Securing America with Bill Walton May 31, 2022
Frank Gaffney (00:00):
We're back and we're joined by one of our regulars here at Securing America, I'm pleased to say. His name is Bill Walton. He is a man of many parts, a former and recovering financier on Wall Street. Master of the universe, as we call him. He has also been a leader of the conservative movement here in Washington, DC, notably as a past president of the Council for National Policy, which I'm proud to be a member. He is, among other things though, and particularly important for the present purpose, the maestro of the Bill Walton Show. It is a television podcast program of extraordinary, I think quality and impact. We're always delighted to be able to chat with him about what's on his mind and that of his guests. Bill Walton, it's good to have you back. Welcome.
Bill Walton (01:04):
Great, Frank. I'm just trying to catch up with you in terms of impact. So, let's do it together.
Frank Gaffney (01:09):
Let's have a contest here. Bill, let me ask you about something that has gotten I think altogether too little attention, as best I can tell. And that was kind of, I don't know, a mea culpa, perhaps one might say, by the premier of China last week about the dismal state of the economy. I ask in part because it has been axiomatic for many years that the only way the Chinese Communist Party can maintain power and control over that massive population, it's perhaps 90 million members controlling 1.4 billion folks, is the Faustian bargain, that they'll enrich the people if you just keep supporting their tyranny. How's that looking at the moment in the aftermath of Premier Li's disclosures about the actual state of the Chinese economy?
Bill Walton (02:12):
Well, the short answer is that the Chinese Communist Party, President Xi in particular, has had a whip hand over, maybe that's quite the wrong word, but control over the Chinese economy and its people because-
Frank Gaffney (02:24):
I'd say whip hand is a pretty good term for how the Chinese communists operate.
Bill Walton (02:30):
Okay, we'll go with that.
Frank Gaffney (02:31):
Go with it.
Bill Walton (02:33):
Anyway, they've delivered. For all our concerns about Chinese, the communists, whatever, the economy's been growing robustly for 20, 25 years now. And even though there's complete lockdown in Shanghai, for example, or totalitarian measures with facial recognition, human rights abuses in China, people in China pretty much overlooked it because they've been getting richer. Well in the last two or three years, that's changing.
Bill Walton (03:01):
We first saw this emerge last year with the meltdown of the property companies in China. Essentially the biggest asset class in China, residential real estate, began losing its grip when Xi said, "You shouldn't be investing in real estate for investment, only to own a home." Well, the developers now are really heading towards bankruptcy, and people in China are seeing their assets just shrink because real estate values are down. Then add in what's happening with Shanghai and the zero COVID lockdown policy, and Xi I think is living off the glory that he experienced two and a half years ago when he locked down Wuhan and the World Health Organization claimed they did a magnificent job reducing COVID to zero. Well, that was a lie. They never really did. They locked down the city partially, but then the COVID virus got out to infect the rest of the world. Xi however-
Frank Gaffney (04:06):
It didn't get out, Bill, if I can correct you. It was sent out by Xi and the Communist Party by locking down their home, but letting everybody go elsewhere.
Bill Walton (04:16):
Frank, I forgot I'm not on Fox. I'm on the Frank show. We tell the truth here.
Frank Gaffney (04:21):
Tell the truth here.
Bill Walton (04:22):
They sent it out, and I totally agree with that. Anyways, very successful in wrecking the world's economy and reducing most of our freedoms during that period, which we're still struggling to recover.
Frank Gaffney (04:36):
The China model, that's called.
Bill Walton (04:37):
The China model. Well anyway, they're trying it in Shanghai and, as I've mentioned, dozens of other cities in China. The economy now in China is naturally suffering and it's in free fall. Industrial productions off 20, 30%. Exports are down. They've shut down shipping in the port of Shanghai, the world's largest port. And by the way, what's happening in China is also going to happen in the United States because we depend on them mightily for a lot of our supply chain items. More than you can imagine, we depend on them. But the political-
Frank Gaffney (05:12):
Including very critical ones, as we've talked about many times, including medicine and rare earths and the like.
Bill Walton (05:17):
But the power, the political effect in China, the president, I think it's Premier Lee who's been a very quiet number two for years, has begun to emerge in the last six months and started to become more of a spokesman. Well, that couldn't happen unless he had a constituency inside the party, unless he had a constituency inside the government. The financial community in China thinks President Xi's lost his mind with his lockdown, and they're now declaring that China's uninvestible. Don't put your dollars, don't put any kind of currency in China because it's a roach motel. It goes in, you can never get it out.
Frank Gaffney (05:55):
But Bill, this is what makes my head explode, is that at the same time that some of those characters at least are truthfully warning that this is a bad investment, others of them, notably Larry Fink, are continuing aggressively, as best I could tell, to insist we need to be investing, indeed investing more. As we discussed with Brad Thayer earlier, they're actually now going to try to tap the $800 billion public pension fund of the federal government, the thrift savings plan. They're not even going to tell the guys and gals who are investing in various mutual funds that they're actually investing in communist China, the uninvestible communist China at that.
Frank Gaffney (06:47):
What do you make of this? Is this not absolute malfeasance on the part of the Federal Retirement Thrift Investment Board and, I would argue, Larry Fink? Our colleague and friend Jerry Boykin has called it a treacherous sedition. Your thoughts?
Bill Walton (07:05):
I think Jerry's right. I think what the Federal Retirement Board is doing is unconscionable. I mean, it's one thing ... As you call me, I'm a recovering master of the universe, which is-
Frank Gaffney (07:16):
There you go.
Bill Walton (07:16):
... a pretty funny way to put it. But five years ago, 10 years ago, everybody wanted to be in China. That was the fashionable, that was the profitable place. I mean, a lot of credible people went in to do things. That's all changed with Xi. Most people have begun to recognize that even JP Morgan's own research departments declared China uninvestible. Think however keeps proceeding, and State Street and BlackRock, which is Larry's firm, and Vanguard, all these firms really want to get China's attention so they can invest their savings dollars. They're pushing ahead with this plan to have retirees of the federal government, in particular in the military, be allowed to invest in Chinese companies through the mutual funds they're making available. This is just unacceptable. I think it's now law, as I understand it, or at least they passed the plan, but we still need to push back.
Frank Gaffney (08:11):
It's not law, but it's going into effect-
Bill Walton (08:15):
It's the reg.
Frank Gaffney (08:16):
... just about the end of this program is when they're going to kick in.
Bill Walton (08:18):
We lose track between actual laws and federal regulations and nudges, I mean.
Frank Gaffney (08:23):
There are fewer and fewer actual laws, it turns out.
Bill Walton (08:26):
Exactly.
Frank Gaffney (08:26):
Other than 2000 page omnibuses.
Bill Walton (08:29):
But I still think we need to be noisy about this because you see what we did with the World Health Organization. Interestingly, the Biden administration wanted to give up US sovereignty to the World Health Organization in the event of a future declared pandemic by its president. And the developed countries, EU, et cetera, were real all in favor of it. But you know what happened? The third world countries, Africa, pushed back.
Frank Gaffney (08:57):
And Iran.
Bill Walton (08:58):
And we shut it down. So I think there are ways, there are mechanisms to do this, and we've got to focus on the Federal Retirement Board to keep pushing back, because this is a decision which can be reversed.
Frank Gaffney (09:14):
It can be. Bill, we're going to talk more about the World Health organization in our next blocks with Reggie Little John, but I'm glad you brought it up. In connection with this issue of the Federal Thrift Savings Plan Board, you're absolutely right we have to keep pushing back, because I think it's predictable, I'd like your sense of this, that you'll hear Larry Fink and Ray Dalio and Steve Schwartzman and others of your former colleagues, holding forth with this so-called mutual fund window opening up and lots of mutual funds that have lots of investments in China becoming, well not only made available to these men and women in uniform and their civilian counterparts, but actually endorsed, at least implicitly, by this federal agency.
Frank Gaffney (10:10):
You're going to have those Wall Street guys saying, "Well, you see, even the United States government now thinks it's time to invest in China and they want people to do it. So don't give me any grief about saying otherwise." This is unconscionable and truly at a moment when, as we've been talking about, Bill, there's a distinct possibility we'll be at war in the not too distant future, not just the unrestricted kind, which is ongoing of course, but the violent kind. Well, this is mad-
Bill Walton (10:41):
To the extent they're still pushing, Frank, their hand grows weaker and weaker and weaker.
Frank Gaffney (10:46):
Well, I hope so.
Bill Walton (10:46):
Because now you've got President Xi, the king himself, making China uninvestible. I think Kyle Bass has been on the show talking about it. You've never really made much money in China. So now we've got the human rights abuses, their attempts at world domination, now coupled with an economy that isn't really working and isn't working for investors. I don't think there's much ... They don't have many arguments left, and that's why I think we need to keep pushing.
Frank Gaffney (11:19):
Yeah. Well, they don't have many arguments left, but what they do have are these surreptitious end runs, I think. Certainly on Donald Trump's order saying, "We're not going to do this with the Thrift Savings Plan," and arguably, even an executive order of Joe Biden that suggests that investing in some of these companies, the ones that support the Chinese military, for example, are engaged in human rights abuses should not be invested in by Americans.
Frank Gaffney (11:46):
But we have to leave it at that. We're hard out of time. Thanks for joining us, as always. Your insights are always very welcome and valuable. God bless you, my friend. Reggie Littlejohn's up next on the World Health Organization and you, right after this.