WEBVTT - Surveillance: Bad Timing For Confidence Vote, Huddleston Says

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<v Speaker 1>Yeah. Welcome to the Bloomberg Surveillance Podcast and I'm Tom

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<v Speaker 1>Keene Jay Lee. We bring you insight from the best

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<v Speaker 1>in economics, finance, investment, and international relations. Find Bloomberg Surveillance

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<v Speaker 1>on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course

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<v Speaker 1>on the Bloomberg Yeah. Joining us from the City of

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<v Speaker 1>London now is Bloomberg's very on one of our finest

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<v Speaker 1>Guy Johnson. Good morning to your guy. What happens next?

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<v Speaker 1>What happens next is Prime Minister's Questions, which is about

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<v Speaker 1>starts in the House of Commons. It's going to be

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<v Speaker 1>interesting to see kind of the body language that is

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<v Speaker 1>being produced by Theresa May. Does she look relaxed? Does

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<v Speaker 1>she look comfortable with what's going on? She has just

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<v Speaker 1>got to her feet in the House of Commons. She

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<v Speaker 1>does look actually reasonably relaxed. Um. It is worth pointing

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<v Speaker 1>out that there is a theory floating around John that

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<v Speaker 1>she has instigated this leadership challenge, that she has had

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<v Speaker 1>some of her sort of colleagues close to her to

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<v Speaker 1>send letters in to make this happen. Because remember that

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<v Speaker 1>if she wins said leadership challenge, she cannot be challenged

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<v Speaker 1>for another year. So it's unclear at this point in

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<v Speaker 1>time how we got to this point, but this afternoon

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<v Speaker 1>we will start that process. We think it's going to

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<v Speaker 1>be a vote that takes place sometime between six and

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<v Speaker 1>eight pm, so starting roughly at one pm Eastern time,

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<v Speaker 1>we are going to start to see that process unfolding.

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<v Speaker 1>If she were to win, she would be secure for

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<v Speaker 1>another year. If she were to lose, well, that certainly

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<v Speaker 1>opens Pandora's box, and Nmuror is talking about a circuit

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<v Speaker 1>three pc drop in Sterling Guy. The easy part is

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<v Speaker 1>triggering the vote. The tough part is getting the one

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<v Speaker 1>votes needed to get the prime minister out. How likely

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<v Speaker 1>is that um At the moment it seems as if

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<v Speaker 1>most people are judging by the sort of the mathematics

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<v Speaker 1>that Bloomberg is doing, she's certainly up too close to

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<v Speaker 1>a hundred certains at this point in time to back.

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<v Speaker 1>So I think the challenge is an uphill one for

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<v Speaker 1>those that would like to ouse Thereason May at this

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<v Speaker 1>point in time. And the e RG, the European Research Group,

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<v Speaker 1>which is basically a collection of brexiteers, hadn't till last

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<v Speaker 1>night struggled to get the necessary votes together or the

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<v Speaker 1>letters sent in to Grand Brady of the nine two

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<v Speaker 1>Committee of backbench MPs to make this happen, and that

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<v Speaker 1>maybe speaks to the idea that they if they have

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<v Speaker 1>struggled to get to the necessary forty eight letters, they

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<v Speaker 1>would certainly struggle to get to the necessary number of

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<v Speaker 1>MP votes to ouse the Prime Minister John a guy.

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<v Speaker 1>We've learned throughout this whole process not to rule anything out,

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<v Speaker 1>but let's go with the base case that the Prime

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<v Speaker 1>Minister survives the vote. Does it change an I think

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<v Speaker 1>I there is a certainly an argument that says that this,

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<v Speaker 1>from a political point of view, is a red herring.

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<v Speaker 1>A more significant development would be a vote of confidence,

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<v Speaker 1>a parliamentary vote of confidence that would be generated by

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<v Speaker 1>the man that is now on his feet in the

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<v Speaker 1>House of Commons, Jeremy Corbyn, the leader of the Labor Party.

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<v Speaker 1>And then that is something that I think the markets

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<v Speaker 1>would react much more violently too. It is interesting today

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<v Speaker 1>that we don't have a very violent reaction in assets. Sterling,

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<v Speaker 1>for instance, is having what's known as an inside day.

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<v Speaker 1>It is trading within yesterday's price action range. The markets

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<v Speaker 1>are not really reacting to today's news. I think if

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<v Speaker 1>you were to see a parliamentary vote of no confidence

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<v Speaker 1>which could trigger a general election, that would be a

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<v Speaker 1>much more significant development. John Well the Prime Minister facing

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<v Speaker 1>down questions in the House of Commons today. In fact,

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<v Speaker 1>right now the Prime Minister ruling out a general election

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<v Speaker 1>also rulling out a second referendum as well. Guy, I

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<v Speaker 1>have no We've got to run over to to Westminster,

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<v Speaker 1>so we're gonna let you run. Thank you very much

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<v Speaker 1>for dropping by the studio for us. I want to

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<v Speaker 1>bring in Eric Nielsen now in any Credit Group chief

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<v Speaker 1>economists who also joins us from our European headquarters in

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<v Speaker 1>the city of London. Eric, good morning, to use a big,

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<v Speaker 1>big list of issues in Europe for the Europeans. Where

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<v Speaker 1>does Brexit rank? No, good morning, Yeah, I was just

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<v Speaker 1>I was just back from Berlin and uh and you

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<v Speaker 1>would be surprised how slightly amused, confused and and and

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<v Speaker 1>not top of the list issues that Brexit is in Berlin,

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<v Speaker 1>Rome and Paris. Isn't that part of the problem for

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<v Speaker 1>the Prime minister, especially now where the French have increasingly

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<v Speaker 1>bigger domestic problems the Italians have had them for a

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<v Speaker 1>while in Germany relative to the stability we've seen for

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<v Speaker 1>a long time. Eric Germany has its own issues. Well,

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<v Speaker 1>I mean they would take that first. I actually think

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<v Speaker 1>Germany in many ways looked like the most stable democracy

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<v Speaker 1>about of any major countries. And we've just had a

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<v Speaker 1>leadership change in the biggest party and the first contested

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<v Speaker 1>one for about fifty years, and afterwards the three consistents

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<v Speaker 1>congratulated to each other and and we're friends and moved

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<v Speaker 1>off if to they sent you to be friends in politics, right,

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<v Speaker 1>so so so that's actually quite stable, I think. I

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<v Speaker 1>think what your point is right in the sense that

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<v Speaker 1>it's a problem for Britain. But the but the problem

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<v Speaker 1>for Britain is that the euro EU twenty seven have

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<v Speaker 1>been amazingly united, by any stretch of the imagination, through

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<v Speaker 1>these two years from negotiations. EU twenty seven have been

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<v Speaker 1>more united than the government or even the government party

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<v Speaker 1>inside Westminster. This is quite amazing, right, and that has

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<v Speaker 1>obviously weakened to rais amazed hand tremendously and it has

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<v Speaker 1>basically proven the Brexitiers arrogance of well German commagers needed

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<v Speaker 1>are started out of all this completely nonsense. The Europeans

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<v Speaker 1>and the Prime Minister, the Prime Minister essentially on a

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<v Speaker 1>tour of the European capitals before this vote of confidence

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<v Speaker 1>came up. Are do you see any chance of her

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<v Speaker 1>securing any concept since whatsoever from the Europeans, none of substance. Uh.

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<v Speaker 1>They keep saying, well, we'll we'll help with the interpretation

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<v Speaker 1>right there. We'll will help with some clarification, so of

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<v Speaker 1>the political memorandum, not the not the treaty or not

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<v Speaker 1>the the the agreement, the many other pages. So that

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<v Speaker 1>will not be reopened. That's completely in conceivable in my opinion.

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<v Speaker 1>But but they will find they would be happy to

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<v Speaker 1>find some sort of wording that sort of helps a

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<v Speaker 1>little bit here and there maybe. But but to be honest,

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<v Speaker 1>this is not anything of a nature that trades are

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<v Speaker 1>making combat and they see, I got something better. It

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<v Speaker 1>it is it's do you have a base case erk

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<v Speaker 1>on what happens here? Oh? Yeah, we have to have

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<v Speaker 1>a base case. And this is unfortunately, it's it's it's

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<v Speaker 1>a tough one. I so I so I think she

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<v Speaker 1>will survive. Her hand will be slightly strengthened because, as

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<v Speaker 1>Guy said, now there can be no no challenge to

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<v Speaker 1>her for twelve months. And I think if you. If

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<v Speaker 1>she wins today or tonight with just a decent majority,

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<v Speaker 1>which I think is a quite likely outcome, then I

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<v Speaker 1>think she has a little bit of a of a

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<v Speaker 1>of a of a base on which to say to

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<v Speaker 1>her party members, you have to vote for my deal.

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<v Speaker 1>So I think actually the chance that her deals deal

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<v Speaker 1>comes through has increased a little bit. Big meeting on

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<v Speaker 1>Thursday outside of all of this, and it's the European

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<v Speaker 1>Central Bank Eric with President drugging, no change the policy expected.

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<v Speaker 1>But I think that news conference is going to be fascinating.

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<v Speaker 1>There is so much going on on the continent. What

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<v Speaker 1>are you looking for? I'm looking for most and foremost

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<v Speaker 1>forward guidance on the reinvestment. It is when you think

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<v Speaker 1>about the world today and there's somewhat weaker growth numbers

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<v Speaker 1>in Germany and other parts of Europe, it's, by any

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<v Speaker 1>stress of the imagination, unfortunate time to enjoy by the

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<v Speaker 1>end of this month, right, So, so the but that's

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<v Speaker 1>set in stone now, So what does he do to

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<v Speaker 1>try to persuade us that the monitor policy stance is

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<v Speaker 1>not really tightened? Tightening it is in a sense, And

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<v Speaker 1>I think the answer to that is a pretty fair

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<v Speaker 1>and forward guidance that they will commit to reinvest the

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<v Speaker 1>entire principle for at least say two or three years

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<v Speaker 1>three years what defected, so but at least two years

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<v Speaker 1>and maybe talk about some liquidity provision that t l

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<v Speaker 1>TR row extended before June or something. But but it's

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<v Speaker 1>it's a tough one for the EASB now because the

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<v Speaker 1>world is looking pretty nasty right there in the in

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<v Speaker 1>the process of rolling off or ending the QUEUEI which

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<v Speaker 1>is a very unfortunate Hey, Eric, great to catch you

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<v Speaker 1>have with you so much. Govin on every Nelson any

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<v Speaker 1>credit group chief economists wanting us out of the city

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<v Speaker 1>of London. Let's look at something stable like the fixed

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<v Speaker 1>income market. Pretty Emizabeth joins us this morning. Pretty good morning,

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<v Speaker 1>Hello morning, thanks for having me. We have a low

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<v Speaker 1>yield regime. I've been watching two stands spread. I'm distracted

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<v Speaker 1>here in London and I've been watching two stands spread

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<v Speaker 1>go nowhere and yet some stability in the ten year

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<v Speaker 1>two point eight nine percent. Do you have a bet

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<v Speaker 1>right now on what price and yield will do so

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<v Speaker 1>in the tenure um. I think we're in a range.

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<v Speaker 1>We're really I think to eight two three. I mean

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<v Speaker 1>I was planning the table when we were above three

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<v Speaker 1>percent that that was not sustained. I think there's enough

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<v Speaker 1>growth headwinds with real rates rising and no evidence that

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<v Speaker 1>structural growth in the US was higher. I wanted to

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<v Speaker 1>fade the rising rates, and I would still fade the

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<v Speaker 1>rising rates, but you know, we have repriced to FED significantly,

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<v Speaker 1>so at this point to say rates are going lower,

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<v Speaker 1>I think we need evidence that the U s economy

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<v Speaker 1>is actually slowing, and we need evidence that the FED

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<v Speaker 1>is going to continue to march on with gradual hikes

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<v Speaker 1>irrespectable of the tightening and financial conditions. Both of those,

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<v Speaker 1>I would say, the US economy seems okay. All the

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<v Speaker 1>US data may really have inflation today, but the data

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<v Speaker 1>suggests the economy is still growing above potential. And I

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<v Speaker 1>have to say the FED is sounding, um, you know,

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<v Speaker 1>somewhat more cautious and talking about uncertainty, so I think

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<v Speaker 1>the risk of policy mistake is somewhat lower. So I

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<v Speaker 1>think we stay stable. I mean, the Brexit thing is

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<v Speaker 1>really being viewed as something that should affect guilts rather

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<v Speaker 1>than treasuries. Um. But I think the FED next week

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<v Speaker 1>ECB tomorrow, there's a there's a couple of events in

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<v Speaker 1>the near term that could move it, but I think

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<v Speaker 1>we stay somewhat range. Were dashes through December, but previous

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<v Speaker 1>it's the last time we spoke to you. We've seen

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<v Speaker 1>major change is not only in FED view, but in

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<v Speaker 1>the makeup of the yield market. Frankly the vaultil of

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<v Speaker 1>the stock market, and you have the vix only two

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<v Speaker 1>nine and within all of that you have to reframe

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<v Speaker 1>a two thousand nineteen view. Let me cut to the chase.

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<v Speaker 1>Do you just clip a coup pond in the bond

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<v Speaker 1>market for next year or do you have to be

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<v Speaker 1>defensive and those short duration or can you be opportunistic here?

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<v Speaker 1>So I think yes, I think it's an opportunistic environment.

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<v Speaker 1>You have to be nimble. Um. I think you can

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<v Speaker 1>certainly stay in the front end, but you know when

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<v Speaker 1>when duration, when Daniel gets to three percent or higher,

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<v Speaker 1>I think it it makes sense to extend some of

0:11:23.320 --> 0:11:26.760
<v Speaker 1>that duration. But again just trade in a very opportunistic

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<v Speaker 1>fashion because I think the market is dealing with higher

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<v Speaker 1>risk premiums in every asset class. Just because now the

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<v Speaker 1>fair is at neutral, are very close to neutral, the

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<v Speaker 1>risk of a policy mistake increases in real rates arising,

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<v Speaker 1>So I think every asset last you have to be opportunistic.

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<v Speaker 1>Not just in fixed income, I would say in credit,

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<v Speaker 1>in equity, just because the time left pretty away in

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<v Speaker 1>on the leverage loan idea, this is front and center

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<v Speaker 1>for so many listeners. Is the extended part of your world, right.

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<v Speaker 1>I think there's a credit component, which you know, default

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<v Speaker 1>rates are still very low, so our credit strategies still

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<v Speaker 1>believe that as long as the economy is going above potential,

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<v Speaker 1>the credit component is is fairly priced. It's the floating

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<v Speaker 1>rate component. I think a lot of people bought leverage

0:12:15.120 --> 0:12:17.360
<v Speaker 1>loans because the FED was going to continue to hike

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<v Speaker 1>and the market wasn't pricing in as much in hikes.

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<v Speaker 1>I don't find that as attractive. Now we're at neutral,

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<v Speaker 1>so we're talking to hike tree hikes at the most,

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<v Speaker 1>and the market is already pricing into So I think

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<v Speaker 1>you have to move away a little bit from leverage

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<v Speaker 1>loans into thinking about duration because the fair is not

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<v Speaker 1>on a preset path here, Thank you so much, Pretty miserable.

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<v Speaker 1>It's too short today with two these securities. So we're

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<v Speaker 1>bringing out of Housan, bring him in from Vietnam. I'm

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<v Speaker 1>told Patterson Institute for International you can this president formally

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<v Speaker 1>of the Bank of England, and I'm always great to

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<v Speaker 1>catch up with you. What do you reckon the conversations

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<v Speaker 1>like on the MPC on Threatenato Street at the moment.

0:13:09.160 --> 0:13:12.200
<v Speaker 1>Oh jeez, that's a really good question. I think that

0:13:12.280 --> 0:13:16.280
<v Speaker 1>the MPC is trying to just watching the cable very

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<v Speaker 1>very closely and they are trying to figure out how

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<v Speaker 1>much the sticks versus being some intra day blip. And

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<v Speaker 1>what do you think it is, Adam. I think it's

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<v Speaker 1>an intraday blip. Um the it's hard to disentangle. I mean,

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<v Speaker 1>part of the reason Sterling and strengthened is because people

0:13:37.679 --> 0:13:41.400
<v Speaker 1>are watching Corbin hunt his opportunity and there's so much

0:13:41.440 --> 0:13:45.280
<v Speaker 1>anti Corbin sentments some huch for good reason that the

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<v Speaker 1>part of the relief in Sterling is about Corbin and labor,

0:13:49.320 --> 0:13:52.079
<v Speaker 1>not so much about Brexit and imposing I want you

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<v Speaker 1>to take a victory lap. You have been one very

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<v Speaker 1>cautious about four or five six A twelve rate increases

0:13:58.000 --> 0:14:01.439
<v Speaker 1>and you know, I look in two thousand eighteen hindsight,

0:14:01.520 --> 0:14:03.839
<v Speaker 1>you look like a genius. Cut to the chase, the

0:14:03.960 --> 0:14:09.600
<v Speaker 1>view forward for Chairman Paul the chase of my no

0:14:09.679 --> 0:14:12.760
<v Speaker 1>longer looking like the genius. It's it's going to be

0:14:13.040 --> 0:14:15.320
<v Speaker 1>the market I think now priced it about right the

0:14:15.360 --> 0:14:22.320
<v Speaker 1>head where somewhere north of one move in largest threas

0:14:22.360 --> 0:14:24.400
<v Speaker 1>in the colleague Jason Firm and artickuting in the Wall

0:14:24.440 --> 0:14:27.040
<v Speaker 1>Street Journal about two weeks ago that if it's a

0:14:27.160 --> 0:14:30.040
<v Speaker 1>weird thing about his speech, Tom was the framed in

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<v Speaker 1>terms of our star, in terms of the interest rate

0:14:33.160 --> 0:14:35.280
<v Speaker 1>neutral interest rate, instead of in terms of the data.

0:14:35.360 --> 0:14:37.840
<v Speaker 1>The data flow could have easily justified the pause. Not

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<v Speaker 1>so much. Well, I guess we're data, you know, and

0:14:40.960 --> 0:14:43.000
<v Speaker 1>you call it that our start stuff as well. Let's

0:14:43.040 --> 0:14:45.640
<v Speaker 1>go to John Ferrell. Can I go wonky with Dr Posen?

0:14:47.440 --> 0:14:51.240
<v Speaker 1>John Williams Adam pose it and one of his ideas

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<v Speaker 1>of what to do given low rates and permanently entrenched

0:14:54.320 --> 0:14:58.640
<v Speaker 1>low terminal values is to target to nominal g d P.

0:14:59.320 --> 0:15:03.320
<v Speaker 1>We target to inflation adjusted GDP for a host opposing

0:15:03.440 --> 0:15:05.560
<v Speaker 1>like reasons, do we need to go back to the

0:15:05.560 --> 0:15:09.520
<v Speaker 1>fifties and the sixties and target denominal growth plus an

0:15:09.560 --> 0:15:14.480
<v Speaker 1>inflation dynamic? Well, I think it's the right idea in

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<v Speaker 1>the sense um that it's it's trying to take an

0:15:17.440 --> 0:15:20.480
<v Speaker 1>account both pieces of the dual mandate, and it's trying

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<v Speaker 1>to take into account that if you're undershooting on inflation,

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<v Speaker 1>you've got to try to make that up. So in

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<v Speaker 1>those senses, I'm very sympathetic. The problem is, it's not

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<v Speaker 1>clear to me either A that you have any easier

0:15:33.640 --> 0:15:37.000
<v Speaker 1>time getting the desired result by simply saying you're targeting

0:15:37.040 --> 0:15:40.120
<v Speaker 1>nominal GDP and B. If you end up with a

0:15:40.160 --> 0:15:43.359
<v Speaker 1>nominal GDP target and say you get four percent inflation

0:15:43.720 --> 0:15:46.120
<v Speaker 1>and one percent growth, that's supposed to be just as

0:15:46.160 --> 0:15:50.000
<v Speaker 1>happy for you as four percent growth and one percent inflation.

0:15:50.040 --> 0:15:55.000
<v Speaker 1>And I'm not sure that's politically sustainable. What is politically sustainable?

0:15:55.040 --> 0:15:58.440
<v Speaker 1>We've got to fed with a president critical of their approach.

0:15:58.880 --> 0:16:02.160
<v Speaker 1>The the saw call them hawks, say we've got to

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<v Speaker 1>get some lifted rates to develop an uh, not a substantial,

0:16:07.200 --> 0:16:10.720
<v Speaker 1>a measured real yield. An actual inflation is just a

0:16:10.800 --> 0:16:15.120
<v Speaker 1>yield to provide normal incentives within the business system. I mean,

0:16:15.160 --> 0:16:18.920
<v Speaker 1>where do you fall in that great conundrum? I fall

0:16:19.000 --> 0:16:23.000
<v Speaker 1>in the great conundrum in the Unfortunately, the stop clocks

0:16:23.000 --> 0:16:25.600
<v Speaker 1>of this President Trump happens to be right at the moment,

0:16:26.080 --> 0:16:29.000
<v Speaker 1>which is there's good reason to wait and see before

0:16:29.080 --> 0:16:31.880
<v Speaker 1>raising rates further. And they think, to the credit of

0:16:32.000 --> 0:16:35.400
<v Speaker 1>the FOC so far they're not preventing themselves and doing

0:16:35.400 --> 0:16:37.480
<v Speaker 1>what they think is right. I fear of looking like

0:16:37.480 --> 0:16:40.640
<v Speaker 1>they're accommodating the president. John, is that a break exclusive

0:16:40.680 --> 0:16:45.120
<v Speaker 1>of surveillance break exclusive? I think I think we need

0:16:45.160 --> 0:16:46.840
<v Speaker 1>to put that out. I do wonder whether it makes

0:16:46.840 --> 0:16:48.680
<v Speaker 1>it a little bit more difficult just in terms of

0:16:48.680 --> 0:16:51.040
<v Speaker 1>the optics to back away from the hikes you've planned

0:16:51.040 --> 0:16:55.680
<v Speaker 1>when the president is putting so much pressure on you. No, John, absolutely,

0:16:55.760 --> 0:16:59.400
<v Speaker 1>I think that's that's a concern um. And this has

0:16:59.480 --> 0:17:02.120
<v Speaker 1>always been the problem. Right when you're in a central bank,

0:17:02.680 --> 0:17:05.760
<v Speaker 1>you you sometimes get caught up in the sort of

0:17:06.040 --> 0:17:08.880
<v Speaker 1>how people perceive, what your perception is, what you're doing.

0:17:08.880 --> 0:17:13.680
<v Speaker 1>It becomes this big circle. I think, unlike the Supreme Court,

0:17:13.760 --> 0:17:16.240
<v Speaker 1>that the FOMC seems to be elite at the moment,

0:17:16.720 --> 0:17:19.160
<v Speaker 1>just calling the balls and strikes as they come in.

0:17:19.600 --> 0:17:22.640
<v Speaker 1>Now you can critique that about they're not giving you

0:17:22.960 --> 0:17:27.080
<v Speaker 1>enough forward looking guidance, but I actually was very sympathetic

0:17:27.200 --> 0:17:29.800
<v Speaker 1>to Chair pals Uh decks a whole speech in which

0:17:29.840 --> 0:17:32.919
<v Speaker 1>you back off that, Dr pos and you are one

0:17:32.960 --> 0:17:36.680
<v Speaker 1>of our arch experts, not only German economics, but how

0:17:36.720 --> 0:17:40.440
<v Speaker 1>it folds into the post World War two German experience.

0:17:40.480 --> 0:17:42.440
<v Speaker 1>There was that image yesterday, or maybe it was the

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<v Speaker 1>day before. I'm losing track, folks. A prime minister may

0:17:45.880 --> 0:17:50.640
<v Speaker 1>inner desperation with a chancellor miracle who is simply moving on.

0:17:51.359 --> 0:17:54.000
<v Speaker 1>Do you look at this is a smooth transition for

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<v Speaker 1>Germany to a new set of government or is it

0:17:57.640 --> 0:18:03.120
<v Speaker 1>a true generational change? Wow, it's a really good question. Tom.

0:18:03.200 --> 0:18:07.200
<v Speaker 1>To me, it is a true generational change in that

0:18:07.680 --> 0:18:10.960
<v Speaker 1>I don't know enough about a PK. Her her likely

0:18:11.040 --> 0:18:14.960
<v Speaker 1>successor um, but it is a generational change in that

0:18:15.080 --> 0:18:17.359
<v Speaker 1>you're going to have a group of people who neither

0:18:17.440 --> 0:18:21.240
<v Speaker 1>grew up under the Soviets nor grew up in the

0:18:21.320 --> 0:18:26.120
<v Speaker 1>post war glow of American occupation and beneficence. And so

0:18:26.280 --> 0:18:29.359
<v Speaker 1>this is a Germany that is a generation that is

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<v Speaker 1>totally either in Europe or in its own and that's

0:18:33.200 --> 0:18:36.240
<v Speaker 1>going to be very difficult to manage. I think it

0:18:36.359 --> 0:18:39.520
<v Speaker 1>is this real shift. I mean, it really hearkens back

0:18:39.560 --> 0:18:42.360
<v Speaker 1>to almost a seventeenth century Germany. I mean, as Dr

0:18:42.440 --> 0:18:46.720
<v Speaker 1>Kissinger talks about it Westphalian Germany. It really hearkens back

0:18:46.720 --> 0:18:50.960
<v Speaker 1>to that, doesn't it. Well. I mean, part of the

0:18:50.960 --> 0:18:54.199
<v Speaker 1>point of Mr Kissinger's discussion of Westphalia is the idea

0:18:54.280 --> 0:18:58.119
<v Speaker 1>that you don't interfere past other people's borders. You you

0:18:58.240 --> 0:19:01.600
<v Speaker 1>try to keep the borders strict, and you know that's

0:19:01.600 --> 0:19:04.680
<v Speaker 1>going to be Essentially the question for Germany going forward

0:19:04.800 --> 0:19:08.879
<v Speaker 1>is are they willing to allow enough interference internally so

0:19:09.119 --> 0:19:13.440
<v Speaker 1>that they can exert a real EU influence because at

0:19:13.520 --> 0:19:16.680
<v Speaker 1>some point that the bill does come due for Germany

0:19:16.680 --> 0:19:20.880
<v Speaker 1>being hypocritical on the banking system and hypocritical and fiscal policies,

0:19:21.520 --> 0:19:25.760
<v Speaker 1>I mean, the EU either there is this toll that

0:19:25.960 --> 0:19:28.000
<v Speaker 1>I know you and John and others have talked about

0:19:28.320 --> 0:19:32.639
<v Speaker 1>that we're seeing with Macrome now that because Germany didn't mertle,

0:19:32.720 --> 0:19:35.480
<v Speaker 1>didn't come through in the last year with Eurozone reforms,

0:19:35.520 --> 0:19:37.840
<v Speaker 1>other people are distrusted now in the way they haven't

0:19:37.880 --> 0:19:41.119
<v Speaker 1>for a while. And I'm posting great a cat sholing

0:19:41.200 --> 0:19:44.520
<v Speaker 1>you as a wise Peterson Institute for International Economous President.

0:19:50.040 --> 0:19:54.240
<v Speaker 1>Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

0:19:54.280 --> 0:19:59.560
<v Speaker 1>listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

0:19:59.640 --> 0:20:03.000
<v Speaker 1>plat Warm you prefer. I'm on Twitter at Tom Keane

0:20:03.560 --> 0:20:07.240
<v Speaker 1>before the podcast. You can always catch us worldwide. I'm

0:20:07.280 --> 0:20:08.160
<v Speaker 1>Bloomberg Radio