TRASHFUTURE - First As Crisis, Then as Crisis-tunity feat. Joe Weisenthal

Episode Date: January 19, 2021

What the hell is going on with equity markets? Why is Tesla worth so much despite doing so little? Why has the line divorced itself from reality, and how long has this trend been happening? To answer this question, we brought on Joe Weisenthal (@TheStalwart) of the Odd Lots podcast at Bloomberg to discuss. 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 *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)

the pump always gets respect the pump. I respect the pump in all assets. Why? Because it's kind of like karma, you know, the power of the pump always comes back to you if you respect the pump of other people. It's crazy, but I have this belief that whatever pumps you have to pay respect. Because otherwise, if you like, oh my god, this scam coin, this scam coin is pumping again. Actually, you are kind of rejecting, you're rejecting the pump from your life. Maybe it's a bit out there, you know, woo woo, but we all gotta believe in something. And I do believe in the power of the pump. It's kind of like, you know, let the pump be with you. I went to bed yesterday. I told you guys on Twitter, I told you guys on Twitter, a good night and let the pump be with

you. Okay, this is how I see it's like this force. It's like this force that is all around us. And if you are, if you are really inviting the pump into your life, it will come. Welcome to this episode of Trash Future, that podcast you were listening to at this very moment. It is the classic lineup, the old school season one lineup. It is me Riley with Milo with Milo. Yeah, hello. And Hussain. We're like, we're doing like the dragon sword configuration. Yeah, that's right. And we're also very excited to be joined by host of the odd lots podcast on Bloomberg, Joe Weisenthal. Joe, how's it going? Great. Thanks for having me. It's a real pleasure to see you.

We always record on a Bloomberg terminal. So it's always a pleasure to get someone in. Thank you for the plug. Not a lot of people know actually that the Bloomberg terminal does have excellent audio normalization. It really does. And it makes it worth the $80,000 a year or whatever it costs. It's only 25. Oh, well, boy. I did a story once where someone had like with a finance guy who has a Bloomberg terminal or like something like that in his house. I didn't know ever it's like a Bloomberg terminal, but it's like one of those things where it basically looks like one to like a normal idiot. And I remember like on his screen, like on top of all the on top of all the the fun

graphs and stuff, one screen had Joe Rogan and the other screen had like some other like adjacent podcasts. He was listening to two we will he was like watching two podcasts at the same time while he was training. You're discovering that like actually the markets correlate to Joe Rogan. I said, that's the way to live trading, listen to multiple podcasts at one time, monitoring stuff on your Bloomberg terminal. Like that guy, that guy knows what he's doing. Yeah, well, the weird thing is right. That's actually kind of not far off from how a lot of financial news gets disseminated now. We're like, I don't know if you all saw, but how Elon Musk after the capital insurrections tweeted use signal and then the stock meaning

the encrypted messaging app, and then the stock of a different company called signal shot up 4,000 percent. Amazing. He's so cool. It's it's it's well, it's weird. It's become kind of like memified, hasn't it a little bit? Yeah, I mean, it's probably one of these things where a bunch of people saw it and a bunch of people didn't know what signal was. And then they looked up to see if there was a stock and there wasn't they probably like, oh, this is a medical device company, probably not what he's talking about. But then I said, well, someone else is probably going to get confused too if I was confused. So why not buy it? And you know, as long as someone is more confused than you can make. Yeah, everyone is at least as stupid as I am. So if I'm buying the stock, everyone is.

You don't even really need anyone, everyone to be stupid. It's like, well, we all agree, we're going to play the game at the same time. And we all know it's a game and we all know it's nothing. But you know, someone's going to win and someone's going to lose. And I think I cannot play you. Why not play? The thing is, he's like Drunken Mastery. Elon is such a weird poster in the sense of like, you know, you never know when he's trying to do a bit and when he's not. I don't think he's actually aware of when he's trying to do a bit and when he's not. But and as a result of just that confusion, it kind of like, his posting is one of the few that like actually causes real like material

effects. I don't know if that's like the right term. But like, I feel like about trajectory and like him knowing that he has like this kind of unique posters, energy bestowed on to him by all like the Tesla sims. Like that's right. I feel like this year is going to be the year where like something really bad happens because he accidentally like pocket, like pocket tweets. Yeah. I mean, like who knows, like, you know, there was obviously like the infamous funding secured tweet where he said he was going to take a Tesla private, like maybe who knows like how planned that was. Maybe he just thought of that tweet, like 15 seconds before he tweeted it, like most of us. I mean, he could, he could, he could, he could probably like get a lot of people

to, to consider like changing their gender if he like accidentally tweets Tesla wrong. That's right. So look, I've almost just like thinking about getting a pussy. So I've, I've done something as well for today, right? Because in the longer sort of run of this episode, we're going to do a little more a TF macro edition and we're going to talk about sort of financial crises and like the long financial crisis that we've all been living through. But first I wanted to go back to our roots. I want to do a startup and it's not, and here's the fun thing. It's a startup of the product because we've been spending the last like year doing the startup segment about predatory fintech, fintechs, decency and surveillance companies. What if your landlord

was your phone, that kind of stuff, or even obvious scams. And this is a refreshingly almost innocently birdbrained company. Oh, nice. That's good. That's fun. And so I had a really fun time researching it. They're not evil. They're stupid. Very much. Well, you know, I mean, if you have enough venture capital funding, what's the difference? But in this case, it's, it's, it's almost naive, I think. So I would like you, and here's the, it was a choice between two one. It was this or there's something called cold snap, which I think went around on Twitter too much. So I decided not to do it. I was so happy because now I get to introduce all of you to a company called, well, the company's called something else, but the product is called the

box. Well, sir, we just make boxes. It is a box. Is it round here? And you could put a pizza in it. Well, they also had a product called the bag, but they've just continued that. The bag was too powerful. People went ready for it. So no, here is the first of it, the marketing copy. So you can tell me what you think it is. The box is not a product. The box is a service. Joe, what do you think that is based on that marketing copy? The box is not a product. The box is a service. I mean, I mean, I feel like the tricky way. Did you wait in the beginning? Did you say it was a fintech or? No, no, it's what I'm saying is we've done so many fintechs, predatory fintechs in surveillance companies. No, no,

this is up. I mean, my first inclination would just be that it's one of these things that, you know, one of these million boxes that you get, but it must be more interesting. It's the mystery box. The box, the box. It's a loot crate. It could be used in the transmission of a loot crate. Yes. It is not itself a loot crate, but it could be used to the transmit one. Oh, it's the film seven. It's what's in the box? What is in the box? It's a severed head. That's what it is. So the box represents a new generation of blank, intelligent, secure and reusable. You know, like, you know, like YouTube trend that you stick around about mystery boxes and like you would send a box to someone and like sometimes

you would get like a PlayStation and sometimes you'd get like a box of bones. Yeah, from the show Bones. Secure and reusable. It's a Wi-Fi connected condom that you wash out and then I'm never completely wrong. So I'll give you a hint. They it's a European company and they heavily quote on their sort of shoe polish next start. They heavily quote on their front page, the new EU directive that directs by 2030. All packaging must be reusable or recyclable. All right. All right. I'm just going to tell you all. Okay. Can I introduce you to the concept of packaging as a service? Wait, what? Oh, yeah. You know how sometimes you have to tell me someone could package this. Well, so it's a box. It's a box. The box is a box. It's by a

company called Living Packets and it is a it's called Living Packets. I'm very funny. That sounds like a sort of Australian phrase for like, if you're doing well, I hide it all night. I'm living packets. Well, they're live. They are certainly living packets. Oh, yeah. Because they have made they have to start saying that on the podcast. I'm living packets. It's my it is it is a box. It is a 32 liter box and it is reusable and incredibly high tech, but for shipping stuff. 32 liters is like a very specific size. Yeah. Well, it's so it's a high tech box for shipping that is loaded with every technology that this startup could think to put in it so that they could solve the problem of waste from people having boxes. Like people get it

ordering stuff and throwing stuff away. Right. It reminds me of, you know, I was thinking about this about 10 years ago, like the wave of startups that we would see and they their pitch was always that X was fundamentally broken. They're like, Oh, we think breakfast is fundamentally broken. And we reinvented or we think reading a book is a fundamentally broken experience. So it sounds like they think that boxes shipping is a fundamentally broken experience. They do. It's just a guy on the front reading a book upside down. How do you do this? So basically, right, all of these companies where they say they're trying to revolutionize something like this, they'll all have the same figures that they Google, like 8 billion tons

of plastic gets put into the ocean. There's this many tons of CO2 that get expended from making cardboard, whatever, whatever they quote all of those and they say their solution is a box that costs 200 euros. Yeah. Right. Cool. You can't own it. Living packets owns it. And if you want to ship stuff to your customers, you're like an e-commerce business with the box, they'll send you one and you pay living packets to pack two euros to like open it and then ship it. So you're renting, you're renting a box or you're renting like the prices and you're also renting like a price to do with the box after they get it. Oh, Joe, you've sort of you've sort of you've sort of skipped to the end here because I'll tell you exactly what they've done is they have spent

200 euros and 200 euros on a box and millions, millions more R&D adding sensors for temperature, humidity, shock, pressure, motion and light, an internal camera, an external microphone, a built-in 4G internet connection. By the way, you can access external microphones, so you can spy on people handling the box. Yes, that's right. So you also you ring doorbell, but for your box, you can also call your box. Hello, just checking. There's a digital e-ink display on its touchscreen interface displaying your address so you can change it mid delivery and really fuck someone's day up. It's an amazing prank where you just keep changing the it never gets delivered because

in a kind of like Sisyphean experience, this delivery driver, as soon as he reaches the driveway, it's like the address changes. That's a killies in the tortoise, basically. Sure. So there is also and this is like some of this stuff's not a bad idea. Like, yeah, it's the box is adjustable. I just want to call the box. The box is adjustable inside. So like 32 liters, yeah, you can still ship something of whatever size inside it. It's on the blockchain for some reason. We love that. The box chain. I don't know how. I don't know why they don't say what's actually it does. I don't really care who I was before I rented the box. And you also need to unlock the box that app on your phone. So if you if an e-commerce person sends you something in the box and you

don't have the app on your phone, you'll have to get the app on your phone before you can open the box. This is a very classic cock cage hacker situation waiting to happen. Right. So, so okay, what's the greatest thing about online shopping? What's the main thing that distinguishes it from normal shopping? No one judges you for the hand. Yeah, exactly. You don't have to go out. What do you think the catch is in having all packaging be completely reusable? Sounds like more work. Well, you have to go out. Basically, they've created a version of online shopping where the transaction ends with you going back to the store. Oh, amazing. That whips. That's pretty cool, right? This is like this side, the opposite of that Jerry Seinfeld bit.

Yeah, you're going out. Why are you going out? So you don't have to go somewhere else. So they basically say, right, it costs about 200 euros to make you rent it for two euros a trip, and then it's recharge. You have to basically it lasts for a thousand trips. Again, they claim none of this is on it. It lasts for a thousand trips. Yeah, that's what they say before they have to recharge the box. Recharge the box. I hate it when my box runs out of battery. All of its many sensors. Again, I don't know why you need a light sensor on your box. Are you shipping them on Lisa? Also, why not just manufacture it in such a way as like the user can recharge it? Well, because the user of the box, you've been on this podcast for too long,

lava. Yeah. Yeah. So they basically have a bunch of ideas to try to square that obvious strange circle about how they've created a shipping box that removes the main part of e-commerce from e-commerce. Yeah. Okay. Where they say, look, if you receive a shipment that you want to return, you just have to push a button on the box to arrange a return to sender. You could say that they've opened a Pandora's Box problems. You could say that. You could say that. When you normally return something to sender, you just write return to sender on it and like put it back in the mail, and you're going to have to give this box back to someone. It's not going to like

excro legs and run out of your house. You're still going to have to do that. Yes. You just won't need a pen. Yeah. That's basically the only... I mean, fundamentally, the issue that I'm seeing is that if you're moving somewhere, and you know, we did a move recently, right? The issue wasn't the boxes. The issue wasn't like how we put things in. The issue was everything else. Yeah. The issue was that we're all podcasters. That's right. And everyone who I know who has moved, like they all kind of say the same thing, which is like, yeah, the problems was like the logistics, not the box. So it's kind of like you're picking on the one thing that is generally

fine for the most part, unless you are like shipping, like really high. We're having this conversation you have where they're like, well, Hussain, the thing people always tell you about moving is that the problem is the boxes, but those people couldn't be any more wrong. Well, this is for shipping specifically. It's probably too expensive to move your stuff with it because to use the box, you have to pay the company two euros. So to open the box, to move stuff from your house to another house, that's two euro bill. They say, but if you have an empty unit of the box, you can use it to ship something else. So I guess start an Etsy store because now you have this smart box that's in your house,

or you can return it to the shop and get a reward for it. So there you go. That's the main thing. Wait, so you have the option to just not return it? Well, then I guess you kind of have to... They haven't really thought... Because the thing is, they have not really thought about this. They're trying to produce 100,000 of these in their factory in Germany, and another comparable company in Finland that's done something similar assumes it loses up over 25% of its inventory, which would make this company, which has spent all of its money on unnecessary sensors, completely unviable. There's some kind of e-commerce right now. I'm trying to come up with the best

case for it. Is there some kind of e-commerce right now where there's just an incredible amount of loss due to not being able to track all the package in real-time? I was trying to think of some of this myself. Maybe extremely high value stuff, potentially, but even then, those tend to be shipped in couriers. They don't know what they have. The anonymity of the packaging tends to be a protective factor. The Russian Postal Service. You just get to phone up your parcel, which you know has been at a sorting office in Moscow for eight weeks, and then there's some woman there on the phone to you who's like, and you still don't receive it. They beat your box with a series of

bats until it shuts up. The use case for this, honestly, is basically just... It needs to be adopted at scale by everyone immediately so that they're just sort of... Of lots of tech companies, they use a bunch of crazy metaphors. They say they want the box to be the red blood cells of the economy. Excuse me. Full of hemoglobin. There's one thing we know about boxes. They love to carry oxygen to the brain, something which these people could do some more of, in my opinion. And so, they basically say, because it kind of actually does work if they're everywhere. And so, you're always getting deliveries of this, and you can always give back that

version to that guy, and so on and so on. If it replaces cardboard immediately, and they immediately become the Amazon of packaging as a service or whatever, I guess it kind of works until you remember that they lose... They can expect to lose 25% of their inventory. And also, two euros per go is a lot. What's that, Joe? I think I'm becoming a... I think you guys are selling me out. I think you guys are... I'm turning into a box ball. I want to get in on the next round.

Here's the thing, Joe. You used to be able to invest directly in the box until friends of the podcast Buffin stepped in and stopped that from happening. Invest directly in the box. Well, so basically, they had a program called the Sharing Angels Program, where if you invested... That sounds like a paedophilia ring. If you invested between 5,000 and 10,000 euros, they were saying you'll get five times your capital back. Okay. That sounds like a... That's a little bit of a red flag to me, when they tell you in advance what your returns

are going to be. I'm looking over to the trash future lawyer here, as I think of what shape in my mind that bridge. Which of the classic shapes that we all know just springs into my mind's eye, as you tell me about that return? Yeah. Yeah. Some kind of cone? Like an inclined plane plan. It reminds me of Egypt, for some reason. I don't know why. Two inclined planes leaning up against one another, and there's a plan around that. Yeah. Something like that. There might be a little pharaoh inside, like that kind of a shape. What is like a... What is two in common, except for like a box anyway? Yeah, that's right. It's just... That's who you could put in the box as a mummy.

So, this is why I thought I was delighted and surprised, and this really locked it in for me that we're going to do this one today. When I saw on their FAQ page, the entry, what are your problems with Buffin? Yes. Yes. And so, basically what it was, was the reason that they predicted what your return would be for investing in them. I actually, I don't think it's any kind of a scheme at all. I think they are just so optimistic and blind to the problems of their own product that they decided, well, we expect that each one can be made a thousand times, and so you're going to get approximately

five times profit on your... Like they did some math with their own rosy projections, and then just publish that as investment advice. Just, there you go. Cool. Yeah. Look, I'm on the website now. It's a cool looking box. Yeah. I told you. This is a pro box podcast. We're just trying to help them. Yeah. I'm pro box though. Yeah.

Getting a very fortnight vibe from this company. I appreciate that. Yeah. So, loot crates of the future, please. You consider using the box if you want to create a whole bunch of extra journeys that don't need to happen. If you invest in our company, you will so totally get an Epic Assault Rifle. Like I can't stress that enough. So, I'd like to move us on a little bit from the box. We've all invested just before, or we were going to before.

Right before everyone hears this. Yeah. Before enemies of the podcast buff in have once again shut down one of our friends. Free Marcus Brown. Free Marcus Brown. Find Jan Marselech. Where is Jan Marselech? So, this is... Find the men who killed Jan Marselech. He's fine.

Oh, yeah. He's alive, isn't he? We found that out. So, against all the odds, a man who I thought was in an oil drum for sure. Did we find out he's alive? I don't think we found out he was alive. I think he's alive. Wasn't he found somewhere? Wait, Jan Marselech alive in Serbia? Joe, do you remember if Jan Marselech is alive? I don't know who that is. Oh, never mind.

The COO of Wirecard. Oh, yeah. Right. We're just big fanboys of financial criminals on this podcast, Joe. I don't know what's happening with them. I feel like that story, I wish I had a better understanding of it. I feel like... Oh, so do they, Joe. So do they. Speaking of Wirecard, I want to move on to a little bit of TF Macro.

Because it is very popular in the hallowed halls of this podcast to talk about a couple of things. One is the way in which the broader economy, you might even call it, the relations of production is failing to uplift the standards of the vast majority of the people living in it, despite an abundance of productivity or value or whatever you want to define it as. And I think that's pretty much tantamount to a brute fact at this point. And two, the way in which that economic setup is unsustainable. And given that the world still ticks over and the markets continue to go up, the second point is a circle that needs squaring.

And that's what we do here on TF Macro. And I think, Joe, when we were talking about doing this before this, I was thinking about financial crises and why we've made Elon Musk the richest person in history and he will be for a while, because something at some point in the last 50 years or so flipped the economy switch from functional to stupid, effectively. Yeah, I mean, I think another way to put it is that at some point in the last 50 or 40 years, the financial markets went from being a reflection of the real economy to being a driver of the real economy to, you know, it's this cliche people often say like, ah, the stock market isn't the

economy. The stock market is the economy. And in fact, what happens in the stock market often precedes what happens in the so-called real day-to-day economy. And so much more of like, you know, just sort of living and buying and consuming is downstream from what happens in financial markets more broadly, whether it's the stock market or credit markets. And I think that like is sort of what you're describing is sort of the is essentially the and I think it's that's one of the reasons why I think it's sort of so instructive to think about sort of the the history of of crisis, how we've responded to them and how our responses to those crises have kind of continually bred the world we live in today. You could even controversially

say that it has been one long crisis. And I think, you know, it's easy to say if you think about today, right? It's easy to say we're in a bubble because prices are high. In fact, Lawrence McDonald tweeted a number that some bulls might find slightly troubling. So there's a ratio. Yes, he treated a red red number. I treated the red number. Yeah. So there's a ratio called price to peak sales, where it's one of a billion valuation ratios that looks at basically how much larger the market capitalization of a given firm is than it's sort of the peak sales that it's had recently. And I can see how this relates to Tesla. So he said he pointed out that in 2000, some of the like some of the dot com boom

poster children such as Cisco, Qualcomm, Microsoft and Intel. Cisco who did the the thong song that guy were at like 30 were like 31 times their value, something around there. This is on a price-to-sales basis. Yeah. It was a good song. I can see why. Like it was the track of the early 2000s for me. And then he points out that a coterie of various, you know, energy firms and electric car manufacturers are considerably above that. When Tesla was at 22 times when he tweeted it, I just looked at it again and it's now well over 30 times. Cool. But you know, the price, the prices of these things, these things that are driving the real economy, they're sort of like Newtonian bodies. They're always moving relative to one another. And just

because prices are high doesn't mean that's what the crisis is. Right. And so what I guess I'm driving at here is that the crisis is more than just number go too far up. It's a kind of an interlocking set of things, right? I think that's exactly right. I mean, you know, I think there's obviously the discrete crisis that we've had from time to time over the last several decades. There was the crisis of that, the economic crisis and the health crisis that dominated much of 2020. There was the great financial crisis, 2008, 2009. Before that, I guess there was the collapse of the comm bubble. Those are crises. But then I think the broader thing is the sort of the lack of income, the lack of sort of private sector or any sector

income to households and the compensation that households have had to engage in via financial market speculation to compensate for the lack of productive income. And I think that's sort of like the bigger crisis that, you know, I don't know if everyone would characterize it as a crisis, but it is certainly the sort of dominant theme. I mean, we talk about it all the time on our podcast, yes, from all different angles, end up essentially coming in a way to that view that financial markets end up compensating for a lack of household income, basically. Yeah. And in fact, the episode of odd lots that I would recommend to listeners of TF who want to sort of understand this kind of thing more is one from September. It's called How All Financial

Markets Turned Into The Same Big Trade. And with a story that is told essentially on that one, is that at base, right, that as inequality sort of skyrocketed, as fewer people had money to spend, the people with money realized that they made much more money just by making their stuff more expensive and making their stuff more expensive. And so at the root of why the economy is stupid is inequality, or at least that's the thesis that's discussed in that episode. Yeah, I think that's right. It's kind of this weird situation in which, again, we talk on our podcast to people who are sort of like more left heterodox types, who are economists. We also talk to a lot of traders who may have the exact opposite perspective, and they're really angry about the

Fed, and they hate the perception that the government is- Because they love the pump. Yeah, they hate the idea that the government is intervening in markets, or they think that's somehow unnatural. But it still ends up as this sort of- They all end up arriving at kind of the same conclusion that we have this sort of inequality, that there's this massive inequality. That depresses consumption because people who have a lot of money don't spend as much of their income as people who don't have a lot of money. So inequality creates weak growth. People compensate for that by buying financial assets. Then, as you mentioned, the idea that the economy is downstream from financial assets, so central banks are very sensitive to declines in financial markets. They

feel the need to ease policy every time. There's a little bit of a crash or a hiccup that ends up redounding back to the benefit of people who have the assets, who are the rich, who don't spend it as much. And so you end up in this cycle, which is exactly, I think, what you're describing, where the only solution is irassive. Yeah, and that kind of- And that sort of creates these situations where there's the- Without almost being too glib about it, right? One of the reasons I like to talk about these sort of silly products up front is to also underscore that these sort of quite wild ideas are getting funded to the tune of millions or, in some cases, hundreds. There was a soft bank company, a company that soft bank invested in called Vue. You all remember Vue,

right? They were the ones with the windows with the different- You could change the views. It was like a screen. It was a window that told you what the weather was like. Awesome. But where that kind of thing would attract this, this thing that is obviously just so unnecessary to the day-to-day flourishing of anyone would attract all of this money, because at some point, sort of capital, if you want to call it that, realize, like, oh, it's- I do better by making this, by putting, like, by basically owning this box that's the wind, not the box, but this, like, window- This is a different box. The legal reasons it's not the same box. Owning this, like, window that tells you if it's raining. That's all right.

And then just- Regular window could never do that. No. And then sort of snapping my fingers and sort of, by consensus, having that be this, like, incredibly valuable thing. And that's how I'm sort of achieving returns on my investment. I'm not even bothering doing things that people need anymore. It's just sort of- It becomes a smoke and mirror game, and the window that tells you if it's raining is almost a byproduct of this strange financial logic. You know, it's funny, like, you know, there's not much inflation in developed economies these days, but if you talk to really wealthy people, or if you talk to macro hedge fund managers, they're always warning about it. They're always worried about it. Or they're claiming that there is actually a

lot of inflation, but it's understated. And a big part of me wonders is, like, maybe in their world, there just is a lot of inflation in the things that they buy, whether it's investments in companies, whether it's real estate in really expensive areas, or- Adrenochrome has gone through the roof recently. Oh, my God. They just see a lot of inflation in the real world. It's not really picked up in most consumer goods, but maybe it's just because that's what they see. Yeah, that's that. If you're desperate to put money in places and everyone's racing to the same Hamptons or Central London or New York penthouses or whatever, then yeah, the prices of stuff that

will never get used or set foot in is skyrocketing. And it's not just make- And it's not that other people are starving because those prices are skyrocketing. It's that those prices are skyrocketing because those other people are starving. It's a strange backwards logic to the sort of intuitive way you'd think about it. Yeah, it really is. And I think this is something that's really crystallized. One thing about 2020, and it's sort of broken everyone's brains to some extent, that we had this huge economic crisis, and then the stock market, some indices are 40%, and Elon Musk became the richest person in the world, thanks to the rally in Tesla. And I think like 2020, I see as like this big acceleration event where all of these trends

that had been building up to 2020, we did like 10 years worth of economic progress in the span of one year or in the span of nine months, really. And so this idea that immiseration and high asset values go hand in hand, and that with the lack of consumption, with the lack of income, the more wealthy people, the more people will pay for financial assets, which are of course claims on future income streams, you have this scarcity of income overall in the economy, which makes any income stream inherently more valuable in that scarcity. And so it kind of breaks people's brains to see what happened in 2020. But if you understand that dynamic, that inequality and scarcity of income is what causes people to pay up for a financial asset for a future income stream,

it kind of makes perfect sense. Yeah, exactly. So actually, I'm interested to hear sort of what your reaction is to all this. I mean, I feel like Joe kind of said what I was going to say about, because I don't know, I feel like I was also one of those people that was kind of confused. I'm not like a fight, like I don't, I'm going to like be upfront, obviously, and be like, I, I, I've struggled to kind of figure out like what the hell is going on and why like you have kind of like stock, stock market values are so high and like why real estate prices and like London's going up. Like I live in like one of like the kind of least wealthy areas of Southeast London and yet like

houses are kind of like veering towards like half a million plus and like that's done so and like within the space of two years, it's like really wild and it's like a type of growth that a lot of people, even like people like like real estate agencies and stuff have never really seen before. So I completely get, I completely like agree with it. Like 2020 was acceleration and like I didn't, I didn't think about it in terms of, because you know, you can see it, you could see it in terms of like discourse, you could see it in terms of like politics and stuff. I didn't really think about it in terms of like finance. So that's really interesting too. I guess like the question that I really have is that like, well, if you have an economy that's like sort of built on

zombie credit and like stuff that doesn't seem like it's slowing down at least from like my half an hour of research before the show, like well, how, you know, I've been seeing on like blogs that there's this thing about business consensus, like this will kind of end at some point. And when it does, it's going to be really bad and it's going to be like, like a fraction of what 2008 was like. But I don't know, I don't know. Is that like overreacting it or like over-inflating it? I think it's probably overreacting it. I mean, people, you know, it's like the problem with claims like that is like, oh, this is going to end and it'll be really bad is like to some extent, it's non-disprovable. Like it, you know, unless you have like a sort of real

prediction, who knows? I mean, there are ways out of this is the thing. And so you have this situation where people talk about like, oh, the Fed is keeps inflating asset values and that's what revives the economy and then that creates more inequality, that creates weaker growth, etc. I mean, we have a way out and the answer is it's kind of boring, but the answer is fiscal policy, spending the government spending money to I was going to say that like we should, yeah, I was going to say that like one solution could be that we like make boxes around. Oh, that's the other solution. Yes, economists would are split between whether we should spend more money to apply households with more money or just make boxes around. But I think we could go

back. That's basically the Mr. Burns economic scenario. It's just like, well, you could either have universal basic income or this round box. The round box also is kind of a poster child for this event because that is what Zoom, SoftBank's Amazon of Food, that's the only product they ever made was after being valued at over a billion for having a van, they created a round pizza box and then promptly went out of business. What I can tell you is I don't have a van and I've never been worth a billion dollars. So based on that logic, watertight, whenever I see a van that sells round pizza boxes, I think respect. But no, Joe, I think like what you were saying is like, that's exactly right, right? Like the solution to this is if we keep pushing that

monetary button and keep trying to solve it with interest rates, then you're not really going to ever solve this problem. You might keep it ticking over for another day. But unless you put money in people's pockets so that they can spend it, and unless you get it there with politics, then I don't really see a way out myself. Yeah, I mean, this is sort of like the conclusion that more and more people are coming to that. The way out is politics and unfortunately, we have no way of sort of putting money into people's pockets without politics. Everyone sort of dreams of the technocratic solution to do it, like some sort of like automatic spending program or why don't we all have bank accounts at the Federal Reserve or the Bank of England where money just appears in our

account by some board somewhere. But in the end, there has to be a decision that the answer to downturns is putting more spending power in the hands of the private sector or in the hands of households specifically and lower income households more specifically who have a higher propensity to spend so that that money will actually go somewhere. But it's a political decision and there's no one trick or what was the old clickbait thing? One weird trick. Fed governors hate her. We have to make that decision. The local mom is stimulating the economy with groups of commerce hungry milfs. But the logic sort of like going against that because I don't know, there's lots of talk at

here about an impending austerity program that's going to come post COVID and everything. I'm pretty sure that was quite likely to happen in the US as well. Yeah, any kind of like bypass and agreement is going to be one which is like, yeah, tax cuts for wealthy people and maybe we'll kind of like set the bar a bit lower. But we're still going to do an austerity program because now the GOP will decide to be like... It might not happen. I mean, there's obviously in the US, we don't really know what's going to happen. But for the first time in a long time, there isn't going to be like a pro austerity opposition that controls a part of government. Now, of course, there are pro austerity people within the Democratic Party. But hey, I think they are weakened compared

to where they were 10 years ago coming out of the great financial crisis. And now anytime someone suggests something like that, that would weaken labor, bargaining power or anything like that, they get really browbeaten on Twitter and people complain about them. So you never know, maybe long term, it's a dangerous bet to think like, oh, something is fundamentally going to change. But I do think that we're used to these situations where every downturn in some way becomes a de facto opportunity to weaken labor, which is arguably like the last 45 years, every downturn is somehow like met with that. It's not guaranteed that this one will be. Let's talk a little bit about history then. I've written here sort of notes from the

last three... Well, this current sort of slow world crisis in the last two. But as we could even go back to like, we want to say 45 years, we could go back to the 1970s, the oil crisis and the first... All crises, Riley. That first crisis where our response was to weaken organized labor. I always see that moment as sort of the ball is set in motion. And then that leads us to the first crisis for which I have notes, which is the dot com crisis in 2000. So as I understand it, that was a big... Almost like a Great Depression style equity bubble where everyone was excited about pets.com and everyone had their... Some of us still are, Riley, holding onto my stock. So for each of these, I'm saying,

so what happened? What was the poster child? What was the biggest scam? And what was the vehicle through which it happened? So as I understand it, and Joe, please correct me if I'm wrong here. 2000, we have a big equity bubble because everyone's excited about web 1.0 tech. They're excited that pets.com is going to sell you a dog collar if only someone would ship it in a box where they could have a camera. Yeah, round box. Round camera box. And the biggest scam was, I imagine, Enron. And the vehicle through which all this happened was equity, it was stocks. So what's... Do you sort of have any particular... Because you were sort of covering... Yeah. Do you have any memory? You were covering finance at this time, right?

Well, I wasn't covering finance because I was 19, but I was actually trading penny stocks at the time and that's partly how I paid for college. But the one thing that I remember about that time is people always refer to it as the dot-com bubble or the internet bubble or whatever. But I would say it's actually more and it was just like people were just insanely optimistic about everything, which was sort of poor timing and then things got really bad. In all kinds of ways, soon thereafter. But there was just clean energy stocks, which we're actually seeing, really, and now by Tesla, but others. Those were flying back in 1999. All sorts of things just seemed possible. And the beauty of

Enron was nobody knew what it did, except it was just going to make everything way more efficient. And they did all kinds of stuff. They had a broadband trading business. They're like, we're going to like, broadband itself is going to be this commodity that people trade like oil. And people got super excited about that because marketing and internet work really well. Say, how much broadband do you have, kiddo? People just got super excited. I bought 30 gallons. And that was like, that was the whole thing. I mean, then it sort of like cracked, you know,

then there was the crash. And then of course, real recession came after 9-11 and the war. But that was like 1999, 2000. I mean, people thought there was going to be peace in the Middle East in a way that I think no one has been optimistic about since. Like, people were just positive on everything at that time. Also, the 90s were really good. And so maybe it was just sort of like the euphoric end to a pretty good decade. We had to stew it a little. It was an entire decade where just because of economic conditions, everyone was basically on ecstasy.

Yeah, Israel and Palestine are going to get along. A mouse can drive a car. Like, I'm going to do cocaine and ride a sitcom. Why not? I mean, the Segway, which was, you know, golf, that was 99 or 2000. And that was like the same thing. Cities are going to be reoriented, was the belief, around the Segway. And we're all going to be like riding around on scooters. It kind of did come true 20 years later. But people are just excited about everything.

What's so strange about that is you can see kind of rhymes with that in the sort of in elements of the tech hype economy today, right? For sure. There's this idea that, for example, something like Tesla. It's like, if you ask Steve Otees, like, oh, no, no, no, it's not even a car company. The cars are a side show. It's a battery company. It's a charging infrastructure company.

And really it's just a company that sells carbon credits. But there is this idea that it's going to create these new industries and therefore is justifying this ludicrous valuation. I've been thinking like about this exact parallel because I do think that there is some of these tech companies just this really exciting enthusiasm about this total new world. It's kind of like hyper-optimistic. But there's also, I would say, and I think you see it in a lot of the enthusiasm around Bitcoin as well, there's also like this like, it's like optimistic cynicism or optimistic

pessimism because there's like an edge to it because people are excited about this new thing. But the excitement is also inherently oppositional. It's like the old thing is deeply corrupt. Like fiat money is deeply corrupt. The existing energy infrastructure is deeply corrupt. So even though like people are very excited about this new stuff, it's also like comes with this like hostile edge. And I think like even the whole Elon me, the whole Elon halt, there is like this like

hostile edge towards incumbents to it. And I don't think that existed in the same way in the 1999-2000 bubble. If we want to talk really even about like, here's my sort of crackpot theory about where that edge came from is in fact the next crisis, the 2008 crisis, because there is if we talk about like the entire economy basically being on ecstasy in the late 90s or early 2000s, a lot of those same assumptions have carried over like the idea that well the sort of tech that there is a permable opinion about like the five biggest winners in the S&P 500. Never mind the other 495, there's a moribund.

There's this, but there is as you say tinged with this like, so it was almost anger or contempt for the dum-dums who don't understand and didn't get in. I think some of that kind of comes from being conditioned by 2008. So in the same vein, you could say what happened? Well, it was a debt bubble, a credit crisis. The poster child was like Bear Stearns or Lehman Brothers. The biggest scam was made off and the vehicle this time was like collateralized debt obligations, which was like ways of sort of selling on toxic mortgages and pretending that they were fine,

that a lot of that caused a whole system at collapse. It was putting mortgages in a big box in a way, in a big special box to set these mortgages. Who boy are they safe and good? And so in the same way, right, we learned on mass, right? Of course, the dot-com crash happened. And then in 2008, there's the other crash doesn't just affect investors, it affects basically everyone and everything. Yeah. No, I think that's right.

I mean, for all of the bad things that happened in 1999, 2000, the internet was really exciting. And it turned out that actually people were not optimistic enough because the internet ended up arguably being a much bigger deal over the next couple of decades in completely reorienting life beyond what I think we had realized in 1999, 2000. I think in 2007, 2008, the financial crisis, there was nothing to get really excited about. There turned out to be a bubble that crashed, but there was no really great thing that was being built out of it. It was just the money without the pretense of transformation or

good things to come out of it. It was just money. Yeah, because in 2000, it was a promise to invent the future. And then in 2008, it was, oh, this basic thing that you need to survive, it turns out you can't have it. Yeah. Basically. Yeah. That's right. You can't. So get over it. Yeah. So go retrain, learn to code in that industry that collapsed eight years ago.

Yeah. That's correct. I mean, this is ultimately what happens when you let a British guy design the future. It sucks. Yeah. It turns out it was the same guy that made triumph. Yeah. Cars you have to repair every 10 minutes. It's also funny. I've only realized this recently, right, but as in my later 20s, I've just spent more time with more Americans. How like people in America had the internet in 2000, like no one in Britain did. I just was not. I think we got the internet in like

2004. And I think, yeah. And then like maybe there were some people had it before that, but it was like only dial up before that. It was a tech company. There was just a cart, a faster cart for your horse. Yeah, exactly. And so you get the like, I do like me, people who I remember being on the internet in 1997 and I'm like, excuse me. Like in Britain, we were still like, I don't know, going to dog races. You were literally trading. You were literally trading penny stocks of pennies. That's right. Yeah.

We were just throwing coins at one another. That's what we were doing. So we sort of talked to death about the 2007 crisis, 2007, 2008 crisis, sort of throughout sort of in our show, 2007 to present crisis. Many people would say that the real crisis in 2007 was the was the death amount of indie music in the UK. Just too much indie. Just full of like, forgetful, forgettable, landfill indie. I feel like the Cooke's, Razerlight, Libertines. I think Block Party really slightly laid it for them.

Block Party, yeah. They're not, they're not indie though, really, in that sense, I wouldn't say. So it's, it's, you can, you can track, I think, the mood of Europe on the basis of what the house music is like, because it was before 2007, before 2007, it was really ecstatic, sort of soulful, lots of like, high female vocals about having a good time. And it was all like from Ibiza and the Bally Erex and stuff. And then after 2007, Dubstep gets huge. Oh yeah. Yeah. Remember Centipede?

No, but I guess that was kind of drum and bass. But we talk about these crises, right? And arguably the 2007, eight one is still going on because we never, we never solved it by giving those people back their essentials that they needed for living. I just want to be a standup comedian. I have so many jobs. All of which are each more online than the last. So, um, and then you can say like, what we're dealing with right now, right? From where I'm sitting, it's that this, the solution to the 2007 crisis kind of created

another version of the 2000 crisis. But because there's just all this free money floating around, it's, it's just, as we were talking about sort of towards the beginning of the segment, it's just driving all of these asset prices up, but where no one else has any money. Right. Right. And if we want to talk about, right, the poster child where we had Bear Stearns and Pets.com, yeah, it's Tesla, SoftBank, Cryptocurrency, or just assets generally, just all of them. Yeah. Amstrad. Well, you know, the other thing that's sort of like the degree of like to which asset ownership,

asset buying has like pervaded the culture. I mean, obviously we haven't seen anything like it really since the late nineties. That was the, that was the last time people like really like talked about stocks in the way they do now. And that's individual speculations, individual stock to a thing. But like, you just see it all over. I mean, like you like go through, go on Instagram and you get ads for like invest in this car, like own a, own a fraction of a rare Lamborghini or own, like you just see it at all, you know, the, the sort of turning everything into an asset that you can sort of own has become just such a part of the culture. And even like something like Tesla,

the stock and the car are like co-branded. It's like, it's all part of the same story in a way. It's not, you know, it's like, I feel like in a different era, people might have gotten like really excited about a car and the stock would be sort of this afterthought or other people, or maybe people on Wall Street would talk about the stock and be separate things. It's all the same story. The product and the asset are essentially, they're paired together. If you go to trashy, you should go to UK slash shop. You can buy a fraction of this bussy. You can buy a shirt. That's a fraction of this show. No, but it's, I think that's part of that also, right? Is the wanting to be involved. You know, it's, it's,

we're changing the world and we're taking it away from what it was. We want to be, we want, we want to build that future and we happen to be a bunch of Reddit dorks. And so we, we want to build Elon Musk's version of, we want to build the epic future. And, you know, I think, you know, you say, what's the biggest scam? I cannot legally refer to supply chain finance as a scam. So I won't. So just write that down. We haven't done that. If you were thinking that supply chain finance is a scam because it looks like a scam, sounds like a scam and functionally might seem to behave like a scam. Don't think that. Because legally, that isn't true. And then the vehicle, right? CDOs, wait, again, we don't know what the vehicle's

going to be. I think it's going to be a Tesla. Yeah. Well, I think maybe SPACs. Because this, I found this quote, and I think this one comes up when people talk about SPACs, which is in 1711 at the height of the South Sea bubble, an investment opportunity was promoted. And this was the prospectus quote for carrying on an undertaking of great advantage, but no one to know what it is. Yeah. Now I love one of the classic lines and that's literally, literally what SPACs are. People put their money with someone or some group of people that they trust for some reason and they count on them to go out and make a bunch of money to make a good deal. And I think if you want to talk about like just the excitement of like infinite,

of infinite credit in 2000 native, infinite growth in 2000, it's the same thing. Well, we just want to get in on assets and we assume someone else knows what asset to get into. So just here, get me into something. Yeah. That's right. And the funny thing is, I was, because I'm a cool guy, I was reading a prospectus by a company called Easterly Alternatives. You're a cool guy for you. Joe, have you seen the Easterly Alternatives prospectus? I haven't. They have launched a SPAC of SPACs. Oh yeah, yeah. A human SPAC-a-peat. They have launched a human SPAC-a-peat. And at the same time, I saw there was an article that the University of Pennsylvania has a student SPAC awareness club for students to talk about.

You gotta have campus awareness about SPACs. That's a really important thing. But crucially, is this like something myself by like, by a SPAC or is it kind of a bunch of nerdy students that like run every like investment finance society in like Ivy League universities or like Russell Group universities or whatever. So I feel like a latter is a lot worse. For what I've read about it, it appears to be the latter. And it's something that sort of brings up that endless, the endless aphorism that you always hear, which is when your shoe shine boy is giving you advice about the market, consider getting out, right? So look, I think we can't the point that no crisis is similar to any other crisis to the point where you can say

in the middle, even that it's a crisis, we might look back at five years and say, well, the 2020s crisis started the day coronavirus hit, or maybe it started when interest rates went to zero, or maybe it started some other time. And maybe the maybe SPACs were the problem, maybe the what 5.4 trillion like corporate debt load globally is the problem. We don't really know. Yeah, I mean, this is a really important point, which is the essentially the impossibility of knowing where you are in the cycle of real time. And people always look for indicators to like, oh, students at Pennsylvania are launching a SPAC of SPACs, you know, like this must be the top, and then it gets 10 times crazier. I mean, I remember, I think it was like 2012 or 2011.

I like, I think Fortune magazine put like Justin Bieber on the cover as like, as a VC investor, like Justin Bieber is making tech investments. And like, at the time, you could have looked at that and say, well, this is the top, like, you know, obviously, if they're putting Justin Bieber on the cover as a VC investor, that must be the top. And then of course, things got exponentially bigger and crazier since then. So I do think there is essentially this, this impossibility of knowing in real time what the thing was, whether it was the vehicle that caused the next crisis, whether it was the top of a bubble, or whether it's the beginning of a bubble, you don't know, only in retrospect, can you look back on something and say, oh, yeah, that was,

that was clearly the top. And I think the key thing here, right, and if I could sort of, if I have kind of one thing that I always tend to think of, right, it's, it's trying to understand kind of why, why crises rather than why this crisis or that crisis or what's this crisis or what's that crisis, why are there crises? And I mean, if you're, if you're, if you're a Marxist, like I am, you'd say, well, that's built in from the, you know, the 17th century, the linen, the linen coat pricing, the organic composition of capital. If you're not, you can, if you're, if you're just sort of a more lefty heterodox, you sort of look at that just long run inequality and sort of moribund, the moribund finances of just regular ass people. And, you know,

you sort of come to that same conclusion, which is, yeah, that this is why there are, it doesn't matter what event precipitates what crisis or when one starts and what doesn't, that we live in a crisis prone society because it's set up that way effectively. Right. And you know, that is just that, that our inclination is to speculate that that's part of, that that's part of the economy. I mean, again, you could set it up a different way and you could have an economy in which speculation is much more random or much more curved. And I actually think, like in Europe, it does seem like it does not feel like the European economy is crazy, but there is not the same level of speculative culture that I would say is in certainly the

United States, maybe the UK, but like there are different degrees to which I think countries and regulatory regimes can enable that. But otherwise, I mean, I think racism is fine the way. Indeed. And you know, I think that is essentially a nice note to wrap it up on. So, I want to say, Joe, thank you so, so much for having me out this day. Yeah. And if you want to check, if you are interested in like getting more sort of into finance, if you, but if you don't like, if you're not like a finance person, but you just want to understand what the fuck is going on. You've got some Bitcoin that you're looking to trade.

If you're not a finance person, you want to know what's going on. I think OddLots is just, is absolutely one of the best ways that you can kind of begin getting into that. I mean, it's either that or like Wall Street Bats. And I would rather go if I look into the podcast and try to learn finance from Wall Street Bats. I would like to recommend Keemstar and also Jay Shetty for any finance queries that you might have. Cobratate. Cobratate has his own finance thing. I mean, he invests in people having big nights out, which maybe that's the smart thing. Maybe years later, they'll be like, man, Cobratate was buying the dip there

by spending 10 grand on a night out in Wolverhampton. You and your dodgy mates are going to go and, oh, fuck it. I had a thing there about like the experience economy. I just lost it. That's it. I'm taking the bends and we're going to the liquid rooms in Nunn-Eaton. And if it's a shit night out, I will punch you in the face. You're such a good at that Tate impression. Anyway, all right. So don't forget, there is five bucks a month, second episode a week on Patreon. It's there for you. I think this week, we are going to be going back to our British roots and talking about widespread

and why it's so bad in Britain. I'm cutting my fringe already. Perfect. All right. So thank you all for listening. Don't forget to listen to OddLots and Joe once again. Thank you very much for being here. Thanks Joe. And please listen to the other podcasts in the TF family. You've got Masters of Our Domain with me and Phoebe. You've got 10K posts with Hussain and Phoebe. You've got, well, there's your problem with Alice. You've got, we should just list. Don't you talk Pony Island Whitefish? Everyone forgets Pony Island Whitefish. Yeah.

Brad Nolan's here. Yeah. All right. Later, everybody.