Latest / Bloomberg Intelligence / Trump and Brexit Are Driving Germany and France to Power, Rahman Says

Transcript

Trump and Brexit Are Driving Germany and France to Power, Rahman Says · Bloomberg Intelligence

0:05
Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
0:08
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
0:11
Speaker 1: bring you the most important, noteworthy, and useful interviews for
0:15
Speaker 1: you and your money, whether you're at the grocery store
0:17
Speaker 1: or the trading floor. Find the Bloomberg p m L
0:20
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. I
0:32
Speaker 1: want to bring in Mutaba Ramen, the practice head of
0:34
Speaker 1: Europe for the Eurasia Group based in London, to give
0:37
Speaker 1: us some details about the G twenty summit meeting taking
0:40
Speaker 1: place in Hamburg. President Donald Trump meeting today with Russian
0:45
Speaker 1: President Vladimir Putin. Mutaba, thank you for being with us.
0:49
Speaker 1: Can you tell us is there a specific agenda that
0:52
Speaker 1: these meetings follow? I mean, what actually goes on when
0:56
Speaker 1: the heads of state meet along with their farm police experts,
1:00
Speaker 1: What goes on in the room. It would be a
1:03
Speaker 1: It would be fantastic to be a file on the wall,
1:06
Speaker 1: wouldn't it. I mean, shupers have been working up the
1:10
Speaker 1: agenda in the preceding weeks for leaders to discuss when
1:15
Speaker 1: they get in the room. Trade, climate change, um, navigating
1:21
Speaker 1: some of the world's hotspots, Syria. I think that this
1:24
Speaker 1: meeting what's interesting is it's going to be the first
1:28
Speaker 1: opportunity for the rest of the global communities leadership to
1:32
Speaker 1: meet with Donald Trump. And that's really what I think
1:35
Speaker 1: this meeting is is going to be about. And when
1:38
Speaker 1: Donald Trump is not in the room, that's certainly what
1:41
Speaker 1: I think other leaders are going to be talking about.
1:44
Speaker 1: That there's a real focus I think on um the
1:47
Speaker 1: US and the US commitment to the multilateral system that
1:51
Speaker 1: has really rustled furthers, let's say, in the G twenty.
1:55
Speaker 1: And that's really what I think this meeting will be about.
1:57
Speaker 1: How do how do leaders perceived Trump and what's their
2:01
Speaker 1: expectation of the direction in which he's going to take
2:03
Speaker 1: US policy over the medium terms. Is there any difference
2:08
Speaker 1: in terms of sort of assessing the president because he
2:13
Speaker 1: is not a veteran political figure like many of the
2:17
Speaker 1: other heads of state. I mean, it certainly becomes more
2:21
Speaker 1: difficult if Trump has proven to be one thing that
2:25
Speaker 1: is unpredictable. So it's not even clear whether the policy
2:30
Speaker 1: position staked out by his aids will be consistent with
2:33
Speaker 1: the line he takes when he's in the room. And
2:36
Speaker 1: think you clearly see concerns certainly, you know, for me
2:40
Speaker 1: covering Europe from the German perspective, a tremendous amount of
2:44
Speaker 1: concern about what Trump is doing over trade, over what
2:47
Speaker 1: he's doing regarding climate change, and in some ways Angela
2:51
Speaker 1: Merkel has set herself up in opposition to Donald Trump
2:55
Speaker 1: and some of the positions that are being taken by
2:58
Speaker 1: this administration and not like the is going to be
3:00
Speaker 1: one subtext of the G twenty in Hamburg over the
3:05
Speaker 1: next few days. Indeed, the bilacteral between Trump putin that
3:08
Speaker 1: will be another. I think also the Chinese leadership and
3:12
Speaker 1: their interaction with the US. These are all, I think
3:14
Speaker 1: subplots in the bigger in the bigger picture that will
3:18
Speaker 1: that will be playing out in Hamburg Mottaba there there's
3:21
Speaker 1: a federal German federal election that will take place as
3:24
Speaker 1: schedule to take place on the September. How has President
3:30
Speaker 1: Donald Trump become if not a major you know, a
3:35
Speaker 1: feature of that campaign, but but kind of in the
3:38
Speaker 1: shadows of that campaign that Angela Merkel is is expected
3:43
Speaker 1: to prevail, so more than certainly more than a shadow.
3:47
Speaker 1: I agree with this Zoo. I think Trump is front
3:49
Speaker 1: and center that the German election, primarily because Martin Schultz,
3:54
Speaker 1: the head of the Social Democrats, who is competing with
3:57
Speaker 1: Merkel for the chancellery has it is running on a
4:02
Speaker 1: very explicit anti Trump ticket. That's really the identity that
4:07
Speaker 1: Martin Schultz has assumed in the election, tapping into, frankly,
4:11
Speaker 1: a tremendous amount of resentment for Trump among the German population.
4:17
Speaker 1: He is reviled in Germany. Donald Trump is and Shelters
4:20
Speaker 1: explicitly trying to tap into that. That put Merkel in
4:23
Speaker 1: something of a difficult situation, and I think that's why
4:26
Speaker 1: over the last weeks and months we've also seen her
4:30
Speaker 1: move into a slightly more critical posture via via the US.
4:35
Speaker 1: But of course Merkel is in office, she needs to
4:38
Speaker 1: have a working relationship with the US. I think that's
4:41
Speaker 1: there's a recognition, of course that fundamentally European interests and
4:44
Speaker 1: German interests of tighter a productive relationship with the US.
4:48
Speaker 1: And as such, I think that's a you put Merkel
4:52
Speaker 1: in something of a difficult situation. But this is front
4:55
Speaker 1: and centers a Trump question in the context of the
4:58
Speaker 1: German election. Wonder if you could speak about the context
5:02
Speaker 1: of the United Kingdom and its vote to leave the
5:05
Speaker 1: European Union. Theresa May, the Prime minister also attending the
5:08
Speaker 1: G twenty meeting in Hamburg. What is her stature like
5:12
Speaker 1: at at a gathering such as this? Very bad, very bad.
5:17
Speaker 1: It's similar to what it's like in the contextus her
5:21
Speaker 1: European Council meetings, when she turns up in Brussels and
5:24
Speaker 1: meets with other European has to say that. I I mean,
5:26
Speaker 1: Theresa May is essentially a prime minister who is one
5:29
Speaker 1: mistake away from oblivion. She has no mandate, she doesn't
5:33
Speaker 1: have the confidence of her parliamentary party, she doesn't have
5:36
Speaker 1: the confidence of the Tory base, not the population. I mean,
5:41
Speaker 1: it's a really difficult situation for her to be and
5:44
Speaker 1: I don't think she has any active objective at the
5:49
Speaker 1: G twenty. I think her mandate, if she does have one,
5:53
Speaker 1: will probably be to deliver Brexit. Whether she can survive
5:56
Speaker 1: to do that remains in question. I don't think she's
5:59
Speaker 1: a player on the noble stage. I think that, you know,
6:01
Speaker 1: the UK is is really in a very defensive, difficult
6:05
Speaker 1: situation that is aggravated by the fact she really did
6:09
Speaker 1: botch her election and and and and erode her majority.
6:13
Speaker 1: It's very difficult for the reason you mentioned the anti
6:17
Speaker 1: Trump sentiment that prevails in Germany, and I'm wondering if
6:22
Speaker 1: that is distracting European leaders from issues such as immigration,
6:28
Speaker 1: border controls, Greece, the potential for reunification of Cyprus. I mean,
6:34
Speaker 1: there are a lot of very specific European issues that
6:38
Speaker 1: have yet to be addressed. Actually not, you know, it's interesting,
6:41
Speaker 1: actually not. I think the combination of Donald Trump and
6:44
Speaker 1: his ambiguous commitment to multilateralism, the facts of the Brexit
6:50
Speaker 1: votes m in combination with Emmanuel Macron in France, not
6:54
Speaker 1: think short of a revolution in France, but Macron has
6:58
Speaker 1: implemented and achieved in the last several months. The combination
7:02
Speaker 1: of those three things is creating impetus in Europe to
7:06
Speaker 1: do more in Europe, for the European Union, to become
7:09
Speaker 1: more cohesive, to integrate and work together collectively, to address
7:14
Speaker 1: more security and defense challenges then and of course to
7:18
Speaker 1: put the Eurozone on a more stable footing. So thankin
7:23
Speaker 1: Trump is actually one factor alongside Brexit um, alongside Macron
7:30
Speaker 1: that are driving there's certainly the French and the Germans
7:34
Speaker 1: to say, look, this is a moment that sees the
7:36
Speaker 1: opportunity let's make let's take advantage of this difficult situation
7:41
Speaker 1: to do more in the European context. And I think
7:43
Speaker 1: we're going to see that over there the next few years. So,
7:47
Speaker 1: if if anything, we're slightly more positive about the outlooks
7:50
Speaker 1: for Europe because I do think the political conversation is
7:54
Speaker 1: evolving in a way that's likely to be beneficial for
7:57
Speaker 1: Europe and the EU. I want to thank very much
8:00
Speaker 1: for spending time with us. Muttaba Ramen is the practice
8:04
Speaker 1: head for Europe for the Eurasia Group. He was joining
8:07
Speaker 1: us from London and here to tell us more about
8:21
Speaker 1: steel but also medals and mining is our own Joe
8:24
Speaker 1: Dough He is our medals and mining reporter for Bloomberg
8:27
Speaker 1: News and he can be followed at Joe Dough d
8:31
Speaker 1: E a u X. There you go. Um, Joe, you
8:34
Speaker 1: were just in Pittsburgh, you were tell him you were
8:37
Speaker 1: at a blast furnace, the original blast furnace for US Steel. Correct,
8:41
Speaker 1: it was. Well, Um, we'll be putting out a story
8:45
Speaker 1: sometime soon about that. To to look at the industry
8:49
Speaker 1: on a hole and and and use steel as well.
8:51
Speaker 1: And you know, as you just heard Andy talking about
8:53
Speaker 1: him in the big, big focus here is in the
8:55
Speaker 1: immediate term, what is going to come of too thirty two,
8:58
Speaker 1: what is the Trump administration going to put out there
9:00
Speaker 1: on steel? And again, as Andy did point out rightly,
9:04
Speaker 1: the market is pretty much just waiting for that. I mean,
9:06
Speaker 1: every other day there's somebody calling in asking when exactly
9:10
Speaker 1: is this going to common. It's one of the things
9:12
Speaker 1: that we've been chasing as well. Well. One of the things.
9:14
Speaker 1: The reason I brought up the blast furnace actually was
9:16
Speaker 1: because I wanted you to describe the number of people
9:20
Speaker 1: necessary to produce steel, because of course the tariff is
9:25
Speaker 1: linked to all right, if there are foreign imports that
9:29
Speaker 1: are being dumped in the United States in order to
9:31
Speaker 1: gain market share, that hurts US companies because then they
9:35
Speaker 1: don't hire workers. And I'm wondering whether you could speak
9:38
Speaker 1: to that. Yeah, it's it's a it's an interesting question
9:40
Speaker 1: and one that we who cover the steel industry are
9:43
Speaker 1: kind of bogged in, bogged down in on a daily basis.
9:46
Speaker 1: Thomas Bauschevill, who's one of our reporters in London it
9:49
Speaker 1: covers the European uh steel market, had a great story
9:52
Speaker 1: in Business Week that went out about a week ago,
9:54
Speaker 1: kind of pointing out so few people that need to
9:57
Speaker 1: run many of the steel uh these steel mills right
10:00
Speaker 1: and in the United States, the numbers about a hundred
10:02
Speaker 1: and forty thousand steel workers directly related to making you
10:06
Speaker 1: know what we know in blast furnaces or electric arc furnaces.
10:10
Speaker 1: And we actually had a story a couple of weeks out,
10:12
Speaker 1: a couple of weeks ago that I did. I was
10:13
Speaker 1: talking to some industry, some downstream you know, industry associations
10:17
Speaker 1: on steel, and they had a number what are they fabricators. Fabricators,
10:21
Speaker 1: you know, they make the panels, or they'll make the trinkets,
10:24
Speaker 1: that make the machines that make the metal, you know,
10:26
Speaker 1: all the all those little things. And and in that
10:28
Speaker 1: conversation an interesting point that they made to us that
10:30
Speaker 1: we put out on the wire was they said, well,
10:32
Speaker 1: there might be a hundred forty steel jobs, but we
10:35
Speaker 1: estimate that all in jobs that are due to the
10:38
Speaker 1: downstream that all of the steel goes into could affect
10:40
Speaker 1: as many six point five million manufacturing jobs. So when
10:44
Speaker 1: you start getting into the numbers of well where the
10:46
Speaker 1: jobs at and who has more jobs you you you
10:49
Speaker 1: start seeing some of these these these numbers that you know,
10:52
Speaker 1: seem to maybe tell a bit of a different story
10:55
Speaker 1: than what we might be getting in terms of a
10:57
Speaker 1: full story from the administration, which I guess is what
10:59
Speaker 1: I'm guessing is what you're kind of hinting. Yeah, Well,
11:01
Speaker 1: I wanted to know, then, did these downstream companies they
11:06
Speaker 1: for the tariffs? The downstream companies are a bit more
11:11
Speaker 1: careful with how they do approach it, right because um,
11:14
Speaker 1: many of them increases their input costs and they've got
11:17
Speaker 1: to raise prices to their customers. Absolutely. And and one
11:20
Speaker 1: of the things we had a we had a really
11:21
Speaker 1: interesting story out of a month ago on the aluminum side.
11:24
Speaker 1: And I was sitting at a conference and the man
11:27
Speaker 1: who buys all of the the aluminum for Miller cores
11:31
Speaker 1: from Molson Cores, uh says, up there, listen, if we
11:34
Speaker 1: get tariffs on the aluminum side, it's going to cost
11:37
Speaker 1: us and ultimately it could cost the consumers. So I
11:40
Speaker 1: said to my editor, gosh, we gotta write this. And
11:42
Speaker 1: sure enough, you know, it got a lot of pick
11:45
Speaker 1: up because it's so basic, right, if you and I
11:47
Speaker 1: are going to go out and buy our you know,
11:50
Speaker 1: our cores light over the weekend and suddenly, you know,
11:52
Speaker 1: the Trump administration has levied these terrorists, you know it.
11:55
Speaker 1: I mean there's a lot, there's a lot of complexity
11:58
Speaker 1: to it, but in some way we could incur, you know,
12:00
Speaker 1: minor changing costs and that's really what they were getting at.
12:03
Speaker 1: And it's very similar with what the downstream producers of
12:07
Speaker 1: steel are trying to argue as well. Well. It seems
12:10
Speaker 1: as though, you know, the supply chain runs both ways.
12:12
Speaker 1: It runs up and then it runs down and ultimately
12:14
Speaker 1: ends with the consumer. Someone ends up incurring the cost
12:18
Speaker 1: that gets passed through, and that is the key thing
12:21
Speaker 1: that everybody's focusing on and is why there has been
12:23
Speaker 1: a struggle within the White House as to whether or
12:25
Speaker 1: not they're going to levy these tariffs or a tariff
12:28
Speaker 1: right quota, and that's something we've been chasing now for
12:30
Speaker 1: quite a few months. All Right, Well, we look forward
12:32
Speaker 1: to you continuing to keep us up to date as always.
12:35
Speaker 1: In fact, I'll buy you that Coulson that Molson co.
12:39
Speaker 1: Joe Doe is our metals and mining reporter for Bloomberg
12:42
Speaker 1: News once again. You can follow him on Twitter at
12:44
Speaker 1: Joe dough. Right now, I want to bring in Andrew Chamberlain.
12:58
Speaker 1: He is the chief economist for glass Door. Uh, Andrew Chamberlain,
13:03
Speaker 1: Great to have you with us. You know, we got
13:04
Speaker 1: some of the details of the report, and there are
13:07
Speaker 1: lots of numbers. But in your study, you tell us
13:10
Speaker 1: the cities in which pay is increasing and also the
13:14
Speaker 1: actual jobs that you want to get and the skills
13:17
Speaker 1: that you need to get that increased pay. Tell us
13:19
Speaker 1: about it. Yeah, Sometimes tech companies like glass Door have
13:23
Speaker 1: better data on the labor market than the VLS and
13:25
Speaker 1: so what we do is we look at ten big
13:27
Speaker 1: metros around the country and we use real time shalary
13:29
Speaker 1: data on glass or to show pay growth. So among
13:31
Speaker 1: the cities, if you're in San Francisco, Seattle, or New York,
13:35
Speaker 1: you're seeing fast pay growth today, well above national average. However,
13:39
Speaker 1: if you're in Houston, Atlanta, or d C you're well
13:42
Speaker 1: below the average. So what it shows you is that
13:44
Speaker 1: slow overall pay number. In the VLS report, it hides
13:47
Speaker 1: a lot of diversity depends on where you live and
13:49
Speaker 1: what you do for a living. Well, here's some of
13:51
Speaker 1: that diversity and the numbers right in San Francisco, median
13:54
Speaker 1: base pay has increased more than two and a half
13:57
Speaker 1: percent from previous year and it stands at just over
14:01
Speaker 1: sixty eight thousand dollars a year. Yeah, that's more than
14:05
Speaker 1: ten thousand, more than fifteen thousand dollars more than the
14:07
Speaker 1: national average. Actually, so UM, definitely various. Pay growth varies
14:11
Speaker 1: a lot by city today, but also varies a lot
14:14
Speaker 1: by jobs. So if you are a recruiter today, so
14:17
Speaker 1: in today's very tight labor market with record low unemployment,
14:20
Speaker 1: many cities recruiters are seeing pay grow it over eight
14:23
Speaker 1: percent year over year, so they are in demand as
14:26
Speaker 1: companies relying on poaching candidates from the competition. UM, we're
14:30
Speaker 1: also seeing some fast pay growth amongst some low skilled jobs,
14:33
Speaker 1: so jobs like warehouse associate and delivery driver. These are
14:37
Speaker 1: people that are fueling the supply chain in places like
14:40
Speaker 1: Amazon and Walmart, and they're actually seeing a pay rise today.
14:43
Speaker 1: I want to mention the barista and restaurant cook job
14:47
Speaker 1: titles only because you say that those are also increasing
14:50
Speaker 1: and pay over seven percent increase ye over a year. Yeah,
14:54
Speaker 1: these are low skilled roles. They only pay about twenty
14:56
Speaker 1: five to twenty nine thousand dollars per year, but we're
15:00
Speaker 1: seeing fast rises of seven eight percent per year. This
15:04
Speaker 1: partly reflects a huge number of job openings in leisure
15:07
Speaker 1: and hospitality and retail today, and also um reflects the
15:12
Speaker 1: minimum wage hikes that we've seen around the country this year.
15:15
Speaker 1: That pay range absolutely is being affected by these you know,
15:19
Speaker 1: twelve and fifteen dollar minimum wages we're seen in big cities.
15:22
Speaker 1: What about some of the highest paying jobs you mentioned,
15:25
Speaker 1: Pharmacists is at the top of the list. Tell us
15:28
Speaker 1: about this particular trend. Yeah, well, many healthcare jobs do
15:32
Speaker 1: show up towards the top of the list. Healthcare is
15:34
Speaker 1: like the eight pound guerrilla of the labor market today.
15:37
Speaker 1: Lots of jobs, like a million job openings in healthcare. UM. Yeah,
15:40
Speaker 1: pharmacist making about a hundred and twenty four thousand dollars
15:43
Speaker 1: per year in our data. Other high paying jobs, there's
15:46
Speaker 1: many in tech. For example, data scientists, you're making about
15:49
Speaker 1: nine dollars on average. Uh. And that was an increase
15:53
Speaker 1: of nearly three percent from the previous year. Yeah, it's
15:55
Speaker 1: high paying and it's fast growing. Uh. And you know,
15:58
Speaker 1: and that's the national average. If you're in San Francisco,
16:01
Speaker 1: you should expect six figures for sure for data scientists
16:03
Speaker 1: and those other tech roles like solutions architect, which many
16:06
Speaker 1: people may not even know what that is, but it's
16:08
Speaker 1: a higher level software engineer who helps craft many of
16:11
Speaker 1: the software products that we use today. UM and also
16:14
Speaker 1: UX designers, So if you are an art student in
16:16
Speaker 1: college and you want to get into tech, UX designer
16:19
Speaker 1: is a someone who designs the front end that we
16:22
Speaker 1: see on many websites. And they're seeing pay rise at
16:24
Speaker 1: four percent per year, and it's almost almost eighty thousand
16:27
Speaker 1: dollars a year. I'm speaking with Dr Andrew Chamberlain. He
16:30
Speaker 1: is the chief economist for glass Door, and he's based
16:34
Speaker 1: in Mill Valley, California. Andrew, as far as the jobs
16:39
Speaker 1: that are showing the weakest growth, I'm wondering if you
16:42
Speaker 1: could spend some time enlightening us about the jobs where
16:46
Speaker 1: you don't have a lot of leverage. Well, jobs that
16:48
Speaker 1: are being affected by automation include more than just blue
16:51
Speaker 1: collar jobs that many people think about. There's some jobs
16:54
Speaker 1: like a loan officer UM, for example, where you know
16:59
Speaker 1: many people can get loans without talking to a person anymore,
17:02
Speaker 1: just using a web based interface, so they are seeing
17:05
Speaker 1: pay fall at about five percent year over year. Other
17:08
Speaker 1: types of jobs that are losing ground include manufacturing related
17:12
Speaker 1: jobs like design engineer. So a design engineer is someone
17:16
Speaker 1: who designs many of the physical products we use. They're
17:19
Speaker 1: seeing pay fall about four percent year over year. So, um,
17:23
Speaker 1: what this shows is that the labor market today is
17:25
Speaker 1: very diverse. Underneath that two and a half percent wage
17:29
Speaker 1: growth figure from the BLS report, it's varies hugely. And
17:32
Speaker 1: so my view is policy makers, especially at the FED,
17:36
Speaker 1: looking at that slow growth number, they need to be
17:38
Speaker 1: digging below the surface and looking at real jobs to
17:40
Speaker 1: see where there's labor shortages and where there aren't today. Well,
17:43
Speaker 1: you mentioned we were talking about remember you mentioned about
17:46
Speaker 1: pharmacists a hundred and twenty let's say a hundred and
17:48
Speaker 1: twenty four thousand dollars a year. But then you look
17:50
Speaker 1: at things like certified nursing assistant making only twenty eight
17:53
Speaker 1: thousand and a pharmacy technician making thirty thousand, so that
17:57
Speaker 1: disparity is large. Yeah. Health care is an interesting case
18:00
Speaker 1: where there's many very high paying roles, especially physicians, which
18:04
Speaker 1: often earned two and three hundred thousand per year for
18:07
Speaker 1: a median um, and then there's many lower skilled roles
18:10
Speaker 1: like M E, M T, S, for example, and and
18:12
Speaker 1: nursing assistant um SO. UM. On average, healthcare UM is
18:17
Speaker 1: like a driver of middle wage job growth today, and
18:20
Speaker 1: it is definitely the single biggest sector adding jobs today
18:25
Speaker 1: by far. Um SO. I'm actually quite optimistic about healthcare.
18:29
Speaker 1: As he got retiring baby boomers, he's more and more
18:31
Speaker 1: healthcare services. UM. Let's just hope that any healthcare form
18:35
Speaker 1: that happens and Congress does not disrupt this giant, giant
18:39
Speaker 1: sector that's about a six of the US economy. I
18:41
Speaker 1: want to thank you very much for spending time with us.
18:43
Speaker 1: Dr Andrew Chamberlain. He is chief economist for glass Door
18:47
Speaker 1: based in Mill Valley, California. Now I want to turn
19:03
Speaker 1: to another topic that is tangential to the meeting between
19:06
Speaker 1: President Donald Trump and President Vladimir Putin, and that is
19:09
Speaker 1: cyber security. Michael Riley is our cybersecurity reporter for Bloomberg,
19:15
Speaker 1: and Michael h the Russians and cyber security and cyber
19:21
Speaker 1: attacks that's been in the news. I'm wondering if you
19:24
Speaker 1: could talk a little bit about those potential attacks, but
19:29
Speaker 1: add in the potential for US electrical grid disruptions because
19:34
Speaker 1: of these kinds of technologies. Yeah. Absolutely, so, uh, the
19:40
Speaker 1: US government sent out on alert to utilities last week.
19:43
Speaker 1: It was pretty thin on details, but it did describe
19:46
Speaker 1: infiltrations into the nuclear and power sector. We talked to
19:49
Speaker 1: some senior US officials and and what we found was
19:53
Speaker 1: that there's actually something very serious going on behind the scenes.
19:56
Speaker 1: Even as as Vladiman Putin and Donald Trump are meeting today,
20:01
Speaker 1: more than a dozen or at least a dozen power
20:03
Speaker 1: plants UM have been breached since May um and these
20:07
Speaker 1: are the the you know, there's there's not an immediate
20:09
Speaker 1: threat to public safety, but the hackers seemed to be
20:12
Speaker 1: looking for information and ways to get from the basic
20:16
Speaker 1: computers of the plant into the control systems UM that
20:19
Speaker 1: which means that they might be able to to to
20:21
Speaker 1: impact the power going onto the grid create a cascading failure.
20:25
Speaker 1: Why this is why this is important is that it's
20:27
Speaker 1: you know, we've seen this happen in Ukraine twice in
20:29
Speaker 1: the last year, where where hackers are actually taken down
20:32
Speaker 1: the electrical grid. I wanted to ask you, excuse me,
20:34
Speaker 1: specifically about the Wolf Creek nuclear power plant in Kansas.
20:38
Speaker 1: What went on there? Yeah, So, when we do know
20:41
Speaker 1: is that that among the twelve plants. One of them,
20:43
Speaker 1: at least one of them, was a nuclear plant, and
20:44
Speaker 1: it's a a plant in Kansas in a relatively rural
20:48
Speaker 1: area called Wolf Creek. This is a plant that was
20:51
Speaker 1: sort of built to be uh the model of three
20:54
Speaker 1: Mile Island UM. It's quite an aging plant UM and
20:58
Speaker 1: it was one of the plants hit by the hackers.
21:00
Speaker 1: It comes to nuclear plants, both the nuclear and conventional
21:02
Speaker 1: power plants were hit were hacked, but nuclear is of
21:05
Speaker 1: of specific concerns because it's a it's a very particular
21:08
Speaker 1: kind of system. And even though the nuclear core itself
21:12
Speaker 1: is quite protected, in part because the technology is very
21:14
Speaker 1: old and so not really vulnerable to digital attacks, it's
21:17
Speaker 1: it's one of those things where if you can shut
21:19
Speaker 1: down the turbin all the you still have a nuclear
21:22
Speaker 1: core that's producing a lot of energy, and that energy
21:24
Speaker 1: has to go somewhere. There are safety systems that are
21:26
Speaker 1: supposed to kick in, but those safety systems themselves are
21:28
Speaker 1: vulnerable to attack. So it gets quite scary when you
21:30
Speaker 1: start looking at nuclear plants. You've also written that the
21:34
Speaker 1: teams from the Homeland Security and the FBI have been
21:37
Speaker 1: working to secure these power stations, but they're not necessarily
21:41
Speaker 1: informing local or state officials. Why wouldn't they do that? Well,
21:46
Speaker 1: I think the first reaction in cases like this is
21:48
Speaker 1: that it's a national security event. These are hackers that
21:52
Speaker 1: that are working for a different country, and any time
21:54
Speaker 1: that they start messing around with critical infrastructure that counts
21:57
Speaker 1: as national security. And I think that the knee jerk
21:59
Speaker 1: reaction is keep every and quite secret. I think that
22:01
Speaker 1: a lot of the utilities themselves would say, look, this
22:04
Speaker 1: isn't an imminent threat to public safety. We're trying to
22:06
Speaker 1: get these these hacks under control. That the hackers haven't
22:09
Speaker 1: got to the control systems, so there's nothing imminent that
22:12
Speaker 1: would cause us to sort of go to state and
22:14
Speaker 1: local officials. But we did talk to some local officials
22:16
Speaker 1: who said who who had gotten inkling of what was
22:19
Speaker 1: going on? And and they were clearly a little dismay
22:21
Speaker 1: that they hadn't been informed. You've also written that much
22:25
Speaker 1: of the work that the hackers have done has come
22:28
Speaker 1: from machine servers that are located in places such as Germany, Italy, Malaysia,
22:33
Speaker 1: and Turkey. Is this new? You know? That's actually how
22:38
Speaker 1: hackers who are trying to hide their identity work. They
22:42
Speaker 1: don't hack directly from their home computers whatever country they're
22:45
Speaker 1: operating from. What they do is they hack into other
22:48
Speaker 1: computers and across the globe and use those as hot points.
22:51
Speaker 1: And the whole idea is to try and disguise who
22:53
Speaker 1: they are. There's a really complicated counter intelligence maneuver where
22:58
Speaker 1: you can try and follow that track from computer computer
23:01
Speaker 1: So it's not exactly new, it's a it's it's sort
23:03
Speaker 1: sort of tradecraft when it comes to nation state hackers,
23:05
Speaker 1: but it does create a sort of a veil that
23:07
Speaker 1: has to be piers to figure out who actually is
23:09
Speaker 1: behind these hacks. Well as far as who was behind
23:13
Speaker 1: these hacks, the intimation is that they are state actors
23:17
Speaker 1: right sponsored by states. That's right there, and in fact
23:21
Speaker 1: the chief suspect now is Russia, which is why this
23:23
Speaker 1: is such a concern um in part because the takedown
23:27
Speaker 1: of the electrical grids in the Ukraine was done by
23:30
Speaker 1: Russian hackers and they're clearly if you look at those
23:32
Speaker 1: incidents in Ukraine, they're they're clearly getting more sophisticated. They're
23:35
Speaker 1: using Ukraine it's kind of a test bed to see
23:37
Speaker 1: how these tools are working. So you had a hit
23:41
Speaker 1: UH in that was a little bit less sophisticated, and
23:45
Speaker 1: then again in twenties sixteen where they had clearly automated
23:49
Speaker 1: a lot of the processes and that the grid wasn't
23:51
Speaker 1: down for very long. That didn't seem to be what
23:54
Speaker 1: the attackers were trying to do. It looked like they
23:55
Speaker 1: were testing these tools. But that means that that when
23:58
Speaker 1: you then see that, you know how ers that link
24:00
Speaker 1: to Russia in your own power plants here in the US,
24:03
Speaker 1: you get really really nervous. Well, you know, you mentioned
24:06
Speaker 1: the hack attacks and in the context of national security,
24:10
Speaker 1: but this also involves companies. So if you think it's
24:12
Speaker 1: just a political or a uh sort of a strategic issue,
24:17
Speaker 1: it's also a corporate issue. Mandale International saying that a
24:20
Speaker 1: cyber attack had crippled their corporate UH computer systems, employees
24:25
Speaker 1: had to work from their mobile phones and that as
24:28
Speaker 1: a result, it's going to reduce second quarter sales growth
24:31
Speaker 1: by three percentage points. So this is an issue not
24:34
Speaker 1: just for governments but clearly or utilities, but clearly for businesses. No, absolutely,
24:39
Speaker 1: and if you if you put the cap of business
24:41
Speaker 1: owners on, this is a huge and growing problem and
24:44
Speaker 1: many companies will will talk about this in in in UH.
24:47
Speaker 1: In general terms, they're they're basically companies and they're being
24:50
Speaker 1: attacked increasingly by nation states. These are like the security
24:54
Speaker 1: agencies of countries that have a huge amount of resources
24:57
Speaker 1: many in many cases that they're they're asked in themselves
25:00
Speaker 1: why their own governments in the US government and others
25:03
Speaker 1: are doing more to protect them, um, and and so
25:06
Speaker 1: it creates a very weird imbalance where if you're a
25:09
Speaker 1: company and you're being hit by the intelligence agencies of
25:11
Speaker 1: another state, you just don't have the same resources that
25:14
Speaker 1: they do. Uh what I get your thoughts. I know
25:16
Speaker 1: you're not in Hamburg, but the amount of electronics, surveillance
25:21
Speaker 1: and countermeasures that are being deployed when you have twenty
25:25
Speaker 1: heads of state has got to be enormous. Yeah, it
25:29
Speaker 1: is enormous. And one of one of the things we've
25:31
Speaker 1: learned from things like the the Snowden leaks and others
25:34
Speaker 1: is that there's a lot of UH efforts to tap
25:39
Speaker 1: into the communications of each of those leaders as they're
25:42
Speaker 1: discussing with their own teams what to say and how
25:45
Speaker 1: to say it. Um. There's some pretty UH interesting and
25:48
Speaker 1: quite colorful examples of how spy agencies do that. Um,
25:53
Speaker 1: but it's it's I mean, I think that that's just
25:55
Speaker 1: part of the spy trade. They're they're basically looking for
25:58
Speaker 1: to read the cards of the other members of the
26:01
Speaker 1: of the of the T twenty that they're going to
26:03
Speaker 1: be meeting with. And and this is like one of
26:05
Speaker 1: the things that you do is you just use your
26:07
Speaker 1: spy agencies to do that. Right. Well, we know that
26:09
Speaker 1: that had already been a topic of conversation because of
26:13
Speaker 1: the hack by US intelligence or the eavesdropping of US
26:16
Speaker 1: intelligence officials on Angela Merkel in the past. I want
26:21
Speaker 1: to thank you very much for being with us. Michael
26:23
Speaker 1: Riley is our cybersecurity reporter for Bloomberg News. Thanks for
26:30
Speaker 1: listening to the Bloomberg P and L podcast. You can
26:33
Speaker 1: subscribe and listen to interviews at Apple Podcasts, SoundCloud, or
26:37
Speaker 1: whatever podcast platform you prefer. I'm pim Fox. I'm on
26:41
Speaker 1: Twitter at pim Fox. I'm on Twitter at Lisa Abramo
26:44
Speaker 1: wits one. Before the podcast, you can always catch us
26:47
Speaker 1: worldwide on Bloomberg Radio.