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Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Jason

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Speaker 1: Kelly and I'm Carol Masser. Welcome to the Bloomberg Business

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Speaker 1: Week Extra. It's our weekly podcast bringing you an in

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Speaker 1: depth interview you will not hear anywhere else. And this

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Speaker 1: week we caught up with Michael Tannenbaumb. What a character.

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Speaker 1: I've known him for a long time and his history

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Speaker 1: on Wall Street, first at bear Stearns, then striking out

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Speaker 1: on his own, creating a namesake investment fund out in California,

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Speaker 1: and then moving to Puerto Rico. This is a guy

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Speaker 1: who's definitely lived life and still doing so. Here's our conversation. Well,

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Speaker 1: and this is a guy that I've actually known for

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Speaker 1: a number of years. He also, i should say, big

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Speaker 1: tennis fan, and he's joining us on the in the aftermath,

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Speaker 1: I should say, of one of the most exciting US opens,

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Speaker 1: but we're not going to talk about that a little bit.

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Speaker 1: Michael Tannebaumb is here the new book Risk, Living on

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Speaker 1: the Edge. It's an unbelievable read, really captures the scope

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Speaker 1: of what you've been doing, uh for a number of

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Speaker 1: years now. Thank you so much for joining us in

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Speaker 1: New York. It is a pleasure and an honor, particularly

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Speaker 1: to hear that you've enjoyed my book makes me happy.

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Speaker 1: We loved it. And I think in part because your

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Speaker 1: story is really one of Wall Street over the last

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Speaker 1: four decades in many ways, why did you decide to

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Speaker 1: write it? Let's start there. Well, it was interesting. Actually

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Speaker 1: I was interviewed at Bloomberg. You've heard of them? And afterward,

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Speaker 1: and this is not hint, uh the uh the journalist said,

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Speaker 1: let's go across the street and have some drinks. And

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Speaker 1: I said, you know a number of my more famous

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Speaker 1: friends have written memoirs. And I was just wondering, I'm

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Speaker 1: sure it was competitive, right, uh, if perhaps I should?

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Speaker 1: And he said something so smart, He said, if you

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Speaker 1: have a story to tell. And I said, you know,

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Speaker 1: I'm not nearly as famous. He said, if you have

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Speaker 1: a story to tell. So, because I was an Army officer,

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Speaker 1: I learned to keep records. You live by your file

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Speaker 1: when you're a bureaucrat. And I had all these records,

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Speaker 1: which I organized by topic and then in chronology, and

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Speaker 1: I realized I did some pretty cool stuff. And and

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Speaker 1: so I started writing, uh, my first effort, and I

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Speaker 1: gave it to my son Andrew, who manages screenwriters, and

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Speaker 1: he said, this is really interesting, this is good. Now

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Speaker 1: get a writer. So I realized mostly I had written reports, right,

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Speaker 1: So I was very fortunate. We we met Donna Beach,

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Speaker 1: who's a very wonderful uh ghostwriter, I guess and uh.

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Speaker 1: And she made this book into something really interesting. You know,

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Speaker 1: if I would mention someone's name, she would go do

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Speaker 1: research and have have this color that she added. So

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Speaker 1: it made me a much more aware reader of other

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Speaker 1: people's books. So that's how what happened. Well, we want

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Speaker 1: to talk to you about your time on Wall Street,

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Speaker 1: but I do want to just go into because the

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Speaker 1: title of the book is risk, living on the edge,

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Speaker 1: and that's a common threat. And you talk about risk,

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Speaker 1: you know, by your grandmother, you talk about risk by

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Speaker 1: your father, just in terms of coming to the United

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Speaker 1: States and the risk that you've taken on throughout your life.

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Speaker 1: Not everybody takes on risk. Well that's really the theme

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Speaker 1: of the book. Because the other thing I was advised

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Speaker 1: to get a central idea. That's something you learned in English, right,

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Speaker 1: I forgot it. So I began looking for a common thread,

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Speaker 1: and I began talking to my super successful, more famous

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Speaker 1: friends who keep working even though they're rich. And I said,

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Speaker 1: you know, what is it? I mean, how have you

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Speaker 1: manage your life when you came to choices? Which one

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Speaker 1: did you take? And they would ramble. And when I say,

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Speaker 1: you see, each time you selected a difficult college, you

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Speaker 1: selected difficult course, you selected difficult career, I said, do

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Speaker 1: you understand that you have a propensity toward risk? And

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Speaker 1: they thought about it and I said yeah. And then

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Speaker 1: I said, and and by the way, it's because your

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Speaker 1: way your brain is wired. You have a shortage maybe

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Speaker 1: a serotonin, so you need more stimulus than other people.

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Speaker 1: And and finally, why don't you quit? You got fame

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Speaker 1: in my bunny. And then they sort of, you know,

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Speaker 1: pretend to be reflective and I say, well, I like it,

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Speaker 1: or what else would I do? Or you know, I

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Speaker 1: don't know, and I said, I'll tell you why you're addicted.

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Speaker 1: And then they get very quiet, because that's that's a

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Speaker 1: emotionally loaded. But it's true. Your brain wearing doesn't change

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Speaker 1: and you keep going. And I became aware of that

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Speaker 1: when I sort of retired to Puerto Rico four years ago.

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Speaker 1: I thought I would read and write and you know,

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Speaker 1: hang at the beach, and I just I couldn't do it.

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Speaker 1: I mean, and I didn't go buying bonds either. Well

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Speaker 1: I did. I bought Puerto Rican bront So. But you

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Speaker 1: see what I mean. But you see what I mean.

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Speaker 1: You know, you got addicted to a certain way of

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Speaker 1: working and you get uncomfortable. I mean, you know, if

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Speaker 1: I bought treasury bills, I would I'd be nervous that

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Speaker 1: the inflation don't be back, which I think it is,

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Speaker 1: by the way, But you talk about educated risk, right,

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Speaker 1: risk with some skills, right, because there people take risk

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Speaker 1: and they really, you know, run into trouble. But you

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Speaker 1: talk about that in your book about having kind of

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Speaker 1: a certain level of skills combined with risk creates incredible opportunities.

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Speaker 1: But that's ever so important. What you said, uh Ill,

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Speaker 1: prepared risk taking is disastrous. I mean, you may get

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Speaker 1: rich for a while, you're a child of your time,

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Speaker 1: you know, and then boom, you give it back. So

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Speaker 1: when you look at particularly those mountain climbers like in

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Speaker 1: Free Solo, you know, the preparation is extraordinary. And you

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Speaker 1: mentioned the tennis. Just imagine how hard those people work

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Speaker 1: all year to be able to endure five hours of

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Speaker 1: asymmetric you know, torking of your frame. So preparation is

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Speaker 1: vital and if you also have the risk appetite, the

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Speaker 1: two usually leads to success, I believe. So speaking of risk,

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Speaker 1: you were on Wall Street at a very well known house,

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Speaker 1: bear Stearns, at a time when in some ways risk

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Speaker 1: was really coming into vogue in a in a lot

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Speaker 1: of ways. What did you experience what did you identify

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Speaker 1: visa the risk when you were at bear Stearns. It

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Speaker 1: was interesting because as you say, Wall Street changed. Uh,

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Speaker 1: it was year before pension plans, insurance companies could buy stocks.

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Speaker 1: People traded in bonds. That's what they did when I

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Speaker 1: went to Wall Street. Uh, beginning of nineteen sixty two. Uh,

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Speaker 1: a couple of my classmates went to Morgan Stanley. They

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Speaker 1: told me that their balance sheet, their net worth in

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Speaker 1: was five million dollars. They didn't take risks, you know.

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Speaker 1: They once they were in a good club. They went

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Speaker 1: there and they got business. So this changed over time

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Speaker 1: as as the Commission structural eroaded and the fat income

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Speaker 1: and profits of Wall Street was attacked, they had to

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Speaker 1: take more and more risk, and that's how they survived

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Speaker 1: and they put their money at risk in order to

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Speaker 1: get transactions the block trades for example, and and risk

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Speaker 1: then became I think almost a central idea of Wall

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Speaker 1: Street and the universal banks. And when you don't do well,

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Speaker 1: you see recently the earnings reports where trading profits were

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Speaker 1: down and now you have margins being squeezed. So you

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Speaker 1: know that usually human behavior is pretty dorp right, So

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Speaker 1: talk to us specifically about bear Stearns, because it really

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Speaker 1: is one of the most storied houses doesn't exist anymore.

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Speaker 1: We all know that all too well. You were onto

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Speaker 1: your next adventure before that demise. But what was it

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Speaker 1: specifically about that firm that that made it different because

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Speaker 1: you had a lot of very senior jobs there. Well,

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Speaker 1: it was interesting when bear Stearns management top management changed,

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Speaker 1: it was usually by what I call in the book

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Speaker 1: brute force. Si Lewis made money trading bonds during the depression,

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Speaker 1: and he pushed out the founders and and took control.

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Speaker 1: And they were smart enough to see they didn't want

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Speaker 1: to lose talent, so they let him do it and

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Speaker 1: they stuck around. This was rather civilized way in Dorwinian

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Speaker 1: world to do things. Then Alan Greenberg, Jury Coolberg, John

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Speaker 1: Rosenwald and sig Warsaker were the four most productive partners

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Speaker 1: in the early sixties, and they went to the then

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Speaker 1: senior partners like sy Lewis and said we're gonna leave

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Speaker 1: if we don't take over, and once again brute force.

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Speaker 1: The older partners were clever enough to realize they didn't

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Speaker 1: want to lose people like this. But the the change

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Speaker 1: that broke that was when Jimmy Caine, through an extraordinary

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Speaker 1: machiavellian UH campaign UH took control by first getting control

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Speaker 1: over compensation, which is the key to Wall Street's heart

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Speaker 1: and UH the eventually UH he had control. But he

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Speaker 1: had not ever managed a large, successful department, so this

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Speaker 1: was different and with extraordinary risk taking. As I point

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Speaker 1: out in the book, the change in composition of the

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Speaker 1: balance sheet was amazing, and the fact that they chose

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Speaker 1: to finance it with short term money which was very cheap,

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Speaker 1: which boosted the return on equity which is how the

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Speaker 1: bonus system worked. You know, it was an extraordinary risk

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Speaker 1: ill liquid assets, overnight financing, bad combination right, which ultimately

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Speaker 1: led to their demise come the financial crisis. Well, as

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Speaker 1: I say in the book, they had this huge portfolio

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Speaker 1: of mortgage back bonds. And when the FED brokered the

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Speaker 1: marriage between JP Morgan and bear Stearns, JP Morgan's board

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Speaker 1: and their brilliant CEO, Jamie Diamond said We're just not

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Speaker 1: going to take that degree of risk. So the FED

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Speaker 1: had to retrade the deal on the Sunday where the

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Speaker 1: FED made JP take of I think it was about

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Speaker 1: a billion and a quarter of the bottom risk. And

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Speaker 1: then after that the FED stood behind this enormous portfolio.

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Speaker 1: And then if you look at what happened to that

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Speaker 1: portfolio over the next few years, it paid off in

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Speaker 1: the had made billions. And so what I say in

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Speaker 1: the books, bear Stearns, if they could have dealt with

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Speaker 1: their ill liquidity would have survived just smaller. So before

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Speaker 1: any of that happened, you took what many would say

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Speaker 1: is probably the biggest risk of your professional career, which

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Speaker 1: is you're in California at the time to hang out

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Speaker 1: a shingle, leave a very lucrative career at a big

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Speaker 1: Wall Street firm, and start your own shop. You captured

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Speaker 1: that moment, and it's a great moment between you and

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Speaker 1: your wife where you're you know, you're looking out at

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Speaker 1: the at the water. If I remember correctly, and she

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Speaker 1: essentially knows you well enough at that point to say, listen,

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Speaker 1: you gotta do this. You're doing it. It's just a

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Speaker 1: matter of how and when, What was inside you at

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Speaker 1: that moment, what was in your head that convinced you

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Speaker 1: this was the right move. As I told her, you know,

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Speaker 1: when I was young, I used to like to swim.

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Speaker 1: I was a lifeguard, and I dove off the low

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Speaker 1: board a lot now. And then I went up to

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Speaker 1: the high board and dove off. And you walk out

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Speaker 1: to the end, you look down and say, why am

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Speaker 1: I doing this? You know this? Why you know you

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Speaker 1: didn't want to climb back down the ladder. Sometimes you did,

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Speaker 1: And I said it was like that, you know, I

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Speaker 1: was so tempted to leave. I hated the climate at

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Speaker 1: bear Stearns at the time and in the nineties, and

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Speaker 1: and but every time I got out to the end

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Speaker 1: of the board, I looked down, and then finally, yes,

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Speaker 1: I said it was enough. And I think she was

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Speaker 1: afraid I'd retire and hang around the house. Gotta do something,

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Speaker 1: you gotta do something, yeah, right. I took Fridays in

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Speaker 1: the house, and so she would go to town on Friday, right,

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Speaker 1: But what did you see that was the opportunity? Because

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Speaker 1: you know you mentioned Jerry Coldberg. Jerry Coldberg sort of

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Speaker 1: see something in nineteen seventy six with you know, two

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Speaker 1: young colleagues, Henry Kravits and George Roberts. You know, fast forward,

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Speaker 1: you know, years later you saw something, an opportunity around

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Speaker 1: distress and around a sort of new form of investing

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Speaker 1: in many ways. What was it? You know a number

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Speaker 1: of people have reviewed my book and said it has

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Speaker 1: a lot of candor, you know, so I have to

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Speaker 1: be candid. I didn't know what the hell I was doing, Okay,

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Speaker 1: I just wanted to go prove I could do it.

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Speaker 1: Is that simple? I mean I had I hired two

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Speaker 1: brilliant young men, right, and we sat around, we came

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Speaker 1: up with these strategies, and trust me, they weren't good.

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Speaker 1: But I was always a contrarian investor, and so I

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Speaker 1: uncovered opportunities that were cheap. And I had made a

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Speaker 1: lot of money for wealthy people, and I would go

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Speaker 1: to and say, okay, uh, we're gonna buy this, and

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Speaker 1: we want you to come in with us, and we'll

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Speaker 1: take this share of the profits. None of them would

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Speaker 1: do it, and so we did it, and we made

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Speaker 1: a lot of money. And and then I thought, dummy,

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Speaker 1: you're a contrary investor. What does that mean? Nobody else

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Speaker 1: likes them? Right? So I realized that I had to

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Speaker 1: get a fund. You might say I got the memo

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Speaker 1: very late. But then we were fabulous. We made high

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Speaker 1: returns and we had funds every year. And but isn't

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Speaker 1: it amazing because I think in your booky right, that

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Speaker 1: you didn't have an audited track record, right, So here

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Speaker 1: you war after how many decades on Wall Street already

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Speaker 1: right and involved in you know, incredible deals, and then

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Speaker 1: all of a sudden you're on your own, but you

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Speaker 1: don't have that track record to stage at somebody see

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Speaker 1: this is what I've done. So it's amazing to have

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Speaker 1: to kind of start at that level. Where were you

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Speaker 1: when I needed you? I mean, neither one of us

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Speaker 1: said we had There are three of us, right, and

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Speaker 1: none of us had a track record. And I mean,

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Speaker 1: you gotta remember I grew up in a small town

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Speaker 1: in South Georgia, right, I mean this all stuff came

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Speaker 1: to me late, but you know that's the truth. Anyway,

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Speaker 1: what we did was we hired one of the national

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Speaker 1: accounting firms. We gave them all my tax returns, all

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Speaker 1: my UH brokerage statements, and they reconstructed my investment record

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Speaker 1: that way. And people I knew were kind enough to

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Speaker 1: lend their name and some of their cash to our

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Speaker 1: first fund, and that's that really got it started. I

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Speaker 1: want to go back there to those days at Bear

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Speaker 1: Sterns because I think what's remarkable about your career is

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Speaker 1: I think Wall Street was at a different time and era.

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Speaker 1: I mean, I love just reading about your early interviews.

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Speaker 1: I mean, you met, you met with those four guys

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Speaker 1: that we're going to leave, including A. S. Greenberg who

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Speaker 1: became it seems like a pretty close friend of yours.

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Speaker 1: Tell me about like the first time you walked and

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Speaker 1: it wasn't your first Wall Street firm, right because you

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Speaker 1: had it been at Burnham. But tell me about that

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Speaker 1: first time at Bear and meeting with these guys and

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Speaker 1: what it was like in those early days. Well, I

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Speaker 1: got fired around Christmas time at Burnham. I just didn't

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Speaker 1: get along with Bobby Lynton and I was a green kid.

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Speaker 1: I mean, you'd say, you know, you better learn to

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Speaker 1: behave differently, right, But I had gone there because I

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Speaker 1: was impatient. You know, I wanted to immediately be successful

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Speaker 1: and not get trained and waste all my time learning

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Speaker 1: how to do things. That was a big mistake. So

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Speaker 1: it didn't work out. And I had a fabulous mentor

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Speaker 1: there though, Danny Cowen, who was also mentoring Warren Buffett,

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Speaker 1: had bought the Berkshire Hathaway stock for him and uh,

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Speaker 1: and Danny said, look, go over to bear Stearns a

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Speaker 1: Screenberg is going to run it sometime and he's really fabulous.

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Speaker 1: And so I went over there and that was great advice.

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Speaker 1: And Danny was a wonderful and a long friend, a

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Speaker 1: long time friend. And then Ace liked me, mostly because

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Speaker 1: Danny said I was good. And then Ace took an

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Speaker 1: interest in my career and that's so important. People, young

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Speaker 1: people today asked me, you know, you know what advice

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Speaker 1: to give? I said, decide where you want to be

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Speaker 1: in two to five years and get a great mentor.

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Speaker 1: And so as you you know develop, you know, fast

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Speaker 1: forwarding again to Tannembomb Capital, you build this up. You

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Speaker 1: do create, to Carol's point, an actual track record that

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Speaker 1: you can then invest against more and more funds. You're

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Speaker 1: building a firm, but you're building a different sort of firm.

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Speaker 1: It feels like, in part because you're in Los Angeles,

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Speaker 1: you're not you know, back in New York, you're not

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Speaker 1: sort of subject to the wiles of uh sort of

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Speaker 1: New York thinking what was it about being in on

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Speaker 1: the West coast in l A That that might have

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Speaker 1: helped the ethos of the place. Well, like I said,

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Speaker 1: I got all the memos really late. I mean, serendipity

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Speaker 1: has been my friend. We tried to figure out what

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Speaker 1: we were going to do with the firm. We realized

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Speaker 1: we had to have funds so we could control the

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Speaker 1: the purchases of the ugly investments, which mostly what we

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Speaker 1: bought because when people don't like them and there's anybody

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Speaker 1: left to sell and uh. After we began to to

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Speaker 1: develop um track record, we became experts in credit. UH.

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Speaker 1: Credit to me, especially the stress credit is the most

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Speaker 1: most complex asset class. You have to understand the economy,

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Speaker 1: the industry, the company, the instrument, the legal processes of

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Speaker 1: particularly like bankruptcy processes. I'm very proud that Tenet Bomb

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Speaker 1: Capital Partners was one of three or four firms that

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Speaker 1: put Caesar's in bankruptcy when they were abusing the investors.

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Speaker 1: So we we we took calculated risks and and our

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Speaker 1: first two funds were returning net a year. So you know,

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Speaker 1: from there it got a lot easier. Talk to us too,

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Speaker 1: about your exposure to Puerto Rico, because you do have

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Speaker 1: a home there. I am a resident, and for people

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Speaker 1: who want to maintain their American citizenship, and you know,

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Speaker 1: I'm a first generation American, my wife's a second and

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Speaker 1: you know, and I have feelings about America. It's been

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Speaker 1: a great place, and so I didn't want to give

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Speaker 1: up my citizenship. But I got pretty tired of seeing

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Speaker 1: my tax dollars wasted and uh and and I just

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Speaker 1: liked to invest. I didn't want to build a business again.

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Speaker 1: And Puerto Rico has these programs that are remarkable for

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Speaker 1: people like that. And I first heard about him through

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Speaker 1: my friend John Paulson, who you know famously put a

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Speaker 1: lot of money down there too, very good result of

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Speaker 1: my dad. So, uh, when I looked into these programs,

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Speaker 1: I realized that a professional investor, what I was going

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Speaker 1: to mostly do is is by things and then at

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Speaker 1: some point get capital gains. And Puerto Rico is a

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Speaker 1: is an exception to the global tax regime of the US,

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Speaker 1: so that when you made new investments, that means that

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Speaker 1: from when you move there, the future capital gains are

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Speaker 1: not taxed. And you know, this is like heaven. And

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Speaker 1: then the other part of the heaven is that uh,

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Speaker 1: notwithstanding uh, having lived in Malibu for forty two years,

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Speaker 1: uh part time the last four. Uh, you know, I

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Speaker 1: live it at the beach, and down there we got

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Speaker 1: a lot more beach and we've got these big palm

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Speaker 1: trees and uh we live in a beautiful resort that

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Speaker 1: John Paulson controls, by the way. But you know it's

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Speaker 1: to me, it's it's heavenly. You know, I've got two

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Speaker 1: dogs who when you throw the tennis balls in the pool,

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Speaker 1: they dive after them. And it's okay. You know, no

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Speaker 1: one comes around and tells me I'm making too much noise.

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Speaker 1: But what about I'm just curious. I mean, you live

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Speaker 1: through a couple of hurricanes down there, um, and just

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Speaker 1: the problems, the economic problems, the financial problems in Puerto Rico.

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Speaker 1: What's the solution you see it? You know firsthand. I'm

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Speaker 1: just curious what you think. Well, you know, Puerto Rico

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Speaker 1: is not unique. You could look at certain states here

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Speaker 1: in the US, and I don't want to get a

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Speaker 1: lot of hate mail. Who are extraordinarily poorly run where

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Speaker 1: there's waste and my suspects, I used to think someone

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Speaker 1: was done. Now I realized they were crooked. Right, So

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Speaker 1: there's corruption, and there's incompetence and all political units almost all,

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Speaker 1: I should say it that way. But Puerto Rico was

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Speaker 1: extraordinary and they brought that to a high level of

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Speaker 1: of accomplishment. And Puerto Rico has extraordinary uh merit. It's

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Speaker 1: the only large Caribbean island's also a commercial center, so

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Speaker 1: and and manufacturing is maybe of the of the g

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Speaker 1: n P. Mostly technology, it's uh, people don't realize this.

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Speaker 1: It's in medical devices, pharmaceutical So I saw really terrific

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Speaker 1: possibilities there in terms of tourism and agriculture and technology,

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Speaker 1: if only it were run well. And uh, we did

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Speaker 1: very well investing in the bonds because there is basically

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Speaker 1: something down there that has merit. Now we've had something

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Speaker 1: rather unusual, you know, a tropical country that had a

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Speaker 1: bloodless coup and and and don't be mistaken, this was

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Speaker 1: a bloodless coup. People went out in the streets. They

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Speaker 1: didn't break windows. They didn't burn cars. I mean, hell,

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Speaker 1: in Paris they do that on Saturday. So uh, and

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Speaker 1: the governor, who was very tenacious, was forced to leave.

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Speaker 1: And we've got lucky because just prior to that, his

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Speaker 1: key aids quit to trying to save him. Right, so

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Speaker 1: they fell on the sword and then he got pushed

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Speaker 1: on one. So now we have a reluctant governor and

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Speaker 1: she is said she's not running for re election and

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Speaker 1: wants to do what's good for Puerto Rico. This strikes

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Speaker 1: me as in a unique opportunity in the history of democracies,

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Speaker 1: and uh, where someone who didn't have to pander to

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Speaker 1: the voters and maybe can do what's needed. And you

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Speaker 1: have this independent commission like we had here in New

385
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Speaker 1: York years ago when New York didn't have discipline, and

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Speaker 1: to the extent they can get a truly balanced budget

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Speaker 1: and they can make the reforms they need. It could

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Speaker 1: be exceptional. You know, I'm putting more of my money

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Speaker 1: into Puerto Rico. We'll see. And what about Wall Street today?

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Speaker 1: You know this many decades on. You know, I think

391
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Speaker 1: about the various issues, to say the least big questions,

392
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Speaker 1: both existentially but also more minor. You know you cross

393
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Speaker 1: paths over the course of your career with Jeffrey Epstein.

394
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Speaker 1: That clearly is one of the threads and narratives that

395
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Speaker 1: is very much talked about on on Wall Street. Right now,

396
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Speaker 1: we're ten years on from the financial crisis. There are

397
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Speaker 1: questions around income inequality in Wall streets role in all

398
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Speaker 1: of that. What do you make a Wall Street right now? Well,

399
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Speaker 1: are we gonna talk about the upstain of Wall Street?

400
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Speaker 1: Come on with all right and just talk about threads.

401
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Speaker 1: Sounds more like a rope anyway. Look, human nature is

402
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Speaker 1: one of the great uh non changing, uh scientific assumptions

403
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Speaker 1: you can make. And when we talk about political systems,

404
00:22:33,720 --> 00:22:35,680
Speaker 1: you know they see all the they say as these

405
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Speaker 1: young people now in favor of socialism, you know, the

406
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Speaker 1: humans like power, they like money, they like sex. I

407
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Speaker 1: can say that on your program. Yes, oh good, So

408
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Speaker 1: I have to be so careful now we're not in

409
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Speaker 1: the college that's lucky before. But it's true. I mean,

410
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Speaker 1: if you want to look at years, is that long enough?

411
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Speaker 1: I mean I'm not even at old. And uh, you know,

412
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Speaker 1: these are themes that run across all kinds of industries

413
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Speaker 1: and behaviors. Wall Street because of the sure amount of

414
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Speaker 1: money that flows through and is sitting around attracts scoundrels.

415
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Speaker 1: You know. Um, I think it was Willie Sutton who

416
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Speaker 1: was a pioneer, uh bank robber. That's when banks were

417
00:23:22,840 --> 00:23:25,160
Speaker 1: early in the West, you know, and they're just starting up,

418
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Speaker 1: and he started robbing banks. He was a specialist. And

419
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Speaker 1: people said, you know, you know when they called him

420
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Speaker 1: samestr Sutton, why was it you robbed banks? He said,

421
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Speaker 1: because that's where the money is. Well, that's the thing

422
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Speaker 1: about Wall Street. The temptation is rife, and so you're

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Speaker 1: going to get a lot of scoundrels there, but also

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Speaker 1: some of the most noble and wonderful people I've ever

425
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Speaker 1: met who were philanthropic. I mean, we used to make

426
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Speaker 1: what most people would think is a nice salary, but

427
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Speaker 1: we made a multiple of that and bonuses that were

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Speaker 1: a lot of people thought subjective. Since I got big bonuses,

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Speaker 1: I thought they were accurate. But but a screenberg said,

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00:24:00,400 --> 00:24:02,560
Speaker 1: you know, your partners are making a lot of money.

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Speaker 1: There people in the world who aren't as lucky as

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Speaker 1: you are. Five percent of your bonus is going to

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00:24:06,720 --> 00:24:08,440
Speaker 1: go to charity, and if you don't do it, We're

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Speaker 1: gonna do it for you. Now have you ever heard

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00:24:10,640 --> 00:24:15,520
Speaker 1: of a big company doing that? Okay, so the the philanthropists,

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00:24:15,640 --> 00:24:20,080
Speaker 1: much like Michael Bloomberg, you know, and and Steve Schwartzman

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00:24:20,920 --> 00:24:24,600
Speaker 1: and John Paulson, people giving hundreds of millions or billions

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00:24:25,119 --> 00:24:28,560
Speaker 1: two good works. Now, you know Karl Marks didn't count

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00:24:28,560 --> 00:24:32,280
Speaker 1: on that, did he. I have to say, like, we

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00:24:32,320 --> 00:24:35,760
Speaker 1: have these conversations a lot, and I'm for capitalism. I

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00:24:35,800 --> 00:24:38,480
Speaker 1: think it's great that people can create companies and make money.

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00:24:38,520 --> 00:24:42,119
Speaker 1: But with the right company, but right, and I have

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00:24:42,160 --> 00:24:44,359
Speaker 1: a boss that gives back a lot, and we are

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00:24:44,440 --> 00:24:46,440
Speaker 1: encouraged to do the same thing. And just to be fair,

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00:24:46,880 --> 00:24:49,200
Speaker 1: Michael Bloomberg of course the owner of Bloomberg LP and

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00:24:49,240 --> 00:24:53,600
Speaker 1: Bloomberg Radio and Bloeberg TV. But to get to Jason's point, Michael,

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00:24:53,640 --> 00:24:56,000
Speaker 1: what do we do though? Because you write in this

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00:24:56,040 --> 00:24:58,359
Speaker 1: book I believe that for democracy to work, it is

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00:24:58,440 --> 00:25:01,600
Speaker 1: necessary to have an engaged and formed electorate. Tough to

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00:25:01,640 --> 00:25:03,879
Speaker 1: do in our complex world, especially in large countries with

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00:25:03,920 --> 00:25:07,639
Speaker 1: diverse constituencies. How do we break the gap of education?

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00:25:08,200 --> 00:25:11,560
Speaker 1: I feel like that has really divided, you know, a

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00:25:11,600 --> 00:25:14,240
Speaker 1: gap in our country. How do we do that? Well,

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Speaker 1: is not everybody has the same opportunities. Was it Aristotle

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00:25:17,240 --> 00:25:20,720
Speaker 1: who wrote this originally? I think three thousand years ago?

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00:25:20,920 --> 00:25:22,840
Speaker 1: You know, good for him, I went to trade schools.

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00:25:22,840 --> 00:25:25,359
Speaker 1: I just started reading him recently. But he said at

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00:25:25,400 --> 00:25:28,760
Speaker 1: all he said that he called him cities because that's

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Speaker 1: what they were there here for a city to have

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00:25:30,720 --> 00:25:35,720
Speaker 1: good leadership, the voting. Uh, people have to have an

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Speaker 1: education to make intelligent choices. What a what a timeless idea? Right?

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00:25:41,400 --> 00:25:43,879
Speaker 1: And uh? And then the other thing that you just

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00:25:43,960 --> 00:25:47,960
Speaker 1: have to take civic exams. Right, we studied, Well, it

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00:25:48,080 --> 00:25:50,159
Speaker 1: used to be you had the Romans in the Senate

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00:25:50,280 --> 00:25:52,919
Speaker 1: and you had the landowners in England, you know, so

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00:25:52,960 --> 00:25:57,200
Speaker 1: it wasn't democratic. But you know, he also Aristotle said

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00:25:57,240 --> 00:26:00,960
Speaker 1: democracy is a political system them designed to help the

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00:26:01,000 --> 00:26:05,160
Speaker 1: poor and will eventually implode. So in Rome, they started out,

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00:26:05,240 --> 00:26:07,359
Speaker 1: you know, when the soldiers came back and they weren't

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00:26:07,359 --> 00:26:10,040
Speaker 1: taking over countries anymore. They were restive, so they gave

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00:26:10,119 --> 00:26:13,159
Speaker 1: them bread, you know, and then they got more restive

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00:26:13,160 --> 00:26:14,679
Speaker 1: and they and they started to give them pork. And

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00:26:14,680 --> 00:26:18,920
Speaker 1: that's how political pork was named. Okay, and so this

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00:26:19,000 --> 00:26:22,520
Speaker 1: has been going on longer than we've been alive and

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00:26:22,760 --> 00:26:27,040
Speaker 1: the solution, I believe the only solution is a separation

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00:26:27,320 --> 00:26:33,080
Speaker 1: of power and competition. If if government, industry, and labor

477
00:26:33,760 --> 00:26:37,120
Speaker 1: are not dominant any one of them, and so they

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00:26:37,119 --> 00:26:40,879
Speaker 1: have to always be competing, you know, for I guess

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00:26:40,880 --> 00:26:44,680
Speaker 1: the same vote in the long run. Uh. Then then

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00:26:44,760 --> 00:26:47,840
Speaker 1: to me, that creates a moderate course, which to me

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00:26:48,080 --> 00:26:52,920
Speaker 1: is the best solution. If you study countries that succeed generally,

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00:26:52,920 --> 00:26:55,320
Speaker 1: they have a large middle class who have a stake

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00:26:55,359 --> 00:26:58,639
Speaker 1: in the system that they want to preserve. And uh,

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00:27:00,240 --> 00:27:03,679
Speaker 1: I believe very strongly education is needed for that. And

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00:27:03,720 --> 00:27:06,359
Speaker 1: the idea that people don't have to be literate or

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00:27:06,480 --> 00:27:11,679
Speaker 1: understand how our government works, to me, is a terrible mistake.

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00:27:11,800 --> 00:27:13,639
Speaker 1: So where's the power of balance off right now in

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00:27:13,640 --> 00:27:18,200
Speaker 1: the United States? Is it more government? Is it more corporations?

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00:27:18,760 --> 00:27:22,080
Speaker 1: You won't like the answer. One of the biggest problems

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00:27:22,320 --> 00:27:27,280
Speaker 1: is for profit twenty four hour media. Media back before

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00:27:27,320 --> 00:27:31,760
Speaker 1: you two were born, used to require to get licenses

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00:27:31,800 --> 00:27:33,639
Speaker 1: renewed every three years or so that you had a

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00:27:33,680 --> 00:27:37,320
Speaker 1: news program. Think about it. They have the five o'clock news,

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00:27:37,400 --> 00:27:39,040
Speaker 1: a six o'clock news. They had to do that to

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00:27:39,080 --> 00:27:42,280
Speaker 1: get their license. Then somebody realized they could make money

496
00:27:42,520 --> 00:27:45,359
Speaker 1: out of news. And about the time they started making

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00:27:45,359 --> 00:27:47,240
Speaker 1: money out of news, where a lot of it became

498
00:27:47,359 --> 00:27:50,959
Speaker 1: like showmanship and uh, you might think I'm attacking somebody

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00:27:50,960 --> 00:27:54,760
Speaker 1: in particular. Uh, the we got the twenty four ourcle

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00:27:55,000 --> 00:27:58,480
Speaker 1: twenty four hour cycle of news, which you know, there's

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00:27:58,520 --> 00:28:02,000
Speaker 1: more news capacity, there are events, and like I said,

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Speaker 1: one of my favorite saying is that you never heard

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00:28:03,880 --> 00:28:06,679
Speaker 1: somebody announced that no baby fell down a well today.

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00:28:07,320 --> 00:28:10,080
Speaker 1: So everybody's looking for something dramatic to say, and then

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00:28:10,160 --> 00:28:14,440
Speaker 1: social media just exacerbated it. So if you look at

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00:28:14,480 --> 00:28:19,280
Speaker 1: that combination of like a huge sucking noise for for

507
00:28:19,359 --> 00:28:22,639
Speaker 1: some kind of salacious news, and add to that the

508
00:28:22,960 --> 00:28:28,920
Speaker 1: absolutely irresponsible protection politicians have for political speech. They can lie,

509
00:28:29,480 --> 00:28:33,240
Speaker 1: they can photoshop you, they can call you terrible names,

510
00:28:33,320 --> 00:28:36,400
Speaker 1: and they're they're they're not subject to any legal thing.

511
00:28:36,480 --> 00:28:40,480
Speaker 1: To me, this is nuts. You can't sell vitamin pills

512
00:28:40,520 --> 00:28:43,040
Speaker 1: with that right, you can't sell stocks, but you can

513
00:28:43,080 --> 00:28:46,840
Speaker 1: become a political leader. How dumb is that? All Right, So,

514
00:28:47,000 --> 00:28:49,880
Speaker 1: wrapping up, what's the what's the biggest surprise to you

515
00:28:49,920 --> 00:28:52,120
Speaker 1: in writing this book? What did you sort of be

516
00:28:52,160 --> 00:28:55,280
Speaker 1: there learn about yourself? Learn about your world, learn about

517
00:28:55,360 --> 00:28:58,760
Speaker 1: history that when you when this went off to the publisher,

518
00:28:58,800 --> 00:29:02,440
Speaker 1: you thought, did I didn't see that coming. I've told

519
00:29:02,520 --> 00:29:07,400
Speaker 1: people who have had even just interesting lives, write a

520
00:29:07,440 --> 00:29:11,400
Speaker 1: book and keep your files, because you'll learn a great

521
00:29:11,440 --> 00:29:15,120
Speaker 1: deal about your motivations and your behavior. I just felt

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00:29:15,120 --> 00:29:17,360
Speaker 1: that I had care themed through life. You know. I

523
00:29:17,400 --> 00:29:21,240
Speaker 1: came to this yuggy barrow said you come to Forking Road,

524
00:29:21,240 --> 00:29:25,040
Speaker 1: take it. And I hadn't realized how I made these decisions.

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00:29:25,400 --> 00:29:28,120
Speaker 1: If I had had that degree of introspection early, it

526
00:29:28,120 --> 00:29:30,800
Speaker 1: would have been very helpful. And when I saw a

527
00:29:30,840 --> 00:29:33,200
Speaker 1: pattern in my life and I started asking my my

528
00:29:33,320 --> 00:29:37,200
Speaker 1: successful friends about theirs, and then I could see this pattern. Well, hell,

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00:29:37,240 --> 00:29:41,640
Speaker 1: it took me a long time, didn't it. I don't know.

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00:29:41,760 --> 00:29:43,880
Speaker 1: Reading your book, it seems like you lived a pretty

531
00:29:43,880 --> 00:29:46,760
Speaker 1: full life and have given back and really explored. I mean,

532
00:29:46,800 --> 00:29:50,440
Speaker 1: you've been a real explorer of the world. It seems well,

533
00:29:50,800 --> 00:29:54,840
Speaker 1: the Explorer Club is honoring me tonight with a book signing,

534
00:29:54,960 --> 00:29:57,479
Speaker 1: So there you go, There you go. That was Michael Tanneman,

535
00:29:57,640 --> 00:30:00,440
Speaker 1: private equity investor and also the author of Risk Living

536
00:30:00,440 --> 00:30:03,040
Speaker 1: on the Edge. You've been listening to Bloomberg Business Week

537
00:30:03,120 --> 00:30:05,600
Speaker 1: Extra be sort of tune into Bloomberg Business Week Radio

538
00:30:05,680 --> 00:30:07,880
Speaker 1: live Monday through Friday at two p on Wall Street Time.

539
00:30:08,040 --> 00:30:10,840
Speaker 1: I'm Bloomberg Radio. I'm Carol Messer, and I'm Jason Kelly.

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00:30:10,960 --> 00:30:11,840
Speaker 1: This is Bloomberg