00;00;00;00 - 00;00;28;05 Speaker 1 We shall defend our treats, whatever the cost may be. We shall fight in the best price. We shall fight in the Costcos. We shall fight in the Walmarts and the Targets. We shall never surrender. And if we can stand up to him, all our treats may be liberated, and the world may move forward into a broad, sunlit Mario world, inclusive, uplifting. But if we fail, then the whole world, including all that we have known and cared for — and Australia — will sink into the abyss of a new dark made more sinister and perhaps more protracted by the lights of perverted science. Let us, therefore brace ourselves to our duties and sober ourselves, that if the American Empire and its happy holidays last for a thousand years, men will still say this was their finest hour. 00;01;20;08 - 00;01;27;25 Speaker 2 Welcome to Normal Men, a podcast run by four very normal men in a time that is not very normal. I'm George. 00;01;27;28 - 00;01;28;17 Speaker 3 I'm Propter. 00;01;28;23 - 00;01;30;26 Speaker 1 I'm Lowtax Speedrun Enjoyer. 00;01;30;27 - 00;01;32;18 Speaker 4 And I am golikehellmachine. 00;01;32;23 - 00;01;49;23 Speaker 2 And this week we're going to talk treats and how we reenacted the Dunkirk boatlift to get as many iPhones as possible into this country ahead of the enormous wall of tariffs that our big wet president has erected around. 00;01;49;23 - 00;01;53;27 Speaker 1 Ten days worth of iPhones. Baby. 00;01;53;29 - 00;01;54;08 Speaker 2 I mean, we. 00;01;54;08 - 00;01;56;16 Speaker 1 Have secured our future. 00;01;56;18 - 00;02;03;17 Speaker 4 I've never heard I've never heard a British accent and a Florida accent at the same time. That was fantastic. 00;02;03;20 - 00;02;07;02 Speaker 2 It's quite disconcerting, but also soothing. 00;02;07;05 - 00;02;11;10 Speaker 3 You got to be you got to be careful with that combination. Or you wind up or you wind up Bahamian. 00;02;12;20 - 00;02;21;09 Speaker 3 So if you're not, if you're not caught up on the Dunkirk iPhone airlift, what happened here is that I believe it was three planes. Is that. 00;02;21;09 - 00;02;52;17 Speaker 1 Right? Five. It's five that we know about. It was reported by, I believe it was the Times of India. And, there was a, there was a helpful bit just to understand the sort of scale here. Apple sells, I believe it's about 150,000 iPhones per day in the United States. A Boeing 747 cargo can carry about 300,000 pounds, I think maybe 350. 00;02;52;20 - 00;03;16;02 Speaker 1 And an iPhone in the little box you get at Verizon or AT&T weighs about a pound. And so a sort of theoretical max is that one plane load could carry two days of supply. So Apple launched its, its, little planes of Tamil Nadu mission here. 00;03;17;11 - 00;03;30;01 Speaker 1 To bring in ten days worth of iPhones. Now it's it's just those five planes that we know about. There's probably more, but, I don't think that's going to get it done. Fellas. 00;03;30;04 - 00;03;48;05 Speaker 2 So there's a couple interesting things about this story. First off, when you set deadlines like the ones that were set around the tariff announcement. So April 2nd is when we have the announcement April 9th, things are supposed to go into effect. It's now April 13th and nobody really knows what's going what's in effect right now. We'll come back to that. 00;03;48;08 - 00;04;05;15 Speaker 2 But when you when you give people a week, they tend to do really wild stuff. They tend to do like very, very wild stuff. And you can see, you know, economists love this sort of thing because you can see a before and after in terms of behavior. And it's like it's a perfect. How did this policy affect behavior? 00;04;05;15 - 00;04;38;09 Speaker 2 Because it's it's on and off and it's great. So that's one thing. The second thing is it's worth mentioning that Apple has already invested a lot in manufacturing in India. This is not a new thing. They've also invested a ton in other smaller southeast Asian economies, in order to avoid reliance on China under the theory that, well, in general, the United States is going to be unhappy about people building a lot of stuff and importing it from, China, but from Vietnam or Cambodia or Thailand or India. 00;04;38;09 - 00;04;59;24 Speaker 2 That's not gonna be a problem. They're not a great power rival. So like, no problem. And then you run into the Trump administration and it's not clear how reciprocal tariffs are going to work out at the country level. It's not clear what the sectoral tariffs are going to be like. But you it is interesting that they were flying those phones out of India and not China. 00;04;59;27 - 00;05;13;23 Speaker 3 And just to kind of bring everybody up to date on this where we're recording this this podcast segment on, Sunday, April 13th. There've been a lot of changes since we last talked about tariffs, which was last Sunday night. 00;05;13;26 - 00;05;16;26 Speaker 1 Five hours ago on blue Sky. 00;05;16;29 - 00;05;43;21 Speaker 3 We expect that by the time anybody hears this podcast, it'll probably be entirely different. But as of right now, the things that happened in the last week were last Wednesday. So last Wednesday, Trump backed off the tariffs that he put in heavy, the week prior and said that almost all countries were going to be tariff to 10%, with the exception of China, which would be tariffs at 145%. 00;05;44;19 - 00;05;49;09 Speaker 3 That sounds like a number I made up. That's not a number I made up. That was the actual number that the white House made up. 00;05;49;11 - 00;05;51;24 Speaker 1 China's response was great, too. 00;05;52;25 - 00;06;09;25 Speaker 3 Right. So then, on on Friday and it says something about the state of affairs that a lot of people in the market and elsewhere view this as maybe a bit of a walk back. China said, okay, we're raising our counter tariffs, but this is it. We're not going to respond to anything else you do. 00;06;09;27 - 00;06;22;10 Speaker 1 Yes. China basically said, this is this is too stupid at this point. Your products are not competitive. We're not going to bother raising tariffs anymore. We might as well just embargo each other at this point. 00;06;22;12 - 00;06;44;08 Speaker 3 So anyway, so maybe that's maybe that's a positive sign for for kind of a step down from this mutual escalation. I'm not sure. Anyway, after that, on Saturday, the Trump administration announced that there would be a number of products specific tariff exemptions that apply not just to China, but to all the other countries that have this new 10% tariff as well. 00;06;44;22 - 00;07;09;18 Speaker 3 On most high tech product categories, that includes smartphones, computers, flat panel TVs, semiconductors, solar cells, and a couple of other minor categories. Critically, it does not apparently include video game consoles for any of you who are Nintendo, and might be eagerly watching to see whether or not you get to preorder a Nintendo Switch to, at any point this year. 00;07;09;20 - 00;07;17;23 Speaker 2 Nintendo famously turned off preorders for the Nintendo Switch, in part because of the tariffs or exclusively because of the tariffs. What am I talking about? 00;07;17;26 - 00;07;42;05 Speaker 1 Which led to some hilarious polling, among young people where Donald Trump's, net approval rating has gone from. I think it was like plus 5 to -29 in a period of about a week. So we've Trump has delayed the switch to and it has turned all the Zoomers into a bunch of Marxists. 00;07;42;08 - 00;08;04;18 Speaker 2 Which is a whole thing we can probably get into at another point polling of 18 to 29. But in any event, so over the course of the weekend, we've then had a series of Trump administration officials, Peter Navarro, that, Andy, the Treasury secretary, sorry. So the Treasury secretary, we've had a whole bunch of press releases. 00;08;04;18 - 00;08;26;02 Speaker 2 We've had true social posts. And the net effect of this is that nobody knows as of right now, 8:30 p.m. Eastern Time, roughly on April 13th, what exactly the deal is. We think we know where we're going to get to based on what the big guy has said in his true social post, but that hasn't actually been nailed down yet. 00;08;26;04 - 00;08;47;25 Speaker 2 And oh, and by the way, there was reporting last week that CBP, the Customs and Border Protection Administration, is not able to actually charge tariffs properly and all this stuff. And so there's a huge percentage of what's going through the border right now. It's just not getting charged here because they can't do it. So great. 00;08;47;27 - 00;09;09;05 Speaker 3 And to clarify, they're still going to owe the tariffs. They're just not collecting them when they come in though. What they're doing is there's something about the system that means that they can't collect tariffs. There was one other major, major announcement that happened today, which is, I believe this was this afternoon that Trump got on Truth Social and explained that this electronics exemption that everybody was very excited about, the one in the day before was only temporary. 00;09;09;05 - 00;09;32;06 Speaker 3 And would soon be paused again. So we don't know what's going on with tariffs, at least right now. Under the terms of the last executive order, they're really high on China and 10% higher on the rest of the globe, which nets out to an actual this is kind of a permitted. This is kind of a pernicious mode of analysis, because the quantities are going to change as a result of the tariff. 00;09;32;06 - 00;09;54;14 Speaker 3 But if you hold quantities imported constant, over last year from everywhere, the tariffs as they stood prior to the Saturday announcements were actually higher than the tariffs were prior to the Wednesday announcements, when they pulled back the tariffs on everywhere but China and cranked up the tariff China and cranked up the tariffs on China. Just because the tariffs on China were so high. 00;09;54;14 - 00;09;58;25 Speaker 3 And China is a significant part of our of our international trade. 00;09;58;27 - 00;10;24;06 Speaker 4 My favorite thing about the tariffs thus far is that every day, analysts or investors or cable news talking heads get very excited and think that something good will happen that maybe Trump today is the day that Trump is going to back down and make a rational decision. And within 24 hours, without fail, Trump always says absolutely not. 00;10;24;06 - 00;10;27;14 Speaker 4 We're going to continue to be stupid. 00;10;27;17 - 00;10;54;04 Speaker 2 They're the best possible example. This was Bill Ackman, hedge fund manager and oh, go online person earlier this week. This is a podcast about a run by normal man about being normal as a man will man Ackman I hope you listen to us man. You need some pointers anyhow. So Ackman immediately after the Trump administration sort of tries to walk back some of the of the tariff stuff. 00;10;54;07 - 00;11;17;26 Speaker 2 He immediately goes Art of the deal. What a great job Mr. President. And it's like what did he get. What did he get if he hadn't there there had been no nothing announced nothing. No concession. No. It was just oh, like you were going to do something insane. And now you're not. You're such a genius. And I just like I don't understand where these guys are coming from other than just kissing up to the guy. 00;11;18;14 - 00;11;35;12 Speaker 2 Which I do get that, but, like, really? Why? It's nuts. So I totally agree. Hell machine we are in a golden age of people trying to give props to the president and being made to look like total fools in the process. 00;11;35;14 - 00;12;09;21 Speaker 1 It is one of his most enduring attributes. This his commitment to humiliating everyone who ever buys in to anything he does. There's there's his blanket humiliation of his supporters, and no one hates Trump supporters more than Donald Trump. That along with the the just gratuitous periodic pot shots at Jeb Bush, is something that I deeply appreciate about the man. 00;12;10;01 - 00;12;17;17 Speaker 1 You do not gotta hand it to Donald Trump, but it is something that you can sit back and kind of appreciate. 00;12;17;19 - 00;12;41;11 Speaker 3 On the topic of making Trump supporters look foolish, I've got I've got a great quote here from Clifford ACARS, who is one of the titans of quantitative analysis on on wall Street. Who responded to Bill Ackman by saying he responded to Bill Akin's praise of Donald Trump by saying that for me, one of the main benefits of making some money is not having to wear a gimp suit for anybody. 00;12;41;13 - 00;12;43;20 Speaker 3 To each his own cliff ass. 00;12;43;20 - 00;13;04;02 Speaker 2 This is an all time, just ordinary dude online and has been for years. Like this. This goes back over a decade. He is somebody that would just unload on people, on Twitter, on like random lobby accounts for no reason, whatever. And, but, you know, if the guy is kind of he's a lot. But I gotta hand it to him. 00;13;04;02 - 00;13;09;20 Speaker 2 He nailed this. Like, that is exactly what's going on. 00;13;09;22 - 00;13;24;16 Speaker 3 So, anyway, we've got a note here that we should talk about. What's next for tariffs? I'm not sure how much we can talk about what's next for tariffs, because we don't know what they're going to be in 12 hours. And we definitely don't know what they're going to be by midweek. But right now they're very high. 00;13;24;16 - 00;13;41;29 Speaker 3 And it would be bad because you wouldn't be able to buy things the way you normally would. We think supply chains are going to choke up. There might be, goods availability disruptions as well as cost disruptions, and there's still some chance the tariffs are going to crash the global economy, which brings us to our next topic, which is that there. 00;13;42;02 - 00;13;43;16 Speaker 2 The bond market. 00;13;43;27 - 00;13;45;20 Speaker 3 Over the course of the last week. 00;13;45;28 - 00;14;10;09 Speaker 2 People are worried about bond market liquidity to use, to use a famous sword. So, last week we saw the largest rise in 30 year bond yields in, like, since 1987. I think it was, if you look at ten year spreads between treasuries and the rest of the world, they rose by I created an index of like Australia, Canada, Japan, England, Germany, UK, Germany. 00;14;10;11 - 00;14;32;29 Speaker 2 And that spread rose by the most in like ever. Really. I could only get data back to 1989 for all six of those economies. So basically our bond yields are surging. Bond yields down, up means price down and vice versa. So basically bond people are willing to buy U.S. Treasury debt for less than they were before. 00;14;33;01 - 00;14;45;28 Speaker 3 And we're attempting to we're attempting to cultivate, listeners here, that both know a lot about bonds and know nothing about bonds. So, George, can can you walk us through what the ten year Treasury bond interest rate means? 00;14;46;00 - 00;15;12;23 Speaker 2 Yeah. So every month the US Treasury sells a bunch of debt that matures roughly ten years in the future. So they'll issue once a quarter, they'll do, a new issue, and then they'll reopen it two more times. And these are large auctions. These are tens of billions of dollars. That ten year interest rate is the benchmark long term interest rate for the economy. 00;15;12;25 - 00;15;47;13 Speaker 2 It's what is most important for determining how much it costs to go and buy a home through your mortgage. It is extremely important for the corporate bond market how much it costs, various, corporate entities to go out and borrow it is very important for determining the overall yield of the bond market. It's also how we finance a lot of what's of what our expenditure is because, right now, the federal deficit, which is outlays, less revenues or less, receipts is about 6% of GDP. 00;15;47;16 - 00;16;12;24 Speaker 2 So that that's a huge number. I mean, it's a very large number. It's very unusual historically to be that large outside of recessions. We could spend an entire podcast talking about what determines long term interest rates. It's very complicated. We could spend an entire podcast talking about how federal, finance works. I could give a lecture on MMT. 00;16;12;27 - 00;16;38;05 Speaker 2 We could talk about the term structure of interest rates and how expectations for monetary policy are important. We could talk about all sorts, different stuff. We're not going to do that. But what we will say is that very large dislocations in the bond market are not a good sign and can create some very, very bad outcomes for economies in general. 00;16;38;07 - 00;17;00;05 Speaker 3 Now, most of the time, bond rates move, most of the time Treasury rates go up when the stock market goes up. Meaning that meaning that the United States is going to pay you more money to borrow money from you. And they go down when the stock market goes down, meaning that meaning that you're going to get less money from the United States Treasury when they borrow money from you. 00;17;00;07 - 00;17;17;02 Speaker 2 And the reason for this is there's a simple reason for this. If the economy's growing faster, inflation will be higher, real output will be higher. That means interest rates higher to account for that higher inflation, higher real output. That also means stocks are worth more because their earnings are going to grow faster. Now that's really oversimplifying a lot. 00;17;17;02 - 00;17;25;23 Speaker 2 But like that's the logic right? If stocks go up then you should see bond yields go up with them or vice versa because of that economic growth. 00;17;25;23 - 00;17;43;23 Speaker 3 And and to be clear, if bond yields are going up, if you're already holding bonds, that means that that means that your bonds are worth less because you can now buy bonds that are paying a higher rate. If bond rates go down, then the bonds that you're already holding are worth more because they're paying a higher rate than you can then get from the US Treasury anyway. 00;17;43;23 - 00;17;57;14 Speaker 3 So this is a relationship that doesn't hold all the time that it holds most of the time. And it is breaking right now, we are seeing decoupling between the way that bonds are going and the way that the stock market generally is going. 00;17;57;16 - 00;18;19;02 Speaker 2 The other interesting thing that's happening right now is that the dollar is also selling off as bond yields rise. So you've got bond yields up, stocks down and the dollar down all at the same time. That is really unusual to see that happen. And it could be a signal that international investors are saying I don't want anything to do with the dollar. 00;18;19;02 - 00;18;37;06 Speaker 2 I want to sell my stocks, sell my bonds and move on. Now, there are other explanations as well, and there is precedent for the degree to which the dollar and the and bond yields are diverging. Bunch, it's happened a bunch of times to the same degree that it is right now, over the past 30 years or so. 00;18;37;09 - 00;18;58;24 Speaker 2 Also, I'm not going to get too far into the weeds on what I look at to see this, but there isn't good evidence that the dollar funding markets like borrowing and borrowing dollars internationally are breaking down the. And that is what you would expect if there was a flight away from the dollar. So, you know, my professional take on this is that yes. 00;18;58;24 - 00;19;25;21 Speaker 2 It's possible that the massive introduction of tariffs have broken essentially the world economy and the dollar's dominance within that global economy. It's also possible we're just seeing markets do what markets do when they have a bad time and dance around. Time will tell. This is something that will probably come back to in the future. But where I sit right now, I think I immediate more towards the, the, the latter thing that this is just volatility. 00;19;25;24 - 00;19;36;01 Speaker 4 It sort of seems like all of this is so unprecedented that it's kind of impossible to try to try to figure out what's happening or what will happen next. 00;19;36;04 - 00;20;04;24 Speaker 2 There is no historical precedent for what's going on right now. In 2007, 2009, there was lots of historical precedent, right? We had been through the Great Depression. We knew what that deleveraging looked like. We knew what a global recession look like. We don't have a historical analog for a hegemonic reserve currency provider. Waking up one morning and deciding we want to destroy the systems that built a position where it. 00;20;04;26 - 00;20;31;29 Speaker 3 And it's kind of an indicator of where where American bond markets are right now. Right now, ten year treasuries pay about a percent more interest than Greek ten year treasuries. And if you have not looked into international finance in a while, that that may be a shocking statement to you. I think that a decade ago there would have been possibly literally no one in the world who would have bet on that outcome in 2025. 00;20;32;02 - 00;20;46;04 Speaker 1 Maybe ten years ago, 10 or 15 years ago, there would have been like five people, even willing to underwrite Greek debt. And and all of them were were at the European Commission. 00;20;46;07 - 00;21;09;10 Speaker 2 And or or the ECB as it, as it turned out or the ECB. Yeah. The I will say I think that's an instructive example. There is a long and rich tradition of people trying to write stories that have a beginning, middle and end about historical and economic processes which have no end. And Greece is a really good example of this. 00;21;09;10 - 00;21;28;26 Speaker 2 Greece actually got upgraded a couple weeks ago, and they still have a very high debt to GDP load, but they have brought it down substantially. They have done a ton of what's called internal adjustments, where the economy is basically gotten more efficient. This hasn't been a very pleasant process for Greek people, but it's one they repeatedly backed at the ballot box. 00;21;28;26 - 00;21;48;02 Speaker 2 And we are now in a situation where Greece looks like Italy, as opposed to Greece looking like a completely failed, economic, you know, completely failed economy. And they're tied in to the eurozone, which has lower inflation and lower growth in the United States. So you would expect their bond yields to be lower. 00;21;48;05 - 00;21;58;09 Speaker 3 Which is which is great for Greece, but maybe bad for the world economy, because Greece has a much smaller impact on the world economy than the United States does. 00;21;58;11 - 00;22;10;19 Speaker 4 Really, really. The only thing that I know about the Greek economy is that the Greek finance minister is married to the woman who was the inspiration for pulps, common people. 00;22;10;22 - 00;22;16;20 Speaker 3 That actually they've actually tracked that down because she was in fact a, she she was a sculpture major, right? 00;22;16;23 - 00;22;17;01 Speaker 2 Yeah. 00;22;17;06 - 00;22;28;09 Speaker 3 At the relevant college. And she was perhaps the only sculpture major at that time at the relevant college, certainly the only sculpture major at the relevant college. You dated Jarvis Cocker. 00;22;28;11 - 00;22;39;00 Speaker 1 Maybe the maybe the bond markets are just expecting, like olive oil and and bad cigarets to be really high value in the coming years, I don't know. 00;22;39;02 - 00;23;01;04 Speaker 3 So one thing that we know that an increase in, in treasury rates will do is it will increase the cost to the United States of carrying debt. We carry a lot of debt. I think we're at about we're at about 130% GDP. It in terms of, in terms of overall debt right now. 00;23;01;06 - 00;23;06;29 Speaker 1 I thought it was about 100, but, I mean, it's, I don't think it matters all that much. 00;23;07;01 - 00;23;37;21 Speaker 3 So the most the most recent numbers I have on this are in 2024, we spent about 3% of our GDP just on debt service, on federal debt service, on paying the interest, on the federal debt. And our our blended interest rate on the national debt we're holding is about three and a third percent. That's if you if you add up the interest rate on all of the outstanding federal debt, weighted by, you know, how much the debt is, at which interest rate, it averages out to about three and a 3%. 00;23;37;23 - 00;24;12;23 Speaker 3 We're currently, I believe, a little bit north of 4.5% on new debt that we're issuing. If hypothetically, that blended interest rate were to get up to 5%, that represents a 50% increase in the cost of carrying our debt. And, in terms of real cuts at the same level of taxation and non debt, federal outlays, that math out to about an eight that maps out to about an 8% drop, in what there is for the United States government to spend on everything that isn't that, if our interest rates get that high. 00;24;12;25 - 00;24;34;24 Speaker 2 It's also worth saying that the way Treasury manages the federal debt, they issue a lot at the front of the curve, which is basically short term bills which are under a year. They don't pay what's called a coupon. They issue a ton of stuff. It's very long term. If you issue a 30 year bond, the interest rate on that does not change for 30 years. 00;24;34;26 - 00;24;59;09 Speaker 2 Right? Ten year bond, ten years. It's so the you know, the Treasury has an approach where they try and keep lots of different securities available all across that what's called term structure. And it also means that the the yield that you pay doesn't change that much over from, you know, one month to the next. It's very slow moving. 00;24;59;11 - 00;25;38;19 Speaker 2 It's also worth saying that right now we have issued a lot at the front of the curve. Secretary, treasurer, Secretary of the Treasury, Yellen during the Biden administration made the decision to instead of, what's called terming out deficits. So issuing more long term debt, they made the decision to not do that and issue more bills. That means that relative to alternative paths or other relatively recent history, if the fed cuts interest rates, then the debt burden, the cost of servicing debt in the in the federal government debt burden will go down very quickly because it's very tied to the short term interest rates, which are directly controlled by the fed. 00;25;38;19 - 00;25;57;24 Speaker 2 And it's easy to see why in that scenario, the president would be so interested in rate cuts, it's actually kind of surprising hasn't been more interest in rate cuts. If you want to reduce the federal deficit right now, the fastest way you can do that with the least pain is cutting interest rates. Now, the Fed's not going to do that just as a solid. 00;25;57;27 - 00;26;14;12 Speaker 2 But it's worth keeping in mind that that will happen. And just to confirm federal debt to GDP right now is 121.9%. So I mean, yeah, it's it's significantly higher than it has been at any point since World War two. 00;26;14;14 - 00;26;53;09 Speaker 3 So I think one of the things that we're worried about was one of the things that I'm worried about in terms of, in terms of this, what may be a flight away from the dollar at the same time as the market is doing some kind of grumbly unhappy things, is that this this may be an omen or a harbinger of kind of the end of American hegemony, which is, I think, a which is a concept I think we're going to return to, unfortunately, a few times over the course of this podcast, that if we see market instrumentation held in something other than U.S. dollars, that is a significant reduction to US power in a 00;26;53;09 - 00;27;24;28 Speaker 3 number of ways, reduces our ability to set the agenda. It reduces our ability to issue debt. Maybe precipitously. That would be a bad feedback cycle. And it just kind of generally is a is a signal that the rest of the world doesn't fully trust that the America of ten years from now is going to look all that much like the America of today or the America of ten years ago, relative to the rest of the world. 00;27;25;10 - 00;27;51;04 Speaker 3 So as omens go, and as George said earlier, this, this disagrees with his sense of what's of what's happening with what the bond market. He thinks this is largely a product of just the things are bouncing around very fast. And as they bounce, they move. But if we were to see a sustained move away from that, that would be that would be a bad omen, for America's place in the world. 00;27;51;07 - 00;28;09;11 Speaker 3 And, you know, all of this has consequences that even in the good scenarios where where Donald Trump is not so much of a long term concern, we're going to be paying for this one way or another, in years to come. 00;28;09;13 - 00;28;31;17 Speaker 2 We got a mulligan on the first term, and there's every indication that we're not going to on the second term. If you look at the rhetoric from very likely, to be reelected Prime Minister Carney in Canada, he has basically said, no, we're done trusting the United States. We're done. We talked, well, there's been a lot of talk about Europe and defense. 00;28;31;17 - 00;28;54;15 Speaker 2 There's been, a lot of conversation around how a country like Vietnam is going to react to these tariffs. It's a laundry list. There's a lot of countries around the world who are just saying, we can't trust these people anymore. And who could possibly blame them? And economically, a system where the dollar is no longer the reserve asset, no longer the reserve asset means a couple of things. 00;28;54;15 - 00;29;13;23 Speaker 2 I think for the listeners of this podcast, the two things I would say that are the most important for day to day life are one inflation will be significantly higher than it than an otherwise would be either either inflation will be higher or real interest rates and monetary policy will be seemingly tighter. So higher interest rates and higher inflation or, you know, trade off between those two. 00;29;13;26 - 00;29;32;00 Speaker 2 The second thing is lower equity multiples. So like the stock market's not going to perform like it has for the past 15 years. That's that's sort of if that's the world we're going into. And there's it's a it's not a binary and it's not a beginning and end. And it doesn't have to be that way permanently. It's just the sort of direction of travel. 00;29;32;02 - 00;29;48;13 Speaker 2 And both of those things strike me as pretty plausible, even if intraday movements of bond yields this week looked more like just a market under stress, as opposed to the end of American Gemini. And a week, I guess. 00;29;48;13 - 00;29;56;27 Speaker 3 I guess the one thing I'd add to that is that if it turns into a binary, we're in a lot of trouble. Oh yeah. If there's if there's a clear break point, that's not a good thing. 00;29;57;00 - 00;30;03;17 Speaker 4 It remains completely insane that we are not even through the first 100 days. 00;30;03;19 - 00;30;19;26 Speaker 2 Yep, yep. It really I there's no other way to put it. 00;30;19;28 - 00;30;43;20 Speaker 2 So moving on to our next, happy topic today. Last year, last week we talked about, Kim Abrego Garcia and his detention in, El Salvador. And we got some developments on that this week. And they're both incredibly depressing and heartening, depending on how you spin them, I think. 00;30;43;22 - 00;31;04;22 Speaker 3 Yeah. So the good news on this, when we recorded the last podcast, we hadn't had word from the Supreme Court yet on how they were going to rule, on this, this motion from the district court to bring, Abrego Garcia home. They have now ruled, that the district court order for the white House to work towards bringing Garcia home is valid. 00;31;04;28 - 00;31;19;11 Speaker 3 And then they've tossed it back to the district court to enforce. There's been some quibbling over whether or not the language they used was sufficiently strong to empower the district court. And we're going to kind of have to see whether or not the administration thinks that it's strong enough. 00;31;19;13 - 00;31;40;20 Speaker 4 So I have a question on that. And I wasn't following it super closely, but but maybe you can help unpack what the difference between effectuate and facil state was, because it seems like there was a lot of a lot of discussion and a lot of argument over exactly what the difference between those two things was. And, and why that matters. 00;31;40;23 - 00;32;09;15 Speaker 3 Yeah. So this is, this is, this is my analysis from the outside, obviously, but it seemed like the Supreme Court was making a big deal out of this relatively minor difference in words which indicated to me that there was some, some amount of internal strife as to what they could tell the district court to do. That may be a portent of future strife on the Supreme Court in terms of what the District court can tell the administration to do. 00;32;10;27 - 00;32;36;16 Speaker 3 One of the issues here is that the courts historically have been pretty protective of the executive's power to conduct foreign policy. That's not something that they want courts involved in. And frankly, I think they're mostly right about that. You think back to the Biden administration and how we had all these policies that were getting stopped by district court judges all over the country. 00;32;36;19 - 00;33;04;11 Speaker 3 We have enough veto points in the system that it would be very difficult to conduct foreign policy if you had to run it by every article. Three judge in the country first. That said, there are close cases and there are not close cases. And this is a case where, just to remind everybody, Chamorro Abrego Garcia is, from all accounts, not somebody who should have been deported, to El Salvador. 00;33;04;11 - 00;33;07;18 Speaker 3 He's a he's a native Salvadoran, including. 00;33;07;18 - 00;33;09;14 Speaker 1 The Trump administration's account. 00;33;09;16 - 00;33;38;23 Speaker 3 Right. By the Trump administration's account, by Garcia's, while yours accounts, by everybody's accounts, this was a mistake, to send them. Yeah. He has a court order that says, do not deport me to El Salvador because they will kill me. Some good news on that front is that, the district court, after after reaming out the designated sacrificial lawyer, for an hour, ordered the Trump administration to give daily updates on what they're doing to bring back Abrego. 00;33;38;23 - 00;33;39;24 Speaker 3 Garcia. 00;33;40;01 - 00;33;42;21 Speaker 2 This is in the wake of the nine oh supreme Court decision, right? 00;33;42;21 - 00;33;43;26 Speaker 3 Correct. Yeah. So. 00;33;43;26 - 00;34;09;04 Speaker 2 Right. So it's worth it's worth saying I mean, we got the Supreme Court agreeing nine oh about the general language and the as, how much you said earlier the language used is a little weird, especially for a non-lawyer, but they agreed nine know and it was very clear in plain English what they intended. Right. So this is not something where it was A54 decided by Justice Roberts or whatever. 00;34;09;04 - 00;34;10;08 Speaker 2 This was. Nine. No. 00;34;10;11 - 00;34;25;01 Speaker 4 That that seemed like one of the most notable things about this to me was that it was a nine hour decision with no dissents, which seems which is just incredibly unusual for almost anything from this court, but particularly for something like this. 00;34;25;03 - 00;34;42;29 Speaker 3 Yeah, this was this was a pretty charged topic. And, and credit credit. Where do at least, at least at this point, everybody on Supreme Court came down on the right side of it, which is that the district court has the ability to go and say, hey, you deported this guy by mistake. You have some responsibility to go get him back, do what you can. 00;34;43;01 - 00;35;09;16 Speaker 3 So that brings us to Friday, where we had, where we had hearings, and kind of a comedy of errors on the part of DOJ, in, in district court in Maryland. First off, they had a deadline for filing a, for filing a brief, that morning, and they tried to file it with no lawyers who were barred in Maryland, signatory to the document they were trying to file. 00;35;10;13 - 00;35;14;06 Speaker 2 For non lawyers. Is that something that that works? Typically it's not. 00;35;14;06 - 00;35;16;11 Speaker 3 Something that works. That's not something that works at all. That should be. 00;35;16;12 - 00;35;21;06 Speaker 1 Wait, you mean you mean you can't just shout pro hoc and and go about your day? 00;35;21;12 - 00;35;51;03 Speaker 3 So so what happened here. And we talked about this a little bit last week is that earlier on in this case DOJ presumably this is, this is coming from the attorney general's desk. But DOJ suspended both the career attorney who'd been arguing DOJ side of this case and the supervisor for the entire section of their, of their immigration enforcement, for failing to properly supervise the guy that they were suspending. 00;35;51;13 - 00;36;05;21 Speaker 3 So since the guy that they suspended was the one who was barred in Maryland and apparently nobody had the the gumption to check and see whether or not they still had they still had a lawyer that could practice law in Maryland. Oopsie. 00;36;05;21 - 00;36;09;06 Speaker 2 Case. 00;36;09;09 - 00;36;29;00 Speaker 1 Your DOJ, you're in the district. How do you not have a lawyer who's barred in Maryland? Well, how are there not how are how are there not 100 lawyers at DOJ who are barred in Maryland? I have been on cases with DOJ, with the Antitrust Division. There's zillions of them in that building. 00;36;29;03 - 00;37;02;13 Speaker 3 DOJ still has plenty of lawyers who are barred in Maryland. But one of the things that we're seeing on this case and on other immigration cases is that the circle of attorneys that whether it's a matter of trust in alignment, whether it's a matter of trust in secrecy, whether it's a matter of of ethics where people are refusing to do this, it's not clear, but the circle of attorneys that they have who are actually appearing in court or signatory to documents on, on these, on these immigration cases, on these deportment cases are, is is very small. 00;37;02;19 - 00;37;08;04 Speaker 3 And it is at this point almost exclusively political appointees. 00;37;08;06 - 00;37;13;26 Speaker 4 Yeah. It's like, Drew Henson. Right. Is he the one whose name keeps popping up over and over again? 00;37;13;28 - 00;37;35;20 Speaker 3 Yeah. Drew Henson is the guy who they sent in the court on Friday to go to go get yelled at. And it was very clear that he was going to go get yelled at, and, and he did, in fact get yelled at, but the district court brought it to a point where she's asking for, where the judge is asking for daily updates on progress. 00;37;36;07 - 00;37;58;07 Speaker 3 That hasn't gone great so far. There have been two daily updates so far on Saturday. We got the very welcome news that Abrego Garcia is still alive, as far as we know, and is in El Salvador's, custody. He got, they found somebody who was willing to attest to that. And then on Sunday, we got a daily update that basically said, no, we haven't done anything. 00;37;59;08 - 00;38;03;19 Speaker 3 So, it said the update said, here is our update. 00;38;03;22 - 00;38;22;12 Speaker 2 And it's worth mentioning, too, that in the intervening time between the Supreme Court decision and at the end, this is on Friday or Saturday, the president was quoted as saying, like, well, I'll do what the Supreme Court tells me to do. The question is, is the Supreme Court actually going to tell them to do what they clearly, based on the nine O decision, want him to do? 00;38;22;16 - 00;38;40;27 Speaker 2 Because then maybe he won't do what they are telling him to do. And then we're in a constitutional crisis. But he's at least saying that if they tell him, you got to let this guy back into the country, he's fine. He'll that they will. He will do that. 00;38;40;29 - 00;39;05;20 Speaker 3 And, one additional wrinkle to this is that, I believe he's still here right now. But, now, Kayleigh, who is the the president of El Salvador, is in the District of Columbia right now, having meetings with, with us people, and it seems like this was in conjunction with that. We haven't had any more flights. 00;39;05;20 - 00;39;34;06 Speaker 3 We had not had any more flights to El Salvador, since the initial three until today. When, when we got reports that ten people who had previously been held at Guantanamo were delivered to El Salvador, again, these are Salvadoran and Venezuelan nationals. The administration is claiming that they have gang affiliations. The administration claims a lot of people have gang affiliations, most of whom appear not to. 00;39;34;06 - 00;39;36;20 Speaker 3 So who knows whether or not that's accurate? 00;39;36;23 - 00;39;43;18 Speaker 1 Both. Both go like hell. Machine and I, are gang affiliated by virtue of our tattoos. 00;39;43;20 - 00;40;10;07 Speaker 4 I was going to say I saw a report the other day where one of the, the the images that they used of, like, a forearm tattoo actually belongs to the forearm of some apparently unaware, British man in some British village, who was very shocked to see an image of his tattooed forearm on ISIS paperwork establishing him as a gang member. 00;40;10;10 - 00;40;20;10 Speaker 2 To be clear, I think it's totally fine to be deporting British people back to Britain. I agree. Yes, that's a joke. We don't actually think that this guy. 00;40;20;11 - 00;40;35;18 Speaker 3 This guy in question, I actually actually, I thought it was a nice tattoo. He's got a tattoo of a clock on his forearm, and the clock says the time that his daughter was born, and it's a very sweet tattoo, but also it's showing up in the ice guides and various state guidance about this is a gang tattoo. 00;40;35;18 - 00;40;41;14 Speaker 3 And you should, you know, deport these people because they're associated, with Venezuelan gangs. 00;40;41;17 - 00;40;48;17 Speaker 1 The Brits have updated their, their, terrorism warning system to, what's all this then? 00;40;52;17 - 00;40;56;04 Speaker 2 And, and in Australia, it's. Crikey. Nah. 00;40;56;08 - 00;40;57;22 Speaker 1 Nah nah. 00;40;57;24 - 00;41;01;20 Speaker 4 When London gets to blimey, we're in real trouble. 00;41;01;22 - 00;41;04;10 Speaker 2 It's coming man, it's coming. 00;41;04;13 - 00;41;28;05 Speaker 3 So next steps on this are that, there's going to be a hearing on on Monday where they'll probably Sandshrew and send in again to go get yelled at. And it's at this point, Abrego Garcia's lawyers have have called for some kind of sanctions, have called for contempt, against the government because they're pretty clearly not complying with the judge's instructions. 00;41;28;16 - 00;42;01;01 Speaker 2 Just just as the husband of, attorney who practices in federal court, it is not common to have sanctions levied against anybody for any reason, right? People very rarely. And like in terms of a percentage of times, I don't know what the number is, but it's it's a tiny percentage of the time screw up so badly that the judge actually hits them or something, the bar maybe a little bit more frequently, but it, it really it's it's uncommon and it's even less common when it's literally the government like the Department of Justice that's in question. 00;42;01;01 - 00;42;05;13 Speaker 2 I mean, do we even know when the last time a DOJ lawyer had, I was going to say. 00;42;05;15 - 00;42;09;02 Speaker 1 I was going to say, I've never heard of a DOJ lawyer being sanctioned. 00;42;09;04 - 00;42;09;23 Speaker 3 Yeah, not. 00;42;09;23 - 00;42;12;12 Speaker 2 I mean, it must have happened somewhere, but I can't I mean. 00;42;12;14 - 00;42;15;01 Speaker 1 Yeah, maybe during Watergate or something. 00;42;15;03 - 00;42;35;19 Speaker 3 Now, I think it's important to distinguish that there's two different kinds of contempt that the judge could offer here. They can offer civil contempt, which is a this is important a non pardonable method of compelling but against to do things that the court is telling them to do. Basically you've been blowing me off. So now we're going to now we're going to strong on this. 00;42;36;04 - 00;43;08;10 Speaker 3 And we're going to hold your wire, until, until you do the thing that we're asking you to do or we're otherwise going to mess with you until it compels your, your compliance. There's also criminal contempt, which. I don't think is real likely here, at least not at this stage of the game. But, that's that's one where, you know, they put you in jail whether or not you're complying because you've been jerking the court around, and the court does not enjoy being jerked around. 00;43;10;19 - 00;43;47;14 Speaker 3 I would guess that we're still a ways away, from contempt, if that's in the cards. Eventually. One of the reasons for that is that as soon as as soon as the judge opts for contempt, it potentially damages her ability to continue leaning on these guys to get Garcia back. If there's really no evidence of any of that happening on Monday, then she may not have a choice that it may be better to to try to drop the boom and and create that pressure, even at the cost of the immediate appeals that would ensue. 00;43;47;27 - 00;44;04;29 Speaker 3 And getting probably eventually the Supreme Court back involved again. But it may be that she feels she can serve justice better by keeping this in the court, rather than handing it over to Scotus to take another week to think about what they're going to do. 00;44;05;01 - 00;44;23;05 Speaker 2 One thing we've seen repeatedly with Donald Trump is that when you when you take the more moderate path to sort of keep things on the level, that goes well for everyone except Donald Trump, right? Like he's his whole thing is not just pushing everything to the max and making people call his bluff, and then everyone folds that. That's not how he operates. 00;44;23;05 - 00;44;25;28 Speaker 2 So I think we should be on good ground there. 00;44;26;01 - 00;45;08;17 Speaker 3 So after we recorded this segment on Sunday, DOJ filed a second document in response to the plaintiff's motion for sanctions that essentially states that DOJ has no intention of doing anything that the court is asking them to do except to file these very, very minimal, daily updates. The government's position is that this facilitate language extends only to allowing Abrego Garcia back into the country and that the effectuate language that was in the original district order, does not allow the district court to ask. 00;45;10;13 - 00;45;38;01 Speaker 3 The United States government to do things like ask for a break. Garcia back. So I would say that the chances that we see, contempt or that we're headed for a constitutional crisis over this, have gone up significantly as a result of that filing. And I would expect that by the time you hear this podcast, we're going to have a bunch of new developments in this, in court, in addition to diplomatically with Bukayo in DC. 00;45;38;03 - 00;45;39;20 Speaker 3 This is a very serious issue. 00;45;39;20 - 00;45;40;26 Speaker 2 And. 00;45;40;29 - 00;46;09;23 Speaker 3 It seems like this might turn into a legal flashpoint for the larger question of whether or not there is any pathway for the United States government to take, U.S. citizens and ship them to an overseas prison without courts having a chance to interfere. We've had one other political wrinkle happened in this case, which is, I didn't I didn't know this prior to this week, but apparently, Abrego Garcia is a union man. 00;46;10;09 - 00;46;35;02 Speaker 3 He's an apprentice, with, smart, which is, sheet metal, air and rail transportation, which is part of the AfL-CIO umbrella. And the unions are starting to speak out on his behalf there. They're pointing out that this is this is not just this is not just some guy. This is a union brother who has been illegally thrown in this hellhole jail. 00;46;35;14 - 00;47;03;26 Speaker 3 You know, Salvador, and you know, this this is the building trades unions that are going to bat for him. They're not the Trump iest unions in the world, but there are definitely on the Trumpy side of the media union. So they they're predominantly male, very heavily immigrant. And possibly this is relevant, much more affected negatively by tariffs than a lot of the other, unions that are similarly situated. 00;47;04;04 - 00;47;44;20 Speaker 4 Do kind of wonder if that is going to be something that we see a lot of, just because if you think about all of the different trade unions, you're you're frequent frequently going to have, you know, folks who are immigrants that are members of those unions, you know, so it might be the building union like this, or it might be the UAW or it various especially will be the SEIU at some point where you've got, you know, union members who are being deported illegally, into, you know, this hell of a prison, and hopefully they can continue to continue to raise their voice, and make some trouble there. 00;47;44;22 - 00;48;04;25 Speaker 3 Yeah. You know, there's been there's been a little bit of a conversation about this happening and this this is a little diversion from what we planned to talk about. But, you're seeing different unions take different positions on tariffs in particular. Right now. And that's kind of reasonable when you think about the structure of what these unions do. 00;48;06;20 - 00;48;18;03 Speaker 3 UAW, the auto workers union, thinks that tariffs are basically good for them. They might be right about that. They might be wrong about that. But that's that's what they that's what they say. That's what they believe. 00;48;18;05 - 00;48;37;00 Speaker 2 They're wrong about that. But you know, like you said, right. It's their belief like you don't one of the if you're a trade unionist, you don't sit and second guess the people that are actually doing this as the union that's been elected to represent their members, like, that's the whole thing. So I think Fein is way wrong on this. 00;48;37;00 - 00;48;50;12 Speaker 2 Sean Fein, the president of UAW. Yeah, big. I mean, I have never said a critical thing about the man in my life up to this point. But, you know, that's union business. It's his choice. I, you know, by the ticket, take the ride. 00;48;50;14 - 00;49;05;17 Speaker 3 Right. And but UAW is, I think I think they're the seventh largest, union in the country. Now, union membership has really transformed from where it was in, in terms of industry, 20, 30, 40 years ago. 00;49;05;20 - 00;49;08;06 Speaker 2 Where about 10% of the private workforce now, which is. 00;49;08;13 - 00;49;26;11 Speaker 3 It's it's smaller, but also also the character of union members has changed that. Yes. What when you think when you think about a union man, at this point, you should be thinking about a woman and you should be thinking about a teacher. That's that's the modal. That's the modal union member in the United States right now. 00;49;27;13 - 00;49;49;06 Speaker 3 So you've got different unions taking different positions on the, on on tariffs. UAW thinks thinks they're may be okay. But the big teachers unions don't particularly like them. There's maybe some amount of union solidarity with manufacturing. But it's not really a wedge issue for them. It's not a, it's not a wedge issue for building trades. 00;49;49;09 - 00;50;16;16 Speaker 3 Who are actively hurt, by the tariffs because they can't import the building supplies. They need to import, to, to build things. Teamsters, somewhat oddly, are kind of tariff friendly. I haven't I don't really understand the thought process on that. It seems like Teamsters would want lots of goods that they would need to transport, but that's where they are. 00;50;16;19 - 00;50;45;16 Speaker 4 Just in general, I think that there's there's and this has been going on since NAFTA. So this has been going on since the 90s. But but there's sort of a cultural sort of approach within certain kinds of unions that sort of generally believes that the tariffs are one of the ways in which, the federal government should be protecting kind of trade workers and particular types of industries. 00;50;45;18 - 00;51;14;13 Speaker 4 I, I feel like this is something that that both Democrats and Republicans and kind of everybody in between has engaged in from time to time. I think it's honest, like it's pretty outdated. And I think that Democrats need to rethink kind of their approach to this, depending on the type of union. But it is just, it's, it's something that that has been real consistent on, you know, from both parties for decades. 00;51;14;16 - 00;51;46;27 Speaker 2 Yeah. It's also worth noting that the Usmca, which replaced NAFTA, did a lot to center unions and center a harmonization of wages across borders within North America in like, the whole thing. So part of the idea of the Usmca was that if you're going to be building cars in Mexico, you need to make sure that those workers have every opportunity to and also are paid not the same as, but a much closer hourly wage to what someone in the United States would earn in a union in the United States building a car. 00;51;47;00 - 00;52;16;00 Speaker 2 And that approach was wildly successful, right? Like like the Usmca is being adhered to by the Mexican auto industry. It it is an interesting example of a domestic union, going after foreign unions, essentially. And again, that's, you know, the UAW elected Fein. These are workers expressing through representation what they think is their best interest, that it's their union. 00;52;16;00 - 00;52;42;15 Speaker 2 And I'm not here to tell them, like they can't be doing that or whatever, but it certainly is objectively true that they are going after, labor in other countries in the process of trying to pursue their own interests. And that's not as true when you talk about, for instance, let's say solar panel manufacturing in the United States versus China, unions are illegal in China, right? 00;52;42;19 - 00;52;54;20 Speaker 2 Like it's not the same thing. So again, it is not. Yeah. No, it's true. 00;52;54;23 - 00;53;14;02 Speaker 2 You were lied to, my friend in that context anyways. I mean, maybe in other ways we can we can maybe do an episode on it. But look, I mean, I think it's fascinating to see when the rubber hits the road where the decisions are getting made. And I think it's also interesting that that. 00;53;14;05 - 00;53;15;00 Speaker 1 That can't be true. 00;53;15;00 - 00;53;18;03 Speaker 2 With some pretty Trumpy membership. So he's at political. 00;53;18;03 - 00;53;20;27 Speaker 1 I was told that China was a leftist US. 00;53;21;25 - 00;53;54;06 Speaker 2 I'm definitely not here to say the UAW is bad, but I will say that I think they are making the dead to rights a wrong call in terms of the economic outcome. It's going to hurt American auto workers, to raise tariff barriers, not the other way around. 00;53;54;08 - 00;54;01;26 Speaker 2 Grad students. 00;54;01;28 - 00;54;20;26 Speaker 1 And if I remember correctly, Fein won that election by a pretty narrow margin. It was something like 500 votes. And the UAW is, if memory serves, not just auto workers, there's there's lots of service sector workers who are members of that union. 00;54;20;29 - 00;54;23;16 Speaker 3 And grad students. 00;54;23;19 - 00;54;25;04 Speaker 1 Our grad students, UAW. 00;54;25;04 - 00;54;29;20 Speaker 3 I think they've done a really good job organizing grad students. 00;54;29;22 - 00;54;41;21 Speaker 1 So I, I wonder if this really comes back to the bite Fein like, sooner than we expect. 00;54;41;24 - 00;54;58;10 Speaker 3 You know, we'll see. I mean, I think Famous Fein shown himself to be a pretty savvy operator, so far. And, I mean, if you think back to last summer, he was definitely one of the guys wearing, wearing the white hats. He was he was a darling. Both of both of left, and of liberals. And my opinion on him is still pretty positive. 00;54;58;10 - 00;55;23;22 Speaker 3 I just, I just think he's really wrong about tariffs. That's that's kind of the extent of my beef with him. One thing I'll say is that I think we're going through kind of kind of an evolution right now from a period in American history where people's primary economic identity was as a worker, that they were very identified with the industry that they worked in, that you tended to stay in one job for big stretches of your career. 00;55;24;12 - 00;55;49;26 Speaker 3 There were lots of company men. There were lots of lots of union people. You would have a pension, perhaps related to your company these days. I think that the primary economic identity that most Americans have is as a consumer, and that, to me, really informs why these tariffs are going to be politically problematic, for, for Donald Trump. 00;55;50;07 - 00;56;01;09 Speaker 3 Because there's not much question that these tariffs are really bad for consumers. You can make an argument that they're good for producers, but for consumers this is a straight tax on us. 00;56;01;11 - 00;56;34;01 Speaker 2 We just saw a massive political fight over the legacy of the Biden presidency and the Biden presidency. Say what you want about foreign policy or about some other issues. You know how they went after, then former President Trump and the courts or whatever, but objectively very, very good at generating wage growth for the lowest part of the incomes spectrum, both through the income supports throughout the Covid pandemic, through the industrial policy that was pursued thereafter. 00;56;34;17 - 00;56;59;28 Speaker 2 Chips, irate bipartisan infrastructure, also through appointments to the Federal Reserve Board of Governors. Right. They appointed economists that broadly value tight labor markets relative to what we had from the 1980s to the late 20 tens. And there were really, really good outcomes for the sorts of people that had really, really bad outcomes over longer periods of time. 00;57;00;03 - 00;57;32;22 Speaker 2 You know, we had lots of inflation, but in real terms, low wage earners way outperformed during the pandemic and the post-pandemic period. And that benefit to labor was completely ignored by maybe not large but certainly non-trivial sections of the electorate. And it was ignored because the cost of going to Chili's and the cost of buying eggs and the cost of filling up your tank were viewed as more salient. 00;57;32;25 - 00;57;47;22 Speaker 2 I mean, I think that consumer first mentality is, is something that we've already seen in a big way over the past three years. And, and, it it's hard to imagine how the tariffs are not going to have a huge negative feedback effect, given that, that prior. 00;57;47;24 - 00;58;14;25 Speaker 4 One thing that I will note, without disagreeing with anything you said, I had been sort of convinced of the idea that a lot of the different Covid supports sort of vaporizing at the same time, things were getting more expensive, did actually create a lot of fairly difficult hardships for people, at least in, in the short term, to be able to manage, on a day to day basis. 00;58;15;08 - 00;58;31;21 Speaker 4 And I'll, I'll, I'll freely admit that I think I was I was more skeptical of that, you know, maybe a year, year and a half ago than I am now. I do think it actually it made a big difference. And it didn't matter in a way that I, I didn't give a lot of threats to. 00;58;31;23 - 00;58;55;22 Speaker 2 For sure. And there's a whole conversation to be had about the electoral implications or, and, or whatever. But I think it is what we can say is broadly true is that the fact that labor income for people that had had a hard time lately outperformed dramatically in real terms relative to people that had gotten had been so well off, over that that critical period that did not create a positive electoral feedback. 00;58;55;22 - 00;59;03;14 Speaker 2 And it was very much the opposite. So again, I think to Proctor's point, consumption is much more defining in our politics and production at this point. 00;59;03;17 - 00;59;38;24 Speaker 1 That that's kind of a fascinating thing when you're when you're looking at the data from this past election, too, and you look at, the income tiers and you see that, you know, folks, folks are in the higher income, region tended to favor Kamala Harris. And folks in the lower incomes tended to favor Trump. I think that goes to, you've talked about this a little bit in the past, George, about the sort of post material, post material politics. 00;59;38;24 - 00;59;42;08 Speaker 1 We sort of seem to be entering into. 00;59;42;10 - 01;00;13;24 Speaker 3 I just want to jump in on that for a second, because that's that's true broadly, if you're looking at primarily white voters, if you're looking at all voters, Dems, Dems still win among among poorer people, that you have a fairly a fairly smooth curve going up. It gets it gets a little bouncy at the, at the high end where you have professionals or over professionals and college educated, voters are overwhelmingly, Democratic voters. 01;00;13;27 - 01;00;19;02 Speaker 3 Right. But high income non-college voters are super red. 01;00;19;04 - 01;00;29;02 Speaker 1 Yeah. I was thinking, yeah, not not down to that level of granularity, but if I, if I remember the exit poll, and again, it's just an exit poll. 01;00;30;20 - 01;00;50;27 Speaker 1 The, the higher income brackets inclusive of all races, all genders, skewed towards Harris and the lower skewed towards Trump, despite the fact that if you're looking at how wages and incomes have behaved over the last five years, it ought to be the exact opposite. 01;00;50;29 - 01;01;15;24 Speaker 3 That that was that was the motion compared to how they voted previously, but not in absolute terms, if that. Okay, so so like so like you're right about the way those groups were moving. But it's the rule is still basically poor people vote Democrat rich people vote Republican. 01;01;17;17 - 01;01;23;12 Speaker 3 What's try to talk really quickly about. About what? About what's happening in North Carolina right now? It's not. 01;01;23;12 - 01;01;55;19 Speaker 2 Good, folks. As the resident North Carolinian. So, so we had a Supreme Court election last November, and the Democrat was able to squeeze it out. Democrats actually performed pretty well statewide in North Carolina. We had the governor win by a historic margin, biggest victory in 40 years because their Republican candidate was terrible or horrible. We had a bunch of other really successful Democrats, the attorney general, a few other council state elections that went our way in big size. 01;01;55;21 - 01;02;06;01 Speaker 3 And to give it to give you a little background on this, this this actually surprised me when I looked it up. North Carolina has elected Democratic governors in eight of the last nine gubernatorial elections. 01;02;06;10 - 01;02;08;22 Speaker 1 Yeah, I saw that, too. I was stunned by that. 01;02;08;24 - 01;02;41;11 Speaker 2 We love us some bland, normie like, typically white guy Democrats in this state. It is. It is what we do. And it paid off again this time around for Democrats. We also won a Supreme Court seat. North Carolina Supreme Court, is heavily Republican. So right now, excluding the most recent seat that was decided last fall, it's A42 majority for Republicans or, sorry, 451 majority for Republicans. 01;02;41;13 - 01;02;52;08 Speaker 2 And, that election was close. It was like 734 votes separating Riggs, from the Republican Riggs. Allison Riggs is the Democrat. 01;02;52;18 - 01;02;54;14 Speaker 3 Griffin is the Republican. Yeah. 01;02;54;16 - 01;03;21;07 Speaker 2 Yep. From, Griffin. So immediately Griffin goes to the courthouse and tries to throw out 60,000 ballots after it. These are ballots that are counted. It's over. There's no question that these voters all followed the rules that were expected. Had it heading into the election that had been, you know, these are not people that were casting provisional ballots or people that were, you know, in some way not getting identified at the poll or anything. 01;03;21;10 - 01;03;41;07 Speaker 2 These are people that they ID themselves. They followed all the rules in place at time. And now that the the Republicans want to throw these ballots out. So this has gone back and forth over the course of the past five months. And, the North Carolina Supreme Court just gave its ruling this week. They said we're not going to throw out all 60,000 ballots. 01;03;41;09 - 01;04;12;13 Speaker 2 But what we're going to do is, I think it's roughly 6000 ballots or something like that. 3000. I can't remember the exact number in four counties that are heavily Democrat that happen to have lots of college students. If you are an overseas voter in those counties, you need to prove, what your Social Security number is or what your driver's license number is, even though, again, you didn't have to do that when the election took place, the Board of State Board of Elections did not need to have that number on file. 01;04;12;20 - 01;04;24;23 Speaker 2 It's fine to vote without that on file, you still had to I.D. yourself at the polls or still had to follow other steps. I.D. yourself from overseas. But just those four counties, not the rest of the counties in Carolina. 01;04;25;05 - 01;04;48;15 Speaker 3 And for the overseas voters, if memory serves, it's actually photo ID that they had specific written guidance that they didn't need to submit photo ID, which is otherwise, a rule in North Carolina. But so obviously, these these people who are overseas who are predominantly either college students on semesters abroad or military, they didn't submit photo IDs. 01;04;48;18 - 01;05;11;03 Speaker 3 So there's, there's I think it's a little over 5000 voters in that category. And then there's another couple hundred voters who just got their votes thrown out completely on another basis that I don't recall. Anyway, the reason this is important is because despite the fact that North Carolina has done an admirable job of electing Democrats to statewide office, North Carolina is gerrymandered to hell and gone. 01;05;11;19 - 01;05;35;00 Speaker 3 It is not plausible right now for Dems to take the state House and after some other litigation and court rulings that happened fairly recently that allowed North Carolina to redraw its federal House districts, it's not possible for for Dems to do better than about a third of North Carolina's representatives in the House of Representatives. 01;05;35;03 - 01;05;39;11 Speaker 1 So it's basically it's basically hungry with but with better food. 01;05;39;13 - 01;05;40;03 Speaker 3 Right. 01;05;40;05 - 01;05;41;20 Speaker 2 Now. 01;05;41;22 - 01;05;51;23 Speaker 3 There is a path to North Carolina eventually, eventually calling its way out of that. And the path runs through the the North Carolina Supreme Court. If statewide office. 01;05;51;23 - 01;06;18;23 Speaker 2 So Democrats can be at worst extremely competitive, if not win that pretty reliably. So if Riggs wins, then it's now A52 court. And then you have elections over the next 3 or 4 years, and that can potentially push it all the way there. But if Riggs is prevented from taking her seat, which she rightfully won in the election, then the math changes entirely. 01;06;18;23 - 01;06;27;13 Speaker 2 And there's no foreseeable future where Democrats can be competitive in the state House, state Senate or federal, House elections. In North Carolina. 01;06;27;15 - 01;06;47;04 Speaker 3 We do we do still have a shot there, which is that there there are a total of four, Supreme Court seats that are on the ballot in either 2026 or 2028. One up in 2026, three up in 2028. I don't know how you guys wound up with three up in 2028. I don't really understand how your terms work or how or how that or how that wins there. 01;06;47;06 - 01;06;49;00 Speaker 1 But I love that though. 01;06;49;07 - 01;07;08;07 Speaker 3 If if Riggs if Riggs wins this election, if Riggs is seated after winning this election, which again, she did again, then that means that we need to go three for four. On these on these judicial elections, to take a majority in 2028. Otherwise we need to go four for four. And that's that's a tall left. 01;07;08;14 - 01;07;31;29 Speaker 2 And it looks like, based on the fact that they're, they're treating voters in different counties differently. So if you're in Mecklenburg County, you don't get treated the same way you do in Gaston County. That is under federal elections law, as close to a black letter, violation of the Equal Protection Clause as you can get. Right. And like everyone supposed to vote under the same rules within a state like this is not this is. 01;07;31;29 - 01;07;38;23 Speaker 2 It's just that simple. Will the Supreme Court could that way? Probably. But we don't know. So fun right? 01;07;38;25 - 01;07;42;01 Speaker 1 Isn't this echoes of also Bush v Gore. 01;07;42;02 - 01;07;43;06 Speaker 3 Yeah. This is the. 01;07;43;09 - 01;07;45;13 Speaker 1 Arguments they made in that case. 01;07;45;15 - 01;07;46;14 Speaker 2 Yes. 01;07;47;23 - 01;08;09;20 Speaker 3 Now the good news is that this North Carolina Supreme Court decision, there's still a couple of different ways that Democrats could win this. They can win this by curing ballots, for the overseas people. They've got I believe it's I believe it's 30 days. Might be 30 business days. To reach out to these voters and try to get them to submit photo ID so their votes count and they're not disenfranchized. 01;08;09;23 - 01;08;12;18 Speaker 2 And if it's 4000 people, that's a lot more doable than 60,000. 01;08;12;21 - 01;08;22;21 Speaker 3 It's much, much more doable. We were we were drawing that if the if North Carolina Supreme Court had done the really bad thing, they did the pretty bad thing instead of a really, really bad thing. 01;08;22;22 - 01;08;31;03 Speaker 2 Legally speaking, in terms of like like how the actual all works. I'm not sure this is any better, but in terms of the outcome, it's more winnable. Now. 01;08;31;05 - 01;08;52;24 Speaker 3 Our other out is that this is also being appealed in federal court. And due to some decisions that were made a very long time ago about what state is in what judicial circuit. North Carolina is in the Fourth Circuit, which is the same circuit that includes, like Virginia and other chunks of the eastern seaboard. So it's it's a pretty evenly split circuit. 01;08;52;26 - 01;09;07;03 Speaker 3 And even some of the Republican appointees on it are pretty reasonable. I don't think this is a super close case on the legal merits, although obviously the North Carolina Supreme Court disagreed with me. 01;09;07;05 - 01;09;26;15 Speaker 2 So it's hard to see the Fourth Circuit, unbound over or not overturning the North Carolina Supreme Court decision. It's hard to see that. And if you don't, you then if you're if Riggs is the winner headed into Scotus, then it really gets tricky for the Supreme Court to step in and. 01;09;26;17 - 01;09;50;12 Speaker 3 Right. I kind of don't think Scotus is going to touch this one unless they really feel that the fourth circuit is screwed it up. Let's go to Scotus. Doesn't want to have to care about about who wins a North Carolina Supreme Court judicial election. That's not that's not something that they are interested in spending time on. 01;09;50;15 - 01;10;09;10 Speaker 3 And it's definitely not something that they're interested in spending credibility on. So if they can duck this, I think they will. Yeah. But right now it's in district court with a Trump appointed judge who may or may not do something good. We'll see. Some people I respect seem to think he might. He might do the right thing. 01;10;09;12 - 01;10;32;16 Speaker 3 So maybe we got a shot there, but if not there, I think our chances on appeal at the Fourth Circuit are pretty good. So this might have a happy ending. But for now, this is a as the law currently stands, it is a significant miscarriage of justice that is going to result in a bunch of people being Disenfranchized and North Carolina being denied the representation that's elected. 01;10;32;19 - 01;10;51;12 Speaker 2 If you know a college student that voted overseas in from in a North Carolina election last fall, get on the horn telling to get in touch with the state SB because, yeah, it's it's it would be great if we could just cure every single ballot and it's a non-issue and probably not going to work that way. 01;10;51;12 - 01;10;53;13 Speaker 2 But hey. 01;10;53;15 - 01;11;16;26 Speaker 3 There are lists online of the identities of these voters. So if you think you might know somebody who's on these lists, then feel free to bring it to ping any one of us, or in particular ping me. I guess I shouldn't volunteer everybody for this job. But ping me on blue Sky and austerity towards the list. So you can find out whether or not you need to harass your your your roommate, your neighbor, your nephew, your niece, whatever. 01;11;16;29 - 01;11;27;22 Speaker 2 And speaking of blue Sky, I think it's a good time to remind everyone, where we can find y'all online. I'm at Perkins on blue Sky. 01;11;28;00 - 01;11;32;09 Speaker 3 You can get me at prompter. Malone on blue sky. 01;11;32;12 - 01;11;35;25 Speaker 4 I'm go like hell. Machine. 01;11;35;28 - 01;11;46;20 Speaker 1 And, you can you can just search for low tech speedrun enjoyer. And, you'll either you'll either find me or you'll find somebody tagging me. 01;11;46;22 - 01;12;06;21 Speaker 2 All right. And with that, I think that's our show for the week. And thanks for listening, y'all. We really appreciate it. It was really, really heartwarming to watch the plays break up last week and to, listen to all the comments people gave us about how bad our mics were and, how much they were looking forward to the next episode. 01;12;06;21 - 01;12;35;26 Speaker 2 Anyways, so we really appreciate it. Thanks for listening. You can find us wherever you get podcasts. You can also like or sorry, rate and reviews on any of those podcast apps. So we appreciate that. And until next time, just stay normal out there.