Breaking Points with Krystal and Saagar - Mini Show #62: Federal Reserve, GOP Agenda, Jim Cramer, & More!

Episode Date: November 6, 2022

Krystal, Saagar, & friends discuss Jim Cramer being wrong, Exxon's CEO, GOP agenda, Saudi battle over Twitter, & Fed raising rates!To become a Breaking Points Premium Member and watch/listen to the show uncut and 1 hour early visit: https://breakingpoints.supercast.com/To listen to Breaking Points as a podcast, check them out on Apple and SpotifyApple: https://podcasts.apple.com/us/podcast/breaking-points-with-krystal-and-saagar/id1570045623 Spotify: https://open.spotify.com/show/4Kbsy61zJSzPxNZZ3PKbXl Merch: https://breaking-points.myshopify.com/ Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

This is an iHeart Podcast. I've seen a lot of stuff over 30 years, you know, some very despicable crime and things that are kind of tough to wrap your head around. And this ranks right up there in the pantheon of Rhode Island fraudsters. I've always been told I'm a really good listener, right? And I maximized that while I was lying. Listen to Deep Cover, The Truth About Sarah on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. This Pride Month, we are not just celebrating. We're fighting back. I'm George M. Johnson, author of the most banned book in America. On my podcast, Fighting Words, I sit down with voices that spark resistance and inspire change.

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Let's listen to how he explained that massive miss. Let me say this about this. I made a mistake here. I was wrong. I trusted this management team. That was ill-advised. You were sure as extraordinary. And I apologize.

Okay. Oh, man, that's brutal. Yeah. I trusted this management team. It was ill-advised. I feel... I know what it's like to eat crow on camera. You should do it more often.

Yeah. You'll get more used to it. I mean, he's definitely living up to his reputation here. There's a reverse Kramer ETF for a reason. Exactly, right. And that's the issue

with this entire game, with all the hype around. The entire, you know, in another life, like doing segments like a BP-style takedown of financial media would also do quite well.

Yeah. Just because, if any way, they're even more crazy and insulated from a lot of criticism because it's just such a small audience. True. But for those of us who pay attention, clearly, like, this is not the first time that he's gotten something wrong in a certain direction.

I'll never forget that one clip of, like, him and Jon Stewart. It's honestly uncomfortable. Yeah. Where he basically is, like, forced to apologize by Jon Stewart on his own show. It's extraordinary. I encourage people to go and watch it. But actually, on the underlying question, you and I were talking about this today. I don't know what to think about Zuckerberg.

Like over the long term. Yeah, over the long term. I mean, I was looking at an analysis that Facebook's current valuation at their stock price is the same as when they had one-tenth of the same revenue as a company. Now, maybe the valuation was wrong when it had one-tenth as opposed to today with Meta under 100. But look, Zuck has been right about every major business decision of literally since he ran the company. Don't sell to Yahoo, buy Instagram, buy WhatsApp, go all in on mobile, newsfeed over that. I mean, the only thing you could argue that you got wrong is content moderation, but even that doesn't really have much of a business impact.

So I remain mystified. To me, the whole metaverse thing, I don't see it, but I wouldn't have seen Instagram at a billion. So I think, okay, it's helpful to say the reason why the stock fell off a cliff on this day, plunged 24% to the lowest price since 2016. Facebook reported its second straight quarterly decline. Their Meta Reality Labs division, which is the thing you're talking about, the Metaverse, houses their VR headsets, lost over $9 billion in the first three quarters. And so, I mean, he really is betting. There's a reason he renamed it Meta. He is betting on the Metaverse. Now, what I would say is different from the other things that you mentioned, particularly like

the acquisition of Instagram, some of the WhatsApp, and some of the other acquisitions, is that was seeing something that was already successful and acquiring it. Versus with the metaverse, he's really trying to build and engineer something from scratch. Now he's also acquiring some other pieces to fit into that world. But that's very different from what they've done before. So far, even people, even like, you know, young people who are more into the virtual reality or more into gaming or whatever, even they are like, this is trash. There's no one here. It's hard to navigate. It makes me sick and queasy to stay in here. And it's hard to really understand, you know, his vision is that we're

going to be doing instead of Zoom calls that we'll all like jump into the metaverse to do our next business meeting. It's hard to see what that really adds over the technology that already exists. So I continue to be very skeptical that the metaverse is really the next big thing. And, you know, I mean, I've got my son who's nine, super, super like addicted to his fricking computer, Roblox, this other game called BTD6 that he's really into. And, you know, he's not really interested in being in those worlds in a way other than what he already is in those worlds. So I don't know. I could be totally wrong.

I could be showing my age here, all of those things. But I do think the fact that Zuck was good on those previous business acquisition decisions does not necessarily translate to building his own world from scratch. I don't know. I mean, he bet the house several times, doubled down. He's always won. That being said, it hasn't been that long of a time. Again, I don't see it. I would totally bet against the metaverse, but I wouldn't have bet on a lot of TikTok. I would have told you it was the stupidest thing I've ever seen. I mean, people like it, so I don't know. I'm curious in terms of the long-term viability, but clearly he sees something and burned $9 billion in money on R&D in the VR department. And they can't even get their own employees to use it.

But with this type of nascent tech, you're wrong until you're right. And sometimes if you do nail it, like, who knows? The latest reporting on the metaverse that I read, which was quite recent, was that, you know, they had some of their reporters actually go and be in the metaverse. The experience was terrible. They couldn't even find anyone, like, to talk to. It was difficult to navigate. And then they also got some leaked documents about how even internally, as you said, their own staff doesn't use it. And so that's part of the problem is like they don't like it and they don't use it, so they don't understand it. And number two, the theory is that once people get used to it,

then they'll be there more and more and more. Well, what they've actually seen is people who were initially excited about it and were early adopters, they've actually fallen off. And the user base has actually atrophied and gone down over time. Now, like you said, maybe they have some technological development and maybe it gains a critical mass and maybe it picks up steam. But that is not the trajectory that it is on right now. So we'll see. We'll see if Jim Cramer is in the end vindicated and has the last laugh here.

Yeah, I think that's right. All right, guys, more for y'all later. So there's been a lot of discussion lately about record-breaking profits being made by the big oil companies. Biden is floating the idea of a windfall profits tax, something that Bernie Sanders has been pushing for a long time. In the wake of all this discussion, the CEO of ExxonMobil has responded. Let's go ahead and put this up on the screen. This is truly amazing. Exxon rebuts Biden's attack on profits, citing dividend payout.

Here is the quote, specifically, Sagar. He says, there has been discussion in the U.S. about our industry returning some of our profits directly to the American people. Exxon chief executive officer Darren Wood said in prepared remarks ahead of the company's earnings conference call, that is exactly what we're doing in the form of our quarterly dividend. I mean, so magnanimous. They're already benefiting the American people with their massive profits. I don't know what anyone's complaining about. This is one of the most ridiculous explanations I have ever heard, which is that returning your investor's cash, by the way, most of those investors are not guaranteed to even be Americans.

Look, this is why the entire thing annoys me. I know this might surprise you, but I'm actually against the windfall profits tax, and I'll tell you why, which is that unless you do what you want to do, Crystal, which is wholesale nationalize the entire industry, then what are you going to do? Well, if you nuke the profits and the investors are going to say, okay, then no more drilling, and then all of us have to pay a shit ton more for oil and gas. So it doesn't make any sense. I know it sounds nice in order to do it, but literally, unless you control 100%

root to branch the entire supply, if you remove all, because remember, we all know why. Why are we all in this position? Why was there not more drilling being done over the last five years or over the last couple of years? Because investors effectively gave Exxon and all the rest of the oil companies half a trillion dollars in funding. They spent all that on drilling. It actually didn't end up working out. And they took a massive bath from 2019 to 2021 during COVID pandemic. Then in the crush, they're like, Exxon says, okay, should we drill more? Should we increase production? The investors are like, no, no, no, no, no, no. You're not increasing production. You're going to pay us back for all the money.

And that's what they're doing. I just wish there was a more honest discussion on all of this. Okay, but that does assume that the price of oil and the price of the gas pump bears a direct relationship to, like, supply and demand. And that's the only thing that's going on here. It has some impact, but it ignores the fact that, I mean, we know that price gougings happen, not only with the oil companies, but with all kinds of corporations across the board, where they see we can get away with charging more. So we're going to charge more.

Then you have in the commodities markets, the prices are set not so much by supply and demand, but by what traders and speculators and even more than that, the like algorithms that fuel these things, what their expectations are of what other speculators are going to do. So it's much more complex than just supply and demand. If it was just supply and demand, I think you make a strong case. But because there's so much else going on here in terms of financial speculators and in terms of price gouging, that I think it could have an impact and the very threat of it ultimately could have an impact as well. Because, I mean, you see the record-breaking profits from all of these companies

while they're crying about high prices and, oh, we don't have enough supply, et cetera. So that's why I'm less persuaded that this is a fool's errand. It wouldn't work whatsoever. So we have done windfall profits taxes a couple times in our history. The most successful ones were actually during wartime, and they were windfall profits taxes on like the military-industrial complex, where it was basically like, I mean, FDR did this. I think it was Woodrow Wilson did it as well during World War I, and it actually raised a lot of revenue. And it was a sort of a check on this idea that, you know, here we are going to war

and then there's these people who are profiting off of it and it's grotesque. That's what I was actually going to bring up, which is that really it only works in a full-blown wartime economy, which, you know. Carter tried one on gas in the 70s and the reason it failed was because it was written in this very, like, loophole-ridden neoliberal kind of a way. So there's a lot of specifics that have to be worked out for it to be effective, but I'm not opposed to it given the fact that we've seen 52% of inflation is really corporate price gouging. Yes. However, I would much rather just pay less for gas and everybody. I just don't see a risk, which is, look, there's a lot of other things you can do outside of windfell profits tax to actually boost production. Their SPR, if they actually leaned into more setting the floor price of oil and all that in the future, would probably have more of an impact.

Haven't they already done that, though? So they didn't, but they didn't do it actually to the extent that what we were calling for, even in the beginning from three months ago. They basically did a half-assed version, and then now they're trying to do it for the future. There's a lot of things that they could actually do on the production front, and they've had almost six months at this point to do it. I just want people to pay less. It's unfortunate Exxon and all of them are making money. But look, at this point, people are getting hosed to a historic degree, and I don't see any evidence that this would do anything to lower the price of gas, and it's directly punitive. Punitive,

I'm fine with, but let's let it come later, not when we actually need these people to pump oil now and actually give us cheaper gas. So, I just think it's counterproductive. And also, like, look, Crystal, in your ideal world, sure, it would work out. But we don't live in that world. We don't actually live in the world where we have the electric transition. Like, they're not investing in anything of the future. Well, that's not true. I mean, the Inflation Reduction Act has significant green infrastructure investments. I agree it's not sufficient, but you can't say they're doing nothing.

It's not going to replace oil and gas. Clearly they are doing something, and the idea is over time it will create the infrastructure that could potentially replace oil and gas. Are we there yet today? No. But actually, I mean, that is one side effect of the war in Ukraine is people are getting a lot more serious about the green energy transition because you realize how susceptible you are, not only in terms of like domestic political shocks, freaking beholden to like, you know, the Saudis and what they want to do with production, the Russians, et cetera, et cetera. So it is accelerating that transition. They're doing

something, but is it here and now? Of course not. I don't disagree. I just think we should not overstate the extent to which it is still a drop in the bucket. You could spend all the money you want on solar, and we're still talking about like 10% of houses in the United States. It's just not happening. Like, what, 90-something percent of the cars on the road run on gas. I was telling you, used car market is two-thirds of the entire market of the United States. We are going to be using gas in our cars for decades to come. That's just the reality. And especially for industry, natural gas, we have yet to find a more proven solution that people are actually willing to spend any money on

in terms of powering our grids. You can't just give up. I'm actually more optimistic about the transition to electric vehicles, in part because California just, you know, basically mandated that— Just make it dry. I mean, because—but we have a track record of California basically setting the standard for the entire country. I mean, the car makers really responded to their demands. And you already—and part of why, because Gavin Newsom is no, like, you know, he's a corporate Democrat. He's sort of cloaking himself in progressivism right now. But the reason he passed that is because it's what the automakers see for themselves for the future and what they're already gearing and retooling towards. So when you have something that industry wants, it makes it much more likely that the Biden administration or a future Trump administration or whatever is going to go along with it because their incentives are always to sort of back down.

I would love for it to be that way. I've seen no evidence we could replace 100% of the cars with the current supply chain that we have, which don't have enough cobalt. We don't have a lot of nickel. That is the big issue. Yeah, that is the big issue. Don't exist for the state of California, let alone the United States. It took, what, when did we start really commercially drilling for oil? 1945? I mean, it took decades to get the infrastructure that we have right now. You're basically asking for a similar infrastructure project. Well, what I'm asking for right now is to penalize and tax the price gougers.

That's what I'm asking for right now. I just don't think it would work. Oil and gas and other industries as well who have been making excess profit. I mean, insane profits off the back of struggling Americans. So I applaud the direction. We'll see. First of all, I know this. It ain't going to pass. Celebrate the quarterly dividend that the CEO is bequeathing to us.

What I'm really learning from this is I should buy some Exxon stock. Maybe. I was probably a liar about that too. Time now for our weekly partnership segment with The Lever. And joining us this week is a reporter from that outlet, one of my favorites, Matthew Cunningham Cook. Great to see you, sir. Thanks so much for having me on, Crystal. I appreciate it. Our pleasure. All right. So we have heard a lot about Doug Mastriano, who is the Republican nominee for governor in the state of Pennsylvania. Race is a lot closer than people would like. We've talked to you about, you know, he was at January 6th. He was really key to Trump's like fake electors schemes and election denialism, very extreme on abortion. But you dug into a part of

his plans that I think is just as significant and important. Let's go ahead and put this up on the screen. Mastroianno and Pennsylvania GOP plot war on workers. The GOP's Pennsylvania gubernatorial nominee is planning to crush unions if he wins on November 8th. So what is he saying he's planning to do here? Yeah, I mean, what we see from his record is that he was one of just a third of his caucus in the Pennsylvania State Senate Republican Caucus to vote against a very modest increase in the minimum wage in 2019. And then more recently, he pledged to use his network to support the passage of right to work in Pennsylvania. And basically, you know, the labor movement calls right to work, right to work for less. It puts the open shop into law. So if you have a union representing you, you can choose whether or not to pay dues.

Nevermind the fact that that creates a financial death spiral for unions. And it means that basically the union is too weak to do anything meaningful in the shop. So that's why you see all these problems with low wages and poor working conditions in places like Mississippi and South Carolina is because unions were never really able to get a deep base in the state,

thanks to right- anti-union views. So we've seen this time and time again. sort of lever, frankly, there's a huge component of this rising extreme right that doesn't engage at all with this very important question of how does the extreme right relate to economics? How does it relate to labor and the working class? Well, and in fact, I mean, you see Mastriano like lazily called a populist and maybe even calls himself that. I don't know. Because he buys into like election conspiracy theories. I don't know how that makes you a populist.

In fact, to me, it's quite the opposite. I mean, that makes you anti-democracy. And like to me, the bedrock of being populist is believing in democracy and believing in the will of the people versus the will of an elite class or a group of authoritarians. And so for me, it makes perfect philosophical sense that if you're basically opposed to democracy at the voting booth, you're also going to be opposed to any sort of democracy within the workplace, which is unions at their best. That's the idea is you're giving workers a little bit of a voice in their workplace. And obviously there's even more, you know, some would call them radical. I think there are common sense ideas for co-ops and things like that, which would give workers even more of a say and a stake in their workplaces ultimately.

So for me, it's not confusing at all to see that this instinct towards authoritarianism in our democratic institutions would go hand in glove with an instinct towards authoritarianism in our democratic institutions would go hand in glove with an instinct towards authoritarianism within our corporate institutions. Yeah, I think that's absolutely right. You know, and it's so funny, all of this, you know, right wing concern about censorship and free speech, some of which is legitimate. I'm not saying it's totally illegitimate, but it's like, where do Americans spend most of their time? I used to joke with a coworker of mine, spend more time together than I spend with my family. And so it's really important to acknowledge the fact that in the workplace, there are no free speech rights. You know, there are no rights to contest what's happening to you unless there's

a union contract protecting you. And that's a huge portion of this whole story that I think is really missing. The other thing that I would just add is that, you know, Pennsylvania Republicans' right to work applies to private sector unions. And Pennsylvania Republicans have also championed so-called paycheck protection laws, more like paycheck deception laws that place all of these really onerous requirements on public sector unions to be able to do their jobs. And so, again, you know, what's so interesting is, you know, all of this extreme pro-police rhetoric, you know, and sometimes you see pro-police and fire rhetoric from the Republicans. Meanwhile, they're attacking the unions. Their unions. Yeah, that's a great that's a great point, too. Well, and do you have a sense of is the Republican caucus in the statehouse and Senate? Are they entirely behind this? Because, you know, at the national level, every Republican is against unions. Every Republican is in favor of right to work,

so-called right to work legislation. But, you know, having lived in states like Kentucky, having worked in states like West Virginia, at the state level, it's a little more complex. You still have some Republicans in state legislatures who are close with unions, who back union rights, who are opposed to right to work laws. And Pennsylvania being a state with, you know, a deep union history and a decent size for, you know, comparatively union population at this point. Is there any of that sort of bipartisan support for unions found in the Pennsylvania statehouse or senate? It's getting smaller every, every year. You know, I mean, the most pro-labor Republican in the statehouse, he got tired of the Tea Party control and was like, I'd rather be a county commissioner,

you know. So that's Gene DiGirolamo from suburban Bucks County. Brian Fitzpatrick, the congressman from Bucks County, is also is a Republican and also consistently gets labor support and was, I believe, one of one or two Republicans to vote for the PRO Act when it came this year. So there is a small group, but it's getting smaller and smaller. But again, you know, it's so interesting how much that is different from the perspective of that's painted by the corporate media, you know, in the New York Times in particular, you know, of kind of Trumpism, which is that this is like about Republicans getting into the working class. And it's like, actually, since Trump took over, almost all of the pro-worker Republicans in Pennsylvania have left, retired, lost, left the legislature. And that's a big kind of part of the story that it's like, actually, the pro-worker Republicans tended to be pro-choice, tended to be moderate on immigration, you know, tended to be in favor of kind of a broad

idea of religious freedom and separation of church and state. That's really kind of what pro-working class Republicans look like. They don't really look like Trump or Don Mastriano. Yeah, I think that's a great point. And, you know, union support is at historic levels, you know, in spite of the fact that you have a glaring example of a massive disconnect between the political elites of the Republican Party and even what the Republican base really wants and is looking for. So it's so important that you shine a light on this, Matthew. Thank you so much for this great reporting, and it's great to see you. Thanks so much for having me on, Crystal. Yeah, our pleasure. is a factor in Twitter that nobody wants to talk about, which is the reason I enjoy discussing it, which is Saudi Arabia's role in all of this, which is one of my favorite subjects

because it's one of Washington's least favorite subjects. I don't know how widely known this is, but there is a Saudi billionaire prince that owns a significant stake in that company. And joined with me today is Khalid al-Jabri, an expert on Saudi affairs, frequent commentator, to explain what does that mean, how might that change under the new leadership, and just what is the nature of this? Because we hear so much about foreign influence in relation to Russia, China, Iran, the usual suspects. We don't hear a whole lot of it from our putative allies in the Persian Gulf. So Khalid, can you talk a little bit about, and before we launch here, can we start with the first element just to give people a sense of, so this is Prince Al-Waleed who owns a

major stake in Saudi Arabia. When Elon Musk first made his offer to try to purchase it, he says, I don't believe the proposed offer by Elon Musk, 5420, comes close to the intrinsic value of Twitter given its growth prospects being one of the largest long-term shareholders of Twitter I reject this offer how is this guy in a position Khalid to reject an offer like that he doesn't have the authority to do that it was really extraordinary when I saw that I think you know first of all thank you for having me on your show again I think the audience is served to know facts about Alwaleed bint Alal so theis, through Prince Alwaleed and his holding company called Kingdom Holding,

have owned a stake in Twitter since 2011. So this is not a new investment. This is not a new cash injection. This predates Musk's takeover of the platform. Simply put, Alwaleed and his holding company exercise their legal right by saying, we want to stay on board with the new ownership structure. Al-Waleed is a very interesting character. He is the grandson of the first king of Saudi Arabia. The current king is his uncle, the notorious crown prince Mohammed bin Salman, or known as MBS, is his cousin.

And basically, he has never been a Saudi official, but he's widely known to be a billionaire, an investor, and a philanthropist. And basically, he is speaking from the kind of sense of authority as one of the major stakeholders in Twitter, believing that Elon Musk's original offer was not at the true value of his investment. And can we get the second element up there to show people how Musk responded to that tweet? He says, interesting, just two questions, if I may. How much of Twitter does the kingdom own directly and indirectly? What are the kingdom's views on journalistic freedom of speech? Again, I said Saudi Arabia is one of Washington's least favorite subjects, and this is

one of the reasons, because it's a petro-state that we rely on for oil, but, you know, its human rights record does not, shall we say, line up with how we like to think of our role in the international system and the kind of, you know, support that we say we have for democracies. Khalid, can you speak a bit to, you know, if there was any response on Awaleed's part and, like, what kind of dynamic this is hinting at? That was a very nuanced and smart tweet by Elon Musk. And I think when he says how much of this kingdom owned directly and directly, he was alluding to what happened to Al-Waleed bin Talal in 2017. Al-Waleed, people should have a bit of sympathy with him as well because he's also a victim of his notorious cousin MBS.

He was part of scores of foils and businessmen that were taken to the Ritz- Carlton Hotel in 2017 that was turned into basically a prison where reportedly people were tortured including at least one case of death and they were tortured into giving up their assets. There were reports about Al-Waleed literally being hung upside down by his ankles and forced to give up his assets. And since then, Al-Waleed, who owns a stake in Four Seasons, he owned a stake in the New York Plaza, he actually owns a private jet that was dubbed as a flying palace, has not even been able to leave the kingdom. And I think what that tweet alludes to by Musk is like, I know what's happening to you.

You're probably, I don't know if that's your own words or you're under duress. And basically, you know, people have reasons now to doubt if Waleed's decisions, including staying on board, is autonomous or something that was influenced by the state. So it sounds like what Musk is hinting at here, which I appreciate in his part, because he's really saying the quiet part loud, which is that, is MBS behind this? Are you actually acting independently here? Because you've been rendered to this hotel and God knows what happened.

And in a regime like Saudi Arabia, it's not like the United States where there's a clear demarcation between private and government. And it's clear from our conversations that there was a lot done at that point in time to appropriate the wealth of the individuals that were brought in there. So do you have much insight into what role the MBS has now? So, I mean, it's not clear. There's a reason actually that Forbes magazine stopped actually looking at Alwaleed's net worth both post-2017. And the reason is nobody can

get accurate data. But just a bit of facts as well. So all of Al-Waleed's holdings are through his personal holding company. 5% of that is floated in the Saudi stock market. And up until May of this year, ironically, around the same time that there was this whole kind of takeover Twitter saga, he owned 95%. People said that there was a backdoor agreement by which he would give the state part of his ownership in that holding company. But actually, in May, he signed an agreement to sell 17% of his holding company to the sovereign wealth fund of Saudi Arabia that is chaired by MBS.

So now, objectively, you can argue that the sovereign wealth fund of Saudi Arabia indirectly through El-Waleed's holding company and his investments has an indirect ownership in Twitter. But again, this is not a function of Elon Musk's takeover. This is something that predated the takeover by more than 10 years. And it's a very important fact. Yeah, it's an interesting point. Can we get a photo up here of former Twitter CEO Jack Dorsey shaking hands with Crown Prince MBS? This was, I believe, after Khashoggi, right?

No, this is actually 2016 when MBS was received with red carpet treatment and hailed as a messiah and a reformer. But what's really troubling is this happened a year after MBS agents recruited spies to infiltrate Twitter headquarters and stole private information from Saudi dissidents. Another story that doesn't get enough attention. Headquarters and stole. Oh, that's right. What private information another story? Yeah attention Justice Department, you know Released a statement saying that you know, Saudi was literally operating a foreign agent, which is like by definite That's the definition of foreign interference. How do we not hear more about this? It's it's a funny story. Actually if you look at the superseding indictment by DOJ While MBS was in Virginia for his first visit to the US as an official, his chief of staff recruited a Saudi engineer who was working for Twitter.

And basically that engineer used Twitter laptops, flew with that laptop to Saudi Arabia, downloaded personal information of Saudi dissidents and handed it over to the regime. And that happened in 2015. So it's really troubling to see the former CEO of Twitter, you know, meeting MBS after that act. I mean, like, I have to be fair to Jack as well. And I don't know if he was aware of what had happened when it comes to this whole kind of spy and infiltration. But it's also troubling if you're the CEO of Twitter and you don't know that that happened as well. Anyway, slice it. It doesn't look good for the previous management. And just to complete the circle, two months ago, there was actually one of the spies was

convicted by a grand jury in a federal court in California for spying for the Saudi regime. What's really disappointing also in how Twitter bungled the situation back in 2015 is the main person who handed the data to the Saudi government after the Twitter lawyers were alerted by federal agents. They interviewed him and he got scared and he left the US the same night. So instead of facing accountability in court, he's now a fugitive in Saudi Arabia wanted by the FBI. Wow. And our Customs and Border Protection didn't stop him. That's extraordinary to me. And not just that, but again, a literal spy. You know, you'd think that this would be one of the things people mention when they talk about foreign influence.

It's something I can barely find any reporting on. Can you talk a little bit about why is MBS so obsessed with Twitter? What is used to him? Because you mentioned one case, you know, if he's bringing a laptop back and finding out about dissidents that you can map out and network and do God knows what to, what are his other interests? Yeah, I think we need to take a step back because it's not just about Twitter. Twitter happens to be the most influential social media platform. MBS has a chronic history of being obsessed with social media and its influence to manipulate the masses and influence public opinion. I'm told by a senior Saudi executive that as early as 2011, and his dad wasn't even

crown prince then, by the way, MBS had to be talked out of an idea to build the Saudi Facebook because he was told there's no value. The value in social media is the network effect. If nobody's using your network, it will have zero value. But he was aware of the power of social media as a network effect and nobody's using your network, it will have zero value. But he was aware of the power of social media because around that time, there was a series of popular uprising in the Arab region, people know it as the Arab Spring, where social media played a very integral part. And if you look at MBS, when it comes to Twitter, he is super obsessed. He uses it for, you know, disseminating state propaganda. It is also a potent self-promotion tool. He also uses it for character assassinations of rivals. And it's also a harassment and transnational repression tool for online intimidation of Saudi dissidents abroad.

Not only that, but recently we see how Saudi kangaroo courts, terrorism courts, are using Twitter as a pretext to sentence activists and dissidents to draconian sentences just for having a Twitter account. The most recent case example of that is actually an American citizen from Florida who had some mildly critical tweets tweeted on US soil. The moment he returned to Saudi Arabia for a vacation, he got arrested in the airport and now he has been sentenced to 16 years in prison on spurious charges that are nothing more than just owning a Twitter account and tweeting on US soil. So I know people have a lot of concern about freedom of speech and so on with the recent

takeover, but when it comes to Saudi Arabia, it's a whole different level. Yeah, and if anybody wants to see that botnet activity and the reaction, I would just encourage them to tweet anything at all about the U.S.-Saudi relationship that's critical. You'll very quickly see how rapidly these things come into... I've seen your Twitter mention. It's basically like you've been a victim of one of the elements at which MBS uses Twitter platform, which is online harassment. And what he tries to achieve with that is to try to

break you down psychologically and deter you from writing pieces about Saudi Arabia in the future. There's a recent case of actually a PhD student in the United Kingdom who went back to Saudi Arabia for vacation. She got sentenced for 34 years in prison, plus 34 years of being on travel ban. Her charges, owning a Twitter account and following dissidents. Not even saying anything. No, not even tweets. There were no tweets. Imagine following a dissident can get you locked up for 30 years in prison in Saudi Arabia. So what you've described, not just a threat to Saudi nationals, but US citizens is the case that you mentioned before, which I'm amazed the State Department isn't. I mean, I'm not surprised but disappointed, let's put it.

So now we have a chance where things might go in a different direction. Do you have any sense of how Musk might run this differently and how you hope that things will play out over the next few months? You know, I see, like, historically, people have had a lot of grievances with the Twitter platform that predate the Musk takeover. And, you know, with any change in any new ownership and management, you know, it's fair for people to basically be apprehensive. But, you know, I'm a contrarian. What I see right now, I think it's totally unfair to go on the offensive and attack Elon Musk for pre-existing grievances. This is the thing, a lot of the reporting is kind of like discovering today that there's a Saudi role in the...

But all of this was very well known, you know, the Twitter ownership, the Twitter hacking, the security vulnerabilities, all of these predated Musk. And I was part of letters that were drafted to the previous management and that went unaddressed. So you can't blame Elon for pre-existing vulnerabilities that the previous management under the previous ownership structure failed to address. As a contrarian, seeing the half full part of the cup, I actually see a bit of optimistic touches made by Elon. That very first tweet, second tweet that you showed, him interacting with now the second largest shareholder in Twitter, he interacted publicly with a Saudi royal

who is the second largest shareholder on Twitter, basically criticizing the kingdom's crackdown on freedom of speech. No other tech executive has said that. So he's already miles ahead. At least, you know, I'm talking about Saudi Arabia and the use of Twitter as an authoritarian tool. He's already miles ahead of that. He has pledged to defeat the bots or die trying.

Basically, he has pledged to make the Twitter algorithms open source and therefore increasing transparency. And he pledged to actually have, I think, what he called a content moderation board that no major decision about content or reinstating some of the blocked accounts or suspended accounts would happen without the council convening. I think all of the pre-existing vulnerabilities in Twitter basically offer an opportunity and a low-hanging fruit and a lot of quick wins for everybody. If Elon genuinely follows through with his pledges, he would actually render Twitter a safer and healthier platform than it ever was by addressing issues that, for one reason or another, the previous management failed to address.

Yeah, what's interesting about all this is that the baseline for these billionaire tech executives and their relationship with Saudi leadership, I mean, we just showed everyone the photo of the former Twitter CEO, Jack Dorsey, meeting with him. But it was also Jeff Bezos met with him as well. All these tech executives do. So it's like you compare that kind of glad-handing to this type of relationship. And there's more tension there. So it's not just the Twitter reply that Musk issued, but also the fact that there was a very strange attempt by MBS to get into the electric vehicle business.

Can you talk about that a little bit? I mean, if you want to put everything in context as well, you can even argue that MBS is a direct competitor of Elon Musk. They own two-thirds of a California-based electric car vehicle called Lucid, which is not doing pretty well at the moment. But still, they're actually competitors. You can even go back and say, I think at some point, they've made a handshake promise with Elon about taking Tesla private and basically walked out at the last minute and caused all sorts of problems with the SEC, with Elon. And again, I just want to say at one point, as a Saudi,

I actually think the engagement between tech companies and the Saudi leadership is actually a more potent tool to influence change in Saudi Arabia than arms sales. As you can see, like MBS was touring, you know, Palo Alto and like Seattle and so on. And I think, you know, like, again, this is my contrarian point of view. With the recent takeover, probably Musk has more leeway and leverage to influence MBS's behavior than Joe Biden himself. Wow. That's quite a statement. Although, seeing what the White House has been doing, or rather hasn't been doing, maybe that's easier to believe. I mean, these statements,

it's so frustrating. They come on and say, we're considering maybe slowing down some of the arms sales. It's like, come on. How is this how you're communicating to this guy after everything? You know about how MBS? We've talked about this before Understands language of force. Yeah, you know, it's it's very troubling because like we saw how during the campaign it was You know either he's gonna be made a pariah He's gonna face accountability and then that ended up being a fist bump And I think I said it last time my expectation is the current promise of consequences would end up being just a wrist slap. Again, it's high time that the US start acting like the senior partner in the relationship. I want that to happen, not because I have any

personal grievances with NBS. I think it's the best hope we have as Saudis, Saudi people, as a Saudi country. I don't even want to go and think what Saudi Arabia would like without a stable partnership with the United States. Nobody in his sane mind would bet on Russia today, or even China. God forbid, if China becomes a strategic partner with Saudi, we're going to end up with a surveillance state, a police state, and autocratic capitalism, and probably modeling what China did, including holding a million of their own citizens in concentration camps. So I just want to close on the possibility. How likely do you think it is that Al-Waleed might pull out his stake in Twitter?

Just because of, I mean, a number of reasons, but the tension that exists between him and Musk, which there was no sort of comparable dynamic under the previous leadership. I would look at it as a business transaction for Alwaleed at this point, notwithstanding the fact that his business decisions might not be fully autonomous. Again, he invested $300 million in 2011, and now they're worth $1.9 billion, so he clearly made a lot of money. Same time for Elon, if he wants to kick Alwaleed out, somebody needs to raise that money for him. But, you know, regardless of that, what I want to summarize is the Saudis

have owned a stake in Twitter more than 10 years before the Musk takeover. MBS has infiltrated Twitter with actual spies, you know, 70 years before the Musk takeover. Authoritarian regimes have been having field days on Twitter for as long as I can remember. Twitter, you know, has had concerning security vulnerabilities that have been, you know, aired in public with the recent whistleblower long before the Musk takeover. As a physician, you know, they train us in med school and residency and fellowship to be very solution-oriented. And when patients come't come my clinic we spend a lot of time on the diagnosis and then you know start talking how do i make you better i think everybody today knows what the problems are with twitter and i would like to see is is less attacks on elon musk for pre-existing

problems and more engagement in a solution-oriented dialogue that would make Twitter a safe platform. There's a reason when I was in business school at MIT that half of our class discussions were about Elon Musk. You don't get to be the richest man in the world by luck or not by being smart. And I think people should judge him by his actions, not just by his words. And even if you look at words, he's made some very positive pledges that if implemented, would render Twitter a safer, better and healthier platform. There's no question that Musk is a wildcard in all this.

And people are kind of watching this thinking, okay, well, what is he going to do? I mean, we just had him come out talking about charging for the blue check. So it's like clearly policies will change. I think that was sort of the question in the first 48 hours is are changes gonna be cosmetic or will the substance change? No question the substance is changing. The question is how and what is that gonna look like? I mean we can consume ourselves in discussions about what would future change look like and be apprehensive of that, that's fair. But I'd rather basically spend our efforts and time in trying to fix the existing mistakes of the past that went unanswered by the previous management and ownership of Twitter,

rather than being distracted by future hypotheticals that might never happen. Does that make sense? Yeah, I'd agree. No sense of history among people generally. But it's an important thing to look at and that I've been trying to report on is just the role of this foreign government. Because again, we hear so much about the usual suspect, our sort of adversaries. But it's important to think about what your putative friends are up to too. So thanks so much for joining us, Khalid. Thank you for having me. It is lever time, time for our weekly partnership segment with our friends over at The Lever. And joining us today is Matthew Cunningham-Cook. Great to see you, sir. Great to see you, too, Crystal.

So you are focusing on something that we have been tracking very closely here, which is the Fed's decision to once again hike interest rates by 0.75 percentage points. Let's go ahead and put your piece up on the screen. You say the Fed chairs November surprise. Jerome Powell is preparing to crash the economy days before the midterm elections, hurting workers and ushering his fellow Republicans into power. Break down for us what you argue here in this piece. Yeah, basically, this decision we know is going to hurt working class Americans. We know that because of prior experiences of that. So in particular, starting in 1979, the Fed launched an aggressive interest rate strategy with the explicit goal of ending inflation. But it was very clear at the time that it was one type of inflation

that the Fed was interested in. It was wage inflation. And so Paul Volcker famously kept an index card, a three-by-five index card that his staff would give him of the average construction worker wages with the explicit goal of being like, well, if these wages are going down, then I'm doing my job. And then Powell has really echoed that. He has said he wants to get wages down. He has said that he needs to bring some pain to end inflation. And it's very clear that this is really just disguised class warfare. But I think what makes it kind of particularly concerning is that doing it a week before an election is really functionally indistinguishable from, you know, what James Comey

did in 2016. It's an active intervention into the political process by an institution that claims to be above politics that has the concrete effect of hurting one party's chances of winning. So that's the main thing here. And I think that it's something that, you know, we're so thankful to shows like Breaking Points for consistently covering this issue, because the mainstream media's reporting on this issue is really, really poor. I mean, my big hobby horse that I'm hoping to write about soon is the Fed does not include the fact that higher interest rates equal higher mortgage costs, higher refinancing costs into it the way that it accounts for inflation. And 67 percent of Americans have of households have a mortgage.

So it's really a dangerous game that they're playing that has the concrete effect of throwing Americans out of work. And nobody's telling the truth about it except for a few smaller outlets. Well, and there's an intentional effort to make Fed policy obscure, make Americans think that they aren't smart enough or don't know enough to understand it or to critique it. You know, this was really an effort, you know, expressly undertaken by former Fed Chair Alan Greenspan, who, you know, made his speeches intentionally opaque. So you had to, like, have a PhD in economics to understand what the F he was saying. And this is all to give the appearance, and this is like a very neoliberal thing that they do, that like the experts are in charge, we're crunching the numbers, there's not even value judgments here, this is just we're just

doing the thing that the numbers tell us to do, when in fact, of course, there are value judgments here. And part of what, to me, in Jerome Powell's speech really gave away the game is he actually said, quote, I don't think wages are the principal story for why prices are going up. And yet at other times he said, we need to get wages down. He said, there needs to be some pain. So if you know that wages aren't the main problem for inflation, which of course they are because the reality is wages are not keeping pace with inflation. So how could they be the main thing causing inflation? That doesn't make any sense. And yet you're continuing in this direction, knowing that your

policy at the Fed is not actually having an impact on the things that are causing inflation. Well, then why are you continuing in the same direction? Yeah, it's a great question. I mean, I think that it's very so. I mean, one of the things that, again, it's such a complex kind of issue when you get into the details on the surface level. It's very simple. You know, the Fed is declaring class warfare against working class Americans. But when you get into the details, it becomes a little bit more complicated, I would say. But one of the things that I, that again, we're hoping to report in the future that I think is really interesting is one of Jay Powell's former colleagues at the Carlyle Group has said

that unlike basically every other industry in America, higher interest rates is going to be great for private equity. Why is that? Because the more distressed businesses that there are because of higher interest rates, the easier it is for Carlyle and other major private equity firms with huge amounts of dry powder capital at their disposal to purchase distressed companies on the cheap. So that's exactly what they're looking to do in the same way, as you pointed out, that this, you know, massive money hose from the Fed that emerged at the beginning of COVID also allowed private equity firms to purchase distressed businesses. So it's really, you know, a heads I win, tails you lose type situation here where only the most powerful firms in the country are able to exploit this economic misery towards their benefits.

And they just happen to be the former colleagues of the chairman of the Federal Reserve. The one thing that I think, you know, wasn't, you know, that we addressed in the piece, but it wasn't in the top paragraph, which, and so that, you know, that I will just point out is that, you know, Biden reappointed Powell, chairman of the Federal Reserve this year. A majority of Democratic senators voted against, voted to confirm him. And that was clearly a major mistake. That was clearly a major error on the Biden administration's part. And I think what it really underscores is just how terrified mainstream politicians are from taking on the Fed. You know, when Trump attacked Powell for

raising interest rates in 2018, there was all this, you know, hand wringing and pearl clutching from the mainstream business press about Trump asking to lower interest, asking to keep interest rates low. And again, you know, what that underscores is the fact is that the media is not going to tell the story that there is no constituency for higher interest rates. You know, even people worth hundreds of millions of dollars, the largest home builders in America, the largest construction firms in America are all hurt by higher interest rates. The only constituency are the people with enough kind of actual capital at their disposal to buy low and then later sell high. And that's,

that's, you know, 0.01% of the population, 0.001 percent of the population. But again, you know, they're including, you know, it's so interesting, the business interests of members of Congress, you know. True. You know, that's their lawyers, their, you know, their, you know, medium sized business owners type things. They're going to be hurt by this too. And really the sad fact is, is that there's very few members of Congress who understand what the Fed is actually doing and how it will impact the economy. And, you know, it really ties back to kind of this, you know, this organized demonization of Bernie Sanders in the 2016 and 2020 presidential campaign, where, you know, every single one of his ideas

were presented as extreme left or on the one side or, you know, racist or sexist on the other side. And it's really about, that was ultimately about like obfuscating a real understanding of how the economy works. Bernie wrote an incredible op-ed in 2016 for the New York Times that talked about a broad set of reforms to the Fed to make it more accountable. You know, the regional Fed boards all have banking and industry representation. Very few have any type of labor representation.

None have any type of working class representation. Bernie was talking about addressing this instead of talking about those real issues. It was like, oh, well, Bernie is a nutcase on the one hand, or, you know, Bernie is, you know, a racist or a sexist on the other hand. We're still living with the consequences of this organized demonization campaign against Bernie. That's a great point. And I'd actually forgotten about that op-ed. So I'm glad you raised it interests. So they're being lobbied by financial interests. They're allowed to have a say, apparently. They're not all, oh, hands off, it's independent. But when it comes to any sort of public input, that's where, oh, the Fed is independent

and we can't hear whatsoever from the population about how these things are impacting them. You know, on the political piece, unfortunately, I think that the Biden administration and most mainstream Democrats have basically bought into the Republican theory of inflation. That's why they're reluctant to put forward any economic agenda, positive economic agenda, if they're able to hold on to power, which as a consequence of not doing that, they are much less likely to hold on to power. That's number one. And number two, there's no indication that Biden really has any issue with what Jerome Powell is doing here, because outside of Elizabeth Warren and maybe a handful of others, I really don't hear many Democrats raising a lot of concerns about the direction of Fed policy. Yeah. I mean, we've just started to see a trickle of interest. You know, I mean, the one person again, you know, I think it's the smarter people in the Democratic Party who

understand this. So John Hickenlooper, who's basically a wholly owned subsidiary of the oil and gas industry, recognizes that higher interest rates is going to really hurt the oil and gas industry. You know, I mean, some people would say that's a good thing. I would say, well, it's better to hurt the oil and gas industry by stopping drilling on federal lands or, you know, by, you know, passing oil and gas extraction taxes as opposed to an ancillary effect of crushing the economy for ordinary workers. But yeah, you know, you have a small group of Democratic senators finally starting to peep up, you know, you have a small group of Democratic senators finally starting to peep up, you know, in a really important development. The AFL-CIO finally spoke up yesterday to speak out against these Fed rate hikes. But it's, you know, it's very much

too little too late in so many cases, because this is really the type of stuff that should have been discussed, you know, back in May May when we at the lever started talking about this. The moment that Powell started raising interest rates, we were covering it as an assault on workers. And we were pointing out that Powell was going after regular workers' wages. The Fed, which has incredible amounts of regulatory and supervisory authority over banks, was doing nothing to talk about the inflationary effects of banker bonuses, particularly banker bonuses at banks with a long history or legacy of misconduct like Credit Suisse or Wells Fargo. There was nothing from the Fed on that front, and there is nothing on that front,

and that's very deliberate. Powell is totally uninterested in going after his buddies on Wall Street. He's interested in going after working class Americans. Well, these workers were getting a little bold, starting to organize, starting to agitate in all sorts of different ways. So had to get in there and discipline labor ultimately. So I think your framing of class warfare is the clearest one. Matthew, thank you so much for joining us. Thank you so much for the great reporting on this. Thanks so much, Crystal. I appreciate your time. Our pleasure. And thank you guys for watching. We will have more for you later. I've seen a lot of stuff over 30 years, you know, some very despicable crime and things that are

kind of tough to wrap your head around. And this ranks right up there in the pantheon of Rhode Island fraudsters. I've always been told I'm a really good listener, right? And I maximized that while I was lying. Listen to Deep Cover, The Truth About Sarah on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. We are showing up and showing out. You need people being like, no, you're not what you tell us what to do. This regime is coming down on us. And I don't want to just survive.

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