1 00:00:15,316 --> 00:00:27,516 Speaker 1: Pushkin. I'm Lyddy Egeen Coott and I'm Michael Lewis, and. 2 00:00:27,436 --> 00:00:30,756 Speaker 2: This is our Picture It companion series on Against the Rules. Michael, 3 00:00:30,836 --> 00:00:32,316 Speaker 2: the other day you were telling me, when you were 4 00:00:32,316 --> 00:00:36,036 Speaker 2: talking about this episode, how you were thinking about your 5 00:00:36,476 --> 00:00:39,636 Speaker 2: days in college when you studied art history. Tell me 6 00:00:39,676 --> 00:00:41,196 Speaker 2: about that. Why are you thinking about that? 7 00:00:41,556 --> 00:00:43,876 Speaker 1: One of the things that happens when you're studying our 8 00:00:43,956 --> 00:00:46,876 Speaker 1: history is professors as just a teaching tool. Often they'll 9 00:00:46,876 --> 00:00:50,156 Speaker 1: just throw up two pictures side by side and ask 10 00:00:50,236 --> 00:00:53,636 Speaker 1: you to compare and contrast, and you just look at 11 00:00:53,676 --> 00:00:56,916 Speaker 1: a Rembrandt painting differently if it's next to a Rubens, 12 00:00:57,316 --> 00:00:59,956 Speaker 1: and you start thinking about what are the differences, Like, 13 00:01:00,156 --> 00:01:02,716 Speaker 1: what are the similarities? What are the differences. It's a 14 00:01:02,756 --> 00:01:06,516 Speaker 1: tool for forcing your mind to move, and as a 15 00:01:06,556 --> 00:01:10,356 Speaker 1: tool for forcing our mind to move. About the two 16 00:01:10,396 --> 00:01:13,156 Speaker 1: thousand and eight financial crisis, I can't really think of 17 00:01:13,196 --> 00:01:18,196 Speaker 1: a better event than the nineteen twenty nine crash and 18 00:01:18,596 --> 00:01:22,156 Speaker 1: the slow rolling depression that occurred after it. And it 19 00:01:22,356 --> 00:01:26,716 Speaker 1: just so happens that a really great financial writer, Andrew 20 00:01:26,796 --> 00:01:30,116 Speaker 1: Ross Sorkin, who wrote a really good book about the 21 00:01:30,116 --> 00:01:32,476 Speaker 1: two thousand and eight financial crisis called Too Big to 22 00:01:32,556 --> 00:01:36,556 Speaker 1: Fail has written a history of the nineteen twenty nine 23 00:01:36,596 --> 00:01:39,996 Speaker 1: crash and the subsequent depression, and I just thought, that's 24 00:01:39,996 --> 00:01:42,356 Speaker 1: holl I'm on and put the paintings next to each 25 00:01:42,396 --> 00:01:45,356 Speaker 1: other and just talk about what happened then and how 26 00:01:45,356 --> 00:01:48,396 Speaker 1: it rhymes or doesn't rhyme with what happened in two 27 00:01:48,396 --> 00:01:48,916 Speaker 1: thousand and. 28 00:01:48,876 --> 00:01:52,796 Speaker 2: Eight, right, and we should say that. Andrew Rossworkin also 29 00:01:52,916 --> 00:01:55,676 Speaker 2: has a column for The New York Times, a financial column, 30 00:01:55,836 --> 00:01:58,796 Speaker 2: and he's the co host of The Squalockbox on CNBC. 31 00:01:59,076 --> 00:02:01,876 Speaker 1: He's had basically he has basically four careers going at once. 32 00:02:01,956 --> 00:02:03,636 Speaker 1: I don't know how he does it. I really don't 33 00:02:03,676 --> 00:02:06,676 Speaker 1: know how he does it. But the book is really interesting. 34 00:02:06,876 --> 00:02:08,476 Speaker 1: I've read it quite a bit about the nineteen twenty 35 00:02:08,556 --> 00:02:10,156 Speaker 1: nine crisis. I read all the great things that were 36 00:02:10,196 --> 00:02:12,196 Speaker 1: written back in the fifties and the sixties about it, 37 00:02:12,716 --> 00:02:14,476 Speaker 1: and it's an original contribution. 38 00:02:15,116 --> 00:02:18,156 Speaker 2: And I can say, Michael's not the easiest person to 39 00:02:18,396 --> 00:02:20,356 Speaker 2: get to like your book, so that's high praise it. 40 00:02:28,476 --> 00:02:31,316 Speaker 1: I began my conversation with the journalist Andrew Ross Sorkin 41 00:02:31,676 --> 00:02:34,036 Speaker 1: by asking him to explain what led to the crisis 42 00:02:34,076 --> 00:02:37,436 Speaker 1: of nineteen twenty nine, the one that eventually set off 43 00:02:37,516 --> 00:02:38,356 Speaker 1: the Great Depression. 44 00:02:39,076 --> 00:02:42,916 Speaker 3: Quick summary is the nineteen twenties were probably one of 45 00:02:42,956 --> 00:02:47,756 Speaker 3: the greatest stock booms in history, in large part because 46 00:02:48,356 --> 00:02:51,556 Speaker 3: Americans got access to credit for the first time, and 47 00:02:51,596 --> 00:02:54,396 Speaker 3: not just credit to go buy actual products for their homes, 48 00:02:54,396 --> 00:02:58,716 Speaker 3: but to be able to go buy on margin stock. 49 00:02:59,196 --> 00:03:01,716 Speaker 3: And people thought it was free money. And so you 50 00:03:01,756 --> 00:03:04,036 Speaker 3: got into nineteen twenty seven, nineteen twenty eight, and then 51 00:03:04,076 --> 00:03:06,596 Speaker 3: into ninety twenty nine, and it had become a national 52 00:03:06,636 --> 00:03:09,796 Speaker 3: pastime to trade. You know, they were broken on the 53 00:03:09,836 --> 00:03:12,156 Speaker 3: corners the way there are Starbucks on the corners today. 54 00:03:12,156 --> 00:03:15,316 Speaker 3: It was literally like that, and people go out of 55 00:03:15,316 --> 00:03:18,796 Speaker 3: their minds, they start gambling. I mean, the American dream 56 00:03:18,956 --> 00:03:21,556 Speaker 3: becomes the get rich quick dream, which, by the way, 57 00:03:21,556 --> 00:03:23,396 Speaker 3: we live with to some degree today. But I think 58 00:03:23,436 --> 00:03:26,876 Speaker 3: that emanated in a large way in the nineteen twenties, 59 00:03:27,756 --> 00:03:33,076 Speaker 3: and you had investors piling in at the same time 60 00:03:33,276 --> 00:03:38,676 Speaker 3: as you had folks on Wall Street and financiers taking 61 00:03:38,716 --> 00:03:42,636 Speaker 3: advantage of them. Insofar as they're both manipulating the market 62 00:03:42,796 --> 00:03:46,876 Speaker 3: in a whole bunch of different ways, they're creating all 63 00:03:46,916 --> 00:03:51,796 Speaker 3: sorts of increasingly leveraged instruments that look like Russian dolls 64 00:03:51,836 --> 00:03:55,996 Speaker 3: of leverage piling on top of each other. And we'll 65 00:03:55,996 --> 00:03:58,716 Speaker 3: never know, We'll never know what it exactly was. That 66 00:03:58,836 --> 00:04:02,596 Speaker 3: sort of was tipped the balance, but the balance was tipped, 67 00:04:03,276 --> 00:04:08,716 Speaker 3: and I think it ultimately fundamentally changed the psychology of 68 00:04:08,756 --> 00:04:12,596 Speaker 3: an entire scarred, an entire generation. You know, I don't 69 00:04:12,636 --> 00:04:15,556 Speaker 3: tell the story in the book, Michael, but I'll tell you. 70 00:04:15,636 --> 00:04:21,276 Speaker 3: My grandfather was eleven years old and was a messenger 71 00:04:22,076 --> 00:04:25,236 Speaker 3: down in October nineteen twenty nine. He was down there 72 00:04:25,356 --> 00:04:27,316 Speaker 3: during this. He was on Wall Street, he was on Wastered. 73 00:04:27,356 --> 00:04:30,196 Speaker 3: He had an older brother who actually he had skipped 74 00:04:30,196 --> 00:04:33,036 Speaker 3: school to go down there, and he watched somebody. He's 75 00:04:33,036 --> 00:04:35,236 Speaker 3: to tell the story. He watched somebody jump out of 76 00:04:35,476 --> 00:04:39,156 Speaker 3: a building and kill himself. And my grandfather, who's no 77 00:04:39,236 --> 00:04:42,236 Speaker 3: longer alive, lived till I think ninety two or ninety 78 00:04:42,236 --> 00:04:45,396 Speaker 3: three now, never bought a share of stock his entire life. 79 00:04:45,436 --> 00:04:47,996 Speaker 3: After that, he bought bonds and other things. But he 80 00:04:48,036 --> 00:04:50,516 Speaker 3: would always say, the stock market is not for us. 81 00:04:50,996 --> 00:04:53,316 Speaker 3: The stock market is like this other thing. 82 00:04:53,476 --> 00:04:56,036 Speaker 1: How'd you get interested in the first place of writing 83 00:04:56,356 --> 00:04:59,036 Speaker 1: a history of the crash? 84 00:04:59,476 --> 00:05:00,756 Speaker 4: This is going to sound so silly. 85 00:05:01,236 --> 00:05:05,196 Speaker 3: I having written Too Big to Fail, I thought, ah, 86 00:05:05,236 --> 00:05:07,756 Speaker 3: I should know something about nineteen twenty nine. I mean, 87 00:05:07,796 --> 00:05:10,676 Speaker 3: I know sort of the contours, the outline. I read 88 00:05:10,676 --> 00:05:13,076 Speaker 3: some of the more famous books, and while there were 89 00:05:13,116 --> 00:05:16,796 Speaker 3: some fascinating books that totally intrigued me about the period, 90 00:05:17,916 --> 00:05:20,276 Speaker 3: I was sort of searching, to be honest with you, 91 00:05:20,396 --> 00:05:23,996 Speaker 3: for the Michael Lewis version of this. I was searching 92 00:05:24,036 --> 00:05:25,716 Speaker 3: for the or the Too Big to Fail version. 93 00:05:26,036 --> 00:05:28,156 Speaker 1: You were looking for your own version of this. 94 00:05:28,316 --> 00:05:32,876 Speaker 3: I wanted to understand the motivations and the personalities, and 95 00:05:33,356 --> 00:05:35,756 Speaker 3: what they were actually thinking in that moment, and why 96 00:05:35,796 --> 00:05:38,316 Speaker 3: they were thinking, what they thinking, and what they did afterwards, 97 00:05:38,356 --> 00:05:40,516 Speaker 3: all those things. I was having to give a speech 98 00:05:40,596 --> 00:05:43,156 Speaker 3: up at Harvard, and I got there early, and I 99 00:05:43,196 --> 00:05:47,276 Speaker 3: went to the Baker Library and I walked in and 100 00:05:47,316 --> 00:05:50,036 Speaker 3: I asked the libraria, the archivist there, if I could 101 00:05:50,076 --> 00:05:52,956 Speaker 3: look at the Thomas Lamont papers from nineteen twenty nine. 102 00:05:54,236 --> 00:05:55,836 Speaker 1: Tell us quickly who Thomas Lamont was. 103 00:05:56,236 --> 00:06:01,276 Speaker 3: Thomas Lamont effectively was the de facto CEO of JP 104 00:06:01,436 --> 00:06:03,676 Speaker 3: Morgan at the time. He wasn't actually the CEO. The 105 00:06:03,716 --> 00:06:07,076 Speaker 3: real CEO was named Jack Morgan. He was the son 106 00:06:07,396 --> 00:06:11,756 Speaker 3: of JP Morgan, but this was the guy who basically 107 00:06:11,836 --> 00:06:16,036 Speaker 3: ran the place and made most of the important decisions. 108 00:06:16,556 --> 00:06:20,556 Speaker 3: And his secretary used to keep transcripts of his phone 109 00:06:20,556 --> 00:06:23,516 Speaker 3: conversations with Hoover. And so I'm sitting there in the 110 00:06:23,556 --> 00:06:27,596 Speaker 3: library reading this stuff, going, oh, my goodness, well maybe 111 00:06:27,636 --> 00:06:31,836 Speaker 3: you could write a book like this. And interestingly I 112 00:06:31,916 --> 00:06:34,556 Speaker 3: went and then talked to that archivist and she said 113 00:06:34,596 --> 00:06:36,876 Speaker 3: that she had read Too Big to Fail, and she said, actually, Andrew, 114 00:06:36,876 --> 00:06:39,836 Speaker 3: you really can't. You can't do what you want to do. 115 00:06:39,996 --> 00:06:42,396 Speaker 3: I know what you're trying to do, and just it's 116 00:06:42,476 --> 00:06:44,556 Speaker 3: not really possible. It's not like one or two or 117 00:06:44,596 --> 00:06:47,596 Speaker 3: three archives either here at Baker or at Columbia or Yale, 118 00:06:47,716 --> 00:06:50,116 Speaker 3: where you can sort of excavate the stuff and then 119 00:06:50,156 --> 00:06:51,956 Speaker 3: you'll be able to write it the way you want 120 00:06:51,996 --> 00:06:56,516 Speaker 3: to write it. And I sort of just didn't want 121 00:06:56,556 --> 00:06:59,476 Speaker 3: to believe her, and then I went on this sort 122 00:06:59,476 --> 00:07:01,596 Speaker 3: of eight year journey to try to figure out and 123 00:07:01,636 --> 00:07:04,356 Speaker 3: she was right in the following way. 124 00:07:04,436 --> 00:07:06,196 Speaker 4: It wasn't all in one place. 125 00:07:05,996 --> 00:07:09,396 Speaker 3: Or two places, or three places or four places had 126 00:07:09,396 --> 00:07:13,036 Speaker 3: to do this sort of like just a different kind 127 00:07:13,076 --> 00:07:13,836 Speaker 3: of excavation. 128 00:07:14,156 --> 00:07:16,276 Speaker 1: There is this line that I wrote you about that 129 00:07:16,356 --> 00:07:18,596 Speaker 1: you must have found in the Lamont archives when you 130 00:07:18,636 --> 00:07:22,636 Speaker 1: were at the Baker Library, and it's and this is 131 00:07:22,636 --> 00:07:25,396 Speaker 1: your description of Thomas Lamont. His attraction to men in 132 00:07:25,476 --> 00:07:29,756 Speaker 1: power reportedly even caused him to ask a senior German official, 133 00:07:30,316 --> 00:07:33,116 Speaker 1: just what sort of fellow is Hitler? Is he the 134 00:07:33,156 --> 00:07:37,196 Speaker 1: sort you'd go fishing with? The reply, my dear Lamont, 135 00:07:37,396 --> 00:07:40,636 Speaker 1: he is the nicest fellow in the world, always making jokes. 136 00:07:40,796 --> 00:07:44,076 Speaker 1: You couldn't ask for a more delightful companion. Where on 137 00:07:44,116 --> 00:07:45,716 Speaker 1: earth does that come from? 138 00:07:46,356 --> 00:07:50,236 Speaker 3: If I recall there was a book written in I 139 00:07:50,316 --> 00:07:55,356 Speaker 3: want to say late thirties or maybe even late forties 140 00:07:56,036 --> 00:07:59,356 Speaker 3: that mentioned Lamont and described this. 141 00:07:59,436 --> 00:08:02,116 Speaker 1: Fly fishing with Hitler is just an image that I 142 00:08:02,356 --> 00:08:04,796 Speaker 1: couldn't get out of my mind I read it. Once 143 00:08:04,796 --> 00:08:06,636 Speaker 1: I read it, I couldn't get it out of my head. 144 00:08:06,836 --> 00:08:08,756 Speaker 3: Once I saw it, I kept thinking, how am I 145 00:08:08,756 --> 00:08:09,716 Speaker 3: going to work the sand? 146 00:08:11,876 --> 00:08:15,236 Speaker 1: So let's run through the characters and let's just describe them, 147 00:08:15,276 --> 00:08:17,716 Speaker 1: and then the analogy. Thomas Lamont, You've given us a 148 00:08:17,716 --> 00:08:20,476 Speaker 1: little sketch. Who do you think the closest to Thomas 149 00:08:20,596 --> 00:08:23,796 Speaker 1: Lamont in two thousand and eight was well. 150 00:08:23,836 --> 00:08:28,396 Speaker 3: I would actually argue maybe he was the Jamie Diamond 151 00:08:28,516 --> 00:08:31,236 Speaker 3: of that period. I think that he's probably the closest 152 00:08:31,276 --> 00:08:34,596 Speaker 3: at that time actually to a Jamie Diamond who was 153 00:08:34,636 --> 00:08:38,556 Speaker 3: trying to work with the government, who was trying to, 154 00:08:38,596 --> 00:08:40,036 Speaker 3: you know, have these relationships. 155 00:08:40,476 --> 00:08:43,116 Speaker 1: It's kind of interesting that in both crises, JP Morgan 156 00:08:43,956 --> 00:08:47,676 Speaker 1: running JP Morgan Morgan plays the analogous role. 157 00:08:47,956 --> 00:08:50,316 Speaker 3: And if you think about it, the government did rely. 158 00:08:50,516 --> 00:08:54,076 Speaker 3: They were relying on Thomas Lamont's advice in nineteen twenty 159 00:08:54,116 --> 00:08:56,996 Speaker 3: nine and after that, and they were relying not only 160 00:08:57,036 --> 00:08:59,396 Speaker 3: on Jamie Diamond's advice in part, but they were also 161 00:08:59,636 --> 00:09:03,356 Speaker 3: relying on his largess and money when he was, you know, 162 00:09:03,996 --> 00:09:06,636 Speaker 3: saving bear Stearns and being used to buy. 163 00:09:07,916 --> 00:09:08,876 Speaker 4: Some of these other banks. 164 00:09:09,236 --> 00:09:12,956 Speaker 1: Yes, tell us about Jesse Livermore. 165 00:09:13,796 --> 00:09:18,756 Speaker 3: Jesse Livermore was a short seller. He was a trader, 166 00:09:18,876 --> 00:09:23,676 Speaker 3: hedge fund manager. He wasn't just a short seller. He 167 00:09:23,796 --> 00:09:26,676 Speaker 3: was the star short seller in the world. He was 168 00:09:26,716 --> 00:09:29,716 Speaker 3: on the cover of magazines, he was a philosopher king. 169 00:09:29,836 --> 00:09:33,916 Speaker 3: People listened to his every word. I'm trying to think 170 00:09:33,956 --> 00:09:37,036 Speaker 3: in my head now though about two thousand and eight, 171 00:09:37,076 --> 00:09:40,756 Speaker 3: and given that The Big Short has a lot, has 172 00:09:40,796 --> 00:09:44,116 Speaker 3: a number of short sellers, but none of those short 173 00:09:44,156 --> 00:09:47,276 Speaker 3: sellers had the sort of fame at the time. 174 00:09:47,956 --> 00:09:50,076 Speaker 1: There has a little Jesse Livermore and all my characters 175 00:09:50,076 --> 00:09:53,236 Speaker 1: in The Big Short, I mean Livermore. I've told you this. 176 00:09:53,596 --> 00:09:58,716 Speaker 1: I sold Showtime a TV pilot, a pilot based on 177 00:09:58,716 --> 00:10:02,076 Speaker 1: the life of the Jesse Livermore, and it opens during 178 00:10:02,116 --> 00:10:04,516 Speaker 1: the crash. One of the many things that appealed to 179 00:10:04,556 --> 00:10:08,556 Speaker 1: me about him as a character was that he was 180 00:10:08,636 --> 00:10:11,596 Speaker 1: so sure of his ability to make judgments under an uncertainty, 181 00:10:13,076 --> 00:10:15,756 Speaker 1: and yet and made so many mistakes along the way. 182 00:10:15,796 --> 00:10:18,476 Speaker 1: And he was so kind of seemingly in control of 183 00:10:18,516 --> 00:10:22,156 Speaker 1: his professional life. His personal life was absolute chaos. 184 00:10:22,676 --> 00:10:25,916 Speaker 3: He would call reporters and they would come to his office, 185 00:10:26,196 --> 00:10:28,516 Speaker 3: and meanwhile, he, by the way, was you know, he 186 00:10:28,556 --> 00:10:32,156 Speaker 3: was drinking. He had alcohol problems, he had personal problems. 187 00:10:32,196 --> 00:10:35,556 Speaker 3: He was being sued constantly by everybody for everything. 188 00:10:36,596 --> 00:10:38,916 Speaker 1: And he's short the end of the crash. 189 00:10:39,156 --> 00:10:43,436 Speaker 3: He's short into the crash. He had actually prior to 190 00:10:43,436 --> 00:10:46,076 Speaker 3: that almost got an out of the shorting business. Because 191 00:10:46,116 --> 00:10:49,076 Speaker 3: the truth was being a short seller on Wall Street 192 00:10:49,116 --> 00:10:52,916 Speaker 3: in nineteen twenty eight and in nineteen twenty nine seemed 193 00:10:52,956 --> 00:10:57,276 Speaker 3: like terrible, terrible businesses. And then this guy comes back 194 00:10:57,316 --> 00:10:59,316 Speaker 3: in at the last minute and wins. 195 00:10:59,596 --> 00:11:03,236 Speaker 1: So any other characters that you would like to highlight. 196 00:11:03,036 --> 00:11:07,996 Speaker 3: So to me, the other major character that drives the 197 00:11:08,156 --> 00:11:10,276 Speaker 3: entire story is Carter Glass. 198 00:11:10,716 --> 00:11:10,916 Speaker 2: Oh. 199 00:11:11,196 --> 00:11:16,556 Speaker 3: Yes, Carter Glass is a senator from Virginia. He had 200 00:11:16,596 --> 00:11:19,076 Speaker 3: been the Treasury Secretary. He later gets asked to be 201 00:11:19,076 --> 00:11:23,076 Speaker 3: the Treasure Secretary again by Roosevelt, and he helped create 202 00:11:23,116 --> 00:11:27,836 Speaker 3: the law that established the Federal Reserve. He was the 203 00:11:27,876 --> 00:11:30,756 Speaker 3: Elizabeth Warren of his time. 204 00:11:31,196 --> 00:11:31,716 Speaker 1: That's right. 205 00:11:32,156 --> 00:11:35,196 Speaker 3: He creates what is now known as Glass Stegel, the 206 00:11:35,236 --> 00:11:39,276 Speaker 3: Glass Steagle Act, which ultimately broke up the banks between 207 00:11:39,276 --> 00:11:42,996 Speaker 3: the sort of casino gambling side of the bank and 208 00:11:43,796 --> 00:11:46,436 Speaker 3: traditional commercial lending side of the bank. And of course 209 00:11:46,476 --> 00:11:49,956 Speaker 3: this becomes a feature of what ultimately happened in two 210 00:11:49,956 --> 00:11:52,476 Speaker 3: thousand and eight, a lot of the calls for by 211 00:11:52,516 --> 00:11:55,396 Speaker 3: Elizabeth Warren in fact, after two thousand and eight to 212 00:11:55,516 --> 00:11:57,596 Speaker 3: break up the banks all over again, in large part 213 00:11:57,676 --> 00:12:00,996 Speaker 3: because the rules that had been put in place by 214 00:12:01,036 --> 00:12:03,876 Speaker 3: the Glass Steagle Act in nineteen thirty three got watered 215 00:12:03,916 --> 00:12:08,196 Speaker 3: down in the nineties, and some people argue ultimately led 216 00:12:08,596 --> 00:12:11,356 Speaker 3: to some of the things that took place in two 217 00:12:11,356 --> 00:12:11,756 Speaker 3: thousan eight. 218 00:12:14,916 --> 00:12:17,756 Speaker 1: When we return, I asked Andrew to compare these reformers 219 00:12:17,796 --> 00:12:20,196 Speaker 1: who arose after each disaster on Wall Street. 220 00:12:24,396 --> 00:12:27,516 Speaker 5: How did the Volkswagen Beetle go from being Hitler's dream 221 00:12:27,596 --> 00:12:30,956 Speaker 5: car to a hippie icon. How did a disgruntled center 222 00:12:30,956 --> 00:12:34,676 Speaker 5: fielder change the business of sports. I'm Jacob Goldstein and 223 00:12:34,796 --> 00:12:37,596 Speaker 5: on Business History. My co host Robert Smith and I 224 00:12:37,636 --> 00:12:40,676 Speaker 5: dig into the people and companies who created the modern world. 225 00:12:41,036 --> 00:12:44,636 Speaker 5: Business History is full of innovations and failures and insights 226 00:12:44,676 --> 00:12:45,356 Speaker 5: into how. 227 00:12:45,236 --> 00:12:46,356 Speaker 1: Business works today. 228 00:12:46,836 --> 00:12:49,156 Speaker 5: At the end of today's episode of Against the Rules, 229 00:12:49,196 --> 00:12:51,516 Speaker 5: We're going to play a clip from our episode about 230 00:12:51,596 --> 00:12:56,916 Speaker 5: Jim Simon's decades ago. Simon's basically invented modern algorithmic trading, 231 00:12:57,156 --> 00:13:00,436 Speaker 5: and after a few early hiccups, including buying up all 232 00:13:00,516 --> 00:13:04,116 Speaker 5: the potatoes in Maine, Simon's built a machine that generated 233 00:13:04,276 --> 00:13:08,596 Speaker 5: incredible returns for decades. The show is called Business History 234 00:13:08,916 --> 00:13:11,036 Speaker 5: and the previous coming up. At the end of today's 235 00:13:11,076 --> 00:13:12,036 Speaker 5: episode of Against the. 236 00:13:12,076 --> 00:13:24,396 Speaker 1: Rules, I'm back with Andrew ross Orkin. When you compare 237 00:13:24,476 --> 00:13:28,076 Speaker 1: and contrast these two characters and what they wanted to do. 238 00:13:28,196 --> 00:13:31,756 Speaker 1: Carter Glass and Elizabeth Warren, what differences do you see? 239 00:13:31,956 --> 00:13:36,556 Speaker 1: Like they're they're policing a different event, the coming in 240 00:13:36,876 --> 00:13:39,076 Speaker 1: after a different The first event is it's a stock 241 00:13:39,116 --> 00:13:42,636 Speaker 1: market bubble, or it's a it's a debt fueled stock 242 00:13:42,676 --> 00:13:45,996 Speaker 1: market boom. The second event is a debt fueled housing boom. 243 00:13:46,636 --> 00:13:50,756 Speaker 1: The role of the bank's slightly different in each case, 244 00:13:50,876 --> 00:13:52,956 Speaker 1: and the institutions that get created a different The SEC 245 00:13:53,036 --> 00:13:55,796 Speaker 1: gets created out of the twenty nine crisis they CFPB. 246 00:13:55,876 --> 00:13:57,516 Speaker 1: He gets created out of the out of the two 247 00:13:57,516 --> 00:14:00,316 Speaker 1: thousand and eight crisis. So like, what differences do you 248 00:14:00,356 --> 00:14:03,756 Speaker 1: see between kind of what they are thinking about what 249 00:14:03,916 --> 00:14:04,596 Speaker 1: bothers them? 250 00:14:05,156 --> 00:14:08,596 Speaker 3: Well, so the similarities are they are vocal, they are allowed, 251 00:14:08,836 --> 00:14:12,036 Speaker 3: they lots of press, and they are the Cassandra's. They 252 00:14:12,036 --> 00:14:17,316 Speaker 3: are the Cassandras in the room. From the beginning. The 253 00:14:17,356 --> 00:14:21,436 Speaker 3: biggest distinction between the two of them is that card Glass, 254 00:14:22,556 --> 00:14:26,996 Speaker 3: I think, actually was genuinely a capitalist and somebody who 255 00:14:27,036 --> 00:14:29,556 Speaker 3: believed in the banking system, in large part because he 256 00:14:29,596 --> 00:14:33,236 Speaker 3: had helped develop the Federal Reserve and he believed in 257 00:14:33,276 --> 00:14:37,476 Speaker 3: these systems. He wasn't so quick to completely and utterly 258 00:14:37,516 --> 00:14:39,916 Speaker 3: break them up and without giving away too much of 259 00:14:39,956 --> 00:14:43,876 Speaker 3: the story, the actual creation of that law, while it 260 00:14:43,956 --> 00:14:47,876 Speaker 3: has his name on it, is so much more complicated 261 00:14:47,956 --> 00:14:52,556 Speaker 3: and dramatic and wild, I think actually too in my estimation. 262 00:14:52,596 --> 00:14:55,196 Speaker 3: It was actually one of the great surprises to me 263 00:14:55,236 --> 00:14:58,956 Speaker 3: as I was reporting on this, because there are so 264 00:14:58,996 --> 00:15:01,916 Speaker 3: many other players who get involved in the creation of 265 00:15:01,956 --> 00:15:07,476 Speaker 3: that law, including people in banking itself, which I think. 266 00:15:07,356 --> 00:15:08,196 Speaker 4: Would shock. 267 00:15:09,436 --> 00:15:14,036 Speaker 3: Which shock Elizabeth Warren given her love for citing that 268 00:15:14,156 --> 00:15:24,196 Speaker 3: bill today. I think Elizabeth Warren was much more about protectingary. 269 00:15:22,236 --> 00:15:24,636 Speaker 1: Americans from the financial predators. 270 00:15:24,676 --> 00:15:25,516 Speaker 4: From the predators. 271 00:15:25,556 --> 00:15:28,036 Speaker 3: I think she was much more focused on that that, 272 00:15:28,116 --> 00:15:31,316 Speaker 3: you know, the ordinary American, the quote unquote little guy. 273 00:15:31,436 --> 00:15:34,556 Speaker 3: She really wanted to make sure that the system quote 274 00:15:34,636 --> 00:15:37,236 Speaker 3: unquote worked for them, that it was equal for them. 275 00:15:38,036 --> 00:15:41,916 Speaker 3: Whereas I'm not sure those were the instincts or at 276 00:15:41,996 --> 00:15:45,156 Speaker 3: least what was the motivation for carter Glass. 277 00:15:45,396 --> 00:15:48,836 Speaker 1: No, there is in the aftermath. It seems to be 278 00:15:49,076 --> 00:15:51,996 Speaker 1: there's a really different tone to the aftermath of eight 279 00:15:52,316 --> 00:15:54,836 Speaker 1: than there was from the aftermath of twenty nine. The 280 00:15:54,836 --> 00:15:58,316 Speaker 1: aftermath of twenty nine, it doesn't in your story as 281 00:15:58,316 --> 00:16:00,676 Speaker 1: you tell the story Anyway, I don't really get the 282 00:16:00,676 --> 00:16:03,796 Speaker 1: feeling that ordinary Americans are thought to have been exploited, 283 00:16:04,316 --> 00:16:07,036 Speaker 1: that these financial predators came in and got them to 284 00:16:07,076 --> 00:16:10,196 Speaker 1: do things that they wouldn't have done wise, and we 285 00:16:10,196 --> 00:16:12,876 Speaker 1: should all feel sorry for them. Whereas in the aftermath 286 00:16:12,876 --> 00:16:15,396 Speaker 1: of Oh wait, that was very much the story. It's like, 287 00:16:15,516 --> 00:16:18,276 Speaker 1: we got the strippers in Las Vegas to buy six 288 00:16:18,556 --> 00:16:21,156 Speaker 1: houses with subprime loans, and we should be ashamed of 289 00:16:21,156 --> 00:16:24,276 Speaker 1: ourselves for having done that. There was much more emphasis 290 00:16:24,276 --> 00:16:31,396 Speaker 1: on bashing the financial elites, well thankful for their predatory behavior, 291 00:16:31,916 --> 00:16:33,916 Speaker 1: because you could very easily say at the back end 292 00:16:33,916 --> 00:16:38,076 Speaker 1: of eight, one natural sort of interpretation is like, once again, 293 00:16:38,196 --> 00:16:40,476 Speaker 1: ordinary Americans got carried away and they borrowed money they 294 00:16:40,516 --> 00:16:42,956 Speaker 1: shouldn't have borred to make to speculate whiys they shouldn't 295 00:16:42,996 --> 00:16:45,476 Speaker 1: and they should be held responsible for that kind of thing. 296 00:16:46,276 --> 00:16:50,196 Speaker 3: So I think there's two distinctions here. One is that 297 00:16:50,436 --> 00:16:54,436 Speaker 3: the sort of turn on Wall Street, the Occupy Wall 298 00:16:54,436 --> 00:16:56,916 Speaker 3: Street sort of movement that happened in the aftermath of 299 00:16:56,956 --> 00:17:00,996 Speaker 3: two thousand and eight, did happen to some degree after 300 00:17:01,156 --> 00:17:04,116 Speaker 3: twenty nine. It just took a lot longer for it 301 00:17:04,156 --> 00:17:07,876 Speaker 3: to happen, and it oddly happened for slightly different reasons, 302 00:17:07,916 --> 00:17:11,556 Speaker 3: which is to say, it was like a very slow collapse. 303 00:17:11,596 --> 00:17:14,876 Speaker 3: People think that nineteen twenty nine the market collapse. You 304 00:17:14,916 --> 00:17:17,516 Speaker 3: hear about this, you know, the one day collapse, and 305 00:17:17,556 --> 00:17:20,276 Speaker 3: that's it. It was really not just that. It was 306 00:17:20,316 --> 00:17:24,396 Speaker 3: the psychological break of that, and then into thirty and 307 00:17:25,076 --> 00:17:27,476 Speaker 3: a whole bunch of other things that happened, including by 308 00:17:27,516 --> 00:17:32,356 Speaker 3: the way, Smooth Hawlly, which was a terrifact somewhat similar 309 00:17:32,436 --> 00:17:35,876 Speaker 3: to what was happening today, but it had a hugely 310 00:17:35,916 --> 00:17:40,236 Speaker 3: deleterious effect on the economy, and you had unemployment then 311 00:17:40,476 --> 00:17:43,956 Speaker 3: spike at one point to twenty five percent. Once we 312 00:17:44,036 --> 00:17:47,596 Speaker 3: got to that, which by the way, didn't really happen 313 00:17:47,676 --> 00:17:53,196 Speaker 3: until nineteen thirty two, then you had people pointing fingers 314 00:17:53,236 --> 00:17:55,716 Speaker 3: and doing lots of things in terms of how they 315 00:17:55,756 --> 00:17:59,036 Speaker 3: thought about Wall Street and the bankers. But I don't 316 00:17:59,076 --> 00:18:02,956 Speaker 3: think people were putting that all together immediately in the 317 00:18:02,956 --> 00:18:07,156 Speaker 3: aftermath of ninet twenty nine, also in part because people 318 00:18:07,236 --> 00:18:10,396 Speaker 3: did have to blame themselves in the following way. They 319 00:18:10,476 --> 00:18:13,156 Speaker 3: knew they were gambling to some degree. It was a gambler, 320 00:18:13,196 --> 00:18:15,956 Speaker 3: weren't trying to in two thousand and eight. At least 321 00:18:15,996 --> 00:18:18,676 Speaker 3: it was framed up in the idea of this American 322 00:18:18,756 --> 00:18:21,116 Speaker 3: dream that we would all own a home, and it 323 00:18:21,196 --> 00:18:25,596 Speaker 3: wasn't you actually got something ostensibly for it. Yep, this 324 00:18:25,796 --> 00:18:30,116 Speaker 3: was truly about trading paper back in nineteen twenty nine. 325 00:18:30,436 --> 00:18:35,236 Speaker 1: Yeah, that's a big distinction. The other difference, And I 326 00:18:35,236 --> 00:18:38,916 Speaker 1: didn't know this. I just assumed that the leftward turn 327 00:18:38,996 --> 00:18:43,196 Speaker 1: in American politics and the rise of Roosevelt was a 328 00:18:43,236 --> 00:18:48,076 Speaker 1: direct response to the hostility towards financial elites and the crash. 329 00:18:48,356 --> 00:18:50,676 Speaker 1: And you make the point that like that wasn't even 330 00:18:50,676 --> 00:18:53,676 Speaker 1: the most salient issue. No, Roosevelt's first campaign. 331 00:18:53,316 --> 00:18:57,716 Speaker 3: Prohibition prohibition, was we need to do away with prohibition. 332 00:18:58,076 --> 00:19:01,276 Speaker 3: People wanted to drink. I really wanted to drink. 333 00:19:02,796 --> 00:19:06,116 Speaker 1: Can you imagine after the SEC is created in. 334 00:19:06,036 --> 00:19:08,996 Speaker 3: What nineteen thirty three, nineteen thirty four, thirty four. 335 00:19:09,316 --> 00:19:12,876 Speaker 1: Yep, that ten years later, or even eight years later, 336 00:19:12,956 --> 00:19:17,196 Speaker 1: people are calling for it's dismantling it because it's getting 337 00:19:17,236 --> 00:19:18,956 Speaker 1: in the way of Wall Street doing what it needs 338 00:19:18,996 --> 00:19:22,556 Speaker 1: to do. I mean, the CFPP is created on the 339 00:19:22,556 --> 00:19:25,516 Speaker 1: back end of the financial crisis, and it's a historical 340 00:19:26,036 --> 00:19:29,516 Speaker 1: terms of kind of nanosecond before there's already attacks on it, 341 00:19:29,796 --> 00:19:32,476 Speaker 1: attempt to kind of neuter it, don't. 342 00:19:32,756 --> 00:19:35,276 Speaker 3: I look at the two thousand and eight financial crisis 343 00:19:35,316 --> 00:19:38,636 Speaker 3: and almost draw a straight line to the election of 344 00:19:39,396 --> 00:19:45,116 Speaker 3: President Trump in twenty sixteen, and arguably again in twenty 345 00:19:45,156 --> 00:19:48,516 Speaker 3: four this idea that the institutions, the experts let us 346 00:19:48,516 --> 00:19:49,036 Speaker 3: all down. 347 00:19:49,556 --> 00:19:52,636 Speaker 4: They failed us. They told us it was all going 348 00:19:52,716 --> 00:19:53,276 Speaker 4: to be fine. 349 00:19:53,916 --> 00:19:56,516 Speaker 3: They you know those quotes from even Ben Bernaki and 350 00:19:56,556 --> 00:20:00,716 Speaker 3: others in two thousand and seven, you know, suggesting that 351 00:20:00,916 --> 00:20:04,116 Speaker 3: we weren't on the precipice, and then we were in 352 00:20:04,156 --> 00:20:04,756 Speaker 3: twenty nine. 353 00:20:04,996 --> 00:20:09,356 Speaker 1: We were. The experts weren't similarly defenestrated. They were were 354 00:20:09,396 --> 00:20:11,836 Speaker 1: like empowered in a way at the back end of it. 355 00:20:12,476 --> 00:20:16,396 Speaker 3: They were empowered until they weren't. Hoover immediately empowered them 356 00:20:16,516 --> 00:20:20,876 Speaker 3: because he was a Republican and he he was having 357 00:20:20,916 --> 00:20:24,276 Speaker 3: meetings with CEOs the way Trump is having meetings with CEOs. 358 00:20:24,316 --> 00:20:26,916 Speaker 3: He was calling them all to the White House. They 359 00:20:26,916 --> 00:20:29,156 Speaker 3: were doing photo ops left and right. 360 00:20:30,676 --> 00:20:30,836 Speaker 4: Now. 361 00:20:30,876 --> 00:20:33,916 Speaker 3: He was desperately trying to press them to do certain things, 362 00:20:34,516 --> 00:20:39,396 Speaker 3: less successfully than Trump was in certain cases, in that 363 00:20:39,756 --> 00:20:42,836 Speaker 3: he would tell them, for example, that he wanted them 364 00:20:42,836 --> 00:20:45,476 Speaker 3: to hire more people, and then the question is would 365 00:20:45,476 --> 00:20:49,196 Speaker 3: they and of course they did the opposite. So the 366 00:20:49,276 --> 00:20:52,236 Speaker 3: other character that I fell in love with, to be 367 00:20:52,316 --> 00:20:57,076 Speaker 3: honest with you, is John Rascob. John Rascob to me, 368 00:20:57,276 --> 00:21:01,996 Speaker 3: actually is very much the Elon Musk of that moment. 369 00:21:02,596 --> 00:21:06,036 Speaker 3: John Rascob helped develop General Motors, So there was. 370 00:21:06,516 --> 00:21:08,436 Speaker 1: No Elon Musk in two thousand and eight. 371 00:21:08,716 --> 00:21:10,636 Speaker 3: There was no Elon Musk in two thousand and eight. 372 00:21:10,636 --> 00:21:14,956 Speaker 3: But back in the nineteen twenties, John Rascob had become 373 00:21:14,996 --> 00:21:18,556 Speaker 3: a hugely successful executive in the automobile business. He helped 374 00:21:18,716 --> 00:21:23,236 Speaker 3: effectively create the idea of credit like truly because he 375 00:21:23,276 --> 00:21:27,036 Speaker 3: created the credit unit at General Motors to help them 376 00:21:27,036 --> 00:21:31,276 Speaker 3: sell cars. Prior to that, actually most people thought it 377 00:21:31,316 --> 00:21:34,396 Speaker 3: was a sin to take on debt, and he really 378 00:21:34,436 --> 00:21:38,156 Speaker 3: fundamentally reshaped that. He then took his winnings from his 379 00:21:38,236 --> 00:21:42,396 Speaker 3: General Motors' days and became a hugely successful investor and 380 00:21:42,556 --> 00:21:45,196 Speaker 3: was making more money investing than he had ever been 381 00:21:45,276 --> 00:21:50,276 Speaker 3: made at General Motors. He then, like Elon, decides that 382 00:21:50,436 --> 00:21:52,276 Speaker 3: he has all this money, has all this power, He's 383 00:21:52,276 --> 00:21:56,316 Speaker 3: going to get into politics. And now he doesn't choose 384 00:21:56,476 --> 00:21:58,716 Speaker 3: the winner in this case, he doesn't choose Hoover. He 385 00:21:58,796 --> 00:22:03,236 Speaker 3: chooses al Smith, who was running against Hoover, and he 386 00:22:03,356 --> 00:22:07,556 Speaker 3: becomes the head of the Democratic Committee. I mean, that's 387 00:22:07,596 --> 00:22:10,676 Speaker 3: what he becomes. And once he loses, and it was 388 00:22:10,676 --> 00:22:13,316 Speaker 3: really hit, the first loss in his whole life, almost 389 00:22:13,756 --> 00:22:18,876 Speaker 3: he then makes it his mission to undo Hoover's reputation, 390 00:22:18,996 --> 00:22:24,436 Speaker 3: to hurt Hoover reputationally by effectively paying people to write 391 00:22:24,636 --> 00:22:28,396 Speaker 3: articles and give speeches undermining his reputation. And by the way, 392 00:22:28,516 --> 00:22:31,276 Speaker 3: Hoover has a very bad reputation even to this day. 393 00:22:31,356 --> 00:22:35,636 Speaker 3: I believe to some degree you can look back at 394 00:22:35,716 --> 00:22:39,276 Speaker 3: John Rascob and say he was responsible for that. Of course, 395 00:22:39,356 --> 00:22:42,916 Speaker 3: Elon musk and did a buying Twitter and uses it 396 00:22:42,956 --> 00:22:47,516 Speaker 3: in all sorts of interesting ways to bolster and undermine 397 00:22:48,436 --> 00:22:52,956 Speaker 3: political reputations. And then he goes off and does the 398 00:22:52,996 --> 00:22:56,836 Speaker 3: equivalent of building a spaceship back in nineteen twenty nine 399 00:22:57,036 --> 00:22:59,836 Speaker 3: called the Empire State building right, and. 400 00:23:01,636 --> 00:23:04,796 Speaker 1: It really does. It maps pretty neatly onto Elon's life. 401 00:23:04,836 --> 00:23:08,076 Speaker 3: And he was also a philosopher, king in that the 402 00:23:08,196 --> 00:23:10,796 Speaker 3: media paid at ten to everything this man said. 403 00:23:11,276 --> 00:23:12,876 Speaker 4: He had all sorts of other ideas. 404 00:23:12,916 --> 00:23:15,116 Speaker 3: At one point he was trying to create the equivalent 405 00:23:15,116 --> 00:23:17,316 Speaker 3: of probably what would have been one of the first 406 00:23:17,396 --> 00:23:23,396 Speaker 3: mutual funds in the world. And he also it becomes 407 00:23:23,476 --> 00:23:27,276 Speaker 3: an advocate for what ultimately turns out to be the 408 00:23:27,316 --> 00:23:30,716 Speaker 3: five day work week. I didn't know this back then, 409 00:23:30,876 --> 00:23:32,796 Speaker 3: most people worked six days a week, including by the 410 00:23:32,836 --> 00:23:34,516 Speaker 3: way people in the stock market. The stock market was 411 00:23:34,596 --> 00:23:38,036 Speaker 3: open on Saturdays in the morning. But he writes a 412 00:23:38,076 --> 00:23:40,596 Speaker 3: paper in November of nineteen twenty nine that actually got 413 00:23:40,676 --> 00:23:45,076 Speaker 3: overlooked until nineteen until the nineteen thirties, where he basically 414 00:23:45,116 --> 00:23:47,596 Speaker 3: made the argument that would be better for the economy 415 00:23:47,916 --> 00:23:50,156 Speaker 3: if there was a five day work week because that 416 00:23:50,236 --> 00:23:52,356 Speaker 3: people would have more leisure time. They would have to 417 00:23:52,396 --> 00:23:54,316 Speaker 3: go out and buy more cars. He owned stock in 418 00:23:54,356 --> 00:23:57,396 Speaker 3: general motors. They would you know, buy camping equipment, they 419 00:23:57,436 --> 00:24:01,236 Speaker 3: would do home home decorps and other things, and it 420 00:24:01,316 --> 00:24:04,596 Speaker 3: would spur the economy. And that was his argument, and 421 00:24:04,676 --> 00:24:08,476 Speaker 3: ultimately he was proved right. So I found him to 422 00:24:08,516 --> 00:24:12,676 Speaker 3: be just a fascinating human at the intersection of all 423 00:24:12,716 --> 00:24:14,836 Speaker 3: of these different component parts. 424 00:24:15,116 --> 00:24:17,716 Speaker 1: We're going to take a quick break. When we come back. 425 00:24:18,076 --> 00:24:20,636 Speaker 1: Andrew and I talk about how the Federal Reserve failed 426 00:24:20,636 --> 00:24:33,476 Speaker 1: to save the day back in nineteen twenty nine, I'm 427 00:24:33,516 --> 00:24:38,796 Speaker 1: back with Andrew Ross Sorkin so to push this poem 428 00:24:38,796 --> 00:24:41,476 Speaker 1: a little further and talk more about how these two 429 00:24:41,476 --> 00:24:45,556 Speaker 1: events nineteen twenty nine rhyme. The people at the Federal 430 00:24:45,636 --> 00:24:49,916 Speaker 1: Reserve in two thousand and eight were scholars of what 431 00:24:49,996 --> 00:24:52,356 Speaker 1: had happened in nineteen twenty nine, and how the Federal Reserve, 432 00:24:52,356 --> 00:24:54,876 Speaker 1: which really faced its first test in nineteen twenty nine, 433 00:24:55,716 --> 00:24:59,396 Speaker 1: responded to it. Talk a little bit about that response 434 00:24:59,396 --> 00:25:03,076 Speaker 1: and how was similar or different from the response in 435 00:25:03,076 --> 00:25:03,956 Speaker 1: two thousand and eight. 436 00:25:04,516 --> 00:25:06,996 Speaker 3: So the response to the crisis in nineteen twenty nine 437 00:25:07,196 --> 00:25:09,836 Speaker 3: was mostly for the Federal Reserve to on its hands. 438 00:25:10,436 --> 00:25:15,996 Speaker 3: And there's a major distinction to understand the almost insecurity 439 00:25:16,236 --> 00:25:19,636 Speaker 3: that people on the Federal Reserve felt in nineteen twenty nine, 440 00:25:19,676 --> 00:25:22,556 Speaker 3: because it was still a new institution. He'd only been 441 00:25:22,596 --> 00:25:27,676 Speaker 3: born in nineteen thirteen. There were genuine concerns, and I 442 00:25:27,756 --> 00:25:32,236 Speaker 3: have diary memos and notes about this that the board 443 00:25:32,356 --> 00:25:36,836 Speaker 3: members really felt that Congress could decide to shut them down. 444 00:25:37,236 --> 00:25:39,476 Speaker 3: I mean, you know, we have debates today about the 445 00:25:39,476 --> 00:25:42,876 Speaker 3: independence of the Federal Reserve. Back then, they were scared 446 00:25:42,916 --> 00:25:45,396 Speaker 3: that they weren't going to be. They weren't going to 447 00:25:45,436 --> 00:25:49,316 Speaker 3: exist if they made, you know, the wrong move, they 448 00:25:49,356 --> 00:25:52,116 Speaker 3: were going to be, you know, completely hung out to dry. 449 00:25:52,556 --> 00:25:56,316 Speaker 3: And so, for the most part, you know, nineteen twenty eight, 450 00:25:56,396 --> 00:26:00,436 Speaker 3: nineteen twenty nine, as the market was getting frothier and frothier, 451 00:26:00,676 --> 00:26:03,516 Speaker 3: as much as they wanted to tamp it down, even 452 00:26:04,076 --> 00:26:07,476 Speaker 3: by raising interest rates, by raising interest rates, they were 453 00:26:07,596 --> 00:26:10,196 Speaker 3: very worried about doing that, and they were very worried 454 00:26:10,196 --> 00:26:12,796 Speaker 3: about harming the economy because they thought if they harmed 455 00:26:12,836 --> 00:26:16,636 Speaker 3: the economy politically, that would not be a palatable situation 456 00:26:17,436 --> 00:26:20,756 Speaker 3: vis a vis their own independence. And so they did 457 00:26:20,756 --> 00:26:23,396 Speaker 3: not take the kinds of steps that you would have 458 00:26:23,436 --> 00:26:25,556 Speaker 3: wanted them to, and they were debating them, they were 459 00:26:25,596 --> 00:26:29,956 Speaker 3: having conversations constantly about raising interest rates, and yet they 460 00:26:30,036 --> 00:26:33,036 Speaker 3: for the most part didn't want to. What they did instead, 461 00:26:33,756 --> 00:26:36,756 Speaker 3: which is they would send out memos to banks and say, 462 00:26:36,916 --> 00:26:41,516 Speaker 3: you know, stop speculative lending. But they wouldn't explain what 463 00:26:41,516 --> 00:26:43,916 Speaker 3: that even meant. They would just tell them to do this, 464 00:26:43,996 --> 00:26:46,636 Speaker 3: and then some banks would just stop lending completely. By 465 00:26:46,636 --> 00:26:48,196 Speaker 3: the way, as they function of this, they would take 466 00:26:48,196 --> 00:26:50,836 Speaker 3: the memo as gospel and they would stop lending, which 467 00:26:50,876 --> 00:26:54,516 Speaker 3: is a real problem for the economy as well. Two 468 00:26:54,556 --> 00:26:58,236 Speaker 3: thousand and eight. Obviously, Ben Bernanke, who was the FED 469 00:26:58,316 --> 00:27:03,836 Speaker 3: chair at that point, his thesis in college at Princeton 470 00:27:04,556 --> 00:27:07,876 Speaker 3: was on the financial crisis of nineteen twenty nine. That's 471 00:27:07,876 --> 00:27:11,516 Speaker 3: what he studied, the Great depres and I think one 472 00:27:11,556 --> 00:27:13,996 Speaker 3: of the lessons was that the Federal Reserve needed to 473 00:27:14,036 --> 00:27:15,436 Speaker 3: flood the system with money. 474 00:27:15,476 --> 00:27:16,356 Speaker 4: That that is the. 475 00:27:16,316 --> 00:27:21,356 Speaker 3: Way you keep the arteries of the system moving. And 476 00:27:21,436 --> 00:27:23,916 Speaker 3: of course that's what they did. Now in the context 477 00:27:23,996 --> 00:27:27,476 Speaker 3: of doing that, that was also remarkably unpopular. I mean, 478 00:27:27,516 --> 00:27:32,356 Speaker 3: bailouts were unpopular. All of it was quite unpopular. Yet, 479 00:27:32,756 --> 00:27:34,116 Speaker 3: and I don't know where you stand on this. I 480 00:27:34,196 --> 00:27:37,396 Speaker 3: think in the end, as we look back, I think 481 00:27:37,476 --> 00:27:39,596 Speaker 3: a lot of those were probably the right decisions, as 482 00:27:39,676 --> 00:27:41,156 Speaker 3: politically unpopular as they were. 483 00:27:41,556 --> 00:27:45,276 Speaker 1: People who get upset about that decision don't really fully 484 00:27:45,276 --> 00:27:48,596 Speaker 1: imagine the counterfactual and who's going to pay the price 485 00:27:48,676 --> 00:27:51,836 Speaker 1: in the counterfactual. The counterfactual so ugly. The counterfactual is 486 00:27:51,836 --> 00:27:55,796 Speaker 1: the depression. It's twenty five percent unemployment rate. I mean. 487 00:27:55,956 --> 00:27:58,876 Speaker 1: One of the striking things about some of the numbers 488 00:27:58,876 --> 00:28:01,396 Speaker 1: in your narrative is one point you describe the cost 489 00:28:01,476 --> 00:28:04,636 Speaker 1: of the economy by the thirties, like GDP or GNP 490 00:28:04,836 --> 00:28:08,756 Speaker 1: or whatever they were measuring time is down by fifty percent. Right, 491 00:28:09,116 --> 00:28:12,116 Speaker 1: Nothing like that happened after two thousand and eight, And 492 00:28:12,156 --> 00:28:14,916 Speaker 1: there's a reason it didn't happen, because they flooded the 493 00:28:14,916 --> 00:28:15,636 Speaker 1: economy with. 494 00:28:15,636 --> 00:28:17,076 Speaker 4: Dollars in the nineteen thirties. 495 00:28:17,116 --> 00:28:20,316 Speaker 3: Everything moved almost into an austerity period, not just at 496 00:28:20,316 --> 00:28:23,476 Speaker 3: the Phoederal reserve, but even politically. There wasn't an ability 497 00:28:24,036 --> 00:28:26,356 Speaker 3: or a view that they should be, you know, completely 498 00:28:26,396 --> 00:28:29,476 Speaker 3: propping up the economy until, of course Roosevelt shows up 499 00:28:29,476 --> 00:28:31,676 Speaker 3: on the scene, and you know, some people thought he 500 00:28:31,716 --> 00:28:33,916 Speaker 3: was going to spend money like, you know, like a 501 00:28:33,956 --> 00:28:38,516 Speaker 3: wild drunken sailor. But ultimately that was the New Deal 502 00:28:38,996 --> 00:28:43,396 Speaker 3: did provide for a lot of employment that ultimately helped 503 00:28:43,396 --> 00:28:45,036 Speaker 3: the economy out. On top of that, of course, there 504 00:28:45,036 --> 00:28:46,476 Speaker 3: was a war and a whole bunch of other things 505 00:28:46,516 --> 00:28:47,076 Speaker 3: that were going on. 506 00:28:47,276 --> 00:28:51,076 Speaker 1: Yes, when I first got in touch with you, the 507 00:28:51,116 --> 00:28:53,596 Speaker 1: first question I asked you, and what I wasteing on 508 00:28:54,316 --> 00:28:56,956 Speaker 1: is the different narratives that emerge at the back end 509 00:28:57,196 --> 00:28:59,436 Speaker 1: of one of these events and how they can be 510 00:28:59,476 --> 00:29:03,396 Speaker 1: competing narratives like it takes a while for the society 511 00:29:03,396 --> 00:29:06,036 Speaker 1: to agree upon a truth if it ever does, about 512 00:29:06,036 --> 00:29:09,596 Speaker 1: what just happened, And their competing narrative is about two 513 00:29:09,596 --> 00:29:12,396 Speaker 1: thousand and eight. Now, was there a similar thing in 514 00:29:12,476 --> 00:29:15,036 Speaker 1: the back end of the nineteen twenty nine crash? Were 515 00:29:15,036 --> 00:29:18,116 Speaker 1: there people trying to tell different stories than the one 516 00:29:18,956 --> 00:29:21,396 Speaker 1: that emerges as the consensus. 517 00:29:22,796 --> 00:29:26,956 Speaker 3: Yes, in that there were some folks who were blaming 518 00:29:27,316 --> 00:29:30,996 Speaker 3: the banks for being reckless in terms of lending. And 519 00:29:31,316 --> 00:29:34,756 Speaker 3: the other competing narrative was the idea that somehow short 520 00:29:34,756 --> 00:29:38,316 Speaker 3: sellers were responsible for all of this. For a period 521 00:29:38,356 --> 00:29:42,036 Speaker 3: of time, Congress was looking at short sellers. They were 522 00:29:42,036 --> 00:29:45,116 Speaker 3: trying to name names. They thought some of the short sellers, 523 00:29:45,116 --> 00:29:49,956 Speaker 3: by the way, were in cahoots with certain politicians about 524 00:29:50,556 --> 00:29:52,916 Speaker 3: how all of this was going on. Then there was 525 00:29:52,996 --> 00:29:59,796 Speaker 3: another version of this that blamed this on stock manipulators. 526 00:30:00,316 --> 00:30:01,676 Speaker 4: The idea of what. 527 00:30:01,756 --> 00:30:05,156 Speaker 3: Was back then, and it was a real thing called 528 00:30:05,196 --> 00:30:10,116 Speaker 3: investment pools, where you'd have a financier who who would 529 00:30:10,716 --> 00:30:13,076 Speaker 3: get a whole bunch of his friends together and say 530 00:30:13,116 --> 00:30:15,036 Speaker 3: we're literally going to pump this stock. 531 00:30:15,356 --> 00:30:17,036 Speaker 4: And it was, by the way, it was legal. It 532 00:30:17,076 --> 00:30:18,196 Speaker 4: was not illegal to do this. 533 00:30:18,476 --> 00:30:20,436 Speaker 1: No, it was amazing what they could do. They could 534 00:30:20,436 --> 00:30:22,716 Speaker 1: do the equivalent of I buy some Pfizer stock and 535 00:30:22,796 --> 00:30:24,876 Speaker 1: I call you Andrews say, could you go on television 536 00:30:24,916 --> 00:30:27,356 Speaker 1: and say everybody should buy Pfizer buy some Pfizer too. 537 00:30:28,476 --> 00:30:31,956 Speaker 3: Even crazier than that, because they would have the specialist 538 00:30:32,196 --> 00:30:35,476 Speaker 3: at the stock exchange and RCA, by the way, back 539 00:30:35,516 --> 00:30:38,916 Speaker 3: then was the meme stock of the moment. It was 540 00:30:38,956 --> 00:30:42,076 Speaker 3: the glamour stock of that period, and the specialist who 541 00:30:42,156 --> 00:30:45,636 Speaker 3: was in charge of that stock would literally run almost 542 00:30:45,676 --> 00:30:49,236 Speaker 3: a theatrical routine on the floor of the exchange, where 543 00:30:49,556 --> 00:30:53,516 Speaker 3: he would have people placed almost like actors, saying, Okay, 544 00:30:53,676 --> 00:30:55,316 Speaker 3: I'm gonna buy for this, you're gonna buy for this, 545 00:30:55,356 --> 00:30:57,796 Speaker 3: You're gonna buy for this, You're gonna buy, and literally 546 00:30:57,876 --> 00:31:00,956 Speaker 3: they would ladder up the prices and then they would 547 00:31:01,036 --> 00:31:05,676 Speaker 3: quote unquote pull the rug, and everybody almost knew this 548 00:31:05,876 --> 00:31:08,556 Speaker 3: was happening. In fact, some investors were trying to get 549 00:31:08,556 --> 00:31:10,916 Speaker 3: on the back of these pools. They knew was happening, 550 00:31:10,956 --> 00:31:12,516 Speaker 3: and they thought, if I can get in and out 551 00:31:12,596 --> 00:31:14,996 Speaker 3: before they get out, I can win too. So there 552 00:31:15,036 --> 00:31:17,836 Speaker 3: was a whole sort of game that was being played 553 00:31:17,916 --> 00:31:20,356 Speaker 3: by the way that game is being played today in 554 00:31:20,396 --> 00:31:24,116 Speaker 3: the world of crypto. In the world of crypto, I 555 00:31:24,116 --> 00:31:26,116 Speaker 3: don't know if I ever told you this wild story 556 00:31:26,156 --> 00:31:28,916 Speaker 3: that happened to me earlier this year. I was on 557 00:31:28,956 --> 00:31:31,276 Speaker 3: TV with Larry Fink and he makes a joke, says, 558 00:31:31,316 --> 00:31:32,516 Speaker 3: there should be a Sorkin coin. 559 00:31:33,476 --> 00:31:33,796 Speaker 4: Okay. 560 00:31:33,796 --> 00:31:39,036 Speaker 3: Two hours later, somebody has created the Sorkin coin, no joke, 561 00:31:40,036 --> 00:31:42,556 Speaker 3: and this sorcing coin is now going up by millions 562 00:31:42,556 --> 00:31:46,716 Speaker 3: of dollars, millions of dollars. And I get a text 563 00:31:46,796 --> 00:31:53,236 Speaker 3: message on x formerly Twitter inviting me into a DM group, 564 00:31:53,276 --> 00:31:56,396 Speaker 3: one of these direct message groups, and there are people 565 00:31:57,396 --> 00:32:00,396 Speaker 3: saying to each other, you know, I'm going to put 566 00:32:00,396 --> 00:32:02,196 Speaker 3: in a million dollars here, then you're going to put 567 00:32:02,236 --> 00:32:04,276 Speaker 3: in three million dollars. It was just happening digitally. In 568 00:32:04,316 --> 00:32:06,796 Speaker 3: my hand, I was watching this happen. It was the 569 00:32:07,036 --> 00:32:10,276 Speaker 3: wildest thing. At one point, they were reaching out to 570 00:32:10,316 --> 00:32:14,396 Speaker 3: my sons. I have two twin boys who are fourteen, 571 00:32:14,996 --> 00:32:18,316 Speaker 3: and they were trying to get them. They thought if 572 00:32:18,356 --> 00:32:21,276 Speaker 3: they could show that the Sorkins owned this coin, which 573 00:32:21,276 --> 00:32:24,276 Speaker 3: we never did, that that would help them pump the stock. 574 00:32:24,636 --> 00:32:26,716 Speaker 3: And so I had to call my son and they're 575 00:32:26,756 --> 00:32:30,276 Speaker 3: offering my son fifty thousand dollars worth of Sorking coin. 576 00:32:32,796 --> 00:32:35,676 Speaker 3: And I'm calling up Henry and I'm saying, Henry, you 577 00:32:35,716 --> 00:32:38,236 Speaker 3: cannot talk to these people. Do not respond to these people. 578 00:32:38,276 --> 00:32:39,836 Speaker 3: We're going to be in jail. We're going to go 579 00:32:39,836 --> 00:32:42,756 Speaker 3: to court. This is horrible. Please don't do this. And 580 00:32:42,796 --> 00:32:44,876 Speaker 3: of course Henry says, you know, Dad, I'm leaving a 581 00:32:44,876 --> 00:32:51,076 Speaker 3: lot of money on the table. But so, yes, the 582 00:32:51,116 --> 00:32:54,076 Speaker 3: investment pools of nineteen twenty nine are very much alive 583 00:32:54,196 --> 00:32:55,676 Speaker 3: and well today, and. 584 00:32:55,716 --> 00:32:57,636 Speaker 1: It does seem like we're living through a period of 585 00:32:57,956 --> 00:33:00,876 Speaker 1: you know, increased distrust of the institutions and erosion of 586 00:33:00,916 --> 00:33:05,676 Speaker 1: the authority of central authority. But maybe I'm wrong. Do 587 00:33:05,716 --> 00:33:06,356 Speaker 1: you disagree with that? 588 00:33:07,356 --> 00:33:09,556 Speaker 3: I wish I could disagree with you, just to make 589 00:33:09,596 --> 00:33:13,196 Speaker 3: the conversation more fun, But I violently agree with you. 590 00:33:13,796 --> 00:33:16,596 Speaker 3: I violently agree with you. And my real worry is 591 00:33:16,996 --> 00:33:19,196 Speaker 3: that when you look at all of the rules that 592 00:33:19,236 --> 00:33:22,636 Speaker 3: are being undone today, it's not just do we need 593 00:33:22,716 --> 00:33:26,676 Speaker 3: new rules that haven't been implemented, it's we have rules 594 00:33:26,676 --> 00:33:31,316 Speaker 3: that are coming off and a disinterest in looking at 595 00:33:31,316 --> 00:33:34,916 Speaker 3: some of these things. I'm shocked, for example, that you know, 596 00:33:35,276 --> 00:33:39,476 Speaker 3: investors are now buying these things called tokens in private 597 00:33:39,476 --> 00:33:44,756 Speaker 3: companies and that's not technically allowed. If you ask the 598 00:33:45,036 --> 00:33:47,476 Speaker 3: new head of the SEC, who's part of the Trump administration, 599 00:33:48,036 --> 00:33:50,436 Speaker 3: you know what he wants to do about what seemed 600 00:33:50,476 --> 00:33:52,236 Speaker 3: like clear violations of the rule. 601 00:33:53,036 --> 00:33:54,796 Speaker 4: He looks at tokenization says. 602 00:33:54,876 --> 00:33:56,996 Speaker 3: That's a form of innovation, and he doesn't want to 603 00:33:57,036 --> 00:34:02,156 Speaker 3: slow down innovation. And so I'm not sure where the 604 00:34:02,196 --> 00:34:05,276 Speaker 3: police on the beat really are going to be when 605 00:34:05,316 --> 00:34:09,116 Speaker 3: and if there's a problem. There's a lot less people 606 00:34:09,316 --> 00:34:11,796 Speaker 3: minding the store. And when people are minding the store 607 00:34:11,836 --> 00:34:14,436 Speaker 3: and you add in the leverage, and you add a 608 00:34:14,436 --> 00:34:16,836 Speaker 3: little speculation, you get problems. 609 00:34:17,836 --> 00:34:19,956 Speaker 1: On that cheery note we're going to end, I really 610 00:34:19,956 --> 00:34:23,076 Speaker 1: love the book. It was terrific, and I do think 611 00:34:23,116 --> 00:34:26,316 Speaker 1: it's curious that your two big master works are studies 612 00:34:26,316 --> 00:34:29,276 Speaker 1: of financial crises. You yourself are such a calm and 613 00:34:29,316 --> 00:34:32,236 Speaker 1: reasonable person, you seem to be attracted to the other. 614 00:34:33,556 --> 00:34:36,996 Speaker 3: I am attracted to whatever is the most interesting thing 615 00:34:37,036 --> 00:34:40,396 Speaker 3: in crises and failure, not because I love failure. 616 00:34:41,076 --> 00:34:42,756 Speaker 4: I root for people's success, but. 617 00:34:42,756 --> 00:34:45,996 Speaker 3: I think that there's so many lessons in failure and 618 00:34:46,476 --> 00:34:49,476 Speaker 3: failure onto itself is interesting because there's oftentimes so much 619 00:34:49,476 --> 00:34:50,316 Speaker 3: we could learn from it. 620 00:34:51,396 --> 00:34:52,876 Speaker 1: Thanks for taking the time to talk to me. 621 00:34:53,556 --> 00:34:55,156 Speaker 4: Thanks for taking the time to read the book and 622 00:34:55,236 --> 00:34:55,796 Speaker 4: to talk to me. 623 00:34:58,436 --> 00:35:00,876 Speaker 1: Andrew ross Orkin writes Deal Book for The New York 624 00:35:00,916 --> 00:35:04,036 Speaker 1: Times and is the author of the new book nineteen 625 00:35:04,116 --> 00:35:07,516 Speaker 1: twenty nine Inside the Greatest Crash in Wall Street History 626 00:35:07,916 --> 00:35:08,956 Speaker 1: and How It Shattered In. 627 00:35:08,956 --> 00:35:19,876 Speaker 2: A Against the Rules, The Big Short Companion is hosted 628 00:35:19,876 --> 00:35:23,356 Speaker 2: by Michael Lewis. It's produced by Me, Ludy, Jean Kott, 629 00:35:23,596 --> 00:35:28,436 Speaker 2: and Catherine Girardeau. Our editor is Julia Barton. Our theme 630 00:35:28,636 --> 00:35:32,556 Speaker 2: was composed by Nick Burtel, and our engineer is Hans Dale. 631 00:35:32,556 --> 00:35:38,596 Speaker 2: She special thanks to Nicole opten Bosch, Jasmine Faustino, Pamela 632 00:35:38,676 --> 00:35:42,916 Speaker 2: Lawrence and the rest of the Pushkin Audiobooks team. Against 633 00:35:42,916 --> 00:35:46,516 Speaker 2: the Rules is the production of Pushkin Industries. To find 634 00:35:46,516 --> 00:35:50,996 Speaker 2: more Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, 635 00:35:51,356 --> 00:35:54,156 Speaker 2: or wherever you listen to podcasts, and if you'd like 636 00:35:54,196 --> 00:35:57,676 Speaker 2: to listen ad free and learn about other exclusive offerings, 637 00:35:57,956 --> 00:36:00,396 Speaker 2: don't forget to sign up for a Pushkin Plus subscription 638 00:36:00,916 --> 00:36:06,596 Speaker 2: at pushkin, dot Fm, slash Plus or Honor Apple show page, 639 00:36:07,116 --> 00:36:09,996 Speaker 2: and you can get the big short now at Pushkin, 640 00:36:10,156 --> 00:36:15,116 Speaker 2: dot fm, Slash Audiobooks, or wherever audiobooks are sold. 641 00:36:22,316 --> 00:36:24,436 Speaker 5: It's Jacob Goldstein. I'm the co host of a new 642 00:36:24,476 --> 00:36:27,396 Speaker 5: show called Business History, and we're bringing you a clip 643 00:36:27,476 --> 00:36:30,356 Speaker 5: right now from an episode we did about a mathematician 644 00:36:30,436 --> 00:36:34,476 Speaker 5: named Jim Simon's. Simons wanted to take human emotions out 645 00:36:34,516 --> 00:36:38,476 Speaker 5: of investing, and after a few early hiccups, including buying 646 00:36:38,596 --> 00:36:41,396 Speaker 5: up all the potatoes in Maine, he created one of 647 00:36:41,436 --> 00:36:44,676 Speaker 5: the greatest money machines in history. I really hope you 648 00:36:44,716 --> 00:36:46,596 Speaker 5: like the clip, and if you want to hear more, 649 00:36:46,676 --> 00:36:49,836 Speaker 5: please check out the show. It's called Business History and 650 00:36:49,876 --> 00:36:52,756 Speaker 5: it's available wherever you're listening right now. 651 00:36:53,716 --> 00:36:56,956 Speaker 6: They were doing what we would call today machine learning. 652 00:36:56,996 --> 00:37:01,356 Speaker 7: A machine learning is like, essentially, you build a system 653 00:37:01,356 --> 00:37:03,276 Speaker 7: in a computer, You feeded a bunch of data, and 654 00:37:03,316 --> 00:37:06,276 Speaker 7: the system sort of builds a map of the relationships 655 00:37:06,316 --> 00:37:08,516 Speaker 7: in that data, and then with new data it can 656 00:37:08,556 --> 00:37:12,196 Speaker 7: kind of enter or extrapolate and make guesses about. 657 00:37:11,956 --> 00:37:12,876 Speaker 1: What should come next. 658 00:37:13,196 --> 00:37:16,636 Speaker 7: And of course today we have an exciting, maybe misleading, 659 00:37:16,756 --> 00:37:18,796 Speaker 7: confounding term for machine learning. 660 00:37:19,316 --> 00:37:20,116 Speaker 5: We call it AI. 661 00:37:20,436 --> 00:37:23,796 Speaker 6: Exactly right, right, this is still very basic machine learning, 662 00:37:23,996 --> 00:37:27,756 Speaker 6: and the computer at the time keeps making mistakes that 663 00:37:27,796 --> 00:37:31,916 Speaker 6: they didn't really understand. So, for instance, once the computer 664 00:37:32,556 --> 00:37:38,836 Speaker 6: developed a taste for potatoes, main potatoes, the system kept 665 00:37:38,916 --> 00:37:44,796 Speaker 6: buying main potato futures in the state of Maine, potato. 666 00:37:44,396 --> 00:37:46,996 Speaker 1: Potatoes, big harvest next year or whatever. 667 00:37:47,236 --> 00:37:51,276 Speaker 6: Yes, okay, until two thirds of the company's money was 668 00:37:51,316 --> 00:37:53,556 Speaker 6: in potatoes. They were all in potatoes. 669 00:37:53,716 --> 00:37:55,796 Speaker 1: And they got a call from the regulators. 670 00:37:55,316 --> 00:37:59,916 Speaker 7: The cft A CFPP Commodity Futures Trading Commission. 671 00:37:59,516 --> 00:38:03,236 Speaker 6: Right, yeah, saying whoa who are you guys, Like, what 672 00:38:03,276 --> 00:38:05,676 Speaker 6: are you doing over there? You have almost cornered the 673 00:38:05,716 --> 00:38:09,636 Speaker 6: market on potatoes. You have to sell. And they ended 674 00:38:09,716 --> 00:38:14,676 Speaker 6: up losing money on the trade because blown out on potatoes, 675 00:38:14,836 --> 00:38:18,476 Speaker 6: they had stopped the computer or whatever the computer's plan was. 676 00:38:19,116 --> 00:38:21,876 Speaker 6: But you know, this was just one small weird thing. 677 00:38:22,316 --> 00:38:26,036 Speaker 6: Simon and Baum were really kind of nervous about this 678 00:38:26,116 --> 00:38:28,916 Speaker 6: whole thing. They had taken investors' money, they didn't really 679 00:38:28,996 --> 00:38:33,236 Speaker 6: know if their system worked. And as the story gets told, 680 00:38:33,276 --> 00:38:36,476 Speaker 6: they start to like second guess the computer and themselves, 681 00:38:36,476 --> 00:38:38,756 Speaker 6: and they start to think, well, I have this intuition 682 00:38:38,836 --> 00:38:42,556 Speaker 6: that gold's gonna go up because of the geopolitical situation, 683 00:38:42,796 --> 00:38:44,556 Speaker 6: and they'd make some money on that, and then they'd 684 00:38:44,556 --> 00:38:47,796 Speaker 6: lose some money on that, and so by doubting their 685 00:38:47,836 --> 00:38:51,596 Speaker 6: own system, it just wasn't really working. And at that point, 686 00:38:51,596 --> 00:38:54,116 Speaker 6: they're just Wall Street investors right with a big computer, 687 00:38:54,356 --> 00:38:57,276 Speaker 6: trying to buy more potatoes, and the man won't let 688 00:38:57,316 --> 00:38:58,196 Speaker 6: them buy potatoes.