Money Talks: Live from the Library of Mistakes

0:06Hello, and welcome to Money Talks, where we talk to the most interesting people about the most interesting things. I'm Felix Salmon of Bloomberg, and a couple of months ago, I found myself in Edinburgh at an amazing little room called the Library of Mistakes. There's a few of these around the world, but the original and best is in Edinburgh, Scotland. And you can spend a lot of time in there just reading books about mostly financial disasters. In the room with me, with a live audience, was the one and only Lee Bukait. He has been on this show in the past. But we had a chat about sovereign debt and all of the craziness that surrounds it historically and in the present.

0:51And it was so much fun that I thought we should just turn it into a podcast episode. So this is me and Lieberkite in Edinburgh. Enjoy.

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3:45We're very lucky tonight that we have a master on the subject at hand, and that is Felix from Bloomberg. So we're in his hands tonight. He will be discussing and questioning Lee on the issues of sovereign debt, sovereign debt default. So over to you. Thanks, Russell. And thanks, Lee. So I first encountered Lee, I guess, in 97-ish, something like that. I was working for this magazine called Euro Money that some of you might know. And I had just recently read an article in Euro Money. And if it's written in Euro Money, it must be true. Saying there are loans to countries and then there are bonds which are issued by countries.

4:25And bonds are much better than loans because you can default on the loans. Then you talk to the banks and you get restructured. And then there's just a long series of defaults. And we've just gone through a big crisis in Mexico with loan defaults. And then all the loans got restructured into bonds. And the great thing about bonds is they cannot be restructured because they're sold to a million different people. And you can only restructure them with unanimous consent among all of the people they're sold to. And that's practically impossible to happen. So there will never be a bond restructuring.

4:56So bonds are safe. And I was like, yes, now I understand the difference between loans and bonds. And then Ecuador defaulted on its bonds. And I was like, that's not allowed to happen. And I phoned up Li and I said, Li, can you explain to me that's not allowed to happen? And basically, ever since then, Li, who is the doyen of sovereign debt, he has represented pretty much every country you can imagine in issuing bonds and restructuring debt and navigating some very fraught waters, which we are going to talk about. So Li is not only the person who explains all of this kind of stuff to us, mere mortals, He is mostly the person who explains all of this stuff to finance ministers because, you know, he's one of those people who has been around the block many more times than the vast majority of finance ministers.

5:46In fact, than any finance minister who's currently in office. And so we are incredibly, incredibly honored to be able to have Lee here to talk a little bit about the subject of this library, which is mistakes. and I wanted to start by asking you about the big fallacy that we are all taught when we first learned a little bit about economics which is that we as individuals have budgets that we need to balance and if we go into debt that's a bad thing and if we borrow more than we can repay that's a very bad thing and running sort of deficits and living beyond our means every single year of our lives is kind of impossible and ruinous and generally bad and so then what we do is we watch movies like Dave or something like that where some accountant gets pulled in from the Midwest and saying says like if I ran my business like you run this country and everyone goes, yes, yes, absolutely.

6:53We need fiscal prudence and responsibility and balanced budgets and all the rest of it. And all of the economists rise up in unison and say, no, no, countries are different. They can print money. They can do all manner of things that individuals and corporations can't do. Countries can't go bust. This is a very famous quote by, was it John Reed at City Bank? No, Walter Wriston. Walter Wriston at City Bank. Countries can't go bust. And so all of us go, ah, that's a good point. Countries can't go bust. And then you come along and you are here to tell us that actually they can and they do and often they should.

7:31Is that right? Indeed. Felix, friends, wonderful to be with you. It's a great pleasure. Answering your question, sovereigns are different, but not that different. A sovereign has means to deal with its debt problem. The most common is simply inflation. That is the most palatable politically for a politician. You know, the alternatives are you can default and restructure, as all of those countries you are mentioning have done. If you are lucky enough to borrow in your own currency, you can print the currency. But inevitably, you're talking about inflation. In the United States, you remember a couple of years ago, poor Mr.

8:19Biden had a little blip of inflation of 8%, 9%. And the political cost of it was ruinous for him. The idea that one could deal with the$38 trillion of debt that the United States has accumulated with inflation is virtually unthinkable. But the broader issue is this, and I've come to think of it really as an intergenerational issue. If a government wishes to spend more than it takes in, principally in the form of taxes, it has very few options. It can raise taxes, but that is politically unpalatable. It can cut its expenditures. That is politically unpalatable. When I say politically unpalatable, and I'm speaking now about all of our democracies, it means that the politicians in office wish to get reelected, and politically unpalatable means they're taking measures that inhibit that objective.

9:29The third option, however, is absolutely delicious. If you're a politician, you borrow the money. Now, to be sure, ultimately, some poor devil is going to have to repay that through taxation. So you're not really avoiding taxation. But the delicious part of it is the poor devil who will have to repay it hasn't yet been born. And that tends to mute their objection. I remember in 2003, at the time that George W. Bush, George II, launched his campaign in Iraq to oust Saddam. I had to give a speech that morning to a group, and the subject was odious debt, debts that when a government collapses or is ousted, the new administration just feels it would be absolutely wrong to honor these debts because the former sons of bachelors stole all the money or wasted it.

10:35So I'm about to give this, and I read the New York Times that morning, and above the crease is an article that said, President Bush went on television last night saying that he was going to ask the U.S. Congress for$17 billion to finance his war in Iraq, period. Many of the people who will have to repay the$17 billion did not hear the president's speech, semicolon, their parents had put them to bed. This is the intergenerational issue. And believe me, it has been recognized for centuries that it is a risk. In the United States, if you look at our history, we've never had an aversion to borrowing money, but we borrowed it to deal with crises.

11:29So we borrowed a great deal of money for the Civil War, both sides did. We borrowed a lot of money for World War I. We borrowed money during the Depression. We borrowed a lot of money for the Second World War. But the ethos, the accepted understanding was that those debts should be paid down reasonably quickly once the emergency passed. Why? For two reasons. First, to simply push them into the future means that the next generation is going to have to deal with them. And that struck people as an intergenerational sin. But even more important, and I would argue this is what's going on today, the economists have this notion of what they call fiscal space.

12:20Fiscal space in this context means the ability of a government to borrow money to deal with a problem at a reasonable interest rate. At some point, if a country has accumulated a debt stock so large, it will, in the first instance, force the country to pay interest rates above what they would find tolerable. But in the extreme, they won't be able to borrow money at all. When you run a sovereign debt at that saturation point, it's not just that some other people are going to have to repay it. It is you have trespassed upon their fiscal space. Do you think the next generation is going to go through their lives without a financial crisis, without a pandemic, without a war, without something?

13:13Of course they won't. They need their fiscal space. And frankly, we have consumed it today. And that I regard as an intergenerational sin. May I speak to your first point? Because this was a fascinating period. The 1980s and early 1990s, the so-called Latin American debt crisis, that was all syndicated bank loan. It was the commercial banks who had their posteriors hanging out there. There were very few sovereign bonds issued by emerging market countries in those days. They were absolutely negligible. And so we never restructured them. They were paid. They were paid simply because it wasn't worth the time to try to restructure them.

14:00But as we moved into the 90s, the banks receded and they wanted to sell their exposure to non-bank institutional investors, you know, the Aetna Insurance Company. So all of those syndicated bank loans were turned into bonds. And the investor community was told, and I did a survey of this about 1995. I looked at the offering circulars for sovereign bonds that had come through a decade of restructuring of their bank loans. Every one of those circulars had some version of this sentence. While the Republic of Ruritania has serially and for 12 years restructured its bank loans, its bilateral government credits, its trade credits, its interbank lines, comma, the Republic of Ruritania has punctually and in full paid all of its bonds.

15:08Now that sentence, friends, for a lawyer is perfectly delicious because it is both true and wildly misleading. It is true that Ruritania paid its bonds because they were so negligible, But it nurtures in the mind of the reader the idea that somehow bonds were senior. This is your point, senior debt instruments. And I remember when Ecuador defaulted on its bonds, I remember getting a letter from an investor. And oh, boy, was he upset with me. And he said, any damn fool knows that restructuring a sovereign bond is illegal, immoral and fattening. And what you have done to the financial system and his argument was bonds were a senior type of debt instrument and inviolable.

16:10That was his word, an inviolable instrument. And this fellow actually ended his letter by implying that my parents weren't married when I was born. But that was the great loss of innocence in the market. And of course, in this century, all of this debt has been in the form of bonds. And friends, once any component of a sovereign's debt stock gets large enough and the sovereign faces severe financial distress, it's going to have to be restructured. There is no notion of an inviolable or senior type of debt instrument. In some people's eyes, there are, especially if you hang out at the IMF long enough.

16:56But you said a couple of things. At the very beginning, you were talking about the extreme reluctance of countries to default. And then you started talking about the unconscionable theft of fiscal space from future generations that happens when you don't default. and the losers in a default are the rich broadly because it's the rich who lend money, who have a lot of money to spare and who, you know, it's a bunch of, as you say, Aetna Insurance Company. People don't care that much about Aetna Insurance Company or a sovereign government or Citibank or someone like that. So what explains the extreme reluctance?

17:44Because it strikes me, if I'm a finance minister, whether I'm in a democracy or not, And I'm faced with your dilemma and I'm like, what do I do with this bunch of debt? I can pile even more pain onto future generations or even current generations, or I can just default and not pay it. And I'm sovereign, so who's going to stop me? Why is that? Why are people so reluctant to do that? You're correct to say that there's a, I think, a popular belief that sovereigns, particularly emerging market sovereigns are actively looking for a pretext to default and restructure their debt and extract debt relief from those avaricious gringos.

18:27The reality, friends, is exactly the opposite. In my experience, sovereigns will go to extraordinary lengths to avoid having to announce that they're facing a debt crisis and need to restructure their debt. They will do things that are positively injurious to the country. And very often, the first phone call I would get from the Minister of Finance of Ruritania would be when he or she was sitting in 19th Street at the IMF building, having just told the IMF or the IMF just told them that there was now no other choice to do this. But you will see these countries will engage in the most extraordinary transactions to try to avoid, even for a few months, the announcement of a debt restructuring.

19:23The motivations are really two. A sovereign debt restructuring for the citizens of the debtor country can be an incandescently painful experience. Felix, these crises do not come in isolation. A sovereign debt crisis will probably be accompanied by a banking crisis, by a currency crisis, by a trade crisis, by a social crisis, by a political crisis. And no politician wants to be the one who leads their country into that. And therefore, they will do extraordinary things to try to defer it, even for a matter of a few months. Second motivation is very few politicians who lead a country into a sovereign debt workout are the politicians who take them out of it.

20:18So it is almost always the end of a political career. I remember I was asked to go to Miami to meet a minister once and he explained to me the situation and when he ended I said, Minister, I've done this man and boy for 40 years and let me commend you, sir, that you're taking these actions before you've defaulted. You're actually trying to deal with it in a proactive way and that is so rare and I applaud you for it. He said to me, son, my government has eight months left in office. Don't you think if I could hand this bag of garbage, and garbage wasn't exactly the word he used, if I could hand this to the next administration, I would do it.

21:10He said, but we won't last eight months, so I've got to do it. I did point taken, Minister. You did mention that a lot of the decisions of politicians are based in this calculus of wanting to get re-elected. But by the same token, you've represented your fair share of ministers in non-democracies. Do they behave any differently? Yes, they share what I think of as this pathological procrastination. in getting on with the task simply because it is so disruptive to the society. But they're not worried about being reelected. And eventually the markets force the issue. The markets will, as they perceive the country's financial distress increasing, the markets will initially become arthritic.

22:03They won't lend as readily. they'll ask for a higher interest rate to compensate them for what they perceive as the risk. In the end, the markets will shut off altogether. And if you're a country, Ruritania, you have a bunch of outstanding bonds. They're maturing. I'm going to tell you something that you'll probably quote me for. In this century, and I mean this sincerely, in this century, no sovereign debtor, Developed country or emerging market borrows money with the intention of repaying the money. If by repaying, you mean divert current resources to settle that debt when it comes due, they borrow all of them in the sure and certain hope that when that debt matures, they'll go back into the market and borrow from someone else to repay that one.

23:01And when the new borrowing matures, they'll do it again and again in perpetuity. It is called refinancing. And every country does it. It is a fallacy to think that when Ruritania issues a bond of$100 million for 10 years, that over that 10-year period, Ruritanian politicians are squirreling away the$100 million that they know they will need in 10 years to repay that bond, and they're keeping it in the vault safe, my left eyeball. They do not do that. They borrow on the assumption that they can refinance it. And you see, when the markets begin to pull back, it is the refinancing assumption that proves fragile for Ruritania, and that is the propellant for the debt restructuring.

23:54And whether you're a dictator or a democracy, when that happens, you don't have any other choice.

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25:44Today's episode of Slate Money is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of funds throw a couple flashy funds your way and call it a day, but not Vanguard. Vanguard bonds are institutional quality. It's a commitment to your clients. It's top-grade products across the board. There's more than 80 bond funds. They're actively managed by a 200-person global squad of sector specialists, analysts, and traders, of course. This isn't about star portfolio managers.

26:27It's about active strategies that aren't locked away with one person, that is shared across the team so that every client benefits from the collective brainpower. no one individual can really mentally encompass the bond market. It's way too complex. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at Vanguard.com slash audio. That's Vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor. I want to ask you about the morality of this, because I think this is deeply profound. When you defaulted on the Ecuadorian par bond, people were writing incredibly angry letters to you.

27:13They felt very emotional about it. You have since then done dozens of other restructurings. I'm sure there wasn't a single one where you didn't encounter extremely angry and emotional creditors. creditors. There is this feeling of betrayal on the creditor side of things. And you are very good at articulating the necessity of these restructurings. There is no alternative. But by the same token, first of all, do you understand where these people are coming from? We are in the library of mistakes. These people are making risky bets. They are often getting substantial spreads over risk-free assets in order to lend to these countries.

27:55They know what they're doing. They should expect the occasional default. And whose mistake really is it when a country defaults? Does the blame accrue mostly or should it accrue mostly on the country or on the lenders? It's usually a bit of both. The country, sometimes the cause of the problem is chronic fiscal mismanagement. But there are many instances where it isn't. I represented Grenada in 2007. September the 5th of that year, Grenada was perfectly solvent. A massive hurricane came through, and the next day the country had lost essentially all of its agriculture and was absolutely insolvent.

28:41So there are situations where the government is not really culpable. But I would say the garden variety is probably fiscal mismanagement. It is a lack of discipline in taxing and resorting to what I've just described as the intergenerational sin of borrowing to cover budget deficits, knowing that I'll be out of office when the day of reckoning comes. But it's great to be upset about that. No, there's blame on that side, too. For every $1 of overborrowing, there's been 100 cents of overlending in retrospect. That's the other thing. You must understand every sovereign debt crisis is perfectly predictable in retrospect.

29:30We're very good at looking to figure out what the financial mistakes were that were made. But But in retrospect, investors have a tolerance for risk. It differs. That's fine. That's what makes the world go round. But if you are signing riskier financial investments, you must simply understand that a certain number of them are going to go bad. And when they go bad, there'll be a workout process. and in my view, creditors have a duty to participate in that in good faith. Come on, folks, we have bankruptcy codes that do precisely that by statute for corporate debtors who get in over their head. We don't think those bankruptcy codes are immoral or anything.

30:25It is the sovereigns, because they are not subject to anyone's bankruptcy codes, that don't have an institutionalized method for dealing with an over-indebted problem. They have got to do it ad hoc. We, the sovereigns, cannot command any creditor to give us debt relief. We must cajole them, sometimes bludgeon them into doing it. And that's frankly the fun of it. so the creditors that you encounter in your global perambulations broadly speaking you get the sovereigns they tend to meet in the basement of parisian treasury building it's called paris club then you have the big banks the big institutional investors and not infrequently you also have small mom-and-pop individuals as well would it be correct for me to intuit that that the small mom and pop investors, they can be irrational, they can get angry, they don't really understand the sophistications of the world in which you live.

31:32But as you get more sophisticated up the rungs through the banks and the bond investors and ultimately to the sovereigns and the multinational development banks and international financial institutions and all of the so on and so forth and three-letter acronyms, at that point everyone is grown up and does not start shouting and being irrational. I have long felt that emerging market sovereigns who run a risk of getting into financial trouble ought not to be marketing their bonds to retail investors, mom and pop and Agatha. The exception, and it is an Himalayan exception to that, was Argentina's decision in the late 90s.

32:16They were desperate to raise money, and they deliberately targeted retail investors in Germany, Italy, and Japan. And when they defaulted in December of 2001, and if you read these prospectuses, you have to understand, And Aunt Agatha looks at the prospectus and there's a beautiful seal, you know, the country seal. And she thinks this is, you know, as sovereign debt, sovereign, mind you, it's safe. And so she puts Julio's college money into an Argentine bond. It causes political problems because the government of the country where Aunt Agatha resides is going to hear from Aunt Agatha about those perfidious Ruritanians who have stolen Julio's college money.

33:11And it's just generally you're dealing with creditors who are emotionally appealing. If ever they go in front of a judge or an arbitrator and Argentina paid a heavy price for this. I helped. This is my only experience in Argentina. Very few things of a creditable nature can be said about my career other than I did not represent Argentina. That was his colleague down the hallway. Except, yes, except for four years when Mauricio Macri came in in 2016. And we had 50 ,000 Italian grandmothers who hadn't been paid in more than a decade. And we started the settlement with creditors. And I'm looking at my friend, Greg Makoff, who wrote the book on this.

34:02We started that settlement with the Italian grandmothers because they were the most appealing. So I'm generally against marketing these bonds to retail investors. It's a bad business. Now you ask about the more sophisticated investors. I do not demonize creditors even during contentious negotiations. Many of those creditors, you know, they got their money from the Detroit policeman's pension fund. It isn't that if I get debt relief, I'm taking money out of the pocket of Jeff Bezos. I'm probably taking money out of the pocket of a lot of other people that are very much like my citizens, just ordinary people trying to.

34:49But having said that, and I'm going to make a generalization here, every sovereign debt crisis at base is a burden sharing decision. The issue is this. How much of the pain of the fiscal adjustment to get out of this crisis ought to be borne by the citizens of Ruritania in the form of higher taxes, lower pensions, lower public sector workforce, lower subsidies? How much should be borne by them and how much should be borne by the creditors of Ruritania in the form of debt relief? And it's almost a dollar for dollar trade-off. I get an additional dollar of debt relief. I don't have to tax my citizens a dollar or I'll have a dollar to spend on them.

35:38There is only one organization on the planet that purports to have both the technical expertise and the political legitimacy to make that basic burden sharing decision because it cannot be done by the debtor. It cannot be done by the creditors. It's the Library of Mistakes. Yes, exactly. It is the International Monetary Fund. So they will come in and they will decide how much austerity you can impose upon Ruritanian citizens before you destroy the economy and perhaps the political stability. And whatever else is needed has got to come out of the hides of the creditors. And the IMF will say to people like me, we're not going to tell you from whom to get the debt relief.

36:27Just here's the quantum of debt relief you must get. If you can get it from your government creditors, go with God. If you can get it from your bondholders, fine. And that's the process. Here in the UK, I think there's broadly quite a lot of sympathy to or sympathy with organizations like Jubilee, who are proposing broad forgiveness of much emerging market sovereign debt. But you were mentioning the agathas in Germany and in Italy. And that reminded me that there are also agathas in the UK. The UK is more a nation by its nature of stock market investors rather than retail bond investors. But you represented Iceland when there were many, many UK citizens who had a lot of money in Icelandic banks who were operating in the UK.

37:21And it's not obvious to most normal people, but in economic fact, depositing money into a bank is not entirely different from lending money to a country. So how did that work out? Okay, well, Iceland, this is about 2010. This was not a sovereign debt crisis. What happened was the largest Icelandic bank opened up an internet banking product that they called IceSave. And they paid about 50 basis points more than you would get if you put your money with Barclays Bank. So a lot of people did. They marketed it actively in this country and in the Netherlands. In December of 2008, 80 % of the Icelandic banking sector collapsed overnight.

38:11They had gotten themselves wildly overexposed. And when Lehman collapsed in September of 2008, that set off a chain reaction, which brought down the entirety of the Icelandic banking system. Obviously, all of those ice-save deposits could not be repaid. And this is where it gets contentious. The British government, which at that time saw a run on a bank called Northern Rock, I believe it was, with queues forming in front of the bank in the morning, decided the last thing they wanted was a bunch of unpaid bank depositors, even if the bank was in Iceland. So the British paid out British ice-save depositors, and the Dutch did the same thing, meaning that all of that money, it turned out to be about$5 billion, was owed now to the British and Dutch governments.

39:09They claim that the Icelanders ask them to do it. The Icelanders deny that. The issue, the legal issue was the British and Dutch said this should all be covered by Iceland's deposit insurance framework. And I looked at this. In Europe, deposit insurance frameworks generally capitalized to an amount equal to one and a half percent of insured deposits. 80 percent of the banking system failed. There was absolutely no way that the deposit insurance framework could have covered remotely that. And the British and Dutch took the view that Iceland should assume this as a sovereign debt. The Icelanders disagreed.

39:58And there was a very brutal negotiation. Iceland put the resulting deal to a referendum. It's a country of, at that time, 320 ,000 people. So, you know, you could have popular democracy on an issue like this. And they voted it down. The Dutch sued. And in the end, Iceland won. The issue was, it seemed to me always clear, is a sovereign responsible for the debts of its deposit insurance framework over and above the capitalization of that framework? And the answer to that for most countries is no. It isn't true even in the United States. Even though if you look at the Federal Deposit Insurance Corporation website, it says, you know, the full faith in credit of Uncle Sam stands behind us.

40:47Taint actually so. They have a 500 billion line of credit at the Treasury, but it isn't full. And believe me, 500 billion wouldn't scratch the surface of an 80 percent banking system collapse. Which, yeah, I mean, the Americans do have, as we saw when Silicon Valley Bank collapsed, the Americans do have a habit of insuring people who weren't even insured. But I think before we throw it open to questions, since we're on this subject of the nexus between banks and sovereigns and the way that countries don't only feel obliged to pay their own creditors back, they also feel obliged to make sure that their banks' depositors are kept whole.

41:31For obvious reasons, no one wants to put money in the bank and then not get it out. You were also, because you are everywhere at all times, you had the veritable Z-League of finance, in Ireland when that whole thing went down. So tell us that story. That's a sensitive one. So this was the beginning of the Eurozone debt crisis in 2010. Greece, you remember, was the flagship, but there were other European Eurozone countries that had fragile financial positions. Portugal, for example, Ireland. And the concern was Spain and Italy. Italy is the fourth largest sovereign borrower in the world. They have north of two trillion euros of indebtedness.

42:20and the idea that Italy could fail. Italy is too big to save. The question in Ireland was, in Greece, the government got into trouble and brought down the banks. In Ireland, the banks got into trouble and brought down the government. The government's debt-to-GDP ratio, when that started, was 14%. Boy, howdy, it doesn't get any better than that. But the European Central Bank, and the president of the European Central Bank, Jean-Claude Trichet, was largely keeping the Irish banking system afloat because they had their discount window open. And that's how the banking system continued to function.

43:04It was Trichet's belief in his core that if you allowed a restructuring of a bond, bank bond, in Ireland, that would spread contagion, that the markets would no longer trust Italian banks, French banks, Belgian banks. So he forbade it. I was sent by an international organization to try to convince, didn't take any convincing for the Irish government that they should not guarantee all the liabilities of their banks, particularly when they had no idea what those liabilities were. that rather they should say to the banks and their creditors, go through a workout process as you would, you know, for a corporate debtor and triché forbade it.

44:01The Minister of Finance, a marvelous man, he had terminal cancer at the time, perfectly understood the logic of not having the Irish taxpayer take those liabilities on their shoulders, but he was caught in a death struggle with Trichet. So they did guarantee it. And it turns out that sufferings are not entirely sovereign after all. They were somehow in charge of Irish fiscal policy. In the eurozone, because the ECB's discount window is absolutely crucial to the domestic banking system, the same thing was true in Greece. The Greek government was told by Trichet, thou shalt not restructure any of that Greek government debt, which was north of 300 billion euros at that point, even though it was true to anyone looking at it, that the country was insolvent.

44:55It had to restructure it, but Trichet forbade it, forcing Greece into a series of massive bailouts coming from the EU and the IMF. The first one in May of 2010 was for 110 billion euros. Most of that money simply went bled out to repay in full and on time, maturing Greek government bonds. So the argument that I made was the liabilities aren't disappearing. Don't you see what's happening is the liability rested on the shoulders of some hedge fund manager in Mayfair or Greenwich, Connecticut. As a result of this bailout, the hedge fund manager was paid in full, gracias European taxpayers. So the liability migrated to the shoulders of some poor Hausfrau in Stuttgart who paid her taxes.

45:52And eventually, particularly the German government, that dawn crept over their horizon and they realized that if a debt restructuring of Greek debt was inevitable, bailing out the creditors who'd lent the money with their taxpayers meant that when that axe fell, it was going to hit the taxpayers. And that was a political issue. So they careened and forced Greece to restructure what was left just about two years later, what was left of its bond indebtedness in a savage debt restructuring. Oh.

46:30Wonderful. You can, of course, join the library as a full-time paying member if you'd like to support the library that way, but it is free if you register. That brings us to the important bit of tonight, which is to thank our guests. It's been incredible. It's rare to get someone of these caliber here. Felix, thank you for the wonderful questions, and please join me in thanking both of them. Thank you all for listening. Thanks for your emails, sleepmoneyatslate.com. Thanks to Jessamyn Molly for producing, and we'll be back on Saturday with the regular Slate Money.

47:13Slate Money is sponsored this week by Your Next Dollar, a podcast from NerdWallet Wealth Partners. Your Next Dollar is built specifically for high earners like you. It covers the financial complexity that comes with a higher income. If you have equity compensation, RSUs, tax planning, housing decisions, figuring out when it's actually okay to enjoy your money, it turns out that the more you earn, the more complicated the questions get. And yet, somehow, there's even less content built for you until now. Your next dollar covers both sides of the equation, building wealth and spending on what actually matters to you.

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