Bloomberg Wall Street Week: Kaplan, Jarrett, Corwin

with David Weston from Bloomberg Radio. A light at the end of the tunnel, But how long is the tunnel? And what lies between us and the light? Welcome to Bloomberg Wall Street Week. I'm David Weston. New York went through what we thought was the worst of the coronavirus last spring, as hospital beds filled, intensive care units were overwhelmed,

and the elderly died in nursing homes. Dr Stephen Corman was in the vanguard of trying to protect New Yorkers as President and CEO of New York Presbeterian Hospital, the leading medical center in the area. As difficult as it was in March and April. There are some ways in which this new wave maybe even worse. Last March and April you saw really it concentrated in the Northeast, and it was more sporadic. Now you're seeing this across the entire country, which is worrisome in terms of how stretched

we're going to be, particularly on issues like staffing. Recall that when New York went through this crisis, we received help from around the country. Uh, staffing help from around the country. That's not gonna be available for many of the health systems now because we're seeing it across the entire country. Testing and testing re agents are going to be stretched as well. So I think that it's it's it's somewhat different now. Having said that, the demography is

is more favorable. Younger people tend to do better than older people. The mortality is less, the number of people requiring ventilators throughout the country is less than when we first saw it, and at the March and April time frame, uh, and in the July August time frame in the in the Southwest, So those are somewhat comforting. I do think that despite all the rhetoric around mask wearing and so on the people paying attention to mask wearing. Social distancing

has helped. So I think we're in somewhat better shape, but there are different challenges this go around. What kind of surgery are you seeing in your hospital center? As a practicmenter for hospitalizations, So at the at the Natier, we were at about two percent of our peak UH. Now we're at about ten to fifteen percent of our peak UH, and we expected to go up to about of the peak depending on exactly what happens over the Thanksgiving holiday and then of course Christmas time, so we

are preparing for it. We do have adequate ventilators, we do have adequate masks, ppe, etcetera. We do worry about the number of re agents that we will have for adequate testing. But I feel that we're in better shape than March and April, and we're hopeful that it will be less strenuous than March and April for sure. And look, we have the the likelihood of the vaccines UH not only being approved but starting to be distributed at the end of December and January and then hopefully ramping up

by the April May time frames. So you can see the goal line in sight. If we can just get through the next few months, well, okay, to follow that analogy, you see the goal line. The question is how do we not fumble the ball in the meantime because there's some people who feel tired about wearing those masks you set help and social distancing. How long do we have to keep that up in your estimation before we really

have effective protection from the vaccine few months. I think you're looking at the rest of November, December, January into February hopefully, but in the February March time frame, you're starting to see widespread availability of the vaccine. And David, I can put a plug in. We must insist on mass vaccination. The pain that we've gone through as a country, the deaths that we've had, the effect on so many different industries and businesses, We've got to insist on mass vaccination.

We've got to make sure that we educate our population about it. I tell you I would be the first in line for either the visor of the moderna vaccine. I think it's been a remarkable accomplishment, and with all of the negatives about how the administration has handled this, I think that Operation Warp Speed was a success. And the private sector really stepped up here in a major way. This is the shortest time to get a vaccine in the in the history of vaccines, and it is really

a remarkable scientific accomplishment. So, dr the question now is how the baton will be passed from the Trump administration of what really everybody agrees is going to be the Biden administration. What would you hope to see from a Biden administration that might be from from what you've seen from a Trump administration. Well, the first thing is, I think this transition is critical. Uh. The initial distribution of the vaccine is let's say, going to be, uh, twenty

million doses or thirty million doses. Uh, if you require two doses for vaccine, you're only talking about fifteen million Americans getting it. So the coordination between the outgoing administration and the Biden administration becomes critical so that everybody's on the same page. How is it going to get distributed? What is the I T system associated with this? What are the state allocations? Do the states have plans that makes sense? How do you prioritize this, how do you

make it equitable? That should be being discussed right now. Uh, And I know that you spoke to the Congressman before. Yes, the election needs to be certified, but we there is a clear winner here, and at the very least there should be widespread support for sharing of information and allowing for an effective transition to happen. If it turns out that the president actually one which no one thinks is likely, okay, then there's no harm, no foul. But not doing this handoff,

I think is is really critical. As you said, you don't want to fumble it when you're inside of the goal line, and we need an effective passing at the baton. That was Dr Stephen Corwin, President and CEO of New York Presbyterian Hospital, coming up, What it takes to put a White House together? From the woman who was President Obama's senior advisor through his eight years there, Valerie Jared.

That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. One of the biggest issues in Washington these days is how we're going to get for a President Trump to a President Biden. We have a president elect, but no transition has begun, at least not as of now, which means the income administration can't fully get up and running despite pressing issues such as the pandemic. I have no budget.

I can't do any of this until I'm sworn in, or I could convince the President now to do things that should be being done already. I mean, there's hardly been a meeting that's taken place in the White House about any of this. We're welcome now someone who has run a presidential transition team before. Valery Jared served for eight years as senior advisor to President Obama. She was co chair of the Obama Transition Team into this Nate, all of which she wrote about in her book Finding

My Voice. When the perfect Plan crumbles, the adventure begins. So M Jed, thank you so much for being back with us. Really appreciated. As I say, you've actually run one of these. You know what a gargent shuan task. This is. How much more difficult is it because we've been delayed at least sometime getting it started needlessly more Now? I will say, obviously his team is the president lex team has been assembled. They have been working diligently on

policies and generating staffing recommendations for the President elect. Both in the White House, he's already named his chief of staff, and also in the cabinet. They go through a vetting process for that. But but in the midst of a pandemic, with millions of Americans losing their jobs, it is more important than ever that the agencies be available to the

transition team. And I always say that one of the things that surprised me, but President of a Wellness Transition was the unbelievable degree of cooperation we received from President Bush. Now we may not have agreed with him on policies, but what President Bush believed is in the smooth and orderly transition of power. And when President Obabou was leaving office, we did the exact same thing in his direction for President Trump, because this isn't about politics. It's about keeping

our country safe, keeping him healthy. And if you think about you know there's been a focus on the presidential daily briefing that the president elect is of getting. But we have sixteen different intelligence agencies, and the team that the President assembled should be in each of those agencies right now finding out the information that won't make it to the presidential grouping for another six months. But what we'll need to be acted upon on day one, and

so we are at peril. It's totally irresponsible, it's putting us at risk. And what there's no need for this. The election has been called. And even if the president wanted to pursue his lawsuits that there is nothing that prevents him from, by the same token, going down a path for a transition. Well, well, sooner or later there will be a transition. I think it's uncomfortable saying, and we're here from some Republicans, they're starting to move in

that direction that we're getting towards that time. Let's talk about that transition. And you refer to the team around the president. You helped President Obama really put together that team. You help pick those people. When you're putting together a team like that, what are you looking for? How do you get a team together that here it really consistent with your views, but at the same time brings a diversity of you points. Well, that's something that's very important

to the president of life. He's made that clear that he wants a team that reflects the rich diversity of our country because he believes he will make better decisions if he's advised by people who don't just think like him. They share his values, that's important, but they have different life experiences and that began with the selection of his

vices president. Obviously the vice president elect Harris qualified experienced track record of leadership, but she has a different life experience, and he wanted to make sure that the last person who talks to him is somebody who he trust. But it doesn't always see the world the same way that he does. I'm not sure, Vario, whether we've all fully absorbed the significancy, historic significance of that vice presidential pick.

The first black vice president, the first Indian American vice president, first woman, as a matter of fact. So so what is that going to symbolize for the country, but also what effect might Kamala Harris have within the White House. I think she's gonna be a powerful voice, and that's what he said he wanted, which I think reflects not only well on her, but also well on him. She's

shattering what very glass ceilings of all kinds. As you mentioned, David, She's will be a role model for people all across the country in the world about the way the new look of leadership. But she also is going to help him make really tough decisions and bring her life experiences to bear on that. And that's what he says he wants,

not just as his vice president, but throughout the administration. Already, the transition team is majority women, is near majority people of color, and so he's off to a very good start. And I think that you can tell a lot about a person by who they surround themselves with. And since I know so many of the folks on the team, well, I am really impressed. I know that he will hit

the ground running. But to return again, David, it would be so much easier if we have the full cooperation of the Trump administration, where I say we I'm in our country, because this is really about putting country first. Every new president comes in with a very full inbox. I think it's fair to say, but this president, in particular, the President Biden, when he takes office, is going to

have the coronavirus. He's got economic issues. He has a lot of issues domestically before he gets the international issues. At the same time, there are pressing issues that you really took some ownership of when you were in the White House, things like racial justice, things like how we're dealing with working mothers who are particularly a hard hit right now. For example, here in New York City, as their kids are not in school, the working mothers have

a very difficult time. What can the White House? What can the administration do without the cooperation of the Congress in those areas well? Tom starts at the top, and I think he's already signaled that his first priority is to get his arms around this COVID nineteen pandemic. He's

already assembled a task force. It's hard work. We'll be making recommendations to him about steps to go forward to not only to contain it, but once we have the vaccine, to make sure that people actually get vaccinated in a fair and equitable way. He has always been an advocate for working family, and I think the pandemic has laid bare a challenges that have existed for a long time.

Pay people, pay paid leave, paid sick days. We know that women are suffering disproportionately in this pandemic, and that's why he said, well, we build America back, we have to build it back better. So what are the levers

we can turn as we craft a recovery package? And look, when he came in in two thousand and nine, President Obama asked is then vice president to be responsible for that eight hundred billion dollar Recovery Act and make sure that the resources were going where they were needed most. And so he is well prepared to do this again. And in fact, his cheapest staff that he just selected was the same person who was this cheapest staff at

that time. So he has got to He said, the only way we're going to grow our economy is to get our arms around this pandemic. And I would say, sitting here watching it spiral out of control with no leadership coming from the White House day after day after day, with reaching to them to the fifty pound and people dead. Just think of those Thanksgiving tables where they're going to be so many empty seats in our country. And so again that's why this is a critical time as that

virus is spiking. So yes, yes, to get on his arms around it. And to the point you've raised in terms of the racial healing and criminal justice reform, that's also priority for Here's a good news. One thing I know about President Left finds he can multitask and his policy shops will be working on all of the issues that he articulated in his campaign. To be true to his worth thanks to Valry Jared, former senior adviser to

President Barack Obama. Coming up, the view from the FED on how the pandemic may be changing the very structure of our economy over the long term from Dallas FED President Robert Kaplan. That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio, and regret to say that we're in the worst economic mess since the Great Depression. Together, we must

chart a different course. We must increase productivity. That means making it possible for industry to modernize and make use of the technology which we ourselves invented. That means putting Americans back to work, and that means, above all, bringing government spending back within government revenues. That was President Reagan

talking about the economic crisis he faced back then. Now we're facing a new crisis, a crisis born not of runaway inflation and high oil prices, but of a pandemic that may have farther reaching consequences on the way we work, the way we learn, the way we live, all of which are very much on the mind of Dallas FED

President Robert Kaplan. So so The irony is we think, UH, over the horizon is going to be a very strong year with GDP growth probably three and a percent or greater, although a lot of that growth will be in the

back half of the year. That the challenges, as you mentioned, is getting through the next six months, and we're seeing resurgence intensify all through the country, and we're seeing mobility and engagement UH fall off in those places where the resurgence is affecting or threatening the health healthcare capacity, hospital capacity.

If that continues, which it looks like it is continuing, you're going to see more and more cities UH fall off El Paso as an example, Wisconsin, Chicago, Utah, Colorado. We're all seeing that kind of mobility engagement fall off, which indicates growth will slow and so UH we'll we'll

have to see what the fourth quarter looks like. We it is possible we could have negative growth if this resurgence gets bad enough and mobility falls off enough so that local officials, even though don't they don't want to do more restrictions, they don't have a choice. So the next couple of quarters is going to be very challenging.

The good news is over the horizon, things will get better, but we've got to get through the next six months, and we've got to do more on masks, wearing, social distancing, because a vaccine will help us eventually, but it's not going to help us get through the next three months. So negative growth and for a couple of months that adds up to a recession is as I understand it.

So you're you're not ruling out that possibility. I'm not ruling out If you had asked me a month ago, I would have said we're going to grow in the fourth quarter as much as four or five percent annualized. But I think with this resurgence, um, I think the risks are all the downside. The only good news if there is and if there is negative growth and the rebound stalls, we our own view as it will be temporary, it'll last for a quarter or two, but it's a

possibility at this point. Might that prompt fed action? Could you, for example, increase your bond buying or is that just not the right response to the problem we're looking at. I don't I don't know if that's the right response. I do think it's critical that the thirteen three programs, these public market, backstock programs and programs like that support Main Street and the PPP that they continue beyond your end.

I think that's very important. I would continue our bomb buying at the same pace that we're buying if we needed to. If this got bad enough, we could extend maturities. But I wouldn't increase the size. Uh, But I think there are tools we have and we're gonna have to watch this very very carefully. So you said maybe three and a half percent GP growth in back end loaded or better or better, fair enough or better, but back end loaded is that entirely contingent upon an effective vaccine

sometime in the middle of the year. Yes, it is, And so what we're assuming is our base case is we'll we'll have a good vaccine or more than one vaccine by the end of this year. But the first order of business is going to be to immunize about twenty million healthcare worker in the United States. That could take up until say March or April, and then in March or April, our expectation is that you'll have broad dissemination that will take a number of months to get

the population inoculated. So we're going to spend a good part of socially distancing mask wearing. But the back half of the year is going to be better and better times will be ahead again, but we've got to get through. We've got to get through a very difficult period first, and that's where our focus is right now. And then the news of these two or three promising vaccine candidates really encouraged I think all of us to believe what you just said, that we will get through it, although

it's gonna be hard between here and there. When we get through it, what will be the long term changes do you think to the very structure of our economy from the pandemic or will they go away? So we're gonna have a number of issues that we're gonna we're gonna have to deal with. The number one, technology and technology and inable disruption was a fact of life pre pandemic,

and the pandemic has accelerated it. People are now even more comfortable shopping remotely, working remotely, and just conducting their lives differently. Some of that will swing back, but I think some of it will not. You could see in the future less business travel, You'll see reconfigured office space, maybe less office space for some companies. That was Dallas FED President Robert Kaplan. Coming up, we wrap up the week with our special contributor Larry Summers. This is Wall

Street Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. We're gonna wrap up the week. We welcome now our special contributor Larry Summers of Harvard. So, Larry, great to have you here, particularly because at the very end of the week we had a fair amount of secretaria treasury action there. One of

your successors took some action. Secretary Manuchin wrote a letter to the head of the Fed, J. Pow, saying, please give us back that money we gave you for those emergency lending facilities. And you had something to say about that. In fact, you had a tweet in which you said Secretary Paulson talk, referring to Hank Paulson. Another predecessor understood in a transition it was his job to help the FED and the incoming administration established a basis for strong

cooperative efforts to contain the crisis. Secretary Manuchin has done just the opposite. So drawing a contrast between these two secretaries, what is going on here? Larry and two Shepherd points one, Uh, every previous government. I mean, there was plenty of bitterness in the Bush Gore campaign, really there was. I mean,

we all thought that election was stolen. But it didn't occur to me, or to anyone who worked with me, or to any other cabinet officer in the Clinton administration not to cooperate fully in helping the government be ready to do whatever our successors wanted to do. The last thing we envisioned doing was thwarting their ability to carry

out their policies. What Steven nuchen uh did in writing uh that letter and making those demands and reducing the authorization was thwart what it's clear and incoming Biden administration wants to do. So that's just wrong on process terms.

The second problem is it's just incredibly imprudent and reckless at a time when the pandemic is getting far worse, at a time when we don't really know where this pandemic is going to go before a vaccine, at a time when we don't have any basis for being confident that there's gonna be agreement on fiscal stimulus, to tie the fence hands in any way, to constrict their abilities to act in an emergency is the height of foolishness.

Why would you throw away a potential insurance policy. Nobody's asking Secretary Manuchin to trigger anything, to pay any money, to authorize any checks that he doesn't want to, but preserving the capacity to ensure against financial arm. Again, it's elementary that that's the right thing to do. It's elementary that it's the right thing to do to facilitate the next administration being able to do what it thinks. Uh

is uh is wise. Uh. I've been surprised by the secretary before war, but never more than this, which really does seem to me very much outside the tradition of the office he holds. So this is a transition that at some point presumably will be over. And then the same time, there are longer term issues at play here. And just this week Bloomberg had the New Economy form that you appeared on with Janny yell in the former Photo Reserve chair, and one of the subjects was actually,

are we saving too much? And are we really in secular stagnations a term that you really revived some years ago, and she basically totally agree with you. This is part of what she had to say. Central banks need to do what they can, but then not overstate, um what it's possible for them to do well. I strongly believe central banks need to be independent and need to do

everything they can. The changes they've made, they're not a game changer from the point of view of secular stagnation, and bottom line, I agree with Larry on what's what's required. So they you go, Larry, things have changed something the first time. I think that you issue that paper some years ago, when you're sort of an outlier I think on the subject. But that leads to the question, Okay, if central banks can't fix this and we're in secular stagnation,

what do we do about? What does it mean for longer term economic policy? It means we're gonna have to rely on fiscal policy rather than monetary policy UH to stabilize the economy going forward when we have cyclical fluctuations, And it means more generally that an important part of the design of policy is going to have to be assuring that savings are fully absorbed, because when you have excess savings and there isn't investment that absorbs that saving,

that's when you get interest rates on the floor. That's when you get the savings flowing into purchasing existing assets, leading to financial bubbles and leading to huge degree of leverage. That's when you get lack of lack of inflationary impulse and an inadequate uh inflation relative to the targets. And that's when you get the sluggish growth that leads millions of workers to be left behind. This isn't a phenomenon of the United States. It's a phenomenon throughout the industrial world.

Nowhere are interest rates at anything like the levels that would have been regarded as normal. And nowhere is there any market judgment if you look at longer term interest rates, that they're going back to normal. And so we've got to move to a very different paradigm. That is not that an undisciplined central bank is going to create of inflation.

It is not a deficit. Are gonna crowd out prompted investment and to have all the savings and get ex orbit and that is what central banks need to be saying. That's what political leaders need to be understanding. Kins talked about this time ago, both in substance and have to understand the basic economic forces to do the right thing, which leads us naturally to a quick lightning round of Summer. Says, because one of the questions is the stimulus. Are we

going to get stimulus? On? How big does it need to be? It should be more than a trillion dollars, and it's odds off that will get it before the inauguration unfortunate, unfortunately because of transigence on both sides, So odds off that we're gonna get it should be more than a trillion dollars. Let me flip take the flip side of this argument for a second, which might surprise you. We've had some people like Martin Wolf from the Financial

Times this week writing about the possible recurrence of inflation. Actually, if we get the vaccine and things bounce back, is there any chance that, in fact, we could have the reverse of your problem and actually have inflation by the end of course, by the end of one I think it's pretty unlikely, but anything's uh possible. But you know, mathematicians have a phrase this reduces to the previous case.

If we found ourselves with an overheating economy and we had to raise the interest strates and the FED was important again, and it was no longer pushing on a string. That would be really good. That would be a much better situation than the kind of profound, long term sluggishness that has led to such disillusionment um around uh the world.

One of the things that Martin Wolf was talking about actually is whether demographics might push us in that direction, because in fact we have a diminishing labor force in places like China as well as the United States in Europe, and might actually increase the pressure on wages, which goodness knows could be good. It could help address some of that inequality problem that we certainly facing in the United States, and that president like Biden, has committed himself to trying

to address. Great to have special contributor Larry Summers with us as always. Finally, one more thought, one man's stimulus package for booksellers. Like all retailers, booksellers have not had an easy time of it since the pandemic hit last spring. But this week saw what could be a turnaround with the publication of President Obama's memoir A Promised Land, a seven hundred sixty eight page tome that is making a

splash like few other books have ever made. With an initial printing of three point four million copies from North America alone, and nearly nine hundred thousand copies sold in the first twenty four hours. It may not be the first of its kind, We've come to expect these from our former presidents, but it may well be the most popular presidential memoir of all time, which can't come sooner off, particularly for the independent bookstores around the country, which the

publisher says are reporting particularly strong sales. As much demand as there is for President Obama's memoir, it still has stiff competition in the eyes of critics, competition from the unlikely source of our eighteenth President, Ulysses S. Grant, who wrote what most historians degree is the gold standard for

presidential autobiographies. Like President Obamas, President Grant's autobiography was immensely popular, helped no doubt by his publisher, Mark Twain's marketing genius in employing Civil War veterans to dress up in their

uniforms and go door to door to sell it. Like President Obama, President Grant wrote his book out longhand fighting through his terminal cancer to finish it just before he died, and like President Obama's book, President Grants was a huge commercial success, earning the equivalent in today's dollars of thirteen million. And we can only hope the President Obama's autoiography bears

one other similarity to that of President Grant. For Ulysses S. Grants two volume memoir was published in eighty five, during the third longest economic downturn in US history, But it was a recession that ended when the memoir was published. Even as we cross our fingers that our current economic recovery can continue despite all that we face. That does it. For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.