Robert Hormats on the Art of Business and Diplomacy (Podcast)

French awarded him the Legion of Honor Medal in ninety two. Uh. He's currently managing director at Tinaman Advisors, who essentially work with a lot of ultra high net worth family offices and some institutions and endowments. Uh. You probably know him best from his many years as vice chairman and at Goldman Sachs. What can I say, a legendary career, really

insightful about the state of the world today. We talk about everything from the infrastructure build out in China, to what the US needs to do to catch up and stay economically competitive, to what's going on in technology and crypto when just really his perspective is is unique and I think he he has a lot of insights not only about investing, but about how to manage your own career, how to build a collaborative enterprise, how to make sure that you stay in touch with people even when they

have nothing to offer you other than collegiality and friendship. And you know, uh, he is very much a thoughtful diplomat and has just put together an amazing track record. Let me stop babbling and just say, with no further ado, my conversation with Bob Hormats. This is Mesters in Business with very renaults on Bloomberg Radio. This week I have an extra special guest. His name is Robert Hormats, and

what a story career he has had. You probably are most familiar with him as his role as vice chairman of Goldman Sachs. Currently he is a managing director at Taman Advisors. He has had a long and quite storied

career in both government and finance. Uh he was the Deputy Assistant Secretary of State for Economic and Business Affairs as well as part of the National Security Council from seventy four to seventy seven, Deputy Trade Representative from seventy seven at seventy nine, Assistant Secretary of State under Ronald Reagan.

UH he was one of the people who not only was an economic advisor to people like Henry Kissinger, General Brent Scotkraft a big knee Brazinski, but he helped manage the Nixon administration's opening of diplomatic relations with China's communist government. He was a recipient of the French Legion of Honor award in nineteen eighty two. He was Under Secretary of State for Economic Growth in the Obama administration. I have to stop there because it could just keep going on

and on. Bob Hormatt's welcome to Bloomberg. Well, thank you for having me on, Barry. I really enjoy your show, and I'm really honored to be a participant in it. Well, well, it's my honor to have you here. It's my pleasure. And one of the first things I noticed about your career that's so fascinating. You were in your like mid twenties and you're serving as a senior staff member for International Economic Affairs on the U s. National Security Council

in like nineteen sixty nine. How do you accrue so much responsibility as somebody in their mid twenties. Well, I was fortunate. I was fortunate enough. First of all, they got a good education. And second, I used the time I was going to undergraduate and graduate school to spend as much time as I could in the practical real world. So I spent one year living in Africa doing research

on economic development. I spent several summers as a summer intern in Germany, where I picked up not only German, but was in the middle of the Cold War, went back and forth to Berlin several times, and I was also a summer intern at States, so I learned both the substance of the issues but also was able to accrue practical experience. And I also was very enthusiastic about getting engaged in foreign policy, so I read all I could read and met as many people who were engaged

in the process as I as I could. And I had a mentor, Enrique Center, who was very keen on giving young people more and more responsibility. If you talk on a tough assignment and you did it well, your reward, as he used to say, is to give you even more work and to see how well you did. And as you proceeded along working for him, you were given more and more responsibility, and if you did well, you were given more and more. Again, very interesting so tell

us what it was like working with Kissinger. He is both a controversial and legendary figure who really looms large in the late twentieth century international world of relations. Yes, I think he really UH, and historians I think will come to the same conclusion was probably, and to a degree still is the premier diplomat of the second half

of the twentieth century. Uh, in part because he was so actively engaged in Cold War diplomacy, in helping to deal with difficult problems with the Soviet Union, and part, of course, because he was so actively engaged in opening American relations with China, and in part also because he really was able, as as George Kennon was before him, to map out a strategy for increasing American influence in

various parts of the world. For instance, I participated with him in the Middle Eastern strategy to deal with the nine seventy three or and to achieve a peaceful resolution of that and many other Middle Eastern issues. That was a very hot topic at that point, So I was able to travel with him and work with him in

those areas. So he was involved in virtually every major foreign policy issue during that period, and also was actively engaged with the other leaders um Masitone Joe and Lyone Shall the Gaul kind of run at an Hour, and

numerous other leaders of that period. So he played an active strategic role, in part because he had actually taught at Harvard diplomacy of another era, but in part because he was so actively engaged in the issues of the time, and it was very good at connecting the dots, at developing strategy, not just dealing with issues at huck Or on a transactional basis, but on a strategic basis. And he also was very, very willing to be a mentor,

so he would take younger people along. He had n't able you to participate in meetings with foreign heads of state uh in in a very intimate way and an intimate, intimate, thoughtful discussions, So he enabled you to learn not just more about the substance, but the people who were making policy and how diplomacy was actually conducted on a real

time basis. So I was a teenager during Nixon's second term, and I have a very vivid recollection of both the Middle East Peace plan that's Kissinger spearheaded and the Cold War discussions and debates and how that move things around with the Soviet Union. I suspect the most consequential thing that Kissinger did was open relations with China. And I also think people wildly underestimated the future impact of that act of diplomacy. You were on that team that helped

to open up China. Tell us a little bit about that team, and did you have any idea, how eck aonomically consequential that would end up being a few decades in the future. I really didn't envisage the kind of rapid development that would occur in China in the course of really three or four decades. Um. I knew it

was consequential, um. And I actually knew something about the Chinese economy because living in Africa, there were a number of Chinese who were studying at the University of College University College in Darith Salam, Tanzania, where I was, and I got to know them and learned as much as I could. Because Americans couldn't go to China then, it

was or trade with China or invest in China. So so getting to know a little bit about the Chinese economy through these individuals actually helped me later on when I was doing papers on how we could normalize to a degree at least UM economic relations with China. But

I never dreamed that it would progress so rapidly. I had a lot of discussions with UM leaders during that period, and particularly in the middle period, with dung Cha Peng, who is really the person who led the economic reforms of China, and Ju Ranji, who was the premier they in the really started the reform process, and I figured it would grow economically. I mean, there was a lot

of poverty. Thirty million people or so maybe more starved to death during the during the Cultural Revolution, and uh so I was very clear about the intentions of the leaders at that point to enable China to grow and to bring millions of people out of poverty, which Dunha Peng and his colleague were intent on doing. But the technological advances were, from my point of view, breathtaking, and I'd go there one year and you'd see a few modern buildings and a few new laboratories dedicated to AI

or other types of scientific advances. But to see how quickly China has become a competitor with the United States and the most advanced technologies of our times was something that I never anticipated. And even the most optimistic Chinese reformers in the nineteen eighties and nineteen nineties anticipated they would grow, anticipated they would improve living standards, and anticipated that they would become an active player in the global scene.

But I think very few could have imagined the dramatic technological capabilities of the country as we see now. And it was because China had had a very bad century where they but they called the Century of Humiliation, where they had really been divided into a lot of fragmentation, and they really didn't make much economic progress. And as a nation and certainly as a leadership, they were determined not to miss what they call their fourth Industrial Revolution,

which is the high tech revolution. So they put a lot of money into new technology. They focused very, very heavily on advanced education. They sent a lot of students abroad a party to the United States to learn advanced technology.

And I can remember one conversation that really summarized it all in my mind, and that is Dung Shaping, who was very advanced in his thinking, had a number of foreigners come and talk and he was able to share his views and we were able to ask him questions, and at one point, I said, you know, I was very impressed with how much economic progress you've made in the last five years. He so he tapped me on the on the leg and said, young man, he said,

that was where it was in my thirties. Um, we have done something that will have an even greater impact, and that is Um, I've enabled lots of Chinese to study abroad, which they could not do before. They couldn't study in the United States. They could study elsewhere, but they went to the United States, and when they come back,

they will change China. So he placed a great deal of emphasis on education and the ability to go send students to other countries to learn advanced technologies, and how advanced economies were performing, and how you could incentivize people to develop new technologies and advanced advanced from an industrial point of view as well, and anyone could have a bad century. Gives you a sense of their concept of long term planning, which which leads me to a question.

You know, we've in the twentieth century we looked at the United States as a leader both in economics and technology and and rule of law and structure. But given how rapidly China has advanced, let's flip that script and ask what lessons can the US learned from China? What what should we be taking from their playbook, be it industrial policy or infrastructure, or what do you see as

something that is transferable back to the US. It's a great question, and let me start uh the answer with something that I learned or picked up in China after the financial crisis that was really general aided from the United States. And one of the senior leaders made interesting he said, we have been operating under the assumption that you were the teacher and we were the student, and we had a lot to learn from you about running

our financial system and running our economy. Then he paused and said, now we're no longer so sure that you're a very good teacher or that you're doing a very good job in addressing your economic issues, because of this major financial crisis which occurred and really rocked the American economy. So they at that point they came to declusion that perhaps they ought to be more active in developing their own models of thinking about finance and about other things,

and not rely as much on the United States. The second thing is that they really did what we did so well in the early part of the nineteen fifties particularly after Sputnik and we realized we were compete with the Soviet Union, and the Soviet Union was never as formidable a competitor as China in as many ways as we find China is able now to compete. So what are what are the United States do? We spend a

lot of money on education, particularly high technology education. We brought the best and the brightest from our own society and from abroad to the United States to work in there and studying our university. We put a lot of money into infrastructure, of the Eisenhower Highway Program being one example. And we mobilize the American people behind the virtues of science and the virtues of technology scientists were regarded is really the key to developing the technology that enable us

to prevail in the Cold War. What the Chinese are doing is almost the same thing. They've put hu amounts of money into research. We put money into our national labs. They put money into a whole range of research facilities that they have. They put a lot of money into their educational system. Chinese kids work very hard. They don't go out at night and have social events. They go home and study because they know that's not only good for their country, but it's good for them. It helps

them advance. Predicting rural kids who we're not used to the city home to the cities, go to big universities and work very hard to advance. They brought in people from all over the world to do research, to go to a Chinese lab. There are lots of Chinese, but they're also people from other countries. They have become a very uh focused society on advancing and playing a leadership role in the in the century on the advanced technologies like AI or quantum computing or five G or other things.

So they have really sort of learned the technology is the key to their economic strength and their economic strengths and their ability to prevail in these new technologies would strengthen their credibility as a leading country in the world. And those are the kinds of lessons that they have learned and the kinds of things that you hear them talk about every time you hear President's hut and Paying

or any of the other leaders of China talk. They're talking about technology, about competitiveness, about growth, improving their society. And they've brought four million people plus probably closer to I learn a many of people out of poverty, which they regarded as almost a given in the nineteen fifties, and given them opportunities, economic opportunities that would have been very hard to envisage in the nineteen fifties and nineteen sixties. So they've gotten a lot of credit for that for

a more equitable society. Although there are still a lot of inequities, they're attempting to deal with those, and technologically they're advancing at a very rapid rate. They're very formidable competitors, and education, I think is the dominant factor that enables them to be that. Quite quite interesting. Let's talk a little bit about your time at Goldman. Was that your

first job after leaving government service? It was. I had been in the government starting in my mid twenties, where I worked for Kissinger as you mentioned earlier, and had a number of other jobs, and then I went in nineteen two from the government to Goldman SAX. So it was really my first private sector job. Yes, So tell us what you did, what was your role and how did that progress. Well, I started out working with a

team that was focused primarily on developing countries. Since I'd spent a fair amount of time in the developing world, particularly in Africa, and over a period of time I moved along the track of developing my own experience in investment banking um in trying to identify the global trends that were affecting or would in the future effect the market.

And gradually was able to move along the path and became vice chairman for Goldman Sacts International and was able to travel around China being one destination, but the Middle East was another. Spent a lot of time in in Europe, and spent a lot of time in various other parts of Asia. At that point when I first came to Goldman, Goldman was not a very international firm. Really, None of the American the big American firms in the investment banking

world had a very large international presence. Some did, but Goldman was really served at the very early stages. And John Whitehead and John Weinberberg, who were the two co

chairs of the firm, were very determined. Both of them had been in World War Two, and both of them had seen the outside world, and they felt that Goldman should be much more proactive in developing its knowledge and its business relationships internationally, in part to be able to serve international clients, but in part because American investors were increasingly interested in international markets and wanted to know what

was going on. So I was at my last government job, which was Assistant Secretary of State, as you pointed out, at that point in the early eighties, and Henry Kissinger and Bob McNamara, we're both on the Golden Advisory Board, and they recommended to John Whitehead and John Weinberg that here was a guy who was getting ready to leave government, had a lot of international experience, so you should bring him on and help him, um give him the sort

of support he needs to help build out the capabilities of Goldman internationally. So I traveled a lot throughout the world identifying opportunities, but also working with a growing number of people on our team who were being stationed in various parts of the world to serve local clients and serve American clients who wanted to know more about what was going on in these parts of the world. Quite quite interesting. You've been an eyewitness to how international finance

has developed and evolved and changed over time. What are some of the most significant changes we we obviously already started talking about China, but what else is out there that people should have on their radar as changes in international finance that are really going to resonate in the coming years. Well, that's one of the interesting challenges that we have in this globalized world of today because for part of this period there were a series of international crises.

One of them started in Asia, one of them started in Mexico, one of them started in the United States um and the problem American investors had was to particularly with events that were occurring abroad, was figuring out what was happening and figuring out how it would affect uh the American market and increasingly Americans who wanted to diversify

their portfolios. We're investing in various other parts of the world, particularly first Europe, which is a market or set of markets that they knew, and most Americans had visited Europe and had a good sense that if you wanted to diversify globally, Europe was the place to start, along with Japan. But then which had a booming market for a number of years. We shouldn't forget now it's the growth rate to slow down, but it's market for a long time

was really steaming. And then m the notion of investing developing countries began to take hold, and first with the banks who were making more and more loans to emerging economies, and then individual investors or foundations or high net worth individuals families were beginning to diversify into the developing world.

So that was really one of the changes. When I first started out of Goldman, there was very little UH interest in international markets, very little exposure to international markets, and international markets had very little impact on the United States. Over the course of the time I was there, and subsequently since I've left left, the exposure has been far greater.

Events abroad have had a far greater impact on our own market, and the notion of diversification has become an increasingly powerful one for h for various portfolios, and just for knowing what's going on in the world. So let's stick with um Goldman Sachs and various governments officials who have moved fluidly back and forth between government and private sector. I don't think there's another firm in finance that understands the importance of government action and how to both anticipate

and shape it better than Goldman Sachs. What is the secret of their success? They really have put together a tremendous track record in that area. It's a it's a very interesting question. It really impart is a tradition UH at Goldman that was there well before I joined the firm. UH. John Weinberg and his father, Sydney Weinberg were both very actively in off them providing financial support and financial advice

to the government during World War Two. Joe Fowler, who was the Sectary of the Treasury, came to Goldman Sachs after he was Treasury secretary. UM, We've seen a number of other people like Bob Rubin who was a Goldman and then became Treasury secretary. So we've had people come from the government and and and go to Goldman Sachs afterwards. And we've had people that myself included I was in

the government and then came to Goldman Sachs. And then there numerous people at Goldman who after they leave Goldman go to the government. I think in part as they get developed experience at Goldman and the kinds of issues that the government has to deal with, particularly during a

financial crisis, but also in dealing with financial markets. And they also are people who I want to give back They've had their experience in the financial sector in New York and have done reasonably well, and they feel that in their next life, rather than sit back and retire, they can bring some of their experience to bear um in working for the government. And I think that back and forth movement is is a very um important part

of the culture of Goldman. Some other firms have this too, but I think Goldman really started the tradition really during World War Two with Goldman people working in Washington to support the war effort. M really really quite interesting and and you have been able to move fluidly back and forth between government and private sector. How have you found that process and what are some of the risks and

rewards of going back and forth like that. You know, when I was in the government, I really did not did not have a very deep knowledge of financial markets in New York. I had a number of friends with whom I'd going to school and or developed over a period of time, who were working in the New York financial institutions. And we're working for corporations too, because obviously

they play a very big role in this process. So when I was asked to join Goldman Sex, I made a very strong point of visiting Washington on a very regular basis and meeting with people with whom I had worked before while I was in Washington and trading thoughts on what was going on in financial markets, and they were in turn conveying their thoughts on what was going on in government and how the government saw economics and the financial world. So it was those those personal relationships

I think are very important and often underestimated. When the relationships you develop when you're in your twenties and thirties, no matter where you are, whether you're in the government or you're in a corporation or you're in a financial institution in New York, you tend to keep those relationships up. They build a level of confidence between you and and

others in Washington and elsewhere in the country. But the other part of it that's interesting is you also build up, extremely particular when you're in the government, extremely close relations with people at your level, um in other governments around the world. So um, your meetings with Japanese and Germans and French and Brits and saudiast and many others, and over time, not at that point, but later Chinese and others.

So you developed not only these linkage is at a young age with between New York and Washington, and New York and the business community in Washington, in the business community, but you developed similar kinds of relationships at this relatively young age with people in other countries, and those relationships helped to build a level of confidence. So you can pick up the phone two years later and talk to

them about a problem. And particularly when you're in a crisis, you want to know who to call, who to talk to, who's going to be making decisions at the other end of the line. And as you advance in your career,

those relationships get stronger. You see these people, you talk to them, and you have that level of confidence that you've developed in an early age, and that really sort of propels you onwards to develop more relationships, more level, more degrees of confidence over the course of your career. And I still to this day keep up with phone calls with people in China or Britain or France or various other parts of the world when something occurs, or they'll call me and say, well, what do you think

of what's going on in Washington? What do you think

of what's going on in financial markets? So these personal relationships are extremely important, and it's important, prickly for younger people who are now moving up or are just starting out to develop develop those personal relationships and those personal confidences over a period of time, because they really do become very valuable at that point, but even more so as your career advances, and they help your career advance, but they also help you understand the world a lot

better than if you live in a bubble. So, Bob, you returned to public office in two thousand and nine as Under Secretary of State for Economic and Business and Agricultural Affairs in the Obama administration. What made you decide to go back to government service And tell me a little bit about that period, right as we were dealing with the worst of the Great Financial Crisis. Well, I've

been in the government. Uh So, the years I've spent government, we're during the Cold War, UM under various administrations, and then UM and then after the Cold War dealing with some of the Middle East issues. But I I saw in in two thousand nine that we were on the brink of or when the process of developing a new world order. There's a post Cold War order, and we

didn't know what it was going to look like. But we knew that the old order was changing or had changed, and the new order had yet to be created, and I thought there was this was a very interesting time

to participate in that process. Um. Second, Um, I had always thought that the job of Undersecretary of State was a thrilling job where you had the opportunity to look at the entire range of economic issues, international economic issues in particular that the country faced and helped to shape American policy during that period and have and have an impact on the global environment for the next decade or

two to come. Third, I'd known Hillary Clinton for a numbers and had a very developed a very good relationship with her, and therefore was was was UM eager to when she asked me to do that job, to to do it, and I found that it was very exciting in terms of the ability to look at how the world was changing and play a constructive role in helping to change it. I had been the financial markets, the

financial world for twenty years. I thought, this is an opportunity to really make a contribution to my country and to our foreign policy and to the global order of the of the twenty first century, and to UM get back and engage in the kind of issues that UM

that I royed and found exciting. UH. John McCain had the statement, it's really exciting and and a very positive feeling to be in the arena, and I felt this was a good way of not only being in the arena arena, but making the contribution to my country and the world UM by going back in the government. M wow, quite fascinating. Let's talk a little bit about your new role. You've been at Tina Mine Advisors for a couple of years where you're managing director. Tell us what they do

and what your roll at the firm is. Well. I when I left government, I spent a number of years UM with Kissinger Advisors, and then I was asked to join UM, a firm that I had been associated with because I was is on their UM Advisory Investment Advisory Committee for a number of years and that of his firm called Team Advisors. It's a UM my relatively new there, but the firm has been around for a while, and what impressed me about it was the quality of the

people and the quality of service to clients. UH. The advisors of tetaman Um work alongside individuals families Endowmond's foundations to help them meet their financial goals, but also to help them UM in in other ways, one of which is to UM have a greater impact through investing in in in companies and in issues on subjects that they that they believe in in. UM emphasizes emphasizing first of all, for instance, the environment and other things of this of

this nature. But it's the strength of the firm is that it is a relatively small firm compared to some of the very large Wall Street firms, and that there is a really strong relationship between the firm and the members of the firm and individual clients, UM and families.

And it's in a way for some people like a family office, if they don't want to put together a family office, UM tetam and can help them perform all the functions of a family office or work with the family office that they have now and helped to deal with issues that they face in such offices. So UM tends to be family offices as opposed to let's say, institutions. They tend to be either individuals high net worth individuals or institutions or family offices. Yes, it's really all three.

And your role in some cases endowments, right, So I'm going to imagine your role is sort of big picture, macro overview of what's going on in the world, or do you get more granular than that. Well, I try to do both. I UM the team of people that is extrict of extremely high quality, and they have people who are experts in investment UM and financial markets and trusts and UH planning help people plan for their financial futures.

And we have offices really throughout the country and Western Europe. So what I do is work a lot with those

regional offices in this country and abroad. I also work with the individual clients of the firm, particularly those who are interested in what's going on internationally and what the impact will be on their portfolios or what's coming down the road, you know, what are the what are the issues that are being UM developed around the world that could have an impact on them or their or their portfolios.

And then I also work with the firm and management of the firm on various changes that are going on prickly using my experience in Washington, but also using my experience internationally. So I work both with individuals with foundations, with family offices but also on longer term strategic issues that the firm or clients of the firm are likely

to face. So one of the things I've been hearing from a variety of high net worth individuals and family offices is just how challenging the macro picture is today. It seems there are a lot of cross currents and a lot of black swans. And how do you frame the state of the world today when you're advising a

family office. Well, I think what you what you need to do is um emphasize that there are a lot of uncertainties that were really in a new environment with the Fed um constantly increasing its balance sheet with very large deficits of an unprecedented leptons that have been built up already and are being built up further as we speak.

And what are the implications of those So I think one of the keys is agility, is trying to look ahead and be able to make decisions with UM a sense of what are the likely opportunities and the likely risks three months from now, six months from now, a year from now. So we utilize the formidable expertise of the firm, and there are a lot of extremely good people with whom I work, So it's it's certainly not

just me alone, it's a whole group of people. But we try to acquaint our clients with with all the risks and all the opportunities in front of them and help them make adjustments in their portfolios that anticipate these

kinds of risks or these kinds of opportunities. Is as we see them, So we try to instead of UM just sort of looking at the world as it is today and assuming it's going to stay the way it is today, try to get a sense of what is what is around the corner, what is over the horizon, how it roll affect their portfolio, and how they should position themselves to address these potential changes. Do you ever start to notice a pattern with similar questions bubbling up

from lots of different clients and types of clients. I recall a couple of years ago getting a lot of question about crypto, and last year it was about, hey, how crazy is this market? This year it's been inflation. Do you see that? Or is it? Um? Pretty much everything goes well, it's really everything goes But now that you mentioned those three things, UM, crypto is really UM

increasingly important. I mean all, virtually all countries are at one state or another looking at what crypto is going to mean financial markets and for the world, and different countries have different models, different companies are developing different models, So UM, it's something that you really can't avoid. You have to really develop a knowledge of of what's going on.

We don't know how it's all going to turn out, but we do know that a lot of very bright people are working on this now and inevitably it's going to have um some perhaps a substantial impact on on the world and perhaps on individual plos and perhaps in

the way markets operate. So knowing about it um and keeping these issues in the back of your mind or making financial decisions anticipating those are are is really is very important to sort of keep up with one this being one of the sort of advanced technological changes that's occurring in markets and in companies and in financial institutions. The second you've put your what are the inflationary implications

of all these things that are going on. Traditionally it's been the case that when the Fed prints money and builds up a large balance sheet, and you see so much liquidity out there, in part as a result of what the government is providing in part as a result

of FED policy, it's going to be inflationary. UM. So far, we have seen evidence of a certain amount of inflation, in part because of that, but more importantly because of by constraints and various impediments and the supply chain that are causing delays in such things as building supplies, uh, semiconductors for automobiles and a variety of things like that, and those two push up prices. So but we really haven't seen and then wages going up in certain areas

as their labor shortages in certain sectors. But we really haven't seen this sort of runaway inflation that we had prinstance, straying the Paul volcre arab that he's so courage was able to deal with so UM. I think we're keeping an eye on this as our most investors, but the impact so far has not been that great. And if the FED um starts changing its policy a little bit um, which it sort of signals now, then the question is what does that mean for markets? So far, the markets

have not regarded this as a serious thing. And we're very fortunate to have J. Powell is as FED chair who I've known for a long time, very sensible, thoughtful guy in and Gianet Yelling, who I work with in Washington, very sensible, thoughtful Treasury secretary. So I have a lot of confidence that the President is getting very good advice from those people as to what's happening and how to

react to it. And I think is one reason the markets have reacted in a more um steady way than they might otherwise when you look at these numbers, because they see competent people who are running the economy, who have had experience and can deal with these issues, even though there's a lot of unknowns, and there are because we've never been in quite this situation before. Um, these are people who know what to do. I wrote a book years ago on happy for our wars called The

Cost of the Price of Liberty. And we've had numbers, big deficits and big debts like this during World War Two, towards the end of World War Two, but we knew when the war ended those numbers would start coming down. Um. And now the question is how do you bring things back to a more normal environment. But we don't know how that's going to happen or what the implications are

going to be. But you just have to keep your eyes open and watch and simplications are going to be for for markets and individuals and and for the global economy. So Wall Street very much as a fan of Jerome Powell, arguably Trump's most competent appointee. I think that's a fair statement.

You want to handicap the odds of him getting reappointed or did the previous president not reappointing Janet Yellen sort of set a president that, Hey, when a FED chair comes live, when that when that seat is up to be reopened, the president gets to put his impremature on the Federal Reserve by appointing his own chairman. I've long since given up the the handicapping of decisions on individuals in Washington, having lived there and participated there for a

long time. In these kinds of decisions, it's very very hard to know my I would I would simply make the point that I think he is and the board are very competent people, and I do think that UM markets have a lot of trust in them, and uh and and leave it at that. What the president is going to do or not do, I'm is beyond my pay grade. Fair enough, so, by the time this broadcast, we should likely have an infrastructure bill passed in the United States. You have long been a very zealous advocate

for both building and repairing infrastructure in the country. Tell us some of the things you think we should have done years, if not decades ago, and what do you like about what you see in the current infrastructure bill. Well, I think this is the best chance we've had in a long time of getting a really good infrastructure bill,

because we need it for several reasons. One, first of all, we've we've for decades, I've been, as you correctly point out, arguing that are weak and deteriorating infrastructure is a huge hindrance to our economic outlook. And if you look around the world, the emphasis of China and many other countries on infrastructure has been one reason that they've been able to create a lot of jobs and b has made

them more competitive. And see, you're a stronger country internationally if you have a strong economy domestically, and a key to a strong economy domestically is good infrastructure, roads, highways, telecommunications, and a variety of other factors. And the Chinese have understood this and at a good training system obviously is very important and modern airports. All these things are important to a strong economy, and as strong economy, as they say,

is critical to your economic influence. It demonstrates your government is functionally able to operate in an effective way, and it strengthens your leadership because other countries themselves want to develop their own infrastructure capability, so that to me is very important. For the moment, we have an especially good opportunity.

Interest rates are very low. There is a lot of bipartisan support, as we've seen on the Hill, particularly now and the recent Center votes for UH infrastructure, large scale infrastructure, and it is critical also to national security because as Eisenhower understood when he developed his Highway bill, you've got to be able to have a good infrastructure to keep up the mobility of people back and forth and build

your own strength as an economy. So we need to do this now more than ever because we have the chance low interest rates. We need more jobs for people who have been laid off during the pandemic. We need to demonstrate to the rest of the world that our economy and our government can function on a bipartisan basis in an effective way. And we need also to deal with a backlog of unmet infrastructure needs that if we don't deal with them now, are just going to get

worse and worse. So people say, well, you're you're leaving a large debt to the next generation. Maybe so, but if you don't do something now, you're leaving a deteriorating infrastructure to the next generation, which is going to hinder the ability to create jobs, and hinder our strength as a country and and make us a weaker economy later on.

So now is the moment, and we ought to be doing this auto biopartisan basis to demonstrate that we can do something on a bipartisan basis that leaves the next generation better off, and a strong infrastructure would would do that. I've always hated the argument you're leaving a large debt to the next generation because it's so intellectually disingenuous. You're also leaving a massive infrastructure, a platform that the private sector can build on. You know, companies report earnings, they

have to report both liabilities and assets. Debt is only half of the picture. And as you pointed out, interest rates are so low. So let me throw a curve ball at you. What do you think of financing a big infrastructure build out with a fifty year or a hundred year bonds. Well, I don't know about a fifty year hundred year bond. We're not really used to this, and the markets are not used to these kinds of things that do this thirty Well, it's hard for me to picture. But a sort of long term bond is

to me very logical. It's the way corporations finance. They don't. They don't finance a new corporation with one with one year paper. They don't finance a new building, a new factory with one year paper. They normally take a longer term picture. They build. They build a factory today and then pay for it over a period of time when it starts increasing its returns, and they blame them the

service the debt. We have to look at at the government in the same way, and that is and the Biden administration I think, is doing this, and that is the big bulk of the infrastructure building will take place in the next few years, and the repayment period will be of a much longer durace ten years, fifteen years,

twenty years, something like that. Whichever, however, the Treasury decides to structure the bonds but I do think that the point that we're both trying to get at is we have a chance now to borrow long term at low rates and build a strong economy which will create a lot of jobs for future generations. And if the economy, as I believe it will, is strengthened by this infrastructure, it will leave opportunities for additional growth and make it easier to repay the debt. So we have to think ahead.

I mean, one of the things that we go back to China, we had teat them and to spend a lot of time trying to think ahead and what's going to happen now and what's going to happen in the future. One thing when you think about China is we're not just competing with the China of today. We're competing with a four thousand year old civilization and they are used

to thinking long term. Um they and what they're doing now is they're they're they're spending money today on infrastructure, not just for the current generation, but for generations to come. We have to have a strategy that is not just focused or preoccupied with what happens today. It's what are we doing to make the economy stronger in the future. What are we doing to build up UH job capabilities for people who have lost their jobs over the long term,

And that's what UM infrastructure will do. UM. We can be a much stronger economy five years from now if we invest today in the roads and the and the bridges, and the airports and the trains and the and the telecommunications infrastructure, all of which will make us more competitive, creating jobs today and making us more competitive not just for one year or two years, but for decades to come.

Eyes and our understood that the so called Greatest Generation, and I believe it was a great generation that Tom Brokaw wrote about the fifties and sixties. UM. They were a great generation in part because of winning the war, in part because of what they did after the war, but in part because they left this country in a much stronger financial and economic position and physician in the world.

Because of what they did. They fought ahead. And we have to think ahead, We have to have a long term perspective, and infrastructure is one of the critical ways of not only thinking ahead but acting UM in a bold way to make our country stronger and to create a much UH stronger capability of creating jobs and demonstrating our strength in the world, and a strong infrastructure program would do that. So so let's stick with that generation.

Right after World War Two, the US implemented the Marshall Plan. We helped to rebuild pretty much all of Europe. We helped to re structure Japan and and create a platform for them to rebuild their economy, and we saw decades of unprecedented growth around the world. When I look at the state of that sort of policy, the closest thing I see to that is the China Built in Road initiative. What sort of plans are there for a new martial plan? Is the US participating on the global stage that way

or have we seeded that leadership role to China. Well, it's certainly true that China is building in two ways. One, if you look at the infrastr ructure within China, it's it's remarkable. These fast trains and modern harbors and modern airports. I mean, the the and the telecommunication system is remarkable. They're rushing moving ahead toward five G and six G.

We've got to be doing that too. We've got to be lead frogging the Chinese and developing our own capability in say five GEN, which you can do with the greater openness open radio access network around their various ways, we can really move dramatically ahead. And five G we're

working on things like um quantum computing AI. These are always and then I'd say it's can demonstrate a our internal capability for technological advancement, but also our capability as a competitive country vis v not just China, but other countries that there are other countries that are competing very rapidly as well. So I think we've we we we've got to do that. I don't know the Belton Road Initiative UM does help, particularly Southeast Asian and Central Asia.

I don't think we're going to get back to a Marshall plan because I think the willingness to spend money here UM it's really focused more on domestic than far and but if we do well domestically, we will strengthen our influence both in terms of a strong economy here and do better abroad. I do think we're also working more and more with the Japanese and working with other countries and what's known as the Quad Australia, Japan, India, and the United States to help build up infrastructure in

in Southeast Asia and elsewhere. But I suspect that the main focus will be domestic and the other part of the of the of the Martial Plan that was so important was not just the money spent, but the fact that it enabled the European countries to work together um to figure out how to spend the money and to cooperate more to prevent a war like we had just

been through in World War Two. And I think that one of the keys to the success of the next generation abroad will be countries like Osson and others working together for joint cooperation on infrastructure. And the United States, I think can play can play a role in that, and that would be that would be a big plus. So let's stay with domestic policy. The US, really since

Eisenhower hasn't had much of an industrial policy. We're seeing some some inklings of that in the Binden administration, including a bit of a push for an electric charging station infrastructure for automobiles. What do you think of current lack of industrial policy. Is that something that the US needs to do to stay competitive with China. I think we tend to look in industrial policy somewhat differently from some

of these other countries. But uh, the answer your question would be, we need a fundamental h collaboration between American companies and the US government, particularly in early stage research and development. We've we used to put a lot of money in the National Science Foundation, into the National Labs, into DARPA, into the sort of energy version of DARPA.

So I do think that the that the Biden administration is really working uh increasingly and I think quite effectively towards a set of policies where the government supports industries that are critically important to US, and particularly high technology industries, but also other other companies like semiconductors where we have UM where we're going to need to make continue to

make advancements in semiconductors to compete with various countries. If you if you look around the world, as I say, it's not just China, it's Taiwan with Taiwan Semiconductor, it's UM Korea and its other countries that are that are advancing pretty rapidly on on stomach conductors. So what we need to do, I think is put money, and I

think this infrastructure program will do that. Put money, working with the private sector into advancements in various types of technology and various types of infrastructure which could be helpful in getting the government more active. We did. It worked quite well in the fifties where the government did play a great role in a lot of new technologies sprung from government collaboration with companies. And I think the government now needs to find new ways of collaborating with companies

in an advanced areas of technology and infrastructure. And and I think that will happen if a bill, an infrastructure bill of the kind they're talking about, is passed. I think it does. We haven't had this for a long time, As you correctly point out, this would be the chance to do it. So, speaking of government and high tech companies, I was kind of surprised by China's crackdown on on their own tech companies and leadership. What do you make

of that? It's it's been about a hundred and fifty billion dollars in market cap lost in the US of China companies listed here, and some people have bullpart died at about a trillion dollars potentially in a shares in China. What are we to make of this? Well, I think it's hard to know exactly what to make of it at this point. UM and I study China pretty carefully, and I would find it awfully hard to analyze what the government's doing and what the purposes are of some

of the measures they have taken. I would simply make two to one this is something that's going on in the in the short term. We have to see whether it's a continuous process or just being done over the over the short term. And second, UM, the government of China does have a strong sense of national champions, and I think that if you look at the way China has developed vias national champions, these big companies have a

lot of collaboration with the Communist Party of China. There's normally representative of of the CPCC um UM the Communist Party of China rating in these companies, and there are probably going to be UM there. I think there's a need really to wait and see what's happening in China before we come to any long term conclusions. So I'm really looking at this as as something that could well be a short term thing, and I wouldn't make any

long term judgments. But this means because there is still a strong government support for innovation and UM and UH, it probably it's going to is going to continue. I don't know how long this current sauda is going to last. So when China first started doing this, I think it was last October or November. With Jack ma of Ali Baba clearly a national champion in China, people thought, hey, maybe this is a one off and Jack just got a little too big first bridges and China sending a

warning shot. But it seems to be pretty aggressive across the board. Uh. It makes me wonder if if is China uninvestable, if you're not a Chinese citizen, can you as an outsider, as an American, put capital at risk in a country that doesn't seem to have the same sanctity of private property either contract laws, rule of law in general? How can an outsider invest in China with such a different set of experiences around private property. Well, this is the area where we have to wait and see.

Because they have been if you read the speeches of President she and others, there is still a strong narrative of getting foreign companies to invest in China. Um they have they have really not said that they don't want foreigners to invest in China, and in fact they're trying to get more foreign companies too to invest in China.

So I hesitate to try to make judgments now about what China is going to look like a year from now or two years from now in terms of its relationship with Chinese companies or foreign companies operating in China. I think China, as we were discussing earlier, has it takes a long term view of virtually any anything and everything. They're not they're not necessarily in most cases, short term players.

They have a medium or a long term view. So I hesitate to jump to any conclusions along the lines of whether it's going to be a year from now an attractive place to invest or two years from now. I don't know, uh and but I but I do think that they understand two things. One that they do want to become more self dependent on certain kinds of technology and certain kinds of companies they're putting, for instance, and semiconductors. They're putting a lot of money into semi inductors.

They're putting a lot of money, as we've just seen in the news, into AI for instance. UM So they want they don't want to be vulnerable to eruptions and supply for whatever reason from other countries. On the other hand, there is not in China a blanket. Um. They don't They don't like the I D coupling because they are in general because they are heavily dependent on foreign energy and foreign food and certain kinds of other foreign products. And they want to be able their companies want to

be able to sell abroad. Um so. And and also they do have, and have had for quite some time, a desire to attract foreign capital. They've been a one American financial firms to operate to a much greater degree in China, and they want some of their companies to be able to invest more or produce more in the United States as they as they globalize. So there are different strains of of of thinking an action taking place

in China. Uh So, I don't think we can simply come to one conclusion about what China is going to do a year from now, or two years from an hour or six months from now. So my preference is, having observed China and also observed what they're doing and have done over the last several years and months, is to wait and see before growing any long term conclusions. Quite fascinating, I know, I only have you for a

certain amount of time. So let's jump to our favorite questions that we ask all our guests, starting with tell us what you were streaming during lockdown? What was keeping you entertained on Netflix or Amazon Prime or whatever. Well, during lockdown, I was I was actually I mean I and my colleagues that teetam and we're doing a lot with our client and trying to um keep keep up relations with them through zoom and phone calls and other things.

So I was really a sort of a zoom. I was in a way glued to zoom for part of the time. UM. What I have done, UM and my wife and I as the result of the end of the day trying to relax a little bit, is to UM before we go to bed, watch a movie or an old sitcom or something like that. UM sort of peacefully in the day in a in a more in a more normal way. So those are the those are the kinds of things that that I have been doing.

And I've tried during lockdown to stay in touch with friends and with colleagues and with people in other countries and see how they're doing. I think one of the things about lockdown is that you were dep physical interperson relations with other people. But the one thing I concluded was the more conversations you have with with friends and colleagues, um, people you work with, or friends you know and have known over the years, that you're you're keeping up that

those human relationships, which to me were very important. And now that things are becoming a little bit more normal in some cases a lot more normal, um, individual relationships mean mean more and more. So those are the kinds of things I did did during lockdown. Very interesting. Tell

us about your mentors. We obviously know some of the bigger names, but who helped shape your career, Well, that's that's interesting And I always, um think when ever anything good happens, I always think that I really owe a lot um to the mentors I had. Starting from when I was in college and graduate school, I had two or three teachers who I always was sort of turned to for advice and wisdom and friendship. When I started working in the government, Kissinger was a mentor, Brent Skullcroft

was a mentor. Hensinger um and big Bridsinski were both heads of the National Security Council staff, and as was as was Scullcroft, and they were all they were all

in various ways mentors. And then there were a number of people who were, uh, not necessarily at such a high level, but I had a lot of good friends who when I was working as a june your person, a summer intern in the state department or intern in Germany or elsewhere, I could turn to and they were you know, desk officers or assistant secretaries or deputy assistant secretaries. The people you could sit down and say, look, I've got an issue here, I've got something that's on my mind.

I'd like to get your advice. And I think the thing I gave a commencement speech at UCSD years ago, um and about five years ago, and the points I made was, people say, don't sweat the small stuff. Um.

The theme of my speech was, yes, sweat the small stuff. Um. If you do well at what you're doing, whatever the job is, and it may seem very small, um, you're going to be People are going to say this, this person really cares about what they're doing, They care about their job, and it really helps you to credibility and momentum um and um a lot of a lot of and work with people, work with people as a team.

You don't get anything done um alone in UM. In government, you need you need to have a team um of people working together, not just in your agency, but but all around the government and outside the government also, So I would I would often turn to various people who I knew or I'd worked with for advice and and mentorship, and that was to me very valuable. And I always think how generous they were to take their time for a young guy who has just come out of graduate

school to help. I'm very very grateful to people like that, and and and in retrospect also I'm grateful I did some of the smaller things that for the moment it didn't seem particularly um interesting um or I didn't see what they were going to do for me. But over a period of time they have built UM. You build confidence in yourself by achieving things that are that are small in nature, and that enables you to have confidence

that you can take on bigger things. I mean. One one example was when I was a summer intern in Germany. The this is still during the Cold War, and they were anxious that people use the autobon to drive from bond which was in the capital of West Germany, to Berlin. To preserve what they called Allied rights to use the Audubon and they really wasn't a very pleasant trip as you might imagine. So they said, are there any volunteers. I was a summer intern, and I said, yeah, I'll

do it. So I would get they'd give you a little money for gas, and then you could go from Bond to West Berlin and it it enabled me to sort of understand the Cold War in ways traveling through East Germany um on an American paths so they didn't stop you, um and seeing what West Berlin looked like the wall, you could go into East Germany if you used your pass. So it was and when it came to working in Washington, I had a feel for how

the Cold War was working, how it affected individuals. So doing the little things that other people may not want to do, and doing them well, or doing them with some interest in some enthusiasm really was very helpful to me. So and and and a number of people who were mentors said, oh, go do it. There will be something no one else is going to do it. Go do it,

enjoy it, learn and and I did so. Um, I think you can you can almost always learn from someone else if you keep your ears open, your eyes open, and your willingness to interact. You can have mentors like a Kissinger or skull Croft or Braginsky, or you can have mentors who were uh in different levels, who are willing to spend time with you and teach you and help you learn. In those days, was the auto bon no speed limit? Were you were you able to well?

It was This was the part of the autobon that was in Eastern Germany, so part of it was in West Germany, part in East Germany. But the there was no speed limit in East Germany. But the quality of the road was not so good. So um, you could you had no speed limit, but you didn't go to speed limit because there were a lot of potholes. Let's let's talk a little bit about books. What are some

of your favorites and what are you reading right now? Uh? Um, what I'm reading right now, I'm reading more books about the future. That There's one book called The Future Is Coming Faster Than You Think, which which documents a lot of the changes that are going on and in in

various tech areas of technology. I've just read a very interesting book called The Queen and the Sultan about relations between Britain and Inland at that point and the Middle East UM in under the reign of Queen Elizabeth the First, which is a very interesting history of of the Middle of Middle Eastern European or British relations UM. I have been reading a lot of American history, documentary American history UM Ulysses Grants memoirs which are fascinating and beautifully written.

I read a wonderful book on Eisenhower and Marshall called Partners in War. Another book on the debate ongoing debatis to whether we should engage in World War Two between Franklin Roosevelt and Charles Lindberg, where Lindbergh was sort of the icon of the isolationists and Roosevelt was trying to get America prepared for for a war that he thought was coming, but America was not after World War One in a move to spend a lot of money and

prepare itself for World War Two. Those are the Those are the are the are the books I've I've read UM last one of Those Angry Days, Yes, those Angry Days. That was That was exactly the title of the book, UM. And it was fascinating because a lot of the arguments that were used during those days are used now for UH internationalism versus intense nationalism. Yes, and the Queen and the Sultan is very interesting because I had no idea how much how close relations between Britain and the Middle

East were, particularly the Ottoman Empire were during those days. UM. So it was it was very interesting. And I'm also trying to read more and more UM about how other societies have UM dealt with their internal issues health, health, societies change, because I think the United States is going to have to spend a lot more time addressing UM, this sort of angry partisanship that is emerging, UM, dealing

with UM a number of inequities in our society. UM. So I'm sort of reading about how other societies have done this. Give us a title that it might be an example of that, or is clean and the Sultan one of those, Well, the Queen the Sultan is one of those, although that was more about Arabs and that more were about ut Ottomans and UM and England. But

on in terms of internal relations. UM. It's mostly articles in for instance, The Atlantic and and and other magazines that are looking at some of these more contemporary issues. Really interesting stuff. What sort of advice would you give to a recent college grad who was interested in a career in either finance or international relations. Well, first of all, you're you're not going to this sort of goes back to the commencement address I gave. You're not going to

remake the world in your first job. So spend time learning learning in two ways. One is learning about the subject that you're dealing with, and you've learned and most people picked up a lot of knowledge from universities or grad schools UM. And second, develop a a group of friends and colleagues who you can work with, who you can develop teamwork with, because, as I mentioned earlier, things are done by by teams and and UM and the more people you work with, the better your outcome is

going to be. And you're also building relationships now and for the for the future that are going to Then I have friends today who I got to know in my twenties working in the government, and friends who I got to know in my thirties working in the financial world. So I think that those than the education, the teamwork that you teamwork skills you've developed, and the UM and the and the long term friendships and interactions that you've

developed are extremely important. I've I find them true for me. I've i've I've valued them enormously, UM, and I think those with respect to specific jobs, I regarded the summer intern program in Washington as a great way of learning. You start out at the lowest possible level, but you're working with a number of people, and you learn about the State Department. You learn about what's going on in Germany from being an intern in Germany, or what other

countries you you might be visiting or working in. And UM, if you're in the financial world, start out at you start at at a low level. You're an analyst, and you build from being an analyst. A lot of the people who run big firms today, we're analysts or runners running stock certificates from one company to another. You had took and did well in low level jobs and developed friendships, develop respect from others, and built from that. So, UM,

you're not going to remake the world. At least I wasn't about to remake the world from from the beginning, UM, but I was determined to learn as much as I could so that I, UM would be able to contribute and learn and do other jobs as as my career. As my career advanced, and I would have a lot of friends who I could count on to talk to

to get their perspectives as as I developed. There's a very good story in the book I mentioned partners in war Marshall and Eisenhower, where Marshall he didn't go to West Point. He went to v M I UM, So he didn't have the advantage of knowing of having the West Point club that that that those who went to West Point you had when they graduated, like MacArthur and others.

But what he did do was, as he advanced in his career, kept a little book UM and he wrote down the names of people who he was impressed by, because at some point he made the decision that he was destined for future leadership of some kind. I don't think he necessarily envisaged that he was going to be the the main presidential advisor for World War Two, but he did anticipate that his career was going to advance.

So he kept the names of people he was impressed by, and when he got higher and higher level jobs, he would call those people that he had met and they were, you know, strewn throughout the country in various military bases and call them and bring them to Washington and have them beyond his staff so or call them for their advice. So he understood the notion of the looking teamwork very

very intriguing. And our final question, tell us what you know about the world of investing today that you wish you knew thirty years or so ago when you were first getting started. Um, I think one thing is this country is when it pulls together, h is very good at overcoming obstacles. A democratic system that is representative of the of the people and is able to um to harness the talents of the millions of Americans who are you know, working hard and and and want to participate

in the growth the economy. That this country is able to grow very rapidly and is able to overcome lots of difficult obstacles. And I think that there are points in time when after a crisis, the middle of a crisis, when there are moments that I would say, Gee, this is going to last for a long time. It's going

to be very hard for the US to recover. Every time that thought has crossed my mind, UM, I come to realize that two years, three years later, the economy has recovered, The country has recovered and is pulling together again. So I guess I come to the conclusion that optimism is a better strategy for addressing financial markets and addressing the economic outlook than pessimism, because in general the optimism is paid off better um than than taking the negative

view of availed look. I will say, however, that in the current environment, UM, it requires and in those earlier environments as well, it requires really good leadership UM. And we have been very fortunate in this country for many decades to have leaders who come through and are are um able to take the reins when when the country

needs them. Harry Truman, who would have thought that a relatively junior senator from Missouri who Roosevelt hardly knew UM was put in as vice president almost by accident and turned out to be, in my judgment, a really great president. UM. That we've we've seen this in the past, that that American that you get various people from various sectors, not just at the presidential level but other levels, who exercise

leadership to help pull this country together again. And I I do think at point we need that more than ever to heal the pipe. The partisanship that tends to stop things from moving ahead. To deal with inequities, inequalities, discrimination, things of that sort, We've got we've got to demonstrate that America is capable of doing the kind of great things that it's done in the past, and that's gonna

quite We've gotten into some bad patterns. We think about the future and how to bring this pull this country together again, not just for economic growth, but for social coesion and a more positive outlook for more and more people who have not been able to participate as fully in the prosperity or the well being of this country as as in the best quite quite fascinating. Thank you, Bob for being so generous with your time. We have

been speaking with Bob Hormats. He is the former vice chairman of Coleman Sachs, legendary member of various administrations from Nixon to Reagan to the Obama administration, currently Managing director at Tina Men Advisors. If you enjoyed this conversation, well check out all of our previous interviews. You can find them at iTunes, Spotify, wherever finer podcasts are sold. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Give us a

review at Apple iTunes. You can sign up from my daily reading list at ridlts dot com. Check out my weekly column on Bloomberg dot com sla USh Opinion. Follow me on Twitter at Ridoltz. I would be remiss if I did not thank the Crack staff that helps put these conversations together each week. Paris Wald is my producer, Atika val Brond is my project manager. Tim Harrow is my audio engineer. Michael Batnick is my head of research.

I'm Barry Ridhlts. You've been listening to Masters in Business on Bloomberg Radio.