What Do You Pay the Man Who Has Everything?

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2:06Hello and welcome to Slate Money, your guide to the business and finance news of the week. My name is Felix Hammond. I'm at Bloomberg. I am joined this week as ever by Emily Peck of Axios.

2:22Felix Salmon: Hello, hello. And Elizabeth Spires of The New York Times. Hello. And we are being featured in Apple Podcasts' Learn Something New collection. So if you found us through Learn Something New, welcome. We're very glad that you're here. Every week on Slate Money, we basically pick three of the biggest stories in business, finance, and economics. And we explain what they mean. And we unpack the news behind the news. And we sometimes nerd out. This week, we're going to nerd out on litigation finance. But we're also going to talk about Elon Musk's pay package. We're going to talk about antitrust and Alphabet and Google and ChatGPT.

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3:42So welcome. And here's the show.

3:50so we normally leave the numbers round for the end in this show but i think we're going to start with the biggest number that has caught all of the headlines this week which is one trillion dollars say that with your pinky in the side of your mouth like dr evil which is the headline value of the stock award, which has been mooted by a special committee of Tesla's board, which is two women, that they want to pay Elon a trillion dollars, assuming he meets various goals, which let's be honest, he probably won't meet. But it's a very large number. And it's so enormous that it wonderfully manages to dwarf the$30 billion pay that they just voted to give him for like his prior performance.

4:42And suddenly like 30 billion seems positively reasonable in the context of one trillion.

4:48Felix Salmon: How, help me conceptualize. No, really help me conceptualize a trillion dollars. What is the size of US GDP? It's hundreds of trillions, right? Yeah, a hundred. I don't think it's, I don't think we've reached 200 trillion yet. Like would it fill how many swimming pools? Does it reach to Mars? Like make me understand. There is probably a country we could reach for that has a trillion dollar GDP, right? Well, I mean, let's not confuse stock and flow, right? Let's not. The first thing that I hate more than anything else in financial journalism and punditry is when people compare a stock of a trillion dollars to a flow of a trillion dollars.

5:27A trillion dollars a year is vastly more than a single stock holding that is worth a trillion dollars. Let's put it this way. The target that Elon has for what they call adjusted EBITDA, if he manages to hit all of his goals, is that Tesla's adjusted earnings need to be$400 billion per year. Right now, to put that in context, Tesla's adjusted EBITDA is somewhere in the region of$15 billion a year and falling. So that would be a massive increase in cash flow. But even if he hits all of these goals and gets the trillion-dollar award, Tesla isn't making anything close to a trillion dollars per year, even in earnings.

6:15so the trillion dollars is the value of the stock because he has to reach certain market cap goals as well and in order to get the full trillion dollars the market cap of tesla would have to reach eight and a half trillion dollars which is you know more than meta and microsoft and alphabet combined you know it's double what nvidia is worth right now which is the most valuable company in the world so what is the point of offering him this pay package if it's that out of reach. So the point is precisely that he is not motivated by like, oh, we'll give you, you know, an income. He's already the richest man in the world, right?

6:54And so what he is motivated by is like crazy audacious goals. And the last pay package in 2018 was equally audacious. It felt as unrealistic then as this one does now.

7:06Felix Salmon: And he met it. And he ended up meeting all of those goals. Right. So it's audacious and it's wild and no one really believes it's possible, but that's what they said last time. And so he is going to be motivated is the idea to hit these goals. And also most importantly, this is the way to give him the 25 % shareholding in Tesla that he has always said that he requires in order to stay at Tesla and have like the requisite degree of control. He's always said that if he doesn't get his more stock in Tesla, then he's not invested enough in Tesla to care and he'll spend more time on XAI or Neuralink or whatever other Mars colonization hobby he has.

7:52Felix Salmon: I guess I'm surprised a little bit that they are this desperate to incentivize Elon Musk to stay at Tesla at this point, because we know that Tesla isn't doing very well this year because of Elon Musk. In Europe specifically, Tesla sales are down quite a bit. Yeah, like more than half in Germany. But let's be clear about this. The job of the board of directors is not to make sure that Tesla sells a lot of cars in Germany. The job of the board of directors is to maximize shareholder value for the shareholders of Tesla. And Tesla is worth, give or take a trillion dollars right now. And in terms of shareholder value, in terms of the amount that the shares are worth, in terms of the amount that the company is worth, Elon is completely irreplaceable.

8:48Compared Tesla to any other car company, it's worth, you know, it's worth more than all of the other car companies in the world combined, basically, right? And on the basis of selling almost no cars compared to all of the other car companies in the world. So like he's doing something right in terms of creating shareholder value. And it kind of stands to reason that if he were to leave, then Tesla would start trading like a car company instead of some kind of Elon meme stock. And it's only the fact that it's trading like an Elon meme stock that's giving it any value. Well, but he also more recently has destroyed shareholder value.

9:23So how No, he hasn't. This is exactly what I'm saying, is that the stock is trading at like$350 a share. It's worth a trillion dollars. It's massively valuable. I don't see a lot of destruction of value there.

9:35Felix Salmon: Actually, the stock is up, as we're speaking on Friday morning, it's up about almost 5 % on this news, which is kind of wild to me. Elon has undoubtedly hurt Tesla's revenues, but I don't think you can make the case that he's hurt its share price. That is so interesting. Well, its peak this year, though, is, let's see. I mean, it's a volatile stock. Tesla is always down from its peak, but it's clearly up from massively, like orders of magnitude up from where it would be sans Elon. This is also, if we remember, we spent at least one, if not more episodes talking about the Delaware court case, which voided Elon Musk's last outrageous pay package.

10:14Felix Salmon: And much ink was spilled over like the audacity of that pay package, the power of the Delaware court. in the end they're offering him so much more money than last time i feel like it's just a little indicator of how powerless the courts can be when it comes to this kind of thing and we're going to talk about the google antitrust case because it kind of just puts me in mind of the sort of inability to rein in we are also going to talk about the google antitrust case and yes you're right they rhyme the point about the delaware ruling was not this pay package is too big. Therefore, I am striking it down.

10:51That's not what Kathleen McCormick said. What she said was Elon basically paid himself that money that the board wasn't independent enough and shareholders weren't aware of the ties between Elon and the board that basically led to him getting what looked like a very sweetheart deal from the board. In this case, one of the reasons that there are only two members of the special committee is that they're being very careful in terms of dotting the I's and crossing the T's to make sure that this is all done in accordance with law. And of course, now that Tesla is based in Texas rather than Delaware, they don't need to care about Delaware law for this one.

11:28They only need to care about Texas law for this one. And everyone just assumes that Texas would never rule in the same way that Delaware did about the pay package. So, you know, I do think it's basically a foregone conclusion that shareholders are going to approve this package, partly because it costs them nothing unless Tesla completely source in value. And if Tesla source in value, then they're super happy. You know, like he gets nothing under this package unless at the very minimum Tesla doubles in value to$2 trillion. And then there's a whole bunch of other, you know, real world, like the EBITDA needs to go up from 15 billion to 50 billion just to get the first tranche, which is 1%.

12:09And then what happens is he gets like restricted stock that he can vote, but he can't sell. And in order to be able to sell it, he needs to stick around for seven and a half years. In terms of the structure of the award, I think it is structured quite intelligently. It's just the number of zeros that are completely insane. You know, it's like 400 million shares or something. It's like no one in the history of capitalism has ever been paid so much, even potentially.

12:37Felix Salmon: When you don't have any money, the bank is like taking more of your money, charging you more fees. Like if you've ever had like a balance in your bank account, that's either like$10,$20, you know what I mean? They're always taking more money. It takes over your whole brain trying to work out, yeah. Yeah, so if you have very little money, every financial institution in the country is like trying to take whatever little bit you have away from you. But if you have money, people are just falling over themselves to give you more. Like once you have a certain level of wealth, It's coming in from all sides.

13:06Felix Salmon: And Elon Musk is, of course, I believe, the richest person in the world. And so the rule is ever more hyper true for him, that he is just being given more and more and more money, or the potential to have more and more money. This is super interesting because he's actually kind of unique in that he's the only ultra-rich centibillionaire that I can think of who cares about his pay package and wants to get paid. Yeah, right. The rest of them get like a dollar in salary. Yeah, exactly. Jeff Bezos, Mark Zuckerberg, Sergey Brin, Larry Page, Bernard Arnault, you name it. All of them are like, I own my company.

13:42And then if the company goes up in value, I get rich. But they're not like twisting the arm of the board saying like, you've got to give me a massive pay package for doing my job as CEO because I'm already incentivized because I own so much of the company. This is strange. But it's very in keeping with his personality and ego. He enjoys being the richest man in the world. and if you could make him 10 times richer, he would consider that bigger bragging rights. I think he's just motivated by stuff like that in a way that other people aren't. I think you're right to a certain extent that part of it is just he likes being the richest man in the world and having that bragging right.

14:17But I do think another part of it is that he genuinely, insanely but genuinely, considers his entire life's project to be to colonize Mars.

14:33Felix Salmon: the buildup for that i was like this is going to be a deep like psychological something yeah this is going to be like a big theory that we've never heard before but no he really does look at all of these companies and all of the stuff that he's doing as like means to an end and the end is not like being rich the end is colonizing mars and if you want to colonize mars then 100 billion dollars you know large sum as it is doesn't get you very far you know being a trillionaire is something that might actually come in handy if you want to colonize Mars. Well, if you want to colonize Mars, it makes no sense to run Doge and then just destroy all the federal infrastructure that helps with research around that.

15:13So good point. Yeah, maybe. Like, no one has ever said that this man is internally consistent. But I do think that is why he wants to become, you know, an order of magnitude richer than he already is. I don't think there's any other reason why you need or want that. I don't think he's that principled. Jeff Bezos famously an interview to Matthias Döpfner once, and Bezos was at that point probably around that rich. And he just comes out and says, I have so much money that the only thing I can really spend it on is space exploration. So that's why I'm doing Blue Origin, because like, what else is there to spend money on other than - Like curing cancer, ending poverty.

15:56Felix Salmon: I mean,$1 billion, I think people have become like numb to it. Right. $1 billion is how many millions of dollars, Felix? A thousand. A thousand million dollars. Like anyone would be happy with a million. Like to think about a trillion dollars, a thousand billion dollars, like that is inconceivable to me. So Elon Musk and I think Adam Neumann are the two people who have sort of come out and basically said, yeah, I want to be the world's first trillionaire. But I'm old enough to remember when Apple hit a trillion dollar market cap for the first time, which means that all of the shareholders of Apple in the entire world, if you took out all of their shareholdings together, it was worth a trillion dollars.

16:38And everyone's like, holy moly, that's crazy, a trillion dollar company. But a trillion dollar company, you know, we've kind of got our brains around that at this point. There are four or five of those. But a trillion dollar individual is wild.

16:50Felix Salmon: A trillion dollar company, and we could argue about it, but has value for the society, for the U.S. economy, for the economy writ large. It's employing people, right? It's making a product that people value. But a trillion dollar person is not offering value to the economy, the society, anything. It really is just a question of wealth allocation. Like NVIDIA is worth$4 trillion, right? Which means that if you add up the wealth of all of the NVIDIA shareholdings, of all the NVIDIA shareholders in the world, it comes to$4 trillion. If Jensen Huang owned 25 % of NVIDIA, then he would be a trillionaire.

17:29He doesn't, so he isn't. But, you know, conceptually speaking, It's just a question of like how that NVIDIA stock is distributed among NVIDIA shareholders. And if you distributed it in a slightly different way, and probably if Jensen Huang had really wanted to retain massive control over NVIDIA and been more Elon-like, he might have been able to retain the 25 % shareholding. Who knows? But that's like how you become a trillionaire is by owning, well, in Elon's case, you know, like a 12 % stake in an$8.5 trillion company.

18:03Felix Salmon: Well, right now, according to the Wall Street Journal, his wealth is at$423 billion. So he's basically poor. Good luck to him. And I hope he's okay. I don't know. He's always shitposting on X. It's hard to tell. I just want to do a little bit of mathematics here. Because he famously basically gives$30 million to each baby he secretly sires just to make sure that the baby is fine. I feel like 30 million is a sensible amount of money to give a baby as a birthright. You know, it'll set you up for life. It's all you really need. That's like when I was born, people gave us like$100 little bonds. You know, I remember when I turned 18, my dad was like, here are your bonds.

18:46And he's worth how much this is? 435 billion?

18:50Felix Salmon: 423 billion. And then if you divide that by 30 million. He's using his calculator. I'm using my calculator. Jessamyn should find some music for this, like beep, boop, beep, boop, beep, boop. He could have 10 ,000 babies, give them$30 million each, and still have billions left over. Well, so I give him ideas.

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21:47let's stick on this subject of globe spanning mega cap technology entities and talk a little bit about alphabet which the courts have ruled is a monopoly and this week we had the remedy phase of that case where they're like you are a monopoly and therefore what you need to do is, Emily, what do they need to do?

22:14Felix Salmon: It's like, you've been convicted of murder and you need to say you're sorry, basically. And share your murdering tactics with other competitor murderers. Tell other people how you do the murder. So Judge Mehta told Google it could no longer require exclusivity if it made Apple or another tech company make its Chrome browser the default browser. Or its search engine, the default search engine. Or its search engine, the default search engine. It couldn't require them to only use that search engine or browser, but it could still get paid gobs and gobs of money for giving Apple or another company the right to use Google search as its default search.

23:00Felix Salmon: I don't think I said that in a very clear way, honestly. Basically, if you open up the default web browser on your phone on your iphone which is safari and you type a search term into the safari bar what safari does is it do you like the way that i say safari bar safari bar how would you say it safari bar you're much more rotech than i am safari bar depends depends on the day you type your search engine into the safari bar and then the thing that comes up automatically is a Google results page. You don't need to navigate to Google to then type in the search term. You just do it like within the browser.

23:41And it's good. I mean, that is good. You don't need to do that extra step. It's, you know, labor saving at sign. But that deal is apparently worth$20 billion a year to Apple, something like that. Google pays Apple billions and billions of dollars a year for that magic to happen. Because obviously that magic is incredibly valuable to Google and all the traffic goes to Google and Google can then monetize that traffic in a bunch of different ways. And I think the ruling is basically saying, yeah, you can't force Apple to make Google the only option. You have to allow them to offer other search engines that people can choose instead.

24:17But who is going to do that?

24:19Felix Salmon: That doesn't make any sense. That doesn't make any sense. You have a default. You want to search something on your iPhone. Your Safari comes up, you press search, like, what is it going to say? Like, do you want to search on a different search engine? No. It's going to give you the option. Apple is going to be like, do you want to switch to Bing? No. And no one is going to want to switch to Bing. They're going to bury that option in the preferences. It's going to take like 50 clicks to get there. It's going to be just like having to unsubscribe from something. They're not going to make it easy.

24:46Felix Salmon: It's basically like the judge is like, keep doing what you're doing, but just don't do it as clearly as before. That's what it seems like to me. Yeah, it's definitely a slap on the wrist. And the interesting thing about this ruling is that the judge was very, very cognizant of the fact that it's a slap on the wrist, and he's not really imposing much of the remedy. And his stated reason is super interesting, which is basically the remedy has already arrived. The remedy is chat GPT. The remedy is AI. What we want as a matter of public policy is for Google to face competition. And there's not much I can do to force Google to face competition, because there is not much competition in search.

25:28Like, there's no number two search engine which has any meaningful market share. But that's okay, because even though I'm kind of incapable of constructing a decent remedy that would solve the problem, the market has come up with a remedy that has solved the problem in the form of chat GPT and other AI chatbots, which are doing a very good job of competing with search. And so, hey, isn't this handy? I don't need to do anything because the market's already done it.

25:55Felix Salmon: Yeah, I don't think he's wrong either. ChatGPT has taken up a good amount of search traffic. And I believe search on Google has declined this year as more people, hundreds of millions, turn to ChatGPT for search. Speaking for myself, you know, ChatGPT reminds me of early Google. Yeah. Google circa 1998 or whatever, where it was just a clean white page and you type in a question and actually what you want comes up rather than this cruft, encrusted, inshittified Google that we have today, which is, you know, you go to the Google homepage and it is not the beautiful white Marissa Mayer clean minimal thing.

26:31It is full of news stories. There's a million different buttons you can press. There's AI results, you know, all over the place. And the whole thing is just less useful, much less useful than it was 20 years ago. And ChatGPT has come in and taken that, like, we're going to do something which gives you what you want cleanly and without ads. And that's amazing. Well, two things. One is that they could, you know, revert to a kind of homepage where they're using Gemini in the same fashion. And then the other thing is that if you're a power user of GPT, you are paying$20 a month and people don't pay anything for Google.

27:04You know, I feel like the judge is intuitively right about this, but what they could do with Gemini would sort of moot that a little bit, right? Well, I mean, in terms of the, some people pay for ChatGPT, sure. Some people pay for all manner of products. The overwhelming majority, like more than 95, I think more than 99 % of ChatGPT's users pay nothing. And they get a really good experience, which is super clean and ad-free.

27:29Felix Salmon: Elizabeth, what you're suggesting is that Google could create a ChatGPT-like product using Gemini. But if it did that, wouldn't it be cannibalizing its search engine revenue and profit, which is like far outpacing anything? They've already made a strategic decision to do that, though. If you use Google, your first results are always whatever Gemini is producing, and it has destroyed traffic to publishers. The thing where Google has the monopoly is search. And if you are a for-profit company and you have a monopoly in something, then you're going to lean into your monopoly. And yes, they are doing AI and they're talking a lot about AI and they have this thing called Gemini that no one really believes is the world's best AI.

28:12And it gives results that are kind of not particularly reliable. And one of the reasons why they didn't roll this out years ago, which they could have done because they bought DeepMind, they had the technology, is precisely because they always considered themselves to be this company that was devoted to giving people true information. And then ChatGPT made them realize that no one cares about what's true anymore, ChatGPT and Donald Trump. And so like now they're just like, okay, we'll give you the AI result and it'll be true most of the time. And people are okay with that. And yeah, Google will evolve.

28:47The product will evolve. The search product will evolve. But I think Judge Matter's point and Emily's point is just it's not going to be a monopoly anymore. You know, the dominant AI chatbot is ChatGPT. It is not Google. And is it possible that Google will be able to out-compete ChatGPT? You know, ChatGPT has first move for advantage, but we've seen over and over again in technology that that only gets you so far. Yeah, it's possible. But now we are in a world of competition, right? And that is what monopoly law is designed to create, is a world of competition. And so like what the judge is saying, it's like, okay, now we're competing.

29:27There was a monopoly. Now we're competing. So problem solved.

29:30Felix Salmon: All the anti-monopoly groups, they were very upset, you know, blasting the ruling. We said slap on the wrist, blah, blah, blah. So, I mean, is it enough to just be like, well, problem solved. The free market solved it and we don't need to do anything. Like this company was allowed to have a monopoly for whatever it was, 20 years. And, you know, good on them. Now they have competition. It's fine. The suit was dumb. I think they're right that it's certainly bad in terms of there's no deterrent effect in terms of like if a company wants to be an evil mustache twirling monopoly, they look at what happened to Google and they're like, yeah, no one in government is going to do anything terrible to me in terms of a remedy.

30:15Even if they find that I am a monopoly, the remedy is going to be a slap on the wrist. The last time there was a real remedy was probably when Mar-Bell was broken up in the early 80s. So I think that point is well taken, that this doesn't deter people from monopolistic practices. But by the same token, it's really, really hard for me to even conceptualize a remedy that would have worked and that would have created real competition. If you're looking at big tech cases in 2001, there was a Microsoft suit. This is probably the biggest remedy in big tech company that prevented Microsoft from imposing contracts on PC makers.

30:56But that strikes me as a just radically different situation than what we have now, where almost any major tech company can design right up to the edge of whatever the remedy is. And the courts are not fast enough to kind of deal with that or react. The Microsoft ruling was a slap on the list as well.

31:12Felix Salmon: Although it was enough to give Google the room it needed to grow its Chrome browser. Yes. We had this discussion already on the show about whether the Chrome browser is a particularly important part of Google. But it's open source. Anyone can create their own Chrome browser. The reason why it's valuable is because it links into all of the other bits of Google. Yeah. But the Microsoft antitrust case, I think, is considered successful in that it opened the door for Google to compete and then build and grow its monopoly. So maybe one day we'll look back on this ruling and be like, this was successful because it let ChatGPT build and grow its monopoly.

31:48Felix Salmon: And when we log into the chat to record Slate money from my retirement home in 20 years, we can talk about ChatGPT and its antitrust case that was filed by the bots that run the U.S. government. You mean our bot personas can log in? From Mars. Exactly. Oh, but Felix, you wanted to make the point, and I think it is worth making, that I feel like one lesson to draw from this is that antitrust works in advance. Antitrust policy, laws, rules, etc. works on the regulation side and in advance, but doesn't work in the courtroom. If you want to do antitrust, prevent the merger from happening. Exactly.

32:26Like, it's good at preventing mergers. I mean, it's not as good as it probably should be at preventing mergers, but it has prevented lots of mergers. And it's quite good at stopping things from happening in the future. But once you already have a monopoly and judges are trying to craft a remedy that unmonopolizes you, like, no, Microsoft was still a monopoly after 2001. Google is still a monopoly today. You know, probably chat GPT is going to become a monopoly. As long as you grow into becoming a monopoly rather than buy your way into monopoly via acquisition, it seems really hard for the monopoly authorities to deal with that.

33:08Felix Salmon: We mentioned AT &T already, but like, and I need to brush up on my history to answer this question, but I'm hoping Felix will know the answer. But back in the Teddy Roosevelt times when he was the trust buster, etc., he busted some trusts, right? Didn't he like bust up some monopolies? So it used to work. So that's the thing, right? that back in the trust-busting days when you had Standard Oil or you had, you know, the railroads or whatever, it was entirely possible to break companies up on geographic ways. You'd be like, you get California, you get the Northwest, you get the South, you get the East, you get these different regions.

33:41And that's what they did to AT &T as well. They broke it up into regional companies. And so what used to be one company then became seven or eight or whatever. You can't do that with Google.

33:51Felix Salmon: Right, you can't have like Google California and Google New York. I mean, you could actually, but it just doesn't make sense. It just doesn't make sense.

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35:06Felix Salmon: This episode is sponsored by Hey Jen. If creating video content feels like a trade-off between looking professional and protecting your time, there's a new way to think about it. Hey Jen lets you turn a script, photo, or presentation into a polished video of you in minutes without setting up a camera or hiring a production team. Whether you're a financial advisor explaining market updates, an attorney answering common client questions, a real estate agent showcasing listings, or a creator growing your audience, it helps you stay visible without constantly filming new content. It's rated the number one AI video platform for small business on G2, trusted by more than 30 million people and 85 % of the Fortune 100, and supports over 175 languages.

35:57Felix Salmon: So your message can reach audiences wherever they are. Here's the wild part. Record yourself for just 15 seconds and Hey Jen builds an AI avatar that makes professional videos for you on demand. so you can post everywhere your audience is, as yourself, without filming every time. Your first three videos are free at heyjen.com slash pod. That's H-E-Y-G-E-N dot com slash P-O-D.

36:28I want to talk about something super nerdy. Can we move on to...

36:32Felix Salmon: As opposed to the topic we were just talking about? Yeah, no, the topics we were just talking about of broad interest to real people. And now I want to disappear down into the world of litigation finance, which is I feel like most slate money listeners will probably could be like, who, what? Anyway, the wonderful world of litigation finance is now trading the refunds that companies will be entitled to in the event that Trump's tariffs are declared illegal. So as we all know, as we have discussed, the Federal Circuit Court of Appeals ruled that the tariffs are in fact illegal. it concurred with the international court of trade in new york and the tariffs are still in place for the time being it's going to go up to the supreme court the supreme court is basically going to rule one of two ways it's either going to agree with all of the other jurists and say yes they're illegal and strike them down or it's going to somehow find some reason why they're legal and keep them in place in the first instance if the supreme court agrees with everyone else that they are illegal, then a whole bunch of companies who paid these tariffs, American companies, the people who paid the tariffs, remember that, those American companies who pay the tariffs will be entitled to a refund on all of those illegal tariffs that they paid.

37:56So if you are a company that has paid, say,$100 million in tariffs, what you can do is you can go along to Cantor Fitzgerald or some other broker and be like, I will sell you the right to my$100 million in refunds for$25 million. And then if you do get the$100 million refund, you don't actually keep it, you have to give it to the person who bought that right for$25 million. And that person makes a$75 million profit. On the other hand, if you don't get the refund, then you are sitting on$25 million you wouldn't otherwise have. And the person who bought that right gets nothing. I love this market.

38:34Felix Salmon: Wait, can I ask one clarifying question? Who fights for the refund once the rights have been sold? Is it Keanu Fitzgerald, which, by the way, we should say denies that they're doing this? Or is it the firm that's owed the refund? The idea is that you kind of don't need to, that that's going to be part of the court ruling. If the tariffs were illegal all along, then the U.S. government just needs to refund it. But that's not how it works in practice for other kinds of tariffs when refunds are owed. Yeah, they are potentially going to have to individually sue the government to get it back. And one of the people quoted in one of the stories, a guy at Cato suggested that given everything we know about the Trump administration, they're just going to throw their hands up and say, well, it's impossible to deliver all these refunds in a way that actually makes sense and is efficient.

39:17And they will create lots of hoops for the companies to jump through in order to get them.

39:21Felix Salmon: I think that sounds feasible. In other situations where the U.S. government has owed refunds, you know, there's like a process that's apparently arduous to get your money back. There's also, I learned this in the prep, I didn't realize that when Howard Lutnick left Cantor Fitzgerald, he left his two 20-something sons in charge of it. And so he's, you know, saying that he has no idea where this is coming from, but looks a little fishy. I have to say that, you know, there was some rent-a-quote professor quoted as saying, oh, it's terribly worrying that Cantor Fitzgerald is buying these things. And no, it's not.

39:54They're just a broker. They're finding some hedge fund or speculator on the other side of the trade, and they're just putting two sides together on a deal. That's what investment banks do. Well, I think the implication is that Letnick is sort of informing them behind the scenes about what he thinks is going to happen with tariffs. Yeah, but there's no evidence. Like, even if Cantor Fitzgerald was doing huge amounts of volume in these things, That's totally not necessary. And there's no reason why he should be. And I'm sure he isn't. And I'm sure he can't because he doesn't even know. Like the only thing that really matters here is what the Supreme Court does.

40:30I really don't know how to handicap this one. I will say that I was mildly disappointed by the fact that the on-bank decision from the federal circuit was 7-4 rather than unanimous. There were four judges who dissented and basically said, no, these tariffs are legal. They're okay. and I tried to read the dissent and it was as far as I could make out, like to me, it was just gobbledygook. I could not make it. Like most judicial rulings are pretty clearly laid out and the dissent in this case was just, it was just like swimming through mud. It was, I couldn't make head or tail of it. But I do think that those four judges who have written the dissent have now given the sort of Trumpy Supreme Court avenue to walk down should they decide that they want to declare the tariffs to be legal?

41:22Felix Salmon: Well, we should say the federal circuit knocked the decision back down to the lower court because they said, can you see if you can figure out a way to do these tariffs that wouldn't be illegal? Well, I mean, there is a way. Like, this doesn't apply to the aluminum and steel tariffs. There are certain tariffs it doesn't apply to, but it does apply to, you know, there are 50 % tariffs on Brazil because they don't like what Lula is doing to Bolsonaro. Like, that is clearly illegal. under both rulings. It seems given the Supreme Court's 6-3 conservative positioning and given the way it's ruled in favor of the Trump administration at basically every turn so far this year, it feels like they'll figure out a way to make this okay and those Wall Street bets won't pay off.

42:04But this is the wonderful thing about a market is that there's a price for everything, right? So you might believe with good reason that 25 cents on the dollar is too much to pay for these claims because probably the Supreme Court is going to allow the tariffs to remain in place. But if it was two cents, then it would be worth it. The thing that's interesting to me is it's really just the price rather than the existence of the market. Like, I want to look at the price and see what signal the price is sending. It was Wired, actually, who did the original reporting on this. And they were saying the quoted price is in the 20 to 30 range.

42:40And I think that's probably right. Right. Let's say that there's like a 60 % chance that the tariffs get upheld somehow by the Supreme Court. And then you add on another, you have to like make a risk adjusted return. And as you said, it might be non-trivial to actually get the money, even if they are declared illegal. And eventually you get yourself down to 20 or 30.

43:01Felix Salmon: What's interesting to me also is that it's companies that are really making out here because they get to offset the tariff costs, A, because they pass those costs on to consumers, the latest estimate from Yale Budget Lab is like something like 60 % of tariff costs are getting passed to consumers right in the form of higher prices. And then they get to sell these rights also to offset the costs. So the only people that I feel like are paying these freaking tariffs are consumers at this point. Everyone else is like, figure it out, work around. Yeah, we don't get a refund. Where's my refund? We don't get a refund.

43:32Felix Salmon: I know like the president has said he's going to do some kind of like tariff check to people, but I don't think that's going to happen. Plus, I'm not sure that's a good idea, you know? And what I'm saying is unfair. I don't know. Boo. I don't like it. I don't like this. It's a Larry David voice. Why is this legal? Can you talk about how this works for other things besides tariff refunds? Like, are people selling? So let's say, to give a more salient example, let's say you're E. Jean Carroll, and you have an$80 million judgment entered into court against Donald Trump. in your favor. And Donald Trump, for various reasons, has not paid the$80 million.

44:16And you are getting on a bit in age and you want to enjoy a luxurious first class lifestyle. What you can do in theory is sell your$80 million judgment to a litigation finance firm for say$40 million and be like, you fight it out with Trump and try and get the money. I'm going to go buy a private island somewhere.

44:36Felix Salmon: Yeah, that seems like a good use of it. So I guess it's okay. It just in this case, it just kind of galling because it's like companies can offset their costs, they can pass them on to consumers, they can do this thing with litigation and selling the rights. But people are just, you know, got to go to the store and buy their coffee. And it costs an outrageous amount of money. Shout out to the listener who emailed us about that. And it seems upsetting. Coffee, coffee and beef. Coffee and butter, I think somebody said. But that was imported butter. You don't need to import butter, people. You really don't.

45:07Felix Salmon: But I've heard that Kerrygold is very good. Irish butter is great. As someone who is increasingly, you know, Irish these days, I will want, like, the French, the French understand this better than anyone. The French, for good reason, are very proud of their butter. And they sneer at everyone else's butter. They sneer at American butter and British butter and Danish butter. Irish butter is the one butter that they rate. If you ask a French person, like, would you eat any butter other than French? they'll say no unless it's iris we should have a numbers round elizabeth do you have a number i do mine is 495 and that's a dollars and that's how much you can pay for a le bling bling which is a bedazzled libubu.

45:59Is this related to Naomi Osaka? Yes, it is. So there's an artist named Karen Rose Gold who bedazzled all of Naomi Osaka's libubus, which she named after tennis people. So she has one called a Billie Jean Bling, for example. Andre Swagasy. Yes, but you can get these yourself if you're willing to pay$495. I mean, that's a bargain because who doesn't want a bedazzled libubu?

46:24Felix Salmon: I take it. I like how Elizabeth has become the LeBou correspondent for Slate Money. I'm fascinated by it. Because also, if you've ever been into the Popmarts that sell them, they're like a billion toys that are kind of LeBou-esque and just kind of like odd. And they're just like pieces of plastic. I don't understand why LeBou-bou specifically, of all the range of stuff, could get popularized on TikTok. Whoever invented those is just one lottery, basically. Because it could have been anything else, you know? Well, it was Popmart. No, it was like an artist who sold the rights to Popmart originally.

46:58Felix Salmon: It was art. Popmart's market cap has increased by$6 billion just as a result of Le Boo Boo's, which is amazing. Didn't you have a number recently on the fake Le Boo Boo's, which are called... Le Foo Foo's. Le Foo Foo's, which also go for a lot of money. The halo effect of Le Boo Boo is quite big and wide. Well, I was considering another number that was the price of a candle called the Fall of Rome, where basically the wax is shaped like the middle of Rome and you can watch Rome burn. Oh, that's fun. It was like, you know, a$25 candle. Somebody asked the creators what it smelled like and they were like, we don't know.

47:33We didn't really care about the smell.

47:35Felix Salmon: We don't know. It went viral because the product description was very political. But yeah, my number is zero, which is a tariff number. Guys, I have some good news. There is a 0 % tariff on Portuguese cork, which if you open a wine bottle which has a cork in it, like a real cork in it, which is still most wine bottles these days, that cork almost certainly came from Portugal. Portugal basically has a global monopoly on cork. So all of the American winemakers and everyone else were saying like, we don't want to pay a 15 % tariff on cork. And the Trump administration said, that's fair. And so it's zero now.

48:11Felix Salmon: Oh, so that's quite reasonable. Why don't others do that? Zero is a good tariff rate. And I think we should have that on more things rather than just cork. it's actually kind of surprising that trump didn't just go all of our cork needs to be made in america now we need to make a cork factory it's kind of wild the way that cork trees you know cork is made from the bark of cork trees it's a wonderful renewable resource you just peel off the bark and then the tree grows a new bark and then you peel off more bark and every time you peel it off you can make corks out of the bark but this only seems to work in portugal no one else's work that had to do it.

48:47Felix Salmon: I don't know how to come back from that. So I'm just going to say my number. What's your number? Three. Three is the number of Trump administration cabinet members who claim more than one primary residence on their loan papers. Three members of the cabinet have two primary residences. Are we going back to this question of the distinction between the primary and the principal residence? Yeah, it was a wonderful story. The three Trump cabinet members identified by ProPublica were the Labor Secretary, Sean Duffy, the Transportation Secretary. And do you want to guess who the third one is? Is that interesting?

49:22Felix Salmon: No, it's Lee Zeldin, the EPA guy. The three of them have mortgages on two different homes, both designated primary residences, which according to ProPublica and a paper from the Philadelphia Fed that I don't remember if we mentioned last time is fairly common and happens often because people don't pay attention to what they're signing. If you've ever closed on a mortgage, you sign a thousand documents. They've looked at the papers, they've seen the check marks, etc. So the idea being something about source for the goose and source for the gander, and if this is a firing offense for Lisa Cook, then these three cabinet members should also be fired.

49:58Is that the idea?

49:59Felix Salmon: Yeah. If you are saying that this is really bad and it's fraud and it's a problem, then yeah, you should be going after everyone who does it. You shouldn't just be isolating certain people that coincidentally you want to be fired from other federal agencies. That's wild. We should totally get the FHFA on this. I'm sure these cabinet members will be fired forthwith. No, the Trump administration said this was all cooked up by the left-wing media, et cetera, et cetera. And interestingly, ProPublica had help in doing its research from Hunterbrook. Do you remember Hunterbrook, Felix? Sam Koppelman.

50:33Felix Salmon: Yes. I'm low-key a fan of Hunterbrook, I have to say. And then my one post script to the story from ProPublica, there is one member of Trump's cabinet that is so upright and so ethical that when he bought a second home in Hyannisport, Massachusetts, guess who? He signed a writer making it clear that he would be using this home as a second home. Who would that cabinet member be? Can you guess based on my use of Hyannisport? Is it RFK? Yes. Very good. I'm super fascinated by the Hunterbrook involvement because how do you monetize this scoop? What's the trade? Maybe it's just getting people like us to say Hunterbrook on this podcast.

51:14Felix Salmon: It's like for marketing, basically, to get their name out there. Also, just partnership with ProPublica probably benefits them down the line. Yeah, for the work they need to do. Well, Sam, if you're listening, give me a ring. Let me know how you monetized. I'd be fascinated to find out. Everyone else, thank you for listening. Thank you for writing in on SlateMoneyAtSlate.com. We do have a Slate Plus podcast on wind power and erstol and renewable energy and the fight about windmills and whether they cause cancer. Sorry, wind turbines, Emily. If you join Slate Plus in Apple Podcasts, you can get an Apple-exclusive two-week-long free trial.

51:51Just press Try Free at the top of the Slate Money show page in the app. Thank you to Jessamyn Molly and Shana Roth for producing this show and also Merit Jacob for setting me up in the Brooklyn studio of Slate. And we will be back next week with more Slate money.

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