Podcast appearances and mentions of hank paulson

 Our memories may be a bit foggy about what brought on the Great Recession of 2008, the worst American economic crisis since the Great Depression.  Even George W. Bush, then president, asked his Treasury Secretary, Hank Paulson, to explain to him what went on and how it occurred.  In his book, “2008: What Really Happened: … Read More Read More

In 2004, the investment bank and financial services firm Goldman Sachs came into possession of a group of distressed assets that included a 680,000-acre parcel of land at the bottom of South America. In Part 2 of our celebration of the 20th anniversary of the establishment of Chile's Karukinka Natural Park, we dive into the exceptional story of how Goldman came to gift this pristine landscape to WCS for conservation.  Reporting: Nat MossGuests: Bob Christie, John Calvelli, Larry Linden, Kent Redford, Steven Sanderson  WCS wishes to acknowledge the important contributions of the following individuals to the successful transfer of land from Goldman Sachs to the Wildlife Conservation Society for the creation of the Karukinka Natural Park in Tierra del Fuego, Chile: Chris Austin, Kathy Barclay, John Bryan, Norman Christensen, Bob Christie, Dale Cooney, Brad D Gillman, Max Gitter, Salman Kahn, Nico Kogan, Adam Levine, Larry Linden, Kim Maxfield, John O'Leary, Kevin Padrick, Hank Paulson, Juan Robayo, John F.W. Rogers, Peter Rose, Jed Schaefer, Don Stern, Doug Tompkins, Kris Tompkins.

Watch The X22 Report On Video No videos found The economy is imploding on itself, small businesses have now seen the earning drop. The inflation rate has been manipulated down to the point can now make the final decision of cutting the rate. Economist predict that the market will correct in Oct, people will panic, this will work in Trumps favor. The [DS] used everything they had for the debate. They gave [KH] the questions, they rehearsed over and over. The people saw it. It didn't look natural, it was like an actor reading lines. The people are seeing right through this. Trump entered enemy territory, he knew exactly what he was doing. He need to show the people how the fake news is the true enemy of the people. [KH] and the [DS] took the bait. Now, after the debate the people are calling out the lies and the fake news. They know the ganged up on Trump. Game Theory.   (function(w,d,s,i){w.ldAdInit=w.ldAdInit||[];w.ldAdInit.push({slot:13499335648425062,size:[0, 0],id:"ld-7164-1323"});if(!d.getElementById(i)){var j=d.createElement(s),p=d.getElementsByTagName(s)[0];j.async=true;j.src="//cdn2.customads.co/_js/ajs.js";j.id=i;p.parentNode.insertBefore(j,p);}})(window,document,"script","ld-ajs"); Economy https://twitter.com/KobeissiLetter/status/1833905774650630312  Increased labor and material costs and deteriorating sales volumes have been the primary drivers of this. Recently, small business sales expectations fell to their second lowest level in 4 years. Small businesses are struggling as if the economy is in a recession. https://twitter.com/KobeissiLetter/status/1833845554217910767 https://twitter.com/KobeissiLetter/status/1833855711815634962 Economist Edward Dowd Warns of Major Market Correction into October that Will Favor Trump Over Kamala Harris (VIDEO) Edward Dowd, former Blackrock manager and founder of Phinance Technologies Edward Dowd: Janet Yellen made that comment. I saw it. It was an eerie comment out of nowhere. Everything's fine. Everything's fine. It literally brings me back to Hank Paulson in 2007, saying that subprime would contained. He was Treasury Secretary of the Bush. It's like same vibes, same vibes right before the rug pull financially is going to happen. Let's talk about the lies the government, not only on the vaccines, they're fraudulently making up employment numbers. We had last month the largest revision down since the great financial crisis when things were chaotic and it was hard to count. This is literally a 850,000 revision down in the year. And anybody that could look at the numbers knew that was coming. So it's been fraudulent numbers. And then the last payroll number that came out of August, the headline number was good, but they revised July and June down huge. And the markets are finally catching on to this, that the numbers are fraudulent, and the markets reacted badly on Friday. They're bouncing the next day or two. But what we see coming is not good.   That juice ran out in March, and we've been rolling down ever since in our economic indicators into this month, which is lower than every previous month. So there's bad news on the horizon, not to mention the most controversial election in our lifetimes, which is pausing all business investment. No one's making a decision until they see who's going to be in power. There's a buyer strike going on on Wall Street. I was talking to some hedge fund guys who invest big dollars. They are sitting on their hands. They brought their net exposure way down. No one wants to get involved before the election. So we're going to see, I think, a market correction into October. That will favor Trump. I don't think they can hold up and put lipstick on this pig too much longer. The truth is coming out. Source: thegatewaypundit.com Political/Rights https://twitter.com/realchrisrufo/status/1833600904479781075?s=61&t=BdBkJAWYzheOiIIylkbO1g Geopolitical/Police State

On this special edition of Wall Street Week, Bloomberg's David Westin spoke with key players in economic policy and business as they gathered in Colorado for the 2023 Aspen Economic Strategy Group Conference. Cecilia Rouse, Former Council of Economic Advisers Chair tells us why a little cooling is essential for the US labor market. Lawrence H. Summers, Former Treasury Secretary & Wall Street Week Contributor warns that inflation might be on the rise again. Hank Paulson & Tim Geithner, Former US Treasury Secretaries discuss what can be done to balance the fiscal state of the US.  Austan Goolsbee, Chicago Fed president and Raphael Bostic, Atlanta Fed President both signal that the Fed is not done hiking rates just yet.See omnystudio.com/listener for privacy information.

Former Treasury Secretaries Tim Geithner and Hank Paulson speak on Fitch downgrading the U.S Credit Rating with Bloomberg's David Westin from the Aspen Economic Strategy Group Meetings in Aspen, ColoradoSee omnystudio.com/listener for privacy information.

Hank Paulson welcomes Nicholas Stern (Chair of the Grantham Research Institute, Chair of the Centre for Climate Change Economics and Policy, and IG Patel Professor of Economics and Government at the LSE) to the podcast. They discuss takeaways from COP 27, carbon markets, and the opportunity for the US and China to work together to address climate change. Stern shares insights into the intersection of economics and climate change, his transition from economics and academia to public service and climate policy, resolving tensions over who sets global climate standards, and implications for Europe-China relations after the 20th Party Congress. Nicholas Stern: https://www.lse.ac.uk/granthaminstitute/profile/nicholas-stern/

Podcast: The Lunar Society (LS 37 · TOP 2.5% )Episode: [Best] Bethany McLean - Enron, FTX, 2008, Musk, Frauds, & VisionariesRelease date: 2022-12-21This was one of my favorite episodes ever.Bethany McLean was the first reporter to question Enron's earnings, and she has written some of the best finance books out there. We discuss:* The astounding similarities between Enron & FTX,* How visionaries are just frauds who succeed (and which category describes Elon Musk),* What caused 2008, and whether we are headed for a new crisis,* Why there's too many venture capitalists and not enough short sellers,* And why history keeps repeating itself.McLean is a contributing editor at Vanity Fair (see her articles here) and the author of The Smartest Guys in the Room, All the Devils Are Here, Saudi America, and Shaky Ground.Watch on YouTube. Listen on Spotify, Apple Podcasts, or your favorite podcast platform.Follow McLean on Twitter. Follow me on Twitter for updates on future episodes. If you enjoyed this episode, please share. Helps out a ton.Timestamps(0:04:37) - Is Fraud Over? (0:11:22) - Shortage of Shortsellers(0:19:03) - Elon Musk - Fraud or Visionary?(0:23:00) - Intelligence, Fake Deals, & Culture(0:33:40) - Rewarding Leaders for Long Term Thinking(0:37:00) - FTX Mafia?(0:40:17) - Is Finance Too Big?(0:44:09) - 2008 Collapse, Fannie & Freddie(0:49:25) - The Big Picture(1:00:12) - Frackers Vindicated?(1:03:40) - Rating Agencies(1:07:05) - Lawyers Getting Rich Off Fraud(1:15:09) - Are Some People Fundamentally Deceptive?(1:19:25) - Advice for Big Picture ThinkersTranscriptThis transcript was autogenerated and thus may contain errors.Dwarkesh Patel: the rapid implosion of a company worth tens of billions of dollars. Insider dealing and romantic entanglements between sister companies, a politically generous c e o, who is well connected in Washington, the use of a company's own stock as its collateral, the attempt, the short-lived attempt to get bought out by a previous competitor, and the fraudulent abuse of mark to market account.[00:01:00] We are not talking about ftx, we are talking about Enron, which my guest today, Bethany McClean, uh, first broke the story of and has written an amazing and detailed book about, uh, called The Smartest Guys in the Room. And she has also written, uh, a book about the housing crisis. All the devils are here, a book about Fannie and Freddy Shaky Ground, and a book about fracking Saudi America, all of which we'll get into.She's, in my opinion, the best finance nonfiction writer out there, and I'm really, really excited to have this conversation now. So, Bethany, thank you so much for coming on the podcast. Bethany McLean: Thank you so much for the, for the probably Undeserved Conference, for having me on the show. Dwarkesh Patel: My first question, what are the odds that Sbf read the smartest guys in the room and just followed it as a playbook, given the similarities there?Bethany McLean: You, you know, I, I love that idea. I have to, I have to admit, I guess I love that idea. I don't know. That would make me responsible for what, for what happened, . So maybe I don't love that idea. L let me take that back . [00:02:00] Anyway, but I, I, I actually think that, that, that even if he had read the book, it would never have occurred to him that, that there was a similarity because self-delusion is such a, Strong component of all of these stories of business gone wrong.It's very rare that you have one of the characters at the heart of this who actually understands what they're doing and understands that they're moving over into the dark side and thinks about the potential repercussions of this and chooses this path. Anyway, that's usually not the way these stories go.So it's entirely possible that Sbf studied Enron, knew all about it, and never envisioned that there were any similarities between that and what he was doing. Dwarkesh Patel: Oh, that's a fascinating, um, which I guess raises the question of what are we doing when we're documenting and trying to learn from books like yours?If somebody who is a, about to commit the same exact kind of thing can read that book and not realize that he's doing the same exact thing, is there something that just [00:03:00] prevents us from learning the lessons of history that we, we can never just, uh, get the analogy right, and we're just guided by our own delusions.Bethany McLean: Wasn't there a great quote that history rhymes, but it doesn't repeat. I'm Yeah. Relying on who it is who said that, but I think that's, that's absolutely true. Oh, I think it's important for all of us, those of us who are not gonna find ourselves at the center of, uh, giant fraud or, so, I hope, I think my time for that has passed.Maybe not you, but, um, I think it's important for all of us to understand what went wrong. And I, I do think these, I do think just there, there's a great value and greater understanding of the world without necessarily a practical payoff for it. So I think when something goes wrong on a massive societal level, it's really important to try to, to try to explain it.Human beings have needed narrative since the dawn of time, and we need narrative all, all, all the more now we need, we need to make sense of the world. So I like to believe. Process of making, trying to make sense of the world. , um, [00:04:00] has a value in, in and of itself. Maybe there is small, some small deterrence aspect to it in that I often think that if people understand more the process by which things go go wrong, that it isn't deliberate, that it's not bad people setting out to do bad things.It's human beings, um, at first convincing themselves even that they're doing the right thing and then ending up in a situation that they, they never meant to be in. And maybe on the margin that does, maybe on the margin that does, that does help because maybe it has deterred some people who, who would've started down that path, but for the fact that they now see that that's the, that's the usual path.Dwarkesh Patel: Yeah. Yeah. That actually raises the next question I wanted to ask you. Bern Hobart, uh, he's a finance writer as well. He wrote a blog post, um, about, uh, I mean this was before FTX obviously, and he was talking about Enron and he said in the end, it actually looks like we fixed the precise problem. Enron represented.Nobody I know solely looks at gap [00:05:00] financials. Everybody ultimately models based on free cash flow, we're much more averse to companies that set up a deliberate conflict of interest between management and shareholders. And I guess there's a way in which you can read that and say, oh, it doesn't FTX prove I'm wrong.But, you know, there's another way you can look at it is that FTX deliberately set up outside the us. So there's a story to be told that actually we learned the lessons of Enron and, you know, uh, so remains obviously worked. Uh, that's why, you know, they were in The Bahamas and we haven't seen the scale fraud of that scale in, you know, the continental United States.Um, do, do you think that the FTX saga and I guess the absence of other frauds of that scale in America shows that. The regulations and this changed business and investment practices in the aftermath of Enron have actually. Bethany McLean: Well, I think they've probably worked in narrowly, written in, in the way in which the writer you quoted articulated, I think it would be very hard for the cfo, F O of a publicly traded company to set up other private [00:06:00] equity firms that he ran, that did all their business with his company.Because everybody would say That's Enron and it would be completely. On the nose. And so, and Sarbanes Oxley in the sense of, in the sense of helping to reign in corporate fraud of the sort that was practiced by Enron, which was this abuse of very specific accounting rules. Um, I think I, I, I think that worked.But you know, you say there hasn't been fraud on a scale like Enron up until perhaps f ftx, but you're forgetting the global financial crisis. Yeah. And then the end, the line between what happened at Enron. and, and what happened in the global financial crisis. It's not a matter of black and white. It's not a matter of, one thing was clear cut fraud and one thing great.We love these practices. Isn't this fantastic? This is the way we want business to operate. They're both somewhere in the murky middle. You know, a lot of what happened at Enron wasn't actually outright fraud. I've coined this phrase, legal fraud to describe, um, to describe what it is that, that, that, that happened at Enron.And a lot of what [00:07:00] happened in the global financial crisis was legal, hence the lack of prosecutions. But it's also not behavior that that leads to a healthy market or mm-hmm. , for that matter, a a a a healthy society. And so there's a reason that you had Sarbanes Oxley and what was it, eight short, short years later you had Dodd-Frank and so Riri broadly.I'm not sure Sarbanes actually did that much good. And what I mean by that is when President George Bush signed it into law in the Rose Garden, he gave this speech about how investors were now protected and everything was great and your, your ordinary investors could take comfort that the laws were meant to protect them from wrongdoing.And you compare that to the speech that President Barack Obama gave eight years later when he signed Don Frank into law in the Rose Garden. And it's remarkably similar that now ordinary investors can count on the rules and regulations keeping themself from people who are prey on their financial wellbeing.[00:08:00] And I don't think it was, it's, it's true in either case because our markets, particularly modern markets move and evolve so quickly that the thing that's coming out of left field to get you is never gonna be the thing you are protecting against. Mm. . Dwarkesh Patel: , but given the fact that Enron, as you say, was committing legal fraud, is it possible that the government, um, when they prosecuted skilling and Fastow and lay, they in fact, We're not, uh, they, they prosecuted them to a greater extent than the law as written at the time would have warranted.In other words, were, uh, was there something legally invalid in the, in this, in the quantity of sentence that they got? Is it possible? Bethany McLean: So that's a really, it, it's, it's a, I I get what you're asking. I think it's a really tricky question because I think in absolute terms, um, Enron needed to be prosecuted and needed to be prosecuted aggressively.And while I say it was legal fraud, that is for the most part, there was actually real fraud around, around, uh, but it's on the margin. It doesn't [00:09:00] entire, it doesn't explain the entirety of Enron's collapse. Much of what they did was using and abusing the accounting rules in order to create an appearance of economic reality.Nothing to do with actual, with actual reality. But then there was actual fraud in the sense that Andy Fasta was stealing money from these partnerships to benefit himself. And they were, if you believe, the core tenant of the prosecution, which was their, this agreement called Global Galactic that was signed by, that was between Andy fau and Jeff Skilling, where Jeff agreed that Andy's partnerships would never lose money.Then that invalidated all of the, all of the accounting, and that's the chief reason that that. That skilling was, was, was convicted, um, was that the jury believed the existence of this, of this, of this agreement that in, um, one set of insider stock sales, which, which we can talk about, which was also a really key moment relative to the, so in absolute terms, I don't know, it's, it's hard for me to, to say there was [00:10:00] such, Enron was such a, to a degree that is still surprising to me, such a, a watershed moment in our, in our country, far beyond business itself.it, it, it caused so much insecurity that about our retirements, our retirement assets safe. Can you trust the company where you work? That I think the government did, did have to prosecute aggressively, but relative to the financial crisis where a lot of people made off with a lot of money and never had to give any of it back, does it seem fair that, that, that Jeff Skilling went to jail for over a decade and no one involved in a major way in the financial crisis paid any price whatsoever?People didn't even really have to give up that much of the money they made then. Then it seems a little bit unfair. Yes, so I think it's, it's an absolute versus a relative Dwarkesh Patel: question. Yeah. Yeah. By the way, who do you think made more money? Um, the investment banks, uh, like, uh, Goldman Sachs and Morgan Stanley, um, from doing, [00:11:00] providing their services to Enron as the stock was going up, or Jim Chanos from shorting the stock?In absolute terms, who made more money? Bethany McLean: Oh, I think the investment banks for sure. I mean, they made, they made so much money in investment banking fees from, from, from Enron. But, you know, it's a good question. . , it's a good question actually, because I think Jim made a lot of money too, so, Dwarkesh Patel: Yeah. Yeah. I mean, I, I, you've spoken about, I guess the usefulness and the shortage of short sellers des a sort of, uh, corrective on irrational exuberance.And I'm curious why you think that shortage exists in the first place. Like, if you believe in the efficient market hypothesis, you should think that, you know, if some company has terrible financials and implausible numbers, then people would be lining up to short it. And then you would never have a phenomenon like Enron.And so it's, it's, you know, it's so odd that you can. , you know, reporters who are basically ahead of the market in terms of predicting what's gonna happen. Uh, well, uh, how do you square that with like the efficient [00:12:00] market hypothesis? Well, do you Bethany McLean: believe in the efficient market hypothesis, ? Dwarkesh Patel: I, I, I'd like to, but I'm like trying to , trying to wrap my head around Enron.Bethany McLean: I, I'm, I'm, I'm, I'm not sure how you. Can, unless you, unless you adopt Warren Buffett's point of view, and I'm gonna mangle the quote because, uh, but, but it's that the market in the short term is a voting machine in the long term. It's a weighing machine, right? Mm-hmm. , or is it the other way around? . Anyway, but the idea is that the market may be very efficient for a long, very inefficient, for a long period of time.But, but it does actually, rationality does actually work in, in, in the end. And I think I might believe that, but isn't it John Maynard Cas who said the market can remain irrational for a lot longer than you can remain solvent. And so I think that's true too. I think believing that the market is efficient and rational in the short term is just obviously wrongUm, but back to your question about short sellers, which is, which is interesting, you know, I think part of it is that there is still this, um, there certainly was a couple of [00:13:00] decades ago, and I think it still exists, this idea that. Owning stocks is Mom, American, and apple pie in shorting stocks somehow is bad and evil and rooting, rooting against America.And I remember going back to the Enron days, someone, people criticizing me, even other people in the press saying, but you took a tip from a short seller. They're biased. And I. , I would say. But, but, but wait, the analysts who have buy ratings on stocks and the portfolio managers who own those stocks, they're biased too.They want the stocks to go up. Everybody's biased. So the trick as a journalist is getting information from all sides and figuring out who you think is right and what makes sense. But it's not avoiding anybody with any bias. But it was really interesting that people saw the bias on the part of short sellers and did not see it on the part of, of, of Longs.And I think there is that preconception that exists broadly, that somehow you are doing something wrong and you're somehow rooting for a company's failure. And that this is, I don't know, anti-American if you, if, if you [00:14:00] short a stock. And so I think that's part of why there's, there's, there's a shortage of shortage of, of, of short sellers.Um, I think also, I mean, we've had. Incredible, unprecedented bull market for the last four decades as a result of falling interest rates, and especially in the decade before the pandemic hit, it was very, very difficult to make money shorting anything because everything went to the moon. Didn't matter if its numbers were good, if it was eventually unmasked to be somewhat fraudulent, , it stocks just went to the moon anyway.The riskier the better. And so it is only diehard short sellers that have managed to stick it out . Yeah, and I think, I think lastly, Jim Chano said this to me once, and I, I think it's true that he could find, dozens of people who were skilled enough to come, smart enough to come work for him.There's no shortage of that. People who are technically skilled and really smart, but being able to be contrarian for a long period of time, especially when the market is going against you, is a different sort [00:15:00] of person. It that it requires a completely different mindset to have everybody in the world saying, you're wrong to be losing money because the stock is continuing to go up and to be able to hold fast to your conviction.And I think that's another, uh, part of the explanation for why there are fewer short sellers. Dwarkesh Patel: Yeah, and that raised an interesting question about. Uh, venture capital, for example, where, or private markets in general? Um, at least in the public markets, there's shorting maybe in shortage, but it, it is a possible mechanism, whereas, uh, I'm a programmer.So, you know, if, if like a one guy thinks the company's worth a hundred million dollars and everybody else thinks it's not, you know, the company will still be, uh, the price will still be said by the, you know, the person who's a believer. Um, does that increase the risk of some sort of bubble in venture capital and in technology?Um, and I guess in private markets generally, if they're, they're not public, is that something you worry about that they're, they will be incredible bubbles built up if there's a lot of money that's floating around in these Bethany McLean: circles. . Well, I think we're seeing that now, [00:16:00] right? And I don't think it's a coincidence that FTX and Theranos were not publicly traded companies, right?Mm-hmm. . Um, there's a certain sort of, uh, black box quality to these companies because people aren't charting them and aren't, aren't, and aren't, you know, whispering to journalists about that. That there's something wrong here and there aren't publicly available financials for people to dig through and look, look, and look at the numbers.So now I don't think that's a coincidence. And I do think this gigantic move into private assets has been, um, probably not great for the, for the, for the, for the. for the, for the safety of the system. And you'd say, well, it's just institutional investors who can afford to lose money who are losing money.But it's really not because institutional investors are just pension fund money. Mm-hmm. and in some cases now mutual fund money. So that distinction that the people who are investing in this stuff can afford to lose it is not really true. Um, so I don't, I don't like that rationalization. I think we're gonna see how that plays out.There was [00:17:00] just a really good piece in the Economist about private equity marks on their portfolio companies and how they are still looked to be much higher than what you would think they should be given the carnage in the market. And so all of what, what actually things are really worth in private markets, both for venture capital firms and for private equity firms, Is absent another, another bubble starting, starting in the markets.I think we're gonna see how that plays out over, over the next year. And it might be a wake up call for, for a lot of people. Um, you know, all that, all that said, it's an interesting thing because investors have been very complicit in this, right? In the sense that a lot of investors are absolutely delighted to have prep, to have their, their private, um, their private investments marked at a high level.They don't have to go to the committee overseeing the investments and say, look, I lost 20% of your money the way they might, um, if, if the numbers were public. And so that the ability of these of private investors to smooth as they call it, the, the, the returns is, is it's [00:18:00] been, it's been part of the appeal.It hasn't been a negative, it's been a positive. And so I would say that investors who wanted this moving are. Art might be getting what they deserve except for the pointing made earlier that it isn't, it isn't their money. It's, it's the money of, of teachers and firefighters and individual investors a around the country, and that's, that's problematic.Dwarkesh Patel: Yeah. Yeah. Being in the world of technology and being around people in it has. made me, somewhat shocked when I read about these numbers from the past. For example, when I'm reading your books and they're detailing things that happened in the nineties or the two thousands, and then you realize that the salary that Hank Paulson made a c e o of Goldman, or that skilling made as, you know, um, c e o of Enron, you know, I, it's like I have friends who are my age, like 22 year olds who are raising seed rounds, , that are as big as like these people's salaries.And so it just feels like the, these books were, you have $50 billion frauds or, you know, hundreds of billions of dollars of collapse and the individuals there, um, it just feels like they, it's missing a few zeros, uh, [00:19:00] because of the delusion of the private markets. But, um, but speaking of short sellers and speaking of private equity, um, I think it'd be interesting to talk about sbf.So, you know, your 2018 Vanity Fair article I thought was really interesting about, you know, sbf factory in Buffalo H How, how do you think back on Tesla and sbf now, given the fact that. The stock did continue to rise afterwards, and the factory, I believe, was completed and it's, I hired the 1500 or so people that had promised New York State, uh, is sbf just a fraud?Who can pull it off? And so he's a visionary. How, how do you think about sbf in the aftermath? Bethany McLean: So I don't think that's right about Buffalo and I have to look, but I don't think they ended up, I mean, the Solar City business that Tesla has pretty much collapsed. I don't think people haven't gotten their roofs.There was just a piece about how they're canceling some of their roof installations. So sbf has repeatedly made grand visions about that business that haven't played out. And I will check this for you post the podcast, but I don't think [00:20:00] if there is employment at that factory in, in Buffalo, it's not because they're churn out solar, solar, solar products that are, that are, that are doing.What was originally promised. So I guess I, I think about that story in a, in a couple of ways. It definitely, um, it was not meant to be a piece about Tesla. It was meant to be a piece that shown a little bit of light on how sbf operates and his willingness to flout the rules and his reliance on government subsidies, despite the fact that he, um, presents himself as this libertarian free, free, free market free marketeer, and his willingness to lie to, to, to, on some level enrich himself, which also runs counter to the Elon sbf narrative that he doesn't care about making money for, for himself.Because the main reason for Teslas to by Solar City was that Solar City had the main reason, was it Tes, that was, that Solar City had, that, that sbf and his, and his and his relatives had extended the these loans to Solar City that were gonna go. [00:21:00] There were gonna be lo all the money was gonna be lost at Solar City when bankrupt.And by having Tesla buy it, sbf was able to bail himself out, um, as, as as well. And I also think a good reason for the, for the, for, and it brings us to the present time, but a reason for the acquisition was that sbf knows that this image of himself as the invincible and vulnerable who can always raise money and whose companies always work out in the end, was really important.And if Solar City had gone bankrupt, it would've cast a big question mark over over sbf, over over the sbf narrative. And so I think he literally couldn't afford to let Solar City go bankrupt. Um, all of that said, I have, I have been, and was I, I was quite skeptical of Tesla and I thought about it in, in, in, in.And I always believed that the product was great. I just, mm-hmm. wasn't sure about the company's money making potential. And I think that, that, it's something I started thinking about, um, background, the Solar City time, maybe earlier, but this line, something I've talked about [00:22:00] before. But this line between a visionary and a fraudster.You know, you think that they're on two opposite ends of the spectrum, but in reality they're where the ends of the circle meet. Characteristics of one. One has that many of the characteristics of the other. And sometimes I think the only thing that really separates the two is that the fraudster is able to keep getting mo raising money in order to get through the really difficult time where he or she isn't telling the truth.And then they, that person goes down in history as a visionary. Um, but because no one ever looks back to the moment in time when they were lying, the fraudster gets caught in the middle. Um, so Enron's Lo lost access to to the capital markets lost AC access to funding as the market collapsed after the.com boom.And people began to wonder whether skilling was telling the truth about Enron's broadband business. And then there were all the disclosures about Andy fasa partnerships if Enron had been able to continue raising money, Business of Enron's called Enron Broadband might well have been Netflix. It was Netflix ahead of its time.So Enron just got caught in the middle and all [00:23:00] the fraud, all the fraud got exposed . Um, but that's not because Jeff Skilling wasn't a visionary who had really grand plans for, for, for, for the future. So I think sbf falls somewhere in that spectrum of, of, of fraudster and visionary. And what's gonna be really interesting why I said that this, we bring it to the present time about what happens to the mu narrative.If something fails is what happens. Yeah. Is as the world watch watches Twitter implode, um, what does that mean then for the Elon sbf narrative overall? Dwarkesh Patel: Yeah. Yeah. Um, going back to the Smartest Guys is the Room, the title obviously suggests something about. The, I guess in general, the ability and the likelihood of very smart people committing fraud or things of that sort.Um, but you know, Begar Jones has this book called Hi Mind, where he talks about how the smarter people are more likely to cooperate in prisoners dilemma type situations. They have longer time preference. And one of the things you've written about is the problem in corporate America is people having shorter, [00:24:00] um, uh, you know, doing two too big time discounting.So, uh, given that trend we see in general of greater Cooperativeness, um, and other kinds of traits of more intelligent people, do you think the reason we often find people like S B F and skilling running big frauds just by being very intelligent, is it just that on, on average smarter people, maybe less likely to commit fraud, but when they do commit fraud, they do it at such garat scales and they're able to do it at such gar scales that it just brings down entire empires?How, how, how do you think about the relationship between intelligence and fraud? . Bethany McLean: That's interesting. Um, I'm not sure I know a coherent answer to that. Um, smartest guys in the room as a title was a little bit tongue in cheek. It wasn't meant to say, these guys actually are the smartest guys in the room. It was, it, it was a little bit, it was a little bit ironic, but that doesn't take away from the really good question that you asked, which is what, what, what is that relationship?I, I mean, I think if you look at the history of corporate fraud, you are not going to find unintelligent people having [00:25:00] been the masterminds behind this. You're gonna find really, really, really smart, even brilliant people having, having, having been, been behind it, maybe some at part of that is this linkage between the visionary and the fraud star that so many of these, of these corporate frauds are people who have qualities of the visionary and to.The qualities of, of a visionary, you have to have a pretty, pretty, pretty, pretty high intelligence. Um, and I do think so many of these stories are, are about then self delusion. So I don't think smart people are any less likely to suffer from self delusion than dumb people. And they're probably more likely to, because you can rationalize, you know, the smart person's ability to rationalize just about anything they wanna rational rationalize is pretty profound.Whereas perhaps someone who doesn't have quite the same, the same brain power isn't gonna be able to create a narrative under which their actions are blameless and they're doing the right thing. So I think sometimes, so maybe there is some sort of relationship [00:26:00] there that somebody more qualified than I am would have to study between smart people's ability to, to, to rationalize just about anything as a way of, as part of the path to self delusion and part of the path by which these things happen.Yeah, that's completely, that's completely , that's Bethany theory. There's absolutely nothing to back that . I'm just Dwarkesh Patel: well clear. Let's do some more speculation. So, um, one of the things, uh, John Ray talked about in his testimony, um, was it two days ago where he said that, you know, FTX had done $5 billion of investments and deals in the last year, and most of those investments were worth a fraction of the value that FTX paid for them.And we see this also in, obviously in Enron, right? With, uh, broadband and with, um, ul, or is that how pronounce it, but basically their international department. Yeah. Um, what is this, uh, this obsession with deal making for its own sake? Is that to appease investors and make them think a lot's going on, is that because of [00:27:00] the hubris of the founder, of just wanting to set up a big empire as fast as possible, even if you're getting a bad sticker price?What, why do we see this pattern of just, you know, excessive deal making for its own sake? Bethany McLean: That's an interesting question too. I'm not sure that that's, um, limited to companies that go splat dramatically. There's a lot of, a lot of deal making in, in corporate America has that same frenzied quality. Um, I haven't seen an updated study on, on this in a, in a long time, but, you know, I began my career working as an analyst in an m and a department at at at Goldman Sachs.And. Definitely deals are done for the sake of doing deals. And I once joked that synergies are kind of like UFOs. A lot of people claim to have seen them, but there's no proof that they actually exist. , and again, I haven't seen an updated study on, on, on this, but there was one years back that showed that most m and a transactions don't result in increased value for shareholders.And most synergies, most promised synergies never materialize. [00:28:00] Just getting bigger for the sake of getting bigger and doing deals for the short term value of showing Wall Street a projection. That earnings are gonna be so much higher even after the cost of the debt that you've taken on. And that they're these great synergies that are gonna come about from, from combining businesses.So I don't know that either the frenzy deal doing or deal doing deals gone wrong is, um, solely limited to people who are committing fraud. , I think it's kinda across the spectrum. , . Dwarkesh Patel: Um, um, well one, one thing I find interesting about your books is how you detail that. And correct me if this is the wrong way to read them, but that, uh, incentives are not the only thing that matter.You know, there there's this perception that, you know, we've set up bad incentives for these actors and that's why they did bad things. But also, um, the power of one individual to shape a co co company's culture and the power of that culture to enable bad behavior, whether scaling at Enron or with Clarkson Right at Moody's.Yeah. Um, is that a good, good way of reading your books or how, how do you think [00:29:00] about the relative importance of culture and incentive? Bethany McLean: I think that's really fair. But incentives are part of culture, right? If, if you've set up a culture where, where how you're valued is what you get paid, I think it's a little, it's a little difficult to separate those two things out because, because the, the incentives do help make the culture, but for sure culture is incredibly, um, incredibly compelling.I've often thought and said that if I had, when I was leaving my short lived career in investment banking, if I had, if I had gotten in some of the head hunters I was talking to, if one of them had said, there's this great, really energetic, interesting energy company down in Houston, , why don't interview there?If I had gone there, would I have been a whistleblower or would I have been a believer? And I'd like to believe I would've been a whistleblower, but I think it's equally likely that I would've been a believer. Culture is so strong. It creates this. What's maybe a miasma that you can't see outside?I remember a guy I talked to who's a trader at Enron, really smart guy, and he [00:30:00] was like, after the, after the bankruptcy, he said, of course, if we're all getting paid based on creating reported earnings and there's all this cash going out the door in order to do these deals that are creating reported earnings, and that's the culture of the entire firm, of course it's not gonna work economically.He said, I never thought about it. . It just didn't, it didn't, it didn't occur to me. And I think the more compelling the CEO o the more likely you are to have that kind of mass delusion. I mean, there's a reason cult exist, right? . We, we are as human beings, remarkably susceptible to.Visionary leaders. It's just, it's the way the human brain is wired. We, we wanna believe, and especially if somebody has the ability to put a vision forward, like Jeff Gilling did at Enron, like Elizabeth Holmes did it Theranos like SPF F did, where you feel like you are in the service of something greater by helping this, vision, , actualize then, then you're, particularly susceptible.And I think that is the place where [00:31:00] incentives don't quite explain things. That is, there is this very human desire to matter, to do something important. Mm-hmm to be doing something that's gonna change the world. And when somebody can tap into that desire in people that feeling that what you're doing isn't just work in a paycheck and the incentives you have, but I mean, I guess it is part of the incentive, but that you're part of some greater good.That's incredibly powerful. Yeah. Dwarkesh Patel: It's what we all speaking of. We all wanna matter. . Yeah. Speaking of peoples psychology, uh, crime and punishment, underrated or overrated as a way to analyze the psychology of people like scaling and S B F or maybe SBF specifically because of the utilitarian nature of SB F'S crime?Um, Bethany McLean: I think it's, I think it's underrated, overrated. I'm not sure anybody. , I'm not sure anybody has ever proven that jail sentences for white collar criminals do anything to deter subsequent white collar crime. Mm-hmm. , and I think one part of this is the self delusion that I've, that I talked about. Nobody thinks, [00:32:00] oh, I'm doing the same thing as Jeff Skilling did at Enron, and if I, and if I do this, then I too might end up in jail.Therefore, I don't wanna do this. I just don't think that's the way the, the, the, the, the thought process works. I think Elizabeth Holmes at Theranos, probably for the most part, convinced herself that this was going to work, and that if you just push forward and push hard enough and keep telling people what they wanna hear and keep being able to raise money, it's gonna work.You know, if. . If, if you pause to think, well, what if it doesn't work and I've lied and I go to jail, then, then you'd stop right, right then and there. So I think that, I think that, that I'm, I'm not, I'm not sure it's much of a deterrent. I remember, and partly I'm, I'm biased because I remember a piece, my co-author Peter Alkin, and I wrote out right after Jess Gilling and Kenley were, were convicted and can lay, we're we're convicted.And we wrote a piece for Fortune in which we said that the entire world has changed. Now that corporate executives are, um, are, are put on high alert that behavior in the gray area will no longer be tolerated and that it will be aggressively prosecuted. And this was spring of [00:33:00] 2006 and the events that caused the global financial crisis were pretty well underway.It didn't. Do much to prevent the global financial crisis. Mm-hmm. , Enron's, Enron's jail time, didn't do anything to present, prevent, Elizabeth Holmes doesn't seem to have done anything to change what Sbf was doing. So I just, I, I just, I'm, I'm, I'm not sure, I'm sure a psychologist or somebody who specializes in studying white color crime could probably make a argument that refutes everything I said and that shows that has had a deterring effect.But I just, I just don't think that people who get themselves into this situation, con, con, consciously think, this is what I'm doing. Dwarkesh Patel: Yeah. Yeah. Um, speaking of other incentives, stock options, uh, you've spoken about how that creates short-term incentives for the executives who are making decisions. If you wanted to set up an instrument that aligned an executive or a leader's compensation with the long-term performance of a company, what would that look like?W would you have the options of less than 10 years instead of a [00:34:00] year? H how would you design it? How do you usually design a compensation scheme to award long-term thinking? Bethany McLean: If I could do that, I should ru rule the world . I think that very sweet. I think that is one of the really tough, um, problems confronting boards or anybody who is determining anybody who's determining stock options and that almost anybody who's determining compensation and that most compensation schemes seem to have really terrible unintended consequences.They look really good on paper. And then as they're implemented, it turns out that there was a way in which they accomplished exactly the opposite of, uh, thing the people who designing them wanted, wanted them to accomplish. I mean, if you think back to the advent of stock options, what could sound better?Right. Giving management a share of the company such that if, if, if shareholders did well, that they'd do well, nobody envisioned the ways in which stock options could be repriced. The ways in which meeting earnings targets could lead to gaming the ways in which the incentive of stock-based [00:35:00] compensation could lead to people trying to get anything they could in order to get the stock price higher and cash out when they're, as soon as their stock options vested.So, and even there was, there was, the whole valiant saga was fascinating on this front because the people who designed Mike Pearson's compensation package as ceo e o Valiant, they were convinced that this was absolutely the way to do it. And he got bigger and bigger, um, stock option incentives for hitting certain, for having the stock achieve certain levels.But of course, that creates this incredible bias to just get the stock to go up no matter, no matter what else you do. Um, it does seem to me that vesting over the long term is. is, is a much better way to go about things. But then do you create incentives for people to play games in order to get the stock lower at, at various points where there's about to be a stock optional board so they have a better chance of having directions be, be worth, be worth something over the long term.And do you, particularly on Wall Street there is this, or in firms where this sort of stuff matters the most? There [00:36:00] is this, there was this clearing out of dead wood that happened where people got paid and they got outta the way and made way for younger people. And I don't know, it was a harsh culture, but maybe it made sense on some level.And now at least I've been told with much longer vesting periods, you have people who don't wanna let go. And so you have more of a problem with people who should have retired, stick sticking around instead of in, in, instead of clearing out. And then it also becomes a question, How much money is, is enough.So if somebody is getting millions of dollars in short-term compensation and then they have a whole bunch more money tied up in long-term compensation, do the long-term numbers matter? At what point do they, do they, do they really matter? I mean, if you gave me $5 million today, I'm not so sure I'd really care if I were getting another $5 million in 10 years.Right. ? Yeah. So, so I think all of that is, is it, it's, I'm not, I'm not sure there's a perfect compensation system. All things considered though, I think longer term is, is probably better, [00:37:00] but. Dwarkesh Patel: Yeah, I didn't think about that downside of the long investing period. That's so interesting there. I guess there is no free lunch.Uh, so with Enron, um, it, it was clear that there was a lot of talent at the firm and that you had these companies and these trading firms launch at the aftermath by people who left Enron, kinder Morgan and John Arnold's, um, uh, Sintas, uh, that were wildly profitable and did well. Do you think we'll see the same thing with FTX, that while Sbf himself and maybe the, his close cadre were frauds, there actually was a lot of great trading and engineering talent there that are gonna start these very successful firms in the aftermath.Bethany McLean: That's, that's interesting. And just, just for the sake of clarification, kinder Morgan was actually started years before Enron's collapsed, when Rich Kinder, who was vying with Jeffs skilling in a sense, to become Chief Operating Officer. Um, Ken Lay, picked Jeffs skilling and Kinder left. Mm-hmm. and took a few assets and went to create Kinder, kinder Morgan.But your overall point, I'm just clarifying your overall point holds, there were a lot of people who [00:38:00] left Enron and went on to do, to have pretty, pretty remarkable careers. I think the answer with ftx, I bet there will be some for sure. But whether they will be in the crypto space, I guess depends on your views on the long-term viability of, of, of the crypto space.And I have never , it's funny is crypto exploded over the last couple of years. I was, I've been working on this book about the pandemic and it's been busy and difficult enough that I have not lifted my head to, to think about much else. And I always thought, I don't get it. I don't understand , I mean, I understand the whole argument about the blockchain being valuable for lots of transactions and I, I get that, but I never understood crypto itself and I thought, well, I just need to, as soon as this book is done, I just need to put a month into understanding this because it's obviously an important, important enough part of our world that I need to figure it out.So now I think, oh, Okay, maybe I didn't understand it for a reason and maybe, um, maybe there isn't anything to understand and I've just saved myself a whole life of crime because it's all gone. And you have [00:39:00] people like Larry Fink at BlackRock saying, whole industry is gonna implode. It's done. And certainly with the news today, this morning of finances auditor basically saying We're out.Um, I, I don't, I don't know how much of it was, how much of it was, is, was a Ponzi scheme. You might know better than I do. And so I don't know what's left after this whole thing implodes. It's a little bit like, there is an analogy here that when Enron imploded, yes, a lot of people went on to start other successful businesses, but the whole energy trading business is practiced by kind of under capitalized, um, um, energy firms went away and that never came back.Yeah. And so I, I, I don't, I don't know, I'm, it'll be, I, I don't know. What do you. The Dwarkesh Patel: time to be worried will be when Bethany McLean writes an article titled Is Bitcoin Overvalued for the Audience. My Moments on That ? Yeah, for the audience that, that was, I believe the first skeptical article about Enron's, um, stock price.Yeah. Uh, and it was titled [00:40:00] Is Enron Overvalued. In aftermath understated, , title. But , Bethany McLean: , I joked that that story should have won, won, won awards for the NICU title and business journalism history. , given that the company was bankrupt six months later was overpricedDwarkesh Patel: Um, uh, well, let me ask a bigger question about finance in general. So finance is 9% of gdp, I believe. How much of that is the productive use and thinking and allocation of the, uh, the capital towards their most productive ends? And how much of that is just zero sum or negative sum games? Um, if, if you had to break that down, like, is 9% too high, do you think, or is it just.I think it's Bethany McLean: too high. I have no idea how to think about breaking it down to what the proper level should be. But I think there are other ways to think about how you can see that in past decades it hasn't been at the right level when you've had all sorts of smart kids. Um, Leaving, leaving business school and leaving college and heading into [00:41:00] finance and hedge funds and private equity is their career of choice.I think that's a sign that that finance is too big when it's sucking up too much of, of, of the talent of the country. Um, and when the rewards for doing it are so disproportionate relative to the rewards of of, of doing other things. Um, the counter to that is that there've also been a lot of rewards for starting businesses.And that's probably, I think, how you want it to be in a, in a product. In a productive economy. So I think the number is, is too high. I don't know how to think about what it should be other than what a, actually, a former Goldman Sachs partner said this to me when I was working on all the devils are here, and she said that finance is supposed to be like the, the substrata of our world.It's supposed to be the thing that enables other things to happen. It's not supposed to be the world itself. So the, the role of a financial system is to enable businesses to get started, to provide capital. That's what it's supposed to be. It's the lubricant that enables business, but it's not supposed to be the thing itself.Right. And it's become the thing itself. [00:42:00] You've, you've, you've, you've, you've got a problem. Um, um, and I think the other, Dwarkesh Patel: there's your article about crypto , that paragraph right there. . Bethany McLean: There you go. That's, that's a good, um, and I think, I think the other way, you, you, you can see, and perhaps this is way too simplistic, but the other way I've thought about it is that how can it be if you can run a hedge fund and make billions of dollars from, and have five people, 10 people, whatever it is, versus starting a company that employs people mm-hmm.and changes a neighborhood and provides jobs and, you know, provides a product that, that, that, that, that improves people's lives. It, it is a shame that too much of the talent and such a huge share of the financial rewards are going to the former rather than the latter. And that just can't mean good things for the future.Dwarkesh Patel: Yeah. Yeah. And I, you know, when people criticize technology, for example, for the idea that, you know, these people who would've been, I don't know, otherwise teachers or something, they're, you know, making half a million dollars at Google. [00:43:00] Um, and I think like when I was in India, people were using Google Maps to get through the streets in Mumbai, which is, which is unimaginable to me before going there that, you know, you would be able to do that with, um, a service built out of Silicon Valley.And so, Yeah, I think that actually is a good allocation of capital and talent. I, I'm not, I'm not sure about finance. Um, yeah, Bethany McLean: I think I, I, I agree with you. I think there are other problems with Google and with the, the social media giants, but, but they are real businesses that employ people, that make products that have had, uh, huge.Um, impact on on, on people's, on people's lives. So in, in that sense, it's very different than a private equity firm, for instance, and especially private equity, even more so than hedge funds draws my ire. Mm-hmm. , because I think one of the reasons they, that it, they've been able to make part of the financialization of our economy has been due to super, super low interest rates and low interest rates that have enabled so many people to make so much money in finance are not, they're just a gift.It wasn't because these people were uniquely smart, they just [00:44:00] found themselves in a great moment in time. And the fact that they now think they're really smart because money makes me crazy. Dwarkesh Patel: Um, are Fanny and Freddy America special purpose entities? Are they our Alameda? It's just the way we hide our debt and uh, that's interesting.Yeah. Bethany McLean: Well, I guess we, you know what? I don't know anymore because, so I last wrote about them when was it in 2016 and I don't know now. No, you're right. Their, their debt is still off, off, off balance sheet. So Yeah, in a lot of ways they, they were. . I would argue though that the old Fanny and Freddy were structured more honestly than, than the new Fanny and Freddy, that it really is conservatorship that have made them, um, that have made them America's off balance sheet entities, because at least when they were their own independent entities.Yes, there was this odd thing known as the implicit guarantee, which is when you think about, back to your point about efficient markets, how can you possibly believe there's an as such a thing as an efficient market when their [00:45:00] Fanny and Freddy had an implicit guarantee, meaning it wasn't real. There was no place where it was written down that the US government would bail Fanny and Freddie out in a crisis, and everybody denied that it existed and yet it did exist.Yeah. Dwarkesh Patel: No, but we, I feel like that confirms the official market hypothesis, right? The, the market correctly, they thought that mortgages backed by Fannie and Freddy would have governments. Uh, okay, okay. You might be father Bethany McLean: and they did . You might be right. I, I, I think what I was getting at you, you might be right.I think what I was getting at is that it is such a screwed up concept. I mean, how can you possibly, when I first, when people were first explaining this to me, when I first read about Fanny and Freddie, I was like, no, no, wait. This is American capitalism . This is, no, wait. What? I don't, I don't understand . Um, um, so yeah, but I, I, I, I think that Fanny and Freddie, at least with shareholders that were forced to bear some level of, of the risks were actually a more honest way of going about this whole screwed up American way of financing mortgages than, than the current setup is.Dwarkesh Patel: What [00:46:00] is the future of these firms? Or are they just gonna say in conservatorship forever? Or is there any developments there? Well, what's gonna happen to them? Bethany McLean: The lawsuit, the latest lawsuit that could have answered that in some ways ended in a mistrial. Um, I don't think, I don't, I don't think unfortunately anybody in government sees any currency in, and I mean, currency in the broad sense, not in the literal sense of money in, in taking this on.And unfortunately, what someone once said to me about it, I think remains true and it's really depressing, but is that various lawmakers get interested in Fannie and Freddy. They engage with it only to figure out it's really, really goddamn complicated. Mm-hmm. and that, and that any kind of solution is gonna involve angering people on one side of the aisle or another and potentially angering their constituent constituents.And they slowly back away, um, from doing anything that could, that, that could affect change. So I think we have a really unhealthy situation. I don't think it's great for these two [00:47:00] entities to be in conservatorship, but at this point, I'm not sure it's gonna change. Dwarkesh Patel: Yep. Speaking of debt and mortgages, um, so total household debt in the United States has been, uh, climbing recently after it's, it's like slightly d decline after 2008, but I think in quarter three alone it increased 350 billion and now it's at 16.5 trillion.Uh, the total US household debt, should we worried about this? Are, are, are we gonna see another sort of collapse because of this? Or what, what should we think about this? Bethany McLean: I don't know. I don't know how to think about that because it's too tied up in other things that no one knows. Are we going to have a recession?How severe is the recession going to be? What is the max unemployment rate that we're gonna hit if we do, if we do have a recession? And all of those things dictate how to, how to think about that number. I. Think consumer debt is embedded in the bowels of the financial system in the same way mortgages were.And in the end, the, the, the [00:48:00] problem with the financial crisis of 2008, it wasn't the losses on the mortgages themselves. It was the way in which they were embedded in the plumbing of the financial system. Mm-hmm. and ways that nobody understood. And then the resulting loss of confidence from the fact that nobody had understood that slash lies had been told about, about that.And that's what caused, that's what caused everything to, to collapse. Consumer debt is a little more visible and seeable and I, I don't think that it has that same, um, that same opaque quality to it that, that mortgage backed securities did. I could be, I could be wrong. I haven't, I haven't, I haven't dug into it enough, enough to understand enough to understand that.But you can see the delinquencies starting to climb. Um, I mean, I guess you could on, on, on mortgages as well, but there was this, there was this profound belief with mortgages that since home prices would never decline, there would never be losses on these instruments because you could always sell the underlying property for more than you had [00:49:00] paid for it, and therefore everything would be fine.And that's what led to a lot of the bad practices in the industry is that lenders didn't think they had to care if they were screwing the home buyer because they always thought they could take the home back and, and, and, and, and make more money on it. And consumer debt is, is unsecured. And so it's, it's, it's different.I think people think about it differently, but I'd have. I'd have to, I'd have to do some more homework to understand where consumer debt sits in the overall architecture of the financial industry. Dwarkesh Patel: I, I, I'm really glad you brought up this theme about what does the overall big picture look like? I feel like this is the theme of all your books that people will be, So obsessed with their subsection of their job or, or that ar area that they won't notice that, um, broader trends like the ones you're talking about.And in Enron it's like, why, why, why do we have all these special purpose entities? What is the total debt load of Enron? Um, or with the, you know, mortgage back securities a similar kind of thing, right? What, what, uh, maybe they weren't correlated in the past, [00:50:00] but what's that? Do we really think that there's really no correlation, um, uh, between, uh, delinquencies across the country?Um, so that, that kind of big picture, think. Whose job is that today? Is it journalists? Is it short sellers? Is it people writing on ck? Who's doing that? Is it anybody's job? Is, is it just like, uh, an important role with nobody assigned to it? Bethany McLean: I think it's the latter. I think it's an important role with nobody, with nobody assigned to it, and there there is a limit.I mean, , I hate to say this, it is not, uh, um, it is not an accident that many of my books have been written. That's probably not fair. It's not true of my book un fracking, but that some of my books have been written after the calamity happened. So they weren't so much foretelling the calamity as they were unpacking the calamity after it happened, which is a different role.And as I said at the start of our conversation, I think an important one to explain to people why this big, bad thing took, took place. But it's not prediction, I don't know, as people that were very good at, at prediction, um, they tried [00:51:00] to set up, what was it called? In the wake of the global financial crisis, they established this thing called fsoc, and now I'm forgetting what the acronym stands for.Financial Security Oversight Committee. And it's supposed to be this, this body that does think about these big picture. That thinks about the ways, the ways an exam, for example, in which mortgage backed securities were, um, were, were, were, were, were, were, were repopulating through the entire financial system and ways that would be cause a loss to be much more than a loss.That it wouldn't just be the loss of money and that security, it would echo and magnify. And so that there are people who are supposed to be thinking about it. But I think, I think it's, it's, it's really hard to see that and. In increasingly complex world, it's even, it's even harder than it was before, because the reverberations from things are really hard to map out in, in, in advance, and especially when some part of those reverberations are a loss of confidence, then all bets [00:52:00] are off because when confidence cracks, lots of things fall apart.But how do you possibly analyze in any quantitative way the the risk that that confidence will collapse? Mm-hmm. . So I think it's, I think, I think, I think it's difficult. That said, and of course I am talking my own book here, I don't think that the lack of the, the increased financial problems of journalism really help matters in that respect, because in an ideal world, you want a lot of people out there writing and thinking about various pieces of this, and then maybe somebody can come along and see the.Pieces and say, oh my God, there's this big picture thing here that we all need to be thinking about. But there's, there's a kind of serendipity in the ability to do that one, that one that the chances, I guess the best way to say that is the chances of that serendipity are dramatically increased by having a lot of people out there doing homework, um, on the various pieces of the puzzle.And so I think in a world, particularly where local news has been decimated mm-hmm. , um, the [00:53:00] chances of that sort of serendipity are, are definitely lower. And people may think, oh, it doesn't matter. We still got national news. We've got the Washington Post, we've got the Wall Street Journal, we've got the New York Times.Um, I would love to have somebody do a piece of analysis and go back through the New York Times stories and see how many were sparked by lp, a piece in the local paper that maybe you wouldn't even notice from reading the New York Times piece, because it'd be in like the sixth paragraph that, oh yeah, credit should go to this person at this local paper who started writing about this.But if you no longer have the person at the local paper who started writing about this, You know, it's, it's, it's, it's less likely that the big national piece gets written. And I think that's a part of the implosion of local news, that people, a part of the cost of the implosion of local news that people don't really understand the idea that the national press functions at, at the same level, um, without local news is just not true.Dwarkesh Patel: Yeah. And, but even if you have the local news, and I, that's a really important point, but even if you have that local news, there still has to be somebody whose job it is to synthesize it all together. And [00:54:00] I'm curious, what is the training that requires? So you, I mean, your training is, you know, math and English major and then working at working in investment banking.Um, is that the, uh, I mean, obviously the anecdotal experience then equals one, seems that that's great training for synthesizing all these pieces together. But what is the right sort of education for somebody who is thinking about the big picture? Bethany McLean: I, I don't, I don't know.And there may be, there may be, there are probably multiple answers to that question, right? There's probably no one, one right answer for me. In, in the end. My, my math major has proven to be pivotal. Even though , my mother dug up these, um, my, my parents were moving and so my mother was going through all her stuff and she dug up these, some my math work from, from college.Literally, if it weren't for the fact that I recognized my own handwriting, I would not recognize these pages on pages of math formula and proofs. And they're like, get gibberish to me now. So , but I, but I still think that math has, so I do not wanna exaggerate my mathematical ability at this stage of [00:55:00] the game.It's basically no. But I do think that doing math proofs any kind of formal, any kind of training and logic is really, really important because the more you've been formally trained in logic, the more you realize when there are piece is missing and when something isn't quite, isn't quite adding on, it just forces you to think in, in a way that is, that in a way that connects the dots.Um, because you know, if you're moving from A to B and B doesn't follow a, you, you understand that B doesn't follow a And I think that that, that, that kind of training is, is really, really important. It's what's given. , whatever kind of backbone I have as a journalist is not because I like to create controversy and like to make people mad.I actually don't. It's just because something doesn't make sense to me. And so maybe it doesn't make sense to me because I'm not getting it, or it doesn't make sense to me because B doesn't actually follow, follow away, and you're just being told that it does. And so I think that, I think that training is, is really, really important.Um, I also have, have often thought [00:56:00] that another part of training is realizing that basic rule that you learned in kindergarten, which is, um, you know, believe your imagination or you know, your imagine follow your imagination. Because the truth is anything can happen. And I think if you look at business history over the last couple of decades, it will be the improbable becoming probable.Truth over and over and over again. I mean, the idea that Enron could implode one of the biggest, supposedly most successful companies in corporate America could be bankrupt within six months. The, from its year, from its stock price high. The idea that the biggest, most successful, um, financial institutions on wall, on Wall Street could all be crumbling into bankruptcy without the aid of the US government.The idea that a young woman with no college degree and no real experience in engineering could create, uh, uh, um, could create a machine that was going to revolutionize blood testing and land on the cover of every business magazine, and that this [00:57:00] whole thing could turn out to be pretty much a fraud. The entire idea of ftx, I mean, over and over again, these things have happened.Forget Bernie Madoff if you had told people a year ago that FTX was gonna implode six months ago, three months ago, people would've been like, no, no, no, no, no, no, no. And so I think just that, that, that, that knowledge that the improbable happens over and over again is also a really fundamental, fundamentally important.Dwarkesh Patel: If we're con continuing on the theme of ftx, I, I interviewed him about four or five months ago.Wow. And this is one of these interviews that I'm really, I'm, I don't know if embarrass is the right word, but I knew things then that I could have like asked, poked harder about. But it's also the kind of thing where you look back in retrospect and you're. If it had turned out well, it's, it's not obvious what the red flags are.Um, while you're in the moment, there's things you can look back at the story of Facebook and how, you know, Marcus Zuckerberg acted in the early days of Facebook and you could say, if the th

This was one of my favorite episodes ever.Bethany McLean was the first reporter to question Enron's earnings, and she has written some of the best finance books out there. We discuss:* The astounding similarities between Enron & FTX,* How visionaries are just frauds who succeed (and which category describes Elon Musk),* What caused 2008, and whether we are headed for a new crisis,* Why there's too many venture capitalists and not enough short sellers,* And why history keeps repeating itself.McLean is a contributing editor at Vanity Fair (see her articles here) and the author of The Smartest Guys in the Room, All the Devils Are Here, Saudi America, and Shaky Ground.Watch on YouTube. Listen on Spotify, Apple Podcasts, or your favorite podcast platform.Follow McLean on Twitter. Follow me on Twitter for updates on future episodes. If you enjoyed this episode, please share. Helps out a ton.Timestamps(0:04:37) - Is Fraud Over? (0:11:22) - Shortage of Shortsellers(0:19:03) - Elon Musk - Fraud or Visionary?(0:23:00) - Intelligence, Fake Deals, & Culture(0:33:40) - Rewarding Leaders for Long Term Thinking(0:37:00) - FTX Mafia?(0:40:17) - Is Finance Too Big?(0:44:09) - 2008 Collapse, Fannie & Freddie(0:49:25) - The Big Picture(1:00:12) - Frackers Vindicated?(1:03:40) - Rating Agencies(1:07:05) - Lawyers Getting Rich Off Fraud(1:15:09) - Are Some People Fundamentally Deceptive?(1:19:25) - Advice for Big Picture ThinkersTranscriptThis transcript was autogenerated and thus may contain errors.Dwarkesh Patel: the rapid implosion of a company worth tens of billions of dollars. Insider dealing and romantic entanglements between sister companies, a politically generous c e o, who is well connected in Washington, the use of a company's own stock as its collateral, the attempt, the short-lived attempt to get bought out by a previous competitor, and the fraudulent abuse of mark to market account.[00:01:00] We are not talking about ftx, we are talking about Enron, which my guest today, Bethany McClean, uh, first broke the story of and has written an amazing and detailed book about, uh, called The Smartest Guys in the Room. And she has also written, uh, a book about the housing crisis. All the devils are here, a book about Fannie and Freddy Shaky Ground, and a book about fracking Saudi America, all of which we'll get into.She's, in my opinion, the best finance nonfiction writer out there, and I'm really, really excited to have this conversation now. So, Bethany, thank you so much for coming on the podcast. Bethany McLean: Thank you so much for the, for the probably Undeserved Conference, for having me on the show. Dwarkesh Patel: My first question, what are the odds that Sbf read the smartest guys in the room and just followed it as a playbook, given the similarities there?Bethany McLean: You, you know, I, I love that idea. I have to, I have to admit, I guess I love that idea. I don't know. That would make me responsible for what, for what happened, . So maybe I don't love that idea. L let me take that back . [00:02:00] Anyway, but I, I, I actually think that, that, that even if he had read the book, it would never have occurred to him that, that there was a similarity because self-delusion is such a, Strong component of all of these stories of business gone wrong.It's very rare that you have one of the characters at the heart of this who actually understands what they're doing and understands that they're moving over into the dark side and thinks about the potential repercussions of this and chooses this path. Anyway, that's usually not the way these stories go.So it's entirely possible that Sbf studied Enron, knew all about it, and never envisioned that there were any similarities between that and what he was doing. Dwarkesh Patel: Oh, that's a fascinating, um, which I guess raises the question of what are we doing when we're documenting and trying to learn from books like yours?If somebody who is a, about to commit the same exact kind of thing can read that book and not realize that he's doing the same exact thing, is there something that just [00:03:00] prevents us from learning the lessons of history that we, we can never just, uh, get the analogy right, and we're just guided by our own delusions.Bethany McLean: Wasn't there a great quote that history rhymes, but it doesn't repeat. I'm Yeah. Relying on who it is who said that, but I think that's, that's absolutely true. Oh, I think it's important for all of us, those of us who are not gonna find ourselves at the center of, uh, giant fraud or, so, I hope, I think my time for that has passed.Maybe not you, but, um, I think it's important for all of us to understand what went wrong. And I, I do think these, I do think just there, there's a great value and greater understanding of the world without necessarily a practical payoff for it. So I think when something goes wrong on a massive societal level, it's really important to try to, to try to explain it.Human beings have needed narrative since the dawn of time, and we need narrative all, all, all the more now we need, we need to make sense of the world. So I like to believe. Process of making, trying to make sense of the world. , um, [00:04:00] has a value in, in and of itself. Maybe there is small, some small deterrence aspect to it in that I often think that if people understand more the process by which things go go wrong, that it isn't deliberate, that it's not bad people setting out to do bad things.It's human beings, um, at first convincing themselves even that they're doing the right thing and then ending up in a situation that they, they never meant to be in. And maybe on the margin that does, maybe on the margin that does, that does help because maybe it has deterred some people who, who would've started down that path, but for the fact that they now see that that's the, that's the usual path.Dwarkesh Patel: Yeah. Yeah. That actually raises the next question I wanted to ask you. Bern Hobart, uh, he's a finance writer as well. He wrote a blog post, um, about, uh, I mean this was before FTX obviously, and he was talking about Enron and he said in the end, it actually looks like we fixed the precise problem. Enron represented.Nobody I know solely looks at gap [00:05:00] financials. Everybody ultimately models based on free cash flow, we're much more averse to companies that set up a deliberate conflict of interest between management and shareholders. And I guess there's a way in which you can read that and say, oh, it doesn't FTX prove I'm wrong.But, you know, there's another way you can look at it is that FTX deliberately set up outside the us. So there's a story to be told that actually we learned the lessons of Enron and, you know, uh, so remains obviously worked. Uh, that's why, you know, they were in The Bahamas and we haven't seen the scale fraud of that scale in, you know, the continental United States.Um, do, do you think that the FTX saga and I guess the absence of other frauds of that scale in America shows that. The regulations and this changed business and investment practices in the aftermath of Enron have actually. Bethany McLean: Well, I think they've probably worked in narrowly, written in, in the way in which the writer you quoted articulated, I think it would be very hard for the cfo, F O of a publicly traded company to set up other private [00:06:00] equity firms that he ran, that did all their business with his company.Because everybody would say That's Enron and it would be completely. On the nose. And so, and Sarbanes Oxley in the sense of, in the sense of helping to reign in corporate fraud of the sort that was practiced by Enron, which was this abuse of very specific accounting rules. Um, I think I, I, I think that worked.But you know, you say there hasn't been fraud on a scale like Enron up until perhaps f ftx, but you're forgetting the global financial crisis. Yeah. And then the end, the line between what happened at Enron. and, and what happened in the global financial crisis. It's not a matter of black and white. It's not a matter of, one thing was clear cut fraud and one thing great.We love these practices. Isn't this fantastic? This is the way we want business to operate. They're both somewhere in the murky middle. You know, a lot of what happened at Enron wasn't actually outright fraud. I've coined this phrase, legal fraud to describe, um, to describe what it is that, that, that, that happened at Enron.And a lot of what [00:07:00] happened in the global financial crisis was legal, hence the lack of prosecutions. But it's also not behavior that that leads to a healthy market or mm-hmm. , for that matter, a a a a healthy society. And so there's a reason that you had Sarbanes Oxley and what was it, eight short, short years later you had Dodd-Frank and so Riri broadly.I'm not sure Sarbanes actually did that much good. And what I mean by that is when President George Bush signed it into law in the Rose Garden, he gave this speech about how investors were now protected and everything was great and your, your ordinary investors could take comfort that the laws were meant to protect them from wrongdoing.And you compare that to the speech that President Barack Obama gave eight years later when he signed Don Frank into law in the Rose Garden. And it's remarkably similar that now ordinary investors can count on the rules and regulations keeping themself from people who are prey on their financial wellbeing.[00:08:00] And I don't think it was, it's, it's true in either case because our markets, particularly modern markets move and evolve so quickly that the thing that's coming out of left field to get you is never gonna be the thing you are protecting against. Mm. . Dwarkesh Patel: , but given the fact that Enron, as you say, was committing legal fraud, is it possible that the government, um, when they prosecuted skilling and Fastow and lay, they in fact, We're not, uh, they, they prosecuted them to a greater extent than the law as written at the time would have warranted.In other words, were, uh, was there something legally invalid in the, in this, in the quantity of sentence that they got? Is it possible? Bethany McLean: So that's a really, it, it's, it's a, I I get what you're asking. I think it's a really tricky question because I think in absolute terms, um, Enron needed to be prosecuted and needed to be prosecuted aggressively.And while I say it was legal fraud, that is for the most part, there was actually real fraud around, around, uh, but it's on the margin. It doesn't [00:09:00] entire, it doesn't explain the entirety of Enron's collapse. Much of what they did was using and abusing the accounting rules in order to create an appearance of economic reality.Nothing to do with actual, with actual reality. But then there was actual fraud in the sense that Andy Fasta was stealing money from these partnerships to benefit himself. And they were, if you believe, the core tenant of the prosecution, which was their, this agreement called Global Galactic that was signed by, that was between Andy fau and Jeff Skilling, where Jeff agreed that Andy's partnerships would never lose money.Then that invalidated all of the, all of the accounting, and that's the chief reason that that. That skilling was, was, was convicted, um, was that the jury believed the existence of this, of this, of this agreement that in, um, one set of insider stock sales, which, which we can talk about, which was also a really key moment relative to the, so in absolute terms, I don't know, it's, it's hard for me to, to say there was [00:10:00] such, Enron was such a, to a degree that is still surprising to me, such a, a watershed moment in our, in our country, far beyond business itself.it, it, it caused so much insecurity that about our retirements, our retirement assets safe. Can you trust the company where you work? That I think the government did, did have to prosecute aggressively, but relative to the financial crisis where a lot of people made off with a lot of money and never had to give any of it back, does it seem fair that, that, that Jeff Skilling went to jail for over a decade and no one involved in a major way in the financial crisis paid any price whatsoever?People didn't even really have to give up that much of the money they made then. Then it seems a little bit unfair. Yes, so I think it's, it's an absolute versus a relative Dwarkesh Patel: question. Yeah. Yeah. By the way, who do you think made more money? Um, the investment banks, uh, like, uh, Goldman Sachs and Morgan Stanley, um, from doing, [00:11:00] providing their services to Enron as the stock was going up, or Jim Chanos from shorting the stock?In absolute terms, who made more money? Bethany McLean: Oh, I think the investment banks for sure. I mean, they made, they made so much money in investment banking fees from, from, from Enron. But, you know, it's a good question. . , it's a good question actually, because I think Jim made a lot of money too, so, Dwarkesh Patel: Yeah. Yeah. I mean, I, I, you've spoken about, I guess the usefulness and the shortage of short sellers des a sort of, uh, corrective on irrational exuberance.And I'm curious why you think that shortage exists in the first place. Like, if you believe in the efficient market hypothesis, you should think that, you know, if some company has terrible financials and implausible numbers, then people would be lining up to short it. And then you would never have a phenomenon like Enron.And so it's, it's, you know, it's so odd that you can. , you know, reporters who are basically ahead of the market in terms of predicting what's gonna happen. Uh, well, uh, how do you square that with like the efficient [00:12:00] market hypothesis? Well, do you Bethany McLean: believe in the efficient market hypothesis, ? Dwarkesh Patel: I, I, I'd like to, but I'm like trying to , trying to wrap my head around Enron.Bethany McLean: I, I'm, I'm, I'm, I'm not sure how you. Can, unless you, unless you adopt Warren Buffett's point of view, and I'm gonna mangle the quote because, uh, but, but it's that the market in the short term is a voting machine in the long term. It's a weighing machine, right? Mm-hmm. , or is it the other way around? . Anyway, but the idea is that the market may be very efficient for a long, very inefficient, for a long period of time.But, but it does actually, rationality does actually work in, in, in the end. And I think I might believe that, but isn't it John Maynard Cas who said the market can remain irrational for a lot longer than you can remain solvent. And so I think that's true too. I think believing that the market is efficient and rational in the short term is just obviously wrongUm, but back to your question about short sellers, which is, which is interesting, you know, I think part of it is that there is still this, um, there certainly was a couple of [00:13:00] decades ago, and I think it still exists, this idea that. Owning stocks is Mom, American, and apple pie in shorting stocks somehow is bad and evil and rooting, rooting against America.And I remember going back to the Enron days, someone, people criticizing me, even other people in the press saying, but you took a tip from a short seller. They're biased. And I. , I would say. But, but, but wait, the analysts who have buy ratings on stocks and the portfolio managers who own those stocks, they're biased too.They want the stocks to go up. Everybody's biased. So the trick as a journalist is getting information from all sides and figuring out who you think is right and what makes sense. But it's not avoiding anybody with any bias. But it was really interesting that people saw the bias on the part of short sellers and did not see it on the part of, of, of Longs.And I think there is that preconception that exists broadly, that somehow you are doing something wrong and you're somehow rooting for a company's failure. And that this is, I don't know, anti-American if you, if, if you [00:14:00] short a stock. And so I think that's part of why there's, there's, there's a shortage of shortage of, of, of short sellers.Um, I think also, I mean, we've had. Incredible, unprecedented bull market for the last four decades as a result of falling interest rates, and especially in the decade before the pandemic hit, it was very, very difficult to make money shorting anything because everything went to the moon. Didn't matter if its numbers were good, if it was eventually unmasked to be somewhat fraudulent, , it stocks just went to the moon anyway.The riskier the better. And so it is only diehard short sellers that have managed to stick it out . Yeah, and I think, I think lastly, Jim Chano said this to me once, and I, I think it's true that he could find, dozens of people who were skilled enough to come, smart enough to come work for him.There's no shortage of that. People who are technically skilled and really smart, but being able to be contrarian for a long period of time, especially when the market is going against you, is a different sort [00:15:00] of person. It that it requires a completely different mindset to have everybody in the world saying, you're wrong to be losing money because the stock is continuing to go up and to be able to hold fast to your conviction.And I think that's another, uh, part of the explanation for why there are fewer short sellers. Dwarkesh Patel: Yeah, and that raised an interesting question about. Uh, venture capital, for example, where, or private markets in general? Um, at least in the public markets, there's shorting maybe in shortage, but it, it is a possible mechanism, whereas, uh, I'm a programmer.So, you know, if, if like a one guy thinks the company's worth a hundred million dollars and everybody else thinks it's not, you know, the company will still be, uh, the price will still be said by the, you know, the person who's a believer. Um, does that increase the risk of some sort of bubble in venture capital and in technology?Um, and I guess in private markets generally, if they're, they're not public, is that something you worry about that they're, they will be incredible bubbles built up if there's a lot of money that's floating around in these Bethany McLean: circles. . Well, I think we're seeing that now, [00:16:00] right? And I don't think it's a coincidence that FTX and Theranos were not publicly traded companies, right?Mm-hmm. . Um, there's a certain sort of, uh, black box quality to these companies because people aren't charting them and aren't, aren't, and aren't, you know, whispering to journalists about that. That there's something wrong here and there aren't publicly available financials for people to dig through and look, look, and look at the numbers.So now I don't think that's a coincidence. And I do think this gigantic move into private assets has been, um, probably not great for the, for the, for the, for the. for the, for the safety of the system. And you'd say, well, it's just institutional investors who can afford to lose money who are losing money.But it's really not because institutional investors are just pension fund money. Mm-hmm. and in some cases now mutual fund money. So that distinction that the people who are investing in this stuff can afford to lose it is not really true. Um, so I don't, I don't like that rationalization. I think we're gonna see how that plays out.There was [00:17:00] just a really good piece in the Economist about private equity marks on their portfolio companies and how they are still looked to be much higher than what you would think they should be given the carnage in the market. And so all of what, what actually things are really worth in private markets, both for venture capital firms and for private equity firms, Is absent another, another bubble starting, starting in the markets.I think we're gonna see how that plays out over, over the next year. And it might be a wake up call for, for a lot of people. Um, you know, all that, all that said, it's an interesting thing because investors have been very complicit in this, right? In the sense that a lot of investors are absolutely delighted to have prep, to have their, their private, um, their private investments marked at a high level.They don't have to go to the committee overseeing the investments and say, look, I lost 20% of your money the way they might, um, if, if the numbers were public. And so that the ability of these of private investors to smooth as they call it, the, the, the returns is, is it's [00:18:00] been, it's been part of the appeal.It hasn't been a negative, it's been a positive. And so I would say that investors who wanted this moving are. Art might be getting what they deserve except for the pointing made earlier that it isn't, it isn't their money. It's, it's the money of, of teachers and firefighters and individual investors a around the country, and that's, that's problematic.Dwarkesh Patel: Yeah. Yeah. Being in the world of technology and being around people in it has. made me, somewhat shocked when I read about these numbers from the past. For example, when I'm reading your books and they're detailing things that happened in the nineties or the two thousands, and then you realize that the salary that Hank Paulson made a c e o of Goldman, or that skilling made as, you know, um, c e o of Enron, you know, I, it's like I have friends who are my age, like 22 year olds who are raising seed rounds, , that are as big as like these people's salaries.And so it just feels like the, these books were, you have $50 billion frauds or, you know, hundreds of billions of dollars of collapse and the individuals there, um, it just feels like they, it's missing a few zeros, uh, [00:19:00] because of the delusion of the private markets. But, um, but speaking of short sellers and speaking of private equity, um, I think it'd be interesting to talk about sbf.So, you know, your 2018 Vanity Fair article I thought was really interesting about, you know, sbf factory in Buffalo H How, how do you think back on Tesla and sbf now, given the fact that. The stock did continue to rise afterwards, and the factory, I believe, was completed and it's, I hired the 1500 or so people that had promised New York State, uh, is sbf just a fraud?Who can pull it off? And so he's a visionary. How, how do you think about sbf in the aftermath? Bethany McLean: So I don't think that's right about Buffalo and I have to look, but I don't think they ended up, I mean, the Solar City business that Tesla has pretty much collapsed. I don't think people haven't gotten their roofs.There was just a piece about how they're canceling some of their roof installations. So sbf has repeatedly made grand visions about that business that haven't played out. And I will check this for you post the podcast, but I don't think [00:20:00] if there is employment at that factory in, in Buffalo, it's not because they're churn out solar, solar, solar products that are, that are, that are doing.What was originally promised. So I guess I, I think about that story in a, in a couple of ways. It definitely, um, it was not meant to be a piece about Tesla. It was meant to be a piece that shown a little bit of light on how sbf operates and his willingness to flout the rules and his reliance on government subsidies, despite the fact that he, um, presents himself as this libertarian free, free, free market free marketeer, and his willingness to lie to, to, to, on some level enrich himself, which also runs counter to the Elon sbf narrative that he doesn't care about making money for, for himself.Because the main reason for Teslas to by Solar City was that Solar City had the main reason, was it Tes, that was, that Solar City had, that, that sbf and his, and his and his relatives had extended the these loans to Solar City that were gonna go. [00:21:00] There were gonna be lo all the money was gonna be lost at Solar City when bankrupt.And by having Tesla buy it, sbf was able to bail himself out, um, as, as as well. And I also think a good reason for the, for the, for, and it brings us to the present time, but a reason for the acquisition was that sbf knows that this image of himself as the invincible and vulnerable who can always raise money and whose companies always work out in the end, was really important.And if Solar City had gone bankrupt, it would've cast a big question mark over over sbf, over over the sbf narrative. And so I think he literally couldn't afford to let Solar City go bankrupt. Um, all of that said, I have, I have been, and was I, I was quite skeptical of Tesla and I thought about it in, in, in, in.And I always believed that the product was great. I just, mm-hmm. wasn't sure about the company's money making potential. And I think that, that, it's something I started thinking about, um, background, the Solar City time, maybe earlier, but this line, something I've talked about [00:22:00] before. But this line between a visionary and a fraudster.You know, you think that they're on two opposite ends of the spectrum, but in reality they're where the ends of the circle meet. Characteristics of one. One has that many of the characteristics of the other. And sometimes I think the only thing that really separates the two is that the fraudster is able to keep getting mo raising money in order to get through the really difficult time where he or she isn't telling the truth.And then they, that person goes down in history as a visionary. Um, but because no one ever looks back to the moment in time when they were lying, the fraudster gets caught in the middle. Um, so Enron's Lo lost access to to the capital markets lost AC access to funding as the market collapsed after the.com boom.And people began to wonder whether skilling was telling the truth about Enron's broadband business. And then there were all the disclosures about Andy fasa partnerships if Enron had been able to continue raising money, Business of Enron's called Enron Broadband might well have been Netflix. It was Netflix ahead of its time.So Enron just got caught in the middle and all [00:23:00] the fraud, all the fraud got exposed . Um, but that's not because Jeff Skilling wasn't a visionary who had really grand plans for, for, for, for the future. So I think sbf falls somewhere in that spectrum of, of, of fraudster and visionary. And what's gonna be really interesting why I said that this, we bring it to the present time about what happens to the mu narrative.If something fails is what happens. Yeah. Is as the world watch watches Twitter implode, um, what does that mean then for the Elon sbf narrative overall? Dwarkesh Patel: Yeah. Yeah. Um, going back to the Smartest Guys is the Room, the title obviously suggests something about. The, I guess in general, the ability and the likelihood of very smart people committing fraud or things of that sort.Um, but you know, Begar Jones has this book called Hi Mind, where he talks about how the smarter people are more likely to cooperate in prisoners dilemma type situations. They have longer time preference. And one of the things you've written about is the problem in corporate America is people having shorter, [00:24:00] um, uh, you know, doing two too big time discounting.So, uh, given that trend we see in general of greater Cooperativeness, um, and other kinds of traits of more intelligent people, do you think the reason we often find people like S B F and skilling running big frauds just by being very intelligent, is it just that on, on average smarter people, maybe less likely to commit fraud, but when they do commit fraud, they do it at such garat scales and they're able to do it at such gar scales that it just brings down entire empires?How, how, how do you think about the relationship between intelligence and fraud? . Bethany McLean: That's interesting. Um, I'm not sure I know a coherent answer to that. Um, smartest guys in the room as a title was a little bit tongue in cheek. It wasn't meant to say, these guys actually are the smartest guys in the room. It was, it, it was a little bit, it was a little bit ironic, but that doesn't take away from the really good question that you asked, which is what, what, what is that relationship?I, I mean, I think if you look at the history of corporate fraud, you are not going to find unintelligent people having [00:25:00] been the masterminds behind this. You're gonna find really, really, really smart, even brilliant people having, having, having been, been behind it, maybe some at part of that is this linkage between the visionary and the fraud star that so many of these, of these corporate frauds are people who have qualities of the visionary and to.The qualities of, of a visionary, you have to have a pretty, pretty, pretty, pretty high intelligence. Um, and I do think so many of these stories are, are about then self delusion. So I don't think smart people are any less likely to suffer from self delusion than dumb people. And they're probably more likely to, because you can rationalize, you know, the smart person's ability to rationalize just about anything they wanna rational rationalize is pretty profound.Whereas perhaps someone who doesn't have quite the same, the same brain power isn't gonna be able to create a narrative under which their actions are blameless and they're doing the right thing. So I think sometimes, so maybe there is some sort of relationship [00:26:00] there that somebody more qualified than I am would have to study between smart people's ability to, to, to rationalize just about anything as a way of, as part of the path to self delusion and part of the path by which these things happen.Yeah, that's completely, that's completely , that's Bethany theory. There's absolutely nothing to back that . I'm just Dwarkesh Patel: well clear. Let's do some more speculation. So, um, one of the things, uh, John Ray talked about in his testimony, um, was it two days ago where he said that, you know, FTX had done $5 billion of investments and deals in the last year, and most of those investments were worth a fraction of the value that FTX paid for them.And we see this also in, obviously in Enron, right? With, uh, broadband and with, um, ul, or is that how pronounce it, but basically their international department. Yeah. Um, what is this, uh, this obsession with deal making for its own sake? Is that to appease investors and make them think a lot's going on, is that because of [00:27:00] the hubris of the founder, of just wanting to set up a big empire as fast as possible, even if you're getting a bad sticker price?What, why do we see this pattern of just, you know, excessive deal making for its own sake? Bethany McLean: That's an interesting question too. I'm not sure that that's, um, limited to companies that go splat dramatically. There's a lot of, a lot of deal making in, in corporate America has that same frenzied quality. Um, I haven't seen an updated study on, on this in a, in a long time, but, you know, I began my career working as an analyst in an m and a department at at at Goldman Sachs.And. Definitely deals are done for the sake of doing deals. And I once joked that synergies are kind of like UFOs. A lot of people claim to have seen them, but there's no proof that they actually exist. , and again, I haven't seen an updated study on, on, on this, but there was one years back that showed that most m and a transactions don't result in increased value for shareholders.And most synergies, most promised synergies never materialize. [00:28:00] Just getting bigger for the sake of getting bigger and doing deals for the short term value of showing Wall Street a projection. That earnings are gonna be so much higher even after the cost of the debt that you've taken on. And that they're these great synergies that are gonna come about from, from combining businesses.So I don't know that either the frenzy deal doing or deal doing deals gone wrong is, um, solely limited to people who are committing fraud. , I think it's kinda across the spectrum. , . Dwarkesh Patel: Um, um, well one, one thing I find interesting about your books is how you detail that. And correct me if this is the wrong way to read them, but that, uh, incentives are not the only thing that matter.You know, there there's this perception that, you know, we've set up bad incentives for these actors and that's why they did bad things. But also, um, the power of one individual to shape a co co company's culture and the power of that culture to enable bad behavior, whether scaling at Enron or with Clarkson Right at Moody's.Yeah. Um, is that a good, good way of reading your books or how, how do you think [00:29:00] about the relative importance of culture and incentive? Bethany McLean: I think that's really fair. But incentives are part of culture, right? If, if you've set up a culture where, where how you're valued is what you get paid, I think it's a little, it's a little difficult to separate those two things out because, because the, the incentives do help make the culture, but for sure culture is incredibly, um, incredibly compelling.I've often thought and said that if I had, when I was leaving my short lived career in investment banking, if I had, if I had gotten in some of the head hunters I was talking to, if one of them had said, there's this great, really energetic, interesting energy company down in Houston, , why don't interview there?If I had gone there, would I have been a whistleblower or would I have been a believer? And I'd like to believe I would've been a whistleblower, but I think it's equally likely that I would've been a believer. Culture is so strong. It creates this. What's maybe a miasma that you can't see outside?I remember a guy I talked to who's a trader at Enron, really smart guy, and he [00:30:00] was like, after the, after the bankruptcy, he said, of course, if we're all getting paid based on creating reported earnings and there's all this cash going out the door in order to do these deals that are creating reported earnings, and that's the culture of the entire firm, of course it's not gonna work economically.He said, I never thought about it. . It just didn't, it didn't, it didn't occur to me. And I think the more compelling the CEO o the more likely you are to have that kind of mass delusion. I mean, there's a reason cult exist, right? . We, we are as human beings, remarkably susceptible to.Visionary leaders. It's just, it's the way the human brain is wired. We, we wanna believe, and especially if somebody has the ability to put a vision forward, like Jeff Gilling did at Enron, like Elizabeth Holmes did it Theranos like SPF F did, where you feel like you are in the service of something greater by helping this, vision, , actualize then, then you're, particularly susceptible.And I think that is the place where [00:31:00] incentives don't quite explain things. That is, there is this very human desire to matter, to do something important. Mm-hmm to be doing something that's gonna change the world. And when somebody can tap into that desire in people that feeling that what you're doing isn't just work in a paycheck and the incentives you have, but I mean, I guess it is part of the incentive, but that you're part of some greater good.That's incredibly powerful. Yeah. Dwarkesh Patel: It's what we all speaking of. We all wanna matter. . Yeah. Speaking of peoples psychology, uh, crime and punishment, underrated or overrated as a way to analyze the psychology of people like scaling and S B F or maybe SBF specifically because of the utilitarian nature of SB F'S crime?Um, Bethany McLean: I think it's, I think it's underrated, overrated. I'm not sure anybody. , I'm not sure anybody has ever proven that jail sentences for white collar criminals do anything to deter subsequent white collar crime. Mm-hmm. , and I think one part of this is the self delusion that I've, that I talked about. Nobody thinks, [00:32:00] oh, I'm doing the same thing as Jeff Skilling did at Enron, and if I, and if I do this, then I too might end up in jail.Therefore, I don't wanna do this. I just don't think that's the way the, the, the, the, the thought process works. I think Elizabeth Holmes at Theranos, probably for the most part, convinced herself that this was going to work, and that if you just push forward and push hard enough and keep telling people what they wanna hear and keep being able to raise money, it's gonna work.You know, if. . If, if you pause to think, well, what if it doesn't work and I've lied and I go to jail, then, then you'd stop right, right then and there. So I think that, I think that, that I'm, I'm not, I'm not sure it's much of a deterrent. I remember, and partly I'm, I'm biased because I remember a piece, my co-author Peter Alkin, and I wrote out right after Jess Gilling and Kenley were, were convicted and can lay, we're we're convicted.And we wrote a piece for Fortune in which we said that the entire world has changed. Now that corporate executives are, um, are, are put on high alert that behavior in the gray area will no longer be tolerated and that it will be aggressively prosecuted. And this was spring of [00:33:00] 2006 and the events that caused the global financial crisis were pretty well underway.It didn't. Do much to prevent the global financial crisis. Mm-hmm. , Enron's, Enron's jail time, didn't do anything to present, prevent, Elizabeth Holmes doesn't seem to have done anything to change what Sbf was doing. So I just, I, I just, I'm, I'm, I'm not sure, I'm sure a psychologist or somebody who specializes in studying white color crime could probably make a argument that refutes everything I said and that shows that has had a deterring effect.But I just, I just don't think that people who get themselves into this situation, con, con, consciously think, this is what I'm doing. Dwarkesh Patel: Yeah. Yeah. Um, speaking of other incentives, stock options, uh, you've spoken about how that creates short-term incentives for the executives who are making decisions. If you wanted to set up an instrument that aligned an executive or a leader's compensation with the long-term performance of a company, what would that look like?W would you have the options of less than 10 years instead of a [00:34:00] year? H how would you design it? How do you usually design a compensation scheme to award long-term thinking? Bethany McLean: If I could do that, I should ru rule the world . I think that very sweet. I think that is one of the really tough, um, problems confronting boards or anybody who is determining anybody who's determining stock options and that almost anybody who's determining compensation and that most compensation schemes seem to have really terrible unintended consequences.They look really good on paper. And then as they're implemented, it turns out that there was a way in which they accomplished exactly the opposite of, uh, thing the people who designing them wanted, wanted them to accomplish. I mean, if you think back to the advent of stock options, what could sound better?Right. Giving management a share of the company such that if, if, if shareholders did well, that they'd do well, nobody envisioned the ways in which stock options could be repriced. The ways in which meeting earnings targets could lead to gaming the ways in which the incentive of stock-based [00:35:00] compensation could lead to people trying to get anything they could in order to get the stock price higher and cash out when they're, as soon as their stock options vested.So, and even there was, there was, the whole valiant saga was fascinating on this front because the people who designed Mike Pearson's compensation package as ceo e o Valiant, they were convinced that this was absolutely the way to do it. And he got bigger and bigger, um, stock option incentives for hitting certain, for having the stock achieve certain levels.But of course, that creates this incredible bias to just get the stock to go up no matter, no matter what else you do. Um, it does seem to me that vesting over the long term is. is, is a much better way to go about things. But then do you create incentives for people to play games in order to get the stock lower at, at various points where there's about to be a stock optional board so they have a better chance of having directions be, be worth, be worth something over the long term.And do you, particularly on Wall Street there is this, or in firms where this sort of stuff matters the most? There [00:36:00] is this, there was this clearing out of dead wood that happened where people got paid and they got outta the way and made way for younger people. And I don't know, it was a harsh culture, but maybe it made sense on some level.And now at least I've been told with much longer vesting periods, you have people who don't wanna let go. And so you have more of a problem with people who should have retired, stick sticking around instead of in, in, instead of clearing out. And then it also becomes a question, How much money is, is enough.So if somebody is getting millions of dollars in short-term compensation and then they have a whole bunch more money tied up in long-term compensation, do the long-term numbers matter? At what point do they, do they, do they really matter? I mean, if you gave me $5 million today, I'm not so sure I'd really care if I were getting another $5 million in 10 years.Right. ? Yeah. So, so I think all of that is, is it, it's, I'm not, I'm not sure there's a perfect compensation system. All things considered though, I think longer term is, is probably better, [00:37:00] but. Dwarkesh Patel: Yeah, I didn't think about that downside of the long investing period. That's so interesting there. I guess there is no free lunch.Uh, so with Enron, um, it, it was clear that there was a lot of talent at the firm and that you had these companies and these trading firms launch at the aftermath by people who left Enron, kinder Morgan and John Arnold's, um, uh, Sintas, uh, that were wildly profitable and did well. Do you think we'll see the same thing with FTX, that while Sbf himself and maybe the, his close cadre were frauds, there actually was a lot of great trading and engineering talent there that are gonna start these very successful firms in the aftermath.Bethany McLean: That's, that's interesting. And just, just for the sake of clarification, kinder Morgan was actually started years before Enron's collapsed, when Rich Kinder, who was vying with Jeffs skilling in a sense, to become Chief Operating Officer. Um, Ken Lay, picked Jeffs skilling and Kinder left. Mm-hmm. and took a few assets and went to create Kinder, kinder Morgan.But your overall point, I'm just clarifying your overall point holds, there were a lot of people who [00:38:00] left Enron and went on to do, to have pretty, pretty remarkable careers. I think the answer with ftx, I bet there will be some for sure. But whether they will be in the crypto space, I guess depends on your views on the long-term viability of, of, of the crypto space.And I have never , it's funny is crypto exploded over the last couple of years. I was, I've been working on this book about the pandemic and it's been busy and difficult enough that I have not lifted my head to, to think about much else. And I always thought, I don't get it. I don't understand , I mean, I understand the whole argument about the blockchain being valuable for lots of transactions and I, I get that, but I never understood crypto itself and I thought, well, I just need to, as soon as this book is done, I just need to put a month into understanding this because it's obviously an important, important enough part of our world that I need to figure it out.So now I think, oh, Okay, maybe I didn't understand it for a reason and maybe, um, maybe there isn't anything to understand and I've just saved myself a whole life of crime because it's all gone. And you have [00:39:00] people like Larry Fink at BlackRock saying, whole industry is gonna implode. It's done. And certainly with the news today, this morning of finances auditor basically saying We're out.Um, I, I don't, I don't know how much of it was, how much of it was, is, was a Ponzi scheme. You might know better than I do. And so I don't know what's left after this whole thing implodes. It's a little bit like, there is an analogy here that when Enron imploded, yes, a lot of people went on to start other successful businesses, but the whole energy trading business is practiced by kind of under capitalized, um, um, energy firms went away and that never came back.Yeah. And so I, I, I don't, I don't know, I'm, it'll be, I, I don't know. What do you. The Dwarkesh Patel: time to be worried will be when Bethany McLean writes an article titled Is Bitcoin Overvalued for the Audience. My Moments on That ? Yeah, for the audience that, that was, I believe the first skeptical article about Enron's, um, stock price.Yeah. Uh, and it was titled [00:40:00] Is Enron Overvalued. In aftermath understated, , title. But , Bethany McLean: , I joked that that story should have won, won, won awards for the NICU title and business journalism history. , given that the company was bankrupt six months later was overpricedDwarkesh Patel: Um, uh, well, let me ask a bigger question about finance in general. So finance is 9% of gdp, I believe. How much of that is the productive use and thinking and allocation of the, uh, the capital towards their most productive ends? And how much of that is just zero sum or negative sum games? Um, if, if you had to break that down, like, is 9% too high, do you think, or is it just.I think it's Bethany McLean: too high. I have no idea how to think about breaking it down to what the proper level should be. But I think there are other ways to think about how you can see that in past decades it hasn't been at the right level when you've had all sorts of smart kids. Um, Leaving, leaving business school and leaving college and heading into [00:41:00] finance and hedge funds and private equity is their career of choice.I think that's a sign that that finance is too big when it's sucking up too much of, of, of the talent of the country. Um, and when the rewards for doing it are so disproportionate relative to the rewards of of, of doing other things. Um, the counter to that is that there've also been a lot of rewards for starting businesses.And that's probably, I think, how you want it to be in a, in a product. In a productive economy. So I think the number is, is too high. I don't know how to think about what it should be other than what a, actually, a former Goldman Sachs partner said this to me when I was working on all the devils are here, and she said that finance is supposed to be like the, the substrata of our world.It's supposed to be the thing that enables other things to happen. It's not supposed to be the world itself. So the, the role of a financial system is to enable businesses to get started, to provide capital. That's what it's supposed to be. It's the lubricant that enables business, but it's not supposed to be the thing itself.Right. And it's become the thing itself. [00:42:00] You've, you've, you've, you've, you've got a problem. Um, um, and I think the other, Dwarkesh Patel: there's your article about crypto , that paragraph right there. . Bethany McLean: There you go. That's, that's a good, um, and I think, I think the other way, you, you, you can see, and perhaps this is way too simplistic, but the other way I've thought about it is that how can it be if you can run a hedge fund and make billions of dollars from, and have five people, 10 people, whatever it is, versus starting a company that employs people mm-hmm.and changes a neighborhood and provides jobs and, you know, provides a product that, that, that, that, that improves people's lives. It, it is a shame that too much of the talent and such a huge share of the financial rewards are going to the former rather than the latter. And that just can't mean good things for the future.Dwarkesh Patel: Yeah. Yeah. And I, you know, when people criticize technology, for example, for the idea that, you know, these people who would've been, I don't know, otherwise teachers or something, they're, you know, making half a million dollars at Google. [00:43:00] Um, and I think like when I was in India, people were using Google Maps to get through the streets in Mumbai, which is, which is unimaginable to me before going there that, you know, you would be able to do that with, um, a service built out of Silicon Valley.And so, Yeah, I think that actually is a good allocation of capital and talent. I, I'm not, I'm not sure about finance. Um, yeah, Bethany McLean: I think I, I, I agree with you. I think there are other problems with Google and with the, the social media giants, but, but they are real businesses that employ people, that make products that have had, uh, huge.Um, impact on on, on people's, on people's lives. So in, in that sense, it's very different than a private equity firm, for instance, and especially private equity, even more so than hedge funds draws my ire. Mm-hmm. , because I think one of the reasons they, that it, they've been able to make part of the financialization of our economy has been due to super, super low interest rates and low interest rates that have enabled so many people to make so much money in finance are not, they're just a gift.It wasn't because these people were uniquely smart, they just [00:44:00] found themselves in a great moment in time. And the fact that they now think they're really smart because money makes me crazy. Dwarkesh Patel: Um, are Fanny and Freddy America special purpose entities? Are they our Alameda? It's just the way we hide our debt and uh, that's interesting.Yeah. Bethany McLean: Well, I guess we, you know what? I don't know anymore because, so I last wrote about them when was it in 2016 and I don't know now. No, you're right. Their, their debt is still off, off, off balance sheet. So Yeah, in a lot of ways they, they were. . I would argue though that the old Fanny and Freddy were structured more honestly than, than the new Fanny and Freddy, that it really is conservatorship that have made them, um, that have made them America's off balance sheet entities, because at least when they were their own independent entities.Yes, there was this odd thing known as the implicit guarantee, which is when you think about, back to your point about efficient markets, how can you possibly believe there's an as such a thing as an efficient market when their [00:45:00] Fanny and Freddy had an implicit guarantee, meaning it wasn't real. There was no place where it was written down that the US government would bail Fanny and Freddie out in a crisis, and everybody denied that it existed and yet it did exist.Yeah. Dwarkesh Patel: No, but we, I feel like that confirms the official market hypothesis, right? The, the market correctly, they thought that mortgages backed by Fannie and Freddy would have governments. Uh, okay, okay. You might be father Bethany McLean: and they did . You might be right. I, I, I think what I was getting at you, you might be right.I think what I was getting at is that it is such a screwed up concept. I mean, how can you possibly, when I first, when people were first explaining this to me, when I first read about Fanny and Freddie, I was like, no, no, wait. This is American capitalism . This is, no, wait. What? I don't, I don't understand . Um, um, so yeah, but I, I, I, I think that Fanny and Freddie, at least with shareholders that were forced to bear some level of, of the risks were actually a more honest way of going about this whole screwed up American way of financing mortgages than, than the current setup is.Dwarkesh Patel: What [00:46:00] is the future of these firms? Or are they just gonna say in conservatorship forever? Or is there any developments there? Well, what's gonna happen to them? Bethany McLean: The lawsuit, the latest lawsuit that could have answered that in some ways ended in a mistrial. Um, I don't think, I don't, I don't think unfortunately anybody in government sees any currency in, and I mean, currency in the broad sense, not in the literal sense of money in, in taking this on.And unfortunately, what someone once said to me about it, I think remains true and it's really depressing, but is that various lawmakers get interested in Fannie and Freddy. They engage with it only to figure out it's really, really goddamn complicated. Mm-hmm. and that, and that any kind of solution is gonna involve angering people on one side of the aisle or another and potentially angering their constituent constituents.And they slowly back away, um, from doing anything that could, that, that could affect change. So I think we have a really unhealthy situation. I don't think it's great for these two [00:47:00] entities to be in conservatorship, but at this point, I'm not sure it's gonna change. Dwarkesh Patel: Yep. Speaking of debt and mortgages, um, so total household debt in the United States has been, uh, climbing recently after it's, it's like slightly d decline after 2008, but I think in quarter three alone it increased 350 billion and now it's at 16.5 trillion.Uh, the total US household debt, should we worried about this? Are, are, are we gonna see another sort of collapse because of this? Or what, what should we think about this? Bethany McLean: I don't know. I don't know how to think about that because it's too tied up in other things that no one knows. Are we going to have a recession?How severe is the recession going to be? What is the max unemployment rate that we're gonna hit if we do, if we do have a recession? And all of those things dictate how to, how to think about that number. I. Think consumer debt is embedded in the bowels of the financial system in the same way mortgages were.And in the end, the, the, the [00:48:00] problem with the financial crisis of 2008, it wasn't the losses on the mortgages themselves. It was the way in which they were embedded in the plumbing of the financial system. Mm-hmm. and ways that nobody understood. And then the resulting loss of confidence from the fact that nobody had understood that slash lies had been told about, about that.And that's what caused, that's what caused everything to, to collapse. Consumer debt is a little more visible and seeable and I, I don't think that it has that same, um, that same opaque quality to it that, that mortgage backed securities did. I could be, I could be wrong. I haven't, I haven't, I haven't dug into it enough, enough to understand enough to understand that.But you can see the delinquencies starting to climb. Um, I mean, I guess you could on, on, on mortgages as well, but there was this, there was this profound belief with mortgages that since home prices would never decline, there would never be losses on these instruments because you could always sell the underlying property for more than you had [00:49:00] paid for it, and therefore everything would be fine.And that's what led to a lot of the bad practices in the industry is that lenders didn't think they had to care if they were screwing the home buyer because they always thought they could take the home back and, and, and, and, and make more money on it. And consumer debt is, is unsecured. And so it's, it's, it's different.I think people think about it differently, but I'd have. I'd have to, I'd have to do some more homework to understand where consumer debt sits in the overall architecture of the financial industry. Dwarkesh Patel: I, I, I'm really glad you brought up this theme about what does the overall big picture look like? I feel like this is the theme of all your books that people will be, So obsessed with their subsection of their job or, or that ar area that they won't notice that, um, broader trends like the ones you're talking about.And in Enron it's like, why, why, why do we have all these special purpose entities? What is the total debt load of Enron? Um, or with the, you know, mortgage back securities a similar kind of thing, right? What, what, uh, maybe they weren't correlated in the past, [00:50:00] but what's that? Do we really think that there's really no correlation, um, uh, between, uh, delinquencies across the country?Um, so that, that kind of big picture, think. Whose job is that today? Is it journalists? Is it short sellers? Is it people writing on ck? Who's doing that? Is it anybody's job? Is, is it just like, uh, an important role with nobody assigned to it? Bethany McLean: I think it's the latter. I think it's an important role with nobody, with nobody assigned to it, and there there is a limit.I mean, , I hate to say this, it is not, uh, um, it is not an accident that many of my books have been written. That's probably not fair. It's not true of my book un fracking, but that some of my books have been written after the calamity happened. So they weren't so much foretelling the calamity as they were unpacking the calamity after it happened, which is a different role.And as I said at the start of our conversation, I think an important one to explain to people why this big, bad thing took, took place. But it's not prediction, I don't know, as people that were very good at, at prediction, um, they tried [00:51:00] to set up, what was it called? In the wake of the global financial crisis, they established this thing called fsoc, and now I'm forgetting what the acronym stands for.Financial Security Oversight Committee. And it's supposed to be this, this body that does think about these big picture. That thinks about the ways, the ways an exam, for example, in which mortgage backed securities were, um, were, were, were, were, were, were, were repopulating through the entire financial system and ways that would be cause a loss to be much more than a loss.That it wouldn't just be the loss of money and that security, it would echo and magnify. And so that there are people who are supposed to be thinking about it. But I think, I think it's, it's, it's really hard to see that and. In increasingly complex world, it's even, it's even harder than it was before, because the reverberations from things are really hard to map out in, in, in advance, and especially when some part of those reverberations are a loss of confidence, then all bets [00:52:00] are off because when confidence cracks, lots of things fall apart.But how do you possibly analyze in any quantitative way the the risk that that confidence will collapse? Mm-hmm. . So I think it's, I think, I think, I think it's difficult. That said, and of course I am talking my own book here, I don't think that the lack of the, the increased financial problems of journalism really help matters in that respect, because in an ideal world, you want a lot of people out there writing and thinking about various pieces of this, and then maybe somebody can come along and see the.Pieces and say, oh my God, there's this big picture thing here that we all need to be thinking about. But there's, there's a kind of serendipity in the ability to do that one, that one that the chances, I guess the best way to say that is the chances of that serendipity are dramatically increased by having a lot of people out there doing homework, um, on the various pieces of the puzzle.And so I think in a world, particularly where local news has been decimated mm-hmm. , um, the [00:53:00] chances of that sort of serendipity are, are definitely lower. And people may think, oh, it doesn't matter. We still got national news. We've got the Washington Post, we've got the Wall Street Journal, we've got the New York Times.Um, I would love to have somebody do a piece of analysis and go back through the New York Times stories and see how many were sparked by lp, a piece in the local paper that maybe you wouldn't even notice from reading the New York Times piece, because it'd be in like the sixth paragraph that, oh yeah, credit should go to this person at this local paper who started writing about this.But if you no longer have the person at the local paper who started writing about this, You know, it's, it's, it's, it's less likely that the big national piece gets written. And I think that's a part of the implosion of local news, that people, a part of the cost of the implosion of local news that people don't really understand the idea that the national press functions at, at the same level, um, without local news is just not true.Dwarkesh Patel: Yeah. And, but even if you have the local news, and I, that's a really important point, but even if you have that local news, there still has to be somebody whose job it is to synthesize it all together. And [00:54:00] I'm curious, what is the training that requires? So you, I mean, your training is, you know, math and English major and then working at working in investment banking.Um, is that the, uh, I mean, obviously the anecdotal experience then equals one, seems that that's great training for synthesizing all these pieces together. But what is the right sort of education for somebody who is thinking about the big picture? Bethany McLean: I, I don't, I don't know.And there may be, there may be, there are probably multiple answers to that question, right? There's probably no one, one right answer for me. In, in the end. My, my math major has proven to be pivotal. Even though , my mother dug up these, um, my, my parents were moving and so my mother was going through all her stuff and she dug up these, some my math work from, from college.Literally, if it weren't for the fact that I recognized my own handwriting, I would not recognize these pages on pages of math formula and proofs. And they're like, get gibberish to me now. So , but I, but I still think that math has, so I do not wanna exaggerate my mathematical ability at this stage of [00:55:00] the game.It's basically no. But I do think that doing math proofs any kind of formal, any kind of training and logic is really, really important because the more you've been formally trained in logic, the more you realize when there are piece is missing and when something isn't quite, isn't quite adding on, it just forces you to think in, in a way that is, that in a way that connects the dots.Um, because you know, if you're moving from A to B and B doesn't follow a, you, you understand that B doesn't follow a And I think that that, that, that kind of training is, is really, really important. It's what's given. , whatever kind of backbone I have as a journalist is not because I like to create controversy and like to make people mad.I actually don't. It's just because something doesn't make sense to me. And so maybe it doesn't make sense to me because I'm not getting it, or it doesn't make sense to me because B doesn't actually follow, follow away, and you're just being told that it does. And so I think that, I think that training is, is really, really important.Um, I also have, have often thought [00:56:00] that another part of training is realizing that basic rule that you learned in kindergarten, which is, um, you know, believe your imagination or you know, your imagine follow your imagination. Because the truth is anything can happen. And I think if you look at business history over the last couple of decades, it will be the improbable becoming probable.Truth over and over and over again. I mean, the idea that Enron could implode one of the biggest, supposedly most successful companies in corporate America could be bankrupt within six months. The, from its year, from its stock price high. The idea that the biggest, most successful, um, financial institutions on wall, on Wall Street could all be crumbling into bankruptcy without the aid of the US government.The idea that a young woman with no college degree and no real experience in engineering could create, uh, uh, um, could create a machine that was going to revolutionize blood testing and land on the cover of every business magazine, and that this [00:57:00] whole thing could turn out to be pretty much a fraud. The entire idea of ftx, I mean, over and over again, these things have happened.Forget Bernie Madoff if you had told people a year ago that FTX was gonna implode six months ago, three months ago, people would've been like, no, no, no, no, no, no, no. And so I think just that, that, that, that knowledge that the improbable happens over and over again is also a really fundamental, fundamentally important.Dwarkesh Patel: If we're con continuing on the theme of ftx, I, I interviewed him about four or five months ago.Wow. And this is one of these interviews that I'm really, I'm, I don't know if embarrass is the right word, but I knew things then that I could have like asked, poked harder about. But it's also the kind of thing where you look back in retrospect and you're. If it had turned out well, it's, it's not obvious what the red flags are.Um, while you're in the moment, there's things you can look back at the story of Facebook and how, you know, Marcus Zuckerberg acted in the early days of Facebook and you could say, if the thing fell apart, that this is why, or, you know, this is a red flag. So [00:58:00] I have a hard time thinking about how I should have done that interview.B

Samm Sacks (Cyber Policy Fellow, New America and Senior Fellow, Yale Law School Paul Tsai China Center) joins Hank Paulson on Straight Talk to discuss the core issues and key technologies of US-China tech competition, data flows, and governing the digital economy. She shares insights into the need for the US to invest in itself and not inhibit advancement by avoiding competition, data security and privacy, and global tech value chains.

Welcome to the seventh episode of The Better Podcast! We're your co-hosts CHIN Hui Leong and CHONG Ser Jing. In The Better Podcast, we want you to get better at this game called life, together with us. This podcast is designed to share what we've learnt about life, business, investing, and so much more.For our seventh episode, we discussed a whole bunch of things, including:Hank Paulson and Neel Kashkari had no idea how much money was enough to save the US financial system when the Great Financial Crisis erupted in 2008; Paulson was the Treasury Secretary back then and Kashkari was his aideWarren Buffett and his investment lieutenants - Ted Weschler and Todd Combs - felt lost in the investment landscape when the COVID-19 pandemic first happenedThe experiences of Paulson, Kashkari, Buffett, Weschler, and Combs highlight the importance of humility when investingHow chaotic the situation was during the Great Financial CrisisA book written by turnaround expert Steve MillerLearning the proper lessons from financial crises and market crashesA prediction by venture capital firm Bessemer Venture Partners from its State of the Cloud 2022 report on how software firms can build different monetisation models through the power of APIs (application programing interfaces)Amazon co-founder Jeff Bezos linking beer brewers in the early 20th century with cloud computing providers todayAn interesting story of how one road in China came to be named “1 Sundram Road”Another prediction by Bessemer Venture Partners from its State of the Cloud 2022 report: Cloud marketplaces will become an important distribution channel for software companiesNothing on this show should be taken as investment advice. It is purely for informational and entertainment purposes only. All opinions expressed in this show by us and our guests are solely our own opinions. We and our guests may hold positions in the financial assets discussed in the show. These holdings are subject to change at any time.We value your feedback, so let us know your thoughts! Contact us at thebetterpodcaster@gmail.comShow NotesBook from Mary Childs on Bill Gross titled The Bond King, which featured the story on Hank Paulson and Neel Kashkari: LinkPodcast featuring Ted Weschler, where he shared his investing experience when COVID-19 happened: LinkBook written by Steve Miller: LinkBessemer Venture Partners State of the Cloud 2022 report: LinkAcquired podcast featuring Jeff Bezos's story on beer brewers in the early 20th century: Link This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit thebetterpodcast.substack.com

Dr. Thornberg is an uncommon economist. Chris is as much at home with philosophy as the nuts-and-bolts of economics and forecasting. As the Founder of Beacon Economics, Chris is not only one of the few, like Hank Paulson, who called the collapse of the housing market, but also one of the few economists who can call it like it is, and share beliefs rooted in facts rather than opinion.

Dr. Thornberg is an uncommon economist. Chris is as much at home with philosophy as the nuts-and-bolts of economics and forecasting. As the Founder of Beacon Economics, Chris is not only one of the few, like Hank Paulson, who called the collapse of the housing market, but also one of the few economists who can call it like it is, and share beliefs rooted in facts rather than opinion.

Jeremy Grantham, CBE (Co-Founder and Long-Term Investment Strategist of Grantham, Mayo, & van Otterloo) joins Hank Paulson on Straight Talk to discuss growing up in the UK in the backdrop of World War II, starting his own investment firm, and making sense of today's market. He shares insights into combining philanthropy with his investment principles to accelerate the transition to a low-carbon economy, greening the energy system, and the need for capitalism reform to increase equity, growth, and advancement. Jeremy Grantham: https://www.gmo.com/americas/people/firm-management/ GMO: https://www.gmo.com/americas/

Creator of Fellowship Week, the entrepreneur school for Inc. 5000 and other owners of fast-growth entrepreneurs and the Chairman of Birthing of Giants: The Oxford Innovation Conference for American Entrepreneurs.Lewis is also the author of the best-selling book, Business Brilliant, which focuses on the wealthcreating behaviors and attitudes for the new economy (Harper Collins 2013) and features in-depth profiles of of entrepreneurial greats such Richard Branson and Steve Jobs. His other books are The Armchair Millionaire, The Middle-Class Millionaire and The First Habit.After selling 2 businesses (Armchair Millionaire and MainStreet.com) to publicly-traded companies,Lewis founded Inc. Magazine's Business Owners Council in 2010, a membership organization for Inc. 5000 honorees. Presenters included: Former U.S. Treasury Secretary, Hank Paulson, Howard Schultz of Starbucks, John Mackey of Whole Foods, Danny Meyer of Shake Shack, Kip Tindell of The Container Store, Deepak Chopra, and others.Today, Lewis has partnered with other education entrepreneurs to reinvent college by transforming a 157 year old university—a “Moneymaker”—into a Moonshot, an EdTech platform called Perfect EDU.Learn More-https://birthingofgiants.com/Influential Influencers with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-lewis-schiff-executive-director-of-moonshots-moneymakers

Creator of Fellowship Week, the entrepreneur school for Inc. 5000 and other owners of fast-growth entrepreneurs and the Chairman of Birthing of Giants: The Oxford Innovation Conference for American Entrepreneurs.Lewis is also the author of the best-selling book, Business Brilliant, which focuses on the wealthcreating behaviors and attitudes for the new economy (Harper Collins 2013) and features in-depth profiles of of entrepreneurial greats such Richard Branson and Steve Jobs. His other books are The Armchair Millionaire, The Middle-Class Millionaire and The First Habit.After selling 2 businesses (Armchair Millionaire and MainStreet.com) to publicly-traded companies,Lewis founded Inc. Magazine's Business Owners Council in 2010, a membership organization for Inc. 5000 honorees. Presenters included: Former U.S. Treasury Secretary, Hank Paulson, Howard Schultz of Starbucks, John Mackey of Whole Foods, Danny Meyer of Shake Shack, Kip Tindell of The Container Store, Deepak Chopra, and others.Today, Lewis has partnered with other education entrepreneurs to reinvent college by transforming a 157 year old university—a “Moneymaker”—into a Moonshot, an EdTech platform called Perfect EDU.Learn More-https://birthingofgiants.com/Influential Influencers with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-lewis-schiff-executive-director-of-moonshots-moneymakers

Carter Roberts (President and CEO of World Wildlife Fund, United States) joins Hank Paulson on Straight Talk to discuss the connection between birding and conservation, the mission and work of WWF, the importance of creating protected areas, and what it will take to secure the health of the Amazon. Roberts also shares insights on the impact of food production on land and water, the intertwining climate and biodiversity crises, and the importance of building partnerships. Carter Roberts: https://www.worldwildlife.org/leaders/carter-roberts

Dr. Ruth Simmons (President, Prairie View A&M University) joins Hank Paulson on Straight Talk to share the obstacles she encountered early in life, her parents' life as sharecroppers, and how they empowered her to get an education. Simmons discusses higher ed and the important work of HBCUs, her views on leadership, and the need to keep learning and be open to what people have to teach. Ruth Simmons: https://www.pvamu.edu/president/about/

The pandemic has exacerbated some of the biggest challenges facing the world, from climate change to public health, and government leadership to education. Over the past few years, Bloomberg Philanthropies has doubled down on existing commitments, expanded our partnerships, and formed new ones to make the biggest impact possible. That work wouldn't be possible without the leadership of Patti Harris - our Chief Executive Officer, who oversees all of Mike Bloomberg's giving, including his philanthropic, corporate, and personal giving, as well as Bloomberg Associates, a pro bono consultancy that works with mayors in cities around the world. In this episode, Bloomberg Philanthropies CEO Patti Harris sits down with Hank Paulson, the 74th US Treasury Secretary, and a member of the Bloomberg Philanthropies Board of Directors, to discuss her experience in public service, the importance of hiring a great team, rallying the private sector to support the clean energy transition, and more. Their conversation was adopted from Straight Talk, a podcast by the Paulson Institute.

I've got a really great episode for you today. For anyone interested in learning about what the economic outlook is for apartment rentals in the US, I've got you covered. I recently listened to a webcast with Hessam Nadji, the CEO of Marcus & Millichap, who was joined by the former Secretary of the United States Treasury, Hank Paulson. The other guest speakers were the President and CEO of TruAmerica MultiFamily, Robert E. Hart, and the President and CEO of ICSC, Tom McGee. This incredible conversation brought together some of the most successful and knowledgeable people in the field with one of the largest apartment transaction coordinators, brokers, and advisors, a one-of-a-kind expert. They went into great detail about growth in our economy, apartment rental industry, e-commerce and much more. While I highly recommend you listen to this conversation, I wanted to share my notes and big takeaways from this event, specifically for multifamily real estate investors. You'll learn why apartment rentals are expected to stay hot, why rent growth is happening in markets all over the United States, and why real estate will remain stable–even in the face of inflation. Key Takeaways with Josh Cantwell Why demand for apartment rentals isn't expected to drop anytime soon. Key reasons that rent growth is happening all over the country–and the trends driving this growth. Why real estate stays valuable even when paper money doesn't. How COVID has led to increased demand for suburban housing. Why the U.S. is still a great place to invest no matter what the future brings. Want the Full Show Notes? To get access to the full show notes, including audio, transcripts, and links to all the resources mentioned, visit https://acceleratedinvestorpodcast.com/260 Rate & Review If you enjoyed today's episode of The Accelerated Real Estate Investor Podcast, hit the subscribe button on Apple Podcasts, so future episodes are automatically downloaded directly to your device. You can also help by providing an honest rating & review over on Apple Podcasts. Reviews go a long way in helping us build awareness so that we can impact even more people. THANK YOU! Connect with Josh Cantwell Facebook YouTube Instagram LinkedIn Twitter Sign Up For My Coaching Program! To unlock your potential and start earning real passive income, visit joshcantwellcoaching.com

Lewis Schiff is the Chairman of Birthing of Giants Fellowship Week, the entrepreneur school for Inc. 5000 and other owners of fast-growth entrepreneurs and the executive director of Moonshots & Moneymakers: The Oxford Innovation Conference for American Entrepreneurs Lewis is also the author of the best-selling book, Business Brilliant, which focuses on the wealth-creating behaviors and attitudes for the new economy (Harper Collins 2013) and features in-depth profiles of ofentrepreneurial greats such Richard Branson and Steve Jobs. His other books are The Armchair Millionaire, The Middle-Class Millionaire and The First Habit. After selling 2 businesses (Armchair Millionaire and MainStreet.com) to publicly-traded companies, Lewis founded Inc. Magazine's Business Owners Council in 2010, a membership organization for Inc.5000 honorees. Presenters included: Former U.S. Treasury Secretary, Hank Paulson, Howard Schultz of Starbucks, John Mackey of Whole Foods, Danny Meyer of Shake Shack, Kip Tindell of The Container Store, Deepak Chopra, and others. --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app

As momentum builds for the financial services industry to act on climate change, continued international alignment is crucial to ensure progress is made quickly. As the world's largest and second-largest carbon emitters respectively, China and the U.S. have an opportunity to demonstrate global leadership in confronting this challenge. In this episode, former U.S. Treasury Secretary and noted China expert Hank Paulson discusses China's recent initiatives to decrease its carbon footprint through innovative solutions, emphasizing how the U.S. and China can work together to tackle climate change—and the potential consequences if they do not.

Hello everyone.I'm very excited to share my conversation with Sebastian Mallaby, the Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations and author of several books including More Money Than Good, The Man Who Knew: The Life & Times of Alan Greenspan, as well as an upcoming book about the history of venture capital (The Power Law). I'm a big fan of More Money Than Good and tweeted about the gems in its footnotes. This conversation was an absolute treat and I hope you will enjoy it as much as I did.You can access it here: Spotify, Apple, Google, RSS, anchor.I'm still learning about editing the audio files and dealing with all the logistics. Happy about any feedback

Evan Osnos (Staff Writer, The New Yorker and author) joins Hank Paulson on Straight Talk to share what inspired him to be a journalist, how he views the China challenge moving forward, as well as social media and the need for tech leaders to ensure their platforms are tools for good. They also discuss US-China relations, the power of tech and how it functions in politics, and Osnos' new book Wildland. Evan Osnos: www.evanosnos.com/ Wildland: The Making of America's Fury: https://us.macmillan.com/books/9780374286675/wildland

Hank Paulson welcomes Gillian Tett (Moral Money Co-Founder and Chair of the Editorial Board and Editor-at-Large, US of the Financial Times) to the podcast to talk about what drew her to anthropology, her transition to journalism and economics, covering climate change and green finance, pandemic beards, and her new book. Gillian Tett: www.ft.com/gillian-tett Anthro-Vision www.simonandschuster.com/books/Anthro-Vision/Gillian-Tett/9781982140960 Financial Times: www.ft.com/ Moral Money: www.ft.com/moral-money

Join host Colbert Cannon in conversation with Will Mesdag, a Senior Advisor to HPS. We'll hear about his 21-year career at Goldman Sachs, where he spanned various locations from New York to Frankfurt, and caught the eye of former US Treasury Secretary Hank Paulson. We discuss his transition to founding Red Mountain Capital Partners in 2005. We also learn about his work with the Equity Alliance to invest in diverse fund managers.    To learn more about Equity Alliance, visit the website here.Check out Will's Best Idea, the book Wilmington's Lie by Pulitzer Prize winner David Zucchino, here. Learn more about Colbert's Best Idea, the book The Anarchy by William Dalrymple, here.

Deborah Lehr, Paulson Institute's Vice Chairman and Executive Director, joins Straight Talk with Hank Paulson to discuss her experience studying in China in the 80s, working on economic relations with China and the country's accession to the WTO, combatting global looting via the Antiquities Coalition, and her advocacy for a career of service. She shares insights on US-China competition, China's expanding role in the Middle East, and how green finance is key to fighting climate change. Deborah Lehr: www.paulsoninstitute.org/staff/deborah-m-lehr/ www.paulsoninstitute.org https://theantiquitiescoalition.org/ https://www.basilinna.com/

Jill Dalton is a actor and writer.  Jill's memoir, My Life in the Trenches ofShow Business: Escape to New York - Act 1  onAmazon.com.  It has a five star rating and was #1 in Acting andAuditioning for several days. Her essays have been published in AuntieBellum Magazine, Delmarva Review, Evening Street Review, TheMacGuffin, Pine Hills Review, and Progressive Activists Voice.Her plays, Collateral Damage (2014) and Whistle-blower (2015)were both semi-finalist in the Eugene O'Neill National PlaywrightsConference. Her solo play, Lizzie Borden Live! was commissioned bythe East Lynne Theater Company in Cape May, NJ, where it had itsworld premiere (August 2007), and a successful and critically acclaimedsix-week run. Tony and 4 time Emmy winning Orchestrator andComposer, Larry Hochman, did original music for the piece, and Ms.Dalton won the 2007 Jacoby Award for her portrayal of Lizzie.Jill has also written and performed two other solo plays: MyLife in the Trenches and Calling on God. These works wereperformed at: Surf Reality, Dixon Place, Womenkind Festival, SoloArts, Hudson Guild, The Field, New York Fringe Festival,Ensemble Studio Theatre, the Int'l, l Midtown Festival (best of thefest), 78th Street Theater Lab, the Kitchen Theatre (Ithaca, NY).Her acting credits include: FBI, Things Heard & Seen, The LoomingTower, Succession, Braid, Too Big to Fail, Law & Order, All MyChildren, As the World Turns, Another World, One Life to Live,Saturday Night Live, Veronika Decides to Die, Rachel GettingMarried, and Oliver Stone's Wall Street.She consulted with William Hurt on his portrayal of Hank Paulson in theHBO film, Too Big to Fail and he was nominated for an Emmy.She spent 4 1⁄2 years honing her skills as a stand-up comic, and is therecipient of the Mary Jo Comedy Show Award for most promisingnewcomer in NYC.In 2019, Jill was selected to be a part of the PERFORMING ARTSLEGACY PROJECT (PAL) developed at the Actors Fund. PAL is anonline platform to document and represent performers' careers and saveour national legacy.https://performingartslegacy.org/daltonPrior to coming to New York she was an Artist-in-Residence with theMetropolitan Arts Council in S.C. Her mime troupe, HOMEMADEMIME, toured the southeast and Puerto with grants from the NationalEndowment for the Arts and the S.C. Arts Commission.Jill is a member of SAG/AFTRA, AEA, and the Dramatist Guildof America.https://jilldalton.nychttps://www.jilldaltonwriter.comhttps://performingartslegacy.org/dalton/My Life in the Trenches of Show Business: Escape to New York - Act 1You'd Be Great At What I DoI Was a Cheerleader in Hitler's Stadium (Will appear in a year in Evening Street Review)No Business Like Show Business  (Will appear in Vol. 14 - November '21 of The DelMara Review)What's Your Porno Name?  (Will appear in Vol. 37.3. of The MacGuffin)The Performing Arts Legacy ProjectSupport the show (https://www.buymeacoffee.com/ThatsHowWeRole)

Melissa Kearney (Director of The Aspen Economic Strategy Group and Economics Professor at University of Maryland) joins Hank Paulson to discuss how she got involved in economics, the economic impact of the pandemic on women, the importance of policy that recognizes children as the future of our country, the mission of the Aspen Institute Economic Strategy Group, and how the US can ensure better economic literacy. Melissa Kearney: www.econ.umd.edu/facultyprofile/kearney/melissa Aspen Economic Strategy Group: www.economicstrategygroup.org/

Hank Paulson welcomes Grammy award winner Maria Schneider (composer, jazz musician, and orchestra leader) to the podcast. She shares insights on writing music and the creative process, building a business in a tough industry. They discuss intellectual property and the free market, birding. And Schneider talks about collaborating with David Bowie. Maria Schneider: https://www.mariaschneider.com/

Paula Johnson, President of Wellesley College, joins Hank Paulson to discuss her mother’s influence on her career, women in STEM and obstacles she’s faced in medicine and academia, the benefits of a women’s college, her management style, what has driven her throughout her career, and leading Wellesley College amidst the pandemic. Paula Johnson: www.wellesley.edu/about/president/biography

Condoleezza Rice (Director of the Hoover Institution and 66th Secretary of State) joins Hank Paulson to talk about growing up in Alabama, her love of piano, what's missing from the national conversation on race, charting a better course toward less divisive politics, and the country's most pressing foreign policy priorities. Condoleezza Rice: https://www.hoover.org/profiles/condoleezza-rice Hoover Institution: https://www.hoover.org/ Condoleezza Rice books: https://www.amazon.com/Condoleezza-Rice/e/B001IU2U6I

Ben Bernanke (Economist and 14th Chair of the Federal Reserve) joins Hank Paulson to discuss his experience leading the Federal Reserve through the Great Recession, what's needed to overcome the COVID economic crisis, how economic principles apply to baseball, and his advice for aspiring economists. Ben Bernanke: www.brookings.edu/experts/ben-s-bernanke/

Joshua Bolten (President & CEO of Business Roundtable and former White House Chief of Staff) joins Hank Paulson to discuss advice for succeeding as White House Chief of Staff, organizing President Bush's efforts to improve public health in Africa, what made Bono the most effective lobbyist he's ever seen, and the new corporate leadership paradigm. Joshua Bolten: www.businessroundtable.org/about-us/staff/joshua-bolten-president-ceo Business Roundtable: www.businessroundtable.org/

Don Garber joins Hank Paulson to discuss leaving the NFL to lead the MLS, US soccer’s standing in the world and his vision for the future, how the MLS navigated the COVID-19 pandemic, and key characteristics of great leadership. Don Garber: www.mlssoccer.com/league/executives/don-garber MLS: www.mlssoccer.com/

Jen Zhu Scott (Executive Chairman of The Commons Project and Founding Principal of Radian Partners) and Paul Triolo (Geotechnology Head, Eurasia Group and Senior Advisor, MacroPolo) join Hank Paulson to discuss the state of the US-China tech competition, what it means for the future of national security, and what to expect from a Biden administration on technology policy. Jen Zhu Scott: https://www.weforum.org/people/jennifer-zhu-scott Paul Triolo: https://www.paulsoninstitute.org/staff/paul-triolo/

Bob Rubin (Chairman Emeritus, Council on Foreign Relations; Former Secretary of the US Treasury) joins Hank Paulson on Straight Talk and shares insights on questioning the seemingly obvious, addressing difficult challenges as Treasury Secretary, developing a generation of economic policymakers, and his advice for those beginning their careers during the pandemic. Bob Rubin: www.cfr.org/expert/robert-e-rubin

Ken Caldeira, Senior Scientist (Emeritus) at Carnegie Institution for Science and Senior Advisor (Climate Science) at Gates Ventures, joins Hank Paulson to discuss the latest climate science, how to get policymakers to act on climate change, and how geoengineering may be vital to ensuring a livable planet. Ken Caldeira: carnegiescience.edu/scientist/ken-caldeira-emeritus

On Monday, November 16, Hank Paulson, Chairman of the Paulson Institute and 74 U.S. Secretary of the Treasury, addressed the 2020 Bloomberg New Economy Forum. In the speech, Paulson lays out his recommendations for President-elect Biden’s China policy, arguing that competition without unnecessary confrontation should be our goal—because confrontation without effective competition has produced some poor results for the American people. He further recommends that the US pursue a self-interested policy that he terms “targeted reciprocity.”

Lessons From Billionaire Stephen A. Schwarzman

Mark Tercek stands tall in environmental action. He was president and CEO of The Nature Conservancy for 11 years.From Wikipedia: "Founded in 1951, The Nature Conservancy has over one million members, and has protected more than 119,000,000 acres of land and thousands of miles of rivers worldwide. The largest environmental nonprofit by assets and revenue in the Americas, The Nature Conservancy ranks as one of the most trusted national organizations in Harris Interactive polls every year since 2005. Forbes magazine rated The Nature Conservancy's fundraising efficiency at 88 percent in its 2005 survey of the largest U.S. charities. The Conservancy received a three-star rating from Charity Navigator in 2016 (three-star in 2015)."Before then he was a partner at Goldman Sachs. Curious how someone goes from investment banking with Hank Paulson to the Nature Conservancy? He describes that calling.We also enjoy that we both are reaching new audiences---I share about Magamedia and he about talking about global warming in Alabama.As much as the content he shared, I loved his emotion of, as I read it, enthusiasm and expectation of success, knowing the challenges andthe likelihood of catastrophe, whatever progress he makes.Green Is Good, The New Yorker profile of Mark See acast.com/privacy for privacy and opt-out information.

Ruth Porat (Chief Financial Officer, Alphabet and Google) joins Hank Paulson to discuss tech's role in sustainability, how Google has responded to COVID and the challenges facing minority-owned businesses, the power of AI to democratize health care, and lessons learned during the 2008 financial crisis. Ruth Porat: https://blog.google/perspectives/ruth-porat/

On today’s show, we’ll dig into former Treasury Secretary Henry Paulson’s column in Foreign Affairs about how to keep the dollar strong. Plus, Big Tech’s new work-from-home reality check and some useful euphemisms for “President Trump lied.” For a full list of the stories we talked about today, check out the episode page at makemesmart.org. And if you can, consider supporting Marketplace with a donation at marketplace.org/givesmart.

On today’s show, we’ll dig into former Treasury Secretary Henry Paulson’s column in Foreign Affairs about how to keep the dollar strong. Plus, Big Tech’s new work-from-home reality check and some useful euphemisms for “President Trump lied.” For a full list of the stories we talked about today, check out the episode page at makemesmart.org. And if you can, consider supporting Marketplace with a donation at marketplace.org/givesmart.

China’s enormous growth and development in the last 25 years have presented significant challenges to environmental sustainability. Sustainable finance and the green bond market has emerged as a key pillar of China’s green strategy. There is an estimated $1 trillion annually needed to meet China’s environmental goals and government investment only covers about 15% of that amount. Private sector initiatives will be key to China’s environmental strategy and is driving innovation.     On this episode we’re joined by Deborah Lehr, Vice Chairman and Executive Director of the Paulson Institute. Deborah advises Hank Paulson, Chairman of the Paulson Institute, on US-China relations and manages the institute’s green finance center. We are also joined by Dan Krieter, who you may remember from our first episode. Dan is a Director in the BMO Capital Markets Fixed Income Strategy Group. He has a special interest and focus on sustainable, fixed income investments and leads the group’s research in the green bonds space.  For full show notes and links mentioned in this episode, visit http://www.bmosustainabilityleaders.com.

Federal Reserve To Start Purchasing Treasury Bills Following a series of repurchase operations that were supposed to be temporary, last week Federal Reserve Chairman Jerome Powell apparently felt that the liquidity issue had not yet been solved. As he said “Indeed, my colleagues and I will soon announce measures to add to the supply of reserves over time.” And sure enough, later in the week the Fed announced that it was going to start purchasing short-term treasury bills. Which is startling in the sense that even after doing almost a month of repo operations, those transactions have not been able to calm the pressures in the funding market. Which in itself is far from ideal, although perhaps only exacerbated in how Federal Reserve officials continue to tell the public that things are normal in the market and there's no cause for concern. Similar to how prior to the financial crisis in 2008 Ben Bernanke and Hank Paulson repeatedly warned the country about how the subprime issues were contained. So while Powell states that this is not quantitative easing, it sure seems like a matter of semantics at best. For the first couple weeks of repo transactions, the primary reason offered was that it was for quarter-end tax purposes. Now the end of the quarter has come and gone, and the Fed intervention continues to grow. And keep in mind that with each one of these programs that are introduced, they are all adding additional money into the system. Fortunately Dave Kranzler of Investment Research Dynamics joined me on the show again to provide an update of what's happening, what you should be aware of, and why the Fed is taking these unusual actions. So to discover what's really going on, click to watch the video now! - To get access to Dave's research go to: http://investmentresearchdynamics.com - To get a free sneak audio chapter preview of my upcoming book “The Big Silver Short” go to: https://arcadiaeconomics.clickfunnels.com/optin30878773 - We want to hear from you! We want your comments! Please tell us your favorite or most insightful time stamp. - Subscribe to Arcadia's Youtube channel now to stay ahead of Wall Street: http://bit.ly/2t1HKOj - To talk with Chris visit: https://arcadiaeconomics.com/getting-help/ - Visit the Arcadia Economics website: https://arcadiaeconomics.com/ - Follow Arcadia Economics on Twitter: https://twitter.com/ArcadiaEconomic - Like Arcadia Economics on Facebook: https://www.facebook.com/Arcadia-Economics-127021697962493/ - Subscribe to Arcadia's Youtube channel now to stay ahead of Wall Street! http://bit.ly/2t1HKOjSubscribe to Arcadia Economics on Soundwise

NYPD Counterterrorism Chief John Miller tells Fareed what it means that ISIS claims credit for the Sri Lanka attacks, despite no longer controlling any territory in Syria or Iraq. Then, Fareed sits down with former Federal Reserve Chairman Ben Bernanke, and former Treasury Secretaries Hank Paulson and Tim Geithner, for an exclusive look back on the financial crisis, a decade later. Guests: John Miller, Ben Bernanke, Hank Paulson, Tim Geithner, Jared Cohen.

Subscribe to Arcadia's channel now to discover what Wall Street doesn't want you to know! http://bit.ly/2t1HKOj - Federal Reserve #Inflations Myths Exposed The #FederalReserve has used a stunning array of tricks to convince the world that it has any clue what it's doing. Yet keep in mind, this is the same institution that couldn't see the housing bubble. Even after it started imploding (google Ben #Bernanke or Hank #Paulson's comments if you need some verification). Of course one of the most often used whoppers is the Federal Reserve's #Keynesian perspective on the topic of inflation. Where the Fed fears that if prices aren't rising fast enough, that somehow that's a problem. Personally, my belief in recent years has been this is just a 3 Stooges routine set up to confuse the public. While in reality it's difficult to believe the Fed really doesn't understand the damaging impact it's creating on the economy. So to resolve the myths that are perpetrated, and help you read through the Fed's nonsense so you can plan for what actually will occur, click to watch the video now! - For more help understanding the markets or to talk with Chris visit: http://arcadiaeconomics.com/ - Subscribe to Arcadia's channel now to stay ahead of Wall Street! http://bit.ly/2t1HKOjSubscribe to Arcadia Economics on Soundwise

Welcome to LaRouche on the Record -- a series of excerpts of Lyndon LaRouche, in his own words, discussing the need for a New Bretton Woods. http://lpac.co/ontherecord In this episode, we hear Lyndon LaRouche speaking at a Washington DC event on Wednesday, October 1, 2008. This speech takes place in the middle of an incredibly significant week in US politics. Two days earlier, on Monday, the House of Representatives, responding to immense public pressure, had voted against the bank bailout bill proposed by Bush’s Treasury Secretary, Hank Paulson. Only a few hours after LaRouche gave this speech, the Senate would support the bailout, with Barack Obama taking a break from his presidential campaign for “Hope and Change” to make a speech on the Senate floor in favor of the bailout. Two days later, on Friday, the House, under huge pressure from Wall Street and the Bush Administration, also voted to pass the bailout bill. Instead of a bailout, what did LaRouche demand?

MultimediaLIVE — After forty years at the helm of Investec, in which he took the obscure finance leasing company started by Ian Kantor in 1974, to a financial institution straddling South Africa and the United Kingdom that oversees assets equivalent to R4 trillion, Stephen Koseff stepped aside as CEO at the end of September 2018. In part three of this extended interview, Koseff describes the “outright, outright panic” that engulfed bank executives during the midst of the global financial crisis (GFC) and how U.S. Treasury Secretary, Hank Paulson, saved the world. Despite having steered the ship through the GFC, Koseff still believes the small banks’ crisis in the early part of the previous decade was the closest he ever came to closing the doors at Investec, and why he thinks the lessons he learnt while writing a thesis in the 1970’s “saved this place a couple of times.”

As two of the nation's top policymakers and regulators, Sheila Bair and Hank Paulson were at the frontlines fighting to contain the worst financial crisis since the Great Depression. Ten years later, the country's economic situation could not be more different: the unemployment rate is at historic lows, corporations are flush with cash, and there has been consistent economic expansion. Further, banks are better capitalized and the financial sector more regulated. Yet US debt is surging, the Trump administration is moving to defang the Dodd-Frank Act, and subprime loans are making a comeback. How confident are policymakers in the lessons they've learned and the regulations they've implemented since 2008? Is our economy truly safer today—and will it be ready when the next crisis hits?

Join us as we discuss the many misdeeds of Henry Paulson. From his time at Goldman Sachs wrestling his boss to the time he let his pet raccoon roam free in his house listen to all the silly adventures of the Paulson saga. We also discuss how as CEO of Goldman Sachs he helped create the 2008 financial crisis through the selling of fraudulent mortgage backed securities and the purchasing of credit default swaps on them from AIG then operated the bailouts in a way to cover up his role in the crisis. Less silly.

Georgios Karpathakis har ADHD – och är Underbara ADHD. Vi frågar honom hur han gör för att nå fram i en så omdebatterad fråga. Och varför en tvåmeterskub får människor att gråta. Plus:  * Barbros inte jätte-PK-fobi * Andreas rasar mot Föräldraföreningen mot narkotika * Barbro dissar bankdirektören Hank Paulson. Missa inte att kolla in vår samarbetspartner www.touchdowns.se – ett nätverk för alla som har minsta intresse av ekonomi och amerikansk politik!

Kate Ryder grew up surrounded by entrepreneurs - her father and grandparents on both sides of the family started their own businesses and set the stage for Kate's future career. When she graduated from college, Kate dreamed of becoming a writer. She made her way through the journalism network, landing jobs at the New Yorker, writing for Hank Paulson, and eventually at the Economist, where she spent 2.5 years traveling and reporting for the prestigious magazine. With the goal of eventually launching her own venture, Kate moved on to become an early stage investor at Index Ventures. Recognizing that the women's healthcare market is incredibly underserved, Kate started Maven, a digital clinic for women that connects patients with healthcare practitioners anywhere, anytime. Kate has been building Maven since April 2015 and has expanded to same day prescription services and Maven Maternity, which helps and supports women from pregnancy through childbirth, postpartum, and returning to the workplace. We're proud to celebrate all that Kate and Maven are doing for women on International Women's Day. Show your support by listening to this incredible story and sharing the interview with all of the women (and men) you admire and respect!

China is both our economic competitor and an ally in the climate change fight. But can it reduce its carbon footprint while lifting its people out of poverty? Henry Paulson, Former United States Secretary of the Treasury and author of “Dealing with China: An Insider Unmasks the New Economic Superpower” (Twelve, 2015) This program was recorded in front of a live audience at the Commonwealth Club of California on April 28, 2015.

When Xi Jinping became China's top leader in 2012, few had any inkling of the sweeping changes that were to come. Three years later, a clearer picture has emerged, but many questions remain. Is he a reformer bent on curbing corruption at the highest levels of government? Or is he merely concerned with consolidating power within China's opaque political system? In this inaugural episode, scholars, journalists, and political figures weigh in on the man that some have described as China's most powerful leader since Mao.

Former head of Goldman Sachs and US Treasury Secretary, Hank Paulson, discusses his long history with China, and what he expects in the coming years.

Climate change is impacting much more than the environment. It’s also slowly changing the political landscape – in Washington and beyond. What’s the best way to move our economy towards a renewable future? More environmental regulation or less? More financial oversight or freer markets? And with mega economies like China and India creating ever-increasing carbon pollution, how do we bring our international friends – and foes – along with us?

China is both our economic competitor and an ally in the climate change fight. But can it reduce its carbon footprint while lifting its people out of poverty? Henry Paulson, Former United States Secretary of the Treasury and author of “Dealing with China: An Insider Unmasks the New Economic Superpower” (Twelve, 2015) This program was recorded in front of a live audience at the Commonwealth Club of California on April 28, 2015.

The Winner of the Intra Sister Wreath contest is announced! Lian's Christmas Eve with the late, great Paul Newman; Hank Paulson who? Julie's got the bail out package all figured out for you; Entertaining Sheila reviews Nights in Rodanthe -- a cashmere sweater, beach house kind of movie

South Carolinians love Hillary Clinton, amnesty for illegal immigrants and Jeb Bush, it appears according to a new poll. Plus, President Obama prepares to do amnesty with his pen, in the process nullifying federal immigration laws he doesn't like, a recap of the weekend's madness in North Charleston, Americans' net worth is declining -- by a lot. Former Bush financial right hand man Hank Paulson says the market crash is coming, Walmart is now selling ice cream sandwiches that don't melt, the Charleston City Council is about to freeze Charleston nightlife with no new bars, and much more. (76:46)

South Carolinians love Hillary Clinton, amnesty for illegal immigrants and Jeb Bush, it appears according to a new poll. Plus, President Obama prepares to do amnesty with his pen, in the process nullifying federal immigration laws he doesn't like, a recap of the weekend's madness in North Charleston, Americans' net worth is declining -- by a lot. Former Bush financial right hand man Hank Paulson says the market crash is coming, Walmart is now selling ice cream sandwiches that don't melt, the Charleston City Council is about to freeze Charleston nightlife with no new bars, and much more. (76:46)

with Brad Friedman & Desi Doyen

with Brad Friedman & Desi Doyen

Former chancellor of the exchequer Alistair Darling talked to Property Week about the 2007-08 banking crisis, his conversations with US treasury secretary Hank Paulson, and what it was like to be woken up with an “unbelievable” call about the bankruptcy of Lehman Brothers. In a 25-minute audio interview at Portcullis House (listen below), marking the […] The post Recovery Special Podcast: Alistair Darling on dark days at Downing Street and Lehman Brothers’ “unbelievable” collapse appeared first on The Property Week Podcast.

In this episode, Max Keiser and Stacy Herbert discuss Hank Paulson sightings in Chicago and the global elite’s Boxing Day presents for the world’s peasants, including 45 banker bad apples at UBS, and an attempt to part the people of India from their gold hoard. In the second half of the show, Max Keiser talks to trends forecaster Gerald Celente of TrendsResearch.com about the next American Revolution and Nehru jackets.   Keiser Report 12-27-12

Today we speak with Sara Nunnally about Barbarians of Wealth, that she co-authored with Sandy Franks. It examines how the greedy, self-serving decisions of a select group of politicians and financial institutions negatively impact the economy and destroy America's prosperity and the American way of life. Sara will detail how Goldman Sachs peddled mortgage-backed securities up and down Wall Street while secretly betting upon their demise. We will discuss how Sanford Weill, founder of Citigroup, spent $100 million lobbying for the repeal of the Glass-Steagall Act, which prevented the merger of commercial and investment banks, and got his way. Sara will offer up examples of other modern barbarians, including the Federal Reserve, Alan Greenspan, Hank Paulson and Timothy Geithner. Barbarians of Wealth is a timely must read for hardworking Americans concerned with their prosperity, and those fascinated with the inner workings of Washington and Wall Street. www.barbariansofwealth.com

Today we speak with Sara Nunnally about Barbarians of Wealth, that she co-authored with Sandy Franks. It examines how the greedy, self-serving decisions of a select group of politicians and financial institutions negatively impact the economy and destroy America's prosperity and the American way of life. Sara will detail how Goldman Sachs peddled mortgage-backed securities up and down Wall Street while secretly betting upon their demise. We will discuss how Sanford Weill, founder of Citigroup, spent $100 million lobbying for the repeal of the Glass-Steagall Act, which prevented the merger of commercial and investment banks, and got his way. Sara will offer up examples of other modern barbarians, including the Federal Reserve, Alan Greenspan, Hank Paulson and Timothy Geithner. Barbarians of Wealth is a timely must read for hardworking Americans concerned with their prosperity, and those fascinated with the inner workings of Washington and Wall Street. www.barbariansofwealth.com