Browse content similar to Mohamed El-Erian, Chief Executive Officer, PIMCO. Check below for episodes and series from the same categories and more!
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Time for Hard Talk. The world's developed economies are in deep | :00:15. | :00:20. | |
troubling but it could get much worse. If the euro zone in raffles | :00:20. | :00:24. | |
no country be will insulate food the consequences and even if it | :00:24. | :00:28. | |
does not, we may be in the middle of a decade-long contraction. My | :00:28. | :00:36. | |
guess today is one of perk's most influential analysts and investors | :00:36. | :00:41. | |
CEO of Pimco which manages morn $1 trillion of other people's money. | :00:41. | :00:51. | |
:00:51. | :01:15. | ||
What is the best way out of the We are in California. Welcome the | :01:15. | :01:21. | |
hard talk. Thank you. You are one of the most prominent respected | :01:21. | :01:25. | |
fund managers in the United States of America. Right now to you feel | :01:25. | :01:34. | |
under more pressure than you have ever felt before? I feel more | :01:34. | :01:38. | |
worried and scared not just as a fund manager but as a father. Every | :01:38. | :01:43. | |
day when I kiss my daughter goodbye in the morning, she is eight, I | :01:43. | :01:49. | |
wonder what she will inherit given the headwinds that refacing at the | :01:49. | :01:53. | |
level of countries, at the level of regions and the level of the global | :01:53. | :01:57. | |
economy as a whole so I would say I'm worried as a fund manager but | :01:57. | :02:01. | |
more as parents. That is a fascinating answer. You have | :02:01. | :02:03. | |
introduced the idea we need the talk about what is happening in the | :02:03. | :02:07. | |
world at various levels from short to mid to long-term. I want to do | :02:07. | :02:17. | |
:02:17. | :02:19. | ||
that in this interview but let me start with the short-term. Right | :02:19. | :02:23. | |
now it looks like nothing can be assumed to be safe - sovereign debt | :02:23. | :02:28. | |
t youren situation we use t biggest banks in the world? What is safe? | :02:28. | :02:34. | |
Yes, yes. I mean the global economy has lots many anchors. Not all of | :02:34. | :02:39. | |
them but has lostt 78 anchors. We have lost the economic anchor, we | :02:39. | :02:43. | |
have lost the financial anchor and we are losing our social anchor so | :02:43. | :02:48. | |
the sense of uncertainty people are unsettled because they do not know | :02:48. | :02:52. | |
what is now the parameter, something you can assume is safe | :02:52. | :02:55. | |
and Constan and what are the variable, something that fluctuates | :02:56. | :03:00. | |
widely so that is absolutely right, this feeling of what is safe is | :03:00. | :03:06. | |
very, very broad and it speaks to why even people who can spend money | :03:06. | :03:10. | |
today people with healthy balance sheets are saying "No thank you". | :03:10. | :03:16. | |
They are going back the sideline and just waiting. As we bring to it | :03:16. | :03:20. | |
real specifics let's to go the eurozone firstly. Right now do you | :03:20. | :03:27. | |
think that we are close to the sort of fear-driven freeze of financial | :03:27. | :03:30. | |
markets because of what is happening in the eurozone t fear | :03:30. | :03:35. | |
that eurozone itself will unravel that we saw in the autumn of 208? | :03:35. | :03:41. | |
Yes, we are. That has prompted this week's Central Banks to come in, in | :03:41. | :03:48. | |
a very coordinated fashion because they are worried as well. Why do I | :03:48. | :03:52. | |
say that? First we are seeing the functioning of markets starting to | :03:52. | :03:55. | |
ab problem. This is like oil in your car. You do not think about | :03:55. | :03:59. | |
the oil in your car often but you realise if something goes wrong | :03:59. | :04:02. | |
with the oil the rest of the car will not function. What we are | :04:02. | :04:07. | |
seeing is the markets themselves t pipes that connect different parts | :04:07. | :04:14. | |
of the global economy are starting to get clog $. Second issue, we see | :04:14. | :04:18. | |
an in ability of policy makers to catch up with the crisis let alone | :04:18. | :04:24. | |
get ahead of it there it is getting worse and worse. Third, the banks | :04:24. | :04:30. | |
are again fragile. And once you put the banking system in play lots of | :04:30. | :04:36. | |
people will step back and stop interact tirpbgs including banks | :04:36. | :04:38. | |
stopping to interact with each other. So put all these thing | :04:38. | :04:43. | |
together t next few days and weeks are critical if we are to avoid a | :04:43. | :04:48. | |
major economic downturn, if we are to avoid a major increase in | :04:48. | :04:54. | |
unemployment and if we are to avoid a major increase in wealth and | :04:54. | :04:58. | |
inequality. You say the next few days and weeks are crucial. We have | :04:58. | :05:04. | |
seen the the US Federal Reserve acting with the ECB, the UK, Japan, | :05:04. | :05:09. | |
Canada and the Swiss as well saying that they will do what is necessary | :05:09. | :05:14. | |
to introduce new liquidity. That is going to work? It is important so | :05:14. | :05:20. | |
in tree deucing liquidity buys you some time. The hope is that the | :05:20. | :05:24. | |
Central Banks are moving because they feel confident this the other | :05:24. | :05:27. | |
agencies which have been basically asleep at the wheel t other | :05:27. | :05:31. | |
agencies are going to move and these other agencies are | :05:32. | :05:37. | |
particularly in Europe and in the run-up to the December 9 summit | :05:37. | :05:42. | |
where major decision haves to be taken, so the hope - an I stress it | :05:42. | :05:46. | |
is a hope - the hope this is the Central Banks are providing a | :05:46. | :05:50. | |
bridge to somewhere. The fear is that it will be yet another bridge | :05:50. | :05:54. | |
to nowhere and that has been the story tore the last two years, lots | :05:54. | :05:58. | |
of bridges by lots of Central Banks but there have been bridges to | :05:58. | :06:01. | |
nowhere because other actors have not stepped up and done what they | :06:01. | :06:08. | |
need to do. You and your company matter because you manage well over | :06:08. | :06:12. | |
$1 trillion of other people's money. I just wonder whether right now you | :06:12. | :06:17. | |
are saying to your clients that you are - you have lots fate in the | :06:17. | :06:20. | |
euro and that you are moving whatever investments you had | :06:20. | :06:26. | |
denominate in euros out of euros as quick as you can? What we will | :06:26. | :06:31. | |
telling our client that is this is the time to be generally defensive | :06:31. | :06:35. | |
and selectively offensive the reason why we are telling them that | :06:35. | :06:38. | |
is because there is a lot of uncertainty out there. Therefore, | :06:38. | :06:43. | |
it is better to have what we call optionality, it is better to have | :06:43. | :06:48. | |
cash in order to be able to move. Your do not want to be stuck off | :06:48. | :06:52. | |
siefrbgsd caught off-side when the world is complaininging so much -- | :06:52. | :06:59. | |
siefpltd in terms of what Europe can do, -- side. We feel Europe | :06:59. | :07:04. | |
faces an engineering and a political challenge. The US faces | :07:04. | :07:08. | |
mainly a political challenge. Europe has an engineering and a | :07:08. | :07:12. | |
political challenge. Engineering a solution that satisfies people | :07:12. | :07:15. | |
where very different initial conditions is hard and we have two | :07:15. | :07:19. | |
Europes not one. We have a strong Germany that has been doing well | :07:19. | :07:26. | |
and that believes that it has a right answer and we have weak | :07:26. | :07:30. | |
peripherals facing enormous economic and social headwinds. That | :07:30. | :07:34. | |
leads to the political prorbgs how do you get agreement again -- | :07:34. | :07:40. | |
problem -- on how do you debt agreement on a difficult decision | :07:40. | :07:43. | |
on what the eurozone feeds the look like to be stronger. So we need to | :07:43. | :07:49. | |
keep an eye on Europe. Europe is really important systemicly and | :07:49. | :07:52. | |
hopefully, I say homefully the Europeans will finally get their | :07:52. | :07:55. | |
act together. Yeah, but people like you in the end do not deal in hope. | :07:55. | :08:01. | |
You deal in what you believe to be probabilities and reallive I wonder | :08:01. | :08:05. | |
we have seen Tim quite near the US Treasury Secretary and Barack Obama | :08:05. | :08:12. | |
send a message to Europe for week upon week upon week of "Get your | :08:12. | :08:14. | |
act together" which is a issue directed to Chancellor Angela | :08:14. | :08:16. | |
Merkel t decision being it is only determine any in the end that has | :08:16. | :08:20. | |
the economic power to rescue the zone don't in its current form. Do | :08:20. | :08:26. | |
you believe the Germans are prepared to do what is necessary? | :08:26. | :08:31. | |
First, I think it is more than the Germans. It is ironic everybody | :08:31. | :08:34. | |
says it is the Germans because the Germans are the most successful, | :08:34. | :08:39. | |
they are the balance sheet t wallet. If they say only they had the will. | :08:39. | :08:44. | |
But there is a reason why the Germans are hesitant. I always tell | :08:44. | :08:48. | |
my colleagues ask why is someone rational acting in a way that seems | :08:48. | :08:52. | |
irrational to you. I think the Germans understand that you need at | :08:52. | :08:56. | |
least the five elements of a solution. Five. One is the Germans | :08:57. | :09:01. | |
need to decide what they want if eurozone to look like. Do they want | :09:01. | :09:06. | |
it to be a full fiscal union which is another way of thinking of what | :09:06. | :09:09. | |
West Germany did for East Germany which is this is a political | :09:09. | :09:11. | |
decisions it is not an economic decision, this is a political | :09:11. | :09:17. | |
decision but they need to do it, or does Germany want a smaller and | :09:17. | :09:22. | |
less imperfect eurozone? That is Germany's desifplgts secondly, we | :09:22. | :09:27. | |
need actions -- decision. Secondly, we need actions to reconcile to | :09:27. | :09:32. | |
very different priorities in the privy. One is to contain that. The | :09:32. | :09:37. | |
other toys grow. Remember, soften say has a numerator and denominator. | :09:37. | :09:41. | |
The numerator is how much debt you have to pay, your denominator is | :09:41. | :09:46. | |
your ability the pay. So far the privy has not met that balance. | :09:46. | :09:50. | |
Third, we need to counter the fragile nature of the banking | :09:50. | :09:54. | |
system. The banks have become a problem on a stand-alone basis. | :09:54. | :09:58. | |
They are no longer just at recipient of the sovereign debt | :09:58. | :10:03. | |
crisis. They are now a source of disruption that is going to get | :10:03. | :10:07. | |
worse unless it is countered. Fourth, we need the ECB to be | :10:07. | :10:12. | |
convinced that it can play a major role as a circuit breaker. You know | :10:12. | :10:16. | |
markets tend to be self fulfilling. The more they worry, the worst | :10:16. | :10:20. | |
outcome, the worst outcome the more they worry. So you need a circuit | :10:20. | :10:28. | |
breaker and only the ECB can be that circuit breaker. Right, but... | :10:28. | :10:33. | |
Number five... Then I have a few quick questions. You talk about the | :10:33. | :10:39. | |
ECB and sick my question was simplistic -- and suggest. Issues | :10:39. | :10:44. | |
about had the ECB will be unleashed to be the lender of last resort the | :10:44. | :10:46. | |
Open itself up to rescue some of these countries it comes back to | :10:46. | :10:50. | |
Germany does it not? In a way I want a simple emotional response | :10:50. | :10:54. | |
from you, whether you think Germany acting in concert with the French | :10:54. | :10:58. | |
and the other Europeans can do what is necessary. They can, if they are | :10:58. | :11:03. | |
convinced that others will also do their part. I think it is important | :11:03. | :11:11. | |
to ask the question why two years after the ECBtIMF and. The EU | :11:11. | :11:15. | |
stepped in dramatically to save Greece every single indicator in | :11:15. | :11:19. | |
Greece is worse, every single one, okay? Not jest relative to where | :11:19. | :11:23. | |
they were two years ago but relative to the expectation of the | :11:23. | :11:29. | |
policy makers. There is a reason for that which is the ECB, the IMF | :11:29. | :11:33. | |
can only provide liquidity. Liquidity is a bridge, but if there | :11:33. | :11:36. | |
is no destination on the other side of that bridge, that liquidity | :11:36. | :11:41. | |
becomes wasted. I think the ECB has realised that over the last two | :11:41. | :11:48. | |
years it has been doing things that has only could be Tam nighted its | :11:48. | :11:52. | |
balance -- contaminated. So the ECB says "I'm willing to play, engage, | :11:52. | :11:55. | |
but I need others tone gauge as well. I cannot be the only player | :11:55. | :11:59. | |
in this game. Because if I'm the only player in this game, everybody | :11:59. | :12:04. | |
is worse off" When you talk about the sings Greece getting worse, | :12:04. | :12:06. | |
that also raises another economic philosophical question in my mind I | :12:06. | :12:12. | |
mean, do you think that Europe right now is over-playing austerity, | :12:12. | :12:15. | |
so preoccupied austerity it is forgetting that actually this | :12:15. | :12:19. | |
crisis can only be ended when real growth is being delivered and in | :12:19. | :12:23. | |
the current climate it is very hard to see where growth in Portugal, | :12:23. | :12:28. | |
Greece or even it listing go to come from? Absolutely. Absolutely, | :12:28. | :12:32. | |
I would say the same from other countries. We face four distinct | :12:32. | :12:37. | |
problems. One is too much debt in the west. We fell in love with | :12:37. | :12:39. | |
level average and this credit entitlement that you could buy | :12:39. | :12:44. | |
things on credit. Now we have the pay it back. Or, we have to impose | :12:44. | :12:50. | |
losses. Second, we are not growing enough. We have tremendous | :12:50. | :12:53. | |
structural impediments to growth and we are not doing enough to deal | :12:53. | :12:58. | |
with it. We are yet to see any serious structural reforms either | :12:58. | :13:05. | |
in Europe or the US. Policy makers are stuck in a cyclical mind-set, | :13:05. | :13:10. | |
what they neat they neructural and secular mind-set, this is hard work | :13:10. | :13:15. | |
and they need to start. A quick- fire response on some particular | :13:15. | :13:18. | |
situation. Let me start here in home in London where I speak to you | :13:18. | :13:22. | |
from with the UK government which has given its latest budget | :13:22. | :13:26. | |
forecast which is extraordinarily blaefpblgt it now looks like six | :13:26. | :13:29. | |
years of consistent austerity coming from the British government. | :13:29. | :13:33. | |
Do you think they have the calibration of economic policy | :13:33. | :13:38. | |
wrong? -- bleak. I think on the whole they got it almost right. I | :13:38. | :13:41. | |
would like to see more structural reforms and the Chancellor's speech | :13:41. | :13:44. | |
this week went a little bit towards that but he could do more. But I | :13:44. | :13:50. | |
think they understand thank a small country looking at storms, as it | :13:50. | :13:54. | |
was called - storms coming from Europe and another storm that will | :13:54. | :13:57. | |
come if the US at some point, that they understand that they do not | :13:57. | :14:00. | |
have the luxury of the US, they do not have the luxury of being a | :14:00. | :14:04. | |
large economy with a reserve economy so I think what brings is | :14:04. | :14:08. | |
doing is understandable, it is not pleasant but understandable. A | :14:08. | :14:11. | |
final thought on the European situation S I was taken with with | :14:11. | :14:16. | |
words from the French economist former head of European bank for | :14:16. | :14:20. | |
reconstruction an development who said he believed there was a 50/0 | :14:20. | :14:24. | |
chance the euro could break down, unravel by Christmas. How would you | :14:24. | :14:29. | |
charge rise the chances of that happening? Think he is right to be | :14:29. | :14:34. | |
worried. I think if we do not see some meaningful action in the run- | :14:34. | :14:42. | |
up and at the December 9 European summit, the transis his citing is | :14:42. | :14:45. | |
correct but Europe still controls its destiny but it will have to | :14:45. | :14:50. | |
make one of two difficult choices, either opt for the full fiscal | :14:50. | :14:55. | |
union or smaller an less in perfect eurozone it needs to make that die | :14:55. | :15:05. | |
If the crisis deepens, should the US government stepped in at some | :15:05. | :15:09. | |
point and use its enormous economic power to do what is necessary to | :15:09. | :15:16. | |
shore up this massive sovereign debt crisis in Europe? That is a | :15:16. | :15:23. | |
great question. The US is playing a supportive role. It could play an | :15:23. | :15:26. | |
even more supportive role by co- ordinating this orchestra that has | :15:26. | :15:30. | |
no conductor. The European crisis is happening partly because there | :15:30. | :15:35. | |
is no global conductor. Everybody is stepping back rather than | :15:35. | :15:38. | |
engaging. But I think the solution is in the hands of the Europeans. | :15:38. | :15:42. | |
The US can support a solution and help ward maid, but it cannot | :15:42. | :15:47. | |
impose a solution. But on the other hand, Obama knows that if Europe | :15:47. | :15:51. | |
does go belly-up, they will be a massive consequence for the United | :15:51. | :15:56. | |
States. You'll go back into recession if not depression. | :15:56. | :16:04. | |
Michael Bloomberg described the situation in the US, you call them | :16:04. | :16:09. | |
political problems, over the budget, he said, cowardice and partisanship | :16:09. | :16:14. | |
in what cent -- Washington is right now really hurting our country. | :16:14. | :16:19. | |
Would you agree? I absolutely agree. First, I say that you cannot be a | :16:19. | :16:24. | |
good house and a bad neighbourhood. If Europe goes down, if the global | :16:24. | :16:29. | |
economy goes into recession, everybody will feel it. The US is | :16:29. | :16:31. | |
political -- politically dysfunctional. That is why we | :16:31. | :16:36. | |
cannot agree. We cannot come to the centre. Not only are the Democrats | :16:36. | :16:40. | |
and the Republicans far apart, but the populist movements are pulling | :16:40. | :16:44. | |
them further apart. The Tea Party is pulling the Republicans further | :16:45. | :16:49. | |
to the right, the Occupy movement is pulling the Democrats further to | :16:49. | :16:55. | |
the left. What we need in the US is what we call a Sputnik moment. A | :16:55. | :16:57. | |
realisation that unless we come together with a common vision and | :16:57. | :17:02. | |
common purpose, things are going to get a lot worse. Let's put your | :17:02. | :17:06. | |
cards on the table. The specifics that the two parties are arguing | :17:06. | :17:09. | |
over when it comes to the Budget and dealing with the deficit are | :17:09. | :17:15. | |
whether it is right to extend the push tax cuts. As part of any | :17:15. | :17:18. | |
deficit-cutting programme, Republicans insist there has to be | :17:18. | :17:22. | |
an extension of the tax breaks for the richest Americans. Obama says | :17:22. | :17:27. | |
that is not acceptable in this hour of need. Where do you sit on that | :17:27. | :17:34. | |
debate? I think Presidink Presidis right. Everybody has to contribute. | :17:34. | :17:37. | |
This is a shared responsibility with shared sacrifices. The rich | :17:37. | :17:40. | |
have been doing extremely well and the United States over the last | :17:40. | :17:46. | |
number of years. I would not extend the tax breaks. Some more quick- | :17:46. | :17:49. | |
fire things. Take us around the world a little bit more. It strikes | :17:49. | :17:53. | |
me that when you and I talk about the state of the world economy, I | :17:53. | :17:58. | |
in London, you in California, with both talk about a sort of doomsday | :17:58. | :18:01. | |
scenario. Perhaps we are missing a particular point, that is, if we | :18:01. | :18:07. | |
were watching this in China, India, or other cities in the emerging | :18:07. | :18:10. | |
economies, we would say that we are way too pessimistic, because | :18:11. | :18:16. | |
overall growth around the world this year will be between 3-4 %, | :18:16. | :18:21. | |
growth, not a contraction. Cannot continue if we are right about what | :18:21. | :18:26. | |
is happening in the industrialised world? First, we live in a multi- | :18:26. | :18:29. | |
speed growth world, where the emerging markets, because of their | :18:29. | :18:35. | |
own efforts, are doing much better. But if we were sitting in these | :18:35. | :18:41. | |
countries, we would say, yes, yes look at us, we are doing fine, we | :18:41. | :18:46. | |
have lots of growth, we have a middle class that is getting richer, | :18:46. | :18:51. | |
we have production and employment, but also, we live at a global | :18:51. | :18:56. | |
system, and at the core of the global system is the US and Europe. | :18:56. | :19:01. | |
They are having difficulties. So we would also be worried, not because | :19:01. | :19:06. | |
our internals are problematic, but because we are part of a system | :19:06. | :19:08. | |
where the core is contaminated. Therefore, we worry about how does | :19:08. | :19:14. | |
that system operate. In 2008 we had that massive sense of crisis in the | :19:14. | :19:19. | |
We Wethin a year, we saw China restored the growth of almost | :19:19. | :19:24. | |
10%, India, 8-9 %, why are you so insistent that they cannot insulate | :19:24. | :19:30. | |
themselves from what is happening now? De buoy reasons. First, in | :19:30. | :19:39. | |
2008, everything stopped. There was a sudden stop. That brought in a | :19:39. | :19:43. | |
lot of fiscal stimulus. Today, we do not have the scope for fiscal | :19:43. | :19:49. | |
stimulus. We have a sovereign debt crisis that has been the impact, | :19:49. | :19:54. | |
the outcome, of what we did in 2008. The first thing is that we have a | :19:54. | :19:58. | |
lot less physical firepower. The second thing is we have a lot less | :19:58. | :20:02. | |
minatory firepower. Interest rates are almost at 0%. Central banks | :20:02. | :20:06. | |
have been doing unconventional things with no assurance that it | :20:06. | :20:11. | |
will work. We have fewer spare tyres, if you like, on this car, | :20:11. | :20:16. | |
that is on a bumpy journey to an uncertain destination. It caused a | :20:16. | :20:20. | |
real stir recently by saying, unlike most big financiers and Wall | :20:20. | :20:24. | |
Street players in the United States, saying that actually the message | :20:24. | :20:28. | |
coming from Occupy Wall Street, the fundamental rejection of many of | :20:28. | :20:31. | |
the values of aggressive capitalism that we have seen, you said that | :20:31. | :20:35. | |
was a message that everybody in the United States needed to listen to | :20:35. | :20:40. | |
and think carefully about. Why did you say that? Because whenever I | :20:40. | :20:44. | |
look around the world, there are social movements. It is not just in | :20:44. | :20:49. | |
the US. It is in Britain, Spain, Italy, the Arab world. It is all | :20:49. | :20:53. | |
over. The reason why is because we have had an incredible increase in | :20:53. | :20:59. | |
income and wealth inequality. No system can operate well when there | :20:59. | :21:03. | |
is a sense that it is not fair. And right now, the perception of the | :21:03. | :21:10. | |
system is that it is not fair. In particular, the system privatised | :21:10. | :21:14. | |
massive gains in the run-up to the 2008 crisis, and then socialised | :21:14. | :21:20. | |
massive losses. These losses were socialised on the premise that this | :21:20. | :21:23. | |
was needed for growth and employment, and neither have | :21:23. | :21:28. | |
materialised at any scale that is sufficient. So we have a perception | :21:28. | :21:32. | |
that the system is unfair, and we have to deal with that perception | :21:32. | :21:36. | |
rather than ignore it, because the more we ignore it, the more that | :21:36. | :21:41. | |
social discontent will increase. you are saying that you now have | :21:41. | :21:45. | |
concluded that capitalism in its current guise in the United States | :21:45. | :21:49. | |
and Western Europe is unfair and unsustainable? Is that what you are | :21:49. | :21:55. | |
saying? Yes. I think we were on a motorway, if you like, where we | :21:55. | :22:00. | |
live to the speed limits without realising that the vehicles that | :22:00. | :22:04. | |
are on this motorway cannot drive at that speed. And therefore we | :22:04. | :22:09. | |
have to be calibrate the whole motorway if we are to avoid | :22:09. | :22:13. | |
accidents. I think that is a recognition that we went too far, | :22:13. | :22:20. | |
we went to mac far in this great age -- too far in this great age of | :22:20. | :22:24. | |
credit, of debt, and of Credit entitlement. And now we have to | :22:24. | :22:28. | |
deal with the consequences. I can't help wondering what your clients | :22:28. | :22:31. | |
make of this new message from you! The deal with some of the richest | :22:31. | :22:34. | |
individuals and corporate clients in the world, they pay you to look | :22:35. | :22:41. | |
after their money and maximise their returns, you say your total | :22:41. | :22:45. | |
return fund can deliver profits for your clients in good times and bad. | :22:45. | :22:48. | |
Are you suggesting that you are part of a fundamentally flawed | :22:48. | :22:51. | |
system? Will you stop doing what you have been doing for the past | :22:51. | :22:56. | |
few years? Nw years? Nate in the system, so we say, given the system, | :22:56. | :23:02. | |
we operate, and what we aim to do is deliver returns and manage risk. | :23:02. | :23:06. | |
We do this because people trust us with their pensions, their | :23:06. | :23:10. | |
retirement funds, with their investments. Now, in doing so, we | :23:10. | :23:16. | |
take a view on what is likely to happen. And we invest on the basis | :23:16. | :23:21. | |
of what is likely to happen. We also discuss what should happen. We | :23:21. | :23:25. | |
don't invest on the basis of what should happen, because we don't | :23:25. | :23:27. | |
control out comes, we are part of this global system, so you have | :23:27. | :23:31. | |
been asking me about what should happen, and we invest on the basis | :23:31. | :23:35. | |
of what is likely to happen. In a perfect world, the two converge, | :23:35. | :23:40. | |
but we don't kid ourselves that we have that power. That power lies | :23:40. | :23:44. | |
and has a policy makers, and we operate, like everybody else, in a | :23:44. | :23:47. | |
world that we must understand in order to navigate well for our | :23:47. | :23:51. | |
clients. A final thought. I began by asking you about pressure. Let | :23:51. | :23:55. | |
me end by asking you about control. Do you feel more helpless today | :23:55. | :24:02. | |
doing your job than you have ever felt before? I feel that every | :24:02. | :24:05. | |
morning, something will happen that will disrupt markets, and we are | :24:05. | :24:09. | |
going to have to react to. I feel we are living in a world that is | :24:09. | :24:13. | |
incredibly volatile, a world full of unthinkables. We used to keep a | :24:13. | :24:17. | |
list of unthinkables. Now we just do it every quarter, because they | :24:17. | :24:24. | |
have been so many unthinkables. We live in a very uncertain world, but | :24:24. | :24:28. |