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- [00:11]
A
Hello. Welcome to the Raging Bull edition of Slate Money, your guide to the business and finance news of the week. You might not have thought that all of those six column headlines about Michael Cohen pleading guilty were business and finance news, but they were cuz he was pleading guilty to white collar crimes. White collar crime. This is well within the Slate Money wheelhouse. We are going to talk about that. We are going to talk about the record setting US Stock market, the longest bull market in living memory, perhaps depending on how you count such things. We are going to talk about bailouts or the lack thereof because apparently Greece is no longer being bailed out somewhat. Can we, can we like raise a glass of Retsina or something to the good burgers of Athens? But oh, I should introduce us all because I have not done this one yet, but I think I'm going to do it now. I am Felix Salmon of Axios. Whoa.
- [01:21]
B
Yay, Felix.
- [01:23]
A
Joined by Emily Peck of Verizon Huffington Post. Joined by Emily Peck of the Huffington Post, a wholly owned subsidiary of the cable company. And Anna Shymansky.
- [01:36]
C
Hello.
- [01:37]
A
And let's talk. Oh, and and in case that's not enough, we are going to have a whole Sleep plus segment on NYU Medical School, which is offering free tuition to all of its students. And some crazy people out there think that might be a good idea. But we enlightened Slatesters know better. So we're going to talk about that in Slate Plus. But first, white collar crime doesn't seemingly get prosecuted very often unless the criminal in question is someone like Paul Manafort or Michael Cohen who gets caught up in some grand political machine. Matt Iglesias at Vox had a reasonably compelling argument that were it not for Trump and his general, you know, presidency and the chaos thereof, probably neither Cohen nor Manafort would ever have been prosecuted for their crimes. And most of the crimes that they were prosecuted for had nothing to do with Trump. So Emily, do you think that Matt is right? Do you think that we under prosecute these crimes? Because these were serious crimes and they carry serious jail sentences. And why aren't, and if that's true, why aren't we prosecuting them?
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B
I think Matt Iglesias was somewhat right and somewhat beside the point based on other things that I have read.
- [03:07]
A
Have you been reading Shane Farrow?
- [03:08]
B
Yes. Our friend Shane Farrow wrote a piece for above the Law, sort of tangling with Iglesias piece. So Iglesias said Noem would go after these guys Manafort for it's basically a lot of tax evasion. Michael Cohen's Also pled guilty to a lot of tax evasion. No one would go after this.
- [03:27]
A
Michael Cohen was pleading guilty to weird things like he applied for a bank loan and didn't disclose all of the debts that he had. And that is wire fraud. And no one ever gets prosecuted for that kind of thing.
- [03:40]
B
Or like he brokered the sale of a Birkin bag and didn't pay taxes on that.
- [03:45]
A
He made $30,000 for. For like just being the intermediary on a Birkin. On the sale of a secondhand Birkin bag, which if it feels to me like that's a lot of money to make from just like, you know, putting a Birkin bag on ebay, what would I know?
- [04:01]
B
But anyway, so Iglesias said, like, if these guys hadn't gotten tangled up in politics, they would go on doing their little crimes forever and maybe get a wrist slap here and there along the way. Like, Donald Trump had a lawsuit over Trump University. But blah, blah, blah, he just made.
- [04:16]
A
Donald Trump himself is exhibit A here. Like, the pre presidency, Donald Trump would break the law with seeming impunity and occasionally would get his wrist slapped and have to pay a fine or something, but he'd just keep on doing it because there didn't seem to be any real consequence to doing so. And he'd just hire Roy Cohn or someone else to defend him and keep on moving.
- [04:38]
B
Right. And that's likely what most guys like Donald Trump, you know, big men with money and connections or women, you know, they get away with a lot of stuff. And so Iglesias does have somewhat of a point, but his broader point, and this was our friend Shane Farrow and above the law argued was we actually do prosecute quite a bit, thousands of cases at the federal level of white collar crimes. They're usually kind of petty white collar crimes, you know, desperate people committing various kinds of mail fraud and other stuff. And the point is that though people want to see these white collar criminals punished and sent to jail, that's really not helping anyone or solving any of the larger problems of corruption in the business world. And that actually holds true for people like Manafort and Cohen, too. Like, there are other laws and regulations that maybe need to be tightened up and other ways of monitoring and regulating business that would be more helpful than just like, locking them all up. Like, locking them up just isn't a solution.
- [05:42]
A
I mean, the one thing that Matt Iglesias and Shane Farrow, I think, agree on is that we are not locking up so many white collar criminals that the risk of going to jail acts as any kind of realistic deterrent. Right now the next question is, does that mean we should lock up more white collar criminals? And like, you know, we can argue about the efficacy of incarceration, but the clear fact is that just in terms of prosecutions, putting aside the sentences, the number of prosecutions, while there are thousands of them, is still tiny compared to the number of prosecutions of violent crimes.
- [06:21]
C
And I think part of the problem is with how difficult it is to prosecute some of these crimes. It's not surprising that the ones that are prosecuted are often going to be kind of low hanging fruit. It's going to be much easier where when you're talking about people who are very wealthy and who are potentially very good at hiding their tracks, they're behind a large organization, it can be extremely difficult to prove something. And you'll have a lot of prosecutors who will say, you know, it's not necessarily worth it.
- [06:48]
A
So Jesse Eisinger has written a whole book about this. You should go out and buy it. It's called the Chicken Shit Club. And basically what he says is the white collar crime prosecutions, especially the big ones like Enron, are incredibly time consuming, incredibly expensive. They consume enormous resources at DA's offices and they have a very high probability of failure, unlike, you know, most violent crime prosecutions. And for that reason, prosecutors who want to rack up a bunch of wins tend to avoid them.
- [07:21]
B
Yeah, and I think Iglesias made a really good point post. Not only did Enron kind of wind up looking bad because some of it wound up getting overturned, and also the company people lost, a lot of people.
- [07:32]
C
Lost their job and Arthur Anderson went under and there is a lot of question about whether that was really necessary.
- [07:37]
B
But then right after that you had 9, 11, and all the sexy prosecutions, whatever that means, went to terrorism. And there was even less of an incentive to go after white collar criminals. And I would just add the emphasize the point that Anna made, which is that powerful people get a pass. They get more discretion from prosecutors, they have more money to fight charges. You know, it's harder to get the powerful people because they're really powerful.
- [08:03]
A
And everyone was shocked. It was sort of jaw on the floor news when the headline crossed the wire that Michael Cohen was going to take a plea deal. Everyone's oh my God, he's pleading guilty. And reverberations echoed across the country for days. 90 some percent of people who get prosecuted take plea deals. We shouldn't have been so surprised. Were it not for the fact that that you know, in these high profile white collar crime cases, that rarely happens. They do turn into these incredibly expensive trials. So the question is, Emily, for you, if we agree that over incarceration is a problem and the last thing we want to do is incarcerate even more people, and if we also agree that there's no real deterrent to most white collar crime these days, with the possible exception of insider trading, which is kind of its own thing, what's the solution here? How do we, like, punish white collar crime without sending more people to jail? How do we deter people from doing this?
- [09:16]
B
I mean, I don't know. I think one thing is to prevent these people from getting back into the game again. Like, that was one of the points Iglesias made about Donald Trump. It was like, he did this, he did that, and yet he's back at it again. Like, it's not enough to slap.
- [09:33]
A
There's a lot of things saying, like, you know, Elizabeth Holmes is not allowed to be the director of a public company. You know, you could say that Donald Trump was not allowed to be a director of a public company, but then again, he never was. It wouldn't have helped.
- [09:45]
B
Right. Like maybe harsher penalties that prevent these people from getting back into the business world. Like I think someone pointed out Steve Cohen, who, who's back running investments now.
- [09:56]
A
Right. Well, he was never prosecuted.
- [09:58]
C
Yeah.
- [09:58]
B
It was just SAC anyways. And I think you look to the tax system, get more taxes out of these people, raise taxes on the wealthy. I think you tighten up regulation so people are monitored more in real time.
- [10:13]
A
And I do think you can definitely rack up the punitive fines. All too often you find people saying, well, what was the damage? And then you have to pay the cost of the damages without, like, enormous punitive damages. But, yeah, make these things really punitive and you might see less of it.
- [10:32]
B
Make it harder to do the crimes. Make it harder to do the crimes. Like maybe increase enforcement, the irs so people can't do as much tax evasion, like, make it hard.
- [10:40]
A
And that's actually a really good point, is that the IRS has been starved of funds for many, many years now, and it's making it just that much more attractive to try and evade taxes. Because the chances of being caught, the chances of being audited are going down and down.
- [10:58]
C
Yeah. So I think if it's improved oversight and then, as you say, really increased penalties, because I think people often will say, oh, it doesn't matter. They can just pay a fine. It doesn't matter. It doesn't matter. But I think what we've talked about in the past year or so with a number of companies getting enormous fines for not white collar crime, but for other things like. No, these things actually can matter if they're big enough.
- [11:17]
A
Like, which.
- [11:18]
C
Well, so we talked about Monsanto.
- [11:22]
A
Yeah, Monsanto is an interesting one because. Yeah. That they, they had one judgment which will probably be reduced on appeal, but people are saying, look, there's a huge amount of risk of a lot more judgments where that came from. But I, you know, I'm not even sure that one counts as white collar crime.
- [11:42]
C
That's what I was saying. I wasn't saying that those were white collar crime. What I was saying is that even if you have things like, you know, the EU finds on Google, it's not white collar crime. But what I'm saying is there is a certain point when penalties and fines really do matter. And so what I'm saying is with white collar crime, if you really do want to try to deter, you're going to have to raise the level of penalty to a point where it actually hurts.
- [12:01]
B
What about Elizabeth Warren's idea? Do you think that would help? Do you think if, do you think if companies were accountable to just more than bottom line and shareholders, they would do less bad stuff?
- [12:13]
A
Well, I mean, it wouldn't help in terms of individual criminal actions. And what you're seeing in, you know, cases of Michael Cohen or Paul Manafort or even Donald Trump back when he was a real estate developer, is that like none of those actions would be covered by rules about corporations.
- [12:30]
B
True. Fair. The Monsanto thing, though, Maybe.
- [12:36]
A
So the other news. Anna, you're our markets person, so you can, you can explain this to me. Something, something bull market record, something.
- [12:45]
C
Yes. So depending on how you calculate it, this week we may have entered the longest bull run in history. I say depending on how you calculate it, because there's a lot of controversy about that.
- [12:58]
A
But yeah, I think, I think basically the idea is that you, you, you count the number of days from the point at which the market bottomed and then the bull run stops when the market drops by 20%.
- [13:13]
C
Yeah.
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A
And right now we've seen people have reached a record. Does this mean anything?
- [13:20]
C
I think it's important just in terms of keeping in mind that markets are cycles and this is a cycle that has been going on for a while and it's roughly.
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A
We're coming on for 10 years now.
- [13:32]
C
Yeah, I mean, I would, I would actually more argue that this didn't really start until 2013. But still, you can say we are getting a little bit long in the tooth. And we are seeing and have seen for a few years a number of relatively high valuations. We've had a little bit of correction.
- [13:46]
A
So the stock market is hitting new highs. We've been expanding. It's been rising for, well, since like 2009. It's been rising even more surprisingly for the past five years or so. And there's this intuitive idea that people have that what goes up must come down and that these things are cyclical and that the longer it goes on, somehow the more real the chances are of either a crash or a decline or a bear market or something like that. And there was this column in the Washington Post by George Will where he was like, now I'm getting scared. For no particular reason other than this has been going on too long.
- [14:25]
C
Yeah. And I think it's a real mistake to say that just because something is going on for a long time, that means that the correction is going to be really severe. That doesn't mean that at all. And if anything, you could argue no.
- [14:35]
A
But they're not even saying it's going to be severe, but they're just saying it's like overdue. That, you know, it's. It's more likely to happen now than it was to happen five years ago.
- [14:46]
C
And I would say that there's the old line. Markets don't die of old age, which even in itself is questionable. But in if you don't have something affecting corporate earnings, there's really no reason for the market to correct. And right now, just because this has been going on for a long time, we are in a period where we're seeing, you know, record profit margins in corporate earnings. So the idea that we're going to be going into immediately some period of correction, there doesn't seem a tremendous amount of evidence for that now. But I do think that even though I don't think we're going to immediately go into any type of, you know, significant decline, the moment when people stop worrying is, I think, actually more when we should worry.
- [15:31]
A
Well, I mean, this. I mean, I've heard this bull market described as like the most reluctant bull market in history. No one has ever been. It's the most hated bull market in history. No one has ever been bought into it. No one has ever been like, yay, we're just going to ride the market up. But there's been no kind of like gleeful money making in this bull market.
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C
So I think this is important because we're not seeing the Type of, you know, irrational exuberance one would expect.
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A
However, and we're not seeing, we're not seeing like speculative, like I'm going, we're not certain kind of the day trading that we saw in the late 90s or any kind of people saying I'm going to buy a whole bunch of stocks and make money that way.
- [16:10]
C
No, but we have definitely potential bubbles in other places.
- [16:15]
A
Well, I mean, we had it in Bitcoin and that one crashed.
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C
Yes.
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B
So I mean, I say who cares?
- [16:24]
A
So my answer that, it's a good question, but my answer to that is just on a sort of personal finance level, there's always been this very standard advice which is go put your money into the market, you know, your retirement funds into the market and leave them there for the long term. And they'll grow over the long term. And it's trivially and obviously true that your money which you invest over the long term is going to get much higher returns if you buy low than if you buy high.
- [17:00]
C
And I think that this is important though, because when people are looking at expected returns, there is a mistake of saying like, well, but over a 20 year period, this is what you can expect to make over. But that's not the right question. The question should be what are expected returns when you have a PE ratio of 24?
- [17:17]
B
I say again, who cares? Most people aren't invested in the stock market. This is a concern of some privileged elites mostly.
- [17:26]
C
Actually more than about half of the United States is invested.
- [17:30]
B
Yeah, but like Those people with $50,000 in a 401k, like, yes, I guess nominally they're invested in the stock market.
- [17:37]
A
And what's more, they have more sensitivity to declines. Like if the stock market declines by 50%, they're the people who are going to get hurt the worst.
- [17:46]
B
Yes, but again, that money was not going to help them very much in retirement anyway. Like the threat to them is like, I guess if the threat to them is Social Security being cut.
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C
Well, no, but also if you have a, if you had a significant stock market decline, that's going to definitely seep into the real market. That's essentially what happened in 2008. That was much more about a financial panic. But then that certainly had very real world consequences.
- [18:09]
A
Wait, wait, wait, let me just jump in. The problem of 2008 was a financial crisis. It was not a market decline. We saw an equally, if not larger market decline in 2000 with absolute.
- [18:22]
C
No, and I completely and I 100% agree with that. I'm just saying that So I can, I do agree that looking at, like, slight increases, declines over time, I do think are not always the most important thing. But if you're looking at people saying what might be happening in the next 10 years, and could that also affect the real economy or reflect the real economy, I think that that's a more valid question.
- [18:46]
A
Okay, but let me put it another way, Emily, for you. Let's say that you are not, you know, let's say that you are about to retire and, you know, you're. You're in your, like, early 60s, say, and you have a 401k and it has a couple of hundred thousand dollars in it. And you start looking at it and you start wondering, should I start, you know, moving out of stocks and into something more, maybe a bit more fixed income? Because I'm worried that in the next, in the next couple of years, maybe the stocks will crash. And I actually kind of need this money.
- [19:20]
B
I mean, I think that's just standard investment advice. As you approach retirement age, you get out of the risky stuff. Like, I remember my father was always like, I don't know, is it time? Is it time? Am I going to retire? It's like, just do it, man. Just do it. Like, that's just the advice. So, I mean, I would. I really feel for anyone who had their money in the stock market, their retirement money, you know, in 2008, and that sucks. But I don't think that the concerns. I think you can avoid that kind of thing by with a little just taking the standard investment advice.
- [19:51]
A
And if you're not in the standard investment advice, I think turned out to be true in that, like, for those people who weren't about to retire and didn't need it immediately, if you were fully invested in 2008, lost half your money and just did nothing, you are fine right now.
- [20:04]
B
Oh, yeah, you're totally fine right now. I mean, the stock market, like, if you look at the charts and this might be. I'm not, I'm not Anna. Everybody knows. But I was looking at the charts and the stock market mostly goes up. Is that a crazy thing to say? But, I mean, the dips are short. They're bad, but they're short. And then they go up again. And if you're ready to retire, get out of the stock market. I don't know. Is it that hard? Is it that complicated?
- [20:28]
A
Let's talk about Greece. This is a super interesting thing. Like, Greece has exited its bailout. And there are lots of talk, there's lots of articles about this in terms of Greece is still. Its economy is really bad. It's so much smaller than it was pre crisis. People are still struggling. There's this enormous brain drain. And I kept on reading the articles and reading the articles and trying to work out what the hell does it mean that they've exited their bailout. And as far as I can tell, the only thing it means is that they're not borrowing even more money from the troika anymore from the EU and the EC and the imf. And if they do need to borrow any more money, then they do so by issuing bonds on the private market rather than borrowing from multinational institutions. Is that it?
- [21:21]
C
It's a little bit more than that. So in theory, what it would mean to exit is that they would become like every other European country and they would have more control over their own fiscal policy. They wouldn't be getting all of these loans. Now that's not exactly what's really happening here because there was debt relief negotiations earlier in the year. And as a consequence of that, a lot of Greece's debts were pushed forward. So they basically don't have to make any payments for like over 10 years of principal and interest. And this was part of the negotiations of exiting the bailout. Involved in those negotiations as well was money that was going to be given to Greece so that they could meet upcoming maturities and have a cash buffer so that they don't have to issue bonds soon. The reason I say all this is to say that although things are a little bit better in Greece, they're not really that much better. And looking to the future, we don't have a lot of evidence that they're going to be getting significantly better anytime soon.
- [22:29]
A
Okay, but you see, this is exactly what I just said. That like, the minute anyone talks about exiting bailout, everyone's like talking about the Greek economy and whether it's good or not. And I still don't know what exiting the bailout means.
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C
Well, it means you're not going to be getting, well, one, it means you're not going to have the be so dependent on this kind of EU IMF financing.
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A
So are they dependent on EU IMF financing at all? They were going to receive one more penny of financing from those institutions or not.
- [22:59]
C
Okay, so I'll make it simpler. The money, a lot of the money that is being given from the Greeks to these European organizations is then being given back to the Greeks, unfortunately.
- [23:11]
A
And so it's. So basically Greece owes money to the EU and then once it gives, pays back that money to the eu, the EU will then turn around and give it straight back to Greece. And that is going to be more money from the EU to Greece?
- [23:24]
C
Not all of it, but yes. And so the reason I say that.
- [23:27]
B
Doesn'T count as a bailout anymore.
- [23:28]
C
No, it doesn't. And that's why I would say, yes, some of this is a little silly, but, but I do think it matters because what we're probably going to see is also some relax, relaxation of the austerity measures.
- [23:41]
A
So because the EU no longer has the ability to tell Greece what they are or are not allowed to do.
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C
Not actually true. Because for the next, I think until 2022, while some of this money is still being dispersed back and forth, that money that the European organizations are going to be giving back to Greece, that can stop if the Greeks don't meet certain targets.
- [24:04]
A
And is that significant money?
- [24:07]
C
It's, it's not insignificant money. And, but so, so has anything changed?
- [24:16]
B
Yes, I would say why do they. Yeah, why are they writing the articles? Why are they writing. Why are they saying the bang.
- [24:21]
C
There is a difference between these, the, you know, troika, the having so much control over what the Greeks can do. Whereas now basically everyone understands that at some point a lot of this debt's just gonna be written off. And everybody knows that it's just not gonna be written off right now because it's politically impossible.
- [24:40]
B
I think you said that they're putting off for 10 years a bunch of payments and then now you're saying in 10 years they'll be like, it's cool.
- [24:47]
C
For people I've spoken to, it appears that right now they're kind of doing the classic extend and pretend.
- [24:54]
B
Extend and pretend.
- [24:55]
C
Right. The point I'm saying is that we are entering a different era. And I guess that's the point I'm trying to make is that although things aren't going to be markedly different, they are going to be different because you even right now hear that the discussions between the Syriza led government and these kind of EU institutions about what fiscal policies they can and cannot do, a lot of the European institutions are being a lot more relaxed about that now. They're starting to understand that maybe some of this austerity that they forced on Greece was not actually a good idea.
- [25:26]
A
But is that just understanding that maybe they should be a little bit, they should allow Greece to have a bit of a longer leash or is that connected in some way to this news which may or may not be news or may or may not be a thing that the bailout is over.
- [25:44]
C
So the reason that the bailout, the news about the bailout being over is important is because it reflects, I think, this new understanding in the troika in a lot of these European leaders that they may have not actually handled this that well. And if they thought that nothing had changed and they were going to just keep doing the exact same requirements that they had in the past, you would not have, this would not be the end of the bailout.
- [26:09]
A
So wait, what you're saying is. Okay, so now I think I'm beginning to understand this a bit better. You're saying that the decision there was an active decision to end the bailout and that decision was made at the EU level, that it wasn't just Greece saying we don't need to borrow any more money from you guys, that there was actually a European decision to say, okay, we're going to end the bailout and you guys are much more free to do what you want.
- [26:31]
C
Exactly. And it's not that they're 100% free. They still have to meet these ridiculous primary surplus targets that they're never going to be able to meet for the long term. And everybody knows that. But yes, it's this idea that the last negotiations that were the negotiations to end the bailout, these negotiations were working under the assumption that things have changed and that Greece is now going to be in a different position. And, and it also looks like Greece is probably going to have the ability to start growing a little bit faster by starting to relax things a little bit. And it doesn't look like the Europeans are going to be as stringent as they were in the past.
- [27:08]
A
So basically Greece has like moved out of its parents house, has a little bit more independence, is maybe still getting a little bit of help with the rent quietly without people talking about it, but is nominally more independent than when they were still living in their parents basement.
- [27:24]
B
Yes. So the reason the eu, the troika learned its lesson is it that they understand now that too much austerity is real bad. Like are they looking at the, I mean all the stories this week about Greece like Felix said, were just these like amazing sob stories about unemployment at record levels and every person that they talked to was like drinking like more liquid so they wouldn't feel hungry all day and like just awful stuff. Is, is that the lesson that the troika saw all this pain and realized like economic growth is not going to come from too much austerity or is it something more?
- [27:59]
C
I think it's it's, there's, there were a lot of lessons learned here because, I mean, I do think it's important to remember that not the Greek people, but the, the Greek government certainly did misbehave in terms of the accounting shenanigans that hid the position they were actually in before they joined the eu. But I do think there is an understanding now that if someone's in a horrible recession, which was the position Greek Greece was in, and you force them to then have fiscal austerity, so you're cutting your. You're increasing taxes, you're cutting benefits, even like the most orthodox economics tells you, that that's going to make things worse. And they're now realizing, I think, to a certain extent, especially if you look at other countries, that maybe this isn't quite the way they want to move forward in the future.
- [28:44]
B
Do you think that's a lesson that applies worldwide? Because I feel like the austerity measures, it wasn't just, you know, the EU on Greece. It was the.
- [28:52]
A
The real question about where this lesson applies is Italy, because we're still waiting for the Italian shoe to drop. And the way that the EU reacts to the inevitable Italian crisis, which is going to happen God knows when, is almost certainly going to be colored by their experience in Greece.
- [29:11]
C
I agree, and I think that it will probably not be as strict and severe. There'll be a little bit more of an understanding of how these things work in practice. It doesn't mean that some of the things that the troika was asking for were unreasonable, because Greece still does need to make their economy more productive. They need to relax some labor laws. There's a lot of things that need privatizations. They need to get their banks in order. Their banks are in a better position, but still not great.
- [29:37]
A
But the question isn't whether Greece needs those things. The question is much more whether the EU is within its rights to demand those things in the face of overwhelming democratic and popular opposition to those things from the country in question. It's like, who has the power to make those decisions?
- [29:58]
C
And this is where it gets so complicated, because, of course, the politics in the countries of the creditors is very different than the politics of the countries and the debtors. So you have a lot of political considerations here. And you also do have to always kind of balance these things of, on the one hand, yes, you don't want to see what happened in Greece happen in other countries, but you also do want countries to be more fiscally prudent.
- [30:21]
A
Moving forward, because who's you in this.
- [30:24]
C
Like situation, I would say most of Europe, and because you, a country can, especially a country that doesn't have control over its own monetary policy, does not have the same ability to live beyond its means. And one could argue about whether Greece even being in the EU ever made any sense, because they would not have had the same severity of destruction of the kind of standard of living if they had not been in the euro.
- [30:53]
A
And it's actually interesting, we're seeing a couple of examples right now of countries having economic problems outside the eu, but inside Europe. And the two I'm thinking of in particular are Russia and Turkey, and they both have control over their own central banks and monetary systems. And Turkey is reacting badly and going down the toilet. And Russian monetary policy, for all of the complaints you can make about Russian aggression and geopolitical and all of those things, its monetary policy seems to be quite good. And having their own currency and having their own central bank and being able to have a decent monetary policy is certainly helping Russia in a way that no European country has the ability to do those things because they don't have control over their own central bank.
- [31:49]
B
Isn't that the flaw of. That's like. The flaw of the EU is like they, they join the currency, but the politics are all separate. So it's like this, it's insanity. It's like if the United States had a single currency.
- [32:01]
A
Oh, wait, we do know.
- [32:02]
B
But like, but each state was like super on its own, right?
- [32:06]
C
So it is always that issue of normally if you're a country that's going through some type of economic crisis, you can essentially deflate away, right? Or sorry, not deflate, inflate away a lot of your obligations. And you can also make your producers, your exports more competitive.
- [32:25]
A
And in the United States, if you're a state going through economic problems, you can't deflate. You're fixed to the dollar, you can't do anything about that. But you have a whole bunch of automatic fiscal stabilizers in the form of federal funds which get spent on Medicare and Medicaid and Social Security and a whole bunch of things like that which automatically go up when the state has economic problems. The shared that money comes into the state and you never have New Yorkers sort of, you know, marching in the streets complaining about how much they're subsidizing Mississippi. It just doesn't happen.
- [32:59]
B
You need the politics to be unified as well as the currency. Otherwise it's EU and this is always going to have problems.
- [33:06]
C
And this is a lot of what you're hearing out of like Macron in France, this idea that you need to have a more integrated union and potentially some sort of banking union. If you're going to have a shared currency, you're going to probably need to have some type of burden sharing. Of course the problem are the politics and.
- [33:22]
A
But you know, this is the, literally the only good thing, the only good thing about Brexit is that once the Brits leave the eu, it actually becomes a lot easier to do that. Let's have a numbers round, Anna.
- [33:36]
C
So My number is 813 billion euros. So this is kind of going off of our last discussion a little bit. So this is the last estimate of what I saw of the non performing loans in the European banking sector, which is significant, especially because those are not equally shared. The.
- [33:57]
A
A lot, A lot.
- [33:58]
C
A lot of those are in Italy. So the percentage of bank loans in say Italy that are now performing are higher than 11%, which is a lot, as opposed to like Germany where it's like 2%. So this just shows you that Europe still has a long way to go.
- [34:12]
A
My number is $200, which is a fight that Apple is having with local property tax inspectors in Cupertino. And what happens with all property tax regimes is that the assessors come around and put a valuation on a building and then the person who owns the building appeals that and says, no, it's not worth nearly that much, it's worth less, so we have to pay less property tax. Anyway. The assessors found this cluster of properties which was owned in and around Apple park. It's owned by Apple and they assessed these properties at $1 billion. And Apple then turned around and said, no, no, no, they're not worth $1 billion. They are worth $200.
- [35:03]
B
That makes sense.
- [35:04]
A
Yeah.
- [35:05]
B
That's like 1/5 of an iPhone, basically. Yeah, that seems right.
- [35:09]
C
Yeah, that's funny.
- [35:11]
A
So that gives you an idea of like tax crazy. But what's your number, Emily?
- [35:16]
B
My number is $800 million and that is Birkenstock sales. The sandals that come from Germany. Sales have of Birkenstocks have tripled since 2012. There's a really good piece, is this.
- [35:31]
A
In New York magazine, mostly in. Is this the Americans? Are they finally doing the Birkenstock thing?
- [35:35]
B
It's the Americans. They some, some fashion designers started doing cool things to Birkenstocks, if such a thing is possible. And so more people started buying them. Then the company, which is a family owned company, they brought an outsider to run it and started doing some little innovations. Such as they started selling these like Eva Birkenstocks, which are cheaper and, and not made of leather and they have taken off. So sales have tripled. So now the question is, will Birkenstock screw it up and become, this is my question. And become like the next Crocs, which also kind of went through like a big explosion in popularity and were ugly and then kind of fell off.
- [36:13]
A
And this is, and this is where I come in and say no, because Crocs were at the mercy of Erin Szymansky and other market types and they were a public company and they had to show growth and they had a stock market listing and that was what killed them because they needed to. They all they wanted to do was get the share price up. But Birkenstock is a family owned company and all they care about is just looking after their family and creating something sustainable for many generations. And so therefore they will be more sensible.
- [36:43]
B
I agree. Also, I like comments.
- [36:48]
A
Anyway, I think that's it for us this week. Thank you so much for listening. If you're a Slate plus member, stay tuned. We will talk about medical school and tuition, but otherwise, thanks for listening to Slate Money and keep those emails coming. Slate Money at Slate. Thanks to Max Jacobs, our indefatigable producer. He has been lining up. I'm telling you, we have some pretty amazing guests coming up in the next sort of foreseeable future. So Slate Money is going to be getting good people. It's, I mean, not that it hasn't been good, but it's going to be getting, it's going to be at least staying good, if not getting even better.
- [37:27]
C
It'll be kind of like growth.
- [37:29]
A
Find out just how much better it can be by continuing to listen to Slate Money. Subscribe to us wherever you find your podcasts and we will talk to you next week on Slate Money.