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Foreign.
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Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon. I'm here with Elizabeth Spires of the New York Times.
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Hello.
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I'm here with Emily Peck of Axios.
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Hello.
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Hello.
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And oh, my God, do we have a show for you this week. This is a particularly frabjous week because we have the one and only Mary Childs back on the pod. Mary, welcome.
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Hi. Thank you so much for having me.
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B
Mary, for those poor benighted few who don't know who you are, who are you?
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A
I'm your future friend, co host of Planet Money, author of a book called the Bond King, person who loves to talk about financial markets and who loves to come on Slate Money.
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B
And you don't just love to talk about financial markets, you like to write about financial markets. And you have written about the treasury market in a massive piece for Harper's, which is still a thing.
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A
Harper's is great, actually. A little drive by by feeling. I'm not just saying that because they published my work.
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Go check out Mary's Harper's piece on Treasury. But we're going to talk about the treasury bond market and whether we should be worried about it. We are going to talk about American statistics and whether we should be worried about them. We're going to talk about Elon Musk's pay package and whether we should be worried about it. We are going to have a whole Slate plus segment with Mary on NPR and public radio and whether we should be worried about it. So if there's a theme coming on here, I think you might be able to tell it. But it is a fun and information rich podcast. It's all coming up on Sleep Money. Race the rudders. Raise the sails. Raise the sails.
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Captain, an unidentified ship is approaching.
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Over.
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Roger, wait. Is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title and more.
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Start converting your B2B audience today.
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Spend $250 on your first campaign and get a free $250 credit for the next one. Get started today@LinkedIn.com campaign terms and conditions apply. This message is brought to you by Apple Card. Apple Card takes privacy seriously. It's your card, your info, your business. So if your credit card isn't Apple Card, maybe it should be subject to credit approval. Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch terms and more@applecard.com since you're here, Mary, let's start with your magnum opus in Harper's. Let me try and see if I can summarize it as fiscal deficit. Something we should care about all of a sudden.
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A
Yeah, I think that's right.
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B
I feel like I've spent the past God knows how many decades listening to people with their hair on fire going, the deficit, the deficit. Everything's going to end in tears. And then the sun rises the following morning, and nothing ends in tears. So you and I guess Jared Bernstein had a piece in the New York Times, R is greater than G, something, something. And basically you're like, there is something different this time.
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A
This time is different, this time is different. And I'll tell you why. So I actually agree with his framing that there are kind of three things that you want to look out for that. That make this moment different. That. That it's like, where the deficit starts to matter. And it's. I think it's like the absolute level of debt and the relative level of debt, like, how much debt you actually have that matters. The interest expense. So how much you are paying on that debt and paying every single time you come to market, which is all the time. And then how hot your economy is. If your economy is growing and your interest expenses are low and your debt is growing, like, that's fine. Everything's fine. And that's the condition that we had for so long. And that's why everyone was like, bro, chill. Like, you don't have to worry about this right now. The deficit is not a big problem because our debt is cheap. We can just keep issuing it. Nobody seems to care. We can rack up more and more debt, and we're basically getting it for free because our economy is growing faster than all of that. And so the fact is that those conditions have changed. We are paying more in interest on our debt. Everyone's favorite fact, the one that just really stings, is that we now pay more in interest expense than we do on defense, which is, you know, you don't have to be like a defense head to think that's a little crazy. And, yeah, it just. It suddenly starts to matter. And I was just talking to someone earlier today about the Greek debt crisis in 2011. Nine through 11, if you recall. And nine through forever is actually how it felt. And it went on for, like, literally 10 years. It took forever to get out of the. But it was funny because they were like, yeah, our debt to GDP ratio at that time, it was pretty bad. It was 120%. And I was like. And he was like, yeah, that's what y' all are today, actually. And I was like, that's a, that's a really good point that you made.
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D
And we have similar political and fiscal conditions that are emerging.
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Yeah, Emerging conditions that might be troubling with respect to government and debt and data. So. Yeah.
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B
So let me ask the first big question which people like the more sanguine crew always say, and I understand there was a lot of moving parts here, but if you just look at that big headline debt to GDP number and you're like 120, that seems high. Talk to me a little bit about Japan, which has gotten way north of like 250ish, and tell me why it's okay to have those kind of numbers in Japan but not anywhere else.
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A
Well, Japan is in some ways like a look into the future for us.
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D
Right.
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Where they have a demographic shape that we're headed for. They have a lot more old people than young people. It's an inverted triangle, as they say. And that creates a lot of strain on your economy because you have fewer young workers contributing to pensions. And so you have it just like the economic situation kind of breaks down in that way. And there's like a big interaction with like retirees and pensions and government debt markets. And the thing that like is sort of edifying about Japan is it's, you can kind of keep going with these government policies of keeping rates low. Like we've had our central bank buying debt kind of helping to keep rates suppressed, if you will. This is sort of a political opinion, so I don't know. Take this as you will. There's been some interesting research that does suggest that like the ability to buy so much from our central bank and from central banks around the world have helped to suppress interest rates that we pay on our debt in this country. And because our debt is like very popular around the world with so many buyers, so people are kind of still happy. But if our central bank keeps buying and other central banks keep buying, then we still have this kind of like friendly buyer that's helping us pay less in interest and that keeps rates sort of artificially close quote low. And that's kind of to some degree like, like Japan invented a lot of the moves, the central bank moves that we have been making in the US and that's helped to keep rates sort of suppressed there. And it was, it's been sort of a remarkable experiment.
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B
What you're saying is the absolute debt to GDP number in Japan is very high, but the deficit to GDP number is relatively low and the interest to GDP is relatively low. Because interest rates are artificially low because the central bank is buying up a lot of debt.
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Yeah, I think you laid it out in a nice, orderly way. Thank you. Yeah, it's like you can kind of fiddle with that mechanism if the market lets you and the market kind of lets Japan. Like, it's just a curious question because there's so many other dynamics at play for us where we are the reserve currency, currency of the world. There are a lot of people, there are a lot of institutions, buyers in our debt that are in some ways not marginal buyers. Like, in some ways, they're not that discretionary. They, like, kind of have to hold Treasuries and dollar products, if you will. Like, that's where someone like Stephanie Kelton would be. Like, it's fine. Like, it's. This is not the thing to worry about. Like, go look elsewhere. We have an enormous base because we are the reserve currency of the world. These people aren't going anywhere. Like, they're going to keep buying Treasuries because they need to put their dollars somewhere. And I think that's true to an extent. But I think where Stephanie and I might differ is that, like, I have. This is sort of on brand, and perhaps I over index here. But, like, I think that the marginal bond buyer of Treasuries, like, is kind of powerful and can make a different choice. Like, I think that's more fragile than it looks. So, okay.
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C
No one cared about Jared Bernstein. And I think he talks about this liberal guy I think served in the Biden administration, didn't care about deficits during the Biden administration, when we spent a lot of money, borrowed a lot of money. It really seems quite political now that everyone, not everyone, but lots more people who didn't care before suddenly care now that Donald Trump is president and is.
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Spending, blah, blah, blah.
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It just. It's hard not to view this through a political lens.
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Totally. And I do think you're right. Like, it is sort of. I actually didn't realize the timestamp on his, like, New York Times op ed. I've been working on my Harper's piece for, like, frankly, years, and with Harper since, like, it started. I started with Harper's in January, but, like, I. Yeah. And he just tweeted it out. Exactly right. But there I was expecting to get canceled, you know, like, rhetorically. There's this feeling that, like, to talk about the deficit is to be a fool, is to be a political tool, is to let Republican puppet masters, you know, like, tell you what to think and care about. And like, this is a spurious thing to care about. It's only something that like, know fiscal conservatives and like the Peterson foundation care about. And like feeling that change in me was weird. Like I was like, I suddenly think that I care. And this for me, it started in 2023. Like I say this in the Harper's article too. It's like I was watching the shenanigans around the debt ceiling. And like that just seems expensive. Like it doesn't have to show up in the market right away. Or maybe it shows up and goes away and everyone thinks it's okay. But there are. It just felt to me like there are these unseen costs to their behavior, to this like political. I feel like it's kind of immaturity that we keep doing all this grandstanding and like forcing each other to the brink and it's so dramatic. And I'm like, this stuff is kind of for real. Like this is serious.
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I have this theory that debt ceiling standoffs are terrifying because it's a repeat game. And every time we've played this game in the past, we've managed to, you know, the correct side has blinked in time and we've managed to, you know, get away with it. But if you play it enough times, eventually that side is not going to blink. And then we enter Armageddon. There is no mechanism to stop us playing it. Basically infinite number of times. And if you play a game an infinite number of times, at some point you're going to lose. The way to stop us playing it an infinite number of times is obviously to abolish the debt ceiling, but that's not going to happen. And that is the thing that worries me about the sovereign debt dynamics in America. And that is completely orthogonal to what worries you in this Harper's piece, which is the sheer quantity of debt. It doesn't matter what the quantity of debt is. As long as we have a deficit, we are going to run up against these debt ceiling issues. And it strikes me that the real thing to worry about, the thing that causes a crisis and that causes Armageddon is like a big unexpected shock, is some kind of fuck up with the debt ceiling and not some kind of slow building up of interest expense over time.
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Yes, but maybe you think that because it just hasn't happened before. So I agree with you and that's where I was coming from too. But the more the debt numbers go up and the interest numbers go up, I mean, they're shocked. Like, have you looked at a chart lately? It's crazy. It just goes straight up. And it goes straight up during the Biden administration, like, to be fair, it does like 20, 21. Our like actual borrowing numbers are just like, it's pretty vertical. And then our interest expense follows on. Right. So we had kind of a period where we were like Wile E. Coyote over the cliff. There's like a moment where he's kind of just hanging out for a second and he's like, that's my favorite. I know, right? And then he falls. So like not saying that we've like fall. I don't want to like sound too, you know, like I'm ringing alarm bells here. But like, you always have that lag. People can get really sanguine about it can get. People get just so comfortable. Like you're saying with all the debt ceiling shenanigans, the market has learned to shrug it off. The market which, like, you know, you don't really think of them as like super complacent, but with debt ceiling political brinkmanship, as S and P put it, it's just like they're like, yeah, they'll figure it out. Like, call me when it's a thing.
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D
Do you think there was a particular inflection point where this sort of vibe changed, where buyers were sort of went from thinking about US Debt as the, I think, as you put it, best house in a bad neighborhood to maybe even that's not good enough. Maybe this is still a problem.
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B
I mean it is the best house. I mean that there is to this day. Let's be clear about this. In the entire universe of debt in the world, US treasury bonds are the most liquid, the safest, the benchmark against nothing trades through treasuries. Right. And there is no future, right. Foreseeable future that anything out there will.
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Trade is no contender. That's right. Yeah, that's right. And the diversification away from the dollar that you've seen largely among central banks is into other, like Australia. Like it's not. They're not. They're doing like a basket of other things instead of like, oh, I'm going to sell my dollars and buy, you know, renminbi or something. There isn't that one to one trade because there isn't a single contender that actually makes sense to replace.
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C
In some ways that's scarier because it's like if something does go wrong, there's no natural contender. Like you're saying. So then what? Then, then that seems even more chaotic.
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I think that's the apocalyptic scenario that.
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Mary's sort of thinking about right, yes, of course. It's a multipolar world which is both less controllable and therefore like maybe less stable. But I don't know. I don't know.
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B
But Mary, let me just jump in because I think there's this sort of premise that we're talking around here that I want to just make a little bit more explicit. You mentioned Greece, which was a credit crisis. Greece could not afford to service its debt. One of the reasons it could not afford to service its debt was that it didn't have the ability to print euros because euro reasons.
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Right, didn't have the lever available. So you're suggesting we inflate away our.
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Debt in general, given that the US government can print as many dollars as it wants, the risk of an outright default, political brinkmanship notwithstanding, is basically zero. This is what everyone has understood about the dollar, is that the Federal Reserve can print dollars and does and buys up debt and it works. And there are monetarists out there who worry that that action is inflationary. There are modern monetarists out there who say that that action is not inflationary. But putting aside the question of whether or not that action is inflationary, the thing that people seem to agree on is that it does kind of get rid of the credit risk. So what is the crisis that you're worried about?
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Well, I don't know that you can entirely get rid of the credit risk. Like I hear you and I think you're right, but we have enjoyed a sort of parallel or like a suspended reality in a way where people consider the US people in the market consider the US government to be risk free. And I'm sorry, but that is funny. You know, that's not true. Everything has risks. There's no such thing as risk free. So we know we're already in a fictional world.
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Well, I mean, no, but I know.
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I sound like an old man. I just want to say that.
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Let's be clear what that means, right? It just means within like the four corners of the bond. If I buy a 30 year bond, treasury bond, and the US government promises to pay me a thousand dollars in 30 years time, plus interest along the way.
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Perfectly good about the fact that they're going to do it. Right?
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They're going to do that.
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Whereas Campbell Soup, like, are they going to adjust to AI? I don't know where Campbell Soup is going to be in 30 years. So I feel much less good lending to them. I think that's right.
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And so just in terms of like the technical meaning of what Risk free means in the bond market. Yeah. They will pay that money back even if there's, you know, I don't have.
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To worry about that quadrant. That's right.
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B
So what is the crisis that you're worried about?
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As you sort of noted, I sort of worry about like a hundred things in this Harper's piece. There's a delicate market structure thing. There's absolute relative amounts of debt, just the sheer volume of debt, which I only really worry about because of expense, interest, expense, and relative to the economy and the economy's trajectory. And then I mean, there's kind of like the post Liberation Day. I mean, Elizabeth, to your question about, like, when did it change? I think it was Liberation Day. I hate using that framing, but I can no longer remember if it was April 2nd or 3rd. It was 2nd. Right. Second. Okay. So we think it was April 2nd when. And I don't want to overstate this because it's not like everybody went running for the exits and it's all over and blah, blah, blah. But it was truly, if you talk to people in the market, it's the moment people were like, oh, well, maybe I do got to worry a little bit. Like maybe this is a different paradigm.
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C
The one thing I worry about. And Mary, forgive me, I don't remember if this is in your piece, but from time immemorial, from, from the time I was a wee girl in the 80s, the worry of the deficit was used as an excuse to cut spending, particularly for poor people, middle class people. That's the go to move of the Republican. It's like, we could spend more on this or that, but this debt, you can't just have it hanging out there.
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B
Or Clinton said the same thing.
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Clinton, everyone. And for a brief shining moment in the pandemic, we talked about it. Everyone was on, on board.
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A
Right.
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C
Issue more debt. Let's whatever it takes. This is an emergency. And that's generally the vibe is like you have an emergency, you spend more money, you go into debt. FDR did it out later.
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A
Yeah.
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C
You figure it out later. When the later comes and things are good, you stop spending so much money. That mechanism appears to be broken now. Now I'm concerned to go back to my question before, like, oh, now the liberals are finally worried about the deficit. And so we're all gonna talk about it. You're gonna write a big piece at a time when we have a White House that is just like frantically cutting spending however it can for poor people, for the press. We'll talk about later. For basically everything Liberals, like, and a lot of other people, like, so you foment fiscal panic. And then that really opens the door for a lot of scary stuff that I think the White House is now like moving into place, like entitlement cuts, especially, because those are the things we spend the most money on.
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A
Right.
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C
But then when you like zoom out and you think about things for a minute, you see that Congress just passed tax cuts for people. This is a problem that actually has a solution. And I hate to say it, but you just raised taxes a wee bit. A wee bit.
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A
It's not even a lot.
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C
And like, if we're reading Ray Madoff's book, she's a professor, her book is about taxing the rich and how we don't really do it so much anymore.
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A
Yeah, we've loved that.
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C
Tax the fucking rich. I know it sounds like a cliche, but like, really this is a problem that has solutions that there is zero political appetite for. So it's like we're drawing attention to what may or may not be this fiscal issue. But I wonder what the attention is going to wind up doing to the country.
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A
Totally. And I hear you. I have sort of a wrong headed attitude about a lot of this where I love talking about nuanced things. And that's wrong. No, it's right. No, it's wrong because, like, rhetorically you're right. Like, I want to talk about things outside of the political sphere. The political sphere in general annoys me. And I don't like being used as a tool and I don't like being like an audience in someone's game. It's not all nuanced place. It's not a nuanced place. But then when you're trying to have a nuance, and Ken Rogoff gets to this in my Harper's piece, I quoted him talking about how it's like impossible to have this conversation because the second you talk about it, it gets like weaponized and twisted and it goes through this transformation where it becomes a blunt instrument used in ways you didn't intend it. So like, I'm over here trying to have a multifaceted conversation about various different ways in which the treasury market is stress inducing. And I tried to kind of package it like, you know, I have the like fiscal conservative, like, oh, no, I'm worried about the deficit levels and the debt levels and the market structure, which is typically more the home of liberal thinkers. You know, the levels don't matter, but the structure matters and the regulation matters. And so those are the two kind of traditional, as I understand it, politically, the two camps that I'm pretty well familiar with at this point, I mean, I think, like, both of those have their merits, and I dislike the. The machine that the information gets funneled into because it's really not productive. I think.
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D
Do you think it's partly because people are just very interested in prescriptive solutions and it's kind of hard to think about these problems without acknowledging that we are in a political system where incentives are a little bit misaligned in terms of getting politicians to spend less and not run up the debt.
- [21:28]
A
No, totally. I mean, I think all politicians have always had this problem where it's much more fun to spend and much less fun to unspend. Like, raising taxes is never a popular. Like, all of the things that you have to do to rein in a deficit suck. No one wants to do them. All of the things to run up a deficit rule, you want to do them. So it's really like, that's. And it was really nice for so long to get that kind of like Olivia Benchach being like, this might be free. Like, we might be able to issue all the debt that we want and have no real public cost. It's amazing that that worked. And we probably could still be living in that time. We've made some different decisions and the world has changed. But, yeah, I don't know that I actually answered either of your questions, but it is sort of. Personally, I'm, like, allergic to the political rhetoric, but, like, it's unavoidable.
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B
I really like this distinction that you're drawing between, like, the way that the political discussion always goes. It's like, well, let's say you're right and there's a problem with the debt, then the only way to solve this is to either spend less or to tax more. Which one do you want to do? What is the solution? And then the answer to that, whatever. There is no good answer to that without sounding like a politician or being a politician. Meanwhile, here's like, Mary Childs talking about market structure. And, you know, like, I go back to one of the things I think we've all forgotten, partly because it was so profoundly boring, was the way that the money market seized up in, like, March, April 2020. At the beginning of the pandemic, Adam Tooze wrote an 8 million page book about it. And everyone went, oh, yes, that this is very important. And then memory holder proceeded to forget all about it. But there was this moment when everyone was like, oh, shit, everything is about to fall apart. Because these, you know, plumbing questions and architecture questions become much bigger and much more urgent than the sort of grand, like, deficits are bad questions. Like none of that was caused by deficits. It was caused by, you know, the pandemic and various other things.
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A
Velocity. Yeah.
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B
And I think that when you say that like your kind of moment of radicalization was Liberation Day was like April two.
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A
No, no, I was, well, radicalized before. No, no, no, I was radicalized in 2023.
- [23:37]
B
Or maybe the market started taking this stuff seriously on. On Liberation Day.
- [23:41]
A
Yeah.
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B
What I look at on that day is the significant and lasting decline in the dollar. And as you and I know, but I think Joe Q. Public doesn't really understand the treasury bill market and the dollar are basically the same market. And when the dollar declines, that bespeaks a sort of lack of faith in some kind of American hegemon. And so it's something to worry about. And then what you do is you sort of zoom back on your US dollar chart to encompass more than about six months and you're like, well, the dollar's actually still quite strong and maybe there isn't that much to worry about after all. And we kind of got through the 2020 crisis and we fixed a little bit of plumbing and architecture problems. Plumbing problems. You can nearly always like call in a plumber and fix it somehow. And so maybe I shouldn't be that worried.
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C
But so wait, if I understand the worry and you'll. I'm sure Felix will interrupt me if this is wrong. But the worry is it's nice to have that. It is investors stop buying Treasuries and then like everything just falls apart, basically. Tldr. And then if investors stop buying Treasuries, they don't want them anymore for whatever reason because they don't like Donald Trump or whatever, then typically the Federal Reserve would like step in. But then the danger right now is that Jerome Powell is going to leave and who knows which Kevin could run the Federal Reserve.
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A
Any number of Kevin's.
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C
Any number of Kevin's could step in.
- [25:11]
A
Perhaps Britney Spears ex husband.
- [25:13]
C
We don't know.
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A
That would be catastrophic.
- [25:14]
C
That would be Peter Navarro also. Not just Kevin's. I think Trump casts a wider net.
- [25:20]
A
Well, that's.
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C
But anyway, that person could be in charge and like, who really knows what happens then? If we have another like 2020 situation and someone at the Federal Reserve is not a more traditional type, chaos could ha. There is room for chaos. There is room for bad things.
- [25:37]
A
Totally.
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B
I would basically completely agree with that. Framing with the single exception of the idea that it is presumptively caused by some kind of investor strike and people don't want to buy Treasuries anymore. I think there are lots of things that can go wrong in the treasury market that cannot be boiled down to investors don't want to buy Treasury. And I think that's exactly what we saw in 2020. It wasn't that there was suddenly no appetite for Treasury Treasuries, it was just, it was really, there was just a bunch of market dynamics and leverage cash.
- [26:11]
A
Yeah.
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C
Didn't want to buy Treasuries, they wanted.
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B
Dollars insofar as there's a difference. And like, you know, and this is where it becomes incredibly nerdy. Right? And you can't talk about this stuff without talking about like the way that you buy treasury bills because then, you know, 90 day treasury bills coincide with the coupon payments on the 30 year treasury bond and you use the bill to pay the bond coupon and all of this kind of stuff. And there's all these big hedge fund trades and then you get crowd trades and yada yada. Like. So there are really nerdy, boring, technical things that.
- [26:43]
A
Not boring. Exciting, Thrilling, exciting, nerdy technical things.
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C
I would say boring on the consequential.
- [26:47]
A
Enormously consequential.
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B
Enormously consequential.
- [26:51]
A
Thank you, Felix. I do want to talk about the hedge fund trade because I think that's like a part. It's confusing how much to care about this one. Like I actually, I was moderating a panel like a couple weeks ago about this specifically and some guys were on the panel who do this trade that we're about to dive into and they were so just like chill about everything. I, I felt all my worries collapse. And I mean it wasn't permanent of course, but I just was like, oh, maybe there's. Maybe everything is actually fine. So the hedge fund trade, and this is what started to stress people out really in 2020. The basis trade, the basis trade. Now real structured finance people know that a basis trade is actually just a trade between a derivative and its underlying. The basis trade is like calling. This is a joke that I'm gonna use on Planet Money in a minute. So like maybe don't use. Maybe I shouldn't ruin it here. But it's like if you're like going to the grocery, but you call it Target, you call every store Target. Cause you just like Target's really big. And so you're just like, I'm gonna go to Target right now and like you're going to like a shoe store.
- [27:51]
C
Like they, how they call soda Coke in some places.
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A
That's so much better.
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C
You can use that.
- [27:55]
A
Thank you.
- [27:56]
C
Into planet Money.
- [27:59]
A
So, so it's this like, because it's gotten so big and because it's about Treasuries and because it's like broken containment, it's called the basis trade. So the basic idea is that like they, because of various structural forces that are kind of complicated and long, there's like a seller of Treasuries. Some people like just don't want to hold them. Okay, fine. That makes them very like a little teeny weeny bit cheap. And hedge funds are like, great, thank you, I'll take it. And then elsewhere, the other buyers, other players in the market want exposure to Treasuries, but maybe in a slightly, you know, easier to manage way. And so they're using the derivative and so they want to go long. Treasuries in the derivatives market. And so the hedge funds, for every long bet, there has to be a short. So the hedge funds go short. So they have the physical cash Treasuries and they've sold them short at the same time, thereby capturing that little teeny weeny difference in value in price. Then they lever it up a whole heck of a lot and so that they can actually make money on it. This is a little bit of a clumsy explanation, but basically that means that we have outsourced holding of Treasuries to hedge funds and we're just like hoping that they're going to stay in a good mood. And the reason I don't have to worry about this is because the Fed can just cure it. If you just get a little comfortable with bailing out hedge funds because we've outsourced this dealer role to them, well then it's fine. So I just, I, maybe it's okay.
- [29:25]
B
And we saw this in 1998. This is, this is basically, we've seen this movie.
- [29:29]
A
I just want to take a moment to acknowledge Emily's face. What happened to Emily's face when I said that it was okay to bail out hedge funds? Could anyone describe Emily's facial expression during that time? It was, it was twisted. Her facial features went in a circle.
- [29:44]
C
I just, I was just worried again about politics. I just don't know if there's going to be, people are going to want to do that.
- [29:51]
B
But let's just be clear about again and this becomes a political problem. Right? In 1998, you get a bunch of technocrats at The New York Fed who get a bunch of banks together and they decide to bail out ltcm, which is a hedge fund. And the great systemic financial crisis that people were worried about as a result of LTCM failing didn't happen because there was a bailout. And so well done, Tim Geithner and everyone else who had kind of orchestrated that. Right. They did that in the full knowledge that it looked very clubby.
- [30:23]
A
And that was a private bailout, though.
- [30:25]
B
Well, I mean private in that the New York Fed was involved.
- [30:27]
A
But yeah, the New York Fed simply babysat the process. They were just the adult in the room being like, you have a mess, I need you to clean it up. Y' all figure it out. I don't know who drew on the walls, but make it, make it undrawn on and we can talk when you're done. So it was more like that.
- [30:43]
D
If we were to agree that bailing out hedge funds was the correct thing to do, how would you have to change the plumbing for that actually work? Because even with ltcm, it was kind of a one off. It wasn't a big structural collapse.
- [30:56]
B
What you need to do, as Mary was explaining the problem here is that there are a bunch of investors who do actually want to buy treasury bonds. They do want that exposure, but they just want it in a slightly different form. And what you need to do as a long term solution is kind of mess with the plumbing a little bit to address their concerns and either make the form they prefer Treasuries in less attractive or make Treasuries more attractive and thereby take those real money investors and move them back into the real market where they belong, rather than the derivatives market where they cause this basis rated string.
- [31:34]
A
That's funny. I was going to say just build a facility at the Fed that can bail out hedge funds. That was. That's what I was going to say. Sorry.
- [31:40]
C
Seems simple.
- [31:41]
D
See, that's what I assumed.
- [31:42]
A
Yeah, yeah, you're right. Because they don't really, you know, like they typically try to deal with banks.
- [31:47]
D
Yeah, yeah.
- [31:49]
C
Like what they did with Goldman in the crisis.
- [31:52]
B
Just make the hedge funds a bank, reclassify them as a bank and problem solved.
- [31:55]
C
Too big to fail.
- [31:55]
A
Boom. It's not that hard. Yeah, so anyway, that's all this is made up, right?
- [32:00]
C
You know, we're just making money out of nothing.
- [32:15]
B
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- [34:23]
A
Okay, yeah.
- [34:24]
B
Which is this whole like the vibes based markets trust in the plumbing that everyone needs to trust in being eroded. Right? And the news here is that Trump threw a tantrum when the jobs report came out last Friday and said I don't like these numbers, therefore I'm going to shoot messenger and fire the woman who's in charge of putting out the numbers, causing an entirely predictable and 100% correct cacophony of outrage from every single economist, statistical association and the rest saying but statistics are very important and reliable statistics are very important. And what you're made doing is you're making the reliable statistics less reliable. And that's going to reduce faith in and then the minute you start using that word like reduce faith in everyone kind of, they stop listening at that point you can kind of see it in the dollar, but at that point it becomes like a plumbing thing and it's just like, oh, you know, do we care? How does faith affect me?
- [35:27]
A
That's plumbing. Isn't that credit risk?
- [35:29]
B
Well, no, it's not credit risk. It doesn't affect the ability of the treasury to repay its debt. It just affects the size of the error bars on the models that economists use to estimate the trajectory of the economy.
- [35:44]
D
But the Fed uses that data.
- [35:46]
B
Yeah, in part two, many of those economists are at the Fed. Yes.
- [35:49]
C
Are you saying that it doesn't matter that the President of the United States didn't like the unemployment data and thus fired the messenger 100% not.
- [36:00]
B
It really matters because I am a, you know, good neoliberal to my boot soles and I believe in the importance of reliable statistics. And I think that, you know, certain countries, including the United States, have historically had really good national accounts, really reliable statistics, and that has helped them in innumerable ways. It's part of honestly is part of the soft power that has help cement US hegemony over the past century. And it's very important. And like Canada, Statistics Canada is a really good statistical organization. New Zealand has really good statistics. These countries punch above their weight financially a lot of the time precisely because people really trust the data that those countries are putting out.
- [36:48]
C
So the other thing people are talking about is setting aside, just don't fire the person in charge of the statistics when you don't like the statistics because that ruins everyone's trust in the statistics and that's really bad for everyone, blah, blah, blah argument. Is that going underneath that? As we've talked about the response rates to BLS surveys have been plunging. The data though everyone said when they were freaking out about this on Friday and then this week everyone said unemployment stats from the BLS are gold standard. They are in fact not really. The gold is tarnished.
- [37:20]
B
The gold is less gold than it used to be.
- [37:22]
A
The percentage of gold is lower. Yeah, yeah.
- [37:25]
C
And the same is true apparently in uk. I was reading in the FT today, one of my colleagues brought it up at Axios.
- [37:31]
A
Courtney Brown.
- [37:31]
B
It's actually a global phenomenon, right. Which is that most of these statistics are produced with surveys. Survey responses across the board have fallen significantly and the lower the survey response, the less reliable the statistic. Statistical agencies have been in a crisis. I wrote a pie in Axios in 2020 talking about like the crisis of statistics and it's only got worse since then.
- [37:55]
C
Yeah. And it's not just the response rates, which has to do with, like, you know, the way people engage with technology and also the way people do or don't trust the government anymore, whatever, but it's also spending on the agencies has decreased. Headcount keeps getting lower and lower and lower. Like, going back to our first conversation, like, there's just less appetite to spend on the government, on statistics, especially with this, again with this administration. So there is actually, like, not to say that Trump has a point, but, like, maybe has a point, like, BLS data could be better.
- [38:27]
D
You know, it's a problem that he has exacerbated because now there. There are certain things that bls, just data they can't collect because they don't have the staffing. And also, I just don't think that he fully understands that, you know, particularly when they have to do these downward revisions, that in a lot of cases, it's because of that. The survey problem we just discussed.
- [38:46]
B
Yeah, yeah. I think what we're all agreeing on here is that, you know, the reason we saw the biggest revision since 1960, it's probably related to the fact that the quality of the statistics is lower than it has been in many decades. And in order to keep the quality of the statistics as high as it has been in past decades, you would need a massive increase in funding to the bls. And instead of having a massive increase in funding to the bls, we're having a massive decrease in funding, not only to the bls, also to the Census Bureau.
- [39:17]
A
And then we're surprised when the quality of the data deteriorates.
- [39:20]
B
And then when you get, like, a big revision, which is what happens when this quality of data goes down, then he, like, shoots the messenger, and it's like, this is. You know, it's like, come on, dude. Like, you caused this.
- [39:32]
A
Yeah.
- [39:33]
C
The appropriate response would just be like, we have a data problem. The BLS is underfunded. Like, let's sell more Treasuries and give them more money and get better data.
- [39:42]
A
One thing that I was thinking a lot, like, I can kind of trace my emotional journey this year by, like, what I've been muttering while I wander around my own house. Like, I'm, like, shuffling my. I. I'm a million years old now. But the thing that I was muttering to myself in the beginning of the year was, like, we underappreciate in this country, I think the extent to which our capital markets are as deep and liquid as they are Treasuries, but also everything, because our courts are orderly and because people do trust our institutions and our open data. We're one of the biggest providers of open data in the world. And we did that on purpose. And that was a bipartisan thing and has been for decades. That was a political choice that everyone agreed on. And like business certainty, being able to predict, to project into the future, to be able to make informed choices. Like all of that is virtuous, right? Like all of that self perpetuates and makes businesses feel comfortable. So then they build a plant, so then they're a job. So that, so it's all like generative. And when you attack each of the planks, you know, of this trust and whether that's on purpose or not, whether they're just like, I want to defund and then like sort of by accident, I didn't think this through. And the data quality has been declining. The net effect. And again, this is a slow thing. So like maybe it's not going to show up for a while, but the net effect is that you get less and less investor confidence and that means everything costs more. That's just friction. That's just more basis points left, right, center.
- [41:03]
B
So there are two related questions and I think Emily is right that we have a slight disagreement on this one.
- [41:11]
C
I was like, Emily is right.
- [41:12]
A
Oh, no, no, no, wait. So a slight disagreement between Felix and Emily. I just want to make sure I hear the. Where am I? Am I?
- [41:20]
B
I'm about to ask you to be like the referee.
- [41:23]
A
Okay. I'm nervous. Okay, me too. Rolling up my sleeves.
- [41:26]
B
I think we all agree that the quality of the statistics has been going down. Like the error bars are high. There are big errors in, off of like some kind of conceptual, platonic ideal of what the truth is. And those, you know, those errors are getting bigger. Then the next question is, have we now started off down the path of politicized data where not only are the statistics unreliable in the sort of like Libor way where you don't know what the truth is and it might be higher and it might be lower, but they're actually being massaged in a certain direction to make the government look better.
- [42:10]
A
Yeah, good question.
- [42:12]
C
What's the disagreement?
- [42:13]
B
I think we are not there yet.
- [42:16]
A
Felix says no, you say yes.
- [42:18]
B
Yeah. So I mean, Emily, I think. Emily, is it fair to say you're saying yes?
- [42:22]
C
Yeah, we're on the road. It's happening. I'm not saying right now. Today, anyone at the BLS is like furiously, like futzing around, futzing making up numbers. That's I'M not saying that. No.
- [42:34]
B
Okay, so what is happening?
- [42:35]
C
Phase one, fire the messenger and then send the message. You, the president, the messages. I want the numbers to look good. People like that message has now been sent. And how the Bureau does or does not react is now, even if they don't react, it's still a question.
- [42:54]
D
Okay, so in April, I did a Blue sky thread about what would happen if the labor numbers came back badly. And I have a post that says my prediction is in that scenario. He blames the bls, which puts out employment data, calls them corrupt, run by Democrats out to get them, fires people there, insists that their numbers can't be trusted, and then the White House puts out some proxy, its own fictitious data to make things look good. And I was thinking about that directionally, because that's, it's. If you understand anything about Donald Trump, he can't admit that he's ever done anything wrong and he always looks for a scapegoat. So if employment numbers are down, what's this obvious scapegoat? It's the bls. But whenever I asked people about this, you know, one of the things that they said was enough of the data is transparent. It would actually be very difficult to manipulate the numbers that much within the BLS, given its current structure. Do you think that's true?
- [43:46]
B
Honestly, I think both of you are right. I think that.
- [43:49]
A
Oh, my God, it is. I'm so happy to be here for this moment.
- [43:52]
C
Just pause.
- [43:55]
B
I think, Elizabeth, you're right that practically speaking, there is actually incredibly little that any individual in the BLS can do to massage the numbers and make them look better. The numbers fall out of models that are hard, if not impossible to futz with. That does, not, to be clear, reassure us that the quality of the statistics isn't declining. The quality of the statistics is declining because you have a Geigo problem. Garbage in, garbage out. So, yeah, if you just have bad data going into the BLS and you're going to get bad stuff, statistics coming out, but the idea that the statistics coming out are going to be sort of massaged by humans within the BLS is 100% a worry. I've seen this worry. And I think that Emily is exactly right that Trump has created an incentive structure for that to happen. I just don't know in practice how it happens. But, Emily.
- [44:48]
D
So one way it could, though, that I just thought of. I wrote a column for Fortune a million years ago about the Boston Commission, which revisited the way that the BLS calculates inflation. And this was when people were accusing Bush of politically manipulating inflation numbers or doing, maybe not directly, but trying to politicize inflation numbers. And there were techniques of measurement that could be altered the way we think about substitution for goats in the basket.
- [45:21]
A
Stuff like that, methodological choices like how does actually matter. And there are a thousand teeny little choices that you can make differently. I guess the net effect of all of those choices, if you keep going one direction with all of them, maybe you could move the needle.
- [45:35]
B
It does seem, and I think it's harder to do that in labor than it is in prices.
- [45:38]
A
It feels tedious. Yeah.
- [45:46]
B
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- [47:29]
C
Goes.
- [47:34]
A
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- [48:04]
B
Move on just to the other big $30 billion news of the week, which is that a special committee of Tesla's board comprising precisely two members.
- [48:15]
A
I love that. That's my favorite part of the whole thing.
- [48:18]
C
The special committee stuck their finger in.
- [48:20]
B
The air and said, $30 billion. That sounds about right. As for how much we should pay Elon Musk, you know, he's a valuable chap. Tesla's worth a trillion dollars. Probably more than 30 billion of that is due to the fact that Elon's here. He said he wants more stock. He says he wants us to pay him more. So let's pay him $30 billion. And Bish Bosh, that happened so great.
- [48:42]
C
Isn't that good? I mean, Elon Musk is a singular character. I can't imagine that Tesla could find a CEO like him to replace.
- [48:49]
B
I mean, there is only one Elon.
- [48:50]
C
He is a flight risk. Right? That's why they did this, because they want to make sure Elon pays attention to the company he is in charge of.
- [48:57]
B
Realistically, he's not a flight risk. We have to be very clear about this. Elon, let's be clear, is very rich. But, like, in terms of liquidity, in terms of having money to play with, all of the money he has to play with is due to the fact that he has liquid Tesla stock that he can borrow against.
- [49:13]
C
He needs this job.
- [49:13]
B
He quit his job. Tesla stock would go through the roof. He would face massive margin calls. He would have a liquidity price through the floor.
- [49:20]
A
It would go through the floor.
- [49:21]
B
Through the floor, sorry. Through the floor. Yeah. The margin course would go through the roof. He would face this massive liquidity crisis. And basically there are a lot of sticks preventing him from leaving Tesla. But the Tesla board is like, never mind the sticks, we'll give you a carrot as well. Or 30 billion carats.
- [49:36]
A
No one ever does this.
- [49:37]
B
For me, my take on this, because this is taxable income, right? He has to pay income tax on all of this. And so finally we have a multi billionaire paying like a real amount of income tax. So I like that.
- [49:48]
A
And so then he's going to have to sell Tesla stock to pay that income tax. And then it's going to start the cascade that they were seeking to avoid in the first place. I'm just kidding.
- [49:56]
D
I also love that there are apparently no conditions on this pay package where, you know, nobody's like, well, could you for maybe 12 months or so, restrain yourself and not do unhinged things that will drive the stock Down. They're like, just show up to work.
- [50:10]
B
There are two conditions. Number one, he has to show up to work for two years.
- [50:13]
C
There's no performance goals or anything.
- [50:17]
B
No, but the whole point of this pay package award is that it's supposed to replace the pay from 2018 that he already earned out on and then that Delaware next. And so the idea is that if you add extra performance goals, then you're not really just rewarding him for what he already did between 2018 and 2023. So I can kind of see the logic there. And in fact, Tesla's saying we don't expect to pay him any of this 30 billion because we expect that pay award from 2018 to be reinstated. And if that pay award from 2018 is reinstated, then the 30 billion go, what?
- [50:54]
A
No double dip? Wow.
- [50:55]
C
They're pretty tough on him. It sounds like, horrible. Wow. So, like, he shouldn't spend the money in case he has to give it back or something.
- [51:05]
B
If he loses the 30 billion, he gets 58 billion. So he'll be fine.
- [51:10]
A
Okay. It's a different kind of deal than we get.
- [51:12]
C
It does seem different where I have to meet the goals and get the performance review, and then maybe I get like the 2%.
- [51:17]
B
But what's more, if he loses the 30 billion, just to be clear about this, if he loses the taxable 30 billion, he gets 58 billion that is not taxable because of reasons.
- [51:27]
A
So he should seek to lose it. I mean, he is.
- [51:29]
B
Yeah, he really wants to lose the 30 billion. It'd be very good for him to lose the $30 billion.
- [51:33]
C
So the 30 billion isn't even real. So even, like, why are we even talking about it?
- [51:37]
A
It's like a thank you note. It's just a sweet little note from.
- [51:40]
D
Your besties on the board.
- [51:42]
C
It's a little safety net.
- [51:43]
B
Well, I think it is real because it all depends on the Delaware Supreme Court. And if the Delaware Supreme Court upholds the ruling of the Kathleen McCormack, the top judge in, in Delaware, then he doesn't get his 58 billion back and he has to make do with 30 billion.
- [51:59]
C
But meanwhile, the companies move to Texas. Right. They will not have any more business before this Delaware court going forward. No more. And in Texas, you have to own, what, like 2% of shares? 3% of shares to file a shareholder lawsuit. So it's less likely that he'll have to face something like this again.
- [52:17]
B
Because really, the only person who owns 3% of shares is Elon, and he's not going to sue Himself.
- [52:22]
A
I mean, he could, and that would be fun, but I would like that.
- [52:25]
C
I can see that happening. Anything's possible.
- [52:27]
A
Don't rule it out.
- [52:28]
C
Did you see that Linda Yaccarino, who quit her job as CEO of X. Com? Because, I mean, duh.
- [52:35]
A
She definitely quit it.
- [52:35]
C
Yep, she definitely quit. And just announced on Tuesday that she's the CEO of a GLP P1 telehealth company.
- [52:43]
A
Oh, good.
- [52:44]
C
I just want to let you guys know that.
- [52:45]
B
So if I want. If I want some, like Ozempic easy without having to go to my doctor, I just phone up Linda and be like, here.
- [52:52]
A
Yeah, text Linda. Yeah, she got you. Yeah.
- [52:55]
B
Hand over a wad of twenties.
- [52:56]
C
You could maybe DM her on x dot com.
- [52:58]
A
I don't know if she's still checking if you're premium. I mean, if you're premium. Right, of course. Which. There's a 30% off sale ending now.
- [53:06]
B
Jump on it, people.
- [53:06]
A
I just re logged in, you guys. I just. I got locked out for months. I just re logged in and they're like 30% off.
- [53:12]
B
How much? And I. You know what? That can be your number, Mary, what is your number?
- [53:15]
A
Wait, I have to see if it's still standing. Let me check. It was a limited time offer.
- [53:21]
C
Limited time offer, limited ending today.
- [53:24]
A
30% off premium and premium plus annual. You gotta get unlock free ads. Ad free scrolling, higher visibility, monetization, Super Grok and 2020 more exclusive benefits. I. I'm not gonna do it. But that is my number. That's an offer that was made available to me.
- [53:40]
B
How much?
- [53:41]
A
It's only $4.90 a month. That's only a little bit more than a bodega coffee.
- [53:50]
B
I just did an interview, which you will hear on this here podcast in a couple of months with Doug Woodham, former Christie's executive who just wrote a biography of Jean Michel Basquiat. And he was complaining as he walks through the offices of Slate in Brooklyn that his bodega coffee, a small bodega coffee, cost $4. And I have to say I am with him on this one. A small bodega coffee should not cost $4.
- [54:14]
C
Has he seen the prices of things that sell at Christie's? And he's complaining about bodega coffee.
- [54:19]
A
You want personalized pricing for him on bodega? You're like, that's a $50 coffee for you, sir. Yes.
- [54:26]
C
Algorithmic pricing should kick in.
- [54:27]
A
To each according to his ability.
- [54:30]
B
Exactly. Lowe's knows you've got a job to do, and we help get it done. With the Milo's Pro Rewards program, eligible members save more with volume discounts on qualifying orders through a quote of $2,000 or more. Join for free today. Lowe's we help YOU save offer can't be combined with any other discount contract and or special pricing exclusions. More terms and restrictions apply. Details@lowe's.com Terms subject to change. Elizabeth, what's your number?
- [55:19]
D
My number is 212,000. And that's approximately how many women over the ages of 20 who've left the workforce since January. And the biggest culprit is apparently a return to office mandates which I find 0% surprising because, you know, my personal situation is that we have a two income household and now my husband is probably going back into an office every day and we have a child and.
- [55:44]
A
That men love going into offices.
- [55:46]
C
I miss the office.
- [55:47]
D
But there was an economist from the University of Kansas who said the most normal situation here is that it's ordered by some old white male person with what I call care privilege, which means they have someone, a new privilege who cooks their meals, who irons their clothes and who picks up the kids. And I think that is a big chunk of what's happening.
- [56:05]
A
Did you read that Time magazine article about this?
- [56:08]
C
Yeah, I should write that up.
- [56:10]
B
Is the 212,000 from the highly unreliable.
- [56:12]
A
BLS report feel like fair question because.
- [56:18]
C
The trend had been going in the opposite direction for the past few years or more. Moms are working.
- [56:22]
B
Yeah. I mean, 212,000 in the context of the US workforce is not enormous, but directionally it's worrying. My number is 250.
- [56:34]
A
What's that?
- [56:35]
B
Oh, sorry. 250 is the number of goals.
- [56:38]
A
I love that number.
- [56:43]
B
Yeah, it's the number of dollars the visitors to the United States are going to have to pay in a visa fee if they want to come here to watch the World cup or the Olympics or something, if they're not coming from a country with a visa waiver scheme. And that's like a non refundable fee that you need for any kind of visitor visa to the United states. And this $250 fee, by the way, is signed into law. It was part of the big beautiful act then on top of that, there is now talk of taking certain other countries. And then if you apply for a visa, you need to put up a bond of 5,000 or 10,000 or even $15,000. And you only get that money back when you leave the US because they're worried that you might overstay your visa. And it is astonishing to me, the degree to which absolutely no one in the Trump administration cares about tourism or actually wants to completely destroy the tourist infrastructure of this country. Because first it's all of the headlines about, you know, tourists are getting jailed at the border and put into these nasty jails for weeks at a time and then deported and all the rest of it. Then you get faced with a $250 fee for a tourist visa. Then you get asked for a $15,000 bond. Like, who is going to come to this country anymore? And I think secretly that's what they want. They want no one to come to this country anymore.
- [58:02]
C
Yeah. Good news for Times Square, I guess, or bad news for Times Square.
- [58:06]
A
Honestly, I was there in April and it was like, so love. I was in. I stayed just Times Square in a hotel, and it was like, great. I didn't get swarmed. I didn't get, like, a panic attack. Everything was.
- [58:15]
B
They've done a good job with the Elmos. They've got rid of most of the.
- [58:17]
A
Elmos and the Elmo streamlining has been great. Yeah.
- [58:20]
B
There's a little, like, painted triangle in Times Square, and if you're an Elmo, you have to stay within the triangle, and then you get unaccosted by Elmo's. If you manage to avoid that triangle. Emily. Emily, what's your number?
- [58:34]
C
My number is 24. That is a percent. That is the. The percentage increase in the stock price of American Eagle on Monday after. Who said it? Go get him. Sydney. Who said it? Our president. He tweeted or he truthed or whatever about American Eagle, which is the subject of controversy that I suggested we speak on on this podcast, but probably the better angels said don't. But there is a controversy, Mary. I'm sure you know about it.
- [59:06]
A
I do.
- [59:06]
C
Where Sydney Sweeney has an ad. She talked about her genes that get passed down and traits that get passed down on genes, but it was a little double play on, you know, genes with a G versus genes with a J. And the upshot was she has the good genes going in both directions. American Eagle genes. Although I've read some commentary that suggests they're not very good genes. But I won't speak on that. Yeah. But I. I have a. I have some hand me downs from. Anyway, it doesn't matter.
- [59:33]
A
Yeah. Okay. So, yeah.
- [59:34]
B
Were they handed down from your mother? From generation to generation?
- [59:37]
C
Handed up. I guess we don't want to speak of my genes because then I could be. They could come for me if I speak of my jeans, but I would only speak of My J jeans, not my G genes. But what happened was Sydney Sweeney spoke about both her G genes and her jeans in this ad. People got upset. They were like, that seems a little white supremacist to be talking about your jeans and your blue eyes. Whatever. There was a lot of commentary, but the conservatives made a lot of hay out of it. All the liberals are crazy and they're freaking out over an ad, which I don't think think is true, but that's what happened. And then it got to Donald Trump, who tweeted, or truthed, not tweeted, truth. His support for Sydney Sweeney, initially spelling her name incorrectly, but then deleting that post and then reposting it, spelling her name correctly, which that's good, people correct there. I make mistakes in spelling as well. And then when that happened, yes, then American Eagles stock shot up to around like 13ish dollars. And the subsequent day is the day we're taping Tuesday. It has come down a little, but is still elevated from where it was prior to the truth.
- [60:38]
A
So.
- [60:39]
C
And apparently it's one of the rare times that the president has truth or tweeted about a company and the stock has gone up. In previous cases, it has gone down.
- [60:47]
D
Does that kind of count as meme stock behavior? Even if it doesn't say a meme stock? Because there's no underlying.
- [60:53]
B
I think it does. And it is a kind of amazing story insofar as I'm quite sure that when they put this ad campaign together featuring, you know, a, a buxom young lady making a dumb pun about genes, they were not expecting to dominate the discourse about, you know, eugenics. And yet this is what happened.
- [61:14]
A
That wasn't the market they were going for.
- [61:16]
B
And normally when you like. And everyone was like, oh, those dumb fucks at VaynerMedia who came up with the ad, I'm sure they were just too stupid to realize that this would blow up in their faces. But then, amazingly, it managed to blow up in their faces in a positive direction and it did a great job for the stock. And like, they're all running to the bank and it's just like, wow, we are truly living in the dumbest timeline.
- [61:37]
D
I think most culture war issues start with just some random thing happening. And then, like, maybe one person on the Internet goes, eh, that's a little creepy. And if they happen to be liberal, the right goes, oh, my God, liberals are outraged. And then the reverse happens in the reverse direction and you can't predict the machine.
- [61:53]
A
It's not a useful machine. I Mean, it is. A lot of people make a lot of money off of it, but I don't think it's a societally productive machine.
- [61:59]
B
Still, all I'm gonna say is that I hope that Sydney Sweeney gets her 30 billion dol dollar bonus for goosing the stock because, you know.
- [62:06]
A
Yeah. Was that tied? That's an interesting question. If she had some kind of compensation tied to the stock price.
- [62:11]
D
Well, there were also reports that she's a registered Republican. So there's.
- [62:15]
C
Which is. Okay. You can be that it's okay.
- [62:19]
D
Well, I mean, that's why people were saying like she did it because that message is supposed to be there. Like she was in on it.
- [62:25]
A
She was in on it. It's an inside job.
- [62:27]
B
Oh, yeah. Because obviously the whole ad was her idea. I'm sure she wrote the whole script and everything.
- [62:32]
C
I don't have American Eagle jeans. I just want to be clear. The jeans I was thinking of were from Hollister, so.
- [62:38]
A
Wow.
- [62:38]
C
Yeah.
- [62:39]
D
I think of those as brands as sort of tween jeans.
- [62:41]
C
Oh, yeah, they're.
- [62:42]
A
They're mall brands. Yeah. No offense. They're mall.
- [62:44]
C
Mall jeans.
- [62:44]
A
Yeah.
- [62:45]
C
None taken.
- [62:45]
A
I just want to submit for consideration a different number because my other one sucked and mine is $1.7 trillion. You guys. I wanted also to have the biggest number.
- [62:56]
B
Congratulations. You now have the biggest number.
- [62:58]
A
Thank you. Thank you. My dreams are coming true. It's the private credit market. And this is because the chief executive of Apollo, they've been working with Goldman and some other major banks to trade.
- [63:10]
B
Private credit, which is a contradiction in terms.
- [63:13]
A
Right. It's so funny because we have public debt markets, we have public credit. And the whole difference, the only remaining difference really, because it used to be maybe the loans were smaller in private credit and bigger in, you know, in public. It's not really called public credit. It's called syndicated credit where you go out and sell it to a bunch of big investors. But the difference was size. Okay. No, it's actually like it's club. Okay. No, there were like, there are no differences. This is the last remaining difference is that there's no like public trading of these things. And now they're going to do it, which like you just invented the same thing. It's the same thing. Tell me what's different.
- [63:47]
B
I like it because. Because now all the private credit is going to become syndicated loans and that's going to create a whole new gap in the market for really private credit.
- [63:55]
A
Actually, private credit, untradably private credit, ultra private credit, double secret private credit.
- [64:01]
B
Yeah.
- [64:01]
A
You need to be a member of.
- [64:03]
B
A very exclusive club to get our credit. Ye, exactly.
- [64:07]
A
You actually need a fully different computer to look at this credit. You can't look at it on your work computer. That would be fun. And I think we've just innovated and that is what the American economy is all about.
- [64:16]
B
And we'll put it on the blockchain.
- [64:18]
A
There we go.
- [64:18]
C
And if that happens, we'll have you back to talk about it.
- [64:23]
B
Oh my God, Mary, can you just come back all of the time because we love you so much.
- [64:26]
A
I would love to. It's so much fun to get to hang out with y'. All.
- [64:29]
B
It has been so much fun having you on this show. Thank you, Mary, for coming on. Thank you to everyone for emailing on slatemoneyastate.com thank you to Jessamyn, Molly and Shayna Roth for producing. And yeah, we'll be back next week with yet more Slate money. That's the sound of the fully electric Audi Q6E Tron and the quiet confidence of ultra smooth handling.
- [64:59]
A
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B
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A
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C
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A
Get started@advertising.roku.com Spotify that's advertising.roku.com Spotify.