Cracking down on egg prices

0:00Sierra Juarez:NPR.

0:30Sierra Juarez:We're going to look at Venezuela's massive amount of debt, the latest in the eggpocalypse saga, and downsizing in the video game industry. Life, liberty, and the pursuit of cheap eggs.

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1:51Sierra Juarez:Okay, first up, Darian Woods, tell us about the economic news that you have been chasing. I've been watching Venezuela quite closely, and in particular, the shockingly large debt its government holds. You know, the government is trying to undertake one of the world's largest debt restructures ever, as we speak, which could not have come at a worse time given the earthquakes. Yeah, the destruction looks absolutely horrific. It really is. there are thousands of confirmed dead, but the real death toll is likely much higher. And at the same time, the economic damage is immense. There's been billions of dollars worth of economic destruction that sums up to about a tenth of Venezuela's GDP.

2:33Sierra Juarez:But like with the deaths, the final toll could be substantially more. So those costs would just add to Venezuela's debt problem. Yeah, the Venezuelan government is likely going to borrow a lot more for reconstruction. There is one tailwind for Venezuela, which is that the U.S. has eased a lot of sanctions. For now, the U.S. is on side with the interim Venezuelan government. That's meaning oil production could double over the next two years. I mean, that's true, but the economic situation is still so fragile. Yeah, even before the earthquakes, Venezuela's government borrowing was at red alert levels.

3:11Sierra Juarez:The government has about$240 billion in debt it's trying to renegotiate. And to put that into perspective, Venezuela's entire GDP, its entire year's worth of economic output is$100 billion. And this number surprised a lot of analysts. They knew it was bad, but not this bad. And now Venezuelan officials are paying a Wall Street investment bank to negotiate with its lenders. Okay, but what actually are they negotiating over? Basically, it's how much debt is forgiven and what the terms are for an extension. It's so the country can borrow more to stabilize its economy. It's really complex, and not least because it involves a hodgepodge of parties.

3:54Sierra Juarez:So on top of the usual government bondholders, you also have$30 billion owed to companies who weren't paid their invoices to the Venezuelan government. You've got companies that are owed a total of$20 billion for having their assets expropriated. ExxonMobil is a big example. They had their assets taken under former Venezuelan president Hugo Chavez. That is presumably part of the current negotiations between Venezuela and Exxon about the oil company returning to Venezuela. I mean, that is a mess. You've got oil companies, you have money, you have politics, and then a whole universe of creditors who want their money back.

4:34Sierra Juarez:And throw in earthquakes. And yeah, that is the grim economic story in Venezuela right now. Let's shift back to the U.S. now with Waylon. What is your story? My story has to do with eggs here in the U.S. Do you remember last year when egg prices were going totally berserk? Yes, I visited an egg farm to see what was going on. You saw the madness firsthand. I did. And you might remember that there were some different explanations circulating for why egg prices were so high. There was one explanation that was a definite factor, a massive outbreak of bird flu. This is what you covered, Darian. The industry lost tens of millions of egg-laying hens.

5:16Then there was another explanation that was a little bit more speculative or controversial, and that is corporate greed. The idea that egg producers were hiking their prices beyond what would be reasonable to cover their rising costs.

5:29Sierra Juarez:Yeah, greedflation. This is a hot area of debate. And now we have a new development in the world of eggs. Last week, the Justice Department announced it reached settlement agreements with three big egg producers. The DOJ and 17 states accused these companies of illegally coordinating to inflate egg prices between June 2022 and March 2025. These companies are Kale Mane Foods, Hickman's, and Versova. Were the CEOs calling each other to say, hey, let's charge$10 for a dozen eggs this week? Yeah, so what the government accuses them of doing is a bit more complicated. There is this market publication that issues daily price quotations for eggs, and these quotes influence the prices that grocery stores and restaurants pay for eggs.

6:17Well, the government says these big egg companies coordinated on submitting information to this publication that inflated the prices.

6:25Sierra Juarez:So what's going to happen now? Well, first, I should say that these three companies have not admitted wrongdoing. But in these proposed settlements, the three companies will pay$3.3 million to the states involved in the lawsuit. They have to put antitrust compliance programs in place, and they also have to donate more than 53 million eggs that will go to food pantries and nonprofits. No bad eggs allowed. All right, Adrian, what do you have for us? This week, I've been following some big developments in the world of video games and specifically involving two of its biggest players, Microsoft and Sony.

7:03Sierra Juarez:So starting with Microsoft, they make the Xbox console. And they announced on Monday that they're planning to lay off over 3 ,000 employees from its Xbox division. Yeah, I heard a new leader came in and said this business was not in the right place. But they already did a bunch of layoffs, I think maybe even from Xbox earlier, right? This is sort of just the latest churn in what has been kind of an unfortunate series of events for the video game industry. One big reason that is cited is that during the pandemic, people were cooped up at home. And Microsoft, in its case, it placed a huge bet on video games.

7:41Sierra Juarez:It hired a bunch of people for Xbox. It spent tens of billions of dollars acquiring various game studios like Activision Blizzard. And it thought that all these investments would pay off later. But now, they basically said that we got it wrong. We miscalculated. And the head of the Xbox division actually says in a typical year, they've been losing about 64 cents for every dollar that they've invested. I'm no financial expert. 64 cents? That doesn't sound like a good return on investment. Oh, no. And Microsoft's competitor, Sony, has also been in the news in recent days because, well, they've laid off some employees recently, not as many as Microsoft.

8:21Sierra Juarez:the big thing they'll be doing is making a big change to how they distribute games. And they say, starting in 2028, they'll stop releasing new games on discs, and they'll only be available digitally. So, you know, they say that this is where their customers already are. That's how they prefer to buy the games. But I think it's fair to say that this also looks like a financial move by them, right? If they don't have to incur the costs of producing discs, that just means more profit for them. What about the GameStop investors? What's going to happen to GameStop? Won't someone think of the GameStop investors?

8:54They've already had their 15 minutes.

8:55Sierra Juarez:They've already had their fun. The fun's over, children. Yeah. But of course, the game players, you know, the ones buying the games, a lot of them are upset about this. And to put it in economic terms, what these gamers are losing with this conversion to digital is something called consumer surplus. an economic term that basically means the value you're getting from a product is above what you paid for it. And for a lot of gamers, there's value in owning a disc. You know, it provides a physical asset that you can continue to play, even if Sony someday decides to take this game off of its digital platform.

9:32Sierra Juarez:And with a disc, you can also lend it out to a friend. You could even sell it and get some of your investment back when you're done playing it. And these things don't really apply to digital purchases. This makes me think about how I still own physical DVDs and Blu-rays. But, you know, when you watch movies on streaming, they don't have the commentary tracks. And I love commentary tracks. So we've lost the behind-the-scenes featurettes on the commentary tracks. That's like negative consumer surplus. What about you, Deryn? Is there like a category of media where like the physical thing is super important to you?

10:06Sierra Juarez:To me, it'd be a physical postcard or a letter. Oh, let's bring it back. I love a physical letter. This episode was produced by Cooper Katz-McKim and engineered by Kweisi Lee. It was fact-checked by Sierra Juarez. Kate Kincannon is our editor and The Indicator is a production of NPR. Once upon a time, there was a listener who just couldn't get enough of The Indicator from Planet Money. Who was it? Rumpelstiltskin? This listener tuned in all the time but thought, what if there was more? But Rumpelstiltskin would be in luck because The Indicator has a brand new newsletter. That's right. We talk about what we think matters in the news that week.

10:45Sierra Juarez:We answer your listener questions and talk about all the crazy gags we get up to. It comes out Friday mornings. Sign up now at mpr.org slash indicator newsletter.

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