Yachts Are Overrated

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S1: The following podcast contains explicit language. Hello. Welcome to the yacht’s overrated episode of Slate’s Money. Your guide to the Business and Finance News of the Week. I’m Felix Salmon of access. I’m here with Emily Peck. So vaccines.

S2: Hi.

S1: We’re here with Elizabeth Spiers.

S3: Thank you for having me.

S1: And we are going to talk about $600 million fuckups, I guess you could call it that. There was a $600 million fuckup at Barclays. That was a $600 million fuck up axie infinity. We’re going to talk about what went wrong and what we can learn from those. We are going to have a whole big slate plus segment about the oil price and whether and how the U.S. government is going to try and bring it down. Not so much the oil price, but mainly the gas price. The gasoline price. But first, we’re going to talk about women in the workforce and how much they’re getting paid and whether they’re actually doing quite well these days, especially if they’re college educated. It’s all coming up on Slate. Money. Let’s start with employment and especially employment of women. Because, Emily, if we look at the latest jobs report, the percentage of prime age women in the workforce is soaring and women seem to be doing great in terms of employment. And you had two stories this week about how women like didn’t leave very much, as much as we thought maybe they did during the pandemic. And how, if they’re under the age of 30, they’re getting paid more than men in like big cities like New York and D.C.. So. Yay! Women doing great in the workforce.

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S2: Hmm. There’s a lot to sort of parse here. So a few things. So first, Pew had this research out looking at census numbers this week that showed in a few cities in the country, including the big ones that we like, New York City, Washington, D.C.. Young women under 30 outearn men. So that’s like I guess it’s good news. But according to my reporting, everything we know, anecdotal evidence, anyone can tell you the gender wage gap is kind of more narrow when women are young and haven’t, you know, started having families and things like that or confronting kind of discriminatory barriers as they move up the ladder. So the wage gap tends to get wider and wider as they get older. So it’s not super surprising that there aren’t wage gaps for these young women. But it’s good.

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S1: But it’s a sign. But it’s also a sign of progress. Right. Like it didn’t we didn’t used to have this.

S2: Yeah. It’s a sign of probably.

S1: Remember when, you know, I’ll never forget that my sister coming back from an interview just to get into university, right? This isn’t like coming into the job market, but just, you know, going to read chemistry at university in England. And she wound up interviewing with this guy who’s like, Yeah, I don’t really think there’s any point in giving you an offer to read chemistry here because you’re just going to wind up like having a family and not doing this for a living. So what’s the point of even teaching it to you?

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S2: Wow. Yeah. I mean, that’s good. And one thing that’s going on here is more women graduate from college now than men. So the cities where there’s no wage gap, are they out earn? Are cities with really good jobs that these college educated women can scoop up and hopefully fewer future bosses like the one your sister encountered.

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S1: Right. I think I think my point there is that what you don’t have is boss is sort of giving women less money or less ambitious jobs in anticipation that they will start a family in the future. When they do start a family, then, as you say, that’s when the wage gap really starts appearing.

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S2: Yes. There’s a wage penalty for mothers, well-documented, like your your wages go down like 6% on average when you become a mother, whereas fathers wages go up on average when they become fathers. So that was like the good news. And actually there is more good news for women in the workforce, I guess, because Claudia Goldin at Harvard also put out some research showing that college educated women, again, these are all victories for college educated women. There’s a whole other conversation to be had and we can have it today about women who are less educated, who really got slammed and continue to kind of get slammed. But college educated women, the beginning of the pandemic and during the pandemic, everyone wrote stories that were like, women are not okay. They’re going to flee the workforce. They’re going to be set back for a generation and all this, like doom and gloom. And that really didn’t happen. Women were not okay, but they didn’t, you know, quit their jobs. Right, Elizabeth?

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S3: Yeah, I didn’t. I mean, it was interesting to see that data because just anecdotally, I feel like there was a kind of meme that that was happening. And, you know, and I knew so many people who didn’t quite drop out of the workforce, but particularly if they were already freelancers, cut back on hours because they were too, you know, kind of forced to take on childcare and caretaker responsibilities. So this might be one of those situations where the vibe that everybody’s getting is much different from what the data says.

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S2: Yeah, exactly. And there is some interesting data that kind of that supports what you’re saying. Like if you look at academic papers, women published fewer academic papers during the pandemic because they were busier. So there’s a difference between holding onto your job and like banging it out of the park at your job. So it could be that in a few years, some other results start trickling out like less fewer promotions or burnout or who knows?

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S1: Can I come in with a very nerdy take about this page for Under 30 thing, which is that what they were doing is they were looking at the ratio between two numbers. They were looking at the ratio between pay for men in any given city versus pay for women in any given city for under thirties. And it’s unclear to me I was trying to find the Pew methodology here and couldn’t really find it. It’s unclear to me exactly how they calculated this, but what is definitely true is that, you know, it’s all comes from some kind of census survey data. And so it’s going to have some some kind of error bar on it. Right. You’re going to have to pay for men number. It’s going to be in some kind of a range. And they just kind of pick the middle of the range and they go with that one. The pay for women number is also going to be in some kind of a range, and then what they’re doing instead is dividing one number by the other. And so the error on the. Ratio is going to be much bigger than the error on either of the individual figures that you’re dividing by each other because, you know, you could have, you know, if one number was off to the upside and the other number was off to the downside, then the resulting error in the ratio would be even bigger. So when we’re seeing like very small differences and we are and these numbers are small, they’re like one 2% in the amount that women are paid relative to what men are paid. My first reaction is, is that just within the margin of error, does that actually mean anything at all?

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S3: I had the same thought and I also was sort of wondering because I do my in my political consulting life, you know, we do some survey research. And I was wondering if the sort of extent to which women are more compliant in terms of filling out the census, especially at higher levels of education, might skew the numbers within that error margin, because we do see that in some research that, you know, women are more likely to feel obligated to fill out.

S1: It’s totally, totally true. And I wrote a piece early on in the pandemic which remains true, which is that the quality of all survey data declined significantly during the pandemic, and in fact, pretty much the quality of all data declined during the pandemic. And I’m going to guess that like most pandemic things, it’s coming back and it’s much less bad than it was in mid 2020. But it’s still something which we should be very conscious of whenever we see any kind of survey data or say, how good is this survey? In general, I trust the Census Bureau much more than they trust, you know, a press release from some company who’s like, we’ve done a survey of millennials and like, you know, I always ignore that. But even this I think we we want to ask exactly the kind of questions that you’re talking about, Elizabeth, because always there are two different types of error in in surveys. There’s the error that I’m talking about, which is just the statistical 95% confidence interval. And then there’s the other what you might call like baked in errors that come from things like women being more dutiful when it comes to filling out census surveys. And it’s really hard to measure those and to account for those.

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S3: The framing of that piece is, you know, they’re really cherry picking the really positive data out of findings that are overwhelmingly depressing. And when you think about the number of metro areas that they were looking at, you know, they said your women are at or above parity in 22 metro areas. You know, out of how many, that’s a it seems intuitive to me that you would have some, you know, outlier situations where, you know, in some city there would be women who out earn men.

S1: Exactly. It’s just like a statistical inevitability, right? Like if you have enough metro areas, then some of them are going to have like this these results.

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S2: I think there’s like broader trends and things to think about that this data point to. And like one is that when people talk about the pay gap, they think it’s like what Felix was saying, like it’s some boss being like, we won’t even hire you or pay you very much because we know you’re going to quit. Or we always pay men more than women. And that’s just not how it works. That’s not why women overall make less than men in the overwhelming majority of metro areas. It’s like all this other stuff that starts creeping in as women get older, that’s harder to see. That all gets captured in those in those numbers. And like broadly the findings of this survey, we know to be correct, you can like nerd out on the details because that’s what Felix likes to do. But broadly speaking, like it’s.

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S1: Getting into the weeds.

S2: But, you know, it’s good to get in the weeds. But broadly speaking, when women are starting out, they have a shot at equal pay and then things transpire to make that shot kind of disappear over time. And it’s sort of hard to it’s hard to like do policy to kind of correct that there’s like this bananas equal pay law that just passed in Mississippi that kind of proves the the point. Like it’s this law that’s like you can’t pay women less than men. And then there’s all these exceptions that are all the reasons people pay women less than men that have nothing to do with sex.

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S1: Yeah, if you can’t, you can’t pay women less than men unless they’ve told you that they’re earning less already. In which case, yes.

S2: That’s fine. What? It’s just. It’s like this weird. It’s a weird. The whole thing is pretty weird that measuring the gap, talking about the gap, every time you write about it, you get letters and tweets that are like, it’s a myth. And it kind of is the way it’s conceived. It’s not. Most people aren’t out there being like, we’re gonna pay women less than men at. A much more subtle and insidious.

S1: Yeah, it’s like racism. It’s like no one’s going out there going like I’m a racist. Therefore, I’m going to treat, you know, black people worse. And no one’s going out there going like, I think, a woman. And I think women just can’t do this job. So if I if they apply for the job, I’m just going to lowball them. Like, you’re right. It’s systemic. It’s and I think that’s the problem. People don’t think of it necessarily. At least the people who react badly to these stories don’t think of it as being a systemic thing. They think of it as like people are pointing a finger at individuals and saying, you hiring manager, you are being sexist.

S2: Yeah, exactly. And then it’s funny because companies will then publish these like reports where they say we pay equally everyone because they do all these like shenanigans to their data. You know what I mean? They’re like, well, they compare, you know, very specific jobs type job types to each other, but they don’t acknowledge like OC upper management is 80% male and they’re all very highly paid, but they kind of like work it out. So it looks like they’re like, we’re 99% pay parity. It’s just there’s a lot of shenanigans.

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S3: There are things that are just really hard to measure because they’re behavioral. You know, if you’re entering the job market, you kind of know what standard salaries are. And so let’s say you enter at the same time in the same job. You’re a woman, one of your peers is man. You’re probably starting at the same salary. But then whenever you start moving up the ladder, there are, you know, other factors that become apparent. And I see those in hiring the women that I’ve hired have been less likely to negotiate their salaries because they think they’ll be punished for it. Or they think that, you know, if they do that, somebody is going to rescind an offer. And when I hire men, they almost always negotiate their salaries up. And so if you consider that as a behavior that just, you know, people keep doing all through their careers and there’s not really a remedy for it. It’s about how it’s really a problem around how women are socialized and men are socialized. It’s hard to measure that in a corporate setting. It’s the thing that you can sort of observe if you’re a part of the hiring process, but it’s not something that would just come out from looking at the data.

S1: The really big gap is with the way that profession’s agenda. And that, you know, when computer software engineers were all women, they were all underpaid. And then when it became a male dominated profession, they all started earning like an absolute fortune. And, you know, if you compare chief technology officers, which is a very male gender job, to how much like chief chief marketing officers make, which is very female? Jane, the job is enormous. The gap between the two and that we’re not even close to really addressing.

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S2: I think on the other thing is worth mentioning, the reason there’s less of a gap at the beginning of someone’s career is because there’s less of a gap in the salaries that you can earn as an entry level worker. Like, even if Bob negotiates better than me for my entry level job, like Bob gets, what, $2,000 more or something? But then when Bob and I both are like getting to the C-suite, Bob can, like, negotiate, I don’t know, $1,000,000. And I’m just happy to get the crumbs, you know, for the low six figures or something. So then the differentials get wider and wider and wider.

S1: I want to segway here into the importance of one woman in particular at PIMCO. When we had Mary Childs on, she talked about this woman part in her book who basically made all of the trains run on time and would make sure that all of the relationships with the cell side banks were completely up to speed, and she was on top of all the documentation. And they did this one trade where she literally had to fly to Chicago and walk in and sees like cheapest delivered bonds. And she was totally on top of who had what. And she was like this key person to making PIMCO be great. She wound up leaving because it was just a toxic environment. And that kind of back off is just like really being on top of your job is again undervalued. And I am talking about it because this week we got the most magnificent example of how incredibly important it is from Barclays, who had someone who was totally not on top of their ship and they were issuing all of the structured products off of this thing called the shelf registration, which is basically they file a thing with the SEC saying we can we can issue $20 billion worth of securities. And then whenever they want to come up with some exotic new security, they just like use that S.E.C. registration saying, well, there’s a billion of them right there, and then it goes down to 19 billion left, and then they do another billion. There’s another billion that goes down to 18 billion left. And the basically the person whose job it was at Barclays to keep count of how many of these things they’d issued and how much they had left in their shelf registration, dropped the ball or left the company or something. And they just kept on issuing these things even when they weren’t allowed to, which is which turns out to have been a $600 million fuckup, because these are all structured products. They go up in value or down in value. If they go up in value, like awesome. You know, you have a contractual obligation to pay me more than they paid for it, so pay me more than they paid for it. On the other hand, if it goes down in value, you say awesome, this contract is null and void because you didn’t have the SCC registration lined up, so you need to pay me back the hundred dollars that I paid for it. And so basically where Barclays thought that it would even out and they would lose money on time and make some money on the other, in fact, they just lost money on some and broke even on the other and they made money on nothing. And they wound up losing $600 million, which I love this story so much.

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S2: I was trying to think like, why does this matter at all? And all I could come up with was that it’s good that when a bank makes a mistake like this, they have to pay up like there is. They’re responsible. They have to. There are rules. There are rules. Because later we’ll talk about this Axie, this crypto hack, another crypto hack where there are no rules, really, and no one is knows if anyone’s going to get paid back. I like that. There’s like this stability in the finance world where, you know, Barclays has to buy back the things that it sold without because it wasn’t technically allowed to sell them, even though really it doesn’t matter.

S3: It seems like an outsized consequence for what’s what appears to be just a bureaucratic mistake, though. I mean, I can’t think of a better remedy, but it seems like something that should be more easily avoidable.

S1: It’s it’s not necessarily the limit of the consequences, because what we have is a clear failure of the checks and balances, the compliance mechanisms, the bureaucracy, the stuff that bank regulators really care about. So, like, I don’t know if you remember when when Citibank made this big principal repayment on Revlon bonds by mistake and lost roughly the same amount of money, not only did they lose all of that money, but also then I think it was the Fed came along and just gave them another big fine for not having the systems in place that would make sure that there were reliable bank. And I can easily see something similar to Barclays, something similar at Barclays, which is that, you know, the the cost of the mistake is bad enough. But also what the mistake does is it reveals gaps in the processes that should never have been there in the first place. And so they might well get fined for that as well.

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S2: Yeah, this is the benefit of centralized regulated finance that crypto people might not appreciate, but like banks are being held accountable for their mistakes. And that’s actually quite important that that’s what I thought that was my takeaway. You can’t just mess up. You can’t even if you make some dumb mistake that totally makes sense and should be forgivable. And Matt Levine is like ideally you could just go and say like, oops. And they could say, that’s fine, but that’s not how it works. You make a mistake and you have to pay for it. No matter, you know, there’s no. Margin. For that, you have to be really good and buttoned up.

S3: Yeah, there’s something broken about the system, though, where you could go for a year and not notice this. That’s mind blowing to me.

S1: I mean, let’s then segway into the other one, which is the Axie hack where they went for six days without noticing it. And I feel like not noticing that you’re lacking a sec shelf registration is something that you can do because who the hell ever bothers to check whether you have an SEC shelf registration that’s like is so just, you know, not something that anyone ever thinks about. On the other hand, not noticing that you’ve just lost $625 million worth of ether, you know, not to mention another $25 million of usdc stablecoins. Like, basically all of the money in your bank account has just disappeared and you don’t notice that for a week. That’s kind of crazy.

S3: Yeah, I find it implausible that they didn’t notice that for a week, because if you were an account holder with enough money, you would notice immediately and you would call it to someone’s attention. So I think they were just panicking for a few days quietly and hoping when else.

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S1: Will know the account holders. So, so like to explain what happened here is that axie infinity is this game you use like to oversimplify a little bit, you use basically coins in the game. The coins in the game are kind of sort of basically wrapped. Etherium Coins. You give the Etherium to Axie, you don’t want to actually use the actual Etherium in the game because every time anyone trades any kind of etherium, it costs 50 bucks and that’s just incredibly expensive and shit. So what they do is they hold the Etherium in their like vaults. They give you a little token that represents that Etherium, and then you’re trading the tokens. And so if you’re an account holder, you have your tokens, you still have your tokens. The tokens they gave you are still the tokens that you can use in the game. The only thing that is missing is that the money that they kept in their vault is no longer in the vault. You can’t see into the vault. This is exactly the same as, let’s say you walk into a casino, you give them $1,000, they give you $1,000 worth of casino chips. You go around, you start playing poker. If halfway through your poker game, someone comes in and robs the casino of all of their cash. You don’t know that unless and until you want it, you try and cash out those chips.

S2: Felix You said this story was interesting because Axie is a Ponzi and the Ponzi got Ponzi it. And at first I was like, What is Felix talking about? I do not understand. But then I read some more articles about it and thought maybe you’d want to explain. But it’s my understanding that during the pandemic, all these very poor Filipino people started playing this game to make money, little bits of money. And now with this hack, a lot of people have lost their money. Is that what you’re talking about when you say Axie as a Ponzi?

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S1: So, yes. So one of the things that is very popular among in certain segments of the crypto world is this idea of play to earn games, that you’re not playing a game just for the sheer enjoyment of playing the game, but you’re playing the game because, you know, if you do well at the game, then you can earn money and you can earn quite decent money. And Axie Infinity was the poster child for exactly that, for players played to earn games, and at one point a bunch of Filipinos were playing this game for money and were earning what by Filipino, what by Philippine standards was actually quite good money that eventually wound up getting like down for reasons we can talk about. But the result of it was the the cost of playing the game became incredibly high. You couldn’t even start playing the game until you paid like $300 and Filipinos don’t have $300. So these are the kind of Filipinos who are earning the relatively low wages that they would playing this game for. So they wound up having to effectively borrow that money from other people, and it became a whole thing. But the bigger point is that the money doesn’t come from thin air, right? If you’re doing a play to earn game, that money that you’re earning has to come from someone. And in the case of vaccine affinity, that where that money comes from is ultimately new people coming into the game because they they think it’s cool and exciting and paying that $300 to try and earn money themselves. And so long as more and more new people are coming in and the cost of playing, the game goes higher and higher, then the older people who’ve been playing the game for a while can continue to earn money the minute that the rate of money coming into the game starts going down rather than up, or having forfend that it starts becoming negative and people start cashing out their money rather than pulling putting in new money, then it basically becomes impossible to earn money on a sort of aggregate basis. Right? Like one or two individuals can earn money. But the reason I call it a Ponzi is because you need new. Schmucks basically to come in and keep on deciding that they’re going to start playing the game in order for the economics to work at all.

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S2: Like a pyramid scheme.

S1: Yeah.

S2: Got it. And at the top and I didn’t realize. So it’s a the owner of Axie Infinity is a Vietnamese company, Sky Mavis, I guess the biggest company in Vietnam or maybe one of the biggest, I should say probably it has investors including Mark Cuban, Alex Ohanian Andreessen like you’re calling it.

S1: Oh yeah. This is this was like the big defi success story, right? People loved this because it was on some level a thing you could actually do with crypto. Everyone’s always the thing that everyone always says about crypto. It’s like, Well, this is all great. If you just want to trade it and speculate that it’s going to go up in value. There’s a million ways of you speculating that’s going to go up in value or go down in value for that matter. But what are you supposed to do with it? What’s the use case? And this Axie Infinity was like this, this shining use case that all of the crypto faithful like Andreessen Horowitz were really like excited about. They’re like, you can play games with it and not only have fun playing the game, but even earn money, like have fun and profit.

S3: What’s what’s crazy to me, though, is this entire situation is, you know, a function of the security risk with the sidechain that they built so that they decided the, you know, the Syrian system is slow and cumbersome and you can’t have this massive multiplayer game on it because it just it doesn’t work. So they build a sidechain that’s way faster, but only has nine validators on it. So it’s much easier to export. And now suddenly there’s a huge security risk. And I think what to rethink about these coins. We think about the volatility of the coins themselves and the risk built in there. But it’s mind boggling to me that you look at how they built the sidechain and how inherently vulnerable that is, and that’s not really built into people’s risk assessment. And you would think that, particularly with these Tier one venture backers, that they would be concerned about that, you know, and this is why I think a lot of crypto systems end up just replicating normal banking systems after a point because they sort of realize that things like cybersecurity are not not something you can dispense with just because you want your system to run faster.

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S2: That’s what I was thinking about thinking about this versus what happened at Barclays. Like they made a little mistake. They’re going to make it right, even righter than they have to like. Everyone is out there making sure these guys make it right. Meanwhile, in this game, you know, 600 million or so dollars get stolen. It’s not clear what has to happen next. Like if the company wants to remain a good company and and continue to be viable, it obviously has to pay this money back or recover it. But like it’s a question, it’s not clear what’s going to happen. And that just seems like you can’t you can’t have a financial system like that.

S1: Yeah. Basically what you’re doing is you’re playing a game with a depository institution and like, no, this reason is we have very, very strict rules about who can be a depository institution. Let’s there’s lots of ways in the real world that I can play games and win money by playing a game like, you know, I can enter a competition and then let you, you know, if you pay taxes very well, we’ll give you $1,000 or something. That’s fine. But I don’t need to deposit, you know, $200 on deposit at some, like, you know, Tetris company before they will then like maybe giving my money back. And yeah, we do need many, much stronger controls around depository institutions because in the crypto world, anyone can do it. No one really knows how secure anything is. What happens to the 625 million is really, really interesting because what we have here is actually quite similar to what happened to the Bitfinex hack, right? Which eventually, you know, razzle con and her boyfriend got arrested for it. Like the money has been stolen. It has gone into two different wallets, one for the Etherium, one for the Usdc. And it’s basically just sitting there like nearly all of the money is just sitting there in this wallet for the world to see completely inaccessible to Axie or to anyone except for the thief. But the thief is, you know, at this point, now faces the question of what do they do with $625 million worth of Etherium that everyone knows has been stolen? Right. They need to try and work out like are they going to be able to launder that somehow and realize some value from it? Or do they ultimately come to an agreement with Axie to give it back and, you know, and get something a little bit. That they can spend.

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S3: Instead, it’s starting to become the norm with with all of these companies that have been hacked, where they put bounties on returning the money. And the fact that that’s the primary remedy for all these situations is just crazy. That’s it’s a sort of janky interim solution to remedying this kind of loss.

S1: Oh, it’s so janky. It’s totally janky. Because, like, even like, let’s say that, you know, Axie wanted to give let’s see, I’m the thief. And let’s say that actually wanted to give me $20 million for me giving the money back. Is that even a way for them to do that in such a way that that $20 million becomes easily and legitimately mine and that like I don’t wind up getting arrested them and I try to spend it.

S3: Play the world’s worst game theory problem.

S1: We should mention quickly the Credit Suisse situation. They securitized a bunch of oligarch loans which were all secured against yachts and this was pre Ukraine invasion, but only a little bit pre Ukraine invasion. And I feel like this timing on the part of Credit Suisse was amazing because they issued these loans, they sold off these loans, which was secured against oligarchs, yachts at an interest rate of 11%. And everyone’s like, why are you selling off these loans at such an incredibly high interest rate? And the and the answer is, is because they were like the first loss tranche on all of these oligarch loans. And if any of the yachts got seized and the oligarchs stopped paying, then all of the money would disappear. And guess what happened?

S2: Wait, what?

S1: So the big picture here is that the Russian oligarchs who are a little bit shady, they buy their yachts for cash, they have lovely lifestyles and they’re yachting around the world and they’re very rich. But the thing they find hard to do is have first tier banking relationships in the West in countries like Switzerland and the U.S., because all of those banks are very suspicious of these oligarchs and don’t really want to deal with them. And so the way they get those banking relationships is they go along to Credit Suisse, who’s always been had a reputation for like banking anyone and being very swift about that kind of thing. And they say, yeah, can I borrow a bunch of money against my yacht and I’ll pay your ridiculously high interest rate for being able to borrow money against my yacht. And it’s not that they need the liquidity. They have the liquidity. What they need is the banking relationship with Credit Suisse, because once they have that banking relationship with Credit Suisse, that’s like the official global financial system seal of approval on you, the oligarch. And you can be like, now I can do things like, you know, buy apartments all over the world and transfer money back and forth. And it’s all very clean and legitimate because it’s coming from Credit Suisse. And so Credit Suisse makes a bunch of money by financing yachts, which the owners of the yachts and even need that kind of financing. But they know that at the end of the day, if the oligarch just doesn’t repay that loan. They’re going to need to seize the yacht and yachts. The hard things to seize. Right, because they move and they, you know, they sail after the Maldives and stuff and it’s really difficult and expensive to seize. Also, there is always the risk. The oligarch winds up getting sanctioned. The yacht gets seized by the authorities, you know, by by the Italians or the Dutch or wherever the yacht is or the French. And then there’s no yacht to seize anymore because it’s you know, it’s already now it belongs to a like, you know, a nation state. And so all of that risk makes this business from Credit Suisse a profitable but very risky business. And so they try and sell off that risk to a bunch of hedge funds, which is exactly what they did with a coupon of 11%. And then the hedge funds lost money.

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S2: So now that the yachts have been seized or in the process of being seized by various governments, the the oligarchs don’t have to pay.

S1: Then what the oligarchs do have to pay. Like just because your yacht has been seized doesn’t mean you get out of this loan contract with Credit Suisse. But if you’re on a sanctioned list and your yacht has been seized and you don’t even have access to any of your dollars anyway because of all of your bank accounts have been frozen, you you neither have the willingness nor the ability to keep making payments on your yacht loan.

S2: And that’s what’s happening. The oligarchs have stopped paying their yacht loans.

S1: Well, they’ve stopped paying everything in dollars because they can’t move dollars around anymore because all of all of their dollar accounts have been frozen. Yeah.

S3: There is also a story that suggested that CSFB was telling people to destroy documents that it traced to ownership of the yachts. So presumably, if you had a yacht that CSFB was funding and you happen to be a Russian oligarch, these documents would have established ownership in some way. And CSFB says, I love.

S1: Mr. Elizabeth coming in here with the with the old school. See.

S3: I it’s so embedded in my brain. I can’t I can’t erase it.

S2: What’s CSFB?

S1: It’s Credit Suisse First. They bought they bought this bank called First Boston, which no one remembers.

S3: They, you know, asked people to destroy documents around the ownership structure. And now Credit Suisse is saying, you know, we do this in the normal course of business, but it looks not great for them right now.

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S1: It looks shady.

S2: It’s such an interesting thing that like if you are a person who wants to be on the down low and like hide your money and obscure things, you also buy a giant fancy boat. I don’t quite understand all of that. And there was a video circulating on Twitter yesterday of like a guy on a yacht being like if people knew how we lived on yachts, they’d bring back the guillotine. Ha ha ha! He said, It’s a joke. He always tells. And I’m like, Well, first that’s not funny. And second, it doesn’t look great on your yacht. Like it was windy and they were eating outside sandwiches. Like, I don’t know, that doesn’t appeal to me as a luxury product at all. Anyway, that’s I guess that’s a sidebar, but I don’t get it really.

S1: So when Emily makes her first billion, she’s not going to go out and buy a she thinks yachts are overrated.

S2: Yachts are totally overrated. I mean, and who who wears the market for them? Like if you have an apartment in New York City that’s, you know, like Scarlett Johansson, expensive, you can probably sell it. But a yacht, I mean, there’s not that many people who can buy them.

S1: All those demand for yachts is massively exceeding supply. They take years to build. And so yeah, like the price of yachts has been going through the roof because there’s just everyone wants a yacht these days, partly because they are very mobile. And the thing the billionaires worry about is what if someone comes along and seizes all my assets and they’re like, Well, if I’m on my yacht in the middle of the ocean, they’re not going to send like a warship to seize me, which is true. All right. Well, they’re going to sail it. They’re going to sail it to the Maldives. They’re going to sell it to a friendly jurisdiction and then just hang out in the Maldives on the yacht. The question is, how do they pay their crew?

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S2: I do enjoy there have been a couple of stories. I think one was in that it was in Bloomberg and it was like a Russian oligarch at home and his London kind of like mansion complaining that he has no money or something. I’m enjoying this like I have a yacht, but I can’t staff it, blah, blah, blah. Those stories I like.

S3: That are making yacht ownership sound like a total pain in the ass.

S1: It is a pain in the ass. It’s very hard. It is very hard to find the yacht owner who’s like, I love my yacht. It’s great. They always complain about it.

S2: Yeah, I’ve heard it said the best day is when you buy your boat. No, the two best days of owning a boat are the day you buy it and the day you sell it.

S1: We should have a numbers around the. My number this week is $6,416,618, $6.4 million thereabouts, which is the amount of tax that jamie petron and Codrington. The Yale School of Medicine didn’t pay to the US Treasury. And so she got dinged for tax evasion and she this is $6.4 million of tax that she should have paid on $40,504,200 worth of income that she got in ten years. How did she get $40 million of income in ten years? Basically by stealing computer hardware and $10,000 chunks. She was an administrator at Yale, and she didn’t need any sort of co-signers to buy less than $10,000 worth of computer equipment. So two or three times a day, she would buy $10,000 of computer equipment. She would then ship it to a reseller who would sell it and who would then, you know, take a little chunk and give her the rest of the money. And she made $40 million that way. Completely illegally stealing from Yale. So the first claim that she got done for was stealing $40 million from Yale. But the other crime that she really got done for was for not declaring that income to the IRS because she defrauded the government of $6.4 million. And just remember, these folks, all criminal proceeds do need to be declared on your tax form.

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S3: This is how mobsters get in trouble, right? Not really this scamming. It’s not reporting it to the IRS.

S1: Exactly.

S2: A good reminder, tax day is coming. Everyone needs to file their taxes.

S1: File your taxes and make sure to include all criminal proceeds on the taxes.

S2: Put your crimes on the form. It’s okay. I mean, the IRS is very understaffed. And I mean, I say, like, take the chance to file your crime. Not.

S1: Elizabeth, what’s your number?

S3: I have two related numbers. Under $23,000.68. So under $23,000 is the cost of a gallon of insulin. Market prices right now. And 68.

S1: It comes by the gallon.

S3: No, this is just thinking about pricing and margins and how much you’re paying for things that should be far cheaper. It costs $0.68 to make. So this morning’s news now builds up for capping insulin. And that’s that’s the disparity. Don’t forget.

S1: The insulin pricing is one of the craziest things that I’ve been writing about this for years. And everyone always is like we are going to set up a nonprofit that is designed to make insulin at cost. And we are going to set up, you know, a bunch of generic insulin manufacturers and all of these attempts to fix the insulin pricing problem. They they seem to come around every like six months to a year and none of them seem to work. And I don’t understand why they don’t work because there’s a lot of, you know, public health people, you know, health philanthropists, nonprofit hospitals, you know, getting involved in trying to fix this problem. And I don’t understand how this problem is so intractable in the face of all of these seemingly obvious and relatively simple solution.

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S2: Is there a legislative there’s something legislative going on now, right? A policy proposal?

S3: Yeah, there’s some there’s there’s a proposal that’s up. But it has to do with capping co-pays, not capping insulin per se. But it would presumably pull down the cost of insulin. And I think what happens historically, this should be an issue that really has and I think it does have bipartisan support. Most most voters think that insulin is way too expensive, but a lot of legislation is also driven by donors and the implications of capping insulin for capping other drugs. So there’s there’s an unwillingness to just target, I think, one drug by people who are on the side of pharmaceutical interests.

S2: Right. This gets me thinking about a whole other thing that I’ve been thinking about, which is unrelated. So about price controls and how, like Americans, you know, want a free market except for when the price of insulin is too high or the price of gas is too high or whatever. Then we’re like, Can you please do price controls?

S1: Emily, what’s your number?

S2: My number is 492. That is the number of a flamingo that escaped escaped from a Kansas zoo in 2000.

S1: Stay free, flamingo for 90.

S2: Do flamingo for 92. Now, they call him Pink Floyd and he lives in Texas. Someone forgot to clip his wings in Kansas. So he flew flew from Kansas. And and now so many years later. Pink Floyd lives on in our hearts and in Texas. And I mean, it’s just an inspiration, I guess.

S1: Is he is he just, like chilling by the pool and like he has little chips that people know where he is or what is it?

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S2: I guess he has a attached.

S1: Airtag attached to his wing.

S2: He has some kind of tag. And I guess, I mean, there’s a New York Times piece that goes deeper. But the woman from the zoo and a social media manager from the Texas Wildlife Group said it was probably definitely Pink Floyd number four, 492. And sadly, the 492 escaped with another flamingo. But that flamingo, the other one hasn’t been heard from. So there is tragedy in 492 whose life we don’t know how how it all went down. But I’m happy to consult on a film.

S3: Flamingos on the lam.

S1: All right. So here’s hoping that we will have, like, some charismatic megafauna escaping somewhere soon so that we can escape all of this talk of inflation and war and all of the other terrible things that are going on in the world. We are going to have a slate plus on, I think on that inflation and war nexus of gas prices and whether the government should release a million barrels a day of oil to try and bring them down. Other than that, thanks for listening to Slate Money. We’ll be back on Tuesday with another movie. And many thanks to Sheila Roth for managing to pull this show together so fabulously. Keep the emails coming on Slate Money at Slate.com and we’ll see you on Tuesday. Let’s have a sleep on this question of the Biden administration is worried that it’s going to get wiped out in the November midterms. One of the top primary reasons why it’s worried is the gas prices are very high and people are blaming the government, even though it’s clearly not the government’s fault. And so the government is doing a couple of things. One is, is the White House is coming out calling it Putin’s gas price hike. They don’t blame me. Blame Putin. And then the second thing they’re doing is they are flooding the market with oil from the Strategic Oil Reserve, a million barrels a day with the hope that that will bring down gas prices and make people less angry. What do we think of this?

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S2: I mean, it kind of worked a little yesterday in that gas prices and oil prices did come down. But I don’t think anyone thinks this is some kind of like long term solution to the problem of high gas prices.

S1: Do we think it’s a medium solution to the problem of the Democrats are going to get wiped out in the midterms?

S3: I don’t know if it’s that directly, but I think it is the administration realizing that the average consumer doesn’t care. You know, food and energy are not in the core inflation basket. They just see prices going up and they see it in the two areas that they care about the most, which are food and energy. And so the Biden administration has, you know, some incentive to do anything that moves prices around those two categories. But also, you’ll notice they’re couching it in this kind of moral imperative that says, you know, if we do this, we’re also depriving Putin and Russia of more revenue. So they’re sort of trying to accomplish two or three things at once. I don’t think it really has much of an effect on overall inflationary measures, at least not as much as maybe, you know, Fed rate hikes.

S1: Do we think it’s going to have much of an effect on actual gas prices?

S3: Well, I wonder if the effect might be temporary. It’s a risk to deplete a third of the national reserves to do this. But Emily is correct. The gas prices tumbled yesterday. So it’s you know, we’re.

S2: Not the ones at the pump right.

S3: There.

S1: Well, I mean, that takes a, you know, a few days or a couple of weeks. But like I yeah, in my mind, the point of the Strategic Petroleum Reserve is to make sure that the United States has petroleum when for whatever crazy, unexpected, exogenous reason, you know, it can’t get its hands on refined petroleum to normal channels. Let a bunch of refineries go offline. They’re blowing up the, you know, sanctions. You know, who knows what can cause this? The United States needs to have a reserve of petroleum because it’s such a key input and it’s such an important part of the economy. This just seems like financial engineering, and I just don’t think that using the petroleum reserve for the purposes of trying to move high street gas prices around, I mean, it is definitely not what it was made for. On the other hand, if they. Settle down a couple of hundred million barrels of oil from the oil reserves now and then come back in a year or two’s time and buy them back. No harm, no foul. Really? Right.

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S2: I saw some estimates that it was like maybe it would save $0.35 a gallon for people, which is nice, I guess. Gas prices are crazy right now. You guys maybe don’t drive as much as I do. I don’t even drive a super a lot. But I just filled up my Jetta. Three quarters of a tank. And it was like $52, which is crazy. I have never spent that much on gas before and I have like a that’s a small kind of car, but like those Americans with those big cars, I mean, the the gas bills are are wild. So, I mean, you can understand why politically Biden has to do whatever, you know.

S1: I mean, this is all about anchoring, right? The gas prices are basically where they were in 2008. And I don’t. Yeah. And was it with people they subsequently I can’t remember. But also I’ve just spent the past three months in Ireland where gas prices are like €2 a litre, which, you know, what does that work out at like $8 a gallon and no one seems to care.

S2: Yeah, I guess it’s anchoring expectations and yeah, I wasn’t expecting the $52 bill. I mean, it’s it’s it is. It’s just shocking. You do get, you do get shocked by the by the change because it’s and it happened really fast, you know what I mean? It’s not been a slow drip, rising prices. It’s been over the past, I think month or something.

S1: It’s been I think I think what happened is that, you know, there was that brief period after gas prices went up in the mid 2000 when people started buying more economical cars. Right. And cars got a little bit smaller and they got better mileage. And then that lasted for two or three years until gas prices went down. And then everyone’s like, oh, no, actually what I want is massive SUVs and and gas guzzling F-150s and that kind of thing. And they forgot all about this idea that it costs a lot of money to run the car. And now here they are in their Escalades, spending $200 to pick up to fill up the tank. And they’re like, maybe that was a dumb thing to buy, but they’re stuck in the Escalade and I’m not sure how much sympathy I have for that.

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S2: Right. The other thing to think about is that the the White House, the Biden administration was supposed to, like do climate stuff. And now it’s like begging oil companies to drill more oil, which is sort of I mean, I’m not the first to point this out. A thousand people have pointed this out. And the White House just says like, well, in the short term, we need more oil. In the long term, will, we’ll transition to clean energy. And at the same time, they announced this release from the oil reserves, they also announced they would be doing stuff to mine for more minerals that would be used to make electric batteries. I hope that made sense. So it’s trying to do both things to have it both ways. And it’s it’s a really interesting moment, I think, for all of this because it’s like on the one hand, it’s now obvious that we have to transition out of these carbon intensive fuels that come from these like warmongering autocracies with bone saws and whatnot. And on the other hand, it’s like, well, right now we still really need the oil from the warmongering autocracies with bonds. So it’s confusing.