Speaker 1: Hey, guys, ready or not, twenty twenty four is here
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Speaker 1: Breakingpoints dot Com. Good morning, everybody, Happy Tuesday. We have
Speaker 1: an amazing show for everybody today. What do we have, Crystal?
Speaker 1: Indeed we do, Boy oh boy, do we have a
Speaker 1: perfect story for you about the deep state and the FBI.
Speaker 1: One of the people who was charged with investigating Trump
Speaker 1: over Russian collusion has now himself been indicted for Russian collusion,
Speaker 1: so we've got all those details for amazing story. We
Speaker 1: also have a new chief of staff in coming to
Speaker 1: the White House and he actually kind of sucks, so
Speaker 1: we'll break those details down for you. We also have
Speaker 1: a big deal being done between open ai Chat, Open
Speaker 1: AI's Chat, GBT and Microsoft, so what is that going
Speaker 1: to mean for the future of that We also have
Speaker 1: a challenger to Kuirson Cinema in the Arizona Senate race,
Speaker 1: Reuben Diego. He's a member of Congress right now, this
Speaker 1: was expected, but he officially announced yesterday put out a
Speaker 1: video that I think was pretty solid. So we'll break
Speaker 1: all of that down for you. And we are tracking
Speaker 1: rumors that Jeff Bezos may be selling the Washington Post
Speaker 1: and buying the Washington Commanders. Interesting now right now he's
Speaker 1: saying no, but the rumors are flying. As I said,
Speaker 1: Sager is taking a look at the history of federal debt.
Speaker 1: I am taking a look at JP Morgan Chase admitting
Speaker 1: they were scammed for one hundred and seventy five million
Speaker 1: dollars by basically like a fake company. Amazing story. We
Speaker 1: also have Derek Thompson back to talk about the Mass
Speaker 1: Tech layoffs. But we did want to start with this
Speaker 1: FBI story, which is just incredible. It sounds like it
Speaker 1: was honestly made up. Let's put the Fox News hair
Speaker 1: sheet up on the screen here. So two indictments released
Speaker 1: yesterday regarding this top FBI counterintelligence agent guy by the
Speaker 1: name of Charles McGonagall, former Special Agent in charge of
Speaker 1: FBI's Counterintelligence Division in New York. He retired back in
Speaker 1: twenty eighteen. While he was at the FBI, he spent
Speaker 1: a lot of time supervising and participating in investigations of
Speaker 1: Russian oligarchs, including a guy you might remember from Russiagate
Speaker 1: by the name of Oleg dere Paska Derek Poskat a
Speaker 1: relationship with Paul Manniford. This is part of how the
Speaker 1: whole Russiagate investigation gets kicked off. Charles McGonagall is there
Speaker 1: at the very beginning, at the origins of the Russiagate investigation,
Speaker 1: and lo and behold McGonagall after he leaves the FBI,
Speaker 1: gets caught, is accused by the government. Of course, I'm
Speaker 1: sure proclaims his innocence, but what the government is saying
Speaker 1: here is that he was taking money rum olig Dereapasca,
Speaker 1: which is illegal because he is a sanctioned individual and
Speaker 1: has been for a number of years now, both to
Speaker 1: help him try to get off of that sanctions list
Speaker 1: of process they call delisting, and also to investigate another
Speaker 1: rival oligarch on his behalf, apparently Deripaska and this other
Speaker 1: oligarch that they don't name in the indictment we're in
Speaker 1: some sort of dispute over control of some sort of
Speaker 1: Russian company. So our FBF former FBI dude was being
Speaker 1: paid a lot of money through a bunch of shell
Speaker 1: companies and using fake names and fake email addresses to
Speaker 1: try to hide his tracks in order to investigate this
Speaker 1: other oligarch, to see if he had hidden assets abroad,
Speaker 1: if he had a different non Russian passport, and to
Speaker 1: see what was going on with this like fight that
Speaker 1: they were involved in for this Russian company. So truly,
Speaker 1: truly incredible. Let me give you a few of the
Speaker 1: specific details about mcgonagall's involvement with the Trump Russiagate investigation,
Speaker 1: because this seems important. Let's put this next piece up
Speaker 1: on the screen. Here from the Washington Free Beacon, they say,
Speaker 1: plot twist. Ex FBI agent involved in Trump Russia probe
Speaker 1: indicted for violating Russia sanctions. Charles McGonagall is accused of
Speaker 1: conspired to live sanctions off Russian businessman with ties to
Speaker 1: Vladimir Putin. So he was one of the first individuals
Speaker 1: that FBI, they say, to learn that a Trump campaign advisor,
Speaker 1: I think that was George Papadopolis had discussed Hillary Clinton's
Speaker 1: emails with a foreign diplomat that helped to cause the
Speaker 1: FBI to open its investigation of the Trump campaign based
Speaker 1: on that conversation. Later found no evidence of collusion between
Speaker 1: the Trump campaign and Russia. He also when he left
Speaker 1: the FBI in twenty eighteen, he was involved in the
Speaker 1: bureau's probe of Trump campaign advisor Carter Page, according to
Speaker 1: text messages that were released by Senate Republicans, and they
Speaker 1: go on to say, it's unclear what other involvement McGonagall
Speaker 1: had in the Trump Russia probe, and just let's go
Speaker 1: out and put the press release here from the Southern
Speaker 1: District of New York where they tout this indictment. And
Speaker 1: then last night there was actally a second indictment that
Speaker 1: was filed. This one was in Southern District of New York,
Speaker 1: this first one regarding Derek Paska, but the second one
Speaker 1: was filed in DC and had to do with while
Speaker 1: he was still in the FBI, taking about two hundred
Speaker 1: and fifty thousand dollars in cash from a former Albanian spy.
Speaker 1: And you know, I think he had set upshell companies
Speaker 1: to do this sort of work as well. So dude,
Speaker 1: was corp while I was in the FBI corrupt. When
Speaker 1: he was out of the FBI, he was actually involved
Speaker 1: given a heads up of which individuals will be on
Speaker 1: the sanction list. So he certainly can't plead innocence here.
Speaker 1: And reportedly a lot of people who are high up
Speaker 1: in the FBI really freaked out about this because of
Speaker 1: the high level of sensitive information this man had access
Speaker 1: to while he was at the bureau. Look, he can
Speaker 1: contest his innocence. Yeah, that's as right as an American
Speaker 1: citizen that said, you read this indictment. I mean they
Speaker 1: pretty much have him dead to run. Yes, Like he
Speaker 1: was creating new Jersey based shell companies while he was
Speaker 1: specially aged in charge of investigating these Russian oligarchs, specifically
Speaker 1: to create a money laundering scheme through which Deripaska and
Speaker 1: this Albanian official could fundy money to funnel money to
Speaker 1: him personally. At one point, Deripasco was paying him some
Speaker 1: forty two thousand dollars per month through this new Jersey
Speaker 1: based shell company. So he's guilty or appears to be
Speaker 1: guilty of not only money laundering but straight up violating
Speaker 1: US sanctions to the tune of potentially hundreds and hundreds
Speaker 1: of thousands of dollars, and when you read it, what
Speaker 1: comes through we're talking here not even just about a
Speaker 1: run of the mill FBI agent. He was a special
Speaker 1: agent in charge charged with our nation's highest, most sensitive
Speaker 1: secrets whenever it comes to Russian oligarchs, who literally was
Speaker 1: working for Russian oligarchs. What's also crazy, crystal in the
Speaker 1: indictment is he went to great lengths to appease some
Speaker 1: of these Russian spies who he supposedly was supposed to
Speaker 1: be investigating. You know, one of them was an official.
Speaker 1: He got his daughter a internship at the NYPD in
Speaker 1: his International Liaisons office, and the NYPD was kind of
Speaker 1: sketched out, even though they gave her VIP treatment, saying
Speaker 1: that the girl was bragging about how she had connections
Speaker 1: to FBI agents and had seen some very top secret
Speaker 1: intelligence like what the daughter of a Russian spy working
Speaker 1: at the NYPD, who says and told open in their
Speaker 1: counterintellig Division in the counter Intelligence Division of the New
Speaker 1: York City Police Department. So we have that, I mean,
Speaker 1: the secondary part though the scheme, in terms of being
Speaker 1: hired by Darrek Pasca and no, So let's let's be
Speaker 1: clear here. Like first he was working at least for
Speaker 1: a cutout law firm where his checks were coming from.
Speaker 1: Eventually he just started straight up working for the guy.
Speaker 1: Also in terms of how they refer to him in emails,
Speaker 1: it's so funny. It's like out of a movie. They're
Speaker 1: like the big guy, you know who, the rich Russian guy.
Speaker 1: It's like, yeah, I wonder, I wonder who you're talking about.
Speaker 1: He flew to Vienna to go or to London and
Speaker 1: to Vienna just to go meet with him, Derrek Paska
Speaker 1: at his house. There. Straight corruption, outrageous, and here's a
Speaker 1: question how many more people they got in these things?
Speaker 1: I mean, it's funny too, because you know, I guess
Speaker 1: it's probably par for the course in Russia, you bribe
Speaker 1: the security States to investigate your rival business opponents. But
Speaker 1: it was like, now this is coming here to New York,
Speaker 1: to the top division of the FBI, and you can't ignore.
Speaker 1: As my friend Chuck Ross wrote in The Free Beacon
Speaker 1: that he was intimately involved in the Trump Russia investigation
Speaker 1: in the first place. So it seems that the person
Speaker 1: most guilty of Russian collusion is one of the FBI
Speaker 1: agents investigating Russian who appears to have helped to spark, yes,
Speaker 1: the Russiagate investigation. I mean again, we really don't have
Speaker 1: a lot of insight into how directly he was involved
Speaker 1: throughout the entirety of the Russiagate investigation, but he was
Speaker 1: definitely there at the beginning. He was the person who
Speaker 1: initially reported those conversations between with Papadopoulos and that helped
Speaker 1: to spark this whole thing, and was involved in the
Speaker 1: investigation of Carter Page, which you know, was a shameful
Speaker 1: episode in and of itself. So it's just it could
Speaker 1: not make it up. You could not make it up.
Speaker 1: And I do find the details here extremely fascinating. It
Speaker 1: wasn't just McGonagall that was indicted. There was another dude,
Speaker 1: Sergei Shstikov, a former Soviet and Russian diplomat who later
Speaker 1: became US citizen Russian interpreter for courts and government offices.
Speaker 1: He was apparently mcgonagall's sort of partner in all of this,
Speaker 1: and he's charged with these same crimes as McGonagall with
Speaker 1: regards to Derek Paska, and you know, violating the sanctions
Speaker 1: that were levied on Derea Pasca after Russia's invasion of
Speaker 1: Ukraine during it was the Obama administration that initially listed
Speaker 1: Deripaska as a sanctioned individual, So he's charged with those
Speaker 1: same things as well. But the day before the FBI
Speaker 1: came and I don't know arrested them or rated them
Speaker 1: or whatever, this other associate Sheskita Shstakov sat with FBI
Speaker 1: agents and totally lied to Oh, no, we don't do
Speaker 1: any business, no, not now Whatso I barely know Charles McGonagall.
Speaker 1: Of course we're not in business together. So he also
Speaker 1: is charged with lying to the FEDS. So look, that's
Speaker 1: the longest short of it. Again, the details here are fascinating,
Speaker 1: and it does raise the question of like how common
Speaker 1: is this? You know, it's so brazen that you thought
Speaker 1: you were going to get away with this for and
Speaker 1: hundreds of thousands of dollars, especially given the all the
Speaker 1: scrutiny that's on Russian oligarchs right now. Derek Paska is
Speaker 1: an interesting figure in his own right. He became an
Speaker 1: oligarch by winning what was called the Aluminum Wars back
Speaker 1: right after the dissolution of the Soviet Union, so he's
Speaker 1: able to gain control of this incredibly valuable resource. So
Speaker 1: he's a big industrialist, incredibly wealthy man, ends up being
Speaker 1: one of the wealthiest men in the world. It was
Speaker 1: also reportedly one of the closest advisors, like really tight
Speaker 1: buddies with Putin. Since this Ukraine invasion has happened, though,
Speaker 1: he has made some critical comments on telegram, calling it
Speaker 1: a war, what you're not supposed to do, calling for peace,
Speaker 1: et cetera, et cetera. So he's you know, he's kind
Speaker 1: of a fascinating figure in his own right, but just
Speaker 1: an extraordinary turn of events here. Yeah, well he's probably
Speaker 1: saying that because all of his yachts and houses and yeah,
Speaker 1: a god, what they really live for are the London
Speaker 1: houses and the houses here. Yeah, it's right, I mean
Speaker 1: in New York. Also, he's a famous doyen apparently of Davos.
Speaker 1: He used to pair allegedly used to throw some of
Speaker 1: the best parties in Davos with Dom perry On. Yeah,
Speaker 1: so he's sad he couldn't make it to Davos this year,
Speaker 1: were banned. You got to feel for the rough forum,
Speaker 1: you know there for an oligar, it's really rough out
Speaker 1: there to be a multi billionaire. But here's what I
Speaker 1: take away. There is no such thing as former FBI
Speaker 1: and former CIA. You may not have a badge anymore.
Speaker 1: If anything, it is worse because he used the badge
Speaker 1: effectively to sell to the highest bidder. How many other people,
Speaker 1: former FBI agents, former CIA, maybe some that you see
Speaker 1: on TV, are on the take to the people that
Speaker 1: they were supposed to investigating him. It's a disgusting practice that. Look,
Speaker 1: the only reason we know about this is because Oleg
Speaker 1: Deripaska is on the sanctions list, and otherwise none of
Speaker 1: this would be illegal. Guy, he probably would have gotten
Speaker 1: away with the Albanian cash grab, the two hundred and
Speaker 1: fifty K he got for this, like Albanians brug probably
Speaker 1: would have gotten away with that. The only reasons because
Speaker 1: Oleg is on the sanctions list. How many people in
Speaker 1: this town within walking distance of where we're shooting this
Speaker 1: show are on the take to the Kingdom of Saudi Arabia,
Speaker 1: to Dubai, Oman, Brunei, Thailand, China. I mean, look, those
Speaker 1: people may not be sanctions, but in many ways they
Speaker 1: are much richer than Oleg Derripaska. And there's an army,
Speaker 1: a cadre of former spooks officials and law enforcement officials
Speaker 1: who are all on the take for them. So just
Speaker 1: think like this is the one that we know about.
Speaker 1: It's just the tip of the eyes. So the richest
Speaker 1: people in this town are the ones who are willing
Speaker 1: to do the skimmiest work that came out from Manafort.
Speaker 1: Remember Manafort's pulling twenty five million dollars wasn't just Russians.
Speaker 1: He was working for his work, the highest spider anybody.
Speaker 1: So we could buy all these Persian books other like
Speaker 1: out it was like an Ostrich jacket or whatever. One
Speaker 1: of my proudest pieces that I wrote at the Daily
Speaker 1: Caller was interview with Roger Stone, specifically only about Paul
Speaker 1: Maniford's wardrobe. Fashion Yeah, Rogers fashion critic hated he thought
Speaker 1: it was gross, even though they were friends in former
Speaker 1: former business colleagues. He was like, this is quite possibly
Speaker 1: the worst wardrobe I've ever seen, So, yeah, it's a
Speaker 1: fun piece. Wish we could have Roger Stone critique Kirsten
Speaker 1: Cinema's outfit at Dovos this year, dressed as a sheep,
Speaker 1: might be interested to know what his thoughts were. She
Speaker 1: literally looked like Corella devellop there. It was amazing. We'll
Speaker 1: show you later. We got that later in the show.
Speaker 1: I will save my fashion content for later in the show.
Speaker 1: Let's go ahead to the next piece here, all right,
Speaker 1: the next chief of staff at the White House. We
Speaker 1: now know who that person is going to be. Let's
Speaker 1: go and put this up there on the screen. Biden
Speaker 1: is going to tap Jeff Zeines as his next White
Speaker 1: House Chief is staff to replace ron Klain, who's been
Speaker 1: in charge of the White House now for two years.
Speaker 1: Claan apparently, I mean it's normal in terms of the
Speaker 1: life cycle of chief of staff wants a step down
Speaker 1: sometime after the State of the Union. By the way,
Speaker 1: we will have special coverage for that here on the show.
Speaker 1: And what does that mean? Zenz has worked in the
Speaker 1: White House both as a deputy chief of Staff, but
Speaker 1: really made his bones and got Biden's trust by working
Speaker 1: as the COVID czar while he was there, so coordinating
Speaker 1: the vaccine response, policy response and some of the American
Speaker 1: rescue plan in the early days. Now, why does any
Speaker 1: of that matter. It's not just about his work product.
Speaker 1: It's actually about who he worked for before he was
Speaker 1: in the White House and how exactly. He leveraged his
Speaker 1: position from the Obama administration to then become a very,
Speaker 1: very wealthy man before he went to work for Biden.
Speaker 1: Let's put this up there on the screen. The incoming
Speaker 1: chief of Staff in twenty twenty one was worth eighty
Speaker 1: nine point three million dollars according to his own disclosure,
Speaker 1: and built his wealth through healthcare companies that were forced
Speaker 1: to pay tens of millions to settle allegations of Medicare
Speaker 1: and Medicaid fraud. For those who've been watching us for
Speaker 1: quite some time, this is not and this is not
Speaker 1: a news story. This is somebody who we focused on
Speaker 1: a lot in the early days of the Biden administration,
Speaker 1: specifically when he was tapping aids. Specifically, remember this report.
Speaker 1: Let's put it up there on the screen from December
Speaker 1: of twenty twenty. It's kind of a mini biography of
Speaker 1: what he did. I mean, this is a person who
Speaker 1: was working for the Obama administration, worked in the economic departments,
Speaker 1: and was a key advisor who leaves the White House
Speaker 1: with key knowledge and with connections and leverages it crystal
Speaker 1: into private equity behemoth, working in some cases at Bain Capital.
Speaker 1: The former Mitt Romney firm, which you can't even make
Speaker 1: that up. That Obama runs against Romney, bashes him and
Speaker 1: really wins on a message of this person would bankrupt
Speaker 1: you the way he bankrupted all these companies. And then
Speaker 1: one of his top deputies leaves and goes works for
Speaker 1: in terms of private equity and then starts doing like
Speaker 1: leveraged activity whenever it comes to the healthcare yeactor, it's
Speaker 1: as scummy as a guest, and no one in liberal
Speaker 1: media bats an eye. No nobody even noticed, like, hey,
Speaker 1: this guy worked at Baden Capital. Weren't you just saying
Speaker 1: that the work they were doing was evil? And like
Speaker 1: the American people actually really agreed with you on that.
Speaker 1: Nobody really said a word about that. I mean, it
Speaker 1: does represent somewhat of an evolution I think post Obama era,
Speaker 1: when there was very little room on the left of
Speaker 1: the spectrum to criticize anything that was happening within a
Speaker 1: democratic administration. At least now you have a little bit
Speaker 1: of a rump caucus that will say, hey, maybe don't
Speaker 1: bring in the dude that got five millions of dollars
Speaker 1: and made a bunch of money off of like defrauding medicare.
Speaker 1: Tiny A few little news items will be there at
Speaker 1: least a few lonely voices will say something about it
Speaker 1: at least But not only does he have that ugly
Speaker 1: past in terms of making tens of millions of dollars
Speaker 1: off of effectively healthcare fraud, he also was one of
Speaker 1: the Obama administration's chief liaisons to executives and lobbyists when
Speaker 1: anger at Wall Street over the seven A crisis was
Speaker 1: at its peak. Top lobbyists such as the Business Roundtable
Speaker 1: and the US Chamber of Commerce have praised mister Science
Speaker 1: as someone who heard them mount. So that's who we're
Speaker 1: bringing in now as Biden's chief of staff, someone who
Speaker 1: probably belongs in prison given the level of fraud that
Speaker 1: he is accused of year in which he had his
Speaker 1: company's affiliated companies had to pay fines for and instead
Speaker 1: being elevated to White House chief of staff, one of
Speaker 1: the most powerful positions in the entire country. Yeah, here's
Speaker 1: an interesting one. He also owns five million dollars in
Speaker 1: gold bars and twenty five million dollars in a security
Speaker 1: that's actually tied to the value of gold, somewhat ironic
Speaker 1: because that's obviously an inflation hedge, and he is actually
Speaker 1: now going to be Joe Biden's literal chief of staff.
Speaker 1: Absolutely kind of hilarious. So anyway, why does this matter
Speaker 1: Exactly because this person is now going to be the
Speaker 1: most powerful person in the White House. And let's also
Speaker 1: not forget this Biden. He's an old man to the
Speaker 1: extent that he controls his calendar, legislation, meetings, and all
Speaker 1: of that, the actual day to day operations of the
Speaker 1: White House. Who knows and if anything, you know, chiefs
Speaker 1: of staff have been incredibly powerful under Trump, who was
Speaker 1: also a disinterested president, and now under Biden as well.
Speaker 1: I mean, Claine was a top negotiator for a lot
Speaker 1: of the bills that were happening. He basically controls the
Speaker 1: president's schedule, which events and all these things go. He
Speaker 1: really can't underestimate the power of these bureaucratic positions, and
Speaker 1: now this person is going to hold that. And Christal,
Speaker 1: as you were saying, Jeff Science named in Politico, let's
Speaker 1: put this up there on the screen. Do you want
Speaker 1: to read your favorite quote from Yeah, well, I love
Speaker 1: the concerns that they raised here in this article about science. Now,
Speaker 1: to be fair, they do have a quote from the
Speaker 1: Revolving door project expressing concerns over his corporate background, but
Speaker 1: they also end with this zience selection is also likely
Speaker 1: to disappoint some Democrats who saw Clan's up exit as
Speaker 1: a prime opportunity for buying to appoint a woman person
Speaker 1: of color as his top aid. So leave it to
Speaker 1: Politico to make the most surface level critique and observation
Speaker 1: and not go an inch deeper than that level of analysis.
Speaker 1: So there you go. Just couldn't resist putting that one in.
Speaker 1: It's just like, come on, like, are we really being
Speaker 1: serious here about what's happening? Like this guy, any objection
Speaker 1: to him, it should not have to do. I don't
Speaker 1: even care. You know, if it could be a black woman,
Speaker 1: if they were also a former Bane consultant, and you
Speaker 1: know at least ran a company that was guilty of
Speaker 1: medicare fraud again that they paid fines and fully acknowledged
Speaker 1: what they were doing, I think that would be the
Speaker 1: same criticism hundred percent. I mean, to be sure to
Speaker 1: political they're actually right that this would be the critique
Speaker 1: that some Democrats wh level. Whereas if it was you know,
Speaker 1: a minority person or some sort of like trailblazing figure
Speaker 1: who had this exact same terrible track record. They'd be Oh,
Speaker 1: this is amazing, this is a step forward, most diverse
Speaker 1: administration history, whatever, and it's like, okay, that's good. But
Speaker 1: what would be more important is to have someone who's
Speaker 1: going to be committed to you know, the common person
Speaker 1: in America and not just cozy cozy with business and
Speaker 1: doesn't have a track record coming in of basically defrauding
Speaker 1: the government. So that's what we're looking at. And Sager
Speaker 1: to your point about how important this position is under
Speaker 1: any presidency. It matters a lot what ends up in
Speaker 1: front of the president, and it especially matters in a
Speaker 1: presidency where you have a declining eighty year old man
Speaker 1: who is really dependent on his staff to know what
Speaker 1: is going on and what's important and to frame issues
Speaker 1: for him. And so this individual, who has again a
Speaker 1: very troubling, very closely tied to both Corporate America and
Speaker 1: Wall Street in his past, is being brought into a
Speaker 1: position of extraordinary power. Absolutely correct. All right, let's go
Speaker 1: on chat GPT. Even more stuff that's going on there.
Speaker 1: We'll talk about tech recessions with Derek Thompson a little
Speaker 1: bit later. But a big business announcement of which there's
Speaker 1: actually a lot to say. Let's put this up there
Speaker 1: on the screen. Microsoft is announcing a ten billion dollar
Speaker 1: investment into open Ai, specifically to fund the chat GPT platform,
Speaker 1: and it's a partnership where they want to quote accelerate
Speaker 1: breakthroughs in AI and help both companies commercialize the advanced technologies.
Speaker 1: So this is the real test for what is the
Speaker 1: future of chat GPT, And actually I think it goes
Speaker 1: to a lot of questions around the Internet. So right
Speaker 1: now it's twenty twenty three, we came off the heels
Speaker 1: of a lot of hype around Web three and like
Speaker 1: what that would look like, crypto ethereum, et cetera. But
Speaker 1: fundamentally it came from this. There was a frustration that
Speaker 1: the promises of Web two, of the Facebook, Google and
Speaker 1: all that they became centralized, felt like innovation was stifling
Speaker 1: and it didn't feel like using the Internet was fun
Speaker 1: or cool anymore. I haven't seen that level of enthusiasm
Speaker 1: around technology and specifically online then basically until now with
Speaker 1: chat GPT. But then, just like with those questions of
Speaker 1: what we should have asked with Facebook and with Google
Speaker 1: about centralized monopolized control over ad space around the tension
Speaker 1: and commodities. We got to ask the same questions too
Speaker 1: around AI and what exactly the quote unquote uses for
Speaker 1: this are going to be. Are these going to be
Speaker 1: open source? You know? Open ai says that they want
Speaker 1: to have that mission, but Microsoft clearly is eyeing this
Speaker 1: for what do they do best? Enterprise business control? And
Speaker 1: there's a lot Look, there's some cool things that could
Speaker 1: come out of it, right, maybe you're using your Microsoft
Speaker 1: Teams and it will draft a response for you to
Speaker 1: an annoying email or in a chat. That sounds cool,
Speaker 1: But what if they also use it to automate somebody's job,
Speaker 1: or what if they also use it to, let's say,
Speaker 1: like predict exactly how many emails you should be sending
Speaker 1: in a day and then benchmarking and then stacking everybody
Speaker 1: up against each other. Like there are all kinds of
Speaker 1: dystopian corporate ways that you could push these things as
Speaker 1: well as what the innovations could be. And clearly that's
Speaker 1: where they see the business opportunity. Yeah, that's why they're
Speaker 1: investing ten billion dollars into this. Yes, so open ai
Speaker 1: they built this thing, but they really they aren't really
Speaker 1: in the business of figuring out how to make it profitable,
Speaker 1: it make money, and so they've basically partnered with Microsoft
Speaker 1: so that Microsoft can figure out how this thing will
Speaker 1: make money for them. And you know, that always is
Speaker 1: a direction that starts to take me nervous, because what
Speaker 1: is going to make money for a gigantic corporation, a
Speaker 1: gigantic monopoly like Microsoft, is not necessarily what is in
Speaker 1: the best interest of society. I am not wise enough
Speaker 1: to predict what all of those applications could ultimately be.
Speaker 1: I will just say it makes me wary. I mean,
Speaker 1: some of the things that have been predicted or I
Speaker 1: guess are in the sort of rumor mill. Are like
Speaker 1: including chat GPT as part of the office Suite. Yes,
Speaker 1: so when you're like writing or microsoftware document, you might
Speaker 1: have access to the chat GPT tools right there where
Speaker 1: you can help use it to write whatever you're writing,
Speaker 1: or ask questions or learn from it. They also might
Speaker 1: incorporate it into their search tool to help sort of
Speaker 1: like you know, garner better results or more useful answers
Speaker 1: to questions that people are asking there. So those are
Speaker 1: some of the obvious directions which are not from the
Speaker 1: jump deeply troubling We've talked about some of the concerns
Speaker 1: which I think are justified among academics about like students cheating. Ultimately,
Speaker 1: I think that ship is sale, though you're just going
Speaker 1: to have to grapple with this as a totally new world.
Speaker 1: And part of why there is a real discomfort with
Speaker 1: chat GPT, which again I think is understandable, is the
Speaker 1: fact that now automation is coming for knowledge worker and
Speaker 1: even creative type people like journalists for example, won't be
Speaker 1: needed in as large quantities if they get this working
Speaker 1: really well where they can actually spit out articles or
Speaker 1: explainers that are accurate and useful to the public. I
Speaker 1: will say that just this morning, I sent you an
Speaker 1: article what was it the Verge that was experimenting already
Speaker 1: with using chat GPT to create a lot of these
Speaker 1: like explainers and basic articles, and they had to stop
Speaker 1: the project because a number of the articles contain significant
Speaker 1: factual errors. And they did disclose that they were written
Speaker 1: by chat GPT, but apparently some of the you know,
Speaker 1: some of the journalists at the Verge felt like it
Speaker 1: wasn't disclosed sufficiently, and so and listen and people are
Speaker 1: reading through this article, they're assuming that it's accurate, so
Speaker 1: they sort of had to pull the plug on that
Speaker 1: because the technology is just not quite there yet. It
Speaker 1: was seen it, but yeah, I'm see which has a
Speaker 1: partnership with bank Rate. But I mean, look, that also
Speaker 1: highlights like we're not there yet, but also it's not
Speaker 1: that far away. It also shows you where a lot
Speaker 1: of the big dollars are going to be invested by
Speaker 1: the tech companies in the coming years. So I would
Speaker 1: say that the two frontiers where they're pumping the most
Speaker 1: amount of money is AI and then obviously the metaverse.
Speaker 1: Apple rumor to release its virtual reality headset sometime in
Speaker 1: the next year or so that's going to rival the
Speaker 1: Oculus or whatever the new name is for it over
Speaker 1: at Meta Then Microsoft is investing this ten billion. Specifically,
Speaker 1: it seems to try and get an edge on Google
Speaker 1: by possibly incorporating chat GPT into the bing search engine.
Speaker 1: But at the same time, Google itself is already ramping
Speaker 1: up and has had a long decades long project on
Speaker 1: artificial intelligence and maybe rolling out their own competitor to
Speaker 1: this soon. So this does seem like the next frontier,
Speaker 1: and I do think it's just really important. There's a
Speaker 1: lot of questions around this stuff, right, which is already
Speaker 1: you know, if you go when you ask chat GPT
Speaker 1: like sensitive social political questions, Oh shocker, you know, it's
Speaker 1: got bias or whatever in some directions. So even the
Speaker 1: way that these things get programmed, I mean, it has
Speaker 1: a lot of impact on the way that people might
Speaker 1: think about things, especially if we become very reliant on
Speaker 1: that technology, and even put the social aspects aside, Like
Speaker 1: what is this going to look like at an enterprise level?
Speaker 1: That is the real question, and that's why Microsoft, Remember,
Speaker 1: is a huge This is a big corporate somehow we
Speaker 1: never really talk about it, but it's a multi billion
Speaker 1: dollar behemoth. I think it's like a trillion dollar or
Speaker 1: something company. And they're openly also not only competing against Google,
Speaker 1: but also Amazon, which wants to incorporate AI into its
Speaker 1: web suite. So I think overall, like this is that
Speaker 1: this really is one of the next frontiers, and if
Speaker 1: they've been working on it for quite some time, but
Speaker 1: this does show you like the moment is here, and
Speaker 1: I think we're going to be covering this for the
Speaker 1: next couple of years. Yeah, no doubt about it. I
Speaker 1: listened to a long interview with Sam Altman, who is
Speaker 1: the CEO of open Ai. There are the makers of
Speaker 1: chat GPT. There was a lot there that was interesting
Speaker 1: from him. I mean, one thing, he was kind of
Speaker 1: shooting down rumors that the next iteration of chat GPT
Speaker 1: would really be this dramatic step forward. I mean, obviously
Speaker 1: it'll be improvement, but they're people out there theoryizing that
Speaker 1: it would be, you know, a sort of like difference
Speaker 1: in kind where you're getting close to that organic they
Speaker 1: call it AGI. What does that stand for? Artificial something
Speaker 1: something intelligence? Right? Anyway, clearly I'm just new learning this,
Speaker 1: but he says, listen, it's not going to be everything
Speaker 1: that people are selling it, sort of downplaying that. He
Speaker 1: also talked about how surprised he was that the reception
Speaker 1: to chat GPT has been what it is like that
Speaker 1: it has been so like people so interested in and
Speaker 1: so freaked down about it, and sparked this whole national
Speaker 1: conversation because he felt like they had sort of intentionally
Speaker 1: released things step by step by step, where this was
Speaker 1: the logical next step. But something about this particular iteration
Speaker 1: and people's ability to really interact with it, you know,
Speaker 1: it really kind of shocked people and so he was.
Speaker 1: He was surprised by that. He also talked about the
Speaker 1: Microsoft partnership. Now they had already had a partnership. This
Speaker 1: latest announcement is an additional tranche of money and a
Speaker 1: deepening of that partnership. So this conversation happened between before
Speaker 1: the latest announcement, but these comments from Sam still give
Speaker 1: you a sense of how they are ultimately thinking about it.
Speaker 1: Listake a listen. Can you talk a little bit about
Speaker 1: your partnership with microsofticgus, how it's going, how they're using
Speaker 1: your tech. It's great. They're the only tech company out
Speaker 1: there that I think I'd be excited to partner with
Speaker 1: this deeply. I think Sata is an amazing CEO, but
Speaker 1: more than that, human being and understands so do Kevin
Speaker 1: Scott and mckil who we work with closely as well,
Speaker 1: like understand the stakes of what AGI means and why
Speaker 1: we need to have all the weirdness we do in
Speaker 1: our structure and our agreement with them, and so I
Speaker 1: really feel like it's a very values aligned company. And
Speaker 1: there's some things they're very good at, like building very
Speaker 1: large supercomputers and the instruction we operate on and putting
Speaker 1: the technology into products. There's things we're very good at,
Speaker 1: like doing research, and it's been a great partnership. So
Speaker 1: he's saying, listen, I mean, as we kind of lay
Speaker 1: it out, what we're good at is building this thing,
Speaker 1: they're good at figuring out how to market it and
Speaker 1: incorporate in products in order to make money. And he
Speaker 1: feels comfortable with the Partnershi. So that's sort of his view.
Speaker 1: And by the way, it's artificial general intelligence was the
Speaker 1: word that I was looking for there. At the same time,
Speaker 1: in terms of education, this thing continues to make head roads.
Speaker 1: Let's put this up there on the screen. The CHAT
Speaker 1: GPT actually passed I believe it was a ten question
Speaker 1: test on the MBA exam at the Wharton School of Pennsylvania.
Speaker 1: It earned a quote solid grade and outperformed some humans
Speaker 1: on the Wharton course. So what they did is they
Speaker 1: took one of their test exams. I think it was
Speaker 1: ten questions. And then it's in his white paper it's like,
Speaker 1: would chat GPT get a Wharton MBA GPT would receive
Speaker 1: a B to B minus grade on the exam, so
Speaker 1: obviously that's still a passing grade. Now I'm not saying
Speaker 1: they obviously would have passed the entire curricula, but it
Speaker 1: does highlight like, wow, this is going to really just
Speaker 1: test the grounds of knowledge working what it means. I mean,
Speaker 1: we talked previously about what level of memorization possibly that
Speaker 1: this could free up, maybe in some students, not even
Speaker 1: necessarily for this, but I did see one where chatch
Speaker 1: ept actually worked on. It was one of the medical
Speaker 1: school exams. And one of the reasons why it was
Speaker 1: so powerful and was able to do well is a
Speaker 1: lot of people in medicine I believe it from what
Speaker 1: I've told and some of the doctors and med students
Speaker 1: who I know, they have to memorize a lot of chemistry,
Speaker 1: a lot of like rote facts and other things they
Speaker 1: have to be able to recall off the top of
Speaker 1: their head. Obviously, chatch EPT, with the availability of information
Speaker 1: that they have at their disposable at their disposal, would
Speaker 1: be it'd be much easier for them to have that
Speaker 1: on a general knowledge type test. And then that comes
Speaker 1: to the question of like, well, how is that possibly
Speaker 1: going to manifest in terms of the actual room, Like, right,
Speaker 1: you could have a future doctor who may not have
Speaker 1: to memorize all that stuff and could rely on the
Speaker 1: technology be generally familiar and be able to type in
Speaker 1: something if they need to have a recall and then
Speaker 1: use that knowledge for future diagnosis or future course of action.
Speaker 1: So the actual disruption here to edge and to a
Speaker 1: lot of these feels, I'm finding that really really fascinating.
Speaker 1: How does that absolutely? I mean, many management consultants looking
Speaker 1: at these results and sort of quaking, wondering if they're
Speaker 1: going to become you know, the peat Boodhagites of the
Speaker 1: world are going to ultimately become irrelevant here, I mean
Speaker 1: in playing with the tool as it exists now, Like yesterday,
Speaker 1: I was playing with it. I asked it to write
Speaker 1: a monologue in the style of Crystal Ball about chat
Speaker 1: GPT and it, you know, it put out a thing
Speaker 1: that was reasonably good, but it was kind of surface level.
Speaker 1: It's not bad, you know, I mean, you can definitely
Speaker 1: tell the difference. It's lacking some like soul to it.
Speaker 1: You can tell. And there's also they talked about with
Speaker 1: regard to this NBA test, there were certain things that
Speaker 1: it was really good at. You know, the sentences are
Speaker 1: perfectly structured, the grammar is precise, you know, the factual
Speaker 1: references are totally you know, totally there and thorough, et cetera.
Speaker 1: But actually on some just sort of elementary math, they
Speaker 1: said it was a bismal, just like totally incapable. Now
Speaker 1: that seems like the sort of thing that maybe even
Speaker 1: in the next iteration they're going to be able to fix.
Speaker 1: But I do think it's a long way to go
Speaker 1: before these chat ai or other similar technology like the
Speaker 1: image generation or whatever. Before it's really in a position
Speaker 1: where you can't tell the difference between the output put
Speaker 1: from chat GPT and the output from a creative, thoughtful
Speaker 1: human beings. So don't worry human beings. You're not irrelevant yet.
Speaker 1: I guess this is my bottom line. Not yet. Also, though,
Speaker 1: you know, in terms of education, what we're talking about here,
Speaker 1: put this up there on the screen. The Stanford Daily
Speaker 1: did a did a survey of its students and asked
Speaker 1: how many of you use chat GPT on your final exams.
Speaker 1: They have a quarterly system at Stanford, I believe, and
Speaker 1: the results said that all hell of a lot of
Speaker 1: people were using chat GPT in the fall quarter of
Speaker 1: twenty two, twenty two. Now, to what extent did you
Speaker 1: use it? So it was about seventeen percent of all
Speaker 1: stand for students admitted in an anonymous poll to using it.
Speaker 1: So I don't know how many of them actually did it.
Speaker 1: I would presume and probably be a little bit higher.
Speaker 1: So how did they poll? Yeah, right, not scientific or whatever.
Speaker 1: It's not like perfect mind whatever you stand for daily
Speaker 1: good for them, they gads sense, Yeah, we did a
Speaker 1: good job here. So to what extent did you use
Speaker 1: chat ept in your finals? They said, brainstorming, outlining, and
Speaker 1: forming ideas. That was sixty percent. That's kind of what
Speaker 1: I talked about before in terms of getting people started
Speaker 1: answering multiple choice questions with the help of chat ept.
Speaker 1: Thirty percent submitted written material from chat GPT with edits
Speaker 1: seven point three percent submitted written material from chat GPT
Speaker 1: without edits five point five percent. I want to meet
Speaker 1: some of those people. Those that's a bold move yet
Speaker 1: straight up copy of books, especially after some of the
Speaker 1: stories and all of that that has come out. Can't
Speaker 1: remember if it was. I think it was this article
Speaker 1: where one of the professors had caught a student using it,
Speaker 1: and he it was like it was pretty easy to
Speaker 1: tell because it's said in whatever the essay was like
Speaker 1: as a artificial intelligence chat creator or something like that.
Speaker 1: And the person clearly didn't even just like read through
Speaker 1: to pull out any self references that this was in
Speaker 1: fact or by chat GPT. So come on, guys, if
Speaker 1: you're going to use it, don't be that lazy. At
Speaker 1: least like reread it and make a few edits for yourself.
Speaker 1: Here's the other interesting thing. If you ask the students,
Speaker 1: you're like, do you think that using chat GPT is
Speaker 1: a violation of the academic honor code? So they had
Speaker 1: over five thousand results here, right, So they said yes,
Speaker 1: if used for more than just ideas, thirty one percent, yes,
Speaker 1: if used it all, twenty two percent, yes. If submitted
Speaker 1: with no edits twenty one percent, no, thirteen percent, twelve
Speaker 1: twelve percent said that they were unsure. So a lot
Speaker 1: of people. It's funny because twenty percent or so of
Speaker 1: them are using it, but thirty vast majorities seem to
Speaker 1: say that if you use it at least in some capacity,
Speaker 1: it is a violation. Yeah, the academic all people kind
Speaker 1: of divided though, Yeah, no, they are divided. I mean
Speaker 1: this and seems like sort of mixed on it. As
Speaker 1: the professors that we've been reading about here and under like,
Speaker 1: I get that for sure. I just feel like you're
Speaker 1: fighting an uphill battle if you're not thinking of ways
Speaker 1: to you know, test your students and build the skills
Speaker 1: that they're going to need. Given that chat GPT is
Speaker 1: now here and is not going away, not going anywhere,
Speaker 1: and is only going to get better from here on out.
Speaker 1: So I definitely get the angst around it, and it's
Speaker 1: going to be a difficult transition. But ultimately, I think
Speaker 1: the most fruitful thinking is, Okay, how do we how
Speaker 1: do we use this tool and then build onto it?
Speaker 1: What are the pieces that human beings still bring to
Speaker 1: the table that are additive to this existing technology? That's right,
Speaker 1: all right, guys. Big political story. So, as you all know,
Speaker 1: Kirsten Cinema, with much fanfare at least in her own mind,
Speaker 1: declared her independence. Of course, she has never been truly independent.
Speaker 1: She is fully beholden to her corporate donors. While more
Speaker 1: in that moment, but that opened up a big question of, Okay, well,
Speaker 1: what are Democrats going to do in terms of this
Speaker 1: next Senate cycle, Because Kirsten Cinema is up for reelection
Speaker 1: this next cycle, this next time around, and you could
Speaker 1: see how they have a bit of a problem here.
Speaker 1: She was not going to be able to win a
Speaker 1: Democratic primary because Democrats basically hate her guts. Now, so
Speaker 1: she declares that she's going to run as an independent.
Speaker 1: So you have her in the race, a Republican in
Speaker 1: the race, and you would assume that she would probably
Speaker 1: take away from any Democrat who jumps in the race.
Speaker 1: So there was this question or Democrats just going to
Speaker 1: let her run and sort of tacit lead back her,
Speaker 1: or are they going to run their own candidate, And
Speaker 1: now we seem to have a pretty clear answer, and
Speaker 1: it was always likely to go in this direction, which
Speaker 1: I think is a good thing because I think democracy
Speaker 1: is a good thing and more choices are more better.
Speaker 1: Ruben Diego, who is a progressive member of Congress and
Speaker 1: a rock War veteran. He has officially announced four Senate
Speaker 1: and put out his big announcement video yesterday. Let's take
Speaker 1: a look at a little bit of that. Growing up poor,
Speaker 1: the only thing I really had was the American dream,
Speaker 1: an opportunity. So one thing that we give every American,
Speaker 1: no matter where they are born in life, kinds of
Speaker 1: step up and be about a figure to my three
Speaker 1: sisters and skipping my teenage years. I really did feel
Speaker 1: that I owed the country something and we got sent
Speaker 1: to Iraq, losing all my friends, consistently being shot at
Speaker 1: and people are trying to blow you up all the time.
Speaker 1: You never really fully come back from the war. I
Speaker 1: will be challenging kirston cinema for the United States Senate
Speaker 1: and I need all of your support. Most families feel
Speaker 1: that they are one or two pit chicks away from
Speaker 1: going under. That is not the way that we should
Speaker 1: be living in this country. Very smart way, I think
Speaker 1: to announce emphasizing the background military service of course genuinely
Speaker 1: heroic in terms of for those who were just listening.
Speaker 1: It actually put up on the screen that his marine
Speaker 1: units suffered one of the highest casual He's actually casualty rates,
Speaker 1: I believe while he was deployed in Iraq. And then
Speaker 1: with the economics there at the end, to really punch
Speaker 1: home the message, combined with the bio, it's a strong ad.
Speaker 1: I think it's a very smart play. Yeah. I thought
Speaker 1: it was well done too. You know, it was emotional.
Speaker 1: He talks about growing up in poverty, what that meant,
Speaker 1: how he had to basically you know, be a kind
Speaker 1: of a leader or father figure to his three sisters.
Speaker 1: You know, his mom struggling with paying bills, and he
Speaker 1: would throw in. It didn't seem gratuitous, but there were
Speaker 1: a few lines that were thrown in Spanish to kind of,
Speaker 1: you know, for Arizona, like make clear to voters that
Speaker 1: he's also fluent in Spanish and culturally connected. So yeah,
Speaker 1: I thought it was I thought it was ultimately very effective,
Speaker 1: and it's going to be interesting to see how this
Speaker 1: all ultimately plays out. Because if it was just Ruben
Speaker 1: versus whoever the Republicans put up, and there's already talk
Speaker 1: of Blake Masters running again, there's already carry Lake running again.
Speaker 1: I think he'd have a pretty good shot at that.
Speaker 1: But it is complicated by the fact that Kreson Cinema
Speaker 1: is like hanging out there and you know, likely to
Speaker 1: run as an independent. She's not going to be able
Speaker 1: to win as an independent. But again, which pot does
Speaker 1: she pull from more You would have to think it's
Speaker 1: the Democratic side. So this is going to be complex.
Speaker 1: It's hard to predict exactly what way this is all
Speaker 1: going to go because she does not have high favorability ratings.
Speaker 1: Among any group in the state of Arizona, not among Democrats,
Speaker 1: not among Republicans, not among independents. But if she's going
Speaker 1: to pull votes from somewhere, you would think, since she
Speaker 1: was a former Democrat, it might come more from the
Speaker 1: Democratic side. We'll see at the same time. You know,
Speaker 1: we cover Davos last week and all the elites gathering
Speaker 1: at the World Economic Forum, and low and behold, guess
Speaker 1: who was there hob nobbing with a bunch of bankers
Speaker 1: and other global elites. Kirsen Cinema, herself, real woman of
Speaker 1: the people. Let's take to listen to a little bit
Speaker 1: of what she had to say there. So, as folks know,
Speaker 1: I have declared, formally declared my independence from what I
Speaker 1: considered to be a deeply broken to party system. Those
Speaker 1: who know me know that I was always an independent
Speaker 1: voice and always have been for the things that I
Speaker 1: believe in and for my state and for my country.
Speaker 1: But I do think it's important to note that that
Speaker 1: what you've heard about partisanship, I believe is accurate. You know,
Speaker 1: in the last two years, if we think, you know,
Speaker 1: January sixth, which is a horrible day from two years ago,
Speaker 1: created I think concern and fear for every patriotic American
Speaker 1: across the country. But in the resulting two years, the
Speaker 1: Democratic Party shared a narrative that said, we would not
Speaker 1: have any more free and fair elections in this country
Speaker 1: if the United States Congress didn't eliminate the filibuster and
Speaker 1: pass a massive voting rights package. As you as we
Speaker 1: all know, the philibuster was not eliminated. Joe and I
Speaker 1: were not interested in sacrificing that important guardrail for the institution.
Speaker 1: That massive voting rights built was not passed through Congress,
Speaker 1: and then we had a free and fair election all
Speaker 1: across the country. We still don't agree on getting rid
Speaker 1: of the philibuster. That's correct. Thank you well, high five
Speaker 1: there between two of the most corrupt members of the
Speaker 1: entire Senate. I mean, it just drives me crazy. We'll
Speaker 1: fight about the philibuster another day, but it does drives
Speaker 1: me crazy. The way that she postures herself like this, Oh,
Speaker 1: truly independent and she's just speaking up for the voices
Speaker 1: of Arizona. This is total, complete garbage. She is there
Speaker 1: for one reason. It's to serve her donors. And I
Speaker 1: say this because there is a really clear track record
Speaker 1: by the way you know report from CNBC. Of course,
Speaker 1: she and mansion and Chris Coon's one of Biden's type
Speaker 1: top advisors, put this up on the screen. They went
Speaker 1: ahead and met with CEOs and private Davos luncheon for
Speaker 1: World Economic Forum. Again, real woman of the people stuff there.
Speaker 1: And also she has been the top ally of private
Speaker 1: equity keeping their goodies in the tax cud, a gigantic
Speaker 1: loophole giveaway that they get in the tax code. She
Speaker 1: got a bunch of cash from them. She preserved what's
Speaker 1: called the carried interest loophole. She has continued after she
Speaker 1: went to bad for them to take their money and
Speaker 1: received donations even from executives at the private equity firm
Speaker 1: whose founder owns the winery where she interned and fundraised.
Speaker 1: So guys just don't buy her nonsense here about how
Speaker 1: she's so independent minded and she's really there for the
Speaker 1: people because it could not possibly be for their For
Speaker 1: the truth, well, most people don't buy it. I mean,
Speaker 1: that's why she has such low favorabilities. And by the way,
Speaker 1: it's not like it's actually winning amongst Republicans. She has
Speaker 1: a low favorability amongst Republicans. The carry Lake people actually
Speaker 1: hate her guts. She has a low favorability. I believe
Speaker 1: it's under forty percent amongst Arizona Democrats. One of the
Speaker 1: reasons that she went independent, but even independent seemed to
Speaker 1: be underwater there. I think the gyego is going to
Speaker 1: really push her because the only way that I could
Speaker 1: see it is if the DSCC and the Democratic top
Speaker 1: don't or the top party comes in and intervenes on
Speaker 1: her behalf. So, for example, Senator Schumer yesterday would not
Speaker 1: say anything about whether he would endorse Reuben Diego. Neither
Speaker 1: would Dick Durbin. So I believe one of the top
Speaker 1: Democrats I know he's want. I think he's a whip
Speaker 1: who's there. So they wouldn't even come out and say, yeah,
Speaker 1: we might support Guyago. Actually, even Bernie Sanders was asked
Speaker 1: about it and he was like, well, he hasn't asked
Speaker 1: yet for my endorsement, And I was like, I guess,
Speaker 1: to be fair, there are other Democrats who may get
Speaker 1: into this product. That's true, Well, I think it's I
Speaker 1: think it's reasonable to wait and see who else gets
Speaker 1: into the race. But if you're really staring at a
Speaker 1: three way race between Diego, Cinema and whoever the Republicans
Speaker 1: ultimately put up to then stay out is you know,
Speaker 1: I think that's absurd. Meanwhile, Mansion is already saying that
Speaker 1: he would back here cin Cinema. So they've got their
Speaker 1: you know, corrupt uh corrupt bond there I guess made
Speaker 1: of with the with the the folks over at Davos. Yeah,
Speaker 1: it's an important story. Will continue to track it. It
Speaker 1: could add up being one of the hottest primaries and
Speaker 1: probably you know, in terms of her donors, like that
Speaker 1: would come in big for her. This could there could
Speaker 1: be a hell of a lot of money. Yeah, that
Speaker 1: happens in this race. One last thing, just to put
Speaker 1: this in context. I was looking at the first Larry
Speaker 1: Sabadeau crystal Ball ratings for the Senate for the next cycle,
Speaker 1: and Democrats are on defense in a lot of places
Speaker 1: including Arizona, Arizona, Ohio, and Montana. They have labeled as
Speaker 1: toss ups. These are all Democratic health seats West Virginia. Also,
Speaker 1: Joe Mann is up. He hasn't said he's running for
Speaker 1: reelection again, by the way, In fact, he's sort of
Speaker 1: like flirted with running for president. Okay, dude, give me
Speaker 1: a breath. But anyway, they have West Virginia, which is
Speaker 1: currently held by a Democrat as lean Republican. So that's
Speaker 1: four states where Democrats are at best a toss up Republicans.
Speaker 1: Every single Republican seat that is held right now is
Speaker 1: effectively safe for them as the writings stand today, looking
Speaker 1: forward to the next Senate election cycle. So this state
Speaker 1: is going to be extremely key if Democrats have any
Speaker 1: prayer of holding on to their control of the Senate.
Speaker 1: There you go, all right, let's move on. Final. The
Speaker 1: rumors are flying here in Washington basically have been ever
Speaker 1: since Dan Snyder said that he might be open to
Speaker 1: a sale of the Washington Commanders. So the richest duienne
Speaker 1: of Washington, our richest resident, Jeff Bezos, let's go ahead
Speaker 1: and put this up there on the screen, may sell,
Speaker 1: and this is according to sources from the New York Post,
Speaker 1: may sell the Washington Post to buy the Commanders. Now
Speaker 1: they're immediately this report denied by Bezos, saying that the
Speaker 1: Washington Post is not for sale. But what the New
Speaker 1: York Posts learned from a source that they say that
Speaker 1: was close to the situation, said that Bezos had told
Speaker 1: the paper senior staff in private meetings that while he
Speaker 1: had no plans to sell the paper, that there were
Speaker 1: others who he had reportedly discussed the actual sale of
Speaker 1: the Post to do so. The only reason why I
Speaker 1: think that this might be dubious is a man is
Speaker 1: worth what two hundred billion dollars? Does he really need
Speaker 1: the He bought the Post for two fifty million. Does
Speaker 1: he really need the one billion maybe that he would
Speaker 1: get for the Washington Post, which is a failing business
Speaker 1: and has yet to turn a profit and is currently
Speaker 1: undergoing layoffs. Does he really need that to fund let's
Speaker 1: say at max is like what a five to ten
Speaker 1: billion dollar purchase for the Washington Commanders. It could be
Speaker 1: And I think this is actually more likely the case
Speaker 1: that if he does sell the Posts, one of the
Speaker 1: reasons would be he just lost interest. I mean, remember
Speaker 1: he bought the Post in twenty thirteen. That was kind
Speaker 1: of his respectability era. That's why he came in here
Speaker 1: to Washington. He built the largest house here in Washington,
Speaker 1: which is truly a site to behold. At the same time,
Speaker 1: he started attending all of these major political dinners like
Speaker 1: the Gridiron Dinner and others. The White House correspondence dinner.
Speaker 1: But then his life all kind of changed after he
Speaker 1: started dating his girlfriend and started taking TRT and getting
Speaker 1: jacked and hanging out on yachts at Saint Bart's and
Speaker 1: in the Caribbean. It's like he kind of resigned as
Speaker 1: the Amazon CEO. He's now like the chairman of Amazon,
Speaker 1: not involved as much in the day to day operations.
Speaker 1: It seems like his interests have gone much more in
Speaker 1: the Hollywood pop culture direction. So that's why it would
Speaker 1: make more sense for him to be one of the
Speaker 1: deans of America's billionaires, an NFL owner, right, Like that's
Speaker 1: as good as it gets for a lot of these
Speaker 1: people in pop culture, whereas with the Washington Post, that's
Speaker 1: more something that you want to own if you want
Speaker 1: to influence the political process. That's the only reason I
Speaker 1: think he might sell it. There were a couple of
Speaker 1: other things that people were theorizing about why he might
Speaker 1: want to get rid of the Post. In particular. I
Speaker 1: don't know if you guys remember he got into the
Speaker 1: spat with Joe Biden over corporate tax rates. Yeah, and
Speaker 1: obviously when you own the Washington Post, like this is
Speaker 1: no longer just sort of your opinion being put out there.
Speaker 1: People that are going to look at the op eds
Speaker 1: and the articles that are being written at the Post
Speaker 1: and take a look at whether they are being reflective
Speaker 1: of the view that you have publicly put forward like
Speaker 1: you now are no longer just like a neutral observer
Speaker 1: out there have in your take, it has huge implications
Speaker 1: for what is happening at the newspaper that you own
Speaker 1: and pay the salaries at. So some people were saying, Okay,
Speaker 1: maybe he realized like he didn't like being muzzled this way.
Speaker 1: And then there's another little sort of drama with regards
Speaker 1: to any potential interest he might have in purchasing the
Speaker 1: Washington Commanders, which is that the current owner, Dan Snyder,
Speaker 1: who's got to be the worst owner in all of
Speaker 1: NFL football history, as a long suffering Washington sports fan,
Speaker 1: he hates Bethos and he hates the Washing Post. Why
Speaker 1: because they were the ones that did those investigations into
Speaker 1: all sorts of allegations of impropriety and sexual harassment rife
Speaker 1: throughout the now Washington Commanders organization, and Snyder, they said,
Speaker 1: suspects that Bezos encouraged that tough coverage in a bid
Speaker 1: to force him to sell the team so that he
Speaker 1: could then sort of pick up the pieces. So you know,
Speaker 1: Snyder would have to agree to sell it to Bezos,
Speaker 1: and he apparently reportedly hayes his guests. It's another complicating factor.
Speaker 1: Five billion dollars is a real easy way to make
Speaker 1: that stomach. And again, ultimately, these guys are all just
Speaker 1: remember of the Green Party. They care about the money. Yeah,
Speaker 1: put this up there on the screen. Bezos immediately denied
Speaker 1: the report, but he's not ruling out buying the commanders.
Speaker 1: I'd seen other speculation that he was considering bringing in outside.
Speaker 1: I know that this is the way a lot of
Speaker 1: people do it now. They'll do like a conglomerate, like
Speaker 1: a couple of famous people or whatever, with some investments
Speaker 1: and then buy it the team as a whole. I
Speaker 1: know they do that in the NBA. I'm not quite
Speaker 1: sure if they do that in the NFL. You're looking
Speaker 1: at a real NFL fan here. People knows quite a bit.
Speaker 1: But I do think that it is important because for me,
Speaker 1: it just tracks with Bezos's evolution clearly in his in
Speaker 1: his in way he sees himself. At first, he was
Speaker 1: donating all this money to the Air and Space Museum
Speaker 1: one hundred million dollars, the Obama Foundation, naming the auditorium
Speaker 1: or whatever he was going for the respectability game. Did
Speaker 1: Jones get a bunch of cash in that? Yes? Yeah,
Speaker 1: oh yeah, like he listen, there's the Bezos Genius Grants,
Speaker 1: which just happened to fund some of the non geniuses
Speaker 1: in our society. Though he now appears to be much
Speaker 1: more interested in Amazon Studios, going to the Oscars, hanging
Speaker 1: out with the Rock, getting a bridge disassembled in order
Speaker 1: to get his buying a super yacht. You know what?
Speaker 1: Did he got into that weird thing with Leo DiCaprio
Speaker 1: where he like joked about Leo stealing his girlfriend and
Speaker 1: now buying the NFL. So this seems to be the
Speaker 1: next evolution of bezos ken. I mean, you know, life
Speaker 1: seems fun. Yeah, it's like real midlife crisis kind of
Speaker 1: vibes too, especially that photo of him with his Miami
Speaker 1: shirt like bawling out like I think he was literally
Speaker 1: he literally looked like he was in Miami. Makes sense,
Speaker 1: He's from there, so maybe you could take the boy out,
Speaker 1: but that's something that clearly sticks with you anyway. That's
Speaker 1: Bezos's next evolution. All right, Zachar, what are you looking at? Well,
Speaker 1: the debt is one of those things that instantly evokes
Speaker 1: a lot of emotion in people. It's something that has
Speaker 1: animated American politics since the founding of the Republic, and
Speaker 1: the fight's over it, the increase in it, and the
Speaker 1: way that we manage it actually tells us a lot
Speaker 1: about the times that we're in. In the twenty tens,
Speaker 1: it seemed that we were living in the era of
Speaker 1: debt politics, the rise of the Tea Party and Greece,
Speaker 1: and then the immense fights that were picked with President Obama.
Speaker 1: Trump seems to have wiped some of that away, but
Speaker 1: with this temporary disappearance that we're back back to what though,
Speaker 1: exactly what is debt? Should we even care about it
Speaker 1: at all? How did he even get like this? Anyways?
Speaker 1: The modern history of US debt is actually fascinating and
Speaker 1: it tells us a lot about American elites and their priorities,
Speaker 1: both in the last thirty years and throughout our entire history.
Speaker 1: So let's go all the way back in time to
Speaker 1: the very beginning. When did we first incur debt? The
Speaker 1: first debt incurred by the sovereign United States. Technically happened
Speaker 1: during the Revolutionary War, but as we understood it today,
Speaker 1: after Alexander Hamilton structured the debt to the tune of
Speaker 1: nearly seventy seventy million dollars in seventeen ninety, debt continued
Speaker 1: to increase throughout the early nineteenth century with the Louisiana Purchase.
Speaker 1: Despite attempts at the time to pay it down, it
Speaker 1: especially ballooned during the War of eighteen twelve to approximately
Speaker 1: one hundred and twenty seven million dollars. Now, a familiar
Speaker 1: story begins to emerge in US history. We get a
Speaker 1: lot of debt during territorial expansion and during war, followed
Speaker 1: by a period of kind of paying it off but
Speaker 1: not really. President Andrew Jackson, in his campaign against the
Speaker 1: National Bank of the United States, actually reduced the debt
Speaker 1: to approximately zero in eighteen thirty five, only for it
Speaker 1: to then explode a again during the Mexican War. From
Speaker 1: that period onward, internal strife, territorial expansion, and more continued
Speaker 1: the debt upwards until it blew up during the American
Speaker 1: Civil War. There again we saw an increase historic rise
Speaker 1: in the debt, crossing the billion dollar threshold and peaking
Speaker 1: at approximately two point eight billion in eighteen sixty five.
Speaker 1: From there, the wild economic ups and downs of the
Speaker 1: Gilded Age kept us in debt, combined with the Spanish
Speaker 1: American War and other attempts at establishing the American Empire. Overall,
Speaker 1: the debt remained relatively stable, approximately consistent at two to
Speaker 1: three billion dollars until you guessed it. Another war, the
Speaker 1: First World War. It exploded American debt from two point
Speaker 1: nine billion in nineteen thirteen to five point seven billion
Speaker 1: when the war ended, and somehow it began ballooning to
Speaker 1: twenty five billion in nineteen twenty. The Roaring Twenties helped
Speaker 1: pay down some of America's debt, or at least keep
Speaker 1: it stable, dropping below sixteen billion, but going down until
Speaker 1: somewhat until the Great Depression. The election of FDR, the
Speaker 1: establishment of social welfare programs unprecedent at the time, exploded
Speaker 1: the debt again, beginning in nineteen thirty three at twenty
Speaker 1: two billion dollars and ending after World War Two at
Speaker 1: a whopping two hundred and fifty eight billion. Here again
Speaker 1: we see a new normal. America is the world leader.
Speaker 1: It has the expansion programs. These things seemed to be
Speaker 1: okay right up until nineteen sixty five, with the simultaneous
Speaker 1: expansion of medicare combined with the Vietnam War, pushed the
Speaker 1: debt up to some three hundred and fifty billion before
Speaker 1: it just kept blowing up even more exponentially. By nineteen eighty,
Speaker 1: we began teetering on the edge of one trillion dollars.
Speaker 1: And when Reagan came into office, he did two simultaneous things.
Speaker 1: He massively expanded the military budget and he cut taxes,
Speaker 1: and from there we are off to the races. The
Speaker 1: debt was increasing fivefold under Ronald Reagan and George W.
Speaker 1: Bush under Clint or George H. W. Bush. Under Clinton,
Speaker 1: we had a very brief respite, mostly because of the
Speaker 1: dot com boom, which massively increased federal tax revenues, and
Speaker 1: because finally we weren't fight any more damn wars. We
Speaker 1: reduced our military spending and we actually had a budget
Speaker 1: surplus for an extraordinary period, a very rare occurrence in
Speaker 1: US history. But all things come to an end. We
Speaker 1: got smacked by the dot com crash then nine to eleven.
Speaker 1: Bush then did the two things that you shouldn't do
Speaker 1: if you care about the national debt. He massively cut
Speaker 1: taxes and he invaded two foreign nations. Doesn't take a
Speaker 1: genius to figure out what comes next. A doubling of
Speaker 1: the national debt under George W. Bush to finance programs
Speaker 1: and disastrous foreign wars to the tune of trillions of
Speaker 1: dollars with less actual with more actual money. Obama similar story.
Speaker 1: You keep the war machine going in Afghanistan. In Iraq,
Speaker 1: debt keeps ballooning a trillion dollars or more so per year,
Speaker 1: in addition to Obamacare and some moderate expansion of the
Speaker 1: federal government. Then of course you get Donald Trump, who
Speaker 1: cut taxes again and for the most part kept the
Speaker 1: war machine running up until twenty nineteen. Then COVID happens
Speaker 1: and that accelerated the game even more unprecedented bailouts, stimulus checks, etc.
Speaker 1: So here we are thirty one trillion dollars in debt
Speaker 1: today counting. What do we do about it? If you
Speaker 1: look back at the story I just told, there are
Speaker 1: three major components that actually contribute the most overtime to
Speaker 1: our debt. One is social spending, which is enormously popular
Speaker 1: and effectively untouchable. Two is foreign wars since our founding,
Speaker 1: wars have historically ballooned the federal debt and expanded the
Speaker 1: role of government to levels that we never quite seem
Speaker 1: to ever get away from. Three is major economic downturn.
Speaker 1: Every major economic downturn has ballooned the debt, requiring in
Speaker 1: recent years not only less federal revenue, but bailouts. Now,
Speaker 1: I'm not against bailouts per se, as long as therefore
Speaker 1: the average American and not industry, but you can guess
Speaker 1: where the vast majority of bailout money has gone in
Speaker 1: the last two centuries, which brings us to the choice
Speaker 1: that we face today. Our debt has increased by ten
Speaker 1: trillion dollars just this year in twenty twenty two up
Speaker 1: to twenty twenty three. Worse, our actual debt servicing payments
Speaker 1: are going up astronomically because the Federals is now raising
Speaker 1: rates now to the extent that this is a problem,
Speaker 1: I think it just highlights how futile much of our
Speaker 1: discussion around this is. Here is the reality. Sixteen percent
Speaker 1: of the six point twenty seven trillion dollar federal budget
Speaker 1: is non military, non entitlement spending. That's basically a rounding
Speaker 1: error on our debt. We really only have a few
Speaker 1: good options for actually solving it, and those are stopping
Speaker 1: military adventurism abroad, ensuring proper federal revenues come in instead
Speaker 1: of slashing taxes repeatedly for the wealthy, and having a stable,
Speaker 1: non financialized economy that doesn't crash all the time. I've
Speaker 1: yet to see anyone actually lay it out this way,
Speaker 1: And when you look at the story over nearly three
Speaker 1: hundred years, it actually seems pretty simple. Unfortunately, we know
Speaker 1: that at every point we almost never learned the right lesson.
Speaker 1: It's really interesting, actually, and if you want to hear
Speaker 1: my reaction to Sager's monologue, become a premium subscriber today
Speaker 1: at Breakingpoints dot Com, Cristsell, what do you take a
Speaker 1: look at? Well, guys, as you've probably noticedom is this
Speaker 1: year is how we seem to be living in a
Speaker 1: golden era of scams, Crypto MLMs, scam influencers, scam members
Speaker 1: of Congress. Truly feels like today the con man or
Speaker 1: con woman is king. But it's not just listless young
Speaker 1: men or dumb rich people or desperate housewives who are
Speaker 1: being scammed routinely. No the highest echalons of society. They
Speaker 1: are falling victim to the same charlatan's impredations as everyone else.
Speaker 1: The latest mark here Wall Street Titan JP Morgan Chase,
Speaker 1: they have now admitted they got scammed by a fraud
Speaker 1: business to the tune of one hundred and seventy five
Speaker 1: million dollars. Now, before I get to all of the
Speaker 1: details here, and you are going to love some of
Speaker 1: the details here, let's just set the table. One thing
Speaker 1: that is core to a successful con is getting the
Speaker 1: story right, figuring out what it is that your mark
Speaker 1: wants to hear. What are their vulnerabilities, their wants, their fears,
Speaker 1: their desires. And like other successful con artists, the young
Speaker 1: woman at the heart of this Chase scam knew exactly
Speaker 1: the part to play and the song to say to
Speaker 1: successfully defraud people who are supposed to be among the
Speaker 1: most sophisticated investors in the entire world. So here's what happened.
Speaker 1: It all started with a big announcement JP Morgan Chase,
Speaker 1: led by fame CEO Jamie Diamond. They issued a big
Speaker 1: press release crowing that they were buying a company called
Speaker 1: Frank which supposedly made it easier for college students to
Speaker 1: apply for financial assistance. Here's how CNBC framed that news.
Speaker 1: Jamie Diamond declared last year he planned to get more
Speaker 1: aggressive and seeking takeovers, and he's certainly made good on
Speaker 1: that promise, with JP Morgan buying another financial startup. This
Speaker 1: time it's college financial planning platform. Frankc dot COM's he
Speaker 1: Son as the exclusive details on the story, and he
Speaker 1: joins us now, Hugh, why this deal? Hey, it's good
Speaker 1: to be with you, Kelly. So the short answer is,
Speaker 1: what they're getting is a software platform that's been pretty
Speaker 1: effective at serving people young people who are heading to
Speaker 1: college and need to try to pay for it. So
Speaker 1: it's got a bunch of tools. The biggest, I think
Speaker 1: the main tool is an automated service that helps students
Speaker 1: apply for federal aids. It's got five million users, and
Speaker 1: you know, Japie Morgan wants to get in on that.
Speaker 1: They want to basically have an affinity program essentially that
Speaker 1: you know, as you're thinking about attending college, you've got
Speaker 1: to chase you know, if all goes going to plan,
Speaker 1: you got to chase bank account. And after that, you know,
Speaker 1: if you graduate, perhaps you're going to add a credit card,
Speaker 1: mortgage in auto. So this is their plate to sort
Speaker 1: of get people hooked into the Chase ecosystem at an
Speaker 1: early age. So Frank this company specifically claimed to JP
Speaker 1: Morgan that they had more than four million customers who
Speaker 1: were already using their tools to apply for financial aid,
Speaker 1: and as the CNBC analyst coldly observes, this represented an
Speaker 1: enticing opportunity for Chase to be able to get these
Speaker 1: young people hooked on their debt products early. Sure starts
Speaker 1: with a streamlined aid process, but before you know it,
Speaker 1: you've got these eighteen year olds into credit cards and
Speaker 1: many other services. Wonderful new way for Chase to profit
Speaker 1: off of the college affordability crisis while also hooking young
Speaker 1: people into a whole lifetime of high interest in debtedness.
Speaker 1: The business prospect of getting their hooks into these young
Speaker 1: people early through a seemingly charitable service was absolutely irresistible,
Speaker 1: and the young founder of Frank herself, Health Charlie Javis,
Speaker 1: Like Elizabeth Thernos and Sam mccinfried before her, she had
Speaker 1: exactly the right personal narrative to sell to elites. As
Speaker 1: The New York Times put it quite well, I thought,
Speaker 1: Miss Javis's story is an archetypal tale of late stage
Speaker 1: startup hustle culture. A teenage prodigy turned Ivy League social
Speaker 1: enterprise maven and shape shifting savior of higher education, or
Speaker 1: so she would have the world believe. Let's get a
Speaker 1: sense of our protagonist here, alleged con woman extraordinaire. Here
Speaker 1: is Charlie Javis on some show that's sponsored by American Express,
Speaker 1: answering a question about what she's had to overcome as
Speaker 1: a female entrepreneur, major roadblock, and you might hear it
Speaker 1: from other female entrepreneurs who are trying to pitch like
Speaker 1: tampon companies or like underwear. Who knows, but male investors
Speaker 1: just don't know about that full segment of the market. Now,
Speaker 1: try and take a segment of the market where investors
Speaker 1: who are usually wealthy have inherited it or made their money,
Speaker 1: have zero exposure to fatso or the financially process, and
Speaker 1: so it's almost like take odds where you might have
Speaker 1: fifteen to twenty percent female investors. Now flip it to
Speaker 1: people where literally maybe one person out of the hundre
Speaker 1: as I've spoken to has had personal exposure with it,
Speaker 1: and that's the largest roadblock. In selling Frank, Javis spun
Speaker 1: elaborate tales of the pain that she had personally suffered
Speaker 1: in trying to afford college. She recounted difficult stories of
Speaker 1: her mother weeping as she tried to sort through the
Speaker 1: complicated financial aid process, months of agony as they waited
Speaker 1: to get answers. In her telling, Javis started Frank to
Speaker 1: keep other struggling students from dealing with the excruciating ordeal
Speaker 1: her own family had supposedly been put through. Course, turned
Speaker 1: out both her parents had master's degrees. Her dad literally
Speaker 1: worked on Wall Street for Goldman, Sachs and Merrill Lynch
Speaker 1: for decades. Hard and Matt and Javis was quite as
Speaker 1: financially strapped and struggling with complex financial bureaucracy as her
Speaker 1: corporate origin story would have you believed. But no one
Speaker 1: in the female empowerment press or business journalists world looked
Speaker 1: into any of these inconsistencies. So Javis started peering in
Speaker 1: all the important lists of up and coming entrepreneurs. She
Speaker 1: made Forbes thirty under thirty, she made Cranes forty under
Speaker 1: forty she got this weird quote, and forty under forty.
Speaker 1: By by the way, in this write up, where she
Speaker 1: says that since women disproportionately hold student loan debt, Frank
Speaker 1: is quote not as masculine around money, whatever that means.
Speaker 1: As time went on, academics and even government agencies in
Speaker 1: the student loan space started growing suspicious of the many
Speaker 1: claims made by Frank about their services, their customer base,
Speaker 1: and their purported college partners. But JP Morgan Chase apparently
Speaker 1: didn't talk to any of them. So when presented this
Speaker 1: seemingly perfect package, a four million plus receptive young Frank
Speaker 1: customers that they could market their products to, and a
Speaker 1: fresh face founder named on all the right list, they
Speaker 1: jumped right in with that one hundred and seventy five
Speaker 1: million dollar offer. It was just one little problem. Those
Speaker 1: four million plus established customers that Frank claimed that they
Speaker 1: had they were fake. All but a few hundred thousands
Speaker 1: of of them were invented out of whole cloth in
Speaker 1: order to get through the JP Mortgan Chase vetting process.
Speaker 1: I'm talking fake names, fake birthdays, high schools, everything, As
Speaker 1: Chase put it in their legal filing against Javis quote.
Speaker 1: In reality, Frank was nearly four million short of its
Speaker 1: representations to JP Morgan Chase. You see, after her initial
Speaker 1: pitch to Chase claiming she had four million plus customers,
Speaker 1: she had to actually put together a fake list in
Speaker 1: order to pass that vetting process. So to accomplish this,
Speaker 1: she took a couple of different approaches. First off, she
Speaker 1: hired a data scientist to generate a quote synthetic list,
Speaker 1: just totally fabricated data is what that means. That was
Speaker 1: enough to get her through that deal diligence and get
Speaker 1: the deal closed. But then Javis had another problem. Chase
Speaker 1: obviously wanted to market to those four million customers, and
Speaker 1: they were going to need to send some actual, real
Speaker 1: email addresses solicitations. So to solve that issue, Javis purchased
Speaker 1: a list of real college students and their email addresses,
Speaker 1: hoping that these acquired addresses would be enough to continue
Speaker 1: tricking JP Morgan. Chase red flag started to pop up
Speaker 1: with this list, though almost immediately. First of all, this
Speaker 1: is kind of funny detail. A Chase engineer noticed that
Speaker 1: the number of lines in one of the files that
Speaker 1: they were see from Frank suspiciously matched precisely the maximum
Speaker 1: number of rows that you're allowed in an Excel spreadsheet.
Speaker 1: The whole cover story was completely blown though. When emails
Speaker 1: went out to a subset of this new purchased list,
Speaker 1: more than seventy percent of Chase's marketing emails to this
Speaker 1: supposed Frank customer list bounced back as undeliverable. Of the
Speaker 1: emails that did go through, almost no one opened the
Speaker 1: email or clicked on any link contained therein. That's the
Speaker 1: sort of result that you might expect from a purchase
Speaker 1: list of random college students, which is in truth, what
Speaker 1: this list actually was. Definitely not the result they expected
Speaker 1: from a cultivated list of students that had supposedly affirmatively
Speaker 1: signed up with interest in the products and services that
Speaker 1: Frank and Chase were then offering. After the marketing campaign
Speaker 1: testra and crashed and burn, whole plot was uncovered quite easily, hilariously,
Speaker 1: all of Javis's scheming about how to generate these fake
Speaker 1: names and make it look real, that was all done
Speaker 1: on Frank email accounts, and once JP Morgan Chase acquired Frank,
Speaker 1: they also acquired those email accounts and could just go
Speaker 1: back through the email traffic that documented every step of
Speaker 1: the fraud in the merger. All told, Charlie Javis pocketed
Speaker 1: about thirty million dollars in proceed and also secured a
Speaker 1: twenty million dollar retention bonus. JP Morgan Chase is of
Speaker 1: course trying to claw all of their money back, and
Speaker 1: I should add here for the lawyers, Miss Javis of
Speaker 1: course denies any wrongdoing and is in fact counter sewing
Speaker 1: JP Morgan Chase. So what is the big takeaway here?
Speaker 1: Number one? Know yourself and your vulnerabilities, know what stories
Speaker 1: you would be susceptible to, and don't be an easy mark,
Speaker 1: because I truly do believe we're living in a moment
Speaker 1: that is a wash in audacious schemes and audacious fraud.
Speaker 1: And if JP Morgan Chase can be tricked, you can
Speaker 1: be too. Number two, it's humiliating that one of the
Speaker 1: world's most sophisticated financial institutions could be duped by such
Speaker 1: a brazen scam. Remember all of the supposedly brilliant minds
Speaker 1: and a lead investors in famous business journals who were
Speaker 1: fooled by Elizabeth Holmes of Farnos and Sam BigMan Freed
Speaker 1: of FTX are not half as smart or all knowing
Speaker 1: as they think that they are. Finally, in these successful
Speaker 1: cons we can see the outlines of the failures that
Speaker 1: exist in our society, and that honestly is the part
Speaker 1: that fascinates me the most. With this story, we catch
Speaker 1: a glimpse of a criminal higher education system that inflicts
Speaker 1: deep financial pain on millions to the profit of a few.
Speaker 1: We see greedy banks licking their lips at the chance
Speaker 1: to market a lifetime of debt to these young people.
Speaker 1: We see bio and identity weaponized to gloss over failed
Speaker 1: products and fake claims. We see how little due diligence
Speaker 1: any of our higher institutions of media and finance are
Speaker 1: actually doing, at least when it comes to people who
Speaker 1: have been vouched for by other elites. If we are
Speaker 1: in a golden age of con artists, it's because we
Speaker 1: are in a dark age of societal failures that have
Speaker 1: left almost everyone vulnerable. And this was a humiliating experience
Speaker 1: for Chase because they had to pull down the website.
Speaker 1: And if you want to hear my reaction to Crystal's monologue,
Speaker 1: become a premium subscriber today at breakingpoints dot com. So
Speaker 1: joining us now we have the aforementioned Derek Thompson. He's
Speaker 1: a staff writer at the Atlantic and host of the
Speaker 1: podcast Plain English, the latest episode of which looks at
Speaker 1: these tech layoffs. Great to see Derek, Good to see Man.
Speaker 1: Good to see you guys too. Yeah. Absolutely, so let's
Speaker 1: go and throw his piece from the Atlantic up on
Speaker 1: the screen. Here. The headline is what the tech and
Speaker 1: media layoffs are really telling us about the economy. About
Speaker 1: one hundred and thirty thousand people have been dismissed from
Speaker 1: their jobs at large tech and media companies in the
Speaker 1: past twelve months. Why and what you get at here, Derek,
Speaker 1: is something that we've been really interested in as well,
Speaker 1: which is, you know, in previous years you had these
Speaker 1: sort of knowledge economy and tech workers that were in
Speaker 1: very high demand and seem to be able to sort
Speaker 1: of like name their price. And at the other end
Speaker 1: of the spectrum, we had service sector workers who you know,
Speaker 1: employers are basically treating as disposable. Well, now you have
Speaker 1: a very low unemployment rate, but at the same time
Speaker 1: you see these huge layoffs in the tech sector in particular,
Speaker 1: but also, as you point out, in the media sector
Speaker 1: as well. So what is going on here isn't an
Speaker 1: incredible flipping like in the first part of this century.
Speaker 1: Is let's say the late twenty twenty tens. The story
Speaker 1: was that the labor market was terrible and Silicon Valley
Speaker 1: was the future, and then the pandemic was sort of
Speaker 1: that narrative on steroids. We had a flash freeze depression
Speaker 1: in twenty twenty, but the big tech companies continue to
Speaker 1: hire more and more people. Now the opposite is happening.
Speaker 1: The overall unemployment rate is three point five percent to
Speaker 1: the first decimal. That is the lowest unemployment rate of
Speaker 1: the twenty first century and the lowest unemployment rate going
Speaker 1: back at least forty fifty years. At the same time,
Speaker 1: now you have one hundred thirty thousand people laid off
Speaker 1: from the big tech and media companies. One hundred and
Speaker 1: thirty thousand people. To give you an impression, that's the
Speaker 1: size of Apple before the pandemic. That is a lot
Speaker 1: of people. And yet it's not showing up in the
Speaker 1: unemployment rate because we are having a kind of jobs
Speaker 1: recession that is concentrated in big tech. So why is
Speaker 1: this happening? I run through a bunch of reasons both
Speaker 1: that article and my podcast Planned English. I'll start with this.
Speaker 1: People thought that the pandemic was going to be an acceleration.
Speaker 1: We said, you know, we're going to be living like
Speaker 1: this forever. In the future, we're working from home, ordering
Speaker 1: all of our groceries from online, never going to grocery stores,
Speaker 1: never going to movies, streaming everything that we watch. But
Speaker 1: what happened as the pandemic wound down, as we'd gotten
Speaker 1: too the sort of let's call it late pandemic period,
Speaker 1: we flipped back. We sort of going at out restaurants,
Speaker 1: We started seeing movies a little bit more, we sorted
Speaker 1: commuting to work a little bit more. And as a result,
Speaker 1: is future that tech thought would materialize and not materialize
Speaker 1: the exact same way. Obviously, at the same time, inflation
Speaker 1: went up, rates went up. That means their stock valuations
Speaker 1: came down, and they said, we hired for a future
Speaker 1: that did not materialize. That means we have to start
Speaker 1: laying people off, and that brings you to six percent
Speaker 1: ten percent layoffs. I just want to throw one more
Speaker 1: thing in here, and we can discuss that whatever you want.
Speaker 1: I also think it's an element of what's called in
Speaker 1: psychology social proof. That is, if Microsoft lays off ten
Speaker 1: thousand people, it's much easier for Google to then lay
Speaker 1: off exactly ten thousand people. Much easier for salesforce to
Speaker 1: then lay off ten thousand people. You can have kind
Speaker 1: of cordated layoffs or de risked layoffs as a CEO,
Speaker 1: because you don't expect the media to get as mad
Speaker 1: at you if everybody is doing it right. It's a
Speaker 1: little bit like a riot. If the first person throws
Speaker 1: a rock through window, they're crazy. If the nineteenth person
Speaker 1: throws a rock through window, they're just a part of
Speaker 1: the crowd. So I do think there's an economic story
Speaker 1: to tell here, but there's also a psychology story to
Speaker 1: tell here with regard to the CEOs that are doing
Speaker 1: this to juice up their stock valuations. That's a really
Speaker 1: excellent point, actually, Derek. I've seen a lot of Silicon
Speaker 1: Valley guys who were looking at the Elon situation. Many
Speaker 1: of them are like, look, I'm not even a fan
Speaker 1: of Elon. They're like, but if you can fire you know,
Speaker 1: seventy percent of your staff and your product still works.
Speaker 1: And I'm putting aside the ad revenue and the down
Speaker 1: on that, but the core product itself doesn't appear to
Speaker 1: have as many problems as predicted. He said, you're an idiot.
Speaker 1: If you think every Silicon Valley CEO is not paying
Speaker 1: attention to that, Do you think that that might have
Speaker 1: played summer role in this in addition to the cheap
Speaker 1: money discussion. Yeah, it's a really interesting point. Let me
Speaker 1: say two things here. The first point to make is
Speaker 1: that you're putting meat on the bones of the social
Speaker 1: proof theory Elon might have offered in this story, social
Speaker 1: proof that you can lay off a ton of engineers
Speaker 1: and computer programmers and people maybe in HR or in
Speaker 1: some other part of the company, and the company seems
Speaker 1: to be at least the product seems to be still
Speaker 1: moving predictably through the rails. Okay, fine, that I understand
Speaker 1: why that might get some people to say, I thought
Speaker 1: about laying off five percent of my workforce. Now maybe
Speaker 1: I can lay off ten percent of my workforce and
Speaker 1: I won't fundamentally damage the underline products. But you also
Speaker 1: put your finger on something that's very important. How is
Speaker 1: Twitter doing as a company? Yes, terribly, but terribly. Their
Speaker 1: advertising revenue is down forty percent. You go on the
Speaker 1: platform and it's a bunch of like recommended promoted tweets
Speaker 1: from people that I don't even follow. The product might
Speaker 1: basically look the same, but as a business, it is
Speaker 1: software to the point that Elon now has to scroungejump
Speaker 1: more money to make that first interest rate payment. So
Speaker 1: if I'm a CEO, I'm a smart CEO in Silicon Valley,
Speaker 1: you want to be careful about what lesson to draw
Speaker 1: from Twitter. Yes, maybe you could argue that your company
Speaker 1: is overstaffed in terms of computer programmers, and therefore you
Speaker 1: can lay off some people and you know, whatever Google
Speaker 1: or Azure whatever can still can still function. But at
Speaker 1: the same time, I don't think that what Elon Musk
Speaker 1: is doing to the business of Twitter should offer any
Speaker 1: kind of roadmap to anybody yet, because Twitter is a
Speaker 1: dumpster fire in terms of its finances. Right, excellent point.
Speaker 1: Let's talk a little bit more about the cheap money piece,
Speaker 1: which has shifted just in the past year, because I
Speaker 1: find this part really interesting. I was listening to an
Speaker 1: interview with Sam Altman, who's the CEO of open Ai,
Speaker 1: and he was saying, counterintuitively, like, listen, I actually think
Speaker 1: now is the best time to start a business. Yeah,
Speaker 1: financing is going to be difficult, but everything else is
Speaker 1: actually easy because you're gonna have an easier time getting people,
Speaker 1: You're going to have an easier time distinguishing yourself and
Speaker 1: being able to innovate and create sort of real value.
Speaker 1: And inherent he put this all very diplomatically, by the way,
Speaker 1: but inherent in his analysis was the fact that you
Speaker 1: had a bunch of tech companies that really didn't have
Speaker 1: a business model that only were continued to able to
Speaker 1: continue to exist because of the ability to grab some
Speaker 1: of this cheap cash and sort of like float their
Speaker 1: debt forever and ever and ever. So I have a
Speaker 1: lot of compassion for the people who are being laid
Speaker 1: off right now, Like that's an incredibly traumatic event ultimately,
Speaker 1: even if you are higher up on the income scale.
Speaker 1: But do you think there could be a silver lining
Speaker 1: here where there is more of an emphasis on like
Speaker 1: actual real business models that generate a profit and include
Speaker 1: innovation and ways that you know, consumers and others ultimately
Speaker 1: benefit from. It's certainly possible. You could definitely tell a
Speaker 1: pretty compelling story that when rates are low and money
Speaker 1: is easy, hiring is easy, which means hiring the right
Speaker 1: person's hard because everyone is trying to hire at the
Speaker 1: exact same time. But it's a different story when rates
Speaker 1: go up and then hiring is a little bit harder
Speaker 1: people are laying off rather than adding to their headcount.
Speaker 1: That means that there are more people that are available
Speaker 1: to be hired. And as a result, you know, you
Speaker 1: take the ten thousand people that are being laid off
Speaker 1: from Google, you add it to the ten thousand people
Speaker 1: being laid off from Salesforce and Microsoft and Amazon, you think, wow,
Speaker 1: this could be the kindling for a really interesting startup.
Speaker 1: So yeah, I think it's important to both have a
Speaker 1: lot of you know, compassion for people who are losing
Speaker 1: their jobs right now. Losing your job sucks, even with
Speaker 1: what I hope would be the fantastic or relatively fantastic
Speaker 1: severance packages from a place like Alphabet. I also think
Speaker 1: that we could be primed for pretty interesting period of
Speaker 1: innovation because now these kind of employees are in the
Speaker 1: marketplace and they're thinking, Okay, what do I do next?
Speaker 1: Do I go right back to you know, trade desk,
Speaker 1: Do I go right back to a shopify, or do
Speaker 1: I think, you know, I really want to do something
Speaker 1: that matters to the world. I want to start a
Speaker 1: company or belong to a startup that's really doing something interesting.
Speaker 1: For the world, and not just creating a new way
Speaker 1: of digitized gambling, which I think is what a lot
Speaker 1: of these crypto startups were. That is an optimistic read
Speaker 1: to put on this. Of course, it's economics. The most
Speaker 1: optimistic read that you can put on something is not
Speaker 1: always the thing that happens, but it certainly could happen theoretically. Yeah,
Speaker 1: I think that's the most important Derek. I know that
Speaker 1: you're really interested in the history of innovation. Where do
Speaker 1: you see things right now? Are you optimistic about this
Speaker 1: in terms of possibly changing the terms of the way
Speaker 1: that tech is going to operate, or do you think
Speaker 1: they were ending more of a lull period. I think
Speaker 1: that we are entering a period where tech is going
Speaker 1: to continue to be an absolutely massive part of our lives,
Speaker 1: and that we would make a mistake if we think
Speaker 1: that one hundred and thirty thousand people being laid off
Speaker 1: from big tech is going to change the role Google
Speaker 1: in our lives, or Amazon in our lives, or Microsoft
Speaker 1: in our lives. These companies continue to be the largest,
Speaker 1: most powerful, most profitable com company in the world. Yes,
Speaker 1: they laid off six to ten percent of the workforce. Yes,
Speaker 1: that is in many cases the largest layoff in these
Speaker 1: companies history. But these still are the most significant institutions
Speaker 1: organizations may be in the world. So if you're a regulator,
Speaker 1: or if you're just an analyst, I would say, don't
Speaker 1: let up. Continue to scrutinize, continue to look at what
Speaker 1: they're doing and criticize what they're doing if it looks
Speaker 1: like they're abusing their power, because they still have quite
Speaker 1: a lot of it, right. I think that is all
Speaker 1: very well put. Guys, follow Derek. He does fantastic work
Speaker 1: and it's going to make you think harder about a
Speaker 1: lot of different topics. Great to see you, my friend
Speaker 1: critzea man, thank you. Thank you guys so much for watching.
Speaker 1: Really appreciate it. I'm sure you guys enjoyed our videos
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Speaker 1: out for Counterpoints tomorrow. Yeah, they got some great Suprise planned.
Speaker 1: They've got some good stuff. I'm always excited to see
Speaker 1: what they is. It's just nice to have a continuous
Speaker 1: flow throughout the week and then of course we'll be
Speaker 1: back here on Thursday. Love y'all, See you Thursday.