Hello! Welcome to Slate Money, your guide to the business and finance news of the week.
I'm Felix Salmon of Axios. I'm here with Elizabeth Spires of New York Times,
Nilsworth. Hello. Hello. I'm here with Emily Peck of Axios. Hi. Hi. Hi. And we are going to talk about
Javier Millet, the Argentine chaos agent and our co-capitalist presidential candidate economist
Guy and his hair. We are going to talk about Martin Groenberg, who's the chair of the FDIC and how he
wants to make the banks safer. We are going to talk about Rio's pastisos and how valuable it is and how
that all happened over the course of the pandemic. And we have a Slate Plus segment on holiday months
at the supermarket. Why are we buying Halloween candies in July? What's happening? We will answer
all of your questions. It's a fun one this week. You should listen. It's all coming up on Slate Money.
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Okay, so let's start with the large but not enormous banks, which it turns out we all
learned in much of this year are systemically important. There are these big things called
global systemically important banks or G-Sips and there are like five of them in America and you
know who they are. They're Wells Fargo and City Group and Goldman Sachs and Bank of America and
JP Morgan and State Street and you know those guys, the giants, trillion dollar balance sheets.
And everyone knows they're too big to fail and as Emily has said many times, too big to fail is
good now because if you're too big to fail, that means you can't fail and you can't cause a banking
crisis. Then one layer below them is the regional banks, which definitely included SVB and
includes people like Truist and PNC and banks like that, which still have hundreds of billions of
dollars in assets and could cause real chaos if they failed uncontrollably. And when SVB failed and
a couple of others, the Federal Reserve was forced to step in and declare something called a
systemic risk exception, basically meaning that all of the uninsured depositors would get all of
their money back because they were really worried about the systemic implications of these banks failing.
And so, Emily, this week we had Martin Grunberg, who's the chair of the FDIC coming along and
giving a really important speech and saying, given that we have now learned basically that these
banks are to all intents and purposes do big to fail, that you have to invoke this systemic risk
exception if they have a fail. In the word, systemic is right there in there. Shouldn't we be
treating them more like too big fail banks and shouldn't we be imposing more conditions on them
and existing? Is that more or less what he said? Yeah, I think so. He said we need to avoid getting to
a place of the sort we were back in the spring. We don't want to do a systemic risk exception.
It's really hairy to get it all pulled off and it's not a guarantee that it would happen,
like say, you know, there's a Trump administration in the White House or any administration,
they might not agree to doing a systemic risk exception and the whole thing might go
cabloey the next time. So, the idea here is to put new systems and guardrails and things in place
so you don't get to that point again, right? Exactly. And even with the systemic risk exception,
the banking crisis this year was kind of hairy and he goes into detail about basically how one of
the things that too big to fail banks all have to do is they have to come up with these things
called living wills and you know, basically really give the regulators the ability to come in and
take over and know where everything is and be able to communicate and know who the key employees
are and all of that kind of stuff. So that if there is a bank failure, you know, the actual
business of banking can continue uninterrupted and basically, although technically they had them
in reality, they were woefully insufficient and the FDIC came into Lexington Valley Bank and
just had no idea what the lights which is were basically. Yeah, I think signature bank had not yet
filed their first one of those. So when they failed, it was chaos. The question I have is I guess we
should say what Greenberg is proposing to do. You already mentioned the living wills and he's
proposing that banks issue long-term debt or bonds to sort of make them more resilient when they're
doing badly and to keep them on their toes more because they'll be like a new class of investors
kind of watching them. But I sort of wonder if what he's proposing is enough and if it actually
addresses what went wrong in the spring. So there's two really good questions and if you talk to
someone like Annette at Murty at Stanford who's, you know, very big on just forcing the banks all
banks to have much more capital than they do, she'll say no, this isn't enough and the only real
solution here is to just force all banks to have much more capital than they do. But like that's not
really on the cards, no one's expecting, no, no one thinks that's realistic for various sort of
political reasons and also just because on some level I'm not sure that making sure that no
bank ever fails is necessarily top of the list of things the government's government should be doing.
Like I think making sure that banks can fail without causing a crisis is important but like
it's better that they should be able to fail and I really, really like this idea of forcing them
to issue bonds. And to be honest, it kind of came as a surprise to me to learn that you had
these huge banks, you know Silicon Valley Bank and SigmaTurbank and Silvergate and various other
ones including like PNC and Truist and these other regional banks. You have almost nothing in the way
of long-term bonds outstanding because you think of banks as being these sort of sophisticated
engineers who are constantly doing clever things with capital stacks and every other company in
the world pretty much has a bunch of softhouses and I think a bunch of bonds outstanding and it kind
of, it's unintuitive that banks would not but it turns out that most bank liabilities are not
bonds. They have a little bit of like overnight debt in the sort of overnight bank lending market,
what used to be called labor and then they have a lot of deposits, those are their main source
of liabilities if they just owe money to their depositors and they don't really have much in
the way of bonds and it turns out that if they do and especially if they're long-term bonds that
solves a huge number of problems at like one stroke. It's a really efficient and elegant way
of solving a bunch of these problems. I don't really understand why maybe you can explain why bonds
are such a panacea. Why are they a panacea? Well, I know it's really weird. I'm the guy who's like,
this isn't going to be a panacea and now I'm the guy coming out and saying, you know what, this
kind of looks like a panacea. This is like cures everything. So let's go down the list of things
that a bond does. The first thing a bond does is it's not what's known as loss absorbing equity
because it's not equity but it basically acts a little bit like that when a bank fails. When a
bank fails, obviously the problem we're worried about is that it's liabilities are bigger than
its assets and so it owes a bunch of money to a bunch of people and it can't pay that money to
a bunch of people because it doesn't have enough assets to cover those liabilities and
the liabilities of the bank as we've said are almost entirely deposits and deposits are
insured and even uninsured deposits are insured. This is the thing that we learned during the
banking crisis this year was that even though technically deposits over $250,000 were uninsured
in practice, bank incomes their systemic risk exception and they all become insured,
which means that all depositors get their money bank. There's no like loss absorbing capacity
on the part of depositors and really it's the government on the hook in the form of the FDIC
insurance fund who winds up having to pay in this case I think $33 billion between Silicon
Valley Bank and First Republic is the estimated losses to the FDIC in terms of having to pick up
the bill for these banks failing. So what bonds do is they create a whole new level of liabilities
that instead of the FDIC insurance fund picking up the losses and instead of it depositors
picking up the losses the people who take the losses are bondholders people who walked in with
their eyes open knowing that they were taking credit risk and saying yeah because we're getting paid
a little bit extra we're getting that extra spread over the risk rate we are willing to lend you
money and we know that the risk we're taking is that we might lose that money if the bank fails
and so that is a way to create this kind of buffer zone of allowing the bondholders to lose
enough money in the event that the bank fails that the depositors never really become at risk.
So the bank fails depositors get their money back but the bondholders lose all their money.
Or at least some of it yeah the idea is like in the in the jargon that the bondholders
adjunia to the depositors. Oh wait and so the bondholder money helps lighten the load on the FDIC
or something. Exactly and it does a couple of other things as well. One of the things it does is it
creates a whole class of bondholders right which and bondholders are very different from shareholders.
Shareholders want to maximize upside they want to make the bank as profitable as possible
and get as much money as possible for themselves because their upside is unlimited.
Bondholders have highly limited upside. They note the best case scenario is that they just get their
money back with you know the statutory interest. So what they want to do is minimize downside
and so now that the bank is being forced to issue bonds on the regular basis the bank is having
to sell securities to investors who don't care about the upside anymore they just care about
minimizing the downside and so they have a whole new set of stakeholders and the bank is
going to want to issue those bonds at a very low spread you know they want to be seen to be very safe
and so they are going to have to persuade the markets that they have a negligible
amount of credit risk because that is the only way that they're going to be able to issue those
bonds at a cheap rate and be able to keep their cost of funds low and so that forces the bank
management to be much more conservative and much safer. So the bond investors are regulators.
Exactly. You remember that famous quote from James Carville about like when I get reincarnated I
want to come back as the bond market because I'm so powerful. It's a little bit like that.
Does anyone remember that? Didn't he say something else that everyone paid attention to?
Was he the one who said it's the economy stupid? Isn't he it's the economy stupid?
I think he might he might be responsible for that. I don't remember the bond quote is what I'm saying.
And then there's this other thing right which is that because the bonds are traded
every day and there's a market price for them every day whenever the market
thinks that a bank might be in trouble it will just mark down the price of the bonds and
that that spread on the bond will start gapping out and that's a really good early warning system
for the Federal Reserve and for regulators and for the market as a whole saying hey there's a problem
here and when that starts to happen the bank is going to really work very hard to raise new
capital or do whatever it needs to do in order to try and you know calm the waters and it's
some that bonds thread is a much much better indicator of how risky a bank is and what its
chances of failure are than the share price which is really all we have to go on right now.
My questions were when I was thinking about this was I went through a little bit of a roller
coaster because Silicon Valley bank I mean it it failed because of a viral panic that happened
over a day when people just yank their money out and does this does greenberg's plan address
that specifically no it's the idea is to head it off so that never happens again so there's
never a viral panic again which I guess makes sense you can't really address viral panic
straight on like the book what are you going to do shut down twitter or x or something no you
just have to make it so that a panic doesn't happen because people are watching the bond market
or whatever and they're looking at signals and they understand the risks more than they did in
Silicon Valley banks case I think that's exactly right that he he's quite clear about this that
the reason why people were panicked was you know they were watching the stock price the reason why
they were watching the stock prices because there wasn't a bond price if the bond price had been
giving signals all along then that would have given the bank a lot more time to raise the amount
of capital it needed to stay alive similarly the reason that people were panicked was because they
knew that if the bank failed they could look at its balance and they knew that if the bank failed
there wasn't the bank didn't have enough assets to cover the uninsured deposits and so
there was a very very rational rush to the exits because they were like if we don't get out now we
could lose all of our uninsured deposits that was a very real risk if there was a whole bunch of
bondholders out there who would take losses before the uninsured depositors then that would put
the uninsured depositors in a much safer place and make them and it would make the chance of them
losing money on those uninsured deposit to on those uninsured deposits much more remote so they
would be much less likely to panic what's interesting now is that the sector of these the regional
bank sector these mid sides banks really aren't doing very well but I don't think that anyone's
really worried about another banking crisis like they just seem to be kind of
ambling along yeah I mean that's fine right I mean this is what banks are supposed to do at this
point in the interest rate cycle you know that they they find it difficult to lend because interest
rates are so high because the Fed has raised interest rates and you know their assets have gone
gone down in value because interest rates have gone so high and so they're they're facing struggles
banks do face struggles at this point in the cycle but the idea is if you have long-term bonds
that are like you know 10 20 years in maturity if you have permanent equity which is what stock is
then those investors in that stock and in those bonds are looking over you know a full cycle they're
looking ten years ahead and so they can see past whatever like immediate troubles the bank has
and they can absorb that kind of volatility in the way that maybe a more fragile structure without
all of those you know bonds and stock buffers might not right and you don't want a fragile structure
and a fragile banking sector where there's like rolling crisis crisis that can kind of play
havoc on the economy and make life harder for actual real people there's one other intriguing
line in the Greenberg speech which no one entirely knows what it means but he's saying that
you that if you have bonds that opens up a new option and like if you have a bank failure
maybe you don't need to sell that bank at all like the way the FDIC works is that if a bank fails
the FDIC takes it over and then it sells that bank nearly always in hold that sometimes in parts
to various other banks and he's saying well maybe you might not need to do that you know
maybe if you have bonds then what you can do is you can basically restructure those bonds maybe
do some kind of a debt for equity swap something like that and then turn those bond holders so
that old bond holders into the new shareholders somehow and then just recreate the bank you know
sort of post failure as a self-standing independent institution he doesn't quite come out and say
that and it's not clear that that's exactly what he hasn't read but it's definitely one way of
reading what he said and it does basically and and what he's very clear about is that what he's
doing is he's giving himself more options in the event of a bank resolution when the bank becomes
owned by the FDIC the FDIC at that point has more options of what to do with the bank if the bank
has these outstanding bonds and that and just more options is always better yeah he also says that it
you know opens up the possibility of being able to break up the banks and sell parts of it
requires instead of having to do a full acquisition by one institution well I mean that's the
bit which I don't understand right they've always had that option and I don't I don't really
understand why the existence of bonds makes it any easier to break up a bank and sell it off in
parts rather than doing it all in one fell swoop like do you understand that I sort of assumed
that it was a function of you know timing so that you wouldn't have to if a bank fails on Friday
due a weekend fire sale the the bond structure combined with the other thing that he's proposing
which is a more fulsome resolution plan that banks would have to file I think that explicitly
details what assets can be potentially sold off I sort of assume that those two things were
working in concert and it wasn't just a function of long term debt well yeah but just a long time
that help at all like what how does it work in concert and of course you know it did take them
a few weeks to sell off Silicon Valley bank he didn't manage to do that over the course of a weekend
so like that that's already something that they can do and do do and I think they did sell
us Silicon Valley bank kind of in parts or they certainly have bits of it left over that they
haven't told you well that's TBD then I suppose we don't know yeah I mean so but I you know maybe
like when we see this you know fleshed out proposal this is just a very high high level picture of
what he wants to do but it will there will soon be like an official draft you know rule making
which will go out for a comment period and all of that kind of thing and maybe when we see that
we'll see what he has in mind on this but I do like the idea that there are more options and that
there's like a bunch of different mechanisms making banks safer and that ideally we won't have
any more of these bank crises which would be a good thing yeah I mean and that's been the trend
kind of less bank crises like if you go back over a hundred years but it was once the norm in
the United States for banks to fail all the time exactly like people were in the habit of like
running to get their money out you know like that was that was how it worked and then the FDIC
existed go watch you know that it's a wonderful life episode of Slate Money or listen to it rather
I mean it's kind of remarkable how much more stable the sector is than than how it was I know it's
a long time and we're all used to it and spoiled by it but it it is really remarkable and it's not
that long since a g-sub failed we actually had a too big to a too big to fail bank fail in the form
of credit suites and you know it was messy but ultimately the systemic implications of that
failure were surprisingly slim like you know the what the the sun rose the following morning and we
certainly didn't have some kind of Lehman Brothers moment where there was a major crisis as a result
we have other crisis crises I'll get it right one day we have other crises to focus on in this
world the banks can just get it together they're boring they're supposed to be boring next week we'll
we'll do a whole episode on on all of the other crises follow it facing the planet all of them all
of them literally all of it and for the time being it looks like maybe banking crises won't be one
of them yeah okay so so let's take a break and then talk about pastor source people
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Emily you're the yes go careful suburb dweller i'm going to say the supermarket shopper
tell me are you a connoisseur of rayos pastisos. Felix i'm not we're about to talk about this big
deal that happened recently where Campbell's bought the food company that makes rayos pastisos they
paid 2.7 billion dollars which is like a lot of money for spaghetti sauce in a jar but apparently
it's worth it because rayos is the best pastisos according to our producer Patrick Fort and the
Washington Post and I guess a lot of and the Wall Street Journal and the Wall Street Journal
but to answer your question I don't use jarged pastisos because because you are a true
earthy child of the planet and you make your own pastisos god damn it. It's so easy you just
well I mean I don't make it from tomatoes usually you just but you just buy a can of you know
crushed tomatoes or whole tomatoes or whatever it doesn't even take that long anyway
any judgment to anyone who uses a jarged sauce it turns it turns out the rayos pastisos is you know
made to very high quality standards in Sicily I believe from very specific Sicilian tomatoes
that are cooked incredibly carefully and very well and it is all natural ingredients and there's
no sort of random additions of canola oil or anything like that and it is significantly more
expensive than most other past jarged pastisos but when we're talking significantly more expensive
we're talking about the difference between like four bucks and eight bucks this is this is the
kind of everyday luxury that people can actually afford and the great success of this brand has
been to basically go to people and say you can afford this why don't you just pay that extra
four bucks and get an actually better pastisos while at the same time going to the supermarkets
in the grocery stores and saying you should really be pushing the rayos because you make more
profit on a single jar of rayos than you do in revenue on any of the other brands incredible
that was an incredible detail in the Wall Street Journal story I thought Elizabeth have you tried
rayos pastisos I'm just going to escape I buy luxury jarged pastisos occasionally and I like
their marinara and I'm also incredibly lazy so I don't make my own sauce that often that's okay
no judgment I think one of the reasons why I bought it initially was because it doesn't have added
sugar and almost every jarged brand that you get past that and so if you're if you're if you're
diabetic or you you know insulin resistant you know having jarged options that don't have those
things in it actually very convenient and it's really just kind of way better than a lot of the
other jarged sauces the sugar thing is really interesting to me because I was kind of asking
myself like why is it that this didn't exist before why is it that all of these other competitors
are full of canola oil and out added sugar and all manner of umskeh and the
there are there were basically three theories I had and I don't know which of them are true
and to what degree that you know they're playing here one is just that it's much cheaper for them
to do it that way and there was there's always been this you know capitalistic urge to try and
produce things as cheaply as possible in order to compete in the market and to maximize your
you know profit margins and that kind of stuff so like you know you do that just for the sake of
making it cheaper the second is that Americans have historically had a very sweet tooth and they
maybe just prefer sweeter things and um maybe it took reos to come along and make people realize
that tastes have changed a bit and now that sweet tooth might be going away a bit um and then the
third thing which I don't know about at all is just this idea that often you find in supermarket goods
that you have a lot of ingredients there just to make sure that the product is shell stable it will
still you know it tastes the same way in three years time as it does today and you know you're not
going to have any botulism outbreaks or anything like that and I do wonder and maybe a slate money
listener can write in and tell us whether this is part of it at all I do wonder whether there might
not have been some kind of low key improvements in jarring technology somewhere over the past you
know 20 years that allowed reos to jar this purely natural spaghetti sauce without having to worry
about being shell stable I mean if I make spaghetti sauce at home and put it in the fridge I can
assure you it's not going to last three years well there's a it's a profitable product like I
would imagine that they worry less about inventory aging out they don't need it to last 20 years or
whatever no but they they need it to last three years I actually I did look this up and they're like
you know this is perfectly fine like it will taste the same until three years and it will continue
to be healthy after that like jars of tomato sauce you know really do just live in the back of the
pantry for years and get pulled out at random times you can't expect people to use them quickly
the other interesting thing was this journal store who's really good there was a line in it that
said reos was the zoom of food during the pandemic and it did much better than zoom because zoom
is like on the way down right now great point it's it's popularity is still here with us um but
yeah sales doubled in the pandemic and that's when I think you know people were all everyone was
cooking at home and standards kind of went up for what you were going to buy and what you wanted you
know you wanted more comfort and you wanted things that tasted better because maybe you weren't going
to restaurants anymore so there's this whole new kind of class maybe of shoppers and consumers
buying things that probably they weren't even buying before and demanding a higher quality
and I think that's not just uh that's not just reflected in the new demand for this
fancier eight dollars I mean it costs like ten dollars I think where I live a jar
pastis sauce but also for like different kinds of ice cream and yogurt and things like that
like these higher end brands are really doing better yeah I think also you know customers were
freaked out by supply shocks during the pandemic and they just started stocking up in a non-perishable
items I think more than they would have yeah but the but the point is this is not like a one-off
up stocking right the if you if you look at the sales of reos they went up during the pandemic
and then they just kept on going up there was no mean reflection at all and that and that's in
part because of the that company sovose when they bought reos from being just a tiny tiny
business they like pumped millions of dollars into the marketing budget and just made sure
to get the product on shelves and just spread the word about it so I think it was like the perfect
timing was just really good you know they nailed it nailed it do you know the trump angle here
no there's there's a fun little trump angle which is
someone's gonna write in and correct me on this one but the first time that reos pastis sauce was sold
to sovose that was like the big exit for you know the the pellegrino family and a bunch of
their friends and basically the people who had turned reos the restaurant into a brand of tomato
sources and one of the family members who got rich from that deal was Donald trump juniors first
wife and she basically woke up one morning very rich and she was like I don't need to be married
to this dickhead anymore and she immediately divorced him oh my god not only is it a delicious
pastis sauce but it liberates women from bad marriage a delicious story yes wonderful all I knew
was reos was this like hundred plus year old restaurant in the Bronx that is impossible to get a
table at and doesn't take reservations and is delicious also which I think people eat there for
the sake of eating at raios more from the sake of more than for the sake of it being delicious but
yeah it is impossible to get a table at I remember when Hillary Clinton became
New York's junior senator and that was the way that she could finally get a table at reos because
she got invited there by Charlie Wrangle is that why she became a junior senator I think that
was why I think she's like yeah you know I've been first lady and everything and I've traveled
around the world but I've never had a table at reos so I think in order to get that table at reos
I just need to become senator for New York well now she could just go to the chapequal
whole foods and buy a jar of the sauce exactly and yes Campbell says yes it's exactly the same I
feel like it's better Campbell's CEO says they won't change the recipe and he had this great quote
about like we haven't changed our chicken noodle soup in 125 years which I really liked I was kind
of like maybe you should change it I've had it and it's not like so great okay so we're going to
take a break and then we're going to talk about some amazing hairdos or at least one amazing hairdo
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insurance company and affiliates price and coverage match limited by state law Elizabeth on the
scale of one to 10 how would you rank have your malaise hair uh what's what's the context in terms
of height or multiple directions it goes in it's it's uh you know we we were talking about this
yesterday Felix had trouble believing that muleo is an economist and possibly because he looks like
a Neil diamond impersonator but his hair is amazing and it exists at an altitude that I don't think
I've ever seen on a politician before so we're talking about who are we talking about Emily yes
so we're talking about a man named haveier mille he's a 50-year-old economist and we're talking
about him because he just won a presidential primary in argentina and there's plenty to say about
argentina and argentina's economy but first we want to talk about this guy's hair because it
is wild Jacob Gallagher and the journal described it as he said it looks like a musk ox cross-bred
with aziaz born it's just like kind of like gives me rod Stewart from the 70s vibes also but different
it looks like a wind pushed his hair forward like the blow dryer was coming from behind and just kind
of like blew it out from the you know what I mean from back to front but then he's also got these
like sideburns running down the middle of his cheeks gotta go google if you're listening it's a
very impressive do and he inevitably when it comes to hair like this is um uh you know extreme right
winger he is definitely in line with boroughs johnson who was also famous for his crazy hair and indeed
donald trump who was you know also one of these people who travels with a very specific hair stylist
and doesn't let anyone else touch his hair in this very weird way to say like like it's there was
this quote I can't remember where I saw it but where someone explained that if you're a male
middle aged white guy politician you know you do this thing of just wearing dark suits and white
shirts and ties and all of these politicians kind of look the same and your hair is the one way that
you can stand out and present as being wild and different and unorthodox yes it's like a plant
coming out of the crack in the sidewalk like everything's tamped down but something has to grow
and grow big and wild and non conformist and it's the hair I mean come to think like Reagan had
pretty impressive hair as well but you know it's it's I have to say if you if if you look at the
politicians with the best hair they're all on the right yeah that's what the the bees that we read
for the show definitely said and and had experts quoted saying which would sort of makes you
wonder if the products and the hair dye are just leeching into the brain somehow well we should
I guess explain a little bit about what makes this man with the hair in Argentina a non conformist
right he hates the country's federal reserve bank he wants to abolish it the central bank he wants
to abolish the central bank he in fact he wants to abolish the entire currency yep get rid
of the currency just bring the dollar to Argentina he's basically an ultra libertarian he has he had
this very beloved dog named Conan which gives you an idea of his politics right there
and when Conan died he cloned the dog because that's what people do these days you know whether
you're having a male or Barbara stress end and he now has five like mini conans one of whom is
also called Conan for continuity purposes and all of the other ones are named after libertarian
economists so there's Milton after Milton Friedman there's Murray after Murray Rothbard and then
there's two dogs named after Robert Lucas there's Robert and Lucas so that's you know it's basically
take that Milton Friedman idea of just like get the government out of as much of the economy as
you can possibly do abolish entire ministries and let the market take care of things because you
know whatever problems there are with the market they won't they'll be tiny compared to the kind
of problems that Argentine government have managed to create over the course of the past you know
call it 140 years yeah Argentina is in rough shape so inflation over the past years 113 percent
like that's that seems bad I am literally old enough to remember when I used to go down there
and there was you know a currency board and the peso was one to one and then at the value
and I went down there and the peso was there were three pesos to the dollar and I'm like whoa
everything is so cheap now this is amazing and I bought like some great leather goods and stuff
at three pesos to the dollar now the sort of unofficial black black market exchange rate is
seven hundred and ten pesos to the dollar like it's seven pesos doesn't even buy you a single
US penny so that seems bad like how much worse could this guy make it right and it's at your
absolutely right about that like and this is one of the things if you look at the cell side
research about Argentina from the banks markets did fall a bit when he won the primary because it's
like chaos you know he's just a complete chaos agent but they don't kind of hate his policies
especially once you realize that he doesn't really have a political party behind him and whenever
whenever anyone runs on his party they do really badly it's really just him he could well win
the presidency but he won't have a party in congress who can pass laws and so you know given
the constraint of if he wants to do anything he's going to need to you know pass legislation
or at least get a referendum through and get a majority of the country and he suddenly didn't get
a majority of the vote in the in the primary there was sort of checks and balance constraints
and what he can do and people are saying well you know he might well actually be a better president
than the people who are just effectively you know quote unquote borrowing money from their central
bank to cover the government spending and everyone knows that those loans will never get paid back
and so it just becomes monetized and hence the you know hyperinflation do you know what he could
do you know laterally if he got elected well like you know a little bit like the US president he has
a lot of leeway in terms of foreign policy so he says he wants to leave mercassure which is the
you know trade block with Chile and Brazil and Uruguay so that could be disruptive but yeah it's not
clear I think is the answer it's not clear how much of a mandate he would have and how much
he'd be able to push through would he be able to dollarize the entire economy I mean he would
really have control of the central bank he would have control of the finance ministry
um so you know it's a your Argentine president so they do have real power is there um an
example of a country that's gotten rid of its own currency and just went to dollars
Ecuador is a good one and that turned out okay I mean I think it would be a stretch to say
that Ecuador has turned out okay they just had a presidential candidate get assassinated
right but that's nothing to do with the dollar probably not because of the dollar yeah
but yeah no it basically what happens is that you you lose an important part of what it means
to be a sovereign nation you know you don't have control of your own interest rates you don't have
as you know a central bank who can you know run the economy you're at the mercy of the US federal
reserve if American inflation is running high for whatever reason in you know the USA and the
federal reserve starts hiking interest rates 11 times then your interest rates in Argentina or
Ecuador whatever have to go up because effectively the federal reserve is your central bank and
the federal reserve has made it very very clear that they do not consider the plight of dollarized
economies when they're making interest rate policies they only consider the United States so
you know the idea that your currency is being controlled by a central bank that
literally does not care about you is definitely you know one of the problems here and definitely
like Argentina's kind of been there done that right I mean they used to like you said they used to
have their currency pegged to the dollar and they didn't have yeah kind of worked until it didn't
you know it was it was quite a popular and successful policy like they didn't quite dollarized
they didn't move two dollars they kept the peso but they just made sure that every peso was
backed by a dollar in what they called a currency board and then you know they had this this
another finite another right-wing politician with good head this guy um
domingo kavaggio was the finance minister who just basically said yeah this isn't working anymore
because they were just they had this this terrible recession sawing unemployment and they just
really needed to do value and so they did and that was the end of that so I guess one of the
things about dollar rising is you cannot devide it because you don't have a currency to devide you
anymore um even less control you know it does it doesn't solve the bigger sort of endemic problems
if like you know what happens if your industry just isn't globally competitive but it's not like
like the US is really unique in that our central bank they can kind of do what they want and we're
okay whereas other countries even if they have central banks that can tinker with interest rates
and things like that they're still kind of at the mercy of the dollar and the and the broader
financial system right and you know what I mean like I mean there are a lot of countries that have a
lot of power and control of their central banks right they tend to be the richer countries so yeah
but you know it's not just in the United States you know it would definitely apply to
UK Japan Canada certainly China India you know they're not sort of at the mercy like the FX rates are
not that important to those countries I guess I'm thinking more of like poorer countries emerging
markets that kind of thing you know emerging markets yeah they do tend that's one of the big
differences between a developed country and an emerging market so the emerging markets do need
to care about much more about the balance of payments and yeah for an exchange rate and that kind
well we'll weird hair make it all the way to the top stay tuned stay tuned with it almost certainly
he will not win the election in October but he will almost certainly be one of the top two so then
there will be a runoff in November and yeah he could he could easily win that all right I think
we should have a numbers round Elizabeth do you have a number I do it's 413 billion
dollars and that's the market value of Nova Nordisk and that's a little bit more than the entire GDP
of Denmark where the company is again we'd love it there was a there was a whole article where
they were like this is a really dumb comparison but we're going to make it anyway because we cannot
resist but anyway Elizabeth go on the thing is for context this company makes olympic and
wagovi which are the weight loss drugs that many many Americans are buying now and there's so much
American demand that this is actually having some ripple effects on the Danish economy
what are the what are the ripple effects on the Danish economy well it's it's strength in the
Danish crooner which is the currency and as a result it's it's kept interest rates lower than
the EU the EU rates so so the weight loss drug is fattening the Danish economy is that what you're
saying basically yes so you know there are there are shares that trade and I own about I own
share in Nova Nordisk and I sell it to someone else at a profit and I get a bunch of money
the idea is that like I'm Danish and I'm getting I'm taking my profits in Danish crooner and so
when I'm selling those shares there's demand for Danish crooner from the person who wants to buy
the shares and that demand for Danish crooner is strengthened the currency is that the mechanism?
I think so there's also an element to this that I didn't realize the company is partly owned by
a foundation and so they for I think some of the money gets planned back into not just the company but
you know public goods in a way or public infrastructure when you say the money do you mean like
the Nova Nordisk dividends have they gone up you know I actually just scratch that you know
not I need to I would need to check that you're going to deep on this one feeling
I am mildly you know obsessed by Nova Nordisk which by the way we should we should make clear
it's mainly a diabetes company like you know the increase in share prices because people are
really excited about oh my god it's going to make so much money from wegowy but for the time being
it's still the overwhelming majority of its revenues are still it's you know core diabetes drugs
that can't last forever these drugs are the lockbuster like this is like
changed these drugs are changing everything that's changing seems like Emily what's your number okay
my number is 59 percent 59 percent is the share of generation Z who watches TV or streaming with
the subtitles on that's from a survey conducted last fall and this is interesting to me because
everyone watches TV and streaming with the subtitles on now and movies too and the young the kids
today they just read TV and they read movies and they like it and partly this is because
today's TVs and iPhones and iPads the way people watch content the the sound just isn't that good
like they didn't care about the sound as much there's a great piece in the Times by Brian X Chen
the kind of goes into like where the speakers are situated on big TVs now and like you should buy
like a sound bar or whatever so the sound's not that good like no one was paying attention to the sound
or like if you're watching a movie on your iPhone the sound's been compressed so it's really hard
to understand what anyone is saying in movies now which is kind of crazy if you think about it like
a movie should show you images and sound and you should be able to like
get the message across but they don't so everyone's reading them now and the kids today they like
to read them there's in the in the survey they talk about how kids like to get ahead of the plot
so they can do other stuff while watching TV you know what I mean so you can see kind of like
what's what's coming because you read faster than you take in the picture in the sound
anyway I just thought that was interesting people reading the movies do you guys do that?
yeah we we started trying to work I'm a Virgo on Amazon and yeah it was like I it was just a
mush of sound and I had to turn it that surprised us on because I had no idea what anyone was saying
yeah I think part of it is that people just don't put as much effort into sound quality as
yeah they used to but one of the interesting repercussions is that the whole art
of sub-subtitling has become way more important and demand for sub-titlers is through the roof
and especially in like when you when you get given the internationalization of streaming
now that a whole bunch of stuff that we watch is foreign whether it's a squid game or whatever
or drops of God everyone just expects everything to be subtitled so like dubbing is basically
disappeared and you just you when you watch something foreign you're watching something genuinely
foreign without anyone trying to pretend that they're speaking in your language it's kind of far
I like it yeah yeah the subtitle the art of the subtitles are it's really interesting and I feel
like one stranger things was popular I guess last summer that was like a big story because this
the subtitles to stranger things were amazing like the word squelch kind of went viral for a time
because it was used in the subtitles I mean they're really really really good my number is 10,500
which is the amount that a farm in Germany is being sued for in euros by a man named Felix
because in Germany we just know that his name is Felix F but Felix F decided he was going for a hike
in Bavaria and he parked his car next to a farm and he went for his hike and he came back
and he discovered that his Mercedes had been severely damaged by being licked by cows
the cows had found his car and had licked it and his car had caused 10,500 euros of damages and so
now he is suing for 10,500 euros and I think last last I saw they offered to settle for about half
and I guess cow licking is not a clause in his in the typical auto insurance policy
it should be guys make sure if you have car insurance that your car is insured against cow tongues
because they can cause a lot of damage on which note I think we really need to wrap this up
thanks for listening to slate money thanks for being a slate plus member if you are we're going
to have a slate plus segment on retail group it's the holidays already apparently so we're
going to talk about that in slate plus many thanks to oh my god Merit and Kevin and Patrick and the
whole slate production edifice we have so many people part of this production this week it's fantastic
and we will be back on monday with yapoka yibo talking about her book a nancy's gold
as part of the slate money criminals miniseries
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