Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelley and I'm Carol Master. Welcome to the weekend
Speaker 1: edition of Bloomberg Business Week. Man, it was a very
Speaker 1: very busy week, so much in the news and so
Speaker 1: much in the magazine. Over the next couple of hours,
Speaker 1: we're going to highlight some of the big stories of
Speaker 1: the week, bring you insights from the magazine, and so
Speaker 1: much more. On this week's show, we're going to take
Speaker 1: you to Australia. Understand the implications of those bushfires. They're
Speaker 1: the massive amount of area that they have encompassed, what
Speaker 1: the tie is to climate change. Also take you to
Speaker 1: Venezuela where they have too many dollars. Well, yeah, go
Speaker 1: figure that's a problem. It's a country with an economy
Speaker 1: that's crippled quarter after quarter of declines, stifling inflation. They've
Speaker 1: attracted a lot of dollars. But as a result that
Speaker 1: has certainly created a problem. And speaking of problems, it's
Speaker 1: been a longstanding one for the Catholic Church, and this
Speaker 1: of course a dealing with sexual abuse charges and claims
Speaker 1: and lawsuits. And what's interesting, they have kind of a
Speaker 1: two wrong strategy when it comes to dealing with some
Speaker 1: of those suits and as a result, those claims that
Speaker 1: are going out to victims not as high as they
Speaker 1: might have been. It's a terrific piece of reporting. Disturbing
Speaker 1: to say the least, but an important one for folks
Speaker 1: to understand. Plus the hidden dangers of the great index
Speaker 1: fund takeover. You've got these funds in your four oh
Speaker 1: one k It's this week's cover story. First up, though,
Speaker 1: let's begin with those ongoing tensions between the United States
Speaker 1: and Iran. For more on that topic, Jason We spoke
Speaker 1: to Economics editor Peter Coy. He took a look at
Speaker 1: that escalation strategy that President Trump is using with Iran,
Speaker 1: taking us back into some history of similar strategies and
Speaker 1: how it really is a risky one, but it also
Speaker 1: has some rewards. It's a strategy he's used all his life.
Speaker 1: Trump is famous for saying, if somebody hits you, hit
Speaker 1: him back ten times. It's hard. It's worked pretty well
Speaker 1: for him in the world of business and politics. The
Speaker 1: question is now will it work as well in the
Speaker 1: world of geo politics? And you know, so far, you
Speaker 1: could argue so good. Knocked off one of America's top
Speaker 1: enemies with relatively small repercussions exactly so far. And the
Speaker 1: question is what happens next, because Iran certainly has other
Speaker 1: ways that can get back at the United States cyber war,
Speaker 1: terrorism and so on, as well as just more attacks
Speaker 1: in Iraq Um. But then there's also the downside for
Speaker 1: the US of the fact that Iran is pulling out
Speaker 1: of its commitments under the nuclear deal. It's it's going
Speaker 1: back to enriching uranium. Uh. The turn of public opinion
Speaker 1: in Iraq await. Until very recently, the Iraqis were turning
Speaker 1: quite negative towards Iran. Now they're pivoting towards being uh
Speaker 1: wanting the US to get out. The Iraqi parliament had
Speaker 1: a symbolic vote to tell the United States to go home. So,
Speaker 1: you know, it's definitely a mixed bag whether this kind
Speaker 1: of strategy works well. And it's a geopolitical story, it's
Speaker 1: also a geo economic story in many ways. This complicates
Speaker 1: so many things when we think about trade, when we
Speaker 1: think about just the relationships between all these countries. This
Speaker 1: is a crucial economic part of the world. Well for sure. Now,
Speaker 1: Trump would argue, and he did argue in his address
Speaker 1: to the nation. That the US is self sufficient in
Speaker 1: oil now close to it it was, still has some
Speaker 1: imports of oil, But that does not mean that the
Speaker 1: oil market does not matter. Matters for all the other
Speaker 1: countries that are buying oil, and the United States remains
Speaker 1: sort of the world's policeman to some degree. And so
Speaker 1: it's a bad thing if suddenly the straight of hormones
Speaker 1: is blocked, for example, by Iran and oil can't get out.
Speaker 1: What I think is interesting and you really do look
Speaker 1: into this whole idea of the escalation strategy. You know,
Speaker 1: you're writing this story that Trump, the president, Trump is
Speaker 1: running into a dilemma that we've seen other US president's face.
Speaker 1: How to fight a foe who pokes and prods using
Speaker 1: asymmetric warfare. This isn't your typical foe. That is fascinating.
Speaker 1: And you go back to Richard Nixon in the world
Speaker 1: in the Vietnam War vent. That was when the US
Speaker 1: was trying to decide what to do, whether they should
Speaker 1: go f after the Vietcong basis and Cambodia, which it did,
Speaker 1: expanding the war and raging US piece of activist and
Speaker 1: what Nixon said at the time was he didn't want
Speaker 1: the US to become a pitiful, helpless giant. That expression
Speaker 1: has gained currency which still gets used today. Trump identically
Speaker 1: does not want the US to be a pitiful, helpless giant.
Speaker 1: It's also interesting too, and Peter, you've written about this before,
Speaker 1: you write about it again. This is the United States
Speaker 1: in a different position in a very different world, and
Speaker 1: that also contributes to this asymmetry that we're seeing. There's
Speaker 1: not a lot of precedent for the US acting in
Speaker 1: this way in a world that is like this. Well,
Speaker 1: the you know, Trump is not your typical president for
Speaker 1: better or worse. Uh that there are people who love
Speaker 1: this kind of strategy. It's about time the United States
Speaker 1: stopped using treating other countries with kid gloves and like
Speaker 1: hit hard. And I talked to people who think that
Speaker 1: this could work. It could create have a deterrent effect
Speaker 1: on further Iranian aggression. Uh So the jury is out
Speaker 1: on this. And that's Peter coy are Economics editor taking
Speaker 1: a little bit of a political bent this week. It
Speaker 1: was the lead of the politics section and a reminder candidly,
Speaker 1: and we talked about this with Peter that politics and
Speaker 1: economics inextricably linked in many ways, especially because so much
Speaker 1: of the interest in the Middle East is ultimately economic,
Speaker 1: be it oil, be it just sort of economic strategy
Speaker 1: in many ways. Well, it really gets to Jason bottom
Speaker 1: line that the president, President Trump has positioned his moves
Speaker 1: against Iran as an attempt to really scare it into
Speaker 1: a more submissive stance toward the United States. But the
Speaker 1: result is could possibly have that opposite effect. And that's
Speaker 1: the game that we're playing right now, or the United
Speaker 1: States is, and the administration is. And I also think
Speaker 1: what's interesting about this is we always look back to
Speaker 1: history for press in history for comparisons, and yet if
Speaker 1: there's one thing we have learned during the Trump administration
Speaker 1: is that history past performance, as they say on Wall Street,
Speaker 1: is not a guarantee of future performance. And you do
Speaker 1: just wonder whether this time really is different. And the
Speaker 1: other thing I just want to get to is, and
Speaker 1: I think we have talked increasingly about these stories in
Speaker 1: the magazine about the United States as a global player,
Speaker 1: kind of backing off from the global stage. And you
Speaker 1: do wonder if ultimately U S forces are out of
Speaker 1: the area, out of Iraq in this case, what kind
Speaker 1: of power vacuum is left and who fills it if
Speaker 1: the United States is not there in some form or another.
Speaker 1: So this story has been front and center, Jason, no
Speaker 1: doubt about. It's been in all of the news reports.
Speaker 1: But I also feel like the Golden Globes, you had
Speaker 1: so many actors and actresses bring attention to the fires,
Speaker 1: the devastating fires in Australia. Well, it's an amazing story
Speaker 1: and a really important one and a reminder of the
Speaker 1: fragility of the climate. Right now, who better to talk
Speaker 1: about that angled in air crossed and he joins us
Speaker 1: from our green team, So tell us what's going on
Speaker 1: in Australia and the implications from a climate perspective. It's
Speaker 1: very difficult to dispel what's going on in the ground
Speaker 1: there and the incredible suffering. There have been two dozen deaths,
Speaker 1: and communities have been uprooted and have uncertain at least
Speaker 1: near term futures. When you take a step back, you
Speaker 1: see that this is a part of a problem we've
Speaker 1: been talking about for a very long time, and that's
Speaker 1: climate change. And the fires aren't over right, the fires
Speaker 1: of this scale, which basically I've never been seen before,
Speaker 1: We'll go on for months. Uh, they've already been going
Speaker 1: on for three or four months, and Australia isn't even
Speaker 1: in its peak summer season yet. Uh, there's not a
Speaker 1: lot firefighters can do. They can try to contain them,
Speaker 1: protect people and property, but expect this to be in
Speaker 1: the news for months. You know. It's interesting. That's just
Speaker 1: stating this story that talks about that the bushfires that
Speaker 1: have burned a combined area twice the size of Swiss Switzerland,
Speaker 1: and as you mentioned, they're not done yet. So just
Speaker 1: to get an idea in terms of size and scope.
Speaker 1: It's not only that, but think about last I guess
Speaker 1: more than a year ago now the California fires and
Speaker 1: those absorbed so many people's attention, caused so much devastation
Speaker 1: in this country. And also we spoke last year in
Speaker 1: two thousand nineteen about terrible fires in Brazil. The Australian
Speaker 1: fires are more than twice as much as the California
Speaker 1: two thousand eighteen and the Brazil two thousand nineteen fires combined.
Speaker 1: And so how does this play into the climate picture?
Speaker 1: I mean, what are the direct ties or even the
Speaker 1: indirect ties that we can draw from this devastation. It's
Speaker 1: pretty straightforward. The two thousand nine was the hottest year
Speaker 1: in Australia on record, which goes back about a hundred
Speaker 1: and forty years. Globally, it was also the driest year
Speaker 1: in Australia on record, and those are the two things
Speaker 1: you need to have a bad fire season. They knew
Speaker 1: months and months ago that it was going to be
Speaker 1: a terrible fire season just because of what two thousand
Speaker 1: nineteen was like in Australia and also what the last
Speaker 1: thirty years have been like in Australia, which is depending
Speaker 1: on what part of the country, we're talking about a
Speaker 1: ten or fifteen percent trend toward drier conditions. I think
Speaker 1: most of us, I think it's safe to say, who
Speaker 1: are you know reading about this? And folks that are
Speaker 1: reporting on it are saying it's climate change. And yet
Speaker 1: from what I understand within the country that they're not
Speaker 1: necessarily saying it's climate change. Is that correct? The political leadership,
Speaker 1: the Prime Minister has not embraced the vast element of
Speaker 1: these fires, that is cimate change. Uh. That is a
Speaker 1: kind of political behavior we've seen for in Australia before
Speaker 1: we see it in the United States, we see it
Speaker 1: in other countries. It's not uh. Based on factually tenable positions,
Speaker 1: you cannot say that climate change is not happening and
Speaker 1: be correct. It is human caused and it's an increasingly
Speaker 1: important factor in everyday weather. What kills me about this story?
Speaker 1: And I just have to bring this up because this
Speaker 1: story kicks off and talks about a report that was
Speaker 1: released back into Live two thousand seven. I think about
Speaker 1: the New York Times that did reporting decades ago, right,
Speaker 1: was it about climate change? And there were things that
Speaker 1: could have been done to prevent where we are today.
Speaker 1: So it's not like, oh my god, we all woke
Speaker 1: up and said, look what's happening to our climate, Like
Speaker 1: there has been a lot of research and reporting done
Speaker 1: for decades that this is where we were headed and
Speaker 1: here we are today. I think it's it's we is
Speaker 1: uh is a is a word that you no, I'm serious.
Speaker 1: That really deserves some scrutiny here, Like, we as a
Speaker 1: human community, led by scientists who study what's going on,
Speaker 1: have known about this for a really long time. We
Speaker 1: people who get up and have families and have jobs
Speaker 1: and are just trying to get through the day do
Speaker 1: not know it's it's an issue climate change, It's an issue.
Speaker 1: It's complicated, or at least until the last few years,
Speaker 1: it's been complicated. Um. So I think there's a lot
Speaker 1: of people who are still waking up and realizing that
Speaker 1: this issue is not like any other issue. Uh. There
Speaker 1: is a scale and an inevitability or inertia to this
Speaker 1: issue that's different and worth noting. The problem is, and
Speaker 1: you guys pointed out fossil fuels still make up of
Speaker 1: our total energy consumption. That's not likely to change anytime soon.
Speaker 1: We hear about automakers and everybody working on it and
Speaker 1: other you know. Uh, but he's working in terms of
Speaker 1: alternative energies. But that's the stark reality of where we
Speaker 1: are and unless we change that. And you guys point
Speaker 1: out in the story that there's the technology out there
Speaker 1: to do it, it's just not being either embraced or
Speaker 1: enacted fast enough. Yes and no, like we do. We
Speaker 1: do have the tools. And the story of the last
Speaker 1: ten years has been absolutely breathtaking and fascinating to watch.
Speaker 1: And that's the decline in the cost of solar power
Speaker 1: in the last ten years, decline in the cost of
Speaker 1: wind power in the last ten years. Uh. And there's
Speaker 1: even there's even really hopeful signs in UH in many
Speaker 1: nations already. There's a really I wish I had it,
Speaker 1: really dramatic depiction of the United Kingdom's energy use historically,
Speaker 1: and the vast majority of it is coal. And so
Speaker 1: this chart is UH most of it is just black
Speaker 1: representing coal. And then what you see in it over
Speaker 1: the last twenty years, UM is this vast use of
Speaker 1: coal goes down to almost nothing as gas comes in,
Speaker 1: as renewables come in, as nuclear comes in. So great
Speaker 1: Britain has done a really remarkable job in a very
Speaker 1: short period of time almost making coal disappear. And this
Speaker 1: is the country that lad the our foray into fossil
Speaker 1: fuels fifty years ago. That's Eric Roston and I have
Speaker 1: to say, Jason, you and I've been talking about this
Speaker 1: story all week long. It's devastating to see the fires
Speaker 1: and the magnitude of these fires over in Australia. And
Speaker 1: the point is, and I still am stuck on that
Speaker 1: that statistic that these fires um a combined area twice
Speaker 1: the size of Switzerland. They're continuing to burn, but that's
Speaker 1: what we're talking about. They are huge, well in the implications,
Speaker 1: you know, you and I have been following this, as
Speaker 1: you say, all week, you know, both online via social media.
Speaker 1: You know, you flagged a tweet that noted that a
Speaker 1: billion animals have been killed. You know, you've had a
Speaker 1: couple of dozen people who have been killed in all this,
Speaker 1: and yet the ramifications go far beyond that in many ways,
Speaker 1: in terms of the economy, but also the geography, the
Speaker 1: topography of this continent. This story one line in it.
Speaker 1: You know, we talked about climate change, and we hear
Speaker 1: about academic studies and so on and so forth, but
Speaker 1: they say, what's what's crucial about what's happening here is
Speaker 1: that you're getting the real life feel for just how
Speaker 1: bad things might become because of climate change. Right, it's
Speaker 1: front and center and you can't ignore it. So really
Speaker 1: really trouble, and you do wonder if behavior does start
Speaker 1: to change with big examples like this, we'll see. So
Speaker 1: one story in the economic section that we wanted to
Speaker 1: bring to everybody's attention. It's about a country we're talking about, Venezuela,
Speaker 1: that has attracted a lot of US dollars. You and
Speaker 1: I were talking about this and the introducer I know
Speaker 1: because I read this story. I read the headline. I
Speaker 1: was like, wait, what is happening here? Because dollars usually
Speaker 1: a pretty good thing for most people in the world.
Speaker 1: But leave it to Venezuela to figure out, you know,
Speaker 1: a way to make it. It's unbelievable what's going on?
Speaker 1: So tell us about the excess of dollars and the
Speaker 1: consequences of editor Christina a little blad here. Thank you,
Speaker 1: you're welcome. Well, there's some good, uh you know things
Speaker 1: have come from it, which is I mean, basically people
Speaker 1: are gravitating to the dollar because you know, the believer
Speaker 1: just you know, keeps like losing its value. It like
Speaker 1: basically depreciate it almost against the dollar last year. So, um,
Speaker 1: you know, everyone from like you know, like haircutters to
Speaker 1: you know, people selling popsicles you know, on the street
Speaker 1: now want to take dollars. The problem is, though you
Speaker 1: cannot open dollar accounts in Venezuela. Banks are not allowed to,
Speaker 1: so there's nowhere to stash your money. So we talked
Speaker 1: to this woman who's in an insurance business who wraps
Speaker 1: her dollars in a plastic bag and taps them to
Speaker 1: the inset of her toilet tank in her office. Um,
Speaker 1: so there's a big concern that this is going to
Speaker 1: spark another wave of crime like the one that Venezuela
Speaker 1: saw at the end of the ninety nineties, which is
Speaker 1: pretty severe. Help me understand something first. Let's talk about
Speaker 1: the bank situation. So like, if I go to a
Speaker 1: bank in the US and I have a foreign currency,
Speaker 1: can't they change it and deposit it? Well? But nobody
Speaker 1: but see, nobody wants to change their dollars into believers
Speaker 1: because it's worth nothing. Yeah, because like you know, a
Speaker 1: week later, like you so do you want to keep
Speaker 1: your dollars? But you know, very it's very few countries
Speaker 1: are banks really like in the business of opening foreign
Speaker 1: currency accounts. So people are hiding them truly, like as
Speaker 1: you said, under their toilet seat or in their mattresses.
Speaker 1: And you're talking in some cases thousands of dollars, right,
Speaker 1: I mean, some banks are allowing people to put them
Speaker 1: in their safety deposit box. But imagine how you'd have
Speaker 1: to take out many right after a while if you're
Speaker 1: a business trying to share dollars that the safe and
Speaker 1: you have people, you know, trying to get the dollars
Speaker 1: out of the country. Even there are limits on what
Speaker 1: you can do so you have an anecdote in the
Speaker 1: story about someone who sent I believe his wife and
Speaker 1: daughter each with his other thousand dollars. Right, is the
Speaker 1: is the limit that you can bring into the yes
Speaker 1: without declaring it to custom So right, so you went
Speaker 1: right under. Yeah, he has a bank account in Miami,
Speaker 1: but he wasn't able to you know, wire the money
Speaker 1: in there. So Christina, my question is why doesn't Venezuela
Speaker 1: just adopt the US dollars, especially since it's been in
Speaker 1: some regards a stabilizing factor for the country. Right as
Speaker 1: a means of transaction, it has, but politically it's a
Speaker 1: radioactive option. I mean other countries have done it though
Speaker 1: it's true, but I mean the US has sanctioned Venezuela.
Speaker 1: I mean this these are this is basically like the
Speaker 1: US is kind of, you know, diplomatically at war with
Speaker 1: this country. So it would be a loss of sovereignty,
Speaker 1: sovereignty that would be unacceptable to the Madua regime. At
Speaker 1: the same time you know that the government has has
Speaker 1: actually I mean Moudas publicly said that, you know, dollar
Speaker 1: informal dollarization has been good for Venezuela, you know, because
Speaker 1: it has provided more price stability it has, you know,
Speaker 1: there's an incentive now to save and invest that there
Speaker 1: doesn't exist with the believe it is right, so it's
Speaker 1: sort of it will stay in a gray area. A
Speaker 1: lot of other countries actually tolerate this, you know, and
Speaker 1: there's countries in Africa and other places that haven't formally dollarized,
Speaker 1: but you know, tolerate informal dollarization. There was during the
Speaker 1: economic section. It's about a country hoping to attract a
Speaker 1: sports industry and Jason, it has to do with kind
Speaker 1: of making over its image. It's also about diversifying its economy.
Speaker 1: We're talking about we're talking about Saudi Arabia Politically, it's
Speaker 1: been in the news a lot over the last couple
Speaker 1: of years, not in a good way. Economically, it's one
Speaker 1: of the most fascinating stories across the globe. The de
Speaker 1: facto ruler uh Deputy Crown Prince Mohammed been Salmon. He
Speaker 1: is trying to change the culture and the economics of
Speaker 1: the place. Christina Lynn Blad she oversees the economics coverage.
Speaker 1: This is a fascinating story. We were talking before we
Speaker 1: came on air. I really love the richness of this
Speaker 1: pun intended because this is a very tangible way that
Speaker 1: the kingdom is trying to move itself into the modern era.
Speaker 1: That's right. So they have a blueprint called Vision for
Speaker 1: how to diversify the economy, and part of it is
Speaker 1: to boost UH kind of Western style entertainment, So everything
Speaker 1: from music concerts to sports events, and the sports events
Speaker 1: is something that they've been leaning very hard on in
Speaker 1: in this last year, and already in the year, we've
Speaker 1: had a very busy calendar. Wee. In December there was
Speaker 1: a big boxing match UH, and then last weekend it
Speaker 1: was the beginning of the Dakar Rally, which Saudi Arabia
Speaker 1: is hosting for the first time UM. And then they're
Speaker 1: going to be a series of UM soccer exhibition matches
Speaker 1: that they've cut a hundred and thirty million dollar deal
Speaker 1: with Spain's Federation Soccer Federation for that. And that's Christina
Speaker 1: Lynn Blad talking about Venezuela and then Saudi Arabia. I
Speaker 1: really liked the Saudi Arabia story. I mean in part
Speaker 1: because I've spent a fair amount of time in the UAE.
Speaker 1: I've spent some time and cutter as well, sort of
Speaker 1: seeing the transformation of those economies, what the rulers and
Speaker 1: that's what they are of those countries and emirates have
Speaker 1: been able to do, attracting a lot of big name
Speaker 1: brands and in this case, big brand athletes in some cases.
Speaker 1: And yet it's also a reminder that it's not so easy.
Speaker 1: Money doesn't solve every problem. Yeah, it's a really interesting story.
Speaker 1: Black Rock Vanguarden, State Street. They have a mass trillions
Speaker 1: of dollars under management, Jason. They hold by eight percent
Speaker 1: of all Index money, and that's why they become known
Speaker 1: as the Big Three. They've got a nickname, that's what
Speaker 1: insiders call it. But it's a real thing in a
Speaker 1: lot of ways, and owing a lot to the extraordinary power,
Speaker 1: at least on paper, they hold. But we want to
Speaker 1: look into what that power actually means, how they're using it,
Speaker 1: and how it might be differently construed. Any Massa helped
Speaker 1: write the story. It's in this week's Business Week. She's
Speaker 1: in New York. Hi, Hi, how's it going right? This
Speaker 1: is really important for people to understand, in part because
Speaker 1: literally everyone listening to or watching this touches these estment
Speaker 1: firms in some way or another. I would imagine exactly
Speaker 1: Index funds have just enjoyed explosive growth over the past
Speaker 1: decade or more, especially in the wake of the financial crisis,
Speaker 1: when investors have realized, hey, it makes a lot more
Speaker 1: sense in a lot of cases to just put my
Speaker 1: money in a passive index product and just track markets
Speaker 1: that way instead of paying for active management. And over time,
Speaker 1: you've concentrated a lot of first of all assets and
Speaker 1: second of all voting power then um through the shares
Speaker 1: that they own in the big three that you mentioned,
Speaker 1: And we want to get into that concentrated power in
Speaker 1: this kind of common ownership by one entity or just
Speaker 1: a few entities. But remind us, I mean when index
Speaker 1: funds kind of came on the scene, they've been around
Speaker 1: for a few decades already, we've all thought what a
Speaker 1: great thing, right, lower fees is as good for investors. Yes,
Speaker 1: they are unquestionably a great innovation for investors, and investors
Speaker 1: who are trying to just make the smart financial decision
Speaker 1: may well decide it makes a lot more sense to
Speaker 1: own index funds than pick individual stocks or pay for
Speaker 1: someone to pick individual stocks for me. And then what
Speaker 1: happens is the in the index fund firms like black
Speaker 1: Rock Vangarden, State Street have the voting rights for all
Speaker 1: the companies that are underlying UH those index products, and
Speaker 1: as a result, they've amassed a ton of voting power
Speaker 1: in each of these UH companies that they own well
Speaker 1: and throughout some some numbers. I thought this was really striking.
Speaker 1: Um combined, the Big three own what about of Apple
Speaker 1: of City groups of it. I mean you're talking about
Speaker 1: that's a big position, that's right. So if you put
Speaker 1: together all of their ownership stakes on average for SNP
Speaker 1: five companies, the Big three own about two of those companies. Now,
Speaker 1: what they say is that they're never going to vote
Speaker 1: as a block. They're not coordinating how they vote in
Speaker 1: matters like um, you know, board elections or M and
Speaker 1: A deals, um. But it's just a striking kind of
Speaker 1: consolidation of power in some ways. And I think that
Speaker 1: what the academics and diivists say on this is that
Speaker 1: you just have to watch that trajectory and monitor how
Speaker 1: that power is being used. They're also managing the retirements
Speaker 1: of a lot of the companies that they ultimately have
Speaker 1: stakes in, right, That's one thing that's come up. So
Speaker 1: you've you've seen various academics come at this from different angles,
Speaker 1: and one question is how are they How are their
Speaker 1: interests and stewardship initiatives, uh clashing or do they clash?
Speaker 1: And that is one thing that's come up in academic
Speaker 1: papers for sure. What the firms say is that they
Speaker 1: have these stewardship divisions which are tasked with going out
Speaker 1: to individual companies and talking about any kind of issues
Speaker 1: that might affect their industry. Yeah. Well, I mean think
Speaker 1: about it, right, So you have these Big three and
Speaker 1: they're managing their retirement plans and at the same time
Speaker 1: they hold a lot pretty significant position in those shares,
Speaker 1: so you do wonder, you know, might they possibly vote
Speaker 1: on matters that might a piece management, right, because they
Speaker 1: also have they want their retirement business. Right. I mean,
Speaker 1: this is all kind of complicated and and kind of
Speaker 1: interesting relationships. Yeah, there are some interesting nuances. And one
Speaker 1: thing that's kind of funny to consider is that academics
Speaker 1: come at it from two different ways in in uh,
Speaker 1: these two different angles. So there's one camp that says,
Speaker 1: look at all of this voting power that black Rock
Speaker 1: Vangarden State Street have a mass, does that mean that
Speaker 1: they could one day sway votes? One way or another
Speaker 1: in a way that's worrisome. Another camp says, look at
Speaker 1: how big these fun companies are and how many different
Speaker 1: individual stocks um they hold, and are they two hands off?
Speaker 1: And that's what black Rocks Barbara Novik has called the
Speaker 1: Goldilocks dilemma. Are they doing too much? Are they doing
Speaker 1: too little? I think black Rock would argue they've got
Speaker 1: it just right, but you've got all kinds of angles well,
Speaker 1: and that too little piece. I have to say, when
Speaker 1: I was reading your story, that was the one that
Speaker 1: really jumped out to me and I thought was such
Speaker 1: an interesting and important twist on this, which is we
Speaker 1: worried so much or we talked so much about like
Speaker 1: they have this in an amount of power, they could
Speaker 1: make all these things happen, but they could essentially just
Speaker 1: allow things to happen because they are ultimately passive. So
Speaker 1: it's not just what they vote for, but it's what
Speaker 1: they might not vote for. Just feel like it's cool,
Speaker 1: keep doing your thing. And that's where you've seen some
Speaker 1: nonprofits and academics say they vote too much for the
Speaker 1: status quo at companies or they couldn't possibly have the
Speaker 1: resources to devote to a stewardship division to really closely
Speaker 1: understand each individual company. The you know, black Off, Vanguard,
Speaker 1: State Street would push back against that and say that
Speaker 1: they've only been increasing their stewardship efforts. But that is
Speaker 1: one one camp of criticism. But and I do wonder about, Like,
Speaker 1: I guess what we're concerned about is whether or not
Speaker 1: Black Rock or State Street or Vanguard, you know, when
Speaker 1: it comes to matters such as an m an a
Speaker 1: deal right, or executive compensation or so and so forth
Speaker 1: for competition of the board or anything. But what kind
Speaker 1: of research has shown that you know, that they're voting
Speaker 1: more in favor of the companies and maybe against you know,
Speaker 1: things that might hurt workers or employees. Like what do
Speaker 1: we know there? Yeah, there are different academic kind of
Speaker 1: studies of their voting records and UM and actually the
Speaker 1: same goes for nonprofits too. There is a nonprofit called
Speaker 1: Majority Action that put out a study of UM climate
Speaker 1: change related shareholder proposals specifically, and that found that black
Speaker 1: Rock and vand Guard tended to vote UM less in
Speaker 1: favor of shareholder proposals related to the environment. Now, UM so,
Speaker 1: so that's one camp of criticism. For example, that they're
Speaker 1: not doing they're not voicing concern enough, they're not voting
Speaker 1: for active change enough. Um. What what they would tell
Speaker 1: you is that they view it kind of as a
Speaker 1: situation where um, different shareholder proposals aren't always created equal um.
Speaker 1: But they they've definitely come under attack for that. So
Speaker 1: how could this change, like what's in the works either
Speaker 1: from a legislative perspective from a regular tory perspective, that
Speaker 1: could alter this picture at all. So regulators are definitely
Speaker 1: taking note of it, and right now it's pretty much
Speaker 1: in a monitoring phase. But the FTC, for example, has
Speaker 1: um voice that they are taking a look at the issue,
Speaker 1: just trying to keep tabs on it and understand it
Speaker 1: as well as they can. And it's for sure a
Speaker 1: conversation that's going back and forth in Washington. But speaking
Speaker 1: of voices that have been concerned, Jack Bogel, shortly before
Speaker 1: he passed away legendary when it came to index funds,
Speaker 1: right van guard exactly, he had some words of caution. Yeah,
Speaker 1: you couldn't think of a bigger proponent for index funds
Speaker 1: than Jack Bogel. But even he before he passed away,
Speaker 1: voiced in the Wall Street Journal, He wrote this op
Speaker 1: ed that said, I don't necessarily think that this concentration
Speaker 1: of power is in the best interest UM, and that
Speaker 1: this has gone very far beyond UM. You know what
Speaker 1: he originally envisioned when he invented index funds. He came
Speaker 1: up with somewhat he some proposals, basically, and one of
Speaker 1: those was around transparency and and just the heightened responsibility
Speaker 1: that comes with this role that index fund firms now
Speaker 1: play well. And it does feel like that, Noha, I'm
Speaker 1: glad you said the word responsibility because we are at
Speaker 1: this moment. I think back last year to the Business
Speaker 1: Roundtable and everything that's going on around big questions of
Speaker 1: who's responsible for what, who ultimately needs to benefit from
Speaker 1: certain things. It can't just be for the bottom line,
Speaker 1: it can't just be for the benefit of shareholders. And
Speaker 1: it feels interesting at least to me that, you know,
Speaker 1: one of the voices sort of raising a lot of
Speaker 1: these big questions is Larry Fink, the CEO of black Rock, right.
Speaker 1: I mean like he's very much in the public conversation
Speaker 1: about all of these things related to shareholders and employees
Speaker 1: and companies exactly. You can see that the index fund
Speaker 1: firms themselves have really been taking it seriously, especially as
Speaker 1: the scrutiny has grown, both from activists, from academia um
Speaker 1: even from in some case regulators, and Larry think with
Speaker 1: his annual letters, has really tried to be a voice
Speaker 1: in that question of how corporations should behave and what
Speaker 1: standards we should hold for them, and ultimately who should
Speaker 1: be holding them accountable. And it just goes back to
Speaker 1: the central premise of this, which is you have nominally
Speaker 1: passive investors who have huge stakes and and ultimately, at
Speaker 1: least on paper, a lot of power. Whether they use
Speaker 1: it or whether they don't use it becomes one of
Speaker 1: the biggest questions here. And I think one of the
Speaker 1: main takeaways is even if not every theory exactly fits together,
Speaker 1: there's a general anxiety growing among all these different parties
Speaker 1: about what it just means for the market, what it
Speaker 1: means for corporate America. And I think there's a broader
Speaker 1: theme also going on. It happened, it's happening with technology,
Speaker 1: just you know, when there's a concentration of power, and
Speaker 1: we're seeing this certainly with the Big Three. And I
Speaker 1: think you guys give us a little bit of a
Speaker 1: history lesson taking us back to standard oil, which I
Speaker 1: think is really important, you know, because John d had
Speaker 1: certainly concentration of power when it came to the industry. Yeah,
Speaker 1: we were like, but you know what I mean, like,
Speaker 1: we are looking at this when there's too much power
Speaker 1: concentrated among one or just a handful of entities exactly,
Speaker 1: and we try to highlight that comparison. Big tech, in
Speaker 1: a similar way, has come has come out with so
Speaker 1: many innovations that have changed people's lives for the better,
Speaker 1: and is now facing more scrutiny as a result of
Speaker 1: the power that they have. And I think you're seeing
Speaker 1: a very similar thing happen in financing. That's any massa, Jason,
Speaker 1: You and I have been talking about this cover story
Speaker 1: all week long. This idea of concentrated shareholder power, about
Speaker 1: common ownership, it really speaks to in many ways kind
Speaker 1: of antitrust perhaps concerns. We get worried when there's too
Speaker 1: much power by anyone entity or institution, And so we're
Speaker 1: looking at that, and what does it mean that black
Speaker 1: Rock Vanguard in State Street hold about of all index money,
Speaker 1: What kind of power does that give them? The story
Speaker 1: that keeps on giving. The latest chapter has to do
Speaker 1: with the great escape of former Nissan chairman Carlos Gone.
Speaker 1: It's not very difficult to the conclusion you're going to
Speaker 1: die in Japan? Are you gonna have to get off?
Speaker 1: This was not about justice. This was, as I felt,
Speaker 1: I was a hostage of a country that I have
Speaker 1: served for seventeen years. And then that, of course was
Speaker 1: Carlos go On, the former head of Nissan and Renault.
Speaker 1: He held a lengthy and detailed press conference and Q
Speaker 1: and A with reporters in bear Route. Let's get into
Speaker 1: it because at that press conference in Beirut was Bloomberg
Speaker 1: News senior reporter Matthew Campbell. He joins us on the phone,
Speaker 1: and first of all, we were rivetted. Jason talked about
Speaker 1: sitting in his car just listening to it. I had
Speaker 1: it downloaded, so I could, you know, listen to it
Speaker 1: on my way to the train and through my train ride.
Speaker 1: Set the scene for us. What was it like being
Speaker 1: in that room? Yeah, Caroly was, as you can imagine,
Speaker 1: a bit of a zoo. Quite a lot of reporters,
Speaker 1: Jos fling to get in. Uh. There were many more
Speaker 1: on the street outside who hadn't been let in. This
Speaker 1: is the first time that Going had appeared publicly to
Speaker 1: speak publicly since his arrest. And this is a guy who,
Speaker 1: when he was at the top of Nissan and Renault
Speaker 1: for for twenty years, was really never far from a microphone.
Speaker 1: So he was clearly ready had a lot bottled up,
Speaker 1: ready to get off his chat. And so, Matt, knowing
Speaker 1: the story as well as you do, you and the
Speaker 1: team have done some phenomenal reporting there. What jumped out
Speaker 1: at you? What did you walk out of their thinking?
Speaker 1: Oh wow, I didn't expect that, either in tone or
Speaker 1: in substance. Well, in terms of the tone, Jason, I
Speaker 1: think I was a bit surprised by how digressive a
Speaker 1: lot of it was. It was not perhaps the most
Speaker 1: organized appearance. There was clearly a lot that Go and
Speaker 1: wanted to cover, which is understandable. But if you hadn't
Speaker 1: followed this very closely, and I have most people haven't,
Speaker 1: you could have really lost track of what was going on.
Speaker 1: So I don't I don't know if it was the
Speaker 1: most effective format for him to deliver his message, but
Speaker 1: if his goal was to get back out there and
Speaker 1: get back into the news, he certainly has done that. Yeah,
Speaker 1: no doubt about it, but it was it involved a
Speaker 1: screen behind him right, and power point or slides and
Speaker 1: so on. I do wonder too, Matt, if it answered
Speaker 1: some questions, are really you know, created a whole new
Speaker 1: round of questions. I think Caroline did answer some questions
Speaker 1: we got from going the names of some of the
Speaker 1: people he feels are behind what he characterizes as a
Speaker 1: plot against him, an effort to end his tenure at Nisan,
Speaker 1: to prevent some of the plans he had for that company.
Speaker 1: We got some interesting statements from him about why he
Speaker 1: came to Lebanon, about what he sees going forward as
Speaker 1: as a possible route to clearing his name and addressing
Speaker 1: these allegations. So there were there was some incremental news,
Speaker 1: but we didn't have was a smoking gun or any
Speaker 1: any truly dramatic revelation. You know, it was interesting that
Speaker 1: listening to it, and again I didn't listen to it
Speaker 1: nearly as closely as you did there in the room,
Speaker 1: but it was notable how much he seemed to essentially say,
Speaker 1: look how poorly this company has done since I've been gone,
Speaker 1: And that tells you all you need to know about
Speaker 1: how important I was. And maybe why they set me
Speaker 1: up in this way. I felt like he was looking
Speaker 1: for shareholder pressure here a little bit, Yes, certainly, and
Speaker 1: I think he'll probably find some shareholder pressure. There's no
Speaker 1: question Nissan and to some of con Reno have been
Speaker 1: in a really tough spot over the last year. I mean,
Speaker 1: how much of that is is due to growing to
Speaker 1: absence versus being due to just general headwinds in the industry,
Speaker 1: I think is quite debatable. But it looked go and
Speaker 1: portrayed himself for a long time as the indispensable man,
Speaker 1: the person without whom neither of these companies could succeed,
Speaker 1: and he he would argue that his absence is proving
Speaker 1: his case. So now what, Like, I just wonder, what's
Speaker 1: going to happen next in this story? Um, you know,
Speaker 1: in terms of the legality of it, Um, I know,
Speaker 1: I think Japan wants to get him back in the country.
Speaker 1: So I don't know, Matt, you know the story inside
Speaker 1: and out like no other. So what happens next? Well,
Speaker 1: he is now in Lebanon. He is a citizen of Lebanon,
Speaker 1: and as a matter of policy, Lebanon does not extradite citizen,
Speaker 1: so he is safe here at least as far as
Speaker 1: anyone knows. Uh. There is some talk that he's sort
Speaker 1: of side step today, but that I think we will
Speaker 1: see resurface that he could be tried in Lebanon, or
Speaker 1: that he wants to be tried in Lebanon, because I think,
Speaker 1: you know, life is a fugitive is not what he's
Speaker 1: looking for. He wants to clear his name, but he
Speaker 1: wants to do it in a country where he deems
Speaker 1: the trials fare. So that could be Lebanon, or I
Speaker 1: suppose it could be elsewhere, but that that's gonna be
Speaker 1: a big question in the next few weeks. And that's
Speaker 1: Matt Campbell joining us from Beirut. Our man on the ground,
Speaker 1: so busy this week. What a tale. And he was
Speaker 1: in the room for that press conference. You and I
Speaker 1: were both riveted. You are literally like on the train
Speaker 1: listening on your mom advice. I was sitting in my
Speaker 1: car at the train station. I think I missed a
Speaker 1: train because he went on and on and on. What
Speaker 1: a scene. Yeah, absolutely, And the story isn't over. It
Speaker 1: is about for him saving his legacy, but the charges
Speaker 1: are still out there. There's so much still yet to
Speaker 1: be known. Matt Campbell is going to be all over it,
Speaker 1: but we'll get the latest from him. According to one source,
Speaker 1: Catholic church leaders paid out about seven fifty million dollars
Speaker 1: from the early nineteen eighties through two thousand two. And
Speaker 1: yet Jason as this story in the magazine Explorers, America's
Speaker 1: Catholic churches are shifting assets and they're finally for chapter eleven,
Speaker 1: it's all about avoiding uh, the paying out of more
Speaker 1: money to settle sex abuse claims. It is an incredibly
Speaker 1: disturbing story, but a very very important one and really
Speaker 1: takes us into the inner workings of the church and
Speaker 1: the business like way that they have approached this. Editor
Speaker 1: Dan Ferrara joins this. He worked on this story very closely.
Speaker 1: Took a long time to sort of get all this
Speaker 1: reporting out. Josh Saul wrote this story. Uh, Dan, take
Speaker 1: us in here and help us understand the sort of
Speaker 1: broad strokes before we dive into the details. Well, the churches,
Speaker 1: um uh, they declare bankruptcy and because sexy, these claims
Speaker 1: are going to overwhelm them, right um and and declaring
Speaker 1: bankruptcy is probably appropriate thing to do. They're they're the
Speaker 1: way they explain it is like if we declare bankruptcy.
Speaker 1: It creates an order to the process. Uh, imagine if
Speaker 1: they didn't do that, and then the first, the first
Speaker 1: big claim could wipe them out and no other victims
Speaker 1: could get would have access to any money. So that
Speaker 1: it makes sense on that level, like do declare bankruptcy.
Speaker 1: What the story us also examining, however, is steps that
Speaker 1: precede the bankruptcy, and that the church sayes they're not
Speaker 1: about anticipating the bankruptcy, but steps that precede the bankruptcy,
Speaker 1: which which diminished the size of the church's estate. So
Speaker 1: the bankruptcy will typically there's there's no there's no heart
Speaker 1: and fast rule. But if if I say, a bankruptcy
Speaker 1: ends up, um, if if sect of these victims end
Speaker 1: up splitting half the church's remaining a state, um, then
Speaker 1: the church that has a has a has an interest
Speaker 1: in minimizing the size of that estate. And this is
Speaker 1: what's interesting and I think most people listening, I think
Speaker 1: about you know corporate America, right, you know, people file
Speaker 1: you know Chapter eleven, so that there is an order
Speaker 1: to the process, and so that you know, creditors are
Speaker 1: are as many creditors are given, you know, a bite
Speaker 1: of the pie. That's and these these victims infect our creditors.
Speaker 1: That's that's that's their status. So we understand that. But
Speaker 1: as this story so well, you know, points out that
Speaker 1: there's two to two points to it. And the big
Speaker 1: thing is these assets that are transferred and reclassified and
Speaker 1: you talk about these archdioces, right that move these assets
Speaker 1: to parishes, and so that money is no longer part
Speaker 1: of that settlement pool. The legal but tell us a
Speaker 1: little bit more about that. It's legal, but it is
Speaker 1: it isn't act. What is in dispute in bankruptcy proceedings,
Speaker 1: like the churches will say that certain assets like UM
Speaker 1: funds of money, UM real estate is the single largest one.
Speaker 1: So it's well, that doesn't actually belong to the arts diocese.
Speaker 1: That belongs to the individual parishes and therefore it's not
Speaker 1: legitimately part of the estate. Well, in a lot of instances,
Speaker 1: the money was moved from the archdiocese to the individual
Speaker 1: parishes in anticipation of or preceding the bankruptcy and right,
Speaker 1: so then the used to be part of the archdiocese
Speaker 1: and that it's moved off. So the lawyers are trying
Speaker 1: to representing the victims are trying to drag those same
Speaker 1: properties back into the archdiocese estate because the lawyers on
Speaker 1: the other side are essentially arguing that the church did
Speaker 1: this in anticipation of these very lawsuits and are seeking
Speaker 1: to minimize the estate. They're definitely seeking Yes, that's that's
Speaker 1: definitely an argument that they're making, and whether or not
Speaker 1: they say you did an anticipation of it, they are saying, like,
Speaker 1: let's be realistic about about who actually controls these things.
Speaker 1: So they may be in the name of the parish,
Speaker 1: but if the archdiocese has has control, then they say
Speaker 1: that that that represents ownership. I feel like, you know,
Speaker 1: so many things were going through my head when I
Speaker 1: was reading the story. I was thinking about, you know,
Speaker 1: a couple that gets divorced, right, and you know, one
Speaker 1: of the partners moves assets before they start to go
Speaker 1: through divorce proceedings, so that that's not considered part of
Speaker 1: the marital assets. Like it almost feels like to that
Speaker 1: extent to you know, it's an analogy that one of
Speaker 1: the one of the one of the victims used because
Speaker 1: it happened in his own life. Well, there's one stat
Speaker 1: in the story, and I think Bloomberg business Week actually
Speaker 1: did a review of court filings by lawyers for churches,
Speaker 1: Catholic churches and victims over the past fifteen years. It
Speaker 1: shows that the U. S. Catholic Church has shielded more
Speaker 1: than two billion dollars in assets from abuse victims in
Speaker 1: bankruptcies using these methods. So now lawyers are going after
Speaker 1: that or tell us like what's what's happening happens on
Speaker 1: a case by case basis and an archdiocese by archdiocese basis,
Speaker 1: like how often is it happening? Is a lot of
Speaker 1: archdioce that are doing this well? I think the story
Speaker 1: says that that I think a half done under seven
Speaker 1: states had sort of an open window, like there's there's
Speaker 1: no setu of limitations applying to sex clergy abuse cases.
Speaker 1: More recently, a number of states have have have removed
Speaker 1: the statu of limitations and um New York State, for example,
Speaker 1: did it in last summer and the churches UH A
Speaker 1: number of churches immediately filed bankruptcy for like, well, this
Speaker 1: is coming bankruptcy is the only is the only option
Speaker 1: at that point. Many of those states, many of those
Speaker 1: archdioce He's had prior to that reclassified assets class and
Speaker 1: reassigned assets. So, Dan, I want to talk about a
Speaker 1: key elemented this story, which is a thread that actually
Speaker 1: pulls through the entire abuse scandal, which is sort of
Speaker 1: who knew what when in many cases and who is
Speaker 1: ultimately implicated in the decision making. Setting aside the culpability
Speaker 1: around the actual abuse and the cover up of abuse,
Speaker 1: this story documents some very senior church officials all the
Speaker 1: way up to the Vatican who essentially were involved in
Speaker 1: making these decisions. That seems like a key part of
Speaker 1: this piece, the decisions around bankruptcy, around sy allocation. There's
Speaker 1: a dispute. Lawyers for the victims say that the lawyers
Speaker 1: for the church are saying, we we we'd like to
Speaker 1: whatever whatever they're talking about, well, we'd let left to
Speaker 1: run that past the bishop, or we'll have to run
Speaker 1: that up up to the Vatican. And the Vatican is
Speaker 1: saying this stuff is all done at a local level.
Speaker 1: It's not us. That's editor Dan fer Our talking about
Speaker 1: Josh Saul's story and Jason. This is another one that
Speaker 1: has really stuck with us throughout the week. Absolutely, I mean,
Speaker 1: it's hard to get through it in some ways, especially
Speaker 1: if you have any association with the Catholic Church. It's
Speaker 1: very clinical what they have done, candidly in terms of
Speaker 1: shifting assets and legal legal as far as we know, Uh,
Speaker 1: there are lawsuits ongoing in a number of jurisdictions, as
Speaker 1: Josh and Dan layout essentially saying you have hidden money
Speaker 1: that should be paid out to victims of this abuse
Speaker 1: that was perpetrated over decades. Uh. It's a really important story.
Speaker 1: It's not been told to this point, and I think
Speaker 1: will change and move the conversation and and hopefully bring
Speaker 1: some different scrutiny to to what's going on. Absolutely, hey
Speaker 1: got to hide. It's a nice tune to walk us
Speaker 1: into the next segment. Jesse Westbrook overseas our financial regulations
Speaker 1: coverage at Bloomberg. He joins us on the phone from
Speaker 1: our d C bureau. And this is a really important
Speaker 1: story though, and kudos to you and your team for
Speaker 1: putting this out there. Help us understand what went on
Speaker 1: with private equity companies or private equity back companies buying
Speaker 1: ads amid this discussion around drug or around medical billing. Yeah.
Speaker 1: So so the backdrop of this, Jason, is surprise medical billing. UM.
Speaker 1: A lot of people don't know this, but if you
Speaker 1: have an emergency, you go to the doctor, you you
Speaker 1: may have situations at the hospital where all the doctors
Speaker 1: who treat you aren't actually covered by your insurance. There's
Speaker 1: no transparency into this. You have no idea UM so
Speaker 1: often or or not often. But what can happen is
Speaker 1: you get a ten dollar bill in the mail that
Speaker 1: you're insured won't cover and you're on the hook to
Speaker 1: pay it UM. So everyone agrees in Washington that this is,
Speaker 1: you know, a huge injustice, huge problem. But it turns
Speaker 1: out that a couple of powerful Wall Street companies, Blackstone
Speaker 1: and KKR, own companies that are that do this UM,
Speaker 1: and they are you know, very have a big stake
Speaker 1: in it not happening. So they funded this massive ad
Speaker 1: campaign more than fifty million dollars spent last year. It
Speaker 1: was a dark money campaign, which is a term we
Speaker 1: use them down here in Washington, where the people paying
Speaker 1: for a campaign don't disclose that they're paying for it UM.
Speaker 1: They sort of come under innocuous names of of made
Speaker 1: up groups. In this case, the group was called Doctor
Speaker 1: Patient Unity UM. So this irritated a lot of lawmakers,
Speaker 1: and that's sort of where we are now. It also
Speaker 1: irritated the White House, which you know, really rebuked the
Speaker 1: private equity firms over this. Well, there's a lot at
Speaker 1: stake right for black Stone and KKR time, Yeah, I
Speaker 1: mean tons of money. They they they bought these companies
Speaker 1: for a combined valuation of like sixteen billion dollars. So
Speaker 1: if those investments go south, um, it would not be
Speaker 1: good for black Stone and KKR. Well, what I find
Speaker 1: so remarkable about this, Jesse, going back to something you
Speaker 1: said just a few minutes ago, is everyone in Washington agrees.
Speaker 1: How often do you ever ever say that at this point?
Speaker 1: And when you and I were talking about this earlier,
Speaker 1: I mean, David Weston made this point too, that this
Speaker 1: is not just Democrats running for president who are like
Speaker 1: private equity, you guys are the worst. This is the administration,
Speaker 1: the Republican administration and key Republicans in Congress who are
Speaker 1: saying this is not good and it's not right. Well,
Speaker 1: that's that's that's fascinating that you bring that up, because
Speaker 1: I think that you look, I mean, there there is
Speaker 1: obviously among demock progressive Democrats, they want to make a
Speaker 1: boogeyman out of everything associated with Wall Street and that
Speaker 1: actually makes probably a lot of people cynical about some
Speaker 1: of the arguments. It's like, oh, they're just going after
Speaker 1: the Wall Street again. That obviously resonated a lot after
Speaker 1: the financial crisis, but you know that that that song
Speaker 1: is getting a little old. Um But what's interesting about
Speaker 1: this is, you know, sort of private equity firms, they
Speaker 1: sort of can't get out of their own way. I mean,
Speaker 1: they're obviously rich and powerful, but you're you're opening yourself
Speaker 1: up to obvious criticism by you know, profiting in this way.
Speaker 1: I mean, I'm not going to stand here and say
Speaker 1: whether it's right or wrong, but you can see why
Speaker 1: it irritates people. Um So, for an industry that is
Speaker 1: in the cross here as principally with progressive Democrats, you
Speaker 1: think that you would want to avoid sort of bringing
Speaker 1: more pain onto yourself by getting into the surprise medical
Speaker 1: billing racket. That's Jesse Westbrook are Financial Regulation team leader
Speaker 1: at Bloomberg News joining us from Washington, and this story
Speaker 1: was among the most right on the Bloomberg terminal and
Speaker 1: it really speaks to and something that's come up on
Speaker 1: the campaign trail, the presidential campaign trail about private equity.
Speaker 1: It's becomes such a big force when it comes to
Speaker 1: the financial and investment markets and arena and there's concerns
Speaker 1: about their lack of transparency, and that's kind of what
Speaker 1: this speaks to. Well, it's become important in politics and finance,
Speaker 1: also important for consumers, and that is what really brings
Speaker 1: this story home. We're talking about surprise medical billing. These
Speaker 1: are bills that go to you and me, to everyday people,
Speaker 1: and understanding where the money is coming from, but also
Speaker 1: understanding where the money is coming from, trying to influence
Speaker 1: legislators lawmakers in terms of changing the law, in terms
Speaker 1: of changing the regulations. And let me tell you, we're
Speaker 1: just getting started in terms of the political scrutiny around
Speaker 1: private equity. And what's interesting about this story is it
Speaker 1: seems like there are politicians on both sides of the
Speaker 1: aisle that agree that this is egregious, that it's happening
Speaker 1: in terms of you know, uh, patients, consumers being builled
Speaker 1: when they didn't expect it, and yet they still haven't
Speaker 1: been able to get anything done. Well, as we joked
Speaker 1: with Jesse Westbrook simply saying the phrase, everyone in Washington
Speaker 1: agrees you sort of stop right there and say wait
Speaker 1: what Yeah, not exactly. So we hear increasingly how everyone
Speaker 1: is spending on experiences, travel specifically, So if you're wondering
Speaker 1: where to go, we've got the god for you. We
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Speaker 1: the next year's version. So I'm already working on twenties
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Speaker 1: guy that tells you not only when where to go,
Speaker 1: but when to go and why. That's what I love
Speaker 1: about this. But what I also love is that you
Speaker 1: respect kind of established places that maybe have a new
Speaker 1: twist on them, but you also embrace the new. Absolutely.
Speaker 1: There's nothing to say that we can't go back to
Speaker 1: Paris every year and love its total But for the record,
Speaker 1: Paris is not on this year's list. It was on
Speaker 1: last year's list. But a classic that's on this year's list,
Speaker 1: I would say, is Budapest. And I think most people
Speaker 1: that think about Budapest think about going on a river cruise,
Speaker 1: and so this year we're saying, don't cruise there, do
Speaker 1: a land trip. The hotels that are opening in the city,
Speaker 1: the city center are really spectacular and pushing Budapest into
Speaker 1: a new level of luxury. There's one that's called the
Speaker 1: Mattilda Palace being opened by Luxury Collection that is literally
Speaker 1: the city's answer to Buckingham Palace. So staying in Budapest
Speaker 1: is suddenly going to become very posh. Were before it
Speaker 1: was a little bit less. So all right, so let's
Speaker 1: stay in Europe. You also mentioned northern Italy again not
Speaker 1: that off the beaten path, but you have a little
Speaker 1: bit of a twist here. Well, sure, I think Italy
Speaker 1: has been trending. I mean Italy is always trending. Let's
Speaker 1: not lie but southern Italy in particular has been very
Speaker 1: busy for the last few years. We're saying go north.
Speaker 1: We're saying, do the Dolomites, the mountains that hug the
Speaker 1: Austrian border. We're saying, do Milan, a city that people
Speaker 1: go to for work but never really like put it
Speaker 1: on their bucket list per se. It's becoming a really
Speaker 1: vibrant city with art and galleries beyond the fashion that
Speaker 1: you already know and love. We're also saying, spend more
Speaker 1: time on spas, health wellness, hiking in this northern region,
Speaker 1: and then eat really well. Because chef Massimo Butta and
Speaker 1: his wife Laura, who run the number one restaurant in
Speaker 1: the world, they have opened a hotel in the countryside
Speaker 1: outside of Moden and it is number one on my
Speaker 1: bucket that minutes. Just a couple of weeks ago, I
Speaker 1: had an interview with Heavy Looks and they are I
Speaker 1: know them personally and they are the most wonderful hosts
Speaker 1: that you could ever imagine, so you must um. I
Speaker 1: thought it was interesting too, is that there were several
Speaker 1: references to James Bond, and I think one of them
Speaker 1: was the Ionian Islands. I think it was either estates
Speaker 1: or stuff that has been in that have been in
Speaker 1: Bond movies. Absolutely, so the Ionian Islands are not necessarily
Speaker 1: on everyone's radar. People go to make a nose in Santorini,
Speaker 1: which are in a different island chain in Greece. However,
Speaker 1: we say that the Ionian Islands are more interesting and
Speaker 1: better in some ways because they're less crowded. Macnose and
Speaker 1: Santorini have gotten famously, very very crowded during peak seasons.
Speaker 1: They also suffer from something called the meltem, which is
Speaker 1: seasonal winds. In the Ionian Islands, you get more consistently better,
Speaker 1: more pleasant weather, and then you can stay in places
Speaker 1: like villas and estates where Bond movies have been shot. Actually,
Speaker 1: now you can run them through agencies like Red Savannah.
Speaker 1: That's fun. Yeah. So, for the record, it was Hector
Speaker 1: Gonzalez's mansion in for your Eyes only for the heavy
Speaker 1: for the heavy duty Bond fans. I'm not I'm not
Speaker 1: a heavy duty Bunch fan, but I tell you Jamaica,
Speaker 1: where what new Bond movie is being shot, the one
Speaker 1: that's coming out in April, um this one. This is
Speaker 1: a place where a lot of sorry we're a lot
Speaker 1: of Bond movies in the past have been shot and
Speaker 1: again now with the release in April of No Time
Speaker 1: to Die. Um. This is also where Levin Letter I
Speaker 1: was shot, so there's some like interesting connections between those
Speaker 1: two movies. And some of the hotels are being renovated
Speaker 1: where the movies were shot in the past, so it's
Speaker 1: exciting there. Talk to us little bit more about the beaches.
Speaker 1: That's what I love, and I thought what was interesting
Speaker 1: was Mozambique. Mozambique is super high on my wish list
Speaker 1: all of the sudden, It's just catapulted there for thanks
Speaker 1: to a resort that's opening that is going to be
Speaker 1: I forgive me an advance for this price tag. It
Speaker 1: will be a night. We will all go bankrupt staying there,
Speaker 1: but I will not go there. It's called you can go.
Speaker 1: You can tack it onto a safari for one or
Speaker 1: two nights. Consider yourself robbed in bankrupt but loving every second.
Speaker 1: Places to pay them. I know Kisawa Reserve. They're actually
Speaker 1: running an eco center for biologists to come and study
Speaker 1: marine wildlife and sustainability. So your money will go to
Speaker 1: a good cost. Talk to us about the Riviera and Niarite.
Speaker 1: That was one that really struck me again, totally another beach. Right, yes,
Speaker 1: so everybody knows everybody knows Cabo, right, everybody knows Cancun
Speaker 1: and Tuloom. So Riviera ny it is the next or
Speaker 1: let's say, the fourth corner in that square west coast.
Speaker 1: It's west coast set a little south of Cabo. If
Speaker 1: if you could draw kind of a straight line, it's
Speaker 1: it doesn't really work that way, but let's pretend it does. Um.
Speaker 1: It's kind of close to Porto Biarta and there's a
Speaker 1: very very large multi use development. So part condo's residence
Speaker 1: is golf, all of that stuff that is christening the
Speaker 1: destination as Riviera ni E to become the next big thing.
Speaker 1: And there are a number, quite a large number of
Speaker 1: luxury hotels going in, including a Rosewood one and only
Speaker 1: Oberge brands that are destinations on to themselves. So nice, um, hey,
Speaker 1: talk to us little bit about if you're interested in
Speaker 1: maybe checking out some ruins, right, there's a few places
Speaker 1: to go. Sure, absolutely, So I'm really excited. This is
Speaker 1: not what you'll expect me to say. But Guatemala, um No, So,
Speaker 1: Guatemala has some ancient ruins. I mean, we know that
Speaker 1: Central America, Mexico, all the way down to South America
Speaker 1: there is full of ancient ruins. Guatemala is no exception.
Speaker 1: What's interesting is that the ruins there are still in
Speaker 1: the process of being excavated after about twenty years of progress.
Speaker 1: They're really cool to see now, but you can go
Speaker 1: and visit with the archaeologists and they're huge, huge. I
Speaker 1: mean we're talking to Cola is like the biggest known
Speaker 1: ruin around there, and the ruins that are being excavated
Speaker 1: now are significantly larger. And Cairo is on the list
Speaker 1: as well for ruins and a new museum I believe
Speaker 1: opening up much anticipated. This is the Grand Egyptian Museum. Yes,
Speaker 1: the gem if you will um. The Grand Egyptian Museum
Speaker 1: has been many years in the making. It has been
Speaker 1: chronically delayed, but it is finally truly opening, and this
Speaker 1: is something that travelers have been waiting with bated breath.
Speaker 1: People who are interested in antiquities will be so relieved
Speaker 1: to hear that Caira's museums, which previously were not air conditioned,
Speaker 1: did not house the entire collections. All of those problems
Speaker 1: are now being solved as these beautiful world treasures are
Speaker 1: being put into a world class space. All right, I
Speaker 1: want to talk a little bit about the United States
Speaker 1: stuff a little bit closer to home National Parks, but
Speaker 1: also the finger Lakes right up the road from US. Stunning, stunning,
Speaker 1: It's an easy drive from New York City. And you know,
Speaker 1: we think about the Hampton's, we think about the Hudson Valley,
Speaker 1: I see, think about the finger Lakes. This year there
Speaker 1: are more than a hundred wineries and the wine is
Speaker 1: actually good, good enough to get James Beard Award nominations,
Speaker 1: which is like the Oscars of the food world. Right,
Speaker 1: and um, not just that, but there's some really beautiful
Speaker 1: hotels that are opening up, some by Brooklyn based designers,
Speaker 1: which give it a cool edge that it didn't previously have.
Speaker 1: Uh and out West. Start with Yosemite Emity. I get
Speaker 1: asked constantly, I'm going to Yosemity, where do I stay?
Speaker 1: And I always draw a blank, not because I can't
Speaker 1: think of a place, but because they really don't exist.
Speaker 1: It's this weird phenomenon, and part of it it's but
Speaker 1: that's what's nice about it right now, it's you can't
Speaker 1: develop inside of national parks for a reason. But the
Speaker 1: problem is that then they become very congested because people
Speaker 1: have to drive from wherever they're staying a few hours away,
Speaker 1: and the parks become congested in the middle of the
Speaker 1: day because everyone drove in to see the thing that
Speaker 1: they wanted to see. Now you can stay overnight in
Speaker 1: nice places right on the border of the park and
Speaker 1: get in before everyone else, before all the traffic clogs
Speaker 1: it up. Is it r VS? Though? Is it RVs?
Speaker 1: It's better, it's converted air streams. Was a place called
Speaker 1: Auto Camp and it's they've actually done a really nice
Speaker 1: job of making the inside feel pretty plushed. And then
Speaker 1: there's a couple of other ones under canvas does these
Speaker 1: really cool tents that are certain like really properly serviced
Speaker 1: like a real hotel. Lamping glamping, but like really like
Speaker 1: people say glamping sometimes and it's any basic this is legit,
Speaker 1: all right. Talk to me about West Hollywood. I love this. Yeah,
Speaker 1: It's a really cool obviously like sort of corner of
Speaker 1: the city. So much going on there. It's what less
Speaker 1: than two square miles of a neighborhood, and it's just
Speaker 1: full of so many delightful things to do and see,
Speaker 1: and we decided to christen it all on its own
Speaker 1: as a place to go. That's partially because so many
Speaker 1: hotels are opening there. We've got the one hotel, We've
Speaker 1: got an addition. Um. And then there's the Michelin Guide,
Speaker 1: which obviously is a wonderful authority for where to eat,
Speaker 1: has actually paid much closer attention in the last year
Speaker 1: to West Hollywood, doing out a pair of Michelin stars
Speaker 1: to sushi games on Nodera if that's your scene. Um.
Speaker 1: There's also a lot of stuff happening kind of on
Speaker 1: the fringes of the neighborhood. The Academy of Motion Martridge
Speaker 1: Museum is finally opening, so you can really base yourself
Speaker 1: in West Hollywood and never go more than a mile
Speaker 1: radius and and have an awesome trip. I know I
Speaker 1: need a little nature, I think, is what I'm saying.
Speaker 1: Great to see you. Thank you. That wraps Uploomberg business
Speaker 1: Week's Weekend podcast. Thanks so much for joining us. I'm
Speaker 1: Jason Kelly and I'm Carol Masser. Be sure to tune
Speaker 1: into Bloomberg Business Week Radio Live Monday through Friday now
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