Small Enough To Fail: Why We're In Another Banking Crisis
Co-hosts Jared Yates Sexton and Nick Hauselman discuss the latest news about the failure of Silicon Valley Bank and how the regulations designed to stop this were repealed in a bipartisan manner. Then they examine the issues with Elon Musk wanting to create a new company town outside of Austin, Texas. When China brokered a deal between the Saudis and Iranians. the geopolitical ramifications are a serious enough threat to American power, and they finish on a powerful and well funded conservative group operating in the shadows to gain systemic control of American society.
To support the show, subscribe to our Patreon at http://patreon.com/muckrakepodcast
Learn more about your ad choices. Visit megaphone.fm/adchoices
The economy is in absolute freefall, but guess what?
Nick Halseman is back!
That's all that matters?
That is all that matters.
How are we doing, buddy?
Welcome back.
Thank you.
I'm good.
I'm good.
I have yet to adjust to the new time zone, throw in a time change, daylight savings, whatever.
Maybe they'll get rid of that this week.
What do you think?
I feel awful, time-wise.
I have no idea what's going on.
Up is down.
Left is right.
Cats and dogs are living together.
Mass hysteria.
It takes me a month.
To get regulated to the time.
I don't know if that's about me.
I don't know if everybody feels it.
I feel odd.
I was worried about you down in the previously free state of Florida.
I didn't know what was going on.
I thought you might have gotten caught up by the state power down there.
We were all worried.
Oh, you know, just driving past huge Confederate flags off of the interstates, which was crazy.
That was near Tampa.
Tampa, which is supposed to be, you know, a thriving city that's probably somewhat progressive, if you will, but literally a few miles off of there, huge, big, big...
Flowing General Lee flag, whatever, flapping in the breeze.
Yep, they love the Confederacy down in those areas.
Listen, we have an absolute jam-packed show.
I'm so glad that you're here so I don't have to sit here and drink a beer and think about the tides of history.
I'm very glad that we get to tackle this together.
Listen, everybody.
China makes a power move on the world stage.
Elon Musk is trying to bring back the ye olde company town.
We got to talk about that.
We got to talk about one of the biggest threats that's rising up within the National Conservatives.
But before we talk about all that, Nick, The second largest bank failure in American history has now taken place.
Silicon Valley Bank, which is one of the main centers of gravity for the tech world, the startup world, the venture capitalist world, it went down.
And it went down really, really hard.
A massive, massive failure that was caused in part for a variety of different reasons, including deregulation.
There was a panicked bank run, which was set off in part by people like Peter Thiel.
The government had to come in, take over the bank, as stocks and faith in the economy have plummeted all over the place.
By the way, we'll get to the Federal Reserve.
They've got egg on their face, Nick.
And then, we currently are watching the FDIC insurance that has been pushed forward.
There's so much to talk about on all of this.
I do want to say that this is exactly the kind of thing that I've been worried about now for years.
This is the kind of thing that history shows us always works in cycles.
Nick, what are your initial thoughts on this?
It doesn't feel good.
I mean, it's completely manufactured in one respect.
You know, like GameStop should have started to give us an indication that you could just get together on a Reddit thread and sort of, you know, affect the entire stock market and make a lot of money, right?
And this is in a similar way where, yeah, where Peter Thiel and all those guys decided to pull their money out.
They didn't have to do that.
And but it's interesting, you know, this economy or the way our money system works is very complex and relies on a lot of different things.
Just in case you're wondering, like, do you You know that if you deposit, let's say, $100,000 in a bank, like, it's not sitting there in cash in a room, right?
I don't know, sometimes I think we learn that that's how we think that's what's happened, especially if it's like, you know... Wait, time out, time out, time out.
Are you gonna sit here and tell the Muckrake community that there's not a giant Scrooge McDuck vault where all of the bankers take their breaks and just, like, jump in there and swim around and spit out coins?
Yeah, no, it's not like Hogwarts and the Ingots, Ingerots, whatever the hell it's called, that place with the dragon on top protecting all the money, no.
And so, right, so as a result, because I've been kind of pulling this apart to figure out exactly why this is a big issue, and of course, you know, because we had inflation, they had to raise interest rates.
That seemed to be pretty- Whoa, whoa, whoa, whoa, whoa, whoa, time out, time out.
That's sort of true.
That's I want to go say go say real fast that inflation is a completely artificial thing.
It created the excuse for them to go ahead and raise the interest rates.
Oh, OK.
Well, please feel free to interrupt with that.
Those kind of points as we go through this, because that's because the inflation is bullshit and the Federal Reserve raising high hiking their rates.
We'll get to that in a second.
But you're exactly right that that is part of the domino effect here.
Right.
And so when interest rates go up, bond values go down.
And it's not necessarily a huge deal if you have bonds that are, you know, 15 years or 30 years maturing.
But if all of a sudden in that environment that we are in now, where all the bonds you've invested in are going, the value is going down, and then a whole bunch of people decide, you know what, I would like my money out of the bank.
They don't have the money.
It's not there.
They would have to then sell those bonds to then have the cash to give you the money that you have deposited.
Well, if the bonds are worth significantly less than what they had paid for originally, then that's what happens to a bank when it goes on a run and they don't have any money to cover anything and then they go out of business.
You know, maybe it's simpler than it feels when I did all the research today, but that's about what happened, and I thought we were beyond this.
Didn't 2008 teach us anything?
No.
No, it did not, and we are Americans, Nick, and it is our God-given, star-spangled right to never, ever once learn from our mistakes.
You know what, Jared?
I'm gonna take a detour really quickly because it reminds me of my trip.
I was in Florida, okay?
I went to, and it's tangential, but it'll connect.
Give me a second.
We went to an Orioles-Pirates spring training game, okay?
I'll take it.
What's that?
Yeah, a hot ticket.
Absolutely.
And front row seats next to the dugout.
And there's netting all along that whole stretch where, you know, there didn't used to be netting, you know, like that.
Any foul balls go that way.
And I thought to myself, we can get netting like that in every major league ballpark and spring training park, but we can't get, like, sensible gun laws.
Right?
Or we can't get sensible banking laws to stick, by the way.
That's the point I wanted to make.
We had the laws in place that would prevent this kind of shit from happening.
And guess who decided to deregulate part of this for smaller banks and allow them to invest more of their money and have less capital at hand to cover things like this?
Ronald Reagan.
No, that would be Donald John Trump.
And by the way, that would be the Republican Party that rolled back a lot of the safeguards that made sure stuff like this wouldn't happen.
But, to go ahead and give this the larger context, that rollback of Dodd-Frank, which was put in place after the 2008 collapse, it was pushed by, including members of the Silicon Valley Bank, that said, you know, hey, we need to go ahead and move the threshold from $50 billion to $250 billion.
To go ahead and give us a little bit of room, basically, to say, hey, let us play around a little bit.
What's fun about that, by the way, is it wasn't just Donald Trump's idea, because he had no idea what was going on.
He was too busy eating hamburgers.
This was a concentrated effort to go ahead and push the envelope.
He was also supported by 17 Democrats, Nick.
Can you name, perhaps, who was involved in the 17 Democrats who helped push back Dodd-Frank?
Oh, jeez Louise.
Well... I'll go ahead and give you one.
That's Barney Frank!
And if that sounds familiar, it's from Dodd-Frank.
And, by the way, Barney Frank currently is playing a role in all of this because after going ahead and rolling back his own protections, somehow or another, Nick, he ended up on the board of Signature Bank, the second bank that has failed.
Are you breaking news right now?
That's completely the truth.
And in the middle of all of this, and this is all great, because this is the same bullshit, different story, different time.
We love it, folks.
The execs and the investors who were on the inside of Silicon Valley Bank, they pulled their money.
The CEO of Silicon Valley Bank, he pulled out, and this is a minuscule amount of money, $83.6 million in stock, meaning that they all had prior knowledge of it.
And then all of a sudden you have Peter Thiel, other investors who have already sort of digested this.
It's almost like what crypto and like going back to GameStop has taught us.
This inflationary hyper investment strategy, which is you only put your money in stuff that you know is going to go up.
And the first time that it's going down, you don't want to be the person left holding the bag.
So that goes ahead and creates an environment for all of these bank runs and all of these situations.
But here's one thing that is at the heart of all of this, which is just absolutely maddening in every single possible way.
These brain geniuses, and I'm talking about Peter Thiel, I'm talking about Elon Musk, I'm talking about Mark Zuckerberg, because one of the reasons why this has happened in the first place is because Silicon Valley Bank, which was in the middle, the nexus of all of this tech investment, these brain geniuses, Nick, Who literally believe that they are so generationally talented that they should be choosing what happens in the future.
They're the ones who should be carrying the light of human consciousness into the stars and that they are personally responsible for delivering us to the future and taking care of the trillions of people who come after us.
It turns out that when the Fed hikes up rates, Nick, they're not such brain geniuses anymore!
It turns out for the longest time that this free money that was completely holding up this house of sand, it turns out you couldn't lose.
It was almost like going into a casino and being given special tokens that ensured that every time that you played, you know, roulette, your number came up.
Or that you played one roulette after another that wasn't, you know, red and black.
It was just red the whole time.
And whenever those interest rates go up, everybody all of a sudden was like, oh my god, things are downturning.
I don't even know what to do.
And they had to fight imaginary inflation in order to try and make people go back to work.
Everybody here who was supposed to be at the wheel making sure that something like this wouldn't happen, Has either been bought off, or they have magical memory that just absolutely forgets what happens in 2008.
There's a reason why the American economy over and over continues to boom and bust.
Because every time that it busts, people put a little bit of a break on it, and a little bit of regulation on it, and then a little bit of time passes, and they yank that shit out, and the next thing you know it happens again.
I don't know that things are going to collapse.
I don't know that this is going to be a meltdown.
If it isn't, and if we manage to dodge the bullet here, it might be time to consider putting those brakes back on the locomotive.
Oh, I mean, I think that Katie Porter's already, you know, she had already had the receipts of saying this is going to happen when they repeal this back in 2018.
And I think that she's now trying to get that back and cover that because, again, you're not supposed to let certain banks leverage more money than they have in the stock market.
And the reason why they want to repeal it is because they don't They make a little less money, Jared.
They get frustrated, they get annoyed that they can't make more money than they want to because, oh yeah, they don't care if anybody suddenly says, I want my money out.
And the other reason why they don't care is because they know the government will bail them out.
Now, the bank itself, if you were, you know, worked at the bank as a manager there, okay, you're probably out of a job.
That's too bad.
Maybe you'll get another job.
But certainly the people who are all invested in that bank, who were taking the money out and they caused it to fail, they know that they're going to be made whole.
Another bank is going to take over those accounts.
And at least at the depositor level, no one's going to lose any of the money.
Now, if you were involved in their investments in the bonds, that's probably all wiped out and you might be screwed there.
But I have to imagine that most people don't have, like, all of their wealth tied up in that anyway.
And so that they'll, but the people who deposited the money, get it all back.
And so it's almost like you said, what we learned in 2008, which was nothing, the government will end up coming in and just bailing everybody out and no one gets held accountable to that.
And that's, that's capitalism, I guess, for you.
Or that's when capitalism and democracy get to meet in a nice little happy party.
That is hypercapitalism.
Because what has been created is an environment, and this is exactly everything that's wrong with our current environment.
They get all of the profits.
These brain geniuses of tech and Silicon Valley, they get all of the profits and they have none of the risks.
They get all the rewards, none of the risks, because our government has been relegated into being shepherds of the economy and being there as a publicly funded piggy bank that can be broken in case of these things happening.
So, what we're looking at right now is the FDIC, which guarantees up to $250,000, right?
They've gone ahead, and in order to try and staunch the bleeding here, because tech, and by the way, It isn't because I'm an economic genius.
It's not because people like me are economic geniuses.
We all knew that tech was going to be the thing that caused this, right?
And there's other parts to it, including housing, which is always in danger, particularly after we didn't learn from 2008.
We all knew that tech was going to be where this took place, largely because of the philosophy that has taken hold there, which is just absolutely go for it.
You know, you are gods in your own mind, gods in your own world.
Now they have gone ahead and in order to try and stave this thing off, like you said, they're making sure that they're all going to be whole.
That they're going to cover every possible account that is coming from Silicon Valley Bank.
They're making up to 25 billion dollars.
Right now they're saying that this is going to be at no cost.
To the taxpayer, which I don't know.
It's almost like we're playing or playing around with Monopoly money here because that's what we're doing.
I do want to say real quick before we get off the subject, Nick, and I don't want to sit here and do the doom and gloom thing the entire time.
A hearty shut the fuck up to Larry Summers.
Go away.
Nobody wants you around.
Nobody wants your opinion on this.
Go away.
Larry Summers should be banned.
And listen, I'm not an authoritarian, but let's make a law that only affects Larry Summers not having a Twitter account.
Shut up.
We don't care what you think.
Don't tell us that the time is to bail out everybody.
We know what you think.
We know what you care about.
This, by the way, is the same guy Go to hell.
Go away.
You're done.
That's it.
I don't ever want to hear from Larry Summers again.
I'm putting that down.
That's the law.
Period.
and we're going to need some financial pain go to hell go away you're done that's it i don't ever want to hear from larry summers again i'm putting that down that's the law period no more larry summers oh i i hear you And, you know, I saw that they're claiming that the taxpayers will not be on the hook for all of this.
And it's worthy of a deep dive to understand how that would be possible, because they're going to take money from, well, the revenue that the taxpayers pay to the government.
Now, that said, we do know that in 2008, when they did bail out for like the auto companies and they bail them out with loans, They did get repaid and there was interest so in theory the government actually made money back on that when they bailed out the auto industry so there could very well be something in that notion there but I still feel like the money has to be fronted first and that's going to have to be taxpayer money I don't unless there's some other money I don't know about that they get.
But that it's all, you know, they're all spinning it now.
It's almost like after debates, presidential debates in the spin room happens.
Everyone just wants to spin this in their own way.
I do feel like it is a bit doom and gloom where it just seems very simple.
They'll take care of the depositors.
Everyone will move on.
It's not going to have the ripple effect that like we saw in 2008.
I want to say very quickly before we move on.
Whenever something like this happens, inevitably it's the same thing.
And people like myself, and I've seen it the past couple of days, people say to myself, they're like, okay, you're such a critic of this system.
What do you think they should do?
It's like, I didn't make this mess, man.
I didn't set this thing up.
This isn't on me.
Like, I gotta tell you, what are my solutions?
Go back in time and don't do this shit.
Don't deregulate.
Don't continually take the brakes off of this stuff and the regulation off of this stuff.
You can have your market.
You can have your investment.
You can have your wealth creation.
All of that and still have a regulator on this.
We've proven it.
It's when it gets to, and this is something that you and I cover all the time, it's when all of a sudden the people involved, they start getting up to that ceiling and they're like, well, what are we supposed to do?
Not grow?
Oh, and then immediately they go ahead and they lobby for it and they get the brakes taken off and this thing repeats itself.
So again, I reject the premise.
You go back in time.
You don't loosen Dodd-Frank.
You go ahead and you make sure that you learn from something from 2008.
And by the way, we got that time machine.
Let's go back and throw some people in jail in 2008.
Let's go ahead and make sure there are some consequences so stuff like this doesn't happen again.
Well, but they don't look at it as like, oh, no, we can't grow next quarter because we grew so much this quarter.
They don't look at that like that way.
They look at it as the regulation is simply like de-incentivizing them to do their jobs well, because there's a cap on their their revenue.
That's how they look at it.
Right.
It just cannot have any kind of cap on the revenue, even if The cap we're talking about was a law that was put into place to prevent the global meltdown in the financial sector, because you need to be able to have stress tests on banks to make sure that they have the capital to cover these kind of runs and that they're not over leveraged.
And they also probably did a shitty job with their investments in bonds, as it was, and they didn't hedge them properly.
So there's a lot of things, which, by the way, that happens, too.
And that's just, you know, when that happens and they lose money, then, oh, well, those guys will get fired.
That happens normally.
When you have the Teals, and this is not a conspiracy theory, I think these guys all move together, all these VC guys, and they are the equivalent.
Like you said, and we mentioned about GameStop, it's the equivalent of that on a text chat instead of a Reddit thread or whatever.
And those guys really have the power to just shut down banks whenever they want.
And that's what's so scary about all this, too.
That shouldn't be available.
And then also, knowing that they can profit off of this.
It's just, yeah, we got to we got to do something to change all of this.
You absolutely nailed it.
Is there so much capital concentrated in so few hands that when these people get together, and by God, they do get together.
I don't know what else to tell you from the lawsuits that have resulted in discovery of everything from Elon Musk in the tech world to what's happening in Fox News.
And we'll talk about this in a minute when we talk about this Teneo thing going on in the right.
Like, this is what they do.
This is how it works, is you have a couple of whales that are moving around and they're consistently changing things.
I mean, Teal and his backed group, that's what started this run.
People looked at them and said, oh my god, they're getting out.
We need to get out.
We need to move.
So that's where that started.
Speaking of influence, speaking of power, Nick, kind of big news on the world stage.
It's kind of weird that the United States isn't talking very much about this.
It's almost like it reveals a, I don't know, a decline in American empire.
China has brokered a deal between Iran and Saudi Arabia to restore their diplomatic ties This has come as a little bit of a shock that China got out in front of this, the United States left down the sidelines.
This is one of those things that we're going to keep an eye on, particularly moving forward.
I've got some thoughts on this.
When you heard about this, how'd you feel?
I mean, listen, can't we all get along?
Isn't that nice?
Isn't that what's happening?
It's just friendship, that's all.
You know, it's not a bad thing to have more peace in the Middle East, you know, okay?
But, I mean, my first instinct was, okay, how much is China going to make selling arms to both these guys now?
That has to be what they're doing and what it is.
And the worry there isn't necessarily that they're going to make money that way.
It's that the influence, if they move into that vacuum of arming other countries more than the United States would, then that's a serious power vacuum that they can suck up and eclipse us.
And that's concerning.
I got to tell you, before we get into the fallout from this and what I think we need to look at long term, Man, with friends like Saudi Arabia, who needs enemies, man?
I mean, really?
Over the past couple of years?
I love, though, that our relationship with the Saudis.
We've protected them.
We've built them up.
We've given them as much legitimacy as possible.
We've traded with them.
And then, Nick, when eventually they gain leverage over us, I mean, America turned into basically the apologizing PR front that's like, I mean, yeah, our friends did murder one of our journalists and dismember them.
Like, yeah, that is what happened.
What?
you don't want us to be friends with them anymore?
Have you seen the money that they give us?
Like it, that leverage in that relationship has shifted so much that Saudi Arabia has been flirting with China.
You know, it's like, it's like being out on a date and you look over and you're like, are you making eyes worse?
What's happening here?
Like, there's some footsie going on and it's been going on for a while.
Saudi Arabia, of course, and Iran have both been very quietly pulled into the situation in Ukraine, in which they've been aligning with Russia, handing them weapons, handing them supplies.
China, of course, has done the exact same thing.
I'm sorry, but there's a lot of people in Washington, D.C.
who knew that China was talking to Saudi Arabia, particularly as China is Saudi's biggest trading partner.
And by the way, I haven't even said the word oil yet in all of this.
The resources that have been put into play here is incredible.
There are people who woke up in Washington, D.C.
when this became official.
They went to bed the night before thinking that this was just going to be a quiet flirtation.
This open, like, public relations coup that China pulled off here, and it's not a coincidence, by the way, that this happened after the war of words started going back and forth between D.C.
and Xi, who has been calling out Washington, D.C.
explicitly in every single one of his speeches lately.
This is not a coincidence that this big giant event happened.
There are people who woke up thinking when they went to bed at night that this wasn't going to happen.
They woke up the next day and this scared the living hell out of them.
Oh yeah.
I mean, throw into the context of like Trump getting into a trade war with them and risking upsetting China on our front, you know, does make this kind of stuff happen.
We're like, okay, fine.
If we're going to have strained relationships between, if China is thinking, if we're going to be strained with the United States, then we might as well move in and find our other partners too, to maximize our profits and our influence.
I suppose the one thing interesting about Saudis Is that eventually they won't have any more influence.
We will have other sources of energy and oil will not be worth anything anymore.
Now, the only problem with that is that when when does that happen?
Is that like is that 50 years from now?
Is it 30?
I don't know, but I feel like it's still in the grand scheme of things, a short term solution to someone like China.
Can I say really quickly, and this is like one of the really, really crucial things I think that you just you just brought up, it is in the United States of America's interest to move away from fossil fuels.
And I'm talking, I'm talking statecraft here, like, and that's not something that I usually don't like talking about geopolitical strategy, because I think a lot of it is bullshit and it forgets what happens to the human being on the ground.
I have a problem with that, right?
I like to go bottom up as opposed to top down.
But even if we want to sit here and be realpolitik Henry Kissinger style pundits, it is in America's best interest to go ahead and move beyond fossil fuels and to be the world leader in alternative renewable energy.
That is in the American interest.
Here's the problem.
America is being held back in large part by a lot of corporations and a lot of the energy companies, even the ones that are housed in the United States.
They don't have any national loyalty.
They have no interest in what's actually going to help the country in the long term because the corporation has superseded the nation state.
Because that has happened, our politics are being intentionally held back.
This is one of the reasons, of course, why the Green New Deal could never happen.
It would be the greatest boon for so-called patriots to go ahead and have America have this revolution in energy, and could possibly be the one thing that could turn the tide of American decline and the burgeoning Cold War.
But it can't be done.
There's no way that can be done because the energy industry has stockpiled too much capital and holds too much sway over all of our politics.
As a result, it's just sort of a downward spiral, and all that people can do is stamp their feet and talk shit about China.
That's all they can do!
They can just, you know, talk about, like, what are we gonna do and, you know, if a war ever happens.
Meanwhile, we have been lapped.
I'm sorry, but seeing these pictures, Of China, Iran, and Saudi Arabia.
And by the way, Vladimir Putin was not at that ceremony, but you better believe he sent his best regards.
This feels, and I'm sure there are people who saw these pictures, this feels like the visits between the heads of state that took place before the 1913 You know, start of belligerence, like we're starting to look at a back and forth where alliances are being created.
And this is a preview of how the different sides get formed, you know, and it's on one side, you have the American order.
And you got to wonder who's on that side with us.
I mean, obviously, you got Britain and France and probably Germany, well, maybe, maybe Germany.
We don't know yet.
But by the way, I got to tell you, those are ascendant countries in terms of power and wealth, for the most part.
They are starting to push back and shake that order.
America has been lapped in a lot of this stuff.
And this development is, it's really concerning.
You're gonna have to forgive me.
It was a little hazy what you said after Henry Kissinger because you know that Clockwork Orange, you know how they condition him, how to react when he sees, you know, lewd images.
When I hear Henry Kissinger, that's what happens to me.
I just have a visceral, you know, I feel like my eyes have been sent open and they're putting eye drops in.
Yeah, it's fascinating because, again, if you look at this in the longest term, like I was sort of, you know, alluding to as far as Saudi Arabia, like, in my mind, Saudi Arabia is already done.
Like, they're over.
It will be over.
And so it's a question of when.
And so it's like, okay, now you're going to find other people who are like China, who think, oh, this is going to be great.
We're going to stick a thumb in the eye of the United States.
And by the way, Saudis think that as well.
When in reality, it's like, okay, like you guys eventually are going to be so insignificant in the world stage anyway.
And he won't have any power or money eventually.
So I just wonder what that means, you know, in the short term now.
But I suppose, yes, like you were describing as far as what the reaction will be in D.C.
You know, it is.
We'll have to.
I guess the next step is keep your eye on what Biden says.
Does Biden start to sort of say some nicer things about Saudi Arabia now in public and sort of begin that process again?
I guess that'll be the way to know what what he intends to do for the rest of his I really don't know where you go.
I mean, the movement at this point, and again, not to sit here and play chess or checkers, but it's like, you know, that that side of the board, you also have India over there now, you know, and India is like moving so far in the authoritarian direction.
Also, I mean, what's going on in Israel is crazy.
I don't know.
I'm not really sure how you sort of push back against that.
The United States Since the war on terror, and you know, I was talking about that on the weekend or a little bit like what a colossal, colossal mistake that looks like I was talking about this on that episode.
We're now coming up on 20 years.
The last 20 years have been defined by the colossal mistake to invade the sovereign nation of Iraq.
And what that mistake has wrought is a loss of soft American power and the transfer of hard American power into private hands and also into industries that literally don't care how America does.
Right.
It's just more about America carrying out the the orders of the machinery.
And I'm sorry, but Russia did not invade Ukraine like all willy nilly, like they thought that this was the moment where they could shake up the snow globe.
And that they could change the world order.
And there's a reason why there's a divide on either side.
It's like the Grand Canyon.
We're on one side and everybody else is starting to move to the other.
And that's kind of what happens.
You either sort of maintain control and hegemony or you start watching people, you know, make a run.
Almost like on a bank that's failing.
Oh, I can make people feel worse than what you just talked about.
Would you like me to try?
I can't wait.
Welcome back, Nick.
Thanks.
New York Times article about this.
It's going to read a couple of sentences from here because it's a little chilling.
Beijing has also sought to emphasize a plan called the Global Security Initiative, first introduced by Mr. Xi a year ago, that it describes as an effort to apply Chinese solution and wisdom to the world's biggest security challenges.
And the initiative, which reprises Mao-era language about promoting peaceful coexistence, calls for a new paradigm in which global power is distributed more equally and the world rejects unilateralism, block confrontation, and hegemonism, a reference to the United States and NATO, which is what you just kind of said, right?
But what I think about this is that China has nuclear weapons, right?
Does Iran?
Well, it depends on who you're talking to.
I mean, that's the question.
It really depends on who you're talking to.
Well, would they like them?
It sounds like they're trying.
Yeah.
And so under the threat.
And by the way, you know, Putin is, you know, probably behind the curtain here on this one.
You know, he's he's freaking out about NATO.
They want to be able to have a more balance of power.
I mean, all there's what I hear that is they want Iran and will have nuclear weapons at some point sooner than later.
And maybe so will Saudi Arabia if they don't already have them, too.
And that just becomes a really sort of frightening proposition, because now you're talking about Israel threatened that way with those with that kind of weaponry.
And that's a scary thing.
Nick, you know what's weird about this is I thought that creating nuclear weapons was going to create a peaceful world.
That all of us having nuclear weapons was somehow going to deter us from using nuclear weapons.
It's really strange what you're saying because it's almost like the people who push that and promise that Thought that there was no possible way that the order of the world was ever going to be interrupted, and that America could never possibly lose power.
We are living, by the way, in the post-World War II American century.
And this is the first century, well it's going to be a short century, let's be frank.
This is the first empire that has involved the major hegemon having nuclear weapons.
Right?
And the challengers having nuclear weapons.
It's almost like the lack of imagination, particularly among the people who are holding on to power and we're pushing to increase power, including, by the way, thanks Dick Cheney.
We love you.
We love you so much.
I'm so glad that you have been completely legitimized in the public sphere because of Donald Trump.
Thumbs up, buddy.
Those people had no imagination and could never imagine a shifting power structure.
And it just so happens, and this is what I keep harping on, and why you and your family should go get your copies of The Midnight Kingdom, A History of Power Paranoia, in the coming crisis.
That this is the moment where this order is in danger.
It doesn't mean it's going to fall.
It doesn't mean that the other side is going to win.
But everything that you just brought up raises the stakes.
It changes the way that this stuff can work.
It starts out economic, and then it starts getting hot.
And that's what we're looking at right now, is that the American century is being challenged.
It's on the ropes, quite frankly.
And its opponents recognize an opportunity to start pulling.
Things like this.
Well, wasn't part of the argument about developing nuclear weapons, A, was obviously the end of World War II, but then they were, like, gonna have the police and make sure that nobody across the world or the globe had these weapons besides, I guess, us and the Soviet Union, right?
Well, they didn't want the Soviet Union to have them, but yes.
Yeah right so but they had a big kind of and then you know then India Pakistan all of a sudden they all start popping up around the world but we had we did have some police around the world who were supposed to be in charge of this stuff and um and how how ask uh how well did that go uh and it actually was working I would actually argue it was working in places like Iran uh up until just very recently for some odd reason where they suddenly uh didn't have to abide by those rules that we had in place that they were agreeing to as well so
This is, uh, you know, everything is going to go back to Trump, ultimately it sounds like.
Well, and that's the thing.
Of course, Donald Trump had no idea what he was doing, but there reaches a certain point in which, and it goes back to like what we were talking about with the bank runs, like there reaches a certain point where you only have so much power and so much profit that's available to you based on the current system.
You need someone to go in there who is corrupt and who has no conscience and is going to go ahead and open things up and basically go ahead and allow you to increase what's going on.
That's what Donald Trump was.
Donald Trump took off all of the brakes because he was told to by all of these right-wing groups, and eventually what happens is the problems that were getting worse were then exacerbated.
And you're exactly right.
I mean, you can go back to the Trump presidency and see where this thing really started getting wild.
And the sad thing about that is, simply because Obama put the JCPOA in to stop Iran from getting weapons, was why he repealed it.
It had nothing to do with how well it worked, what it was, anything.
It was simply, did he do it?
Then we gotta get rid of it.
And that's what he did for a lot of different things that were helpful, and that's, you know, we're gonna be, we say this all the time, the repercussions of a Donald Trump presidency, even if it was just those four years, are gonna be felt for decades.
Well, and by the way, he was backed by a lot of people, and again, you're exactly right of why Donald Trump thought that he did this, right?
That was the personal reason, right?
It was, he looked at everything that Obama did, and if Obama did it, it was obviously evil.
But everyone around him was just absolutely licking their chops at the possibility of fighting a war with Iran.
This has been one of the main goals of the American neoconservative and right-wing establishment for decades now.
And by taking that off, like, it seemed like maybe you were going to be able to go ahead and sort of goad them into this.
Well, guess what?
All of a sudden, it's not a coincidence, Nick, that we hear, I think it was last week, that Iran is X number of days away from, like, having a nuclear weapon, which we've been told for a while, but that's a different thing altogether.
Next thing you know, they're sitting there for a photo op with Xi Jinping?
That's not a coincidence!
It is a soft battle of maneuvering that's taking place, and again, I mean, it's almost like, um, Red Rover, Red Rover, and we looked up and it's like, oh man, we don't have anybody holding hands with us.
It's not great.
No, I mean, throughout the Russian invasion of Ukraine as well, and all the, like, why is it happening now?
And there's a lot of, all these things are connected and related.
And if you don't have competent leadership and you don't have people who are thinking 10 steps ahead, then yeah, your power wanes and everybody suffers for it.
Exactly.
Okay, next up, we got to talk very quickly.
Down in the great state of Texas.
We love Texas, folks.
Of course, Elon Musk relocated from Knicks, California.
It got too liberal.
It got too woke for him, Nick.
I'm sorry.
I'm sure you were sad to see him go.
He relocated to Austin, Texas, of course, taking his companies of Tesla, Boring, SpaceX with him.
Down in Texas now.
Musk and his consortium have bought up over 3,500 acres outside of Austin, Texas, which I like Austin, by the way.
Have you been to Austin?
Love it.
I was there in 1995, South by Southwest, before it got corrupted.
Love the place.
Beautiful.
The stories about South by Southwest before it became South by Southwest are amazing.
I was there at South by Southwest just as things were starting to get really, really wild.
You couldn't get, you know, a beer for under $200 in Austin, basically, when I was there.
And what has happened at this point is there has been announcements for a new town In Texas, that is basically going to be a place for employees of Musk's Tesla, Boring, and SpaceX to live in.
It's called Snail Brook, which I gotta tell you, Nick, really appealing name.
I cannot wait to go down to Texas and Settle down in good old Snailbrook, which Musk has promised is going to allow his employees to live, to rent places, new houses, for quote, below market prices.
You know what's funny about all this, Nick, is we've seen this before, and in the past we called it company towns.
In which these corporations and groups basically controlled every single aspect of life.
It's pretty incredible how this guy who talked about colonizing Mars and talked about indentured servitude as a means of getting there is literally just recreating the oppressive capitalistic systems of the past.
It's really something to behold. - Well, especially because you can merge the technology now with that ideology and then you have a surveillance state and it's like, are you sick?
Are you not sick?
Why aren't you coming to work?
Let's go find out.
Let's check our cameras and see where you are.
Like that kind of thing.
I don't know if people would wanna work there and do that and live like that.
I mean, I suppose if they have enough bowling alleys and whatever, it seems fun to go And maybe if you were 23, you didn't want to do it.
But we've already seen what he did to Twitter.
People sleeping there.
No food served there anymore.
All the different kind of amenities that used to make it attractive are gone.
It's remarkable that he's able to do anything at this point, short of bite his nails and worry that he's going to be bankrupt having to pay off the debts from Twitter that he accrued.
I mean, literally, it's like watching a person just continually to make things worse and worse for themselves.
I mean, the reports that are coming out of Twitter and his associated businesses are that this is, surprise, surprise, a person who is deeply, deeply unwell and paranoid as he descends into right-wing paranoia and madness.
Now all of a sudden we have this idea, and for people who don't know about company towns, this came along with the rise of industrialization.
This, you know, this included the coal industry, mining industry, lumber industry, major projects that were taking place all over the country as America was modernizing.
These companies would build up these, you know, these company towns.
They would control everything.
I'm talking about the stores.
I'm talking about the culture.
I'm talking about the currency itself, oftentimes giving them money that could not be spent outside of the town.
In this way, they created employees who could not leave their jobs, who could not push back against management, and by the way, the way that these societies were structured is that they went ahead and indoctrinated the children, they indoctrinated the people, they made sure that all of their cultural decisions were made for them.
And I gotta tell you, as we move closer and closer towards a neo-feudal state, helmed over by idiots like Elon Musk, This development, I gotta tell you, this is what corporations want.
They do want to go ahead and create situations where people can't get jobs elsewhere.
They're educated, maybe even in private kindergartens, all the way up into private training for these individual corporations.
You don't have other opportunities, it isn't transferable skills, and they basically have you where you cannot quit, you cannot leave, and your entire life is more or less controlled, as you were saying.
Now, with cutting-edge technology, this is nightmare stuff.
This should not be allowed, first of all, and second of all, I'm shocked by how unsurprising this is.
Well, I do have a question for you then.
I mean, do you think that there is a way to do this sort of thing in a nice way where people actually are treated properly and they want to go work there and it's not nefarious?
I don't know of any way.
I mean, unless you had, you know, an active labor union that was able to, like, step up for people.
But I gotta tell you, I don't think you're gonna have a company town as long as you're having an active labor union.
You know what I mean?
Like, part of this is about the fact that you're supposed to be able to live where you want, stay where you want, but the problem Is that Austin, Texas, going back to what we talked about, much like a lot of these other cities in the country, the cost of living is through the roof.
It's almost impossible to live in Austin, Texas right now.
Normal people have been priced out.
As a result, if you want to go work in Austin, Texas, which is where Elon Musk has decided to be, Like, your options are going to be pretty low.
The same thing's going to happen in your neck of the woods, you know, with places like Google and Apple and, you know, Silicon Valley, unless it absolutely plummets in a meltdown, you're going to start seeing this being the only means of possibly living in these places and working at these corporations.
Well, we already saw it in Silicon Valley.
People who work there can't afford it, and people who work at Google, they cannot afford it within, you know, 50 miles of the place.
Do you know how that works, by the way?
Do you know how the Google employees and Apple employees, do you know how they handle that?
Uh, you know, remind me, like they're sitting on people's couches.
What are they doing?
Oh no, they're, they're living, you know, upwards of an hour away from places like San Francisco and Apple and Google are having to bus them in.
And basically you have like, uh, this transportation that you have to sit there for like an hour commute and they've got them all decked out where you have wifi and you can go ahead and start your work while you're on your way to work.
That's how bad it is.
And we're not talking, by the way, about people who are cleaning up trash cans.
We're talking about people who are well in six figures, who are making a ton of money, who are making iPhones, who are making Apple Watches, you name it.
These are the people who are creating the biggest and most giant influential products, and they can't even live in those cities now.
Right.
But, you know, and you could say, well, they should just build housing for them.
They should do that.
I suppose it's still cheaper to just bust them in and do all that stuff instead.
But it would make everyone's life a lot easier if they just would do that.
And, you know, last I checked, Apple makes money, right?
They're not losing money.
They have a little extra cash on hand.
Just do it.
But I hear you.
There is a it's like there's a suspicion there.
Like, I don't want to live in a building that my boss built.
You know, that my manager, who's annoying as fuck, is all over my shoulder.
He's like living next door to me or whatever.
I hear you.
That's an interesting dilemma as well.
So yeah, I guess the only other solution would be, yeah, you want to build a place where it isn't expensive to live.
But that's sort of what he's doing.
It's a conundrum.
It's absolutely awful.
And by the way, real fast, we wanted to end this episode.
I wanted to talk a little bit about this new thing to give you a little bit of insight.
Leonard Leo is a name that we all should know.
Leonard Leo is one of the main figures behind the Federalist Society stealing the Supreme Court.
He's been one of the biggest power brokers behind the right-wing assent in Washington, D.C.
Our friends at ProPublica, Andy Kroll, Andrea Bernstein, and Nick Sergei from Documented, have released this report on a new project.
And this new project is now involving Leonard Leo, who, a reminder, was just given over a billion dollars by one donor.
Must be incredible.
In this report about this thing called the Teneo Network, it says, quote, Leo declared in a slick but private video to potential donors he planned to, quote, crush liberal dominance across American life.
The country was plagued by, quote, wokeism in corporations and education, quote, one-sided journalism and, quote, entertainment that's really corrupting our youth.
Now, I got to tell you, before we get into how they plan on doing this, Nick, isn't it always weird how when they talk about this on the right, it's almost word for word what people said the Jews were doing?
Isn't that strange how that happens?
You know, it's interesting that you went there, because I was thinking it's exactly what they said, like, when Elvis came on the scene, too, right?
This is the complaint every generation has about where we are with our society and our culture.
Every 20 years, it just gives a new object to focus on.
But I think we're still here, right?
People are still living and treating, you know, the society is functioning at the very least versus the doom that they're trying to predict from this.
So, yeah, I just kind of find it hard to believe.
But then again, is it that shocking that you'll find a whole bunch of people who will follow this line of reasoning?
Well, let's find them.
The roster of this Secret of Shadowy group involves a friend of the show, J.D.
Vance, Josh Crowley, Elise Stefanik, federal judges left and right, Ben Shapiro, dozens of executive senior figures in the worlds of finance, energy, and beyond have also been members.
That's incredible, Nick, isn't it?
Now, with this, I want to point out, and this is how they talked about this, and by the way, it all came up, this is just wonderful, that this is how they envision the world.
Are you ready for this, Nick?
Because this is a, I don't know how else to put this, this is a stupid and ridiculous way that they view the world.
Are you prepared?
That's a rhetorical question, isn't it?
So, of the leadership there, they say, this is how it started, and it included a... Of course, it involves billionaire hedge funders.
And this is how they say that liberals control the world.
Quote, in a meeting at the Harvard Club, is where they say it takes place, a billionaire says, wouldn't it be cool if middle school kids had free access to sex change therapy paid for by the federal government?
And then the filmmaker says, quote, I'd love to do a documentary on that.
It will be a major motion motion film.
The Harvard professor says we can do studies on that to say that's absolutely biological, sound and safe.
And the New York Times person says all profile people who feel trapped in the wrong gender.
I want to go ahead and say, by the way, we've covered this.
The New York Times has been incredibly critical of trans care.
But on top of that, this is the most juvenile perspective on how anything happens that I've ever seen.
This is not how things happen.
This isn't how stories happen.
It's not how political movements take place.
They literally think that it's a conspiracy that people are meeting over lunch to have.
I kind of like the story, though.
I mean, it sounds good to me.
Let's do that.
Let's have some people.
I want to go to more lunches, you know.
And by the way, this Tenniel thing, it's a supper club.
This is how they decided to do it.
They get together for dinners, and they hang out.
Jared, we need to start our own dinner club where we can discuss these things, and maybe we'll raise millions of dollars every year, too.
We should do this.
I think that they're onto something.
I love it, okay?
And by the way, I want to point out, listen to this.
So, this guy who is a co-founder, he admits that he came up with a large part of this idea while, you guessed it everybody, having lunch With Peter Thiel says that they had lunch together and decided that they needed to come up with a way in order to influence politics.
So what they did was they had a lunch in which they came together on a conspiracy to change politics and then projected that onto their opponents.
That is the right-wing mentality absolutely personified.
You couldn't make that up if you had to.
But they also stress that they want to describe themselves as center-right.
Now, center-right seems like, oh, it's reasonable, moderate, whatever, but then they go on and poach Members from the Federalist Society to get into this thing.
It's like a secret society inside of another one of the Federalist Society.
It's like a Sherlock Holmes movie.
I saw this movie where they burn the candles and they have the arrows, whatever.
It's insane.
It is literally insane what they think that like progressives are doing and how they're trying to take over the world.
But it's a very powerful way to then get your agenda done, right?
Because No.
And this is what the Republicans always do is they love to accuse Democrats of being vicious and organized, whatever, which I love to hear.
It makes me feel really good because I know it's not even close to the case.
No.
Yeah, there's no viciousness.
There's no organized organization.
There's nothing.
There's no.
There's nothing.
Yeah.
But, you know, they and they believe they know that.
Right.
They know that, but they know that they can use that signal to then get everyone else more organized.
You know, if you're evil, then you're more organized.
Isn't that like sort of, isn't that like interest rates and bond prices, they all go together?
Well, and by the way, for anyone who isn't aware of this, they don't spend the time, like, absolutely immersed in this bullshit the way that I do, and good for you if you don't.
This is a re-explanation of a theory that they have called the Cathedral.
It's this idea that has been pushed forward by authoritarian ideologists within this entire sphere, and by the way, Peter Thiel is absolutely all over that.
It's the idea that the deep state, culture, and the academy are All involved in this big giant conspiracy, which by the way, the federal government has been completely defanged.
The deep state they're talking about are a bunch of technocrats, many of them who are just charged with keeping the lights on.
The entertainment industry does what the entertainment industry does!
They're not taking meetings determining how to push things, necessarily.
And then finally, the Academy?
Are you kidding me?
The Academy is on fire.
It's not working anymore.
It's falling apart.
So what is their answer to this, Nick?
Because you're exactly right.
The answer to this, they say, in this article in which they're admitting it, they say to, quote, confront woke capitalism, which doesn't exist.
Jonathan Bunch, a longtime Leo deputy and now Teneo board member, wrote that the group had brought together a coalition of Teneans working with or serving as state attorneys generals, state attorneys general, state financial officers, state legislatures, journalists, media executives, and best-in-class public affair professionals in order to carry out the war.
Nick, they have the power!
They have all the power.
They're imagining their opponents having power when they don't actually have power.
And what is that doing?
It's legitimizing their conspiracy.
It's incredible!
It's the most amazing, distilled, actual explanation of right-wing politics that I've seen in forever.
Right.
And it's all for money.
That's all.
And power.
I mean, they wanted to be able to get people on every kind of board imaginable, from private schools to the Senate.
And they have.
Hawley is now in the Senate, and the list is long of politicians now who are part of this society.
It is kind of...
Frightening, because again, it's the Sherlock Holmes movie.
It literally sounds just like that.
And you know what?
There's probably truth in that movie and what they were describing, maybe in the history of England and whatever, how they were controlled.
But it certainly feels like that's what's happening here.
And they're doing a lot of work to get there.
And we're seeing on school boards, right?
And now all of a sudden, the curriculum has changed.
And next thing you know, it's propaganda.
It's not the truth.
It's locus and stuff.
By the way, I forgot to bring this up.
Did you see the Wall Street Journal opinion of why the Silicon Valley Bank failed?
You saw this, right?
Because it's kind of what we're talking about.
They want to blame wokeism for it because the board had, and by the way, the way to describe it is completely racist as it is, but because there were too many minorities basically on the board.
Yeah, I have this actually.
They said that if they were less worried about diversity hires, It's real bad.
It's real, real bad.
Yeah.
And those are all triggers.
Those are all the safe words, whatever the words they use to get everybody up, you know, to get behind their cause.
This is Wall Street Journal, by the way.
I actually have the quote.
I just found it.
Quote, was there regulatory failure?
Perhaps.
Silicon Valley Bank was regulated like a bank, but looked more like a money market fund.
Then there's this.
It's proxy statement.
SVB notes that besides 91% of their board being independent and 45% women, they also have one black, one LGBTQ+, and two veterans.
I'm not saying 12 white men would have avoided this mess, but the company may have been distracted by DIVERSITY DEMANDS!
That's incredible!
Literally nobody at the Wall Street Journal said, wait, are you saying that this entire collapse was caused because they had, quote, one black, one LGBTQ+, and two veterans?
Is Larry Summers the editor there?
Is that who's writing this shit?
Because that's what it sounds like.
It sounds like some old 78-year-old white guy, you know, with bad teeth that's just, like, complaining about... He needs to go away!
If there's one thing to take away from this episode, it's that Larry Summers needs to exit stage left, pursued by Bear.
By bear or a bear?
Don't worry about it.
Is it a bear?
By bears.
By lots of things, yes.
He'd just be fearing for his life as he runs.
I don't wish ill on anybody, really, but if he stubbed his toe really hard, that wouldn't be such a bad thing.
I just want Larry Summers uncomfortable.
That's all I want.
All right, everybody.
We're going to end this episode before it gets much worse.
Thank you so much for listening.
It's good to have Nick back.
We will be back on Friday with the Weekender edition.
Again, go to patreon.com slash muckrake podcast.
I've been hearing from a bunch of people who have come on board who said they don't know why it took them so long.
Get on board!
This train is leaving the station.
Jump on board.
Support this podcast at patreon.com slash muckrakepodcast.
If you need us before then, Nixa, can you hear me?
