1 00:00:00,160 --> 00:00:03,120 Speaker 1: Masters in Business is brought to you by ex On 2 00:00:03,200 --> 00:00:10,719 Speaker 1: Mobile Energy Lives here. This is Master's in Business with 3 00:00:10,800 --> 00:00:15,440 Speaker 1: Barry Ridholds on Bloomberg Radio Today. On the podcast, I 4 00:00:15,560 --> 00:00:19,880 Speaker 1: have Roger Lowenstein. He is a journalist and author, and 5 00:00:20,320 --> 00:00:23,720 Speaker 1: we spoke for ninety minutes. I'm not gonna make I'm 6 00:00:23,720 --> 00:00:27,440 Speaker 1: not gonna take too much time in this intro because 7 00:00:27,480 --> 00:00:31,600 Speaker 1: there's plenty to hear. The book that I've always adored 8 00:00:31,640 --> 00:00:34,720 Speaker 1: of his uh is When Genius Failed to the story 9 00:00:34,720 --> 00:00:37,840 Speaker 1: of long term capital management, and we do a deep 10 00:00:37,920 --> 00:00:42,159 Speaker 1: dive into that. I use that book extensively in my 11 00:00:42,280 --> 00:00:45,400 Speaker 1: prep work for Bailout Nation, as well as another book 12 00:00:45,440 --> 00:00:48,840 Speaker 1: of Rogers, which was Origins of the Crash, which talked 13 00:00:48,880 --> 00:00:52,479 Speaker 1: about all the factors that led to the two thousand crash. 14 00:00:52,520 --> 00:00:54,800 Speaker 1: We go into a lot of details on some of this. 15 00:00:54,920 --> 00:00:57,480 Speaker 1: Some of this we really just skip over um and 16 00:00:57,520 --> 00:01:01,200 Speaker 1: talked very lightly about. So it's ninety minutes. It's a 17 00:01:01,200 --> 00:01:04,560 Speaker 1: fantastic conversation, and rather than me babil, I'm just gonna 18 00:01:04,600 --> 00:01:09,160 Speaker 1: send you right to the podcast and broadcast without further ado, 19 00:01:09,640 --> 00:01:16,920 Speaker 1: my conversation with Roger Lowenstein. This is Master's in Business 20 00:01:17,040 --> 00:01:21,480 Speaker 1: with Barry Ridholts on Bloomberg Radio. This week on Masters 21 00:01:21,480 --> 00:01:25,720 Speaker 1: in Business on Bloomberg Radio, I have a special guest author, 22 00:01:25,959 --> 00:01:31,880 Speaker 1: Rock Contour journalist Roger Lowenstein. You probably know him from 23 00:01:31,920 --> 00:01:34,600 Speaker 1: what is actually one of my all time favorite books, 24 00:01:34,959 --> 00:01:37,480 Speaker 1: When Genius Failed, The Rise and Fall of Long Term 25 00:01:37,520 --> 00:01:41,400 Speaker 1: Capital Management. But he is also the author of Buffett, 26 00:01:41,480 --> 00:01:45,080 Speaker 1: Making of an American Capitalist, Origins of the Crash, which 27 00:01:45,120 --> 00:01:48,040 Speaker 1: I thought was a really interesting book that I used 28 00:01:48,040 --> 00:01:51,440 Speaker 1: as part of my research for Bailout Nation, End of 29 00:01:51,480 --> 00:01:55,880 Speaker 1: Wall Street, While America Aged, How the pension debts ruins 30 00:01:56,240 --> 00:02:00,680 Speaker 1: General Motors, and his most recent book, An Erica's Bank, 31 00:02:00,800 --> 00:02:04,920 Speaker 1: The epic struggle to create the Federal Reserve. Roger Lowenstein, 32 00:02:05,080 --> 00:02:08,560 Speaker 1: Welcome to Bloomberg Barry. Always good to be on your show. Um, 33 00:02:08,680 --> 00:02:10,680 Speaker 1: is this the first time we've had you on this 34 00:02:10,680 --> 00:02:12,359 Speaker 1: This will well, you don't know if it's good to 35 00:02:12,360 --> 00:02:15,680 Speaker 1: be always good to be with you, so it's always 36 00:02:15,680 --> 00:02:17,840 Speaker 1: good to be in your company. Roger and I know 37 00:02:17,919 --> 00:02:20,880 Speaker 1: each other for a few years from similar circles. We 38 00:02:20,919 --> 00:02:23,880 Speaker 1: had lunch not too long ago, less lunch outside the library. 39 00:02:23,919 --> 00:02:27,000 Speaker 1: I think that while you were working on that book, 40 00:02:27,040 --> 00:02:30,080 Speaker 1: and we talked about your process and your research, and 41 00:02:30,080 --> 00:02:32,919 Speaker 1: I really want to get into it. But before we 42 00:02:32,960 --> 00:02:36,800 Speaker 1: start talking about America's bank, let's talk a little bit 43 00:02:36,840 --> 00:02:39,799 Speaker 1: about your history. You were at the Wall Street Journal 44 00:02:40,200 --> 00:02:43,000 Speaker 1: for a part of a decade longer. I was at 45 00:02:43,000 --> 00:02:45,880 Speaker 1: the Wall Street Journal for fifteen years. Um, you know, 46 00:02:45,919 --> 00:02:48,799 Speaker 1: I always had loved being at the journal, always had 47 00:02:48,960 --> 00:02:51,959 Speaker 1: kind of books in my veins. And you always knew 48 00:02:51,960 --> 00:02:54,160 Speaker 1: you wanted to be a writer from early on? Or 49 00:02:54,200 --> 00:02:57,680 Speaker 1: how did that evolve? Um? Early on? I can't tell 50 00:02:57,720 --> 00:03:00,440 Speaker 1: you. You You know, when I was a reporter the Cornell 51 00:03:00,480 --> 00:03:02,240 Speaker 1: Daily Son, if I was thinking of books or not, 52 00:03:02,360 --> 00:03:04,960 Speaker 1: But I was always what was called an egghead back 53 00:03:05,000 --> 00:03:09,239 Speaker 1: in the day, and a walk that's right. That word 54 00:03:09,280 --> 00:03:11,880 Speaker 1: didn't exist back in my Cornell days. And I was 55 00:03:11,919 --> 00:03:13,360 Speaker 1: looking for a book, you know, as my career at 56 00:03:13,360 --> 00:03:16,080 Speaker 1: the Journal went on, and I knew something about this 57 00:03:16,120 --> 00:03:20,919 Speaker 1: investor out in Omaha. Who actually at the time we're talking, 58 00:03:21,800 --> 00:03:24,320 Speaker 1: we're talking the early nineties, so no one knew who. Really, 59 00:03:24,720 --> 00:03:27,280 Speaker 1: I wouldn't say no one, but not like not. He 60 00:03:27,400 --> 00:03:30,880 Speaker 1: wasn't the icon. He isn't on their radio and put 61 00:03:30,919 --> 00:03:32,959 Speaker 1: him on them all the time. Well I think he 62 00:03:33,000 --> 00:03:36,080 Speaker 1: put himself from the map. But but I was writing 63 00:03:36,120 --> 00:03:38,360 Speaker 1: the Herd in the Street column for the Journal and 64 00:03:38,600 --> 00:03:41,320 Speaker 1: the song which, by the way, there is a number 65 00:03:41,400 --> 00:03:46,920 Speaker 1: of storied Pulitzer Prize winning journalists who have occupied it 66 00:03:47,000 --> 00:03:49,240 Speaker 1: was a good chair and one was infamous. We won't mentioned, 67 00:03:49,520 --> 00:03:53,480 Speaker 1: but um doing that column, and the Solomon Brothers scandal happened. 68 00:03:53,800 --> 00:03:56,400 Speaker 1: Buffett flies into New York and all of a sudden 69 00:03:56,400 --> 00:03:58,720 Speaker 1: people are very interested in him, and so I pitched 70 00:03:58,720 --> 00:04:02,680 Speaker 1: a book idea and did that book, did very well, 71 00:04:02,720 --> 00:04:04,520 Speaker 1: went back to the General, wrote a column for a 72 00:04:04,520 --> 00:04:08,120 Speaker 1: few years, and since then I've written exclusively books. So 73 00:04:08,200 --> 00:04:11,800 Speaker 1: the Buffet story is kind of fascinating. The Solomon comes in, 74 00:04:11,960 --> 00:04:15,960 Speaker 1: save Solomon Brothers, works them out from their headache, subsequently 75 00:04:16,560 --> 00:04:20,360 Speaker 1: does the same thing with Goldman Sachs in the financial crisis, 76 00:04:20,839 --> 00:04:23,159 Speaker 1: kind of gives them a capital infusion they needed to 77 00:04:23,160 --> 00:04:26,120 Speaker 1: stay liquid. You talked a lot and wrote a lot 78 00:04:26,240 --> 00:04:30,960 Speaker 1: in Origins of the Crash about the previous UH crisis, 79 00:04:30,960 --> 00:04:34,000 Speaker 1: the two thousand dot com crash, But the end of 80 00:04:34,080 --> 00:04:37,960 Speaker 1: Wall Street was really your story, not so much about 81 00:04:38,040 --> 00:04:42,200 Speaker 1: the financial crisis, but what happened with Wall Street during 82 00:04:42,240 --> 00:04:44,800 Speaker 1: that period. Yeah, the end of Wall Street, you know, 83 00:04:44,800 --> 00:04:47,360 Speaker 1: it was about the two thousand and eight mortgage bubble 84 00:04:47,360 --> 00:04:50,640 Speaker 1: and everything that happened after the FED interventions that tarp 85 00:04:50,720 --> 00:04:53,679 Speaker 1: all of that, and the you know the difference between 86 00:04:53,680 --> 00:04:55,680 Speaker 1: that story and the one we're gonna talk about America's 87 00:04:55,720 --> 00:04:58,560 Speaker 1: Bank is this was what a crisis looked like when 88 00:04:58,600 --> 00:05:01,120 Speaker 1: we had a federal reserve and we had a strong 89 00:05:01,240 --> 00:05:06,839 Speaker 1: federal financial presence as opposed to before. Were you just 90 00:05:06,960 --> 00:05:10,840 Speaker 1: krene from your you're on your own crisis to crisis. 91 00:05:11,360 --> 00:05:14,039 Speaker 1: Maybe JP Morgan will organize a loan for you, if 92 00:05:14,080 --> 00:05:17,200 Speaker 1: not Sion our maybe and and by the way, sionar 93 00:05:17,279 --> 00:05:20,040 Speaker 1: to the system as well too, So we're gonna definitely 94 00:05:20,040 --> 00:05:23,200 Speaker 1: spend more time talking about that. I would be remiss 95 00:05:23,320 --> 00:05:26,560 Speaker 1: if I failed to mention your dad. Your father was 96 00:05:27,000 --> 00:05:29,960 Speaker 1: Louis Loan Stein, and he was really a well known 97 00:05:30,520 --> 00:05:34,920 Speaker 1: law professor and corporate executive who pretty much spent three 98 00:05:35,000 --> 00:05:40,040 Speaker 1: decades dissecting the excesses of Wall Street. If if he 99 00:05:40,120 --> 00:05:42,840 Speaker 1: was alive today, he would be active on Twitter, he 100 00:05:42,880 --> 00:05:44,920 Speaker 1: would have a blog, and he would be trashing Wall 101 00:05:44,960 --> 00:05:47,280 Speaker 1: Street on a fairly regular basis. Know, I don't know 102 00:05:47,320 --> 00:05:51,080 Speaker 1: about Twitter, because I remember trying to get a dad, 103 00:05:51,320 --> 00:05:56,080 Speaker 1: um My dear and late father to accept photos and 104 00:05:56,120 --> 00:06:00,400 Speaker 1: texting on his cell phone and and different generation. But 105 00:06:00,720 --> 00:06:04,479 Speaker 1: he seriously he was a law professor who, instead of 106 00:06:04,560 --> 00:06:07,560 Speaker 1: just sticking with um, you know, the standard text that 107 00:06:07,600 --> 00:06:11,279 Speaker 1: other professors were teaching, said hey, there's something going wrong 108 00:06:11,320 --> 00:06:13,799 Speaker 1: in business. I don't care if it's business law or business. 109 00:06:13,800 --> 00:06:16,480 Speaker 1: This is in the era of junk bond sales and 110 00:06:16,560 --> 00:06:19,400 Speaker 1: junk bond excesses. And he really he was a pioneer 111 00:06:19,440 --> 00:06:22,520 Speaker 1: and saying the way the prospectuses are written isn't right, 112 00:06:22,560 --> 00:06:24,919 Speaker 1: disclosures aren't right, the risks that they are being taken 113 00:06:24,920 --> 00:06:27,039 Speaker 1: by mutual funds aren't right. And he was out in 114 00:06:27,080 --> 00:06:30,880 Speaker 1: front very much an investor advocate. Is that a fair statement. Yeah, 115 00:06:30,920 --> 00:06:36,480 Speaker 1: he was an advocate for good, fair, open, honest disclosure transparency. 116 00:06:36,880 --> 00:06:39,800 Speaker 1: He also warned about the dangers of short term investing 117 00:06:39,839 --> 00:06:42,920 Speaker 1: and in ignoring the long term. The question I want 118 00:06:42,920 --> 00:06:46,960 Speaker 1: to ask is how did your father's philosophy affect your 119 00:06:47,200 --> 00:06:49,839 Speaker 1: your thinking? You know very much. But we both got 120 00:06:49,880 --> 00:06:52,880 Speaker 1: into we sort of both edged into writing careers or 121 00:06:53,200 --> 00:06:56,360 Speaker 1: authorial careers. He was a corporate lawyer for the all 122 00:06:56,360 --> 00:06:59,840 Speaker 1: of my growing up, and I was a journalist and 123 00:07:00,160 --> 00:07:01,280 Speaker 1: you know, at the beginning of my career, I wasn't 124 00:07:01,320 --> 00:07:04,560 Speaker 1: even a business journalist. And then uh, you know, when 125 00:07:04,600 --> 00:07:06,480 Speaker 1: I went to college, I wasn't even interested in business. 126 00:07:06,480 --> 00:07:08,039 Speaker 1: And then at some point I joined the Wall Street 127 00:07:08,080 --> 00:07:12,920 Speaker 1: Journal around uh, nineteen seventy nine. I joined the journal. 128 00:07:13,080 --> 00:07:16,720 Speaker 1: At that time, Uh, he was a chairman to become 129 00:07:16,840 --> 00:07:19,120 Speaker 1: a CEO of one of his clients, path Mark, the 130 00:07:19,480 --> 00:07:23,480 Speaker 1: s GC, the supermarket chain. H. At some point, uh, 131 00:07:23,680 --> 00:07:27,280 Speaker 1: soon after that, he segues into Columbia University become a 132 00:07:27,360 --> 00:07:30,800 Speaker 1: law professor. And by now I'm writing about finance, and 133 00:07:30,880 --> 00:07:34,200 Speaker 1: as a law professor, suddenly he's writing about finance, and 134 00:07:34,680 --> 00:07:37,480 Speaker 1: suddenly we're sort of doing it. Not the same things, 135 00:07:37,480 --> 00:07:41,040 Speaker 1: but similar things just happened almost simultaneous, Almost simultaneously. He 136 00:07:41,080 --> 00:07:43,880 Speaker 1: wrote his his first two books before I wrote any books. 137 00:07:43,880 --> 00:07:47,920 Speaker 1: But I was a financial reporter, and so you know, 138 00:07:48,000 --> 00:07:52,240 Speaker 1: we really really enjoyed. We would add each other's books 139 00:07:52,400 --> 00:07:55,679 Speaker 1: and it was a relationship. Um. There was no tension 140 00:07:55,720 --> 00:07:58,240 Speaker 1: in it, there was no disagreement. It was just it 141 00:07:58,360 --> 00:08:02,160 Speaker 1: was a pure love and also an intellectual connection which 142 00:08:02,240 --> 00:08:06,040 Speaker 1: I treasured. You're listening to Masters in Business on Bloomberg Radio. 143 00:08:06,280 --> 00:08:09,760 Speaker 1: My guest this week, author Roger Lowenstein. He has a 144 00:08:09,800 --> 00:08:14,400 Speaker 1: new book out called America's Bank, The Epic Struggle to 145 00:08:14,520 --> 00:08:17,800 Speaker 1: create the Federal Reserve, And it's really very much a 146 00:08:18,040 --> 00:08:23,120 Speaker 1: deep dive into the history and creation of the Federal Reserve. 147 00:08:23,200 --> 00:08:26,400 Speaker 1: And and it's really apparent to me you spent a 148 00:08:26,560 --> 00:08:31,200 Speaker 1: long time doing some really archival research on this. When 149 00:08:31,200 --> 00:08:33,320 Speaker 1: we had launched a couple of summers ago, you were 150 00:08:33,360 --> 00:08:36,600 Speaker 1: already a year or two into the research process, and 151 00:08:36,600 --> 00:08:39,199 Speaker 1: here it is months and months later in the book 152 00:08:39,240 --> 00:08:43,640 Speaker 1: is just coming out recently. What was the research process 153 00:08:43,679 --> 00:08:47,439 Speaker 1: like for digging into the creation of the Federal Reserve. 154 00:08:47,640 --> 00:08:49,640 Speaker 1: So that's a good question. Because my other books were 155 00:08:49,640 --> 00:08:53,080 Speaker 1: mostly contemporary stories. This is a history. Although there is 156 00:08:53,120 --> 00:08:57,280 Speaker 1: some contemporary aspects relative to what just took place, but 157 00:08:57,440 --> 00:09:00,640 Speaker 1: most of it is really a deep historical go back 158 00:09:00,679 --> 00:09:03,480 Speaker 1: and interview wood Row Wilson. You can't interview Carter Glass, 159 00:09:03,520 --> 00:09:06,040 Speaker 1: Paul Warburg, Teddy Roosevelt. These are all big characters in 160 00:09:06,080 --> 00:09:09,640 Speaker 1: the book. So you go to archives, and um, you 161 00:09:09,679 --> 00:09:12,640 Speaker 1: wouldn't believe archives all of these famous people either in 162 00:09:12,679 --> 00:09:16,120 Speaker 1: the library Congress or the Woodrow Wilson Library, Like you're 163 00:09:16,120 --> 00:09:19,520 Speaker 1: doing White glove. Original document is white glove. Because you 164 00:09:19,600 --> 00:09:23,920 Speaker 1: go into the say the Library Princeton, and um, they 165 00:09:24,000 --> 00:09:26,640 Speaker 1: almost do a strip search. You can't take in you know, 166 00:09:26,760 --> 00:09:28,720 Speaker 1: I can't take my cappuccino and with me because they 167 00:09:28,720 --> 00:09:31,160 Speaker 1: don't want me spilling my cappuccino one hundred year old 168 00:09:31,240 --> 00:09:34,120 Speaker 1: original pieces of parchment. I can't blame them, can't really 169 00:09:34,160 --> 00:09:36,360 Speaker 1: blame my. I'm not allowed to take cappuccinos, by the way, 170 00:09:36,400 --> 00:09:38,800 Speaker 1: in the living room either at my house. But that's 171 00:09:38,800 --> 00:09:41,360 Speaker 1: for a different reason. All the Bloomberg people in relationists 172 00:09:41,360 --> 00:09:45,360 Speaker 1: the entire places waterproof so's it's quite amazing. So each 173 00:09:45,400 --> 00:09:47,360 Speaker 1: of these and there were about ten different sets of 174 00:09:47,480 --> 00:09:52,000 Speaker 1: archives JP the Morgan Library of different basically bankers and 175 00:09:52,080 --> 00:09:54,760 Speaker 1: politicians at the time. And what you see when you 176 00:09:54,760 --> 00:09:58,560 Speaker 1: get into them is that although you can't to contemporaries interviews, 177 00:09:58,760 --> 00:10:02,880 Speaker 1: there are no emails, people back then really wrote letters, 178 00:10:03,160 --> 00:10:05,960 Speaker 1: and they really bared their souls and give an example 179 00:10:06,000 --> 00:10:08,400 Speaker 1: of of something you can you can learn from then 180 00:10:08,440 --> 00:10:11,480 Speaker 1: you couldn't learn today. Washington, d c. Obviously is a 181 00:10:11,600 --> 00:10:14,559 Speaker 1: very hot, steamy town. Before the ear of air conditioning, 182 00:10:14,880 --> 00:10:18,000 Speaker 1: political spouses would take the summer off. That was true 183 00:10:18,000 --> 00:10:21,320 Speaker 1: in n in the summer when the Federal Reserve Act 184 00:10:21,920 --> 00:10:24,280 Speaker 1: was really reaching a peak in terms of the legislation. 185 00:10:24,600 --> 00:10:28,880 Speaker 1: So Ellen Wilson, the President's rather delicate wife, holds up 186 00:10:28,880 --> 00:10:32,040 Speaker 1: in New Hampshire during the summer. So he's writing her 187 00:10:32,559 --> 00:10:36,440 Speaker 1: virtually every day, and you're seeing in the archives the 188 00:10:36,480 --> 00:10:40,559 Speaker 1: problems he's facing the legislation, which committees and committee congress 189 00:10:40,559 --> 00:10:43,680 Speaker 1: people are giving him trouble, what his strategy is. He's 190 00:10:43,720 --> 00:10:46,040 Speaker 1: telling her, don't worry. The press is writing this. They 191 00:10:46,080 --> 00:10:48,080 Speaker 1: don't know what they're talking about. I'm gonna do an 192 00:10:48,160 --> 00:10:52,160 Speaker 1: end run around him. People bear their souls and letters 193 00:10:52,679 --> 00:10:55,319 Speaker 1: in a way that's more trustworthy than an interview, because 194 00:10:55,400 --> 00:10:57,360 Speaker 1: you know, you go interview somebody, of course they're going 195 00:10:57,400 --> 00:10:59,640 Speaker 1: to tell you what they want you to know. But 196 00:11:00,080 --> 00:11:02,720 Speaker 1: is his Woodrow talking to his wife, or it's Paul 197 00:11:02,760 --> 00:11:06,800 Speaker 1: Warburg talking to his most trusted comrade or something, and 198 00:11:07,200 --> 00:11:11,400 Speaker 1: it just opens up a window into the contemporaneous activities 199 00:11:11,760 --> 00:11:14,800 Speaker 1: back years ago that that sounds like it would have 200 00:11:14,880 --> 00:11:19,000 Speaker 1: normally been dinner table conversation if if the misses was 201 00:11:19,080 --> 00:11:21,280 Speaker 1: in town. But since he doesn't get to come home 202 00:11:21,280 --> 00:11:23,880 Speaker 1: from work, how is your day, honey, here's what happened 203 00:11:23,880 --> 00:11:28,679 Speaker 1: in Congress. He actually wrote specific details. Do these guys 204 00:11:28,800 --> 00:11:32,080 Speaker 1: realize this stuff ends up in archives and libraries or 205 00:11:32,160 --> 00:11:33,880 Speaker 1: is it just Hey, I'll be dead. I don't care. 206 00:11:33,960 --> 00:11:36,560 Speaker 1: What's the thinking that. No, they're saving their letters, they're 207 00:11:36,559 --> 00:11:39,800 Speaker 1: saving duplicates. Carter Glass, who many people may know from 208 00:11:39,800 --> 00:11:42,680 Speaker 1: the Glass Steagel Act, but he's also the father, legislative 209 00:11:42,720 --> 00:11:45,960 Speaker 1: father the Fed Reserve Act, a very fiery guy. He 210 00:11:46,000 --> 00:11:49,200 Speaker 1: goes to the White House one day and Wilson shocks him. 211 00:11:49,360 --> 00:11:52,280 Speaker 1: Glass wants to have on this emergent legislation for this 212 00:11:52,320 --> 00:11:54,720 Speaker 1: new body, the Federal Reserve. He wants to be run 213 00:11:54,760 --> 00:11:58,640 Speaker 1: by bankers, not by federal appointees, not by presidential appointees. 214 00:11:59,040 --> 00:12:03,120 Speaker 1: Lewis Brand, Wilson's adviser, and William Jennings Bryant, his Secretary 215 00:12:03,160 --> 00:12:05,480 Speaker 1: of State, says, uh, this is a new day and 216 00:12:05,559 --> 00:12:07,959 Speaker 1: new a new dawn. This agency is going to run 217 00:12:08,000 --> 00:12:11,400 Speaker 1: the banking system has to be presidential appointees. Wilson lays 218 00:12:11,440 --> 00:12:14,880 Speaker 1: down the line. Glass goes back to his hotel. He's shocked, 219 00:12:15,000 --> 00:12:17,560 Speaker 1: he's outraged. He's a kind of he's a conservative, doesn't 220 00:12:17,760 --> 00:12:20,880 Speaker 1: he can't begins to write letters. You can see them 221 00:12:20,920 --> 00:12:23,640 Speaker 1: today on the Raleigh Hotel stationary. That's where he stayed 222 00:12:23,640 --> 00:12:27,119 Speaker 1: when he was in Washington. Page after page, he's exploding 223 00:12:27,160 --> 00:12:29,600 Speaker 1: off the page, you know he was. He wasn't thinking 224 00:12:29,640 --> 00:12:32,520 Speaker 1: then about his reputation for posterity because he sort of 225 00:12:32,520 --> 00:12:35,520 Speaker 1: embarrasses himself. He's a He's finally says to somebody, I'm 226 00:12:35,520 --> 00:12:37,240 Speaker 1: gonna call the president tomorrow and see if I can 227 00:12:37,240 --> 00:12:39,440 Speaker 1: get him to change his mind. No way, Wilson's gonna 228 00:12:39,520 --> 00:12:41,920 Speaker 1: change his mind. Wilson's made have made up his mind. 229 00:12:42,280 --> 00:12:46,560 Speaker 1: But um, they they they bear themselves in a way 230 00:12:46,640 --> 00:12:49,400 Speaker 1: that that we rarely see today. And it just because 231 00:12:49,440 --> 00:12:53,240 Speaker 1: there's such big characters in history. You know, if if 232 00:12:53,280 --> 00:12:55,160 Speaker 1: you're a nut for that sort of stuff, it's kind 233 00:12:55,160 --> 00:13:00,319 Speaker 1: of fascinating. Let me ask a broader historical question. How 234 00:13:00,320 --> 00:13:02,960 Speaker 1: come in the United States was one of the last 235 00:13:03,800 --> 00:13:07,600 Speaker 1: major industrial countries to get a central bank. You look 236 00:13:07,640 --> 00:13:10,800 Speaker 1: at Europe and Japan and elsewhere, just about everyone else 237 00:13:10,840 --> 00:13:13,800 Speaker 1: at a central bank. Why were we so far behind 238 00:13:14,520 --> 00:13:17,559 Speaker 1: the rest of the civilized world. So the thesis of 239 00:13:17,600 --> 00:13:20,760 Speaker 1: the book is, this is our heritage. We rebel against 240 00:13:20,840 --> 00:13:23,760 Speaker 1: the English king. Uh, we were at rebel against the 241 00:13:23,800 --> 00:13:27,120 Speaker 1: central government. What's the first debate in American history. It's 242 00:13:27,120 --> 00:13:30,760 Speaker 1: Hamilton's against Jefferson. Hamilton wants a central bank. Jefferson says, no, 243 00:13:31,160 --> 00:13:35,240 Speaker 1: that's like the English tyranny that as settlers pushed west 244 00:13:35,240 --> 00:13:39,160 Speaker 1: and the pioneers pushed west. They're continually saying, we don't 245 00:13:39,200 --> 00:13:42,160 Speaker 1: want control by New York, we don't want control by Washington. 246 00:13:42,480 --> 00:13:45,600 Speaker 1: This is recreating everything that we rebelled against. And by 247 00:13:45,600 --> 00:13:48,480 Speaker 1: the way, Barry, look today, look to the Tea Party today. 248 00:13:48,720 --> 00:13:50,880 Speaker 1: You know they don't want a strong central legency. They 249 00:13:50,880 --> 00:13:53,160 Speaker 1: want to under the Fed right now. So in every 250 00:13:53,200 --> 00:13:55,920 Speaker 1: country in Europe they sort of accepted, we have a 251 00:13:56,360 --> 00:13:59,040 Speaker 1: national government, we have a national monetary system. Of course 252 00:13:59,080 --> 00:14:01,880 Speaker 1: we're gonna have a central bank. But in America, you know, 253 00:14:02,160 --> 00:14:05,200 Speaker 1: a good swath the population remains very touchy about it. 254 00:14:05,240 --> 00:14:07,840 Speaker 1: Ask Rand Paul, this is this is our heritage. And 255 00:14:07,840 --> 00:14:09,760 Speaker 1: if you look one whose last book, by the way, 256 00:14:09,840 --> 00:14:12,640 Speaker 1: was and one of the main opponents of the federal 257 00:14:12,679 --> 00:14:16,239 Speaker 1: reserve legislation is Charles Lindbergh, senior father of the Aviator, 258 00:14:16,480 --> 00:14:19,360 Speaker 1: real populist out in Minnesota, so who held this district 259 00:14:19,440 --> 00:14:21,240 Speaker 1: until a few years ago. In our day and age, 260 00:14:21,400 --> 00:14:24,680 Speaker 1: Michelle Bachman, the Tea Party Report. You know, Crusader, This 261 00:14:24,720 --> 00:14:27,520 Speaker 1: is not a coincidence. This is we have this populist, 262 00:14:27,800 --> 00:14:31,120 Speaker 1: suspicious mindset in much of the country that always feared 263 00:14:31,320 --> 00:14:34,160 Speaker 1: in Andrew Jackson's day, in Woodrow Wilson's day, and today 264 00:14:34,440 --> 00:14:36,800 Speaker 1: that if you have a central bank, Wall Street's gonna 265 00:14:36,840 --> 00:14:39,360 Speaker 1: run it, They're gonna be inco hoots against the common 266 00:14:39,360 --> 00:14:42,160 Speaker 1: man and so on, and that's that's our legacy. There 267 00:14:42,200 --> 00:14:44,840 Speaker 1: are people who wouldn't disagree with with those fears. Let 268 00:14:44,960 --> 00:14:48,760 Speaker 1: let me ask you a question about the most surprising 269 00:14:48,800 --> 00:14:52,040 Speaker 1: thing you found about the FED in your research. What 270 00:14:52,160 --> 00:14:55,360 Speaker 1: really leapt out and surprised you. You know, I was 271 00:14:55,400 --> 00:14:59,040 Speaker 1: surprised at how similar the eras were. People. We had 272 00:14:59,080 --> 00:15:02,840 Speaker 1: a financial cray seven. We had a bank panic, a 273 00:15:02,920 --> 00:15:04,760 Speaker 1: real panic. By the way, I don't mean red lines 274 00:15:04,760 --> 00:15:06,840 Speaker 1: in the computer screen. I mean people running to the 275 00:15:06,880 --> 00:15:09,560 Speaker 1: street corner to take their money for fd I c 276 00:15:10,360 --> 00:15:16,680 Speaker 1: pree really and every any federal supervision control of the currency. 277 00:15:16,720 --> 00:15:19,600 Speaker 1: One guy in Washington. That was it. But people were 278 00:15:19,880 --> 00:15:22,400 Speaker 1: some people wanted deposit insurance, some people were afraid of 279 00:15:22,440 --> 00:15:26,480 Speaker 1: moral hazard. That idea was, you know, very current JP 280 00:15:26,600 --> 00:15:28,920 Speaker 1: Morgan steps in. He's kind of a hero, kind of 281 00:15:28,960 --> 00:15:32,520 Speaker 1: like you know JP Morgan Chase today buying up bear Sterns. 282 00:15:32,560 --> 00:15:35,320 Speaker 1: Six months later, people are accusing JP Morgan of having 283 00:15:35,360 --> 00:15:38,360 Speaker 1: plotting the whole panic, and Teddy Roosevelt says, wait a second, 284 00:15:38,400 --> 00:15:40,600 Speaker 1: this is getting out of hand. People are people are 285 00:15:40,600 --> 00:15:42,760 Speaker 1: starting to say that every bank is something rotten in it. 286 00:15:43,080 --> 00:15:47,280 Speaker 1: Their populous fighting bankers. Uh, there's a people who want 287 00:15:47,280 --> 00:15:49,360 Speaker 1: the goal standard, people who are very upset about it 288 00:15:49,360 --> 00:15:52,120 Speaker 1: because they think it's too deflationary, too tough on the 289 00:15:52,160 --> 00:15:57,120 Speaker 1: average farmer, average worker. The the fights between regions of 290 00:15:57,160 --> 00:16:02,520 Speaker 1: the country Republicans and Democrats sounds just like today. It's 291 00:16:02,560 --> 00:16:06,240 Speaker 1: it's it's hard to I was shocked at how current 292 00:16:06,400 --> 00:16:09,040 Speaker 1: the debates sounded as I read them. You're listening to 293 00:16:09,120 --> 00:16:12,680 Speaker 1: Masters in Business on Bloomberg Radio. My guest today is 294 00:16:12,840 --> 00:16:16,840 Speaker 1: author and journalist Roger Lowenstein. You probably know him from 295 00:16:16,840 --> 00:16:19,720 Speaker 1: such books as When Genius Failed, The Rise and Full 296 00:16:19,760 --> 00:16:24,440 Speaker 1: of Long Term Capital Management, as well as Buffett Making 297 00:16:24,720 --> 00:16:28,280 Speaker 1: of an American Capitalist. I found Origins of the Crash 298 00:16:28,320 --> 00:16:31,560 Speaker 1: about the two thousand Crash to be fascinating book, and 299 00:16:31,600 --> 00:16:37,040 Speaker 1: it was tremendously helpful in my own research about compensation 300 00:16:37,320 --> 00:16:40,720 Speaker 1: and stock options. And and I recall you're the first 301 00:16:40,760 --> 00:16:44,680 Speaker 1: person who reported about the Hinz executive who I think 302 00:16:44,680 --> 00:16:48,760 Speaker 1: it was in had gotten a hundred million dollars. Some 303 00:16:48,880 --> 00:16:53,200 Speaker 1: insane that back when a hundred million dollars was real money, 304 00:16:53,720 --> 00:16:56,320 Speaker 1: it was. It was crazy. So let's talk a little 305 00:16:56,360 --> 00:17:00,160 Speaker 1: bit about your your research and your writing process. Us 306 00:17:00,520 --> 00:17:03,400 Speaker 1: walk us through through your process. How do you decide 307 00:17:03,440 --> 00:17:06,560 Speaker 1: on a topic. Where do you begin? Well, if you 308 00:17:07,240 --> 00:17:10,680 Speaker 1: let's look at the recent book America's Bank, it's a 309 00:17:10,800 --> 00:17:14,000 Speaker 1: history of the founding the Federal Reserve. I was interested 310 00:17:14,000 --> 00:17:16,639 Speaker 1: in doing a history. I began that one after the 311 00:17:16,720 --> 00:17:19,280 Speaker 1: last book, which was the End of Wall Street, which 312 00:17:19,320 --> 00:17:22,240 Speaker 1: was a contemporary story about the mortgage crash. I wanted 313 00:17:22,400 --> 00:17:24,840 Speaker 1: something historical. And as my editor and I were talking, 314 00:17:25,320 --> 00:17:27,560 Speaker 1: you know, it was we were very aware of how 315 00:17:27,680 --> 00:17:31,600 Speaker 1: present the Federal Reserve today had been in everything throughout 316 00:17:31,960 --> 00:17:34,000 Speaker 1: you know, throughout this experience in two thousand and two 317 00:17:34,040 --> 00:17:37,040 Speaker 1: thousand and nine. And she said, at one point, you know, 318 00:17:37,200 --> 00:17:40,399 Speaker 1: be interesting to look at what what the country was 319 00:17:40,440 --> 00:17:43,040 Speaker 1: like before we had a FED, How we're crises handled? 320 00:17:43,880 --> 00:17:45,720 Speaker 1: Why was it? The people thought, why didn't we have 321 00:17:45,760 --> 00:17:48,240 Speaker 1: one until so late? Why do they think we needed one? 322 00:17:48,240 --> 00:17:50,840 Speaker 1: How do they get one? And it just seemed it 323 00:17:50,880 --> 00:17:52,720 Speaker 1: just seemed to fit there. Would it would be in 324 00:17:52,720 --> 00:17:55,200 Speaker 1: a sense of great book end to the contemporary history 325 00:17:55,200 --> 00:17:57,920 Speaker 1: we're living today. So you said you were working with 326 00:17:58,000 --> 00:18:01,640 Speaker 1: your editor and she help you shape. I mean, we're 327 00:18:01,680 --> 00:18:06,520 Speaker 1: always throwing ideas back and forth and and she said, um, 328 00:18:06,600 --> 00:18:10,080 Speaker 1: and she's not a financial expert per se. She's and 329 00:18:10,280 --> 00:18:12,920 Speaker 1: got off. She's in my mind, the best editor there is, 330 00:18:13,840 --> 00:18:17,560 Speaker 1: but she's throwing out topic ideas. And then I would 331 00:18:17,560 --> 00:18:20,080 Speaker 1: go back and say, hey, is there something to this idea? 332 00:18:20,119 --> 00:18:23,720 Speaker 1: And started to research, um, what went into the making 333 00:18:23,720 --> 00:18:26,159 Speaker 1: of the Federal Reserve? What else has been written about it? 334 00:18:26,359 --> 00:18:29,040 Speaker 1: How resident is it to today? And you know, it's 335 00:18:29,080 --> 00:18:33,480 Speaker 1: just astonished. There's this incredible, mysterious trip that bankers in 336 00:18:33,560 --> 00:18:35,879 Speaker 1: the U. S. Senator take down to a remote island 337 00:18:35,880 --> 00:18:38,240 Speaker 1: in Georgia. Because the thing is so controversial, they got 338 00:18:38,240 --> 00:18:41,600 Speaker 1: to plot it in secret. There's a Wall Street crash 339 00:18:41,760 --> 00:18:44,600 Speaker 1: very much like the crash that um that we just 340 00:18:44,960 --> 00:18:50,000 Speaker 1: lived through. There are great characters, great presidents, um, financial 341 00:18:50,000 --> 00:18:52,119 Speaker 1: tycoons and so on. And at that point I go 342 00:18:52,200 --> 00:18:54,160 Speaker 1: back to her and say, I think we got one here, 343 00:18:54,480 --> 00:18:56,320 Speaker 1: and she says, okay, put it in paper, because you 344 00:18:56,560 --> 00:19:00,560 Speaker 1: until you write a proposal, anything can sound good, uh, 345 00:19:00,600 --> 00:19:02,800 Speaker 1: in a coffee shop or you know, over the dinner table. 346 00:19:02,840 --> 00:19:04,960 Speaker 1: But and you're I think I wrote a proposal about 347 00:19:06,280 --> 00:19:08,440 Speaker 1: is something like that? And at that point she says, 348 00:19:08,440 --> 00:19:10,479 Speaker 1: wow this. You know you've got something here and let's go. 349 00:19:11,040 --> 00:19:14,880 Speaker 1: And then uh, you do a timeline. That's a that's 350 00:19:14,880 --> 00:19:17,960 Speaker 1: a for me, the most important next apt chronology of 351 00:19:18,000 --> 00:19:21,680 Speaker 1: a chronology of the events. What happens, you know, when 352 00:19:21,680 --> 00:19:24,600 Speaker 1: does the book start? And this book has a background period. 353 00:19:24,720 --> 00:19:27,920 Speaker 1: We go into the Gold Silver debates, across a Gold 354 00:19:27,960 --> 00:19:30,119 Speaker 1: Speech and all that stuff in the late nineteenth century. 355 00:19:30,160 --> 00:19:34,040 Speaker 1: To set the table um, Paul Warburger is a major character. 356 00:19:34,520 --> 00:19:38,760 Speaker 1: He this German financier emigrates the US, is astonished that 357 00:19:38,800 --> 00:19:40,919 Speaker 1: our system is so primitive, and you know, and he 358 00:19:40,960 --> 00:19:43,040 Speaker 1: begins to lobby for the federal reserves. So when does 359 00:19:43,080 --> 00:19:44,800 Speaker 1: he come in? When does he come into this country? 360 00:19:45,000 --> 00:19:47,360 Speaker 1: And you go on with a timeline so that as 361 00:19:47,359 --> 00:19:51,000 Speaker 1: you're getting information, you can add, you can fill it 362 00:19:51,040 --> 00:19:54,000 Speaker 1: into the timeline. So things are where you want to 363 00:19:54,040 --> 00:19:56,080 Speaker 1: find them when you go to you go to writing 364 00:19:56,119 --> 00:19:58,359 Speaker 1: the book. So let me talk a little bit about 365 00:19:58,359 --> 00:20:01,360 Speaker 1: some of your other books. Do you have any personal 366 00:20:01,400 --> 00:20:04,199 Speaker 1: favorites as a finished work? Which one of those books 367 00:20:04,800 --> 00:20:09,600 Speaker 1: the finished products are you happiest with? You know, it's 368 00:20:09,680 --> 00:20:12,639 Speaker 1: really for me as a writer, like asking about my 369 00:20:12,960 --> 00:20:15,720 Speaker 1: which one of your children? Of course, so I like 370 00:20:15,840 --> 00:20:19,400 Speaker 1: my three children best. After that, I like my six 371 00:20:19,440 --> 00:20:24,600 Speaker 1: books right right now, I'm very partial to America's Bank. 372 00:20:25,040 --> 00:20:31,800 Speaker 1: You know, it just came out. The history, the historical characters, Um. 373 00:20:32,080 --> 00:20:35,520 Speaker 1: The process of trying to bring them alive, UM, was 374 00:20:35,760 --> 00:20:39,240 Speaker 1: just enriching and fun for me. And UM, so that's 375 00:20:39,520 --> 00:20:42,320 Speaker 1: because it's so new, you know, you're it's not surprising. 376 00:20:42,359 --> 00:20:46,119 Speaker 1: I would say that you mentioned origins of the crash 377 00:20:46,200 --> 00:20:50,200 Speaker 1: the compensation system, and that for me was really fun 378 00:20:50,240 --> 00:20:53,320 Speaker 1: to dig into what's really wrong with the compensation system 379 00:20:53,359 --> 00:20:55,960 Speaker 1: and and to flush it out in a way I 380 00:20:55,960 --> 00:21:00,240 Speaker 1: hope hadn't been done before. Uh, the Pension book. You know, 381 00:21:00,280 --> 00:21:02,399 Speaker 1: in a way that was too early, because the idea 382 00:21:02,400 --> 00:21:04,920 Speaker 1: of that book was, hey, we have a real way, 383 00:21:05,000 --> 00:21:06,720 Speaker 1: you know, we have a problem. But I think it 384 00:21:06,840 --> 00:21:10,240 Speaker 1: still holds up today that these cities and states you 385 00:21:10,280 --> 00:21:15,240 Speaker 1: can't just keep legislating increases saying you know, we'll take 386 00:21:15,320 --> 00:21:17,280 Speaker 1: up we'll take care of it later. And that I mean, 387 00:21:17,320 --> 00:21:20,200 Speaker 1: look around today, you know, Puerto Rico, Illinois, wherever you look, 388 00:21:20,280 --> 00:21:23,880 Speaker 1: all these cities in California, Detroit, it's it's come home 389 00:21:24,160 --> 00:21:29,439 Speaker 1: to roost um. The Buffet book was really fun to 390 00:21:29,480 --> 00:21:32,639 Speaker 1: write because I was sitting in people's living rooms, partically 391 00:21:32,680 --> 00:21:36,479 Speaker 1: in Omaha, asking him about this little, um precocious kid 392 00:21:36,480 --> 00:21:38,399 Speaker 1: they knew named Warren, who was telling everybody he was 393 00:21:38,440 --> 00:21:40,280 Speaker 1: gonna be a millionaire back in the in the middle 394 00:21:40,280 --> 00:21:42,879 Speaker 1: of the depression in Nebraska, when nobody knew what a 395 00:21:42,880 --> 00:21:47,119 Speaker 1: million dollars was. Um, you know, so you liked them 396 00:21:47,160 --> 00:21:50,800 Speaker 1: all in a different way. When Genius Failed was a 397 00:21:50,840 --> 00:21:56,160 Speaker 1: really tough reporting exercise because as much as everybody wants 398 00:21:56,200 --> 00:21:59,040 Speaker 1: to get in on the Warren Buffet story and say, hey, 399 00:21:59,080 --> 00:22:01,080 Speaker 1: it was Warren and me, you know, I helped him 400 00:22:01,080 --> 00:22:03,399 Speaker 1: out on this, nobody wants to be part of the 401 00:22:03,440 --> 00:22:05,760 Speaker 1: when Genius failed story. Nobody wants to be part of 402 00:22:05,760 --> 00:22:08,640 Speaker 1: a hedge fund that went down. I'm Barry Ridults. You're 403 00:22:08,680 --> 00:22:12,200 Speaker 1: listening to Masters in Business on Bloomberg Radio. My guest 404 00:22:12,240 --> 00:22:17,480 Speaker 1: today is author Roger Lowenstein. His latest book is America's Bank, 405 00:22:17,560 --> 00:22:21,160 Speaker 1: the Epic struggle regarding the creation of the Federal Reserve. 406 00:22:21,640 --> 00:22:24,959 Speaker 1: And we were talking earlier about one of my not 407 00:22:25,080 --> 00:22:27,520 Speaker 1: just favorite Lowenstein books, but one of my all time 408 00:22:27,520 --> 00:22:32,240 Speaker 1: favorite finance books is When Genius Failed. And not just 409 00:22:32,400 --> 00:22:36,920 Speaker 1: because it's such a fascinating story and it is an 410 00:22:36,920 --> 00:22:41,000 Speaker 1: epic story of of hubrist and failure and and Nobel 411 00:22:41,080 --> 00:22:47,000 Speaker 1: laureates and people being blind blindsided by their own failings 412 00:22:47,000 --> 00:22:51,080 Speaker 1: and shortcomings, but the characters are so vivid and the 413 00:22:51,200 --> 00:22:55,960 Speaker 1: story is so amazing, and really it was the last 414 00:22:56,200 --> 00:23:02,680 Speaker 1: great opportunity for Wall Street to learn a lesson about risk, 415 00:23:03,359 --> 00:23:06,159 Speaker 1: and that was really a great missed opportunity. I recall 416 00:23:06,240 --> 00:23:11,720 Speaker 1: you ending the book UM and ending UH the discussion 417 00:23:12,000 --> 00:23:15,760 Speaker 1: of origins of the crash with a reference back to, Hey, 418 00:23:15,800 --> 00:23:20,040 Speaker 1: if the FED didn't bail out Wall Street with the 419 00:23:20,080 --> 00:23:23,600 Speaker 1: collapse of long term capital management, what lessons might the 420 00:23:23,640 --> 00:23:26,760 Speaker 1: Street have learned? So I said it in the end 421 00:23:26,800 --> 00:23:29,320 Speaker 1: of the book. Uh. Two things at the end of 422 00:23:29,320 --> 00:23:32,080 Speaker 1: but one was I thought that the Fed on balance 423 00:23:32,480 --> 00:23:35,760 Speaker 1: UM was wrong to organize the rescue because it was 424 00:23:35,800 --> 00:23:38,159 Speaker 1: a private sector rescue. So no dollars went into it. 425 00:23:38,200 --> 00:23:39,879 Speaker 1: But you know, when you have the New York Federal 426 00:23:39,880 --> 00:23:43,520 Speaker 1: Reserve Bank calling in the sixteen because Wall Street firms, 427 00:23:43,680 --> 00:23:46,520 Speaker 1: that's some pretty heavy pressure. You can't say, I have 428 00:23:46,560 --> 00:23:49,199 Speaker 1: a busy calendar. I can't make you cannot tell the 429 00:23:49,200 --> 00:23:51,760 Speaker 1: New Federals or if you have busy calendar, your chief regulator. 430 00:23:51,880 --> 00:23:55,119 Speaker 1: And I really thought at the time that as dire 431 00:23:55,160 --> 00:23:58,720 Speaker 1: as the crisis was, that Wall Street and the economy 432 00:23:58,760 --> 00:24:02,199 Speaker 1: would have worked its way through um. And look, you 433 00:24:02,200 --> 00:24:05,320 Speaker 1: don't want the government to come in unless they really 434 00:24:05,359 --> 00:24:08,920 Speaker 1: really really have to judgment call. But that was my judgment. 435 00:24:08,920 --> 00:24:10,000 Speaker 1: And the other thing I said at the end of 436 00:24:10,000 --> 00:24:12,520 Speaker 1: the book was I made a reference to the dot 437 00:24:12,600 --> 00:24:15,480 Speaker 1: com bubble, which was riding high at the time, and 438 00:24:15,480 --> 00:24:17,879 Speaker 1: and this might have let air out of the bubble 439 00:24:17,920 --> 00:24:20,840 Speaker 1: before it inflated so much so much larger. But of 440 00:24:20,880 --> 00:24:24,280 Speaker 1: course the real comparison, you know, and people have said 441 00:24:24,320 --> 00:24:27,119 Speaker 1: this to me later on, was that when Genius failed 442 00:24:27,280 --> 00:24:30,840 Speaker 1: about this collapse, his hedge fun was really a dry 443 00:24:30,960 --> 00:24:34,119 Speaker 1: run and a mislesson for the mortgage crisis. For the 444 00:24:34,160 --> 00:24:36,280 Speaker 1: bubble that you know so much seems similar. If you 445 00:24:36,280 --> 00:24:39,360 Speaker 1: look at a firm like Bear Stearns, these seemingly well 446 00:24:39,440 --> 00:24:44,240 Speaker 1: capitalized Wall Street firms with seemingly safe assets, you know, 447 00:24:44,560 --> 00:24:49,919 Speaker 1: mortgage securities, triple a uh, you know, low risk rating, 448 00:24:50,600 --> 00:24:54,160 Speaker 1: all of that, and suddenly nobody wants them. All correlations 449 00:24:54,200 --> 00:24:57,040 Speaker 1: go to one. Nobody wants any kind of these assets, 450 00:24:57,080 --> 00:24:58,960 Speaker 1: and just in so many. In fact, I did a 451 00:24:59,000 --> 00:25:02,240 Speaker 1: piece in the spring of two thousand and eight, the 452 00:25:02,280 --> 00:25:05,200 Speaker 1: tenth anniversary of when ltc M began to get into trouble, 453 00:25:05,600 --> 00:25:08,000 Speaker 1: uh and right around the time of Bear Sterns, because 454 00:25:08,000 --> 00:25:13,400 Speaker 1: the comparisons uh were so close to the level of leverage. Well, 455 00:25:13,600 --> 00:25:16,600 Speaker 1: LTCM a hundred to one, bear Sterns thirty five or 456 00:25:16,640 --> 00:25:19,440 Speaker 1: forty five to one, that's still a tremendous amount of 457 00:25:19,480 --> 00:25:25,960 Speaker 1: average dicey assets. Ltc M was backwater Russian paper as 458 00:25:25,960 --> 00:25:29,919 Speaker 1: amongst other stuff. Who really knew what securitized sub prime 459 00:25:29,960 --> 00:25:34,240 Speaker 1: mortgages were pre crisis. That's really something we all kind 460 00:25:34,240 --> 00:25:37,040 Speaker 1: of learned it once. And correlation is going to one 461 00:25:37,119 --> 00:25:39,919 Speaker 1: when nobody wants when the when the proverbially, you know 462 00:25:39,960 --> 00:25:43,120 Speaker 1: what hit the fan. Not only did nobody want Russian debt, 463 00:25:43,440 --> 00:25:46,520 Speaker 1: nobody wanted any kind of debt other than US treasuries, 464 00:25:46,560 --> 00:25:48,960 Speaker 1: and the same thing happened. You know, look in in 465 00:25:49,160 --> 00:25:52,400 Speaker 1: the fall of two thousand and eight, General Electric could 466 00:25:52,440 --> 00:25:56,040 Speaker 1: not sell its paper. Nobody wanted commercial debt, nobody wanted 467 00:25:56,160 --> 00:25:59,480 Speaker 1: risky paper with even this until of risk. And just 468 00:25:59,800 --> 00:26:03,080 Speaker 1: like General Electric or that's just like that point general 469 00:26:03,359 --> 00:26:08,400 Speaker 1: everything is a real example. You know, Goldman Sachs, which 470 00:26:08,480 --> 00:26:11,240 Speaker 1: on paper was completely solvent, was running off to Warren 471 00:26:11,240 --> 00:26:13,679 Speaker 1: Buffett to get capital because he was sort of the 472 00:26:13,680 --> 00:26:16,760 Speaker 1: only place that they could get capital from. And these 473 00:26:16,760 --> 00:26:19,920 Speaker 1: examples are just you it was just one firm and 474 00:26:19,960 --> 00:26:22,440 Speaker 1: a few firms around it. In two thousand and eight 475 00:26:22,760 --> 00:26:26,200 Speaker 1: it was all of Wall Street, so that was really 476 00:26:26,240 --> 00:26:30,760 Speaker 1: a missign And in terms of limits on leverage, reliance 477 00:26:30,920 --> 00:26:35,160 Speaker 1: on on arithmetic risk measures, which is really a big 478 00:26:35,240 --> 00:26:39,240 Speaker 1: theme in when Genius failed. These these you know, computerized 479 00:26:39,320 --> 00:26:42,240 Speaker 1: value at risk measures tell you you can only you're 480 00:26:42,280 --> 00:26:44,560 Speaker 1: only gonna lose so much. Why because the computer says 481 00:26:44,600 --> 00:26:47,600 Speaker 1: that's that's how much you've lost in every every previous day. 482 00:26:47,840 --> 00:26:50,400 Speaker 1: What about if tomorrow is different and they didn't learn 483 00:26:50,480 --> 00:26:53,640 Speaker 1: that lesson in what do you know suddenly in two 484 00:26:53,680 --> 00:26:56,800 Speaker 1: thousand and eight tomorrow was different. So you had a 485 00:26:56,800 --> 00:26:59,280 Speaker 1: firm bear Stearns was trading what a hundred and seventy 486 00:26:59,280 --> 00:27:03,720 Speaker 1: bucks I think peaked around that and and a year 487 00:27:03,800 --> 00:27:06,320 Speaker 1: later it's sold for two dollars two dollars, but they 488 00:27:06,359 --> 00:27:09,360 Speaker 1: did lobby it back up to ten dollars. My favorite 489 00:27:09,400 --> 00:27:12,399 Speaker 1: picture of the entire crisis, some wise guy took a 490 00:27:12,400 --> 00:27:15,760 Speaker 1: two dollar bill taped it to the front glass door 491 00:27:15,760 --> 00:27:19,480 Speaker 1: of the new beautiful bear Sterns building over on Vanderbilt 492 00:27:19,480 --> 00:27:22,080 Speaker 1: and forty and there's a picture of the two dollar 493 00:27:22,119 --> 00:27:25,600 Speaker 1: bill with the bear Sterns logo that that is now 494 00:27:25,840 --> 00:27:28,520 Speaker 1: the JP Morgan building which they got as part of 495 00:27:28,520 --> 00:27:31,120 Speaker 1: the deal, that that might be one of the best 496 00:27:31,160 --> 00:27:34,880 Speaker 1: assets they picked up in that deal for pennies literally 497 00:27:34,920 --> 00:27:40,879 Speaker 1: pennies on the dollar. So lost opportunity to um prevent 498 00:27:40,920 --> 00:27:46,280 Speaker 1: a little moral hazard, inject a little normal risk management. 499 00:27:46,680 --> 00:27:49,560 Speaker 1: What other lessons do we pick up from from lt 500 00:27:49,720 --> 00:27:54,119 Speaker 1: CM that are applicable not to oh eight but today. Well, 501 00:27:54,240 --> 00:27:58,560 Speaker 1: one lesson is that when interest rates are very low, uh, 502 00:27:58,600 --> 00:28:00,800 Speaker 1: there's a particularly strong ten and see to look for 503 00:28:00,920 --> 00:28:03,840 Speaker 1: yield elsewhere and to reach to reach you know, how 504 00:28:03,880 --> 00:28:07,240 Speaker 1: often what is it hogs get fat, pigs get slaughter? 505 00:28:07,359 --> 00:28:10,000 Speaker 1: Is it the diverse but reaching for a little bit, 506 00:28:12,800 --> 00:28:16,680 Speaker 1: reaching for extra yield. Uh, when the safe stuff isn't 507 00:28:16,880 --> 00:28:19,600 Speaker 1: isn't paying off? Why do you think it's safe? Why 508 00:28:19,640 --> 00:28:22,159 Speaker 1: do you think the other stuff is paying more yield? 509 00:28:22,200 --> 00:28:24,640 Speaker 1: And the way to invest if you want to buy 510 00:28:24,680 --> 00:28:27,600 Speaker 1: the risky stuff, buy it when it's down by it, 511 00:28:27,600 --> 00:28:31,680 Speaker 1: when it's thirty cents in the dollars, or at least 512 00:28:32,080 --> 00:28:33,919 Speaker 1: when it's being this when you're getting paid for it. 513 00:28:34,280 --> 00:28:36,560 Speaker 1: That way. If you're wrong, yes you're wiped out. But 514 00:28:36,600 --> 00:28:39,160 Speaker 1: if you're right, you really get paid for it. But 515 00:28:39,160 --> 00:28:41,880 Speaker 1: but to buy a piece of potentially really risky paper 516 00:28:42,160 --> 00:28:44,320 Speaker 1: to make um, you know, a couple of a hundred 517 00:28:44,320 --> 00:28:47,320 Speaker 1: extra basis points, you know that, I think that's really lesson. 518 00:28:47,360 --> 00:28:50,160 Speaker 1: And to think that an asset that everyone regards as 519 00:28:50,200 --> 00:28:55,920 Speaker 1: safe therefore makes it safe. Look at these um mortgage securities. Okay, 520 00:28:55,960 --> 00:28:59,440 Speaker 1: so standard pors moody is, you know, Fitch. They all 521 00:28:59,480 --> 00:29:01,640 Speaker 1: said their trip bal a rated. But how many people 522 00:29:01,680 --> 00:29:04,400 Speaker 1: really looked at the Did anyone look at the securities 523 00:29:04,400 --> 00:29:06,680 Speaker 1: behind them? Did anyone look at the homes behind them? 524 00:29:06,760 --> 00:29:10,560 Speaker 1: The quality of mortgages so painfully few, you know, do 525 00:29:10,680 --> 00:29:14,560 Speaker 1: your own research, look at within those securities the fact 526 00:29:14,600 --> 00:29:17,320 Speaker 1: that everyone's in them might tell you, in fact that 527 00:29:17,360 --> 00:29:20,040 Speaker 1: they're selling for a pretty a high price, that they're 528 00:29:20,040 --> 00:29:22,280 Speaker 1: selling it a premium, and you should be extra wary. 529 00:29:22,360 --> 00:29:25,360 Speaker 1: And that that was a lesson that was just skated over. 530 00:29:25,960 --> 00:29:28,959 Speaker 1: And I think the other lesson is the over reliance 531 00:29:29,120 --> 00:29:33,440 Speaker 1: on the I mentioned this before, Uh, the arithmetics, the 532 00:29:33,480 --> 00:29:37,280 Speaker 1: computerization of Wall Street. Um, don't get fooled by these 533 00:29:37,280 --> 00:29:41,040 Speaker 1: spreadsheets and these you know, thirty page printouts. Look at 534 00:29:41,080 --> 00:29:44,880 Speaker 1: the underlying asset. You know, release your inner war and buffet, 535 00:29:44,920 --> 00:29:48,360 Speaker 1: so to speak. Beneath every security, there's an asset on 536 00:29:48,400 --> 00:29:51,280 Speaker 1: Main Street? What are the houses really worth? Don't look 537 00:29:51,280 --> 00:29:54,320 Speaker 1: at the trading patterns. The trading patterns don't tell you anything. 538 00:29:54,520 --> 00:29:56,160 Speaker 1: All they do is tell you what somebody else is 539 00:29:56,200 --> 00:29:59,280 Speaker 1: willing to pay for it yesterday. Because when liquidity drives up, 540 00:29:59,360 --> 00:30:01,360 Speaker 1: that's a meaning. This number, you know, there was there 541 00:30:01,400 --> 00:30:05,200 Speaker 1: was an embedded red flag in the whole proposition. And 542 00:30:05,240 --> 00:30:08,000 Speaker 1: I heard this repeatedly in oh four, oh five or six. 543 00:30:08,560 --> 00:30:11,400 Speaker 1: This is as safe as treasuries. It's rated triple A, 544 00:30:11,760 --> 00:30:15,200 Speaker 1: but it pays two fifty bases points more. Someone should 545 00:30:15,200 --> 00:30:19,120 Speaker 1: have turned around and said, isn't that economically impossible. Either 546 00:30:19,320 --> 00:30:22,880 Speaker 1: it's riskier and paying more, or it's not paying more 547 00:30:23,160 --> 00:30:25,320 Speaker 1: and it's the same risk. How do you get this 548 00:30:25,480 --> 00:30:30,920 Speaker 1: wildly disparate spread between two triple A rated things. Everybody 549 00:30:31,040 --> 00:30:34,360 Speaker 1: ignored that in the Reach for You. Barbara Reguez at 550 00:30:34,440 --> 00:30:36,960 Speaker 1: f p A, the Great Mutual Fund Investor, was one 551 00:30:37,000 --> 00:30:39,280 Speaker 1: of the few people who didn't ignore it. And I 552 00:30:39,280 --> 00:30:42,200 Speaker 1: think two thousand and six or seven he went to 553 00:30:42,240 --> 00:30:44,120 Speaker 1: the one of the meetings of one of the big 554 00:30:44,280 --> 00:30:47,479 Speaker 1: credit rating houses and he said, he asked him a question, 555 00:30:47,920 --> 00:30:51,960 Speaker 1: what happens what's the assumption behind your your your risk 556 00:30:52,080 --> 00:30:54,920 Speaker 1: ratings on real estate? And they said, our our assumption 557 00:30:55,040 --> 00:30:57,560 Speaker 1: is that the increase in real estate values is going 558 00:30:57,600 --> 00:31:00,560 Speaker 1: to taper off. And he said, well, what happens to 559 00:31:00,600 --> 00:31:02,920 Speaker 1: your assumptions if they don't taper off? But if real 560 00:31:03,040 --> 00:31:05,600 Speaker 1: estate prices are flat And they said, well, the models 561 00:31:05,600 --> 00:31:07,640 Speaker 1: will be a little off then. And then he said, 562 00:31:07,760 --> 00:31:10,400 Speaker 1: what happens to your models if in fact, real estate 563 00:31:10,440 --> 00:31:12,920 Speaker 1: prices in the US fall by say two percent a 564 00:31:13,000 --> 00:31:19,000 Speaker 1: year And they said, this is this is documented in 565 00:31:19,040 --> 00:31:20,760 Speaker 1: the book at the end of Wall Street. They said, 566 00:31:20,760 --> 00:31:23,920 Speaker 1: then the model completely breaks down. So here's a model 567 00:31:24,360 --> 00:31:27,160 Speaker 1: one of the three big rating agencies on which you 568 00:31:27,160 --> 00:31:31,800 Speaker 1: know thousands of investors are relying. And the assumption is 569 00:31:32,120 --> 00:31:34,440 Speaker 1: that there can't even be a two percent per year 570 00:31:34,480 --> 00:31:38,480 Speaker 1: decline in real estate prices, and before the next season comes, 571 00:31:38,680 --> 00:31:44,880 Speaker 1: we're having a five. That's what kind of uberses that. 572 00:31:45,480 --> 00:31:49,360 Speaker 1: Forget the Great Depression where real estate prices, depending on 573 00:31:49,440 --> 00:31:53,520 Speaker 1: what data you want to use, fell fifty. Back then, 574 00:31:53,640 --> 00:31:56,239 Speaker 1: mortgages were three or five year interest only you had 575 00:31:56,280 --> 00:31:59,400 Speaker 1: to roll them over. But just go back to the 576 00:31:59,440 --> 00:32:02,000 Speaker 1: early nine indies and you had a big real estate 577 00:32:02,440 --> 00:32:05,440 Speaker 1: pulled back from the peak of the late eighties. It 578 00:32:05,560 --> 00:32:09,120 Speaker 1: wasn't unthinkable to see flat real estate here in New 579 00:32:09,200 --> 00:32:11,440 Speaker 1: York City. You bought something in eighty nine, you didn't 580 00:32:11,480 --> 00:32:14,239 Speaker 1: get back to break even until ninety eight or so. 581 00:32:14,720 --> 00:32:17,400 Speaker 1: How could that not be? There was this myth that 582 00:32:17,520 --> 00:32:20,280 Speaker 1: real estate doesn't go down, And as you say, there 583 00:32:20,360 --> 00:32:24,360 Speaker 1: was a terrible real estate depression in basically nine to 584 00:32:25,440 --> 00:32:27,720 Speaker 1: It hit Texas, it hit the Midwest, it hit New 585 00:32:27,720 --> 00:32:31,240 Speaker 1: England and hit New York, hit Atlanta, hit Florida, um 586 00:32:31,280 --> 00:32:35,120 Speaker 1: everywhere where Moody's in SMP actually operated. Yeah, so I 587 00:32:35,160 --> 00:32:37,160 Speaker 1: don't know how this you know it was a sort 588 00:32:37,160 --> 00:32:39,560 Speaker 1: of at this time. It's different. Uh, same thing with 589 00:32:39,600 --> 00:32:41,760 Speaker 1: the tech bubble. Uh, you know, this is different new 590 00:32:41,800 --> 00:32:44,320 Speaker 1: economy all that stuff. Um. Look, it happened with the 591 00:32:44,400 --> 00:32:48,200 Speaker 1: railroads in the in the eighteen sixties, seventies and eighties. Um, 592 00:32:48,360 --> 00:32:50,560 Speaker 1: we have a lot of railroads today. But those original 593 00:32:50,600 --> 00:32:54,400 Speaker 1: securities aren't worth anything, most of them. Uh, there's this 594 00:32:54,560 --> 00:32:59,360 Speaker 1: fiber optic, television, automobiles crossing right name and industry. There 595 00:32:59,400 --> 00:33:01,200 Speaker 1: was a boom and bust, and then you building on 596 00:33:01,280 --> 00:33:05,120 Speaker 1: the on the survivors. Virtually all of the early computer makers, 597 00:33:05,120 --> 00:33:07,720 Speaker 1: the Tandi's and so on, they're gone. Computers are here, 598 00:33:07,920 --> 00:33:10,520 Speaker 1: Both those early manufacturers aren't here. People who want to 599 00:33:10,560 --> 00:33:15,080 Speaker 1: find your work outside of Amazon and Roger Lowenstein dot com. 600 00:33:15,120 --> 00:33:18,040 Speaker 1: Where else can they see what you've done? You know, 601 00:33:18,120 --> 00:33:21,800 Speaker 1: Barnes and Noble, Amazon, the website, Roger Lowenstein dot com, 602 00:33:21,880 --> 00:33:23,960 Speaker 1: and the indie bookstores. I love to sell books in 603 00:33:23,960 --> 00:33:27,120 Speaker 1: indie bookstores. There you go in independent bookstores. We've been 604 00:33:27,160 --> 00:33:30,800 Speaker 1: speaking with Roger Lowenstein. Be sure and hang around for 605 00:33:30,880 --> 00:33:33,240 Speaker 1: the rest of our conversation. That will put up on 606 00:33:33,280 --> 00:33:38,360 Speaker 1: the web and on Apple, iTunes, SoundCloud, and Bloomberg dot com. 607 00:33:38,520 --> 00:33:42,480 Speaker 1: Check out my daily column on Bloomberg View dot com. 608 00:33:42,680 --> 00:33:46,920 Speaker 1: Follow me on Twitter at rid Halts. I'm Barry rid Holts. 609 00:33:47,120 --> 00:33:50,440 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio. 610 00:33:51,200 --> 00:33:54,200 Speaker 1: Masters in Business is brought to you by x On 611 00:33:54,280 --> 00:33:59,000 Speaker 1: Mobile Energy Lives Here. Welcome back to the podcast. My 612 00:33:59,160 --> 00:34:03,360 Speaker 1: guest this week is Roger Lowenstein, who is actually an 613 00:34:03,360 --> 00:34:06,320 Speaker 1: author I've been reading for quite a while and I've 614 00:34:06,320 --> 00:34:09,040 Speaker 1: been a huge fan of his work. His his books 615 00:34:09,080 --> 00:34:13,200 Speaker 1: are um, how do I say this and not embarrass him? 616 00:34:14,160 --> 00:34:18,360 Speaker 1: They are the standard by which all financial writing is measured. 617 00:34:18,640 --> 00:34:21,680 Speaker 1: There aren't a lot of people who can take a 618 00:34:21,880 --> 00:34:24,840 Speaker 1: relatively dry topic and make it come to life the 619 00:34:24,840 --> 00:34:31,440 Speaker 1: way you can. And you seem to pensions, uh, complex 620 00:34:31,600 --> 00:34:36,320 Speaker 1: financial instruments that crash on an obscure hedge funds stop 621 00:34:36,360 --> 00:34:40,080 Speaker 1: and think about, and the Federal Reserve. These are terrible, 622 00:34:40,280 --> 00:34:43,920 Speaker 1: terrible topics that you had to make a compelling pitch 623 00:34:44,280 --> 00:34:47,600 Speaker 1: for a publisher to say that sounds like a great idea, 624 00:34:48,320 --> 00:34:51,840 Speaker 1: and you described the pitch for America's Bank. I remember 625 00:34:51,840 --> 00:34:55,680 Speaker 1: when Genius Fail came out that was relatively soon after 626 00:34:55,760 --> 00:34:58,760 Speaker 1: everything kind of hit the fan, wasn't it? How deep 627 00:34:58,880 --> 00:35:02,440 Speaker 1: and long was that after the collapse. That was a 628 00:35:02,520 --> 00:35:05,319 Speaker 1: real rushed pace because that it was so tied to 629 00:35:05,400 --> 00:35:09,360 Speaker 1: one event. Um they that rush paste suits you because 630 00:35:09,360 --> 00:35:12,239 Speaker 1: that book is so readable you don't even need an 631 00:35:12,280 --> 00:35:16,000 Speaker 1: interest in finance. It's a great narrative thing of itself. 632 00:35:16,040 --> 00:35:18,719 Speaker 1: That book came out excuse that they imploded in the 633 00:35:18,760 --> 00:35:21,560 Speaker 1: full of course, and the book came out exactly two 634 00:35:21,640 --> 00:35:24,799 Speaker 1: years later. So that's a story search it. You got 635 00:35:24,800 --> 00:35:26,919 Speaker 1: to write it. The publisher needs, you know, a good 636 00:35:26,920 --> 00:35:28,880 Speaker 1: eight months to turn around, so it was it was 637 00:35:28,920 --> 00:35:31,480 Speaker 1: a very fast You should get Brad Pitt to do 638 00:35:31,520 --> 00:35:34,080 Speaker 1: a movie version of you know, he should call my agent. 639 00:35:34,560 --> 00:35:37,880 Speaker 1: All right, well, I think Michael Lewis has him lockdown 640 00:35:38,080 --> 00:35:41,480 Speaker 1: for money. Bull was not only a great book, but 641 00:35:41,520 --> 00:35:44,240 Speaker 1: a fabulous movie. Everything I hear about The Big Short 642 00:35:44,600 --> 00:35:46,759 Speaker 1: is that it's a great movie. But I think I 643 00:35:46,760 --> 00:35:49,440 Speaker 1: would actually like you to play, you know, a lead role. Okay, 644 00:35:49,640 --> 00:35:52,280 Speaker 1: no wants to see my fat behind on screen. This 645 00:35:53,160 --> 00:35:58,319 Speaker 1: when Genius failed. It's such a great story. It's it's 646 00:35:58,360 --> 00:36:01,160 Speaker 1: from a purely let me gush a bit, from a 647 00:36:01,320 --> 00:36:07,880 Speaker 1: purely financial perspective. It's a fascinating tale about Nobel Laurel 648 00:36:07,880 --> 00:36:11,880 Speaker 1: its and complexity and value at risk and all the 649 00:36:11,960 --> 00:36:15,960 Speaker 1: other we talked about, all the mathematical um illusions that 650 00:36:16,040 --> 00:36:19,839 Speaker 1: create a full sense of certainty that lead people to say, yeah, 651 00:36:19,880 --> 00:36:21,920 Speaker 1: we could buy this obscure paper at a hundred and one. 652 00:36:22,239 --> 00:36:27,719 Speaker 1: But the narrative about all the people is absolutely fascinating. Well, 653 00:36:27,800 --> 00:36:31,120 Speaker 1: thank you the narrative people. Really, I mean you you 654 00:36:31,200 --> 00:36:33,680 Speaker 1: opened up by saying you know you're right about boring topics, 655 00:36:33,680 --> 00:36:37,360 Speaker 1: but you you don't make them boring. That's the people wrote, 656 00:36:37,560 --> 00:36:41,120 Speaker 1: not boring, right, So that's always the key. So you know, 657 00:36:41,200 --> 00:36:44,280 Speaker 1: this America's Bank about the FED, but it's not about 658 00:36:44,280 --> 00:36:46,560 Speaker 1: the FED. It's about Woodward Wilson and Paul Warburg and 659 00:36:46,680 --> 00:36:50,279 Speaker 1: JP Morgan and Teddy Roosevelt. These people are fun in 660 00:36:50,520 --> 00:36:55,279 Speaker 1: um and when genius failed, the narrative in way I 661 00:36:55,280 --> 00:36:58,160 Speaker 1: think it was almost a template narrative for financial crisis. 662 00:36:58,200 --> 00:37:01,080 Speaker 1: You had these guys who were considered the smartest guys 663 00:37:01,120 --> 00:37:02,960 Speaker 1: on Earth or on Wall Street. So let's go over 664 00:37:03,040 --> 00:37:05,960 Speaker 1: some of the list. You have John mer John Merryweather, 665 00:37:06,520 --> 00:37:10,239 Speaker 1: who was head of Solomon Brothers, or the head of 666 00:37:10,239 --> 00:37:14,759 Speaker 1: the risk arbitrage that the risk arbitrage, the UH, the 667 00:37:14,840 --> 00:37:18,239 Speaker 1: trading the high powered trading group at Solomn Brothers did 668 00:37:18,280 --> 00:37:22,120 Speaker 1: this in house, left with a few of his guys 669 00:37:22,120 --> 00:37:26,440 Speaker 1: such as Eric Rosenfeld, Larry hillibrand Victor Gatti Uh to 670 00:37:26,560 --> 00:37:30,680 Speaker 1: start their own head shoes Stacks development in that group. 671 00:37:30,840 --> 00:37:33,080 Speaker 1: I can't remember where shoes stack came from. So um 672 00:37:33,239 --> 00:37:36,160 Speaker 1: but then we also had not one, but two Nobel Laureates. 673 00:37:36,360 --> 00:37:40,080 Speaker 1: Of course they became Nobel Prize winners during um uh 674 00:37:40,360 --> 00:37:43,160 Speaker 1: during the period in which LTCM was up and running. 675 00:37:43,640 --> 00:37:48,520 Speaker 1: Uh well it wasn't wasn't um right? But what uh 676 00:37:49,520 --> 00:37:52,480 Speaker 1: Myron Shoals didn't he win previous to No, they both won. 677 00:37:54,480 --> 00:37:57,960 Speaker 1: So but look they were acclaimed to claim they had 678 00:37:58,000 --> 00:38:02,360 Speaker 1: invented along with fish are black the black shows option 679 00:38:02,400 --> 00:38:05,040 Speaker 1: pricing theory. So you know who could this is like 680 00:38:05,040 --> 00:38:08,279 Speaker 1: getting Jonas Salt to prescribe penicillin. You know they are 681 00:38:08,719 --> 00:38:12,000 Speaker 1: you know who who could better trade risk? These guys 682 00:38:12,040 --> 00:38:14,719 Speaker 1: that had amaze invented if they created the method for 683 00:38:14,760 --> 00:38:19,160 Speaker 1: evaluating risky they created the modern method for evaluating a 684 00:38:19,280 --> 00:38:22,960 Speaker 1: risk in an arithmetic sense, which is different, by the way, 685 00:38:22,960 --> 00:38:27,000 Speaker 1: than risk the notion of uncertainty. If you look at, 686 00:38:27,360 --> 00:38:29,880 Speaker 1: for instance, if you're standing at the edge of the cliff, 687 00:38:30,760 --> 00:38:34,279 Speaker 1: and and you see maybe tend people the edge of 688 00:38:34,280 --> 00:38:35,920 Speaker 1: the cliff, and you say, I wonder what the odds 689 00:38:36,000 --> 00:38:37,759 Speaker 1: are that one of those people are going to fall 690 00:38:37,760 --> 00:38:42,000 Speaker 1: off the cliff. That's uncertainty, not risk. You can't calculate 691 00:38:42,040 --> 00:38:45,040 Speaker 1: the odds. You know that the closer they get to 692 00:38:45,040 --> 00:38:48,480 Speaker 1: the cliff, the higher degree of likelhood is, but there's 693 00:38:48,520 --> 00:38:51,600 Speaker 1: no way of measuring it. However, if someone said to you, 694 00:38:52,080 --> 00:38:54,759 Speaker 1: what's if I roll dice, what's the odds I'm gonna 695 00:38:54,800 --> 00:38:56,759 Speaker 1: roll snakeheads snake guys, I can tell you it's one 696 00:38:56,760 --> 00:39:00,560 Speaker 1: out of thirty six. That's the difference between how regulated 697 00:39:00,800 --> 00:39:04,760 Speaker 1: arithmetic risk and uncertainty. Most things that happen in financial 698 00:39:04,800 --> 00:39:08,600 Speaker 1: markets really are given over to uncertainty. What's the risk 699 00:39:08,680 --> 00:39:10,560 Speaker 1: that some company is going to have a terrible quarter? 700 00:39:10,880 --> 00:39:12,399 Speaker 1: Is it one out of three, one out of four, 701 00:39:12,520 --> 00:39:16,279 Speaker 1: one out of eight? Hard to measure. The conceit of 702 00:39:16,320 --> 00:39:20,160 Speaker 1: these risk managers, of of of these scholars was to 703 00:39:20,360 --> 00:39:24,279 Speaker 1: think that they could turn financial markets from uncertainty to risk, 704 00:39:24,360 --> 00:39:26,839 Speaker 1: that it could be calculable, that they could determine down 705 00:39:26,920 --> 00:39:30,000 Speaker 1: to the penny what their risk exposure was, and it 706 00:39:30,040 --> 00:39:33,359 Speaker 1: turned out to be dead wrong. Isn't that the underlying 707 00:39:33,480 --> 00:39:37,160 Speaker 1: issue with all models? You know? The statistician George Box 708 00:39:37,560 --> 00:39:40,560 Speaker 1: has a wonderful quote, all models are wrong, but some 709 00:39:40,680 --> 00:39:44,120 Speaker 1: are useful. Once we forget that this is merely a 710 00:39:44,239 --> 00:39:48,319 Speaker 1: useful model and start thinking it's true, it's reality, not 711 00:39:48,400 --> 00:39:51,359 Speaker 1: just a depiction of reality, doesn't that lead us down 712 00:39:51,360 --> 00:39:56,160 Speaker 1: the road to increasing the possibility of of some implosion? Yes, 713 00:39:56,239 --> 00:39:58,440 Speaker 1: because you you bet on. Look, if if you had 714 00:39:58,440 --> 00:40:01,200 Speaker 1: been if you'd ask some uh, some guy with a 715 00:40:01,239 --> 00:40:04,279 Speaker 1: computer model in the year two thousand, what are the 716 00:40:04,280 --> 00:40:06,920 Speaker 1: odds that we would have a cataclysmic breakdown of the 717 00:40:06,920 --> 00:40:09,520 Speaker 1: economic system and then unemployment would go to ten percent? 718 00:40:10,080 --> 00:40:12,600 Speaker 1: He would say, we haven't had a real breakdown since 719 00:40:12,640 --> 00:40:15,719 Speaker 1: the Great Depression. Unemployment hasn't been ten percent since the 720 00:40:15,760 --> 00:40:18,400 Speaker 1: early nineteen eighties. You know, I would say, the odds are, 721 00:40:18,680 --> 00:40:21,120 Speaker 1: you know, one and a hundred if this happens. If 722 00:40:21,160 --> 00:40:25,080 Speaker 1: you asked him now, he'd say, even money, even money, 723 00:40:25,160 --> 00:40:27,880 Speaker 1: you know, isn't that? Isn't that like the hundred year floods. 724 00:40:28,120 --> 00:40:31,440 Speaker 1: They always show these houses washed away on the banks 725 00:40:31,440 --> 00:40:33,520 Speaker 1: of the missiles we're getting every two years. Yeah, you're right, 726 00:40:33,520 --> 00:40:36,360 Speaker 1: it's maybe we need to rename the hundred of your flood. 727 00:40:36,480 --> 00:40:39,120 Speaker 1: That's very different than if you're at Las Vegas. You 728 00:40:39,200 --> 00:40:41,120 Speaker 1: know what the odds are at black check and they 729 00:40:41,160 --> 00:40:45,160 Speaker 1: don't change, so you can make an intelligent mathematical bet 730 00:40:45,600 --> 00:40:50,240 Speaker 1: at Black Chack. Securities are different, to say the very least. 731 00:40:50,640 --> 00:40:55,240 Speaker 1: So UM. John Corzine is mentioned in Long Time Capital 732 00:40:55,239 --> 00:40:59,680 Speaker 1: Management in One Genius Failed. What was his involvement in 733 00:41:00,120 --> 00:41:04,480 Speaker 1: uh in the hedge Fund? He had a very significant 734 00:41:04,520 --> 00:41:08,520 Speaker 1: involvement in that story. And um, this is the former 735 00:41:09,040 --> 00:41:12,399 Speaker 1: CEO of Goldman Sachs and then governor and senator from 736 00:41:12,440 --> 00:41:17,320 Speaker 1: New Jersey who ultimately ended up running UM. What was 737 00:41:17,360 --> 00:41:19,319 Speaker 1: the company that we had a little Jersey company with 738 00:41:19,320 --> 00:41:22,799 Speaker 1: a little sniff, Yeah, oh, dear lord, you'll plug it in, 739 00:41:22,840 --> 00:41:25,360 Speaker 1: but pop in. We were talking about the reading glasses. 740 00:41:25,600 --> 00:41:29,760 Speaker 1: This is another So he m global, m F global, 741 00:41:29,840 --> 00:41:32,120 Speaker 1: very good. So I liked John a lot, and um 742 00:41:32,120 --> 00:41:34,040 Speaker 1: he was a very helpful source to me when I 743 00:41:34,080 --> 00:41:37,920 Speaker 1: was researching the book. He had UM a large involvement 744 00:41:37,960 --> 00:41:42,680 Speaker 1: in some ways the tragic involvement with LTCM LTCM needed 745 00:41:43,120 --> 00:41:45,560 Speaker 1: this is the hedge fund. Of course. John Murraywether's hedge 746 00:41:45,560 --> 00:41:49,680 Speaker 1: fund needed strong financial backers, people who would fund its trades, 747 00:41:49,719 --> 00:41:52,560 Speaker 1: and they basically went to the main Wall street firms, 748 00:41:52,719 --> 00:41:59,200 Speaker 1: so Mol Goldman and so Goldman was very very involved 749 00:41:59,680 --> 00:42:04,560 Speaker 1: in UM backing LTC. M uh core design at the 750 00:42:04,640 --> 00:42:09,000 Speaker 1: time was co chief coc Co Ceo. I believe the 751 00:42:09,000 --> 00:42:13,600 Speaker 1: title was with a guy named John, Hank Paulson, UM 752 00:42:13,640 --> 00:42:16,640 Speaker 1: and Goldman. Believe it or not, it is hard to 753 00:42:16,640 --> 00:42:20,240 Speaker 1: believe because it seems so Reacon was then a private firm. 754 00:42:20,280 --> 00:42:23,480 Speaker 1: That's right. Everybody forgets most of these banks were private 755 00:42:23,480 --> 00:42:26,360 Speaker 1: firms prior to twenty years ago. So that makes a 756 00:42:26,400 --> 00:42:31,120 Speaker 1: big difference because you know, Merrill Lynch is UM lending 757 00:42:31,160 --> 00:42:34,920 Speaker 1: some of their credit over to LTCM, so is Morgan Stanley. 758 00:42:35,040 --> 00:42:36,960 Speaker 1: Uh So, why does it make a difference that they're 759 00:42:36,960 --> 00:42:39,680 Speaker 1: a partnership and not a public because doesn't Merrill go 760 00:42:39,760 --> 00:42:42,600 Speaker 1: home at night and don't worry about it when the 761 00:42:42,600 --> 00:42:45,560 Speaker 1: guys go home from Goldman. It's their capital in the line. 762 00:42:45,600 --> 00:42:49,480 Speaker 1: It's a partnership. It's owned by John Corsign and Hank 763 00:42:49,520 --> 00:42:52,960 Speaker 1: Paulson and the other you know senior bankers. A joint 764 00:42:53,000 --> 00:42:56,719 Speaker 1: and several liability means that if the firm collapses, they 765 00:42:56,719 --> 00:43:00,920 Speaker 1: don't just lose their stock options, they lose their entire everything. 766 00:43:00,960 --> 00:43:04,720 Speaker 1: They are on the hook as partners untill every partner's 767 00:43:04,760 --> 00:43:08,320 Speaker 1: assets are exciting. And look, let's let's you know, at 768 00:43:08,400 --> 00:43:12,080 Speaker 1: Meryl Today or at at at any public securities firm. 769 00:43:12,920 --> 00:43:15,560 Speaker 1: The people who are called partners aren't really partners. Their 770 00:43:15,600 --> 00:43:19,000 Speaker 1: managing directors or whatever shareholders. They own a small scintilla 771 00:43:19,120 --> 00:43:23,160 Speaker 1: of the firm, but their liability is limited to that ownership. 772 00:43:23,200 --> 00:43:25,759 Speaker 1: But the partners at Goldman owned it all. So the 773 00:43:25,760 --> 00:43:29,640 Speaker 1: exposure to ltc M was their exposure. So what happens 774 00:43:29,680 --> 00:43:33,759 Speaker 1: as lt cm UH starts to go down UH is 775 00:43:34,120 --> 00:43:37,759 Speaker 1: they're scrambling around for money and they're turning to the 776 00:43:37,800 --> 00:43:41,200 Speaker 1: big Wall Street firms. John Corsign is very involved in 777 00:43:41,280 --> 00:43:45,280 Speaker 1: trying to get um UH big folks on Wall Street, 778 00:43:45,280 --> 00:43:48,759 Speaker 1: Warren Buffett, others to put up money. Goldman thinks about 779 00:43:48,800 --> 00:43:53,359 Speaker 1: whether it should recapitalize UM ltc M. At the same 780 00:43:53,360 --> 00:43:57,319 Speaker 1: time his partners are getting UH core designs. Partners at 781 00:43:57,360 --> 00:43:59,520 Speaker 1: Goldman are getting more and more upset with him because 782 00:44:00,200 --> 00:44:02,480 Speaker 1: they don't want more of their capital risk. And to 783 00:44:02,560 --> 00:44:06,960 Speaker 1: make matters worse, Goldman has an I P. O scheduled. Okay, 784 00:44:07,080 --> 00:44:08,759 Speaker 1: right in the middle of this, what do you want 785 00:44:08,760 --> 00:44:10,640 Speaker 1: to do? You know, when you have an I p O. 786 00:44:11,000 --> 00:44:12,400 Speaker 1: You want to have a road show. You want to 787 00:44:12,400 --> 00:44:15,040 Speaker 1: direct dress yourself up, you want to look pretty. We're 788 00:44:15,040 --> 00:44:17,359 Speaker 1: a great firm. We've been around since uh you know 789 00:44:17,400 --> 00:44:20,080 Speaker 1: Sam Sacks in nine ten or whatever it was. You 790 00:44:20,080 --> 00:44:22,840 Speaker 1: don't really want to go on the road and say, oh, 791 00:44:23,000 --> 00:44:26,320 Speaker 1: we got major exposure to the worst hedge fund implosion 792 00:44:26,960 --> 00:44:30,800 Speaker 1: in history, in history. And as this is going down, 793 00:44:31,640 --> 00:44:34,600 Speaker 1: core Design is battling his partners. As the FED is 794 00:44:34,640 --> 00:44:37,359 Speaker 1: telling all the Wall Street banks you gotta go in. 795 00:44:37,680 --> 00:44:40,000 Speaker 1: You each got to put up a few hundred million 796 00:44:40,080 --> 00:44:44,000 Speaker 1: dollars to bail out this firm, Core Design is getting 797 00:44:44,000 --> 00:44:47,120 Speaker 1: it from his partners, and he really, um, he really 798 00:44:47,200 --> 00:44:50,719 Speaker 1: lays his own backside on the line. At the end 799 00:44:50,719 --> 00:44:53,920 Speaker 1: of the day, Goldman does join the consortium. Uh, they 800 00:44:53,960 --> 00:44:59,000 Speaker 1: do bail out LTCM. Uh. The I p O is 801 00:44:59,560 --> 00:45:02,919 Speaker 1: post owned, but at the moment it's canceled that nobody knows. 802 00:45:03,080 --> 00:45:06,839 Speaker 1: Goldman is itself uh suffering huge losses because they owned 803 00:45:06,880 --> 00:45:09,600 Speaker 1: some of the security same securities the LTCM does. Everybody's 804 00:45:09,600 --> 00:45:13,080 Speaker 1: getting everybody's Piggy the same Meryl takes a terrific loss 805 00:45:13,080 --> 00:45:16,799 Speaker 1: to UH and John Corzyne is sacked and loses his 806 00:45:16,920 --> 00:45:20,480 Speaker 1: loses his job, he goes into politics, and goes into politics, 807 00:45:20,560 --> 00:45:23,440 Speaker 1: and and um, you know, I think we we talked 808 00:45:23,440 --> 00:45:27,200 Speaker 1: about MF Global, and I wondered after that went down 809 00:45:27,360 --> 00:45:30,560 Speaker 1: if some of that over reaching there was an attempt 810 00:45:30,600 --> 00:45:35,239 Speaker 1: to regain some of the rehability loss luster at at 811 00:45:35,800 --> 00:45:39,120 Speaker 1: the unfortunate way his career ended at Goldman. But I 812 00:45:39,560 --> 00:45:42,399 Speaker 1: really think, um, he was being a citizen of Wall 813 00:45:42,400 --> 00:45:44,160 Speaker 1: Street and a citizen of the country when he said 814 00:45:44,160 --> 00:45:46,600 Speaker 1: we we got to participate in this, We got to 815 00:45:46,640 --> 00:45:48,480 Speaker 1: see this thing through. So he fell on his sword. 816 00:45:49,400 --> 00:45:52,839 Speaker 1: Quite fascinating. There's a footnote to the rescue of Long 817 00:45:52,920 --> 00:45:56,240 Speaker 1: Term Capital Management. Of all the banks on Wall Street, 818 00:45:56,800 --> 00:46:00,560 Speaker 1: one refused to participate, That's right. So that was bear 819 00:46:00,600 --> 00:46:05,440 Speaker 1: sterns Uh. They were the prime book broker of of LTCM. 820 00:46:05,520 --> 00:46:09,240 Speaker 1: So they said, we have too much exposure to LTCM already. 821 00:46:09,600 --> 00:46:11,480 Speaker 1: We can't bail them out. We're already on in the 822 00:46:11,480 --> 00:46:13,920 Speaker 1: hook as a counter party, and we have holdings and 823 00:46:14,000 --> 00:46:15,880 Speaker 1: we have this, and we have that. What were the 824 00:46:15,920 --> 00:46:19,640 Speaker 1: repercussions of that a decade later. Well, so that's a 825 00:46:19,719 --> 00:46:23,680 Speaker 1: great you know, Wall Street parlor discussion. Jimmy Caine didn't 826 00:46:23,680 --> 00:46:26,399 Speaker 1: want any more exposure than it came time to help 827 00:46:26,400 --> 00:46:28,680 Speaker 1: out Bear. Was anybody going to help them? And so on? 828 00:46:29,480 --> 00:46:32,440 Speaker 1: Um uh, you know, at the end of the day, 829 00:46:32,880 --> 00:46:36,000 Speaker 1: JP Morgan Chase did come in to buy them at 830 00:46:36,040 --> 00:46:41,080 Speaker 1: two dollars, at two bucks, but down from almost right 831 00:46:41,120 --> 00:46:43,160 Speaker 1: and with the Fed's backing. Let's not forget it was 832 00:46:43,200 --> 00:46:48,640 Speaker 1: only agreed to guarantee. You know, Carl con said it, 833 00:46:49,040 --> 00:46:50,960 Speaker 1: you want a friend on Wall Street by a dog. 834 00:46:51,600 --> 00:46:55,319 Speaker 1: I think if someone had thought Bear Stearns was worth uh, 835 00:46:55,400 --> 00:46:58,120 Speaker 1: you know, twenty bucks, they would have paid twenty bucks 836 00:46:58,239 --> 00:47:01,239 Speaker 1: and everyone was terrified. No one want to step back. Yeah. So, 837 00:47:01,320 --> 00:47:04,960 Speaker 1: although it certainly seemed to be poetic justice, I think 838 00:47:04,960 --> 00:47:07,240 Speaker 1: that's the point you're arriving at it, and I agree 839 00:47:07,239 --> 00:47:10,600 Speaker 1: with you. You know, suddenly the tables returned. I don't 840 00:47:10,640 --> 00:47:13,520 Speaker 1: think that's the reason that that they came a cropper. 841 00:47:13,560 --> 00:47:16,000 Speaker 1: I I you know, people in Wall Street, we're gonna 842 00:47:16,080 --> 00:47:18,719 Speaker 1: offer whatever they thought Bear Stearns was worth, not a 843 00:47:18,760 --> 00:47:21,040 Speaker 1: penny more, not a penny less on account of what 844 00:47:21,200 --> 00:47:24,640 Speaker 1: they had or hadn't done for LTCM. Wall Street just doesn't. 845 00:47:24,960 --> 00:47:28,120 Speaker 1: It's it's too cold blooded, right, it's too bloodless for 846 00:47:28,160 --> 00:47:30,120 Speaker 1: that to have happened. But it's still there's a touch 847 00:47:30,160 --> 00:47:34,480 Speaker 1: of irony in that. Here, here's the one firm that 848 00:47:34,520 --> 00:47:38,160 Speaker 1: didn't participate in that. It's very ironic. That's right to 849 00:47:38,200 --> 00:47:42,960 Speaker 1: say the least um so Lehman participated didn't do them 850 00:47:43,000 --> 00:47:44,960 Speaker 1: a lot of good ten years later. Now, now my 851 00:47:45,000 --> 00:47:47,800 Speaker 1: favorite footnote with Lehman. Since you brought up the gentleman 852 00:47:47,880 --> 00:47:50,960 Speaker 1: name Warren Buffett, and not a lot of people knew this, 853 00:47:51,160 --> 00:47:54,440 Speaker 1: I dropped this into bail outmation. I've mentioned that many times. 854 00:47:54,600 --> 00:47:57,279 Speaker 1: People say, I don't I never heard that before. Is 855 00:47:57,280 --> 00:48:01,839 Speaker 1: that true? When Lehman was spending the summer looking for 856 00:48:01,880 --> 00:48:04,840 Speaker 1: financing and we have the Korean finances amidst Bank of 857 00:48:04,920 --> 00:48:09,640 Speaker 1: Mitsubishi and all these people who ultimately fell through, Buffett 858 00:48:10,000 --> 00:48:14,719 Speaker 1: made a very credible multibillion dollar offer to Dick Fold 859 00:48:14,800 --> 00:48:19,080 Speaker 1: of Lehman brothers, including and and by the time we 860 00:48:19,120 --> 00:48:25,040 Speaker 1: got to oh eight, Berkshire Hathaway was essentially the Wall 861 00:48:25,040 --> 00:48:29,120 Speaker 1: Street equivalent of the Good Housekeeping Seal of approval, and 862 00:48:29,360 --> 00:48:33,600 Speaker 1: Fold said, look at this terrible deal. Uncle Warren is 863 00:48:33,680 --> 00:48:38,840 Speaker 1: offering us. This is awful. He's trying to steal the company. 864 00:48:39,320 --> 00:48:41,359 Speaker 1: It turns out that that was a much better deal 865 00:48:41,440 --> 00:48:44,920 Speaker 1: that he ultimately ended up doing with Goldman Sachs, a 866 00:48:45,000 --> 00:48:49,440 Speaker 1: much bigger, better, stronger bank. Goldman got better, worse terms 867 00:48:49,520 --> 00:48:53,160 Speaker 1: than Dick Fold rejected. Yes, because the when he when 868 00:48:53,160 --> 00:48:56,640 Speaker 1: Buffett did the Goldman deal, although Goldman's obviously stronger firm, 869 00:48:56,960 --> 00:48:59,239 Speaker 1: the conditions on Wall Street by then had become so 870 00:48:59,360 --> 00:49:02,439 Speaker 1: much more die or that. But that was three months later. 871 00:49:02,880 --> 00:49:05,359 Speaker 1: It's not like it was years later, four months later. 872 00:49:05,400 --> 00:49:09,240 Speaker 1: It was. Yes, it was after Lehman said no to Warren, 873 00:49:09,360 --> 00:49:12,280 Speaker 1: and ultimately, now it turned out at that point Goldman 874 00:49:12,760 --> 00:49:15,200 Speaker 1: was you know, everybody was saying, o our Morgan Stanley 875 00:49:15,200 --> 00:49:17,120 Speaker 1: and Goldman going to be the next martl the next Lehman. 876 00:49:17,200 --> 00:49:20,120 Speaker 1: At that point, Goldman was not in a position to negotiate. Obviously, 877 00:49:20,160 --> 00:49:23,640 Speaker 1: had Dick Fold cut that deal, it's very unlikely that 878 00:49:23,760 --> 00:49:26,200 Speaker 1: Lehman would have gone down, because you know what that 879 00:49:26,200 --> 00:49:29,080 Speaker 1: would have done for its confidence. But Dick Fold, you know, 880 00:49:29,520 --> 00:49:31,759 Speaker 1: you get a better deal, and he got wrong. You know, 881 00:49:31,800 --> 00:49:35,320 Speaker 1: the amazing thing is Folded Buffett a favor because between 882 00:49:35,360 --> 00:49:39,120 Speaker 1: REPO one oh five and everything else. Who news knows 883 00:49:39,360 --> 00:49:42,680 Speaker 1: how long it would have taken for Buffett to make 884 00:49:42,680 --> 00:49:44,799 Speaker 1: his money back. Maybe he never makes it. Maybe he 885 00:49:44,840 --> 00:49:49,200 Speaker 1: never makes it back. That's correct, that's correct, And so 886 00:49:49,280 --> 00:49:52,719 Speaker 1: we end up with a situation that Fold, being not 887 00:49:53,040 --> 00:49:58,240 Speaker 1: especially smart or or let's just say, especially arrogant about 888 00:49:58,320 --> 00:50:01,759 Speaker 1: the deal, rejects Buffett. Sends Buffett a few months later 889 00:50:01,840 --> 00:50:05,160 Speaker 1: into the arms of a much better deal, which ultimately 890 00:50:05,200 --> 00:50:08,640 Speaker 1: made him what was in a nine percent ten percent 891 00:50:08,680 --> 00:50:11,640 Speaker 1: coupon plus a nice slug of equity that was a 892 00:50:11,680 --> 00:50:14,279 Speaker 1: home run for Yes, I heard Buffett talking about it 893 00:50:15,080 --> 00:50:17,440 Speaker 1: at Berkshire's annual meeting. I can't recall his last year 894 00:50:17,480 --> 00:50:20,000 Speaker 1: the year before, but he started to talk about how 895 00:50:20,000 --> 00:50:22,000 Speaker 1: it was ten percent and he said, you know, uh, 896 00:50:22,200 --> 00:50:24,640 Speaker 1: we get paid even when we're sleeping. Ten percent tick 897 00:50:24,760 --> 00:50:28,600 Speaker 1: tick tick with the deal made him very happy, to 898 00:50:28,640 --> 00:50:30,359 Speaker 1: say the least. So let's talk a little bit about 899 00:50:30,400 --> 00:50:33,920 Speaker 1: Warren Buffett. And you wrote a book on him before 900 00:50:34,280 --> 00:50:37,719 Speaker 1: he was the legend he is today. What was it 901 00:50:37,760 --> 00:50:42,560 Speaker 1: like researching Buffett in Omaha? What was that process like? 902 00:50:43,120 --> 00:50:46,120 Speaker 1: It was a lot of fun because, um, you know, 903 00:50:46,200 --> 00:50:48,720 Speaker 1: some people are famous because of one thing that happens 904 00:50:48,719 --> 00:50:52,560 Speaker 1: in their career or because they're successful. But um, if 905 00:50:52,600 --> 00:50:55,840 Speaker 1: you went back, um earlier in their career, you know, 906 00:50:55,960 --> 00:51:00,400 Speaker 1: in their childhood, you wouldn't necessarily see that. You know, 907 00:51:00,440 --> 00:51:03,360 Speaker 1: young Michael Eisner was going to be in the entertainment business. 908 00:51:03,719 --> 00:51:06,719 Speaker 1: There are very few people. You know, Steve Jobs is 909 00:51:06,760 --> 00:51:09,799 Speaker 1: obviously Steve Jobs from the moment. You know, he was 910 00:51:09,840 --> 00:51:12,120 Speaker 1: different from the beginning, from when they were hacking phone 911 00:51:12,360 --> 00:51:16,359 Speaker 1: and and most Mozart was writing symphonies. You know, from 912 00:51:16,360 --> 00:51:20,200 Speaker 1: the time he was four. Uh, Buffett was like that. 913 00:51:20,520 --> 00:51:24,319 Speaker 1: He was thinking about making money, fascinated by it. Uh, 914 00:51:24,560 --> 00:51:26,279 Speaker 1: you know, from the age he could talk. He walked 915 00:51:26,280 --> 00:51:28,640 Speaker 1: around with a little change person you know, you know, 916 00:51:28,800 --> 00:51:31,080 Speaker 1: like a Triluman's change personally, you know, strapped to his 917 00:51:33,560 --> 00:51:36,319 Speaker 1: he was you know, he was selling cokes, he was 918 00:51:36,320 --> 00:51:39,360 Speaker 1: selling lemonades. He was going to the race track looking 919 00:51:39,400 --> 00:51:41,520 Speaker 1: for use tickets. Every so often you found one that 920 00:51:41,560 --> 00:51:44,719 Speaker 1: someone had arrently discarded. It was worth something. He was 921 00:51:45,000 --> 00:51:48,080 Speaker 1: telling people as a uh, you know, a twelve year 922 00:51:48,080 --> 00:51:49,799 Speaker 1: old boy, he was going to be a millionaire by 923 00:51:49,800 --> 00:51:51,480 Speaker 1: the time he was thirty, or he's going to jump 924 00:51:51,480 --> 00:51:54,560 Speaker 1: off the tallest building in Omaha, which I guess was 925 00:51:54,560 --> 00:51:56,759 Speaker 1: tall enough to do some damage and which horrified people. 926 00:51:57,200 --> 00:52:00,800 Speaker 1: But so this it wasn't by accident that he became, 927 00:52:01,440 --> 00:52:05,000 Speaker 1: if you. Um. When I talked to his former fraternity brothers, 928 00:52:05,360 --> 00:52:08,000 Speaker 1: they said that they would have this game at at 929 00:52:08,040 --> 00:52:12,240 Speaker 1: fraternity nights. They would gather around a semicircle and listen 930 00:52:12,320 --> 00:52:14,920 Speaker 1: and ask him questions. They lobb him questions. They just 931 00:52:15,000 --> 00:52:17,640 Speaker 1: like to hear him talk. He was such a good talker, 932 00:52:17,920 --> 00:52:20,000 Speaker 1: such a good explainer. And then I thought of that, 933 00:52:20,320 --> 00:52:23,080 Speaker 1: this is the guy who would have people come to 934 00:52:23,120 --> 00:52:25,000 Speaker 1: his annual meeting because people have to hear him talk, 935 00:52:25,080 --> 00:52:29,360 Speaker 1: the great explainer. Um. There was just something intrinsic and 936 00:52:29,400 --> 00:52:32,520 Speaker 1: inherent about the person, uh that that has come out 937 00:52:32,560 --> 00:52:35,480 Speaker 1: in his career. So it was just fun to uncover 938 00:52:35,560 --> 00:52:38,239 Speaker 1: these steps all along the way. It was all of 939 00:52:38,280 --> 00:52:42,680 Speaker 1: a piece. Um. The Warren Buffett who hangs onto his 940 00:52:42,719 --> 00:52:46,520 Speaker 1: stocks for so long, you know, forever being his favorite 941 00:52:46,520 --> 00:52:48,960 Speaker 1: holding period. As he says, and and and often lives by. 942 00:52:49,560 --> 00:52:52,880 Speaker 1: He's the guy who never changes his foods, never changes 943 00:52:52,960 --> 00:52:56,160 Speaker 1: his restaurants, still lives in the same house he lived 944 00:52:56,280 --> 00:52:59,040 Speaker 1: fifty years ago, still works on that street in Omaha. 945 00:52:59,760 --> 00:53:04,719 Speaker 1: So the biography was a there's no Warren Buffet at 946 00:53:04,719 --> 00:53:06,960 Speaker 1: work and Warren Buffett at home. It's just warn Buffett. 947 00:53:07,000 --> 00:53:09,919 Speaker 1: There's one guy. There's one guy, and you know, you'd 948 00:53:09,960 --> 00:53:13,200 Speaker 1: hear about him and his wife going out to dinner 949 00:53:13,600 --> 00:53:16,279 Speaker 1: and the couple of good friends are entertaining them, and 950 00:53:16,760 --> 00:53:19,760 Speaker 1: after twenty minutes, Warren's often aside room reading an annual report. 951 00:53:20,000 --> 00:53:24,320 Speaker 1: That's his dinner. What now today, I think Charlie Munger 952 00:53:24,400 --> 00:53:28,080 Speaker 1: has really come into his own. He's really regarded as 953 00:53:28,160 --> 00:53:30,359 Speaker 1: an equal partner to Buffet, although I don't know how 954 00:53:31,160 --> 00:53:35,399 Speaker 1: widespread that belief either is today or certainly was ten 955 00:53:35,520 --> 00:53:39,400 Speaker 1: or twenty years ago. What was your thought process with 956 00:53:39,680 --> 00:53:43,960 Speaker 1: Munger as his partner when you were researching? Uh, Buffett, 957 00:53:44,320 --> 00:53:47,520 Speaker 1: I don't think Munger is or was an equal partner 958 00:53:47,520 --> 00:53:50,560 Speaker 1: in the sense that overwhelmingly the bulk of the ideas 959 00:53:51,080 --> 00:53:53,520 Speaker 1: that end up in the Berkshire, and I'm a shareholder, 960 00:53:53,520 --> 00:53:58,040 Speaker 1: I should say full disclosure. Uh, overwhelmingly they come from Warren. 961 00:53:58,560 --> 00:54:01,920 Speaker 1: But um, Charlie is unique ability and it is unique 962 00:54:01,920 --> 00:54:04,399 Speaker 1: with regard to Warren is he can tell him he's 963 00:54:04,440 --> 00:54:06,920 Speaker 1: fully you know what, not a lot of people can 964 00:54:07,160 --> 00:54:11,000 Speaker 1: he is fearless. I mean Warren used to call him. 965 00:54:11,000 --> 00:54:12,640 Speaker 1: I think I use this line in the book The 966 00:54:12,680 --> 00:54:17,240 Speaker 1: Abominable no Man. But Charlie's not afraid to say Warren, 967 00:54:17,360 --> 00:54:20,000 Speaker 1: you're full of it. This is wrong, this is crazy. 968 00:54:20,440 --> 00:54:22,920 Speaker 1: I don't like this. And so they just have this, 969 00:54:23,320 --> 00:54:26,080 Speaker 1: you know, freewheeling relationship like you and I are talking. 970 00:54:26,280 --> 00:54:30,400 Speaker 1: You know, we're not afraid. And whereas it may be 971 00:54:30,520 --> 00:54:33,279 Speaker 1: one of the longest running partnerships I'm aware of, they've 972 00:54:33,320 --> 00:54:36,560 Speaker 1: been working together for how long they've been working together 973 00:54:36,719 --> 00:54:40,919 Speaker 1: since the mid seventies, So you're talking forty plus years. Yeah, 974 00:54:40,920 --> 00:54:43,680 Speaker 1: you're talking forty plus years? Um, how many? And they 975 00:54:43,680 --> 00:54:46,280 Speaker 1: were and they were good friends from the late sixties. 976 00:54:46,840 --> 00:54:49,759 Speaker 1: Uh Monger was a blue Chip Stamps at some point, 977 00:54:50,000 --> 00:54:52,560 Speaker 1: I believe in the early seventies blue Chip merges into 978 00:54:53,000 --> 00:54:55,520 Speaker 1: UH to Berkshire Hathaway. So they had a sort of 979 00:54:55,520 --> 00:54:58,279 Speaker 1: an unofficial partnership going on, and then at some point 980 00:54:58,280 --> 00:55:00,800 Speaker 1: they're in the same company and it's an official relationship. 981 00:55:01,880 --> 00:55:04,400 Speaker 1: How many people are you know? Warren's now run Brookshire. 982 00:55:04,400 --> 00:55:07,480 Speaker 1: This is the fiftieth anniversary. Monger has been there for 983 00:55:07,560 --> 00:55:10,600 Speaker 1: virtually all of it. You know, so the record of 984 00:55:10,600 --> 00:55:15,239 Speaker 1: management consistency is unheard of, probably never to be replicated. 985 00:55:15,760 --> 00:55:20,320 Speaker 1: But Monger himself is scarily bright. He has terrific instincts 986 00:55:20,320 --> 00:55:25,240 Speaker 1: about business. Uh. He has a BS monitor or detector, 987 00:55:25,640 --> 00:55:28,520 Speaker 1: you know, that is second to none. Great instincts, great 988 00:55:28,560 --> 00:55:32,719 Speaker 1: perspective instincts. And he's not so diplomatic. In fact, he's 989 00:55:32,719 --> 00:55:35,399 Speaker 1: not diplomatic at all. That that's the beauty. He's just 990 00:55:35,520 --> 00:55:39,400 Speaker 1: says what he thinks. And Warren is not like. Warren 991 00:55:39,480 --> 00:55:43,280 Speaker 1: doesn't like conflict, doesn't want to hurt people's feelings. Central 992 00:55:44,520 --> 00:55:47,520 Speaker 1: cent Charlie at that had given the bad news. Um. 993 00:55:47,640 --> 00:55:51,040 Speaker 1: But so that that's the dynamic. There's a little Lenin 994 00:55:51,080 --> 00:55:55,160 Speaker 1: and McCartney there. There each different, two geniuses in their 995 00:55:55,160 --> 00:55:58,040 Speaker 1: own way. Yeah, but I I don't think it's right 996 00:55:58,120 --> 00:56:03,040 Speaker 1: to look at them as um. Warren is the executive operator. 997 00:56:03,160 --> 00:56:06,160 Speaker 1: He's the guy who's coming up uh with most of 998 00:56:06,160 --> 00:56:10,040 Speaker 1: the ideas. When one of the units wants to say 999 00:56:10,080 --> 00:56:13,719 Speaker 1: invest more capital, that Warren's making that decision. Yes, that 1000 00:56:13,760 --> 00:56:16,319 Speaker 1: sounds like a good project or no, uh, you can 1001 00:56:16,360 --> 00:56:18,040 Speaker 1: dive it in that money back to Omaha, thank you. 1002 00:56:18,040 --> 00:56:20,040 Speaker 1: We'll find something better to do. With it. Those are 1003 00:56:20,040 --> 00:56:24,200 Speaker 1: Warren's decisions, but the tough decisions he's They have a 1004 00:56:24,280 --> 00:56:27,440 Speaker 1: running conversation and so Charlie is going to be in 1005 00:56:27,600 --> 00:56:30,520 Speaker 1: on all those. He took Sees Candy to Warren. That 1006 00:56:30,600 --> 00:56:33,879 Speaker 1: was because California Candy, it was an early company He's taking. 1007 00:56:33,920 --> 00:56:36,520 Speaker 1: You know, plenty of others over the years, but this 1008 00:56:37,520 --> 00:56:41,240 Speaker 1: he was very influential. Also early on when Warren made 1009 00:56:41,600 --> 00:56:45,759 Speaker 1: something of a switch, not in his philosophy but in 1010 00:56:45,840 --> 00:56:49,640 Speaker 1: his approach in being willing to pay up more for 1011 00:56:49,800 --> 00:56:52,799 Speaker 1: good business as this think from paying as this think 1012 00:56:52,880 --> 00:56:55,720 Speaker 1: from only paying really low prices for businesses and naturally 1013 00:56:56,200 --> 00:57:01,480 Speaker 1: once so good and Monger's discussed that philosophy as a 1014 00:57:01,560 --> 00:57:06,120 Speaker 1: good business has a value that it's very hard to 1015 00:57:06,640 --> 00:57:10,520 Speaker 1: um either recognize or or easy to underestimate the value 1016 00:57:10,920 --> 00:57:13,560 Speaker 1: of a really good business that even a terrible management 1017 00:57:13,600 --> 00:57:16,840 Speaker 1: team can't message the gift that keeps on giving. Uh. 1018 00:57:16,920 --> 00:57:20,080 Speaker 1: So you know what is it worth to be Sees 1019 00:57:20,160 --> 00:57:23,600 Speaker 1: Candy and Airport in those stands? Uh? Would you pay 1020 00:57:23,640 --> 00:57:26,800 Speaker 1: more for it than you know, Joe's candy, someone's never 1021 00:57:26,840 --> 00:57:28,720 Speaker 1: heard of. You would pay more for it? Now? How 1022 00:57:28,800 --> 00:57:31,760 Speaker 1: much more? That? That's an open question? But Munger really worked. 1023 00:57:31,800 --> 00:57:34,520 Speaker 1: And now Phil Fisher, the Great Investor, was another person 1024 00:57:34,600 --> 00:57:38,640 Speaker 1: who worked on Buffett, who stuff Buffett read and influenced 1025 00:57:38,680 --> 00:57:41,680 Speaker 1: him in that regard and moved him away from the 1026 00:57:41,720 --> 00:57:44,880 Speaker 1: strict Ben Graham buying stuff for you know, just less 1027 00:57:44,880 --> 00:57:46,640 Speaker 1: in the cash value of the scurity and so on. 1028 00:57:47,120 --> 00:57:49,880 Speaker 1: So when you were researching this, you spend a lot 1029 00:57:49,920 --> 00:57:52,600 Speaker 1: of time in in Omaha, Nebraska, a lot of time. 1030 00:57:53,160 --> 00:57:55,680 Speaker 1: What was that like and what was it like speaking 1031 00:57:55,720 --> 00:57:59,600 Speaker 1: to all these local families who had known young Warren 1032 00:57:59,640 --> 00:58:02,040 Speaker 1: as a it The first thing that was interesting me 1033 00:58:02,040 --> 00:58:03,960 Speaker 1: about Omaha was if you come from the East, and 1034 00:58:03,960 --> 00:58:06,880 Speaker 1: I came from New York, you think of Omaha as 1035 00:58:06,880 --> 00:58:10,120 Speaker 1: a complete hay seed place. Uh, you know, I think 1036 00:58:10,120 --> 00:58:12,480 Speaker 1: of Mutual of Omaha's the first thing that pops into 1037 00:58:12,560 --> 00:58:15,120 Speaker 1: my head. But I'm of the age where that show 1038 00:58:15,240 --> 00:58:17,840 Speaker 1: was on Sunday nights when I was a kid, and 1039 00:58:17,920 --> 00:58:20,959 Speaker 1: so that's been drilled into my head for however many 1040 00:58:21,120 --> 00:58:23,320 Speaker 1: years of my youth. So I thought of as purely 1041 00:58:23,360 --> 00:58:26,280 Speaker 1: the sticks, and what I saw was it's a real city, 1042 00:58:26,520 --> 00:58:29,520 Speaker 1: a real downtown. Warren Buffett was not a farmer. His 1043 00:58:29,560 --> 00:58:33,520 Speaker 1: father was. His father was a stockbroker. And I say 1044 00:58:33,560 --> 00:58:36,280 Speaker 1: that because there was this tendency to to say that 1045 00:58:36,360 --> 00:58:38,800 Speaker 1: the street Warren Buffett is some savant who you know, 1046 00:58:38,880 --> 00:58:41,840 Speaker 1: wizard of oz who emerged on the planes or something. 1047 00:58:42,200 --> 00:58:43,760 Speaker 1: But he was not a farm boy. He was not 1048 00:58:43,800 --> 00:58:46,680 Speaker 1: a hay seed stockbroker's son. Grew up in an urban 1049 00:58:46,760 --> 00:58:49,720 Speaker 1: area or not too far from a completely an urban area, 1050 00:58:50,160 --> 00:58:52,640 Speaker 1: and he roamed the streets of Omaha. He went to 1051 00:58:52,680 --> 00:58:55,240 Speaker 1: his father's you know, stockbroker in office. He was not 1052 00:58:55,960 --> 00:59:01,160 Speaker 1: uh uh some you know Carlos Castanada, uh, you know, 1053 00:59:01,520 --> 00:59:05,320 Speaker 1: a grarian savant or something. Um. And that was that 1054 00:59:05,400 --> 00:59:07,960 Speaker 1: was the thing that struck me about Omaha was and 1055 00:59:08,000 --> 00:59:10,000 Speaker 1: for you know, if you're in Nebraska, it's a big city. 1056 00:59:10,120 --> 00:59:14,360 Speaker 1: You know. He was following the baseball teams and so on, um, 1057 00:59:14,560 --> 00:59:17,920 Speaker 1: following the stock market and so as a kid, uh, 1058 00:59:18,120 --> 00:59:21,680 Speaker 1: the research in Omaha just all these people who knew him, 1059 00:59:21,680 --> 00:59:24,280 Speaker 1: and the story never changed. He thought about nothing but 1060 00:59:24,440 --> 00:59:27,240 Speaker 1: making money morning, noon and night. And he had this 1061 00:59:27,360 --> 00:59:32,880 Speaker 1: infectious enthusiasm so that everybody he knew at every stage 1062 00:59:32,880 --> 00:59:34,880 Speaker 1: of his life got caught up in it. And I 1063 00:59:35,320 --> 00:59:37,560 Speaker 1: you know, for instance, this idea to you know, to 1064 00:59:38,440 --> 00:59:40,800 Speaker 1: to drum home, the point how it was there all along. 1065 00:59:41,320 --> 00:59:43,720 Speaker 1: He used to say that he liked his favorite business 1066 00:59:43,720 --> 00:59:46,720 Speaker 1: would be a monopoly toll bridge. Okay, so because you 1067 00:59:46,760 --> 00:59:48,760 Speaker 1: know monopoly toll bridge, you gotta get over the bridge. 1068 00:59:48,920 --> 00:59:51,440 Speaker 1: He's the only one they can set the toll. So 1069 00:59:51,680 --> 00:59:54,480 Speaker 1: he's sitting pretty right. So it turns out I was interviewing. 1070 00:59:54,560 --> 00:59:56,880 Speaker 1: I'll never forget this his He had a friend named 1071 00:59:56,920 --> 00:59:59,800 Speaker 1: Bob Russell he grew up with. They were friends, particularly 1072 00:59:59,800 --> 01:00:02,840 Speaker 1: when he was ten twelve round there. Bob Russell's mother 1073 01:00:02,880 --> 01:00:04,959 Speaker 1: was still living when I when I was researching the book, 1074 01:00:05,440 --> 01:00:08,120 Speaker 1: and she said, and they had a house that overlooked 1075 01:00:08,120 --> 01:00:12,160 Speaker 1: a main thoroughfare in Omaha where trolley went by, and 1076 01:00:12,200 --> 01:00:13,880 Speaker 1: they had a porch and they'd sit on the porch 1077 01:00:13,920 --> 01:00:17,000 Speaker 1: drink lemonades and watch the trolley. And Mrs Russell said, 1078 01:00:17,000 --> 01:00:19,080 Speaker 1: he used to sit there and say, if only you 1079 01:00:19,120 --> 01:00:22,480 Speaker 1: could set up a toll booth. Mrs Russell judge the trolley? 1080 01:00:22,640 --> 01:00:25,320 Speaker 1: What what? Twelve year old thanks of this? You know, 1081 01:00:25,360 --> 01:00:28,120 Speaker 1: it's more like give me another lemonade. But not Warren Buffett. 1082 01:00:28,320 --> 01:00:30,160 Speaker 1: He's thinking of setting up a toll booth on a 1083 01:00:30,200 --> 01:00:33,400 Speaker 1: busy street. Uh you know when he's twelve years old, 1084 01:00:33,880 --> 01:00:37,439 Speaker 1: and so that that was just something in him that 1085 01:00:37,440 --> 01:00:40,080 Speaker 1: that that you know, And so I as I wrote 1086 01:00:40,080 --> 01:00:42,800 Speaker 1: the book, I sort of thought that regardless of what 1087 01:00:42,880 --> 01:00:46,120 Speaker 1: society he had been born into, um, you know, he 1088 01:00:46,120 --> 01:00:48,520 Speaker 1: would have been the numbers guy, the financial guy. He 1089 01:00:48,560 --> 01:00:50,880 Speaker 1: was born to do it. So before I get into 1090 01:00:50,920 --> 01:00:54,800 Speaker 1: some of my favorite questions, I'm compelled to ask, what's 1091 01:00:54,840 --> 01:00:56,640 Speaker 1: the next book we're going to see from you? The 1092 01:00:56,640 --> 01:00:58,800 Speaker 1: next book will be a history. I'm going over a 1093 01:00:58,800 --> 01:01:02,480 Speaker 1: few ideas I am not in a position to tell 1094 01:01:02,520 --> 01:01:06,040 Speaker 1: you which we enjoyed this sort of deep diving. I 1095 01:01:06,120 --> 01:01:09,919 Speaker 1: really loved UM late nineteenth century, early twentieth century. There's 1096 01:01:09,920 --> 01:01:13,840 Speaker 1: a sort of a larger than life equality, Gilded Age, 1097 01:01:13,880 --> 01:01:18,560 Speaker 1: progressive era, UM because really everything else I've read of 1098 01:01:18,600 --> 01:01:22,160 Speaker 1: yours was sort of teared right off the headlines, so 1099 01:01:22,440 --> 01:01:24,840 Speaker 1: very tell. If you look at those books, there's there's 1100 01:01:24,880 --> 01:01:26,320 Speaker 1: a lot of history and all of them, if you 1101 01:01:26,680 --> 01:01:30,360 Speaker 1: there's a lot of context, which requires understanding the history 1102 01:01:30,560 --> 01:01:33,520 Speaker 1: of the history of markets, the history of pension funds, 1103 01:01:33,560 --> 01:01:36,360 Speaker 1: the history of Warren Buffets goes back to Ben Graham, 1104 01:01:36,440 --> 01:01:38,720 Speaker 1: goes back to his father in the nineteen thirties. But 1105 01:01:38,760 --> 01:01:42,040 Speaker 1: you can only put so much history in these books. Um, 1106 01:01:42,080 --> 01:01:45,400 Speaker 1: if you go back to the early nineteen hundreds, they're 1107 01:01:45,400 --> 01:01:48,880 Speaker 1: worried about inequality, you know, they're worried about big corporations, 1108 01:01:48,880 --> 01:01:52,440 Speaker 1: about America becoming a sterile soul is place run by 1109 01:01:52,640 --> 01:01:56,000 Speaker 1: far off, remote corporations. Well, thank goodness, we avoided that faith, 1110 01:01:56,200 --> 01:01:59,760 Speaker 1: thank god. So sound familiar. So there's something about in 1111 01:01:59,800 --> 01:02:02,320 Speaker 1: the old age, they're horrified all of a sudden they're millionaires, 1112 01:02:02,560 --> 01:02:06,760 Speaker 1: you know, never used to have those. So these periods 1113 01:02:07,320 --> 01:02:09,480 Speaker 1: both hold a fascination for me, and I think they're 1114 01:02:09,480 --> 01:02:11,640 Speaker 1: particularly resident today. So it'll be something in that area 1115 01:02:11,640 --> 01:02:14,760 Speaker 1: again that sounds interesting. Let me go, because I know 1116 01:02:14,920 --> 01:02:17,280 Speaker 1: I can't keep you forever, although you and I could 1117 01:02:17,320 --> 01:02:20,600 Speaker 1: keep chatting about this stuff for a long time. Let's 1118 01:02:20,640 --> 01:02:23,360 Speaker 1: talk a little bit about these are questions I asked 1119 01:02:23,760 --> 01:02:27,240 Speaker 1: all my guests, and I always get some fascinating answers. 1120 01:02:27,720 --> 01:02:30,720 Speaker 1: You mentioned your father was an influence on you. Who 1121 01:02:30,800 --> 01:02:36,240 Speaker 1: are some of your other early mentors hm Um, I 1122 01:02:36,400 --> 01:02:42,120 Speaker 1: had some very good editors, you know along the way 1123 01:02:42,440 --> 01:02:46,480 Speaker 1: in newspapers, um both um, Norm pearl Stein at the Journal, 1124 01:02:47,240 --> 01:02:51,200 Speaker 1: and Paul Steiger. So you had some real terrific rock 1125 01:02:51,280 --> 01:02:56,760 Speaker 1: star legends, terrific, terrific editors at the Journal. I'm hesitating 1126 01:02:56,760 --> 01:02:59,440 Speaker 1: that I don't want to forget anybody. You'll get an 1127 01:02:59,440 --> 01:03:04,440 Speaker 1: angry man. Um. You know, Warren Buffett letters were an 1128 01:03:04,520 --> 01:03:07,720 Speaker 1: education in business. You know, I went to grad school 1129 01:03:07,760 --> 01:03:11,040 Speaker 1: with Lawrence Cunningham, who wrote that book, The Essays of 1130 01:03:11,040 --> 01:03:14,360 Speaker 1: Warren Buffett, which was amazing that I was in grad 1131 01:03:14,400 --> 01:03:17,960 Speaker 1: school saying, what why are you publishing on this? This 1132 01:03:18,040 --> 01:03:21,000 Speaker 1: is a law school, this is a and yet it 1133 01:03:21,040 --> 01:03:24,960 Speaker 1: turned out to be tremendously insightful idea before there were 1134 01:03:25,000 --> 01:03:28,560 Speaker 1: really a lot of that was back before you couldn't 1135 01:03:28,600 --> 01:03:31,120 Speaker 1: go on to Edgar and pulled down or the website 1136 01:03:31,480 --> 01:03:35,760 Speaker 1: and pulled down the actual letters. He bound, had them 1137 01:03:35,760 --> 01:03:38,480 Speaker 1: bound published and there were a huge success. So when 1138 01:03:38,480 --> 01:03:42,440 Speaker 1: I was reading those letters, the contrast reading those letters 1139 01:03:42,440 --> 01:03:44,600 Speaker 1: and writing the herd on the street every day and 1140 01:03:44,640 --> 01:03:48,000 Speaker 1: being involved in how you know, the average company was 1141 01:03:48,040 --> 01:03:49,880 Speaker 1: doing things. And then I go back and read the 1142 01:03:49,960 --> 01:03:53,920 Speaker 1: letters and the contrast was such that, Um, that was 1143 01:03:53,960 --> 01:03:57,480 Speaker 1: also an education. I saw um that what he was 1144 01:03:57,560 --> 01:04:01,880 Speaker 1: preaching was so unusual in Wall Street that you know, 1145 01:04:01,920 --> 01:04:05,600 Speaker 1: most annual reports, they're written by consultants. Uh, they're full 1146 01:04:05,600 --> 01:04:11,000 Speaker 1: of malarkey. They're spinning everything. Um. And he's just outlanded 1147 01:04:11,080 --> 01:04:12,880 Speaker 1: the way it is. You know, they're they're trying to 1148 01:04:12,920 --> 01:04:17,040 Speaker 1: game their earnings. Uh. There was just so much that 1149 01:04:17,160 --> 01:04:21,560 Speaker 1: was different. And and the combination of reading those letters 1150 01:04:21,600 --> 01:04:24,919 Speaker 1: and being involved in the everyday work a day Wall 1151 01:04:24,960 --> 01:04:27,360 Speaker 1: Street experience was an educational Did you get to speak 1152 01:04:27,400 --> 01:04:31,840 Speaker 1: to Buffett for the book? Very little? Um. Buffett didn't cooperate. Um. 1153 01:04:32,080 --> 01:04:34,640 Speaker 1: He said in the beginning that he said that he 1154 01:04:34,680 --> 01:04:37,040 Speaker 1: didn't stop people or discourage them or encourage him. He 1155 01:04:37,120 --> 01:04:38,960 Speaker 1: just said, that's you know, you do what you can do. 1156 01:04:39,520 --> 01:04:41,360 Speaker 1: He said, it will work better for me, and it 1157 01:04:41,360 --> 01:04:44,560 Speaker 1: will work better for you too. Huh. And that's interesting 1158 01:04:44,640 --> 01:04:46,920 Speaker 1: with interesting And do you think that was right? I 1159 01:04:46,920 --> 01:04:49,200 Speaker 1: didn't at the time. I thought thanks a lot. I 1160 01:04:49,200 --> 01:04:51,080 Speaker 1: thought thanks a lot, war And he actually said, Um, 1161 01:04:51,520 --> 01:04:54,439 Speaker 1: he said he didn't want to give me his own 1162 01:04:54,480 --> 01:04:56,240 Speaker 1: stuff because he was saving it for his book and 1163 01:04:56,280 --> 01:05:00,919 Speaker 1: I would cut into his sales. Come on, warrened, that's hilarious. 1164 01:05:00,920 --> 01:05:03,640 Speaker 1: But by the way, many a truth is spoken in jest, 1165 01:05:03,800 --> 01:05:06,760 Speaker 1: and he is only half joking when he says that 1166 01:05:06,840 --> 01:05:09,280 Speaker 1: I don't. I don't doubt it. But but to answer 1167 01:05:09,320 --> 01:05:11,720 Speaker 1: to your other question, I did come to agree with 1168 01:05:11,800 --> 01:05:14,600 Speaker 1: him because I think had had I sat down for 1169 01:05:14,680 --> 01:05:17,640 Speaker 1: interview after interview with him, the book would have come 1170 01:05:17,640 --> 01:05:20,120 Speaker 1: out in his words and with his take, and it 1171 01:05:20,120 --> 01:05:24,200 Speaker 1: would have been his conception of his life. And by 1172 01:05:24,240 --> 01:05:26,400 Speaker 1: not talking to him and talking to everyone else around him, 1173 01:05:26,400 --> 01:05:28,560 Speaker 1: I got to tell the story as I would tell it, 1174 01:05:29,080 --> 01:05:31,600 Speaker 1: and so yes, in the end, I think it was 1175 01:05:31,720 --> 01:05:34,040 Speaker 1: worked best for both of us. I'm gonna have to 1176 01:05:34,040 --> 01:05:36,840 Speaker 1: get you as get from you his email address and 1177 01:05:36,840 --> 01:05:38,760 Speaker 1: and invite him to do the show the next time 1178 01:05:38,760 --> 01:05:40,880 Speaker 1: he's in New York, because I know he's got two 1179 01:05:40,880 --> 01:05:45,400 Speaker 1: hours to kill any time, any time he wants. Um. 1180 01:05:45,400 --> 01:05:47,960 Speaker 1: What are some of your favorite books? And I'm referring 1181 01:05:48,000 --> 01:05:50,440 Speaker 1: to ones that you didn't write. What other books have 1182 01:05:50,560 --> 01:05:55,040 Speaker 1: you enjoyed? Uh? Finance books, boy, I'm gonna could be finance, 1183 01:05:55,120 --> 01:05:58,320 Speaker 1: could be other books, but just not by Roger Loans. Yeah, 1184 01:05:58,680 --> 01:06:01,800 Speaker 1: I'll start with you know the G eight Crash by 1185 01:06:01,880 --> 01:06:05,800 Speaker 1: John Kenneth galbrand Um is a book that I've always loved. 1186 01:06:06,680 --> 01:06:09,680 Speaker 1: Read it again and again. Boy, it reads like just 1187 01:06:09,720 --> 01:06:11,520 Speaker 1: a lemon drop of a book. Melts in your mouth 1188 01:06:11,560 --> 01:06:13,840 Speaker 1: and it and it could have been written yesterday. That's 1189 01:06:13,880 --> 01:06:17,720 Speaker 1: the thing that's amazing, could have been written yesterday. Um. 1190 01:06:17,760 --> 01:06:19,640 Speaker 1: You know there's a book. I read a lot of 1191 01:06:19,640 --> 01:06:23,240 Speaker 1: business books, and usually because I review them, most of 1192 01:06:23,280 --> 01:06:25,280 Speaker 1: them don't go on the small shelf of ones I'd 1193 01:06:25,280 --> 01:06:30,120 Speaker 1: recommend by Italian economist Pietra Rivoli, The Travels of a 1194 01:06:30,160 --> 01:06:35,080 Speaker 1: T Shirt, The Travels of anybody anybody wants to. Um, 1195 01:06:35,280 --> 01:06:39,240 Speaker 1: have fun with a book on trade on cotton. I 1196 01:06:39,280 --> 01:06:42,800 Speaker 1: mean really have fun. It opens up a world you 1197 01:06:42,880 --> 01:06:46,760 Speaker 1: never thought was there. I just just love the book. 1198 01:06:47,600 --> 01:06:51,919 Speaker 1: I love John Brooks's books on Wall Street. Um, well 1199 01:06:52,000 --> 01:06:54,280 Speaker 1: give me a title. Uh, let's see the one the 1200 01:06:54,280 --> 01:06:58,720 Speaker 1: go go years about there about the sixties and once 1201 01:06:58,720 --> 01:07:03,120 Speaker 1: in Galconda. That on my bookshelf. Unread waiting in my 1202 01:07:03,320 --> 01:07:09,680 Speaker 1: que about um the nineteen thirties. Um the rob The 1203 01:07:09,760 --> 01:07:13,440 Speaker 1: Robber Barons by Matthew Um who what's the last name 1204 01:07:13,480 --> 01:07:15,760 Speaker 1: of that author? I've seen that book. I've never read 1205 01:07:15,840 --> 01:07:18,440 Speaker 1: that either. That's you're you're giving me homework to do. 1206 01:07:18,600 --> 01:07:22,000 Speaker 1: You know that's kind of a populist take, but it'll 1207 01:07:22,120 --> 01:07:26,440 Speaker 1: it'll be residant today. Um, I love Roncher Now's the 1208 01:07:26,440 --> 01:07:28,720 Speaker 1: House of Morgan and Hamilton's and his other books My 1209 01:07:28,800 --> 01:07:31,920 Speaker 1: head or Research. Mike bat Nick just finished that and 1210 01:07:32,040 --> 01:07:35,200 Speaker 1: cannot stop raving. He's working his way through all of 1211 01:07:35,280 --> 01:07:39,960 Speaker 1: Churnhouse book. He's just thrilled to death. Um, so there's 1212 01:07:39,960 --> 01:07:43,520 Speaker 1: a you know, a starting list for for Christmas Byes 1213 01:07:43,800 --> 01:07:47,400 Speaker 1: House of Morgan and of course America's Bank. By the way, 1214 01:07:47,400 --> 01:07:49,880 Speaker 1: did you ever get around? So when I'm working on something, 1215 01:07:50,600 --> 01:07:52,760 Speaker 1: I try not to read a book on the same 1216 01:07:52,800 --> 01:07:58,040 Speaker 1: top title because topic, because it influences your perspective, you're 1217 01:07:58,160 --> 01:08:00,960 Speaker 1: you're you want to stay away from it. But I 1218 01:08:01,160 --> 01:08:04,000 Speaker 1: adored Lords of Finance, and I'm wondering if you read 1219 01:08:04,040 --> 01:08:07,600 Speaker 1: that when you would? Is a great book. This book 1220 01:08:07,680 --> 01:08:12,400 Speaker 1: is like one of the so that's involves four central bankers, 1221 01:08:13,000 --> 01:08:16,080 Speaker 1: and this is like one bank of the four. Like 1222 01:08:16,160 --> 01:08:20,120 Speaker 1: this is a giant digression from Lords of the AQUITAMDS 1223 01:08:20,120 --> 01:08:24,080 Speaker 1: Pults Prize winner, amazing, every bit deserving of a Pulletzer Prize. 1224 01:08:24,120 --> 01:08:26,760 Speaker 1: It is a terrific book. And talk about a guy 1225 01:08:26,800 --> 01:08:28,759 Speaker 1: who can tell a story and make it come to life. 1226 01:08:29,200 --> 01:08:33,040 Speaker 1: You should be on any Financial Readers shortlist. Really just 1227 01:08:33,360 --> 01:08:36,439 Speaker 1: a tremendous, tremendous book. Let me keep going through my 1228 01:08:36,520 --> 01:08:41,879 Speaker 1: last few questions. Um, so you've been writing professionally for 1229 01:08:42,560 --> 01:08:46,760 Speaker 1: thirty years? Is that right? Well, I started out at 1230 01:08:46,800 --> 01:08:52,519 Speaker 1: the Newport News Times Herald in seventies. Sixty years next year. 1231 01:08:52,840 --> 01:08:55,880 Speaker 1: So let me ask you a question. What has changed 1232 01:08:56,760 --> 01:08:59,400 Speaker 1: in three hours or less since you've become a writer 1233 01:09:00,200 --> 01:09:04,719 Speaker 1: for for better or worse? Well, Um, finance and business 1234 01:09:04,760 --> 01:09:09,559 Speaker 1: are much hotter topics and the much bigues much. You know, 1235 01:09:10,280 --> 01:09:12,519 Speaker 1: there were no finance sections when I started. There was 1236 01:09:12,560 --> 01:09:14,640 Speaker 1: a Wall Street Journal and basically nothing else. There were 1237 01:09:14,640 --> 01:09:18,880 Speaker 1: no financial shows, there was no Bloomberg. Um, so that's 1238 01:09:18,920 --> 01:09:22,400 Speaker 1: just become much more central to the way we live 1239 01:09:22,479 --> 01:09:27,200 Speaker 1: and work. Um. Obviously, the news business itself has become 1240 01:09:27,360 --> 01:09:30,799 Speaker 1: way more challenged, for you know, by the Internet. You know, 1241 01:09:31,360 --> 01:09:35,200 Speaker 1: listeners don't need an education that when Wren Buffett went 1242 01:09:35,240 --> 01:09:39,080 Speaker 1: into the business, newspapers were so called monopoly toll bridge 1243 01:09:39,080 --> 01:09:41,320 Speaker 1: and the only way to get to advertisers now is 1244 01:09:41,360 --> 01:09:43,800 Speaker 1: he is he still part of part of the Washington Post? 1245 01:09:44,280 --> 01:09:48,760 Speaker 1: Is that now? That still still owns Buffalo Eeping News 1246 01:09:48,800 --> 01:09:51,439 Speaker 1: and he owns a local paper and Omaha, so he's 1247 01:09:51,439 --> 01:09:54,520 Speaker 1: still in the in the business local paper and Oma. Yeah, yeah, 1248 01:09:55,040 --> 01:09:59,240 Speaker 1: that's the world, the world, Harold, so m uh but um, 1249 01:09:59,360 --> 01:10:01,920 Speaker 1: those are the those are the biggest. I mean, the 1250 01:10:01,920 --> 01:10:05,720 Speaker 1: the number of news venues, the extent of the competition. 1251 01:10:05,760 --> 01:10:07,400 Speaker 1: You know, when I started at the Journal, which was 1252 01:10:07,400 --> 01:10:10,000 Speaker 1: in seventy nine, you could spend a long time with 1253 01:10:10,080 --> 01:10:14,439 Speaker 1: a story. Now the more competition is just so out there, 1254 01:10:14,560 --> 01:10:18,439 Speaker 1: and it's that that's a lot different things. I find 1255 01:10:18,479 --> 01:10:21,400 Speaker 1: when I'm writing something to just do a blog post, 1256 01:10:21,439 --> 01:10:25,280 Speaker 1: a little throwaway two D word blog posts. I used 1257 01:10:25,320 --> 01:10:28,519 Speaker 1: to schedule stuff around a certain rhythm. I like this 1258 01:10:28,600 --> 01:10:31,320 Speaker 1: sort of thing on Tuesday nights, and I like this 1259 01:10:31,400 --> 01:10:34,120 Speaker 1: on Friday mornings. And I find if I do that, 1260 01:10:35,280 --> 01:10:37,519 Speaker 1: it's in the ether. Somebody is going to write about 1261 01:10:37,520 --> 01:10:40,439 Speaker 1: it beforehand, and so you can't. You have to just 1262 01:10:40,479 --> 01:10:43,320 Speaker 1: publish some more choices about what to read. You can't 1263 01:10:43,320 --> 01:10:45,880 Speaker 1: read every blog, you can't read it. Possibly there's an 1264 01:10:45,880 --> 01:10:49,439 Speaker 1: overwhelming amount of stuff. So that's historically what's changed. What 1265 01:10:49,479 --> 01:10:53,200 Speaker 1: do you see going forward for media and journalism and 1266 01:10:53,320 --> 01:10:57,200 Speaker 1: book publishing in the future. You know, I think they'll 1267 01:10:57,200 --> 01:11:01,160 Speaker 1: be around for longer than than the word. The most 1268 01:11:01,240 --> 01:11:06,439 Speaker 1: pessimistic prognosticators say in indie bookstores, are you know, making 1269 01:11:06,439 --> 01:11:09,679 Speaker 1: a comeback? The percentage of books that are being read 1270 01:11:09,680 --> 01:11:12,960 Speaker 1: in print as this thing from digitally has actually leveled off, 1271 01:11:13,000 --> 01:11:17,400 Speaker 1: and I think as ticked up pretty smartly. Um, you know, 1272 01:11:17,560 --> 01:11:20,439 Speaker 1: newspapers I don't know about I think Charlie Munger has 1273 01:11:20,479 --> 01:11:22,880 Speaker 1: said that that the newspaper is most loyal readers, are 1274 01:11:22,960 --> 01:11:24,599 Speaker 1: you know, to be found in the cemeteries or something 1275 01:11:24,920 --> 01:11:29,280 Speaker 1: some something like that. Newspapers are obviously evolving, people like 1276 01:11:29,360 --> 01:11:31,680 Speaker 1: Jeff Bezos behind the Washington Post trying to be a 1277 01:11:31,720 --> 01:11:34,439 Speaker 1: few vanity projects that all so you'll have the Times, 1278 01:11:34,439 --> 01:11:38,160 Speaker 1: the Journal, the Post and a handful of others. Public 1279 01:11:38,439 --> 01:11:41,920 Speaker 1: is a nonprofit formula, and I think the person who 1280 01:11:41,960 --> 01:11:44,800 Speaker 1: took the Herd on the Street column after you, jesse eisener. 1281 01:11:46,360 --> 01:11:50,760 Speaker 1: So I think the formulas are still you know, it's 1282 01:11:50,760 --> 01:11:53,960 Speaker 1: still we're still experimenting with that, and we don't I 1283 01:11:54,000 --> 01:11:55,960 Speaker 1: don't as culainly don't know. And I don't think anyone 1284 01:11:56,000 --> 01:11:59,240 Speaker 1: knows what the news universe will look like, except to 1285 01:11:59,280 --> 01:12:01,679 Speaker 1: say that people we're still hungry, very hungry for news. 1286 01:12:01,720 --> 01:12:03,360 Speaker 1: A lot of people want to go on the news business. 1287 01:12:03,920 --> 01:12:06,559 Speaker 1: It'll exist. We just don't know the form. We don't 1288 01:12:06,560 --> 01:12:08,800 Speaker 1: know what it's gonna look like. So a millennial or 1289 01:12:08,800 --> 01:12:11,360 Speaker 1: a recent college graduate is beginning in their career and 1290 01:12:11,360 --> 01:12:13,800 Speaker 1: they want to be a writer or a journalist, what 1291 01:12:13,920 --> 01:12:15,800 Speaker 1: sort of advice would you give them? The advice I 1292 01:12:15,840 --> 01:12:18,160 Speaker 1: give I get asked that a lot is have a 1293 01:12:18,200 --> 01:12:21,240 Speaker 1: specialty these days. I think it's very important not just 1294 01:12:21,280 --> 01:12:24,960 Speaker 1: to be a journalist. You know, no all you can 1295 01:12:25,040 --> 01:12:28,040 Speaker 1: about finance, know all you can about sports, know all 1296 01:12:28,080 --> 01:12:31,759 Speaker 1: you can about ballet, know all you can about energy 1297 01:12:31,840 --> 01:12:34,599 Speaker 1: or global warming or whatever it is. But be someone 1298 01:12:34,680 --> 01:12:37,120 Speaker 1: who whatever the news venue is, is going to say 1299 01:12:37,200 --> 01:12:40,519 Speaker 1: we need an expert in whatever that is, and they'll 1300 01:12:40,560 --> 01:12:43,080 Speaker 1: be a place for you. I don't think the you know, 1301 01:12:43,320 --> 01:12:46,120 Speaker 1: these days, it's tough to go in and say, you know, 1302 01:12:46,200 --> 01:12:48,720 Speaker 1: Johnny Apple used to say the times, you've got to 1303 01:12:48,720 --> 01:12:51,400 Speaker 1: be able to ride a five car fatal and and 1304 01:12:51,400 --> 01:12:53,240 Speaker 1: and that's true. But these days you've got to be 1305 01:12:53,240 --> 01:12:56,320 Speaker 1: able to do more than that. Last question, what is 1306 01:12:56,320 --> 01:12:59,280 Speaker 1: it you know about Wall Street and finance today that 1307 01:12:59,360 --> 01:13:02,080 Speaker 1: you wish you knew when you started forty years ago? 1308 01:13:04,800 --> 01:13:06,920 Speaker 1: You know, I don't think, I mean I know now 1309 01:13:06,960 --> 01:13:09,800 Speaker 1: how repetitive. It is, how how how cyclical is how 1310 01:13:09,920 --> 01:13:12,759 Speaker 1: everything we talked about before, how the lessons don't get learned. 1311 01:13:12,760 --> 01:13:16,840 Speaker 1: But there's no way. It's not like you can transport 1312 01:13:17,000 --> 01:13:20,600 Speaker 1: that experience and and you know, put it into some 1313 01:13:20,720 --> 01:13:22,800 Speaker 1: pill and and give it to a twenty two year 1314 01:13:22,840 --> 01:13:25,519 Speaker 1: old and he will absorb it. On the other hand, 1315 01:13:25,800 --> 01:13:27,280 Speaker 1: that's what makes it fun. You know, he or she 1316 01:13:27,280 --> 01:13:28,920 Speaker 1: will go out and learn from the cells. And that's 1317 01:13:29,520 --> 01:13:33,320 Speaker 1: so UM. But what have you learned that you wish 1318 01:13:33,320 --> 01:13:36,200 Speaker 1: you knew when you started? What little tidbit of knowledge 1319 01:13:36,240 --> 01:13:38,120 Speaker 1: would have made your life easier? I guess I'm a 1320 01:13:38,160 --> 01:13:43,200 Speaker 1: little more cynical. I'm surprised at how often, UM, to 1321 01:13:43,280 --> 01:13:47,080 Speaker 1: avoid using a three letter word, people don't tell the truth. UM. 1322 01:13:47,760 --> 01:13:53,160 Speaker 1: Uh surprised at how often people will spin. You know, 1323 01:13:53,720 --> 01:13:56,639 Speaker 1: there are a lot of slippery characters out there, and UM, 1324 01:13:56,800 --> 01:14:00,200 Speaker 1: I tend to be trustworthy and sometimes naive, and I'm 1325 01:14:00,240 --> 01:14:04,560 Speaker 1: surprised at how often, uh, people would take advantage of that. 1326 01:14:04,880 --> 01:14:06,320 Speaker 1: And it it would have been nice to know that starting 1327 01:14:06,360 --> 01:14:09,400 Speaker 1: your career. Roger, this has been great. Thank you so 1328 01:14:09,479 --> 01:14:13,360 Speaker 1: much for being so generous with your time. UM. We've 1329 01:14:13,360 --> 01:14:15,880 Speaker 1: been speaking with Roger Lowenstein. He is the author of 1330 01:14:15,880 --> 01:14:20,599 Speaker 1: the new book America's Bank, The Epic Struggle to create 1331 01:14:20,680 --> 01:14:23,679 Speaker 1: the Federal Reserve, which you can find at Amazon, Bornes 1332 01:14:23,680 --> 01:14:27,720 Speaker 1: and Noble and independent booksellers everywhere. You can read more 1333 01:14:27,760 --> 01:14:33,080 Speaker 1: of Roger's work at Roger Lowenstein dot com. Um check 1334 01:14:33,120 --> 01:14:35,720 Speaker 1: out my daily column Bloombergview dot com. Follow me on 1335 01:14:35,720 --> 01:14:38,600 Speaker 1: Twitter at Ridholts. The blog is Ridhults dot com. I 1336 01:14:38,640 --> 01:14:41,720 Speaker 1: want to thank Charlie Vohmer, my producer, and Mike bat Nick, 1337 01:14:41,800 --> 01:14:45,400 Speaker 1: my head of research. If you enjoy this conversation, be 1338 01:14:45,479 --> 01:14:48,879 Speaker 1: sure and look up or down an inch on Apple 1339 01:14:48,920 --> 01:14:53,120 Speaker 1: iTunes and you can see all seventy something or sixty 1340 01:14:53,200 --> 01:14:56,879 Speaker 1: something previous shows we've done. They're all available for download, 1341 01:14:56,880 --> 01:15:01,680 Speaker 1: and they're all commercial free and free. Uh. Thank you 1342 01:15:01,720 --> 01:15:04,920 Speaker 1: for listening. You've been listening to Masters in Business on 1343 01:15:05,080 --> 01:15:09,240 Speaker 1: Bloomberg Radio. Masters in Business is brought to you by 1344 01:15:09,320 --> 01:15:11,920 Speaker 1: Exxonmobile Energy lives here.