Disastrous Scenario If Turkey Exited NATO: Stavridis

our country's history, brings a lawsuit. It will be then be very easy to get all of his records, texts, emails, and documents to show not only the poor job he did, but how he was involved with the mother rigged witch hunt. He won't sue. He went on further to talk about how everybody wants their security clearance and why it's important

to strip certain people of it. Joining us now, I'm very pleased to say, is Admiral James Staffriti's a Bloomberg opinion columnist, also a retired U S. Navy admiral and

former military commando of NATO. He is the author of Sea Power, The History and Geopolitics of the world's oceans, and he also is one of more than one hundred and seventy five former State Department and Penticot officials who have added their names to a statement signed by national security officials criticizing President Trump's decision to provoke security clearance to a number of people, including John Brennan, Admiral. Thank

you so much for joining us. What a pleasure, Lisa, I would love to just start with, how important is it to the nation, aside from just a personal issue, uh, that there are these attacks on former intelligence officers and a revocation of their security clearance. I think it's a mistake from really a very pragmatic point of view, Lisa, as follows um, when you have an important job, I

was the Supreme ali Ander of NATO. I had three million troops working for ME, Afghanistan, Libya, the Balkan Syria Piracy. When you have that kind of job, you need help, you need advice. And I was able to pick up the phone and call former Supreme Allied commanders, going all the way back to General West Clark and get good advice from them because they still had security clearances. That's

the idea of this. So if we strip away security clearances. UM, it'll chill the ability of people in big important jobs to reach to their predecessors. And I think that's a real mistake. Leaving aside the politics of this, which are not very good. In addition to that very pragmatic point, what's morale like? What is morale like? I think morale is concerned would be the way I would use the term.

From top to bottom. The national security, UH, establishment is concerned about more than any seeing the erratic nature of policy. You know, there are some things that President Trump is doing that makes sense, going after the Islamic State, negotiating with Kim Jung not unleashing fire and fury um, but there are other things that we disagree with. It's that um up and down, back and forth, the whipsaw effect of policy. And I think this feeds into that sense.

And Lisa, it's how it's viewed from overseas audit concern US Admiral Sturdi is uh. We just are getting word that Turkey is launching a World Trade Organization dispute against the US regarding the still and aluminum tariffs. I'm just wondering. I'd love to get your thoughts on Turkey as the former military commando of NATO and Uh, your thoughts on the idea of Turkey leaving NATO are becoming less allied with the United States going forward? What do you think

about that? Yeah, three key points, Lisa. First, Turkey has historically been a very strong member of the Alliance and a very strong partner to the United States and to the other twenty seven nations of the Alliance. And I say that very practically having seen Turkish troops, Turkish sailors, Turkish airmen fighting alongside NATO troops in Afghanistan, Libya, the Balkans on countervirusy missions. They're very capable, um point to.

Under President Urduwan, they are drifting away from the Alliance, and that ought to concern us very deeply. And that gets us to point three, which is the drift is getting closer and closer to Russia. We see a Turkey buying advanced air defense systems from Russia. We see a lot of collaboration between President Urduan and President Putin that ought to really concern us UM in terms of this particular dispute which kind of centers around UH, a preacher

who has been unjustly incarcerated in Turkey. President Trump is correct to go after the Turk high and hard about that, but we ought to be doing that in a way that recognizes the fundamental importance of Turkey to the Alliance. UM. I think we can get our way through this. The number one prescription is let's get an ambassador in Turkey. We don't have one there yet. We need to land this one diplomatically. Well, Admiral, I want to I want to go a little bit further with that. Let's say

Russia does become much closer with Turkey. What's the potential consequence of that in the worst case scenario from your vantage point, Yeah, I think worst case, and it's probably approaching a ten to possibility, would be Turkey leaving the NATO Alliance. Again, I don't predict that. Let's say it's an they stay in. But I'm shocked I'm saying these words publicly. It's very concerning that we are at this past.

At the end of the day, I think the geopolitical balance will tip in favor of Turkey remaining in the Alliance because of the economics, Russia really doesn't have that much to offer Turkey. UM. I am hopeful that President Urdwan will realize that in the time to come in the geopolitics will outweigh the emotion of the moment. Admiral just in about a minute. Why would it be bad at Turkey LEFTNATO? UH? First of all, their capability they have the second largest army in the Alliance after the

United States UH. Secondly, their geopolitical position they sit right on the border with the most troubled region. And thirdly the symbology. We've never had a nation leave NATO. To have a big, important one like Turkey be the first would be disastrous for the Alliance. Admiral James Taffritis, thank you so much for being with me. I wish we had another hour to hear your your thoughts, because you come with such a rich perspective of what's going on

both internationally as well as domestically. Admiral James Tefriti is Bloomberg Opinion calumnist, retired U S. Navy Admiral and former military commando of NATO. He also is the author of the recent book See Power, The History and Geopolitics of the World's Oceans, shutting light on a really important point, which is the strategic importance of oceans and how that

could be changing. Well, semiconductor shares have been really taking a blow on the head again and again in the past few sessions, and we can see that again today in video shares leading the way down nearly two declines following nearly five percent decline on Friday. The question is why and is it justified? Is this just a bitcoin freak out or is this something deeper? And I'm so happy that we have David Garretty here with us. He's chief executive of g v A Research based in Brooke. Actually, no,

he moved. He moved to Manhattan and he is here in our eleven three oh studios UH in New York City right now. David, what do you think is the significance of the recent declines that we've seen in the semin conductor companies. Well, I think when you look at the global economy and you look at the important sectors of a technology, is certainly become more important as a

sector over time. Much as people have talked about the decrease or decline in copper prices since early June by about as being indicative of an industrial economy slowdown, we take the view that when you look at semiconductors, there's a technology sector related slowdown which certainly is being affected by the deceleration and the economy in China because of the expected impact around some of these tariffs that we've

been seeing. And so from that standpoint, um, you know, we tend to look at semiconductors as being an economically sensitive commodity category, albeit of a highly finished kind. So are you are you saying that the weakness that we've seen of late suggests or points to either a slowdown in tech consumption broadly or you know, specifically a slowdown

in the broader Chinese economy. We would see as being a slowdown clearly of tech consumption and would argue that perhaps in this case, this is a slowdown in tech consumptions being more specifically perhaps in the greater China markets or those markets that would be affected by tariffs. There may be some spillover depending upon how the tariffs have

unfolded other geographic areas outside of China. Because clearly what the current US administration has been doing has been basically going after any and all global trading partners with tariffs being imposed. All of this has created economic uncertainty. All this arguably is serving to suppress consumption or demand. Really interesting and sort of raises a lot of questions about the smartphone supercycle as well as car production, I mean,

all the things that chips are in. Really it raises some questions for and definitely as an area to watch. But since we're in China, let's talk about Google going to China. They made it decision in two thousand and ten not to have their search engine in that country because of some of the sanctions and the things that they would have to follow, the protocol they'd have to follow with censorship. Now they're rethinking that decision. What gives

what a difference? Eight years makes? What a difference that the rise of Baidu and other sort of China national tech champions has had upon Google And the fact that there seems to have been the decision made internally with Google that while the mantra might have been starting off to do no evil, well, everything has a price. And the fact is, at the end of the day, Google's business model is based upon tracking users and so gathering data.

And when it comes to looking at uh state sponsored surveillance of populations, you know, Google is essentially saying, well, chucks, this is something that we're doing in effect for ourselves already. So you know, to the extent that perhaps this is something that might be applicable in the case of meeting the demands of a client such as the Chinese eight um, it may not necessarily be all that wide a gap

to bridge. In other words, they're okay with certain censorships that they weren't okay with in two thousand and ten because the business opportunity is too great for them to ignore. There is that, and there's also the fact that Google says, we're already in a position to be able to track

individuals online activities and behaviors. And if what the client wants to do is to, you know, put some filters on this client being the Chinese cover client being the Chinese government in this case, because there's significant Chinese ownership, Chinese government ownership in the Chinese Internet, and from the standpoint that the client wishes to put these filters in place, well, you know who's Google to say no. I mean, certainly this falls in part and parcel in some respects with

kind of the debate that's been going on within social media is that you know what really constitutes speech and you know, should we be in the business of arbitrating what speech is or is not to be so talking

about tracking clients. We were talking when you came in today about Netflix and how they're sort of this conundrum facing a number of social media companies and others in the tech world, including Netflix, of how much to crack down on fuzzy numbers about users and subscribers versus how much to monetize, Uh, you know what you have and Netflix, you were saying, has a lot of subscribers who share their passwords with other people, meaning that if Netflix were

to crack down, they could get a lot more revenues. So why wouldn't they You lay at the issue right, I mean, the estimates are that you know, Netflix has lost revenue from account sharing is something in the order of about five million dollars a year. So this for a company like Netflix, given their losses, you know, it

could be a substantial benefit from financial performance perspective. Looking at this problem from a demographic perspective, we see that users who are baby boomers in terms of that demographic cohort, according to recent surveys, you might share thirteen of them might share account information. But when you get to younger demographics, say under twenty one, that number actually goes with up

to forty two. The problem is is that as the baby boomers age out, you're left with a user base who has an expectation that content is going to be free. The question here is this might represent something of a threat in terms of the business models of these companies unless they can do something to promote better consumer behavior around paying for the content that's being consumed. So what's the argument on the other side for why Netflix would want to reduce their numbers in the short term in

order to do what get more advertising? When debate have that, Yeah, no, I mean the issue is if Netflix wishes to maintain a model that does not necessarily rely upon advertising, then you need to have in place a far more stringent regime, if you will, from the standpoint of making sure that you know account information and is not being shared, and that you're actually being able to realize the revenue per user uh that you should be doing out of the

subscription model. And that's where um and we have literally like twenty seconds left, but we were talking earlier about help blockchain is sort of going to play a role eventually in this if they can tract better. Yeah, but there will be an available use of apply private blockchains to do a better job in terms of tying consumers and content consumption. So from the standpoint of sharing, uh, look for decentralized technology to be used to try to

address this problem. David Garrity always a pleasure. Thank you so much for coming in today. Thank you. David Garritty is a chief executive of g v A Research talking all things tech. Also, I'll be us move forward to Damien sass Our, fixed income strategist with Bloomberg Intelligence. He brings us intelligence as always on the developing world, with decades of experience in this area. Damien, it is all about Venezuela this morning. What are they doing to valuation

in the Bolivar? What's the purpose? I mean, are they basically just trying to uh absolutely remove this instrument from being relevant any way, shape or form. Yes, they are. I mean this conjures images of the Black Friday that kind of led to the rise of Hugo chabas Um. It's when Camping's the former president, value the boulevard by something on the order of and there was riding in the streets, and there was bloodshed and and here we are.

But look, I mean what's really interesting is over the weekend we saw MAURICEO McCree, the President of Argentina, together with Chili, Paraguay and Columbia come out and say that they might actually be taking um Maduro to the I c C, to the Hague UM. And I think that's kind of interesting because it's really the first evidence we're seeing that it's not a unilateral US you know, uh, focused measure to kind of get you know, Venezuela to buckle and the Madure regime to buckle. It's really now

brought extending beyond just the US into Latin America. And that's the first evidence of it. And just to be clear, what they were saying is that the Madure administration has committed crimes against humanity and they're trying to get the Hague to come in and rule on that. What would that do to the Madure administration? Would that potentially cause some sort of ignite, some sort of regime change or is it sort of a cosmetic you know, we all

hate you now, right? So the whispers there that Maduro's in power because the military protects him and because the generals and party. I mean, you know, part of his regime at the top lieutenants, top generals, they're all kind of you know, they've got his back, so to speak. And you know, by you know, if you take in conjunction evaluation of the Bolivar last week, the removal of some of the fuel subsidies, and some of the other

measures that they're taking. I linking their currency to the petro, which is a cryptocurrency that's linked to Venezuela crude oil exports that has been entirely discredited. Yes, yes, absolutely absolutely, and the fact that it's now the link went on what six point one billion dollars of bonds with US dollar credits. I mean, it all kind of paints are really a really kind of unnerving picture, one that kind of you know, I think they're trying to get you know,

it shows that they're very vulnerable. Venezuela is very vulnerable and um and they've got some real issues ahead of them, and hopefully the i c C can iron this out and sort of add some pressure and get and get a regime change. One thing that I find interesting both about what we're seeing in Venezuela as well as Turkey is where the international help is coming from. I mean, Turkey obviously has seen a dramatic devaluation of their currency

of the lira, which is continuing today. It's losing value against the dollar. Um interesting that Russia and China have emerged as lenders to both of these nations at some point or other. And I'm wondering, I don't know if China has actually stepped at this point to Turkey, but certainly China's been a big lender to Venezuela. What is this sort of I don't know, demonstrating as far as a sea change, a shift in China and Turkey and

Russia lending to developing market. Yeah, you're going down a path that a lot of people are not whispering behind closed doors. The fact that, you know, the US dollar strength has always been sort of the acts that kind of you know, slits the throat, so to speak, of

emerging market assets and so diversifying your currency exposure. You know, we all talk about the broad trade weighted real US dollar, which is basically a basket of currencies and how they perform a relative to the dollar, and how that's done.

And I think what we're seeing here is you know, China and Russia trying to step in and be that lender of last resort to some of these, uh, some of these economies that really need assistance, you know, and and that that whose currencies have really declined and the valued relative to the dollar. Whether or not um you know, that's acceptable to the countries themselves and they're populous, whether or not, you know, that doesn't force us to now put China and Russia in the same bucket as them,

which obviously we started to do. Right We have sanctions against Russia, we are putting tariffs against China, so maybe they feel, you know, what, what more do we have

to lose? But I think in China's case, this is really quite interest thing because trying has been lending to you know, emerging economies for for some time now, and you know, maybe they're kind of trying to get the you know, the renminbi out there and into the reserves of a lot of these countries and that might you know, kind of save them in the long run and allowed them to issue more debt to reach their own GDP growth targets, which are being scaled back as we speak.

So we'll see how it all kind of shakes loose. I think it's just you know, quite interesting. You know, if you look at just what happened over the weekend, you look at Venezuela, you look at Turkey, I mean, um, you know, and you look at the squeeze which is now turned into a dollars shortage. It's just going to be really painful for a lot of creditors. Damian Sasa are always wonderful to hear from you. Damian Sasso is fixing up strategist focusing on developing markets for Bloomberg Intelligence.

Certainly an important thing to watch. Where are some of these developing markets that are certain they're currently in a crisis situation where they getting their money. This is something we will continue to watch. The plunge in bitcoin this year has been precipitous. It's hard to overstate it. It's sort of the year at more than thirteen thousand dollars per bitcoin now trading six thousand, four hundred and forty

six dollars. The question is what does this due to investments in blockchain, which has been traditionally thought of as the mainstay and sort of the value behind this asset. Joining us now are really happy to say, is Ron Quaranta, chairman of the Wall Street Blockchain Alliance, and Ron, I'm wondering, do you watch the price action in bitcoin and ether which is actually plunged more we do, and thanks for having me, Lisa, It's good to see you again. UM.

Really focusing on the price action that we see. We have a Cryptoasset to working Group and we have this conversation fairly regularly within the wus B a UM. We try to separate what's the speculative fervor around some of the price action that we're seeing. In any particular day, you see ten to price moves UM. Certainly from the peaks we're seeing, we've seen quite a bit of decline in prices. UM. We suspect that's a bit of froth coming out of the market. There are some fundamental technical

things that we look at as well. So for example, some of those I c o s that were funded with ether, as they become more cash trapped and they unload that Ether, that clearly puts downward pressure on prices, but none of that changes the dynamic of what we're seeing at the evolution of leveraging blockchain technology across global financial markets. UH and things like supply chain for example. Alright, so you're still seeing investments made by big Wall Street

firms and beyond in blockchain. There's no sort of knock on effective from this, Yeah, I mean, I think the knock on effect really is indicative of the challenges that the industry is having involving evolving given institutional interests. So for example, I think there's JP Morgan and Bank of America recently invested, sorry Goldman is actually invested in a company called a sony Um. I think it was reported by Bloombergner was really focusing on building the nancial markets,

infrastructure and tools associated with engaging cryptocurrencies and crypto assets. Well, I guess that one. Uh right now, I'm looking at in Videos shares there down one and a half percent, down nearly five percent on Friday. Uh. And in Video reported earnings, the big question mark was that they said that their sales were down when it came to people who are looking to mine cryptocurrencies, and that have been a big driver of certain sales in a small segment,

and that was weighed down. And I guess I'm trying to understand, especially at a time when blockchain investments haven't borne fruit for a lot of places the way they've been looking for. Um, do you view this as sort of the decline of of seeing blockchain is sort of the holy grail? Or do you think that this is just sort of a right sizing of expectations. I think it's more of the right sizing of expectations. I don't both from the blockchain as a technology solution perspective as

well as cryptocurrency hype overblown expectations by far. When you look at the innvideo example, the economics of mining don't make sense below a certain price point, and when you look at forty fifty sixty print drops in things like bitcoin, it becomes a challenge to sell those ships. When bitcoin was approaching twenty people couldn't get those ships fast enough. So again, in our mind, this is the right sizing

of the expectations across the technology landscape. It's the right sizing of the expectations from almost an investment landscape perspective looking at cryptocurrencies, and that ultimately is good for the evolution of the space. What's the mood like among providers of blockchain technology right now? Yeah, it's a lot of the mood in the conversations that we have is biding time and patients to develop these ecosystems. There's a lot of pressure around why is in blockchain delivering on some

of these promised solutions? Why aren't cryptocurrencies achieving the price points that everyone thought they would and the providers who are doing the day to day work really putting together solutions, and it's big and small firms um really are working to ex san that ecosystem and make it makes sense over time, and so they're fighting the idea of how do we challenge these expectations of blockchainsers of all problems immediately versus it's going to take time to evolve the space.

What is the ecosystem that's necessary for blockchain? Yeah, there are a couple of things that are really important, and I'll use something like supply chain as an example, and recently um IBM, I think they have now something over ninety firms involved in their supply chain blockchain solution. It's acceptance in education. We always go back to the education comment, which is, how do you get firms that would participate

to understand the dynamics of what blockchain accomplishes for them? Wow, what the efficiencies are associated with it, and then it's the challenge of interoperability and integration. How do you take a blockchain solution and integrated into how they do what they do currently, And that's a lot of work. That's

a lot of work from the provider perspective. Look at an IBM for example, it's a lot of work for those new firms that would want to leverage blockchain technology, and the idea or just to to move beyond using blockchain is sort of like a word of jargon where people like, you know, if you've got a problem, you've got a problem with your son blockchain UM. But that basically the idea is being able to track either products, payments, whatever else in real time and it is sort of

an unalterable format from place to place. Is that am I characterizing this correct? Yeah? Absolutely so. It's really the ability to have that immutable audit trail of data that is perpetually tied to specific solutions again like supply chain UM they're doing likewise in food, they're certainly looking at things in financial markets to track things again like syndicated loans and other instruments UM. And also the security associated with that data and the ability to disintermediate the costs

associated with trusts between parties. There's a lot of cost savings that happens there. Run Quaranta. Thank you so much for being here. A really pertinent topic right now round Coronta, chairman of the Wall Street Blockchain Alliance. Bitcoin is certainly having quite a swoon, more than half its value being raised so far this year, and in video is set to unroll some products in the near future. Thanks for

listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.