How Is Boeing OK?

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S2: Hello and welcome to the how is Boeing, okay. Edition of Slate Money, your guide to the business and finance. News of a pretty big week this week. We’ve had a bunch of corporate earnings. We’ve had news about capital markets. Main street lending facilities, GDP. In any case, I am Felix Salmon of Axios. I’m here with Anish Romanski of Breakingviews. Hello. I’m here with Emily Peck of Huff Post. Hello. We are going to talk about Boeing this week and how on earth is it still even a company not in bankruptcy? Also the airlines, also the meat packers. We are going to talk about GDP and what it reveals and more importantly, what it conceals. But first, half the country is now reopening. We’re going to talk about what that means in terms of supply and demand and the whole American economy. All that coming up on slaked money. It’s made people happy, may have happy, May, happy, may, happy May. Yeah, and if you are in Texas, that means that your state is now, well, entirely reopened. But the reopening has officially begun. You can go to a restaurant and sit down and have a meal under certain restrictions. You can go to a movie theater and go and watch a movie under certain restrictions. This is what we all hoped for, right? When when the Corona virus first hit, we were like, we will start seeing a bounce back in the beginning of the summer. And now I guess it’s the beginning of the summer in Texas. And so it’s beginning to bounce back.

S3: Yeah, I mean, states are. I think it’s about half the states in the country starting to reopen or lift. Stay at home orders now. And I mean, all the usual caveats and arguments are going to apply. There’s still not enough testing to really do it safely. So it seems like some of these states may be jumping the gun. And then the other problem, I think, is that some of these governors are threatening that if people don’t go back to work when ordered to, they’ll lose their unemployment benefits. That’s happening in Iowa. And I think one other state, which is obviously not great, if you’re someone who’s at high risk for contracting coronavirus and schools and child care centers aren’t open yet, so raises questions if you’re ordered back to work. We have no one to watch your children. Like, what are you supposed to do? It seems like this is the opening up procedures haven’t been as well thought through as they should be. Is my impression.

S2: So what you’re saying that the big the big thing that you’re saying hasn’t been thought through is what does this mean for employees? Yeah, if you’re an employee of this company that is now reopening, even if it’s only reopening at a fraction of its former capacity, then at that point you need to try and work out how do you go to work while also having your kids be home schooled or how do you go to work if you are immunocompromised and your you don’t want to go out into the world, or how do you go back to work in the face of a virus that has clearly not been vanquished yet? And I do think this is going to be a much bigger question than like state by state reopening. This is going to be a big question overhanging the reopening or the recovery of basically every economy in the world or certainly in the Western world, regardless of where we are on testing that would like until we get some kind of hugely reliable vaccine, there’s going to be a large number of people who feel unwilling or unable to go back into their former role in the economy.

S1: Yeah, I mean, I think that, you know, we’ve had kind of this first phase of of this crisis. And I think now we’re getting to a point where it’s very clear that this is going to last for a very long time. I mean, even if we get a vaccine at some point, then the ability to create enough of that vaccine, you know, that that’s a that’s a separate issue. So we have to try to figure out how we can get the economy going in some way while also keeping people safe, because it can’t simply be we stay inside for the next year. However, it can also be well, we put people in tremendous amount of harm and we don’t think through, as you said, the child care implications. So I think it’s this it’s this moment of saying, OK, we need to figure out how we can move forward from this.

S2: I think the solution here is to just be a little bit more specific when talking about we that there are, I think broadly two different sets of people in America. There’s know set a, which is I am bursting to get out of this house. I’ve been stuck in and I really want to go back to some semblance of my former life. And then there said be saying I am, as I say, unwilling or unable to go back out into the world right now for any number of different reasons. And however the reopening works, it kind of needs to accommodate both sets.

S3: The policy makers really need to take a look at the infrastructure underpinning the reopening. Like you’re not reopening into the United States of February. You’re reopening until like the covered United States. So what does that mean? Like what kind of supports are in place for the workers who can’t go back to work or are the ones with kids at home or the ones who just don’t want to die from having to work? Like, what are you going to do to keep people safe economically and, you know, physically as you reopen? And it doesn’t really seem like there’s a lot of thought going into that.

S2: And I think the reason why this is so difficult in the United States in particular is federalism that every other country can. Make these decisions at a national level and in the United States. The shutdown were all done at the state level, which means the reopenings all going to be done at the state level and these kind of infrastructural policies about giving people the ability to stay at home if they need to. I don’t think states can do that. I don’t think they have the resources to do that. They’re already facing massive budget crunches and these things cost money. Like being able to support people if they need to be able to stay at home. That’s something that I think only the federal government can do. And I don’t see the federal government really grappling with this issue.

S1: Yeah, I agree. I think that it’s not I don’t necessarily think it’s an issue of wanting to have one top down option that applies to every state because every state is different. Even different parts of the state are different. That’s something Andrew Cuomo has said about New York. However, I think you’re right that when it comes to the funding mechanism, that 100 percent is something that we need from the federal government. And so ideally, what we would have is kind of this mix of allowing some of these states to somewhat figure out what makes the most sense for their state while also having support, more support from the federal government where they’re not battling for that support. It’s just simply being given.

S3: And I think I mean, you could blame it on federalism, but it’s not hard to imagine a stronger federal government not run by a lunatic that would put out appropriate guidance and put a structure in place that sort of balances the needs of like a. a saying bouncer’s the needs of the states with some kind of like, overarching federal guidelines. Like, you have to have this percentage of people. You have to have this decline in your curve. You have to have this, you know, a capacity in your hospitals in order to open this or that. And you have to, you know.

S2: Yeah, I think I mean, I think that’s happening to some degree. I mean, if it does vary from state to state, as it always will be, if you look at what’s happening in Texas, they’re very explicitly saying there are two Texases now. There’s urban Texas in rural Texas and urban Texas is reopening to 25 percent. Capacity in rural Texas is only opening to 50 percent capacity. And you’re like, okay, that like that does kind of reflect reality in some way. I don’t think that what we’re seeing is a problem, that there aren’t strict enough federal guidelines on reopening so much as we’re seeing the problem that when states do decide that they want to reopen, they don’t have federal support to make it workable, as you say, fit for a bunch of employees who might feel left behind.

S1: Yeah. So it’s not that it’s not that we have a federal system. It’s that we currently have an incompetent federal system in the sense that our states are at war with our executive because our executive is insane. But I think that that’s fundamentally the problem here is that if you just had a normal federal government that was not trying to win battles with individual states, it seems like this would be not easy, but at least a little bit more manageable, although it’s not.

S2: I mean, I think Congress has a huge role to play in this one. It’s not really the executive that could say, listen, here’s a bunch of worker protections. And if you have to stay at home because you have a kid or because you’re immunocompromised, then we have a bunch of money for you that the executive can’t do, that only only Congress can do that. And I don’t see Congress even thinking about that right now.

S1: Well, they definitely are thinking about into the sense of they have discussed more money for the states. So, I mean, you’re right. Obviously, money is going to be coming, you know, approved by Congress. But I think what the relationship we’ve seen between the executive branch and the states has also influenced what Republicans are doing in Congress.

S2: And there is this weird mistrust of bailing out the states that you see, especially among Republicans in Congress, but also among Republicans in the White House. And that is making the whole thing much more complicated because they have this feeling that if they send money to the states, then the states are just going to use that money to throw it into the public sector unions and their pension plans. And that’s not where they want the money to go and therefore they want to sort of not give the money to the states. And Mitch McConnell’s out there on the radio saying maybe this state should file for bankruptcy, which they’re not even allowed to do under the US Constitution. But there’s a bunch of very messy federal issues, which I just don’t see in any other country. I mean, it’s not happening in Germany, which also has a strong federal system. But somehow and the Germans have worked this out.

S3: The other thing I should we touch on, if we’re talking about reopening, is like, yeah, you can open the doors, but will the people even come? Like, I don’t know about you guys, but, like, I’m not going to the movies for a long time. Right.

S2: I mean, I think that I think that solves itself. Right. I mean, I think that, like, we will I mean, Texas will be one of the first places that we look to to see whether that’s happening. But if you’re restricted to 25 percent capacity, some businesses just don’t work. They’re not economical at 25 percent capacity. So they’re not going to open up at all. Yeah, I think you’re seeing that already in Georgia. There are a bunch of businesses that were allowed to open, especially in Atlanta, and the more urban areas have not opened because they just think it’s insane. So there will be businesses which technically can be open but on open. And you’re seeing that even in New York with things like laundromats that counted as essential services and they were allowed to be open, but they’re closed. So that will reduce the supply of services. And then, you know, the demand might be enough to fill 25 percent of the capacity of the ones that are open. We’ll see that there will always there’s always a dance of supply and demand. Right now, I think this sort of theoretical problem of there won’t be enough demand to fill supply. I haven’t seen that yet, but we haven’t really started reopening yet. It will probably happen in certain sectors, but we’ll see what a mess.

S1: Yeah. I would just say maybe last thing I do also wonder, you know, when we’re looking at other countries in terms of the how much that how quickly that demand is come back. I mean, I do also wonder if the U.S. because we probably also resisted, you know, a lot of the country resisted the locked down in a way. If you could also have a sharper jump back because of that and demand might have had in other countries.

S3: I don’t know the public if you have real support for the lockdown’s right. I mean, really overwhelming support for staying at home right now, even in Michigan, where those limits were with freedom, but with with 300 million Americans.

S2: Emily, like, you know, you can have 70 percent support for the lockdown, but 30, 30 percent if 300 million, there’s still a lot of people to get back out. Well, you know, consumer demand.

S1: Right. I mean, I’m not saying exactly. I’m not saying that. Oh, it’s just gonna go back to normal. I just wonder if America’s kind of libertarian ethos or whatever could, in a way get people to increase that demand more that you might see in other countries.

S2: And of course, we know we will begin to see now over the coming weeks. The degree to which reopening causes number of cases to rise. And right now, that’s just a huge, huge unknown.

S1: Yeah, I agree, because I feel like if if they don’t, then obviously, you know, that that’s going to incentivize people. However, they do. Much different story.

S2: So let’s talk about big business and I have a couple live data points that I want to throw out here. One is that Boeing, which, you know, famously built an airplane that didn’t work and crashed and killed hundreds of people and, you know, really suffered from that. And then. It’s in the airplane business and every single airline in the world is basically not flying right now and not making any money. And you can’t imagine Thierer, really a company that is in worse straits than Boeing. And it just went out to the market and raised like twenty five billion dollars in new debt financed way. So has all the money it needs. Delta Airlines, United Airlines, they are issuing debt. They’re issuing stock. If they need money, they can find it privately. It’s almost as if they don’t even need the government bailout because the markets are happy to give them whatever they need. And when you have other parts of the economy which are doing really badly, like the big Midwestern meat processing plants, which supply most of the meat for the country, they come down with Cauvin and look like they might need to be shut down and the whole meat supply chain is in danger. You know, incomes Donald Trump with his Defense Production Act authorities saying I’m going to force you guys to stay open and continue to produce meat. It seems to me that. One thing we’re not seeing here, which I was expecting to see, was major pain among big business. And it seems to the big businesses are being able to access the markets and keep on going kind of whether they like it or not.

S1: So I think it’s interesting if you look last month actually had the highest. I believe the highest amount of investment grade new issuance in the US this month is looking to perhaps top that in the midst of this crisis. I would say that what we are seeing here is fundamentally a Fed bailout. And I’m not necessarily saying that in a negative way, because this is kind of the ideal solution for the Fed and even for the government to a certain extent, is that you want the private capital markets to function. You want them to be taking this risk of Boeing and Delta and whatever. You don’t necessarily want it to have to be the Treasury coming in and basically bailing out these firms. So by the Fed coming in and propping up these markets, it is enabling them to do that.

S2: But the Fed can’t take risk. And this is the thing that is surprising me is that the people lending money to Boeing and Delta and United are taking that risk on themselves. And yes, for sure, the Fed has made sure that those markets are liquid and clearing. And that’s great. And I think the Fed has done a magnificent job in this crisis. But I’m still wondering, like, who are these people lending billions of dollars to Boeing right now and why are they doing it?

S1: Because what we’ve seen in the last crisis and what we’ve seen in this crisis, not just in the United States but globally, is that central banks are going to step in to prop up the credit markets. So if I’m an investor, and especially for the foreseeable future, it’s pretty clear to me that the Fed is going to be making sure that these markets are not falling below a certain level, even if that’s not what they’re saying. That’s clearly what the results will be. Well, then I’m actually taking on less risk.

S2: Can you, like, just expand on that a little bit? Because prop up the credit markets is something which people can say and it’s not necessarily easy to understand. So the credit markets, if I lend money to Boeing, I’m taking the risk that Boeing won’t be able to pay that money back. That’s called credit risk. And what is the Fed doing to reduce that credit risk?

S1: So a few things. One, because the Fed has essentially brought rates to zero and because the Fed is doing all of this, all of this bond buying, it is going to make it much easier for firms to roll over their debt. It’s gonna be far less expensive to roll over their debt. So the default risk then is going to be less.

S2: So just to just let you down, just to make this absolutely clear, when I lend money to Boing Boing, then needs to pay it back in like, you know, let’s say three years time. And the big risk for me is that Boeing won’t have the money to pay it back in three years time. But what you’re saying is that it doesn’t matter if Boeing doesn’t have the money to play it back in three years time because Boeing will just be able to issue a new set of bonds in three years and use the money from the new bonds to pay me back. And so long as there’s a bunch of liquidity sloshing around the money and people can borrow as much money as they need, it kind of doesn’t matter whether they are profitable or not because they’ll always just be able to borrow what they need to service their debts. And that’s why people in the bond markets aren’t so worried about default risk.

S1: Exactly. By the Fed coming in. They are literally lowering default risk. So it’s not surprising that the risk that you’re being paid for is going to come down. And then just one other thing. What we are also seeing in this crisis, which we obviously didn’t see, is the Fed saying it’s actually going to buy corporate debt. So that’s the other reason you’re seeing a lot of these firms coming in, because if this idea we know at this enormous buyer that’s going to be coming into the market. So I want to front run that and buy some of these bonds because I know once the Fed really starts buying in theory, that the prices will go up. So that’s another reason why you’ll have private creditors coming in.

S2: So that’s the other big piece of news that we saw this week was the main street lending program. The Fed is working hard on its main street lending program, which means that big companies, which aren’t quite big enough to have capital markets access, but it’s still bigger than the small businesses are going to get a Fed program of their own, where the Fed will buy loans from banks who are lending money to these businesses in on an order of like a few million dollars at a time. If this worked for big businesses with access to the bond market, is it going to work for medium sized businesses to.

S1: I would probably assume not as well, just to be perfectly honest. I just feel like the problem is that the Fed with the Fed is designed to do is to essentially make sure that credit these capital markets are functioning. And yes, by keeping rates low, that will help firms. But the Fed is not designed to be essentially like giving out these loans to these smaller firms. So I’m hoping it works out. But I question whether it will. It’s crazy to me that we have now.

S3: And this makes so clear. We have only one system in the United States that seems to function pretty well. And it’s the system that props up the biggest companies. And everyone else is kind of at the mercy of, you know, policymakers and Congress and and companies like Boeing are doing OK thanks to the Fed. But, you know, like small businesses everywhere are are going under. The restaurant industry is in dire straits filled with small businesses. People aren’t getting, you know, their unemployment checks still. It’s it’s so interesting that the biggest businesses with sort of the most money get the most money and get to survive. And everyone else is like to the wolves, like this crisis, just meat makes that so clear.

S2: It’s interesting that the if you look at Boeing in particular, when the crisis hit, the first thing Boeing did was come out and say, we need a multi-billion dollar federal bailout and we need a huge amount of money from the government. And then there was this huge back and forth between Boeing and the government. And the government’s like, OK, fine, how much do you need? Obviously, there will be restrictions on, you know, how much your CEO can get paid and whether you can pay a dividend and those kind of things. If you need the money, you need the money. Let’s tell us what we should put on the, you know, check. And then Boeing this week turned around and said, actually, you know what? We have so much money from the bond market. We don’t want anything from the government at all. Like what?

S1: Well, no, but in theory, I like that, you know, in a perfect world, then what would happen is then the government would actually be able to use more of that capacity not to be bailing out the large companies, but actually to focusing on the smaller firms and people, because that’s where that’s supposed to come from. I think this is the problem. The problem is not that these large, in my personal opinion. The problem is not that the capital markets are functioning and these companies can raise money. The problem is that the other side of that, the actual federal government is not doing its job very well.

S3: Right. It’s just reinforcing every every piece of this crisis is reinforcing and widening inequality. You know, from the big companies being able to the Fed, helping them get as much money as they need versus small companies who have not been served by any of these new policy is really very well. I fear like and from Mike, who has to work right now versus who can stay at home. You see the president forcing the workers in in meatpacking industries to go back into dangerous workplaces. I mean, it’s just at every level. And in terms of what neighborhoods are hit the hardest. At every level, inequality is reinforced by this crisis. And this is really no different. And it seems like when we come out of this, finally, you’re not going to have a lot of options on Main Street anymore.

S1: Yeah, I mean, I would just say two things. One. I mean, you can argue that, you know, what we saw after the 2008 crisis was exactly that, that we were exacerbating inequality because we only use monetary policy, which helps the capital markets. It raises asset prices. That’s great. We did nothing essential or very with nothing. We did very little in terms of fiscal policy. And so it’s not surprising that then you had tremendous amount of inequality. I mean, I think the hope you would have and I’m going to try to be somewhat optimistic is that you come out of this and there is a significant push to have more fiscal spending directly on individuals, whether it’s through a larger infrastructure program that would employ a lot of people while the economy is kind of getting back. This is going to take a while, whether it’s an actual health care plan for everyone. I mean, these kind of things, that would be the hope that you could then try to tax corporations that have been doing well, have been doing slightly better, and then use that to actually fund these things. I realize this is probably not going to happen, however, that that’s my only optimistic scenario.

S2: OK, so let’s talk about the big economic news of the week, which was the GDP report, it came out for the first quarter and the number is minus four point eight, which I think conceals much more than it reveals. It doesn’t mean a huge amount. And the one thing which I’m just going to come out and say very, very loudly right here is these numbers are annualized. And in the second quarter, the number is going to be much, much bigger. It’s going to be like minus 40 or something enormous. Like that does not mean that GDP has fallen by 40 percent. It means it is falling at a rate which if it continued to fall at that rate over the over 12 months, at the end of this 12 months, GDP would be 40 percent lower than it was at the beginning. So we have minus four point eight, which is obviously just the beginning of this crisis. Emily, what does it mean? What does it mean anything?

S3: It means a little bit of a thing, which is what we already knew, that people are staying home. They’re not buying as much stuff, especially services. But and I think this isn’t a new criticism of GDP. It conceals new areas of productivity that are going on in our houses all over the country and our apartments all over the country that don’t get counted like I think. Betsey Stevenson, an economist at the University of Michigan, pointed out on Twitter, for example, like maybe people are buying less bread, but they’re making bread. But the bread making doesn’t count as part of GDP or like all the schools are closed. But people are home. That doesn’t count as part of GDP. Child care centers are close. No one’s paying those people. But we’re doing child care at home now. We’re no one’s going to restaurants. That’s not getting counted, but we’re all making more food at home, et cetera, et cetera. So there’s all this uncounted productivity happening right now. And that’s not even talking about the the well-being of Americans. That’s doesn’t really show up in GDP because we’re all staying home and not getting sick, ideally. Right.

S2: So I. I find this absolutely, really fascinating. It’s that on some level, the thing that GDP measures is there’s a huge amount of value added to the bag of flour. When you turn it into a loaf of bread and people who made the place a dollar value on that transformation, and when you go to your local bakery and you buy a loaf of bread from them, what you’re doing is you’re paying for the value of that transformation because you could easily just buy the flour. So if you don’t buy the fire service, you buy the bread because they are very good at making that transformation. And there’s similarly some kind of dollar value on doing it yourself. And if you put sitting around with a salad, those starter in your kitchen and you’re feeding it every morning and you’re getting your scrapers and you’re making your bread and you’re creating this delicious stuff in your oven and you’re learning that, oh my God, I can actually bake. And I never knew I could do that. You are making yourself happy. You’re making your family happy. There’s lots of fresh bread and there’s value to that as well. But only one of those two types of value shows up in GDP figures. And if for anyone who thinks that there’s more value to a home baked loaf of bread than there is to a store bought loaf of bread, you’re probably right on any kind of commonsense term. But just not in terms of economic statistics.

S1: Yeah, and I think this is less, I would argue, less of an issue of GDP itself and more of an issue of how we use GDP. We use GDP to represent, you know, value work the economy. But, you know, what is actually GDP? Well, depending on which side you measure it on, you’re measuring expenditures or you’re measuring income. So when you think of it, if that’s all it’s measuring, well, then yes, there is a difference whether I’m cleaning my apartment just myself or whether I am paying someone to clean my apartment in one of those. Someone gains income that is counted. And the other one they don’t. Does that mean it’s worth less in some metaphysical way one way or the other? Of course not. In fact, the person who cleans my apartment does a much better job. So it’s clearly better. But I. I guess I would just say that.

S2: But think about the morals of it. And it’s it’s morally elevating to be down on your knees, trying to get behind the toilet. I’ve been doing this. This has been my job for the past seven weeks. I’ve been I’ve been the toilet cleaner. I feel I feel I feel morally elevated in doing so.

S1: No, but I mean, I guess it just goes back to this idea that I think we use it. Everybody is guilty of this. I’m guilty of this. We all are. We use GDP to represent so much more than it actually is. And so. It wouldn’t make any sense to say, well, GDP is measuring, you know, expenditures, but we’re going to count something where there’s no monetary transaction in. Because that’s simply not what it’s measuring. We could have some other means of, you know, you had, what was it, some country that had gross domestic happiness, which I’m not going to lie to turn. It was the greatest idea.

S2: Yeah, but New Zealand, some other process. But New Zealand come out and said, oh, Jacinta, then. The prime minister of New Zealand came out when she was elected and said, I’m not going to be trying to maximize GDP. I’m going to be trying to maximise some other thing that actually is harder to measure but is more reflective of the total value in the economy.

S1: That’s reasonable, actually. And to me, that’s a correct usage. You’re you’re you’re saying this is what GDP represents. And there are other things that are outside of that. I want to try to maximise all of those things, not try to somehow make GDP something it isn’t. Yeah. I feel like.

S3: Right. Currently, we’re learning a lesson in what we should value, like to grow GDP because lots more people are cleaning our houses or like making our food for us maybe. Doesn’t it discounts the value in, you know, all the stuff that no one thinks is worthy of measuring, like caring for other people, cooking food and then preparing food for other people, not for money, but just because, like, it’s nice. Like, DDP doesn’t measure. It’s nice, but we use it that way. And that seems maybe not so great.

S2: It’s kind of a nice lesson, which doesn’t stop the fact that, you know, this time next year when we’re looking back on the GDP numbers for 2020 and we’ll be like, this was the worst recession since the Great Depression and this is what happened to unemployment and this is what happened to GDP. You know, we’re not going to have the asterisk in there if we were all baking our own bread.

S1: We need a real dog with. Yeah, I would probably argue that the people who are not getting paid to serve us in restaurants or not getting paid to clean a house probably would argue that. Guess what? There’s some value deducted there as well. Yes. So, you know, yes, we want to grow GDP. You want more people to be gaining income and jobs. But you also need to recognize that there is more than my bread was terrible.

S3: The loaf, I may add. I just want you guys to know it was everyone’s this terrible, disgusting. They need not to do that again. I’m not.

S2: And the practice makes sense. That worked out well.

S3: My motto of what’s good. My crackers were excellent. But like the rising and the needing, for me, it’s just not for me.

S2: Let let’s have the numbers round. Emily, what is your number?

S3: It’s kind of old, but it’s 40 percent. That was the percentage uptick in sweatpants sales at net a porter.

S2: Did people not have sweat pants? I feel like everyone has a pair of sweatpants like pants, apparently.

S3: No, I don’t have enough soft pants to do to deal with the current situation after I’m one of the people not I didn’t go to net a porter, which is where at the 40 percent number to by the sweat pants. But um, yeah, I did have to buy my way.

S2: This is this is sweat pants at Netta per day. Oh yeah.

S3: Overall sweatbands, a net importer at other places the sales are up to.

S2: And I feel like they’re supporting sweat pants are all like three hundred dollars now.

S1: Can you believe that. Who goes there to buy sweat pants.

S3: I’m sorry. And if I’ve offended a listener, I’m sorry, but what kind of terrible person who’s buying sweat pants at the say for three hundred dollars. That seems really wrong.

S2: My number is this is this is just for Anna. My number is five hundred and sixty two point one. Three billion or five hundred sixty two billion. One hundred and thirty million Mexican pesos. Which works out if you convert it into U.S. dollars at twenty three point six billion U.S. dollars. And Anna is going to tell me what it. It’s how much money Pemex contrived to lose in one quarter. Pemex is the state oil company in Mexico. I didn’t know it was possible for an oil company to lose 24 billion. I mean, this money gets it. It loses money. It normally loses like a billion or two, not 24 billion. And the interesting thing about the 24 billion dollar loss is it’s actually twice as large as its total revenues.

S1: Yes. So Pemex actually always loses a tremendous amount. So the thing with Pemex is a lot of Pemex as money goes to fund the state. So the reason, part of the reason Pemex, actually this big loss had to do with the peso declining so much in value. But the reason that you see this oil company losing money is because it’s kind of all you can think of is like fees or taxes, that they’re basically just funding the state.

S2: And just to be clear, this is the thing which really confused me properly. The peso fell and so Pemex lost money on Pemex as an oil company. Oil companies export. Oil and get dollars for that oil, we shouldn’t. A weak local currency be good for them? Answer no. Because Pemex is an importer of oil. It actually buys oil from abroad because Mexico produces like heavy, nasty crude oil, which they can’t do anything with domestically. And they have to import all of the gasoline and everything that they may be used to make the country run. And all of that is done through Pemex. So Pemex is one of those oil companies that actually imports more than it exports, hence the losses. I don’t know. The whole thing is, well, a little bit hard to understand, but I’m just going to say. Twenty four billion dollars is a lot of money to lose that any company in one quarter, especially after you had already hedged the price of oil.

S1: I mean, Barrack’s also has more debt than any other oil company in the world. So Pemex, that’s that’s their bonds. We just downgraded, unsurprisingly, that junk now. Yes. And what’s your number? My number is 55 million. And so, Emily, this is somewhat of a number for you. And I will get to why it is so. It was actually the total number of viewers over three days at the NFL draft of this virtual draft, which I’m not going to lie. I watched the entire first day with three days to do this. Oh, they always do it over. They have their multiple rounds. So you’re going to slow down. This has its own day. No, because some of the other days have multiple rounds. The first day of the first round set. Wow. The reason I say I thought this was so interesting is what actually came out after this was that all of these, you know, big, tough football managers and coaches and owners were all like, you know, this was way better. We got to spend time with our families. We didn’t have to go out and visit all of these. We had such a nicer work life balance, like, we need more of this. I thought that that was a nice thing that came out of the NFL draft.

S2: The only the only thing I know about the NFL is the Dallas Cowboys, because I wrote an article about their art collection once, and I hung out a bunch at their headquarters. And I was reading this thing. Oh, I was watching Twitter go by with a bunch of sports, awful stuff, which I didn’t understand at all. But the one thing that jumped out at me was that the owner of the Dallas Cowboys is a very tall big guy called Jerry Jones. He was calling into the draft from an undisclosed location on his 250 million dollar mega yacht. I don’t like that is you can see how he is not having a bad lockdown.

S1: It was just funny because you had all they were in all of these, like, players living rooms with their families. I mean, even like the owners and such were mostly unlike your normal places, church efforts. So clearly. And got that in Bill Belichick dog or that.

S2: So, yeah. You know, like if anyone knows where Jerry Jones, his yacht might be, where in the world is Jerry Jones? Send it send us an email slate money at Slate dot com. Emily, where would you park your yacht if you had a yacht and you could be anywhere right now.

S3: I am in the water somewhere, Felix.

S1: Imagine having a choice. But yachts are actually horrible. Yachts are like just floating money pits. They’re the worst idea in the world right now.

S2: I mean, they’re bad if you don’t want to lose money. But if you don’t mind about losing money, I think that’s true. You could just be on your yacht in the South Pacific somewhere.

S1: And like, what’s it like Pemex, where I would just just keep losing money?

S3: When they took their yacht trip on succession, where where were they?

S2: That was off the coast of Croatia. It seems very pretty. I think I would be down more like New Zealand ish or something where it was, you know, less police to be.

S3: Right. They’re doing everything they won. I mean, they’ve won every race.

S2: And they have a nice I mean, they are a tourism based economy and they have no tourism for seeable future. But, yeah, they they have they have now come off the extreme lock down. I ordered some flowers in New Zealand this week and that florist is up and running again. So, yeah, New Zealand is doing OK. Yeah. On which note, I think we will wrap up this episode as late money for all of our listeners in New Zealand. Well done on doing this one. Right. And congratulations on exiting the worst of the lock down. Well done. You for everyone else. If you’re in Texas, let us know if you are out. If you are going to a restaurant or anything like that. Sleep money at Slate dot com. Many thanks to just me in my life producing this show from her Brooklyn apartment.

S4: And we will talk to you next week on sleep. Money.

S2: I’m fascinated about there are three big meat processors in this country. There’s J. Yes. And Tyson and Smithfield. I think they’re called and they between them have two thirds of the market. It’s this classic monopoly situation. And they are too big to fail. It seems even if they are risking their workers lives, they have to keep on churning out the meat products.

S3: I mean, do they? There is there are good pieces about World War Two and meat rationing back then. And, you know, at that time, Americans had no problem limiting the amount of meat that they ate. And I mean, meat is not a necessity, is it?

S1: This is something I’ve. Yeah, this is something I felt just kind of funny, as you know, like resident, like now actually vegan over here who’s who’s like reads all these articles where they’re like, but people can’t live without meat, they can’t possibly live without meat. And I’m like, well, I’m not going to an annoying vegan that says they have to, but like they can. I mean, I’m still right, you know. So the idea that you this is, you know, vital. I mean, it can be vital perhaps in other ways. But, yes, you definitely don’t have to, you know, eat meat.

S2: And it’s meat. An essential service, is it. I know. To recommend that. Can I do it? Can I do a film recommendation here? If you haven’t seen it? There’s this amazing film from 1984 called A Private Function, which was written by Alan Bennett. And it has Michael Palin and Maggie Smith and Denham Elliot. And it’s brilliant. And it’s all about the black market in meat during World War Two in the UK. And go watch that. That, I think. Yeah. Why can’t we all just be Maggie Smith right now?

S1: Yeah. Just give me some Nikou. We always just be Maggie Smith ration Russian army.

S3: I mean, we don’t need to eat it at all. Anna’s doing OK.

S1: We have this like I am. I mean, it’s actually been running more.

S3: It’s so perfect that Trump, of course, was like, we can’t we can’t let them meet people. We have to get the meat guys back to work. And like, he obviously doesn’t care about any of the people working in the in the plans. Right. Because of the his racism, blah, blah, blah. So it’s just Hilaire, it’s kind of funny to me that that’s the essential industry we’ve chosen, although this is the one thing and this will be, I’m sure, a topic we’ll talk about on different, larger segment.

S1: But when you have a tremendous amount of government evolvement in the economy, this is always one of the risks, is that you start to get who, you know, government favouring certain industries certain because they’re buddies with them or because and this is one of those incidents, instances where, you know, we are clearly seen or even the fact that you also then have Amazon, whether you like them or not. I think you can probably see it’s clear that what the White House has been doing in relation to Amazon is clearly politically motivated.

S3: Right.

S1: I guess I would agree that socialism can be bad, sometimes it can be on the other nationalized capital markets are doing just fine.

S3: I also learned that there are only 50 slaughterhouse, 50 plants in the United States controlled 98 percent of the slaughtering, which is crazy. They’re doing so much slaughtering. And apparently that the Trump administration, the regulations on how fast you can do the slaughtering of the cattle. I don’t know. I learned a lot about meat in a short amount of time. Meat production. And it’s really nasty. It’s it’s horrifying. Like, I just want to buy. I was looking at maybe buying bacon from the supermarket. And prices are insane right now. Used to be like around five dollars a pack and now it’s like 10 at buy.

S1: You know, you also because pork has not been doing well, because last year you also had the African swine flu that like they cold like half of the pigs in China. Oh, yeah. You know, because this was just massive. Right. So now then you have. So it’s it’s not it’s never a good time to be a pig because you could be killed either way.

S2: It’s good time to be a pig.