tv Bloomberg Markets Balance of Power Bloomberg June 19, 2018 12:00pm-1:00pm EDT
>> the stories we are watching this hour. president trump faces congressional critics. on trade the president could slap an additional $200 billion of tariffs on chinese goods. on immigration, republicans in congress make moves to end family separation. plus lloyd blankfein is straight ahead. the goldman sachs chairman and ceo speaking to john mickelthwait about trade, the global economy and his future at the investment bank. david: we have heard a lot about u.s. trade issues with china. it seems the more they negotiate, the further apart they get.
china responded in kind saying "if the u.s. loses its senses and publishes such a list, china will have to take quantitative and qualitative measures." greg, give us a peek inside the white house at this point. did they anticipate this happening? craig: i think they were prepared to have it happen. , maybe afew weeks ago month ago, steve mnuchin, some of the heavy hitters in trade for trump were in beijing meeting with chinese officials. it seemed they were making progress. one official went back for a second visit. you assume they are talking. it turns of they are shooting at each other and it has escalated quickly in a dangerous way for the world economy. billion,talking 50 china quebec with their 50.
the you -- china came out with their 50. the u.s. came out with the possibility of $200 billion a product facing u.s. tariffs. aren't $350 billion worth of u.s. products being bought by china so the retaliation if china were to go to protect good start to get even more damaging where you have them sanctioning companies, sectors, not just individual products. we have gotten into some dangerous waters for the global economy. in their response the chinese said quantitative or qualitative and as we know there are lots of things that are non-tariffs that can make it difficult for u.s. business in china.
saying there was so not -- was not such policy. we could spend a long time on this program debating who is following the law or not. suffice it to say the trump administration has taken a strict interpretation of the law that says anyone caught in a certain stage trying to get into the country can be jailed. the parents go to jail and the children get separated into get put in a different facility. trump would say we are just following the law, democrats would say your over interpreting and taking it to an extreme place. donald trump is not a ballot in 2018, all of the houses, -- house is, one third of the senate is and they are scared. days of children wailing for their mothers, it is pretty chilling. whatever you think about the issue, on a human level this is very bad politically. republicans are peeling away from trump. there is a bill as early as today to try and end this policy. trump is standing his ground and going to the hill to try to sell both trade and immigration. that could be a tough room and even a hostile meeting. he is putting people in political peril. that he does not share. they will tell that to him in his face. david: that's what i find fascinating. president trump made no mistake he would be tough on
immigration. but these photos and the sound coming out now of these children. whenacted very strongly there were children in syria that were gassed. did he got himself caught in something that is administration -- reluctant to let the president off the hook. he has advises around him, stephen miller, a very hawkish hardliner on immigration. they are only advisors. they give him advice. miller wanted top border, peter navarro wants tariffs, trump could say no. he has not said that yet. a little bit of his stubbornness is taking hold, nothing seems to have broken their willingness to stand by this policy. trump himself has spoken about it. we will see. maybe he will soften today as the politics become so untenable for him. there has been no sign of that on immigration.
no blinking on trade or immigration yet. stay tuned. shery: thank you so much for that. our washington bureau chief. let's get on to the markets. we are seeing stocks coming off from a session low. julie hyman is here for the latest. persisting inrns a way they were not yesterday as we see the administration ratcheted up what they are looking at for possible tariffs and the chinese responding. all three averages are down. you still see something of a divergence between the dow and the nasdaq but it is different. the nasdaq not showing the same resilience. this is the daily change. the nasdaq in yellow has been holding up better than the others. you see today's session is down. even if decline does not match that of the dow. losers on an0 big
index point basis. facebook --and apple and facebook. om selling off as well along with chinese stocks and the broader chinese markets. companies -- we are also watching apparel companies. these were not on the latest list of industries targeted for potential tariffs by china. there is concern in the industry they will be and there could be for productsfects they use. we will see the ripple effect from all of this. we are seeing stocks, bob the defense.use of it looks like what investors are playing.
10 year yields are falling so that looks to be good news for telecom, utilities, real estate. also the classic defensive sectors even with materials and industrials seeing the most pain today. david: up next, the conversation with lloyd blankfein from the economic club of new york. this is bloomberg. ♪ ♪
i would say i do know this going to be the pattern of north korea with a lot of bluster. i don't think we are in a suicide pact on this so i expect we will not carve the economy to think as somei do people are commented that this is a common negotiating pattern. trump went to china with all those months ago, are you disappointed with his china policy? lloyd: there was a trade mission and i have to say let me give credit. they did not occur to us to go as a trade mission. i got called by the white house and said to you guys have a pending transaction that is near enough to close and to close it as part of our trade mission to china and i just said no we don't. , we have a lotck
of things going on in china. from them a couple of weeks later just before. they said it turns out yes you do, the chinese said you do. we went there and we closed an which is aransaction joint venture between ourselves and china to go out and each ande an amount of money invest in u.s. businesses that would be able to export into china. this is an early effort symbolic an important but symbol of what china wanted to do. >> you think china's attitude has changed. back then they seem to be looking outward in doing things like the deal with you and now
they are retaliating. lloyd: i think the whole thing with china is there is a lot of frustration with china from here. i know china is frustrated with the sudden aggressiveness of u.s. policy. has transacted with china appreciates the potential of china, has had good experiences in china and frustrating experiences. and at various times one or the other comes to the floor. almostelves 15 years ago set up our joint venture in china that was to lead to us being able to own our own investment bank in china which seemed imminent at the time. there have been a lot of suggestions that would happen quickly and statements that said it is already available and then oftentimes that gets announced at the seniormost level and we get into the ministries that
have to assess these things, we found out recently these many years later that it has to be capitalized at a level that totally nott sensible to do it so we are back to square one. we are in finance but we are advises to people in other industries and other industries have similar experiences. this would not be the course i would have done. i can see what happened to china. a lot of the people who are this is a very difficult thing. day publicly the making these statements, you have to pay homage to your clients in china and customers in china and at the same time when they are not in public could very well be going to the u.s. government saying what you
are doing may not be such a bad thing. so i can understand how we get to the place we get to. >> do you see the argument that was acceptable with $50 billion were the tariffs but now you have $200 billion worth of tariffs and has it gone beyond? lloyd: it is not my style, but what you want to show is if you want to give someone incentive to see the world from your point of view, it does not help to remind them of your negotiating position is a better one. if we go tit for tat by the time you get to 100, they run out of things to apply a tariff to and we don't. so if you want to make that point, you make that point. that's what you would do if you were crazy and really wanted to and free trade and that's what you would do if it was a negotiating position and you wanted to remind your
negotiating counterpart of how much firepower you have to bring to negotiation. which one is it? i don't know. >> do you think donald trump is a perfectionist? who am i to say what he thinks. doon't know what he would just what i would do in his place and i'm not sure what he would do in his place. if you ask me can i give a narrative about how this is a aeful thing to do, i can say lot of people do with respect to everything he does this makes no sense at all, it does not make no sense to me at all. >> if you look around the world at the moment you have the china situation and italy, it would
seem hell-bent on challenging the eurozone. you've got brexit and argentina, turkey, the popular -- possibility of a populist in mexico. you have all these things in the market seems to shrug their shoulders. is political risk not really a factor? lloyd: a lot of the risk in the today, a big concentration of risk today is sovereign risk. we are looking at the politics but you can look at the economic situation. if you look at it, a lot of the leverage in the world that was didn't disappear from the world, they migrated to sovereign. the four point $5 trillion balance sheet, you look at the euro, similar amounts. you look at japan, similar amounts.
the banks have deleverage, but now the risks are with the sovereign. >> do any of those were you? lloyd: for a variety of reasons. italy has a huge amount of debt, for its might be big partners. 2011 when there was a sovereign debt crisis in southern europe, the issue was is there a willingness by the -- to sort this out and back it up? now those lines never converged. they were getting in interest-rate subsidy for being connected to germany but they didn't apply that to reduce their debt. so i think at this point that question is not the willingness, but the capacity to do it. , wething about the u.s.
print the money we borrow in. japan prince the money it borrows in. there's a lot of risks and that, butes to doing that's not exactly going off a cliff. in europe, everybody borrows a foreign currency. italy does not print euros. it is always more worrisome how one would deal with that. there are rules be countries in europe used to protect fiscal policy. are issue and immigration the big risks to the whole construct of europe at this point. >> you see italy as the biggest sovereign threat. it is and also because of its size. but also because more recently there election --
>> an unusual coalition. lloyd: and getting more unusual all the time. what happened in the united states, the weakness of mrs. merkel in germany. the financialg risk of these countries and also the immigration issue which creates stress on establishment governments which feed into the financial crisis. that creates your geopolitical risk. >> especially with happening to merkel of the moment, do you see this wave of populism sweeping around the world links to immigration? lloyd: we are seeing this in the united states on our southern border. we have a horrible tragic situation, but it's an
immigration issue that splits the debate -- that splits the country. and more dramatically and consequentially in the near term, the immigration issue in where magnanimously germany admitted a couple of , but hard cases make bad law. to theis a direct link consequences to the immigration crisis. butou get a soft brexit people are speaking of, the only thing britain will have accomplished in brexit is the immigration matter. and you look at the populism in the extent it's going on in italy and certainly the relatively right-wing movements in central europe, those are reactions to immigration questions. hand -- one
be in i wouldn't want to a position we find our government in now with respect to the tragedy on the border. >> you wouldn't know which to choose. lloyd: i couldn't do it. i agree with all the things, but when you watch tv and listen to the pond and's i don't hear anyone talking of the consequences. , i don't hear anyone talking about the consequences. if we permitted people to pass through, the same thing you happen -- the same thing that happened. you saw the tragedy along the mediterranean. one of the cliches of law school, hard cases make bad law. when you want something in it appeals to you and your heart and it make something work out as a matter of your sense of justice as opposed to rational progression, you can end up with a hard case and bad law.
>> using the politics is much harder than business. all these people from goldman went to the white house, it's sort of like the house of lords. friends of yours did that and now they've come back. do you look at those decisions which they make, people like merkel and trump, do you think that's harder than the decisions those people have to make? lloyd: we can change our mind. some days i do things out of the public eye. i think the consequences. ry.n i watch the pundit mole we are watching now his heart rendering. becaused i'm not there in my world and certainly in government you have to make these choices. it's never right against wrong, good against evil. the issues are always right against right, what do you want to do.
you admit millions of people into germany and whatyou admit e into germany and what happens, the european construct that work for 60 or 70 years which arguably ended a pattern of every generation warfare, that has been put at risk. is that right to do? no. is it right to leave people strewn on beaches? of course not. hard, it's what's easy to criticize and it's easy to say what you would do if you didn't have to pay the consequences. but when you have to bear the consequences and realize there are adverse consequences on both sides, that's what's really tough and i have a lot of sympathy on the one hand but appreciation for the decision-making. when something doesn't work out right, i don't want to kill the person that makes the decision. >> does that put you off having a later career in public life?
lloyd: i can't imagine being more miserable than i was made to feel outside of public life. the financiers of your age to run for mayor of new york city. lloyd: somebody put that out i would be mayor of new york city, i don't know how to run for mayor. general impression you get, it's interesting. you seem relatively sanguine about the markets and economy but you just run throw these political risks. lloyd: i have a lot more. >> the idea italy could get in trouble, trump, trade wars. lloyd: how about rising interest rates. >> how high do you think those can go in this country? lloyd: i've lived through -- ,hen i got out of school
short-term government interest rates were in the teens and not the low teens. above way inflation was 10% and employment was above 10%. so these things can happen. andow everybody is debating lips are quivering if the fed raises three times this year or four times. i remember seeing in 94 i remember the fed raising 50 basis points between weeks. braced andeople are will we be const -- for what the fed will decide and what the consequences are. everybody wants higher interest rates for it higher return. in everyonement portfolio will drop in value and it will be worth less. just think of all the assets in
the world that are priced off a discount model. how about real estate? to thenk what happened finances of the world because when you had a dramatic and drop ined and rapid real estate prices. think the rapid rise in interest rates would have a more germanic effect. is it my base case, no. i am forced to spend about 98% of my time worrying about the 2% of the things that will go wrong. that cannot to buy more than the time you have year. areas people many worry about, one is consumer -- lloyd: by the way, i'm optimistic. >> i am wallowing in the 2% at this point. i live in that state of
terror. >> we will come back to that. you have -- many people say consumer debt is the first thing to will be hit by higher interest rates. -- the newobably get york fed said $13.2 trillion worth of consumerand yet that it goldman has chosen to expand. personalonsumer debt, finance, that sort of area. does that make sense at this stage of the cycle? i don't know how long the cycle will last. we are not going to try to get into and out of his misses that are franchise businesses, acclimating the risk and how we land on the protocols and the profiles to what we feel the market is.
in a way, we are going into the consumer business, but not so much that we are chasing the consumer business that is so foreign to us. it is generally foreign to goldman sachs and institutional firms. but really what is happening is as a result of movement from technology, the opportunity is us andconsumer space for if you are lending to 500 people the kind of decision-making you make in consumer lending, it's with ammy stewart wonderful life, you look into someone's soul and you are a good neighbor, i will lend you that much money. if you are lending to 50 million ourle, it's math, it's rhythms. its macro risk management, the stuff we are kind of good at and have been good at for a very long time and if you are -- if they are not your neighbors but they are coming to you online,
it's digital delivery and digital platforms, which we are kind of good at and have done for a long time. it's obviously a big customer .xperience to this in the firm a lot of those risk management decisions that have been made, the distributions and the algorithms that one would go into, it is kind of in our wheelhouse. one of the reasons why that represents a big opportunity for us is that we don't have legacy stores. we don't have thousands and thousands of branches that we have to protect on the one hand, and the silicon valley crowd that would normally come into the space are not licensed --osit takers without bob without deposit sheets. they really can't kind of do it, jerry rigging and securitizing these loans, making them the same. it's rare that you would get a big bank like ours that doesn't
have a legacy consumer business. >> it strikes me that goldman at the moment, you feel the loss from big companies, sometimes you have to say no to them. in this particular case of things go down or things change, 20% subprime, it will be normal people in houses where you say we need the money back. this will be a different political -- , what we arere doing so far is unsecured lending. if a lose and don't want to pay us back, there is no house to repossess or car to take over. that would be a poor risk decision. i won't feel happy they don't pay us back. [laughter] >> hank paulson came here -- lloyd: but we still assume the people will be caring about their credit ratings and people tend to payback when they can
and we will have to rate -- make the right macro risk decision. ismake a risk and a judgment a sketchy thing. it's easy to make a judgment on 50 million people. it's a law of large numbers. ,> if the politics come back you seen these banks go through the hell of 2008 and 2009, which you did in a very different way. a different one, we will see if it goes bad consumer debt. people using images that may not be as helpful. lloyd: these are not mortgages on people's homes. we will be the ones on chief that you will feel sorry for. [laughter] >> it's possible. [laughter] lloyd: by the way, we have other consumer verticals in this space, but it looks very attractive. it's again the migration of the opportunity.
what werying to be would have had in 10 years if we chased it 10 years ago. >> hank paulson apparently came to this room in 2013 the you should expect a financial crisis every eight years. lloyd: me, personally? wrecks he probably could have told you that already. does it feel as if there is another financial crisis in the works? you said you are happy with consumer debt. where do you look when you get worried? more than eight years since the last one and for a fewu know, hundred years people were told to expect the war of a generation and it hasn't happened. i look for these things, i don't think the mere passage of time causes it. you need kindling on the floor of the forest, those kinds of things. leverage, things that could blow
up. then you need a spark. look for too much leverage, bad behavior in the context of the last financial crisis, bad origination practices. and of course, the spark could be some macro event, some default, that happens, a bad play by the sovereign. [no audio] and i would say that if you are looking for some signs now where earnings are good, you are not feeling that kind of leverage, maybe you don't see it until after the fact and you look at can say -- it was there when i didn't know it i would say -- and seemsto
relatively easy. it's nother hand, remotely close to the leverage that one would have that people like us would have financed in the 2007 2000 a crisis in terms of the transaction. things youee that can't see. these are why these things become bubbles that are not easily seen. the advantage of your job versus and i can'thave p&l remember to have seen it, you can always are overseeing it. >> you do get some other benefits from an ease. [laughter] -- employees. [laughter] in terms of that -- lloyd: sometimes it's even worth it. >> i know. you have had a long time to reflect on it, what's the thing that did badly in the crunch and what's the thing the you think you did asked? i think the worst thing we did, look, how risk
management was pretty good, we participated in the market. the crisis was real estate. real estate prices went down and that was the crisis, real estate and down and all the debt in the world that was collateralized by real estate went down. it was 95% of it. risk management, we didn't know what would happen. you basically saw that on the balanced look. the crisis was really two halves for us. part. the existential do you use a lot of money for existential risk question mark did we navigate it well? in the reputational part of it for having navigated it pretty well, it went from how did you do it to how did you do it. when you were hedging, you sold things to people. you must have known, should have known, bob loblaw.
we didn't lose money in those years, but we lost a lot of reputation in those years. the ones they did the worst with was under appreciating -- we are a wholesale firm. we never advertise -- we didn't have a name on the building. we think about putting her name on our old building now. [laughter] other people, if they had some kind of crisis, they change the copy of their ads and they talk to their customers but we took the position that all we had to do was keep her name out of the paper, put our customers at the forefront, represent them in m&a, but it's not us getting the attention. we had no real advertising budget at all. it turns out that, you know, all of those other names, we had a consumer business, but the other name for consumers are taxpayers and citizens. we had an important -- all the stuff that we discovered that we
had, they discovered we had a relationship with us -- they had a relationship with us, we had a big effect on them and they had a big effect on us. not because we were consumers and they were a bank, but because the role of taxpayers and consumers in the financial system with a big influential firm is influential in the context of the finances that affected everybody. an adjustment that we had to make very quickly. prior to the financial crisis, i never would have appeared at anything. my predecessors certainly didn't . it never would have occurred to me and i realized that if you don't describe what you do and help to define yourself, you will leave a vacuum that someone will very easily describe and define for you. that was an important lesson and i learned a lot of little lessons of crisis management that i never expected to need to know. at finance now to the eyes of those stakeholders, do you think that the government
has represented their interests well? you have had his role of regulation. lloyd: i think the most important regulation and the most important role is the way the banking system has been the leveraged, forcibly and aggressively. even though in some cases it looked like a medium affair with all of these noises and hearings and everything, people around the world would watch this stuff and would dismay about this public display, at the end of the day, the regulators did it. people will write dissertations on the tranquility of some carol in some library about how they should have done this or that, how they got it wrong, but at the end of the day, almost in the heat of battle, they did all of this stuff and it got done. in stress tests were done such an aggressive way and let me tell you i was the focus of the a lot of -- of a lot of the aggression. but they were done in such a way that there was no issue about
whether it was convincing from the point of view of whether it was just soft or whether it was real and they actually persuaded the credit world that this was real and that tanks were credit worthy. some places of europe -- in europe are still not certain, many years later. so i would say that regulation, which of course from my point of view, and from the view of a lot of people, was strung together very quickly. time for an adjustment, not to appeal it, but adjusting. >> what is the point you would most like? lloyd: redundancy, leverage test, there is supposed to be a catchall tank. capitalsupposed to have related to the riskiness of the assets in your balance sheet. then there was the general worry that maybe we were not assessing riskiness the right way because the financial crisis, we underestimated the riskiness of
certain assets. to using a normal test of leverage based upon the risk of your assets, let's have a general catchall where we don't assess riskiness, we just look at all of the assets on your balance sheet, including dollars and banks. that was supposed to be a catchall to make sure that -- kind of like the taxed version of an alternative tax, if you will. it got to the point where the catchall is now the binding constraint. it was never intended. those things have to be adjusted. the volcker rule was added as people an addition to having capital against risky assets and being able to -- you are able to wind down an institution that was failing. test.as a state of mind what was the reason why you would engage in that transaction? to support a client's nest? or because somebody wanted to
buy low and sell higher? people aren'trld really thinking that way. it's kind of the market making and doing that. that's been a little bit counterproductive, because the regulators in turn put -- they assume that everything is for a bad purpose unless you prove for atate of mind was near-term expectation of a client float. time, the bulk a of our i.t. was set to provide metrics that would prove that. some people, if you open it up, they think you will wreck everything. way that thisthe was put together and after living with it, living with some adjustments, i don't want to get
away from lauding the regulators at the time. and the people in the public sector for the way that they handled the war -- the fog of the war, and the aftermath. all you had to do was juxtapose the u.s. financial system and how it has responded and how quickly it regain footing compared to our counterparties in europe. >> there's another thing going on at the moment were people look and they say look at money, money has gone increasingly into the darker areas of finance and away from public markets. into bitcoin and cryptocurrency on the one hand, private equity and short capital away from public companies. is that the trend? it's a real problem for all of us and that obviously didn't start with the financial isis. sarbanes-oxley was a big contributor. but look at the, look at the notion the you are seeing in the press now for where aramco is
going to list. in other words, in an effort to make our markets pristine with laudatory goals, complex to the litigation standards, it is -- i mean -- i will tell you, not everything about being a cut public company ceo is as attractive as it must look. >> how would you change it? it is a real structure. >> you make it tougher and tougher and companies won't want to be public. all of a sudden you will get a two track system. tough regulation on companies that are public companies and increasingly companies that are with the public consequence that their investors are not remotely as well protected. and possibly a theranos. so, what you want? i'm saying -- by the way, not to
-- you didn't use the example i used, per se, but this is something that the chairman of the sec said -- there are half as many public companies, half is what they want. if you wanted a really tough confinement of public companies with everyone else dealing in private markets with increased liquidity available, what we have accomplished safety and silent -- safety and soundness in the system? i'm not bargaining for a collapse on the system, but once you do a cost-benefit analysis of some kind, whatever incremental benefit you are getting compared to the burdens of the cost you are putting on the system. >> would goldman have worked at or if it was an old-style partnership? lloyd: parts of our business, but it's not something we could record eight about or wring our hands. we couldn't stay public with who we were in the financial system. the way that the world evolved,
we started out as an advisor, but in order to be an effective advisor, you had to be able to give effect to the advice that you are giving. i can tell you that you should do this merger. i should tell you to this financing. then tell you to grow business in this way, but to be an effective advisor i had to put capital on the table for you or for your benefit. to help you raise it to achieve the objective that you and i would agree was our good advice. if we were merely advice givers, we would have an important role in the system through boutiques. they don't have 90% of the issues or problems we have in my life. somebody who runs goldman sachs on the other hand is not as important in a lot of ways, not the influential institution that we are. we decided as a firm that we liked the position that we had
as a very, very important of growthn and driver and change in the financial system, the evolution of business. we like to we were and in order to do that we had to have a balance sheet and to have a balance sheet we had to have permanent capital and go public. >> how does -- lloyd: and we were the last was to go public. >> how does wall street change over the next five or 10 years? can you pick on one thing that people here have asked about? cryptocurrency, does it become a real issue or not? do you worry about that? have you put your toe in the >> people, you know, it would be painful for somebody who put their entire net worth into cryptocurrency, but it's not a systemic issue at this point. people are passionate for it, passionate against it. i remember when it came out first with -- when they came out with cell phones, i remember thinking -- god, who the hell is
going to lug this around. besides there's 10 phone booths on any -- on every corner. this is a fad, no one will carry a cell phone. i passed on the whole thing. turns out to have worked. [laughter] so, now they have cryptocurrency and i/o is thought -- i can't say why it should work, but if it did work i would be able to explain it in hindsight. well, it did. >> has that been your secret to success? you have a look at things from both sides. sometimes i say -- will this happen? what are the chances this happens? thinking about something, let me postulate. this happened, tell me why it did. it's an easy way of seeing it and a look at the evolution of money and i say -- you start up gold as money and people only take hard currency, you make
gold coins. a gold coin is worth five dollars, you had five dollars in gold and eventually they would give you a piece of paper with a promise that there was five on that fiveld dollars is a paper and you could redeem it. then you had a piece of paper that there was five dollars in gold and they said you can't redeem it. at some point they give you paper that said it was worth five dollars, you can't redeem it, and you don't have it -- and we don't have it even if you wanted. [laughter] lloyd: going to that fiat currency, saying that it's worth what it's worth because the government says it is, why couldn't you have a consensus currency? it's not for me, i don't do it, i don't own bitcoin. goldman sachs as far as i know, no one told me, has no bitcoin. but if it does work out, i could give you the historical path to why that could have happened. i'm not in the school of saying
that gee because it's uncomfortable because it's unfamiliar, this can't happen. >> no woman has run a big wall street company. you did something yesterday where you set up a $500 million initiative to help women fund managers amongst the people as a possibility. only five out of 31 on the management committee are like that. inlain to me, looking back five years, whether there will be a woman running a wall street firm. explain it. other firms have had senior women, people take different career paths. the most senior woman at goldman untilran until actually the end of this month because of the resignation.
you know, sometimes people have to work harder at this and get it done. we are working very hard at this and you are right, is nobody who is that proximate. other firms may have different experiences. we have metrics in some cases at the highest level, but at the highest level, sad to say, blaming some of it is fortune. problem, --f it's a >> is it a problem generally for wall street? lloyd: it's a problem for business as a whole and you can look outside of business, too. it's a problem for institutions and walks of life. it's a issue where no one wants
to explain it away because there is no explanation and it looks like you are trying to be exculpatory, so let's just say we all have to work hard and we tried various things. you were about to point out to a fund that we were committing to that will invest startups for women managed venture funds, we have other programs that are like this with support, women's initiatives, women in the workplace initiatives. again, we have a very good record of sponsoring and bringing women into the firm. like everyone else, a very poor record of bringing people to the top of leadership positions in the firm. >> what has been the biggest thing that has changed in your 36 years in finance? lloyd: when i started it was a generation and a half ago and the big thing i would have said at the beginning of my career
globalization, which sounds like a clean term now, something going through a cycle that we are all time to -- trying to kill. that's gone full cycle. when i came into the firm and came into the foreign exchange department, we could not issue a firm that could issue anything in another country other than the dollar, they didn't print it . i wrote the crest of the wave of globalization. now in the last 15 years the crest of the wave has been digitalization and technology. today if you want a price on an 98%, 90r instrument, 9%, could be 100% of the prices that we make a mark to market made are out resumes systemically. it's not just distributed that way. they are made off the inputs digitally. that is a kind of new phenomenon. another observation is that the decision-making of course isn't
just business, but it is being made by programmers and software experts. a lot of times i look at something -- it used to be called judgment -- that's a judgment decision saying judgment decision? that's just a few million extra lines of code. >> doesn't that frighten you? variety of ways, of course it does. but it creates an interesting phenomenon. look at uber. want to have drivers question mark g, why did you -- why did you drive through that stoplight and into that storefront and injure those people instead of swerving into the wall? and killing yourself? well, you would say i didn't know, it was a natural instinct, it just happened the way that it happened and it's all a blur to me. it won't be a blur. some programmer is going to say hear thatu see or
wall drive in, it won't fade out and it will come back and they will say why didn't you drive into the wall instead of into that storefront and risk more lives than your own? those are things that are going to happen. what did you take into consideration when you made that risk judgment? let me subpoena your software, your lines of code and see it act request you anticipated to have done in the situation. it's an interesting set of phenomenon. >> i'm sure there is an investment banking equivalent of driving into the wall. is,d: of course there that's the point i'm making, having driven into several myself. that people can work anywhere, they can be based anywhere, this is the economic club of new york. new york prosper in this new range of algorithms? what do you worry about from that perspective? turns out -- remember
that the world is flat? on the steps work of central europe and central asia? it doesn't work that way. by richardhis book florida, i think, where turns out that people in the kind of creative craft like to live amongst each other. they like to go to the theater and aggregate together. of course, it's not going to be a world of automatons. there will be creation and, by the way, even though those lines of code have to be written, it's not going to be latin. the people who create and come together and engage are going to want to aggregate together. new york has had quite a head start on aggregating together. people who are like that and who have this infrastructure that attends -- that tends to attract more people like that, they tend to attract each other and i tend
not to worry about new york as long as they don't keep making it so very expensive to be here versus other very, very attractive places. >> if you became mayor, you could solve that problem. [laughter] lloyd: if i advocated moving out of new york, it would really hurt my chances. [laughter] >> lloyd blankfein, thank you very much. lloyd: thank you very much. [applause] >> right, you were listening to a conversation with the scene eo of goldman sachs, lloyd blankfein, and our bloomberg editor-in-chief, john mickelthwait. right, let's now had two president trump, who is speaking at an mf i.b. event, the anniversary of the independent is this. let's listen in. trump: they are really smart. the united states just surpassed germany as having the most
asylum-seekers of any nation on earth. can you imagine? talking about germany, they allowed millions of people -- and by the way, the crime from the time they started up more than 10%. that's one of the reasons it's at that level, they don't like record -- reporting that kind of crime. they put it down as different kind of crime. but their crime is up more than 10% since they started taking them in. i heard someone say that crooked hillary clinton was questioning that statistic. she said it's not true, it's not true. didn't she already have her chance? i will tell you what, when you , with thesereport really dishonest people -- i was never a deep state guy. let me tell you, we've got some bad doing bad things.