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March 13, 2023 - The Ben Shapiro Show
56:43
Is The Economy About To Meltdown?
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Well, the second biggest shutdown of a bank in U.S.
history happened over the course of the last 72 hours, and people are freaking out.
And there's a reason that they are freaking out when a major bank goes belly up like Silicon Valley Bank just did.
That freaks out everybody, especially because as it turns out, Silicon Valley Bank is apparently not the only bank that has the same kind of issues that shut down Silicon Valley Bank Signature Bank has also been closed right now.
There is now talk about the possibility.
Of other banks following in the footsteps of Silicon Valley Bank and having serious problems on their hands on their own.
That would include, for example, First Republic apparently has similar issues to SVB.
So we're going to go through exactly what happened with SVP, why it shut down, and we'll talk about whether there's a system wide banking issue.
The first thing to understand is that the reason for all of this is federal government mismanagement.
The reason for all of this is because the federal government blew it on inflation and then had to ramp up the interest rates in order to fight the inflation.
So, here is what happened.
According to the Wall Street Journal, SVB Financial is the parent company of Silicon Valley Bank, which counts many startups and venture capital firms as clients.
So this means that a lot of people are sort of laughing today because look at all the big tech bros who are about to go under.
Now here's the reality.
What's actually going to happen, as we'll discuss in a moment, is that the federal government is going to bail out the depositors, meaning that all of the people who had their money invested in Silicon Valley Bank, everybody who took their money and put it in Silicon Valley Bank and left it there, and then they would take Swing loans in order to pay their staff.
All those people will be fine.
It's the bank itself that is going to shut down.
This does mean the federal government is violating its own rules.
The Federal Deposit Insurance Corporation, which is supposed to give you back $250,000 of your deposits.
Every time you go to the bank, you'll see there's like a little sign on the bank teller window that will say, FDIC insured up to $250,000.
Well, most people who are running companies keep a lot more than $250,000 there.
The FDIC is going to fill in all of those people anyway.
This does create a situation of moral hazard.
But what happened here is that SVP Financial had billions and billions in total deposits.
They had about $200 billion in total deposits by the end of the first quarter of 2022.
That was a major increase in the amount of money that they had in deposits from the first quarter of 2020.
In 2020, they had $60 billion in deposits.
By 2022, they had $200 billion.
Why?
Well, because between 20 and 2022, we injected more money into the American economy than any time in human history.
We just shoveled money out the door.
And a lot of that money went to the big tech companies.
A lot of that money went to firms that didn't know where to put the money, and so they started shoveling it to tech.
Because remember, that was a tech boom.
It was really a tech bubble.
It was very reminiscent of the dot-com bubble of 1999-2000, where all of a sudden, Firms that really should not have been valuated at the valuation that they were being provided were suddenly being valuated at extraordinary prices because people had money just gushing out of their pockets.
Like, what am I going to do with this?
Well, I can go invest in Petco.
I can go in Pets.com.
I can go take my money and I can put it in some weird venture capital attempt and I can just throw the money at it because what else am I going to do with this money?
And so all of those companies then took their money and they put it in Silicon Valley Bank.
And so you saw the balance sheet expand dramatically For Silicon Valley Bank Financial.
So this created a question for Silicon Valley Bank is the way the banks actually make money.
They don't keep your money in a lockbox.
It's not like you have a safety deposit box and you bring in your million dollars and they take it in cash and they shove it into the wall or something.
That's not what they do.
Instead, it's all digital.
And what they do is they then lend out the money to other possible ventures or they go and they buy bonds or they go and they buy stocks.
They invest the money themselves and then they essentially arbitrage the difference between what they have in their coffers and what they owe back to you and what they think they can earn from the markets.
So what exactly did SVB Financial do with this massive influx of cash?
Well, they started buying tens of billions of dollars of seemingly safe assets, primarily long-term U.S.
treasuries and government-backed mortgage securities.
Which means that SVP's securities portfolio rose from about $27 billion in the first quarter of 2020 to $128 billion by the end of 2021.
So they took all that money that was being thrown out there by the federal government, this inflationary wave by the federal government, they took all that money and they shoved it back into U.S.
treasuries.
Well, normally the U.S.
Treasury is supposed to be pretty safe, right?
I mean, the way the U.S.
Treasury works is that you take $950, you invest it in a $1,000 bond, and that $1,000 bond is supposed to come to maturity in, say, 10 years.
And that means that your rate of return on the $1,000 bond is, you know, a few percentage points.
And that's fairly safe because you know you're going to get that money back.
The problem is if the interest rates dramatically increase, then the value of your bond drops really dramatically.
Because let's say that you buy a bond and that bond is going to give you a yield of 4%.
And then suddenly there is an interest rate increase.
And so the government is issuing bonds at a much higher rate.
Well, then the market for your bond, which is going to earn you a much lower rate, The market just disappears.
Suddenly your bond is worth like nothing because I can go down the street and get a brand new bond issued by the U.S.
government that is going to earn me a much greater yield than the bond that you are now.
You're going to have to sell your bond at discount to compete with the new bonds that are being issued by the federal government.
This is why when interest rates increase, the prices of bonds that are currently on the market tend to drop.
So they tend to work in sort of Counterbalance to one another.
So what happened here is that SPV Financial thought that they were being safe by buying a bunch of U.S.
Treasuries, but they were being stupid because they didn't look at the market and say, okay, wait, inflation is likely to follow here.
And so when inflation follows, you're gonna have to ramp up the interest rates.
When they ramp up the interest rates, what is likely to follow is that the bond holdings that we have are going to drop in value.
So if there's run on the bank and all of our money is invested, all of their money, all of your money is invested in the bonds, we're gonna have to sell off those bonds at a loss and that's gonna bankrupt the bank.
That's essentially what happened here.
We'll get to more of the explanation in just one moment.
First, in this economic climate, it's pretty sketchy out there.
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Okay, so good.
Again, according to the Wall Street Journal, they bought all of these securities.
The problem, Emerge, is that because they pay fixed interest rates for many years securities, that's not necessarily a problem unless the bank suddenly needs to sell the securities.
Because market interest rates have moved so much higher, those securities are suddenly worth less on the open market than they are valued at on the bank's books.
And as a result, they can only be sold as a loss.
That's what I was telling you.
The price on the bonds they had bought declined from when they had bought them because of the interest rate increases necessitated by the inflation.
So as the Wall Street Journal says, at the same time, SVB's deposit inflows turned to outflows because clients were burning cash and they stopped getting new funds from public offerings or fundraising.
So remember, all of their clients are tech companies.
Those tech companies are very reliant on inflation.
Those tech companies were burning through cash at an extraordinary rate.
For about two years there, if you were a company that was in search of public financial capital, you would just seek to get bought up by what was called an S-PAC.
A SPAC.
You sought to be bought up by a publicly traded company that didn't have any content to it.
It was basically just a slush fund and then it would buy you and then you would become the publicly traded company.
We've seen a few of these.
Truth Social was funded through a SPAC, for example.
But when all the money dried up, then suddenly all these companies came up short.
They've been burning through cash at this extraordinary rate because there was so much cash flowing through the system.
And then interest rates increased.
People stopped spending money quite as much.
All the investments dried up.
And at that point, everybody started trying to draw down their balance of the bank.
And when they started to draw down their balance of the bank, suddenly the bank had to figure out, because everybody is operating on essentially marginal deposits, right?
Everybody at the bank.
Again, they keep a certain amount of money at the bank, like what they have to by law, but then the rest of it is being lent out or bought or whatever.
And so suddenly, if everybody goes to the bank at the same time, you have the Mary Poppins scenario, right?
Everybody goes to the bank at the same time, it's a run on the bank, and everybody freaks out because they have to shut the windows.
There actually is no money at the bank.
And so how do they fill back in that hole?
Well, they have to go and they have to sell all these bonds at a loss, which bankrupts the company.
So on Wednesday, SVB said it had sold a large chunk of its securities worth $21 billion at the time of sale at a loss of about $1.8 billion after tax.
The bank's aim was to help it reset its interest rates at today's higher yields and provide it with the balance sheet flexibility to meet potential outflows and still fund new lending.
And then it tried to raise about $2.25 billion in capital by selling stock.
The problem is that the run was already on.
Everybody went to get their money.
On Thursday, customers tried to withdraw $42 billion of deposits, about a quarter of all of the money that was supposed to be held in the bank.
And it just ran out of cash.
And then other banks started to get hit.
Because there were other banks that were invested in this bank.
Stocks of other mid-sized lenders like First Republic Bank and Signature Bank were halted on Friday morning.
And in fact, Signature Bank essentially went into receivership for the exact same reason.
They were invested in Silicon Valley Bank and also they were heavily invested in bonds.
And so the question becomes, okay, so what happens next?
So that's two questions.
Question number one is, are they going to bail out SVB?
Are they going to bail out the depositors?
How many other banks are in the vulnerable position that SVB was in?
How many banks are not telling you they're in that vulnerable position?
And nobody really knows the answer to that.
There's a lot of unease in the markets today because even if the depositors of Silicon Valley Bank are bailed out, well, what happens to all of the, what happens to all the unsecured credit holders in Silicon Valley Bank?
There are a lot of people, in other words, who invested in Silicon Valley Bank.
They're not going to get their money out.
That money is now gone.
And Silicon Valley Bank was a big concern.
So that means those people are going to lose a lot of money, which means they can't hire.
It means they can't fire.
It means they can't, like, they're bankrupt.
I mean, it can bankrupt a lot, a lot of people.
And so we are in the same situation, financially speaking, that we were not to the same extent as we'll discuss in a moment.
During 2007-2008, when you started to see major financial institutions go down because they'd made bets that they did not see as being risky because they thought the federal government was going to backstop them.
Now, again, This is almost a mirror image, in terms of the morality of it, of 2007-2008.
You had a bunch of financial institutions who were tacitly relying on the promise that the federal government was going to fill them in to make risky bets, and then those bets fail, and then the federal government does indeed at least fill in the depositors.
Now, they're not going to save Silicon Valley Bank here.
Silicon Valley Bank will not be a going concern from here on out unless there is somebody who comes in, sweeps in, and actually buys up the assets.
Now, that could have been done on the open market anyway, right?
There could have been... Elon Musk talked about buying up Silicon Valley Bank, for example, and then going and finding investors to fill in what depositors were owed.
Because it's not like Silicon Valley Bank had no money.
It's not like they went from $200 billion in holdings to $0 in holdings.
They still were able to liquidate some of the bonds that they had on the market.
They would need somebody to come in and buy them up and fill it back in, and people would presumably continue to invest in Silicon Valley Bank once they realized that the run was over.
But that's not what the federal government did.
So the federal government had basically two concerns here.
Concern number one is making sure that this thing did not spread directly from Silicon Valley Bank to the rest of the system.
That there wasn't a meltdown where depositors lost their money and so everybody across the system went, hold up a second, my money is not safe at my bank.
I'm gonna go do a run on the bank right now.
And because there is a sort of herd mentality when it comes to this stuff, is my bank safe?
Are they doing the same thing?
Are they lying to me?
And everybody goes get their money at the same time and suddenly a lot of banks start to go under and it looks very much Like 2007, 2008, and the federal government rushes in to fill in the gap.
The other is the moral hazard created by the simple fact that over and over and over again, the federal government keeps doing things and people keep relying on the federal government to fill in the gap.
In 2007, 2008, the presumption was for everybody who was invested in subprime mortgages that the federal government was going to back their play because Fannie Mae and Freddie Mac, which were quasi-government subsidies, subsidized, they were backing that play.
In 2007-2008, the smart money was that the federal government was backing subprime mortgages.
So, what's the big deal if we mix in a bunch of crap subprime mortgages with actually good mortgages and then we mix it all together and create a credit derivative structure that allows us to create a crap sandwich and then Everybody eats the crap sandwich, but most of the sandwich is not crap, so it's probably okay.
Well, as it turns out, the federal government stepped in to save everybody from their own stupidity in relying on the federal government.
Same sort of thing here.
Because all of these companies relied on the federal government not to raise those interest rates to dramatic levels.
That's exactly what happened with SVP.
They said, yeah, we can see that you're inflating the currency, but we will bet that you're not going to raise those interest rates to high levels, even as Jerome Powell was saying we probably will.
And then, of course, things went south and now they're going to get bailed out by the federal government, at least the depositors are.
And it's a question as to how much, how many other institutions are going to be guaranteed that way, which raises the question as to if depositors are just getting bailed out by the FDIC.
Then why exactly is the federal government subsidizing a bunch of banks in the first place to engage in investments they would not make with their own money?
Because that's really what you're talking about here.
We'll talk about the moral hazard in just one second first.
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Alrighty, so, The federal government, again, has two main issues here.
One is to ensure everybody, it's all fine.
It's all going to be fine.
So Janet Yellen, the former head of the Federal Reserve and current Secretary of the Treasury, she says two things.
One, we're not going to bail out SVP.
Two, the banks are in good shape.
We're totally fine.
Your counterpart in the United Kingdom has said that the government there has ruled out a bailout of the UK arm of Silicon Valley Bank.
Have you also ruled out that kind of government intervention?
Well, let me be clear that during the financial crisis there were investors and owners of systemic large banks that were bailed out and we're certainly not looking and the reforms that have been put in place means that we're not going to do that again but we are concerned about depositors and are focused on
Okay, so she says we are going to make sure depositors are taken care of, but we're not going to save Silicon Valley Bank.
The question is whether that's going to be enough to quiet the financial markets, because let's say that you are a bank.
You're like, okay, well, my depositors are safe, but I am not safe.
So there are a lot of the banks right now that are looking over their shoulder.
Joe Biden's OMB Director, Office of Management and Budget Director Shalanda Young says, don't worry, our banking system is safe and secure.
Everything's good.
So you can tell the American people this morning, because I think this has caused a lot of concern, that the U.S.
banking system is safe and secure.
I think the voice here is our Treasury Secretary who is our lead in working with regulators.
That's the appropriate person we should listen to here and who's tracking this the most closely.
But again, what I will say is after the financial crisis, the reforms put in place have given regulators more tools and our system is more resilient and the foundation stronger because of it.
Okay, so what is the final outcome here?
So what they've decided to do is they're going to, number one, bail out all the depositors.
So all the depositors, people who had their money in SVB, they're going to get their money out.
According to Politico, after a white-knuckle weekend, you can be confident payroll will be met, checks will clear, your company will have access to every cent of its Silicon Valley Bank deposits, not just the FDIC-insured limit of $250,000.
After federal agencies stepped in on Sunday evening to backstop the failed bank and attempt to stem a burgeoning crisis among the nation's medium-sized banks, if you're a banker, investor, financial regulator, business owner, or Biden administration official, you might still be plenty nervous.
While Sunday's announcement was aimed at restoring faith in the banking system, the earlier Monday is that markets might not be buying it because another mid-sized bank, First Republic has similar issues to SVP and they've come under close scrutiny over the past week and they saw their shares drop precipitously in early trading.
That would suggest that the federal government's emergency moves last night could just be the beginning, not the end of the Washington response.
So here is what the Treasury Department, Federal Reserve and FDIC have already announced.
One, depositors will be able to access all of their money.
How exactly?
Well, apparently any losses to the deposit insurance fund to support uninsured depositors will be recovered by a special assessment On the banks, certain unsecured debt holders and shareholders will not be protected and also senior management has been removed.
So they're decapitating the rest of the company and they're going to pay off the depositors, which again raises the question as to why we aren't banking directly.
I mean, this is what Elizabeth Warren wants.
She wants us to just bank directly with the federal government and then the federal government can just give risky loans to everybody else and bail out those people.
Well, if you're SVB, that's kind of what this looks like in practice, actually, just without, just with the federal government as kind of the shadow monster in the background waiting to do all of these things.
There's also the bank term funding program that is going to have, it's going to be a federal lender.
SVB's problem was it had too much of its money invested in long-term treasuries and mortgage-backed securities that tanked in value as the Fed raised those interest rates.
There are other banks with the same problem.
To make sure they don't suffer the same fate, there's a new agency, yay, new government agency, that will allow them to access loans with generous terms.
Instead of having to sell off their interest rate-ravaged treasuries, they'll be allowed to use them as collateral for a loan at their original value.
So they are going to now get a loan from the federal government on the basis of the bonds that they are still holding.
Now, the federal government, of course, has an interest in that because they don't want to see the bond markets, the secondary bond markets, absolutely tank, which, again, would force another rate rise, presumably in the interest rates.
Meanwhile, New York based Signature Bank was closed and we'll get the same exact treatment as SVP.
This one, this one's pretty spectacular considering that SVP, you know, that that's one thing.
Signature Bank is a person on the board is Barney Frank.
Barney Frank is the guy who was involved in Dodd-Frank.
Barney Frank was the head of the House Financial Services Committee for decades.
And he was on the board over at Signature Bank, which shows you that the regulators who are very often in charge of these banks, let's just say that they have a finger in the pie very often.
And they never bear the results of their own bad decision making.
So in a second, we'll get to the problems.
There are really two problems here of Systemic moral hazard.
We'll get to that in a moment.
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Okay, so.
Hilariously, Larry Summers, the former Secretary of the Treasury under Bill Clinton and a person who had predicted the inflationary increase, he says, guys, we don't need the moral hazard lectures.
Quote, this is not the time for moral hazard lectures or for lesson administering or for alarm about the political consequences of bailouts.
Well, actually, this is exactly the time for moral hazard lecturing.
I mean, when the moral hazard arrives, that's when you normally lecture about moral hazards.
It's a moral hazard is the concept in economics.
And when you incentivize bad decision making, you get more of it.
So in other words, when you bail out depositors, What you are doing is telling them it does not matter where you put your money.
You put your money where you can get the highest return, you'll get your money back.
Because the Federal Deposit Insurance Corporation will always pay you back your money.
So instead of you being a wise consumer and looking at the various financial products and services provided to you in the market, instead you just say, which one of them promises the highest rate?
So long as that firm is of sufficient size and scale in the United States economy, you will get your money back.
That's a pretty major moral hazard.
It means that basically it's now up to the federal government and not to consumers, which firms ought to be successful and which ones ought not to be successful.
Because again, right now, the too-big-to-fail phenomenon that was supposed to die back in 2007, 2008, that, wrong, wrong.
Because again, the moral hazard that attaches here is twofold.
One, you have, let's say that you run a bank.
And your generalized feeling is the way that I grow my bank is by promising 9% returns.
In order to get to those 9% returns, I'm going to push out risky loans, like I'm going to take big swings in the market.
And I know that my as long as I have $200 billion in deposits, all those people can get their money back.
So worst case scenario, worst case scenario is that everything goes belly up and I end up in a bad personal situation because the bank goes bankrupt.
But best case scenario, I become one of the biggest banks in America because I'm promising 9% returns and all my depositors are going to get back their money.
So you are actually incentivized to take these riskier swings.
You are incentivized to do stupid things like buying tons of bonds in a market that is about to increase interest rates rapidly over the course of two years.
So that is a moral hazard.
It's a moral hazard for the people who run the banks.
Second, it's a moral hazard for the depositors, because if you're a depositor, again, you just put your money where you are promised the highest rate of return.
So instead of you actually actively looking at the bank where you put your money, you say, should I put it in this safe community bank that I know is going to give me back 3% year on year?
I know the people who run the bank.
I vet them.
They're not going to take the money and make stupid moves with it in order to get me that extra percentage point or two.
Instead of that, you just say, well, you know what?
I'm getting my money back no matter what.
Federal government's going to pay me back.
So, I totally understand the bailout position because, again, the urgent is generally the opposite of what is necessary.
The urgent and the necessary are constantly at war with one another in the financial markets.
The urgent is bail it out so the economy doesn't collapse and you don't have more banks that do this because they've all relied on this system.
The necessary is that at a certain point, you're actually going to have to have one of these banks go into receivership and the people who have their deposits in the bank, you're going to have to have those people rely on somebody else to come in and fill that back in when the bank is bought for a very low price.
Now, presumably, anybody who comes in and buys that bank is going to have to fill back in those deposits.
I mean, those deposits do exist.
Those are outstanding debt secured against the actual assets of the bank, usually.
With that said, why not allow this to go to the open market?
You could theoretically do that.
You could allow it to go to the open market.
So, listen, I get the various considerations.
It's very much like what happened in 2007, 2008.
Everybody was very against TARP.
Everybody was very against the idea that we're going to bail out the banks because, again, it was creating incentive structures for banks to make moves like this in the future.
Those incentive structures will continue to exist so long as the federal government is in the belief system of we fill in the mistakes made by big banks.
This is why you are seeing the federal government basically take the untrue position that it will cost the taxpayer nothing to do any of this stuff.
It'll be totally fine.
We'll magic money out of thin air.
Don't worry, it's not actually a bailout.
So that is the big moral hazard.
Then there's a secondary moral hazard, which again, is that banks like SVB, they had other priorities.
Their top priority was not, in fact, making money for their depositors in a safe and secure way, in a risk In a risk-neutral way.
Instead, SVB, it turns out, was a very, very woke company.
They didn't even have, as it turns out, a risk manager.
According to the UK Daily Mail, collapsed lender Silicon Valley Bank operated without a chief risk officer between April 22 and January 2023, while the operation's United Kingdom-based head of risk stands accused of prioritizing pro-diversity initiatives over her actual role.
This revelation comes after the firm became the largest bank to collapse since the 2008 financial crisis, disclosing a $1.8 billion loss in its finances.
SVB's former head of risk, Laura Izurieta, who formerly performed a similar role at Capital One, left the bank in April 2022.
She was not replaced until almost a year later when the bank hired Kim Olson, formerly of Japanese bank Sumitomo Mitsui.
The bank announced Olson's hiring in January with a press release saying she brought 30 years of financial services experience.
The bank's CEO credited Olson's deep and multifaceted financial services experience as a senior risk leader that positions her perfectly to manage SVB's financial and non-financial risks.
But meanwhile, Jay Irsipa, who acts as CRO for the bank in Europe, Africa and the Middle East, the chief risk officer, and who describes herself as a, quote, queer person of color from a working class background, organized a host of LGBTQ initiatives, including a month long pride campaign and implemented safe space catch ups for staff.
In a corporate video published just nine months ago, she said she could not be prouder to work for SVB, serving underrepresented entrepreneurs.
Professional network Outstanding listed UrsaPath as a top 100 LGBTQ future leader.
Apparently she is quote unquote allies with gay rights charity Stonewall and her author numerous articles to promote LGBTQ awareness, and these included Lesbian Visibility Day and Trans Awareness Week.
So obviously there's a lot of people who.
You know, I think we're deeply concerned with the things that matter.
Really deeply concerned with all the things.
Bernie Marcus.
Who is a major investor on his own.
He ripped the wokeness of the bank over the weekend.
He's like, guys, shouldn't you actually have some priorities like risk assessment?
I think that the administration has pushed many of these banks into more concern about global warming than they do about shareholder return.
Everybody is focused on diversity and all of the woke issues and not concentrating on one thing they should, which is shareholder returns.
So, according to the Wall Street Journal, Silicon Valley's bank failure hit not just its depositors and investors, but also its customers.
The business is financed by SVB for years, now look riskier.
Shares of home solar installer Sunrun, for example, fell 12% on Friday.
Roku set about $487 million of its $1.9 billion in cash Was at SVB.
Apparently they are going to get all of their money back.
So again, you see what the government is trying to do and you also see why it creates future hazard.
This is always the game with the federal government.
When it comes to the federal, you get into bed with the federal government and eventually someone is going to end up being screwed.
If you're lucky, you're big enough that it's not you and it's somebody else.
But there is, um, there's a real problem here.
If you're a smaller bank and this happens to you, do your depositors get back their cash?
Does the federal government really step in?
I mean, presumably the answer now is going to be yes.
That for all time, the actual real way the banking system in the United States is now going to work, according to the federal government, is anytime a bank starts to go under, the federal government is going to step in and it's going to secure the deposits of the people who put their money in the bank.
Which does raise the question as to whether these banks actually work for the federal government.
Because again, this means the federal government is now subsidizing the risk-taking by people who are concerned with things like ESG.
Which is a problem.
Because again, the markets were supposed to sort this sort of stuff out.
When you fail, you are supposed to actually fail.
When you're not good at a thing, you're actually supposed to lose.
But again, apparently the basic idea here is that we got to stop the meltdown while we got to stop the meltdown.
While I'm sympathetic to the stop the meltdown mentality, considering that everybody has money in the market at this point, at some point you're going to actually have to let consequences take place for firms that make bad risk assessment.
And those consequences are going to have to hit people who put their money in banks like this.
And the way that that's going to rejigger the system will allow for better and more meticulous risk planning.
So anybody who says that this is a quote-unquote failure of capitalism, no, this is a failure of corporatism as always.
When the government creates systemic risk structures that favor too risky behavior and then bail out sort of the downside risk, this is what you get.
Not a giant shock.
Okay, in just a second, we'll get to the Oscars last night.
It was an incredibly dull Oscars, but it was Diversity Forward, which is the thing that matters most.
First, let's talk about how you get better employees at your firm.
So, let's say that you run a bank and you actually would like a risk assessment officer who assesses risk rather than promoting various diversity days.
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Also, What if I told you there's one book that has done more for literacy than any other book?
It's shaped literature, art, culture, government, countless lives.
Of course, I'm referring to the Bible.
You know who else?
It's had an influence on Jordan Peterson.
In addition to his Exodus series, Jordan has a documentary called Logos and Literacy.
He traces the Bible through history to show you the impact it had on the Western world.
Here's some of the trailer.
I was very much struck by how the translation of the biblical writings jump-started the development of literacy across the entire world.
Illiteracy was the norm.
The pastor's home was the first school, and every morning it would begin with singing.
The Christian faith is a singing religion.
Probably 80% of scripture memorization today exists only because of what is sung.
This is amazing.
Here we have a Gutenberg Bible.
Bible printed on the press of Johann Gutenberg.
Science and religion are opposing forces in the world, but historically that has not been the case.
Now the book is available to everyone.
From Shakespeare to modern education and medicine and science to civilization itself.
It is the most influential book in all of history and hopefully people can walk away with at least a sense of that.
It's a fantastic piece of work from Jordan.
Now, this is the part where I'd normally tell you Logos & Literacy is only for DailyWirePlus members, but we are making it available for free for everyone right now at DailyWirePlus.com.
Only for a limited time.
So, watch Logos & Literacy today at DailyWirePlus.com.
Meanwhile, last night was the Oscars.
I believe that it just ended like five minutes ago.
As always, the Oscars is way too long.
It was apparently quite boring.
It did have some moments.
So first of all, the overall Oscar analysis, diversity always wins.
So you can bet these things.
I mean, seriously, if you're going to bet the Oscars, always bet on the diversity film in order to win.
This year, the diversity film was indeed everything, everywhere, all at once, all the time, forever.
And that film was likely going to win.
Now, normally what happens with the Oscars is that there is a film that sort of emerges as the early frontrunner, and then there's a backlash against the film, and then some other film wins, right?
You'll remember that happened the year that it was like three billboards at Ebbing was in the lead, and then all of a sudden it just sort of fell away because everybody's like, ah, it's a lot of white people in that movie.
We can't do that.
That thing sort of happens a lot.
Well, the Oscar winner last night, the big Oscar winner that took everything home, was everything, everywhere, all at once, forever, for the rest of time.
That movie ended up winning Best Actress for Michelle Yao.
It ended up winning Best Picture.
It ended up winning also, I believe, did it win Best Director?
I think it won Best Director as well.
It won Best Director.
It basically swept.
Now, the reason that it swept is because it fulfills two intersectional check boxes.
It fulfills the Asian intersectional checkbox, and we already had Parasite, the one a couple of years ago, so we've done that, but it's a very gay movie.
Everything all at once is a very LGBT movie.
The main storyline is essentially an Asian immigrant mom who is working really hard and ignoring her family, but she has to learn that her lesbian daughter's girlfriend should be introduced to grandpa, who has to be taught to accept The new ways of the world.
The whole movie is about alternative universes and parallel universes.
And in one of them, Michelle Yao herself is a lesbian.
Oddly, her daughter is a lesbian in all the universes, apparently.
But Michelle Yao is a lesbian in some universes with Jamie Lee Curtis in like Hot Dog Fingers universe.
None of this makes any sense unless you've seen the movie because the movie itself does not make a whole hell of a lot of sense.
I was kind of lukewarm when I first watched it.
The more I reflect on it, the less I like it.
There's a Hollywood and quiet ballot that got revealed before this.
I said I had to watch, I had to sit there like four times to get through it.
I think that's right.
The movie itself is 139 minutes.
It's really, really long movie.
I mean, 139 minutes is a two hour, 20 minute film.
This movie should have been done about 140.
In any case, it's not like a horrible movie.
It's just kind of nonsensical in a lot of ways.
And then finishes with sort of the mushy.
Can't we all get along story.
In any case, that was sort of the only big political moment of the night.
There were a couple other political moments.
That was the big one.
Was the Oscar winning director, Daniel Shynard, saying that I used to dress in drag as a kid and no one's threatened by drag.
No one.
Because I used to dress in drag as a kid.
Spread your morality.
Hollywood, do it.
We want to dedicate this to the mommies, all the mommies in the world, to our moms.
Specifically my mom and dad, Ken and Becky, thank you for not squashing my creativity when I was making really disturbing horror films, or really perverted comedy films, or dressing in drag as a kid, which is a threat to nobody.
Um, so, yeah, that's, um, I mean, I'm sorry.
Talk to us more about your morality, Hollywood.
Yes, I want to hear from Hollywoodites how to raise kids.
That's definitely what I want to hear.
So, Everything Everywhere All at Once was the big winner last night, again, because of the diversity.
I will say that the best moment of the Oscars was a winner, again, it swept, from Kei Haekwon.
You'll remember him as the short round from Indiana Jones and the Temple of Doom.
He was handed the award by Harrison Ford.
I will say it's kind of amazing that Harrison Ford still has not won an acting Oscar, but Kei Haekwon, who would have called that?
That short round is going to win an acting Oscar before Harrison Ford.
But in any case, he did give a quite wonderful speech last night.
My journey started on a boat.
I spent a year in a refugee camp.
And somehow, I ended up here on Hollywood's biggest stage.
They say stories like this only happen in the movies.
I cannot believe it's happening to me.
This, this is the American dream!
Yeah, that's quite wonderful.
That really is, like, a nice thing.
And I think that's why everybody was rooting for Kehek Kwan.
The other aspects of sort of the diversity picks were, for best actor, a straight white male won, but playing a gay white male, of course.
An overweight, morbidly obese gay white male, that'd be Brendan Fraser in The Whale, who won over Austin Butler, who probably gave the best performance of the year as Elvis, really kind of inhabited Elvis.
But Brendan Fraser won for The Whale.
Uh, Michelle Yeoh, one best actress.
She is very good and everything everywhere all at once.
The other person, but there's one person who just got...
Top Gun, I believe, did not win a single award.
Did Top Gun win anything last night?
Top Gun, it won Best Sound.
It won Best Sound.
I think a better performance in to Leslie, but doesn't matter because of course, diversity above all best supporting actress went to Jamie Lee Curtis, who's a big sweep, as I say for everything, everywhere, all at once, all the time.
Now the big shutout here, and it's worth noting here, the big shutout here is Top Gun.
So Top Gun, I believe did not win a single award.
Did Top Gun win anything last night?
Top Gun, it won best sound, it won best sound, which, okay, best sound.
It did not win best production design.
It did not win Best Film Editing.
It did not win... By the way, it certainly should have won Best Film Editing.
The notion that everything, everywhere, all at once won Best Film Editing is absurd.
Everything, everywhere, all at once needed to be edited with a chainsaw.
But Top Gun Maverick won Best... Did not win Best Film Editing.
It did not win even Best Visual Effects.
That went to Avatar the Way of Water.
This is a tactical mistake by Hollywood.
Because in five years, nobody's going to be watching everything everywhere all at once.
It's just not going to happen.
It's going to be a movie like Birdman or The Revenant.
You know, things were in the moment.
People like, oh, man, that's a great movie.
And then no one ever watches it again.
I know the critics fell in love with this movie.
Again, I think I know the reasons why, but it is not.
It's not.
Top Gun was clearly the phenomenon of the year.
The fact that there were so many people who were opposed to Top Gun was a quasi political statement.
It was sort of along the lines of this piece from MSNBC called Top Gun Maverick is the most insidious movie at the Oscars is from Zeeshan Aleem, who said that it is a it's insidious because it is very much in favor of the American war machine as a beacon of virtue and excitement.
It's a poisonous kind of nostalgia, one that smuggles love of endless war into a celebration of live action.
I think that that is one of the kind of subtle reasons the Top Gun had to lose, because it was just it was kind of too pro-America.
I wasn't allowed to win.
Speaking of people who are not pro-America, one of the people who spoke last night was a guy named Donnie Yen.
Donnie Yen is in John Wick 4.
I'm not sure why Donnie Yen was was speaking at the Oscars, but as it turns out, Donnie Yen also is a front person for the for the Chinese regime.
So according to NME. There's a petition that was actually set up against Donnie Yen doing this, set up by a Hong Kong activist who claimed the decision showed contempt for the people of Hong Kong and that Yen's presence would damage the image and reputation of the film industry. He had opposed the pro-democracy protests in Hong Kong in 2019. He called it a riot.
He is, he was known for starring in the Ip Man series, which is a kind of kung fu series. He was in Rogue One, he's in the 2020 live action remake of Mulan.
But he is, in fact, a frontman for Chinese positions at the Oscars.
Again, not particularly shocking that the Oscars was perfectly fine featuring all that.
Overall, however, pretty boring Oscars.
Jimmy Kimmel kind of hemmed it in.
He didn't get too political, which I think the Oscars needed to do.
It's not going to revive the Oscars.
The Oscars is still a flagging enterprise by the numbers.
It's still going down and down and down and down.
Again, the reason for that is because the big movies are the ones, the only two that really did like amazing business last year were Top Gun and Avatar, and neither of them really cleaned up at all.
Okay, meanwhile, insanity breaking out over at Stanford Law School.
So, according to the UK Daily Mail, a federal appeals judge appointed by Donald Trump has now demanded an apology from Stanford Law School after he was invited to speak.
His name is Judge Kyle Duncan.
He's on the Fifth Circuit Court of Appeals.
He was actually ambushed by an Associate Dean of Equity, Diversion, and Inclusion named Kyrian Steinbach during a discussion on Thursday night.
Steinbach is a former ACLU lawyer who had previously defended freedom of speech.
She initially claimed that Duncan had a right to express his views and then launched into a six-minute speech condemning his life work and condemning him in front of the students, which is just Perfect chef's kiss woke idiocy from Stanford.
One of the reasons all these colleges and universities are too expensive is because they spend hundreds of thousands of dollars per employee to create administrative positions that are just pure nonsense and garbage.
This lady is obviously a career useless person and here she is going at a judge.
So, you've invited me to speak here, and I'm being cackled non-stop, and I'm just asking for an administrator to sign the rules.
That's an abuse of power!
Your racism is showing!
If you want a marketplace of ideas, you have gotten what you wanted, take it.
Like, do you want an echo chamber?
but what's the issue?
Can I help?
I guess I have to hold their remarks.
They're not letting me in.
I want you to be able to take care of it.
Go ahead.
Yes.
Steinbach said, It's uncomfortable to say this to you as a person.
It's uncomfortable to say that for many people here, your work has caused harm.
I know that must be uncomfortable to hear.
It must be.
I'm also uncomfortable because many of the people in this room here, I have come to care for.
And then she started yelling about how he was tearing at the fabric of the community that I am here to support.
And she said, is the juice worth the squeeze?
For many of the people here, your work has caused harm.
In my role at this university, my job is to create a sense of belonging for all students.
That is hard and messy and not easy.
The answers are not black or white.
So he got lectured by the people who invited him.
Eventually, the Stanford president and the law school dean had to apologize to Duncan on behalf of their DEI dean.
It's an absurdity.
They put out statements and we write to apologize for the disruption of your recent speech at Stanford Law School.
Has already been communicated to our community.
What happened was inconsistent with our policies on free speech.
We're very sorry about the experience you had while visiting our campus.
It's not an experience that he had.
The reality is that this DEI administrator should lose her job for this.
Because it turns out that is not your job, is to berate invited speakers in front of the rest of the students.
But this is what it's come to at many of these universities.
Again, the goal of many of these administrators is not to actually perform their job.
It is to perform in favor of the woke students in order to maintain their job, because the woke students and they play an inside-outside game where then, if they get fired, the woke students protest and create all sorts of trouble at the university.
It's a great way of preserving your job, is to play this really stupid game by attacking the very people that you have invited.
Okay, meanwhile, the Biden administration continues to fail abroad on literally every front.
I mean, it's amazing how much they are failing on pretty much every front.
The only front you can say that this administration is not failing on right now is Ukraine, where they're basically just sort of holding the line, but not providing Ukraine enough assistance in order to actually win, but not providing enough assistance, not providing enough impetus for them to actually make a deal.
So it's kind of just inertia in Ukraine, essentially.
As always, Joe Biden leading from behind.
Meanwhile, situation over in Mexico continues to be absolutely egregious.
The Texas state government now says that Mexico is too dangerous for spring break, which of course is not a shock considering that people keep getting kidnapped after crossing the border.
I remember my wife and I were thinking of vacationing in Cancun about a year ago, and my security team was like, no, you're not going to Cancun.
Like they're going into hotels now and actually trying to trying to kidnap people.
Well, Senator Bob Menendez of the Democratic Party in New Jersey, he says that he is not even sure that he would declare the cartels terrorist organizations, which is sort of weird.
Would you vote to designate these cartels terrorist organizations?
Well, that has a certain designation.
We've saved that for truly terrorist organizations in the world.
Certainly, they are consequential to questions of national security.
I'm more interested in doing something that ultimately seeks to destroy the cartels.
So, you know, he's in favor of something that seeks to destroy the cartel, but I don't know what exactly he is talking about.
Meanwhile, he insists that the problem on our southern border is not Alejandro Mayorkas.
So, what is the problem, then?
What's your level of confidence in Secretary Mayorkas?
Well, look, this is not about Secretary Mayorkas.
It's about the administration.
The best part of the administration's immigration policy over the first two years is that they ended family detention, which proved to be a failure under both the Obama and Trump administrations as a way to deter individuals from coming.
It's so tiresome.
Guys, you're the ones in charge.
The border is yours now.
Do something about it.
Meanwhile, they're not going to.
Meanwhile, they're allowing China to just run roughshod over the rest of the world.
It's amazing to watch China expand its influence as its actual power decreases.
That is the sign of an incredibly weak administration.
China right now has amazingly serious demographic problems, amazingly serious military problems, incredibly serious financial problems.
And yet, they're expanding their footprint pretty much everywhere.
Xi Jinping, right now, according to the Wall Street Journal, has been moving definitively to end the reform and opening era.
While Deng built a collective leadership system to protect against one-man rule, gave private enterprise right a room to flourish, and marked a separation between the party and the government, Xi has done away with term limits, narrowed the scope of the private sector, and placed the party at the center of Chinese society.
And now, he has set in motion changes to further emphasize the party's leadership over all aspects of governance, according to the Wall Street Journal.
He paved the way for giving the party more direct control of the country's financial and technology sectors, and pledged to cut the staff of the central government by 5%.
Meanwhile, even as this is happening, China has built up its power in the South China Sea.
The Wall Street Journal reports that Beijing is becoming the dominant force in the South China Sea, through which trillions of dollars in trade passes each year, a position it has advanced step by step over the past decade.
With incremental moves that stay below the threshold of provoking conflict, China has gradually changed both the geography and the balance of power in the area.
Beijing now claims pretty much all of the South China Sea, even though it's ringed by Taiwan, other Southeast Asian nations, even though it is, in fact, the hub of transit for virtually A huge percentage of goods and services across the globe.
China has turned reefs into artificial islands, then into military bases with missiles, radar systems, and airstrips that are a problem for the U.S.
Navy.
It's built a large coast guard that, among other things, harasses offshore oil and gas operators of Southeast Asian nations and a fishing militia that swarms the rich fishing waters lingering for days.
The U.S.
missed the moment to actually do anything about it.
China continues to expand its power.
Meanwhile, China is expanding its power in the Middle East.
So as the Biden administration has taken an anti-Israel, anti-Saudi position, this has actually driven the Saudis into the arms of the Chinese.
So the Chinese came in to the Saudis, who have been, again, put on the ropes by the Biden administration, and they said to them, we love the Iranians, we are working with the Iranians, and we can see that you guys, you need to triangulate with regard to the Americans, because Joe Biden ain't helping you out, so why don't you come over here and sign an agreement with the very people who wish to destroy your entire government, the Iranians.
And the Saudis, seeking to play both sides of the table, Because they are an independent nation.
They were like, okay, I guess we'll sign something with Iran.
This obviously actually increases the possibility of conflict in the region.
One of the things that was hemming Iran in was an alliance of other nations, Arab and Jewish, in the entire area that was saying that Iran cannot expand beyond its borders or if it tries to develop a nuclear weapon, we're going to work together to stop it.
Now China is coming in and actually facilitating Iran's dreams.
By attempting to bribe the Saudis into going along with all this and pledging that it will play neutral arbiter between the Saudis and the Iranians.
Meanwhile, Joe Biden's just sitting there asleep.
According to the Wall Street Journal.
When Arab leaders met Xi Jinping at a regional summit in Riyadh last December, the Chinese head of state pitched an unprecedented idea, a high-level gathering of Gulf Arab monarchs and Iranian officials in Beijing in 2023.
People familiar with the plan said.
Days later, Tehran signed on as well.
By Friday, China had brokered a deal to restore relations between Iran and Saudi Arabia, which had gone seven years without ties.
The broader summit between Iran and the Six-Nation Gulf Cooperation Council, which hasn't previously been reported, is on track for later this year, according to those people.
Mr. Xi's diplomatic initiative shows Beijing sees a central role for itself As a new power broker in the Middle East, a strategic region where the U.S.
has been the most influential outside player for decades, no longer focused exclusively on energy and trade flows, China's foray into the region's politics signals a new chapter in competition between Beijing and Washington.
This again is going to actually increase the possibility of a serious war in the region because if the Abraham Accords were a guarantor against war because Iran couldn't go up against everybody combined, especially Israel using Saudi airspace, what happens exactly when the opposite occurs?
When China brokers some sort of cold rapprochement between Iran and Saudi Arabia and Israel is isolated again while Iran is developing nuclear weapons?
It's a real problem.
Apparently, the Netanyahu team is blaming the Biden administration for the deal.
According to anonymous officials, quote, there was a feeling of American and Israeli weakness.
So Saudi Arabia turned to other channels.
Now, again, is this going to change the underlying problem between Iran and Saudi Arabia?
Absolutely not.
But it does mean that China has been able to weigh in in a very powerful way in the Middle East.
That is to the detriment of America and America's allies.
And Joe Biden is asleep at the switch, as per our usual arrangement.
Let's do some things I like and then we'll do some things that I hate.
So, things I like today.
So, there is a woman who starred in Stranger Things, I believe it was in the first season.
Her name is Grace Vandian.
And Grace Vandian, she's now a Twitch streamer.
And she was asked why she had turned down acting projects in the recent past.
Because obviously she's a good actress, she's a beautiful woman.
And she said, because I don't feel like being sexually abused by directors.
Good for her.
Turning down acting projects and deciding to stream more.
But the fact of the matter is, the last few projects I've worked on, I didn't have the best experiences.
One of the last movies I did, one of the producers asked me to Like, he hired a girl that he was sleeping with, and then he had her ask me to have a threesome with them.
So, like, that's my boss.
Good for her.
Good for her for saying, I don't wish to work for people like this.
And increasingly, I hope you'll see this in Hollywood, because as it turns out, that as Hollywood loses its luster, people are going to have additional choices and they're gonna be able to make smaller films and get into the sort of stuff they want to get into without having to deal with predatory Hollywood directors.
Who use the casting couch in order to get what they want.
Again, the notion that Me Too started in Hollywood and that Hollywood then became the sort of tip of the spear in terms of fighting Me Too is always bullcrap.
And they went right back to doing what it is that they do.
Okay, time for some things that I hate.
Boy is the patriarchy clever.
I mean, the patriarchy is so clever.
So clever.
So somehow the patriarchy in Germany has convinced women that in order for them to achieve full equality with men, they have to show their boobs.
So, big win for the gentlemen.
According to CNN, women in Berlin can now swim topless in the city's public pools if they choose to, just as men can.
As well as being hailed as a step forward for gender equality in the German capital, the measure introduced this week is symptomatic of Germany's love for Freikörperkultur.
Literally translated as free body culture, which has its roots in the late 19th century, Berlin's authorities took action after a female swimmer said she was prevented from attending one of the city's pools without covering her chest in December 2022.
The woman then lodged a complaint with the city ombudsman at the Senate Department for Justice, Diversity and Anti-Discrimination.
The authorities agreed that the woman had been a victim of discrimination and said all visitors to Berlin's pools, including women and those who identify as non-binary, are now permitted to show their tits.
It follows a similar incident at a Berlin water park in the summer of 2021.
French woman Gabrielle Labreton sought financial compensation from the city after security guards ordered her to leave the premise when she refused to cover up her breasts.
She was with her five-year-old son when the incident happened.
That kid's gonna grow up healthy and happy, I think.
Speaking to German newspaper Die Zelt at the time about why she believed it was gender discrimination, said, for me, and I teach this to my son, there is no difference for both men and women.
The breast is a secondary sexual characteristic, but men have the freedom to remove their clothes when it is hot and women do not.
Uh, no, actually.
Men's chests are not considered generally a secondary sexual characteristic.
Excited to see Germany really embracing full-on androgyny.
Of course, that is not going to, um, it's not about androgyny.
Teenage boys everywhere in Germany are very excited today.
The patriarchy is, again, incredibly, incredibly clever.
Great job, everyone.
Great job.
And meanwhile, speaking of people who have clevered themselves out of existence, Seth Rogen says that he is very happy not to have kids.
In this particular case, I will agree with him.
He said in a recent interview that he and his wife are very excited that they don't have children.
You referenced earlier you don't have any kids.
I do not.
That has helped me succeed as well.
Definitely.
Oh, yeah.
There's a whole huge thing I'm not doing.
Which is raising children.
People, obviously, someone will be listening.
Yeah, but it'll make you happier.
You know, someone might say that.
I'm trying to rebuttal.
I don't think it would.
Some people want kids.
Some people don't want kids.
I think a lot of people have kids before they even think about it.
From what I've seen, honestly, you just are told.
You go through life, you get married, you have kids.
It's what happens.
And me and my wife, we're just, neither of us were like that, you know?
And honestly, the older we get, the more happy and reaffirmed we are with our choice to not have kids.
Okay, so two things.
One, I'm fine with this idiot not having kids.
Totally cool.
That's fine.
Certain people?
Alright.
Second thing, the reason that you have kids is not for personal happiness.
We've built our entire civilization around the idea that everything you do is supposed to be about your personal happiness.
Guess what?
It isn't.
Whatever gives you happiness is only one component of what your life is supposed to be.
We do things every day that don't give us happiness, that give us a meaning of fulfillment and purpose, but don't give us happiness.
The happiest path, generally, is to be incredibly narcissistic and to do what you want every day, all day, and then let the consequences fall where they may.
This makes you a selfish and bad person.
Also, it's not a path to actual happiness.
It's a path to temporary pleasure.
It's not a path to actual happiness.
It turns out that this is what happens in a society that says that human beings have no actual telos.
They have no actual purpose.
They have no actual meaning.
Whatever floats your boat is the order of the day.
Whatever floats your boat is not a situation that society can sustain.
That's what we've been experiencing in Western civilization over the course of time.
So, Seth Rogen can do exactly what he pleases.
It's a free society, but a free society without the basis of any moral duty.
Does not, is not meant to last long on this earth.
Alrighty guys, the rest of the show is continuing right now.
You're not going to want to miss it.
We'll be getting to Anthony Fauci protesting.
No one will ever, what could he be prosecuted for?
Plus, we'll get into the mailbag.
You have to be a subscriber, however, if you wish to have your question answered.
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