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00:00:00a great university, why are people unhappy everywhere?
00:00:03Polls show that there is a wave of dissatisfaction
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00:00:10sweeping the world. In "How to Get Out of the Hole," journalist
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00:00:17combat unhappiness. It is now available in bookstores and
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00:00:31We are CNN, the world leader in news.
00:00:49Hello, how are you? I am José Antonio Montenegro, this is Globo Economía
00:00:53today dedicating our time to the American
00:00:56economy, to what lies ahead, to what is on
00:01:00the horizon, many self-inflicted
00:01:03problems and many gratuitous
00:01:06problems by the country's own administration, which should not
00:01:10be there, but well, they are there as a consequence, as
00:01:13I say, of that attack
00:01:16against oneself, which goes well, from the
00:01:19Iran war to the
00:01:23tariffs issue, passing through other issues that we may not have
00:01:26focused so much on, but that... are there, for
00:01:30example, immigration, well, it turns out that immigrants
00:01:34are not that they are not a problem of the caliber that we normally
00:01:38hear, in that false narrative of
00:01:41immigration as a problem, as
00:01:44a great, in short,
00:01:46for the voters of misfortune for the country, but rather the opposite, more
00:01:49immigrants are needed, there are a lot of sectors
00:01:53scenario, so to speak, of from, of course, the agricultural to
00:01:56hearing everything and more the real estate, construction and health sectors, and a very
00:02:00long list that would need
00:02:05depends on reputation and more jobs of a type that immigrants usually fill and that are not
00:02:08available, that's similar to the issue you may have heard
00:02:12recently with meat imports, well, this country
00:02:15was going to import, it was going to
00:02:19have everything done internally, but now it turns out that to lower prices
00:02:22and as a consequence of inflation, we have to
00:02:25import minced meat
00:02:28from abroad, well, that's what there is, I say, to
00:02:31talk about some
00:02:35images that reflect how the economy is, all in an
00:02:39economic scenario that we have to say that the stock market
00:02:42completely
00:02:45the majority of saves it, the good performance of the stock market and the consumption of the sectors
00:02:48with greater purchasing power, there is a group
00:02:51of population and
00:02:54financial activity that is doing exceptionally well and that many
00:02:57times the numbers
00:03:00the more global numbers seen from above
00:03:04turn out very, very satisfactorily,
00:03:08we constantly talk about the resilience of this economy, which is
00:03:11absolutely real also about
00:03:15how that pull of consumption is happening,
00:03:20today dedicating ourselves to but for a very small part, that pull of consumption is what economists call a
00:03:24K-shaped consumption, meaning there is a
00:03:27going forward, we have talked in sector of the population that is doing very well and there is another sector
00:03:30of the population, which are all the middle classes and less
00:03:33favored classes, who are doing very badly with consumption, but
00:03:37that seems to even be getting into
00:03:40difficulties because companies that are key to
00:03:44measuring this, like Walmart, say they are noticing less
00:03:47movement lately
00:03:50in their warehouses and that, in short,
00:03:54consumption is increasingly
00:03:56in suffering, finally we are going to ask ourselves, because these are one of the
00:04:00issues that I say are very important on the horizon,
00:04:04what happens with that scenario that has been worrying us for a long
00:04:07time, of an
00:04:09economy that, well, continues with a very
00:04:13high inflation, higher than desirable, between 3 and
00:04:164%, and a
00:04:19consumption that does not quite pull with the necessary
00:04:23force, that is, a scenario of this
00:04:25stagflation that would be very difficult to
00:04:29Mancora, the best surfing destination in correct, eh, also something that has happened in recent
00:04:33inflation was being moderated and what times is relevant, the debt of this country is absolutely skyrocketing, it is
00:04:3740 trillion dollars,
00:04:40and in short, that makes the task of
00:04:43the Fed and the economic progress itself very difficult,
00:04:47because it means that
00:04:48somewhat moderate, it did not completely to place bonds you have to pay
00:04:51much more than a few months ago,
00:04:55but let's go into detail with the help of my guest today,
00:04:59the economist. Professor at Yale University and good friend of this
00:05:02program, José
00:05:05moderate stagflation, if you want, Antonio Espín Sánchez. José Antonio, how are you? Welcome to Globo com to Globo
00:05:08Economía. Hello, José Antonio, thank you very much and as
00:05:12always. a pleasure and a pleasure to be here talking about economics
00:05:14with you, hey, and let's start with
00:05:18with a little of what I was telling you about the description of the
00:05:22economy of this country, well, I have done something very focused on two or three things, but in
00:05:26a very general way, from above, the big
00:05:29numbers, the big magnitudes that we always
00:05:33have to look at, how would
00:05:34you describe it to us?
00:05:37well, the economy is not doing badly at all, but it is in a very
00:05:41delicate situation, right?
00:05:43As you well said, inflation numbers are not yet
00:05:46controlled, the war and other
00:05:50external factors continue to push inflation a little, so
00:05:54monetary policy tools are somewhat
00:05:57limited, the other factor you mentioned about the debt
00:06:00that has practically doubled in the last decade also makes
00:06:04the fiscal lever to correct if we enter a recession have
00:06:08quite limited effectiveness, right? because there is already a lot
00:06:11of debt and the markets
00:06:15are starting to resent it, they are starting to penalize how
00:06:19American debt is paid long-term, the dollar is not as
00:06:22strong as it was even a few years ago, eh, so as you
00:06:26well said, capital, people
00:06:30with high purchasing power continue
00:06:33market, especially with things like artificial intelligence and related
00:06:36companies, are still pushing a little, but we are in a
00:06:39situation where something could happen. If something happens, we don't have
00:06:43many tools to fix it, we are all, let's say,
00:06:47at the limit, both the indebtedness of public
00:06:50administrations and the indebtedness of households are almost all
00:06:54at the limit, eh,
00:06:56let me say that these are perhaps particular but important
00:07:00issues, I mentioned in my
00:07:03presentation about immigration, well, we have been
00:07:08negative about immigration. There is a whole
00:07:12narrative about the serious problems it presents, I
00:07:16always insist, of course we are not talking about open
00:07:20doors, of course immigration has to have a
00:07:23regulation, of course
00:07:25common sense must prevail in this as in all
00:07:29other chapters of life and the
00:07:32economy, but now it turns out that something that was
00:07:36coming from somewhere else, that is, it is no surprise, at least it has not been for
00:07:39me, that immigrants are needed. Immigrants
00:07:43are needed to harvest crops in the agricultural
00:07:46sector, immigrants are needed in the health
00:07:50sector, because they are needed,
00:07:54they are needed in construction, because
00:07:57the works and houses in this country
00:08:01are built by immigrants, well, and what do we do,
00:08:05right? Because these things cannot be, that is, there are
00:08:08advances and setbacks all the
00:08:11cannot be corrected overnight, right? Is
00:08:14that right? Am I exaggerating?
00:08:17No, totally agree, what we have talked about again in the program, right? This uncertainty, the
00:08:21word uncertainty that has been created, this lack of rigor
00:08:24and rule of law, that people
00:08:28come to other countries, certain investments, not only
00:08:31local but also foreign, and every three months
00:08:35the Supreme Court changes the directive, the White House says one
00:08:38thing, then says another, each one pushing for their own side
00:08:42and... and this is about people who have made, like
00:08:45American businessmen, investments to finish a building, as they said in
00:08:48construction, they have made investments to produce a harvest, and after
00:08:52three months, the regulation changes, the policy changes, the
00:08:56air changes, and they realize that they cannot
00:08:59find workers to finish a
00:09:02commitment, an investment they had made, right? So this
00:09:05uncertainty is what is creating, let's say, the lack of
00:09:08consumption, the rise in prices and, as you well said,
00:09:12the administration, instead of trying to
00:09:15reduce uncertainty or help more people come
00:09:18to be able to work and finish these works we mentioned,
00:09:21on the contrary,
00:09:24what it does is have that idea that if they don't come from outside,
00:09:28people from inside will do it and it will be done the same and something that is not
00:09:32happening for different reasons, we have to take
00:09:36a break and when we return, we will have skipped the topic of the
00:09:40stellar tariffs.
00:09:42Of course, no one had thought of starting to impose
00:09:46tariffs for decades and
00:09:49decades and decades and decades, well, there must have been
00:09:53a reason, I have always insisted on some kind, now
00:09:57we know why and we will comment on it when we return, in Globo Economía.
00:10:20Live from Mexico
00:10:22City.
00:10:25A story can change everything, a look at
00:10:28the reconstruction efforts of a city and the hope of a people
00:10:32determined to rise, it evolved very quickly and we never thought
00:10:36it would reach category five, and to understand what
00:10:39is happening, let's go with my colleague Ione Molinares to
00:10:43Washington,
00:10:45the explosion, we can see the dimension it had to take away the entire
00:10:49facade, we listen to the protagonists, they
00:10:53mocked us as mothers.
00:10:55and fathers of the 43, where she lived a bomb
00:10:58fell, we are about to board this Mexican air force plane
00:11:02heading to Romania to have a complete
00:11:05view, we are here as migrants to progress and
00:11:08make this country grow, there are great stories to know and many
00:11:12perspectives to analyze. Perspectives with Mario
00:11:15González, Monday to Friday on
00:11:18CNN.
00:11:21I am Mexican-British, I have been practicing
00:11:25journalism in Mexico City, in the United
00:11:28States and now in Miami for CNN. CNN
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00:12:43What would your advice be to me? You believe the civil
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00:12:50how in the world did you survive this? The full force of that technology
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00:13:42We are back to Globo Economía
00:13:45reviewing how the economy of this country, the United
00:13:48States, is doing and how it seems to be
00:13:52the first part, the first segment of this program, about all the self-inflicted
00:13:56attacks, I was referring to the chosen war
00:13:59in Iran, and I was
00:14:02referring to the issue of immigration, cutting it off and
00:14:05creating problems, but there is the issue of
00:14:09tariffs, absolutely stellar, which, well, every
00:14:12day they are a new problem, uncertainty
00:14:16and a difficult
00:14:19normalization now once
00:14:22we want to do something else. Is that not
00:14:26right? No,
00:14:28it seems, if it weren't for the consequences, it would be a funny
00:14:32thing, as it has been going on for more than a year, more than a year and a half, with the back and
00:14:36forth, the Supreme Court has even said that the executive
00:14:39branch, the White House, does not have the power to set them, the refunds to
00:14:43companies have been ordered and we are still going,
00:14:47even fighting now with Canada and with the European
00:14:50Union, our traditional
00:14:53and legitimate partners, and it
00:14:57is trying to use an economic weapon that, as I said, is very
00:15:00dangerous as a
00:15:03diplomatic pressure measure,
00:15:06but in the end it is not clear who is winning with all this, with
00:15:09all this absurd war,
00:15:12and then it is producing situations in which
00:15:15there are already supply problems, like that is
00:15:19very, it is a metaphor of, well, it is something that is not so
00:15:22representative, it is representative, but I mean there are many more things, or the
00:15:26meat that I mentioned
00:15:28in the previous segment, well, it was supposed to be
00:15:32something we had internally and that we could solve here, that it was going to
00:15:36promote that industry, well, it seems that no, that for prices to go
00:15:39down, we have to import from
00:15:43abroad, so the result in many
00:15:46chapters, in many
00:15:49headings, is not that it is
00:15:53not what was expected, it is just the opposite of what was expected,
00:15:57right?
00:15:59Indeed, the problem with tariffs, even in
00:16:03the best of cases when the idea works, is that you can put
00:16:07tariffs on finished products that local
00:16:10companies produce, but if you put tariffs on products that are an
00:16:14input to what your local companies produce, what you are doing is the
00:16:18opposite, instead of generating employment, you are reducing employment, so of course, this
00:16:22policy of saying tariffs to such a country
00:16:24or to such
00:16:27uniformly to everything, does not take into account these
00:16:30differences, which means that even local production, as it needs
00:16:34its inputs, let's say, from abroad, is not producing
00:16:38one of the problems we mentioned with the war in Iran
00:16:41is the scarcity that is beginning to be noticed of
00:16:44fertilizers, and fertilizers are needed to grow alfalfa
00:16:48or corn, which are then an input for cows and
00:16:52livestock, right? So everything is connected, when demand begins to be interrupted, these
00:16:56things, of course, in the end even local producers, it's not that you have already imposed
00:17:00taxes on the import of beef, it's that you are also
00:17:03affecting the inputs that farmers need to
00:17:07be able to function, both workers and
00:17:10fertilizers, right? So everything is affected and what
00:17:14ends up happening is that prices go up and, as you well said,
00:17:18specifically meat is a very popular thing
00:17:23the current administration and now they have come up with another
00:17:26thing to keep them happy that, as you say, completely
00:17:30contradicts everything you said, they are not solutions, they are
00:17:33patches here and there to see how it works every day.
00:17:37Totally, and we haven't even pronounced the word "Strait of
00:17:40Hormuz" because the issue of fertilizers you mentioned is linked to
00:17:44that, that is, well, it's oil, that is, it's another
00:17:48inflationary point, energy is going up, oil is
00:17:51going up, but a lot of other products that
00:17:55usually pass, as is the case of fertilizers, through that
00:17:59strait, which it turns out that during
00:18:02all, in short, the history we know was a free
00:18:05passage and now it turns out that we are talking about whether it
00:18:09belongs to Oman, to Iran, to the United
00:18:13States, that is, it is a kind of,
00:18:16I insist, a self-inflicted shot in the foot, one of
00:18:20those that one gives oneself when one is very bad here,
00:18:24let's go to a break and when we
00:18:27return, two important issues on the
00:18:30horizon, stagflation,
00:18:34it seems that we may not be able to avoid it, but it is important.
00:19:07I know it's difficult, but how do you reach a balance,
00:19:11eh, in which we don't lose sight of this that we had all
00:19:14over the place when we started preparing this
00:19:17talk, which is the common good objective, that we
00:19:21all benefit, not just a few, it
00:19:24should not be a business, because as a
00:19:27business, other things can be invented, but something so
00:19:31delicate and with so much technological advancement as artificial
00:19:35intelligence must have a
00:19:38basic condition that it serves a
00:19:42majority of humans.
00:23:05Hello again, Globo Economía, today we are talking about the economy of
00:23:08the United States with José Antonio Espín
00:23:12Sánchez, professor of economics at Yale
00:23:15University, in this last segment we
00:23:18said that we did not want to stop reviewing
00:23:21two topics that we believe are very definitive for
00:23:25the future, very relevant, the first is
00:23:29that of, well, what
00:23:32happens if we don't grow or
00:23:35we grow at a rate that is not too
00:23:38strong and at the same time inflation, however,
00:23:42skyrockets, it goes ahead, that is, if we are in these numbers
00:23:45of around 3 and 4% or a little
00:23:49more of the... at a given moment and yet the
00:23:53growth continues at two, two and something, which is good, we must
00:23:56insist, this economy is not bad, this economy is a very
00:23:59resilient, very strong economy, that responds to everything and that
00:24:03even in such absolutely extreme circumstances as
00:24:06these it is responding
00:24:08well, confirm to me now if it is so, but of course
00:24:12when you put it in such an excessive
00:24:15stress state like this, it's not eternal either,
00:24:19so the issue of the question of stagflation, that
00:24:22situation in which there is a lot of inflation and not much
00:24:25growth, could it be around the corner or do you think that the
00:24:29resilience and the strength and muscle that this economy has
00:24:32will save that less desired
00:24:34scenario?
00:24:37No, I think that this inflation in a more moderate way than it was in the 70s and 80s
00:24:41is already here, right? As you said before,
00:24:46the COVID crisis, 2020,
00:24:49there was an expansionary fiscal policy to prevent
00:24:53a more lasting crisis, right? We especially
00:24:56economists had in mind that in the 2008
00:25:00crisis, the fiscal response was not as great as it should
00:25:03have been, so in 2020 a larger
00:25:07fiscal response was made, eh, now some think it was a little too
00:25:10large due to the inflation it generated, but at least that
00:25:14crisis was avoided, especially at a global level, but as you said, for
00:25:182024 it had already gone down. Spending was being reduced,
00:25:23we needed was a fiscal and monetary policy,
00:25:27let's say, moderate to get out of that spiral of
00:25:30inflation, eh, and what happened was that, well, monetary
00:25:34policy remained at least
00:25:38get out of inflation, but fiscal policy with these tax
00:25:41cuts, not the big beautiful bill and other things, fiscal policy was
00:25:45expansive at a time when it needed to be more moderate as I said
00:25:49and that is what has generated this spiral we have of this
00:25:55in which unemployment remains high, inflation remains high,
00:25:58the deficit is enormous and it is not going down and...
00:26:02and this has a limit that is relatively close, I
00:26:06think, because as we said, you cannot continue to increase debt
00:26:10without any control, and the markets
00:26:13are already penalizing American debt, something that, as I said, had not happened in
00:26:17decades,
00:26:19that is a scenario, the markets are penalizing American
00:26:23debt, that is the phrase, that is what worries
00:26:26most, that is, this economy has always had a
00:26:29debt that if it had something
00:26:32as a primary quality it was
00:26:35security, that is to say, the United States debt is a safe debt, it is a
00:26:39debt that has no problems and that is why it allowed to have some,
00:26:43you had to pay the people who bought it something reasonable, right now
00:26:46it is not like that, that is, the yields
00:26:50that have to be paid at 10 and 30
00:26:53years have grown and grow daily in a way that many
00:26:56times you say, hey, be careful, this is not a situation we have handled, this
00:27:00is a new situation because the company. or what is behind all this, these
00:27:04things we talk about is that there is a loss of confidence in what will happen
00:27:08in 10 or 30 years here, is that right,
00:27:11yes, indeed, as I said, the debt has grown
00:27:15and above all to pay that debt you have to make
00:27:18political decisions that are costly in political
00:27:21terms, you have to raise taxes and lower spending and that is
00:27:25something that the last three administrations, let's
00:27:28say, for different reasons, have not done, the deficit, in any case, has
00:27:31increased, which means that the markets think that there is no
00:27:35scenario, as I said, in the short and medium term in which anyone is going
00:27:39to lower spending and raise taxes to start reducing that debt, so the
00:27:43expectation is that the debt will continue growing and and as we said
00:27:46another spiral, no, the debt continues to grow, the markets penalize, the interest rate
00:27:50they charge you goes up, so the debt goes up even more, no, so this is a
00:27:55a banana republic in
00:27:58which, as we are seeing, it is relatively easy to enter
00:28:02with... increasing spending and it is very difficult to get out because it is something that
00:28:07future expectations and they are very difficult to
00:28:11change, exactly, very very difficult
00:28:14to correct, we have very little time, but in that scenario the
00:28:18Fed clear neither can, the Fed
00:28:21has a relatively small room for maneuver,
00:28:25no, yes, yes, as we said, that is fiscal policy, we have already
00:28:29said what it is, monetary policy, uh, as...
00:28:33Diaz, the Fed has been, amidst everything that is happening, the only adult in the
00:28:37room that has still behaved reasonably, eh, with the new president of the
00:28:41Fed, eh, it seems that
00:28:44all new cheer, it seems that it will still maintain a
00:28:48reasonable way, without, let's say, lowering interest rates
00:28:51too much, but but of course, the Fed is, as we said, in
00:28:55this situation, if the economy starts to not grow
00:28:58so much, there will be a lot of pressure for the Fed to lower rates and... in
00:29:02this case, inflation will skyrocket, so it will be even harder to get
00:29:05out of here, so as I said, we are in
00:29:08a moment that is currently eh, let's say
00:29:12critical but stable, but if something happens that
00:29:15causes the economy to decelerate, for example, eh, the Fed will
00:29:19be in a very difficult situation and will not have much room to
00:29:23maneuver to improve, no, and as I said, we can forget about fiscal policy because fiscal
00:29:26policy is already, let's say, at its maximum
00:29:30of the policy. Go on, well
00:29:34Antonio, well, our time is up, we
00:29:37have to go, of course the topic gives for much, much, much more,
00:29:41especially if you talk to you, thank you very much for having
00:29:44been in Globo Economía,
00:29:47thank you very much Jose Antonio, as always a pleasure and a
00:29:50delight to be here talking about economics with you,
00:29:54it was Jose Antonio Espin Sanchez, professor of economics at the
00:29:57University of Yale, thank you very much and thank you all for being
00:30:01with us every week. and letting us into your
00:30:05homes, until next week on Globo
00:30:08Economía, a big hug.
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