Will the regional bank panic bring down the world financial system? And if it does, what you should do to protect your family.
Don’t take our word for it, listen to our expert panel of economists. Speaking regular talk.
On the Left: Richard Wolff, the leading voice of socialist economics.
On the Right: Richard Excell, former managing director of UBS O’Connor.
Believe it.
They see the same issues with America’s crony capitalism and the elected “representatives” who sell you out to Big Money.
It’s the same all over. New Haven Connecticut, says Wolff. Chicago Illinois, says Excell. Detroit Michigan says LeDuff.
And don’t believe Detroit Mayor Mike Duggan, the Teflon Leprechaun. That’s not a rainbow with a pot of gold. That’s an economic thunder cloud.
If the banks fail, Detroit fails. Just listen to our economist on the left and the right. Guys who make their money to know money. Not steal it.
Charlie and Red take you on a tour of Detroit’s billionaire welfare giveaway. Spoiler alert: The rich get richer. The politicians get fatter. The poor get port-a-potties.
Transcript:
Speaker 1 (00:00:18):
And guess where Jerry’s new bank is headquartered just down the road from Chrissy Ilis new publicly financed hockey arena. It’s
Speaker 2 (00:00:28):
Gary.
Speaker 1 (00:00:29):
What Me is Gary? Gary
Speaker 2 (00:00:31):
Turow.
Speaker 1 (00:00:31):
Gary Turga. Yeah. What I say, Jerry, Gary, Jerry, whatever motherfuckers making money
Speaker 3 (00:01:08):
Just stood breaking the double war bullshit. Dobo bullshit.
Speaker 1 (00:01:13):
Well, the world’s in free fall, but that’s okay because I’m ensconced up here in the upper level of the world. Famous American, Coney Island in the heart of downtown Detroit. Good evening, Karen. Good evening, red.
Speaker 4 (00:01:26):
Good evening Charlie and everybody. How you
Speaker 1 (00:01:29):
Doing? Is his stuff on there? It’s red on. One more time. One more time. Rick. What up Dough? Oh, there. What up dough? Man, you got anything besides that? Hey, that’s Detroit all day. Coming up with what up dough? All right, listen, let me look. The world’s in free fall. Let me read you what my senator is tweeting. Well, one of what’s happening with our money must is our bank going to shut down. What’s going on in the Ukraine? It’s Covid over. Is it May 11th. Yet the whole night Marks K can’t eat Jesus. Okay, bud. New. When I get down, I turn to Senator Debbie stabbing on Michigan who tweets. We are seeing the greatest economic turnaround in a generation. POTUS budget builds upon this momentum by creating jobs, lowering costs for families and reducing our deficit. We’re running. We’re running record deficits. Look here. Now look, here’s the deal. Tell I am too good for this audience. I told you, I’ve been telling you for years now. I told you it’s a house of cards. So it’s time for the hipsters tweeting for the empty head of politicians, the armchair pundits, the financial writers stop with the supply chain already. We printed too much money.
(00:02:51):
Yep. That’s what’s heavy. So now a friend of the, it’s all economics tonight people, you’re going to love it. I brought you the most accessible economist in the world for a round table. No questions too dumb and gentlemen, ground rules do not be eggheads. We have bankers listening. We have boiler makers listening. They’re all smart people. My mom, mom called me last week, Richard and Rich, God, that’s going to be tough. And she said, I’m sorry to bother you this early in the morning, son. You know, she’s retired, she lives alone. She’s watching the tv. She says, but what’s a basis point? What’s a basis point? My 80 year old mother, oh my God, the world’s falling and she doesn’t know what a basis point is. Will she make it to heaven? So
Speaker 5 (00:03:43):
Depends on how lower her basis points are, what her gain is.
Speaker 1 (00:03:47):
So with us friend of the show, Richard d Wolff, I’m going to read the whole thing. Richard, professor of Economics emeritus from the University of Massachusetts Amherst and a visiting professor in the graduate program of International Affairs of the New York, the new School university in New York. He’s founder of Democracy at Work and host of their nationally syndicated economic update. His books include the Sickness in the System when Capitalism fails To Save Us from Pandemics or Itself. His other book, understanding Socialism and his other book, understanding Marxism. Yes, that is correct. Richard is a pinko. He is a socialist communist. And I think pretty much Richard’s winning the argument these days also with us Richel, who they formally called the Wonderboy of Wall Street. He is a professor of finance at the University of Illinois. He spent the majority of his career with UBS O’Connor, a Swiss bank where he was managing director, senior portfolio manager, and head of the fundamental equity market neutral fund. And you can read his work as I do on CK and you start reading it. And he’s really smart. Both of these guys are accessible. So let me start with Richard. Richard, what’s going on here? The fed’s propping up banks with 2 trillion. SVB goes down, signature goes down, credit suis goes down. Was Marks correct all along?
Speaker 6 (00:05:29):
Well, Marx was absolutely right that capitalism is full of contradictions and that he foresaw that they would be increasingly difficult to control and to contain and that eventually capitalism would become very old and begin to have the kinds of problems old people do when they have one sickness and it requires these three medications. But when you give them those, something else goes wrong. So you give them another medication, but it clashes with the first and after a while it’s too many problems crowding in on too many segments of the society and it falls apart. And he was confident in predicting this for capitalism because it’s a real good description of every other economic system known in the history of the human race. Why? So what’s
Speaker 1 (00:06:18):
Going on? What’s going on now? What are we seeing right now? Give me the root cause.
Speaker 6 (00:06:24):
Well, right now we have an accumulation of too many problems. We had an economic crash in 2020. We had a pandemic that we failed as a nation to cope with before those even were behind us. We have an inflation now. We have an interest rate rising to die to deal with the inflation, but the rising interest rate cripples the banks or at least some of them. That’s what I mean. Too many problems. And you solve one and you aggravate the other. Last point, the Federal Reserve stepped in to try to cope with the disaster of the Signature Bank and the Silicon Valley Bank. And what are they doing? They’re opening a limitless supply of money. Any bank who can’t meet its depositor’s requests can go to the Fed and get more money. Hey, we’re having an inflation. Throwing more money into the inflation is a little bit like throwing kerosene on a fire. You’re making one problem worse as you try to cope with the other and you have to begin to ask the question rather than patching this and that in the next bit. Why don’t you question the system itself, stop the taboo in this country, which denies us the chance to talk about that and put it on the agenda where it should have been for the last 75 years. Anyway, well
Speaker 1 (00:07:40):
We’ll get to that though. So let’s go to Wonderboy. Rick. Are we in the trick bag here? Injecting money into an inflationary cycle? Is there a way out of this?
Speaker 7 (00:07:53):
Well, I mean there is a way out of this and the way out of this to start slowing down the money spend. I mean, you talked about the central bank injecting money and printing money, which it has at a historic level right after Covid, but a bigger accelerant I think to this inflation problem was the fiscal spending that went on, which is separate, right? Our government at work, not our presumably independent fed. I think the one thing I would disagree with the other Rich or Richard about is I think this was the problem here was that capital was misallocated, right? Money was invested or loaned to too many bad projects. That happens when money is free, when money’s free, it gets allocated in all sorts of bad ways. We’ve seen this multiple times through history and it oftentimes gets allocated out to other sorts of cronies. And so I would say capitalism, we should give capitalism a try. We actually haven’t tried that here in about a hundred years in the United States. We have cronyism. We don’t really have capitalism. So that’s kind of where I would leave it. But I would say we had Misallocated capital and then Silicon Valley Bank was poorly managed on top of that. So I think there’s some other issues here at stake too.
Speaker 1 (00:09:05):
Okay, let me see. Try, let me get my economic analysis here. We got real shitty politicians who are in the bag for like say Wall Street. We repeal like banking laws like glass Stegel. Money becomes cheap. Nobody’s looking out. Anybody can borrow it. We get into a gigantic housing bubble. It collapses. We got to save the banks. So we come up with what the treasury, which is broke, starts issuing debt. It can’t sell it directly to the Fed, it’s bank. So it sells it to Wall Street, which acts as the middle man who then sells it to the Fed. The Fed being the Bank of the Treasury is also broke, doesn’t have any money. So what does it do? It just adds a couple of zeros to its account. So far so good.
Speaker 6 (00:09:58):
Absolutely, yes.
Speaker 1 (00:09:59):
Okay. That’s called quantitative easing. My mom asked me that one too. So now we got a bunch of fake money going around. Interest rates are cheap, we all know it. You borrowed it, you took it. There was inflation. It was called the stock market. Everybody borrowed money and threw it into the stock market. Everything went. Then you get Silicon Valley Bank and shit like that. Okay? Then a bush contributed to it. Obama definitely contributed to it. Trump running trillion dollar deficits and then Biden with the big firecracker, with the 2 trillion American rescue package, inflation goes out of control. The fed’s not going to pump money in there anymore. It’s going to stop pumping money in it. But what happened? Oh, banks, all the banks like Silicon Valley Bank, they started buying the treasuries bullshit debt at 1% interest. But when the Fed started raising interest rates, guys like me went to the bank and go, Hey man, I want five. Why? You give me one? I want five. All of a sudden, everybody, I did it. I did it a month ago. I’m taking my money out of here, man. I can give five. And they said, whoa, whoa, whoa. We’ll give you five. But if everybody in my neighborhood figured it out, my bank would’ve gone down. Is that about what’s happening boys?
Speaker 6 (00:11:25):
Charlie, if I could just return to one thing, it’s not somewhere that fell out of heaven that the interest rates were low and that therefore businesses borrowed. The interest rates were dropped because at the beginning of this century, we had a crisis called the.com crash. Then a few years later, we had an even worse crisis called the Great Recession. The economy, the leaders of the economy and the Fed and the government and everywhere else were desperate to prevent those crashes from becoming another great depression. And they used monetary policy to try to cope with that problem by dropping interest rates to zero or any suitcases even to the negative. So it’s not that it’s somehow the money is too cheap. That was already an effort to control and out of control capitalism with conventional monetary policy bringing down the interest rates. But of course, if you think about it, what happened was when you bring the interest rates to historic lows, you are sending a message to every capitalist.
(00:12:31):
And here’s what it says. No matter what your problem is, technology, labor relations, market destruction, whatever it is, the quickest and cheapest way to solve your problem is go borrow money. Cause it’s at record. Low interest rates literally approaching zero. So all the corporations did that. They’re all loaded up to here with their debt. They can’t function anymore without, depending on the credit markets. And now the credit markets are shaken by the inflation that moved, as you rightly said, from the stock market to the general economy. And my point, too many problems crowding in the solution to one worsens the other. And you are at your wit’s end. And that’s why Americans feel rightly that everything’s falling apart because economically it is
Speaker 1 (00:13:23):
Rich. You take on that.
Speaker 7 (00:13:27):
Well, a couple things I would say that I think I would probably agree with some parts, but not with everything. First of all, you mentioned that the banks were buying the bonds because the bonds yielding 1% or whatever, not on. They weren’t doing that necessarily because they wanted to. Regulators made them. One of the things that after FI 2008, one of the regulatory changes from dod Frank, and of course Barney Frank was a BO on the board of directors of Signature Bank. We shouldn’t forget that, but they were required by regulation to hold what they call high quality liquid assets, right? Yes. What is that? That’s treasuries and mortgage backed securities. That’s the same thing that the Fed was buying with quantitative easing. So the banks, the insurance companies and the Fed were all buying the same things, which drove the prices to where they were. Now, the only thing I would say differently about the leverage that was taken on is first of all, the leverage at the corporate level,
Speaker 1 (00:14:19):
Time out, out leverage ladies and gentlemen, means debt.
Speaker 7 (00:14:22):
Okay? Debt. The amount of debt at the corporate level in absolute terms is high, is higher than it’s been. But relative to gdp, which I think is the right way to look at it relative to the size of the economy, is not higher than it was in 2008. In fact, for consumers it’s lower. And so I always say that one of the reasons why companies are taking on this debt isn’t necessarily because it’s just free and it’s free money. It’s because they don’t really have better ideas of what to invest in. And that’s a lot more going on to that than just kind of the financial engineering’s card. There
Speaker 1 (00:14:56):
You go. There you go. Which is, they’re stupid. They’re stupid. Like Silicon Valley Bank, you knew. Everybody knew. I Red knew. And Red’s living in the Normandy Hotel guys on Woodward. What is that, 110 a week? 1 39. He gets the cheap rooms because it’s the fourth floor and they don’t got an elevator. His wife put ’em out. It’s a long story he should check out, check us out on that. But the wizards of banking in Silicon Valley, they didn’t buy any insurance. It’s called a hedge an option. It’s like your car insurance. You buy insurance for your car in case you crash it, right? Normally you don’t crash the car so you lose the money. But if you do crash the car, you get your car fixed, which I just went through as well. There. You see, Rhett, this is regular people stuff. So what went on there, Richard and Rich is the, I don’t even know who’s in charge of it, that the treasurer of the bank, I don’t know, but they never hedged. Now they didn’t hedge. Why? Because it was going to hurt their bottom line or they were dumb or what? I’ll give that to you, rich.
Speaker 7 (00:16:10):
I would say a little bit of both. They were greedy. They didn’t want to lose money. And then hedging. Hedging was going to reduce their profitability. But I think they were one of the few banks that didn’t see higher rates coming. And so they should have been hedging and what? Either using options or using swaps, either one of ’em. And you said don’t get too wonky, but what a banks supposed to do, they’re supposed to match their assets and liabilities. Their assets. The loan portfolio essentially was going to reset with higher rates, right? Because they were locking in. Their customers were smart enough to lock in low rates. And so they’re on the other side. That means they’re going to lose if rates move higher. Yet for some reason, I think that’s where the stupidity or greed kicks in. They decided not to hedge, but they were one
Speaker 1 (00:17:03):
Of the two. They made loans at low rates. They bought instruments at low rates, stuff that was supposed to be safe. And now long-term US treasury bonds are toxic. Richard, isn’t this what you’ve been talking about? I mean, it’s a basic bailout for boneheads.
Speaker 6 (00:17:20):
No, it is no question that this is a bailout d desperate politicians need to pretend that it isn’t like saying quantitative easing instead of printing money. So people don’t have any idea think that some fancy new gimmick that’s been right on
(00:17:38):
It is. And I take my cue from the name of your program. It’s a lot of bullshit that is flying around here. It’s our job. Well, for example, interest rates went up and the bank didn’t react. Let me remind you, interest rates have been going up for at least eight months. They had plenty of time. And the Fed kept saying, we’re going to raise it, we’re going to raise it. It became a game in which the only speculation was how much they were going to raise it. Not whether, so they knew that the value of the bonds in their portfolio would go down with each upward movement of the interest rate. They made a decision. And by the way they, that’s a board of directors that, I don’t know exactly the number, but usually it’s about 10 to 20 people that constru construct a board of directors, that bank’s board of directors knew what was happening, knew that it was depressing the value of their assets.
(00:18:34):
They also read, we all did that massive layoffs in the high-tech sector in the hundreds of thousands. If you add ’em up, that’s their depositors in the bank. The troubles that startups were having raising money. So the deposit base was shrinking and the value of their assets was shrinking. Hello, you are in trouble. You got to get in trouble. Talk to people. But we have a capitalist system that allows a tiny minority of people that constitute boards of directors to have special access to the information, be able to make the decisions that shake up the lives of millions of people who, to whom they are in no way accountable. They’re
Speaker 8 (00:19:16):
All, Hey, they’re
Speaker 1 (00:19:16):
All buddies around. They’re all buddies around here, Richard.
Speaker 8 (00:19:19):
Yeah. And I want to ask you something right quick where, because what you saying is they already knew. So did they just continue this behavior? Cause they knew the government was going to come in and bail ’em out?
Speaker 6 (00:19:29):
Absolutely. That’s part of it. We have a fancy terms for that. If you like fancy terms. It’s called moral hazard. It’s when you take a step to fix a problem, but you kind of don’t realize cause you don’t want to what the other consequences are. Every bank in the world is watching the United States as the government through the Federal Reserve bails out the banking system a bear 10 years after the last major bear bailout as if we learned nothing, as if the reforms pass are as thin as toilet paper. Look, that’s the reality. The rest of it is an attempt to put a beautiful face on a pretty ugly pig Rich,
Speaker 7 (00:20:16):
I want to, can I push back a little bit? Yeah, no,
Speaker 1 (00:20:18):
A lot push back a lot. It makes a better program.
Speaker 7 (00:20:21):
Yes. Yes. Bailout who got bailed out? Well, cause I think the term bailout there definitely was a bailout. But let’s ask ourselves who got bailout? Because Richard, you’re making the point here. The board of directors got bailed out. They didn’t get bailed out, they get paid in stock and their stock went to zero. The stockholders and the bond holders, all of their value, all their money went to zero. The management got fired. So those people were not bailed out. Who was bailed out there were bailouts. It was the insured and the uninsured depositors. And so that’s the insurer. The people that had less than 250 grand in a bank account because they have F D I F D I C insurance like every bank does. And they deserve to get bailout because they were in an insured account. Now who got taken care of above that, those were the companies that had more than 250 grand in their bank accounts and that were a lot of technology companies, et cetera. And the reason they bailed them out was the rears and the Fed stepped in to bail them out so they could make payroll. Because if they don’t make payroll and most companies start to go belly up, then what’s going to happen is every company’s going to pull their money out of the banks and the entire banking system’s going to collapse. So I don’t know, that’s necessarily what we wanted to happen. So I just want to push back and say
Speaker 1 (00:21:32):
Normally that’s No, no, no. See, you’re being hostile because that’s not a pushback. That’s absolutely true. That’s absolutely true. And it had to be done because everything’s so fucked up. We agree, we all agree with that. But I’m not sure about it is a bailout because this thing can cascade, as you said. So the Fed set up a true trillion dollar fund for smaller banks, not the big five, but the regional banks. You’ve got one year you can borrow and as your collateral, it’s these bonds that aren’t worth any. Well, there’s worth something, but not the par value, not the face value, not what you thought you were getting if you want to sell ’em today. So my question is, you got all these shitty bonds and you got one year. You got one year to get deposits up to get liquid somehow. How in the world is that going to happen? I mean, aren’t we going to be here 12 months from now going fuck, we got another emergency. Either guy or Karen, if you know the answer,
Speaker 6 (00:22:39):
Charlie, let me try to explain what I meant by bailout. Rich is right. The executives, they made a big point of that. The executives there are fired and all of that. But that’s not who got bailed out. Those are the victim, those are the fall guys. They’re the ones you can piss on. Here’s who got bailed out. Every other bank in this country was able now to get away, to keep the board of directors in their places and the big salaried executives in their places because the government said any bank that has any problem with its deposits is now free to come to a new special window at the Fed and collect the money it needs by providing Lord knows what kind of evidence to demonstrate that they’re in trouble. We know what happened with the P P P. We know what happens all the time when these government programs are set up.
(00:23:41):
This is an invitation. Every other bank has now got its depositors feeling pretty good if they’re got insured deposits. But even if they have uninsured deposits, yes, it was done because the system is so close to collapse that anything like this could be the trigger. But that’s the definition of a system that isn’t working when it is vulnerable like that and has crashes this often of this magnitude. It’s like the person who comes and fixes your busted refrigerator and says to you, I’ll fix it. All right, but you’re going to see me in three weeks because it’s too old. It’s been fixed too many times. It’s got bandaid where it needs aion of the whole business. And therefore, my advice dear, a customer buy a new buy refrigerator, we got a system that doesn’t work for most Americans and they know it.
Speaker 1 (00:24:35):
Sound like DT e to me sounds like our power company, right? Sounds like our power company. Now Richard, I
Speaker 7 (00:24:41):
Think we’re kind of conflating a couple things here. Okay, we’ve got problems at the government side. We got the government problems with fiscal and monetary policy. I completely agree with you on that. See,
Speaker 1 (00:24:50):
Wait, wait. Let’s pause there for a moment. This is important so it doesn’t get lost. It’s actually Richard’s on the right. He should be on the left and Rich is on the left, but he should be on the right. We’ll fix that in post. But we’re all agreeing at a space here and that’s refreshing to hear. Now we, it’s a healthy society when we discuss and argue right? And intellectualize our way out of it. But there’s something good going on here. I’m sorry sir. Rich, please continue.
Speaker 7 (00:25:21):
No, I agree with Richard that we have problems and excesses of fiscal and monetary policy. I totally agree with you on that. However, I think that one thing that’s at its core here too is that we have what’s called a fractional banking system, right? And I’m not going to try not throw a wonky won. Oh look, no,
Speaker 1 (00:25:39):
You two, you did. Because in and the Richard goes, yeah, right, you’re writing. All of us are like what?
Speaker 7 (00:25:44):
Think of Bailey Building
Speaker 1 (00:25:46):
Even. I dunno, that one
Speaker 7 (00:25:48):
You guys have seen. It’s a wonderful life. Think of the Bailey building alone. Yes, I Old Bailey building alone. George Bailey’s taken in people’s deposits and he’s making loans for people to make to buy houses. And so what happens then? Everyone comes and they want their money at the same time. George can’t pay ’em all. Why? Because your money isn’t here. It’s in so-and-so’s mortgage. Your money isn’t here. It’s in so-and-so’s business, right? That’s because what banks do is they take those deposits and they make loans. And by law they’re able to make up loans up to 10 times whatever deposits they take in. And so that’s the fractional part of it. So if everyone comes and wants their deposits back at the same time, any single bank is going to be screwed regardless of how they manage that. Why? Yes, because they’re just not liquid.
(00:26:31):
And that the liquidity that the Fed’s providing is so everyone doesn’t go to Bailey building alone on Monday and want their money back at the same time because they’re going to be made good. Now, fractional banking that’s had that for hundreds of years. And yes, there are times when we have a bank crisis, a liquidity crisis. 2008 we had a solvency crisis because the assets were crap, et cetera. So that can happen and the Fed should step in and make whole the customers of these banks. So there are losses. So it doesn’t feed into the real economy. Well,
Speaker 1 (00:27:06):
What’s what, I don’t think, okay, that’s one thing. Well, I’m going to throw
Speaker 7 (00:27:09):
This. Oh, fiscal monetary is completely separate. And I agree. I agree with Richard. I agree with you guys that
Speaker 1 (00:27:14):
We’re spending too much money. We look, we can’t live the way we want to. Go ahead, Karen.
Speaker 9 (00:27:19):
Carol, I want to ask, all of this is good in terms of understanding where we are, how we got here, and the fact that this isn’t a new space for us as Americans from a financial perspective. But for the average person, what concerns should they have as it relates to our banks not going to be the places to keep our money? I’ve heard people say it should be in other areas. Is it gold? Are we moving to a digital space? And from both of you, we have some viewers that want to know what do you each think the solution to all this is,
Speaker 1 (00:27:55):
Okay, and one minute or less pinko. Richard, you go first.
Speaker 6 (00:28:02):
All right, let me show you what a pinco means. You ask the basic question. Your question is great. Here’s the basic answer. You have to be willing to change the institutions. You can’t keep giving them a pass, fixing them up with this government slap dash job or the next one. And here’s what I mean. We allow the monetary system of this country, which every single person depends on. That’s why your question is good. What is the average person with a savings account or checking account? What are they going to do? And if you have a monetary system, we all depend on what crazy irrationality puts it in the hands of companies who tell you, honestly, we are here to make money. We are here to make profit for this bank at this time in the best way we can. If this system is dependent on the monetary arrangements, then we have to organize it so that the people who depend on it run it. The workers in the bank, the customers of the bank together rerun the bank for them because they’re the majority is a
Speaker 9 (00:29:12):
Credit union. Is that a credit union kind of thing?
Speaker 6 (00:29:16):
Yeah, a credit union is a tentative, weak step in that direction. It’s a good step. It’s better than what you, because it introduces the idea. Make the institution serve the people, right? Banks in this country serve the major shareholders that own them, the executives that run them. And the rest of us live with the consequences and have zero control over what those people do and they screw up with irregularity. That makes it a mystery to me. Why otherwise smart American people allow this system to continue?
Speaker 1 (00:29:52):
Well that’s not very helpful. Where do
Speaker 9 (00:29:53):
You have your mind?
Speaker 1 (00:29:54):
That’s not very helpful for today. That’s the long-term solution. Wall Street. Richard, what should people be doing today? They’re scared. What should they do? They
Speaker 7 (00:30:04):
Are scared, but they are scared and they should be scared because we could be on the brink of a recession and the banks are certainly going to hold off on lending or lending to different people. So it’s going to be a tough time here for sure. What should they do? Well, to the extent that they can, should have up to six months worth of expenses in a bank. Presuming that amount of money is less than 250 grand because that is still insured by the federal government. That money will be good regardless. And so I would keep your expenses so that you and something fairly liquid that you can get to them in case you have a problem with your car or in case you have any expenses you didn’t expect outside of that, I think that’s where it gets a little bit more difficult. Where do people have their money?
(00:30:52):
Well, I think that’s where, you know, looked at do you really want to invest your money in treasuries where the feds buying the treasuries and where the banks are investing it? That looks like a lot of risk for not a lot of return if we look at the returns that we’re getting on those products. And so Karen, you were asking about gold. Gold is a part of the portfolio that a lot of people will have about 10% of their portfolio in there. Because gold is, we know what the value of gold is going to be, right? And it has gone up over time relative to other fiat currencies, crypto crypto’s. Interesting. But crypto’s a very speculative asset. That’s not something that’s going to be something that’s going to be kind of a stable core part of where you should have your money. And I think what you’re seeing increasingly more and more other, more and more people do to the extent that they can is they’re having it. They’re Ty tying it up in rental properties and trying to get a return on their money that way they’re kind of getting out of the financial paper money system where
Speaker 1 (00:31:48):
You didn’t ask me where
Speaker 9 (00:31:49):
Do you two Richards have your money it okay, where? Where’s yours?
Speaker 6 (00:31:55):
Well, I’m like most Americans, I have no idea what’s being talked about. I don’t have any money. I’m going to put away six months of money to take care of my problems. Let me remind you, there are many surveys indicating that the majority of American people can’t meet a $400 unexpected expense because of their money is all tied up.
Speaker 1 (00:32:19):
There’s one right here,
Speaker 6 (00:32:21):
There’s too much month at the end of the money that that’s the joke. But it’s a joke that everybody understands cause it’s part of their life. If we’re going to answer the question, what do people now need? We have to start with the people who don’t have any money and can’t. Everything that Richard said is correct about the different rates and returns and risks that are involved. That’s what the advice is that you give to people who have money. But the problem of most Americans is that their savings between the crash of 2020 pandemic now the inflation and the rising interest rates, they’re not in a position
Speaker 1 (00:32:57):
To do so. That’s correct. And that’s that’s who we live on. You’re going to see that coming up. I got to move this along. This is mine. If you’re fortunate enough and it’s sad when you labor that you got to call it fortune, right?
(00:33:11):
Yeah. Like Wall Street. Richard said, you got to stay liquid. That means you got to have cash on hand. So put six months aside if you have for those that have money after that, my recommendation, and I’m not licensed on anything, so you can’t sue me, this is what I’m doing. There’s something called that I bond. I told you guys that it’s fully backed by the United States Treasury. It’ll give you 1% return plus projected inflation. You can’t touch it for a year. And if you do between one year and five years, you’ve penalized the last three months of interest. But after five years, there’s no penalty. And the three months penalty is negligible. So if inflation’s going go up, what’s the Fed going to do? They’re going to, let’s say they projected at six, they’ll pay you seven, then they’ll reset it in six months.
(00:34:07):
The last time around it was 9.6. No risk. That’s what I would do. Keep some cash, get an instrument. And in the meantime I’m going to be with Pinko Rich and we’re going to be lightening, lightening the torches, getting the pitchforks and these son of a bitches that are supposed to represent us and they don’t do it. It’s getting bad and you can’t build a wall high enough. And I like Wall Street, Richard, because the guy’s from a real place and he didn’t lie. Doesn’t lie. He teaches young people about money. So these two guys, this was the best panel I think ever now be before you guys go, I wrote something, it’s a monologue. You’re both economics professors. I want to read it to you. And then I want a grade. I want a real grade, okay? A real, because this is where the rubber hits the road in the mun, the municipal and state sectors, which nobody pays attention to. That’s where the grease is distributed. But before I do that, let me just tell you, if you are fortunate enough to have a little disposable income, overreaction is not the strategy for the long term investor. Correct? Wall Street, Richard. Correct? That is neither is bearing your head in the sand and hop opening. It all turns out for the best. Isn’t that right? Marxist, Richard?
Speaker 6 (00:35:31):
Yes. That that’s a policy that you should never pursue for anything.
Speaker 1 (00:35:34):
Exactly. So another solution is call pal Luke Nakia Pinnacle Wealth 2 4 8 6 6 3 4 7 4 8 for rational financial advice. And this guy does give me rational financial advice and he and I are going to have a whiskey on the phone tonight to help me with my bronchitis and to talk about this. He’s watching. I know you’re watching Luke. This was interesting baby. And this was for you Luke Acky. 2 4 8 6 6 3 4 7 4 8. Another way to save some money is take a look at your insurance, your car insurance, your home insurance, your life insurance, your medical insurance. I called Legacy partners. I save 1500. What’d you save?
Speaker 5 (00:36:17):
About 2,500. Yeah,
Speaker 1 (00:36:19):
You called them.
Speaker 8 (00:36:20):
Called them. They did a lot of work. Saved a couple
Speaker 1 (00:36:23):
Bucks. Couple, but there you go. All right. They don’t, didn’t hard sell anybody, right? That’s what they do. No, they shop for you. They work hard. They call you back the same day. They give you their number. 5 8 6 2 0 9 4 1 0 6 telling I sent your legacy partners. 5 8 6 2 0 9 4 1 0 6. And finally, wall Street, Richard Socialist. Richard, if you do have a house and you’ve got a lot of credit card debt, you do have equity in a house, the credit card debt costs you a lot more right than your mortgage debt. Is this correct?
Speaker 10 (00:36:57):
Yes. Correct. That’s a lot
Speaker 1 (00:36:58):
More, sir. These are economies. These are the guy on the left. Who’s the guy on the right? This cause big ass banker. This dude, the guy, the guy on the right is supposed to be on the left. Right? He cares about fix it. He just cares about the everyday working proletariat. That’s right. So if you’re lucky enough and you have a house, you got massive credit card debt, there’s equity in your home, the interest rate is less on a refi on your home than it is for your credit card. You guys agree with this, right?
Speaker 10 (00:37:27):
Right. Yeah.
Speaker 1 (00:37:28):
My life, see, not lie. I told you people, I use all of these products. Save. Just don’t be stupid. Call H Hall Financial, right? Whether you’re looking to purchase that home or refinance, get your credit card and all your other debt bundled at a lower rate. You do eight sixty six call hall or call hall first.com. I wish it was a way I
Speaker 8 (00:37:51):
Could refinance my room
Speaker 1 (00:37:52):
At the Normandy. You see that boys? I, when people believe in this program, I give it my all and it’s true. And you don’t get to advertise in this program if you’re some kind of chump. We just don’t do it. Don’t want to be associated with it. Now, if I might, are you ready for my term paper, gentlemen?
Speaker 10 (00:38:08):
Yep. Yes.
Speaker 1 (00:38:09):
Okay. I have the bronchitis, so excuse me, but I’m going to give it, give you something. And I want points for presentation.
(00:38:17):
What a speech mayor Mike Duggan gave last week, a Google of graphs, a kaleidoscope of multicolored charts and all without notes there he stood the Wizard of Woodward peppering his audience at the state of the city speech with a machine gun blast, a massage statistics and tortured arithmetic. The city’s back. He crowed the Silicon Valley of tomorrow. That’s what he foretold. Nevermind that General Motors was preparing at that very moment a press release asking for voluntary buyouts from its 58,000 salaried employees in the United States. The most, the majority of them living right here in Michigan, or that the financial markets were roiling from rising inflation and interest rates, or that Silicon Valley was in free fall as its biggest venture capital bank was failing. Nope, it’s Big Rock Candy Mountain in Motown. That’s by his honors telling. Don’t worry about the billions in handouts through billionaires and multi-billion dollar corporations.
(00:39:23):
Those aren’t handouts at all, but they are. And we’re slipping backwards. The culprit. A parity of property taxes in any healthy municipality. The lion share of operating revenue comes from property taxes. But according to the Chicago Fed Detroit’s revenue from property taxes is a measly 12%. Despite the highest property tax rates in the country, the city of Detroit’s tax revenues have steadily fallen under Duggan’s stewardship. In 2015, the first year after the city emerged from its historic bankruptcies, revenues were higher than they were for 2019 when adjusted for inflation and you always have to adjust for inflation. And they were higher in 2015 than the current projections for 2023. Now guaranteeing wealthy developers a profit with cash handouts, tax breaks, and real estate giveaways is a recipe for cold stone soup. A new developer is guaranteed a profit while longtime landlords have to lower their prices in the face of this subsidized competition.
(00:40:41):
When His honor says his rich stone has received discounts but not handouts, don’t believe the little man standing in front of the tall curtain. The state writes checks and the city hands over property below market rate, thinks skyscrapers and fulfillment centers while insisting he keeps no master list of these deals. Duggan would have you believe that without the bountiful corporate welfare, there would be no demand for Detroit. But how would we ever know? And remember, fewer property taxes means less funding for public safety. But don’t worry about that. Says the Wiz Detroit suffered one less homicide in 2022 than it did in 2021. So things are turning around. Of course, that’s just slight of hand. What the mayor didn’t tell his captive audience is that the police brass buried 37 homicides last year declaring them to be justifiable. That’s 12% of all the murders. You can bet no other city in America does that so bad.
(00:41:49):
Is it 200 police officers left the department last year. And again, not to worry says the Wiz, after the police got a big raise, 25 officers who left Detroit came back. Now I went to public school, but that’s, that’s a net loss of 175 cops. And the city has no guaranteed revenue stream to fund those raises. Then there’s the looming pension crisis. There were about 1000 shootings in Detroit last year. Solutions to the gun violence, his honor announced a 10 million pilot program funded by the Biden Covid money where community groups get paid to broker peace in the neighborhoods. How will they accomplish this? Who knows? Just throw 10 million at it and see what sticks. I say, why not just give the money directly to the Dope gangs then every time they feel like conducting a drive by, we just pay them 10 grand not to do it.
(00:42:51):
And voila, no more shootings, unemployment is down 7% in the city. Isn’t that amazing as the mayor? But the fact is Detroit has nearly 8,000 fewer people working then in November, 2019, because people quit, they simply dropped out of the labor force. That means three of every five adults in Michigan, in not Michigan, Detroit, 60% of adults in Detroit aren’t working or even looking for work. And if you’re not looking for work, you’re not considered unemployed. Abra cadabra. Now you can call it the dark arts of machine politics. You can call it whatever you want. Just don’t call it a back professors.
Speaker 6 (00:43:47):
That’s easy. I give you an a
Speaker 7 (00:43:52):
I I’m right there with you. I give him an A for sure. Maybe even a plus because of the presentation quality too. Oh
Speaker 1 (00:43:59):
Yeah,
Speaker 6 (00:44:00):
Yeah. No, actually I take it back. I’m corrected by my colleague here. The presentation was excellent, the substance was good. And you know, ought to be considering maybe a career adjustment
Speaker 1 (00:44:18):
Professor of Marxism or Senator of the State of Michigan.
Speaker 6 (00:44:24):
Well, I can tell you just personally that the interest in what I do and the way I come at materials is greater now than it’s been in 50 years. I, I’m overwhelmed by it, but I understand it has nothing to do with me. It has to do with the fact that Americans, after a long hibernation in a world in which they pretended they didn’t have to worry about the capitalist system, they, they’re worried. Oh, they’re worried big time and they’re interested. Now, it’s not that they all agree with me. They don’t. And I’m not stupid. I understand that. And we have a long way to go. But the openness to think critically about this system, I’ve never seen it before. I was born in Youngstown, Ohio. I’ve lived and worked here all my life. It is amazing what is now happening a bit below the surface, but it is happening all over the country. It’s remarkable.
Speaker 1 (00:45:19):
Wall Street, Rick, we both probably studied socialist economic theory, I mean was offered at University of Michigan. I took it. I will say this about Marxism. It does the best job of criticizing the pitfalls of capitalism. But in the end, it’s solution stink, I think. But it is a very good gage. I think. I’m not, I
Speaker 7 (00:45:48):
Know I don’t, yeah, I mean, I’m not, I wouldn’t suggest that capitalism is flawless by any stretch. There’s definitely a lot of pitfalls. And like I said, I think one of the biggest ones that we’re is what we see is we actually have crony capitalism and not really pure capitalism because pure capitalism, we allow companies to fail in pure capitalism. So we don’t even have that
Speaker 1 (00:46:08):
Socialist, Richard, you agree with that, right? It’s crony capitalism.
Speaker 6 (00:46:11):
No, I mean it is crony capitalism. That
Speaker 1 (00:46:15):
Goes my great God.
Speaker 6 (00:46:17):
No, no, no, it is. It is crony capitalism. What I enjoy is the fantasy that there’s another kind. When you talk to socialists and communists, they can also, if they’re not very well sophisticated and trained, they can also paint you a wonderful picture that the socialism and communism we have had isn’t the real McCoy. That it’s really, if it was allowed to be what it could be, well, it would be this wonderful thing. And they have a point. But we’ve not yet seen the kinds of socialism and communism that would make us go in that direction. You
Speaker 1 (00:46:52):
Mean the kind that works, but it never going to work because people are fucked. They’re just, go ahead, Ray, just throw it
Speaker 8 (00:46:59):
In just for the common person who’s broke doubt, financial, all this, that and other. I’m going to just say what I think the solution is. Stop letting big business bet on ass. That’s what we say in the streets. You can’t just walk up and get in the dice game on a hope, a prayer, a aisle. And it sounds like that’s what the whole system is to me. Better on ass.
Speaker 1 (00:47:21):
We all agree on that. But see, you, Karen, me, the listener, wall Street Rec and social is rec. We all agree that we do. We lost our way and we better get, and I really got to say, the people that we elect to represent us are so pliable. So for sale stand up, right? There’s money to be made. Anyway, you guys hang out. Look, I want to show you a pe. I wanted to show people and not tell people the examples what the mayor said and I, but I want to show you the reality. So will the economists, will you hang with us and watch this? Sure. Awesome. Now I got the bronchitis. But here’s the thing, people, here’s the other thing. Work. You got to work. No handouts if you can. You know what I’m saying? No blubbering, no pushing your kids off of somebody else. You got to honor your obligations and do what you can do. And for those that can’t do it, we got to take care of them. That’s the deal. But Charlie,
Speaker 9 (00:48:30):
Don’t. Charlie, don’t you agree that, and we’ve talked about this for over time, especially during the pandemic, people saw themselves as undervalued, underappreciated, and undercompensated. So I think a lot of people have either gone back to school, started their own businesses or done other things rather than be abused by the traditional employer employee relationship.
Speaker 1 (00:48:55):
Well then they would be employed. If you’re working for yourself, you’re counted as employed. I people just,
Speaker 9 (00:49:00):
Well, yeah, I know, but I know and I agree with that. People should find something to do if they can. I encourage everybody to do that. But I mean,
Speaker 1 (00:49:06):
Well, I’m answering it because I don’t agree because that’s a cop out. Less than 60% of Michigan as a whole is going to work. There’s jobs. Go do it. Go do it. I don’t know how you live. I’m sorry, I got to be that. I got to be that old school now. That’s how I was ready. You got to work. If you can
Speaker 9 (00:49:28):
See, you do work, but you’re non-traditional opportunities. People are gig workers. People are, I mean, there are these
Speaker 1 (00:49:33):
Testers.
Speaker 8 (00:49:34):
Hey, I am going to say I have to agree with Karen because in my little circle, I know a lot of people who were avid, they went to work, they had no problem with working 40 hours, but the pandemic came along. They had extra resources financially that they didn’t have before. So they gave them the opportunity to pursue their ideal of being their own boss. And since then, some of them have really flourished not to even get back in.
Speaker 1 (00:50:02):
How is it on my back? That’s the dream, right? I’m not attacking that. But if it didn’t work,
Speaker 8 (00:50:08):
You got to go back to work. All
Speaker 1 (00:50:11):
Right, now let Richard and Richard, let me just roll this. So we like to keep it to an hour and then we’ll talk right after it. This me and Red hitting Detroit. Forgive the voice because I’m working bronchitis and not I’m working.
(00:50:35):
So Mayor Mike Duggan, the mayor of Detroit, or as I like to call him, the Wizard of Woodward, likes to tell us that the billionaire developers he’s hooking up, aren’t getting hooked up at all. It’s just a discount. Well, let me give you a refresher. That’s the Hudson skyscraper. It’s all covered in yellow paneling. That’s not building Dan Gilbert, that’s just putting yellow paneling up behind me. That parking lot that’s supposed to be a skyscraper. And behind me over here, you can’t see it because it’s hidden. And that’s good that skyscraper’s supposed to be open. And the only people coming out today are sleepy eye construction workers taking naps during the work hours. All of this 700 million of your dollars. And yes, we send them a check every year. And here’s the next spot, the site of the famous failed Wayne County Jail, where they bull those $400 million because they don’t know what the fuck they’re doing in this town. So Dan Gilbert had a great idea. Why didn’t you give me this property and the courthouse and the maximum security jail and the regular jail and the juvenile hall jail property were $200 million. Give me that. Give 50 million in just in case money. Give me 30 million for parking and I’ll give you 150 million and build you the new jail. See how that works? Well, the new jail’s not ready. It’s over budget and somebody’s going to pay for it. And I bet you it ain’t going to be Dan.
(00:52:13):
What am I doing in this dumpster? I’m having a look around Brush Park described as Detroit’s hottest new neighborhood, but it’s not really hot. It’s cold. And there’s muddy vacant fields and dumpsters and million dollar condos with no drywall. This gorgeous little Pearl brought to you by Dan Gilbert. Yep. We gave him the land. He promised $70 million in development and then we gave ’em 23 million more. That’s how it works in Detroit. They promised me rooftop terraces and greenways, and I’m just standing in a dumpster. The Little Caesars arena, the taxpayer went for that one too. We kicked in 350 million. We borrowed it. So there’s the interest. That’s $700 million. You always got to count the interest. Oh, here comes the Q line. That cost us $250 million. Thanks Dan. Nobody was in it.
(00:53:18):
Now for that 700 million in taxpayer money, Christie promised to make all of this vacant. A city would end a city and then he didn’t. And that was seven years ago. So now he’s back and he wants 900 million more to build some offices and other stuff to make that city in the city. And we’re going to give it to him. But you should know that at the hockey arena, he doesn’t share the hotdogs with the city or the parking or the jerseys. In fact, I’m told when you tip the pizza server in the arena, Chris keeps the money.
(00:54:01):
And let’s not forget about Chemical Bank. Jerry Toga. Jerry used to own a firm called the Sterling Group. His kids run it now because Jerry bought Chemical Bank. Irene first met Jerry when he sold the Guardian building to Bob FAO in Wayne County for three times the appraised value, three times the appraised value. You know what Jerry’s doing now? I’ll tell you what Jerry’s doing now. He’s shitting himself because he took chemical bank and merged it with another bank. And now everybody’s worried that their bank is going to go under. But don’t worry about it. Jerry’s got an ace in the hole. He built himself a new skyscraper for a hundred million dollars. His kids built it and we got to pay 30 million of it. And guess where Jerry’s new bank is headquartered just down the road from Chrissy Ilis new publicly financed hockey arena.
(00:55:00):
It’s Gary with me. It’s Gary. Gary Turow. Gary Turow. Yeah. What’d I say? Jerry, Gary, Jerry, whatever. Motherfuckers making money. And finally the last stop on our walk of shame is the old state fairgrounds. They used to have rodeos here and baby cows, the pet. And you can still see some of the old architecture behind me. And that’s supposed to be a bus terminal. The city of Detroit bought it from the state of Michigan for $7 million in the middle of bankruptcy. And then Mike Duggan turned around and sold it to Chemical. Jerry, Jerry, Jerry Gary sold it to Chemical Jerry for 9 million. The appraised property value about 59 million. But that’s okay because Jerry needs to make money. So he cut a 400 million deal with Amazon to build that, the fulfillment center. And you got that a bus stop that doesn’t exist. So they put everybody out there in the vacant lot with some porta potties in the cold. In fact, amongst the people, I think I see Red.
Speaker 8 (00:56:16):
I want to just ask everybody. They supposed to gave us a 20 million new bus terminal heat air. This is supposed to been done about two, three years ago. Now they talking about another year for the building. What you think
Speaker 11 (00:56:30):
Shit is. Hell, I ain’t did nothing at all. What they said supposed to been something over there, but they ain’t did nothing.
Speaker 8 (00:56:39):
You been sitting out here in the cold for a year while we supposed to been and got 20 million bus stations.
Speaker 11 (00:56:45):
Yep.
Speaker 12 (00:56:46):
As working people. Our tax dollars. We should at least have our bus terminal. They got one downtown, they moved it from over there to here. So when we going to get our bus terminal, we got to continue stand out here and freeze. These people that come out here every day that I see on a daily basis going to work buses late. We out here freezing in Blizzards the rain. It don’t make no sense that our tax dollars is going to waste
Speaker 8 (00:57:11):
What I’m looking at. Ain’t no action being taken. They basically the move, the old bus sheds or about a thousand feet from where the old bus terminal is. Ain’t a bit of goddamn construction going on after two city council votes. 400 million deal later. This is all we get. I guess this is supposed to be the new enhanced bus terminal. As you can see, they gave some bathrooms like this said. And I guess that’s the new structure to protect you from the heat and coal and oh yeah, by the way, it’s wasted money on security. Did you go to the state fair when it was here? Yeah. Which would you rather have the Amazon building
Speaker 12 (00:57:52):
State
Speaker 8 (00:57:52):
Fair? Say no question. And with the, cause
Speaker 12 (00:57:54):
There’s too many kids out here that I don’t even know. This generation of kids don’t even know about the state fair.
Speaker 8 (00:57:59):
So not only did they not give us what they were supposed to give us in the deal, which means nothing for the people, they also took something from us culturally, you feel?
Speaker 12 (00:58:08):
Yeah. On state fair itself, this was a beautiful area. Now it’s like dead.
Speaker 1 (00:58:14):
And now you see how the modern Detroit works. The rich get richer, the politicians get fatter and the poor get babies
Speaker 13 (00:58:25):
In Detroit. Char little duff. No bullshit news hour.
Speaker 1 (00:58:31):
It’s a good piece. Charlie. Yep. Gentlemen, last word.
Speaker 6 (00:58:38):
For many years I worked on city development in the city of New Haven, Connecticut. And I particip that didn’t
Speaker 1 (00:58:44):
Work.
Speaker 6 (00:58:46):
I right. I participated in countless public hearings, redeveloping the downtown, exactly the same thing. And if you just changed the name from Detroit to New Haven, the movie would pass without question and have the same impact and the same content. It’s part of a system that doesn’t work
Speaker 1 (00:59:09):
Rich.
Speaker 7 (00:59:11):
I would echo the same thing. If I’m from Chicago, it’s exactly the same stuff going on in Chicago. So part system doesn’t work.
Speaker 1 (00:59:18):
Alright, that No, that makes me excited in a bad way. But again, we really thank you Professor Richard Wolf and Professor Richard Xcel because that’s what we’re trying to do. Bring everybody together. There’s some place in the middle where we can talk New Haven, Connecticut, Chicago, Illinois, Detroit, Michigan. Don’t believe the height. Stick together. Try love one another. Gentlemen, I hope you enjoyed the power of the No Bullshit News Hour. It’s the best show you ever been on. Even better than you guys’.
Speaker 6 (00:59:54):
And I love the name.
Speaker 1 (00:59:57):
I hope you’ll come back. That was really great. Absolutely.
Speaker 6 (01:00:00):
Absolutely. You invite me, I’ll be
Speaker 1 (01:00:03):
Here. I’m going to send you Coney Dogs from the historic American Coney Island. Both of you text me your addresses. You got my number, text them. Little special surprise from Detroit coming, Karen. Love you girl. Enjoy Jamaica.
Speaker 9 (01:00:17):
I’m not, I’ll be back Monday. I’m not leaving until after the show. Monday’s a trip.
Speaker 1 (01:00:21):
We so, bro, she can’t only go to Jamaica for a day. I’m
Speaker 9 (01:00:23):
Not leaving until the show Monday and then I’ll be gone for a week.
Speaker 1 (01:00:27):
Oh, see that? Because Karen works. I’m not going until after the show. See that? All right. That’s how you do, right?
Speaker 8 (01:00:34):
I’m, I’m going to Jamaica Street. I got a show over there in two weeks. Man. Going to wear some Bahamas shorts. My
Speaker 1 (01:00:44):
Man. Hey, don’t, don’t rub that gold too much. Silver.
Speaker 8 (01:00:47):
Silver.
Speaker 1 (01:00:48):
Yeah. Don’t rub that silver too much. You’re going to turn green. Motherfucker
Speaker 8 (01:00:51):
Not. Not at all.
Speaker 1 (01:00:52):
Later guys. Later everybody.
