WW: Thank you Susan and welcome everyone to another Walker Webcast. As we’ve said before, if it's Wednesday, it's the Walker Webcast.
It's a real pleasure to have my old friend and incredibly talented writer, reporter and editor David Ignatius with me today. David and I both went to St. Albans School in Washington, DC and lived very close to one another before my family moved to Denver last year.
Beyond being a biweekly columnist on foreign affairs for The Washington Post, David is the author of eleven exceptional novels, and I would encourage any of you looking for a good COVID read to purchase David's newest spy thriller, The Paladin.
Before I jump into questions for David in US foreign policy, a few comments on the commercial real estate world from W&D’s perspective.
Still surprised that we didn't get a stimulus bill in the first two weeks of August. I had breakfast with some Republican Senate leaders last Saturday here in Colorado and was encouraged by their view that a deal will get struck. I was encouraged by the amount of unemployment insurance boost that they think will be in the eventual bill, and I was also encouraged that during a Senate leadership call last week the issue of rental assistance was on the table and very much discussed as a needed component of whatever stimulus bill comes out, hopefully in early September. And so that sounded encouraging, if you will, right from the horse's mouth of some Senate Republicans who are obviously very much in the driver's seat on what the next stimulus bill contains. At the same time we’ll see if everyone gets back to Washington and can actually get a deal done.
In the meantime, many of you have seen probably the National Multifamily Housing Council’s rent tracker for rent collections in the first two weeks of August. The numbers stood for up until August 13th at 86.9 percent of rents being either fully paid or partially paid. That's about two percentage points below last year's number of August of 2019, and it's about 70 basis points below July of 2020. If you think about the fact that there is no stimulus checks in the market today that's a very good print as they would say as it relates to collections for the first two weeks of August. Clearly every owner-operator that Walker & Dunlop works with is very concerned of what happens to those numbers if we don't get a stimulus bill sometime soon.
As it relates to liquidity in the market and spreads; spreads are historically tight right now and while the Fed is still in the market, they actually haven't been buying a significant amount recently. Since the beginning of the pandemic the Federal Reserve has bought over $9 billion of agency commercial backed mortgages but over the past three weeks they've actually taken their weekly purchases down from $82 million to $6 million to $8 million and so while they’ve only bought $100 million over the last three weeks, with spreads as tight as they are, the Fed being in the market is having exactly the effect you would hope it would which is that private capital is buying those bonds but the Fed is there to pick up anything that is not being purchased by the Federal Reserve.
Fannie spreads have come in 20 to 25 basis points since the beginning of the summer and as I mentioned last week on the webcast we did a deal a week before last at a 213 coupon rate and I got a lot of grief from bankers and brokers at Walker & Dunlop because they got phone calls from all of you saying why can't I get the same rate. I would just put forth to everyone that, as we all know, coupon rates depend not only on where the 10 year is on a given day, or where spreads are on a given day, but it also includes the underlying asset, the location, the leverage level of the sponsorship, etc. And to be perfectly honest, I'd love to be trading at the same P/E multiple as Amazon but that's sort of wishful thinking. The real message is that rates are historically low, there is a lot of liquidity in the market and to those people who want to finance either acquisitions or refinance properties they should consider doing so today.
On the sales side we've seen a solid amount of activity in the multifamily sector. As we stated on our earnings call two weeks ago, we have around $1.3 billion of multifamily investment sales that are scheduled to close in Q3 which is a significant uptick from the $460 million of properties that we sold in Q2.
As far as pricing is concerned, due to the drop in interest rates and the cost of financing, we're seeing deals trade either at or just slightly below pre-COVID pricing and we actually have a deal in Jacksonville that the buyer is hard on right now that is under contract for $240,000 a door. The old Jacksonville record on a per door basis was $220,000 per door so we're at a $20,000 premium on a per door basis on that asset over the previous record sale price of a multifamily asset in Jacksonville, Florida.
Two other points before I turn to David. First student housing. Given that UNC and Notre Dame both went back to school and then sort of shut down there's a lot of concern about student housing. From speaking with our big student housing borrowers they had pre-leasing numbers north of 90 percent pretty much across the country and given that many of these universities such as Notre Dame who have everyone back are shutting down for two weeks to try and contain the virus and then taking a look at it in two weeks, the students aren't just all of a sudden leaving and going home and, as everyone also knows, many of them have already signed lease agreements for this academic year. So while the kind of on-off nature of this school cycle is clearly concerning to parents across the country, and clearly to the health of their children, as it relates to rent rolls in student housing properties so far everything looks to be holding up quite well.
Finally, I want to mention that Fannie Mae made a very significant leadership change yesterday that is absolutely wonderful on many fronts. First, Jeff Hayward who's done a magnificent job running Fannie Mae’s multifamily business for the last eight years is going to step into a new role as Chief Administrative Officer for the entire enterprise and is one of the most successful African American leaders in the commercial real estate industry. It's wonderful to see Jeff take on this new role inside of Fannie Mae. And Jeff’s replacement, Michele Evans, is as talented an executive as you can find. She knows the production, underwriting and technology aspects of our industry as well as anyone and it's wonderful to see that along with Debbie Jenkins at Freddie Mac, two of the most significant jobs in the commercial real estate lending industry are today held by women. Many congratulations to both Jeff and Michele as well as Hugh Frater, Fannie Mae’s CEO on making these impactful changes.
So with that, to David. First of all welcome David and, second of all, having read a lot of your writing on what's going on from a foreign policy standpoint, I think that our discussion will have a lot of question marks as it relates to some of the things the Trump administration has done. To sort of level set all of us as it relates to your view and kind of filter on foreign policy, can we back up to the Reagan administration and would you give just a grade on foreign policy as it relates to the interests of the United States of America from the Reagan administration through to the Trump administration just to sort of set the playing field.
DI: It’s a pleasure and thanks Willy for inviting me. Thanks to this very large audience for tuning in. Ronald Reagan's foreign policy was to me a continuing education. I can remember going to Moscow once in the period while the Communist Party was still very much in control, going to see a dissident in a Moscow suburb. So it's just after Reagan made his “Evil Empire” speech and this man said to me unforgettably, “How can it be that in your country which is so rich and we thought was so decadent, you've elected a president who tells the truth about us and calls us by our right name, an evil empire?” And it just knocked me out and I think that was the strength of Reagan's foreign policy. There were weaknesses. It wasn't always well managed, there was friction, sometimes bitter friction between different cabinet departments, but I do think Reagan in his own direct, sometimes simple way, told the truth - Russia was an evil empire and it began to unravel during the Reagan administration.
Concluding the Cold War successfully was the work of Bush 41, George H.W. Bush, and I watched that at close range and I’m not sure I've ever seen a more masterful piece of foreign policy craftsmanship than Bush and his National Security Advisor Brent Scowcroft - who was a good friend of mine and just passed away as everyone knows - that they managed to end the cold war without creating the kinds of after problems that we've seen often when wars end, certainly that's true of World War I, so I think both Reagan and Bush 41 deserve high praise.
I think Clinton as a foreign policy president was sort of presiding over the success that had been wrought before him. He didn't do great damage, but it was not a period of great achievement. He certainly tried hard to make peace with the Palestinians. I wish he'd been successful, but he wasn't.
And then we move into the post 9/11 era. I think like many people, perhaps like many of you, as I look back, I remember how united we were as a country after the September 11 attacks, united against terrorism, against the threats to our homeland. But I think that the truth is America destabilized itself in that period. As we look back there were over reactions, certainly the invasion of Iraq in the judgment I think of history was a mistake that we're still struggling to recover from. I credit George W. Bush for staying the course - he made a mess in Iraq, but he was wise enough to be as careful about getting out as he'd been in my judgment incautious almost reckless in going in.
The presidency of Barack Obama, it's still early I think to make final judgments. He desperately wanted to escape the Middle East and all its incumbrances, and he couldn't. He ended up fighting a war against ISIS, inaugurating that strategy. I traveled to many of those battlefields in Syria, Iraq, just about every place in the Middle East I've been over the last 40 years. I think the sad truth that Obama discovered is that as the American military effort seeks to withdraw from places like the Middle East others try to fill the vacuum in ways that can be harmful to our interests.
So that's a brief survey. I will talk more about Donald Trump. I have to say I think his foreign policy has not been successful by and large but I'll leave that Willy for later discussion.
WW: When Trump came into office he had the motto “I'm going to drain the swamp.” From having interacted with special interests personally for the last several years, it appears as if the swamp as it relates to policymaking is still fully intact and yet what we have seen is sort of a draining of the U.S. influence around the globe, whether it be the renegotiation on NAFTA to the Paris accord and the Trans-Pacific Partnership, even something as sort of basic as Open Skies agreement to allow our airlines to fly around the globe he’s pulled us out of.
I think David one of the key premises here was that the President said he was going to come in and do better deals but so far we haven't seen better deals replace those previous deals. Is the read here that he sort of left us kind of drifting, having taken us out of all these partnerships and all these deals and hasn't put them back in? Is that a fair assessment or is there credit to be given on China and on this most recent UAE-Israel deal that really kind of can offset those lack of accomplishments of putting new deals in place?
DI: A lot of questions packed into that one and I'll try to unthread a few. It's fair to say this President is better at writing headlines than he is at filling in the details below. “Drain the Swamp” is a great slogan - we have too much special interest and influence in Washington, too many people trying to manipulate our process of government, reducing that was a good ambition. I'm sorry to say I think we're swampier than ever. Lobbyists run some, former lobbyists run some key federal agencies. Other federal agencies have weak, or just acting leadership, which makes them very vulnerable to manipulation by lobbyists and that's just not a good way for our country to be governed.
In terms of foreign policy, the same thing. The President is good at the headlines, he believes that disruption of existing agreements, relationships, overturning the tables, putting people on edge has its benefits and there are examples where that's true. His difficulty has been the follow up. The most obvious example is North Korea. After intense rhetorical exchanges with Kim Jong-un President Trump told the world that this was his new best friend, that we've had a series of face to face summit meetings. It's clear that President Trump believes in personal diplomacy and his ability in that intimate relationship with Kim Jong-un or I think he feels the same way about Xi Jinping in China, that he can forge a kind of personal diplomacy. The returns on that have not been strong and it's very interesting that the area that they have made some progress recently, the normalization of relations between Israel and the United Arab Emirates, is one where the President pretty much left it to Jared Kushner, his son in law and Senior Advisor. Jared has worked tirelessly, is the honest truth on this, but he really left it to our close allies and I especially credit the United Arab Emirates for seeing that to achieve this normalization, which the UA decided was worth all the risks, all the attacks that it would get from Iran and Turkey and the Palestinians, was worth those risks, but only if Israel backed off of what it saw as a destabilizing effort to annex West Bank land that had been a campaign promise by Prime Minister Netanyahu. The leader of the United Arab Emirates, Mohammed bin Zayed recognized correctly, big mistake, and he had their ambassador who is a personal friend of Willy’s and mine write an Op-ed in Hebrew in the Yedioth Ahronoth, one of the biggest papers in Israel, saying don't do it, normalization will bring such benefits for Israel, annexation is not normal, don't do it. And in the end little UAE backed up powerful Israel and we ended up with the deal that we have.
I should caution. This is a wonderful movement toward what we all hope will be broad normalization between Israel and the Arab states. It is not a Palestinian peace plan. We’re really no closer to a resolution of that problem than we were before and indeed you can argue that this may even have made it harder for Trump or some future president to get to a deal that will work. So I just come back Willy to the basic point I made - good headlines - I'm all for negotiation with North Korea, I think it's great, but in terms of follow through, pretty limited returns.
WW: The question I ask you is, you know agreements typically take time, you’ve watched negotiations and teams of department officials work for years to try and get up to a point where an agreement is actually paper and pencil to sign. And here in the midst of a pandemic when nobody is able to travel we get the OpEd by Yousef which is followed up by a lot of work by Jared Kushner and the White House, with Netanyahu who is obviously in a challenged position as the leader of Israel to come up with a breakthrough agreement. It seems unbelievable that this could happen sort of in the dark of the night. What are we missing as it relates to either what was worked on up until it got done or something that happened this summer that allowed for this breakthrough agreement to take place between two, if you will, bedfellows that weren't interested in getting in bed together?
DI: Well, the first thing I'd say is that maybe the dark of the night is the best time to do serious diplomacy. In a flood of daylight it's sometimes hard to have conversations that lead to breakthroughs, that's just a fact about diplomacy. We journalists like everything to be in the sunshine because we can report on it, but sometimes progress is made in a different venue. It’s important for everybody to understand that the breakthrough normalization announcement between the UAE and Israel has been coming for years. It's been an open secret that the UAE and Israel had unadvertised contacts. I can remember off the record moments where I was at the Munich Security Conference and I was talking with an Israeli foreign minister and suddenly the foreign minister said, excuse me, I’ve got to go, I’ve got to meet my counterpart from the UAE. I thought, geez, that's interesting. That was a decade ago.
Similarly I can remember, I wrote about this the other day, being at a dinner at Cafe Milano - maybe some of our viewers have been to that shrine of good Italian food and high prices - and I can remember being at a private dinner with Ambassador Yousef Al Otaiba and a bunch of journalists and somebody said, hey, Prime Minister Netanyahu and his wife Sara are out there in the dining room. So we sent one of our journalist friends out to ask if the Prime Minister would like to stop by and say hello. Yousef Al Otaiba, our UAE host had to gag on his pasta. So in the door walked Netanyahu and Sara and we had a lively conversation for five or ten minutes. Sara turned to Yousef at the end and said we hope to see you in Israel someday soon Ambassador, to which Yousef said, “Inshallah”. We never quite knew just what that meant.
But this has been ground that's been well prepared but still it needed to become formal people needed to actually make it happen and, again, I credit the UAE for pushing Israel. Willy this is like anything in your world, it’s about interests. The UAE concluded it had an interest in moving forward with normalization. UAE, Dubai and Abu Dhabi want to be entrepôt where people, goods, services, investment move back and forth and it decided that normalization with Israel was in its interests, certainly Israel thinks this normalization is in its interests. What was required was that the Israelis essentially give up another political ambition that Netanyahu had for annexation, The Declaration of Sovereignty, for this larger interest and I think they were wise to do that.
WW: So one question, the final question on this David. Was the US pulling out of the Iran nuclear deal in May of 2018 a necessary precursor to getting this agreement done?
DI: I don't think so. It's certainly true that the UAE and Israel share an antipathy to Iran and have been happy to have in President Trump somebody who's strongly anti-Iran, that's been an anchor for the bilateral relationships between Netanyahu’s Israel and UAE and the US. My own judgment is that in terms of US security interests the danger of proliferation of nuclear weapons both in Iran and across the region to Saudi Arabia, to Turkey, is greater now because the agreement ended. And so I thought at the time, and I haven't changed this judgment, but it was unwise. Your question really is different, was it a necessary component of this normalization? If it's in Israel's and the UAE’s interest to go forward - as I was saying earlier countries act out of interest - then you'd say no, that it was not necessary. But I think that kind of backward-looking crystal ball stuff is tough, and I can't give you a sure answer.
WW: So let's switch for a moment to Russia and the US-Russian relationship and, more specifically, Russian interference in the upcoming elections. William Evanina, who's the head of the National Counterintelligence and Security Center, said that Russia is using a range of measures to denigrate Biden and what it sees as anti-Russian establishment and he also added in testimony this week, “Some Kremlin linked actors are also seeking to boost President Trump's candidacy.” I guess the first question is, is all this meddling in our elections actually new. Like is the level to which Russia is trying to meddle in the election something completely new or has this been something that's been going on for a long time, there's just more focus on it? And then I think the second one is, how much money and resources can or should be put to this right now to try and protect us come November?
DI: So certainly misinformation, disinformation, the attempt to deceive and manipulate your adversaries is as old as the spy business. Back in the days of the newspapers buying up journalists around the world whether by the Czar's, Secret Service, the Ottoman Turks, the British, that was standard practice. It was amplified during the Cold War. For people who are interested in this subject there's a superb new book called Active Measures: The Secret History of Disinformation and Political Warfare by Thomas Rid which I recommend to people. The Cold War took this process of manipulation through the media to a different level but clearly the advent of internet web-based media gave disinformation actors a new suite of tools that was unimaginable before, so it made it easier to intervene in another country’s politics, and I think added to the destabilization. Whatever you think about Donald Trump, pro or con, we ought to agree as the Senate Intelligence Committee led by Republicans agreed that what the Republicans did in the 2018 election was an attack on our country and it's something we all should feel strongly about and it continues to disturb me that President Trump doesn't just say flat out this is unacceptable, this is totally, totally wrong.
The Russians are still at it. How well prepared are we? Well, our Cyber Command headed by General Nakasone, a first-rate military officer, has been working hard, used the 2018 midterm elections as a test to try to push back in cyberspace. General Nakasone’s view is that we are in a constant state of low-level cyber war all the time with our key adversaries - all the time. That's problematic for me because it's a war that's taking place on the train where I do my work, what the Russians call information space. So NSA, Cyber Command, both headed by General Nakasone have been working very hard to identify threats, to find ways to push the Russians back. I quote this morning in my column the head of the DHS agency known as CISA, the Cybersecurity & Infrastructure Security Agency within DHS, a very experienced and knowledgeable person who was talking about all the things that DHS and his unit of it are doing to communicate with state and local election authorities, to provide hotlines for people to answer questions.
The simple point I'd make in closing my response to this is, we all know that in an election where absentee ballots of necessity are going to be just a huge part of how people vote. My father's 99 years old. I want him to vote in November. There's no way that my dad should go to a polling place. There are a lot of people who just are going to need to vote that way. We are not going to know the results election night, we may not know them a week after election night, so the country is going to be in a state of hyper-anxiety, confusion, uncertainty and in that period we will be vulnerable I'd say as never before to efforts from outside and inside both to manipulate us - to play on people's anxieties, to spread false rumors, to get people in the streets and then argue these people have to be driven out of the streets, and so it's going to be a very dangerous period and people need to be two things that I mentioned in the column, they need to be patient and they need to be certain that the information they're acting on is accurate. In other words they need to add an additional filter. If you're an MSNBC or a Fox News viewer, you're going to have to add some additional certainty, ideally going to election authorities, they're trying to set up their own information hotlines. But we're going to have to, as we like to say, we’re going to have to keep cool in those days, maybe weeks after November 3.
WW: You mentioned General Nakasone and it just brings up a question I have for you as it relates to President Trump's relationship with the military. A number of your colleagues, including Carol Leonnig and Phil Rucker who wrote the book A Very Stable Genius and they corroborated an account that your other colleague, Bob Woodward, wrote about in his book about an incident that took place at the Pentagon in The Tank where the President, per their reporting, from people who were there, humiliated the very, very top levels of the United States military establishment to the point where Secretary of State Rex Tillerson had to step up and stop the conversation to which, both by Woodward's account as well as by Leonnig and Rucker’s account, that was the beginning of the end for Secretary of State Tillerson as it relates to his confidence from the President and he then was pushed out of the administration.
What's the relationship between President Trump and the military because you've watched presidents come and go, the military, if you will, tries to stay as agnostic as possible to Republicans or Democrats being the commander in chief and trying to look at the office, but it appears that Trump has gone to a different level as it relates to going after the military. Does that have ramifications or is your sense that the military continues to operate as it always has?
DI: Willy that’s a great question, one that we all should take seriously. The independence and professionalism of our military is one of our greatest national assets and there have been moments when President Trump did unusual things, they’re within his authority as commander in chief, but that doesn't mean they're wise.
At the top of my list would be intervening in the disciplinary proceedings for a Navy SEAL named Eddie Gallagher. The SEALs, who have the strictest standards, they have to be, their people in the most extreme situations of life and death so they hold their people to account and Eddie Gallagher's behavior had been judged in a court martial to have violated the SEALs rules. The SEALs had an administrative process under way under Admiral Green, the commander of the SEALs, and the President got spun up about this by some reporting on Fox News and decided that he liked Eddie Gallagher, he thought that what the SEALs were doing to Eddie Gallagher was unfair and intervened in that case. That was immensely damaging. I mean I've had people in the Navy, across the military services, just describe how disheartened they were that their attempts to maintain discipline using their tools within the uniformed military had been overturned so I think that illustrates the danger.
I've been impressed by the way General Milley, whose the current chairman of the Joint Chiefs of Staff has tried to recover the military’s independence after what he says was a real mistake by him appearing in his cammies, in his camouflage uniform, with the President on that early evening in Lafayette Square when the President marched across the park with his Bible and stood in front of the church. General Milley looking back thinks that it was not appropriate for him to be there in uniform. He's made that clear to members of the military and public statements sent to all the forces, private statements, and I think he really has created some space again for the military to be what we want it to be - independent of politics, professional, reliable, so good on General Milley on that after his initial mistake.
And as concerned as I think people should be about the dangers here of the military being pushed into politics, I don't see that happening. I think the military knows the dangers here and between now and the election I can't imagine President Trump doing anything to fire General Milley, he would seem to be pretty much bulletproof until November 3, afterwards we'll see.
WW: So while we’re on the military let’s talk about NATO funding because I do believe that that's one thing where we have actually seen the President’s what I would call stronger tactics actually producing results. At the end of 2019 Secretary General Jens Stoltenberg said that spending by Canada and the European members was up by 4.6 percent in 2019 and in 2016 when the President stepped in and started to push members of NATO to increase their military spending, military spending by the Canadians and Europeans is up by $130 billion and it appears as if that two percent mark is going to be met by most member nations by 2024 right now. So is that not a great success that the President's been able to go and sort of raise the level and get other member nations of NATO to step up and pay their fair share of, if you will, military expenses for all of our collective safety?
DI: I think it is good that President Trump's pressure has gotten other countries to put more into our collective security. Trump is not the first president to complain that European nations are not meeting their targets in terms of pledging a percentage of their GDP to the common defense. That was a regular theme under President Obama, he just didn't get much done on it. The problem Willy is that I think it'd be very hard to say that even with this additional funding NATO is in better shape today than it was four years ago. The evidence is pretty strong that it's, unfortunately, in worse shape. And why is that?
At the end of the day NATO like any military alliance is fundamentally about trust, the mutual confidence that the members of the Alliance will come to each other's defense in a crisis. And I'm sorry to say I think President Trump by kind of banging on Germany, banging on other NATO members so regularly has reduced some of that trust, some of the confidence that Europeans have to have that if they got in trouble, yeah we'd actually risk, crazy as it sounds, we’d risk Chicago to come to the defense of Frankfurt or Berlin or whatever place you want to mention. I think the next president, and I'm including the possibility that Donald Trump will be the next president, a second Trump administration, an urgent priority is to repair our relationships. We're lucky, we have great allies. You think of the collection of allies that Russia and China have, they’re a joke, they have terrible allies. We have really great allies in Europe, in Asia, Japan is a superb ally, Australia, increasingly India so we need to be very attentive to those partnerships and stop looking at this as so transactional, like what are you going to pay me for my defense. It's almost like a pay as you go rent-a-cop solution, that's not what alliances are and we should remember at the end of the day this is the most important thing we can do to help our own security, we're not doing it as a favor for other people. Sure, let's get them to pay more, but you’ve got to tend the garden carefully.
WW: So on our alliances, you mentioned our great strong alliances. Just recently the United States wanted to put sanctions on Iran and obviously since we pulled out of the nuclear agreement there's been an attempt to try and get to another agreement. The Iranians won't come to the table now. Secretary of State Pompeo put 12 demands on Iran to try and set the table for future negotiations, none of which Iran has met. And just recently in the UN Security Council on the 14th of August, the US sponsored a resolution at the Security Council to put an arms embargo on Iran which got support from only the Dominican Republic, even our strong allies in the UK, France and Germany abstained from the vote and Russia and China voted against it.
I'm no historian of the UN Security Council but that would appear to be sort of the low point for US influence at the UN Security Council. Talk for a moment about the state of our alliances because you just said how strong they are and at the same time here we are putting something on the table at the UN Security Council that one would think that our allies in France and the UK and Germany would join us on and they abstained from a vote.
DI: I think you just need to back up a minute and think about the Iran nuclear deal which President Trump attacked from day one. It was a product of all of the major powers in the Security Council. They negotiated the treaty jointly, they worked together to an unusual extent, they all had a stake in its success. I think Trump has hoped that he could draw France, Germany, maybe even China and Russia into an effort to renegotiate the agreement. He sent Shinzo Abe in effect as his emissary to Tehran for conversations with the supreme leader in the hopes that he could get another negotiation going.
The misjudgment that he made in that instance, and I would say generally in his Iran policy, is thinking that this supreme leader was going to be prepared feeling that he was in effect tricked into signing the earlier agreement to come back to the table. That's certainly not going to happen before the election, before January 20. The interesting issue is whether a Biden administration should just go back and kind of reanimate the old deal and say we’ve got a new sheriff in town and we're going to just click it back to the on position. I don't think that that would be wise. I think that there's too much water over the dam. I think the evidence of Iranian meddling in the region, the concern that countries from Israel, Saudi Arabia, Iraq, I mean we’ll have the Iraqi Prime Minister in Washington this coming week and he's going to be here for talks about his and the United States shared concern about Iranian influence in Iraq. So I think if it goes this way, president elect Biden would be wise to signal we're not just going to hit the reset button, it's going to be more complicated than that.
WW: So on both Iran and China, David, we have strong economic sanctions against Iran right now and we have a trade war going on with China that is clearly slowing down the Chinese economy, the President has highlighted that. We started this conversation with you saying that during the Reagan administration they, if you will, prosecuted the Cold War to the point where they then created a breakthrough during the George H.W. Bush administration to bringing down the wall. So what's the, is there a longer term strategy here as it relates to both economic sanctions in Iran and a trade war with China that the Trump administration thinks that they're going to, that these are all means to an end and that they're actually going to get what they want at some point if they just keep turning the screws?
DI: It's very hard to see a clear strategy from the Trump administration on China. You can see different strands of it, talking to different officials for the President the main thing sometimes seems to be the trade balance, if he could just get more agricultural exports and get those trade numbers better, he'd be satisfied. I think the thing that I've come to see the last few years is that we're in a period where there's - quite apart from President Trump – a fundamental reevaluation of the US-China relationship taking place among I want to say pretty much all the people who look thoughtfully at that subject. We do have a broad foreign policy elite or establishment, they meet for conferences two or three times a year to talk about US-China policy. It's amazing how different the consensus is today from what it was five years ago. And in this I would say that President Trump in terms of his language has been correct. This is a period where I think there's now general agreement - we need to be tougher on China, we need to regard China as a greater potential competitor-adversary, we need to change the terms of trade before China gets any more powerful, while we still have a chance to do that. I've come to think that the pressure on Huawei through the entity list designation that the administration has announced probably makes some sense for now. I don't want to see a total decoupling of the technology sector, but I think while we have a chance to keep the world from going with entirely Chinese made infrastructure for 5G telecommunications, we should probably do that. There’s an old joke about the barnyard stall, you know there must be a pony in here somewhere. There must be a strategy in here somewhere. It's sometimes hard to identify but I think the idea that we need to get tougher on China is right.
WW: So on China and US-Chinese relations it makes me think about Amazon, and it makes me think about the owner of The Washington Post. First of all, how's it been having Jeff Bezos as the owner of the Post?
DI: Well I'm going to say what everybody probably would expect me to say which is he's been a really good owner, but I'll back it up with some specifics. You’d think that the person who bought the newspaper like The Washington Post would buy it because they wanted to use it as a political hobbyhorse, I mean why do it otherwise, and Jeff really hasn't, he’s stayed away. When he first bought the paper, we were all kind of pretty destabilized by it, we didn't know what was coming. He came to Washington and he said I don't know what's going to work in terms of making a news organization online that will be profitable and successful but I’m going to lengthen the runway. In other words, I'm going to give you the time and the capital so you can begin hiring again, you can begin experimenting. We were really strapped, every month talent was walking out the door, the paper was getting thinner, any reader of The Washington Post remembers that time. And Jeff allowed us to stabilize and begin to grow and expand and we are now, I don't know the precise numbers, but we're basically a profitable, successful business making money. We've tried a lot of new things. And to my knowledge, I'm not in management anymore, used to be, I don't think that Jeff Bezos tries to dictate editorial policy, which most publishers do, you know he has an interest in a few key subjects, but basically I think he wants The Washington Post to be a great newspaper and he has provided the money to help us do that. So he's my boss, you're not going to hear a ringing critique, but that's been my experience.
WW: The one other thing that I'd ask on that David is you obviously aren't inside of The New York Times or The Wall Street Journal, but you talk to your colleagues. As it relates to technology and what The Washington Post is doing from a technological standpoint versus The New York Times or The Wall Street Journal, are there things that you're seeing that are fundamentally different in the way that you all are going about aggregating news and writing about the news and conveying the news to all of us that - you don't need to give me any trade secrets here - but I'm just curious, is it operating to your mind pretty much the same except you've got the resources to go and hire really good writers, and keep really good writers, or is there something that's happening at the Post that ten years from now we'll sit there and say that was something that took Besos’ mind and money to invest in that fundamentally changed the way that news is reported?
DI: So obviously I don't know what I don’t know about the Times and the Journal and some of what I know about the Post I shouldn't talk about but, something that I think is widely understood in the news business is that Jeff said - Marty Baron, his editor, strongly embraced the idea that we needed to have engineers sitting with journalists to help us figure out how to make the information that we were gathering and providing more accessible to readers and then how to bring readers towards making a commitment to pay for the news product, so I think that fusion of engineering, not in a way that's visible to most readers, has been important.
When you think about the Amazon shopping experience, the genius of one-click shopping, the way in which Amazon through Prime, put together this incredibly easy shopping experience, that just happened. We don't think of just how complicated a piece of engineering that is and I think that the same is true with our journalism, there's an awful lot that you don't see. Using The Washington Post online is pretty easy once you pay the money, cross the paywall, there's a lot there. I think that's increasingly true of The New York Times as well. We know a lot more about our readers than we used to, we know a lot more about what motivates them to want to buy the paper. Those pieces of information will be useful to us eventually I hope in being useful to our advertisers. We want to be a marketplace where it's good to sell things, where we connect people who have something to sell, our advertisers with people who want to buy things, our readers. It's the business we always were in. The Washington Post was an incredible marketplace. If you wanted to sell groceries or anything else in our area you just couldn't do it without The Washington Post. So hopefully we’ll end up over time using technology to be more valuable to advertisers. That's when we really begin to make money. Subscriptions have been more lucrative than we thought online but I think the breakthrough will come when we really get the advertising piece right.
WW: Using the Times and The Wall Street Journal as, if you will, left and right, has the Post tried to carve out the center as it relates to being more balanced? And as you respond to that David just a little bit on the polarization in America today and from your standpoint how either concerning or how natural to our democracy the somewhat seeming vitriol between the two sides is today.
DI: I won't speak to the Post’s news editing, that's the province of Marty Baron. I wouldn’t want him commenting on my columns, which ones he liked and didn't like, so mutual respect. I will address the more fundamental question that you're asking which is - is what is often called mainstream journalism, the kind that I was trained to do, in some difficulty? And the answer is yes, it is. We live in a media environment where increasingly people seem to want to have their biases confirmed by what they read and watch rather than challenged.
The whole premise of the journalism I was taught to do, is you challenge people. You present them with information they don't know. You don't go into a story having made up your own mind as a reporter. You don't have obvious political biases. Some of my colleagues didn't vote for decades because they didn't want to have to make up their minds. We’re in a different world now where so often news stories on TV, in print, seem more like what we used to call news analysis and I think that's dangerous. It makes people feel that journalists sometimes have made up their minds rather then letting the reporting be decisive. That's why I think investigative reporting is more valuable than ever. These projects take a long time where people really dig, they really spend time with the facts.
So I think in the end, what I'd say to this audience is, in a sense people will get the news media that they deserve. If people throw their clicks or their television preferences behind sources that are basically in the bias confirmation business rather than the challenge your audience business, you’ll get more of that. If good mainstream reporting is rewarded, if people end up supporting it and wanting it, demanding more of it, then you'll get more. It's much like voting, we get the democracy we deserve, we’ll get the news media we deserve. You won't want to live in a media information landscape where every fact you’ve got to think I wonder if there's some spin behind that. You certainly won’t want to live with that in terms of financial news, but I think we should extend that to political as well.
WW: So on that I will say thank you David for joining us. The fact that we were deserving of an hour of your time is greatly appreciated and we will be back next week with another Walker Webcast and again, David, thank you very much for your time today. It was great talking to you.
DI: Thanks Willy, a pleasure to talk to everybody.