. >> rose: welcome to program. tonight larry fink the ceo of blackrock talks about the global economy. the reason why i found this to be so remarkable the change in the oil market is all driven by technology, and we talk about technology in so many other areas, whether social media or other things, we spend too little time focusing on how technology is changing our every day economy like gasoline or how we are how it is -- how it is changing everything and i look at this as transformational. this is going to be, this new tech

>> rose: funding for "charlie rose" has been provided by: >> rose: additional funding provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose.

we have political issues that are impacting us, we never dreamed of even two years ago and an uncertain economy worldwide. we still have the middle class. you know having witnessed huge market movements upward and seeing real wealth craigs for some. and to the world.

now. >> hard in any one company to talk about that equalization process but at the same time i talk about the divergent world over the last ten years. we have had the biggest rise in middle class income worldwide in man's history so a lot of good things are happening and i think right now -- >> most of that was china? >> it is china, brazil, mexico, it is turkey, but -- so as you listen to the news you would be confused about all of the good things going on because the dominance is all of this divergence, and the divergence is going to be with us, so we have to overcome some of the negativity and focus on some of the other things going on and some of the things that are quite strong. so where the world is today the world is improving. the u.s. economy is going to grow a little faster than last year. probably a little weak never the first quarter because to the energy change. >> it is going to put it right

around three percent? >> lower, perhaps 2.8, 2.7. >> europe is going to be incrementally better than last year because they finally fixed the banking crisis and they have benefited by a very weakened euro, and they are benefiting by a very accommodative central bank so you are starting to see modest improvement in the european economy and then you have economies like india with a new government, with modi, who i happened to visit a few weeks ago. you have an economy that was stagnating around 5ish percent a year ago, and now they are going to receive the benefit of this lower oil price. that is going to add at least one percent to gdp to india alone, the reforms that prime nine officer modi is focusing on will probably add one or two percent to gdp so you will see india going from a five percent economy to an eight. now india -- china is going

through a modest reduction in gdp, if you remember five years ago it was growing at ten percent and now hovering around seven percent, probably going to grow slower this year but china may grow at six, eight, this year so another reduction of two tenths of six-tenths but the up swing of india will overcome all the weakness in china. >> because they will produce demand? >> or what? >> well, just because china and india are both big importers of crude. >> yes. >> big importers of natural gas alone the commodity costs is down so much they are able to now produce more, produce the consumers who are buying all the kerrkerosene and all the oil are going to be able to benefit and spend more. so this is always a good thing, but the most remarkable thing i think about the world is how technology is in front of our faces, we talk about it and i think the last time i was hear i was talking about the benefits of the united states because of energy and the united states was creating a million barrels

incrementally above it was two years ago and probably $2 million incrementally over the last few years and this is in front of us and yet oil was staying at $100 and being tested in early 2014 we has isis and the uncertainty in iraq and many issues and yet oil did not spike upward, and then we had the imf talk about global growth slowing modestly and you had the breakage of oil. now, the reason why i found this to be so remarkable the change in the oil market is all driven by technology, and we talk about technology in so many other areas, whether social media or other things. we spend too little time focusing on how technology is changing our every day economy, like gasoline or how we are -- how it is changing every thing, and i look at this as transformational. this is going to be -- this new technology and the cost of the new technology is going to create a permanent reduction in the cost of petroleum products.

now, can it -- can oil go from 50 back to 70 or 80? sure. but i don't think we are going to see it back at 100 and mexico is focusing on their reforms now. one or two years out, they are going to be beginning their hydraulic fracking and their energy reform, they are going to produce more oil so we will see more and more oil being produced, so unlike all all the other oil shocks we witnessed in our lifetimes most oil shocks were demand driven, this is oil shock that is supply driven and the supply was created by new technology. and our theme is about how tek following is going to change everything we touch, whether it is our sharing economy i believe there is so much focusñi on companies like uber how it may change the tech i have, i think charlie that uber may change carñi ownership so if you live in new york city or you

live in san francisco, for those people, you don't really need to own a car anymore. when you buy a car, it depreciate it is day you buy it you have to pay maintenance and you have to pay for storage and if you have some form of sharing, and this is a really remarkable transformation in society, i think the millennials are not so wrapped up like i was as a young kid to own a car. and i think now the whole concept of sharing a car, whether it is an uber or something different in five years, this whole sharing concept, and it started with sharing music on the internet and then we started sharing our hard drive calling it the cloud so, you know, we are just expanding this whole concept of sharing, and now it is touching the consumer, really importantly4zg items and one of the dynamics

is, while i am still and remain steadfastly bullish on the united states these technologies are all being created in this country. >> how are they affected in manufacturing? >> and what are the -- some worry about -- >> displacing the jobs? >> exactly. >> no question. we are seeing a displacement of jobs, because so many mechanized jobs -- or jobs are becoming mechanized. i think for educated economies like the united states we are in the next ten years we are going to be a big beneficiary of this too. >> my worry about jobs in the next ten years it will have a bigger impact in the rising population economies that are just beginning to find a route towards middleñi class. these economies have been based and if you talk about the emerging market most emerging

markets were based their economy growth was based on cheap labor. even in china today, china was the largest purchaser of robotics of any country in the world. china's wages have gone up consider my as we talked aboutxd the middle class has grown dramatically there. china to remain competitive now has to start having more efficient factories which means less human labor which means more mechanistic processes .. and so i believe the manufacturing process worldwide is going to change, but the engine of this ingenuityçó is in the united states and over a long cycle, not a short cycle we will have displacement in the short time and in the long cycle we are going to be creating more and more men and women who have the ability to deal with this technology, to deal with. >> more leisure time? >> we are going to need more people working on leisure time, helping people in leisure time as we have an aging population

which i talk about the longevity, we are going to have more people helping the aged. so over a long cycle i am not worried about the short-term displacement the technology does, in this country i am more worried about displacement in other cubs, but nevertheless for those men and women being displaced right now it is a worrisome period of their lives and in some instances it is very difficult to get another job. now, if you look at the labor statistics in the last two announcements by labor related to our unemployment rate actually unemployment rates for the high school graduate only has come down over two percentage points, so the unemployment rate is still two high at eight and a half percent but in 2008, 2009 2010 we were hovering at 12 percent so we have seen a dramatic decline in unemployment for the high school graduate. and if you even look at the

breaking up by ethnic group we are seeing a dramatic decline in unemployment for african-american and hispanics. >> lots of presidential candidates will make their way to your door stop in order to both seek your advice and as well as ask for support. most of those candidates are trying to articulate a theory of the case about middle class, income inequality about how to make the economy more. >> robust. >> robust what do you tell them? what is your own theory of what ought to be the best description for american that resonates to those questions? >> well, unfortunately, it is time and education, and time and education are long-term solutions, short-term solutions is creating -- >> more education. >> and also time. as we saw, many for people unemployed two years ago as we have now.

what i am saying is time. i think we will see wage inflation later this year and the statistics tell me it is harder to tell me educated young workers in the job market today. and that is why it is now filtering down. we are reaching lower in training. that's what the markets tell me today. and i think that is going to start showing up possibly later this year, definitely next year and we will start seeing wage inflation and that wage inflation is going to start lifting everybody up. we already have seen what 23 23 states who waged minimum wage i don't know if that number is correct but i think that is approximately correct. you are starting to see companies volunteer to raise minimum wage when they have a lot of workers so. i think it is happening. but the statistics do borne out the top one percent have benefited mightily more than the other parts of our society. >> obviously you just described things that are happening as a matter of course in terms of

wage inflation dipping in deeper in terms of people who in retraining them. >> yes. >> what does the government need to do what does the private sector need to do. >> do we need tax reform? >> president obama proposed free education in the community schools. >> right. >> will is a start. if that is approved and it happens to me that is a very powerful beginning but that is honk term trend to re-educate and to retool. >> i am a big believeçó never tax reform, i believe we need to make sure this is a nation where everybody want to come,çó getting back to my statement about the neckation of, neck khannationñi of .. the positive side object what is going on now labor represent as smaller component of unit cost in the manufacturing side. we are now seeing more companies bringing back manufacturing and

on shoring again we have seen in tens of years. >> what is causingñr that? you don't have the same labor costs we had before? >> labor costs labor represent as smaller component of the overall cost of manufacturing because we mechanize it so much. >> we have fewerñi workers on the manufacturing line so could we spend a few dollars more on labor because that would be offset -- that would be a little higher on that component cost but we won't have a transportation cost the shipping 0 something from china or korea or indonesia here, second date one advantage 0 in the united states no western economy has we have the cheapest natural gas of any nation in the world, so if you are a manufacturing, it depends on all of the forms of natural gas from, you know, from plastic to fertilizers these are all derivatives of natural gas.

and so our component costs are cheaper than what it would cost the manufacturing of those same items in germany or even in japan or china. so we he have this big structural advantage over every other manufacturer today. >> what is the decline of oil prices to 52 i think it was today and it may go up, you suggest -- >> it may go down to 30 before it goes to 70 yes. >> what will decide that? >> saudi arabia? >> no. >> the markets. the demand. saudi arabia -- opec has less control of the oil markets than it ever had. they represent 30 percent of the market of the overall market, you have to understand the market is priced to the last 2 million barrels, the last million barrels, and so if we have incremental more demand or incremental more supply, that is going to change the overall price for the entire market. and that is what is going on.

we have a supply imbalance and then some supply imbalance in the first six months of the year is actually greater than it was last year, because of all the wells that we started to build outlast year are now on stream and then are producing. we are not producing as many new wells going forward and that will impact oil prices in two years. canada already spent huge sums of money in their oil sands. that -- they have 500,000 more barrels of oil this year than last year. and then you have mexico which a year or two years down the row rowedñi will start seeing a real surge in production, so we see more supply, now key is if we have more global demand for carbon then we will find an equalization and that equalization from our long-term statistics is probably 70çó to $80. that doesn't mean it touches 84 or spike up around there but we believe long-term central is

probably 20 to $30 lower than it was for the last five years. >> you believe the keystone pipeline is necessary? >> certainly not necessary. it is a stipulate boll today. in fact, one thing people don't talk about, the fact that we did not do keystone and i was not against doing keystone when it was originally proposed but the fact that we did not do keystone, no one talks about it, we became more active in north dakota in producing more oil with we became more self reliant because we did not do keystone. so not doing keystone had a positive impact? >> yes very positive impact to the companies that transport, like all the train -- >> rose: so why billion dollars it? >> well the question i would raise, we have witnessed over the last few years some very horrific accidents with trains transporting oil. now if you want to talk about a

risk, these oil tankers going through towns, don'tñi you think a pipeline is safer and environmentally putting all of this oil in a tanker and going through all of these -- you know, the country side and towns? but i am not going to get into a political debate. i did not understand why we vetoed it originally. to me, it is now more political and do we need it today? no but my big strong view is, north america is the best place to be in the world today and talk about mexico and canada and the united states, the fact that we cannot create a regional cooperative energy system is a shame, and so keystone became a symbol more than açóñi fact. we are -- you know, mexico is going to produce huge amount of pipelines. and i don't hear any backlash on their proposed pipeline. texas has many pipelines now because, you know, they are piping oil in and natural gas to

mexico. this became a political symbol more than a would help u.s. growth? and first question is, if we see 2.8, can you imagine the gdp growthsgrowth in the u.s. over the next ten years reaching four percent? >> sure. >> easily. >> easily. >> can i tell you how many people three years ago, four years ago, five years sat at this table, smart people and said i can't imagine u.s. gdp growth at four percent. >> because of the same people probably could not imagine us becoming energy independent. >> yes. >> so people talk about deflation. >> yes. >> tell me what they mean and what is the -- i mean i realize it is the oppositeñr of inflation but what does it mean this terms of our economy today? >> deapplication means stagnation more than anything else. let's separate stag nation for a second. i believe we use too broad of a world calling it deval patrick application because it meansñr

everything deflation, i actually believe there is good deflation. >> oil prices at 52 versus 100 you can't say that is not good deflation so to me, what deflation represents for me, i don't want to talk about other people, it represents that it may meançóñi stagnation, you can't get out of this global -- this global poorçó performing economies. we look to japan as a great example of 20 years of gdp plus or minus one percent. and that is the stagnation that everybody -- >> in the last quarter did we come out of recession? >> they actually had a very strong first part of last year and they raised the consumption tax and the companies who sold over five percent last quarter grew 2.3. so and one of the big things about economics which is successful they have for the first time in 20 something years

wages in japan are up two and a half percent this year. it is patriotic to raise people's salaries in japan. but so deflation is overly used, it means we are going to have a stagnant economy. and if we really had true a0deflation that is really bad for financial markets, very bad for financial assets. deflation is truly one of the worst out comes of any economy, becapq it really just shows that we are regressing. the whole concept we are trying to have our children to have a better life than we will that can never happen in a deflationary environment. >> rose: do you have a theory of theñi market or so that you look at just look at companies individual companies and make decisions or do you primarily look at a macro economy or do you primarily look at what?

>> i spend all of my time because i am not anñr investor i manage investments. i spend all my time focusing on the macro economies. i allow my investors to find what is the best stock within a sector, but i believe in the 0 concept of factor investing, focusing on the big macro pictures and then translating that intoxd individual stocks or individual asset allocations, one of the big reasons etfs are the fastest growing market of the capital markets is you don't have to be a stock picker but you could have exposure, so if you believe that india is the place to be, you could buy an etf just for indian stocks if you believe that pharmaceuticals are going to be the best place to invest you can buy an etf just on pharmaceutical stocks. >> you are buying the index. you are buying the whole inindex. >> rose: got you. >> and if you really understand

the markets, which very few people do. but as an allocation probably represents 80 percent of performance so unless you have a long-term horizon picking what warren buffett has done, warren buffett has had a 40 plus, 50 year horizon of looking atñr companies taking good leadership and companies that are in a good position, he is using top down analysis of where to go, i mean one of the most brilliant moves of warren buffett, he believed the u.s. economy was strong and always advocating for a stronger economy and during the height of the financial recession of '09, he buys burlington northern. now, he possibly could havexd said well oil products, would be transported in cars too but, you know -- so to me, if you don't have a long horston hike warrenwarren buffett i do believe then

you need to focus on being, you know, investing more in indexes. >> he sold all of his exxon holdings, why did he do that? >> i don't know, by i assume,, to me it is a bearish view on the oil market. that they are going to to go down? >> a top down view. this is "the new york times". what you have been talking about. the economy is slowing, brazil is struggling as commodity prices plunge orcs russia facing western sanctions and heading into into a recession as big markets stumble india is emerging as one of the few hopes for global growth, the stock market and rupee are surging, multinational companies are looking to expand their indian operations or start new ones the growth in india's economy long a laggard just matched china's pace inñi recent months. >> >> what you were just saying? >> is it all because of modi? >> good leadership. great leadership who reenergizes hope.

and we know psychology is so much a component of how we liberal lies, how we live our lives, how we spend our money. >> hope and confidence. >> hope and confidence and modi is really given new hope to india, you have to understand, independent i can't is 148th in terms of being competitive in terms of ease of doing business. >> rose:, right, right. >> he will change that. >> when i saw the prime minister two weeks ago he said my hope to get it to 50. now, we would not think being 50 is so good if he can get it to 75 from 140 -- >> that is big. india has so much opportunity but we have seen this story many times, we have had many times we believed island and we have been proven to be disappointed this prime minister who is very successful as a governor of the state of india has organized

incredibleñi leadership team around him. brought some of the smartest minds in india. he brought in people from the u.s. who were born and raised in india. >> have come back. >> have come back, you know. and so i came away with a group of people, very confident in this government and at black rock we expect to be providing our clients opportunities to invest in india. >> talk about europe and greece. >> well,ñi the markets are pretty calm and a lot of people are asking, why are the markets calm about greece? and this is a big macro issue i haven't seen much on, but greece is not a private sector problem. in 2010 if greece failed then the private sector owned most of the greek debt.ñr today, 70ish percent of the greek debt is held by the ecb,

greek banks, they are all part of it, and then you have the imf who has a huge loan outstanding to greece, so it is not a private certain problem. as you think about what has transpired in the last fiveñr years after the great recession, we have had a transformation of debt being held by the private sector to an expansion of debt in the public sector. i mean the federal reserve owns $4 trillion of ponds you have the bank of japan buying all of this, the ecb doing the qe, so now we are watching -- >> rose: who is buying those? the central bank? >> i think we would be in a much worse position today, but i do believe those moves make people who have money in the stock that's correct wealthier and that's the one percent. so that unquestionably quantitative easing was very powerful for the wealthy but that was -- but it also had very big impact on the company but getting back to greece for a

second,. >> it is a game of kabuke. greece, in my mind is part of the international grid if you want to remain in the grid, you are going to have to ultimately conform. and if they don't conform they will become argentina argentina was in the grid, they did things that global economies said was wrong and they are now have no access to capital outside of the world argentina can't borrow? >> they can't borrow and if greece walked away today the banks would be bankrupt, greece experienced a 26 percent decline in gdp from 2008 to now:that's what we experienced in the 30s. that was from what to what 08 to 30 if they walked away now 0 you would see another ungodly amount

of decline in their economy. >> when would they be out of the euro zone. >> oh immediately -- >> this is a game of a bookie. >> kabuke. >> they haven't missed a debt payment yet. there is all being prepared. >> so this is all just negotiating talk? >>. i would think there they are going to try to find a way to extend their debt payments, extend their maturities and -- so it hooks like a win with a new government, but the europeans can say we held stead arizona. >> steadfast. i don't worry about this type of noise because i do believe this in most circumstances will work out. >> because i do believe common sense would be if you are a government and you want to make sure of the future of your country is better, walking away from that would not produce that outcome in the shore, maybe in

ten years it would but create a huge amount of pain for the greek citizens the at the moment i believe there is more than a billion -- there are a number, there is certainly more than a billion dollars of money leaving greece every day. >> so the wealthy are taking their money out of there so the country becomes poorer and poorer and poorer. >> rose: i mentioned central bank. you like -- >> i do. i think he is one of the hardest jobs of any politician or regulator in the world. >> well, he came through in terms of competence the at the time he needed it. >> he has proved to be quite resilient in terms of going guest consensus and even with some politicians against his positioning. he believed that he was the only -- the ecb was the only entity that could stabilize europe because the politicians of europe did not have a political will. >> so that was a huge confidence

building factor? absolutely. and you could see that across the board. now do i believe huey in europe is going to be very powerful? to. i believe what he has done is an out right devaluation of the euro from 140 to where it was before he began to 1.14 today. and that has helped competitiveness of europe considerably and this is why i think europe is going to start seeing an up tick. >> two other countries because of oil and sanctions iran and russia. >> again russia was part of the grid. and they are losing their connectivity to the world. i do believe. >> does that offer opportunities for investors or not? you know, these are -- politicians -- i don't make -- i don't believe in an investment strategy betting whether a politician performed admirably or performed aberrantly.

>> you don't bet on the behavior of politicians? >> i think there are other people better suited for that. i don't think it is a good investment strategy. it is very binary and it is binary and you cannot control. i like out comes where you have some knowledge. you can't control. you have no knowledge as to how mr. putin will perform in this. i do believe he miscalculated quite a bit related to the european response to his invasion for support. >> and then he got up front and couldn't get it back. >> i think that is the problem now. i think what cans lohr merkel did was powerful, last week or the week before and seeing the president, i believe, if the united states voted on bringing you know, weaponnized, providing weapons to the ukrainians, i think then we adjust amped up

the problem. i think we would respond pretty hostilely if the soviets or russians brought weapons close to our. >> yeah, i just don't think that is our responsibility. >> i think chancellor merkel, i assume that is what the conversation use. >> last week. >> last week, yes. >> moving back to the united states. the federal reserve. we have got accustomed to benjaminbenbernanke can i. >> then he was followed by yellen. >> how do you think she is doing? >> i think she has done a great job. >> doing the same policies -- >> i think she may be more biased a tad aáq doveishness but very similar, i think having stan fisher as vice chairman i think stan might be a little more right of janet i think the complement of the two is quite good. what i am impressed by a janet yellen and i have been to a few meetings over the last six months with her. she is very forthright unlike

most chair people of the fed. she is basically describing her views of the world and she is very open about where she thinks is world is going to go and economy activity and she says if my view is right we are going to do x. but in the next six months we are going to look at the data and if my views are wrong we may not do that. and so today the federal reserve announced that they are now considering elongating the zero interest rate policy and to me that -- and they cited international conditions and they cited, you know the target inflation rate is not being met the inflation rate is actually lower than the target. which we -- which we have more time to do things so my most important component about what janet yellen is doing, you should not be surprised at her actions. she has much more openness federal reserve policy and you

have a pretty good understanding of how she is and a half gaig the federal reserve. what is necessary to stimulate u.s. growth beyond what the federal reserve might do? >> well a big change we are not -- haven't spent must have time on in the last two years is state and government finances are much improved. we have states like ohio a $2 billion surplus this year. i don't know why ohio is not spending the $2 billion in infrastructure. they have some of the worst bridges in america. i mean they could create so many wonderful jobs in ohio to be added to its economy. even the state of california had a surplus this year, so we are beginning to get our motion -- you know, we are starting to see the transmission of all the federal reserve activity and starting to see state and local governments who had very severe austere at this programs in '09 and ten and

austere at this programs brought down expenses and one of big drags of the u.s. economy was we had rising employment in the private sector and declining employment in the public sector. >> that is stabilized too so many of these macro trends just take time to stabilize so i actually believe we will see more elevated growth beyond what my concern in the first quarter and we will probably see three to three and a half percent growth in the second half. the big anybody the first quarter that we talked about the concern was not spending 50 or $100 savings they are getting on the petroleum, so historically -- >> they are staving. >> they are staving it, right. and every consumer brand company i talk to is they areñi not seeing the big impact upon sales yet but what i am here is deposit rates are growing and american consumer are saving more. our view is that if the american

consumer sees that these savings at the pumper assist and it is not not just 50 or $100 savings a month but $800 savings after six or eight months, we will then see this is a reason why the third and fourth quarter will be better than consensus, because i do believe at that time the american consumer is going to say i have a little more spending money. i also hope the american consumer who is now saving this 50 to $100 a month are thinking about putting some of this away for their retirement, getting back to our issue about longevity. >> whatever happened to all of the concern about debt and deficit? >> at the federal level? >> yes. >> well, we indeed have -- >> we have deficit hawks everywhere. >> and i was guilty of being somewhat of a deficit hawk, so i am not totally 0 totally innocent on that. >> meaning the performance of the economy -- >> the economy has done better. >> surprised you and you were

wrong about fears -- >> yes, i probably was more an alarmist in 2011, you know, we need to -- or 2010 we really need to address some of this. >> right. >> but the federal government didñr this, the sequester that has some negative impacts,. we have cut our spending rates dramatically and last year our federal deficit was down to $470 billion, you know, three years ago it was $1.2 trillion. so we have now a slow -- we have a lowering of our annual deficits and we are having a rising economy, so as a percent of gdp, our debt to gdp is much lower than it was before. >> right. >> so the problem is, some of the reduction in savings -- reductions in spending we have done in the united states will start accelerating again out in about 20-20, and so we will have the same problem again we are going to have accelerated deficits if we don't find a way to navigate some of these long-term structural issues. the question is, what worries

you. >> is it the unexpected? or is it something more specific? >> well the biggest worry i have is when you read about -- getting back to my grid analogy, you have organizations like isis that is not on the grid, that is why there are more frightening than anything around, because they want to question stroi destroy the grid. they don't want so society, western society as it is and they are not funding, they are not linked to western society. i mean, as bad of what you may think of russia, russia is linked. their banking system is linked, you know internationally. >> and russian companies are doingxd business internationally and american companies are -- >> and the same with greece. >> right. >> so when you -- so if you want to persist in being part of the grid you are going to have to find a way to conform to the grid but when you have things like isis that are purposefully trying to destroy western

society that is probably the most frightening thing for me than anything that i can read today. most of the stuff i read is a little more alarmist and i don't think we are alarmed enough about -- >> rose: what would that be? >> oh, you know we talk about cyber security. >> oh, sure, right right right. >> you see these things. you know, what happened if they shut down the financial market and find a way? these are things that could change how we live our lives. the president last week was at stanford university talking about cyber security of the private certain. i actually am more worried about cyber security at the state level. i don't believe our state governments are spending as much money as the private sector in protecting the information that they have. most states in this country have a state income tax. most states collect social security numbers most states

collect all the information where you live. that's the information that people are trying to get so they can find ways of attacking a financial statement of an individual. well, we need to be -- we need to be rigorous and vigilant in making sure that our -- that as we get more connected to the web, whether it is state and local government, federal government, individual or corporation we need to make sure that we have security and protection. you know, when we talk aboutñi interconnectivity, as a world we are becoming more interconnected through the internet and we need to make sure that how we hiv our lives and how we are -- how we live our every day life is being protected. >> all right. there is finally two things, one about your firm, but secondly, i mean my last question about the oil picture, leon panetta, bob gates, lots of other people of

respected intelligence, high positions in the government and security field have said time after time the thing that worried me more than any other national threat to american security is dysfunction in washington. >> now is that alarming to you? >> uno what? i am almost numbed by how dysfunctional washington is. >> yes. so not alarming to me because i am numbered. >> i got you. >> i think this country would be so much better if we had a productive water. uh i think our economies would be growing more today if we had a productive washington. >> if we had more educating 800,000 students here and most we kick out so they can't compete with us and get educated here and they have a good history of being a good citizen why don't we let them stay here we don't have an infrastructure

policy and the worst infrastructure policy in the world. i am focusing on infrastructure the investing in india and focusing on infrastructure investing in mexico. and other countries worldwide. i just can't focus in the united states, because it is so hard to get anything done. it takes years to go through federal state local authorities. and so one of the reasons why our infrastructure is falling apart we don't have a federal government focus on these things and so. >> because they are gridlocked between republicans and democrats. >> immigration policy. >> same about tax reform. >> if we had tax reform we would have more companies to want to come here. >> science and technology. >> we could go on and on. >> those are all fair statements asses i said we would have at least one percent more gdp in this country. >> if we had one percent more gdp if there was not so much disgunks. >> all of the things that are necessary to make this country great were done, as we said,

immigration, infrastructure,, and tax reform, those three big things alone would be tremendous. >> of course some people say that is democracy and that's what we like. >> >> that's the down side of democracy. >> well -- >> go to washington and they -- >> i think there are periods of democracy when it is fabulously productive and i think there are periods of time when democracy fabulously unpredictive. we are in that bottom trough right now and we need to get back in having the men and women representing this country to build a better america and i just don't believe they are focusing on america. i think they are just focusing way too much on their jobs. and it really leads to, you know do we need to have term limits? do we need to do other things, you know, to focus on the right thing instead of preservation of their jobs. >> then finally there is this. you have four .6 trillion in

assets under management the largest anywhere. how did that happen? >> what did you guys do right? >> in other words -- >> i surround myself with smart men and women. >> we have a very simple business model. >> which was? >> we are only going to be a fiduciary, we are not be in any business where we compete with our clients. we will not change the and evolve into something we are not, we remain -- we have been in business 27 years and remain what we were 27 years ago. only an asset management company we conot have a balance sheet to compete with our clients. we, all our businesses on behalf of our clients all the revenues are from the client. we don't manage our own balance sheet and account:we believe that technology is going to be

critical in risk management so when we started the company in 198825 percent of the founders had a technology risk management background and we steadfastly always had a believe that risk management and technology is going to be critical and today we have been able to consistently build this platform to what it is today. >> and what was the biggest mistake you have made in the process? >> we have let down clients at times. we have been at times bad investors. we are not perfect and the most important thing we need to admit those problems and there are times, it was public when i went to one of the state funds, when i went to the board and stood up and apologized to them. >> we made a mistake? >> we made a mistake and let you down. >> what did they do in response? >> they thanked me and. >> did you continue business? >> yes, but not -- our business

was reduced quite a bit. we were in the penalty box for a while. >> you took the medicine? >> yes, i took the medicine and i didn't expect to have the same relationship after that. but most importantly, i would say overall, we have lived our responsibilities every day the same way importantly we are driven by exceptional client service. i measure the share of my client's wallet and what percent of that wallet we are earning and we are managing on their behalf and i am please odd to say in almost the majority of cases we are enjoying a larger share of our client's wallets worldwide and also believe in the global station of the capital markets so we believe the world was a great place to invest in. and we are in 41 different countries where we have over a billion dollars of assets on behalf of our clients. >> and 41 separate countries youok have more than a billion dollars in assets.

>> >> you said this, we are maniacal about driving high performance. we are also a family, our clarity of purpose is crystal clear, has never changed and never will what is the clarity of purpose?e4 future for our clients so. >> and to help them think about out comes instead of -- >> most people are focusing on too much noise on the newspaper, too much about what is happening today and if the focusñr on your -- >> and what the market is doing? >> it is meaningless. if you have a 30-year objective to have a pension fund does it really matter what is happening in greece or india today? no. so you need to focus on youraf now if you are focused, if your focus is to earn enough money and save enough money to have a down payment on a house in the next four years then that information in the newspapers is a little more important. so then you decide that the

advantage for that individual is differently. if your purpose or outcome is your child's education 18 years out, that is a different design. and so we are spending too little time on the moment, on the trade not enough time on theçó solution. and. >> i think we have done a very good job of trying to identify to more and more client a solution. >> we live in a political world, define for me what you would consider the character and characteristics of presidential candidate you would want to support. we talk about the gridlock in washington.t we need axd leader who can work the middle and build consensus and build a bipartisan washington again. we need a true inspirational leader. we talked about modi.

ini can't is a very fragmented political system but people built this view, while around this one leader, the same thing in mexico, president -- we need a leader. >> but looking at the same thing with him, he is in trouble down there. pin net toe he is in trouble down there because of his administration's deafness related to security and crime. >> yes. so. >> so 43 children and corruption at the -- >> yes. that has not been proven but implication of corruption related to home purchases. >> yes. >> family stuff. >> >> and yet. the economy grew 2-point throw percent in the last quarter. >> and he has announced there have been reforms in the energy and telecommunications. >> keep in mind some of the most reform mined leadership in the world, usually don't have two

terms. so -- or they lose -- or their term is truncated if you look at schroeder in germany, if you look at george h bush, one term. >> but he set up this economy for the great opportunities that we had there bill clinton. now bill clinton's administration took it even further but i do believe we can't look at -- or look at harry truman. >> right. >> you can't -- sometimes the most dynamic leaders end up being unpopular until the history books are written about them. >> truman is a good example of that. >> >> so jeb bush and hillary clinton. >> yes. you could support either of them? >> well i am a democrat. >> you are a conservative democrat. >> yes yes. >> and let's leave it at that, i am a conservative democrat but you know, historically i have voted democrat. >> you supported president obama?

>> i did. >> does the fact he couldn't do something about gridlock lie in part at his pete? >> at his feet? >> in part? >> i look at a president as a ceo. when i am the one who is blamed when we do things poorly or we don't execute properly the president is , you know, takes the leadership role wherever the president is in history and their job is to make this country better now the country is certainly better under president obama where it was when he got here. because he got here in january 09 in the midst of the biggest recession we had. so the economy is most certainly improved quite considerably, we were. >> win two wars and now we have a different challenge? >> well, we have a huge challenge in front of us. >> i am sure the president says he could have done things better. >> we do need now more than ever

as we talked about immigration, taxation reform, infrastructure. we need whoever that next leader is to focus on these big picture items to transform this economy. >> and that requires a certain level of leadership skills too? >> that you can ride the country behind you and have them engage in your vision and be able to communicate, and at the same time operate within the structures of washington, to motivate and demand -- >> or you have to speak to the people and have the people believe you and the then the politicians will follow. >> exactly. thank you. great to see you. >> charlie. thank you. >> thank you for joining us. larry, thanks for the hour. see you next time. >> for more about this program and early episodes visit us online at pbs dot come and

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this is "nightly business with tyler mathisen and sue herera. >> word games, investors are ready and waiting for fed chair yellen's testimony on capitol hill tomorrow. and there are certain words you need to pay close attention to. up and running, the west coast sports are back to full force, after both sides reached a temporary deal. but it will be months before things are back to normal. retirement rules. president obama backs tougher regulations for brokers. a topic we discussed last week and tonight we'll have more details. all that and more tonight on "nightly business report" for this monday february the 23rd. and good evening, everybody. welcome. i'm bill griffin in for tyler mathisen ma and i'm sue herera. invest