Latest / Stephanomics / Will Ferdinand Marcos Jr. Revive the Sins of His Father?

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Will Ferdinand Marcos Jr. Revive the Sins of His Father? · Stephanomics

• 0:13
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:16
  Speaker 1: global economy to you. And what you heard there was
• 0:18
  Speaker 1: the sound of Trevinano, tiny quiet village in the hills
• 0:22
  Speaker 1: of central Italy. It's been getting smaller and smaller, just
• 0:26
  Speaker 1: a hundred and forty two residents at last count. But
• 0:29
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  Speaker 1: money in the poorer regions of the Eurozone isn't sending
• 0:51
  Speaker 1: money down the drain. Our Italy economy reporter Alessandra and
• 0:55
  Speaker 1: Miliaccio has that story in a few minutes. I'm also
• 0:58
  Speaker 1: going to talk to our chief you as economist Anna Wong,
• 1:01
  Speaker 1: about the US Central banks big inflation mistake and whether
• 1:05
  Speaker 1: China's continued to struggle with COVID nineteen will make things
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  Speaker 1: easier for the FED or even worse. First, surprisingly. Perhaps
• 1:15
  Speaker 1: we're going to the Philippines to talk about the extraordinary
• 1:18
  Speaker 1: outcome of the elections there. First because what happened really
• 1:22
  Speaker 1: was extraordinary, but also because it perhaps sheds a different
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  Speaker 1: kind of light on the fractures opening up in the
• 1:29
  Speaker 1: global economy and where things go from here. Bloomberg Opinion
• 1:33
  Speaker 1: columnist Dan Moss is usually based in Singapore, but he's
• 1:37
  Speaker 1: just back from Manila. Dan, thanks for doing this. I
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  Speaker 1: know you're exhausted from your time in the Philippines. I
• 1:42
  Speaker 1: guess for those who haven't been paying attention to tell
• 1:44
  Speaker 1: us what happened. Ferdinand Marcos Jr. Known as Bong Bong,
• 1:49
  Speaker 1: secured a landslide win to become the next president of
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  Speaker 1: the Philippines. Now, if you think you've heard that name before,
• 1:58
  Speaker 1: it's because you have his father, Ferdinand Marcross Sor ruled
• 2:04
  Speaker 1: the Philippines for two decades. The bulk of that as
• 2:08
  Speaker 1: an autocrat. Martial law was declared in nineteen seventy two,
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  Speaker 1: and democracy, which was suspended, never got to look in
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  Speaker 1: until the end, and that was his undoing. So you
• 2:22
  Speaker 1: have another Marcros headed to the White House with Sarah
• 2:26
  Speaker 1: de Tote, the daughter of the incumbent president as his
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  Speaker 1: running mate and Stephanie. That result was not a particular surprise.
• 2:36
  Speaker 1: What was a surprise was the way he just swept
• 2:40
  Speaker 1: the board. I mean, this was not just a win,
• 2:43
  Speaker 1: this was a blowout. This was Lyndon Johnson sixty four
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  Speaker 1: stuff um. And just to remember his father, there were
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  Speaker 1: millions of people in the streets when he left, thousands
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  Speaker 1: that died under his rule. They'd sort of robbed the economy,
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  Speaker 1: but robbed the country blind. We had all his wife's
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  Speaker 1: shoe collection. I mean, it did not end well with
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  Speaker 1: his father. No, And some of the shoes are on display,
• 3:10
  Speaker 1: you can go see them. But here this is the
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  Speaker 1: interesting thing. Via social media and a extremely disciplined campaign,
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  Speaker 1: Bong Bong Bakos was able to, if not erase, then
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  Speaker 1: dilute the memory of his father's period for a huge
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  Speaker 1: chunk of voters. There's a huge segment of the voting
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  Speaker 1: population that either was not alive when Marcos Senior fled
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  Speaker 1: into exile in Hawaii or they were small now. But
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  Speaker 1: the really fascinating thing is when you talk to people
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  Speaker 1: who said they were going to vote for Marcos, I say, oh, look,
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  Speaker 1: you know his father was a great man. This was
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  Speaker 1: a great period for the Philippines. We had stability, we
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  Speaker 1: had strong leadership. And I'm like, okay, what about people
• 3:56
  Speaker 1: who were detained without trial? What about the looting of
• 4:00
  Speaker 1: the treasury, what about the spiral of debt? What about
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  Speaker 1: martial law? Oh look, you know, I'm too young to
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  Speaker 1: remember that. But yet you're you're not too young to
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  Speaker 1: have this view of it as an imagined great period.
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  Speaker 1: So you know, there's an inherent contradiction there. And we
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  Speaker 1: should say that this is not in reaction to terrible
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  Speaker 1: economic situation in the Philippines, because it's actually doing much
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  Speaker 1: better than other countries in the region. It's doing excellently
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  Speaker 1: relative to other countries in the region. Uh, you know,
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  Speaker 1: according to the I m F, it's going to blow
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  Speaker 1: any of every other place in Southeast Asia away, with
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  Speaker 1: the exception of Vietnam. Um for most of the term
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  Speaker 1: De Torto's term, prior to the pandemic, I realized that's
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  Speaker 1: a huge asterisk. But it was growing north of six
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  Speaker 1: The government, the outgoing government has predicted, the Finance Ministry
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  Speaker 1: is predicted it could even grow nine percent this year.
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  Speaker 1: The way iron is going, Steph, that's about three times
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  Speaker 1: China's rate of growth when the Philippines was called the
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  Speaker 1: sick man of Asia. So Dan obviously, and you've just
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  Speaker 1: got back, And there's a lot of elements of this
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  Speaker 1: which are specific to the situation of the Philippines. But naturally,
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  Speaker 1: when we're looking at it from outside, we're also tending
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  Speaker 1: to try and put it into our global narratives and
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  Speaker 1: the debates that we're having about the direction of the
• 5:24
  Speaker 1: world's going in. So I guess in one of those
• 5:27
  Speaker 1: debates is about populists and that kind of style of
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  Speaker 1: leadership um doing better relative to the sort of classic liberal,
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  Speaker 1: pro market Western governments. I mean, his bong bongs win
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  Speaker 1: win is a is a win for the populist right.
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  Speaker 1: It's certainly a win for populist packaging. Look, somebody said
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  Speaker 1: to me over dinner on Friday night, if this were
• 5:54
  Speaker 1: an election for the Metro Manila area rather than the country,
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  Speaker 1: it would beat Lenny rob Rito in a walk. She
• 6:01
  Speaker 1: had the urban professional class, she had civil society folks,
• 6:05
  Speaker 1: she had students. Now, if you travel outside Metro Manila,
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  Speaker 1: get past the excerbs, you see fewer and fewer Lenny
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  Speaker 1: Robrito signs and more and more Bongbong Marcos signs. I
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  Speaker 1: drove through on Sunday some pretty impoverished communities in Tarlac Province,
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  Speaker 1: ironically the home province of the Akino family. But anyway,
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  Speaker 1: these folks were living in pretty tough conditions, yet the
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  Speaker 1: Bong Bong Marcos campaign signs were plastered everywhere. I find
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  Speaker 1: it hard to believe he's going to do much for
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  Speaker 1: those folks. But if the objective is to tap resentment
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  Speaker 1: against urban professionals and the quote unquote Manila elite goal
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  Speaker 1: mission accomplished. And the other big debate we're having is
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  Speaker 1: about this sort of division in the global economy between
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  Speaker 1: China and the US, and China extending its influence relative
• 7:09
  Speaker 1: to the US. I mean, there's there's a big dimension
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  Speaker 1: of that here as well. Yeah, China has extended its
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  Speaker 1: influence in the Philippines, There's no question about it. And
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  Speaker 1: that is stark because you know, as you said, the
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  Speaker 1: Philippines as a former colony of the United States, and
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  Speaker 1: Marcos Senior had backing from the US during the Cold
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  Speaker 1: War with the Soviet Union for many many years when
• 7:33
  Speaker 1: Marcos Senior was in office, particularly when he imposed martial
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  Speaker 1: law of seventy two, China's economy was a nothing burger.
• 7:40
  Speaker 1: Now it's a very substantial something burger, but one that
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  Speaker 1: is plagued by some cyclical difficulties right now, So what
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  Speaker 1: has China done for the Philippines in the past six years.
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  Speaker 1: It's done infrastructure, It's done tourism, it's done real estate investment.
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  Speaker 1: So Rodrigo went to Beijing in came back with dozens
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  Speaker 1: of infrastructure projects to announce, many of which would receive
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  Speaker 1: backing under China's Belton Road a sid Now some of
• 8:15
  Speaker 1: those pre dated to today's time, but details right, who cares?
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  Speaker 1: But many of them have been played staff by constant delays,
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  Speaker 1: only about twelve or any sort of advanced state of construction.
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  Speaker 1: I visited a bridge on Thursday in Central Manila that
• 8:37
  Speaker 1: was opened in April. There's nothing subtle about this. Two
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  Speaker 1: giant flags are emblazoned on the base of the bridge.
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  Speaker 1: One is the Chinese flag, one is the Philippines flag.
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  Speaker 1: There's a banner fluttering on the on ramp that says
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  Speaker 1: to the effect Philippine China Prosperity Association. But no one's
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  Speaker 1: traveling on this bridge, you know. And in fact, there
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  Speaker 1: was so little track. We can even we could even
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  Speaker 1: stop our van on the on ramp and and take
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  Speaker 1: some photos. And you know, workman was still sort of
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  Speaker 1: tinkering away, you know, with widgets and bolts, you know,
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  Speaker 1: while this thing was nominally open, and I came away
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  Speaker 1: thinking would this be a white elephant. Tourism from China
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  Speaker 1: has grown dramatically over the course of Rodrigo to today's term.
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  Speaker 1: Obviously hasn't been much in the past two years and
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  Speaker 1: been much of anything. Uh, and investment, you know, particularly
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  Speaker 1: in real estate, and China was also a huge presence
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  Speaker 1: in offshore gambling. Now you know, these things are very
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  Speaker 1: much in retreat right now because it's hard to get
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  Speaker 1: out of China. That's hard to move from one part
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  Speaker 1: of Shanghai to the other. I'll get on a plane
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  Speaker 1: and go to Philippines. Well, I was going to ask you,
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  Speaker 1: so that you now have China going into this and
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  Speaker 1: yet another slow down linked to yet more lockdowns and
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  Speaker 1: the COVID zero strategy not going anywhere. Um, not just
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  Speaker 1: for the Philippines but for for the region. This could
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  Speaker 1: potentially be challenging, hugely challenged. If you made a bet
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  Speaker 1: as to tourte appeared to do early in his term
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  Speaker 1: that the US, you know, is a sunset operation and
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  Speaker 1: China is the way to go. Then, um, you know,
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  Speaker 1: you're in a bit of a pickle now, I mean
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  Speaker 1: what to do? You know? Do you ask yourself? Look?
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  Speaker 1: You know, is China past its peak? And when and
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  Speaker 1: if China recovers from its current moment, will it go
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  Speaker 1: back to being the way it was? You know, did
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  Speaker 1: the Philippines only cottoned on to the China era? You know,
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  Speaker 1: when it was like on its way to being over.
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  Speaker 1: Dan Moss has been fascinating, Thank you very much. Thanks
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  Speaker 1: a lot, Steph. Good to see it. Now. All of
• 10:59
  Speaker 1: that has given me a good excuse to catch up
• 11:01
  Speaker 1: with our chief US economist, Anna Wong, because, as it happens,
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  Speaker 1: she's just been looking at how the slowdown in China
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  Speaker 1: could affect global growth and even potentially change the course
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  Speaker 1: of the US Central Bank. Now it's embarked on quite
• 11:15
  Speaker 1: rapid interest rate increases to finally bring down inflation. So Anna,
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  Speaker 1: let's just remember briefly quite how sharp that slowdown in
• 11:25
  Speaker 1: China is now expected to be. Yeah, so our our
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  Speaker 1: Asia team expects that your growth in China will be
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  Speaker 1: moving towards to around two. And that was compared to
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  Speaker 1: earlier this year when they were expecting growth to be
• 11:41
  Speaker 1: around closer to five. That's a massive that's a massive decline. Now,
• 11:46
  Speaker 1: I know that one of one of your key jobs
• 11:48
  Speaker 1: when you were at the Federal Reserve was you were
• 11:50
  Speaker 1: there to just you were looking at how events in China,
• 11:53
  Speaker 1: the Chinese economy could affect the US and potentially Federal
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  Speaker 1: Reserve policies. Maybe you should just buy sort of talk
• 12:01
  Speaker 1: us through in principle, how China's growth or lack of
• 12:05
  Speaker 1: it could affect the US economy and the FED. Right, So, um,
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  Speaker 1: you know what the Photo Reserve we we look at
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  Speaker 1: China from a couple of ways. First, we have analysts
• 12:17
  Speaker 1: who like myself at the time, briefing the officials on
• 12:22
  Speaker 1: how growth outlook would affect China, would affect emerging market growth,
• 12:28
  Speaker 1: and then that would feed into the FED trade model
• 12:31
  Speaker 1: because foreign demand affects US export. And then that trade
• 12:36
  Speaker 1: model in term will affect the dollar model, which feeds
• 12:39
  Speaker 1: into what happens to the dollar, because obviously whatever it
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  Speaker 1: happens to Chin Chinese growth will affected un and whatever
• 12:45
  Speaker 1: it happens to you and will affects the dollar UM
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  Speaker 1: and and that will feed into the bigger you know,
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  Speaker 1: domestic picture of the us GDP growth forecast and UM.
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  Speaker 1: I think the the episode of China slowed down a
• 13:01
  Speaker 1: twenty sixteen highlighted for uh F O m C officials
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  Speaker 1: how important China was in Chinese growth was to the
• 13:10
  Speaker 1: dollar and the primary channels through which China slowed down
• 13:15
  Speaker 1: effect US is through dollar and financial conditions, not through
• 13:20
  Speaker 1: direct trade and financial uh channels. In fact, if if
• 13:27
  Speaker 1: any FED models or any general Equaliver models, if you
• 13:30
  Speaker 1: just slow China growth by the amount we're talking about,
• 13:32
  Speaker 1: you know, from five to two, it would barely create
• 13:36
  Speaker 1: any us GDP growth slow down maybe just maybe like
• 13:40
  Speaker 1: point three percentage point. However, in those models, the people
• 13:46
  Speaker 1: at the FED modelers would put in extra shocks like
• 13:49
  Speaker 1: credit spread widening, dollar has to appreciate by a ten
• 13:53
  Speaker 1: percent That will get you to the more you know,
• 13:57
  Speaker 1: sensible forecast of UM. You know, a three percent drop
• 14:01
  Speaker 1: in Chinese growth should are slowed down in Chinese growth,
• 14:05
  Speaker 1: should it lead to about one percentage point slowed down
• 14:08
  Speaker 1: in us GDP. I think that would be about the
• 14:11
  Speaker 1: figure that are the big risk scenario will be showing
• 14:15
  Speaker 1: in the deal book. That is interesting because we think
• 14:17
  Speaker 1: of you, now, China is one of the biggest economies
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  Speaker 1: in the world, and when it slows down, we think
• 14:22
  Speaker 1: of it as having immediate knock off. But I guess,
• 14:24
  Speaker 1: I guess part of the issue that people have long
• 14:26
  Speaker 1: complained about with China is that they don't necessarily buy
• 14:29
  Speaker 1: lots of goods from the rest of the world, so
• 14:31
  Speaker 1: they're not contributing to demand in the rest of the
• 14:33
  Speaker 1: world in the same way as you mentioned about trade.
• 14:36
  Speaker 1: But what does happen is that people just get frightened
• 14:39
  Speaker 1: of the slowdown in Chinese growth, and so there's this
• 14:41
  Speaker 1: tightening of financial conditions and people rush into the dollar,
• 14:44
  Speaker 1: and it's that increase in the dollar and things becoming
• 14:48
  Speaker 1: more expensive to to export for for America, that's what
• 14:51
  Speaker 1: has the impact. That's interesting. So um, so if you're
• 14:55
  Speaker 1: looking at that slowed down and used to it could
• 14:57
  Speaker 1: be potentially did you say one percent of the outcome? Yeah?
• 15:03
  Speaker 1: So what about inflation, I mean, is there a prospect
• 15:05
  Speaker 1: that the Federal Reserve does say, oh, well, now we've
• 15:09
  Speaker 1: I know, we've talked about having to have a lot
• 15:11
  Speaker 1: more rate increases, but actually China slowdown means that that's
• 15:15
  Speaker 1: going to do some of the work for us. What's
• 15:16
  Speaker 1: the what's the chance of that? You know. Traditionally, a
• 15:20
  Speaker 1: China growth shock should be very disinflationary through its effect
• 15:24
  Speaker 1: on commodity prices. Chinese demand for global commodities is huge
• 15:30
  Speaker 1: and it accounts for over fifty of global demand in
• 15:36
  Speaker 1: several metals categories, you know, like zinc, aluminum, um, copper.
• 15:44
  Speaker 1: Copper effect is a very good barometer of Chinese growth
• 15:47
  Speaker 1: if you you're looking for alternative indicator for a Chinese
• 15:51
  Speaker 1: growth um and as well as oil prices. So I
• 15:54
  Speaker 1: I wrote a paper with my UH former FED colleagues
• 15:59
  Speaker 1: on the global spillovers from China back then, and we
• 16:03
  Speaker 1: estimated that you know, suppose China's growth slowed um UH
• 16:09
  Speaker 1: four of GDP level over two years, so that would
• 16:14
  Speaker 1: be about two percentage point in the first year then
• 16:18
  Speaker 1: kind of what we're seeing right now. In fact, then
• 16:21
  Speaker 1: you could expect to see oil price fall by thirty
• 16:25
  Speaker 1: percent in the first metal prices. But today we have
• 16:29
  Speaker 1: a different situation. Offsetting this disinflationary China shock is the
• 16:34
  Speaker 1: oil potential oil embargo on UH you know, on Russia,
• 16:39
  Speaker 1: and I remember that a month or two ago, forecasters
• 16:43
  Speaker 1: or I bank commodities groups were saying that oil will
• 16:47
  Speaker 1: go to one eight or two hundred if there's an
• 16:49
  Speaker 1: oil embargo, and right now we haven't seen that or
• 16:53
  Speaker 1: even close to that. And that could be accounted by
• 16:57
  Speaker 1: the China demand um right so and one of the biggest, biggest,
• 17:02
  Speaker 1: So this disinflationary force, you know, it should be it
• 17:06
  Speaker 1: should be very disinflation disinflationary um. And and under typical circumstances,
• 17:13
  Speaker 1: China scrist slow down. The kind of magnitude that we're
• 17:17
  Speaker 1: seeing today should probably translate to about US c p
• 17:22
  Speaker 1: I falling by you know, one percentage point relative to spaceline,
• 17:26
  Speaker 1: which in the last few years would have been a lot.
• 17:28
  Speaker 1: But now when we're looking at seven or eight percent inflation,
• 17:31
  Speaker 1: it's not going to do the job. Yeah. And on
• 17:33
  Speaker 1: top of that, there's the offsetting force from whatever you
• 17:36
  Speaker 1: know that will happen with oil price if the embargo
• 17:39
  Speaker 1: were to content place. Yeah, okay, So I guess the
• 17:43
  Speaker 1: bottom line of this is that China's may on the
• 17:46
  Speaker 1: margin be a little bit helpful, but it could all
• 17:48
  Speaker 1: just get lost in the wash, and the Fed's still
• 17:51
  Speaker 1: got a pretty big inflation problem. You know the problem
• 17:54
  Speaker 1: of the US is we had excess demand for goods
• 17:58
  Speaker 1: and now we're seeing those accesses are subsiding, and in
• 18:03
  Speaker 1: the meantime, China is slowing so which which helped compressed
• 18:07
  Speaker 1: demand further. This really helped the FED, and it helped
• 18:11
  Speaker 1: the FED in in the way that that such that
• 18:14
  Speaker 1: the FED does not need to raise interest rate by
• 18:16
  Speaker 1: as much. Perhaps it's substitute it for some I guess
• 18:21
  Speaker 1: if you're sitting in the FED, you know you've had that.
• 18:23
  Speaker 1: And we've talked about this on the podcast before, because
• 18:25
  Speaker 1: lots of people are weighing in on the FED, and
• 18:27
  Speaker 1: you know, we've had Larry Summers complaining about how slow
• 18:30
  Speaker 1: they were to raise interest rates. You know, they have
• 18:32
  Speaker 1: now to some extent persuaded the financial markets and everyone
• 18:36
  Speaker 1: else that they're serious about inflation. They're thinking in terms
• 18:39
  Speaker 1: of half a percentage point increases, whereas we had got
• 18:42
  Speaker 1: used to this world of a court of percentage point
• 18:45
  Speaker 1: and potentially quite a few of those rates increases. I
• 18:49
  Speaker 1: guess if they were them, given how much criticism they've had,
• 18:54
  Speaker 1: they're going to be very reluctant to want to start
• 18:57
  Speaker 1: tamping down that rhetoric or they need a very good
• 19:00
  Speaker 1: reason to start saying, oh maybe we'll do a bit less,
• 19:04
  Speaker 1: because at least as far as the critics are concerned,
• 19:06
  Speaker 1: they still haven't gone far enow, Yeah, exactly right. I
• 19:10
  Speaker 1: think that the them being behind the curve um and
• 19:14
  Speaker 1: you know, now there's a lot of public pressure for
• 19:17
  Speaker 1: them to act, it makes them more reluctant to revive
• 19:22
  Speaker 1: the transitory uh language, even if some of those transitory
• 19:28
  Speaker 1: forces did turn out to be transitory. So there is
• 19:32
  Speaker 1: a risk that all the public pressures you know, could
• 19:36
  Speaker 1: cause effect to over tightened. But I think that risk
• 19:40
  Speaker 1: is still small relative to them, you know, still needing
• 19:44
  Speaker 1: to catch up to what they should be. UM as
• 19:47
  Speaker 1: we saw today at the CPI report, Um, sure, good
• 19:52
  Speaker 1: prices are declining. In fact that we saw we saw
• 19:55
  Speaker 1: a decline in many good good prices, the goods that
• 19:59
  Speaker 1: saw a huge ban during the pandemic. But the services
• 20:03
  Speaker 1: inflation is just gang buster. It's and you can see
• 20:07
  Speaker 1: it across all the categories, categories that we did not
• 20:11
  Speaker 1: even see increases or a rapid pace of inflation before,
• 20:15
  Speaker 1: like medical, water, sewitch education. It's just widespread, and that
• 20:22
  Speaker 1: highlight the mistake that the FED made last year. The
• 20:26
  Speaker 1: inflation problem we have today started out as an excess
• 20:29
  Speaker 1: demand on goods, you know, goods, goods prices driving driving
• 20:34
  Speaker 1: up inflation. But now those stuff, those those those forces
• 20:38
  Speaker 1: are readjusting hum coming back to normal, starting to become
• 20:42
  Speaker 1: to normal. But because of its slow response services, inflation,
• 20:48
  Speaker 1: which is more sticky, became very strong and it it's
• 20:51
  Speaker 1: now a harder problem to temp down. I guess you
• 20:54
  Speaker 1: have to be a PhD economist formerly of the FED
• 20:57
  Speaker 1: who can use technical terms like going like angbusters and not.
• 21:02
  Speaker 1: But do you as someone who used to be in
• 21:04
  Speaker 1: the FED, Just as a final question, I mean, I'm
• 21:05
  Speaker 1: quite surprised. You have some quite a former quite senior officials,
• 21:11
  Speaker 1: some of whom like Richard Clarenda or Brandy Quiles. You know,
• 21:15
  Speaker 1: we're in the FED on at a senior level. It's
• 21:17
  Speaker 1: helping to set policy. You know. Until the beginning of
• 21:20
  Speaker 1: this year or later last year, they've been out there
• 21:23
  Speaker 1: criticizing the FED. Richard Clarenda thinks rates are going to
• 21:27
  Speaker 1: have to go much higher than they've accepted. Randy Quailes
• 21:30
  Speaker 1: has said that they should have started increasing interest rates
• 21:34
  Speaker 1: in September along with some of the other officials who've
• 21:38
  Speaker 1: been away for longer, like Bill Dudley used to head
• 21:40
  Speaker 1: the New York FED. Do you don't normally get this
• 21:43
  Speaker 1: kind of friendly fire if you're sitting in the FED,
• 21:45
  Speaker 1: do you, I mean, it's quite unusual to have people
• 21:48
  Speaker 1: in the peanut gallery who actually were down in the
• 21:50
  Speaker 1: FOMC only a few months ago. Yeah. I could speak
• 21:55
  Speaker 1: to this from a from the point of view of
• 21:57
  Speaker 1: being a former FED staff and being in the FED
• 22:00
  Speaker 1: last year. I would say so. Richard Clarida is is
• 22:04
  Speaker 1: like the architect, the bran child of this new monetary framework.
• 22:07
  Speaker 1: So for him to criticize this, which is all about
• 22:10
  Speaker 1: sitting on your hands and letting in place together, I think.
• 22:14
  Speaker 1: You know, after this, the FED will have to do
• 22:18
  Speaker 1: a review of what went wrong, and one of the
• 22:21
  Speaker 1: likely conclusion is very similar to what happened in two
• 22:26
  Speaker 1: thousand and eight, which is group think. And um, after
• 22:31
  Speaker 1: two thousand and eight they did such a review, and
• 22:33
  Speaker 1: you know, they attributed to group think, and since then,
• 22:37
  Speaker 1: you know, they introduced an Alternative view box and TIL book.
• 22:42
  Speaker 1: But I mean, there's a group think, but at some
• 22:44
  Speaker 1: level that's just a diagnosis to say that we were
• 22:46
  Speaker 1: all wrong together. But that's what is essentially what power
• 22:49
  Speaker 1: has been saying, like, yeah, we were wrong, but so
• 22:52
  Speaker 1: is the consensus. But the thing is not everybody was wrong,
• 22:56
  Speaker 1: but you you need to it's it's there's also this
• 22:59
  Speaker 1: culled sure in in the FED where you know, in
• 23:02
  Speaker 1: normal times, I think, um, that culture would be good
• 23:06
  Speaker 1: because it's the culture is you know, record that model
• 23:11
  Speaker 1: based that stuff, use models to forek as inflation and uh,
• 23:16
  Speaker 1: and the bar is very high for you to be
• 23:20
  Speaker 1: to claim that something is really different today than yesterday. Well,
• 23:25
  Speaker 1: one thing we know for sure is that all the
• 23:28
  Speaker 1: the writers of FED statements long into the future will
• 23:32
  Speaker 1: think very hard before using the word transient. But anna woan,
• 23:36
  Speaker 1: thank you very much. Okay, thanks Stephanie. And so finally
• 23:48
  Speaker 1: to that little village in central Italy who's a hundred
• 23:51
  Speaker 1: and forty two residents have won the European Union Recovery
• 23:54
  Speaker 1: Fund jackpot, but must now also be a poster child
• 23:58
  Speaker 1: for the future of Europe. Es Alessandra Miliaccio. It's quiet
• 24:11
  Speaker 1: in the tiny hilltop village of Cravenano in central Italy.
• 24:15
  Speaker 1: The young people have all moved away to the larger towns,
• 24:18
  Speaker 1: and only a few elderly residents remain on the sun
• 24:20
  Speaker 1: Big plateau, along with the birds, an occasional car passing by,
• 24:25
  Speaker 1: and the sounds of the local fountain. Yet, Cravinano is
• 24:32
  Speaker 1: about to become the test site for Europe's most ambitious
• 24:34
  Speaker 1: economic experiment since the creation of its single currency. The
• 24:39
  Speaker 1: hamlet of a hundred and forty two residents just secured
• 24:42
  Speaker 1: a twenty million euro grant from the European Union's Recovery Fund.
• 24:46
  Speaker 1: The facility touted as Europe's new martial plan, aimed at revamping, revitalizing,
• 24:52
  Speaker 1: and digitalizing the old continent so as to finally boost
• 24:56
  Speaker 1: economic growth across the twenty seven member EU block. Clevinano
• 25:01
  Speaker 1: is receiving the money along with a very small group
• 25:03
  Speaker 1: of villages in Italy, as part of a broader European
• 25:06
  Speaker 1: project to fight the population. The town has plans to
• 25:10
  Speaker 1: attract new and younger residents through a plethora of initiatives,
• 25:14
  Speaker 1: from improving transport and connectivity to hosting researchers, students, tourists
• 25:20
  Speaker 1: and artisans in an attempt to jumpstart village life. The
• 25:25
  Speaker 1: success or failure of projects like this, both big and small,
• 25:28
  Speaker 1: in the euro region's weaker economies will help determine the
• 25:31
  Speaker 1: appetite of richer countries to extend support in future and
• 25:35
  Speaker 1: even to pull physical resources permanently. However, some critics suggests
• 25:41
  Speaker 1: just throwing around a bit of the bloc's financial largest
• 25:44
  Speaker 1: won't reverse decades of decline, and that the proposed improvements
• 25:48
  Speaker 1: in places like Clevinano are too little, too late. Alessander
• 25:54
  Speaker 1: to Rosie, the mayor of nearby Appopendente, which includes the
• 25:58
  Speaker 1: hamlet of Trivinano, understands the responsibility. A great risk is
• 26:10
  Speaker 1: in partidant. The risk is that in the first few
• 26:16
  Speaker 1: years there is a strong impact after the investment, and
• 26:19
  Speaker 1: then things slowly fade. We need to be able to
• 26:22
  Speaker 1: create a virtuous circle that can continue to live on.
• 26:27
  Speaker 1: The town needs to come alive, and to do that,
• 26:30
  Speaker 1: the first condition is to include and cater to all
• 26:33
  Speaker 1: components of society, from children to the elderly, from tourists
• 26:37
  Speaker 1: to restaurant owners to workers. If that is missing, there
• 26:41
  Speaker 1: is a risk that it will all fall apart once
• 26:44
  Speaker 1: the initial potion is over, leaving Nano and twenty other
• 26:52
  Speaker 1: villages one in each region and autonomous problems really will
• 26:55
  Speaker 1: dealt up four twenty million euros. Well two twenty nine
• 27:00
  Speaker 1: other local communities across the peninsula will share another five
• 27:04
  Speaker 1: and twenty million euros in recovery fund cash. The goal
• 27:09
  Speaker 1: is to counter the depopulation that is emptying villages across
• 27:12
  Speaker 1: Europe as people choose urban centers with jobs and better services.
• 27:18
  Speaker 1: In Germany, eastern regions are most affective. In France, the
• 27:22
  Speaker 1: phenomenon is visible nationwide, and in Italy it's the interior
• 27:27
  Speaker 1: that is generally worst hit according to European Commission data.
• 27:34
  Speaker 1: Maybe not easily meets the criteria of remoteness. It's about
• 27:37
  Speaker 1: two and a half hours by car from Rome, past
• 27:40
  Speaker 1: endless fields, winding roads, end up a tiny platel There's
• 27:45
  Speaker 1: no school and the post office is rarely open, but
• 27:48
  Speaker 1: it does have two restaurants, one of them near the
• 27:52
  Speaker 1: village's ramparts has been run for decades by Gianfranco Delli Campi.
• 27:56
  Speaker 1: These days he only opens on weekends for lack of clients,
• 28:00
  Speaker 1: but he talks about the past from his tiny kitchen
• 28:03
  Speaker 1: as he prepares artichokes for the weekend service. When there
• 28:11
  Speaker 1: was a child that we had three or four times
• 28:14
  Speaker 1: more people here, maybe even five times more. My father
• 28:20
  Speaker 1: told me there were six hundred ninety voties citizens in
• 28:24
  Speaker 1: nineties sixty four. I really hope people returned the countryside
• 28:31
  Speaker 1: and the fields were full of people in the past
• 28:34
  Speaker 1: and now they stand empty. There were children were school
• 28:40
  Speaker 1: when I went to school, there were forty kids. Mayor
• 28:44
  Speaker 1: to Rosie, an agronomists and a former member of parliament,
• 28:47
  Speaker 1: has come up with a plan to bring to Nano
• 28:49
  Speaker 1: back to life by focusing on lots of small projects
• 28:53
  Speaker 1: no manic construction sites. The village lies close to the
• 28:58
  Speaker 1: via French Regena, for example, one of Europe's oldest pilgrim itineraries,
• 29:02
  Speaker 1: which goes from Canterbury all the way to Rome. The
• 29:06
  Speaker 1: idea is to restore homes which can become accommodations for
• 29:10
  Speaker 1: the pilgrims and tourists and to ferry them up the
• 29:13
  Speaker 1: hill in new electric buses paid for by EU cash,
• 29:16
  Speaker 1: which would also attract locals. The mayor also wants to
• 29:20
  Speaker 1: restore the town's small castle, which sits on the very
• 29:23
  Speaker 1: edge of the hamlet. The plan is to turn it
• 29:26
  Speaker 1: into an exhibition and training space for students already coming
• 29:30
  Speaker 1: to the valley to study its ancient sites, and she
• 29:33
  Speaker 1: wants to attract apprentices from a nearby trade school to
• 29:37
  Speaker 1: make Trivinano a center for artisans, thus creating jobs. You
• 29:42
  Speaker 1: money will also fund infrastructure to deliver faster web services
• 29:46
  Speaker 1: and greener energy. Now, once locals and pilgrims start coming
• 29:50
  Speaker 1: up the hill to visit or settle the Rosie thinks
• 29:54
  Speaker 1: remote workers from further afield will follow. But the idea
• 29:58
  Speaker 1: of dolling out law sums of money in far removed
• 30:02
  Speaker 1: places does have its critics. One a history professor at
• 30:08
  Speaker 1: the University of Molize in southern Italy, I'm me shured,
• 30:14
  Speaker 1: even if they succeed that you don't resolve the overall
• 30:17
  Speaker 1: program of the small villages in the internal areas of
• 30:19
  Speaker 1: the country by just making twenty one aumlets of excellence.
• 30:24
  Speaker 1: Communities needs access to health, schools and transport. If you
• 30:28
  Speaker 1: don't have these services, which means having the fundamental right
• 30:33
  Speaker 1: to health, education, mobility, the rest is just talk. Italy's
• 30:38
  Speaker 1: Cultural Heritage Minister Dario Francescini, was, however, more hopeful. Speaking
• 30:43
  Speaker 1: to reporters last month, he highlighted how well spent money
• 30:47
  Speaker 1: aim to jumpstart village life can really make a difference,
• 30:50
  Speaker 1: particularly if private investors come in to fill the gaps,
• 30:54
  Speaker 1: at which point he said, there's no stopping the process.
• 30:59
  Speaker 1: That Italy is an extraordinary open air museum. It's not
• 31:03
  Speaker 1: just the well known capitals of art. There are other
• 31:06
  Speaker 1: beautiful places that unfortunately have lost their population. This is
• 31:11
  Speaker 1: a huge challenge that can help us recover some of
• 31:13
  Speaker 1: our historical and artistic treasures, but it can also bring
• 31:17
  Speaker 1: jobs back now that smart working and broadband allow it,
• 31:21
  Speaker 1: as well as people back to these extraordinary locations. That's
• 31:40
  Speaker 1: it for this episode of Stephonomics. We'll be back next week.
• 31:43
  Speaker 1: In the meantime, please do rate the show if you
• 31:46
  Speaker 1: like it so more people will listen and check out
• 31:48
  Speaker 1: the Bloomberg News website for more economic news and views
• 31:51
  Speaker 1: on the global economy. You can also follow as Economics
• 31:54
  Speaker 1: on Twitter. This episode was produced by Magnus Henderson with
• 31:59
  Speaker 1: support from some Saddi. Special thanks to Flavia Rotondi for
• 32:03
  Speaker 1: telling Alessandra Miliacco about that village in the first place.
• 32:06
  Speaker 1: Also to Dan Moss and Anna One. Mike Sasso is
• 32:10
  Speaker 1: executive producer of Stephanomics and the head of Bloomberg Podcast
• 32:13
  Speaker 1: is Francesca Levy. M