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Bad Vibes Economics
00:43:58
Slate Money talks bad vibes, financial literacy, and Larry Ellison.
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- [00:10]
A
Hello. Welcome to the Bad Vibes Economics episode of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. My colleague Emily Peck is also here.
- [00:24]
B
Hello. Hello.
- [00:25]
A
We joined by Elizabeth Spires.
- [00:28]
C
Hello.
- [00:29]
A
And we're going to talk about bad vibes this week. We're going to talk about the bad vibes from the inflation report that came out on Friday. We're going to talk about the bad vibes of gas prices. We're going to talk about recession, whether it's here, whether it's coming. We're going to talk about Larry Ellison owning an island in Hawaii and what that's like. We're going to talk about financial literacy in Missouri and also in the Marcy projects in New York. We have a Slate plus segment all about market structure and stock trading. Thank you, Max, for sending in that question. We will answer that question in Slate Plus. It's a fun show and it's all coming up on Slate money. So, Emily, can we talk about vibes?
- [01:16]
B
Let's do it. Let's get into vibes.
- [01:18]
A
I need to come out here and glory in being wrong. I always say if you're never wrong, you're never interesting. I was completely wrong when I came out a few months ago and said inflation has peaked. That 8.5% year on year inflation rate that we saw back in March. I was like that's as high as it's going to get because although other things like housing are still going to go up, the main thing, which is energy prices is coming down. And so we don't need to worry about inflation ever being quite as high as 8.5% again. Well, on Friday, inflation came in at 8.6% because energy prices are volatile and I forgot that what goes down can go up. And gas prices at $5 a gallon, we now have record inflation again at 8.6%. And not just record inflation, but, but record inflation driven by the most salient price in the economy, which is gas price. It's the one thing that Americans care about right now is inflation in general and gas price inflation in particular. And it is my thesis that is making everyone very grumpy and there are bad vibes.
- [02:35]
B
Felix, I think you are correct. You wrote about it this week and you cited some data. I think it was a YouGov poll that said a really high percentage of Americans think that we are 55%. Yes, 55% of Americans think we're in a recession right now. We are not in a recession. To be clear, the Unemployment rate is like close to a 50 year low. There are jobs for everybody. Prices are high.
- [03:00]
A
Jobs are being created every month as we see in the payrolls report. Even though like anyone who wants a job already has one, we're still somehow creating new jobs every month.
- [03:11]
B
Yeah, I was just on Indeed.com actually reporting for another story and I was just idly looking at the jobs that are available right now. And first of all, if you want a job, you can get a job. Second of all, there are sign on bonuses for everyone who wants a job, including dishwashers, line cooks. Like employers are still pretty desperate. So for those who are grumpy, it's kind of weird because our experience, my experience is really in the recovery from the Great Recession when people were very grumpy and, and there were not sign on bonuses for dishwashers and there were not job listings that say, like, you don't need an education. Prison record is fine, you can start the same day, please just take our jobs.
- [03:56]
A
And this was back. Yeah, I feel like 10 years ago. Well, not 10 years ago. When was the Great Recession? Six years ago. The five years ago. Time has no meaning post pandemic, right? No, it was 14 years ago. Anyway, back in 2009, 2010, 2011, back when things were feeling very grumpy and bad. Yeah, the DishWashers were making $7.25 an hour and now they're making $15 an hour. And somehow the economy has changed so much that it was easier to find a dishwasher at 725 in 2011 than it is to find a dishwasher at 15 in 2022.
- [04:32]
C
I think all of this though presumes that people are actually looking at the data. And this just seems to be vibes to me. You know, people will conflate.
- [04:39]
A
Elizabeth, tell me, where did the vibes come from if not the data? The vibes not coming from the same place that the data comes from? No, think so. So where are they coming from?
- [04:48]
C
I think people conflate their sense of financial security with a sense of overall stability and security in general. So if there is a lot of chaos happening in the world, they will automatically sort of assume that this is affecting them economically, even though it that might not be the case.
- [05:06]
B
Also, the stock market, it's not looking great and a lot of people, even people who don't have money in the stock market, see those numbers here, like, and just to annoy Felix, I'll say hear that the Dow is down a lot and think like things are bad.
- [05:21]
A
They'Ll be like, it fell 100 points. And everyone's like, oh, no, the down, the down 100 points. No one knows what that means, but it sounds bad, right? Yeah.
- [05:28]
B
But I think a lot of people equate the stock market going down with recession and bad economy.
- [05:33]
A
Exactly. So what we have is three different, possibly four different bad vibes all going on at the same time. Possibly five, depending on how many different ways you count inflation. Right. There's rent inflation and mortgage inflation. Right. Anyone wanting to move into a new house of any description, whether they want to rent it or whether they want to buy it, they're getting amazing sticker shock because the cost of renting a house and, or the cost of buying a house is really high thanks to higher mortgage rates and higher rents. So that's making people grumpy. It's keeping them in their homes and they're like, I want to move, but I can't afford to. Number two, gas prices, obviously. Number three, food prices, obviously. Number four, inflation. Generally, everything is going up except for clocks and timepieces. That was like the only thing that went down in the last inflation report. Oh, and televisions. If you want to buy a new television, you can get away with that. So just generally this whole feeling that, you know, this 8.6 inflation is real. We have lost 8.6% of our buying power over the past year. That feels bad. That's grump number one. Grump number two is the stock market. Your stocks are down. You used to feel wealthy because stocks were up high and rising. Now you feel poor because stocks are lower and falling. And then number three is the Fed is interest rates, which is partly the mortgage thing, but it's also more broadly this feeling that the Fed is pulling away the punch bowl. And I don't know if this really affects normal people, but it definitely affects businesses and people who are slightly closer to the sort of internal machinations of capitalism. And they're like, interest rates are rising. That's really bad. And so you get those three things and it just feels bad vibes. And when it feels bad vibes, the result is people say, well, obviously we're in a recession, as did Cardi B.
- [07:28]
C
We're actually trying to buy a house right now, like crazy people.
- [07:31]
A
Congratulations. I'm sorry for you.
- [07:33]
C
Thank you. Mortgage demand just fell to a 22 year low, which is.
- [07:39]
A
So it's the buyer's market for mortgages. That's great.
- [07:42]
C
Yeah.
- [07:43]
A
I mean, the good news about American mortgages is they don't have any kind of Prepayment penalty. So you can get a mortgage right now and if mortgage rates come down in the next few years, you can refinance a relatively low cost and it's kind of no harm, no foul. So that's the good thing.
- [08:01]
B
You can also get an adjustable rate mortgage. They aren't as bad as they were during the housing boom of the 15 years ago or the two years ago depending on your perspective.
- [08:10]
A
Yeah, arms a little bit cheaper than the 30 year. So maybe that makes sense too.
- [08:15]
B
Yeah, they've become a little bit more popular in the current environment. What I was going to say was that vibes, they seem like fake. Like we're like, oh, people are grumpy, but it's not a recession. But bad vibes can help us get to a recession. If people start really getting the bad, bad vibes, then consumer spending falls and consumer spending makes up like a crazy percentage of our economy. So like womp, womp, like vibes can become very real.
- [08:42]
A
Yeah, it's 70% of the economy. And it's not just bad vibes among consumers, it's bad vibes among businesses. Right. It's Elon Musk and Jamie Dimon and all of these, you know, CEOs who have bad vibes and they're coming out saying, ooh, things are really bad, there's a hurricane coming. And if you think things are really bad and there's a hurricane coming, then you wind up pulling back on investment, you wind up firing people, you wind up putting in hiring freezes, you kind of move out of hyper growth mode and growth mode in general and you start sort of hunkering down for bad times. And the hunkering down, you know, as I say, it's a self fulfilling prophecy and it causes less economic activity and therefore it contributes to the kind of business cycle that will eventually, perhaps result in a recession.
- [09:32]
B
Also, the business news often frames things from the perspective of the Jamie diamonds and not from the people. Like I was thinking about this this week because Target came out and said we have way too much stuff, we bought all the wrong stuff, we have too much inventory and like their stock fell or whatever and everyone, yeah, they.
- [09:51]
A
Had a huge amount of televisions, which is the one thing that didn't go up in price. Like Target, how did you manage to fuck that one up?
- [09:57]
B
They have like televisions and like patio furniture and that's bad for them. And so a lot of the reporting like in the financial press was like oh no. But like from a consumer perspective it's kind of like Target has too much stuff and now there's a big sale. Like that's great news. So sometimes, you know, the bad vibes get amplified because everyone's looking at this from the perspective I think of like CEOs, when for real people it's very different.
- [10:24]
C
So danger of treating corporate executives as economic forecasters, which I think people do way too often.
- [10:31]
B
What about Cardi b though?
- [10:32]
A
Well, the other thing we do is we. And also Cardi B. But like, but the other thing we do is we treat economic forecasters as economic forecasters, you know, and economic forecasters aren't, don't have a much better track record than executives or anyone else when it comes to predicting the future. No one predicted the big bounce back economically from the pandemic and almost no recession ends up being forecast. So if there is a recession, like Jamie Dimon is saying there's a hurricane coming, but all of his economists are saying we're fine, we're going to keep on seeing real economic growth for the next year or two. There's a disconnect there between what Jamie is saying and what his employees are saying, what his actual forecasters, who he pays to be forecasters are saying. But what forecasters say is rarely particularly very useful. I've never seen a lot of utility in economic forecasts. The one thing I will say is we just had two very big forecasts for the world from the World bank and from the oecd and both of those showed pretty healthy growth in both 2022 and 2023 in the United States and globally. Like basically everywhere that isn't Russia or Ukraine seems to be on track for like 2 and a half to 3% growth, which is not fantastic, but it's definitely not a recession.
- [11:58]
B
The other thing I could add, if we wanted, was that some of this inflation pain and the vibes are kind of self inflicted because the Biden administration and Europe, everyone decided to really take a stand against Russia for invading Ukraine and say like, we're not going to buy the Russian oil anymore. And that really drove up energy prices, which is a big part of what's happening now. And politically it's interesting, I think, because the Biden administration was like, Americans will understand and will sacrifice. And I really don't.
- [12:33]
A
And the Americans are like, no, no, we were. No, no. I mean it is now this dumb political game of the Republicans all blaming Biden and Biden is blaming Putin and everyone's just trying to point fingers and you're like, come on, grow up. But I at least blaming Putin has some kind of basis in reality. What I struggle to understand is the blaming Biden thing, like, it's really hard for me to understand what it is that the Republicans think that Biden did that caused the inflation. Like, was it that one stimulus bill in like early 2021 that they're now saying, like that one bill in early 2021 is causing all of this inflation in like June 2022? Seems like a little bit of a stretch.
- [13:28]
C
They don't genuinely believe that Biden is responsible for it. It's just politically expedient for them to suggest that he is. And they also, they were opposed to the stimulus bill and they don't want to see it repeated because, you know, as a matter of policy, they don't like those kinds of economic remedies. So if they can indict it after the fact as being directly responsible for inflation, it behooves them to do that. They're not making a good faith argument.
- [13:55]
A
Meanwhile, I can report back from Davos that Joe Manchin was there being very self congratulatory and basically accepting everyone's congratulations for having single handedly prevented inflation from being even worse by preventing the stimulus from being even bigger. Yeah, well, thank you, thank you, Joe Manchin, for, you know, your selfless service in the aid of disinflation.
- [14:20]
B
But all the other OECD countries are seeing record inflation also, and they didn't.
- [14:26]
A
Have, which is definitely a data point that would suggest that the pointing fingers at Putin makes a little bit more sense than pointing fingers at Biden.
- [14:35]
B
Right, right. Unless you could say, and I was wondering about this, and we can cut it. But I'm, I was just curious, like you make that argument everywhere else has record high inflation, but the US is so influential that is our inflation contagious. Like the dollar is the dominant thing. So if the country that makes the dollars is having inflation, would it spread that way? Is that weird? Really?
- [15:06]
C
I've heard that argument from people who I think should know better and they sort of tied into dollar hegemony argument generally. But, you know, it just doesn't make sense to me. And I always think that when people are really bending over backwards that way to explain something that has, you know, several much more simple and obvious explanations that, you know, they have an investment in a very specific explanation that isn't that.
- [15:34]
A
I mean, there is a kind of attenuated way in which it happens. Right. Which is that when you have an inflationary environment, the Federal Reserve raises interest rates. When the Federal Reserve raises interest rates, the Dollar strengthens. The dollar is very strong right now. When the dollar strengthens, US Exports become more expensive for the rest of the world. So if you are a European or any other country that is importing stuff from the United States, then those imports become more expensive in your local currency. That then causes inflation to the degree that you import stuff from the United States.
- [16:08]
B
Good stuff.
- [16:10]
A
Should we talk about financial literacy?
- [16:12]
B
Because I think we should, because we have a lot to learn.
- [16:16]
A
I feel like we have a financial literacy program in this country. It is called Slate Money. And what we need is for everyone to listen to Slate Money and then everyone will become financially literate. But no, what's happening is that Michigan is it. Michigan has just become the 14th state, something like that, to mandate financial literacy education in high school. And I am on the record critic of what I have called the financial literacy industrial complex. And I am not a big fan of how a lot of financial services firms try to wrap themselves in the financial literacy flag and, and say, like, look at us, we're doing great things for the youth by giving them financial literacy videos on their phones or whatever. But like that said, I think a well constructed academic curriculum in a state that puts that curriculum together with academics who have studied what's effective and that doesn't just ask Charles Schwab or Robin Hood to give them a curriculum is a good thing. I don't have a problem with high school students learning the basics of what money is from people who are coming from a relatively sane point of view. So I am all in favor of that. I am kind of hilariously laughing at the idea that in certain places in Michigan, taking this financial literacy course will count towards your foreign language requirement. Because apparently finance is a foreign language.
- [17:58]
B
That's fair. I think it's deliberately so. Sometimes financial firms write things deliberately in an obscure way to make things seem very complicated. So you wave your hand and give up. So it makes sense to me that it'd be considered a foreign language actually.
- [18:14]
C
What do these programs actually entail? I'm curious, because I went to teeny, tiny, rednecky school in rural Alabama and there were 32 people in my graduating class. And our government teacher, who was also the basketball coach and the baseball coach and the assistant principal and so on our senior year had us do a six week long project where we just had to learn to fill out our taxes and also create a budget and find hypothetical employment. He said he was doing this because most of the kids that I graduated with didn't go to college. They went straight into the labor force. And he thought it would give them, you know, basic life skills that they, you know, would have before they graduated. And I always thought that was a great idea. But when we talk about financial literacy in this context, are we Talking about teaching 9th graders Options trading or are we talking about, you know, basic.
- [19:09]
A
Yeah, absolutely. No, no, no. That is exactly what we're talking about. We're not even talking about stuff as advanced as filling out your taxes. It's really basic stuff like what is interest, what is, like, a budget in terms of income versus expenditure, and like, you know, what is the concept of, like, living between within your means, what are taxes? You know, stuff like this that really do need to know to participate in a capitalist society. But along the way, no one necessarily teaches you. And if you don't grow up with parents who tell you about it, you know, that's a problem.
- [19:47]
B
Where it gets dangerous or weird is when people blame poverty on a lack of financial literacy. Like, if only poor people understood how to budget, then they wouldn't be poor. And it's like, yeah, you can understand how to budget, but if you don't have enough money to pay your bills.
- [20:02]
C
Not have any money to pay, they.
- [20:03]
B
Don'T matter, you know, And I feel like that happens a lot, you know, totally, 100%.
- [20:08]
A
And what you see a huge amount of is people, like, parachuting into poor neighborhoods and saying, like, we are going to save you by teaching financial literacy. And it's this kind of savior complex, which actually weirdly frequently comes from rich black folk parachuting into black neighborhoods, rather than rich white folk parachuting into black neighborhoods. But either way, it's the same kind of savior complex. The thing that, like, just had steam coming out of my ears this week was the African American billionaire, Mr. Jay Z Teaming up with Jack Dorsey, the guy who runs Block, which is a crypto trading outfit, used to be known as Square, and they have decided to set something up called the Bitcoin Academy in the Marcy project in New York City. And dear God, I like, can I just quote some of what they want to teach these kids in the project? Classes will be offered from June 22 to September 7 and will include what is cryptocurrency and what is blockchain? Is apparently a, quote, a financial literacy program titled the Bitcoin Academy. And I'm like, this is just the worst. Like, what? No, don't. No, like, and the idea. And also, like, what is money? And they're going to be like, money is this terrible thing that governments can just produce at will and it's worthless. But bitcoin is amazing, hard, trustless, the future. And it's a great place to invest. And it only goes, I don't know, I cannot. None of this can end well.
- [21:50]
C
They're basically going to teach you how to invest in the riskiest asset class available to you right now. When you're probably the least qualified person to do that.
- [22:01]
A
Or when you're. Yeah. And when you're like 13. Yes. Like, come on, come on.
- [22:05]
B
Maybe it'll go nowhere. I mean, have they actually done anything yet? Or is this the press release saying.
- [22:10]
A
Yeah, it's starting like the week after next.
- [22:12]
C
Is there an optional NFT class people can take?
- [22:15]
A
Almost certainly. They'll be like, we're mainly about bitcoin, but we will also branch out into, you know, normal basic financial literacy, things like Ethereum and NFTs.
- [22:27]
B
I mean, that's the other downside. There's. Financial literacy can be okay if it's teaching kids things they need to know. Then it veers into bad if it's teaching poor people that the reason they're poor is because they're illiterate about finances. And then there's the third tier, which is like financial literacy as marketing tool, where finance companies, people hawking crypto or whatever, say, we just need to teach you financial literacy. But what they're really teaching you is to love whatever problem product they're trying to sell you, which is a big component of all this. And I think a lot of those firms are involved, I think, in making some of these curriculum that are getting mandated in the states. Like, a finance company will come in and say, like, oh, we'll help you make your curriculum. And then the next thing you know, you're like marketing for Fidelity or something like that. Maybe not Fidelity specifically.
- [23:16]
A
My favorite ever example of this, and this is actually real, like I confirmed this happened, was a small local bank, I can't remember where, I think it was in Oregon, decided to sponsor some financial literacy classes for a group of like middle schoolers, or I think they were like 8, 9 year olds, I can't remember. So each of them was given $5. And what they did was they opened up their like kitty bank account and put the $5 into their bank account at the local bank. And they were like, look at this. And it had some interest rate. And they'll be like, you can grow over time, but it's safe here. And then if you want to withdraw your money, you can withdraw like $2 to buy or whatever and you can put more money in. And you know, basically just teaching kids like what a bank account is. And then the bank got acquired by some big national bank and implemented monthly account fees for people with a low balance and every single kid got their money wiped out immediately.
- [24:14]
C
I mean, that is a kind of financial literacy.
- [24:18]
A
It really is. I mean, that's the true lesson right there. I mean, so many of these curriculums are put together by banks and so many of them or financial services companies of one type or another. And so many of them are basically saying, like, trust the banks, they know what they're doing. And then there's also the bigger subtext to financial literacy as a concept, which is being financially healthy and especially like financial health for poor people is like, is on you. It's not a societal problem, it's a personal problem. And if you manage your finances well and you know, are responsible in a good, like Protestant kind of way, then you will do well. And then it places the onus of responsibility on the individual. When a lot of the problems surrounding poverty and predatory lending and all of these kind of things are societal. And you don't fix predatory lending by teaching people not to take high interest rate loans. You fix predatory lending by making it illegal.
- [25:21]
B
Yeah, if you ask people, if you look at survey data, the people who get predatory loans know that they are bad. They just often don't have a choice. It's not like they're choosing, you know, to go to the check cashing place for a loan. Like you go there out of desperation.
- [25:38]
C
Yeah, we also just have a lot of policy in this country that's designed explicitly to stigmatize poverty. And when you actually dig into it, you make lawmakers really defend it. They'll always say something like, well, you know, if we gave poor people this assistance mechanism, it'll just encourage them not to work and not to make money. As if any poor person is sitting around going, well, you know, I kind of like financially struggling, please enable me to do it further. It's built into tax. Almost every policy decision that we make on a regular basis, our orientation toward poverty and who we blame for it.
- [26:18]
B
I just was thinking about Elizabeth, your teacher slash principal slash gym teacher having to teach you how to fill out your tax forms. The real issue is that we have to fill out tax forms. The US is like the one country where you have to spend hours, months, feels like dealing with these tax forms. Or in most countries they, you know, send you a bill. They're like, okay, this is how much you owe this is how much you're getting back. Like that's the problem. Like, we shouldn't have to be wasting time explaining to kids what certain things mean. It's all backwards. We should make things simple to understand and therefore not have to teach them.
- [26:54]
A
So I have a idea which is that instead of living in some kind of a Hobbesian world where everyone has to compete with each other to try and grab financial stability, we could all live in a medieval world where we're all basically just serfs who work for a benign billionaire. And we live in housing provided by the benign billionaire and he pays us wages that he kind of decides what they are. And we work for businesses that are owned by the benign billionaire. And he will come down from on high and give us like a nice school or a nice playground or whatever, according to his whims and his benign nature. And so long as he has enough billions, then he doesn't really mind. And we can all live a kind of idyllic life. And ideally this would happen in some kind of tropical paradise. And we can all live in a tropical paradise and be happy living, you know, happily for and working for and be being more or less owned by a benign billionaire. And that sounds quite nice, especially if there are like tropical fruits involved, right?
- [28:10]
B
It sounds perfect. It sounds like, I mean, you dreamed it, Felix, but Larry Ellison made it real. Larry Ellison owns a Hawaiian island. And Bloomberg Businessweek, I believe, has a huge article out and podcast as well on what happened to the island of Lanai after Mr. Ellison purchased it for $300 million. And it's not quite the paradise that you've outlined, Felix.
- [28:40]
A
Damn it. You mean medieval serfdom isn't all it was made out to be?
- [28:45]
B
Well, I mean, there are two Nobus. Now. One of the first things Mr. Ellison did was get a nobu built because he didn't like the food.
- [28:54]
A
Yeah, he said the food was terrible. So he brought in two Nobus. And there are two Four Seasons. And if you manage to stay at the Four Seasons for just one or two thousand dollars a night, you're doing quite well. They can go up to like over $10,000 a night very easily. But obviously none of the islanders can afford that.
- [29:14]
C
If you're an islander, the extent to which everything he does touches your life is insane. You are renting from an Ellison owned company. You work at an Ellison owned company. And by the way, if you get fired from your job, they can take away your housing. You shop at an Ellison owned grocery store, which determines prices there's nothing on the island that he doesn't own. So it's. It really is kind of feudal system.
- [29:36]
A
Almost my favorite. Well, there are lots of great parts of the article, but there was one amazing thing, which is that if you want to run a business, Your lease is 30 days long. And he just like renews your lease every 30 days, which makes it impossible to invest.
- [29:52]
B
Yeah, no bank will lend to you if you're subject to a 30 day lease. I can't even imagine that the apartments were in 30 day leases, were they?
- [30:00]
A
No. But as Elizabeth says, there is a clause in the apartment saying that if Larry Ellison fires you, then you have to leave the apartment.
- [30:08]
B
The piece focuses on this one man who had moved to Lanai. It was like a paradise. He's living in this Hawaiian island, helping his friend build a woodworking business. They get a little bit of work for Ellison when he's just like setting up on the island, I think maybe at the Nobu or maybe at the Four Seasons, whatever. And then next thing he knows, Ellison buys the guy's woodworking business. So this man is specifically out of a job. And then he starts delivering newspapers. But then Ellison changes the Four Seasons newspaper contract and switches all of it to iPads so they don't need newspapers anymore. So the guy's out of another job and now he's, you know, dependent on charity to live, basically. And this is kind of how the fortunes of a lot of people on this island go after Ellison comes there and like ostensibly makes it better for everyone, which he doesn't. And I can't believe this is the United States. Like, I don't understand. They describe these town meetings where the Ellison people come in and they're like, this is what we're doing. And then people ask questions that don't get answered. How is that America?
- [31:11]
C
This is kind of what an actual privatized, you know, pseudo nation state would look like. There's an actual, you know, vein of thought in Silicon Valley right now that's neo reactionary that says that this is kind of an ideal state of affairs where instead of having a democracy, you have a fiefdom run by a CEO style executive. And somehow that makes everything more efficient and everyone's taken care of. And you can see in this real world example that's clearly not the case. Although I do think you have to admire Ellison's decades long consistent commitment to being horrible. If I were going to guess who had done this, I think Ellison would be at least in my top five. It's Completely unsurprising.
- [31:58]
A
There's a local Hawaiian, and it's worth noting here that the word Hawaiian refers to, like, native Hawaiians, not to just anyone who lives in Hawaii, but there is a local Hawaiian man who is particularly cares about sustainability, which is quite high up, apparently, we are told, on the Larry Ellison priority list, and who has been trying to get a meeting with Larry Ellison for over a decade to talk about whales and things like that and has never spoken to him. Ellison is a very remote landlord and his whims, like, manifest themselves in the appearance of Nobus and the lake. But there is no real. There's certainly no accountability, but there's not even really much in the way of visibility. And then there's this wonderful story about Tom Cruise where, like, Tom Cruise comes to the island because Larry Ellison likes to hang out with his celebrity friends and he, like, totals the Jeep or whatever. And because everything like this police force is owned by Larry Ellison, the records are owned by Larry Ellison. Like, there's no record of this ever happening. And there was one guy who was actually fired from his job for even mentioning that Tom Cruise had ever set foot on the island.
- [33:12]
B
I put my tinfoil hat on and was reading that anecdote and thinking about, of course, succession and thinking like, we can't really know what happened with Tom Cruise and the Land Cruiser. And like, I don't know, I was just starting to spiral. Because in the show succession, for those who don't listen, the son of the rich patriarch gets into a car accident where someone winds up dead. I'm not saying Tom Cruise has killed anyone, to be sure, but maybe he did. I don't know. We don't know. It's all covered up on Larry Ellison, but it is.
- [33:43]
A
But. But it is incredibly similar. Like, you know, something. Something happens and then if you're rich enough and own, Own and control enough of the infrastructure, which Alison totally does in the night, then, yeah, no one need ever know that you were even that wild.
- [34:00]
C
Emily's going to get strange voicemails. Scientologists.
- [34:05]
A
This has nothing like. Larry Ellison, to my knowledge, is not the Scientologist, you know, like that his ability to cover up whatever happened to Tom Cruise on the island of Lanai has nothing to do with Scientology.
- [34:17]
B
I'm not saying Tom Cruise did anything wrong on the island. To be clear. I am looking forward to one day seeing his latest movie. As far as I know.
- [34:27]
A
As far as we know, there was no one else in the vehicle and.
- [34:29]
C
No one was hurt, as far as we know.
- [34:32]
A
Should we have a numbers round. Elizabeth, what's your number?
- [34:36]
C
My number is 1.9 billion. I'm going back to giant numbers now, and this is from a story that is personally devastating to me. And it's that there's a giant Sriracha shortage now because Mexican droughts mean that we don't have enough chili peppers in this country. And it turns out that the US Is the largest importer of chili peppers, are responsible for 30.9% of total volume.
- [35:03]
A
Wait, wait, so we 30.9% of what is what?
- [35:06]
C
Total chili pepper imports, or at least imports for whole dried chili peppers, most of which we get from Mexico.
- [35:13]
A
So wait, 30.9% of US chili pepper consumption is imported? Is that what you're saying?
- [35:19]
C
No. Total imports in from one country to another in 2020.
- [35:24]
A
Like total trade?
- [35:25]
C
Yes.
- [35:26]
A
Like, the global chili pepper trade is like 31% American. 31% is going to America. We know that the rooster sriracha sauce, which is made by a company called Hoi Fong, is not shipping any more Sriracha until September. But I feel like there are other Srirachas out there, you know, and that all you need to do is realize that you can get chili sauce in many different ways from your local Asian supermarket. That maybe isn't Hoi Fong, which is the one that everyone buys. And maybe this is an opportunity to discover a whole new world of interesting new chili sauces that aren't the rooster one that we all just reach for reflexively.
- [36:11]
B
Also, I remembered back in, like, 2013, also, Huy Fong warned of a Sriracha shortage because there was, like, people in the neighborhood where it produced the sauce were complaining about the smell or something. So it got all, like, crazy and warned about a shortage of Sriracha, and everyone, like, panicked. I feel like. I don't know. I'm not saying I don't believe that there's a shortage of chili peppers or whatever. I'm sure that that's all legitimate.
- [36:39]
A
I mean, there is a big drought in California and New Mexico, which produce a lot of chili peppers. So we do believe that.
- [36:45]
B
Yes. But there's something going on where they know that if they, like, make a thing out of it, it's going to. I don't know. Again, like, the Tom Cruise thing.
- [36:54]
A
We don't know. Although this comes. This was like. I don't know. There was a letter they sent to their suppliers in April, and it kind of got leaked in June. So.
- [37:02]
B
Okay.
- [37:02]
A
I don't know.
- [37:03]
B
Okay. No shade.
- [37:04]
A
Yeah. But I still. Wait. I Think I've forgotten. What's the 1.9 billion?
- [37:08]
C
That's the amount of the dollar amount of chili peppers we import from Mexico.
- [37:13]
A
Ah, that feels low. If I had to guess how much chili peppers we were importing from Mexico, I would have guessed something much more than just a couple billion. But maybe we just produce so much in New Mexico that we don't need to.
- [37:25]
C
Yeah, it is just whole dried chili peppers. That's not the. The entirety of it. That's just the primary thing that we import.
- [37:32]
A
I mean, this is the secret of the rooster sauce, right? Is that they add a lot of sugar to it. The. The other chili sauce is a not as sweet, so they're not as popular. The way you make money in the food industry in America is by just adding sugar to things. My number is 5.2 million. So this is the weirdest story I've come across in ages, and I don't understand what's going on. And I've looked into it and I've read a bunch of articles, and I still don't understand what's going on. 5.2 million is the number of dollars that was awarded first by an arbitrator to a Missouri woman who sued her boyfriend for giving her HPV after they had sex, and specifically after they had sex in his car. And then they immediately turned around and said, well, I'm not going to try and get it from my boyfriend. I'm going to try and get it from my boyfriend's car insurer. And so now the Missouri courts have awarded and $5.2 million to this woman from Geico. And GEICO needs to pay $5.2 million because this woman had sex with her boyfriend in his car and he had throat cancer and had been told that the throat cancer had hpv. And apparently he didn't tell her that, and then she got hpv. And like, to be clear, like, there is like a 75% chance that if you're an adult in America, you will get hpv. Like, everyone winds up getting this, but somehow some arbitrator then seemed to decide that this was worth $5.2 million. Geico didn't even find out about it until the court said, well, yes, obviously this is geico. Like, GEICO insured the car and they had sex in the car. And therefore it's on Geico. And now Geico is being asked for $5.2 million. And it is the weirdest story. And I need someone to explain to.
- [39:27]
C
Me that's kind of like if you had sex in an office applying for a workman's comp. If that.
- [39:33]
A
If you got hpv. Yeah. So the main thing that I really want you Slate money people to explain to me if any of you guys are in Missouri or have been following this case, is like, what was the stated reason why there were $5.2 million worth of damages here? Because that's the first thing that I really don't understand. And then everything else kind of like waterfalls from there.
- [40:02]
C
How does she. How does she know?
- [40:04]
A
And like, obviously they were having sex in other places that weren't the car as well. You know, like, the whole thing is very odd.
- [40:11]
B
Did you read the. The documents? It sounds so.
- [40:14]
A
So all of the court. The court documents are all, like, procedural, and it's all like, you know, like, once this thing has been arbitrated, like, can GEICO be held responsible? And, you know, which state should this be litig. And there was a whole thing about whether the plaintiff and the defendant needed to be named. And, like, the man is named in some suits but not others, and the woman is just known by her initials and all of this stuff. The amount of time they spend talking about whether the man should be known by his initials or his name seems to dwarf the amount of time that anyone spends saying, like, wait, why is this $5.2 million in the first place?
- [40:53]
B
There's gotta be something we don't understand. It's like in the 90s when there was the McDonald's hot coffee suit and the details were covered in the press in one way, which was like, can you believe this idiotic legal system where a woman can get a lot of money and she just spilled coffee. But then if you, like, dive deep into the whole case, which I only did because I listened to, you're wrong about. You find out, like, the woman was very, very badly injured. And there's like, a lot of circumstances which make it all make sense. You know, it wasn't so frivolous. So that's like my instinct to be like, there's something else going on here.
- [41:26]
A
Yeah, that's what I'm trying to work out. Like, can HPV like, cause $5 million of damages? I mean, maybe. I guess there's kind of a hint running through the court filings that there's collusion between this woman and her ex boyfriend. And they, like, colluded, even possibly with the arbitrator. The arbitration proceeding took one day, and that they somehow colluded with the arbitrator who knew that he could award, or he or she, I guess, could award $5.2 million because the ex boyfriend would not be asked for that money and it would just they would immediately turn around and ask Geico for it anyway. Litigation is ongoing.
- [42:07]
B
I don't know how to follow that, but I will.
- [42:10]
A
Well, you're gonna have to change the order.
- [42:13]
B
My number is 50,787. That is the number of out of gas calls fielded by AAA in April. In other words, people calling AAA for help because they have run out of gas. And it was a 32% increase from April 2021. And the reason, according to the Washington Post piece and according to AAA for this big increase is because gas is more expensive now. So people don't fill up their tanks as much. They just like top off or get like do dollars worth or whatever. So they're more apt to run out of gas. So I'm here to tell people to please make sure you have enough gas to drive your car to where you need to go.
- [42:56]
A
Don't run out of gas people. It can ruin your entire day. All right, I think that's it for Slate money this week. But we are going to have a Slate plus on something we will work out what we don't just throw this show together, you know. Many thanks to Jessamyn Molly, the amazing Jessamyn Molly who managed to produce this show from Savannah, Georgia but she is still at Seaplane Armada. We love them. Many thanks to Shannon Roth and the whole Slate crew. Many thanks to you guys for emailing us on slatemoney slate.com we love those emails. We are going to have a Slate plus segment where we respond to one of those emails. Wanted to know about what Gary Gensler was saying and payment for order flow and that kind of thing. So we're going to talk about that on Slate Plus. Market structure, bit of a nerdy Slate Plus. Otherwise we will be back next week with even more sleep money.