The Knock-on Effects Of Italy's Covid-19 Lockdown (w/ Lenore Elle Hawkins)

Video Transcription:

  The Knock-on Effects Of Italy's Covid-19 Lockdown (w/ Lenore Elle Hawkins)

ED HARRISON: Welcome to Real Vision. Lenore Hawkins, it's very good to talk to you. LENORE HAWKINS: Thanks. Good to talk to you. ED HARRISON: We've spoken before in the past and I know you as L, so you don't mind if I use that name. You're the chief macro strategist at Tematica, aren't you? LENORE HAWKINS: Yes. I like L better anyways. ED HARRISON: Good. You're over in Italy right now in lockdown. I think that's one of the reasons that I wanted to talk to you because not only do you have a very considered macro view on economics, but you're also in the middle of things that are going on right there. LENORE HAWKINS: Yeah, talk about being in the epicenter, the epicenter you never really want to be in. We've been in lockdown. This is now for the majority of the country. We're in the fourth week of lockdown. They've been over time, tightening it more and more. A couple weeks ago, we went from just locked down, social distancing and all that, but you could still go out for a run to where now, you can't even take a walk or go for a run and the only thing you can do is go out for groceries, or for medication. That's it and they're not letting-- like if they see anybody over like 70, they get very upset when they see them outside. It's like no, get other people to go get your things for you. ED HARRISON: I want to talk about all of that, but actually, I want to go way back to what brought you over to Italy and your journey that came there in Tematica and so forth, just to give viewers on Real Vision a sense of who you are and why you're in the old countries that is big. LENORE HAWKINS: Yeah, very much the old country. Well, I was in-- before I came here, and I still have a base in San Diego, but it was in 2012. I got an opportunity to join a family office that was fairly newly formed. It's a family that had sold a couple businesses and were in the billions and they've built a family office and a friend of mine from business school, who's our Chief Investment Officer and was struggling dealing with only Italians when an awful lot of the investments that the family were getting involved with involved partnership with Americans, with American hedge funds or so on, and they also just needed to know not just how they worked, but just to think how they think and he also wanted to create a family office it was a little bit more of a hybrid between your more traditional European and the more American. I took the leap. It was a time in my life where I was ready for a change. I took that leap and came to Italy, and I was able to keep my job with Tematica, a chief investment strategist there. I was able to keep that work going. At the time, I was doing some other stuff that's similar, just a different company. I was able to keep that work and found that was really actually very helpful and augmented my perspective because instead of being just in the US and trying to have an international viewpoint on things because if you're talking to macro, you have to be able to appreciate what's going on all over the world, I actually got to be in meetings with major players on the international stage, making big decisions, seeing what's going on out there, like involved in say, an Italian bank that's really struggling and so hearing what's going on with the ECB, things like that really gave me a better flavor for it, because it's one thing if you read about it, it's another thing if you're living it entirely. ED HARRISON: Yeah, without a doubt. Of course, that goes back to you're living it, so to speak right now in terms of in Italy. Before we had this interview, we spoke on the telephone about that too. You told me the story of when you found out that they were moving to the extreme lockdown that you actually want to run. Tell that story. I thought that was interesting. LENORE HAWKINS: Yeah, it was. They put us on a lockdown over a weekend and then I guess like, two weeks later, I'm out going for a run. At this point, it went-- it was amazing. Within a couple of weeks, it went from where you didn't see anybody acting differently, like everything was normal. Within a couple of weeks, it went from that to where everybody outside is wearing a mask, people are staying really far away from each other. It's that look when you see someone where it's high, we're in this together, we're all commiserating, but at the same time, I'd really appreciate it if you stay far away. I'm out on a run and I'm by myself, rode far away from everyone. The police actually pulled me over and told me that I had to go back and at that point, we're allowed to be more than 200 meters from home. 200 meters, what are you going to do? That day, everything really changed. That was two weeks ago, it got really bad and now, at night, you really don't-- we can't really be outside. There's so many police and military cruising the streets, which is just a such a bizarre thing. You're imprisoned and being patrolled by police and army and you haven't done anything wrong. ED HARRISON: That is bizarre. Are they taking precautions in terms of like they have the masks and when they come up to you and so forth? LENORE HAWKINS: Oh, yeah, they're completely masked up, gloves and everything. What I think probably the most disturbing thing is when you go to the grocery store, first you have to stand in line for hours, literally, because we're only letting a few people in at a time. If there's like 20 people trying to go to the grocery store, it's going to take a very long time, and you can't go together. People have to go just one person. You stand in these lines that are like six, seven feet apart from one another, and then the guy who's at the entrance to the grocery store, he's literally in a complete hazmat suit, with goggles and the mask and everything and they take your temperature as you approach the door. Before they'll even let you in, they're checking your temperature. Then when you get in, there's employees of the grocery store, fully hazmat suited out with the goggles and the glasses and the masks and everything, and they are following everyone around all like three people in a massive grocery store. Everywhere you go, they're scrubbing right behind and spraying and disinfecting everywhere you go. It is-- I don't know how we ever forget this, how it doesn't permanently change the way we all live. The US is going to be facing this soon, New York is already dealing with it. ED HARRISON: When we spoke, it was probably a week ago or so, and we hadn't gotten to that point in the United States but the numbers of cases per day in the US are now the most, your trajectory is actually flattening. Talk about flattening the curve, the stuff that you're doing now, it sounds like that's having a measured impact. LENORE HAWKINS: We went into the lockdown because the thing, the measure that you really need to watch is called the R naught. That's basically the rate of contagion. If you have an R naught of two, then that means on average, every person who has the virus is going to give it to two people. You can understand, if you have an R naught of one, you're going to have the percent of the population that has it is not going to accelerate. If you have an above one, that's a big problem, because you're going to get more and more of the population having it. We had an R naught of about 2.3 to 2.7 right when they did the lockdown. Right now, a little over four, like four weeks in, our R naught is down to about I think about 1.2. They're estimating that it's going to be 0.7 by Easter. That's when they can start to open up things. A couple interesting things that we've seen here though, and you were saying that our case counts. Our peak net new cases was March 21st. That was Little like two and a half weeks in, we had the peak number of new cases, and ever since then, we've been going down. It's not been like a solid consistent every single day down but on average, it continues to keep dropping. That's great. The number of deaths, now the deaths also rolled over. That took a little bit longer, it's about a week later before the deaths really started to roll over. There's some good signs there as well. Some interesting data that recently has been released is looking at the total number of deaths in Italy in 2020, compared to each of the past five years. What they've found is that for every COVID death, you had an extra 1.5 to 1.8 additional deaths beyond what you normally have every year and the population of Italy hasn't changed so dramatically so you should be seeing right roughly the same deaths year after year. Say, if you have like 100 COVID deaths, for every 100 COVID deaths, there was an additional 50 to 80 deaths beyond what you would see in a typical year. That's across all of Italy. If you go into Bergamo, which was the hardest hit, for every 100 deaths, you had an additional 220 deaths that are above what you would normally see. What that is telling us is that it's probably a combo of these that there are some additional deaths that aren't being coded to a COVID death. For example, somebody passes away at home and they don't swab after the person has passed away so that they can identify this as a COVID debt. Also, what we're probably seeing and this was the big concern is also that massive stress that gets put on the medical care here and that's what really pushed the lockdown because you run out of hospital beds, and everybody in the States is seeing this now with what's going on in New York, you're seeing it in Spain. Spain's just getting crushed under this. For a little perspective on this to just to point out-- because we did run into a huge problem with hospital beds here in Italy and with ventilators, people have been hearing about that. Just so that people don't think it's that Italy has some inferior medical system, there are 3.2 hospital beds in Italy for every thousand person, people. 3.2 beds for every thousand. The United States has 2.7, and if we're looking at doctors, Italy has 4.1 doctors for every thousand persons, whereas the US has 2.7 so 4.1 to 2.7. It's not that Italy is just underfunded in the healthcare sector. ED HARRISON: Interesting. When you when you mentioned Spain and Bergamo, it immediately made me think of when we were talking, you talked about a Champions League match that was what you might call a super spreader. The Mardi Gras of Italy. I think it was Adelanto against Valencia and tell me what do people ascertained about that match and why that matters? LENORE HAWKINS: We'd all heard about South Korea had that, I think it's Patient 31, the super spreader who was at a church function and just got a ton of people sick from that one event. Well, people were asking why did Italy get hit so hard? Then why did Spain get hit so hard following that? It's a little strange part is because Italy has some fairly close ties with actually, with Wuhan. You have direct flights from Wuhan to Milan, but that didn't really explain this explosion that we saw here. What they think is that there was a very similar event to the South Korea super spreader, where we had that soccer tournament between a team from Bergamo, Adelanto, and a team from Spain, Valencia. Now, the game was just too big of a game and so many people went to watch it. They couldn't host it in Bergamo, so it was held in Milan. You see, you have this huge match in Milan, tons of people at it. I think that there were enough people who are sick at that game that you ended up having this huge spread of the virus. Because everybody comes to see the games, there's like 10s of thousands of people. Then they go back to Spain and they go back to Bergamo, which explains why Bergamo got hit so much harder than anybody else. ED HARRISON: Yeah, it's very unfortunate. Also, it tells you, as I was saying Mardi Gras, that tells you how these things, people come together then they go out and then they spread the disease. That's where the US is going. I want to use a-- we can talk for hours. I could talk to you for hours about this, your being in lockdown because you were telling me how you have access to the roof, and you can run around and so forth. It's just fascinating to hear about the lockdown situation, but you're an economist, you know what impact this has on the economy, and also with the political economy. I think that those are the two things that are most interesting for me. When you think about the economic and the political impacts of the coronavirus, what comes to mind first for you where you are right now? LENORE HAWKINS: Well, there's a couple of things. To start with, one of the big challenges right now, the US is talking about this, Spain's talking about it. Italy's a little bit further ahead on the curve, having been hit harder earlier. The problem we're facing, it's akin to having a bunch of people-- you've got like Italy's population, about 60 million people. Well, you got 60 million people sitting on a plane on the tarmac going when the hell do we get off? It drives you nuts when they don't tell you, when no one says anything about when you're going to get off the damn plane? That's what we're having right now. We're really struggling with getting some decent communication on what the plan is? How are we going to start to open up the economy? What's the timeline? They started getting a little bit better about it, because without that, how to businesses plan? If you know you're going to be locked down for a month versus four months, a couple of weeks, you're going to handle the situation differently. One of the things that really needs to happen everywhere is governments need to do a better job of communicating and that will help the economy as well because people can have in their head, all right, here's what I need to do to get through this. We've had a couple of different things as well here with some that are a little bit funny. Yesterday, April 1st, and it's fun that it was on April Fool's Day. April Fool's Day was the first day in Italy that you could apply to get a 600 euro a month aid for those people who-- they're out of work, they need to make ends meet. About 4 million people went to the website to try and do this. The website kept crashing and on top of crashing, it was also occasionally popping up other people's personal information. That's par for the course for the Italian government now, can't really knock that because the US had some similar issues with the launch of Obamacare, but that's some of the frustrations but a little bit of a humorous note with somebody tweeted out about how it's why they prefer the private sector to the public sector, because like 4 million hits to the Italian help website and it crashes. 400 million people going to Pornhub no problem. Pornhub, of course, then tweeted to the Italians that they would be willing to help the government with their servers, so got that [indiscernible]. So far, we haven't had some really great data on what the actual unemployment hit has been. Italy doesn't do the weekly the way the US does and right in the US, we've seen just absolutely astronomical record increases in the first claim, first initial filings for unemployment. Italy, we will get that in a couple days, because they just do it by month and February's data, starting out, it wasn't that great. It was great in Italy terms, but it wasn't great compared to where you'd like it to be. Because unemployment was already at like 9.7% so it's not like we're starting off at a really good point. ED HARRISON: What do you make of those numbers? Because we were talking about this just before you came on, you had a 3.2 that became a 3.3. Then you had a 6.6. By the way, these are seasonally adjusted, now these seasonal adjustments don't really matter because the magnitude is so large that it swamps any seasonal adjustments, the real number was 5.8. Still, nonetheless, that's an enormous number. In the market, futures sold off a little bit in the US in the wake of this, but generally speaking, the market tone is relatively positive. How do you reconcile that? LENORE HAWKINS: I think a good part of that is what's going on with Trump tweeting about the oil market. I think the market's in for a big disappointment because looking at his numbers, he's implying that Russia and Saudi Arabia are going to cut their production roughly in half and the US isn't going to do anything. I don't really see Russia and Saudi Arabia basically agreeing to subsidize the American shale oil sector, so I don't think we're going to get the numbers that he's talking about. I can't imagine that Saudi Arabia and Russia are not at some point going to go, all right, we both need to blink, this hurts. This is hurting all of us. We're hitting the point with oil where there's literally no place to put it. It's not like these are things that you can just go turn on, I don't know, you're going to turn it off for a couple of hours. This is big commitment to increasing capacity or decreasing capacity. I think that the market got all excited about that. Plus, I think the market still has this belief that if it's really, really bad, the government can come in and do something. That, to me is the most terrifying belief. You have that belief in Italy as well, although it's not really directed exactly at the Italian government that the Italian government is going to save the day, it's more that the European Union will come and save the day. The degree to which that is possible is decidedly suspect, to say the least. Let's take a look at where Italy's situation at the moment and just to give Italy a little bit of credit, it's not like Italy's economy is about 1/10 the size of the US, so its GDP about 1/10 of the US where it has about 1/5 of the population. That's pretty weak. That doesn't sound so good. On the plus side, Italy actually, their labor participation rate is higher than the US. It's 65.5%, where the US is 63.4%. There's actually more people in Italy looking to work. The unemployment rate here is much higher at 9.7%, but the real problem here is the amount that the government is already involved in the economy, government spending actually counts for 48.4% of the economy. That's half of the economy comes from the government spending. One of the dirty little secrets about that is that government spending gets counted whether the company-- so the government hires a company to do something, so build a bridge. We've had a problem, we got some problems with bridges lately. They don't actually give the cash to the company, they give an IOU, but the spending gets counted even though the company hasn't received it. There's actually a huge market in Italy for companies to go to the banks and say, okay, I have this payable from the government. They've owed me for like a year. Can the bank please lend me the money? Okay, well, then the length, the government's like, yes, you should lend the money. The banks lend the money and you get into this spiral. That's a really bad situation to be in. We're already-- so we're already dealing with a country that almost half of the economy is government spending, and they're not even paying to run a business. Pay your employees, have your employees be able to buy stuff and have the economy going when they're not getting paid. ED HARRISON: Oh, they are. They're being paid in fiat money if you think about it, because isn't that what fiat money is, it's just an IOU? LENORE HAWKINS: Yeah. This is even worse, this is all fiat. ED HARRISON: As you were speaking, I was thinking to myself that redenomination risk. Redenomination risk. That's the word that came into-- or the phrase that came into my head. I was thinking to myself, how long has this been going on with these IOUs? Because at the end of the day, that's how you redenominate is you redenominate via an IOU that allows you to therefore say, these are now lira. These are real money. We're going to move from the Euro to these IOUs. LENORE HAWKINS: That is definitely the threat. Because Italy can look at the Eurozone, it's one thing the Eurozone has already been rocked by Brexit. That was pretty ugly. The UK had been part of the European Union, not the Eurozone with the unified currency but part of the European Union for decades. This is a massive, massive rejection and to have Italy then fall out, it's a pretty good threat. Europe's not going to-- it's really not going to want that. Let's look at how good the Eurozone has actually been for Italy. Now, I'm not saying that it's the Eurozone doing this but while Italy's been in the Eurozone, things haven't gone that well. We've all heard about how Greece, we had the Grexit because Greece was a complete disaster. Well, since the start of the Eurozone, Greece's per capita GDP in constant currency has gone up 3.1%. That's pretty bad, like 20 years and with GDP per capita has gone up 3, that's like over 20 years, your pay increased 3%, not per year, but totally so that's ugly. Well, 3.1 looks pretty damn good when you're looking at Italy, which has seen its per capita GDP drop by 2.1%. No other country in the Eurozone, no other major country has seen anything like that. For comparison over that same time period, you've got the US per capita GDP up 24.6%. Ireland knocked it out of the ballpark, they're up nearly 80%. Germany, who's the one that does a lot of the finger wagging, they hold the purse strings, they're at 24.6%. Around the same as the US, and yet Italy has gone down. Now, part of that is argued to be because the Eurozone with the stronger northern economies, you create a currency that is stronger than it would be if it was just the southern guys that are less productive. Italy's exchange rate is higher than it should be. It exports less and its imports are more difficult like it's tough on the economy when your currency is valued too high. That's what you do when you want to get your economy going, devalue your currency against everyone else and suddenly, your stuff's cheap. Well, Italy's been facing that headwind but there's more to it than that. That's a pretty easy answer. Right now, the pushes for the floating of Euro bonds. You float these euro bonds and then you give more money to the Italian government to spend, so what? The Italian government is going to account for like 60 70% of GDP, because we're already almost at 50%? How is that going to work out, and how can the private sector-- because it's the private sector that has to generate the wealth to pay those bonds. It's not the public sector, public sector creates no wealth. It just takes wealth from other places and spends it. You have to have the private sector, oh, the private sector is down to like, 30%, 40%, how the hell is this going to possibly work? Those people are thinking, oh, well, we'll borrow money, we'll euro bonds, that'll be fine. We'll just keep doing this, same old, same old, it isn't going to work. The problem is much, much bigger. ED HARRISON: It's not even going to work politically because that's where the story comes into play. The real story is that as we speak now, you have a contingent of Southern European economies, the four, Portugal, Spain, Greece and Italy. Then you have four northern economies. That's Finland, Austria, the Netherlands and Germany, basically tete-a-tete with each other. The last that I've heard about the Euro bonds is that there's a contingent of even the likes of Latvia, actually, interestingly enough, are moving into the Southern European camp with France as the kingmaker. From my perspective, it seems like we're at a pivotal moment in the redenomination risk game with people like Mark Rutter, who's the head the Dutch government saying under no circumstances are we changing our position. Where does this go, this whole euro bond versus ESM debate? LENORE HAWKINS: I think it is going to be very, very difficult to actually get this through and make it work. Italy's debt to GDP is already 132%. That is part of what's crippling the economy, the government is a massive portion of the economy, and there's a massive amount of debt sitting on the economy. You cannot solve this problem by dumping more debt on it. I don't see how other economies that have been doing quite well are going to be willing to put this basically a big old cement block and tie it to their feet while they try to swim across the sea. That's just-- I don't see that being politically all that feasible. The problem is you have this mentality that government will solve the problem when the problem is, in fact, the government. I think this is going to get really ugly. I think there's either one or two things is going to happen. You're either going to have significant fiscal consolidation, fiscal policy consolidation which means that Italy is no longer nearly as autonomous as it used to be. Its finances are going to be run more and more by Brussels. Now, some would argue that that might be a good idea because it's not like that Italy has this fantastic track record but history pretty much is clear that when you have some guy over there making decisions for our guy over here, that doesn't tend to go very well because you don't have any skin in the game. You're not dealing with the consequences of your own decisions. That's unlikely to work out well. ED HARRISON: Even Conte has said that's a deal breaker, just like Brussels is saying it's a deal breaker to do a euro bond, the Italian government is saying they would never do that. LENORE HAWKINS: They're the only options and you've got half the people saying no way on option A and the other half going no way on option B and it's like those are the only options. The other thing you can do is Italy falls out of the Eurozone, goes back to the lira, probably, well, definitely it would need to have a big default on the debts. That is also literally nearly impossible. I don't know how you even do that. How would Italy default, and they can't borrow any money? They have an old population, it's the second oldest population in the world. First is Japan. It was the oldest in Europe. How are you going to take care of all these people, these pensions, when you drop out of the Eurozone, and you cannot borrow any more money? There's all bad options around and the clock is ticking. Part of the work I do here now is involved in having Italian companies, some private, some public that are looking to perhaps have a strategic acquisition, be acquired or get funding primarily from American companies. What we're seeing is a lot of the big private equity companies, names that you would all know, they're looking at their portfolios right now as the world is coming to a grinding halt and saying, we know we're going to have to take losses. Where are we willing to take them, and where will we provide additional capital? Because right now, it's not like you're looking at a company and saying, well, I'm going to invest for growth, what you're doing is you're putting money in to keep it afloat. That's going to be the focus. If you're doing that, you're going to have to say, all right, we're going to have to let some of these go. Italy is probably one of the worst looking at the moment. You've got capital, investing capital, no longer coming into the economy, and that is just accelerating this pace. We have a company that last year got them some emergency funding. It's a publicly traded company. They were in a tough spot, needed some emergency funding, got them that, things were going great, they're back on their feet and after this, and it's a consumer products company, after this, they're running out of time. You're not talking about a small company. This is a publicly traded company that has a couple months at most before it's completely out of cash. That is the story everywhere, and where's the money going to come from? ED HARRISON: Well, let me ask you this. How does that compare from your knowledge to what UK companies are facing in terms of Brexit? From my perspective, it seems like Brexit is an easier scenario by far than Italexit would be. LENORE HAWKINS: Yes, much easier. Well, the UK doesn't have the percent of government, I think their government spending is like 30, I think about 38% of GDP. Government accounts for a much smaller portion of the economy and they also don't have the outrageous debt to GDP, and they have a stronger economy that's got-- there's a lot more phasing in their economy and how it operates. Here, it's actually very difficult to speak of the Italian economy because you've got two very distinct economies. You have the North, which is where I am. Thank God, we ended up being the epicenter because this is a very wealthy part of the country. Things work really well here, there's a lot of GDP generated here. Then you have the bottom half, you north, go south, when you go down there, it's a completely different world, very, very poor. There, you end up with some of these perfect examples of what is so wrong with the country where you have like more guys that work and basically their version of fishing game in the southern parts that you have in huge parts of the United States. It's just it makes no sense. You have government just paying people to do nothing because they don't know what else to do. ED HARRISON: Where do we go from here, not just in Italy, but also globally from an economic perspective? To game out different scenarios, obviously, you have to almost be a virologist at this point in time because A, you have to understand when's this going to end, and you already talked about not getting any clear signals from that. B, you have to understand what the policy response is going to be. Then C, you have to get a sense of what the backside economic damage is going to be. If you could game out best case, medium and worst case scenarios for Italy and other places that you're interested in, what would you say? LENORE HAWKINS: Well, I think what we've seen out of the ECB, I think they're going to pull out all the stops. They're going to come up with everything they can possibly come up with. I think Germany is not going to be able to fight back the way it has been. Angela Merkel, I think she knows you just can't have Italy fall out. They've at least got to give it a shot. One good thing, Salvini, he's the leader of what used to leg up and like is the much more nationalistic, very anti-EU group. He's got a lot less power than he had a couple years ago, so that's a good thing to help that relationship along. There's talk here. We'll see if it comes to pass, but there's a lot of talk of scrapping the current government which there's precedent for this in a crisis. Remember last time, the Great Financial Crisis, they basically scrapped the Italian government and they put Draghi in charge. There's talk of that happening again, and I think that would actually be probably the best case scenario. The leadership here right now, it's stunningly bad. For example, when they tightened down the lockdown rules, how that all panned out was Conte, the Prime Minister, got on Facebook at 11:00 at night on a Saturday, no preannouncement, just gets on Facebook, starts telling everybody here's the rules except for the rules hadn't really been agreed to. That was Saturday, saying, well, if you're not essential, only essential people can go to work on Monday. By Monday morning, people had no idea if they should go to work or not. That's just one little example. I already told you about the website. This government is not getting it done. We need to have an adult in charge. Hopefully, we do get Draghi in, I think that would be a really, really good move for the country. I think it would be good for the European Union to get him in. I think Christine Lagarde, having her be put in the ECB, I think that was a very big sign that they were going to be willing to do some very creative things. You're asking what would be good? Well, there's good in the short term, and then there's good on the long term. The markets really only care about the very short term these days. I think if we get the ECB to get very creative, the Euro bonds, if maybe we get Draghi or some other person that's put in charge here with some decent marching orders instead of what we've got, I think that will be very good, short term. Long term, I think if they do that, it will probably be disastrous for Italy and it will continue to struggle because the real problems of this economy cannot be solved by just loading more debt and having the government spend more. I think this is something you were saying, well, what needs to be happening all over the world. We need to get back to some basics here. To grow an economy, you can only do-- there's only two ways to grow an economy. You grow the labor pool, you grow productivity. While growing the labor pool, either you bring in immigration, which is you want to bring in like the best and the brightest. If your economy is struggling, it's very difficult to get the world's best and the brightest to want to work in your economy, or you have babies. Well, that's a long term solution. There's not much we can do on the labor force. What you can do is improve productivity. Productivity isn't really like people think about productivity is like shop floors or something like that, building more widgets. That's its '80s idea on productivity. The real what you get with productivity is information, clarity of data. What we have seen all over the world is with central banks really mucking with the price of money, that's a very important data point. There's a lack of information and productivity needs good decision making. When you don't have good data coming in, it's very difficult to make good decisions. We've seen post-financial crisis an incredible explosion in regulation and an increasingly complex tax code. That also changes the way people do things and they do things based on these regulations in this tax code. Then that means that the information you're getting is even more mucked up. Until we start really addressing that those are some of the problems and not the solutions, I think longer term, we're going to see slower and slower economy, which is exactly what we've been seeing. The rise of central banks post-Alan Greenspan, when he decided he could just monetary policy away the normal business cycle and get rid of failure, get rid of recessions. When we started doing that, and then as we saw more regulation, increasingly complex tax code, economies are just growing slower and slower. ED HARRISON: With regard to Italy, if I could boil it down, it sounds to me like there are only two options. One is default. The other is redenomination, which also might include default. LENORE HAWKINS: Yeah, that would be a default because there's no way you're going to pay those euro denominated debts with a lira. To do that is it is going to be so disastrous, because just think about all the contracts like Italian companies, all the contracts that they have. These contracts are all talking about euros. How do you just switch to lira? It's an impossible situation. It's impossible in either direction, which is, I think, why we're going to have to see somebody like a Draghi come in. ED HARRISON: Maybe we'll have to leave it there with the impossible situation. It's unfortunate, but I think that's how it is. Hopefully, you'll get a little clarity on your lockdown. I'd say Godspeed and stay safe. LENORE HAWKINS: Thank you. ED HARRISON: Good to talk to you. JUSTINE: Hey there. Since you got to the end I'm guessing you liked the video and that's because we don't just turn on a camera and film, we work really hard on getting the narrative flow just right. 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