Inside The Military’s $223 Million ‘Doomsday Plane’


If there ever were a nuclear war and all US military ground
communication was destroyed, this $223 million plane would become the command
and control center for the US military’s
most senior officials. This is the E-4B “Nightwatch.” It’s basically a flying war room designed to withstand a nuclear blast. Ryan Pickrell: I like to think
of the E-4B as kind of like a flying backup Pentagon. Potentially more secure than the Pentagon. If you’re seeing it at
its maximum capability, which hopefully we never do, yeah, you’re looking at
an apocalyptic scenario, which is why it’s affectionately known as the “doomsday plane.” Narrator: Four E-4Bs make up the National Airborne Operations Center. And the US Air Force is responsible for the operation of all four of them out of Offutt Air Force
Base near Omaha, Nebraska. The retrofitted Boeing
747s were made for war. Originally designed in
1973, the E-4 series planes were thought to be the best way a president during the Cold War might survive a nuclear explosion. And since their inception,
one of the doomsday planes has stood on alert 24/7. Edward Garcia: Because
we’re a 24/7 ops mission, we are not a non-deployable
unit due to our proximity to the president and all
other key assets at one time. But, day to day, it is highly important because we can assume the role
of a primary command center, much like the Pentagon is,
much like strat-com can be. We can assume that role
in the air as well. Narrator: In the immediate
aftermath of a nuclear blast, the president, the secretary of defense, and the joint chiefs of staff would all be safe aboard the E-4B. From there, they could
order nuclear strikes or execute emergency war orders. And while the majority of
the E-4B’s capabilities are classified, we do know a few things. The plane has three
decks and can hold a crew of up to 112 people. With four massive
engines, the E-4B can fly for 12 hours straight without refueling, though with aerial refueling capabilities it could theoretically
fly for several days. It costs nearly $160,000
per hour to fly the E-4B, making it the most expensive airplane the Air Force operates. And it’s built to survive a nuclear blast. To prevent radiation, the
windows have a wired mesh, similar to what you’d see on
the window of a microwave. Equipment and wiring on board are hardened to survive an electromagnetic pulse. There’s also thermal and nuclear shielding and direct-fire countermeasures. Aboard the plane, space is broken down to optimize war coordination. At the front of the plane, executive quarters house the
senior military officials. The upper rest has 18 bunks available for the Air Force crew. They work 24-hour, seven-day
shifts and sleep on board. Beneath that is the
secure conference room, where the joint chiefs, president, and secretary of defense
can give war orders. The briefing room is where officials can update the traveling
press, or battle staff, on strategy and coordination efforts. In the center of the plane, officers from every branch of the military will hammer out a strategy
in the event of a crisis. This base is known as
the battle-staff room. And all outside communication happens at the back of the aircraft from the communication and
technical control room. From here, operators can communicate with virtually anyone in the world, in any situation. Scott McCandless: It’s designed that, in the most austere environments, during or after a nuclear war, it survives and can communicate, from the most cutting-edge
communications technology to old, antiquated
communications technology. We have the ability to
endure and communicate with fielded forces and the
rest of the US government. Narrator: That bubble on top of the E-4B is where all the communication
technology is held. It’s called the “ray
dome,” and an estimated 67 satellite dishes and
antennas are kept here. The E-4B has more
communication capabilities than Air Force One. There’s even a 5-mile-long
“tail” that can be extended behind the plane to
allow for communication with submarines that are underwater. But even with all the
fancy communication tech, you’d be surprised at how old-school the rest of the technology on board is. There’s no digital, and
there’s no touch screens. Everything is analog.
And that’s on purpose. That vintage vibe continues
throughout the airplane. Pickrell: The E-4B doesn’t
really have windows, and it’s actually really
drab on the inside. You’re looking at kind of a beige color that looks like it came straight
out of the 1970s or ’80s, which it did. Narrator: The doomsday
plane’s utilitarian nature is completely intentional to keep
the focus on the job at hand: preparing for the worst. But hopefully we’ll never have to see the doomsday plane at its full capacity. During peacetime, the E-4B’s
main job is to transport the secretary of defense on foreign trips, and one always follows the
president in Air Force One on overseas visits. Garcia: The mission is very
tedious, it is, no kidding, one of the most arduous things
that you could possibly do, but it’s so rewarding in the sense of, every day you know that
you’re doing something or you’re preparing for the worst.

Trump slams the Fed after ECB cuts key rate


>>THE COUNCIL STARTED TO RESTART NET PURCHASES UNDER, AT A MONTHLY PACE OF 20 BILLION EURO AS FROM NOVEMBER 1st. CHARLES: EUROPEAN CENTRAL BANK PRESIDENT GOING BACK TO THE TOOL BOX, BRINGING BACK QUANTITATIVE EASING, OTHERWISE KNOWN AS MONEY PRINTING, EVEN TAKING NEGATIVE YIELDS EVEN LOWER. THIS PUTTING MORE PRESSURE ON OUR FEDERAL RESERVE TO CUT RATES AT THEIR NEXT MEETING NEXT WEEK. PRESIDENT TRUMP HAS A MESSAGE FOR POWELL, THE BALL IS IN YOUR COURT, TWEETING EUROPEAN CENTRAL BANK ACTING QUICKLY, CUTTING 10 BASIS POINT. EURO FENCE THE VERY STRONG DOLLAR HURTS U.S. EXPORTS. THE FED SITS AND SITS. THEY GET PAID TO BORROW MONEY WHILE WE’RE PAYING INTEREST. WANT TO BRING IN WEALTH PLANNING STRATEGIST, JEFF SAUT. JEFF, I THOUGHT IT WAS FASCINATING BON VOYAGE BY MARIO DRAGHI. HE TOOK SHOTS AT EVERYONE, EUROPEAN ECONOMIES AND FISCAL POLICY AND SEEMS TO ME TO PUT A LOT OF PRESSURE ON JAY POWELL.>>I WOULD AGREE WITH THAT. I WOULD SAY DRAGHI’S POLICIES PROBABLY PREVENT AD DEPRESSION IN EUROPE BUT THEY HAVE ABJECTLY DIDN’T WORK I SHOULD SAY. INFLATION HADN’T COME BACK. GROWING HADN’T COME BACK. THE FACT HE IS TELLING CORPORATE EUROPE THAT INTEREST RATES WILL STAY LOWER FOR LONGER, ACTUALLY ENCOURAGES CORPORATIONS TO DO NOTHING, TO SIT ON THEIR HANDS AND WAIT. WHICH IS NOT THE WAY YOU REKINDLE GROWTH. CHARLES: JEFF, HE SAID, HE WANTS A SIGNIFICANT INCREASE IN INFLATION. HE SAYS THERE CONTINUE TO BE READY TO MAKE ADJUSTMENTS. WITH ALL THEIR INSTRUMENTS, BECAUSE HE IS WORRIED ABOUT PERSISTENT DOWNSIDE RISK. HE SAY NEGATIVE INTEREST RATES HAVE BEEN A VERY POSITIVE EXPERIENCE SO FAR FOR EUROPE. SO HE IS BACKING HIS TRACK RECORD. HE IS SAYING FOR THE MOST PART THAT THE ECB SAVED EUROPE. THAT THEY CREATED 11 MILLION JOBS, AND THEY SAVED EUROPE. IT IS TIME FOR GOVERNMENTS THERE TO DO SOME PRO-GROWTH POLICIES?>>I DON’T DISAGREE WITH THE FACT THAT HE SAVED, EUROPE, CHARLES, THE FACT OF THE MATTER HIS POLICIES HAVEN’T WORKED. IT HAS NOT REKIN DILLED GROWTH. IT HASN’T BROUGHT BACK INFLATION IT DEPRECIATED EURO WHICH SHOULD HELP IN LONGER SCHEME. KEEPING INTEREST RATES LOWER IS NOT THE WAY YOU GET CORPORATE EUROPE TO RESTIMULATE ITSELF AND HAVE GROWTH COME BACK. CHARLES: WHERE DOES THAT PUT JAY POWELL IN YOUR OPINION, IN YOUR THOUGHTS? BECAUSE OBVIOUSLY JAY POWELL HAS A LOT ON HIS PLATE, WAY BEYOND THE DUAL MANDATE?>>YEAH I AGREE WITH THAT TOO. I THINK YOU WILL CUT INTEREST RATES BY 25 BIPS NEXT WEEK. WITH WHAT I SEE IN THE ECONOMY I DON’T THINK INTEREST RATE CUTS ARE NECESSARY. I THINK HE WILL BOW IF YOU WILL TO THE WISHES OF THE PRESIDENT. I DON’T THINK NEGATIVE INTEREST RATES, WHICH IS WHAT PRESIDENT TRUMP IS TALKING ABOUT IN THIS COUNTRY. I THINK THAT WOULD BE DISASTER FOR THE U.S. BUT I THINK THEY WILL CUT NEXT WEEK. CHARLES: HOW MUCH FURTHER DOWN? YOU DON’T LIKE NEGATIVE RATES BUT IS IT A POSSIBILITY THAT WE COULD EVER GET TO ZERO OR LESS?>>CERTAINLY. MARKETS CAN DO ANYTHING. IT IS CERTAINLY A POSSIBILITY. MY HUNCH IS HE CUTS 25 BASIS POINTS NEXT WEEK. THEN SITS ON HIS HAND FOR A PERIOD OF TIME SEE WHAT IS REFLECTED IN THE ECONOMIC NUMBERS. CHARLES: ALL RIGHT. I GOT TO TELL YOU THAT WAS AN

Varney: New York is paying a big price for its economic incompetence


STUART: CARL ICAHN IS LEAVING NEW YORK, AND HE IS TAKING MOST OF IS EMPLOYEES WITH HIM. THEY’RE RELOCATING TO, FLORIDA. THE HIGH TAX, LARGELY DEMOCRAT-RUN STATES LIKE NEW YORK ARE PAYING A VERY BIG PRICE FOR THEIR DECADES OF ECONOMIC INCOMPETENCE. IT IS A MODERN-DAY EXODUS, AND IT IS BECOMING A FLOOD. THE RICH ARE LEAVING IN DROVES TAKING THEIR MONEY WITH THEM. SOME WHO SAY, GOOD RIDDANCE, BUT MORE SOBER DEMOCRATS ARE QUIETLY VERY NERVOUS. SO THEY SHOULD BE. CARL ICAHN IS MR. NEW YORK. HE HAS LIVED AND WORKED HERE ALL HIS LIFE. HE OWNS HOMES AND RUNS HIS BUSINESS HERE. THERE IS A STADIUM NAMED AFTER HIM. THERE IS MEDICAL CENTER NAMED AFTER HIM. HE IS WORTH OVER $17 BILLION AND HE IS HEADING SOUTH. IN MESSAGES TO HIS STAFF, HE WANTS QUIETER LIFE IN A WARM CLIMATE. HE REPORTEDLY TOLD ASSOCIATES IT IS TAXES PUT PUSHING HIM OUT. HIS ESTATE IS WORTH 17 BILLION. IN FLORIDA THERE IS NO ESTATE TAX. DAVID TEPPER, PAUL TUDOR JONES ARE ALREADY GONE. YOU CAN’T BLAME THEM. IF YOU MAKE GOOD MONEY IN NEW YORK CITY, YOU WILL LOSE 60 CENTS ON EVERY DOLLAR YOU EARN. SOMETIMES MORE THAN THAT THE IN A CITY WHERE THE MAYOR HAS NO TIME FOR YOU. HE WANT YOU TO PAY EVEN MORE. SO DOES THE GOVERNOR OF NEW JERSEY. SO DOES THE GOVERNOR OF CONNECTICUT. SO DOES THE GOVERNOR OF ILLINOIS. DEMOCRATS ALL. IF ANY DEMOCRAT WINS THE 2020 ELECTION THEY WILL TO AFTER EVERYTHING THAT YOU HAVE GOT LEFT. PILE ON THE RICH TIME. IT IS ALL THEIR FAULT. TAKE THEIR MONEY, YOU CAN SOLVE EVERY SINGLE PROBLEM. WHAT UTTER NONSENSE. IF TAX TO THE MAX WAS A SUCCESS, HIGH-TAXED STATES WOULD BE BOOMING, BUT THEY’RE NOT. LOW TAX REPUBLICAN STATES ARE GROWING FAST, TEXAS AND FLORIDA. THERE IS NO SIGN THIS IS GOING TO CHANGE. WE HAVE YET TO HEAR ANY DEMOCRAT AT THE STATE OR NATIONAL LEVEL SUGGEST A TAX CUT OF ANY KIND. MEANWHILE, MR. NEW YORK IS PACKING HIS BAGS. HE LEAVES NEW YORK MARCH 31ST, NEXT DAY, HE OPENS UP IN FLORIDA.

How Chinese Debt & Business in China Have Evolved (w/ Fraser Howie)


FRASER HOWIE: My name’s Fraser Howie. I’m an independent analyst on China. And author of a number of books on the Chinese
financial system, in particular, Red Capitalism, and then before that, Privatizing China. So I’ve been in Asia for about 25 years, primarily
working in the financial sector– Hong Kong, Beijing, Hong Kong, again, and now I’m based
in Singapore. But always with a big focus on China, in terms
of my day job, but also my writing and commentary. It was actually myself, and a co-author, and
a colleague at a company called CITIC, which was the first Sino jointventure securities
company set up in China. About 15 years ago, we started writing about
the Chinese financial system, simply because we saw what was being written by China back
then, and this was in the late ’90s, 2000 or so. And frankly, we thought it was nonsense. We were on the ground in China. We saw what the securities markets were like. We saw what the stock market was like. And it was clear that the pundits in Hong
Kong were just far too optimistic about what China was. And then we thought, there’s a story to tell. That got us writing. It was actually on the back of a report we
wrote for the CICC at the time. And we wrote Privatizing China, which was
based on a look at what was then about 15 years of the stock markets in China. And really, just going right back to basics–
really in the late 70s, when reform started in China, fair share issuance in ’79, and
then the development of 4trading through the ’80s, listings– And they say that was privatizing
China. But then as the knot progressed, we realized
that we had more to say, and in particular, in the banking sector because if you remember–
go back to that time when we were writing Privatizing China and riding on the stock
markets. The Chinese banking system was basically bankrupt. In 1999 Zhu Rongji, the Premier at the time,
started a big bailout program where they set up bad banks, asset management companies in
China, and we saw that happening real time. It was a very long process. And so by ’05-’06 you started seeing these,
what were just previously, bankrupt banks being listed, raising multi-billions of dollars. And we thought, this is nonsense. These are Chinese banks. These aren’t Western banks. And they aren’t banks in the way we understand
them in the west. And we thought there’s a story there. So that was the genesis of Red Capitalism. And in Red Capitalism, which was eventually
published in late 2010, beginning of 2011, we went through that history of how banks
were reformed in China, how you took a bank or banking system and you made it into what
was, at the time, basically, the world’s most expensive banks. Valuation– I think it was something like
a quarter of a trillion dollars, $250 billion with all the Chinese banks. That’s an incredible figure remembering that
day declaring the system was bankrupt. So that was the genesis of Red Capitalism. Interestingly, the bulls thought it supported
their case, the bears thought it supported their case. We didn’t write it with any case in mind. We wanted to tell a story because we felt
that, again, so much of the hype, so much of the headline in China is superficial. In understanding China, you’ve got to get
away from the facade, the face of China. China is great at telling a story about how
it sees itself. And a lot of people buy into that because
China can be a very opaque and difficult place. But especially in the stock markets and then
in the capital markets in general, that almost certainly what it says on the tin isn’t what’s
in the tin. And so therefore, it’s important to understand
the background to these things, to understand the accountancy behind it, and this chicanery,
quite frankly, in a lot of the financial system. I think it’s really important if you want
to understand where we are in China now. It’s what I call the Olympic cycles. If you look back to the ’08 Beijing Olympics,
I would still maintain, although the economy was probably less than half the size it notionally
is now, I would say that’s the modern high point of China, frankly. That If you look before– the Beijing Olympics,
they put on this incredible show. They built so many subway lines. They did so many things which no other country
allegedly could do. It was a great catalyst for building across
the country. The economy was booming. Everything seemed to be going. Everyone was pandering to China. And I think that really was a high point. Of course, that was August in ’08. And then, of course, global financial crisis
and we all remember– or maybe we don’t remember now, but that last quarter of ’08 really was
dreadful. Things, literally, just fell off a cliff in
that last quarter. And that was very important in China’s case
as well because China was hugely affected by that. I think that everyone, of course, remembers
the output or the response to ’08, by the Chinese government, this huge stimulus program,
which started off a whole series of events, which we’ll come to. But I think, remember, before that, and the
real reason for that was not simply to keep global growth going, but China had, was it,
the headlines, 20, 30 million people unemployed, these migrant workers. This was the mainstay of the Chinese economy
that this migrant population was working in factories along the coast, and that just the
downturn in exports, the downturn in the global economy really impacted China. And so what you saw there– and this again
was absolutely central to why we wanted to tell the bank story– was because the response
of this stimulus was basically you turn on the credit taps. That after spending the better part of a decade
trying to reform the banking system, trying to make it into something that was something
at least approaching a market-based system where there was some degree of risk control,
some oversight, you basically had the rulers in Beijing reverting to their old practice
of using the banks as a piggy bank to basically fund growth. And so you turn on these credit taps, and
literally any warm body could get money in ’09. And so you had this huge expansion of credit. And of course you saw, guess what, a big rebound
in growth, which should not surprise anybody. Growth’s an output, not an input into these
models. And so you had this huge expansion of credit. But I think that was the start of something
that has taken China, as I say, before those Olympics, before that last quarter of ’08,
China was a growth story. There’s no question about it. It had been 20 years by then of double digit
growth. China could continue to grow for another two
decades, three decades, whatever it may be. And yet, that was a real turning point because
China’s gone from a debt story– or from a growth story to a debt story, which is just
staggering. And I think we forget about this because the
growth numbers have still remained high. And people say, yes, they’ve fallen from their
highs, but hey, they’re still doing 6 and 1/2% or 7% if you believe in those numbers. They say, it’s still much better than what
the West’s doing. But that’s incidental, because the real story
in China now is that the reason you’re still getting that growth is because credit is growing
at double the rate of GDP growth. And so that ’08, that response, that ’09 stimulus,
the early stimulus to keep growth going really set in motion an addiction to debt, and took
China– and let’s remember, well, there was clearly an impact from the global economy. It wasn’t necessarily a crisis per se. And so it’s interesting now that you look
and you compare Chinese growth numbers and the growth, particularly the build up of gross
debt in the economy, it gets compared to what the US is or what the UK is or Japan is or
Greece or whatever. You can take any of these countries. But these are all countries that have clearly
gone through crises. In China’s case, I don’t see there’s a crisis. Yes, there’s slowing growth. There’s lots of problems with their economy. There’s many areas in China you can look at
and say there’s real problems. But in terms of actual real fundamental financial
crisis, there isn’t one. There’s no real panic there. There’s still a lot of faith in the government. There’s still a lot of resources and capacity
of the government they can put to work. And so, you’ve had that huge credit build
up in spite of a real problem, which really makes me wonder when I think about future
issues, when you think, if a crisis does come in China, and given what’s happening in the
States with the new president, you can certainly see scenarios where you are going to get crises
coming, then will China have the wherewithal and resources? But coming back to that stimulus. So you had a positive response from China
in ’09. That obviously was lauded at the time that
this would support global growth, support global demand. At the same time, you also had a government
who started to acknowledge that there was fundamental imbalances in their economy, and
that this needed to be reformed. And of course there was lots of nice words
and nice talk about this, how we’re going to restructure, we’re going to move away from
this dependence on fixed asset investment. and we’re going to move more towards a consumer-driven
economy. And here we’re eight years on, an Olympic
cycle– two Olympic cycles later, and you think, this really is quite horrible. You’ve effectively had the growth rate halved
and the debt double, which hardly is really a successful formula in many ways. I think whether China becomes the world’s
largest economy is almost frankly irrelevant, because that’s just– that’s like just weighing
the health or measuring the health of your kids based on their weight. There are many other factors that are far
more important to think about than simply, are they simply getting bigger? Are they growing? And I think China has continually failed over
this past eight years or so to really grasp that reform process. And again, this isn’t just something from
the new leadership. This is something if you go back to about
five or six years, there was a big report from the World Bank, done in conjunction with
the Chinese government, called– I think it was China 2030, but need to restructure their
economy, move away from fixed asset investment. And it laid out a whole series of reforms
and steps to try and remove this dependency. But guess what? As the global economy has failed to recover,
as China’s own economy has started to stutter in many ways, there has been a continual dependency
on debt. And so what you’ve seen in China, you’ve seen
incredible innovation, but in the worst possible way. That instead of, whereas at the start of this
crisis in ’08 you still had 60% of debt in their economy- – or probably higher, certainly
a decade more or so ago, you had 80% of debt in China basically being from bank loans,
very simple. You can look at the amount of deposits they
had, and you looked at their bank loans, and you control that through a loan to deposit
ratio. So it was very easy to literally turn the
tap on and off. But what you’ve seen is a proliferation, over
the past eight years or so, of broadly called shadow banking. And I think that doesn’t even come close to
describing it, because it’s such a murky term by definition. But you have had incredible innovation, as
it were, of bankers and entrepreneurs and businessmen figuring out ways to get around
systems which are put in place by bureaucrats to try and limit credit. And the difficulty is that returns for much
of China’s business is low, and therefore they’re desperately trying to look for new
inventive ways. At the same time, as rates have fallen in
China, you’ve also got depositors who are saying, I want better returns. And so you’ve had this springing up of– and
we talked about this when we wrote Privatizing China. This was really just the start of this process,
of these wealth management products, short term products, guaranteeing better rates which
got immediate deposits, which weren’t necessarily carrying it under the loan to deposit ratio. But again, got around that, that lending restriction. We got depositors’ funds into the hands of
those who wanted it. And in some ways, it’s a good sign. It’s a liberalization of the currency or of
the interest rate market, which is always a very important thing in China. But effectively what’s happened is that much
of that control over the banking system has been lost. And where we had highlighted this at the end
of Red Capitalism, the system now has become so much more complex. Whereas you really could think previously
of a dozen banks or so controlling the bulk of the loans, you knew exactly where they
were going, and it was very manageable, you now have a highly opaque system of banks,
of shadow banks, of wealth management products, of trust funds, of corporate lending of what’s
called entrusted loans– it’s just loans being siphoned through banks– wealth management
products created by securities companies. And then mix into that guarantee companies,
which have sprouted up to try and guarantee these loans. You have then also things being sold on the
internet. You have pawn shops where– it’s almost endless. And I keep thinking, I should write down and
try and map this whole system out. And then I though, it’s like trying to map
the brain, that there’s almost so many connections and nodes that have appeared. And the difficulty is you don’t actually know
the connections from one to the other. And you’re so, am I double counting this debt? Is this a chain of debt that’s growing? Is this new debt? And so you can actually– and I read some
reports about estimating the size of debt in China. And I think, I have absolutely no idea if
that’s true or not. These are huge numbers. And again, argued that there must be some
double counting there. Clearly what you see when you actually speak
to our entrepreneurs, when you speak to businessmen on the ground, when you speak to banks, there
is, without question, an A lending to B lending to C lending to D, and this chain and this
node of connections. And then you think, this is clearly worrying. And it is worrying. But what no one seems to have any idea about,
including myself is, when is too much too much? And this is the real problem. We can talk about this problem. We can talk about this growing problem in
China. But frankly, I have no idea when the party
stops. And again, you can look back in history. A lot of cases, you know, the Ottomans probably
peaked in the 17th century and they were still going up until the end of the Second World
War. Things can go on– bad things can go on for
a long time. I think also that the greatest comfort that
China should take in its current debt situation is that Japan still exists. For my 25 years in finance, I started following,
like many, the Japanese warrant market. And you know, Japan had problems. Japan was falling. And then people thought, there was even people
in the early ’90s who thought the Nikkei was going back to 40,000. But it was actually on the way to 7,000. And Japan has largely been in recession for
the best part of 20 years or more. And you think, well, why can’t China pull
off a similar trick- – a different sort of trick. It’s clearly not as rich, clearly not as developed,
but you are ultimately still underpinning so much of this in China, even if you can
map this highly complicated system, which you can’t. Because into that you’ve got, is it local
government financing? Is it, like I said, the wealth management
products? Is it the regular bank business? Is it rich individuals? Is it overseas funding? OK, so let’s see you map it all. But who’s actually going to be the person
to pull their fingers out of the dyke and let the water fall through? Because in China, there is this continued
belief still that the government will underpin everything. And to some extent as a working model, I think
that probably makes sense. And again, anyone who is predicting the collapse
of China– first of all, I have no idea what that means. If your debt’s doubled and your growth’s halved,
that looks pretty much like a collapse in some ways already. The bullish case in China has now become it’s
not collapsing, which is a big turnaround from where we were five or six years ago. So, even if you can map all that, I still
think, yeah, you’ve got to look at the politics here as well. You’ve got to look at the mindset, the control
of information. So someone goes bankrupt? Why should I care about someone else’s bankruptcy? My wealth management paid back. Wealth management product is very difficult
to get someone out in the street protesting or really causing a stink for someone else’s
misfortune. And so therefore I think, how does this really
become a systemic crisis? And it’s not clear to me that it does. Telling me the numbers are getting bigger
still doesn’t tell me how you get a systemic crisis. What staggers me is that there are so many
people– and again, clever people, lots of smart people. And whether it be economists, hedge fund managers,
whatever, lots of smart people who will go on TV and talk about the economics of the
debt issues, et cetera. And I think, can’t really argue with any of
that. I’m not a trained economist. I may be right, may be wrong. But what does stagger me is that there is
often a willingness or a willful blindness on the politics of it. And I think nothing in China– you simply
cannot divorce economics from politics in China. And certainly if you’re worried about debt
situations, and from big picture– so if you’re looking at the stability of the banking system,
if you’re talking about the currency, if you’re talking about government debt, if you’re talking
about local government financing vehicles, bank bailouts, however you want to propose
it, the politics is absolutely essential. And to think that it’s somehow China– I would
say the law of economics works just as well– if they work at all, they work just as well
in China as they do outside of China. They don’t stop at the border. So in that sense, economics, yes, does work
in China. But at times people think, oh, somehow the
Chinese have got their own economics or it works differently. I say, well that’s because you’re not accounting
for it probably, because much of that other accounting is effectively the politics, and
you’ve got basically the government is standing there. And without question, I think that the right
view to take, certainly for the moment, is that the government will stand by. It’s certainly going to stand by the banks. You’re not going to get a Lehman Brothers
moment. One of the big banks, one of the big– I think
they technically have four and then seven what they call systemically important banks
in China. So none of those big banks are going under. Smaller rural banks, yeah, that’s possible,
but they will be merged in something else. But politics and political support is absolutely
essential. And to ignore that, you do so at your peril. I think the trouble there is though, I think
it was Churchill who said about Chinese politics, “It’s like two dogs fighting under a carpet.” You frankly got no idea what’s going on at
any given time. And I think the very rise of Xi Jinping, where
you may take the positive stance that this is a strong, powerful leader consolidating
power, and so can push through reform– you say, well frankly, that means we had everything
wrong about Chinese politics before. Because before he came into power, the consensus
across the board– there was just no.. China was now a consensus driven leadership
by committee type of model. There was not going to be a strongman again. That was not going to be a strong political
leader. So basically we have either completely misunderstood
things previously to allow Xi Jinping to come into place, or we just were just simply ignorant
of the fact in the first place. I think the mistake is that, to almost give
too much credibility to Chinese political institutions, that we have seen certain things
happen over and over since Tiananmen Square, so over the past 20 years. And we have assumed that these are institutionalized
processes of smooth transfer of power. And frankly they weren’t. There was a lot more fighting behind the scenes. Bo Xilai is an obvious example like that you
know. 2011, people were talking about Bo Xilai,
as of 2010, as a possible next leader. Very few people saw the Bo Xilai issue coming. Those that did were roundly abused to be certain. No, no, this could never happen in China. There is no sort of coup coming. There’s nothing like this. And clearly the behind the scenes machinations
were very active. So while I may say, the politics is important,
I’m also going to admit somewhat contradictory as well, I have no idea what’s going on in
politics half the time. And as I say, I think Xi Jinping, by the analysis
of five years ago, should never have come to power. His consolidation of so many titles– how
much power he’s got, there’s probably some debate. But certainly of titles, again, should never
have happened either. That was not supposed to be able to happen
in this consensus model. And so, you think, but even with that power,
what does he really want? I come back to even why we started writing. Even that phrase reformer in China– he’s
a reformist. He’s a reformer. I have no idea what that means in the Chinese–
I do have a– but what I tell you, it doesn’t mean what we think it means in a Western sense. And again, it’s not just like the Chinese
have their own way of doing things. But these names, just these labels have such
different meanings. And so when Xi Jinping wants reform in the
sense that he wants things to run better, he wants the Communist Party to run better,
he wants state-owned enterprises to be more efficient, he wants less dependency certainly
on the US dollar, certainly on the States. He wants less dependency on foreigners. He doesn’t want Western ideas seeping into
Chinese education, and so things like that. So if that’s reform, it’s reform. It’s a self-sufficiency that he wants. But the idea that he wants to embrace free
markets in any way, or even embrace the market as a decisive factor– which his own documents
have said– I think is highly misleading. This is a person who wants it– Reform so
often in the West is understood to be economic reform with the government pulling back, of
the markets taking a bigger hold and market forces taking a bigger hold, of bankruptcy
coming to the fore. Hey, your business is bankrupt. We’re going to bankrupt your business. We’re going to close this. We’re going to sell these assets. That’s not what the Chinese mean by reform. They’re talking about administrative reform. They don’t necessarily want to face all those
arbitrary things. And so when you look at what happens in the
markets, I think this is a classic. It’s, let’s go back. So we’re at the end of 2016. Let’s go back 10, 11 months and we saw the
renminbi collapsing. It moved a few percent, if that. It’s hardly a collapse. The renminbi in the past 18 months have moved
10%. I think the yen did it in about six weeks
recently, and sterling did it in about six hours. So this is hardly major market moves. But of course for China, these are are major
market moves. And I think if you go back to the beginning
of the year, January, February, when the currency started to get very weak, the panic in Beijing
simply wasn’t lower currency levels. It wasn’t that the moves had been so significant. They’re all well within any bands they themselves
have set. They’re well within historic ranges. But what they didn’t like was they didn’t
like the market pulling them. And this, I think, is the real fear. Because if you start having a market fall,
as the stock market did in 2015, as the currency started to do then later in the year and beginning
this year, as anyone who’s spent any time in a market knows, that takes on a dynamic
of its own and so on that forces people to come out and do something. They have to act because it will be even worse
tomorrow. And that’s of unexpected or that unknown reaction,
that being forced by the market to do something is what really worries the Chinese. Now we’re nearly touching seven. We’ve already had a PBOC fixing of 6.95 in
the past few weeks. And so in that sense, it’s not simply the
lower level which is the worry, but it’s the unexpected and the volatile nature of markets
that forces people to do things. Chinese leaders don’t like to be forced to
do anything. They certainly like to give the impression
they’re very much in control. And they themselves– This idea, I think one
of the things that sticks– there’s a number of things from, let’s say, the past 20 or
30 years in China that stick– or in Asia that stick with the Chinese leaders. 1997, the Asian financial crash really stuck
with them. I think they looked at Hong Kong. They looked at Thailand. And these sort of headlines, whether they
were true or not that a New York hedge fund manager presses a button and a billion dollars
leaves Thailand, and Thailand is decimated and people are unemployed and factories are
closing– very simple, very tabloid type of headline, but that’s exactly the type of thing
the Chinese government are desperate to avoid. And so that volatility of markets, the unexpected
nature of markets is something that they recoil against. So, where does that leave the currency? It’s going to get weaker. I don’t think that’s really any surprise. But do I see a great devaluation? No I don’t, because I don’t see how that plays
into the government’s favor. This idea of taking sort of tough medicine
early, getting the worst over with, I think sadly that’s passed. I think that’s the difficulty, that that time
has now passed for them. I think if they were to do that– And again,
we know markets overshoot. And again, if you were to say if the currency
is overvalued– and I don’t really care if it is overvalued or undervalued, I just know
it’s not market-driven. And I’m pretty big on market-driven forces. So, in that sense, I don’t know what the right
level is. But should you devalue 5%? Is 5% enough? Well, why 5.0%, 4.9%– well, 5.1%? Be a numbers snob, go for 9.9%. You know, is it 10%, 11%, 12%, 13%? I don’t know, is it 15%? Maybe it should go to 20%. Maybe it should go to 8.5%. I don’t know, what’s enough? What’s enough and what are you guys trying
to signal there? Because certainly if you were to go back to
8.3, where we were for best part of 15 years or so, then that sends a very bad signal of
course. That basically almost wipes out the past 11
years of currency movements and currency strength. And then you think, oh my God, China is like,
it’s really going back to some almost prehistoric economic environment as it were. So I don’t see them doing that because I think
it sends such a destabilizing signal. I think instead they’re going to waste more
reserves, waste a lot of time, a lot of effort by this slow depreciation. And it’ll come in fits and starts. It’s not going to be a straight line. But there’s going to be some fits and starts
on the way down. The argument that somehow they’re wasting
reserves, the Communist party has never been efficient. They’ve been– it’s efficacy, not efficiency. They achieve what their goal is. They’ve got lots of people. Their entire history is about wasting resources
to achieve some arbitrary goal they set on one day that the next day was no longer important. My God, this was a country that sent out schoolchildren
to clap all day to ensure that sparrows couldn’t land so they would die, thinking that that
would improve public health in Beijing. So in that sense, I get that somehow they’re
wasting resources. I don’t think that matters to them, because
what they’re focused on is maintaining control, and not necessarily being exposed to that
market volatility and that whiplash. Because goodness knows where that could take
you. Because if you lose confidence in the government–
and again, this is what underpins so much of what goes on in China. You can talk that, oh yes, they’re rebalancing. The growth rate’s coming down. You could argue their debt’s not too high. But everyone basically falls back on, but
the government’s in control. They’re still in control of all those levers,
whether it’s fiscally, whether it’s socially, whether it’s the internet, information flow,
whatever. And if you have that sort of shock to the
system, then I think that becomes highly destabilizing. When you’re talking about politics and risks
of China in the coming years, I think the risks are ultimately political, not actually
economic. Because the politics– and again, how can
anyone be sitting here at the end of 2016, while thinking ahead to next year, without
thinking about Donald Trump, because the rhetoric there, that relationship– which has always
been a bit of a love and hate relationship, going back for centuries– clearly will change. It’s already started to change. For better or for worse, we’ll find out. I think though what’s very clear is that Trump
is clearly going to take a much tougher stand on China. He’s certainly talking tougher on China. What his stand is on China when he’s in power
and we’ve been through six months, a year, then I’ll tell you what it is, because frankly
I have no idea what it’s going to be now. But you know he’s going to certainly try and
be tougher on China. I think there are a number of things that
are worrying about that though. Not that being tougher on China is a bad thing,
because I think if my complaint– and I’ve often been called about, I’ve been bearish
on China. And I think that’s a dreadful term. I think bulls and bears exist in the stock
market. I think they’re dreadful terms with trying
to talk about countries or bigger picture things. I’ve always seen myself as a realist in China
because I’ve spent a long time there. I’ve worked with Chinese companies. And I’m very realistic about the real limitations
of China, often that China, because of its sheer size of population, of financial reserves,
or whatever it may be, seems to be this behemoth which seems unstoppable. And yet the reality of dealing with Chinese
companies and often individual Chinese, or even the Chinese government, is much more
fractious and nowhere near as successful as the big picture would be. And so when I’ve been sort of negative and
critical in China, it’s because I think one of the first things is to start talking truthfully
to China about China and about your relationship with it. So in that sense, tough talking does no harm. I think because much of what China– I think
the frustration that people have often with China is that China doesn’t even live up to
its own promises, of whether it be reform, of market opening, market access, and things
like that. So in that sense, there’s lots of reasons
to be tougher with China. And that’s the good side, if you like, of
Trump. Although, is that what he’s going to do? I don’t know. What worries me more with Trump is that there
seems to be– he’s fighting the wrong battle. He’s fighting a battle from a decade ago or
from two decades ago, that somehow that the very basic model of American jobs moves somehow
direct from America straight to China, and that if only we are tough on China, put tariffs
on Chinese goods, that those jobs will come back. Well, if that simplistic picture was ever
true, it’s certainly not true now. And simply putting tariffs on Chinese goods
doesn’t solve that problem. So I’m worried that the– and certainly his
economic adviser Navarro, whether his economics even holds up, many economists would argue. But certainly his China policy doesn’t necessarily
seem to hold up. He seems to paint China as the great evil
in the world that’s responsible for all ills. And certainly China has a role to play in
many of those ills. And certainly Chinese policy has certainly
contributed to many of those apparent ills. And there’s things we should be tough on China
about. But simply this rather belligerent attitude
I don’t think is very conducive. Not that I’m annoyed or worried about upsetting
the Chinese. That’s almost an argument for saying those
things if you’re just upsetting the Chinese Communist Party. I have no problems with that at all. But you’re not necessarily going to achieve
the goals you want. I think that’s what you’re– Trump’s wanting–
needs wins, and he needs wins against China. The approach he’s taken, I’m not convinced
he’s going to be able to do that. What you have seen as well of course– and
this plays into Trump’s worldview, and others– is it China of course themselves have become
more and more belligerent over the past five years or so. And this has certainly increased under Xi
Jinping. It’s partly been to support their own economy. And this has come across a wide range of issues. One of course is of economic and the greater
focus on domestic production of certain goods, of restricting fair competition from foreign
companies or forcing foreign companies to onsource certain activities into China, particularly
in the technology space, which is obviously very worrying given the tight control that
China has over technology, et cetera. So there’s those sorts of aspects. But you’ve also seen them being nationalistically
much more belligerent. Obviously we’ve seen that in the East China
Sea. You’ve seen that in the South China Sea. And it’s China as the bully, China as the
big country and you’re the small country, get used to it type of model. Which, ultimately I think will backfire on
China. yes, we all know China’s a big country. We all know that all the countries in Asia
are very dependent on it. Economically they’re very linked with it. But China is– I’m not quite sure what it
thinks it’s setting itself up for, because it has no friends. I was once giving a talk in Europe and I said
that China has no friends. And a lady from the Chinese embassy came up
afterwards and say, “But that’s not true. We do have friends.” I said, “Well name one.” “We have a friendship treaty with Pakistan.” I went, “Ah, anyone else?” And she said, “Singapore.” I said, “Sorry, is that a question or a statement?” And so China doesn’t have friends. It goes out almost out of its way to alienate
countries in the region, certainly countries it should be cooperating with, countries that
have large Chinese diaspora as well. So they have natural affinities with them,
but they seem to be unable to build an inclusive type of model. And it becomes a very Han chauvinistic model. And this, I think, is ultimately an underlying
weakness in the politics in China. So, you look at those domestic sort of political
issues, that domestic inability to build friendships and alliances, even within Asia, its natural
community. You then bring into this Trump, who has almost
alienated everybody he meets. And then you think, this is clearly going
to be volatile for the coming years. Being tougher on China, not a problem. Is Trump the person to do it? I really have to doubt, because I can’t see–
he’s a man who revels in his own ignorance, and seems to have surrounded himself with
people who, again, are not necessarily think that simple solution to complex problems are
the way forward. I don’t think that’s necessarily is going
to be– it may be good for markets. There certainly will be volatility, as many
of my friends would say. But it’s not necessarily going to be good
outcomes I think. What is interesting– and obviously I work
in finance and I write about the Chinese financial system, but I don’t manage money. I thankfully don’t need to give people advice
to what to invest in China, although my default answer is, I’m sure there’s lots of good of
good business to invest in China. But I think what’s interesting or when I think
about China or how I think about it differently from others, or many of the people who would
be my peers or the readers of Red Capitalism, that I came to China because I was interested
in China. I didn’t come to China for the market because
it was a big market or there was a big stock market or there was business opportunities. And so I’ve often thought that’s given me
some advantage, perhaps, of trying to understand China or trying to just, maybe, just accept
some of the frustrations there. And I think of this particularly over the
past– since that Asian– or since the global financial crisis. So you look at over that long eight years,
those two Olympic cycles as I talk about, and you think about, lots of people have done
lots of work on debts and whatever, and this growing network of debt and all these notes
and look at these empty apartment buildings and whatever. And I said yes, that’s true, that’s very nice. And then they automatically then sort of jump
through on to, well this must stop, that this must come to an end, that default beckons
or whatever. And I think, that’s sort of true. Of course it’s true, and ultimately there
is a price to be paid. But I think in China, two of the things that
I always think about China– this is because I’ve been interested in China long before
the economics of it as it were– is that China is the land of the absurd and the arbitrary. And I think unless you understand or appreciate
that China is this absurd country in some ways that’s struggling to become modern, then
you come too quickly to these conclusions. Oh the bank’s accounting’s all hocus pocus. The bank must therefore go bust and I’m shorting
the banks. Well why would you do that? There’s no evidence banks are going to go
to zero. There’s no short sell report that’s going
to show– expose all. And so you’re almost looking for the wrong
sort of outcome. And I think it’s understanding this, of the
absurdity and the arbitrariness of it, that you simply, when you do your China analysis,
you are left with a lot of unanswered questions. You are left almost in dead ends. You think, but surely the next step means–
I say, well it does. I’m not saying it doesn’t. But who’s going to take that next step? Who’s going to force the bankruptcy? Who’s going to ask the difficult question? In Chinese, when you raise these types of
points, Chinese will say to you, semi-apologetically, but also in earnestness about just apologizing,
In China it’s like this. And you think, not again. And you know it’s true. But this, sadly, is– and I think if you’re
an investor, at all sorts of levels, not just whether you’re picking stocks or whether you’re
doing real business– and clearly people have made a lot of money in China. So it’s not as if it’s just a complete fiction
or fraud. But you simply end up with a lot of these,
like I say, loose ends and unfinished stories, that often sort of fizzle out in some way,
and it doesn’t come to a clean bankruptcy or something. But what you find is that the loss has been
socialized in some ways, that someone else bailed somebody else our or they borrowed
from here, and the story morphs into something else. And that’s very difficult, I think, to explain
a lot of the time. It’s a bit like the politics we talked about,
the politics and economics being tied up. But it’s often very difficult. If you focus just on the numbers, yes, the
numbers can expose a lot of sort of malfeasance or wrongdoing. But that’s only part of the story, because
there’s also then another parallel track of almost like back as it were or state support
or local support that carries on in the background that allows things to continue. And everyone sort of plays along with the
game. It’s in nobody’s interest to pull the rug
away in that sense. So I think once you understand that about
China, I think, does it make you a better investor? Maybe– maybe you get a bit less frustrated. Because again, people– even though I’m in
sort of financial markets, I was authorized. So I consult with various people on all sorts
of China topics. And I remember somebody came here doing a
big project, a big property deal, with a big blue chip Chinese name. And I was advising him over a glass of wine
as you do. And he said something like, “So, what did
you think of my Chinese partner?” And I said, “Well the first thing you need
to understand is that all Chinese partners are bad partners.” And he said, “Well what did you mean?” I said, “Well it’s not necessarily they’re
out to defraud you, but they’re almost certainly not what you think they are. And so even though this is a blue chip name
and they’re saying they’re going to invest X hundreds of millions of dollars with your
property project, do they have approval to bring the money out of the country?” “Well they’re a big Chinese name.” I said, “Do they have approval to bring–”
“We’ve not asked, but surely they’ll be able to get it.” “Why would they be able to get it? Aren’t you watching the news? Don’t you know how difficult it’s getting
money out of the country? Have they got approval to do the project in
the first place?” “Oh? You mean they may not?” “Well why would there? You cannot assume that.” So it’s not that they’re necessarily lying
to you. They may be very honest about doing this project. They may have the money in China. But you don’t need the money in China. You need it somewhere else. And so I think understanding the framework
in which China operates, partly you could argue is a good deal due diligence. But it’s also understanding how China operates,
how entities, how individuals operate, that will often speak well beyond their capabilities
because they’ll think something will turn up, that oh, we’ll figure out a way to do
it. And often, of course, they won’t figure out
a way to do it, which makes it very frustrating because you think, I’m dealing with a blue
chip Chinese name here. And then actually they are just as beholden
to the arbitrary regulations of the government as anyone else.

The Rise And Fall Of Forever 21


Forever 21 was once
among America’s fastest-growing
fast-fashion retailers. It transformed its
once penniless founders into billionaires, established itself as
a powerhouse in the fast-fashion world, and, at its peak, made
$4.4 billion in revenue. But the once flush
company is now preparing to file
for bankruptcy. So, what happened? Back in the day, Forever 21 embodied the
American dream. In 1981, Jin Sook and Do
Won “Don” Chang moved to Los Angeles from
South Korea with no money, no
college degrees, and speaking little English. To make ends meet, Jin Sook
worked as a hairdresser while Don worked
as a janitor, pumped gas, and
served coffee. Until he noticed that
“the people who drove the nicest cars were all
in the garment business.” So three years later,
with $11,000 in savings, the Changs opened a
900-square-foot clothing store called
Fashion 21. The couple took advantage
of wholesale closeouts to buy merchandise from
manufacturers at a discount. Their system worked. The store made $700,000
in sales its first year. Fashion 21 was initially
only popular with LA’s Korean
American community. But the Changs
leveraged their success, opening new stores
every six months, which broadened the
company’s customer base at the same time. They also changed the
name to Forever 21 to emphasize the idea
that it was “for anyone who
wants to be trendy, fresh and young in spirit.” The company’s key to
success was simple: cultivate a huge following
by selling trendy clothing
for low prices. While this is something
that today’s consumers pretty much expect, Forever 21 was one
of the first to do it. And they were the fastest. Jin Sook was eventually
approving over 400 designs a day. Which meant the
company could sell trends as they were happening. Even if some of those designs
landed Forever 21 in trouble. But while other brands
and designers might not have been
Forever 21’s biggest fans, customers couldn’t
get enough of their affordable styles. As a result, Forever 21
became one of the largest tenants
of American malls, with 480 locations
nationwide. And by 2015, business
was booming. Forever 21’s sales peaked, with $4.4 billion in
global sales that year. As for the Changs? They became one of
America’s wealthiest couples, with a combined net
worth reaching an estimated $5.9 billion
in March 2015. Forever 21’s goal
was to become an $8 billion company
by 2017 and open 600 new
stores in three years. But the company’s
aggressive expansion would also lead to
its downfall. Part of what made Forever 21
popular in the first place was its fast-fashion model. Even though its products
were always mass-produced, they still felt unique
because its stores only sold select styles
for a limited time. However, as the company
focused on growing bigger, its styles became more
“cookie-cutter.” As a result,
Forever 21 started to lose touch with
its core customers, while competitors like
H&M and Zara rose. No longer the trendsetter, Forever 21 became
the butt of the joke. It’s also no longer the
fastest in the game. Internet brands like
Fashion Nova churn out celebrity- and
influencer-inspired styles at a rapid-fire pace. And as e-commerce
has continued to boom, traditional retailers
like Forever 21 have struggled to adapt to changing consumer
behaviors. According to a March
2019 survey, millennials make 60% of
their purchases online and overall prefer
online shopping over going to a
physical store. Yet, Forever 21 continued
opening new stores as recently as 2016, even expanding
existing stores to take over multiple
floors with mens, childrens, and
home-goods sections. Which could help explain
why Forever 21’s sales are estimated to
have dropped by 20% to 25% in 2018. On top of that, the Changs, who still own the company, have lost more than
$4 billion from their personal
net worths. The company overall is
now $500 million in debt and considering
filing for bankruptcy. Forever 21 has already
started downsizing its stores. And as one of the largest
tenants of America’s malls, a widespread shutdown
of Forever 21 could exacerbate what’s
already being referred to as the “retail apocalypse,” which has already closed
more than 15,000 retailers across the US and could shut down
75,000 more, according to investment
firm UBS. But bankruptcy
doesn’t always mean the end for
a company. In fact, it could give
Forever 21 time to restructure
and bounce back. The company could
shut down its least profitable stores and try rebranding itself. But in an age of cheap
internet boutiques and fast-fashion empires,
this might not be enough. So it turns out Forever 21 might not be forever
after all.

Trump: I would consider interim trade deal with China


>>[INAUDIBLE] PRESIDENT TRUMP: IT’S SOMETHING PEOPLE DON’T TALK ABOUT. I WOULD RATHER GET THE WHOLE DEAL DONE. WE HAVE TAKEN IN MANY, MANY BILLIONS OF DOLLARS IN TARIFFS. IF WE ARE GOING TO DO THE DEAL, LET’S GET IT DONE. I SEE A LOT OF ANALYSTS SAYING WE’LL DO PIECES OF IT, THE EASY ONES FIRST. BUT THERE IS NO EASY OR HARD. THERE IS A DEAL OR THERE IS NOT A DEAL. IT’S SOMETHING WE WOULD CONSIDER. WE ARE DOING VERY WELL.

How to deal with redundancy


Have you ever lost
a job you loved? Maybe you’ve suffered
a crisis of confidence after a long and successful
career as a great company was brought to an abrupt end. I want to know what it’s
like to deal with redundancy, and bounce back when it feels
like your world is falling apart. My name’s Kimberly, and I
used to work for Sainsbury’s. I worked straight
out of university, did their graduate
training scheme, and worked for
them for 22 years. Ending up as marketing
and PR manager for beers, wines, and spirits. I was made redundant, and it
came as a complete shock to me, and just saw me ending
my career there, because I really
enjoyed what I did. I had a call from my boss. Sadly she told me that I
was one of the ones at risk. How did you feel? I burst into tears. I hadn’t long been back
from maternity leave, so I had a small baby. We’d just done an extension
to our house and remortgaged, I was just trying to think,
what am I going to do for money. I need to pay the bills,
couldn’t see a future outside of Sainsbury’s. Maternity leave can sometimes
knock your confidence. Did you feel confident
at that point? No. I’d been out of the
game for a year. So it there’s a lot to come
back to, a lot to learn. Yeah, I was just probably at my
lowest confidence level anyway, and then it was a big knock. It isn’t unusual
to feel helpless in a situation like this. Writer and broadcaster
Christina Patterson was made redundant after a 10
year career at the independent. In her book, The Art
of Not Falling Apart, she examines how to cope
when life goes wrong. I’ve lost people
very close to me, and I’ve had breast
cancer twice, and I’m afraid to say it
sounds awful to say it, it felt like the
worst thing that ever happened to me in my life. There was a moment when
I talked to the editor, and he told me he wanted
to freshen the pages up, which is not a
phrase that is ever going to gladden your soul. And I literally felt as if
I was falling off a cliff. And I walked out of that
office, and I didn’t stop shaking for two weeks. I lost eight pounds
in four days. I mean normally I’m thrilled
to lose a pound or two, but when you lose
eight pounds in four days you think oh my god,
something’s really wrong here. It’s a trauma, and that’s how
the body reacts in trauma. So I think you shouldn’t be
surprised that happens to you. Kimberly cancer s lucky that the
Sainsbury’s redundancy package provided her with
lots of support. Mel Barclay is head of career
transition at LHH Penner. She helped Kimberly when
she was at her lowest. She was feeling very
vulnerable, and I think she was unaware
of what the job market held for her personally. So she came to us for programme
support where she had coaching, one to one coaching with a
career transition consultant. She joined in workshops
and virtual classrooms and general networking events
to build her confidence, and through that
she then decided to go down the self
employment route, and set up her own business. Feel free to take notes. They were so useful. You could choose
what courses and what sessions you wanted to attend,
so I did lots on setting up your own business, things
about social media, how to do a website, how
to be on Facebook. Tax, that– you know,
quite practical things. And also things about
building confidence, again. Because it really,
really suffered. I was also offered
counselling which I’m very glad that I took up. I wasn’t going to, but I
thought it was extremely useful, and really helped
me change my mindset about coming out of redundancy
positively rather than feeling very negative about it. There is something
amazing about talking to someone who is very clever
at the end of the phone, and always has an answer
for what you’ve got to say. I could have seen
someone face to face, but I quite liked the fact
that he didn’t see me. My first session I pretty
much spent in floods of tears. It was just very, very
cathartic, and very, very useful. You kind of go through
this arc of emotions. Why was it me? And it’s anger,
then you’re upset. And it just helped me to
talk to somebody about it, and that it’s not me, it’s
just a massive business, and they have to do this. And there are brighter
things on the other side. The first thing you’ll need to
do is to kind of get a grip, and get some support. And make sure that you don’t
allow yourself to feel crushed, because if you’re wandering
around looking absolutely miserable, nobody’s
going to think, I know exactly the
person I need to help me with my project, or
a job, or whatever. It’s going to be that I’m
really miserable person who looks as though they’re
about to slit their wrists. You need to be kind of
as energetic and positive as you can be in
the circumstances, while also acknowledge
that you are going to be feeling pretty awful. There’s a lot of fear
around age discrimination, and a lot of people
coming in who are sort of perhaps not that
far off what they anticipated to be retirement feel quite so
fatalistic about their chances in the job market. But what we will do is we’ll try
and focus on their strengths. As a result of being in an
organisation for 25 years, you’ve acquired a huge amount
of skill and experience which another organisation
would like to have. And they will find
you a role for you, because a younger
person hasn’t got that. Redundancy can also leave
you feeling like you’ve lost part of your identity. It is like the
worst breakup ever, because it’s been
part of your life. All my friends know me as
working at Sainsbury’s. It’s where I met my husband. So yeah, just suddenly to
be without that huge chunk in your life was really sad. But it can present
an opportunity to reinvent yourself. Did you know what you want to
do when you were about to leave? I was going to
set off on my own. And so those lost 12 weeks,
even though I was still working, was sort of prepping
for going out there into the big wide world. At Sainsbury’s I used to run
any wine events, wine tastings, write copy for magazines, and
on the backs of the wine labels. I do similar things now
for other companies. I had managed to line up
a job while I was still at Sainsbury’s, and I started
work on that the following week after I left Sainsbury’s. Kimberly received a
generous redundancy package, which she could have
lived off for a year while she worked
out what to do next. But she didn’t want
to touch her lump sum, so she didn’t waste any time. Lots of people hurry
to get a similar role to the one they had before. If you can financially
take time out, it could be worth
considering your options. Yeah? Wherever possible we encourage
people to take some time out between leaving a role and
starting something else, mainly because it helps
them to sort of settle any feelings of resentment
or anxiety they’ve had. And most people
just need time out to sort of recharge
the batteries. It is a very emotional
process, and most people really need a bit of
restorative time to be at their best for the next role. As much as it’s important for
people to get another job, particularly to
pay their mortgage and to keep their
families together, we also think it is an
opportunity for them to explore things. Because if they don’t,
and they don’t actually satisfy that
particular career itch, they may regret just jumping
into another role too quickly, and potentially be
at risk of trying to find something else again
in a short period of time. And if you take
that extra time out, it can be a chance to truly
reinvent your working life. I was very clear. I didn’t want to
get another job job. You know, I wasn’t interested in
climbing some corporate ladder. I wanted to piece together a
portfolio of different things. A public service
strand, which is unpaid. I have a creative strand,
which is book writing. I have a commercial strand,
which is consultancy. And I think it’s almost a
kind of millennial approach. How can I piece
together a work life that for me ticks the different
boxes of a bit of money here, a bit of status there, a bit
of creative satisfaction there, a bit of public service there. And everybody will have
their own response to that. And for some it will
be a different job. It might be retraining
for a new career, or it might be putting
together a package. Larva coming out. Redundancy you can also
present an opportunity to redefine your
work life balance. Kimberly works from home
now, and sees much more of her husband and children. She doesn’t miss waking
up at 5 AM every morning, or the long commutes
into London. My alarm goes off
at 7:00, so it’s quite nice to have a lie
in, and get the kids up, and able to spend time with
them, give them breakfast. So much more of a nice
sort of family morning. And take them to kid– to school and nursery, and
come back and start work. What are you doing, you monkey. They love it. They love having
mommy around more. In the past they’ve
not known who’s going to be there
when they wake up. Now it’s always me,
so they just love it. Well, my husband works from
home as well, but pretty much we don’t see each
other during the day. But it’s nice because he go to
spend more time with the kids now. He’s having loads
more family time. Kitchen table. You’ve done good. Yes. Say it. I used the word
proud, but I mean had I gone through
that same thing, I know that I
would have probably kind of inside freaked. What the hell am I going to do? I’d have gone out, probably
gone to another big company, look at the security
of that role, I think, is incredibly brave. He’s never said anything
like that to me before. It’s like Mister and Missus. I’m glad I was a service. Kimberly loved her old job,
and was devastated at first, but she advises anyone
in a similar situation to try to stay calm. Take as much advice as you can
from your friends and family, anyone in the same business
that you’re working in, and just take the time
to work out what’s going to be best for you. Take a leap. Take a leap of faith if
you want to go alone, because it is
extremely rewarding. But obviously do
your research first. I love the job itself,
I know, I really, really used to enjoy
going into work. I enjoy spending time
with my colleagues. But I say my life is
so much better now that I don’t miss it. So if you’ve just
been made redundant, you feel like your life has
been turned upside down, and you don’t know what to do
next, consider the following. Take professional
advice, whether it’s counselling or career coaching,
it’ll help focus your mind. Try to stay positive. You may feel like
you’re falling apart, but that isn’t an image
you want to present the rest of the world
when you’re networking. Take time to consider
your options. If you rush into something,
you may live to regret it. And don’t panic. You might be in
a state of shock, but things will get better. And who knows, redundancy
may be the catalyst you need to build a better career.

DOJ launches probe into automakers’ emissions deal with California


YOUNG AMERICANS FOR LIBERTY. KRISTIN, WHAT DO YOU MAKE OF THE IDEA THAT THEY CUT SIDE DEAL WITH CALIFORNIA AND VIOLATING FEDERAL LAW?>>WELL, I THINK A LOT OF THE AUTOMAKER LIKE FORD AND HONDA ARE SIDING WITH CALIFORNIA HERE BECAUSE THEY WANT SHORT-TERM REGULATORY CLARITY, RIGHT, BUT IN THE LONG TERM SIDING WITH CALIFORNIA LAWMAKERS WILL PROBABLY COME BACK TO BITE THEM BECAUSE THE RULES THAT CALIFORNIA HAS PUT IN PLACE INCENTIVIZED THE PRODUCTION OF CAR THAT IS HAVE NO CONNECTION TO MARKET FORCES, SO THIS WILL LEAD TO FAILED SLUMPS AND JOB LOSSES AND A LOT OF THIS PROBABLY COMES DOWN TO VIRTUE SIGNALING AS WELL, YOU KNOW, THESE COMPANIES WANTING TO TAKE PUBLIC CREDIT FOR GREEN POSTURING BUT I READ MULTIPLE REPORTS THAT, YOU KNOW, LEADERS AT THE AUTOMAKERS HAVE APPROACHED THE ADMINISTRATION PRIVATELY BEHIND CLOSED DOORS AND URGED THEM TO MOVE FORWARD WITH EFFORTS TO WEAKEN OBAMA-ERA REGULATIONS ON GAS MILEAGE STANDARDS BECAUSE THAT WOULD BE BETTER FOR THE INDUSTRY IN THE LONG RUN.>>BUT THE UPROAR AND ALL THE GUYS SAID THAT PRESIDENT OBAMA WAS IN OFFICE, GRAVITATE TO WHERE YOU WANT TO GO, IT’S JUST HOW QUICKLY YOU WANT US TO GET THERE, CALIFORNIA STANDARDS ARE NOT AS ONEROUS AS THE OBAMA STANDARDS ARE BUT THEY ARE SUBSTANTIALLY HIGHER AND I THINK ALSO PEOPLE SHOULD STUDY HOW FLEETS MAY HAVE ONE VEHICLE AND GETS THEM GAZILLION MILES A GALLON, I FIND IT FASCINATING THAT ALL OF THE INDUSTRIES THAT WERE SO UPSET ARE NOW SAYING AND CAN GO ALONG WITH THIS KIND OF STUFF AND THE PRESIDENT ARE TRYING TO HELP BIG BUSINESSES, WE CAN’T GIVE UP SHORT-TERM GAINS OF CALIFORNIA SALES. I ALSO WANT TO ASK YOU ABOUT SALES, EVERY AUTO COMPANY AROUND THE WORLD RAMPING UP DEVELOPMENT BIG TIME INCLUDING ALL ELECTRIC FORD MUSTANG, I THINK THEY ARE BETTING ON PUBLIC OPINION STARTING TO SHIFT, YOU KNOW, THEY THINK IT’LL BE BETTER JOB FOR GOVERNMENT SUBSIDIES, DO YOU THINK THEY’RE RIGHT?>>CONSUMERS ARE NOT BUYING ELECTRIC CARS, CHARLES, AND I THINK IT’S GREAT THAT THE LIBERALS WANT TO MAKE A PUSH TOWARDS GREENER AND CLEANER CARS, HOWEVER, THE STANDARDS THAT ARE IN PLACE IN CALIFORNIA AND THE OBAMA STANDARDS, THEY ARE UNREALISTIC AND THEY END UP HURTING LOWER AND MIDDLE-INCOME EARNERS MOST, THE SAME PEOPLE THAT CAN’T AFFORD ELECTRIC CARS, THEY ALSO CREATE REGULATORY COSTS THAT HAVE BEEN OVER $77 MILLION THAT ARE PASSED DOWN DIRECTLY TO CONSUMERS, THE TRUMP ADMINISTRATION PROPOSALS WOULD SAVE AVERAGE OF $2,500 ON EVERY NEW CAR PER PURCHASE, THIS WOULD, OF COURSE, ALLOW FAMILIES TO BUY SAFER, NEW EFFICIENT CARS AND, YOU KNOW, CALIFORNIA MEANWHILE IS JUST TRYING TO SQUASH CONSUMER CHOICE AT THE HANDS OF GOVERNMENT BURR — BUREAUCRATS. CHARLES: MY WIFE GOT NEW

Ellis talks applying pressure on China, Trump meeting with GM CEO


WE’LL SEE WHAT HAPPENS. EDWARD, THANKS, MAN. WITH INSIGHT TO THE WHITE HOUSE’S THINKING AS THE MEETING SOLIDIFIED I WOULD LIKE TO BRING IN FORMER TRUMP TRADE ADVISOR CURTIS ELLIS. IN THE SPAN OF COUPLE DAYS CHINA MAKING MANY MOVES PEOPLE A WEEK AGO SAID WOULDN’T HAPPEN. WE SAW IN HONG KONG, POTENTIALLY WITHDRAWAL OF EXTRADITION ORDER. AGREEING WE DO WANT TO MEET, WE WANT TO TAMP THINGS DOWN. WHAT DO YOU MAKE OF IT?>>CHINA IS UNDER A LOT OF PRESSURE. THEY’RE RATIONING PORK IN THE MARKETPLACE IN CITIES IN CHINA. INFLATION ON FOOD IS OUT OF CONTROL. REMEMBER TARIFFS AND SANCTIONS THEY PUT ON AMERICAN FARM PRODUCTS ARE AFFECTING CHINESE CONSUMERS. YOU SEE THIS WITHDRAWAL OF THE LEGISLATION IN HONG KONG, THEY KNOW THAT THEY CAN’T REVERT TO FORM, JUST BRUTALIZE PEOPLE AND EXPECT TO GET ANY KIND OF TRADE AGREEMENT WITH THE U.S. SO THEY’RE UNDER A LOT OF PRESSURE AND PRESIDENT TRUMP MADE IT VERY CLEAR THIS IS ABOUT MORE THAN THE ECONOMY. THIS IS NOT ABOUT THE DOW FUTURES, ABOUT THE FUTURE OF OUR COUNTRY. THEY MAY HAVE UPS AND DOWNS HERE AND THERE AND PAIN HERE AND THERE AND WE HAVE TO HAVE A COUNTRY. WE HAVE TO MAKE SURE CHINA DOES NOT CONTINUE STEALING OUR PROPERTY, SELLING DRUGS INTO OUR COUNTRY WHOLESALE AND BASICALLY UNDERMINING OUR SYSTEM OF FREE ENTERPRISE. NEIL: WHAT IS THE, TO BORROW WALL STREET PARLANCE WHAT IS THE EXIT STRATEGY? CHARLES: IN OTHER WORDS WHEN THESE THINGS HAPPEN, PRESIDENT TRUMP TWEETS HEY, THIS IS A VICTORY, WE’RE BEATING THEM. WE KEEP HEARING CHINA WANTS TO SAVE FACE WHERE DOES THE ADMINISTRATION LET UP A LITTLE BIT ON THE PUBLIC FIGHT FOR THE CONSUMPTION OF THE PUBLIC AND ALLOW PRESIDENT XI AND COMPANY MAYBE TO COME UP WITH SOME SORT OF A RESOLUTION THAT ALLOWS THEM TO GRACEFULLY LOSE?>>ARE YOU ASKING ME THAT? CHARLES: YEAH.>>OH. YOU SEE CHINA CAN START BEHAVING AND ACTING LIKE THE MAJOR POWER THAT IT IS. IT WANTS TO BE A RESPECTED MEMBER OF THE TRADING COMMUNITY LET’S ACT THAT WAY. THAT IS FACE SAVING. WE TREAT YOU LIKE A BIG BOY, LIKE ONE OF THE GANG. NOW YOU CAN ACKNOWLEDGE THAT THE WAY YOU ARE GOING TO ACT, WE’LL ACCEPT THAT. CHARLES: CURTIS, LET ME ASK YOU, CHARLES EVANS, ONE OF THE VOTING MEMBERS OF THE FED, SORT OF DISSED THE TRADE WAR, SAYING THEY DON’T WORK FOR ANYONE. SUGGESTED THAT GLOBAL TRADING CREATES INNOVATION. I GOT TO TELL YOU, IT SOUNDS CLICHE BECAUSE I SEE NOTHING INNOVATIVE ABOUT CHEAP LABOR, STEALING AMERICAN KNOW HOW, BUT WHEN YOU HAVE ALL THE POWERFUL FORCES AGAINST THE PRESIDENT AND HIS TRADE FIGHT, HOW MUCH HARDER DOES IT MAKE FOR US TO WIN THIS THING?>>IT CERTAINLY DOESN’T HELP WHEN LEADING VOICES IN THE MEDIA, I’M NOT TALKING ABOUT YOU, THIS MEDIA, FELLOW YOU MENTIONED ACTING LIKE TOKYO ROSE BASICALLY TAKING THE OTHER SIDE APPEASEMENT, GIVE IN, SURRENDER. THERE IS FORCES GREATER THAN AMERICA THAT WE HAVE TO ACCOMMODATE THIS IS NOT HELPFUL AT ALL. PEOPLE ARE ON THE PRESIDENT’S SIDE. LATEST HARVARD “HARRIS POLL” SAID 67% OF AMERICANS SAY WE NEED TO CONFRONT CHINA OVER THE TRADE PRACTICES EVEN PAYING MORE AT THE MALL. CHARLES: A LOT OF CRITICS ACCEPT THAT CHINA IS CHEATING BUT STILL DISPUTE WHETHER WE SHOULD HAVE BONN THIS WAY. I DO WANT TO ASK ABOUT PRESIDENT TRUMP. HE IS MEETING GENERAL MOTORS CEO MARY BARRA, DISCUSSING TRADE. THEY’RE DISCUSSING AMERICAN JOBS. WHAT KIND OF A LINE DOES HE HAVE TO WALK, A PRESIDENT TELLING AMERICAN BUSINESS HOW TO RUN THEIR COMPANY.>>THEY GOT A HUGE TAXPAYER-FUNDED BAILOUT. THEY GOT A HUGE BAILOUT FROM AMERICAN TAXPAYERS. GM STILL OWES THE AMERICAN TAXPAYERS $10 BILLION. YET THEY ARE CLOSING PLANTS IN AMERICA AND DOING PRODUCTION IN CHINA. LOOK, CHINA SAID TO GM, YOU WANT TO SELL CARS HERE, YOU HAVE TO MAKE THEM HERE. GM SAID YES, SIR, BOB. BUT THEY ARE MAKING BUICK ENVISION SUV 100% IN CHINA, IMPORTING IT TO AMERICA. WHAT IS GOOD FOR THE GOOSE IS GOOD FOR THE GANDER HERE. THEY HAVE GOT A LOT TO TALK ABOUT AND THE PRESIDENT WANTS TO MAKE SURE THAT THE WORKERS OF GM

Markets predict slow growth, not recession: Ed Lazear


ARE KICKING OFF WITH TOP STORY RALLYING MARKETS, AFTER A DISMAL DAY YESTERDAY ON TUESDAY, THE MARKETS THIS MORNING ARE UP BETTER THAN 200 POINTS, COMING BACK, FROM THAT BIG SELL-OFF YESTERDAY WEAKER THAN EXPECTED MANUFACTURING DATA SECTOR SHRINKINGH FIRST TIME SINCE 2016S BLAMING HEIGHTENED UNCERTAINTY IN GLOBALING MANUFACTURING TO HEIGHTENED TRADE TENSIONS WITH CHINA FORMER ECONOMIC ADVISORY TO HE GEORGE W. BUSH THANKS SO MUCH FOR BEING HERE.>>NICE TO BE WITH YOU.>>BACK-AND-FORTH EVERY DAY, WITH MARKETS, AS INVESTORS REACT, EVERY WORD COMING OUT OF CHINA OR U.S. HOW DO YOU SEE THINGS?>>WELL, YOU KNOW, IF YOU LOOK AT WHERE WE ARE RIGHT NOW, COMPARED TO WHERE WE WERE A YEAR AGO I MEAN THE REALITY IS THE NUMBERS ALMOST ALL THE NUMBERS ARE WEAKER TODAY THAN A YEAR AGO SO YOU KNOW, IT IS — IT IS NOT QUITE AS ROSY A SCENARIO AS IT WAS — IN 2017, BUT WE’RE NOT IN DISASTER SITUATION RIGHT NOW. WHAT THE MARKET IS BASICALLY TELLING US IS AND, BY THE WAY, WHEN I SAY THE MARKET THERE ARE A COUPLE MEASURES WHAT MARKET IS SEEKING PEOPLE HAVE BEEN TALKING ABOUT YIELD CURVE A WHOLE LOT PAST FEW WEEKS, BUT NIGS TO IT YIELD CURVE YOU SIMPLY WANT TO LOOK AT STOCK MARKET, THAT IS FORECASTING NOT RECESSION JUST FORECASTING SLOW GROWTH. RIGHT NOW IF YOU USE THE S&P 500 WHICH IS ONE THAT I USE, THAT IS THE BEST INDICATOR OF WHERE WE’RE GOING NEXT FOUR QUARTERS SHOWING SOMEWHERE AROUND ONE AND ONE HALF TO 2% GROWTH NOT RECESSION, BUT NOTE SPECTACULAR BREAKOUT GROWTH. WANT THE YIELD CURVE AGAIN, YOU KNOW SOMEWHAT MORE PROBLEMATIC, BUT — THAT IS SOMETHING THAT USUALLY FORECASTERS UP TO TWO YEARS IN ADVANCE NOT CLEAR TELLING US WE ARE IN IMMINENT DANGER.>>LOOK AT DOLLAR, TOUCHING THE HIGHEST LEVEL MORE THAN TWO YEARS CONSTANT GLOOMY OUBLT OUTLOOK ABOUT ECONOMY UNCERTAINTY OVER TRADE IS THIS CUTING INTO EARNINGS ECONOMIC GROWTH ONE MORE PRESSURE ON — ON OVERALL ECONOMIC ACTIVITY?>>WELL, I THINK IT IS, AND I THINK, ALL OF OF THESE THINGS ARE AGAIN LOOKING AT THINGS SLOWING DOWN SO REMEMBER WHAT IS A RECESSION MEAN 2 RECESSION SIMPLY MEANS WE’VE PASSED THE PEAK THE QUESTION IS ARE WE GOING TO HIT A PEAKS SOMETIME OVER THE NEXT TWO YEARS? AND THE CHANCES THAT WE ARE, ARE YOU KNOW PROBABLY 15 ARE YOU KNOW PROBABLY 50-50, WHAT YOU ARE BASICALLY SEEING SLOWING AS YOU GET CLOSE TO THE TOP OF THE PEAK YOU SEE THAT IN A NUMBER OF INDICATORS, LOOK AT LABOR MARKET LAST YEAR CREATING ABOUT 225,000 JOBS, NOW DOWN TO 150, 170 STILL NOT BAD STILL IN ON A RECOVERY PACE, BUT SLOWER THAN WE WERE LAST YEAR, LOOK AT INVESTMENT INVESTMENT HAS SLOWED LOOK AT MANUFACTURING, YOU HAVE BEEN MENTION THAT A GOOD BIT IN YOUR PROGRAM THIS MORNING, MANUFACTURING, HAS SLOWED, ONE OF THE THINGS THAT IS IMPORTANT TO RECOGNIZE, BY THE WAY, IS THAT MANUFACTURING RETAILING AND CONSTRUCTION ACCOUNT FOR 150% OF THE JOB LOSS WHEN YOU GO INTO RECESSION, SO IT IS IMPORTANT TO KEEP WATCHING THOSE SECTORS BECAUSE THEY DO FORETELL THE FUTURE.>>CENTRAL BANKS ACROSS THE WORLD ARE STIMULATE WE GO KNOW EUROPEAN CENTRAL BANK IN FAVOR OF A STIMULUS PACKAGE COULD TRUE RATE CUT NEW GUIDANCE ECB PRESIDENT TOLD US THAT THAT THEY ARE LOOKING FOR MORE STIMULUS, BOSTON FEDERAL RESERVE PRESIDENT ERIC SAID HE DOESN’T THINK AN INTEREST RATE CUT IS NEED, IN THE UNITED STATES, AT THE MOMENT SO WHEN YOU LOOK ACROSS THE WORLD YOU SEE ALL THESE A CENTRAL BANKS STIMULATING. YOU SEE THE 10 YEAR IN U.S. AT BELOW 1.5%, IT IS A BIG MONTH CENTRAL BANKS THIS MONTH WHAT SHOULD WE EXPECT WHAT IS THE IMPACT?>>WELL, YOU KNOW WHEN YOU LOOK AT — YOU MENTIONED THE 10-YEAR RATE SO LET’S THINK ABOUT THE YIELD CURVE FOR A MOMENT YOU BASICALLY HAVE TWO SIDES TO THE YIELD CURVE RIGHT YOU HAVE THE LONG-TERM RATES AND YOU HAVE THE SHORT-TERM RATES, AND WHAT THE LONG-TERM RATES GENERALLY INDICATE IS EXPECTATIONS ABOUT THE FUTURE, SO WHEN LONG-TERM RATES ARE LOW ESSENTIALLY WHAT THAT IS TELLING YOU IS THAT PEOPLE DON’T THINK THAT THE FUTURE IS QUITE AS ROSY AS IT WAS YOU KNOW, AS I SAID MAYBE A YEAR AGO. WHEN YOU LOOK AT SHORT END OF IT WHAT THAT IS TELLING YOU THAT IS THE FED IS IN A CON TRACK SHUNRY MODE IF YOU LOOK BACK TO REPRIEVE, PREVIOUS TWO RECESSIONS WHAT HAPPENED LONG-TERM RATES NOT LOW THEY WERE PRETTY HIGH BUT THE SHORT-TERM RATES EVEN HIGHER SO RIGHT NOW IN A WAIGS WHERE LONG-TERM RATES ARE LOW, IN ABSOLUTE TERMS BUT AS YOU POINTED OUT THEY ARE NOT LOW RELATIVE TO THE WORLD CAPITAL MARKETS 10 YEAR ONE 1/2% HERE LOOK WHERE IT IS IN GERMANY NEGATIVE .7%. MARIA: RIGHT.>>SO IN RELATIVE TERMS WE ARE STILL PRETTY HIGH ON THOSE LONG-TERM RATES SO THE QUESTION IS YOU KNOW WHERE SHOULD WE BE GOING FROM HERE INTERESTING THE FED IS HAVING THE DEBATE RIGHT NOW, AND NOT ALL PLAYERS ARE THE ONES THAT I’D PREDICTED ACTUALLY BEING ON THE DIFFERENT SIDES OF IT SO IT IS QUITE INTERESTING TO BE AN WATCHING THIS. MARIA: YOU ARE RIGHT A DIVISION BETWEEN FEDERAL RESERVE EVEN BILL DUDLEY FORMER PRESIDENT NEW YORK FED ANSWERING BACKLASH ON SCATHING OP-ED LAST UNIQUE WITH NEW ONE IN BLOOMBERG THIS MORNING HERE IS WHAT HE IS SAYING, WHAT I MEANT WHEN I SAID DON’T-ABLE TRUMP WRITES DUDLEY AS I SAW IT BINGES OF THE TRADE WAR PRESIDENT’S TAX ON FED THREATENED TO BUT CENTRAL BANK IN UNTENABLE POSITION PRESIDENT TRUMP SHIFTING RESPONSIBILITY FROM DOWNSIDE RISKS FROM TRIED WAR ON TO FED I THOUGHT AN IMPORTANT ISSUE WORTHS EXPLORING WRITES DAY GOT SO MUCH BACKLASH ON THAT OP-ED HE WROTE LAST WEEK. YOUR REACTION TO WHAT BILL DUDLEY IS TRYING TO SAY.>>WELL, YOU KNOW I MEAN IN TERMS OF HIS PRINCIPLE SITUATION PRIVATE INDIVIDUAL NOW HE CAN SAY WHAT HE WANTS. THE FED SHOULD NOT BE THINKING IN TERMS OF POLITICS CERTAINLY IN TERMS OF OF AFFECTING ELECTIONS WOULD BE TERRIBLE PRECEDENT. IF I AM CHAIRMAN RIGHT NOW LOOKING AT THE SITUATION, AND I AM SAYING YOU KNOW WHAT SHOULD WE BE DOING, THEY ARE BASICALLY TWO KINDS OF MISTAKES THAT THE FED CAN MAKE THE FIRST IS CUTTING RATES, AND THEN AFTER THE FACT WISH IT HADN’T OR OPPOSITE IS REFUSING TO CUT RATES THEN AFTER THE FACT WISH THAT YOU HAD IT IS PROBABLY THIS COULD THE SECOND ENDANGERING IS MORE PRONOUNCED THAN THE FIRST ONE DOWNSIDE ASSOCIATED WITH SECOND ONE IS PROBABLY MORE SIGNIFICANT IF I WERE CHAIRMAN POWELL I THINK THAT IS HOW WOULD I BE THINKING ABOUT IT TRADING OFF TWO KINDS OF MISTAKES THAT YOU CAN MAKE, AND THINKING ABOUT WHEN ONE IS GOING TO BE MORE DETRIMENTAL TO THE ECONOMY OBVIOUSLY, YOU DON’T WANT TO MAKE EITHER MISTAKE IF GOING ONE WAY OR THE OTHER MY GUESS IS THAT THEY ARE THBDZ TOWARDS BEING A LITTLE BIT MORE LENIENT RIGHT NOW AND THEY ARE NOT WORRIED ABOUT POLITICS OF THE ELECTION.>>WHERE IS THIS HEADEDED? YESTERDAY WE A HAD FACTORY DATA OBVIOUSLY, SHOWED MANUFACTURING IN FAIR AND ACCURATE TO SAY SHRANK FIRST TIME IN THREE YEARS THEN YOU’VE GOT CONSUMER TWO-THIRDS ECONOMIC GROWTH SEAMS DOING VERY WELL ASK CONSUMER SPENDING SENTIMENT IS UPSET HOW WOULD YOU CHARACTERIZE THINGS RIGHT NOW AND ARE YOU EXPECTING A RECESSION AT SOME POINT.>>WELL ALL RIGHT –>>IN YOUR TERMS NOT –>>KWLAE LET’S TAKE THAT PIECE BY PIECE YOU SAID CONSUMERS ARE SPENDING I THINK SPENDING BY THE CONSUMERS REFLECTS WHAT WE ARE SEEING IN LABOR MARKETS LABOR MARKETS STILL SLOWING, UNEMPLOYMENT IS VERY LOW. EMPLOYMENT IS RELATIVELY HIGH EVEN WAGE GROWTH LOOKS PRETTY GOOD, SO ALL OF THOSE THINGS FEED DIRECTLY INTO CONSUMER SPENDING AND I THINK THAT IS WHEN WE’RE SEEING. IF YOU ARE THINKING ABOUT THE FUTURE, THE NUMBERS THAT YOU TALKED ABOUT THIS MORNING, THE ISM, THEY ARE NOT THEY DON’T NECESSARILY PREDICT WHAT IS GOING ON, THEY ARE INDICATORS OF A SLOWDOWN, AND TO MY MIND, THE MOST IMPORTANT INDICATOR THAT I HAVE SEEN OVER THE PAST COUPLE OF QUARTZ, IS INVESTMENT SO WE HAD, YOU KNOW, A COUPLE OF VERY GOOD INVESTMENT QUARTERS IN 2017 NOT QUITE THERE RIGHT NOW IF I AM THIS COULD ABOUT THE FUTURE THOSE TO ME ARE THE MOST IMPORTANT INDICATORS NOW YOU SAID ARE WE GOING TO HAVE A RECESSION, AGAIN I GO BACK TO WHAT I SAID EARLIER WE KNOW WE’RE GOING TO HAVE A RECESSION AT SOME POINT BECAUSE RECESSION JUST MEANS WE HAVE PEAKED WE ARE PAST THE PEAK WE KNOW WE ARE GOING TO HAVE A RECESSION AT SOME POINT I DON’T THINK MARKETS ARE TELLING THAT RECESSION IS IMMINENT THE NEXT TWO TO THREE YEARS I WOULD SAY CERTAINLY 50%>>WE ARE ON YEAR 11 OF THIS EXPANSION I GET THAT, QUICK WE GOT JOB NUMBER ON FRIDAY A FED MEETING ON THE 18TH. THIS MONTH, WHAT ARE YOUR EXPECTATIONS FOR THE JOB NUMBER AND DO YOU THINK THE FED HE CUTS RATES? ON THE 8 ON THE 18TH?>>I AM TERRIBLE AT PREDICTING IF I HAVE TO GIVE A PREDICTION WOULD I SAY SOMEWHERE IN 150,000 RANGE ABOUT WHERE WE SHOULD BE RIGHT NOW. MARIA: YEAH, THAT IS PRETTY MUCH WHERE THE ECONOMISTS ARE 158.>>YEAH, YOU KNOW BUT WE’RE — WE’RE MAYBE SLIGHTLY WORSE THAN WEATHERMAN, BUT, YOU KNOW, I AM NOT SURE HOW WE ARE IN TERMS OF.>>WHAT ABOUT THE FED.>>IN TERMS OF CUTTING CUTTING RATES, YOU KNOW, I WOULD BE VERY SURPRISED IF THEY DON’T CUT AT THIS POINT. ALL THE NUMBERS SEAM TO BE MOVING IN THAT DIRECTION SO I WOULD AND THEY ARE GOING TO CUT. MARIA: ALL RIGHT. WE WILL SEE IF 25 BASE POINTS PRESIDENT TALKING ABOUT ONE POINT OVER TIME. ED GREAT TO SEE YOU.