B (3:36)

Okay, so let's go back a little bit, Claire. Let's say Trump is legally allowed to fire Cook. Why would this be such a big deal? I mean, isn't Cook one of several members of the Federal Open market committee?

C (3:48)

There's 12 members on that Federal Open Market Committee who have a vote on interest rates, of which Cook is one. However, she's also part of the much smaller Federal Reserve Board. That constitutes seven members. And so we already have two members of that board that are, I wouldn't say allies of Trump, but you know, they were appointed by Trump in their first term. And we also have a Trump nominee who's gonna take another seat on the board. And then if Lisa Cook does depart, then that gives Trump the chance to nominate another ally to fill a seat. So we're potentially in a situation there where Trump has majority of four on this seven strong board. Now that really, really matters for the Federal Reserve's governance.

B (4:41)

And that's a big deal because this board chooses regional Fed presidents who are some of the people who vote on interest rates. Claire, I want to go back to the question of legality. Can Trump actually fire Cook? Because he seems to think so.

C (4:58)

We don't know. Fed governor has never been fired. And the legal argument for doing so that there was four cause and they'd committed gross malfeasance. We don't really have even a sense of what gross malfeasance constitutes and whether or not it would apply in this case. So there are an awful lot of unknowns here. It will most probably end up in the Supreme Court. So there's a very difficult period ahead here for the U.S. s highest court, I think.

B (5:30)

Claire Jones is the FT's U.S. economics editor. Thanks so much, Claire.

C (5:34)

Thanks, Mark.

B (5:41)

We now have more details on what US Security guarantees might look like in a post war Ukraine. Senior American officials say that after the war ends, the US Is ready to provide intelligence, assets and battlefield oversight to any Western security blanket and it would be prepared to take part in a European led air defense shield for Ukraine. Ukraine. This is all according to European and Ukrainian officials. The offer is contingent though on European countries deploying tens of thousands of troops to Ukraine. The proposal represents a significant shift in the Trump administration's stance on the war. Just earlier this year, the White House ruled out any US Participation in protecting a post conflict Ukraine. French bonds and stocks suffered a major hit yesterday. Borrowing costs jumped to their highest level since March and stocks sold off for a second straight day. Investors are nervous about a possible government collapse. As soon as next month. And it's all over. A fight about French Prime Minister Francois Beru's budget. Here to explain is the FT's Leila Abboud. Hey, Leila.

D (6:52)

Hey.

B (6:53)

So tell me about this potential government collapse. What signs do we have that it could be imminent?

D (6:59)

Well, the prime minister on Monday surprised everyone by asking parliament to vote on September 8th to back him. Basically a confidence motion and it's over his 44 billion euro fiscal package to try and start to repair France's quite degraded public finances. It's highly unpopular, as one can expect from a package that includes tax rises and spending cuts. And everyone knew Beirut was going to have trouble passing this because his government doesn't have a majority in parliament. But he's based basically taking the initiative to put this vote on the table right away instead of waiting for the opposition, potentially just triggering his own fall much more quickly than expected.

B (7:40)

Okay, so what are some of the things in Beirut's plan?

D (7:44)

So it's a mix of tax rises and spending cuts. He wants to freeze all government spending outside of defense for a year, which obviously mechanically generates billions in savings. They also want to curb some pension spending, increase the amount that French people pay for medicine, reduce sick leave, tighten unemployment benefits, stuff like that. Sort of a broad effort to cut spending. And there will be tax rises including in it. So, you know, it's not, it's not popular stuff.

B (8:14)

I understand that it's not popular, but if it's between a budget they don't like and the government collapsing, why won't other parties back it?

D (8:23)

So the strongest blocs in parliament are actually the far left and the far right. So they're just like the far left is congenitally opposed to any reduction in state spending. The far right here, led by Marine Le Pen, is not economically conservative in the sense you would think of that in the UK or American context. She has this sort of much more populist view of the economy, supports a pretty big role for the state and is against something like pensions reform or cutting public spending on healthcare. She's against all of that because she has positioned the party as sort of the advocate for the working classes in France.

B (9:00)

So it sounds like things aren't looking so good for Beirut. If his government does collapse, what does that mean for the French economy?

D (9:08)

It's not great. The growth here has been pretty stagnant lately. Unemployment is ticking up. So the French economy is not in a great place as a starting point. And we've already seen, as you said before, the markets, especially the bond market, really react negatively to this latest bout of uncertainty. As ever, even as in America when Trump was doing all these tax cuts, et cetera, you have to watch the bond market. And that's what will be the real barometer of whether this political crisis turns into something that could have much more severe effects on the economy. We're not there yet, so I don't want to sort of scare everyone.

B (9:47)

Leila Abboud is the FT's Paris bureau chief. Thanks for not scaring us, Leila.

D (9:51)

Always try and help.

B (9:55)

You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT news briefing. Check back tomorrow for the latest business news.

C (10:20)

Thinking long term about your investment career?

B (10:22)

Hear stories, advice and lessons from seasoned leaders at Capital Group on the Capital Ideas podcast. Subscribe and start listening today. Published by Capital Client Group Inc. Buying.

A (10:34)

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