I think we need to wait until this is resolved. So it's not. I'm not. I'm not a line. It's not me. I'm not a line at all, it's not me. That could be me. It kind of shows like that. I think that was me. I'm sorry. Okay, call to order this meeting of the Salarons of call to order this meeting of the San Lorenzo Valley Water District Board of Directors. Will the Secretary please call the roll? President Hill? Here. Director Falls? Here. Director Mayhood? Here. Director Smalley? Here. And Vice President Ackman is not here this evening but she said it was planned to absence. Okay, so we need to have a quick ball to excuse Vice President Ackman, can you call a roll for that? Okay, President Hill? Yes. Director Falls? Yes. Director Mayhood? Yes. Director Smalley? Yes. Okay, the absence is excused. Okay, are there any changes to the closed session agenda? Seeing none. Hearing none. Moving on. Any oral communications regarding items of the closed session agenda? Mr. Holloway? Hi, I'm Bruce Holloway and I'm a military. So this is a second meeting in a row with no financial information on the agenda. And I guess what I said last time was I don't think the general manager is meeting the job requirement if there's no financial information on the agenda. And I tried to describe how it used to be when there were two meetings a month and on the second meeting of the month is when the liquid assets were presented because those statements come at the end of the month. So by the second meeting of a month, they're all then received and they should be available. Some of the things that you would see if you saw the liquid assets would be, you know, the interest rate on the county investment pool. This was discussed in the finance committee last week, but it seems like people don't know what it was paying in February. But that's one of the things that you would know if you have the monthly statement for the county investment pool. Also, Laef is paying a little bit better or in December is paying better than the county investment pool. I don't know what the rate is for February, but if there was a statement for February, you can see it. You'd also know that today that the Treasury Bill is maturing in April. I think there's one. So there's useful information in these monthly statements. And I feel that the board could be doing its proper oversight role. You need to be looking at these statements monthly. So I had the records request, so hopefully I will learn what the February statements say. But there's really no reason why I should be able to know that if not the whole board. And I'm going to continue to make records requests on a monthly basis. And so everybody agrees that this is what the board needs to be aware of. Another thing about the monthly statements is I don't think this would involve any finance personnel. You wouldn't have to pay your contract to do this because I think all the statements are being received by the district, either by US mail or by email. They're just simply statements that are being received.  It doesn't require anything of the finance department. But it seems to me that it's a responsibility of the general manager to report that to the board. So I'm disappointed at what I saw tonight. And I don't think it should continue. And I think you should make it clear the general manager. Thank you. Okay. Seeing no other comments, we will adjourn the closed session. We're back in an hour of CTV. You give me this in. Okay. It is 6.30. We'll call the meeting back to order. We have no actions from the closed session to report. So we will move on to any changes in the agenda. Item number seven. We need to take roll call again. I don't know. Do we need to take roll call again? Yes, okay. Please take roll it. President Hill? Here. Director Falls? Here. Director Mayhood? Here. Director Smalley? Here. And Director Ackman is absent and excused. Okay. So yes, President, I would like to pull item 10C from tonight's agenda, the wholesale intertie rates. And we'll bring it up in April 4th. Thank you. Okay. Moral communications. This portion of the agenda is reserved for all communications by the public on any subject that lies within the jurisdiction of the district. And it's not on the agenda. Any person may address the board of directors at this time. Normally presentations must not exceed three minutes of length. That individuals may speak only once. Please understand that the Brown Act limits what the board can do regarding issues not on the agenda. No action or discussion may occur on issues outside of those already listed on today's agenda. Any director may request that a matter raised on oral communications be placed on a future agenda. Mr. Holloway? I'm Bruce Holloway from Boulder Creek. And I don't see the district council on the screen. So I'm just curious. Is there a district council in attendance at this meeting? She is in attendance. I don't see that she has been promoted. But because she is a public participant right now. CTV, can we please make part of, excuse me, Barbara Brenner, a panelist. Good evening. Hello. Good evening Barbara. Thank you. Hey, unfinished business. There is none. No business. The 2021 CIP Pipeline replacement project. Thank you president. So, Garrett, I'm going to present that to you. Yes. So we have a lot of change orders from the contractor full of 24 requests at this time. We've reviewed, we've rejected one of the change orders. So we're bringing to you tonight. Change orders 9, 10, 11, 12, 13, 14, 15 and 16 for approval to the construction contract with JMD construction. The project has had some delays. The original award was in August of 2022. And we had a 284 day delayed due to materials and not being able to get the material. And then we had to add a mixer to the Blue Ridge tank. That was another delay. I'm happy to report that we've received the mixer. The mixer is installed and Blue Ridge tank is in service at this time. So we have consultants that are assisting the district with this project. One of the consultants is 360 PSM. They're providing certified payroll and labor compliance services for the district. And so we're looking for an amended and restated professional service agreement with 360 PSM to finish off the job. We're looking for an amended and restated professional service agreement with the engineer record, Sandis. So once we're done with all the construction work, Sandis will do a final site visit among the sites and help us in preparation of any punchless items that the contractor needs to fix prior to final payment. And they will issue a letter indicating that the construction is in conformance with the design intent and the design documents. We also have a professional service agreement with MME. And they're providing construction management services for the Blue Ridge tank site exclusively. After the passing in of my predecessor, there was a scramble to get additional assistance on some of these construction projects that were already under contract. And so MME was brought in to assist with the Blue Ridge Tank project. And with that, I'd like to take any questions that you have. So looking at this project and also the other one that you have up there, I noticed that a fair number of these changes were things like we were going to put the pipe here. And when we actually dug it up, we found that the pipe was over there, or there wasn't a pipe, or there was a hole in the ground or something. How are we validating where the existing infrastructure is on the plans before we get into the position where the contractor is digging a hole in the ground and finds that there's either no pipe or the pipe is 40 feet down the road or something like that? What are we using to validate where this infrastructure is? So typically, we will hire a consultant, a design engineer to prepare the plans. And they would ask for records from the district that we have. And so we would supply them with any information we have on our existing pipe plans. Okay. Are they also going to the county and for things? I mean, some of this was not necessarily our pipeline. It was some other thing. So I assume they must be going to the county for those. I'm not aware that they go to the county for information. A lot of times the surveyor will call a utility locator and they'll mark all the underground utilities. And then that will be included in the survey. Okay. Yeah. Thank you. Do you have any questions on this one? You know, I have a few and I appreciate you going through some of the background. Some of that, I would encourage you to go ahead and put in the narrative. I'm assuming this is the Altaville project then? We're talking about the 2021 CIP project. So that includes the Blue Ridge Tank. And Altaville. It includes Orman Road. It includes Zion Drive. It includes Hermosa Avenue. And it includes Winnie the Woods. And it was okay. The Altaville. You said there were 24 change order requests. Part of what I'm trying to do here is get a sense of what the total amount of money that's involved in those 24 requests, because we don't have all of them in front of us here. And I'm trying to relate that to the, I believe it was a 10% contingency we had on this. And that 10% was for the entire project, including all the consultants, or just for the construction. So the 10% contingency was included in the construction base. So basically up to almost $500,000. Correct. The bid I think was four and a half million. So it would be 450,000. I'm not sure where we are here, but it says right here 4.964 million. So not to exceed contracts. So that included the contingency. So on August 18th, 2022, the board awarded the contracts and the bid amount of $5,023,380, which included a 10% contingency. So without the contingency, it was four and a half million. So I might be getting lost here in terms of the history, but I'm looking here at the change orders would increase the not to exceed contract from 4.9 million to 5.1 million. Correct. So the contractors are authorized to spend a 10% contingency until we have a signed agreement that he can spend portions of that 10% contingency. So there's actually bid line items. And if you add up all the line items for the hydrant or the pie or the connections for all the items contained in the bid, that was only four and a half million. So what's the 4.964 million relative to the numbers you talked about earlier? So we've already approved change orders for the mixer. That was about $40,000 and other change orders up to change order six. I'm sorry, change order eight, my bad. Okay. So we've already basically incurred $500,000 more or less of change orders on this project. And now we have another set of change orders that we're going to do, which will go over that 10% contingency that we're talking about. Correct. Okay. Got it. Are the consulting agreement extensions due to the delay in the start of the project, and the fact that we're now going longer? And wouldn't the consultants start when the project actually starts? So I'm not exactly sure how that lines up. You're correct. The consultants start when the construction starts. We are anticipating that construction would be completed in November of 2023. However, we had delays, for instance, the mixer we didn't receive until March of 2024. So we have weekly meetings with the contractor. And with the consultant, we still get monthly progress payments from the contractor.  We have some middles or RFIs that would go to the construction manager and into the engineer record for the progress payments, they have to have certified payroll to show that they're meeting the requirements for that before we can issue the progress payment. So of the, so what is the total number out of the change orders one to 24? What's that? The total request from the contractor is over $800,000. Okay. It seems to me that most of this is work that wasn't anticipated or work that we thought it was going to be. I have a couple more questions. Sorry. The storm drain. That would be a county storm drain? Or is that a private road storm drain? Oh, the drainage manifold. Is that what you're talking about? The Blue Ridge tank storm drain. Change orders. Oh, okay. So that one is, so there's an existing, there was an existing. Is that a county storm drain or a private storm drain? There was no storm drain. There was no. So is it an accounting road or a private road? I believe it is a private road. All right. And the Blue Ridge retaining wall. Was that just a design issue that was missed? That's a pretty substantial number. Correct. So the neighbor, the neighbor's thanks and propane tank are necessitating the I get why that was not caught during the design phase. It's correct. Okay. Yeah, I mean, I, Brian, you're more probably have more expertise in this. Well, what would be sort of a normal range of change order percent is 10% 20%. I'm just, you know, what would we expect to look at on a complex type project? Especially in our area. Especially in our area with the general lack of hard inventory information, narrow roadways, you know, all the other things going on. I don't think, I don't think 15% is unusual. Okay. So 750 on the contract. I don't think that that's unusual given as much as we have here. Yeah. And so we're about in that range. So far as something we don't have any more change orders, are they looking at more change orders? We are very close to finishing with the construction. It is my goal to deny change orders whenever possible. Okay, well, I mean, if it's for some of these things, we can't because fair is fair. I mean, if you know, yeah, okay, I appreciate that background, because that's and Brian, you would agree with that that 15% is probably, I've seen him go, you know, I've seen him go much higher. It really depends on the project.  But yeah, I mean, they, it varies.  Yeah, no, I guess I kind of view this as there's a lot of house claiming and they just point out some things that are put right as we had expired contracts that were still paying off, hence they're called amended to restate it, which is why Barbara can chime in here. But that's why I guided Garrett to do them that way, because then you pick up and you say that it's deemed to have commenced at the beginning of the contract and you don't lose your continuity. So we had to do that in two places. And in one place, he never had really a contract, there wasn't an agreement, it was just signed the consultants agreement, which is, I've learned that's always a no, no, we have this harvest created templates for us that had been reviewed. That's what we follow. That's exactly what I wanted to hear. So in other words, this is, this is so we're having $78,000 plus worth of house keeping. Okay. On a very large project. Okay, great. I really appreciate the template, the focus on cleaning things up, putting in processes and standard that all that stuff music to my ears. So thank you, Brian, for that. Thanks. I've got, I think just a couple of questions on the retaining wall. The propane tank and the fence were there before we came there. So shouldn't our engineer design firm have picked those up? Or did something change in the field? They're showing all the survey. Yeah. And they're not accounted for in the design. Okay. Did, um, Sandus come back with a change order to make those changes then? At no cost? Well, that's where I'm going. They missed it. Were they trying to, and it wasn't clear to me in their change order whether they were, oh, and here's additional money for the design of that. The design changes. They are seeking additional compensation for design of the retaining wall. Okay. No. No. Okay. Is that part of this package? It is.  It wasn't clear to me that that was part of that package. No, um, to that. Well, I mean, I have, look, how much, how much is that redesigned? Because it's 81, it's 82,000 and they're retaining wall. I'm not concerned about the contractor's cost. No, I know because they're not, because they're not the ones, but the design firm, I feel is. Well, that could be a default for the 82,000. Because I've never been, I've never been able to get that out of a design firm for their errors and emissions. But for that, I don't, I don't know if I need to know the answer to that right now. But I guess Bob asked that question. Anyway, perhaps we could finish up with questions. Yes. Yes. The memo, it was a good memo. He had, I think, sufficient descriptions and details in this. I like the way that, that you put all of that together. I appreciate the fact that you mentioned that you were rejecting one of their change orders for 22,000. You didn't have to tell us that, but that to me is showing, okay, yes, I am doing what I can to refute any of those. Okay. It was that retaining wall that, and, and Sandus's performance or lack thereof in that. Okay. That's the questions I have. No, I have nothing to add. So if I, I will respond to the question, I would, there's a couple of different ways to frame this is, yeah, consultants make mistakes. And it's quite common that you end up, they missed it, but you're in and paying for their time to fix it because they are working, they are basically burning by the hour. You know, you're paying them by the hour. That's the consultant's point of view. The other thing is, remember a lot of this stuff happened. Can't really say, I mean, I'm not, I don't want to defer blame, but it's like, we were trying to, this is a cleanup effort. And if we go picking at small amounts of money, we've got a lot of fish to fry, a lot of big projects. We've got millions of dollars we need to spend on cap improvement. And yeah, it's unfortunate. I went, I do encourage Garrett. I can attest it a lot of times. He doesn't want to fly to contract or un-changer. I said, oh no, you have grounds, you fly them. And that's, that's where you can fly. You know, we fight where we can and we're, and here's the other fight. The bigger fight is do you hire that consultant the next time around? Sandus has done work for us. We're gonna hire Sandus again. I fully expect it. Um, maybe not. They won't keep one to have lunch with me. Um, okay. And um, it's not, in other words, what I'm saying is, is that doesn't go unnoticed. They've done other good work for the district, um, in terms of their engineering. Yeah. Um, clearly. Yeah. Yes. Uh, including that. Uh, so I respect most of what they do, but, okay, I understand what you're saying, Brian. I'm just zooming out a little bit and saying, yes, it doesn't go unnoticed. And, and my philosophy is, I said it today in a meeting, it's mistakes happen. And then I say, okay, how do we get better and not make the mistake? I don't, I'm not into blaming. I'm not into pointing, flavoring a mistake. It's just like, okay, what do we do to, sort of, when we go forward, we step better. So that's why, and yeah, this is messy. It happens a lot in public contracts. Um, do I like it? No. Um, and unfortunately, unfortunately, sometimes it is the way it is because that is a game that contractors play too. It's like they did what's on the plans and they know it's like they forgot that, they forgot that and they know there's their profit. They've already, trust me, they're doing it by sticks and stones and adding them up and they know. Yes. It's not the contractor in this case that I was questioning. Well, the contractor. Yeah, I already get this one too for a number of reasons because, um, you know, the propane tank's actually encroaching on our property and I was like, well, then move the propane tank. Yeah. That was my first response. Yep. Apparently that wasn't, you know, it didn't work out and, you know, if I send James and Garrett up there to fix it and it's like they still come back with the same answer that I'm not gonna. Right. I'm not gonna argue with them. It's just, okay, let's move on. You know, we tried to fix it. We tried to lower the price because I'm just looking at it from the, like, again, zooming out saying, yeah, 80 grand won't, and we even tried to get the price down on that. We tried to use a different style of construction and it's like all said and done, it wasn't gonna save any money and we couldn't get the, we couldn't get the vehicle up there to do it a different way. It wouldn't, it would have been too hard to get the rig up there to do it, like with journal piles. So, great. I'm not questioning the, the means and methods. Yeah. Of how you did it simply. Sandises. Yeah. Right. They dropped the ball and I've seen it plenty of times before and it's like to go back to a consultant and say, yeah, don't, sometimes on a big thing, it's like if it's August and I was there and I was intimately involved with it, I certainly could call them on it. Right. I don't think I'm in that position because I don't know who said to who, when, and how it got missed. But like I said, I mean, I'm just giving you the overview of the, like, we did consider other methods and means, not that it doesn't need to be part of this discussion, but I'm always looking at, okay, $80,000, how can it be $40,000 or not at all? It's like, okay, I can't erase it, so I'll just live with it.  Yeah, I mean, right. That's like, really? I moved my tank for that. Sure. For that. Yeah. Well, okay. Okay. So, quick question here. Do we want to vote on each one of these separately or no? No, thank you. So, let's move on to Lion Big Steel. Sorry, we have to vote on this agenda. And we have to go after the public. Yes, but we don't want to vote on each change order individually. I thought that was your question, also, Jeff. No. Okay. So, let me make a motion then. Yes. Before we go up, the Board of Dricks, the General Manager to Execute, Change Orders for JMB Construction, 360 PSM, Sandus Engineers, MME, as stated in the meeting minutes for March 21st to 24th on pages five and six of the memo. A second. Okay. Comments from the public. I see no hands up online. We have no comments in the room. Okay. President Hill. Yes. Director Falls. Yes. I'm sorry. Yes. Yes. Director Mayhood. Yes. Director Smalley. Yes. Okay. Moving on. Item 10B, Lion Big Steel Project, Change Orders. Okay. Sorry. It's going to let him. So, we are proceeding with the Lion Big Steel Project. We are filling the lines right now. Pressure testing and disinfecting. Getting ready to put the new lines in service. The contractor has submitted Change Orders for consideration. District staff has reviewed the Change Orders and recommends payment to MPE, as stated in the meeting. I'll take any questions that you have. Does this wrap up this project Change Orders? It does not. What's the total amount that we're requesting? There are two additional Change Orders that we're in negotiation on and the contractor is revising the pricing for district comments. So, we're awaiting those documents. What was the original request? Total. So, ballpark number. Yeah, ballpark number. Yeah, it doesn't have to be exact. The total amount? Ballpark. $100,000 total. Okay. Great thing. I do have a couple of other questions. Bob, where are you today? Oh, are you still? I would comment that if you're negotiating with them and they came in at this and you're now down at this, just tell us that in the memo. The next one that comes through on this? Sure. Okay, that's it. Any questions? Yeah, it seems like we might have a similar situation here with a couple of Change Orders that were missed in the design about a fair, I mean a $34,000 one-in-service line is, that's a boy, that's a, I want that service line in my place. Yeah, that was unfortunate. So that was missed in the plans. There's a ranch, the Yondi Ranch very close to our tank site and we have run a cross-country pipeline after the fire through their orchard and they're connected through their backyard essentially off that above ground emergency pipeline. And so part of this project with the new pipeline we're installing a meter on the highway on Big Basin and then it's 460 feet up their driveway to where the connection is being made to the existing bombing. Do they have a long, long agreement with us? Well, the meter is actually going to be on in the right of way. So it's all on the customer side where we're doing this 460 feet of trenching. We're using the bid item price that's provided by the contractor, the low bid line item. So I guess I'm not sure I understand this. So we provided the connection from the meter to their house. Correct. And that was because, I mean what did they have prior to the fire? I'm not sure what they had prior to the fire. Interesting. How do you know? Their service line came from like a line plant directly across the creek and then downhill. Okay, well that would be a historical legacy item. That line melted during the fire. Yeah, of course. Yeah, we ran another one temporary for them as well. Okay, so basically what we're doing there is we're making this a real connection to a real meter in the real right of way. And because of that, we had to eat the cost of their connection to the house. Correct. Okay, sounds reasonable to me. Yeah, I understand. And then the other one was a lateral under a resonance. That's very special. Okay, that's also legacy. I'm sure historical and all the rest of it. Okay. All right, great. Thanks. Any questions? I do want to comment on the good description detail backup materials on all of that. And the fact that we require the contractor to provide bid per foot items that you're able to then reference then for we need 460 feet of line. It's this much? Yes, good way to get that pricing up and up ahead of time. So, continue. I have to say though, a one inch line for 500 feet, that's a lot of friction and pressure with protection. Okay, they must be in a great pressure zone because in my place, even a hundred feet, I had no pressure. So anyway, good for them. Okay. I'll make a motion that the board directs the interim general manager to execute contract change orders one, two, four and five for payment to moderate peninsula engineering for the lion and big still zone pipeline projects to the sum of 70,334 dollars increasing the not to exceed contract from 6,233,100 to 6,303,434.  For the participants. I don't see anyone online. Mr. Holloway can I have a comment? I noticed that almost all the questions came from the two members of the finance committee. I mean, the engineering committee. No, I'm not on the engineering committee. I'm not on the engineering committee. Oh, okay. I missed the meeting that's going to start in zero. So both of the last two items that said no committee action. And I guess I continue not to understand what the committees are for. Thank you. Okay. So President Hill. Yes. Director Falls. Yes. Director Mayhoy. Yes. Director Smalley. Yes. Motion passes. Okay. The next item has been withdrawn. So we are now to the consent agenda. I don't see anyone requesting anything from the consent agenda. Do we have district reports? No, it says not here. You don't want to vote on that. I'll need a motion and a second. A motion on the consent agenda. And also you have to ask the public if they want to comment on that consent agenda. Okay. So on the consent agenda. I move the consent agenda. Okay. I'll second that. Okay. Any comments from the public? Seeing no comments. Can we have a vote? President Hill. Yes. Director Falls. Yes. Director Mayhoy. Yes. Director Smalley. Yes. Motion passes. Okay. I see we have no district reports. No written communications. There's information material. The Smigwa 2023 independent auditor's report. Does anyone have a comment on that? Then I think we can adjourn. Okay. Thank you. Thank you, ZTV. Seven and five adjourned. Thank you. Thank you.


You may call me Simon if you wish. I'm Russian, I live in Prague, and I represent here a company called Team8. Half a year ago we released our product called SubGit. Does anyone know about SubGit here? Thank you. Thank you very much. Okay. The next question. Does anyone use Subversion here? I mean daily. Oh, cool. Because my topic is for you basically. So SubGit is a tool that allows one to build bidirectional read-write mirror of Subversion and Git repositories. To show you how it works, I have a live demo here. So I have Subversion repository at SVN repo directory, and I just hit one common SubGit install into this repository. Here's how it works. This repository already has five, 15, 50 revisions, so it just, oh, sorry, oh, cool, at least somehow. So I've just hit the common SubGit install, and basically just add a few hooks into repository Subversion and Git, and after that I can commit into Subversion repository. I can push commits to Git repository. They all got synchronized. So I have here a working copy, Subversion working copy, and Git working tree. I've just cloned. So let's modify some file here from Subversion side, just add new line here, right, and commit this modification. I've just committed it. So that's it. This commit gets translated to Git repository, and I can fetch this modification here. Here it is, new line on Git side. I can create a new branch, like full, full, do, I don't know, and push this branch into Git, into central Git repository, like this, right, and I can update my working copy and see that it's here, sorry, sorry, sorry, one more time. Here it is. So here's how it works. If you want to know more about SubGit, please visit our site, subgit.com, follow us at Twitter, SubGit, and please find me and talk to me. I would be really glad to see you. Thank you very much.


We all work now! We all work!  It is operating at 2-10% capacity right now and the night we got to go it was operating probably around 2%. There was hardly anyone there and we got to experience it in its full depth and it is one of my favorite haunted attractions now. It's right up there with Fear Farm and all of you who watched our videos last year knows how much I love Fear Farm. This is exactly up there with Fear Farm with me. So I just wanted to do a quick introduction to this video before you guys watch this crazy experience that we got to go through on their haunted hayride. This is the best haunted hayride I have ever experienced in my life for several reasons and you'll get to see it throughout the video. Again it is dark so you're not going to get to pick up everything but boy okay so again they were operating at 2% capacity so we're in the line to board this. There's maybe like three other groups on the tractor so we get up on the tractor. It's like this old rustic wooden like looks like it could fall apart tractor like any hayride you go on and the reason I didn't start filming right away is every haunted hayride or hayride that I've been on you take the hayride out into a forest and it usually takes about 5-10 minutes to get there and then your haunted experience starts. It's like that at Fear Farm, it's like that at other farms that I've been to. So I was going to start filming the minute I saw the first sign to film. So we're sitting down you know they close up the wagon and suddenly this giant alarm goes off and a little like scare prop pops up and then this tractor goes from like zero to a hundred in a matter of seconds. All I remember is everyone literally rolling like if you were sitting at the front of the tractor you were suddenly at the back of the tractor. It was crazy like honestly like I didn't even have a chance to turn on the camera immediately after that because we were all shook at everyone was laughing dying. There were people screaming and it was just the craziest experience I've ever had on a haunted hayride. I kid you not it was going probably like 60 kilometers an hour if I had to make a guess which for a tractor and a hayride is crazy. There were moments where the dirt would like curve up like an airtime hill and you did get airtime you'll see that in the video. Anyways I just wanted to explain this because the commentary rate start my camera turns on out of nowhere and you just hear us kind of like freaking out a bit. I needed to explain what was going on for you to understand the story in its entirety so hopefully that sums up what you're about to witness. It's kind of embarrassing and yeah it's super awesome set designs as well so hopefully you enjoy that and thanks so much for watching guys enjoy the video have a good one bye. Is he holding something? I was unexpected to like there's no see that jolting speed out of nowhere. Well he did give a horn sound at least there's some horn. It felt like top fell dragster. Where is he going? I don't know. See usually there would be like a scary thing by now. Okay this is going to be a shite turn. What happened? No wonder I'm not losing. I'm booking it. This needs over the shoulder restraints. I'm waiting for the inline twist now. Right? Well is this my like rag quota for the season? If this counts as a credit I swear to God this counts as a credit. I'm really close to database where are you guys? I wish I picked up the beginning I feel like I screwed up that I did. Oh my gosh. You're gonna have to do it again. I have no idea. We're like far from the farm. You're like five minutes away from it. Oh are we gonna stop here or what's happening? No we're just gonna stop like we go super fast and we just slow down. This guy dealt with the TCA. Oh god. There's an oil rig there. There's something over top of that. What? There's fire.  What's going on? What is this? Are we going under the lake? The other people signed a waiver what? I didn't sign the waiver. Are we getting shot at? Oh what the heck? Oh my god. Oh god. It's sort of alright it's like hand speeding up. No I think the bombshell is going off. Yeah that's true. We're going through water. Are we? Yeah we're going underwater. Water oh my god. We're in a bayou right now.  I ain't about this. Oh my god I got touched.  I didn't expect it to like contact me. Talk about covid's catch points.  Thunder run? Try not to flip. When I met in version I was making as a joke. Why are we going slow here? Because I was coming up for sure. I'm so confused. Oh my god. Is this where we get off? Ow. Oh my god I got wet. It's got a little dark here. What is this? It's not coming up on the right. Oh look at that. Look at that. It's speeding up earlier. Trippy. I feel so trippy. I expect sharp and hard turns now. Oh more branches. Oh god. That's great. I don't think there's anything going on here. I'm going slow. Mother ducker. I heard something flop and that's what I knew someone was coming. Usually he turns the lights on when he goes fast. He's driving in the dark. Resistance? Is this another animatronic? Oh it's the old... It looks like a zombie apocalypse. Probably an old nosy or something. Why aren't the lights coming out? It's all over the globe. There we go. It's not getting ripped by the trees. Oh god. What's the time? Oh it's not coming back so here we come.


Live from Washington D.C., it's theCUBE, covering .next conference brought to you by Nutanix. Good morning, everybody. In 2009, infrastructure professionals and the vendors who supplied products to them started to realize that the cloud was real and that they began to try to replicate that cloud on site and the first instantiation was what we called converged infrastructure. Converged infrastructure was essentially a combination of storage, server, and networking, kind of bolted on together, but pre-packaged, pre-tested, and engineered to be installed and delivered in a more seamless fashion to minimize the amount of labor that had to go into the management of infrastructure. That was around 2009 and that same year, Nutanix was born with a slightly different vision to actually develop a solution that was truly cloud-like on-prem. Welcome everybody to Nutanix.next 2017. This is theCUBE, the leader in live tech coverage. My name is Dave Vellante and I'm here with Stu Miniman from SiliconANGLE Wikibon, who is an expert on Nutanix on hyper-converged infrastructure, which was the next instantiation of converged infrastructure. And now, Stu, we see this going into the cloud era. This Nutanix is a company that's probably going to do close to a billion dollars this year, if not a billion. They got a two and a half billion dollar market cap. They got a gross margin model in the high 50s. They're growing at 65, 66% per year. The stock, when they did their IPO, was a meteoric rise, sort of flattened out since. It's up today on some news that was broken by CNBC that they're doing a deal with Google. This is our, let's see, fourth, third of fourth. Third year of the U.S. show, the fourth Nutanix Conference overall. Stu, great to be working with you. We've been together a lot this month at a number of shows. This is sort of the capstone of what we call true private cloud and a great instantiation, an example of it. What are your thoughts, early thoughts? And what to hear. So Dave, great to be with you as always. And yeah, excited to be here at this show. One of the things I love in our role as analysts is when you see something in some of the early stages. So I first got introduced to Nutanix when they were about 20 people. Little bit smaller than, say, when I first met VMware, when they were about 100 people. And to watch this company and this wave grow, I remember John Furrier and I interviewed Diraj, CEO of Nutanix, back at VMworld 2012. And right, infrastructure and converged infrastructure. I mean, I worked on some of the original, you know, VBlock architectures when I worked at EMC. And we're saying, take my storage, take my network, take my compute, put them together, package them, integrate them, try to make it simpler. But when we talked to Diraj, it wasn't about the infrastructure. He really posited that the challenge of our day is building distributed systems. And it's really a software challenge. And that is at the core of what Nutanix is IP, what their engineering mentality is. And they've kept that going forward.  We talk about hybrid cloud or multi-cloud today. That's what Nutanix is starting to deliver in their vision when they first launched themselves as an enterprise cloud as their marketing. Everybody was like, what are you talking about? They're an HCI player. What's their cloud mission? Making an announcement with Google shows that they are going to have some partnerships there to live in that hybrid or multi-cloud world. And Dave, I want to clarify, when I, you know, we throw around these terms hybrid and multi, for me these days, I look at it as hybrid is a lot of what I know you used to call federated. So, how do I have a model that really looks the same, whether that's just the application layer or, you know, even going down to the infrastructure layer spreading between environments, typically my private cloud and my public cloud, service riders can be in the mix there. Multi-cloud means I've got data and I've got applications that are going to live in multiple public clouds in multiple data centers. Of course we've got SaaS. So that differentiates a little differently. Things like Kubernetes are really helping with that explosion and that discussion of multi-cloud, kind of replacing what we used to talk with PaaS, the platform as a service, where I could really be independent of the cloud. So, you know, there's a lot of nuance and detail which I'm looking forward to digging into over the next two days.   It's a data plane and a control plane that spans multiple physical locations. I worry about things like identity. I worry about things as to, you know, how does security span these environments? You know, governance of course plays in a lot, but you know, I'm sure we will hear things about consumption model, because one of the things cloud consumption model, you know, it used to be like, oh, well some business guy just swipes a credit card and goes and does it. Well, shouldn't all infrastructure be as easy to buy as we did? I mean, Dave, you remember a decade ago we always talked about the consumerization of IT. Now it's really that cloudification of IT with companies like Amazon really driving forth the model that everyone wants to copy. So since we've started researching Nutanix and talking to some of its customers, two years ago at the initial dot next conference at the Fontainebleau in Miami, really talked to a number of customers and you could see the enthusiasm for simplicity. You could see the desire to reduce their reliance on VMware and the VTACs that was hanging over their heads. And at that time, a couple of years ago, Nutanix introduced Acropolis, which is essentially a hypervisor inside of its, what they call now the cloud operating system. And so, but that is a strategic move by a company that's basically saying, hey, we're not just hyperconverged, because everybody's now pivoting to hyperconverged, we're cloud. So it's a message to the financial world, to the industry analysts and to the customers that we have a vision to the financial world, we have a large TAM. Financial guys are always worried about TAM expansion. That's their TAM expansion play. Now, bringing it back to some of their financials just briefly, Nutanix essentially loses 37 cents from an operating basis on every dollar of revenue it makes. Okay, that's, I guess, in vogue these days. But it's funny accounting, because they don't recognize the full value of their OEM deals like the Dell deal. Again, some nuance. And there are some accounting changes that are occurring, which should be a tailwind for this company from just from the optics of the income statement. So you're going to see, and I think the streets finally starting to understand this. Again, stocks up today on the Google news that no press release yet, but CNBC broke that news. What do we know about that? Yeah, so first of all, right, the accounting change is coming this summer. If I remember right, I believe it's August. So that means that rather than taking the three year subscription and only taking a small piece of that today and pushing most of it out into the future, there will be a restatement of all of Nutanix's number, which right, will be a tailwind, as you said, and push all that in. Google, number one is you look at, one of the most interesting dynamics of Nutanix is it's been in a relationship with VMware. I did an interview with Thiraj right after the IPO. I was at the headquarters sitting with him in this beautiful library that they have there. And he turns to me and he's like, I'm Cameron, he says, Stu, if VMware hadn't been so negative on us and not allowing us to OEM or ship their product, I don't know if we would have launched our own hypervisor. It was not an initial plan. It was something that he's talked to the analyst community and talked and said, this is something that was not simple. It was not something that was done lightly. It was something that their hand was really forced because customers say, I want this simplicity. I want to be able to just stand it up. I need that to come pre-installed. And there was additional value that Nutanix felt they could bring. The DNA that they had, as they said, from companies like Facebook, from Google, and the like, where they understand the underlying code that they need to build to be able to build this distributed architecture. So building off of KVM, they built the Acropolis hypervisor. One of the next big shifts coming is containerization. And this is where Google fits in. They should be able to accelerate that move, which is the thing I worried about with hyperconverge is we took our virtualized sand environments and we just put them in a slightly different form factor. It's simpler, yes. It's great. It's going to be, you know, hopefully a better economic environment, but how do we move the company forward faster? Two years ago, the customers were really excited because they said, I got my weekends back. What you want from an IT department is not to say, I'm no longer just overworked, but I'm driving the business forward. Dave, you've always said the role of the CIO is not just to maintain the business, but to transform and grow the business. So that's where we need things like containerization to help companies be more agile and move faster and have IT turn into a force that can help code, create new business lines, leverage our data more. The thing that we've heard at every storage show we've been at recently, Dave, is, you know, NetApp actually says, storing is boring and that is something that we hear is I need to leverage our data, we need to get it out there and that's what I'm looking for this week is to hear more of that cloud native piece. I was at the Cloud Foundry Summit a couple of weeks ago. I could sit that on top of Nutanix. So how does partnerships like Google and some of these environments help with, you know, application modernization, you know, analytics where I can get new, you know, take my data and create new business value because that's where we're going to really transform and grow companies into new revenue streams and Nutanix is a platform to help deliver on that. So Stu, since the spring when we released our latest True Private Cloud report, the Wikibon team, there's been a lot of talk about that report, its implications. We had, there was a blog post today from your own Haviv at Iguazio saying you guys need to rethink your definition of True Private Cloud because the on-prem guys have no chance against the cloud guys, we don't agree with that by the way. But the notion of True Private Cloud is this on-prem infrastructure that substantially mimics the public cloud and as I said before, has a control plane that spans multiple physical locations. That's a concept that we've got to put forth and started to quantify because there was so much cloudwashing going on and it really is frankly the savior of the existing infrastructure guys or could be because their legacy business is not growing, in fact it's declining and this is a very high growth market opportunity for these folks. So my question to you is can Nutanix participate in that high growth market? You know there seems to be an aspiration, maybe I'm overstating this, but to be the next VMware of sorts. Can they do it? Exactly and Dave you're not overstating it, I've heard people from Nutanix say that was their target, their target wasn't to replace a flex pod. Their overall vision was right to be the next VMware, they want to be a platform to be able to grow on that and the thing I've been looking at at every show when we go to infrastructures, how do you live in that multi-cloud world because you can't put blinders on and say, right well, Amazon's in a corner. No, we know Amazon, customers are using them. So, you know, right as you said Dave, I want that operational model in my own environment to build what we called a true private cloud. Absolutely Nutanix is a player there. There's still work to be done for all of these infrastructure players, but what are they doing? How does their control plane span beyond that and why should Nutanix be more than just a piece of the infrastructure? Because there are lots and lots of players, not only the infrastructure players, lots of software companies and the cloud companies themselves that are going to say, I'm going to own that piece. I mean, Microsoft identity is one of their greatest strengths. Google and Amazon have been going after that.  So why should Nutanix not just eat some of the old guys but be a player that lasts into the new world is, you know, looking forward to the announcements later tonight. We've got a lot of their partners and customers on here to be able to deliver proof points and Nutanix is still growing, still doing real well and, you know, to be excited. Yeah, so we're going to be covering this wall-to-wall coverage of two days. We've got some great outside guests coming in. We've got Diane Greens, you know, speaking at this event. Bill McDermott speaking at the event. The word is Peter McKay from Veeam who's going to make another appearance. He's like theCUBE, he's everywhere. And then some really interesting outside speakers. Melotra is here again. So really excellent lineup that we have for you guys this week. Two days, wall-to-wall coverage. This is theCUBE. We'll be back from the district, live in Washington, D.C. This is Nutanix.next, right back.


Ladies and gentlemen, the Vice President and I are pleased, very pleased to welcome you to our press conference. Based on our regular economic and monetary analysis, and in line with our forward guidance, we decided to keep the key ECB interest rates unchanged. As regards the non-standard monetary policy measures, on 9 March, we started purchasing Euro-denominated public sector securities as part of our expanded asset purchase program, which also comprises purchases of asset-backed securities and cover bonds. Purchases are intended to run until the end of September 2016, and in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below but close to 2% over the medium term. When carrying out its assessment, the governing council will follow its monetary policy strategy and concentrate on trends in inflation, looking through unexpected outcomes in measured inflation in either direction, if judged to be transient, or to have no implication for the medium term outlook for price stability. The implementation of asset purchase programs is proceeding smoothly, with volumes in line with the announced figure of 60 billion euros of securities per month. In addition, there is clear evidence that the monetary policy measures we put in place are effective. Financial market conditions and the cost of external finance for the private sector have eased considerably over the past months, and borrowing conditions for firms and households have improved notably with a pickup in the demand for credit. Looking ahead, our focus will be on the full implementation of our monetary policy measures. Through these measures, we will contribute to a further improvement in the economic outlook, a reduction in economic slack, and a recovery in money and credit growth. Together, such developments will lead to a sustained return of inflation towards a level below but close to 2% over the medium term, and will underpin the firm anchoring of medium to long-term inflation expectations. Let me now explain our assessment in greater detail, starting with economic analysis. Real GDP in the euro area rose by 0.3%, quarter on quarter, in the last quarter of 2014. Domestic demand, especially private consumption, continued to be the main driver behind the ongoing recovery. The latest economic indicators, including survey data up to March, suggest that the euro area economy has gained further momentum since the end of 2014. Looking ahead, we expect the economic recovery to broaden and strengthen gradually. Economic demand should be further supported by ongoing improvements in financial conditions, as well as by the progress made with fiscal consolidation and structural reforms. Moreover, the lower level of the price of oil should continue to support households' real disposable income and corporate profitability, and therefore private consumption and investment. Furthermore, demand for euro area exports should benefit from improvements in price competitiveness. However, the euro area recovery is likely to continue to be dampened by the necessary balance sheet adjustments in a number of sectors, and the sluggish pace of implementation of structural reforms. While remaining on the downside, the risks surrounding the economic outlook for the euro area have become more balanced on account of the recent monetary policy decisions, the fall in oil prices and the lower euro exchange rate. According to Eurostar's flesh estimate, euro area annual HICP inflation was minus 0.1% in March 2015, up from minus 0.3% in February and minus 0.6% in January. This pattern largely reflects an increase in oil prices in euro terms since mid-January. On the basis of information available and current oil futures prices, annual HICP inflation is expected to remain very low or still negative in the months ahead. Supported by the favorable impact of our monetary policy measures on aggregate demand, the impact of the lower euro exchange rate and the assumption of base effects and somewhat higher oil prices in the years ahead, inflation rates are expected to increase later in 2015 and to pick up further during 2016 and 2017. The governing council will continue to monitor closely the risks to the outlook for price developments over the medium term, and in this context we will focus in particular on the pass-through of our monetary policy measures, as well as on geopolitical exchange rate and energy price developments. Turning to the monetary analysis, recent data confirmed the gradual increase in underlying growth in broad money, M3. The annual growth rate of M3 increased to 4% in February 2015, up from 3.7% in January. Annual growth in M3 continues to be supported by its most liquid components, with a narrow monetary aggregate M1 growing at an annual rate of 9.1% in February. Loan dynamics also gradually improved further. The annual rate of change of loans to the non-financial corporations was minus 0.4% in February after minus 0.9% in January, continuing its gradual recovery from a trough of minus 3.2% in February 2014. In this respect, the April 2015 Banklanding Survey confirms that improvements in lending conditions support a further recovery in loan growth, in particular for firms. Despite these improvements, the dynamics of loans to non-financial corporations remain subdued and continue to reflect the lagged relationship with the business cycle, credit risk, credit supply factors, and the ongoing adjustment of financial and non-financial sector balance sheets. The annual growth rate of loans to households increased further to 1% in February 2015, after 0.9% in January. The monetary policy measures we put in place should support further improvements both in borrowing costs for firms and households and in credit flows across the Euro area. To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the need to implement firmly the Governing Council's recent decisions. The full implementation of all our monetary policy measures will provide the necessary support to the Euro area recovery and bring inflation rates towards levels below but close to 2% in the medium term. Monetary policy is focused on maintaining price stability over the medium term, and its accommodative stance contributes to supporting economic activity. However, in order to reap the full benefits of our monetary policy measures, other policy areas must contribute decisively. Given continued high structural unemployment and low potential outgrowth in the Euro area, the ongoing cyclical recovery should be supported by effective supply-side measures. In particular, in order to increase investment, boost job creation and raise productivity, both the implementation of product and labor market reforms, and actions to improve the business environment for firms need to gain momentum in several countries. A swift and effective implementation of these reforms will not only lead to higher sustainable growth in the Euro area, but will also raise expectations of permanently higher incomes and encourage both households to expand consumptions and firms to increase investment today, thus reinforcing the current economic recovery. Other policies should support the economic recovery, while remaining in compliance with the stability and growth pact. Full and consistent implementation of the pact is key for confidence in our fiscal framework. In view of the necessity to step up structural reforms efforts in a number of countries, it is also important that the macroeconomic imbalance procedure is implemented effectively in order to address the excessive imbalances as identified in individual member states. And now we are at your disposal for questions. Jonathan Gould. I was hoping to ask you about Greece, Mr. Draghi, and I was wondering in particular about Greece. There have been some reports that you've extended the ELA for Greece, for Greek banks. I was just wondering how much further you can go with the ELA. Is there any upper limit to what you can do in that regard? I think the answer to your question is entirely in the hands of the Greek government. As you know, we approve the ELA and will continue to do so, extending liquidity to the Greek banks while they are solvent and they have adequate collateral. So far, we've reached an exposure to Greece of 110 billion euros, which is the highest in the Euro area in relation to GDP. So from this viewpoint, we continue to, we are all, we've always been, and we continue to be a rules-based institution. Alessandro Speziale. Thank you, Mr. President. My first question is on QE. You have said on a couple of occasions that you don't foresee any problems in fulfilling the 60 billion target and the QE program, and that so far no problems have arisen. Should issues of scarcity arise in the coming months, maybe towards the end of the year also because of the yields going down in Germany below the deposit rate? How do you plan to address this eventual scarcity further down the road? My second question is in your opening statement, you said that you're now going to look at trends in inflation in assessing the success of the program, and could you elaborate a bit on that, please? Thank you very much. You're welcome. Now, the worries about scarce, potential scarcity of government bonds, sovereign bonds to be bought under our purchase program are just a little exaggerated. We don't see problems. All both direct and indirect evidence and market feedback show that there isn't any problem. And our program is flexible enough in an event to be adjusted if circumstances were to change. So also, some of these worries have been motivated with the need that some banks would have to retain sovereign bonds for complying with the liquidity requirements, the regulatory liquidity requirements. Now, that's also not quite clear why this should be a worry because government bonds are used for liquidity as well as is cash used for liquidity. So if they sell bonds that get cash from a regulatory perspective, it shouldn't change unless I'm mistaken. But by and large, we believe that these worries are, to say the least premature, certainly not supported by the current evidence. You are right. Yes, the second question. You are absolutely right. There is a sentence which wasn't here, but basically it's an explanatory sentence that gives the meaning of a sustained adjustment when we say, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below about close to a percent over the medium term. So this sentence that you rightly identified explains what we mean by that, by sustained by medium term. We're not going to be judging or assessing on the basis of a point in time observations. That's what the meaning of this sentence is. It has to be looking through unexpected outcomes and measured inflation in either direction if judged to be transient or to have no implication for the medium term outlook for price stability. Miguel Ángel García. Spanish television. Mr. President, my first question is about the BLS, as you have said, the credit standards on loans to enterprises have improved in all large euro area countries except in Spain. Do you have an explanation for that? My second question is, every day you speak here about the need of structural reforms. Recently I have read that you have mentioned Spain as an example for reforms, but Spain has 24% unemployment rate and the reduction is quite slowly. Do you think that Spain needs more reforms? Thank you. Thank you. On the first question, the bank lending survey is done over 142 banks in the euro area and this time more strongly than previous occasions, banks have been reporting better credit standards, better credit conditions. Also when we look at the composition of these answers, we see that the risk aversion factor which used to be a strong limit to credit expansion has lost a lot of its weight, not all. We see that the return of demand for credit is also a factor in this positive assessment that the bank lending survey gives. We see also that the return of competition amongst banks is playing a factor in this credit expansion. Having said that, this progress is uneven. As you rightly said, there are countries where this is more visible and countries where this is less visible and Spain is not the only one where this progress in credit standards is less visible. However, it's a matter of time. It's a matter of time. We see, and we can discuss this further later on, we see how our monetary policy measures are finding their way through the economy, namely are being passed through the banking channel to the real economy. And I will expand if there are questions on this later on. On Spain, it's, I think, out of question the fact that the Spanish economy is experiencing a strong and employment-rich recovery and almost half a million jobs being created since the end of 2013. Now, it's also unquestionable that these progress have been supported by important labor market reforms undertaken since 2012. So to sustain these developments, enhance conditions for hiring youth and long-term unemployed, and reduce, that's a key point, reduce the still elevated duality of the labor market, certainly, as you suggest, you seem to say, further action is needed on strengthening active labor market policies. So that's what, that's the answer. Brian Blackstone. Brian Blackstone with the Wall Street Journal. You mentioned the purchases going until the end of 2016 and in any case until you see a sustained adjustment in inflation path. Does that mean that the purchases could end or taper even before 2016 if you have inflation developing in a way where it rises faster than you expected, or is this something that you can rule out as, and you'll go to September 2016 no matter what? My second question back to Greece, is there not the limit on the size of the ELA but a limit in terms of the calendar? How long you can keep doing this given the delays in coming up with a financing solution for Greece? Could you at some point say there's going to be a certain date and after that we won't do ELA anymore? Thank you. Thank you. Thank you, Brian. No. The answer to the second question is no. There isn't any date. It's entirely depending on the conditions that will be in place, that are in place. And clearly the answer to all these questions about ELA and further prosecution of ELA is entirely in the hands of the Greek government and the negotiations that are taking place between the Greek government and Euro era members. The second question is I should reread my introductory statement because it says everything. Purchases are intended to run until the end of September 2016. As some of you when I first used the word intended rather than expected rightly pointed out the difference between the two concepts. This was at the beginning of December last year in an introductory statement where we changed the word and that was meant and was accepted by markets as being a powerful signal of changing in monetary policy. Purchases are intended to run until the end of September 2016 and in any case until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates, et cetera, et cetera. And then there is this new sentence explaining exactly what we mean by sustained and by medium term. I don't think it's the case now to go beyond this. In any event I'm quite surprised frankly by the attention that a possible early exit of the program receives when we've been in this program only a month. And like a colleague of ours said today during the discussion ago in Council he said he's run several marathons. It's like asking yourself after 1K are we going to finish this marathon? So it's very much like that. Thank you. Johanna Tricke. Johanna Tricke, Market News. I would like to get back to the inflation trends. You explained what you meant by that looking at the medium term and ignoring sort of one-offs. But isn't that the way that the ECB has always conducted monetary policy? So why are you explaining this to us again or is there any change in your reaction function? And if so could you please explain that to us. My second question is on Greece. Has the governing council at all discussed increasing the haircuts on collateral the ECB accepts on Greek sovereign debt in ELA? And can you perhaps give us an idea of how likely do you think such a discussion will become in the days ahead? Thank you very much. Thank you. On the second question, the haircuts on Greece were mentioned in today's governing council, mentioned, not discussed. And so why is this? Because we decided, the governing council decided to carefully monitor where the conditions would warrant a change in the current schedule taking into account the changing environment. So we will come back on this issue in due time. On the first point, and really there is no change in our reaction function, not at all. If you meant to say that we are consistent with our previous monetary policy strategy, yes, the answer is yes, we are consistent. So why have we felt the need to explain more? Because we are talking about unconventional instruments. So the more we explain, the better these instruments will be understood by you, by the markets, by the public opinion. Claire Jones, please. Claire Jones, Financial Times. Two questions on Greece. What specific forms would Athens need to table in the coming weeks for yourself and the rest of the governing council to consider reinstating the waiver on Greek government debt? And would it be possible for you to explain the specifics of what happens to ELA support in the event that there is some? What happens? What would happen? Exactly how does it happen to ELA if there is some default by Greece to its international creditors? Well, I quickly and rarely answer the second question immediately saying that I don't even want to contemplate that. And based on the Greek government leaders' statements, this option is not contemplated by themselves as well. So I'm not ready to discuss any possible situation like that. On the waiver, let me get this once again. The ECB lifted the waiver because the conditions for a successful conclusion of the review were not there. And the precise statement that I've used at that time and that I've used on and on and on and everybody who is that to reinstate the waiver, there must be a credible perspective, a credible perspective for a successful conclusion of the review under the current arrangements. So having said that, the governing council will assess the existence of these credible perspectives in total independence. And of course, we are ready to reinstate the waiver if the conditions are there. Annette Weisbach? Thank you. I have two questions, one on also going back on the potential scarcity of bonds. Would you ever consider lowering the deposit rate if you came to such a scenario that more and more bonds trade in negative territory when it comes to their yields? And also, I would like to get your assessment how concerned are you about a bubble in the bond markets looking at the increasingly negative yields in the bond markets according to Goldman Sachs, more than 42 or 42% are actually now a negative yielding territory. Thank you. You're welcome. The answer to the first question is no. And the answer to the second question is certainly, I mean, we are certainly aware that a protracted period of time with very low interest rates is potentially conducive to financial stability in balances. So we are carefully monitoring developments. So far, we have not seen evidence of any bubble. There are certain conditions that would lead people to think that may be a bubble that we have seen before the crisis started, one of which is a serious significant increase in leverage. What we observed was an increase in debt accompanied by in the banking sector. And we are not seeing that. We're not seeing an increase in leverage accompanied by sustained bank credit development. So, but certainly we are, and if we were to assess that financial imbalances are forming, the first line of defense, of course, is use of macro-prudential instruments to some, to the extent that these imbalances are somewhat localized, that's the answer. So the answer is not change your monetary policy stance. The monetary policy stance is determined by our objective to reach price stability. Thank you. Yes, please. Romain Fonserive, AFP, the French Newswire. Good afternoon, Mr. Draghi. Going back to the issue of bonds cartity, I just wanted to ask, so you said the program is flexible enough to be adjusted, should you encounter any complications? But there are actually a lot of rules to this program, the deposit rate, the capital key, there's the issue limit. You just said that you won't lower the deposit rate. So can we... Did I say that I want to lower the deposit rate? No. The answer was no. No, no, you won't. We are not going to lower the deposit rate. You won't. No, I'm sorry, just... Sorry, mispronounced. So which rules would you consider dropping? Should there be any issues? And the second question would be about the euro. Are you comfortable with the current euro's level? And at which level would you consider that there's a risk of overshooting the ECB's inflation target in the medium term? Well, I would say that there is one word which, in a sense, puts together these two questions, that they are premature. It's like, to us, it's about scarcity of the... In the bond market, it's really premature. We really don't see any such phenomenon that it's also impossible to answer what would one do in case something that's not evident at all were to materialize. And it would be very difficult to answer to this question now. We had to see what sort of scarcity, where, who's actually scarce of these bonds. But so far, frankly, we don't have any evidence that this might happen in the future. So, but it's always good to ask difficult questions. It's just the force you want to think. On the second question is, as I've said many times, the exchange rate is not a policy target. We view the current developments, the current and recent developments of the exchange rate as the outcome of different monetary policy cycles in different jurisdictions. And the monetary policy cycles, in turn, depend on the different business cycles in the different jurisdictions. Marc Schwarz? Yes, thank you, Marc Schwarz. Also, just let me add one thing about the exchange rate and its relationship with inflation. Also, it's not obvious to... And that's one of the things that look more and more apparent in the analysis. It's not obvious what's the pass-through between changes in the exchange rate and the inflation rate. For example, we are seeing that previous appreciations of the exchange rate still have an effect on the current inflation. So it's a very... This pass-through will happen, pretty sure, but it's happening, actually, so that right now we are seeing two competing effects, the lagged effect of previous appreciation with the incipient effect of the recent depreciations. I'm saying this because it's not... It's something that's not easy to assess and it's gradual. It's taking place very gradually. Sorry. No worries. Thank you. My first question is on inflation expectations. You have stressed in the past several times the importance of the five-year, five-year break-even inflation rate. This indicator has stabilized, but it has not shown any significant increase. Are you disappointed by that fact? And the second question is on the German current account surplus. A couple of days ago, you have stressed that this high surplus clearly violates EU rules. And also in response to that, the German Finance Minister has said that the reason for the surplus is also the expansionary monetary policy and the weaker euro. So do you feel also responsible and guilty for the German surplus? Thank you. Thank you. No. I mean, the answer to the second question is no. We don't feel responsible for that. We have a mandate. And the only responsibility we feel is if we are not able to comply with our mandate. On the first question, let me just read through a few data about inflation expectations. Oh, just also answering previous questions about when would you assess that you are in a certain situation so that you would change monetary policy stance. As I said, it's very, very early to say anything like that. But also, let me give you an idea of what may come out in a certain amount of time from now is, first of all, we are not bound by one specific indicator. We'll be using a variety of indicators about inflation expectations. And second, if history and experience tells us something, it's very unlikely that the governing council will choose a route with clear quantitative constraints in its decision making. If you look back and you look at our forward guidance, how that was different from the forward guidance that was stated in other monetary policy jurisdictions, this would give you a good hint of what may come out. So it's going to be mostly a qualitative process and based on several indicators. So if we go back and look at these indicators, that's very important for a reason that I will say in a moment. In a one year forward swap rate one year ahead, the average in 2014 was 0.46 inflation expectation. Now it's 0.94. The two year ahead same indicators was 0.66 in 2014. Now it's 1.16. The four year ahead same indicator was 1.28 in 2014. It's now 1.53. And as we move forward, we go to nine year ahead, for example, was 1.73 on January 15. Now it's 1.87. The five year spot IEL swap rate was 0.57 as an average of 2014. It's now 1.20. And so most indicators actually moved up dramatically. The longest, to some extent, the longest time defined indicators moved up to but less dramatically. This is very important, I say, so that's why I spent time in reading these numbers. Because that accounted for a significant decrease in real interest rates. You may remember when last year in December, I did mention the fact that in a zero lower bound situation, where nominal interest rates are at lower bound, what determines real rates are movements in inflation expectations. And in December, they were still trending down. And real rates were going up. So much so that I think I struck a parallel between our most recent decisions about lowering nominal interest rates and the decrease in inflation expectations. And I did say that the recent, then recent changes decreases in inflation expectations have actually nullified our monetary policy decisions taken in the previous months of lower nominal rates. Now we are on a completely opposite trend and real interest rates actually declined. And that's certainly very supportive of the real economy. And that's why I'm saying that we start seeing a pass through from our monetary policy decisions to the real economy. Through significantly lower real interest rates. Mihai Vanita? Oh, by the way, what I would suggest, Christine, is that we make up for the time we've lost before. So we can stay, say, 10 minutes more. Please. Good afternoon. Mihai Vanita, Economic Analyst Romania. I want to ask Mr. Governor, if a study made by John Williams, the president of the San Francisco Fed, suggests that there was a total overall impact of quantitative easing in 10-year US Treasury bonds of about 15 to 25 basis points. What metrics should we use to measure the effectiveness of the European quantitative easing? Is it an inflation rate, or is it some other benchmark? And the second question is there, do you see an extension of the eurozone sooner than 2020? As some countries are there in terms of master criteria, but in terms of real convergence, they are still behind, lagging. Thank you. I'm sorry, I'm not sure I understood the second question. If you see that an extension of the eurozone is possible before 2020. I see. And your candidness. Well, on the first question, our metrics is essentially the inflation expectations, and in the end, actual inflation. That's the only way we define our objective. And so that's the metric we use. And so far, developments have been on the right side, because as I said before, real interest rates declined significantly. The second question, I just take note of what you said, but there are procedures for the eligibility to be a member of the euro area. So I have very little to add to that. There are criteria that all countries had to comply with at the time of accession to the euro area. Even recently, countries that have entered the euro area had to go through this and comply with these criteria. Yes, please. John Boyd, World Business Press. So Draghi, you have reiterated many times how monetary policy is not enough alone and how the speedy adoption of structural reforms is crucial to competitiveness and sustained growth. So my question is this, with only 22% of country-specific recommendations fully implemented at present, aren't you a little worried we're pumping air into a flat tire without fixing the punctures first? Or are you seeing now governments react to your call and start to take more action in this sense? Thank you. Thank you. Well, that data is indeed quite troubling. And I think if we are to run the same survey now, we'll probably find a better number. There has been some improvement. But it's very important to understand that our expansionary monetary policy finds its natural complement in structural reforms. Some people argue, and you certainly have heard them arguing this way, that accommodative monetary policy removes the incentives for governments to undertake structural reforms. It's just the other way around. It's just the other way around. Monetary policy actually accompanies, there is a dividend from a combined expansion monetary policy and the right structural reforms. But there are good reasons for doing structural reforms without too many questions. And the main reason, really, is that we are in an area where potential output is bound to grow modestly given the demographics, the age in population, the decline in the labor force. At the same time, the European Economic Commission figures show that there is an average structural unemployment rate in the euro area of 11%. And that's an average, which means that some countries, and we know which, have an unemployment rate of around 20 or even above 20%. And they had this high unemployment rate even before the financial crisis. That's why there is no other way than undertaking the needed structural reforms. And one reason why they are also important was quoted in the introductory was given in the introductory statement. One argument is, yes, structural reforms, also we have to see which structural force we talk about. Because there are reforms that are changing the education system, the judiciary, and so on, which are completely different. But the argument, which we hear often, is that structural reforms in the long run may produce some positive effect on output growth. But in the short run, they actually don't. Now, one of the reasons why this may not be entirely correct is that good sound structural reforms actually raise expected permanent income, expected permanent income, and therefore have an effect immediately on consumption for firms, for households, and on investments for firms. That's what I read in the introductory statement. So that's why there shouldn't be any doubt about doing structural reforms. Jack Ewing? Jack Ewing, New York Times. I wondered if you could just maybe elaborate a little bit more on the effects of quantitative easing that you've seen now that it's been going on for a month. For example, how much did quantitative easing contribute to the improvement in the lending survey yesterday? Are there any other transmission effects that you're observing? And also, you addressed a question on bubbles a few minutes ago. Are there any effects that worry you at all? Thank you. Well, to the second question, I really can repeat my answer that I gave before. We are aware that very low interest rates for a very long time are, I would say, it's called fertile terrain for financial stability imbalances. We've seen that in the past, and we are aware that this is a risk. So that's why our monitoring of this aspect of our monetary policy is continuous, and it's very, very careful. Having said that, we don't see, at this point in time, evidence of systemically large financial stability imbalances. And finally, the first line of defense to that is use all your macro-prudential instruments. And there is a lot of work going on as far as macro-prudential instruments are concerned, both in ECB, in ESRB, in EBA. All agencies are actually thinking, and national authorities, of course. National companies and authorities are thinking about this, because as you know, the implementation of these macro-prudential instruments is in great part at national level. Of course, the ECB can top up on that and coordinate certainly all this, but it's mostly at national level. On the first question, first, let me say that the revisions to previous forecasts for growth have been very significant. The first was the ECB revision, of course, which raised from 1% for 2015 to 1.5%. And for 2016, about the same, from 1.5 to 1.9%. All other institutions since then have come out with revisions in the same direction, not of the same amount, but in the same direction. So all institutions now see the prospects for a recovery. As I said, the downside risks are still there, but they have diminished. So the issue now is to firm up this recovery and create conditions so that it's sustained through time, that it's not only cyclical, but becomes a structural recovery. The recovery certainly due to our monetary policy, and that's because our monetary policy, a commodity monetary policy, stands, which has been in place, by the way, a long time before we actually did QE. It's finally finding its route through easier credit conditions and, as I said, significantly lower real interest rates. At the same time, and here it's not clear which is the channel of causation, certainly the monetary policy stands helped, but there must be other factors. Both consumer and business confidence have picked up, creating a very positive climate for a continuing recovery. There is a second aspect in which the monetary, even the recent monetary policy decisions have been important. You remember when we experienced this dramatic fall in oil prices, there were many worries that there may not be all that passed through into higher spending, but actually the opposite could take place, having negative second round effects on lower inflation. Now, it's quite clear that our monetary policy stands avoided that risk. And so it eased the pass through of lower oil prices into higher consumption and, in due time, higher investment. Also, there is another channel, of course, which is the difference in monetary policy cycles between different jurisdictions, which had implications on the exchange rate. So these are the main drivers that one can see. There are also other long term drivers less evident now, one of which is certainly the condition of the capital stock in the euro area, where many, many years of low investment, both private and public, would suggest that the years ahead should see a firming up of investments. There's another factor which would suggest that the pressure to deliver should gradually ease if it's not eased already. And finally, of course, there are going to be less headwinds coming from fiscal policy consolidation than what was in place a year ago. And this because of the progress that many governments have already achieved on that front. So as I said, it's silly. Now, the current recovery is basically the output, the outcome of two competing factors. Oil prices, actually not competing. They are complementing factors. Oil prices and our monetary policy stance. But there is one condition which makes a big difference. It was not in place in 2012 when we first started creating conditions for the return of confidence in the financial markets, namely the banking system. The health check that all banks had to go through last year nowadays ensures that more common monetary policy is being translated into better credit conditions, which is not something we've seen before. You remember in 2012, many of you were asking me this question. We were happy after July, August 2012 about the changes in financial markets, the Euro, the return of confidence in the Euro, the dramatic decline in sovereign spreads. And all this, however, had very hard time in being translated into better credit conditions and being translated into better credit standards for firms and households. Now, the situation seems to be different. And I think one very important reason often neglected is the better health of the banking system. And finally, let me restate one thing, that this recovery is conditional upon the full implementation of our monetary policy stance. So let's never forget that. Now, of course, there are risks. And I've dwelt on that. But if you have any questions, I'd be glad to take up. Jean-Philippe Lacou. Jean-Philippe Lacou from Lézéco. Mr. President, follow up this question of risks. We read here an introductory statement that while they are remaining on the downside, they are more balanced. And in the minutes of the last meeting in Cyprus, we read, if I understood, well, that there were a great uncertainty about recovery in particularly after 2016, it was expressed this great uncertainty. So was it discussed today, this level of uncertainty, or did it vanished? And the ECB has a more optimistic stance. That is the first question. The second one, since we understand that the level of the forthcoming of the QE as a marathon is a long distance to go from now. 16 billion purchases in months as long. 60, pardon me, until September or as long as needed. But my question is, do you exclude or is that the point where the design, maybe, of the program could be arranged in another way, different way, without changing the size effect? I mean, there are voices for instance, calling for the ECB should buy a substantially more EIB bonds, so to help this bank to finance European projects if there are any one. So about the mix within the program, is it something that could be discussed at a certain point? And Christine, maybe allow me a little add-on question. But due to this intervention of the activists at the beginning of the conference, I observe that you remain very calm. How do you manage this? Well, let me answer the two questions. The answer to the third question, I think you give it yourself, I guess. It's just, now to the first point, if I correctly remember our discussion, it was not so much about the certainty or uncertainty of the recovery after 2016. But it was about the cyclical nature of the recovery as it is today. It's quite important to remember that monetary policy, as such, cannot have a long-lasting effect whereby potential output growth increases. That's why the combination of monetary policy and structural reforms is so important. Because what gives to the economy the resilience to carry on this recovery through time is the structural reforms. So I think the discussion was not so much about certainty or uncertainty, but about what are the conditions that need to be in place after, say, 2016, maybe 2017, that would guarantee that the present cyclical recovery becomes a potential output growth recovery. So the second question is, some of your colleagues asked me the same question before. You know, one thing that you can, of course I'm a biased observer, but one thing that I hear people say is that our program has been so effective, by the way, there are three moments to measure the effectiveness of our program. One was the expectations. This thing started being expected way back last year in August. The announcement and the implementation. Each one of these three stages produced positive effects on the markets and in due time to the economy. One of the considerations that I heard being made, quite, I would say, complimentary towards the ECB, was that the design of the program and the determination with which was applied, implemented, produced some extra positive effect. And now why do you want me to change this program now or say that it's going to be changed? So it's another way to say it's premature. I will take one more from the media. I'm Claudia Perez and then we'll finish on a different note. We have the winners from the Euro Generation Award. I'll say a few words afterwards on that and we'll give the next generation the last question. Claudia, over to you. Well, I'm not from the next generation. I'm sorry. I have a question about the investigation of the European Commission about the fair tax credit that could be illegal state aid. Do you think that this issue has the potential to provoke another banking crisis in some southern European country like Spain, like Greece, like Italy, or Ireland? I know too little other than what you said, really, about this, that you call the investigation. So I don't know enough to say that, to say what's going to be the consequence I would assume that, well, let me step back. First of all, we certainly need to achieve a situation where the definitions of capital are going to be harmonized. That's one of the important aspects of having a common supervision, a one supervisor. It's also certainly important and desirable that we have a level playing field in the banking sector that actually holds true for all sectors of the economy. But I can't go beyond these points that I've, by the way, I've raised them myself in various hearings in parliament about the desirability of these changes. But I can't go beyond this to say what is going to happen exactly, what are going to be the measures taken or agreed by the various parties in this dialogue. Thank you. So now out of over 600 students. Just a moment, but let me, but there's one thing, one reassuring thing, I mean that I assume that all these people who are actually part and parcel of these big decisions are responsible people. So I take for granted that they will not cause a banking crisis. Thank you. As I was saying, out of over 600 students, 50 schools, your team won. St. Catherine's British School out from Greece and you've also expressed your wish to have a question. The floor is yours. Thank you. Thank you, Mr. President. Our question, and when I'm saying our, I'm talking on behalf of Europe's youth, we would like to ask you, although general economic prospects are slightly improving, what is the employment outlook for Europe's youth today and more specifically, when we enter the workforce in a couple of years? Thank you. Thank you. Well, it's probably the most difficult question I got today. It's, what can I, what I can say is that the present situation of the labor market is something that should be overcome. Should have been overcome many years ago. When I hear that the level of interest rates could be an incentive or a disincentive for countries' governments to change their labor markets, I ask myself, shouldn't the unemployment level be an incentive to change the labor market? Especially since these levels are not the output or not only the output of the financial crisis. Have been high, very high for many years before the financial crisis. So on top of this, in the early years, 2000s many different, several countries have passed labor legislation. Well, with the view to increasing flexibility in the labor market, they passed legislations where the labor conditions of the ones who were already employed wouldn't change at all. But the new entrance would have very flexible terms of employment. So the outcome of this was a disproportionate fall of flexibility onto the young sector of the working population. This was, as you can imagine, especially unfortunate for a variety of reasons. One of which is, was that as soon as the financial crisis struck, the first to lose the jobs were the young people, were the youth. And that's why we still have such high levels of young, of youth unemployment. So that has to change. We have to eliminate this sort of dual labor market condition and we have to make sure the flexibility as it's needed falls proportionately on all segments of the labor market. So first, restore the conditions whereby people hire, entrepreneurs, companies hire people easily. Reduce the amount of time if someone loses a job. Reduce the amount of time he or she is unemployed. Change the educational skills, improve the educational skills because very much, very much so today, we see that more and more employment is dictated by the technological skills and conditions. So education today is a most important factor for finding a job. So from this viewpoint, you are a privileged person. You and your classmates, of course. And so I think that's what's needed. And especially now that we seem to enter into a period of time where the economic conditions are improving. Thank you. Thank you very much. Thank you.