TRASHFUTURE - BlackRock Fink feat. George Pearkes

Episode Date: December 15, 2020

We are joined by George Pearkes, macro strategist at Bespoke Invest and all around financial funnyman, to peek under the hood of the world's largest owner of assets: BlackRock. What do you do when you own nearly everything? As we will see in the episode, you try to own more things until you can really do away with that "nearly." Also, we talk about Uber's decision to drop its self driving car division and the thrilling conclusion (?) to Laguna Beach's billionaire battlefront, as bond king Bill Gross's war with his neighbour enters its denouement. Also, special thanks to Neoliberal Dad on twitter for cooking up some of the core ideas explored herein. If you want access to our Patreon bonus episodes and powerful Discord server, sign up here: https://www.patreon.com/trashfuture We support the London Renters Union, which helps people defeat their slumlords and avoid eviction. If you want to support them as well, you can here: https://londonrentersunion.org/donate Here's a central location to donate to bail funds across the US to help people held under America's utterly inhumane system: https://bailproject.org/?form=donate If you want shirts, you can order them on our new web storefront! Get it here: https://www.trashfuture.co.uk/shop *WEB DESIGN ALERT* Tom Allen is a friend of the show (and the designer behind GYDS dot com). If you need web design help, reach out to him here:  https://www.tomallen.media/ Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and Alice (@AliceAvizandum)

In the old country, we were taught as very young children that there's no shame in supplicating yourself when you respect someone. On behalf of Capitol Pictures, the administration, and all of the stockholders, please accept this as a symbol of our apology and respect. Hello and welcome again to this free episode of TF. It is that time of week again. We're all here. It's Riley Milo, a rare Nate. Yes, I'm here in studio. I built the new recording machine in the studio last night and today. It didn't work last night and I cut my hands numerous times on the radiator blades for the heat sink. I bought a cat with my bare hands, but I'm happy to be here. It's a lovely day in London. The sun set at like 3.50 p.m. Absolutely gorgeous. Luxury. You got 3.50 p.m. It set an hour after it went up at like 8 p.m. The most British thing of all is to try to campaign to somehow make there be no daylight so everyone suffers. The sun is actually scared of Glasgow.

And we also have Hussain and Alice. Hi. Hello. I was going to say before we start that like, because Peter Hitchens' whole thing is that he wants to just like get rid of daylight saving time. And I feel like he's been on this campaign for so long that he just wants to like eradicate time as a concept. So I imagine that like his next step will be to like abolish the sun and I'm completely with him on that. Yeah, I also support Peter Hitchens on this one. That's right. Yeah, Peter Hitchens' war with God. The only reason daylight savings time is a thing is it's a peon to farmers and they've already got enough shit out of this already.

Well, I mean, also, I'm sure you could get people to abolish daylight savings time or time in general in Britain if you just make the argument that Islam is the most time compliant religion out there. That's right. Yeah. All of the dads would be like, yes, ban time. Why do you want to know what time it is so you can face Mecca? And we are also joined by our guest, George Perks, who is the macro strategist at Bespoke Investment. George, thank you very much for coming and wasting your time with us today. Oh, it's a pleasure to be here, y'all. I'm looking forward to completely wasting my afternoon. Nice.

Well, hey, what will be more of a waste of time? The hour it took us to get the computer to work, all the hour we spend recording the episode. Well, listen to decide. Yeah. So if you have an opinion on that, fill it in in your TF comment card and then mail it in a self-addressed stamped envelope. However, I have our first thing to discuss today. It is that wouldn't you know it Uber has gone ahead and sold self-driving car business? Huh? But that was the whole thing that made them different from like a cab company, but more extractive, right?

Now, George, I want to sort of throw to you right here because I remember the Uber S1 set two conditions for long-term profitability, which is one, that all public transport in the world has to shut down and be replaced by Uber or something like Uber. Step one, we kill every public transportation system. And two, that all of those Ubers that were replacing public transport had to be self-driving AI cars. So George, when a company loses its path to profitability like that, what's going on? Yeah. I mean, Uber was just never a very good business. It sounds crazy because they were able to grow so quickly and get so big. But at the end of the day, you either had an unsustainably high like rake that you were taking off of the labor of the people that were actually driving cars and the depreciation on those cars.

Or you had self-driving cars, which were extremely capital intensive, not just to like do the R&D and figure out how a self-driving car would work, but actually build the damn things. So yeah, you know, the original valuations were just really crazy because this company was not going to make money for the foreseeable future. And if they were going to, they needed to have a huge amount of invested capital to do it. So I never understood Uber and I still don't understand why it's as valued as high as it is to this day. Are we saying this is some kind of a Lyle landly monorail situation? I have a theory about this, which is that there is a significant amount of value to be found in step one. We destroy all public transportation. And then after that, everybody else kind of gets off of the Uber.

Well, I was going to say bus. Yeah, I mean, the problem with this is that anybody that had a sufficient amount of capital could just come in and start a similar company. So like Lyft is their major competitor, but there's nothing stopping someone else from developing rideshare software, spending a bunch of money upfront to subsidize riders and drivers, and basically taking over whatever market they happen to be operating in. Trash future mini cab hailing. Exactly. Like trash future could absolutely raise $10 billion and get to it in London or Glasgow or whatever other pocket little city. We got to change the name of the Twitter account again.

I just changed it back to podcast. Well, I think is really interesting about this, right? We talk a lot about sort of investments in lost chasing and stuff. But we look at this area. It's it's a kind of version of public services that are subsidized to the point of that are basically public services that are subsidized by capitals. They can create monopolies while emissorating workers, but it's still venture capital being given back to Americans in the form of or and Canadians and British people venture capital being given back to people in the form of a billion different subsidized rideshare companies that are all trying to become monopolies with fake AI projects. It is essentially a kind of parody of public services.

Listen cupcake. I'm lost chasing Statham and if I don't monopolize public transport in the next 15 minutes, my arts going to literally explode. It's a while since we've heard from Jason Statham. My evaluation is going to become literally insane. So here's a little bit more of the details of this. What they're doing is they've essentially sold off their their autonomous driving unit, which again could only like drive while killing an average of like two or three pedestrians in like gridded cities that had barely any buildings and no pedestrians. If they sold it to by the way, a self-driving car startup called they split it off the called Uber Advanced Technology Group. They've sold it to a self-driving car startup called Aurora and localized entirely within your public transport where and it is an equity deal valued at four billion, which is basically a major drop in valuation for ATG.

When we read, which was used to be valued at 7.25 billion just last year, almost as though people are realizing that this isn't really possible and it's just become a kind of marketing hot potato. Well, I think it's worth mentioning that like autonomous vehicles are going to happen one day. It's not like that can't happen and it's not like it wouldn't be a very valuable thing to get right. The problem is it's just a really, really hard problem to solve. And then once you solve the technical issues with R&D, you have to actually build the things. I mean, this is not something that's easy to do. If anyone's followed Tesla, seeing them get up to scale has been like watching, I mean, it's just a complete clown show, right? It's all sorts of issues.

It takes years and years and years. So that's really the issue here. I mean, it's not that there's not some value there in autonomous vehicles like and it would save everyone a lot of time, but actually solving the problem and then getting it out to the world hard to do. One also imagines that if you're, for example, you're built too fast Tesla Model 3, like the doors don't close because they're cut to the wrong size. That's a slightly less significant problem than my autonomous vehicle malfunctions in such a way that it fails at its job, which is to not kill people. Well, that also happens in Teslas. That is true. There's the autopilot, batteries catching on fire.

Get yourself a car that can do both. Yeah, it's sort of the way I think of this as well, right, is it's who's building them, who's developing them. If you have like Travis Kalanick and Dara Kazarashahi, like if they're the ones who are at the helm of trying to develop like path breaking technologies, then of course they're going to just they're going to keep cutting corners and try to like, you know, think about the next quarterly statement to shareholders and they're going to or they're going to do it in like, let's in the way that they actually did it, which is if you recall, they tested all these self-driving cars in gridded Arizona cities with barely any pedestrians, as opposed to basically anywhere else in the world. This is the city of the future. You'll all live in the desert and no one will walk. Deal with it.

That actually is the city of the future. Ironically, everyone will live in the desert. Right. And if we want to think about a little bit looking ahead, we know what Uber and Lyft need to do as saying with DoorDash, all these companies that are saying that we're we are trying to automate stuff and all this like psycho labor exploitation is just happening for now until we can automate it. They basically the only thing that they have left to do the only thing they can do to stay a profitable company. So it seems and George, I welcome you to correct me if I'm wrong here is try to get involved as involved in politics as possible and push like universal basic prop 22 around the world. Basically, right. And also kind of horrifying.

I mean, there are some exceptions like food delivery was a pretty good business before we had the folks from Silicon Valley get involved in it. So I think there's definitely some some case to be made that a company like DoorDash is going to be around for a long time to come. That said, you know, growing, you know, 100% year over year in terms of your revenue and, you know, earning 30% margins. Well, maybe not, which is sort of what they've done in the pandemic year because everyone said to stay home because the world sucks. But yeah, I mean, at the end of the day, all of these companies are basically an effort to extract more value from labor through sort of informal relationships that aren't how labor market typically worked in the United States of UK or Canada or wherever. And, you know, the best way to do that is to do an end run around regulation. And, you know, that's what's happened in California.

And, you know, that could happen in the United States as a whole or elsewhere as well. And, you know, fortunately, there's no risk of that happening at a federal level in the U.S. because the last I checked the Biden Harris, the Biden Harris transition team wasn't just mostly Uber and Lyft, Uber and Lyft alumni as well. Bad news, mate. Bad news. Yeah. Oh, are you all buddies? But those two guys in the same room, they hate each other. Are you, wait, are you saying that a bunch of Uber alum? Oh, no.

Great. Cool. I love the Democratic Party. Thank you very much. Yeah. Because Uber is a woke company, you know? Yeah. Well, they're sending out mass mailers now.

I don't know if you've seen this. Do you work for the NHS? Get a free starter on Uber Eats. Cool. That's what I'm saying. Thank you. I mean, they also had the billboard here in London that said, are you racist, delete Uber or something like that. Something along those lines.

Download the right wing competitor ride hailing app, which I'm sure exists. Also called Uber. Wayo. Zingers coming out of this one. Yeah. So I just, I think it's very interesting that essentially what we've undergone with Uber at this point is the prestige. The realization that there was never anything there. Just dumps the smart car into a basement full of dead smart cars.

Yeah. That's right. So as George, as you said, it's basically like we've always known it's an end run around regulation. It's just now it's completely undeniable that that's what it is. Like there is. Basically. This is the season, the season three trash you should promise of all of the masks get dropped everywhere. And Uber is just like, yeah, no, fuck you.

This is, this is our business model now. Yeah. It's a, oh, you wanted, you wanted sick pay. Well, sorry. If you didn't realize there's a pandemic, we have to pull together. Anyway, we're, we're changing, we're Uber X, the X and Uber X is now the X from folks. It's extra woke now. We're the Democratic Party.

Yeah. People of Uber. Yeah. It's something that I would just interject. I thought this was funny. And George, you probably know, I mean, I imagine you more about this than I do. But I just recall hearing this about in London, obviously you have, you know, it's, it's quite a good paying job to be a black cab driver, but it's, it's like a guild. Getting in is, is incredibly challenging.

It takes years. You have to memorize the famously easy to navigate streets of London. You have to. Now you apply for Minance. Exactly. You have to be English, but you can't say you're English because then you'll go to jail. But when Uber first started in London, if I remember correctly, like drivers, the incentive to become a driver was great because people were earning, working not even over time for, you know, year round, we're earning six figures in pounds, which was an incredible salary. But now it's not.

Now it's, it's, it's less subsidized that the payouts are less for new drivers. You don't get far less and you're exposed to more risk. And so I'm just sort of wondering like, do you feel as though this is going to be the model going forward for all of this stuff that it's going to start out like to convince people that this is a great thing to abandon, previous things they relied on or things they thought were dependable to take on this new technology and then it's slowly, slowly just tightening the vice once it's taken hold in the market. Yeah. I mean, if you look at the business model that all these companies engage in, and this is true of Facebook as well, DoorDash, Uber. I mean, pretty much anything that's come out of Silicon Valley and is large in recent years. The whole idea is this idea of the platform where you're, you're sort of standing in between the driver and the writer and you're collecting a rake off of matching them up with your amazing software.

And, you know, that to build that platform and lock people into that platform through patterns of behavior or that's their main income now or whatever. The way you do that is by incentivizing them to do it at preferential rates, whether it's cheap rides or good pay for the drivers initially. And then when everyone's locked into this platform, when you're the only rideshare company or when a lot of people are depending on you for income or a lot of people are depending on you for transportation, you can squeeze them for margin. I mean, this is a pretty classic effort at creating a monopoly. And it's really interesting to sort of see the as this, this, this business model has become has proliferated and become more, you know, widely known. We're starting to see real pushback on the idea of monopolies for the first time in certainly my lifetime and arguably longer than that in the United States. I mean, this past week, Facebook got hit by a monopoly suit by the Federal Trade Commission and 48 attorneys general in the United States. It's not hard to see a future that is unfortunately for the name of this podcast, not so trash where there's a political blowback against them.

And the idea of monopolies, you know, doesn't become as attractive to people for a bunch of reasons. And there is like in American history anyways, a long tradition of that. So, you know, I don't think we need to get to sort of like negative about the future. There can be political pushbacks to this sort of system. But definitely if these companies get their way, what they're trying to do is lock people into a monopoly and extract rents from it. And that's not great to put it mildly. And do you think, I mean, I know Ryder's going to move on, but do you think that given the, I mean, we joke about this, but the proliferation of Uber and Lyft alums in the incoming administration, do you feel like that's going to make that harder? I mean, because to me, it just sort of feels like a lot of my, my, I don't have any insider experience with this sort of thing.

But my notion is that when, you know, your company gets its former general counsel or whomever in a presidential administration, it's not because they're going to be there to fuck over the old company and get revenge. Like it's, it's, there's going to be a benefit to you. For sure. But at the same time, I do think it's interesting that there was such a broad consensus around, you know, this idea of anti monopoly suit towards Facebook. You know, 48 states, what, what can you get 48 different states to agree on these days, right? Like not that much. And it's worth saying that the FTC is, is a Republican majority right now. So, you know, this is not like typically a group that's going to go out of their way to be super aggressive towards business in terms of regulation.

You know, a guy like Josh Hawley, who is like really gross from Missouri, he's a neo fascist, not a fan. But like he's a big advocate of this sort of type of behavior that's quote unquote good for the little guy. Of course, he finds other ways to mess with the little guy. But that aside, it's, it's also regular Republican psychoshit with a mad at Facebook for censoring their posts. That's part of what's animating this. But at the end of the day, you know, the fact that there is this bipartisan consensus around Facebook's anti competitive behavior gives you sort of hope that, as I said, that the future isn't quite as trash. As it could be if all these companies got their way. And I don't know how it'll play out, but it's certainly not a good sign that the executive branch is going to step in to sort of, you know, regulate or, or push back against them if you've got a bunch of alumni from these groups, you know, sort of making policy from day to day.

Yeah, well, what's going to happen is that they're going to decide that the the monopoly of workers in labor unions is unfair against a few scattered software developers like uber. Yeah, we have to break up the people. Exactly. We have to break up the people into the component parts so that you have one arm being paid for piecework for door dash and one arm getting paid for piecework for uber and the legs doing mechanical Turk stuff with a foot mouse. Can't have too many siblings anymore. I do love the idea that you get like a modern antitrust breakthrough, like similar to what happened in the early part of the 20th century in America, solely because there's a weird coalition of Democrats who want to regulate to some extent tech companies and Republicans are just like, I my posts don't get enough likes and this is a crime. It's the same as it ever was, right? Because like the the first wave of antitrust legislation was like half and half. Holy shit, there's like brains in my food and the other half was just like there's a Serbian man touching my food. The things to remember here as well, right, is that when when when this act, because I'm remembering back to the episode we talked about Sicilian and J.

Paul and stuff, we looked at what the what the sort of consensus was produced between I get the Democrats who in unusual fashion seemed like actually concerned with the with the mean with meaningful like transformation of these companies and the Republicans who, you know, wanted their wanted their sort of anti mask rap video to be able to be shared more broadly. It was very good to be fair up there with Sean Kingston's 9-1-1, but that that can they weren't really able to come to a consensus and the group found itself at the mercy of the moderate Republican who said he could bring like the like the hooting squared answers like Greg Stooby back on board. If you just strip out everything meaningful, you know, so it's I and I'm I'm personally slightly concerned that yeah, but a Biden administration would be much more interested in looking at these kind of let's say third way approaches. Greg Stooby insisting on an addition to the bill that he actually cannot in fact believe that it is not butter. Stop tricking me. I have a question for the I can't believe it's not butter corporation. I'm confused. Is it butter or not? This is a this is a kind of fraud on the American people.

You think I am too stupid to tell whether or not it is butter, sir. So with leaving leaving Uber in the in the rearview mirror, I suppose, for a little bit, hey, I want to move on to to the life of the mind to talk about about Larry Fink and his big dreams. Larry the think George, can you tell us what exactly is BlackRock? Alright, so BlackRock is a company that sells ETFs and other investment strategies. So basically, if you've ever bought in your Robinhood account, which I know your listeners are very into their day to day speculation, or, you know, for retirement or whatever. If you've ever bought SPY, the S&P 500 ETF, you have bought an ETF that gives you broad exposure to the stock market. BlackRock runs a hideous number of these investment vehicles. They're very simple. Basically, a company buys a portfolio of S&P 500 stocks or a trust buys a portfolio of S&P 500 stocks, and you buy exposure to that trust, you buy a share in that trust.

And they're really convenient because instead of going out and picking stocks, you just get broad exposure to a group of stocks. So maybe you really like banks, or maybe you really like consumer discretionary companies, or maybe you just want the market as a whole. The Spotify playlist of investing? Yes. I mean, basically, and you know, this sounds like it wouldn't be that particularly useful, but the thing is over time, very few people are actually smart enough or lucky enough to consistently deliver higher returns than like the market as a whole. It's very hard to do that. So if you're the average investor, most of the time, what makes sense is just to buy broad equity market exposure and sort of take it as it comes and not worry about which specific company is doing what. And so BlackRock has a business doing this. They're one of the biggest fund providers in the world, and you know, they have a huge portfolio of stocks that are owned through these trusts that they give exposure to end investors to. And that's basically their business. There's a little bit of other stuff bolted on to it and probably not super germane to the conversation we're about to have, but they're the ETF warehouse basically. This is why I've personally resigned myself to the fact that I can't tell which one's a butter or not. So I buy a selection of butters and non-butters and I mix them together in a big pot and I just spread that on my toes.

Then it works out in the end. A few facts and figures here. BlackRock has eight trillion assets under management and it is the largest shareholder in a huge amount of companies around the world. And when you include when you, yeah, that's right. They own a six of this podcast and when you include its two peers in the same business, so Vanguard and Fidelity between those three. They own 15% of 88% of companies in the U.S. and then other huge swaths around the world. Yeah, it could have been very problematic if they had invested differently, slightly differently. And it's like, for example, they also own like a major portion of Saudi Aramco. They own tons of companies like throughout the throughout the UK, Canada, etc, etc. And George, as you said, most of that is just like buying everything in equal proportion for these very sort of these relatively like safe diversified ETF investments. They also have some actively managed funds where managers with the strategy pick investments and try to beat the market. And then, yeah, those passive funds. And why to bring this up, right? Is that Larry Fink, the guy in charge of BlackRock, thinks of himself as one of the nice billionaires. He is a Democrat. In fact, a lot of him.

Oh, him and the Bat. Yeah, he takes Ubers all the time. A lot of several. Again, if you want to talk about alumni in the Biden administration, BlackRock is sending a bunch of people to go. Not BlackRock is sending them, but a lot of ex BlackRock people are also legally say the BlackRock is sending them there. A lot of ex BlackRock people are also going to the Biden administration. And this was a big part of the like Kremlin ology of the Biden transition team, right? Was people were looking at this and saying, well, wait a second, this differs from, say, the Obama administration in that all of the Goldman Sachs guys are now being replaced by BlackRock guys. And what does this mean?

Can I just say that it kind of sucks that like, I remember when the Trump transition team happened and you just had like some really fun characters going into the transition team. And like, yeah, people were sort of losing their mind, but like the characters that were going in were really fun and they were really diverse. They had like these kind of, you know, backgrounds in, you know, fun entertainment and stuff like that. So not only are the BlackRock guys seemingly like far, like at least the same level of being sinister, but they're also boring. But just boring people who like probably do like post online, but all the stuff they post online is like stuff like woke stuff from 2012 about like, you know, downloading the downloading Uber to be like a freedom fighter. Every single one of them posts with their real name, a photo of them in their suit and quote tweet stuff would say like, interesting. I would say, I mean, posting aside, like, and I'm not here to defend anyone from BlackRock's posts, they're almost certainly terrible. What I would say is like, it's important to sort of have the background understanding where BlackRock isn't like a traditional investment from like your hedge fund and you're going out and you're buying a stake in a company.

Like you're actively deciding, OK, this is a company and you're using capital you have on hand to go and advance the interest of that company or whatever. BlackRock isn't owning stakes and companies for BlackRock's interest. All of the economic interest of their ownership in whatever company is passed on to whoever their end investor is. So it's important to understand that like, this is sort of abstract, but the interest of BlackRock is to continue gathering assets to manage. It's not for, oh, our investments in XYZ company to do well or our specific interest in a given industry to do well. It's no, we want more people buying ETFs and using us to manage their funds. So it is sort of a little bit, you know, a second level or like a third level away from sort of the traditional way to think about these large institutional investors that I think most people would default to and thinking about. You know, from like Blackstone or something like that, totally different ballgame.

But BlackRock itself. Please don't confuse us with Blackstone over here at BlackRock. Yeah, we're completely different bunch of guys. Yeah, I just, you know, the ultimate people that the ownership is benefiting are very different from like who BlackRock is. And so it's just an abstraction that kind of complicates this conversation, but also makes it very interesting as I think we'll get into. And they don't do typically activist investor stuff, do they? Well, so that's where this gets interesting, right? They typically don't.

Now an act just terminology wise, activist investor is somebody who goes and buys a stake at a company and says to the board, we want you to change your behavior of like whatever thing you're doing. We don't think it's the right thing to be doing, so you should stop doing that and do what we say. I'm pretty sure Twitter with Fleets was an activist investor that somebody bought a stake in them and there was like, make, do something new, change it. How good friend missed Elliott management? Yeah, exactly. So activist investors are very, very smart and very, very good, as we can tell. No, but I mean, sometimes, you know, it depends on the situation. Sometimes an activist investor will come in and shake up a company that's just been closely held for a long time and could be operating more efficiently or, you know, entering a new market or whatever.

And, you know, sometimes they're complete vultures and they're they're stripping assets and they're, you know, doing bad stuff. It sort of depends. Either way, this is not what BlackRock does, right? BlackRock is sort of passively buying into a market, into a company and sort of they have a large exposure to that company that they're passing through their investors. But historically, they haven't done a lot with that, even though, as mentioned earlier, in some companies, they've got a lot of power. They might be the biggest shareholder. They might be, you know, coming up towards a quarter of the company owned through their various investments. So, you know, when BlackRock goes to these companies, they could potentially have a lot of influence over how the company operates because they own so much of it.

And indeed, they have started to be much more interested in that. So like I said, Larry Fink is a nice billionaire. And there are several threads I want to pull in here. Like one of them is, you know, what does, what kind of political influences would BlackRock could BlackRock benefit from, considering they just want to own everything. But also like that capital is, you know, full of these contradictions and that BlackRock sharpens this contradiction between the interests of capital as a whole and individual capitalists. So I want to look at its CEO letter, which is the letter that Larry Fink sends to CEOs. It's like a Christmas round, Robin. What happened this year? The dog got sick. Mostly complaining about his son for some reason.

Well, stay tuned. He says, climate change has become a defining factor in companies' long-term prospects. So he's a big ESG guy. Last September, when millions of people took to the streets to demand action on climate change, that's all they demanded. Many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity. And I believe we are truly on the edge of a fundamental reshaping of finance. Will cities, for example, be able to, will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? What will happen to the 30-year mortgage, a key building block of finance, if lenders can't estimate the impact of climate risk over such a long timeline? And if there's no vulnerable, if there's no viable market for flood or fire insurance in impacted areas, what happens to inflation in turn interest rates if the cost of food climbs from drought and flooding?

I mean, again, with these people are very smart point that this was an excellent lesson to have written 20 to 30 years ago. Yeah. So I'm not entirely convinced that the people that he's referring to who are protesting on the street about climate change were like that financial feasibility was necessarily on any of the placards or like what will happen to our infrastructure projects? Why will the effect be on interest rates? I watched a Pepsi advertisement and I was pretty sure they were very concerned. Yeah. When she gave the Pepsi to the cop, I was like, but seriously, though, kind of change. And so, George, what I sort of want to look at, right, is he's interested in using his administrative power to like to try and say, you know, to let's say avert climate catastrophe.

What I think is really going on here is, again, from the point of view of the market, a company like BlackRock is just deeply, deeply conservative and wants to make sure that it can continue reaping the benefits from the companies that it owns. I kind of have a comparison here, a historical one, that I'm interested to see if there's like borne out or if you guys think is total nonsense, right? And that is like, I kind of feel like BlackRock financially is much like the sort of medieval political activity of the Catholic Church, right, of the papacy. In that, it has a lot of power that it has gained on the promise of exercising that power very seldom and very judiciously. And now is having to like, it's being put in this position where it feels as if it has to do more stuff. And that may threaten the fact that, like, what allowed it to gather all of that stuff in the first place. Well, I look forward to an anodyne letter from the Pope about how a large man this year nailed some letters to a door. Those Germans, you got to keep an eye on them, especially in the investing world, but no seriously. That has been borne out by history.

Yeah, exactly. Yeah. Okay, so I do think that BlackRock's, you know, effort to sort of make it look like they're doing something, or maybe actually do something. Time will tell, probably the former, but maybe the latter is actually best viewed as like the interests of BlackRock. BlackRock needs to gather assets. That's what they want to do. They want more people to buy exposure to their ETFs. So one way to do that is to say, oh, look, like we're doing all this good stuff. Our ETFs are, you know, if you buy our ETFs with us instead of Vanguard, then, you know, you're going to have someone that's going to talk to corporate boards and like actually pressure them to do something responsible as opposed to Vanguard who's just going to do nothing. So that's like a point of differentiation. Those corporate boards won't do it, but, you know, we'll have said it. Yeah, right. It's a fine line to walk, right? Where you don't want to be too much, you don't want to be literally an activist investor, but at the same time, like you want to spin it, like, that this passive investment has this sort of ESG kicker or this like, you know, positive kicker on the world.

You're basically doing mob shit like a nice company here will be a shame if something were to work. They can active interest in managing it. Exactly. And it is really interesting, though, because if a bunch of these fund companies, you know, were to start actively voting on on proxies or on stuff that happens when when questions are put to shareholders and sort of picking aggressively, you know, the side of more corporate sustainability or whatever, you know, cause you want to frame for them, like they could exercise a huge amount of power because other investors could say, OK, well, what we want to do is we want Exxon to, you know, sell off or stop investing in all its crude extraction businesses, which I mean, that's not going to happen anytime soon, but let's go with it. You know, and BlackRock might vote for that were in the past, they haven't at all. And so that's the thing that they're able to exercise is this sort of administrative power over, you know, which initiatives they're going to they're going to support as shareholders. There's also the flip side of this, where if BlackRock wants to, they can push and market aggressively ESG sort of products, and that might benefit a company, because their share price will appreciate because more people want to buy it if they're in an ESG index. So BlackRock is kind of on both sides of this thing in trying to maximize their total portfolio size, their total AUM by both marketing to investors and changing corporate behavior or sort of, you know, flexing a big stick at corporate behavior. And what I find most interesting about this, right, is that they have found themselves put in a situation where they are using enforceable administrative power to try to plan and organize the future of society through economic productivity. And the only other organization that does that is called the state. Yeah, it's good that we don't have communism.

Like, this looks a lot like like a state run company coming in and saying, OK, well, we're going to tell this or a state run, you know, administrative agency coming in saying, OK, we want you to engage in this kind of economic activity, not that kind. Yeah, well, I mean, people have been saying that for years that capitalism has central planners, they're just all guys at BlackRock or Vanguard. Yeah, it's just a straightforward plan taking place over five years. I don't see what's remotely communist about it. Interesting. I got the new Larry Fink CEO letter says that we all have to go into the countryside. Yeah, a pig melting, a pig-eye and smelting furnace in every company. I'd like to congratulate Larry Fink on awarding himself as fifth hero of the Soviet Union Award. Right. And I think that this is, I mean, this is so many things, I think, come back to like, you know, People's Republic of Walmart stuff and how that can be seen as, let's say, unrealistic. And again, there are several levels here, which is number one, BlackRock is essentially exercising administrative power in order to make sure people keep investing with it,

which basically, like, if you want to look at a market-based solution to climate change, then just hoping and praying that you have someone at the head of BlackRock who isn't a Coke brother is basically like the best you can do. And that's what I started with, who isn't a Coke. I didn't know where that was going. I hope we get a good Pope who is going to exercise moral authority, even though he doesn't really want to. Yeah, unfortunately, Rodrigo Borgia is waiting in the wings. Right. So it's, if you want to look at, if you're thinking about this in terms of risk management, then deciding to centralize all of that power in three ETF companies, essentially, seems wildly risky. And again, also, if you think that these kinds of things are important, which I think, you know, as socialists, we tend to, profoundly anti-democratic, because then this entire process becomes one of elite bargaining. And when it's a process of elite bargaining, you know, there's all the interest of the people, the interest that will be sacrificed first are of the people who are actually working to generate all of those assets that BlackRock is trying to monopolize. It's also worth pointing out, too, I think that when BlackRock is able to exercise control or, you know, prospectively looks to exercise control in the future, they're not going to have any kind of, like, microcontroller.

They're like, okay, Apple, you should push back your newest iPhone release, like, a month, because we think that's the right thing to do. It's all a very sort of loose margin that they're working on. And it's sort of, like, broad-steering, pulling, like, some very wiggly levers, as opposed to, like, you know, running a command economy based out of their corporate headquarters. Right. But it does bring up some pretty interesting possibilities around what a world looks like where there is more sort of central planning from another entity. You know, that doesn't totally do away with, you know, the current system we have, but instead sort of pushes things around or pushes things in a broad direction. You know, and that takes you back to the People's Republic of Walmart. People's Republic of BlackRock. I mean, why not? BlackRock sending a Don Draper type guy into your office to go, listen, people have believed it's not butter for some time. You've got to change the name. So, also, I want to, I also want to talk, right, about, this is two paragraphs from Matt Levine and...

Matt Levine is someone who is, you know, informs, I think, a lot of my views on sort of trying to understand business. And he writes, and I'm going to read these in full, because I think they're very good. Will BlackRock's decision to send what is essentially a strongly worded letter about sustainability reshape how corporate America does business? Well, I remember two years ago when Larry Fink sent a strongly worded letter about how companies needed to make society better, and that was supposedly going to, quote, cause a firestorm in corner offices of companies everywhere, and yet society remains remarkably the same. Now, BlackRock will send a strongly worded letter to CEOs about the environment. They arrive on the desk of the CEO of Saudi Aramco, a company where, according to Bloomberg data, BlackRock is the largest outside shareholder, a company that did a bond offering last year after the Saudi government murdered and disemboweled Jamal Khashoggi,

after Fink sent that letter about making society better, in which BlackRock was also a big investor. We wanted the Aramco bond to be much bigger, Fink said at the time, when his public relations goal was to butter up Saudi Arabia. Now it is January and his public relations goal is to butter up environmentalists. So BlackRock, quote, will make investment decisions with environmental sustainability as a core goal. Next time a big oil company is looking for money, presumably that goal will change once again. The head of Saudi Aramco sat under the air conditioner with his feet on a child's slave, eating baklava, looking out of the window outside where the street is on fire because it's 400 degrees in Riyadh and going, what about a single climate change?

I love to send an encyclical that's very like pointedly criticizing the Holy Roman Emperor and then just kind of hoping that he does what I say, but also it depends, like my entire safety depends on him not doing that, but I'm going to send the thing. Of course, he said the thing. So I think that seeing this as so much more marketing is, I think, probably quite wise. And additionally, right, one of the products that they're doing to try to nudge people into more wise investments are they're trying to nudge people into buying ETFs that don't include coal companies. And now George, I mean, coal is a hot resource with nowhere to go but up in price, right?

Like it's just a good investment and people are being moral by not investing in it, correct? Yeah, I mean, it doesn't take a genius to look at the output of coal in the United States and go, oh, OK, so that's dying. Oh, right. Guess we'll go buy some natural gas instead. You know, at the end of the day, though, I do think it's important to understand that BlackRock doesn't really care whether their portfolio of ETFs is invested entirely in coal companies or invested entirely in solar companies or invested entirely in, I don't know, poker chips from the Bellagio. What they care about is collecting a sliver of the assets and their management in annual fees.

And, you know, they want to build that in a sustainable way, but they want it to be at big scale. Obviously, $7 trillion, even if they're taking only a few basis points, is still a lot of money. So, you know, I just think it's important to understand that there is no, you know, higher imperative for BlackRock other than to make sure that they keep expanding that pool of assets that they manage. And, you know, that's their business. That's what their, you know, that's their imperative for their shareholders and so on and so forth. But at the same time, we can take some really instructive lessons around what control looks like and what administrative power can or can't do based on those sort of actions that they take to make themselves look more appealing to ETF investors. And I think the, I want to take that opportunity then to sort of circle back round to the politics.

Thinking about how many Obama alumni, like Obama may have recruited out of Goldman Sachs, but after you worked at the Obama White House, you go work for BlackRock and you come and coming from BlackRock into, into the White House, our Brian Deese will be on the NEC and Otto Wally, Adam and Ammo. Kind of a door that goes around in a circle. Indeed. As I think I deputy treasury secretary, if I recall, right? So I think one of my questions is if BlackRock's interests are getting just maximizing its AUM, then what can it hope for from, what can it hope for from the White House?

What would, what would, what would BlackRock have to ask from elected governments? I think the easiest thing to say is just they would want more people to buy ETFs. They would want more people to, you know, put their retirement savings into some sort of vehicle that BlackRock offers. You know, defined contribution pension plans or 401K as opposed to my defined benefit pension plans, that sort of thing is like a very easy, like high level incentive you could pick out. You know, there may be something that could be done in terms of SEC regulation. There may be other things. I mean, the other possibility is that a lot of these alums coming out of BlackRock just happen to have worked there

because that fits the ideology that matches them well to being slanted onto the Biden transition team. It's not a question of direct investment in a corporate outcome, but sort of a complimentary mindset or complimentary viewing the world that fits them well at BlackRock and also happens to fit them well at the Biden land. And, you know, that doesn't necessarily mean they won't look out for the home store when, you know, they're doing stuff for the executive branch. But I think that's also a very big motivating factor as well as, you know, the naked interest in advancing whatever BlackRock wants to have happen.

The trouble with the kids these days is they're very happy to go around the revolving door from the White House to BlackRock, but they refuse to circle the big BlackRock in Mecca. I was going to make a BlackRock cover joke and I was saving it to the end of the segment. Milo, you've culturally appropriated Alice. So the other thing is wait till my binder full of Percy's joke. If you want to think of, I think the way I sort of tend to think about this, right, is that both the Republicans and the Democrats kind of agree on a need to privatize social security in the States. It's that if it's the Republicans doing it, then it's going to be like, you know, my uncle's, you know,

like speedboat rental service. Everyone's at pensions are invested in my uncle's speedboat rental service. Whereas if you're a Democrat, then you value your education in the badge of superiority. It gives you over other people and you know that you can be trusted to be a technocratic manager and all this stuff. And so you reroute all the country's pensions into BlackRock and you put social security in that way or some other ETF, right? It is that ideology of we're going to sort of conservatively, passively manage things for you. And I mean, the sort of the conservatism of a company like this is talked about quite a bit by Adam Curtis as well. So Adam Curtis is very interested in BlackRock.

He talks about how Fink himself... Meanwhile at another rock, which was also black. Yeah, meanwhile in Mecca. That's how Fink was a sort of a banker who'd undergone sort of a catastrophic trade where he sort of failed to predict an interest rate transformation, lost his job and then built from scratch this computer that would laden, that would handle that is BlackRock's tech platform that has all of this historical information in it, basically of everything that's ever happened. And it just is hungry, hungry for more and more information so that it can make more accurate predictions.

And essentially act as a large risk management machine. Now, again, this might be for the more active management, actively managed funds, but you see this as essentially conservative where if you are a board member of both Etna and Exxon, then you're interested in lowering people's and lowering the costs of like that health insurers payout. Well, at the same time being interested in maximizing a lot of like the incomes of polluting industries. I think there's a really interesting parallel here between this idea of the supercomputer that can do the ultimate financial markets risk management strategy and a supercomputer that can just run the whole economy and decide where supply and demand meet and who needs what resources at what point for how long and so on and so forth, right?

I mean, at the end, and I think Curtis makes this analogy too, you're really talking about a sort of allocation system for economic resources, and it's really funny to see like a liberal or sort of centerists shop like BlackRock with all the views of the world that that brings with it come up with what's effectively a version of central planning, right? It's very strange. It's central planning whose goals are quite like, whose immediate goals are quite like tightly defined, which is yet increased that AUM number and whose long term goals are sort of very loose and technocratic and in many ways,

depending on the moral choices of individuals, you know, you're a good person. If when you're investing in your ETF, you click the no coal thank you version and that everyone needs to rely on. Everyone needs to rely on, again, being a good and virtuous individual. So, you know, it's a very sort of, it's got a lot of tensions in it. For sure. I mean, this is a problem too with the broader concept of ESG beyond BlackRock, right? I mean, there was a story this week about Facebook marketing, you know, the early version of TikTok to sort of young women or old girls, depending on your definitions, and how the ads that that generated got a lot of attention from middle-aged men, right?

Because it's these dancing girls in ads and middle-aged men love that. And some data scientists were like, whoa, like this is bad, we shouldn't be doing this. And Facebook basically said, no, it's making us lots of money. We should keep doing this for sure. So is that like less socially responsible than, you know, I don't know, building out wind farms and solar projects as well as extracting fossil fuels from the ground? I don't know, but it's not clear to me that there's like an obvious sort of right answer there. And, you know, what that does create is this liminal space where like everyone's version of morality

can be stapled onto whatever they want to define ESG as. And it's just perfect representation of your values in a portfolio, like you said. So, you know, there's reason to believe that that would be very popular with the sort of people who have lots of disposable income and are generating lots of assets right now, which is coincidentally the same group of people that handed Joe Biden the White House is, you know, mostly white, not entirely white, but mostly white, mostly upper-middle income people, mostly in suburbs across the United States. And so it's really interesting to see all these sort of confluence together into this one subject

of a relatively boring asset manager. Well, one thing that I think people that comes is a bit of a shock for people who haven't lived in the U.S. or worked in the U.S. before is just the extent to which, for example, 401Ks have completely replaced your sort of standard pension thing outside of the public sector. And, you know, I even recall in, you know, when I was in the Army, there was like a federal retirement investment thing, but that is still routed. That's still a 401K that you make contributions to. And so, like, when people talk about the possibility of, you know, this replacing Social Security, for example,

like, that gets sold as a doomsday scenario in a lot of cases. And I think, personally, I think it would be catastrophic because I feel like you could look at the example of the knock-on effects of people not retiring when they expected to because of the 2008 crisis and what that's created in the job market in the U.S. or at least did for the previous decade. As an example of, like, yeah, this could have some really bad ripple effects that we aren't anticipating. But I don't think that it, like, I guess when I rightly mentioned that previously, like, I don't see that as, like, an unlikely scenario because it's just, it's been part of the rhetoric of American politics for so long. I mean, it was a thing Clinton was planning on doing,

or at least said he had planned on doing in his second administration. It's a thing that has been kind of loaded out there as an idea that, like, wouldn't it be great if our prosperity was linked to the stock market even more? And I don't believe it's not social security. Exactly. And that's the thing that gets me slightly concerned is that this all sounds great until there's the obvious downturn or something. I mean, I guess. No, that's never going to be that. What if we just collateralize more things? Well, that's the thing, right? I thought there wasn't going to be,

I thought there was going to be a big stock downturn with the coronavirus pandemic, and well, apparently not. So everything's going to grow forever. And there are no global events that are going to prevent that from happening. Certainly not ones which might turn most of the world into a desert with no water. It is interesting to think about it, too, and, you know, back to the conversation about the rise of an anti-monopoly movement in the United States. It's a re-resurrection of an anti-monopoly movement in the United States. If you look at the sort of series of anti-poverty or, you know, collective programs in the United States that were introduced as part of the New Deal or as part of the Great Society,

you know, the big one that you really can't mess with or historically have had a very hard time messing with is social security, right? That is sort of like the the frontier for a more market-oriented, you know, you can use the term neoliberal, I guess, project in the United States to sort of move towards is that, you know, government pension scheme, right? So if you're looking to deconstruct the series of programs and, you know, policies that rose in the 1930s and 1960s, it's hard to come up with a bigger target that would be more meaningful than social security. So, you know, it is interesting to see the tides flowing in reverse still after, you know, roughly 30 or 40 years of this sort of trend of rolling those programs back. You know, one of the last big ones left standing is social security and BlackRock would be a huge beneficiary

of social security being privatized. There's no doubt about that. I'm sure that everyone's going to remember that after they leave BlackRock to go work for the Biden administration in various powerful positions that they're going to remember that they know they work for the Biden administration now. And there's they have to be honest brokers and they're only going to privatize social security if and only if it will benefit the entirety of the people of the state. I mean, also just throw out to them and they did, in fact, do this in Chile. And I know I realized like, OK, maybe it's ham-handed to make that comparison to say like, OK, neoliberalism is going to create Chile wherever it goes. But that was a thing that they did. They privatized the entire pension system.

And as I understand it, it is still privatized to this day. There's obviously some contention now about potentially undoing that. But, you know, that was 50 years ago and it's held on. And I mean, the big one, the big one in my mind would be, yeah, privatizing social security, privatizing the NHS. And it's like, well, they're kind of doing the latter by stealth. So what's to stop this from happening if you have all the ideological ducks in a row? Looking back on the privatized social security with all these BlackRock people who worked for the Biden administration, I have to admit it was a mistake putting a glory hole in the Chinese wall.

Look, I object to the pessimism of this podcast. And I say that under the Biden administration and the sunny days ahead, yes, the 401k maybe the social security may be privatized. But the companies who will be allowed to buy it will have to abide by very strict rules. For example, they will have to meet particular diversity quotas, gender quotas. They will have to like prove their knowledge of like various TikTok dances. So I feel like this is nothing to worry about. You know, we're heading for like, you know, this is a golden period. Trump is out, maybe. Sunlit uplands. I love it when my pension is gambled away by trans women of color.

So the last thing to add, I think before we move on to just someone I love talking about is also like, I like to talk about the limits of anti-monopoly, right? Because when we say capital, we say, well, who's capital? And in many cases, it's BlackRock, Vanguard, Fidelity. In terms of just the ownership of stuff, the ownership of resources, the ability to control that, it's that kind of property relation. And again, like, this is a new and strange form of ownership. When I say new, like, new compared to, you know, like owning a factory,

like it's a relatively recent compared to that. And, you know, and so something like breaking up a monopoly, it might hurt that individual capitalist. But when capital mostly just owns kind of everything in proportion, just waiting for it to grow by itself, it doesn't matter because they'll just invest in the companies in equal proportion that the monopoly is broken up into, right? It's basically turning the entire economy into one giant syndicate, right? Like one giant conglomerate where, you know, one division of the economy, like for instance, Pfizer is incentivized to price their vaccine very low

because the benefits to another division of the conglomerate, say for instance, airlines are extremely high, right? And it works out that the benefit outweighs the cost there. And that's something that you could definitely see being an issue too, is that because there's so much collective ownership via these abstracted ETF vehicles and abstracted index fund vehicles, if all the different industries are all in part owned by these people, by the same, you know, interests, then they don't have as much incentive to compete against one another. And this is something that's actually starting to be studied in empirical finance. And, you know, there is some evidence that if you've got large cross holdings across a range of companies,

from for instance, an ETF company, then competition is reduced. And the sort of benefit, you know, that one of the big benefits of a capitalist system is that there's lots of competition, right? Hypothetically anyways, and that leads to good outcomes in terms of more efficiency, lower prices, whatever, whatever, whatever. Well, what if we didn't have that competition? What would happen? And, you know, we're back to anti-monopoly, you know, trust-festing is the solution. Why don't they make the whole economy out of the monopoly? That's sort of right. You know, at least, at least, and next time someone says, oh, you're going to think about tractor production, eh, comrade?

It's like, BlackRock is thinking about tractor production, actually. But also it's hilarious to me too, because it's like, at least you could make the lame Stalinism joke about the tractor factories and stuff when you want to, you know, hit on anybody on the left in the UK who's not, you know, basically anybody to the left of fucking royalists. But it is really funny to me when you think about, like, what tractor production nowadays actually entails. It's like, at least Soviet tractors worked and didn't have, like, defeat switches, where if you changed the battery without paying, they exploded. Like, it's so much more intensely, well, not sustainable in my opinion.

Soviet tractor was fine product of Belarus. If you need potato, reliable tractor. So we talk about, like, as we've been really, because we've been talking, I think, there's been sort of an informal theme the last few episodes about, like, about looking at the macro about how, about these relationships between capital and work. Shocking, we're talking about the relationship between capital and worker, right? It's bad, folks. It's bad. But that we've, there's been a real sort of heavily leaning in the last sort of month or so on this show

about, like, we're looking at a shitty, expensive version of the Soviet Union because we have collective ownership, but it's the collective ownership through ETFs. Yeah, the collective ownership. We have slowly become the one Soviet joke where the guy goes to Moscow and then comes back to his tiny hometown. They ask him what it was like and he says, oh, it's fantastic. There, everything is for the betterment of man. I even saw that man.

Yeah. Exactly. I can't believe it's not man. And now I think we've had enough time being shown the life of the mind. So that was a very interesting, I think, walk through what actually, who and what actually owns everything. But now I want to talk about just an absolute diamond of a man, a favorite of mine in terms of people to talk about recurring guy returning

Giza. Now he now appeared on the podcast a gross of times three times. Entrepreneur Mark Tophic has had caught the upper hand in his long battle with bond investor Bill Gross. Gross alleges that their war began some months previously when Tophic's Laguna Beach home was loaned out to film the HBO series Ballers. Tophic, on the other hand, has said that it was Gross who cast the first stone when he repeatedly played 50 cents in Da Club and the theme from Gilligan's Island

at huge volumes to defend a Dale Shahouli sculpture that was purchased from the lobby of the Bellagio in Las Vegas. It is a sick mash-up to be fair. We now return to the finale of their epic conflict. So Bill Gross is trying to settle his lawsuit against his neighbor Mark Tophic that has resulted that has torn the wealthy South Laguna Beach community apart in Southern California. George, have you been following this at all?

As little as possible, but it's hard to avoid. I mean, this is just spectacular stuff. I don't think there's any better avatar for the just collective degeneracy of a certain kind of really rich guy than what Bill Gross has gotten into over the last few months. Personally, I like that Bill Gross has, because they both have this story about how they've been horribly wronged, right? Yeah, it's two insanely rich guys going to court in Florida to say,

this is the worst thing that's ever happened to anyone in the world. In the course of human history, this man playing Gilligan's Island very loud. Or alternatively, this man filming me as I play Gilligan's Island very loud. This is the worst injustice that's ever been done to anyone. Alice, I believe you have a clip. I have such a clip. I have a clip from Mark Tophic recording Bill Gross. And bear in mind, while this is happening in the background,

you will hear the Gilligan's Island theme. And Bill Gross is, at this point, wearing only his underwear. And it's like the old guy, why France kind of underwear. You're going to say either that voice or you're going to erase it. That's harassment. Harassment. I like the sexy trill on the second time he said harassment. Harassment.

Harassment. That's right. That's people going. So where we where we've landed, right? Is that Gross as has alleged number one that yes, Mark Tophic in allowing his set house to be used for it to film HBO's ballers directed by Peter Berg. Peter Berg, an inescapable director. He's always there.

Yeah, has essentially started this. Harassed him. The Boston based robot that they let loose in the neighborhood. That's right. Yeah. Bill Gross is now saying, hey, come on, haven't we fought too much? What if we just gave all of what we were going to pay our lawyers, which I'm sure now numbers in the millions of dollars over this

side yard dispute to Orange County food banks instead and donate our legal fees to charity. I will point out, by the way, that Bill Gross texted Mark Tophic when they started, peace on all fronts, big boy. All the nightly concerts will continue. Do you know? Awesome. Do you know?

I'm looking at, I'm looking at what ballers is and she knows produced by Mark Wahlberg. To be fair, having Mark Wahlberg next door to you is harassment. So it's produced by Mark Wahlberg and Dwayne The Rock Johnson. And my theory is incredible. My theory is that it began because Dwayne The Rock Johnson and Mark Wahlberg didn't say hello to Bill Gross. Wait, fuck.

I want a film about the dispute between Mark Tophic and Bill Gross, where they're played by Mark Wahlberg and The Rock. That's right. This guy next door, he keeps playing his fucking music so loud. What the fuck? It's in the club. In the club. 17 years ago.

There is a kind of like weird affinity to, to what's it called, not spend a confidential fuck. I only like, I can only remember one movie at a time with the other one. The other Wahlberg one. Yeah. What was the other day? Pain and gain.

Last time. Pain and gain. I feel, I feel like this is very much there. There is like an affinity to pain and gain in this story. Which I don't know if these guys are rips like they're both extremely skinny nerds. One of them is just like hanging out in his extremely gross underwear.

Just like, and for most of that clip, by the way, he's like, he's wearing his underwear and he's just like sitting against a wall in his own garden facing away from the camera. And while Gilligan's Island blares and this guy just films him and then he gets up apropos of nothing and simply says, this is harassment. Harassment. Does it, is he's doing like Greek philosopher shit.

Just like being naked in his garden, just sitting there like yelling, thinking about stuff. Yeah. That's right. So what I, what I think interesting now is that this has become this PR war where Gross actually released his own statement on PR Newswire saying, the absurdity would be laughable even to me if I wasn't a direct participant.

Cool. For the top it is to release a PR Newswire like an official PR statement about your personal like properties dispute with a neighbor. He's so bad at this. Like I was, the place that I got this video from was it was from a local Florida journalist who had been covering this and she went to the courthouse on the court date when they were appearing

and Bill Gross's people tried to trick her by saying, well, while they were waiting for him to come out with the photographer at the front door of the courthouse, he sent a guy out to say, oh, you're too late. They slipped away through a side door and this journalist just went, wait a second. There isn't a side door. It's a courthouse and just stay there.

I just love the idea that basically, you know, to reference the thing Milo said previously, like these people have hired Don Draper's firm to negotiate their like bin dispute in their front yard. Like it's just, it's just such an absurd thing, but it just reminds me that basically when you get to a certain level of rich reality bends before you and if you want to like channel the entirety of like all the high stakes PR people that you own to

basically negotiate whether or not you're allowed to play a 50 cent song from 2003, you can do that. Bill. Also just to be totally fair to the folks in Florida. This is California. It does sound like the sort of dispute that would happen in Florida, but it's Orange County, California. Oh, I've been wrong about this.

I've had the wrong state this whole time. Florida man is Legion and fearsome, but he's not the guilty party in this case. God, a formal apology to the states of Florida. That's right. The podcast is code here. I was actually wondering what was up with the Florida connection when you mentioned.

I was like, it would make me laugh if they went the Hulk Hogan route and they had filed their neighborhood dispute in Florida just because they thought they'd get more punitive damages. That's right. If this were all bin disputes will be resolved in Florida. You've been fucking with my bins there, brother. That's actually real. I'll see you in Tallahassee, sir.

Lib Dem Manifesto 2024. Remove the all bin disputes to be decided in Florida. Some guys are having something filmed in his garden while I take that man to court in Pensacola. He's never caused us to sue anyone, and I hope we don't. But if we do, we got to serve in Florida court. So grosses attorney Jill Basinger told Los Angeles Daily News in a statement.

In the system. Mr. Tophik's rejection of Mr. Gross's proposal that we settle this dispute in a way that will benefit those in need during these difficult times proves our assertion that his claims are nothing more than a thinly veiled publicity stunt and a desperate money grab and that he cares about no one other than himself. The fact that someone with his wealth would reject this

opportunity to help those considerably less fortunate, I believe speaks volumes about his character or lack thereof. Are you telling me that the guy that stink bombed his own house to get back at his ex wife is somehow selfish? I just I can't believe that. I sang that this guy's an NPC. It's that what I like is right. Like you're imagine that you are an attorney who has gone to

enough like prestigious schools and so on to be hired and really worked incredibly hard. You got perfect marks in your LSAT. You never had a drink. You never had a great fishman. You just yeah, you just right. It was all all that all of that grinding and striving to be hired by the kind of firm that Bill Gross would then hire.

And then it's like, okay, I your job now is to basically say that the defendant is telling you more about you than about me with how he's treated me. You have to say this dumb bullshit after you have done nothing but strive your entire life. This is why I'm more intrigued by who the like Don Draper PR guy is in this scenario. He's just like, Bill, we're going to keep it simple.

It's harassment. That's all you say. So the gross also said despite Mr. Tophik's vindictive and self-serving rejection of my proposal that we settle our dispute and redirect our cost to the Orange County food bank men in the octagon. Yes, in the octagon, I intend to calculate my legal fees and court expenses that I've already spent and will spend

in my case and will donate the proceeds to those same charities this Friday. Has the law firm okay that or are they getting paid as well? I'm confused here because you don't want me to be I believe what he's saying is he's going to match his own costs. Yeah. So it's now practice to ensure that Bill stays in court for as long as possible.

This is America's version of Captain Tom Moore, where we're just these two sort of just rich obsessive rich guys. A normal person would have backed down or changed something about their behavior at some point in the last, like, one or two years ago. I don't know. I don't know. I don't know.

I don't know. I don't know. They didn't change something about their behavior at some point in the last, like what year that these two guys have been in a pitched battle with one another? And yet they are normal people. And yet what they're going to do is essentially is now basically like, do a kind of fun run.

Where they're mortal fight to the death. Sherlock and Moriarty on the right can backfall is they are going, they are going to essentially raise money by trying to fight one another until one of them is dead. Yeah. I mean, but this is the best system that has ever existed. It's the least flawed of all of them. These guys just deserve to have this power.

Absolutely. That's right. I can't believe it. This guy says I like character. What the fuck? He listens to 50 cent. What kind of character is that? You're kind of a Mickey Mouse wool bug.

Yeah, Mickey Mouse wool bug. That's right. So this is basically now the situation between Bill Gross's life defining side yard dispute and one of and yet another of the many sort of petty vindictive vendettas that have defined his life as an investor, a husband, a father and now a California public figure. Hmm.

It's very cool. That's what we can say about it. You know, you know, he can say about it. That's harassment. I mean, may that drop have a long life on future streams and episodes is all I can say. So George, do you have any final thoughts on Bill Gross before we all go on about our day?

I just really wish I never had to hear his name again. I've got more important things to think about and it's nice to have a laugh now and then, but oh man, this is getting tiresome. The tattooed son I felt bad for the neighbor having to see Bill Gross and his underwear. It's just terrible situation for all involved. You know, I'll say this.

I felt bad for the tattooed son until I learned more about the tattooed son. They absolutely deserve each other. Oh, okay. Well, maybe the tattooed son did deserve it. I'll send you a file of that bonus episode. We go deep into the tattooed son. But hey, you know what?

The trash feed chagang go deep into the tattooed son. Uploaded. They're only fans. That's right. So hey, I want to say to George, thank you very much for spending some time talking to us today. Thanks for having me on, y'all. It was a good time and hopefully some folks learned some stuff

about ETS. Indeed. And to all of our listeners, thank you for continuing to listen. Don't forget $5 a month on Patreon for the second episode, which will be out on Thursday. $10 a month on Patreon for the Q&A. Yeah.

If you want that special, special Q&A. If you have Q's and you want them aid. Yeah. If you want to hear us go deep into our tattooed selves. If you like posts, don't forget to listen to 10K posts. If you like Russian, don't forget to listen to too much pod. That's right. Now, number one in Estonia.

Yeah. It's number one in Lithuania and Estonia. And number two in the Czech Republic. That's right. And if you like problems, don't forget to listen to Well There's Your Problem. And if you want to die, please listen to Well There's Your Problem.

If you want to die, please listen to Well There's Your Problem. That's right. Check out the macro strategy. If you're fan of macro strategy. Then check out George's Twitter feed. Follow me on Twitter. I write columns of business insider to that folks might

like that are pretty accessible. So if you have any interest there, just Google my name and business insider. Indeed. All right. I think that about tears this other than to say that our theme song is into club by 50 cent featuring Bill Gross. Yeah.

Later. Better erase it. That's harassment. Arrestment.