Pal addressed that yesterday, and I think, look, people have
Speaker 1: to have a balance and a transparency. We have strict
Speaker 1: rules about that reporting in the US House of Representatives
Speaker 1: and John, what's great as French show walked into Congress
Speaker 1: with two hundred thousand shares of Apple, so he's feeling great.
Speaker 1: It wasn't trading them something. And the news conference yesterday
Speaker 1: it seems Congressman, thank you, thank you very much, said
Speaker 1: the Republican congressman that French Hill of on Konsil. This
Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us
Speaker 1: live weekdays from seven to ten AMI Eastern on Bloomberg
Speaker 1: Radio and on Bloomberg Television each day from six to
Speaker 1: nine a m. For insight from the best in economics, finance, investment,
Speaker 1: and international relations. And subscribe to the Surveillance podcast on
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on
Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg