Bloomberg Wall Street Week: Bryant, Perry, Greene

David Weston from Bloomberg Radio. The new year stumbles out of the gate, but the markets take it in stride. This is Bloomberg Wall Street Week. I'm David Weston. Riots broke out on Capitol Hill this week as a mob stormed the Capitol to disrupt the counting of the Electoral College votes, driving the House and the Senate from their respective chambers and delaying the proceedings. It was history being made,

and not in a good way. As political scientists Barbara Anne Perry of the University of Virginia's Miller Center explained, If you take exactly what happened, and that is a mobocracy, attempting to foment a coup and break into the precincts of power, into the very Houses of Congress, into their chambers, their inner sanctum. Uh, nothing like that has happened in this kind of context when the Senate and the House were attempting to engage in their constitutional, statutory ministerial duties

to certify the electoral college winner of the election. Now, people will go all the way back to eighteen fourteen, and you know, during the War of eighteen twelve, a foreign power, the British, came and invaded Washington, and they burned the Capitol, and they burned the White House as James Madison and Dolly Madison had to run for their lives from the Executive Mansion. But in this context, in a word, no, nothing like that has ever happened in our history. It's all confess. I was not around in

eighteen fourteen, but I was around as a fairly young man. Uh, in the nineteen sixties when we did have marches, very large marches across the country, particularly in Washington. I remember Richard Nixon hold up in the White House. Is there some parallel with that? Oh? Absolutely, Uh, And we haven't even mentioned eighteen sixty eighteen sixty one when in response

to a presidential election that is of Lincoln. Uh, you had to begin with seven states secede from the Union in a total of eleven to form a whole holy new nation within the United States, the Confederacy. So yes, we've had that in nine eight I do as well remembered as a young person. Uh awful, awful think of Chicago. Uh, think of the Democratic Convention that year's think of the assassinations of Robert Kennedy and Martin Luther King. So are our leaders being gunned down? Uh? And yes, the the

uprisings of the race riots, the student uprisings. Uh. So it's not as though we've never been through this. But when I'm asked about context again, the Senate and the House attempting to do their constitutional statutory duties in the role of presidential election. No, we've never had that. And we've never had a mob um again, short of the British of Horn Invader break into the Congress and attempt

to take in effect take power. Before the riots, we had Donald Trump Jr. The son of the President, basically speaking to that crowd on the ellipse and saying, this isn't the Republican Party at all. This is what he said in part. The people who did nothing to stop this deal, this gathering should send a message to them. This isn't their Republican party anymore. This is Donald Trump's

Republican Party. So, Barbara, amongst so many extraordinary things, I found that extraordinary with the son of the president saying this is not the Republican Party, this is Donald Trump's party. Do we have parallels to that, I mean, maybe Bull Moose under Teddy Roosevelt or something. Sure, we've had these splinter groups, but particularly nineteen twelve, where you have the former president Teddy Roosevelt, who decided he wants to run again and and can constitutionally at that point, wants to

run again. Uh. He is his protege, William Howard Tapped is the incumbent president. But Teddy doesn't like the way he's going because he's not progressive enough, so he splits his own party into forms the Bull Moose Party, the third Party, the Progressive Party. Uh, and therefore causes Democrat Woodrow Wilson to win the nineteen election. So careful when you split off from your party. Third parties or splinter parties,

uh tend not to work very well. They haven't since the GOP was formed back in the late eighteen sixties because of slavery. Um. So it's not as though we haven't had split parties. We're just used to our parties becoming as they have in this time of polarization so monolithic. But think of the New Deal period up through the

nineteen seventies when all the Democratic Southerners became Republicans. So you had Fdr Truman, Kennedy Johnson having to deal with a split party of segregate shist white Southern uh, white supremacists in the South who had all the power in Congress. And then people like Hubert Humphrey in a Midwestern Northeastern

Liberals or even the Republicans as recently as before. You know, we're split between the Nelson Rockefeller Liberals and the Ronald Reagan on the scene coming out along very gold Water Conservatives. And even George H. W. Bush faced this, you know, he he sort of lost the Reagan wing of the party and then it became really the Reagan Republican Party until it became now the Trump Party. So it remains to be seen do they splinter off. Do they try

to find any kind of common ground. Let's talk about the twenty FI Amendment, that provision in the Constitution that allows in one section for the vice president with his ironsmand at the majority of the cabinet basically certified the President pro tempore up in the House that the president is not confident. Is there any realistic prospect of this?

Is has ever been considered, much less used before? Well, certainly not considered for a president who's been being viewed as having as if I can put it in a pedestrian way, lost as marbles close, if we could get to that, of course, would be Richard Nixon, who was seemingly becoming mentally unhinged towards the end and prior to

his resignation. But the process of impeachment was so underway that you had members of his own party, leaders of his own party, led by very Goldwater, going down to the White House to say, after the Supreme Court's decision in the Watergate tapes case, Mr President, if you do not resign, you will be impeached and you will be convicted, and you don't even have our votes, members of your

own party. So no, we haven't had to consider it really for physical or mental and capacity on the part of the president since that became part of the constitution in the mid nineteen That was Barbara and Perry of Uvier's Miller Center coming up the historic Senate runoff elections in Georgia and what John Hope Bryant says they could mean for small business as the driver for economic justice.

That's next on Wall Street Week on Bloomberg. Yeah, this is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Control of the Senate hung in the balance this week, and to the surprise of many, the two Democratic challengers won both of the runoff elections, giving President Like Biden a razor thin margin in the Senate and sending the first black Senator to Washington from Georgia. But John Hope Bryant, founder of Operation Hope, says that when it comes to

civil rights, the key is economic opportunity. I think that we felt massively disrespected by our some of our national leadership in the last four years. Um really felt dehumanized, and given the history of this country, where one could argue the largest reverse transfer of wealth happened with African Americans building the core of this country's wealth in the sixteen seventeen hundreds with slavery and free labor. Uh. And

we couldn't create capital because we were capital. Uh. We thought that was a particular disrespect um, the lack of empathy, of understanding the role that we played and uh and the role of public officials to care after the lease of these God's children, which, by the way, often become the primary assets. You know. Sam Walton had a high school education, as you know, David, but is now the

respective responsible to the largest retailer in the world. That's what happens when you invest at the bottom of the pyramids. So I think that you had people turn out in mass because they felt, uh they were given uh. You know, I can't say on your program, they were given a massive disrespect uh by our by some of our elective officials. And we wanted to send a message. And I think

we've done that brilliantly. Something else is very interesting, David. Um. The place where in the sixties you had Dr King led, you know, lead a movement of social justice, uh, which was backed by primarily African Americans and Jewish brothers and sisters, now has a U. S. Senator from that same place. That's an African American and one of our Jewish brothers. Um. And it was a coalition of the willing. Yes, Blacks were decisive in the presidential election and this one, but

we couldn't have done it alone. You have really all races who said, knock it off, America, it is time to get back to business, and uh, let's make American normal again. But let's rebuild her with the best of her bones, which all which includes all of her economic levels. You make a very important point for the distinction. They're making America normal again in some respects will not do it.

As you point out, there's four hundred years now of basically building America on the backs of people who were not equally treated, who did not have the ability to earn the money and amass the capital. What realistically can the black community expect from a President Biden when he

takes over to start to change that phenomenon. Well, uh, and by the way, it's interesting, uh that Reverend Warnock, who had Operations Award in the background when you did his acceptance speech, we we knowed that we we we actually asked me to put a hope inside location at

Ebenezer Church, Dr. King's Church about eight years ago. Uh. And so this concept of civil rights and civil rights, that the real color is green, and that we need to provide social justice through economic empowerment through homeownership and small business creation and wealth creation is something not foreign to Reverend Warknock. And you'll see, I think you'll start to see a moderation of him, a moderating leadership from

him that I think most people will appreciate. I think likewise, and I've been contracted by the bid the administration transition team. You're gonna see, I think a focus on small business, which is the right place to start. That's where most wealth creation from my white counterparts came from. And and it's almost it's almost, uh was it ninety eight trillion dollar layers? I believe is a number of my white counterparts that they are not even sent of all equities

and all wealth in this country. That comes a lot from small business. That's where jobs coming from. The three percent of all jobs in this country, your employers with the employees are less. Uh. Conversely, half of black businesses or sidelined in in the coronavirus and of all black businesses, as you know, David, don't have an employee. I'm gonna repeat that, of all the businesses in this country are sober prietorships with no employees. So how do you create wealth?

How do you create jobs when you don't have, uh, the mechanism to do so. So so so I think you can see a massive focus on not just some raw stimulus that's not enough, that that that is actually can be negative. If that's all you do. You have to turn the stimulus into an investment. You're gonna see that in I think small business, and I think you have to see it in massive internship programs map to

my millions of internships, not hundreds of thousands. So there there you're talking to private sector as well as public sector. And we have seen some big private companies start to do some of that investment, particularly in the financial services area, which you know so terribly well. Yeah, when you know, once again it was the private sector, David, in the nineteen sixties that led the effort to desegregate the South

because it was bad for business. Very few people know this, but it was not the government that integrated the South. The government, the governor was set staying in the door, saying over my dead body, oftentimes sounding like what some of our federal leaderships are signing like today. It was the private sector who said, and knock it off. This is bad for business. Whether your black or white, we need some more green. That's takedown. The whites only signs

from the soda shops, the department stores, et cetera. Let's integrate these places where blacks are coming in to buy. That. It was the private sector once again, David. You have the private sector that's made a three billion dollar investment in alone on social uh justice to economic empowerment. Companies like uh Shopify, where I partnered with the creative melion black businesses. UH. Companies like JP Morgan, Well it's Fargo, Uh,

oh my god, met is it? PayPal? All these companies, Twitter, etcetera. Who stepped up, uh into this gap. I think the private sector, you know not you said, of all jobs, David, as you know, come from the private sector. Most legitimate wealth comes from the private sector. We have the fortune here is at the bottom of this pyramid, and the private sector understands they can't get there without black and

brown customers. UH. Diverse companies and diverse geographies win. That is a fat I like math because it's not having an opinion. Uh, that is that that is a winning formula and the government needs to follow that lead. So the government should be the stimulus for the private sector. I talk about massive internships state massive. I'm talking about millions of young people who know that they can the latter is repaired, including my white brothers, and by the way,

to get that opportunity for the future. Does this make the Small Business Administration administrator a critical position and the Biden administration, I do believe it does. It's been a tetular member of the cabinet in the past, but I believe now, Uh, small business has proven in the pandemic to be uh, well we what you And I've always known the basebone, the backbone of this economy and of jobs. And I think that's gonna get special recognition, uh in

the next couple of years. I think that people are gonna be pleasantly surprised. Think you're seeing it in the in the way the markets are responding. Seeing I had a billionaire friend of mine texting me and say, well, I guess my taxes are going up for good reason. I mean, so he was he was like, look, I don't mind it if they go they go up, and we're talking about social justice through economic empowerment and uplift and smart smart taxation, where all both rise, you're gonna

have more GDP. This economic That was John Hope Bryant, founder, chairman and CEO of Operation Hope coming up. The Federal Reserve stays on course, but Megan Green at Harvard explains why that doesn't mean they're optimistic about the economy. That's next on Wall Street Week on Bloombero. This is Bloomberg

Wall Street Week with David Weston from Bloomberg Radio. This week we got to see the minutes of the Federal Reserves meetings at the end of last year, and f o MC members for the most part, seemed pretty happy with where they are, though Megan Green of Harvard's Kennedy School did go through the risk the FED maybe facing This wasn't the most earth shattering FED minutes, but there

were a few things in there for starters. They changed their language around continuing bond purchases, so instead of saying they'll continue for coming months, they said they'd continue until they'd reached sufficient progress on hitting their targets, but they were also pretty careful to say that those targets wouldn't be quantitative, they'd be qualitative. So if that feels kind

of frustrating in vague, it is, and it's intentionally so. UM. There was widespread expectations in early December UM market participants that the FED might actually try to extend the duration on their bond purchases to keep the long end of the yield curve down, and there was very little appetite for that in the FED minutes. That, of course was before the ten year yield started creeping up in recent days, so that that might have changed already since mid December

when these FED minutes UM were recorded. And then finally the FED talked a little bit about their outlook, and you know, in mind with expectations, they're pretty pessimistic about the upcoming months. It's going to be a hard winter, but they're hoping that a vaccine will result in a release the pent up demand and a recovery in the second half of this year. So they were much more optimistic, but there's so many risks around that view. I think

that's worth keeping in mind. Well, it's interesting, as I understand it, what they said is on the question of inflation specifically, the risk was the downside, that is to say, we undershoot rather than overshoot. But this, of course was before we had those two seats go to Democrats in Georgia. Do you think it's a different world for the Fed today than it was just two days ago? Well, so a lot has happened since the Sped minutes, even just

a couple of weeks ago. Um, And I actually don't think that we're in a different world, but I do think that the market seemed to be expecting that we are, and that that might be a risk. So I mentioned the tenure yield was up, particularly off the back of yesterday's Georgia's Senate results, and that's on the basis that will probably get some kind of stimulus out of this government with the Democrats in control of the Senate, and and that's probably right, but it is worth considering that

might not be a linear process. It will require absolute unity amongst the Democrats in the House and the Senate to get significant fiscal measures passed, and so I think

we might see wallboles along in the process. Um. These minutes also happened before there was a new variant, a new contagious variant of COVID nineteen which we've seen ripping through southeast England, and so I do think that, you know, the FED said that they were optimistic that a widely distributed vaccine would really lead to a rebound and that could feed into inflation, but actually with this new variant, I think there's a risk there. Of course, our vaccine

rollout has been pretty slerotic. Hopefully we'll get better at that um, but right now it's not looking great for a massive rebound because it's not looking like we're getting

vaccines and arms quickly enough. And then finally, it's worth pointing out that we've we've run an experiment where we've had massive amounts of stimulus before recently in ten and if we learned one thing from the Trump administration, it's that you can go ahead and provide significant stimulus when the economy is running pretty hot, it's really taking along,

and not generate significant inflation. So I really question, even if we got the stimulus the markets are hoping for, I question whether we're going to generate a lot of inflation without a lot of sustained inflation with that, when the economy is still in a hole. The FETE has made no serious fact that they really conserve out jobs as part of their mandate. They also talked about maybe income inequality, wealth inequality. Is there anything they can do

at this point beyond what they've done to improve that situation. Yeah, So, as someone who's looking a lot at income and wealth in equality, I wish I could say that the could do anything about it. They're clearly aware that that they've contributed to it um by you know, resulting in a

in a bowl market and most asset holders are are wealthy. Um. But unfortunately, other than kind of running the economy hots, letting inflation come down, trying to pull in workers marginal workers from the sidelines, there's really not a whole lot that the FIG can do about it. That's much more up to fistical authorities. And that's partly why J. Powell has been pretty outspoken, and he's not the only Central Bank chair to to be outspoken about how fistical authorities

really need to step in and do their job. Mag when you talk about helping individuals, as you know, Larry Summer's got a lot of attention by saying two thousand dollars a person is not the way to go. The fact a lot of people will just save that money. They can't spend it effectively. We need to target it other ways, such as state and local assistance. Is he right? Yeah? So, and Larry is not the only one saying that, you know, there's a better allocation of that money. Will they be able?

And Shark came out and said the same and also got a lot of for it. I think that is right though. That dispersing checks, you know, they say when you're coming up with the ideal fiscal policy, it needs

to be targeted timely and temporary. UM Dispersing two thousand dollar checks isn't particularly targeted, And so I do think things like allocating money to local UM officials who are on the front lines and can go ahead and figure out how to plow that into education versus vaccine distribution, UM and local services is probably a more effective way of supporting community. That was Megan Green of Harvard's Kennedy School. Coming up, we wrap up the week with our special

contributor Larry Summers of Harvard. That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. We're gonna end the week as we do every week, with our special contributor Larry Summers of Harvard. He is, of course, former Treasury secretary Larry. Welcome back. Let's start with the end of the week, if we can. With the jobs numbers. We lost a hundred forty jobs. Although last month's numbers were revised up somewhat,

people thought that it might be bad. The markets actually seem to think maybe this makes them that's more likely. Were you surprised by the numbers and what do they tell us, if anything about the economy. I wasn't amazed by the numbers. I think they tell us that we need to get COVID in the rear view mirror. I think they tell us that there's a limit to what kind of recovery we can have when UH people are

fearful of going outside and getting more fearful. And so I think the number one message from this statistic is the importance of doing vaccinating better than we did testing, and it doesn't look like so far we're doing a

very good job of that. That's got to be priority one, um priority two, and priority three for the new administration and how much of that, Larry will require some very targeted stimulus, because one of the things that we hear from a lot of people is small business is is what it's all about, particularly when it comes to job creation, and obviously a lot of those small businesses are and

things like retail and particularly leisure and restaurants things like that. Look, David, it doesn't really matter unless people can go to the store and unless they can go uh to the restaurant. I think we've done okay with the p p P. I'm more worried about the mass layoffs to have taken place in state and local governments, And I'm more worried about fear. That's keeping people UH indoors, that's keeping people unable to go out and engage in the kind of

spending they want to. And I think the longer we have this and the longer we respond just by throwing money, the more complicated problem we're gonna have of a huge pent up demand whenever we start to UH make some progress. So I'm very focused right now less on the macro economics than on the having effective public health UH strategies. And in all honesty, I don't think the only culprit has been the politics of the Trump administration is terrible

as it has been. I think our medical establishment has not planned in the way it should have for a satisfactory UH vaccine UH rollout, and I sure hope that is going to change in a way. David, I link two events. I link the failure to protect the capital and the failure to be able to organize the use of all the vaccines that are being delivered. There's a basic question of public sector competence that I think is

a profound challenge for the new administration. And I think that decades of running against government, of venerating what the private sector can do and suggesting that government's just incompetent, that whole ethos has I think proven to be a bit of a self fulfilling prophecy, to terrible consequence for everybody. And so I hope that the new administration is going to put enormous emphasis on effective public management, because I think it's implementation of what we all agree on more

than its grand new schemes that is UH necessary. There's a history of this. It goes back to the fact that they didn't get the computers working right for Obamacare. It goes to the fact that we're having people with incomes over ten million dollars who don't pay taxes, who the I R. S doesn't even try to find. It goes to UH the leading the water in UH in Flint. And I hope that the business community is gonna start recognizing the need for effective, competent government rather than just

excoriating government in every term. I think everyone can get behind a real urge for more competent government. But at what level? I mean, we'd like a competent at all levels,

but particularly take the vaccine for example. We have something of a raging debate right now between government WOMO on the one hand, and the Mayor of New York Citio Mr. De Blasio, about exactly who's setting out the rules, because de Blasio is saying, what a second, you've got your rules so strict that means we can't get every vaccinated. You should loosen them up. Some who should be calling the shots. As a matter of competence, where should the

decision making be. That's a hard thing to judge. In general, I think we need to be putting more responsibility on the federal government in UH some of these areas, And I think that having things be invented and reinvented fifty

times is often problematic. I think with respect to vaccines, we need to focus on getting as many people vaccinated as possible, and I think by designing optimal algorithms according to philosophers and epidemiologists, we have probably made a sacrifice in terms of effectiveness, and I put more emphasis on

getting as many jabs into arms as possible. I also don't think we've done the research in the right way, done the planning in the right way with respect to the issue of one versus two vaccines, and I hope when this is over there'll be a investigation not just of all the political terrible stuff Trump has done, but also of some of the thinking and decision making in

the medical community. I cannot understand why we did not do more testing and studying that would have enabled us to be making more intelligent judgments right now about first time versus second time vaccinations as the optimal use for controlling the public health problem. I can't understand why we're holding large inventories to give people second doses, whether people whose lives could be saved UH today, even if we

can't postpone the second doses. We surely can rely on production several weeks from now as the basis for the second dose and use all the doses that we have today. I don't think this is a pretty picture um at all. And I think among those who are going to have to do a lot of rethinking are the health and the public health profession. And I would suggest that we've had private health norms in a problem that requires public

health solutions. As you refer to. We had just a stunning, harrowing event this week with that attack, assault on the Capitol, really attempt at armed insurrection. It is no less than that. How might that affect what President Biden when he is president, can get accomplished in the Congress, particularly when you add ef fact we also had, by the way, this week, two seats from this in the Senate go to Democrats from Georgia, So it means that he has an effective,

if narrow majority. You know, the transition from inconceivable to inavitable can be very rapid in Washington. The combination of three things, the Georgia Senate victories to give the Democrats effective if narrow control of the Senate, the actions that have discredited total opposition to Joe Biden, and let's give credit where credit is due. The President elect has been pitched perfect over the last week in everything he said

and has done. All of that means that it is going to be much much more difficult to go into reflex opposition to a set of policies that come from the moderate center. And there's a big set of policies, whether it's infrastructure investment, whether it's strengthening education, whether it's making investments in technology that enable us to compete with China. The chances that we can really build back better, those

chances have gone way up. I still think there's a prospect that we're gonna fix things and get things together, and a couple of months from now, the vaccination process is going to be back on track, and with it, the economy is really going to be taking off. And if Joe Biden has that momentum, the Republicans have a desire to show that frankly, they're not crazy, and the best way to demonstrate that is going to be for

their moderates to cooperate. I think we can see more more progress, and there's a larger window than I would have fought plausible A month ago. Now that's no certainty, and it could easily not happen, but the prospect of more um has to be much more there than anybody thought likely a month ago. Okay, let's wrap up with a quick round of the summer says, and let's start really where you just laid off. The first question is it looks like there's likely to be more stimulus. What's

the right way to do that? In the wrong way to do that? More health, more state and local government getting started on infrastructure, not just sending people uh checks when disposable income is running already very high. Number two, infrastructure. You've mentioned it more than once. What are the chances that will get a really substantial infrastructure package within the next six months? Are a little better than that or a little better than that, And that's a much higher

number that I would have you've been a few months ago. Okay, thank you so much for Larry Summers, our special contributor of Harvard University. Always great to wrap up the week, d Larry. Thanks David. That does it for this episode of Wall Street Week. I'm David Weston. This is Bloomberg. See you next week.