1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? A defresent is a real issue to use. 3 00:00:06,400 --> 00:00:09,920 Speaker 1: Economy continues to send mixed signals, the financial stories that 4 00:00:10,039 --> 00:00:13,000 Speaker 1: cheap our world fed action to con concerns over dollar 5 00:00:13,080 --> 00:00:16,520 Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people 6 00:00:16,520 --> 00:00:19,160 Speaker 1: in the world. Through the eyes of the most influential 7 00:00:19,239 --> 00:00:22,880 Speaker 1: voices Larry Summers, the former Treasury Secretary, Starbard, CEO, Kevin 8 00:00:22,960 --> 00:00:26,640 Speaker 1: Johnson sec Chairman j Clayton, Bloomberg Wall Street Week with 9 00:00:26,760 --> 00:00:32,520 Speaker 1: David Weston from Bloomberg Radio. Finally almost US stimulus steal 10 00:00:32,640 --> 00:00:35,280 Speaker 1: is all but done, and at Brexit deal appears to 11 00:00:35,320 --> 00:00:37,920 Speaker 1: be within reach. But the one thing we know for 12 00:00:38,000 --> 00:00:41,360 Speaker 1: sure is that we have a vaccine. This is Bloomberg 13 00:00:41,360 --> 00:00:44,200 Speaker 1: Wall Street Week. I'm David Weston. Well, the Federal Reserve 14 00:00:44,240 --> 00:00:46,680 Speaker 1: is going to try and lower interest rates. That will help. 15 00:00:47,080 --> 00:00:49,600 Speaker 1: That will bring some figger back to the economy, but 16 00:00:49,760 --> 00:00:53,840 Speaker 1: it can only be mended by an increasing willingness on 17 00:00:53,880 --> 00:00:57,880 Speaker 1: the part of the public to buy goods, general confidence 18 00:00:57,920 --> 00:00:59,800 Speaker 1: in the system itself, and much of that has been 19 00:01:00,040 --> 00:01:03,319 Speaker 1: voted over a number of years. That was Pimco's bill 20 00:01:03,400 --> 00:01:07,119 Speaker 1: gross back in the Federal Reserve met again this week, 21 00:01:07,240 --> 00:01:09,560 Speaker 1: but gone in the days when it can restore vigors 22 00:01:09,600 --> 00:01:13,080 Speaker 1: the economy by cutting interest rates. Instead, FED chair j 23 00:01:13,280 --> 00:01:15,960 Speaker 1: pal tried to restore that vigor by assuring the markets 24 00:01:16,280 --> 00:01:18,840 Speaker 1: that the FED will continue to buy bonds until the 25 00:01:18,840 --> 00:01:22,399 Speaker 1: economy is substantially better than it is today. We asked 26 00:01:22,400 --> 00:01:25,560 Speaker 1: black Rocks rick reader whether those words were likely to 27 00:01:25,600 --> 00:01:28,440 Speaker 1: do the trick. I mean, I mean, they're they're on 28 00:01:28,480 --> 00:01:31,880 Speaker 1: a persistent movement to support the economy. I think there 29 00:01:31,959 --> 00:01:34,319 Speaker 1: was there was a lot of analysis that had said 30 00:01:34,360 --> 00:01:37,319 Speaker 1: that the FED was hawkish because they didn't increase the 31 00:01:37,319 --> 00:01:41,680 Speaker 1: weighted average maturity or they didn't actually increase YESID purchase program. 32 00:01:41,920 --> 00:01:45,600 Speaker 1: Anybody who describes this vet as hawkish is so misguided. 33 00:01:46,120 --> 00:01:48,200 Speaker 1: This is a fan that is just going to continue 34 00:01:48,640 --> 00:01:51,320 Speaker 1: to be there and be as accommodative. They know. They 35 00:01:51,320 --> 00:01:53,160 Speaker 1: said they're going to continue to ask a purchase program 36 00:01:53,200 --> 00:01:56,200 Speaker 1: at least as large, both in treasuries and mortgages. By 37 00:01:56,200 --> 00:01:57,600 Speaker 1: the way, I don't even think they need to increase 38 00:01:57,640 --> 00:02:00,200 Speaker 1: mortgages out all. I think they can shrink them. But 39 00:02:00,240 --> 00:02:02,120 Speaker 1: they're gonna They're gonna keep going, and they're going to 40 00:02:02,200 --> 00:02:05,840 Speaker 1: be incredibly supportive of the new administration and the fiscal stimulus. 41 00:02:05,880 --> 00:02:07,800 Speaker 1: From here, well, let's pick up on that exactly where 42 00:02:07,920 --> 00:02:10,880 Speaker 1: why are they sticking with this allocation for mortgages? You know? 43 00:02:11,120 --> 00:02:13,320 Speaker 1: I mean, I actually, well, I think the Fed is 44 00:02:13,360 --> 00:02:15,280 Speaker 1: doing a brilliant job this. I don't think they need 45 00:02:15,320 --> 00:02:17,320 Speaker 1: to do that. I mean, if you think about more, 46 00:02:17,440 --> 00:02:19,720 Speaker 1: there aren't enough mortgagees to purchase from what they're what 47 00:02:19,800 --> 00:02:23,359 Speaker 1: they're doing, the banks are dying for those assets and uh, 48 00:02:23,440 --> 00:02:26,520 Speaker 1: and the levels are incredibly low. And even if they 49 00:02:26,600 --> 00:02:29,000 Speaker 1: slowed down, the purchase program rates aren't mortgage rates aren't 50 00:02:29,000 --> 00:02:32,040 Speaker 1: moving higher. The demand for mortgage product is incredible. And 51 00:02:32,080 --> 00:02:33,960 Speaker 1: then you take the other side of it. The housing 52 00:02:34,000 --> 00:02:36,639 Speaker 1: market is an incredibly good shape. And if you think 53 00:02:36,680 --> 00:02:38,639 Speaker 1: about it, you know, one of the things that is 54 00:02:38,680 --> 00:02:40,880 Speaker 1: a risk for a particularly lower and middle income is 55 00:02:40,919 --> 00:02:44,000 Speaker 1: the housing market is doing so well that you'll continuously 56 00:02:44,160 --> 00:02:46,520 Speaker 1: increased home prices, which I would argue that is the 57 00:02:46,520 --> 00:02:48,760 Speaker 1: one part of inflation that I actually think is real. 58 00:02:49,240 --> 00:02:51,480 Speaker 1: And then quite frankly, it's burdensome to a lot of 59 00:02:51,480 --> 00:02:54,800 Speaker 1: the economy, a lot of particularly lower middle income. So anyway, 60 00:02:54,840 --> 00:02:57,560 Speaker 1: that part I don't other than signaling we're just not 61 00:02:57,560 --> 00:03:01,240 Speaker 1: gonna we're not gonna pull any accommodation. Um. I don't 62 00:03:01,280 --> 00:03:04,880 Speaker 1: think they need to do that. So, as I say, 63 00:03:05,240 --> 00:03:06,960 Speaker 1: the message out of the FED I thought was we 64 00:03:06,960 --> 00:03:09,959 Speaker 1: think it's going to start getting better, presumably large but 65 00:03:10,120 --> 00:03:12,880 Speaker 1: because of the vaccine, which we're hoping for so much. 66 00:03:13,240 --> 00:03:15,560 Speaker 1: At the same time, there's a real divergence, maybe even 67 00:03:15,560 --> 00:03:19,080 Speaker 1: a bifurcation in the marketplace, but whether it's individuals or 68 00:03:19,080 --> 00:03:21,520 Speaker 1: its companies between some people who are doing very very 69 00:03:21,520 --> 00:03:24,959 Speaker 1: well and some people are doing very very badly. Yeah. 70 00:03:25,000 --> 00:03:27,560 Speaker 1: I mean, David, you hit the nail on the head. Listen. 71 00:03:27,560 --> 00:03:29,280 Speaker 1: But I think this is you know what the central 72 00:03:29,320 --> 00:03:32,440 Speaker 1: bank does is you know, it's tools are blunt and 73 00:03:32,480 --> 00:03:35,240 Speaker 1: a lot of what happens is it lifts financial assets 74 00:03:35,600 --> 00:03:38,800 Speaker 1: and it creates a this bifurcation as you describe, and 75 00:03:38,840 --> 00:03:40,920 Speaker 1: it doesn't you know what the FED can do is 76 00:03:40,960 --> 00:03:45,120 Speaker 1: it sort of paves the runway for for other policy 77 00:03:45,200 --> 00:03:48,160 Speaker 1: to come in. Now you really need the fiscal and 78 00:03:48,200 --> 00:03:50,800 Speaker 1: the fiscal is where you can direct tax policy, where 79 00:03:50,800 --> 00:03:53,400 Speaker 1: you can direct where the stimulus gets to things like 80 00:03:53,480 --> 00:03:58,880 Speaker 1: state and local things like healthcare, spending, education, spending, etcetera. 81 00:03:59,040 --> 00:04:01,360 Speaker 1: Things that can actually a close that gap. I mean, 82 00:04:01,400 --> 00:04:03,680 Speaker 1: you know, now we actually are going to get what 83 00:04:03,760 --> 00:04:06,600 Speaker 1: I think, particularly when you think about chair yelling, I 84 00:04:06,640 --> 00:04:10,960 Speaker 1: still call it chair yelling the Treasury secretary. And now 85 00:04:11,000 --> 00:04:14,040 Speaker 1: you've got functionally two FED chairs that are going to 86 00:04:14,120 --> 00:04:16,159 Speaker 1: operate in concert with one another. And that's where you 87 00:04:16,160 --> 00:04:19,000 Speaker 1: get really effective policy when when fiscal monetary work hand 88 00:04:19,040 --> 00:04:21,680 Speaker 1: to glo up with one another. So is that constructive 89 00:04:21,800 --> 00:04:24,080 Speaker 1: or does that undermine the independence of the FED? I mean, 90 00:04:24,120 --> 00:04:26,000 Speaker 1: how closely do you want the two of them to 91 00:04:26,040 --> 00:04:30,880 Speaker 1: operate together You've called a sort of pilot and copilot. Yeah, 92 00:04:30,920 --> 00:04:32,800 Speaker 1: it's a great question. I do believe in the in 93 00:04:32,839 --> 00:04:35,680 Speaker 1: the independence and I certainly know that people at the 94 00:04:35,680 --> 00:04:38,440 Speaker 1: FED really believe in the independence of the FED. However, 95 00:04:39,279 --> 00:04:42,280 Speaker 1: you know, you do create some coordination. By the way, 96 00:04:42,440 --> 00:04:44,600 Speaker 1: having where they're where they're not talking that is that 97 00:04:44,880 --> 00:04:48,960 Speaker 1: is a problem, um, but having some coordination coordination makes sense, 98 00:04:48,960 --> 00:04:52,640 Speaker 1: particularly as you described earlier, we've got a problem in 99 00:04:52,680 --> 00:04:54,640 Speaker 1: the country that we need to put more people to work. 100 00:04:54,760 --> 00:04:58,000 Speaker 1: You know, until vaccine starts to really get implemented, we 101 00:04:58,040 --> 00:04:59,880 Speaker 1: need to put more people to work, and we need 102 00:05:00,080 --> 00:05:03,760 Speaker 1: stabilize and account of employment dynamic that is real. And 103 00:05:03,839 --> 00:05:06,360 Speaker 1: so you know that that idea that the FED is 104 00:05:06,360 --> 00:05:09,520 Speaker 1: going to neutralize the debt, that the that the that 105 00:05:09,560 --> 00:05:11,560 Speaker 1: the fiscal is going to put on. And by the way, 106 00:05:11,880 --> 00:05:13,240 Speaker 1: you know, I think I think of Larry Summer is 107 00:05:13,240 --> 00:05:15,200 Speaker 1: gonna talk about this, their paper that they wrote on 108 00:05:15,200 --> 00:05:18,200 Speaker 1: the system can actually withstand more debt is a hundred 109 00:05:18,240 --> 00:05:21,400 Speaker 1: percent right and as long as and a big part 110 00:05:21,440 --> 00:05:23,240 Speaker 1: of it is the FED is keeping rates low, so 111 00:05:23,320 --> 00:05:26,320 Speaker 1: the interest burden on the economy is not onerous. Yeah, 112 00:05:26,400 --> 00:05:28,920 Speaker 1: no question. And this goes to Larry Summer's secular stagnation 113 00:05:28,960 --> 00:05:30,680 Speaker 1: that the problem we have is too much savings, not 114 00:05:30,720 --> 00:05:33,080 Speaker 1: too little, that we need to actually be investing in 115 00:05:33,120 --> 00:05:35,680 Speaker 1: spending some money. The question always is, isn't it how 116 00:05:35,680 --> 00:05:37,800 Speaker 1: do you spend that money? Okay, you can borrow really cheap, 117 00:05:37,920 --> 00:05:39,680 Speaker 1: but it depends on how you how you spend it 118 00:05:39,760 --> 00:05:43,720 Speaker 1: or invest it. It's definitely right. By the way, I 119 00:05:43,760 --> 00:05:45,839 Speaker 1: think we're at a point in time today. What Larry 120 00:05:45,880 --> 00:05:48,840 Speaker 1: says is dead right is the amount of savings. I mean, 121 00:05:48,880 --> 00:05:52,080 Speaker 1: you think about the liquidity in the system, what's been created, 122 00:05:52,120 --> 00:05:55,000 Speaker 1: the aging demographic. I know we've talked about for years pensions, 123 00:05:55,000 --> 00:05:57,599 Speaker 1: life insurance companies that need the ability to fund is 124 00:05:57,640 --> 00:06:01,279 Speaker 1: extraordinary savings do outweigh the sets by a lot, and 125 00:06:01,320 --> 00:06:03,839 Speaker 1: that's why you're seeing appreciation and so many assets across 126 00:06:04,000 --> 00:06:06,839 Speaker 1: across different markets. But you're right, I mean there's different 127 00:06:06,839 --> 00:06:10,760 Speaker 1: return on equities as it were, uh return on equity 128 00:06:10,800 --> 00:06:13,440 Speaker 1: possibility spending on how the government spends the money. I 129 00:06:13,480 --> 00:06:15,680 Speaker 1: actually think we're at a point in time today that 130 00:06:15,800 --> 00:06:19,279 Speaker 1: the velocity of tax dollars working their way through that 131 00:06:19,320 --> 00:06:22,760 Speaker 1: comes on the backside of fiscal um quite tranquility, lowers 132 00:06:22,839 --> 00:06:25,120 Speaker 1: the bar for what those returns need to be for 133 00:06:25,240 --> 00:06:28,160 Speaker 1: those government programs. But like you say, some are obviously 134 00:06:28,640 --> 00:06:31,880 Speaker 1: much more efficacious than others. And but I truly think 135 00:06:31,920 --> 00:06:34,440 Speaker 1: that that quite frankly, most of the fiscal stimas you 136 00:06:34,440 --> 00:06:37,279 Speaker 1: put in today, is gonna It's gonna create a velocity 137 00:06:37,440 --> 00:06:40,599 Speaker 1: and which impacts the monetary base that the FED is 138 00:06:40,640 --> 00:06:43,599 Speaker 1: created in a very positive way. That was Rick Reader's 139 00:06:43,600 --> 00:06:46,520 Speaker 1: CIO for Global fixed Income and head of the Global 140 00:06:46,640 --> 00:06:50,320 Speaker 1: Allocation Investment team at black Rock, coming up a major 141 00:06:50,440 --> 00:06:53,520 Speaker 1: cyber attack on the U. S. Government, pointing out again 142 00:06:53,720 --> 00:06:57,360 Speaker 1: how vulnerable we are, something that Sam Paulisano, the former 143 00:06:57,400 --> 00:07:00,640 Speaker 1: head of IBM, knows about that's next on Wall Street 144 00:07:00,680 --> 00:07:09,520 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 145 00:07:09,680 --> 00:07:13,280 Speaker 1: David Weston from Bloomberg Radio. We learned this week about 146 00:07:13,280 --> 00:07:17,160 Speaker 1: a massive hack of government computers, and we still don't know, frankly, 147 00:07:17,160 --> 00:07:19,440 Speaker 1: how many were hacked or how much data was taken. 148 00:07:19,600 --> 00:07:21,920 Speaker 1: It was bad enough that the National Security Advisor had 149 00:07:21,960 --> 00:07:23,880 Speaker 1: to come back from his trip overseas to try to 150 00:07:23,920 --> 00:07:26,720 Speaker 1: assess the situation. To help us assess the situation, we 151 00:07:26,760 --> 00:07:29,960 Speaker 1: now have the former chairman and CEO of IBM, Sam Paulisano. 152 00:07:30,360 --> 00:07:33,000 Speaker 1: Sam also served as the vice chair at Prison Obama's 153 00:07:33,000 --> 00:07:35,560 Speaker 1: Commission trying to deal with cybersecurity, knows just a little 154 00:07:35,560 --> 00:07:37,440 Speaker 1: bit about it, and now as an institute to try 155 00:07:37,440 --> 00:07:40,160 Speaker 1: to address the issues. So when you heard this this week, 156 00:07:40,400 --> 00:07:42,520 Speaker 1: what did you make of it? My first reaction when 157 00:07:42,560 --> 00:07:44,840 Speaker 1: I heard about it, quite honestly, I thought it was 158 00:07:44,880 --> 00:07:47,800 Speaker 1: the Chinese. And I'll tell you why. I say that, 159 00:07:47,840 --> 00:07:50,680 Speaker 1: because if you look at his stark, stark pattern of 160 00:07:50,720 --> 00:07:53,160 Speaker 1: the various types of attacks have occurred in the past, 161 00:07:53,880 --> 00:07:56,040 Speaker 1: that this is more like the Chinese trying to get 162 00:07:56,080 --> 00:07:58,480 Speaker 1: access to information and data, and then the Russians had 163 00:07:58,480 --> 00:08:01,600 Speaker 1: their own strategies and we can talk about you know, uh, 164 00:08:02,200 --> 00:08:04,280 Speaker 1: election interference and the like, as well as in the 165 00:08:04,320 --> 00:08:08,559 Speaker 1: financial side of transactions. So however, obviously that's not the case. 166 00:08:08,600 --> 00:08:10,640 Speaker 1: I mean, this time it was the Russians and whatever 167 00:08:10,680 --> 00:08:14,400 Speaker 1: they call themselves, Cozy Bear Apt. Twenty nine, whatever it 168 00:08:14,440 --> 00:08:17,200 Speaker 1: happens to be. I think that from what I've read 169 00:08:17,240 --> 00:08:19,520 Speaker 1: and what I hear from my friends in the government, 170 00:08:19,760 --> 00:08:23,240 Speaker 1: that they're pretty confident that's who it was this time. Now, 171 00:08:23,280 --> 00:08:25,480 Speaker 1: having said all that, I mean, I think it does 172 00:08:25,760 --> 00:08:28,840 Speaker 1: wake the nation up to the risk we faced if 173 00:08:28,880 --> 00:08:32,280 Speaker 1: we don't do something better cybersecurity and our infrastructures. So 174 00:08:32,640 --> 00:08:34,760 Speaker 1: how does this happen? Sam? And for those of us 175 00:08:34,760 --> 00:08:37,240 Speaker 1: who don't understand this world the way you do, this 176 00:08:37,280 --> 00:08:39,080 Speaker 1: is not the first hack we've told we've heard about, 177 00:08:39,160 --> 00:08:42,400 Speaker 1: either of government computers or often of private sector computers, 178 00:08:42,640 --> 00:08:45,000 Speaker 1: and yet it seems it was quite vulnerable. This organization, 179 00:08:45,080 --> 00:08:47,800 Speaker 1: solar Wins, a private company, has something like two or 180 00:08:47,920 --> 00:08:51,000 Speaker 1: seventy five or three hundred thousand different customers, about eighteen 181 00:08:51,000 --> 00:08:52,920 Speaker 1: thousands they say might have been affected here, but it 182 00:08:52,960 --> 00:08:56,400 Speaker 1: included things like the Treasury Department and the State Department, 183 00:08:56,400 --> 00:08:58,800 Speaker 1: and that the Department of Homeland Security. The I R s, 184 00:08:59,160 --> 00:09:02,240 Speaker 1: how how can we need that vulnerable at this point? Well, 185 00:09:02,280 --> 00:09:04,400 Speaker 1: I mean, actually, David, if you if you kind of 186 00:09:04,640 --> 00:09:07,760 Speaker 1: stand back from this hack, uh, And there's a pattern 187 00:09:07,800 --> 00:09:09,880 Speaker 1: of this. In fact, we study this in the Obama 188 00:09:10,000 --> 00:09:12,920 Speaker 1: Commission and my my as you mentioned, my faint Tank 189 00:09:13,040 --> 00:09:15,319 Speaker 1: is focused on this as well. I think about it 190 00:09:15,360 --> 00:09:19,360 Speaker 1: as your supply chain. In this particular case. Solar Wind 191 00:09:19,480 --> 00:09:23,400 Speaker 1: is a provider of services, network services, but services to 192 00:09:23,440 --> 00:09:27,160 Speaker 1: all these various entities, and that's the nature of their business. However, 193 00:09:27,360 --> 00:09:30,000 Speaker 1: there's they're very innovative, they're very good, they're growing very 194 00:09:30,080 --> 00:09:33,240 Speaker 1: very quickly. But but perhaps they weren't as thorough as 195 00:09:33,240 --> 00:09:35,719 Speaker 1: they needed to be as far as securing their particular 196 00:09:35,800 --> 00:09:39,280 Speaker 1: platform itself. I don't know that. But the suspicion is 197 00:09:39,320 --> 00:09:42,080 Speaker 1: that they were able to get in. Uh. The hackers 198 00:09:42,080 --> 00:09:44,240 Speaker 1: were able to get in and to what they would 199 00:09:44,280 --> 00:09:48,079 Speaker 1: call a backdoor or vulnerability, and then through that vulnerability 200 00:09:48,559 --> 00:09:50,920 Speaker 1: they were in there for a long time. And that's 201 00:09:50,920 --> 00:09:53,400 Speaker 1: where they go on detected. Which is the complexity of 202 00:09:53,400 --> 00:09:56,560 Speaker 1: trying to figure out how this happened and who they 203 00:09:56,600 --> 00:09:58,760 Speaker 1: are and what the impact is because they've been kind 204 00:09:58,760 --> 00:10:01,280 Speaker 1: of invisible, the all of a sudden something happens with 205 00:10:01,440 --> 00:10:04,520 Speaker 1: they become apparent. Uh neither a big data sets start 206 00:10:04,559 --> 00:10:06,840 Speaker 1: to disappear or wherever that happens to be, or the 207 00:10:06,920 --> 00:10:10,320 Speaker 1: government sees what's going on and they have to begin 208 00:10:10,360 --> 00:10:12,480 Speaker 1: to react. But the point of it is is the 209 00:10:12,880 --> 00:10:15,920 Speaker 1: key is the vulnerability of people's supply chains. I mean, 210 00:10:15,960 --> 00:10:18,800 Speaker 1: if you were going to go hack the US government, 211 00:10:18,840 --> 00:10:20,920 Speaker 1: you wouldn't go hack the military or n s A 212 00:10:21,080 --> 00:10:23,920 Speaker 1: or c i A. You would hack the civilion side 213 00:10:23,920 --> 00:10:26,440 Speaker 1: of government, which is not nearly as secure coming through 214 00:10:26,520 --> 00:10:30,160 Speaker 1: one of their providers, their service providers. No different than 215 00:10:30,200 --> 00:10:32,719 Speaker 1: if you're going to attack hack a bank. I mean, 216 00:10:32,760 --> 00:10:35,320 Speaker 1: to go after a bank that's spending billions of dollars 217 00:10:35,360 --> 00:10:38,040 Speaker 1: or hundreds of millions of dollars to protect their infrastructure 218 00:10:38,320 --> 00:10:41,120 Speaker 1: is very challenging. However, if you go through someone within 219 00:10:41,120 --> 00:10:44,120 Speaker 1: their supply chains, from small innovative company that they're using 220 00:10:44,480 --> 00:10:47,160 Speaker 1: to either help with technology or just sell their products 221 00:10:47,200 --> 00:10:49,640 Speaker 1: and those sorts of things, they're the ones that are 222 00:10:49,679 --> 00:10:52,400 Speaker 1: the most vulnerable, and then therefore you your entity is 223 00:10:52,440 --> 00:10:55,200 Speaker 1: vulnerable because they're part of your operations. Well, that was 224 00:10:55,240 --> 00:10:58,000 Speaker 1: the question. How dependent are we in the government on 225 00:10:58,040 --> 00:11:01,200 Speaker 1: those independent contractors, and not just the contractors, but the 226 00:11:01,200 --> 00:11:05,360 Speaker 1: subcontractors and the subcontracts to the subcontractors. We're very dependent 227 00:11:05,440 --> 00:11:07,400 Speaker 1: on them. And you saw that not just in cyber 228 00:11:07,480 --> 00:11:09,360 Speaker 1: go back to the pandemic when all of a sudden 229 00:11:09,400 --> 00:11:11,920 Speaker 1: we couldn't get PPE and those sorts of things. So 230 00:11:11,960 --> 00:11:14,480 Speaker 1: there's a total dependency on the supply chain and those 231 00:11:14,520 --> 00:11:17,760 Speaker 1: suppliers within the government. That's not a bad thing, I mean, 232 00:11:17,840 --> 00:11:20,400 Speaker 1: quite honestly. But what it what it requires is the 233 00:11:20,440 --> 00:11:24,160 Speaker 1: government established standards, just like a company would establish standards 234 00:11:24,200 --> 00:11:26,400 Speaker 1: that if you're going to be a provider of services 235 00:11:26,400 --> 00:11:30,080 Speaker 1: to us, whether that's software, people, whatever it happens to be, 236 00:11:30,200 --> 00:11:32,720 Speaker 1: you have to comply with these cyber standards. Now, there's 237 00:11:32,720 --> 00:11:35,880 Speaker 1: a standard that was established called NISTS by in the 238 00:11:35,920 --> 00:11:38,800 Speaker 1: Commerce Department that we worked on years ago. That's a 239 00:11:38,920 --> 00:11:42,080 Speaker 1: very good standard by the way to secure the infrastructure, 240 00:11:42,120 --> 00:11:44,480 Speaker 1: and a lot of the privact sector companies are complying 241 00:11:44,559 --> 00:11:46,760 Speaker 1: with that. What we did in my little think tank 242 00:11:46,960 --> 00:11:49,720 Speaker 1: would think of the cyber readiest incident. We felt that 243 00:11:49,760 --> 00:11:52,160 Speaker 1: people were going to focus on these very small businesses 244 00:11:52,400 --> 00:11:54,400 Speaker 1: so we created a whole set of tools that we 245 00:11:54,520 --> 00:11:57,280 Speaker 1: distribute for free. I mean they're actually for freeworred nonprofits. 246 00:11:57,280 --> 00:11:59,120 Speaker 1: So we can do these sorts of things, and we 247 00:11:59,200 --> 00:12:02,559 Speaker 1: probably have hundreds of thousands of subscribers now, even small 248 00:12:02,600 --> 00:12:05,480 Speaker 1: spots with three or four employees, not just companies or 249 00:12:05,520 --> 00:12:08,520 Speaker 1: government agencies, to give them a basic level of protection 250 00:12:08,880 --> 00:12:11,120 Speaker 1: when it comes to cyber threats. Now, the point of 251 00:12:11,160 --> 00:12:13,680 Speaker 1: it again is why are we doing this? Is because 252 00:12:13,679 --> 00:12:17,400 Speaker 1: if your General Motors or Exonmobile or some large entity, 253 00:12:17,640 --> 00:12:20,400 Speaker 1: you have all these small little partners involved in your infrastructure, 254 00:12:20,480 --> 00:12:23,439 Speaker 1: drilling operation, card dealerships, etcetera, etcetera. So you want to 255 00:12:23,440 --> 00:12:27,560 Speaker 1: be able to protect yourself from their vulnerabilities, not just 256 00:12:27,679 --> 00:12:31,079 Speaker 1: your own. From a cyber perspective, we have a president 257 00:12:31,080 --> 00:12:34,560 Speaker 1: like Biden coming to office January twenty. Who does he 258 00:12:34,679 --> 00:12:37,000 Speaker 1: have responsible for this? Or who does the current president, 259 00:12:37,040 --> 00:12:38,920 Speaker 1: President Trump have response to this? Who does he call 260 00:12:39,000 --> 00:12:41,080 Speaker 1: up when he hears about something like this? Well, that's 261 00:12:41,080 --> 00:12:43,679 Speaker 1: a great thing. That is a great question, my friend, 262 00:12:43,880 --> 00:12:46,720 Speaker 1: that is unbelievably a great question. I would say they 263 00:12:46,720 --> 00:12:48,920 Speaker 1: should start with somebody within the White House staff. But 264 00:12:49,000 --> 00:12:51,800 Speaker 1: let's talk about it as it is. Today versus as 265 00:12:51,800 --> 00:12:54,680 Speaker 1: maybe a point of view, as it should be. As 266 00:12:54,720 --> 00:12:58,480 Speaker 1: it is today, there is an agency UH called the 267 00:12:58,520 --> 00:13:02,680 Speaker 1: Cybersecurity and infash Structure Security Agency. It's part of the 268 00:13:02,720 --> 00:13:05,960 Speaker 1: Department of Homeland Security that it's responsible for these kinds 269 00:13:06,000 --> 00:13:09,560 Speaker 1: of hacks, for agency protection, pandemics, all sorts of things. 270 00:13:09,559 --> 00:13:12,240 Speaker 1: But they are the responsible agency that does these things. 271 00:13:12,600 --> 00:13:15,520 Speaker 1: As you might recall, there's nobody leading that agency at 272 00:13:15,520 --> 00:13:17,720 Speaker 1: this point in time because they were all fired. So 273 00:13:17,800 --> 00:13:21,040 Speaker 1: there's no one in the agency at the agency level 274 00:13:21,160 --> 00:13:25,000 Speaker 1: who is in charge of leading these operations. There's also 275 00:13:25,120 --> 00:13:27,440 Speaker 1: no one in the White House staff either, by the way, 276 00:13:27,720 --> 00:13:31,360 Speaker 1: because as UH it was part of the focus in 277 00:13:31,360 --> 00:13:35,240 Speaker 1: the National Security Council of all administration. We are proposed 278 00:13:35,360 --> 00:13:37,640 Speaker 1: in the Executive Order that they elevate it to give 279 00:13:37,679 --> 00:13:40,160 Speaker 1: it established a higher set of priorities. That would be 280 00:13:40,200 --> 00:13:42,880 Speaker 1: a visible way to create priority within the government is 281 00:13:43,000 --> 00:13:47,280 Speaker 1: elevate that person or that individual. Since then, that actually 282 00:13:47,280 --> 00:13:50,400 Speaker 1: has been kind of lessen. Their responsibilities have been lessened, 283 00:13:50,440 --> 00:13:53,079 Speaker 1: and therefore obviously their focused and their impact has been lesson. 284 00:13:53,120 --> 00:13:56,040 Speaker 1: So I'm the President of the United States, sitting President 285 00:13:56,080 --> 00:13:58,880 Speaker 1: United States, and I wanted to call somebody from my 286 00:13:58,960 --> 00:14:00,920 Speaker 1: staff in my office. Is that tell me, hey, what's 287 00:14:00,920 --> 00:14:03,640 Speaker 1: going on? What should we be doing? There's no one there. 288 00:14:04,840 --> 00:14:07,040 Speaker 1: Do we have the people in the United States government 289 00:14:07,120 --> 00:14:10,760 Speaker 1: somewhere working somewhere who have the technical expertise to deal 290 00:14:10,800 --> 00:14:12,760 Speaker 1: with this? I mean, this is very special stuff. Certainly 291 00:14:12,800 --> 00:14:15,320 Speaker 1: I wouldn't know how to go about dealing with it. 292 00:14:15,400 --> 00:14:17,880 Speaker 1: But do we have the level of sophistication in the 293 00:14:17,960 --> 00:14:20,680 Speaker 1: people we have employed in the government. Yes, we do, 294 00:14:20,800 --> 00:14:22,920 Speaker 1: but it's it's it's more and I'll call it the 295 00:14:23,000 --> 00:14:27,200 Speaker 1: National Security and the Defense establishment. They really are excellent skills. 296 00:14:27,320 --> 00:14:30,680 Speaker 1: If you look at what they referred to as dot mill, 297 00:14:30,960 --> 00:14:33,680 Speaker 1: you know, uh U S Government, Dot Mill, Brouss, dot gov, 298 00:14:33,760 --> 00:14:37,640 Speaker 1: which is the civilian side, they're very very good at this. 299 00:14:37,720 --> 00:14:40,680 Speaker 1: They have good infrastructure. They actually do a pretty good 300 00:14:40,720 --> 00:14:43,920 Speaker 1: job in defending their own infrastructure as well as our country. 301 00:14:44,280 --> 00:14:46,320 Speaker 1: It's when you get to the civilian side of government. 302 00:14:46,400 --> 00:14:50,520 Speaker 1: You know, you mentioned Treasury. The previous acts were hacks, 303 00:14:50,520 --> 00:14:53,480 Speaker 1: were OPI, the Office of Personnel and Management O p M, 304 00:14:54,000 --> 00:14:56,800 Speaker 1: I R S, etcetera, etcetera. They don't have the same 305 00:14:56,880 --> 00:15:00,120 Speaker 1: level as skill and their infrastructure is very antiquated. That 306 00:15:00,200 --> 00:15:04,640 Speaker 1: was Sam Paulisano, former chairman and CEO of IBM coming up. 307 00:15:04,800 --> 00:15:07,840 Speaker 1: The vaccine is good news, but how good is it? 308 00:15:08,000 --> 00:15:10,840 Speaker 1: And what do we need to do until everybody gets it? 309 00:15:11,400 --> 00:15:19,600 Speaker 1: This is Wall Street Week on Bloomberg. This is Bloomberg 310 00:15:19,640 --> 00:15:23,640 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. Well, 311 00:15:23,680 --> 00:15:26,400 Speaker 1: every single day seems to bring new news about vaccines, 312 00:15:26,440 --> 00:15:31,080 Speaker 1: but also new instances of COVID nineteen infections and hospitalizations 313 00:15:31,120 --> 00:15:33,640 Speaker 1: and yes, deaths. The question then, is how do we 314 00:15:33,640 --> 00:15:35,680 Speaker 1: get from the current crisis to the time when we 315 00:15:35,680 --> 00:15:38,120 Speaker 1: can start to get our lives back together again. Well, 316 00:15:38,160 --> 00:15:40,160 Speaker 1: partners in Health is leading the way in that with 317 00:15:40,240 --> 00:15:43,800 Speaker 1: its pioneering and the in testing and in tracing across 318 00:15:43,880 --> 00:15:46,440 Speaker 1: the country. Welcome to the CEO of Partner's Health. She 319 00:15:46,560 --> 00:15:48,720 Speaker 1: is Dr Sheila Davis. So, Dr Davis, thank you so 320 00:15:48,760 --> 00:15:50,320 Speaker 1: much for being with us. Give us a sense of 321 00:15:50,360 --> 00:15:52,480 Speaker 1: what you were doing at partners in Health. Yeah, in 322 00:15:52,520 --> 00:15:55,760 Speaker 1: the US, we've been working closely, certainly through the in 323 00:15:55,800 --> 00:15:58,640 Speaker 1: the state of Massachusetts at the invitation of Governor Baker, 324 00:15:58,880 --> 00:16:01,920 Speaker 1: and then in eleven other jurisdictions in the US who 325 00:16:01,920 --> 00:16:04,240 Speaker 1: have asked us to come in and help, and we've 326 00:16:04,320 --> 00:16:07,840 Speaker 1: taken lessons learned from our work around the world in 327 00:16:07,960 --> 00:16:10,800 Speaker 1: Haiti and Sierra Leone in other places on how to 328 00:16:10,840 --> 00:16:14,880 Speaker 1: actually do contact tracing as one piece of a comprehensive plan. 329 00:16:15,480 --> 00:16:18,360 Speaker 1: We really need a strong public health system, and this 330 00:16:18,760 --> 00:16:21,680 Speaker 1: COVID nineteen has illuminated I think that in the U 331 00:16:21,880 --> 00:16:25,440 Speaker 1: s we're really lacking a robust public health response. Well, 332 00:16:25,440 --> 00:16:27,520 Speaker 1: that's one of the interesting things here. I heard someone say, 333 00:16:27,560 --> 00:16:29,640 Speaker 1: I think Larry Summers actually said we've over invested in 334 00:16:29,640 --> 00:16:32,360 Speaker 1: private health, under investment in public health, as you say, 335 00:16:32,680 --> 00:16:34,920 Speaker 1: partners in health. Originally really in Haiti, but you've done 336 00:16:34,960 --> 00:16:37,840 Speaker 1: an extensive word in other countries, including Rwanda, elsewhere around 337 00:16:37,840 --> 00:16:39,840 Speaker 1: the world. What can we learn from some of the 338 00:16:39,920 --> 00:16:42,760 Speaker 1: less developed countries that can really be applied and we 339 00:16:42,840 --> 00:16:45,560 Speaker 1: need here in the United States of America. Yeah, I 340 00:16:45,600 --> 00:16:47,360 Speaker 1: think it's a great question. You know, there's a lot 341 00:16:47,440 --> 00:16:50,360 Speaker 1: we can learn. We know that other countries that do 342 00:16:50,400 --> 00:16:52,680 Speaker 1: not have the same investment in health have done much 343 00:16:52,720 --> 00:16:55,840 Speaker 1: better through this pandemic. And I think a lot of 344 00:16:55,880 --> 00:16:59,680 Speaker 1: it is because there is a comprehensive healthcare system that 345 00:17:00,160 --> 00:17:03,440 Speaker 1: have a public health model that includes contact tracing, that 346 00:17:03,520 --> 00:17:07,359 Speaker 1: includes much more of people embedded in the community like 347 00:17:07,520 --> 00:17:11,119 Speaker 1: community health workers. We still need high tech i c 348 00:17:11,359 --> 00:17:14,199 Speaker 1: u s in all the places that we work, but 349 00:17:14,320 --> 00:17:17,359 Speaker 1: we definitely can have lessons learned from Rwanda, which has 350 00:17:17,400 --> 00:17:21,200 Speaker 1: done a fantastic pantemic control and other places, and how 351 00:17:21,200 --> 00:17:24,560 Speaker 1: do we infuse those into the US health system and 352 00:17:24,600 --> 00:17:28,480 Speaker 1: really build a system that's not reliant just on hospitals 353 00:17:29,080 --> 00:17:32,320 Speaker 1: as the pinnacle of all of the healthcare. We've seen 354 00:17:32,400 --> 00:17:35,399 Speaker 1: the testing ramp up from very very modest origins, and 355 00:17:35,440 --> 00:17:37,840 Speaker 1: now it seems to be moving along in most of 356 00:17:37,840 --> 00:17:39,920 Speaker 1: the United States. At the same time, I wonder about 357 00:17:39,920 --> 00:17:42,120 Speaker 1: the tracing part of it, because I know you're very 358 00:17:42,200 --> 00:17:44,919 Speaker 1: involved in that. We have reports, for example out of 359 00:17:45,320 --> 00:17:49,000 Speaker 1: New Jersey, for example, where we had reports from Governor 360 00:17:49,160 --> 00:17:52,400 Speaker 1: Murphy that maybe sev the people contacted don't comply, don't 361 00:17:52,400 --> 00:17:55,440 Speaker 1: cooperate in helping with the tracing, you know. I think 362 00:17:55,440 --> 00:17:58,600 Speaker 1: what we've found is that when people are when we're 363 00:17:58,640 --> 00:18:01,800 Speaker 1: able to also assess up their needs are a lot 364 00:18:01,800 --> 00:18:04,720 Speaker 1: of people are not able to isolate a quarantine safely 365 00:18:04,840 --> 00:18:08,560 Speaker 1: if they don't have the social support that's needed. People 366 00:18:08,640 --> 00:18:12,040 Speaker 1: need diapers, people need formula, people need food. So a 367 00:18:12,040 --> 00:18:15,320 Speaker 1: core component of what we embedded in the Massachusetts program 368 00:18:15,359 --> 00:18:18,800 Speaker 1: as well as um with other places we're working, is 369 00:18:18,840 --> 00:18:23,040 Speaker 1: that there's a direct connection to when our contact tracers 370 00:18:23,080 --> 00:18:25,840 Speaker 1: reach out, which is the advantage of versus a text 371 00:18:25,960 --> 00:18:29,720 Speaker 1: or some other type of of tech option, and assessing 372 00:18:29,760 --> 00:18:31,720 Speaker 1: do people need help, that they need a place to 373 00:18:31,800 --> 00:18:35,320 Speaker 1: say where they can safely isolate from their family members. 374 00:18:35,359 --> 00:18:38,720 Speaker 1: So it really is has to be a more of 375 00:18:38,760 --> 00:18:41,760 Speaker 1: a safety net model. So I think most people do 376 00:18:41,880 --> 00:18:44,800 Speaker 1: want to comply, but many people don't have the ability 377 00:18:44,840 --> 00:18:47,000 Speaker 1: to have a separate wing in their home or a 378 00:18:47,000 --> 00:18:49,520 Speaker 1: separate way to have food brought in. Now that sounds 379 00:18:49,520 --> 00:18:51,840 Speaker 1: like a pretty labor intensive effort. As you say, it's 380 00:18:51,880 --> 00:18:54,280 Speaker 1: not just a technological fix to figure out who's got 381 00:18:54,280 --> 00:18:55,880 Speaker 1: it and who might give it to somebody, But how 382 00:18:55,880 --> 00:18:57,679 Speaker 1: do we support you in fact you have and you 383 00:18:57,720 --> 00:19:00,400 Speaker 1: have to isolate or you have to quarantine somehow. How 384 00:19:00,480 --> 00:19:02,320 Speaker 1: labor intensive is this? How many people do have working 385 00:19:02,320 --> 00:19:06,400 Speaker 1: on this, you know in Massachusetts in collaboration with other 386 00:19:06,480 --> 00:19:09,119 Speaker 1: members of the state agencies, which has been a phenomenal 387 00:19:09,119 --> 00:19:11,600 Speaker 1: experience for us, and we've learned a lot. We have 388 00:19:12,280 --> 00:19:15,240 Speaker 1: now over two thousand people who are working on this effort, 389 00:19:15,520 --> 00:19:17,800 Speaker 1: But really there are people who are picking up the 390 00:19:17,840 --> 00:19:20,920 Speaker 1: phone talking to people um, you know, assessing what their 391 00:19:20,960 --> 00:19:24,480 Speaker 1: needs are and connecting them to existing resources in the state. 392 00:19:24,920 --> 00:19:27,560 Speaker 1: So a lot of it was not Certainly some new 393 00:19:27,600 --> 00:19:30,880 Speaker 1: money was infused for the social support efforts, but part 394 00:19:30,880 --> 00:19:33,639 Speaker 1: of it was also making sure that we're connecting the dots. 395 00:19:34,040 --> 00:19:37,240 Speaker 1: And if we look at the overall cost of what 396 00:19:37,359 --> 00:19:40,480 Speaker 1: it costs to have robots public health programs, it's much 397 00:19:40,560 --> 00:19:43,960 Speaker 1: cheaper in the long run than a few days, weeks 398 00:19:44,040 --> 00:19:46,520 Speaker 1: or months in a hospital, which is the most expensive 399 00:19:46,560 --> 00:19:49,960 Speaker 1: place certainly to have care. How widely distributed is this 400 00:19:50,000 --> 00:19:52,360 Speaker 1: the United States? I mean you've mentioned Massachusetts. I remember 401 00:19:52,440 --> 00:19:55,240 Speaker 1: the Governor of Massachusetts at the news conference announcing early 402 00:19:55,280 --> 00:19:56,800 Speaker 1: on that he was going to turn to partners and 403 00:19:56,800 --> 00:19:59,200 Speaker 1: help to help them on the tracing how far beyond 404 00:19:59,280 --> 00:20:03,280 Speaker 1: Massachusetts it's gone. So we're now currently working in eleven 405 00:20:03,320 --> 00:20:07,240 Speaker 1: different jurisdictions, and it's anywhere from states to counties to 406 00:20:07,400 --> 00:20:11,240 Speaker 1: working with mayor's office of offices. And we're also taking 407 00:20:11,320 --> 00:20:14,440 Speaker 1: lessons learned and having a learning collaborative, which is an 408 00:20:14,440 --> 00:20:18,399 Speaker 1: open sourced ability for UM lessons learned to be shared 409 00:20:18,440 --> 00:20:21,359 Speaker 1: from Illinois to North Carolina and in a way that 410 00:20:21,400 --> 00:20:24,359 Speaker 1: we're continuing to learn from each other. So we have 411 00:20:24,600 --> 00:20:28,240 Speaker 1: staff embedded in all of these different places and they 412 00:20:28,240 --> 00:20:33,680 Speaker 1: are providing technical support. They're looking at um connecting for convening, 413 00:20:33,720 --> 00:20:37,600 Speaker 1: for knowledge sharing, and also we're really um committed to 414 00:20:37,600 --> 00:20:41,040 Speaker 1: advocacy and that we're using this moment to also look 415 00:20:41,080 --> 00:20:43,240 Speaker 1: at how do we have a better health system in 416 00:20:43,240 --> 00:20:47,000 Speaker 1: the US that really focuses on those who are who 417 00:20:47,080 --> 00:20:49,800 Speaker 1: need it most and those who have been most disproportionately 418 00:20:49,840 --> 00:20:53,639 Speaker 1: impacted by COVID nineteen. That was Dr Sheila Davis, CEO 419 00:20:53,840 --> 00:20:56,359 Speaker 1: of Partners and Health, coming off. We wrap up our 420 00:20:56,400 --> 00:20:59,360 Speaker 1: week as we do every week, with Larry Summer's off Harvard. 421 00:21:00,080 --> 00:21:15,080 Speaker 1: This is Wall Street Week on Bloomberg. This is Bloomberg 422 00:21:15,160 --> 00:21:19,440 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. As 423 00:21:19,480 --> 00:21:22,159 Speaker 1: we do every week, we conclude our week with Larry Summers, 424 00:21:22,160 --> 00:21:25,600 Speaker 1: our special contributor, former treasure Secretary of Harvard. So Larry, 425 00:21:25,760 --> 00:21:28,560 Speaker 1: great to have you back with us. We finally, finally 426 00:21:28,640 --> 00:21:31,240 Speaker 1: are gonna get that stimulus about nine billion dollars. What 427 00:21:31,280 --> 00:21:35,040 Speaker 1: do you make of it? Better than the alternative? Good 428 00:21:35,080 --> 00:21:41,880 Speaker 1: insurance against things going wrong? Glad to see more investments 429 00:21:41,960 --> 00:21:47,240 Speaker 1: in testing. Really sorry to see that we're not supporting 430 00:21:47,359 --> 00:21:51,320 Speaker 1: state and local governments. It's not a healthy thing that 431 00:21:51,440 --> 00:21:54,560 Speaker 1: we couldn't reach some kind of compromise on the liability 432 00:21:54,640 --> 00:21:59,520 Speaker 1: issue and the state and local government issue. That's really 433 00:21:59,560 --> 00:22:03,959 Speaker 1: a very poor reflection on our system, and I'm not 434 00:22:04,000 --> 00:22:06,199 Speaker 1: sure we need it. And across the word set of 435 00:22:06,320 --> 00:22:12,800 Speaker 1: checks for households at this date, given the vaccine is 436 00:22:12,840 --> 00:22:18,399 Speaker 1: on the way, given that there's very substantial accumulated savings 437 00:22:18,440 --> 00:22:21,879 Speaker 1: in large parts of the household sector. So I'm glad 438 00:22:21,920 --> 00:22:24,360 Speaker 1: to see that stimulus is coming. I'm glad to see 439 00:22:24,400 --> 00:22:28,600 Speaker 1: help for small business. I'm glad to see continuation of 440 00:22:29,200 --> 00:22:32,560 Speaker 1: unemployment insurance. But this is not as good a bill 441 00:22:32,600 --> 00:22:35,880 Speaker 1: as we could have had. Still, it's better than I expected, 442 00:22:36,119 --> 00:22:38,960 Speaker 1: uh two weeks ago, and we should be grateful for that. 443 00:22:39,320 --> 00:22:41,680 Speaker 1: So so pick up on your point about checks going 444 00:22:41,720 --> 00:22:44,800 Speaker 1: to everybody, regardless of what their particular needs are not. 445 00:22:45,240 --> 00:22:47,919 Speaker 1: We heard from Chair J. Powell of the Federal Reserve 446 00:22:48,040 --> 00:22:51,159 Speaker 1: this week saying he thinks overall that the prospects are 447 00:22:51,200 --> 00:22:53,960 Speaker 1: brightening for these economy in we have a rough patch 448 00:22:54,040 --> 00:22:56,080 Speaker 1: to go through, but we do have a vaccine coming. 449 00:22:56,119 --> 00:22:59,440 Speaker 1: But he also pointed out that really below that top 450 00:22:59,480 --> 00:23:01,760 Speaker 1: line number or there are some people doing very very well, 451 00:23:01,800 --> 00:23:04,600 Speaker 1: whether it's individuals or corporations or and other people doing 452 00:23:04,840 --> 00:23:07,840 Speaker 1: really not well at all. What can we do about 453 00:23:07,920 --> 00:23:11,960 Speaker 1: that part of the problem. Look, it's a case shaped recovery. 454 00:23:12,520 --> 00:23:15,639 Speaker 1: There's no question that for people who can sit in 455 00:23:15,680 --> 00:23:20,200 Speaker 1: the solitary splendor of their homes uh doing their work 456 00:23:20,359 --> 00:23:27,440 Speaker 1: by zoom, having their groceries uh delivered um with more 457 00:23:27,520 --> 00:23:33,120 Speaker 1: family around than uh usual, this has not been an 458 00:23:33,119 --> 00:23:37,280 Speaker 1: agonizing period. For others who work with their hands, who 459 00:23:37,359 --> 00:23:42,119 Speaker 1: are providing uh those uh deliveries, who don't have a 460 00:23:42,280 --> 00:23:45,639 Speaker 1: kind of space to be fully safe, and may not 461 00:23:45,800 --> 00:23:48,520 Speaker 1: even have a kind of cash flow to be able 462 00:23:48,560 --> 00:23:51,920 Speaker 1: to buy both their medicines and their food, it's been 463 00:23:51,960 --> 00:23:56,040 Speaker 1: a very very difficult period. This is why we need 464 00:23:56,119 --> 00:24:00,879 Speaker 1: a more just and generous society. We need a stronger 465 00:24:01,359 --> 00:24:07,919 Speaker 1: set of refundable tax credits, particularly the childcare tax credit. 466 00:24:08,480 --> 00:24:11,920 Speaker 1: Above all, though, we need to run this economy strong 467 00:24:12,359 --> 00:24:16,360 Speaker 1: and have an economy where the dominant theme is jobs 468 00:24:16,400 --> 00:24:20,119 Speaker 1: trying to find workers rather than the dominant theme being 469 00:24:20,160 --> 00:24:23,960 Speaker 1: workers trying to find jobs. If we do that then 470 00:24:24,000 --> 00:24:28,680 Speaker 1: the engine of capitalism will be harnessed UH towards fairness. 471 00:24:28,760 --> 00:24:33,760 Speaker 1: People will be sending buses into disadvantaged communities to find 472 00:24:33,840 --> 00:24:39,640 Speaker 1: an attract and pull out employees. People will be providing 473 00:24:39,760 --> 00:24:45,440 Speaker 1: second chance training programs for falons for others who may 474 00:24:45,640 --> 00:24:51,119 Speaker 1: not have traditionally attractive credentials for work. But if you 475 00:24:51,560 --> 00:24:54,199 Speaker 1: can run the economy to the point where people are 476 00:24:54,280 --> 00:24:58,560 Speaker 1: sufficiently eager for workers, you can cause all kinds of 477 00:24:58,560 --> 00:25:01,920 Speaker 1: good social things to happen. Larry, as you just laid out, 478 00:25:02,040 --> 00:25:05,200 Speaker 1: the Biden administration as it comes in next month, has 479 00:25:05,280 --> 00:25:08,640 Speaker 1: a long list on its agenda economically for the United States. 480 00:25:08,720 --> 00:25:12,199 Speaker 1: At the same time, I wonder about globally, can we 481 00:25:12,240 --> 00:25:14,640 Speaker 1: really succeed in the long term in the United States 482 00:25:14,720 --> 00:25:18,119 Speaker 1: without having the global economy recover what lessons are there 483 00:25:18,160 --> 00:25:21,760 Speaker 1: from the vandemic for the global economy. I used to 484 00:25:21,760 --> 00:25:25,080 Speaker 1: say when I was Treasury Secretary that the world economy 485 00:25:25,560 --> 00:25:31,040 Speaker 1: couldn't fly forever on a single American UH engine, or 486 00:25:31,080 --> 00:25:34,879 Speaker 1: that no nation can be an oasis of prosperity in 487 00:25:34,920 --> 00:25:38,920 Speaker 1: a troubled world. I think we're going to reap very 488 00:25:38,960 --> 00:25:44,600 Speaker 1: substantial consequences from the fact that after decades when developing 489 00:25:44,680 --> 00:25:48,160 Speaker 1: countries were developing and we're catching up with the world's 490 00:25:48,200 --> 00:25:54,000 Speaker 1: major economies. That trend is going into reverse UH right now, 491 00:25:54,560 --> 00:25:59,520 Speaker 1: given the difficulties they're having and managing COVID, managing reduced exports, 492 00:26:00,000 --> 00:26:05,320 Speaker 1: managing heavy debts, managing reduced remittances, and we need to 493 00:26:05,480 --> 00:26:07,959 Speaker 1: step up on that. We need to step up with 494 00:26:08,520 --> 00:26:14,960 Speaker 1: very substantial global financial support provided through the international financial institutions. 495 00:26:15,359 --> 00:26:21,880 Speaker 1: We need to UH step up with an SDR special 496 00:26:21,960 --> 00:26:26,760 Speaker 1: drawing right allocation from the i m F. We need 497 00:26:26,800 --> 00:26:31,480 Speaker 1: to step up with much more investment in making sure 498 00:26:31,560 --> 00:26:35,800 Speaker 1: that there's not another pandemic, and while we're at it, 499 00:26:36,160 --> 00:26:40,080 Speaker 1: making sure that there really are the resources to get 500 00:26:40,560 --> 00:26:44,199 Speaker 1: vaccine to all the people on the planet, not just 501 00:26:44,359 --> 00:26:49,399 Speaker 1: the people in the rich countries UM as quickly as possible. 502 00:26:50,240 --> 00:26:53,359 Speaker 1: We've got to k shaped recovery problems. We need to 503 00:26:53,400 --> 00:26:59,240 Speaker 1: fight a case shaped recovery problem in America and the 504 00:26:59,320 --> 00:27:05,520 Speaker 1: case shaped recovery problem globally. And ultimately it's gonna be 505 00:27:05,600 --> 00:27:11,880 Speaker 1: cheaper for us to fight that fight to support developing 506 00:27:12,000 --> 00:27:17,639 Speaker 1: countries sooner rather than to support the UH later. And 507 00:27:18,080 --> 00:27:20,520 Speaker 1: I hope that one of the first initiatives of the 508 00:27:20,520 --> 00:27:25,080 Speaker 1: Biden administration will be bringing the global dimension to the 509 00:27:25,160 --> 00:27:28,600 Speaker 1: COVID recovery effort. So that's a global perspective. Let's go 510 00:27:28,720 --> 00:27:31,520 Speaker 1: local now we talk about global Wall Street, Let's talk 511 00:27:31,560 --> 00:27:34,320 Speaker 1: about New York Wall Street and particularly New York City, 512 00:27:34,320 --> 00:27:37,679 Speaker 1: the metropolitan area. What is going to happen to some 513 00:27:37,760 --> 00:27:40,040 Speaker 1: of the vibran cities like New York there are also 514 00:27:40,080 --> 00:27:43,240 Speaker 1: a high price San Francisco is another example. What's gonna 515 00:27:43,240 --> 00:27:45,600 Speaker 1: happen as the result of this pandemic. We're seeing surveys 516 00:27:45,640 --> 00:27:48,320 Speaker 1: now of various people, both people who hire and the 517 00:27:48,359 --> 00:27:50,640 Speaker 1: workers themselves, saying they think they're gonna be working from 518 00:27:50,640 --> 00:27:54,600 Speaker 1: home a lot more. Look, I think in terms of cities, 519 00:27:55,160 --> 00:27:58,520 Speaker 1: the tendency has been for the last several decades in 520 00:27:58,560 --> 00:28:01,720 Speaker 1: the United States for the rich to get richer, for 521 00:28:01,840 --> 00:28:08,320 Speaker 1: the force to be sent center in rather than center out. 522 00:28:09,160 --> 00:28:13,600 Speaker 1: I think that may change the combination of people being 523 00:28:14,440 --> 00:28:22,040 Speaker 1: uncomfortable with density even post COVID, having seen what technology 524 00:28:22,119 --> 00:28:27,200 Speaker 1: in terms of working at home can enable, the fact 525 00:28:27,280 --> 00:28:31,320 Speaker 1: that there's no longer state and local tax deductibility means 526 00:28:31,400 --> 00:28:34,920 Speaker 1: that the tax burdens associated with their major cities are 527 00:28:35,000 --> 00:28:39,400 Speaker 1: much more burdensome for the affluent people who UH live 528 00:28:39,480 --> 00:28:43,480 Speaker 1: in them, a sense that people are moving out rather 529 00:28:43,600 --> 00:28:47,560 Speaker 1: than moving in, which then creates a kind of self 530 00:28:47,600 --> 00:28:54,680 Speaker 1: fulfilling prophecy. UH. I would expect that if you look 531 00:28:54,720 --> 00:29:00,160 Speaker 1: at great cities like New York, like San Francisco, like 532 00:29:00,640 --> 00:29:05,440 Speaker 1: uh Los Angeles, that it's likely to be a difficult 533 00:29:05,960 --> 00:29:13,280 Speaker 1: UH few years of declining public services, declining in migration, 534 00:29:14,000 --> 00:29:20,360 Speaker 1: increasing UH out migration. And so my guesses we're going 535 00:29:20,400 --> 00:29:23,720 Speaker 1: to see a quite substantial term doesn't give me any 536 00:29:23,720 --> 00:29:28,479 Speaker 1: pleasure to make that forecasts. And in many ways, I 537 00:29:28,520 --> 00:29:34,440 Speaker 1: think those concentrations of talent have been what pushed our 538 00:29:34,480 --> 00:29:38,680 Speaker 1: country forward. But I think you're gonna see quite dramatic 539 00:29:38,880 --> 00:29:43,840 Speaker 1: changes in traditional patterns of economic geography. We always like 540 00:29:43,920 --> 00:29:46,240 Speaker 1: to end the week with a lightning round of Summer says, 541 00:29:46,640 --> 00:29:49,280 Speaker 1: Let's take a three questions here. Number one, we heard 542 00:29:49,360 --> 00:29:51,440 Speaker 1: j Powell, the tariff of the Fed, to this week 543 00:29:51,520 --> 00:29:53,800 Speaker 1: say he's not going to back up bond buying until 544 00:29:53,880 --> 00:29:56,040 Speaker 1: we really restore a lot of the employment. What are 545 00:29:56,040 --> 00:29:58,200 Speaker 1: we going to move back to a four percent unemployment 546 00:29:58,280 --> 00:30:01,840 Speaker 1: rate in this country end of twenty two? And what 547 00:30:01,960 --> 00:30:05,120 Speaker 1: about inflation? He also talked about inflation. One won't be 548 00:30:05,160 --> 00:30:08,800 Speaker 1: back over two percent inflation in the United States sometime 549 00:30:08,920 --> 00:30:13,880 Speaker 1: during two will see at least several months because of 550 00:30:13,920 --> 00:30:18,480 Speaker 1: some combination of specific factors where the inflation rate will 551 00:30:18,480 --> 00:30:23,280 Speaker 1: get above above two percent um would be my guests. 552 00:30:23,320 --> 00:30:26,520 Speaker 1: I think that may come sooner than people think. And Larry, 553 00:30:26,600 --> 00:30:30,720 Speaker 1: finally we've seen yet again the markets really hold up 554 00:30:30,840 --> 00:30:32,600 Speaker 1: no matter what's going on. In the respect of COVID 555 00:30:32,680 --> 00:30:35,520 Speaker 1: nineteen as it spreads rapidly throughout the country. Are the 556 00:30:35,560 --> 00:30:38,760 Speaker 1: marketing equity markets in particular, are they justified right now? 557 00:30:38,800 --> 00:30:41,080 Speaker 1: Are they price about right? Are they overpriced? Where do 558 00:30:41,120 --> 00:30:44,360 Speaker 1: you think they are? Many people think they're overpriced because 559 00:30:44,400 --> 00:30:48,000 Speaker 1: they look at a very strong, very high price earnings ratio. 560 00:30:48,960 --> 00:30:52,640 Speaker 1: I think that the kind of analysis the German Powell 561 00:30:52,640 --> 00:30:57,000 Speaker 1: offered in his testimony on Wednesday UM or his press 562 00:30:57,040 --> 00:31:01,800 Speaker 1: conference on Tuesday or Wednesday was right when he emphasized 563 00:31:01,880 --> 00:31:04,160 Speaker 1: you have to look at price earnings ratios in the 564 00:31:04,280 --> 00:31:08,120 Speaker 1: context of real interest rates, and that with real interest 565 00:31:08,200 --> 00:31:11,240 Speaker 1: rates low for what I think are quite deep seated 566 00:31:11,320 --> 00:31:17,960 Speaker 1: structural reasons. My guess is that you're going to uh 567 00:31:18,200 --> 00:31:23,360 Speaker 1: see markets uh priced uh not unreasonably. That doesn't mean 568 00:31:23,400 --> 00:31:25,320 Speaker 1: they're going to keep going up as fast as they 569 00:31:25,320 --> 00:31:28,320 Speaker 1: have in the last six months. But I don't have 570 00:31:28,440 --> 00:31:33,240 Speaker 1: a sense of extremely precarious ball. What does that due 571 00:31:33,240 --> 00:31:35,320 Speaker 1: to price discovery and the equity markets. Is a practical 572 00:31:35,360 --> 00:31:37,719 Speaker 1: matter because the low interest rates are true for everybody, 573 00:31:37,720 --> 00:31:40,080 Speaker 1: whether you're a well run company or a poorly run company. 574 00:31:40,120 --> 00:31:42,840 Speaker 1: Are we sustaining some and sometimes they call hi zombie 575 00:31:42,880 --> 00:31:44,640 Speaker 1: companies who don't have enough e butit debt? It really 576 00:31:44,640 --> 00:31:47,280 Speaker 1: sed to really service the debt. Is there a risk 577 00:31:47,320 --> 00:31:49,560 Speaker 1: here to economy on the long run that we don't 578 00:31:49,560 --> 00:31:53,840 Speaker 1: have prices coming really starting out the sheep from the goats, 579 00:31:53,880 --> 00:31:56,720 Speaker 1: if I can put it that way. Incorporating it may 580 00:31:56,720 --> 00:32:00,320 Speaker 1: be a bit of that, David, But I actually think 581 00:32:00,440 --> 00:32:05,160 Speaker 1: the larger effect is probably that low interest rates mean 582 00:32:05,320 --> 00:32:09,480 Speaker 1: lower discounting of the future, and so everybody is encouraged 583 00:32:09,560 --> 00:32:13,320 Speaker 1: to take a longer view in their economic decision making, 584 00:32:13,480 --> 00:32:17,960 Speaker 1: and it's that forward looking activity that's most likely to 585 00:32:18,120 --> 00:32:23,040 Speaker 1: deliver large external benefits to the economies. So I think 586 00:32:23,080 --> 00:32:26,280 Speaker 1: one should see these low interest rates more as an 587 00:32:26,280 --> 00:32:29,920 Speaker 1: opportunity that is a burden, Okay, Larry Summers, It's always 588 00:32:29,960 --> 00:32:31,440 Speaker 1: a light to end the week with you. That is 589 00:32:31,440 --> 00:32:35,040 Speaker 1: our special contribuer to Larry Summers, former treasure Secretary of Harvard. 590 00:32:35,480 --> 00:32:37,560 Speaker 1: That does it for this episode of Wall String Week. 591 00:32:37,880 --> 00:32:41,000 Speaker 1: I'm David Weston. This is Bloomberg. See you next week.