Slate Money – The Natural Beauty Edition

Date: March 3, 2018
Hosts: Felix Salmon, Anna Szymanski, Jordan Weissmann

Episode Overview

This week’s Slate Money pivots from the usual pure finance talk to connect the dots between politics, environmental finance, and the rapidly-evolving regulatory landscape on Wall Street. With the departure of Jordan Weissmann looming, the show covers three major themes: President Trump’s steel and aluminum tariffs, the innovative Seychelles “debt-for-nature” swap, and the comeback of expert networks amidst changing European financial regulation—all framed in the characteristically irreverent, candid, and wonky style of the hosts.

Key Discussion Points & Insights

1. Trump’s Steel and Aluminum Tariffs (“The Trade War”)

[04:23–19:00]

• Announcement Chaos:
  Trump unexpectedly announces 25% tariffs on steel and 10% on aluminum after a White House meeting, alarming both the financial markets and his own administration.

  • Quote (Felix Salmon, 05:01):
    “He has this very kind of photo op meeting with a bunch of steel executives at the White House and then… blurts out, ‘yeah, we’re going to have 25% tariffs on steel and 10% on aluminum, as you guys call it. And then all hell breaks loose.’”

• White House Factions:
  A battle within the administration: protectionists (Ross, Lighthizer, Navarro, Bannon) vs. free traders (Cohn, Mnuchin).
  The departure of Rob Porter (ex–staff secretary) removes checks on the protectionist agenda, resulting in the sudden push for tariffs.

• National Security Justification:
  The use of “national security” (Section 232 investigation) as a pretext for tariffs is seen as bureaucratic maneuvering rather than a genuine defense concern.

  • Quote (Anna Szymanski, 07:22):
    “…is it flimsy as fuck? Yeah, it’s flimsy as fuck…”

• Trade Policy Implications:
  Likelihood that tariffs could backfire—hurting US manufacturers, consumer prices, and disrupting global supply chains (especially for industries like car manufacturing where parts cross borders multiple times).

  • Quote (Felix Salmon, 13:01):
    “We live in a world of supply chains where… parts which make up the car, have crossed the border between Mexico and the US or between Canada and the US like 30,000 times before you finally get a car.”

• Potential Global Fallout:
  Europe and Canada are the US’s main steel suppliers, not China. Risks of retaliatory tariffs and trade war, with parallels to Bush-era tariffs (which the WTO overturned after EU retaliation).

  • Quote (Anna Szymanski, 18:09):
    “It just comes back to, is steel worth a fight with all of our trade partners?”

2. Debt-for-Nature Swap in Seychelles

[19:08–31:44]

• Landmark Environmental Finance Deal:
  Seychelles designates 30% of its marine territory as protected, using a “debt-for-nature” swap mechanism—this is an innovative use of sovereign debt management to drive conservation.

  • Quote (Felix Salmon, 19:49):
    “99% of the people listening to Slate Money have never heard of a debt for nature swap. Debt for nature swaps are my favorite thing in the world…”

• How It Works:
  The Nature Conservancy’s investment arm (NatureVest) raises ~$22 million in grants and loans (with donors like Leonardo DiCaprio). Funds are channeled to a local trust; Seychelles uses those funds to buy its own debt at a discount. The repayments fund conservation and an endowment.

  • Quote (Anna Szymanski, 22:10):
    “The proceeds… are used to pay back the people who lent the money… pay for current conservation efforts, and… capitalize an endowment… so that they can protect this land in perpetuity.”

• Seychelles’ Debt Troubles:
  Despite being Africa’s highest per capita GDP, Seychelles suffered from heavy borrowing and a poorly structured Eurobond, triggering a major debt crisis post-2008.

• Benefits and Motivation:
  While Seychelles’ restructuring is mostly completed, the swap acts as a political “commitment device” for the current and future governments to maintain marine conservation as central to policy.

  • Quote (Felix Salmon, 30:35):
    “The way to look at it is as a commitment device that the current government is not going to be… allowing a bunch of people to drill for oil… But what they want… is a structure which basically constrains future governments as well.”

• Wider Interest:
  Other island nations (Jamaica, Grenada) are considering similar deals which blend finance and conservation.

3. The Return and Role of Expert Networks, Regulatory Shifts

[31:44–41:01]

• What Are Expert Networks?
  Services like Gerson Lehman connect investors with industry experts for specialized, often high-fee consultations.

  • Quote (Felix Salmon, 31:56):
    “An expert network is a company like Gerson Lehman which will put hedge fund managers and other investors in touch with experts in their respective fields…”

• Compliance Risks and Scandals:
  Past abuses—including the notorious SAC Capital case involving insider medical data—led to tighter compliance but did not kill the industry.

• Why the Renewed Popularity?
  New European regulation (MiFID II) forces asset managers to pay separately for research and trading, pushing them toward more bespoke, potentially valuable info sources—like expert networks.

  • Quote (Anna Szymanski, 34:17):
    “You can no longer bundle research services in with brokerage fees… Now you have to actually pay for their research separately.”

• Expert Networks vs. Sell-Side Research:
  Sell-side bank research is often of low utility and questionable objectivity, while expert consults offer more targeted insight—but with risks of misuse or undue influence, especially given power imbalances between finance pros and naïve experts.

  • Quote (Anna Szymanski, 35:17):
    “The vast majority of it is garbage and just not well-targeted. So if you’re thinking, like, look, am I going to spend it for research, much of which is going to be completely useless, or am I going to spend it for something that’s much more targeted?”

• Ethics & Oversight:
  Compliance is much stricter post–SAC, with calls recorded and rules against unsanctioned contact. Yet vulnerability remains, especially among experts hoping to “be part of that club.”

  • Quote (Anna Szymanski, 42:28):
    “A lot of people who… are not in finance are… sometimes in awe of portfolio managers… and they kind of, you know, they want to be part of that club…”

Notable Quotes & Memorable Moments

• Departure Banter

  • [00:33]
    Felix Salmon: “I don't know how long this team is going to stay together. Are you quitting on me?” Anna Szymanski (joking): “We're consciously uncoupling.”

• Steel As National Security?

  • [07:22] Anna Szymanski:
    “Is it flimsy as fuck? Yeah, it's flimsy as fuck.”

• Seychelles Explainer

  • [19:49] Felix Salmon:
    “99% of the people listening to Slate Money have never heard of a debt for nature swap. Debt for nature swaps are my favorite thing in the world…”

• Trade War Irony

  • [14:50] Felix Salmon:
    “The fact that the President of the United States has no conception of gains from trade…”

Important Segment Timestamps

• 00:14-04:25 — Show intro and team banter
• 04:25-19:00 — Trade war and tariff segment
• 19:08-31:44 — Seychelles debt-for-nature swap deep dive
• 31:44-41:01 — Expert networks & Wall Street research
• 43:28-47:25 — Numbers round (Georgia jet fuel, noncompetes, EM debt)

Numbers Round Highlights

[43:28–47:25]

• $50 million: Lost Georgia state sales tax revenue from jet fuel—tied to Delta/NRA controversy.

  • “This is such a stupid story.” – Felix Salmon [44:39]

• 24.5%: Share of US workforce ever covered by a non-compete agreement.

  • “That's just kind of a… crazy fucking number.” – Jordan Weissmann [45:13]

• $340 billion: Emerging markets sovereign debt issued in one year.

  • “[Tajikistan] had a big, they had a big [debt issuance].” – Anna Szymanski [48:31]

Tone and Style

The episode features sharp, highly informed but conversational analysis. The rapport between Felix, Anna, and Jordan swings from breezy banter to deep dives on complex topics, liberally spiced with dry humor and the occasional explicit language for emphasis (“flimsy as fuck”). The hosts strike a balance between wonky expertise and pop-culture references, making even technical finance accessible and engaging.

Conclusion

The Natural Beauty Edition captures the nexus of politics, finance, and the environment—from the administration’s brash economics to the innovative uses of sovereign finance for conservation, to regulatory shifts reshaping the way Wall Street makes its bets. The show’s signature: an ability to make these complicated, high-stakes stories understandable, relevant, and often, fun.

For a deeper dive, including the Slate Plus segment on Tierra del Fuego and more niche sovereign debt escapades, listeners are encouraged to subscribe to Slate Plus.