The Greenspanaissance

0:07Hello. Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg. I'm here with Emily Peck of Axios.

0:19Felix Salmon: Hello, hello. I'm here with Elizabeth Spiers of New York Times. Hello. And we are going to talk about the maestro, Alan Greenspan, RIP. What is his legacy? What did he do right? What did he do wrong? And, of course, since we are massive fans of Succession here at Slate Money, we're going to talk about Succession and Succession planning at companies in general and at J.P. Morgan in particular. We are going to talk about another maestro in his own way, Master Song of SoftBank and the eggs that he lays, because in a way, he's a goose. We also have a Slate Plus segment on Wendy's and Hertz. So it's all coming up on Slate Money.

1:25perfectly. Choose premium, clean fragrances, adjust the intensity, and set schedules right from your phone. It's whole home scenting designed for the way you live. Build your Pura system today at Pura.com slash whole home.

1:43Slate Money is sponsored this week by Bill, which is the intelligence finance platform that helps business and accounting firms scale with proven results. Bill is a leading provider of software that simplifies, digitizes, and automates back office financial processes for accounting firms and small to medium-sized businesses. What does that mean? It means they help businesses pay and get paid by ACH, JET, credit card, wire transfers, you name it. It's secure. It has AI-powered accounts payable automation that erases the busy work from capturing invoices and processing payments. It syncs seamlessly with accounting software.

2:22It does your 1099 tax filings, you name it. It's an end-to-end workflow. Its customers come from all industries, ranging from startups to established brands and nonprofits to accounting firms themselves. When business owners choose Bill, they aren't guessing. They're choosing infrastructure that It is already proven by millions of users and over a trillion dollars in secure payments. Build doesn't just move money. It enables the business's entire accounts payables workflow, and it creates the ability for them to control their financial operations securely and at scale. So talk with a payments expert at build.com slash proven and get a$150 gift card as a thank you.

3:04That's build.com slash proven.

3:11so emily you have coined my favorite word of the week which is green span-a-sance the green span-a-sance green span is having a renaissance he's only been dead for a couple of days and he's already been reborn he did die this week at the age of 100 he had a good innings i like to say that he died slightly above par at about 100.21, I think, which is apropos. And now his, would it be fair to say that Kevin Walsh is a Greenspan disciple?

3:46Felix Salmon: I think it would be fair to say that, yes. So the new head of the central bank is very much formed in Greenspan's image and has certainly taken a leaf out of Greenspan's inscrutability book. Greenspan famously said that if you understood what I'm saying, you probably misunderstood me or something. If it sounded

4:09Elizabeth Spiers: clear, you probably misunderstood me. But in any case, yeah, we should talk a little bit about his legacy because this has been certainly a sort of big topic of conversation around the Bloomberg water cooler greenspan good or bad i think 10 years ago or 15 years ago in the immediate wake of the financial crisis it would have been unambiguously bad he set the stage for the greatest financial crisis to afflict the planet since 1931 but i also think that there as you say that people are re-rating him. There's a little bit of revisionism going on. And it is true that in terms of the mandate of the Fed, which is low unemployment and low inflation, and then possibly a third mandate of low long-term interest rates, he kind of nailed all three for the entire term of his office, which was a very long term.

5:11Felix Salmon: I think that you're right that the Trump administration in particular, Scott Besson and now Kevin Warsh want to reframe the conversation about Greenspan. And I think the thing they particularly are highlighting is that during the dot-com bubble, Greenspan didn't act to raise rates and quash the excitement because he argued the dot-com bubble wasn't going to be inflationary because of something, something productivity, productivity gains. And so we like let it rip. And they're like, the same thing's going to happen with AI. AI is going to lead to productivity gains and just let's just let it rip kind of a vibe.

5:50Elizabeth Spiers: I feel like this is another instance of maybe coincidentally Warsh being stuck in the late 80s, early 90s, because there are things that Greenspan was dealing with structurally that Warsh is just in a totally different environment. And one is that it was okay for Greenspan to be largely inscrutable when he was communicating with people, in part because they just didn't have this 24-7 news cycle that we have right now, where information is really ubiquitous, and not having it creates maybe an outsized amount of uncertainty that it wouldn't have during Greenspan's early tenure. But the other thing is, if Warsh is sort of anticipating that he can account for productivity gains because of AI, the other two things that caused productivity gains during Greenspan's tenure were an influx of Mexican migrants and globalization.

6:38Elizabeth Spiers: And those are two things that the Trump administration is either rolling back or trying to extract itself from. I think I agree with the second much more than the first. I don't worry about less communication from the Fed. I think that markets can cope just fine with less communication from the Fed. I do think you're right that Walsh does kind of feel sometimes, or at least he was during his audition period for Fed Chair, as though he was trying to sort of work backwards and find reasons to be dovish and want to cut rates. Now that he is Fed Chair, we have to sort of give him the benefit of the doubt, I think.

7:15And I do, as I have mentioned on this show before, I do think the next Fed move is going to be a hike rather than a cut. It is worth noting that Greenspan, part of what made Greenspan respectable in the eyes of the market was that he was willing to hike in the face of political opposition, right? In 94, he hiked because he saw inflation coming down the road before inflation had arrived. And everyone kind of went, oh, my God, that was very prescient. And you did the right thing. And it was politically unpopular. And George H.W. Bush blamed you for losing the election to Clinton and all of this kind of stuff.

7:51So, like, Greenspan does have a certain amount of inflation fighting bona fides in the way that Walsh does not yet. And if Walsh starts off with a hiking cycle, maybe that will get him somewhere there. But the big point about the Greenspan's failure to hike rates during the dot-com bubble was that on a very profound level, he was right. He was right that there was productivity. He was right that there was no inflation. He was right that you could keep rates low. You could ignore the Phillips curve, which says that if unemployment is too low, then inflation rises. And for various reasons, inflation wouldn't arise.

8:34And he was, if nothing else, he was very nerdy and data driven. He just, he would spend weeks and weeks like sitting in his office with printouts of macroeconomic data. And he'd talk to people and he would like, he would go where the evidence led him to a very large degree. And the evidence led him to believe that there wasn't actually inflationary pressure. And he kept rates low. And that was the other big thing that he, I think, correctly got credit for.

9:02Felix Salmon: Okay. So there's all this revisionist history now. And there's, as you call it, a re-rating. And everyone's going back to the dot-com bubble because that feels like the most relevant comparison to today. And I think we're doing a little bit of like 2008 erasure or amnesia. We're like pandemic braining it or something because, like you said, Felix, for a long time, everyone was like, Brother Greenspan really cocked it up on this one. And I think a lot of former Fed people talk about it. He really – he thought Wall Street – his big theory was Wall Street would regulate itself because they were concerned about their reputation.

9:42Felix Salmon: Like there are many quotes from him saying things like that. Not just their reputation, but their share price. Their share price. This is obviously they can police themselves and it's totally fine. And the Federal Reserve, yes, it has to. It has its mandates on employment and on inflation, on prices. But it also is a bank regulator. And I think the consensus was and still is that they did not do their job. They did not do their job. And by the way, that's not just the consensus of you and me. This is also something that Greenspan himself admitted that he fucked that one up. He was actually OK.

10:20He was arguably good when it came to monetary policy. We can talk about whether his monetary policy in the early 2000s after the dot-com bust helped to create the bubble that then created the financial crisis. But broadly speaking, in terms of his monetary policy mandate of low unemployment and low inflation, he nailed that one. But he totally fucked up in terms of the bank regulation side of things. He was very laissez-faire. He was an Ayn Rand disciple. And he believed that everyone who was taking risk was knowingly taking risk. And that there would be no, that if risk takers lose money, that's salutary and is not going to cause any major disruption.

11:05All of that was false.

11:06Elizabeth Spiers: It's also kind of strange that he got that wrong, not because it makes sense in the context of his sort of libertarian beliefs and this idea that the banks were going to regulate themselves. but he also had a reputation for digging deep into esoteric data and talking to people on the ground to sort of inform his viewpoint. And I think even before he was out of Fed chair position, there were some emerging things that were happening in the data that other people kind of spotted. And some of the, anecdotally, the things that were happening were we were seeing these foreclosures happening where people had just borrowed too much money and they couldn't pay it back.

11:43Elizabeth Spiers: and that seems like exactly the kind of thing that historically would have been on Greenspan's radar. So I don't really understand how he missed it. Well, I mean, like, again, to be clear, think of this in terms of Greenspan as a Fed chair who cares much more about monetary policy than he does about bank regulation. If you are looking at data and worrying that foreclosures are going up, at the margin, what that does is it encourages you to keep rates low, right? Which is basically what he was doing. Because lower interest rates mean freer money and more liquidity and basically less damage to the lending markets.

12:26The foreclosures turned out to be a canary in the coal mine in terms of regulation of the financial sector, which is something where he totally had desire off the ball. And we can agree on that. But in terms of monetary policy, because yeah, when he was looking at data, he was looking at data in terms of how is the economy doing? What are the risks to the economy? How hot is it running? How cool is it running? And that kind of thing. And if he's seeing foreclosures begin to rise, and they didn't really spike until Bernanke came in. But if he's seeing foreclosures begin to rise, then And, you know, he's like, well, this only reinforces my idea that I should keep rates low.

13:06And in fact, what was happening was that the low rates were causing this sort of liquidity glut that was creating an enormous amount of excess risk taking in the financial markets. And a lot of that risk was being held in places by Norwegian sovereign wealth funds or German banks who didn't know that they were holding the risk. They thought they were holding AAA-rated securities, and it turned out they were holding nuclear waste. And we don't need to relitigate the entire financial crisis. But yes, he did miss that. But at that point, also, maybe it was kind of too late. It's not obvious what he could or should have done at that point.

13:46Felix Salmon: Well, maybe all along he should have done more looking into the situation. All along he should have cared more about bank regulation. And he certainly didn't care enough about bank regulation. That is true. Like the flip side of he didn't care about bank regulation and also had talked about like bubbles are fine, actually. Like that's one of his things. And by the way, that was his experience during the dot-com bubble, right? Which was stocks went up. Everything seemed great. Stocks went down. He cut interest rates. A few people lost money in the stock market. But there was no real recession at all.

14:24and you could just keep on going. And he was like, we have the monetary tools to cope with a bubble bursting. If the only risk in the, if the housing bubble behaved like the dot-com bubble, that would have not been a problem. In the dot-com bubble, the people taking risk knew that they were taking risk. In the housing bubble, the people taking risk were like homeowners who couldn't afford to take risk and conservative investors who thought they were buying AAA securities and all of the rest of it. And that was the big difference.

14:51Felix Salmon: The lesson he learned from the dot-com bubble was, bubbles are probably fine and no one gets hurt. And then we all unlearned that lesson pretty hard in 2008. And now I think we're in maybe another bubble. And it's like, what lessons?

15:05Elizabeth Spiers: Well, another part of Greenspan's legacy that's maybe not so great is that when he bailed out long-term capital management, he kind of set a precedent in the minds of people on Wall Street that if something bad happens, the Fed will just clean it up. And that's why people began to call this the Greenspan put because the idea was, well, if the institutions don't self-regulate and there's a problem, the Fed will bail them out, which turned out to be exactly what happened. I think calling it a bailout is maybe a little bit of a stretch. Basically, what happened was that all of the big banks in New York were called down to the New York Fed.

15:43And the New York Fed was involved in this and as it should be is the main bank regulator in new york and they were basically told you guys need to find a bunch of cash to bail out ltcm and they basically said fuck off we'll let it fail and a lot of arms were twisted and eventually they did but it wasn't it's not what the fed did there was it used what's known as moral suasion to basically persuade a bunch of bankers to do something they didn't want to do and i think that is exactly the right thing that It should have done that.

16:15Felix Salmon: But what I was trying to say before was just that we're probably in a bubble now. And all the people in charge are looking at that 2000.com bubble and taking those lessons away and suggesting the Fed act in the way it did for the 2000 bubble. Which maybe that's fine because, as you say, the people who took risks lost money but no one else did. But I don't think you can really know that until everything washes out. I think you can. Actually, here's my sort of rule of thumb here, right, which is the equity bubbles are relatively harmless and debt bubbles are very dangerous.

16:53Elizabeth Spiers: Okay. And this is clearly an equity bubble. Okay. Wasn't the dot-com boom an equity bubble too? Yes, exactly. Yeah.

17:00Felix Salmon: But the argument is it wasn't harmful systemically.

17:03Elizabeth Spiers: Well, it wasn't as harmful as the credit crisis, no, but I think the idea that it wasn't harmful is not correct. The idea is that the Federal Reserve does not have the ability to prevent bubbles from happening. Greenspan, if you look at his record, did actually try a couple of times when he thought the stock markets were too frothy. He kind of raised rates a little bit more than maybe the inflationary outlook would have suggested because he's like, look, there's irrational exuberance in the market. And when he made his irrational exuberance comments, the markets fell, but then they bounced back literally the following day.

17:38And he realized that trying to use interest rate monetary policy to burst a stock market bubble is, A, it's ineffectual. It doesn't work. And B, it kind of means that you're taking your eye off the main ball, which is your dual mandate. So I think, broadly speaking, he gave up at that point on trying to worry too much about stock market bubbles. And I do agree that right now, the Fed consensus is not there's not much we can do, and probably not much we should do about the stock market bubble. But I'm interested, Elizabeth, in what you think. Let's say, X-hypothesis, we are there is a stock market bubble right now.

18:27And let's say that the, you know, the Elizabeth Spires fed is worried about it what do you do to address it what is your policy response i mean i'm not

18:36Elizabeth Spiers: sure what you do but i i can see levers that might affect it like i think i've raised interest rates that sucks some of the air out of the debt that these ai companies are taking on no like i bet that's my point we tried raising interest rates during the dot-com bubble it didn't have that much effect if you look at where interest rates are right now they're not that low that's true But was the first dot-com bubble as heavily debt-laden? I think of that as almost a purely equity bubble. It was almost purely an equity bubble. But then again, so is this one. You know, there is more debt. I mean, just the orders of magnitude of everything are much bigger now than they were in the 1990s.

19:15But if you look at the asset prices that are too high, it's all equity. The amount of people worrying, I feel like we're now sort of six months on from people worried about private debt and all of that kind of stuff, private credit. Is there a little bit of people taking known risks in the AI space who could lose some money if everything goes fair shape? Sure, there is. But I don't think there would be sort of massive macroeconomic consequences to those people losing money.

19:47Felix Salmon: Maybe to refine what I was saying, I don't know if the Fed can use monetary policy to address an equity bubble. But what I said before holds now maybe even more so. And that's when Greenspan was running things, he really fell down in his responsibility to do regulation of the banks because based on his free market theory, whatever. Right now, we have an administration that is profoundly anti-regulation of the financial industry. And there's all kinds of stuff going on in the financial industry, maybe not in the banks specifically. So maybe the Fed can't do anything about this. There's all kinds of new products coming down the pike that are using a lot of leverage.

20:30Felix Salmon: There's all this offshore stuff happening. you know with hyperliquid we've talked about who knows what else shenanigans are going on prediction markets are booming everyone has a prediction market now i think facebook wants to have one i don't know what that's about something surely needs to be taken a look at right yeah and if i was can't be good and if i was in charge of a merged sec cftc because obviously those two should be merged yeah the first thing i would do is i would start cracking down on calcium in polymarket. I would start cracking down on crypto. I would start cracking down on people using VPNs to do a bunch of trades that are illegal in the US, but they're all Americans.

21:11All of this stuff is very low hanging fruit and shouldn't be allowed and is allowed and is a problem. I don't think that any of it is macroeconomically important or systemic. It's just too small. It's big in terms of, oh, billions here and billions there, but it's too small to affect the economy.

21:35Felix Salmon: I agree. But I'm also like, something's got to happen here. What? Things are bananas. But I don't know. Things were bananas in 2021. The stock market fell in 2022. And frankly, I worry about bank regulation too. I think there's way too little bank regulation right now. and we recently like this week had uh not quite a bank failure but a major bank scandal in germany where a bank that has been around since 1590 the baffin the german financial regulator they basically fired the top three executives including the ceo and said like we're replacing you because you are terrible and like it's baffin clearly had its eye off the ball and didn't know and panicked.

22:19And I don't think I can't name a good bank regulator anywhere on the planet right now. Bank regulation is definitely in a fallow period. The thing that gives me a little bit of reassurance is that we're still close enough to Basel III and the golden era of bank regulation following the financial crisis that a whole bunch of safeguards were put around the banking system that are still there. And if we don't tend those safeguards, things will leak out and it will get more dangerous slowly over time. But they're still strong enough for the time being that I'm not worried that the banks are going to be the cause of any crisis anytime soon.

23:03Felix Salmon: No, I feel like if anything, like all the golden age of regulation you just talked about, pushed whatever shenanigans the banks may have been doing into other weird corners. Yes. So maybe that's good. I don't know. I think that is good because, as we all know, bank failures are much more systemically dangerous than any other failure of a financial institution because if a bank fails, then depositors don't get their money. Bank can depositors that risk-free, information insensitive, you know, yada, yada. I think maybe we've come to a sort of general consensus here that Greenspan, his main failure was on the regulatory side rather than on the monetary policy side.

23:40Sure.

23:42Felix Salmon: and also liking and and do i say your name ayn rand there's a good sub stack that was i thought fun to read because i had just finished reading like all the laudatory obituaries of alan greenspan and i'm sure he was a nice man and everything and he was married to andrew mitchell whatever but this post sub stack from eric loomis just really takes the whole thing down and i enjoyed reading it. It reminded me of the old days of blogs.

24:08Elizabeth Spiers: I will counterintuitively say something nice about Alan Greenspan, which is that he was part of the Gates Commission, which eliminated the compulsory draft, which I agree with.

24:17Felix Salmon: But was that good really, Elizabeth? Yes. I don't know. Shouldn't the citizens have a stake in, isn't that a key part of democracy? If people really care about going to war, we wouldn't go to so many states and we vote. The slow rightward drift of Emily Peck is something. If rich people had to send their kids to war, we would not be in Iran at all.

24:42Elizabeth Spiers: Well, they can either pay more taxes or send a kid to war. They can pick one.

24:48Felix Salmon: I mean, some rich people have a lot of kids. Do you know what I'm saying? I'll just leave it there.

25:03Slate money is sponsored this week by Policy Genius. Right now, I am planning my summer vacation in Canada, where it's going to be cool. I'm not going to be sweating and sweltering. And I am going to be relaxing. And one thing I am not going to be worrying about is life insurance. Because who wants to be worried about stuff like that? You want to relax. You want to take all of those worries off your shoulders. Policy Genius makes finding the best life insurance for your family easier, giving you a more carefree summer. Policy Genius is an online insurance marketplace that allows you to compare quotes from some of America's top insurers side by side for free.

25:45They have a licensed team and they will help you get what you need fast so you can get on with your life. You find what you need easily. Coverage amounts, prices, terms, no guesswork, just clarity. With PolicyGenius, you can see if you can find 20-year life insurance policies starting at just$276 a year for$1 million in coverage. So head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you could save. That's PolicyGenius.com.

26:19Slate Money is sponsored this week by Upside, which is an app you can use to make those high gas prices, high grocery prices lower. You can get cash back if you're using the Upside app. I am a rational human being. I like getting credit card points. But if I can get cash back on top of credit card points, then what's not to love? This is one of those habits. It's just a handy thing to get into. It literally costs you nothing. It makes you money. you can transfer straight to your bank account. Over 100 ,000 participating locations means that once you start checking the app, you realize just how often there's an offer right where you're already going.

26:56Upside has given back more than a billion dollars to its users. So to find out how much you could earn, download the free Upside app and use promo code SLATEMONEY to get an extra 25 cents back for every gallon on your first tank of gas. That's an extra 25 cents back for every gallon on your first tank of gas using promo code SLATEMONEY.

27:22Hey, Pablo Torre here. As a sports journalist, I've covered global sports for many years now. And there is one thing that I can promise you. Nothing compares to the World Cup. And this time it is even better thanks to McDonald's. You have the chance to take home one of nine legendary cups when you order the FIFA World Cup meal. The cups feature some of the biggest legends in football, like David Beckham, Terry Henry, and Ronaldinho, Christian Pulisic, Lamine Yamal, and Alfonso Davies. Right now, get one of nine legendary cups when you order the FIFA World Cup meal only at McDonald's. At participating McDonald's, only for a limited time, while supplies last, all rights reserved, copyright 2026, McDonald's at the FIFA World Cup 2026.

28:07Emily, what would you like to talk about next?

28:09Felix Salmon: Well, you spoke of bank regulation and too big to fail. The biggest bank on the planet is going through some turmoil right now. So we could talk about that if you want. Certainly the biggest bank in the Western world. Boy, is there a bigger bank than JPMorgan Chase? In terms of assets, I think a couple of Chinese banks are bigger, yeah. China. China. But yeah, so Jamie Dimon, insofar as there was an heir apparent at JPMorgan, It was Marianne Lake and Jamie Dimon and or the board, we don't know exactly, basically took her to one side and said, you know. And so she peaced out. And now another couple of men have been promoted.

28:51So there's a new bake-off for title of heir apparent. It's either going to be like one guy who's in charge of the investment bank or the other guy who's in charge of the commercial bank.

29:00Felix Salmon: Doug and Troy. Doug and Troy, with a small chance that it might still be like one of the two other women, Jen or Mary. Mary or Jen? Mary. No, Mary's out. No, Mary's not out. No, no, Mary Erdos. Oh, sorry. Mary Erdos is in the third part of the bank, which is wealth management. And she, by all accounts, is doing a good job there. And she's kind of the dark horse. But yeah, the point here is that Jamie Dimon has been there for, I believe the technical term is forever. and it's very hard to do succession planning when you outlast all of your potential successes. There have been at least a dozen heirs apparent over the decades and everyone's like, well, Jamie says he's going to be around for the next five years so in five years' time, Daniel Pinto is going to take over, whoever the heir apparent is that week.

29:52And then five years later, Jamie Dimon's like, I'll be here for about another five years because Jamie Dimon is always around for another five years in much the same way as the Iran war is going to be over in two weeks. You know, it's like it's just a rolling time thing. And eventually, these people either just get sick of waiting or realize it's never going to happen. And so they get replaced. Or Jamie just gets bored of them because they've been around for so long. And they wind up shuffling off to run some other bank somewhere or count their millions or whatever it is they do when they leave J.P.

30:21Morgan. And someone else cycles in. And the question basically that faces the board of J.B. Morgan is a pretty simple one. They're basically saying, we love Jamie Dimon. If he could live forever, we would want him to be CEO forever. He's the best. He's the greatest. If he wants to cycle through a range of potential successes while he stays in charge, then he's in charge. And that's good. and succession planning is important, but it's less important than keeping Jamie happy for as long as he wants to be happy. And so I think what they've done is they've made a very conscious decision that this is bad for succession planning, but it's good for the company because Jamie is good for the company.

31:06Elizabeth Spiers: Yeah, I think you can sort of understand their dilemma because he's 70, which is not, you know, is fairly young in terms of when we see CEOs retiring right now. and he seems, you know, he doesn't particularly want to leave. He's doing a good job. And it's always going to be an inflection point when they do finally hand the reins over that involves some risk. So if you're on the board, you kind of do want him to stay as long as he possibly can while he's still doing a great job. He has also said explicitly that when he steps down as CEO, he will remain as executive chairman. And this, as long-term Slate Money listeners will know, is my great white whale.

31:45Like, I hate this job of executive chairman. I think no one should have the job of executive chairman. And if you are the CEO of JPMorgan Chase and Jamie Dimon is executive chairman, which means he is the chairman of the board, which means he is your boss, then you are not the chief executive. Jamie Dimon is still the chief executive. He's executive chairman. He's not just a chairman. He's an executive chairman. Therefore, he's an executive. and he's your boss of the CEO. Therefore, he is the chief. You know, anyway.

32:15Elizabeth Spiers: Is this what happened with Bob Iger? Was he the chief executive and then he got bounced back into the job whenever the succession? Yeah, sometimes the executive chairman comes back and kicks out the replacement CEO and comes back to be CEO a second time. Sometimes they don't, but either way, they're breathing down the neck of the CEO and the CEO does not really have full range of motion and the ability to actually own decision-making in the way that a CEO should. So, I hate the executive chairman idea. Hate. Hate. Hate. No one should be executive chairman. It's a terrible job.

32:49Felix Salmon: What about just for like a month or something, just to make sure everything goes well in the transition? Just, that happens. That's called chairman. That's why they make the distinction between executive chairman and chairman. That the executive chairman has a day job running bits of the company rather than just sitting on the board and overseeing the CEO. I'm okay with chairman. I just don't want it to be a negative. I don't want, because the minute the chairman has executive responsibility and can actually tell underlings what to do, like other than just the CEO, everything goes sideways because the underlings don't know who to report to.

33:27Felix Salmon: A more zoomed out thing is Jamie Dimon, boomer, age 70, won't retire. This is a problem that people like to complain about economy-wide, right? old people getting older as they do and refusing to retire and get out of the way of the next generation. And that seems to be part of what's happening here. He's Jamie Dimon is 70 years old. He's the David Remnick of J.P. Morgan. I mean, and his, the Doug and Troy, Doug is 61 and Troy is 56. So they're not exactly spring chickens. They're, they're also, I think 56 is like Cuspy boomer or not sure but um 56 is still gen x like marianne lake was or is 56 like she can still she is already juggling a whole bunch of job offers she's gonna do something big she'll be fine we're not worried about her even though she didn't get the little 30 million dollar retention bonus that everyone else got very nice by the way do we think that you gotta go if you're 70 what do you guys think do you think the boomers just gotta get the hell out so so we were talking a little bit about who did succession planning well.

34:38And the first thing, as we've discussed, is people who are willing to quit while they're ahead and don't want to just hold on for dear life as long as they can. So like James Gorman at Morgan Stanley is a good example of that. Morgan Stanley was doing fine. He's like, yep, I have this heir apparent, Ted Pick. He's good. I can let him take over. I don't need to be here forever. That is good. You need a certain sort

35:00Felix Salmon: of selflessness to do that tim cook 65 he was like okay but the flip side of that is on some level warren buffett who stayed in charge into his 90s also had a relatively successful succession it took a bit longer than anyone thought it might but he put these two guys in charge eventually one of them became the ceo the other one left as you would probably expect joined jp morgan actually and there is no indication that Buffett is like breathing down anyone's neck and second-guessing any decisions. I mean, he's literally too old. Like we're just lucky he is in fact breathing, right? So you can hold on into old age.

35:44But yeah, broadly speaking, we have this sort of gerontocracy in the Senate and in the CEO suite. Like if you look at that median age of CEOs, it has been going up for 20, 30 years. and it should start coming down. But yeah, I don't see any indication that it will.

36:04Felix Salmon: But is that a good, well, I guess you didn't really, you didn't answer. You're just, you're not taking a stand on it. No, I didn't. I took a stance. I said it should start coming down. That is what you believe should happen or that is what you think mechanically will happen? No, normatively it should, right? You want younger leadership. CEOs should step down for no reason other than that they have reached retirement age. And boards should be like, dude, you're 65. Can you like, you've made your money, you've made your mark, can you retire now? And they should be a little bit firmer about that rather than going, oh, but you're so good.

36:35We want you to stay on. Can you have a few extra million dollars? The norm that the CEO reaches 65 and retires, which was the case in the previous century, has eroded, you know, various medical advances, if nothing else. And the CEO classes are physically healthier now than they used to be. And they can operate at a high level past that age. And I can understand the argument that if I can, why shouldn't I? But yeah, no, I do like the idea that senior ranks of companies should be a little bit younger than they are.

37:09Felix Salmon: There was an interesting study I wrote about earlier this year that said one of the reasons CEOs are getting older is because a good chief executive officer needs to have a varied experience. Like, for example, like these guys at JP Morgan, like one was mostly has trading experience. So now he's going to the commercial banking side to get experience there because you want to like understand the whole operation. But I believe what the study found was that that's harder for executives to get now because they like bounce around more, but they bounce around in the same narrow field. It just takes them longer to get the broad diversity of experience they need to become CEO.

37:50Felix Salmon: I mean, isn't it good for an older person to be in charge? Because they're more, that was part of this study too. Like the older leaders tend to be more measured. They tend to be less volatile, more of a steady hand. So if the archetypal Gen X CEO is Elon Musk, then yeah, we can do it with less of that. Yeah, maybe it's fine for them to be old. I don't know. I think what we do have right now is the manager CEOs who are hired to do the job tend to be older. And the founder CEOs who build companies tend to be younger. And that's a weird sort of two-track system. And I do think that at some point we want a little bit of convergence there.

38:40Cool. That's fine.

38:41Felix Salmon: Everyone's getting older anyway. Every single person on the planet, Emily, is getting older. Yeah, that's the solution. We should all just be able to get younger rather than older. Can you imagine? Well, imagine we could live to 200. Some CEOs do. Oh, are we going to talk about Massasol? Is that your segue? Yeah. Yeah.

39:16This episode is powered by AT &T Business. For every small business owner, there's a moment they remember when they realized they wanted to start their own business. It can be a life-changing moment, but those first steps are never easy. Figuring out the right building blocks, your goals, your schedule, your mindset, you have to think about an entire ecosystem. Not just the big stuff, but the little bits too. In this day and age, a major point for any successful business is strong connectivity. Spotty internet has led to some terrible work calls in my life, But when you're running a business, connectivity can make or break you.

39:44AT &T Business has the tools, team, and expertise you need for a reliable network you can depend on. They make connecting easy, and that's the main thing you want in a provider. Less time stressing, so you can focus on the million other things on your plate. Can I hire more people? Should we get a bigger office space? Don't lose sleep over the small stuff. Keep focusing on the big things. AT &T Business built to work. Get AT &T Business at business.att.com. slate money is sponsored this week by lisa which is a mattress company and makes genuinely really comfortable and great mattresses i have one myself and i have been tracking my sleep and every morning i wake up and it says oh my god you slept so well you fell asleep in three minutes and you didn't wake up once and it was awesome and i have to say on some level you have to credit the mattress with some degree of that because if you're on a lumpy crappy mattress you're not going to sleep well if you're on a good mattress you're going to sleep really well it cannot remotely operate without having enough sleep it is why i hate traveling internationally it's sleep disruption stay at home get a good mattress get nine hours of sleep and you can conquer the planet lisa has a full lineup of beautifully crafted mattresses tailored to how you sleep each mattress is designed with specific sleep positions and feel preferences in mind.

41:06So go to Lisa.com for 30 % off select mattresses as part of the July 4th sale and get an extra$50 off if you use the promo code money. That's just for you guys. That's L-E-E-S-A.com promo code money for 30 % off plus an extra 50 % off. And when you use that code, you're supporting Slate Money too. So Lisa.com, promo code money. Massa-san had one of his wonderful slide decks this week, and I would highly recommend you check it out because it is glorious. But the slide deck starts with, I was going to retire, and now fuck that shit.

41:52Felix Salmon: Yeah, it really is related to our conversation. It really does flow nicely. Master Son will never retire. I mean, this is obviously true.

41:59Elizabeth Spiers: Why would he? So what we're talking about is the new Stop Inc slide deck. And Son has a reputation for putting out these crazy decks. But maybe because this one didn't land on time, I thought this was satire for at least three hours. Even knowing that he puts out crazy slide decks. Eggs don't lay eggs, Elizabeth. Back in 2014, he made this argument. but I think he just, the AI pictures are just so much better this time than they were in 2014 that it went more viral. I'm not quite sure. So yeah, Massasson's argument, and this is also related to Warren Buffett. Massasson's argument is that on some level, he's a fund manager.

42:44People give him money. He invests money in companies. The companies do well. And so then his company does well just like Warren Buffett and I think he has quite explicitly considers himself to be like the Warren Buffett of Japan what he then goes ahead and says in a way that Warren Buffett never did was I am the goose that lays golden eggs Warren Buffett would never talk about himself like this

43:09Elizabeth Spiers: he would never I think we have to explain that this was part of the slide deck that son made that had a bunch of illustrations that you're absolutely gonna have to go to the show notes and look at the deck to understand the full kind of picture. The awesomeness of it. He's like, look, I have laid three golden eggs, you know, and his arm is one of them and whatever. It doesn't even matter what they are. And he's like, you are valuing my company at less than the value of the golden eggs. And this is true. Like the value of SoftBank, the market cap of SoftBank is lower than the value of the shares that SoftBank owns.

43:51There's a massive discount. And he's like, this is dumb because not only should you be valuing the company at the value of its holdings, you should be valuing the goose. Eggs don't lay eggs. This is my favorite slide in the whole thing. Geese lay eggs. If you are a goose that has the ability to lay golden eggs, you should be valuing that. you should be valuing SoftBank not at a discount to its holdings, but at a premium to its holdings. And he's like, I'm going to create$6 trillion worth of value over the next 16 years. So you should bid SoftBank shares up to the point at which you're pricing in some of that future value creation because I am a goose that lays golden eggs.

44:37Felix Salmon: Makes complete sense. And so here's my question for you, Emily. Is Marcisson a goose that lays golden eggs? And should that be valued? I don't believe that he lays the eggs, Felix. Thank you for asking. I think his metaphor analogy is good. What matters is not the eggs. Eggs don't lay eggs. These are facts, okay? Eggs don't lay eggs. I know that. And I'm glad he told me, frankly. but softbank does not lay eggs softbank buys eggs right it goes out and it finds interesting eggs and it it purchases purchases the eggs it doesn't lay them it doesn't create the eggs soft bank has a big stake in open ai i believe didn't didn't it lay we work we work could not have happened without stuff back.

45:30Felix Salmon: Yeah, and that was a stinky egg. Okay. But yeah, I think it overstates it to say that they're laying the eggs when they're really just buying the eggs.

45:39Elizabeth Spiers: To extend the metaphor, though, if using this analogy, Son is the goose and he has all these eggs, and Son is what's bringing down the value of these eggs according to the market, you should maybe just get rid of the goose, right? The market, no, is not saying that Massa is bringing down the value of the eggs. But they are implying it because anytime a fund is trading at a discount to its net asset value, the problem is they're really betting on the fund manager and their future judgment, you know, because they can already evaluate how much the assets are worth. And they've decided that the fund is worth less.

46:15Yeah, yeah. They're saying that the soft bank is trading at a discount to its assets, but they're not saying that the assets are worth less because

46:21Elizabeth Spiers: they're owned by massa the the value or lack of value is in the fund and the fund manager not the underlying assets exactly so they so the market has never really rated massa as a fund as a goose even though as his um slide deck shows he has actually been quite good at being a fund manager like he made that massive bet on alibaba which turned to be turned out to be great he's made this massive bet on ARM, which turns out to have been great. What's interesting to me is that if you look at the sort of substance of the deck and like his vision for the future and where the six trillion dollars of value is going to come from in the future, his thesis is basically the Elon thesis, the Tesla thesis, which is it's all going to be in humanoid robots.

47:11Humanoid robots are going to go out and do all of the jobs that are too dangerous for humans to do or that there just aren't enough humans to do and that is going to cause a massive productivity get boost and everyone's going to make trillions of dollars and he is saying that soft bank is positioning itself for this future of what he calls artificial super intelligence and that's interesting to me and maybe it is but i feel like if we do get intelligent humanoid robots they're either going to be like their base case scenarios are going to be chinese and the second case scenario is that they're going to be Tesla.

47:48And I'm not sure that SoftBank is going to be involved either way.

47:53Felix Salmon: I don't know. I mean, we're definitely going to get humanoid. I hate that word, humanoid robots. I think NVIDIA this week announced new chips they're making for a humanoid robot. They don't call them humanoid robots. They just call them humanoids. I just, can we find a different, I mean, wasn't robots a fine term? I don't know. But yeah, you may be right. I don't think it's clear yet who comes out on top of the humanoid revolution.

48:17Elizabeth Spiers: I think contextually, though, it's important to note that Son has always, in his decks, predicted these incredibly sci-fi-like things that are going to happen. And sort of just in a stop clock way, some of them probably will. But if you go back to his 2010 deck, some of his predictions are brain computers. And one slide says, bring brain computer to life. we have that now cloning yeah it's the thing like he is basically elon it is neural link to some extent but he in the 2010 deck he also says he thinks humans will be able to communicate via tele telepathy this way that's true um i i can read emily's mind that's that's true i also love he he articulates softbank's values and number four is think till our brains crush that's what i do to prepare for slate money you don't want to be near emily when her brain crushes it's It's a sight to behold.

49:09Felix Salmon: What matters is not the eggs. I also disagree that eggs don't lay eggs on a certain way. I think that one of the...

49:16Elizabeth Spiers: Oh, longer term, I guess they do. I guess that's true. Like, NVIDIA, the most valuable company on the planet, has spent the past five years laying eggs, and has done very well at it. Like, all of these great AI companies that are being birthed in a very large, meaningful way have been birthed by NVIDIA. NVIDIA has...

49:34Felix Salmon: NVIDIA is a goose. Well, it's also an egg. which came first which came first the goose or the egg but if an egg becomes a chicken it does in fact play eggs after that it depends on what kind exactly nvidia is an egg that became a chicken right so they're like the fertilized eggs so you have to make that distinction we can we move on to the numbers round because i just had one more thing i wanted to say which is i like these slide decks that are just fun instead of being all nerdy with like data and like incomprehensible charts.

50:07Elizabeth Spiers: This is just incomprehensible generative AI. They're like little poems. There was that wonderful one, I put it in my newsletter back in 2020, where he showed unicorns descending into the valley of coronavirus and then flying out on wings. I'm like, unicorns on wings! Yes! We need more whimsy in our investor updates.

50:36All right, now we can have a numbers round. As a German, I'm going to kick off with 59, which is the percentage of Deutsche Bahn trains that were on time in February. Deutsche Bahn, of course, being the railway passenger rail system in Germany, the biggest passenger rail system in Europe, if not the world. Well, not as big as China, but definitely in Europe. and this country that is famed for its efficiency and punctuality is just i mean it has become a national joke it is terrible the news hook here is that on tuesday night the entire system just ground to a halt not a single train moved for over two hours and it took them forever to recover from it and the reason was that the whole communication system that keeps deutsche man going that so that everyone knows where the trains are and all of that is built on 2g remember 2g from like cell phones like a million years ago it's all built on 2g and they were trying to like roll out a software update or a patch or something and the whole thing just broke and they're literally buying old 2g companies just so they can keep on producing the old components so that they can keep on trying to patch this 2g system and eventually they'll move to 5g but apparently that's not going to happen until like 2037 or something yeah it's so um so should germany just bring back

52:04Felix Salmon: fascism to get the trains to run on time is that what you're saying felix no is that the between the lines that's that's the emily take right bring back the draft bring back fascism and yeah exactly no i'm just saying like it is a bit of a national embarrassment and lots of people are talking about how what a shit show the united kingdom is but other countries are kind of falling apart as well Yay. All right, Elizabeth, what's your number?

52:31Elizabeth Spiers: My number is 11, and that's a dollars. And that is how much parents have to pay, or did have to pay on Ryanair to sit with their children. And Ryanair also required parents with children under 12 to sit next to them. But in order to do that, you had to pay this child tax. So people are mad about it, and Ryanair is being forced by the courts to roll it back. I mostly think that's bullshit, but the fee, not the courts rolling it back. But then I also deal with this problem every time I fly with my kid, where we always get assigned seats at the last minute, especially on smaller airlines. And then you have to go through this epic process of either trading seats with somebody or changing tickets at the gate.

53:12Elizabeth Spiers: Because the system will not let you just say, I'm traveling with a 10-year-old. Can you just automatically put me next to them? It just doesn't work that way. So I would probably pay$11 just to not have to deal with that. I've heard people talk about this a lot. Normally when I book a plane ticket, it offers me the opportunity to book my seat when I book the ticket. Do you not have that opportunity? It depends on which class you're flying in. If you're flying economy, it usually doesn't. If you're flying economy, plus you can. I fly economy. I'm not that rich. There's something called basic economy where you can't choose your seats.

53:49If you fly basic economy, at that point, the whole reason why basic economy is not economy is that you don't get to pick your seats and if you're flying with a kid then you do need to pick your seats therefore you should be flying economy and not basic economy that's like it's the american airlines way of charging 11 to sit together only instead of charging 11 as an extra fee to sit together they just have a discount for

54:14Felix Salmon: not sitting together brian air seems like they messed up what a lot of companies are really good at, which is like hiding fees in clever ways, maybe. What an outrage. Outrageous. Emily, what's your number? My number is$1 ,299. Is that a price in dollars? Yeah, it's$1 ,299. That is the new price of the MacBook Air 512 GB, because Apple announced this week that it was doing these quite substantial price hikes for its computers. Yeah, like 20 % in some cases. Yeah, 20%. And the reason is, and we've talked about it before, the surge in demand for storage and memory in computing because of AI. So everyone talked about the AI job apocalypse.

54:57Felix Salmon: But what has happened instead so far is the AI inflation apocalypse because this is AI inflation. AI has driven up demand for memory and storage chips. And that has raised Apple's costs so much that it is now passing on these quite big price increases to everyone. I bought myself a Mac Mini in January, and I went back yesterday to see how much it would cost today. It's not even offered anymore. I bought this Mac Mini with 32 gigs of RAM. You can't even buy it with 32 gigs of RAM anymore.

55:27Elizabeth Spiers: Yeah, I think that's because everybody was using that, the power agent, the agent of AI. It's not just computers. If you look at the Xbox, Microsoft has raised the price of the Xbox three times in 13 months. the basic Xbox that was$500 when it was released is now$800. This is the first time in my lifetime, or possibly ever, that consumer electronics have gone up in price.

55:55Felix Salmon: iPhones are going to get more expensive too. And that's, yeah, so far. And this point was made, I heard it first from the wonderful Axios' own Courtney Brown, who came to that epiphany yesterday and has a story out on Friday about it, that AI is leading to inflation instead of job loss, which is interesting. Yet more reason for Kevin Walsh to raise rates. Or not. Maybe that's productivity, right? Sometimes inflation comes from productivity.

56:20Elizabeth Spiers: We'll never know because he's going to be very vague about it, a la Alan Greenspan. Alan Greenspan. I think that's it for us this week. Thank you for listening to Slate Money. Thank you for emailing us on slatemoneyatslate.com. Thank you to Jessamine Molly for producing. And if you are one of the elite, one of the beautiful, one of the fabulous plus subscribers, we have a Slate Plus segment for you about meme stocks and what on earth is going on with Hertz, which is kind of wild. So if you want to nerd out about convertible arbitrage, that's happening over at Slate Plus. Otherwise, thanks for listening, and we'll be back next week with more Slate Money.

57:29accounting firms, and small to medium-sized businesses. What does that mean? It means they help businesses pay and get paid by ACH, JET, credit card, wire transfers, you name it. It's secure. It has AI-powered accounts payable automation that erases the busy work from capturing invoices and processing payments. It syncs seamlessly with accounting software. It does your 1099 tax filings, you name it. It's an end-to-end workflow. Its customers come from all industries ranging from startups to established brands and nonprofits to accounting firms themselves. When business owners choose Bill, they aren't guessing.

58:06They're choosing infrastructure that is already proven by millions of users and over a trillion dollars in secure payments. Bill doesn't just move money. It enables the business's entire accounts payables workflow and it creates the ability for them to control their financial operations securely and at scale. So talk with a payments expert at bill.com slash proven and get a$150 gift card as a thank you. That's bill.com slash proven.

58:54He's got Davies at the table just behind him. Davies going for his collectible cup. Oh, no! A steal by Henry, who pulls his own collectible cup. Collect one of nine legendary cups with a FIFA World Cup meal. At participating McDonald's for a limited time. While supplies last, all rights reserved. 2026 McDonald's at FIFA World Cup 2026.