WEBVTT - Former Goldman Sachs CEO Lloyd Blankfein on Why He Doesn't Tweet 0:00:02.720 --> 0:00:15.880 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.560 --> 0:00:21.400 Hey, there are odd lots listeners. This is Tracy Alloway 0:00:21.720 --> 0:00:22.120 and Joe. 0:00:22.120 --> 0:00:22.720 Why isn't thal? 0:00:22.840 --> 0:00:23.560 We are very. 0:00:23.440 --> 0:00:27.080 Pleased to bring you a live recording of the podcast 0:00:27.160 --> 0:00:31.920 that was part of Bloomberg invest that's our flagship investment 0:00:31.960 --> 0:00:35.000 conference over here at Bloomberg. And we truly had the 0:00:35.000 --> 0:00:38.080 perfect guest, someone I've wanted to interview for a very 0:00:38.159 --> 0:00:40.920 long time, never got the chance. It is, of course, 0:00:40.960 --> 0:00:45.320 the former CEO of Coleman Sachs Lloyd Blankfine. Take a listen, Joe, 0:00:45.320 --> 0:00:46.360 I have a confession to make. 0:00:46.680 --> 0:00:47.360 Yeah, go on. 0:00:47.760 --> 0:00:50.320 This is probably the most nervous I've ever been for 0:00:50.360 --> 0:00:51.240 an adlots episode. 0:00:51.240 --> 0:00:52.440 Are you for real? Yeah? 0:00:52.479 --> 0:00:55.160 And I'll tell you why, and actually the reason why 0:00:55.320 --> 0:00:58.040 you'll know because you want to do the first time 0:00:58.120 --> 0:01:00.720 Joe and I ever met Lloyd blank Fine in person 0:01:01.040 --> 0:01:03.480 was at a sort of media round table, and for 0:01:03.520 --> 0:01:05.880 some reason I felt it incumbent upon myself to tell 0:01:05.920 --> 0:01:06.240 a joke. 0:01:06.319 --> 0:01:08.720 We were late too, Oh, I was you came in late? 0:01:08.760 --> 0:01:10.800 All right? I forgot that part. I like that I 0:01:10.880 --> 0:01:13.960 told a joke to try to, you know, make it up. 0:01:14.040 --> 0:01:17.240 I guess probably the joke was at Goldman's expense, at 0:01:17.280 --> 0:01:20.679 which point Lloyd leaned forward on the table and he said, 0:01:21.400 --> 0:01:22.840 let me tell you how I would have made that 0:01:22.959 --> 0:01:27.000 joke funny. And the worst part was he then made 0:01:27.000 --> 0:01:29.400 a very very good joke that was a lot funnier 0:01:29.440 --> 0:01:30.280 than what I had just said. 0:01:30.280 --> 0:01:32.800 I think I said, you're supposed to you should put 0:01:32.800 --> 0:01:34.640 the punchline at the end, not at the beginning. 0:01:34.760 --> 0:01:36.560 That's right, We can we actually talk about what the 0:01:36.640 --> 0:01:39.200 joke was, the context of the joke, because I remember 0:01:39.240 --> 0:01:39.600 it well. 0:01:39.840 --> 0:01:40.120 Go on. 0:01:40.640 --> 0:01:43.600 So the whole reason that the media roundtable happened was 0:01:43.640 --> 0:01:46.160 that apparently Lloyd was supposed to be in China for 0:01:46.200 --> 0:01:50.000 some reason, and something happened like someone from the UK 0:01:50.200 --> 0:01:53.160 was there and Lloyd's schedule got changed, and so they 0:01:53.480 --> 0:01:55.360 at the last second they're like, oh, maybe some reporters 0:01:55.400 --> 0:01:58.000 will bring in and that The joke that Tracy made 0:01:59.360 --> 0:02:01.480 was something about having to be like, oh, were you 0:02:01.560 --> 0:02:05.680 going to go there to recruit princelings for Goldman's Sex, 0:02:05.720 --> 0:02:08.240 which at the time was you know, one of those scandals. 0:02:08.360 --> 0:02:10.800 I swear it was better than that, but that was the. 0:02:10.680 --> 0:02:13.280 Theme of the joke. It was a Goldman's expense. 0:02:13.280 --> 0:02:14.919 All right, So we all learned our lesson, which is 0:02:14.960 --> 0:02:17.120 don't try to be funnier than Lloyd because he'll beat 0:02:17.120 --> 0:02:19.560 you at it every time. But Lloyd, congratulations on the book. 0:02:19.680 --> 0:02:20.280 Well, thank you. 0:02:20.680 --> 0:02:22.560 Very exciting to be speaking with you. One thing I 0:02:22.639 --> 0:02:24.880 learned from the book is that you're spending your time 0:02:25.320 --> 0:02:27.800 trading now. And when I read that, I sort of 0:02:27.840 --> 0:02:30.720 had a vision of you on your phone on Robin 0:02:30.760 --> 0:02:33.919 Hood trading like zero day options or something like that. 0:02:34.240 --> 0:02:36.799 What are you actually trading and where. 0:02:36.960 --> 0:02:38.760 Well, I'm sort of committed to Goldman, I would be 0:02:38.760 --> 0:02:43.120 on Robin History now. To me, that's one of the 0:02:43.120 --> 0:02:47.200 occupational hazards of my prior life is that I watch 0:02:47.280 --> 0:02:49.440 markets all the time. I watch markets at night while 0:02:49.480 --> 0:02:51.400 I'm asleep, and so I know the price of everything 0:02:51.440 --> 0:02:54.720 all the time, and I trade. But it's not like 0:02:55.080 --> 0:02:57.920 when you say I'm spending you spend your time trading, No, 0:02:58.000 --> 0:03:01.560 it's just background noise. I'm having a conversation in my 0:03:01.639 --> 0:03:04.600 life with people like you know, hanging around with Sometimes 0:03:04.600 --> 0:03:07.640 in business it is not continued to be rude that 0:03:07.680 --> 0:03:10.120 if you're talking to somebody, you're not looking at them 0:03:10.120 --> 0:03:12.320 but looking at a screen or a phone or something 0:03:12.400 --> 0:03:14.679 like that. That's that's kind of okay. So it's like 0:03:15.000 --> 0:03:18.840 work Joe, so trade doing that. When somebody says what 0:03:18.880 --> 0:03:22.360 percentage of your time? Your time, it's like listening to music. 0:03:22.480 --> 0:03:24.440 You can listen to music while you're doing something else, 0:03:24.480 --> 0:03:26.400 so it adds up to more than one hundred percent. 0:03:26.720 --> 0:03:29.800 What are you I'm not we're not here for stock recommendations, 0:03:29.840 --> 0:03:33.440 but like what's interesting in markets and such that you 0:03:33.520 --> 0:03:36.840 feel compelled to click buttons and try to anticipate move Well. 0:03:36.880 --> 0:03:38.760 I was always kind of a mac I mean, came 0:03:38.840 --> 0:03:41.600 up through what we call them, you know, the macro markets, 0:03:41.720 --> 0:03:45.600 large things, interest rates, you know, government policy, fiscal you know, 0:03:45.760 --> 0:03:49.280 the sort of stuff that kind of moves all assets together. 0:03:49.320 --> 0:03:52.520 Although there's all these differences. So that's my background. But 0:03:53.080 --> 0:03:56.840 the themes, I mean, everybody now is in the is 0:03:56.880 --> 0:03:58.720 in tech because if you weren't in tech, you'd be 0:03:58.760 --> 0:04:01.480 bankrupt because you'd be wrong for all this time. So 0:04:01.520 --> 0:04:05.440 everybody is given how the markets have moved sort of 0:04:05.480 --> 0:04:08.360 consistently for a very long time. I could tell you 0:04:08.440 --> 0:04:10.760 what everybody is kind of in, and of course I 0:04:10.760 --> 0:04:12.520 could tell you who's getting hurt at any given part 0:04:12.560 --> 0:04:14.960 when it gets upset for a day. But I'm in 0:04:15.960 --> 0:04:19.040 probably things that wouldn't surprise you. But maybe the biggest 0:04:19.040 --> 0:04:21.280 surprise is that I'm all in, you know, so like 0:04:21.320 --> 0:04:25.120 I'm always one hundred percent in equities, now risk assets, 0:04:24.920 --> 0:04:28.719 that's what you say, risk risky assets. 0:04:29.120 --> 0:04:31.640 Well, so after you retired from Goldman, some people were 0:04:31.680 --> 0:04:34.840 surprised that you didn't choose to go into politics, like 0:04:34.960 --> 0:04:37.640 some of your peers. Yeah, well, explain that, like why 0:04:37.640 --> 0:04:41.400 did you you took a proper break when you left Goldman. 0:04:41.800 --> 0:04:43.640 Yeah, well, let me tell you. If somebody gave me 0:04:43.680 --> 0:04:47.120 something overwhelmingly interesting and fun, I might have done it. 0:04:47.160 --> 0:04:50.560 Five of my last six predecessors either went into the cabinet, 0:04:51.000 --> 0:04:53.360 except for John Corzon, who became Senate of New Jersey. 0:04:53.400 --> 0:04:56.120 But you know, you know, Bob Rubin and Hang Pauls 0:04:56.120 --> 0:04:59.520 and Treasury secretaries and whatnot. I came out in the 0:05:00.400 --> 0:05:02.719 I stopped in twenty eight and end of two thousand, 0:05:02.720 --> 0:05:06.240 so the second half of Trump one, the beginning of 0:05:06.279 --> 0:05:09.160 Trump one, you know, the economic team was Gary Khane 0:05:09.200 --> 0:05:11.279 and Steven Nutch and all ex Goldman. So I think 0:05:11.320 --> 0:05:13.600 we had had enough of that, and I certainly didn't 0:05:13.600 --> 0:05:15.280 want I didn't want to like add myself to the 0:05:15.360 --> 0:05:18.440 list at that point, and so kind of drifted on. 0:05:18.560 --> 0:05:20.279 Then I drifted through COVID, and I say, you know, 0:05:20.360 --> 0:05:23.480 I kind of like this, you know, not sending an alarm 0:05:23.440 --> 0:05:26.440 clock in the morning and Saturday afternoon, having lunch with people, 0:05:26.560 --> 0:05:28.159 and not having to go to the airport on a 0:05:28.160 --> 0:05:30.800 Saturday afternoon so I could get to Beijing first thing 0:05:30.839 --> 0:05:34.960 Monday morning. And so it's easy to get used to sloth. 0:05:35.680 --> 0:05:39.120 So here's the thing I get not taking some big 0:05:39.200 --> 0:05:42.880 job after retirement, Like I totally get that. I get 0:05:43.279 --> 0:05:47.640 wanting to trade and that sounds like stimulating and intellectually, 0:05:48.160 --> 0:05:50.200 you know, interesting and fun and so forth. 0:05:50.440 --> 0:05:52.800 Here's what I don't get. Why don't you tweet more? 0:05:52.920 --> 0:05:55.440 And the reason I asked that is like, because like 0:05:55.480 --> 0:05:59.240 I'm addicted to posting, and a lot of people in 0:05:59.279 --> 0:06:02.800 your shoes or at your level, you fuel this impulse 0:06:02.839 --> 0:06:04.520 to like always weigh in on everything, and. 0:06:04.520 --> 0:06:07.120 Twitter is a graduate to I know, but number that much. 0:06:07.160 --> 0:06:08.200 And what I want to know is like. 0:06:08.160 --> 0:06:11.159 No, I was I was fighting with people. I was 0:06:11.160 --> 0:06:12.960 fighting with people that had subpoena power. 0:06:13.080 --> 0:06:15.760 Okay, so how resist the temptation to keep doing it 0:06:15.800 --> 0:06:17.640 because I would like to know how to post less. 0:06:17.920 --> 0:06:20.320 So how do you resist the urge to chime in 0:06:20.360 --> 0:06:20.800 on everything. 0:06:20.839 --> 0:06:23.640 I was in the risk management business, and so the 0:06:23.760 --> 0:06:27.320 risk reward a certain things. So, for example, retired. When 0:06:27.360 --> 0:06:30.040 things are going badly, you can't leave my job. And 0:06:30.040 --> 0:06:31.880 by the way, we had the Crisis of the century 0:06:31.920 --> 0:06:34.520 every four years, and most of the time that accused 0:06:34.600 --> 0:06:37.679 us of and probably you accused us of causing it falsely. 0:06:37.720 --> 0:06:39.040 Of course I did write a few those. 0:06:39.120 --> 0:06:42.719 Yes, I'm sure I pretend to have forgotten that. But 0:06:43.360 --> 0:06:45.839 when things are going well, you know, when things going badly, 0:06:45.880 --> 0:06:47.640 you can't leave. When things are going well, you don't 0:06:47.640 --> 0:06:50.640 want to leave, which is why in my line of work, 0:06:52.080 --> 0:06:56.279 everybody leaves in distress. You get fire, something comes over, 0:06:56.320 --> 0:06:58.159 the world blows up, you don't do well, you have 0:06:58.279 --> 0:07:02.240 you lose. Something happened, and I didn't do that. I 0:07:02.320 --> 0:07:06.560 left on my own steam, and I quit tweeting. I 0:07:06.600 --> 0:07:10.400 still tweet very occasionally, but I mostly quit tweeting before 0:07:10.440 --> 0:07:13.480 I got canceled, which is very unreal impressive because most 0:07:13.480 --> 0:07:17.000 people quit after they most people most people get quit, 0:07:17.040 --> 0:07:17.960 they don't quit on their own. 0:07:18.000 --> 0:07:21.280 And you chalk that up to your natural risk management 0:07:22.160 --> 0:07:26.240 knowledge and intuitions. You're like, you know what, I'm just 0:07:26.240 --> 0:07:28.040 gonna I'm not gonna do it until the end when 0:07:28.040 --> 0:07:28.920 you're not going to. 0:07:28.960 --> 0:07:31.640 Go In general, chalk it up to my normal anxiety 0:07:32.200 --> 0:07:35.280 and my not wanting to, you know, get killed. So 0:07:35.840 --> 0:07:39.520 cowardice you might call, you know, just sensible. Well, it's sensibile, sense, sensibility, 0:07:39.960 --> 0:07:43.720 but really most of that stuff. And you know, because 0:07:43.760 --> 0:07:45.320 I was doing things on the line, I would fight 0:07:45.360 --> 0:07:48.360 with you know, Lizabeth Warren, and you know, largely because 0:07:48.360 --> 0:07:51.480 they would say something. Mostly I was responding, and I 0:07:51.560 --> 0:07:54.480 kind of liked it. And the problem is you get 0:07:54.480 --> 0:07:56.680 a good reaction something, you know, good reaction, and then 0:07:56.720 --> 0:07:59.280 you start to feel clever, and when you start to 0:07:59.280 --> 0:08:01.360 feel clever, that's when you're going to get killed because 0:08:01.400 --> 0:08:04.920 then you think, gee, this is irresistible. And then somebody 0:08:04.960 --> 0:08:07.240 might say, well, they're not going to like that. And 0:08:07.240 --> 0:08:10.080 I said, how can I resist? It's so clever? And 0:08:10.120 --> 0:08:13.880 so guess what, I found it resistible? So I stopped impresent. 0:08:14.120 --> 0:08:16.920 Yeah, it just takes one bad tweet. So when I 0:08:17.000 --> 0:08:19.560 think about your career, and you know, I've read the 0:08:19.600 --> 0:08:22.160 whole book, so I know your career trajectory fairly well. 0:08:22.200 --> 0:08:24.120 At this point. I kind of think of it as 0:08:24.160 --> 0:08:28.120 synonymous with globalization, and you know, you wrote the sort 0:08:28.120 --> 0:08:31.560 of wave of international expansion, and then you retired in 0:08:31.640 --> 0:08:34.880 twenty eighteen, and it turned out twenty eighteen twenty twenty 0:08:35.000 --> 0:08:38.520 was sort of the end of that globalization era. 0:08:38.800 --> 0:08:40.360 Yeah, the world is a little less flat. 0:08:40.559 --> 0:08:42.960 Yeah, when you look back on that time, do you 0:08:43.000 --> 0:08:47.640 think that was a blip? Was that an unusual circumstance 0:08:47.720 --> 0:08:48.920 that's never going to be repeated? 0:08:49.000 --> 0:08:52.880 When I start, you know, when sentiment changes, it changes 0:08:52.920 --> 0:08:54.679 your memory of what you used to think. It's kind 0:08:54.679 --> 0:08:57.280 of a weird thing. So nobody can remember being friends 0:08:57.320 --> 0:09:00.160 with Russia now, but we were when I started. Did 0:09:00.960 --> 0:09:02.840 you couldn't think of going to Russia? I remember I 0:09:02.880 --> 0:09:05.280 once my early trips. I was in the commodities business. Also, 0:09:05.280 --> 0:09:07.160 I started in the commodities business. I used to go 0:09:07.200 --> 0:09:09.600 to Russia in the early eighties literally like nineteen eighty 0:09:09.600 --> 0:09:12.160 two and nineteen eighty three, middle of the Cold War. 0:09:12.320 --> 0:09:13.920 And I remember when the plane would take off and 0:09:13.920 --> 0:09:16.280 you wouldn't go directly go to switch you know, going 0:09:16.280 --> 0:09:19.160 the end, people start applauding the plane lifted off. You 0:09:19.200 --> 0:09:22.760 couldn't imagine Russia being normal, like a place to do business. 0:09:23.120 --> 0:09:24.920 Then in the go go years after the fall of 0:09:25.000 --> 0:09:27.200 the Iron Curtain, you'd go there and it was like 0:09:27.240 --> 0:09:31.680 the what it was capitalism on steroids, and you thought 0:09:31.679 --> 0:09:34.480 that that was going to endure, and now you know 0:09:34.520 --> 0:09:36.960 it reversed again. Same thing with China, when you know, 0:09:37.000 --> 0:09:40.079 we invested a lot of time. I personally invested a 0:09:40.120 --> 0:09:41.440 lot of time and effort, and in a your brother, 0:09:41.440 --> 0:09:43.320 we still have a big business in China, but it's 0:09:43.360 --> 0:09:45.320 you know, as imagine I've strained now it's very hard 0:09:45.320 --> 0:09:47.480 to do business. We had a lot of joint ventures 0:09:47.480 --> 0:09:50.000 that can't be done because it's a Chinese you know, 0:09:50.679 --> 0:09:53.600 too much of a Chinese association for it. But when 0:09:53.600 --> 0:09:56.920 I started, you couldn't have gone. Then for a long 0:09:56.920 --> 0:10:00.040 time you thought we were growing into each other, and 0:10:00.040 --> 0:10:01.880 then you know, now we hit a speed up. The 0:10:01.960 --> 0:10:04.560 point is there are cycles to everything. It's not a 0:10:04.640 --> 0:10:06.679 question of something being blipped. Everything is a blip and 0:10:06.720 --> 0:10:09.280 everything gets a little bit undone. I think I would 0:10:09.280 --> 0:10:12.400 have said, and I still believe. I think the tendency 0:10:13.200 --> 0:10:16.080 is for things to improve, to get better. You know 0:10:16.120 --> 0:10:19.720 what happened what you know, globalization. It's not just the 0:10:19.840 --> 0:10:22.320 rivalries or the polarization of the East and the West. 0:10:23.200 --> 0:10:27.679 The global financial crisis contributed to that because what happened was, 0:10:27.880 --> 0:10:30.080 you know, there was the central banks of the world 0:10:30.120 --> 0:10:32.560 and the governments of the world were coordinating their policies. 0:10:33.160 --> 0:10:35.800 And then when it hit the fan. In a digital 0:10:35.840 --> 0:10:40.920 world where nothing really moves except electrons and digital notations, 0:10:41.400 --> 0:10:46.319 it suddenly became important to each government where an institution's 0:10:46.400 --> 0:10:49.560 assets were. If the assets were in the United The 0:10:49.679 --> 0:10:53.400 US Central Bank, the FED was lending money, for example, 0:10:53.480 --> 0:10:57.960 to the US affiliate of Deutsche Bank, and they were 0:10:58.040 --> 0:11:02.400 lending to Deutsche Bank multiples of the assets that Deutsche 0:11:02.400 --> 0:11:04.880 Bank had subject to the US because most of their 0:11:04.920 --> 0:11:07.280 assets were Germany. All of a sudden, people realize that, 0:11:07.679 --> 0:11:11.120 and it became very nineteenth century. It became where are 0:11:11.160 --> 0:11:13.760 the assets like physically, as if they were really physical 0:11:13.760 --> 0:11:16.720 assets as opposed to but assets have a location. And 0:11:16.760 --> 0:11:19.840 they discovered that similarly, I mean you can go case 0:11:19.880 --> 0:11:23.160 by data point by data point COVID. It made a 0:11:23.200 --> 0:11:27.160 real difference who where they were manufacturing the vaccines for 0:11:27.240 --> 0:11:30.000 who got them first or the PPE and all this 0:11:30.080 --> 0:11:34.360 other stuff, and so now of course that's been you know, 0:11:34.520 --> 0:11:37.320 emphasized now because now it's you know, America first, and 0:11:37.320 --> 0:11:39.160 I'm sure, you know, I don't speak German, but i'm 0:11:39.160 --> 0:11:41.280 sure in Germany it's Germany first, and it's like that. 0:11:41.559 --> 0:11:44.200 But that also will evolve, and that's that cycle will 0:11:44.200 --> 0:11:48.600 go again, because you know, does the world It turns 0:11:48.600 --> 0:11:51.640 out when when we started to globalize, you say, does 0:11:51.720 --> 0:11:56.280 Europe need fourteen battery makers? Shouldn't they just have three 0:11:56.360 --> 0:11:58.520 for the whole thing? And then it became very important 0:11:59.040 --> 0:12:00.959 that you had a battery make if it's strategic in 0:12:00.960 --> 0:12:03.400 your own country, and supply chains another things that make 0:12:03.480 --> 0:12:04.800 people less global. 0:12:20.960 --> 0:12:24.360 When you think about that time, the FED opening up 0:12:24.400 --> 0:12:27.840 swap lines with central banks all around the world, banks 0:12:27.880 --> 0:12:32.000 getting support even if they're not necessarily primarily domiciled in 0:12:32.040 --> 0:12:34.240 the US, do you think that that would even be 0:12:34.360 --> 0:12:37.480 possible today in the current media environment because it was 0:12:37.520 --> 0:12:40.319 controversial then what was going on. 0:12:40.440 --> 0:12:42.400 First of all, you have to do what you have 0:12:42.480 --> 0:12:45.480 to do, So would you think it would be possible 0:12:45.520 --> 0:12:49.960 to an America first presidency where we're not going to 0:12:49.960 --> 0:12:52.320 go into wars? Is this possible? But of course, you know, 0:12:52.400 --> 0:12:54.440 he felt you know, obviously he felt there was some 0:12:54.480 --> 0:12:56.959 compulsion to do it. People disagree, but that's certainly how 0:12:56.960 --> 0:12:59.240 he's representing it. So you do what you have to do. 0:12:59.280 --> 0:13:02.120 If we had a cry is like that, you would 0:13:02.240 --> 0:13:07.199 have to sort out the banking system. Now you can 0:13:07.440 --> 0:13:10.120 want to bring them up and trial and kill them. 0:13:10.360 --> 0:13:12.600 You do whatever you want to do it. But at 0:13:12.600 --> 0:13:16.240 the end of the day, governments don't lend money to people, 0:13:16.480 --> 0:13:19.640 and central banks don't lend money to people. The transmission 0:13:20.160 --> 0:13:24.640 for economic policy and for monetary policy and getting money 0:13:24.640 --> 0:13:27.719 out into the public is the banking system. And if 0:13:27.720 --> 0:13:32.880 the banks are distressed, if you gave them money, they 0:13:32.960 --> 0:13:35.280 husband that money to increase their reserves so they could 0:13:35.280 --> 0:13:37.199 be solvent. And in fact they have to do that, 0:13:37.360 --> 0:13:40.920 the regulation requires that they do that. And so it's 0:13:41.040 --> 0:13:44.199 very very hard to get money and resources and get 0:13:44.240 --> 0:13:47.000 people going and provide that stimulus to the general public 0:13:47.360 --> 0:13:51.360 with a distressed banking system, which is why the big 0:13:51.400 --> 0:13:54.040 recession was a big recession because it was very hard 0:13:54.040 --> 0:13:58.079 to get over. Today, if we had bad employment, if 0:13:58.120 --> 0:14:01.040 growth went down, and we weren't particular worried about inflation, 0:14:01.640 --> 0:14:04.040 it'd be no problem to stimulate the economy, you take 0:14:04.120 --> 0:14:06.880 rates down, fiscal spending, the banks are in good shape. 0:14:07.120 --> 0:14:09.040 If the banks are in bad shape, that's very hard 0:14:09.080 --> 0:14:09.320 to do. 0:14:09.760 --> 0:14:13.360 I mean, since we're talking sort of hypothetical crisis scenarios, 0:14:13.480 --> 0:14:15.680 one of the things we sometimes hear from people is 0:14:15.720 --> 0:14:19.440 because the US government is very polarized at the moment, 0:14:19.560 --> 0:14:23.160 maybe some people would say feels a little bit disorganized 0:14:23.320 --> 0:14:26.320 at times. If we had a financial crisis, the response 0:14:26.360 --> 0:14:30.440 would be a lot less direct or a lot less 0:14:30.520 --> 0:14:32.960 swift than what we saw in two thousand and eight 0:14:32.960 --> 0:14:36.080 when we had ex Golmannites like Hank Paulson at the 0:14:36.080 --> 0:14:39.800 Helm or Guythner for that matter. What's your sense of 0:14:39.800 --> 0:14:43.440 how the current administration would react to something like that. 0:14:43.720 --> 0:14:46.680 I've said this, and you know, you don't know, nobody 0:14:46.680 --> 0:14:50.720 knows anything, But my guess is they would be flee 0:14:50.800 --> 0:14:52.160 to footing. They would do because you have to do 0:14:52.200 --> 0:14:55.080 what you have to do. They would hate, Look, they 0:14:55.080 --> 0:14:58.800 would hate if that had to happen hypothetically, they would 0:14:58.840 --> 0:15:01.360 hate it. They hated it in two thousand and eight, 0:15:01.560 --> 0:15:05.240 really hated it, really really fifteen more relies hated it. 0:15:05.800 --> 0:15:09.560 But we would look, you know, staring at not so 0:15:09.600 --> 0:15:11.440 much staring at the abyss like it would have gone. 0:15:11.760 --> 0:15:16.400 But my guess, and everyone's always asking it, I think 0:15:16.440 --> 0:15:20.360 there was like like a fifteen seventy fifteen to twenty 0:15:20.520 --> 0:15:23.040 percent chance that it could have really have gone off 0:15:23.080 --> 0:15:25.320 the rails and that we really would have had a 0:15:25.360 --> 0:15:28.120 crisis that would have taken a very long time, because 0:15:28.200 --> 0:15:31.560 what happens is in a kind of crisis where there's credit, 0:15:31.600 --> 0:15:34.560 a credit crisis, which is what it was, a credit crisis. 0:15:35.560 --> 0:15:37.920 We owe each other money. There's a daisy chain of money. 0:15:38.040 --> 0:15:39.920 You bought something from him, he bought it from me, 0:15:40.560 --> 0:15:43.080 and that goes around in a credit where you don't 0:15:43.120 --> 0:15:46.160 know the sovereignty of your counterpart. You're not going to 0:15:46.200 --> 0:15:49.720 pay me until I pay you, so you're waiting. But 0:15:49.840 --> 0:15:52.680 I can't pay him unless I get my money from you. 0:15:53.240 --> 0:15:56.160 So I'm stuck and he's stuck, and he's stuck and 0:15:56.200 --> 0:15:59.400 he's stuck. So the system is frozen. You need somebody 0:15:59.400 --> 0:16:01.840 with a big back sheet, and it's usually a government 0:16:02.080 --> 0:16:04.880 to say we will for this short term cover it, 0:16:04.960 --> 0:16:07.120 so all of you will get paid. Now go in. 0:16:07.160 --> 0:16:09.000 Generally you don't have to use the money. The money 0:16:09.000 --> 0:16:12.760 comes back because it's just insecurity that drives that, and 0:16:12.800 --> 0:16:16.000 I think the government would have to do that. They'd 0:16:16.040 --> 0:16:18.760 hate it, but would have to do that. And by 0:16:18.760 --> 0:16:21.720 the way, is that going to happen again? You know? Fortunately, 0:16:21.720 --> 0:16:24.280 you know it was a once in eighty year storm. 0:16:24.480 --> 0:16:26.760 But you know, I don't think I'm going to see 0:16:26.800 --> 0:16:30.840 the next one. But you know these things, You know, 0:16:30.920 --> 0:16:32.920 when you get through a crisis like that, everyone says, 0:16:33.080 --> 0:16:35.760 let's ensure we never have another crisis again. And you 0:16:35.800 --> 0:16:37.840 know how you can do that. You can turn yourself 0:16:37.840 --> 0:16:39.720 into a treasury bill. You can turn you and even 0:16:39.720 --> 0:16:41.800 a treasure bill has risk because you're taking a risk 0:16:41.800 --> 0:16:44.160 with the value that the value of the dollar doesn't 0:16:44.160 --> 0:16:47.320 get inflated away and retains its purchasing power. If you 0:16:48.000 --> 0:16:51.720 take zero out risk, you will have zero progress and 0:16:51.800 --> 0:16:55.480 zero growth. And so what happens is and again it's 0:16:55.520 --> 0:16:59.280 a cycle to things. You come out of that and 0:16:59.320 --> 0:17:03.000 you say never never, never never. You implement very very 0:17:03.360 --> 0:17:08.399 tough protocols and regulations and things, and over time you 0:17:08.440 --> 0:17:11.160 start to think, you know, it'll be a lot growth here, 0:17:11.320 --> 0:17:13.800 if there was more here's a good word, it'd be 0:17:13.840 --> 0:17:16.320 a lot growth here. It wouldn't be great if banks 0:17:16.320 --> 0:17:18.680 did mortgages again, it wouldn't it be great if you 0:17:18.720 --> 0:17:20.439 didn't have to put down thirty percent to get them 0:17:20.440 --> 0:17:23.000 mary and blah blah blah. And it relaxes that time, 0:17:23.280 --> 0:17:27.320 memories start to dim and it gets to a point 0:17:27.320 --> 0:17:29.240 and maybe it gets past the point where it should 0:17:29.240 --> 0:17:31.479 and the cycle resumes, And you say, how could that 0:17:31.560 --> 0:17:34.280 have happened again so soon? It's only been eighty. 0:17:34.160 --> 0:17:36.800 Years, so one area. 0:17:36.800 --> 0:17:38.600 And you've commented on this a little bit in your 0:17:38.800 --> 0:17:42.600 little media tour over the last several days weeks. But 0:17:42.720 --> 0:17:46.120 you know, we've had a lot of stress in private assets, 0:17:46.240 --> 0:17:49.840 private credit in particular, some of the big companies having 0:17:49.960 --> 0:17:52.879 issue all kinds of issues. It's one thing for it 0:17:52.920 --> 0:17:55.680 to be bad, and maybe it's one thing for people 0:17:55.680 --> 0:17:58.239 to lose money. Is there anything about the structure though, 0:17:58.280 --> 0:18:00.720 that could get systemic where it be come to something 0:18:00.840 --> 0:18:04.360 beyond just investors lost money because they may better? 0:18:04.400 --> 0:18:07.800 I think, you know, talking about credit, I think the 0:18:07.920 --> 0:18:11.760 general issue is ill liquid liquid stuff. It could be 0:18:11.800 --> 0:18:15.200 private equity and you know, like everything, like everything else 0:18:15.200 --> 0:18:18.040 that balloons into a crisis. Of course, I don't think 0:18:18.040 --> 0:18:19.879 it's going to be systemic. No one does. No one 0:18:19.960 --> 0:18:22.280 thought because if everyone thought it would be systemic. You know, 0:18:22.359 --> 0:18:24.160 you'd have fixed it or we would have done something 0:18:24.200 --> 0:18:26.440 about it before it got to that point. You're always surprised. 0:18:26.480 --> 0:18:28.600 Even the people who you think are in the inside 0:18:28.640 --> 0:18:32.560 who should know better, they're also surprised too. I don't know, 0:18:32.640 --> 0:18:37.239 you know, the private credit and other private assets. I 0:18:37.280 --> 0:18:41.160 think they're generally, of course, by by definition they don't 0:18:41.240 --> 0:18:46.000 trade publicly, so they're less liquid and probably maybe sometimes illiquid, 0:18:46.480 --> 0:18:49.480 and consequently very hard to price. So when you have 0:18:49.760 --> 0:18:51.480 your asset and you look at your account and you 0:18:51.520 --> 0:18:53.760 own this and you get a mark to market, is 0:18:53.800 --> 0:18:56.080 it reliable? Is it where you can sell it? There 0:18:56.080 --> 0:18:58.720 are a lot of private assets on people's balance yet 0:18:58.760 --> 0:19:01.159 that take private equity. We've just gone through a period 0:19:01.200 --> 0:19:05.840 of time where we've had record equity prices in a 0:19:05.880 --> 0:19:08.760 world that's a wash with liquidity, the best financing market, 0:19:09.000 --> 0:19:11.359 and they're still in an accumulation of assets on the balance 0:19:11.400 --> 0:19:15.000 sheet of companies that are in the business of selling 0:19:15.040 --> 0:19:17.560 the assets they invest in. Yet it hasn't happened, so 0:19:17.720 --> 0:19:21.280 maybe they're not marked for sale really to be done, 0:19:21.320 --> 0:19:23.920 So that could be an issue. In general, I'd say 0:19:23.960 --> 0:19:27.919 one of the things now there's nothing wrong with private credit, 0:19:27.960 --> 0:19:30.800 private asset, private equity, as long as the returns, the 0:19:30.800 --> 0:19:34.720 expected returns, compensate you for the ill liquidity, and the 0:19:34.760 --> 0:19:38.560 people you're communicating to understand the illiquidity and the consequence 0:19:38.600 --> 0:19:41.480 of the illiquity to them, that has to be made clear. 0:19:41.560 --> 0:19:44.520 I'm not always sure that it is, and certainly if 0:19:44.600 --> 0:19:47.320 it goes wrong, no one will remember having been told that, 0:19:47.800 --> 0:19:51.080 so I would say, and taking account of that, I 0:19:51.080 --> 0:19:54.960 would say, a particular private asset, whether it's credit or 0:19:55.040 --> 0:19:58.040 private equity, is no different in your hand, in an 0:19:58.080 --> 0:20:03.399 individual's hands, or an institution hand, but the consequence of 0:20:03.480 --> 0:20:07.680