tv Bloomberg Surveillance Bloomberg September 14, 2015 6:00am-8:01am EDT
korten -- he is not tony blair or gordon brown. it is fashion week in new york. will drapeeem khan human silk that beyonce would die for. this is "bloomberg surveillance ," live from new york. it is monday, september 14. i'm tom keene joining me, brendan greeley. overview missed overnight, china. we have not even talked about it, but china markets are weak. i saw the shanghai was down. you hear that sound in the distant? distance? that is the sound of sobs as william jefferson clinton and tony blair pouring them scotch and saying what happened to our parties? tom: the stunning results in the united kingdom over the weekend. let's get to our top headlines with brendan. data is new economic
adding to concerns about the slowdown in china. in chinal out put rose but fell short of estimates. .nvestors reacted chinese stocks had their worst day in three weeks. the shenzhen composite was down more than 6%. germany is going to slow up the influx of refugees, at least for now. the government is reposing border controls. they a sign to europe that need more help. >> at this moment, germany is introducing temporary border checks again at the internal frontiers. the focus in the first instance will be at the border with austria. the aim of this measure is to limit the current influx to germany and come back to an ordered proceeding of the entry again. this is necessary for safety reasons. brendan: european officials meet
in brussels on the refugee crisis to discuss the plan of introducing styling seekers to your europe. fast-moving firefighters in california have killed one person and destroyed several homes and businesses. at least 81 homes were destroyed in a separate fire near sacramento. surging toers is double-digit leads over hillary clinton in both early voting states iowa and new hampshire. a new bc -- a new cbs poll shows him 10 points ahead of mrs. clinton. he has a 22 percentage point edge in new hampshire. joe biden is third in both states, even though the vice president is not in the race. tom: it was most fun in new york city. novak djokovic has won's second u.s. title, beating roger federer last night. it was his 10th grand slam singles title, and it was a bit
different with serena stepping out a few days too early. lovean: i just want/i lose -- i just love watching djokovic play. he says are you cheering for me? is that me? we do not say- over, struggling. just older. was there a step there? brendan: i guess so. but all tennis stars are now younger than me. tom: i would mention martina hingis in the doubles doing most well after two decades. a data check on international relations, the euro, 1.1330. nymex crude, 44.58 per barrel. fed target rate back to paul volcker. the skyhigh interest rates of the 80's, moderation.
what is the last time we raised rates? 2004. now we go to the discussion of this moment. brendan: there was a great piece that both of us read in "the new york times" that said we can say that we can raise rates. do we know how to do it? what they are doing, the federal reserve bank of new york is planning to raise interest rates when they are ready using this collar, between the rate that they pay on excess reserves and the reserve repo rate. tom: how many people alive in economics do not even remember the last time we raised rates? we have a most interesting show this morning. we will speak to the excitement of fashion week. one avoid or is -- will embroider -- willem buiter will join us. and in the united kingdom, liberal politics, it is a throwback to written's socialist
1930 -- to britain's socialist 1930's. .t is a standing indication corbynoff the -- mr. was off the radar until this saturday. we go to francine lacqua. francine: a lot of people were win from an out right jeremy corbin, and i cannot really work out the two. he came out of nowhere. bernie sanders was one of the first ones to congratulate him. i cannot tell you enough how so far jeremy corbin has been anything but a moderate. important to say he is nowhere near government, but people almoste him as venezuelan style economics. he is anti-american, dislikes nato. is appointed somewhat shadow
chancellor, even less moderates and him. it makes jeremy corbyn look like a moderate because this guy wants the bank to stop -- tom: could he become prime minister? what is likelihood that he could replace mr. cameron? i would say at this point very unlikely if not impossible, but he actually comes into power -- that he comes into power. this means a very fragmented labour party, and it could mean that conservatives do not have an opposition party. this is dangerous not for the election because it is five years away, but he does we have an eu referendum at our doorstep in the next 18 months. his country goes to vote. we do not know whether jeremy corbyn at this point is pro-europe or not. we know he is lukewarm. we know that someone who is very close to him has refused his job
because he does not think he is pro-europe enough to try and tor the citizens of britain vote, to stay within the european union. i would say that is probably more dangerous and him actually coming into power. the u.s. audiences waking up and looking at this now. where is jeremy corbyn on the bernie sanders scale? almost the would say same. this is someone that wants to nationalize the banks. .e is against austerity the only thing i would quantify is that he has just been elected, so whether he tones down the rhetoric or not is something we have to see. he has also consorted with terrorist groups. one of the most surprising things are that would have repercussions for the united states, is that he blames the west for russia's invasion of ukraine.
this is hard left. they do not usually come into power yet alone -- let alone govern an important british system. , thank: francine lacqua you. it does sound like he is somewhere to the left of bernie sanders. talking about nationalizing banks, re-nationalizing the railroads. the way he sees foreign policy, it is hard to directly compare him to bernie sanders. bernie sanders is an economic populist. jeremy corby is something else. tom: our guest host this hour is robert burke. let's take the broader view here, mr. burke. we look at an antiestablishment moment with jeremy corbyn on bond street, at the same time
there is a booming luxury business. in your experience, running is thef for years, polarity we have seen in the world right now some the you have seen before? isert: not as much as it right now, but there is certainly that luxury sector and london is kind of a mecca of there,that have moved that have bought the real estate, and buy luxury goods. tom: are global cities that you consult to -- new york, london -- the global cities you consult to a luxury, are they removed from their own countries? robert: i think that because people travel so much and have multiple homes, they are not necessarily wed just to their city. we have seen a slowdown in tourism in the u.s., particularly in new york, due to russia and brazil. tom: your industry is living the
global -- robert: i think it has a global impact. it is not a regional or country impact. brendan: one of the hard things about understanding china is getting there good data -- is getting good data. when you look at the markets in london and new york, what can they tell us about china? robert: we are not seeing the kind of chinese tourism we saw a year ago or two years ago, and not the type of purchasing we saw. we saw a major increase over the last three years of the chinese getting visas and traveling and buying, and they wanted to buy a broad because they are traditionally suspicious of counterfeit goods and they did not want to buy those in china, which three people for a tailspin. we still think that they want to buy, but obviously -- tom: the other thing you are so good at -- that idea of aspirational luxury.
within the financial crisis, the polarity we see with jeremy corbyn, others with luxury, is that aspirational link of fashion is still there, the link from the couture like name, to bergdorf, etc. is that link still there within your industry? is definitelynk there, maybe more tightly connected than before because you have a customer that may be trading down if they are not completely comfortable. h&m,may be going to an unico, when they did not do that he year or two ago. it is all one stream. tom: robert burke is with us for the hour. brendan: coming up, brazil downgraded the real. what can be done to get that economy started? this is "bloomberg surveillance," streaming under tablet, your phone, and bloomberg.com.
tom: good morning, everyone. "bloomberg surveillance peter: e." right now, top headlines of brendan greeley. brendan: airbus is going after bowling in its own market. -- is going after boeing in its own market. it is only the second such factory airbus has built outside europe. has about 20% of the market in america for jets. it wants 50%. we would talk with thomas enders, the ceo of the group, and not :00 eastern time on bloomberg television. president obama is heading to iowa to talk about college cost at a back-to-school event in des moines. it comes after startling federal
figures about student loans. morgan half of college vocational students fail to pay a single dollar on their loans after seven years. student loan debt totals nearly $1.25 trillion. has been hired by google. op-ed, theg in an country's finance minister says too much of a concern should not be put on monetary policy. oura porzecanski is correspondent. do they actually have a governing majority that is capable of carrying out this policy in brazil? katia: she has lost a lot of her popularity. his is the situation with
scandal with petrobras. cut is a great reminder to politicians to get things done before things get out of hand. it is a great reminder that there are consequences today for not taking action. s&pdan: as with the downgrade, it was about looking at political dysfunction, not necessarily economic data. katia: fitch had a conference last week. they said the same thing, what political disintegration is doing to the economy. this plays a massive role in terms of getting reforms across. tom: can markets tell the politicians what to do? real, it is not just the it is also the debt load across countries and companies, that borrowing costs are going to rise for a lot.
companies have increased their debt load, doubled it. so that load borrowing costs are going to rise, and the repercussions will be felt throughout the economy. brendan: lily throw in a number here. we are looking at $270 billion a number me throw in here. we are looking at $270 billion. katia: it will be felt throughout the economy here. tom: let's go to robert burke, robert berg associates and you have to deal with a brazilian economy. weaker currency, better manufacturing -- will that happen for brazil? robert: yes, and we are already seeing it. we are looking at manufacturing being very advantageous, and exporting those goods to the u.s., and countries where the goods are in demand. tom: brazil is -- brazil is not mexico. brendan: there -- how do you
overcome the cost of brazil here go robert: brazil is not necessarily like that. there are some very well-established companies. one of the copies we work with, they went public -- one of the companies we work with, he went public. they have 350 stores in brazil. they see the opportunity and they have the production capabilities, and they see the possibility of doing exports. brendan: does the movement in are other companies looking at manufacturing in brazil, or is it too soon to tell? katia: i think it is too soon to tell. we have to see how it plays out. tom: on your desk this week, what are you going to look at? depreciation,real -- the 4.25%d
bond. to look at the fed. tie janetre going to yellen to latin america? katia: it could really push the rally even briefly. brendan: is the central bank chief there the last adult left in brazil? katia: that is harsh. unfortunately, he just had everything going against him and was brought in too late. tom: katia porzecanski, thank you. in the next hour, william bute or -- willem buiter. on the stunning announcement of the united kingdom. stay with us worldwide. "bloomberg surveillance. ♪
tom: it is a lovely, fragile bridge across the thames. you must believe it is a fragile bridge for the labour party as they try to move out from a starting -- from a stunning will moveemy corbyn them left of mr. blair and mr. brown. one of our themes this morning. right on another european matter,. brendan greeley. brendan: i spent a lot of time trying to get a handle on what is happening with your. i read a really nice piece in project syndicate from jan gross.
brendan: one of the things we have seen in the last week, two weeks, the opening of a new front within europe. what used to be north and south is no east-west -- is now used-west. the european states are saying this is not our problem. this is poland, the czech republic, slovakia, hungary. they are saying this is not our fault. this is not our problem. tom: i want to ask a direct question. you see the stunning headlines late last evening, 5:00 p.m., 7:00 p.m., of germany shutting down the border with austria. for an amateur like me, are there elements there of the middle 1930's? brendan: i don't know if you would put it that way.
these borders are important to the european union's psychological understanding of itself. i lived there in the 1990's when all of these borders came down. union, thaturopean was extraordinary. the free movement of people and goods across borders in europe is elemental to how it understand itself. tom: we are going to frame this with mr. greeley right now. admiral stavridis will be with us in the next hour, speaking about the migrants coming into the united states. is that a big number? brendan: it is huge number. the white house has conceded 10,000, and we do not know how we are going to do it. i agree with everyone who says this is a challenge that europe has not seen since the second world war. you have german ministers meeting because the states within germany do not know how to divide up the 800,000. tom: what is the disparity
between munich and hamburg? brendan: they were going to open up the temple half airport, which has been closed, in berlin. tom: brendan greeley with his experience of years living in europe. coming up, we will switch gears. this is a great week in new york city, truly one of the best weeks in the year. better than good. also, fashion week. we will speak with naeem khan on silk. ♪
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surveillance prime time this wednesday. we have had a huge response. michael mckee and myself with ray dalio. 6:00 p.m. this coming wednesday. here is brendan greeley. brendan: european officials are trying to reach a deal with a surging flood of refugees. european union wants to impose binding quotas, redistributing refugees to ports in hungary, greece, and italy. donald trump has lashed out against carly fiorina, this time going after the business record of his fellow republican presidential candidate. he spoke on "face the nation." trump: hewlett-packard was a disaster, lucent was a disaster. these were two disastrous reigns and now she is running for president. least 12in egypt, at
people were killed when security forces mistakenly opened fire on a group of mexican tourists. the attack happened in egypt's southwestern destert. a tourist convoy had wandered into a strict it area -- into a restricted area. int chrysler was targeted negotiating a new labor contract. in sunday night football, the first of the weekend for this season, it was a thriller. tony romo threw an 11 yard pass to jason whitman with just second second -- with just seven seconds left. what a great start to the season. i watched a little bit more of this than i usually do on sunday afternoon. logo. that
brendan: there was also a wobble on that snap -- a bobble on that snap. tom: very good. there it is, a good start to the season. much more as the months wind on. it is a special time in new york city. away from economics and a most is a day for international relations. what am i going to wear? there is absolutely nothing in the closet. robert burke knows this. he is the chief executive officer of robert work associate -- of robert work associates. naeem khan's family is steeped in the history of silk and fashion. you can find his eveningwear. wonderful to have you with us. fashion week is inciting that is exciting. your show is such a big splash a few days ago. i would say the entire industry is going to naeem khan.
is everybody coming to your area? are,: yes, of course they because we make such special, beautiful things. these are dresses that take hundreds of hours to make. it is something that you wear that makes a statement. when you come in, it is glamorous. beyonce, i can understand. carrie underwood, the country music superstar, comes to naeem khan and says i need something to read how do you approach that? naeem: first of all, it is a great complement when you have amazing stars like these who want to wear your things. themminantly, you get things from the collection. you do not make one-of-a-kind because that is difficult to do. you are designing with people in mind. you are making clothing that is not sold in stores. clothing for the
stars because they make your brand. brendan: when you say hundreds of extra hours of work to make these dresses, what is it in the construction that set them apart? naeem: it is the embroidery. designers have to have a story. what is my story? my story is about clothing made by hand. i am taking something so traditional from thousands of years ago in in india and i am making an modern. aautiful techniques with modern touch to it, and that takes hundreds of hours to make. tom: robert burke is with us as well. how do you bring someone like naeem khan into america? robert: he had a great background in fashion and had worked for halston for many years, so he understood the u.s. market. when he launched his own line, it made sense. he married all his history of production in embroidery in
india. tom: with everybody owned by everybody else, how does someone like naeem khan compete? robert: they compete really well because they have the ability to be nimble and to be flexible and to also really market themselves. they are not part of the really .ig group there is more interest in independence now. tom: from superstars, more interest in being different than original. brendan: let's talk about mortals. this look that you have will eventually be worn by mortals. how do you turn this into something you can buy off the rack? naeem: timing is very important to fashion. how can you have it done within the period of three or four months that you can design, ship, and sell?
you have to be very nimble, so you have to set up your workshops and factories in a way that i can make 1000 dresses in three months or two months, super fast. that is the only way you can survive. a skilled labor company because this is difficult work. are using labor that has been in india for thousands of years. you look at a farmer woman in india, she is wearing a beautiful embroidered sari. you create something to market to america, but with your own touch. the ferment of luxury in new york city. away, as youake worked from halston, from oscar delivered to that from oscar dealer and to from years ago?
naeem: you have to have your identity. look at oscar as an example. oscar never swayed from the way he designed for us, and you have to be true to that woman. you build your market on that aspect. brendan: you design to a certain woman, you have to be true to that woman. but you had to have a little bit of a freak out when you designed for the first lady. naeem: i did. i had no idea it was coming to me. i was asked when she came into i had no idea she was going to wear it because nobody knows she is going to wear it. it was thanksgiving, probably my best thanksgiving ever. having the that, first lady where your dress, it is so important as an endorsement in the industry.
where will the industry be with celebrity endorsements five years from now? it is so important to address -- to dress the celebrities. who reallye icons make your brand. i have really made my brand by dressing celebrities. i am on my way to dubai this week to design for the royal family, the royal house of dubai. we are going to be making a wedding dress worth $300,000. tom: i could see the greeley household looking at that in a few years. brendan: i will give you a call. naeem khan, this has been fascinating, taking this thousand year tradition. bad is the china slowdown for u.s. equities yet that is the subject of our single best chart. we are staying on your tablet, your phone, and number.com. good morning. ♪
coverage from bloomberg economics and government. look for that at 2:00 p.m., the important news conference at 2:30 thursday afternoon. time for the single best chart on china. here is brandon. brendan: we have watched lower growth ripple through china across emerging markets. how those numbers look at u.s. equities is the subject of our single best chart. here is a jpmorgan note of where the chart came from. percent revenue comes from china. what we are talking about is apple. just stunning. that is just superb. brendan: i did nothing. tom: 1.6%. brendan: 6.0% of revenue comes from china for technology stocks.
that is the real exception. i would say what we're looking at here is apple. tom: it has to be apple computer, and we learned that apple computer is not going to miss a beat in china. robert burke is with us. robert burke associates. storese are five product stores in hong kong, is that the success? robert: china has really suffered. rands put a lot of energy and time and money into building up china, and then they found that to buy ase really like broad, and they are now getting visas and even with the economic -- chinese really like to buy a broad, and they are now getting visas. brendan: the luxury brand to
complete -- to compete somewhere down the line? robert: i think they will. angela aronson and the group at apple are attuned to retail and attuned to regional differences. i think they will figure it out. tom: i am so glad that you brought this up. card --rt burke report how has it worked out with her at apple? robert: i think she has done an excellent job. you see the stories she has focused on, and the watch was a big step. they just did a collaboration. tom: should we do a rip up the script? why not? robert burke is here. brendan: you are the script ripper upper in chief. go ahead. tom: who wins? robert: everyone. they have great executives who moved from fashion to apple to
really make it a luxury product. have -- i'm people sure the people that came up with that idea. you are reaching a lot into positioning. brendan: i'm going to rip up tom's ripped up scripts. what about fashion in china? we have been talking about this. what about selling locally? how does that market change? you talk about wanting to buy abroad. how would that change given the numbers we have seen this summer? robert: it will continue but not at the clip it has been doing. it is not as if the market is drying up. by no means is it drying up. it will not have the double-digit increases that everyone became happy with. to the:'s that do more economic slowdown or the crackdown on corruption within the party?
robert: when the corruption crackdown happened, the heart of luxury goods -- watches, jewelry -- that got hit first. now we are seeing a general slowdown because of the economy. brendan: do you want to rip up the script again, or should i do top photos? tom: what do you have on photos? brendan: number three top photo, mount oso erected this pted this morning. it is beneath tokyo. hikers00 tourists and were in the area and were escorted to safety. is a volcanologist, and he said the thing that we do not it about volcanoes is that is active. geological time is so slow that
things that we considered dormant are not ever dormant. japan's meteorology bowl -- japan's meteorological agency airline flights will be canceled. kelly slater hops off his board, find it again. this is the world surf league event in california. a backside reverse, finds it in the rough. amazing. he got a 4.17 out of 10 for the judges. he gets a 10 out of 10 from this desk. viewers were stunned. kelly slater is the michael jordan of surfing. he has done things that nobody else could do. tom: is he the guy that the shark was going to eat the other day? no, nick fanny was the
guy who punched the shark. showed off a reagan-bush 1984 t-shirt. i guess maybe that is going to work. who knows what else is going to work? he finally admitted he is a push. tom: we are bringing in robert burke in on this. would you please expand to me why every fashion designer has to have a $300 t-shirt? .obert: they sell that is exactly why. it is accessible at a luxury level. tom: the reagan t-shirt probably cost 12 us. "surveillance" a direction. the volcano was in a different area. tom: in the next hour, william
"bloomberg surveillance." sachsro churns, goldman out this weekend with her reiteration of low parity. like willem buiter out of citigroup, out a few years. now, the brazilian real. the ruble near $70. a challenge moment for hydrocarbon and commodity currencies. here is brandon with top headlines. brendan: a private equity firm has agreed to buy solera holdings. $6.5 billion was paid, including debt. facebook is working on a virtual reality app for mobile phones. it would allow users to change the way they see video by tilting their phones. , mark zuckerberg, says virtual reality is the next platform. bill ackman scores a win on the
tennis court. he led the u.s. to victory during the finance cup in new york, the first ever event to bring together top money managers from the u.s. and europe. tom: a retail, or focus on new york fashion, we go to wall street. isoomberg surveillance" focused on luxury, and luxury is fashion and all else that goes with us -- that goes with it. burke, i want to go to the attachment to fashion, which is you need a car. there is this huge buzz about the bentley suv. i know next to nothing about it. at the state of life, where are we in our conspicuous consumption? do we want to be conspicuous, or are we more cautious in how we display luxury? robert: i think there is a little bit of caution that is going on, but the consumer
really wants to spend. they are a little cautious, but still willing to spend. tom: the grind of it, you mentioned bergdorf blowing up. in september, it is time to buy a new handbag. give us an update of the symbol of luxury. arert: handbags and shoes the iconic pieces of the fashion consumer, and they look toward buying that your they sometimes will re-shopped the closet, see what clothing may have. they are definitely going after the new handbag. tom: brennan, that is what we do. p our closet. brendan: i am looking at the bloomberg consumer comfort index. it is well up from its lows in 2009 and 2010. for your work, are you looking at the broader consumer comfort
index, or indicators of how much rich people spend? robert: the luxury industry is the luxury industry. you look at wealthy -- you look at a wealthy percentage of people that will be spending. what are your indicators? robert: the stock market is very connected to it always, and i was say that the global market is connected to it. particularly new york, has been dependent on international tourism. you see countries like your russia -- like russia or brazil or china being greatly affected, it affects the overall retail climate. my home town was definitely affected by mr. goodale working for tommy hilfiger. mr. hilfiger is doing better than good, with rafael nadal
wearing next to nothing. that still works? robert: we see cycles. i think that this could be a really good tommy hilfiger time. he is opening stores, opening international stores. he is focusing on his u.s. business, and the underwear is everywhere. they pushed it in a way that other brands cannot. -- it was held the not calvin. brendan: there was an outcry was wearing sleeves on the court. he had been wearing sleeveless jerseys, and he put a little bit of fabric out there, and there was a huge cry of this appointment. tom: robert burke, thank you so much for making us wiser on fashion week. we continue on international relations on economics. willem buiter is with us in the
are most uncertain as they move into this thursday's fed meeting. has america left the financial crisis behind? the united kingdom in political crisis as jeremy corbyn is not tony blair or gordon brown. in germany at the austrian border crossing. migrants andis on economics in america. i'm tom keene. joining me, brendan greeley. the germany-austria border was incredible last night. brendan: for germany, which was one of the architects of dropping the borders, free movement of people and goods across borders, for them to reinstate it and say the pragmatic question of what to do refugees has gotten ahead of their vow to take in 800,000.
tom: phil about her is with us for the entire hour. right now to brief us with headlines -- willem buiter is with us for the entire hour. now top headlines with ramy inocencio. ramy: investment during the first eight months of the year in china increased at the slowest pace in 15 years. the markets were quick to react three chinese stocks had their worst day in three weeks. fellhenzhen composite after the communist party put out a plan to overhaul state run industries. officials in northern california as a pairrson is dead of wildfires rage out of control. the fires forced thousands of people from their homes. at least 400 homes have been destroyed. high winds arts stoking -- are stoking those flames. bernie sanders is surging to double-digit leads over hillary clinton in iowa and new hampshire. him 10bs poll shows
percentage points ahead of mrs. clinton among iowa to have met kratz -- i would democrats. even though third he is not in the race. novak djokovic shows why he is the top tennis player. he won the u.s. open and disappointed a hostile crowd by beating roger federer in four sets. singles grand slam title for the serbian star. tom: let's do a quick data check -- equities, bonds, currencies, commodities. the euro strengthening this morning. crude, 44 .54, soggy the last few days. it is a stunning validation of what bernie sanders and donnie trump -- and donald trump stand for, a seismic shift as too many countries, in 2015, simply
rebel. we see it in france, and greece, and now in the united kingdom. jeremy corbyn is not tony blair or corporate route -- or gordon brown. francine likewise in london. what will be the first action tot mr. corbyn will take move the labour party forward? francine: it is very difficult to say at the moment are usually when we have a new labor leader, he shows up for prime minister questions. we understand that jeremy corbyn will not do that. an opponent of the -- if you ask me, i'm not sure. we have not really heard his views on europe yet. he is not speaking to the press, for at least another 48 hours. we are a little bit in a wait and see moment. wondan: this election was
in part with new entrants to labor voting. is there a disconnect between the mp's and the people who vote for labor? francine: there is, and there are a lot of leadership contemporaries -- a lot of leadership contenders. strong labor supporters are now saying they want to form a --dow government with jeremy with jeremy corbyn. this is a concern for the labour party. of the labour party, nowhere near the u.k. government. is there any talk between tony blair, mr. brown, and jeremy corbyn? blair came out and said that it would be a disaster if jeremy corbyn were elected to the labour party. election is not until five years. the appointment of chairman corbin -- of jeremy corbyn has
huge repercussions. tom: francine likewise in london. i know you have the poll numbers on bernie sanders. "the telegraph" had a fabulous essay pulling this announcement back to the 1930's. brendan: i do not know if we necessarily need to go back that far. we keep looking at surprises, how centrist parties are surprised. bernie sanders is double digits ahead of hillary clinton. that is in iowa. he is farther ahead in new hampshire. we have willem buiter with us to put this into context. what is it that central -- centrist parties do not understand about what voters want? willem: inequality in both europe and the u.s. has increased massively over a number of decades, and the middle class vote does not feel than it wastter off
20 or 30 years ago. it is a sense that the system is failing them. has the financial crisis turned the public at large against them. centristcan these parties give them -- do anything to get back? willem: it looks as though the response to right-wing populism is left wing populism. i do not know whether anything else can at the moment attract voters, anything more sophisticated. tom: you are from the netherlands and the netherlands has their own challenges, given all the tumult in europe. you have been front and center on grexit or the idea of germany going it alone.
netherlands nexus to go it alone. do you see a breakup of your upcoming? willem: i very much hope not. i am not at the point where i think it is a most likely scenario, that it is worrying when two of the great centerpieces of the european immigration -- the europe reached -- the european integration unit -- grexit is a live issue. the freeourse, killing mobility of people within 26 of the 28 euro members. what is next, ending their ability -- their mobility as citizens? brendan: what does losing schengen mean for europe? willem: it means somebody from texas would need a passport to get to new york. it really is undermining the
notion -- of a united states of europe. giantse cowboys beat the last night, late. we need a passport for them. we have so many things to speak to you about right now. your recession call the other day, 50% likelihood. give us the state of the global economy within this tumult of jeremy corbyn, refugees, migrants, a fractious american political landscape. where do you sense we could be after the first of the year? global economy is slowing down. it is mainly met by emerging as. brazil, russia, already in recession. china slowing down very rapidly. outcome,he most likely unless there is a miraculous loss, convergence to the chinese
authorities, keeping china on its feet, a recession in china. everys not mean that advanced economy, especially the u.s. and the u.k., will go into recession. across the board, -- tom: within henry kissinger's world order, are the elements here of the late 1920's in europe, or into the 1930's? the cacophony seems reminiscent of the elements of that. willem: yes, the populist rhetoric going out of europe, the growth of extreme neo-nazi parties, is reminiscent of that. the one difference is that we had the surges, and people have hopefully learned from that. just as we did not get the great depression again following the rate financial crisis. so i think we may have -- and i
hope we do have -- the good sense to pull back from the abyss of radical populism and do something that is more humane and sensible. tom: we will continue this discussion. willem buiter is with us. a perfect day to speak with him. coming up, willem buiter together with james stavridis, the dean of the fletcher school here it but that barely describes his ability to understand a europe in the hated -- inundated with refugees. in this hour of "bloomberg surveillance." stay with us. dow futures are -24. good morning. ♪
tom: if you are just waking up, the united states over the weekend -- stunning announcements out of the labour party in the united kingdom, with jeremy corbyn taking over there, sending seismic shocks through all of europe and political america. good morning. brendan greeley has the "morning must-read." writing about the ecb --
brendan: willem buiter gave a chuckle at the fairy dust metaphor. let's look at his point. he believes qe works the first time but you cannot keep pulling on the handle and expected to work on the second time. can they do the same thing again? than -- theoes less more orderly the markets are and the more highly leveraged the private sector is. in europe, the markets are orderly, and the private sector leveraged.y i would expect continued effects on asset markets. from theted effects
stock market, foreign exchange market, bond market, risk .preads the transition on the economy will be the minimus. asset markets will continue to be there. tondan: does the ecb need change its inflation targets? willem: just because you cannot change your target does not mean you should. that makes life too easy. it means we need other instruments. policy -- tofiscal achieve the inflation target in a reasonable horizon. we are not there yet. tom: i want to get out front of what we are going to's the of .ater in the hour -- willem: the single most likely -- i would call it most
the european company will announce plans to build planes in alabama. will costy in mobile $600 million. it is only the second airbus assembly plant outside europe. we will talk with thomas enders at 9:30 eastern on bloomberg tv. president obama will talk with high school students in iowa about college costs. it comes after the release of startling figures about student loans. the government says more than half of college and vocational students fail to pay a single dollar on their loans after seven years. u.s. student loan debt now totals nearly $1.25 trillion. an auto industry executive is joining google to lead its driverless car unit. john kraft chick has been the head of true car and previously worked for ford. those are the top headlines. brendan: germany telling her
early closed its border with austria this weekend. taking an 800,000 refugees is being overwhelmed by the practical question of how. admiral stavridis is the former supreme allied commander of nato. you have said that the u.s. should accept up to 100,000 refugees from syria. let me put to you the same question the germans are trying to figure out how? stavridis: first and foremost, you had to do it safely in terms of security. that means vetting. facilitate a better vetting process. use vital metrics, big data searches. you look at social networks, look at cell phones. you cannot do that with 10,000 people a day, so you slow the flow down. i think that is how we do it safely. but this is not a european problem, this is fundamentally a transatlantic problem, at the very least, if not a global
problem. we are all in this together. brendan: are our agencies working with french and german agencies to figure out who the bad guys are? obviously that is the biggest concern. admiral stavridis: the answer is yes, there is very strong transatlantic cooperation at all levels, looking at intelligence, looking at the biometrics, looking at all of the high-tech ways we could do this, as well as putting people on the ground to try and understand exactly who we are dealing with has people come across. tom: the immediacy of your quote in "foreign policy" magazine recently, "the 100,000 that we would rather take in to the united states, we should first and foremost agree to take in a significant number of refugees come as many as $100,000. thus far, the obama administration has committed to
taking 10,000. that is far too few." nationsthat, but the are overwhelmed with influx. which institutions will help the u.s., will help germany, and for that matter, helped switzerland's? admiral stavridis : first and foremost, the private sector and our network of families in the united states and in europe can do a great deal in this phase. we are seeing that in germany already, and we have a long history of that in the united states. in terms of international institutions, the u.n. high commissioner for refugees, the various international nongovernmental organizations from red cross to doctors without borders, they have a significant role to play. finally, i would say our militaries have a role to play. huge manpower, a lot of capability, a lot of logistic muscle. if needed, you could see nato stepping in and helping with the humanitarian side of this.
that could be the same here. the united states could easily absorb 100,000 refugees. brendan: we go to you so often to help understand the middle east during what is the responsibility of the gulf states in this crisis? how can they be urged to meet it? admiral stavridis: their responsibilities huge. everything we have talked about thus far is politics. that is dealing with symptoms. we need to go to the unrest, the sunni-shia war occurring in the middle east, and the gulf states have the money, the capability, and they can help us cap down isis, which is a sunni phenomenon. at the same time they can stand as a bulwark against what iran is doing on the shia side. their responsibilities are huge. tom: let's switch to the application of the fletcher school of diplomacy. what is the stavridis
prescription over what the obama administration should do on syria? admiral stavridis: first and foremost, it is an international solution. solve itt going to unilaterally. that means building up this coalition to include, as we were discussing, the gulf states. we need to get turkey more ground in the game with troops on syrian territory. we have to ramp up the bombing side of this thing. we need more special forces in the country, and we need to play the long game, which is the diplomatic soft power side. tom: admiral, thank you so much. james stavridis with us this morning. brendan: the word that i took from that interview is that what we are doing does not fix the problem. it fixes the flood of refugees, but we need to do something about that. tom: international relations will continue this discussion. tomorrow on "bloomberg
the global american political economy. get to top headlines with ramy inocencio. ramy: germany is defending its position to resume border checks in abandoned 20 years ago. chancellor says the country can expect one million migrants this year alone. slovakia joined germany in the cold -- in resuming controls at the austrian border. the surge in migrants is treasury hungry, italy -- is pressuring hungary, italy, and greece. during a cbs interview, donald trump criticized carly fiorina's business record. hewlett-packard was a disaster, lucent was a disaster. now she is running for president. be on the stage with trump wednesday night for the next republican presidential
debate. at least 12 people are killed when egyptian security forces opened fire by mistake on tourists. it happened sunday in the southwestern desert. the government says troops were tracking terrorists. officials say they wandered into a restricted area. a surprise move i the united auto workers. they are targeting fiat chrysler for negotiating a two -- a new contract. the unity usually spec picks the strongest automaker to come up with the best terms for its members. and tony romo threw an 1-yard touchdown pass. that allow the cowboys to win giants, 27-26. el-erian rootinged
for the green of new york. the fed target rate back to the time of volcker. here, ato is right younger willem buiter. brendan: the younger willem buiter has the same amount of hair as the older willem buiter. solution as the well. brendan: one of the questions -- one of the answers i constantly hear to what is the fed going to -- havetes are going gone on for so long, they have just got to go up. the look of that is a complete non sequitur. the questions is, are the conditions facing the u.s. economy, in terms of the objectives of inflation and employment, such that an increase makes sense. the only criteria that matters. tom: we are going to dive into this in the next half hour.
right now go to the global framework where janet yellen is, where mario draghi is, were mark carney is. is everybody doing qe? willem: no, mr. carney is not doing qe. the bank of england has been ,itting at 375 billion pounds no qe ceiling for a couple of years now. 50 basis points for a bank rate. the ecb is doing qe. the u.s. is of course not doing qe in the sense that it is no longer increasing the stock of its financial exercises balance sheet. but it is still -- tom: is any of this at the textbooks you used at the london school of economics to teach?
the interest rates get stuck at some floor. we never thought of it as the zero floor, but, sure. we know what happens. tom: looking back at the chart -- here is the liquidity trap. there is no equivalent of this back to paul volcker. brendan: tom the sense that i gt from our audience is that the fed is making a choice to keep rates where they are. forced to make a choice based on the savings? -- logo its two objectives inflation and employment dictate for an increase now is not obvious. in the past, certainly, going the other way. by the weakness
of aggregate demand value that potential out put. tom: let's come back and continue this discussion. willem buiter with us. we look at equities, bonds, currencies, commodities. soggy,a little bit 44.58. brendan: this is "bloomberg surveillance." industrial output in china failed to meet targets last month. investment during the first eight months increased at the slowest pace in 15 years. chinese stocks had their first -- their worst day in three weeks. enda curran joins us from hong kong. where wew with china were two years ago with europe? bad news is good news because it means intervention? enda: the problem with china is they cannot break the circuit right now. it is a never ending cycle of bad news on the economy. the data yesterday reinforced the point that after all the policy efforts they have made,
cutting interest rates and pumping money into the economy, it is not getting traction. there is a feeling that china's economy is far from turning a corner and would require much more stimulus from the fiscal and monetary policy side of things before it starts gaining ground. brendan: is there a feeling the chinese economy is far from the officially stated growth rate of 7%? enda: a growing sense among the private sector. we saw one of the investment banks downgrading their growth forecasts and moving away from the 7% target that the chinese government -- all bloomberg intelligence analysts say growth is well below 7%, the magic number that turned up. increasingly it will be more difficult for them to hit the september target given how the economy is getting traction. bloomberg's enda
curran, staying up late in hong kong. willem buiter is here with us on the desk. we have been talking about various interventions that the chinese government can make, but i also get a sense from people saying that the chinese government does not know how to do this. they are not good at intervening. rateslarger policy cut and provided the additional liquidity. stillas the exchange rate being pushed back on a string. what they need to do is a large-scale fiscal stimulus, mainly as households or on public consumption. it has to be funded by the central government, and after the central government, by the central bank. tom: the new slow this morning -- we did not even notice the chinese stocks -- you and your
colleagues talk about a china policy bomb grade that is quite a phrase -- a china policy bomb. that is quite a phrase. willem buiter just writes what he wants to write, and we thank you for that. willem buiter the financial meltdown we had in the stock market and the policy response by the, the fallout kerfuffle in the foreign exchange market, where the government did not really provide convincing evidence that it knew what it was doing -- the lack of action in stimulating aggregate demand, they have a supply-side solution to everything. tom: well said. should christine lagarde, the global adult in the room, step into china and say where are the demand solutions? willem: it is strange that the same person continuing to
lecture the fed on not raising rates, says that the chinese are doing ok. in terms of macro economic damage meant, china is in much worse shape than the u.s. tom: the october meetings, it is a huge deal. brendan: the one advantage to the chinese system is that they can do whatever they want. what is holding them back from the demand size -- they have never funded a fiscal stimulus through the central government. they have always done it through the banking sector because it is a commercial infrastructure project. they simply have to in some free.become buiter is back with us and we will have a discussion with michael mckee.
brendan greeley is with us as well. willem buiter is with us, and we are talking about a ginormous situation over the weekend. neil irwin writing on the economics in america. this goes back to willem buiter's london school of economics. 50 years ago, the top economist came out of continental europe. american university stole them from lsc. now the game is from the east coast, where stanford is bidding for the best talent. it is a talent war out there, is that? willem: it has to be a talent war. there is nothing new about this. has a moment, stanford , but they cannot dominate forever.
tom: one of them i think of is john taylor who has been a wonderful supporter of bloomberg on the economy and "bloomberg surveillance." how important is it to have an iconic person out of school like john taylor? it is important to have someone that younger people can work with, that they can learn from and begin to use it and mentor. tom: even if they do not agree with him? willem: absolutely. brendan: the other trend is the move away from theory and the move toward a data sets. this is one of the things that seems so attractive about stanford, that they have access to people who understand data and program and algorithmic thinking. it is a different kind of economics. that the datation is a west coast invention --
that has been going on for a number of years now. an enormous promise, but as long as you have wi-fi you can do it -- that is the case in calcutta. tom: for the parents listening this morning, and for many of the students who listen to us worldwide, you get through it, knocks -- you get to economic 101, is it economic history? what is the next desk course? willem: there are three. , economicmics history, and accounting. the one thing economists do not learn at a phd level is to distinguish debit from credit. a fast learning process to get a proper job. it is like the --
we have much more coming up. michael mckee is just off the set. he is wired and looking at his iphone, wired into the fed. we will have a discussion on september 17 with willem buiter of citigroup and our michael mckee. kathleen hays, michael mckee, and myself. we look as the fed decides. stay with us. "bloomberg surveillance." ♪
are all thatts matters. tomorrow we continue on international relations and hydrocarbon. gideon rose. we are thrilled to give you yerginjuerge -- daniel on his commanding height in the stunning news out of england. right now our headlines. here is ramy inocencio. ramy: more than 350 inmates are running free in afghanistan after the caliban attacked the prison -- after the taliban attacked a prison. four guards and three insurgents were killed. the attackers were more -- the attackers wore military uniforms.
a private equity firm is buying a company that sells risk management software for investors. solera holdings. vista equity partners will pay $6.5 billion in the deal. that is a 13% premium over solaris's closing price friday. tol ackman, well accustomed successful that results, scores a win on the tennis courts. he led the u.s. to victory during the finance cup in new york, the first ever event bringing together top money managers from the u.s. and europe. tom: now on to the fed. we have been waiting for this for weeks. it is upon us and the distinctions are sharp. stanley fischer is concerned about an ultra accommodative federal reserve. others say patience. here is ken rogoff on friday. why are you starting now if you know you do not have room? directionin the wrong
, it is harder to do something about it. i am just lost at the strategy. tom: there is ken rogoff. we have a bombshell, breaking news now. this is the archconservative australia, losing. this is mr. trimble -- mr. turnbull, losing. this really shows, when we talked to willem buiter, about worldwide political tumult going on, whether it is to the left, as we see with jeremy corbyn in london, or to the right, as may be for committing in france and now australia. willem buiter is with citigroup and joins us on this breaking news. it just never ends, the political turmoil. is the financial crisis of england or of america or of australia still with us, leading with this political tumult gekko willem: the economic legacy is
still there. the political legacy is there for a long time. this is not going to go away until we address the financial problems, the debt problems. i do not know, like the new generation. tom: but the commodity super cycle is part of that collapse which brings us to the archconservative mr. abbott, moving over to a more neutral terminal. willem: it is clear that the global economy is slowing down, and as long as the slowdown is being led i emerging markets, especially china, the most commodity intensive production and demand that there is only one place for oil prices to go. brendan: it is an interesting quote that jason scott in our sydney bureau pulled, basically
saying that this is from turnbull, now the former prime minister -- ultimately the prime minister is not capable of providing economic leadership or confidence. the new style of leadership needs to respect people's intelligence and explain complex issues that set out the course of action. what is the explanation to australians that respect their intelligence? the wrong side for them of the commodity super cycle. they had better learn to rely on domestic amand -- on domestic demand to make up for the export losses. tom: many bring in michael mckee with an observation and a professor for perfect -- and a question for willem buiter. michael: let me put it this way -- the problems in australia and england and the united states -- do they think the central banks can address it?
willem: not effectively in the u k and the u.s., and there are still a couple of percentage points to play with. michael: so they are not going to fix the fundamental problems you were talking about three willem: it is a very simple problem. external demand for their main exports have weekend. the second main -- have weakened. the second main point is education. a lot of students are chinese, so they need to switch to the demand in the production. 's answer would be that foreign exchange solves problems. can a weaker australian dollar assist mr. turnbull as he takes over from a more conservative? willem: yes, australia will need a significant real depreciation. ramificationsthe
of this on janet yellen as she goes to thursday? what is the ramification of a ruben-like dollar? willem: the consequences of prematurely raising the rates is that the u.s. dollar becomes the depreciate or of last and first results. tom: you wonder what that does to the thursday meeting. michael: going back to australia, you say the economic true that needs to be told to australia is that their main export partner, china, is slowing down. billion dollars in trade with china, their nearest competitor. only $37 billion in trade with the u.s. willem: they will have to handle it. you substitute not one export with another export. it is subject to domestic demand.
that reaches the stimulus. australia, unlike the u.s. and the u.k., has very little public debt. a lot of private debt but not public. tom: we welcome all of you worldwide. the bombshell over the weekend, mr. corbin on the left, winning the labor party endorsement in the united kingdom. then we go the other way with the archconservative mr. abbott in australia, giving way to a more neutral-centrist. mr. abbott moving out of office in australia. we welcome all of you in australia, new zealand this morning. and to singapore with this bombshell out of southeast asia. right now we are in -- we're going to turn to coverage. from where you sit, michael mckee with decades of coverage of washington, how can janet yellen and stanley fischer ignore these set of announcements? michael: they are not ignoring them. they will factor them in into
their analysis where the united states will be in a year. but that is the key point. where will the united states be in a year, not where it is right now. we do not know what is going to happen, and the longer you wait, the more you still do not know what is going to happen because something else keeps coming up. you go back to may, we thought the fed was going to raise rates in june. now we do not think they will raise rates because of china, australia, whatever. clarity does not come. they have to make a decision waste on weather forecast is going to be. tom: ken rogoff on friday was adamant that they should not raise rates. brendan: i keep going back to what jim bullard told us, that the fed is not comfortable moving during a period of volatility. threee be fine moving it days from now when we are still in april 2 of volatility?
the volatility -- michael: the volatility is calm and. willem: if they move, on the there will ben soft talk to keep the consensus. if there is no move, there will be hard talk. tom: everyone looks at a vector or trajectory of whatever the fed is going to do. how do you respond to people that say just raise rates to get it off the zero bound and say we are going to sit here for further data? ken rogoff says no. many say yes. should it be? willem: there is no need to move for the sake of moving. that makes absolutely no sense. in order to do with inflation, volatility down the road, and then unemployment. tom: willem buiter, thank you
>> this is "bloomberg surveillance." x this morning, the fed is on -- this everyone who is at home listening to us today on this .oliday, here is the trade markets have turned south. the dow is down by 19 points. higher during much of the futures trading hours. in europe, they have turned south as well. by .4%.x 600 is off the british over t