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Bad Policies are Greasing the Wheels for a Global Recession · Stephanomics

0:00
Speaker 1: The total amount that would be wiped out by the
0:03
Speaker 1: slow down of the world economy is going to be
0:07
Speaker 1: between now and six four trillion dollars. This is the
0:11
Speaker 1: size of Germany g d P gone. And when we
0:17
Speaker 1: when we look at the picture, we are asking what
0:20
Speaker 1: are the drivers and of course what can be done?
0:27
Speaker 1: Hello Stephanomics, here the podcast that brings you the global
0:31
Speaker 1: economy this week from Washington, d C. For the meetings
0:34
Speaker 1: of the World Bank and International Monetary Fund. Though as
0:37
Speaker 1: you'll here, I have an entirely escaped the crisis battering
0:41
Speaker 1: the UK. It's the first of these meetings they've been
0:44
Speaker 1: able to hold a hundred percent in person since before COVID,
0:48
Speaker 1: which might have added an upbeat tone to the proceedings
0:51
Speaker 1: if the news from the world economy hadn't been so bleak.
0:55
Speaker 1: The I m S Managing director Chris d'lina Gorgieva kicked
0:57
Speaker 1: things off with that morning that Shion would blow a
1:00
Speaker 1: Germany sized hole in the global economy by six and
1:04
Speaker 1: that rather set the tone. It's inflation that's causing the trouble.
1:12
Speaker 1: Inflation and central banks efforts to control it, which have
1:17
Speaker 1: produced the largest, most synchronized increase in interest rates the
1:21
Speaker 1: world seen in thirty years. In a few minutes, we
1:24
Speaker 1: have a report from Maria Eloisa Caburo in Brazil on
1:28
Speaker 1: the way high inflations infecting daily life in Latin America
1:32
Speaker 1: and upending the region's politics. We also go to Beijing
1:36
Speaker 1: to find out exactly what's involved in covering the Chinese
1:40
Speaker 1: Communist Party Congress happening next week, and we're told hugely
1:45
Speaker 1: important for cementing the rule of President shi Jing Ping.
1:48
Speaker 1: Theo's Bloomberg correspondent Callum Murphy explained working out exactly what's
1:53
Speaker 1: happened is going to be a challenge. But first, here's
1:57
Speaker 1: some of a conversation I had with my friend, the
1:59
Speaker 1: Financial Time senior economic commentator, Martin Wolf. The event was
2:03
Speaker 1: hosted by the Institute for International Finance and moderated by
2:07
Speaker 1: its president and chief executive, Tim Adams. He started by
2:10
Speaker 1: asking us what on earth was happening in the UK? Martin,
2:15
Speaker 1: tell me about your new prime minister. What's she going
2:16
Speaker 1: to do well? In my I think my last column
2:20
Speaker 1: them ended up. These people are mad, bad and dangerous.
2:24
Speaker 1: They have to go. This was a serious understatement. So oh,
2:31
Speaker 1: I didn't expect them to know. I just want his
2:33
Speaker 1: treat to note that I called it. We have a
2:38
Speaker 1: government that came in with a plan. Uh plan is
2:43
Speaker 1: far too fancy a word, a a manifesto, agenda of
2:51
Speaker 1: how Britain will be fixed forever, essentially of an idealized Thatcher,
3:00
Speaker 1: without the fact that that was a great politician, which
3:02
Speaker 1: is quite an important distinction, or in American context, Reagan Reaganism,
3:09
Speaker 1: and he was also a great politician, which these people
3:12
Speaker 1: certainly aren't. I'm not sure that even now understand it.
3:15
Speaker 1: I'm very happy to talk about economics and why it's
3:18
Speaker 1: all problematic and what on earth does the Bank of
3:20
Speaker 1: England do when everybody can see that the government is
3:24
Speaker 1: run by lunatics. But the really interesting question is how
3:28
Speaker 1: our group finished here, is how this happened, And I
3:32
Speaker 1: think the answer to that is, in extreme form, we
3:37
Speaker 1: are going through a political crisis, crisis crisis in the
3:43
Speaker 1: political institutional system, which we are also seeing in different
3:47
Speaker 1: ways in some other G seven nations, not all, and
3:52
Speaker 1: and this has become increasingly obvious over the last at
3:57
Speaker 1: least twelve, fifteen, twenty years that spends when you start
4:01
Speaker 1: the COCA every party coalition doesn't work anymore. And in
4:06
Speaker 1: this case a really rather small part of the Conservative
4:10
Speaker 1: Party coalition from an electoral point of view, but a
4:14
Speaker 1: large part of the membership, which is tiny now really tiny,
4:19
Speaker 1: chose a Prime Minister who represents at most perhaps a
4:26
Speaker 1: third depends on how you look at it of them
4:29
Speaker 1: of the views of the members of Parliament. And that's
4:33
Speaker 1: what we're living with. Let's give it a little bit
4:35
Speaker 1: of growth. There is an ambition to have capital formation
4:39
Speaker 1: focused on supply side growth. When you say there are
4:42
Speaker 1: some elements there that are worth pursuing. It is true
4:45
Speaker 1: that the UK has lagged behind other countries since the
4:49
Speaker 1: global financial crisis in terms of what looks like it's
4:51
Speaker 1: sort of potential growth rate. I mean, none of them
4:53
Speaker 1: are looking great, but the UK was definitely had taken
4:56
Speaker 1: a step down post global financial crisis. And some of
4:59
Speaker 1: the idea is in the quasi quatngs growth collection of
5:04
Speaker 1: ideas to maybe not plan were perfectly good, but they
5:08
Speaker 1: involved some difficult things like planning were formed to really
5:11
Speaker 1: insist that houses get built or make it easier for
5:14
Speaker 1: big infrastructure programs to get built. One problem with some
5:18
Speaker 1: of our agenda was that a lot of the natural
5:21
Speaker 1: enemies are conservative supporters, the people who don't want big
5:26
Speaker 1: housing estates built in their backyard. And another was that
5:30
Speaker 1: this we've already gone quite far down this road with
5:32
Speaker 1: Margaret Thatcher to the to the extent that it was
5:34
Speaker 1: a deregulatory agenda or low tax agenda, we'd already gone
5:37
Speaker 1: further than most other countries. There are diminishing returns. The
5:41
Speaker 1: major issue is a program like that. We have not
5:44
Speaker 1: there's not been centered around tax cuts in the past
5:47
Speaker 1: that were unfunded. And to make that kind of gamble
5:52
Speaker 1: at a time when the markets were quite likely to punish,
5:55
Speaker 1: punish that in a way that would be completely self defeating,
5:59
Speaker 1: I think was was the really foolish thing. I mean,
6:02
Speaker 1: if you want growth, you don't tank the currency and
6:06
Speaker 1: lead to a further run up in borrowing costs that's
6:08
Speaker 1: actually going to cost you more in the long run
6:10
Speaker 1: and probably hurt growth. Oh and by the way, in
6:12
Speaker 1: order to reassure about the long term fiscal strategy, you're
6:16
Speaker 1: looking at around forty to fifty billion pounds more squeeze
6:21
Speaker 1: more austerity than George Osborne did. And a lot of
6:26
Speaker 1: that the easy things to do, like cutting public investments
6:29
Speaker 1: that will hurt growth much more than if these tax
6:31
Speaker 1: cuts would ever help it. You can't do rea economics
6:34
Speaker 1: in the UK period, but you surely can't do it
6:37
Speaker 1: in the middle of a world crisis. I mean, come on.
6:40
Speaker 1: But the other question you asked is would it work economically,
6:44
Speaker 1: And as I've tried to explain them and go through it,
6:46
Speaker 1: the answer is no. The we don't have a very
6:52
Speaker 1: deep problem of personal incentives. Are tax ratio is by
6:59
Speaker 1: the standards of most of our peers pretty low. We're
7:01
Speaker 1: not the US and we will never will be. Um.
7:04
Speaker 1: We have incredibly low rates of corporate investment. But the
7:10
Speaker 1: tax on corporations that they're going to introduce is the
7:13
Speaker 1: one that was introduced by George Osborne, which did nothing
7:17
Speaker 1: for corporate investment, which, by the way, I said at
7:19
Speaker 1: the time, if I think wouldn't it's economically frivolous, to
7:26
Speaker 1: put it bluntly. So Andrew is in a tough spot.
7:29
Speaker 1: He's got a fine inflation at the same time, is
7:31
Speaker 1: in the guilt market today and maybe extending for weeks
7:36
Speaker 1: to come. The Bank of England's in a tough spot.
7:39
Speaker 1: How does he navigate this? Um? Well, I think what
7:45
Speaker 1: he has to do is use every institutional means he has,
7:52
Speaker 1: and it may or may not be enough to cajole
7:56
Speaker 1: behind the scenes the Chancellor and the Prime Minister into
8:02
Speaker 1: putting forward a fiscal plan which looks are sustainable. If
8:08
Speaker 1: they have a fiscal plan which looks sustainable, then the
8:14
Speaker 1: pressure on sterling and on the guilt market. It's clearly
8:18
Speaker 1: going to have much higher interest rates than before, but
8:20
Speaker 1: that was going to happen anyway for various reasons, and
8:23
Speaker 1: that will affect the public announces, So that's important. But
8:27
Speaker 1: the Central Bank cannot maintain stability in the bond market
8:30
Speaker 1: for a government that has a fiscal plan which everybody
8:33
Speaker 1: regards us crazy. This is that now we get into
8:36
Speaker 1: a problem that is going to be faced by other places,
8:38
Speaker 1: not least the ECB when it thinks about Italy. We're
8:41
Speaker 1: going to have a dynamic with a lot of countries
8:43
Speaker 1: about how much do you let investors make a new
8:46
Speaker 1: judgment about the long term sustainability of debt without that
8:51
Speaker 1: is that is harsh? Um, how do you let that
8:55
Speaker 1: happen whilst but avoid sort of great a risk. The
9:01
Speaker 1: CBS problem is going to in my view, but I've
9:04
Speaker 1: tried not to write about going to be even bigger,
9:07
Speaker 1: and I segue into Europe, and then I'm gonna turn
9:09
Speaker 1: to the audience. You and I Remunich a few weeks
9:10
Speaker 1: ago for a conference. The outlook for Europe is pretty bleak,
9:16
Speaker 1: given energy prices, potentially energy rationing, obviously a war on
9:21
Speaker 1: the eastern periphery of the continent. Uh It's tough times
9:25
Speaker 1: have had rates are going to have to go up
9:27
Speaker 1: as well as as we've seen. How do you see Europe?
9:30
Speaker 1: And throw awa In politics? We have had elections in Sweden,
9:33
Speaker 1: We've had elections in Italy which have turned decidedly to
9:36
Speaker 1: the right. Although we can debate about how right it
9:38
Speaker 1: truly is, some of it is is less um, less
9:42
Speaker 1: problematic than that. Maybe the headlines, how do you see
9:45
Speaker 1: Europe given that we were just in Germany, Well, let's
9:48
Speaker 1: go for the context and then think about the policy choices,
9:52
Speaker 1: particularly central bank, we're going to have. They're going to
9:55
Speaker 1: have a deep recession and it will uh um. And
10:01
Speaker 1: I don't think there's much they can do about it,
10:02
Speaker 1: because it's a real shock and they have obviously done
10:06
Speaker 1: very very well, I think, probably as well as they
10:08
Speaker 1: can to try and manage the gas situation, and nobody
10:10
Speaker 1: knows how the well eyesactually don't know how this will
10:12
Speaker 1: play out. But given what's happened to prices, share availabilities,
10:17
Speaker 1: the industrial impact and so forth, it's going to be severe.
10:20
Speaker 1: It's also going to be differentiated. This will be a
10:24
Speaker 1: crisis in which Germany will be really seriously it it's
10:27
Speaker 1: it's in the cockpit, as it were. Italy is also
10:31
Speaker 1: very vulnerable because of its dependence on gas, Russian gas,
10:37
Speaker 1: but it's worked quite hard to get to other supplies.
10:39
Speaker 1: But it's clearly there's a big, huge, real shock, and
10:43
Speaker 1: that follows the real shock of COVID, so that two
10:45
Speaker 1: massive real shocks. That's the first point. The second point
10:49
Speaker 1: is at the EU level, I would say, and include
10:52
Speaker 1: the ECB here overall, the political response to these crises,
10:56
Speaker 1: given that it has been so far remarkably good, by
11:00
Speaker 1: and large, they managed this as well as you could
11:03
Speaker 1: really imagined. Third point, however, is that the real tensions
11:09
Speaker 1: I think are to come, and and they will come
11:12
Speaker 1: in two directions, people and markets. The people level is
11:20
Speaker 1: will people be willing to accept the policies on Ukraine
11:26
Speaker 1: in the context of this, And the other point is
11:32
Speaker 1: the CBS tank needs you say, there is going to
11:35
Speaker 1: be immense political pressure, political pressure coming from the economics.
11:41
Speaker 1: How is the new Italian government going to fare? And
11:46
Speaker 1: is the ECB going to be able to stabilize those
11:48
Speaker 1: debt markets? So there are huge questions about the future.
11:52
Speaker 1: You will be excited to hear that I don't completely
11:54
Speaker 1: agree with one of them. Normally I would match him,
11:57
Speaker 1: you know, step for step down the dark alley of
12:00
Speaker 1: pessimism and glue might be there. But although governments have
12:08
Speaker 1: not been good at some things, these storage levels are
12:11
Speaker 1: incredibly high. They have actually brought a lot of the
12:14
Speaker 1: gas imports, all energy imports onstream faster than many people
12:17
Speaker 1: expected a few months ago. Um, we are energy sort
12:24
Speaker 1: of consultancy bit of Bloomberg. Beneft actually estimates that this
12:29
Speaker 1: that the demand for energy for gas going into this
12:33
Speaker 1: winter is running about seventeen percent below the five year average.
12:38
Speaker 1: So you've seen quite a big demand response despite I
12:41
Speaker 1: might say government's actually cushioning way too much of the
12:45
Speaker 1: blow and not allowing perhaps enough of that to happen
12:48
Speaker 1: with these massive fiscal programs of France and Germany. If
12:52
Speaker 1: you have a reasonably mild winter that could actually mean
12:56
Speaker 1: that prices fall quite dramatically, and then you get a
12:59
Speaker 1: positive of reinforcing effect where that Europe is not having
13:04
Speaker 1: to spend quite so much. Suddenly importing gas we think
13:07
Speaker 1: at the moment it would have to be about five
13:08
Speaker 1: percent of GDP, and that's one of the things that
13:11
Speaker 1: squeezes the economy, pushes it into recession. So I do
13:14
Speaker 1: think there is a possibility that in a few months
13:17
Speaker 1: time we will sort of say, well, Europe's got too
13:20
Speaker 1: much gas? How did that happen? It isn't our sort
13:22
Speaker 1: of main scenario, but I think this is probably the
13:25
Speaker 1: one area where I think the risks are potentially on
13:27
Speaker 1: the upside. Where I agree with you is I think
13:30
Speaker 1: there's the seeds of real solidarity issues. So the German plan,
13:34
Speaker 1: they're not going to spend to underbillion. They always say
13:35
Speaker 1: they're going to spend a lot of money, and then
13:37
Speaker 1: in a sort of Germanic way, they find a way
13:39
Speaker 1: to spend much less. We think it will be less
13:42
Speaker 1: than that, But you are right that it sends the
13:44
Speaker 1: French plan. The German plan sends a signal to send
13:48
Speaker 1: released in Europe that they're willing to just spend all
13:51
Speaker 1: It takes to cushion their households, and the countries that
13:54
Speaker 1: are most affected that can't do that are sort of
13:59
Speaker 1: left on the sideline. In Europe is important and if
14:01
Speaker 1: you get a very hard winter, the question of sharing
14:05
Speaker 1: of the available stock of gas becomes very critical. And
14:08
Speaker 1: I think we don't have an answer to that, but
14:11
Speaker 1: there is a possibility things will be back. Let's turn
14:13
Speaker 1: to the audience. This gentleman right here, Thank you, Matthew
14:16
Speaker 1: saw I f cum according to the sentatis are failing
14:21
Speaker 1: quote in Bloomberg this past summer, supply factors account for
14:25
Speaker 1: more than half of the current level of inflation. Housing
14:28
Speaker 1: it painted because we hadn't invested enough in it. Supply
14:31
Speaker 1: change are stretched because we hadn't invested enough in on
14:35
Speaker 1: shore manufacturing energy. Yeah, there's a war to serve that
14:41
Speaker 1: we need to invest more. Raising interest rates doesn't exactly
14:44
Speaker 1: encourage an investment, in fact makes everything more expensive. So
14:49
Speaker 1: do we actually have a death sparreal of inflation because
14:51
Speaker 1: cental banks are using a wrong instrument for the job.
14:55
Speaker 1: My view is a fairly simple one. To create a
14:57
Speaker 1: lot of inflation, you need a lot of demand RelA
15:00
Speaker 1: to supply, so uh, sort of pretty basic So if
15:05
Speaker 1: supply was more constrained than we realized when the the boom,
15:13
Speaker 1: when the recovery from COVID occurred, that was an argument
15:18
Speaker 1: for having a greater demand contraction, not less because it
15:25
Speaker 1: was constrained. So the basic logic of this just makes
15:29
Speaker 1: no sense to me. That would be a case for
15:32
Speaker 1: saying even more strongly what I thought that once it
15:37
Speaker 1: was clear that we're going to have a very very
15:38
Speaker 1: strong recovery, the unbelievably easy monetary policy of which I
15:44
Speaker 1: wrote my first call, I'm worrying about inflation in made twenty,
15:48
Speaker 1: combined with his massive fiscal expansion, was bound to be inflationary.
15:52
Speaker 1: So once that stops and is halted, we would expect
15:56
Speaker 1: inflation to fall a lot because those temper three factors go.
16:00
Speaker 1: The energy scene is not temporary as far as I
16:03
Speaker 1: can see. Well, if it's a permanent supply constraint on energy,
16:06
Speaker 1: then that part of the story of what you have
16:08
Speaker 1: to adjust to. But the problem is now, if you
16:14
Speaker 1: look at inflation, core inflation is really quite high. It's
16:17
Speaker 1: not just headline for the which is basically food, energy,
16:22
Speaker 1: these elements, and core inflation is high because we've got
16:25
Speaker 1: an overstressed. We've got an overstressed supplying situation worldwide. Demand
16:33
Speaker 1: therefore has to be contained somewhat ideally in ways that
16:38
Speaker 1: would allow investment to rise, which is why, coming back
16:43
Speaker 1: to our earlier discussion, the fiscal monetary policy mix that
16:47
Speaker 1: we are proposing in the UK is a gain nuts. Unfortunately,
16:53
Speaker 1: my watch tells me it's time we've got to go.
16:55
Speaker 1: Martin's new book, The Crisis Democratic Capitalism, will be out
16:59
Speaker 1: January January m h. There's no subtler, no surer means
17:10
Speaker 1: of overturning the existing basis of society than to debauch
17:14
Speaker 1: the currency, so wrote John Maynard Canes about inflation in
17:20
Speaker 1: supposedly quoting Lenin in Latin America. Double digit inflation today
17:26
Speaker 1: has started to undermine the rule of law in some countries,
17:30
Speaker 1: and the argument over who's to blame for rising prices
17:33
Speaker 1: has hit the streets. Here's Brazil economy reporter Maria Eloisa
17:38
Speaker 1: Capro Mike at oil Way. Well, wait, eggs are the worst.
17:44
Speaker 1: You have to be reached to buy them nowadays, a
17:47
Speaker 1: millionaire even, that's my A shopper in the Columbia city
17:52
Speaker 1: of Rio Ata, near the border of Venezuela, it's eggs, cheese.
17:56
Speaker 1: I honestly don't see anything that's cheap in my consumption. Ambascue. Yeah,
18:02
Speaker 1: she's three six and takes care of her father, and
18:06
Speaker 1: she says that in order to do that, she will
18:08
Speaker 1: need two million pastles just to barely get by on
18:12
Speaker 1: a regular month. That's about four hundred U s dollars.
18:16
Speaker 1: Eggs used to cost her five cents, but now Jave
18:20
Speaker 1: doubling price, and eggs are just really one in a
18:24
Speaker 1: number of basic food items that have gotten more expensive
18:28
Speaker 1: in the last year. Milk went up thirty eight percent
18:32
Speaker 1: and plantains sixty It's not just Colombia, It's happening all
18:40
Speaker 1: across Latin America. High inflation is widening the gap between
18:45
Speaker 1: the reach and the poor in the most unequal region
18:48
Speaker 1: in the world. At least one third of the population
18:51
Speaker 1: in Latin America we'll meet the criteria for being poor,
18:55
Speaker 1: and if some estimates are true, they will face an
18:59
Speaker 1: inflation rate that is a full percentage point higher than
19:02
Speaker 1: that of the rich. To paint from inflation is appending
19:07
Speaker 1: politics in this region of the world, and politicians who
19:11
Speaker 1: want sustain power are raising to find ways to help
19:15
Speaker 1: their constituents pay for the gas and groceries. In Colombia,
19:21
Speaker 1: Maria ellis that woman who struggles to buy X. She
19:25
Speaker 1: voted for Gustavo Petro, who got elected this year as
19:28
Speaker 1: the first left wing leader in the country's history. She
19:32
Speaker 1: believed things would change under Petro and welfare benefits would increase,
19:37
Speaker 1: but inflation remains her main concern. And that's because inflation
19:42
Speaker 1: is above twelve percent for the poor and the vulnerable,
19:46
Speaker 1: but it remains at single digits for the rich. Their
19:50
Speaker 1: vulnerable spend more of their consumption budget in food staples
19:55
Speaker 1: just at that time when inflation is driven by food,
19:58
Speaker 1: so that makes inflation higher for them. In Brazil, inflation
20:03
Speaker 1: for the poorest he had two digits months before he
20:06
Speaker 1: did so for the rich. Now, consumer prices are falling
20:11
Speaker 1: for everyone, but mostly on the back of recent tax cuts.
20:15
Speaker 1: Us un Nestor levision, head economists for Latin America at
20:19
Speaker 1: City Group. This round of inflation is even more handful
20:23
Speaker 1: for poverty levels and income distribution because it's affecting food
20:27
Speaker 1: prices and in the initial stages energy prices such as
20:31
Speaker 1: gasoline and electricity, so the day to day lives of
20:34
Speaker 1: consumers is more difficult. Petro's government might now need to
20:39
Speaker 1: cut long standing self service that helped lower gasoline prices
20:44
Speaker 1: in order to free up money to make higher welfare
20:47
Speaker 1: payments to the poor, and with that his risking products
20:51
Speaker 1: from drivers, trackers and many of his own borders. How
20:56
Speaker 1: to ease the pain from inflation without breaking the anc
21:00
Speaker 1: is a lement that many other governments in the region face,
21:04
Speaker 1: and it's grabbing the attention of world leaders. Protesters block
21:09
Speaker 1: high winds in Panama, Strikers in Peu demanded state health
21:13
Speaker 1: for the poor. Riots broken equal or oversawing costs of living.
21:18
Speaker 1: Peu and Chile opted for radical change of government as
21:22
Speaker 1: the pandemic students long standing inequalities. Here's revision again. If
21:28
Speaker 1: we consider that there was already discontent in Latin America
21:33
Speaker 1: since two thousand nineteen and before, and we put on
21:35
Speaker 1: top of that the worst economic crisis in the Depression
21:39
Speaker 1: and a very unequal health crisis with COVID nineteen, the
21:43
Speaker 1: probabilities of unrest are clearly increasing. President andress Manuel Lopez
21:50
Speaker 1: of Radar has managed to keep his approving ratings above
21:55
Speaker 1: despite high inflation, and that's because his convinced borders that
22:00
Speaker 1: things would be worse without him. The key might very
22:04
Speaker 1: well be at twenty two million package of gasoline subsidies
22:08
Speaker 1: and social programs that reached many voters, but in parts
22:13
Speaker 1: of Mexico like the middle class and industrial areas, his
22:17
Speaker 1: enchantment is well enough for now. Mexican hardware store owner
22:24
Speaker 1: Causes Avala remains undecided, but my stick with Lopezo Rador,
22:29
Speaker 1: who's also known by his initials Ect. We talked about
22:38
Speaker 1: how expensive things are. Everything is going up. Vegetables, chicken, meat,
22:43
Speaker 1: it is really expensive and that takes a towel in
22:46
Speaker 1: my budget. It's too expensive. Milk, bread, it's really expensive.
22:53
Speaker 1: Savalis a widower and has his daughter and grand daughter
22:56
Speaker 1: to take care of, and though he is stressed all politicians,
23:01
Speaker 1: he still says that Amlo wanted to change things. Next
23:06
Speaker 1: year the elections for governing his state, an Amblos party
23:10
Speaker 1: might have a voter in Savanah. We complain about how
23:15
Speaker 1: expensive things are, but it's only that and why I
23:19
Speaker 1: don't really know. I don't really know to tell you
23:22
Speaker 1: the truth. But everything is more expensive now in Brazil.
23:27
Speaker 1: In fusion is one of the main things in the
23:30
Speaker 1: presidential rates. Here's an ad from former president Listen Silva,
23:36
Speaker 1: who's trying to secure his comeback to the presidency, that
23:43
Speaker 1: Fili under Lula, families were able to buy much cheaper
23:48
Speaker 1: food staples, but under Boso minimum wages barely afford the
23:52
Speaker 1: basic consumption basket. Lula is trying to remind borders that
23:57
Speaker 1: their purchasing power was higher under his presidency. It could
24:02
Speaker 1: be working. On the first round of the presidential election,
24:06
Speaker 1: he got forty eight percent of the votes and he's
24:09
Speaker 1: headed to a runoff as the favorite candidate. The incumbent
24:14
Speaker 1: Jaibelsonato had a later wakened too inflation problem. I'm back.
24:18
Speaker 1: In July, he pushed for a multivillion social program that
24:22
Speaker 1: included gasoline tact cuts and boosted paychecks to the poor.
24:27
Speaker 1: Bosonato plans to keep throwing money at the problem. He's
24:31
Speaker 1: promising more social spending to improve his standing ahead of
24:35
Speaker 1: the runoff. As politicians from Mexico to Chile worked to
24:40
Speaker 1: prevent unrest among their citizens, Latin America is proving how
24:46
Speaker 1: high prices of eggs, cheese, and gasoline can distrut politics.
24:52
Speaker 1: For Bloomber News from Brazilia, this is Mariello. Now there's
25:10
Speaker 1: an event starting next week in Beijing, which is almost
25:13
Speaker 1: certainly going to be more important for the future of
25:15
Speaker 1: the global economy than this week's i am f from
25:17
Speaker 1: World Bank meetings, But it's also a much tougher gig
25:21
Speaker 1: for journalists to cover, especially foreign ones. The meeting in
25:25
Speaker 1: question is the Chinese Communist Party Congress, which happens only
25:29
Speaker 1: once every five years, and this year is being built
25:32
Speaker 1: as a critical test of President Chi Jingping's hold on
25:35
Speaker 1: the party and the future direction of China. Well Bloomberg
25:40
Speaker 1: Government reporter Colin Murphy is one of those benighted foreign
25:44
Speaker 1: journalists in Beijing who will be trying to cover the congress. Column.
25:47
Speaker 1: Thanks so much for for coming on Stephanomics your debut.
25:53
Speaker 1: This is a party congress, now, obviously. I mean in
25:57
Speaker 1: the UK we've just had these annual conference is of
26:00
Speaker 1: the major political parties. In fact, we had to report
26:02
Speaker 1: the other day from the Conservative miserable Conservative Party one.
26:06
Speaker 1: And I guess if you had those words in the US,
26:09
Speaker 1: you might think of the party conventions that you have
26:13
Speaker 1: in the summer before a presidential election. But this Chinese
26:17
Speaker 1: Party Congress isn't anything like any of those, is it
26:20
Speaker 1: not at all? It's first of all once every five years,
26:24
Speaker 1: and the scale is quite impressive. There's more than like
26:28
Speaker 1: two thousand delegates will descend on the Great Hall of
26:31
Speaker 1: the People in Beijing, and basically it's it's a lot
26:35
Speaker 1: of theater, it's a lot of you know, reinforcing how
26:40
Speaker 1: China's Communist Party has succeeded over the past five years
26:44
Speaker 1: and why it is necessary that China maintains the Communist
26:49
Speaker 1: Party going forward. So it will be a lot of
26:52
Speaker 1: looking back on achievements and also pointing towards the future.
26:56
Speaker 1: Just to sort of think about it from your perspective,
26:59
Speaker 1: what will you be able to cover and how challenging
27:02
Speaker 1: do you think it will be. Yeah, it's it's a
27:04
Speaker 1: little bit of a sort of paradox in a way
27:06
Speaker 1: because you know, this is a major milestone and in
27:10
Speaker 1: terms of reporting assignment in China, it's one of the events.
27:15
Speaker 1: But even though this is the case, the reality is
27:18
Speaker 1: that our access to the event is very limited. Regardless
27:23
Speaker 1: of whether we're they're in person or not. Access to
27:27
Speaker 1: the actual delegates and to the leaders is you know, minimal,
27:31
Speaker 1: in fact non existent, I would say, but I would say,
27:34
Speaker 1: you know, access is is not just an issue for
27:37
Speaker 1: the Congress itself. It's also an issue generally being a
27:42
Speaker 1: foreign reporter in China, and it's one that's got increasingly
27:46
Speaker 1: harder and more more constrained in the past two to
27:50
Speaker 1: three years. So for example, you know, speaking to officials
27:55
Speaker 1: or even academics at universities, which for reporters, you know,
28:00
Speaker 1: it tends to be kind of a low hanging food.
28:02
Speaker 1: If you want to get an expert quote, you ring
28:04
Speaker 1: up a university and and and they you know, talk
28:06
Speaker 1: to an expert. Even something like that has become increasingly difficult.
28:09
Speaker 1: In the end, if you're lucky, they will come back
28:12
Speaker 1: to you and say no, we can do the interview.
28:15
Speaker 1: So so that's that's definitely an aspect. And of course,
28:18
Speaker 1: you know, this also extends to the broader Chinese society
28:21
Speaker 1: because there has been this pronounced demonization of foreign journalists
28:26
Speaker 1: in China through the state media propaganda. When we go
28:29
Speaker 1: out in the field, it can become a security issue.
28:32
Speaker 1: People can get um, you know, quite sort of aggressive
28:37
Speaker 1: in trying to stop people from reporting. So just going
28:41
Speaker 1: back to the convention, I mean, I'll be watching video
28:44
Speaker 1: of that and then or you're on the sidelines trying
28:46
Speaker 1: to talk to people. I'm just trying to get a
28:48
Speaker 1: sense of how you physically report it. So it will
28:52
Speaker 1: depend on the event sort of. The main opening event
28:56
Speaker 1: will take place on October sixte and that will be
28:59
Speaker 1: in the Rate Hall of the People, which of course
29:02
Speaker 1: is this massive structure in the center of Beijing just
29:05
Speaker 1: off Tianamen Square. Most likely what will happen is that
29:09
Speaker 1: we will be sent into quarantine a couple of days
29:12
Speaker 1: in advance to a hotel. Uh. Then we will be
29:16
Speaker 1: transported by a bus from the hotel to Tianamen Square.
29:20
Speaker 1: They'll bring us up to one of the higher galleries
29:23
Speaker 1: and there'll be rows upon rows of delegates and probably
29:27
Speaker 1: up on the front there will be a dias with
29:30
Speaker 1: you know, the leaders. And at that event, President Seating
29:34
Speaker 1: Pain will will give a work report, a long speech
29:38
Speaker 1: which can go on for anything up to three hours um.
29:42
Speaker 1: And I guess what I'll be looking out for in
29:44
Speaker 1: that capacity obviously will be following the speech as closely
29:47
Speaker 1: as possible, but also looking for any sort of um,
29:50
Speaker 1: you know, color that we might see on the day.
29:52
Speaker 1: What's the reaction from the audience, what's the degree of applause,
29:57
Speaker 1: which which part of the speech got more attend mention. Uh,
30:01
Speaker 1: you know, was there music playing, so on and so forth.
30:04
Speaker 1: So basically just trying to capture at that moment there
30:07
Speaker 1: might be some hiccup which you cannot rely on the
30:11
Speaker 1: TV feed for so I would say, you know, depending
30:14
Speaker 1: on the reporter that you ask. I personally am quite
30:18
Speaker 1: excited about sitting through three hours. I do think it's
30:21
Speaker 1: a historic event. You're really selling anyone who was wondering
30:24
Speaker 1: whether or not to be a foreign correspondent in Beijing. Gosh,
30:27
Speaker 1: you're making it sounds so good. Yeah, it is a
30:32
Speaker 1: little bit. It's a bit sad in the way that,
30:34
Speaker 1: you know, the access on the ground, which is the
30:36
Speaker 1: whole purpose of being a foreign correspondent, is it's curtailed.
30:40
Speaker 1: But you cannot replace the fact that we are on
30:44
Speaker 1: the ground in Beijing, that we we do have access
30:46
Speaker 1: to at least the pageantry, but also talking to people
30:49
Speaker 1: who live in the city and listening to the conversations
30:53
Speaker 1: around the congress, and much of that is actually related
30:56
Speaker 1: to COVID these days. And we do know, we I mean,
30:59
Speaker 1: we do know that it has hurt hurt the economy,
31:01
Speaker 1: and I'm interested. Um, as you say, people waiting to
31:06
Speaker 1: see once this congress is over, whether the government's going
31:10
Speaker 1: to be willing to start living with a bit of COVID.
31:13
Speaker 1: And there's been some talk online about discontent with the
31:17
Speaker 1: policy perculating up through social media and accidents of involving
31:23
Speaker 1: bus loads of people being taken into quarantine and then
31:26
Speaker 1: being complaints about that. I mean, would you say that
31:28
Speaker 1: there's been an uptick in in sort of visible opposition,
31:31
Speaker 1: you know, by by the standards of communist controlled China, definitely, um,
31:36
Speaker 1: I would say that the more and more people are
31:38
Speaker 1: expressing dissatisfaction with COVID zero, there is definitely more voices
31:45
Speaker 1: coming out complaining about COVID. We only see these sort
31:49
Speaker 1: of protests in in in pockets at a very extreme moment.
31:52
Speaker 1: So for example, during the two months lockdown in Shanghai,
31:56
Speaker 1: we had a couple of protests, and then there was,
32:08
Speaker 1: of course, as you mentioned, that bus tragedy where a
32:12
Speaker 1: couple of dozen of people were killed being transported to
32:15
Speaker 1: a quarantine center. And all of these acts sort of
32:18
Speaker 1: like flashpoints where you have a bubbling up of of
32:22
Speaker 1: sentiment and people become quite vocal or expressive on social media,
32:26
Speaker 1: but they tend to die down. So all said, the
32:29
Speaker 1: answer is yes, there's an uptick in frustration with COVID.
32:34
Speaker 1: Whether that would influence any government decision is the next question,
32:38
Speaker 1: and it's unlikely that there will be any major changes.
32:42
Speaker 1: What we might see is some sort of incremental uh
32:47
Speaker 1: you know, small measures being relaxed here and there. But overall,
32:51
Speaker 1: the direction of COVID zero still looks like it's it's
32:54
Speaker 1: going to be in place for some time to come.
32:57
Speaker 1: People who have heard about this Congress will have heard
32:59
Speaker 1: that it's very important for s Jing Ping seal his
33:02
Speaker 1: position potentially as president for life, certainly for a for
33:06
Speaker 1: a third term. What should we watch for first signs
33:11
Speaker 1: that it's been more or less successful for him? Relatively? Right?
33:15
Speaker 1: Um So, yes, I would say that what I'll be
33:19
Speaker 1: looking out for anyway in the coming weeks will be
33:22
Speaker 1: the combination of the Politburea Standing Committee. Right, so, this
33:28
Speaker 1: is the top group of leaders. We will be looking
33:30
Speaker 1: very very closely to see who exactly all of them
33:34
Speaker 1: wearing the same suits, probably and probably all men as well,
33:38
Speaker 1: I will add, um So, that will happen roughly around
33:42
Speaker 1: one week after the opening ceremony. We will they will
33:46
Speaker 1: be paraded out and they'll come out in order, and
33:49
Speaker 1: then we will all be jumping on that because we
33:51
Speaker 1: want to know how many people on that Standing committee
33:56
Speaker 1: have an association which she are considered to be part
34:01
Speaker 1: of his, his, his, his group. We'll also be looking
34:04
Speaker 1: at like what sort of backgrounds they have, what expertise
34:07
Speaker 1: they have, are they more ideological or are the technocrats
34:10
Speaker 1: and so on and support. So that's basically the key thing,
34:14
Speaker 1: I would say, But we'll also be looking for things
34:16
Speaker 1: that sort of indicate either a consolidation or an elevation
34:21
Speaker 1: of she's stature. And one of the things might be
34:24
Speaker 1: like what sort of titles he might get in the process.
34:28
Speaker 1: So one of the titles might be People's Leader, which
34:31
Speaker 1: would be a sort of an elevation or a confirmation
34:34
Speaker 1: of of his sort of supreme importance to the party.
34:37
Speaker 1: These are a whole combination of things that we'll be
34:40
Speaker 1: looking for, but obviously to get to the specifics of
34:44
Speaker 1: the policies, we'll have to wait until next spring, when
34:48
Speaker 1: the MPC takes place in March. Usually in March in Beijing,
34:52
Speaker 1: that's where we start to see more granular details emerge,
34:56
Speaker 1: and also that's the time where she will actually get
34:59
Speaker 1: the title of present, that's it for Stephanomics. We'll have
35:10
Speaker 1: more on China next week and who knows what else
35:13
Speaker 1: in the meantime. Do please rate the show and check
35:16
Speaker 1: out the Bloomberg News website for more economic news and
35:18
Speaker 1: views on the global economy. Who should also follow at
35:22
Speaker 1: economics on Twitter. This episode was produced by Summer Sadi
35:26
Speaker 1: Yang Yang and Magnus Hendrickson. May ir Back and Matthew
35:30
Speaker 1: Bristow helped with the reporting of that Latin American inflation story.
35:34
Speaker 1: Special thanks also to Martin Wolf, Tim Adams, Maria Aloisa Gaborro,
35:39
Speaker 1: Daniel Cavallo, is Adora, Colombia, and Callum Murphy. Mike Sasso
35:44
Speaker 1: is the executive producer of Stephanomics. This episode has been
35:48
Speaker 1: corrected just to accurately identify Christine Naggeva, the managing director
35:52
Speaker 1: of the imf ST