tv Asia Edge Bloomberg January 25, 2015 10:00pm-11:01pm EST
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the price of crude oil. >> coming up this hour, a new year and new mood. india and the u.s. coysy up again and fut diplomatic rile behind them. more on the prospects from oil. plus taking center stage. jack says alley bautista can be bigger than -- alibaba can be bigger than walmart. >> the last week of january, more important reaction to greece and the oil price dragging down. all the markets are down. australia is closed today for australia day. no reaction there until tomorrow. china actually opened higher. and the japanese markets are down by 2/3 of a percent.
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they are all down. clear thri greek story is weighing on investments and what does it mean for the future of europe? i'll give you reaction to the greek in detail. >> greece march to victory in election some say may decide the future of the euro. just two seats shy of a majority. and what the result could mean. what do we have? >> this anti-bailout coalition coming together and reports that alexi will be sworn in monday morning. the new government could be formed by tuesday evening according to party officials. this brings together years of anti-bailout sent nment greece. anger that greece had to bear the brunt of the financial crisis there and bear the brunt
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of sweeping restrictions imposed by its eu partner. >> the much lothed troy cayou could argue. >> they still want to be in the euro. we have 74% suggesting they would not like to leave the euro area. what is next for that area, what is next now for greece? >> they have to put the coalition together and find unitty within the coalition to map out this strategy going forward. how will their funding requirements be met. what will the eurozone offer going forward? the current round of financing expires the 28th. the european commission resolve in september. key issues at stake here. the greek people not happy with the state of affairs in recent years and with this vote they say things will change. let's listen in.
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>> the new greek government will be ready to cooperate and negotiate with our partners a fair, mutely beneficial and sustainable solution for greece to escape the vish vicious circle of excessive debt and for europe to return to stability growth and values like democracy and darty. >> we're getting early comments after this election and as they prepare to form this coalition and we'll hear from european leaders in the coming days. european finances minister set to meet monday on this vote. >> let's get back to the markets and get reaction to the greek
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election of course not just being reflected in this weakness of the euro. >> yes. look at the yen. yen is strong the euro is weakening that means further pain for the exporters in japan. they have a strong trade relationship with europe. look at this performance. this is the trading range. there has been no change this morning. that's the reaction you'll see again. look at the longer term charts, it's significantly weaker. the yen is strong exporters get damaged. look at the industrials, industrial goods, construction stocks. these exporters, when you are shipping to europe, you see not
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rising clearly the impact will be goods more expense ave broad. you have the cement builders there. construction companies. dollar is strong as well clearly against the yen, that doesn't matter. the obviously trade today look at the reaction to greece is indeed that yen euro. there is a little bit of concern, obviously the fear index. markets are fearful and the u.n. against the euro is just passed 7,000 for the first time since 2001. it's very much about what is happening in greece. what is going to happen and particularly the precedence being set for what could be a very broken up european currency
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which we'll find out in good time. >> we're going to be joined by andrew in-in just a few minutes time. >> the other big story today president obama's visit to india. the trip comes just weeks after the prime minister's successful trip to the u.s. and hails a warmer atmosphere as the two nations vow to deepen particularly in trade.
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♪ >> good to talk with you. what can we expect today? >> the centerpiece of president obama's visit to india. he's tending the republic day parade with the first lady there. it's a very big deal in india they are here. it's a parade that last for several hours. president obama will be in a viewing stand.
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he'll see a show of military might of india. he'll see performers. he'll see a whole perspective cal and the whole country will be watching on tv. later the president is going to meet with c.e.o.s of u.s. and indian companies hoping for results from the talks this week from the ob and prime minister. they are eager to talk with him and hear what new business opportunities may come out of this week. >> already some agreements in play. how significant are the agreements on nuclear energy and climate that came out yesterday? >> the government of the u.s. and india are both excited about the progress they made yesterday but it's more of the incrementle nature than a huge change. the prime minister was just in the u.s. in september so all the details they were working on was announced then and it's a short aamount of time to work that
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agreement. there has been a change in how india will approach liability for operators of nuclear power plants and that means that companies like g.e. and westinghouse may be more willing to invest in india in the nuclear power industry. it remains to be seen if companies site as big as the governments do. >> what role does the personal relationship that we're seeing grow between obama and the prime minister really weigh here? >> that's the important part which is why their second meeting since he became prime minister since last year. they've spent a lot of time together both in washington where president obama took the prime minister to the martin luther king memorial which is very meaningful to the indian people and it's a significant
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visit in india. the two spent a long time together in a series of meetings yesterday and the personal relationship really is important to improving relations between the u.s. and india which were very tense after last year. things have greatly improved since then and the leaders of both countries are much more optimistic they can be strategic partners especially given the tensions in the middle east and relations with china. the u.s. sees india as a very strategic partner. >> strategic and very important partner. covering the visit, thanks for that. >> let's get you up to speed with some of the headlines now. china said to be under pressure from some of its biggest share holders to find a chief executive. plans could be announced as early as next month. rising cost for bad loans
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forcing the bank to cut three times in 2014. amazon japan are fully cooperating with police against child pornography. there is an investigation whether sellers used its website to trade pictures of underaged girls. it generated more than $600 billion in 2014. >> japan has a record trade deficit for 2014 despite the rebound of exports. shipts climbed 12.2% from a year ago period with exports to the united states growing at almost twice that. and they came in at 24%. imports climbing 2% leaving a deficit of $5.6 billion. the rest of the day news go to bloomberg.com, and you can catch
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up with some of the interviews you missed on bloomberg today. >> still to come predictions oil will rebound to $65 a barrel this year. coming up next more on the wider implications of the recent greek elections. our next guest says the country's debt burden has always been overestimated and there will be no greek exit. that's up next. ♪
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international credit tors. the greek economy has shrunk by a quarter since 2010 and youth unsploiment running at r50%. let's get more from our next guest who sees no greek exit. did you bring that with you? >> you are good with greek. let me add value here. the name of the party that just won the election citizen means cutting off from the root. they are cutting off from the root. the idea is this -- >> no more austerity. >> it means two things. they will have to assume strong posturing towards european partners. they know if they were to leave the euro there will be an arctic financial in greece that will last 10 years and it will pail in significant to what has gone
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on before. there are three ways they can take that. the first way is we're going to stop with economic reforms and sale of public assets or linebacker lies the public economy and that the european union is going to swallow. the second is not tax any debt to the irs. that's a no no. out of greece $250 billion owed to international institution. 2/3 primarily held by european institutions and small by the i.m.f. and then they can average matty of the greek is 15 years. streck stretch that to 20. the interest rate they are paying is 2.5% of g.d.p. they can say we've negotiated. we are holding on to what we're
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saying and with this change we change nothing. >> we're speaking greek, we're speaking french. tall languages. >> what a national broadcast this is. >> markets are speaking volitility right now. >> we have to put that in context because greece say small pebble in what has been happening. this is what we can do but we need drastic economic reform which he's not going to get. >> and recognition austerity alone can't -- >> we're in for an unbelievable messy year 2015 and that's why i believe the americans will not increase interest rates not because they want to help the global economy. if they do they will see
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american interest rates coming down. they are supposed to be going up as the fed is increasing there. is going to be a huge flow of money back into united states glardelar. the europeans have said we're not going to do anything to interest rates until september 2016. that's nearly two years from now. zero interest rates in europe and japan and increasing interest rates in united states without this causing their rates to come down as they increase them, no way. i stick my neck out. that doesn't increase interest rates in the year 2015. >> you stick your neck out often which is why we love having you on. let's talk about greek exit. no austerity and whatever that means. but really the con tagen not financially but politically. spain, italy and portugal have their anti-austerity political toned elections coming up.
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>> put greece is still under the i.m.f. and european union. spain and portugal are not. they exited that. so greece has in a sense their right to say we're being strangled. you're not. so we have the right or the to the fight for breathing space where you are not under any obligation to do anything that the european union and i.f.m. are telling you. so they might have a weird right to say we are different. and therefore giving less right to the portuguese and spaniards to say we're not going to obey the 56789 c.b. they are not under the obligation to do so. they have been raising their own money and greece has not. there is a big difference. >> a lot more coming up with you in about 20 minutes from now. hang in there. thanks andrew. >> china now the world's biggest
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china is overtaken the united states as the biggest market. >> in terms of iphone sales this. is the turning point the c.e.o. mentioned a couple of months ago saying china will be the biggest revenue contributor for the company after a very saturated market we've seen in the u.s. again, this report coming out from the financial times citing several analyst, broke out the numbers for us there is aing recent data suggest that iphone demand saw outsized growth in china off the charts, as much as 36% of shipments in the quarter went to the country compared to 22% last year. then in the u.s. 24% of the shipments went to the u.s. this quarter. analyst say the turning point happened once apple signed that deal back in 201 allowing them to cell the iphone in china.
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and another analyst being quoted saying they forecast around 2 million more iphones were sold in china than the u.s. and north america in the quarter overall. >> apple doesn't have its own way looking ahead. we have all these upstarts, some of them more than upstarts producing a lot of rivalry here. >> yes still the most popular smartphone maker in the country there, similar to app until terms of design language and their marketing as well. but overall they have dirt cheap prices that we've seen in that market there. so it is tough to beat. then you have the run ins with the chinese government. you may remember the latest iphone release was delayed by a month because of the long review process. >> let's check in on some of the stories making headlines around the world. japan is shocked to the news one of its nationals may have been
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killed in syria. they demanded a $100 million ran some for each of them. the message from website sent after it was posted. united states says it's prepared to step up sanctions on russia amidst violence in ukraine. 30 killed and more than 100 wounded over the weekend. the attack came just hours after prorussia separatist rejected peace talks and promised a new offensive against government forces. >> two attempts to lift the air asia plain fuselage failed after collars snapped. officials say strong currents were too much for the ties and the wreckage sank back to the sea. but 70 bodies have been recovered from the plane. fishes say a preliminary accident report may be released this week but a full
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investigation may take months. >> a quick check on the markets trading in the region touchdown. we are seeing .1% lower. some dampened sentiment on the heels of the party winning the election in greece over the weekend. here in hong kong we are seeing chinese stocks trade in hong kong falling for the first time in five days. financial and commodities down also had. we're looking forward to the afternoon's business in tokyo where the morning session was in negative territory. your watching "asia edge." ♪
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euro weakening towards 11 year low monday morning the small came up fourth. together they are going to have the majority. only one stock fairly flat. the rest falling 2.5%. industrials down .5%. all the major industries are in decline because the yen is strongs that making good more expense ave broad. australia closed for australia day.
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you can see again two day chart. there it is opening lower. now it's changed directions. it's a quite volatile market in europe. no real individual reaction to the greek lecks. japan is the obvious one letting the market digest the implications of this victory in greece and what it means for the future of the euro. does it now become fragmented and can greece not pay their money and debt and default. all these questions are unanswerable right now. right now the markets are just taking in and will it be a big game changer. >> crude futures are also continuing to decline this monday. cheap oil has helped many countries around the world but none as much as the philippines. >> a lot of countries have the situation where they are net oil
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importers. you have techs porters and the importers. what is unique about the philippines and why it's a bigger winner here and why investors have bought into the idea it's not a very wealthy country so a big drop in the oil price feeds into things like making commuting cheaper, bringing down electricity bills. so a big drop in oil puts a lot more money into the pockets of consumers. if a 70% consumer driven economy meaning 70% of the economy is made up of consumption. >> that's the same case as the united states and we've been talking about the tax break that is cheaper oil. >> the transfer of wealth from oil producers into a lot of net importers of oil. the bulk of what has gone into southeast asia into the philippines, apart from the philippines it's maybe
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singapore. the philippines you have half a billion there in the first three weeks of january. everything else, indonesia, thailand and malaysia which is oil exporter has seen net out flows. record high on friday. we are down a little right now but it's out performing. longer term it's still the investment theme is in tact. you had good demographics and now it's benign inflation. short term it's looking a little expensive compared to its neighbors and that's one of the reasons we may see a rotation outside the philippines. the fundamental reason of the economy is that as they look add cross 45 countries and they are saying if oil stays or trades at about $40 and we're $5 above that. if it trades at $40 for the next two years. philippine growth will average
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7.6% growth. that's something a lot of countries would absolutely kill for. that's a big gift. $40. we don't know where oil prices will be. >> it could rise, never know. >> thank you. >> oil may slip further but will bounce back. thank you so much for joining us. now you are suggesting that there is all this talk about $20 a barrel is nonsense and we're headed back to $100 but perhaps not in the near term. what gives that you idea? >> operating cost issue. if the price of oil goes below operating cost then everybody stops everything and the prices will jump. so $20 exceeds operating cost of
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unconventional oil and some operation cost of canadian and conventional oil production. it is inconceivable thing anymore than a week or two the prices could be at that level. we expect the price to go down to $40 range and bounce back in the third quarter and more in the fourth quarter of this year. >> bounce up to what? what are you suggesting here? >> i think that third quarter will see $50, $60 and fourth quarter will see $60 $70. we have to realize it has had no impact on production of the oil in the united states yet. in fact this year we see u.s. production going up by a million barrels per day. it's only by the end of sum ter impact of these lower prices would be translated in real actual decline in production. so fourth quarter is the first sign of reduction in supply we
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see from the united states. >> what you are saying to me is that you are subscribing to the theory that oil production is remaining artificially high just to bring down the price and put the shell producers out of business? >> i don't think this is a theory. it's issue which has been discussed openly by opec countries, in particular the oil minister in saudi arabia. he said why should low cost producers have to suffer when they are prospering and that means that the high cost producers need to be able to survive in a low cost environment. so i think it's more than a theory. it is a reality of the market and this is the way that the market is heading. >> that's just it here. so you think this is a wise decision in your view that opec continue with policy the way it is and actually overproduce? >> actually opec has no choice.
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if they did not do this this year they would have to do it two or three years from now. from our point of view this should have been done early 2013. you need to restructure the world so that the low cost producers would have an advantage over the high cost producers this. is economic logic. this has been reversed. so we are now seeing a restructuring and the division economically is sound and something that the markets would understand. >> but there is one thing you your notes you talk about, you say many oil producing countries have a boss but not the u.s. there is a boss. it's called the price. >> yes. the boss is the price and there are lots of small producers. they all hedge it differently. they have different practices. that is why there is not one
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break even point. there are many break even points. if the price of oil goes up then the production comes back in again. so we have to be ready for the volitility. the prices go down, the production goes out. prices go up, production comes back in. you have to understand the way the oil producers work. we believe at $40 to $45 you would hit the growth of the business in a severe way. but we have not reached the floor in our view yet. >> that's like trying to catch a falling knife and these markets tend to overshoot. if you were an airline boss and recommended what he or she should do next. should they hedge and hedge pretty soon? >> no, i think this is the problem. the airlines haven't been able to reduce prices because short of one or two of them, i hear
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hedged benefited. at this point in time you should try to catch the floor and the floor still is not here. so hedging now is a mistake in our view. >> thank you so much for joining us. pleasure having you on the program. >> time now for a look at the corporate stories making headlines. >> the plan to merg two of britain's mobile phone operators will need the green light from europe. hutchson may have to make significant concessions to win regulatory approval for the $15 billion deal between three and o 2. spain ha h to sell 30% of its network capacity last year. user names and passwords of 20 million visitors have been stolen and offered for sale. they posted the news on an on
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line forum fleented by cyber criminals. it's for users in russia and the european union. the details could be used to try to access bank accounts and other sensitive data. >> the website of malaysia airlines has been hacked in some regions. a group named the cyber cal la fate says it was behind the attack. isis will prevail. malaysia airlines is still working to resolve the issue. those were the top corporate headline this is hour. >> coming up next the voters have decided against austerity in greece. but what does that mean for the future? our all in discussion when "asia edge" returns.
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>> let's talk about the whole problem with greece which is this huge tcheat it has. this is arguably smoke in mirrors. it may not be as bad as that you could argue. >> there has been a movement in the way debt has been accounted for. it's not anywhere near the 175% of g.d.p. that doesn't matter because you are dividing apples with bananas. g.d.p. say flow concept. it has andersen you'll flow of goods and services and income. debt doesn't have a flow. so it's like saying i'm going to divide like the price of my house with my income so it doesn't mean anything at all. >> be that as it may the more
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important is how much of the greek g.d.p. is dedicated to paying interest? take a deep breath. .5%. that doesn't look that big. >> that is interesting. >> 15 years maturity which is one of the longest in europe. so there are a lot of different ways in which the greeks will be able to stretch it without saying we're defaulting. now the european union can give them an exit of five years. they can cut the interest rate they are paying. a lot oist is interest rate free for 10 years. there are a lot of ways they can play it without saying we are not paying. i.m.f. debt is untouchable. nobody is going to say we're paying i.m.f. debt. which means they can turn to the leck or thes and say we're going to renegotiate. they stay in europe and sort of live happily ever after.
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i don't think we're going to see some really dramatic happening. if they were to take greece out of the euro that's arctic winter for the next 10 years. they will be hanged within one year from lamp post. >> i don't think even the greek people want an exit. what they do want is a stop to all of these austerity measures that where one in two young people don't have a job. imagine that. >> i was in athens, we go about three times a year and i was there at christmas and their shopping was not good. >> the weather was terrible. >> the weather was quite nice but it was the worst i've ever seen in terms of looking at people and talking to people and walking out in the street. >> the problem there is exactly that.
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it's not the anti-austerity feeling. it's the fact it can spread and just in spain for example the leftist party for them are coming in with all of these notions of anti-austerity. so how big of a problem is that? >> what do the people say to you, what was their biggest gripe? >> the mood is there seems to be no toned it. we had a big debt we never paid taxes. the civil survants were good. what is next? more caps more austerity. haffs the issue. now being asked whether this was right or not, the answer of course is that the amount of economic reform that greece needs to go through has not even been started. that's true for the rest of the european union. to point the finger at the greeks and say where are we now. once drag sirks introduced.
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there was big that said we need fundamental reform and if that doesn't take place forget about me. >> the emergence of the far right parties have a lot of power in europe. that is getting more and more attraction. >> does that change the voting culture? that's a scary thing. >> yes and no. the greek communist party, let's go back nearly 70 years. there was one massive civil war in greece that is hardly known outside greece that started before the second world war had even end. they fought in december 1944. when did hitler commit suicide may 1945. threrp already fighting their allies, the greek communist party fighting the allies and that continued until august 1949. greek communist party gets year
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in year out 12% of the vote. it means one historic with a pinch of salt. that's why they are positioned in greece, the right wing party. as they get nearer to have having a vote majority in the parliament is good news because they will not need to rely on anybody else. like them, don't like them, that's the way it's going to be. >> thanks for that. that's the way it's going to be. right now at least. still to come. >> we got an interview with alibaba and how he's used to people calling him crazy.
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>> we have a chance to speak to some of the big names including the u.s. treasury secretary. he's happy about the strength of the dollar. >> i'm going to repeat what i and all my predecessors always said which is a strong dollar is good for america. right now we have a strong u.s. committee. we have an committee that tha is stronger than a lot of other committees in the world. i think the challenge is to bring it to a better performing position. >> we asked if he's feeling extra pressure from tighter banking regulations in the u.s. >> it's part of the background we are dealing with now that effects almost everything we do. i can't think about our technology spent without the number of head i have to hire to build the systems to comply with the new regulatory funks. it's a fact of life.
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but no choice, no problem. >> and the governor of the bank of japan gave us his view of the bank stimulus. he says it's good for the world economy. >> this action by the european central banks would be eradicated and grow accelerated. both of them would be beneficial to the world economy including the japanese economy. so we welcome this action by the european central bank. >> another big name talking to us. alibaba founder told us about the challenges of conquering his fear of going to jail. >> the first few years alley bar bab ba is marketplace for information. what you have, what i have we talk about don't do any business
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because there is no payment. talk to the banks, no banks want to do it. they say no, this thing never work. so i don't know what to do. because if i launch a payment system, it's against the financial legal laws because you have to have a license. but if i don't do it e-commerce will go nowhere. so then i listen hadded to a leadership discussion. leadership is about responsibility. and after i listened to that panel i give a call to my friends, my colleagues and say do it now. if something wrong, the government not happy about that. if one body have to go to the prison jack might go to prison because it's so important for china. if you do not do it, and do not
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do it properly money wash, no trust record, i send you to the prison. so that was the thing. and people don't like it. so many people i talk to at that time say this is the stupidest idea you have ever got. but i say i don't have stupid as people use it. >> he invested a billion dollars. it turned out to be a pretty good investment for yahoo!. but you raised this money on your own outside of china with invest tors. >> yeah, i'm very thankful for all the investors because 1999 year 2,000 and even lot of people say this jack is crazy. he's doing something we don't understand. a lot of venture capitals give you money because there is
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american model there. but they say alibaba we don't see this kind of model. this is crazy guy. i remember my first time in time magazine. they called me crazy jack. crazy is good we are crazy but we are not stupid. we know what we are doing. if everybody agree with me. if everybody believed our idea is good, we have no chance. so the money we raised we are very thankful. so when our vest tars make a lot of money, aren't you proud and honored. >> you get more on that jack talking to charlie rose of course. download the bloomberg app at the app store or anywhere else you want to go to the android store. it's available on all three
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