>>Martin Sorrell: As usual, I find myself
in 150% agreement with Jim.
This is a process of -- just listening over
the last hour or so, it's a process of readjustment.
And, you know, Niall -- I studied history,
not at university but with my close friend
Simon Schama, which always makes Niall tremble.
But, you know, I just think -- I believe in
cycles, and this is a cycle.
And if we went back to 1820, China and India
would be 50% of the world's GNP, which is
where Goldman and Jim and his colleagues predict
it will be again shortly, and it's just inevitable.
We can do one of two things.
You know, we can either kick the can down
the road again and avoid the evil day or we
can -- we can adopt Niall's plan, but there's
a third leg that has to take place which he
touched on.
It is that we have to get the structural inflexibility
right.
And that means pain the other way.
It's going to be extremely unpleasant.
I see, you know, a headline in the FT this
morning.
No fault dismissal is now going to become
the latest issue that Vince Cable follows
out of agreement with the coalition, and it's
going to be -- it's going to be unpleasant,
that side, too.
So what do you do, you know, whilst all this
conversation is going on, if you're trying
to run a business?
And the answer is, you know, you do what we
did this morning.
You open up Myanmar, for example.
66 million people.
A mini Vietnam.
Or not so much a mini Vietnam.
Potentially as strong an economy as Vietnam
in opportunity, which is a mini China.
On Friday, we acquired the leading digital
agency in Russia, Grape.
And that's what you have to do.
So I'm totally in agreement with Jim.
You have no choice.
You know, our -- ironically, pension funds
look at companies, institutional investors
look at companies on a quarterly basis, but
ironically, we have a longer time view than
politicians.
Politicians are concerned about being -- you
know, they're in the business to be reelected,
and that's it.
So if you're at the beginning of a five-year
term, or 40% into it, like the coalition here,
you have a little bit more time to be flexible.
If you're Obama, in America, where you have
an election every two years -- of course you
have the midterm Congressionals -- you have
very little room to maneuver if you want to
stay in power, which is -- which is what it's
all about.
So we have to take -- ironically, we have
to take a much longer-term view.
And what am I trying to do with WPP?
Well, you know, our strategy is new markets,
so that's the BRICs and that's the MINTs,
however you want to define it.
It's new media.
It's what Google stands for, whether we're
talking about Facebook or whether we're talking
about Twitter or whether we're talking about
Apple or Amazon or whatever.
It's about consumer insight, trying to figure
out what the hell is going on in the consumer's
mind.
And lastly trying to get our people, our 158,000
people in 107 countries, to work together
more effectively.
So I'm totally focused on that.
In a way, I find these conversations depressing,
distracting, and they're off strategy, as
far as I'm concerned.
You know, you remember what Macmillan said.
Macmillan said "Events, dear boy.
Events, dear boy."
When somebody said, you know, "What politics
like?"
"Events."
Now, a member of the government, the cabinet,
said that to me exactly four weeks ago in
response to the question "Why does the government
not have a strategy?"
"Events."
Well, I mean, you know, if you're worried
about the red tops and what the red tops are
saying every morning -- which is what they
do worry about, the ministers -- what do you
expect?
>>Stephanie Flanders: Okay.
But one --
>>Martin Sorrell: So -- so I think you just
need to be realistic about it.
>>Stephanie Flanders: But one classic political
strategy, for either side of the Atlantic,
is "no crisis tomorrow."
That is the main thing that will often animate
politicians.
>>Martin Sorrell: Yeah.
>>Stephanie Flanders: But are you saying as
a businessman that you would rather Europe
be plunged into chaos --
>>Martin Sorrell: No, no, no.
>>Stephanie Flanders: -- over the next six
months --
>>Martin Sorrell: No, no, no.
>>Stephanie Flanders: No.
I'm serious, though.
Would the Greeks be -- well, that is kind
of what you're suggesting.
>>Martin Sorrell: Let's take Niall's plan.
Let's say -- you know, I always look in these
discussions for concrete proposals, and you
very rarely get them.
Let's take Niall's program.
Let's let Eurobonds out.
But there's a third leg -- you know, I was
just reading a breaking news before I came
up which exactly follows -- not completely
follows Niall's thesis or diagnosis, but then
adds "you have to deal with labor market inflexibility."
It is high -- you know, I'm not a great fan
of Jean-Claude Trichet, but he has been consistent
over the years before he left the ECB.
He's been consistent about high unit labor
costs being a problem and there has to be
a readjustment.
We have to get more --
But, you know, going back to your intro, whether
it's the advertising industry -- you know,
"We think we're so wonderful here in London"
or "We think we're so wonderful in New York"
and we traipse around the world, we give festivals
and we tell all these people and we call them
emerging markets.
They're not emerging markets.
They've emerged.
China is the second largest economy in the
world.
7 trillion, $8 trillion.
America's 15.
Where are we?
>>Stephanie Flanders: Okay.
But is the lesson of the last couple of years
that someone like you, we ought to just tune
out of Europe, if we possibly can, or leave,
for that matter --
>>Martin Sorrell: No.
We have to --
>>Stephanie Flanders: -- and wait for 10 years
until Jim O'Neill's solutions have all come
--
>>Martin Sorrell: No.
You have to look at it like Detroit looked
at it a few years ago.
You know, the Big Three in Detroit, Ford did
not take government money but Ford got its
act together under Alan Mullally, Jim Farley,
Mark Fields.
They all got their act together.
>>Stephanie Flanders: Diana was talking about
that.
>>Martin Sorrell: The other two companies
-- right? -- went into bankruptcy.
You know, to succeed in America, you have
to get into Chapter 11 and you shore yourself
of the health care liabilities and the pension
fund liabilities.
That's what you have to do.
And you have to understand that it has -- that
it is an unpleasant adjustment.
This is not -- you know, I -- one statistic
that always sort of amazed me.
You remember when Apple had its problem with
Foxconn and about cheap Chinese labor?
And the Chinese government said, you know,
the -- the compromise was Chinese workers
will not work for longer than 49 hours a week.
What was Francois Hollande elected on?
35-hour week in France.
Tells you everything.
You know, whether those are productive hours
or they're unproductive hours, we have to
adjust.
We have to get our minds around the fact that
we're not in the catbird's seat.
And by the way, I was thinking about that
game of chicken.
It reminded me of the Jimmy Dean film.
I can't remember the -- it may be that nobody
in the room is old enough to remember this,
but in the James Dean film where they have
the two cars.
And you remember what happens in the chicken
run is that -- not James Dean, he jumps out
of the car, but the other guy, he gets his
sleeve caught in the door and he goes over
the cliff.
So there's always the danger.
And I agree that this is a game of chicken
and Angela Merkel and the Germans have to
take this position, they have to take this
sort of front with the Greeks.
It also reminded me a little bit about Chelsea's
strategy against Bayern.
You know, the rope-a-dope -- the rope-a-dope
strategy.
You know, you take the -- the Mohammad Ali,
"I'm standing on the ropes, I get bashed about,
I protect myself and then I -- you know, I
come out, I break out and I score," or I win
in that particular case.
So the Greeks actually -- Chelsea --
>>Stephanie Flanders: I wonder if there's
anyone who came here today not knowing all
about that game because they would certainly
find it very mystifying, but they bloody well
ought to know about that game.
>>Martin Sorrell: Yeah.
That would be fun.
It's worldwide.
>>Stephanie Flanders: But do you think -- I
mean, there will be a lot of people in this
room who actually think, a little bit similar
to what Jim was saying, that this is -- you
know, what governments do and these nice headlines
about these nice figures -- you know, Chancellor
Merkel and Francois Hollande -- is not actually
central to what they do anymore and not central
to the direction certainly of the global economy.
Because what's actually happening is that
people are succeeding despite their national
economies, rather than because of them.
Is there an element of that in your business
or do you feel --
>>Martin Sorrell: No.
No.
I just think it comes down to very --
You know, I'm sort of simple in my thinking.
It's not complicated.
You know, for anybody to believe that 1.3
billion people in China, or 1.1 or 1.2 billion
people in India, can't produce better advertising
agencies or research companies or identity
companies or PR companies than 60 million
people in the U.K. or in 300 million people
in the U.S. is living in a dream world.
I mean, over time, that is going to happen.
You know, for 200 years, history has been
against China, India.
It may not be in the next 200 years.
It's going to be in favor.
And by the way, you know, all this stuff about
America, Diana was right.
You know, a couple of years ago the Europeans
looked at America and said "They got us into
this mess," right?
But here again, we're here between -- sort
of between Bear Stearns and Lehman now.
A lot of people believe what's going on now
is just a forerunner to another September
2008 crisis with Lehman.
By biggest worry, actually, is not about Europe
or western Europe.
By the way, there's one other thing.
To be quite clear, western Europe and eastern
Europe are two totally different things.
Germany, Poland, and Russia -- you know, the
same way the world is moving eastwards, I
believe Europe is moving eastwards, and the
center -- and this raises lots of political
issues.
The axis -- and I use that word advisedly.
The axis of Germany, Poland, and Russia is
an extremely powerful one.
Jim's statistic about Russian GNP is absolutely
on the money.
You know, Putin faces, I think, the issue
of trying to deal with the regional integrity
of Russia.
It's not about the demonstrations in Red Square.
Those are, quotes-unquote, friendly demonstrations.
It's about maintaining the regional integrity
of the republics.
Because they were -- and I was in -- don't
ask me why, but I was in Tatarstan a few weeks
ago and they give 78% of their local revenues
to Moscow, and the president and prime minister
of Tatarstan spend more time in Moscow trying
to get the money back than -- than anything
else.
So think about -- and I think the issue is
in America, because I think after the election,
they will be unable to kick the can down the
road.
I personally think -- this is a personal view
-- Obama will get reelected, although the
polls are starting to tighten up, but we'll
have deadlock, gridlock.
Republicans will control the House or the
Senate or both.
And so you'll -- the problem is that you get
into that gridlock situation and then they'll
have to come up with some form of Simpson-Bowles
solution.
They won't be able to kick the can down the
road, inevitably.
I was at the -- sorry to say this -- the Microsoft
conference last week and there was a lot of
gloominess about that particular issue post
the election.
>>Stephanie Flanders: We're going to finish
up in a minute.
Just to take us back to where we started --
>>Martin Sorrell: Yeah.
>>Stephanie Flanders: -- various stories about
people searching again for the drachma symbol
again on their keyboards.
>>Martin Sorrell: Yeah.
>>Stephanie Flanders: You know, is that something
that internally you're preparing for?
Not having a Euro?
>>Martin Sorrell: Yes.
We sweep every night, you know, out -- we
sweep every night.
The Telegraph was slightly inaccurate on a
number of -- I mean, we're not moving to Singapore.
It's amazing how journalists actually seek
to sensationalize --
>>Stephanie Flanders: How is that the answer
to "Do you expect the" --
>>Martin Sorrell: No, but I -- because they
also -- I wanted to get that one in.
[ Laughter ]
>>Martin Sorrell: They also -- they also said
that we -- we move our money into stronger
currencies out of the Euro.
That's not quite true, but we do sweep every
night, to protect ourselves.
>>Stephanie Flanders: So when you say "sweep,"
you mean make sure that you haven't got any
outstanding positions on the Euro that will
get you in trouble.
>>Martin Sorrell: Yes.
That's right, that's right.
>>Stephanie Flanders: Okay.
>>Martin Sorrell: So essentially, we've taken
that sort of action to try and --
>>Stephanie Flanders: But in a year's time,
do you think 17 countries will still be in
the Eurozone?
>>Martin Sorrell: I still feel that we don't
know what the implications are of Greece pulling
out.
I still think it is a game of chicken.
I still think there will be some resolution
of the -- that the Germans will ante up.
It looks to me that this is sort of similar
to west Germany buying east Germany.
It's unpleasant in the short term, but in
the longer run it's to the Germans' benefit.
I mean, who has benefitted from the Euro?
The Germans.
Their free-floating mark.
They would have been priced out of the export
markets.
So I just think at the end of the day their
self-interests will prevail.
I mean, you said, you know, you have your
choice between price stability or this, and
I think I would go for this.
>>Stephanie Flanders: Sir Martin Sorrell,
thank you very much.
>>Martin Sorrell: Thank you very much.
[ Applause ]
