1 00:00:01,160 --> 00:00:03,240 Speaker 1: I am the son of immigrants and have son of 2 00:00:03,279 --> 00:00:07,280 Speaker 1: immigrant energy, which means I just save everything. I tend 3 00:00:07,320 --> 00:00:10,399 Speaker 1: to not really spend that much money because I'm saving 4 00:00:10,440 --> 00:00:12,400 Speaker 1: for the rainy day that we all know is going 5 00:00:12,440 --> 00:00:15,280 Speaker 1: to come. But there are a lot of signs pointing 6 00:00:15,320 --> 00:00:18,520 Speaker 1: to the economy taking a potential left turn. Here the 7 00:00:18,600 --> 00:00:21,600 Speaker 1: report card that tracks how the economy is doing, it's 8 00:00:21,640 --> 00:00:24,480 Speaker 1: called the Leading Economic Index has been falling for months. 9 00:00:24,920 --> 00:00:27,280 Speaker 1: Big banks like UBS are saying there's a high chance 10 00:00:27,280 --> 00:00:30,520 Speaker 1: of a recession soon. And then you have economists who 11 00:00:30,560 --> 00:00:32,320 Speaker 1: individually are sort of like, oh, the odds are like 12 00:00:32,360 --> 00:00:34,720 Speaker 1: fifty to fifty within the next year. But at the 13 00:00:34,720 --> 00:00:37,960 Speaker 1: same time, fewer houses are being built, companies are hiring less. 14 00:00:38,040 --> 00:00:40,960 Speaker 1: There's obviously an affordability crisis in major cities, but in 15 00:00:41,000 --> 00:00:43,479 Speaker 1: plenty of places around the country. And that's why we're 16 00:00:43,479 --> 00:00:46,760 Speaker 1: here today. And instead of instead of scaring you further, 17 00:00:46,800 --> 00:00:48,680 Speaker 1: I thought, why not talk to somebody who actually knows 18 00:00:49,360 --> 00:00:51,519 Speaker 1: and has written about the two thousand and eight financial 19 00:00:51,520 --> 00:00:53,559 Speaker 1: crisis and can help us understand whether we're headed for 20 00:00:53,600 --> 00:00:54,120 Speaker 1: a new one. 21 00:00:56,000 --> 00:00:56,640 Speaker 2: You know, it's funny. 22 00:00:56,680 --> 00:00:59,280 Speaker 3: I don't live my life in fear of a financial crash. 23 00:00:59,320 --> 00:01:02,280 Speaker 3: So I'm not thinking, oh, it's always this way, but 24 00:01:02,480 --> 00:01:02,920 Speaker 3: because you. 25 00:01:02,840 --> 00:01:05,560 Speaker 2: Have gold under your bed, that well actually do a 26 00:01:05,560 --> 00:01:08,039 Speaker 2: little bit, just a little bit. 27 00:01:11,360 --> 00:01:17,920 Speaker 1: Here we go again, again, again, again. This is here 28 00:01:17,959 --> 00:01:20,600 Speaker 1: we Go Again, a show where we take today's trends 29 00:01:20,600 --> 00:01:24,480 Speaker 1: and headlines and then ask why does history keep repeating itself? 30 00:01:24,959 --> 00:01:27,240 Speaker 1: I'm Calpin, here we go. 31 00:01:42,160 --> 00:01:46,200 Speaker 2: I'm here, Michael cal So. 32 00:01:46,319 --> 00:01:49,720 Speaker 1: Let me brag a little bit about the person across 33 00:01:49,760 --> 00:01:52,880 Speaker 1: from me. I'm a big fan of Michael Lewis. Michael 34 00:01:52,920 --> 00:01:54,680 Speaker 1: Lewis is one of those rare people who can take 35 00:01:54,800 --> 00:01:58,400 Speaker 1: really complicated, insane things like Wall Street creed or baseball 36 00:01:58,440 --> 00:02:02,200 Speaker 1: statistics and them digestible in like a page turning. This 37 00:02:02,280 --> 00:02:04,520 Speaker 1: is a thriller sort of a way. He's written books 38 00:02:04,840 --> 00:02:06,600 Speaker 1: like The blind Side and The Big Short. The Big 39 00:02:06,600 --> 00:02:09,680 Speaker 1: Short just got re released as an audiobook, which Michael 40 00:02:09,720 --> 00:02:12,239 Speaker 1: narrates for the very first time. He's got a podcast 41 00:02:12,280 --> 00:02:15,239 Speaker 1: about trust in modern life. It's called Against the Rules. 42 00:02:15,360 --> 00:02:18,960 Speaker 1: So basically, I'm nerding out hard because I love complicated 43 00:02:19,000 --> 00:02:21,480 Speaker 1: things that can be distilled down for like a nerdy 44 00:02:21,560 --> 00:02:23,359 Speaker 1: dummy like me, and I'm fortunate enough to get to 45 00:02:23,400 --> 00:02:26,160 Speaker 1: ask him the question that's been on my mind. Are 46 00:02:26,160 --> 00:02:27,760 Speaker 1: we going to live through another two thousand and eight 47 00:02:27,800 --> 00:02:28,640 Speaker 1: financial crisis? 48 00:02:28,680 --> 00:02:29,080 Speaker 2: I hope not? 49 00:02:29,480 --> 00:02:31,640 Speaker 1: But then who can I actually trust with my money? 50 00:02:31,840 --> 00:02:34,639 Speaker 2: So? What are we doing? What is this? Tell me something? 51 00:02:35,280 --> 00:02:37,560 Speaker 1: I remember Michael the first time I saw Moneyball, and 52 00:02:37,600 --> 00:02:41,160 Speaker 1: obviously I'm a big fan of the big short and 53 00:02:41,200 --> 00:02:42,840 Speaker 1: my first question was, all, how do I get cast 54 00:02:42,840 --> 00:02:45,919 Speaker 1: in this? Because there are hell of shady brown guys 55 00:02:46,040 --> 00:02:48,960 Speaker 1: in the finance world, many of whom are now in prison. 56 00:02:49,400 --> 00:02:52,320 Speaker 1: I'm trying to get life rights to some of these stories. Also, 57 00:02:52,360 --> 00:02:53,960 Speaker 1: I'm from New Jersey, so if we want to talk 58 00:02:54,000 --> 00:02:57,720 Speaker 1: about like shady guys in the finance world, I know 59 00:02:57,800 --> 00:03:01,000 Speaker 1: some of them, having grown up with County. But I'm 60 00:03:01,000 --> 00:03:03,760 Speaker 1: a big fan. I appreciate you being here. In prepping 61 00:03:03,800 --> 00:03:07,160 Speaker 1: to talk to you, I thought about two thousand and 62 00:03:07,200 --> 00:03:12,080 Speaker 1: eight financial crisis, and sort of after it, I learned 63 00:03:12,120 --> 00:03:15,200 Speaker 1: that an old friend of mine at the time, pretty 64 00:03:15,200 --> 00:03:19,399 Speaker 1: good college friend, had been directly involved in the following way. 65 00:03:19,480 --> 00:03:23,960 Speaker 1: He was selling subprime mortgages for one of those big companies. 66 00:03:24,080 --> 00:03:26,480 Speaker 1: And so, I, you know, I was a little bit 67 00:03:26,480 --> 00:03:28,280 Speaker 1: on my soapbox, I think like most of us were, 68 00:03:28,320 --> 00:03:31,680 Speaker 1: and I wanted to learn what it was like to 69 00:03:31,760 --> 00:03:33,960 Speaker 1: cause that much harmed to vulnerable people. And I think 70 00:03:34,000 --> 00:03:35,760 Speaker 1: maybe part of the problem was I asked it in 71 00:03:35,800 --> 00:03:39,200 Speaker 1: that way, and I was kind of reminded of how 72 00:03:39,320 --> 00:03:43,200 Speaker 1: naive I am sometimes, because this guy's answers were basically 73 00:03:43,680 --> 00:03:45,720 Speaker 1: that he and everyone else knew that what they were 74 00:03:45,720 --> 00:03:49,240 Speaker 1: doing was wrong all along. He couldn't resist all the 75 00:03:49,280 --> 00:03:52,360 Speaker 1: bonuses and the new clients that he was getting by 76 00:03:52,360 --> 00:03:55,920 Speaker 1: selling these subprime mortgages. Everything turned to shit. These guys 77 00:03:55,920 --> 00:03:58,080 Speaker 1: basically just shrugged and said oh well and moved on 78 00:03:58,120 --> 00:04:00,440 Speaker 1: to a different job. And then when all was said 79 00:04:00,440 --> 00:04:03,200 Speaker 1: and done, there were like zero consequences for him and 80 00:04:03,280 --> 00:04:06,680 Speaker 1: kind of anybody in his position, with the exception of 81 00:04:06,680 --> 00:04:09,680 Speaker 1: maybe like losing my respect, which I don't think he 82 00:04:09,760 --> 00:04:12,560 Speaker 1: cared to found much to begin with. But that's always 83 00:04:12,560 --> 00:04:16,160 Speaker 1: bothered me because aside from the sheer moral outrage, there 84 00:04:16,200 --> 00:04:19,760 Speaker 1: was this huge lack of consequences, and I just sort 85 00:04:19,800 --> 00:04:22,159 Speaker 1: of was thinking, like, you know what, what's stopping these 86 00:04:22,160 --> 00:04:25,400 Speaker 1: people from doing this kind of shit again? So namely, 87 00:04:25,680 --> 00:04:26,800 Speaker 1: I thought maybe we'd open it. 88 00:04:26,880 --> 00:04:28,440 Speaker 2: Can stop? Can I stop your yes? 89 00:04:28,480 --> 00:04:29,000 Speaker 1: Please please? 90 00:04:29,480 --> 00:04:32,880 Speaker 3: I want to unpack that little anecdote. So when you 91 00:04:33,040 --> 00:04:35,600 Speaker 3: encounter him and he explains what he's doing, is still 92 00:04:35,640 --> 00:04:37,520 Speaker 3: peak craze or is it after the fact. 93 00:04:37,760 --> 00:04:38,960 Speaker 1: It's after the fact. 94 00:04:39,160 --> 00:04:40,600 Speaker 2: So's it's all collapsed. 95 00:04:41,320 --> 00:04:42,239 Speaker 1: It has all collapsed. 96 00:04:42,320 --> 00:04:45,480 Speaker 2: Yes, And the fact that you say, you know, people just. 97 00:04:46,880 --> 00:04:49,359 Speaker 3: I think people are bewildered by the idea of selling 98 00:04:49,440 --> 00:04:53,760 Speaker 3: subpower mortgages because you think, as your homeowners take out mortgages, 99 00:04:54,040 --> 00:04:57,119 Speaker 3: the idea of these things being pedled like you're trying 100 00:04:57,160 --> 00:05:00,160 Speaker 3: to persuade people to take out alone and that as 101 00:05:00,160 --> 00:05:04,200 Speaker 3: an act of sales to people who already have dicey 102 00:05:04,320 --> 00:05:07,600 Speaker 3: credit right there, there's like, like, what is this? 103 00:05:07,760 --> 00:05:09,600 Speaker 2: It's not intuitive? 104 00:05:10,120 --> 00:05:12,919 Speaker 1: No, and this was this is what kind of enraged me. 105 00:05:13,040 --> 00:05:16,240 Speaker 1: Is like, you know, I mean the son of immigrants 106 00:05:16,440 --> 00:05:19,320 Speaker 1: who whose immigration story is very different. My parents both 107 00:05:19,480 --> 00:05:22,000 Speaker 1: speak English, they're multi lingual. They moved to the United 108 00:05:22,040 --> 00:05:25,360 Speaker 1: States with advanced degrees. So when I hear stories of like, oh, 109 00:05:25,400 --> 00:05:27,640 Speaker 1: somebody didn't know what they were signing, my first reaction 110 00:05:27,720 --> 00:05:30,440 Speaker 1: is well, boo fucking who, Like who told you not 111 00:05:30,520 --> 00:05:32,719 Speaker 1: to read all the paperwork? But then you talk to 112 00:05:32,800 --> 00:05:36,920 Speaker 1: guys like this who are literally peddling something saying like Oh, 113 00:05:36,960 --> 00:05:39,560 Speaker 1: don't worry about it. I'm your friend. Don't worry about 114 00:05:39,560 --> 00:05:41,920 Speaker 1: the fine print. Knowing that these people are going to 115 00:05:41,960 --> 00:05:44,280 Speaker 1: default on their mortgages at some point, but that there 116 00:05:44,320 --> 00:05:46,200 Speaker 1: was a bonus in it for him was insane to me. 117 00:05:46,520 --> 00:05:50,640 Speaker 3: And there's you know, there there's a eons of habit 118 00:05:51,400 --> 00:05:55,640 Speaker 3: baked into the minds of the consumer, and it's a 119 00:05:55,680 --> 00:05:57,240 Speaker 3: bit like it's a bit like junk food. 120 00:05:57,240 --> 00:06:00,279 Speaker 2: Like that, you you know, baked into our brains. 121 00:06:00,279 --> 00:06:03,719 Speaker 3: A scarcity so that anything you get thrown at you, 122 00:06:04,160 --> 00:06:05,560 Speaker 3: I'll just take more and more and more and more. 123 00:06:06,400 --> 00:06:08,000 Speaker 2: And the idea that. 124 00:06:07,839 --> 00:06:11,440 Speaker 3: Someone's going to give you a loan that you shouldn't take, 125 00:06:12,000 --> 00:06:13,880 Speaker 3: it's a little hard to get your mind around that. 126 00:06:13,960 --> 00:06:15,560 Speaker 3: You're thinking, like, well, if they're lending it to me, 127 00:06:15,640 --> 00:06:18,440 Speaker 3: they know what they're doing. You know that I should 128 00:06:18,680 --> 00:06:21,920 Speaker 3: It means I should do it. So my first reaction 129 00:06:22,040 --> 00:06:23,839 Speaker 3: when I started to hear the story of the subprime 130 00:06:23,880 --> 00:06:25,520 Speaker 3: crisis back when I was working on the Big Short 131 00:06:25,560 --> 00:06:29,159 Speaker 3: was like, well, you know, people shouldn't borrow money they 132 00:06:29,160 --> 00:06:32,479 Speaker 3: can't repay. It was less sympathetic. The more I dug 133 00:06:32,560 --> 00:06:35,440 Speaker 3: into it, the more predatory it all felt. And that's 134 00:06:35,480 --> 00:06:38,120 Speaker 3: not to let everybody off the hook. But you were 135 00:06:38,279 --> 00:06:40,279 Speaker 3: right to be outraged by. 136 00:06:40,120 --> 00:06:41,560 Speaker 2: Your friend's behavior. 137 00:06:41,680 --> 00:06:45,640 Speaker 3: It was just where high finance met the working class, 138 00:06:46,279 --> 00:06:51,320 Speaker 3: that border, where someone was who understood these things was 139 00:06:51,360 --> 00:06:53,520 Speaker 3: actually peddling them to someone who didn't. 140 00:06:53,839 --> 00:06:56,760 Speaker 2: Was maybe the ugliest part of the whole event. 141 00:06:57,120 --> 00:06:58,920 Speaker 1: So what I was going to say was, if you like, 142 00:06:59,040 --> 00:07:01,080 Speaker 1: let's say we went back to two thousand and six 143 00:07:01,200 --> 00:07:04,120 Speaker 1: leading up to two thousand and eight, as if I 144 00:07:04,279 --> 00:07:07,200 Speaker 1: was like a five year old, what are some indicators 145 00:07:07,279 --> 00:07:09,560 Speaker 1: that we could see as like normal people that were 146 00:07:09,560 --> 00:07:11,360 Speaker 1: heading towards this crash in two thousand and eight. 147 00:07:11,880 --> 00:07:16,640 Speaker 3: It's funny I asked the same question of all my 148 00:07:16,880 --> 00:07:20,440 Speaker 3: characters back in the day, and just recently re asked 149 00:07:20,480 --> 00:07:23,080 Speaker 3: them for the podcast I'm doing alongside The Big Short, 150 00:07:23,240 --> 00:07:24,240 Speaker 3: And I said just that. 151 00:07:24,320 --> 00:07:25,760 Speaker 2: I actually said, like an eight year old or a 152 00:07:25,800 --> 00:07:26,440 Speaker 2: seven year old. 153 00:07:26,640 --> 00:07:30,520 Speaker 3: And Steve Eisman, who was played by Steve Steve Correll 154 00:07:30,560 --> 00:07:33,240 Speaker 3: in the movie, looked at me. He said, you can't 155 00:07:33,240 --> 00:07:35,400 Speaker 3: explain this to a five year old, He said, you 156 00:07:35,400 --> 00:07:37,000 Speaker 3: can explain this to I, haven't we start with. 157 00:07:36,920 --> 00:07:37,760 Speaker 2: A twenty year old? 158 00:07:37,840 --> 00:07:38,080 Speaker 1: Yeah? 159 00:07:38,080 --> 00:07:40,720 Speaker 2: Fine, great, but okay, no, I'll do my Yeah. So 160 00:07:40,840 --> 00:07:43,160 Speaker 2: five year old's a little rough. But can can we 161 00:07:43,200 --> 00:07:45,200 Speaker 2: be a little older? Yeah? Please? Can me a little older? 162 00:07:45,200 --> 00:07:46,440 Speaker 1: You picked the age twenties. 163 00:07:46,200 --> 00:07:48,160 Speaker 3: I'll pick the age, but I'll just try My mother 164 00:07:49,080 --> 00:07:53,080 Speaker 3: an eighty eight year old. So what happens here? Your 165 00:07:53,160 --> 00:07:57,280 Speaker 3: friend was selling subprime mortgages, and which is a weird idea, right, 166 00:07:57,320 --> 00:07:58,680 Speaker 3: you have to get your mind around that. He's run 167 00:07:58,680 --> 00:08:00,920 Speaker 3: around looking for people who probably shouldn't borrow the money 168 00:08:00,920 --> 00:08:04,040 Speaker 3: to borrow the money to buy a house. And your 169 00:08:04,080 --> 00:08:06,800 Speaker 3: friend is only doing that because your friend is not 170 00:08:06,840 --> 00:08:09,280 Speaker 3: going to sit there with the loan. Your friend isn't 171 00:08:09,360 --> 00:08:12,680 Speaker 3: lending you that person the money himself. He's not going 172 00:08:12,680 --> 00:08:14,880 Speaker 3: to sit there. He's going to lose any money if 173 00:08:15,160 --> 00:08:18,840 Speaker 3: if those that person eventually defaults, as they turned out 174 00:08:18,880 --> 00:08:22,880 Speaker 3: likely to do. So what your friend is doing is 175 00:08:23,000 --> 00:08:27,480 Speaker 3: acting on behalf of some bigger mortgage lender who will 176 00:08:27,520 --> 00:08:32,880 Speaker 3: then take the loans and hand them off to I 177 00:08:32,880 --> 00:08:36,080 Speaker 3: mean there'll be sometimes multiple stages, but a big Wall 178 00:08:36,080 --> 00:08:40,000 Speaker 3: Street firm eventually and a city group, a merrill lynch, 179 00:08:40,240 --> 00:08:42,880 Speaker 3: a goldman's axe who will put them all in a 180 00:08:42,880 --> 00:08:47,120 Speaker 3: big pot. All these loans and the pot you know 181 00:08:47,160 --> 00:08:50,120 Speaker 3: what's coming into that pot is mortgage payments from all 182 00:08:50,160 --> 00:08:52,959 Speaker 3: these people who bought the houses, and that can be 183 00:08:53,000 --> 00:08:55,360 Speaker 3: turned into a bond, you know, It's just like that 184 00:08:55,400 --> 00:08:57,320 Speaker 3: looks like a bond, so they can sell it off 185 00:08:57,360 --> 00:09:01,200 Speaker 3: as pieces of paper in this pool of mortgages. Now 186 00:09:01,920 --> 00:09:04,439 Speaker 3: who ends up owning it? That at the time was 187 00:09:04,480 --> 00:09:06,440 Speaker 3: one of the great mysteries. This stuff went all over 188 00:09:06,480 --> 00:09:08,439 Speaker 3: the world, and in fact, some of the big Wall 189 00:09:08,440 --> 00:09:10,280 Speaker 3: Street banks end up keeping a lot of it on 190 00:09:10,360 --> 00:09:11,640 Speaker 3: their books stupidly. 191 00:09:12,360 --> 00:09:13,520 Speaker 2: But along the way. 192 00:09:13,640 --> 00:09:16,360 Speaker 3: The big point is the person making the loan is 193 00:09:16,400 --> 00:09:19,160 Speaker 3: not exposed in any way. The person's physically doing it. 194 00:09:19,200 --> 00:09:21,120 Speaker 3: They have no incentive for the loan to be a 195 00:09:21,200 --> 00:09:24,120 Speaker 3: smart loan, incentive to generate as many of the loans 196 00:09:24,120 --> 00:09:27,720 Speaker 3: as possible. They also have an incentive because these loans, 197 00:09:27,960 --> 00:09:32,239 Speaker 3: you know, the general characteristics of the loan are evaluated 198 00:09:32,280 --> 00:09:33,760 Speaker 3: by the people who are taking the loans off the 199 00:09:33,800 --> 00:09:36,600 Speaker 3: hands of that person who lent the money. So the 200 00:09:36,640 --> 00:09:40,920 Speaker 3: fight the credit scores. How much money do they put down? 201 00:09:41,200 --> 00:09:43,880 Speaker 3: All that stuff they would make a loan riskier or 202 00:09:43,920 --> 00:09:46,840 Speaker 3: less risky. They have an incentive to lie about that 203 00:09:47,960 --> 00:09:51,600 Speaker 3: or game it in some way. So what happens there's 204 00:09:51,640 --> 00:09:55,480 Speaker 3: a chain. This loan gets passed through several hands and 205 00:09:55,520 --> 00:09:59,000 Speaker 3: eventually ends up being held by some investor in the 206 00:09:59,040 --> 00:10:04,240 Speaker 3: form of a bond. But along the way, in various ways, 207 00:10:04,280 --> 00:10:07,840 Speaker 3: the risk gets disguised, and along the way it gets 208 00:10:07,880 --> 00:10:11,920 Speaker 3: packaged into these big and big black boxes, and the 209 00:10:12,000 --> 00:10:15,199 Speaker 3: boxes get harder and harder to see inside of, so 210 00:10:15,280 --> 00:10:21,960 Speaker 3: that it takes superhuman sort of analytical research diligence to 211 00:10:22,160 --> 00:10:24,920 Speaker 3: figure out what the hell of the loans are behind 212 00:10:24,960 --> 00:10:27,520 Speaker 3: the bonds, and that in fact, the characters are the 213 00:10:27,520 --> 00:10:30,120 Speaker 3: big short one of them. Anyway, you know, he distinguished 214 00:10:30,160 --> 00:10:32,199 Speaker 3: himself of actually going into the black box and seeing, 215 00:10:32,240 --> 00:10:34,400 Speaker 3: oh my god, there's a stripper. There's a stripper in 216 00:10:34,440 --> 00:10:37,559 Speaker 3: Las Vegas with twenty seven houses. You know, it's that 217 00:10:38,000 --> 00:10:42,120 Speaker 3: kind of thing. So what makes it possible is one 218 00:10:43,320 --> 00:10:45,800 Speaker 3: the neediness at the bottom of the chain, the neediness 219 00:10:45,800 --> 00:10:47,480 Speaker 3: of the person who is borrowing the money in. 220 00:10:47,480 --> 00:10:49,960 Speaker 2: The first place, the desires. 221 00:10:50,240 --> 00:10:52,760 Speaker 3: As one of my characters put it, this market was 222 00:10:52,920 --> 00:10:57,320 Speaker 3: totally a reflection of the working class Americans inability to 223 00:10:57,360 --> 00:11:00,320 Speaker 3: live up to their expectations, and financial expectation is that 224 00:11:00,360 --> 00:11:02,480 Speaker 3: their salaries were not meeting and. 225 00:11:02,400 --> 00:11:05,079 Speaker 2: This sort of filled the hole, so it starts there. 226 00:11:05,600 --> 00:11:06,720 Speaker 2: Then it's like your. 227 00:11:06,559 --> 00:11:11,120 Speaker 3: Friends immorality, willingness to to exploit, to make these loans 228 00:11:11,200 --> 00:11:14,400 Speaker 3: people wh shouldn't have them, the willingness of the whole 229 00:11:14,440 --> 00:11:17,920 Speaker 3: financial system, the big banks to disguise the risk in 230 00:11:17,960 --> 00:11:21,439 Speaker 3: the loans and their ability is subsequently to pedal these 231 00:11:21,480 --> 00:11:25,480 Speaker 3: loans in the form of bonds to like German investors. 232 00:11:25,960 --> 00:11:27,560 Speaker 1: That's what you mean when you say stuff went all 233 00:11:27,600 --> 00:11:28,120 Speaker 1: over the world. 234 00:11:28,320 --> 00:11:30,760 Speaker 3: It went all over the world. And part of the 235 00:11:30,760 --> 00:11:34,320 Speaker 3: reason there's a crisis is that no one knows how 236 00:11:34,400 --> 00:11:37,079 Speaker 3: much of it there is or who's got it. So 237 00:11:37,240 --> 00:11:40,520 Speaker 3: it's like you can't nobody trust anybody at that moment. 238 00:11:40,640 --> 00:11:43,040 Speaker 2: It's like, are you bankrupt too? Are you not? 239 00:11:43,559 --> 00:11:48,560 Speaker 1: A big date when Lehman Brothers went bankrupt was September fifteenth, 240 00:11:48,640 --> 00:11:51,840 Speaker 1: two thousand and eight. For somebody who does what you do, like, 241 00:11:52,320 --> 00:11:54,800 Speaker 1: is that a date where you remember what you were doing, 242 00:11:54,880 --> 00:11:57,280 Speaker 1: remember what you were thinking, or did things follow that 243 00:11:57,760 --> 00:11:59,160 Speaker 1: showed you the gravity of that day. 244 00:12:00,520 --> 00:12:03,000 Speaker 2: I was already into the book I was. 245 00:12:04,160 --> 00:12:06,920 Speaker 3: I was already reporting the big short when bear Stearns 246 00:12:06,960 --> 00:12:09,559 Speaker 3: went down in whatever February. I didn't remember the dates. 247 00:12:10,000 --> 00:12:12,160 Speaker 3: I locked in on it. I started to kind of 248 00:12:12,240 --> 00:12:16,280 Speaker 3: kick around and talk to people. I can't remember where 249 00:12:16,320 --> 00:12:18,360 Speaker 3: I was when Lehman went down. And you know what's 250 00:12:18,360 --> 00:12:21,400 Speaker 3: funny is not only can I not remember where I was, 251 00:12:22,280 --> 00:12:26,839 Speaker 3: I remember vividly where my characters were, who I cared about. 252 00:12:27,200 --> 00:12:30,199 Speaker 3: I started to live this through my characters. And there 253 00:12:30,240 --> 00:12:31,960 Speaker 3: was a scene that I thought was going to end 254 00:12:32,000 --> 00:12:34,640 Speaker 3: the movie, and it ended the book where these characters 255 00:12:34,800 --> 00:12:37,720 Speaker 3: there were. The firm was called Front Point Partners. It 256 00:12:37,800 --> 00:12:41,679 Speaker 3: was an obscure hedge fund that mainly traded in stocks. 257 00:12:42,200 --> 00:12:44,720 Speaker 3: Had figured out that all the Wall Street firms were 258 00:12:44,720 --> 00:12:47,720 Speaker 3: making this mistake and made this big bet against the 259 00:12:47,760 --> 00:12:56,160 Speaker 3: subprime mortgage market. And they were so disoriented by being 260 00:12:56,600 --> 00:12:59,920 Speaker 3: proved so right that it wasn't just they were going 261 00:12:59,920 --> 00:13:02,240 Speaker 3: to get rich, but maybe the whole world was going 262 00:13:02,320 --> 00:13:04,200 Speaker 3: to come down, Like it was just a little unclear 263 00:13:04,280 --> 00:13:07,760 Speaker 3: at that moment whether you know, capitalism was going to survive. 264 00:13:07,920 --> 00:13:09,760 Speaker 2: Kind of thing. It was that it felt that dire 265 00:13:09,840 --> 00:13:10,600 Speaker 2: to them. 266 00:13:11,120 --> 00:13:14,640 Speaker 3: They were so aware of just how badly behaved the 267 00:13:14,720 --> 00:13:18,800 Speaker 3: financial system had been. They imagined a cataclysm even greater 268 00:13:18,880 --> 00:13:20,559 Speaker 3: than the one that occurred, and. 269 00:13:20,520 --> 00:13:22,520 Speaker 2: They all wandered the streets. There were four of them. 270 00:13:22,559 --> 00:13:24,800 Speaker 2: They wandered the streets of Manhattan and converged on. 271 00:13:24,760 --> 00:13:27,800 Speaker 3: Saint Patrick's Cathedral and sat on the steps and just 272 00:13:27,920 --> 00:13:30,400 Speaker 3: watched the people like they were ghosts, passing them by, 273 00:13:30,440 --> 00:13:32,199 Speaker 3: and say, those people do not know what's about to 274 00:13:32,280 --> 00:13:35,200 Speaker 3: hit them. So when I think about that day, I 275 00:13:35,280 --> 00:13:37,600 Speaker 3: wasn't there. You know, they just told me about this. 276 00:13:38,559 --> 00:13:40,559 Speaker 3: It's their experience that pops to mind. 277 00:13:40,760 --> 00:13:44,520 Speaker 1: What was the result of that financial crash for people 278 00:13:44,520 --> 00:13:46,760 Speaker 1: in your lives? Like I obviously know this guy who 279 00:13:46,800 --> 00:13:50,120 Speaker 1: was selling some mortgages, and I had friends who you know, 280 00:13:50,800 --> 00:13:53,360 Speaker 1: lost money in retirement or money that they had saved 281 00:13:53,400 --> 00:13:55,760 Speaker 1: up for their kids college. But did any of your 282 00:13:55,840 --> 00:14:01,680 Speaker 1: neighbor's friend's family lose jobs houses? Did you see anyone 283 00:14:01,679 --> 00:14:04,760 Speaker 1: on the news that you knew that you were researching? 284 00:14:04,920 --> 00:14:06,880 Speaker 1: Like what was that impact like for you? 285 00:14:07,240 --> 00:14:10,520 Speaker 3: But you know what actually popstimized nothing that I was. 286 00:14:10,559 --> 00:14:13,679 Speaker 3: So I was reading the news of other people's people. 287 00:14:13,720 --> 00:14:18,240 Speaker 3: I didn't know their tragedies. It wasn't hard to imagine them. 288 00:14:18,720 --> 00:14:22,760 Speaker 3: I had old colleagues on Wall Street whose careers went 289 00:14:22,840 --> 00:14:26,880 Speaker 3: up in flames and in some cases kind of unjustifiably, 290 00:14:26,920 --> 00:14:28,520 Speaker 3: you know, it was a funny thing I worked. I 291 00:14:28,560 --> 00:14:31,040 Speaker 3: worked at Solomon Brothers in the nineteen eighties, you know, 292 00:14:31,160 --> 00:14:33,800 Speaker 3: in the Stone Age, but that as it happened. 293 00:14:33,960 --> 00:14:35,880 Speaker 2: This is one of the reasons I got I took 294 00:14:35,880 --> 00:14:36,840 Speaker 2: an interest in the story. 295 00:14:37,320 --> 00:14:40,600 Speaker 3: Is I was there basically when the mortgage bond market 296 00:14:40,680 --> 00:14:42,840 Speaker 3: was being invented by Solomon Brothers. 297 00:14:42,920 --> 00:14:43,240 Speaker 2: Uh huh. 298 00:14:43,280 --> 00:14:47,440 Speaker 3: So I saw, you know, Frankenstein's monster be created, and 299 00:14:47,480 --> 00:14:49,880 Speaker 3: now I was watching the monster come back and eat everybody, 300 00:14:50,320 --> 00:14:52,960 Speaker 3: and the people who had created the monster knew what 301 00:14:53,040 --> 00:14:54,280 Speaker 3: the monster was capable of. 302 00:14:54,840 --> 00:14:57,640 Speaker 1: Were everyone's reactions like that? Like, I assume you called 303 00:14:57,640 --> 00:15:00,080 Speaker 1: a lot of these people up, like the idea of that, 304 00:15:00,120 --> 00:15:02,480 Speaker 1: oh shit, we were the ones that created this. Was 305 00:15:02,520 --> 00:15:05,960 Speaker 1: that across the board or or by the way, is 306 00:15:06,000 --> 00:15:08,240 Speaker 1: this truly one of those like there are five puppeteers 307 00:15:08,240 --> 00:15:10,960 Speaker 1: at the top type of situation and they're acknowledging it, 308 00:15:10,960 --> 00:15:13,360 Speaker 1: but everybody at the deputy level is pretending they had 309 00:15:13,360 --> 00:15:14,120 Speaker 1: nothing to do with it. 310 00:15:14,320 --> 00:15:17,160 Speaker 2: So here's the weird thing. Maybe it's not so weird. 311 00:15:17,480 --> 00:15:19,360 Speaker 3: You know how it's easy to confess to something that 312 00:15:19,400 --> 00:15:21,920 Speaker 3: you actually didn't. It's not that damning to confess to 313 00:15:22,320 --> 00:15:25,560 Speaker 3: Oh I work too hard. Oh, I care too much, 314 00:15:25,840 --> 00:15:29,200 Speaker 3: my biggest too, I loved you, I love too well, 315 00:15:30,200 --> 00:15:32,920 Speaker 3: it's not quite that. But no one was going to 316 00:15:32,960 --> 00:15:36,640 Speaker 3: prosecute Louis Ranieri for creating the mortgage bond. No one 317 00:15:36,680 --> 00:15:38,920 Speaker 3: was going to no one was probably going to completely 318 00:15:38,960 --> 00:15:41,920 Speaker 3: buy he was really responsible for someone taking the mortgage 319 00:15:41,920 --> 00:15:43,440 Speaker 3: bond and doing awful things with it. 320 00:15:44,120 --> 00:15:47,680 Speaker 2: So there's something a little disingenuous about taking. 321 00:15:47,480 --> 00:15:49,240 Speaker 3: The blame for the whole thing when you're not to. 322 00:15:49,600 --> 00:15:52,760 Speaker 3: And the people who were to blame this answer your question. 323 00:15:53,480 --> 00:15:57,280 Speaker 3: They were people inside the Wall Street firms in two 324 00:15:57,360 --> 00:16:01,080 Speaker 3: thousand and six to two thousand and eight who really 325 00:16:01,600 --> 00:16:04,160 Speaker 3: really should have taken the blame. And none of those 326 00:16:04,160 --> 00:16:05,680 Speaker 3: people got up and said, oh I'm sorry. 327 00:16:06,280 --> 00:16:08,840 Speaker 1: No for any of them, Right, you just said nobody's 328 00:16:09,160 --> 00:16:11,920 Speaker 1: nobody's going after that that top guy. But for any 329 00:16:11,960 --> 00:16:13,680 Speaker 1: of them, the top guy or anybody in the middle, 330 00:16:13,720 --> 00:16:16,080 Speaker 1: did they actually technically do anything illegal. 331 00:16:17,080 --> 00:16:18,200 Speaker 2: It's a really good question. 332 00:16:19,120 --> 00:16:22,520 Speaker 3: And I have a friend, the writer Michael Kinsley, who 333 00:16:22,520 --> 00:16:25,640 Speaker 3: always says the scandal isn't what's illegal, it's what's legal. 334 00:16:26,320 --> 00:16:28,800 Speaker 3: A large part of the story of the crisis is 335 00:16:28,840 --> 00:16:31,440 Speaker 3: it's scandalous how much of this was legal, Like how 336 00:16:31,520 --> 00:16:34,000 Speaker 3: much you could define print got you off the hook 337 00:16:34,480 --> 00:16:36,960 Speaker 3: because it was immoral. It's you know, the idea that 338 00:16:37,080 --> 00:16:42,800 Speaker 3: for example, Goldman Sachs could conspire with John Paulson, short 339 00:16:42,800 --> 00:16:48,080 Speaker 3: seller who wanted to bet against subprime mortgages, to create 340 00:16:48,160 --> 00:16:51,000 Speaker 3: billions and billions of dollars of side bets on the 341 00:16:51,200 --> 00:16:54,680 Speaker 3: very worst mortgage bonds they created, so so so paulse 342 00:16:54,720 --> 00:16:57,000 Speaker 3: could bet they were going to go bad. And these 343 00:16:57,000 --> 00:16:58,640 Speaker 3: are just like it's just like it's a you can 344 00:16:58,720 --> 00:17:01,600 Speaker 3: think of it as like replicating the worst loans to 345 00:17:01,720 --> 00:17:06,240 Speaker 3: infinity and injecting those things into the financial system. So 346 00:17:06,280 --> 00:17:08,800 Speaker 3: getting other people Germans or whoever to take the other 347 00:17:08,880 --> 00:17:09,840 Speaker 3: side of that bet. 348 00:17:11,240 --> 00:17:14,480 Speaker 2: Now maybe that's legal, it is legal. It's horrible. 349 00:17:14,720 --> 00:17:18,800 Speaker 3: It's like because you're essentially introducing pollution, are a poison 350 00:17:19,119 --> 00:17:21,919 Speaker 3: into the financial system, and so you can take a 351 00:17:21,960 --> 00:17:22,960 Speaker 3: little profit off of it. 352 00:17:23,000 --> 00:17:25,840 Speaker 2: People who know more than I do would tell you 353 00:17:25,920 --> 00:17:27,440 Speaker 2: that people. 354 00:17:27,240 --> 00:17:32,840 Speaker 3: In firms hid or ignored reports of how bad. 355 00:17:32,680 --> 00:17:34,879 Speaker 2: The mortgages were so no one would know. 356 00:17:35,200 --> 00:17:37,720 Speaker 3: So that, you know, is that fraud. Maybe you could 357 00:17:37,760 --> 00:17:41,199 Speaker 3: get people on fraud. It was hard if you go 358 00:17:41,320 --> 00:17:44,840 Speaker 3: if you rewind the tape at the very beginning. 359 00:17:44,480 --> 00:17:44,879 Speaker 2: You may not. 360 00:17:45,200 --> 00:17:46,720 Speaker 3: You know, I don't know sure this is even in 361 00:17:46,720 --> 00:17:48,359 Speaker 3: the book, and my memory of it is going to 362 00:17:48,400 --> 00:17:52,359 Speaker 3: be a little fuzzy. But bear Sterns had a fund 363 00:17:52,640 --> 00:17:55,800 Speaker 3: that was attached to bear Sterns that went down, and 364 00:17:55,800 --> 00:17:56,920 Speaker 3: it went down because they. 365 00:17:56,840 --> 00:17:59,000 Speaker 2: Were actually they owned a lot of this stuff. 366 00:18:00,880 --> 00:18:04,240 Speaker 3: US prosecutors tried to put the people who ran that 367 00:18:04,359 --> 00:18:09,320 Speaker 3: fund in jail, and the trial was in New Jersey 368 00:18:09,440 --> 00:18:12,760 Speaker 3: and this was early early financial crisis, and not only 369 00:18:12,800 --> 00:18:17,280 Speaker 3: did they fail, but the jur there were jurors quoted 370 00:18:17,280 --> 00:18:20,200 Speaker 3: in the newspaper afterwards saying, can you get me the 371 00:18:20,280 --> 00:18:22,960 Speaker 3: number of those guys from barristers? I wanted them to 372 00:18:23,240 --> 00:18:26,960 Speaker 3: I think have I wanted to invest my money for. 373 00:18:27,960 --> 00:18:30,920 Speaker 3: So there was such a there was such a There 374 00:18:30,960 --> 00:18:34,080 Speaker 3: was such an at the very beginning, they were prosecutors 375 00:18:34,080 --> 00:18:37,880 Speaker 3: who were embarrassed trying to kind of like prosecute this thing, 376 00:18:38,480 --> 00:18:42,040 Speaker 3: and it was hard, it was so complicated. So the 377 00:18:42,119 --> 00:18:45,920 Speaker 3: answer is, I don't I'm sure people broke the law. Basically, 378 00:18:45,960 --> 00:18:48,719 Speaker 3: no one went to jail. In retrospect, the whole society 379 00:18:48,760 --> 00:18:50,240 Speaker 3: would have been better off if they've been at least 380 00:18:50,280 --> 00:18:53,840 Speaker 3: an attempt to prosecute the very topic there wasn't. 381 00:19:01,240 --> 00:19:03,840 Speaker 1: Yeah, so then if there was no attempt made to 382 00:19:03,840 --> 00:19:06,120 Speaker 1: prosecute and it sounds like if you know, okay, you 383 00:19:06,200 --> 00:19:10,120 Speaker 1: did all these fifty things wrong that caused this massive, 384 00:19:10,280 --> 00:19:14,000 Speaker 1: awful global collapse, but technically the only thing we could 385 00:19:14,000 --> 00:19:17,080 Speaker 1: get you on is fraud, then that makes me wonder 386 00:19:17,320 --> 00:19:20,360 Speaker 1: all of the conversations about how fragile the economy is 387 00:19:20,520 --> 00:19:24,639 Speaker 1: again today, are there systems in place to prevent another 388 00:19:24,800 --> 00:19:27,639 Speaker 1: crash in the way you just described it? And if so, 389 00:19:27,720 --> 00:19:31,199 Speaker 1: what are they? What are they responsible for? Putting a 390 00:19:31,320 --> 00:19:34,719 Speaker 1: check in? And it did the current administration dissolve any 391 00:19:34,720 --> 00:19:37,200 Speaker 1: of them? Like did they exist post two thousand and eight? 392 00:19:37,600 --> 00:19:40,800 Speaker 1: But then over the political spectrum have they been kind 393 00:19:40,800 --> 00:19:41,840 Speaker 1: of watered down themselves? 394 00:19:42,359 --> 00:19:47,680 Speaker 3: So there is a deathless problem in the financial system always, 395 00:19:47,760 --> 00:19:50,159 Speaker 3: and it gets worse the more complicated it gets, and 396 00:19:50,200 --> 00:19:53,080 Speaker 3: the financial system gets it's more and more complicated, And 397 00:19:53,119 --> 00:19:56,640 Speaker 3: the problem is that people get paid more to take 398 00:19:56,680 --> 00:20:00,480 Speaker 3: more risk, and the best way to get paid more 399 00:20:00,520 --> 00:20:02,920 Speaker 3: for taking more risk is disguise the risk you're taken 400 00:20:02,960 --> 00:20:05,960 Speaker 3: and not actually take the risk yourself. The system is 401 00:20:05,960 --> 00:20:08,720 Speaker 3: always looking to hide the risk. So part one of 402 00:20:08,760 --> 00:20:12,480 Speaker 3: the answers to you this question you just asked, is so, yes, 403 00:20:12,640 --> 00:20:16,080 Speaker 3: things that systems were put in place, constraints were put 404 00:20:16,119 --> 00:20:21,520 Speaker 3: in place, and specifically the banks were neutered. They can't 405 00:20:21,560 --> 00:20:24,480 Speaker 3: take the same kind of risk that those banks, you know, 406 00:20:24,640 --> 00:20:28,760 Speaker 3: City Group, Maryland, Morgan Stanley, Bank of America, that they 407 00:20:28,760 --> 00:20:32,080 Speaker 3: have more capital and they're not allowed to roll the 408 00:20:32,080 --> 00:20:33,960 Speaker 3: bones in the way they roll the bones way back 409 00:20:34,000 --> 00:20:39,080 Speaker 3: when they're much more boring. Places they themselves are unlikely 410 00:20:39,160 --> 00:20:41,280 Speaker 3: to be the place where the risk gets hidden. 411 00:20:42,280 --> 00:20:44,480 Speaker 2: However, the risk still wants to be taken. 412 00:20:44,560 --> 00:20:46,120 Speaker 1: Yeah, and I feel like they know the people taking 413 00:20:46,160 --> 00:20:46,760 Speaker 1: the risk. 414 00:20:46,840 --> 00:20:48,480 Speaker 3: And yeah, they know the people getting the risk, and 415 00:20:48,880 --> 00:20:51,600 Speaker 3: they're getting more and more involved. The place where the 416 00:20:51,680 --> 00:20:55,159 Speaker 3: risk is being taken are places that you maybe or 417 00:20:55,200 --> 00:20:56,760 Speaker 3: even just barely conscious of. 418 00:20:56,840 --> 00:21:00,000 Speaker 2: The place is called Apollo and Blackstone. 419 00:21:00,200 --> 00:21:01,600 Speaker 1: These are all private equity. 420 00:21:02,080 --> 00:21:05,920 Speaker 3: They're all private so they're all they're all way outside 421 00:21:06,320 --> 00:21:10,520 Speaker 3: regulatory framework that top stops the banks from So it's 422 00:21:10,560 --> 00:21:13,480 Speaker 3: like you squeeze the orange and the juice went outside, 423 00:21:13,560 --> 00:21:17,640 Speaker 3: and the juices outside and it's floating or it's sloshing 424 00:21:17,720 --> 00:21:19,720 Speaker 3: around and it's hard to know. 425 00:21:20,600 --> 00:21:22,240 Speaker 2: I mean I had someone tell me the other day. 426 00:21:23,560 --> 00:21:24,720 Speaker 2: I mean someone who. 427 00:21:24,560 --> 00:21:30,040 Speaker 3: Watches these places closely that Blackstone areas Apollo, who are 428 00:21:30,080 --> 00:21:32,960 Speaker 3: now making they have trillions of dollars and loans they're 429 00:21:32,960 --> 00:21:34,919 Speaker 3: making there used to be That's not what they used 430 00:21:34,960 --> 00:21:38,879 Speaker 3: to do, the especially doing banking outside the banking system, 431 00:21:39,200 --> 00:21:41,399 Speaker 3: told me that they've these are the institutions that are 432 00:21:41,400 --> 00:21:42,280 Speaker 3: now too big to fail. 433 00:21:42,720 --> 00:21:43,800 Speaker 2: By too big to fail. 434 00:21:43,640 --> 00:21:46,480 Speaker 3: I mean that if they were to fail, the government 435 00:21:46,520 --> 00:21:49,840 Speaker 3: would come in and backstop them so that anybody who's 436 00:21:49,840 --> 00:21:52,639 Speaker 3: got money in them won't lose their money. And we 437 00:21:52,720 --> 00:21:55,919 Speaker 3: don't know exactly how it's going to go down, but 438 00:21:56,000 --> 00:21:59,000 Speaker 3: the risk that they're terrified of is that it's the 439 00:21:59,040 --> 00:22:02,000 Speaker 3: financial next oneancial crisis starts there. I do not know 440 00:22:02,000 --> 00:22:04,400 Speaker 3: if that's true. Uh huh, I just I do know that, 441 00:22:05,400 --> 00:22:07,800 Speaker 3: you know, people follow their incentives in the financial system, 442 00:22:08,000 --> 00:22:10,280 Speaker 3: and if you can find ways to get paid short 443 00:22:10,359 --> 00:22:11,920 Speaker 3: term for taking. 444 00:22:11,720 --> 00:22:14,000 Speaker 2: A lot of risk that won't go bad for a while, 445 00:22:14,680 --> 00:22:15,760 Speaker 2: people will do that. 446 00:22:15,800 --> 00:22:18,440 Speaker 3: And the risk goes bad when the risk goes bad, 447 00:22:18,440 --> 00:22:20,960 Speaker 3: and between now and then, people make a lot of money. 448 00:22:21,160 --> 00:22:23,119 Speaker 2: I mean, this is why these things go in cycles. 449 00:22:23,320 --> 00:22:26,440 Speaker 3: It's partly memory and partly it takes a little while 450 00:22:26,440 --> 00:22:28,080 Speaker 3: for the financial system to figure out how to hide 451 00:22:28,119 --> 00:22:28,680 Speaker 3: the risk again. 452 00:22:28,920 --> 00:22:31,760 Speaker 1: But so if people are making money in the short term, 453 00:22:31,800 --> 00:22:34,960 Speaker 1: then who's losing money in the long term when something. 454 00:22:34,680 --> 00:22:40,520 Speaker 3: Collapses, Well, if the collapse occurs in an institution that's 455 00:22:40,520 --> 00:22:44,040 Speaker 3: too big to vail, the first approximation is the taxpayer 456 00:22:44,080 --> 00:22:47,760 Speaker 3: their government comes in. It's more complicated than that. Let's 457 00:22:47,760 --> 00:22:50,359 Speaker 3: take a single simple example. There was a trader at 458 00:22:50,359 --> 00:22:53,160 Speaker 3: Morgan Stanley in the run up to the financial crisis 459 00:22:53,680 --> 00:22:57,320 Speaker 3: who I think was paid fifty million dollars in bonuses 460 00:22:57,359 --> 00:22:59,919 Speaker 3: for his supposedly clever trades in the subprime mortgage more 461 00:23:00,760 --> 00:23:04,480 Speaker 3: he was effectively long in the market, effectually owns subprime 462 00:23:04,480 --> 00:23:05,360 Speaker 3: mortgage bonds. 463 00:23:05,600 --> 00:23:07,840 Speaker 2: More complicated than that, but roughly so. 464 00:23:08,119 --> 00:23:11,760 Speaker 3: When his trades go bad and Morgan Stanley loses on 465 00:23:11,880 --> 00:23:17,720 Speaker 3: his trades ten billion dollars, first place, it's Morgan Stanley's shareholders. 466 00:23:18,040 --> 00:23:20,800 Speaker 3: Second place, it's any taxpayer of funds that come in 467 00:23:20,880 --> 00:23:23,280 Speaker 3: to bail out Morgan Stanley. But he never got he 468 00:23:23,320 --> 00:23:24,440 Speaker 3: never had to give his bonus back. 469 00:23:24,720 --> 00:23:25,679 Speaker 1: That's crazy. 470 00:23:26,080 --> 00:23:28,800 Speaker 3: It's crazy. So it's crazy. So that's the problem. Where's 471 00:23:28,840 --> 00:23:31,880 Speaker 3: the in New Jersey where they all. 472 00:23:31,800 --> 00:23:33,600 Speaker 1: Go to see? This is what did I say when 473 00:23:33,600 --> 00:23:37,200 Speaker 1: I opened? I knew plenty of people growing up who 474 00:23:37,240 --> 00:23:39,399 Speaker 1: were who were shady as hell, and it wasn't just 475 00:23:39,440 --> 00:23:40,320 Speaker 1: the mafia ties. 476 00:23:40,680 --> 00:23:42,320 Speaker 2: No, you got to you got to find all us 477 00:23:42,320 --> 00:23:45,280 Speaker 2: in New Jersey. Yeah. New Jersey's is filled with characters. 478 00:23:45,760 --> 00:23:47,520 Speaker 1: That's a very diplomatic way of putting here. 479 00:23:47,560 --> 00:23:49,680 Speaker 3: Probably gambling on sports. I don't know what he's doing, 480 00:23:50,000 --> 00:23:55,159 Speaker 3: So they're just The problem is incentives. People follow their incentives, 481 00:23:55,160 --> 00:23:58,439 Speaker 3: and a really complicated system starts to generate screwed up 482 00:23:58,440 --> 00:23:59,960 Speaker 3: incentives and people do screwed up things. 483 00:24:00,280 --> 00:24:04,240 Speaker 1: Can I just want to very simply try to recap 484 00:24:04,400 --> 00:24:06,199 Speaker 1: something that you said to make sure I understood it 485 00:24:06,240 --> 00:24:10,399 Speaker 1: properly that I was curious what laws have changed to 486 00:24:10,480 --> 00:24:14,000 Speaker 1: make sure that the same thing doesn't happen as what 487 00:24:14,080 --> 00:24:17,480 Speaker 1: happened in two thousand and eight. And you're saying that 488 00:24:18,160 --> 00:24:20,760 Speaker 1: all of the risk then went to private equity, which 489 00:24:20,800 --> 00:24:24,199 Speaker 1: means there's zero oversight. So we've collectively decided as a 490 00:24:24,200 --> 00:24:27,879 Speaker 1: society that instead of putting proper checks and balances to 491 00:24:28,240 --> 00:24:30,800 Speaker 1: prevent the system from repeating those mistakes, we're just going 492 00:24:30,880 --> 00:24:32,680 Speaker 1: to make it so that nobody can see what those 493 00:24:32,720 --> 00:24:35,879 Speaker 1: mistakes are. Is that correct? 494 00:24:36,440 --> 00:24:38,200 Speaker 2: That's not a bad way of putting it. 495 00:24:38,240 --> 00:24:40,639 Speaker 1: That's fucking crazy. 496 00:24:40,880 --> 00:24:43,600 Speaker 3: It's it's a little more complicated than that. It wasn't 497 00:24:43,640 --> 00:24:46,960 Speaker 3: just it's not just private equity, but it is true. 498 00:24:47,359 --> 00:24:50,040 Speaker 3: It is crazy. On the other hand, let me argue 499 00:24:50,040 --> 00:24:51,240 Speaker 3: against myself a moment. 500 00:24:51,680 --> 00:24:53,000 Speaker 2: Well, I do think. 501 00:24:53,359 --> 00:24:57,040 Speaker 3: Where this all starts for me, where the financial crisis starts, 502 00:24:57,720 --> 00:25:00,720 Speaker 3: is when these bank these investment banks, acts and Solomon 503 00:25:00,760 --> 00:25:03,320 Speaker 3: Brothers and Morgan Stanley and so on in the eighties 504 00:25:03,359 --> 00:25:08,320 Speaker 3: and early nineties go from being private partnerships to being 505 00:25:08,359 --> 00:25:13,639 Speaker 3: public corporations. Because it is true that when they're private partnerships, 506 00:25:14,080 --> 00:25:17,320 Speaker 3: the people who own them are the employees, and it's 507 00:25:17,840 --> 00:25:20,920 Speaker 3: they're exposed. They don't want to do really stupid things 508 00:25:20,960 --> 00:25:21,800 Speaker 3: when they're exposed. 509 00:25:22,520 --> 00:25:23,640 Speaker 1: They're exposed in what way? 510 00:25:23,680 --> 00:25:24,200 Speaker 2: What does that mean? 511 00:25:24,400 --> 00:25:28,120 Speaker 3: Well, so if Lehman Brothers when it went down, had 512 00:25:28,119 --> 00:25:31,000 Speaker 3: not been a public corporation, it had been back what 513 00:25:31,080 --> 00:25:33,159 Speaker 3: it used to be, it was owned by the employees, 514 00:25:34,240 --> 00:25:36,280 Speaker 3: all those you know, Dick Fold and all the people 515 00:25:36,280 --> 00:25:39,240 Speaker 3: who own ran that place, would have not only lost 516 00:25:40,040 --> 00:25:42,280 Speaker 3: all the money in the place they would lost their houses. 517 00:25:42,800 --> 00:25:43,840 Speaker 3: You know, they would have been they would have had 518 00:25:43,920 --> 00:25:46,520 Speaker 3: unlimited liability for the things that happened there. 519 00:25:46,600 --> 00:25:48,000 Speaker 2: They wouldn't have behaved that way. 520 00:25:48,040 --> 00:25:52,399 Speaker 3: They wouldn't have taken this risk, this catastrophic risk for 521 00:25:52,520 --> 00:25:56,000 Speaker 3: short term return, because they knew that when the catastrophic risk, 522 00:25:56,000 --> 00:25:59,040 Speaker 3: they would have sensed it. When things went bad, they 523 00:25:59,040 --> 00:26:02,359 Speaker 3: were on the hook. So I do like that structure, 524 00:26:02,480 --> 00:26:05,960 Speaker 3: and that structure in some ways, I think Wall Street 525 00:26:06,000 --> 00:26:09,159 Speaker 3: has been remoralized in that jump trading in Jane Street 526 00:26:09,160 --> 00:26:12,080 Speaker 3: and Citadel. These are all private companies and if they 527 00:26:12,119 --> 00:26:15,000 Speaker 3: go bad, if they do really stupid things, the people 528 00:26:15,000 --> 00:26:17,760 Speaker 3: who run them are going to feel a lot of pain. 529 00:26:18,080 --> 00:26:21,280 Speaker 3: So I think they'll behave more intelligently. The big private 530 00:26:21,280 --> 00:26:23,920 Speaker 3: equity firms, I think most of them are there are 531 00:26:23,960 --> 00:26:28,280 Speaker 3: their public companies, so we in that case, So the 532 00:26:28,280 --> 00:26:30,720 Speaker 3: ones who are doing all this banking, this kind of 533 00:26:30,840 --> 00:26:32,760 Speaker 3: I don't know what you call it shadow banking or 534 00:26:32,800 --> 00:26:35,000 Speaker 3: whatever you call it, they're actually making the loans and 535 00:26:35,040 --> 00:26:38,080 Speaker 3: trillions of dollars loans. They have the same problem as 536 00:26:38,160 --> 00:26:41,320 Speaker 3: the old banks did going to the financial crisis, and 537 00:26:41,400 --> 00:26:45,879 Speaker 3: it is essentially, you know, one there's a phrase that 538 00:26:45,920 --> 00:26:49,120 Speaker 3: people use on Wall Street, regulatory arbitrage, which just means 539 00:26:49,160 --> 00:26:51,959 Speaker 3: moving the risk to places where the regulators. 540 00:26:51,280 --> 00:26:56,320 Speaker 2: Can't see it. Geez the word for it. And so yeah, 541 00:26:56,400 --> 00:26:59,280 Speaker 2: so I mean that's that's what's going on. That's what's 542 00:26:59,320 --> 00:26:59,679 Speaker 2: going on. 543 00:27:00,359 --> 00:27:03,440 Speaker 1: Does this moment that we're living in, like right now, 544 00:27:03,480 --> 00:27:07,159 Speaker 1: does that feel different than any of the other moments 545 00:27:07,160 --> 00:27:09,680 Speaker 1: that we've lived through or are people always scared that 546 00:27:09,720 --> 00:27:13,080 Speaker 1: we're headed towards a financial crash? 547 00:27:13,160 --> 00:27:13,840 Speaker 2: You know, it's funny. 548 00:27:13,840 --> 00:27:16,439 Speaker 3: I don't live my life in fear of a financial crash, 549 00:27:16,520 --> 00:27:19,240 Speaker 3: so I'm not thinking, oh, it's always this way. 550 00:27:19,359 --> 00:27:22,040 Speaker 1: But because you have gold under your bed, well. 551 00:27:22,000 --> 00:27:25,280 Speaker 2: Yeah, I actually do a little bit, just a little bit. 552 00:27:25,480 --> 00:27:29,119 Speaker 2: But the it's it always. 553 00:27:28,880 --> 00:27:32,439 Speaker 3: Feels different, right What feels different now to me is 554 00:27:33,119 --> 00:27:37,880 Speaker 3: in an alarming way. The reason we endured the financial 555 00:27:37,920 --> 00:27:44,760 Speaker 3: crisis without social collapse, without depression, without thirty percent unemployment, 556 00:27:44,880 --> 00:27:48,920 Speaker 3: without like political chaos, all the rest was we had 557 00:27:48,920 --> 00:27:53,800 Speaker 3: these institutions, the Federal Reserve, the Treasury, Federal Reserve especially, 558 00:27:53,840 --> 00:27:58,360 Speaker 3: and the independence of the Federal Reserve, its ability to 559 00:27:58,400 --> 00:28:01,080 Speaker 3: be the grown up in the room. And I used 560 00:28:01,080 --> 00:28:04,800 Speaker 3: that with this word carefully, but the trusted institution. No 561 00:28:04,840 --> 00:28:08,040 Speaker 3: one really doubted in two thousand and eight that the 562 00:28:08,080 --> 00:28:12,800 Speaker 3: federal government, the US federal government had the wherewithal to 563 00:28:12,920 --> 00:28:15,119 Speaker 3: backstop all the risk, to come in and say, all 564 00:28:15,160 --> 00:28:17,480 Speaker 3: these banks made all these shitty loans. They're all going 565 00:28:17,560 --> 00:28:19,439 Speaker 3: to go to business, but we're going to be able 566 00:28:19,440 --> 00:28:20,720 Speaker 3: at the banks. So the banks are going to be 567 00:28:20,920 --> 00:28:23,720 Speaker 3: calmed down. Everybody, don't pull your money out of the banks. 568 00:28:24,240 --> 00:28:26,119 Speaker 3: The banks can continue to do their business as they 569 00:28:26,160 --> 00:28:27,119 Speaker 3: always do their business. 570 00:28:27,520 --> 00:28:28,280 Speaker 2: We're good for it. 571 00:28:28,640 --> 00:28:33,480 Speaker 3: And the Federal Reserve bought trillions of dollars of mortgages, 572 00:28:33,600 --> 00:28:35,800 Speaker 3: you know, they took the loans off the books of 573 00:28:35,800 --> 00:28:37,400 Speaker 3: the banks. Turns out they made a lot of money 574 00:28:37,400 --> 00:28:39,800 Speaker 3: doing it. I mean they bought them at distress prices, 575 00:28:39,960 --> 00:28:42,760 Speaker 3: so it all worked out. But the premise of this 576 00:28:42,880 --> 00:28:47,960 Speaker 3: whole resolution was the existence of a trusted grown up 577 00:28:48,720 --> 00:28:52,520 Speaker 3: whose credit no one doubted. We are now in a 578 00:28:52,560 --> 00:28:57,040 Speaker 3: situation where we have an administration that is dying to 579 00:28:57,080 --> 00:28:59,880 Speaker 3: get its hand on the Federal Reserve and essentially eliminate 580 00:29:00,080 --> 00:29:02,200 Speaker 3: all trust in it, which is what will happen if 581 00:29:02,200 --> 00:29:04,400 Speaker 3: they get their hands on it, like make it politicize 582 00:29:04,400 --> 00:29:10,280 Speaker 3: the institution and our federal government's finances seem uncontrollable, and 583 00:29:10,360 --> 00:29:13,720 Speaker 3: so what happens if there's a financial crisis without a 584 00:29:13,800 --> 00:29:16,560 Speaker 3: trusted adult's that's what feels different. 585 00:29:17,000 --> 00:29:18,680 Speaker 2: Like if people run. 586 00:29:18,560 --> 00:29:22,680 Speaker 3: For gold or bitcoin or whatever, the next time things 587 00:29:22,680 --> 00:29:27,640 Speaker 3: start collapsing, will the promise of the US government to 588 00:29:27,680 --> 00:29:31,680 Speaker 3: bail everybody out stop them? Like say, oh, okay, I 589 00:29:31,720 --> 00:29:34,120 Speaker 3: believe that, Yeah, yeah, I do want hold these dollars 590 00:29:34,120 --> 00:29:37,560 Speaker 3: that you're going to print gazillions more of. Yeah, yeah, 591 00:29:37,600 --> 00:29:40,000 Speaker 3: I really do believe the Federal Reserve is going to 592 00:29:40,680 --> 00:29:43,400 Speaker 3: is to calm everything down. And I just I just, 593 00:29:44,200 --> 00:29:46,440 Speaker 3: you know, it's it's not we've reached a point where 594 00:29:46,480 --> 00:29:49,920 Speaker 3: those institutions can't function, but they've been really weakened. And 595 00:29:49,960 --> 00:29:52,920 Speaker 3: I just don't know how a financial crisis plays out 596 00:29:52,960 --> 00:30:00,920 Speaker 3: without an institution that you trust. 597 00:30:01,560 --> 00:30:03,760 Speaker 1: The trust part of it, I'm so curious about. I 598 00:30:03,840 --> 00:30:06,120 Speaker 1: think about this a lot also, not just by the 599 00:30:06,120 --> 00:30:09,719 Speaker 1: way government institutions, but all of these legacy institutions that 600 00:30:09,800 --> 00:30:14,680 Speaker 1: I think people are questioning, right, your newspaper, your you know, 601 00:30:14,720 --> 00:30:18,400 Speaker 1: I'm a biased artist, First Amendment advocate all of the 602 00:30:18,880 --> 00:30:22,400 Speaker 1: everything from you know, Biden and Harris's crackdown on college 603 00:30:22,440 --> 00:30:25,480 Speaker 1: campuses for free speech, right up to Jimmy Kimmel getting 604 00:30:25,920 --> 00:30:29,000 Speaker 1: taken off the air for free speech. Like there are many, 605 00:30:29,040 --> 00:30:32,400 Speaker 1: many multifaceted sides to that conversation, but a lot of 606 00:30:32,400 --> 00:30:35,920 Speaker 1: it distills down into do we trust ABC and Disney? 607 00:30:36,000 --> 00:30:37,560 Speaker 1: Do we trust the New York Times? 608 00:30:37,880 --> 00:30:38,080 Speaker 2: Yeah? 609 00:30:38,120 --> 00:30:40,520 Speaker 1: What are we trusting these institutions? So it's not just government. 610 00:30:40,600 --> 00:30:43,200 Speaker 1: So I'm curious, like when you wake up every morning, 611 00:30:43,240 --> 00:30:45,720 Speaker 1: where do you go for your information? Who do you trust? 612 00:30:45,720 --> 00:30:48,240 Speaker 1: Who do you trust with your money? Like the like 613 00:30:48,480 --> 00:30:52,720 Speaker 1: you know gold jokes aside, are you in residential? Are you? 614 00:30:53,040 --> 00:30:55,000 Speaker 3: It wasn't a joke for me too? No, I know, 615 00:30:55,320 --> 00:30:56,760 Speaker 3: So I will tell you. I'll tell you what do 616 00:30:56,800 --> 00:31:01,080 Speaker 3: I do? How do I live this way? Where do 617 00:31:01,160 --> 00:31:07,520 Speaker 3: I place my trust? I do not share Americans seemingly 618 00:31:07,600 --> 00:31:12,120 Speaker 3: complete distrust of media. It is amazing how untrusted the 619 00:31:12,160 --> 00:31:13,880 Speaker 3: media is in our country right now. 620 00:31:14,600 --> 00:31:17,360 Speaker 2: I've written for the New York Times and the New 621 00:31:17,440 --> 00:31:18,040 Speaker 2: Yorker and. 622 00:31:18,040 --> 00:31:22,120 Speaker 3: All these places, and I know there are referees who 623 00:31:22,200 --> 00:31:26,520 Speaker 3: are there to make sure you're not just making stuff up, 624 00:31:26,840 --> 00:31:31,960 Speaker 3: you know, And having said that, this is an important point. 625 00:31:32,120 --> 00:31:35,920 Speaker 3: I can remember when I first became aware of the news. 626 00:31:36,560 --> 00:31:40,120 Speaker 3: I mean, like it as a thing that you just 627 00:31:40,160 --> 00:31:42,840 Speaker 3: didn't take on faith. And it was when I was 628 00:31:42,880 --> 00:31:45,320 Speaker 3: at Solomon Brothers when all of a sudden I was 629 00:31:45,360 --> 00:31:48,320 Speaker 3: doing something that was in the news. I was in 630 00:31:48,320 --> 00:31:50,680 Speaker 3: the Solomon Brothers training program and a New York Times 631 00:31:50,720 --> 00:31:53,200 Speaker 3: magazine writer came through and wrote about our training program. 632 00:31:53,800 --> 00:31:56,360 Speaker 2: And then I was twenty three or years old. 633 00:31:56,360 --> 00:31:58,160 Speaker 3: I was, you know, basically a kid, and I looked 634 00:31:58,200 --> 00:32:00,440 Speaker 3: at and I thought, well, it's not it's. 635 00:32:00,320 --> 00:32:03,080 Speaker 2: Not completely wrong when she wrote. But it was like 636 00:32:03,520 --> 00:32:06,960 Speaker 2: it wasn't completely right. She missed it shouldn't have it. It 637 00:32:06,920 --> 00:32:08,880 Speaker 2: wasn't that she had an angle. It was just that 638 00:32:09,200 --> 00:32:11,120 Speaker 2: she didn't know very much. You know. She was there 639 00:32:11,120 --> 00:32:12,360 Speaker 2: and talked to a couple of people. 640 00:32:12,760 --> 00:32:15,160 Speaker 3: So then a penny drop for me, Well, if this 641 00:32:15,240 --> 00:32:18,760 Speaker 3: is true of something I know about, what about all 642 00:32:18,760 --> 00:32:19,240 Speaker 3: these things. 643 00:32:19,160 --> 00:32:20,040 Speaker 2: I don't know about. 644 00:32:20,240 --> 00:32:23,280 Speaker 3: If I'm reading about the Arab Israeli conflict, what's the 645 00:32:23,480 --> 00:32:25,240 Speaker 3: likelihood that they've got that anymore? 646 00:32:25,360 --> 00:32:25,560 Speaker 2: Right? 647 00:32:26,200 --> 00:32:28,760 Speaker 3: And so assume the persons more or less trying to 648 00:32:28,760 --> 00:32:31,240 Speaker 3: do their best and has some bias, and sometimes they 649 00:32:31,240 --> 00:32:34,560 Speaker 3: reveal their bias, but mainly it's just like the nature 650 00:32:34,560 --> 00:32:37,600 Speaker 3: of news gathering is pretty shallow, so how getting out 651 00:32:37,600 --> 00:32:38,960 Speaker 3: of How do I live my life? So I hold 652 00:32:38,960 --> 00:32:39,880 Speaker 3: it all kind of loosely. 653 00:32:40,480 --> 00:32:43,320 Speaker 2: But I read the New York Times. I glance at 654 00:32:43,320 --> 00:32:46,480 Speaker 2: the Washington Post. I read the Wall Street. 655 00:32:46,320 --> 00:32:49,440 Speaker 3: Journal, you know, very useful to me because it's coming 656 00:32:49,440 --> 00:32:50,760 Speaker 3: from a completely different spaces. 657 00:32:50,840 --> 00:32:54,240 Speaker 2: The Financial Times they just sort of like they're Switzerland. 658 00:32:54,440 --> 00:32:57,480 Speaker 3: They don't they like they're looking at what's going on 659 00:32:57,480 --> 00:32:58,960 Speaker 3: in America, like they're looking at Mars. 660 00:32:59,160 --> 00:33:02,000 Speaker 2: And that's very helpful. So those are newspapers. 661 00:33:02,440 --> 00:33:06,800 Speaker 3: I let all kinds of podcasts and stuff in I graze, 662 00:33:07,120 --> 00:33:11,160 Speaker 3: I get more, more sources, less deeply. In the last 663 00:33:11,160 --> 00:33:13,160 Speaker 3: ten years, I've not read the New York Times as 664 00:33:13,200 --> 00:33:15,480 Speaker 3: deeply as I read the New York Times twenty years ago. 665 00:33:16,040 --> 00:33:18,720 Speaker 1: And it's much shorter now anyway. 666 00:33:19,200 --> 00:33:21,480 Speaker 2: And my money where I do? Where do I keep money? 667 00:33:22,320 --> 00:33:25,320 Speaker 1: Where do you keep your money? So who do you trust? 668 00:33:25,640 --> 00:33:29,760 Speaker 3: Schwab huh very important. They don't take big positions themselves. 669 00:33:30,560 --> 00:33:35,280 Speaker 3: They were notably like they were not in trouble during 670 00:33:35,320 --> 00:33:39,840 Speaker 3: the financial crisis. JP Morgan, As I figure that in fact, 671 00:33:39,840 --> 00:33:41,880 Speaker 3: I don't know. I got to say I don't understand why. 672 00:33:41,760 --> 00:33:43,520 Speaker 2: Anybody keeps more than you know. 673 00:33:43,600 --> 00:33:46,960 Speaker 3: Whatever the deposit insurance now is at a local bank, 674 00:33:47,240 --> 00:33:50,640 Speaker 3: at a regional bank. It's their handful of banks that 675 00:33:50,640 --> 00:33:53,920 Speaker 3: are implicitly federally guaranteed, like too big to Fail, and JB. 676 00:33:54,040 --> 00:33:56,720 Speaker 3: Morgan is the biggest and the best run and a 677 00:33:56,760 --> 00:33:59,360 Speaker 3: little bit out of the country, like not a lot, 678 00:33:59,360 --> 00:34:01,640 Speaker 3: but a little bit out of the country. And that's 679 00:34:01,640 --> 00:34:05,160 Speaker 3: a I lived in London when I started my writing career, 680 00:34:05,200 --> 00:34:06,680 Speaker 3: and so I had to have a bank account. 681 00:34:06,720 --> 00:34:08,480 Speaker 2: I just kept that bank account in London. 682 00:34:08,640 --> 00:34:09,600 Speaker 1: Oh cool, Okay. 683 00:34:10,440 --> 00:34:13,640 Speaker 3: But what I invest in in my weak moments, I 684 00:34:13,680 --> 00:34:18,400 Speaker 3: will very occasionally buy a stock of a company, of 685 00:34:18,440 --> 00:34:19,240 Speaker 3: an actual company. 686 00:34:19,360 --> 00:34:20,880 Speaker 2: It's almost always a mistake. 687 00:34:21,280 --> 00:34:23,800 Speaker 3: I get lucky and don't I never know enough to 688 00:34:23,840 --> 00:34:25,799 Speaker 3: actually I know, I know, I don't know more than 689 00:34:25,840 --> 00:34:27,960 Speaker 3: the market and I and I get excited about something 690 00:34:28,000 --> 00:34:30,400 Speaker 3: and I ignore the fact that I don't know. Mainly 691 00:34:31,040 --> 00:34:34,759 Speaker 3: index funds and Berkshire Hathaway, which is a kind of 692 00:34:34,760 --> 00:34:35,520 Speaker 3: index fund. 693 00:34:35,600 --> 00:34:38,520 Speaker 2: It's a big fund. And then gold. 694 00:34:38,680 --> 00:34:43,400 Speaker 3: So I have a friend who runs money, who was 695 00:34:43,440 --> 00:34:46,000 Speaker 3: a high school friend. He became a libertarian, he became 696 00:34:46,040 --> 00:34:49,319 Speaker 3: an iron Randian. I lost track of him until the 697 00:34:49,320 --> 00:34:51,720 Speaker 3: financial crisis. I heard he was working for bear Stearns. 698 00:34:52,640 --> 00:34:54,880 Speaker 3: I was worried about him. I call him up and 699 00:34:54,960 --> 00:34:56,719 Speaker 3: he's got this excited tone of his voice, even though 700 00:34:56,719 --> 00:34:57,919 Speaker 3: I haven't talked in twenty years. 701 00:34:57,920 --> 00:34:59,799 Speaker 2: It's like we was yesterday. It goes, Michael, Mike, I can't talk. 702 00:34:59,800 --> 00:35:01,759 Speaker 3: I'm and I said, I'm just worried about you, and 703 00:35:01,800 --> 00:35:04,600 Speaker 3: he goes, no, no, no, I'm sure he had a fund 704 00:35:04,600 --> 00:35:07,600 Speaker 3: outside of Bear that bear Stearns funded, and he made 705 00:35:07,640 --> 00:35:09,960 Speaker 3: the big short. He made the trade, and he gave 706 00:35:10,000 --> 00:35:13,000 Speaker 3: me a little lecture ten years ago about the debasement 707 00:35:13,040 --> 00:35:16,319 Speaker 3: of the currency and the history of currency debasement, and 708 00:35:16,360 --> 00:35:18,560 Speaker 3: it so spooked me that I just thought, Okay, I'm 709 00:35:18,560 --> 00:35:21,720 Speaker 3: gonna buy some gold. So I actually bought some gold, 710 00:35:22,120 --> 00:35:25,520 Speaker 3: and it's gone up and up and up. And I 711 00:35:25,560 --> 00:35:29,160 Speaker 3: can't recommend it really, except that. 712 00:35:29,120 --> 00:35:33,560 Speaker 1: It's worked for people who are listening. Why specifically gold 713 00:35:34,320 --> 00:35:36,520 Speaker 1: because your friend told you to or because there was 714 00:35:36,600 --> 00:35:37,080 Speaker 1: something else. 715 00:35:37,239 --> 00:35:41,480 Speaker 3: So the argument is gold has no intrint really, it's 716 00:35:41,520 --> 00:35:43,160 Speaker 3: not worth thirty six hundred dollars. 717 00:35:42,960 --> 00:35:44,759 Speaker 2: Announced it's use value. 718 00:35:45,400 --> 00:35:49,600 Speaker 3: The argument is it has social trust. You can't explain 719 00:35:49,640 --> 00:35:52,760 Speaker 3: why or how it got this, but it is ingrained 720 00:35:52,760 --> 00:35:56,040 Speaker 3: in us, in human beings, to believe this thing is 721 00:35:56,120 --> 00:35:59,040 Speaker 3: valuable and to run to it when all else doesn't work, 722 00:35:59,480 --> 00:36:02,319 Speaker 3: and every he agrees to do it, even if they 723 00:36:02,320 --> 00:36:06,319 Speaker 3: aren't conscious of it. And so when things go really bad, 724 00:36:06,440 --> 00:36:10,359 Speaker 3: it's going to go up. And there's saying why you. 725 00:36:10,680 --> 00:36:13,360 Speaker 3: I mean, it's just it's got a history. But I 726 00:36:13,400 --> 00:36:15,240 Speaker 3: do feel I got to say, I don't feel completely 727 00:36:15,280 --> 00:36:19,359 Speaker 3: comfortable with my holding. I bought into this idea that 728 00:36:19,560 --> 00:36:22,680 Speaker 3: my friend sold me, sold me over an afternoon. 729 00:36:23,160 --> 00:36:23,600 Speaker 2: I thought. 730 00:36:24,200 --> 00:36:25,520 Speaker 3: Part of what I was thinking is will be a 731 00:36:25,520 --> 00:36:27,080 Speaker 3: fun way to keep in touch with him, is I'll 732 00:36:27,080 --> 00:36:29,719 Speaker 3: buy some of it and we will be talking about it. 733 00:36:30,239 --> 00:36:32,239 Speaker 3: And then it just started going up so fast I 734 00:36:32,320 --> 00:36:34,719 Speaker 3: forgot about my friend and thought about, wow, I. 735 00:36:34,600 --> 00:36:39,280 Speaker 2: Got a bunch of gold. So that's what happened. 736 00:36:39,320 --> 00:36:40,839 Speaker 1: I'm going to ask you a couple of rapid fire 737 00:36:40,880 --> 00:36:43,600 Speaker 1: trust questions. Do you trust the following? 738 00:36:43,800 --> 00:36:45,359 Speaker 2: Can we do one to ten? Or is it yes 739 00:36:45,440 --> 00:36:45,600 Speaker 2: or not? 740 00:36:45,719 --> 00:36:47,239 Speaker 1: Sure? You could do one to ten? Yeah, one of 741 00:36:47,320 --> 00:36:49,360 Speaker 1: ten's great. Do you trust the front page of the 742 00:36:49,360 --> 00:36:50,439 Speaker 1: New York Times? 743 00:36:51,080 --> 00:36:53,240 Speaker 2: Eight? The front page? 744 00:36:53,320 --> 00:36:56,319 Speaker 3: Yeah, I mean the New York Times generally eight seven 745 00:36:56,320 --> 00:36:59,279 Speaker 3: and a half eight. In these times, people have been 746 00:36:59,360 --> 00:37:01,360 Speaker 3: run out of New York Times for being wrong thinking 747 00:37:01,520 --> 00:37:04,120 Speaker 3: in the last ten years. You can't you know the 748 00:37:04,200 --> 00:37:05,400 Speaker 3: James Bennett episode. 749 00:37:05,400 --> 00:37:06,120 Speaker 2: That kind of stuff. 750 00:37:06,400 --> 00:37:09,800 Speaker 3: Printing something that offended other people gets people fired. 751 00:37:10,120 --> 00:37:12,920 Speaker 2: That's outrageous. So that that is that has caused my 752 00:37:13,040 --> 00:37:15,120 Speaker 2: trust in the New York Times to decline. 753 00:37:16,040 --> 00:37:18,120 Speaker 1: That's well said. Okay, what about the front page of 754 00:37:18,120 --> 00:37:19,840 Speaker 1: the New York Times style section. 755 00:37:20,920 --> 00:37:23,200 Speaker 2: Ah, that's stuff. That's ten baby, there it is. 756 00:37:23,239 --> 00:37:25,319 Speaker 3: And by the way, ten being in the most asked me, 757 00:37:25,600 --> 00:37:28,160 Speaker 3: it doesn't really ask me to trust it. 758 00:37:28,160 --> 00:37:30,640 Speaker 1: It's critical for an idiot like me who has no 759 00:37:30,719 --> 00:37:32,799 Speaker 1: sense of style and is trying to learn because I. 760 00:37:32,760 --> 00:37:34,399 Speaker 2: Trust, don't do that. 761 00:37:34,800 --> 00:37:37,560 Speaker 3: Don't do not figure out which colored T shirt to 762 00:37:37,600 --> 00:37:39,600 Speaker 3: wear or whether you can wear shorts in the winter 763 00:37:40,000 --> 00:37:40,520 Speaker 3: from you. 764 00:37:40,640 --> 00:37:41,520 Speaker 2: Don't don't do that. 765 00:37:41,920 --> 00:37:48,040 Speaker 1: Okay, Street tacos in Los Angeles four Ooh, hard to start. 766 00:37:48,480 --> 00:37:50,560 Speaker 3: I have a very sensitive stomach and I've had some 767 00:37:50,680 --> 00:37:51,480 Speaker 3: bad experiences. 768 00:37:51,520 --> 00:37:53,319 Speaker 1: Okay, that's fair. I would do I would do it 769 00:37:53,320 --> 00:37:55,200 Speaker 1: in an eight point five or nine. But if it's a 770 00:37:55,200 --> 00:37:56,040 Speaker 1: stomach issue, I. 771 00:37:55,960 --> 00:37:57,080 Speaker 2: Get it's a stomach issue. 772 00:37:57,200 --> 00:37:58,919 Speaker 1: Okay, then let's move on to hot dogs. Hot dogs 773 00:37:58,920 --> 00:37:59,760 Speaker 1: at Yankee Stadium. 774 00:38:00,360 --> 00:38:02,920 Speaker 2: Oh god, five, I'm sorry. 775 00:38:03,040 --> 00:38:05,400 Speaker 3: It's and it's just and it's it's also just like, 776 00:38:05,719 --> 00:38:09,040 Speaker 3: as I've gotten older, the appeal of the hot dog 777 00:38:09,080 --> 00:38:10,719 Speaker 3: has declined, and it's declining. 778 00:38:10,920 --> 00:38:13,120 Speaker 2: It won't it's asymptotically. I don't think it will go 779 00:38:13,160 --> 00:38:13,560 Speaker 2: to zero. 780 00:38:14,080 --> 00:38:16,879 Speaker 3: But it went from oh, this is a natural thing 781 00:38:16,920 --> 00:38:20,040 Speaker 3: that a human being should eat to I really I 782 00:38:20,040 --> 00:38:21,600 Speaker 3: feel the same way about pop tarts. 783 00:38:21,640 --> 00:38:24,600 Speaker 2: Like if if if like someone from. 784 00:38:24,520 --> 00:38:26,960 Speaker 3: Outer green little green man from outer space, came down 785 00:38:26,960 --> 00:38:29,279 Speaker 3: and stared at this thing, would he yet identify it 786 00:38:29,320 --> 00:38:33,600 Speaker 3: as a food? And it probably not? And there's probably 787 00:38:33,600 --> 00:38:34,640 Speaker 3: a good reason for that. 788 00:38:35,160 --> 00:38:38,920 Speaker 1: Okay, social security. 789 00:38:40,360 --> 00:38:43,920 Speaker 3: A six and a half seven, and that is just 790 00:38:43,960 --> 00:38:46,840 Speaker 3: it's going to be inflated away. 791 00:38:46,960 --> 00:38:48,600 Speaker 2: I mean, the value of that. I think the value 792 00:38:48,640 --> 00:38:50,560 Speaker 2: of the benefits will be eroded. 793 00:38:51,200 --> 00:38:53,759 Speaker 3: I don't think the population will put up with it 794 00:38:53,920 --> 00:38:57,040 Speaker 3: just being taken away, because people have it in their 795 00:38:57,040 --> 00:38:59,719 Speaker 3: head as I paid for this, that's my money. It 796 00:38:59,840 --> 00:39:03,160 Speaker 3: just so, I mean, you can print, always print more dollars, 797 00:39:03,920 --> 00:39:05,799 Speaker 3: so we'll get some of. 798 00:39:05,760 --> 00:39:07,480 Speaker 2: It, but not what you'd hope for. 799 00:39:08,120 --> 00:39:09,319 Speaker 1: Congress. 800 00:39:10,520 --> 00:39:12,239 Speaker 2: I mean, I got to ask trust to do what. 801 00:39:13,960 --> 00:39:16,399 Speaker 3: I mean, I could ten in some ways in one 802 00:39:16,440 --> 00:39:20,480 Speaker 3: another is it's here's the conundrum, the thing that I 803 00:39:20,520 --> 00:39:22,880 Speaker 3: can't get out of my head about Congress. If you 804 00:39:23,000 --> 00:39:26,759 Speaker 3: go in and spend time with the individuals, as I've 805 00:39:26,800 --> 00:39:30,000 Speaker 3: actually i've done recently, I always come away feeling good 806 00:39:30,040 --> 00:39:33,560 Speaker 3: about the people. I always come away feeling bad about 807 00:39:33,560 --> 00:39:35,480 Speaker 3: their circumstances, like the situation. 808 00:39:36,280 --> 00:39:37,000 Speaker 2: And so I come. 809 00:39:36,880 --> 00:39:39,840 Speaker 3: Away thinking, it isn't the actual people we're putting in 810 00:39:39,920 --> 00:39:42,319 Speaker 3: there that's the problem. It's the situation we put them in. 811 00:39:42,760 --> 00:39:45,920 Speaker 3: So the things about the structure of the institution that 812 00:39:45,960 --> 00:39:50,920 Speaker 3: are catastrophically bad. So I actually kind of trust the people, 813 00:39:51,360 --> 00:39:53,960 Speaker 3: like when I meet them and spend time with them, 814 00:39:54,239 --> 00:39:57,239 Speaker 3: but I know that the institution is going to end 815 00:39:57,320 --> 00:39:58,720 Speaker 3: up in a not a good place. 816 00:39:59,239 --> 00:40:01,680 Speaker 2: So anyway to ten, if you put this to the 817 00:40:01,680 --> 00:40:02,839 Speaker 2: American public, you get a one. 818 00:40:03,120 --> 00:40:07,520 Speaker 1: Yeah, three, Okay, Well my last my last two trust 819 00:40:07,560 --> 00:40:09,880 Speaker 1: things were gold and you're weed guy, And I know 820 00:40:09,920 --> 00:40:10,960 Speaker 1: how you feel about gold. 821 00:40:13,320 --> 00:40:16,319 Speaker 2: You know I gold eight. But my we guy. 822 00:40:17,160 --> 00:40:22,799 Speaker 3: So I have never taken a single hit. I never 823 00:40:23,000 --> 00:40:28,400 Speaker 3: I've never even tried marijuana, and you just do edibles. Eventually, 824 00:40:28,440 --> 00:40:32,080 Speaker 3: I'll probably come around edibles. Friends tell me like they'll 825 00:40:32,160 --> 00:40:35,959 Speaker 3: change my life, but I have not, so I don't 826 00:40:35,960 --> 00:40:37,759 Speaker 3: have a view of my we guy. All right, So 827 00:40:37,800 --> 00:40:41,360 Speaker 3: there's a level, not a we guy. So I default 828 00:40:41,400 --> 00:40:43,440 Speaker 3: to trust. So we'll say ten. I trust my week 829 00:40:43,480 --> 00:40:44,200 Speaker 3: guy ten. 830 00:40:44,360 --> 00:40:47,000 Speaker 2: Because it cost me. It costs me nothing to trust him. 831 00:40:47,040 --> 00:40:50,760 Speaker 1: Awesome, Thank you for your time, Michael, all Right, totally fun. 832 00:40:53,320 --> 00:40:56,040 Speaker 1: Here we go again as a production of iHeart Podcasts 833 00:40:56,080 --> 00:40:59,320 Speaker 1: and snap Fu Media in association with New Metric Media. 834 00:41:00,000 --> 00:41:04,560 Speaker 1: Executive producers are me Calpen ed Helms, Mike Falbo, Melissa Martino, 835 00:41:04,719 --> 00:41:08,680 Speaker 1: Andy Kim, Pat Kelly, Chris Kelly, and Dylan Fagan. Meghan 836 00:41:08,760 --> 00:41:11,160 Speaker 1: tan Is our producer and writer. Dave Shumka is our 837 00:41:11,160 --> 00:41:15,560 Speaker 1: producer and editor. Our consulting producer is Romin Borsolino. Tory 838 00:41:15,600 --> 00:41:19,120 Speaker 1: Smith is our associate producer. Theme music by Chris Kelly, 839 00:41:19,320 --> 00:41:23,440 Speaker 1: logo by Matt Gosson, Legal review from Daniel Welsh, Caroline 840 00:41:23,480 --> 00:41:27,640 Speaker 1: Johnson and Megan Halson. Special thanks to Glenn Bassner, Isaac Dunham, 841 00:41:27,840 --> 00:41:31,640 Speaker 1: Adam Horn, Lane Klein, and everyone at iHeart Podcasts, but 842 00:41:31,800 --> 00:41:38,400 Speaker 1: especially Will Pearson, Carrie Lieberman and Nikki Etour. Thanks for listening. Everybody, 843 00:41:38,400 --> 00:41:40,720 Speaker 1: tell your friends, write a review. All of this helps. 844 00:41:40,760 --> 00:41:43,279 Speaker 1: I appreciate you listening, and until we go again, I'm 845 00:41:43,360 --> 00:41:43,720 Speaker 1: Calpen