Surveillance: Far From Denuclearization, Collins Says

Are the top stories overnight. Let's begin that the President walking out of his second summit with Kim john n after the two leaders could not agree on a deal to relieve North Korea of U S sanctions in exchange for giving up much of its nuclear weapons program. Here's the President of the United States. We had some options, and at this time we decided not to do any

of the options. And we'll see where that goes. But it was it was a very interesting two days, and I think actually it was a very productive two days. But sometimes you have to walk, and this was just one of those times. Sometimes you have to walk, and this was just one of those times. Joining us now from Hanno with Vietnam. It's bloom Bug's chief Washington correspondent, Kevin, Sir, Really, Kevin,

if it was productive, what exactly did we achieve? Well, I'm not sure that it was productive, and in fact, even the President himself at the press conference a couple of hours ago, said that he was disappointed that that these talks, which had been really trending rhetorically speaking, quite positively in the twenty four hours leading into this, but ultimately the day was cut short two hours worth. They

were supposed to have, like a joint signing agreement. There was speculation there was going to be a formal ending of the Korean War following the ceasefire of nine three. But Jonathan, this was not the deal at all or the day rather that President Trump was hoping to have. And currently as we speak, he's flying aboard Air Force one back state side. And we all know the storyline there with Michael, So Kevin, let's talk about how typically

these things play out. Typically, the outcome of summits like this a predetermined before the president even boards Air Force one at leaves the White House. This is a very different approach negotiations with foreign leaders, isn't it? It absolutely is. And and and even just in texting and emailing with analyst backstate side since the press conference, I mean, Jonathan,

there's an ability, there's there's the level of unpredictability. That I remember President Trump, then Candidate Trump would talk about on the campaign trail, but he wanted to be unpredictable, and we've seen that play out virtually in real time here in Hanoi. But but these analysts are criticizing that same approach because now there's no step forward in terms of the nuclearization, in terms of defining the nuclearization, or in terms of bringing the Russians and the Chinese to

the table to get folks to the nuclearize. Kevin, since I last spoke to you an hour and a half ago, I'm sure you've taken tea at the Metropole Hotel in Hanoi before you wander back to America. Vietnamese coffee, Vietnamese coffee. But you know there's a spin to this and all

that everybody he's adapting and adjusting. The fact is, it is stunning the difference in two tweets from the one this morning by the President finessing the moment versus what I saw nineteen hours ago, maybe twenty hours ago, of a happy, happy, shaking hands pat on the shaking hands thing. I mean, those images are stark. How will the president massage that message when he lands at Andrew's Air Force Base.

You know, it's it, that's that's the task ahead. I mean, there's this plant in North Korea, this nuclear plant called Young Young Young, which is a nuclear plant that that has really gotten a lot of attention for a nuclear development site. But the President in his press conference Tom also said that they displayed evidence of intelligence that there were other nuclearar sites in North Korea, and that caught the North Korean's, according to President Trump and Secretary Pompeo,

a bit off guard. And so now, uh, the thirty five year old dictator from North Korea, he's gonna stick around here in Hanoi for he's supposed to at least for another twenty four hours or so. Uh and presumably is going to be meeting with the Chinese president. She has already dispatched his foreign minister to meet with the North Koreans. Mind you, the Chinese presence here in Hannoy was you felt it? Uh? And And and to Jonathan's earlier point, the summit that I covered in Singapore had

a much different feel. I mean, what was difference between Singapore and Hannoi besides a hotel food? You know, I'll put it simple. I mean to use your lingo. They didn't rip up the script in Singapore, they stuck to the script. Here in Hanoi, they ripped up the script there was There wasn't even a script to rip up from. From the moment that Uh Kim Kim Jong un took that stepped off that sixty hour Chinese arranged train ride uh and arrived at the hotel and kicked out the

White House press pool. You could tell this was a much different feel. Kevin, thank you so much, Kevin SURREALI he will be in Hannoy for his important effort tonight five pm nationwide soundown with Kevin Surreally driving before now. Yeah, well, you know it's Thursday and we're cutting near to the real you'd a tough way. I don't have anything to plug. But anyways, let's just really in Hannoy and he will give you unique perspective that you will see off the

Washington studio. But nationwide, we've got a lot to talk about today. Let's bring in Chris Grassanti Show with Grossanti Capital Management CEO. There are some positives to the unpredictable nature of the President of the United States. You can get the Chinese to the table in a way that other people haven't been able to. Chris, there is the downside as well, as we mentioned previously. Typically these are predetermined summits. Before you get the outcome has already been decided.

This is some of the downside from other night, isn't it. Yeah? Thanks so, Jonathan forgive me for being a little bit cynical. But as far as the President's concerned, we're sitting here talking about North Korea instead of talking about Cohen, right, so his little bit of drama at the summit is

probably not so counterproductive as as we might think. Um, what I would say is China, as we we looked at the China trade dada this morning, when I talke about it's just a disaster, I mean it's really ugly. So but that that perversely maybe kind of good news because what that says is the Chinese need a trade deal. They needed badly. So for anyone that missed the data from overnight Chinese manufacturing, the p M I coming at

a forty nine point too. I was going to wait this letter and we'll revamp this at five things you need to know, And thank you Interact of Brokers for that support. Chris John Ferrell absolutely nailed the slope, the gradient of this p m I X words out of China. I mean, it was extraordinary. What you did? What you what do you? No? Can I just say there is a silver lining in this very ugly p m The slope is a generous ur It's like a black diamonds.

There is there is a there is a silver lining in this p m I. From overnight in China, the business activity expectation component was actually really positive for both the manufacturing p m I the non manufacturing p m I. The other piece of good news I have to say is that the input prices for this p m I as well is in positive territory. There was a concern that we'd have that twenty sixteen replay of exporting disinflation. But I've really got to look for this, Chris, You've

really got to look hard to find some positivity. So so my real question for the rest of this year, and I think this is where it starts. February you had a big Chinese holiday. It's really really difficult to get a clear read on the Chinese economy. We go into March, we're gonna get some clean data, probably from China, from the United States as well, and big question for this year, and I think it holds the key to asset classes for can stimulus out of China bite? When

does it bite? And how much support does it offer this economy because I'm not saying much of it right now, and I think you need a two barrel approach. You need the stimulus that has to work, and you need a trade resolution, at least a temporary one to get us through the summer. Until that is the value Man optimistic about financial markets because we have ripped through so far. Absolutely, I mean we have to be a lot more selective now.

There were some terrific bargains the last week of the year, but you know we're up almost fifteen per cent since then. One place that does still seem to have value our financial stocks. They haven't risen because rates have been benign. If rates, as we think, will start to ease higher again, you could get us some bids in the banks. I mean in Europe, I mean one of the other changes John quickly here that we've seen as German tenure yield is finally lifted up, I mean a little bit off

the mat in the last three days. Are you in Europe at all no, you know we we the opportunities in the United States is higher growth and less risk. Okay, Christmas, Chris, thank you so much. Morning, just extraordinary morning. This is a joy. This is what we like to do best. On surveillance. It may be on the markets. That may be on foreign exchange or bonds. It may be some fancy economists to define a definitive voice. Lisa Collins is extraordinary.

She's out of Oberlin and is pieced together in a shockingly short amount of time definitive knowledge on their hermit kingdom. You know the photo. I think I saw it in the Boston Globe a million years ago of Asia lit up this photo from the satellites, and there was North to create Korea dark and black. She owns with Victor Cha the granularity of the economy and the political system of North Korea. And we welcome Lisa Collins with the

Center for Strategic and International Studies. Lisa, if you could say to our audience the one thing about the stereotype of medieval North Korea, what do we most get wrong? Well, I think we get wrong that there are people inside the country who are trying to live their lives the best that they can there. You know, they are trying to UM use their own agency to create better lives and to create these markets that you've just talked about.

UM And despite the repression that's happening inside the country, which Kim Jongan has tried very hard to keep the people from doing, UM is creating these markets. That is, they're living on their own terms and they're trying to survive the best that they can do. They want to go across the d m Z or go north across the river Peter Hessler and Oracle Bones riding that river years ago. Do they want to go north or south and escape? Some of them do. Some of them have

tried multiple times to leave the country. They've either been captured and returned to the country and are being held in prison camps or in jail. UM and others are quite content to stay inside their country and try to profit from the markets, try to make again UM living for themselves and for their families outside of the reach of the government. Interpret forest. The outrage over, you know, the language is intense about the human rights violation of

Chairman Kim and the rest of it all. Is it legitimate of the human rights people done their homework and they are looking at outrageous conditions. Certainly. I mean, this has been going on for sixty seventy years. It wasn't just something that happened under Kim jonga, and it's been happening under his grandfather and his father. Um, they built these prison camps, He's pulled prison camps when the nation

was first founded. They are very much like the Russian gulags or the Soviet Union gulags, and some in some cases are probably worse. Um. There was a Special Commission of Inquiry that was formed by the United Nations in two thousand fourteen which did an extensive study on all of North Korea's human rights violations, came out with a great report at the end of two thousands, at the beginning of two thousand fourteen, and it basically lists all

of these horrendous things that have been happening. If you're just joining us today, without question, my interview of the day on North Korea, Lisa Collins with this a fellow Korea chair at the Center for Strategic and International Studies. I put out on Twitter her website at c s i S and it's just absolutely definitive. Okay, the president

with his work today, Lisa. The president yesterday with handshakes and that famous hand pad that he has with Chairman Kim, and the constant theme through it is the President believes there can be a tremendous capitalistic oppertu tunity in North Korea. Do you agree with the president or how would you modify his tone? Well, I think that there certainly is

opportunity in the long term in North Korea. As has been mentioned by many analysts, not just President Trump, but North Korea sits at a very opportune location in the middle of Northeast Asia, surrounded by some of the greatest

largest economies in all of Asia even the world. So if the country were to open up and were to um create a market economy, a regularized market economy, I mean, there could be tremendous opportunities, but that is only if there is radical political change to cut to the chase, and I did a per capita analysis of the communist countries of Asia. Can they become a Laos? I mean not can they become a Vietnam? But landlocked Laos is really struggling. Their goal is a medieval hermit kingdom, is

to get to Laos. There's Lisa Collins think they can get laos forgetting about Vietnam, not not under the current regime. UM, and Kim Jong Uan himself would have to make a radical change in his strategy of control over the people and the markets and the country itself. UM. Under a different leader, this may be possible, and over a very long period of time, it could potentially be possible, but it it might take decades. UM and the South Koreans would probably have to help in that. They would have

to invest a lot. The Chinese would probably want to invest more than they already do. UM and the other countries in the region, of course, would be involved in development as well, Lisa, have we determined that that is actually their goal. We we do know that Kim jongan is very anxious to develop his country, but on his terms, and he's very clearly stated that in all of his speeches and and his public statements UM going back for years.

I think we don't know. What we don't know is whether he is willing to open up in the terms that the United States and the rest of the Western world will like to see North Korea do, and that is to follow the model of Vietnam, or even that of China where there's slow reform, economic reform, and some political opening. Um. Of course, we you know, as Americans, we would like to see the entire Korean peninsula become free, democratic,

and market society. That is the ultimate goal eventually, but um, how that happens and whether it can happen under the current Crean leadership is is definitely a difficult question. At least, it's what degree does an existential threat validate the regime? It's a great help to validate their um the rationale for keeping control of their people. That's the ultimate reason. Which that's the question leads as to why the leader of North Korea would actually look for any kind of

peace deal. Well, so, I think the reason might be that if he really is, Kim Jong un is really serious about opening up the country, but he's not exactly sure how to do it and in what um, you know, what steps he needs to take to do that. First, he has to change the propaganda within the country. He has to change the mindsets of the people, um, who have been basically brainwashed over decades. So he has to convince them that there's no longer a threat from the

United States. And then he could probably UM engage in some opening diplomatic openings, people to people, more people to people exchanges, maybe again the market openings. But you know, changing the internal dynamics propaganda of the country is will be very difficult. Um. Changing the minds of the elites could be very difficult. And then also convincing UM others that he the threat from the United States is gone

is something that he probably faces a large challenge on. So, Lisa, from what I'm hearing from you and from the research that's been put in front of me from this morning from from your team, is that we are a long long way away from any kind of final, fully verifiable denuclearization deal. Yes, I think there are experts who estimate that it could take from ten to fifteen years to completely denucarized North Korea all of its sites, even if they're being helpful UM and engaged in the process of

dismantlement of vernicular weapons program. Of course, if they throw up roadblocks, walk out of talks, UM, you know, decide not to participate in in this process, then it could take much longer, if at all. UM. Yeah, so it's a very difficult situation. You imagine John and Ivy had the privilege of speaking to all sorts of Asia. Heavy wis just as one the giant Jonathan Spence of Yale University,

Lisa Collins, what's it like working with Victor's Chaw? I mean, what what is it like working with the dean of all of Korea? I mean Dr Chaw's extraordinary right, Yes, he is an extraordinary analyst. He is very very well versed in Korean affairs. So what gets him upset? What's getting you? You and him are sitting around, uh, you know, talking up a Korea. What is the topic that the two of you get most upset about with in the

mainstream media on North Korea? Well, I think what is upsetting to some degree as the lack of focus on human rights. And that's something that he does get him UM somewhat disturbed from time to time, and I think he tried to write about it in the run up to this summit. Is the lack of focus, the lack of attention that was being paid to human rights. And I think that's something that we hope that will continue to get attention um, despite what's going on on the

demaimalization front or the negotiations. So we should not forget that North Korea is still a prison state. It's a state that U has to survive by repressing its own people, and that there should be movement and openness discussion with North Korea about making progress on those fronts at the same time that we're also trying to dismantle their nicular weapons programs. This is another one hour conversation and we'll do that with Lisa Collins that maybe with Dr Shaw

as we can as well. Just extraordinary and somehow John, I think we'll continue with discussion on the Greater Korean UH Peninsula was c SIS, a Center for Strategic and International Studies. Were thrilled to bringing Lisa Collins. Not enough time right now with someone who's joined us before. Catherine Moon is at Brookings, but that barely describes her iconic position at a small school outside Boston known as Wellesley College. To bring up the speed folks. Wellesley College literally pioneered

Asian studies a zillion years ago. Professor Moon thrilled to have you with us UH today if you were if you were lecturing freshman at Wellsley. They're so eager to get in front of the Asian studies program at Wellesley. What's the first thing you would show that that pushes against our common myths on Korea, commons against UH commentments

on North Korea that we need to to unveil. I would say the first thing is it's a real country that plays hardball diplomatic strategies and has a domestic audience that it needs to pay attention to. Even though it's

a dictatorship. Kim jongan does not run it alone and he needs to have the backing of especially the military and some members of the population help us with the president's constant theme as the summit fell apart in two days ago when there was happy handshakes, and the constant theme is his belief that North Korea can be a force of capitalism going forward. Can it do the Asian

tiger thing? Can it be like Laos or Cambodia and move forward or is there a different equation that you see I think I think Donald Trump is doing the right rhetoric to try to raise the expectations of the North Korean people and its leadership to step up. And it is aligned with Kim Jong UN's own desire to develop his economy. That is sincere Um, many observers believe that but in terms of how the question is, are they capable of growing economically into another dragon or tiger?

How fast and how fast and how stable is the question? And I think those are the two areas where I would take issue with Mr Trump. UM. One thing I want to mention is that you know, even though the news headlines say that this is a failed summit because Trump walked away with nothing and basically the negotiations broke down, I look at it a little differently. I think actually this was a good summit in the sense that it

was constructive. We finally got to see that that Mr Kim Jong un can play real hardball and they have real clear um bars about what it takes to the US to absolutely work with North Korea towards the nuclearization, which is full listing of the sanctions UM. And I think that it's very good for Mr Trump to realize that his own personal charm offensive has its limits and that now you need to leave it to the people who are experts to really thrash this out, and it'll

take a lot of time. So, Professor Moon, who do you think needs a deal more the US or North Korea? Here? Well, the US needs a deal and the question is is it Mr Trump needing a deal he wanted mostly uh, progress toward a Nobel prize for himself. That is not something that was hidden. UM. But also I think for the US government, if we are serious about UM preventing nuclear escalation, military escalation in East Asia and trying to bring some level of cooperation in peace on the peninsula

after seventy plus years. Yes, it's very, very important, and it is considered North Korea is considered a major nuclear, major security threat to the United States. UM. But North Korea needs the US give because Kim has to have economic development in order to survive, and so both sides have a pretty loaded game here. Okay, I have to leave it there. We're just too short a time. We need to get you back on soon as we can. Catherine Moon, she is at Wellesley College and the Brookings

Institute there on the Many Koreas is open. Faulse twoone and Tom Keane And we really look towards the longer days of spring, which means the i m F meetings, and we really kick off here our movement towards those important International Monetary Fund meetings that will see along in April. And we do that strong with the head of their Western him Sphere department, Alejander Werner, with us now the

International Monetary Fund. I want to begin a discussion on Venezuela and Argentina, but I first have to pause and that you took your PhD at m I T with one of the giants, Rudy dornbush uh in economics. He was of a profound impact at i m F with Professor dorn Bush of years ago. Would he recognizes i m F today or is it a different institution. It's definitely a different institution, but that maintains the core of

its mission. So I think he will recognize and I think he will salute the changes that have taken place given and that he was a person that really put together strong theory with policy implications and applications of that theory. We have the privilege and that was speaking literally the day of these changes in Venezuela with Ricardo Houseman of original Sin and a lot of other theory, and that

as well. Should Ricardo Houseman and you and should An Blegard be optimistic now of a constructive solution to Professor Houseman's Venezuela. Well, that's more of a political question than economic. That's but I think, look, I think there's a strong will by Venezuelan society to start fixing things in their country. There's a strong will in the international arena to support

Venezuela in this transition. So hopefully we will have a government in Venezuela that reaches out to the international community and and that puts in the policies to fix this. Can you apply what you did in Argentina to Venezuela or is it so broken the i m F has to use a different path. It's it's it's clearly a very different situation. It's a different path. It's one of

the most complex crisis that we have seen. It combines a humanitarian crisis, they complete destruction of the productive network of the economy, hyper inflation, a dead crisis, and a migration crisis. So we have dealt with some of them in each of the cases that we go through, but the five of them together, it's a very complex situation that it will need the efforts of many institutions. But I mean, it can obviously be done, and a success story, certainly for the I m F was the Ukraine recently,

where creditors received almost par on their bonds. But I think you know, even I it's probably unlikely that that would occur in Venezuela. So what what are the creditors? What do they expect in any type of restructuring here? What is they what? What do you think is kind of the how does supply out? I think what they what they expect, it's a a policy package that actually puts the country in so sustainable path. I think if you look at the pricing of the bonds today, obviously

nobody is expecting a full recovery. But what they what they would expect, and that's why they're holding onto these bonds is basically that eventually a package will be put together that a country with the wealth that Venezuela has can laid out the policies to go back to a sustainable, inclusive growth process that eventually will give some value to those bonds and people will have some upside given the policies put together and given the growth path that they

that the economy can get into. To what extent can the I m F B a part of that? What's the balantry that I am f How much can have come in and support whatever change takes place? Obviously, we we can, we can, and I think hopefully Venezuela will see in US an institution that can help us give them the international experience on many areas on how to put policies together, can give them the financial part of the financial support that they will need to grow themselves

out of these problems. There will be a lot of needs for investment in the oil and non oil sector, but also needs to increase the consumption of the population that it's at very low, low level, generating very deep health problems. And as I said, we have the expertise and we do have an important balance sheet to help and finance this transition. What is the state of populism

in South America? You do the Western hemisphere and that's a pretty broad mandate, but the state of political unrest in Europe or this you know the story in America as well. The state of populism that we see in South America and how it links in the prosperity If you don't work on this, yeah, it's it's it's a very interesting question because I mean Latin America in this let's call it populism cycle and defining populism. It's it's it's a fuzzy concept took place before what we're seeing

in some advanced economies. At the end of the day, we saw a significant burst of regimes that tried to spend their way out of the deep social and economic problems that some Latin American nations have on the back of huge income coming from the commodity boom. So the Venezuela is the extreme. On the back on the of the oil boom, we saw a huge increasing government expenses, et cetera that when commodity prices collapses, then these regimes

were unsustainable. So those are the changes that we have seen in Argentina and we're seeing now in Ecuador, and now we're seeing the deep problems in Venezuela. So we're seeing the last stages of the of that process. We have to leave it there, but look for the senior and looking forward to see you in the spring. Thank you so much is Western Hemisphere Department leader for the International Monetary Fund. Thanks for listening to The Bloomberg's ban

Last 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.