Transcript: Robert Hormats



The transcript from this week’s, MiB: Robert Hormats on the Art of Diplomacy, is below.

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BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: Strap yourself in, this week on the podcast, I have an extra, extra special guest. Robert Hormats, former Vice Chairman of Goldman Sachs. God, his – his resume is just astonishing from the Nixon administration to the Reagan administration to the Obama administration, back and forth into private sector to public service. Really, just -just a legendary guy. The French awarded him the Legion of Honor medal in 1982.

He’s currently Managing Director at Tiedemann Advisors who essentially work with a lot of ultra-high net worth family offices and some institutions and endowments. You probably know him best from his many years as Vice Chairman at Goldman Sachs.

What can I say, a legendary career, really insightful about the state of the world today. We talk about everything from the infrastructure buildout in China to what the U.S. needs to do to catch up and stay economically competitive to what’s going on in technology and crypto when just really his perspective is unique and I think he has a lot of insights not only about investing but about how to manage your own career, how to build a collaborative enterprise, how to make sure that you stay in touch with people even when they have nothing to offer you other than collegiality and friendship. And he is very much a thoughtful diplomat and has just put together an amazing track record.

Let me stop babbling and just say with no further ado, my conversation with Bob Hormats.

VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week, I have an extra special guest. His name is Robert Hormats and what a story career he has had. You probably are most familiar with him as his role as Vice Chairman of Goldman Sachs. Currently, he is a Managing Director at Tiedemann Advisors.

He has had a long and quite story career in both government and finance. He was the Deputy Assistant Secretary of State for Economic and Business Affairs as well as part of the National Security Council from 1974 to ’77; Deputy Trade Representative from ’77 and ’79; Assistant Secretary of State under Ronald Reagan. He was one of the people who not only was an economic advisor to people like Henry Kissinger, General Brent Scowcroft, Zbigniew Brzezinski but he helped manage the Nixon administration’s opening of diplomatic relations with China’s communist government

He was a recipient of the French Legion of Honor award in 1982. He was Undersecretary of State for Economic Growth in the Obama administration. I have to stop there because I could just keep going on and on. Bob Hormats, welcome to Bloomberg.

ROBERT HORMATS, MANAGING DIRECTOR, TIEDEMANN ADVISORS: Well, thank you for having me on, Barry. I really enjoy your show and I’m really honored to be a participant in it.

RITHOLTZ: Well – well, it’s my honor to have you here. It’s my pleasure. And one of the first things I noticed about your career that’s so fascinating, you’re in your like mid-20s and you’re serving as a senior staff member for international economic affairs on the U.S. National Security Council in like 1969. How do you accrue so much responsibility as somebody in their mid-20s?

HORMATS: Well, it’s very fortunate. I was fortunate enough, first of all, to get a good education and second, I use the time, I was going to undergraduate and graduate school, to spend as much time as I could in the practical real world.

So, I spent one year living in Africa doing research on economic development. I spent several summers as a summer intern in Germany where I picked up not only German but was in the middle of the Cold War, went back and forth to Berlin several times. And I was also a summer intern at the state.

So, I learned both substance of the issues but also was able to accrue practical experience. And I also was very enthusiastic about getting engaged in foreign policy. So, I read all I could read and met as many people who were engaged in the process as I – as I could.

And I had a mentor, Henry Kissinger, who was very keen on giving young people more and more responsibility. If you took on a tough assignment and you did it well, your reward, as used to say, is to give you even more work and to see how well you did. And as you proceeded along working for him, you were given more and more responsibility and if you did well, you’re given more and more again.

RITHOLTZ: Very interesting. So, tell us what it was like working with Kissinger. He is both a controversial and legendary figure who really looms large in the late 20th century international world of relations.

HORMATS: Yes. I think he really, and historians, I think, will come to the same conclusion, was probably, and to a degree still is, the premier diplomat of the second half of the 20th century in part because he was so actively engaged in Cold War diplomacy and helping to deal with difficult problems with the Soviet Union and part, of course, because he was so actively engaged in opening American relations with China and in part also because he really was able, as George Kennan was before him, to map out a strategy for increasing American influence in various parts of the world.

For instance, I participated with him in the Middle Eastern strategy to deal with the 1973 war and to achieve a peaceful resolution of that and many other Middle Eastern issues that was a very hot topic at that point. So, I was able to travel with him and work with him in those areas.

So, he was involved in virtually every major foreign issue during that period and also was actively engaged with the other leaders, Mao Tse-Tung, Chou En-lai, Charles de Gaulle, Konrad Adenauer and numerous other leaders of that period.

So, he played an active strategic role in part because he had actually taught at Harvard diplomacy of another era but in part because he was so actively engaged in the issues of the time and was very good at connecting the dots at developing strategy, not just dealing with issues ad hoc or on a transactional basis but on a strategic basis.

And he also was very, very willing to be a mentor. So, he would take younger people along. He enables you to participate in meetings with foreign heads of state in a very intimate way and intimate thoughtful discussion. So, he enables you to learn not just more about the substance but the people who are making policy and how diplomacy was actually conducted on a real-time basis.

RITHOLTZ: So, I was a teenager during Nixon’s second term and I have a very vivid recollection of both the Middle East peace plan that Kissinger spearheaded and the Cold War discussions and debates and how that moved things around with the Soviet Union. I suspect the most consequential thing that Kissinger did was open relations with China and I also think people wildly underestimated the future impact of that act of diplomacy.

You were on that team that helped open up China. Tell us a little bit about that team and did you have any idea how economically consequential that would end up being a few decades in the future.

HORMATS: I really didn’t envisage the kind of rapid development that would occur in China in the course of really three or four decades. I knew it was consequential and I actually knew something about the Chinese economy because living in Africa, there were a number of Chinese who were studying at the university college in Dar es Salaam Tanzania where I was and I got to know them and learned as much as I could because Americans couldn’t go to China then or trade with China or invest in China.

So, getting to know a little bit about the Chinese economy through these individuals actually helped me later on when I was doing papers on how we could normalize, to a degree at least, economic relations with China. But I never dreamed that it would progress so rapidly.

I had a lot of discussions with leaders during that period and particularly in the middle period with Deng Xiaoping who is really the person who led the economic reforms of China and Zhu Rongji who was the premier. They, in the 1980s, really started the reform process.

And I figured it would grow economically. I mean, there was a lot of poverty, 30 million people or so, maybe more, starved to death during the Cultural Revolution. And so, I was very clear about the intentions of the leaders at that point to enable China to grow and to bring millions of people out of poverty, which Deng Xiaoping and his colleagues were intent on doing.

But the technological advances were, from my point of view, breathtaking and I go there one year and you’d see a few modern buildings and a few new laboratories dedicated to AI or other types of scientific advances. But to see how quickly China has become a competitor with the United States in the most advanced technologies of our times was something that I never anticipated.

And even the most optimistic Chinese reformers in the 1980s and 1990s anticipated they would grow, anticipated they would improve living standards and anticipated that they would become an active player in the global scene. But I think very few could have imagined the dramatic technological capabilities of the country as we see now and in part it was because China had had a very bad century where they – what they call the century of humiliation where they had really been divided in a lot of fragmentation and they really didn’t make much economic progress.

And as a nation and certainly as a leadership, they were determined not to miss the – what they call the fourth Industrial Revolution, which is the high-tech revolution. So, they put a lot of money into new technologies. They focused very, very heavily on advanced education. They sent a lot of students abroad particularly in the United States to learn advanced technology.

And I can remember one conversation that really summarized it all in my mind and that is Deng Xiaoping, who was very advanced in his thinking, had a number of foreigners come and talk and he was able to share his views and we were able to ask some questions. And at one point, I said, I was very impressed with how much economic progress you’ve made in the last five years. So, he tapped me on the – on the leg and said, young man, he said, that was when I was in my 30s, we have done something that will have an even greater impact and that is I have enabled lots of Chinese to study abroad, which they could not do before, they couldn’t study in the the United States. They could study elsewhere but they went to the United States. So, when they come back, they will change China.

So, he placed a great deal of emphasis on education and the ability to go send students to other countries to learn advanced technologies and how advanced economies were performing and how you could incentivize people to develop new technologies and advance from an industrial point of view as well.

RITHOLTZ: Anyone could have a bad century gives you a sense of their concept of long-term planning, which – which leads me to a question. In the 20th century, we looked at the United States as a leader both in economics and technology and rule of law and structure.

But given how rapidly China has advanced, let’s flip that script and ask what lessons can the U.S. learn from China. What – what should we be taking from their playbook be it industrial policy or infrastructure or what do you see as something that is transferable back to the U.S.?

HORMATS: It’s a great question and – and let me start the answer with something that I learned or picked up in China after the financial crisis that was really generated from the United States. And one of the senior leaders made it interesting, he said, we have been operating under the assumption that you were the teacher and we were the student and we have a lot to learn from you about running our financial system and running our economy.

Then he paused and said, now, we’re no longer so sure that you’re a very good teacher or that you’re doing a very good job in addressing your economic issues because of this major financial crisis which occurred and really rocked the American economy. So, they – at that point, they came to conclusion that perhaps they are to be more active in developing their own models of thinking about finance and about other things and not rely as much on the United States.

The second thing is that they really did what we did so well in the early part of the 1950s, particularly after Sputnik, and we realized we were competing with the Soviet Union but the Soviet Union was never as formidable competitor as China in as many ways as we find China is able now to compete.

So, what did the United States do? We spent a lot of money on education, particularly high technology education. We brought the best and the brightest from our own society and from abroad to the United States to work in our and studying our university. We put a lot of money into infrastructure of the Eisenhower highway program being one example.

And we mobilized the American people behind the virtues of science and the virtues of technology. Scientists were regarded as really the key to developing the technology that -that enable us to prevail on the Cold War.

What the Chinese are doing is almost the same thing. They have put few amounts of money into research. We put money into our national labs. They put money into a whole range of research facilities that they have. They put a lot of money into their educational system.

Chinese kids work very hard. They don’t go out at night and have social events. They go home and study because they know that’s not only good for their country but it’s good for them, it helps them advance, particularly rural kids who are not used to the city, come to the cities, go to big universities and work very hard to advance.

They brought in people from all over the world to do research, to go to a Chinese lab. There are lots of Chinese but there are also people from other countries. They have become a very focused society on advancing and playing a leadership role in the 21st century on the advanced technologies like AI or quantum computing or 5G or other things.

So, they have really sort of learned that technology is the key to their economic strength, and their economic strength and their ability to prevail in these new technologies would strengthen their credibility as a leading country in the world. And those are the kinds of lessons that they have learned and the kinds of things that you hear them talk about.

Every time you hear President Xi Jinping or any of the other leaders of China talk, they’re talking about technology, about competitiveness, about growth, improving our society. And they brought 400 million people plus, probably closer to 500 million people out of poverty which they regarded as almost a given in the 1950s and given them opportunities, economic opportunities that would have been very hard to envisage in the 1950s and 1960s.

So, they’ve gotten a lot of credit for that for a more equitable society. Although there are still a lot of inequities, they’re attempting to deal with those and technologically, they’re advancing at a very rapid rate. They are very formidable competitors and education, I think, is the dominant factor that enables them to be that.

RITHOLTZ: Quite interesting. Let’s talk a little bit about your time at Goldman. Was that your first job after leaving government service?

HORMATS: It was. I had been in the government starting in my mid-20s where I worked for Kissinger as you mentioned earlier and had a number of other jobs. And then I went, in 1982, from the government to Goldman Sachs. So, it’s really my first private-sector job. Yes.

RITHOLTZ: So, tell us what you did, what was your role and how did that progress.

HORMATS: Well, I started out working with a team that was focused primarily on developing countries since I spent a fair amount of time in the developing world, particularly in Africa, and over a period of time, I moved along the – the – the track developing my own experience in investment banking, in trying to identify the global trends that were affecting or would in the future affect the market and gradually was able to move along the path and became vice chairman for Goldman Sachs International and was able to travel around China being one destination.

But the Middle East was another. I spent a lot of time in Europe and spent a lot of time in various other parts of Asia. At that point, when I first came to Goldman, Goldman was not a very international firm. Really, none of the American – the big American firms in the investment banking world had a very large international presence. Some did but Goldman was really served at the very early stages.

And John Whitehead and John Weinberg, who were the two co-chairs of the firm, were very determined. Both of them had been in World War II and both of them had seen the outside world. And they felt that Goldman should be much more proactive in developing its knowledge and its business relationships internationally in part to be able to serve international clients but in part because American investors were increasingly interested in international markets and wanted to know what was going on.

So, I was at my last government job, which was assistant secretary of state as you pointed out, at that point in the early ’80s and Henry Kissinger and Bob McNamara were both on the Goldman Advisory Board and they recommended to John Whitehead and John Weinberg that here was a guy who was getting ready to leave government, had a lot of international experience so you should bring him on and help him – give him the sort of support he needs to help build out the capabilities of Goldman internationally.

So, I traveled a lot throughout the world identifying opportunities but also working with a growing number of people on our team who were being stationed in various parts of the world to serve local clients and serve American clients who wanted to know more about what was going on in these parts of the world.

RITHOLTZ: Quite – quite interesting. You’ve been an eyewitness to how international finance has developed and evolved and changed over time. What are some of the most significant changes? We obviously already started talking about China but what else is out there that people should have on their radar as changes in international finance that are really going to resonate in the coming years?

HORMATS: Well, that’s one of the interesting challenges that we have in this globalized world of today because for a part of this period, there were a series of international crises. One of them started in Asia, one of them started in Mexico, one of them started in the United States.

And the problem American investors had was to – particularly with events that were occurring abroad, was figuring out what was happening and figuring out how it would affect the American market. And increasingly, Americans who wanted to diversify their portfolios were investing in various other parts of the world, particularly first Europe, which is a market or set of markets that they knew and most Americans had visited Europe and had a good sense that if you want to diversify globally, Europe was the place to start along with Japan but then – which had a booming market for a number of years, we shouldn’t forget. Now, the growth rate has slowed down but its market for a long time was really steaming.

And then, the notion of investing in developing countries began to take hold and first with the banks who were making more and more loans to emerging economies and then individual investors or foundations or high net worth individuals, families were beginning to diversify into the developing world. So that was really one of the changes.

When I first started out at Goldman, there was very little interest in international markets, very little exposure to international markets and international markets had very little impact on the United States. And over the course of the time, I was there and subsequently since I’ve left, the exposure has been far greater events abroad, have had a far greater impact on our own market. And the notion of diversification has become an increasingly powerful one for various portfolios and just for knowing what’s going on in the world.

RITHOLTZ: So, let’s stick with Goldman Sachs and various governments officials who has moved fluidly back and forth between government and private sector. I don’t think there’s another firm in finance that understands the importance of government action and how to both anticipate and shape it better than Goldman Sachs. What is the secret of their success? They – they really have put together a tremendous track record in that area.

HORMATS: It’s a very interesting question. Really in part is a tradition at Goldman that was there well before I joined the firm. John Weinberg and his father, Sidney Weinberg, were both very actively involved in providing financial support and financial advice to the government during World War II. Joe Fowler, who was the Secretary of the Treasury, came to Goldman Sachs after he was Treasury Secretary. We’ve seen a number of other people like Bob Rubin who was at Goldman and then became Treasury Secretary.

So, we’ve had people come from the government and – and – and go to Goldman Sachs afterwards and we’ve had people that – myself included, I was at the government and then came to Goldman Sachs and then there are numerous people at Goldman who, after they leave Goldman, go to the government. I think in part is they get develop experience at Goldman in the kinds of issues that the government has to deal, particularly during the financial crisis but also in dealing with financial markets.

And they also are people who want to give back. They’ve had their experience in the financial sector in New York and have done reasonably well and they feel that in their next life rather than sit back and retire, they can bring some of their experience to bear in working for the government.

And I think that back-and-forth movement is a very important part of the culture of Goldman. Some other firms have this, too, but I think Goldman really started the tradition really during World War II with Goldman people working in Washington to support the war effort.

RITHOLTZ: Really, really quite interesting. And you have been able to move fluidly back and forth between government and private sector. How have you found that process and what are some of the risks and rewards of going back and forth like that?

HORMATS: When I was in the government, I really did not – did not have a very deep knowledge of financial markets in New York. I had a number of friends with whom I’ve gone to school or developed over a period of time who were working in the New York financial institutions and were working for corporations, too, because, obviously, they play a very big role in this process.

So, when I was asked to join Goldman Sachs, I made a very strong point of visiting Washington on a very regular basis and meeting with people with whom I worked before while I was in Washington and trading thoughts on what was going on in financial markets and they were, in turn, conveying their thoughts on what was going on in government and how the government saw economics and the financial world. So, it was – those – those personal relationships, I think, are very important and – and often underestimated. When the relationships you develop, when you’re in your 20s and 30s, no matter where you are, whether you’re in the government or you’re in a corporation or you’re in a financial institution in New York, you – you tend to keep those relationships up. They – they build a level of confidence between you and – and others in Washington and elsewhere in the country.

But the other part of it that’s interesting is you also build up extremely, particularly when you’re in the government, extremely close relations with people at your level in other governments around the world. So, your meetings with Japanese and Germans and French and Brits and Saudis and many others, and overtime, not at that point that later Chinese and – and others.

So, you develop not only these linkages at a young age with between New York and Washington and New York and the business community in Washington in this community but you develop similar kinds of relationships that this relatively young age with people in other countries. And those relationships help to build a level of confidence. So you can pick up the phone two years later and talk to them about a problem.

And particularly, when you’re in a crisis, you want to know who to call, who to talk to, who’s going to be making decisions of the other end of the – of the line. And as you advance in your career, those relationships get stronger. You see these people, you talk to them, and you have that level of confidence that you’ve developed in an early age and that, really, sort of propels you onwards to develop more relationships, more level – more degrees of confidence over the course of your career.

And I still, to this day, keep up with phone calls, with people in China or Britain or France or various other parts of the world when something occurs or they’ll call me and say, well, what do you think what’s going on in Washington, what do you think what’s going on in financial markets? So, these personal relationships are extremely important and it’s important, particularly for younger people who are now moving up or are just starting out to develop – develop those personal relationships and those personal confidences over a period of time because they really do become very valuable at that point, but even more so, as your career advances. And they help your career advance but they also help you understand the world a lot better than if you live in a bubble.

RITHOLTZ: So, Bob, you returned to public office in 2009 as undersecretary of state for economic and business and agricultural affairs in the Obama administration, what made you decide to go back to government service and – and tell me a little bit about that period right as we were dealing with the worst of the great financial crisis.

HORMATS: Well, I’ve been in the government – for the years I spent government were during the Cold War under various administrations and then it – then after the Cold War, dealing with some of the Middle East issues. But I – I saw in – in 2009 that we were on the brink of – or when the process of developing a new world order that is a post-Cold War order. And we didn’t know what it was going to look like but we knew that the old order was changing or had changed and the new order had yet to be created. And I thought there was – this was a very interesting time to participate in that process.

Second, I had always thought that the job of undersecretary of state was a thrilling job where you have the opportunity to look at the entire range of economic issues that are actually common tissues in particular that the country faced and help to shape American policy during that period. And – and have a – and have an impact on the global environment for the next decade or two to come.

Third, I’d known Hillary Clinton for a number of years and had a very – developed a very good relationship with her and therefore was – was – was eager to, when she asked me to do that job to – to do it. And I found that it was very exciting in terms of the ability to look at how the world was changing and play a constructive role in helping to change. I’ve been to the financial markets – the financial world for 20 years. I thought this is an opportunity to really make up contribution to my country and to our farm policy and to the – the global order of the – of the 21st century and to get back and engage in the kind of issues that – that I always had found exciting.

John McCain had the statement, it’s really exciting and – and a very positive feeling to be in the arena. And I felt this was a good way of not only being in the ring – arena, but making the contribution to my country and – and the world by going back in the government.

RITHOLTZ: Wow. Quite fascinating. Let’s talk a little bit about your new role. You’ve been a Tiedemann Advisors for a couple years where you’re managing director. Tell us what they do and what your role at the firm is.

HORMATS: Well, I – when I left the government, I spent a number of years with Kissinger Advisors and then I was asked to join a firm that I had been associated with because I was on their advisory – investment advisory committee for a number of years and that was a firm called Tiedemann Advisors.

It’s a – I’m relatively new there but the firm’s been around for a while and what impressed me about it was the quality of the people and the quality of service to clients. The advisers of Tiedemann work alongside individuals, families, endowments foundations, to help them meet their financial goals but also to help them in other ways, one which is to have a greater impact through investing in – companies and in issues on subjects that they – that they believe in – in emphasis – emphasizing, first of all, for instance, the environment and other things of this – of this nature.

But it’s the strength of the firm is that it is a relatively small firm compared to some of the very large Wall Street firms and that there is a really strong relationship between the firm and the members of firm and individual clients and families and it’s, in a way, for some people like a family office, if they don’t want to put together family office, Tiedemann can help them perform all the functions of a family office or work with the family office that they have now and help to deal with issues that – that they face in such offices. So …

RITHOLTZ: So the clients …

HORMATS: It’s a …

RITHOLTZ: … tend to be family offices as opposed to, let’s say, institutions?

HORMATS: They tend to be either individuals, high-net-worth individuals or institutions or family offices. Yes. It’s really all three.

RITHOLTZ: And your role is …

HORMATS: And in some cases, endowments.

RITHOLTZ: Right. So I’m going to imagine your role is sort of big picture macro overview of what’s going on in the world or do you get more granular than that?

HORMATS: Well, I try to do both. I – the team of people is of extremely high quality and they have people who are experts in investments and financial markets and trusts and planning how people plan for their financial futures and we have offices, really, throughout the country and in and Western Europe. So, what I do is work a lot with those regional offices in this country and abroad.

I also work with the individual clients of the firm particularly those who are interested in what’s going on internationally and what the impact will be on their portfolios or what’s coming down the road, what are the – what are the issues that are being developed around the world that could have an impact on them or their – or their portfolios.

And then I also work with the firm management and management of the firm on various changes that are going on to using my experience in Washington but also using my experience internationally. So, I work both with individuals, with foundations, with family offices, but also on longer-term strategic issues that the firm or clients of the firm are likely to face.

RITHOLTZ: So one of the things I’ve been hearing from a variety of high-net-worth individuals and family offices is just how challenging the macro picture is today. It seems like there are a lot of crosscurrents and a lot of black swans and how do you frame the state of the world today when you’re advising a family office?

HORMATS: Well, I think what you – what you need to do is emphasize that there are a lot of uncertainties, that we’re really in a new environment with the Fed constantly increasing its balance sheet with very large deficits of an unprecedented – that all have been built up already and are being built up further as we speak.

And what are the implications of – of those? So, I think one of the keys is agility, is trying to look ahead, and be able to make decisions with a sense of one of what are the likely opportunities and the likely risks three months from now, six months from now, a year from now. So, we utilize the formidable expertise of – of the firm and there a lot of extremely good people with whom I work, so it’s – it’s certainly not just me alone, it’s a whole group of people.

But we try to acquaint our clients with – with all the risks and all the opportunities in front of them and help them make adjustments in their portfolios that anticipate these kinds of risk or these kinds of opportunities us as we see them, so we – we try to, instead of just sort of looking at the world as it is today and assuming it’s going to stay the way it is today, try to get a sense of what is what is around the corner, what is over the horizon, and how it will affect their portfolio and how they should position themselves to address these potential changes.

RITHOLTZ: Do you ever start to notice a pattern with similar questions come – bubbling up from lots of different clients and types of clients? I recall, a couple years ago getting a lot of question about crypto and last year was about, hey, how crazy is this market? This year, it’s been inflation. Do you see that or – or is it a pretty much everything goes?

HORMATS: Well, it’s really everything goes. But now that you mention those three things, crypto is really increasingly important. I mean, all – virtually, all countries are at one state or another, looking at what crypto is going to mean to financial markets and for the world and different countries have different models, different companies are developing different models.

So, it’s something that you really can avoid. You have to really develop a knowledge of – of what’s going on. We don’t know how it’s all going to turn out, but we do know that a lot of very bright people are working on this now, and inevitably, it’s going to have some, perhaps a substantial impact on – on the world then perhaps on individual patios (ph) and perhaps the way markets operate.

So, knowing about it and keeping these issues in the back of your mind or making financial decisions anticipating those are – is really – is very important to sort of keep up with one – this being one of the sort of advanced technological changes that’s occurring in markets and in companies and in financial institutions.

The second, you put your finger, what are the inflationary implications of all these things that are going on? And traditionally, it’s been the case that when the Fed prints money and builds up a large balance sheet and you see so much liquidity out there, in part as a result of what the government is providing and part as a result of Fed policy, it’s going to be inflationary.

So far, we have evidence of a certain amount of inflation in part because of that. But more importantly, because of eye constraints and – and various impediments in the supply chain that are causing delays in such things as building supplies, semiconductors for automobiles and a variety of things like that and those to push up prices.

So, but we really haven’t seen – and then wages going up in certain areas that as their labor shortages in certain sectors, but we really haven’t seen the sort of runaway inflation that we had prints and strength of the Paul Volcker-Arab, that he so courageously was able to deal with. So, I think we’re – we’re keeping an eye on this as our most investors but the – the impact so far has not been that great and if the Fed starts changing its policy a little bit which it sort of signals now, then the question is what does that mean for market? So far, the markets have not regarded this as a particularly a – a serious thing.

And we’re very fortunate to have Jay Powell as Fed chair, who I’ve known for a long time. Very sensible, thoughtful. Diane – and Janet Yellen who I worked with in Washington, very sensible and thoughtful Treasury Secretary. So, I have a – a lot of confidence that the president is getting very good advice from those people as to what’s happening and how to react to it.

And I think it is one reason, the markets have reacted in a more steady way than they might otherwise when you look at these numbers because they see company people who were running the economy, who have had experience and can deal with these issues. Even though there’s a lot of unknowns and there are because we’ve never been in quite this situation before.

These are people who know what to do. I wrote a book years ago on how you for our wars called the cost of – “The Price of Liberty.” And we’ve had numbers, big deficits and big debts, like this during World War II toward the end of World War II, but we knew when the war ended, those numbers would start coming down.

And now, the question is how do you bring things back to a more normal environment. But we don’t know how that’s going to happen or what the implications are going to be. But you just have to keep your eyes open and – watch and supplications are going to be for – for markets and individuals and for the global economy.

RITHOLTZ: So, Wall Street, very much is a fan of Jerome Powell, arguably Trump’s most confident appointee. I think that’s a fair statement. You want to handicap the odds of him getting reappointed or did the previous president not reappointing Janet Yellen sort of set a precedent that, hey, when I Fed chair live, when that – when that seat is up to be reopens, the president gets to put his in premature on the Federal Reserve by appointing his own chairman?

HORMATS: I’ve long since given up the – the handicapping of – of decisions on individuals in Washington having lived there and participated there for a long time and in these kinds of decisions, it’s very very hard to know why I would – I would to make the point that I – I think he is – and the board are – are very competent people and I do think that John markets have a lot of trust in them and – and leave it at that. What the president is going to do or not do, I’m – is beyond my paygrade.

RITHOLTZ: Fair enough. So, by the time this broadcast, we should likely have an infrastructure bill passed in the United States. You have long been a very zealous advocate for both building and repairing infrastructure in the country, tell us some of the things you think we should have done years if not decades ago and – and what you like about what you see in the current infrastructure bill?

HORMATS: Well, I think this is the best chance we’ve had in a long time of getting a really good infrastructure bill because we need it for several reasons. One, first of all, we’ve – we’ve, for decades, I’ve been – as you correctly pointed out, arguing that our weak and deteriorating infrastructure is a huge hindrance to our economic outlook. And if you look around the world, the emphasis of China and many other countries on infrastructure has been one reason that they’ve, A, been able to create a lot of jobs and, B, it has made them more competitive. And C, you’re stronger country internationally if you have a strong economy domestically.

And a key to a strong economy domestically is good infrastructure, roads, highways, telecommunications, and a variety of – of of – other factors. And the Chinese have understood this and had a good train system, obviously, is very important in modern airports. All these things are important to a strong economy and a strong economy, as they say, is critical to your economic influence. It demonstrates your government is functionally able to operate in an effective way and it – it strengthens your leadership because other countries themselves want to develop their own infrastructure capability.

So, that, to me, is – is very important. For the moment, we have an especially good opportunity interest rates are very low. There is a lot of bipartisan support as we’ve seen on the Hill, particularly now and the recent Senate votes for infrastructure, large-scale infrastructure.

And it is critical, also, to our national security because as Eisenhower understood when he developed his highway bill, you got to be able to have a good infrastructure to keep up the mobility of people back and forth and build your own strength as an economy. So, we need to do this now, more than ever, because we have the chance, low interest rates, we need more jobs for people who’ve been laid off during the pandemic.

We need to demonstrate to the rest the world that our economy and our government can function on a bipartisan basis in an effective way and we need also to deal with the backlog of unmet infrastructure needs that if we don’t deal with them now, are just to get worse and worse.

So, people say, well, your – you’re leaving a large debt to the next generation. Maybe so, but if you don’t do something now and you’re leaving a deteriorating infrastructure to the next generation which is going to hinder the ability to create jobs and hinder our strength as a country and – and make us a weaker economy later on.

So, now is the moment and we ought to be doing this on a bipartisan basis to demonstrate that we can do something on a bipartisan basis that leaves the next generation better off and a strong infrastructure would – would do that.

RITHOLTZ: I’ve always hated the argument, you’re leaving a large debt to the next generation, because it’s so intellectually disingenuous. You’re also leaving a massive infrastructure, a platform that the private sector can build on, you know, companies report earnings, they have to report both liabilities and assets. Debt is only half of the picture and as you pointed out, interest rates are so low, so let me throw a curveball at you, what do you think of financing a big infrastructure buildout with a 50-year or a 100-year bond?

HORMATS: Well, I don’t know about a 50 or a 100-year bond. We’re not really used to this in the markets. We’re not used to these kinds of things that …

RITHOLTZ: Thirty-year?

HORMATS: … do this – 30? Well, and it’s hard for me to picture but a sort of a long-term bond, it – is to me, very logical. It’s the way corporations finance.


HORMATS: They don’t – they don’t finance a new corporation with the one – with one-year paper. They don’t finance a new building, a new factory with one-year paper. They – they normally take a longer-term picture. They build the – they build a factory today and then pay for it over a period of time when it starts increasing its returns, enabling them the service the debt.

We had to look at – at the government in the same way and that is – and the Biden administration, I think, is doing this and that is the big bulk of the infrastructure, building, will take place in the next few years and the repayment period will be of a much longer duration of 10 years, 15 – 20 years, 20 years, something like that, whichever, however that the treasury decides the structure of the bonds.

But I do think that the point that we’re both trying to get at is we have a chance now to borrow long-term at low rates and build a strong economy which will create a lot of jobs for future generations. And if the economy, as I believe it will, is strengthened by this infrastructure, it will leave opportunities for additional growth and make it easier to repay the debt.

So, we – we have to think ahead. I mean, one of the things that – we go back to China, we at Tiedemann do a – spend a lot of time trying to think ahead, what’s going to happen now and what’s going to happen in the future. One thing, when you think about China is, we’re not just competing with the China of today.


HORMATS: We’re competing with a 4,000-year-old civilization. And they are used to thinking long-term. They – and what they’re doing now is there – they’re spending money today on infrastructure, not just for the current generation, but for generations to come.

We have to have a strategy that is not just focused or preoccupied with what happens today, it’s what are we doing to make the economy stronger in the future? What are we doing to build up job capabilities for people who have lost their jobs over the long term and that’s what infrastructure will do.

We can be a much stronger economy five years from now if we invest today in the roads, in the – in the bridges and the airports and the trains and the – and the telecommunications infrastructure, all of which will make us more competitive, creating jobs today and making us more competitive, not just for one year or two years, but for decades to come.

Eisenhower understood that. The so-called greatest generation, and I believe it was a great generation, that Tom Brokaw wrote about, the ’50s and ’60s, they were great generation in part because of winning the war, in part because of what they did after the war, but in part because they left this country in a much stronger financial and economic position and position in the world because of what they did. They thought ahead.

And we have to think ahead. We have to have a long-term perspective and infrastructure is one of the critical ways of not only thinking ahead, but acting in a bold way to make our country stronger and to create a much stronger capability of creating jobs and demonstrating our strength in the world, and a strong infrastructure program would do that.

RITHOLTZ: So let’s stick with that generation, right after World War II, the U.S. implemented the Marshall Plan. We help to rebuild pretty much all of Europe. We help to re-structure Japan and – and create a platform for them to rebuild their economy and we saw decades of unprecedented growth around the world.

When I look at the state of that sort of policy, the closest thing I see to that is the China Belt and Road Initiative, what sort of plans are there for a new Marshall Plan? Is the U.S. participating on the global stage that way or have we ceded that leadership role to China?

HORMATS: Well, it’s certainly true that China is building – in two ways, one, if you look at the infrastructure within China, it’s – it’s remarkable, these fast trains and modern harbors and modern airports. I mean, the -and the telecommunication system is remarkable. They’re rushing, moving ahead toward 5G and 6G, we’ve got to be doing that too.

We’ve got to be leapfrogging the Chinese and developing our own capability in, say, 5G in which you can do with a greater openness, open radio access network or there are various ways we can really move dramatically ahead in 5G, we’re working on things like quantum computing, AI, these are always – but then I’d say it can demonstrate, A, our internal capability for technological advancement but also our capability as a competitive country. B is not just China, but other countries.

There are there other countries that are competing very rapidly as well. So, I think we’ve so I think we’ve – we’ve got to do that. I don’t – the Belt and Road initiative does help particularly Southeast Asia and in Central Asia. I don’t think we’re going to get back to a Marshall Plan because I think the willingness to spend money here is really focused more on domestic than foreign.

But if we do well domestically, we will strengthen our influence both in terms of a strong economy here and do better abroad. I do think we’re also working more and more with the Japanese and working with other countries in the – and what’s known as a quad, Australia, Japan, India, and the United States, to help build up infrastructure in Southeast Asia and elsewhere.

But I suspect that the main focus will be domestic. And the other part of the – of the Marshall Plan that was so important was not just the money spent but the fact that it enabled the European countries to work together to figure out how to spend the money and to cooperate more to prevent a war like we had just been through in World War II.

And I think that one of the keys to the success of the next generation abroad will be countries like ASEAN and others working together for joint cooperation on infrastructure and the United States, I think, can play a – can play a role in that and that would be a – that will be a big plus.

RITHOLTZ: So, let’s stay with domestic policy. The U.S., really since Eisenhower hasn’t had much of an industrial policy, we’re seeing some – some inklings of that in the Biden administration including a bit of a push for an electric charging station infrastructure for automobiles, what do you think of current lack of industrial policy? Is that something that the U.S. needs to do to stay competitive with China?

HORMATS: I think we tend to look at industrial policy somewhat differently from some of these other countries. But the answer to your question would be we need a fundamental collaboration between American companies and the U.S. government, particularly, in early stage research and development.

We’ve used up a lot of money in the National Science Foundation and to the national labs and the DARPA and to that serves energy version of DARPA. So, I do think that the – that the Biden administration is really working increasingly and I think quite effectively toward a set of policies were the government supports industries that are critically important to the U.S. and particularly high-technology industries, but also other – other companies like semiconductors where we have – where we – we’re going to need to continue – to make advancements in semiconductors to compete with various countries.

If you – if you look around the world, as I say, it’s not just China, it’s Taiwan with Taiwan semiconductor, it’s Korea and it’s other countries that are – that are advancing pretty rapidly on semiconductors. So, what we need to do, I think, is put money and I think this infrastructure program will do that, put money working with the private sector into advancements in various types of technology and various types of infrastructure which could be helpful in getting the government more active.

We did – it worked quite well in the ’50s where the government did play a great role in a lot of new technologies, strong from government collaboration with companies and I think the government now needs to find new ways of collaborating with companies in advanced areas of technology and infrastructure. And I think that will happen if a bill, an infrastructure bill of the kind they’re talking about this is passed.

I think it – it does – we haven’t had this for a long time as you correctly point out. This would be the chance to do it.

RITHOLTZ: So, speaking of government and high-tech companies, I was kind of surprised by China’s crackdown on – on their own tech companies and – and leadership, what do you make of that? It’s been about $150 billion in market cap lost in the U.S. of China companies listed here and some people of ballpark did at about $1 trillion potentially in A shares in China. What are we to make of this?

HORMATS: Well, I think it’s hard to know exactly what to make of it at this point and I study China pretty carefully and I would find it awfully hard to – to analyze what the government’s doing in and what the purposes are of some of the measures they have taken. I would simply make when – this is something that’s going on in the – in the short term, we have to see whether it’s a continuous process or just being done over the – over the short term.

And second, that – the government of China does have a strong sense of – of national champions and I think that if you look at the way China’s develop these national champions, these big companies have a lot of collaboration with the Communist Party of China. There is normally representative of the – of the – with like the CPCC, the Communist Party of China, trading in these companies.

And there are probably going to be – this – there, I think there’s a need, really, to wait and see what’s happening in China before we come to any long-term conclusions.

RITHOLTZ: So when this …

HORMATS: So, I’m …

RITHOLTZ: Go ahead.

HORMATS: I’m really looking at this as a – as something that could well be a short-term thing and I wouldn’t make any long-term judgments but this means because there is still a strong government support for innovation and – and probably is going to – is going to continue. I don’t know how long this current saga is going to last.

RITHOLTZ: So, when China first started doing this, I think it was it was last October or November, with Jack Ma of Alibaba clearly a national champion in China. People thought, hey, maybe this is a one off and Jack just got a little too big for his britches and China sending a warning shot. But it seems to be pretty aggressive across the board.

It makes me wonder if is China on investable if you’re not a Chinese citizen? Can you, as an outsider, as an American, put capital at risk in a country that doesn’t seem to have the same sanctity of private property, the contract, laws rule of law in general, how can an outsider invest in China with such a different set of experiences around private property?

HORMATS: Well, this is the area where we have to wait and see because they have been – if you read the speeches of President Xi and others, there is still a strong narrative of getting foreign companies to invest in China. They have – they have really not said that they don’t want foreigners to invest in China. And in fact, they’re trying to get more foreign companies to – to invest in China.

So, I hesitate to try to make judgments now about what China is going to look like a year from now or two years from now in terms of its relationship with Chinese companies or foreign companies operating in China. I think China, as we were discussing earlier, has – takes a long-term view of virtually any – anything and everything. They’re not – they’re not necessarily, in most cases, short-term players. They have a medium or long-term view.

So, I hesitate to jump to any conclusions along the lines of whether it’s going to be a year from now on attractive place to invest or two years from now. I don’t know. And but I – but I – I do think that they understand, two things, one, that they do want to become more self-dependent on certain kinds of technology and certain kinds of companies. They’re putting, for instance, in semiconductors, they’re putting a lot of money into semiconductors, they’re putting a lot of money as we’ve just seen in the news into AI, for instance.

So, they want – they – they don’t want to be vulnerable to interruptions in supply for whatever reason from other countries. On the other hand, there is not, in China, a blanket – they don’t – they don’t like the decoupling because they are in general. Because they are heavily dependent on foreign energy and foreign food and certain kinds of other farm products and they want to be able – their companies want to be up to sell abroad.

So, and also, they – they do have – and have had for quite some time a desire to attract foreign capital. They’ve been allowing (ph) American financial firms to operate to a much greater degree in China and they want some of their companies to be able to invest more or produce more in the United States as they – as they globalize.

So, my preference is having observed China and also observe what they’re doing and have done over the last several years and months is to wait and see before drawing any long-term conclusions.

RITHOLTZ: Quite fascinating I know I only have you for certain amount of time, so let’s jump to our favorite questions that we ask all our guests starting with tell us what you were streaming during lockdown? What was keeping you entertained on Netflix or Amazon Prime or whatever.

HORMATS: Well, during lockdown, I was – I was actually, I mean, I and my colleagues at Tiedemann were doing a lot with our clients and trying to keep – keep up relations with them through Zoom and phone calls and other things. So, I was really a Zoom – I was – in a way, glued to Zoom for part of the time. What I have done – and my wife and I, as a result of the end of the day, trying to relax a little bit is to before we go to bed watch a movie or a – an old sitcom or something like that, sort of peacefully end the day in a more – in a more normal way.

So, those of the – those of the kinds of things that I have been doing. And I’ve tried, during lockdown, to stay in touch with friends and with colleagues and with people in other countries and see how they’re doing. I – I think one of the things about lockdown is that you were deprived of physical interpersonal relations with other people.

But the one thing I concluded was the more conversations you have with – with friends and colleagues, people you work with, or friends you know and have known over the years, the – you’re – you’re keeping up that – those human relationships which, to me, were – very important.

And now that things are becoming a little bit more normal, in some cases, a lot more normal, individual relationships mean more and more. So, I – I’ve – those are the kinds of things that I did – did during the lockdown.

RITHOLTZ: Very interesting. Tell us about your mentors. I – we obviously know some of the bigger names but who helped shape your career?

HORMATS: Well, that’s – that’s interesting and I always think when ever – anything good happens, I always think that you – I really owe a lot to the mentors I had starting from when I was in college and graduate school. I had two or three teachers who I always would sort of turn to for advice and wisdom and friendship.

When I started working in the government, Kissinger, was a mentor, Brent Scowcroft was a mentor, Huntzinger ph, and Zbig Brzezinski were both heads of the National Security Council staff and as was – as was Scowcroft and they were all – they were all in various ways, mentors.

And then there were a number of people who were not necessarily at such a high level, but I had a lot of – of good friends who when I was working as a junior person, summer intern the State Department or intern in Germany or elsewhere, I could turn to and they were desk officers or assistant secretaries or deputy assistant secretaries, so people you could sit down and say, look, I’ve got an issue here, I’ve got something that’s on my mind, I’d like to get your advice.

And I think the – the same – I gave a commencement speech at UCSD years ago and about five years ago and the points I may was people say don’t sweat the small stuff. The theme of my speech was, yes, sweat the small stuff.


HORMATS: If you do well at what you’re doing, whatever the job is and it may very small, you’re going to be – people are going to say this – this person really cares about what they’re doing. They care about their job and it really helps you to gain credibility and – and momentum. And a lot of – a lot of – and work with people. Work with people as a team. You don’t get anything done alone in and government. You need to – you need to have a team of people working together, not just in your agency, but but all around the government and outside the government also.

So, I would – I would often turn to various people who I knew or I’d work with for advice and mentorship and that was, to me, very valuable and I always think how generous they were to take their time for a young guy who’s just come out of graduate school to help. I’m very, very grateful to people like that.

And in retrospect also, I’m grateful I did some of the smaller things that for the moment, didn’t seem particularly interesting or I didn’t see what they were going to do for me. But over a period of time, they have built – you built confidence in yourself by achieving things that are of – that are small in nature and that enables you to have confidence that you can take on bigger things.

I mean, one – and one example was when I was a summer intern in Germany, the goal – this is still during the Cold War and they were anxious that people use the autobahn to drive from Bonn, which was in the capital West Germany, to Berlin to preserve what they called Allied rights to use the autobahn. And they really wasn’t a very pleasant trip as you might imagine.

So, they said are there any volunteers? I was a summer intern and I said, yes, I’ll do it. So, it’d get – they’d give you a little money for gas and then you could go from Bonn to West Berlin. And it – it enabled me to sort of understand the Cold War in ways traveling through East Germany on an American pass so they didn’t stop you. And seeing what West Berlin look like, the wall, you could go in to East Germany if you use your pass.

So, it was – and when it came to working in Washington, I had a feel for what how the Cold War was working, how it affect that individual. So, doing the little things that other people may not want to do and doing them well or doing them with some interest and some enthusiasm, really, was very helpful to me.

So, and a number of people who were mentors that don’t do it, it’s a – it will be something – no one else is going to do it. Go do it. Enjoy it. Learn. And I did. So, I think you can – you can almost always learn from someone else, if you keep your ears open your eyes open and your eyes open and your willingness to interact, you can have mentors like Kissinger or Scowcroft or Brzezinski or you can have mentors who were in different levels who are willing to spend time with you and teach you and help you learn.

RITHOLTZ: In those days, was the autobahn no speed limit? Were you – were you able to rent a …

HORMATS: Yes. No speed limit. Well, yes, it was – this was the part of the autobahn that was in Eastern Germany. So, part of it was in West Germany, part in East Germany. But the – there was no speed limit in East Germany but the quality of the road was not so good. So …


HORMATS: … you could – you have no speed limit but you couldn’t go the speed limit because there were a lot of potholes.

RITHOLTZ: To say – to say the least. Let’s talk a little bit about books. What are some of your favorites and what you reading right now?

HORMATS: What I’m reading right now, I’m reading more books about the future. There’s one book called “The Future is Coming Faster Than You Think” which documents a lot of the changes that are going on in various tech areas of technology. I’ve just read a very interesting book called the Queen and the Sultan about relations between Britain and England at that point and the Middle East in under the reign of Queen Elizabeth I which is a very interesting history of the middle – of middle eastern European or British relations.

I have been reading a lot of American history documents or American history. Ulysses Grant’s memoirs which are fascinating and beautifully written. I read a wonderful book on Eisenhower and Marshall called Partners in War. Another book on the debate – ongoing debate as to whether we should engage in World War II between Franklin Roosevelt and Charles Lindbergh where Lindberg was – served the icon of the isolationists and Roosevelt was trying to get America prepared for – for a war that he thought was coming, but America was not after World War I in a move to spend a lot of money and prepare itself for World War II. Those are the – those are the – are the books I’ve – I’ve read.

RITHOLTZ: That last one, is that “Those Angry Days”? Roosevelt, Lindbergh?

HORMATS: Yes. “Those Angry Days.” That was – that was exactly the title of the book. And it was fascinating because a lot of the arguments that were used during those days are used now for of internationalism versus the intense nationalism. Yes.

RITHOLTZ: Very interesting.

HORMATS: And the Queen and the Sultan is very interesting because I had no idea how much – how close relations between Britain and the Middle East were, particularly the Ottoman Empire, were during those days. So, it was – it was very interesting.

And I’m also trying to read more and more about how other societies have dealt with their internal issues, how societies change. Because I think the United States is going to have to spend a lot more time addressing this sort of angry partisanship that is emerging, dealing with a number of inequities in our society. So, I’m sort of reading about how other societies have done this.

RITHOLTZ: Give us a title that might be an example of that or is Queen and the Sultan one of those?

HORMATS: Well, the Queen and the Sultan is – is one of those although that was more about Arabs – more about some Ottomans and England. But on in terms of interrelations, it’s mostly articles in, for instance, The Atlantic, and other magazines, sort of, that are looking at some of these more contemporary issues.

RITHOLTZ: Really interesting stuff up. What sort of advice would you give to a recent college grad who was interested in a career in either finance or international relations?

HORMATS: Well, first of all, you’re not going to – this sort of goes back to the commencement address I gave. You’re not going to remake the world in your first job. So, spend time learning. Learning in two ways. One is learning about the subject that you’re dealing with and you’ve learned, most people picked up a lot of knowledge from universities or grad schools.

And second, develop a group of friends and colleagues who you can work with, who you can develop teamwork with because, as I mentioned earlier, things are done by – by teams and the more people you work with, the better your outcome is going to be.

And you’re also building relationships now and for the – for the future that are – and I have friends today who I got to know in my 20s working in the government and friends who I got to know in my 30s working in the financial world. So, I think that those – the education, that teamwork, that you the teamwork skills you’ve developed and the and the – and the long-term friendships and interactions that you’ve developed are extremely important. I find them true for me. I’ve – I value them enormously.

And I think those, with respect to specific jobs, I regarded the summer intern program in Washington as a great way of learning. You start out at the lowest possible level, but you’re working with a number of people and you learn about the State Department, and you learn about what’s going on in Germany from being an intern in Germany or what other countries you – you might be visiting or working in.

And if you’re in the financial world, start out at – you start out a low level, you’re an analyst and you build from being an analyst. So, a lot of the lot of the people who run big firms today were analysts or runners, running stock certificates from one company to another, that took on and did well and low-level jobs and developed friendships, developed respect from others and built from that.

So, you’re not going to remake the world, at least, I wasn’t about to remake the world from the beginning, but I was determined to learn as much as I could so that I would be able to contribute and learn and do other jobs as my career advanced and I would have a lot of friends who I can count on to talk to to get their perspectives as I develop.

There’s some very good story in the book I mentioned, Partners in War, Marshall and Eisenhower, where Marshall, he didn’t go to West Point, he went to VMI. So he didn’t have the advantage of knowing – of having the West Point Club that – that those who went to West Point had when they graduated like MacArthur and others. But what he did do was as he advanced in his career, he kept a little book, and he wrote down the names of people who he was impressed by because at some point, he made the decision that he was destined for future leadership of some kind. I don’t think he necessarily envisioned that he was going to be the – the main presidential advisor for World War II but he did anticipate that his career was going to advance.

So, he kept the names of people he was impressed by and when he got higher and higher-level jobs, he would call those people that he had met and they were strewn throughout the country in various military bases and call them and bring them to Washington and have them be on the staff, so – or call them for their advice. So, he – understood the notion of developing teamwork.

RITHOLTZ: Very, very intriguing. And our final question, tell us what you know about the world of investing today that you wish you knew 30 years or so ago when you were first getting started.

HORMATS: I think one thing is this country is, when it pulls together, is very good at overcoming obstacles. A democratic system that is representative of the – of the people and is able to harness the talents of the millions of Americans who were working hard in and want to participate in the growth of the that this country is – is able to grow very rapidly and is able to overcome lots of typical obstacles.

And I think that their points in time when after a crisis, the middle of a crisis, when there are moments that I would sort of say Jesus is going to last for a long time, it’s going to be very hard for U.S. to recover every time that thought has crossed my mind, I come to realize that two years, three years, later, that the economy is recovering, the country has recovered, and is – is pulling together again.

So, I guess, I come to the conclusion that optimism is a better strategy for addressing financial markets and addressing the economic outlook than pessimism because, in general, the optimism is paid off better than – then taking the negative view of the outlook.

I will say, however, that in the current environment, it requires – and in those earlier environments as well – it requires really good leadership and we have been very fortunate in this country for many decades to have leaders who come through and are – are able to take the reins when the country needs them.

Harry Truman, who would’ve thought that a relatively junior senator from Missouri who Roosevelt hardly knew was put in as vice president almost by accident and turned out to be, in my judgment, a really great president that we – we’ve seen this in the past that – that American – that you get various people from various sectors, not just at the presidential level but other levels, who exercise leadership to help pull this country together again. And I – I do think at point, we need that more than ever to heal the pipe with – the partisanship that tends to stop things from moving ahead to deal with inequities, inequalities, discrimination, things of that sort.

We’ve got – we got to demonstrate that America is capable of doing the kind of great things it’s done in the past and that’s going to require – we’ve gotten into some bad patterns. We think about the future and how to bring this – pull this country together again, not just for economic growth, but for social cohesion and in a more positive outlook, for more and more people who’ve not been able to participate as fully in the prosperity or the well-being of this country as – as in the past.

RITHOLTZ: Quite – quite fascinating. Thank you, Bob for being so generous with your time.

We have been speaking with Bob Hormats. He is the Former Vice Chairman of Goldman Sachs, legendary member of various administrations from Nixon to Reagan to the Obama administration. Currently Managing Director at Tiedemann Advisors.

If you enjoyed this conversation, well, check out all of our previous interviews. You can find them at iTunes, Spotify, wherever finer podcasts are sold. We love your comments, feedback, and suggestions, Write to us at Gives a review at Apple iTunes.

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I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Paris Wald is my producer. Atika Valbrun is my project manager, Tim Harrow is my audio engineer, Michael Batnick is my head of research. I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg radio.




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