Look at the world in 2020. Here at our table is Daniel Franklin, executive and diplomatic editor at the economist. Here is the cover, the world in 2020. You say this year will not be short of drama. What do you think . Politically, the big drama is going to be the election in the u. S. , running through november. Elsewhere, as we have seen in recent days, it is a risky world, and the pace of change seems to be so fast. Host you break it down into many different facets, which i think viewers will find interesting. You begin saying it is judgment time. It is doubly true for President Trump, first in congress as the democrats try to remove him from office, and then with this election in november. Tell me about judgment time. Guest i think the world will be watching. This is something that clearly concerns the u. S. , but given the importance of this country to everything that happens around the world, this is an international, global drama. I think particularly starting with the actual impeachment trial in the senate, people will be tuning in, and then particularly once we get to the further stages of the democratic nomination process, everybody will be fascinated. We dont actually make a prediction in this volume, but we did ask an Artificial Intelligence what it thought would happen, and it did predict donald trump would lose. That is not a prediction to take terribly seriously, but it was more to test the skills and Artificial Intelligence can work. Host we have talked about judgment time, meaning the impeachment and the election. You speak about the economy. The economy is wrestling with negativity, not so much in this country, but what are you writing about the economy . Guest i think it is a tough time around the world. India has slowed rather dramatically. Withe has been struggling almost a recession in germany lately. It is not a particularly pretty picture around the world. Whereception is the u. S. , i think people have been somewhat cheered up, surprised that a recession that looked not so long ago looks less likely. That has repercussions because how the economy performs here will have an influence on the way the voters feel about things come november. Host do you do this addition every year . Guest yes, we do. I have done 17 of them as editor. I think it is a natural time to look ahead. We come out with this just around thanksgiving. Year, i have the joy of looking back at what we wrote the Previous Year and trying to assess what we got right and wrong. Host how do you decide what topics to cover . Guest we have a brainstorm among colleagues, and then we are constantly tracking big wents, anniversaries, topics want to cover. We are tracking people we think will be influencing things at the yearend, politicians, scientists, business people. Host lets put the phone numbers on the screen for Daniel Franklin of the economist as we 2020ahead to the year domestically and around the world. Democrats 202 7488000. Republicans 202 7488001. Independents 202 7488002. It is the world in 2020. We have been talking about politics, impeachment, the president ial election, economics. You also write about china. You write china highlights positivity. What do you mean . China had a rough time in 2019 it had some tricky anniversaries to get through, particularly tiananmen square. At the end ofget the year to achieve something they called moderate prosperity. It does not sound terribly grand, but they said this target back in 2012, doubling the 10tional income over 20 levels, the elimination of extreme poverty in every region. These are quite ambitious targets. They will have come pretty close. This will be important for xi jinping to claim they have reached a new level of this extraordinary lifting of people which extreme poverty, was the situation not many decades ago in china. Host how is the relation between the u. S. And china . Guest this is essential, not only on trade, but all aspects of the relationship, including technology. We write about we call the splinternet of things. On possibility is we are different tracks. The chinese and the americans are going to be separated off for fear of security essentially, and who controls which critical technologies. I think this is a very tricky relationship. Understanding in the u. S. Now that china is a longterm strategic challenge to americas essential supremacy in the world, which it has come to take for granted in recent times. Host we know in a couple days they are signing the socalled phase one trade agreement. Will there be a phase two . Guest eventually. I think it is in the interests of both governments to have some truths in what has been an unsettling trade war. Trump, a. S. , president truce with china helps the market, which helps the economy. China has not found it easy to as fast as it has done. I also mentioned, this sense of strategic rivalry goes very deep. Host what does that rivalry me to the rest of the world . Guest i think it is tricky for many other countries to position themselves. Mainany china is their trading partner, but many of the same places, the u. S. Is their main security partner. They often try to avoid the tricky choice between china and america. That is getting harder on many issues, such as, what do you criticalr your infrastructure . Those issues are becoming much harder for them and are being asked across the world from europe to asia. Host we will go through the rest of the list from the economist of what to watch out for in 2020. Lets get to the calls. Florida, democrat, steve. Caller good morning. Thanks for taking my call. As economics goes and what i have seen in my lifetime and the decisions i make to vote, i have always been is fed to me what of supplyside economics. You hear politicians say if you cut corporate taxes, if you deregulate, if government decreases regulations on it puts money into the private sector, and businesses expand, and therefore higher. In my lifetime, i feel like i have seen this movie for the third time. It starts out as an economic boom, and then it crests. I guess what i want to ask you is how much of this economic , and do youlitical muchlaws in it, and how impact do you think it has on the economy we are enjoying now . Guest a very big question about economics. This argument will continue to rage on. Becauselitical ultimately it is politicians who make the decisions about how to proceed with economic policy. If you go too far in one direction, you hit trouble. In many parts of the world, there is the sense that there is too much bureaucracy getting in the way of growth. We have an article published in this edition by the head of the ifld bank who argues that you reduce that level of regulation, you can unleash a lot more growth. At the same time, you have to be careful of levels of debt that are quite high in some countries, and then you get the problems of assuming a growth model that is too far in one direction. I dont think we are going to end this argument anytime soon. Host michael, calling from illinois, republican color. Caller good morning. , would like you to comment your guest, to comment on Interest Rates. Interest rates are being cut again. That 70 of any economy is driven by consumer spending. As a senior, i depend on fixed income investments to supplement my meager retirement. Byave just been devastated this policy of blocking off any somal pattern of investing that all the money is going into the stock market. For an older person, this is like suicidal because if it corrects, when i need the money, i could starve. I want you to focus on how these artificially low Interest Rates are destroying my capability to help the economy by spending more money . Guest i think you are describing a real problem. You probably should be thankful that you are not living in europe where it is an even bigger problem. I talked earlier about negativity in the economy. In europe, you have Interest Rates moving in the negative territory. Getome places, you can payback less on a loan then you took out. You can take out a mortgage where you are paying out less of the amount than you were at the beginning. Odd, allisony alice in wonderland, topsyturvy world. Are still feeling that working through the system. It is rather New Territory for Central Banks to be living with these negative Interest Rates for so long. Back to the list of the big events to watch out for in 2020. Sports, you bring up sports. Moving from the economy to sports. Guest it is nice to talk about sports because that is a cheerful thing. Is an olympic year first of all. Olympic games in tokyo in summer. I think it is probably the event in 2020 where you will have the greatest number of people wanting the same thing. That makes for a global conversation. It is a big opportunity for japan to represent itself to the world. With all the rise of china that we were talking about earlier, people tend to forget about japan because it is still the thirdbiggest economy in the world. Had a big sporting tournament last year that you probably did not Pay Attention to the u. S. Because rugby is a big event there. It did very well. They are trying to present an image of a much more userfriendly place, encouraging tourism. Time, there are new sports, rock climbing, skateboarding. Olympics, there is also, if you are a soccer fan, it is euros 2020, which is taking place across a dozen countries in europe and the final will be at Wembley Stadium in london. Host you mentioned japan. That reminds me of number five on the list, worries about nukes proliferate. Japan is always watching out for what north korea is doing. This is quite a radical shift. Guest you have the chair. With sports and then the really gloomy stuff, which is nuclear proliferation. That is going to be on peoples minds in 2020, not least because there is the review conference of the Nuclear Nonproliferation treaty happening in the spring. This happens every five years. It is not meant to be a cheerful affair this time because people have serious concerns about what is happening in this arena. Andt of the guardrails agreements we have had in place on the Nuclear Front have either disappeared or are falling apart. We have said goodbye to the intermediate Nuclear Range treaty. The socalled new start treaty, whether that will be extended just after the end of this year. We have seen what is happening in iran with the dispute over ,he the Nuclear Agreement there and the north korea problem has not gone away. Other countries are looking at this and saying, maybe we need to rethink our nuclear strategy. Maybe we need to get hold of Nuclear Weapons too we had . On nuclearf a lid proliferation, but that is looking shakier. Host we have built from new york, and independent. Caller thanks for taking my call. 23 when london on june they had the brexit vote. Im interested in hearing what mr. Franklin thinks how britain would look different at the end of this year as they leave the European Union. Brexit, first thing to say is we are going to actually have brexit shortly. That was not obvious until we had our election last month, which resulted in a very clear victory for the conservatives under Boris Johnson and therefore his ability to pass the brexit law through the parliament, which is now happening. At the end of january, britain will be out of the European Union. There is a huge difference between being in and out. Change legally. It is not yet a big change on the ground. Through the end of this year, we still have a transition where the same rules and regulations apply. It is not a dramatic change. Deal,bition to do a trade a new treaty governing the future relationship between britain and its European Partners by the end of the year, and that is a hugely ambitious goal. I dont think they are going to manage to achieve the competence of treaty that is sometimes talked about. There is still a lot of negotiation to be done. And the European Union live together sidebyside , extremely integrated trading partners, how that happens, that is all still up for grabs. Updatedat is an u. S. U. K. Relationship like post brexit . Guest that is something the Trump Administration has been making very encouraging noises about, how quickly it might happen. These things are complicated to negotiate. I think from the british perspective, once we are out of the European Union, the relationship with u. S. Becomes all the more important. It becomes crucial. We are much more midatlantic once we are out than we were before. Host ivan is calling from texas on the republican line. Good morning. If anybody likes the economy now, they need to vote for donald trump. The democrats already said they are going to triple our taxes just to pay for whatever they think donald trump has done. Then they call for wanting to charge donald trump war crimes charges. I guess they forgot about george bush, madeleine albright, condoleezza rice. They dont talk about that. Turn thesee just people over to the war tribunal and take care of this problem . The democrats even need to get out of the way so this country can move on or move to a different country if they want to live in el salvador. Do you see anyone on the democratic side making a compelling enough economic argument to defeat President Trump . Guest i think the argument is one thing, but the state of the economy is another. How well people feel the economy is going. There is a potential for things to go wrong between now and the moment. The economy looks pretty strong. The American Consumer is an extraordinarily potent and persistent player. This is already the longest expansion in u. S. History. At some point it will and, and there have been occasional worries. That will play into things as well. Thehe question of candidates, a lot will depend on appealing to those that dont feel they have benefited so much from the expansion the economy has had and this question of who gains and how it is distributed will be a big one. Host on page 39 of this edition of the economist, figuring out the 2020 race. What do current statistics and historical trends say about the election . Guest the current data says the incumbent president starts with a big advantage. They tend to do well. If their Approval Ratings are as low as Donald Trumps have been, that makes you think this might be an exception. Look at the statistics every which way and come up with different conclusions. The fact is there are still so many variables in this campaign that anyone who thinks they know which way it is going to go in november is probably fooling themselves. Host you are on with Daniel Franklin. Good morning. Caller thank you very much. Thank you for having me on. I have three quick points. This should be front page news everywhere, but it is not. Apparently the central bank starting in september, late october, has pumped more money into the Financial System than at any time since the great financial crisis, approximately 400 billion and counting. There is a perfect correlation with rising stocks and these qe measures the fed takes. It is almost a 100 correlation. I trade Financial Instruments for a living, so i know something about this. I was curious why nobody is soering this since it is dramatic and out of the ordinary , and if i could just get one other quick point here. I consider the stock market a little bit of an inequality index. The vast majority of people dont own any stocks. There is a small majority that own 40,000, but the majority is owned by the 1 . This is the third asset bubble i have seen in my lifetime. The sort of things should be generational. It seems like we have Central Banks that have lost their minds. The same things over and over again, and the rich keep getting richer. The billionaires in this country had a 25 increase in their net wealth this year alone. That is a direct correlation with the stock market rise. If you could comment on those things, and i would like to say to the people out there, Percent Inflation mandate by the fed his a joke. You lose your purchasing power every 20 years by 50 . Boeing trading at a market istiple at 50 times earnings ridiculous. If you look at the multiples on some of the stocks, they are like the. Com bubble. Bubble. Otcom were talking earlier about what could the democrats do to get purchase . You heard some of the arguments in that sense. Swaths of the population that are missing out on the benefits. On the question of the Central Banks, i think this is somewhat removed from politics and that you do have independence from the central bank, and the u. S. Is not alone. Ing lots ofre pump money into the economy. They still have largescale quantitative easing and even lower Interest Rates than the u. S. There is an effort to keep this expansion going even though there are many people that feel they have not benefited. Int lets go to paul virginia. Hes on the independent line. Hey, paul. Paul, you with us . Caller can you hear mecaller . Host yes. Caller i have a different perspective from your texas republican, who is giving undue praise to President Trump. You say the economy is strong, but isnt it true that we are simply borrowing and deepening our debt and deficit . If you give me a credit card with no limit, i can provide a Pretty Good Party for everybody. Basically debt and deficit, dont they equal a false positive economy . Guest i think one of the Big Questions is is there a big bubble that will burst at some time . The question politically is will it burst before the election, or will it happen afterwards . You are right that debt, not just in the u. S. , there are potential debt bubbles in many part