Paul
Hello and welcome to Macro Bytes the economics and politics podcast from abrdn. My name is Paul Diggle and along with my co-host Stephanie Kelly, we're guiding you through the macro-economic and political themes that are driving global markets. And we took a break last week for Easter. But we're back and Steph and I are going to talk about the future of the European fiscal rules. Steph and I have actually spent some time recently talking with our contacts in Brussels now elsewhere about the future of the European fiscal rules. And today, we want to share a bit what we've learned and what our thoughts are on the future of these quite complicated rules. So Europe has a set of fiscal rules, which are meant to keep Member States on sustainable fiscal paths. But these rules have often been seen as overly constraining, sometimes even actively unhelpful for economic recoveries. And they're really getting rethought at the moment in the context of the pandemic, the EU recovery fund. And the big paradigm shift a lot of economists are going through about the appropriate role of fiscal policy, which is something we've discussed a lot on the podcast before. So that's what Steph and I are going to get into. But I thought we'd start with a clip from European Commission vice president Dombrowski, talking about precisely this topic.
Paul
Steph, let's start with some background. Europe has a notoriously complicated set of fiscal rules, actually, that complexity is one of the criticisms of them. But can we summarise the main idea, the main points in the fiscal rules?
Stephanie
Yeah, of course. I mean, I think this is one of the dangers, I think, with European Union treaties is, especially as the years have gone on, they've gotten more and more complex and added bits and pieces. So there was the Stability and Growth Pact, and then they had the fiscal compact, broadly speaking, I think it's useful to think of it as just a set of fiscal rules that are designed to ensure that essentially, fiscal discipline is maintained and enforced within the European Union. In particular, it's useful to think of it as having two arms, essentially, there's the preventive arm. So essentially, the rules that determine that countries are on the right track. And then the corrective arm, which we hear a lot about in kind of European crisis circles, which is, you know, excessive deficit procedure is essentially, if you haven't followed the rules, what then? So maybe is it worth just outlining what those rules are?
Paul
Yeah, I think there are basically three numbers that I keep in mind, there's a lot of caveats with a lot of complexity. But I think there has been three really important numbers. And they are 3% 60% and 1/20. And what I mean by that is there is a 3% budget deficit rule. So economies can run, or governments can run deficits, up to 3% of GDP per year, but theoretically no larger. The 60% rule is 60% debt to GDP, so the debt to GDP ratio should be kept below 60%. And then the 1/20 is that where the debt to GDP ratio is above 60%. Each year, the country should close 1/20 of that gap between their actual debt to GDP ratio and this idealise 60% level. And I mean, they get so much more complicated than that there are so many caveats and parts of the rule. Perhaps the most important sort of layer of complexity to mention is this Medium-Term Objective, the MTO, which is a structural budget balance that the European Commission chooses for each country. The idea is that you run a structural budget balance, I.e you strip out the effect of the economic cycle, that budget balance should then in some sense, restore fiscal sustainability. But as we say, the complexity of these rules is actually one of the criticisms a lot of people have about them as why people always talk about changing them.
Stephanie
Exactly. So I think because with that Medium Term Budgetary Objective, it's something like, it can be said to half a percent of GDP for states with a debt to GDP ratio exceeding 60% or 1% of GDP for states with debt levels within 60%. You know, it's just so not user-friendly I think. Even for investors and economists, I think they struggle with all these different little rules.
Paul
Absolutely. And I think the fact that the rules are so opaque is a problem for markets. And it's a problem for governments because how do you internalise in your decision making, as a government a set of rules that actually very hard to understand, at least in a sort of a to a layman's perspective?
Stephanie
Because I think especially if you think about the dynamics of bracing fiscal policy, you know, if your voters can't even understand what the rules are, let alone do they really want what happens to them to be governed by these really confusing, opaque rules? It creates, I think, a legitimacy issue for the rules as well, it becomes so complicated, it becomes so opaque and then not respected, that it becomes a self reinforcing cycle that you end up with, you know, diversions from what the European Union would ideally like to have.
Paul
Absolutely. But maybe before we get into all the problems with them, because they are they are manifest. Why don't we talk about why these rules exist in the first place? Well, what was the original justification for the fiscal rules?
Stephanie
Yeah, for sure. I mean, I guess you could point to a lot of different factors. A big portion of it is just around the nature of the European Union itself. It's such an entrenched union of countries that are very different. I think one of the big concerns has always been and it still plays out today, that countries that are more fiscally careful or "responsible", end up carrying the can for countries that don't they're more exposed to crisis as a result. I think that's where it came from, Paul.
Paul
Yeah I mean, It was in the Maastricht Treaty, you know, all the way back in the early 90s. These rules were part and parcel of the European Union and the eurozone and the entire project. And, yeah, I like to think of it as having a political dimension, as you say, this was a group of such diverse countries with such different political histories and histories of fiscal responsibility or irresponsibility in many of the cases. So the price, say, of Germany's involvement in the project was there must be a set of rules, which constrain other European countries to be more like Germany. So there was these important sort of political considerations. But the other really important way, which I think about it is, it's trying to move towards an optimal Currency Area. If you're going to share a currency, in the economic literature, the idea is that you should share a lot of other things as well, like cultural homogeneity might be a good thing, or fiscal policy should be in some sense harmonised across countries. And the idea is that the optimal Currency Area is a more sustainable Union, the US is the paradigmatic optimal currency area where the states are all are in a fiscal union with each other as well as a currency union. So I like to see in those kind of terms pushing towards an optimal Currency Area and bringing fiscal policies into line with each other.
Stephanie
I think it's just much more challenging to do that. I know we're going to get into the challenges. I feel like I'm, I'm doing it too early. But I do think the difference with the US is a good example whereby there's always been this push pull around fiscal policy at the domestic level, and also, of course, then the question of fiscal union at the European level. But the difference is that in the United States, they do have, at the same time as they have the fiscal harmonisation, they also do have cultural homogeneity, they, you know, yes, there are differences between states. But ultimately, they all consider themselves American, one of the great failings of the European Union has been the failure to create a truly European identity to compliment not replace national identity. And that's incredibly hard to do. And I think they haven't done it yet.
Paul
Yeah, absolutely. And remember, as well, the 90s. In the economics profession, it was all about making central banks independent, and then outsourcing macro economic management and macro policy to central banks. There was sort of a thought in the profession that central bankers and monetary policy were all you needed to manage the economy. So the idea of actually constraining the ability of governments to set whatever fiscal policy they like, was actually at the time seen as a really good idea. And again, it was part of bringing, you know, Italy to become more like Germany and allowing these countries to join together. But let's get into the elephant in the room, then the real big issue is what's the problem with all these fiscal rules? They've been so heavily criticised? Economists, politicians markets, we love to talk about the problems with the fiscal rules. So why don't you outline some of them Steph.
Stephanie
I think we've touched on a few already. I won't lie, the first few minutes we've basically highlighted a lot of them. Right, one is complexity. Complexity and opaqueness, which doesn't help with buy-in. The politics of them, I think has been really problematic, particularly in the post financial crisis era. I think "austerity" was a really dirty word in a lot of countries, I have to say, I mean, I grew up in Ireland, and I was I was studying economics at the time of, you know, the sovereign debt crisis. And it was really, you know, a huge blow to not only the actual economic realities, but also the perceptions about the value of the fiscal rules. I think, in some ways that damage has not been undone yet. And then the third, I'm sure, you'll have a lot to say on this. The third critique would be is it appropriate that Germany and Italy and France and Ireland and all the Eastern European countries, is it appropriate that they have the same fiscal policy?
Paul
Yeah, I really don't think it is. I mean, yeah, these rules are more honoured in the breach than the observance. Yeah. So few countries actually meet these rules, year after year. So having a set of rules that you just never meet is this sort of instant undermining of the legitimacy of them, the point of them in the first place. And I think that's a really important thing to say. I think the other points are that the whole justification of why they came about in the first place, the thinking of having harmonised fiscal policy, outsourcing macro economic policy to monetary policymakers, our view of those things has changed now. I mean, the fiscal rules are seen as overly constraining government's ability to handle crises and asymmetric economic shocks, especially when monetary policy is just less able to provide the stimulus that these economies need as interest rates get lower and lower. And remember the debt rules failed to prevent the European sovereign debt crisis, which arguably, the point of them was to prevent a runaway debt crisis and, you know, Southern economies building up huge unsustainable debt loads, and they just failed to do that in the first place. So they sort of failed on their own terms.
Stephanie
I think in some ways, I think it's the point I think about context and point in the cycle and economic situation more broadly, it's something that rules this rigid, just can't really account for. And I think that's reflected, in particular in the decision to suspend the rules during the COVID crisis. And at the moment, the you know, the fear isn't about government debt levels, the fear is, you know, the incredible damage human and economic that the Cobra crisis has created. And in some ways, that's a microcosm of why some of the critiques of the fiscal rules are valid, because they aren't adaptable, you kind of have to suspend them in times when you need fiscal policy to work. So then what's the point of them? You know, that they work in good times, but they don't work in bad? You know, it's just harder to defend them I think in that way.
Paul
Yeah, the fact that they are suspended. And we should say that the fiscal rule, the general escape clause, as it's called, of the stability and growth pack was triggered. Last year, during the start of the pandemic, it was extended into 2021. And the commission is now actively thinking about what it's going to do for 2022. But my assumption, I don't know about your Steph, would be that there's another year of suspension of the rules in 2022. So as you say, if you're suspending rules during a crisis, are they fit for purpose in the first place? The point about complexity is really important as well, because one of the ways in which the MTO ,The Medium Term Objective, is set. This is the structural budget deficit, is economists at the European Commission have to estimate the point in the cycle that economies are at, and the amount of spare capacity, the output gap that those economies have. And then the calculation sort of feeds through into the structural deficit countries allow to run. And that's just really, really hard, technically speaking, model speaking, to actually estimate an output gap and where you are in the cycle. And a lot of the criticism the fiscal rules get in sort of policy wonk circles is that you just can't estimate output gaps. And I've seen papers where the the subsequent revisions as these models get updated, of output gap estimates which are crucial for these fiscal rules are as large as the initial estimates themselves. In other words, the initial estimates have no then not statistically significant, be different from zero, you just don't know what these numbers are. So the whole sort of technical econometric model basis of the rules is, I think, deeply, deeply in question.
Paul
Which I think is I mean, it is essentially what you're saying is, you know, we all say, with models, garbage in, garbage out, I think if there isn't credibility in those, what are also incredibly technical terms for, you know, average people to understand, there isn't even the credibility and the numbers you're working with. And then you kind of, I mean, why are the thresholds where they are, I guess, is the other question? I don't know if you have any kind of context on that Paul. But why 60%? Why 1/20?
Paul
I think that's really important, because those numbers seem to make sense in the 90s. But a lot of countries had debt to GDP ratios around that kind of level. In the intervening 20, 30 years, they have built up hugely higher debt to GDP ratios, and much larger deficits than 3% have occurred a lot of the times, so those numbers made sense, I think, for prevailing conditions when these rules were written the first time around. And you said that they updated all sorts of times, but the main numbers 63, and 1/20, have remained the same. They just look hugely out of step with the way the economy has evolved. In the meantime, where debt to GDP ratios have reached I mean, well over 100% in many European economies, and where interest rates have moved to extremely low. And we've talked about this a number of times on the podcast before we did a whole episode on the paradigm shift amongst economists for what counts as a sustainable fiscal position where the debt to GDP ratios even matter in the first place. So this is all part, interestingly, a part of a much bigger intellectual and market debate amongst economists and investors.
Stephanie
Yeah, and I think the COVID crisis has really shifted that I mean, you know, we've said on the podcast before, but you know, in the US, Obama didn't want to say a trillion, because he thought that that will be too outrageous a number to present. And now, you know, you're looking at the multi trillion similarly, in Europe, I think the conversation has been moved on by virtue of the nature of the crisis. And it begs the question, can you put it back in its box again, or is it actually that just a step change that, inevitably, I think European policymakers will still be too slow to adjust to, but ultimately might have to adjust to?
Paul
So that interaction with the US is really interesting, because the paradigm shift in policymaker thinking in the US is basically happening before our eyes. And you and Luke were talking about it a couple of weeks ago, the size of US stimulus measures. The fact that the Biden administration has had that big structural break with what went for in terms of the size of fiscal stimulus it's willing to do. And I wonder if Europeans are looking at that and sort of saying, well, actually, we need to rethink our fiscal architecture here as well.
Stephanie
Which I think that the thinking is probably going on, I think, to be honest, it's been going on even pre COVID among lots of member states who feel that it is unnecessarily constraining and punitive towards certain member states and not other member states who maybe have less or more political power within the European Union. I think the challenge you have is just the speed with which decision making takes place in Europe compared to how it happens in United States, which has lots of different issues to contend with. But obviously, you have a Biden administration that can make decisions quite quickly, because it's inpowered to do so. That's another important difference when it comes to the European Union, whereby unanimity is required for treaty change. And so any major breaks the past require not just one, but you know, 20, something states to all be on board with it.
Paul
So personnel change in the top tier of European politics is another really interesting reason why the future of the fiscal rules is up for discussion at the moment. And these different personalities are going to argue different positions in terms of the reform proposals. They're going to put forward. So Steph do you want to sort of talk about who are actually the key players in this debate from a political perspective?
Stephanie
So I think, traditionally, we always talk about the Franco German axis being absolutely crucial to European Union decision making in general and particularly Germany. Let's face it, Merkel has been at the centre of solving lots of crises that Europe has faced and finding compromises, finding solutions. And there, leadership is changing. So we I believe now do actually have confirmation that the her replacement both in terms of the leadership in CDU/CSU but also in terms of the chancellor, the candidate Chancellor for the next election which is due to take place in the autumn, is going to be Armin Laschet, who we've talked about on this podcast before. It was between him and Markus Söder. And we've talked about Markus Söder, before on this podcast in terms of saying that he's probably the more uncertain candidate, I guess from the perspective of do we know exactly what he's going to do? He seems very politically savvy, and would play to domestic audiences on euroskeptic issues. Armin Laschet is not going to be like this. So he's kind of a continuity candidate. The question is, does he really have the credibility to solve crises in the way that Merkel built up a reputation of doing? You know, does he get that just automatically by being part of that? I'm kind of sceptical, I think. I think it's good to have a steady pair of hands in Germany, but it's not necessarily going to have the same effect, as Merkel did, because of the, you know, the fact that she had just built up such a reputation and credibility in those circles for solving problems.
Paul
And he's seen as maybe a little bit less fiscally hawkish than Markus Söder who was from the more conservative CSU branch of the Union. But I suppose a lot really depends on, if the CDU/CSU are part of the governing coalition, which maybe not completely clear, but presumably is going to be the case, but who their partners are as well. And the fact that the Green Party is looking pretty likely to be the coalition partner. And they have I think bolder fiscal rules, certainly for German politicians.
Stephanie
Yeah, exactly. You actually touched on one important thing there, which is, I think, the question with the new chancellor in Germany, whoever that might be, and the way polling is going at the moment, you could end up potentially with the green finance minister in Germany, it would be a real paradigm shift for German politics. But nonetheless, if their polling continues to strengthen even marginally, they really come into contention for being the largest party. However, I think there's a question between A. how fiscally conservative is the chancellor and the finance minister crucially? But then also, so it's their own personal ideology, but then it's also how influential are they within the European debate? I think those are the two characteristics you're kind of looking for. So as you kind of rightly pointed out, Laschet is less hawkish, but he is probably less influential than Merkel, at the very least, maybe at the margin, he's seen as a little bit more trustworthy than Söder. Although it's really hard to say at the European level, we just got the new German Green Party leader as well. So the German Green Party's Chancellor candidate is going to be Annalena Baerbock. And she is seen as quite, as you mentioned, actually a little bit more flexible in terms of both fiscal policy within Germany, and also, crucially, the fiscal rules. I do think the coalition will ultimately be the major decider of how much Germany becomes a more flexible partner on the issue of fiscal rules. Because traditionally, you know, Paul, they've always been more so on the conservative side and pushing the rules in a more consistent way.
Paul
It's worth saying that if the greens are the junior coalition partner to the CDU/CSU, which is probably a sort of base case assumption, they may then, what the convention is, they would then fill the finance minister function, the equivalent in Britain of the Chancellor obviously. The Chancellor is the leader, very confusing that. So and they have a platform of dropping the German debt break the Schuldenbremse rule, which is sort of constrains Germany's ability to run a deficit of any size, let alone a 3% deficit. So quite an important break there. But that's the German context. And so a lot depending on the election outcome, the balance of power within the coalition, who forms the coalition, but there's another really important new kid on the block or old kid who's come back, which is Mario Draghi, and he's got a big role, my favourite European political figure. Yeah, he's got a big role in this debate, doesn't he?
Stephanie
Yeah, absolutely. I think clearly, what Italy has sometimes in the past lacked is a voice that is really well-known and well-regarded in Brussels. And I think what Mario Draghi gives is that voice very much so. Generally speaking, southern countries tend to be more understandably, more keen on a bit more flexibility, given their fiscal positions, given the challenges they face. But sometimes what they've lacked is a really, you know, influential visible figure. I think, if ever there was one, it's going to be Mario Draghi. The question is, timelines? How long is he going to be prime minister? If he wants to be president, that could potentially mean as early as, you know, the first quarter of 2022. So less than a year away, he could stand out from being Prime Minister to become president. And as some of our contacts in Brussels think that that's very much the plan, others seemed less inclined and if anything actually Paul, I was really struck that there was seemed to be actually a growing suggestion that maybe Mario Draghi will stay in until the next elections. But that would only bring us to 2023, which is probably still not long enough to really determine a final change. I don't know. What do you think?
Paul
Yeah. It seems to me like that question of whether he steps up to the presidency role or stays in the PM role is ultimately only he knows the answer to that. Probably it depends a lot on the early success he has with implementing the recovery fund and fighting the pandemic in Italy. I mean, I'm certainly expecting him to be a strong voice precisely as you say Steph, because he's someone the commission and other European leaders see they can do business with. He is a serious Italian leader of the sort that some European leaders might not be used to. A very strong voice with a lot of political authority and clout in these debates about fiscal reform and, and structural reform in Europe. So I do think he has a big a big role to play in he would obviously be pushing in the direction of a more flexible set of fiscal rules. That was always what he said, when he was president of the ECB, that there should be a bigger role for fiscal policy. I wonder if you think Stpeh if Macron has a sort of position in this fight, or has staked out any strong views on the fiscal rules?
Stephanie
Yeah, it's a tricky one to call because, again, Macron is also facing election in early 2022. So we have this kind of confluence of timelines here, whereby, as you said at the beginning, 2022 will be we expect an extension of that flexibility that we've seen through the Covid crisis. So it really becomes the 2023 decision making that matters. But of course, Macron has to fight an election at home before that. And so I think a lot of his political capital will be spent on you know, domestic electioneering, and particularly on green policy. Actually, one thing on the green element, because I've been kind of struck that, reading about like, Annalena Baerbock's own policy agenda, and some of the suggestions we've heard about Draghi's preferences on fiscal, it kind of seems like there might be some kind of political at least appetite for discussing exemptions on the basis of green or digital investment. What do you think?
Paul
Let's get into that, then the actual policies on the table. Maybe it's worth saying the things that we would love to happen or I might love to happen. From as a technical economists perspective, that are probably unlikely to happen. And that was just dropped these numbers to 60% becomes 100%, or something like that, though there is no debt GDP limit, 3% becomes larger than 1/20 convergence path becomes 1/14, or something like this. But the fact that these numbers have been around since the early 90s, have survived successive reforms already of the fiscal rules, I think means they're not going away. And when we were talking to our to our Brussels contacts, they were telling us look, these rules, these numbers are sort of sacrosanct. It's just that they get watered down in so many ways around the edges. And some other rules that I might like I've heard Draghi, arguing for them would be, say, a golden rule, which we had for a long time in the UK, where the budget is balanced over the cycle, but you exclude investment spending from it. And that's a pretty common one. But I think you're right Steph, what will happen is, you get a lot of exemptions or carve outs from what's included and what's not included in the 3% deficit rule, or maybe in the debt to GDP rule. And green spending is absolutely at the forefront of that carve out and we will not count green investment spending in the 3% calculation because Europe has broader policy aims which prize an increase in green investment. That seems like a very easy way for these various personalities in the debate to sort of compromise and reach common ground.
Stephanie
Exactly, it seems like an obvious place, we had a bit of a preview of that approach through the European recovery fund, for example, in the green promote proportion of that. I guess it's just always a question of something that seems like it should be a fairly simple agreement, just when you get to the European level can be a little bit more tricky to work out. But that seems like the sensible option. I mean, as well as that the advantage of allowing for that carve out invest investment is that that should then help to boost long term potential growth which is a crucial weakness particularly of the very countries that do not agree with the fiscal rules. Places like Italy, that have very low potential growth rate. So it could be a winner on multiple fronts, both in terms of helping Brussels achieve certain climate aims, but also maybe even in a perfect world mitigating the differences and helping to boost long term potential growth.
Paul
And I think digital spending is also sort of one that's also talked about as being part of this carve out that fulfils a lot of other broader policy aims as well as giving additional flexibility to the fiscal rules as well. I mean, other things I can imagine happening would be these output gap estimates. I'm talking about the way those are done could be improved in sort of a technical modelling sense or less weight can be put on on that because it's fundamentally an estimate, rather than something you really know about the economy, or that the medium term objective could be much more discretionary. It could be there could be a judgement from the from the Commission on, they could they could look at interest rates, they could look at growth rates, and they could make maybe a more qualitative judgement about what a sustainable structural budget deficit would be. I mean, I wonder what you think, Steph, that this, this landing ground is probably going to be about creating more exemptions actually increasing the complexity of the rules in the process, defanging them and watering down the importance, even more of 60% 3% 1/20? I mean, I think I welcome that. But is there a danger, this increasing complexity, while keeping these headline numbers that no one's meeting? Does that does that create problems?
Stephanie
So I think at the headline level it, as you say, increases complexity. I guess what it benefits from though is, and this is what I was thinking about when we're talking about the technical changes that could be made, and how can they make it so that they work better? But I think a significant part of this is also about how do you make the politics of fiscal policy in Europe work better. And even if this means more complexity, if it's something you can package up as an opportunity for countries to spend more money on building up their infrastructure in key areas like green and digital, then maybe it doesn't matter too much if it gets more complex. It just becomes maybe an acknowledgment of what we've kind of underscored throughout this whole episode, which is, these rules exist, but no one really follows them most of the time, or at least, the countries that they are designed to kind of constrain aren't particularly constrained by them. And then the countries that created them, who naturally fit into them, because they have their own domestic rules. They still fit into them, right. So maybe it's just more an acknowledgement of the reality, rather than necessarily discrediting something that honestly already, I think, is just seen as somewhat discredited by the reality of how it's borne out.
Paul
Yeah, I agree with all that. Why don't we end them by a few implications of all this for investors in financial markets. I think I have two which would be more active European fiscal policy, what I would call better European fiscal policy is here to stay, the current fiscal rules may never be reimposed in their current form, they'll probably be rewritten, as we've been talking about before they're reimposed. And that's probably a good thing. It means better macroeconomic management. It might increase issuance, which increase bond yields in markets as well. But to the extent that actually improves the overall management of the economy, I think that should be a pretty, pretty welcome thing. And then maybe the other takeaway I have for implication for investors is that if we are moving into a world of more active fiscal policy. More monetary fiscal coordination is also here to stay. So the idea of a central bank, anchoring bond yields low or keeping interest rates low or in some ways using say QE to exert some influence on bond yields, which gives you fiscal space and allows governments then use fiscal policy, that whole setup of monetary and fiscal policy is probably here to stay. And concretely for investors. That means actually, there's a lot more control from policymakers on what the actual bond yield itself is.
Stephanie
I might add to that in terms of the key takeaways, I mean, to your point about bond issuance, in particular, given the demand that there is particularly within European markets for green opportunities and opportunities to invest in climate change. One would expect that in a world where there was a carve out for investment in green, that that might result in greater green bond issuance, which could create opportunities for investors more generally, anyway. And then I think what the discussion has really underscored is just how important the political decisions that get made in 2021 and the early part of 2022 will be for determining these really important long-term structural questions. Who wins the German election? Who's in the financial ministry position? Who wins the French election? And crucially is Draghi still in place when it comes to really getting into the nitty gritty of fiscal negotiation at the Brussels level. I think that's something for investors to watch very carefully, because obviously, it matters a lot for those domestic economies. But it clearly also has important implications for the longevity of fiscal policy and indeed the changes and like I made in the next couple of years.
Paul
Steph, brilliant, thank you very much. So that's about all we have time for this week. Thank you for listening to Macro Bytes. Remember we have a mailbox macrobytes@abrdn.com we'd love to hear from you if you have questions or feedback on the show. Don't forget to like or subscribe on your podcast platform. Next week, we're back talking about the role of central banks in tackling climate change, which I think is going to be a great episode. But until then, Goodbye and good luck out there.