>> from our studios in new york city, this is "charlie rose." >> because longevity is the defining challenge of our age, it will affect our financial security. it will affect our tax bills. our job prospects in the future. in short, all of our future, and the future of our global economy. in 2013, the markets were up over 30%. and so we entered 2014 with a really elevated market, and the market needed a correction. we had a correction. the problem is we had so many investors expecting the momentum of 2013 would just automatically carry through 2014, and it was just, these were false expectations. so we've had a nice correction. the greatest component has been in the emerging market world. we have had a five percent correction here in the united

states and equity markets and we had a six percent increase in long treasury. we had a 12% between the valuation of long treasuries in equity markets. in the last few days, we have been, the market directions have turned. we have had rising equity markets and we have had a little decline in the credit markets. we're ok. the world is just, the world has many issues. and i do believe 2014 is going to be a hairier market. we will have to expect more volatility like we have had, but i do believe the net outcome of 2014 will be higher markets. but for most of our investors of the world, we should not pay attention to these inner movements because if you are focusing on an objective of 30 or 40 years, these little market

gyrations should not impact your overall needs to protect your retirement and build an outcome that will give you the nest egg -- >> i will come to retirement in a moment, but in terms of, or are we seeing any kind of shift from equities to bonds? >> we saw that in the fourth quarter. people made such huge profits and equities. they rebalanced into fixed income. we saw that behavior in the fourth and first quarter. some of it -- much of it is a process. you are a large pension fund and you have an allocation of 50% and equities and 20% in bonds. equities rallied so much, you needed to rebalance. unless you wanted to keep your higher equity balance, you needed to do that rebalance. we saw quite a bit of it in the fourth quarter. this is why we were not surprised that the market correction in equities. what is surprising everybody is how attitudes have changed towards china and the emerging world.

as i said, the developed markets more than doubled. the developing markets are down the last two years. so we have had a real change in attitude about the prospects of the developing world and the opportunities here. >> why do you think it is a good time to invest in emerging markets? >> if you look at the valuations of the companies within those countries, they are trading at relative to the potential growth rate am a they are inexpensive. they are trading at lower p.e. ratios than what is happening in the united states. and we all have memories of what happened in 1998 when you had the revaluation, 1990 with mexico. this is a whole different world of emerging markets. let's talk about indonesia. indonesia, a growing economy, high gdp growth --

the positives about indonesia. its debt to gdp is lower than most of europe. and so whereas europe continues to have very high debt issuance, these emerging markets have growing and stronger balance sheets. and a faster gdp than most of developing worlds. much of this is a liquidity issue -- money running and, money running out -- the long-term trend. indonesia is a good example of a strengthening economy and a strengthening balance sheet. >> when you say that, i you thinking about looking at markets there and investing in companies that will start the market there or regardless? you can find a way to invest in those companies that take advantage of the gross circumstances of a particular economy in the country talk about. >> you can do that through index funds or etf's. you can do in emerging market index. there are many ways of investing that you have liquidity but you

have the exposure in those economies. >> is the essential quality of emerging markets that they have a developing, an emerging middle class with enormous consumption power? >> unquestionably. that is going to be the big debate. can this economy translate itself from an export driven economy to a domestic driven economy? so china's economy went from the fifth-largest economy to the second largest economy in 12-15 years. and it was on the back of exports. and now has to translate its economy. this is what the reforms that are about to happen in china is to make it a more consistent economy that is based on domestic consumption. >> and they also say they will allow more allowance for competition with companies that are owned by the states. >> we are seeing an increase in

private companies growing. they are going to reduce the influence of public companies or state run enterprises. the future of china is going to be in the private enterprises, like ali babba. >> everyone is talking about that public offering. that is the thing to watch. >> ali baba is the equivalent of amazon. the laws in china are not as exacting as we have here. ali baba is playing the role of an investment firm. they are trying to sweep all of the cash of all of their enterprises and offer a money market return. it's one of the fastest-growing portals in the world. he's running the company, so he is creating that atmosphere. he is creating, like a ceo should, he is creating the direction of the organization. >> so when you look at that,

your guesses about the slowing down of china's economy, below seven percent to? >> so china has a big issue in front of itself. we were all pretty influenced by the reform announcements this past november. but the reforms are pretty onerous to become pushed. they are going from a policy rented economy to a market oriented economy. first of all, they have to create the metrics. how do you understand what a market economy is? so they have a lot of work in front of them to change this enormous economy towards a market-driven economy. i think that is going to take time. if you were a governor and some central province and and you were accustomed to directing through policy mandates, building a bridge, building the school to a point where you will be guided by market needs.

and if you do not have the metrics to make that determination, you are going to pause. you are going to see that. you are seeing a slowing economy at the moment and that is disturbing the overall market. one thing great, as we watch china, they do not care about a one-year movement. they are focusing over 10, 20 years. as investors, we need to be patient as that evolves. we will see how successful they are. it is too early to determine how successful they will be. >> and the leadership, the most -- the thing they most want is stability in the thing they most fear is the absence of stability. and some kind of tension in the social fabric. and as they shift to more of a market economy, there are the kinds of concerns about unemployment and all kinds of issues that come to the fore. >> absolutely. but this is not just a chinese issue. this is a brazilian, indian problem. when we talk about the 99-1 in

this country, technology is changing the whole landscape of our job creation. this is not just a developed economy problem. this is a developing economy issue, too. even india, i visited one of the largest manufacturing companies in india, and the ceo was telling me in their factory they once had 10,000 employees. today they have 1200 employees here and they have 30% more output. >> that is because of technology and enabled gains in productivity. >> the one thing we do not understand is the transformation and agriculture. technology is changing agriculture as fast as it is changing the manufacturing of electronic goods.

we are creating combines today that have eyes that can visualize the quality and the freshness of the fruit. and so you have combines picking fruit and vegetables. you do not need human laborers anymore. so think about the china-india-brazil equation. in all those countries, you still have many people leaving the rural, agrarian environment and moving to the city. and we are seeing more job displacement in agriculture worldwide than in any industry. we are seeing working in a factory in cities. this is my black swan. the biggest issue is are we going to create sufficient jobs in the china and brazil and india as this movement out of the agrarian area into the cities and into these factories, is there enough global gdp? in india, you went from 12,000 jobs to 1200 jobs in this one factory. technology is impacting every country. and it has less of an impact in a country like the united states or europe and japan because we have an aging economy.

we do not have that migration out of the moral area like they are experiencing -- the rural area like they are experiencing. this social issue will be the key issue for all of these countries as they try to navigate their economies and try to bring their economies forward. they have this incredible social pressure of people moving out of the rural areas and seeking work in the cities. can we create enough jobs in the cities? can we create enough global gdp to satisfy those job needs? >> do you think worldwide, and maybe you have been speaking to that in part, that the idea of somehow the 99-1% is going to be a growing issue? and income inequality becomes a growing issue? >> in every country i visit, and i have been in 20 countries in the last four months, every leadership i talk to is worried about job creation. and growing gap between those who have capital and those who do not.

and when you have rising equity markets, those that have capital were able -- were benefited by that, and those who did not are being left behind. and that is being aggravated by this whole transformation of technology. >> that return quickly to how you see the u.s. -- economic growth in terms of growth in gdp, just where you see, because you manage so much money. 3% for 2014? >> i would say 2.75 to 3.25%. so it is better than last year. but i do not think it is going to be as strong. they could get to 3.5. but i will target between three and 3.25. i think we have, we still have many things to overcome. i think the weakness in europe

is going to continue and maybe it has positive gdp of .2%. so we are just not going to benefit by a lot of trade overseas, but we are the envy of the world right now. the energy revolution that we have in this country. and finally being recognized in europe. this is one of my big themes that europe is just being left behind because of the cost of energy. blackrock is just going to be building a new data center in upstate new york. it's hydroelectric, it's green and it will be three cents a kilowatt. >> why did you choose upstate new york? >> we worked with the state. we were looking for something that would be socially acceptable because data centers are heavily energy use. obviously, it is quite inexpensive. so in new york city, it is $.22. versus new york city 3 cents is as low as you can find in the united states.

we have a status center in the state of washington with that same type of cost on the columbia river. my point is if i open that data center in germany, and germany is really moving toward more green and less reliant on nuclear, and they have not agreed on any forms of fracking. so electricity costs and germany are externally costly. so 3 cents in the united states -- $.46 in germany. so when you think about natural gas, although natural gas has moved from $3.50 to $5.00 btu in the u.s. it is $12.50 in europe. so we have huge benefits, and we're seeing many companies moving jobs into the united states, but those factories that once had 1000 people in the

united states may have 200. so getting back to this whole technology boon, we are just not creating as many jobs even as we develop more and more factories. >> staying with united states, having looked at my notes because i wanted to remind of this, -- remember this, you talk about energy, the cash the corporation's have and three is the banking community has, because of regulation, is firmer than it has ever been. those are the three things that you cite in terms of the u.s. economy and its future. >> the beauty of the united states. when we discover we have a problem, we generally are very cathartic nation. i talk about -- we fixed it. so in 2009 secretary tim geithner proposed the stress tests. we aggressively over four months raised $80 billion for these banks. in europe today, they are on their third stress test and this is being run by the ecb. we are so much further along.

our banks are looking to put money to work. in europe, the banks are still deleveraging as we speak. in the united states, we need more loans. >> with respect to monetary policy, is anything remaining to be done or is that not going to be a factor as you see tapering? >> chairwoman yellen spoke today that she will carry on the policy that chairman ben bernanke, she reinforces concept of low interest rates for a long period of time. and she reaffirmed the need to reduce the bond purchases and continue with the tapering. the one thing that people forget when we talk about the tapering, everybody gets concerned about what does this mean? we went from u.s. federal deficits of $1 trillion or more to deficits that will be around $600 billion this year.

so the treasury borrowing for the last few years have fallen considerably. so when you think about the federal reserve buying, going from $80 billion per month purchases, if they do not start tapering rapidly, they will be buying everything that is ever issued. so when we think about taper, we should think about taper in the context of what is being issued. this is why i have been a believer that we should be even more aggressive in tapering. >> ok. finally, to retirement. as something you care deeply about and think the country needs to think about. washington. fiscal policy. does -- any sense of optimism there? >> no. i spent quite a bit of time there, and i have eternal hope that we find ways of coming to grips with immigration reform. we need to really address our fiscal position and there are

just no ability for the men and women on both parties to come together and do what is right for america. >> i had the finance minister from mexico here, and he will be on the same program with you tonight. they came in, 3 party, president. they got three parties to agree. and i thought, this will not happen in. >> what the president it alongside his finance minister and the central bank is really one of the more inspiring moments. this is why we are so bullish on mexico. i happened to see the finance minister yesterday, too. and we are very constructive in mexico. we think mexico is another reason why we are constructive on the u.s. the reforms the president henan et al. has done -- penenetto has done, if the reforms are executed properly, mexico will become a juggernaut and energy. if you think about north america and mexico, we will be the

energy giants. >> what is the issue about retirement? what is the country need to know? what do retirees need to know? >> we need to educate everybody that we have a blessing in front of us, and that blessing is longer life. and we need to make sure the blessing of longer life is achieved with dignity now that we can afford longer life. we spend so much time focusing on good health, focusing on exercise and eating the right thing. and so we are going to live longer. when people think about the averages of long life, people forget to talk about that many men and women past in their 20's and 30's. so statistically if you were a couple in good health at 60 years old, one of the two is going to live to 92 today. >> 50% of 60-year-olds will live to 90? wow. so they need to think about what

the financial demands of better. >> the whole issue, getting back to jobs, we have seen a huge amount of job creation him about the job creation is for the men and women over 50. why? because they realize they did not save enough. >> so they have to go get a job. >> they need to work longer. that is a big social issue between the young seeking jobs in the elderly staying on longer, but the reality is with a potential of 1/3 of your life left, you had better be prepared financially. this is why we have spent so much time try to educate people. let's make longevity a blessing. how much money do you need to live with the dignity you're looking for? so what does that mean? it means you need to be prepared earlier. you need to start putting money away earlier for retirement. and it also means that you probably have to start thinking about having a more dynamic life

in your 60's. it probably means that we all should stop taking about retiring at 65, because you do have a very productive life in front of you. and so it is a combination of being prepared for retirement, making sure that retirement is done where you can have retirement with dignity, and it requires a lot of preparation, a lot of preparedness in terms of savings. and this is why we applaud president obama when he announced the mira, the my ira proposal. although it is a very modest amount, it reinforces this need that we have to get prepared for retirement. even in the corporate defined contribution plans, only 50% of americans participate. and so many americans today are not getting prepared for

retirement. >> and you are saying the first of you have is a recognition. how you do it may be the second step, but you have to recognize you have to have a plan. >> this is why whether you are republican or democrat, we need to educate on this whole issue. and then, once people start recognizing i am going to live longer and maybe i want to look -- to work longer, then you can have a very good date related -- debate related to entitlements. it is hard to take anything away, but you could create a glidepath today, if you are 20 years old and you are educated towards that you will live to 90. 20 20-year-olds will live to their 90's. for those men and women who are 50, you cannot change anything. but there are glide path things you can do. it creates a whole conversation. as a lifelong democrat, i

believe we need to have that conversation. and we need to talk to the men and women in this country and not treat them like children, treat them like educated people about the need to start being prepared. we have healthcare protection today, but we have no retirement protection. what i'm frightened of, many of us men and women have to live with their children. so they had better like their children. >> it is the responsibility not only of the executive branch of the government and the congressional branch, it is also the responsibility of the private sector. and the responsibility of the media. >> well, it is certainly a real responsibility with companies to help their population understands that issue. and it is the media's need to construct these issues. we do not have public support for those men and women who do not have adequate needs to live their remaining life and dignity.

we need to have a fullsome conversation about that, and then have them think about the need for preparedness towards retirement. >> thank you for coming. i know i've kept you longer than i should. next time, we will talk about stockholder activism. thank you. larry fink from blackrock. back in a moment. stay with us. ♪

>> pena has been talking about creating a gendarmeria, which is a special force with the civil command that will conduct what the military is currently doing, and that is also a big ticket item in the budget. >> luis videgaray is here. he has been the finance minister of mexico since the election of the president in 2012. the mexican economy has remained resilient during a turbulent time for emerging markets. drug-related violence continues to affect parts of the country. the government has started to operate with the vigilante groups. later this month, president obama will attend the latin

american summit in mexico. i am pleased to have luis videgaray at this table for the first time. welcome. >> thank you, charlie. it is an honor to be here. >> you told me a wonderful story, when you were at mit working on your phd, that our show on pbs was your companion for dinner. because you were living in a very small apartment. >> thank you for that because you are a great companion for those lonely years. >> thank you. >> particularly in the winter. >> you have had an interesting life from an academic to an investment banking to now. someone said the president has four important advisers -- you, you, you, and you. and he him in the state of mexico and worked with him there.

tell me about his and your vision for mexico. >> charlie, thank you again. the thing is, this is a time for mexico to move ahead. and to change and to address the changes that for many years were not addressed. 2013 was a remarkable year in terms of reforms that the congress approved. that is the commitment that the president has in changing things in a way that would improve the quality of living for mexicans. for many years, mexico was no as a stable economy -- known as a stable economy, as an open economy very open to trade, but with little growth. >> 2% over 20 years. >> the last 30 years the average growth in mexico has been only 2.4%. that is very low for an emerging

economy. that is not what you expect from economy with the fundamentals mexico has. >> you believe you can get to 5% over a long time? >> we believe that the growth rate should be five percent over the next decade or it in the reform agenda the president is pushing in congress approved last year is designed for that purpose -- to create better paying jobs not only for the regions that are now more competitive throughout the whole country. if you look at our energy reform -- telecommunications, labor, and financial reform -- all of these reforms have increased growth. >> growth is the key thing for you. >> for many years we have know that mexico has been blessed by nature, having abundant energy resources.

but the reality is we have not been able to seize that opportunity in terms of creating jobs and create low-cost energy for families and companies in mexico. small, medium, or large companies. that is something we can change. we cannot change nature, but we can change our laws and politics around energy. and these has been a very bold step. you are absolutely right. to have these restrictions on energy as part of mexico's essence. now the congress has approved a deep reform that will basically allow for two things. to have private investors, both international and domestic investors to come into the oil and gas sector and the electricity sector to compete. and also allow for competition.

which is critical. our state owned companies will remain a very significant player, and a wholly owned company by the state, but now it will have to become a more competitive company because it will face competition, and the competition will favor mexican families, mexican citizens by allowing better services, better quality of products, and more important, a cost effective supply of energy. >> is the keystone pipeline important, as an example of cooperation between canada and the united states? >> north america has -- anything north america can be the most exciting region in the world economy. it can be a very competitive region. and one of the reasons for that is energy, because we are, we have the natural resources for the. >> and shale oil coming downstream.

>> the mexican reform can foster that from the south. any we do to improve our coordination and ensure the supply of cost-effective energy for production in north america is good. so the keystone pipeline is part of it, but it is not the whole story. we are also building pipelines from the u.s. into mexico. and now with our manager reform, we should be able to create a very competitive platform. i think north america, now that we are the 23rd anniversary of nafta, has become a manufacturing powerhouse that is exported to the world. now the energy opportunity can create an even better competitiveness for the three countries. >> is mexico the third or fourth largest exporter of cars in the world?

>> mexico is the fourth-largest exporter of cars, but we are also the first exporter of flatscreen tv's, and the fifth exporter of computers. >> are you making all those things or are you simply making some of the constituent parts of those things and sending them away to be assembled in the united states? >> no. we are doing the finished goods. it is interesting that mexican exports to the world have an average 30% u.s. content. that means that every mexican export to the rest of the world is also an export from the u.s.. so mexico has become an important part of the supply chain -- where you see living, cutting edge technology being developed by our manufacturing, working closely together with north

american producers. and what is interesting is that north american integration is happening regardless if it is liked or not by our governments. it has more to do with market forces that whatever happens in washington or mexico city. and the most perhaps bright example of that is our joint manufacturing capacity. it is difficult to talk about the mexican manufacturing industry or the u.s. manufacturing industry. it is the north american manufacturing industry. >> do you find yourself now with talented, educated workers not going to the united states or somewhere or to asia, and are now staying in mexico? >> every year we have more engineers graduating from school. in mexico than we have in germany. the talent and the skills of the mexican workforce is a key factor enabling what we are able to produce and export. that is the source of competitiveness.

now net migration into the united states from mexico is zero. it used to be a large positive number here we have a net migration of mexicans coming into the u.s.. now the number is zero. it is other things. it is supplied trade, it is --supply chains, trade. it is a different time and we need to see opportunities created by this integration. >> when president obama comes at the end of february. >> next week. >> middle of february. when he comes next week, what does mexico want to hear and want from the american president and policies that might affect mexico? >> we have a very fluid

relationship with the u.s. government. president obama was in mexico back in may. we had a visit from joe biden also later in the year. and we have a lot of conversations ongoing with the u.s. government. >> the secretary commerce. >> the secretary commerce spent a whole week in mexico last week. i speak regularly with jack lew, the secretary of the treasury. these meetings are not about setting priorities are getting to know each other. these are about -- >> what would make it a successful meeting? >> to follow up on the priorities and the tasks we have set up since the beginning. that me tell you about one. border infrastructure. since nafta was enacted -- >> 20 years ago. >> trade between mexico and the u.s. has multiplied sevenfold. but the infrastructure on the border has not increased significant way. so now we are getting long

waits, cues for border crossing -- not only people book products. that is not something that will help the region as a whole. so we have to invest more in the border. and expedite secure border crossings. for that, we need capital investments in technology. that is something that as governments we need to address jointly so we have a working group focused on that. and this will be a good time to follow up and to evaluate how successful we have been. >> how would you like to see immigration policies change in the united states? >> first, immigration reform is something that would be a good thing, first of all for the u.s. and second for any mexicans that live in the u.s. it is something that the u.s. should resolve by itself. we understand it is a complex process.

and we think it can be good for the u.s. on an economic basis. >> are you insulted when everybody talks about strengthening border enforcement? >> no. it is about enforcing laws. and it's natural that the u.s. has increased security concerns after 9/11. and we understand that. but i think it is more important that an immigration reform in the states can have an impact for the competitiveness of the u.s. itself. there is a lot of labor, skilled, that could be in the states on a legal basis. be more productive and add more value to the u.s. economy. so it makes sense, not only on a fairness basis but on an economic cycle. it is the u.s. issue, and

something the u.s. will solve. >> let me turn to telecommunications. first, reformed energy. second reformed telecommunications. there has been a monopoly there and you intend to change that. >> if you think what to make a difference for a company to be productive or not? these days it is the access to information technology, internet, and telecommunications. in mexico, we do not have the competition to provide that. so the essence of the reforms passed last year is to introduce more competition. so we have a fully independent regulatory authority that has the power to enact specific actions to foster competition. that authority is already in place and starting to work. and we are quite optimistic they will enact measures to foster competition. and there are some secondary

issues pending. and we are working with congress for that to happen in this first session of the year that ends april 30. so the landscape for competition and for telecommunications. >> so what will this do to carlos slim's holdings? >> this is about the consumer. this is about allowing telmex to compete. right now competition is relatively limited. all observers of mexican economy -- and we want all companies to be successful but in a competitive environment. >> there is also u.s. economic growth.

what influence does it have on mexico? >> we export 81% of our goods. we export them to the u.s. >> so where do the other 19%? >> some goes to canada, some goes to europe. only 4% goes to asia. that means we are very much linked to the u.s. economy and this is a good thing right now, because the prospects for growth in the u.s. look much better than they did just a few years ago. so our fate and our growth rate is very much linked to the u.s. economy. so now that we're seeing these improvements, we obviously have good prospects for mexico. >> we have a new fed chairman here, janet yellen. and therefore, the question has to do with monetary policy here and tapering and how the fed makes a judgment as to how it

has to stimulate the u.s. economy. what do you think of that? >> for mexico, tapering is a symptom of something very good because tapering means that monetary policy is going back to normal in the u.s. and that is because the economy is growing again. as we find the u.s. economy is recovering, tapering is a good sign for mexico. of course, tapering is a challenge. it creates volatility in the markets. it creates an environment of higher interest rates, but we will always take growth, even if it comes along with tapering. it is important for emerging markets including mexico that the tapering happens in an environment of certainty. that means that markets understand what tapering is going to be like. the federal reserve has done a good job explaining the tapering and adding certainty to what the tapering will look like. now the markets understand that much better. and volatility is not such a threat.

remember, when we have small movements in the u.s. markets those amplify in emerging markets. so for us volatility is always a concern. the better understanding the market has of the tapering, that's something good for emerging markets. >> you are the finance minister of mexico. you feel good about the american economy? >> its recovery looks good. there seems to be some slack remaining in the labor market. >> exactly. job reports are not as much as they would like for them to be. >> so that is why monetary policy in the short end of the interest rate curve will actually remain quite low for the near future. but it's certainly a much better shape than it was. you look at the balance sheets of companies, families, and even the government it looks much better. >> if you look at the bric

countries -- brazil, russia, india china -- how is mexico's economy doing in comparison, which some of my mexican fans are upset they were not part of that? >> the key difference is that the fundamentals for stability and growth in the mexican economy look better than any of those countries. it is always hard to compare such a large economy is china with mexico. >> and russia has an economy that is dominated by one thing -- energy. >> of course, india is also huge. it is difficult to compare. but looking at mexico, and other emerging markets, our fundamentals look better. i will give you two examples. one, the current exchange count deficit. our deficit is very small. it is only 1% of gdp. whereas in other countries like indonesia and brazil, it is much

larger. it is one of the reason why analyst believe that mexico is in a better position. also our debt to gdp ration, government debt, is only 38% of gdp. that is 1/3 of what you have in the u.s. >> we are at 75. >> it is 1/3 of what you have in europe, and 1/2 of what you have in the u.s. so the fundamentals of the mexican economy look good. now with reforms in place, the prospects for growth will look better. so mexico, a lot of work needs to be done, implementation is a challenge, but the prospects are looking better. >> the key word is a limitation. that is the challenge to see if you can implement this. a tough challenge, too. >> yes, it is a challenge. in some cases, we need secondary legislation. that is the case in the telecom

reform. in education or financial reform, and those we just need to get it done. and this is a priority for the president and the government. and we think there is a fantastic opportunity. >> you are pretty much in agreement with the kind of indication from basel iii? >> we were one of the first countries to fully implement basel iii. now, at the beginning of this year, just a month ago, we elevated basel iii's standards into law. so they have been enacted into law. that makes our banking system one of the most robust systems in the world.

the capitalization rate in mexican banks is stronger than in the u.s. or europe. so that is also a strength of the mexican economy. >> does mexico look at nafta 20 years from now and say it was a huge success? >> certainly we think it has been successful. it has changed a lot of the economic structure in the country. some jobs were lost with nafta, but many others for created. the jobs that were created our jobs and sustainable industries. we think this is been a success. >> there is also this -- the war on drugs. we have had stories recently of some beheadings, which is not a new story. we have had stories of vigilante groups as they are called in association with police attacking drug cartels. where do you stand, and how is your policy different from the previous president? >> first of all, security is a priority. and will continue to be. this is accomplished problem that mexico faces and it needs to have a consistent strategy.

the trends are are favorable. the homicide rate since the administration came in is down 16%. and there are some cities where violence reached a peak, monterrey, are now much more secure than they were two years ago. there are some encouraging trends, but we have challenges in specific regions of the country, that is grabbing headlines he stay. in one state, there is a challenge to the rule of law. and the president took bold steps to address that. first of all, substituting local police forces and those were

substituted by federal forces coming from out of state. he sent a special commissioner with authority to have leadership of all federal offices in the state. and also announced an unprecedented amount of public resources devoted to the state, not only for security but for economic element. it is a challenge, but the president is acting boldly. but it will continue to be, this will continue to be a process of strengthening the rule of law. the rule of law is important not only for security but for the economy. >> i hear two things. number one, you would like to see more integration with united states. two, that you would like to make sure that the reform that you have implement it that you have passed is implemented as soon as possible. third, the image of mexico. if you have a story to tell, you want to make sure that is the story that is heard and not

another story. >> that is correct. the past few years, the only things you heard about mexico was security problems and shootings and killings. in mexico has not been like that. now what you are hearing about mexico is that the country is changing. you are hearing about reforms, political agreements enabling things to get through congress and get reforms done. so that is the image of mexico. and that is the true mexico we want to convey abroad. and there is a lot of interest and enthusiasm as to what is going on. >> coming to power of this ministration is the return of the free party to control, to

the executive role in mexico. one of the things that americans would look on with, how did they do that, would be something that is called the pac from mexico where you got three political parties to cooperate. >> that was an unprecedented event. >> something we cannot imagine. >> for me, we all knew that reforms were needed in mexico. we were just unable to agree upon them. and finally, last year, through an agreement, a broad agreement with the three main political forces the president was able to push his reforms and get them done. >> how did he do it? >> it was based on agreement. spending many hours talking to the leadership of all three political parties, of the three main lyrical parties and setting up a common agenda. the telecommunication reform, financial reform, many of these reforms are part of this agreement. it is based on the reality that in democracy it is going to be only through agreements in congress that we will be able to push change. so the main priority since he

was elected was to create the agreements and the environment for in congress to get the changes done. and it has been a success so far. >> thank you for coming. >> it is a pleasure to see you again. >> thank you for joining us. see you next time. ♪

>> live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. our focus is on innovation, technology and the future of business. following a few big stories today, alibaba is launching an e-commerce site. we do not know if it will look more like amazon or etsy.