Matt Taibbi and Joe Rogan expose the 2008 financial crisis as systemic fraud, where banks like AIG sold credit default swaps—essentially bets on mortgage failures—while regulators like the OTS were clueless. Taibbi reveals racial targeting of elderly black borrowers ("mud people") in bank emails and how unchecked derivatives triggered AIG’s collapse. Rogan links Trump’s energy to stimulants, critiquing pharmaceutical-altered leadership, while both mock spectacle-driven politics, from Lil Tay to Trump’s news-cycle dominance. The episode underscores how incompetence and greed thrive when oversight fails, whether in finance or governance. [Automatically generated summary]
Yeah, he wanted to come on wearing a Barack Obama mask, actually.
It's actually really funny.
The whole story is really funny.
I'm writing this book.
I spilled it too.
It's called The Business Secrets of Drug Dealing.
You can find it at businesssecretsofdrugdealing.com and I'm serializing it.
But basically, somebody I knew for ages in a completely different capacity sort of came out to me last year And said, you know, I've been a high-level drug dealer for a long time, basically my whole life, and wanted to tell a story about, you know, sort of the whole progression of his life.
So he ends up having this whole career and he wanted to sort of explain to me what The rules of the game were and do sort of a book version of the Ten Crack Commandments and so we sat down and we couldn't quite figure out how to do it at first but we ended up essentially doing a sort of fictionalized version of his
life and And the progression is amazing because he goes from being a dealer in all these different parts of the country in different social spheres.
He's in college.
He deals to rich white kids.
He deals on the street and in tough urban neighborhoods.
And then ends up sort of in the legal business in this state.
And so he's describing that world, which is not, there are a lot of misconceptions about There are some things about it that are not known terribly well.
Like, what do you do when you work at a farm and your crop tests dirty with a contaminant?
Well, not everybody just throws it away.
know a lot of that stuff ends up shipped across country goes to other markets and he sort of describes a lot of this like what kind of contaminants would that be Like fungal or pesticides?
Yeah, like a fungus.
Something like that.
You know, there are labs that basically have to clear, you know, from what I understand, that have to clear each of the crops.
And there are situations where, you know, there's a whole bunch of crop and you got workers that have to be paid.
And what do you do with it?
And the legal market isn't big enough to accommodate all the stuff that's grown.
And so there's sort of still, you know, kind of a black market that goes on.
And he describes this.
But even before that, it's just a fascinating book about, All the different things that he learned in the course of his career about how to do the job and not get caught, how to rig a load to drive cross-country, how do you do a dummy car.
He tells a story about how basically you want four cars, you want the guy in the front seat to be To look like a drug dealer, have a terrible record, drive badly, basically to attract the police.
And the third car is the load car.
The second car is watching to see if there's cops in either direction.
And then the fourth car is basically driving up behind the load car to prevent anybody from seeing the license plate and that sort of thing.
So he just talks about all this stuff, and it's fascinating, and it was a new kind of writing for me because I've never really done anything except straight journalism, and we sort of had to do it in narrative form, and so we're putting it out serially online right now, which is really cool.
So, the book is actually structured with all these rules.
Each chapter has rules in it.
One of his most important rules is always have a job.
It's for a number of reasons.
Number one, he talks about how when he was young, he worked at places like Marriott or Applebee's and he's like, "If you can have the patience to serve people at an Applebee's and not blow up and scream at people, then you won't screw up a package.
In other words, if you can have the self-discipline to actually get through one of these jobs and not blow up and be crazy, then you're going to handle yourself well at a car stop.
He learned, among other things, like another one of his rules is dress like an off-duty's Applebee's waiter.
Do not dress.
He talks about this, about how most dealers, they learn their profession by watching movies.
There's no book out there.
I mean, it's not like this generation is growing up reading the old Iceberg Slim or Donald Goyne's novels or whatever it is.
They're watching The Wire or Blow or Ozark now or whatever it is.
But But dealers very often dress like dealers.
You can kind of spot them.
know and he says that's exactly the opposite of what you have to do um you know wear sperry shoes wear boring clothes look like you know you've you're on your way to to you know your freshman english class or whatever it is um and you know sound like a nerdy college kid when when uh the cops pull you over and
All this stuff is central to his whole world view about how to avoid getting caught.
And, you know, the fact that the co-author is actually a person who's pulling this off makes it really interesting.
And it makes it a real challenge to write it, too, because, you know, I had to kind of simulate his voice and kind of communicate to people what those situations were like and what things look like from his point of view.
And obviously I'm white and he's African-American and that's tough.
I haven't had this much fun, like fun, fun writing anything for a long time because, you know, most criminal memoirs, and again, I grew up a junkie in terms of reading this stuff.
I love books that are written after the fact by people who were in crime, you know, like Papillon was one of my favorite books growing up.
I mean, it's an amazing story about not just crime, but about prison and what's that like.
But they're always written by people after they got caught, right?
And so there's never that book by the person who's still out there and talking about what outlaw life is like.
Successfully, still on the other side of the law.
And that part of it is fascinating.
It's a completely new thing.
And he has all these insights that I would never have thought about.
He talks about how there's a thing he calls the hood price.
When you're selling in black neighborhoods, even he charges a higher price There are more problems that you inevitably run into when you're dealing in those neighborhoods because there's more cops, which means more lawyers, which means more security, which means more attention to detail.
When you deal to rich white kids, nobody's paying attention.
So there's less overhead in the business, which is fascinating.
And, you know, he talks all about this.
And he spent a lifetime kind of just keeping all this stuff in his head, always wanting to put it down.
And he just got to be too much.
And he just sort of tapped me on the shoulder one day and said, can we have lunches?
And, you know, when you take ignorance and then the full weight of the executive branch, you know, especially the anti-drug apparatus, you know, that's a terrible, terrible combination.
And it's too bad because I think even the law enforcement community was kind of coming around on this.
You know, they don't want to be picking up people for dealing weed.
I mean, I talked to, for my last book, about the Eric Garner case, I talked to lots of cops and they just hate having to do that.
Yeah, having that guy and in that kind of a position and saying things like good people don't smoke marijuana or You know when families come across the border illegally, we're gonna separate the parents from the children like the fuck is wrong with you And then you throw in a good joke dose of the jesus Yeah, exactly scary fucking time at least Trump has said that he's gonna he's not going to support sessions on Going after marijuana in states where it's legal.
He's gonna leave the states To take care of it themselves.
The problem with Donald Trump, and this is something that I didn't clue into until I'd spent a lot of time watching the guy and following him around, is that he can sound like he believes something very deeply.
And you can be absolutely convinced that he even logically thinks a thing.
But he'll have a meeting with somebody, and five minutes later he'll have completely the opposite opinion.
So I have no confidence that Donald Trump will, anything that he says, that it will stay his opinion on anything.
He can be convinced to go to a complete 180 on basically any issue, which is scary.
And I talked about this when I was covering him because people said, oh, what does this billionaire New Yorker have in common with With ordinary Americans.
He has a lot in common with them.
He has exactly the same media habits that they have.
He reads the same dumb shit on the internet.
He has the same total inability to separate fact and fiction.
He's completely credulous when he reads a news item about something that he personally agrees with.
And he'll Tweet it out five seconds later before he checks it out, which is like what every other American does.
They get something on Facebook and they immediately share it with all their friends.
And this is an American thing now, just the total inability to logically look at things.
And, you know, it's funny because if you watch Trump's speeches, or actually better yet if you read Trump's speeches, they would pass out the text of what Trump was supposed to say before his events.
And so I'd be sitting there, I'd be looking at the remarks, and they would be cogent from one end to the other.
Then he would get up there and the first line would be like, oh, it's so great to be back in Manchester, New Hampshire.
I'm sure I always loved being here and that would be right.
And then he would veer off and he would start saying one thing and then the other thing and his thoughts would drift in all these different directions and then when you looked at the actual transcript Of what Donald Trump had said, he not only wasn't completing thoughts, he wasn't completing sentences.
He talks in these sort of strange fragments and he'll drift from one idea to another and they won't have any logical connection to each other.
And people still responded to it, which tells you something both about him and about his audience, right?
Because they're on the same weird mental wavelength where just sort of disconnected bits of emotion and thought is enough now, right?
I think what it's revealing is what a small amount of time most people spend actually thinking.
Thinking about ideas, thinking about themselves, thinking about behavior, thinking about the impact that someone who's in the position of president can have.
Very few people are out there actually thinking.
I mean, a pretty large number overall, but very few in terms of percentages.
In terms of the people that you can reach and the people that will show up at his press rallies, that's a big thing too, right?
Who the fuck is going to go to a campaign speech for anybody unless you're a journalist?
Well, that's interesting because I've been to a million campaign rallies, right?
And my opinion on them is, you know, I would rather basically stick a railroad spike in my ear than voluntarily go to one of these things and not be paid to do it.
Because normally a campaign speech is like this supernaturally boring experience where a guy or, you know, a woman stands up there and reads out a preselected, a market-tested list of political cliches that have no meaning whatsoever and that, you know, don't represent what they're actually going to do when they're in office anyway.
And if you have to listen to that 40 or 50 times in a row, which is what happens when you're covering campaigns, you want to kill yourself.
So why anyone would go voluntarily to see that as entertainment is sort of beyond me.
But that happened in 2015 and 2016.
Trump's events were a little different.
And I think he got a little bit of this from his WWE experience.
He turned them into these menacing, weird audience participation things where he would have the audience turn on the press and shout at us and throw things.
Because we're always standing up on those risers and we have ropes around us, we look like zoo animals or something.
And we were the representatives of the hated elite, you know.
And he turned it into this sort of like physical, menacing, intimate thing.
And, you know, people would come from all over.
They'd come from down in the hills, you know, and drive 50 miles to see the spectacle.
It was fascinating to watch, but kind of terrifying, too.
Yeah, again, we'd be sitting there and a whole bunch of reporters and we're a bunch of geeks in Arrow shirts, you know, and we got pads and we're kind of surrounded by, you know, in some cases, 15,000 people.
You know, we're kind of turning in our direction.
And, you know, in a couple of cases, it was definitely up in the air whether this was going to turn ugly or in a few places it did turn ugly.
But he was very clued in.
The one thing I will say about Trump is that he has a keen instinct for audience.
He knows where they are.
He knows what their mood is.
He knows what he has to do to wake them up, to stir them up.
He can tell when he's losing them.
That is one talent that he does have, but it's a negative talent for sure.
I'm so glad I could talk to Matt Taite about this.
This is great.
Was it Washington Post that first talked about it?
They found the Dwayne Reed pharmacy where he was first prescribed diet pills by this doctor who described it for a non-existent condition, like a metabolic deficiency or some shit like that.
Metabolic disorder, I think he called it.
And it allowed him to prescribe, and this guy was like a known prescriber of these things.
This is in my, like the way I look at it, it's like this is indicative of where America stands today.
It's not just that he's a good representative of America because he has the same media consumption habits and the same inability to read books and all these different variables, but also because he's pilled up.
I mean, there's a little bit of a precedent there because Kennedy had so many physical problems that I'm not sure if you remember.
There was a book, The Dark Side of Camelot, that came out by Cy Hirsch, where it talked about how Kennedy in the morning used to have a Secret Service agent give him a shot of basically amphetamines every morning.
And he would sort of pace around the Oval Office talking about who he wanted to whack today.
This was like the background for Bay of Pigs.
you know, all these other things.
So it's very dangerous when a president is, you know, pharmaceutically altered.
When a person who is, you know, if he's on speed and he's tweeting threats to a nuclear power, like, I mean, that would be a very ironic but terrible way for all of us to end.
You know, you've got to save that and put it in your favorites because we talk about it so many times.
You've got to figure out a way to save that and put it in a bookmark.
He had the Duane Reade pharmacy, and then there's this speculation about what the most recent stuff is that he's on, which is, again, one ingredient in fen-fen.
But one of the things that they were saying is that when you look at the side effects of this stuff, one of the side effects is delusional perception of reality, delusions of grandeur, aggression, impulsiveness, like all these things that we associate with Donald Trump.
That we might be dealing with essentially a pharmaceutical intervention into not just American lives in terms of individuals, but in terms of the way policy is driven.
I remember talking about this with some of the other reporters because As you say, the campaign trail is incredibly grueling.
There's a reason why some candidates can't do it.
Or they opt to do lots of legacy media appearances or ad buys.
They travel less and appear more.
The people who tend to succeed are the ones who can do three or four appearances a day, fly to three different cities a day, and most of those people are either health freaks, people who are in good physical condition.
Obama was definitely one of those people who had to have a run at some point, or else he couldn't do that schedule.
But Donald Trump You know, you look at him and it's kind of a mystery.
When he was not overweight, I countered with medical records.
They cut me off.
People misreading drug was diethylpropion, 75 milligrams a day.
Prescription filled at Dwayne Reed on 57th Street in Manhattan.
Oh, I know that one.
Not that I know things.
Doctor who wrote prescription, Dr. Joseph Greenberg, diagnosed him with metabolic imbalance.
Which we have never heard about again.
Greenberg was later publicly slammed as someone who provided uppers to rich people in Manhattan.
A metabolic imbalance, in quotes, if true, could be electrolyte insufficiencies, anaerobic imbalances, acid imbalances, and an assortment of related disorders that can have serious health consequences.
Yet his other doctor, Dr. Harold Bornstein, said he had been Trump's doctor since 1980 and had never mentioned the metabolic imbalance found by Greenberg.
I mean, everybody in America's pulled up and, you know, I don't know how a person whose diet is cheeseburgers and Diet Coke could run for president without drugs.
Fenn was actually the name of the very cheap speed that used to be imported.
When I lived in Russia, there was a type of speed that used to come from the Baltics that allegedly, you know, the urban legend was that the Nazis had all their soldiers on a cheap speed for the long marches going into Russia.
and they set up these pharmaceutical plants.
And again, the street legend was that that was what this drug was, but they called it FEN.
I believe it was, and I think this is one of the speculations as to why they could get suicide bombers, the kamikazes, to slam their jets into aircraft carriers.
That's also, yeah, there's definitely some speed that gets prescribed and steroids also to soldiers.
I mean, if you talk to people that have been in, you know, they'll tell you about what different things that they allowed them to take and gave them to take.
But that modafinil stuff is, that's really common.
And then I know a lot of fighter pilots will take that.
Keeps you from getting sleepy, keeps you alert and awake.
And that was also something Hillary Clinton was supposed to be on.
Well, I think we're probably going through a similar period now where all kinds of stuff is being prescribed that we're going to find out 50 years from now.
Like, oh, really?
Like, we prescribed Adderall to 50 million children or whatever it was.
Prozac, Adderall, and then the numbers of SSRIs that are prescribed needlessly.
Who knows how many people actually need those things versus how many people are just having a bad day and went to the doctor and they give you something that numbs you up.
Experimenting on people's brains, and absolutely, these pharmaceutical companies have billions of dollars in massive influence, and they're making it so this stuff is okay.
We've just had a look at the number of people that are dying, just dying from opiate pills.
If those were illegal drugs, we'd be saying, there's a goddamn epidemic.
Yeah, but there's no question that it's a conscious strategy to get people hooked and get them taking those pills in every conceivable scenario so that they will seek them out in other areas, non-legally.
But some prosecutor is going to have to figure out some way to hold some of those companies accountable because they're definitely doing that on purpose.
Yeah, and I think a lot of what people call fake news is just news that is very heavily slanted in one direction.
And people talk a lot about how Fox is fake news.
Well, most of the time when you watch Fox, what they're just doing is they're selectively picking out stories that they know are going to rile up their elderly, freaked out, terrified audience.
And so they pick out the four or five things that actually happened around the world.
They can do that without lying.
They don't have to make the stuff up.
They can find the lineup of facts that they want.
But working as a journalist now is very, very different.
The business is undergoing extremely rapid change and it's not something that we really have reckoned with.
We haven't sat down and had a discussion about where this is all going and how we can fix it because The business is changing in a way that is extremely negative, and no one's talking about how to reverse that.
Long-form investigative reporting started to disappear in the 80s, but it's accelerated to the point where there's almost none of that now.
Almost everybody who works in the business is doing quick hits, and there's almost no Time left to do, you know, kind of real hardcore investigative work.
And we've trained our audiences also to be unable to consume that kind of stuff.
So, you know, we're all basically doing clickbait now and I think it's a really dark time in our business.
And this is a fascinating sort of subplot to what happened to the media business because a lot of that is because of something that Google did a long time ago.
They had this thing called the first click rule.
Which is sort of mandated that all news sites have at least some free content or else the algorithm would push the news story far down on the search results.
So if you didn't have free content on your site, if you didn't meet Google's first click rule, when you search for a news story, you just wouldn't find it.
So in the early days of digital journalism, all the news companies offered their content basically for free.
And that trained audiences to not pay for journalism, basically.
And it's pretty hard to put the genie back in the bottle and tell everybody to go back and And pay for everything.
It just doesn't work that way.
So we're in this place where everybody's sort of consuming free media.
And not only that, there's this additional problem of the, you know, the internet platforms like Facebook and Google pushing news that they already know people are going to agree with to users.
So there's sort of less news that challenges people.
They're just not going to see it, you know, because that's not the way the algorithms work.
It's probably a little bit worse on Facebook than it is on Google, because Google, you at least have some control over what you search for.
But even Google will prompt you with things, right?
But with both of them, yeah, they're accumulating lots and lots of information about your – not only about what you read, but about the things that you buy, the movies that you watch, what your predilections probably are, what your opinions, your political stances are.
And so they pick out news stories that they think you're likely to endorse or spend a lot of time reading.
Right.
That says you personally are responsible for something bad, right?
That's like thing one.
You will see a lot of news stories that say your neighbor is responsible for something bad.
And that's one of the reasons why like divisiveness is a conscious commercial strategy.
It's just it's a natural result of a lot of this, a lot of these behaviors.
Even MSNBC? Yeah, even MSNBC, it's worse with Fox and CNN, and I don't want to misquote it, but I know they're all above 65. 68, you're right, look at that.
Yeah, they have subscriptions and the Times is – the Daily News definitely does have delivery for sure.
Yeah, I would think so.
Yeah.
I just spent a lot of time writing about this.
That model where newspapers had this direct relationship with their readers, right?
Like they not only owned the content and created the content, but they also completely controlled the distribution, right?
They had the trucks.
They had the paper kids like us, right?
That was all part of what gave the press its power is that we had the unique ability to reach all these people.
Well, once the internet came along, they cut that in half, right?
So now the distribution is all Google and Facebook, and the content is all being made by somebody else.
So it makes it very difficult to make money, A, and then B, you just don't have that personal relationship with the consumer anymore, which is a completely different sort of paradigm.
Also, I think it opens up the door to all this wacky advertising where pop-up ads and scroll down ads, like you try to scroll down a screen and the ad follows with you.
They're so invasive and they're everywhere, even on really good websites.
Like, say if you go to CNN, you get the real stories, and then below you get this stuff that looks like stories, but there's a very faint print that says paid content.
But that's, I mean, I think it's one of the things that's really bad about that is that if you spend enough time doing that, your brain stops being able to do other things.
When you're reading books, books require you to sit there and construct in your head all the visuals for everything that you're reading.
You have to imagine what the people look like.
You have to do all this mental work to construct the scene.
So your brain is actively engaged in this really highly specific and creative way.
Right?
But the internet now just has it moving from place to place, clicking from place to place, going from sensation to sensation.
You don't have to ponder anything.
You don't have to have an opinion about anything.
You don't have to look at both sides of anything.
You just have to move from one thing to another to the next thing, which is what you're talking about with Trump.
That's the way his brain works, right?
I think it's a bad thing.
It's not only bad in itself, but it makes it impossible for us to do the other thing, which is more constructive.
Yeah, no, it's almost like mental range of motion.
Like if somehow or another your joints were restricted where you could only move a certain amount, after a while you would lose your full range of motion.
I have a harder time reading books now than I did when I was, you know, probably 11 years old.
Wow.
And that's just from...
Right, I'm a writer.
I love it, but I still find that I have a harder time doing the work.
And that's difficult.
Or, like, when I was younger, I read more fiction, which is harder because it requires you to do more, you know, sort of mental construction work.
Now, it's much, if I'm going to read a book, it's typically nonfiction, which is linear, which is an argument, right?
It requires less work of the reader, right?
It may be just as interesting, but it just requires less work.
So, like, the hardest thing to read is, you know, Anna Karenina or something like that, right?
Because you have to not only think, but you have to construct.
But if you're just reading, you know, The Diary of Kim Kardashian or something like that, you're just kind of listening to somebody, you know, going like that.
So I think it's bad.
I think all this stuff is negative, but I don't know.
The positive things are that anybody can have a voice now and anybody who has something interesting to say can be instantly elevated and have an audience overnight.
and that's great, right?
Like, you know, in the old days, if you had to penetrate this ridiculous oligarchy of entertainment people who really tightly controlled who got access to what, who got to be, you know, have an audience.
And now you get to bypass that entirely and sort of directly appeal to people, which is great.
I mean, that's an interesting thought exercise, though.
Like, where do you go down from Donald Trump?
I mean, because the progression has to go down, right?
Does it?
Because I remember when Bush was president, talking to reporters, Bush used to do this thing where he would carry around a biography of Dean Aitchison for weeks and weeks and weeks just to prove to reporters that he could read.
And we all used to joke with each other, like, nobody's stupider than this is ever going to be president, right?
And now, you know, you look back and Bush is, you know, he's like Einstein compared to Trump.
I had a joke that I did back in my Netflix special from 2005 when Bush was in office, where it was a bunch of people were trying to figure out how dumb people are.
And they're like, the only way, they're like, there's speculation, like, let's get a smart guy to act dumb.
Like, no, no, no.
You gotta get a real dumb guy.
Otherwise we'll never know.
You've got to have a real dumb guy.
And then so they get the real dumb guy and they do a bunch of things.
They vote him in a second time and then someone in the back of the room goes, I think we can go dumber.
Like, during the inauguration, when no celebrities wanted to go, and they had to dig out, like, really weird, like, real fucking on-the-outskirts celebrities.
We like jolted over this parallel world where things just don't seem like at least things used to make sense.
Like, you'd be disappointed that this guy won, or you'd be disappointed that the country was doing this, or that we were invading Iraq, or whatever it was.
It's kind of like what we were talking about before.
I mean, previously, like the entertainment industry, politics was tightly controlled by a small group of cigar-chumping people who sat in the back room and...
And in both parties, they carefully outlined a sort of narrow range of acceptable political opinions.
And in one party, you could be all the way up to somebody like Ron Paul, But they tended to put somebody like George Bush as the candidate.
But there was no directly appealing to the electorate and asking them who they wanted to be the candidate.
I mean, Donald Trump is really the first internet president.
He completely bypassed that entire oligarchy.
He didn't have to go through the priesthood to get to be president, which on the one hand, Trump is evidence of a good thing, because it's actually more democratic than the system was before, where it was pretty much closed to everybody except for a few people who paid their dues through this system.
But Trump, just by being famous and just by attracting media attention, He was able to bypass all the usual tests and bypass the party's decision-making process.
And he got to be president, but he's like Lil Tay, right?
I mean, he just represents the dumber side of us as opposed to the more enlightened side of us.
So it's hard to know what to think about it.
I mean, when I was covering it, I thought, on the one hand, this is evidence that the electorate is breaking away from being told who to vote for.
On the other hand, The first time they take that freedom out for a test drive, this is what they pick?
But, you know, what the result of that will be is...
Not yet to be determined, yeah.
I mean, it could be the end of civil, I said this before that, you know, when I was covering the Trump run, part of me wanted to write it as a comedy, Like, all the early stories were, like, highly comic.
I was trying to write about the funny aspect of it.
And then after he became president, it's like, well, this is either the funniest thing that's ever happened in America or it's the end of civilization, right?
Does that make it funnier that it's the end of civilization?
I don't know.
I mean, you're a comic, so I should ask you about this.
Like, so, all our ideas about maintaining civilization are an attempt to prolong this state or mitigate any possible disastrous effects of collapse, right?
All I'm saying is it would be a good time to reconsider how we run things.
And I think one of the good things about having a guy like Trump in office is maybe we should sit down and say, hey, we probably shouldn't have a popularity contest to see who controls the nukes.
And one thing I'm hoping is that this presidency and the whole idea of having a popularity contest will allow people to realize, first of all, we shouldn't have one alpha chimp running things.
That's an antiquated idea that was really great in a tribe of 50 nomads.
You get them together and you have the wisest, strongest one with the most battle experience.
But when there's 350 million people and you have the ability to manipulate things and you have tweets and Facebook posts and you can make wacky little Tay videos, we're not designed for this.
Do you see that Rosie O'Donnell got in trouble for raising money under various names?
And donating too much money.
It's like Roy Moore's opponents.
Wow.
Yeah.
What exactly happened?
unidentified
I read that she had used a website that she thought should have stopped her from donating the extra amount because it was being divvied amongst many people and that it should have been returned to her, which I don't know enough about it that candidates are supposed to return extra funds once they've crossed over the amount that an individual is supposed to give.
I guess that happens, but it didn't happen in these cases.
That was one of the stories that wasn't followed up after 2016, but it was one of the things that came out in those hacked DNC things was that there was a little bit of a scam going on in terms of, as you said, the individual donation limit is pretty small.
It's like $2,700 for an individual, so a couple, it's $5,400.
So what they would do is they would host these dinners with celebrities like George Clooney and a bunch of his friends, and they would raise all this money.
And theoretically, the money was supposed to go only a tiny portion of it to the presidential campaign.
the rest of it's supposed to go to the regional parties but what was actually happening according to politico anyway uh...
was that the money was basically going to the parties and then going immediately back to the presidential campaign And a lot of the people who gave the money didn't even know that that was happening and they were upset about it.
But that was a story that wasn't followed up after 2016. Yeah, there's just entirely too much money.
Yeah, it says O'Donnell donated $4,700 to Alabama Senator Doug Jones in his special election against Roy Moore, $3,600 to Pennsylvania Rep. Conor Lamb for the special general electorate he won in March, $2,950 to California Rep.
Schiff for his primary, $4,200 to Illinois congressional candidate Lauren Underwood for her primary run and $3,400, $450 to Omar Vade, a congressional candidate in Staten Island and Brooklyn.
Nothing nefarious.
Rosie O'Donnell says, "I was not choosing to over-donate.
The $2,700 cutoff.
Candidates should refund the money," she wrote.
"I don't look to see who I can donate most to.
I just donate assuming they do not accept what is over the limit.
I don't know how convinced I am by that explanation, but it doesn't really matter because the reality is there are a million ways that you can legally give money to campaigns now that don't involve just the individual donation.
You can give money to a foundation or a 501c3 or whatever it is that buys an ad that will help the candidate just as much as it would if you don't donate it directly.
In the post-Citizens United universe, It's a story, but the bigger story is that very rich people and companies can basically spend unlimited amounts of money on campaigns.
Well, he got a big bump from talking about her in the debate.
And, you know, that was another thing that he did very early on is he clued into the fact that people hate journalists and they hate Hollywood actors.
And so he made sure as much as possible to talk about all the groups, the major food groups of hate in America, right?
Immigrants.
Hillary Clinton, Hollywood actors and reporters and those were the staples of his routine and it worked.
I mean it was smart on his part.
I think particularly the targeting of journalists was brilliant because he was able to portray us as the wealthy elite He's the billionaire, but he's pointing the finger at us as, oh, look, they're the guardians of rich America, which worked and was a brilliant thing.
I mean, he had that 1962 press conference where he's like, you won't have Nixon to kick around anymore.
Right, right.
And from all accounts, he was an incredibly profane, nasty person in private, and he only talked to a few reporters.
I mean, I think all politicians hate reporters.
If they don't, there's probably something wrong with them because the press corps in most cases really is out to get them, or at least is dangerous.
But with Trump and Nixon, it went to a whole new level and went to a paranoid place.
But on the other hand, I don't want to bore you with this, but the whining about being kicked out of the White House and not being able to fly with Trump and the sort of separation between the president and the press corps and the fact he doesn't show up at the White House correspondence dinner.
As a reporter, my response to that is, so what?
We should be on the outside.
I don't shed a tear about that.
I think it's very strange, the response in our business that, oh, we don't get to hang around with the president and pal around behind the rope line with them anymore.
It's kind of a separation of church and state thing for me.
I had an experience when I covered the Obama campaign, and I liked Barack Obama as a candidate in 2008. I was really impressed by him, but I remember going into the plane the first time.
Going back into the press section and I see that there's photos all over the walls of the campaign plane.
And apparently there's a tradition where each of the reporters had like a little sort of high school yearbook photo taken with the candidate where, you know, they got their arm around Obama and they're posing and it was a tradition to kind of put the photo up on the wall.
And I'm like, you know, this is not a good look for the press corps.
Even if you like the guy, you You've got to at least pretend to have a little bit of that.
The mode is supposed to be there, you know what I mean?
Reporters are kind of supposed to be these unpleasant, kind of grumpy people who instantly deface the posters of powerful people whenever they get a chance and throw darts at pictures of them and stuff like that.
Well, first of all, the holy grail of reporting is to latch on to a politician before they become famous and before they become president and follow them all the way.
And that way you get to be the insider who gets invited into the Oval Office.
So it's a big thing that a lot of reporters kind of dream of is to latch on early to somebody like Bill Clinton.
And become the sort of favorite reporter on that beat.
That's why at the outset of presidential elections, you'll often see a lot of jockeying within newsrooms to see who gets to cover which campaign because people always want to pick the winner because they think they're going to get a book deal out of it at the end and they're going to end up having their own show on MSMEC or whatever.
I mean, if you add in the fact that we've had concerns about nuclear conflict with two different nations, right, since Trump has been elected, I mean, there's the North Korea thing, and then there's the fact that We've had military exchanges where Russian mercenaries reportedly have died.
That's certainly unnerving.
The nuclear clock, which was established, the doomsday clock, which was established way back in the 50s, has us at the The most dangerous point since 1953. Really?
Yeah.
At a time, in their estimation, I forget what the organization is actually called, but I think it's Physicians for Social Responsibility.
But this right now is more dangerous than the Ka-7 shooting, the Cuban Missile Crisis, like we're We're at a moment that's incredibly tense between these two countries.
And what's fascinating about this, and I only heard about this because I wrote about this a few months ago, And I made a mistake by saying that the color used to toggle between red, which was the highest, and green, which was the lowest, but apparently not once in its entire history was it ever green.
Like, they never had threat level low.
Even once in its history.
So we were always some level of anxiety.
But those were weird times, too.
Remember that when they used to kind of tell us how scared we were supposed to be about stuff?
Well, so the program, it took a huge hit when one of the guys who was involved, who was the former head of Homeland Security, if I'm not mistaken, came out with a story about That he had been told by some of the Bush people to jack up the color in advance of an election.
And it was shortly after that story came out that they discontinued the program.
It came out in a book by the former head of the Homeland Security Department.
As a journalist, do you look at these times and say, this is great, this is great for business, or do you more so look at it as a human being and go, this is just a fucking mess, and I wish we weren't so ridiculous?
So when I first started covering the Trump campaign, I thought, this is the most awesome thing ever, because That dynamic I was talking about before about reporters wanting to be on the ground floor with a future winner.
Nobody wanted to be on the Trump campaign because nobody thought he was going to win.
I was stoked to be assigned to cover Trump because I thought this is the most insane thing ever.
I thought this is the black comedy that I was sort of born to cover and born to write.
And for the first, I don't know, five or six things that I wrote about it, about Trump, I thought it was the most amazing, crazy, interesting story of my lifetime.
and then it took this incredibly dark turn where he actually won and I think it was a dark turn for him too yeah there's no question about it there's no I mean I knew some of the people in his campaign.
I can't say this definitively, but I have a very good educated guess that they had absolutely no expectation of it ever even being close, let alone winning.
And that they did this as a publicity stunt in the beginning, probably with the aim of either creating a media network or just bolstering Trump's overall Q rating or whatever it was.
And the same thing that made Trump perfect for that show made him perfect as the main protagonist in campaign coverage, which is actually really just a really long, super boring reality show, or at least it used to be, until Trump came along.
Trump completely changed the dynamic of it.
You know, if you're thinking of it in terms of how it looks to a network, what were the networks thinking before?
If they were going to have people like Scott Walker and Lindsey Graham be the stars of their lead reality show, like, let's get a real performer in there, right?
And when they did, when Trump entered the fray and became a real candidate and started getting votes, suddenly news started making money, like real money for the first time.
And there's an amazing data point right now, which is that the public trusts...
The press less than ever, right?
They believe the things that we say less than ever.
All the polls show this, that there's been a dramatic downturn in how much people will put stock in the things that people like me say, right?
But they're watching television news more than they ever have, by a lot.
So what do those two data points say together, put together, that people are consuming news not as news, but as entertainment?
they're watching it more, right?
So we've, you know, CNN made over a billion dollars last year.
They're just eating into the entertainment budget.
That's all they're doing.
And it's all Trump, which is fascinating and kind of horrifying, but really interesting, too.
Yeah, and there was no doubt in my mind that he was doing that intentionally.
I remember watching him in New Hampshire where he's giving a speech and you probably remember this, this woman stood up and said, "Ted Cruz is a pussy!" Right?
And Trump looks over at her and he says, oh, that's terrible.
That's terrible.
she just said a terrible thing about Ted Cruz, right?
And I remember him looking over at the rise of where all the cameras are, and you could see him thinking...
He's thinking, it's a story for six hours if she says it.
It's a story for three days if I say it.
And he thinks and he goes, she just said that Ted Cruz is a pussy.
And next thing you know, it completely dominated the news.
And he understood The dynamic of how the news works better than even the people in the news understood it.
But I know quite a few people that have, that have had pill problems and have gone to Mexico and taken my friend, Ed Clay, who has an actual center down there now.
He started it after he had gone down there for treatment.
He had a back injury, I believe it was, and got hooked on pills and was like, Jesus, I've got to figure out a way to get off these fucking things and did Ibogaine and then cleared it right up.
And I don't think it was an accident that Hunter's coverage was that he chose that year to do these diaries.
I remember my father telling me about how every reporter would wait for Rolling Stone to come out that week so they could read the coverage of the election.
But Hunter kind of took this unknown senator from the Dakotas, George McGovern, and made him into this Christ figure, basically.
I don't think that McGovern would have won the nomination without that sort of relentless hyping that he gave him.
Because you're right, he would bring you in and the reader would kind of surf along this incredibly charged, fast-paced narrative that read like the fastest, most engrossing fiction.
Right?
But he would intersperse it and stop and pull back and do what we call a Rolling Stone, we call them wisdoms, right?
Where, you know, you just sort of stop and say, here's my take on this.
And those were amazing.
I mean, he just had this ability to sort of cut through the bullshit and see See things from an angle that nobody else saw.
And that was a rare technique back then, the idea of the kind of individualized take on things.
Nobody was doing that in reporting back then.
I mean, nobody even thought of it as a form that you could really experiment with.
I mean, there were a few people back then, like Terry Southern and Tom Wolfe, who were Who are doing some things like that.
But Thompson was completely unique.
And there hasn't been anybody like him since then.
I think it's not an accident that nobody's been able to pull that off again.
And one way I really saw that comparison was your brilliant coverage of the financial crisis and what was the mechanisms behind the scene of the financial crisis.
And I became a really big fan of your work reading that because I think you covered that as well, if not better than anybody.
Yeah, I mean, so I knew nothing about, I mean I couldn't even balance my checkbook when they assigned me to that story.
And I had to start basically from square one.
And I was calling people and saying things like, can you tell me something about something that I'll understand?
I was cold calling investment banks and literally saying that.
And I finally got a guy to have lunch with me, and he said, your problem is that you're trying to understand this as an economic story.
Once you look at it as a crime story, you'll get it.
And from that point forward, I felt like I started to understand the whole mechanism, the subprime mortgage scam.
It really was a scam.
It's really just a massive, corporatized version of, like, Selling oregano is weed, basically.
They took stuff that these incredibly worthless, highly risky mortgage loans, right?
You know, they would give out loans to everybody with a pulse.
You know, whether you had a job or not, whether you were a citizen or not, didn't matter.
Important thing was to get the loan, immediately sell it off, chop it up, turn it into securities, and then they used this highly advanced sort of mathematical trick to turn all that sort of mortgage hamburger into AAA-rated securities.
So you'd have like a junk-rated mortgage, like the riskiest loan in existence, something that was so toxic that And companies like Country Ride wouldn't want to hold on to it for more than a week because they were afraid the stuff would blow up.
And then they would sell it off to a pension fund or an insurance company in the form of a AAA-rated security, which is as safe as a U.S. Treasury bond.
Again, the metaphor of taking baby powder and selling it as coke or whatever, that's exactly what it was.
They just took worthless shit and sold it as something that was gold.
And they did it for years and years and years and years, and they knew that this gigantic Huge bubble of risk and disaster was just accumulating and that someday it was going to all explode and cascade and ruin the economy.
But everybody was trying to time it right and bet on when that would happen and make their money before that judgment day came.
And it was fascinating.
Once I started to learn about it, it was just such an amazingly disgusting, fascinating story that it was just hard not to get into it.
He was famous because he sold the Eiffel Tower twice.
He had this scam that he called I think it was called the Hungarian box.
I'll have to go back and look.
But basically what he would do is he would get on a boat in New York and he had this sort of beautiful mahogany box with a crank on it that had two holes in it.
And he would show all the guests that he would put a blank piece of paper in one end, turn a crank, and a $100 bill would come out the other end.
And he convinced them all that it was a machine that made money.
And everybody would offer him an increasing amount of money for this invention.
And he wouldn't sell it until the last day when he would sell it for, you know, $40,000 or $50,000.
And then he would disappear and jump off the boat in France and never be seen again.
So yeah, it was obviously fake, but that's what the mortgage scam was.
They were taking basically blank paper, these subprime loans that belonged to janitors who were going to foreclose within 10 minutes, right?
And They were telling people that, oh, we have this new mathematical process that actually makes this stuff really safe, and you can put it in your college endowment,
you can put it in your pension fund, and so all these people whose retirement monies were based on Securities were buying all this shit that they thought was was AAA rated and that's that's how they woke up, you know in 2008 2009 and they found their 401ks were were,
you know Wiped out by 40% or whatever it was my neighbor really that happened to him my neighbor bought this plot of land and had this dream to build his dream house and He would go by the plot of land and he was always cleaning up and getting ready and I was talking to him and then Boom!
2008 happened.
He lost everything.
And he would still go by that plot of land and clean it up.
No, I think he I think he died He eventually got really sick and they took him out of his house and brought him somewhere, but I think he's dead now But yeah, his story was awful, awful to hear.
This guy who was in his 60s, who had got this piece of land with a nice view, and was like, this is where I'm going to build my dream house.
And he had all this money prepared for it, all this money saved away, and he was ready to rock and roll, and then boom, it all went out.
It just drained out.
Somebody put a hole in the bottom of the boat and everything went to the bottom of the ocean.
Yeah, and then he probably got ripped off twice because his tax dollars went to go bail out the guys who, you know, because some of the banks got stuck holding some of this shit.
And rather than eat the losses like your friend did, they got the Federal Reserve to buy it from them, you know, or the Treasury.
If you looked at the fine print of all the bailouts, it basically said that you had to repay the money by X time before you could start paying people exorbitant amounts of money again.
But a lot of those conditions were never really followed, and the conditions of repayment were kind of glossed over, and the The companies, they were supposed to be able to pass these things called stress tests, which demonstrated that they were back on solid footing again before they paid people bonuses, but the stress tests were all fudged.
Crime and corruption and illegality basically in every direction during that whole period and not just in the government but in all these companies as well.
Yeah, well, because one of the things that I found out that was really interesting was I did my first story about this, and I got this incredible reaction because it turns out that the financial press, there is nobody in the financial press who writes for ordinary people.
Like, it's basically what I was doing was a translation job.
I was trying to Basically take what had happened and explain it in a way that a person who knew nothing about finance would be able to understand.
And it turns out that nobody's doing that.
So all these people who had questions about it, who wanted to know what had happened to their money, or why did my house get foreclosed on, or what's a subprime mortgage, Wow.
It's a bank that, you know, I wouldn't be surprised that a lot of people listening have their accounts at this bank.
They had to pay a settlement to the government because they were intentionally targeting elderly black people to Sell subprime mortgages to, and they called the mud people.
And there were all these toxic emails going back and forth about how stupid they were and how they'll buy anything, et cetera, et cetera.
And so they had to pay a settlement to the government.
But the racial component of that crash was something that I didn't really clue into until late, but that was a big part of it, too.
A lot of it involved these mortgage lenders going into particularly lower middle class black neighborhoods and knocking on doors where there'd be an elderly person at home and saying, Hey, would you like to refi your mortgage and you'll have a little bit of extra spending money this month, right?
And the person won't know anything about finance and they'll sign this refinance deal that allows them to save a little bit of money each month, not knowing that they had just converted their fixed mortgage into a floating mortgage.
And that as soon as the interest rates change, you'd have people who went from paying $900 a month to paying $7,000 a month, right?
And suddenly they're out in the street, and the company that sold them the loan is long gone by then.
They're not holding it.
As soon as they got her name on the dotted line, they sold it off to a bank in New York.
Who in turn, again, chopped it up into a hamburger and sold it probably to your pension fund or whatever.
Because before that, I was mostly covering elections, right?
And again, if you cover elections, it's incredibly boring, and you never hear anything of substance, and it's not terribly complicated.
And, you know, the Democrat says that, you know, we want to help the middle class, and the Republican says we want to protect family values, and that's pretty much the extent of the intellectual challenge in terms of covering that stuff.
And I always thought to myself, you know, politics in America must be a lot more complicated than this, right?
There must be some other hidden thing where it's incredibly complex and diabolical and, you know, the real machinations of power must be visible somewhere.
And I think that you find that when you start looking into how Wall Street works, how money works, how central banking works, How the concentration of wealth works.
Basically, the subprime scheme was an effort to pull the remaining savings out of the population.
In the old days, investment banks made their money by lending money to companies who would build factories, and they would make stuff and sell it around the world, and everybody would make money, and even the population would benefit from it.
But that manufacturing economy, it's all gone.
It's overseas.
So you have this financialized economy and they have no normal beneficial way to make money.
And all they can really do is look to see where is their money and how can we get it.
And most people had money in their houses, right?
Like the accumulated savings of most people, whatever was left after the internet crash in the 90s, Was in real estate.
And this was the scam by which they took the wealth that was left in the pockets of ordinary people and transferred it to, you know, nine people in Manhattan, basically.
I mean, that's why you have, you know, when we talk about wealth inequality now, right, being a huge factor that, you know, the top 95, I'm sorry, the top 1% of the population owns 90% of the wealth in the country or whatever it is.
That's a consequence of schemes like this where they're finding out where people have a little bit of money and they're systematically coming up with scams to move it from there to here.
And that was the other part of the story that I ended up having to cover later, which was the last time they tried something like this, like during the SNL crisis, which was also sort of a giant fraud scheme also that involved real estate lending.
But the government after that actually indicted 1,800 people.
They put 800 people in jail.
They put a lot of serious, influential people on the dock after that.
Nobody went to jail after this stuff.
And people think that, well, they didn't do anything that was technically illegal.
No, bullshit.
There was lots of stuff that was brazenly illegal.
Criminally illegal.
I mean, they committed fraud on a broad scale.
But some of these companies were into the things that were even worse than that.
I mean, you take HSBC. HSBC admitted to laundering $850 million for a pair of Central and South American drug cartels, including the Sinaloa Cartel, right, which is suspected in thousands of murders like And, you know, they admitted to this activity.
They agreed to a deferred prosecution agreement with the government where nobody did a day in jail.
No individual had to pull out a dime out of their own pockets to pay.
The shareholders ponied up $1.9 million, but some of that was tax deductible, which means we paid some of that fine.
And the only real punishment with any teeth is that some of the executives had to partially defer their bonuses for five years.
So, laundering $850 million for narco-terrorists gets you a total walk.
You know, that tells you basically everything you need to know about Do we prosecute white-collar crime in this country?
Basically, no.
I mean, that's the answer, ultimately, that you find out.
Oh yeah, if you look at the agreement, and you can watch the Thursday, There's a video of Loretta Lynch and Lanny Brewer, because this is before Loretta Lynch was Attorney General, but she was basically the head of this deal.
They talked about the fact that the HSBC branches, because most of this was done in Mexico, HMEX, which was the subsidiary company, they had special teller windows built to fit cash boxes that the drug cartels were bringing into the bank.
So, basically, you've seen the scene in Scarface where the guys come in with duffel bags of cash to the bank, right?
And, you know, that's like a montage, you know, there's that song, I forget what song it is in the background.
Same thing.
These guys would come into the bank, they would slide in these boxes of cash one after the other, and that's admitted activity.
The bank signed off on this.
It's not like they're contesting it.
They're not saying we neither admit nor deny.
It's part of the deal.
And they agreed to the amount, everything.
So, yeah, it was a $1.9 billion settlement, but, you know, it's not like it came out of the pockets of the people who did it, and it's not like any of the people who did it are in jail.
It's just, you know, a thing that happened, and, you know, that's five weeks of profit for the bank, so what the fuck?
That was a sobering documentary where they're talking to the very people that caused the financial crisis and realizing that these people were economics professors that eventually got these jobs, really lucrative jobs with banks, and how they finagled this system and made it so it looked like these things were appropriate.
Yeah, no, I talked to some of the things that they invented that made this the crash possible sounded like good ideas.
Like they came up with this thing called the credit default swap, right?
And I won't bore you with what that is exactly, but basically it's a kind of insurance where it's basically a bet.
It's hard to explain, but it's a way of quasi-insuring a product without having to pony up a lot of money.
And it's called a derivative, right?
And these instruments are completely unregulated.
How can I put this?
A credit default swap is like you and I betting on whether or not a third person's house is going to burn in a fire, right?
Like the old school insurance said that it had to be your house in order for you to get insurance on it.
This new form of quasi-insurance said that two totally disinterested parties could have an interest in a third thing that happens.
So it's basically gambling.
And So on the one hand, it allowed people to create a whole lot of capital, which allowed them to lend more money, which theoretically allowed people to buy more houses.
But in reality, it just created the system where all these people had bets that were back and forth on all these properties.
So that's one of the reasons why when the crash happened, when all those mortgages started to fail, it wasn't just the failures of those properties.
It was all these people who were betting on whether or not these people could pay their mortgages.
They started to lose money.
And then there were people who had bets on that who started to lose money.
And it's like this cascading whirlpool of shit that happened.
And again, it just started out as an idea to just create more money to lend.
And it turned into this nightmare Mechanical scenario that just that created losses You know in this almost apocalyptic fashion and and a lot of them had no idea but that that was going to be the eventuality Wow, yeah, it's it's great.
It's definitely crazy stuff as a person who didn't really follow finance before how much has that affected your life now like the way you look at things and I definitely pay a lot more attention to the fine print when I enter into any financial contract.
I think about where I do my banking.
But the reality is you just don't have a whole lot of choice in this country anyway.
I mean, it's like everything else.
There's only a few companies left.
So almost every bank that's out there where you can have a bank account and a mortgage is a bank that I've written about some massive scandal before.
So that's a problem.
But yeah, I worry about it all the time.
I mean, I have friends in finance who call me and they They tell me that, you know, that things are incredibly unsafe and that this, that and the other could happen.
And so I have an anxiety level about things that I never had before.
But apart from that, yeah, I mean, that's a natural consequence of having to spend seven years looking at all these horror stories.
There's a lot of negative press about subprime auto loans, for instance, which is not exactly the same, but it's a similar thing.
I mean, the same basic scam of taking loans, chopping them up, and then repackaging them as something that's more valuable than the original loan You can do that with anything, any kind of credit.
You can do it with credit cards, you can do it with aircraft loans, you can do it with car loans, you can do it with home mortgages.
And so the mechanism of taking things that are toxic and risky and making them look like AAA is still part of the economy and it's everywhere.
The plus side of that is that there's more credit available.
Almost anybody can get a credit card or even if you've had screwed up credit, you can get a car.
Yeah, and in the old days, you'd have a lot of confidence that, well, the stock market always eventually goes up significantly.
So, yeah, there's going to be bad days, but it'll go back up.
But the problem is the underlying economy in America just isn't all that hot.
What do we really make in this country?
where's the floor, right?
Like we have, we have some industries that sort of perform well, but if, you know, periodically we go through these bubbles that are based on nothing more than enthusiasm, In the 90s, it was the tech bubble where people like Alan Greenspan would say things like, well, we have a new paradigm in economics.
So it doesn't matter whether a company hasn't shown any ability to make money or has no reasonable profit and loss statements.
It's just if it's a good idea, the stock is sound and everybody should invest in it and the stock market is going to continually go up.
So don't worry about it.
Of course, that doesn't happen.
It blows up.
Everybody loses their shirt.
But what do they do?
The Fed lowers interest rates, basically allows Wall Street to recapitalize, drink itself sober, and they plunge into the next madness, which is mortgages.
And once again, you have Alan Greenspan saying, hey, real estate is a great bet.
It's going to continually ascend.
People should use their homes as ATM machines.
You should consider refinancing your house so that you can get a little bit of extra cash.
This was actually the message they sent to America.
Again, it creates this artificial mania where the economy is stoked artificially.
to gigantic dimensions but it's not based on anything and so when when it crashes when you finally get like any Ponzi scheme it you know it depends it depends on more new investors coming in than old investors leaving right so there's always going to be that moment when suddenly we don't have as many new ones as old ones and the instant that happens it all goes kaboom right and that's what happened with With the subprime market,
there was a moment in time where they just couldn't keep it going anymore.
They couldn't find any more new suckers to get to sell mortgages to and the mania ended and it all went splat and then it was amplified by the fact that we have I'm terrified every time I see the stock market go up What's it based on?
It's a story of one of those things where You find someone who you hope exists and you build them up.
There was this woman.
She looked like Steve Jobs.
She wore a black turtleneck in every photo.
And she was the richest ever self-made woman.
She was worth $4 billion.
She had built this company called Theranos right out of college.
She was like 19 when she started the company.
It was a blood testing company that just required a small prick of your blood to do complicated blood analysis for diseases and things along those lines.
Turns out it didn't work at all.
And they faked a bunch of shit.
Widespread fraud.
A lot of people got their blood tested.
It turned out to be, you know, they were at risk for all these diseases.
Yeah, when you find out that really wealthy people that do this for a living, Warren Buffett does that for a living, that he can get scammed out of $125 million.
His mantra is supposed to be picking the absolute long-term investment, right?
So he's not like a Stevie Cohen type who just looks at the tape and tries to time it just right so that you can make an investment for 10 seconds and come out with a...
If he's investing in a company and even he can be fooled, that's pretty terrible.
But look at Enron.
I mean, Enron was another example of the world's best financial analysts were looking at this company for a decade, and the results were completely ridiculous.
Like, it should have been obvious to any layperson that these profit numbers couldn't possibly be real.
And it wasn't until one of those guys, I think it was Jim Chanos, who was sort of a famous short seller, you know, sort of said, hey, wait a minute, there's something up here.
But people continually invested in these companies, and there's just not a whole lot of oversight that goes on with Wall Street.
And I think that's a major lesson of, you know, The last 20 years is that there's just not a lot of eyes on crime in this area.
Another example is, I'm sorry, who's the guy who scammed all the rich people?
There's a great book called The Octopus, which is about somebody who did a Madoff-like scam, another hedge fund.
Same thing, they weren't really making trades, they were just sort of creating phony profit and loss statements and creating records that look like trades that they could tell their investors about, but they weren't actually doing anything.
So if anybody, any expert at any time had just poked their nose You know, not to get back to, you know,
my drug dealing book, but this is one of the things that he says, which is that, you know, you can be in a, you know, in a poor black neighborhood, and a couple of kids will be on a cell phone talking about selling $10 worth of weed, and they'll be picked up by cops, You know, within 20 minutes or something like that.
Meanwhile, you know, somebody like, you know, Bernie Madoff can commit $100 million frauds year after year after year and not even take any effort to try to cover it up all that well.
Yeah, if he had laundered it through a slightly more legitimate process, he would have gotten out fine.
But one of the things that a lot of these guys, these scam artists, get into it thinking that they're actually going to be real hedge funds and that they have some stock picking system that's actually going to make all their clients money.
And one of the things they find out is that, A, they suck, they're not outperforming the market, and they're not that smart.
But B, that their clients can't tell if they just make up the numbers.
So there are a number of cases of people who start out trying to be legitimate and trying to be real investment advisors, but they just end up turning into Bertie Madoff types because it's just easy.
No, but even so, even if you take that into consideration, then the number of eyes that are on this world is ridiculously low.
Like, take AIG, right?
AIG was one of the world's largest companies that, you know, before it crashed, it had like 180,000 employees.
It took advantage of this weird loophole that allows financial companies to essentially choose their own regulator.
So because AIG had a thrift or a savings and loan, that's basically the same thing.
They chose to be regulated by the OTS, which is the Office of Thrift Supervision, which is this tiny, tiny little office in Washington that oversees basically savings and loan operations.
And in the OTS, this is actually true, they had exactly one insurance expert on staff.
So essentially, the world's largest insurance company was being regulated by A government office that only had one person who really understood insurance.
And even that person wouldn't have understood the part of the company that blew up, which was essentially an investment bank within the insurance company that was creating these sort of highly advanced derivative operations, that they just would not have been able to understand that stuff.
The government just does not place a lot of resources into, you know, keeping an eye on even the most basic things.
And when you compare that to law enforcement and other areas, you know, is how many people do we have, you know, worrying about bank robberies in this country or drugs, right?
or how many people are being watched because they're marijuana dealers in other states.
I mean, it dwarfs the number of people who are watching for economic crimes.
I think it was merged into some other, because there used to be the OCC, the officer of the comptroller of the currency.
And I think they created a new regulator out of all that after the crash.
But yeah, AIG chose its regulator and its regulator, you know, was totally overmatched.
Couldn't understand shit.
And that's one of the reasons why the company blew up.
The company also blew up because it was run by insurance people who didn't understand.
AIG was basically Wall Street's bookie.
All these investment banks were betting on whether or not mortgages were going to fail or not.
And AIG was selling the product that they could use.
To make those bets.
Essentially, they were taking on insurance on packets of mortgages.
So if they exploded, you would get a payout.
It's like buying an insurance policy on your neighbor's house.
If it goes up in flames, you get paid.
AIG was selling a product that allowed banks essentially to buy insurance on houses, on mortgages.
And if people foreclosed, if the mortgages failed or pools of mortgages failed, if you bought that kind of insurance, you got these huge payouts.
So people were betting against mortgages, basically.
And AIG was taking all this book and But the heads of the company were old school insurance executives and just didn't understand this sort of newfangled, complicated form of insurance.
And so they would look at the numbers that they were being given and even they didn't get it.
They didn't understand how exposed they were.
And so when all the bets started going the wrong way, suddenly they're being asked to pay out billions of dollars and they're like, Wait, where is this coming from?
So even the companies were kind of clueless about the shit that was going on, it turns out.