WEBVTT - Bloomberg Businessweek Weekend - April 28th, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.079 --> 0:00:22.919 So you might recall a Bloomberg BusinessWeek cover store Is 0:00:22.960 --> 0:00:25.040 a while ago, and it talked about how everything is 0:00:25.040 --> 0:00:28.280 private equity now, from pet stores and doctors practices, to 0:00:28.360 --> 0:00:31.240 real estate loans, to businesses, to startups and more. Private 0:00:31.240 --> 0:00:34.120 equity has trillions of dollars in assets under management and 0:00:34.159 --> 0:00:36.760 has made billionaires out of many of its founders. And 0:00:36.760 --> 0:00:39.960 according to our next two guests, private equity is wrecking America. 0:00:40.200 --> 0:00:43.000 Pull Uzer Prize winning journalist and senior financial reporter for 0:00:43.120 --> 0:00:47.839 NBC News, Gretchen Morgenson and Josh Rosner, financial service policy analyst, 0:00:48.120 --> 0:00:51.120 maaging director of Graham Fisher. They co wrote you might 0:00:51.159 --> 0:00:54.320 recall the New York Times bestseller Reckless Endangerment, which was 0:00:54.360 --> 0:00:57.280 about the Great Financial Crisis. Their new book is entitled 0:00:57.320 --> 0:01:01.600 These Are the Plunderers, How Private Equity runs and America. Guys, 0:01:01.600 --> 0:01:03.840 thank you so much, so great to have you here. 0:01:03.960 --> 0:01:04.160 Josh. 0:01:04.200 --> 0:01:05.520 When you mentioned the book, We're like, you got to 0:01:05.520 --> 0:01:08.600 come on, you got to come on. Private equity not 0:01:08.720 --> 0:01:11.040 a new thing. It's been around for a long time. 0:01:11.520 --> 0:01:13.800 Leveraging in deals not a new thing. So why are 0:01:13.840 --> 0:01:16.119 you guys writing about private equity? Why put the book 0:01:16.120 --> 0:01:16.520 out now? 0:01:17.280 --> 0:01:20.120 You know? I think that what we're learning now about 0:01:20.160 --> 0:01:23.920 private equity, we have enough longitudinal data, right, we have 0:01:24.080 --> 0:01:28.120 decades of data about what happens when companies are taken 0:01:28.160 --> 0:01:32.360 over by these actors who pile the debt on them, 0:01:32.480 --> 0:01:36.320 and we are now getting data, for example, on you know, 0:01:36.480 --> 0:01:40.440 how many more deaths there are in nursing homes that 0:01:40.520 --> 0:01:44.039 are owned by private equity. So it's really a lot 0:01:44.080 --> 0:01:46.080 about the data, but it's also a lot about what 0:01:46.200 --> 0:01:49.480 happened in COVID when we really started to see this 0:01:49.800 --> 0:01:53.680 really huge gulf between rich and poor, and we really 0:01:53.720 --> 0:01:54.760 wanted to look into why. 0:01:54.880 --> 0:01:56.840 And that's what I wonder, like, if COVID didn't happen, 0:01:56.920 --> 0:01:59.800 might you not be doing this or might the impact 0:01:59.840 --> 0:02:03.840 on private equity and healthcare specifically, might this not have 0:02:03.960 --> 0:02:05.360 come to be? Well? 0:02:05.400 --> 0:02:07.520 I mean I think that it would have in any case, 0:02:07.640 --> 0:02:10.160 because really, what you've seen as a trajectory in the 0:02:10.440 --> 0:02:14.040 changes in private equity. The targets, right, and they're running 0:02:14.120 --> 0:02:17.560 out of targets, and so they are more and more targeting. 0:02:17.600 --> 0:02:21.160 Industries that used to be viewed as socially important social 0:02:21.240 --> 0:02:24.880 goods not expected to run for profits because there's not 0:02:24.960 --> 0:02:28.480 a target rich environment anymore, and so healthcare education have 0:02:28.560 --> 0:02:32.400 become increasingly the focus and the target, and that would 0:02:32.520 --> 0:02:36.400 naturally have led to worse outcomes in industries COVID or 0:02:36.440 --> 0:02:38.440 not that are socially important. 0:02:38.480 --> 0:02:41.880 I have to say, though, plunderers it's a pretty strong word, right, 0:02:41.919 --> 0:02:43.800 and I just like kind of let me throw it 0:02:43.840 --> 0:02:46.120 up in Google definitions. Someone who steals or removes things, 0:02:46.240 --> 0:02:48.920 especially in a violent or severe way, to rob of 0:02:48.960 --> 0:02:52.000 goods by force. A loaded word, A strong word. Why 0:02:52.360 --> 0:02:53.040 why that word? 0:02:53.520 --> 0:02:56.360 Well, I mean, when you're going into a company and 0:02:56.520 --> 0:02:59.400 the focus is to get yourself paid out as quickly 0:02:59.400 --> 0:03:04.960 as possible, regardless of the impact on the employees, the pensions, 0:03:05.639 --> 0:03:09.839 the communities in which you exist, the broader economy, I'm 0:03:09.840 --> 0:03:12.760 not sure that that's an unfair or particularly harsh word. 0:03:13.120 --> 0:03:14.200 And that seems to. 0:03:14.120 --> 0:03:17.040 Be where the industry has moved, or many parts of 0:03:17.080 --> 0:03:19.760 the industry have moved. When you start looking deal by deal. 0:03:20.480 --> 0:03:24.480 Greg, Well, you also have this, to Josh's point, this 0:03:24.600 --> 0:03:26.000 big circle of pain. 0:03:26.400 --> 0:03:26.600 Right. 0:03:26.639 --> 0:03:29.520 You've got a very few people making an awful lot 0:03:29.520 --> 0:03:32.919 of money. This is a billionaire minting machine private equity, right, 0:03:33.440 --> 0:03:35.720 and yet you have all of these other people who 0:03:35.720 --> 0:03:37.240 are on the other side of the table. And what 0:03:37.320 --> 0:03:39.720 we really wanted to do was to try to shine 0:03:39.760 --> 0:03:42.000 the light on the people who are on the other 0:03:42.200 --> 0:03:43.320 side of the table. 0:03:43.600 --> 0:03:46.480 Can you give me an example for my mom listening 0:03:46.520 --> 0:03:49.400 to this. We know about the nursing home impact. That 0:03:49.520 --> 0:03:51.480 seems to be a popular one, but is there one 0:03:51.480 --> 0:03:53.680 that you think will be most surprising to readers of 0:03:53.720 --> 0:03:54.160 the book? 0:03:55.200 --> 0:03:57.920 Well, I think healthcare affects so many people that healthcare 0:03:58.000 --> 0:03:59.120 is always going to resonate. 0:03:59.200 --> 0:03:59.720 We have a. 0:03:59.680 --> 0:04:03.440 Doctor in the book who was fired. He worked in 0:04:03.480 --> 0:04:07.680 an emergency department in a hospital in the Midwest, and. 0:04:07.640 --> 0:04:10.480 He was fired because he was. 0:04:10.400 --> 0:04:12.760 Trying to get the hospital to change the code blue 0:04:13.560 --> 0:04:16.680 practices that they had. It was really impacting patients, it 0:04:16.760 --> 0:04:20.359 was really going to have problems, cause problems. He was 0:04:20.400 --> 0:04:23.840 fired by his staffing company, which was owned by private equity, 0:04:23.920 --> 0:04:26.839 because he was making too much noise trying to protect 0:04:26.839 --> 0:04:29.760 the patients. So that is I think a great example. 0:04:30.040 --> 0:04:31.760 There are some other ones in the yeah, I mean, 0:04:32.200 --> 0:04:32.760 I think on. 0:04:32.720 --> 0:04:36.120 Top of that, even more broadly than healthcare, another major 0:04:36.200 --> 0:04:39.160 example is the purchase of one of the last of 0:04:39.200 --> 0:04:43.920 the Rust Belt businesses, a large aluminum company, rolling company, 0:04:44.360 --> 0:04:46.560 which was the largest employer in the county of one 0:04:46.600 --> 0:04:50.200 of the poorest counties in the country. Private equity comes 0:04:50.240 --> 0:04:54.680 in leverages up an already struggling business, forces the governor 0:04:54.760 --> 0:04:58.360 to get involved to get them electric utility rate reduction, 0:04:58.960 --> 0:05:01.560 while they're taking money out the back door, and within 0:05:01.600 --> 0:05:05.039 a matter of six months they've taken all their money out, 0:05:05.440 --> 0:05:09.800 and within three or four years they end up bankrupting 0:05:09.839 --> 0:05:13.640 the company, laying off more than two thousand employees, almost 0:05:13.640 --> 0:05:17.520 all of the employees, and there goes thirty percent of 0:05:17.560 --> 0:05:21.560 the school's tax base, right, And so this is hollowing 0:05:21.560 --> 0:05:22.200 out America. 0:05:22.400 --> 0:05:24.680 No, and I hear what you're saying. I gotta say, 0:05:24.720 --> 0:05:27.200 we've been talking about this book in the newsroom a lot, 0:05:27.279 --> 0:05:29.640 because I think it's been an interesting time where we're 0:05:29.680 --> 0:05:32.080 seeing a few banks get into trouble and you know, 0:05:32.080 --> 0:05:35.280 we're wondering about, you know, with shadow banking, the term 0:05:35.320 --> 0:05:39.040 itself feels like it's it's shady, but having other sources 0:05:39.080 --> 0:05:41.400 of funding out there, especially if you think about middle 0:05:41.440 --> 0:05:44.919 market companies who can always tap into the JP Morgan's 0:05:45.000 --> 0:05:46.359 or the big banks that are out there, that it 0:05:46.400 --> 0:05:51.679 has provided, you know, a necessary you know, funding avenue 0:05:51.720 --> 0:05:53.359 if you will. So I wonder you know how you 0:05:53.400 --> 0:05:54.920 think about that, Gretchen. 0:05:54.920 --> 0:05:58.239 Well right to that point. I had an email today 0:05:58.240 --> 0:06:01.000 from a guy who said, I just heard your interview 0:06:01.120 --> 0:06:03.960 on another station, and he said this happened to me, 0:06:04.440 --> 0:06:06.839 and he wrote chapter and verse about how his small 0:06:06.839 --> 0:06:09.840 ash company was taken over by private equity. He said, 0:06:09.839 --> 0:06:13.080 my founders got rich. I got a little bit richer, 0:06:13.760 --> 0:06:18.400 but they savaged the company and left me as roadkill. 0:06:19.360 --> 0:06:21.120 And so this is just the. 0:06:21.160 --> 0:06:23.799 Kind of thing that has happened so often across America. 0:06:23.880 --> 0:06:25.320 I think we're going to be hearing a lot of 0:06:25.360 --> 0:06:27.200 stories as people read this book. 0:06:27.279 --> 0:06:27.680 It's all. 0:06:29.400 --> 0:06:32.359 So to your point though, also, Carol, I think that 0:06:32.440 --> 0:06:34.599 you also have to think about there are proper ways 0:06:34.600 --> 0:06:37.960 to do it. We're not condemning private equity, period We're 0:06:38.080 --> 0:06:42.039 condemning private equity the way it's largely done with huge 0:06:42.040 --> 0:06:45.400 amounts of debt foisted on the company with special dividends 0:06:45.480 --> 0:06:48.760 out to the equity holders quickly, with a short term 0:06:48.839 --> 0:06:53.200 return focus rather than a partnership, longer term focus, which 0:06:53.240 --> 0:06:54.919 is what it should be. Right, If the purpose of 0:06:54.960 --> 0:06:57.840 capitalism is to aggregate and allocate capital through the system 0:06:58.240 --> 0:07:00.400 for productive purposes, this isn't that. 0:07:00.640 --> 0:07:03.120 But then shouldn't regulation be part of that conversation? 0:07:03.320 --> 0:07:05.159 I think that's very fair. I think I think that's 0:07:05.200 --> 0:07:07.720 part of what we're hoping comes out of this, is 0:07:07.760 --> 0:07:11.520 that there's a recognition that there needs to be more oversight. 0:07:11.600 --> 0:07:14.640 There needs to be fewer waivers on transactions being able 0:07:14.680 --> 0:07:17.720 to occur. There needs to be some constraints on if 0:07:17.720 --> 0:07:20.920 you're taking over the company, you need to actually retain 0:07:20.960 --> 0:07:24.320 an equity interest and not special dividend and leave the 0:07:24.360 --> 0:07:25.920 carcass for someone else to clean up. 0:07:25.960 --> 0:07:28.000 But there are some you know, go ahead, gretcha. 0:07:28.040 --> 0:07:30.640 The other thing is that we really do need to 0:07:30.760 --> 0:07:34.200 know how pervasive private equity is in this country. You know, 0:07:34.600 --> 0:07:37.880 does everyone know that forty percent of the emergency departments 0:07:37.880 --> 0:07:40.800 are run by private equity firms? No, It's very hard 0:07:40.800 --> 0:07:43.720 to find that information out, and so consumers can't make 0:07:43.760 --> 0:07:46.480 the right decisions right if they don't know who owns 0:07:46.520 --> 0:07:49.760 these companies. And so I think just even the transparency 0:07:50.200 --> 0:07:53.360 of knowing who owns the company, who backs the companies, 0:07:53.680 --> 0:07:57.400 and whether they are building up enough you know, anti 0:07:57.440 --> 0:08:01.120 competitive type behavior. I think the FDC is starting to 0:08:01.160 --> 0:08:03.760 look into private equity in that way. I think DOJ 0:08:04.040 --> 0:08:06.840 is starting to. This is an area that has just 0:08:06.880 --> 0:08:09.840 been left to grow and grow and grow with very 0:08:09.840 --> 0:08:10.520 little oversight. 0:08:10.680 --> 0:08:12.920 And you get into though, like you know, the gaps 0:08:12.920 --> 0:08:14.760 that are out there, And I guess I would argue 0:08:14.760 --> 0:08:16.560 too that there's a lot of reasons why there are 0:08:16.640 --> 0:08:18.760 the gaps and inequities. We've been talking about it a 0:08:18.760 --> 0:08:21.360 lot coming off of the pandemic, but whether it's government 0:08:21.440 --> 0:08:25.080 programs or access to financing or financial literacy, like the 0:08:25.360 --> 0:08:27.560 gaps that are out there, and I'm just curious how 0:08:27.600 --> 0:08:30.040 you kind of counter that, well. 0:08:30.040 --> 0:08:32.280 But the gaps that are out there matters. Remember we 0:08:32.320 --> 0:08:34.760 had a period coming out of COVID where we had 0:08:34.800 --> 0:08:38.560 surprise billing becoming a major issue where people would go 0:08:38.559 --> 0:08:41.200 into an emergency room, right they'd end up with a 0:08:41.200 --> 0:08:46.520 bill because the emergency room actually had outsourced parts of 0:08:46.559 --> 0:08:49.240 its business to affiliates who weren't part of the insurance, 0:08:49.440 --> 0:08:53.240 so they could then actually boost their fees and so 0:08:53.280 --> 0:08:55.160 that became part of the problem again. 0:08:54.960 --> 0:08:58.640 The bad actor. A bad actor was a spece. 0:09:00.720 --> 0:09:02.880 I mean, this is why they take over the emergency 0:09:02.880 --> 0:09:06.240 departments is to you know, generate higher revenue. 0:09:06.320 --> 0:09:09.240 Josh Rosner's with US Managing Director Graham Fisher and Company 0:09:09.280 --> 0:09:12.440 here in studio and at Gretchen Morgenson, senior financial reporter 0:09:12.480 --> 0:09:15.320 at NBC News Investigative Unit, their new book, These are 0:09:15.360 --> 0:09:19.040 the plunderers How private equity runs in rexs America. Somebody 0:09:19.080 --> 0:09:21.480 on Twitter is saying, please ask them who most of 0:09:21.520 --> 0:09:25.440 the LPs are in these funds, public pension funds, public 0:09:25.480 --> 0:09:26.600 pension funds, right. 0:09:26.440 --> 0:09:28.200 CalPERS, cal stirs. 0:09:28.600 --> 0:09:30.880 Now they are there in private equity because they want 0:09:30.920 --> 0:09:34.160 the outsize returns. That's correct. Are they getting the outsetce? 0:09:34.200 --> 0:09:35.880 They need the outsize returns. 0:09:35.920 --> 0:09:36.880 We will all agree with that. 0:09:36.960 --> 0:09:40.439 Right, they have obligations that they cannot meet. But now 0:09:40.520 --> 0:09:42.959 the returns are not They're reverting to the mean to 0:09:43.000 --> 0:09:45.880 the S and P five hundred much cheaper, you know, 0:09:46.360 --> 0:09:49.560 less opaque, much more transparent, you know what you own. 0:09:49.920 --> 0:09:52.199 Plus you don't have the problem with the weird marks, 0:09:52.440 --> 0:09:55.000 you know, marking to market that private equity can do 0:09:55.080 --> 0:09:57.480 where you don't really know what the value is. 0:09:57.800 --> 0:10:00.839 But the pension funds think that they're getting a better turns. 0:10:00.559 --> 0:10:03.840 Absolutely because the private equity people told them they were. 0:10:04.080 --> 0:10:06.840 And they're not looking at it necessarily net of expense. 0:10:07.160 --> 0:10:08.480 Yeah, right, And that's. 0:10:08.320 --> 0:10:11.280 Part of the problem as well. The other piece with 0:10:11.360 --> 0:10:13.960 the with the whole game is the pension funds really 0:10:14.040 --> 0:10:18.040 are the enablers here, and you know, it's partially due 0:10:18.080 --> 0:10:20.920 to it's partially due to the accounting rules that we 0:10:20.960 --> 0:10:23.520 had an underfunded pension system for a very long time 0:10:23.559 --> 0:10:26.479 where the pension funds were allowed to make actuary assumptions 0:10:26.480 --> 0:10:30.000 about what their future obligation was and therefore impute what 0:10:30.040 --> 0:10:33.240 the returns needed to be. And so we ended up 0:10:33.280 --> 0:10:36.520 with most of our pension system wildly underfunded, and so 0:10:36.559 --> 0:10:39.600 they had to swing more and more aggressively for the fences. 0:10:39.640 --> 0:10:42.080 They thought this was the solution, and it's become less 0:10:42.080 --> 0:10:44.400 and less of the solution, to the point where PE 0:10:44.440 --> 0:10:47.640 is now buying insurance companies as part of the way 0:10:47.679 --> 0:10:50.480 for them to stuff those future liabilities. 0:10:51.240 --> 0:10:53.360 So you guys are great, and you know some of 0:10:53.360 --> 0:10:55.719 The criticism that has probably already come back is that 0:10:55.880 --> 0:10:59.400 you know, you looked at certain studies and then you know, 0:10:59.400 --> 0:11:02.160 maybe didn't take is wide. There's been some other studies 0:11:02.160 --> 0:11:04.200 that I've been reading that you know that actually private 0:11:04.200 --> 0:11:07.080 equities holding their investments for longer. So what do you 0:11:07.120 --> 0:11:09.400 say to some of the things that are I know, 0:11:09.440 --> 0:11:12.079 you're just starting your media tour that are coming at you. 0:11:12.080 --> 0:11:14.880 You know, it's funny that you bring up academic studies 0:11:14.920 --> 0:11:18.360 because there are so many academic studies times that are 0:11:18.600 --> 0:11:22.280 funded by private equity. You really have to look hard 0:11:22.559 --> 0:11:25.640 to see and the authors sometimes don't tell you about 0:11:25.640 --> 0:11:28.520 the conflicts, and so you look and you see, oh, look, 0:11:28.600 --> 0:11:31.720 this author has an affiliation with a private equity firm. 0:11:32.000 --> 0:11:35.000 When I was helping do the reporting with Josh on this, 0:11:35.600 --> 0:11:39.000 I went to the American Investment Council and I said, 0:11:39.040 --> 0:11:41.840 please give me studies that you would like us to 0:11:41.880 --> 0:11:44.400 look at on the benefits of private equity. Also asked 0:11:44.440 --> 0:11:47.280 them for best deals. You know, we really want to 0:11:47.280 --> 0:11:51.360 hear that side of the story. And you know, unfortunately 0:11:51.440 --> 0:11:53.280 they just gave me a lot of studies that had 0:11:53.320 --> 0:11:57.600 private equity, you know, sort of affiliation. Next and I 0:11:57.640 --> 0:11:59.559 said to them, I'm sorry, I'm just not going to 0:11:59.640 --> 0:12:03.000 do that. Really need to have unbiased resources here. The 0:12:03.080 --> 0:12:06.559 other thing we had was we did have interaction with Blackstone. 0:12:07.120 --> 0:12:12.439 Blackstone said that they have created two hundred thousand their 0:12:12.480 --> 0:12:16.840 portfolio companies have created two hundred thousand new jobs, and 0:12:16.920 --> 0:12:20.199 that they don't go bankrupt as often as the generic 0:12:20.240 --> 0:12:24.000 sort of academic research shows, and so therefore that our 0:12:24.400 --> 0:12:27.880 research was incorrect. And I said, well, that's fantastic. I 0:12:27.920 --> 0:12:31.320 really want to report that. I really love to see 0:12:31.360 --> 0:12:37.760 the data, and no, no data. Respectfully decline, Well, I'm curious, 0:12:38.120 --> 0:12:40.800 did you talk to all of who in terms of 0:12:40.800 --> 0:12:42.520 looking at this universe? 0:12:42.679 --> 0:12:45.160 Do you throw all of private equity in this bucket? 0:12:45.720 --> 0:12:45.920 Yes? 0:12:46.559 --> 0:12:50.440 No, again again I think that look, private equity is 0:12:50.480 --> 0:12:52.320 a is a big field with a lot. 0:12:52.160 --> 0:12:55.240 Of players, correct, and private equity for really not just 0:12:55.320 --> 0:12:55.880 private appa. 0:12:56.000 --> 0:12:59.080 That's correct, and so we're really just talking about the 0:12:59.120 --> 0:13:02.000 more traditional leveraged players, the. 0:13:02.000 --> 0:13:04.080 People who used to call themselves leveraged by it. 0:13:03.960 --> 0:13:06.400 Exactly right, exactly, That's what we're talking about. Is that 0:13:06.440 --> 0:13:08.560 business model should have died a long time ago with 0:13:08.679 --> 0:13:11.040 the end of greed is good, and. 0:13:11.440 --> 0:13:15.040 It didn't Okay, so three minutes left, let's solve the problem. 0:13:15.080 --> 0:13:19.000 But I'm curious if if you buy into what you're saying, 0:13:19.200 --> 0:13:23.200 and where does it end, like what happens then you 0:13:23.240 --> 0:13:26.080 say it's going to wreck America? Well you would, says already. 0:13:26.280 --> 0:13:28.120 I think it already has in many ways. 0:13:28.160 --> 0:13:31.000 I think it's what's the extreme? 0:13:31.559 --> 0:13:33.480 Well, I mean, I think the extreme, as we were saying, 0:13:33.559 --> 0:13:35.840 is most of these firms that we're talking about have 0:13:35.880 --> 0:13:40.200 also bought insurance companies more recently less and so the 0:13:40.240 --> 0:13:44.960 next level is you're essentially taking over retirement plans, putting 0:13:44.960 --> 0:13:50.520 those into annuities, stuffing those retirement accounts with riskier deals, 0:13:51.240 --> 0:13:55.320 and you're essentially begging for a future crisis not only 0:13:55.360 --> 0:13:58.640 for retirees, but for the insurance industry and for the 0:13:58.640 --> 0:14:00.720 public in that And I think that may well be 0:14:00.800 --> 0:14:03.080 the terminus that we should be looking forward to. 0:14:03.960 --> 0:14:06.040 And this is in part why we started with the 0:14:06.120 --> 0:14:10.760 executive life situation, because it is really almost full circle. 0:14:11.679 --> 0:14:13.000 So what what should be done? 0:14:14.280 --> 0:14:18.200 We need more transparency, we need more antitrust activities. We 0:14:18.320 --> 0:14:21.960 just need more scrutiny on what these folks are doing, 0:14:22.040 --> 0:14:25.520 who they're impacting and affecting the pension funds really need 0:14:25.560 --> 0:14:28.680 to rethink whether they want to be in this business 0:14:28.720 --> 0:14:32.440 and actually, you know, promote it and give it the 0:14:32.480 --> 0:14:33.720 oxygen that it needs. 0:14:34.080 --> 0:14:35.800 Josh, you spent a lot of time up on Capitol 0:14:35.840 --> 0:14:38.400 Hill during the Great Financial Crisis, So what's you know, 0:14:38.440 --> 0:14:41.680 the will or interest in doing something more? And you know, 0:14:41.800 --> 0:14:44.920 to be fair, a lot of whether it's corporate America, 0:14:45.040 --> 0:14:47.200 you know, pick your institution or your sector, A lot 0:14:47.280 --> 0:14:49.760 of people are spending a lot of time in Washington 0:14:49.840 --> 0:14:52.520 or making sure that they're on the right campaign. So 0:14:52.600 --> 0:14:54.240 I'm just curious, what's the well. 0:14:54.320 --> 0:14:56.640 That was actually one of the one of the original 0:14:56.760 --> 0:15:00.120 impetuses for this was when Gretchen and I started at 0:15:00.200 --> 0:15:03.600 what was going on during the COVID crisis with everyone 0:15:03.600 --> 0:15:07.280 in corporate America going hand and you know, open to Washington, 0:15:07.760 --> 0:15:10.560 and we started seeing the private equity guys quietly lobbying 0:15:10.600 --> 0:15:12.440 for handouts. And I'm sorry to call it that, but 0:15:12.480 --> 0:15:16.960 that's what we're talking about, or bailouts. And I don't 0:15:17.000 --> 0:15:20.520 think that there's a lot of interest broadly in Washington. 0:15:20.600 --> 0:15:22.920 I think what's interesting is you're starting to see people 0:15:23.000 --> 0:15:26.600 on the progressive side and the very conservative side starting 0:15:26.600 --> 0:15:29.880 to recognize that this is actually a family a worker. 0:15:29.960 --> 0:15:33.560 A retirment interest loophole, right, Like that has bipartisan support, 0:15:33.600 --> 0:15:34.880 but it hasn't gotten anywhere. 0:15:35.120 --> 0:15:37.120 I think this is actually a little different because we're 0:15:37.160 --> 0:15:40.880 starting to see it talked about as a maintain street 0:15:41.000 --> 0:15:45.840 issue of jobs retirement rather than let's tax sure, right, 0:15:45.920 --> 0:15:47.840 And I think that you're starting to see that from 0:15:48.440 --> 0:15:51.600 the Elizabeth Warrens on the one side, to the JD 0:15:51.760 --> 0:15:55.160 Vance's rubios and Josh Hawley's on the other side, They're 0:15:55.160 --> 0:15:57.880 all sort of coming to the same place here, and 0:15:57.920 --> 0:15:59.720 that usually means the middle is going to start moving 0:15:59.720 --> 0:16:00.200 as well. 0:16:00.960 --> 0:16:02.760 What do you hope that somebody reads this book? What 0:16:02.840 --> 0:16:05.880 do you hope that they ask themselves or kind of explore. 0:16:06.080 --> 0:16:08.960 Well, I hope that they say this is wrong and 0:16:09.120 --> 0:16:10.160 I want it to change. 0:16:10.400 --> 0:16:12.080 Yeah, and I'm curious, like I'm going to do some 0:16:12.120 --> 0:16:15.800 googling on my various medical practices that I'm a part 0:16:15.840 --> 0:16:16.920 of your quick glass thought. 0:16:17.360 --> 0:16:17.560 Yeah. 0:16:17.600 --> 0:16:19.240 No, I mean I think that it would be nice 0:16:19.280 --> 0:16:21.720 if we all started becoming aware of every company that 0:16:21.760 --> 0:16:22.960 we interact with daily. 0:16:23.160 --> 0:16:25.360 Well, and I think transparency across the board, whether it's 0:16:25.400 --> 0:16:27.480 private equity or everything, and I think this is what 0:16:27.520 --> 0:16:29.560 you're seeing with ESG kind of going through a racketing 0:16:29.640 --> 0:16:32.720 in a big way. Thank you so much for coming in. 0:16:32.960 --> 0:16:36.560 Really appreciate it. Josh Rosner, Imagining Director, Graham Fisher, Gretchen 0:16:36.600 --> 0:16:40.160 Morgenson over at NBC News. These are the Plunderers, How 0:16:40.200 --> 0:16:43.400 private equity runs and wrecks America. This book is new 0:16:43.440 --> 0:16:44.560 and it's out. 0:16:44.800 --> 0:16:48.360 You're listening to the Bloomberg Business Week Podcast. Catch us 0:16:48.400 --> 0:16:51.080 live weekdays from two to five pm Eastern. 0:16:50.960 --> 0:16:54.200 On Bloomberg Radio, the Bloomberg Business App, and you too. 0:16:54.560 --> 0:16:57.600 You can also listen live to our flagship New York station, 0:16:58.160 --> 0:17:02.320 Just say Alexa, play bloom Hey. 0:17:02.360 --> 0:17:04.840 We'll keeping an eye on shares of Tesla as well, 0:17:05.160 --> 0:17:07.480 stock down about three and a half percent just off 0:17:07.520 --> 0:17:11.200 their lows, and they have backtracked nearly twenty five percent 0:17:11.240 --> 0:17:14.680 since March thirty. First, we continue to see Elon continuing 0:17:14.680 --> 0:17:16.920 to shape strategy that includes betting the house on low 0:17:16.960 --> 0:17:20.119 prices and razor thin margin. So this story is today's 0:17:20.119 --> 0:17:22.560 Bloomberg Big Take. It's also the upcoming new issue of 0:17:22.560 --> 0:17:26.000 Bloomberg Business Week on newsstands later on this week tomorrow. 0:17:26.080 --> 0:17:28.640 In fact, already online at Bloomberg dot com, slash BusinessWeek 0:17:28.640 --> 0:17:30.879 and on the Bloomberg terminals. So let's get to it. 0:17:31.160 --> 0:17:34.640 Let's get to Bloomberg News Globals. Are cars are Craig Trudell. 0:17:34.680 --> 0:17:37.439 He's on the phone in London, Craig, Good to have 0:17:37.520 --> 0:17:39.520 you here with us. So, yeah, it does feel like 0:17:39.560 --> 0:17:41.240 every day we come in and there's either another price 0:17:41.280 --> 0:17:44.440 cut or some kind of price move from Elon. Tell 0:17:44.480 --> 0:17:46.760 us a little bit about your story in this strategy 0:17:46.800 --> 0:17:47.680 of mister Musk's. 0:17:47.960 --> 0:17:49.680 Yeah, well we'll see if I wake up to it 0:17:49.920 --> 0:17:53.560 and one overnight it'd be right in the middle as 0:17:53.600 --> 0:17:56.600 I'm sleeping. So, I mean, this has been a story 0:17:56.600 --> 0:17:59.159 of just yeah, relentless cutting all year long, and we 0:17:59.240 --> 0:18:03.040 really started to see hints of it even late last year. Uh, 0:18:03.119 --> 0:18:05.720 you know, whether there were there were some cuts in 0:18:05.720 --> 0:18:09.080 in China or some incentive offers in the US. 0:18:09.640 --> 0:18:09.760 Uh. 0:18:09.880 --> 0:18:12.200 But but in the end, we're we're now to a 0:18:12.240 --> 0:18:16.720 point where, uh, where it costs almost a third less 0:18:16.840 --> 0:18:18.840 to buy a model why now than it did just 0:18:18.880 --> 0:18:21.520 a little over three months ago. And and this is 0:18:21.600 --> 0:18:24.000 just something that we haven't seen before. Right, It's it's 0:18:24.000 --> 0:18:27.679 not a model that you know is really uh, you know, 0:18:27.840 --> 0:18:30.480 low low volume or or has been in this you 0:18:30.480 --> 0:18:34.000 know market decline. If anything, it's been their strongest model, 0:18:34.080 --> 0:18:36.320 and it's potentially, I mean, it could end up being 0:18:36.359 --> 0:18:39.440 the best selling vehicle in the world this year. Uh 0:18:39.480 --> 0:18:42.639 And yet it's a case of adding a heck of 0:18:42.640 --> 0:18:44.480 a lot of capacity very quickly. 0:18:45.119 --> 0:18:45.359 Uh. 0:18:45.480 --> 0:18:49.200 And and the model itself, you know, going into that 0:18:49.240 --> 0:18:53.199 process being quite high price, being high volume. Uh and 0:18:53.280 --> 0:18:56.600 yet with all that capacity coming online and real changes 0:18:56.600 --> 0:18:59.600 in the sort of supply demand dynamics for the broader industry, 0:19:00.040 --> 0:19:02.400 you know, all of those things have sort of combined 0:19:02.840 --> 0:19:06.760 to also, I guess add in a CEO who is 0:19:07.119 --> 0:19:09.800 sort of prone to making very sort of sudden changes, 0:19:10.200 --> 0:19:13.240 and boom, you get yourself. You know, these these massive, 0:19:13.680 --> 0:19:15.480 you know, price cuts in the last few months. 0:19:15.640 --> 0:19:17.520 Craig, does it work for the company? 0:19:19.200 --> 0:19:22.680 I think that's that's a question that's really difficult to 0:19:23.160 --> 0:19:26.640 answer because you have, you know, really smart people who 0:19:26.800 --> 0:19:30.800 come to just radically different conclusions where you know, some 0:19:30.800 --> 0:19:33.360 some will tell you it's it's desperation, and some will 0:19:33.359 --> 0:19:35.960 tell you it's just disruption, and you may even actually 0:19:35.960 --> 0:19:38.240 hear it, you know, hints of that in the in 0:19:38.280 --> 0:19:41.280 the same answer from the same person. And I allude 0:19:41.280 --> 0:19:44.560