Animal Spirits Podcast: “A National Housing Emergency” (EP. 428)

Date: September 3, 2025
Hosts: Michael Batnick & Ben Carlson
Theme: Exploring the housing crisis, inequality, market behavior, and reflections on markets and life in 2025.

Episode Overview

This episode dives into America’s growing national housing emergency, the return of Gilded Age wealth and inequality, and how the stock market and consumer behavior seem remarkably detached from worries about economic headwinds. Michael and Ben also riff on market history, investing behavior, private equity, trends in personal finance, and the changing American dream. Throughout, their back-and-forth is peppered with notable stats, book and media recommendations, listener questions, and their irreverent sense of humor.

Key Discussion Points & Insights

1. End of Summer, Reflections on Wealth & Old Money

• Michael shares a recent trip to Newport, RI, remarking on the overwhelming visible wealth—mega yachts, historic mansions, and “Gilded Age” vibes ([03:00]).
• Quote: “I was off on Friday…took the kids to Newport, Rhode Island. …There's just yachts all over the place…Old, old money there.” – Michael ([02:58])
• Discussion of Cornelius Vanderbilt, the vanishing of old fortunes, and whether we’ll see fortunes disappearing so quickly today. Michael suggests generational wealth now is more professionally managed; Ben notes “second or third generation can still screw it up, but not to that degree.” ([04:42])

2. Inequality, Housing, and the Modern Gilded Age

• The episode sets up a theme of inequality, comparing today to the Gilded Age, and juxtaposing “yachts everywhere” against growing complaints of middle class distress.
• Stat: “When [Vanderbilt] died in 1877, if his estate was liquidated, he would have had one out of every $20 in the country.” ([03:55])
• Discussion of the top 1% historically holding “61% of all income” in NYC at the dawn of income tax ([05:30]).
• Pivot to today’s national housing emergency and the challenges of building enough new homes.

3. Market Valuations, Bubbles & AI

• The WSJ claims “U.S. stocks are now pricier than they were in the dot com era” ([07:49]) — but Michael and Ben push back on the comparison. While price-to-sales ratios have hit dot-com levels, price-to-earnings are not as extreme, and today’s market leaders are actually highly profitable.
  • Quote: “This is not the dot com bubble…Back in the dot com bubble, [companies] did not make any money. These are mature businesses.” – Ben ([08:34])
  • Quote: “If you’re saying…there’s going to be a bust where The NASDAQ loses 80% of its value. Come on.” – Michael ([09:06])
• The ongoing “AI infrastructure” boom is priced in—highlighting Nvidia forecasting $3-4 trillion data center spend by decade’s end ([09:59]).

4. Market Resilience & Investor Behavior

• Discussion of market “V-shaped” recoveries: “The S&P just rallied 25% over 100 trading days for the 12th time in 70 years…three months later, it was higher every time.” ([11:01])
• Ben notes, “The markets don’t care”—discretionary stocks are surging despite news of softening labor markets. Junk bonds are resilient, private credit is booming ([15:32], [16:28]).
• Speculator behavior is constant: listeners submit Reddit threads about massive options trading losses; Ben and Michael link this to stories of speculators from the 1800s ([18:55]), highlighting the eternal presence of “lighting money on fire.”

5. The National Housing Emergency

• Key Segment ([38:14]):
  • Michael references reporting that the Trump campaign is considering declaring a national housing emergency.
    • Quote: “There is a housing emergency; what the solution is…can’t they buy mortgage bonds and just get the spreads down a little bit?” – Michael ([38:14])
  • Ben outlines what an effective solution would take: only by direct government intervention to cut through red tape and spur building—as was done post-WWII—could the shortage be addressed ([39:22]).
    • Quote: “They would have to say blanket, we’re going to make it easier for homebuilders to build…That’s what they did in the 50s.” – Ben ([39:22])
  • Lower rates might help with monthly payments, but wouldn’t solve the structural shortfall of 3-5 million homes.

6. Market Structure, Index Funds, and Flows

• Record-breaking flows into the “Magnificent 10” (top S&P companies), with billions moved monthly via index funds and retirement accounts ([23:01]). These relentless flows do impact markets, but fundamentals still determine index composition over time.
  • Quote: “Index funds and retirement accounts are propping up every stock…Ultimately, fundamentals will drive which stocks are in the top 10.” – Michael ([23:53])
  • Ben points out, “In 10 years, three or four of these stocks will not be in the top 10 anymore.” ([23:37])

7. The “Vibes” Recession — Perceptions of the Middle Class

• Surveys show a persistent sentiment among Americans, especially the middle class, that the chance of improving one’s standard of living is at historic lows—“the lowest it’s ever been, 25%…” ([27:12])
  • Ben attributes this to the “social media breaking sentiment readings forever.”
  • Michael and Ben acknowledge the contradiction: the US still leads the world in entrepreneurship and upward-mobility, but the “vibes” just don’t match the data ([30:01]).
    • Quote: “Maybe we haven’t spent enough time thinking about how many brains were just completely melted from the pandemic…” – Ben ([28:57])

8. Private Equity Returns, Liquidity, and Endowment Models

• Ivy League endowments’ private equity allocations are delivering lower returns than the S&P over the past decade, with questions about self-reported data and lack of liquidity ([40:49]).
  • Ben: “I don’t ever really trust these private equity indexes because they’re usually self-reporting.” ([41:02])
  • S&P’s performance has outpaced private equity, and excessive illiquidity is catching up with some endowments ([41:02]–[41:53]).

9. Market History, Time, and “This Time Is Different”

• Reflection on the length and nature of the post-2013 bull market ([44:57]):
  • Quote: “This period of time is in the history books. …For people that have been following the markets that are around our age…this is not so small a chapter in the history of the stock market that we just experienced.” – Michael ([44:57])
  • Ben notes we truly did live through a “this time is different” era, especially for mega-cap tech—something very few expected ([46:31]).

10. Consumer Debt, Personal Finance, and Social Shifts

• Extended car loan terms (six to seven years) are now the norm—reflecting more on monthly payment psychology than on consumer distress, per Ben ([47:30]).
• Discussion of young workers’ employment and AI’s disruptive effect: “The entry level automated work” is where impact is felt most, not across all job types ([33:51]).

11. Social Trends & Cultural Quick Hits

• “996” work/life culture among Bay Area youth (9am–9pm, six days a week) in sharp contrast to the drug/alcohol-fueled hedonism of generations prior ([54:47]–[55:58]).
• The housing crisis, the rise of index/investment products like ETFs, and the irrepressible American urge to start new businesses ([30:01]) are all positioned as markers of today’s unique socio-economic texture.

Notable Quotes & Memorable Moments

• On Old Wealth:
  “If his estate was liquidated, he would have had one out of every $20 in the country.” – Michael ([03:55])

• On Market Valuations:
  “This is not the dot com bubble…Back in the dot com bubble, [companies] did not make any money. These are mature businesses.” – Ben ([08:34])

• On Housing Emergency Solutions:
  “They would have to say blanket, we’re going to make it easier for homebuilders to build…that’s what they did in the 50s.” – Ben ([39:22])

• On Market History:
  “There's been people…fighting this bull market since 2013…This period of time is in the history books.” – Michael ([44:57])

• On Youth Work Culture:
  “[In the Bay Area:] No drinking, no drugs. 996: Work from 9am to 9pm, six days a week, lift heavy, run far, marry early, track sleep, eat steak and eggs.” – Ben ([55:32])

Important Timestamps (MM:SS)

• 03:00: Michael’s Newport trip and reflections on old money
• 07:49: Market valuations discussion (“pricier than dot com”)
• 11:01: S&P’s historic market rallies; V-shaped recoveries
• 15:32: How consumer stocks & junk bonds signal market optimism
• 18:55: Options trading blowups; “lighting money on fire”
• 23:01: Flows into the “Magnificent 10” (Nvidia, etc.)
• 27:12: Middle class vibes and social mobility worries
• 38:14: National housing emergency: potential policy responses
• 41:02: Private equity vs S&P returns for Ivy League endowments
• 44:57: Reflections on the bull market and market history
• 54:47: Gen Z/Zoomer work trends—Bay Area “996” culture

Media & Book Recommendations

• Audiobook: Michael recommends “The First Tycoon” (Vanderbilt biography), “Tough Jews,” and advocates for audiobooks on accelerated speed ([63:19]).
• Movies: Both discuss “Once Upon a Time in America” (Michael gives a mixed review), and “Mission Impossible: Final Reckoning” (Ben found it unnecessary but enjoyable for action fans) ([61:53]).
• TV: “Platonic” (Michael: “thanks for the rec!”), anticipation for upcoming crime series, noting a “bear market for TV shows” in summer 2025 ([52:45]–[54:47]).
• Documentary: “Unknown Number: The High School Catfish” on Netflix—Michael calls the twist “one of the craziest things I’ve ever seen” ([66:50]).

Tone and Takeaways

Michael and Ben remain conversational, lightly irreverent, and data-driven. The tone is pragmatic, sometimes skeptical (especially about media narratives of bubbles or sentiment), but also deeply appreciative of America’s unique economic dynamism—even while noting profound social and housing challenges.

Big Picture:
The U.S. is in a weird, contradictory period—historic wealth creation persists, but perceptions of opportunity are collapsing for many, and the housing shortage presents a genuine, “national emergency”-level challenge policymakers have yet to effectively address.

For More From Animal Spirits

• Email: animalspirts@thecompoundnews.com
• Website: The Compound
• Next episode: Live at Future Proof (conference details at episode’s end)