This podcast is originally published by BBC Business Matters in this link: https://www.bbc.co.uk/programmes/w172yzrvv1zq9p3.
BBC’s Description:
The US Federal Reserve has left interest rates unchanged at a 22 year high in a bid to stabilise price rises which has reached record levels. We’ll be getting the latest reaction from a business in the US.
Shares in the world’s biggest offshore wind developer Orsted has fallen all because they abandoned a project to build two huge wind farms off the east coast of the United States. We hear why it seems so hard to get these developments of the ground.
And would you fancy a 70-hour working week? Well one man in India has sparked a debate in the country with this call saying young Indian professionals need to work harder and longer.
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Transcript
BBC
Tony Nash is also with us, CEO of Complete Intelligence. Of course, he’s there in Texas. Tony, if you were to be interviewed by anybody, who would you want it to be?
Tony Nash
Oh, gosh. Elon Musk is not a bad choice. Joe Rogan is not a bad choice. I mean, or are you?
Rachel Cartland
Yeah, exactly. One of those BBC seasoned professionals, these are the people.
Tony Nash
Right, exactly.
BBC
Yeah, well, I’m certainly not seasoned and certainly not professional either, to be perfectly honest with both of you. But, I mean, interestingly, Joe Rogan did interview Elon Musk quite recently, didn’t he?
Tony Nash
He did just last week.
BBC
Yeah, good chat there. Tony, everybody expected this. There’s rates between five and a quarter to five and a half %. The key is, is this the end of the rises or could we see more? And how long are they going to be paused at these high levels? Do you want to have a bash in answering all those questions?
Tony Nash
Sure, yeah. I honestly think they don’t know. I think there is still instability in the banking sector, so they have to be very careful how much higher they push things. I think there’s difficulty on personal balance sheets, household-level balance sheets. I think with higher mortgage payments, things are delicate there. But we do have persistent inflation. I really do think these guys are taking it month by month to see they’ll raise if they have to. But I think things are fairly delicate right now and they’re trying to see how long they can keep this going.
BBC
When you say they’re fairly delicate, in what way?
Tony Nash
Well, we have a lot of, say, commercial real estate buildings right now that have lost a lot of value. A lot of that commercial real estate is on the balance sheets of regional banks, which came into problems in March of this year. But some of them are on the balance sheets of bigger banks. The Fed doesn’t want those regional banks to, any more of those regional banks, to fail because they don’t want to force a larger bank to buy any more regional banks. They had JPMorgan buy Silicon Valley Bank. That’s just one example. But when you look at, say, household cash flows and what’s happening because of higher mortgage interest. Now, a lot of people are at 3% mortgage interest rates. But for those people who aren’t, it’s really stressful on households to pay those. When we look at even things like grocery prices, the tightness of personal budgets and household budgets is very high. We’ve seen 22% or 24% price rises on average since 2020, and wages have not kept up. It’s tight all around. He has to really put pressure on downward and pressure on inflation. But interest rates are really to the point where they’re hurting people a little bit.
Tony Nash
I wouldn’t say they’re excessive interest rates, but if he can keep it at the current rate, he’s going to try to do that.
BBC
A quick one for you, Tony. When will we see rates being cut? It could be six months, nine months.
Tony Nash
Oh, yeah. I don’t think it’ll be until at least the first half of ’24 is over, unless there’s a catastrophic event, of course. But short of that, I think it’ll be mid ’24 by the time we see starting to talk about talking about interest rates coming down. Yeah, and that, of course. The inflation has been very high. And so, yeah, it’ll be sometime.
BBC
Yeah. And we’ll be heading right into the election period. There you are in Texas. Everyone talks about Silicon Valley, but a huge tech industry in Texas, isn’t there? At the moment in places like Austin, et cetera. Do you think there’s a lot of interest there in what’s happening here in the UK? Or do people think, Actually, it’s really not that important, this conference? Sure.
Tony Nash
Sure. And, Rahul, you know I run an AI company, right? Yeah. This is very relevant to us. I think when multilateral statements like this are made, I think it’s a nice sentiment, but there is no enforcement mechanism to this. Do we think the US, China, the UK, EU are going to abide by this? Probably not. Okay. Most of those places, I doubt, try to know, but most of those places have laws against things like malicious code, which is viruses and malware. There are existing laws against this stuff. Ai is just software. Many of the worries that people have about AI, around things like doing bad things, around racial profiling, these sorts of things, there is existing law in place about doing these things. If we look at Joe Biden’s executive order from yesterday, every single point that was in his executive order, there is existing law and regulation already on the books for all of those things. This is an interesting event, but none of these countries are really going to adhere to it. When somebody like Elon Musk stands up and says AI is terrifying, we have to ask why he’s saying that. He’s saying that because he has existing AI technologies, and he and the other large AI companies are trying to build a regulatory moat around their businesses.
Tony Nash
They’re trying to stuff down companies like mine so that they can be entrenched from a regulatory perspective in the AI space.
BBC
Well, yeah, it’s fascinating to hear from you.
Tony Nash
Why do you laugh? I’m just curious.
BBC
No, that was Rachel.
Rachel Cartland
That was me. Sorry. I was just wondering if there’s a, I don’t want to be rude, but is there the teeniest, tiniest bit of self-interest creeping in here?
Tony Nash
For me or for Elon Musk?
Rachel Cartland
Yeah, for you.
Tony Nash
No. Look, of course, I want to compete, but who are the loudest voices around AI regulation? It’s Sam at ChatGPT, it’s Elon Musk, it’s Facebook, and so on. These are the largest AI businesses out there today. Amazon, they just invested in a large language model called Anthropic. These are the largest AI companies out there today, and they’re out screaming for regulation. Why do big companies scream for regulation? Because they want to be entrenched into the business. And so there is no other reason for them to want to scream for regulation.
BBC
It is a subject we’re going to discuss, but fascinating to hear that conversation between Tony and Rachel. Before we went to the news, we were having this discussion about offshore wind as the world’s biggest offshore wind company, Austin, actually canceled two wind projects in the US. And, Tony, there you are in Texas. We think about it. We think of Texas and oil, don’t we? A lot. But there’s a lot of renewable energy there. But interesting that another big energy company recently said, BP, that the US offshore wind industry was fundamentally broken.
Tony Nash
Yeah, I mean, it is. Obviously, this Orsted issue, they got a billion dollars from the New Jersey government just recently, sorry, from the state government of New Jersey. So if these guys can’t survive without subsidies in a market environment, then there’s only so long over which you can amortize the initial costs of these. Windmills, I see windmill blades, used windmill blades going up and down the highway near my house on a regular basis. Those windmill blades only last so long. Then there’s actually a burial ground for windmill blades here in Texas. It’s a massive site where they can’t recycle windmill blades, so they have to take them out into the middle of West Texas and bury them. There’s the cost of them. There’s the cost of repairing them and maintaining them. There’s just not a feasible scenario for it. Texas was one of the first places in the US to deploy massive wind farms in the 1990s, and at one point had the largest wind farm in the US. And now obviously there’s been so much subsidy across the US for wind farms that other places are competing for that.
BBC
To this issue of productivity, it is an important one, isn’t it? Because for many economies, if they want to drive growth, it’s going to have to come through increased productivity.
Tony Nash
Yeah, you’re exactly right. And whether it was literal or figurative, you just need to work harder. Predictivity is output per worker. You get that either by investing in some technology, whether it’s mechanical or software or whatever, or by workers working harder. I think all he’s saying is it’s unlikely that a lot of this investment is going to come for some companies. So people are going to have to do it by working more. Is 78, 5 hours excessive? I mean, I’ve done it through my career. I’m not German or Japanese, but I don’t do it anymore. But for 15, 20 years, that’s what I did probably longer. I think people have to realize that if you want to have a higher income at a national level and or a personal level, in most cases, you’re going to have to work harder. You’re going to have to be more productive. I think that’s really all he’s saying.
BBC
Rachel, is there something a little bit generational about this? My dad said to me, You don’t work as hard as I do, and I find that I say that to my kids nowadays. We all think that maybe the next generation doesn’t work quite as hard as we do.
Rachel Cartland
Yeah, and I think we’ve got to be careful to avoid this looking back with rosy tinted glass and thinking we were so wonderful. But on this quiet quitting thing, I happened to be in a coffee shop the other day and a really well-dressed, well-spoken, obviously well-educated young woman was speaking, chatting at the next table so bitterly to a friend, I suppose, saying that she was not going to do a moment more than she considered that she was being paid for, that she would work out how many dollars worth of effort she needed to put in. At that point, she would turn off. I must say it was all I could do not to get up and go, Hey, this really isn’t having a way to have a happy life, believe me. Find a job you really can put your heart into and then do it.
BBC
I can hear you nodding in agreement there, Tony.
Tony Nash
Well, yeah. If people don’t want the job, then they can work for something else. It’s really interesting the generational question because the generation that, say, really gains the wealth. If you look at in China through the say, ’90s and 2000s, ’80s, ’90s, and 2000s, a lot of hard work, a lot of hours have gone in. Do Chinese workers today work as hard as people did 20 years ago? Probably not because they’ve hit a certain income level and they don’t have to. In the US and in the West, largely people talk about work-life balance. That’s a luxury to be able to talk about work-life balance because a level of wealth has been achieved in the West. That level of wealth hasn’t been achieved in India yet. So is that a luxury that people in India can talk about? Yeah, maybe in certain social classes and certain income strata, but generally across the board, it’s just not a luxury that people have.
BBC
Yeah, it’s a good point that I know many people in India, many women who were doing three or four different jobs just to try and make ends meet and just to keep the families going. Tony, whatever happens in this case, there are going to be a lot of questions at the end of it about the regulation that took place of this company. And there are concerns there, aren’t there?
Tony Nash
Oh, there are concerns were voiced for years. This isn’t something that just happened because of FTX. People have been shouting about regulation that was needed around crypto for years. This is just a symptom, as the commentator said, of a wider problem. It’s interesting that I think that what’s going to happen with SPF is he’ll be found guilty of something, but I really don’t think he’s going to serve that much of a sentence, and he’s probably going to be the CEO of another company in 2-3 years. This is really something that I think likely is going to be overlooked at some point.
BBC
Let us see what happens. Of course, he has quite strenuously denied those charges that have been, We’re going to end the program. Rachel set the theme for the program today, which she started by talking about her concerns about what happened with her We talked about the world’s largest wind offshore company seeing its shares collapse. Well, we’ve also seen WeWork see, it shares plunge in after hours trading, following reports that the troubled flexible office sharing firm is preparing to file for bankruptcy. No confirmation yet of that. I mean, Tony, have you ever used a WeWork yourself?
Tony Nash
I’ve never done it for my company, but I’ve met other companies in a WeWork. I actually knew the guy who broke the WeWork story about how their revenues were pretty hollow. And he was actually a WeWork tenant when he broke that story. And they kicked him out because he’s the one who broke the story about WeWork.
BBC
Just fascinating. Fascinating stuff.