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Speaker 1: Masters in Business is brought to you by the American

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Speaker 1: Arbitration Association. Business disputes are inevitable, resolve Faster with the

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Speaker 1: American Arbitration Association, the global leader in alternative dispute resolution

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Speaker 1: dot org. This is Masters in Business with Barry Ridholts

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Speaker 1: on Boomberg Radio. This week. On the podcast, I have

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Speaker 1: Sebastian Mallaby, and I have to tell you I found

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Speaker 1: this to be an absolutely fascinating conversation. We definitely sort

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Speaker 1: of go off into the weeds on some wonky um

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Speaker 1: history and biography of who Alan Greenspan was and why

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Speaker 1: he had such an outsized uh influence. If if you're

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Speaker 1: a Federal Reserve watcher or econo geek, you will find

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Speaker 1: a lot of this stuff fascinating, and we talked about

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Speaker 1: it extensively. I prob belie could have spent another hour

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Speaker 1: just on Alan Greenspan, but if I did that, I

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Speaker 1: wouldn't have been able to get some more money than God,

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Speaker 1: which is a delightful book on hedge fund managers, highly recommended.

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Speaker 1: I could babble about this stuff endlessly, but instead of

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Speaker 1: me doing that without any further Ado my conversation with

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Speaker 1: Sebastian Mallaby. This is Masters in Business with Barry Ridholts

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Speaker 1: on Bloomberg Radio. My special guest today is Sebastian Mallaby.

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Speaker 1: He is an author and the paul A. Vulgar Fellow

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Speaker 1: for International Economics at the Council on Foreign Relations. He

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Speaker 1: has contributed to The Washington Post and The Economist, and

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Speaker 1: he is the author of More Money Than God Hedge

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Speaker 1: Funds in the Making of the New Elite, that won

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Speaker 1: the two thousand and eleven Lobe Prize and was a

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Speaker 1: New York Times bestseller. His most recent book, The Man

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Speaker 1: Who Knew, The Life and Times of Alan Greenspan. Uh

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Speaker 1: Sebastian Mallaby. Welcome to Bloomberg. Great to pay with you, Parry,

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Speaker 1: So I'm fascinated by both your process and the topics

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Speaker 1: you cover. Let's start with The Man Who Knew, a

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Speaker 1: title I perhaps might choose to argue with you over,

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Speaker 1: but I can't argue with this quote. This sex up

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Speaker 1: from the book. No post war figure has loomed over

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Speaker 1: global finance as imposingly as Alan Greenspan, America's FED Chairman

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Speaker 1: became FED Chairman the month of the crash, and no

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Speaker 1: figure has been more paradoxical. A man who preached the

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Speaker 1: virtue of the gold standard yet came to embody paper money.

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Speaker 1: A man who posed as a dry technocrat yet was

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Speaker 1: political to his core. Let's discuss that. Well, he is

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Speaker 1: a man of paradox this and I didn't quite understand

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Speaker 1: before I began writing quite how deep those paradox has went.

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Speaker 1: But he was a person who had lectured in the

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Speaker 1: nineteen sixties that the creation of the Federal Reserve was

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Speaker 1: and historic disaster. So the man who later embodied the

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Speaker 1: Federal Reserve personified the central bank. He didn't believe there

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Speaker 1: should be a central bank, which which is which is ironic?

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Speaker 1: I always found it fascinating that he was such a

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Speaker 1: Fed chairman, interventionist, and yet he very much argued for

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Speaker 1: learning the marketplace work things out themselves. Yes, he had

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Speaker 1: begun in his earlier life, in his thirties and forties,

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Speaker 1: as a very determined libertarian. I mean this idea that

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Speaker 1: there shouldn't be a central bank was because he believed

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Speaker 1: in a goal standard. Why because he didn't want the

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Speaker 1: government to be in the business of making money. He

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Speaker 1: thought that that was too much government power. And yet

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Speaker 1: when he was FED chairman, of course, not only did

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Speaker 1: he move interest rates around quite a lot to try

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Speaker 1: to micromanage the level of inflation, but also he was

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Speaker 1: willing to intervene when there was a crisis repeatedly and

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Speaker 1: bail things out. Literally within his first few weeks of

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Speaker 1: joining the FED, the seven Crash occurs down in a

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Speaker 1: single day, lots of panic, and he stepped in and

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Speaker 1: provided liquidity. Really that set the tone for the rest

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Speaker 1: of his his career. It did, so you know, when

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Speaker 1: there was the Mexico crisis in the beginning of nineteen five,

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Speaker 1: the FED helped to bail out Mexico. When there was,

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Speaker 1: you know, the East Asian crisis, green Span was involved

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Speaker 1: long term capital management. The hedge fund goes down in

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Speaker 1: and the FED, in my view, that's really where they

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Speaker 1: really go overboard and cut interest rates no fewer than

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Speaker 1: three times to try to stabilize the markets. After that

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Speaker 1: hedge fund went down. Then, of course, after the Nasdaq

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Speaker 1: bubble bus, you know, another round of super loose policy.

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Speaker 1: So yes, repeated interventions to stabilize finance, and and of

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Speaker 1: most famously after nine eleven there were fairly radical interest

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Speaker 1: rate cuts, the Greenspan FED took rates down to level

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Speaker 1: they really hadn't been on, especially for as long as

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Speaker 1: they were kept there right now. As I remember, they

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Speaker 1: were down at one on the federal funds rate in

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Speaker 1: the summer of two thousand three and stuck there for

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Speaker 1: a whole year to two thousand four, right below two

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Speaker 1: percent for three years, at one percent for a single year,

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Speaker 1: and subsequent to that, a number of assets that are

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Speaker 1: priced in either dollars or credit, housing, oil, all the commodities, gold,

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Speaker 1: they all took off right And I think what that

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Speaker 1: points to is the difficulty for the FED on the

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Speaker 1: one hand of targeting inflation. So if you're looking at

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Speaker 1: consumer price in fashion or however, you measure that that

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Speaker 1: can be stable, while asset prices are not a tool stable.

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Speaker 1: They're going crazy. And the central dilemma, which still remains

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Speaker 1: for the FED and maybe quite relevant actually in the

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Speaker 1: next twelve months, is that you can be thinking, Okay,

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Speaker 1: I'm doing a good job because inflation is low and stable,

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Speaker 1: but you're not getting a good job because all these

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Speaker 1: asset prices are bubbling away uncontrollably. The thing that stood

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Speaker 1: out to me from another book that takes A similar

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Speaker 1: look was Roger Lonstein's Origins of the crash, and he

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Speaker 1: talks about the opportunity the Federal Reserve had after long

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Speaker 1: term capital management to impose some discipline on market participants

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Speaker 1: and say, hey, we don't want to engage in moral hazard.

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Speaker 1: You guys mess this up, you figure it out. It's

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Speaker 1: not systemic, it's not threatening. And maybe there's a lesson

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Speaker 1: to be learned there that that might be asking a

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Speaker 1: little too much of the Federal Reserve to think along

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Speaker 1: those lines. But do you agree with that assessment that

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Speaker 1: this intervention, amongst many help set the stage for the

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Speaker 1: future crisis. Definitely. I mean, I think that the expression

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Speaker 1: used on wall streets after the long term capital management

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Speaker 1: experience was Uncle Allan will take care of us. That

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Speaker 1: is not a good way for traders to be feeling,

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Speaker 1: because then they're gonna take too much risk. And I

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Speaker 1: think it was really ascerbated by the way in the

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Speaker 1: two thousand four or five period when the Fed started

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Speaker 1: to do a forward guidance that further exacerbated this feeling

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Speaker 1: that Uncle Allan was there. He was pretty much telling

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Speaker 1: you how quickly interest rates we're going to be raised,

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Speaker 1: and therefore you could take a ton of risk because

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Speaker 1: you knew you wouldn't be ambushed by a sudden rate

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Speaker 1: hike of seventy five basis points. I'm Barry Rihults. You're

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Speaker 1: listening to Master's in Business on Bloomberg Radio. My special

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Speaker 1: guest today is Sebastian Mallaby. He is the author of

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Speaker 1: the highly regarded The Man Who Knew The Life and

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Speaker 1: Times of Alan greenspan. Uh. The reviews on this book

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Speaker 1: have been wonderful. I've been working my way through it.

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Speaker 1: You spent so at first, I have to talk a

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Speaker 1: little bit about your process. You spent about five years

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Speaker 1: researching and writing. This is that right? Yeah? My kids

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Speaker 1: make fun of me that every time I write a

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Speaker 1: book it seems to take longer than the last one.

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Speaker 1: And this did take a bit over five years. And

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Speaker 1: it wasn't that was my plan. But it was so

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Speaker 1: fascinating once I got into it. I discovered so much

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Speaker 1: new stuff that people didn't know about this very public figure,

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Speaker 1: and yet there were private things to be discovered. Give

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Speaker 1: us an example, well, you know we remember the sort

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Speaker 1: of bursuited sober, pinstriped fed chairman going on about trucking

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Speaker 1: capacity utilization in the Midwest. You don't remember that he

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Speaker 1: was the guy who bought the Buick Electra convertible automobile,

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Speaker 1: you know, and drove it so fast up and down

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Speaker 1: Manhattan that, as his girlfriend said, um, you know, it

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Speaker 1: wasn't a moderate pace and he got he got plenty

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Speaker 1: of speeding tickets. You know. He was not against marriage.

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Speaker 1: He did it twice, but he was single between twenty

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Speaker 1: seven and seventy one. You describe him as a ladies man.

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Speaker 1: Is that an exaggeration or is that a fair description. Well,

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Speaker 1: he had a succession of remarkably beautiful girlfriends in this

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Speaker 1: as he said, you know, there was this little interim

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Speaker 1: between twenty seven and seventy one, and in this period

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Speaker 1: and these are his words, not mine, you know, he

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Speaker 1: dated news anchors, beauty queens and much in between. So

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Speaker 1: there was quite a list there. That's quite that's quite fascinating. Look,

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Speaker 1: we were referencing earlier, um, the forward guidance that the

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Speaker 1: FED began in two thousand and four. So this was

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Speaker 1: with green Spans still as FED chairman, but the new

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Speaker 1: kid in town coming in as vice chairman, Ben Bernanke,

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Speaker 1: and you argue more or less in the book that

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Speaker 1: forward guidance helped set the stage for the financial crisis.

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Speaker 1: So let's talk a little bit about this. Why was

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Speaker 1: this such a break from past policy and how did

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Speaker 1: it impact um the future crisis. Well, in terms of

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Speaker 1: the difference from past policy, if you go back to

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Speaker 1: the nineteen eighties and you look at the big moments

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Speaker 1: in monetary policy, they were remarkably untelegraphed. So Paul volca

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Speaker 1: in two gave up monetary targets, big change in the

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Speaker 1: Fed's policy. He didn't even announce it when he did that,

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Speaker 1: and then he showed up a bit later at a

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Speaker 1: conference of bankers and said something like him, well, we

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Speaker 1: made a little adjustment and how we approached this stuff,

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Speaker 1: but we might go back, and we're not sure if

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Speaker 1: we're going to stick with it. I mean, the level

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Speaker 1: of communication was very, very low, to the point where

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Speaker 1: people didn't know that the Fed wouldn't come out and announced, hey,

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Speaker 1: we raised interest rates. It would show up in in

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Speaker 1: their actual open market activity, not from a missive And

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Speaker 1: that all changed under Greenspan, didn't it exactly? So bit

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Speaker 1: by bit there was more openness, and the Fed did

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Speaker 1: announce the policy change once it decided it. And then

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Speaker 1: in the two thousands you get to this period where

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Speaker 1: not only does the Fed announce what it's just decided,

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Speaker 1: it also guides the markets about what it's going to

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Speaker 1: be doing in the future. And that's the crucial change.

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Speaker 1: And to me, what that did to Wall Street was

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Speaker 1: that Wall Street suddenly felt it wouldn't be ambushed by

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Speaker 1: a sudden jump in the short term interest rate. So

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Speaker 1: this change took normally conservative bond managers and traders and

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Speaker 1: gave them a little more carde blanche to take more

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Speaker 1: risk and embrace a trade that was fraught with the

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Speaker 1: potential of the Fed suddenly and unexpectedly raising rates. If

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Speaker 1: you compare the two thousand four kind of period to

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Speaker 1: four when the FED was in a tightening cycle, and

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Speaker 1: at one point it did twenty five basis points, sometimes

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Speaker 1: fifty basis points. There was one meeting where they raised

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Speaker 1: by seventy five basis points. That cause what one bond

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Speaker 1: trader at the time called Hurricane Greenspan. Right, people got

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Speaker 1: blown up if they were leveraged. You know, there was

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Speaker 1: real market discipline being imposed. Market discipline meaning people weren't

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Speaker 1: leveraging up. The carry trades because you never knew when

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Speaker 1: a sudden rate increase would come along, and the guys

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Speaker 1: who were leveraged, like Michael Steinhardt, the hedge fund trader,

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Speaker 1: for example, blew up. You know, he was done enormously

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Speaker 1: in punished by the FED for taking too much risk.

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Speaker 1: And you've got to do that in markets a bit

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Speaker 1: to to remind people that it's risky. So removing that

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Speaker 1: potential of the unexpected increase pretty much allowed allowed traders

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Speaker 1: to embrace more risk, embrace more leverage, get much further

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Speaker 1: out over their skis than they previously had been doing. Yeah,

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Speaker 1: and I think it's worth just trying to encapsulate this

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Speaker 1: for your listeners in the following way, because it's it's

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Speaker 1: it's a misunderstanding and a disagreement that persists even today

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Speaker 1: in the debates that I have with policy makers. So

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Speaker 1: sometimes there people say to me, look, if you raise

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Speaker 1: the short term industrates the FED was raising rates in

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Speaker 1: two thousand five, then you know the short term rate

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Speaker 1: is more expensive to borrow, so you're gonna have less

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Speaker 1: carry trade. And I say, yeah, you have to think

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Speaker 1: about the risk adjusted return, not just the return. If

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Speaker 1: the sharp ratio, the risk adjusted return on a carry

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Speaker 1: trade improves, then Wall Street will do more. One of

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Speaker 1: the things that I was aware of and and you

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Speaker 1: reference was in the early nineties is when a few

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Speaker 1: days before an f O m C meeting, green Span

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Speaker 1: on his own decides to cut rates and the governors

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Speaker 1: Reserve to act that independently outside of a real emergency.

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Speaker 1: Tell us a little bit about that moment. Well, you know,

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Speaker 1: Greenspan was always known as the Imperial Fed Chairman. He

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Speaker 1: massed massive power unto himself, and if you know, all

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Speaker 1: through this period he really dominated the system. And in

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Speaker 1: the early period he had this particular device that you're

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Speaker 1: talking about, where basically they would have a meeting, they

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Speaker 1: wouldn't quite come to a decision about what they should do,

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Speaker 1: and so they would end the meeting saying that the

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Speaker 1: Fed Chairman had the authority to move into straits in

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Speaker 1: between meeting, just on his own authority. And Greenspan of

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Speaker 1: course like that because it gave him the power, and

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Speaker 1: he used to do that a lot in the first

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Speaker 1: few years, until finally his committee had enough of that

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Speaker 1: and stopped him. I mean, it was just days before

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Speaker 1: a meeting. It seemed like he was snubbing his nose

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Speaker 1: at them and they weren't happy with it. Let's let's

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Speaker 1: talk about some of the other things. Ben BERNANKEI gave

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Speaker 1: you a wonderful He said, it wasn't a review, but

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Speaker 1: it was a write up of the book. He disagrees

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Speaker 1: with you about green SPAN's role uh in leading up

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Speaker 1: to the crisis. Um, let's let's discuss that. What do

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Speaker 1: you think about the former Fair chairman's discussion of the book. Well,

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Speaker 1: you know, I'm very grateful to Ben Bernankey because he

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Speaker 1: did write a very gracious, long response. He said, it's

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Speaker 1: highly recommended, So how can I complain. Um. At the

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Speaker 1: same time, we we do have a disagreement, and you're right.

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Speaker 1: Part of the disagreement is about the interpretation of Greenspan's

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Speaker 1: motivation for not raising interest rates more aggressively. I say

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Speaker 1: in my book that some of it had to do

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Speaker 1: with personality, that green Span didn't like to confront people

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Speaker 1: directly and aggressively. I'm Barry Ridholts. You're listening to Master's

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Speaker 1: in Business on Bloomberg Radio. My special guest today is

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Speaker 1: Sebastian Mallaby. He is the author of More Money Than

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Speaker 1: God Hedge Funds and the Making of the New Elite,

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Speaker 1: as well as, most recently The Man Who Knew the

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Speaker 1: Life and Times of Alan Greenspan. Let's talk a little

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Speaker 1: bit about your writing process. You you referenced that it

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Speaker 1: took you five years to write this. Is that the

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Speaker 1: research that's so time consuming or is it physically the

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Speaker 1: process of getting words on paper, um, and then editing

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Speaker 1: and re editing that that's so time consuming. It's mostly

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Speaker 1: the research. I mean, this was a huge project of

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Speaker 1: going to presidential archives and you know, going through what

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Speaker 1: the Nixon Library might have about Nixon's involvements with green Span, etcetera, etcetera,

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Speaker 1: And and the big I think what really makes this

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Speaker 1: kind of book worth doing is you've got to put

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Speaker 1: on the table information that people didn't have before. And

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Speaker 1: that's not easy with a guy who is literally in

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Speaker 1: the public eye and financial television is showing the thickness

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Speaker 1: of his briefcase on the way to one f M

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Speaker 1: f m C meeting as indication of what might happen.

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Speaker 1: He's that closely watched. Yeah, but so you really have

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Speaker 1: to go down every moss hole and really hope you

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Speaker 1: find something, and sometimes you just get lucky. So, for example,

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Speaker 1: I went to see the guy who operated green Spans

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Speaker 1: computers when you know, like the technician who was working

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Speaker 1: for green Spans consulting company in the nine sixties. And

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Speaker 1: I went there on the theory that this is a

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Speaker 1: person who would have some color about the culture of

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Speaker 1: green SPAN's little company. And so I show up and um,

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Speaker 1: it's in the middle of nowhere in the woods in Virginia.

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Speaker 1: There's a clearing in the words, a cabin, this guy

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Speaker 1: living by himself, and I start talking with him, and

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Speaker 1: it turns out he's an Iron Rand follower, and he

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Speaker 1: was the person who in his basement had this store

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Speaker 1: of green Spans speeches when he was close to Iron

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Speaker 1: Rand come on three page transcript on it was called

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Speaker 1: the Economics of a Free Society, green SPAN's worldview when

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Speaker 1: he was thirty eight years old. So you know, I

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Speaker 1: didn't go there expecting to find it there, but I did.

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Speaker 1: And you just have to go everywhere and hope you

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Speaker 1: find stuff that that's amazing. So did this guy ever

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Speaker 1: publish that or did he allow you full access to it?

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Speaker 1: He gave me a full three page print out of

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Speaker 1: the whole thing a photocopy, and it would have taken

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Speaker 1: me five years to read three hundred pages of Queen

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Speaker 1: spans ran speeches. Now you get a feeling of why

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Speaker 1: it does take a while to do this this work.

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Speaker 1: You know. I went to see Pat buchannan on the

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Speaker 1: theory that Bricannon was a Nixon speech writer and green

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Speaker 1: Span had been involved in the same Nixon campaign. So

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Speaker 1: I thought Pat mcannon would tell me if his stories.

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Speaker 1: It turns out he didn't just tell me stories. He

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Speaker 1: also said, now in my basement, you should come down

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Speaker 1: and have a look. And in Pat mcanna's basement there's

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Speaker 1: two things, right, there's a fantastic collection of antique firearms,

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Speaker 1: and there are all the memos that people wrote to

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Speaker 1: Nixon in the sixties seven sixty eight campaign, including green

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Speaker 1: Spans memos. So that doesn't go to a presidential library.

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Speaker 1: I would assume the law was that has to be archived,

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Speaker 1: or maybe that's a ladder piece of legislation. Well, I

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Speaker 1: think that the campaign stuff. Yeah, right, So this is

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Speaker 1: when green Span was in the war room during Nixon's campaign.

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Speaker 1: He begins by writing pure economic advice, then he starts

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Speaker 1: to do political advice. He starts to analyze polls for

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Speaker 1: Nixon and then he does spin. I mean literally is

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Speaker 1: telling Nixon, you know you believe this, but you shouldn't

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Speaker 1: emphasize it too much because it won't go over well

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Speaker 1: with the with the public um. So you know, how

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Speaker 1: about phrasing it this way? That's fascinating. It reveals the

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Speaker 1: political side of Alan Greenspan. I need to get some

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Speaker 1: more stuff in my basement. So in the description of

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Speaker 1: the book, it says you have unlimited You had unlimited

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Speaker 1: access to Alan Greenspan. Define unlimited access? Did you really

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Speaker 1: spend that much time with him? And how forthcoming was

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Speaker 1: he about the writing you were doing. When I would

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Speaker 1: go over to his office every week or two, I'd

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Speaker 1: spent a couple of hours talking to him. After doing

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Speaker 1: this for seventy hours, I stopped counting. I think for

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Speaker 1: me it was research and for him it was therapy.

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Speaker 1: So it was very open access. And for example, one

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Speaker 1: other document that nobody had been able to find before

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Speaker 1: was Alan Greenspan's PhD thesis, and I heard about that.

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Speaker 1: He gave it to me. Now he gave it to

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Speaker 1: me partly because I think, you know, I was asking

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Speaker 1: him so many questions about his early intellectual development. And

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Speaker 1: after a while he kept on glancing up at a

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Speaker 1: shelf and I looked up there and I saw this

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Speaker 1: big binder, and I kind of I figured he had

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Speaker 1: it there, so he gave it to me. And you know,

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Speaker 1: that was fascinating because it was really about how the

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Speaker 1: central bank must fight bubbles. So it's one of these

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Speaker 1: enormous ironies. Wow, that's amazing. Now. The also famously he

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Speaker 1: never got his PhD in economics. What why did he

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Speaker 1: not complete his PhD? THEASI, Well, what happened was actually

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Speaker 1: that he began the PhD when he was young, in

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Speaker 1: the nineteen fift and never completed it. Then he went

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Speaker 1: into business. He was a guy who grew up with

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Speaker 1: not much money. He wanted to start making money, and

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Speaker 1: so he did very well as a paid consultant and

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Speaker 1: economics and that was more attractive. But then way later,

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Speaker 1: in fact, when he was in his early fifties, he'd

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Speaker 1: by this time being President Ford's chairman of the Council

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Speaker 1: of Economic Advices, and his old friends at New York

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Speaker 1: University said, um, you know, you should really get a

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Speaker 1: PhD since you're an economist, and why don't you come

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Speaker 1: back and take some classes. So he went back, took

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Speaker 1: the classes, did the coursework, and they assembled a collection

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Speaker 1: of papers that he'd written over the years, and then

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Speaker 1: he did get a PhD. Then I'm Barry Ridholtz. You're

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Speaker 1: listening to Master's in Business on Bloomberg Radio. My guest

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Speaker 1: today is Sebastian Mallaby. He is the author, amongst other things,

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Speaker 1: More Money than God, which won the Lobe Award in

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Speaker 1: two thousand eleven. It was a New York Times best seller.

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Speaker 1: Let's talk a little bit about this book, um, which

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Speaker 1: is really quite fast. And first I have to ask

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Speaker 1: explain from whence the title comes. Well, it's a bit

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Speaker 1: of a funny one. But the U nickname for JP Morgan,

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Speaker 1: the famous banker, was Jupiter. And I looked up how

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Speaker 1: much money JP Morgan had when he died um in

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Speaker 1: an inflation adjusted dollars, and it came to something like,

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Speaker 1: I think one point three billion is a piker exactly.

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Speaker 1: I realized that modern hedge fund managers in a single

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Speaker 1: year occasionally make more money than Jupiter. Jim sound Simon's

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Speaker 1: Ray Dalio. They have two and three billion dollar years

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Speaker 1: on a regular basis, right, So I went for the title.

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Speaker 1: A lot of people hate the title. They say, oh,

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Speaker 1: I love the title it because you know, you're describing

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Speaker 1: a very very distinct class of of asset managers who

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Speaker 1: have been there's no other way to describe it, wildly compensated.

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Speaker 1: And you know, nothing is more expressive than than their phrase.

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Speaker 1: So so let's let's discuss this group a little bit.

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Speaker 1: Explaining the most secretive subculture of our economy posed an

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Speaker 1: irresistible investigative challenge. Uh. You also say the common view

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Speaker 1: of hedge funds seemed ripe for correction. So let's let's

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Speaker 1: talk about both of those. What was the investigative challenge

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Speaker 1: here reviewing a variety of different hedge fund managers. Well,

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Speaker 1: I mean, a lot of aspects of the U S

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Speaker 1: economy are very transparent. You can look stuff up on

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Speaker 1: the Internet and so forth. Hedge fund managers are typically

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Speaker 1: quite secretive, and they didn't want to talk about their

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Speaker 1: methods because some of it is proprietary, and they just

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Speaker 1: want to be discreet because they figured most public attention

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Speaker 1: they get is negative, and so persuading people to talk

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Speaker 1: to me was quite a challenge, and it took me

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Speaker 1: four years but in the end I did get a

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Speaker 1: huge amount of access. So, and let's talk about the

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Speaker 1: second part of that statement. Common view of hedge funds

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Speaker 1: seemed right for a correction. What do you think people misunderstands?

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Speaker 1: What is the public perception that's that's erroneous. Well, I

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Speaker 1: think people view hedge funds as the wild West of finance,

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Speaker 1: the people to take the most leverage, the most risk,

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Speaker 1: and they're the craziest and therefore, in some ways the

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Speaker 1: scariest and and the opposite is true, isn't I think

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Speaker 1: that what you can definitely say all the hedge funds

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Speaker 1: do blow up. They do take a risk, of course

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Speaker 1: they do. Whereas a lot of banks are too big

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Speaker 1: to fail and taxpayers on the hook, hedge funds is

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Speaker 1: small enough to fail, and they can fail without getting

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Speaker 1: any taxpayer help. And I think that's way more healthy

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Speaker 1: for the system. And in fact, hedge funds had nothing

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Speaker 1: to do with the financial crisis of oh eight or nine.

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Speaker 1: They were a participant, they were an actor, but they

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Speaker 1: weren't the players who had completely leveraged up. And and

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Speaker 1: the few that crashed, namely the bear Sterns one, the

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Speaker 1: losses were limited to their own investors. It didn't become systemic, right.

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Speaker 1: I mean, as we were discussing earlier, this Greenspan put

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Speaker 1: existed and that encouraged too much risk. But I think

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Speaker 1: that encouragement applied especially to the big banks that felt

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Speaker 1: they were kind of inviolable. They felt they were so big,

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Speaker 1: so powerful, that they could take all this risk and

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Speaker 1: be okay. Hedge funds always knew that they were driving

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Speaker 1: along rapidly in a rickety car that could just fall

430
00:24:22,640 --> 00:24:25,040
Speaker 1: apart in him, and so they were more careful. I

431
00:24:25,080 --> 00:24:28,680
Speaker 1: love that description. So you have access so not just

432
00:24:28,760 --> 00:24:32,520
Speaker 1: like you had a wonderful access to Alan Greenspan, you

433
00:24:32,520 --> 00:24:36,840
Speaker 1: you received access to a number of legendary hedge fund

434
00:24:36,840 --> 00:24:40,200
Speaker 1: managers who who do you wish you could have gotten

435
00:24:40,240 --> 00:24:45,800
Speaker 1: a conversation with that either was unavailable or unwilling to

436
00:24:45,880 --> 00:24:48,760
Speaker 1: chat with you. Well, you know, the first character in

437
00:24:48,760 --> 00:24:53,280
Speaker 1: my book is Alfred Winslow Jones, who started the hedged Fund,

438
00:24:53,800 --> 00:24:56,680
Speaker 1: as he called it, And you know, he was a

439
00:24:56,720 --> 00:25:00,679
Speaker 1: fascinating guy who in his early life had fallen in

440
00:25:00,720 --> 00:25:05,440
Speaker 1: love with a Marxist beauty in Berlin, and he himself

441
00:25:06,200 --> 00:25:10,080
Speaker 1: enrolled in the Marxist Workers School, which is a funny

442
00:25:10,080 --> 00:25:13,119
Speaker 1: place for the you know, father of hyper capitalist hedge funds,

443
00:25:13,240 --> 00:25:15,280
Speaker 1: or all the best hedge fund managers go through the

444
00:25:15,280 --> 00:25:18,679
Speaker 1: Marxist point. Anyway, he was dead by the time that

445
00:25:18,800 --> 00:25:21,040
Speaker 1: I read the book, so I had to go speak

446
00:25:21,080 --> 00:25:24,480
Speaker 1: to his portfolio managers who told me stories. But I

447
00:25:24,560 --> 00:25:27,600
Speaker 1: never met him in my office. There's an internal debate

448
00:25:27,640 --> 00:25:30,920
Speaker 1: as to whether Winslow or ed Thorpe was the first

449
00:25:31,000 --> 00:25:36,199
Speaker 1: true quant we we've been we've been arguing that, um internally.

450
00:25:36,520 --> 00:25:39,879
Speaker 1: So we know hedge funds have been under performing the

451
00:25:39,960 --> 00:25:45,080
Speaker 1: past decade or so, UM, what what's your your take

452
00:25:45,119 --> 00:25:46,919
Speaker 1: on that? Why do why do we see hedge funds

453
00:25:47,400 --> 00:25:51,760
Speaker 1: as a group under performance? You know? I think one

454
00:25:51,920 --> 00:25:57,399
Speaker 1: point is that yields have been compressed, so risky bonds

455
00:25:57,440 --> 00:26:00,399
Speaker 1: are not paying you much more in interest than unrisky bonds.

456
00:26:00,960 --> 00:26:04,359
Speaker 1: And that's a general point that if the expertise of

457
00:26:04,400 --> 00:26:08,120
Speaker 1: a hedge fund is to finally manage risk and figure out,

458
00:26:08,280 --> 00:26:11,280
Speaker 1: you know, which risk is mispriced. If all of these

459
00:26:11,400 --> 00:26:14,280
Speaker 1: risks are priced very low, you're just not being compensated

460
00:26:14,359 --> 00:26:17,200
Speaker 1: very much for that expertise anymore. So I think that's

461
00:26:17,200 --> 00:26:19,360
Speaker 1: one point. And now the point is that in an

462
00:26:19,440 --> 00:26:23,440
Speaker 1: environment of low returns overall, in in at least in

463
00:26:23,480 --> 00:26:29,040
Speaker 1: fixed income low yields UM. You know, the two and

464
00:26:29,119 --> 00:26:32,120
Speaker 1: two and twenty fee structure is taking a big nut,

465
00:26:32,200 --> 00:26:35,199
Speaker 1: an insane bite right out of the return to the

466
00:26:35,240 --> 00:26:37,960
Speaker 1: final investor. And I think that's the second reason we've

467
00:26:38,040 --> 00:26:41,399
Speaker 1: seen that compressed. We've seen you know, one point five

468
00:26:41,480 --> 00:26:44,800
Speaker 1: and fifteen or one in ten that's coming wrong. You know,

469
00:26:44,840 --> 00:26:49,040
Speaker 1: I'm reminded of UM Jim Chainos's comment. He said thirty

470
00:26:49,119 --> 00:26:52,000
Speaker 1: years ago when when he launched his hedge funds, can

471
00:26:52,000 --> 00:26:55,320
Speaker 1: A Coach Partners, can Coast Associates, there were a few

472
00:26:55,400 --> 00:26:58,800
Speaker 1: hundred hedge funds and they all created alpha. Now there's

473
00:26:58,800 --> 00:27:01,400
Speaker 1: eleven thousand hedge funds and those same two hundred edge

474
00:27:01,400 --> 00:27:04,959
Speaker 1: ones or the alpha generators. How much do we suspect

475
00:27:05,680 --> 00:27:09,080
Speaker 1: the lack of performance is a function of a ton

476
00:27:09,160 --> 00:27:13,840
Speaker 1: of entrance into the space, some of which probably shouldn't

477
00:27:13,880 --> 00:27:16,800
Speaker 1: be in there. I think there's some truth in that UM,

478
00:27:16,960 --> 00:27:20,560
Speaker 1: but I also think that you know, the notion that

479
00:27:20,560 --> 00:27:24,080
Speaker 1: there's a finite amount of alpha maybe understates the way

480
00:27:24,119 --> 00:27:26,320
Speaker 1: that you know, financial markets are being globalized, that there's

481
00:27:26,359 --> 00:27:30,119
Speaker 1: new opportunities of trade, frontier markets that didn't exist before.

482
00:27:30,520 --> 00:27:33,440
Speaker 1: It may understate the way that there are new financial

483
00:27:33,440 --> 00:27:36,280
Speaker 1: instruments being created and you can trade those. There's also

484
00:27:36,320 --> 00:27:38,359
Speaker 1: a new kinds of data and all the kind of

485
00:27:38,400 --> 00:27:42,320
Speaker 1: world of big data and online intelligence that we're getting.

486
00:27:42,359 --> 00:27:46,040
Speaker 1: So I think the world is constantly changing creating new opportunities.

487
00:27:46,080 --> 00:27:48,800
Speaker 1: So I didn't put so much emphasis on the idea

488
00:27:48,880 --> 00:27:51,480
Speaker 1: that there's a natural limit to how many hedge funds

489
00:27:51,480 --> 00:27:55,000
Speaker 1: there ought to be that that that's quite quite interesting.

490
00:27:55,520 --> 00:27:59,120
Speaker 1: And the other data point that I find so fascinating

491
00:27:59,560 --> 00:28:06,000
Speaker 1: since hedge fund assets are up twenty five fold and

492
00:28:06,160 --> 00:28:09,760
Speaker 1: recently crossed the three trillion dollar mark for the first time.

493
00:28:10,119 --> 00:28:15,280
Speaker 1: So what does that tell us about this form of investment. Well,

494
00:28:15,320 --> 00:28:18,320
Speaker 1: I think it shows you that allocators in other ways,

495
00:28:18,359 --> 00:28:21,399
Speaker 1: the professionals who worked for university and diamonds or pension

496
00:28:21,440 --> 00:28:26,040
Speaker 1: funds or what have you, recognize that the incentive structure

497
00:28:26,040 --> 00:28:30,480
Speaker 1: and hedge funds is attractive. So you know, in a

498
00:28:30,560 --> 00:28:32,920
Speaker 1: normal state of the world where returns and not being

499
00:28:32,960 --> 00:28:36,520
Speaker 1: messed around by quantitative easing, you've got hedge funds which

500
00:28:36,560 --> 00:28:39,360
Speaker 1: have a few characteristics. One is that the manager has

501
00:28:39,360 --> 00:28:42,160
Speaker 1: his own money in the fund, so he's incentivised not

502
00:28:42,200 --> 00:28:45,120
Speaker 1: to blow it up. So there's downside risk protection because

503
00:28:45,120 --> 00:28:47,120
Speaker 1: it's you know, some of his own money, the infamous

504
00:28:47,120 --> 00:28:50,080
Speaker 1: skin in the game. Right. The second thing is that

505
00:28:50,520 --> 00:28:53,200
Speaker 1: because he's being paid two and twenty, he wants the twenty,

506
00:28:53,280 --> 00:28:56,120
Speaker 1: he wants to do the research necessary to drive a

507
00:28:56,160 --> 00:29:01,320
Speaker 1: return quite high. Because of that carry the profit share. Uh.

508
00:29:01,840 --> 00:29:04,280
Speaker 1: Then there's the freedom of action. There's the fact that

509
00:29:04,840 --> 00:29:07,640
Speaker 1: you know you can go long and short, you can

510
00:29:07,720 --> 00:29:10,840
Speaker 1: use leverage, and that enables you to kind of combine

511
00:29:10,880 --> 00:29:15,240
Speaker 1: those two things in clever ways to target particular risks

512
00:29:15,280 --> 00:29:17,160
Speaker 1: that you want to take and then screen out other

513
00:29:17,240 --> 00:29:19,280
Speaker 1: risks you don't want to take. So I think there's

514
00:29:19,320 --> 00:29:22,040
Speaker 1: a bunch of freedoms and a bunch of incentives that

515
00:29:22,160 --> 00:29:25,400
Speaker 1: come with the hedge fund structure that ought in normal

516
00:29:25,440 --> 00:29:28,320
Speaker 1: states of the world to make for good returns. So

517
00:29:29,200 --> 00:29:32,640
Speaker 1: there's a famous quip that I tracked down the source,

518
00:29:33,080 --> 00:29:35,560
Speaker 1: and I couldn't find the original source, but I did

519
00:29:35,600 --> 00:29:42,600
Speaker 1: trace the first publication in The Economist, which I'm paraphrasing.

520
00:29:43,120 --> 00:29:47,280
Speaker 1: Hedge funds are a compensation scheme disguised as an asset class.

521
00:29:47,880 --> 00:29:50,200
Speaker 1: You're familiar with that. I don't know if you know

522
00:29:50,360 --> 00:29:54,920
Speaker 1: who originally penned that, But I definitely could go back

523
00:29:55,000 --> 00:29:57,400
Speaker 1: no further than I want to say, oh three or

524
00:29:57,440 --> 00:30:00,840
Speaker 1: oh four in the Economist what what should take on that?

525
00:30:01,840 --> 00:30:04,640
Speaker 1: I'm familiar with that phrase. It's a compensation scheme, not

526
00:30:04,680 --> 00:30:06,800
Speaker 1: an asset class. I didn't know where it came from originally.

527
00:30:07,680 --> 00:30:11,040
Speaker 1: I think, um this truth in that, in the sense

528
00:30:11,120 --> 00:30:13,600
Speaker 1: that there are so many different styles of hedge fund

529
00:30:13,600 --> 00:30:15,600
Speaker 1: one of the fascinations about writing my book was that

530
00:30:15,640 --> 00:30:18,720
Speaker 1: you could explain to the reader what event driven funds do,

531
00:30:18,840 --> 00:30:21,640
Speaker 1: what long short equity to what statistical albertrage funds do.

532
00:30:21,720 --> 00:30:24,280
Speaker 1: There's all these different styles of macro trading and so forth,

533
00:30:24,840 --> 00:30:28,280
Speaker 1: so there's no one style. So in that sense, it's

534
00:30:28,320 --> 00:30:32,320
Speaker 1: not one asset class. So of the various hedge fund managers,

535
00:30:32,360 --> 00:30:35,160
Speaker 1: you spoke with, and you spoke to a large number

536
00:30:35,160 --> 00:30:38,440
Speaker 1: of them, who surprised you the most, Who who either

537
00:30:38,600 --> 00:30:45,160
Speaker 1: in what they said or their personas caused an arched eyebrow. Well,

538
00:30:45,200 --> 00:30:48,120
Speaker 1: I think the character of George Soros is fascinating, and

539
00:30:48,240 --> 00:30:50,200
Speaker 1: I spoke to him, But more importantly, I spoke to

540
00:30:50,720 --> 00:30:52,840
Speaker 1: a ton of people who worked for him, and that's

541
00:30:52,840 --> 00:30:54,880
Speaker 1: often the best way when you're doing a book to

542
00:30:54,960 --> 00:30:56,720
Speaker 1: really get a view of a person is to speak

543
00:30:56,760 --> 00:31:00,120
Speaker 1: to those who interacted and have an outside views. You

544
00:31:00,160 --> 00:31:03,520
Speaker 1: construct a set of many perspectives in one person. We

545
00:31:03,640 --> 00:31:06,479
Speaker 1: have been speaking with Sebastian Mallaby. He is the author

546
00:31:06,600 --> 00:31:09,400
Speaker 1: of More Money Than God and more recently, the Man

547
00:31:09,480 --> 00:31:13,120
Speaker 1: Who Knew the life and times of Alan Greenspan. Be

548
00:31:13,280 --> 00:31:16,000
Speaker 1: sure and check out our podcast extras, where we keep

549
00:31:16,040 --> 00:31:20,320
Speaker 1: the tape rolling and continue discussing all things green Span

550
00:31:20,800 --> 00:31:24,080
Speaker 1: and hedge funds. Be sure to check out my daily

551
00:31:24,160 --> 00:31:27,360
Speaker 1: column on Bloomberg View dot com. You can follow me

552
00:31:27,400 --> 00:31:30,760
Speaker 1: on Twitter at rid Halts. We love your comments and feedback.

553
00:31:30,840 --> 00:31:34,240
Speaker 1: Be sure and write to us at m IB podcast

554
00:31:34,600 --> 00:31:38,280
Speaker 1: at Bloomberg dot net. I'm Barry rid Halts. You've been

555
00:31:38,320 --> 00:31:44,240
Speaker 1: listening to Masters in Business on Bloomberg Radio. If you're

556
00:31:44,280 --> 00:31:46,960
Speaker 1: having a business dispute, the process can be slow and

557
00:31:47,080 --> 00:31:50,360
Speaker 1: drawn out, especially if you rely on litigation in the courts.

558
00:31:50,800 --> 00:31:53,120
Speaker 1: You can wait for years before your case is resolved,

559
00:31:53,360 --> 00:31:56,120
Speaker 1: and the longer your case proceeds, the more your case

560
00:31:56,200 --> 00:32:01,040
Speaker 1: can cost. Not with the American Arbitration Association arbitration or

561
00:32:01,080 --> 00:32:05,040
Speaker 1: mediation with the American Arbitration Association is faster. In fact,

562
00:32:05,320 --> 00:32:09,040
Speaker 1: nearly fifty of our cases settled prior to hearings a

563
00:32:09,160 --> 00:32:14,160
Speaker 1: d r dot org resolve Faster. Welcome to the podcast, Sebastian.

564
00:32:14,200 --> 00:32:15,960
Speaker 1: Thank you so much for for doing this. This has

565
00:32:15,960 --> 00:32:20,640
Speaker 1: really been fascinating stuff. I know some of the Greenspan

566
00:32:20,760 --> 00:32:23,640
Speaker 1: stuff is a little um wonkie for some people, but

567
00:32:23,760 --> 00:32:27,120
Speaker 1: there is a audience for that that absolutely is gonna

568
00:32:27,240 --> 00:32:30,920
Speaker 1: eat that up. And my head of research, Mike Patnick

569
00:32:30,960 --> 00:32:34,120
Speaker 1: in the office loves More Money than God. It's one

570
00:32:34,120 --> 00:32:36,600
Speaker 1: of his favorite books that it helps him on some

571
00:32:36,680 --> 00:32:40,760
Speaker 1: research he's doing on a on another project. There's so

572
00:32:40,800 --> 00:32:43,760
Speaker 1: many questions I didn't get to. I really want to

573
00:32:44,040 --> 00:32:47,280
Speaker 1: um before we get to our standard questions, I have

574
00:32:47,480 --> 00:32:50,560
Speaker 1: to I have to come back back to let's start

575
00:32:50,560 --> 00:32:53,360
Speaker 1: a little bit. We didn't really talk about your time

576
00:32:53,440 --> 00:32:57,600
Speaker 1: at The Economist. You're working in London as a as

577
00:32:57,640 --> 00:33:01,680
Speaker 1: a journalist, as a writer, you're covering international finance, and

578
00:33:01,720 --> 00:33:03,400
Speaker 1: then out of left field, you get a sign to

579
00:33:03,520 --> 00:33:07,120
Speaker 1: South Africa. How does that happen? It was the other

580
00:33:07,160 --> 00:33:10,680
Speaker 1: way around. Actually I went first to South Africa and

581
00:33:10,720 --> 00:33:13,160
Speaker 1: then I came back from London. So you're working in London,

582
00:33:13,200 --> 00:33:15,960
Speaker 1: you and was that where you were first started with

583
00:33:16,000 --> 00:33:18,320
Speaker 1: the economist. I joined the economist, I joined the Foreign

584
00:33:18,400 --> 00:33:20,360
Speaker 1: Department and they put the new kid on the block

585
00:33:20,960 --> 00:33:23,720
Speaker 1: to do Africa because I guess it was the poorest

586
00:33:23,720 --> 00:33:25,600
Speaker 1: part of the world. And so the youngest guy got it.

587
00:33:26,200 --> 00:33:28,680
Speaker 1: And I did that a bit in London, and then

588
00:33:28,720 --> 00:33:30,520
Speaker 1: I insisted on moving there. So I went to live

589
00:33:30,520 --> 00:33:33,000
Speaker 1: in Zimpa. So this this was your choice. This wasn't

590
00:33:33,040 --> 00:33:35,360
Speaker 1: them saying, all right, sent the kids to South Africa.

591
00:33:35,800 --> 00:33:37,760
Speaker 1: Now I wanted to go live there. I was sick

592
00:33:37,800 --> 00:33:40,280
Speaker 1: of being in London after a couple of years and

593
00:33:40,320 --> 00:33:43,360
Speaker 1: trying to follow Africa but not being in Africa. So

594
00:33:43,400 --> 00:33:46,520
Speaker 1: I said, okay, I actually quit, and they kind of

595
00:33:46,520 --> 00:33:49,719
Speaker 1: persuaded me not to quit by persuaded by giving me

596
00:33:49,760 --> 00:33:51,960
Speaker 1: the option of where did you want to go in Africa?

597
00:33:51,960 --> 00:33:53,480
Speaker 1: Where do you want to live? So I picked Zimbabwe,

598
00:33:54,360 --> 00:33:56,920
Speaker 1: which was kind of next to South Africa but not

599
00:33:57,040 --> 00:34:00,160
Speaker 1: in it at the time with apartheid still being there,

600
00:34:00,160 --> 00:34:02,400
Speaker 1: there were travel restrictions if you lived in South Africa,

601
00:34:03,600 --> 00:34:05,360
Speaker 1: and I think it also South Africa was was in

602
00:34:05,400 --> 00:34:08,600
Speaker 1: a boring political phase where they were not going to

603
00:34:08,840 --> 00:34:11,440
Speaker 1: release Mandela, nothing was going to happen, and and of

604
00:34:11,480 --> 00:34:13,000
Speaker 1: course I was totally wrong. So as soon as I

605
00:34:13,040 --> 00:34:18,040
Speaker 1: got to Zimbabwe, political change began in South Africa, and

606
00:34:18,080 --> 00:34:19,839
Speaker 1: I wound out spending a lot of time living out

607
00:34:19,840 --> 00:34:22,759
Speaker 1: of a suitcase, traveling around. And when Mandela came out

608
00:34:22,760 --> 00:34:26,680
Speaker 1: of jail in there, I was twenty five years old

609
00:34:26,800 --> 00:34:29,160
Speaker 1: outside waiting for him to come out, and I knew

610
00:34:29,200 --> 00:34:31,800
Speaker 1: my career would be downhill thereafter because nothing could be

611
00:34:31,840 --> 00:34:36,520
Speaker 1: as exciting. So a UK citizen living in Zimbabwe has

612
00:34:36,680 --> 00:34:40,080
Speaker 1: greater travel freedom than a UK citizen living in South Africa?

613
00:34:40,160 --> 00:34:42,000
Speaker 1: Was that the thinking? Yeah, at the time, that was

614
00:34:42,040 --> 00:34:44,960
Speaker 1: the case, because if you had visa stamps from South

615
00:34:45,000 --> 00:34:48,279
Speaker 1: Africa all over your passport and then you tried to

616
00:34:48,320 --> 00:34:51,360
Speaker 1: go to another country, like I don't know, Tanzania, the

617
00:34:51,400 --> 00:34:54,680
Speaker 1: Tanzanian government as a kind of protest against apartheid might

618
00:34:54,680 --> 00:34:57,080
Speaker 1: give you a hard time. That makes a lot of sense.

619
00:34:57,080 --> 00:35:01,600
Speaker 1: So you're you're you're covering now some Mandela, what was

620
00:35:01,640 --> 00:35:04,360
Speaker 1: that experience, like, did you get to interview him? How

621
00:35:04,840 --> 00:35:09,200
Speaker 1: was your South African experiences? The South African experience was amazing.

622
00:35:09,239 --> 00:35:11,440
Speaker 1: It was an incredible time of political change, and I

623
00:35:11,480 --> 00:35:14,680
Speaker 1: wrote a book called After Apartite, which kind of laid

624
00:35:14,680 --> 00:35:17,720
Speaker 1: down what I thought the future would be like after

625
00:35:18,120 --> 00:35:21,879
Speaker 1: white minority rule ended, and I draw on a lot

626
00:35:21,880 --> 00:35:23,919
Speaker 1: of my travels in the rest of Africa to try

627
00:35:23,960 --> 00:35:30,120
Speaker 1: to understand how post white rule society has tended to develop.

628
00:35:30,719 --> 00:35:32,759
Speaker 1: And all of that was just a great experience in

629
00:35:32,800 --> 00:35:36,080
Speaker 1: my twenties to to have that adventure. Did you did

630
00:35:36,080 --> 00:35:39,480
Speaker 1: you ever get to interview Mandela? I didn't interview Mandela unfortunately.

631
00:35:39,719 --> 00:35:42,120
Speaker 1: That that and then from there you end up getting

632
00:35:42,120 --> 00:35:45,880
Speaker 1: assigned to Japan. Yes, well, I came back to London

633
00:35:46,000 --> 00:35:49,080
Speaker 1: for a couple of years and that's when I started

634
00:35:49,080 --> 00:35:51,719
Speaker 1: to write about finance and it was a total learning experience.

635
00:35:51,719 --> 00:35:55,120
Speaker 1: I remember just asking questions, just going to see fund managers,

636
00:35:55,680 --> 00:35:59,439
Speaker 1: traders whoever. Would see me and say, you know, I've

637
00:35:59,440 --> 00:36:01,520
Speaker 1: got some questions. I'm sorry, and then I would just

638
00:36:02,239 --> 00:36:04,120
Speaker 1: quiz them and quiz them and quiz them until they

639
00:36:04,160 --> 00:36:06,480
Speaker 1: threw me out of their offices because you know, an

640
00:36:06,520 --> 00:36:09,680
Speaker 1: Arab gone by. But by using the name of the economist,

641
00:36:09,719 --> 00:36:12,400
Speaker 1: I got into a lot of offices and I am

642
00:36:12,440 --> 00:36:14,279
Speaker 1: and I abused a lot of people's time to get

643
00:36:14,320 --> 00:36:17,160
Speaker 1: my sort of education in finance. I'll let you in

644
00:36:17,200 --> 00:36:19,920
Speaker 1: on a little secret. I use the name Bloomberg to

645
00:36:20,040 --> 00:36:22,200
Speaker 1: be able to sit with people like Sebastian Maloby and

646
00:36:22,200 --> 00:36:24,200
Speaker 1: talk about stuff like this. So that had to be

647
00:36:24,280 --> 00:36:28,160
Speaker 1: a culture shock. I'm thinking the UK, South Africa, Japan.

648
00:36:28,719 --> 00:36:31,240
Speaker 1: If I asked someone picked three of the most wildly

649
00:36:31,280 --> 00:36:35,200
Speaker 1: disparate cultures and societies, I don't think you can find

650
00:36:35,280 --> 00:36:39,520
Speaker 1: three more different societies around the planet than those three, right,

651
00:36:39,520 --> 00:36:42,239
Speaker 1: And going to Japan in the early nineties was fascinating

652
00:36:42,320 --> 00:36:46,040
Speaker 1: because that was a time when people still believed that

653
00:36:46,120 --> 00:36:50,200
Speaker 1: the Japanese economic model might be superior to the Western one.

654
00:36:50,280 --> 00:36:54,160
Speaker 1: The Japanese miracle absolutely, and although the market had crashed

655
00:36:54,200 --> 00:36:57,680
Speaker 1: in Um, it took a bit of you know that

656
00:36:57,760 --> 00:36:59,680
Speaker 1: one of those cartoon characters that runs off the edge

657
00:36:59,719 --> 00:37:02,520
Speaker 1: of the right and then keeps running, doesn't actually fall

658
00:37:02,640 --> 00:37:05,120
Speaker 1: until he looks down and notices it exactly. And so

659
00:37:05,160 --> 00:37:06,960
Speaker 1: we were in that moment where in Japan is kind

660
00:37:06,960 --> 00:37:09,800
Speaker 1: of off the edge of the cliff but still levitating somehow,

661
00:37:09,840 --> 00:37:12,040
Speaker 1: and some people believe that it would be able to

662
00:37:12,040 --> 00:37:16,520
Speaker 1: scoot right back onto terra firma um and not fall.

663
00:37:16,880 --> 00:37:19,359
Speaker 1: And so there was a fascinating debate about the nature

664
00:37:19,400 --> 00:37:22,920
Speaker 1: of capitalism, which model worked best, and so forth, and

665
00:37:22,920 --> 00:37:25,120
Speaker 1: and so that was a great education. I know I

666
00:37:25,239 --> 00:37:28,880
Speaker 1: missed pronouncing this. Kuritsu is the Japanese model of you.

667
00:37:28,880 --> 00:37:34,440
Speaker 1: You're stacking all these different industries and one vertically integrated company.

668
00:37:34,920 --> 00:37:39,320
Speaker 1: My favorite example Mitsubishi Bank of Mitsubishi, Mitsubishi Heavy Industries,

669
00:37:39,360 --> 00:37:43,640
Speaker 1: Mitsubishi real Estate, and Subisi Aviation. They were building these

670
00:37:43,880 --> 00:37:49,560
Speaker 1: giant companies made it challenging for Japan to allow their

671
00:37:49,680 --> 00:37:52,520
Speaker 1: banks to to go into bankruptcy. It's a whole house

672
00:37:52,520 --> 00:37:54,839
Speaker 1: of cards on top of it. Yes, And I think

673
00:37:54,840 --> 00:37:58,480
Speaker 1: what's fascinating though, is that the kretsu system in Japan

674
00:37:58,640 --> 00:38:02,080
Speaker 1: is sort of cross shareholding banks lending on the basis

675
00:38:02,080 --> 00:38:06,600
Speaker 1: of a relationship. It's not arms length stock market capitalism

676
00:38:06,640 --> 00:38:11,640
Speaker 1: where people are trading bits of paper securities without having

677
00:38:11,719 --> 00:38:15,120
Speaker 1: much direct contact with the companies or the entities that

678
00:38:15,200 --> 00:38:18,600
Speaker 1: issued those securities. So it's a much more kind of

679
00:38:18,760 --> 00:38:23,719
Speaker 1: hands on um. People said long termist version of capitalism,

680
00:38:23,719 --> 00:38:26,760
Speaker 1: and when Japan collapsed, people thought, oh, well, that's obviously

681
00:38:26,800 --> 00:38:29,040
Speaker 1: not a good model. But if you if you substituted

682
00:38:29,080 --> 00:38:33,000
Speaker 1: the word Japan and you said instead Northern California, And

683
00:38:33,040 --> 00:38:35,480
Speaker 1: you think about the way that venture capital has been

684
00:38:35,520 --> 00:38:39,520
Speaker 1: so important in the technology stuff, and when it's venture capital,

685
00:38:39,560 --> 00:38:45,080
Speaker 1: it's long termist. It is direct provision of capital to companies.

686
00:38:45,920 --> 00:38:49,440
Speaker 1: It is not about trading secondary claims and markets. And

687
00:38:49,520 --> 00:38:53,239
Speaker 1: it's been fabulously successful. Yeah, but you those are new

688
00:38:53,280 --> 00:38:58,960
Speaker 1: technologies and small startups. In Japan, it's almost dynastic in

689
00:38:59,120 --> 00:39:04,080
Speaker 1: terms of the giant entities, these giant conglomerates, including many

690
00:39:04,200 --> 00:39:07,520
Speaker 1: of the biggest companies in Japan and in the world.

691
00:39:08,000 --> 00:39:11,719
Speaker 1: It's a fascinating comparison. Um, I think it works better

692
00:39:11,760 --> 00:39:15,279
Speaker 1: with small companies than it does with the big conglomerates. Yeah.

693
00:39:15,320 --> 00:39:18,480
Speaker 1: I think that's a good insight. And I think that um,

694
00:39:18,520 --> 00:39:21,960
Speaker 1: you know, I'm not ready to say that markets and

695
00:39:22,080 --> 00:39:24,480
Speaker 1: financial trading are a bad thing. I mean, I read

696
00:39:24,480 --> 00:39:27,840
Speaker 1: about hedge funds and I believe that they're often a

697
00:39:27,840 --> 00:39:31,319
Speaker 1: good thing. Um. But it is interesting the way that

698
00:39:32,440 --> 00:39:36,359
Speaker 1: venture capital is finance, but without finance, I mean, people

699
00:39:36,400 --> 00:39:39,840
Speaker 1: don't use mathematical models. It's very much based on looking

700
00:39:39,840 --> 00:39:42,319
Speaker 1: at the entrepreneur in the eyes and saying, does this

701
00:39:42,360 --> 00:39:44,239
Speaker 1: person have the stuff it takes to set up a

702
00:39:44,239 --> 00:39:46,600
Speaker 1: company and make it work. So it's a very different

703
00:39:46,680 --> 00:39:49,239
Speaker 1: kind of provision of capital that you get instead of

704
00:39:49,239 --> 00:39:51,600
Speaker 1: con Valley, and it clearly has worked, not to say

705
00:39:51,640 --> 00:39:55,480
Speaker 1: the least. So so we covered um, South Africa. You

706
00:39:55,520 --> 00:39:58,480
Speaker 1: were in Japan for how many years? Three years? Did

707
00:39:58,520 --> 00:40:01,880
Speaker 1: you learn Japanese? I did? Yeah? Are you still fluent

708
00:40:02,040 --> 00:40:08,560
Speaker 1: or or very rapidly after I left Japan? In that

709
00:40:08,640 --> 00:40:11,239
Speaker 1: whole world kind of fed off my mental map. Have

710
00:40:11,320 --> 00:40:13,440
Speaker 1: you been back since I haven't? It's terrible. I should

711
00:40:13,520 --> 00:40:15,919
Speaker 1: go back. It's one of the places on my list.

712
00:40:15,920 --> 00:40:19,440
Speaker 1: It looks like an absolutely fascinating country that that is

713
00:40:19,480 --> 00:40:24,200
Speaker 1: truly so different from from my experiences. It looks utally fascinating.

714
00:40:24,400 --> 00:40:28,280
Speaker 1: Let's talk about something a little closer to home, um,

715
00:40:28,440 --> 00:40:32,480
Speaker 1: the U k And and Brexit. You know, to an

716
00:40:32,520 --> 00:40:39,000
Speaker 1: outside observer, Britain looks spectacularly calm, considering there's a whole

717
00:40:39,040 --> 00:40:43,000
Speaker 1: bunch of big economic changes coming their way. What what's

718
00:40:43,040 --> 00:40:44,799
Speaker 1: your take on this? I know you've written about it

719
00:40:44,840 --> 00:40:50,560
Speaker 1: for the Washington Post. In fact, Brexit Britain seems shockingly calm.

720
00:40:50,640 --> 00:40:53,879
Speaker 1: Is your your headline? So? What is going on in

721
00:40:53,880 --> 00:40:56,480
Speaker 1: in Great Britain? Well? I think the main thing that

722
00:40:56,520 --> 00:40:59,800
Speaker 1: happened is that I had assumed, and most people assumed

723
00:40:59,800 --> 00:41:04,440
Speaker 1: that if the Brexit vote succeeded, everybody would be terrified

724
00:41:04,480 --> 00:41:07,960
Speaker 1: that the uncertainty of leaving Europe would cause consumers to

725
00:41:08,040 --> 00:41:11,440
Speaker 1: quit spending, and in fact, consumers did the opposite. They

726
00:41:11,440 --> 00:41:16,400
Speaker 1: went out and borrowed. Household debt ratios have actually, you know, risen,

727
00:41:17,080 --> 00:41:19,680
Speaker 1: and so people just refused to be scared. And I

728
00:41:19,719 --> 00:41:23,000
Speaker 1: think that it's kind of a behavioral insight that when

729
00:41:23,040 --> 00:41:26,320
Speaker 1: there's a political development that's very complex and it seems

730
00:41:26,360 --> 00:41:29,120
Speaker 1: to be you know, yak yak yak, all those politicians

731
00:41:29,160 --> 00:41:32,040
Speaker 1: talking to each other, the average person just kind of

732
00:41:32,120 --> 00:41:35,800
Speaker 1: zones it out and goes off on a spending spree,

733
00:41:36,280 --> 00:41:38,480
Speaker 1: just ignoring what's coming down the pike. And I think

734
00:41:38,920 --> 00:41:42,200
Speaker 1: when the reality of Brexit hits and you suddenly find that,

735
00:41:42,600 --> 00:41:46,080
Speaker 1: you know, your company cannot export without a customs check,

736
00:41:46,480 --> 00:41:50,360
Speaker 1: or that you yourself cannot travel and work in Spain

737
00:41:50,480 --> 00:41:54,160
Speaker 1: or whatever, I think when the reality hits, then consumers

738
00:41:54,360 --> 00:41:56,879
Speaker 1: will start to reign in their spending and then we'll

739
00:41:56,880 --> 00:41:59,799
Speaker 1: see the cost of Brexit. The expectation is if if

740
00:41:59,840 --> 00:42:05,920
Speaker 1: ah Brexit goes through the way, it's reasonably expected to

741
00:42:05,960 --> 00:42:09,520
Speaker 1: go through, meaning all the things we're referencing actually a car.

742
00:42:10,080 --> 00:42:12,440
Speaker 1: This is a pretty big hit to g d P,

743
00:42:12,680 --> 00:42:15,959
Speaker 1: isn't it. Yes, I mean, you know, Britain joined the

744
00:42:16,000 --> 00:42:19,600
Speaker 1: European Union in the nine three so it's been a

745
00:42:19,640 --> 00:42:25,600
Speaker 1: long time of progressive integration into those markets of British

746
00:42:25,600 --> 00:42:29,120
Speaker 1: exports go to the rest of the European Union, so

747
00:42:29,320 --> 00:42:33,399
Speaker 1: losing full market access in those economies as a big deal.

748
00:42:34,120 --> 00:42:38,080
Speaker 1: And it's arguable that the Great Britain had the best

749
00:42:38,080 --> 00:42:40,440
Speaker 1: of both worlds. They were a full member, but they

750
00:42:40,480 --> 00:42:44,040
Speaker 1: still had their own currency. What I'm perplexed as to

751
00:42:44,120 --> 00:42:46,719
Speaker 1: why they would want to exit a situation that's so

752
00:42:46,920 --> 00:42:50,120
Speaker 1: advantageous to them. Well, I'm perplexed too, and I you know,

753
00:42:50,280 --> 00:42:53,239
Speaker 1: I helped to set up a website that did fact

754
00:42:53,320 --> 00:42:58,640
Speaker 1: checking to point out the lies frankly of the side

755
00:42:58,640 --> 00:43:01,000
Speaker 1: they wanted to get out. Well, you don't. You don't

756
00:43:01,000 --> 00:43:02,959
Speaker 1: think we're gonna get the UK is going to see

757
00:43:02,960 --> 00:43:07,480
Speaker 1: four hundred million pounds a week for the National Institute

758
00:43:07,480 --> 00:43:09,120
Speaker 1: of Health. That's not going to happen. This is one

759
00:43:09,120 --> 00:43:10,840
Speaker 1: of those myths, right that they put out there on

760
00:43:10,880 --> 00:43:12,800
Speaker 1: the side of a bus that they read the post

761
00:43:12,840 --> 00:43:18,040
Speaker 1: truth campaign style. We try to say that truth mattered. Unfortunately,

762
00:43:18,080 --> 00:43:20,480
Speaker 1: not enough people listen to us it. I mean when

763
00:43:20,480 --> 00:43:22,480
Speaker 1: you look at the opinion polls and you say, well,

764
00:43:22,480 --> 00:43:25,200
Speaker 1: why do people vote for exit? The first thing was

765
00:43:25,239 --> 00:43:28,120
Speaker 1: a sort of nebulous belief that you'd get sovereignty back.

766
00:43:28,360 --> 00:43:31,000
Speaker 1: What does sovereignty mean? We live in a globalized world.

767
00:43:31,440 --> 00:43:34,600
Speaker 1: We are dependent on what happens in other countries is

768
00:43:34,640 --> 00:43:38,200
Speaker 1: banned to affect us, And so I think that's a shaimira.

769
00:43:38,360 --> 00:43:40,919
Speaker 1: What about the control of borders. We have an open

770
00:43:40,960 --> 00:43:43,480
Speaker 1: border policy. We want to control, we want to keep

771
00:43:43,480 --> 00:43:48,160
Speaker 1: bad elements out. Yes, so that is a politically potent line,

772
00:43:48,440 --> 00:43:50,560
Speaker 1: both here in the United States as we've seen, and

773
00:43:50,600 --> 00:43:54,960
Speaker 1: in and in Britain um. And you know, if you really,

774
00:43:55,000 --> 00:43:57,960
Speaker 1: really really want to keep foreigners out, I guess that's

775
00:43:58,000 --> 00:43:59,920
Speaker 1: your choice and people can vote like that. But if

776
00:44:00,160 --> 00:44:05,759
Speaker 1: was economically migrants positive, very positive, And I would say

777
00:44:05,800 --> 00:44:08,760
Speaker 1: even culturally. You know, the diversity that you have in London,

778
00:44:08,800 --> 00:44:12,200
Speaker 1: a very melting pot kind of city. You walk on

779
00:44:12,239 --> 00:44:14,560
Speaker 1: the street, you get in the subway, people are speaking French,

780
00:44:14,680 --> 00:44:18,200
Speaker 1: Arabic whatever. I like that. Plus the food is so

781
00:44:18,280 --> 00:44:22,520
Speaker 1: much better between the pizza, the Indian food and the sushi.

782
00:44:23,000 --> 00:44:25,279
Speaker 1: London is now a city you can actually enjoy your meal,

783
00:44:25,320 --> 00:44:28,080
Speaker 1: and that wasn't necessarily true thirty years ago. Yeah. I

784
00:44:28,239 --> 00:44:30,759
Speaker 1: left London to go live in Japan in nineteen two,

785
00:44:30,760 --> 00:44:33,919
Speaker 1: and it was not with that much regret. But when

786
00:44:33,920 --> 00:44:37,320
Speaker 1: I came back to live there in it's a fantastic place.

787
00:44:37,520 --> 00:44:41,399
Speaker 1: It's completely changed, and it's it's far more international and cosmopolitan,

788
00:44:41,480 --> 00:44:44,160
Speaker 1: and um, you would always oh, you would have always

789
00:44:44,160 --> 00:44:47,560
Speaker 1: assumed that about London, given the history of of the UK,

790
00:44:47,719 --> 00:44:50,440
Speaker 1: but that really wasn't necessarily the case for a long time.

791
00:44:50,840 --> 00:44:53,759
Speaker 1: And now you're a UK resident or US resident, I

792
00:44:53,800 --> 00:44:58,560
Speaker 1: now have this funny split existence. My wife annoyingly got

793
00:44:58,600 --> 00:45:01,920
Speaker 1: promoted so much that she has a great job in London,

794
00:45:02,680 --> 00:45:05,480
Speaker 1: editor in chief of the Economist magazine, and so we

795
00:45:05,520 --> 00:45:08,879
Speaker 1: live in London for that very good reason. But my

796
00:45:09,320 --> 00:45:12,200
Speaker 1: writing and my professional interests are mostly in the US.

797
00:45:12,760 --> 00:45:14,319
Speaker 1: So I'm here kind of half the time and in

798
00:45:14,360 --> 00:45:17,399
Speaker 1: London half the New York or d c B alright,

799
00:45:17,440 --> 00:45:20,520
Speaker 1: because I keep him in the phrase Nylon, which is

800
00:45:20,640 --> 00:45:25,120
Speaker 1: the New York London. Um um swap, let's um all right,

801
00:45:25,160 --> 00:45:28,440
Speaker 1: So let's leave the economists behind. But the only other

802
00:45:28,480 --> 00:45:31,560
Speaker 1: thing I have to ask, since you're in London so often,

803
00:45:31,719 --> 00:45:35,759
Speaker 1: I have to ask you about um Europe. How much

804
00:45:35,760 --> 00:45:41,120
Speaker 1: trouble is Europe in? Are we overstating the damage here?

805
00:45:41,160 --> 00:45:43,799
Speaker 1: We look at the banks in Europe, they're selling for

806
00:45:44,000 --> 00:45:46,360
Speaker 1: half of book in the U S it's one to

807
00:45:46,400 --> 00:45:49,520
Speaker 1: two times book. How much trouble is Europe really in

808
00:45:49,719 --> 00:45:52,200
Speaker 1: going forward? Or will they be able to resolve everything?

809
00:45:53,120 --> 00:45:57,319
Speaker 1: I think that the euro Zone um is still a

810
00:45:57,360 --> 00:46:00,800
Speaker 1: disaster waiting to happen. That is huge amounts of debt

811
00:46:01,680 --> 00:46:04,200
Speaker 1: uh and they still haven't gotten to a position where,

812
00:46:04,280 --> 00:46:08,200
Speaker 1: although growth has picked up a little bit, even nominal

813
00:46:08,280 --> 00:46:14,360
Speaker 1: growth is lower than the deficit in some of these countries.

814
00:46:14,360 --> 00:46:19,279
Speaker 1: So public borrowing is adding to the debt um. And

815
00:46:19,320 --> 00:46:22,480
Speaker 1: we're talking to southern Europe. Yeah, I mean in Greece

816
00:46:22,600 --> 00:46:25,520
Speaker 1: is the obvious one is true? Italy? I think Italy

817
00:46:25,560 --> 00:46:28,480
Speaker 1: more than Spain. But you know, I do think those

818
00:46:28,520 --> 00:46:30,920
Speaker 1: countries have a fundamental problem, which is that they are

819
00:46:30,960 --> 00:46:34,560
Speaker 1: locked into a monetary policy that is partly designed to

820
00:46:34,600 --> 00:46:38,799
Speaker 1: suit Germany and um, well, it certainly has helped Germany

821
00:46:39,360 --> 00:46:42,799
Speaker 1: over the past few decades, right, And I think that

822
00:46:43,600 --> 00:46:45,759
Speaker 1: there is no obvious if you just think about the

823
00:46:45,800 --> 00:46:50,800
Speaker 1: debt sustainability dynamics in a place like Italy with negative demographics,

824
00:46:51,360 --> 00:46:54,319
Speaker 1: I'm not sure how they're going to stabilize that, and

825
00:46:54,400 --> 00:46:56,560
Speaker 1: I would be remiss if I did not ask you.

826
00:46:57,120 --> 00:47:02,840
Speaker 1: I've been reading about the increasing chatter that hey, maybe

827
00:47:02,880 --> 00:47:06,320
Speaker 1: when everybody figures out how expensive it's going to be

828
00:47:06,440 --> 00:47:11,560
Speaker 1: for the UK to actually exit um the EU, and

829
00:47:11,600 --> 00:47:16,320
Speaker 1: maybe Scotland reconsiders their vote and is there any realistic

830
00:47:16,360 --> 00:47:20,960
Speaker 1: possibility that they suddenly um get religion and decide to

831
00:47:21,360 --> 00:47:25,319
Speaker 1: stay in the EU with some some minor accommodations or

832
00:47:25,360 --> 00:47:27,479
Speaker 1: is that just a pipe dream? It's a pipe dream.

833
00:47:27,520 --> 00:47:30,560
Speaker 1: If you look at the political line up in Britain

834
00:47:30,719 --> 00:47:33,880
Speaker 1: right now, you have a Labor Party opposition which is

835
00:47:33,880 --> 00:47:37,040
Speaker 1: in total disarray, with a very left wing leader who's

836
00:47:37,239 --> 00:47:41,120
Speaker 1: extremely uncharismatic says it's not gonna come from him. Um.

837
00:47:41,200 --> 00:47:44,840
Speaker 1: Then you've got a bunch of regional parties um, including

838
00:47:44,880 --> 00:47:47,239
Speaker 1: mostly the Scottish National Party, that would like to stay

839
00:47:47,239 --> 00:47:49,719
Speaker 1: in Europe. But they're regional, they're not gonna, you know,

840
00:47:50,239 --> 00:47:52,839
Speaker 1: have much influence in in the heart of Britain, which

841
00:47:52,880 --> 00:47:56,840
Speaker 1: is England and then you're left with the governing Conservative Party,

842
00:47:57,400 --> 00:48:02,080
Speaker 1: and Theresa May is a of rather dug it, not

843
00:48:02,239 --> 00:48:06,719
Speaker 1: terribly imaginative or flexible leader, and she is doggedly proceeding

844
00:48:06,800 --> 00:48:09,279
Speaker 1: towards leaving the European Union, and she's not going to

845
00:48:09,360 --> 00:48:13,839
Speaker 1: be put off. Quite fascinating. There's a ton of questions

846
00:48:13,920 --> 00:48:16,960
Speaker 1: that I still want to get to, but I have

847
00:48:17,120 --> 00:48:21,520
Speaker 1: to get to my favorite questions, UM that I asked

848
00:48:21,560 --> 00:48:24,800
Speaker 1: all of my guests in the remaining fifteen twenty minutes

849
00:48:24,840 --> 00:48:28,120
Speaker 1: we have Before I hit those questions. There's there's one

850
00:48:28,520 --> 00:48:31,359
Speaker 1: other comment I had to ask you about. So your

851
00:48:31,400 --> 00:48:35,759
Speaker 1: father was the United Kingdom ambassador to Germany and later

852
00:48:35,760 --> 00:48:41,319
Speaker 1: an ambassador to France. That's a fascinating UM background. Did

853
00:48:41,320 --> 00:48:43,440
Speaker 1: you spend a lot of time growing up in Germany

854
00:48:43,520 --> 00:48:46,399
Speaker 1: or France? What was what? How did that impact um?

855
00:48:46,520 --> 00:48:49,759
Speaker 1: Your childhood? Well, when I was a kid, there were

856
00:48:49,880 --> 00:48:54,000
Speaker 1: two countries where I remember going on vacation from boarding

857
00:48:54,040 --> 00:48:56,560
Speaker 1: school even living there. In fact, one with New York.

858
00:48:57,160 --> 00:48:58,920
Speaker 1: My dad was in New York when I was between

859
00:48:58,920 --> 00:49:01,160
Speaker 1: the age of seven and ten, So I was a

860
00:49:01,160 --> 00:49:05,920
Speaker 1: Central park baseball playing gum chewing kid. Um. You can

861
00:49:05,920 --> 00:49:07,879
Speaker 1: tell by my accident that it really stuck a lot

862
00:49:07,960 --> 00:49:11,560
Speaker 1: now and so you can't you can't tell where I'm

863
00:49:11,560 --> 00:49:15,000
Speaker 1: from at all. I do such a good job hiding.

864
00:49:15,680 --> 00:49:19,480
Speaker 1: I know you grew up in London. The other thing

865
00:49:19,640 --> 00:49:21,680
Speaker 1: that happened was that we then moved from New York

866
00:49:21,680 --> 00:49:25,160
Speaker 1: to to Russia, to Moscow, and so I have these

867
00:49:25,200 --> 00:49:28,680
Speaker 1: weird memories of communist Russia. And so when when was

868
00:49:28,680 --> 00:49:32,000
Speaker 1: your father ambassador of Germany? Was that before your time

869
00:49:32,120 --> 00:49:35,480
Speaker 1: or or after? You're already out of the household by

870
00:49:35,480 --> 00:49:38,719
Speaker 1: that point, I was the economist correspondent in Africa. I

871
00:49:38,719 --> 00:49:42,080
Speaker 1: remember a funny experience actually sitting with a bunch of

872
00:49:42,120 --> 00:49:46,600
Speaker 1: reporters in Namibia right next to next to South Africa,

873
00:49:46,719 --> 00:49:50,160
Speaker 1: which was having a sort of historic election of independence.

874
00:49:50,960 --> 00:49:54,799
Speaker 1: And every single senior Africa reporter in the world had

875
00:49:54,840 --> 00:49:56,840
Speaker 1: come to Namibia and they were looking forward to getting

876
00:49:56,840 --> 00:49:59,440
Speaker 1: on the front page the next day, and on the

877
00:49:59,440 --> 00:50:01,640
Speaker 1: front page the next day. All there was was the

878
00:50:01,640 --> 00:50:04,880
Speaker 1: collapse of the Berlin Wall. And so Malaby Sor and

879
00:50:04,920 --> 00:50:07,920
Speaker 1: otherwise my dad, who was a master in Germany, was

880
00:50:07,960 --> 00:50:09,840
Speaker 1: in the middle of the biggest story in the world

881
00:50:09,880 --> 00:50:13,359
Speaker 1: of a generation. And Mallaby Jr. That's me was Offen

882
00:50:13,600 --> 00:50:16,520
Speaker 1: Maybia and I'm afraid we're on page seventeen. Oh that's very,

883
00:50:16,640 --> 00:50:20,319
Speaker 1: very funny. So so let's um, let's jump into our

884
00:50:20,440 --> 00:50:25,560
Speaker 1: our favorite questions. Um, So, did you always know you

885
00:50:25,640 --> 00:50:29,839
Speaker 1: wanted to be a writer? Was that something that that

886
00:50:30,040 --> 00:50:32,400
Speaker 1: was in your future or or how did that come about?

887
00:50:32,719 --> 00:50:34,840
Speaker 1: Actually I was asked when I was at high school

888
00:50:34,880 --> 00:50:37,320
Speaker 1: around the age of sixteen to fill in some questionnaire

889
00:50:37,360 --> 00:50:38,800
Speaker 1: saying what would I like to do in the future,

890
00:50:39,280 --> 00:50:44,120
Speaker 1: and I wrote journalism and writing, So I've known it's something.

891
00:50:44,160 --> 00:50:48,160
Speaker 1: It's a combination of being fascinated with the craftsmanship of

892
00:50:48,200 --> 00:50:51,400
Speaker 1: the written word. I actually like fiddling around with semi

893
00:50:51,400 --> 00:50:55,200
Speaker 1: colons and sentences and and language. I just love language.

894
00:50:55,760 --> 00:50:59,359
Speaker 1: Um maybe that comes from having a French mother and

895
00:50:59,440 --> 00:51:01,479
Speaker 1: having grown up with a couple of languages in the house,

896
00:51:01,520 --> 00:51:05,680
Speaker 1: and then learning German and other languages later. So I

897
00:51:05,840 --> 00:51:08,399
Speaker 1: loved language. But I also love discovery. I love going

898
00:51:08,400 --> 00:51:11,439
Speaker 1: out talking to people, figuring out what makes them tick,

899
00:51:11,719 --> 00:51:15,160
Speaker 1: what their ideas are, and so that whole world of

900
00:51:15,239 --> 00:51:19,360
Speaker 1: understanding making sense of current events has been my passion.

901
00:51:19,840 --> 00:51:22,879
Speaker 1: Sounds sounds quite fascinating. Let's talk about some of your

902
00:51:22,920 --> 00:51:28,680
Speaker 1: early mentors who who guided your career when you were younger. Well,

903
00:51:28,760 --> 00:51:31,280
Speaker 1: when I joined the Economist magazine right out of college,

904
00:51:31,840 --> 00:51:34,560
Speaker 1: first as a sort of temporary intern position, and then

905
00:51:34,560 --> 00:51:39,239
Speaker 1: they kept me. Um, there were several older journalists who

906
00:51:39,239 --> 00:51:42,120
Speaker 1: were really terrific in terms of helping me to learn

907
00:51:42,120 --> 00:51:44,359
Speaker 1: how to write, how not to waste the reader's time

908
00:51:44,400 --> 00:51:47,480
Speaker 1: by really getting to the point quickly. I remember one

909
00:51:47,520 --> 00:51:51,640
Speaker 1: exercise where, um, you know, I was terrified when I

910
00:51:51,640 --> 00:51:53,279
Speaker 1: first joined the Economist, and I didn't know if I

911
00:51:53,280 --> 00:51:55,799
Speaker 1: could write stories that they would actually use. So I

912
00:51:55,800 --> 00:51:58,120
Speaker 1: would I would stay late and write a draft and

913
00:51:58,160 --> 00:52:01,480
Speaker 1: give myself basically a full all morning the next day

914
00:52:01,600 --> 00:52:04,920
Speaker 1: to crunch this small piece into an even smaller space

915
00:52:04,960 --> 00:52:07,640
Speaker 1: by taking out every piece of fat in the pros.

916
00:52:08,040 --> 00:52:10,720
Speaker 1: And I would spend four or five hours just taking

917
00:52:10,719 --> 00:52:13,840
Speaker 1: out redundant words. If I said in spite of I

918
00:52:13,840 --> 00:52:17,279
Speaker 1: would say, ah huh. If I changed that despite, I

919
00:52:17,320 --> 00:52:19,759
Speaker 1: can cut it from three words to one word. So

920
00:52:19,960 --> 00:52:23,200
Speaker 1: this obsessive polishing of language or something I learned from

921
00:52:23,200 --> 00:52:25,719
Speaker 1: my colleagues of the Economist. So so was the man

922
00:52:25,760 --> 00:52:28,600
Speaker 1: who knew originally eight words and now it's down to

923
00:52:28,680 --> 00:52:32,040
Speaker 1: six forty or how did that history affect You're writing

924
00:52:32,040 --> 00:52:34,400
Speaker 1: a book like this, so you're talking pages, they're not words,

925
00:52:34,400 --> 00:52:37,080
Speaker 1: But yes, did I say words pages? Yes? This was

926
00:52:37,120 --> 00:52:42,480
Speaker 1: originally so this is six How how large was this?

927
00:52:42,719 --> 00:52:45,680
Speaker 1: Because it's a giant topic and you covered decades in

928
00:52:45,680 --> 00:52:48,560
Speaker 1: the book, I did cut out two hundred pages. Really

929
00:52:49,320 --> 00:52:51,520
Speaker 1: is it painful? Because I know it's the worst thing

930
00:52:51,560 --> 00:52:55,600
Speaker 1: in the world to have to exercise your your precious words.

931
00:52:55,760 --> 00:52:57,680
Speaker 1: You see. The funny thing about me is it's not painful.

932
00:52:57,719 --> 00:53:01,040
Speaker 1: I actually love sitting there with ages at pros and

933
00:53:01,080 --> 00:53:04,480
Speaker 1: figuring out how to make it more beautiful by cutting

934
00:53:04,480 --> 00:53:07,839
Speaker 1: out the ugly bits. Less is more, to say the least.

935
00:53:07,920 --> 00:53:10,480
Speaker 1: Let's let's talk about writers who may have influenced you.

936
00:53:10,840 --> 00:53:15,600
Speaker 1: Who who do you admire? What writing or writers affected

937
00:53:15,600 --> 00:53:19,359
Speaker 1: your approach and your style? Well, I love reading, and

938
00:53:19,400 --> 00:53:21,520
Speaker 1: I'm a bit of a slow reader because I'm always

939
00:53:21,560 --> 00:53:24,200
Speaker 1: trying to learn from the book, both about the style

940
00:53:24,320 --> 00:53:28,160
Speaker 1: and about the content. I mean, Roger Lonstein is somebody

941
00:53:28,360 --> 00:53:30,680
Speaker 1: who when I started to write about hedge funds, you know,

942
00:53:30,719 --> 00:53:35,399
Speaker 1: I read both his Warren Buffett biography and I read

943
00:53:35,480 --> 00:53:38,560
Speaker 1: When Genius Failed. I thought those were both fantastic books

944
00:53:38,600 --> 00:53:42,239
Speaker 1: about and he gave you a delightful blurb for the

945
00:53:42,280 --> 00:53:44,680
Speaker 1: man who knew. He's been good about that. And so

946
00:53:44,760 --> 00:53:47,040
Speaker 1: i've I am getting a blurb from Summer writer that

947
00:53:47,080 --> 00:53:51,919
Speaker 1: you really admire. Sure, it's fantastic. Sure, and um so

948
00:53:51,920 --> 00:53:54,439
Speaker 1: so who else anybody else influence your approach? By the way,

949
00:53:54,520 --> 00:53:57,520
Speaker 1: for those of you who haven't read When Genius Failed,

950
00:53:57,960 --> 00:54:03,640
Speaker 1: it may be one of the all time great financial narratives.

951
00:54:03,680 --> 00:54:08,520
Speaker 1: It's just a wonderful, a fascinating tale, wonderfully told. A

952
00:54:08,520 --> 00:54:13,000
Speaker 1: long time ago, Joe lily Felt, the who became editor

953
00:54:13,000 --> 00:54:15,759
Speaker 1: of The New York Times, wrote a book called Move

954
00:54:15,840 --> 00:54:18,239
Speaker 1: Your Shadow. And this was based on his experience as

955
00:54:18,239 --> 00:54:22,000
Speaker 1: the South Africa correspondent. And that was a model of

956
00:54:22,040 --> 00:54:28,040
Speaker 1: taking a mixture of history analysis but also personal experience,

957
00:54:28,560 --> 00:54:31,760
Speaker 1: you know, describing himself in South Africa and putting himself

958
00:54:31,760 --> 00:54:34,439
Speaker 1: into the book. And I thought that the kind of

959
00:54:34,480 --> 00:54:39,960
Speaker 1: the range of um voices he could blend was a

960
00:54:40,040 --> 00:54:42,520
Speaker 1: lesson in how when you write a book, you've got

961
00:54:42,520 --> 00:54:45,080
Speaker 1: to change gears, right. You You shouldn't just write in

962
00:54:45,120 --> 00:54:47,359
Speaker 1: the same voice and at the same pace all the time.

963
00:54:47,680 --> 00:54:50,759
Speaker 1: You've got to have passages of analysis that you switch up.

964
00:54:50,800 --> 00:54:55,360
Speaker 1: With passages of narrative. Sometimes you cover three years and

965
00:54:55,480 --> 00:54:58,640
Speaker 1: three paragraphs. At the times you have thirty pages about

966
00:54:58,680 --> 00:55:01,480
Speaker 1: one day. It's that, you know, if you think about

967
00:55:01,560 --> 00:55:05,120
Speaker 1: making a movie, sometimes you use a wide angle lens,

968
00:55:05,520 --> 00:55:07,840
Speaker 1: other times it's a telephoto. You've got to think like

969
00:55:07,920 --> 00:55:11,120
Speaker 1: that with a book, to various variety and structure, and

970
00:55:11,160 --> 00:55:15,160
Speaker 1: that's what ultimately impacts what the final book looks like.

971
00:55:15,200 --> 00:55:17,279
Speaker 1: So so let's talk about books. What what are some

972
00:55:17,360 --> 00:55:20,880
Speaker 1: of your favorite books, be they finance or nonfinance fiction

973
00:55:20,960 --> 00:55:24,640
Speaker 1: or nonfinance nonfiction. You said you'd like to read. Tell

974
00:55:24,680 --> 00:55:27,240
Speaker 1: me what you're reading now and what have you enjoyed

975
00:55:27,239 --> 00:55:30,080
Speaker 1: in the past. Actually, I've I've become interested recently in

976
00:55:30,120 --> 00:55:32,400
Speaker 1: Silicon Valley and I read just now a book by

977
00:55:32,520 --> 00:55:37,520
Speaker 1: David Horowitz, who is the co founder with Mark Andres

978
00:55:37,560 --> 00:55:40,600
Speaker 1: and about recent Horowitz, And what's striking about that book

979
00:55:40,760 --> 00:55:46,520
Speaker 1: is how he describes the experience of being an entrepreneur

980
00:55:47,320 --> 00:55:51,359
Speaker 1: setting up companies. The sheer terror when you think you're

981
00:55:51,360 --> 00:55:53,480
Speaker 1: going to go bankrupt and you're gonna lose all your

982
00:55:53,520 --> 00:55:56,880
Speaker 1: investors money and all your friends who have sweated blood

983
00:55:56,920 --> 00:56:00,279
Speaker 1: working late working weekends for you. Um, you I'd have

984
00:56:00,320 --> 00:56:03,400
Speaker 1: to lay them off. And the kind of you know,

985
00:56:03,440 --> 00:56:07,880
Speaker 1: the visceral experience of being an entrepreneur in Silicon Valley

986
00:56:07,960 --> 00:56:10,920
Speaker 1: is something that came across to me very vividly reading

987
00:56:11,120 --> 00:56:15,040
Speaker 1: David Herbert's books called The Hard Thing About Hard Things.

988
00:56:15,200 --> 00:56:18,400
Speaker 1: It's pretty good. Anything else, what else? What else stands

989
00:56:18,440 --> 00:56:22,000
Speaker 1: out to you? Let's see. I read recently a study

990
00:56:22,040 --> 00:56:27,960
Speaker 1: offbeat book by the Austrian writer stefansk Um. I think

991
00:56:28,000 --> 00:56:31,480
Speaker 1: it's called the World of Yesterday, and it's essentially about

992
00:56:31,560 --> 00:56:40,480
Speaker 1: how cosmopolitan Europe of descended into the nightmare of Nazism.

993
00:56:40,520 --> 00:56:42,360
Speaker 1: And of course it's a book which today has a

994
00:56:42,360 --> 00:56:45,960
Speaker 1: certain resonance as you see these political trends appear to

995
00:56:46,000 --> 00:56:49,359
Speaker 1: threaten globalization, and this is about the unraveling of that

996
00:56:50,040 --> 00:56:53,200
Speaker 1: early globalization of the nineteenth century. That seems to be

997
00:56:53,239 --> 00:56:57,360
Speaker 1: a narrower slice than what lie quad Ahmed wrote about

998
00:56:57,440 --> 00:57:00,359
Speaker 1: in Lords of Finance. And he's another person who gave

999
00:57:00,400 --> 00:57:04,239
Speaker 1: you a fantastic blurb. Yes, I mean, Nakamen is a

1000
00:57:04,239 --> 00:57:08,000
Speaker 1: fantastic writer, and that was a wonderful, wonderful book, wonderful

1001
00:57:08,120 --> 00:57:12,719
Speaker 1: one if I totally agree, you know, brilliantly combining um,

1002
00:57:12,880 --> 00:57:17,440
Speaker 1: substantive economic explanation with the color of the zeitgeist, you know,

1003
00:57:17,480 --> 00:57:21,640
Speaker 1: the feeling of um, what that belly park was like

1004
00:57:21,720 --> 00:57:23,880
Speaker 1: in the nineteen twenties. You know, there's a there's a

1005
00:57:23,880 --> 00:57:29,280
Speaker 1: little vignette there. I think of some French socialite arriving

1006
00:57:29,440 --> 00:57:32,760
Speaker 1: furious with a French statesman and shooting him with a

1007
00:57:32,800 --> 00:57:37,880
Speaker 1: pistol that was disguised in her scarf wrapped around the gun.

1008
00:57:38,360 --> 00:57:43,720
Speaker 1: I mean, it's just amazing sort of evocative writing and

1009
00:57:43,800 --> 00:57:48,960
Speaker 1: the concept of telling the story of of the post

1010
00:57:48,960 --> 00:57:53,760
Speaker 1: war era through four central bankers. I just thought it

1011
00:57:53,800 --> 00:57:57,440
Speaker 1: was a brilliant conception and and so well executed. But

1012
00:57:57,560 --> 00:57:59,880
Speaker 1: before we leave books, any other any other books you

1013
00:58:00,040 --> 00:58:02,919
Speaker 1: want to reference anything, what are you reading right now?

1014
00:58:04,280 --> 00:58:06,640
Speaker 1: So I just got done with this David Harrowitz Silicon

1015
00:58:06,720 --> 00:58:08,919
Speaker 1: Valley book. I'm a bit of a Silicon Valley kick,

1016
00:58:08,960 --> 00:58:12,880
Speaker 1: and I'm going to read. You know, one of the

1017
00:58:12,920 --> 00:58:18,080
Speaker 1: famous venture capitalists is William Draper. He's written a memoir

1018
00:58:18,160 --> 00:58:21,480
Speaker 1: about his time in the valley. So I'm really trying

1019
00:58:21,480 --> 00:58:26,680
Speaker 1: to understand that very dynamic section of the American economy

1020
00:58:26,720 --> 00:58:29,040
Speaker 1: and and what was the road of financing that. Have

1021
00:58:29,200 --> 00:58:31,840
Speaker 1: you read The New New Thing Michael Lewis. Of course

1022
00:58:31,840 --> 00:58:33,800
Speaker 1: I've read The New New Thing. It's an amazing but

1023
00:58:33,960 --> 00:58:37,960
Speaker 1: Michael Lewis is the ultimate storyteller, and I have enormous

1024
00:58:37,960 --> 00:58:41,200
Speaker 1: respect for his craft. Um. Yeah, I really enjoyed that

1025
00:58:41,200 --> 00:58:43,840
Speaker 1: that book as well. UM. So we're down to our

1026
00:58:43,920 --> 00:58:47,200
Speaker 1: last two questions, and and let me put both of

1027
00:58:47,240 --> 00:58:50,360
Speaker 1: these to you. The first question is, so someone who

1028
00:58:50,400 --> 00:58:53,800
Speaker 1: just graduates college or a millennial comes to you and says,

1029
00:58:53,880 --> 00:58:57,120
Speaker 1: I'm thinking about becoming a writer or a journalist. What

1030
00:58:57,240 --> 00:58:59,880
Speaker 1: sort of a career advice might you give them? I

1031
00:59:00,040 --> 00:59:03,960
Speaker 1: would say, don't do it, um, and then I would

1032
00:59:03,960 --> 00:59:07,760
Speaker 1: be secretly pleased if they ignored my advice. So I

1033
00:59:07,760 --> 00:59:09,200
Speaker 1: think you have to if you're going to be a

1034
00:59:09,240 --> 00:59:12,800
Speaker 1: writer or a journalist, you have to really, really really

1035
00:59:12,800 --> 00:59:15,280
Speaker 1: want to do it, because it's not the most compensate,

1036
00:59:15,320 --> 00:59:20,880
Speaker 1: best compensated form of activity. Um. And you know, sometimes

1037
00:59:20,920 --> 00:59:23,160
Speaker 1: if you write a book, it's lonely, you're stuck there

1038
00:59:23,200 --> 00:59:26,080
Speaker 1: for a long period by yourself. You have to really

1039
00:59:26,120 --> 00:59:28,480
Speaker 1: like it, um. And you know, there are a lot

1040
00:59:28,520 --> 00:59:30,080
Speaker 1: of things you can do in life which are more,

1041
00:59:31,160 --> 00:59:34,320
Speaker 1: you know, better paid for that amount of Given a

1042
00:59:34,320 --> 00:59:37,240
Speaker 1: certain amount of education and skill, you can certainly make

1043
00:59:37,280 --> 00:59:39,040
Speaker 1: more money elsewhere, so you have to really want to

1044
00:59:39,080 --> 00:59:40,640
Speaker 1: do it. But if you do really want to do it,

1045
00:59:41,160 --> 00:59:43,840
Speaker 1: then I think it's a wonderful way to spend your

1046
00:59:43,880 --> 00:59:48,160
Speaker 1: life because you're out there understanding things, going off, speaking

1047
00:59:48,160 --> 00:59:52,280
Speaker 1: to people, making discoveries. And our final question, what is

1048
00:59:52,320 --> 00:59:55,880
Speaker 1: it that you know today about writing and journalism that

1049
00:59:56,000 --> 00:59:58,400
Speaker 1: you wish you knew twenty five years ago when you

1050
00:59:58,440 --> 01:00:01,680
Speaker 1: were first starting out. I think the main thing is

1051
01:00:01,720 --> 01:00:07,080
Speaker 1: that there's no substitute for discovering new stuff. That investigation

1052
01:00:08,240 --> 01:00:12,000
Speaker 1: really really matters, because if you're just taking what is

1053
01:00:12,040 --> 01:00:14,320
Speaker 1: generally known already and putting your own spin on it,

1054
01:00:15,080 --> 01:00:18,479
Speaker 1: then there's you know, a hundred other guys also doing

1055
01:00:18,480 --> 01:00:21,040
Speaker 1: that and it's not distinctive. You've got to go find

1056
01:00:21,200 --> 01:00:25,640
Speaker 1: I think I wish the profession as a whole had

1057
01:00:25,880 --> 01:00:30,640
Speaker 1: more resources to put into investigative reporting. Well, we're starting

1058
01:00:30,640 --> 01:00:33,919
Speaker 1: to see things like pro Publica and other forms of

1059
01:00:34,440 --> 01:00:40,560
Speaker 1: privately supported nonprofit um support for that, but at one

1060
01:00:40,560 --> 01:00:43,600
Speaker 1: point in time it was a thriving business that seems

1061
01:00:43,640 --> 01:00:47,640
Speaker 1: to be under assault by both the Internet and and

1062
01:00:47,960 --> 01:00:52,200
Speaker 1: alternative facts. Apparently it's too bad that you know, it's

1063
01:00:52,360 --> 01:00:56,200
Speaker 1: it's happening that way. I have UM in my Greenspan research,

1064
01:00:56,280 --> 01:00:59,720
Speaker 1: I had some young researchers who helped me and they

1065
01:00:59,720 --> 01:01:02,320
Speaker 1: went did the work in the archives. And you know,

1066
01:01:02,440 --> 01:01:05,720
Speaker 1: one of them, called John Hill, was such an amazing

1067
01:01:05,720 --> 01:01:09,200
Speaker 1: researcher that I thought he would immediately be snapped up

1068
01:01:09,240 --> 01:01:13,120
Speaker 1: by a news organization after he moved on, and he

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01:01:13,120 --> 01:01:15,400
Speaker 1: he did work at The Economist a bit. But he's

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01:01:15,400 --> 01:01:18,120
Speaker 1: telling me that finding a job as an investigative reporter,

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01:01:18,760 --> 01:01:21,720
Speaker 1: even though he is the best investigator I've ever met,

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01:01:22,440 --> 01:01:25,960
Speaker 1: is tough. Wow, that that's amazing. We thank you so

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01:01:26,040 --> 01:01:28,480
Speaker 1: much for being so generous with your your time. Sebastian.

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Speaker 1: We have been speaking with Sebastian Mallaby. He is the

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01:01:32,120 --> 01:01:35,000
Speaker 1: author of The Man Who Knew and More Money Than God.

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01:01:35,080 --> 01:01:40,320
Speaker 1: He is also UM a pole Vulcer scholar at the

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01:01:40,360 --> 01:01:44,200
Speaker 1: Council on Foreign Relations. If people want to find your work,

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01:01:44,280 --> 01:01:46,720
Speaker 1: I know they can access not just the books, but

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01:01:46,880 --> 01:01:50,520
Speaker 1: you you still contribute to the Washington Post and any

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01:01:50,520 --> 01:01:53,720
Speaker 1: place else they can find your writings. Well. There's always

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01:01:53,720 --> 01:01:56,440
Speaker 1: a good collection on the Counsel and Form Relations website

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01:01:56,480 --> 01:01:59,880
Speaker 1: CFL dot org. But you know, Google is normally the

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01:02:00,200 --> 01:02:03,320
Speaker 1: to these questions These days, Google is always the answer. UH.

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01:02:03,360 --> 01:02:06,200
Speaker 1: If you have enjoyed this conversation, be sure and looked

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01:02:06,280 --> 01:02:08,720
Speaker 1: up an inch or down an inch at any of

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01:02:08,760 --> 01:02:12,920
Speaker 1: the other hundred and twenty five or so such conversations

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01:02:13,560 --> 01:02:17,240
Speaker 1: we've had in the past. UM, I would be remiss

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01:02:17,560 --> 01:02:21,400
Speaker 1: if I did not thank my recording engineer, Medina. UH.

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01:02:21,480 --> 01:02:24,680
Speaker 1: Taylor Riggs is my booker, and Michael Batnick is our

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01:02:24,720 --> 01:02:29,600
Speaker 1: head of research. We love your feedback, comments and suggestions.

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01:02:30,000 --> 01:02:33,240
Speaker 1: Be sure to write to us at m IB podcast

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01:02:33,400 --> 01:02:37,560
Speaker 1: at Bloomberg dot net. I'm Barry Hults. You've been listening

1093
01:02:37,600 --> 01:02:42,040
Speaker 1: to Masters in Business on Bloomberg Radio. Masters in Business

1094
01:02:42,080 --> 01:02:45,480
Speaker 1: is brought to you by the American Arbitration Association. Business

1095
01:02:45,480 --> 01:02:49,919
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1096
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01:02:55,160 --> 01:02:57,800
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