WEBVTT - Lessons of the Great Depression 0:00:15.316 --> 0:00:27.516 Pushkin. I'm Lyddy Egeen Coott and I'm Michael Lewis, and. 0:00:27.436 --> 0:00:30.756 This is our Picture It companion series on Against the Rules. Michael, 0:00:30.836 --> 0:00:32.316 the other day you were telling me, when you were 0:00:32.316 --> 0:00:36.036 talking about this episode, how you were thinking about your 0:00:36.476 --> 0:00:39.636 days in college when you studied art history. Tell me 0:00:39.676 --> 0:00:41.196 about that. Why are you thinking about that? 0:00:41.556 --> 0:00:43.876 One of the things that happens when you're studying our 0:00:43.956 --> 0:00:46.876 history is professors as just a teaching tool. Often they'll 0:00:46.876 --> 0:00:50.156 just throw up two pictures side by side and ask 0:00:50.236 --> 0:00:53.636 you to compare and contrast, and you just look at 0:00:53.676 --> 0:00:56.916 a Rembrandt painting differently if it's next to a Rubens, 0:00:57.316 --> 0:00:59.956 and you start thinking about what are the differences, Like, 0:01:00.156 --> 0:01:02.716 what are the similarities? What are the differences. It's a 0:01:02.756 --> 0:01:06.516 tool for forcing your mind to move, and as a 0:01:06.556 --> 0:01:10.356 tool for forcing our mind to move. About the two 0:01:10.396 --> 0:01:13.156 thousand and eight financial crisis, I can't really think of 0:01:13.196 --> 0:01:18.196 a better event than the nineteen twenty nine crash and 0:01:18.596 --> 0:01:22.156 the slow rolling depression that occurred after it. And it 0:01:22.356 --> 0:01:26.716 just so happens that a really great financial writer, Andrew 0:01:26.796 --> 0:01:30.116 Ross Sorkin, who wrote a really good book about the 0:01:30.116 --> 0:01:32.476 two thousand and eight financial crisis called Too Big to 0:01:32.556 --> 0:01:36.556 Fail has written a history of the nineteen twenty nine 0:01:36.596 --> 0:01:39.996 crash and the subsequent depression, and I just thought, that's 0:01:39.996 --> 0:01:42.356 holl I'm on and put the paintings next to each 0:01:42.396 --> 0:01:45.356 other and just talk about what happened then and how 0:01:45.356 --> 0:01:48.396 it rhymes or doesn't rhyme with what happened in two 0:01:48.396 --> 0:01:48.916 thousand and. 0:01:48.876 --> 0:01:52.796 Eight, right, and we should say that. Andrew Rossworkin also 0:01:52.916 --> 0:01:55.676 has a column for The New York Times, a financial column, 0:01:55.836 --> 0:01:58.796 and he's the co host of The Squalockbox on CNBC. 0:01:59.076 --> 0:02:01.876 He's had basically he has basically four careers going at once. 0:02:01.956 --> 0:02:03.636 I don't know how he does it. I really don't 0:02:03.676 --> 0:02:06.676 know how he does it. But the book is really interesting. 0:02:06.876 --> 0:02:08.476 I've read it quite a bit about the nineteen twenty 0:02:08.556 --> 0:02:10.156 nine crisis. I read all the great things that were 0:02:10.196 --> 0:02:12.196 written back in the fifties and the sixties about it, 0:02:12.716 --> 0:02:14.476 and it's an original contribution. 0:02:15.116 --> 0:02:18.156 And I can say, Michael's not the easiest person to 0:02:18.396 --> 0:02:20.356 get to like your book, so that's high praise it. 0:02:28.476 --> 0:02:31.316 I began my conversation with the journalist Andrew Ross Sorkin 0:02:31.676 --> 0:02:34.036 by asking him to explain what led to the crisis 0:02:34.076 --> 0:02:37.436 of nineteen twenty nine, the one that eventually set off 0:02:37.516 --> 0:02:38.356 the Great Depression. 0:02:39.076 --> 0:02:42.916 Quick summary is the nineteen twenties were probably one of 0:02:42.956 --> 0:02:47.756 the greatest stock booms in history, in large part because 0:02:48.356 --> 0:02:51.556 Americans got access to credit for the first time, and 0:02:51.596 --> 0:02:54.396 not just credit to go buy actual products for their homes, 0:02:54.396 --> 0:02:58.716 but to be able to go buy on margin stock. 0:02:59.196 --> 0:03:01.716 And people thought it was free money. And so you 0:03:01.756 --> 0:03:04.036 got into nineteen twenty seven, nineteen twenty eight, and then 0:03:04.076 --> 0:03:06.596 into ninety twenty nine, and it had become a national 0:03:06.636 --> 0:03:09.796 pastime to trade. You know, they were broken on the 0:03:09.836 --> 0:03:12.156 corners the way there are Starbucks on the corners today. 0:03:12.156 --> 0:03:15.316 It was literally like that, and people go out of 0:03:15.316 --> 0:03:18.796 their minds, they start gambling. I mean, the American dream 0:03:18.956 --> 0:03:21.556 becomes the get rich quick dream, which, by the way, 0:03:21.556 --> 0:03:23.396 we live with to some degree today. But I think 0:03:23.436 --> 0:03:26.876 that emanated in a large way in the nineteen twenties, 0:03:27.756 --> 0:03:33.076 and you had investors piling in at the same time 0:03:33.276 --> 0:03:38.676 as you had folks on Wall Street and financiers taking 0:03:38.716 --> 0:03:42.636 advantage of them. Insofar as they're both manipulating the market 0:03:42.796 --> 0:03:46.876 in a whole bunch of different ways, they're creating all 0:03:46.916 --> 0:03:51.796 sorts of increasingly leveraged instruments that look like Russian dolls 0:03:51.836 --> 0:03:55.996 of leverage piling on top of each other. And we'll 0:03:55.996 --> 0:03:58.716 never know, We'll never know what it exactly was. That 0:03:58.836 --> 0:04:02.596 sort of was tipped the balance, but the balance was tipped, 0:04:03.276 --> 0:04:08.716 and I think it ultimately fundamentally changed the psychology of 0:04:08.756 --> 0:04:12.596 an entire scarred, an entire generation. You know, I don't 0:04:12.636 --> 0:04:15.556 tell the story in the book, Michael, but I'll tell you. 0:04:15.636 --> 0:04:21.276 My grandfather was eleven years old and was a messenger 0:04:22.076 --> 0:04:25.236 down in October nineteen twenty nine. He was down there 0:04:25.356 --> 0:04:27.316 during this. He was on Wall Street, he was on Wastered. 0:04:27.356 --> 0:04:30.196 He had an older brother who actually he had skipped 0:04:30.196 --> 0:04:33.036 school to go down there, and he watched somebody. He's 0:04:33.036 --> 0:04:35.236 to tell the story. He watched somebody jump out of 0:04:35.476 --> 0:04:39.156 a building and kill himself. And my grandfather, who's no 0:04:39.236 --> 0:04:42.236 longer alive, lived till I think ninety two or ninety 0:04:42.236 --> 0:04:45.396 three now, never bought a share of stock his entire life. 0:04:45.436 --> 0:04:47.996 After that, he bought bonds and other things. But he 0:04:48.036 --> 0:04:50.516 would always say, the stock market is not for us. 0:04:50.996 --> 0:04:53.316 The stock market is like this other thing. 0:04:53.476 --> 0:04:56.036 How'd you get interested in the first place of writing 0:04:56.356 --> 0:04:59.036 a history of the crash? 0:04:59.476 --> 0:05:00.756 This is going to sound so silly. 0:05:01.236 --> 0:05:05.196 I having written Too Big to Fail, I thought, ah, 0:05:05.236 --> 0:05:07.756 I should know something about nineteen twenty nine. I mean, 0:05:07.796 --> 0:05:10.676 I know sort of the contours, the outline. I read 0:05:10.676 --> 0:05:13.076 some of the more famous books, and while there were 0:05:13.116 --> 0:05:16.796 some fascinating books that totally intrigued me about the period, 0:05:17.916 --> 0:05:20.276 I was sort of searching, to be honest with you, 0:05:20.396 --> 0:05:23.996 for the Michael Lewis version of this. I was searching 0:05:24.036 --> 0:05:25.716 for the or the Too Big to Fail version. 0:05:26.036 --> 0:05:28.156 You were looking for your own version of this. 0:05:28.316 --> 0:05:32.876 I wanted to understand the motivations and the personalities, and 0:05:33.356 --> 0:05:35.756 what they were actually thinking in that moment, and why 0:05:35.796 --> 0:05:38.316 they were thinking, what they thinking, and what they did afterwards, 0:05:38.356 --> 0:05:40.516 all those things. I was having to give a speech 0:05:40.596 --> 0:05:43.156 up at Harvard, and I got there early, and I 0:05:43.196 --> 0:05:47.276 went to the Baker Library and I walked in and 0:05:47.316 --> 0:05:50.036 I asked the libraria, the archivist there, if I could 0:05:50.076 --> 0:05:52.956 look at the Thomas Lamont papers from nineteen twenty nine. 0:05:54.236 --> 0:05:55.836 Tell us quickly who Thomas Lamont was. 0:05:56.236 --> 0:06:01.276 Thomas Lamont effectively was the de facto CEO of JP 0:06:01.436 --> 0:06:03.676 Morgan at the time. He wasn't actually the CEO. The 0:06:03.716 --> 0:06:07.076 real CEO was named Jack Morgan. He was the son 0:06:07.396 --> 0:06:11.756 of JP Morgan, but this was the guy who basically 0:06:11.836 --> 0:06:16.036 ran the place and made most of the important decisions. 0:06:16.556 --> 0:06:20.556 And his secretary used to keep transcripts of his phone 0:06:20.556 --> 0:06:23.516 conversations with Hoover. And so I'm sitting there in the 0:06:23.556 --> 0:06:27.596 library reading this stuff, going, oh, my goodness, well maybe 0:06:27.636 --> 0:06:31.836 you could write a book like this. And interestingly I 0:06:31.916 --> 0:06:34.556 went and then talked to that archivist and she said 0:06:34.596 --> 0:06:36.876 that she had read Too Big to Fail, and she said, actually, Andrew, 0:06:36.876 --> 0:06:39.836 you really can't. You can't do what you want to do. 0:06:39.996 --> 0:06:42.396 I know what you're trying to do, and just it's 0:06:42.476 --> 0:06:44.556 not really possible. It's not like one or two or 0:06:44.596 --> 0:06:47.596 three archives either here at Baker or at Columbia or Yale, 0:06:47.716 --> 0:06:50.116 where you can sort of excavate the stuff and then 0:06:50.156 --> 0:06:51.956 you'll be able to write it the way you want 0:06:51.996 --> 0:06:56.516 to write it. And I sort of just didn't want 0:06:56.556 --> 0:06:59.476 to believe her, and then I went on this sort 0:06:59.476 --> 0:07:01.596 of eight year journey to try to figure out and 0:07:01.636 --> 0:07:04.356 she was right in the following way. 0:07:04.436 --> 0:07:06.196 It wasn't all in one place. 0:07:05.996 --> 0:07:09.396 Or two places, or three places or four places had 0:07:09.396 --> 0:07:13.036 to do this sort of like just a different kind 0:07:13.076 --> 0:07:13.836 of excavation. 0:07:14.156 --> 0:07:16.276 There is this line that I wrote you about that 0:07:16.356 --> 0:07:18.596 you must have found in the Lamont archives when you 0:07:18.636 --> 0:07:22.636 were at the Baker Library, and it's and this is 0:07:22.636 --> 0:07:25.396 your description of Thomas Lamont. His attraction to men in 0:07:25.476 --> 0:07:29.756 power reportedly even caused him to ask a senior German official, 0:07:30.316 --> 0:07:33.116 just what sort of fellow is Hitler? Is he the 0:07:33.156 --> 0:07:37.196 sort you'd go fishing with? The reply, my dear Lamont, 0:07:37.396 --> 0:07:40.636 he is the nicest fellow in the world, always making jokes. 0:07:40.796 --> 0:07:44.076 You couldn't ask for a more delightful companion. Where on 0:07:44.116 --> 0:07:45.716 earth does that come from? 0:07:46.356 --> 0:07:50.236 If I recall there was a book written in I 0:07:50.316 --> 0:07:55.356 want to say late thirties or maybe even late forties 0:07:56.036 --> 0:07:59.356 that mentioned Lamont and described this. 0:07:59.436 --> 0:08:02.116 Fly fishing with Hitler is just an image that I 0:08:02.356 --> 0:08:04.796 couldn't get out of my mind I read it. Once 0:08:04.796 --> 0:08:06.636 I read it, I couldn't get it out of my head. 0:08:06.836 --> 0:08:08.756 Once I saw it, I kept thinking, how am I 0:08:08.756 --> 0:08:09.716 going to work the sand? 0:08:11.876 --> 0:08:15.236 So let's run through the characters and let's just describe them, 0:08:15.276 --> 0:08:17.716 and then the analogy. Thomas Lamont, You've given us a 0:08:17.716 --> 0:08:20.476 little sketch. Who do you think the closest to Thomas 0:08:20.596 --> 0:08:23.796 Lamont in two thousand and eight was well. 0:08:23.836 --> 0:08:28.396 I would actually argue maybe he was the Jamie Diamond 0:08:28.516 --> 0:08:31.236 of that period. I think that he's probably the closest 0:08:31.276 --> 0:08:34.596 at that time actually to a Jamie Diamond who was 0:08:34.636 --> 0:08:38.556 trying to work with the government, who was trying to, 0:08:38.596 --> 0:08:40.036 you know, have these relationships. 0:08:40.476 --> 0:08:43.116 It's kind of interesting that in both crises, JP Morgan 0:08:43.956 --> 0:08:47.676 running JP Morgan Morgan plays the analogous role. 0:08:47.956 --> 0:08:50.316 And if you think about it, the government did rely. 0:08:50.516 --> 0:08:54.076 They were relying on Thomas Lamont's advice in nineteen twenty 0:08:54.116 --> 0:08:56.996 nine and after that, and they were relying not only 0:08:57.036 --> 0:08:59.396 on Jamie Diamond's advice in part, but they were also 0:08:59.636 --> 0:09:03.356 relying on his largess and money when he was, you know, 0:09:03.996 --> 0:09:06.636 saving bear Stearns and being used to buy. 0:09:07.916 --> 0:09:08.876 Some of these other banks. 0:09:09.236 --> 0:09:12.956 Yes, tell us about Jesse Livermore. 0:09:13.796 --> 0:09:18.756 Jesse Livermore was a short seller. He was a trader, 0:09:18.876 --> 0:09:23.676 hedge fund manager. He wasn't just a short seller. He 0:09:23.796 --> 0:09:26.676 was the star short seller in the world. He was 0:09:26.716 --> 0:09:29.716 on the cover of magazines, he was a philosopher king. 0:09:29.836 --> 0:09:33.916 People listened to his every word. I'm trying to think 0:09:33.956 --> 0:09:37.036 in my head now though about two thousand and eight, 0:09:37.076 --> 0:09:40.756 and given that The Big Short has a lot, has 0:09:40.796 --> 0:09:44.116 a number of short sellers, but none of those short 0:09:44.156 --> 0:09:47.276 sellers had the sort of fame at the time. 0:09:47.956 --> 0:09:50.076 There has a little Jesse Livermore and all my characters 0:09:50.076 --> 0:09:53.236 in The Big Short, I mean Livermore. I've told you this. 0:09:53.596 --> 0:09:58.716 I sold Showtime a TV pilot, a pilot based on 0:09:58.716 --> 0:10:02.076 the life of the Jesse Livermore, and it opens during 0:10:02.116 --> 0:10:04.516 the crash. One of the many things that appealed to 0:10:04.556 --> 0:10:08.556 me about him as a character was that he was 0:10:08.636 --> 0:10:11.596 so sure of his ability to make judgments under an uncertainty, 0:10:13.076 --> 0:10:15.756 and yet and made so many mistakes along the way. 0:10:15.796 --> 0:10:18.476 And he was so kind of seemingly in control of 0:10:18.516 --> 0:10:22.156 his professional life. His personal life was absolute chaos. 0:10:22.676 --> 0:10:25.916 He would call reporters and they would come to his office, 0:10:26.196 --> 0:10:28.516 and meanwhile, he, by the way, was you know, he 0:10:28.556 --> 0:10:32.156 was drinking. He had alcohol problems, he had personal problems. 0:10:32.196 --> 0:10:35.556 He was being sued constantly by everybody for everything. 0:10:36.596 --> 0:10:38.916 And he's short the end of the crash. 0:10:39.156 --> 0:10:43.436 He's short into the crash. He had actually prior to 0:10:43.436 --> 0:10:46.076 that almost got an out of the shorting business. Because 0:10:46.116 --> 0:10:49.076 the truth was being a short seller on Wall Street 0:10:49.116 --> 0:10:52.916 in nineteen twenty eight and in nineteen twenty nine seemed 0:10:52.956 --> 0:10:57.276 like terrible, terrible businesses. And then this guy comes back 0:10:57.316 --> 0:10:59.316 in at the last minute and wins. 0:10:59.596 --> 0:11:03.236 So any other characters that you would like to highlight. 0:11:03.036 --> 0:11:07.996 So to me, the other major character that drives the 0:11:08.156 --> 0:11:10.276 entire story is Carter Glass. 0:11:10.716 --> 0:11:10.916 Oh. 0:11:11.196 --> 0:11:16.556 Yes, Carter Glass is a senator from Virginia. He had 0:11:16.596 --> 0:11:19.076 been the Treasury Secretary. He later gets asked to be 0:11:19.076 --> 0:11:23.076 the Treasure Secretary again by Roosevelt, and he helped create 0:11:23.116 --> 0:11:27.836 the law that established the Federal Reserve. He was the 0:11:27.876 --> 0:11:30.756 Elizabeth Warren of his time. 0:11:31.196 --> 0:11:31.716 That's right. 0:11:32.156 --> 0:11:35.196 He creates what is now known as Glass Stegel, the 0:11:35.236 --> 0:11:39.276 Glass Steagle Act, which ultimately broke up the banks between 0:11:39.276 --> 0:11:42.996 the sort of casino gambling side of the bank and 0:11:43.796 --> 0:11:46.436 traditional commercial lending side of the bank. And of course 0:11:46.476 --> 0:11:49.956 this becomes a feature of what ultimately happened in two 0:11:49.956 --> 0:11:52.476 thousand and eight, a lot of the calls for by 0:11:52.516 --> 0:11:55.396 Elizabeth Warren in fact, after two thousand and eight to 0:11:55.516 --> 0:11:57.596 break up the banks all over again, in large part 0:11:57.676 --> 0:12:00.996 because the rules that had been put in place by 0:12:01.036 --> 0:12:03.876 the Glass Steagle Act in nineteen thirty three got watered 0:12:03.916 --> 0:12:08.196 down in the nineties, and some people argue ultimately led 0:12:08.596 --> 0:12:11.356 to some of the things that took place in two 0:12:11.356 --> 0:12:11.756 thousan eight. 0:12:14.916 --> 0:12:17.756 When we return, I asked Andrew to compare these reformers 0:12:17.796 --> 0:12:20.196 who arose after each disaster on Wall Street. 0:12:24.396 --> 0:12:27.516 How did the Volkswagen Beetle go from being Hitler's dream 0:12:27.596 --> 0:12:30.956 car to a hippie icon. How did a disgruntled center 0:12:30.956 --> 0:12:34.676 fielder change the business of sports. I'm Jacob Goldstein and 0:12:34.796 --> 0:12:37.596 on Business History. My co host Robert Smith and I 0:12:37.636 --> 0:12:40.676 dig into the people and companies who created the modern world. 0:12:41.036 --> 0:12:44.636 Business History is full of innovations and failures and insights 0:12:44.676 --> 0:12:45.356 into how. 0:12:45.236 --> 0:12:46.356 Business works today. 0:12:46.836 --> 0:12:49.156 At the end of today's episode of Against the Rules, 0:12:49.196 --> 0:12:51.516 We're going to play a clip from our episode about 0:12:51.596 --> 0:12:56.916 Jim Simon's decades ago. Simon's basically invented modern algorithmic trading, 0:12:57.156 --> 0:13:00.436 and after a few early hiccups, including buying up all 0:13:00.516 --> 0:13:04.116 the potatoes in Maine, Simon's built a machine that generated 0:13:04.276 --> 0:13:08.596 incredible returns for decades. The show is called Business History 0:13:08.916 --> 0:13:11.036 and the previous coming up. At the end of today's 0:13:11.076 --> 0:13:12.036 episode of Against the. 0:13:12.076 --> 0:13:24.396 Rules, I'm back with Andrew ross Orkin. When you compare 0:13:24.476 --> 0:13:28.076 and contrast these two characters and what they wanted to do. 0:13:28.196 --> 0:13:31.756 Carter Glass and Elizabeth Warren, what differences do you see? 0:13:31.956 --> 0:13:36.556 Like they're they're policing a different event, the coming in 0:13:36.876 --> 0:13:39.076 after a different The first event is it's a stock 0:13:39.116 --> 0:13:42.636 market bubble, or it's a it's a debt fueled stock 0:13:42.676 --> 0:13:45.996 market boom. The second event is a debt fueled housing boom. 0:13:46.636 --> 0:13:50.756 The role of the bank's slightly different in each case, 0:13:50.876 --> 0:13:52.956 and the institutions that get created a different The SEC 0:13:53.036 --> 0:13:55.796 gets created out of the twenty nine crisis they CFPB. 0:13:55.876 --> 0:13:57.516 He gets created out of the out of the two 0:13:57.516 --> 0:14:00.316 thousand and eight crisis. So like, what differences do you 0:14:00.356 --> 0:14:03.756 see between kind of what they are thinking about what 0:14:03.916 --> 0:14:04.596 bothers them? 0:14:05.156 --> 0:14:08.596 Well, so the similarities are they are vocal, they are allowed, 0:14:08.836 --> 0:14:12.036 they lots of press, and they are the Cassandra's. They 0:14:12.036 --> 0:14:17.316 are the Cassandras in the room. From the beginning. The 0:14:17.356 --> 0:14:21.436 biggest distinction between the two of them is that card Glass, 0:14:22.556 --> 0:14:26.996 I think, actually was genuinely a capitalist and somebody who 0:14:27.036 --> 0:14:29.556 believed in the banking system, in large part because he 0:14:29.596 --> 0:14:33.236 had helped develop the Federal Reserve and he believed in 0:14:33.276 --> 0:14:37.476 these systems. He wasn't so quick to completely and utterly 0:14:37.516 --> 0:14:39.916 break them up and without giving away too much of 0:14:39.956 --> 0:14:43.876 the story, the actual creation of that law, while it 0:14:43.956 --> 0:14:47.876 has his name on it, is so much more complicated 0:14:47.956 --> 0:14:52.556 and dramatic and wild, I think actually too in my estimation. 0:14:52.596 --> 0:14:55.196 It was actually one of the great surprises to me 0:14:55.236 --> 0:14:58.956 as I was reporting on this, because there are so 0:14:58.996 --> 0:15:01.916 many other players who get involved in the creation of 0:15:01.956 --> 0:15:07.476 that law, including people in banking itself, which I think. 0:15:07.356 --> 0:15:08.196 Would shock. 0:15:09.436 --> 0:15:14.036 Which shock Elizabeth Warren given her love for citing that 0:15:14.156 --> 0:15:24.196 bill today. I think Elizabeth Warren was much more about protectingary. 0:15:22.236 --> 0:15:24.636 Americans from the financial predators. 0:15:24.676 --> 0:15:25.516 From the predators. 0:15:25.556 --> 0:15:28.036 I think she was much more focused on that that, 0:15:28.116 --> 0:15:31.316 you know, the ordinary American, the quote unquote little guy. 0:15:31.436 --> 0:15:34.556 She really wanted to make sure that the system quote 0:15:34.636 --> 0:15:37.236 unquote worked for them, that it was equal for them. 0:15:38.036 --> 0:15:41.916 Whereas I'm not sure those were the instincts or at 0:15:41.996 --> 0:15:45.156 least what was the motivation for carter Glass. 0:15:45.396 --> 0:15:48.836 No, there is in the aftermath. It seems to be 0:15:49.076 --> 0:15:51.996 there's a really different tone to the aftermath of eight 0:15:52.316 --> 0:15:54.836 than there was from the aftermath of twenty nine. The 0:15:54.836 --> 0:15:58.316 aftermath of twenty nine, it doesn't in your story as 0:15:58.316 --> 0:16:00.676 you tell the story Anyway, I don't really get the 0:16:00.676 --> 0:16:03.796 feeling that ordinary Americans are thought to have been exploited, 0:16:04.316 --> 0:16:07.036 that these financial predators came in and got them to 0:16:07.076 --> 0:16:10.196 do things that they wouldn't have done wise, and we 0:16:10.196 --> 0:16:12.876 should all feel sorry for them. Whereas in the aftermath 0:16:12.876 --> 0:16:15.396 of Oh wait, that was very much the story. It's like, 0:16:15.516 --> 0:16:18.276 we got the strippers in Las Vegas to buy six 0:16:18.556 --> 0:16:21.156 houses with subprime loans, and we should be ashamed of 0:16:21.156 --> 0:16:24.276 ourselves for having done that. There was much more emphasis 0:16:24.276 --> 0:16:31.396 on bashing the financial elites, well thankful for their predatory behavior, 0:16:31.916 --> 0:16:33.916 because you could very easily say at the back end 0:16:33.916 --> 0:16:38.076 of eight, one natural sort of interpretation is like, once again, 0:16:38.196 --> 0:16:40.476 ordinary Americans got carried away and they borrowed money they 0:16:40.516 --> 0:16:42.956 shouldn't have borred to make to speculate whiys they shouldn't 0:16:42.996 --> 0:16:45.476 and they should be held responsible for that kind of thing. 0:16:46.276 --> 0:16:50.196 So I think there's two distinctions here. One is that 0:16:50.436 --> 0:16:54.436 the sort of turn on Wall Street, the Occupy Wall 0:16:54.436 --> 0:16:56.916 Street sort of movement that happened in the aftermath of 0:16:56.956 --> 0:17:00.996 two thousand and eight, did happen to some degree after 0:17:01.156 --> 0:17:04.116 twenty nine. It just took a lot longer for it 0:17:04.156 --> 0:17:07.876 to happen, and it oddly happened for slightly different reasons, 0:17:07.916 --> 0:17:11.556 which is to say, it was like a very slow collapse. 0:17:11.596 --> 0:17:14.876 People think that nineteen twenty nine the market collapse. You 0:17:14.916 --> 0:17:17.516 hear about this, you know, the one day collapse, and 0:17:17.556 --> 0:17:20.276 that's it. It was really not just that. It was 0:17:20.316 --> 0:17:24.396 the psychological break of that, and then into thirty and 0:17:25.076 --> 0:17:27.476 a whole bunch of other things that happened, including by 0:17:27.516 --> 0:17:32.356 the way, Smooth Hawlly, which was a terrifact somewhat similar 0:17:32.436 --> 0:17:35.876 to what was happening today, but it had a hugely 0:17:35.916 --> 0:17:40.236 deleterious effect on the economy, and you had unemployment then 0:17:40.476 --> 0:17:43.956 spike at one point to twenty five percent. Once we 0:17:44.036 --> 0:17:47.596 got to that, which by the way, didn't really happen 0:17:47.676 --> 0:17:53.196 until nineteen thirty two, then you had people pointing fingers 0:17:53.236 --> 0:17:55.716 and doing lots of things in terms of how they 0:17:55.756 --> 0:17:59.036 thought about Wall Street and the bankers. But I don't 0:17:59.076 --> 0:18:02.956 think people were putting that all together immediately in the 0:18:02.956 --> 0:18:07.156 aftermath of ninet twenty nine, also in part because people 0:18:07.236 --> 0:18:10.396 did have to blame themselves in the following way. They 0:18:10.476 --> 0:18:13.156 knew they were gambling to some degree. It was a gambler, 0:18:13.196 --> 0:18:15.956 weren't trying to in two thousand and eight. At least 0:18:15.996 --> 0:18:18.676 it was framed up in the idea of this American 0:18:18.756 --> 0:18:21.116 dream that we would all own a home, and it 0:18:21.196 --> 0:18:25.596 wasn't you actually got something ostensibly for it. Yep, this 0:18:25.796 --> 0:18:30.116 was truly about trading paper back in nineteen twenty nine. 0:18:30.436 --> 0:18:35.236 Yeah, that's a big distinction. The other difference, And I 0:18:35.236 --> 0:18:38.916 didn't know this. I just assumed that the leftward turn 0:18:38.996 --> 0:18:43.196 in American politics and the rise of Roosevelt was a 0:18:43.236 --> 0:18:48.076 direct response to the hostility towards financial elites and the crash. 0:18:48.356 --> 0:18:50.676 And you make the point that like that wasn't even 0:18:50.676 --> 0:18:53.676 the most salient issue. No, Roosevelt's first campaign. 0:18:53.316 --> 0:18:57.716 Prohibition prohibition, was we need to do away with prohibition. 0:18:58.076 --> 0:19:01.276 People wanted to drink. I really wanted to drink. 0:19:02.796 --> 0:19:06.116 Can you imagine after the SEC is created in. 0:19:06.036 --> 0:19:08.996 What nineteen thirty three, nineteen thirty four, thirty four. 0:19:09.316 --> 0:19:12.876 Yep, that ten years later, or even eight years later, 0:19:12.956 --> 0:19:17.196 people are calling for it's dismantling it because it's getting 0:19:17.236 --> 0:19:18.956 in the way of Wall Street doing what it needs 0:19:18.996 --> 0:19:22.556 to do. I mean, the CFPP is created on the 0:19:22.556 --> 0:19:25.516 back end of the financial crisis, and it's a historical 0:19:26.036 --> 0:19:29.516 terms of kind of nanosecond before there's already attacks on it, 0:19:29.796 --> 0:19:32.476 attempt to kind of neuter it, don't. 0:19:32.756 --> 0:19:35.276 I look at the two thousand and eight financial crisis 0:19:35.316 --> 0:19:38.636 and almost draw a straight line to the election of 0:19:39.396 --> 0:19:45.116 President Trump in twenty sixteen, and arguably again in twenty 0:19:45.156 --> 0:19:48.516 four this idea that the institutions, the experts let us 0:19:48.516 --> 0:19:49.036 all down. 0:19:49.556 --> 0:19:52.636 They failed us. They told us it was all going 0:19:52.716 --> 0:19:53.276 to be fine. 0:19:53.916 --> 0:19:56.516 They you know those quotes from even Ben Bernaki and 0:19:56.556 --> 0:20:00.716 others in two thousand and seven, you know, suggesting that 0:20:00.916 --> 0:20:04.116 we weren't on the precipice, and then we were in 0:20:04.156 --> 0:20:04.756 twenty nine. 0:20:04.996 --> 0:20:09.356 We were. The experts weren't similarly defenestrated. They were were 0:20:09.396 --> 0:20:11.836 like empowered in a way at the back end of it. 0:20:12.476 --> 0:20:16.396 They were empowered until they weren't. Hoover immediately empowered them 0:20:16.516 --> 0:20:20.876 because he was a Republican and he he was having 0:20:20.916 --> 0:20:24.276 meetings with CEOs the way Trump is having meetings with CEOs. 0:20:24.316 --> 0:20:26.916 He was calling them all to the White House. They 0:20:26.916 --> 0:20:29.156 were doing photo ops left and right. 0:20:30.676 --> 0:20:30.836 Now. 0:20:30.876 --> 0:20:33.916 He was desperately trying to press them to do certain things, 0:20:34.516 --> 0:20:39.396 less successfully than Trump was in certain cases, in that 0:20:39.756 --> 0:20:42.836 he would tell them, for example, that he wanted them 0:20:42.836 --> 0:20:45.476 to hire more people, and then the question is would 0:20:45.476 --> 0:20:49.196 they and of course they did the opposite. So the 0:20:49.276 --> 0:20:52.236 other character that I fell in love with, to be 0:20:52.316 --> 0:20:57.076 honest with you, is John Rascob. John Rascob to me, 0:20:57.276 --> 0:21:01.996 actually is very much the Elon Musk of that moment. 0:21:02.596 --> 0:21:06.036 John Rascob helped develop General Motors, So there was. 0:21:06.516 --> 0:21:08.436 No Elon Musk in two thousand and eight. 0:21:08.716 --> 0:21:10.636 There was no Elon Musk in two thousand and eight. 0:21:10.636 --> 0:21:14.956 But back in the nineteen twenties, John Rascob had become 0:21:14.996 --> 0:21:18.556 a hugely successful executive in the automobile business. He helped 0:21:18.716 --> 0:21:23.236 effectively create the idea of credit like truly because he 0:21:23.276 --> 0:21:27.036 created the credit unit at General Motors to help them 0:21:27.036 --> 0:21:31.276 sell cars. Prior to that, actually most people thought it 0:21:31.316 --> 0:21:34.396 was a sin to take on debt, and he really 0:21:34.436 --> 0:21:38.156 fundamentally reshaped that. He then took his winnings from his 0:21:38.236 --> 0:21:42.396 General Motors' days and became a hugely successful investor and 0:21:42.556 --> 0:21:45.196 was making more money investing than he had ever been 0:21:45.276 --> 0:21:50.276 made at General Motors. He then, like Elon, decides that 0:21:50.436 --> 0:21:52.276 he has all this money, has all this power, He's 0:21:52.276 --> 0:21:56.316 going to get into politics. And now he doesn't choose 0:21:56.476 --> 0:21:58.716 the winner in this case, he doesn't choose Hoover. He 0:21:58.796 --> 0:22:03.236 chooses al Smith, who was running against Hoover, and he 0:22:03.356 --> 0:22:07.556 becomes the head of the Democratic Committee. I mean, that's 0:22:07.596 --> 0:22:10.676 what he becomes. And once he loses, and it was 0:22:10.676 --> 0:22:13.316 really hit, the first loss in his whole life, almost 0:22:13.756 --> 0:22:18.876 he then makes it his mission to undo Hoover's reputation, 0:22:18.996 --> 0:22:24.436 to hurt Hoover reputationally by effectively paying people to write 0:22:24.636 --> 0:22:28.396 articles and give speeches undermining his reputation. And by the way, 0:22:28.516 --> 0:22:31.276 Hoover has a very bad reputation even to this day. 0:22:31.356 --> 0:22:35.636 I believe to some degree you can look back at 0:22:35.716 --> 0:22:39.276 John Rascob and say he was responsible for that. Of course, 0:22:39.356 --> 0:22:42.916 Elon musk and did a buying Twitter and uses it 0:22:42.956 --> 0:22:47.516 in all sorts of interesting ways to bolster and undermine 0:22:48.436 --> 0:22:52.956 political reputations. And then he goes off and does the 0:22:52.996 --> 0:22:56.836 equivalent of building a spaceship back in nineteen twenty nine 0:22:57.036 --> 0:22:59.836 called the Empire State building right, and. 0:23:01.636 --> 0:23:04.796 It really does. It maps pretty neatly onto Elon's life. 0:23:04.836 --> 0:23:08.076