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Speaker 3: dot com. Turning out to China, this story absolutely captivated
Speaker 3: me and is really picking me think a lot about
Speaker 3: their system versus ours. Let's put it up here on
Speaker 3: the screen, see one. So in China, the headline that
Speaker 3: The Wall Street Journal rights is this billionaire becomes China's
Speaker 3: Charles Schwab quote ben Beijing crackdown leaf lea Futu brokerage
Speaker 3: has become a central target in the government's campaign to
Speaker 3: control the flow of Chinese money offshore. So leef Lee
Speaker 3: said his inspiration came from Charles Schwab. Within a decade,
Speaker 3: he built a company that spanned all of China, Hong Kong,
Speaker 3: Asian markets, and the US. Like his American idol, Lee
Speaker 3: pivoted from simple trading to managing clients well.
Speaker 1: Through mutual funds and advisory services.
Speaker 3: Now Lee's ambition is colliding with Chinese authority. His company,
Speaker 3: Futu Holdings, has become a central target in the state's
Speaker 3: crackdown on the flow of Chinese money offshore. Authorities in
Speaker 3: May handed the NASDAQ listed Futu a two hundred and
Speaker 3: seventy one million dollars penalty for offering brokerage services and
Speaker 3: mutual funds to customers and mainland China without a license,
Speaker 3: and that action included a personal fine for Lee. The
Speaker 3: news obviously sent their per share price down thirty percent
Speaker 3: in a single day and now has a market cap
Speaker 3: of less than fifteen billion. But the quote the fall
Speaker 3: in the share price is knocked hundreds of millions of
Speaker 3: dollars off of Lee's network, which is now at roughly
Speaker 3: five point seven What they point to, though, generally, is
Speaker 3: that this regularatory action against this company is a way
Speaker 3: for the previously China's tech elite, As they explained, we're
Speaker 3: able to list their companies in Hong Kong and then
Speaker 3: mint fortunes offshore beyond the reach of Chinese authorities. What
Speaker 3: this does is they have completely shut that down any
Speaker 3: foreign flight of capital, and they said that they will
Speaker 3: continue to tax offshore trusts previously, which is a very
Speaker 3: popular tool for a lot of these Chinese investors. But
Speaker 3: the reason why that they went after this company specifically,
Speaker 3: and like kind of the story of this entire takedown
Speaker 3: is that Chinese authorities, at the end of the day
Speaker 3: are like, no, you do not get to offer securities
Speaker 3: and tax advantages to a bunch of our rich people
Speaker 3: without suffering the consequences and operating under a license. So
Speaker 3: you know before that this guy was like a global
Speaker 3: celebrity and the Wall Street Journal takedown really of this
Speaker 3: is like, this is the story of there's a lot
Speaker 3: of Chinese billionaires which basically were inspired to recreate, recreate
Speaker 3: many of the rapacious capitalist industries of the United States. Literally,
Speaker 3: the guy says, Charles Schwab was my idol.
Speaker 1: Right.
Speaker 3: They did the same with Google, they did the same
Speaker 3: with Uber. I think it's called d d over there.
Speaker 3: Like you know, basically because China would ban our services,
Speaker 3: they would just recreate them. But what the Chinese state
Speaker 3: saw is that those fundamentally were threats to the power
Speaker 3: of the state. And so while they let them grow
Speaker 3: and initially they were happy with a lot of their
Speaker 3: wealth accumulation, they eventually come to see the Jackms and
Speaker 3: Ali Baba's and this Futu and all of these other
Speaker 3: billionaires as tools of like a globalist class which are
Speaker 3: fundamentally loyal to capital and to the rest of the
Speaker 3: world into the state. And so what they've done is
Speaker 3: they've come in and cracked down dramatically and sent a
Speaker 3: message to their entire billionaire classes like you work for us,
Speaker 3: and whatever we tell you to do, when we tell
Speaker 3: you to jump, you're going to say how high?
Speaker 1: I mean? You know, it's complicated, like you know, we
Speaker 1: want freedom, et cetera.
Speaker 3: But like, how can you not admire like this system
Speaker 3: where you've got these filthy rich people. All they're doing
Speaker 3: is just helping, you know, like this company. It seems
Speaker 3: like a big part of their cell was just like, hey,
Speaker 3: if you're rich, let me get your money off into
Speaker 3: a tax haven. And they came there like, oh, that's
Speaker 3: not happening at all and then just shut it down completely,
Speaker 3: and they all snap into line, like that's about preserving
Speaker 3: the primacy of the state. Now, obviously there's an undemocratic state,
Speaker 3: but the tool and the mechanism of that is something
Speaker 3: which you can't help but admire the seriousness which they
Speaker 3: take their endeavor of sovereignty. They're like, we run shit.
Speaker 3: The government is a person ultimately that you will be
Speaker 3: accountable to. You do not get to create these private
Speaker 3: next seas of wealth which ultimately will challenge our authority,
Speaker 3: and like, that's how it should be in my opinion.
Speaker 2: You can't help but admire the lack of corruption that
Speaker 2: this that this indicates, because you could not imagine a
Speaker 2: service that not only was run by a powerful, very
Speaker 2: wealthy person, but then is servicing all of the powerful
Speaker 2: wealthy Americans that our government would come.
Speaker 4: In and say, oh no, you can't do that, we're
Speaker 4: shutting this all down.
Speaker 2: Sorry, entire billionaire class would never happen here because of
Speaker 2: our own democratic failures and the way that oligarchy, the
Speaker 2: aligarchy has been allowed to buy our political system, and
Speaker 2: money has been equated with speech. So you look at
Speaker 2: that and you're like, wow, that's possible for you. That
Speaker 2: is wild, regardless of whether you think it's the right
Speaker 2: policy or not. But to your point, it's not just
Speaker 2: that they were moving their money into tax havens. It's
Speaker 2: also that they were investing their money in other global
Speaker 2: companies outside of China. So you know, they were buying
Speaker 2: stocks in American AI companies. A lot of this was
Speaker 2: heavily invested in, you know, the AI American stock boom.
Speaker 2: And so this is also no you can invest you
Speaker 2: can invest in Chinese companies here at home. That's what
Speaker 2: you are allowed to do, and we're going to actually
Speaker 2: enforce it and make sure that that is the case.
Speaker 2: They've also instituted policies not just in this regard, but
Speaker 2: to make sure that their top graph are not by
Speaker 2: and large going into Wall Street type financial engineering, that
Speaker 2: they are much more focused on STEM and technology, and
Speaker 2: as a result, the number of engineers that they graduate
Speaker 2: every year vastly.
Speaker 4: Exceeds I mean it's not even close.
Speaker 2: It's multiples of times more than what we graduate here
Speaker 2: in the United States. And then that also has led
Speaker 2: to Okay, now you've got the best in the bartist
Speaker 2: minds not going in to create some new exotic derivative
Speaker 2: that basically crashes the economy and exploits for people. They're
Speaker 2: going to develop technology, and that's why China on almost
Speaker 2: every technological frontier development is leading us.
Speaker 4: I was just saying in humanoid.
Speaker 2: Robotics, they have like ninety eight percent of the market, Like,
Speaker 2: we're not even competing there. The only thing we fit
Speaker 2: focus on is AI, where our frontier labs are a
Speaker 2: little bit a little bit ahead of them. But even that,
Speaker 2: you ask how long is that going to be the case.
Speaker 2: There's nothing that says that we're going to maintain that
Speaker 2: lead forever.
Speaker 4: So it's just a completely.
Speaker 2: Different orientation of their priorities, of their politicist.
Speaker 3: The crackdown is meant to fit funnel Chinese individual investors
Speaker 3: into licensed platforms where the people can trade only on
Speaker 3: China's domestic stock exchanges. Citizens are also permitted to invest overseas,
Speaker 3: but mainly through government approved methods that return any profits
Speaker 3: in Wand so they're like, look, sure you can invest abroad,
Speaker 3: it will be under a domestically licensed platform. The profit
Speaker 3: has to be delivered in Wan because we don't want
Speaker 3: currency problems. Again, like what they're focused on principally is sovereignty.
Speaker 3: That's at the end of the day, Like, that's what
Speaker 3: our biggest problem is here. Like if we have the
Speaker 3: biggest tension that we've always had, this is between the
Speaker 3: capital billionaire globalist class, which cares much more about making
Speaker 3: money than about their own citizens. That has always been
Speaker 3: our dance with democracy and with capitalism. Part of what
Speaker 3: we've seen over the last twenty five years is many
Speaker 3: of these people believe of themselves as transnational entities of
Speaker 3: which their only job is to preserve shareholder value, and
Speaker 3: they don't give two shits about the American world. And
Speaker 3: the only person that that American worker can look to
Speaker 3: is their government to make sure that those people are
Speaker 3: kept in check and to make sure that some of
Speaker 3: this extraordinary profit will also have ancillary benefit to the
Speaker 3: median American beyond your four oh one k going up
Speaker 3: when fifty percent of the country doesn't have four oh
Speaker 3: one k. Compare it then to our system, which kind
Speaker 3: of looks like the old Chinese system. Let's put C
Speaker 3: two up here on the screen.
Speaker 1: Here's Trump. This is the latest story from Trump.
Speaker 5: Quote.
Speaker 3: The curious case of Guran Bobby Zoo shows the ease
Speaker 3: with which investors with shady backgrounds and unknown motivations can
Speaker 3: funnel money to the president. They say Trump Crypto took
Speaker 3: one hundred million dollars with businessman from a businessman with
Speaker 3: red flags, and they specifically point to this photo at
Speaker 3: the World Cup where you have Zach Witcoff, who's the
Speaker 3: son of Steve Witcoff, in a private suite at the
Speaker 3: World Cup with this investor, Bobby Zoo two years earlier.
Speaker 1: Apparently, Quote was.
Speaker 3: A fail build hardwood flooring retailer in Britain who had
Speaker 3: come under investigation for money laundering and presided over the
Speaker 3: collapse of a small crypto startup. Out of nowhere, he
Speaker 3: became one of the biggest buyers of tokens from World
Speaker 3: Liberty Financial, dropping a total of one hundred million dollars
Speaker 3: to a firm called Aqua. I kept it quiet for months,
Speaker 3: other than briefly speaking as mister Bobby on an audio
Speaker 3: stream on x. However, as they dig into the curious
Speaker 3: case of Zoo, illustrates the ease with which buyers from
Speaker 3: unknown backgrounds motivations can use the anonymity of crypto to
Speaker 3: shower mister Trump with money. The President's recent financial disclosure
Speaker 3: form shows he collected one point four billion from crypto
Speaker 3: businesses last year, the majority of it from anonymous sources.
Speaker 3: It is not even clear how closely they scrutinized his
Speaker 3: past and a money laundering investigation in England with publicly
Speaker 3: available information, as reportions of Joao's troubled business history were
Speaker 3: public record at the time that they decided to accept
Speaker 3: his money. Now look to be clear, like he did
Speaker 3: give the money. He did not respond to a request
Speaker 3: for comment. We don't know about pay for play. I'm
Speaker 3: not really sure why anybody gives somebody one hundred million
Speaker 3: dollars as a president of the United States for no reason,
Speaker 3: just my opinion whenever it comes to businesses. I just
Speaker 3: saw today. You know how Trump's company is selling the
Speaker 3: one hundred thousand dollars a month for first access to
Speaker 3: his true social market moving posts. They have ten customers already,
Speaker 3: so ten times one hundred thousand a month. That's a
Speaker 3: healthy little profit line that you've created there purely off
Speaker 3: of your own information and tool of power. You know,
Speaker 3: in the state, like this is what China was like
Speaker 3: in the nineteen nineties, and it's like we've seen a
Speaker 3: reverse of what that system is looking.
Speaker 2: At in this dude, No one knows where this money
Speaker 2: came from. Literally, he left a wrap sheet of failed businesses,
Speaker 2: was basically deported from the UK because his visa had expired,
Speaker 2: and then he had this sort of money laundering allegations
Speaker 2: hanging over his head and they were leg and no,
Speaker 2: you got to go. He turns back up in Dubai
Speaker 2: and suddenly out of nowhere, and we have no idea
Speaker 2: where the money comes from. Is flush with this one
Speaker 2: hundred million dollars to give to World Liberty Financial And
Speaker 2: of course Trump and the sons and the wick Coughs
Speaker 2: who are also involved in this, they don't ask a
Speaker 2: single question this thank you for the money, sir, amazing
Speaker 2: doing business with you and keeping it moving right along.
Speaker 2: And as a public, we have no idea what this
Speaker 2: man expects to get from that one hundred million dollars
Speaker 2: or whoever he is representing, whoever he is the front
Speaker 2: person for. We have no idea what strings this money
Speaker 2: is coming with. And this is just another day under
Speaker 2: the Trump regime, this.
Speaker 1: Sort of story.
Speaker 4: You could literally tell this.
Speaker 2: Story every day of the week of some utterly shameless
Speaker 2: level corrupt skeazy deal, and much of it to do
Speaker 2: with Crypto in terms of the massive amount of increase
Speaker 2: in wealth, the billions that he has been able to accumulate,
Speaker 2: Justin's coming back into power in Trump two point zero,
Speaker 2: so very extraordinary. There's another story we wanted to highlight here,
Speaker 2: which is wild, so we covered before Dear to our hearts,
Speaker 2: Jared Kushner and Avanka were on the yacht you can't
Speaker 2: even tell this story without just sounding anti Semitic, on
Speaker 2: a Rothschild yacht and discovered, like their Christopher Columbus, this island,
Speaker 2: Albanian island that oh my god, it would make Avonka's
Speaker 2: dreams come true to develop into some sort of luxury property.
Speaker 2: And talking about this thing, we played the video before, well,
Speaker 2: the people of Albani were like, no, this is our island.
Speaker 2: We don't want you there. And as part of this
Speaker 2: island deal, they are also buying buying property on this
Speaker 2: nearby peninsula. And now we're finding out more about the
Speaker 2: incredibly sketchy, to say the least, characters who are involved
Speaker 2: in this transaction that Kushner quote unquote bought this land
Speaker 2: for from put this up in the scream from the
Speaker 2: Wall Street Journal. Okay, the suspected gangster causing headaches for
Speaker 2: Kushner's Albania deal. I won't go through all of the
Speaker 2: insid outs here, but the TLDR is this dude, our Torchi,
Speaker 2: who is accused of not only being a money launderer,
Speaker 2: not only of having created forged fake documents to claim
Speaker 2: that he owns this peninsula land that the local say
Speaker 2: he does not actually own, and this is apparently common
Speaker 2: problem by the way, in Albania. He also is accused
Speaker 2: drunk trafficker and human smuggler. Okay, that's who Kushner is
Speaker 2: quote unquote buying this Albanian property for so you know,
Speaker 2: just the sketchiest most corrupt dealings you can possibly imagine,
Speaker 2: whether it's here, whether it's in the Middle East, whether
Speaker 2: it's through Crypto, whether it's through Trump.
Speaker 4: And the pardon the.
Speaker 2: Pardon for sale shop that he is set up in
Speaker 2: his second administration. The list goes on and on, but
Speaker 2: no surprise that you've got this kind of incredibly sketchy
Speaker 2: gangster who is deeply enmeshed in this Albanian situation.
Speaker 3: As you said, my favorite part of the story, by
Speaker 3: the way, is what you highlighted is that one chunk
Speaker 3: of land was secured by one of shay Who's lawyers
Speaker 3: in seven by presenting property officials with a mistranslated Ottoman
Speaker 3: era land record while translating from Ottoman Turkish and archivist
Speaker 3: substituted the original owner and inserted his name instead. Court
Speaker 3: later found that is apparently how property is disputed in Albania,
Speaker 3: which is incredible, incredible, All right, Let's get to the
Speaker 3: next one, turning down to flock cameras, which in my opinion,
Speaker 3: is the new data center issue. Every locality in the
Speaker 3: nation having a discussion around these privacy invasion and the
Speaker 3: ubiquity of these cameras everywhere, and they're pairing with police
Speaker 3: powers now becoming a matter significant political controversy all the
Speaker 3: way up to the federal level. Of course, that's going
Speaker 3: to invite certain people to defend them, one of them
Speaker 3: being Barry Weise's Free Press.
Speaker 1: Let's take a listen.
Speaker 6: Do you ever feel like your block That's the panic
Speaker 6: behind a new fear sweeping across America.
Speaker 4: People are freaked out about.
Speaker 6: Surveillance from our employers, our nannycams, and our phones watching
Speaker 6: our every move and right now, this anxiety is being
Speaker 6: taken out of electric saws, in cans of spray paint
Speaker 6: on tools used by law enforcement to keep us all safe.
Speaker 6: The target block safety cameras. In Upstate New York, someone
Speaker 6: cut down a flock safety camera with an electric saw.
Speaker 6: In Oakland, California, another was covered in King Tan In Idaho,
Speaker 6: someone rammed one with their truck. And in good Old Florida,
Speaker 6: a man just sits in his lawn chair with a
Speaker 6: cardboard held up for the less. Since January, roughly twenty
Speaker 6: three cities have handled their contracts or shut off their
Speaker 6: block camera over a fourth amendumal Din service. There's even
Speaker 6: an open source intelligence website deflock that's finding these cameras
Speaker 6: so people know exactly where to vandalize them.
Speaker 4: There's what's actually under attack.
Speaker 7: In twenty twenty five alone, this system help lowly ten
Speaker 7: thousand missing lays off about twenty seven people a day,
Speaker 7: or about one every hour. Over forty percent of agencies
Speaker 7: that block help recover over half of the stolen vehicles
Speaker 7: in their jurisdiction. And Indiana, an infant abducted at a
Speaker 7: shopping center was found in under two hours. In Ohio,
Speaker 7: a missing girl was located in under thirty minutes, and
Speaker 7: this is the tool that people are treating like the enemy.
Speaker 7: It is fair to have concerns about how companies use
Speaker 7: and track our data, but that's not what these cameras
Speaker 7: are for.
Speaker 5: To be blunt, they're not interested in.
Speaker 6: You unless you're a kidnapper, a thief, or someone who
Speaker 6: intends to do harm.
Speaker 1: They're not interested in you unless what does it do
Speaker 1: you need to comply? If you've got nothing to hide,
Speaker 1: then why do you worry?
Speaker 3: This is a vintage of privacy arguments from like the
Speaker 3: War on Terror era, but this is where it actually
Speaker 3: bears investigation. It's like, okay, are these claims even true.
Speaker 3: Let's put the next one up here on the screen.
Speaker 3: And we've gone through some of this before. One in
Speaker 3: three alerts wrong, high error rates and data concerns for
Speaker 3: cities to drop flock, a thirty two percent LAPD false
Speaker 3: positive rate, and immigration data fears have pushed eighty two
Speaker 3: contracts across twenty eight states to collapse. They say that
Speaker 3: an LAPD audit reveals that FLOCK safety cameras produced a
Speaker 3: thirty two point three percent false positive stolen vehicle alert
Speaker 3: rate and at least eighty two municipalities have canceled them.
Speaker 3: More than five thousand cities now currently have flock cameras,
Speaker 3: which are scanning license plates.
Speaker 1: Again, most residents never voted for it.
Speaker 3: Thirty localities apparently just deactivated them since early twenty twenty five,
Speaker 3: and that number continues to grow. But I feel like
Speaker 3: that LAPD in particular, being one of the largest, what
Speaker 3: is the second largest city in the nation, being one
Speaker 3: of those who is going to come out and say, hey,
Speaker 3: purely based on business reasons, I'm not going to put
Speaker 3: morality in the LAPD. I don't think those two things
Speaker 3: to go together. They're not like worried about privacy or
Speaker 3: any of that. For them, it's pure business. They're like,
Speaker 3: oh yeah, we've used it and it got a false
Speaker 3: positive rate for stolen vehicle. We've covered some of the
Speaker 3: stories here, terrifying incidents of people being pulled over and
Speaker 3: finding themselves like either held at gunpoint or others being
Speaker 3: accused of false posits or of having a stolen vehicle.
Speaker 3: We covered previously the guy who drives cars like for
Speaker 3: a living for dealership plates. He got surrounded by police
Speaker 3: on some sort of a false incident, and I think
Speaker 3: there's just like a bigger question like she talks about like, oh,
Speaker 3: these companies are not interested in you, but they do
Speaker 3: have all of the data, so they are interested. And
Speaker 3: also it's not the government that has a data, it's
Speaker 3: the private company themselves. They claim, you know that they
Speaker 3: have to abide by X, Y and Z privacy record.
Speaker 1: Is there an audit of it? Like what are the
Speaker 1: internal controls? What exactly what you know?
Speaker 3: Recourse do I have as a citizen to make sure
Speaker 3: that that is not being improperly used?
Speaker 1: And this is everywhere.
Speaker 3: She also says deflock is an organization for people to
Speaker 3: analyze that. Again, by that definition, ways is a terrorist
Speaker 3: tool because I know where every cop is on I ninety.
Speaker 4: Five that framing R.
Speaker 1: That's what I thought, right, So.
Speaker 3: Like they're like, oh, by just knowing where it is,
Speaker 3: that in and of itself is a tool of vandalism.
Speaker 3: I'm sure cops hate it when we mark them on
Speaker 3: ways we do because we don't have a speeding ticket.
Speaker 3: That doesn't make you a terrorist.
Speaker 4: Right right?
Speaker 2: Yeah, of course, And all of this has required obfuscation
Speaker 2: in hiding from people what is actually happening in their
Speaker 2: own towns.
Speaker 4: So they do see deflock.
Speaker 2: As you know, the CEO of a company who later
Speaker 2: apologized called it a terroristic organization because it is providing
Speaker 2: people with just transparency and information about what is happening
Speaker 2: so that they can politically organize.
Speaker 4: And act on it.
Speaker 2: It is so dishonest in her little you know, vertical
Speaker 2: video to not talk about any of the instances of
Speaker 2: misuse that have been documented. I'm not even talking about
Speaker 2: the false positives or police really think they got the
Speaker 2: bad guy and then they come and will show you
Speaker 2: one in a minute and create very dangerous situations.
Speaker 4: By the way, not to mention.
Speaker 2: This as a waste of police resources because they're going
Speaker 2: after the wrong person. Meanwhile, the person whoever they're trying
Speaker 2: to get is getting off scott free. I'm talking about
Speaker 2: the fifty police officers who've been charged with abuse of
Speaker 2: this system using this to stock. Tell me that Flock
Speaker 2: is not interested in you unless you're a kidnapper or thief, etc.
Speaker 2: Tell that to the woman who was stalked by her
Speaker 2: abusive ex, whose child was also stalked by the abusive
Speaker 2: X who'se you know, future partners also stocked. But I mean,
Speaker 2: so it's so such incredibly dishonest and selective frame, and
Speaker 2: she also uses the stats that come directly from the company.
Speaker 2: Just this is like basically a flock camera press release
Speaker 2: that they put together for the free press. To give
Speaker 2: you another example here of you know, a really dangerous
Speaker 2: situation because of a flock error. This is a local
Speaker 2: news story about the wrong person being aggressively pulled over
Speaker 2: on an interstate cops jumping out, guns drawn, and it
Speaker 2: wasn't even the right person.
Speaker 8: Let's take a look at that. This is dfour good morning.
Speaker 8: Yeah quite the vix of Brookefield Police say they pulled
Speaker 8: over a car because Flock Cabra flagged it for connection
Speaker 8: to a Milwaukee homicide, and investigation will turns out quite
Speaker 8: the mix up. Not just wrong person, but also wrong car.
Speaker 8: Take a look again at that video that you see here.
Speaker 8: You could see multiple squads on I ninety four in
Speaker 8: Waukeshaw County, officers with guns drawn and a passenger sticking
Speaker 8: their hands out the window. Police pulled over the car
Speaker 8: after a flog camera flagged it again for Milwaukee homicide.
Speaker 8: But when Brookfield police called Milwaukee, Milwaukee said they no
Speaker 8: longer needed the car or the people inside, so officers
Speaker 8: let them go. That's according to Brookfield Police.
Speaker 4: Wow how long until this gets someone killed?
Speaker 2: I mean, if you're a normal person, it reminds me
Speaker 2: of the ice stops with like the you know, unmarked
Speaker 2: vehicles where people think they're being carjacked. Like, if you're
Speaker 2: a normal person, look, these are marked cars, so to
Speaker 2: be fair here, but you're not expecting to have this
Speaker 2: aggressive You're on an interstate and they're pinning you in
Speaker 2: and coming out guns drawn. Most people don't know how
Speaker 2: to react in that situation. You make one wrong move,
Speaker 2: next thing you know, you've got a person who is killed.
Speaker 2: And the death on the conscience of the officers too,
Speaker 2: by the way, all because of this stupid tech that
Speaker 2: got something wrong.
Speaker 4: It is a very disturbing situation. And I get that.
Speaker 2: There's no doubt they're helping to solve some crimes. There's
Speaker 2: no doubt about it.
Speaker 1: You're right, But you have to ask.
Speaker 2: A question where do you draw the line, because that
Speaker 2: logic will work forever of Okay, Well, if we just
Speaker 2: put cameras on every street, if we just put cameras
Speaker 2: in every building, if we just put cameras, you know,
Speaker 2: activate your phone camera in every house, then no one
Speaker 2: could ever get away with anything, and then they'd have
Speaker 2: one hundred percent compliance.
Speaker 4: With the law.
Speaker 2: Is that worth it to you? So where are you
Speaker 2: going to draw the line? And I think many Americans
Speaker 2: at this point are drawing the line before we get
Speaker 2: to flot cameras. There was a man who was arrested
Speaker 2: in West Virginia for vandalizing a FLOT camera and the
Speaker 2: Facebook post about his arrest, but D three b up
Speaker 2: on the screen twenty nine thousand plus commons and all
Speaker 2: of them are like, Oh, it couldn't have been him.
Speaker 2: He was with me, were helping orphans. Yeah, it's a
Speaker 2: couldn't have been him. He was helping me make a
Speaker 2: tank setup for some snakes. He was saving my neighbor's
Speaker 2: dog from a fire all day. Couldn't be him arrested
Speaker 2: for doing community services wild, couldn't be he was connoeing
Speaker 2: with me that day. This is literally I can't say
Speaker 2: one hundred percent, but this is like ninety nine percent
Speaker 2: of the comments that were left on this post. To
Speaker 2: give you a sense of how much this has disturbed
Speaker 2: the population at large.
Speaker 3: And I think that the private angle really matters here.
Speaker 3: It's a company with no like, for example, their Trust
Speaker 3: Center says every search is recorded, logs and review tools
Speaker 3: to help agencies check usage. That The thing is, though,
Speaker 3: is that the audit and review system is run by
Speaker 3: the agency using the camera. It's not by an independent party,
Speaker 3: and none of us voted for it. Like, look, I
Speaker 3: support actually, like, if we're going to have, you know,
Speaker 3: a radical reduction in petty crime, which would be my
Speaker 3: dream here in the United.
Speaker 1: States, I need to make that case.
Speaker 3: We all need to buy in and be like, all right, guys,
Speaker 3: we're going to have these camera systems everywhere. We will
Speaker 3: no longer have petty crime or any of this. But
Speaker 3: this is why I think this is a good bad idea.
Speaker 3: You get to vote and to decide if I lose,
Speaker 3: so be it right?
Speaker 4: Well, and that's important.
Speaker 2: That sort of discussion would require the people who wanted
Speaker 2: them to say, and here's going to be the checks.
Speaker 2: Here's how we're going to make sure that when the
Speaker 2: police department implements this, there's not going to be abuses
Speaker 2: of police officers randomly stalking their ex girlfriends, the mother
Speaker 2: of their children or whatever. And so you would have
Speaker 2: those systems put in place instead. This is the wild,
Speaker 2: wild West people didn't have any idea this was happening.
Speaker 2: There was no democratic accountability or a check. So now
Speaker 2: you have this I think increasing. I mean, I haven't
Speaker 2: seen any polling on it yet, but you were talking
Speaker 2: about how you searched us in Every local news station
Speaker 2: is picking up on LIM because it really is like
Speaker 2: becoming this flashpoint and it ties back to the Francesca
Speaker 2: Haunk things. She's picked us up in her campaign too.
Speaker 3: Very savvayre advice for any politician. When I was researching
Speaker 3: this story, every single look I'm talking talking about Wyoming
Speaker 3: flock cameras, Chicago flock camera, Texas flock camera, every single
Speaker 3: negative headline everyone is about communities getting upset through vandalism,
Speaker 3: about debates. You know, local news organizations are running polls.
Speaker 3: Should we have flock in Cheyenne or something small? Not small,
Speaker 3: but by our standards are small. Like this is not
Speaker 3: a national national issue yet, but it's like data centers.
Speaker 3: I can smell it, Like when there's local news, they
Speaker 3: these people like they know exactly, like what's capturing attention, right,
Speaker 3: that's why they cover crime and.
Speaker 4: They they live in the community, like.
Speaker 1: They know what gets attention.
Speaker 3: If they're all writing up flock and it's all negative,
Speaker 3: free advice for any politician out there. And like I said,
Speaker 3: if you want to defend it, like the free press
Speaker 3: and all that are doing, it needs to be taken
Speaker 3: to a ballot. A locality must vote on whether they
Speaker 3: want themselves, you know, to be surveilled all the time.
Speaker 3: They need guarantees, independent audits, and none of that's happening.
Speaker 1: That's what's so terrifying about this.
Speaker 3: There's no it's like opting in just because the cops
Speaker 3: like it, they get to do whatever they want to do.
Speaker 3: Like that is the inverse of what a civilian force
Speaker 3: we grant extraordinary control should be able to be able
Speaker 3: to do to us.
Speaker 1: So that's my last thing.
Speaker 3: We have to have a democratic, actual process surrounding this,
Speaker 3: and if we come around on it, then that's fine.
Speaker 3: But I don't think that that's going to play out
Speaker 3: right now. Let's get to David dan he's standing by.
Speaker 2: As you guys know, we have been closely tracking a
Speaker 2: lot of developments in the AI space, including whether or
Speaker 2: not this entire BILLDOUN is a massive bubble that may
Speaker 2: end up with taxpayers funding the largest bailout in history.
Speaker 2: David Dan of the American Prospect has identified a potential
Speaker 2: backdoor bailout mechanism that may already have been established. The
Speaker 2: headline here is the AI bailout could be baked into
Speaker 2: the AI bubble. Private credit companies are key owners of
Speaker 2: AI related assets. Many of their parent private equity firms
Speaker 2: own life insures that are dumping grounds for bad loans
Speaker 2: and subject to state bailance. American Prospects David Dan joins
Speaker 2: us now to explain Welcome, Sar, good to you, Hi,
Speaker 2: how you doing great? So just explain to people as
Speaker 2: basic as you can the mechanism here and what your
Speaker 2: concerns are.
Speaker 5: I mean, it's not going to be that easy, but
Speaker 5: here we go.
Speaker 4: Yeah, take your time.
Speaker 5: Oh yeah.
Speaker 9: Private equity over the last several years has purchased a
Speaker 9: number of life insurance firms. Some of the more famous
Speaker 9: ones are Apollo, which is a big private equity firm,
Speaker 9: buying athene KKR, another big fee firm, as a couple
Speaker 9: different life insures, and these life insureds operate very differently,
Speaker 9: particularly their portfolios are very different than a normal life insure.
Speaker 9: A lot of these private credit loans are making their
Speaker 9: way into the balance sheets of the these life insurers,
Speaker 9: and this then gets tied into the way that life
Speaker 9: insurance insolvencies are resolved, so it's not through the traditional
Speaker 9: bankruptcy system, and there's good reason for that because life
Speaker 9: insurance policies are relied upon by people and families when
Speaker 9: one of their loved ones die, and the public policy
Speaker 9: does not want those to just simply go away if
Speaker 9: a life insured becomes insolvent, so there's a lot of
Speaker 9: risk on these pe owned life insure balance sheets in
Speaker 9: the event of an insolvency. The way it works in
Speaker 9: almost every state is that there are after the fact assessments,
Speaker 9: almost like deposit insurance with the FDIC, with one key
Speaker 9: difference in deposit insurance, the assessments are made before a
Speaker 9: company goes bankrupt, so all banks pay into this fund,
Speaker 9: and when there is an insolvency that bank those deposits
Speaker 9: are covered by the amount of money in the fund.
Speaker 9: With life insurance, if there's an insolvency, only the surviving
Speaker 9: companies end up paying for the insolvent firm to back
Speaker 9: up those policies. However, there's sort of this bailout written
Speaker 9: into it. Those surviving firms in forty four states then
Speaker 9: can get a tax credit that is equal to one
Speaker 9: hundred percent of the assessment that they make, and therefore
Speaker 9: it's state taxpayers who end up on the hook for
Speaker 9: these insolvent life insurance companies. The theory here is that
Speaker 9: private credit, which has a lot of AI related assets,
Speaker 9: make these insolvencies a bit more likely. And if that's
Speaker 9: the case, then essentially the popping of the AI bubble
Speaker 9: could trigger this process by which state taxpayers would essentially
Speaker 9: be paying for the sins of these life insurance companies
Speaker 9: owned by private equity.
Speaker 3: Got it, Okay, So when we put all of this together,
Speaker 3: all of this financing, this deck of cards, we can
Speaker 3: put E two, for example, up on the screen. This
Speaker 3: was just announced yesterday Wall Street giants partnering with Nvidia
Speaker 3: on a five hundred billion dollar AI financing deal. Apollo,
Speaker 3: Blackstone Goldman among the groups working with the chip maker
Speaker 3: to raise capital for data centers. Apparently it is one
Speaker 3: of the largest capital raises I think private capital raises
Speaker 3: in Wall Street history.
Speaker 1: How do these two things fit together?
Speaker 9: Well, obviously, there's just a ton of money flooding into
Speaker 9: this space, and if you think about some of the
Speaker 9: events of the last few weeks, the release of more
Speaker 9: AI models that show that actually you don't need this
Speaker 9: kind of capital expansion to create functional artificial intelligence funnels,
Speaker 9: the extreme expense that private companies are paying for things
Speaker 9: like chat GPT, for things like anthropic models, and then
Speaker 9: abandoning this process because the price has risen so heavily
Speaker 9: on tokens, which is the way that companies pay for AI.
Speaker 9: You put this all together, and the incredible, as I'm
Speaker 9: sure you guys have reported, the incredible backlash to data
Speaker 9: center buildouts. Many of these private credit loans are based
Speaker 9: in the financing of construction of data centers. And so
Speaker 9: you put all this together, and there are a lot
Speaker 9: of ways where the current model of throwing hundreds of
Speaker 9: billions of dollars at capital expenditures which finance data centers,
Speaker 9: which create frontier.
Speaker 5: Models, could go away, right.
Speaker 9: I mean that there there are a lot of ways
Speaker 9: where that could go sour. And whether it's Wall Street
Speaker 9: money from uh, you know, private banks, or whether it's
Speaker 9: money that has been loaned through these special purpose vehicles
Speaker 9: that are tied to private credit, any way in which
Speaker 9: the data center mass capital expenditure becomes problematic could threaten
Speaker 9: any of those those sources of capital. And you know,
Speaker 9: the difference between this being a situation with banks and
Speaker 9: the different and being a situation with private credit loans
Speaker 9: that have been dumped on mass into these life insurance
Speaker 9: company portfolios is that with banks, you'd have to sort
Speaker 9: of put together some sort of bailout authority, you know,
Speaker 9: much like TARP into thousand and eight or the Federal
Speaker 9: Reserve would have.
Speaker 5: To engage in some action.
Speaker 9: Whereas with respect to the life insurance companies if they
Speaker 9: go insolvent, this is just triggered because this is already
Speaker 9: the law in most states in the Union.
Speaker 2: Can you explain for people what private credit is and
Speaker 2: why it has ended up being such an important source
Speaker 2: of financing for the AI build out.
Speaker 9: Private credit is essentially the credit arm of private equity.
Speaker 9: So most private equity firms now are these sort of
Speaker 9: full service entities and platforms, and private credit is their
Speaker 9: lending arm. Most private credit loans are two portfolio companies
Speaker 9: of that private equity firm. That's not completely out of
Speaker 9: the woods either, because a lot of private equity firms,
Speaker 9: for example, bought software companies that are threatened if the
Speaker 9: AI actually goes well, and these software companies are no
Speaker 9: longer needed. We've had this software apocalypse in the markets
Speaker 9: where software companies have seen their stocks just absolutely plummet.
Speaker 9: That has led to a lot of redemptions from companies
Speaker 9: or for investors who are in private credit. The way
Speaker 9: that private credit is financed is the same way that
Speaker 9: private equity is financed. Investors, institutional investors give money to
Speaker 9: the private equity fund. The private equity fund invested, in
Speaker 9: this case in loans. In the case of just normal
Speaker 9: private equity, the money is used along with borrowed money
Speaker 9: to buy companies. So it's just another way to engage
Speaker 9: in this financing. And a lot of these loans are
Speaker 9: somewhat suspect.
Speaker 5: It's hard to value them.
Speaker 9: They have sort of bespoke credit rating agencies that are
Speaker 9: paid by the private equity firms to give them good ratings.
Speaker 9: Not a lot of people know what sort of goes
Speaker 9: into the secret sauce of these private credit loans, and
Speaker 9: certainly the National Association of Insurance Commissioners, which is a
Speaker 9: state based organization of state insurance commissioners, has no idea
Speaker 9: what are in these loans. And one thing a paper
Speaker 9: that is put out by two researchers, one from Texas
Speaker 9: and on from Yale, looked at some of the portfolio
Speaker 9: balance sheets of these private credit companies and found that
Speaker 9: specifically prospect to life insurers. Whereas a normal life insure
Speaker 9: has a pretty modest mix of mostly corporate, very blue
Speaker 9: chip corporate loans and treasuries, about thirteen percent of a
Speaker 9: normal life insure is in private placement like alternative assets,
Speaker 9: private credit loans, things like that. When it's a private
Speaker 9: equity owned private life insure, about half of those loans
Speaker 9: are in private credit and things of that nature.
Speaker 5: And so these are just much riskier debts.
Speaker 9: And it does seem that these life insurance companies, their
Speaker 9: balance sheets have become sort of dumping grounds for loans
Speaker 9: that couldn't be you know, and maybe they're not being
Speaker 9: not performing well, or they're engaged in for bearans where
Speaker 9: the you know, the borrower doesn't have.
Speaker 5: To pay right away, things of that nature.
Speaker 9: And so this has raised a lot of concern from
Speaker 9: a lot of key observers.
Speaker 3: Wow, yeah, kind of scary, I think hearing you talk
Speaker 3: about it, because it's almost an ingenious way, very similar
Speaker 3: to how they were able to keep the mortgage backed
Speaker 3: security fraud going for so long, and to have a
Speaker 3: built in bailout, I mean, what are the signs that
Speaker 3: we should look for. I mean, are there any regulatory
Speaker 3: ability to crack down on this or is the cake
Speaker 3: just baked well?
Speaker 9: I mean that is the main issue here, is that
Speaker 9: we have not seen this sort of system of life
Speaker 9: insured insolvencies en mass in our history. Since this thing
Speaker 9: has been set up, this kind of procedure whereby the
Speaker 9: surviving firms paid for the policyholders and then they get
Speaker 9: a backdoor bail out through these tax credits, it just
Speaker 9: hasn't happened. In two thousand and eight, AIG was a
Speaker 9: major insurance company and it went basically insolvent, But because
Speaker 9: the federal reserves stepped in and later on Congress blessed
Speaker 9: that through the TART program, we did not see this
Speaker 9: potential this insolvency procedure in action. So it's very untested.
Speaker 9: The people that I talked.
Speaker 10: To, these people who wrote the paper, these research from
Speaker 10: Texas and Yale, don't think it will actually work because
Speaker 10: think about if at the height of the financial crisis,
Speaker 10: every state had to go undergo this process to bail
Speaker 10: out aig like, think about how hard that would have
Speaker 10: been and at a time of extreme stress.
Speaker 5: And that's what we would see.
Speaker 9: If there was, you know, sort of a macro economic
Speaker 9: level of stress throughout the economy and one of these
Speaker 9: life insurance companies a theme or one of the others
Speaker 9: went under, you'd have to have fifty state programs to
Speaker 9: try to resolve this thing.
Speaker 5: And so it's dangerous.
Speaker 9: Obviously there's a lack of sort of regulatory juice on
Speaker 9: the part of these insurance commissioners.
Speaker 5: There's a hope.
Speaker 9: That you know, we could get more more of an
Speaker 9: insight into that, and there's a number of recommendations in
Speaker 9: the paper that I write about in this story about
Speaker 9: how to do that.
Speaker 2: Yeah, very important story. I really recommend people read it.
Speaker 2: I read it two or three times to make sure
Speaker 2: that I understood the dynamics here. But you know, it
Speaker 2: does remind very much of the financial crisis, where there
Speaker 2: were all these linkages beneath the service the surface, and
Speaker 2: also the ratings agencies also being asleep at the switch
Speaker 2: or compromise in a lot of regards. It has a
Speaker 2: lot of echoes for some of what went down there.
Speaker 2: David Dan, thank you. So much.
Speaker 4: Great to see you.
Speaker 1: Thank you, David, appreciate it. Thank you guys so much
Speaker 1: for watching.
Speaker 3: We appreciate it. It'll be a great show for everybody.
Speaker 3: Tomorrow Wednesday.
Speaker 1: See you then