WEBVTT - $11 Billion EM Investor Is Sticking With Brazil Despite Strike 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.560 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P and L 0:00:20.840 --> 0:00:33.520 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Gasoline 0:00:33.520 --> 0:00:37.160 stations in Brazil are out of gas. Fresh food supplies 0:00:37.200 --> 0:00:41.240 in Brazilian supermarkets have dwindle, flights have been canceled. Many 0:00:41.280 --> 0:00:46.360 schools and universities have suspended classes, all because of a 0:00:46.400 --> 0:00:50.639 truckers strike. Paul McNamara is Investment director for Emerging Markets 0:00:50.680 --> 0:00:54.240 for g A m UK Limited, helping to manage more 0:00:54.280 --> 0:00:57.560 than eleven billion dollars in developing world assets, and he 0:00:57.680 --> 0:01:02.440 joins us from London. Paul, explain what's going on in Brazil. Well, 0:01:02.480 --> 0:01:04.560 what we've seen is a combination of the high oil 0:01:04.600 --> 0:01:08.560 prices that we've seen everywhere UM, plus a weakening in 0:01:08.720 --> 0:01:11.759 the Brazilian rail um. You know, there's a bunch of 0:01:11.800 --> 0:01:14.840 things gone on lower. They've had big interest rate cuts there. 0:01:15.360 --> 0:01:18.560 It's one of the most popular emerging currencies, so there's 0:01:18.600 --> 0:01:21.720 emerging currencies have sold off, but that combination means that 0:01:21.760 --> 0:01:24.320 the price of oil in rail has really shot up. 0:01:24.880 --> 0:01:28.440 And um, and you know it's not just Brazil. About 0:01:28.480 --> 0:01:30.240 sort of four or five years ago. We actually a 0:01:30.240 --> 0:01:32.800 bit longer, we saw something similar in the UK when 0:01:32.840 --> 0:01:36.039 tax raises on fuel. Truckers are the people in the 0:01:36.040 --> 0:01:38.880 modern world with a lot of power, and the government 0:01:38.880 --> 0:01:41.760 has to respond to that. Okay, So, Paul, thank you 0:01:41.800 --> 0:01:44.040 so much for being with us. I'm struck by the 0:01:44.080 --> 0:01:48.240 idea that we've had so off in emerging markets. More broadly, 0:01:48.280 --> 0:01:52.320 people were talking about Turkey and Argentina's idiosyncratic issues. Brazil 0:01:52.360 --> 0:01:55.600 was supposed to be a recovery story after just emerging 0:01:55.640 --> 0:01:59.440 from the worst financial crisis on record. Uh and here 0:01:59.480 --> 0:02:04.440 we are seeing something that will crimp growth, potentially eliminating 0:02:04.440 --> 0:02:08.799 two point six billion dollars from their economy this year. 0:02:09.280 --> 0:02:12.920 So as an investor, how does this change your perspective 0:02:13.040 --> 0:02:16.960 on Brazil? I mean, I think it's a demonstration of 0:02:17.000 --> 0:02:19.560 something that we already knew that Brazil was vulnerable on 0:02:20.400 --> 0:02:23.600 because I mean, the government has has effectively surrendered to 0:02:23.919 --> 0:02:28.240 the to the truckers by agreeing to absorb any further 0:02:28.880 --> 0:02:31.840 rises in the price of oil, that they'll they'll create 0:02:31.919 --> 0:02:35.200 subsidies as the price of oil goes up. Now, of 0:02:35.240 --> 0:02:37.880 all the emerging markets, Brazil is in one of the 0:02:37.960 --> 0:02:41.960 weakest positions to do so, although they've had some success 0:02:41.960 --> 0:02:44.800 in tightening fiscal policy because they pay much higher interest 0:02:44.880 --> 0:02:47.840 rates than anyone else. It's the one country where where 0:02:47.840 --> 0:02:51.520 the fiscal rather than the private sector is a bit 0:02:51.520 --> 0:02:53.880 of a problem. And I think, you know, that's why 0:02:53.960 --> 0:02:57.560 Brazil has been particularly badly hit. And also I think 0:02:57.600 --> 0:03:00.120 if you if you look at Petrobras, which is the 0:03:00.600 --> 0:03:02.800 company which is going to be bearing the brunt of this. 0:03:03.280 --> 0:03:04.840 I mean, their their share I mean I'm not an 0:03:04.880 --> 0:03:08.320 equity investor, but their share are off about fifteen percent 0:03:08.440 --> 0:03:12.160 or so in a week now. Michelle Tamara the president 0:03:12.280 --> 0:03:15.600 of Brazil. He's got a lame duck government and there's 0:03:15.600 --> 0:03:19.800 a presidential election in October. Does this mean that you 0:03:19.919 --> 0:03:22.799 wait until the results of the election before making an 0:03:22.800 --> 0:03:27.920 investment decision. I think it's you know, it increases the risk. 0:03:28.000 --> 0:03:30.400 I mean, what's different about Brazil this time around is 0:03:30.440 --> 0:03:34.200 that historically it's been the highest yielding emerging market. If 0:03:34.240 --> 0:03:36.680 you kind of go back to two thousand and thirteen, 0:03:36.720 --> 0:03:39.360 they were in the middle of a hiking cycle kind 0:03:39.360 --> 0:03:42.800 of rates peaked in low double digits. Now we've got 0:03:42.960 --> 0:03:47.320 a headline celebrate around below seven percent, which is, you know, 0:03:47.320 --> 0:03:50.520 which is historically very low by Brazilian standards, and it 0:03:50.560 --> 0:03:53.240 does mean that the price of waiting has never been lower. 0:03:53.640 --> 0:03:55.520 So I think you know that the you know that, 0:03:55.560 --> 0:03:57.400 whereas historically, you know, if you do, if you just 0:03:57.440 --> 0:04:00.440 sat still in Brazil marked time, you made a decent profits. 0:04:00.720 --> 0:04:03.040 I think the calculus is against Brazil and people are 0:04:03.080 --> 0:04:05.880 going to be less willing to hold low yielding Brazilian 0:04:05.880 --> 0:04:08.680 assets than they were high yielding assets in the past. So, Paul, 0:04:08.680 --> 0:04:11.080 how are you currently thinking about Brazil? Are you buying more? 0:04:13.120 --> 0:04:16.040 We're holding onto what's a what's a pretty substantial and 0:04:16.120 --> 0:04:19.640 to be honest, slightly expensive overweight we've held for some time. 0:04:20.360 --> 0:04:22.200 I mean, two things stand out for us in Brazil 0:04:22.240 --> 0:04:24.839 at the moment. One is that this government has actually 0:04:24.920 --> 0:04:27.880 may you know, combined with an economic recovery, has made 0:04:27.880 --> 0:04:30.080 a dent in their fiscal problems. They have about half 0:04:30.160 --> 0:04:33.279 the primary deficit from three percent of GDP to just 0:04:33.400 --> 0:04:35.719 over one and a half percent. And at the same 0:04:35.720 --> 0:04:37.960 time they're running trade surplus is bigger than they did 0:04:38.000 --> 0:04:40.560 in the peak of the commodity bubble, of around five 0:04:40.600 --> 0:04:42.799 and a half billion dollars a month. So that combination 0:04:42.839 --> 0:04:46.160 of decent activity numbers and a very strong external balance 0:04:46.560 --> 0:04:49.320 is something that we think should be supportive. The trouble 0:04:49.440 --> 0:04:51.320 is that when the U. S. Dollar is strong against 0:04:51.360 --> 0:04:53.599 the developed markets, it tends to be very strong against 0:04:53.640 --> 0:04:57.159 em and that's when we're caught. At the moment, Brazil 0:04:57.240 --> 0:04:59.839 is no place to try and fight a stronger dollar story. So, 0:05:00.279 --> 0:05:03.080 putting aside the currency issue, which nobody can seem to 0:05:03.120 --> 0:05:06.080 have much confidence in right now, if you talk to 0:05:06.120 --> 0:05:07.880 people that have a view on the dollar, and then 0:05:07.960 --> 0:05:11.400 quietly they'll say, but I have no idea. Um, I'm wondering, though. 0:05:11.480 --> 0:05:14.720 You talked about the export balance and how Brazil is 0:05:14.760 --> 0:05:17.720 such a big commodity exporter, and I'm wondering, given the 0:05:17.760 --> 0:05:21.880 fact that this trucker strikes so directly affects that industry, 0:05:21.920 --> 0:05:26.760 specifically with the soybean exports, how does that change or 0:05:26.839 --> 0:05:31.080 alter your view on your positive outlook on Brazil. I mean, 0:05:31.120 --> 0:05:34.200 I think you know this is this is that long 0:05:34.279 --> 0:05:37.119 standing an issue you know. I mean e M isn't 0:05:37.120 --> 0:05:40.000 that different different from d M in that investors can 0:05:40.040 --> 0:05:43.480 bear in mind one or factors bit national disasters or strikes. 0:05:43.880 --> 0:05:46.599 So you know, if we see slightly wobbly activity data, 0:05:46.680 --> 0:05:49.000 if we see slightly if he trade data for a 0:05:49.040 --> 0:05:50.840 month or two, I think I don't think that's going 0:05:50.880 --> 0:05:53.560 to be that that's going to be a problem. You know, 0:05:53.600 --> 0:05:56.279 it's the structural situation that investors are looking at. Yeah, 0:05:56.279 --> 0:05:57.520 I mean, I think we're probably going to get some 0:05:57.600 --> 0:06:02.320 ropey numbers, but that's not our our biggest concern. What 0:06:02.400 --> 0:06:05.919 about the reform of the pension system in in Brazil? 0:06:06.080 --> 0:06:09.120 Isn't that the sort of the key issue? It is 0:06:09.160 --> 0:06:11.919 absolutely a key issue, and you know it's one that 0:06:12.000 --> 0:06:16.680 investors remain generally quite bullishly biased on that. You know, 0:06:16.720 --> 0:06:21.440 although President Temor himself isn't particularly popular, the balance in 0:06:21.480 --> 0:06:26.240 Congress is broadly space broadly speaking centrist. And you know, 0:06:26.320 --> 0:06:29.520 if we get a pension reform that's that's correctly put 0:06:29.560 --> 0:06:33.359 together or you know, in some way politically palapable. I 0:06:33.400 --> 0:06:36.960 think the consensus is still that that should pass. Um 0:06:37.000 --> 0:06:39.760 if we get closer to actually getting that through, that's 0:06:39.839 --> 0:06:42.800 that's clearly going to be a positive because Brazil stands out, 0:06:42.839 --> 0:06:45.159 as I said, as the one emerging market where the 0:06:45.200 --> 0:06:47.839 government balance sheet, you know, rather than in Turkey where 0:06:47.839 --> 0:06:51.400 it's the banks which are the problem. But they absolutely 0:06:51.400 --> 0:06:53.440 You're absolutely right, they do need to fix that, that 0:06:53.520 --> 0:06:56.719 pension reform. Paul McNamara, thank you so much for joining us. 0:06:56.760 --> 0:06:59.400 So wonderful to have you. As always. Paul McNamara is 0:06:59.440 --> 0:07:02.720 investment or actor for emerging markets at GAM UK Limited 0:07:02.720 --> 0:07:06.719 with about eleven billion dollars in developing world assets. Joining 0:07:06.800 --> 0:07:25.200 us from London. We've been talking a lot about Italy today, 0:07:25.200 --> 0:07:29.160 in particular how markets are in turmoil in Italy as 0:07:29.160 --> 0:07:34.200 a result of the populist movement and increasing euroskeptic sentiment 0:07:34.280 --> 0:07:37.880 that is sweeping the government. But how is this affecting businesses. 0:07:38.280 --> 0:07:41.080 Let's bring in it Fernando napolitan No. He's President and 0:07:41.120 --> 0:07:45.600 chief executive officer of the Italian Business and Investment Initiative 0:07:45.920 --> 0:07:48.600 based in New York, although he is in Rome right now. Fernando, 0:07:48.680 --> 0:07:51.120 thank you so much for being with us. So what 0:07:51.320 --> 0:07:54.480 is the word from chief executives who you speak with 0:07:54.680 --> 0:07:58.360 in Italy about what's going on with the political sphere 0:07:58.400 --> 0:08:01.760 right now. Well, as you know, it's been quite a 0:08:01.800 --> 0:08:05.520 particularly new situation even for Italy that is used to 0:08:05.680 --> 0:08:10.000 along negotiations, So there is uh, let's say that there 0:08:10.040 --> 0:08:12.840 are two views. The first is that the President of 0:08:12.920 --> 0:08:17.320 Republic acted in the supreme interest making sure that there 0:08:17.400 --> 0:08:21.080 is order at least in the processes of forming a government, 0:08:21.520 --> 0:08:23.880 and I think it's given a very clear message that 0:08:23.960 --> 0:08:27.080 Italy is strong and solid within the Euro and will 0:08:27.120 --> 0:08:30.920 be respecting the European agreements starting from serving to that 0:08:31.080 --> 0:08:34.560 and of course the member of the euro currency. The 0:08:34.640 --> 0:08:39.520 second is, of course there is a general moral azarre 0:08:39.880 --> 0:08:43.040 by the population in Italy, and I think this is 0:08:43.040 --> 0:08:45.400 also the result of the quantity vision. There is this 0:08:46.360 --> 0:08:51.400 general unfunded perception that there's there's gonna be somebody who's 0:08:51.400 --> 0:08:53.920 going to footing the bill ultimately, and it's going to 0:08:54.000 --> 0:08:56.640 be the central Bank, and I think this is what 0:08:56.760 --> 0:09:00.360 has been fueling the discussions, especially over the last three weeks, 0:09:00.480 --> 0:09:05.000 that have created anxiety in the market, and also the 0:09:05.320 --> 0:09:08.120 difference between the Italian bonds and the German bonds that 0:09:08.720 --> 0:09:12.560 have skyrocket as we're speaking. And so this is something 0:09:12.640 --> 0:09:17.280 that I am expecting CEOs to take the lead and 0:09:17.280 --> 0:09:21.760 in addressing UH these issues more broadly, especially visa v 0:09:21.960 --> 0:09:24.520 the investors and the dead holders that as you know 0:09:25.480 --> 0:09:29.880 about of the Italian dad or two point seven trillion euros, 0:09:29.960 --> 0:09:34.600 it's owned by foreigners. Fernando Napolitano, do you believe that 0:09:34.640 --> 0:09:40.160 whoever becomes the prime minister or indeed populates the Italian 0:09:40.200 --> 0:09:43.120 government or to brush up on their German language skills, 0:09:45.720 --> 0:09:49.280 you know, And there's always been UH, you know, hateen 0:09:49.360 --> 0:09:53.679 lo of in UH, in the relationship with with the Germany, 0:09:53.920 --> 0:09:58.319 and of course on the emotion that have been comments 0:09:58.400 --> 0:10:01.400 that I would not subscribe. But angel A Miracle, I 0:10:01.480 --> 0:10:05.320 think I made a very clear statement visit the Italy 0:10:05.400 --> 0:10:09.400 and the respect that Italy Italy deserves. The new prime 0:10:09.440 --> 0:10:13.439 minister or appointed prime Minister A Carlo Corelli, I think 0:10:13.640 --> 0:10:17.839 is a huge job again, you know, in the next 0:10:17.880 --> 0:10:21.120 couple of weeks, making sure that he explains and communicates 0:10:21.240 --> 0:10:24.760 well to the Italian people. What is the status so 0:10:24.840 --> 0:10:29.360 that UH September's election. This is pretty much the Framewords 0:10:29.400 --> 0:10:32.840 agrees upon. We will have a cognizing electorate that will 0:10:32.920 --> 0:10:36.840 go to the ballots, understanding that it is not a 0:10:36.880 --> 0:10:40.480 lot of a leeway considering the fact again that we 0:10:40.520 --> 0:10:43.840 have a hundred percent of the GDP in terms of 0:10:43.920 --> 0:10:48.000 depth and and and any comparison with Japan is not 0:10:48.160 --> 0:10:53.480 founded because Japan it's all internally owned, so that there 0:10:53.600 --> 0:10:56.200 is uh, there is a bit of relationship going going 0:10:56.200 --> 0:10:59.440 with Germany. But we are confident and we're sure, especially 0:10:59.480 --> 0:11:02.520 the business imunity, that the number one partner of Germany 0:11:02.559 --> 0:11:07.040 in Europe cannot be a defaulting and we're expecting a 0:11:07.040 --> 0:11:09.880 lot of help coming from Germany. So Fernando, let's just 0:11:09.920 --> 0:11:11.839 take a step back here, because at the heart of 0:11:11.880 --> 0:11:14.079 a lot of the turmoil that we're seeing in Italian 0:11:14.120 --> 0:11:18.000 markets right now is this fear that the movement to 0:11:18.080 --> 0:11:21.000 break away from the shared currency is going to is 0:11:21.040 --> 0:11:25.559 going to gain steam. I'm wondering, from a business community standpoint, 0:11:25.760 --> 0:11:29.680 do you hear companies executives saying, you know what, if 0:11:29.720 --> 0:11:32.440 we had the lira back, if we could not have 0:11:32.520 --> 0:11:35.360 to be part of the shared currency, our businesses would 0:11:35.360 --> 0:11:38.320 be much stronger, our currency would be weaker, we would 0:11:38.320 --> 0:11:43.040 have better export power. Do you hear that? No? I 0:11:43.120 --> 0:11:48.760 don't I think that any business leader initialy, especially those 0:11:48.840 --> 0:11:53.360 that are that are fuelling the Italian export are really 0:11:53.880 --> 0:11:58.600 into the Euro and they are appreciating having a stable currency. Yes, 0:11:58.679 --> 0:12:01.080 there are the fluctuation is a bit of dollars that 0:12:01.160 --> 0:12:04.000 at times may hamper our export, but as you know, 0:12:04.880 --> 0:12:08.280 every year we are increasing our export, which is now 0:12:08.400 --> 0:12:12.680 about five hundred billion a year, and so everybody, especially 0:12:12.720 --> 0:12:17.079 in the medium sector, is not regretting a delta UH. 0:12:17.120 --> 0:12:19.319 As you want to do a step back, let's really 0:12:19.440 --> 0:12:23.439 understand that if we were not joining the the first 0:12:23.520 --> 0:12:26.760 year of the Group of the Euro currency UH, but 0:12:26.960 --> 0:12:31.400 seventeen years ago Italy would that most likely defaulted. If 0:12:31.520 --> 0:12:34.240 that it would have you know, a serious like what 0:12:34.360 --> 0:12:38.160 happened in Argentina at the time. So the business community 0:12:38.200 --> 0:12:40.480 is solidate in the back. And by the way, it's 0:12:40.600 --> 0:12:45.160 the same business community that largely has supported the one 0:12:45.200 --> 0:12:48.000 of the two political parties, the North League, because as 0:12:48.040 --> 0:12:51.120 you know, the the electoral split is that the Five 0:12:51.200 --> 0:12:57.680 Star Movement UH, the new UH political parties primarily um 0:12:57.960 --> 0:13:00.719 from the south the voters, while the North League is 0:13:00.720 --> 0:13:04.559 primarily from the north, where you know, the strong economic 0:13:04.640 --> 0:13:07.880 engines of Italy are. So I am not convinced that 0:13:08.320 --> 0:13:13.520 the business community would support any movement outside the Euro 0:13:13.679 --> 0:13:17.320 whose cost would be enormous. But most importantly, there is 0:13:17.360 --> 0:13:23.720 no process for quitting the euro Is this availed confrontation 0:13:23.840 --> 0:13:28.520 between the private sector and the public sector in Italy? No, 0:13:29.040 --> 0:13:32.720 I think that the the there there are. There are 0:13:32.720 --> 0:13:35.640 a number of things, of course which are not working uh. 0:13:35.640 --> 0:13:38.960 And number one is the unemployment rate. Number two, we 0:13:39.000 --> 0:13:42.760 have had a huge flood of immigrants with whose process 0:13:43.640 --> 0:13:47.760 has not been managing, manage been vented carefully. So there 0:13:47.840 --> 0:13:51.240 is a lot of anxiety, especially in the young people. UH, 0:13:51.280 --> 0:13:54.840 and the and the and the business community of course 0:13:55.080 --> 0:13:58.960 is concerned. But in a way we are going through 0:13:59.000 --> 0:14:01.520 a kind of recall, very not as healthy as we 0:14:01.559 --> 0:14:05.880 would that like. But I think the the the the 0:14:05.880 --> 0:14:10.640 future government and the future election unfortunately will be uh. 0:14:11.000 --> 0:14:13.920 Are we in Europe or out of the Europe? And 0:14:14.000 --> 0:14:15.720 so this is I think it's going to be the 0:14:15.800 --> 0:14:19.960 major team where the business community needs really to step 0:14:20.080 --> 0:14:22.040 up in a way that has never done in the 0:14:22.160 --> 0:14:25.160 history of Italy. So they need to speak up and 0:14:25.400 --> 0:14:27.480 h I think that's what's going to happen in the 0:14:27.480 --> 0:14:30.720 next sixth late weeks. Thank you very much for Noto 0:14:30.800 --> 0:14:33.720 Napolitano as the president and the chief executive of the 0:14:33.760 --> 0:14:39.120 Italian Business and Investment Initiative speaking about current events in 0:14:39.280 --> 0:14:56.600 Italy him. There is a story in Bloomberg Business Week 0:14:56.920 --> 0:15:00.640 this week by Peter Coy talking about how how there 0:15:00.640 --> 0:15:04.720 seems to be a much lower birth rate among US 0:15:04.760 --> 0:15:09.360 millennials and the question is why. And my question was 0:15:09.400 --> 0:15:11.400 how much does this have to do with the availability 0:15:11.440 --> 0:15:15.240 of childcare and how how cheaper expensive it is. And 0:15:15.440 --> 0:15:17.880 to weigh in on that is Betsy Stevenson who joins 0:15:17.920 --> 0:15:20.640 us now. She's Associate Professor of Public Policy at the 0:15:20.680 --> 0:15:24.320 Ford School of the University of Michigan, joining us from 0:15:24.360 --> 0:15:27.000 an Arbor, Michigan. She's also the former chief economist at 0:15:27.040 --> 0:15:31.000 the U S Department of Labor UH from and eleven. 0:15:31.040 --> 0:15:34.400 Thank you so much for joining us. Betsy, my pleasure. 0:15:34.400 --> 0:15:36.480 It's great to speak with you. So I wanted just 0:15:36.520 --> 0:15:38.960 to start with this idea that the birth rate has 0:15:39.000 --> 0:15:42.880 been falling among younger people, and I'm wondering, do you 0:15:43.000 --> 0:15:47.200 think that childcare has anything to do with that? So 0:15:47.440 --> 0:15:49.840 I do think that childcare has something to do with it, 0:15:49.960 --> 0:15:54.200 but I think it's actually um kind of a trifecta 0:15:54.840 --> 0:15:58.040 of not just the high cost of childcare but a 0:15:58.200 --> 0:16:02.640 lack of paid leave, paid family leave to you, you know, 0:16:02.640 --> 0:16:04.400 thinking about it. You go to have a child, you 0:16:04.400 --> 0:16:05.880 don't know that you're gonna be able to take any 0:16:05.880 --> 0:16:07.800 time off of work. If you do take time off, 0:16:07.840 --> 0:16:10.280 you may have to take it unpaid, and then you 0:16:10.400 --> 0:16:15.960 face enormous costs putting those children into childcare if you're 0:16:15.960 --> 0:16:18.680 going to go back to work, and then you often 0:16:18.720 --> 0:16:23.360 face discrimination in the workplace. And research shows that women 0:16:23.640 --> 0:16:27.040 can face a really steep wage penalty when they have children. 0:16:27.400 --> 0:16:30.600 So you put those three things together and you see 0:16:30.640 --> 0:16:32.920 a lot of young women who are saying, wait, this 0:16:33.000 --> 0:16:36.920 is really really expensive, um, and I'm just not sure 0:16:37.200 --> 0:16:40.040 I can do it, or I need to wait longer 0:16:40.080 --> 0:16:42.560 to do it. So we are seeing the age of 0:16:42.640 --> 0:16:46.360 first birth really getting pushed up quite rapidly. And I 0:16:46.400 --> 0:16:48.960 think part of what women are doing is delaying, and 0:16:48.960 --> 0:16:51.520 they're delaying so that they can save up for to 0:16:51.640 --> 0:16:54.880 pay that, you know, these these high costs of child care. 0:16:55.360 --> 0:16:58.480 And because research shows that every year you delay having 0:16:58.640 --> 0:17:03.680 a child, the motherhood wage penalty that you face is lower. 0:17:03.920 --> 0:17:06.240 So they know that if they can just you know, wait, 0:17:06.440 --> 0:17:09.040 their careers will turn out better and they'll be able 0:17:09.080 --> 0:17:12.400 to save up for childcare unfortunately for a lot of women. Though, 0:17:13.160 --> 0:17:14.800 Now wouldn't you wait and wait and wait to have 0:17:14.840 --> 0:17:18.359 a kid, You can often run out of time. So, Betsy, 0:17:18.400 --> 0:17:22.000 I'm just wondering, compared to other nations, where does the 0:17:22.119 --> 0:17:25.439 United States rank in terms of things such as paid 0:17:25.520 --> 0:17:31.080 maternity leave or indeed even paid childcare. So, uh, in 0:17:31.200 --> 0:17:34.720 terms of paid maternity leave, this one's easy because the 0:17:34.800 --> 0:17:38.919 United States is alone. UM. I think Papua New Guinea 0:17:39.000 --> 0:17:42.320 also uh no longer it doesn't have paid maternity leave. 0:17:42.359 --> 0:17:44.639 But aside from those two countries, the United States and 0:17:44.680 --> 0:17:48.560 Papua New Guinea, everybody else has paid maternity leave UM. 0:17:48.640 --> 0:17:52.959 And the research shows that that does increase fertility. So 0:17:53.000 --> 0:17:57.960 Australia has one of the more recent paid maternity leave policies. 0:17:57.960 --> 0:18:02.040 In two thousand eleven they introduced eighteen weeks of paid 0:18:02.119 --> 0:18:05.600 leave and then some additional unpaid leaves and there's some 0:18:05.680 --> 0:18:07.960 new research coming out that shows that women have more 0:18:08.000 --> 0:18:12.600 children as a result, so it did boost fertility rates. UM. 0:18:12.640 --> 0:18:16.520 In terms of childcare, you know, other countries do support 0:18:17.000 --> 0:18:21.800 childcare more. You know, the United States UM is mostly 0:18:21.840 --> 0:18:25.800 a system of private childcare, was very little government funding. 0:18:27.000 --> 0:18:29.400 So that's you know. One thing that I'm struck by 0:18:29.520 --> 0:18:32.320 is what would you say to people who said, look, 0:18:32.440 --> 0:18:34.399 you know, if people don't want to have have babies, and fine, 0:18:34.480 --> 0:18:37.159 don't have babies if they can't afford them, that's their issue. 0:18:37.760 --> 0:18:39.920 It's a lifestyle choice. If they want to make it work, 0:18:39.920 --> 0:18:42.320 they make it work. If they don't, they don't. Um, 0:18:42.320 --> 0:18:45.040 it's their choice. If they're not doing it, fine, What 0:18:45.119 --> 0:18:46.560 do you say to people who say that, I mean, 0:18:46.640 --> 0:18:51.000 why do why should we care? From a public policy perspective, Well, 0:18:51.000 --> 0:18:53.640 I think from a public policy perspective, as a nation, 0:18:53.680 --> 0:18:56.400 we're supposed to be forward looking um and not just 0:18:56.720 --> 0:19:00.320 you know, partying like there's no tomorrow. So that means 0:19:00.359 --> 0:19:03.480 that we need to be thinking about the next generation 0:19:03.880 --> 0:19:06.520 as well as thinking about what you know, the current 0:19:06.560 --> 0:19:11.440 generation would like. And the issue with early childhood education 0:19:11.560 --> 0:19:14.880 and child care is if you make those investments, they 0:19:14.880 --> 0:19:19.200 can pay huge dividends in the future. So UM research 0:19:19.240 --> 0:19:23.600 shows that children who've got uh good early childhood education 0:19:24.080 --> 0:19:27.200 go on to earn higher wages as adults and to 0:19:27.280 --> 0:19:31.040 pay more in taxes. So if we want to continue 0:19:31.080 --> 0:19:36.080 to have you know, uh, you know, a strong society 0:19:36.200 --> 0:19:39.679 with people who are productive and a lot of economic growth. 0:19:39.960 --> 0:19:42.280 But we need to support the next generation who's going 0:19:42.320 --> 0:19:45.080 to go on to be those workers that are productive 0:19:45.400 --> 0:19:51.120 and uh contributing to economic growth and paying taxes. Uh so. 0:19:51.680 --> 0:19:53.960 And the thing that makes it so difficult for parents 0:19:54.760 --> 0:19:58.000 is you have your kids early in life. It's you know, 0:19:58.400 --> 0:20:00.400 we spend a lot of time worrying about how parents 0:20:00.440 --> 0:20:03.640 are going to pay for college, but parents have eighteen 0:20:03.720 --> 0:20:07.600 years to save for their kids college. When your child 0:20:07.680 --> 0:20:10.680 is born, you face college tuition in that first year. 0:20:11.000 --> 0:20:14.920 In twenty eight states, the cost of center based care 0:20:15.080 --> 0:20:17.119 for a child in the first year of life is 0:20:17.160 --> 0:20:21.080 more than in state public tuition in those states. So 0:20:21.160 --> 0:20:23.600 you could have sent your kid to college for less 0:20:24.200 --> 0:20:28.720 than putting them in child care. And yet people can 0:20:28.800 --> 0:20:31.119 have their children when they're just getting their start in life. 0:20:31.160 --> 0:20:35.560 They haven't saved up to pay college tuition. In fact, 0:20:35.640 --> 0:20:37.600 some of them are still paying their own student loans. 0:20:37.600 --> 0:20:40.520 They're paying for their own college tuition. So if we 0:20:40.560 --> 0:20:43.119 want to invest in children that were investing in the 0:20:43.200 --> 0:20:46.879 next generation, we need to help parents out with these 0:20:46.960 --> 0:20:50.440 expenses because parents often can't do it, and certainly the 0:20:50.520 --> 0:20:52.440 kids can't do it. You know, a six month old 0:20:52.440 --> 0:20:54.240 can't go to a bank and say, can I have 0:20:54.280 --> 0:20:56.040 a loan? This is going to make me a more 0:20:56.040 --> 0:20:59.080 productive citizen and I'm going to be, you know, a 0:20:59.119 --> 0:21:01.280 better member of this it in twenty five years if 0:21:01.280 --> 0:21:04.600 you just pay for my early childhood education. Now, we 0:21:05.200 --> 0:21:07.360 that that's not the way the system works, and so 0:21:07.440 --> 0:21:10.159 it's one of the reasons why we really need the 0:21:10.200 --> 0:21:13.880 government to step in and support investments in early childhood education. 0:21:14.520 --> 0:21:18.359 By some estimates, the in the United States, couples spend 0:21:18.400 --> 0:21:21.639 more than more than a quarter of their income on 0:21:21.880 --> 0:21:24.320 childcare costs, and that if you happen to be a 0:21:24.359 --> 0:21:28.160 single parent, that number is about fifty of your income 0:21:28.560 --> 0:21:31.479 for childcare costs. Is that out of line when compared 0:21:31.520 --> 0:21:35.880 to other countries? That is out of line with compared 0:21:35.920 --> 0:21:41.440 to other countries. And you know, the the the United 0:21:41.480 --> 0:21:47.400 States spends less on UM safety net programs and other 0:21:47.440 --> 0:21:49.919 countries by a lot. We spend a much smaller share 0:21:49.920 --> 0:21:54.359 of gdp UM on social programs than other countries do. 0:21:54.840 --> 0:21:57.639 But and the money we do spend in the United 0:21:57.680 --> 0:22:01.199 States is way more tilted towards the elderly than in 0:22:01.359 --> 0:22:07.520 other countries. UM. So it's you know, in UH UM 0:22:07.560 --> 0:22:13.119 in the United States spent five the federal government spent 0:22:13.480 --> 0:22:17.679 five thousand dollars per child um. In comparison, the federal 0:22:17.720 --> 0:22:21.520 government spent thirty five thousand dollars per person over the 0:22:21.520 --> 0:22:24.680 age of sixty. So we have a system that's really 0:22:24.720 --> 0:22:28.399 tilted towards the elderly. And that's because we've passed a 0:22:28.440 --> 0:22:30.840 bunch of policies that are really beneficial to the elderly, 0:22:30.880 --> 0:22:34.600 like Social Security and Medicare. I haven't passed policies that 0:22:34.720 --> 0:22:37.800 support kids. We gotta leave, gotta run, Thank you very much, 0:22:37.880 --> 0:22:42.160 Betsy Stevenson, Associate Professor Public Policy, the Ford School, University 0:22:42.160 --> 0:22:59.439 of Michigan. Pam Me raised a good point earlier when 0:22:59.480 --> 0:23:02.639 you said you would think that banks would have learned 0:23:02.720 --> 0:23:05.639 after paying ten billion dollars and penalties and after a 0:23:05.680 --> 0:23:09.080 trader was sent to prison. Evidently not. And joining us 0:23:09.119 --> 0:23:12.560 to detail what is going on currently in the foreign 0:23:12.560 --> 0:23:16.000 exchange market is Lennon Nuian. She has FX reporter for 0:23:16.160 --> 0:23:19.000 Blue Broke News, and she wrote a story today detailing 0:23:19.160 --> 0:23:24.879 ongoing abuses frankly in the five point one trillion dollar 0:23:25.040 --> 0:23:29.359 a day f X market. Can you explain, Lenan, well, Lisa, 0:23:29.880 --> 0:23:32.280 what participants are worried about in this market is that 0:23:32.320 --> 0:23:35.639 there are a few lingering practices that are still you know, 0:23:36.080 --> 0:23:38.919 as far as regulators are concerned, kind of okay. And 0:23:39.000 --> 0:23:42.119 sou Anie Mack from Vanguard who's the head currency trader, 0:23:42.200 --> 0:23:45.560 they're warned of some abuses that potentially could happen as 0:23:45.560 --> 0:23:48.240 a result of these practices, like last look, where dealers 0:23:48.280 --> 0:23:50.720 can kind of reneg on a price and front running 0:23:52.080 --> 0:23:56.840 g front running. Um, that doesn't sound uh really good, 0:23:56.920 --> 0:23:59.040 does it? I mean that that that's getting in front 0:23:59.040 --> 0:24:02.600 of your own to in order to profit. Yes, So 0:24:02.720 --> 0:24:04.639 if you have knowledge in for an exchange of a 0:24:04.720 --> 0:24:07.840 customer trade in advance, you can kind of get ahead 0:24:07.840 --> 0:24:11.280 of it, which is not okay in other markets like equities. Um. 0:24:11.320 --> 0:24:13.760 Andy mac from Vanguard comes from the equities markets. So 0:24:14.040 --> 0:24:15.800