Virginia's McAuliffe Criticizes Trump's First Month

Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and of course on the Bloomberg Joe Quillin with US with US Trust Merry Lynch and working on a broader thematic strategy. Let me come to the theme. I was having dinner in Mayfair the evening of June twe on the fourth ten am on Junee, the world came to an end for England, for Britain, for the United Kingdom. And then the next morning was a total uproar. And at seven pm on a summer's evening, I had a dinner there.

The world was gonna end. November eight, the world's gonna end once again. Here we are at twenty eight hundred. So when do I know when to get out? I think that's a great question Tom in the sense that the politicians have to pay attention to the populist movement that's angry a lot of anks. Yet the key is they're they're responding to us. So you remember austerity. Now

we've got more fiscal spending. So when we if we do not get these policies in place that promote growth trickled down and I hate that concept because it rarely happens, then we're gonna see more pressure on the politicians to spend more. And I think the markets will take that the wrong way and here we go, we roll over. So's it's the key, the politics responding to the populism that creates the growth that kind of pacifies and pushes back kind of the day of reckoning when in particularly

in your credit markets. So we're not there yet. But Joe, why are we seeing these record highs for in disease? Is it really unfundamentals or it's still that cheap money out there, Francy Nancy, It's combination. It is. It is cheap money, there's no doubt about that. It's the fundamentals. It's a cyclical upswing and it's also in particular the expectation that dabos Man will respond to this popular populace uprising and make it happen. Pacify the workers, everyone that's angry. Trickle.

You're seeing the employment numbers gradually improve and there's a lot of noise there. So it's the expectation that the simulus is coming. Alright, what does it take to correct or, as you say, to see a little bit of a pullback from these in disease. I think it's going to be profit taking. Um, you know, I think a lot of hedge funds from Francine is too young to remember what that phrases. I have not, I have not. I

have not heard that phrase seven years one time. I think you know this cliche, you know, selling may and go away. I think that's gonna be come with a vengeance. So we have calling of the twins. Do you have a tape recorder on? We just said Millard, Mr Quinlan here say selling may and go Away's gonna work this year. I'm really thinking the last four years in a row,

it's been a total fraud. It's been a total all But this year from from the election, I think people will take their profits and the key will be, well, what's gonna happen in June July. When it comes to the actual policy background. If we don't get the policies coming forward, then then we're gonna have some real prompts and the critical moment will be in the summer. Help Francine here when we got you for the whole half hour, which is great. Help Francing Rechoir with your idea of

a global lift. She is so weighted down by the collapse of Italy, all the political stuff, etcetera. She was weighted down by Burbery, had no plaid and there in their show this ye. But but come on, Joe, help me here with the global lift. Nobody's buying you. Well at the time, the numbers are there. I mean, you see the p m I numbers. You see China stabilizing, Brazil, Russia better. Um, you know the developed markets are playing

along in Japan's numbers, so I think. But the monetary stimulus has been out there for so long as you know that it does, it's it's not gonna it's finally working. I'm not looking for like they're a bit better, but but they're not what we saw ten fifteen years ago. We're never going back to pre crisis levels. Or are we now? I would never say never, Francy and I agree with you. It's gonna be more muted growth growth.

But if we can get the global GDP growth average back to three and a half three point seven percent in that range, have the emerging market stabilized, then we can kind of plod forward. And I would I would agree in the sense that maybe the markets are giving too much credit to the policy makers and the economic background. But earnings are good. I mean, corporations are doing a great job managing their expenses. They're using technology to be

more productive. That you can't discount that either. Okay, but how do you deal? And and Tom and I were in Davos and it was the Davos Man or the Devils Woman. Looking at this new world order where globalization is not the name of the game anymore. When do markets realize, Well, I don't think Francy and I haven't thrown in the towel on globalization. I think we've kind of hit the pause button, and perhaps we kind of we've got to reconfigure it or rethink it, or kind

of like make it more broader, more integrated. So I the markets have certainly not priced in de globalization. If they had, then we'd have a bigger problem. So we gotta look. You know, actually global trade volumes are picking up, trade flows are increasing, m and A globally is picking up. But I think there's too much I would say optimism around the policy backdrop, and so if there's any failure there, we've got problems. Let me do this for Francy, because

fancy and I know you're based in Sterling. The doll this year, if you're in London up SPI underperformed. It's up only thirty six percent. The foot seas up twenty If you invested in Tokyo from Sterling, you're up thirty four percent. I mean, it's a most unloved, ginormous bullmarket, Joe, I've ever seen Francy. Get it one more question and you're not gonna do some breaking news. Yeah, what the currencies?

You know, when you look at in the season around the world, what's the currency you want to be in? Um the Mexican pay So, I mean we've I've been saying that for quite some time. I think it's you know, it was oversold. I still think there's more upside. Francine at the Quad London I'm Tom keenan New York with this Joe Quinlan. We continue our discussion, let's run it over to economics. I mean just Cheer Yelling is she's central banker to the world, and I think a question

for the weekend reading. Does Cheer Yelling care about the record lows in the German two year My guesses she does. Well, she she has to. You're you're right, and it's interesting we haven't talked much about the FED thus far this morning. I think the feed is looking to looking at the data, saying they're gonna move perhaps in March, if not June, maybe twice this year put some ammunition back in the bank, so they have that ready, but certainly worried about the

numbers coming out of Germany. But I do think what we'll have to see how that plays out. And I'm sure she's worried about distress out of Italy in Spain that's driving those flows in the German Say paper, Joe, how would you look at political risk in Europe? Does it play out two weeks before the French election? Does it wait until something ugly happens? To talk me through the psychology of the markets right now? Well, I mean, we're looking at the Dutch elections, see how that plays out.

Watch the currency. I mean, the currencies is always a canary in a coal mine. So I think, you know we're here, here's francing. We should not be so surprised in two thousand and seventeen as we were in sixteen. If we do get these political shocks quote unquote, So the markets are pricing in perhaps being a little bit more cautious, more risk management. So if Lapen or if there's any kind of a populous movement that gains traction in Europe this year, that should not be so surprising

to investors. So maybe that mutes the reaction. What if we're jumping at shadows? Joe. We had a brilliant piece by Mark Gilbert, one of our Bloomberg View columnists, saying, what if Sen meant that the markets are jumping at shadows because now we're pricing political risk everywhere when there's none. Well, then that perhaps means that we have this cyclical rebound, we get the policy pro growth policy put in place. Remember we've had too much austerity and too much dependence

on monetary policy since the crisis. If we do if it's a head fake, but we still get the fiscal stimulus that tells me that we've got decent overall nominal global growth, which is gonna be good for earnings and equities. When I look, Joe h the idea of I got a four O one K. And let's assume that our audience is behind those numbers I quoted earlier. How do you catch up? I mean, we've been here before. There's

been other bull markets where we've been behind. But I don't believe I've ever seen you know, all the different theories and efficient markets and allocation. Come on, we just want to I just can I just do the sp And a lot of people can't say that. How do you catch up? I mean, don't swing for the fences. You and you have to save, right, I mean you have to have the capital to make capital. So we're looking at kind of these long term divotting growers. Payers

don't panic the answers. We gotta put a lot more money. We gotta put a lot more money, you know, and and that takes away from discretionary spending. That's just where we're at, and I don't think we're gonna make it. Francine is the United Kingdom. The same. I have no idea is the United Kingdom the same and that everybody's under invested like we have off the Arisa Act of Well,

I'm not sure. It's a great question for Joe. The I guess the million dollar question Joe is are we under invested because of bregsit or did it happen before? I think perhaps before? And I do think you know, this is a great study economists. How much did monetary policy post a crisis really create income inequality? Where inflated the asset values for people who own the assets versus the folks who didn't and created the spread which then

created the ankst and anger related populism. Are talking about that one more question and offer that William Gross has told us with Jana's Capital that the financial repression will continue for years, if not decades. Are you saying at some point we will normalize and we will see assets subdue and the income disparity will lessen. Is the rich get poorer? Not necessarily rich get poor, but we kind

of have the pie distribution differently. We're gonna have to bring along the folks that are left behind the populace uprising, or you should be all in the cash think of it that way. So the policy responses to be more pro growth, more stimulus, and that for a while medium term is good for equities. But I think this is one of those markets between now and when you know

you you want to get out. We had a lot of clients saying that Joe I can't do two th eight again, and that's exactly what we got to keep in a COLLI thanks for the time. I greatly appreciate your Quidlin with a lot going on in Europe this morning. Uh, he is with us trust Mary Lynch and thematic strategy. Francine, what's your key in sight this morning? What? What did he learned? Excuse me through the week? Well, you know what we haven't talked about today and I learned today

because of this by election. You mentioned it briefly, tom So the UK Prime Minister Theresa May. Um you have a lot of investors saying she won't last a year. That's what George Sorrows told me in Davos, because she's pushing for this clean cut heart bregsit and then yesterday and today she demonstrated her dominance of the political landscape by winning a by election. Now a by election is basically a small election in the middle of an election cycle.

It's extremely rare Tom almost impossible for the government in place to win it, and she did just that. I'm glad you brought that up. Is this like a mid what we call on mid term election? Yes, it's it's not really a mid term, but when somebody steps down of a seat, then you have an election that could be just one region or or one part of the UK. But historically it's very rare that the party in charge

wins in very good. Let me bring in now someone who is really a joy to speak to, Terry mccauliffe. He has been important for his Democratic Party on too many fronts. It now has maybe the best job in political America. I could say this because within all the political turmoil Governor mccauliffe in Washington, and really in my healing after the election turmoil, I'm reading everything on Jefferson

i can. And so you get the bathe and all the legacy of Thomas Jefferson in Virginia, beginning with your wonderful executive mansion in Richmond, Virginia, which goes back to near eighteen twelve, the famous Alexander Paris House that you that you have there your prison, and I'm gonna ask you, Terry, some tough, delicate questions. Did Mr Trump win the election or did the Secretary State? Did Secretary Clinton lose the election? Which is it? Listen, you gotta give President Trump people

on the election. I mean, uh, hindsight, I would make the argument that, uh, the our campaign should probably have leaned it more on economics, job creation, talk about all the great things that had happened. But you know, listen, he's the president at the end of the day. He's sitting in the Oval Office right now, and uh, it just was a very unique time. And you know a lot of surrounding circumstances with Comey's letter and all the

Russia hats and all that. But you know, these are the things that happened in presidential politics, and you know, you get a lot of things, a lot of surprises happen, and uh, he's sitting there and he was inaugurated, so you know he wasn't It's all I can say. The fabric of your Virginia is one of the most diverse states in the nation. Maybe Illinois, maybe Georgia. I'll let you decide. You're the pro at this, I'm not, but you have a diversity in Virginia that I would suggest

is like nowhere else. What is the underlying support for President Trump right now from his core constituency witnesses speech today, but particularly Terry at the marginal Republican level. Are those people with them or are they stealable by you Democrats? Well he's in He's in a bad shape politically today in Virginia. Paul came out the other day. Um, I think you know the Quinnipec Pole. He was underwater sixteen or eighteen points. We've never seen anything like it this fast. Um,

so Pe, We're very concerned. We have a lot of issues. I mean, he's done the federal hiring freeze. We are very concerned about what he's gonna do on Obamacare, a repeal without replacement town would cost US two hundred million dollars a year automatically and our budget. We're very concerned about the travel ban. As you know, I went to

Dallas Airport. I think I was the first elected official out when I heard there was a family being detained there with two children with US passports without access to legal counsel. Were very concerned about what is happening with ICE officials today. We had an incident at a church the other day. It was a hypothermia center. Folks went in there to get out of the coal. They came out the next day and uh six seven ICE agents accosted him. I mean the first person they talked to, Francy.

And I'd make a joke here about Dallas Airport and Governor mc caull if is gonna fix the world's worst airport. But it's not funny. Unfortunately, there's so much seriousness, seriousness going on in this fancy time. If you could have been there with me, I'm telling you, with these families, it was heart wrenching. I mean families there six eight hours. They got on a plane with legal documents and were

detained when they landed. And how about yesterday reports of coming off of domestic flights in America and having to show your eye, Governor. Well, the institutions work. And actually, I I don't know about the airport, Tom, but I'm a huge fan of Virginia because it reminds me of childhood memories going around Shinando, a National park with my family. Well, the institutions in America work to try and fix some

of the problems you were just talking about. I believe. So. In fact, we're here this weekend the National Governors Association, which I'm the chairman of. We have our largest crowd ever. We have forty seven governors going to be here for four days. We're gonna meet several times with President Trump. We're having lunch today with Vice President Pence. We're gonna meet with the congressional leaders on Monday. Listen, we have

to work together. And the point we like Listen, that executive travel ban, executive order was hastily put together with no consultation with with the Congress or the courts. And of course he paid a price for that. And you know, the border agents, custom agents did not have clear guidelines, and it really was an embarrassment for our great nation, you know, the bastion of civil liberties democracy to have

that go on. But the systems will work. But in my point as chairman, which I will say to the President, we have to work together. You know, two hundred and thirty years ago in New Yorktown, Virginia, we sent the British back in the Battle of Yorktown. We got rid of the king. We're not bringing one back two d thirty five years later, he's just joining us. Terry McCall if he is the governor of the state of Virginia, Friends and Laquad in London. I'm Tom Keane in New York, Governor.

When I look at immigration, I guess the feeling I have, and I think so many Americans have, as we understand on the cover of the New York Times today, the Walter Journal, the F. T. Bloomberg whatever, that there seemed to be almost two white houses. How did the cabinet officers get control of the procedural dialogue of this White House? How does Governor General Kelly, General Maddis, Mr Tillison, how do they become dominant figures? Or is that just a fiction? Well,

they better become dominant or else where. This country is in for a very rough road. I'll be meeting with General Kelly. I sent him a letter in my concern about what had happened in Virginia. I'll be meeting with General Kelly on Sunday with Ice officials to go through. I mean, it's clear now we have a new standard here in America that you can randomly stop anyone you are without any due process. Any do cause that is a really that's a big shift in America that's never

happened before. But my fear as governor is this to me, all comes back, the economy comes back to jobs. This could have a chilling effect on the economy. I have already lost several site visits of companies from overseas who are coming to Virginia to build manufacturing facilities have now said, you know, it's not the right time to come to America. We're scared to come to American And remember Tim and franccene that of the world's customers live outside of America.

It is truly a global economy. We're doing great in Virginia, thousand new absence i've been governor. Unemployment's gone from five four to four one. But we do that because I trade on a global basis. And when when you start doing these with a fear of raids and all these other issues, it is going to affect the U. S economy. Governor, how difficult is it for Democrats and for a democratic governor to push back against some of the Trump policies.

Do you not need to convince because it's very easy for the President to turn around and say, well, you're the opposition, of course you would say that, do you not need to convince people within his own party to to maybe change and take a different tack. Well, and I think the most important that we can do as governors is we have a very large bully pulpit. You know. Listen, when I went out to Dallas Airport, I was on all the networks and they carried it live on Fox

and CNN. That's what you can do is raise the issue. I have been very vocal on these ice detainer issues, and I think what we can do is raise awareness. But right the federal government has the ability, you know, to do what they want to do on these federal issues as it relates to deportation and so forth. But we want to work. Listen, I listen, everybody, every governor wants the same thing. We want strong economy, we want jobs, we want a great healthcare and education system. That should

be the same thing. I have known President Trump for twenty years. I've had dinner with him, I've golfed with him. He actually gave me twenty five dollars when I ran for governor. I and I just, uh, he and I should have the same goal about growing the economy. But I think he's had a very rough start. I think he's got a lot of mistakes in the first thirty days. Let's let's continue this discussion Terry mccauloff with his folks.

Of course, with his service to the Democrat Party. He's somebody the Republicans have always respected in terms of just loyalty to the party. Will continue on the Democrats with this Governor mccauloff of Virginia, and it's always good to talk to him about the present politics. Terry. I want to go back to your exceptional competencies of running things for the Democratic Party, and I can take it all the way back to scenic Syracuse, New York and Bishop Laden.

A few years ago, the Democrats got clobbered in Cayuga, Courtland, Madison on a Daga, and Oswego County, the heart of central New York. In Oswego County, Mr Trump took fifty of the vote. How does the next Democratic candidate, How do the progressives of the Democratic Party get back to winning their fair share of those votes. It's a good question, tom uh. One thing I have argued with the Democrats we need a stronger economic message. I mean, as I say,

look at Virginia today. We traditionally used to be a red state, purple state, uh in elections. We've now moved to a blue state in presidential elections because like when I ran for governor, I ran in a strong economic message. My focus is going to be jobs, jobs, job diversifying. The academy. We're leading the country today on cybersecurity and new bioscience is human genome sequencing. Democrats have to lay out a plan. What is it you're going to do

for me? And you know President Trump during the campaign, you know, he had his slogans and he has things, and it resonated with a lot of folks. You know, the end of the day, the ills of our economy cannot be put on trade. But you know it's easy to blame, let's say, in Mexico or China. I always say on trade, tim you give me a fair trade deal, protect work of rights, environmental Right. I can beat anybody in the globe. I can sell our products anywhere, give

me a fair deal. But this idea that we're gonna put walls up around our country and isolated. We cannot grow by just selling to ourselves. We have to take part, as I say, in the world's customers outside America, you gotta go with those customers. So the Democratic Party message, I mean, I consider myself a very fiscally conservative, pro business Democrat. I'm socially very progressive. I just vetoed two days ago HB two. You know, a defund planned parenthood

bill in Virginia. They constantly are sending me bills anti women, anti LGBP. My argument and all this is leave people alone, focus on the economy, give the children a quality education, let the transportation system work, and people are gonna be happy. And and today I have very high approval ratings because it's all about economics, It's all about jobs. And I think the Democrats have gotten their eye off the ball. I mean, how Tom did we lose Michigan when Barack

Obama saved the auto industry. And that's the heart of the matter for instance. Right, But Governor, you say that Democrats need a plan, they also need a leader. Who is your party going to rally? You know, I don't know if it's gonna be one person. I mean, we have a d NC election. But you know, I served as the chairman of the party. You're not the leader of the party. In that sense, you run the mechanics, the guts of the party, you put the primaries on it to do all that. I think it's gonna be

a chorus of individuals. I mean, when you have the president, obviously he's the leader of the party, I think most of the leadership is going to come out of the Governor's got to remember every day I worry about economic development, jobs. I have to have a quality education system. I can't bring businesses to Virginia. I gotta be able to move people to northern Virginia. Let me, let me interrupt you. This is so important for Francine Laqua. Governor mccauliffe held

spellbound all of Paris at the climate talks. Okay, am I right to Devanka. Trump had to basically go into the Oval office yesterday and say, Dad, don't scool around with climate change. How are you going to shift the dialogue on some of these issues. Well, I think in fairness, you know, he's only thirty days. In fair but he has got some big issues. I think they've learned how tough this is. First of all, they talked about repealing Obamacare. I'm gonna do a day when when I get elected, Well,

guess what Speaker Better said yesterday. The Republicans aren't going to do it. This is not easy to throw eighteen million people on the street and take their healthcare away from This is a very complex It's not a political sound bite. The president listen to me, that's no. But come on, seriously, great, come on, Terry francaying, you don't

know this. The cover Francy's question is brilliant the cover of the New York Times today, Governor mcauloff, I have never seen there are not one, two, three parallel paths within the White House. Who is President Trump going to listen to? He better listen to the people. Here's what I would say. He better listen to people who have had the experience and expertise in the areas that they are in charge of. And I hope he listens to General Maddis. I hope he listens to General Kelly, because

these folks are experts. They know what's going on. I mean, listen. I have a son in the Air and Forces. I have a son who's a United States Marine. I'm very proud of it. I want to make sure that when these military decisions are made, that we are protecting our young men and women uniform. And we are doing this deliberately. Governor. We didn't get to the lousy commutant Virginia, which is eighth worths in the nation, sandwich between Illinois and Georgia.

Francy and I need to come to Washington, go to Williamsburg. Show Francine, how British America did things right in your Virginia before we threw the mother country across the Atlantic Ocean. We need we need to come down there and meet with you again. Terry McCullough, thank you so much. He is a governor of Virginia. Francy. You see how I did that. We can do the show from Yorktown. It's a road trip. It's not a show. It's a road trip. It's a road trip to Yorktown. We can see where

corn Wallace said goodbye. Brought you by Bank of America, Mary Lynch. Dedicated to bringing our clients insights and solutions to meet the challenges of a transforming world. That's the power of global connections. Mary Lynch, Pierce Federan Smith Incorporated, Member s I P See and now, Frankly, the most important interview of the day, George Friedman is fiery with an encyclopedic knowledge of military and defense. UH, and has always interesting George. We could speak literally for five hours

straight today. There's so much to talk about. He is with geopolitical futures, George. I um looked at the cover of the New York Times today, the cover of the f T, the cover of Bloomberg's work. I've never seen anything like this on issue after issue after issue. There are two streams of thought coming out of the Trump White House. Let's just begin with generals in Mexico. Tell me what we do when we project General Maddis and General Kelly in the cabinet. But I believe they have

no power. How do they get a voice within the administration? Well, very frankly, we have a rule and everything a no attention what any political leader says. You wouldn't buy a stock based on what the CEO said yesterday. Watch what they've actually done. The actual actions of the administration have been much more conservative. UH. And that's what's important. So when we ask who has the influence, we assume we know what Trump is thinking, We assume we know what

the power structure is inside the White House. The fact is, just look at what they're doing. They're doing what they said they were doing in a very modern and limited way. Okay, and then the next treatment and fancy and this guess that's going on a half hour with Mr Freeman. The photo yesterday that stopped all of America deadnets tracks whatever anybody believes was a domestic flight. I believe out of s f oh of I c E. Customs, immigration types,

checking passports. That's almost a quasi military group. Is that a military operation? Actually, it's the rule of law. Congress passed law on immigration back in the Clinton administration. Clinton

agreed to it. Um it was never enforced properly. So one of the questions is do we have laws and immigration where don't we It's not that I'm a supporter of Trump and many things, but in this particular case, uh, he's putting clean up for Obama, Bush and Clinton who never really enforced And in fancy, I wain'ted to jump in here with Mr Freedman, but Francy, let me make clear that a large body of Americans agree and here's the key word with some of the president on immigration.

I mean, he's got huge support on some of these immigration actions, right. But Georgie how do you see this unfolding? You have he the president has some support, he has a lot of support, and he has a lot of dissent. Who are the institutions that will decide what comes next? I keep on being told the president, even if he's the president of the United States, can't do what he wants all the time. Well, this is law. What he is doing in dealing with illegal immigration is a law

that's been in place and he's enforcing it. Now, what is going on here is an argument by those who would like to change the law and allow legal immigrants to romain United States, and then maybe a very good idea that we're going to do that regardless of what the law says. So in terms of the law, it's

all on his side. In terms of the politics, um, you know, there's a large number of people in the United States who feel that first they're uncomfortable with immigration, but more important, they're very uncomfortable with the idea that a president consusably ignore the law. So I think in the long run he's going to be a pretty strong shape. All right, But Georgia, okay, and I understand, I mean, we have Look, I live in London, we have very

bizarre laws. I mean, there's one law saying that you can't be drunken a pub, So of course it's law. I understand that. I get that the law has not been enforced in certain cases because illegal immigrants add a lot to certain industries. I'm thinking of the farming industry. Right. Well, yeah, you can't. This is not a bizarre law. The United States has had a law on immigrations. Uh. It has

always been enforced. So if what we're going to say is, look, we're not going to enforce laws that cause economic disruption, we've got a problem. Instead, what we do is go to Congress and have them changed the law. Congress doesn't want to change the law. Uh. And now we're a poll that somebody who's gonna enforce it. So the question is a political one, not a moral one. That's right or wrong in the end. Uh, he's going to get

a lot of support on this. Right now, it's being presented as if it is an arbitrary action by him. The media has been all over him. But the fact of the matter is that all he's doing is enforcing a law that's been on the books. Fears your expertise with a pentagon and with the military does does And I understand the I do not speak as of amateur folks. The difference between military and police force in seven other shades. Mr Freedman, you know better than us. Does the military

want to be involved with this? Is this something they just say, you know, we don't want to do this battle? How does the Pentagon feel about the militarization of our immigration effort? Well, you know that's a media statement. The little military cannot be involved in law enforce in the United States under that called that was signed in eighteen seventies. So there is no option of taking the U. S Military and turning the police force unless you got to

break the law. The second thing is is that if you were going to decide that you aren't going to take care of this problem, you're gonna writ people checking. If you want to call that the militarization, you know, great, Um, what he's doing is probably not quite right from a practical point of view, he's moving fast, but from a legal and a political point of view, it's not molitorization. Okay, So Georgia, what's been happening so far have previous administrations

turned a blind eye on illegal immigration? Is that how you would describe it. They have not completely turned to briand Ie. Obama expelled two million, five dred thousand illegal immigrants, but they did not make it a priority of enforcement. To some extent, the president has the right to decide what the priorities of enforcement are, so long as within the framework of the law, and previous presidents decided politically, even if it was law, they weren't going to do it. Interestingly,

the most aggressive one enforcing it was Obama Georgia. A few more questions, if we could on the present tense of Washington, d C. What is the actual relationship of the Secretary of Defense, General Maddis and the Pentagon. Well, to me, it's a mystery how the Secretary of Defense dovetails with the Pentagon. How do they do that? Well? The Secretary defends legally, Uh, These joint chiefs of Staff are answerable to him. He effectively overseas and runs them.

This particular Uh, this particular Secretary Offense is extremely knowledgeable about it. And one of the things he's come in with is arguing that the military has become enormously inefficient, spending large amounts of money on things that take years to field. One of them was a armored vehicle that was badly interacted to five years to get into the field, and he intends to make it more efficient by making it, among other things, a much smaller bureaucracy in the Pentagon

and many more troops in the field. George talked to me a little bit about the Secretary of State Rex Tillerson. So I've been reading a lot of US news political the Washington Post, both describing how the former exce on Mobile CEO had been cut out of the loop on some shifts in terms of foreign policy and slapt down by the White House on personnel choices. What does that mean on how President Trump will deal with his cabinet. Well,

first as assumes that this is true, very good. Yeah. Secondly, it assumes it forgets that he came into the cabinet latest, so he's not really up to date, so that when he went to Europe he basically said, I'm here to listen and not to act. He's never had a government job, he has never really done this before, and he knows it,

and I think he's being very careful. You can interpret the fact that things have to be done and he's not ready to do them cutting him out of the loop, or you can simply say they're going to give him a couple of months to find a seat. Uh. But also remember one thing. In Washington or in London, lots of people get cut out of the loop on decisions. The simple fact that you hold a job with a certain title doesn't mean that you're prime minister or our

president is going to consult you on everything. That's just the standard way government's run, stand away companies run. Right, But he is he arguably the most important appointment for the Trump administration. He is one appointment. He runs the State Department. Uh, the appointment of Defense Department is equally important to National Security Advisor, the head of the c i A. Unfortunately, and I think this is a problem.

The complexity of American decision making in foreign policy means that there is no one person and point to who is the most important. He is one of many. Well, this is a very good point, and that the president speak you this morning. We'll have that for your folks in seven minutes of seapack, and then we go on to his congressional efforts next week. Everyone can agree this is a president that likes simplicity. He likes simplistic statements,

simplistic theory, simplistic plans. I'm not trying to make a judgment your folks. I'm just stating the fact you've just stated, our foreign policy and defense projection is highly complex. How is the industry, George Friedman that you're in going to deliver a simple message to the president. Well, first we have to have a simple message to deliver, and there is no simple message, partly because this really is complicated and can be boiled down to just a simple message.

Partly because the industry loves to complicate it. Yeah. The more complicated the issue is, the more they own it, more you need. Yeah. So, I mean the problem that we had here is that we have reached the point is everybody points out we have six in intelligence agencies that's built to fail in his simplistic way, and the president puts things in simplistic ways. Uh. You know, he's

pointed this out. You know, he's pointed out that the decision making structure of our foreign policy can't generate strategy, doesn't listen to the president when strategy is made, and so on. This has been an old discussion. Now he's going to take a shot my expectations, hopfil I mean this is this is built into our firm policy from from where you set And I say this, folks, with Mr Bannon's comments yesterday, and who knows what we'll see as we staggered a Monday, A grizzled guy like you

in the middle. I love this frenzy and I love saying this. George Freeman is part of the military industrial complex. Thank you think I didn't know we were meeting, but as part of a phrase from another time in place and you know military movies from the other at the time. What does your industry do with Mr Bannon? Do you do? You do you just wait him out? Or is General Madison others going to do something? What? What's the Here's what I say. Every administration has an ideologue in his

foreign policy structure. Um the Obama administration was filled with them. What you're doing is one your answerable to the president and you have to carry out the policy. Secondly, the idea logue mostly make speeches. He's in charge of whipping up the base and saying all the things are going to happen to Usually abandon has no effect. He doesn't really get down into the meetings where things really happen.

But I don't know if any administration that hasn't had abandon Now this Bannon is particularly disliked by foreign policy establishment compared to some of the others that have been there. But still it has to have some sort of ideological statement for the public. And you do have to remember, as he was elected, so he is the president. So can you say with any certainty that the u S foreign policy at the moment is America first? Is that

foreign policy? Well, it's supposed to be because the president is charged with making certain by the Constitution of the American safety, that's his job. I think bold presidents do that. But remember we've been to war for fifteen years. It hasn't worked. Our relationship to Mexico hasn't evolved. So Mexico when we signed MAFTA was I think they si largest economy in the world. It is now eleventh largest economy

in the world. There's a different dynamic going on. So one of the problems I wish Trump would be able to enunciate is, Look, we are playing by a playbook that's ten twenty years old. It needs to be updated. Europe certainly isn't what it was in in terms of organization, structure, solidity and so on. We can't continue a foreign policy that assumes that nothing has changed, and the foreign policy establishment likes to do that. So the answer is that

he was elected to transform the system. I don't know if he can do that, but part of that is he's very offensive to a lot of people, so to understand and the back law, all the things that are saying what he'd done so far in foreign policy not a whole lot. We need to talk more often. George Freedman,

Thank you so much. We've got a huge response to Mr Freeman is not so much giving his opinion, but just stating in fact, like this is the law, and in this case, the president is finally affecting the law. As you heard, it's been around since President Clinton. Somehow, I would suggest this debate will continue. Frenzy like, thank you so much. We heard from David Gura. I can't

even pronounce the name. He's in some city and tear de Fuego at the tip of South America, y Shiya or something, on his way back from Antarctica with his kids. So maybe we'll see David Gura on Monday. What a week it spend. Thank you so much for your attention to us on radio, on television worldwide. This is Bloomberg. 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, brought you by Bank of America Mary Lynch. Dedicated to bringing our clients insights and solutions to meet the challenges of a transforming world. That's the power of global connections. Mary Lynch, Pierce, Fenner and Smith Incorporated Member s I p C.