WEBVTT - An Economic Dumpster Fire 0:00:02.560 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio news. 0:00:12.880 --> 0:00:15.560 This is Everybody's Business from Bloomberg BusinessWeek. 0:00:15.640 --> 0:00:16.960 I'm Stacey Banocksmith in. 0:00:16.880 --> 0:00:19.960 New York and I'm Brad Stone in San Francisco in 0:00:20.040 --> 0:00:24.920 for Max Chafkin, who selfishly is taking a vacation this week. 0:00:25.360 --> 0:00:27.480 I know he thought this would be a really good 0:00:27.480 --> 0:00:30.639 week to be out because normally Brad August is sleepy. 0:00:30.640 --> 0:00:31.880 It's supposed to be sleepy. 0:00:32.440 --> 0:00:36.479 Major miscalculation on Max's part, because the news never slows down, 0:00:36.520 --> 0:00:41.200 particularly these days. On today's show, landfill fires are becoming 0:00:41.240 --> 0:00:44.240 a massive problem across the US. They're making people sick, 0:00:44.520 --> 0:00:48.680 breaking regulations. And we've got ACE reporter Laura Bliss, my 0:00:48.800 --> 0:00:52.000 San Francisco Bureau colleague, on to talk about her latest 0:00:52.000 --> 0:00:52.960 BusinessWeek feature. 0:00:53.440 --> 0:00:56.000 And of course there has been panic in the bond 0:00:56.080 --> 0:00:59.400 market this week. The government even stepped in on Wednesday, 0:00:59.760 --> 0:01:03.120 and we also learned that the debt in the US 0:01:03.320 --> 0:01:06.600 is on track to hit forty trillion dollars, which is 0:01:07.959 --> 0:01:09.959 I don't even know if it's mind blowing. It's just 0:01:10.000 --> 0:01:12.360 so far beyond anything I can conceive. 0:01:12.880 --> 0:01:14.919 Also, oil prices are on the rise. 0:01:15.120 --> 0:01:17.640 Diesel set a record this week over one hundred dollars 0:01:17.640 --> 0:01:20.440 a barrel, and stacy that could push up prices everywhere. 0:01:20.840 --> 0:01:24.759 All of this mix of economic news has people worried 0:01:24.920 --> 0:01:28.640 about stagflation, which is truly, I think one of the 0:01:28.680 --> 0:01:32.760 scariest things in economics. The idea of a stag flated 0:01:32.800 --> 0:01:34.160 economy not good. 0:01:34.520 --> 0:01:37.839 And we talked to your friend economist Alison Schrager about 0:01:37.880 --> 0:01:41.240 some of those historical corollaries and what's really relevant today. 0:01:41.680 --> 0:01:45.200 Okay, Brad, I am now off for an everybody's business 0:01:45.280 --> 0:01:48.320 economist field trip just a few blocks away from Bloomberg's office, 0:01:48.480 --> 0:01:49.120 East River. 0:01:49.800 --> 0:01:50.880 I will be back. 0:01:56.680 --> 0:02:02.120 Alison Schrager, Stacy Vannocksmith here in front of the Roosevelt 0:02:02.160 --> 0:02:05.560 Island tram, and we are here to talk about one 0:02:05.600 --> 0:02:10.800 of the biggest scariest monsters in all of economics, and 0:02:10.840 --> 0:02:16.279 that is stagflation. This tram is a living monument to stagflation. 0:02:16.720 --> 0:02:20.520 So back in the seventies, New York was borrowing all 0:02:20.560 --> 0:02:23.880 this money to do all these big capital projects buildings 0:02:23.919 --> 0:02:26.720 and subways, and they were supposed to build a subway 0:02:26.760 --> 0:02:29.600 to Roosevelt Island, which is an island in the East 0:02:29.680 --> 0:02:31.400 River where a lot of people live and there's a 0:02:31.400 --> 0:02:34.440 big park, and the subway was supposed to go there, 0:02:34.480 --> 0:02:37.720 but they ran out of money because borrowing costs got 0:02:37.840 --> 0:02:41.360 so high, and so they built this tram as a 0:02:41.400 --> 0:02:43.840 temporary stop gap just until they could get the money 0:02:43.840 --> 0:02:46.120 together to continue the subway line. 0:02:46.320 --> 0:02:47.520 I want to have a little. 0:02:47.360 --> 0:02:51.040 Challenge for you if your game Allison as our favorite 0:02:51.880 --> 0:02:56.400 stunt economist here at Everybody's Business, We want to ride 0:02:56.680 --> 0:02:59.960 the tram with you and have you explain stag lace 0:03:00.000 --> 0:03:02.880 shouldn't answer all of our questions on the ride over. 0:03:03.360 --> 0:03:05.320 Do you accept the stagflation challenge? 0:03:05.360 --> 0:03:06.760 Oh? Yeah, I was worried you're gonna ask me to 0:03:06.760 --> 0:03:08.359 do some sort of Spiderman stunt on it. 0:03:08.480 --> 0:03:10.400 So that's for the way back. 0:03:10.480 --> 0:03:13.600 Okay, Yeah? 0:03:17.280 --> 0:03:18.960 Are we standing? 0:03:19.240 --> 0:03:19.400 Yeah? 0:03:19.440 --> 0:03:20.880 I think we're gonna have to stand. 0:03:23.120 --> 0:03:26.960 Like this stagflation challenge Go okay, what is stagflation? 0:03:27.680 --> 0:03:30.000 It is high inflation and high unemployment. 0:03:30.520 --> 0:03:32.880 Why is everybody so scared of it? This is the 0:03:32.919 --> 0:03:33.760 worst of all worlds. 0:03:33.840 --> 0:03:36.280 You lose your job and your money's worthless at the 0:03:36.280 --> 0:03:37.200 same time. 0:03:37.760 --> 0:03:41.800 Why does it usually not happen? Why is it like unusual? 0:03:42.120 --> 0:03:46.320 Well, because usually inflation is associated with high demand economic growth, 0:03:46.320 --> 0:03:49.360 and if that's the case, then usually people are hiring, so. 0:03:49.400 --> 0:03:51.800 Like if prices are rising, then people are hiring. The 0:03:51.800 --> 0:03:53.720 economy's hot, there's a lot of money. 0:03:53.800 --> 0:03:56.200 Yes, inflation is usually associated with the hot economy, which 0:03:56.200 --> 0:03:57.240 also means more hiring. 0:03:57.720 --> 0:04:00.320 And then the stagflation part is what what's the stagnant part? 0:04:01.040 --> 0:04:03.080 Usually it means also means the economy is not growing, 0:04:03.120 --> 0:04:05.440 so people are not hiring and inflation is hot. 0:04:06.200 --> 0:04:08.120 Why is everybody worried about that right now? 0:04:08.680 --> 0:04:11.160 Well, everyone's concerned because it does seem like the job 0:04:11.200 --> 0:04:13.600 market's been okay, but not as great as it used 0:04:13.600 --> 0:04:16.480 to be. But in the same time, inflation is also 0:04:16.720 --> 0:04:19.599 ticking up, so everyone's concerned we might be moving into 0:04:19.600 --> 0:04:20.320 that sort of scenario. 0:04:20.400 --> 0:04:21.000 Oh, it'll be fair. 0:04:21.040 --> 0:04:22.960 We've been worried about this since twenty twenty one. 0:04:23.600 --> 0:04:24.880 What should people be watching? 0:04:24.920 --> 0:04:28.400 What numbers in the economy should people be watching for stagflation? 0:04:28.640 --> 0:04:31.560 Jobs numbers, inflation and unemployment? 0:04:32.200 --> 0:04:38.039 Okay, thank you, yes, I want yeah, got it. 0:04:39.760 --> 0:04:43.960 So here we are on Roosevelt Islands, host sagflation challenge. 0:04:43.960 --> 0:04:45.680 How are you feeling? I'm feeling good. 0:04:45.720 --> 0:04:46.920 I feel like I conquered it. 0:04:47.400 --> 0:04:47.880 I think you did. 0:04:48.040 --> 0:04:50.120 I mean we might not have conquered it as economists 0:04:50.160 --> 0:04:53.680 or policymakers. Yes, but I can answer straightforward questions about it. 0:04:54.880 --> 0:04:57.719 Well, Allison, if your game, We're going to take the 0:04:57.800 --> 0:05:02.280 tram back over to Manhattan, back to Bloomberg, and we're 0:05:02.279 --> 0:05:04.760 going to join Bradstone, and we're going to talk about 0:05:04.800 --> 0:05:08.719 stag fleetion, what's going on in the bond market, and 0:05:09.160 --> 0:05:14.240 a whole bunch of other economic things. Sounds good, Alison Schrager, 0:05:14.360 --> 0:05:17.479 Senior Fellow at the Manhattan Institute. We are back in 0:05:17.560 --> 0:05:20.919 the studio after our Roosevelt Island adventure, and we are 0:05:21.040 --> 0:05:24.599 joined by Bradstone, editor of BusinessWeek. 0:05:25.000 --> 0:05:26.840 Hello Brad, hi, guys. 0:05:27.120 --> 0:05:30.119 I love how all the tourists on the tram aren't 0:05:30.160 --> 0:05:34.000 paying a lick of attention to you, guys, even though 0:05:34.080 --> 0:05:39.320 you're basically saying the dirtiest word in economics, which is stagflation. Now, 0:05:39.360 --> 0:05:42.279 I'm old enough to remember the seventies, but I mean 0:05:42.320 --> 0:05:46.640 it's not that comparable today, right, I mean, inflation is high. 0:05:46.920 --> 0:05:49.880 Stacy wrote about this recently. It's still too high, but 0:05:49.880 --> 0:05:53.600 it's a little over three percent. Unemployment four point one 0:05:53.600 --> 0:05:56.440 percent in July, so so really, how strong is the 0:05:56.440 --> 0:05:59.800 corollary to the nightmare period of the seventies. 0:05:59.839 --> 0:06:03.440 He well, you know, both those numbers they would have 0:06:03.440 --> 0:06:05.920 been very happy with in the seventies, Like three percent 0:06:05.960 --> 0:06:08.720 inflation would have been an amazing rate that they would 0:06:08.720 --> 0:06:11.400 have just felt like inflation is not a problem at all. 0:06:11.839 --> 0:06:14.840 In fact, even in the twenty tens, a lot of 0:06:14.920 --> 0:06:17.120 economists are saying four percent would be even better than 0:06:17.120 --> 0:06:21.600 two percent. So there's nothing necessarily wrong with three percent inflation. 0:06:22.120 --> 0:06:24.280 It's just that we're used to two and that's what 0:06:24.320 --> 0:06:26.679 the central Bank thinks we should have. So it's higher 0:06:26.680 --> 0:06:28.960 than we would like, but not high in the grand 0:06:28.960 --> 0:06:31.160 scheme of things. And also, for a lot of years, 0:06:31.200 --> 0:06:33.520 we thought the natural rate of unemployment was five percent, 0:06:34.120 --> 0:06:36.920 so you know, relative to what we always thought, these 0:06:36.960 --> 0:06:40.200 are both very respectable numbers. But I think I think 0:06:40.240 --> 0:06:42.760 the concern is this could change. We're in a sort 0:06:42.760 --> 0:06:46.200 of a higher inflationary environment than we're used to. We 0:06:46.320 --> 0:06:49.800 might have fewer disinflationary pressures on the economy, which might 0:06:49.880 --> 0:06:52.560 keep it higher. And then if the economy is weakening, 0:06:52.600 --> 0:06:55.400 which it will eventually for some reason, then we could 0:06:55.520 --> 0:06:57.120 end up in a stackflation situation. 0:06:57.560 --> 0:07:00.920 All right, Well, speaking of a weakening This has been 0:07:01.000 --> 0:07:06.520 kind of a major week in macro economic global news. 0:07:07.000 --> 0:07:11.360 The bond market has been making headlines. There's trouble in 0:07:11.400 --> 0:07:15.000 the bond market. Apparently the thirty year bond bond is 0:07:15.040 --> 0:07:17.200 basically like a loan that you give the government and 0:07:17.240 --> 0:07:19.240 the interest rate it has to pay on those loans, 0:07:19.800 --> 0:07:22.120 aka the yield getting really high. 0:07:22.120 --> 0:07:24.440 Apparently investors think the US is riskier. 0:07:25.240 --> 0:07:28.280 What is going on, Well, part of it could be 0:07:28.520 --> 0:07:32.280 the inflation. You know, this is a nominal bond that 0:07:32.400 --> 0:07:35.040 you know, pays off in thirty years, and if inflation 0:07:35.160 --> 0:07:37.840 is indeed three percent forever, that's only a two percent 0:07:37.960 --> 0:07:42.080 yield after inflation, so you would expect yields to be higher. 0:07:42.560 --> 0:07:44.480 My theory is that, you know. 0:07:44.520 --> 0:07:46.760 Markets are just waking up to the fact that everyone 0:07:46.840 --> 0:07:48.760 kind of expected inflation went up, but the Fed said 0:07:48.800 --> 0:07:50.600 we're going to get inflation back to two and now 0:07:50.640 --> 0:07:53.000 maybe we're just gonna live with three for a while. 0:07:53.320 --> 0:07:55.840 So you would expect long term meials to go higher 0:07:56.360 --> 0:07:58.080 as a result of inflation. 0:07:58.520 --> 0:08:02.600 Well, speaking of debt, I feel like government debt is 0:08:02.640 --> 0:08:05.160 like climate change. Now, it's just something our leaders and 0:08:05.280 --> 0:08:08.280 legislators have decided they're not going to talk about anymore. 0:08:08.640 --> 0:08:11.040 And yet we read this week that the debt is 0:08:11.120 --> 0:08:14.239 expected to hit forty trillion dollars Allison, As you mentioned, 0:08:14.480 --> 0:08:17.160 treasury yields are at a high, so it's getting more 0:08:17.200 --> 0:08:21.120 expensive for the US government to borrow money. This is staggering. 0:08:21.200 --> 0:08:24.560 I mean, these numbers can't even imagine. I worry a 0:08:24.560 --> 0:08:27.840 lot about what it means for our kids and grandkids. 0:08:27.880 --> 0:08:30.280 So what does it mean though, for the US economy 0:08:30.320 --> 0:08:32.120 in the short term, Well. 0:08:31.840 --> 0:08:34.280 You know, sovereign debt crisis and I'm not saying that's 0:08:34.320 --> 0:08:38.760 going to happen, but they seem to unfold slowly then suddenly. 0:08:39.240 --> 0:08:42.960 So the concern is like if you look at CBO forecasts, which. 0:08:42.800 --> 0:08:45.920 Okay, whoa, whoa, Okay, do you wonk? Do wonk? 0:08:46.280 --> 0:08:51.480 So the Congressional Budget Office, yes, does estimates on how 0:08:51.480 --> 0:08:54.199 worried we should be about the debt, and they always say, 0:08:54.800 --> 0:08:55.640 be very worried. 0:08:55.920 --> 0:08:56.559 This is bad. 0:08:56.679 --> 0:08:59.559 We should do something, and everyone says, yes, we should 0:08:59.600 --> 0:09:01.640 do something and then does nothing. So they do that, 0:09:02.000 --> 0:09:06.240 but they generally assume interest rates, like the tenure is 0:09:06.320 --> 0:09:08.560 going to be you know, like three four percent? 0:09:08.960 --> 0:09:09.560 Is that high? 0:09:09.640 --> 0:09:12.120 Well, yeah, higher than it was in the twenty tens, 0:09:12.280 --> 0:09:13.440 but like reasonable, So the. 0:09:13.480 --> 0:09:14.840 US is paying more to borrow money. 0:09:14.960 --> 0:09:16.679 Yeah, And when you pay more to borrow money, that's 0:09:16.679 --> 0:09:19.520 the rate we pay it back at, So it becomes 0:09:19.520 --> 0:09:22.240 a bigger part of the budget. So if it's five 0:09:22.320 --> 0:09:25.880 percent and it stays at five percent, then it's like 0:09:25.960 --> 0:09:28.360 we have to devote more of our budget to interest 0:09:28.360 --> 0:09:31.720 payments and not things like Social Security, you know, assuming 0:09:31.800 --> 0:09:34.400 because you know that's also becoming an issue we might 0:09:34.440 --> 0:09:36.920 have to pay for that of general revenues or other 0:09:37.120 --> 0:09:39.680 nice things we want to give people, or defense or 0:09:39.720 --> 0:09:40.559 all these other things. 0:09:40.640 --> 0:09:41.280 We've reached a. 0:09:41.240 --> 0:09:43.560 Point where we're paying more in interest than we are 0:09:43.600 --> 0:09:46.040 in defense, and I guess historically that's been. 0:09:45.920 --> 0:09:49.839 Bad, right, So essentially the government is borrowing a ton 0:09:49.880 --> 0:09:51.800 of money, it is now having to pay more to 0:09:51.800 --> 0:09:54.600 borrow that money. And the amount of money we're paying 0:09:54.679 --> 0:09:57.240 servicing our debts, paying interest on it and things like 0:09:57.280 --> 0:09:59.360 that is now more than the amount we spend on. 0:10:00.679 --> 0:10:04.080 Yes, and it's getting worse. And honestly, I would argue 0:10:04.160 --> 0:10:07.080 five percent for a thirty year bond, giving the fiscal 0:10:07.160 --> 0:10:10.280 nightmare we are is actually pretty low. I mean, historically 0:10:10.320 --> 0:10:11.720 that's not actually that high. 0:10:11.760 --> 0:10:13.719 In interest rate we just got used to. 0:10:13.720 --> 0:10:16.319 It's like inflation, we just got used to freakishly low inflation. 0:10:16.440 --> 0:10:19.440 We got into freakitionly low bond yields. And you know 0:10:19.520 --> 0:10:21.880 that's one of the reasons we also have this expectation 0:10:22.600 --> 0:10:25.800 of what mortgages should be because the mortgage rate is 0:10:25.800 --> 0:10:28.160 based on the tenure, which is a longer term interest rate. 0:10:28.679 --> 0:10:31.400 So when they all go up, we pay more mortgages 0:10:31.440 --> 0:10:33.439 and that starts to really hit consumers. 0:10:33.920 --> 0:10:37.079 So next week in Jackson Hole, we have the Economic 0:10:37.160 --> 0:10:40.920 Policy Symposium, also known as Stacy Vanixsmith's super Bowl. 0:10:41.360 --> 0:10:43.440 She wasted her participation for it every year. 0:10:43.480 --> 0:10:44.560 It's very emotional for me. 0:10:44.880 --> 0:10:47.280 Yeah, and a new chairman in town, Kevin Walsh. 0:10:47.280 --> 0:10:49.480 I would love to hear from both of you, Alison 0:10:49.520 --> 0:10:52.040 and Stacy, what you guys want to hear from Kevin 0:10:52.080 --> 0:10:53.440 worsh I would like to. 0:10:53.360 --> 0:10:56.760 Start getting a better sense of his philosophy of monetary policy. 0:10:56.840 --> 0:10:59.440 I know what he's against. I'm rethinking a lot of 0:10:59.440 --> 0:11:01.760 things in my life life as an economist, and one 0:11:01.800 --> 0:11:04.960 of them is overly transparent monetary policy and forward guidance. 0:11:05.240 --> 0:11:09.280 So I'm with him on skepticism with that, but I 0:11:09.280 --> 0:11:12.400 would like that to be replaced with a better sense of, 0:11:12.840 --> 0:11:15.560 you know, his philosophy in monetary policy. You know, there's 0:11:15.640 --> 0:11:19.080 two schools of thought. Either it's rules it's like this 0:11:19.120 --> 0:11:21.280 is what we do when the data says this, or 0:11:21.280 --> 0:11:23.040 there's discretion and say we don't know what we do. 0:11:23.080 --> 0:11:24.440 We see what the data says and then we sort 0:11:24.440 --> 0:11:26.800 of go with our gut. And in a way, I 0:11:26.800 --> 0:11:29.000 know he's gonna be more data dependent. I haven't gotten 0:11:29.040 --> 0:11:30.880 a sense if he's a rules or a discretion guy. 0:11:30.960 --> 0:11:32.080 I'd like to know that what is. 0:11:32.120 --> 0:11:33.160 Rules or discretion guy? 0:11:33.240 --> 0:11:33.400 Mean? 0:11:33.720 --> 0:11:35.719 So rules would be it's like something called like a 0:11:35.800 --> 0:11:38.240 tailor rule be an example, and it's pretty much if 0:11:38.280 --> 0:11:41.959 inflation is this, and GDP is this, or unemployment is this, 0:11:42.120 --> 0:11:44.000 we do this and this is like what we call 0:11:44.040 --> 0:11:44.920 reaction function. 0:11:45.040 --> 0:11:47.520 Oh that's what reaction function means. It means like if 0:11:47.520 --> 0:11:50.160 this happens, then the FED will do this. If he 0:11:50.280 --> 0:11:52.520 or heard this term, I have not understood this term. 0:11:52.559 --> 0:11:54.960 Okay, excellent, And discretion is just sort of like, you know, 0:11:55.080 --> 0:11:55.840 we see how it goes. 0:11:56.360 --> 0:11:59.320 So I have a slightly different, much less informed take 0:11:59.400 --> 0:12:03.120 than Allison and much less sophisticated, but Jackson hole is 0:12:03.160 --> 0:12:05.439 the moment when the fed chair can kind of show 0:12:05.480 --> 0:12:08.920 their personality. It's a little bit more sort of looser, 0:12:09.600 --> 0:12:12.680 as loose as a fed chair gets, which is not loose. 0:12:12.720 --> 0:12:13.959 Maybe I wear a cowboy hat. 0:12:14.240 --> 0:12:16.160 Oh my gosh, if you wear a cowboy hat, I 0:12:16.160 --> 0:12:19.319 would be all in for Kevin worsh But what I 0:12:19.720 --> 0:12:21.319 kind of want to get a sense of the person 0:12:21.559 --> 0:12:25.600 because to me, I think the personality of the person 0:12:25.800 --> 0:12:28.520 in that position is crucial. At such a powerful position, 0:12:28.720 --> 0:12:31.480 he's going to be under enormous pressure, very likely from 0:12:31.520 --> 0:12:36.360 President Trump, enormous pressure from Congress and the economy, and 0:12:36.480 --> 0:12:38.880 he's just under major scrutiny. 0:12:38.880 --> 0:12:40.480 I feel like that's going to be a hard scrutiny 0:12:40.480 --> 0:12:40.839 to handle. 0:12:40.880 --> 0:12:42.920 It's a tough moment, Like you were saying, for the economy, 0:12:42.960 --> 0:12:45.400 a lot of mixed signals were kind of counting on 0:12:45.480 --> 0:12:48.640 this person. So I kind of want to see a 0:12:48.720 --> 0:12:50.840 sign of like the metal of the man, if that 0:12:50.880 --> 0:12:51.480 makes sense. 0:12:53.120 --> 0:12:56.880 So bringing it back to stagflation alson, like, how how 0:12:56.880 --> 0:12:59.640 should people listening to this prepare? Like what do you 0:12:59.679 --> 0:13:02.960 do as an as an investor, as a consumer to 0:13:03.080 --> 0:13:07.280 prepare for the idea of these unusual economic circumstances of 0:13:07.360 --> 0:13:10.000 high inflation, high unemployment, and low growth. 0:13:10.240 --> 0:13:13.040 I mean, like what you do with any risk diversify 0:13:13.720 --> 0:13:18.680 by gold No, I mean, if that's your thing, but 0:13:19.080 --> 0:13:21.920 you know it actually adds risk to your portfolio, it 0:13:21.960 --> 0:13:22.760 does not reduce it. 0:13:23.200 --> 0:13:24.840 Okay, Sorry, I did not mean to sidetrack. 0:13:25.000 --> 0:13:28.400 I hope my dad is listening, by the way, But 0:13:28.760 --> 0:13:31.440 I mean, you just you don't know how things are 0:13:31.440 --> 0:13:34.000 going to play out. I would just, you know, keep 0:13:34.040 --> 0:13:36.800 money liquid that you need and other than that, buy 0:13:36.840 --> 0:13:41.080 a little bit of everything. Maybe don't speculate on sports gambling. 0:13:41.440 --> 0:13:43.920 You know, good sensible long term invest. 0:13:44.200 --> 0:13:45.080 Like a cowboy hat. 0:13:45.360 --> 0:13:50.080 Yeah all right, Allison, Well, thank you for going on 0:13:50.120 --> 0:13:51.600 the stagflation journey with us. 0:13:51.679 --> 0:13:52.440 It's been a pleasure. 0:13:52.600 --> 0:14:03.000 Any So, Stacey, the US produces almost three hundred million 0:14:03.320 --> 0:14:05.079 tons of garbage every year. 0:14:05.120 --> 0:14:05.640 Did you know that. 0:14:06.120 --> 0:14:10.000 I did not. That's a lot. And like it goes 0:14:10.360 --> 0:14:11.360 where does this go? 0:14:11.600 --> 0:14:14.720 It goes into landfills and they are scattered all across 0:14:14.720 --> 0:14:17.480 the country, hidden away from sight. But a lot of 0:14:17.480 --> 0:14:21.560 these landfills are becoming huge problems. BusinessWeek Senior editor Laura 0:14:21.680 --> 0:14:25.280 Bliss has a really amazing investigative feature in this issue 0:14:25.320 --> 0:14:26.760 about some of these landfills. 0:14:26.840 --> 0:14:29.560 Hi, Laura, Hi, thanks for talking trash with me. 0:14:31.440 --> 0:14:33.800 So this story is actually a sequel. 0:14:34.120 --> 0:14:38.520 So last year you published a blockbuster story I remember 0:14:38.560 --> 0:14:43.560 it's called America's Hot Garbage Problem. It was focused in California. 0:14:43.920 --> 0:14:47.920 Beneath layers of waste. Landfills were getting very hot, reaching 0:14:47.960 --> 0:14:52.760 scorching temperatures, leeching out what you memorably called trash juice, 0:14:53.040 --> 0:14:55.800 and neighbors were getting sick, and regulators responded. 0:14:56.240 --> 0:14:58.160 Now this week you've advanced the story. 0:14:58.160 --> 0:15:00.600 Tell us how yeah, I mean of how you queued 0:15:00.680 --> 0:15:04.080 up this segment, because, just to put this into context, 0:15:04.320 --> 0:15:07.800 landfills trash not the normal subjects of everybody's business. But 0:15:07.960 --> 0:15:11.040 I mean, trash is something we all interact with every day. 0:15:11.120 --> 0:15:14.160 We're generating more of it per capita than an ever 0:15:14.280 --> 0:15:17.120 before here in the US. And yet, yeah, most of 0:15:17.160 --> 0:15:18.880 us never think about what happens to it once it 0:15:18.960 --> 0:15:21.640 leaves our hand or our curb side barrel. But the 0:15:21.680 --> 0:15:24.880 reality is the more of the waste we're generating, the 0:15:24.920 --> 0:15:29.080 bigger landfills get, the bigger the challenges that this is 0:15:29.120 --> 0:15:32.360 actually creating for the companies that are responsible for dealing 0:15:32.400 --> 0:15:35.560 with it, as well as the you know, government agencies 0:15:35.600 --> 0:15:37.600 who are supposed to be overseeing. 0:15:37.680 --> 0:15:38.880 You know, environmental health. 0:15:39.600 --> 0:15:43.480 And so yeah, the TLDR of this story is that 0:15:43.560 --> 0:15:47.000 we found, you know, several landfills, a much larger number 0:15:47.000 --> 0:15:49.880 than we really realized, have been getting really really hot, 0:15:50.000 --> 0:15:52.880 hotter than they're supposed to be under federal rules, and 0:15:52.920 --> 0:15:56.560 in several cases that's leading to pretty serious environmental problems 0:15:57.160 --> 0:15:59.960 like millions of gallons of the trash juice you just 0:16:00.000 --> 0:16:03.120 describe technical term is lead hit, as well as toxic 0:16:03.160 --> 0:16:07.280 emissions that can affect surrounding communities. And this new story 0:16:07.320 --> 0:16:10.880 is based on an analysis of public records from one 0:16:10.960 --> 0:16:14.840 hundred landfills across the country. And the kind of big 0:16:15.000 --> 0:16:18.280 takeaway here is that, you know, when landfill temperatures and 0:16:18.440 --> 0:16:24.000 other key indicators pass these kind of regulatory thresholds, operators 0:16:24.040 --> 0:16:27.240 and regulators really are not intervening at the level that 0:16:27.480 --> 0:16:28.720 experts say is needed. 0:16:29.000 --> 0:16:32.440 So what is the problem here, So the garbage and 0:16:32.480 --> 0:16:36.200 the landfills, it's getting too hot. Why is that something 0:16:36.240 --> 0:16:39.040 that needs to be addressed? Why is this an emergency? 0:16:39.200 --> 0:16:40.200 Great? Great question? 0:16:40.600 --> 0:16:45.200 At a basic level, waste is breaking down in these landfills, 0:16:45.240 --> 0:16:47.280 which can be you know, hundreds of feet deep. It 0:16:47.360 --> 0:16:50.280 generates heat naturally, that's part of the kind of natural process. 0:16:50.440 --> 0:16:53.600 Sometimes it gets way too hot. The EPA sets these 0:16:53.720 --> 0:16:57.360 thresholds on kind of how hot operators are allowed to 0:16:58.080 --> 0:17:01.880 run these landfills at because at certain levels it could 0:17:01.920 --> 0:17:05.439 indicate a fire, like an underground buried fire, which is 0:17:05.480 --> 0:17:09.160 really bad because that releases these toxic emissions we're talking about. 0:17:09.160 --> 0:17:11.880 There's also other kinds of reactions that could be happening 0:17:11.880 --> 0:17:14.920 that are not good. And again, like these hot landfills 0:17:14.960 --> 0:17:17.719 cause problems. They can be really odorous. They can release 0:17:17.800 --> 0:17:21.520 all kinds of noxious emissions from carbon monoxide to benzene, 0:17:21.560 --> 0:17:24.439 which is a carcinogen, and produce huge amounts of this 0:17:24.560 --> 0:17:27.359 leech eate. And so just as one example, the story 0:17:27.359 --> 0:17:31.320 that we published this morning looks at a landfill outside Richmond, Virginia, 0:17:32.200 --> 0:17:35.600 which is generating like a million gallons of this trash 0:17:35.640 --> 0:17:38.520 juice every month. As an apparent side effect of how 0:17:38.560 --> 0:17:41.679 hot the trash's gotten, some of that has been leaking 0:17:41.720 --> 0:17:45.320 into the wastewater system, which feeds into local creeks, which 0:17:45.400 --> 0:17:47.960 ultimately goes into the Chesapeake Bay. So this is a 0:17:48.040 --> 0:17:51.239 huge problem for this community, and the cleanup is going 0:17:51.280 --> 0:17:53.600 to be hugely expensive, like one hundred and seventy three 0:17:53.600 --> 0:17:57.840 million dollars. The operator has declared bankruptcy, putting taxpayers on 0:17:57.880 --> 0:18:00.639 the hook potentially for that amount out and for what 0:18:00.720 --> 0:18:04.720 looks like really serious mismanagement going back several years. You know, 0:18:04.800 --> 0:18:06.760 the other story we did last year focuses on a 0:18:06.840 --> 0:18:10.879 landfill in LA where really related problems, right, tons of 0:18:10.880 --> 0:18:15.680 this toxic trash, juice, really sickening emissions, with neighbors reporting 0:18:15.680 --> 0:18:20.720 stuff like headaches and nausea and more serious and yeah, 0:18:20.960 --> 0:18:25.280 more serious problems too, right, which are obviously always hard 0:18:25.280 --> 0:18:27.280 to draw a causal link. 0:18:27.119 --> 0:18:29.159 Right one one way or the other. But this is 0:18:29.600 --> 0:18:30.960 a problem that is serious. 0:18:30.720 --> 0:18:33.679 Enough that that you know, public health officials are investigating it. 0:18:33.960 --> 0:18:36.760 Are regulators overwhelmed? Is this a resource problem? 0:18:36.840 --> 0:18:39.280 Or is this regulatory capture and they're just putting too 0:18:39.400 --> 0:18:40.719 much trust in operators? 0:18:41.040 --> 0:18:41.240 You know? 0:18:41.359 --> 0:18:43.880 I think at the state level, which is where most 0:18:43.960 --> 0:18:46.600 of this is happening, I think, and we saw examples 0:18:46.600 --> 0:18:49.120 of this, like think in Virginia, there's something like two 0:18:49.640 --> 0:18:53.320 you know, air quality inspectors like for the entire state, 0:18:54.119 --> 0:18:57.000 and so I do think largely speaking, it is a 0:18:57.080 --> 0:19:01.520 question of just limited resources and limited staffing and limited training. 0:19:01.560 --> 0:19:02.520 In a lot of cases. 0:19:02.880 --> 0:19:05.280 We are starting to see this problem more and more, 0:19:05.480 --> 0:19:09.199 these overly hot landfills, and so, you know, this is 0:19:09.200 --> 0:19:11.320 something that's coming on to radar screens. But what we 0:19:11.359 --> 0:19:13.439 saw on our reporting is just like a lot of 0:19:13.440 --> 0:19:16.639 cases where regulators just do not seem to be equipped 0:19:16.760 --> 0:19:19.359 to ask the right questions. At the federal level, I 0:19:19.359 --> 0:19:24.359 think it's more complicated kind of answered that question. You know, 0:19:24.400 --> 0:19:27.680 the industry certainly has a lot of say right and 0:19:28.080 --> 0:19:31.000 kind of how regulations are set. They weigh in any 0:19:31.040 --> 0:19:34.120 time rules get updated. So yeah, I think I think 0:19:34.119 --> 0:19:35.560 it's kind of a mix. 0:19:35.880 --> 0:19:39.040 What is so bad about the garbage getting really hot? 0:19:39.160 --> 0:19:41.000 Why does it matter if it's a fire or not 0:19:41.119 --> 0:19:44.560 a fire? I mean, I imagine that in any landfall 0:19:44.560 --> 0:19:47.320 situation the garbage or emissions from the garbage might kind 0:19:47.359 --> 0:19:47.960 of leak out. 0:19:48.640 --> 0:19:50.480 Why is this different? Why is this worse? 0:19:51.160 --> 0:19:55.520 Yeah, I mean one of the kind of risk factors 0:19:55.680 --> 0:19:59.159 here is And again I know this is wonky, but 0:20:00.000 --> 0:20:02.879 it's also fascinating and on the wall, we know, we 0:20:03.000 --> 0:20:06.800