CNBC’s Senior Economics Reporter Steve Liesman talks with the Opportunist’s Managing Editor Leslie Stone about his time in Russia following the fall of the Soviet Union, what he thinks about the U.S. debt crisis and his favorite pastime.
Steve Liesman reports on all aspects of the economy, including the Federal Reserve and major economic indicators. He appears on “Squawk Box” from 6 to 9 o’clock on weekday mornings as well as other CNBC programs throughout the day. He joined CNBC from The Wall Street Journal, where he covered monetary policy, international economics, academic research and productivity and also served as the Journal’s Moscow Bureau Chief. During the early 1990s, Liesman was the founding business editor of Russia’s first English-language daily newspaper, The Moscow Times, and helped create the publication’s first stock index—the country’s first. He was also a member of the reporting team recognized with a Pulitzer Prize for stories chronicling the crash of the Russian financial markets.
“I came to broadcast journalism through print media, when Journal reporters were appearing on CNBC,” Liesman explains. “They liked me and asked me to be their economics reporter. It made sense to try it and I remember talking to Paul Steiger, managing editor of the Wall Street Journal, to ask him what he thought and he said ‘Just because you put on makeup doesn’t mean you check your brains at the door.’ The transition was difficult in that I didn’t realize how much it actually took in the way of brains to do TV. To my mind, it’s a lot harder than it is for print. To make things shorter and understandable and still true is a very difficult job. These last few weeks, for example, have been filled with learning about the Constitutional process of how we govern our nation’s finances. That was a really fascinating story that required a detailed understanding of Constitutional law including the 14th Amendment, but that’s not made for TV. That’s wonderful for me as a reporter.”
Opportunist: How did you get the opportunity to work in Russia?
Steve Liesman: I was living in Florida and working for the St. Petersburg Times. I lived 10 minutes from a great fishing hole, a horse track and the beach and really enjoyed my job. Life was wonderful. But my soon-to-be wife was a Russophile and she talked me into going to Russia. So we went for six months—and ended up staying for six years. [Laughs] It was an amazing time. We arrived about a year after the Soviet Union fell apart. There weren’t that many business reporters over there or many reporters who recognized that Russia was no longer a big nuclear arms story or a geopolitical story. It was an economics story. I was stringing for the New York Times and they were really happy with me coming in and doing all the IMF and Russian budget stories. The bureau chief told me I was one of the few people in Moscow who could write an English sentence and calculate a percentage change.
Opportunist: The Russian economy seems to have come far within just a few decades.
Steve Liesman: Freeing prices was an amazingly powerful tool that brought products to market quickly but ended up hurting a lot of people who couldn’t afford free-market prices. Oil companies, for example, were placed in private hands in the 1970s and that reversed the decline of oil production that had plagued the Soviet Union. But things still aren’t free enough over there. They have gone from a big communist dictatorship to being a plutocracy or certainly an oligarchy. The marriage of business with government is a big problem. We still have to be really concerned about political developments and political freedom over there. In the 1990s, there were several positive developments on local regional elections, but Putin sort of put an end to that.
Opportunist: On the domestic front, were you surprised when Congress dodged a potentially catastrophic debt default and ended the government shutdown?
Steve Liesman: I felt positive that they didn’t reach the debt ceiling and that the government was back open, but I’m not positive about the two-month deal. You can see and feel—and you just know because you find it in the data—that this stuff hurts the economy. Long-drawn-out political debates have cast a pall over economic growth. Some research says it has hurt the economy since 2010. I don’t have a problem with debating debt and deficits but working at cross purposes is hurting economic growth and making the debt and deficit worse. The cure seems worse than the illness. I think there is a lot of misconception about debt and deficit right now and people should think about what the numbers actually are.
Opportunist: Speaking of numbers, the S&P hit an all-time high after the budget dispute was resolved. Should investors find that encouraging?
Steve Liesman: The idea that stocks went up is a hint that markets were more concerned about the shutdown and a breach of the debt ceiling than they were about the immediate level of the debt. That doesn’t mean we don’t have to deal with debts and deficits; it means the market perceives we have some time and that shutting down the government and brinkmanship politics is not helpful. The typical businessman I talk to is not incredibly political—they want Washington to give them a playbook that explains what the landscape is going to look like so they can plan. Obviously, most business owners prefer lower taxes but if higher taxes are necessary they can generally live with it within limits, especially if it means some certainty. We, of course, should understand: higher taxes on business are mostly passed along to consumers.
Opportunist: Will the deficit affect the market?
Steve Liesman: It doesn’t right now. I am way more concerned about reaching the debt ceiling and the ability of the U.S. government to fund and finance itself, especially in an environment where debt has come down and the debt level to GDP is clearly declining. The long-term problem is what we have to worry about—three to five years out—depending upon economic growth. We have to come up with a way to talk about entitlements before we can come up with solutions.
Opportunist: You have likened U.S. Treasury Secretary Jack Lew’s dilemma to the head of a household with a family member gone rogue with a credit card. Did you have fun shooting the segment where you portrayed Lew scrambling to figure out which bills to pay while taking calls from the President, Sen. Ted Cruz and the country’s creditors?
Steve Liesman: Whether it was a moment to be making fun of or not, what the segment did was illustrate the choices and ended up being humorous. People were otherwise attracted to it. The most important thing was that it was a good way to show people about the choices that would have to be made if we got to the place where we would have to run the government without debt.
Opportunist: Is there anything that the American people should be mindful of in the wake of the debt crisis?
Steve Liesman: They should do their best to make informed decisions based on data and research rather than emotion. When it comes to economic decisions, people seem to be more emotional and intuitive than they have to be. They should be spending time trying to figure out what’s really going on and weigh options by asking what are the costs of making one decision versus another—opportunity cost is an important analytical tool.People need to think in those terms more than they otherwise do.
Opportunist: Was Janet Yellen a good choice to succeed Ben Bernanke as chair of the Federal Reserve?
Steve Liesman: I’ve known Janet for a long time—at least since she was chair of the White House Council of Economic Advisers during the Clinton Administration. Lots of people think of her based on her recent policies but I think her policies have been relative to the underlying economy. And those policies may not be the same ones she pursues if the underlying economy changes. Stereotypes have a risk of being very wrong. I also know that it’s not so important who Janet Yellen was as a vice chairman or a Fed member. What will prove more important is what the Janet Yellen Fed is like and that’s going to be a result of who is on the board and how she runs it. Remember, there are lots of vacancies and the board changes year to year. How Janet chooses to run the board and what type of board she has to run will determine what kind of Fed chairman she is. Is she qualified? For sure. One of the things we have seen over the last 12 or 13 years, at least since I’ve been covering the Fed, is that these jobs look like jobs for technocrats rather than political appointees. Janet Yellen is a technocrat.
Opportunist: Is the U.S. economy resilient enough to overcome another crisis?
Steve Liesman: You know, I guess it has proven remarkably resilient. Sure, there has been an underlying adjustment with continuing deleveraging and fallout from the financial crisis—especially adjustments to the changing regulatory landscape in the financial sphere. Lending channels are very critical to the economy, but I am not sure if banks have a good feel for what the playing field is going to be. We need to get that right before the economy does better. The U.S. economy has also suffered from global weakness. If the European Union could get its act together, it would be enormously helpful.
Opportunist: Do you believe the euro zone is out of the woods?
Steve Liesman: I think the European economies are still in the woods but the trees have stopped falling on them. They still have enormous governance issues to resolve, although it looks like the European Central Bank sort of resolved those issues from a monetary standpoint in that they’re standing behind the euro currency. I am not quite sure if the political side has made the same decision, given the continued challenges with the banking system and sovereign debt of certain countries. I think there are still a couple of years to go in terms of breaking out of this morass, but if Europe continues to take decisive action to get its banks healthy and create confidence for the private sector it will stabilize in a meaningful way. If Japan can come in and take the place of growth in Europe, then maybe two years down the road the world can get into that sweet spot of synchronized global growth.
Opportunist: Does Title II of the JOBS Act hold potential to jumpstart the small business sector here in the United States?
Steve Liesman: There is some potential downside in that investors should be wary of getting caught up in scams, but when I think about Title II I hope it has a positive effect for small business. I don’t know if others think the same way, but competition in financing from a nonbank source might kick start banks into providing more lending. I still think small banks are the best place for small businesses to get loans but they’ve been kind of tight. In places where we see more competition, we see banks ease up credit standards. Recent Fed surveys for senior loan officers show that competition from other debt markets is often the reason for increased lending. So that could loosen up the spigot a bit at the banks.
Opportunist: Who is the most impressive person you have met during your career?
Steve Liesman: Well, let’s see … any CEO who thinks about his company in macroeconomic terms. I like Apple’s CEO Tim Cook. I had a chance to attend a luncheon with him. I have known Tim Geithner [former U.S. Secretary of the Treasury] for a number of years and I thought he was fairly impressive during the crisis. I would say the same about his predecessor Hank Paulson.
Opportunist: Is there a particular interview that you consider your best?
Steve Liesman: I did a bunch with Geithner and Paulson in the middle of the financial crisis that I thought were helpful for explaining what was going on. I also did one with Simpson and Bowles [of the National Commission on Fiscal Responsibility and Reform], where we got into a lot of discussions going on around the debt and deficit issues. I really like talking to the different Fed presidents around the country, especially when they use those interviews to announce some form of policy change. We have done interviews with James Bullard from the Federal Reserve Bank of St. Louis and Charles Evans of the Federal Reserve Bank of Chicago in which they used those segments as a staking out of policy, a new policy change or policy initiative.
Opportunist: What’s a typical day for you, Steve?
Steve Liesman: There isn’t one, which is why I like my job so much. [Laughs] My day starts relatively early in the morning, with reading the data and what the economists are saying about the data and what kind of quirks could come up. I go to news meetings throughout the day and talk about what producers want for their show and I talk to sources and read reports all day long. I typically do three, four or five TV appearances and possibly a radio hit every day and sometimes write stories for the web—it’s a multimedia extravaganza around here. [Laughs]
Opportunist: You have won several awards, including an Emmy and a Pulitzer Prize. How does it feel to be recognized by your peers?
Steve Liesman: It’s really nice. It’s hard to do this stuff and get on the radar of some of your peers sometimes. I mean these stories are not typical living room stories. [Laughs] The financial crisis in Russia was a big story that year but writing about it was not—they hadn’t given a financial journalist an international reporting prize for 30 years. The financial crisis in the United States was sort of a household story but it’s not an easy story to tell. You strive to do a good job of explaining a complicated story to people. That’s what I always hope to provide in my job.
Opportunist: We understand you have another passion besides economics and Fed policy.
Steve Liesman: Yes. I play guitar and sing. It’s sort of like my mental health program. [Laughs] I am in two bands: the Mooncussers, which does originals and straight up rock ‘n’ roll cover stuff, and Stella Blue’s Band, a pretty popular local Grateful Dead band in Westchester outside New York City.
Opportunist: Where did you get the name the Mooncussers?
Steve Liesman: It comes from a book I read by Henry David Thoreau. He walked from Boston to Cape Cod in the 19th century and along the way met people called ‘mooncussers’ who were kind of land-based pirates who put fires on the beaches to make ships steer toward the reef. The mooncussers would pillage the boats but rescue the survivors. They were called mooncussers because they would cuss the moon if it was too bright because their scheme wouldn’t work in the moonlight. I read that book I don’t know how many years ago and I always thought I would call a band the Mooncussers if I got the chance. There are a variety of mooncusser things on Cape Cod, where I have vacationed every year. There’s a mooncusser sandwich at a deli and a mooncusser tattoo shop.
Opportunist: Is a full-time music career in your future?
Steve Liesman: If my day job ever got boring I’d probably leave but it hasn’t done that. [Laughs] When I lived and worked in Russia I kind of felt that I had covered the best story you could ever have a chance to cover and then America comes along and blows up. The transition to the new Fed chairman and, hopefully, a major transition to a new policy will be interesting. I could see myself doing this for a number of years to come. It doesn’t get old.
Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in Florida. Follow her on Twitter at @les7989.
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