#734: The Generational Wealth Heist with Nick Nemeth

Summary

---

TFTC Podcast #734: "The Generational Wealth Heist"

Guest: Nick Namath
Host: Marty Bent
Date: April 8, 2026

---

Episode Overview

This episode explores the alarming fragility within the US life insurance and annuities sector, particularly how private equity ownership and reinsurance practices are eroding the financial safety of millions of Americans. Marty Bent and guest Nick Namath dive deep into how accounting tricks, opaque offshore structures, and excessive leverage are hiding an existential crisis in the insurance industry—a slow-motion heist of generational wealth. The discussion connects this growing systemic risk to broader economic vulnerabilities, generational divides, and the case for Bitcoin as a hedge against fiat and institutional trust failures.

---

Key Discussion Points & Insights

1. The Existential Crisis in US Life Insurance

• Overview: Most of the top 30 US life insurance companies are technically insolvent if you strip away specific accounting maneuvers.
  • Quote: “29 of the top 30 life insurance companies in America are technically insolvent if you strip out one accounting trick.” – Nick Namath [00:55]
• The episode’s central insight: Life insurance, annuity, and pension claims may not be backed by real money, risking a massive consumer fallout.
• The bull case for Bitcoin rests partly on this systemic rot: In a world of fiat devaluation, “Bitcoin wins.” – Nick Namath [00:19]

2. Private Equity’s Insurance Takeover

• Mechanism: Private equity (PE) firms acquire insurers, immediately install themselves as asset managers, and shift stable portfolios into higher-risk, illiquid assets for greater fee extraction.
  • Quote: “They took the Warren Buffett playbook and said, let’s make it evil.” – Nick Namath [04:46]
• PE incentives favor velocity and fee maximization, not prudent stewardship of policyholder capital.
• Oversight breakdown: Purchases often route insurance reserves into shell reinsurance entities in opaque jurisdictions like Bermuda.

3. The Bermuda/Offshore Black Box & Regulatory Failure

• Opaque structures: Offshore reinsurance entities hide true asset quality and capital adequacy.
  • Captive insurance subsidiaries in Vermont, Bermuda, and the Caymans exploit legal loopholes—some even immune to US subpoenas.
  • Quote: “If there’s a court subpoena they don’t have to turn it over. According to Vermont … If you just opened up that black box, it would all be over.” – Nick Namath [18:52]
• Rehypothecation: Assets are repeatedly pledged, hollowing out true reserves.
• Key insight: “Regulators are asleep and the Federal Reserve can’t bail out a balance sheet bigger than its own.” – Nick Namath [13:45]

4. Red Flags: Accounting Tricks, Mark-to-Model, and Leverage

• PE-driven insurers use aggressive leverage (sometimes up to 70x) and “mark-to-model” accounting to overstate asset values.
  • Example: Loans marked near par despite clear market discounts.
  • Quote: “In some cases, there’s literally a public market price and they just choose not to use it.” – Nick Namath [28:36]
• Downgrades and mass redemptions could set off a cascade, forcing fire sales and revealing insolvency.
• Illiquidity and bad incentives increase the risk of a disorderly unwind—mirroring or even surpassing 2008, but outside regulated banks.

5. Systemic Risk & Generational Tension

• Wealth Extraction and “Boomer Communism”:
  The current system extracts about $1 trillion/year in fees, disproportionately benefitting older generations and entrenched interests while leaving younger Americans asset-light and hopeless.
  • Quote: “I title everything is no more Boomer Communism. The extraction is complete and it’s gonna continue.” – Nick Namath [54:09]
• The coming crisis is described as a “generational wealth heist.”
• Millennials and Gen Z, deprived of opportunity and housing, feel the system is rigged.

6. Political Dynamics and “What’s Next”

• Both parties are seen as complicit, though Namath notes there may be an opening for reform if public scrutiny mounts—especially in an election year.
• “If you see Elizabeth Warren start talking about this … that’s a huge indicator.” – Nick Namath [54:04]
• The likely outcome for PE: Some fines for egregious actors, but expect “Lehman moments” for several big players. “Investors are about to learn a tough lesson.” – Nick Namath [48:26]

7. Solutions & Personal Strategies

• Transparency: Regulators and the public need to “open the black box” and demand honest asset and liability disclosures from insurers and reinsurers.
• Encourage individual due diligence:
  • Fact-check and publicly discuss these issues using AI and social media.
  • Cautious diversification: “Don’t just 100% buy Bitcoin and gold and root for the world to end.” – Nick Namath [73:47]
• Resetting the system: Namath advocates letting asset prices fall (“wiping the wealth”) so capitalism can reset and younger generations can rebuild.
  • “Equity prices … need to go down 40, 50% at least. And then we build from the ashes.” – Nick Namath [61:54]

---

Notable Quotes & Memorable Moments

• “If you’re not paying attention, you probably should be. Probably should be.” – Nick Namath [00:20]
• “They [PE firms] start pushing [insurance reserves] into private debt. And this is where things get hairy.” – Host [12:06]
• “You’re trusting Bermuda Courts to protect Americans while they get paid and their economy booms from all the premiums.” – Nick Namath [18:52]
• “All of this is going to happen at the same time. Credit events don't happen in a silo.” – Nick Namath [27:05]
• “This is a bomb. We are lucky if the hole is just, you know, a trillion dollars.” – Nick Namath [13:45]
• “Cash is not a security. So I can say cash is good, okay? Bitcoin is not a security … CYA on what the potential bailout could be at the same time, don’t just 100% buy Bitcoin and gold ...” – Nick Namath [73:47]
• “We’ve got guys our age flying F15s, dropping out of helicopters in the Middle East. We could at least make sure that something gets fixed by the time they come back.” – Nick Namath [72:38]

---

Timeline of Key Segments

| Timestamp | Topic/Quote | |-----------|---------------------------------------------------------------------------------------------------| | 00:07 | Bitcoin as a safe haven in a world of currency devaluation | | 00:55 | “29 of the top 30 life insurance companies ... are technically insolvent...” (Big claim intro) | | 04:46 | “They took the Warren Buffett playbook and said, let’s make it evil.” | | 09:10 | Explanation: Private equity, insurance, reinsurance, captive entities | | 13:45 | “We are lucky if the hole is just, you know, a trillion dollars ...” | | 18:52 | “You’re trusting Bermuda courts… once it’s invisible in Bermuda, that’s where it gets scary.” | | 23:36 | Underlying risks: “This is all built on trust … nothing the Fed can do.” | | 27:05 | Systemic liquidity risk & downgrades | | 28:36 | Mark-to-model tricks: “Sometimes they choose to ignore the market price.” | | 48:26 | What happens to PE firms? “They're about to learn a tough lesson...” | | 54:09 | “No more Boomer Communism. The extraction is complete...” | | 61:54 | “We need to wipe the wealth ... Equity prices ... need to go down 40, 50%...” | | 73:47 | “Don’t just 100% buy Bitcoin and gold ... CYA on what the potential bailout could be...” |

---

Takeaways for Listeners

• The US life insurance industry’s safety net is far more fragile than most realize, with PE firms exploiting opaque offshore reinsurance and aggressive accounting to siphon wealth and gamble with policyholder money.
• If the dominoes fall—via asset downgrades, redemption runs, or exposed fraud—the social and financial repercussions could dwarf 2008, hitting millions of ordinary Americans.
• Current problems aren’t “contained” to private equity; they reach deep into pensions, annuities, and the intergenerational social contract.
• Namath calls for transparency, urgent regulatory scrutiny—and a real reckoning with generational privilege and systemic rot, not band-aids or denial.

---

Summary written in the candid, urgent, and sometimes irreverent tone of the episode.

Transcript

[Nick Namath]

You've had a dynamic where money's become freer than free. If you talk about a Fed just gone nuts, all, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for bitcoin. If you're not paying attention, you probably should be. Probably should be. Probably should be.

[Host]

Nick Namath, welcome to the show, sir.

[Nick Namath]

Thanks for having me on.

[Host]

Well, I'm pumped to have you on. Like I was telling you, I love your energy. Binge your YouTube channel last night, read one of your recent articles and I think we should just jump into it. So you've been saying that 29 of

[Co-host]

the top 30 life insurance companies in America are technically insolvent if you strip

[Host]

out one accounting trick. So that means if you're out there, you're listening, you have a life insurance

[Co-host]

policy, an annuity, a pension.

[Host]

The money backing that claim might not actually exist. And I think just starting off there, how did you back into this claim?

[Nick Namath]

So the private credit part that everyone's talking about, Bloomberg, Wall Street Journal. I quickly realized athene is a big part of this. We all knew that. So I'm looking into, wait a minute, how much is this actually levered? And they say in their consolidated equity, it's only. They say they have $13 billion of equity. They say it's my assets.

[Host]

I don't know.

[Nick Namath]

20 times levered, 24 times levered. But you're trusting Bermuda hold cos. And you're trusting Bermuda Courts. In reality of what we control, it's 69 times longer. So I started diving into this and then all of a sudden, Tom, forensic accountant, went on the Eisman podcast. And I was like, holy shit, this is worse than I thought. So it took a fire and made it into an inferno. And I start just really diving in because I got, I got business, I got a bunch of stuff. And I'm like, okay, I'm going to focus on this, make sure this gets out. Then Tom started saying, hey, you know, I really appreciated what you wrote up and the letter to Johnson, and it's actually so much worse than he thought. And at that point I was like, no, I can't do any worse. I can't do any worse. But we, we've been diving into it and people who've got to understand look up Tom what's his Twitter? I don't think he has a Twitter.

[Host]

His last name's Gober, though. G O B E R. Yeah, yeah, Tom.

[Nick Namath]

Tom Gober. You can look him up online. He's got journalists that have covered him, but journalists write everything, like, Super Milk Toasty, you know, And I'm a substack author. I got no sponsor. I'm like, ah, this is driving me insane. I'm going to say exactly how I feel about it and then actually tone it down, because what I really want to say would probably get me sued.

[Host]

Well, I mean, I think to

[Co-host]

paint

[Host]

the clear picture for anybody listening out there, I mean, so I caught that episode between Steve Eisman and Tom Gober. So Tom Gober, as you mentioned, forensic accountant out of Mississippi. He's been cited many times, been part of FBI trials doing forensic accountant, uncovering fraud.

[Co-host]

He was on Steve Eisman's podcast.

[Host]

Steve Eisman, the guy from the Great financial crisis. Steve Carell played him in the Big Short.

[Co-host]

And the thing that caught my attention in that episode and something that you've

[Host]

been saying, what you alluded to in

[Co-host]

the open, is that everybody's focused on private credit.

[Host]

Looking at what's happening with Blue Owl, all these different funds basically gating redemptions, and they're saying, oh, this is the big problem.

[Co-host]

But I think what Tom and Steve discuss and how you describe it is

[Host]

private credit is just a fuse. The big bomb is the insurance underlying it. And what Tom really highlighted on the

[Co-host]

Eisman podcast and what you've been writing

[Host]

about is a lot of these private equity companies have acquired life insurance companies, basically trying to replicate the Warren Buffett style of investing, and they've been rolling a lot of those premiums into relatively risky, illiquid investments that have put those policies in a bad position. Is that a correct characterization?

[Nick Namath]

Right. That's a great start. They took the Warren Buffett playbook. Makes sense. You get an insurance balance sheet and you start taking a little bit of risk. You cannot get outsized returns. It can work well for policyholders and shareholders. Warren Buffett himself, everyone's happy. They took the Warren Buffett playbook and said, let's make it evil.

[Co-host]

So how. How did this happen?

[Host]

Because. And I think another important detail to mention, which you've covered at length, is

[Co-host]

really the reason that I think you

[Host]

feel confident in your analysis and why Tom felt comfortable coming forward on Steve

[Co-host]

Eisman's podcast is because there was a

[Host]

mistake made in terms of disclosure of a shell company's financials by Brookfield, which is a large private equity company, right?

[Nick Namath]

And anytime any of that has ever been gone into the courts, it takes a while for anyone. They go into the courts about things. It's been found to be fraud. So they're creating an asset, an XO asset. You could think of it as a put right, a put against your assets. Because just to overview annuity in life, their biggest risk is their balance sheet. They know the liabilities they're going to have to pay out. They do some crazy actuary math to make it look like it's less because they say people won't pay. They, you know, they have huge assumptions built into the irr. So they have a small reserve. You know, I'm looking at hanover reinsurance, it's 60 billion against 1.1 trillion. So I don't know what their math is, but if it was a 30 year duration with no runoff, that's a 10% CAGR. A little bit over a 10% CAGR. So then you say, okay, we'll take some runoff or you know, but the idea, it expands significantly. So I have a problem with it to begin with and I want to question the actuary math. But then we look at Brooksfield that acquires this insurance company, puts an asset saying this is the value of our put and it's not the premium that they paid. It is the entire value of the contract, right? So then Hanover supposedly selling a naked put, not a cash secured put, but something that they put a little bit of reserve, you know, a little bit of a margin requirement. They don't have all the money. When you look at what Brookfield, through AEL American Equity has done is they've actually made the strike of that put below 0, because 0 is when it goes into receivership. And the way we know that is because they posted it. They weren't supposed to. Their tech team journalists have covered this, made a mistake. They didn't know that once you get a captive insurance, it's all this, you know, it's this gimmick, right? You don't need to talk about it anymore. There's a reason why that was legitimate to begin with. You know, reinsurance in general, the overarching view of it spreading out risk is reasonable as a first principle. But then you go to Hanover, they have zero reserve, they expect to pay zero. So matching that, as Tom Gobert did, he found that this one contract is clearly invalid. That would take AEL1 into negative equity by lot, would go from 75 to 1.3. 75 million positive to 1.3 billion negative. There's three of those. And that is a window into what is happening in this reinsurance space so that they can book assets so they're not insolvent, take more risk. And you know, it's, it, it's a really dangerous thing. Even More so because seven companies are backing up the 680. So reinsurance really is again, you take risk and you're supposed to spread it out. But they're concentrating it in these seven companies. Andover's only the third largest.

[Host]

And so taking a step back and trying to really paint the picture for anybody who's not well versed on the interplay between just insurance companies, reinsurance companies, and then adding the private equity players to the equation. And then on top of that, these captive entities.

[Co-host]

And so just sort of defining the

[Host]

entity actors in this fraud, as I think some of these instances may be fraud. I think Tom felt comfortable saying if you ever see something like this, most likely is fraud. But just for people who are hearing us say Brooksfield Hanover, ael, like how are these entities related and how do they play with each other?

[Nick Namath]

So Brookfield is a trillion dollar Canadian asset manager that tried to do a dance to get into the S P500 so they would get passive money. S P said no, but they are an alternative asset manager. They do private equity, they do infrastructure, you know, private equity. They have a huge section of infrastructure which is probably their best besides the green stuff. Then they have private credit as well that they've been pushing into. They've recent also a lot of CRE and they keep on walking away from CRE deals and that's. Sorry, excuse me, commercial real estate. I hate using the acronyms and people are like, what is it? I hate that you have to learn it. And then all of a sudden you start using them and it's really obnoxious. So commercial real estate, office space. So they have this massive balance sheet, trillion dollars, but they want more. All of these guys want more and more. So they'll buy an insurer that has a balance sheet and they immediately become the asset manager. Then they strip the insurance company as much as they can in order to maximize returns in every single which way. And really these guys are buying Wealth Advisor. However, they can get assets, they will get assets.

[Co-host]

And when it comes to the insurance

[Host]

company and becoming their asset manager, essentially they'll buy an insurance company, an insurance company just in its day to day operations. They have to match liabilities with long term duration sort of products, whether it's fixed income equities, Whatever it may be in there, buying the insurer saying, all right, your asset management strategy that you've had up to this point is done. We're going to take over.

[Co-host]

And then that, I would imagine introduces

[Host]

some perverse incentives, moral hazard, where they're then able to push those funds that need to be managed into products that they already control.

[Nick Namath]

For sure. Yeah, they immediately become the asset manager. They immediately get the management fee. The management fee very quickly pays for the entire purchase. Obviously the Treasuries and investment grade corporate bonds and the mortgages that they used to be into, they don't get paid for that. So they start pushing them into private debt.

[Host]

And this is where things yet, Harry, because at the end of the day, the pensioner, the individual couple buying whole life insurance policy or an annuity are none the wiser. Going on under the hood, you have people paying premiums on life insurance policies, on annuity policies, expecting that when they go to retire or, God forbid, pass away, that they'll be paid out in whole. But the way that this scheme has been devised and architected, it's becoming clear, going back to Brooksfield's fumble, by showing the, the balance sheet of the. Keep forgetting the name, the, the entity that they control, the subbed entity, a American Equity. American Equity basically zeroed out and they were sending the assets on their balance sheet to a reinsurer or doing an XO purchase with a reinsurer, basically saying, we're diversifying our risk and they're positioning it as a hedge on some of their other investments. But Hanover basically, if you look at their balance sheet, says they don't expect to pay anything back.

[Nick Namath]

Hanover has $775 million of capital in their US entity. Then they have, you know, it's a German reinsurer, but the German reinsurance, we're only talking about the US entity. We have no idea how much reinsurance they're doing in Europe. They're also big in shipping during the Iran war. Like these guys are just, you know, saying, oh, we got all you guys. Don't worry about it, don't worry about it. Meanwhile, you look at their balance sheet and even if one of these contracts go under, the 231 companies that they're supposedly backstopping go under. So no matter which way you look at this, like there's so many ways for it to break that. Me as a guy that, you know, thinks the stock market goes up over time is really bullish on AI. I'm like, this is a bomb. This is, you know, we are lucky if the hole is just, you know, a trillion dollars, right, because there's more components that we'll get into. But, you know, it's, it's scary. And, and, and you know, I'm, I'm coming on here and I'm like, how do I communicate this effectively? You've seen me on YouTube. I'm like, either just ranting and raving or I go on, you know, Josh Brown's podcast. And people are like, this guy's too expressive. And I'm like, how do I be expressive and serious at the same time? So people actually listen to me. I' think of the communication. You know, I'm writing furiously. I'm using, you know, throwing out these Excel spreadsheets. I'm sending it to whoever's email I can think of because it just takes a modicum of understanding before you go, well, this kid might be crazy, but I think we should probably look into this and the amount of complacency built up because, you know, the Fed always bails this out. It's like the annuity in life balance sheet is bigger than the Federal Reserves. Okay, that bailout is not something you just do like Silicon Valley bank. And the world moves on.

[Co-host]

Sub freaks.

[Nick Namath]

Guess what?

[Co-host]

Just booked my tickets to Vegas headed for Bitcoin 2026. It's that time of the year, April 27th to 29th in Las Vegas. I'm going to be there. A ton of people are going to be there. You better get your ass there. You know what people are calling a bear market. You know, these are the best conferences I've been going since 2019 when it was in a parking garage in San Francisco. If you want to get the best possible ticket prices, make sure you use our link and the code TFTC. You go to 2026 B TC use the code TFTC. You'll get 10% off. You can bundle with a hotel room to save big and make the most of your experience staying on site at the Venetian. That is where I will be. Ticket prices are increasing, so make sure you get yours today. Join bitcoiners from all around the world. It's a global endeavor. It's a, it's a, it's a pilgrimage, if you will, for the ultimate networking experience. There's going to be a ton of people there. You can hear from the biggest names in the industry. Sailor is going to be there. Matt and I and the Pub keyboards and the Bugle Boys. We're going to have live hot style takeover that's going to be there too. All in the Venetian. Everybody's meeting up. It's going to be fun.

[Host]

Get there.

[Co-host]

2026.be tc Use a code TFTC at signup suffering this rip. A TFTC was brought to you by our good friends at BitKey. BitKey makes Bitcoin easy to use and hard to lose. It is a hardware wallet that natively embeds into a two or three multisig. You have on the hardware wallet, one key on your mobile device and block stores a key in the cloud for you. This is an incredible hardware device for your friends and family or maybe yourself, who have Bitcoin on exchanges and have for a long time but haven't taken a step to self custody because they're worried about the complications of setting up a private public key pair, securing that seed phrase, setting up a pin, setting up a passphrase. Again, BitKey makes it easy to use, hard to lose. It's the easiest zero to one step, your first step to self custody. If you have friends and family on

[Host]

the exchanges who haven't moved it off,

[Co-host]

tell them to pick up a bit key. Go to Bitkey World, use the key TFTC20 at checkout for 20% off your order. That's Bitkey World code TFTC20.

[Host]

It's massive. And I think again, like I said, having consumed a ton of your content with written and the YouTubes videos that you've made over the last couple weeks, I think pulling this out of you. Let's highlight where the smoke is again. Brooksfield releasing that balance sheet of that captive entity. Smoking gun number one.

[Co-host]

Regulators come into state.

[Host]

Regulators come into it. This is where Tom's Bread and Butter is working at the state level to do forensic accountants.

[Co-host]

There's something going on in Vermont in

[Host]

terms of what they're allowing these private equity funds to do, in terms of the leverage they're taking within these insurance companies. And then I think the other area where smoke can be rising is the fact that you have these offshore entities, particularly in the Caymans, in Bermuda there, it's a lot of black box. And then there's also this legal wall between those entities in the U.S. right?

[Nick Namath]

So it's sort of like it. It's a spider web. There's, you know, the captive insurers that are supposed to be invisible. Why are they supposed to be invisible? Because someone in Vermont said that it's supposed to be inv. Even to subpoena, that is like. I just want to pause for a second. If there's a court subpoena they don't have to turn it over. According to Vermont. Federal rules say that's not allowed. Vermont says, you know what, you can do it. So every other commissioner, you know, there's a couple, a few states that do that, do that. But let's say of all provinces, there's 53 commissioners that are silent while other states do this. That is a huge, huge issue. If you just opened up that black box, I think it would all be over. Right. So maybe that's the angle that, you know, this all becomes unveiled. You know, the American, the captive insurer in Vermont that is going to find one of these seven reinsurers. But at the same time, you have Apollo going straight to Athene in offshore in the Bermudas. So then this all ends up offshore, where supposedly there's $2 trillion backstopping everything. And what you see is every single thing we see. There's not enough capital to back this up. And then we're just supposed to trust when it's invisible in Bermuda that it's all there. And that's where it gets really scary, because that's not under our jurisdiction. We are trusting the Bermuda and bermudes courts to protect Americans while they get paid and their economy booms from all the premiums that are sent there. So there's also the angle of it. Once it goes there, then it could be sent elsewhere, then it could be sent right back to the us so it's a giant chain of people selling naked options, naked puts, and then they don't, like, once they buy the put, they'll put the full value of the put. Then the premium goes, the next person will sell the premium put, the whole value of the put. And it's a chain where once we go to the end, I'm very confident saying it's going to be worse than TARP, which was 450 billion at the end of the day.

[Co-host]

Yeah.

[Host]

And so people are basically rehypothecating assets and marking them on their own balance sheets.

[Nick Namath]

It's like we've seen this before, right? Everyone's saying, oh, but this is different because it's not central to the collateralization and there's not CDO squared. And it's like we might be talking in slightly different vehicles and slightly different mechanisms. The idea is exactly the same. The, the Dodd Frank only took it out of the banking system. But if you have a credit event that's going to end up affecting the banks, but it's not going to be primary. Right. You're going to see all of these Credit places as people look for liquidity, there's a lot of leverage built into the system. It's all going to come down with a bigger hole than the global financial crisis. And when that all happens, you know I've heard really smart people say listen, the deficit is $2 trillion, 500 billion is 1/4 of deficit we can cover, it's no big deal. But this is all built on trust. The entire system is built on trust. We have Treasuries that are rehypothecated that the Saudis are using to lever up into our equities through hedge funds. We have mortgages, you know, the mortgages are still rehypothecated. We have abls. A lot of that is subprime loans. You know that's the scariest part there we have commercial reals. All of this debt is based on an M2 of $22 trillion. But supposedly out there we have $1500 trillion of wealth. So people are doing the wrong math. They're like the deficit is this and that's just the hose. But it's not adequate to. Only if you lose trust in a 1500 trillion dollar system there's nothing the Fed can do. And that's where it gets really scary.

[Host]

Yeah. And that, I mean and again I don't even think we have to go as far as to highlight and not to say we're speculate but I think the low hanging fruit, thinking from first principles, understanding why this could end badly. Just getting back to what is the collateral like, what is underlying the potential payouts of these insurance policies if they're ever claimed in the future. And again if you're a private equity company acquiring insurer, becoming its asset manager and then pumping it into relatively illiquid private equity deals, whether that's in commercial real estate or tech, that's becoming abundantly clear that both those sectors specifically are under stress. And the idea that the assets being held on the balance sheets of these insurers, if they're in these private credit

[Co-host]

or private equity vehicles are going to

[Host]

be the cash flow, the fixed income of those collateral assets that are there to pay off payouts in the future when people claim their policies, that that seems very obvious to me that that can be impaired right now.

[Nick Namath]

Yes.

[Host]

Without any of the rehypothecation or anything.

[Nick Namath]

Right. I just mean to do that so that people don't just like write it off as like you know, old news. It needs to be put in perspective of the entire system when it comes to what the trigger is. It's Private credit. Right. And the insurance companies will say, well, we only have 10% or 8% or Athene will say 15% exposure to this private debt. But the thing is that for ATHENE they have $4 billion of capital that is in reserve. So it's not when you have assets and you have liability, the difference in accounting sense is equity or capital surplus, the percentage of private debt to completely wipe out the capital surplus. I mean just on the average and some are way worse. As you can imagine, private equity guys have the incentive to do that. It's 8% versus 6.5%. And obviously, you know, I don't know if people, you know, your listeners understand, you know, what happened with Silicon Valley bank, but. Oh, they understand. Well, yeah, these guys definitely have duration in Treasuries and mortgages that they never acknowledged because they just hold to maturity and they think that it's all fine because these are long duration assets. But once this starts being paid attention to, you're going to see people surrender their annuity, get their money back. So that could be, you know, everything's going to happen at the same time. You're going to have the assets need to go down. They will be forced to go down. Then people are going to get scared because they bought into security for their family and themselves in retirement and they're going to get their money back. They're going to be like, I don't need that 4 and a half, 5% yield, I need the money. Right. And at the same time, because of the assets going down, you're going to have downgrades. And when you have a downgrade, your triple B rated stuff that they, that everyone says that they have has a $40 in reserve for every hundred dollars. That is, you can go 70 times levered on that. Right. And triple B in private debt is what, you know, single B would be in the public markets. Maybe, you know, it wouldn't be investment grade, but they call it investment grade because they have these rating agencies that they just pay money to do that. So once that downgrade happens, you're going to see the regulator say you need to post 5, 10, $15 billion of capital, which they don't have. All of this is going to happen at the same time. People are going to get scared. Credit events don't happen in a silo. So then you're, because we're not being proactive when, because we're never proactive, the damage is going to be worse. So that's why I'm saying bring some attention. Regulators what are you doing?

[Host]

Yeah, and there's. There's another thing here, too, that I think it's important to touch on, explain to people, which is how a lot of these assets are marked. Right. It's not like they're. They're not in public vehicles. And so there's not quarterly filing requirements. You're not being marked to market by people trading your securities on a free floating book. The managers of these private equity funds, private credit funds, get to mark their investments pretty liberally.

[Nick Namath]

Yeah, I mean, in some cases, there's literally a public market price and they just choose not to use it. Like, you know, the idea that this is all marked to model because there's no market price, sometimes they choose to ignore the market price and say, nope, my Excel spreadsheet says 99.7 cents.

[Host]

But what, what's an example of this in Cliffwater?

[Nick Namath]

I found a few. It's the. Especially the B B, the B. The broadly syndicated loans where you might have a public company in there. Right. So Blackstone does some broadly syndicated stuff. Dropbox, you know, I think Dropbox is probably one of the better software companies in the public markets. But when they loan to Dropbox, you can see the Dropbox bonds trade pretty liquid, and yet they're not marking them down on par with that. So there's. I mean, we're talking about 400 businesses in B cred. We're talking about 2700, you know, little slices. And it's not so little slices, but in Cliffwater cclfx. But generally speaking, like, you know, off the top of my head, there's this sleep doctor URL. And Cliffwater's one of their. Their loans. And Cliffwater marks 93% of their book at par or within a center.

[Host]

Par.

[Nick Namath]

And I look at this one and I'm like, cliffwater, you actually marked this one at 42 cents. But then, you know, I'm taking Claude and I'm running five years of annual reports through, and I'm mapping out the price changes for any of these bonds. And of course, most of them are pinned towards par. This one goes down to 35 cents and up to 42 cents. And obviously I have to look into it. So I'm like, what is sleep doctor URL? Give me all the information you got on it, Clyde. And it is something that is completely eliminated by Google search. Like there's, you know, just on Cliffwater's book. And remember, these are syndicated. Cliffwater doesn't own 100% of any bond, but there was a hundred million dollars of debt on this, on a URL on a website that sent you, by the way. You need sleep number. You need Magic Mattress Factory. There's no way that's worth 42 cents of whatever $400 million in debt that, that there was on it. So they actually marked it up from 35 to 42. And I'm like, this might be worth. This is probably worth zero after all the court costs. The. You know, and I'm just like, oh, my God. Okay. Like we, we always hear there's going to be some defaults. Like, of course it's a large portfolio, it's diversified. There's going to be some. But I look at the worst marks and I'm like, how is this even still value? And what you have to understand is that 42 cents, that was 100 million, now it's 42 million. I don't know. The actual might have been 70 million to whatever, but they're collecting a management fee on that, right? They're not getting paid any cash. It's a clear default and they're still taking 1%.

[Host]

So they're eating into the principle of that, essentially.

[Nick Namath]

So obviously the nav is too high, but the nav is getting more and more too high each year because of the fee. Because they're taking cash for a management fee for a value that is insane. And that's just one loan, right? When you go through all of this, you see, we'd be lucky if these things are only off 15 cents because they all use leverage, right? So that's the, that's, that's the problems people seem to have a good grasp of, right? And I wrote my first piece called. These people are not investors. They're dealmakers. They're just, they're trying to just allocate. They're trying to put money to work. They're allergic to cash drag because that hurts returns. And cash drag is just like, if you have any cash in there, it's only getting 4% while everything else is getting more cash is like your ability to have liquidity. You know, you should have a little bit like, you should have at least 5% for 1/4 and then be able to like, what. But instead, not only do they have no cash, but they have billions and billions of dollars of contracts that they go, okay, we'll give you 150, 150, or maybe $400 million, you can call it whenever you want, but you have to send us 7 to 10 million dollars right now. So then they use that 7 to 10 million dollars to pretend like there's a little cash pile or potentially even go out and lend more loans and they say they have liquidity, that's totally fine. So that pictures what starts this and we already talked about where it ends and people do not seem to have the ability to connect the two right because there's a trillion dollars of this private debt on insurance balance sheets. There's 670 in pension fund balance sheets. The rest is high net worth individuals nobody's going to cry about. But this is something that's going to affect everyone.

[Co-host]

Sup freaks? Up next, the Bitcoin Scaling conference where Bitcoin developers meet institutional capital is coming to New York. Join bitcoiners from Blockstream, Chaincode, Brink and more at the Can't Miss Summit. At the intersection of Bitcoin tech and finance, this conference has one of the best signal to noise ratios and that's why I'll be joining Block Space's third annual Bitcoin Tech Conference on April 16th at the New York Times center in Midtown Manhattan. There's only room for 200 attendees and they've already sold more than 100 tickets of their open spots, so you've only got a few weeks to get your travel plans in order for New York. With the ticket you get access to the best programing and bitcoin tech from Bit VM to Bitch at catered lunch and access to the Pub Key After Party wearing the hat Pub Key After Party. Up next is where builders meet capital, founders find funding and companies source top talent. Plus meet institutional investors and developers from BlackRock, HC Wainwright and Bitcoin Infrastructure Corp. If you're at a venture fund or another finance firm, this is the event to learn more about the quantum computing leading edge bitcoin tech and topics that will define Bitcoin's futures. Go to opnext.dev for tickets and use the code TFTC to get 25% off a general admission or VIP ticket to the event. Again, that's op next.dev code tftc for 25% off a ticket. I'll see you there. What's up freaks? This rip is brought to you by good friends at Crowd Health. I've been a happy Crowd Health member for almost five years now. My wife and I have had two children while we've been on crowd health and I actually just got the last bill for our third child funded. It was $6,157. Crowd health negotiated down to $2,309 and we only paid $500. The rest was crowdfunded by the crowd Health Network. If you're sick of health insurance premiums and having to pay deductibles and getting ripped off at the hospital, join CrowdHealth. It's an alternative way to pay for your healthcare. It's not health insurance, it's crowdfunded healthcare. As you can tell, they negotiate prices for you. You pay in cash. It's much cheaper. Overall, we're much happier. They have incredible Perks. Go to JoinCrowdHealth.com TFTC to sign up. Five years on CrowdHealth.

[Host]

Not looking back.

[Co-host]

Join CrowdHealth.com TFTC Use the promo code TFTC. Once you set up your account, you're going to get $99 a month for

[Host]

your subscription for the first three months. And what in your mind does the timeline look like? Because obviously Steve Isman and Tom did their podcast, I think you mentioned on one of your recent YouTube videos and Michael Barry is finally acknowledging that something like this is going on. A lot of people are comparing it to the mortgage backed security crisis that existed in 2008. And as we know, if you've read the big shorts and how that played out, many people, Steve, Michael Barry, others had this thesis for a long time and it took longer than expected to play out. And the banks eventually noticed what was going on and made sure they got themselves on side before letting everything fall apart. Like where, where do you see ourselves now if this is going to play out? Where are we in the the story

[Nick Namath]

ARC mathematically within 4/4 of BDCs and interval funds because these are pro cyclical redemptions are growing. It's not going to stop. There's only so much dry powder that's you know, for me there could be stealth bailouts of some sort. There could be people trying, you know, like on the private side, like let's just give Cliffwater some money because if we don't, the jig is up. I'm worried that people are loading up the silverware and getting on the lifeboats. Right. So what's different between 2007 and today is social media. What every single person I've talked to says this is going to take longer than you think. I've read the books. They live the experience that it takes longer than you think. I am acknowledging that's been every single person has told me that however, we could rip the entire cover off of this by looking behind the reinsurance. Right. If there was one single commission, we could limit damage by maybe 50%. So it's up to the populace to decide how unruly they will be about this issue. That's, that's the variable that would change the fork work or quarters. You know, as we're going into an election season, what I'm trying to, you know, think about is like, what is the competitive dynamic. Both parties are backed by lobbyists, but both parties have people that want to win. And at a certain point in time, you can't cover. Right? You can't cover. So Democrats, if you want to reach out, happy to reach out. Republicans, if you want to reach out, I'm happy to discuss this. This is completely too far from partisanship for me. Right. So, you know, I, I, I hope to shorten that timeline and minimize the damage just by being incredibly loud.

[Host]

Bringing this back to the first question. So we're talking about like insurers, private equity funds, but like you, you said like if the dominoes begin to fall in the way in which you, you imagine they will and potentially can, like 29 of the largest, 29 out of 30 of the largest life insurance companies could be in trouble. Like just trying to help people grasp the gravity of this with some brand names they may recognize or understand. Like, hey, I've got an annuity policy with them, a life insurance policy with them.

[Nick Namath]

Right. So if you have an annuity or life insurance policy, first of all, I want to speak to those people. You know, it's better in a mutual than a publicly traded insurance company or a PE backed insurance company. Just, you know, that, let's give that, you know, playbook. I have a lot of assumptions in my article, the whole, and what I try to do is say, let's look at this scenario. Let's look at this scenario. Let's look at this scenario. The entire thing is backed up by reinsurance that we cannot just trust. You don't have to agree with everything that I'm saying, but I think everyone should agree that there should be transparency. And my opinion is that once we look into it, it's all going to be extremely obvious. Anyone that opposes looking into it has gravy in the train. There's no reason we shouldn't at least look at this. Right? So you have Apollo, they might be the worst. But then you have prudential, you have MetLife, right? These are, Lincoln national is a big company. These are the MetLife building in New York, I think is going to change its name.

[Host]

Sorry, I was on mute. I was saying really? Because that's iconic right there, right?

[Nick Namath]

People can't imagine. And people can imagine Lehman Brothers going down. They couldn't imagine AIG having any issues. They couldn't imagine Solomon Brothers going down. Right? These are iconic names.

[Host]

So let's steel man this because this is like consuming your content and watching others talk about this problem. It's hard for me to believe that people in the seats that are deploying the capital in this way cannot see this freight trade coming or cannot foresee these problems rising when they're taking bets like this. What do you think the mindset of these insurers and these private equity fund managers is just a cost, fees at all cost, everybody else be damned? Or do you think there's a famous for legitimacy?

[Nick Namath]

I estimate that there's $1 trillion in fees extracted from the system every single year between private equity, private credit and the insurance. And we're not just talking about management fees and incentive fees. We're talking about this is the highest margin businesses for banks, the lawyers, the auditors, the ratings agencies, the actuaries. It is enormous, right? So people want to pretend like there's nothing the issue. You know, people like. I've been getting a lot of references for, for the movie Margin Call, right? And it just, this, this happens all the time. There's a specific scene in there where he's going through all the times that this has happened and it's just like we just react, you know, and I think that there would be, the industry would, would go back and they would say, you know, like this is dramatic and he's pointing to Hollywood movies and this and that. But I tried to seal man the article in there. Do you want to pull it up?

[Host]

This is a long read, by the way.

[Nick Namath]

I know I got, I gotta leave it there. And then I try to make it bite size. And you know, if people listen to all of this podcast, I think that they'll be, you know, they have the attention, they pass the test. The first one, the actual asset, they're going to be like the puts legitimate. And what I would say is one, what is the strike? Is it negative $5? Because then that's not legitimate. By the way, this fails the NAIC's own test. It cannot be contingent on an, on an event. So just in an accounting sense, it's invalid. But then when you go to the reinsurers, where's the capital? Okay, you got $5.3 billion reliant there. Where's the capital? They have 775 million, okay, in surplus. So then what are you, what are you saying? They're going to sell their balance sheet assets in order to pay for this. Okay. How many times can they do that? Right? They don't have any. It's not a liability on there for Hanover. And you can just think about it this way. It's like, why would Hanover take all, all of the risk of the balance sheet for 70.7% of the value of the contract? Because the premium is so low. You know, it's just pay to pretend. So really I would say hammer in on the reinsurance there. The second Steelman is captives are adequately supervised by Vermont or Iowa and in reality they've, they can't even see what's in the Bermudas. Right. So it doesn't make any sense. It's like, okay, they look at, you know, reinsurance contract, they can't see what's backing it up. They've made it impossible to do so. And I like this line. The best defense for moving a trillion dollars offshore is that you did not want to pay taxes on it. Right. If that's why you say tax optimization and the industry says tax optimization, well, that's your best reason. Right?

[Host]

Well, is there nothing again, steel matting this further, like, there's nothing these insurers of reinsurers can do when interacting with Bermuda to like on the diligence process, to like check their books to get confidence that they'll be backed up sufficiently.

[Nick Namath]

They give you an eight page document versus Athens that they actually show in Iowa is 9,600 pages. So essentially, no, they can't actually see. They can see the asset liability equity consolidated. They can't see.

[Host]

Yeah, to trust me, bro.

[Nick Namath]

Yeah, yeah. It's like I'm going to write down a number on a piece of paper and Bermuda signed off on it. And trust me, bro.

[Host]

Lovely. Then third affiliate reinsurance is quote on schedule S. Regulators can see it.

[Nick Namath]

What, so you converted this to bitcoin?

[Host]

Oh, I have a. Yeah, I mine coded an extension that converts everything to bitcoin.

[Nick Namath]

The first time I saw that I was like, I just didn't mentally process that. I love that. Yeah. So what we can see is hardly if not completely not backed by assets. Everything we see liabilities are greater than assets. So I don't like it. Like, let's just, you know, the fact that it's disclosed the Hanover has the contract does not make me confident.

[Host]

Yeah. And there's, I forget who it was. I forget it was KKR or Apollo used as an example. But the way these captives work, the people buying policies from these captives, I don't know how it works exactly, but long Story short, people are led to believe that the parent company is backstopping one of these entities and then they will pull from their balance sheet if the captive entity ever finds a hole. But if you dig into the legal lease of the parent company that doesn't exist. That correct?

[Nick Namath]

Right, right, exactly. So when Apollo is, you know, pushing for the Athenian acquisition to be completely captive, they're saying we're responsible for this. There's a Financial Times article about this. That's why it's aligned interests. It's not, you know, moral hazard or anything like that. But then when you actually go into the docs, it says it's non recourse. And when they go to investors, they say, guys, guys, nothing's going to happen. There's no issue, you don't need to worry about anything. And by the way, it's not even recourse. What are you talking about? We have an 11 forward PE buyer stock.

[Host]

Do you think these, these large PE firms are about to be humbled? They're humbled out or you think they'll be humbled? Are we going to get fucked again?

[Co-host]

But.

[Nick Namath]

Yes, yeah, they're about to find out how recourse or not recourse it is. And they're either going to pay a healthy fine just to be like stop, or they are potentially going to be, you know, all those bonds, all that equity completely wiped out. And they're so powerful that I would think it's pay a fine route, but they're not central. So again, this is Lehman, Bear, Stearns. It's like you can't imagine Apollo going away, right? But it's, you know, who's going to cry for Leon Black's Equity and Apollo, right? So then the question is, do they have Apollo take the charge? What about kkr? What about, you know, all of these companies? And in reality, some are going to survive and some are going to fail. The idea that you just buy them because they're at a, you know, at 11 forward PE investors are about to learn, they're about to learn a tough lesson. You know, they got their golden parachutes ready, set up. If you're buying those stocks right now, we'll see.

[Host]

And what's going to happen to the pensioner, the person holding these policies?

[Nick Namath]

I don't care too much about the pensions, to be honest, because the pensions don't care about the next generation. They only care about the people that they got. But having said that, they're going to have funding issues. They've crept up payments, they've crept up Benefits in the assumption that these private market games are going to play out forever. It's the same allocations that happened in 2007. And they're going to have to take a loss and maybe we bail them out, maybe we don't. I'm full in front of the narrative that we have to or it's an existential issue for middle America. This is a game played by the rich. 100% to benefit the rich to the tune of a. A trillion dollars in extraction per year.

[Host]

Yeah.

[Co-host]

And it's.

[Host]

I mean, does this get back to Glass Steagall, do you think? Because where I remember Glass Steagall well, what was it the act that abolished Glass Steagall between City and Travelers Corp. That there was a delineation between insurance and commercial banking and funds that Clinton took away in the early 2000s or late 1990s. And it seems like more of the same. That's the other thing. Where are the risk managers inside the insurance companies that should understand, like, hey, even though we've been acquired by this private equity fund, the way they're managing our assets is completely irresponsible and will lead to a blow up at some point. Is there any, Is there any. Where are the good men in insurance standing up against this?

[Nick Namath]

They are. They're in my DMs. The, the ones you're talking about. Private school, 75 grand a year these days. They got into the right private school. They got into the country clubs. They bought. It's the pill that they give. Right. Without too much looking into, without reading the footnotes, without reading the 9,600 page filings, without being Tom Gober, you can say okay, but they're not. That they're not doing their job. Fiduciary irresponsibility in the most favorable way to say it.

[Host]

Yeah. What, what are the first signs that you're looking for to. To have more confidence that this is underway? Like obviously you have private equity funds gating redemptions right now across the board. Is that the first sign is there

[Nick Namath]

that's the most obvious. And then you know that yeah, redemptions downgrades, but also which politician's going to say anything? Because once you see that, it's like, okay, maybe they're losing control.

[Host]

Do you think the politicians will say anything again, midterms? So you think it'll be blakely expedient to hop on this early and beat

[Nick Namath]

the drawer for the Trump administration to follow on the sword? I think it's hard to imagine going into the midterms unless they Just throw in the towel. The problem is that all those billionaires are right behind the Trump administration. And I voted for Trump. Okay, let's just, you know, put my, you know, going into this bias out there. The Democrats I have higher hope for because I'm like, wait a minute, we're going to win the House, maybe the Senate. Let's put this issue so we can be the saviors. Now, they're also backed by lobbyists, but if you see Elizabeth Warren all of a sudden start talking about it or whoever, maybe it's somebody young. Hopefully it's somebody young that starts talking about this. I think that is a narrative that people are gonna write off as it's just another politician, but I think that's a huge indicator.

[Host]

Yeah. So you view this as a generational battle 100.

[Nick Namath]

That's why I title everything is no more Boomer Communism. Because the, the, the extraction, you know, is complete and it's gonna con. It's gonna continue. That's not going into the hands of, you know, the 30 year old who just got a girlfriend because he hasn't been able to date. And, you know, he's trying to buy a house. He can't buy a house. He's trying to start a family. Can't start a family. Like, that's who I care about.

[Host]

Right.

[Nick Namath]

So you're going to see a lot of pensioners, the people close to retirement say, we got to hold up the market. We got to do this, we got to bail out the system when it happens. And I'm going to be sitting there saying, well, all that money you have is fake. All of that wealth you have is fake. Okay, how about we let you realize that for a little bit?

[Host]

Yeah, no, it's. I mean, as I know where I fall, I was born in 91, mid-30s. Now, I guess officially you're a millennial. I know I'm a millennial. I don't know if I'm a younger millennial or a middle of the road millennial.

[Nick Namath]

No, that's.

[Host]

I mean, that's, that's what radicalized me. I was a senior in high school when 08 happened, 9, 11 when I was 10. Forever wars bullshit with COVID I think guys our age, it is this weird inflection point we find ourselves in where the prospects are not good at all for most people, and particularly if you're younger. And then you have this refusal of a generational passing of the baton from the boomers to the millennials who are. We're in our prime earning years. We're supposed to be starting families. We're supposed to be building the next generation of Americans and that's been completely railroaded by what seems to be. And again, as many boomers that listen to the show, there are many well intended boomers out there. But I think collectively, just societally in that generation, I think it's objective in just the way markets operate and all these perverse incentives we've been describing here it is leaving the world in a worse spot than it was when they got it handed to them. And my whole perspective is like, just pass the baton. Let us try and pick up the pieces. That's why I focus on bitcoin. I think bitcoin is a way to route around the system that's been erected around us. But yeah, it is. And I worry about the blowback too, which I don't think many, many people in the older generations, I think they have a bit of cognitive dissonance when it comes to understanding just how pissed off younger millennials and more. More, I think aggressively Gen Z is right now.

[Nick Namath]

Yeah. Are you a fascist or a communist?

[Host]

Probably. No.

[Nick Namath]

Okay. If you're not, you should be scared. Right. Because those are the only two excited parties about what's happening, you know, with the political charge. Right. Right now. Okay. You know, this is the amount of disaster in the system bullish for bitcoin, let me tell you. I would sacrifice bitcoin in a second to have a financial system that's even, you know, remotely functioning at a level where there's class mobility and, you know, there's ability to start families. Right. So I don't think. Yeah, I think there's a lot of cognitive dissonance. I mean, obviously, you know, I joke I'm racist against boomers. You know, I. Boomers are my mentors, you know, a lot of them. But at a certain point in time, it's like, you guys have blocked out Gen X. They're never going to get a president. Right. We're getting to the time where we're not being excluded from the adult table anymore. This is ridiculous. The experience, the wisdom, the pejorative nature of a lot of these conversations where you need to be 45 in order to be able to say anything. You know, everyone's already made it or not by 4d5. And if you haven't made it, you. Nobody can listen to you because you didn't make enough money. And if you did make it, you're already in the country club. Right. Like, it just doesn't make any sense. And, and I Think, people think the things, the ways, the way it's gone for the past 40 years is the way it's always going to go. And quite frankly, you know, I think you just have to open up a history book like this. This is not the way it's always going to be. And that's. That's scary or that's, you know, exciting. And what I hope for is that people are excited not because they're a fascist or a communist, but because the, the narrative, the weakness and the structure is so apparent, but it's gonna take some logic and reason, you know, in order to fix this. And like you said, you know, I was 6 years old when 911 happened. I remember seeing the towers go down. I was living in New York City, turning on Nickelodeon, turning on cartoon networks, and it's just the towers, the towers, the towers, every single channel. And I'm like, what is this? I'm six, okay? And then by the time I'm, you know, eight years old, I'm like, go, Bush. Go get them. You know, I was the most pro war 8 year old of all time, right? And it's, It's. It's an experience that boomers cannot relate to because sure, they might have had the Vietnam War, but they walked into the best infrastructure, the best economy as a large generation with the baton being handed to them, like, go have fun, kids. Right? And now the Overton window of. Of conversation has gotten so tight and so small on country club, you know, boundaries for finance. And also, as they've grown up in society, we've noticed that we have to grow up with them. Right. It almost seems like, because there's such a big generation and they have so much power, we have to speak like we're 65 years old, right? And, you know, I think that's very soon to taking as, you know, vigorous individuals have more rapidly firing neurons. And quite frankly, you know, the narrative is tired. It's kind of like the me too cancel culture, you know, the aspects of that. The reason we got that was because boomers were behaving inappropriately, if we're honest, not all boomers. But then all of a sudden, that's hurting the millennials. And it's like, what. What is going on? I can't be a man, right? So as, as. As the, the testosterone has gone down for the boomers. Testosterone. And it's like, okay, these guys are not prepared. Markets are a contact sport. Let's get back to that. Let's talk ideas.

[Host]

Yeah. I mean, on that note,

[Co-host]

What would

[Host]

your hope be for the other side of a crisis if it manifests. And what would an orderly handing of the baton look like? What interests you? Like, how do you think we used the technologies at our fingertips and the knowledge that we have to build a better system?

[Nick Namath]

We need to wipe the wealth. Right? We need to let it go back down to reality again. The total M2 in the world, China actually has a lot, but it's somewhere in the neighborhood of $90 trillion. There's so much debt that needs to deliver through just debt being written off. And that needs to happen across sectors. Equity prices because of earnings and multiple compression need to go down 40, 50% at least. And then we build from the ashes. That's what I'm hoping for. Because when 55 and up own 74% of the wealth in the country and it's similar elsewhere in the world, in Europe as well, they have this issue and they're angry as well. You know, I would say if you're less than 10 years from retirement, we can take a couple of bad years. Okay, we can do it. You know, you might lose your job, but at the same time, when you get a new job, you're going to be buying blue chip companies for 11, 12 times earnings that are growing and spectacular. You're going to be able to get a home for at least 25% less in over two years when it's typically been going up 4%, 5% per year. Like the economics needs to change because then we can have actual capitalism again. And now there's boomer communism.

[Host]

Yeah, that's the one thing I think the whole boogeyman of a, of a true market correction is just that, a boogeyman. Because I mean it is, can be fear inducing for people and say like, ah, I can't take a 40 to 50 haircut on my portfolio. I'll never recover. But I think you need this sort of controlled burn cleansing mechanism.

[Nick Namath]

People are very, let the boomers sell, right when they get scared it's going to hurt us. But just imagine how much more it would hurt if you're in retirement and you've been over levered to equities. Even though every sort of financial intelligence would say you shouldn't have that much in retirement. When all these boomers have $2.5 million homes. Right? Let that come down. Let them sell. They have to move to Florida. Okay, you sell 1.4 and you buy trailer park.

[Co-host]

Sorry.

[Host]

Well, I've been a big, big proponent of multi generational housing. If you're millennial, can Buy a house, maybe get an extra room. Invite your boomer parents in to take care of the kids for you.

[Nick Namath]

Yeah, seriously, you want a retirement home? Okay, you take care of the kids now. And then additionally, we got to change the tax system and do all that if we can clear the deck of a lot of these policies that have been put in, and they're just incredible. You know, we got AI. We got so many things. We could have new leadership. We have social media where ideas can actually be battled as long as the power isn't too tight. And then, you know, for the boomers listening to this, as well as, you know, the super influential, you know, very rich, you know, already made it. Like, you guys are fine, right? You guys won't be fine if you continue to pretend like you can do this. Right. If you guys hate me, okay, There's a hundred times worse version of me, Right? That's. That's what you should be worried about, Right?

[Host]

Yeah. How did. How did you come to be this way? For lack of a better phrasing there when a lot of judging. Yeah, yeah.

[Nick Namath]

A lot of rejection. I mean, from 8, 10 years old, I always wanted to, like, talk about stocks and, you know, for. For a really long while, it was a lot of learning. It's like, okay, by the time I'm 16, I'm like, you know, kid analyst. You know, like, I have ideas and I want to be listened to. Then all of a sudden, like, I'm. I'm getting grow. I'm growing up, growing up, and I'm not being listened to anymore. Even though I've acquired more, you know, knowledge and insight and, you know, I'm in college, Trump gets elected. I'm like, oh, my God, what is this? You know, I'm just like continuing to go and acquire, you know, more and more knowledge. And it's partially personality type. I also was drinking a lot. I'm now sober. Like, there's definitely part parts on me, but there's, you know, there's been this rejection of what I feel like and sort of this, you know, nobody is listening to me. I don't see an entrance to utilize all knowledge that, you know, quite frankly, if you're a pianist and you're. And you're 10 years old and you got talent, you're recognized. But it just felt like to me, in the 80s, you had to show up on Wall street with a good attitude and you became a millionaire.

[Host]

Right?

[Nick Namath]

You had to show up with a good attitude, become a millionaire. They knew nothing walking into those stores, right? And then when in my 20s, you know, I'm interviewing everyone says that they want, you know, someone who thinks outside the box, whatever, you know. And I don't get the job. I don't get the job. I don't get the job. And I'm seeing the people that, that do get the job and they're like copy paste, right? So that's, that's been, you know, probably the driving, driving force for me where it's like, you know, finally I have success and people listen and it's, it's, it's all great. But listen, those years did not, not shaping, you know and from when I, when I wrote the entire letter to besent. We're all human, you know. These guys inside these, the system. Why are they doing it? Because that's what the system expects from them and because they are shaped, they're shaped by the institutions that they're inside of. I am shaped by the institutions I've been outside of. Right. There's, there's not, I'm not trying to demonize people, but I need to tell them when they're stupid. That's sort of my perspective.

[Host]

Yeah. I mean since you mentioned it. What, what exactly did you say to Secretary Bessant?

[Nick Namath]

Letter to Secretary Bessant. I'm talking about the incentive structure. I'm talking about, you know, I go high level why this is happening, how this is similar, how this entire industry marks the market. Then give sort of micro specific examples. Talking about Cliff water better Sharpe ratio than Bernie Madoff who chose his Sharpe ratio. Right. Like Bernie Madoff could have chosen any Sharpe ratio. He chose 3.5, cliff water is 3.75, you know and then I'm talking about the individual loans, the sleep number and then bringing it home with ask which is just basically like addressed the mark to a model risk. You know he's already said comments like, you know, we don't want this to end up the junk to end up on 401k's balance sheet but you know, launch an investigation, oversee the regulators, you know, pay attention to this. Then it went to Johnson on insurance and then the whole, with Tom Grover being a forensic accountant, like what it, what, how surgical can we get on the issue here and allow people to go where they want on what is the biggest issue that they want but take away. Holy. We've got to look at this because if this kid is even 10% right, we have a major problem.

[Host]

Yeah. And it's just another, another problem on a heap of problems that we have. Right now, which is that, like my observation again, I've been following markets since I was in high school and it just feels like the gravity and the pace at which things you have hiccups in the system are just increasing. Like 08 European banking crisis and you have spasm of 2019. Obviously all the stimulus during the COVID era. The banking crisis is 2023, and here we are three years later, another liquidity spasm, this time in private equity, private credit. It feels like the system is faltering and collapsing it on its own weight.

[Nick Namath]

Right? And every time that there's a spasm and there's a mini panic and it's not 08, people get more and more confident in the power of the Federal Reserve. And the only reason I'm trying to compare things is like they will blast bazooka wealth at the margin. Do you know who also did that? The bank of Japan. And they had a lost decade, two lost decades. Right. So what we're seeing is so much money and no velocity of money. That's why they have to do more and more and more. And what it's doing is just jacking up asset prices. And we're seeing the top 10% do so well and spending goes up and GDP numbers go up. That is not health. That is absolutely not health. And yeah, you're, it's like a crisis every year. You know, we get a Six Sigma event every year and people still want to talk about value at risk, you know, and it's like, holy shit, guys,

[Host]

what, what's your recommendation for anybody our age or your age and my age

[Nick Namath]

listening to this, go, whatever article you like, you know, you want to look into insurance, you know, the private markets take AI and say, fact check, this AI is going to come back. I might have some commentary on my takeaways, but, you know, the facts are the facts. And then, you know, send it around. Be like, I, this is seems scary. I don't, you know, let's. You might be an expert, you might be like, I know exactly what this kid is talking about and I need to take this to this person. I know exactly who it is. But if you don't, don't believe that your voice doesn't matter as much as people will try to punch you and say that. You could even, you know, quote, tweet and be like, I don't even really understand all of this, but it seems scary. And then 10 more people, you know, like, that's what social media is an asset for.

[Host]

Yeah, it's powerful. And the players involved with this, don't like you talking about it. Which is another signal, please.

[Nick Namath]

Oh, no, they don't. They're sending their publicists and we got guys our age flying F15s, dropping out of helicopters in the Middle East. We could at least make sure that something gets fixed by the time they come back.

[Host]

Yeah, I agree with that, brother. I agree with that. This has been great. Like I said, I love your energy and I think there's something here. I mean, seems. I think it would be naive to think that these types of actors are post 2008, post 2019, 2020, got their act together and are acting as upright citizens trying to do good by their shareholders and the pensioners and the owners of these insurance policies at the end of the day. But I've touched a stove too many times in my life to know that greed does get in the way. Incentives do matter. The incentives seem out of whack here, right?

[Nick Namath]

I think the most dangerous thing is to think that there's no way to change anything. It's always going to end up the same. It don't waste your energy and also don't protect yourself. Right. Because it all. Nothing ever happens. You know, Peter lynch says, don't time the market, you know, and it's like, listen guys, cash is not a security. So I can say cash is good, okay? Bitcoin is not a security. So I would say, you know, CYA on what the potential bailout could be at the same time, don't just 100% buy Bitcoin and gold and then all of a sudden be rooting for the world to end, you know, rooting for the death of the US dollar. That, that's, that's, that's not the world. You, you, you're going to be rich on the beach and miserable, you know, so. Yeah. And don't be so scared of, you know, stock prices going down because we got earnings power, don't we?

[Host]

No. Use the AI tools. Use them if you're not already freaks for sure.

[Nick Namath]

Get it? Yeah, get it in your terminal. Command center for Macket's terminal. Takes a little bit to set up. Used Claude in browser. Any error messages, you say how to. Any error messages, copy back there and then crunch some data. Right. It's pretty, pretty speed.

[Host]

Yeah, it is very sweet, Nick. It's been great. Hopefully we can do it again because I don't think the story's going away. I think you're making enough noise yourself. Tom Gober are definitely piquing the interest of many people and just looking externally to your analysis at all the redemption gating that's going on in private credit and private equity. It seems like something's happening. And for everybody who's thinking this could be isolated too. Private credit, private equity. I think understanding the exposure that life insurance and annuities have to that industry is important to understand, too. So thank you for doing the work that you've done and expressing it the way that you have, and articulating it the way that you have may not tickle everybody's fancy, but I love the energy and I'm picking up what you're putting down.

[Nick Namath]

I appreciate that. Thanks for having me on.

[Host]

All right, Peace, Love Freaks okay, thank

[Co-host]

you for listening to this episode of tftc. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can, leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early and ad free, make sure you download the Fountain podcasting app. You can go to Fountain FM to find that $5 a month get you every episode a day early ad free helps. The show gives you incredible value, so please consider subscribing via Fountain as well. Thank you for your time and until next time.