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- [00:10]
A
Hello and welcome to the One Dimensional Checkers episode of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. I'm here with Emily Peck of the Huffington Post. Hello, I'm here with Anna Shymansky. Hello, and welcome. We are going to talk about Donald Trump, who has been playing One Dimensional Checkers on Twitter with China. What could possibly go wrong? We are going to talk about Jay Powell. He cut rates. We haven't had a rate cut in this country for over a decade. That's kind of a big deal. We are going to talk about generic drugs, which cost more than you think they might. We are going to talk about Equifax, which is just over. Oh, my God, what on earth? You know, we're gonna be a little bit more coherent than that, but not much. We're just gonna all sit around going, oh, my God, what on earth. We are even gonna have a whole Slate plus segment on the latest college scandal in Illinois. It's a jam packed Slate Money, so stay tuned. Okay, this is gonna be an amazing August episode because weirdly and strangely for August, there's lots of news and we are literally fighting with each other about what news are we going to cover. But the big, big news of the week, which we have to cover is the huge events in markets this week. Because we had this one, two punch on Wednesday, or technically, I like to think of it as a 1, 2, 3 punch, that at 2 o' clock on Wednesday afternoon, the Fed came out with its rate cut announcement. And they cut rates by a quarter of a point, the first rate cut since 2008 in over a decade. It's the longest that the Fed has gone without cutting since 1954. Huge, huge, big thing. Markets kind of don't move, even though it's a huge, big thing. And then half an hour later, Jay Powell does his press conference. Markets move all over the shop. Because Jay Powell, apparently, I don't know, is not the world's great press conferencer. And then after the markets tried to understand what on earth he was trying to say in his press conference, they all try and catch their breath. And by about 1:25 on Thursday afternoon, they've more or less caught their breath when, bang, what happens? But Donald Trump commits Twitter. He comes out on Twitter because this is what he does. And he announces 10% tariffs on $300 billion of Chinese goods starting in September. And all hell breaks loose. And the 10 year bond yield crashes down to unprecedented levels. And so all I have is Questions and all that Anna has is answers. So I feel like Anna is going to give me some answers to this. Should we take this in chronological order? Should we start with the Fed cut and then do the tweet or are they kind of connected? This is one of the big questions I had is like, did Trump announce these tariffs just because that was the only way that he reckoned he could persuade the Fed to keep on cutting?
- [03:24]
B
Which is interesting because if you believe the Fed funds futures, it in fact did have that effect.
- [03:29]
A
So, yeah, Fed funds futures, according to John Others at Bloomberg, the probability of a rate cut in September went from 64% at like 124 to 95% at 127 after the tweets came out. It was a huge move because Trump.
- [03:48]
C
Trade war intensification means that the Fed will have to give the economy a little bump again because he's messing with things.
- [03:57]
A
There was a new word, there was a new word in the Fed statement this month and people read the Fed statement very, very, very closely. And there was a brand new word that they haven't used for a very long time. And that word is global. When they were explaining why they cut rates, they weren't talking about what was happening in the US Economy so much as what they were talking. They were talking about what's happening in the global economy. And what Trump's tariffs are going to do is they're going to have a deleterious effect on the global economy. And the Fed is now looking at the global economy and that is what, what did the assumption that certainly the markets have is that means they're going to rate cut rates again.
- [04:35]
B
Right? Because you really have to talk about these things together. Because when you listen to Powell's statement, you have much of it saying like all of these things are going pretty well and then all of a sudden, all of which things in terms of consumer spending, consumer confidence, then certainly the.
- [04:53]
A
Markets are all time highs.
- [04:55]
C
Unemployment, 30 year low.
- [04:57]
B
Exactly. But then you're moving into the trade uncertainty and on top of that you're in this he doesn't say, but everybody knows is true, is that the US Rate was becoming a little bit of an outlier in terms of, in relation to other rates. It was so much higher.
- [05:14]
C
The US Trump said in his tweet.
- [05:16]
A
Essentially the US rates were 2 and a 2 and change and everyone else is basically at zero.
- [05:21]
C
And his tweet, when he complained, Trump tweeted, after the Fed cut rates, he tweeted like this isn't good enough. Essentially and this is different.
- [05:28]
A
Why can't we have zero rates like everyone else? They all have zero rates.
- [05:32]
B
Why can't I have zero rates also tax our banks?
- [05:35]
A
So, so, so, so this is a good question, Anna. Is that a legitimate criticism? Can you compare nominal short term interest rates in US versus Europe versus Japan and say this is an apples to apples comparison and the US is an outlier?
- [05:52]
B
It's not nearly that simple. However, if the US had not cut rates and moving forward continued to not cut rates, it appeared that the US was going to be on a bit of a different trajectory from the rest of the world. And that would have suggested that the US dollar would have strengthened quite a bit. So it's not that they're trying to weaken the dollar, it's that they're trying.
- [06:14]
A
To prevent it from strengthening. And this is, I mean, at least Trump now seems to have decided whether not he wants a strong dollar. There was this famous bit at the beginning of his presidency where he called in his national Security advisor or something at three o' clock in the morning and said, can you remind me whether I want a strong dollar or a weak dollar? I forget. He doesn't forget that anymore. He is now 100% on board with the idea of wanting a weak dollar, which is, I'm going to say, pretty much unprecedented, at least in my memory. Like there was this running joke for decades that the only thing that the Treasury Secretary was ever meant to say about the dol recitation of saying a strong dollar is in the national interest. And they would just keep on saying that. And if they said anything other than that exact form of words, then the FX markets would freak out. Now we have a president who's like saying, no, we need a currency war, we need a weak dollar. And somehow the FX markets have managed to shrug that off.
- [07:14]
B
Yeah, I mean, the big takeaway here, I'd say are like maybe two or three main things. One, that the trade war is legitimately appearing to affect the economy. I mean, what we're seeing that in investment, that is one of the areas where we're definitely seeing weakness.
- [07:27]
A
So explain to me what business investment.
- [07:30]
B
Is in terms of companies engaging in capital expenditures. Like they're actually, they're the companies investing.
- [07:38]
A
So basically the opposite of buybacks. If, if they, if they spend money on, on themselves, that's capital investment, that's business investment. And if they use it for stock buybacks, that's just giving money back to shareholders because they have nothing better to do with it. And what we're seeing is A trade war. If they have money because of the trade war, they're more likely to give the money back to shareholders and less likely to reinvest it in.
- [08:01]
B
Well, I mean, it's just that in general, if you're thinking like, okay, am I going to spend a ton of money, you know, creating a new plant, or am I going to spend a ton of money investing in intellectual property, whatever, when I have no sense of what's going on. Because, you know, tomorrow all of a sudden, Donald Trump announces a new, like, winging this trade war. So it certainly has affected markets and then also it's affected markets in another way and it's affected global markets in another way, which is that we're seeing this global slowdown. And there are a number of things that are causing the global slowdown. However, it's almost certain that part of what's causing the global slowdown is what's happening in China. And then that's affecting, that's also affecting Europe. Other things are affecting Europe as well. But we're seeing this manufacturing slowdown. And that's a big, a big part of why the Fed did this as well.
- [08:47]
A
Right? If people don't want to invest in Chinese manufacturing because they're worried about a trade war between US And China, if they don't want to invest in US Manufacturing because they're worried about retaliatory tariffs, which is going to get imposed on the US by, you know, any number of potential countries that Donald Trump could wake up one morning and decide he wants to be in a trade war. And with. If they're not investing in British manufacturing because they're terrified about a no deal Brexit, like, that's a lot of places where they're not investing in manufacturing. And even if they do invest in like, places that aren't China and the US And Britain, all of those places are potentially at risk of an American trade war. Like, there's literally no country in the world that Donald Trump can't wake up one morning and decide he's not at war with.
- [09:35]
C
He's just this big global wild card that's really screwing things up for everybody.
- [09:40]
B
So it's finally.
- [09:41]
A
And that's why the Fed is cutting, right?
- [09:43]
B
Yeah. I mean, ultimately, I mean, there's. You could also make the argument that, well, although it's connected, right, is that they're doing like the, what they're calling like insurance cuts, this idea that they want to keep this recovery going. And this is what happened in 95 and 98. You had this kind of a few cuts. Not that it was supposed to be the start of, like, this long easing cycle, but they were a few cuts to just kind of juice the economy a little bit so that it would continue growing for longer.
- [10:09]
A
So can you explain what a mid cycle adjustment is? Because this is like, if anything, the second biggest thing that happened in the markets this week. The first biggest thing was the Trump tweets. The second biggest thing was when Jay Powell comes out at the beginning of his Fed conference and uses the phrase mid cycle adjustment. And this sounds like the wonkiest phrase you can possibly imagine, but the minute that the words mid cycle adjustment come out of his mouth, every single stock market just falls off a cliff. So explain what that is and why that's such a big deal for him to say it.
- [10:43]
B
Well, so the issue is, what he appeared to be trying to telegraph was that this isn't the beginning of a easing cycle. So it's not as though, like, we're.
- [10:55]
A
Still in the tightening cycle, but we're cutting rates.
- [10:58]
B
Well, yeah, but the. But the idea that, like, okay, he didn't want to say, we're definitely gonna be cutting more, but he didn't also wanna say, but we're not not gonna be cutting more.
- [11:09]
A
I mean, he did wind up having to go back on himself. And it's kind of interesting that as he was talking, the stock market goes down. As far as I know, up at that lectern there, he doesn't have like a ticker showing what the market is doing. But fortunately, he does have a bunch of wi fi connected reporters in front of him. And they actually say, excuse me, Mr. Powell, but while you've been talking, the stock market's been plunging off a. And he did do this backtrack thing where he's like, well, look, in theory, a mid cycle adjustment could be that we've been hiking rates, and then we do a little rate cut, and then we keep on hiking rates. But then he said, but I don't think that's going to happen. He said, I think that it's probably more likely we'll do another rate cut than another rate hike. And then the market kind of breathed a huge sigh of relief and came back up again.
- [11:57]
B
Yeah, I mean, to be fair to Powell, like, this is legitimately really hard to explain because there are so many traditional economic signals that would suggest, like, why are we cutting rates? So he has to signal like, okay, we get all of that, but then we also have all of this stuff going on that in theory, we're not normally supposed to care about. Like the Fed isn't normally supposed to be thinking as much about the global economy, which they obviously always have, but they're not necessarily supposed to. And then on top of that, he has to signal like it's possible we will have more rate cuts, but don't assume and don't start price again that we have more rates. I know you're already doing that.
- [12:34]
A
Why does he need to signal that?
- [12:35]
B
Well, because I do think legitimately Powell, and not just Powell, but all of them do actually want to be data dependent and they don't want to feel that the market has so clearly like tied in rate cuts that they almost feel like they have to do it. They want to be able to actually respond to the data as it comes in. And so I think that's why he wanted to say what? Well, look, we're not promising either way.
- [12:57]
A
Here, but the fact is that the market has done a much better job of knowing what Jay Powell is going to do than Jay Powell has.
- [13:08]
B
But that's also because I do think, even though he would never admit it, they're also kind of reacting to the markets. Right. So I mean, like it's, these things aren't happening in a vacuum. I mean, like he's seeing, okay, like everyone's saying, like, these are priced in, these are priced in, these are priced in. Is that the only reason he's doing it? No, it's not.
- [13:23]
C
One thing I thought was interesting, it's more of a side note, but Ben Castleman at the New York Times on the Daily was talking about how typically the Fed doesn't really think about, you know, normal people, regulars, low income people, inequality, things like that. So the fact is that a lot of people besides Donald Trump wanted them to do the rate cut. And in part that's because the expansion hasn't really trickled all the way down yet. It's sort of starting to. Felix mentioned a few weeks ago, like black unemployment is finally going down. And so a rate cut could actually be really good for people at the bottom because it puts more pressure on employers to, you know, raise wages and to hire more. It keeps things going. When can finally we can see some economic benefits.
- [14:04]
A
I want to talk about the dual pay scale. I want to talk about the dual mandate here because I think this is super fundamental. The Fed has literally two jobs. It has one job which is to manage inflation and it has another job which is to maximize employment.
- [14:19]
B
Right.
- [14:20]
A
And what's fascinating about what you're saying, what Ben's saying is that in terms of maximizing employment, our headline unemployment numbers are good.
- [14:29]
C
Right.
- [14:30]
A
But they aren't saying everything. There is, you know, the employment to population ratio. We've talked a lot on this show about, you know, how there are many fewer people working than theoretically could and probably should be working. And that's especially true in lower income communities and communities of color. And so the Fed, in terms of maximizing employment, now has the opportunity to go ahead and do things with a rate cut which will improve the employment prospects of people who are out of the labor force right now, but could come back into the labor force. And so that's a reason to cut rates. Then, on the other hand, they have this other part of their mandate, which is inflation. And for kind of, I want to say, the first time ever, the Fed has explicitly said we are cutting rates in order to get inflation up to the level where we want it to be at. It has been too low for too long, and we are not comfortable with that and we want it to be higher. And, you know, inshallah, if we manage to get things right with this rate cut, inflation will rise to where we want it to be. And I can never remember the Fed ever doing that in the past. It's always been, you know, we raise rates to prevent inflation. Never, we cut rates to create inflation. And that I think is, is kind of historic.
- [15:52]
B
Well, but you have had. We keep rates extremely low because inflation isn't high enough.
- [15:57]
A
Right, right.
- [15:57]
B
So it's a similar, similar idea.
- [16:00]
A
But they, but, you know, this is, this is something which they could have done a year ago. You know, there wasn't any inflation a year ago and they didn't cut rates a year ago. But. And there isn't inflation any, any inflation now. And they're cutting rates now and they're saying, well, part of that is because there isn't any inflation. You're like, well, why didn't you do it a year ago?
- [16:18]
B
Right. Now this is, though, on the one hand, it is very clear that I think part of why they're doing this is also because they probably hiked too much last year.
- [16:25]
A
Right, but so is this an admission that they made a mistake?
- [16:28]
B
They will never say that. Of course. They will say like, no, this is clearly because data changed, but we all kind of know.
- [16:32]
A
Right.
- [16:33]
B
But the point I do want to make, though, is that if you look at the history of the last, like, you know, 50 years or so of monetary policy, like since the Fed became its kind of modern form, the Fed always makes mistakes. They constantly make Mistakes. It's just that what they do is still so much better than anything else we, any other our options. But I think sometimes there's this idea that, like the Fed making mistakes now is a new thing. It is just every single cycle, they either cut too early, they cut too late. It's, it's because no one really knows. Nobody knows where the neutral rate is. No knows, you know, our start. Nobody knows any of this. It's all just kind of working with the data that they have and trying to do the best that they can.
- [17:14]
A
So did they get it right? I mean, I feel like in terms of the rate cut, most people are like, yeah, okay, maybe they got it right, they should have cut rates. The criticism, I think more came in terms of the press conference, but certainly in terms of what Donald Trump, immediately after the rate cut, came out and said, no, I'm sorry, this rate cut was shit. You should have cut by twice as much and you should have made it clear that you're easing and I want you to be on the path down to zero. And I'm going to raise. Well, he didn't quite say I'm going to go raise tariffs.
- [17:46]
C
Such a little baby.
- [17:48]
A
But I think that he has people on his side who aren't babies. There are definitely people out there saying inflation. If you genuinely want 2% to be a symmetrical target for inflation, and we haven't been at 2% in a decade, then you need to be much more aggressive about getting inflation back up to your target.
- [18:07]
B
Right. And I. So two things here. One, I think you're right. I also think, even though the Fed has never said it before, I do think it is important now that the, that the Fed is saying we actually want to try to get more people into the workforce. I think that, that, that is really important. But I also think there's something else to think about here when it comes to the trade war and this idea that Trump's activities are potentially getting the Fed to cut rates more. So the reason that he's doing that is because in his mind, if we cut rates significantly, we're going to have this huge boom in the economy. But the reason that the Fed would be cutting rates is because his stupid trade war is having a negative impact on the economy. So, like, this is the thing. Like it, it's, it doesn't work.
- [18:48]
C
I don't think Trump understands, I'm pretty sure that he doesn't understand the connection between his trade war, really, and interest rate.
- [18:54]
A
No, I think I have sophisticated. I actually talked to Jonathan Swan are, you know, amazing. He knows stuff about Trump. And what Swan said to me, this is the chief White House correspondent, Axios. What he said to me is, no, like, Trump is not doing, like, whatever the Trump version of four DGs and like, you know, starting a trade war because he wants something. The Fed to do something. No, he is starting a trade war because he thinks that the Chinese promised to buy a bunch of agricultural goods and then went back on that promise. And he's angry. And so he's like throwing his toys out of the pram and something.
- [19:28]
B
Something fentanyl.
- [19:30]
A
And that's genuine. Like, it's. He's the one thing you can say about Trump's tweets. Yeah, as. As, like, you know, as. As weird and childish as they may be is they're nearly always genuinely honest. He doesn't, you know, he doesn't have a filter there.
- [19:46]
C
There's lies in the tweets.
- [19:47]
B
Honest in terms of what he's thinking, not honest in terms of actually factual.
- [19:52]
C
Okay, yeah, like, they're just from his, like, lizard brain. Yeah, yeah, okay, that's fair. That's fine.
- [19:57]
A
And so, yeah, I think, honestly, it doesn't feel like it here when these things come in such quick succession, but I think it was a coincidence.
- [20:06]
C
Oh, it was 100% a coincidence. I just was talking to some academic and she was explaining that there's this bias people have towards, you know, like powerful white men where when they make mistakes, you assume it's strategic. So you think, oh, they're smart and they know what they're doing. This is all strategy. This is all so cunning. They're playing, what is it, three dimensional chess, when it's just like, they're screwing up. And if it was anyone else, if it was like a woman or a person of color would be like, oh, they're really messing up. They don't know anything. But with people like Trump or like Boris Johnson or something, we think it's their strategy to play dumb. No, they're just dumb.
- [20:44]
B
Exactly. It's one dimensional checkers is what he's playing.
- [20:48]
A
Oh, you found your Pfizer notes. I did.
- [20:50]
C
It was just on the back of the Fed chair.
- [20:53]
B
Look at that.
- [20:54]
C
I found my Pfizer notes.
- [20:55]
A
What do they say?
- [20:57]
C
Okay, okay, they say that, but on Monday, Pfizer announced that it was giving its off patent arm to Myelin Pharmaceuticals in a big drug deal.
- [21:09]
B
Different type of drug deal.
- [21:11]
C
Big drug deal.
- [21:12]
A
Big drug deal. This is not kilos of cocaine in suitcases, but this is Viagra.
- [21:18]
C
Livor Viagra, a bunch of formerly patented drugs. Extremely profitable Pfizer.
- [21:23]
A
I did not know that Viagra was off patent.
- [21:25]
C
I think it was just in the past few years. You can write in and tell me if I'm wrong.
- [21:30]
A
Is there like a generic Viagra I can get now?
- [21:33]
C
Yes, were I so inclined.
- [21:36]
A
I mean, as a habitual Viagra, I would love to save money on my Viagra habit.
- [21:42]
C
So their CEO at Pfizer, his strategy is to focus on just patented drugs and get rid of all the other stuff. And they did a deal also, I think this year where they got rid of like some over the counter kind of drugs. They gave that stuff like Advil to Glaxo. So he just wants to narrowly focus on patented drugs, which is kind of a gamble. And I, it's not clear to me, like why he thinks it's going to work. Actually.
- [22:04]
B
His focus is supposed to be on kind of innovative, especially cancer drugs and this kind of like new classes of drugs. And partly this has to do with just the generic market in general has become significantly more competitive and it's just very, very hard for people to make money in it. So it, Pfizer is thinking, okay, like this is just going to be a, a drag on us. So let's focus our efforts. Although honestly there are a lot of market participants who agree with you, Emily, who think that this actually was not a good move. I think this actually made them less diversified.
- [22:35]
C
Yeah, because generics and over the counter drugs give you a steady stream of revenue. And patented drugs, I mean, that's really like, that's like playing, that's gambling. That's the lottery. Like you get, you could get a Lipitor, you get a Viagra. But there are other drugs that are duds. Like they had a couple of drugs they had to, they abandoned an Alzheimer's drug recently, a Parkinson's drug, there was some other drug they got rid of.
- [22:57]
A
I see it a slightly different way, which is that they're basically taking over Mylar. Is it Mylar or Mylan? Mylan. There you go. Mylar is the shiny stuff that you wrap yourself in after a marathon. Mylan is the company that was really suffering on the stock market. It went through a whole bunch of negative publicity about EpiPens. And what Pfizer is doing, if you look at this is they're basically kicking out all of the senior management of Mylan. They're replacing them with Pfizer, people who are taking with them all the Pfizer drugs. And what you basically have is Pfizer people running the off patent portfolio of Pfizer drugs at a company with a name that isn't Pfizer, but it's still basically Pfizer. And they're adding to their portfolio the EpiPen and a bunch of other Mylan drugs. And then what you're really doing is you're seeing Pfizer splitting in two. You know, you're seeing Pfizer splitting into the patenty bit and the off patent bit. They're adding a bunch of Mylan drugs to the off patent bit. And then shareholders can make the decision like, do we want to invest in patented drugs? In which case we buy Pfizer, do we want to invest in off patent drugs? In which case we invest in my land and you allow the shareholders to decide which one they want to hold. So in that sense, I don't think that strategically it's so silly. If you like the Viagras and the Lipitors and even the EpiPens, then you buy Mylan. If you like the monopoly profits you get from patented drugs, you buy Pfizer. And if you kind of like them both, you buy them both.
- [24:32]
B
And for Mylan, this also does make some sense because they do need to be able to generate a bit more cash because even though this deal is there, the new company is going to have a significant amount of debt on it. Part of the reason Myelin is doing that is even though that is the case, they still will technically be less levered than they currently are. And like, specialty generics don't necessarily make a ton of money, but specialty generics do. And they're going to be bringing that in. And then so in theory, it's going to be easier for them to pay down their debt as well.
- [24:59]
C
And maybe there's a.
- [25:00]
B
Which might be boring, but it's important.
- [25:01]
C
When other Pfizer drugs go off patent, maybe they can. Myelin can get in there first because whatever generic company gets to the off patent drug first, they get like a mini monopoly, you know, when something's off patent.
- [25:11]
A
One of the very interesting things that has been happening in pharmaceuticals for the past few years is the massive price hikes of off patent drugs. This is what, what was that company that, you know.
- [25:25]
C
Oh, the worst person in the world.
- [25:26]
B
Martin Shkreli.
- [25:27]
A
Not Martin Shkreli, No. Anyway, a bunch of different companies who aren't just Martin Shkreli would do this.
- [25:33]
C
Mylan did it with the EpiPen.
- [25:35]
A
Yeah, it was Valiant. It was big companies whose entire business model was we buy up drugs which are Cheap because they are off patent. And what we do is we make them expensive. And what the Economics 101 says is that if you make them expensive, well, because they're not patented, any number of other people can come in with the identical drug and sell it for cheaper. In reality, given the strictures of FDA approval and various other things, that doesn't happen. And you can raise the prices of drugs, including epivens, but many other things as well, by thousands. You can take bills that used to cost 50 cents and start selling them for $50 and no one will come in and price compete you down. This is what's happening with insulin right now. Like the cost of insulin in the United States has been going through the roof, even though insulin has obviously been off patent for decades.
- [26:27]
B
Disgusting. Yeah. Although I will say that the vast majority of actual consumption of drugs are generic drugs in the United States.
- [26:36]
A
Right. That's the problem.
- [26:38]
B
Right. But they're not necessarily. They're lower cost generic drugs. You're not necessarily. I mean, it is true that there are instances of what you're saying that is accurate. Although in the actual overall generic market it's becoming much more competitive and prices have been coming down.
- [26:53]
A
That's the other thing. That's this new book out about generic drugs which is saying that insofar as they are coming down, even that isn't great because a lot of them are being made in India in factories that the FDA has very lax control over and are kind of, to put a technical term, shit.
- [27:09]
B
Yeah, I mean, it's, it's interesting, I think that if you look at the drug market in developed markets versus the drug market in developing markets. Although what this particular book says is really interesting and I think somewhat disturbing in general, the regulations we have around generic drugs have enabled a generic market where people can get more competitive costs for these drugs for drugs that are off patent, for a lot of these drugs. That is not the case in developing markets where almost all the drugs are being purchased are not generic. The reason is because they really can't trust the drugs are good. It's like 10% or so of the drugs are not good. And so then people just don't use them at all. And part of the reason for that is because the regulations that you have in a lot of developing markets are not regulations that actually make things safer, they actually make things less safe because they make it really hard for different competitors to come in. They protect local.
- [28:02]
A
Sure. But the fact is that there are a bunch of U.S. generics which are, you know, prescribed to people at U.S. pharmacies down the street in, you know, Boise, Iowa. And is that a place?
- [28:13]
B
Idaho? No, Idaho. Idaho.
- [28:15]
A
Boise, Idaho. I'm like, yeah, my US geography is a bit weak today. But the, you know, normal drugs prescribed by normal pharmacists in normal towns, which are made in generic drug factories in India, this happens the whole time. And the FDA says that it holds those generic drug factories in India to exactly the same standards as it would any drug manufacturer in the US and no one really believes that. And there are many hospitals in America and doctors in America who literally refuse to prescribe the generic, not because they think that a generic is intrinsically worse, but just because they don't trust the manufacturing process.
- [28:59]
B
So, 1. I think that this is interesting, and I actually would be interested at some point to have the woman who wrote that book on, because I think it sounds fascinating. And one of the things she points out is that part of the problem is that in the US if you have factories, you can just. You do. When the regulators come, they don't announce they're going to come, but when the factories that are in India and China, they very much announce that they're going to come. And so what ends up happening, at least if this book is to be believed, is that they will basically make things appear much safer than they actually are. And like she noted, one person, like, she. Someone caught them, like, shredding documents showing that they had, you know, sold insulin that had pieces of metal in it.
- [29:35]
A
So don't do that.
- [29:36]
B
Don't do that. Yeah, Bad thing. So I very much agree that. That I'd be curious to see actually how big of a problem this is. My only issue is that if I were to say what is actually the really, really globally big problem with the generic market, it is in developing markets where it's so hard for good generics to get in and for actually the types of regulations to get in that would actually make people safer.
- [30:00]
A
Right. Which, which is why all of these new attempts to create nonprofits which make high quality generic drugs in the US Are awesome.
- [30:09]
B
None of it just right. And you don't even. And it's also just you, like, you have a limited supply of regulators. And so what you want is people to be spending their time figuring out where there are fakes and getting rid of them and actually doing that. What you don't want is people to be spending all of their time having to go through all of these, like, ridiculous processes to register different things that have nothing to do with safety. It's simply about maintaining local monopolies and getting people to be able to take bribes here and there. So part of it is just having actually smart regulations more than like you could then allow the market to work.
- [30:39]
A
Well, which is, you know, I mean. So I'll put this back to you. Who is the best pharmaceutical regulator? Who should we put in charge of regulating generic drugs and signing off on them globally so that no matter where they're made, we can trust that they're good?
- [30:58]
B
No, I mean, and that's a good point. I mean, I think that the FDA has it. It appears again, I don't know the ramifications of what the woman says in this book. I don't know like how far that actually goes. In general. It appears that the FDA has actually for the most part done a pretty good job because most people take generic drugs and they work well. So that would appear. Now, does that mean the FDA should be the regulator for the world? I don't know.
- [31:21]
A
I don't think the FDA should be the regulator for the world. But I do think that what we're seeing with this Pfizer Mylan merger is that people are really interested in off patent drugs as a massive profit center and the combined company is going to be worth a lot of money. And my gut feeling, just as someone who vaguely understands Economics 101, is that off patent drugs shouldn't be worth anything. Like it's no secret how to make them. And the marginal cost of making these drugs is basically zero. And so when you look at a company like that, which is worth billions of dollars and has no patents to its name, you wonder like, wait, why are they worth so much money? Shouldn't those prices be competed away? Okay, so my numbers round last week was $125, which is the amount of money you get if you sign up for the Equifax settlement. And all you need to do is go online and like everyone will get $125 and we're all going to be rich. So so many things were wrong about that. So a major mea culpa, I apologize to all of you. Number one, thank you for everyone who wrote in to say, wait, hang on a sec, I don't actually qualify. It turns out a bunch of you don't qualify. So it's not everyone. If you don't qualify, don't feel sad because it turns out you're not missing out on $125 after all. We don't know how much money you are missing out on, but it's going to be much less than $125. Because it turns out that even though 147 million people were affected by this breach, the total amount of money that Equifax put aside as part of this FTC settlement to give each of those 147 million people $125 was $31 million. Now, I'm not very good at math, but I'm going to say that 147 million times 125 is a lot more than that is accurate.
- [33:33]
C
Yeah, it's really, it's confounding that this happened. And then this week, the ftc, right, they put out a release saying, hang on, you're not probably not going to get that $125.
- [33:44]
A
You are certainly not going to get that $100.
- [33:46]
C
You should opt for the free credit.
- [33:48]
A
Monitoring, which is worth much more than whatever it is you're going to get. And this is the bit which I, like Steam started coming out of my ears. Like, number one, they basically now have made it impossible to apply for the $125. Not 100% impossible, but 99% impossible. The lovely little page which says you get $125, click here. That page basically doesn't exist anymore. Now it's just like, sign up for free credit monitoring here, and if you want the $125, good luck to you trying to work out how to apply for it. So they know how many people have signed up.
- [34:24]
C
That's millions.
- [34:25]
A
I think they can do the math. They can divide $31 million by the number of people who have signed up and they can work out how many dollars we're actually going to get. And the FTC refuses to announce what that number is. And I don't understand why they're being so coy about that.
- [34:40]
C
Well, there was a piece in slate that's really dug into the Equifax settlement and it said that after four and a half years, the $31 million cap lifts and there's more money that comes.
- [34:51]
A
So it is conceivable that after four and a half years, you make four.
- [34:54]
B
And a half years.
- [34:56]
A
Let's put that to one side for the time being. The other weird thing is that if you want the free credit monitoring, you have to give up any cash. And this also makes no sense to me. Like, if free credit monitoring is a good remedy for having been hacked effectively, then shouldn't everyone who was hacked get the free credit monitoring? I don't entirely understand why it should be an either or Thing anyway.
- [35:26]
B
Well, because I think it's supposed to.
- [35:27]
A
Be here to explain.
- [35:28]
B
No, I'm not.
- [35:31]
A
Because none of this makes any sense. When nothing makes any sense, I ask.
- [35:35]
B
Well, I would say the, the credit monitoring thing makes some sense to me because you get the $125 if you don't already have credit monitoring. So the point is you're supposed to have credit monitoring either way. You either have it or they're going to give it to you. Then the point is, well, if you already have it, then you've already paid for it. So they're saying, well then that's not entirely fair if you're eligible. So now we're going to give you this cash.
- [35:52]
A
Oh, I see. So everybody, everybody gets credit monitoring. But if you already have credit monitoring, then you have to get something. So what we'll give you is 125 bucks.
- [36:00]
C
All such bunk. First of all, Equifax, do you remember back when this, this hack happened and Equifax revealed that, you know, they had a breach and it took them months to really come clean about what had happened and they kind of lied about it. Then they offered credit monitoring to people for free, which like, no one wants to have their credit rating in the first place. It's kind of this ridiculous, arbitrary.
- [36:23]
B
No, actually we do. We really do.
- [36:24]
A
No, no we don't.
- [36:26]
B
No, actually we do because.
- [36:27]
C
Not done. And then, so then they said everyone can have free credit monitoring. Then they stuck an arbitration clause into the free credit monitoring. So you sign away your, you know, your right to sue Equifax, which obviously cannot be trusted to monitor one's credit because they can't be trusted with the freaking data they have.
- [36:45]
A
You can't even trust them to turn up on Thursday at 7 o'. Clock.
- [36:47]
C
Yeah, and then like, and now they go through this whole settlement and everyone should just get 125, everyone should get $500. Give everyone as many dollars, as.
- [36:59]
A
Dollars as possible. But the thing which annoys me the most is that for all that, it's incredibly easy to get annoyed at Equifax here because they are a very bad company. And it's. Even Anna is not going to defend.
- [37:11]
B
I am, I'm nodding, I'm nodding.
- [37:12]
A
Even Anna is not going to defend Equifax. Somehow the FTC seems to have been captured and they are coming out on the Internet and saying, hey, the value of this credit monitoring is worth hundreds of dollars. It's worth much more than $125, let alone there of money. And so the FTC is buying into this idea that credit monitoring services are worth hundreds of dollars. Now, if you are a regular slate money listener, you all know there's many ways of getting credit monitoring services for free. And it's a very lovely thing to have if it's free. If you want to give it to me for free, I'll take it. Like, honestly, it's great, but don't ask me to pay for it and certainly don't try and persuade me that it's worth hundreds of dollars dollars, because it isn't. Basically, if you want to protect yourself against identity theft, freeze your credit that is free. You do not need to pay a penny for that. Do it with all three credit rating agencies. You can do that as a one. Many one stop shops do that and it's free. If you want to know what your credit score is, there's a bunch of free services which will tell you what your credit score is. If you want to sign up for credit monitoring services from Equifax, by all means do that. But don't let the FTC tell you that this is worth hundreds of dollars a year, because it isn't. And if the next time you see a webpage saying you get $125 just by filling out this form, don't believe it. Because there's always going to be a small print saying, well, actually you only get that if less than 27 people sign up. And if like it's all over Twitter, then forget about it because you're going to. That 31 million is going to wind up getting divided between God knows how.
- [38:58]
B
Many people, especially if it's in Felix.
- [39:03]
C
I'm holding out hope for 2024, that in four and a half years this cap will lift and I'll get a shock surprise check in the mail and I'll go out and buy whatever $125 gets me in 2024. Maybe not a lot.
- [39:15]
A
Are you worried about inflation?
- [39:18]
C
The Fed keeps cutting rates. What could happen? I don't know.
- [39:21]
A
Okay, let's have a numbers round. Anna, you have a number?
- [39:25]
B
I do.
- [39:25]
A
You do have a number. What's your number?
- [39:27]
B
My number is, is $3 million. So that is the amount of money that Kyle Bugha Geardorf won.
- [39:35]
A
Kyle Buga. Wait, is this a Fortnite number?
- [39:37]
B
It is.
- [39:38]
A
Oh, I love Fortnite numbers.
- [39:40]
B
Yes. So this was. He won the Fortnite World cup. He is 16 years old at Arthur.
- [39:45]
A
Ashe Stadium in New York City.
- [39:47]
B
This is very true. Now, my favorite part of the story.
- [39:49]
C
At this point, is amazing.
- [39:50]
B
Apparently he signed on with some, like, esport team. So now they're saying that actually a portion, like, and not an insignificant portion of that. I think it's like $600,000 has to go to this other company that he signed on. And my. The reason I bring this up is because there's this quote in I think the Wall Street Journal where they were like, you know, and a lot of these players, they don't have a good handle on the business side of being an esport player. I'm like, he was 15 years old when he signed this.
- [40:17]
A
I'm shocked that he doesn't know this kid was 13. The guy who won, like, the doubles. Wow.
- [40:22]
B
Yeah.
- [40:22]
A
The sad side of esports is that every single competitor in the top 100 in the Fortnite World cup was a guy.
- [40:31]
B
Well, that doesn't. No, you know what? That is not sad because.
- [40:34]
A
No, no, because there's no evidence that girls are worse. In fact, there's a lot of evidence that they're just as good, if not better. But they wind up, because these things are so social and there's all of the audio stuff, they wind up getting harassed off the platform. My number is $125, which is how much you get. I'm actually serious about this. This is my number. It's $125 and it's 29,000 Sears employees had life insurance policies. And these life insurance policies, depending on who you were and what level you were and all the rest of it, these life insurance policies ranged in value from $5,000 to $2.7 million, depending on where you are in the company. And then Sears went bust, as we all know. And as part of the bankruptcy proceed with life insurance policies are considered unsecured creditors of Sears, basically. And so the proposal is. Which they. It's basically take it or leave it proposal is they all get $5,000 of unsecured credit of Sears, which works out in terms of present value, in terms of actually how much money that is to $125. Basically, these hundreds of thousands of dollars of life insurance that you used to have and was yours when you were a CS employee is now worth 125 bucks. So well done, Sears employees.
- [41:55]
C
Elizabeth Warren gonna fix that.
- [41:56]
A
Elizabeth Warren is gonna fix that. She has a plan for that.
- [41:59]
B
I'm sure she does.
- [42:00]
C
My number is 100 trillion.
- [42:03]
B
Oh, so big.
- [42:04]
A
Right? That's. That's.
- [42:05]
B
It's a big number.
- [42:06]
A
It's big. I love that number.
- [42:08]
C
That is the approximate number of Mosquitoes in the world.
- [42:12]
A
Oh, my God. Are we gonna have Mosquito Edition?
- [42:15]
C
I would love to. There was a story in the Times, and then I, I went down a mosquito hole, but. So those 100 trillion mosquitoes kill at least 700,000 people a year. And then I found out this crazy estimate that was gonna be my number, but then I changed my mind, which is that they think that mosquitoes have killed half of the humans that have ever died.
- [42:37]
A
Okay, so I was on Twitter.
- [42:39]
C
Just blows my mind.
- [42:40]
A
I was on Twitter with Max Rosa this week, who's our World in Data guy. And this statistic is amazing. And he has been searching for the source of this statistic and he can't find it.
- [42:55]
C
That last one about half the people that ever lived.
- [42:57]
B
Okay, good.
- [42:57]
A
I'm glad that I tweeted at the guy who wrote the op ed in the New York Times.
- [43:01]
C
Yeah, yeah, he's written a book on.
- [43:02]
A
Mosquitoes, who's written the whole book on this. And I'm like, he would know. And he doesn't seem to be very active on Twitter, so. Please, Slate Money listeners, if you know the source of this statistic that 50% of all of the humans that have ever died have been killed by mosquitoes.
- [43:16]
C
It seems really implausible, doesn't it?
- [43:18]
A
Well, I mean, it could. I mean, I love it. Or even if, even if it's interestingly wrong, please write in and tell us what the source is, because we want to know. And I have had a low key obsession with mosquitoes for a couple of years now. And we will have, this is an absolute promise. We will have a mosquito edition of Slate Money probably next year. And I know exactly who our guest is going to be and it's going to be amazing. And we will, we will astonish you with an amazing addition. But until then, I think that's it for Slate Money this week. Thank you for listening. Thanks to Jessamy and Molly for producing. And we are gonna have a Sleepless segment on the latest college scam. College scams never go away. So we're gonna talk about children who basically, what do they do? They divorce their parents to get married. Emancipation, Emancipation. This is the kind of emancipation that you do for money. We're gonna talk about that on Sleepless. Otherwise, many thanks to all of your questions over email. We'll be answering them in an upcoming episode and we will talk to you next week on Sleep Money.