Slate Money – The Call-In Edition

Date: December 23, 2017
Host(s): Felix Salmon, Jordan Weissmann, Anna Szymanski

Episode Overview

This special call-in edition of Slate Money features hosts Felix Salmon, Jordan Weissmann, and Anna Szymanski answering audience questions on personal finance, public policy, market mechanics, and the ethos of financial journalism. The episode is conversational, candid, and occasionally philosophical as the hosts engage deeply with listener anxieties, skepticism, and curiosity about how financial systems and reporting really work.

Key Discussion Points & Insights

1. Is My 401(k) Safe? (Listener: 01:12)

• Concern: Is now the time to get money out of a 401(k)/pension with the stock market looking "bubbly?"
• Advice (Felix, 01:55):
  • “If this is retirement money, it’s not designed to be spent around the house, it’s not designed to be sold. You don’t try and time the markets. You just keep it in there.”
  • Acknowledge the market looks frothy, but long-term investment is key.
• Advice (Anna, 04:01):
  • “If you do that, you pay penalties and taxes and you may end up losing as much just from that as you would from a market correction.”
  • Withdrawal penalties on 401k are a critical deterrent.
• Risk Tolerance (Felix, 04:48):
  • “It is normal and reasonable and absolutely fine to have a relatively low risk tolerance. That doesn’t mean you shouldn’t have a 401k—but maybe it means yours shouldn’t be as heavily invested in the stock market.”
  • Solution: Consider shifting allocation to safer assets within the plan, such as short-dated bond funds, rather than withdrawing.
• On contributions (Jordan, 06:15):
  • “If you really do have immediate needs... it’s not crazy to take some money out of your paycheck and spend on that rather than saving it right now... But don’t go raiding your 401k.”

Memorable Quote:
Felix: “Plan for the future as if there’s going to be a future.” (04:11)

2. Should We Fear the National Debt? (Listener: Peter from Westchester, 07:16)

• Question: Is the growing U.S. deficit and debt a problem? When should we worry?
• Context: Reference to economists Reinhart & Rogoff claiming high debt:GDP ratios hurt growth.
• History Lesson (Jordan, 09:03):
  • “There was a very famous paper... which said that when a country crosses the 90% debt to GDP ratio, the economy starts to suffer and slow down... But there were two issues: One was the Excel error heard around the world... and the second was whether or not they were confusing correlation with causation.”
• Empirical Caution (Jordan, 10:08):
  • “There are countries like Japan that can have like a 250% debt to GDP ratio and their economy doesn’t seem to be suffering...”
• Sovereign Currency Advantage (Anna, 12:42):
  • “These individual European countries do not print their own currency. They are on the euro. And that makes all the difference.”
• Bottom Line:
  • For countries that borrow in their own currency, the empirical “magic line” for debt trouble isn’t clear; it’s as much about institutional trust and economic context as levels.

No urgent alarm bells; the situation merits ongoing attention, not panic.

3. Why Isn’t Trade Settlement Instant? (Listener: Michael in Colorado, 13:23)

• Question: In the digital age, why does T+2 (trade settlement two days after the transaction) remain standard?
• Industry Explanation (Anna, 13:59):
  • “Even in this day and age where you think everything is electronic and it’s really easy to settle, it is not as easy as you think it is, especially depending on the type of securities that you’re trading.”
  • For some investor types, especially institutions, managing cash to settle instantly is complex.
• Retail Angle (Felix, 14:57):
  • “If you are trading in the stock market, I’m perfectly happy to assume that you’re basically a rich person. You can wait a couple of days to get your money.”
  • Delays help address errors and give markets time to correct misalignments or glitches (e.g., flash crashes).
• Is someone "playing the float"? (Anna, 17:10):
  • “It used to be called playing the float, where you were kind of making money off of this, but because of the way... rates are right now, it’s really negligible.”

Takeaway: Settlement lags are legacy features, partly risk management, partly inertia, and not significant profit centers for middlemen.

4. The Morality of Financial Reporting (Listener Question, 18:34)

• Question: Why does financial journalism often seem so impersonal or "ghoulish"? Shouldn’t there be a broader soul-searching about how markets affect people?
• Straight Talk (Felix, 19:49):
  • “No, you can’t change it without nationalizing everything... if you want a perfect alignment between labor and capital and human happiness and profit, then... you want common ownership of the means of production.”
• Balancing Act (Jordan, 20:26):
  • “If you want to talk about these issues on a granular level, especially when you are writing for... a business audience, you can’t spend every other paragraph talking about how ordinary families are getting screwed. You can try and work that in a little bit, but I don’t think you have to be a ghoul, you just have to know who you’re writing for.”
• Empathy vs. Objectivity (Anna, 22:32):
  • “...it is true that you, especially if you’re in like emerging markets... you are in meetings where you have people entirely talking numbers. ...there actually can be sometimes certain people who are troubled by that. And I do think that there is also a problem, sometimes, in the market where you’re very much encouraged not to think about the larger ramifications.”
• Critique of Media (Jordan, 23:56):
  • “If you try to turn everything into a commentary on class inequity, the guys who run companies aren’t going to listen to you... CNBC is actually kind of ghoulish because they aren’t just sort of morally neutral... they are like, yes, capital must fucking prevail.”
• Reality Check (Felix, 24:54):
  • “I don’t actually believe in common ownership of the means of production... I think that often the profit motive and the, you know, treating your people well motive are not in conflict with each other.”

Takeaway: Financial reporting often operates from a business or investor lens, but human and ethical ramifications are not absent—they are contextual, and audiences shape tone and focus.

5. What Makes the Slate Money Crew Tick? (Alexander Hoffman, 28:01)

• Q: What are the differences in values or perspectives among the hosts?
• Felix (28:52):
  • “I basically rely on Jordan to care about politics because I kind of hate politics... The really great thing about Anna is she comes out of the trading world... And in that world, you can’t be ideological. If you walk into that world with a preconceived notion... you will lose all your money very quickly.”
• Jordan (31:07):
  • “I’m not someone who cares about finance qua finance. I’m someone who cares about politics and the economy and how you make it run... Felix actually enjoys both the art and folly of finance... Anna is actually the person who knows how the shit works.”
  • Praised Anna’s insider know-how and Felix’s global, high-low synthesis.
• Anna (33:14):
  • Appreciates Jordan’s political depth and Felix’s willingness to approach things from unexpected angles.
  • “...again, I’ve really enjoyed this year being on the show... Felix is someone who’ll often come at things from an angle that frankly just never would have occurred to me.”
• All agreed: They present a spectrum on the (generally left-leaning) economic/political spectrum, with differing emphases but constructive respect.

Notable Quotes & Moments

• Felix Salmon (on risk tolerance, 04:48):
  “It is normal and reasonable and absolutely fine to have a relatively low risk tolerance.”
• Jordan Weissmann (on the Reinhart & Rogoff Excel error, 09:03):
  “There was the Excel error heard around the world...”
• Anna Szymanski (on market mechanics, 13:59):
  “Even in this day and age where you think everything is electronic and it’s really easy to settle, it is not as easy as you think it is...”
• Felix Salmon (on financial reporting’s purpose, 21:26):
  “It is absolutely possible and legitimate to look at every story in America through a kind of human interest lens of like, what does this mean for the worker? And that’s not what we do on this show because I feel like there are other lenses which are also interesting, not least the flip side of the coin, which is, what does this mean for the investor?”
• Anna Szymanski (on capitalism, 26:00):
  “I’m someone who’s a big believer in having kind of a healthy dialogue between capital and labor, between business and government... standard of living globally has improved because of the profit motive.”
• Felix Salmon (on China’s economic transformation, 26:52):
  “When China had common ownership of the means of production, there was mass immiseration... when China moved to a capitalist system, that did amazing things for the wealth and well-being of the Chinese population.”

Timestamps for Important Segments

• 401(k) Panic & Stock Market Risks: 01:12–07:13
• National Debt/Deficits Debate: 07:16–13:19
• Why T+2 Trade Settlement: 13:23–18:34
• Morality in Financial Journalism: 18:34–27:47
• Co-hosts’ Perspectives & Differences: 28:01–35:12

Tone & Style

The episode is collegial, reflective, and at times wry—balancing practical advice, nuanced economic analysis, and a healthy dose of skepticism about market orthodoxy. The hosts often challenge each other, surfacing both their expertise and their personal quirks.

Conclusion

This call-in episode of Slate Money highlights the team’s commitment to pragmatism and empirical reasoning in the world of finance, while acknowledging the very real anxieties and moral challenges that listeners face. Whether addressing bubbles, deficits, Wall Street mechanics, or the spirit of journalism itself, each host brings a unique angle that together offers listeners clarity, context, and occasionally, reassurance.