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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: Carol Master along with Tim stenovikleven Our Bloomberg Interactive Broker Studio.

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Speaker 2: We all just listen to Jamie Diamond on Bloomberg. JP Morgan,

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Speaker 2: by the way, featured very prominently in a new book

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Speaker 2: out on the nineteen twenty nine market crash, and this

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Speaker 2: feels like kind of the right conversation to be having

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Speaker 2: at this moment in time when certain investing narratives dominate

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Speaker 2: US financial markets, AI, private credit, transparency concerns, crypto prediction markets,

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Speaker 2: and more questions about whether these narratives are the right

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Speaker 2: ones that lead to longer term gains and prosperity for

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Speaker 2: investors and for the country.

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Speaker 3: There's a lot of questions.

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Speaker 1: Out there, yeah, stub about exuberants as well. Could it

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Speaker 1: lead to a crisis or to a crash? It does

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Speaker 1: lead us to nineteen twenty nine, a book that takes

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Speaker 1: us inside the greatest crash in Wall Street history and

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Speaker 1: how it shattered a nation. The book by New York

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Speaker 1: Times bestselling author of Too Big to Fail, who also

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Speaker 1: happens to be an award winning journalist for The New

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Speaker 1: York Times. He's a founder and editor at large of

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Speaker 1: Deal Book. He's anchor of Squawk Box on CNBC. Andrew

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Speaker 1: Ross Sorkin joins us. Now, welcome, thanks for having me, guys. Yeah,

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Speaker 1: thanks for jeving me here. You know, it's funny. Jamie

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Speaker 1: Diamond was asked about just now by David Rubinstein about

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Speaker 1: the financial crisis and about whether or not we could

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Speaker 1: have another big financial crisis. Our question for you is,

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Speaker 1: in this day and age, could we have another nineteen

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Speaker 1: twenty nine like stock market crash? Or is the structure

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Speaker 1: just completely different? Are the protections now in place? Could

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Speaker 1: it happen again?

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Speaker 4: So yes and no. I can explain why no, And

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Speaker 4: then if you'd like, I can get you there if

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Speaker 4: you want to get if you want to go there. Look,

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Speaker 4: the good news is the world is very different today

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Speaker 4: from a technology perspective. One of the reasons that nineteen

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Speaker 4: twenty nine ever even happened was literally the stock exchange

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Speaker 4: was oftentimes off, meaning the numbers that you saw on

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Speaker 4: the big board were three four five hours behind the

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Speaker 4: actual the actual numbers, and as a result, people were

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Speaker 4: just selling indiscriminately because they just thought the whole thing

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Speaker 4: didn't even work. I mean, one of the reasons you

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Speaker 4: always see this famous pictures of people down the New

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Speaker 4: York SAX ex Change next Planta. The reason they're there,

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Speaker 4: the reason they're all in the street, is these are

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Speaker 4: people who come from all over New York and the

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Speaker 4: rest of the country to try to find out, like

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Speaker 4: what's happened to their money. So that piece of it

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Speaker 4: you take off the table because you can get the

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Speaker 4: numbers right here and off of your terminal and everything else.

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Speaker 4: There's an SEC Insider trading is not legal. It was

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Speaker 4: legal then, sore all the manipulation that was taking place.

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Speaker 4: There was no FDIC, so you had bank runs that

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Speaker 4: took place in the aftermath of this crisis. You know,

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Speaker 4: we could talk about Glass Stiegel and what that either

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Speaker 4: representator didn't or whether you think it's come back or not.

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Speaker 4: But here's a bigger one. Capital requirements for banks there

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Speaker 4: were none zero back then. So there's a lot of

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Speaker 4: reasons you'd like to believe that we can't have another

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Speaker 4: crisis of the magnitude we did. And by the way,

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Speaker 4: it's also worth noting the crash in nineteen twenty nine.

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Speaker 4: It wasn't preordained that when that happened that we had

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Speaker 4: to have a Great Depression. That was really the first

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Speaker 4: domino of a series of dominoes, and then a series

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Speaker 4: of frankly terrible policy choices, the Federal Reserve basically doing nothing,

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Speaker 4: the implementation of tariffs. We can discuss what that means today.

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Speaker 4: You know, there was a gold standard, so there was

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Speaker 4: a question about how much money you could throw into

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Speaker 4: the system. Austerity, all of that that worked against things

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Speaker 4: that led to twenty five percent of unemployment didn't have

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Speaker 4: to happen, if you will.

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Speaker 2: I have to say that was one of the things

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Speaker 2: in reading your book that I was like, wait, I

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Speaker 2: think there was just an assumption that it was the

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Speaker 2: market crash that caused the great depressions.

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Speaker 4: Always everybody fasted, like there's one bad day and then

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Speaker 4: somehow there's a great depression. But there's so much in between.

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Speaker 2: You know, listen, so many people on your book tours

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Speaker 2: like everybody's like, nineteen twenty nine happen again. And I

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Speaker 2: do wonder, is there a better, smarter question that we

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Speaker 2: should be asking you. Having done all this research and

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Speaker 2: taken us back there, making us feel like we.

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Speaker 3: Were in the room when it happened, you know that

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Speaker 3: we should.

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Speaker 4: Be asking you, Well, look, it didn't happen, and then

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Speaker 4: I'll tell you, I'll give you actually how you could

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Speaker 4: get to nineteen thirty two today, And that sort of

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Speaker 4: maybe speaks to this. So one of the lessons that

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Speaker 4: came out of nineteen twenty nine, it was actually the

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Speaker 4: lesson that Ben Bernanke learned when he was doing his

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Speaker 4: Great his thesis on the Great Depression at Princeton is

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Speaker 4: when there's a crash or a crisis or a panic,

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Speaker 4: the playbook is to throw money at the problem. Maybe

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Speaker 4: politically unpopular, but that is the lesson. And he did

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Speaker 4: it in two thousand and eight, and by the way,

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Speaker 4: we did it again during the pandemic. And I think

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Speaker 4: we now think that there is a playbook. And by

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Speaker 4: the way, there's also therefore a put on the market

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Speaker 4: because we now we have the playbook. The one thing

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Speaker 4: that's different this time is if you genuinely believe every

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Speaker 4: financial crisis to some degree is a function of debt.

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Speaker 4: Too much debt in the system. So far we're all

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Speaker 4: talking about corporate debt. Really back then, there was in

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Speaker 4: nineteen twenty nine, there was a budget surplus in America.

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Speaker 4: Now we have thirty eight trillion dollars The question is,

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Speaker 4: let's say we have a crash and the government says,

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Speaker 4: you know, we're gonna write a check for five trillion dollars.

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Speaker 4: That's the put and whether you believe that there is

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Speaker 4: some kind of invisible line that turns into a red

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Speaker 4: line for the bond market where they say, you know what,

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Speaker 4: we like you guys in America. We'll happy to lend

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Speaker 4: you money at three or four times the rate that

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Speaker 4: we do today. And that's the interest that you're going

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Speaker 4: to pay. And then all of a sudden you actually

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Speaker 4: do get into some kind of austerity spiral, and then

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Speaker 4: you're living at a twenty five percent unemployment rate in

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Speaker 4: the country. That's I mean, when you really started trying

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Speaker 4: to get through the permittations, how do you get there

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Speaker 4: in this day and age. That's one way. One other

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Speaker 4: thing that's interesting today is the technology, as bad as

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Speaker 4: it was then, in some cases, could even be too

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Speaker 4: good today. And I think we learned that with the

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Speaker 4: Silicon Valley Bank of Failure, where someone goes on Twitter

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Speaker 4: and says, I'm pulling my account. Now that information is accurate.

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Speaker 1: Everybody does it over the weekend on their pe.

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Speaker 4: Everybody does it. I used to think, oh, this device

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Speaker 4: is so great because if there was a bad piece

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Speaker 4: of information be corrected very quickly. But if there's an

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Speaker 4: accurate piece of information that's not.

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Speaker 3: Good, right, people act on it quickly.

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Speaker 1: Well, so let's talk more about the technology today and

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Speaker 1: sort of parallels and the idea of maybe irrational exuberance

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Speaker 1: and signs of irrational exuberance right now. In reading the book,

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Speaker 1: in the nineteen twenties, there were certainly a lot of that,

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Speaker 1: but it seemed like it was, you know, more on

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Speaker 1: credit and people buying on margin. Nowadays, there's the idea

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Speaker 1: of crypto some of that has been kind of pulled back,

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Speaker 1: and in just a couple of months actually, since since

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Speaker 1: you published the book, we've seen something. There is a

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Speaker 1: lot of debt in the crypto market, I mean shocking

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Speaker 1: about leverage. So there's there's that side of things. There's

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Speaker 1: prediction markets and sort of the money that's going into those,

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Speaker 1: the excitement around those private credit and concerns about private

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Speaker 1: credit that we've seen in the last couple of months,

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Speaker 1: any signs of anything there.

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Speaker 4: Look, the private credit business has always concerned me because

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Speaker 4: of the transparency of it, or frankly, lack of transparence.

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Speaker 4: I think if you were to talk to J. Powell,

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Speaker 4: he would tell you that, you know, even the Federal

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Speaker 4: Reserve doesn't have a full grasp of how interlinked all

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Speaker 4: of the debt and credit is in the private credit market.

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Speaker 4: Having said that, depending on what numbers you're looking at,

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Speaker 4: you could argue, it's only two trillion dollars two trillion

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Speaker 4: dollars a lot of money. But it's not. It's not

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Speaker 4: the entire market. It's stem So I don't know if

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Speaker 4: it's I don't know if it's systemic. By the way,

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Speaker 4: I might worry more today about short term treasuries. I mean,

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Speaker 4: by the way, we the United States have been trying

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Speaker 4: to sell short term treasuries like crazy because we think

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Speaker 4: that we can get a cheaper rate that way. That's

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Speaker 4: also a much more complicated place to be if, in fact,

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Speaker 4: you actually have to pay it back more quickly.

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Speaker 2: One of the questions we were kicking around when we're

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Speaker 2: thinking about having our discussion with you, is is Wall

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Speaker 2: Street greedier today?

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Speaker 4: I don't know if it's greedier today. Frankly, I always

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Speaker 4: argue agreed, Look, I think.

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Speaker 3: There's greed bad necessarily, I think.

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Speaker 4: The lesson for me of writing this book in some

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Speaker 4: ways was that they didn't use the phrase back then.

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Speaker 4: But this idea of fomo, which by the way, is

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Speaker 4: driven in part by this phone and talk and people

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Speaker 4: seeing all sorts of things, and by the way, I

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Speaker 4: think makes inequality. Actually I don't know if it makes

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Speaker 4: it worse, but the perception of it and just the

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Speaker 4: visibility of it. But I do think the sort of

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Speaker 4: fomo greed envy, I think that's what's driven. That is

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Speaker 4: what's driven people for you know, the test of time,

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Speaker 4: and that's what it is. Is it is it worse

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Speaker 4: today than it was before? I don't know, except and

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Speaker 4: maybe this gets to the inequality piece. I think there

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Speaker 4: are more people who think that they're effectively unable to

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Speaker 4: actually make it, and therefore more willing to take risk

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Speaker 4: and more willing to sort of try to grab this

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Speaker 4: lottery ticket as opposed to sort of make it over

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Speaker 4: time slowly. So so on.

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Speaker 1: That the ultra wealthy today versus the ultra wealthy back then.

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Speaker 1: And reading the book, there's a lot of you know,

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Speaker 1: people have their yachts and in some in some cases

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Speaker 1: actually sailing to work in Lower Manhattan on the yacht.

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Speaker 1: Absolutely today, the wealthiest people today, how much different are

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Speaker 1: their lives versus the ultra wealthy, and not with the technology,

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Speaker 1: but I mean what they were able to do versus

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Speaker 1: what the normal person is able to do. I mean

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Speaker 1: you have, you know, billionaires going to space.

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Speaker 2: Now, I think.

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Speaker 4: There is a distinction. But look, I think you go

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Speaker 4: back and I think of JP Morgan's son, he was

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Speaker 4: building the biggest, the biggest yacht at the time. People

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Speaker 4: would have thought that's like, you know, the gates, Obezos,

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Speaker 4: whatever yacht you're thinking of. I think that there was

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Speaker 4: a distinction. But I remember having an interesting conversation oddly

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Speaker 4: enough to drop a name with President Obama, interesting maybe

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Speaker 4: two thousand and fifteen about the idea that and I

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Speaker 4: think this is true in the twenties, but really true

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Speaker 4: even just twenty five years ago. I think CEOs people

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Speaker 4: of means were oftentimes living in the same neighborhoods with

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Speaker 4: the people who worked on the factory floor of their companies,

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Speaker 4: and as a result, their kids went to the same schools,

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Speaker 4: and they went to the same temples and churches, and

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Speaker 4: ran into each other at the same restaurants and markets.

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Speaker 4: And I think that there's a cohesion there that's important

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Speaker 4: for our culture, and I think that increasingly that has

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Speaker 4: come apart.

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Speaker 2: We were talking with Andrew Ross sork In the book

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Speaker 2: is nineteen twenty nine Inside the Greatest Crash in Wall

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Speaker 2: Street History and how it shattered a nation. You know,

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Speaker 2: politics got in the way of regulating banks and markets

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Speaker 2: back then, and I think it was kind of fascinating

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Speaker 2: to see.

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Speaker 3: Some of that.

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Speaker 2: Is there a parallel to that today when you look

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Speaker 2: at the activities Andrew coming out of the White House

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Speaker 2: on things like cryptocurrencies, regulatory oversight, Like, I just wonder

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Speaker 2: how you see that?

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Speaker 4: Well, I'll give you actually a parallel that may seem

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Speaker 4: like not like a parallel, but to me is which

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Speaker 4: is we're all talking about right now the politicization potentially

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Speaker 4: and independence of the Federal Reserve. I actually remember, as

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Speaker 4: I was working on this book, looking at the diaries

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Speaker 4: of a lot of the people who worked on the

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Speaker 4: Federal Reserve on the board, and it was still such

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Speaker 4: a new institution born in nineteen thirteen that they were

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Speaker 4: concerned about the political implications of either raising or lowering

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Speaker 4: interest rates at any given moment. They actually cared about

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Speaker 4: the politics now It wasn't that Hoover was telling them

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Speaker 4: exactly what to do, but they were so scared, not

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Speaker 4: that they were just going to get hauled up in

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Speaker 4: front of Congress from making the wrong choice, but that

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Speaker 4: the entire thing, which people still called back then the

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Speaker 4: experiment at that point, that Congress could effectively disband this

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Speaker 4: very idea. And so I raised that only because it's

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Speaker 4: clear to me that actually the independence of the FED matters.

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Speaker 4: In fact, one of the reasons I think that they

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Speaker 4: didn't act more forcefully in nineteen twenty nine and in

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Speaker 4: nineteen thirty and after that was in part because there

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Speaker 4: was their own concern about the politics, putting aside whether

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Speaker 4: the White House was telling them one thing to do

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Speaker 4: or the other.

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Speaker 3: Do we have that today, I think.

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Speaker 4: Less so, or at least up until recently less so.

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Speaker 4: I think that maybe in the same way that clearly

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Speaker 4: those governors of the FED back then were cognizant and

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Speaker 4: nervous about the politics. I mean, I don't think this

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Speaker 4: bed things are going to be disbanded, but I think

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Speaker 4: that they're cognizant. They are very aware, very aware of

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Speaker 4: what the President's saying, what their reputations are going to

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Speaker 4: be like as a result what people are saying about them,

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Speaker 4: whether they have to do certain things to demonstrate their independence.

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Speaker 4: I mean, that's the thing. The idea of demonstrating your

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Speaker 4: independence effectively means you might even make a decision that

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Speaker 4: might not be the decision you'd otherwise make, but you're

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Speaker 4: doing it for your own reputation. So yes, I think

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Speaker 4: that all of that is not healthy.

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Speaker 1: Does the FED keep that in a few months when

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Speaker 1: Jay Powell is no longer FED chair, And look, we

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Speaker 1: can't see the future. We don't know who will be nominated.

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Speaker 4: I have a view that is maybe contrarian in this space,

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Speaker 4: which is there's a board and there's a number of

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Speaker 4: people on that board. I've never believed that the entire

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Speaker 4: FED is controlled by one human being. It just isn't.

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Speaker 4: And so I think it's very important who is running

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Speaker 4: it telling you it isn't. But I do think there

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Speaker 4: will be people on that board, those who care also

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Speaker 4: about their own independence, who will, By the way, another

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Speaker 4: reason I think Ja Powell may ultimately stay on that

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Speaker 4: board for that reason.

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Speaker 3: That you went there. Because we're hearing that a lot, right,

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Speaker 3: Because we.

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Speaker 2: Keep waiting, we're going to expect to hear an announcement.

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Speaker 2: It just keeps getting pushed off, and I just think there's.

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Speaker 4: A lot no. No, By the way, it's not that

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Speaker 4: I think that jap I was going to be in

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Speaker 4: this role for forever. They're gonna let him stay, No,

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Speaker 4: but just that you know, he can stay for another

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Speaker 4: two years after this on the board, on the board,

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Speaker 4: and I think it is more likely that he will stay.

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Speaker 4: And in fact, to the extent that this the President

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Speaker 4: would somehow like to use that spot for for somebody

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Speaker 4: that he'd like to nominate, I would argue this, this

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Speaker 4: whole thing has backfired. In fact, you know, I was

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Speaker 4: talking to Harvey Schwartz at the New York Economic Club

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Speaker 4: yesterday from Carlisle, and he made the point most people,

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Speaker 4: most taxi drivers, people in the street didn't care about

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Speaker 4: the the idea of FED independence at all. A week ago,

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Speaker 4: they didn't even know. I mean, this has been an

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Speaker 4: academic conversation for the most part. Now it's like a thing. Yeah,

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Speaker 4: and people constituents across the country all of a sudden

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Speaker 4: care about this issue. They may start to call their Congress.

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Speaker 4: I mean, it's very interesting what's happening.

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Speaker 2: Yeah.

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Speaker 1: I was actually I've shared this story before, but I

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Speaker 1: was with a friend's Sunday night who he follows the news,

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Speaker 1: but he's not in financial news or anything, and he

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Speaker 1: picks up his phone. He's like, have you seen this

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Speaker 1: video from j Powell? I was like, why do you

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Speaker 1: care about Jay Powell? And that's how big of a

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Speaker 1: deal it was over the weekend.

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Speaker 4: And so to me, that's why, in some ways I

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Speaker 4: think Harvey Schwartz is probably right. The idea of fetting

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Speaker 4: dependence may have actually become more important and potentially even stronger,

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Speaker 4: at least in the short term.

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Speaker 2: Hey, I want to ask you about the process. I

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Speaker 2: remember reading Too Big Defail, loved it and reported through

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Speaker 2: it and was able to I think, like you talk

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Speaker 2: to some of the people who were in the room

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Speaker 2: when it all happened. I remember driving to John mack

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Speaker 2: on a panel of course, formerly a Morgan Stanley and

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Speaker 2: getting that actual physical tech from Mitsubishi. It felt like

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Speaker 2: it felt like, excuse me, you were in the room

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Speaker 2: like the way I read it, So to tell me

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Speaker 2: how you did that?

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Speaker 3: So unform what was the box of things that you've got?

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Speaker 4: You're like, oh my gosh, so unfortunately all of these

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Speaker 4: people were not allIt.

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Speaker 3: No.

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Speaker 4: What and you really I spent about eight years, really,

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Speaker 4: you know, just combing through boxes and boxes and materials,

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Speaker 4: some at libraries, some from families that were involved in

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Speaker 4: this universities. I was able to convince, after a lot

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Speaker 4: of knocking on doors, the Federal Reserve in New York

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Speaker 4: to give me access to the board minutes. That was

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Speaker 4: something that they haven't given out over the past one

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Speaker 4: hundred years. They, by the way, interesting on their website

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Speaker 4: today you can get you know, last month's board minutes.

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Speaker 4: You still can't get the nineteen twenty nine board minutes.

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Speaker 4: But that sort of became a treasure map for me.

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Speaker 4: But a lot you know, when you see two people

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Speaker 4: talking to each other in a room, what's oftentimes happening

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Speaker 4: is I'm finding a series of depositions. For example, where

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Speaker 4: Charlie Mitchell, who's the main character of the book, ran

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Speaker 4: National City, which become a city group. You know, he

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Speaker 4: would be interviewed in the deposition or in a civil case.

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Speaker 4: There were also criminal cases where they would ask him,

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Speaker 4: you know, where were you when X happy He said, well,

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Speaker 4: I was walking down the street and I got to

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Speaker 4: sixty fifth Street, and what did you say to so

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Speaker 4: and so, and I said such and such, And then

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Speaker 4: they would interview his colleague and they'd say, well, you

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Speaker 4: were standing on the corner, what did you say to it?

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Speaker 4: And he would say, this is what I said. And

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Speaker 4: then they'd interview his wife and so when you though

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Speaker 4: all of those quotes are real. And then oftentimes I

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Speaker 4: would go and try to find the architecture plans or

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Speaker 4: a photograph of the room so I could really try

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Speaker 4: to put you in it, and I try to understand

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Speaker 4: what the weather was that day and what you know,

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Speaker 4: whether it was light out or not, all of these

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Speaker 4: sort of little things so that again, if you're trying

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Speaker 4: to as a narrator narrator, you can sort of feel

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Speaker 4: like you're.

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Speaker 2: There, right.

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Speaker 1: Was there a time when you were, you know, in

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Speaker 1: some sort of archive over the last ten years doing

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Speaker 1: this where you got this sort of treasure trove of

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Speaker 1: correspondence between two people and you were like, Okay, this

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Speaker 1: is what I need, this is the ticket. It's just

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Speaker 1: going to illuminate.

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Speaker 4: You know what it was? One of it was like

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Speaker 4: or is it just so peaceful? No, it was like

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Speaker 4: it would either be raining, like you're in the rainforest

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Speaker 4: and it was fabulous, or just like the desert for nods,

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Speaker 4: and you'd know because you'd go to these places looking

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Speaker 4: for stuff and then you'd go through all these boxes

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Speaker 4: and there'd be nothing, and then you'd be so depressed,

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Speaker 4: and then magically something would happen. I mean there, I

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Speaker 4: will say there was one moment for me still that

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Speaker 4: I think was just like a true aha, which is

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Speaker 4: one of the main characters of the book is Carter Glass,

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Speaker 4: of course, is the Glass to Eagle. He was a

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Speaker 4: senator in Virginia, and I think I had an impression

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Speaker 4: going in. You know today, it's off that bill is

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Speaker 4: often held up by Elizabeth Warren other people as this

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Speaker 4: sort of pure effort to really break up the banks

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Speaker 4: for all the right reasons, and I found a trove

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Speaker 4: of correspondence that showed, I think, maybe for the first time,

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Speaker 4: that in fact, parts of that bill were actually written

387
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Speaker 4: by a out their banker trying frankly to screw over

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Speaker 4: JP Morgan. And you think to yourself about, you know,

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Speaker 4: money in Washington and lobbying, and I thought, oh, the

390
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Speaker 4: good old days, they didn't do things like that. And

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Speaker 4: it's no different.

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Speaker 3: Yeah, exactly what I.

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Speaker 1: Want to talk about Evangeline Adams.

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Speaker 4: Ie the Evangeline, the.

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Speaker 1: Character that everybody wants to talk about. Well, we should

396
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Speaker 1: explain who she has for people.

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Speaker 4: Ev Angeline Adams is an astrologer. She had an office

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Speaker 4: up at Carnegie Hall on fifty seventh Street, and every

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Speaker 4: banker in town would go visit with her. She had

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Speaker 4: a newsletter. I mean, I like to think deal book

401
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Speaker 4: is successful. She had a newsletter with one hundred thousand subscribers.

402
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Speaker 4: Back then. People would go visit with her. They'd pay

403
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Speaker 4: fifty dollars an hour to sit with her, and they

404
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Speaker 4: she would ask her what's going on for the stock market,

405
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Speaker 4: and she would tell them. They would go off and

406
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Speaker 4: make their trades, And it was just She's just an

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Speaker 4: unbelievable character. Even believe that something like that existed and

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Speaker 4: that serious people were, you know, really engaged with what

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Speaker 4: she was saying and doing.

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Speaker 1: It was almost like she was a confidant for some

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Speaker 1: of these people, which was pretty surprising to me.

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Speaker 4: I almost think of her as a psychiatrist, like a

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Speaker 4: therapist for people back then.

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Speaker 2: Yeah, yeah, I mean, just the similarity is like I

415
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Speaker 2: think about kind of the Wall Street South that existed

416
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Speaker 2: right with folks in Florida, and we have that today,

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Speaker 2: Tom Springs.

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Speaker 4: I mean when I learned that mar A Lago happened

419
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Speaker 4: to be owned by who if Hutton, which is just

420
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Speaker 4: such an indication of what was going on in America

421
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Speaker 4: at that time. And by the way, if Hutton had

422
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Speaker 4: also moved in I don't know if you saw it

423
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Speaker 4: to the Plaza Hotel, the famous Oakroom, which is a

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Speaker 4: bar right during profession, had become a brokerage house.

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Speaker 2: So do you feel like you have a better understanding

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Speaker 2: of what would cause Like Jamie Diamond said, we may

427
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Speaker 2: not get another great financial crisis, but there will be

428
00:19:50,840 --> 00:19:53,199
Speaker 2: a problem. Like do you feel like you know, I

429
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Speaker 2: think because everybody keeps saying could we get this again?

430
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Speaker 3: Is it likely?

431
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Speaker 2: Or do you get a better indication of like what

432
00:19:59,600 --> 00:20:02,720
Speaker 2: we should be watching out for in terms of what marks?

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Speaker 3: Is it leveraging? Is it think it's always leveraged.

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Speaker 4: It's it's just it's like a one word answer. It's

435
00:20:07,960 --> 00:20:12,080
Speaker 4: probably boring. Leverage is the match that lights the fire

436
00:20:12,320 --> 00:20:14,720
Speaker 4: every single time. You could have all the bad actors

437
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Speaker 4: you want on stage doing all the bad, greedy things

438
00:20:17,080 --> 00:20:20,560
Speaker 4: you could possibly imagine, but there isn't the leverage piece.

439
00:20:22,280 --> 00:20:25,879
Speaker 4: It's very hard to have a true systemic problem, you know.

440
00:20:26,359 --> 00:20:28,320
Speaker 4: I was shocked to know that at the end of

441
00:20:28,400 --> 00:20:31,840
Speaker 4: nineteen twenty nine the stock market was only down seventeen percent,

442
00:20:31,920 --> 00:20:33,399
Speaker 4: And I actually think it was a headfake for a

443
00:20:33,400 --> 00:20:36,160
Speaker 4: lot of politicians who were looking at the market and saying, oh,

444
00:20:36,400 --> 00:20:39,119
Speaker 4: looks like things are better. But most people didn't appreciate

445
00:20:39,240 --> 00:20:42,520
Speaker 4: that during the fifty percent downdraft that had happened prior

446
00:20:42,560 --> 00:20:45,760
Speaker 4: to that, it wasn't just that equities had fallen fifty percent.

447
00:20:45,960 --> 00:20:49,080
Speaker 4: Is that people had taken out loans, oftentimes ten to one.

448
00:20:49,760 --> 00:20:52,719
Speaker 4: So they didn't just ow, oh what the equity was

449
00:20:52,840 --> 00:20:55,800
Speaker 4: that had fallen. They were getting margin calls saying you

450
00:20:55,840 --> 00:20:58,439
Speaker 4: got to sell your house, and so it's that. And

451
00:20:58,480 --> 00:20:59,960
Speaker 4: I think we saw that again in two thousand and

452
00:21:00,080 --> 00:21:02,800
Speaker 4: eight with the subprime crisis, and I mean, you can

453
00:21:03,119 --> 00:21:03,720
Speaker 4: it repeats.

454
00:21:03,960 --> 00:21:06,399
Speaker 2: Well, it's funny, you know, the Joe Kennedy thing about

455
00:21:06,400 --> 00:21:07,760
Speaker 2: like when is it your shoeshine guy?

456
00:21:07,880 --> 00:21:08,040
Speaker 3: Right?

457
00:21:08,080 --> 00:21:13,200
Speaker 2: And I always think about before the GFC being on

458
00:21:13,240 --> 00:21:16,520
Speaker 2: a yoga retreat in Mexico and everyone was talking about

459
00:21:16,560 --> 00:21:18,840
Speaker 2: buying real estate, and I thought, this is like, this

460
00:21:18,960 --> 00:21:22,720
Speaker 2: is just weird, like those little snippets of things as

461
00:21:22,720 --> 00:21:25,800
Speaker 2: an indicator that things are just exuberant irrationally.

462
00:21:25,840 --> 00:21:27,639
Speaker 3: Perhaps is that fair?

463
00:21:28,080 --> 00:21:28,720
Speaker 1: I think it's fair.

464
00:21:28,720 --> 00:21:30,679
Speaker 3: I think Look, I think all of these are, with

465
00:21:30,760 --> 00:21:32,399
Speaker 3: all the data that we have, right to look at

466
00:21:32,440 --> 00:21:32,720
Speaker 3: the mark.

467
00:21:32,840 --> 00:21:35,600
Speaker 4: All these are red flags being thrown on the field.

468
00:21:36,119 --> 00:21:39,080
Speaker 4: But just because maybe I should say yellow flags being

469
00:21:39,119 --> 00:21:41,840
Speaker 4: thrown on the field. And the question is when do

470
00:21:41,920 --> 00:21:44,240
Speaker 4: they turn red? And I think that's the hard part

471
00:21:44,320 --> 00:21:46,760
Speaker 4: to know. You know. Famously, here we are started the

472
00:21:46,800 --> 00:21:49,600
Speaker 4: segment coming out of Jamie Diamonds's interview in two thousand

473
00:21:49,640 --> 00:21:51,879
Speaker 4: and eight. His daughter had come to him, as this

474
00:21:51,960 --> 00:21:54,840
Speaker 4: is all happening and said, Dad, what's a financial crisis?

475
00:21:55,200 --> 00:21:57,320
Speaker 4: And he said it's something that happens every seven or

476
00:21:57,359 --> 00:21:59,920
Speaker 4: eight years. And so I think the truth is, well,

477
00:22:01,400 --> 00:22:03,480
Speaker 4: check your calendar. We might be due.

478
00:22:03,720 --> 00:22:05,840
Speaker 1: We're speaking with Andrew Ross, sork And, author of nineteen

479
00:22:05,840 --> 00:22:08,639
Speaker 1: twenty nine Inside The Greatest Crash in Wall Street History

480
00:22:08,800 --> 00:22:12,760
Speaker 1: and how it shattered a nation? Does Herbert Hoover get

481
00:22:12,800 --> 00:22:13,400
Speaker 1: a bad rap?

482
00:22:14,720 --> 00:22:19,719
Speaker 4: So I have maybe more empathy for Herbert Hoover than others.

483
00:22:19,800 --> 00:22:22,520
Speaker 4: It's not that I think he made the right decisions

484
00:22:22,560 --> 00:22:24,880
Speaker 4: in fact, he made a series of very poor decisions.

485
00:22:24,880 --> 00:22:30,520
Speaker 4: It's just that I think, at least historically, the narrative

486
00:22:30,520 --> 00:22:32,840
Speaker 4: that's been described on him is that he didn't even

487
00:22:32,960 --> 00:22:37,480
Speaker 4: understand what was happening. I think he understood very well

488
00:22:37,520 --> 00:22:39,399
Speaker 4: what was happening. I think he had some of the

489
00:22:39,440 --> 00:22:42,159
Speaker 4: wrong people in his ear, including Andrew Mellon, who was

490
00:22:42,200 --> 00:22:45,600
Speaker 4: his treasure secretary, who had a terrible, unfortunately relationship with

491
00:22:46,040 --> 00:22:50,760
Speaker 4: early on. I think his decision on tariffs was completely misplaced.

492
00:22:50,800 --> 00:22:52,680
Speaker 4: Why did he do that? He did that, by the way,

493
00:22:52,720 --> 00:22:54,880
Speaker 4: for political reasons, because in nineteen twenty eight is he's

494
00:22:54,920 --> 00:22:57,200
Speaker 4: running around the country desperate to get farmers to vote

495
00:22:57,200 --> 00:22:59,600
Speaker 4: for him. He's pledging to them, you vote for me,

496
00:22:59,720 --> 00:23:00,479
Speaker 4: I'll help you.

497
00:23:00,840 --> 00:23:04,480
Speaker 3: Wait wait, wait, are you talking about two thousand and twenty.

498
00:23:04,280 --> 00:23:06,359
Speaker 4: Years and so. But when he hits you know, and

499
00:23:06,400 --> 00:23:09,400
Speaker 4: by the way, nineteen thirty rolls around every economist in America,

500
00:23:09,520 --> 00:23:12,359
Speaker 4: all the bankers are saying, please don't do this, mister president,

501
00:23:12,560 --> 00:23:14,119
Speaker 4: and he says, well, I have to do it because

502
00:23:14,160 --> 00:23:17,040
Speaker 4: I pledge these folks that I would. So you see

503
00:23:17,040 --> 00:23:19,280
Speaker 4: these sort of repeat things. And it's not that he

504
00:23:19,280 --> 00:23:20,879
Speaker 4: didn't know what he was doing. I think he just

505
00:23:20,880 --> 00:23:24,080
Speaker 4: didn't understand. He was also, unfortunately for him, a terrible,

506
00:23:24,280 --> 00:23:27,720
Speaker 4: terrible communicator, right, And I will say maybe this is

507
00:23:27,760 --> 00:23:30,639
Speaker 4: true of all presidents. He had this view that he

508
00:23:30,680 --> 00:23:34,560
Speaker 4: could somehow jawbone people into believing that things were better

509
00:23:34,600 --> 00:23:36,640
Speaker 4: than they really were. And I think we're seeing that now,

510
00:23:36,680 --> 00:23:38,919
Speaker 4: by the way, with the last idllustration that is a

511
00:23:39,040 --> 00:23:42,720
Speaker 4: bipartisan tactic by the White House.

512
00:23:43,160 --> 00:23:46,840
Speaker 2: What's your biggest takeaway from doing this? My understanding is

513
00:23:46,840 --> 00:23:49,800
Speaker 2: you wanted to do this because people used to ask you,

514
00:23:49,800 --> 00:23:51,879
Speaker 2: you know, nineteen twenty nine versus two thousand and eight, But

515
00:23:52,119 --> 00:23:52,520
Speaker 2: tell me.

516
00:23:54,000 --> 00:23:54,840
Speaker 3: You wanted doing this.

517
00:23:56,520 --> 00:23:59,480
Speaker 4: I mean selfishly, I felt like I now understood what

518
00:23:59,600 --> 00:24:03,840
Speaker 4: actually happened. Just as a student of history. I actually

519
00:24:03,880 --> 00:24:05,720
Speaker 4: just genuinely wanted to really get it. I want to

520
00:24:05,720 --> 00:24:07,679
Speaker 4: know who the people were. I wouldn't understand their incentives

521
00:24:07,880 --> 00:24:10,640
Speaker 4: or their motives were why they were doing what they did.

522
00:24:10,760 --> 00:24:13,720
Speaker 4: And I think ultimately the truth is that we are

523
00:24:13,800 --> 00:24:18,760
Speaker 4: all human beings. Maybe it's fomo, maybe it's envy. Maybe

524
00:24:18,760 --> 00:24:22,280
Speaker 4: we all want more, and that's for better or worse.

525
00:24:22,320 --> 00:24:24,520
Speaker 4: What seems to drive people. And then the question is

526
00:24:24,920 --> 00:24:28,160
Speaker 4: when people get a little too confident, you know, can

527
00:24:28,200 --> 00:24:31,480
Speaker 4: you have the humility effectively to step back and realize

528
00:24:31,720 --> 00:24:33,960
Speaker 4: that maybe that confidence could be misplaced?

529
00:24:34,320 --> 00:24:37,320
Speaker 1: You right, that the anidote to irrational exuberance is not

530
00:24:37,400 --> 00:24:41,119
Speaker 1: regulation by itself, nor skepticism, but humility, the humility to

531
00:24:41,240 --> 00:24:44,000
Speaker 1: know that no system is full proof, no market fully rational,

532
00:24:44,000 --> 00:24:47,520
Speaker 1: and no generation exempt. Do you see that humility out

533
00:24:47,560 --> 00:24:48,119
Speaker 1: there today?

534
00:24:48,800 --> 00:24:50,520
Speaker 4: I said it better than the book that I said.

535
00:24:50,640 --> 00:24:53,480
Speaker 4: Now we have the full screen for it, so I

536
00:24:53,520 --> 00:24:57,800
Speaker 4: see there's humility today. I see that humility among some Look.

537
00:24:57,840 --> 00:25:00,199
Speaker 4: I think, you know, we're also talked about Warren buff It,

538
00:25:00,520 --> 00:25:02,240
Speaker 4: Jamie Diamond and David Rubens, and I we're talking about

539
00:25:02,240 --> 00:25:05,040
Speaker 4: Warren Buffett, did think. I think Warren Buffett has a

540
00:25:05,080 --> 00:25:08,720
Speaker 4: remarkable humility, and when it comes to sort of even

541
00:25:08,760 --> 00:25:10,959
Speaker 4: his own confidence, he has humility about that. I think

542
00:25:11,000 --> 00:25:12,920
Speaker 4: there are a number of business leaders and investors who

543
00:25:12,960 --> 00:25:15,920
Speaker 4: absolutely do, and then there's a number of business leaders

544
00:25:15,960 --> 00:25:20,200
Speaker 4: and operators and investors who clearly don't. And I think

545
00:25:20,240 --> 00:25:22,400
Speaker 4: anybody who walks in the door and sits down at

546
00:25:22,400 --> 00:25:24,680
Speaker 4: this table and can tell you exactly what or it thinks,

547
00:25:24,720 --> 00:25:27,160
Speaker 4: they can tell you exactly what's going to happen, probably

548
00:25:27,200 --> 00:25:27,480
Speaker 4: can't