บทถอดความฉบับเต็มของ Live from New Delhi: What the World's Financial Leaders Fear Most

sure classics scholars would tell me that this is off-base, Stephanie, but it seems to me that one of the themes that comes through in The Odyssey is this idea of a world where the rules of hospitality have broken down. You see it in Polyphemus the Cyclops, a host who eats his guests. You see it in Penelope's suitors, guests in Odysseus's house, eating his food, drinking his wine, trying to steal his wife. I thought this idea of the Odyssey and a world where the rules of hospitality have broken down will be a kind of neat framing for a presentation to the audience. 00:03:50 Speaker 5: So what are some of the consequences from an economic standpoint of this world where the rules of hospitality are broken down? 00:03:57 Speaker 6: So I think one of the places where we're seeing this dynamic play out is in the US bond market. If we think about the cost of borrowing for the US Treasury, back in 1980, that was around 15%. Over many decades, the cost of borrowing for the US Treasury fell and fell until by 2020, it was close to zero. Now, in the last few years, that trajectory has changed, and the cost of borrowing for the US isn't falling anymore. It's rising. The 10-year rate is now north of 5%. And I think that's a reflection of some of these big dynamics that we're seeing. A world where war is more likely, and so companies have to borrow more to pay for defense. A world where there's been rupture between the US and China, the US and Russia, the US and the petrostates. So these countries, which in the past were willing to put their savings to work in the US treasury market, are now not doing that anymore. And a world where geopolitical shocks like the Iran war are pushing inflation higher. And of course, bond investors need to be compensated for higher inflation. So in this world where the rules of hospitality have broken down, the US Treasury has to pay more to borrow. And of course, when the US Treasury has to pay more to borrow, everybody has to pay more to borrow. A fact which is pretty consequential for our hosts here in India, hoping to attract more FDI to finance the build-out of their infrastructure and their manufacturing base. 00:05:41 Speaker 5: One of the other themes that came through, which obviously has been much discussed in this conference, is AI is actually something that might surprise some people, that we have seen with the build-out of AI, in many ways, a kind of reassertion of global supply chains, at least in a certain part of the economy, and reanimation of globalisation and trade. And with that... the return of very large global imbalances. So despite Donald Trump's best efforts, China exporting more than it ever has. We actually had new record trade surplus numbers coming out of China this week. And the US, despite Donald Trump's efforts, importing, we reckon, $ 500 billion more a year than in 2016. That's allowing for inflation, not all from China, but it has in many ways become more dependent on the rest of the world as a

result of, in part, AI and other things about the way the world has gone. But as you pointed out, the flip side of that is big trade surplus and surplus revenues for China, Korea, Taiwan are We've seen those before. They used to be invested via central banks into US treasuries often. What's different this time? 00:07:10 Speaker 1: It's strange. 00:07:11 Speaker 6: President Trump imposed these sweeping tariffs to try and reduce the US trade deficit, reduce the Chinese trade surplus. In fact, what we've seen in the last couple of years is actually those surpluses and deficits have exploded higher, right? We've now got surpluses in China, Taiwan, Korea, and deficits in the US that are bigger in dollar terms than they were back in the early 2000s before the global financial crisis. But as you note, Stephanie, there's also a different dynamic at work. In the early 2000s, let's take China as an example, the trade surplus meant a huge pileup of dollar savings in the economy. Those dollar savings were managed by the People's Bank of China Central Bank, a very conservative buy and hold investor. And the PBOC put those dollars into the US Treasury market, the most stable, safest asset in the world. This time around, the savings piling up in East Asian countries, they're not being managed by central banks. They're being managed by private investors, much more nimble, much more focused on returns, And when we look at the data, what we see is they're not going into the treasury market anymore. That's one of the reasons the treasury is having to pay more to borrow. They're going into stocks. They're going into corporate bonds. The pretty clear signal is that they're going into the AI revolution, right? So you've got this circular flow of funds where the US is importing a huge amount of chips to build out its data centers and And the countries making those chips are taking the dollars the US is paying them and turning around and investing them back in the US AI companies. Now, if you're an AI optimist, and there's lots of reasons to be an AI optimist, that's all good, right? AI is going to make us better off. This is accelerating the AI revolution, which is going to make us all better off. But if you're an AI pessimist, And you think the profits from AI might turn up a day late and a dollar short. And there's going to be a moment where there's a big adjustment in the markets, a crash. This dynamic means the pain from that crash is going to be spread out around the world. 00:09:35 Speaker 5: It does certainly sound like a risky combination. What was striking to me was A slightly different view from that panel I mentioned at the start, although they, at least one of them, was pretty focused on the risks lurking in government debt and government balance sheet. So let's hear from that now. And I'm actually going to let my colleague, Eric Schatzker, the editorial director of NEF, who presided over the panel, do the introduction. 00:10:06 Speaker 7: Distinguished guests, I'd like to say a few things about our panelists to explain why we've invited them to join me here on stage this morning. Rishi Sunak, as you know, is a sitting member of parliament in the UK and, of course, the country's former prime minister. He has become a strategic voice in Silicon Valley as an advisor and also as a visiting fellow at Stanford's Hoover Institution. He has also rejoined his old firm, Goldman Sachs, as a senior advisor offering counsel on geopolitical risk, trade dynamics, and macroeconomic shifts. John Gray, runs the world's largest manager of private capital, a total of more than $ 1. 3 trillion, with assets across real estate, infrastructure, life sciences, credit, insurance, private equity, renewables, and of course, data centers. And Chandra is the leader who transformed Tata for the 21st century, building on its strength in IT services, automotive engineering, and heavy industry to enter semiconductors, advanced electronics manufacturing, electric mobility, and digital platforms, an extraordinary trio of minds to tackle this provocative conceit, the end of predictability. Every generation thinks its moment is uniquely uncertain, right? If you were around for the oil embargo, 1973, the Gulf War, 1991, of course, the financial crisis, 2008, what I'd like to know, and I'd like to start with you, Chandra, What is actually different about this moment in history? 00:11:49 Speaker 8: First, I think we have had it very good for the last five decades. That's what the first realization is. But if you look at a group like ours, which is about 160 years old, we have seen two world wars, we have seen the pandemics, and we have seen high borrowing levels, many things, and we have survived. So it's not the first time that something as hard as this is happening. But the primary difference is all of it is happening at the same time. The geopolitical disruption, the AI disruption, and commodity crisis, supply chain crisis, and the world has become so advanced and so connected. We are trying to decouple it. It has never been this coupled. Tackling all of it at the same time is the unique thing now. 00:12:52 Speaker 4: We obviously have two live wars in Russia, Ukraine, and in the Middle East with Iran and its proxies. We obviously have an environment that has got more volatility. 00:13:06 Speaker 1: We see the U.S. 00:13:08 Speaker 4: With a little more tension with its allies. although I think there are enough shared values that will ultimately get through this. I think the biggest thing, when we look back in history, when we look back 10, 20 years from now, will be the technology. Because I think that's the thing that's going to define this era. 00:13:29 Speaker 3: That we're moving from a place like we did in the U.S. 00:13:32 Speaker 4: From 1870 to 1900 with the Industrial Revolution, that when you bring this superintelligence to the entire world, that it's going to profoundly change how we live, how consumers live, how

businesses are impacted, and how governments oversee societies. And to me, that's the big thing. That's the biggest challenge. 00:13:54 Speaker 7: What we are talking about is a cocktail of risks. Geopolitics is a risk. Technological disruption, obviously a risk. Bad policy is a risk. Climate events are a risk. 00:14:09 Speaker 1: Market dislocations are or a risk. 00:14:12 Speaker 7: Which of those risks, or perhaps a risk that I didn't mention, do you find hardest to manage? And which worries you the most? 00:14:21 Speaker 1: Rishi? 00:14:23 Speaker 2: AI is often compared to the Industrial Revolution, but I think that actually undersells it. I think of it as the Industrial Revolution combined with the Enlightenment, that period in Europe of invention and discovery of new ideas, combined with the printing press, which democratized information and knowledge around the world. So this trifecta is going to be extraordinary. It's going to raise the floor for humanity. We talked about that here in India in February at the AI Summit. However, all new technology brings with it new risks. And what technology does is lower the barriers to entry for bad actors. And that's what this technology does. And I think our job as policymakers is to get ahead of that, provide safeguards, governance, and a framework so that we can not only prevent bad things from happening, but also bring along the public with us who outside of places like India or China and the Gulf are deeply distrustful of this technology. And if we don't reassure them, we're not going to get all of its benefits. So put aside all the geopolitics. We'll manage that. But John's right. The technology is a thing that, for better or worse, we will be talking about for years to come. 00:15:22 Speaker 1: Chandra, they're not the same thing, right? 00:15:24 Speaker 7: The thing that you worry about the most and the thing that you find hardest to manage. In Rishi's case, it sounds like it is the same thing. 00:15:30 Speaker 1: What about for you? 00:15:31 Speaker 8: Rishi is right, definitely in near term. technology both in terms of what it will do at the hands of the bad actors and also the labor restructuring that has to happen near term is going to be a big deal in medium to long term is going to be hugely powerful it's going to make I at least think the world beautiful and highly impactful but the other thing I worry about is the war situation I think we seem to be opening wars on every front And nothing is getting closed. So I don't know. Somebody is going to press a button. 00:16:11 Speaker 1: We should all be worried about that. 00:16:13 Speaker 8: I worry about that a lot. 00:16:15 Speaker 4: John? I definitely agree on both of these fronts and the technology, which I highlighted. But since Rishi covered that, maybe I'll talk about another risk, which is the lack of fiscal sustainability. in Western governments. Interestingly, emerging market countries in many cases have been much more responsible. And we're now facing a bit of a reckoning. We're seeing that in terms of what's happening in the bond market, which also the wars have contributed to the demand for capital because of AI. 00:16:47 Speaker 1: But also there's. 00:16:48 Speaker 4: A perception that, hey, these countries are running deficits that are well above their inherent growth rates. And you worry, shocks come along. You saw it with, obviously, the financial crisis, with COVID, governments now with deficits that are greater than 100% of GDP and don't seem to have a path to bend that curve. And what happens, of course, is It leads to affordability challenges, particularly around housing. And it means you have to make tough choices around taxes and social services. I continue to think that technology probably is the biggest sort of existential risk. But this is one that has been slow moving, and it's going to force very tough choices. 00:17:31 Speaker 2: Just interesting, John's point there, you see these different forces coming together, right? Because On the one hand, you've got governments who aren't able to be fiscally conservative and the kind of populist politics we're seeing across Europe and elsewhere contributing to that. But this massive capital build-out of AI is then adding to the mix, as John knows, because the demand for capital from the technology companies is so huge that, remarkably, if you think about long-term debt, so 10-year-plus debt, next year, I think the technology companies are going to be bigger net issuers of that debt than the U.S. 00:18:06 Speaker 1: Government is. 00:18:08 Speaker 2: And it gives you a sense of the scale here. But that ultimately is putting pressure on governments in Europe, contributing to some of the challenges that John mentioned. It just speaks to the interplay between these big structural forces that we're living through. 00:18:20 Speaker 7: I was just going to follow up briefly with you, John, because you can see this coming to a head right now in France. The situation that the French are dealing with is very real. There just simply isn't enough money. There isn't enough money in the United States either. Now, America has exorbitant privilege. Perhaps that puts it in a different category. But at what point do you begin to worry that what's going on in France is going to become a similar problem in America? 00:18:48 Speaker 4: I think there's a very important difference. I think all of these countries face this challenge. 00:18:54 Speaker 1: But the growth rates in the U.S. are much higher. And when you look at the technology. 00:19:02 Speaker 4: the investment, what's happening with AI, you're seeing it lead to a lot of capital flows in. And that higher rate of growth gives you a little more room. Now, ultimately, the US is going to have to face tough choices. But I think now this is more of a France, UK, continental Europe challenge, just because there you have. 00:19:27 Speaker 3: Much lower rates of growth

approaching, call it 1%. 00:19:31 Speaker 1: But also very large deficits. 00:19:34 Speaker 4: And what we've seen over time is these get addressed when there's crisis. We saw this in Greece. And unfortunately, that feels the way this is going. But I would say the U.S., its great strength is both the age of its population, but also its. 00:19:48 Speaker 1: Higher growth rate. 00:19:50 Speaker 4: And I think people are underestimating how much growth is going to come out of the U.S. because of this investment and then productivity boom. So that's helpful to us. But again, we, like everybody, are going to have to find a way over time, either through much higher growth or better fiscal responsibility or a combination to get to sounder footing. 00:20:09 Speaker 1: I'd like to stick. 00:20:10 Speaker 7: With you for a moment because when we talk about unpredictability and we talk about risk, of course, we should be talking about how to manage, how to hedge those risks. And the hedge for unpredictability is resilience. But resilience is expensive, right? 00:20:30 Speaker 1: It comes at a cost, efficiency. And since we're talking. 00:20:34 Speaker 7: About markets, investors really aren't very good at putting a price on resilience. For the most part, they don't actually value resilience, just the opposite. When you think about the need to build resilience into the investments that Blackstone makes, are you implicitly, or do you find yourself wondering whether the implicit consequence of that is that your investors are going to have to accept structurally lower returns in exchange for securing those cash flows? 00:21:06 Speaker 1: There may be some of that. 00:21:07 Speaker 4: I think if you went back over time, you probably just looked at where could I get the lowest cost, let's say. Where could I source a product, set up my business to manufacture in that lowest cost location? 00:21:20 Speaker 1: Optimizing for efficiency. Optimizing for efficiency. 00:21:23 Speaker 4: I think it's clear now, after you go through COVID, you go through wars, you have tariffs, you recognize if I run a manufacturing business. 00:21:34 Speaker 1: I need multiple sources of input. 00:21:36 Speaker 4: But I would say that we focused a lot on risks here. It's worth pointing out that we're seeing real revenue growth globally. So our companies in the second quarter saw 11% revenue growth. We've seen margins consecutively go up for now two and a half, three plus years. 00:21:53 Speaker 3: We've just seen steady improvement. We see this in the public markets. 00:21:57 Speaker 4: So what we're finding in our companies is even if they have some incremental costs to absorb that resilience, they're able to do it and continue to grow the businesses. 00:22:07 Speaker 1: And one of the reasons you strengthen. 00:22:08 Speaker 4: Markets, particularly the US markets, is because the revenue growth and the margin growth have been such that you're getting compensated even though there are more risks out there. 00:22:18 Speaker 7: Chandra, how do you decide how much resilience is worth paying for? 00:22:24 Speaker 8: See, I think I have a fundamentally different viewpoint. In a highly unpredictable, volatile environment, optimizing for efficiency is definitely not the right thing. And to think that resilience is opposite of efficiency is a wrong move. I believe that If you design it for resilience in an unpredictable environment, actually you're optimizing for efficiency. We had an air crash. We had a cyber attack. We had supply chain disruptions. Still, as a group, we will deliver double-digit growth. And margins are holding up. So I think we are paying more attention. I send the message across the group. We have to think what is resilience for each one of our businesses. We can't define resilience as a global thing. Every company has to think of what is resilience. I think if you design it for resilience, you will optimize for efficiency because that's the nature of the word. 00:23:32 Speaker 7: Rishi, I made the point that markets aren't very good, or investors at least, aren't very good at valuing resilience. But nevertheless, and we keep hearing about this, every country... wants a resilient economy. So what happens if the market doesn't reward companies for having excess inventory, right? Spare capacity, surplus capital, supply chain diversification. If the market doesn't reward you for that and the genius of having it only looks brilliant in a crisis, what do you do? 00:24:07 Speaker 1: Is that where government needs to step in? 00:24:09 Speaker 7: Does government need to subsidize or incentivize And if so, how? 00:24:16 Speaker 2: It does, but you have to be careful because politicians always like opportunities to protect local businesses. They like opportunities to put up barriers that you protect the producers. And this gives them an excuse to do that. I think the instructive example here is the French. When Pepsi, big, bad American company, tried to come and buy Danone, the important French company, the French declared that yogurt was a strategic national priority in order to block this transaction. And that is an example of what not to do. Having said that, it's clear, as Chandra said, the world has changed and governments need to adapt to it. And the G7 we had when I was in office, we talked about this notion of de-risking. 00:25:04 Speaker 1: Rather than decoupling. 00:25:06 Speaker 2: And the National Security Advisor, Jake Sullivan, in the US actually had this concept that we put in a speech that was very good, which is this concept of a kind of small garden or small yard and a high fence. And it's trying to figure out what are the small number of absolutely critical things that you do want to have national sovereign capability in, where you need to have a really good range of options. where you're going to prioritize to protect. But outside of that, we should be careful to make sure that we enjoy the benefits of

free markets and enterprise, which all of us realize creates growth and prosperity for our citizens. Hard as it is sometimes to defend, Chandra and I spend an enormous amount of time working on different things together in government, and that's probably indicative of the environment that we're in. But the other thing I'd say with that is, going back to what John said about financial market risk, I think generally this is inflationary. It comes at a cost. In the UK, take an example, gas storage. John talked rightly about the supplies we've seen. In the UK, we had our storage capacity at a rundown over time. You have the energy shock in Europe when Russia invaded Ukraine, new energy shock now in the Middle East. And then you realize the value of having more storage. Ultimately, that storage comes at a cost for all the other years. that it's not used and that requires the government to step in and provide essentially some incentive to do that. 00:26:42 Speaker 7: I'd like to flip the script a little bit and talk about predictability and Chandra and I have had conversations about this. And in those conversations, Chandra, you've told me that the Tata, which to your point earlier is almost 160 years old, has learned to think in terms of generations, maybe even centuries, which is quite a thought. Any strategy, any plan built on that kind of timeframe requires at least some certainty about the future. What do you believe is predictable? 00:27:22 Speaker 8: See, I think if you look at our own history and go back some of the decisions that were made by Jamshed G. Stein in the early 1900s, he believed that steel was fundamentally important. 00:27:37 Speaker 1: Steel. 00:27:38 Speaker 8: Was fundamentally important. He felt power was fundamentally important. He imagined a steel plant. He imagined a hydroelectric power plant. And he imagined R & D is important, science is important. None of this he saw. He didn't live to see any one of those. But the steel plant came up in 1907, and the hydroelectric power plant came in 1911. And they had raised money in Ohio in 1911. So then the IASC came about. And subsequently, there are many decisions that have been taken by people various chairmen in the group, which have all proved to be right in long term. And sometimes things go wrong, then you course correct. But I believe that directionally, if you design it on the belief that it is needed for India, it is needed for mankind and for enterprises, you will get it right. Even from the time we went in, to electronics to start manufacturing, the India's exports has gone from 12 billion five years ago to 48 billion this year. So the manufacturing sector is growing at 9%. And advanced manufacturing is here to stay. And if you take chips, I think if you take a vote, everyone will say chips are the future. So whether we will get it right and meet the numbers two years or three years is not the point. We need partnerships because we may not have all the technologies and so

we need partners. But if you design it, definitely we'll get there. We can't be reckless in saying that I'm going to be putting a two nanometer chip. It's just not going to work. So we need to also see where the demand is. But I think for me, the metric is it's important for India or it's important for businesses and people and its future. Third, it can create jobs. Fourth, it's financially viable. It's not that you're going to have a very clean spreadsheet in this uncertain world, that everything is going to be certain. But a lot of things are certain. Direction is certain. The need is certain. The ability to execute is certain. And only thing is how much you ramp up, how fast you ramp up, which technology you go to. 00:30:13 Speaker 1: All this is uncertain. 00:30:14 Speaker 7: John, if I look at Blackstone's track record, maybe I'll use the hockey reference, being the Canadian that I am, that you want to skate to where the puck is going, right? 00:30:23 Speaker 1: Not where it is. 00:30:24 Speaker 7: So where is the puck going for Blackstone next? 00:30:27 Speaker 1: What is. 00:30:28 Speaker 7: The next trend that you anticipate will become a big business for you. 00:30:32 Speaker 4: I think we'll continue to be very long electricity because everything we're talking about around technology, the data centers, the autonomous vehicles, the robots, all of it's going to use electricity. So this AI is going to move from the desktop to the physical world. That'll demand more electricity. Obviously the digital infrastructure, hugely important. I think, unfortunately, based on the discussions here, Rishi knows better than all of us, but defense is going to be hugely important for pretty much every country in the world is going to be investing more on its own resiliency. I think life sciences is an area that we will keep doubling down. It'll be obviously good for India. But this technology, which we all rightfully focus on the risks, the benefits to human health are going to be the number one thing that's going to come from it. 00:31:29 Speaker 3: So there's going to be lots of innovation. You'll still have you'll need to do a lot of trials around that. 00:31:35 Speaker 4: And then I would just say geographically, because we are here, this place is It's got an incredibly bright future. When you look at the size and age of the population, the education that's here, English speaking, lots of people with degrees in technology and engineering, a government that's pro-growth. and yet you're working off GDP per capita that's 1 30th of the United States. 00:32:04 Speaker 1: Now with new infrastructure, this is. 00:32:06 Speaker 4: A place when we look over the next century that I think will grow faster than any other major economy in the world. 00:32:13 Speaker 3: So we want to deploy more capital here. 00:32:16 Speaker 7: And Rishi, the last word on predictability goes to you. What trends do you believe are durable enough to outlast the today's geopolitical and technological uncertainty. 00:32:33 Speaker 2: It used to be said that you couldn't be a high income country without being a high energy country. And I think John touched on that well. I think the same will be true for intelligence and compute. And that to me is the critical infrastructure of the next couple of decades. And ensuring that a country has that enabling infrastructure, I think is going to be absolutely critical of the electricity powers that India's investing in it. Countries need to do that in order to get all the benefits that John talked about, whether it's in life sciences, whether it's in productivity and elsewhere. And we're living in the midst of this extraordinary explosion in demand for intelligence, right? The Jivans paradox that people are familiar with from the 1860s when a new engine came along that made it all more efficient meant that the consumption of coal went up extraordinarily. And we're seeing that today. The demand for tokens is growing exponentially. I think that will continue and enable all these things. So yes, all these swirling currents are there. But as a country or as a company, having access to that raw intelligence to power your future, I think, is the thing that you can bet on. And alongside that, I'd say human ingenuity, right? No matter what comes our way, we are always able to find solutions, right? So I would always bet on human ingenuity, whether it's in countries like India or elsewhere, the people who are innovating, the entrepreneurs who are creating new things, supporting them and allowing their ideas to flourish and grow. That's ultimately how you develop not just security, but also prosperity and health to your society. 00:34:06 Speaker 7: An appropriate note of optimism on which to end our conversation. Rishi Sunak, John Gray, Chandra, distinguished guests, please join me in thanking them. 00:34:14 Speaker 6: Thank you, Rishi. 00:34:23 Speaker 5: Thanks for listening to Trumponomics from Bloomberg. It was hosted by me, Stephanie Flanders, and I was joined here in Delhi by Bloomberg's chief economist, Tom Orlick. You also heard a panel hosted by NEF editorial director, Eric Schatzker, featuring the Right Honourable Rishi Sunak MP, John Gray... and N. Chandra Shekram. Trumponomics was produced by Samasani and Moses Andam, with help from Gautam Gulati and Ajunt Singh. Sound design was by Blake Maples and Kelly Gary, and Amy Keene is executive producer of Talk Podcasts, with Cheryl Brumley, the head of 00:34:55 Speaker 8: Podcasts at Bloomberg.