Slate Money Podcast: "The Bad Eggs Edition" (July 29, 2017)

Hosted by Felix Salmon, with Anna Szymanski and Jordan Weissmann

Episode Overview

This week’s "Slate Money" dives into a trio of offbeat but revealing stories from the world of business and finance. Hosts Felix Salmon, Anna Szymanski, and Jordan Weissmann begin with Anthony Scaramucci’s tangled financial dealings and the challenging SkyBridge Capital sale. From there, they dissect the mystery of stagnating productivity growth in the economy, then pivot to some high-drama startup shenanigans at vegan foodmaker Hampton Creek. The episode concludes with an ultra-wonky bonus segment on the mechanics of sovereign debt litigation, focusing on Argentina and vulture funds.
Tone: Irreverent, wonky, conversational, sharp, and skeptical.

Key Discussion Topics & Insights

1. Anthony Scaramucci, SkyBridge, and Shady Dealings (00:10–15:26)

The Mooch’s Dubious Hedge Fund Credentials (02:08–06:53)

• Felix sets up Scaramucci’s hiring as White House Communications Director and connects it to his questionable business persona.

• "He likes to portray himself as a hedge fund manager. Or as I like to say, he plays one on TV." – Felix Salmon (03:46)

• SkyBridge Capital’s Precarious Value

  • Scaramucci owns a fund-of-funds but wasn’t actually selecting investments.
  • SkyBridge’s best returns were years before he bought it (from Citigroup post-crisis).
  • Felix: "[He] picked up SkyBridge on the cheap... then went out and started selling it to mom and pop investors who had absolutely no business investing in hedge funds, let alone funds of hedge funds." (06:12)

The HNA Sale and Possible Conflicts (07:04–15:26)

• Scaramucci had to sell SkyBridge to take the White House job—but the purported buyers (China’s HNA and Venezuela’s Ron Transatlantic) are mysterious, and the offer price is suspiciously high.
• Anna: "SkyBridge without the Mooch is... almost completely worthless and has already seen like $1.6 billion of outflows." (07:31)
• No transparency or clarity about who controls HNA.
• CFIUS (government review board) is slow-walking the deal.
• Jordan: "It looks very much like someone is trying to suck up to the Mooch by overpaying for his company." (08:07)
• There’s little likelihood of another, legitimate buyer.

Broader Worries: Chinese Overextension, Systemic Risk

• The panel veers to China’s aggressive overseas buying and risks to its financial stability.
• Jordan: "These companies that are so enmeshed in so many parts of the Chinese economy right now and have become so huge that if they can't pay back their debt... That could create a tremendous amount of instability." (12:26)

2. Why is Productivity Growth So Lousy? (15:26–26:37)

Definitions & The Real Economic Mystery (15:29–17:12)

• Jordan briefly defines "productivity" as "output per hour of work" (15:46).
• US GDP growth relies on productivity, but improvements have stalled since the 80s.
• Felix: "This productivity growth which made the planet wealthy seems to have disappeared." (16:37)

Demand-Driven Productivity Theory (17:19–19:48)

• Recent economic research suggests flat wage growth and slack labor markets discourage business investment in productivity-boosting technology.
• Anna: "If you think that productivity growth just comes out of nowhere... you can't really factor [it] into your economic analysis. But if a really tight labor market... actually drives up productivity, that creates all sorts of interesting possibilities..." (19:28)

Policy Implications & “Overheating”

• If strong demand tightens labor markets, governments should pursue policies that push unemployment super-low, even if inflationary. (20:51)
• Anna: "Is this 2% inflation target we have... keeping us from becoming more productive because it's keeping unemployment too high...?" (21:24)

Contrasting Productivity Models (21:34–26:37)

• Felix’s factory comparison: German robot-driven efficiency vs. Apple/Foxconn-style human assembly lines. (21:34)
• The hosts debate tech vs. labor-intensive models, with Jordan noting, "Every day you look at the newspaper, there’s another article about the robots are taking our jobs... and then this would suggest that we need more robots." (22:29)
• Foxconn’s new Wisconsin factory and the shrinking wage gap with China comes in for scrutiny.

3. Hampton Creek: Startup Dysfunction (26:45–35:17)

The Board Quits, CEO Goes Rogue (26:45–32:57)

• Vegan mayo maker Hampton Creek loses its entire board and most executives after founder Joshua Tetrick repeatedly overrules and fires anyone dissenting from his "moonshot" ambitions (lab-grown meat).

• Anna: "It seems like the conflict... is that [Tetrick] has really big ambitions... and a lot of his executives are like, we should really focus on the eggs. And he's like, you're fired." (28:15)

• Board tries to claw back control but had previously ceded it in 2015.

• Legendary firing story: Executives summoned to a fake investor meeting in Spain, only to be dismissed over video chat.

  • Anna: "The board is sitting there being like they're dealing with a dog that won't stop eating the roast beef..." (30:06)

Fake It Till You Make It – Silicon Valley Style

• Jordan: "This company essentially misrepresent[s] itself. Pretending that it's a tech company when ultimately it's no different than... a company where I make vegan cookies and then I try to pretend... I'm going to develop this product..." (30:58)

• The panel compares it to Theranos and Juicero—a Silicon Valley pattern of message over substance.

  • Felix: "What matters is the message more than the reality. Because it's only the message which is going to allow you to realize the reality." (33:45)

• Likely endgame: an established food giant buys Hampton Creek for (just) its vegan mayo and other real products.

4. Numbers Round & Notable Stories (37:42–43:02)

• Anna: 19% – Altria’s stock plummet after the FDA moves to reduce nicotine in cigarettes—huge public health and regulatory story. (37:42)
• Jordan: 50,000 – Number of asylum seekers from Venezuela to the US; Venezuela faces a constitutional/authoritarian crisis. (40:51)
• Felix: 2 billion – Facebook’s monthly active users (and $3 billion quarterly profit); the hosts muse about regulating it like a utility. (41:45)

5. Bonus Segment – Wonkfest: Sovereign Debt Restructuring (44:39–70:18)

Special Guest: Sadie Blanchard, Yale Law School research fellow (44:38–45:18)

• Sadie asks: Why do vulture funds keep suing sovereigns when wins are so rare?
  • Felix: “Bond is just a contract, and contracts are legal documents. If you want to collect... the only way you can do that is by using legal mechanisms…” (46:51)

Legal Pressure as a Negotiation Tactic

• Jordan: "Often when you're suing, you understand that you're not going to be able to reach the sovereign itself. But what you can do is influence third parties…that can have a significant impact on pressuring the sovereign and making it more likely they'll pay.” (47:42)
• Litigation is a "sanction"—not to win, but to make default expensive and complicated.
• Anna: “It’s like trench warfare.” (51:53)

The Role of Discovery & Publicity

• Sadie: “They got discovery all over the world, not only about the Congo’s assets but also about the assets of the leader... Then the hedge funds, like, leaked the information to Global Witness and caused a big scandal.” (56:09)
• Felix shares a personal anecdote about reporting on the Congo case, where vulture funds wanted to be painted as anti-corruption crusaders, not profit-seekers. (57:26–58:43)

Why Don’t Creditor Committees Work?

• Felix: “There has never, ever, ever been a creditor committee that actually worked... Because bondholders are everywhere and they're fungible…” (60:27)
• Litigation (or the threat of it) serves as a coordination point for otherwise scattered creditors.

Notable Quotes & Moments

• On the Mooch:
  “He plays [a hedge-fund manager] on TV.” – Felix Salmon, 03:46
  “SkyBridge without the mooch is... almost completely worthless.” – Anna Szymanski, 07:31

• On Productivity and Robots:
  “Every day you look at the newspaper, there’s another article about the robots are taking our jobs... and then this would suggest that we need more robots.” – Jordan Weissmann, 22:29

• On Hampton Creek:
  "Fake it till you make it" is “deeply ingrained” in Silicon Valley, giving rise to Theranos and similar startups. – Felix Salmon, 33:45
  “The vegan alpha bro may be the worst of all possible types.” – Jordan Weissmann, 35:17

Timestamps for Key Segments

• Anthony Scaramucci & SkyBridge: 00:10–15:26
• Productivity Stagnation: 15:26–26:37
• Hampton Creek Mayhem: 26:45–35:17
• Numbers Round: 37:42–43:02
• Venezuela Crisis Note: 40:51
• Bonus: Sovereign Debt/Vulture Funds (with Sadie Blanchard): 44:38–70:18

Summary Takeaway

The episode skewers the commodification and messaging-driven nature of modern finance and Silicon Valley, calls out murky international finance maneuvers, and argues that productivity—and even debt crises—are often more political and psychological than strictly economic or legal. As always, "Slate Money" mixes sharp economic insight, cynicism, and offbeat wit, topped this week by a delicious (and egg-heavy) cake recommendation.

Contact the hosts: slatemoney@slate.com
Bonus: For the Torta de Santiago egg cake recipe, email Felix!