Monday, when we had 97 basis points. Some of the risk on currencies not necessarily reacting as they should, like the euro. We will break that down over the next couple of hours as the market digests the news and what it means Going Forward as cases pickup. Now we welcome our tv viewers andradio listeners, modernas ceo. The biggest question that it seems like people have is why does your vaccine require less cold storage then pfizer, key to distribution . Good morning, and thank you for having me. I think it goes back to the fact that we have been working on mrna vaccines for more than 10 years. That you mentioned, it is the first time they are doing an Infectious Disease vaccine. Over the years, we have invested heavily in science, and process develop and that allows us to have much better storage conditions than what we had five years ago. Guy this is really important because it is going to have a huge impact on distribution. How much of an effect will that stability at a higher temperature have for everyones ability to get a hold of this vaccine . Stephane i think it is a huge impact. We have another vaccine stored at 20 in the factory and distribution centers. Those are able to handle that type of product because they are andady approved by the emea europe, as well as the u. S. What is very important with todays news is that we can now have the vaccine stored in the , and everydge pharmacy, doctors office, hospital has that capability, so we think it is a game changer. The other piece to keep in mind is our vaccine does not require dilution. The other vaccine you mentioned requires dilution. You take the vaccine out and you need to dilute it. It is an extra step. What we need to get the world back to normal is a massive Vaccination Campaign that has never really happened before. Every time we are wasting doing these types of things is going to be an issue, so we think the storage and the fact that we do not require any dilution on site does give a big advantage to nurses, and to be able to provide the vaccine quickly to the population. Alix those are good distinctions. Have you had conversations with the Current Administration [no audio] stephane process to get the vaccines out to hospital and pharmacies. All of the big pharmacy chains in the u. S. Have signed up to get the vaccine, to provide administration and the pharmacies. So this is going to be available in hospitals, in some rural areas and community hospitals, in a gps office. Whereas the military is being involved to help with logistics. Guy one of the key questions as we all watch the case count climbing around the world is what impact will these shots have on transmission. If i had this in my arm, what effect will this have on my ability, if i come into contact or get the virus, to transmit it to others . Stephane this we dont know yet. What we know from todays data is if you get the vaccine, you have a 94 chance to have no covid disease. That is obviously a big deal. What is of his lien more important in my opinion is in the case of disease that we , thezed yesterday secondary endpoint of that phase 3 study, so 11 of the 95 cases were severe. So is really more so what is really breakable really there were no cases reported of the people who got the vaccine. When you put that data together, what does it tell you . It seems that our vaccine, if you get it, you have a very high chance of being with no disease, and if you get the disease, most probably you get the mild disease. Think about the impact on hospitalization, i see you, and the impact on the economy when governments around the world are trying to slow down contacts because they want to manage the limited hospital and i see you capacity and icu capacity. So if it can prevent severe disease, that is a game changer. To your question about transmission, we will know soon as part of a study. We are also looking at measuring antibodies that come from the fibrous, but could not come from a vaccine from the virus, but could not come from a. Accine the most important thing is to prevent disease. Vaccinated and do not have disease, we will be in a very different world. 65 . for people over what was the effect . Stephane we dont know all of the details yet because the company is blinded. The data is run by the independent safety board. But what we know is that we had only five active cases on the drug. We anticipate a good response in the elderly. We will know in a couple of weeks when we have the study , but if you look at the phase one data, of all of the vaccines in the clinic, we able too substate sustain the same level of antibodies for all participants in the study. So we are cautiously optimistic that in the elderly and of people with high comorbidity factors, we can successfully vaccinate. Guy Christine Lagarde was asked the other day what her greatest fear was. One of them was war. Wasof them the other mick. How big if fear is mutation, and is mrna vaccination the best way of dealing with any mutation . Yes, mrna stephane is the best to deal with any mutation. We have shown in january that it tos 42 days to go from a human, quality product. Tomorrow there was a new mutation like the one you mentioned that could have an impact on the efficacy of the vaccine, we could within a month go back and have a new vaccine. Chemistry for the molecule of mrna. It is the same manufacturing process. Message that the is very long, if you change it for mutation, you do not have to redo clinical studies anymore. So mrna is clearly the best for mutation. On the one you mentioned, we are tracking it. We are going to run the experiment very quickly to see does the blood that we have from humans who were in our phase one and phase to neutralize the new virus. If it does, we know the vaccine works well. If it doesnt, we can quickly change the sequence and avenue vaccine. Alix can you give me some perspective on the side effects . Stephane yes, the side effects, we have reported the serious side effects in the press release for transparency reasons. They are very similar to what you see with other vaccines. Report the fever because they were less than 2 of cases had fever, and what you see is with commercial vaccines. They go away with no medication, especially in the elderly group, you see people have a bit of headache. Those things go away usually within a day or so. Of course, people can take a tylenol or equivalent and actually not even feel this. Guy you mentioned a moment ago about being able to reformulate. How quickly do you think you will get into 2. 0, 3. 0 . How quickly do you think that cycle will happen, and what improvements do you think you will be looking for . As you look for reformulations, what work are you doing, and how improved will be the product, and how quickly . Stephane that is a great question. We are always working on temperature and stability. Have the data. We continue to monitor the stability. The other piece is singledose usage. The current product, like all of the other products, is multidose. You will get 10 doses for 10 people. Thateason the industry did is there enough there is not enough capacity in the world. So we can get much quicker product in the marketplace to vaccinate people. If you thing about the potential use of the mid to long in terms much easier will be to have a single dose vaccination like when you get the seasonal flu shot. Guy as you said at the beginning of this conversation, you have been working on this for a long time. Mrna forooking to use other therapies. Can you talk to me about the acceleration you have been through within your business as a result of covid19 . I am looking for silverlinings here. Will this help and treatments elsewhere, cancer and other areas . Stephane yes, the place is going to most it is going to help the most is Infectious Disease vaccines. Is cmv, a virus that drives the number one cause of birth effects in europe or in the u. S. 10,000 cases in the u. S. Per year. No vaccine on the home market. The industry has tried for 20 years to get the vaccines to work. They all failed. With a positive phase ii study year,tember, phase 3 next we have notuct that licensed, and we have many more like this. We Just Announced we are going to get into the flu business. It is a derisking of platforms for vaccines, which has a lot of value. We were supposed to be commercial in the 2023 to 2024 timeframe. Now we are being commercial before the end of the year. Guy that is quite in the coloration. Thank you very much that is quite an acceleration. Thank you very much. Bancel, the modernist ceo the moderna ceo, joining us on tv and radio. Lets talk more about modernas interim results. Doing this is dr. Gregory Clinic Research group. Dr. Poland this is exciting new to for the field of facts analogy in dealing with this but as a scientist, you always want to temper your enthusiasm with what you dont know yet. Remember, this is a press release. We havent actually seen the data. This is efficacy in the 14 days after the second dose. What will the durability of that immunity be . What will the protections be against a symptom at disease and transmission . What will efficacy against death be . Room or that generally speaking, in the context of these trials, they are being carried out in places where we are Wearing Masks and we are socially distancing. What are the same metrics with masks off . Those are important for us to examine as we go along. The other thing is that i absolutely agree that the stability at refrigerator temperature is important. Important to show is keeping it at that temperature gives us the same measures of efficacy. And finally, we want to know detail. Who were the five that got infected . Where they elderly . Were they people who had certain comorbidities . These are all very important as we try to develop strategies and policies for how the vaccine will be used. Alix related to your first point, when are we going to know that information . That vaccineation had a good efficacy rate because we were all Wearing Masks and socially distancing, that that maybe creates the efficacy . Dr. Poland we always know that the efficacy of a vaccine in a carefully controlled Clinical Trial is lower when you actually the data. People who are excluded from Clinical Trials would now be included in the general use, and. S i say, the distancing lets talk a bit about reformulation. How quickly does this treatment get better . Dr. Poland this is a really important question that you asked. I am going to add something to the context of this discussion, and that is yes, they can move very quickly. That is one of the exciting things about mrna based vaccines. The second thing is we might need that. On the mrna that produces the s protein from a particular strain. What happens when we give a vaccine against one type of protein from one type of sars virus, and that mutates . It has already mutated. It doesnt appear to be something that will change the. Fficacy of the vaccine where does this leave astrazenecas vaccine in terms of timing, and terms of what we need to look for, whether it may be better, etc. . Dr. Poland good question. That really awaits seeing the data. Remember, all we have for the mrna vaccines are two press releases. Those are fine, but as scientists, we really want to see the data begin to dissect, what are the assumptions here . Where did not work . That thell say is adeno vector vaccines in my experience, you have to give higher doses of it. The news that there is the potential for this mrna vaccine to be stored for 30 days at refrigeration temperature means that this vaccine, funded by the american taxpayer for the benefit of the world, could actually be used around the world. When you get to requiring 75 freezers, you have now limited it to Major Medical centers in the west and not the rest of the world. So if this stability turns out to not harm efficacy, this will be really important in the use of this product. Alix gregory, so great to talk to you and for helping us break that down. Medicalpoland, mayo School Vaccine group director, thank you. Lets take a look at how investors are weighing these developments. Ahnsen, Bahnsen Group cio, is joining us now. The reaction today is muted, kind of disappearing. Youre not really seeing any moving yields. The nasdaq is underperforming, but still up on the day. More thanhink it is just a small cap action. There was a big rotation into energy and the financials, and i think you are seeing that continuing today. I think it is obviously catalytic from the vaccine news last weekend this week, but i also think it is inevitable and has been inevitable, but boy, is it taking some patients to get here. Guy do i just ignore what is happening on the ground right now . Do i just ignore the climbing case counts, look through it, invest for next year . David you do, and the reason why is we have already been through this lesson. The case count is irrelevant to markets. We found out what we needed to know months ago, which is that there is a particularly vulnerable class of people for covid19 in our country, and we have the ability to better protect them. We have more than doubled the discharge rate getting out of hospitals because of therapeutic improvements, and the mortality rate not only for cases, but even for severe hospitalizations , has collapsed. So markets are able to look through that and see that, though the headline number around higher testing produces higher positive cases, the fact of the matter is we are able to safely reopen, and in fact, have to do so. Alix but david, doesnt what we do now affect how we come out of this . For example, we dont have the stimulus out of this. Have the program from the the stimulusas rolling off at the end of the year. Isnt that where it matters . David let me offer a different perspective on that when you say we dont have the stimulus here. We dont have a fourth stimulus, but we havent spent all the money from the third stimulus yet. We need a more targeted package. I agree that there will need to be additional, and in fact, the market is well aware that there is going to be. The questions are just if it is going to be in the lameduck session or into q1, and what the size and scope of it will be, but the fact of the matter is the stimulative effects of c. A. R. E. S. Act are nowhere near gone, let alone the trillions of dollars of monetary stimulus. Theres still ppp benefits throughout society. That is the lowest fruit for additional stimulus, giving more support to those businesses that were doubly impacted by the lockdowns. Guy can i just come back to this kind of tension that is in the market right now, between the here and now in the huge numbers of people suffering from covid, and the post covid world generated by the vaccines we are going to be getting . Is the rotation a Straight Line . Are we going to see quite a lot of turbulence between now and then . How do you pick your entry point . How do you position yourself during this period . David that is a really quite a really great question. I believe what is usually just referred to as a growth into value rotation, but there is a lot more nuance around it now, sector specific and even subsector, but it wont happen in a Straight Line. My argument is it began in september, and yet theres certainly been big nasdaq rallies, and big faang rallies along the way. But this is the rotation that is not just going to be driven by the vaccine and post covid economic realities. It is a rotation that was long overdue anyways. Pick growth got another pick up. It was a perfect storm for that relationship. That unwinding and mean reversion is a market inevitability throughout history. I think we are in that moment, but i think there will be turbulence. To your question about picking the entry point my cup the entry point, my earnest advice is to not try to pick an entry point because they will not be able to. That is my job, to tell people that they will not pick a perfect entry point, so they has to kind of average into those right spots and in a properly diversified portfolio. Alix so it is not a 100 rotation all the time. How long term is the rotation going to be . Citi looks at next year, yields capped at 1. 25 for the 10 year. I wonder, does that cap the rotation . David i dont see this is only connected to the level of yields. I do think the steepness of the curve matters. I dont happen to agree that we will even get to 1. 25 , but that has more to do with fed manipulation then it does economic strength. I think the economy will be plenty Strong Enough to support a 1. 255 a 1. 25 10 year, but the fed is not going to let the 10 year and thirtyyear year with deficits this high get there. I think they will end up using yield curve control to put down the longer into the curve. But ultimately, i think the issue is that it is sort of a permanent reality, and yet we just got so out of whack in terms of the relationship of certain sectors to one another that there has to be a mean reversion. It would be very market disruptive, i think mostly positive. As you know, we are Dividend Growth investors. Other sectors will have their day, but there will be new stimuli and new catalysts that affect the future rotation. Guy thank you for the input today. Greatly appreciate it. What have we got coming up . We are going to look at how these vaccines are going to be stored and then moved. We are going to diss to discuss all of that with stuart henderson. That conversation is coming up. We generate the vaccine, but storage and transport and stability are absolutely pivotal in its ability to get around the world and have the effect that everyone is hoping it will have. In terms of the market reaction, we were off to the races. Today we are seeing a more subdued response, we do have equities higher. Even the nasdaq is up a bit now. Crude absolutely surging. This is bloomberg. Guy this is Bloomberg Markets. Lets carry on our conversation about our top story. The Moderna Vaccine has been hailed as a potential game changer. Is oneution and storage of the critical questions we need to answer. Joining us for more is stuart henderson, accenture global lifesciences lead. We were just talking to the ceo of moderna, and talking about distribution and how important temperature is going to be in terms of being able to deliver the vaccines from labs to peoples arms. Can you walk me through just how complicated a process this is . Stuart thanks, guy. Great to be on. Before i dive into explaining thatger piece temperature piece, we are truly grateful to not only scientists and also the Health Care Providers and professionals that have worked day and night on this tirelessly since the beginning of the pandemic, i think what is in the region of 3000 volunteers who take part in Clinical Trials that are fromding the results moderna this morning. I think with these two results, we are hoping as you do to see the beginning of the end of this it,emic, and boy do we need where it is 1. 3 Million Deaths at this point. If using about that, that is the equivalent of the population of dallas. When with it about the storage and shifting of this, it is important to understand what we. Ean , wealk about mrna vaccines talking abouty Assembly Instructions for yourselves to put together a by the, then recognized immune system is something they want to attack, and that builds a memory. The issue with mrna is essentially, it is a messages has to a messaging system used inside your body to repair things. It is shortlived in your body because essentially, it is meant to be a message. It is a shortlived process. When you transport it, you have to keep it in a way that doesnt allow for the degradation of that mrna so that by the time it gets to the patient or the person who going to have it injected, it is sufficiently effective. So that is the background you need to understand. Alix lets get deeper into that. What do you need to transport it , and what does it need to sit in if it is in the middle of a huge walmart parking lot . Stuart that question is answered in essentially three parts. The first part is that pfizer has done i think an extra in their job, and the same way they had a ton of scientists working on the science itself, theyve had a similar level of effort on the supply chain side. What they have been building is a network that will revolve around two large refrigerated storage sites, one in michigan and one in belgium. A simply centers elsewhere in the markets. They have developed, just like they developed the science, they developed issue case size container that is going to hold between one and 5000 doses. They will have Cold Chain Technology that keeps those boxes at the appropriate temperature for up to 15 days. They have figured out how to ship what will likely be 6. 7 million doses coming out of those facilities on a daily basis into airplanes, and two trucks around the world. Those platforms, those boxes, if you like, they have tracking technology from a gps perspective, as well as the technology to say was the cold chain broken at any point. Did it go above a certain temperature . The work that is ongoing that has to be done is at the last mile. If you think about it, once you get that box or that suitcase to the states,in theyve got to figure out how they do that last piece. Once it has risen up to room temperature, they have a certain number of hours to dispense it, i certain number of days associated with bridge temperatures. So we will see the last mile be the place where a lot of work is required. Pfizer has done no extraordinary job on the first part. The states have got the last mile to work on. That is where a large amount of technology will come into play. Guy the United States is a developed country. Europe is a developed region. What about the rest of the world . Stuart for sure. We are talking about getting this around the world, and you heard earlier of course that one of the previous conversations that the moderna temperature storage is a different temperature, and of course, that may mean it is more applicable to different places. The reality is we are going to need all of these vaccines. We want to multiple winners. They are all based on the protein so far, this spike protein. If you think about it, pfizer in 22 anyone is committed to 1. 3 billion doses, but are not to 2. 1 billion doses, pfizer in 2021 is committed to 1. 3 billion doses. The Pfizer Vaccine will be very applicable to certain parts of the world. Vaccine to certain others. We will see them shift worldwide. It is important to remember that this Cold Chain Storage is not something new. The democratic republican of congo deplored this for the ebola vaccine. It was not hard. It was just expensive. It is not impossible. It just takes hard work. Alix really appreciate that kiefer distribution, and how we can sort that out. Stuart henderson, thank you very much. Coming up to you got a wall street versus main street conversation. Former fed chair janet yellen and former ivory i governor , a former rba governor, and former treasury of the secretary Larry Summers are weighing in on the debate at the Bloomberg New economy forum. We will bring you some of that panel next. This is bloomberg. There was an overwhelming rush to the safety of cash in march. It threatened massive asset fire sales, which could have caused credit to dry up in the economy, and the fed and other Central Banks erected emergency liquidity and lending facilities that have really worked and kept credit flowing in the economy. For example, spreads on Corporate Bonds were just spiking, and after the fed set up its secondary credit market facility, they really came way down. Theres been a great deal of issuance. Monetary policy ritika Bloomberg Markets Bloomberg Markets this is this is Bloomberg Markets. Coming up on bloomberg, the moderna founder. That is at 5 00 p. M. This is bloomberg. Alix lets go back now to the new economy forum, where former fed chair janet yellen is withing on a panel former treasury secretary Larry Summers. Janet talked about the advanced country Central Banks having done a fantastic job, and isaac this did help many emerging markets which were subject to the same kind of stress that you saw in the beginning of the crisis in march, and the accommodative policies of the Federal Reserve, the ecb, the bank of japan that help alleviate some of that e. M. Stress. Also, emerging markets have adopted some of the tools from the industrial Country Central Bank toolkit to have their governments do the spending, which is extremely important to ensure that the real economy by helpinglapse small and Medium Enterprises and households and Central Banks across the emerging world. How do question now is you ensure that the bridge to the end of the virus actually extends that far . That means that theres far more stressed that has built up within the system which has been postponements,nt and that has to be dealt with. This is not a central bank problem. Fixing theroblem of system so that it can alleviate. Tress so far, it has been very good, but so far, whenever you get into these kind of policies, exit is often a great issue. How do we exit without tanking the system once again . It is who are leased it is too early to start taking about it, but it is a question which we faced down the line. , if we takemers that quite a long has gone right in the major Central Banks response, but what would you have done differently . Was preventingg a financial collapse. The capacity to provide a meaningful impetus to their economies in any way that is consistent with any concept of centralbank functioning. They do not have the capacity to meaningfully affect any degree of inequality. They do not have the capacity to vaccinate people. They do not have the capacity to fight Climate Change. The need to acknowledge limitations of their influence in a clear way so there can be no pretending about what they are going to do, and that the authorities have the responsibilities they do. The Central Banks have also, in my view, not put adequate emphasis on the Global Dimensions of this problem. A striking feature of the contrast between this crisis and the last crisis is that the last crisis had a major response from the imf. Big increasesrs, in lending from the world bank that was driven by the global community. Theres been no boldness at the global level, bold to the boldness at the national level, and that could get us in real. Rouble down the road frankly, the central bankers, because they want to curry domestic political favor in each country, have not had enough to say about that. Just to come back on that, you talk about a lack of boldness. Larry summers, you proposed as one of the things that could happen to support the global system a big new issuance of imf special drawing rights for sdrs. Have you persuaded the incoming President Joe Biden of that yet . They will speak for themselves. I am austin missed i am optimistic that the u. S. Will not be the kind of block it has been on that proposal before, and of course, it is possible to do substantial things. Billion is up 500 without congressional approval, so i am optimistic that we will see progress on that. But i think that unlike the central bankers of an earlier era, you have seen much less in the central Banking Community of the global imperative, particularly the challenges necessary if emerging markets are to avoid a wave of financial crises Going Forward, the issues associated with debt relief, and i think that is an unfortunate, and i have to say, i think it has been because the Central Banks have been excessively focused with their domestic politics, which leaves liketo talk about subjects small business, like the environment, which are really not within their proper limit. Do you agree that may be the fed shouldnt be talking about needing to target the difference between black and white Unemployment Rates, for example, as it did in the summer, and shouldnt be engaging on this broader agenda of Climate Change . Has always operated under a dual mandate, its inflation and maximum employment. In this environment of very low inflation, to lowinflation, theres really no conflict between these two goals, and the fed is really focused on trying to create a very strong job market, and i think that they have made that clear. I am not sure that everyone in the public on main street understands that, but full employment is a goal that they want to pursue. I agree with larry that the effective lower bound is a big constraint. At this point they are doing almost all they can do. They need fiscal policy to help. But when they talk about inequality and the disproportionate burdens on minority workers, what they can do is to try to pursue the strongest possible job market because when they are successful at that, as they were prior to the pandemic with unemployment at a 50 year low at 3. 5 , that brings benefits particularly to less skilled and minority workers. When job markets are really tight, we saw wages rising most rapidly at the bottom of the wage distribution, workers being pulled off from the sidelines, coming back into the labor market. Firms finding it incredibly difficult to hire, lowering qualifications, engaging in their own training to bring people up to speed, willing to with a weakthat, labor market, the resumes would not have been looked at all. The fed has recently revised its framework for conducting Monetary Policy and emphasized that full employment is a broadening, inclusive goal, and they have changed their operating strategy to, and because of the importance of the effective lower bound, to pursue that with vigor. I think that is appropriate, and i think it is the strongest contribution that Central Banks withake to trying to deal inequality of those tools. Can i just say whether we are in agreement . I am 100 in agreement with you on the absolute importance of maximizing employment in the current context, when there is no real danger of getting inflation to an excessive level. I am and 100 agreement with you that maximizing employment is the best social program of all, and confers all sorts of doubts. But dont we think that central carefulally need to be about holding out the idea that they are relevant to sectoral issues involving differentials between one sector and another, or structural issues like Environmental Protection . Would you agree, for example, that any idea that the fed should make special efforts to buy green bonds is a confusion . Never heard the fed say that they are trying to target the Unemployment Rates or situations of any particular group. In a tight labor market, the gaps between, for example, the Unemployment Rates of minorities and whites tends to narrow. I dont think there is anything they can do on that front beyond a generally strong labor market, so it would be a mistake, i think, to say we are targeting the Unemployment Rate of any particular groups. , i on sustainable goals think it does make sense in supervision to be taking risks from Climate Change, both climaterelated risks and the risks of changes in prices and stranded assets, as countries adopt meaningful climate policy, to consider that as a risk to two banking organizations, and to do stress tests, but of course, we need Public Policy oriented towards making a big difference on Climate Change, and i agree with you that is not something Central Banks can be asked to accomplish. Add would like to just something on what larry said about inward looking. Issome extent, what you see the large developed countries have become inward looking for obvious reasons because of the Political Forces within those countries. So theres really no Global Leadership right now. Hopefully it will emerge. But also, i think the point about Central Banks is short of the fact that theres tremendous pressure to look inwards in these countries. The Federal Reserve had these swaps with a number of countries , and the Global Financial crisis, and got a lot of flak for looking outward at that point, so it did start focusing a lot more inward, so that does leave a vacuum on the global stage on issues of global transmission of Monetary Policy, Crossborder Capital flows, etc. , but also the issue that larry mentioned about crossborder credit, which at this point is heavily under stressed. Ofwe remember the title this is about main street or wall street. Given what larry has said, do you think that Central Banks, the bank of england, or other Central Banks have done enough to show that there that they are supporting main street, not just wall street . You think they are perceived to be propping up asset prices is a main tool of policy at the moment . Factam concerned that the that the narrative about why monetary easing has been so strong in these particular circumstances, that narrative hasnt been made clear, so it is not surprising that people who have got away with the impression that the objective of Central Banks is to support asset prices, i dont think that is their objective. I can see why some people might think it. I thing larry is absolutely right in saying that the danger with Central Banks today is that they often give the impression that there is an allpurpose, too good institution. There is a problem in the world that exists, Central Banks have to step in and deal with it. I think that is a terrible mistake. I think janet is very compelling in arguing that the dual mandate tothe fed allows the fed pursue strategies of maximum unemployment, and it is reasonable to argue and to explain why that strategy will have benefits for wider constituencies in the country, not just the aggregate, but individual groups of benefit, but i do worry that, if you are like the new generation of Central Banks that have been very willing to step into areas, as larry said, that include Climate Change, one of the big lessons through which we are now passing is if youre going to do stress tests on Climate Change, we certainly do stress tests on the next pandemic, whenever that may come. Are we prepared for that . There are many ways in which Financial Stability is threatened, other than Climate Change. And i think over the next few years, the big challenge the world will be facing is dealing with a wave of debt restructurings if both the business, and in many cases the sovereign sectors. So i think larry is right to point to the global strategy for dealing with this. One reason this is so difficult is over the past 20 years or so, Central Banks as well as governments around the industrialized world bought into this agenda of unfettered aobalization, and we see now very real pushback to that on very understandable grounds, and many people have not benefited from that. Therefore, Central Banks are naturally cautious before stepping in. But when it comes to debt restructuring over the next few years, Central Banks need to be part of that global debate. They were when larry and i were involved 50 news ago, and i think they need to be again. Summers, is the response to this great popular need to show that policy is more inclusive, that globalization be more inclusive, added to the long list of things that you said Central Banks are impotent about . Is it to say that central bank is to make largescale fiscal action more affordable . Should they just recognize that that is their main role at this point . I wouldnt put it that way. I would put it that their main stable,to support noninflationary Economic Growth. I think for the foreseeable future, that is likely to involve keeping Interest Rates at very low levels. I think the deep problem, the deep macroeconomic problem that the world has today is that savings are exceeding the natural level of private investment, putting downward pressure on Interest Rates to and zero or below levels, leading to sluggish growth and lack of inflation. That is the worlds fundamental problem. It is not a problem that Central Banks can on their own resolve. It is a problem that Central Banks can acknowledge, as janet certainly has in the period after she left office, and a very strong and clear way, as the evidence has become clearer. But they need to point out this is a problem, recognize that it has important implications for fiscal policy, important implications for the ways in which governments manage their debts, and that they are part. Ed to do their it doesnt necessarily mean explosions in debt, but it does mean careful thought about a range of fiscal and structural policies. But we do need to recognize that whereas from the period from the late 1970s until the early to thousands, the central macroeconomic problems where the temptation to inflate and the crowding out of private investment by budget deficits. Today, the central problem is absorbing all of the savings in a healthy way so that we have strong Economic Growth and we dont have huge leverage and huge financial bubbles. That is a fundamentally different macroeconomic problem that calls for fundamentally different macroeconomic strategies of which there may be a role for inflation targeting, but it is largely beside the point in a world where the real problem is insufficient Price Inflation and excessive asset Price Inflation. We need to adjust central bank paradigm to take account of those realities. If i could say one more thing, the worlds financial leaders said after doddfrank was passed, after the Financial Stability forum did all its things, that we now have a much healthier Financial System that could continue to function without largescale bailouts. Less than five years after that was definitively proclaimed, we had the biggest set of actions directed at propping up the Financial System in global history, and while it is looking ok right now, we are not sure that even what we have done is going to be enough to hold. That suggests the need for a great deal of fundamental rethinking. We are going to hold that thought. We need to get the polling answers, which i gather are pretty strong. If we could just bring up what the response from the audience to the poll was
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