1 00:00:00,200 --> 00:00:03,760 Speaker 1: Today, I have the pleasure. I have the pleasure of 2 00:00:03,800 --> 00:00:08,320 Speaker 1: announcing key nominations and appointments for the critical economic positions 3 00:00:08,320 --> 00:00:12,320 Speaker 1: and administration. A first rate team that's going to get 4 00:00:12,360 --> 00:00:15,880 Speaker 1: us through this ongoing economic crisis and help us build 5 00:00:15,880 --> 00:00:18,520 Speaker 1: the economy back. Not just build it back, but build 6 00:00:18,560 --> 00:00:21,639 Speaker 1: it back better than it was before. A team that's 7 00:00:21,680 --> 00:00:26,120 Speaker 1: tested and experienced. It includes groundbreaking Americans who come from 8 00:00:26,200 --> 00:00:30,560 Speaker 1: different backgrounds, but to share my core vision for economic 9 00:00:31,320 --> 00:00:41,159 Speaker 1: relief here in the United States of America. Hello, and 10 00:00:41,240 --> 00:00:43,879 Speaker 1: welcome to Stephano Mix, the podcast that brings the global 11 00:00:43,880 --> 00:00:47,159 Speaker 1: economy to you. And the sound that you heard was 12 00:00:47,200 --> 00:00:51,720 Speaker 1: the sound of gods changing. Joe Biden will be US 13 00:00:51,760 --> 00:00:54,560 Speaker 1: President in less than seven weeks time, and though the 14 00:00:54,600 --> 00:00:57,960 Speaker 1: transition was in suspended animation for a few weeks, it 15 00:00:58,160 --> 00:01:01,040 Speaker 1: is now fully up and running. We're starting to get 16 00:01:01,080 --> 00:01:03,240 Speaker 1: a much clearer sense of who's going to be sitting 17 00:01:03,240 --> 00:01:06,319 Speaker 1: in the key post. What are these first appointments tell 18 00:01:06,400 --> 00:01:10,440 Speaker 1: us about the new administration's economic priorities, and how on 19 00:01:10,480 --> 00:01:12,600 Speaker 1: earth is he expecting to get round the fact that 20 00:01:12,680 --> 00:01:14,440 Speaker 1: the Senate is likely to stay in the hands of 21 00:01:14,520 --> 00:01:18,360 Speaker 1: Republicans so far loyal to President Trump. I can't think 22 00:01:18,400 --> 00:01:20,280 Speaker 1: of a better person to ask about all of this 23 00:01:20,600 --> 00:01:24,160 Speaker 1: than Jason Furman. He's a professor at Harvest Kennedy School now, 24 00:01:24,160 --> 00:01:27,440 Speaker 1: but he was head of President Obama's Council of Economic Advisors, 25 00:01:27,640 --> 00:01:30,640 Speaker 1: and he's good mate with most of the new economic team. 26 00:01:30,640 --> 00:01:33,600 Speaker 1: He's also just published a paper with Larry Summers calling 27 00:01:33,640 --> 00:01:37,039 Speaker 1: for a revolution in fiscal policy, just as the incoming 28 00:01:37,080 --> 00:01:41,360 Speaker 1: president considers his first budget nut We're also going to 29 00:01:41,520 --> 00:01:44,520 Speaker 1: check in briefly on the new era coming for Britain 30 00:01:44,560 --> 00:01:48,240 Speaker 1: on January one, as it fully leads the European Union 31 00:01:48,760 --> 00:01:51,400 Speaker 1: less than five weeks out. We still don't know what 32 00:01:51,480 --> 00:01:53,880 Speaker 1: our brave new world's going to look like, but we 33 00:01:53,920 --> 00:01:56,559 Speaker 1: can already say it's not going to be great news 34 00:01:56,680 --> 00:01:59,760 Speaker 1: for the city of London. I'll be asking Bloomberg Financial 35 00:01:59,760 --> 00:02:03,840 Speaker 1: Report to Veran Vagela how much financial business has already 36 00:02:03,920 --> 00:02:07,520 Speaker 1: left the UK in all the uncertainties over breakit, and 37 00:02:07,640 --> 00:02:10,519 Speaker 1: what's at stake if the trickle of jobs and money 38 00:02:10,600 --> 00:02:14,520 Speaker 1: out of London becomes a flood. But first, we are 39 00:02:14,600 --> 00:02:17,840 Speaker 1: lucky to have this introduction to the incoming President's economic 40 00:02:17,880 --> 00:02:21,760 Speaker 1: agenda from the Star economic reporter and columnist for Bloomberg 41 00:02:21,800 --> 00:02:36,760 Speaker 1: Business Week Peter coy in Washington. Personnel as policy, the 42 00:02:36,840 --> 00:02:39,760 Speaker 1: people of President elect Joe Biden has picked run economic 43 00:02:39,800 --> 00:02:42,960 Speaker 1: policy are for the most part, centrist veterans of Washington. 44 00:02:43,440 --> 00:02:45,600 Speaker 1: Is picked for the most important job Secretary of the 45 00:02:45,600 --> 00:02:48,680 Speaker 1: Treasury Janet Yell and the former FED chair who's an 46 00:02:48,720 --> 00:02:51,960 Speaker 1: advocate of extraordinary fiscal support the count of the pandemic. 47 00:02:52,440 --> 00:02:56,000 Speaker 1: Listeners to Stephanomics, may recall her pointed comments on that 48 00:02:56,240 --> 00:02:59,360 Speaker 1: at the Bloomberg New Economy for him last month. The 49 00:02:59,440 --> 00:03:03,360 Speaker 1: notion if the FED can do all that is required 50 00:03:03,720 --> 00:03:07,560 Speaker 1: at this point to support the economy, UM is just 51 00:03:07,760 --> 00:03:12,840 Speaker 1: wrong and the Fed is really pleading for fiscal relief. 52 00:03:13,200 --> 00:03:18,480 Speaker 1: I believe it's essential for Director of the National Economic Council. 53 00:03:18,480 --> 00:03:21,760 Speaker 1: Biden is going with an Obama administration veteran, Brian Diese, 54 00:03:21,960 --> 00:03:24,520 Speaker 1: according to people familiar with the matter, des is an 55 00:03:24,520 --> 00:03:27,840 Speaker 1: executive at black Rock, the multi trillion dollar fund manager. 56 00:03:28,240 --> 00:03:30,840 Speaker 1: X Obama official Cecilia Rouse of Princeton, said to be 57 00:03:30,840 --> 00:03:33,760 Speaker 1: the first African American to lead the Council of Economic 58 00:03:33,760 --> 00:03:37,400 Speaker 1: Advisors the Office of Management and Budget. Biden wants near 59 00:03:37,400 --> 00:03:40,520 Speaker 1: A Tandon, who worked for both Clinton and Obama, although 60 00:03:40,560 --> 00:03:44,400 Speaker 1: Republicans are threatening to block her over partisan comments on Twitter. 61 00:03:45,480 --> 00:03:47,840 Speaker 1: Joe Biden ran for president as a healer and a 62 00:03:47,880 --> 00:03:52,720 Speaker 1: bridge builder, and Bidonomics reflects that Biden hasn't fully embraced 63 00:03:52,760 --> 00:03:55,520 Speaker 1: progressive causes such as the Green New Deal in Medicare 64 00:03:55,560 --> 00:03:57,640 Speaker 1: for All, which could set him up for a battle 65 00:03:57,680 --> 00:04:01,720 Speaker 1: with liberals like Congresswoman Alexander Occacio Cortez, who says the 66 00:04:01,760 --> 00:04:04,160 Speaker 1: Democrats would have done better in the election if they 67 00:04:04,160 --> 00:04:10,080 Speaker 1: had tilted further left. I think that it only has 68 00:04:10,160 --> 00:04:13,640 Speaker 1: ever been radicals that have changed this country. Abraham Lincoln 69 00:04:13,680 --> 00:04:18,000 Speaker 1: made the radical decision to sign the Emancipation Proclamation. Franklin 70 00:04:18,080 --> 00:04:22,720 Speaker 1: Delano Roosevelt made the radical decision to embark on establishing 71 00:04:22,760 --> 00:04:31,080 Speaker 1: programs like social Security. That is radical. But Biden does 72 00:04:31,120 --> 00:04:33,440 Speaker 1: plan to rejoin the pre Paris Climate Accord and says 73 00:04:33,480 --> 00:04:37,039 Speaker 1: he'll slash carbon ambissions through jobs. Heavy investment must have 74 00:04:37,080 --> 00:04:40,240 Speaker 1: beef up. Obamacare raised taxes on people earning over four 75 00:04:40,320 --> 00:04:42,720 Speaker 1: hundred thousand dollars a year and raised the corporate tax 76 00:04:42,880 --> 00:04:47,440 Speaker 1: rate to one. Unless Dems win two Senate seats in 77 00:04:47,440 --> 00:04:50,800 Speaker 1: Georgia next month, he'll struggle to pass as a domestic agenda, 78 00:04:51,000 --> 00:04:54,279 Speaker 1: he'll have more leeway internationally acting to cool off the 79 00:04:54,320 --> 00:04:56,680 Speaker 1: trade wars and create a united front of nations to 80 00:04:56,720 --> 00:05:01,360 Speaker 1: take on unfair Chinese trade practices. There's nothing dramatic and biodynamics, 81 00:05:02,040 --> 00:05:08,840 Speaker 1: but right now drama is the last thing most people want. Well, 82 00:05:08,880 --> 00:05:12,359 Speaker 1: I'm really delighted we can talk about Bidenomics now with 83 00:05:12,480 --> 00:05:16,839 Speaker 1: Jason Furman. Jason, a bit of scene setting first. How 84 00:05:16,880 --> 00:05:21,799 Speaker 1: does the economy that presidents led Biden's inheriting now compare 85 00:05:21,839 --> 00:05:25,719 Speaker 1: with what faced President Obama in two thousand and eight. 86 00:05:25,839 --> 00:05:29,359 Speaker 1: You had a massive recession then, and unemployment was a 87 00:05:29,520 --> 00:05:32,920 Speaker 1: similar rate, but it has a very different feel at 88 00:05:32,960 --> 00:05:35,919 Speaker 1: times now. Yeah, well, it's definitely thanks so much for 89 00:05:36,200 --> 00:05:41,120 Speaker 1: having me on. When President Biden takes the oath of 90 00:05:41,120 --> 00:05:44,760 Speaker 1: office in January, the unemployment rate will be similar to 91 00:05:44,839 --> 00:05:47,479 Speaker 1: what it was when President Obama took the oath of 92 00:05:47,480 --> 00:05:51,719 Speaker 1: office in January two tho nine. There'll be a huge 93 00:05:51,760 --> 00:05:54,560 Speaker 1: difference though, which is that in two thousand nine, the 94 00:05:54,600 --> 00:05:58,039 Speaker 1: unemployment rate was rising and the worst days of the 95 00:05:58,040 --> 00:06:02,159 Speaker 1: economy were ahead of us. This time, the unemployment rate 96 00:06:02,200 --> 00:06:05,440 Speaker 1: is very very likely to be falling over the course 97 00:06:06,040 --> 00:06:12,440 Speaker 1: of one maybe not completely healing the economy. But certainly 98 00:06:12,920 --> 00:06:16,520 Speaker 1: the better days will be ahead, it seems obvious. But 99 00:06:16,560 --> 00:06:18,560 Speaker 1: what are the what are the big economic priorities that 100 00:06:18,600 --> 00:06:22,719 Speaker 1: he faces. The biggest economic priority is getting the virus 101 00:06:22,760 --> 00:06:26,840 Speaker 1: under control, much of which involves the distribution of vaccines. 102 00:06:26,920 --> 00:06:30,000 Speaker 1: But we can't wait for the vaccines to be distributed, 103 00:06:30,080 --> 00:06:35,640 Speaker 1: so testing encouraging social distancing, which is implemented at the 104 00:06:35,680 --> 00:06:40,159 Speaker 1: state level um in the United States. But second that 105 00:06:40,240 --> 00:06:43,080 Speaker 1: getting the virus under control won't be enough. You know, 106 00:06:43,279 --> 00:06:46,120 Speaker 1: if you get the virus under control, a restaurant can open, 107 00:06:46,760 --> 00:06:48,719 Speaker 1: you still need people to be able to afford to 108 00:06:48,800 --> 00:06:53,799 Speaker 1: eat in the restaurant, and so supporting demand, supporting job 109 00:06:53,920 --> 00:06:59,360 Speaker 1: creation through fiscal measures is critical. And then finally, even 110 00:06:59,400 --> 00:07:01,840 Speaker 1: if people can afford to eat in restaurants, and I'm 111 00:07:01,839 --> 00:07:04,880 Speaker 1: obviously using this as a metaphor um, there's still a 112 00:07:04,880 --> 00:07:08,120 Speaker 1: lot of reallocation of labor people that lost their jobs, 113 00:07:08,160 --> 00:07:11,720 Speaker 1: people that need jobs for new employers, new industries, um. 114 00:07:11,720 --> 00:07:15,840 Speaker 1: And that reallocation process can sometimes take years to play out. 115 00:07:17,000 --> 00:07:19,520 Speaker 1: We heard a little bit earlier from Peter Koy about 116 00:07:19,520 --> 00:07:21,880 Speaker 1: some of the individuals who have come in. Obviously some 117 00:07:21,960 --> 00:07:24,880 Speaker 1: of them, many of them very well known, to you 118 00:07:25,000 --> 00:07:28,200 Speaker 1: and in indeed too to Stephanomics, the likes of Janet Yellen. 119 00:07:28,560 --> 00:07:31,880 Speaker 1: But overall you probably know many of them better than 120 00:07:31,920 --> 00:07:35,600 Speaker 1: we do. What what should we take from this from 121 00:07:35,640 --> 00:07:39,120 Speaker 1: these people coming in? Yeah, so I'm friends and have 122 00:07:39,200 --> 00:07:42,560 Speaker 1: worked with all seven of the people that have come 123 00:07:42,560 --> 00:07:47,560 Speaker 1: out as key members of President Biden's economic team. I'm 124 00:07:47,600 --> 00:07:53,320 Speaker 1: really thrilled about all of them. They're diverse in terms 125 00:07:53,600 --> 00:07:57,200 Speaker 1: of you know, gender, ethnicity, race and the like. UM, 126 00:07:57,240 --> 00:08:01,200 Speaker 1: they're all very focused, especially though on labor issues. UM. 127 00:08:01,280 --> 00:08:04,160 Speaker 1: Janet Yellen is a macro and monetary economist, but a 128 00:08:04,160 --> 00:08:06,320 Speaker 1: lot of her focus, and she's going to be the 129 00:08:06,360 --> 00:08:10,880 Speaker 1: Treasury Secretary, is on labor markets and how they function. 130 00:08:11,640 --> 00:08:14,240 Speaker 1: The Council of Economic Advisors, which is what I used 131 00:08:14,280 --> 00:08:17,800 Speaker 1: to run. All three of the economists there are focused 132 00:08:17,800 --> 00:08:23,000 Speaker 1: on labor, the first time that we've ever seen that. UM. 133 00:08:23,000 --> 00:08:26,080 Speaker 1: You'll have Brian Diese as the Director of the National 134 00:08:26,080 --> 00:08:30,960 Speaker 1: Economic Council. He'll coordinate the economic policy making. In his case, 135 00:08:31,120 --> 00:08:33,960 Speaker 1: his biggest focus is climate change, and you're going to 136 00:08:34,120 --> 00:08:38,480 Speaker 1: see I think climate change not just as an environmental issue, 137 00:08:38,760 --> 00:08:43,120 Speaker 1: but very much integrated into the thinking on economic policy 138 00:08:43,160 --> 00:08:46,640 Speaker 1: as well well. I guess at the that's a critic 139 00:08:46,720 --> 00:08:49,880 Speaker 1: would would say that this is a lot of retreads 140 00:08:49,960 --> 00:08:54,040 Speaker 1: from the Obama and Clinton administrations. And I would have 141 00:08:54,040 --> 00:08:57,240 Speaker 1: phrased to there's people with a lot of experience, but 142 00:08:57,360 --> 00:08:59,440 Speaker 1: even you know, we have her, we've heard the likes 143 00:08:59,480 --> 00:09:02,480 Speaker 1: of alex Andre Okay, of course, there's say you know, 144 00:09:02,720 --> 00:09:05,440 Speaker 1: there's a need for more radicalism. In fact that you know, 145 00:09:05,559 --> 00:09:08,120 Speaker 1: the Democrats should have been more radical in their approach 146 00:09:08,120 --> 00:09:10,559 Speaker 1: to the election, and they might have done better if 147 00:09:10,640 --> 00:09:13,120 Speaker 1: times have really changed. Is it right to have a 148 00:09:13,120 --> 00:09:17,760 Speaker 1: team of people who were in past administrations. Absolutely, you 149 00:09:17,760 --> 00:09:20,160 Speaker 1: want people who are experience, You want people who can 150 00:09:20,200 --> 00:09:25,160 Speaker 1: get things done. The Biden administration is never going to say, oh, 151 00:09:25,240 --> 00:09:28,719 Speaker 1: we don't want to do blank on climate change. It's 152 00:09:28,720 --> 00:09:31,800 Speaker 1: going to be Congress that stops them. They're not going 153 00:09:31,840 --> 00:09:35,439 Speaker 1: to say we don't want to go, you know, too 154 00:09:35,440 --> 00:09:38,959 Speaker 1: far on labor markets and wages. Congress is going to 155 00:09:39,080 --> 00:09:41,440 Speaker 1: be the break there. So I don't think any of 156 00:09:41,480 --> 00:09:44,800 Speaker 1: these advisors will be a constraint on the ambition of 157 00:09:44,800 --> 00:09:48,880 Speaker 1: the Biden agenda. And you want experience people to understand 158 00:09:48,920 --> 00:09:51,719 Speaker 1: what you can get done without Congress. You are incredible 159 00:09:51,760 --> 00:09:55,160 Speaker 1: people like Janet Yellen, they can help persuade Congress to 160 00:09:55,240 --> 00:09:57,920 Speaker 1: take the steps that need to be taken. I want 161 00:09:57,960 --> 00:09:59,800 Speaker 1: to talk a bit about Congress because that's obviously a 162 00:10:00,000 --> 00:10:01,680 Speaker 1: potential roadblock for all of us. But I want to 163 00:10:01,679 --> 00:10:04,600 Speaker 1: get onto your paper with Larry Summers because it goes 164 00:10:04,640 --> 00:10:08,320 Speaker 1: directly to not just the Biden agenda, but that of 165 00:10:08,360 --> 00:10:12,640 Speaker 1: every other industrial economy. Right now, there's been a lot 166 00:10:12,640 --> 00:10:14,880 Speaker 1: of debate that we've talked about, actually on cephonomics, quite 167 00:10:14,920 --> 00:10:17,360 Speaker 1: a lot about the changing balance between monetary and fiscal 168 00:10:17,360 --> 00:10:19,400 Speaker 1: policies since the global financial crisis. And I guess the 169 00:10:19,559 --> 00:10:24,319 Speaker 1: justifications for that is, you have interest rates at record lows. 170 00:10:24,360 --> 00:10:26,640 Speaker 1: We've seen central banks go as low as they can 171 00:10:26,679 --> 00:10:32,040 Speaker 1: go repeatedly, and people had said already fiscal policy is 172 00:10:32,080 --> 00:10:33,839 Speaker 1: going to have to play more of a role, and 173 00:10:34,080 --> 00:10:37,400 Speaker 1: then this year you saw that happened with a vengeance. 174 00:10:37,440 --> 00:10:40,920 Speaker 1: You've had this enormous amount of spending and borrowing by 175 00:10:40,960 --> 00:10:45,520 Speaker 1: industrial countries, maybe around up to twent of GDP borrowing 176 00:10:45,559 --> 00:10:50,439 Speaker 1: extraordinary numbers. The reaction of many people to that, including 177 00:10:50,480 --> 00:10:54,400 Speaker 1: the UK Chancellor very recently in his Spending Review, has 178 00:10:54,400 --> 00:10:56,080 Speaker 1: been that we're kind of lucky to get away with 179 00:10:56,120 --> 00:10:59,199 Speaker 1: this borrowing. We shouldn't expect to repeat it, and we 180 00:10:59,200 --> 00:11:01,160 Speaker 1: should actually be looking to cut borrowing as soon as 181 00:11:01,160 --> 00:11:03,840 Speaker 1: we can, once we have we have a vaccine, once 182 00:11:03,880 --> 00:11:07,440 Speaker 1: we have a recovery after this crisis. You say, in 183 00:11:07,440 --> 00:11:10,040 Speaker 1: a sense the opposite, you're saying, it just calls for 184 00:11:10,080 --> 00:11:13,040 Speaker 1: a revolution in the way we think about borrowing. So 185 00:11:13,200 --> 00:11:15,240 Speaker 1: just take us through that a little bit, your augument 186 00:11:15,280 --> 00:11:18,520 Speaker 1: with Larry Savis. Yeah, so I think we don't want 187 00:11:18,520 --> 00:11:21,920 Speaker 1: to focus on the debt. That's the wrong measure to 188 00:11:22,000 --> 00:11:25,600 Speaker 1: look at. You want to look essentially a debt service, 189 00:11:25,880 --> 00:11:29,400 Speaker 1: what you're paying each year on the debt, and compare 190 00:11:29,480 --> 00:11:34,840 Speaker 1: that to where your economy is. Interest rates are incredibly 191 00:11:34,920 --> 00:11:38,320 Speaker 1: low right now. There are a lot lower than the 192 00:11:38,400 --> 00:11:41,880 Speaker 1: growth rate, something that Olivier Blanchard, who was president of 193 00:11:41,880 --> 00:11:47,080 Speaker 1: the American Economics Association his presidential address, noted necessitated a 194 00:11:47,080 --> 00:11:51,079 Speaker 1: profound rethinking of fiscal policy. Now. You might think interest 195 00:11:51,160 --> 00:11:55,760 Speaker 1: rates are lowes temporarily, but they were incredibly low in 196 00:11:55,920 --> 00:12:01,080 Speaker 1: December before COVID struck our economy. And if you look 197 00:12:01,120 --> 00:12:04,320 Speaker 1: at financial market forecasts in the United States, for example, 198 00:12:04,800 --> 00:12:07,160 Speaker 1: the FED thinks it's going to raise rates eventually to 199 00:12:07,240 --> 00:12:10,600 Speaker 1: two point five percentage points, that itself would be quite low. 200 00:12:11,160 --> 00:12:13,640 Speaker 1: The market doesn't believe them. They think the Fed is 201 00:12:13,679 --> 00:12:15,560 Speaker 1: only going to get rates up to something like one 202 00:12:15,600 --> 00:12:20,320 Speaker 1: point four percentage points. And so you do see policymakers 203 00:12:20,320 --> 00:12:24,160 Speaker 1: around the world sometimes talking about, you know, this won't last. 204 00:12:24,840 --> 00:12:27,760 Speaker 1: Their forecasts have been wrong for the last couple of decades. 205 00:12:27,880 --> 00:12:32,160 Speaker 1: On interest rates. Markets are sending a very clear signal 206 00:12:32,559 --> 00:12:36,559 Speaker 1: and there's um I think some very fundamental economic reasons 207 00:12:36,960 --> 00:12:42,439 Speaker 1: why global saving has increased, the demand for investment has declined, 208 00:12:42,760 --> 00:12:45,440 Speaker 1: and so equilibrium interest rates are lower. We need to 209 00:12:45,480 --> 00:12:48,840 Speaker 1: think about fiscal policy very very differently in that world. 210 00:12:49,720 --> 00:12:52,280 Speaker 1: How would it affect the way we decide whether a 211 00:12:52,320 --> 00:12:55,320 Speaker 1: government's public finances are in decent shape. So these days, 212 00:12:55,679 --> 00:12:58,360 Speaker 1: you know, we economists at Bloomberg or others, we look 213 00:12:58,400 --> 00:13:04,160 Speaker 1: at the debt rates, you debt relative to GDP. You're 214 00:13:04,200 --> 00:13:06,240 Speaker 1: suggesting we should just look we should look at the 215 00:13:06,320 --> 00:13:08,920 Speaker 1: cost of that debt. Presumably we should also look at 216 00:13:09,080 --> 00:13:12,440 Speaker 1: where spending or where borrowing is going to because you 217 00:13:12,480 --> 00:13:14,960 Speaker 1: want it to actually be supporting economic growth. So how 218 00:13:15,000 --> 00:13:17,640 Speaker 1: do we judge whether we're spending money on the right things? 219 00:13:17,640 --> 00:13:22,160 Speaker 1: In this environment, right, So if an economy has excess 220 00:13:22,280 --> 00:13:27,040 Speaker 1: unemployment and an interest rate around zero, you can spend 221 00:13:27,040 --> 00:13:29,880 Speaker 1: money on anything and it would be good for the economy. 222 00:13:29,920 --> 00:13:32,600 Speaker 1: So if you just do the famous canes digging holes 223 00:13:33,040 --> 00:13:36,480 Speaker 1: filling in the holes, that will help. It's way better 224 00:13:36,720 --> 00:13:40,520 Speaker 1: to instead of digging a hole and refilling it to 225 00:13:40,559 --> 00:13:44,680 Speaker 1: build a highway, to do something for telecommunications, UM, for 226 00:13:44,800 --> 00:13:48,680 Speaker 1: clean energy M or the like. Then, as we look 227 00:13:48,720 --> 00:13:51,560 Speaker 1: over the medium term M, what Larry Summers and I 228 00:13:51,640 --> 00:13:55,400 Speaker 1: recommend is that you look at real debt service as 229 00:13:55,400 --> 00:13:58,719 Speaker 1: a share of GDP UM. It's real debt service you're 230 00:13:58,720 --> 00:14:02,920 Speaker 1: ajuting for inflation him because inflation is eating away part 231 00:14:02,960 --> 00:14:07,440 Speaker 1: of your debt. You want to count that against interest UM. 232 00:14:07,480 --> 00:14:10,760 Speaker 1: In the United States and most other UM of the 233 00:14:10,840 --> 00:14:14,400 Speaker 1: major economies right now, real debt services currently around zero 234 00:14:15,200 --> 00:14:20,280 Speaker 1: because inflation is offsetting interest and it's projected to rise, 235 00:14:20,680 --> 00:14:24,440 Speaker 1: but to rise very modestly, and even a decade from 236 00:14:24,480 --> 00:14:28,280 Speaker 1: now still be quite low by historical standards. So that 237 00:14:28,320 --> 00:14:31,200 Speaker 1: would be the measure I would look at to decide 238 00:14:31,240 --> 00:14:34,640 Speaker 1: if we were worried. And then finally, in terms of spending, 239 00:14:34,960 --> 00:14:37,840 Speaker 1: it's going to vary from country to country, but at 240 00:14:37,920 --> 00:14:41,640 Speaker 1: low interest rates, there are a lot more public investments 241 00:14:41,680 --> 00:14:45,680 Speaker 1: that actually repay themselves. Um. They cost money upfront, you 242 00:14:45,760 --> 00:14:49,840 Speaker 1: get higher wages, a stronger economy later on, and so 243 00:14:49,880 --> 00:14:52,840 Speaker 1: it doesn't actually cost you anything, and you don't want 244 00:14:52,880 --> 00:14:55,360 Speaker 1: to think of it as costing you anything. Um. In 245 00:14:55,400 --> 00:15:01,080 Speaker 1: the United States, investments and children meet that criteria, education, 246 00:15:01,960 --> 00:15:06,160 Speaker 1: some infrastructure, research and development. I don't think you want 247 00:15:06,200 --> 00:15:09,520 Speaker 1: to think about paying for something when the bigger danger 248 00:15:09,600 --> 00:15:11,720 Speaker 1: we have is that we won't do enough of it. 249 00:15:19,480 --> 00:15:22,360 Speaker 1: You know, some people listening to this will say, hang on, 250 00:15:22,440 --> 00:15:25,120 Speaker 1: I've heard arguments about this before, and they used to 251 00:15:25,200 --> 00:15:28,720 Speaker 1: get trashed by some economists. And because it sounds a 252 00:15:28,720 --> 00:15:32,480 Speaker 1: bit like a sort of liberal or progressive version of 253 00:15:32,720 --> 00:15:35,440 Speaker 1: voodoo economics. You know, we used to be told by 254 00:15:35,520 --> 00:15:40,680 Speaker 1: some on the Republican side that you could gain tax 255 00:15:40,760 --> 00:15:44,680 Speaker 1: revenues by cutting tax rates. Um. In effect, it sounds 256 00:15:44,720 --> 00:15:47,600 Speaker 1: like you're saying we can save money by spending more 257 00:15:47,640 --> 00:15:49,440 Speaker 1: of it. Is that really the world we're in with 258 00:15:49,520 --> 00:15:52,760 Speaker 1: interest rates at this low? Yes, it is. And the 259 00:15:52,880 --> 00:15:58,440 Speaker 1: difference is that the what I'm talking about comes out 260 00:15:58,520 --> 00:16:05,400 Speaker 1: of over hundred peer reviewed economic research papers, many of 261 00:16:05,440 --> 00:16:08,920 Speaker 1: them written in the last decade. They were summarized in 262 00:16:09,000 --> 00:16:12,560 Speaker 1: an important and synthesizing important paper by two of my 263 00:16:12,640 --> 00:16:16,960 Speaker 1: colleagues at Harvard, Nathan Hendron and Ben Spronkeiser, went through 264 00:16:17,080 --> 00:16:19,480 Speaker 1: rigorous peer review process and ended up in one of 265 00:16:19,480 --> 00:16:23,720 Speaker 1: the top economic journals, the Quarterly Journal of Economics, and 266 00:16:23,920 --> 00:16:26,840 Speaker 1: UM they found this part of this is because of 267 00:16:26,880 --> 00:16:31,680 Speaker 1: a revolution in economic research where you can use large 268 00:16:31,680 --> 00:16:35,680 Speaker 1: scale administrative data to follow large numbers of people over 269 00:16:35,760 --> 00:16:38,560 Speaker 1: long periods of time. And so we can now look 270 00:16:38,560 --> 00:16:44,480 Speaker 1: at people that received preschool education, that received nutritional assistance, 271 00:16:45,000 --> 00:16:49,280 Speaker 1: that received healthcare as a child, look at them thirty 272 00:16:49,360 --> 00:16:52,080 Speaker 1: years later, and we see they're more likely to be working, 273 00:16:52,480 --> 00:16:56,040 Speaker 1: to have higher wages, to be healthier, not to be 274 00:16:56,080 --> 00:16:59,520 Speaker 1: in prison, um and the like. And that evidence is 275 00:16:59,520 --> 00:17:03,880 Speaker 1: is just increasingly powerful. Just because I know some people 276 00:17:03,920 --> 00:17:05,920 Speaker 1: listening to this podcast will have a bit of whiplash 277 00:17:06,000 --> 00:17:08,720 Speaker 1: from hearing your argument, because we only last week had 278 00:17:08,800 --> 00:17:11,920 Speaker 1: Charles Goodheart and Managed Product talking about why inflation was 279 00:17:11,960 --> 00:17:15,240 Speaker 1: going to go up and rates interest rates were potentially 280 00:17:15,240 --> 00:17:18,359 Speaker 1: going to go up not immediately but over sort of 281 00:17:18,480 --> 00:17:22,160 Speaker 1: five year ten year time frame because of the reversal 282 00:17:22,359 --> 00:17:27,400 Speaker 1: of demographic changes that we saw or at least a continuation, 283 00:17:27,480 --> 00:17:29,679 Speaker 1: so we now have if we have a rising dependency 284 00:17:29,800 --> 00:17:33,560 Speaker 1: ratio everywhere. Their argument was that you would start to 285 00:17:33,600 --> 00:17:37,000 Speaker 1: have inflationary pressure and wages go up, and that this 286 00:17:37,040 --> 00:17:42,199 Speaker 1: could change all of those expectations and forecasts that you 287 00:17:42,600 --> 00:17:45,000 Speaker 1: just talked about in the financial markets, and that rates 288 00:17:45,040 --> 00:17:47,199 Speaker 1: would end up being much higher and inflation would end 289 00:17:47,320 --> 00:17:48,919 Speaker 1: up being much higher. What do you what do you 290 00:17:48,960 --> 00:17:50,640 Speaker 1: say to that, you know, we could just we could 291 00:17:50,680 --> 00:17:53,000 Speaker 1: completely change our way of looking at fiscal policy just 292 00:17:53,040 --> 00:17:55,439 Speaker 1: in time for for the world to go back to 293 00:17:55,520 --> 00:17:58,560 Speaker 1: more like it was, say in the nineties seventies. So 294 00:17:58,640 --> 00:18:01,119 Speaker 1: my view on fiscal parts see is that there is 295 00:18:01,160 --> 00:18:05,000 Speaker 1: not a timeless truth here. You can't look into some 296 00:18:05,160 --> 00:18:08,400 Speaker 1: theory like modern monetary theory and say deficits are never 297 00:18:08,480 --> 00:18:12,160 Speaker 1: a problem, nor should you have some theory that deficits 298 00:18:12,160 --> 00:18:14,760 Speaker 1: in debt or always a problem. Um. You need to 299 00:18:14,760 --> 00:18:21,639 Speaker 1: base it on empirical evidence about the economy, about interest rates, 300 00:18:22,240 --> 00:18:28,000 Speaker 1: about the overall macroeconomic situation. You can have all sorts 301 00:18:28,040 --> 00:18:31,920 Speaker 1: of theories about interest rates rising. That's not what financial 302 00:18:31,960 --> 00:18:36,800 Speaker 1: markets think. That's not been the trend um for several decades. 303 00:18:37,280 --> 00:18:41,520 Speaker 1: That certainly might happen. And so you know, Larry, and 304 00:18:41,560 --> 00:18:44,560 Speaker 1: I suggest you should be worried if real debt surface 305 00:18:44,640 --> 00:18:49,200 Speaker 1: rises above two percent of GDP. But I wouldn't jump 306 00:18:49,280 --> 00:18:51,840 Speaker 1: right up to two percent of GDP and say we're fine. 307 00:18:52,040 --> 00:18:55,400 Speaker 1: In fact, if you look at the program we recommend UM, 308 00:18:55,400 --> 00:18:58,680 Speaker 1: it would still keep interest payments about one percent of GDP, 309 00:18:58,720 --> 00:19:03,639 Speaker 1: about half of the margin that I think we should 310 00:19:03,640 --> 00:19:06,520 Speaker 1: be at. So yes, leave some room for error, be 311 00:19:06,680 --> 00:19:10,800 Speaker 1: somewhat prudent, But right now, the bigger risk is that 312 00:19:10,880 --> 00:19:14,440 Speaker 1: we don't do enough, not that we do too much 313 00:19:14,560 --> 00:19:19,080 Speaker 1: deficit reduction. Okay, so back to the real world. None 314 00:19:19,080 --> 00:19:23,119 Speaker 1: of this is going to happen. Surely if the Republicans 315 00:19:23,240 --> 00:19:27,080 Speaker 1: remain in control of the Senate for the first years 316 00:19:27,080 --> 00:19:29,760 Speaker 1: of the Biden administration. Could you think anyone on that 317 00:19:29,840 --> 00:19:32,639 Speaker 1: side has has read your paper? Are you expecting them 318 00:19:32,680 --> 00:19:36,720 Speaker 1: to come on board? You know, I certainly hope that 319 00:19:36,760 --> 00:19:41,320 Speaker 1: this is a set of ideas that Democrats and Republicans 320 00:19:41,480 --> 00:19:44,560 Speaker 1: in Congress takes seriously. I'm going to make an effort 321 00:19:44,680 --> 00:19:48,120 Speaker 1: to try to get them out there and discuss them 322 00:19:48,200 --> 00:19:52,119 Speaker 1: with people UM at a more practical level. I was 323 00:19:52,160 --> 00:19:57,320 Speaker 1: in the room many times as Vice President Biden was 324 00:19:57,440 --> 00:20:03,160 Speaker 1: negotiating with Senator Connell, who is currently the majority Republican 325 00:20:03,240 --> 00:20:06,120 Speaker 1: majority leader of the Senate Um. The two of them 326 00:20:06,200 --> 00:20:12,600 Speaker 1: have a good wrapport with each other, pretty transactional negotiating style. 327 00:20:13,240 --> 00:20:16,800 Speaker 1: That may not be enough to get anything done, but 328 00:20:16,920 --> 00:20:20,240 Speaker 1: I do think it's the best shot at getting something 329 00:20:20,320 --> 00:20:24,679 Speaker 1: done in divided government, and there's certainly some areas like infrastructure, 330 00:20:25,040 --> 00:20:29,880 Speaker 1: which do generate interest from both political parties. Well, that's 331 00:20:30,000 --> 00:20:32,600 Speaker 1: a voice of optimism that is also a voice of experience, 332 00:20:32,640 --> 00:20:36,320 Speaker 1: a rare treat Jason Ferman, thank you very much, thanks 333 00:20:36,320 --> 00:20:46,840 Speaker 1: for having me m. I might have hoped to be 334 00:20:46,920 --> 00:20:50,199 Speaker 1: telling you finally this week about a deal between the 335 00:20:50,280 --> 00:20:53,000 Speaker 1: UK and the European Union to cover the period when 336 00:20:53,000 --> 00:20:56,480 Speaker 1: transitional arrangements stop and the UK in January is fully, 337 00:20:56,800 --> 00:21:00,479 Speaker 1: entirely actually out of the European Union. And as this 338 00:21:00,600 --> 00:21:03,480 Speaker 1: podcast was being put to ben on the third of December, 339 00:21:03,880 --> 00:21:06,720 Speaker 1: there was still no deal to be seen. So much 340 00:21:07,040 --> 00:21:10,480 Speaker 1: so predictable, you might say, we've learned that I'm picking 341 00:21:10,520 --> 00:21:14,560 Speaker 1: a nearly fifty year old marriage between two very complicated 342 00:21:14,640 --> 00:21:18,159 Speaker 1: modern economies was always going to be tough. But if 343 00:21:18,240 --> 00:21:21,800 Speaker 1: you step back, what's odd when you think about it, 344 00:21:21,840 --> 00:21:23,960 Speaker 1: is not that the negotiations have been going down to 345 00:21:24,000 --> 00:21:27,560 Speaker 1: the wire, but what exactly is causing the trouble. The 346 00:21:27,720 --> 00:21:31,639 Speaker 1: three big sticking points, as the EU negotiator Michel Barnier 347 00:21:31,720 --> 00:21:36,400 Speaker 1: confirmed this week, are still the leving playing field for business, 348 00:21:37,040 --> 00:21:41,200 Speaker 1: access to British fishing waters, and how the overall agreement 349 00:21:41,440 --> 00:21:44,240 Speaker 1: is going to be enforced. What has not been front 350 00:21:44,280 --> 00:21:47,920 Speaker 1: and center in any of these negotiations, it seems it's 351 00:21:47,960 --> 00:21:52,320 Speaker 1: been relations between the City of London, the financial services 352 00:21:52,359 --> 00:21:55,879 Speaker 1: industry that's so important to the UK economy, and the 353 00:21:55,920 --> 00:22:00,800 Speaker 1: European Union itself. Critics say the city in fact got 354 00:22:00,840 --> 00:22:03,280 Speaker 1: thrown to the lions a long time ago in these 355 00:22:03,280 --> 00:22:06,679 Speaker 1: Brexit negotiations, and meanwhile, a lot of money and jobs 356 00:22:06,760 --> 00:22:11,000 Speaker 1: have been exiting London as a result. Varen vaguela Bloomberg 357 00:22:11,000 --> 00:22:14,120 Speaker 1: Finance reporter, has been totting up the impact so far 358 00:22:14,280 --> 00:22:16,440 Speaker 1: and read a piece about it this week. I mean, 359 00:22:17,280 --> 00:22:20,960 Speaker 1: how much business has gone from the city now as 360 00:22:21,000 --> 00:22:23,040 Speaker 1: a direct result of Brexit? Is it? Is? It a 361 00:22:23,080 --> 00:22:27,320 Speaker 1: lot more than we might initially have expected. So e 362 00:22:27,480 --> 00:22:29,920 Speaker 1: y and the report last moment said that seven of 363 00:22:30,280 --> 00:22:34,000 Speaker 1: seven thousand, five hundred Roles and one point two trillion 364 00:22:34,040 --> 00:22:37,280 Speaker 1: pounds in assets have already moved, and it says that 365 00:22:37,359 --> 00:22:40,280 Speaker 1: this is just the beginning. Obviously, if the transition period 366 00:22:40,400 --> 00:22:45,480 Speaker 1: ends in a matter of for four weeks and then 367 00:22:45,720 --> 00:22:50,520 Speaker 1: we could see the toll really really rise. We know 368 00:22:50,760 --> 00:22:55,320 Speaker 1: a few other things such as equity trading. About thirty 369 00:22:55,720 --> 00:22:58,720 Speaker 1: of that business in European stocks is done in London 370 00:22:59,160 --> 00:23:02,760 Speaker 1: through London and based trading venues, and that's also at 371 00:23:02,840 --> 00:23:07,520 Speaker 1: risk of moving on jan four. Is it more than 372 00:23:07,640 --> 00:23:09,800 Speaker 1: we might have thought when the referendum happened. I was 373 00:23:09,840 --> 00:23:12,879 Speaker 1: sitting in JP Morgan and a little bit closer to 374 00:23:12,960 --> 00:23:16,000 Speaker 1: this and at the time there was a feeling that 375 00:23:16,040 --> 00:23:22,200 Speaker 1: actually banks were going to still find London very attractive. Overall, 376 00:23:22,400 --> 00:23:25,520 Speaker 1: the impact so far has been far less than some 377 00:23:25,680 --> 00:23:32,639 Speaker 1: anticipated around that time. Post six the referendum, the CEO 378 00:23:32,720 --> 00:23:36,440 Speaker 1: of London Stock Exchange over times every year Role said that, 379 00:23:36,960 --> 00:23:39,840 Speaker 1: you know, hundreds of thousands of jobs would leave the 380 00:23:39,920 --> 00:23:44,000 Speaker 1: city and clearly that hasn't come to pass just yet. 381 00:23:44,840 --> 00:23:48,760 Speaker 1: It's a much smaller magnitude so far. And part of 382 00:23:48,760 --> 00:23:52,480 Speaker 1: the theory at that time was the clearing business in 383 00:23:52,840 --> 00:23:58,840 Speaker 1: derivatives clearing a multi trillion dollar market would potentially moved 384 00:23:58,880 --> 00:24:03,439 Speaker 1: to Europe. Now hasn't happened. But what's at stake? I mean, 385 00:24:03,480 --> 00:24:08,520 Speaker 1: if the city did gradually lose its status as one 386 00:24:08,520 --> 00:24:13,919 Speaker 1: of the world's great financial hubs, what's at stake in 387 00:24:14,080 --> 00:24:18,400 Speaker 1: terms of the economy. The problem with these BRESA negotiations 388 00:24:18,440 --> 00:24:20,560 Speaker 1: is a lot of focus has been on the trade 389 00:24:20,600 --> 00:24:26,000 Speaker 1: talks and industries like fishing. But in the UK, finance 390 00:24:26,040 --> 00:24:28,840 Speaker 1: makes up about seven percent of the economy and more 391 00:24:28,880 --> 00:24:33,080 Speaker 1: than a tenth of all tax revenue employees more than 392 00:24:33,119 --> 00:24:36,800 Speaker 1: a million people. So the City of London is really 393 00:24:36,800 --> 00:24:42,159 Speaker 1: critical too to the UK economy. So there is a 394 00:24:42,160 --> 00:24:45,359 Speaker 1: lot at stake and it's surprising, surprise a lot of 395 00:24:45,520 --> 00:24:48,600 Speaker 1: senior executives in the City of London, but it hasn't 396 00:24:48,600 --> 00:24:52,560 Speaker 1: been more focused from the UK government on finance and 397 00:24:52,640 --> 00:24:58,920 Speaker 1: forging away to make sure that critical industry is safeguarded. 398 00:25:00,240 --> 00:25:01,919 Speaker 1: I mean, it's obviously it's one of the things that 399 00:25:01,960 --> 00:25:04,640 Speaker 1: we've talked about again and again around Brexit, which is 400 00:25:04,720 --> 00:25:09,120 Speaker 1: that you know, you have an advanced, modern economy. It's 401 00:25:09,119 --> 00:25:11,040 Speaker 1: probably it's the first time in sort of that I 402 00:25:11,080 --> 00:25:14,159 Speaker 1: can remember where that a decision has been made that 403 00:25:14,280 --> 00:25:18,680 Speaker 1: really put other things ahead of business interests and economic interests. 404 00:25:18,800 --> 00:25:21,080 Speaker 1: That decision to leave the EU. There was no question 405 00:25:21,119 --> 00:25:23,520 Speaker 1: I think in anyone's minds that there would be a 406 00:25:23,560 --> 00:25:25,560 Speaker 1: negative impact. You could have a debate about whether it 407 00:25:25,640 --> 00:25:29,040 Speaker 1: be large or small, but there had always been a 408 00:25:29,119 --> 00:25:32,920 Speaker 1: concern about the economic impact. And it's just interesting that 409 00:25:33,640 --> 00:25:37,440 Speaker 1: the government has not tried to offset that or work 410 00:25:37,480 --> 00:25:41,320 Speaker 1: against that in defending the city in these negotiations. They 411 00:25:41,320 --> 00:25:43,080 Speaker 1: seem to be quite happy to have the city be 412 00:25:43,160 --> 00:25:49,880 Speaker 1: an emblem of this putting of sovereignty and other issues 413 00:25:49,920 --> 00:25:52,800 Speaker 1: of national control ahead of you know, what is our 414 00:25:52,880 --> 00:25:58,280 Speaker 1: most important business. But just on that point you mentioned equivalence, 415 00:25:58,320 --> 00:26:02,160 Speaker 1: we should probably just sayflee what that is and why 416 00:26:02,160 --> 00:26:05,600 Speaker 1: it matters, you know, absolutely so with the big banks 417 00:26:05,720 --> 00:26:10,360 Speaker 1: in London for for for decades, JP Morgan, Goldman, Sachs 418 00:26:11,080 --> 00:26:14,760 Speaker 1: and other Wall Street lenders have established big, big operations 419 00:26:14,760 --> 00:26:18,439 Speaker 1: in London to do trading business, markets, businesses, and they 420 00:26:18,480 --> 00:26:21,000 Speaker 1: were able to serve EU clients like a French fund 421 00:26:21,080 --> 00:26:24,400 Speaker 1: manager or a Dutch pension firm for their hedging and 422 00:26:24,720 --> 00:26:28,399 Speaker 1: trading business from London. So London really grew to be 423 00:26:28,560 --> 00:26:33,680 Speaker 1: this fantastic financial center global financial center. Now, of course, 424 00:26:33,920 --> 00:26:38,560 Speaker 1: after the UK leaves EU or leaves the transition period 425 00:26:38,560 --> 00:26:40,720 Speaker 1: in a few weeks time, it will lose all the 426 00:26:40,760 --> 00:26:44,359 Speaker 1: passporting rights of those firms were enjoyed to service for 427 00:26:44,400 --> 00:26:48,920 Speaker 1: the European firms. So the back, the fall back is equivalents, 428 00:26:49,400 --> 00:26:56,199 Speaker 1: which is in essence, the European Commission determining that the 429 00:26:56,320 --> 00:27:01,040 Speaker 1: UK's rules on finance as robust as its own. Now 430 00:27:02,400 --> 00:27:06,320 Speaker 1: de facto, the UK's rules on finance are as robust. 431 00:27:06,440 --> 00:27:09,760 Speaker 1: The UK wrote many of the rules when it was 432 00:27:09,840 --> 00:27:14,720 Speaker 1: in Europe. Its influenced that the way those rules evolved. 433 00:27:15,560 --> 00:27:19,840 Speaker 1: But the problem is that equivalent is a political decision, 434 00:27:19,960 --> 00:27:25,720 Speaker 1: a series of political decisions. It's a byzantine patchwork whereby 435 00:27:25,760 --> 00:27:29,480 Speaker 1: the European Commission determines in different areas such as the 436 00:27:29,480 --> 00:27:34,840 Speaker 1: investment services, clearing and about forty other areas that the 437 00:27:34,960 --> 00:27:39,280 Speaker 1: UK's rules are as robust. It's a gift of the 438 00:27:39,520 --> 00:27:42,960 Speaker 1: European Commission and it's being used as a political tool 439 00:27:43,480 --> 00:27:46,359 Speaker 1: in the negotiations to make sure that Europe gets what 440 00:27:46,480 --> 00:27:52,080 Speaker 1: it wants. Just thinking about sort of the global implications 441 00:27:52,200 --> 00:27:54,400 Speaker 1: of this for those who are not sitting in the UK, 442 00:27:55,160 --> 00:27:59,080 Speaker 1: if is there another big European city that's going to 443 00:27:59,200 --> 00:28:02,239 Speaker 1: come through this as a as a competitor, not just 444 00:28:02,280 --> 00:28:05,000 Speaker 1: to London, but to New York or is it is it? 445 00:28:05,840 --> 00:28:08,120 Speaker 1: Is it New York that's likely to benefit because there's 446 00:28:08,160 --> 00:28:11,480 Speaker 1: no single place that combines all of the things that 447 00:28:11,560 --> 00:28:16,000 Speaker 1: London has. Now, it's an interesting question because I think 448 00:28:16,040 --> 00:28:20,120 Speaker 1: nobody's saying in all of this that London's days and numbered. 449 00:28:20,640 --> 00:28:23,800 Speaker 1: It has obviously a lot of advantage still like it's 450 00:28:24,800 --> 00:28:28,520 Speaker 1: the lat English language, it's legal system, and I say 451 00:28:28,600 --> 00:28:33,440 Speaker 1: it's it's built up the rules in many areas of finance. 452 00:28:34,320 --> 00:28:37,720 Speaker 1: It attracts a big talent pool. So a European city 453 00:28:37,760 --> 00:28:41,200 Speaker 1: like Paris or Frankfurt, which are vying with London for 454 00:28:41,400 --> 00:28:46,040 Speaker 1: more business, isn't likely to overtake London anytime soon or 455 00:28:46,040 --> 00:28:50,360 Speaker 1: perhaps perhaps ever. Um some of the trading venues in 456 00:28:50,400 --> 00:28:55,920 Speaker 1: London has has split their European presence now between Amsterdam 457 00:28:55,960 --> 00:29:01,120 Speaker 1: and Paris. Um some of the banks have big operations 458 00:29:01,160 --> 00:29:04,280 Speaker 1: now in Frankfurt. So always seeing is a sort of 459 00:29:04,280 --> 00:29:09,800 Speaker 1: fragmented future for finance in Europe. But many people still 460 00:29:09,840 --> 00:29:14,160 Speaker 1: think that London will dominate. It's always reinvented itself. We 461 00:29:14,480 --> 00:29:18,280 Speaker 1: talked about how the Big Bang in the nineteen eighties 462 00:29:21,160 --> 00:29:25,680 Speaker 1: from Margaret Fatch's time, was a big impetus for the 463 00:29:25,720 --> 00:29:28,520 Speaker 1: city of London and made it a huge share trading hub. 464 00:29:29,040 --> 00:29:31,640 Speaker 1: London is always that was the deregulation where they got 465 00:29:31,720 --> 00:29:33,000 Speaker 1: rid of a lot of rules that actually made a 466 00:29:33,040 --> 00:29:35,840 Speaker 1: lot of us banks want to prefer London for some 467 00:29:35,960 --> 00:29:40,480 Speaker 1: things because of the reduction of rules exactly. And this 468 00:29:40,560 --> 00:29:42,960 Speaker 1: is maybe a good analogy with what we may may 469 00:29:43,000 --> 00:29:46,600 Speaker 1: see in a post Brexit era. It's always looking at 470 00:29:46,920 --> 00:29:52,320 Speaker 1: increasing competition, making rules better for the end user, and 471 00:29:52,360 --> 00:29:58,920 Speaker 1: that ultimately makes London very attractive or has done well. 472 00:29:58,960 --> 00:30:02,680 Speaker 1: We will wait and see. You. You referenced that era 473 00:30:02,840 --> 00:30:07,080 Speaker 1: of thatcher Right deregulation in the opening to your piece 474 00:30:07,200 --> 00:30:09,880 Speaker 1: that the golden age of the City of London began 475 00:30:10,000 --> 00:30:13,120 Speaker 1: with a big bang. It's ending with a whimper. Well 476 00:30:13,200 --> 00:30:16,000 Speaker 1: maybe not, we'll find out over the next few years. 477 00:30:16,920 --> 00:30:24,800 Speaker 1: Veron Vaguela, thank you very much, Thank you, thanks for 478 00:30:24,800 --> 00:30:27,120 Speaker 1: listening to Stephonomics. We'll be back next week with more 479 00:30:27,240 --> 00:30:30,440 Speaker 1: on all things economic, and remember you can always find 480 00:30:30,480 --> 00:30:33,440 Speaker 1: us on the Bloomberg Terminal website, app or wherever you 481 00:30:33,480 --> 00:30:36,120 Speaker 1: get your podcasts. You can also get a lot more 482 00:30:36,200 --> 00:30:40,360 Speaker 1: news and analysis from Bloomberg Economics by following at Economics 483 00:30:40,360 --> 00:30:43,760 Speaker 1: on Twitter. This episode was produced by Magnus Henderson, with 484 00:30:43,840 --> 00:30:47,640 Speaker 1: special thanks to Peter Koy, Jason Furman, and Vien Vaguela. 485 00:30:48,160 --> 00:30:51,600 Speaker 1: Lucy Meekin is the executive producer of Stephonomics and the 486 00:30:51,640 --> 00:31:00,960 Speaker 1: head of Bloomberg Podcast is Fancesca Lego. Five