Speaker 1: Hey, and welcome to What Future. I'm your host, Joshua Topolski,
Speaker 1: and we're back, of course again. I'm looking out my
Speaker 1: window right now. This is like, um, I think a Trotsky.
Speaker 1: There's a famous story about when he was I think
Speaker 1: he was killed. Well maybe I just made this up,
Speaker 1: but in my in my imagination, Trotsky was sitting at
Speaker 1: his writing desk. He was looking out at a beautiful
Speaker 1: sunrise or something, and then somebody took an ice axe
Speaker 1: to his head or something and killed him. Very sad.
Speaker 1: But anyhow, I was just looking out my window here
Speaker 1: where I record the podcast. I have a view out
Speaker 1: into my backyard, which is just forest. It's just trees,
Speaker 1: and and it's has been snowing all day, and there
Speaker 1: is several inches of snow on the ground here in
Speaker 1: just outside of New York City. And it's a cold, windy,
Speaker 1: classic winter day. And it's fucking six days away from
Speaker 1: the beginning of spring. Actually, when you listen to this,
Speaker 1: it'll be four days away, because we're recording this Tuesday,
Speaker 1: and the show is released at the strike of midnight
Speaker 1: on Thursdays. The clock bells ring out and then immediately
Speaker 1: our editor Adam goes to an arcane ancient computer and
Speaker 1: pushes a large red button and the show is dispersed
Speaker 1: to the Internet at midnight. So anyway, but you know,
Speaker 1: it's been a tumultuous few days for the economy. You
Speaker 1: may not know this, but there's been a lot of fear, uncertainty,
Speaker 1: in doubt about our banking structures in America because Silicon
Speaker 1: Valley Bank, a well known and presumably well well I need,
Speaker 1: a bank of the VC elite, has gone belly up,
Speaker 1: had been taken over by the government, and there was
Speaker 1: of course great fear of a contagion that would plunge
Speaker 1: us into eternal darkness, not unlike the Last of Us
Speaker 1: post apocalyptic nightmare world, where we would be forced to
Speaker 1: befriend a child and take them across the country on
Speaker 1: a harrowing journey with a very dark dark end. Maybe
Speaker 1: or not, I don't know, because I haven't seen it,
Speaker 1: and that's not a spoiler, And if it is a spoiler,
Speaker 1: that I apologize. That was completely unintentional. Anyhow, with all
Speaker 1: of this banking calamity, I thought we should have an
Speaker 1: expert on the show, so I called up Felix Salmon,
Speaker 1: my old pal Felix Salmon, who is the chief financial
Speaker 1: correspondent at Axios, and he's also the host of Slate Money,
Speaker 1: which is a Slate podcast, so he's got Slate in Axio.
Speaker 1: It's a very lucrative situation, very shrewd. Anyhow, Felix is here.
Speaker 1: He's going to explain this banking crisis to us. Actually
Speaker 1: it's not a banking crisis. Is gonna explain the the
Speaker 1: near banking crisis and help us all understand the future
Speaker 1: of money on planet Earth. So let's just get into it.
Speaker 1: So it's all over. The bank crisis is in the past.
Speaker 1: It is we solved it. Biden has once again swooped
Speaker 1: in and exactly Janet yelling to the rescue. Okay, So Phelix,
Speaker 1: I should just say before we get into this, you're podcasting,
Speaker 1: you're a correspondent. You're writing. I mean, you just wrote
Speaker 1: something yesterday, so you're writing on a regular basis. I'm
Speaker 1: writing many things, and I have a book coming out
Speaker 1: on May the ninth called The Phoenix Economy. You have
Speaker 1: a book coming out. You wrote a book during all
Speaker 1: of this. Yeah, what's the book about? Before we get
Speaker 1: into this topic, I'm curious, what's the book about? It's
Speaker 1: it's basically how the pandemic caused all manner of weird,
Speaker 1: unpredictable things to happen, like minor banking crisis. Is that
Speaker 1: good or bad? Is your book like pro pro the
Speaker 1: current state of the of the economy? I call it
Speaker 1: the new normal? Right? You know shit's getting weird. It
Speaker 1: is weird, right, I mean it is weird because actually
Speaker 1: this is a great example. So so the reason I'll
Speaker 1: just get into it. The reason I wanted you to
Speaker 1: come on is to talk about this SVB Silicon Valley
Speaker 1: bank collapse and then the ensuing panic. But that's not
Speaker 1: the only weird thing happening in terms of economics and
Speaker 1: the way money flows around the world, and a lot
Speaker 1: of weird shit is going on. And do you take that?
Speaker 1: It's like, and we'll get into some of the weird stuff.
Speaker 1: I do you think it's a positive or negative? It's weird,
Speaker 1: bad or good to you? I mean it's good if
Speaker 1: you're a financial journalist. Makes makes your life a little
Speaker 1: more interesting. Right, There's a lot of shit to talk
Speaker 1: about exactly that keeps me employed. Will you just take
Speaker 1: us through a little bit of explaining what happened? Everybody
Speaker 1: knows this bad got like basically shut down and taken
Speaker 1: over by the government. But I don't know if everybody
Speaker 1: who's listening will have understood how this happens. Can you
Speaker 1: give us a little bit of what the big news
Speaker 1: around SBB was, just if you could explain it. Like, like,
Speaker 1: I'm five years old. So the first thing you do
Speaker 1: when you're five years old is you watch Mary Poppins, Yes,
Speaker 1: very good, which is one of my favorite movies. You're
Speaker 1: an American, you've seen Mary Poppins, right, Well, Mary Poppins
Speaker 1: is a Disney movie if I'm not mistaken, And so
Speaker 1: now the original, the original Mary Poppins with Dick Van
Speaker 1: Dyke and Julie Andrews, Yeah, that's a Disney film anyway.
Speaker 1: Vandyke is an American. Am I crazy? Dick Van Dyke
Speaker 1: is Americans and he has a terrible, terrible accent. Just
Speaker 1: because it's set I like this that you're taking ownership
Speaker 1: of it set in It is set in England, right,
Speaker 1: but it is set in England. It does Julie Andrews,
Speaker 1: who's undeniably England and Rex Harrison absolutely a Disney production.
Speaker 1: But anyhow, go on, first forwarding through the question of
Speaker 1: the nationality of Mary Poppins. Yes, there is a really
Speaker 1: lovely bank run in Mary Poppins, and everyone talks about
Speaker 1: it's wonderful life. But Mary Poppins real really nails the
Speaker 1: mechanics of a bank run. If a lot of people
Speaker 1: all want to get their money out from a bank
Speaker 1: at the same time, the only thing that the bank
Speaker 1: can really do is just shut its doors and closed down,
Speaker 1: because banks don't have everybody's money just sitting two hand
Speaker 1: and right. Technically, all of those individual depositors are allowed
Speaker 1: and within their rights to ask their money back at
Speaker 1: the same time. But if that ever happens, the bank
Speaker 1: fails because there's just not enough money to pay them
Speaker 1: all back. Right. Yeah, The size of the bank run
Speaker 1: at Silicon Valley Bank was completely unprecedented. The largest bank
Speaker 1: run in American history was Washington Mutual in two thousand
Speaker 1: and eight, which suffered a bank run of sixteen points
Speaker 1: something billion dollars in ten days, so call it one
Speaker 1: or two billion dollars a day. The bank run at
Speaker 1: Silicon Valley Bank was forty two billion dollars in one day. Yeah,
Speaker 1: we have never seen anything like it. That's crazy. No
Speaker 1: bank can survive that, and therefore it didn't survive that,
Speaker 1: and it wound up getting nationalized. No, you say no
Speaker 1: bank could survive that. JP Morgan couldn't survive that. Well,
Speaker 1: maybe JP Morgan forty two billion. But the point is
Speaker 1: that JP Morgan is too big to fail, so nobody
Speaker 1: would try to take their money out with JP Morgan, right,
Speaker 1: because the whole point about two big to fail banks
Speaker 1: is they're too big to fail, therefore they won't fail.
Speaker 1: Therefore you don't need to worry about them failing. Right,
Speaker 1: Therefore you don't need to try and get your cash
Speaker 1: out now before everyone else. And those banks are actually
Speaker 1: there's a way to refer to those banks in the
Speaker 1: grand scheme of the economics of this that they're called
Speaker 1: what the what is the term? It's like g sibs
Speaker 1: g sibs, which means global systemically important banks, Global systemically
Speaker 1: important banks. Okay, And so JP Moore is a g
Speaker 1: SUP which means it's too big to fail. Silicon Valley
Speaker 1: Bank was not a GCUP. It was small enough to fail,
Speaker 1: and it did fail. Right. It's funny because when I
Speaker 1: did my startup many years ago, all of the vcs
Speaker 1: who funded it were like, well, you've got to open
Speaker 1: an account of Silicon Valley Bank. That's the bank that
Speaker 1: everybody uses. The weird thing about this, and I know
Speaker 1: this isn't true. I know there was an enormous amount
Speaker 1: of money in Silicon Valley Bank, and it was a
Speaker 1: very storied bank with very serious clients. But it always
Speaker 1: felt a little flimsy to me. Just calling a bank
Speaker 1: Silicon Valley Bank just to me said suggested that it
Speaker 1: could fold very easily. So I was only a little
Speaker 1: bit surprised, doesn't I mean, when you think about Silicon Valley,
Speaker 1: what I think about his companies like Yo, I think
Speaker 1: about like things like Yo. You remember the app Yo?
Speaker 1: I not only remember it, I think I might even
Speaker 1: still have it on my phone. You're an early investor
Speaker 1: in Yo. But frankly, I don't know if people even
Speaker 1: remember it. It was all it did was you could
Speaker 1: send a message to someone in the message was Yo,
Speaker 1: and they could send a message back, I believe, and
Speaker 1: it was also Yo. Is that correct? That's correct? Yeah? Right?
Speaker 1: And they raised ten I think ten million dollars, at
Speaker 1: least ten million dollars on the basis of this concept
Speaker 1: of Yo. Yeah. So Yo as a service Yo as
Speaker 1: a service. Right, And I'm sure that was the headline
Speaker 1: of an article that you wrote in twenty What gear
Speaker 1: is that twenty thirteen or something. So I need to
Speaker 1: ask you as someone who actually did this. You had
Speaker 1: a start up, you had VCS. They invested some quantum
Speaker 1: of money which I'm going to assume it was more
Speaker 1: than two hundred and fifty thousand dollars, it was more
Speaker 1: than two or to fifty thousand surprisingly into your company.
Speaker 1: You then deposited that money at Silicon Valley Bank. Yes,
Speaker 1: we got a check and then we put the check
Speaker 1: into the bank. Right. Did it ever occur to you
Speaker 1: that you were lending Silicon Valley Bank a whole bunch
Speaker 1: of money interest free, and that this was an unsecured
Speaker 1: liability of Silicon Valley Bank, and that really you ought
Speaker 1: to worry about that. You know, Well, the answer is no.
Speaker 1: But and I assume that for the most people the
Speaker 1: answer would be no, Right. I mean I assume that
Speaker 1: if you asked anybody, or even VCS or the founders
Speaker 1: this question, I presumably they all would say no. I
Speaker 1: didn't feel like I was giving them alone. I'm putting
Speaker 1: money in the bank where I keep it to be
Speaker 1: used for my purposes. But you bring up an interesting point,
Speaker 1: which is, like my perception of money, and perhaps this
Speaker 1: is just me. I think for humans in this age,
Speaker 1: the concept of money, it sort of doesn't exist the
Speaker 1: way it used to, right you. Actually we're talking about
Speaker 1: the people would go to the bank right in Mary Poppins,
Speaker 1: where they go to the bank right to get their money.
Speaker 1: Right in the nineteen twenty nine people went to the
Speaker 1: banks to get their money that was there, or their
Speaker 1: jewelry that was in a lockbox somewhere or whatever. I
Speaker 1: don't think we think of money like that. So the
Speaker 1: check is like this like totally weird piece of paper
Speaker 1: that represents something. Then it's sitting somewhere, and our money
Speaker 1: is like wildly distributed across all of these different credit
Speaker 1: cards and services and you know, automatic payments and things,
Speaker 1: and so I feel like money itself, I think it's
Speaker 1: become much less of a real thing. Like no one
Speaker 1: even takes cash anymore. I mean, you live in New York, right,
Speaker 1: Like you know what it's like. I mean you used
Speaker 1: to go to restaurants in New York and they were like,
Speaker 1: we only take cash, and those are like gone now.
Speaker 1: As I just think money has kind of disappeared as
Speaker 1: a concepts why like NFTs could be as valuable as
Speaker 1: they were at one point, because it just seems like, well,
Speaker 1: it's just as good as money. It's just like a thing. No.
Speaker 1: I have a chapter in my book about this actually,
Speaker 1: which is basically the way that money is this thing.
Speaker 1: I think I compare it to tomato seeds. Every time
Speaker 1: you try and get a grip on the mint like
Speaker 1: slid its away. It's hard to understand money. It's hard
Speaker 1: to get a grip on money. But one thing that
Speaker 1: happened during the pandemic, I don't know if you remember this,
Speaker 1: Towards the end of the pandemic is Russia invades Ukraine
Speaker 1: and the US government decides to retaliate by basically confiscating
Speaker 1: all of Russia's money that it has on deposit of
Speaker 1: the New York Fed. Yeah, I remember this violate. It
Speaker 1: was only like a year ago or something. Yeah, it
Speaker 1: was a year ago. And this like completely undermines this
Speaker 1: whole concept of like having was money being something you
Speaker 1: can own, Like suddenly you can have I think Russia
Speaker 1: had like seventy five billion dollars or something on deposit
Speaker 1: of it just disappeared. Right, I mean money is not real.
Speaker 1: I mean this is a well known thing, right, I
Speaker 1: mean this is money is just a concept. I mean
Speaker 1: money is a necessary collective fiction. If it didn't exist,
Speaker 1: we would have to invent it. I really love what
Speaker 1: direction you're taking this podcast. Just really do you hear?
Speaker 1: This does get you a little bit of SVB fails?
Speaker 1: What was the other bank that failed? I'm like, it's
Speaker 1: it's great. They sat Signature, they got lost in the shuffle.
Speaker 1: They're like small potatoes by comparison. These two banks fail.
Speaker 1: And then it's Friday, right, I think it was Friday?
Speaker 1: Is that correct? Last Friday? Technically SVB fails on Friday
Speaker 1: and Signature fails on Sunday, right, Okay, this bank collapsed
Speaker 1: and then Monday morning all of the banks started dropping,
Speaker 1: like all of their prices started just falling off a cliff,
Speaker 1: including big banks like Schwap stuff. Right, And this is
Speaker 1: just pure fear. So what causes that? So two things
Speaker 1: caused this, and it's impossible to disentangle them because all
Speaker 1: we're doing is looking at one thing, which is the
Speaker 1: stock market. And if money doesn't mean anything, stocks mean
Speaker 1: much less. And there's always dangerous to try and read
Speaker 1: too much into stock prices. If you look at the
Speaker 1: share price of First Republic, you know, it went down
Speaker 1: by you know, seventy percent on Monday, and it went
Speaker 1: up by fifty percent on Tuesday. Like, these things bounce
Speaker 1: around enormously, and reading too much into share price moves
Speaker 1: can be dangerous. But broadly speaking, what people were scared
Speaker 1: of on Monday was that if Silicon Valley Bank can fail,
Speaker 1: if Signature Bank can fail, then other banks can fail too,
Speaker 1: and so we should sell any bank that might fail.
Speaker 1: And more broadly than that, there is a banking crisis.
Speaker 1: Like you know, you have three banks closing down within
Speaker 1: like four days. If you add in Silvergate, right, that
Speaker 1: is not normal. Between them, they had four hundred billion
Speaker 1: dollars of assets. This is an absolutely enormous number of
Speaker 1: assets in closed banks, unresidented since the global financial crisis. Right,
Speaker 1: So there's a banking crisis. It kind of stands to
Speaker 1: reason that if there's a banking crisis and in bank
Speaker 1: bank trucks are going to go down, Right, that's the
Speaker 1: first order thing. The second order thing is just they
Speaker 1: used to be up until a few weeks ago, We
Speaker 1: used to live in a world where people like Josh
Speaker 1: Tapolski could keep a couple million bucks in the bank
Speaker 1: and not really worry about it. It would just kind
Speaker 1: of sit there and no one ever really worried about
Speaker 1: how much of that is insured, how much of that
Speaker 1: is uninsured? You know? And now people are realizing that
Speaker 1: lending money to banks is risky, and what's more, it
Speaker 1: is actually much more attractive to just take that money
Speaker 1: invested in t bills which yield five percent and that
Speaker 1: is risk free. Right. Why would you get zero percent
Speaker 1: on your money in the bank account, which is risky,
Speaker 1: when you can get five percent on your money in
Speaker 1: a risk free treasury bill? So right, right? What is
Speaker 1: happening is that a whole bunch of people, either in
Speaker 1: reality or just like this is what the stock market viered,
Speaker 1: removing their money from banks, from deposit accounts in banks
Speaker 1: and putting it somewhere else. And that is bad for
Speaker 1: banks because deposits are very cheap sources of funding for banks, right,
Speaker 1: And if banks lose that cheap funding, then they will
Speaker 1: be less profitable. And then again it stands to reason
Speaker 1: that their share price will go down. Right, I mean
Speaker 1: this all makes sense. What is the origin of the
Speaker 1: banking crisis as you see it? Because I mean, it
Speaker 1: is interesting that the last real I guess, the last
Speaker 1: major banking crisis, what we say was two thousand and eight.
Speaker 1: Would we say that was like when there was a
Speaker 1: real definitely very much in the expectation he or the fear.
Speaker 1: Rather much of it ginned up by, like weirdly by
Speaker 1: people in Silicon Valley, like vcs like Jason Calcanus, who
Speaker 1: were like literally absolutely panicking on Twitter that he had
Speaker 1: to buy guns and oil now or something. Jason was
Speaker 1: the Jim Kramer of twenty twenty three. You know, it's shouting,
Speaker 1: They don't, they have no idea. How about it is
Speaker 1: out there just screaming, screaming like a maniac. Meanwhile, the
Speaker 1: government like very nonchalantly was like, don't it's fine, we
Speaker 1: got it. We'll cover this, like yelling, jumped it. It
Speaker 1: was like, it's fine. Even after the government was like
Speaker 1: we're gonna handle it. Don't worry, everybody's gonna get their money,
Speaker 1: people were still panicking, like for reasons I can't quite explain,
Speaker 1: except that they don't I don't know, they don't have
Speaker 1: anything better to do. Or they want to incite panic,
Speaker 1: they want people to be panicked, you know. Sort of
Speaker 1: the point about the bank stocks and their prices dropping,
Speaker 1: It is a lot of like fear of things happening
Speaker 1: that motivated. I mean, fear is often motivating the way
Speaker 1: the market moves. Surprisingly strangely, you would think there'd be
Speaker 1: some way to not do that. There are only two
Speaker 1: motivations for the way the market moves. Josh, it's fear
Speaker 1: and greed. You know that. Yeah, But so what is
Speaker 1: this banking crisis? Like, what is the root of this?
Speaker 1: Where does this come from? Why are we at this point?
Speaker 1: So depends how far back you want to go. I
Speaker 1: want to know. Actually, you tell me how far back,
Speaker 1: and you go to trace this crisis they were experiencing
Speaker 1: right now. So I would go back to more than
Speaker 1: the decade of zero interest rates from the federal which
Speaker 1: created this huge flood of liquidity into tech broadly and
Speaker 1: crypto in particular. And this idea that money was worthless
Speaker 1: and you couldn't get any interest on your money. And
Speaker 1: this was true for over a decade, right, and it
Speaker 1: was a specific policy of the federal there. It's called
Speaker 1: z zero interest rate policy. It's just in any way
Speaker 1: spurred by two thousand and eight, or is it connected
Speaker 1: in anyway or yes, yes, this is this is the
Speaker 1: fed's attempt to goose the economy in the wake of
Speaker 1: the financial crisis. Right, So you could go further back
Speaker 1: if you really tried, Yeah, you could go yeah, but
Speaker 1: let's start with the Yeah. What ZEB does is it
Speaker 1: causes a huge amount of money to wind up sitting
Speaker 1: in deposit accounts, especially at Silvergate and Silicon Valley Bank,
Speaker 1: where no one cares that they're not earning any interest
Speaker 1: because there is no interest in this world, and no
Speaker 1: matter why you keep your money, it earns no interest. Right.
Speaker 1: And what's more, vcs are raising huge amounts of money
Speaker 1: because they're like, you know, get rich quick and all
Speaker 1: of this kind of stuff. So all of that money
Speaker 1: that flows into VC funds from big foundations and endowments
Speaker 1: and suffering wealth funds and all of that kind of
Speaker 1: stuff winds up flowing into startups and crypto companies. And
Speaker 1: all those ups and crypto companies need a bank account,
Speaker 1: and the vcs all given the same advice, which is
Speaker 1: the same advice they gave you, which is just opening
Speaker 1: the account of Silicon Valley Bank Cilicon Valley, Yeah, except
Speaker 1: for when Silicon Valley Bank would look a scance at
Speaker 1: people who are a bit too crypto and say like,
Speaker 1: we'll take pretty much any any startup, but not if
Speaker 1: it's too crypto, right, And then those people weren't wound
Speaker 1: up going to Silvergate. So what you wound up with
Speaker 1: was basically, you know, on the order of three hundred
Speaker 1: plus billion dollars of deposits which were all you know,
Speaker 1: the result of equity funding from vcs, just kind of
Speaker 1: sitting in these accounts waiting to get spent. Right. Then
Speaker 1: what happened is the Fed started raising interest rates. Those
Speaker 1: deposits started looking like, why are they earning zero percent
Speaker 1: when I couldn't be making more in treasury bills. And
Speaker 1: at the same time, all of the VC funding started
Speaker 1: drying up, and there was a crypto winter, right, and
Speaker 1: so the crypto winter people all started needing to pay
Speaker 1: out dollars, the tech startups all started needing to pay
Speaker 1: out dollars. The deposits therefore started going down quite significantly.
Speaker 1: And when deposits go down, what the banks need to
Speaker 1: do is sell their assets. Now what were their assets?
Speaker 1: Their assets were longer dated bonds that they had bought. Unfortunately,
Speaker 1: what had happened is they bought those bonds when interest
Speaker 1: rates were low. They are now selling those bonds when
Speaker 1: interest rates are high. And Josh Topolski is a master
Speaker 1: of bondmath. You can tell me what happens to the
Speaker 1: price of a bond between if you buy it when
Speaker 1: interest rates are low and sell it when interest rates
Speaker 1: are high. Well, I would assume the value of that
Speaker 1: bond goes down to the potential buyer. I assume they
Speaker 1: want to paid lasts for it. That's exactly correct. And
Speaker 1: so what happens is these banks wind up losing money
Speaker 1: on their bond sales. And in fact, if you mark
Speaker 1: their bond holdings to market, it looks like the banks
Speaker 1: were insolvent. The banks look like they're insolvent. Depositors will
Speaker 1: start panicking. Peter Thiel starts a bank run, and right,
Speaker 1: you know, and the rest is history. You said they
Speaker 1: look like they're insolvent, are they not? Is that just
Speaker 1: an appearance? So it's a kind of weird existential question. Right,
Speaker 1: if you're a bank and you have a bond and
Speaker 1: you're intending to hold it to maturity, and that bond
Speaker 1: will pay out one hundred dollars when it matures. As
Speaker 1: far as you're concerned, that is one hundred dollars On
Speaker 1: a long enough timeline, it's one hundred bucks. Yeah, it's like,
Speaker 1: you know, the whole point of a bank is that
Speaker 1: they invest through the cycle, right, and then if suddenly
Speaker 1: an emergency happens and you have to sell it and
Speaker 1: you can only get eighty three dollars for it, then shit,
Speaker 1: you're insolvent. But you're only insolvent when you're forced to sell.
Speaker 1: If you're not forced to sell, you're not insolvent. You're saying,
Speaker 1: those bonds are like if you look at the value
Speaker 1: of them and go, well, this will be cashed out
Speaker 1: at some point at the face value. The bonds were
Speaker 1: issued by Fannie Mae and Freddie Mack, and you know
Speaker 1: entities that have zero credit risk. Right, you know you
Speaker 1: will get paid back, There's no doubt about that, right,
Speaker 1: unless you need to sell them sooner exactly right, unless
Speaker 1: you need to sell them when the interest rates are
Speaker 1: high and they are not fully mature, in which case
Speaker 1: am I understanding this correctly? In which case things go
Speaker 1: very badly. Yes, this is fascinating to me, I mean,
Speaker 1: it also seems obvious. It seems obvious, seems like banks
Speaker 1: shouldn't do this. Seems like there's a way for banks
Speaker 1: to prevent themselves from doing this. I'm not an expert,
Speaker 1: but is there a mechanism, Yeah, by which a bank
Speaker 1: like Silicon Valley Bank could have prevented totally itself from
Speaker 1: becoming or appearing insolvent at the time when everybody started
Speaker 1: drawing their money out. So one of the things that
Speaker 1: could have done is not go eight months without having
Speaker 1: a chief risk officer. That would have been smart. Maybe
Speaker 1: it could should have listened to regulators who maybe the
Speaker 1: regulators should have been a bit more firm about don't
Speaker 1: take that kind of interest rate risk. There are lots
Speaker 1: of ways that banks could avoid taking massive amounts of
Speaker 1: interest rates. They can invest in floating rate bonds instead
Speaker 1: of fixed rate bonds, they can put on rate swaps,
Speaker 1: they can you know, there's like, this is not rocket science.
Speaker 1: Every bank knows this. For reasons that remain a bit unclear,
Speaker 1: Silicon Baldy Bank did not do this, but yes, totally
Speaker 1: they A lot of this was unforced errors on the
Speaker 1: part of SVB. Right, So unforced errors but also has
Speaker 1: a lot to do with the mentality of the people
Speaker 1: who bank it. At SVB, there's a there's a thread
Speaker 1: doing the rounds, which I'm sure you've seen of this
Speaker 1: guy kind of gone I forget, you know, it's on
Speaker 1: Twitter and he's sort of like, oh, here's my story
Speaker 1: about the last few days. And it's like Wednesday morning.
Speaker 1: I wake up and I go into my you know,
Speaker 1: slack with hundreds of founders, and they're all panicking about
Speaker 1: the banks, like they're panicking about um silver Gate. Yes,
Speaker 1: so they're panicking about silver Gate or whatever. They're like,
Speaker 1: what about SVB or something like that anyhow, and they're
Speaker 1: all like, we should take our money out of here, right.
Speaker 1: He takes his money out and then correct me if
Speaker 1: I'm wrong, but he then buys h A's an SVB. Yes,
Speaker 1: He's like, this is temporary and SBB is a good investment.
Speaker 1: I'm get taking my money out now, but I know
Speaker 1: it's going back up because this is there's nothing to
Speaker 1: worry about, even though even though literally the reason I
Speaker 1: am taking my money out is because there was something
Speaker 1: to worry about. The bank run is happening because of
Speaker 1: those conversation. Oh the bank run. Yeah, they are the
Speaker 1: bank run, right, Like those people are like, we gotta
Speaker 1: get out of this, and in doing so, it's a
Speaker 1: self fulfilling prophecy essentially. Right. Yes, but this guy, yeah,
Speaker 1: he bought shares that day he took his money out,
Speaker 1: and he's like this it'll be it's crashing now, but
Speaker 1: it'll be back up him that he was like, I
Speaker 1: made I made a mistake. It's like, well, I think
Speaker 1: it could have been several mistakes. But but but do
Speaker 1: the I mean, do the do the customers of SBB.
Speaker 1: I'm not trying to focus my ire on you know,
Speaker 1: Silicon Valley or or founders or vcs. I mean, it's
Speaker 1: not like anybody deserves to be in a situation where,
Speaker 1: you know, they have like the kinds of problems people
Speaker 1: are having when this bank sort of became insolvent. But
Speaker 1: I mean, did they bear some responsibility? Man? This is
Speaker 1: like if all those two hundred founders or however many
Speaker 1: and there were, that was once in the only group chat.
Speaker 1: I assume if they just hadn't pulled their money out
Speaker 1: like this wouldn't have happened. It would have all have
Speaker 1: been found right, Yeah, it was absent the bank run
Speaker 1: Cilicon Baldy Bank would would still be pootling along quite happily,
Speaker 1: like they'd be fine. Those bonds would be sitting there
Speaker 1: accruing value over the long enough timeline to be worth
Speaker 1: whatever they say they are, and we would just be
Speaker 1: there as having a normal afternoon when not talking about
Speaker 1: this at all. SCB, like, you know, it might feel
Speaker 1: like it needed a bit more capital. It might you know,
Speaker 1: have actually been able to do the capital raise it
Speaker 1: announced it needed funding VC funding. It might have had
Speaker 1: a couple of years of losing money, but that was okay.
Speaker 1: Banks can lose money for a few years. Look at
Speaker 1: credit squeets. It's lost money for every year that I
Speaker 1: can remember, and it's still going. That's why I say
Speaker 1: that all the time to people. I said, just take
Speaker 1: a look. I don't. I wasn't aware of that. Actually,
Speaker 1: that's interesting information. I won't be doing it. I would
Speaker 1: have bet any bank with them. Okay, But here's a question. Now.
Speaker 1: First off, the contagion worry, there was a big concern,
Speaker 1: right like that. Then the reason why all of these
Speaker 1: banks are eating crushed on Monday. Now they're way back up.
Speaker 1: If you had just bought some shares. By the way,
Speaker 1: I want to be clear, I'm in no way ever
Speaker 1: giving financial advice. But if a person had just bought
Speaker 1: some shares, like I was, like, boy, if I had
Speaker 1: just bought some schwab, you know, when it was way
Speaker 1: down on Monday. On Tuesday, I'd be looking pretty good.
Speaker 1: But the fear was this is going to create a
Speaker 1: domino effect and all of the banks, or many of
Speaker 1: the banks are going to end up in the SVB boat.
Speaker 1: Two questions here, One is like, is there still a
Speaker 1: risk of contagion? And if not, or if so, even
Speaker 1: how do we fix this problem? You take them in
Speaker 1: whatever order you want. Yeah. So the reason why the
Speaker 1: government stepped in on Sunday night was because there was
Speaker 1: clearly a risk of contagion. The steps they took on
Speaker 1: Sunday night with their attempt to fix the problem. By
Speaker 1: Tuesday morning, it was more or less apparent that they
Speaker 1: had succeeded in fixing the problem, and therefore the stunks
Speaker 1: went up. You're just speaking to the meme I assume
Speaker 1: of the guy right, the weird the weird like humanoid
Speaker 1: guy with the three D the stunks guy sk So
Speaker 1: we're good. We solved it. We fixed it. We don't
Speaker 1: have anything to worry about, is what you're saying. Like
Speaker 1: SVB can fail, it's not a big deal. Well, no,
Speaker 1: SDB failing is a big deal for the Silicon Valley ecosystem, right,
Speaker 1: As you know, the poor vcs, they don't have a
Speaker 1: lot of imagination. They only know that one bank exists,
Speaker 1: and they tell all of their company, their portfolio companies,
Speaker 1: to go put all of their money into this one bank.
Speaker 1: If that one bank fails and like literally just doesn't
Speaker 1: reopen or just like winds down under national ownership, right,
Speaker 1: that would be a real problem for Silicon Valley broadly
Speaker 1: because they would need to find another bank, and apparently
Speaker 1: that's beyond their can. Right. The definitely other banks in
Speaker 1: the area, though apparently there's only one. Judge that I've been,
Speaker 1: I've been reliably informed there's only one bank in Silicon Valley.
Speaker 1: I've been. I've been to that part of California, and
Speaker 1: I can tell you I've seen multiple branches of all
Speaker 1: sorts of different banks up there. In any case, the
Speaker 1: overwhelming likelihood is the Silicon Valley Bank will end up
Speaker 1: getting sold to someone or other. It will reopen under
Speaker 1: new ownership, it will be owned by Barkley's or Truist
Speaker 1: or JP Morgan or Goldman Saxe or someone else or
Speaker 1: maybe or maybe Elon Moscus. Someone suggested, I feel like,
Speaker 1: did I see this? Am? I imagine that somebody was
Speaker 1: like tweeting in him, going like, maybe you should buy SVB?
Speaker 1: And he and he replied saying I'm open to the idea.
Speaker 1: I hope to the idea. Yeah. The fucking guy incredible stuff.
Speaker 1: I can tell you there is exactly zero chance that
Speaker 1: the FDIC would allow him to own a bank. He's
Speaker 1: so good at running businesses. I think this is there
Speaker 1: is also like it does kind of need to be
Speaker 1: a bank. I would be shocked if SVB got bullet
Speaker 1: by a non bank. Right, maybe Jason Calcanis could run it.
Speaker 1: See how he does Every time you sees eddy fluctuation
Speaker 1: of the numbers, he just loses his shit, just complete
Speaker 1: madness every twenty four hours. Okay, So, but is it good?
Speaker 1: Have we fixed like the banking crisis? Like concept? Are we?
Speaker 1: Are we no longer and in danger of I mean,
Speaker 1: I guess like I'm asking this and I'm wondering. Part
Speaker 1: of me is just going, are we just totally admitting
Speaker 1: that money is absolutely meaningless and made up and like
Speaker 1: doesn't there doesn't really hit there's no real value except
Speaker 1: the one that we are all, you know, sharing in
Speaker 1: the illusion of like it feels like rights, just like, hey,
Speaker 1: here's look at you. You're getting You're getting onto logical again. Joe, Well,
Speaker 1: I just think it's interesting. I'm a big fan of money.
Speaker 1: I think it's great for purchasing things, which is my
Speaker 1: favorite pastime, shopping, the American great American pastime. But one,
Speaker 1: have we solved any future banking crisis just by the
Speaker 1: fact that you know, the government can step in and
Speaker 1: handle it. You know, what do you think this banking
Speaker 1: crisis was? It turns out a lot easier to solve
Speaker 1: than the two thousand and eight banking crisis, right, right,
Speaker 1: The two thousand and eight financial crisis was based on
Speaker 1: absolutely enormous real losses around the planet. There was a
Speaker 1: credit crisis, and a lot of people lost a lot
Speaker 1: of money. Right in this banking crisis, the only people
Speaker 1: who really lost a lot of money were the shareholders
Speaker 1: of Silicon Valley Bank and Signature Bank, And there weren't
Speaker 1: that many of them. And they'll be fine, right because
Speaker 1: they were all diversified. So yeah, so the stakes are
Speaker 1: much lower this time around. And it turns out that
Speaker 1: the federal government with by extending the FDIC guarantee to
Speaker 1: all of the deposits in Silicon Valley Bank, not just
Speaker 1: the insured ones. The FED opening up its discount window
Speaker 1: to you know, the other banks that people were worried about,
Speaker 1: like Chua and First Republican people like that seems to
Speaker 1: have done the job right. So yeah, I think, you know, like,
Speaker 1: without getting to ontological, we you know, we had a crisis.
Speaker 1: The crisis as of Tuesday afternoon seems as though it's
Speaker 1: more or less than the best. Yeah, there's a kind of, um,
Speaker 1: I don't know if it's what you call it. A
Speaker 1: rumor comes some thinking that the FED will cool its
Speaker 1: rate hikes because of this situation. Is there any indications
Speaker 1: that's actually true or that that would make any sense?
Speaker 1: You know, I'm sort of an armchair observer to all
Speaker 1: of this. Obviously I care about the global economy and
Speaker 1: certainly the US economy, though I'm of the mind that
Speaker 1: whenever things are bad, it's just a matter of time
Speaker 1: before they're good again. I don't know about you, but
Speaker 1: when the markets having a bad day. What I don't
Speaker 1: do is look at any investments that I have and
Speaker 1: think about how poorly they're doing, because it feels like
Speaker 1: ultimately a waste of energy. The first thing you should
Speaker 1: do when it comes to looking at any investments you
Speaker 1: might have is never look at how they're doing. There
Speaker 1: is a lot of empirical research showing that the more
Speaker 1: often you look at your stockport vidio, the less well
Speaker 1: you perform. Um. Sure, I mean, I don't know if
Speaker 1: that's true. That sounds like a lie that you just
Speaker 1: made up, But no, that is true. That is actually
Speaker 1: it's it's a core finding in behavioral finance. But to me,
Speaker 1: it feels like if you just look, if you just
Speaker 1: look at the history of the of the markets. I
Speaker 1: mean again, I'm not giving anybody advice, but for me personally,
Speaker 1: I just think, well, the line is going up. It's
Speaker 1: just constantly going up over a long enough timeline. And
Speaker 1: I'm I've still got a few years left. So you're
Speaker 1: you're a baby, Josh, you have a decades ahead of you.
Speaker 1: I'm a young man. I've got at least a few years.
Speaker 1: I will answer your question about the FED, yeah, and
Speaker 1: the answer is that at the margin, credit conditions and
Speaker 1: monetary conditions are slightly tighter now than they wear a
Speaker 1: week ago. All of these banks that you know have
Speaker 1: suffered deposit withdrawals, uh, that much less likely to lend
Speaker 1: out money and they wear a couple of weeks ago.
Speaker 1: And it's therefore conversely that much more difficult to borrow
Speaker 1: money to start a business, to invest in your business, whatever.
Speaker 1: So that is exactly what the FED is trying to
Speaker 1: achieve with its rate hikes. So in one way, the
Speaker 1: market and the little baby banking crisis we just had
Speaker 1: has done the Fed's job for it, and then the
Speaker 1: Fed doesn't need to be quite as aggressive because the
Speaker 1: market is already doing it. Oh, I say, interesting, Do
Speaker 1: I think the FED is going to just stop raising raids? No?
Speaker 1: I mean, like if I had to bet. Part of
Speaker 1: the problem here is there in this quiet period. The
Speaker 1: rate decision comes on the twenty first, and they're all
Speaker 1: meant to just shut up in the run up to
Speaker 1: the meeting. So we don't really know what they're thinking
Speaker 1: about this crisis and what its effect it's going to
Speaker 1: be on monetary policy. Right, but in general, do they
Speaker 1: care about Silicon valley startups? Not really. They're interested in
Speaker 1: the broad economy, which still seems to be pretty hot.
Speaker 1: Inflation still seems to be well above where they want
Speaker 1: it to be, and so yeah, we'll probably see another
Speaker 1: quarter point, right Like, But I mean, Silicon Valley is
Speaker 1: not like a Bellweather No, no, it really is not.
Speaker 1: I mean it's it's the economy of Silicon Valley in
Speaker 1: the in the startup world is completely deranged by comparison
Speaker 1: to I mean, you know this because you know all
Speaker 1: these people and you've covered this and read about it assuredly.
Speaker 1: It's just a I mean, what is it, like ninety
Speaker 1: percent of startups fail. It's it's people are dumping enormous
Speaker 1: amounts of cash into things that are inevitable failures. I
Speaker 1: mean it's it's so it's like, I feel like it
Speaker 1: doesn't indicate much of anything for the rest of the
Speaker 1: country or the world, right correct. The one thing we
Speaker 1: do need to underscore is that SVB did not make
Speaker 1: bad loans to startups. Well, if it did, that wasn't
Speaker 1: the problem, right, No one is. No one is saying
Speaker 1: that like they lend a whole bunch of money to
Speaker 1: you know, Adam Newman and Elizabeth Holmes, and they lost
Speaker 1: all of their money, and now right and now their bust. Right,
Speaker 1: that was not the cause of the problem. Now, those
Speaker 1: people had the money and lasted. It wasn't like the
Speaker 1: bank gave it to them. Right, Like, those people raised
Speaker 1: a lot of equity capital. They did not raise a
Speaker 1: lot of debt capital, because lenders are smarter than that
Speaker 1: as a general rule, right, right, correct? No, I mean
Speaker 1: I'm not I mean I wasn't suggesting that. I'm just
Speaker 1: saying that the entire world of economics there just seems
Speaker 1: deranged by comparison to the rest of like exactly, like
Speaker 1: there's a there's a class of person who will give
Speaker 1: money to a company that is a ninety has a
Speaker 1: ninety percent chance of failing, and that class of person
Speaker 1: is called a venture capitalist. That class of person is
Speaker 1: not called a lender. Like no lender would ever do that. No,
Speaker 1: that's actually the strangest thing really when you think about it.
Speaker 1: There is no expectation that they'll get the money back.
Speaker 1: I mean for the most part. I mean, if ten
Speaker 1: percent of those have an axit or even you know,
Speaker 1: do better than just have a real meaningful liquidity event,
Speaker 1: it's it's special and wonderful and it helps you know,
Speaker 1: obviously like shorts up the bottom line there, But they're
Speaker 1: not lending it. It's being given. Yeah, it's being given.
Speaker 1: Like I know. I know this because I was given money,
Speaker 1: you know, to do a startup. And yeah, well yeah,
Speaker 1: if you actually technically speaking, I think if you look
Speaker 1: at the term sheet, yeah, it will have been in
Speaker 1: the form of like preferred something something something which technically
Speaker 1: you owe back. Well, yes, of course that converts in
Speaker 1: many different ways. Obviously in reality it was equity. It
Speaker 1: wasn't that. Did the YO founders have to pay back
Speaker 1: their ten million? I don't think so. It is definitely
Speaker 1: non recourse right, but that is again not the cause
Speaker 1: of the SBB failure. So now where do we go.
Speaker 1: Are we in a recession? No, you're an expert, I am.
Speaker 1: We're not in a recession. We're not in a recession. Yeah,
Speaker 1: Felex says it's not a recession. Then it's fucking not
Speaker 1: a recession. That's it. That's I'm I'm good as far
Speaker 1: as hearing that. If you if you look at this
Speaker 1: this wonderful Yugov pole which they've been running every week
Speaker 1: for like the best buds of a year now, and
Speaker 1: they come out every week and they ask for two
Speaker 1: thousand Americans, are we in a recession? And every week
Speaker 1: a majority of Americans says, yes, we are in a recession,
Speaker 1: and every week a majority of Americans is wrong. And
Speaker 1: it's just one of those things where most people are wrong.
Speaker 1: To me, it's like, I remember what a real ression.
Speaker 1: I feel like, I remember what a real recession feels like.
Speaker 1: Even if we were in a recession, it wouldn't be
Speaker 1: what you call a real recession. One of the problems
Speaker 1: here is that the last two recessions we've had have
Speaker 1: both been unbelievably enormous, gut wrenching, massive things, and everyone
Speaker 1: now thinks, oh my god, if it's a recession, it
Speaker 1: has to be like two thousand and eight or twenty twenty.
Speaker 1: It doesn't. Most recessions are much milder than that and
Speaker 1: kind of no a big deal, right, But yeah, we
Speaker 1: are not in a recession right now. Yeah, And do
Speaker 1: you believe that we are going to enter some kind
Speaker 1: of recession era in the near future? Does it feel
Speaker 1: like the fear is warranted? Why do so many Americans
Speaker 1: keep answering this? Yougo of pol on a geological time
Speaker 1: frame then sure, but like, yeah, okay, yes, someday there
Speaker 1: will be a recession. Someday there will be a recession,
Speaker 1: but like it's a mug's game trying to predict when right.
Speaker 1: You don't feel like the temperature is that hot or cool. Rather,
Speaker 1: now the economy is still pretty hot if you look
Speaker 1: at the GDP numbers, if you look at the consumer
Speaker 1: spending numbers, even if you just look at the inflation numbers,
Speaker 1: Like the reason why there's so much inflation is because
Speaker 1: people are out there spending loss of money. Right again,
Speaker 1: getting back to emotion, there's a mood of like could
Speaker 1: something be wrong? It's something wrong. Maybe everybody's a gun
Speaker 1: shy following the pandemic, Like it feels like you're just
Speaker 1: waiting for the next thing to go wrong. Do you
Speaker 1: think there's a single thing that could change the attitude
Speaker 1: of people? Is there some way to get that ugo
Speaker 1: of pull to shift in a different direction? Like what
Speaker 1: would it take to convince the people who are wrong
Speaker 1: about the recession that there actually isn't a recession? So
Speaker 1: big question. I don't know, if you get aheadser it's yeah,
Speaker 1: I mean, like I'm trying to think, like when was
Speaker 1: the last time you remember like a feeling of national
Speaker 1: optimism and hope and jubilation, like when Wow, Obama was
Speaker 1: elected in two thousand and eight, you know, I mean
Speaker 1: react maybe the reelection probably like there people were at
Speaker 1: least like this is not a one term you know situation,
Speaker 1: this is this is real. I don't know. I mean
Speaker 1: when was when was gay marriage? When did that? When
Speaker 1: did that get Yeah? That was the gay marriage. But
Speaker 1: like like that, there hasn't been a lot of sort
Speaker 1: of caused the great celebration in the United States of
Speaker 1: late right, Yeah, I mean obviously the Trump years were
Speaker 1: very depressing, um for I feel like even for people
Speaker 1: who liked Trump, I don't think they were that happy.
Speaker 1: They were mad. Yeah, the reason they supported Trump is
Speaker 1: because they were unhappy and you know about things, they
Speaker 1: were aggrieved and they were like now we can like
Speaker 1: shout out loud or whatever. And then the pandemic, which
Speaker 1: was obviously huge downer. And I wouldn't say that by
Speaker 1: I mean, I like, you know, there's something about Biden.
Speaker 1: He's just a charming, just a hilarious kind of president
Speaker 1: just like seems to be seems to be just like
Speaker 1: floating through everything in a way that it is sort of,
Speaker 1: I don't know, comforting to some degree. He did a
Speaker 1: great job here of just like delegating everything to Janet
Speaker 1: Yellen and is saying like, are you going to deal
Speaker 1: with this? And she's like yep, and she did well.
Speaker 1: The value of having really good, smart people around you
Speaker 1: who know how to get it done is in calculabot.
Speaker 1: I mean, I mean one of the things I will
Speaker 1: say this is also in my book. I have a
Speaker 1: whole chapter about like how Steve Manusian is massively underrated
Speaker 1: and was actually an incredibly good Treasury secretary. He seems horrible,
Speaker 1: but maybe he's great. I mean, like as a person,
Speaker 1: I'm not going to start coming out and saying like,
Speaker 1: oh yeah, he's made a bunch of really great personal
Speaker 1: decisions in terms of like who he marries and stuff.
Speaker 1: But I am going to say, wow, that the if
Speaker 1: he would in charge during this banking crisis, as someone
Speaker 1: who you know, used to run a bank, he would
Speaker 1: have probably done the exact same thing, right, Like he like,
Speaker 1: it's not rocket science what they do, right. So I mean, again,
Speaker 1: that's Biden delegating, like you said, to somebody who knows
Speaker 1: what the hell they're doing, I mean, having somebody in
Speaker 1: place to deal with it. Not that it seemed to
Speaker 1: calm anybody down Listen, in California, I think I think
Speaker 1: it did. Honestly, I think that things are common right,
Speaker 1: like as we speak on Tuesday, things are common in California.
Speaker 1: Like it took an extra day of like not really
Speaker 1: knowing whether any more banks were going to get taken
Speaker 1: over and nationalized on Monday. When we all woke up
Speaker 1: on Tuesday morning and there had been no bank failures
Speaker 1: and it was pretty obvious that there weren't going to
Speaker 1: be any more bank failures. I think there really was
Speaker 1: this kind of large sigh of relief, this excellation and
Speaker 1: even the panic throne vcs in Silicon Valley like yeah,
Speaker 1: you know, just keep your money in Silicon Valley Bank,
Speaker 1: encourage people to take it over, and let's try and
Speaker 1: go back to how we were. Right, they climbed out
Speaker 1: of their bunkers exactly, took off their body armor. Yeah,
Speaker 1: they emerge from their bunkers and they were ready to
Speaker 1: reintegrate into society. It's true though today definitely felt different.
Speaker 1: In fact, I mean, you know, looking at the market,
Speaker 1: it's things almost feel optimistic, right, Like it's kind of like, oh, well,
Speaker 1: you know better than anyone not to really mead too
Speaker 1: much into one day's stock market moves. But yeah, no, no,
Speaker 1: I don't. It's it's actually the worst we should as
Speaker 1: as someone you know, with your day Joe. No, it's true,
Speaker 1: it is true. It's very important. I have to look
Speaker 1: at it. If you care about stocks, you know, look
Speaker 1: at how they're doing over ten years, don't look at
Speaker 1: how they're doing over twenty four hours. I mean, that's
Speaker 1: to me that at the base of all of this,
Speaker 1: and it is like that that, you know, the chat
Speaker 1: with the founders who are like, oh my god, you've
Speaker 1: got to get our money out of there. All of this,
Speaker 1: to me is the world of money, and the world
Speaker 1: of global economics is one that would seemingly require an
Speaker 1: enormous amount of nerves of steel, right, and also an
Speaker 1: analytical perspective on it, right, a kind of very pragmatic
Speaker 1: analytical perspect because you're talking about potential for you know,
Speaker 1: huge changes, huge shifts in the economics and huge shifts
Speaker 1: and in the way you know things are going. But
Speaker 1: what seems strange to me is that so many of
Speaker 1: the of the people who are engaging at such high
Speaker 1: levels even are motivated, still motivated, but there's like almost
Speaker 1: animal instinct of like running away from or trying to
Speaker 1: flee some perceived I get it's money. I get it's
Speaker 1: like you're always trying to protect your money. But it
Speaker 1: does feel like it shouldn't be so easy to create
Speaker 1: such panic or such you know, fear so quickly that
Speaker 1: you can you know, tank, Silicon Valley Bank in again
Speaker 1: they're responsible for the ultimate reasons that they became insolvent
Speaker 1: or near to it or apparently but as they're ever
Speaker 1: affixed to, like the fear, uncertainty and doubt that motivates
Speaker 1: people like in the market or conversely that you know,
Speaker 1: greed spirals that we see during your various cycles. No,
Speaker 1: like we're humans, we're animals where you know, we react
Speaker 1: on a very gut level to outside stimuli. Like if
Speaker 1: you don't understand the deeply sort of biological nature of
Speaker 1: all markets, then you don't understand markets. Right. It seems
Speaker 1: ridiculous though, doesn't it in a way, I mean, when
Speaker 1: you get right down to it, doesn't it seem absurd
Speaker 1: to think about it? Yeah? I mean, yeah, like we're
Speaker 1: all playing around with this perceived thing that has this
Speaker 1: made up value, and like if things get scary, we
Speaker 1: like literally people have tantrums and you know, wrack their
Speaker 1: own playpen. Well exactly, I mean that's the irony you know,
Speaker 1: has gone remarked upon ad nauseam of the thing that
Speaker 1: the venture capitalists were most upset about, being the very
Speaker 1: thing that the venture capitalists caused. It's like, come on, people, right, well, listen, Felix.
Speaker 1: I know you have to go. You've got a very
Speaker 1: important meeting to get to that important but I do
Speaker 1: have to get to it. You have a book coming out,
Speaker 1: hunt it. Tell us about the book really quickly, because
Speaker 1: you talked about a little bit. But I just want
Speaker 1: to make sure. Tell me about this book and where
Speaker 1: I can purchase it, and when I can put Yes,
Speaker 1: you can purchase it wherever all good books are sold,
Speaker 1: or even bad books. Go to your favorite book, your
Speaker 1: five feelings book. Well, they definitely won't have it yet
Speaker 1: because it doesn't come out until May the ninth, but
Speaker 1: you can pre order it. And it's called The Phoenix Economy, Life,
Speaker 1: Work and Money in the New Normal, and that idea
Speaker 1: of the new normal things being very unexpected, unpredictable, and
Speaker 1: the way that we can try and understand unexpected events
Speaker 1: as and when they happen through the lens of basically
Speaker 1: the pandemic. The pandemic turns out to have really changed
Speaker 1: the world in quite profound ways that I think a
Speaker 1: lot of people haven't quite realized. This book sounds super
Speaker 1: interesting and may it's kind of a ways off, so
Speaker 1: we will be great. You should come back. I'll, you know,
Speaker 1: check out the book and then we can talk about
Speaker 1: some of the some of the ideas in there, because
Speaker 1: I'm actually excited. I didn't I didn't know you were
Speaker 1: working on this, and I'm excited to read it because
Speaker 1: part of what interests me about money right now and
Speaker 1: the way it moves is that it feels like it
Speaker 1: as a part of culture in a way I felt
Speaker 1: like when I was a kid growing up and when
Speaker 1: I was a young adult, even it wasn't in the
Speaker 1: conversation quite as viscerally or didn't seem to matter quite
Speaker 1: as much. Understanding these sort of like global mechanicians, and
Speaker 1: I think there's like some really I mean kind of
Speaker 1: amazing stories that are that are happening. I think the
Speaker 1: pandemic has sort of either created or you know, inspired
Speaker 1: or altered in some way. So you have to come
Speaker 1: back and we'll talk about your book. I will come back.
Speaker 1: I will definitely come back, all right. Well, Felix, thank
Speaker 1: you so much. I now understand the entire state of
Speaker 1: the economy, and I didn't before. So this is really good.
Speaker 1: Do you see. That's that's what I'm handful exists. You
Speaker 1: really have cleared up a lot of big questions for me,
Speaker 1: so I deeply appreciate it. Thank you so much. You know,
Speaker 1: I think we learned a lot here today. I think
Speaker 1: we learned a lot about ourselves and about the world,
Speaker 1: and about the global economy, and about what fear really
Speaker 1: means and what fear can really do. And I think, um,
Speaker 1: you know, we saw it with with this a near
Speaker 1: banking crisis, and of course all of the characters in
Speaker 1: the new Scream film also experienced a great deal of fear,
Speaker 1: I assume before they were stabbed repeatedly. I haven't seen
Speaker 1: it because I don't know. I feel like the franchise
Speaker 1: is kind of lost. It's it's whatever it had, it
Speaker 1: doesn't have it anymore. I will watch it eventually, because
Speaker 1: I do I do feel like I have, I owe
Speaker 1: it to myself and to the memory of West Craven
Speaker 1: to watch it and then say Wes Craven would have
Speaker 1: hated this. Anyhow, That is our show. We'll be back
Speaker 1: next week with more what future, and as always, I
Speaker 1: wish you and your family the very best.