repeals the volcker rule. gives more oversight of the consumer financial protection enacts heftier fines for financial misconduct. what is the volcker rule? why does it need to be repealed? guest: when they passed dodd frank, they took a collection of things the democrats had on the side they wanted to impose on the marketplace come on wall street and main street that they had been hoping for for a long time. one of them was the volcker rule . to basically put limitations on what banks could do. if you dig down into it, you realize the crisis of 2008 had nothing to do with proprietary trading, how banks make their money. that was not the problem. the problem was the real estate marketplace, mortgages. that is what push the economy over the edge. they put in all these other things. volcker come after the regulators try to say how do we implement this new cumbersome arcane rule, said this is not what i intended. i did not intend for the banks to be restricted in this manner. that is what we do in this legislatio

none of them have the guts like paul volcker and ronald reagan to spark the economy. none of the governments have the guts to do that. >> you are right to mention paul volcker, as chairman of the fed with us, when we came in, he was spectacular. he handled monetary policy, brought interest rates from way too high which brought them down to equilibrium market, and you had good growth and low inflation, and that you just have to hand off to paul volcker, a wonderful accomplishment, along with ronald reagan, they worked as a team beautifully. and today we don't have any of that. a bad president, a bad fed, and don't be surprised if the results are bad as well. charles: i'm not sure how much you heard of president obama's -- >> di. charles: update on isis, it became more of a stump speech. i tweeted move over elizabeth warren, this is the real attack dog in the race for hillary. we're talking about illegal immigration and the big argument over enforcing borders, controlling borders is a central issue in europe, particularly in england where they vote on the brexit. where

repeals the volcker rule.es more oversight of the consumer financial protection enacts heftier fines for financial misconduct. what is the volcker rule? why does it need to be repealed? guest: when they passed dodd frank, they took a collection of things the democrats had on the side they wanted to impose on the marketplace come on wall street and main street that they had been hoping for for a long time. one of them was the volcker rule . to basically put limitations on what banks could do. if you dig down into it, you realize the crisis of 2008 had nothing to do with proprietary trading, how banks make their money. that was not the problem. the problem was the real estate marketplace, mortgages. that is what push the economy over the edge. they put in all these other things. volcker come after the regulators try to say how do we implement this new cumbersome arcane rule, said this is not what i intended. i did not intend for the banks to be restricted in this manner. that is what we do in this legislation, r

period not the volcker where we want to kill inflation. that is the most efficient way to reflate our way out of this debt morass. the name of the game is to generate accelerating nominal income growth. betty: is their fiscal support for the economy during this time of fed tightening? david: i just got a beep in my ear so i missed three words of your question. it in is there enough of of fed tightening? david: quite the opposite. adjusted deficit to gdp ratio was around 5%. today it is .5%. we have gone through and a lot of this was courtesy of those radical tax increases that were passed in 2012 and the sequestering and all this is the gift that keeps on giving if you are a big fiscal hawk. fiscal policy is tightening and i would say 100% and we blaze that trail. did the same. we'll have to see more of that policy, thetary laws of diminishing returns is the first and we are seeing that in monetary policy. betty: i wanted to read for you there editorial that basically case for maintaining stimulus is strong but the case for doing it with m

early look back since the 1980's when volcker took us up and we started to come down, the 10-year hasting down yearmost 24 basis points a down, down, down. the ultimate next stop in terms of cycle is economic growth cannot be rejuvenated by current interest rates. is probably around 1.25%. erik: great having you with us this morning on bloomberg television. bill gross of janus capital. vonnie, what a conversation. vonnie: some phenomenal headlines. check out bloomberg.com for more of the interview. mark? mark: it is 3:43 in london on this historic day. let's check in with bloomberg first word news. emma has the latest. emma: president obama is trying to ship millions of people they don't even if your immediate deportation. that after a supreme court ruling that effectively killed his plan to shield millions of immigrants. this role, says his administration will continue to focus on criminals, and of the deportation of long-term immigrants remains a low priority. was thegroup of walmart retailer. to support the republican national convention because of likely nominee donald trump. the

, you wonder, they don't have the wherewithal to det out of this, should they take the whole paul volcker thing, it will be painful. >> they can't -- they are supporting market, they failed at supporting economies. charles: there is no wealth effect. >> it is the pumping up of the market. charles: it has not extended to people going out and making investments. >> that is what is scary. >> they are hurting insurance companies. charles: do they have guts to say we'll start hiking rates. >> the normalization process, will be a lower interest rate, we're not going back to 6%, maybe up to 3%, right now this is unintended consequences they have to slowly move hire get out of this ridiculous game. >> interest rates would be on the floor anyway if the feds didn't do anything. so artificialy low, in europe, and japan, negative terrory is a testament to what has not worked. charles: and buying this toxic junk from banks thinking that banks would do something -- >> early on, i thought it was a good idea. charles: it seemed like it on paper. we have to jump t fed's defense, monetary policy they are n

apartment bombings in russia that took place in the region of dagestan in moscow and in the city of volckerto ask. the apartment bombings cost 300 lives. they terrorized the country and they created the conditions for a new war in chechnya. that war was very convenient and very gratuitous. because on the eve of that war the popularity rating of yeltsin was 2%. now, sociologists understand that in any public opinion poll, 6% of the respondents don't understand the question. so it was really debatable whether anyone in russia supported yeltsin at that time. his chosen successor, vladimir putin, a little-known former head of the fsb, the sake of the police, the successor organization to the kgb, was similarly supported like 2% of the russian population. it seemed impossible that anyone associated with yeltsin could win in the 2000 elections that were scheduled. and it was for that reason it was widely believed in moscow at the time that some type of massive provocation was going to take place to make it possible for yeltsin and his entourage to declare martial law. and cancel the elections. th

paul volcker is to step down. he has been chief executive since april 2008.r will replace him as chief executive. he is the current chief executive of a german health care group. that is it for the european close. ♪ jonathan: live from london and new york, i and jonathan ferro . scarlet: i'm scarlet fu and this is "bloomberg markets." a rally between european stocks deepening and falling to a deep decade low as the shocks of the british vote to leave the european union ripple through the markets. oliver: there will be a joint news conference in berlin that will likely set the tone for europe's response. scarlet: we are halfway through the u.s. trading day. european equities trading ended for the day. get acu catch up and glimpse from julie hyman. julie: they are hovering around the lows as well. we are not seeing any kind of rebound really in today's session when it comes to equities whether it is here in the united states or in the european session. the pound is also

strategy to rein in wall street, to regulate the shadow banking system, to shore up what is known as the volcker rule, to help celebrate investment banks from commercial banks. honestly, elizabeth warren is very comfortable supporting hillary clinton, because hillary clinton has embraced a huge amount of what elizabeth warren stands for. including, you heard her spend a huge amount of time talking about student debt, and that is directed at bernie sanders supporters, as well. but tamron, what i thought this speech did was to really importantly, in ohio, and in places like michigan and pennsylvania, when she got to the part where she was talking both about trade and about making stuff in america, that is -- that resonates so deeply with our citizens. and that resonates across the board with people who are insecure about their jobs. so she's going to bring -- donald trump says, yeah, we're going to bring jobs back. but when she points out he's manufacturing suits in mexico, manufacturing ties in china, and picture frames in india, everything he has made, he makes somewhere else. and it exposes his

paul volcker was a central banker, you would be having raging double-digit inflations in the u.s., that are much more independent in the art. tom: stephen roach will come back with us. roberts,ords, -- mark thank you. the markets are calmer today. calmingerts, homing -- the markets today. stay with us. ♪ let's do a quick report. yen, 10 three out to a weaker 104, 28. francine? francine: coming up, "bloomberg " with david westin and jonathan ferro. david: looking forward to present next week. we will be joined by west a cot talking to him about the tragedy that occurred yesterday in england and what it means for the campaign going forward as well as the state of brexit. we had a big, dill -- deal announced microsoft buying linkedin. we are going to see what bill gates thinks about it. aol is a major force in the internet area. that is coming up. tom: david westin, thanks so much. be sure to talk to ted about the pittsburgh penguins. [laughter] tom: make sure he is aware of the pittsburgh penguins. david: we are asking about las vegas and new york city. [laughter] tom: david wes

tepid.d -- she was very paul: i miss paul volcker. at least with him he took the view. yellen is delicately balancing on the fence. i do not know whether she has been scarred by what happened in 2008 and feels uncertain, that we got this very, i'm going to tell you how wonderful the economy is and we have a litany of risks. i think they are going to hike and i think the inflation story justifies that. nearly every inflation number is above its 20 year average except for the headline, and that is the oil affect. for goodness sake, take the decision, put us out of our misery. i think that is what markets would respond to. tom: the problem -- francine: the problem is they keep saying fed independent. is it a blip or something more sinister? when any economist says data dependent, it does not mean the fomc has been clustered around the bloomberg terminal. the point is, you are not supposed to react to a single data point. this is one of the most divided statistics on the planet, is highly inaccurate. we know the numbers have been revised at least three quarters. we should b

here's the fed funds rate pre-volcker. what we forget here, i could show this chart literally every day. we do it like once a quarter or whatever. here is 1994 with a length of policy stability, accommodation and this timeline here puts in scale the massive zero bound combination in this modern crisis. francine: i got a lollipop chart made. shows the amount wagered on the pound falling to the 1980's levels has more than doubled in the last three months. this is my first circle and this is when the u.k. was taken by a recession. the second one you can see volatility and how many bet showed the pound would fall was the scottish referendum. guess what this is? the referendum coming up next thursday, june 23 and which you will be in london to cover. the fed ties back to the referendum, divergence, what yields are doing, and it sets monetary policy along with the bank of japan, bank of england, and swiss bank. simon derrick joins us for the next hour. i do not know who has the toughest job, the fed or when you look at these odd

. >> the problem is the implementation of the volcker rule is goes to cause a lock of liquidity in the market today so you'll see a lot of stocks bouncing in a way, stuart, they wouldn't have bounced prior to the introduction of the volcker rule. >> and some countries aren't exactli exactlied-- affected by this. >> and it's in the health care business, we need the services they provide, mainly, the u.s. companies, it's not like a big bank that's going to be affected. stuart: i think there will be some bargain hunting. >> for financial services. stuart: to the driven trades will drive some of the big, big names way down and some savvy individuals, we've got a little cash on the side will say, you know, i kind of like apple at 89 or whatever it gets down to. i kind of like google below-- >> the right day to do it. stuart: takes a strong stomach, doesn't it? >> that's the point. been up all night and the man is running on one hour's sleep. stuart: a lot of coffee, you know what i mean? bargain hunting, you can see that happening? >> i think there will be bargain hunting and i think that t

moves the economy and that there's a-- that the genuine link anna nicole that used to be in the paul volcker waist, if -- days, if i do this i don't think it's the same way it used to be. charles: one final thought of the market. trading in a he think rah-- trading in a range. where do we make the big break? >> i don't know. i think you've got a whole lot of the political situation-- >> i'm sorry, let me cut you off. hillary clinton is going to speak here. great answers, got to get you back soon. >> thank you all. thank you. thank you. i am -- i'm absolutely -- i'm absolutely delighted to be back in cleveland and to be here at the industrial innovation center. i've had a chance to learn about the great work you do here. i especially want to applaud team wendy for everything you do to protect our troops first responders. and others from traumatic brain injury. it is so important that we continue to support those who protect us. [clapping] . >> thank you. thank you all. it is good to be back in cleveland i can tell you that. i want to thank your extraordinary senator sherrod brown for his lead

and they're realizing that with wall street being stepped on by volcker, by dodd-frank, maybe they needt the liquidity come back, because it's not here. charles: is there a happy medium for someone like you? in other words, should the banks separate operations, you know? should their risk be anywhere associated or influenced even the commercial side of business, those kind of things, would you look at something like that? >> look, i am the one who knocks, charles. [laughter] i'm the guy who, like, breaks -- the iconoclast who breaks through and says we need the little guys, that's what i do all day. charles: so, all you needed was was -- give 'em your web site. >> yeah, we'll do that. thank you. but the point is this, creative destruction, how do businesses evolve. evolution is being thwarted because we don't know what the next innovations to make life better is. let me take it a step further, what about everyone's 401(k)s and pensions? getting them the best prices for stocks, they can't because the natural liquidity providers, the big banks, aren't there. maybe congressman hensarling's

in the reagan years when i served there's plenty of coordination between president reagan and paul volckernot opposed to that. i'm just saying you want to think outside the box, rick. we need a different model. in other words, zero interest rates, or negative interest rates, and tons and tons of government spending for all these g7 countries have not worked. government spending and zero rates. >> $58 trillion of debt worse since the credit crisis, larry, and nobody talks about that. >> all right. well, listen, i love to talk to you about that. but debt to me the way you deal with that and the way you deal with the economy, the way you deal with productivity -- >> growth. >> -- is growth, thank you, buddy. growth. so right now what i see is much more a fiscal problem, a fiscal obstacle -- >> you know, there was a point i agree with you, larry, but i think we have negative feedback loop. when you've seen the extreme of low rates it goes negative. they are now the problem. they are the enemy. and they're keeping inflation and pricing pressures and all the other issues that need to be fixed yo

when you think about paul volcker when he became head of the fed, everyone was worried about inflationhen all of a sudden paul took care of inflation and for the next 20 plus years, inflation has not been a problem. i think central banks have a lot of firepower and when you have governor kuroda who was recently at the council on foreign relations in a closed session talking about transmission mechanisms and yes, he was not able to achieve what he wanted in this particular qe. tricks up got other his sleeve i believe. alix: what you guys wind up talking about is the 2% inflation target. no matter what they do it seems we cannot get there, but you say there is extra firepower we can use. fact, the struggle to get to 2% is the struggle of us being in a liquidity trap. that is related to the fundamentals such as slow productivity, slow demographics. a sick youular, not will -- sick you are phenomenon -- secure -- ian: as a result, the real interest rate needs to be lower than in the past and lower than where it is now. to of the tools is not just try to lower nominal interest rates further

secondly, i like paul volcker's basic view of people sitting on the sidelines having been around. not helpful. michael: we're going to switch topics a little here and talk more about the u.s. economy. when i was a reporter chasing you around the halls of congress, we used to always talk about what was alan greenspan favorite indicator of the moment. there was scrap metal and railroad car loadings. give us your view now on the outlook for the u.s. economy and what you are looking at that tells you. alan: the fundamental issue is the fact that productivity growth has ground to a halt. we are running out of people. everyone is very pleased that the fact the employment rate is rising, but the statistics tell us that we need more and more people to produce less and less. that is not a prescription for a viable political system. and so what we have at this stage the stagnation. i do not think there is anything out there which suggests that there is a recession, but i don't know that. what i do know is that the money , which has always been a critical indicator of inflation, is for the f

complaining about the regulators, we have record capital and record liquidity and record oversight and the volcker rule and all this the banks too safe. no one's complaining now. now you're going to see the benefit. in fact, this might be the u.s. banks, you know, a fine hour for the u.s. banks if they show the resiliency even more during a scenario like brexit. >> we're going to let you go. got 115 stocks on my faxit right here. every one of them down over a week. the least worst cincinnati financial, so congratulations cincinnati financial. mike mayo, thank you very much. >> by the way actually we're just getting this headline. the uk government is set to put the sale of rbs lloyd stakes on hold. this according to roeuters. that's the headline right now. mike, what's your reaction? does that change anything at all? >> my reaction to that is the relative strength of the u.s. banks versus the european banks is even stronger. that's something to look out for over the next several years. >> we're not going to let you go just yet. a lot of raw nerves, mike, in britain following that brexit vote. we c

remember the combination of things happening, one is volcker rule.he commercial banking or investment banking side to split the markets here. so what you're see something lack of liquidity. you're seeing a fear about what the regulations are going to look like in europe and you're also seeing deflationary pressure in the overall system where banks make money on positive yield curve, positive sloping yield curve as opposed to negative interest rate cycle. >> anthony, slain this to me, if these are the smartest guys in the room, financiers are brilliant ones, the best there is, how come they keep missing it? why do they keep failing to see these trends happening? >> well, i think some of it has to do with the group think. i think there is establishment group think getting shattered right now, elections what is going on with donald trump. i will confess to you, i said this on "wall street week" over the weekend i got this wrong, because when i looked at consequences economically, rational person would not have exited the eu given the economic consequenc

. >> let me interject, you agree with your colleagues that volcker, risk retention, some of the supplemental leverage ratio and other requirements have decreased trade sizes, resulted in fewer active trading participants, transfer of market-making activities out of highly regulated banks into the less regulated shadow banking sector which has less capacity to act as a liquidity provider. >> i don't know -- >> more perspective than he did. that was happening according to a lot of markets. >> you put a lot of things on the list that i am not aware of any research suggests is relevant to this phenomenon. i am not aware of research that documents the role of any specific regulation but it is something we are looking at. >> let me follow up on a specific question about this issue i asked you in february. i asked how the fed was reviewing and tailoring the fundamental review of domestic markets. that increases capital held against securitization exposures and trading by 5 times the amount already required. one industry study suggests trading us asset-backed securities will become uneconomical if t