Bulwark Takes - BREAKING: Worst Consumer Sentiment in History; DOJ Drops Criminal Probe of Chair Powell

Episode Date: April 24, 2026

Catherine Rampell and JVL are going live to cover the week's biggest developments in the world of finance and the economy.Read Catherine Rampell's 'Receipts' NewsletterTickets for our Bulwark Live shows in San Diego and LA in May

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The sooner you call, the more options you'll have. And the weight, leave that for the grocery bags. The Credit Counseling Society. When debt's got you, you've got us. You ever notice how debt has the worst timing? Like, it waits until 2 a.m. to remind you it exists. But getting help doesn't have to wait at the Credit Counseling Society. Find out for yourself.

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We're here as we are every Friday to talk about the economy. And as it is, every Friday, the news is delicious. Delicious or distasteful? I don't know. Both, both. Yeah. It's all the same. We open with breaking news that Judge Box of Wine, Janine, Pyrrude. has announced that she is curtailing her investigation of the chairman of the Federal Reserve Board because she has asked, as of this morning, the Inspector General, the IG's office at the Federal Reserve, to scrutinize these things. And so Judge Janine is looking like a real, she's so butch here. And she's like, you know, I've directed my office to close her and say, but no, well, no well. I will not hesitate to restart a criminal investigation should the facts

warrant doing so. Catherine, could you please explain to the people that this is actually a surrender cloaked as butching up? Well, it's sort of a surrender and it's sort of not. So the background here is that Donald Trump via Janine Piro has been launching this criminal investigation into Jerome Powell, the Fed chair. How is that possible? There's a line between the Department of Justice and criminal prosecutions in the president's office.

You know what? I'm sure. It's independent, Catherine. I'm sure it was just a total coincidence that they launched this criminal investigation that had bullshit underpinnings. And also, Donald Trump is really mad at Jerome Powell for not

cutting rates as much. Yes, total coinketing. So that's the backstory here. Powell is actually, slated to end his term as chair in about three weeks anyway. He, you know, he has a fixed term and that term ends in mid-May. There is somebody waiting in the wings to take over from Powell. His name is Kevin Warsh. He just had a confirmation hearing this week. And one thing that has been standing in the way of Warsh getting that job is the fact that Tom Tillis, Senator from North

Carolina has said, I'm not going to move forward any Fed picks until this investigation is dead, until it is gone. With great finality, we know that it's over with finality, transparency, whatever language he used. And so it was basically Donald Trump keeping his own pick from getting in the job. So Tillis has laid down this marker and Trump, instead of acquiescing and abandoning this political prosecution, persecution, whatever you want to call it, had tried to escalate. Now, it looks maybe like a surrender, except that. A couple of things.

First is that there was already an IG investigation going on before all of this. Oh. Oh, interesting. Okay. So it didn't just start this morning. No. You know who called for the IG investigation? Why, who would that be, Cameron?

It was Jerome Powell, because as far as he's concerned, he has. has done nothing wrong. He has nothing to hide. So he has called for it publicly. So to my knowledge, that has been going on, I think, for a few months. So nothing new here. In addition, not to sound like paranoid, but it's not totally clear that they are actually done with this investigation. Piro says in that tweet, they've dropped it for now. She will not hesitate to relaunch an investigation. and she was noticeably silent on whether or not she is going to appeal a judge's decision recently that basically blocked her from issuing subpoenas to the Fed. Previous to all of this, she had said very publicly, we plan to appeal, we plan to appeal,

they can't stop us. So it's not really clear, to my knowledge, she has not said anything since then. Maybe I've missed something in the last hour or so. I don't know that Donald Trump has also said anything about the end of this investigation. And so again, Tillis and Powell have both said, like, until this is done, Powell is not going away quietly and Tillis would not allow a successor to get into that the top job. So I don't know what this is actually going to change until there's some clarity about what happens to that announced appeal and whether or not they're continuing to leave the door open to a political investigation slash prosecution of Powell.

I don't know what that means. I think this will probably be enough for Tillis to say, fine, I will stop standing in the way of Kevin Warsh's ascension to FedShare. He likes Kevin Warsh a lot. He said that very publicly. So this was not about him. This was about the investigation. I think we still don't know what it means for Powell because, let's say Warsh does get confirmed, as he's likely to be if Tillis gets out of the way, Powell can actually remain at the board for another couple of years as a regular board member, not as chair.

This almost never happens, like once you've gotten demoted, who wants to stick around. But Powell had indicated that he might stick around at least, well, he said he would stick around at least until the investigation is dropped and maybe longer. So I don't know. I don't know that the drama is actually over here.

I mean, I look at this. And if Tillis is willing to take this as his definitive, like, thing, I think he's crazy. I think he's been looking for an off-ramp. You think he's looking for an off-ramp? Yeah. He didn't think that he... So Trouble of one would not surprise me at all if the minute Warsh is confirmed, they ramp things back up or something like that. I mean, it just seems crazy to me.

I do worry for incoming Chairman Kevin Warsh, though, because should circumstances prevent him from cutting rates aggressively at the very first opportunity, it seems like he could be in for some criminal investigations himself. Yeah, and it's very disappointing, actually, that when he had his confirmation hearing earlier this week, no one asked him about that. There were a bunch of sort of oblique questions about Fed independence, and of course he gave lip-stor. service to Fed independence. Fed independence is important. It's great. It's the most important thing. Blah, blah, blah. All of that is true. But nobody asked him, like, what would you do if Donald Trump deployed the same weaponry that he's deployed against Powell instead against you? What would you do if Donald Trump called you an enemy of the people or otherwise smeared you or launched a fake, you know, a bogus criminal investigation into you or threatened to fire you. Those are really the most

critical pieces of information you want to know about Kevin Warsh. I mean, who knows if I guess he would answer honestly, but that's what we need to know. Like, how would he behave? It's one thing to say you will safeguard Fed independence, but what happens when you're actually under that same pressure? And Warsh would not even condemn the political investigation into Powell. That was too far a field for him to say like this is inappropriate or there's no evidence here or what like very basic banal things he could have said he just said i'm not commenting on any of that uh so you know that that was his opportunity to at least demonstrate some political independence he had some other opportunities too including answering a question about who won the 2020 election um but nobody

yeah nobody even pushed him on this question of like what would you do and to your point it is i think almost inevitable that he is going to come into conflict with the president's interest rate preferences pretty soon because of the war that the president has launched. The war and tariffs and other things that have made inflation worse, it's going to make it much harder for Warsh to push through interest rate cuts if he even wants them. You know, he's one of 12, he will be one of 12 votes setting interest rates. So it's not just up to him. It's up to the rest of the board as well, the board and Fed presidents. But I don't know that he wants it. Markets don't seem to think that he wants to cut rates despite what he says. When Warsh was first announced as Donald Trump's Fed pick,

you know, treasury yields actually went up a little bit, which suggests that while Warsh claims he would, he wants to cut rates, which is what Donald Trump wants, markets don't really believe him. I think it's actually gotten much harder for him to take that path that Donald Trump wants him to take, given the war. So, you know, he's going to get tested pretty soon if, in fact, he gets confirmed. I know practically nothing about the history of the Fed. Is it common at all to have a split of opinion between the chairman of the Fed and then the majority in board? I'm not sure it's ever happened. It's so historically, there is almost always unanimous consent from the board.

There have been a few rare cases where there's even one dissent or a couple of dissents. And those have been relatively recent, to be clear. So it's not like it never happens, but usually it's like one or two voices that are defecting. And everybody else is voting. as a block, and that block is what the Fed chair has kind of guided everyone toward. Because it's supposed to be a consensus-based institution. You know, you can disagree. And people are always pouring over the Fed transcripts years later to find out, like, oh, who was actually disagreeing on this? Or like, what were they thinking at the time? But people will often express

their reservations and still vote along with, you know, sort of what the board, what the, rest of the committee, the FOMC, the Federal Open Market Committee, what they, like, are leaning towards. And actually, this was true of Kevin Warsh. So Kevin Warsh was on the Fed board from, like, 2006 to 2011 thereabouts. He was appointed by George W. Bush. And you can see in the Fed transcripts, which again came out years later, that he was worried about inflation. He talked a lot about how he was worried about runaway inflation. He was worried about inflation even when we were experiencing deflation. And, you know, unemployment was like around 10%. He was worried about inflation the day after Lehman failed when, again, the main concern would be about deflation, about like another

Great Depression. So you can see this in the transcripts, but he still voted along with the rest of the board, or the rest of the committee, despite his reservations that he expressed in those meetings. So I think it would be very unusual. Like I said, it may be unprecedented, probably unprecedented. But again, how is Warsh going to navigate this? Because he has to prove, or at least Trump thinks Warsh is going to prove his loyalty by doing what Trump wants. So I don't know. I mean, again, nobody pressed him on any of this, which I thought was very disappointing.

Seems crazy to not press him on these things. Yeah. Because I would imagine that, I mean, so first of all, it makes sense that they have to be publicly unanimous because that's where the power of the central bank lies, right? I mean, they can have disagreements before they actually vote. But when it's all sort of going onto the record, you do need it to look like there is no daylight between people

and that it's all consensus about this is what the best thing is. Because what you don't want is like, well, we've got a, you know, a 7-5 split as to what we think is the right thing to do. all of a sudden, that doesn't inspire any confidence in markets. And actually, when Warsh testified this week, he did say he thought that there was too much group think in these meetings and that they need to be more forceful in expressing disagreement and all of that. And I think, you know, that all seems reasonable to me that people should be willing to disagree and make their case rather than just go along because it is a consensus-based model. but there's a difference between like doing that in good faith versus bad faith. And I guess the question is, is Warsh going to say what he believes to be the right path for the economy in terms of what the Fed should do?

Is he going to do what Trump wants to hear? I don't know. And I'm very concerned about what his tenure could look like. Not that it can't be fine. I mean, a lot of people I know who I respect. Sure. Say he's a good guy and he's smart and he definitely seems smart. And that they're not worried about him selling out, blah, blah, blah.

He has to say these things in order to get the job, cut him some slack. I've heard various versions of this. There's no way you could get that job and not say that they're, you know, and say that Joe Biden won the 2020 election because that's like a screening mechanism. That's like a screening mechanism for everyone. I would just say that seems bad. I know. If true, it's bad.

And also if true, it's only true because everybody cooperates with it, right? If people simply refuse to cooperate with it, well, eventually they would have to appoint somebody who didn't tow the line because there wouldn't be enough people on, whatever. Now we're getting far revealed. So what is going to weigh on this in addition to do everything else. A piece of the puzzle will be consumer confidence. we have some new consumer confidence numbers first from University of Michigan.

They bad. This is, they're historically bad. Yeah. Wow, look at the line go down. Line go down. Yeah, that's the lowest reading on record. Yeah. So it looks like beginning in 2022, consumer confidence started going up.

and then Donald Trump was elected and then consumer confidence started going down. If I'm reading this, right, it's very hard to understand. But I guess eggs were super expensive, so people had to do what they did. Can you talk to me a little bit about, so what does consumer confidence mean in the real world? When you look at this, and is it still meaningful?

You and I have, like, touched and fenced around this a little bit. And just sort of some people who might be new. here. Just recapitulate for me, like, what this number means. And while you're doing that, Jamie, if we have the Gallup numbers, which are also pretty bad. Yeah, the Gallup numbers show that so this is like the percent of people who think that the economy is getting better or worse or that it's good minus or good or poor. So a negative number means that they're more likely on balance to say things suck. Positive number means. Not going to get. There's directionality. Well, getting worse or that they are.

bad right now because it's like it's the two different measures. Got it. The two different questions, current economic conditions and economic outlook. So it's bad. So, you know, I think we've talked about this. You have to take these numbers with a grain of salt because they have become much more partisan than they used to be. And by partisan, what I mean is Republicans are more likely to say bad things about

the economy when there's a Democrat in the White House, vice versa. and so that has, there seems, that was always the case to some extent, but there seems to have been a noticeable shift like in the last decade where that partisan lens really, really has strengthened in how people answer these questions. It doesn't mean that the answers are meaningless, right, particularly since we have had a Republican in the White House for over a year now. So you can look at how bad things are today or in these kinds of metrics versus a year ago. You can also look at how do independents feel about things or how do Republicans feel about the economy when a Republican is in the White House? So there are ways to tease out some maybe more meaningful numbers rather than just like, do people hate somebody from the other party?

And they're kind of sending this referred pain toward how they answer questions about the economy. So and those things are also bad, right? Like Republicans have also become more likely to say that the economy. Hold off on that, Jamie. We're going to go to that minute. Yeah. So I guess my point is that they're useful to an extent. They have to be viewed in the context of these partisan leanings.

They also have to be viewed in the context of what people are actually doing. Economists talk about revealed preferences versus stated preferences. Stated preferences might be things like the economy sucks and everything is too expensive. revealed preferences might be something like people are actually going out and spending lots of money. I know you'd like to talk about how many boats. Your favorite indicator, the boat indicator. So, you know, when those things are at a disconnect, I would probably put more weight on the what do people actually do rather than what do they actually say.

But what do they say is not useless, is not meaningless, particularly since what they say they feel about the economy is maybe more likely to affect their behavior at the ballot box. So all of those things matter. But, you know, and it's fun to talk about how poor the ratings of the economy aren't now. But, you know, you have to put it in the context of, like, how people are actually behaving. I think one thing that's interesting to me about all of this is how much people hate this economy today when it's not actually that. bad, right? You and I have talked about this a bunch before.

It's not great, but it isn't terrible. It's not autumn of 2008. Absolutely. Autumn of 2008 when Kevin Warsh was worried about it, hyperinflation. Right. So the question is like, how much worse would those numbers get if, in fact, the economy really, really soured if we had mass layoffs? And we're actually, I think we have some recent Wall Street Journal headlines about that. Yeah, we have those. Yeah, here we go. Meta laying off 10% of employees in May, Microsoft doing buyouts, Nike, cutting people. So these are things that are happening. And so I would just put the consumer confidence numbers within the broader picture, which is maybe they aren't indicative of where consumer confidence really is. But an all

All time low in the survey doesn't mean that things are actually good in terms of consumer confidence, right? It may not be actually worse than it's ever been, but it's directionally not good. Yeah. We do have slightly rising unemployment numbers. We do have very flat job growth. We do have somewhat persistent in inflation, which is starting to move up. You set the spot food prices to me, which are up by 70%.

up by 7.9% year every year from March, which is just a pure fuel cost. So, like, things are happening in the wider economy that do make sense as to why people might feel not good, even if it isn't the worst not good they've ever felt. Like, directionally, this is probably right. I think we can say that. Yeah, I think that's right. And the fears about the future, I think, are very well grounded at the very least. Like so maybe you would, at least I would be a little bit more skeptical about how people feel about the economy today, how they rate economic conditions today.

But I do think that that apprehension about forthcoming economic conditions is really legitimate and valid, particularly since like you mentioned food prices going up. You know, that was commodity prices for food. And as you note, that price increase is solely driven by higher diesel costs. That's not the only input that goes into food. Fertilizer has also gotten a lot more expensive, and that hasn't been passed down the food chain. The planting season cut off is like next week, I think, or something. Right. So we haven't even felt the full impact of the warflation here.

We've only seen little tiny bits and pieces of it, and it's going to get a lot worse, I fear, particularly if the Strait of Hormuz continues to be effectively closed off. for the near future, all of the alternative routes. Pardon? I'm not worried about that. The president said last week that the Iranians had promised to never close it again. So, problem solved. They pinky swore.

So I'm sure it's fine. So very quickly, Jamie, you could throw that other thing up now because, Catherine, I would like to dunk on people I hate. And so Axios did this little survey of who people blame for high prices, because a lot of people are very upset. My favorite, you go all the way to the bottom there, 76% of Republicans blame Democratic members of Congress for high prices. I just think that's amazing. I would like to sit down with those people and ask them how.

How are they doing it? The question may be phrased as, who do you blame for high prices? But the way people hear it is which party do you hate more? And that's how, that's to some extent. Why would you say, see, I think that's infantilization. Yeah. Like, I mean, people hear the words. If they're, it, it isn't like they have some auditory problem that prevents their brain from processing.

They choose to interpret it a different way or they really believe this. Like, I don't, I just, this is like, you and Sarah Longwell are always like trying to make excuses for the voters. I'm like, no, they're the same as you and me. Okay. You know, you and I can hear the actual words coming out of people's mouths. So can the people who answer these surveys. Fair. Okay.

Okay. Yeah. Last topic. Yeah. Sorry, go ahead. I didn't mean to cut you off. Go ahead. There was some, sorry, I forget what it was, but there was some exchange recently.

Oh, you know what it was? I think it might have been Kevin Warsh. I'm trying to remember where somebody basically blamed Democrats for the inflation that we have today. Oh, good. Yeah, anyway, it doesn't matter. Go on. Okay, so Spirit Airlines, the present to the United States, seems to be purchasing maybe a 90% state. Wants to.

Wants to. We're going to do this. I am, I love this for America. Yeah. I think it's great. I think, you had a sensational newsletter on this yesterday, one of your best ever, which is a high bar. I would encourage people to go sign up for the receipt.

Go to the bulwark.com and sign up for the receipts. This is the airline America deserves in 2020. The worst airline in America, which is a competitive category, but the spirit is worse than frontier, I think we can all say, worse than JetBlue. You know, Sam Stein disagrees with you on that. We had this whole back and forth about whether whether Frontier or Spirit was really deserved like the superlative for worst possible airlock.

Like I said, competitive category, but I would give it to spirit. It sucks. Either way. It's a terrible, terrible thing. And, Jamie, can we just talk this very, very funny bit that you found on this? Airlines flight, and there was like a medical emergency. You know what they come on there? Like, is there a doctor on board?

And everybody was panicking. And I was just like, I go, there's no doctor on a spirit airline's flight. There's no medical professional on this flight. This ticket costs $40. We're all unemployed, okay? So that's a very inspired bit. I would say that, as you point out, this is an airline which has filed for bankruptcy twice in the last two years. On the other hand, so you made the point that like, this is a bad, this seems like a bad bet for American consumers.

I don't know that it necessarily is because we live in a command economy. And so if in 18 months the president says it would be very good, you, David Ellison, have something else coming in front of the FCC that requires my approval. Don't you think you should own an airline? I think that whoever it is who needs something from the federal government will jump to go and pay whatever is asked for. Okay. Because that's the world we live in now. Yeah, I mean, that may well be the case. Maybe it'll be the case that Trump has done.

It would only be a bad investment if we were still in like a quasi free market system. Yeah, yeah. Maybe Trump did good stock picking here. I don't know. The problem is not. By definition, the president can't do bad stock picking because the president wields so much power over the economy that people will always do what he tells them to do. And see, you'll find some rich person to buy.

this out from underneath him so that he does well. Yeah. Well, okay, so a few points of pushback here. Sure. Maybe it'll pay off. Maybe it'll be a great investment for the U.S. taxpayer, despite the fact that, by the way, the reason why Spirit is finally maybe facing liquidation is that Donald Trump has spiked jet fuel prices. And, you know, like adding. There is an arsonist firefighter aspect of this. Exactly. Yeah. He did them in, basically. They were already struggling. As you mentioned, they had already filed for Chapter 11 bankruptcy protection, which doesn't force liquidation. It allows you to reorganize your debts. But now they're dealing with like a $360 million additional cost on their balance sheet as a result of Donald Trump.

And I don't know that you can sell enough $40 tickets to fill that hole in the balance sheet. Okay. But let's say it pays off. The problem isn't only about whether stock price go up or down, it's also that this is like a huge distortion of how markets allocate capital, which maybe sounds like an abstract thing to worry about. But it's a big problem. It's why economies that have better rule of law or countries that develop better rule of law tend to have better economic outcomes because you don't have investors making choices about where to plunk their money based on who has the closest ties to the president or who has least pissed off the president. You end up with, you know, actually, the Bloomberg had a great story about this a few months ago

about how people who were trying to figure out where to invest. They were looking a little bit less at things like, does this company sell a good product or have good management practices or have talented people working for it and more about what political connections do they have to the president, which is not a good state of the world you want to be in. It ends up with lots and lots of market distortions. It ends up in the long run with, you know, worse living standards for the people because, like, everybody's trying to shoehorn their business model into, like, what will appeal to the president the most as opposed to what will produce the best product

and get the most customers and all of that. So this is bad even if this stock pays off, and I am doing. dubious that it will pay off. One thing we haven't even talked about is like Donald Trump actually has experience running an airline and that did not end up so well. Tell people about the Trump shuttle. Yeah. Tell them about the bathrooms. Yeah.

So Trump shuttle, Donald Trump owned for a whopping three years. It never turned a profit. He sank a lot of money into renovating the bathrooms to have gold colored laboratory fixtures. And yeah, it went fast. Not actual gold. Just gold colored. Yeah. Do you know why it ultimately went bust?

I feel like it had to do with fuel prices. Yes. Yes. Yes. But that war was bad because Donald Trump didn't start it. Very different. I forgot that part. They're very different, Catherine.

Yeah. The words that Trump starts are good wars by definition. And wars that were not started by Trump are bad wars. Yeah. So I have an economics question for you. here, though, because when I look at the spirit takeover, my first immediate concern is actually the effect this has on the other airlines, because in a moment of, like, crisis for the industry caused by rising fuel costs, having the least fit of the airlines go belly up should be

a slight lift to everybody else, because suddenly you can pay a little bit less for labor, because there's more labor in the market. You have more pricing power for tickets because the low-price carrier has been cut out, and so it gives you a little more pricing power. And so having Spirit go away would make it like, you know, this much easier for all the other airlines to try to survive. And so this, it isn't really just about helping Spirit.

This does make life a little harder for everybody else, no? Yeah. And maybe it's at such a small degree that it doesn't matter. Yeah, and what we ultimately care about is what's good or bad for consumers, not what's good or bad for the competitors for spirit. So I don't want to like put too much weight on that. Well, I just mean helping them survive in a moment. Helping them survive. Yeah, this is in normal times, like you don't really care about what's good for them.

But in a situation where the fuel costs are going to get so high that it is possible that this will just be the first carrier who is pushed into real problems? Yeah, I mean, they're all facing problems. There have been headlines every day about airlines cutting flights. This has been more of a problem in East Asia and in Europe where, like, you know, I forget who I left Hansa just announced a deal. Yeah, because of jet fuel. Yeah, they were like three weeks away from losing jet fuel from being out of jet fuel or something. Yeah, but it's going to be a problem here in the U.S.

A huge problem because a lot of the jet fuel that airlines in the U.S. use comes in, it's not actually made in the U.S. or not refined in the U.S. because of like where the refineries are and everything else. A lot of it comes in from Korea and is sent to the west coast of the U.S., but Korea has been, I guess, ratcheting back their exports to the U.S. are imports of their jet fuel. So it's going to be a big. Yeah, they want to hold on to it. So it's going to be a big problem here very soon. I mean, the best thing that Donald Trump could do or could have done would be like not starting the war as opposed to starting the war, noticing all of these problems, not taking responsibility for those problems, and then like throwing taxpayer money

at the cleanup effort, which is what this is, right? When Donald Trump is talking about bailing out Spirit Airlines, it is using your and my taxpayer money to bail it out, which by the way is also not very popular, but also probably not a great idea. So and there's not going to be enough money to out all of the airlines. We have bailed out basically all of the airlines before. It happened during COVID. It's not unprecedented, but it is extremely expensive. And again, a much more expensive than just not starting the problem in the first place. So I want to just close us out here by asking you if you have like a theological view about bailouts, because I do not. Like my my view of bailouts is basically that every bailout question is a prudential decision

in that there are there are times in which the government really has no business bailing out a company or an industry and there are times when it is very important that the government bails out that company or industry and that part of the reason you don't elect game show hosts as president is because you want the people who have to make those decisions to be like not perfect, they're never going to be perfect,

but like a little bit better than the average person. But maybe that's wrong. I mean, a lot of, you know, if you go to the Wall Street Journal, they're at a trial page, think that all bailouts are terrible. And so do you have like a holistic view of or philosophical view of bailouts? Like bailouts good or bailouts bad? No, I think I'm like you in that there are some bailouts that are important because of the, the knock-on effects that might happen if the company goes under, right?

The externalities. And sometimes those things are not obvious to the general public. And so you get a lot of blowback. This happened with TARP, with the bailout of the banks in 2008. Right, yes, 2008. Which everybody lays at Obama's feet, but it was actually under George W. Brush. Yeah.

Yeah. In any event, like that was super unpopular. I get it. These banks behave very badly and they don't, like, on some moral level, like it feels terrible to rescue them. But you're not rescuing them because you're worried about the bonuses or whatever of the people who work there. You're rescuing them because the financial system has its tentacles into everything else in the economy. And if you let Wall Street burn down, you're that means Main Street also burns down. And, like, that's not always obvious ex ante. So, so, like, that was a really politically difficult thing for politicians to deal with, I think. But it was ultimately the right thing to do, even if it's not obvious. Meanwhile, other kinds. Could have been a couple with some criminal prosecutions. Well, the problem, yeah.

I think it would have been easier to swallow had there been criminal prosecutions of the people who made billions of dollars through. Yeah, I mean, allegedly criminal activities relating to fraud. Yeah, well, the problem is that a lot of the stuff that they did was not illegal. Right. So it was bad and subsequently became illegal through some measures in Dodd-Frank, which passed after all of this. And some of it was like hard to nail down besides. But yes, there was plenty of bad behavior to go around. I don't know that we need to relitigate all of this.

But there are other times when, you know, well, the best medicine is preventative, right? It's to have a system where something is not too big to fail. It doesn't cause systemic issues if one institution goes under. And like in the case of Spirit, I don't know what the systemic issues are. Like what is the thing that they are worried would happen if Spirit goes under. It will be the case that a lot of people will lose their jobs. I'm not going to dismiss that. But there's a labor shortage, as I understand it. at other airlines. And so I'm a little less worried about all the pilots, for example, who have already been in short supply, not finding a place to land, so to speak. So, you know, it's not that that's unimportant, but like you have to think about what's, what is the thing we're worried about preventing? And is that better or worse than the remedy that is being administered in this case, a potentially $500 million cash infusion courtesy of, you know, the American taxpayer. It's not clear that that shakes out. Then there are other things like,

you know, the bailout of the auto companies after the financial crisis. And I have less defined views on that. So yeah, it's case by case. In your view, like, what are examples of good bailouts versus bad bailouts in recent history? I think the GM bailout after the financial crisis is probably good. Critically important to keep that type of manufacturing happening in the United States for sort of national security and defense purposes. And also a key part of this is,

are you looking at critical industries which are being damaged as collateral damage from something that's happening elsewhere in the economy, right, which is what was happening in 2008, 2009 with GM. There are, I mean, so, during the financial crisis, and I always get this wrong, I forget who went first, whether it was layman or bear. Bear. But there was a rule of thumb, which was I think you have to, which is it, you bail out

the first one, but you let the second one fail, or is it you let the first one fail and you bail out the second one? I think the idea was they bailed out Bear Stearns. And the reason for that bailout, the logic behind it was you got to start. stop the panic. And so if you bail out the first one, the signal you're saying to the market is everything is going to be okay, don't panic. But with the second one, you can't bail them out because you've got to show the rest of the market, okay, they're going to be penalties here. Like, you know, people are going to have to take their medicine. And so those sorts of things, like I am interested and I am listening to those sorts of calculations when it come where you're

talking about contagion, right? Because that is a, when you're looking at contagion, that's a, different question than just company X, is it bad for consumers or workers if it goes away? Like that is a, you know, we have a big systemic problem here. Can we stop the spread of it? Yeah. If you talk to regulators who were around during that period, they will maintain that they were, they had the legal authority to help with Bear and not with Lehman. I don't remember what exactly the rationale was and I'm not a, you know, regulatory lawyer or

whatever financial lawyer. So I don't, I don't know if that's bullshit or not. But that is certainly the argument that they have made that it was not strategic. It was that they were able to do one thing. They were not able to do the other thing. I mean, the other piece of all of this that matters, in addition to like, is it a waste of taxpayer dollars? Will it feel unfair to do these kinds of bailouts is the idea of moral hazard, which is that are you encouraging bad risk? Right. Encouraging. It's really about morality. It's are you encouraging people to take bad risk, which is going to hurt everybody else even more down the line. Yeah, yeah.

So, and which is a really hard thing to wrap your head around. And it's like, if we bail out this company now, you know, if they bail out in your example of Bayer versus Lehman, if they bail out Bear, does that encourage somehow worse behavior from Lehman? I mean, probably the dumb things that Lehman did. They had already done. No, because they happened after three weeks, right? I mean, that was a, that was an all hands-on-deck.

Holy shit. The global financial system is unraveling. Yeah, yeah. Yeah. There's no more of a year. Yeah. I don't know. It would be an interesting question to have someone on,

like someone who actually works on the legal side of all of us to talk about at some point, maybe for one of our future live. Yeah. I mean, I would say this is a very niche topic. The number of people who would be interested in that conversation can be measured in the 10. I mean, it may become less niche in the coming year because Donald Trump is doing all of these things to undermine the business model.

of lots and lots and lots of companies. So the question is like, do the farmers deserve a bailout from the things that Donald Trump has inflicted on them? Do, you know, other companies, like companies that have been paying tariffs, companies that are going to pay higher jet fuel prices or higher fertilizer prices or higher plastics prices or anything else? Do they deserve a bailout? It's not their fault that Donald Trump launched this war. And I think actually this is going to be a pretty timely, unfortunately, conversation in the months ahead. Yeah, except for the fact

that we know how this will go, which is that politically favorable groups to Trump will get bailouts and politically unfavorable groups won't. So it's a nice academic conversation, but we know how it's going to play out in reality. Yeah, sure. Okay. Catherine, it was fun, as always.

We'll be back next Friday to talk about all the fantastic economic news from this golden age of America where we are the hottest country on Earth. We were dead. The country was totally dead. We didn't even have a country two years ago. But now we're the hottest country in the world. A guy told me this, a big, tough,

strong guy. He had tears in his eyes. He said, JBL, sir. He said, sir. Sir. We're so hot right now. We're like Hansel. We're so hot right now. All right. Good luck, America. We'll catch you next Friday.