DC Doesn't Have the Collective Will or IQ To Take on Big Tech, Galloway says

to have you with us on the program. It is some some soothing words from President She. Can it actually materialize into real policy. It's great to be here. Thank you. Um. I think that these words are necessary at this junction to the cool things down on me. At this point, I eat China US has really trade frictions, not yet ignited a trade war. What President She's also trying to acknowledge is that given that China has benefited so much from globalization in the last few decades, it is actually

time to give back to the global system. So I think that is really good news in the pubic positive signal. Looking at our reporting over the last twenty four hours from the team at Bloomberg News, it seems if there's a a point of tension, Professor, it's over the made in China twenties five goals and the subsidizing of those industries that China would like to excel at. Is that going to be a red line for the Chinese in

these negotiations when they do officially start. I think that these are kind of trigger points that have attracted a lot of attention in China and has kind of, um to some extent, irritated the Chinese government officials. So these

will definitely be points of of tension. Um. I think what is clear is that despite the fact that President she As announced to the world these kind of soothing words, um, China is ready ready to stand, uh, you know, to confront if necessary, rising trade tension, even a trade war. I think that they are totally prepared for a contingent strategy. Professor.

Is there a an understanding on the Chinese side of what the minimum condition of successes for the United States, what the United States would like, what would actually equal success.

I think the perspective in China is that if the US, particular President Trump's administration is ready to back off in some of these very strong words that have been put forth, then China welcomes it, and that China would um prefer to have talks and negotiations UM, the outcome of which would depend, but I think that the preference is for UH there you know, the US to UH to UH to use the tension and then try to to follow suit.

Professor good morning, Tom Keene in New York. When I when I look at the Chinese culture here in the tapestry that they bring to these debates, it is a timeline that is longer than any American timeline known. Is the basic theme of the Chinese to wait all this out um exactly. Very interesting that I think that the Chinese perspective is that they are ready and prepared to um to to deal with the rising trade engine, even trade war, and they believe that it's a war of endurance.

And yet yeah, absolutely right, Tom. There's part of the studies cultural, but also the fact that the government has a horizon now with the term limit cancelations of indefinite horizons, that they think that they will be able to wear this out better than Americans. I mean, part of this is their perspective of our president. They look do they look at the president is a one off cultural event. Do they look at the president? Is a change, is a a moment in American history where this will be

consistently the American voice? Or is it? Is it something more substantial than that. Well, I think this is actually precisely the problem of this every four or eight years and change of president, because they're trying to actually think that they want to build a constructive and enduring good relationship to the US. But that's not going to work if you know, every four eight years there comes a president that is willing to completely destroy what they have constructed.

So there is no consistency or constancy of that relationship. And that's why it's very difficult for China US relations despite the fact that it is the most central form relations going forward. Sometimes, Professor, we take quite a simplistic view of things and frame this tension through just one data point, the trade deficit between the United States and China. What is the prospect of actually a radicain in that

trade deficit anytime soon? Professor um So, I think that first of all, there is um consue on both sides about the nature of trade deficits. Uh, this confusion little bit fatal because so long as the Chinese people produce more than it's able to consume, which I can see in the foreseeable future, it is always going to run a trade surplus. And similarly for the US. Of the Americans don't raise their saving rate, it's always going to

raise the trade deficits. Though it's not just a bilateral trade agreement kind of issue between the China and the US. And we have also seen that Chinese you know, R and B or the Chinese guardency has appreciated a substantially in the last ten years, and the trade deficits has reduced also substantially. UM and the Chinese have sent you know, multiple high level officials uh to uh you know, to to kind of ease the trade tension talk, and this

has not been enough. So now the Chinese people have been kind of set up and actually the Chinese businesses are putting putting pressure on the government to engage. For our listeners, just turning again, the mood music really improving overnight with the speech from the President of China. Futures up by twenty eight points on the SMP five positive, about two seventy six on the DOW. As we approach the market open about two hours and twenty three minutes away.

Professor keep saying the mood music has improved because the story, the sentiment around this speech gave a sort of a considiatory tone from the President of China. But when I look for real new policy or a suggestion that we would get new policy, I see a president reiterating things he said before. Is there anything new in this? Well, I think you're absolutely right. I mean there is rhetoric.

When the Chinese government official puts together these very formal, you know, a kind of speeches and then those actions, I think that the spirit for a greater openness is certainly true. I think they're kind of commitment to open China even more by importing more and giving back to the global trading system and especially in terms of financial services is certainly there. But the question is over what time horizon tenders be reached. Is it really going to

be executed? Um, you know, in the time horizon that is relevant? I think that is a very big question. Marker, Preson jin thank you so much. Jin Uh with the London School of Economics, Daniel Tannembam has without question the

oddest job at Price Waterhouse Cooper's b WC. And that he's in the financial crimes unit with a huge history of things like sanctions, but yet yet bringing to get over to homeland security and and such, I just got to go to an open question, Daniel Tannembam, and that is what was your response when you saw a private attorney have an FBI rate his home, his office, and I believe where he was staying at the Loews Regency hotel two blocks away from our office. How did you

respond when you saw those headlines yesterday? And it's a fairly significant move by the Southern District of New York by the FBI to move further on an attorney for obviously a facially high profile individual. Philip Bump as a wonderful explainer in the Post today where there was literally a team within the team of the Federal Bureau of Investigation to protect the client attorney privilege. Have you ever seen this in your career, not in this high profile

of an instance. I mean, the barrier to entry to obtain a warrant in a situation like this is significant. I think people need to bear that in mind, given the fact that a federal judge would have needed to approve the warrant to allow this search to happen. So this wasn't just kind of a decision made by the Special Council or even the U. S. Attorney for the Southern District. There was a lot more that went into it, including Mr Rosenstein at Corday. Let's move on to your expertise.

What is step two or step three or step eight of sanctions? I mean, I guess we all get brea cheese is a sanction item. Where do we go next on sanctions if we sanction, well, if we're looking at Russia, and I think the move that the Trump administration made on Friday was by far the most significant since the Russia sanctions came out. The Trump administration finally made good on the congressionally requested mandate to designate oligarchs and businesses

close to president putin January thirty one. Around eleven fifty seven pm. There was the first oligarch list that came out, which was really nothing but the Fortune list of the top one hundred wealthiest people in Russia. What came out on Friday was significant. These are businessmen who actually are part of the global economy, who have dealings with the United States, that have global businesses. This was a significant designation.

What's fascinating about this and it it strikes me as incredible when you have such a huge divorce between narratives and reality. The reality is this administration has not actually gone aboff and beyond what the previous administration did on Russia. This is really quite strong stuff from this administration against Russia.

And it's not even just this. If you take the action for the amount of diplomats expelled, it was greater than any European country, including the UK, in terms of how many diplomats from the Russian government were forced out. So they've actually taken some fairly significant steps against Russia. You don't hear much narrative outside of the actions and the press releases coming out of Treasury, however, so let's

talk about what this ultimately means. They've sanctioned twenty four individuals, fourteen companies, How does this actually play out, and what are the kind of hotspots you're looking at. So the simple rationale of what this means is all of these individuals and entities and their assets in the United States are considered blocked, so they cannot access them, move them, do anything with them. It also means that US businesses um and US persons cannot do this with these individuals

and entities. Where this gets more complicated and where I'm advising clients very specifically at the moment, is this is not an exhaustive list. So if you look at these oligarchs and you look at the list of entities designated, this is not an an exhaustive list of their holdings. Anything that these individuals own fifty cent or more is also considered a block entity, meaning there's prohibitions and dealings

with them. So it's a bit of a go fish exercise because you have to do the due diligence understand beneficial owners of your clients to know who actually owns these businesses in Russia and is it one of these designated oligarchs. So for a lot of companies outside the United States of America, now I would assume, and you can correct me if I'm wrong, the bias will be just to stop doing business with them full stop. I mean you can't, it's Russia. It's not that simple to

just wind down. But the reason I asked down is because for many multinationals outside of the the United States, they'll be wondering whether these sanctions apply to them and whether if they continue doing business with them, ultimately, what does

it mean for doing business with the United States. So that is of the questions, and the US has had for some time what are called secondary sanctions, and that basically is forcing foreign businesses with otherwise no US presence to choose between doing business with the target of the U. S Government or the United States. And I think that is a point we may get to. It's also pretty clear that this is just the first round of these type of designations. There's likely going to be more to

come within this. Do the Russians fear sanctions or do they just sort of yeah, yeah, yeah, whatever. The sentiment in Russia's I understand it from my colleagues is this is having an impact. Obviously, you look at what's happened to the ruble, You look at what's happened to some of the listed companies, some of which have lost in value over the last few days, and the sixteen billion dollars in personal wealth lost by some of the oligarchs. This is having some bite to it. So this will

have an impact. What it means in terms of the Russian response, both either positively in trying to wind back some of the behavior that drove the package or offensively against the United States, that's still unclear. Just take a company like russol Tom owned by like Dea Pasco. They're responsible for seven percent of global aluminium production. I mean, it's huge. So you've now got this big immediate shortage

for aluminium supply for so many people. And if actually if you look at the commodity market just briefly alumin you're flipping into backwardation because the front end has just shifted aggressively high. So there's some really interesting market bike points that are taking place here, Dan, I think moving forward, this isn't just about Russian sanctions off the back of what happened in the election here in the United States, and there's also a conversation around Syria, but it's it's

also crimea as well. This is like a huge parge of issues that drove the designation to US just briefly about how the Syria issue could actually escalate things even further if there is continued pastoring by the Russian government in terms of what they're calling fake news in the attack that the Asside regime had placed upon its people over the last few weeks. I think that does further exacerbated. I don't need to rub the storage is broken, it's been out, but so Cana in a ferraud kozak out

of Istan will really right it up. And it goes right to the complexities uh Dan Tannebon that you guys have to work with. From Damascus, if you go two hundred and sixty miles straight north almost a Turkey, you're running into the old hate province, going back to like World War One and Lawrence of Arabia and all that. And there is a town called Afron, Syria which the Turks have taken over and they're not going to give

it back even though Russia wants it. When you see geo politics like that, how does that fold into the financial threats and world of Russia. It all feeds into trying to understand where and which you have interested parties that may be prohibited from dealing with certain territories. So

where there's heightened Russian interest, these are provinces. These are regions that businesses may want to avoid to ensure that they don't get ensnared in any further sanctions issues themselves, that they may not find themsel elves as the target of a potential investigation. So really, I mean you need to understand where you're doing business and where its sanctioned parties or at least neighboring territories to sanction countries are in operation to try and manage that risk. And John

the headline here from Mr Iurdwan. When the time comes, we will return offering to its people, but we will decide on its timing. And right, i'm que speaking of our contention Turkish laa out to new weakness. Dollar Lira record high, a new record high in dollar era. Not a substantial move for the dollar against the Turkish leader in the grand scheme of things, of just six tents of one percent, but it's certainly a continuing bleed for that emerging market currency. In circuits home, this is the

interview of the day on Syria. Stephen Cookers of the Council and Foreign Relations is he has done long and hard thinking about Syria, about French Syria and the greater in Near Middle East. Stephen Cooks thrilled that you're with us today. Let me begin with an open question, what will you listen for from President Trump and his General's Well, First of all, thanks for having me on and I think Uh, it's I think the President has been clear in signaling that there is an American military strike uh

in the office. Um, he has said over again that those who are responsible for this terrible chemical strikeer going to pay a price. So now the question is what does the Pentagon planning look like. Uh. We did fire fifty nine cruise missiles at Syria not long after the President took office. Uh, so it seems that they're going to have to do something much larger because those fifty nine cruising hadn't didn't do the job that it was supposed to do, which was to deter the offsets from

music about the weapons. Again, your book False Dawn is out. What is the false dawn right now for the Middle East? What is the false dawn for the artificial borders of the Mandate of nineteen two big games that became Syria. Well, the false dawn is this terrible, horrible civil war that has become a war tex of violence that has destabilized both the Levant as well as parts of Europe. Uh, and the the outflow of refugees from Syria has had a tremendous impact on the politics in Europe. So it

is really tast this shadow or this false dawn. When at the at the outset in March of two thousand eleven, when Syrians rose up against the straw offset and the idea was that he would fall in democracy would follow. We have had actually tremendous amount of blood set and signit the can political change um not just in the greater Middle East, but stretching as far as Europe. Help us with the response of the allies of Mr Asad, Mike Allen and Jonathan Swan over to actually, as I

do think, do a nice job folks of partitioning. If we do a they do be. If we do see they do d etcetera, etcetera. Does a pro like you, Stephen Cook worry about the responses of these allies to our surgical force. Yeah, that is in part an important part of thinking about what our strategy should be in Syria. It's not only how to respond to the actual event, but then subsequently how the and his allies in turn

going to respond. And I think we are in a process, we are testing each other, and we're at a rather dangerous moment because the Russians have laid the ground work for UH indicate saying that this is some type of false black operation, an excuse to the United States UH and its allies to take action against Syria, and we

are inching ever closer to a real complication. Let me let me give credit to David Lawler over to Access It wrote this smart article of the three Thrust Stephen Cook to quote, if one idea hitting targets like joint Russian Iranian bases or command and control centers, is that even feasible? Now that's a real escalation from what we saw with the previous tomahawk attack, isn't it. It absolutely is an escalation. And there is a school of thought in Washington that, um, you need to take this type

of action. The Russians UH are more capable than they have been in the past, but not as capable. Clearly don't match the United States, so that we could really send a message to them that they need to reig in Charlotte and it would give us significant leverage in any negotiation process. And I think that that I think that's the position that makes sense. But we need to keep in mind the tremendous risks associated with the first

day and the job. I can't imagine Stephen Cook your first day in the job for Richard has it comes on foreign relations. Imagine Mr Bolton, his national security advisor. Does he change the calculus of these choices or is he someone that's going to be a bystander to Pentagon choice. I think that that baster Bolton Long has a history of being hawkish on both the Russians and Uranians. So I uh supposed that he's deeply involved in these discussions

and evaluating what types of military plans. I would imagine that he is leaning more heavily towards sending a stronger message to the Russian recognizing that our capabilities are now remained greater than those are the Russians. Stephen Cook consolant foreign relations. In the time we've got left with you, I want to go back to your core abilities. And this goes to the Crown Prince of Saudi Arabia with Mr McCraw, and we look over at the old French Syria.

As I mentioned earlier, Folks, Damaskus two hundred and sixty miles straight north to Turkey is a town in Syria. The Turks have taken over Alfred. They said, no, we're not going to give it back. Help us with the minority calculus of Western Syria buttter stuff against the Levan and the Mediterranean. What does that calculus look like right now for these leaders and particularly soon He dominated Saudi Arabia.

This is the Syria problem has been UH forefront for the Saudias, primarily because Siria has had a long standing strategic relationship with Iran, and that has put Syria really in play. And the way in which other powers in the region have sought to use soon He's with and Syria pit them against the minority, but in power UH minority. The way in which the courage have been used by outside powers who are trying to advance their own interests.

That is why we see this fragmentation. There is this central conflict that runs through the Middle East right now, and that's between Iran and Saudi Arabia and being played out in places like Syria, in Yemen, less so in Iraq, also in Lebanon. So Um, I'm afraid even if the United States take some sort of muscular action in UH the region against the Syrians, this type of proxy conflict is going to continue over a period of time because Shoudis are not being killed and Iranians are not being

killed in large numbers. They're using others in their own conflict against each other. Then within French Syria, this oddity of Mr Assad and his Syria alloyed Syria and next door Lebanon. I mean, the adjacence ease here are extraordinary complex, aren't they They are indeed, Uh, And it has been a great mystery to many people why the violence in Syria hasn't spilled over in a big way into Lebanon. Part of that has part of it has to do with the fact that through much of this conflict, the

Lebanese have not had a government. Uh. They do actually have a government now, but is dominated by his Blah, which is keeping a lid on my smid. But you mentioned French Syria. What we're seeing is a legacy of French colonial policy in this area that had sought to build up minorities at the extent of the Sunni community, that sought that it was their right to be in control in UH Syria and Lebanon. Um. As a results, you have an empowered alle white community in in Syria.

The drews were built up specifically on the Marinite community within Lebanon had a special relationship with friends, and this has created these kind of ethnic and religious differences that have plagued this part of the Middle East for a very very long time. Stephen Cook, this has been fabulous a clinic of your great abilities. Mr Cook is at

the console on foreign relations. I really can't say enough about his work and I we're trying to bring you, folks, within our mix of economics, finance and investment, this important international relations at these important times, to provide clarity for are you now on the Facebook of your grandparents, your parents, you and your children? Is Scott Galloway of New York University. Many of you know his book The Four The Hidden DNA of Amazon, Apple, Facebook, and Google was immediately my

Book of the Year last year. I can't wait for the paperback with the updates. Scott Galloway, page one eleven. In your brilliant chapter on Facebook, you talk about the difference of posts and interactions. How will these politicians talk to Mark Zuckerberg about his thing that makes us interacts? Good to be with you, Tom, and thanks to the

kind words. It's going to be difficult, just logistically because I believe it's what's called an open session, and each senator only has four minutes, so they're going to have time to sort of ask a question, and they're gonna have to get angry pretty fast, which I think a lot of them want to do. But it's going to be difficult for them to really get any sort of what i'd call engagement or conversation going unless one senator

more than one yield to someone else. So it's going to be a series of quick hits, is what we're likely and store for. Within this is the history that you've studied of technology. We had an uproar about radio, We had an uproar about TV. Bob Moon mentions the Paola uproar of the fifties. Now we've got an uproar about Facebook. Is that the same professor is our earlier uproars or is this time different? That's the right analogy time, and that is Facebook at its base case isn't really

doing anything that any media company hasn't done before. Media companies trying to gather information on their viewers and their advertisers and then use it to make the programming and the advertising and the targeting more deft. The issue is nobody has ever been this good at it, and the other issue is that it doesn't appear the firm has taken really any steps to protect against bad actors. The analogy of a bank that leaves its doors and its

vaults open and then screams, we've been robbed. And you have these old economy firms, media companies policing what is the most technologically literate firm or one of them in history. So there's just a general lack of regard for the commonwealth that has got everyone angry here, Scott Galloway, you know, in in reading your book The Four, the Hidden DNA of Amazon, Apple, Facebook, and Google, I am reminded of the Big Four and that takes us to another century.

The Big Four being the creators of the Central Pacific Railroad, Leland Stanford, Collis Huntington's, Mark Hopkins and Charles Crocker. They were all individuals and their empires and their legacy depended on individuals. Is that going to be the same legacy for these for companies. Yeah, I'm just sitting here Pim and thinking I'd love to see an intellectual dance off between Pim Fox and Tom King on economic history. That

would be fun to watch. But yeah, these these guys look we're out of my view a similar part of the in the natural and a healthy part of the economic cycle, where a few firms have aggregated so much power that it requires external intervention and it doesn't necessarily mean they've done anything wrong. That doesn't mean they're bad people. It just means the markets need to be oxygenated. PIM.

If we did that for Scott Galloway into economic history, we could do that at a paint store up at Electington Avenue, when we could watch some paint dry while we talk PIM pick it up. Well, I don't know about that. You can find the big the big paint store, the black paint store down in the near Soho in the East village. We can throw some paint and it will stick and it is exciting to watch because Scott, you know, to your point there was a popular lit

backlash against the business tactics of the Big four. Are we going to see a popular backlash against these four companies? And should we be mindful of the reaction that, once let loose, cannot be controlled. You know, I don't think so, Pam. I think consumers talk a big game about supply chain ethics and then want that little black dress, and how do you people? A lot of people are upset, A lot of consumers are upset about the scepter fuge of

our democracy, and where do they express their outrage? They only go to Facebook for Instagram. So this revolution will not be led by consumer. Scott Gello, you have been great. You're almost professor of arrogance at n y U is just gonna pound the arrogance out of Silicon Valley. Maybe not Apple, maybe there are a separate beast, but the in Bezos as well. But the common theme of so many of these unicorns and want to be unicorns has

been business and financial arrogance. Does this event of Mr Zuckerberg today begin the pound that arrogance out of him? You know, I'd like to thank so. I'm a bit cynical. I don't think anything is gonna happen. Anything's gonna come out of d C here. DC does not have the collective will or i Q to take on big tech. If the White House takes on big Tech, it's Mayweather McGregor part two, and that is the redhead gets the crap kicked out of him. The only progress here against

big tech is happening in Europe. When's your paperback come out? Thanks for asking. It comes out in September. Tom September, perfect time. He's just so, He's so. Let me? Could I be as cynical as Scott Galloway? John Tucker Scott Galloway with a paperback out in September, perfect for classrooms nationwide. I was hoping for summer reading at the beach. At the beach, it could be the way, Scott Galloway. The book is the Four the hidden DNA of Amazon, Apple, Facebook,

and Google. You will agree and disagree with every single page of it. It is so contentious about these four giant parts of our life. Him, I don't know what we're gonna hear today in the hill. That's the summer I get from all these interviews. Probably a lot of us. I'm sorry. What do you think? I'm sorry? And I won't do it again. I don't know. There it is the Fort, Scott Galloway. Thanks for listening to the Bloomberg

Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio,