Slate Money – "The Raging Bull Edition" (August 25, 2018)

Host: Felix Salmon (Axios)
Co-hosts: Emily Peck (Huffington Post), Anna Szymanski
This episode explores white collar crime prosecution, the record-setting US bull market, and Greece's bailout exit.

Episode Overview

This week’s Slate Money dives into three major topics:

• The realities and shortfalls of prosecuting white collar crimes, using the examples of Michael Cohen and Paul Manafort.
• A deep look at the US stock market’s historic bull run—what it means, what could make it end, and if it matters to most Americans.
• The end of Greece’s bailout status, what that really means on paper and in practice, and lessons the EU (and world) may have learned.

The hosts bring wit, skepticism, and sharp analysis, making complicated financial news accessible and lively.

Key Discussion Points and Insights

White Collar Crime: Prosecutions and Deterrence

[00:10–12:36]

• Cohen and Manafort:
  The hosts open with the news of Michael Cohen’s guilty plea and Paul Manafort’s conviction, noting such prosecutions are rare outside political contexts.

• Systemic Under-Prosecution:

  • Matt Iglesias (Vox) argues that without the Trump presidency, neither Cohen nor Manafort would have been prosecuted. Emily partly agrees but highlights Shane Farrow’s point (Above the Law) that "thousands of federal white collar crime prosecutions" happen each year, but most are minor cases and don’t tackle systemic or high-level corruption.
    • Emily: "People want to see these white collar criminals punished and sent to jail, but that's really not helping anyone or solving any larger problems of corruption in the business world." [04:01]
  • The focus tends to be on low-hanging fruit: petty criminals versus powerful, wealthy actors who can often evade charges.

• Why Aren’t There More Big Prosecutions?

  • Felix references Jesse Eisinger’s book The Chicken Shit Club, which shows that major prosecutions (e.g., Enron) are "incredibly time consuming, incredibly expensive... and have a very high probability of failure." [06:47]
  • Anna: "It's much easier [to prosecute] when you're talking about people who are very wealthy and who are potentially very good at hiding their tracks... it can be extremely difficult to prove something." [06:21]
  • Prosecutors shy away from these cases, preferring easier wins.

• Is Prison the Solution?

  • There’s little evidence that the current rate (“thousands” at the federal level) of white collar prosecutions deters future crimes.
  • Emily advocates for alternative penalties, like barring convicts from business, higher fines, increased IRS enforcement, and stronger regulation.
    • Emily: "Maybe harsher penalties that prevent these people from getting back into the business world." [09:44]
  • Anna: "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." [12:00]
  • Discussion highlights the starved resources at the IRS, which diminishes the risk of tax evasion.

Record-Setting Bull Market: Does It Matter?

[12:36–20:27]

• Is This the Longest Bull Market?

  • Anna: "Depending on how you calculate it, this week we may have entered the longest bull run in history." [12:44]
  • Whether you start measuring from 2009 or 2013, it’s been unusually long.

• Market Cycles and Corrections:

  • The hosts challenge the common belief that a correction is "overdue" just because the bull run has lasted so long.
    • Anna: "Markets don't die of old age... if you don't have something affecting corporate earnings, there's really no reason for the market to correct." [14:45]
  • Felix references George Will’s “now I'm getting scared” column, pointing out that vague fears are not a substantial reason to expect a crash.
  • The current bull market is dubbed "the most hated bull market in history"—few participants seem exuberant or overconfident. [15:30]

• Bubbles in Other Assets:

  • Though stock market speculation feels muted, the group notes that possible bubbles exist elsewhere, such as cryptocurrencies.
    • Anna: "We have definitely potential bubbles in other places." [16:10]

• Does the Stock Market Matter to Most People?

  • Emily is skeptical: "Most people aren't invested in the stock market. This is a concern of some privileged elites mostly." [17:16]
  • Anna: "More than about half of the United States is invested." [17:26]
  • Felix and Anna note that ordinary savers—the "401k middle class"—are indeed exposed, and bear the brunt of declines.

• Investment Advice When Nearing Retirement:

  • Emily: "As you approach retirement age, you get out of the risky stuff... that's just the advice." [19:19]
  • Felix: If you just "did nothing" after 2008’s crash, you'd still be fine now thanks to market recovery. [19:50]

Greece Exiting Its Bailout: Substance or Symbolism?

[20:27–33:33]

• What Does Exiting the Bailout Really Mean?

  • Felix struggles with media reports that frame bailout exit as a big positive, but notes the Greek economy remains weak.
  • Anna clarifies:
    • Greece no longer takes new loans from the "troika" (EU, EC, IMF) but still owes significant money.
    • Payments are deferred for 10+ years, and Greece has a "cash buffer" to avoid rushing back to private markets.
    • There’s some relaxation of austerity measures, but not complete sovereignty—some EU oversight lingers until at least 2022.

• Is It Really Independence?

  • Anna draws an analogy: Greece has "moved out of its parents' house," but "is maybe still getting a little bit of help with the rent quietly." [27:08]

• Lessons Learned by the EU?

  • Emily wonders if the EU recognizes that "too much austerity is real bad," citing Greek hardship stories.
  • Anna: There’s a realization that forcing fiscal austerity during a deep recession is counterproductive—even conservative economics "tells you that's going to make things worse." [27:59]
  • Felix and Anna discuss whether these lessons will apply to future crises—Italy, for instance.

• Limitations of Eurozone Structure:

  • Felix and Anna compare the US and EU: US states can't adjust currency, but benefit from federal fiscal transfers; the EU lacks this political-fiscal union, making crises harder to address.
    • Felix: "You have a whole bunch of automatic fiscal stabilizers in the form of federal funds... 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." [32:25]

Notable Quotes and Memorable Moments

• On the Difficulty of Prosecuting White Collar Crime:
  • Felix: "The white collar crime prosecutions, especially the big ones like Enron, are incredibly time consuming, incredibly expensive... and they have a very high probability of failure." [06:47]
• On Market Advice:
  • Emily: "Just do it, man. Just do it. Like, that's just the advice... if you're ready to retire, get out of the stock market. I don't know. Is it that hard? Is it that complicated?" [19:19, 20:04]
• On Greece's Nominal Independence:
  • Felix: "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." [27:08]
• On EU Flaws:
  • Emily: "That's the flaw of the EU—they join the currency but the politics are all separate, so it's... insanity." [31:49]
• Punishments for White Collar Crime:
  • Anna: "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." [12:00]
  • Emily: "Make it harder to do the crimes... maybe increase enforcement the irs so people can't do as much tax evasion." [10:32]

Numbers Round

[33:35–36:47]

• Anna: €813 billion – The total value of non-performing loans in the European banking sector, concentrated especially in Italy. [33:35]
• Felix: $200 – What Apple claimed its Cupertino properties were worth for tax assessment (against a $1 billion valuation). "That's like 1/5 of an iPhone." [34:12]
• Emily: $800 million – Annual sales of Birkenstock sandals, which have tripled since 2012, with speculation about whether fashion fads will push them the way of Crocs. [35:15]

Conclusion and Tone

Slate Money, true to form, delivers deep yet witty business and finance analysis. The hosts blend sharp skepticism, humor, and practical perspective to demystify complicated topics—often by challenging each other's assumptions. Memorable analogies (e.g., "moving out of the parents' house") and direct, engaging exchanges make this episode especially useful and enjoyable for listeners at all levels.

Important Segments (Timestamps)

• White collar crime prosecution: [00:10–12:36]
• Stock market bull run: [12:36–20:27]
• Greece’s bailout exit: [20:27–33:33]
• Numbers round: [33:35–36:47]

For questions or comments, reach out to the show at slatemoney@slate.com.