Surveillance: Modi's Cash Move Is Radical, Rogoff Says

Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and of course, on the Bloomberg Princie The Quad in London. I'm Tom Keene in New York and listening now. We know are so much of Asia, and particularly the people of India. Kenneth Rogoff of Harvard University wrote A Little Look a year or so ago about cash, about corruption, about the underworld, about suitcases of cash going to no good. It is my book of the year. It is without question,

the most controversial book of economics in decades. Professor Rogoff joins us now on India. Let's first start with what Mr Modi is trying to do. What was his change in policy for India. Well, on the same day that we were electing President Trump, the Prime Minister went on the air and said the two largest notes in India, the five thousand rupea note four hours from now will be no longer youthful boom and you have fifty days

to turn it in for other cash. That is radically different than the policy I propose, which is doing it over say five to seven years, trying to avoid collateral damage. Within the collateral damage. What would be your advice to the Prime Minister now to move forward after this announcement, I mean away from the debate about cash. What's ken rogos to do list for India this morning? Well, that's

a tough question. I mean, the Prime Minister cites a lot of the reasons, all the reasons that I've given the book of why cash is pernicious, uh, you know, corruption, crime, tax of Asian terrorism. But on the other hand, I mentioned as tactics are very different. And by the way, my book states again and again very carefully, if you're a developing economy, don't try this at home. You need financial inclusion. He's done a lot of things. I think

India's reached a point where implementation is very important. There could be long run beneficial effects, but it really involves, you know, doing things to assure people that in the long run, we're fighting crime, we're fighting corruption, which is a huge problem in India. In many ways I have learned, and this goes back to one of your great mentors, Jagnaguadi, that India is, in each and every case, always about

domestic politics. What would the RBI, their central bank do, and could rob and rog and their former leader at the Bank of the Boot School Chicago, could ragu have stopped this tough po is bad pos well. I suspect they were overridden. Initially, when I heard about this, it seemed that the rb I was behind it, a joint you know push. But I think as time went on,

we didn't see Governor Patel. The governor replaced where John speak for a couple of weeks, which kind of made it clear that they weren't um It doesn't mean that they don't agree with the broad idea, but they might not have agreed with the tactics. They might have wanted to do it slowly and gradually, as others, say myself would suggest. And by the way, India doesn't have a

large note. Their largest notes fifteen dollars. To introduced a bigger one in this to replace the old ones, which again is a hundred eighty degrees opposite to what I would advise for advanced economies. If we focus on the news right that we have had overlast to two weeks, we had a record load from repee extreme volatility will dis continue well. I think the thinking is eventually they will come out of this. They hadn't printed enough currency.

We just don't know all the considerations why this was so sudden. Evidently word leaked that they were going to do it. I suspect that will all settle down. And you know, it's surprising how many Indian economists people think in the long run making this statement against corruption, which of course as India's number one problem, will have you know, good effects, but they have to get there. There have been really a lot of problems, really poor planning implementation,

uh in the short run. But I think that will probably sort out. But it isn't done yet. And I know the RBI, for example, put some limits on withdrawals from no frill bank accounts. I mean, is it always a bad idea it can to limit withdrawals. Yeah, I mean they were very awkward position that they hadn't printed enough currency. It's actually not that easy to print currency.

It could take a year. I kind of wonder why they didn't do maneuver like the Greeks had considered a stamp the old currency to create the new currency temporarily. I just don't know what the planning was. They haven't really described it. It's clear what the goals were, which I think are laudable, but the implementation and execution, they haven't really explained why they did it this way. There

are people who recommended sudden currency moves. There was an economist in the mid seventies, James Henry, who said, let's do a sneak attack on the criminals and the drug dealers. I think the collateral damage is just too great. In the case of the U S, it looks too much like a default. Again, what is the you know, the lessons learned. We've seen you know, panics or volatility of whatever you want to call it in other countries, and as long as there's one or two lessons that you

don't repeat, then the country will be Okay. What's it in this case, Well, it's about implementation and planning and again and developing economies. The issue of financial inclusion is huge. Uh, you know in the US, it's very easy to cover that. My book explains how to do that. And Indie a Prime Minister Modi has taken a lot of steps. He's taken biometric data for almost a billion Indians and you can get a bank account if you have that, but they're way away from doing that. This was a very

radical step to take. One of the strengths of your book, The Curse of Cash is you put out front your critics amersing on page seven, Lord Summers, you're calling at Harvard on page one two, the Greatest sing of Germany, the Great Summers of Cambridge. They pushed back against Ken Rogoff describe their caution about the curse of cash in

your formula. Well, actually, Larry Summers has come around to be a big champion of getting rid of hundred and fifty dollar bills and that's been fantastic Admares saying, you know, sites of Dusty Jevsky and says, you know, money is coined freedom. Uh, but I think there's a big difference between you know, getting rid of big notes and getting rid of all cash. I am for less cash, not no cash. Is money a repress seditive of freedom. In Mr.

Modi's India. Well, it's how a lot of the economy functions. It's transactions I think he would like, and many steps that officials are so corrupt. I had a colleague who told me about her father sold an apartment just recently in a rural India. He gets back the deed that list half the price that he paid because the official was paid off. This is routine business India. Modi wants to stamp it out. Francine, the Curse of cash and India. Of course, I'll put this out on social again today.

Ken Rogoff joins US now cabinet Professor of Public Policy, professor of economics at Harvard, the author of Tom's Book of the Year, much Ballyhood book of the Year by Time, the Cursive Cash. We will talk about that in a little bit, but some news at first, Ken Rogoff, good to have you with us, Thanks for being thank you

good to be here. I'm very curious and I've been asking a lot of people about this, the definition of Trump economics, what Trump and omics is, and and here a few weeks after the election, are you went it closer to to coming up with to having a definition of what it is? No, I'm not. I mean, also, bear in mind everybody's watching these appointments and saying, who is he going to point he isn't locked in. This is a guy who made his living by firing people.

And it wasn't so long ago, back in the Jimmy Carter days, even you know Lynton Johnson, where they routinely fired people all the time. So what I'm expecting is not just have a parade of candidates. I'm expecting a parade of appointees. He'll have a meeting, He'll have the three guys you know shamefully lined there. He'll go you're fired, you know, or however he says that line. So I think he will recalibrate if he's not happy how things

are going. I expect just as he recalibrates his comments, he'll recalibrate as appointees to looking for some some drama there in the appointments, at least not immediately down the line. What power does does a president? Does a Treasury secretary, say, have to to influence the trajectory of the the U. S economy right now? The Treasury secretary's power comes a lot from their ear having the ear of the president,

and to the extent they do. Of course, they have a lot of influence over legislation, especially with the Republican controlled Congress. And I've got to say, there's a lot of talk about, well, Trump wants this, Congress wants this. He won't get his policies through. Yes, he will when he decides what they are. I think in the short run there will be a honeymoon with the Republican Congress. A lot of them opposed Trump or didn't support him. They'll support him here. They'll give him what he wants

and you know, see how it goes. So I do think we'll see a pretty dramatic stimulus plan. I don't know if it'll be completely coherent, but I think we'll see something very dramatic. All this stuff about the Republicans won't go along with deficits, that's just nonsense. They wouldn't go along with deficits when they're spending it on what President Obama wanted. But if you talk, if President Obama had proposed tax cuts to get deficits, he would have got it passed in an afternoon. Also, So I'm but

exactly what shaped this will take. I think, you know is constantly Morphing, There's no doubt about it. We're beginning to hear something of a debate here about the timing of those tax cuts or or an infrastructure spending plan, whether or not now is the time to do those things. Do you expect that to be a robust debate in Washington? You mentioned the support he'll likely have from the Republican Congress. Well, I think I really think he can do whatever he

wants to do. We really haven't seen someone come in with this, you know, kind of support for a long time. I'm not you know, in terms of having Congress in the Senate. Uh, it's been a while, and I suspect he'll do what he wants to do. Yes, they'll be debate, they'll be bad articles, they'll be complaints, They'll people say that I voted for even though he didn't mean too. I think the infrastructure has bipartisan support. If he can't get the Republicans to support it, he'll get the Democrats

to support it. Uh. That's something everyone agrees on. We'll finally get it done. The tax cuts are a whole another matter, and I don't even know what they're gonna be. I don't think it's the most effective form of stimulus, but it's been you know, red meat for the Republican Party. He's going to give it to them, maybe to get support in other areas. Ken roll Off with us of Harvard University will speak of India and the curse of cash his book and my book of the year, I

might point out, we'll do that here in a bit. Ken, You're in the class, you're you know, manque's got a headache, you've gotta teach at ten are in the basic undergraduate class teaching at Harvard, and somebody says to you, Vice Chairman Fisher, he's of a college down the road. M I T. Vice Chairman Fisher says, we're almost fully employed. Donald Trump got elected because we're not fully employed. Is

it to America's? And do we do our macro economics just chair yelling, do our macroeconomics as one America one mathematical distribution? Or do we need to always consider that there's two America's in every discussion. Well, first of all, you're not gonna get me sharply agreeing with Stan Fisher, who's you know, a great a great man, and I think you know, really understands the data. But it's sort of a definition of what it doesn't mean to be employed.

And I think the quality of jobs, the quality of life for many people hasn't improved at the rate that they thought, and I think Trump got elected on the back of that. That's the core of the populism with the middle class. But the policies to fix that are really much more about improving education. They're conceivably infrastructure, things

you can do with the tax system. One area where I think maybe there's cause for some optimism is that business investment has just been awful all across the world. And if there is a coherent policy, almost any coherent policy going forward, I think we could see a big pick up in business investment. That's the key. If you don't see that it's not going to be great for long from your reading of history. Can we migrate policy

to create incentives for domestic investment? Can we do tax credits to make Jeff Emil invest in David gur Is Ithaca versus Malaysia. I love Ithaca. I grew up in Rochester like you, Tom, but I think they're much more important. Much more important in Trump's policies are the how he handles regulation because there's, you know, a lot of needed regulation, but at the same time, there there's a lot of

it's hard to interpret. I certainly know some of the regulation that's come on universities has been dramatic changes, difficult to interpret. If it's been in other industries like that, it's hard to function and where there's confidence, where there's optimisms coming from that. More than anything, I get the sense that, you know, when when Congress takes up a tax plan, it's a tax plan that's on the shelf. Republicans have been talking about tax cuts and reforming the

tax code for for a long time. With regulation, I lived in Washington for a long time. I heard Republicans mostly decrying Dodd Frank for years and years and years. But it was all about removing that law, not replacing it. How nuanced do you think the conversation is going to be about about what regulation looks like here under the new prison We're seeing anything but nuanced conversation and the debate in America today. But I mean, Dodd Frank has a lot of problems. I think Dodd Frank uh does

need to be fixed. Uh they've known that. President Obama knew that, but they couldn't get anything through Congress. Usually when you pass a law, there's a whole sequence of fixes that you do, little technical fixes. They couldn't do it because there was so much difficulty. So at a minimum they're going to do that. I think we need to make the path for small and medium sized businesses to get loans much better than it's been. They are

the core of productivity in this economy. I think the that's where we've slowed down, particularly the businesses that eventually get big. Obviously, and you know, improving innovation, improving investment and Dodd Frank you know, stopped us from having the financial crisis of two thousand and forty, but didn't necessarily generate the recovery we needed just to going overseas here

for a bid. Looking at Europe, we had the President of the Eurogroup this morning saying that the UK would likely get access to internal markets in the European univer We saw sterling strength and on that news, what do you make of how this has played out, how indeed this is playing out, this Brexit process, and and what it what it what it portends here for the UK economy. I'm very leary about the longer term they want it.

There's no precedent for this of having this tightly net trade deal and pulling out short of a war, civil war, revolution or something. It's not that easy to do. And by the way, negotiating the new treaties is not that easy to do. Usually a trade agreement takes five years to negotiate, five years to implement, and that's fast track. And here they're trying. They haven't only two years to

negotiate it, then you know, three years for implementation. There's going to be a long period of accodus from the UK economy of people, firms. Uh, they face a very difficult road ahead. I think the Braxitters seem to have no idea what they're doing. I had been assuming they would back down. I've been assuming there was going to be a soft Braxit, but at least term, you know,

won't brook that it could all change. I really would hold the possibility that they'll just you know, pull out at the last minute, though the French chemed to be pushing them out the door. Ken Rogoff with us because we got we could go with the Professor Rogoff here for five or six hours, maybe get to the Italian referendum by ten am Wall Street time this morning. We will not do that. Coming up, what many of you been waiting for, particularly our listeners in Asia in India.

Ken Rogoff on the history making effort by Mr Mody to limit cash in Indian society. Coming up, Ken Rogoff on the curse of cash, the curse of cash. What did Mr Modi get wrong in India? He tried to apply Rogolf one oh one, and you made clear you can't do that in an emerging market. What did he get wrong? Well, I mean the first thing, I don't know if he got it wrong because I don't know all that it tail. But I view the right way to do phasing out large bills is very slowly to

void collateral damage. It's not technically easy to do there. You know a lot of people that you heard in addition to the tax of aiders and criminals. He did it overnight. Uh. He really wanted to lash out. He's very angry about corruption. And of course India didn't have any big bills. Their biggest bill was about fifteen dollars, which is you know, basically where I'm hoping to end up with countries like the United States, and the euros twenty or thirty years and now, by the way, no

time soon. And he was taking away these bills that the particularly five rupe notes seven dollars and fifty cents that ordinary Indians use. One more question is what can we learn from Sweden? In your book you drop in these nations that are affecting your plan. What can the United States learn from Sweden? Again, my book is really about the issues with cash and what surrounds it. And there's more than one way to skin a cat. I try to propose something very simple. Sweden does it on

many dimensions. You can't easily find an a t M machine in Sweden. Their places in all of the Nordic countries where you might have to go a hundred kilometers to find ATM machines. Well, they were very worried about crime. They stripped cash out of a lot of the banks that had a lot of violent crime. There's a lot of support in society. They also have very very good mobile person to person apt way more sophisticated than ours. We need to rip up the script and David Gurry,

you're going to help her with this. You gave that you had the ceremonial first move at the Chess Championships, and then Mr Teal Peter Teal did the same thing. I believe yesterday we have a newly minted chess champion veteran. Is he as good as you were? Is he different? Is it like tennis where we don't even know what the game was? First of all, Carlson is was the champion and defended it. He's just turned twenty six years old. As good as I was, he's so much better than

I was. I mean, I couldn't like a handle to him. He's an incredible player. His Russian opponent put up a big fight. Putin followed very closely. They weren't couldn't do the Olympics, of course, so they were very excited about the chess match. This opponent played great. But I have to say when I made the first move, uh, you know, I shook both their hands. Carlson was smiling and relaxed. Karyakin looked like he was about to be fed to

the wolves. Here Professor of Public Policy, Economic international grandmaster as well. David ger and I played chess. Was embarrassing. He beat me in seven moves, David. When you watch it, when you watch matches likely when somebody who is skilled at chess, who's played chess for a long time watches, is it for pure enjoyment or is is he or she learning new new opens, learning new moves? How does one watch a match like this? I mean watching Carlson

is just such a pleasure. Um. He manages to press in these creative ways. He wins positions where Bobby Fisher, who arguably might have been the greatest player of all time until be cast prov in Carlson. I mean, Bobby Fisher would have given me a draw. Where's Carlson's just starting to go to work? Uh? And it's just beautiful. And his opponent, by the way, was incredibly creative. He defended positions where he looked like he was dead, and he did these risky, creative things. It was a really

fantastic match. What's your sense of the health of the game these days? Down at the Full Market building in Lower Manhattan they had a V I P lounge. This was streamed worldwide. How do you gage the interest in chess? Right? I mean, the interest in this match was just phenomenal. You have to remember chess as an online game even more than say football, as a TV sports so they had you know, certainly millions of people just watching every move online paid subscribers, and then it was shown live

on television in many countries of particularly Russia. You read square was just filled with people like it was New Year's Eve watching the games. It's still very very popular. It's interesting despite computers coming in, chess as as popular as ever and just very quickly. This lasted many weeks. How do these how are these matches structured? Well, I mean,

I just say the physical components very very important. Carlson always has trained physically, and this was really the first time he came up against opponent who was in the kind of shape he was think of taking. If a six hour exam every day for several weeks in a row, it's gonna grind anybody down. Plus you gotta study for the exam, let's not forget. So there's a huge physical component. Carlson tip typically tears people up in the fifth and sixth hour, and this guy, karayak In was just right

with him. We're going to leave it there. Thank you. The book my book of the year. Read it. It is controversial. The Curse of Cash Daniel Jurgen next. This is Bloomer. This is Bloomberg Surveillance on Bloomberg Radio. David Gurreau with Tom Keane. The news broke yesterday while we were on air. OPEC members had come to a deal at their meeting in Vienna, a production target of thirty two points seven million barrels a day, by all accounts,

a pretty broad deal. I want to bring in perhaps the pre eminent expert on OPEC on the global energy market. That's Dan Jurgen, vice chairman of i h S, Founder of i h S Cambridge Energy Research Associates, author of course of the quest and the prize. Dan, You're gonna great to have you with us this morning. Thank you, Good morning. I mentioned that the relative broadness of that deal. Did it surprise you A that we got a deal?

And be that it seems so broad? Well, going into the deal, I had about a seventy probability that they would do a deal. It was certainly as though a cliffhanger at the end, and where you had basically on the one hand, the specter of the onslaught of UH new waves of Saudi oil versus h Iranian UH negotiating talents. But at the end I think self interest prevailed among all these countries and there were enough wiggle room in

the deal that everybody could claim a victory. We were talking about OPEC, of course, we were also talking about Russia, not a member of the cartel. Explain why Russia was playing such an outsized role here in these deliberations. Since the late nineties nineties, OPEC has tried to win it back then, to to bring Russia into a sort of solving the market problem at that point when there was a collapse in oil prices and Russia said they'd go along, but they didn't. But this time Russia was much more

actively involved. UH. The Energy Minister Alexander Novak has been out front on this really since early in UH in twenty six and even President Putin at one point gathered all of the CEOs of the Russian oil industry in a room and said, this is earlier in the year, I'm in favor of a freeze. Are you all in favor of a freeze? And remarkably everybody was in favor

of a freeze. So I think that the Russians, looking if you look at their budget, you look at their sovereign wealth funds, and where they were there, We're going to move into a situation of a lot more financial pressure. So I think they were eager to get a deal. The big thing was to get them to agree to a cut and not just a freeze. Daniel, you're gonna improving the prize. And you go back to in the sobering moment for the cartel. Are they at that point now?

Is there a a psychological mindset of the cartel in Saudi Arabia that is equivalent or similar to the agony of well, I think that's you know, that's probably the best analogy to uh where the market has been for the last two years. And I think then too, there was a resistance to do anything, and finally, when everybody was looking at how far down prices would stay or

might go, they finally were able to come together. And I think that was the same situation here because remember uh Tom two years ago, uh Opek resigned at quit it said we're out of the business of market management, and now they're back. And I think it's that they looked over the side of the abyss and so that's pretty down deep there, and if we get down there, we don't quite know how we get out of it. All of this is at the margin. What is the marginal dynamic you and uh your shop will look for

in the coming weeks and months from the supposed cartel. Well, I think it will be, of course, a degree of compliance. And uh the so called secondary sources that monitor uh output, and I think we're one of them. Uh, everybody will look at those numbers. Uh, the countries will look at the numbers, and the other communities. That's really important. The traders will look at it, and also the hedge funds will look at it and and vote in effect in the market whether they think the deal will be there.

Often when these things start off, they're shaky. There's a lot of skepticism. It's only a six month deal. What they're really trying to do is by time, get through the winter when inventories would normally build, try and prevent that from happening, and get to a more balanced market in the spring. That's with this. This is more like a sprint than a marathon. How is a producer in saying Oklahoma watching the goings on in Vienna? What's his

sense of his sense? Or two things? One is a giant sigh of relief and the other is a rush of adrenaline. And I think we saw that the same thing in the in the stock markets yesterday. Uh. One guy actually said to me said, you know, we're holding our breath until until November, and they had to hold it for several days there until they got to an agreement. But I think this says that people will feel more

confident they'll be investing. We'll see rick counts go up, and we think, you know, if the agreement roughly holds, and it's only going to roughly hold, it's not going to be a perfect agreement. Uh, then we'll see US production turning around and uh in increased by the by this time next year. We would be rude if we did not speak about the history making new administration we have. First of all, have you been called by the transition team? Would professor you're dr you're gon be part of a

Trump administration? I don't think so. Uh. I mean, I think they're still organizing themselves in terms of what they want to do. Do we do we have a national energy policy? Then? Well, I think, um, I think we kind of summarize it at S market is uh more rigs less rags is what we're going to see I mean, you know, there'll be more activity. I think, you know, I think in the first instance, people think there will

be this vast rolling back of regulations. I don't think that's the case, first of all, and a lot of much of oil production is governed by state regulations, not federal regulations. But I think what it does mean is that we're not going to see another wave of additional regulations. I think that's the kind of the the starting, the going in point. Let's leave it there, Daniel, You're gonna thank you so much. A short visit here. Really after history in uh Vienna, the Quest is his latest effort,

and it's really remarkably good. I was surprised, David. I did not expect the drama out of the end. No, and I was taken by the drama leading up to it as well, and how quickly the meeting itself seemed seemed to go. But you know, we've been through this, as we mentioned time and time again over these last few meetings, there is talk of a deal and then

no deal. So I think it will be waiting to see here how cohesive OPI looks going forward, how disciplined the Bartel is going to be going forward is a tries to win force this deal. Who you put your trust in matters. Investors have put their trust in independent registered investment advisors to the tune of four trillion dollars. Why they see their role is to serve, not sell.

That's why Charles Schwab is committed to the success of over seven thousand independent financial advisors who passionately dedicate themselves to helping people achieve their financial goals. Learn more and find your independent advisor dot com. David, and to bringing our next guest. We've had Kenneth rog up to and and you're going to know another wonderful guest. But we need to frame this, David. We need to do this right.

A little bit of foggy bottom game show. When only three or four candidates depending on the season, are left, they are interviewed. Rather than being assigned to task. Executives from various companies interview the finalists and report their assessments to the host. Based on the interviews, a boardroom meeting

and firing takes place, leaving two candidates. I don't know if that's the apprentice has described in Wikipedia, or if that's our selection of the next Secretary State and many of us saw CNN correspondent Jim Acossa's photograph from John George the other night of Donald Trump sitting with one Mitt Romney, former governor of Massachusetts, former presidential candidate, as well Nicholas Burns here, a professor of the practice of

diplomacy the Kennedy School of Government at Harvard University joined us here in New York. Is Mitt Romney the forerunner here? Who else is in the running here? Who else are the finalist? Well, he's certainly. Mit Romney's certainly one of the finalists. Um, You've also have David Portray as very very smart, experience general, and you have Senator Bob Corker, the chairman of the Form Relations Committee. All these three

people have in depth international experience, especially General Portrays. All of them are mature people of even temperament. All of them have credibility both here and also overseas. And so I think that, Um, it's okay, that's that's the ambassador. We only let ambassadors have their phone on. That's exactly what it is. But if you think about it, Donald Trump is going to be the very first president in the history of the United States are with no prior

public experience, political experience, military experience. He's gonna need a lot of help. He's a smart guy. He's obviously succeeded in New York and real estate, but international politics is a very different game. And so I think any one of these three would center him, give him the credibility he needs, and I think make up for some of the one dimensional nature of the current national security of Romans. General Flynn's a very smart cons a military officer who

has been a counter terrorist person. You need someone who can thank broadly and act broadly globally. Is that message getting telegraphed to him? We saw his pick forree Treasury secretary, uh Steve semnuchen A, a loyalist, somebody who ran his campaign finance operation. Are you worried here that that message that he needs to pick somebody with a lot of experience in statecraft is not going to get the job. I'm not sure any of us know, because all that

matters is what's in the kind of Donald Trump. But this this team of rivals thing, it wasn't just Barack Obama and Hillary Clinton. It was Lincoln of course. With the appointing Seward as Secretary of State. I think it makes sense for this government. I come from a world international politics and diplomacy were experience actually counts for a lot. You know, Trump's going to have to go up against Demir Putin j and ping. These are consequential, very tough piece.

I want to tie two strands together here, Ambassador. The first one is Joseph Nye, who was just with us, the giant of international relations. Yes, my good friend of college an adamant Adam about a strong America, America exceptionalism, the negativity of America is unfounded. And then I want to tie you in the massive miscalculation of all to how weak Russia was when it collapsed. Our intelligence there

really wasn't I believe that good. Is Mr Trump and his supporters misjudging the state of America within the international community. I think so. And what bothered me during the campaign was Donald Trump talking down American power, but also Bernie Sanders on the left talking down American power. I see a country, the United States. We are the strongest economy in the world. We're growing, maybe not a China's six

or seven present, but we're growing. We have the knowledge economy, skill set, and I think dynamics to do well in the century. Strongest military, politically, the most influential Joe and I will tell you culturally, the greatest soft power, the greatest cultural attraction. We're at the top of our game. We're not weak, we're not failing, but we do need leadership. Is there an historical precedent for us being quote unquote

at the top of our game? And what we observed in this election, which is not so much the walls, but boy, those oceans are comfortable to keep us away. I think the Internet. I think there is, and you and I are thinking alike. It's Woodrow Wilson. It's the our victory in the First World War, our buoyant economy in nineteen and twenty, and then we tossed it all away by going towards protectionism eventually and also thinking that

we could withdraw from the rest of the world. We can't in a globalized Is there a mirrored hall where everyone can get together? Are we so away from the Westphalian system of the of the Palace of Versailles that Mr Trump is not going to have that tool? You know? I think hopefully he gets a team around him, and whether it's Jim General, Jim Madison Defense, or Mitt Romney or Bob Corker in state who who carefully kind of nudge him towards internationalism. That doesn't mean giving away the story.

It means that American economic power and future depends on trade deals. If we walk away from the Trans Pacific Partnership that's Global GDP, the Chinese will move in with their own highly protectionist for China trade regime will be at a disadvantage for a generation. We have an opportunity for a free trade agreement with the European Union. It also bothered me that the left, Bernie Sanders and Donald Trump talked down trade. I think we're a free trade

society and we ought to stick with that. We had the pleasure of speaking on on election night, thank you again for for coming in as those votes were being tabulate, and George Mitchell was on the show as well, and I was thinking, is there an opportunity here diplomatically for there to be someone like a special Envoid of Russia to bridge this relationship. Is there a need here to focus more doggedly on improving that relationship with somebody in

a capacity like Senator Mitchell had in the past. Well, there's so many people you could choose for that, former Secretary James Baker, Condoleeza Rice, Robert Gates. But here's the deal. We don't want to just have a good relationship with Russia. We want to have the right relationship with Russia. And right now, the deal he wants to make with Donald Trump he us the sanctions lifted. These are the energy and financial sanctions that have been very difficult for the

Russian economy. And we shouldn't give that up. Because when we give up the sanctions, these are European Union, Canadian, American sanctions. Then Putin his stealing crimea, his division of Ukraine is rewarded, and that's the bad signal to send. So if there's Trump should not be looking for a deal. I think that Putin responds to strength and conviction. He's that kind of a guy. He takes advantage of weakness.

And so the right strategy for Trump in his new secretary state is tough minded, align yourself with Anglo Merkel, keep the sanctions on. The e will vote on this in the next ten days, and then wait for Putin to crack. So sometimes diplomacy is just not making deals, it's being strong and protecting your interests. Let's go back to Let's go back to Roosevelt. How does Nick Burns show the flag over the next four years this commune? I mean, first of all, I think we're gonna have

all generals in the cabinet the way we're going. But are there are there too many generals being involved? How do we know? The flag is a nation to the rest of the world. So you know, obviously, if you can get someone like Jim Maddis to be Defense Secretary, that's a good thing for the United States. But you don't want to have a cabinet that is primarily in national security, military and nature of nature, because you do

have civilian control. Is traditionally the United States over the military and people from civilian life, whether it's a diplomat like Condoleeza or Rice or a politician like Mitt Romney sec. This is too important. Should Condo Lisa Roy step forward to provide leadership? I want to get you in trouble here, and don't get she's a very close friend of mine, so don't get me in trouble. I think she's very

happy where she is asked forward to provide leadership to America. Well, she is stepping forward in a lot of different ways to provide that leadership. But you know, the President of the United States is the one who has to call, and he's not going to call. He's already made it clear. There are four, as they say reality TV jargon finalists. I think this campaign this by the way, this selection process been too public. It's demeaning to the people who

won't make it. We've never had this before in either Republican or Democratic administrations. Not the right thing. Thank you for visiting Nick Burns with a splasher investor de Greece one other services to America's international relations worldwide. This is Bloomberg. This is a great honor for David Gura and myself. We spoke with Kenneth Rogoff earlier on his economics and had what a privilege to speak to ken Rogoff about chess and his thoughts on the recent tournament. He is

the US chess champion. Fabiana Karna who joins us. All right now, Fabiana, good morning, Well, it's wonderful to have you on. I want to go to David Gura's Park Slope, Brooklyn. You moved from Miami to Park Slope, Brooklyn years ago and you had the privilege of a giant of chess. Is your first coach at age five? Ever six, Bruce Pandelfini. All of us have read Bruce Pandelfinie What it was? What was it like as a child to work with

Bruce Pandelfini? Well, just growing up in the chest in New York and working with Bruce was was great because there's so much history behind it. He's worked with a lot of fantastic players. He commented on the UH on the match between Bobby Fisher and Borspasky when when he was just you know, coming onto the scene. Um. And he has a very patient style, which is great for you know, a young up and coming chess player. He kind of nurtures talent, which which helped me a lot.

And he's never harsh. I guess you've you've probably seen the the movie Searching for Bobby Fisher were um, where Bruce is portrayed by Ben Kingsley, And he's very different from how he was portrayed in that movie, although they did do a great job as well. Yeah, my daughter goes to school at the school where you had your first asked lessons, and I marvel at how young. The kids are there playing chess when I go to to pick her up. There's a sense here that there there

is a gift for chess. There are chess prodigies, but this is hard work, and there there's a lot of practice, a lot of work that goes into becoming a great chess player. Ken Rogoff told us that this morning, talk a bit about how you made that jump from somebody who was interested in the game indeed good at the game, to one of the greatest in the world. I think in the United States you have an enormous amount of very talented young players starting chest at you know, age

five six. Um. I started when I was five years old, and there was a large group of kids who were as talented as me, or more talented, and most of them became grandmasters, top players. But um, but I didn't stick with it, you know, moved into academics and and chose other paths. Well. I basically probably chess professionally from the like the age of fourteen, and UM, chess has

always been like the main focus for me. So I think if you take a young player with some talent and put them in a strict chess environment of playing and studying chess constantly, then there's a good chance that they will you reach the top of chess. The chess playing. The chess following world has been focused on Lower Manhattan here over these last few weeks, Magnus Carlson winning the World Chess A Championship, there was a v I P room.

There are a lot of people watching these games, these matches, indeed, from from from around around the world. You've played him before, tell us a bit about his style, what he's like as a player. Well, Magnus is a player who when he gets a better position, even a position where the advantage is maybe not visible to most people or extremely minuscule, he he tries to nurture that advantage and turn it slowly, turn it into something more, something which is more tangible

and um enough for a win. And he does that over the course of many hours. Um he might play, you know, a seven hour game trying to turn um what looks like nothing thing into into something and eventually win the game. Like that, so it is very dangerous too to get a bad position against him, well against other players in the world. Um, even though obviously you don't want to get a bad position, you might have more hopes of of trying to salvage the game. Uh

So against Mangnus, it's possible, it's possible to win. And he I mean even he lost a game in this last World Championship match. Um so I have I have beaten him several times. But it really requires that you go for the throat, that you don't be afraid of him, um and that you you know, you don't try to let's they go into a defensive mode when he might slowly strangle you and you you try to get from from move on. We are honored, Fabiana, thank you so much.

He is the chess champion of the United States. And of course I urge you to look at all the different coverage of what we saw. What a great privilege of Keneral and Fabian a car on on Blueberk surveillance in the same day. Just that's what. That's what the youngest is, David. When we play chess at home, she goes, she is she's tough, she's she's known to move all of a sudden, you you know, you look away at the red Sox or whatever on TV and one of

your bishops is gone ahead. She's taking no she's taking pieces off the board. Struck by what Fratianna said there and Ken Rogoff as well, just about how long these matches can be, six or seven hours in the physical rigor the strength required to play a match. That pretty's great. This is what this is why we do the show. The surprises folks of dealing with this and dealing with Bob Moon as well. You know chess champion of surveillance

as well. He does that when he's not doing the STEM report, he's he's playing chess out with Michael Barr. Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm out on Twitter at Tom Keene. David Gura is at David Gura. Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio. Who you put

your trust in? Matters? Investors have put their trust in independent registered investment advisors to the tune of four trillion dollars. Why learn more and find your independent advisor dot com