Let's start with those Fed minutes we were all waiting for, then they came
out. I'm not sure they indicated the Fed is
heading in a different direction than what you've been saying.
Those minutes were superseded by history in terms of the strong CPI print.
The incredible job market creation and the retail sales.
So I don't think there was anything much informative in them.
Look, I think we've got an extremely difficult economy to read.
On the one hand, we've got a set of very, very strong statistics.
I think the data are coming in in a way that confirms the view that I have had
for a long time, that inflation does not get back to 2 percent without a
meaningful slowdown in economic activity.
Yes, inflation may over some intervals come down, but that's really mean
reversion from the transitory increases that took place.
But that's not enough to bring us to enduring 2 percent.
The other big uncertainty that we have is that while so-called coincident
indicators, things that move right along with the economy look very strong, there
are a variety of leading indicators that are more troubling.
Inventories look to be building up relative to sales.
Firms are reporting concerns about their order books.
It looks like the business sector has a lot of people on hand for the level of
output they're producing. And consumer savings are being depleted
with a low savings rate. And Pluto's where the market's going to
go next. Lauren Lewis leads to the scary
question. At a time when you and others were
concerned about inflation and. I was saying, don't worry if it happens,
we have the tools to deal with it. Is it possible the Fed does not have the
tools it needs to really get inflation under control given the circumstances
right now? Look, you can always stop the car by
hitting the brakes hard enough. But that doesn't mean you can stop a car
without the car skidding and sliding in and hitting things.
And so, yeah, the Fed can stop inflation, but whether it can stop
inflation with a soft landing without impacts on economic activity, that's
been very much in doubt. From the beginning here since we set off
this inflation and my own sense is that it continues to be very much in doubt.
And as the figures have come in and particularly the figures on non housing
services looked to be running way above target level, I think the chances of a
soft landing which looked to be getting better are now receding
a bit. What the timing will be, that is hard to
know, but we don't have historical examples.
When unemployment gets below 4 and inflation gets above 4 of getting
through the situation without having a recession at some point.
And I think that's a powerful historical truth.
And I think it's one that's relevant to our current situation, Larry.
This week, as you know, marks one year now since the beginning of the war in
Ukraine when Russia invaded. Obviously, there's been horrific costs
in terms of lives and also include the occurrence of the damage done to the
Ukraine economy. But what about globally?
What had been the global economic effects from your perspective of this
conflict? It's been devastating for poor people in
poor countries around the world that have had to deal with food price hikes
on a very substantial scale that have had to deal for some
interval. We have higher energy prices.
It's accelerated the concerns about the fracturing of the
global economy. And that will ultimately, whatever its
impacts on us, I think, have some substantially adverse impacts for four
countries where historically exports have been a major route to economic
growth. Look, I think the world's going to have
to step up in the international economic area.
We're going to have to spend a lot ultimately supporting the Ukrainian
economy and reconstructing the Ukrainian economy.
We've got substantial increases for that reason and for others of refugees.
But that doesn't make the question of climate.
That doesn't make a question of preventing the next pandemic.
That doesn't make the question of poverty.
It doesn't make what's happening in the sea heal any less urgent.
And so this is a time when we're going to need a lot of imagination, a lot of
energy from global policymakers. Well, when you talk about the world
stepping up, one of the institutions which traditionally look to is the World
Bank. We received word on Friday the President
Biden will nominate a J. Banga.
He's the former MasterCard CEO to the position.
What do you think about then, I guess as important, what still stands in front of
Mr. Bunga if, in fact, he becomes the head
of the World Bank? ISE Bang was seen as a visionary and
highly, highly successful leader of MasterCard, which was.
Unique or substantial in its global vision and in its commitment to
inclusion of a very, very wide range of people in financial services, of course
the World Bank is a very different kind of institution than any other bank.
Having global development as an as its central mission.
And it's going to need transformation of a kind it has not seen probably since
Robert MacNamara was its leader more than 40 years ago.
So I think that IJA Bulger has a huge opportunity ahead of him to bring about
transformation. But in a world where his shareholders
have really serious political challenges at home, it is not going to be easy.
And finally, Larry, let's revisit Israel, something you raised on this
program earlier. You saw I had some possible risks, not
just for the politics in Israel of Bibi Netanyahu, his aggressive pursuit of
reform of the judiciary, but also as a puzzle effect to the economy between the
tech sector. We're not seeing it even with respect to
the shekel. What is going on in Israel and for your
present perspective, is it getting better?
Is getting worse? Where is it?
I'm very concerned. The first reading of the judicial reform
are passed through that could asit I. That was very troubling legislation, not
because ultimately judicial reform is is important.
It is really, in my view. But that particular set of judicial
reforms driven through by a narrow majority in a hurry at a fragile
political moment will raise profound questions for the owners and deploys of
capital both in Israel and around the world.
And I think it is a matter of very substantial economic importance for the
remarkable economic story that Israel has been, that we move from a phase of
driven legislation to a phase of compromise and deliberation as judicial
reform moves forward.