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.

New Skills At Work – Leading With A Purpose – Chase


Over the past five years the American economy
has added about 5million net new jobs, yet over eleven million Americans remain unemployed. The same
is true in countries around the world. Unfilled jobs but stubbornly high unemployment. One big
reason for this is something called the skills gap. What’s the skills gap? Here’s an example. Meet Sally.
Sally owns a company that manufactures widgets. New technologies make Sally more competitive than
ever. But running those advanced machines, it requires specific skills. Sally needs to hire, but
has trouble finding qualified applicants. Now, meet Jack. Jack is a High School graduate looking for work in Localville.
He sees Sally’s help wanted ad but he doesn’t even apply for the position. He knows he’s not
qualified. Okay now the distance between Sally and Jack? That’s the skills gap and right now as many
as four million jobs in America are unfilled because of it. To help close the skills gap and create more
broadly shared prosperity in America and around the world we need a real time understanding of the skills
needed for open jobs at the local level and training programs that prepare eager workers for those
opportunities. That’s why JPMorgan Chase has launched New Skills At Work, a landmark five year,
two-hundred-and-fifty million dollar global initiative to bridge the skill gap. New Skills At Work starts with
local research to understand the skills gap in key cities in the U.S. and around the world. Then we incorporate
industry intelligence from local employers to further understand what skills are needed in high
growth sectors. Out of this data gap reports are produced to inform our efforts. New Skills At Work then
teams up with leading non-profit organizations, providing them with tens of millions of dollars each
year to support their proven job skills training programs. Over time participating cities will share their
experiences so they can learn from each other about the best ways to close the skills gap. By focusing
on good data, a clear picture of the credentials employers are looking for and accountability for results,
New Skills At Work will help bridge the gap between Sally and Jack and serve as a model for workers, businesses
and economies around the world. To find out more, visit us at NewSkillsAtWork.com

Trump Fakes a Deal: The Daily Show


as the Obama administration
is coming to a close, uh, unemployment has plunged
to a nearly nine-year low. When Obama came to office,
it was at 7.8%. Now it’s at 4.6%, which is really good. -(applause)
-But… but-but, you see, America’s
future is not about being good– it’s about being great. REPORTER:Trump promised to keep
Carrier jobs in the U.S.
He says Carrier’s gonna bring
back those jobs to Indiana. He, as president,
will make it happen. I’m gonna call up Carrier, and I’m gonna tell the head
of Carrier, “I hope you enjoy your stay
in Mexico, folks, “but every single unit
that you make “and send across our border,
which now will be real, you’re gonna pay a 35% tax!” (cheering) And you know
what Carrier’s going to do? They’re going to call me
in 24 hours, and they’re going to go,
“Mr. President, “we’re moving back
into the United States, we’re going to build
in the United States.” -(applause and cheering)
-That’s what’s going to happen, 100% sure! Man, say what you want
about Trump, but he really kicks ass
in imaginary negotiations -against himself.
-(laughter) “Then Carrier’s gonna say
they’re sorry, “and everyone will shout
my name. “Then, Rosie O’Donnell
will be like, “‘Donald rules, and I drool.’ “Then the failingNew York Times
will print a headline “that says,
‘Air-Conditioner Factory Stays, -Trump Keeps His Cool.'”
-(laughter) “And it’ll be a great pun, and
everyone will laugh at the pun, “and they’ll say,
‘Great pun, Donald!’, because they’ll know
it was really my pun!” (laughter) And by the way, by the way,
it’s easy to see why Trump wants more
air-conditioning in America. -Look at his face there.
-(laughter) He was sweating so much,
he looks like he’s doing an impression
of Fat Bastard. -Like, what is he…
what is he doing? -(laughter) (with Scottish accent):
“Get in my country.” (laughter) But… but…
and this is crazy. Once Trump won the election,
he actually did it. He got on the phone,
negotiated with Carrier, and he made his first deal. WOMAN: The air-conditioning
giant tweeted last night, “We are pleased
to have reached a deal “with President-elect Trump
& VP-elect Pence to keep close to 1,000 jobs
in Indy.” MAN:
The deal is extremely popular. 60% of registered voters saying it gave them a more
favorable view of trump. Wow. Yes. After Trump’s deal, some people
see him in a better light. “He saved 1,000 peoples’ jobs,
and he grabbed zero pussies? -Wow!” (chuckles)
-(laughter) “Maybe we should give
this guy a chance!” But before
you give him a chance, you may want to examine the
Carrier deal a little closer, because,
like Donald Trump’s hair, -there’s something that’s just
a little off. -(laughter) Numerically,
there are some… issues here. Donald Trump,
during his speech, said that there were about
1,100 jobs saved. It turns out it’s probably more
like 800 jobs that were saved, 300 that he was referring to were actually never going
to move in the first place. It’s not a sustainable strategy to save 800 or 1,000 jobs
at a time. WOMAN:
The deal gives the heating
and air-conditioning company
seven million dollars
in state tax breaks
over ten years.
What Trump is doing is setting
a very dangerous precedent. My guess is today,
there’s some corporation who may not have thought one
second about leaving America– now they’re going to announce, “Hey, we’re going to Mexico,
we’re going to China. Hey, Mr. Trump,
what you gonna do for us?”-Bernie!
-(laughter)-Bernie!
-(applause and cheering) (Noah crying) We should have listened to you,
Bernie! -(laughter)
-(Noah crying) You know every time
Democrats see Bernie Sanders, they’re like, “Damn,
I wonder what could have been.” (laughter) But he’s right. It’s not sustainable for
the government to pay companies to keep uncompetitive jobs
in the country. But now that other companies
have read Carrier’s blackmail script, they could also
threaten to leave and wait for those sweet, sweet
tax breaks to roll in. It’s like that children’s book. If you give a mouse a cookie, he’s going to want to (bleep)
you in the ass. -(laughter) -You guys had
the same book, right? -It’s the same book.
-(laughter) And by the way, by the way, I love how Donald Trump made it
like, “I told Carrier what to do,
and they did it!” No, no, no,
that’s not what happened. They threatened something,
Trump paid them the money, and they still sent hundreds
of jobs to Mexico. Like, Trump would be the worst
hostage negotiator in the world. He would be just like,
“Come out with your hands up! “Free all the hostages! “No? “All right, you asked for it! We’re sending in a million
dollars and more hostages!” (laughter) “All right, cover me, boys. I’m going in to give him
a hand job. Cover me.” (laughter) (applause and cheering) -(audience whooping)
-Worst negotiator ever. Oh, there’s another aspect
of this deal, uh, but it has good news
and bad news. The good news is:
Carrier has agreed to invest more money
into their factory. The bad news is:
it’s gonna be like Westworld. Updating the plant
will result in more automation and an important consequence. We’re gonna make a $16 million
investment in that factory… That sounds good,
except they’re doing it to automate
the manufacturing process, which will shed jobs. As bad as this deal is, what makes this so good
for Donald Trump is that it gives the illusion that he’s done
something meaningful. That’s what Trump is all about,
is the show. Because all
the headlines say is: Trump saves a thousand jobs! Which, don’t get me wrong,
I acknowledge is something for every single person
whose jobwassaved. I don’t deny that. But at the scale the president
is supposed to work on, that’s barely
a drop in the bucket. It’s all about
“the thousand jobs.” What abouteveryone’sjobs?
You got to create jobs as well. This is basically a classic
con man move, you know? A con man makes you focus
on what youthinkyou can get, and distracts you
from everything that you stand to lose. -(applause)
-That’s all it is. And look… look, the Carrier deal
might have some benefits. But it would be naive to ignore
all of the side effects. In fact, I have a proposal. Every time
Trump makes a promise, he should be forced
to include the fine print. And you know what
Carrier’s gonna do? They’re gonna call me
in 24 hoursand they’re gonna go,
“Mr. President,
(fading): we’re moving back
into the United… WOMAN:Donald Trump’s promises
are not intended
to be taken seriously.The number of jobs
will be lower than promised.
Side effects could include
massive corporate tax breaks,
higher consumer costs,and companies giving the jobs
to robots anyway.
Ask your doctor if your economy
is healthy enough for Trump.
He’ll probably say no,
but (bleep) him,
make America great again.

US, China officials confirm trade talks will resume


THE TOP STORY THIS HOUR IS CHINA TRADE NEGOTIATIONS, PRESIDENT TRUMP TAKES AIM AT CHINA’S ABUSIVE TRADE POLICIES, DOUBLING DOWN ON HIS PROMISE TO SECURE A STRONG DEAL FOR THE UNITED STATES.>>CHINA HAS TAKEN ADVANTAGE OF OUR COUNTRY FOR DECADES. THEY STEAL OUR INTELLECTUAL PROPERTY, SO MANY OTHER THINGS. NOW IT’S DIFFERENT. NOW IT’S WORKING THE OTHER WAY AND TARIFFS ARE A BEAUTIFUL THING WHEN YOU KNOW HOW TO USE THEM, THEY’RE A BEAUTIFUL THING. WE’RE GOING TO BE TALKING NEXT WEEK. WE’RE TALKING NOW. THEY’RE GOING TO BE COMING TO THE UNITED STATES IN TWO OR THREE WEEKS AND WE’LL SEE WHAT HAPPENS. BUT UNLESS WE’RE GOING TO MAKE A GOOD DEAL OR A FAIR DEAL FOR OUR COUNTRY, LET’S FACE IT, WE CANNOT GO BACK TO A SITUATION, WE’RE GIVING HUNDREDS OF BILLIONS OF DOLLARS TO CHINA BECOMES STANDARD FARE. NOT GOING TO HAPPEN. WE CAN’T DO IT. MARIA: THIS COMES AS BOTH SIDES WORK TOWARD A TRUCE WITH THE NEXT ROUND OF FACE-TO-FACE NEGOTIATIONS LIKELY EARLY NEXT MONTH, EARLY OCTOBER IN DC. MY NEXT GUEST JUST RETURNED FROM CHINA WHERE HE MET WITH TOP TRADE NEGOTIATORS. JOINING US NOW IS GEORGIA SENATOR AND FORMER REEBOKS AND DOLLAR GENERAL CEO, DAVID PERDUE. THANK YOU FOR JOINING US.>>GOOD MORNING, MARIA. MARIA: WE WANT TO TALK CHINA WITH YOU. YOU’VE GOT A UNIQUE PERSPECTIVE, AS A CURRENT LAWMAKER AND THE FORMER CEO OF RETAIL GIANTS THAT WERE IN CHINA, LIKELY TO GET AFFECTED BY THE TARIFF FIGHT. YOU’RE JUST BACK FROM CHINA. WHAT HAVE YOU LEARNED?>>WELL, SENATOR DANES AND I WERE OVER THERE LAST WEEK AS A PART OF AN ONGOING EFFORT TO DEVELOP A RELATIONSHIP WITH R THEIR NATIONAL PEOPLE’S CONGRESS. WE MET WITH THEIR CHAIRMAN AND VICE CHAIRMAN. THE NEXT DAY WE MET WITH THE TRADE REP, LEO HU AS YOU MENTIONED. WE SAID THIS PRESIDENT IS VERY SERIOUS AND HAS BIPARTISAN SUPPORT IN CONGRESS TO GET A LEVEL PLAYING FIELD WITH CHINA. THE PERSPECTIVE HERE IS THAT WE HAVE A NEW FREE TRADE AGREEMENT WITH SOUTH KOREA UNDER PRESIDENT TRUMP. WE HAVE JAPAN WITH AN AGREEMENT IN PRINCIPLE. WE HAVE AN USMCA THAT IF WE PUT IT BEFORE THE HOUSE AND TODAY IT WOULD PASS IN MY OPINION AND WE HAVE EUROPE IN HERE. CHINA IS REALLY MOVING I THINK TO DEVELOP A MORE LEVEL PLAYING FIELD. IT’S A SERIOUS CONVERSATION AND IT’S GOING TO BE ONGOING FOR A WHILE, I’M AFRAID. DAGEN: SENATOR, IT’S DAGEN McDOWELL. HOW LONG IS A WHILE? THERE’S AN ELECTION COMING UP. NOT TODAY, IN NORTH CAROLINA, BUT I’M TALKING ABOUT NEXT YEAR.>>WELL, OBVIOUSLY THE BIG PICTURE HERE IS THAT WE’VE GOT TO GET A PRESIDENT INTO A SECOND TERM TO DEAL WITH WHAT YOU TALKED ABOUT JUST A MINUTE AGO AND THAT’S THIS DEBT CRISIS THAT WE HAVE AND WE HAVE TO DEAL WITH THE ENTITLEMENT PROGRAMS AND MANDATORY EXPENSES TO DO THAT. BUT I THINK RIGHT NOW WHAT WE SEE IS AN EFFORT TO GET CHINA TO THE TABLE AGAIN AND THEY’RE COMING BACK IN A FEW WEEKS AS YOU MENTIONED. I’M HOPEFUL THAT WE’LL SEE SOME PROGRESS. LOOK, WE HAVE ALREADY MADE A LOT OF PROGRESS WITH CHINA IN TERMS OF EQUAL ACCESS. WHAT WE HAVE IS SOME DIFFICULTIES WITH REGARD TO INTELLECTUAL PROPERTY RIGHTS, THE FORCED TRANSFER OF TECHNOLOGY, THE CYBER WAR, AND THE COMPLIANCE WITH THE WTO. THESE ARE REASONABLE REQUESTS THAT PRESIDENT TRUMP HAS. ISN’T IT HIGH TIME THAT SOME UNITED STATES PRESIDENT STOOD UP TO CHINA AND SAID LOOK, WE NEED EQUAL ACCESS HERE AND A LEVEL PLAYING FIELD. MARIA: JACK?>>SENATOR, IF YOU HAD TO GUESS — I WAS ONE OF THESE PEOPLE WHO THOUGHT FOR SURE WE’RE GOING TO HAVE A RESOLUTION BEFORE THE 2020 ELECTION BECAUSE THE PRESIDENT CAN’T GOING TO WANT TO GO INTO A CAMPAIGN WITH THIS HANGING OVER. NOW IT DOESN’T LOOK LIKE THAT. ARE WE TALKING YEARS THIS COULD DRAG ON?>>I’LL LET A CAREER POLITICIAN MAKE A PROGNOSTICATION ABOUT THAT. THIS IS A DEAL THAT CAN BE DONE. WE HAVE TWO SIDES THAT ARE NOT EXACTLY ON THE SAME PAGE YET. YOU’VE GOT TO RESPECT THE CHINESE, THEY’RE THE LARGEST DEVELOPING ECONOMY IN THE WORLD. THEY HE SEE US AS THE LARGEST DEVELOPED ECONOMY IN THE WORLD. I WORRY ABOUT LONG-TERM INTENTIONS THAT CHINA HAS DISCLOSED OVER THE YEARS MANY I BELIEVE WE COULD GET AN AGREEMENT IN PART BEFORE NEXT YEAR. OUR NEGOTIATORS ARE FINELY IN TUNE TO THIS. I THINK SECRETARY MNUCHIN AND AMBASSADOR ARE JOINED AT THE HIP IN TERMS OF THIS NEGOTIATION. I’M STILL HOPEFUL BY THE END OF THE YEAR WE COULD SEE NOTICEABLE PROGRESS THAT WE COULD DISCLOSE PUBLICLY. MARIA: THERE’S CHINA AND THEN THERE’S USMCA AND, YOU KNOW, WE KNOW THAT USMCA AND THE TRADE WITH CHINA AND — I’M SORRY, THE TRADE WITH MEXICO AND CANADA IS MORE THAN A TRILLION DOLLARS. $1.1 TRILLION. CHINA THE TRADING IS $500 BILLION. SO CONGRESS IS BACK IN SESSION WITH A BIG TO DO LIST. OBVIOUSLY IT FEELS LIKE THE MEXICO, CANADA SITUATION IS EVEN MORE URGENT THAN THE CHINA STORY. 11 TRADE GROUPS INCLUDING THE HE SEMICONDUCTOR INDUSTRY ASSOCIATION AND THE INTERNET ASSOCIATION ARE URGING LAWMAKERS TO PASS PRESIDENT TRUMP’S DEAL WITH MEXICO AND CANADA, IT’S A TOP PRIORITY FOR REPUBLICANS THIS FALL. IT’S STALLING IN THE HOUSE. DEMOCRATS ARE DELAYING THE VOTE. WHAT ARE YOU GOING TO DO?>>MARIA, YOU’VE GOT IT. THIS IS NOTHING BUT PURE POLITIC. THIS IS A DEAL THAT GOT EVERYTHING THE DEMOCRATS JUANED FOR THE LAST DECADE. STRONG RER LABOR REQUIREMENTS, STRONGER COMPENSATION REQUIREMENTS IN MEXICO, MEXICO’S ALREADY RATIFIED IT. CANADA’S IN THE PROCESS RIGHT NOW. I BELIEVE IF WE PUT IT ON THE FLOOR OF THE HOUSE AND SENATE IT WOULD PASS TODAY. AMERICANS WANT THIS. $68 BILLION INCREASE IN GDP, 176,000 HE POTENTIAL NEW JOBS. THIS IS A GOOD DEAL, BETTER THAN NAFTA THAT WE’RE UNDER TODAY. I CAN’T SEE ANYTHING BUT PURE POLITICS IS KEEPING THIS FROM BEING PASSED TODAY.>>SENATOR, I HAVE ONE QUESTION. YOU TALK ABOUT THIS PRESIDENT NEEDING TO BE REELECTED. RIGHT NOW, WE KNOW THE TRADE WAR IS OBVIOUSLY HITTING CHINA MORE THAN IT’S HITTING AVERAGE AMERICANS, FOR THE AVERAGE AMERICAN IT’S GOING TO COST THEM ABOUT $400 THIS I DON’T REMEMBER. BUT WHAT IF THAT DOES UPTICK BEFORE 2020? WHAT THEN?>>YOU KNOW, IN MY STATE SOYBEAN FARMERS HAVE BEEN HURT REALLY BAD BY THIS TARIFFS. THEY’RE THE STRONGEST SUPPORTERS OF THIS STRATEGY AND HERE’S WHY. BECAUSE EVERYBODY SEES THE LONG-TERM REALITY OF A LEVEL PLAYING FIELD F WE GET A LEVEL PLAYING FIELD OUR EXPORTS GO UP DRAMATICALLY. AND YOU KNOW, GUYS, IF YOU WANT TO CONTINUE TO GROW THIS ECONOMY NORTH OF 3%, WHICH WE HAVE TO DO TO DEAL WITH THE DEBT, YOU’VE GOT TO GROW EXPORTS. AND THAT’S WHAT THIS PRESIDENT’S TRYING TO DO. LOOK, WE HAD UNLEVEL PLAYING FIELDS ON MOST OF OUR TRADE AGREEMENTS FOR THE LAST 50 YEARS. ACTUALLY, SINCE WORLD WAR II, BECAUSE WE WERE TRYING TO HELP THE THIRD WORLD DEVELOP. I LIVED IN ASIA. SENATOR DANES LIVED IN ASIA. THAT’S ONE REASON WHY WE’RE TRYING TO PLAY A SMALL PART IN HELPING THIS DIMENSIONAL RELATIONSHIP WITH CHINA. BUT THIS IS A LONG-STANDING ISSUE OF OUR OWN MAKING. DAGEN: SENSE R TORE, REALLY QUICKLY — SENATOR, REALLY QUICKLY, DO THE FARMERS NEED AND WILL THEY GET ANOTHER BAILOUT FROM THE FEDERAL GOVERNMENT? I THINK THERE HAVE BEEN TWO, NORTH OF $25 BILLION TOTAL, IF MY MATH IS RIGHT. DO YOU THINK MORE MONEY IS HEADED THEIR WAY?>>WELL, WE’LL SEE. I MEAN, THE BEST THING THAT COULD HAPPEN TO FARMERS IS THE COMMODITY PRICES WOULD REBOUND. WE HAVE THE LOWEST COMMODITY PRICES IN YEARS AND THAT’S REALLY DEVASTATING RIGHT NOW NOT ONLY IN THE SOUTHEAST BUT THE MIDWEST AS WELL. AS WELL AS CALIFORNIA. SO WE’LL SEE. I THINK THE PRESIDENT HAS MOVED JUDICIOUSLY SO FAR AND HE STANDS READY OF TO BACK OUR FARMERS. WE KNOW THIS IS A STRATEGIC INDUSTRY, OVER HALF THE GDP IN GEORGIA. THE PRESIDENT’S GOT HIS EYE ON THAT FOR SURE. MARIA: ALL RIGHT. WE’LL LEAVE IT THERE.

Ep. 13: YOUR TAX DOLLARS AT WORK | Barbara Kopple


♪♪ You have to pay taxes, or else you not gonna
get nothin’ done. I mean, sometimes,
on a week to week basis, you’re like, “Wow, that’s a lot
coming out of my paycheck.” People should really start
asking questions, as far as where our money
is really going. ♪♪ [Mike Pesca]
Where are we, as Americans, generally, on taxes
and government spending, what do we think is worthwhile? Social Security,
Medicare, defense, that is government
actually spending money. [Sharon Jones & The Dap-Kings:
“Money” ♪] Think about that,
the arguments we have over the Department
of Education, almost literally,
a rounding error. Most of the debates about how
government spends money is politicians finding a way
to-to grab someone’s heart and make it seem as if some
narrow thing they care about is really what
government spending means, either good or bad. I’m gonna stop
the subsidy to PBS. I’m gonna stop other things.
I like PBS. I love Big Bird. – Give me one damn program
he said he’d cut. One!
– He has cut entitlements. There’s no more cuts to make. When someone says
we don’t have enough money for this space probe, you are removing the only thing that gives people something
to dream about tomorrow. When I think
of government spending, one of the first things
I think about is my dad. Lives in housing that is
sponsored by the government. Now, I’m glad
my dad lives there. I’m– I would never want
to kick him out. I grew up there.
I loved it. I had a great childhood there.
I like a lot– you know. But intellectually, I’m not sure that
that is an optimal use
of government money. – It’s head versus heart, right?
– Yes. ♪♪ – You worked there, George,
you told me.
– Yes. Two paintings I did of my wife
when we were very, very young. [laughing] Penn South is supported
by the government. It’s middle income subsidized. We probably couldn’t
raise a family in the city without living at Penn South. We have different
generations here. That’s what makes this
so unique. This is really the promise of
subsidized housing paying off. It’s a success story The year I was born,
this place opened in ’63. When it opened,
President Kennedy came here. [applause] [Kennedy] If you wanna have
equal opportunity for all Americans, if we want to rebuild
our cities, if we wanna make this country as wonderful a place
as it can be, for the 300 million people who will live in this country
within 40 years, then we have to do
our task today. [applause] We obsess over things
like welfare and foreign aid and solar panels, but almost all of it
is Social Security, Medicare, defense, so what’s the right discussion to be having
about the big things? I think the obvious one
that is-is most misunderstood is the Social Security number,
and just how to feel about that. My grandmother
was a Russian immigrant, and she didn’t read English, but she used to listen
to the radio all the time, and she said,
“Thank God for Social Security.” That was her favorite saying. And she was right. Bicep curls again. Hope, is it in? Good. I don’t even think I’m
gonna be able to retire at 65. Maybe 70, but… I-I don’t think that’s
the magic number anymore, especially for our generation. The more that people…
being put back to work, the more taxes they are paying. And then you get it
in the middle,
and you get both sides. Kids going to college and
mother-in-laws that need money. [laughing]
Middle generations. It does,
it does get tough, yeah. I think Social Security
gets overblown. With either no adjustments
or very minor adjustments, Social Security’s fine. There’s a broad consensus, and there’s huge room
for compromise and agreement. The military,
I support. They’re giving up
their lives for our country, so I support it. ‘Kay, and there’s no X-rays
involved now, right? Well, my wife just had surgery, and most of it was
taken care of by Medicare. The union provides us
with a pension. Between that, Social Security, and Medicare,
it’s livable. ♪♪

China won’t make major trade concessions: Gasparino


COMING. JACKIE, THANK YOU VERY MUCH. CHARLIE GASPARINO, HAS HIS DOUBTS, RIGHT?>>YES, I WILL TELL YOU WHY. I MET WITH A CHINESE DIPLOMAT, VERY INFLUENTIAL, CAN’T USE NAMES. NEIL: CAN THE NAME THE PLACE?>>IN NEW YORK CITY. NEIL: OLIVE GARDEN?>>NO IN A TOWNHOUSE, THAT HOUSES OLIVE GARDEN. MAJOR — A LOT OF PEOPLE THAT DO PRIVATE EQUITY DO BUSINESS IN CHINA AND THEY MAD A MAJOR CHINESE DIPLOMAT THERE. I WAS ASKING THE FIRST QUESTION, I WAS DEEMED FIRST QUESTION, THE LONE REPORTER, I ASKED ABOUT TRADE, ARE YOU GOING TO DO A DEAL? I MENTIONED IN HIS PREAMBLE THE DIPLOMAT MADE THIS POINT. SINCE 1980, CHINA HAS TAKEN 800 MILLION PLUS PEOPLE OUT OF POVERTY. IT IS NOT THE POVERTY WE HAVE HERE, WHICH IS, SOMETIMES ENTRENCHED, IT IS MUCH DIRE, MUCH MORE EXTREME POVERTY. THEY HAVE 20 MILLION PEOPLE LEFT IN THIS EXTREME POVERTY, OKAY? EVERYTHING THEY DO IS DIRECTED, PRESIDENT XI, EVERYTHING IS DIRECTED TO GET 20 MILLION PEOPLE OUT OF POVERTY. THERE CAN BE NO COMPROMISE IN GETTING THOSE PEOPLE OUT OF POVERTY. THIS IS WHAT HE SAID. NO COMPROMISE? YOU WON’T TAKE A DEAL, THAT SORT OF MAKES COMPROMISES A LITTLE BIT WITH US, SHORT TERM, MAYBE PAIN IS DIVERTED, FROM BEING SO FOCUSED 20 MILLION FOR LONG-TERM GAIN, RELATIONSHIP WITH THE U.S., LONG TERM? HE SAYS NOTHING WILL STOP US FROM COMPROMISING, THERE WILL BE NO COMPROMISE GETTING THOSE 20 MILLION PEOPLE. I TOOK THAT AS LIKE, THEY DON’T CARE, I.P. THEFT IS MEANS TO AN END, GETTING 20 MILLION PEOPLE OUT OF POVERTY. ALL THE STUFF THEY DO, UNFAIR TRADE RELATIONSHIPS. NEIL: WHY THE TALK WAS THEY WANTED TO SEPARATE THAT STUFF. IT IS DISPUTED. WHAT DO YOU THINK?>>THEY ARE NOT GOING TO DIVERT THEIR ATTENTION AWAY FROM WHAT THEIR MAIN GOAL, ACCORDING TO THEM GET 20 MILLION PEOPLE OUT OF POVERTY. I SAID, ISN’T THIS HURTING YOU THE TARIFFS? LET ME TELL YOU SOMETHING. HE GAVE ME A HISTORY LESSON ABOUT THE OPIUM WARS, HOW WESTERN COLONIALISTS TRIED TO EXERT PRESSURE ON CHINA TO CHANGE THEIR TRADE POLICY, BRITAIN AND FRANCE, THAT IS WHAT THE OPIUM WARS WAS B CHINA WAS STRONG ECONOMY IN EARLY 1800’S, VERY BIG EXPORTER. THEY CHANGED DYNAMIC, DESTROYED CHINESE ECONOMY. THEY WILL NEVER GO BACK TO THAT. NEIL: LONG MEMORY.>>THEY WILL NEVER LOSE FACE. THAT IS WHAT HE TOLD ME, WE CANNOT LOSE FACE PARTICULARLY WESTERN AGGRESSION ON TRADE. THERE IS VERY LITTLE THAT THEY’RE GOING TO COMPROMISE IF YOU START ATTACKING THEM ON TWITTER. JUST SO YOU KNOW. NEIL: DOING THINGS, REPORTEDLY WE’LL BUY MORE AGRICULTURAL GOODS, OR ADMINISTRATION SAYS WE’LL OPEN UP MORE MARKETS.>>YOU SAY YOU’REGONNA? NO, THEY SAY WE’RE NOT GONNA. NEIL: OKAY.>>I’M JUST A SIMPLE COUNTRY REPORTER. I TELL YOU — NEIL: YOU NEVER LIVED IN THE COUNTRY.>>WHAT COUNTRY YOU’RE SUPPOSED TO SAY. I SAY THIS THREATS ARE NOT GOING TO WORK WITH THEM. THEY WILL NOT COMPROMISE. NEIL: THAT IS ALL WE HAVE HAD.>>ALL WE CAN DO IDENTIFY WHERE THEY STEP OVER THE LINE WHICH THEY CLEARLY DO, I.P. THEFT AND OTHER THINGS, I THINK, THREATENING THEM IS NOT GOING TO WORK. CREATING SOME SORT OF GLOBAL ALLIANCE WHICH PUTS PRESSURE ON THEM IN SOFTER WAY WAS PROBABLY THE ONLY WAY TO GO AND PRESIDENT TRUMP DIDN’T DO THAT. I DON’T HOLD UP MUCH HOPE ANYTHING IS GOING TO CHANGE. NEIL: YOU’RE A HATER. BUT THANK YOU FOR THAT LESSON AND OPIUM WARS AND EVERYTHING ELSE. THAT WAS A RATINGS JUGGERNAUT. THANK YOU.>>YOU WERE AROUND BACK THEN. NEIL: YES I WAS.>>WAY BEFORE JACKIE WAS BORN [LAUGHTER] NEIL: ABSOLUTELY. THANK YOU VERY MUCH, BUDDY. HE GOES TO THE FANCY EVIDENT PLACES, HANGS OUT WITH THE FANCY

Steven Mnuchin: Trade tensions haven’t impacted US economy


THOSE STORY COMING UP TOP STORY FANNIE MAE, FROMED FRED TRUMP ADMINISTRATION PROPOSING A PRIVATIZATION OF MORTGAGE FINANCE GIANTS COULD KEEP THEM AT CENTER OF U.S. HOUSING MARKET FOR YEARS TO COME JOINING ME RIGHT NOW TO TALK ABOUT THAT HOST OF OTHER TOSS-UPS U.S. TREASURY SECRETARY STEVEN MNUCHIN MR. SECRETARY ALWAYS A PLEASURE TO SEE YOU THANKS FOR BEING HERE.>>HI, MARIA GOOD TO BE WITH YOU AS WELL.>>ALL RIGHT. SO THE TREASURY HAS SUBMITTED HOUSING PLAN TO THE PRESIDENT CAN YOU I HAVE IT HERE 53 PAGES WORTH OF IT CAN YOU TALK ABOUT THANK YOU HOUSING PLAN, TO WRZ AGAIN PRIVATIZE GOVERNMENT SPONSORED ENTITIES FREDDIE MAC FREDDIE MAC.>>IN CON CERTIFY TORESHIP 11 YEARS WE THINK NOW TIME TO RECAPITALIZE MAKE THEM STRONGER THAT TAXPAYERS ARE NOT THE AT RISK, EVENTUALLY RAISE THIRD PARTY CAPITAL, SO THAT WE RESTRUCTURE THEM, AND THAT IN ANOTHER HOUSING DOWNTURN TAXPAYERS ARE NOT AT RISK. MARIA: ONE OF THE ISSUES HERE IS YOU’VE GOT TO GET PRIVATE CAPITAL YOU’VE GOT TO GET COMPETITION, IN THE MARKETPLACE ALSO HAVE TO GET CAPITAL TO COME INTO THIS. SITUATION, SO HOW ARE YOU GOING TO DO IT? PULL OUT SOME OF THE HE MORE IMPORTANT ITEMS FROM THIS HOUSING REFORM PLAN THAT YOU THINK IS GOING TO THAT YOU THINK WILL IN FACT MOVE THE NEEDLE ON THAT?>>WELL MARIA FIRST STEP IS WE ARE IN THE PROCESS OF NEGOTIATING WITH FHFA ON CURRENT LINES, WE EXPECT IN NEAR FERM WE WILL HAVE AN AGREEMENT WHERE WE WILL ALLOW BOTH FANNIE MAE AND FREDDIE MAC TO RETAIN, THEIR EARNINGS, WHEN WILL BE A SIGNIFICANT INCREASE IN CAPITAL A STEP IN THE RIGHT DIRECTION TO US ULTIMATELY RAISING THIRD PARTY CAPITAL.>>I THINK YOU MAKING A REALLY IMPORTANT POINT, BECAUSE, YOU KNOW I WAS READING A COUPLE OF COMMENTS ON TWITTER ON SOCIAL MEDIA AND, YOU KNOW, PEOPLE ARE SAYING LOOK, HOW SOON ARE WE GETTING FANNIE FREDDIE OUT OF CON CERTIFYSHIP PEOPLE FEEL UNCONSTITUTIONAL IN THE FIRST PLACE TO FORCE COMPANIES OFF IF ALL PROFITS GO TO TREASURY, TELL THEM WHEN AND WHEN THEY SHOULD AND SHOULD NOT PAY DIVIDENDS.>>I AM NOT GOING TO COMMENT ON LEGAL CASE FOR OBVIOUS REASONS BUT I WOULD SAY WHAT WE ARE FOCUSED ON IS HOUSING REFORM, AND AS PART OF HOUSING REFORM, WE DO WANT TO MAKE SURE THAT THERE IS REAL CAPITAL, IN FRONT OF TAXPAYERS, THE OTHER ISSUE, I LOOK FORWARD TO TESTIFYING AT SENATE TOMORROW LOOKING FOR A BIPARTISAN LEGISLATION TO PUT A FULL FAITH AND CREDIT ON THE SECURITIES. AND WE THINK THE GOVERNMENT SHOULD BE PAID FOR THAT. WRAP, WE THINK SHOULD BE SIGNIFICANT PRIVATE CAPITAL IN FRONT OF IT OPTIMISM TO FDIC MODEL OR THE GINNIE MAE.>>WHERE WE HAVE TALKED ABOUT THIS BEFORE IN THE PAST YOU ACTUALLY AGREED WITH MY ASSESSMENT THAT FOR TIME OBAMA ADMINISTRATION WAS JUST TAKING MONEY FROM THESE COMPANIES AND PUTTING IT WHEREVER THEY WANT, I MEAN THE INVESTORS GET TOTALLY SCREWED FANNIE AND FREDDIE NOW PEOPLE SAY LOOK THE GOVERNMENT LOOTED FANNIE MAE AND FREDDIE MAC WHEN ARE WE GOING TO BE ABLE TO GET MONEY BACK.>>MAR I AM NOT GOING TO COMMENT ON INVESTORS’ SITUATION I WILL COMMENT ON YOU ARE RIGHT THEY HAVE BEEN IN CONSERVATORSHIP TOO LONG WE WANT TO MAKE SURE THEY ARE IN THE NO CONSERVATOR SHIP ON PERMANENT BASIS IF WE CAN’T DO THAT WE ARE PUNISHABLE COMFORTABLE MOVING FORWARD ON ADMINISTRATIVE SAID MAKING THE CHANGES WE NEED TO DO. MARIA: ALL RIGHT, THIS IS A BIG ISSUE, FOR INVESTORS, AS YOU KNOW. YOU — I KNOW YOU DON’T WANT TO TOUCH CERTAIN THINGS, BUT — WHAT CAN YOU TELL US ABOUT THE FACT FEDERAL APPEALS COURT IN NEW ORLEANS OVERTURNED THE RULING THAT BACKED GOVERNMENT PROPRIETY TO TAKE UL MORTGAGE GIANT PROFITS OF THE JUDGES ALSO INCLUDED THAT THE STRUCTURE OF FANNIE AND FREDDIE REGULATOR UNCONSTITUTIONAL BECAUSE OF JOB PROTECTIONS FOR THE DIRECTOR WHAT DO YOU ASK YOU A.>>WE HAVE OBVIOUSLY, BEEN WORKING WITH DEPARTMENT OF JUSTICE ON THIS CASE REVIEWING THE DECISION NOT LETTING THIS STAND IN THE WAY ONE WAY OR THE OTHER WITH HOUSING REFORM AS I SAY THERE IS AN INVESTOR ISSUE WILL CONTINUE TO GO THROUGH THE LEGAL PROCESS, BUT THE MOST IMPORTANT ISSUE IS REGARDLESS THAT HAVE CASE, WE WILL RESTRUCTURE, FANNIE MAE AND FREDDIE MAC SO THAT THEY HAVE PRIVATE CAPITAL, IN FRONT OF ANY TAXPAYER RISK.>>HOW LONG WILL THIS TAKE WHAT IS TIMING ON THAT? DO YOU BELIEVE YOU CAN BEING ACTUALLY GET NEW CAPITAL INTO THE SITUATION AND ALLOWING COMPANIES TO RETURN TO THE PRIVATE SECTOR?>>WELL, MARIA I THINK WE ARE GOING TO WORK WITH CONGRESS IN THE FIRST PART OF THIS, I HOPE THAT IF WE ARE GOING TO GET CONGRESSIONAL SUPPORT WILL BE NEXT THREE TO SIX MONTHS IF WE CAN’T DO THAT WE WILL MOVE ON ADMINISTRATIVE FRONT, AS I SAID EARLIER, THE FIRST STEP OF CAPITAL WILL BE WE EXPECT IN VERY NEAR-TERM TO REACH AN AGREEMENT, TO ALLOW FOR CAPITAL BUILT UP THEY EACH HAVE THREE BILLION IN CAPITAL THE TREASURY LINES WE ARE GOING TO START RETAINING EARNINGS SO THAT IS FIRST STEP IN CAPITAL.>>ONE INVESTOR WANTS TO KNOW GIVEN THE RULING THAT NET WORTH SWEEP WE KNOW WAS ILLEGAL, IS THE SEPTEMBER SWEEP GOING TO BE HALTED ARE WE GOING TO SEE MONEY GO BACK TO THE INVESTORS?>>THE MONEY WOENLT GO BACK TO INVESTORS THE MONEY WOULD STAY IN THE COMPANIES AND THEN OBVIOUSLY, THE LEGAL PROCESS WILL GO FORWARD. AND OBVIOUSLY, THE TREASURER HAS VERY SIGNIFICANT CLAIMS FOR THE MONEY THAT WE’VE OUTLAID, BUT, YOU KNOW, I EXPECT WE ARE GOING WE ARE IN PROCESS OF WORKING WITH FHFA, GOING TO TRY TO SEE IF WE CAN DO IT IN SEPTEMBER IF NOT IT WILL BE VERY SOON AFTER THAT.>>WHAT WOULD BE A REALISTICALLY TOO MANY FRAME IN YOUR MIND, THAT THAT FANNIE AN FREDDIE COULD COME OUT OF CONSERVATORSHIP.>>DEPENDS WE ARE GOING TO DO IT QUICKLY AS WE CAN AS I SAID PART DEPENDS ON HOW QUICKLY WE GET CONGRESS TO ACT BUT WE ARE GOING TO MAKE SURE THAT WE LAY OUT A PLAN, TO GETTING THESE ENTITIES OUT OF CONSERVATORSHIP OUR GOAL.>>CONNECT THE DOTS FOR US FOR AUDIENCE, WHY DO YOU THINK THAT IS GOING TO HELP THE HOUSING MARKET WHAT WILL THAT MEAN OVERALL THE AT THE END OF THE DAY, GIVEN FACT RIGHT NOW COMPANIES CONTROL 95% MORTGAGES, MR. SECRETARY?>>WELL IF THESE COMPANIES WITH FHA CONTROL A VERY, VERY BIG PART OF THE MARKET AND LET ME COMMENT ON THIS IS REALLY HOUSING REFORM, AND WE ARE ALSO WORKING WITH HUD ON LOOKING AT REFORM OF FHA WE WANT TO MAKE SURE IF WE WITH FIGURES FANNIE AND FREDDIE WE DON’T PUT TAXPAYERS AT RISK AT FHA, THAT IS ALSO SOMETHING WE ARE LOOK BEING VERY CLOSELY AT WORKING WITH SECRETARY CARSON ON.>>DO YOU BELIEVE FHFA EXCEED STATUTORY AUTHORITY AS CONSERVATOR.>>MARIA A NICE TRY YOU KNOW I AM NOT GOING TO COMMENT ON.>>A ALL RIGHT LET ME SWITCH GEARS SECRETARY MNUCHIN OBVIOUSLY, THIS WHOLE CONVERSATION OF RECESSION HAS TAKEN OVER, A LOT OF PEOPLE WORRY THAT THE JOBS NUMBER ON FRIDAY SHOWED A SLOWDOWN UNTIL THE ECONOMY. WHERE ARE WE ON THAT? WHAT CAN YOU TELL US AS WE WATCH THESE NUMBERS COME IN? AND A LOT OF PEOPLE ARE BLAMING THE PRESIDENT’S TRADE POLICY LEADING TO UNCERTAINTY. AND THAT IS CAUSING MANAGERS TO SIT ON CASH.>>MARIA, THERE IS NO QUESTION THERE IS A CONSIDERABLE SLOWDOWN IN THE WORLD ECONOMY BOTH IN CHINA, AND IN EUROPE. BUT AS YOU LOOK AT THE U.S. WE CONTINUE TO BE THE BRIGHT SPOT OF GROWTH. I JUST CAME FROM G7 WITH THE PRESIDENT A FEW WEEKS AGO, THAT IS WHAT EVERYBODY WAS TALKING ABOUT, THE PRESIDENT’S ECONOMIC PLAN OF TRUTS REGULATORY RELIEF TRADE ARE REALLY WHAT IS DRIVING THE U.S. ECONOMY, I DON’T SEE IN ANY WAY U.S. RECESSION I THINK IF YOU LOOK ABOUT AT INTEREST RATES, I THINK WHAT YOU SEE IS BOTH IN TERMS OF LONG-TERM INTEREST RATES HISTORIC LOW GOOD FOR ECONOMY, I THINK YOU SEE THAT ON A RELATIVE BASIS WE ARE STILL HIGH RELATIVE TO THE REST OF THE WORLD ON INTEREST RATES, YOU ALSO SEE THE MARKETS EXPECTATION OF THE FED DOING RATE CUTS, SO I DON’T IN ANY WAY THINK YIELD CURVE REFLECTS A RECESSION AS FAR AS WE SEE VERY HEALTH ROBUST GROWTH FOR THE BALANCE OF THE YEAR.>>I KNOW NUMBERS ARE STILL SHOWING GROWTH TO WHOLE IDEA THAT WE’RE GOING TO BE IN A RECESSION DOESN’T MAKE A LOT OF SENSE TO ME EITHER BECAUSE YOU ARE SEEING ACTUAL SLID NUMBERS IN TERMS OF GROWTH WHAT CAN YOU SAY TO INVESTORS AND PEOPLE OUT THERE, WHO MIGHT BE WORRIED THAT THE UNCERTAINTY AROUND CHINA THE UNCERTAINTY AROUND THIS TARIFF SITUATION, IS CAUSING THE ECONOMY TO STALL EVEN IF IT IS THE JEWEL OF THE WORLD I GET THAT CERTAINLY THE BEST STORY OUT THERE IN GLOBAL ECONOMY.>>WELL MARIA YOU KNOW THE PRESIDENT IS YOU KNOW WANTS TO DEAL WITH THIS VERY IMPORTANT ISSUE OF CHINA TRADE. AND WE HAVE BEEN WORKING ON THIS FOR THE LAST TWO AND A HALF YEARS SINCE FIRST MEETING WITH PRESIDENT TRUMP TOURNAMENT XI IS THERE WAS AGREEMENT ON BOTH SIDES TO REBALANCE THE TRADING RELATIONSHIP, SO IT WAS A FAIRER RELATIONSHIP. AND AMBASSADOR LIGHTHIZER AND I HAVE BEEN WORKING VERY HARD TO GET TO THAT THAT RESULT. AND IF WE CAN GET A GOOD DEAL WHICH IS OUR ON THE WE WILL BERINTO A DEAL WITH CHINA. WE HAVE TALKS COMING UP ON VICE MINISTER LEVEL THIS MONTH THEM COMING HERE VICE PREMIER COMING HERE IN THE BEGINNING OF OCTOBER, OUR OBJECTIVE IS TO GET A GOOD DEAL A DEAL GOOD FOR AMERICAN WORKERS AND AMERICAN COMPANIES.>>YOU HAVE BEEN FRONT MAN YOU AND BOB LIVE TEAM COVERAGE KAU AU BOB LIGHTS US HAVE AR DO YOU THINK THERE IS WILLINGNESS TO — SECRETARY MNUCHIN BIG TICKET ITEMS NOT — THE THEFT INTELLECTUAL PROPERTY FORCED TRANSFER OF TECHNOLOGY ISN’T THAT REASON THEY RENEGED IN APRIL THEY DON’T WANT ENFORCEMENT MECHANISM IN PLACE WOULD HAVE CREATED CONSEQUENCES IF THEY WENT BACK TO OLD WAYS OF STEALING.>>I THINK TALKS BROKE DOWN LESS ABOUT ENFORCEMENT, AND PARTIALLY ON OTHER ISSUES, WHERE THERE WAS SIGNIFICANT PUSHBACK. IN CHINA. I THINK THE ENFORCEMENT AREA WE HAVE A CONCEPTUAL — AN AGREEMENT ON, BUT, AGAIN, WE HAVE A DOCUMENT, WE HAVE MADE A LOT OF PROGRESS THEY ARE COMING HERE I TAKE THAT AS A SIGN OF GOOD FAITH, THAT THEY WANT TO CONTINUE TO NEGOTIATE. AND WE ARE PREPARED TO NEGOTIATE. IF WE CAN GET A GOOD DEAL, A DEAL THAT IS GOOD FOR US, WE WILL SIGN IT IF NOT THE PRESIDENT IS PERFECTLY FINE WITH CONTINUING THE TARIFFS, WHEN ARE RAISING SIGNIFICANT AMOUNTS OF MONEY FOR UTREASURY.>>IS IT FAIR TO SAY, ITS IMPACTED CHINESE ECONOMY BUT ALSO IMPACTED U.S. ECONOMY?>>FAIR TO SAY IT IS IMPACTED THE CHINESE ECONOMY WE HAVE NOT YET SEEN ANY IMPACT ON THE U.S. ECONOMY. SO I THINK AS YOU KNOW WE HAVE NAVIGATED CAREFULLY RRENMINBI PROOESHDZ SIGNIFICANT PAID FOR MAJORITY OF TARIFFS I THINK CERTAIN SITUATIONS WHERE THERE HAVE BEEN DIFFICULTIES FOR COMPANIES AMBASSADOR LIGHTHIZER HAS DONE VERY GOOD JOB ON CASE BY CASE BAYS WE HAVE NOT SEEN IMPACT ON U.S. ECONOMY VERY CAREFULLY MANAGING THAT.>>CAN YOU REALLY SAY THAT A EVEN THOUGH WE ARE SEEING GROWTH SLOW DOWN BECAUSE OF INTERCEPTOR AROUND TRADE CAN YOU REALLY SAY IT HASN’T IMPACTED THE ECONOMY HERE.>>YES I CAN REALLY SAY THAT WHEN YOU SAY GROWTH HAS SLOWED DOWN, YOU KNOW LET ME JUST COMMENT THAT THESE NUMBERS HAVE VOLATILITY ON THE UPSIDE AND DOWNSIDE, THERE IS NO QUESTION THAT OUR GROWTH IS SIGNIFICANTLY HIGHER THAN THE RESTED OF THE WORLD THERE IS NO QUESTION THAT TO A CERTAIN EXTENT GLOBAL GROWTH WILL HAVE A MODERATE IMPACT ON U.S. GROWTH BUT I XHP WE ARE GOING TO SEE A VERY ROBUST FINISH OF THE YEAR, AND, AS I SAID, NO SIGNS OF A RECESSION, THE TRUMP ECONOMY THE ECONOMIC PLAN IS WORKING. MARIA: ARE WILL THAT INCLUDE THE END OF THE YEAR USMCA? YOU KNOW THE SPEAKER HAS TO BRING IT TO THE FLOOR, A LOT OF PEOPLE ARE WORRIED THAT THE U.S. WORKER IS GOING TO GET — DISADVANTAGED BECAUSE MEXICAN WORKERS MAKE ABOUT 1.50 AN HOUR WE LOOK FORWARD — CONGRESS IS NOW COMING BACK NO QUESTION ABOUT IT AT TOP OF OUR AGENDA O AMBASSADOR LIGHTHIZER WORKING CLOSELY WITH HOUSE I HAVE SPOKEN TO THE SPEAKER ABOUT THIS SEVERAL TIMES. AND WE LOOK FORWARD TO WORKING WITH HER THIS MONTH, HOPEFUL TO GET TO THE POINT WHERE THEY ARE COMFORTABLE, IN BRINGING THIS TO THE FLOOR BECAUSE I THINK IF THEY BRING IT TO THE FLOOR IT HAS VOTES TO PASS THIS IS IMPORTANT FOR GROWTH, WE SEE A SIGNIFICANT INCREASE IN GROWTH, IN PASSING USMCA.>>THERE IS ALSO GROWTH QUESTIONS AROUND DEBT, ONE OF THE TOP STORIES IN THE BUSINESS SECTION OF THE JOURNAL DAY RISING GLOBAL DEATH HELPS KEEP RATES LOW GOING TO CUT INTO ECONOMIC GROWTH. WHEN DOES 22 TRILLION DOLLARS IN TERMS OF DEBT BECOME A REAL MAJOR PROBLEM WE HAVE BEEN TALKING ALL DAY ABOUT REPUBLICANS GETTING RELIGION ON SPENDING.>>MARIA WE HAD A VERY MODEST INCREASE IN THE BUDGET THIS YEAR, AND NEXT YEAR IN TWO-YEAR DEAL THE MAJORITY OF THAT WENT TO THE MILITARY, I THINK YOU KNOW THAT IS AN IMPORTANT ITEM FOUGHT TOURNAMENT.>>YES.>>MR. –>>GO AHEAD.>>JUST WE’RE LOOKING AT DEBT TO GDP THAT IS SOMETHING WE

Varney: Chaos in Hong Kong, China strengthens Trump’s position


STUART: OVER THE WEEKEND, MORE EVIDENCE THAT CHINA’S LEADER XI JINPING IS IN SOME TROUBLE. NOW, OF COURSE YOU WOULDN’T KNOW IT FROM CHINESE STATE-RUN MEDIA, WHERE XI IS CALLED THE PEOPLE’S LEADER. THAT’S THE KIND OF HERO WORSHIP NOT SEEN IN GENERATIONS. BUT THAT’S A MASK. CONCEALING A TROUBLED ECONOMY, A STILL-CHAOTIC HONG KONG AND REPORTS OF GRUMBLING INSIDE CHINA. THOSE ARE REAL PROBLEMS FOR A LEADER FACING A U.S. PRESIDENT WHO WILL NOT BACK DOWN.>>>LOOK WHAT HAPPENED OVER THE WEEKEND. TENS OF THOUSANDS MARCHED TO THE U.S. CONSULATE PLEADING WITH PRESIDENT TRUMP TO LIBERATE HONG KONG. THE AMERICAN FLAG HELD HIGH AS THE CROWD SANG AMERICA’S NATIONAL ANTHEM. THE VIOLENCE CONTINUED. VANDALISM AT SUBWAY STATIONS, BURNING BARRICADES, THE POLICE AGAIN USED TEAR GAS. THE CONCESSION, THAT IS WITHDRAWING THE EXTRADITION BILL, HAS NOT SOLVED XI’S BACKYARD PROBLEM. HONG KONGERS ARE LOOKING TO AMERICA FOR SUPPORT. YET AGAIN, CHINA HAS RESORTED TO MORE STIMULUS TO KEEP ITS ECONOMY GOING. SUNDAY, MORE MONEY WAS RELEASED TO CHINA’S BANKS. WHY DO THAT, IF THE ECONOMY IS GROWING AT A 6% RATE AND EVERYTHING’S FINE AND DANDY? ANSWER, IT’S NOT GROWING AT 6% DESPITE WHAT BEIJING SAYS. THE “WALL STREET JOURNAL” HAS LOOKED AT A VARIETY OF INDICATORS SUGGESTING MUCH LOWER GROWTH, MUCH HIGHER UNEMPLOYMENT AND A SHARP DROP IN CHINA’S EXPORTS TO AMERICA. THEIR ECONOMY IS STRUGGLING. ALL OF THIS HAS PROVOKED SOME GRUMBLING INSIDE CHINA. THE INTERNATIONAL EDITION OF THE “NEW YORK TIMES” REPORTS HINTS OF UNEASE IN CHINA’S LEADERSHIP. COMMUNIST DICTATORSHIPS HAVE A VERY HARD TIME ADJUSTING TO INTERNAL CRITICISM. ALL OF THIS IS THE BACKDROP TO THE TRADE FIGHT. IT SURELY STRENGTHENS PRESIDENT TRUMP’S NEGOTIATING POSITION. HE’S PLAYING A STRONG HAND. THINGS ARE GOING HIS WAY. NOT SO WITH XI JINPING.

Larry Kudlow: America is working


285, AND AWAY WE GO. ALL RIGHT LARRY KUDLOW IS NOW WITH US. LADIES AND GENTLEMEN, HE’S WITH THE NATIONAL COUNSEL DIRECTOR AND HE JOINS US NOW ALL SET LARRY HERE WE GO. HERE’S MY INTERPRETATION I’LL START WITH MY POINT OF VIEW. ON THE YOU NIGH IF I WAS GOING TO DO THIS I THINK IT IS VERY, VERY MODEST JOB GROWTH IN A SLOWING ECONOMY WHICH IS BEING SLOWED BY UNCERTAINTY OVER CHINA TRADE. TELL ME I’M WRONG. GO AHEAD.>>YOU’RE WRONG. [LAUGHTER]>>EXPONGED ON THAT WILL YOU.>>NO STUART, YOU KNOW, I HAVE GREATEST RESPECT FOR YOU. NOBODY BETTER IN THE BUSINESS LOOK — LET ME JUST TRY TO — ILLUMINATE NUMBERS 130,000 PAYROLL A SOLID NUMBER NOT A SPECTACULAR NUMBER BY THE WAY SEASONABLY, THE AUGUST PRINT CIALLY COMES IN LOW AND THEN REVISED HIGH OR. BUT LET’S NOT GET THAT OUT. HERE’S THE STORY. HERE IS THE STORY. OKAY — THE HOUSEHOLD SURVEY. HOUSEHOLD SURVEY FROM WHICH UNEMPLOYMENT RATES ARE DERIVED HOUSEHOLD SURVEY TENDS TO BE SMALLER BUSINESS NEWER BUSINESSES, AND LEADING INDICATOR EXPLODED EXPLODED. 590,000 NEW JOBS IN THE HOUSEHOLD SURVEY. THAT IS VIRTUALLY UNPRECEDENTED STUART, AND THIS IS THE THIRD STRAIGHT MONTH OKAY — LET ME READ YOU — 373,000 AVERAGE, 373 AVERAGE FOR THE LAST THREE MONTHS THIS FROM THE HOUSEHOLD SURVEY, BLOWOUT NUMBERS SHOWS YOU REAL HEALTH ANOTHER NUMBER I WANT TO SAY THIS, CIVILIAN LABOR FORCE CIVILIAN LABOR FORCE UP 571,000 AGAIN, THE THIRD STRAIGHT MONTH THE AVERAGE IS 425. WAS THAT MEAN CIVILIAN LABOR FORCE? THAT IS PEOPLE COMING BACK IN TO THE REPORT OF LABOR FORCE. WE SOMETIMES SAY THEY’RE COMING OUT OF THE WOODWORK. THE HOUSEHOLD SURVEY AT 590, THE INCREASE OF CIVILIAN LABOR FORCE 571 TELLS ME THAT AMERICA IS WORKING. AND THAT IS SO IMPORTANT. AND FINAL POINT STU FINAL POINT ON THE WAGE FINISH AVERAGE HOURLY EARNINGS 12 MONTH CHANGES 3.2%. BUT IN THE LAST THREE MONTHS ALL RIGHT WHILE WE’VE SEEN AN EXPLOSION IN THE SMALL BUSINESS HOUSEHOLD SURVEY, AND EXPLOSION IN NEW LABOR FORCE ENTRANCE, THE WAGE RATE FOR THE LAST THREE MONTHS AT ANNUAL RATE IS 4.2%. SO I’M JOUST GOING TO SAY THIS. AMERICA’S WORKING, AMERICA IS GETTING PAID WELL. AMERICA IS SPENDING, AND SAVING AND PRODUCING. SO I THINK THIS IS A DYNAMITE REPORT WHICH GOT TO LOOK UNDER HOOD MANY ANALYSTS DON’T.>>YOU’RE LUCKY TO HAVE ME ON HERE. I USED TO DO THIS FOR A LIVING. SO — OUR HARRY I’M STILL DOING IT FOR A LIVE OKAY.>>WE CAN LOOK UNDER THE HOOD AND FIND THESE NUMBERS. BUT I’M REALLY QUITE SERIOUS. THIS I’M NOT JUST BEING POLITICAL HERE. THESE ARE ACTUAL FACTUAL NUMBERS THAT NEED TO BE COVERED. BECAUSE THEY TELL A MUCH DIFFERENT STORY THAN THE HEADLINES.>>OTHER PART OF MY OPINION WHICH I EXPRESSED A MOMENT AGO IS IT SHALL THE ECONOMY IS SLOWING. IN PART BECAUSE OF UNCERTAINTY OVER CHINA TRADE. WHAT CAN YOU TELL PUS ABOUT CHINA TRADE, THE CONVERSATIONS THAT YOU HAVE BEEN HAVING THE TELEPHONE CALLS BEEN MADE MEETINGS THAT IS GOING TO TAKE PLACE NEXT MONTH HOW COULD YOU CHARACTERIZE STATE OF THE TRADE NEGOTIATION AND WE’RE AT ON THE SUBJECT. IS THERE A CHANCE THAT AFTER A THESE MEETINGS THIS WILL BE A VERY MODEST AGREEMENT ON BUYING AGRICULTURAL PRODUCTS AND DROP THE TARIFFS? AND THEN CONTINUE TALKING ON THE MORE ISSUE OF INTELLECTUAL PROPERTY THEFT WHERE ARE WE GOING HERE?>>I DON’T TO PREDICT OUTCOME I’LL JUST SAY THIS. KUDLOW ACTUALLY ALWAYS BETTER TO TALK THAN NOT TO TALK. SO — EVEN THOUGH GOING BACK TO MAY WE WERE DISAPPOINTED WE THOUGHT WE WERE CLOSING IN ON AN AGREEMENT. AND OUR CHINESE TRENDS WITHDREW ALL RIGHT. BUT WE’VE BEEN IN COMMUNICATION WITH THEM THE WHOLE TIME. AND SO NOW AFTER A THE PHONE CALL EARLIER THIS WEEK WITH SECRETARY MNUCHIN AND AMBASSADORLIGHT HOUSE AND HIS TEAM IT WAS IT DOESED THAT DEPUTIES, THE DEPUTIES ON BOTH TEAMS WILL CONVENE HERE IN WASHINGTON, D.C. LATER THIS MONTH AND PRINCIPLE NEGOTIATORS MR. MNUCHIN AND MR. LIGHTHIZER WILL JOIN HIMMING AND HIS TEAM I SUPPOSE IN EARLY OCTOBER HASN’T BEEN SET YET. THAT BY ITSELF IS VERY GOOD THING A VERY GOOD THING HAD. SO WE ARE BACK NOW TO THE TABLE. PENCHT OTHER NEGOTIATIONS CALM? IS THE ATMOSPHERE CALM BETWEEN THE TWO SIDES? NOT SHOUTING AND SCREAMING?>>LOOK, IF THEY WERE YELLING AND SCREAMING — THEY WOULDN’T HAVE IS — COME I DON’T KNOW 18 HOUR PLANE FLIGHT I’VE MADE IT A COUPLE OF TIMES THEY’RE COMING THAT’S A VERY GOOD THING.>>ANY INDICATION FROM THE PHONE CALLS THAT CHINA IS PREPARED TO GO BACK TO WHERE IT WAS BEFORE THEY WERE MADE?>>LOOK, I CANNOT POSSIBLY BE SPECIFIC ON THAT. THOSE NEGOTIATIONS TRICKY BUSINESS LIKE LABOR NEGOTIATIONS YOU KNOW ONE STEP AT A TIME ONE POINT AT A TIME COMING BACK TO THE TABLE IS A GOOD THING. NOW AS FAR AS I KNOW, AND MY CONVERSATION WITH MY COLLEAGUES — ALL THE TOPICS WILL BE ON THE TABLE. I MEAN WE WOULD PREFER THAT QUESTION GO BACK TO MAY WHERE WE WERE MAYBE 90% HOME ON A DEAL. BUT WE’LL SEE. I DON’T TO PREDICT I DON’T TO SUGGEST ANYTHING. LAST EVENING AND THIS MORNING I SPOKE TO MY COLLEAGUES MNUCHIN AND LIGHTHIZER ON HAVE VERY POINT YOU CAN REST ASSURE STUART THAT EVERYTHING WILL BE ON THE TABLE. YOU CAN REST ASSURED FOR EXAMPLE THE ABSOLUTE KEY STRUCTURAL ISSUES THE IP THEFT FORCE TRANSFER OF TECHNOLOGY, CYBERSPACE, THE CLOUDS, THE FINANCIAL SERVICES, ALL OF THAT WILL BE ON THE TABLE. AGRICULTURAL PURCHASES INDUSTRIAL PURCHASES, ENERGY PURCHASES, GETTING TARIFF AND NONTARIFF A BARRIERS DOWN SO CHINA OPENS ITS ECONOMY. THAT’S WHAT AMERICA WANTS. TRUMP IS DETERMINED TO DEFEND AMERICAN ECONOMY AND WORK FORCE. AND WE MUST DO THIS BECAUSE OF CHINA’S UNFAIR TRAINING PRACTICES WHICH WE HAVE DISCUSSED BUT WE’RE GOING TO HAVE THIS WHOLE BROAD-BASED DISCUSSION. AND WE’LL SEE WHAT HAPPENS LOOK, OUR IMHI ECONOMY IS VERY STRONG THEIR ECONOMY IS NOT. NAIR LOWERING THE U — THAT IS ESSENTIALLY NEUTRALIZE IT IS THAT IMPACT ON OUR CONSUMERS BUT IT PUTS CHINA IN A VERY BAD PLACE WITH CAPITAL FLIGHT AND DISINVESTMENT I DON’T TO GO INTO THAT DETAIL BUT WE THINK THEY NEED A DEAL PRESIDENT TRUMP THINKS THEY NEED A DEAL PRESIDENT TRUMP HAS SAID PREENGTLY EVERY DAY RECENTLY HE’S — HE WOULD MAKE A DEAL. AS LONG AS IT’S A GOOD DEAL FOR THE UNITED STATES. HOPEFULLY IT WOULD BE A GOOD DEAL FOR BOTH COUNTRIES. PRESIDENT TRUMP BELIEVES CHINA WOULD LIKE A DEAL. BUT IT WILL BE HAMMERED OUT AND THAT MEANS IF I MAY, WE HAVE THE BEST NEGOTIATORS IN THE BUSINESS. ALL RIGHT IF I MAY — BOB LIGHTHIZER BEST TRADE GUY IN THE BUSINESS AND INCIDENTALLY NEVER TALK ABOUT THIS RIGHT IN FRONT OF US AS CONGRESS COME BACK AND SESSION — THERE’S A USMCA MEXICO CANADA USA DEAL THAT WOULD ADD AT LEAST A HALF A POINT TO OUR GDP WITH A COUPLE OF HUNDRED THOUSAND JOBS EVERY MONTH THAT WOULD BE FANTASTIC. WE ANNOUNCED AT THE G7 AND FRANCE, I WAS OVER THERE. THE OUTLINE OF A DEAL WITH JAPAN THAT DEAL MAY BE FINISHED AND ANNOUNCED IN ENTIRETY AT THE U.N. MEETINGSES COMING UP IN A COUPLE OF WEEKS, AND HECK, WE EVEN SOLD SOME BEEF TO EUROPEAN UNION THEY SAID IT COULDN’T BE DONE AND I THINK THOSE TALKS ARE CONTINUING. SO BY LOWERING TRADE BARRIERS, THAT IS PROGROWTH THAT IS THE PRESIDENT’S VISION. BUT HE INSIST THERE HAS TO BE REST AND HE’S GOT TO DEFEND THIS COUNTRY’S ECONOMY AND ITS WORK FORCE. ARE WE GOING TO GET BACK TO 3% GROWTH? FIRST QUARTER OF THE YEAR. 3%? ABOUT SECOND QUARTER 2%. “THE NEW YORK TIMES” THIS MORNING SAYING A PERIOD OF SLUGGISH GROWTH LOOKS MORE LIKELY TO BE IMMEDIATE FUTURE. ARE YOU PREDICTING A BOUNCEBACK TO 3% GROWTH IN THE THIRD AND MAYBE FOURTH QUARTERS OF THE YEAR?>>I LIKE WHAT I SEE, STU. I LIKE WHAT I SEE AS I’VE SAID PING UNDERNEATH HOOD THESE JOB NUMBERS, OR VERY POWERFUL. I THOUGHT ISM SERVICES RELEASE WAS ABSOLUTE BLOWOUT. ABSOLUTE E BLOWOUT, CONFERENCE BOARD CONSUMER CONFIDENCE ABSOLUTE BLOWOUT ESPECIALLY BY THE WAY, IN THE JOBS CATEGORY. NOW, QUESTION HAVE SEEN A LITTLE SOFTNESS IN PRODUCTION AND CURABLE GOODS AND CAP SPENDING SOME SAW THAT WHATS ALONG A CYCLE, YOU KNOW YOU GO UP AND DOWN — I NOTICED DURABLE GOODS PARTICULARLY THE CORE IS NOW PICKING UP THE ORDER BOOKS ARISING BY BETTER THAN 6 PBT ANNUALLY OVER THE FAST THREE MONTHS I LIKE THAT VERY, VERY MUCH. WAGES, SALARIES HERE’S ANOTHER ONE FOR YOU STU. PRODUCTIVITY NOW I’LL GO EIGHT QUARTERS EIGHT QUARTERS. 1.8% THAT’S A TREMENDOUS PAKISTAN FROM THE PRIOR I DON’T KNOW TEN YEARS OR MORE AND EMPLOYMENT GROWTH IS 1.3% EIGHT QUARTERS REASON I SAY THAT IS AS A RULE OF THUMB, BACK OF THE ENHAVE THEY ENVELOPE REAL GDP EQUALS PRODUCTIVITY PLUS EMPLOYMENT GROAT, GETS YOU TO OVER 3% RIGHT NOW SO IF WE REMOVED SOME OF THE MONETARY OBSTACLES AND WE CONTINUE OUR INCENTIVES WITH LOW TAX RATES AND ROLLED BACK OF REGULATION AND CHEAP AND PLENTIFUL ENERGY I’M GOING TO PLAY THIS ON THE BULLISH I’M SURE YOU’RE SHOCKED TO HEAR THAT AND I’LL PLAY WHAT — WHAT STEW VARNEY WHATEVER YOUR NUMBER IS I’LL TAKE IT OTHER AS I ALWAYS DO. [LAUGHTER] YOU’VE BEEN RELATIVELY RIGHT. SOME KUDLOW FORECAST IS BETTER THAN OTHERS. OVER LAST 40 YEARS BUT — SO FAR THE OPINION SOME VARNEY OPINIONS ARE BETTER THAN OTHERS I MIGHT THAT AS WELL THAT’S A MATTER OF FACT LARRY I’M AFRAID WE’RE OUT OF TIME BUT WE APPRECIATE IT ALWAYS WHEN YOU’RE

Women At Work (Skills USA–Non-traditional Builders)


Rob McClendon: Well, with the opening of the
new 320,000-square-foot building in Oklahoma City, the Boeing Co. is preparing to more
than double its workforce in Oklahoma. More than 2,100 jobs are coming to the state
according to the company’s CEO because of Oklahoma’s reputation for top-end affordable
engineers. But maintaining a well-skilled workforce is
an investment, which is where our Alisa Hines picks up the story. Alisa Hines: That’s right, Rob. Across the aerospace industry, companies are
in search of high-skilled, well-trained employees, which is why Boeing hosted a group of Oklahoma
educators to help give them some insight into the importance of piquing students’ interest
in aviation at an early age. With a presence in Oklahoma since 1953, engineers
at Boeing have been supporting Tinker Air Force Base and the missions they do for our
country. Michael Emmelhainz: We provide engineering
solutions for the sustainment of the aircraft and weapons system that the Tinker Air Force
Base supports. Alisa: Michael Emmelhainz is the site director
at Boeing and says engineering talent is key to their success, but not always easy to find. Michael: As the global economy expands, the
ability to, to, to have that engineering talent gets to be more and more of a challenge. We’re expanding in Oklahoma City; we’re, we’re
actually gonna double in size over the next two years, and as we do that, it’s gonna drive
more and more requirements for engineering talent. Certainly we get a pretty good supply from
the regional universities, OU, OSU, and, uh, and that certainly is a huge benefit to what
we need. I want to be here another 50 or 100 years,
so we need a pipeline of engineering and math students to help fill that need as we go forward. Alisa: So they’re helping build their own
pipeline. Michael: We were honored this year to get
to host the education day portion of the Oklahoma Aerospace Summit, and it’s a very, very important
event. It’s one where teachers throughout the state
are invited, they come and they sit through some workshops and learn more and more about
stem education, the aerospace industry, how we can partner and support them. So it’s a great opportunity for them to spend
some time with leadership in the aerospace community and understand it a little bit better,
but it’s just a wonderful way, also, for us to thank them for what they do to help ensure
the education of our young people. Alisa: According to retired Brig. Gen. Ben Robinson, there’s a shortage of engineers
in aerospace, and it takes a long time to train someone so we need to start early. Ben Robinson: It’s important not just in Oklahoma
but across America. We have got to improve our science, technology,
engineering and math if we want to get from where we are right now, from 17th in the world
in engineering back to the top. That’s the way we’re gonna create jobs because
we’re going to bring engineering back from offshore, back to America; this is, this is
where it starts. An engineer starts in middle school, and it’s
a decade-and-a-half-long process, but it starts in middle school. We’ve got to start making those connections
now and firing up and creating that enthusiasm, that creativity, that ingenuity in our middle
school students, and they will produce engineers in the future. So this is, this is a, this is our paying
it forward to our future. Female voice: Do we still see evidence of
those impacts today? Alisa: So how do you get students excited
about such a challenging field? Dorinda Risenhoover is with the Oklahoma NASA
Space Grant Consortium. Dorinda Risenhoover: Kids don’t realize it,
but they’re born as scientists; you know, when they’re little babies, they’re little
natural scientists. And somewhere along the way they decide, most,
mostly girls, but even some of the boys decide that they might be so good at science, and
they don’t realize it’s just what they’ve been doing all their entire life. And so activities like this remind them that
anyone can be a scientist, and that they are a scientist every single day. Alisa: But before you can teach the student
— Dorinda: I have them come up first with how
can they make it move with just the rocket. Alisa: — you have to teach the teacher. Dorinda: Well, the biggest thing is, especially
right now with the huge push of STEM education, science, technology, engineering and mathematics,
that they need real-life, hands-on activities that they can do with their students that
are simple enough and applicable enough back to the classroom and cheap. And the activities that I’m doing with them,
which are very consistent with a lot of NASA activities, they are using recyclable materials
or using very cheap materials, so the teachers can easily implement these in their classroom. And it’s a real working model that allows
the children to really discover the concept without being told the concept. Alisa: Kelly Wardlaw is a Stillwater Middle
School teacher and says it’s hands-on instruction. Kelly Wardlaw: Anytime you can put something
in their hands and get ’em playing, then they’re learning, and they don’t know it, and they
love it. [laughing]. Alisa: Just lookin’ at how much fun these
teachers are havin’, I’d say their students are in for a really fun school year. Teri Kimble: Oh they will love it, absolutely,
anytime you give them a chance to work. They’re probably better with glue sticks than
we are. [laugh]. Janell Lundgren: They always learn. Every time you give ’em something to do, they’re
always learning something. Alisa: Even after school programs are getting
involved. Cedric Currin-Moore is the STEM project coordinator
for the Oklahoma After School Network and says these activities help connect education
to the real world. Cedric Currin-Moore: And it shows not only
teachers, but students how important science is, math is, and how, you know, it connects
to the aerospace industry and other industries. Alisa: This program has even caught the eye
of the director of the National Career Pathways Network, David Bond. David Bond: This is extremely important; I’m
very impressed with what’s going on here. The teachers are learning ways to show students
how what they’re learning in the classroom is used in the real world, and that’s just
a perfect way to learn. Alisa: A learning experience for teachers
to take back to the classroom and make future engineers. Now, while many of the jobs coming into the
state may be filled with Boeing workers from Wichita and the West Coast, Boeing officials
know that for the long-term viability of their company, they need to be able to produce home-grown
engineering talent. Rob: Now, I want to ask you about something
Gen. Ben Robinson said. Does it really take 18 years to educate an
engineer? Alisa: You heard right, Rob. STEM classes tend to build upon themselves,
and STEM advocates seem to think that to get kids interested in these skills, they need
to get to them before they hit high school because once they hit high school, they seem
to think taking these kind of classes is just too hard. Rob: Humph. Pretty interesting. Thank you so much, Alisa. Alisa: You’re welcome, Rob. Rob: Now, when we return we’ll take a look
at why the next big thing in aviation may be very, very small.