Slate Money: "The Mayday Mayday Edition"

Episode Date: June 10, 2017
Host: Felix Salmon
Co-hosts: Anna Szymanski, Jordan Weissmann

Episode Overview

This week’s edition of Slate Money—dubbed the “Mayday Mayday Edition”—is a whiplash round-up of global financial and political turmoil, anchored by the surprise UK election results, the ongoing European banking crisis, and the bizarre, high-stakes standoff between Qatar and its Gulf neighbors. Felix, Anna, and Jordan dive into the “bonkers” political moment in Britain, unpack European financial regulation in response to bank failures, and analyze the steep international consequence of Gulf power politics—all while maintaining the show’s signature mix of irreverent banter and sharp economic insight.

Key Discussion Points & Insights

1. The Shocking UK Election: From Foregone Conclusion to Total Mayhem

(00:10–17:07)

• Election Surprise:

  • Felix opens with disbelief at the UK elections, labeling them “bonkers.” He and the others reflect on how the election, initially predicted as a Conservative landslide, resulted instead in a hung parliament, upending Brexit plans and Theresa May’s leadership.
  • Quote:
    • “The UK election was bonkers. Bonkers.” — Felix Salmon (01:12)
    • “I thought the Belgians invented surrealism.” — European official, quoted by Felix (01:18)

• Theresa May’s Political Missteps:

  • The hosts chronicle how May went from refusing to call an election to betting on polls and disastrously misreading her mandate (“misguided optimism,” Felix at 03:25).
  • May’s weak campaign, robotic slogans (“strong and stable”), and the notorious “dementia tax” (a deeply unpopular policy punishing elderly homeowners) are dissected as reasons for her loss of support.

• Corbyn’s Unexpected Success:

  • Despite accusations of being “beardy” and old-school, Labour’s Jeremy Corbyn managed to energize young voters and erode Conservative majorities, even capturing traditionally safe Tory seats.
  • Quote:
    • “He has people who like him. He has a constituency which she does not seem to have.” — Anna Szymanski (04:39)

• Coalition Scenario and Northern Ireland’s DUP:

  • Theresa May’s only remaining hope: forming a government depending on Northern Ireland’s Democratic Unionists. The show explores Brexit and border complexities, with special attention to the invisible Ireland/Northern Ireland border and the peace accords.
  • Quote:
    • “The crazy ones... the spiritual descendants of Ian Paisley.” — Felix (05:49)

• Brexit Implications:

  • May’s hard Brexit mandate is lost—Labour’s stance is murky, and DUP suggests a softer border, leading to potential delays, confusion, and yet another election.
  • “No way you can negotiate a deal of this magnitude in the amount of time they have available. It is not possible.” — Felix (10:59)
  • Possible leadership shakeups (e.g., Boris Johnson or Corbyn) and overall uncertainty roil both markets and politics.

2. European Banking: Crises Contained or Still Smoldering?

(17:08–28:41)

• Banco Popular’s Swift Collapse:

  • A major Spanish bank is declared failing, quickly resolved and absorbed by Santander. The hosts praise Europe’s post-crisis banking regulation (BRRD) for working as intended—no contagious panic, bondholders take losses, depositors remain protected.
  • “You can resolve that bank without creating a crisis.” — Felix (19:18)
  • Anna breaks down why Italy’s Monte dei Paschi crisis is more complex and politically sensitive, especially with retail investors holding “risky” bonds.

• Contrast with U.S. Resolution Regimes:

  • U.S. allergy to bank mega-mergers post-crisis contrasts with Europe’s rapid wind-downs. However, Felix argues most U.S. banks can still be resolved by selling to the “big four.”
  • Spain’s banking sector remains a drag on Europe’s recovery; note that Southern Europe remains in critical condition—e.g., Spanish unemployment has only dropped from 26% to 18%.

• Underlying Eurozone Economic Strain:

  • Lack of bank lending drags out the recession, particularly in Spain and Italy. Labor mobility is presented as Europe’s pressure valve, with Brexit threatening to worsen the situation.

3. Qatar’s Multi-Billion Dollar Ransom and the Gulf Crisis

(29:34–40:15)

• Outline of the Gulf Blockade:

  • Qatar is suddenly blockaded by Saudi Arabia and allies, accused of funding extremism and being too cozy with Iran. The proximate cause: a reported $1 billion ransom to free Qatari hostages, some of which allegedly went to Iranian interests and various militant groups.
  • “A billion dollars is a large...” — Felix (33:26)

• Complexities of Gulf Politics:

  • Qatar’s habit of “playing both sides” (e.g., supporting Hamas, dealing with Iran, housing Al Jazeera) leads to mounting regional enmity.
  • Anna explains the diplomatic and economic impact of the blockade, including the disruption to food supplies and air traffic.

• Ethics and Repercussions of Hostage Ransom Payments:

  • US/UK refuse to pay ransoms but see more hostages killed; other countries pay, potentially funding illicit networks—a thorny moral and strategic dilemma.
  • “If you pay, you are essentially funding terrorists. And I don't know where to come down in that argument. It's a really difficult question.” — Anna (35:06)

• Role of U.S. and Unexpected Consequences:

  • President Trump’s tweets supporting Saudi action escalate the crisis, which, according to the hosts, should have remained a “family” matter among Gulf states.

4. Numbers Round: Statistics With a Twist

(40:15–46:20)

• Anna’s Number:

  • $1 Billion: Amount Lone Star Capital is investing in Portugal’s Novo Banco, with a quirky twist—senior bondholders must swap for riskier instruments, while government-held equity is protected, upending typical capital-structure norms.
  • “Night is day. Shit, man.” — Anna (42:13)

• Jordan’s Number:

  • 233: The number of House Republicans who voted for the CHOICE Act, a bill that would gut Dodd-Frank regulations, undo the Volcker Rule, and weaken consumer protections. Jordan highlights the “derangement” in current regulatory thinking.
  • “Jeb Hensarling...said [about Lehman Brothers] ‘the Lehman bankruptcy...to some extent worked as it should have worked.’ That is the thinking that is now powering the majority party approach to financial regulation.”—Jordan (43:52)

• Felix’s Number:

  • $187 Billion: Market capitalization of Taiwan Semiconductor, which now surpasses Intel, marking an epochal shift in the global chip industry.
  • “Intel, which is always the 800-pound gorilla in the room, is no longer the world’s biggest chip maker. And I just thought that was interesting.” — Felix (46:07)

Notable Quotes & Memorable Moments

• “You don't get a period of stability by losing your majority in Parliament.” — Felix Salmon on Theresa May’s failed campaign (14:09)
• “Nobody in Britain has a plan. Like, there's really nobody anywhere because there's...Because nobody thought this would happen.” — Anna & Jordan on Brexit confusion (10:53)
• “This is not good for us that this is happening. But also, this is typically the kind of thing that's kind of handled in the family in the Gulf...But once the U.S. President gets involved, that means all of a sudden, all hell fucking breaks loose.” — Jordan on the Qatar crisis & Trump’s tweets (40:15)

Important Timestamps

• 00:10–17:07: UK Election breakdown, Brexit implications, and political fallout
• 17:08–28:41: European banking crisis (Banco Popular, Monte dei Paschi), regulatory successes and failures
• 29:34–40:15: Qatar-Saudi dispute: ransom, regional power dynamics, Trump’s intervention
• 40:15–46:20: “Numbers Round” — finance oddities and regulation highlights
• Notable quotes/segments:
  • 01:12, 03:25, 10:53, 14:09 — UK election drama
  • 17:18, 19:18, 20:52, 22:06 — Banking crisis
  • 33:26, 35:06, 36:38 — Qatar ransom and international ethics
  • 43:52 — Financial regulation quote (CHOICE Act)

Tone & Style

The episode has a dynamic, conversational style blending skepticism, humor, and sharp economic analysis—full of memorable analogies (e.g., “turd in the punchbowl” on the dementia tax), insider explanations, and a candid view of global finance gone awry.

Summary

The Mayday Mayday Edition delivers a globe-trotting, intellectually engaging episode: from a surreal and destabilizing UK election through the careful containment of Europe’s ongoing banking woes, all the way to an eye-popping Gulf diplomatic incident, Slate Money’s team delivers timely context, biting wit, and unparalleled clarity on why money—and politics—remain unpredictable forces.