90. Major Changes to Housing & Education—What You Need to Know

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Ready?

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I'm playing some music.
[Music]

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[Music] [Music]
[Music] [Music]
Hey there.
Welcome to episode
90 of Drunk Real Estate.
I am Kyle Wilson,
Ashley Wilson's husband.

(00:57):
And what do you think,
guys? Is that?
Is that going to be
our new new intro
replace what
we got before.
I thought that
was pretty cool. So.
So for those who are
wondering, that
theme song,
I guess you could call it
for lack of a better term,
came from
one of our listeners,
Rob Army,
just out of the blue,
put together a theme
song for the show.
I guess
he didn't like our intro

(01:18):
or something,
and, sent
that to us,
and it's actually
about three full minutes.
I, we cut it up
a little bit, but,
so the thing.
Is that all is that.
Is that all I generated?
I assume so he he he
he indicated that
that it was.
So the fact that
he probably just
he probably uploaded
a bunch of our episodes
or transcripts
or whatever,
and then the frickin
AI spits out
the whole jingle,

(01:39):
which is just crazy.
Well, Rob
does a lot of AI stuff,
and he sends me emails
every once in a while,
just giving me some tips
on, like Dre daily,
the newsletter
I do every day
and how to automate that.
And so
I'm thinking
we might want to ask him
if he wants to come on
a future episode
and talk a little bit
about AI and,
how we as real estate.
Are you going
are you going to
post the full thing
for us?
Jay yeah, I'll

(01:59):
post in the,
in the YouTube
description.
I will
post a
link to that full audio.
Okay.
Because it is,
there are some pretty
funny parts
where like it calls out
like our,
you know, how
we pretend to be
people and stuff. So,
where are we at
least transcribe it?
Because I want it
to be out there.
But, Jay,

(02:19):
how's it going, man?
Other than that.
Going. Well?
It's we're
we're recording
early today.
Normally we recorded
like, 730, 7:00 my time,
and here we are at 330.
And so you've got me
drinking in the afternoon.
Yeah.
You can actually see
back behind me my.
There's light
coming in
through my windows.
It's crazy.
What what
are you drinking?

(02:40):
I just grabbed
the first thing I found,
which is this, Lobo EFL
valve seal.
How do you pronounce that?
Mauricio.
I don't know
if it's from Costco.
I don't give a rat's ass.
That's not.
It's,
Wolf and Falcon 2021
from Portugal.
No idea where it's from,
but it was not Costco.
Do you think
I'm from Portugal?
That I would understand
Portuguese? And she's.

(03:00):
She's like, just.
They're all the same age.
Yeah.
Just it's,
you know, just
you've got
your white privilege.
Just just stay over there.
Same as Spanish.
It's actually beautiful.
It's,
a language
that is complex and rich.
Yes, it is.
It is is not beautiful.
I mean, romantic.
That's exactly
what I'm saying.

(03:20):
Yes, exactly
what I'm saying.
How's it going, Mauricio?
Dude, I'm drinking.
I mean, it's like.
It's like just
the morning
just ended over here
because I'm on
the West coast,
so I'm, I'm
drinking my little coffee.
Yeah, but it isn't.
Isn't it
your fault
that that we're
having to record
this early, so I can't.
You can't really complain.
Like.
It is definitely
not my fault.
And it was AJ.
Somebody else
had a conflict scheduled,

(03:41):
a scheduling conflict.
It was not me.
Well, you're the you're
the reason
we have to do it.
No, I like that.
We're just throwing him
under the bus,
so I'm going to
stick with that.
I'm not going to answer.
It really. Is. What?
What are you
drinking, Mauricio?
I'm drinking coffee.
Some Nespresso.
Nespresso?
Just coffee.
Yeah, I got
I got stuff to do, guys.
I mean, this ends at like,

(04:02):
2:00 in the afternoon,
I got work.
Oh, geez.
I gotta go
get one of those episodes.
Real estate syndicators.
They depend on me.
All right, agent, go.
Tell us about your
caffeine and your dinosaur
Diet Coke.
Red solo.
Doesn't matter
if it's
early morning,
afternoon, night.
I'm good.
I'm sticking with it.

(04:23):
And Ernie
is sticking by me.
Kyle, you drink of that.
That, that,
nonsense thing again.
The clear,
whatever it's called.
Yeah.
I'm just going to try
and keep as much energy
even though
we're so early,
but, Yeah, it's perfect.
It's just like.
It's like drinking,
like flavor.
Just a little hint
flavored water, actually.
You guys ever
have that hint water?
It's excellent.
It's like Costco,

(04:44):
by the way.
Jay, you should be able
to get some hint water.
I love it.
All right,
should we get into this?
I know
people have time crunches,
and we gotta.
We got
a lot of cool stuff
to talk about,
especially Fannie
and Freddie.
Cool topic. Right, guys?
Fannie
and Freddie are names
most people
never really even heard of
until the great
Financial crisis in 2008,
but they are hybrid public

(05:06):
private entities.
And these government
sponsored enterprises,
they're called GSEs,
if you ever want to look
it up,
have been the cornerstone
of American
real estate mortgages
since the
Great Depression.
Well, now
they've been highly
profitable entities
for a number of years.
So people are saying
it's time for them
to step
out of Under
Big Brother's shadow.
But many are believing

(05:26):
it could spell disaster
for the cost of
real estate prices here.
So Jay is privatizing
Fannie and Freddie
really a good idea?
Yeah,
I think there's
actually a good debate
to be had here.
And I'm not even sure
which way I fall on this.
And hopefully
by the end of the episode,
I'll have an opinion.
But let's start
with a little
bit of history,
because I think
this will be important
moving forward, because,

(05:47):
we're kind of moving back
to where we have been
at a previous point
if we're if we privatize.
So Fannie
Mae was created in 1938.
Freddie Mac
was was
a couple of decades later,
the reason
Fannie Mae was created
was during
the Great Depression.
Basically,
it was really tough
to get mortgages
you couldn't get.
Lenders were
tightening up.

(06:07):
Nobody wanted
to lend money.
Homeownership rates
plummeted.
And so
the government
basically wanted
to create a stable
and reliable source
for funding mortgages
at the tail
end of the
Great Depression.
So 1938,
Fannie Mae was created.
The goal was basically
Fannie Mae would buy
mortgages from lenders.
So a lender

(06:28):
like a Wells Fargo bank,
I don't know if they had,
well, Wells Fargo back
then, but Wells
Fargo Bank
makes a loan at Wells do.
They came in wagons
from the East Coast
and they went to the Wells
Fargo was like with horse
and carriage.
Dude. Come on.
Thank you.
Okay. Good point. Yeah.
So well,
there's an example.
So Wells Fargo,
would originate a loan
to make a loan
to a homeowner, and then,
Fannie Mae would come in

(06:49):
and they would backstop
that loan.
They would
they would repay Wells.
So Wells
could then recapitalize
and go make a loan
to somebody else.
And this was a essentially
a government agency.
1968 comes along
and I think was 1968,
1968 comes along.
And the government
decided, let's make Fannie
Mae private.
So made them

(07:10):
a private company,
listed them
on the New York Stock
Exchange,
still regulated by HUD.
But it was basically
the goal
was for this organization
to make money.
Well,
now that it was a
private organization,
it needed competition
because we
like competition
in this country.
And there were no
other organizations
nearly
the size of Fannie Mae
that could compete.
So the government
created a second

(07:30):
organization called
Freddie Mac
in, somewhere around 1970,
I think,
and Freddie Mac
was basically a brother
company to, to Fannie Mae,
with the goal
of essentially
being competition
for Fannie Mae.
So two private companies,
Freddie Mac
was originally owned
by like a dozen banks,
as opposed to being listed
on the stock exchange.
But basically,

(07:51):
these two companies
were private companies
buying up
all the mortgages
or most of the mortgages
in the country,
so the banks
could continue to lend
and lend and lend.
So, Jay,
when you say when you say,
I just say
just a curiosity here
because you said
they're the
private company,
but we said that
the government created it.
So like,
which one is
the government
create the Freddie in 1970
or is that a
private company?
So the government created

(08:12):
or originated
Freddie Mac
again under the under
the regulation of HUD,
but they created it
as a private company.
So they, they
Congress
enacted a law
that put it
into existence,
gave it over to 12 banks
that were the big
12 home
lenders at the time,

(08:34):
and those banks ran it
and it was regulated by,
just like Fannie Mae.
But Fannie Mae was
on the stock exchange
and owned by everybody.
But they were
two private companies
by 1970.
And again,
their job
was to buy mortgages
from lenders,
pull those mortgages up,
and then sell them off
to investors
as what we call
mortgage backed
securities,
which you may have heard

(08:54):
that term,
if you were paying
attention in 2008,
where you basically pull
lots of loans together
and sell them
to investors.
And one of the nice things
about Fannie and Freddie,
is it kind of it really
it stabilizes
mortgage rates
because there's less
risk to the lenders.
If Wells Fargo thinks
they have to hold a loan
for 30 years,
they're going to charge
a higher interest rate

(09:14):
than if they know
that they can
originate alone.
And then two weeks
later, a month later,
sell it to Fannie
because there's
no interest rate risk.
They don't have to
worry about rates going up
and then having
their money out at 3%
when they could
get 6% later.
So they really stabilize
mortgage rates.
2008 comes around,
and I mentioned
that Fannie Mae,
Freddie Mac took
all these loans

(09:35):
and packages
them up into mortgage
backed securities, MBS
and in 2008,
if you recall,
we had this issue where
all of these bad
loans were made, all these
all these subprime
loans were made.
And so
all of these packages
of loans, these MBS
basically
became worthless.
And so all the banks
that had bought these MBS,

(09:57):
we're screwed.
They lost lots of money.
The government
had to bail them out
at the same time,
Fannie Mae
and Freddie Mac,
they were doing
really poorly.
They couldn't
like they again,
private companies,
they couldn't
support themselves.
And so
the government had
to basically bail
them out as well.
And government
didn't want them
to go away.
They wanted them to to
to stick around
because, again,

(10:17):
they served
a very important function
in, in the housing market.
So the government
basically bailed them out
by buying about
80% of them
in terms of equity,
warrants, which is,
just a way
to make an investment
in a company.
But for the most part,
the government owned about
80% of these two companies
since 2008.

(10:37):
The goal was always, hey,
we should privatize
these companies again
at some point
in the future.
But the Fannie Mae
and Freddie
Mac owed so much money
to the government.
And things
were actually going pretty
well the last 15,
17 years.
That hasn't
been a high priority.
Trump in his first term
talked about doing it,
but it just
there was so much,
so much other stuff
going on.
It just didn't

(10:57):
become a priority.
Biden administration
didn't even talk about it.
And now Trump
coming back into office
one of the big
discussions is do
is now the right time
to take Fannie
Mae and Freddie
Mac private again? But
my question is why?
Like, why
do they want to get rid
of Fannie and Freddie?
Like what?
Like what's
what's the push?

(11:18):
Like whenever
I hear people
talking about it,
like in the,
you know, government
officials and stuff
and they say like, oh,
we should do this,
but I've never
really heard
a compelling argument
for why the government
should get rid of them.
Like they're a
profitable company.
They're doing fine.
Like, why
why do we need
to privatize them?
I could be
I could be skeptical
and say the same reason

(11:39):
that I think
this administration
is looking
to privatize
a bunch of different
functions of
the government.
It provides
tremendous
financial opportunity
to those people
that come in
and end up
running the companies.
Basically you
you get some billionaires,
the opportunity,
to, to run
some potentially

(11:59):
very profitable companies.
The problem
is to make certain
things profitable.
And I'm not saying
Fannie Mae and Freddie
Mac is in this
in this, the.
Government owns it.
How does it give
control to the
billionaires then
to take it?
So the government
right now
can well,
they own about 80%.
They can sell it.
So they. Can.
You were saying to

(12:20):
the government,
take it over.
Well,
so then is the question
that is this
is this a cash grab?
Like
if they were going to sell
Fannie and Freddie
and they're going to
make money off it
and pay down
our deficit or.
Like, well, here's
the here's the problem.
So right now,
Fannie
and Freddie are still
in conservatorship,
which means the government
is still controlling them.

(12:40):
Fannie and Freddie control
about six and a half,
$7 trillion in loans,
50% of all the
housing debt out there.
They don't have enough
money on hand
to run
privately right now.
They're still relying
on the fed
to backstop them.
So every year
they need about $325
billion to,
to make
to, to run to

(13:01):
up in operational cash.
They've got about
125 billion on hand,
which means they're
about 175 billion short,
which they can rely
if they have cash flow
issues on the Treasury
and the fed
to basically backstop them
and give them that cash.
They are profitable.
They make about
25 billion a year,
but they don't
have enough cash on hand

(13:21):
to deal
with a cash flow shortage.
So the thought is one
they could IPO.
And if you IPO
you basically raise
lots of capital,
hundreds of billions
of dollars potentially.
And that could
raise the capital
that they need.
Second issue
is that,
again,
the Treasury owns
about 80% of Fannie
Mae and Freddie Mac
to the tune of about

(13:42):
340 billion.
If they were.
They own the rights.
So they own the rights
to take over it.
Correct?
They own warrants
and stock.
So they own some stock
and they own
some warrants.
Warrants are basically
a type of debt option.
Yes.
And so if they were
to roll off
Fannie and Freddie,
basically whoever
bought them

(14:02):
in order
to make taxpayer whole
because again,
they're owed money,
basically
they made a lot of loans.
They made a lot
of investment
into Fannie
and Freddie back in 2008.
And the value
of what they bought
is about $340 billion.
And so
if they took them private,
somebody owes
the taxpayers
the Treasury,
the fed,

(14:23):
this $340 billion that
that their equity
and warrants are worth.
And so in theory,
if somebody were
to take over
Fannie Mae
and Freddie Mac,
they would owe us
taxpayers $340 billion.
Could the government
forgive that?
Sure they could.
They could say,
hey, just take it.
We don't need
our 340 billion.
But I think it's
going to be hard to argue

(14:43):
right now.
To the American.
The market value,
you said
they're making 25 billion
a year.
Like what's their market
value then? Like that's.
I mean,
you could capitalize
that at whatever.
There's considered.
There's considered
triple A credit rating.
Right.
So well that's
and that's
the other issue.
They're considered
Triple-A credit rating
because right now

(15:04):
they're backed
by the full faith
and credit of the U.S
government. Right.
So if they became private,
that's actually
one of the issues.
If they became private
now, they're
no longer backed
by the full faith
and credit
of the U.S government.
And now their credit
rating could drop,
they would
become a higher risk.
And so it may be harder
for them to raise money.
They may have
to raise rates.

(15:24):
We may see we would likely
see higher mortgage rates
because again,
we don't have the.
Explaining to
explain to me
the argument against that,
because people like
there are people
on both sides.
I heard someone
arguing the other day
that it would
actually be better
for the mortgage industry,
and mortgage rates
could go down,
but I don't like it.
Like I don't see
how this doesn't lead
all roads to me.
Leads to higher and higher

(15:45):
interest rates
for mortgages.
Yeah, higher
interest rates
likely higher,
tighter lending as well
because as a
private company, again,
they need to
make decisions
not based on
what's in the best
interest of Americans,
which they can do
if they're a government
controlled entity.
The government
can say, hey,
even if we're making
some bad decisions,
even if we're making
some bad loans,
if we're
helping out Americans,
we can justify
where the government.

(16:05):
We can
somehow justify ways to
somehow justify ways to.
Argue that
Fannie and Freddie
may have helped out
Americans in
any way, shape or form,
considering they basically
were a key
part of
imploding our
entire economy.
Well, no.
So they weren't really
I mean,
they didn't make loans.

(16:27):
They guaranteed loans
that other banks made.
That's the key, though.
The key is that
these aren't really
private companies,
even though even though
they're
technically private,
because they it's
the guarantee
that makes it all work,
like the Wall
Street bankers did.
His point
if these if
they didn't have a Freddie
or Fannie
that was guaranteeing
those loans,
they wouldn't have
they wouldn't
have been able to packages

(16:48):
or wouldn't
have wanted to packages
because they wouldn't
have been able
to get the right price.
The fact that these
are guaranteed.
So the reason why
we had to bail out
Fannie and Freddie
made it
so that cancer
was attached
to all of them.
The bankers came.
And if Fannie and Freddie
fell,
all the banks
would come down.
They were like
the keychain.

(17:08):
So it's once again,
it is not even arguable.
Fannie and Freddie,
due to the position
they were in,
they literally locked up
our financial system
in a way
that the only way
we could not have
our country be destroyed
was to bail out
all the banks, even banks
that didn't
want the bailouts.
They didn't

(17:28):
make the loans, but they
they more or less did,
like they gave
the guidelines under
what the banks
should make the loans to
and like
they were overseeing.
And the and it's literally
just like it's
the same thing
for us
for large apartments.
We get Fannie
and Freddie loans.
And when we get a
a loan from Fannie
and Freddie,
we're not getting it
from Fannie and Freddie.
We get it from Arbor

(17:48):
or from what,
like whatever
these dust lenders are.
And but it's
the same forms.
It's the exact
same process
and it's
the exact
same requirements.
So you're
basically whenever
someone says,
what kind of loan
do you have?
You say
Fannie and Freddie,
but depending
on what it is,
because that's.
But it's the same, but
because they're
guaranteeing it's
like if I said,
hey, Jay,
let me money, but Warren
Buffett's guaranteeing
the loan.
It's a it's basically,

(18:08):
relying on Warren Buffett
because he's guaranteeing,
you know, the loan
because I know
Jay can't pay off a loan.
So it's the
guarantee part.
That's that's
the big issue right now.
I want to go back.
Well,
if you want to finish up,
but I want to go back
to a more basic concept.
There's there's one other
there's one
other player in this
that's worth mentioning.
There's an organization,
a government
agency called FAA.
So Federal

(18:29):
Housing Finance Authority,
and they're actually
the ones
that make
the lending requirements.
They're the ones that say
you're allowed
to make a loan,
a conventional loan
down to this credit,
score.
You can make
a conventional loan
at this DTI.
You can make
a conventional loan
on these types
of properties.
It's not Fannie Mae,
Fannie Mae and Freddie Mac
who make those decisions
today.
It's FHA f f HFA

(18:52):
that makes
those decisions.
And again,
because Fannie Mae,
Freddie Mac,
or backstopped
by the government,
they don't have
a lot of risk by saying,
okay, we'll take
we'll buy loans
no matter
what the how bad
the loans are.
We'll buy them
because they know that
if for some reason
all hell breaks loose,
hits the fan,
Fed's going to step
in, Treasury is

(19:12):
going to step in
and they're going
to give them
the $5 trillion
that they need
to bail them out,
just like they
did in 2008.
So I'm not saying that,
Fannie Mae
and Freddie Mac,
I did say I apologize
because I did say
that they weren't
responsible for 2008.
I still contend
that they didn't
have the bulk
of the responsibility.
But you're
certainly right.
That they the banks,
FHA, Congress,

(19:34):
who made a lot
of lending laws.
I mean, they were
all responsible
and certainly Fannie Mae
and Freddie Mac
were part of that,
but I wouldn't
give them personally.
I wouldn't say that
they're the bulk of the
the issue back then.
It's probably equal across
all these agencies.
But they had the trillions
of dollars
of mortgage
backed securities
that were held.
And I think that was the
real leveraging point.

(19:55):
And it connected
all the other banks
that they were buying from
for Fannie and Freddie.
And so I think
the only to the point
just being as that
centralized connection.
So when you
have governments,
white entities,
what you do is you
it creates systematic
risk lots of times
because it's
a centralized,

(20:16):
noncompetitive
market driven
that has an,
moral hazard
of endlessly
being backed up.
So there mistakes
and things
that they do
can be leveraged
massively,
whereas the other banks
individually,
like they let
a couple of the banks go,
but they couldn't
let Fannie and Freddie go
because of that reason.
Yeah.

(20:36):
I mean, it's a bedrock
of of our low
interest rates, right.
Like point like
because you guys
made a point
that I'd love to hear
what the rationale
is for it,
but I mean,
you've got to answer
a fundamental question,
I guess, which is,
are you okay
with the government or the
centralized, parties sub
I mean,
subsidizing
interest, right?
I mean, I don't
I would argue that

(20:58):
when you say
interest rates
would go up,
I would agree,
but it's more like
it's not like
they would go up.
They would just go
to market conditions.
And market
conditions are higher
than they are today.
Like if you just let
the market
do its thing,
interest rates
would be at eight
and I don't know what
there would be
eight and 9%.
This is subsidizing
that and that
you could argue
that's a good thing.
That's a bad thing.
But at the end of the day,
the government is subsidy
izing
the mortgage industry.
And the question

(21:19):
you have to ask you,
do you want to do that?
So that's number one.
And then my second
for real quick.
I do want to be clear.
They're not
technically subsidizing
Fannie Mae.
And Freddie Mac.
What they are doing
is they are
they are
backstopping risk.
Of course,
but they're guaranteeing
the like, who's
going to make the nobody's
going to make the loan
at 5%.
I absolutely didn't know

(21:39):
for a fact
that that Fannie Mae
was going to buy it
because because if
we weren't sure
they're going to buy it
or they're going to buy it
at a higher rate,
then you wouldn't make the
you wouldn't
give the loan.
The only reason
you're extending
the loan
is because you know,
you're going to be able
to sell it
in the secondary market.
And the investors
who were buying
that mortgage backed
securities know that
if for whatever reason
they default,
the government
is going to pay them.
It's almost like
a risk free.

(21:59):
And I
would actually argue,
mortgage backed securities
based off of residential
mortgages are
ship products
without the government
backing, in my opinion.
But we can
we can get back to it.
Yeah.
And again,
I'm being a
little pedantic,
but I'm doing it
for the listeners
because I want them
to understand
Fannie Mae and Freddie
Mac are profitable.
They do run like they
they it's not like
the it's

(22:19):
not it's
not like the post office.
For now,
when we're having
interest rates
that have continually
been going up.
And not paying back
what was lent to them.
So it's easy
to be profitable
if you give them
$1 billion
and they don't
have to pay it back.
That's right.
The problem is
these these,
these quasi
governmental companies,
they're the
they're private
when they make profits,

(22:40):
but when they lose,
it all gets socialized.
And so yeah, it's
great that you make
$25 billion every year.
But then if
every ten years
you lose
700 billion
and you have the
government to
bail you out,
that's not a
profitable company.
Well,
and it's
not a profitable company
like it,
where it's
only certain
market conditions
where they're
going to win.
So think about it
this way.
If your options are to buy

(23:01):
a government
bond or treasury note,
let's say
let's even say 30 year
because you can get
a 30 year
Treasury note right now.
When you buy that,
you know,
you're getting
your interest rate
4% or whatever.
And for as
long as you hold it,
it's going to be 4%.
But you have the upside.
If all of a sudden
interest rates
go down,
you could
turn around and sell that,
get the upside right.

(23:21):
But the downside,
if the interest rates go
up, you just hold hold it.
If you look at these
mortgage backed
securities,
they technically
have 30 year terms.
But like the
what they're securitized
by could end at any time.
Like I can go
and turn around
and I could sell my house.
And it's a requirement
of the loan
that I could just
pay off the loan
anytime I want.

(23:42):
I don't even
have to have to.
I could refi,
I could do whatever
I want,
I could just
get out of that.
So if you're buying
that mortgage
backed security,
you basically
you have no upside
and no downside
or you have no upside
and all downside,
like you
don't know
how long your
term is going to be
and you don't
have the upside
that if interest rates
go down, it's
actually going
to be worse.

(24:03):
Because when
interest rates
go down, everyone's
going to sell
and get rid
of those securities.
So like it's it's a lose.
Lose in the
artificial loans.
Like are
the artificial
interest rates.
What that does
I think every homeowner
would agree at this point
that holding
interest rates
artificially low low,
whether that's by the fed

(24:23):
or by Fannie
and Freddie packaging up
housing loans
and not taking on
any risk
has not only not
helped any of us,
but it has created
the worst financial crisis
and then led to a point
where people can't
even buy homes
because housing prices
were driven up
artificially.
So the reason why
we had a disconnect
of housing prices

(24:44):
was largely driven
because interest was free.
And so all of a sudden
you could pay a multiple
that you could
normally pay.
Well, that that
that's so artificial
that it affects
and makes
one group of people
really wealthy.
While it makes others
not only really poor,
it creates mass
barriers of entries
because it's artificial,
it's not real.

(25:05):
It's not tied to like
income levels.
It's necessarily
it's not tied to
other things.
And I think that
this quasi
government stuff,
where they're
where they're
pushing the market
to do things
they want it to do,
the implications
of what we see
is not it's
catastrophic on one end,
but it also really,
really hurts people
that want
to be homeowners.

(25:25):
So although the
idea's good,
we're going
to make it available
for more homeowners.
But at the same time,
then what happens is
prices go up.
So the people that need
the insurance
can't even get them.
And the challenges.
They do,
the challenges that you
the the system
now is kind of
addicted to that.
So it's not as easy
as saying, well, we don't.
Pay more interest
rates a pleasure.
Let's just unwind it all.
Let's go back to like

(25:46):
let's just have
all the pricing
go back down
50% and let's
go interest rates go in
and whatever.
That just causes so much,
you know, issues
with the economy that
unless you wean
off of it slowly
and you say, okay,
this is
this is a 20 year plan
where we're slowly going
to get off of this,
just suddenly eliminating,
for example, family
or friend,
because I think
that's the discussion
you eliminate.
It's not a discussion

(26:07):
of whether it should be
a private
or government owned, it's
whether you should
have it or not.
That's really
I think that the
main discussion,
I think having it
private is really
it's almost like
a slap in the face,
because we all know
that if
if we have a big downturn
and there's
a huge economy,
and even
if they're private,
the government
will come in
and bail them out.
So it's really
the same thing.
But if there the question.
Is, wouldn't
that cause it's
because like,
you know what

(26:27):
Jay was talking about?
How if you're backstopping
those interest rates
with the government,
it leads you to be able
to take on more?
If it's a
private institution,
they're going to go
we we're not going
to do that. Yeah.
But but that was the thing
AJ, remember because we
you and I are old enough
to remember the stuff.
But like prior to 2008,
there was almost like this

(26:47):
question of like, I will
they will
the government
bail them out?
Well,
if there's this
financial crisis will
it was like
we didn't really know,
but that was priced
in like
it wasn't 100%
sure they would,
but it wasn't 100%.
So it was like a 5050
would the government
step in.
And we got the answer,
which is they will.
And so investors coming in
when they're
raising capital
to recapitalize
these companies,
there's
going to be a factor

(27:08):
in there.
That's like,
hey, if we do lose money
or if we do
have a downturn,
that usually would
wipe us all out,
I feel pretty decent
that the government
is going to come in
and bail us out.
Otherwise, it's
just a catastrophic thing
for all of it.
But here's another way
to think about this.
You're certainly
I think you guys
are certainly right.
I mean,
they're always going
to get bailed out.
The question
is, is a bailout
in this situation

(27:29):
that bad of of an idea?
If you think about it,
we are all
I assume
we're all in agreement
that bailing out
the big banks in 2008
was was horrendous,
both from a
how much it cost
the government
from a
capitalist standpoint,
from a, from
from all
different standpoint,
bailing out
big banks
was probably
not a good thing to do.

(27:50):
Bailing out
a big bank
who benefits
the big bank benefits?
There are plenty of other
smaller banks
that are going to step in
and and provide
the same service
at pretty much
the substantially
the same price
and all that.
But if Fannie Mae
and Freddie
Mac went out of business,
not only would
nobody else step in,
but it doesn't just hurt
Fannie Mae

(28:10):
and Freddie Mac.
It's not like it
just hurts
JPMorgan Chase
when when they or
when when they go
out of business.
Fannie Mae and Freddie Mac
going out of business,
not getting bailed out
is bad for tens,
hundreds of millions
of Americans
who, you know.
I don't think
if JP
Morgan had gone under,
you wouldn't have
lost anything
that was above
your FDIC insurance
back then,
which was like a.
Hundred grand.

(28:30):
I mean,
the government
could have done
something in the middle
where they said,
we're going to bail out
the depositors
without bailing out
the bank.
We're going to let
we're going to let Chase
and the sheriff,
we're run out.
The shareholders
lose money.
We're not going to let
the depositors lose money.
They could have done that.
They did that.
Well, they did that
with Silicon Valley Bank
last year.
That's exactly
what they did.
They said,
we're going to bail out.
I mean,
there are plenty
of depositors
that had millions

(28:51):
of dollars,
lots of
of startup companies
and VCs
that had
millions of dollars
in Silicon Valley Bank.
They bailed out
all the depositors,
but they let the
shareholders go down.
And that's
the moral hazard, though,
that we keep
talking about.
The moral hazard is
you keep doing that,
then people don't care
what bank they put in.
They're not going to pay
any attention
to where the banks are.
Good bank,
a bad bank
if they're concerned,
if they're aggressive
because they know
it doesn't matter.

(29:11):
Like if I put money
in this bank of that bank,
I'm insured.
I'm going to get covered.
Versus
if you don't cover them
now, you've got to
I don't think.
I don't think it changes
the fact, though,
that if they were to go
private, their credit
rating would take a hit.
Like basically
their credit
rating is the exact same
as the US government.
You saw that back in 2023,
like in 2023.
There was that time

(29:31):
where Fitch or Filch
whatever,
like they downgraded
the US government
from triple
AA down to double AA plus.
And what happened
at the exact same time
Fannie and Freddie
got downgraded
to the same rating.
And when asked why
they literally said
that the downgrade was due
to the US government
being downgraded.

(29:52):
So like their
their credit
rating is literally tied
to the US government.
So if they were
to become private,
they would have
to separate those two.
Regardless of the fact
that we
we know
that they would
get bailed out
and they're creating
that rating
would take a hit.
With now,
I still think
it would affect
interest rates.
Well,
I guess that's
what I'm saying, is that

(30:12):
if you like,
if you're having to.
So they package up
these mortgage
or these mortgage
backed securities
and then resell them,
like if you have
a credit down
rating of of your product,
then the price
that you're going
to have to
to give that out,
that goes up.
And if the price goes up
they're going to
have to charge
higher fees.
You're going to have the.
Cost of capital, right?

(30:34):
Is that's
going to increase
because they're so Fannie
and Freddie
would have to onboard
way more capital.
They don't have to
right now. Right.
And it would also
have to then provide,
profit to shareholders.
It would have to
attract investors
that have to provide
a lot more of
those business
functionalities,
which it doesn't
have to do.
So the interest rates

(30:54):
would have to rise
because you also have
so anything smaller
you take 30 year,
for example,
like not commercial
but 30 year fixed only
it really is
the 30 year
mortgage, is it?
It is only viable
because of the U.S
government.
Let's just be it.
So it's not.
One of like
three countries

(31:15):
to offer it.
Even Canada doesn't
offer it.
So imagine your payment.
Imagine your payment
if you had to
just get
a 15 year mortgage,
which is what the market
may may
be willing to give you.
Now you got to
buy the house
with only a 15 year.
Your payment is basically
almost done
in most countries.
The Max is ten.
So so so here,
here are three
kind of risks
that that we face
that we haven't
gotten into that

(31:35):
are probably worth
mentioning to
to round out
this discussion.
One is
if this were privatized,
if you guys owned
Fannie Mae,
Freddie Mac,
and your goal
was to reduce risk
and maximize profit,
we probably all
get rid of that
30 year mortgage.
We probably
all raise rates.
We probably all
make tighter
lending requirements.
We would
lend a whole lot
less money.
And so it's harder

(31:56):
to get a loan.
All those things.
Number two,
and this is kind of
in the weeds a little bit,
but it's kind of important
in this particular market.
In the bond market
there's this thing
called the
to be announced.
The TBA market
and TBA
bond markets
are basically this thing
where and I'm not
that familiar with them,
but they're basically
where somebody says, I'm

(32:16):
going to issue bonds
at some point
in the future.
It might be 24
hours, might be five
days, might be a week.
Whatever.
I don't know exactly
what those bonds
are going to look like,
but I want you
to give me a price
on those today.
And this happens
a lot in the mortgage
market,
especially with MBS,
because with MBS,
one package of of mortgage
backed securities
for houses
is pretty much the same
as another

(32:37):
package of mortgage
backed securities
for houses.
So nobody needs to look
at the package to say,
this is what I'll pay for.
And I'm happy
to pay the same
in three days
as I am today.
This is what allows us
to lock rates
in the mortgage industry,
this TBA market,
and the reason we have
this TBA market
is because Fannie
Mae and Freddie Mac
do so much volume
that they can say,

(32:58):
we're going to give you
substantially the
same MBS packages,
today, tomorrow,
next month, next year,
because we have
so much volume
that they're all
statistically
going to look the same.
If Fannie Mae
were privatized,
it's very likely that
whoever is running
it isn't going
to want to say, I'm
going to lock a rate
for you
a week in advance
or a month in advance.

(33:19):
And now suddenly
we can't lock our rates.
And that changes
the calculus as well,
because if you
can't lock rates,
that changes. How?
How did it work in 2007?
Were they not
locking rates in
oh seven
when they were private?
They were still doing it.
So how were they doing it
if they were because.
The government
was forcing them to
and maybe
the government continues
to force them to.
And so that's

(33:39):
what we're going back to.
Oh, this is they came
private in 1937
where everything was
I mean, this is literally
right before the it's
because of the
financial crisis of
oh 8 in 2007
or the week
before the
financial crisis.
They were
that's what
we would be going back to.
Yeah,
it'd be the same way
we were.
Except
except when
they were private
before 2008,
nobody saw those risks.

(34:01):
Basically,
we had seen a stable
housing market since 1935,
and so nobody said
we need to mitigate risk
by not locking rates.
We need to mitigate risk
by not having
30 year mortgage
just because
what's going to happen?
It's been 100 years
and nothing bad
is going to happen.
Well,
now we know something
really bad can happen.
And so it's

(34:21):
going to change the way
whoever's running
those companies, again,
if any of the four
of us were running it,
we'd be thinking
about 2008 all the time.
And were you
thinking then,
I don't want to get
in that situation again.
What do I have to do
to avoid that?
But once again, though,
if it's so,
because I think there's
if we can already the
the fundamental
category of 30 year
mortgages,
the government
can still force.
So it's not like you
privatize and it's got

(34:41):
no they can still do
what they did prior.
But I think what
we're really
talking about here
is interest rates
being really low
due to the fact
that they're not
a private company.
They have those backstops,
they have everything else.
The 30 more year mortgages
aren't going to go away.
None of that's
going to happen
because the government
would do
just like they did
prior to, oh, wait.
And I think my argument is

(35:02):
that then privatization
is better
than having
literally
a mortgage industry
that is artificially low
and not does not coincide
with real market
functioning risks
and everything else.
That doesn't make sense.
And so I think you can say
we did learn from 2008,
but what we learned

(35:23):
then created the worst
housing environment
we've ever had
because we totally
went the other way.
So it's like we need
to have 30 year mortgages,
but having the
government
artificially keep
rates down at levels that
I mean
technically cause
inflation, housing prices

(35:43):
that are way too high,
right?
And on and on on.
I just
I think it's better
if it's aligned
with the market.
As long as they
as long as a Congress,
as long as Congress passes
the law at the same time
that says in the event
that these guys
blow up and screw up
and BC
that the government's
not going to step up,
step in and bail them out,
that's really what the.
Problem is

(36:03):
that they
get away with it.
Like you could
you can
then say there's
no downside to me making,
you know,
pushing all the way
as far as I can
and taking
these risky loans
and doing all this stuff
because they know
worst case scenario,
they're just going to
get bailed out.
You do exactly like
Silicon Valley,
bank and do,
once again, all banks
in the United States,
all the big five,
they are all
too big to fail.

(36:24):
There is no way
the United States
government
will let one of them fail.
So the risk we're talking
about already exists
with the banks.
That's not
that's already done.
They are so much bigger
than they were in 2008.
It's crazy.
So like that
risk in
2008 has gone up ten x.
So that those banks are
they already have it.

(36:44):
So privatizing
I think like we
we don't
we don't hold that risk
that is not already there.
I don't think we disagree
that it wouldn't
be like good
just for a free
market reasons.
But at the same time,
I don't
I don't think
any of us can say
that it won't lead
to higher interest rates.
It's going to it's
going to produce
a less desirable product
on the free market.

(37:05):
So less
desirable means
you're going
to have to charge.
You're just
going to have to be
a higher rate
in order
for someone to buy it.
It's going to have we
I don't think we
even talked about
like insurance,
like insuring those.
Like it's
not just one
level insurance.
Once you get to that big
A level for these mortgage
backed securities,
you got to insure
the top line.
And then the person who
who does that insurance,
they get reinsurance.

(37:26):
And then like
all of these insurance
rates for to buy
these are going to go up.
So they're going to put
a bigger spread on that.
There will be higher
rates. Right.
They're all
going to lead to
higher interest rates.
So like are we willing to
accept that in the
in our
in the
right now
in this point in time
where we already have high

(37:46):
mortgage rates
compared to the last,
you know, 20 years.
And why do we have such
high interest
rates and mortgage rates,
compared to
in our lifetime?
That was purely due
to government intervention
and holding down
interest rates. Right.
But I guess like, why now?
Like I feel like our

(38:07):
like our economy's
teetering a bit.
We are our housing
affordability
is already like
in like as low
as it's ever been.
Like why right now?
Like let's let's why
mess with it now.
Let's, let's.
Housing may lose
40% of its value,
which makes it
more affordable
for everybody else.
Now, if you own
real estate,
that's not a good
that's not a good thing

(38:27):
if you own real estate.
But if you
if you're trying
to get real estate
and you're arguing,
hey, there's no housing
could make it
more affordable.
Like you're
assuming that like,
yeah, maybe
in the long term
if the entire market
like housing
market collapses,
but in the short term,
like everything's
going to be
less affordable,
you're going
to have no ones.
First of all,
you can't just get rid
of all the current
Fannie and Freddie loans.

(38:48):
They have to keep those
and they have
to back those.
And you can't
change those.
So no one's going to move.
Everyone's going
to keep their
their current loans.
If you put your house
up in the market
for a million bucks,
and which is right now,
let's say,
and it's a seven, 6.5%
interest rate,
and now interest
rates are at 9%.
You're not
going to be able
to sell your house
for a million bucks.
You I'll tell you. Right.
So you're not
going to sell what.
The spread though
is like 200
basis points prior

(39:08):
to what it was. Right.
And then after.
So you have a 200
basis, spread.
We've already seen
that in the
last two years.
Well,
first thing
is going to happen,
it's going to take
FHA loans, right?
Because like the moment
Fannie and Freddie
go private, then it's
like everyone's
going to be like,
I can't like Fannie,
and Freddie
is too expensive.
I'm going to go
for an FHA.
So it's going to tank
those loans
because it's
going to be overwhelming.

(39:29):
How many people
want to go for those?
And then so like,
like the whole thing
is just going to be
like a huge cluster
that's going to lead
to higher, higher prices
in the beginning.
And then
the only thing that's
going to alleviate
higher prices is to.
So it's
going to be like a crash.
So like
what do we want here.
You lower interest rates.

(39:50):
How in the world
is that going to affect
lowering interest rates
won't make prices go down.
They'll make prices.
Go up
by lowering interest.
We're talking about
interest rates going up
I know.
But what he's saying
is that you're like okay,
so interest rates
go up right.
That's going to make it
more unaffordable.
No interest
rates going down
will make it,
just as much unaffordable

(40:10):
because every
time you go down,
half of
percent interest,
you open up to 30,000
new buyers.
We have a limited supply.
We can't change
the amount of houses.
Right.
So if you lower
interest rates,
all these people
that need houses
need to get in.
So and that's kind of why
I look at it and go,
well you're affecting
at a 200 basis

(40:31):
point spread.
We can't affect
the supply.
So affecting that demand
it's already there.
We already have it.
We got here
because of the low
artificial interest rates.
It wasn't a line.
It didn't move
with markets.
Well then why not
go to that now.
And the idea
that it becomes
less affordable.

(40:51):
I actually agree
with Mauricio.
You're right. It does.
So you have less
people buying
because we can
only affect demand.
And that is a short
term problem
that everybody already
has anyways.
But but I guess
my point is, is
it's just going to lead to
a crash,
which okay,
we can argue
whether or not
that's a good thing,
but who's going to.
How lead to a crash.

(41:12):
Just because the like
if you
if you take it
that next step further
if you go higher
because interest rates
are going to get higher,
right. Mortgage rates.
Sorry, mortgage
rates
are going to get higher.
And even when people
run to fan or run to FHA,
it's still going to it's
going to rise all the all
all the ties
for higher interest rates.
And then the problem is

(41:32):
you still have
all of these
sitting mortgages
from before that.
Nobody's going
to want to sell.
Like everyone's
just going to sit
and we're going to have
no transactions.
That's what's happening
right now.
But it's
but that's my point.
It's going to get worse.
We at least
we at least got.
Already down
200 basis points.
So like that's
what I'm saying.
Like you're talking about.

(41:53):
Oh it's not like
we're going to something
we haven't seen
or don't know. Right.
If we're on a downside
interest rate.
So the economy's
slowing down.
When was
when was the last time
we saw rates that low
and then go up this high.
This quickly is the point
where we're in
an unprecedented time
where we have
we still have what
what percentage was it
80% of people

(42:13):
still have mortgage rates
below 4%?
Like it's just the higher
our mortgage rates get,
the more people are just
going to not move,
and the more it's
just going to like
the housing
market needs to move
for it all to work
like we need people.
No one's going
to build anymore.
If there's no
transactions, no,
it's just going
to get worse
the higher
these rates get.
But right now

(42:34):
we are on the
opposite side
of higher interest.
Interest rates
are coming down.
So why don't you rather
do this
in a time
where the overall interest
rate is going down,
as opposed to when it's 3%
and all
the sudden you go to 5%,
you kill the market?
I would say
when you say going down
like we're

(42:54):
that's debatable right now
we're kind of
just down a little bit,
up a little bit.
We're kind of
just hanging around.
I would, I would
argue, let's
wait for a time
where we are
moving significantly down,
where we can cushion
that a little bit.
And it's not
just going to be a make
it all worse a bit.
Right now.
I just
I just don't think now's
the right time.
I don't
I don't disagree that
it would be good
long term.

(43:15):
I just don't think now's
the right time.
Why are we focusing
on this now?
We have a system
that's working.
We have a system
that's like
no one's really
complaining about,
like in the sense
that, yeah, they can
they can complain about it
for the wrong reasons.
They can say, okay,
you know,
mortgage rates
are too high,
and Fannie and Freddie
are the ones
who do mortgage
mortgage rates.
But like,
that's not the

(43:35):
real reason.
But like,
no one's
really complaining
about how this system
is working right now.
Like we've got so
many other issues.
Let's focus on that.
When things are
a little bit better,
a little bit more stable
in the housing market,
and then
talk about privatized,
like when they
talked about it
last time like that.
To me,
that was a better time
to talk about it, right?
When the last
Trump administration,
when they talked about it
going up into before

(43:56):
the pandemic,
rates were relatively low,
like things
were going well,
we weren't talking about,
okay.
Like,
our inflation
being a big issue.
We weren't
talking about jobs
being being a big issue.
Like to me,
that was the time
to talk about it
to me now.
Like, why,
why are we bringing
this up now?
No one needs
to bring it up.
Let's just
let it be for now
and we'll revisit it
when it's a better time.

(44:17):
All right.
I guess
I get the last point
there. That was nice.
Thanks, guys.
We all fell asleep
five minutes ago.
Did you.
Did you say something,
Kyle?
I usually make a point.
Disagrees with me. Is it?
We stopped, paid attention
about ten minutes ago.
Oh, come on,
you had nothing
to say, Jay.
Just admit it.
I got you once.
All right,
let's talk about
Department of Education.
Last week,

(44:38):
executive order was signed
dismantling
the Department
of Education.
Since the department
has come
under increasing scrutiny
since our education
ranking worldwide fallen
significantly since Covid.
Critics point out
the department's
allocation has increased
from historically, around
2% of the federal budget.
Now it's up to around
4% of the federal budget

(44:59):
in 2024,
with no real results.
Many argue
that 90% of school
funding already
comes from state
and local funds.
So what's the point
of doing this?
As someone personally
in our company,
we use school districts
as one of our top criteria
for picking areas
where to invest.
I want to ask Mauricio,
is this something
that could lead

(45:19):
to big changes,
or is this just another
big argument
that's going to end
in having little effect
on anybody doing anything?
Yeah.
First of all,
I don't think
the numbers you
I know where you got
the numbers,
I think
I think the numbers now
that's about 1%
of, of it's
actually been coming down
quite a bit since 2020.
It peaked
to like 600 billion.
Now they're at
about 100 billion.
But this is
interesting to me
because I've been
on both sides

(45:40):
of this, discussion.
And the first time
I heard about this,
I think, was in Trump's
it must have been
during the campaign.
And Trump's first,
first time around.
And he was
talking about
potentially getting rid
of the Department
of Education.
And I was like,
I preposterous.
How do you get
rid of that?
So that doesn't
make any sense.
Why are you
getting rid of it?
Like education
is important
and all of this
cool stuff.
And, what I didn't realize

(46:01):
and what I started
researching back then
is that,
yeah, USA
facts is that you're
just distracting me now.
I'm putting stuff up.
Well, I'll.
Let you call me out
to where I got
my facts from.
There you go.
And so what I didn't
realize, for example,
for example,
is that the Department
of Education
only came
into an existence in 1980.
It's a relatively new
I mean, I guess it's
been now 40

(46:21):
something years.
But like if
you talk to your,
you know, parents
or maybe if you're
a little bit younger,
your grandparents.
They went to Skylab,
came into existence
around 1980.
Yeah.
Cow came into existence.
But like your parents
or your grandparents
maybe.
Like for me,
it's like, well,
my parents
were in a
different country,
but in my wife's height.
His parents,
they went to school
like in the 1970s.
There was no Department

(46:41):
of Education. Right.
And so maybe you should go
to your grandparents
and say,
hey, grandpa, like,
how in the world
did you go to school
in 1970
without a Department
of Education?
How did you
how did you survive?
Oh my God,
it must have been awful.
Like, what's going on?
Well, and,
There was it was kind of
just under the
another department
with Department of Health
and Human Services.
Right.
Like they just
separated it and.
That's
part of the funny part.

(47:02):
I'm kind of blending
my other argument.
But then what
I really realized
I thought
was really fascinating
is that
and I assume it's
in every state,
but I was gonna
give you the exact
example of
me specifically.
I live here
in Southern California,
so you've got the
the Department
of Education, right,
which is the
federal Department
of Education.
That's I'm not quite
sure exactly what they do,
but there's the Department
of Education. Right.
Then there's each state

(47:23):
has its own Department
of education.
So California,
for example,
has a
California Department
of corporation.
All right. Cool.
So we got the US
Department Corporation.
We got California.
Then the county itself
has a department
of a corporation.
There's an Orange County
because I live in Rose
County.
Orange County
Department
of organizational
I got the federal
I got the state,
I got the county.
And then you.

(47:44):
Got slow down.
You're you're saying
Department
of corporation,
Department
of organization.
You're saying, so.
Me do this right.
Let me just clarify.
Every time he said that
he meant Department
of Education. Yeah.
So I've got the
federal Department
of Education,
I've got the state
California Department
of Education,
I've got the Orange County
And then I've got

(48:04):
the local districts
that have their own
frickin thing,
in addition
to the Department
of Corporation,
the dependent.
So anyway,
we just have bureaucracy
over bureaucracy,
bureaucracy, bureaucracy.
And so you start
asking yourself,
like what? Why? Like why?
Why do we have some
all of these
different layers
of bureaucracy to.
It, really
all the great results
that the education
has done in the.

(48:24):
That's right.
That's right.
You put up like,
what have we gotten for
this 40 years of,
of an additional
layer of bureaucracy.
Have we really gone
oh my God.
We were kind of
pretty good.
And now we're
top of the world.
We're number one
in math and science
and reading. Also.
We got civil rights.
That's what we got.
We basically got
what we need.
You said that
in a very dismissive way.

(48:45):
I think that's got kind
of it's kind of report.
Kyle's pissed about that.
He's like,
if it wasn't for that,
we wouldn't have to deal
with civil rights.
No, no.
No, I was saying it
the other way
because everyone's
always like,
I keep hearing
this argument.
Department of education
doesn't do any
it don't do anything.
Well, you know, like
we have this little thing
called civil rights
that need that
or is like a national
like program

(49:05):
that like it's
kind of important.
There's no civil rights
at the state level.
Not for schools.
And that's not something
they can do either.
It doesn't exist.
And also you can't do that
if you don't have
the Department
of Education.
You cannot have
civil rights.
I mean, yeah,
I mean, those are the
I mean, I.
Was they're
being sarcastic.
I mean, that's okay.
Yeah. It's okay.
I mean,

(49:26):
we have a lot of laws
at the federal level
because we
don't necessarily
trust states
to do the right thing.
I think
if we go back to
the Civil War,
I can give you
an example of.
Have you ever been
in Florida like you
expect Florida
to be doing the
right thing? Come on.
You can't even get a
Texas can in Florida for.
Granted.
Expecting like
each individual
state to do good.
We just said

(49:46):
you're all going
to suck together.
In fact,
you're going to perform
so bad
that you're going
to have third
world countries
that are going to
outperform you.
We don't want
one of you to do good.
You're all let's yeah,
let's let's let
Mauricio finish this
because we're
we're definitely
not arguing
that the Department
of Education
does a good job.
We're just saying
there are a few things
that the Department
of Education does
that are kind
of important.

(50:07):
Yeah, I mean, it all
kind of
got blown together.
Maybe just a kind of
I'll put a bow on it
and give you
maybe the top
2 or 3 reasons
that I'm in favor
of getting rid
of the Department
of Education,
a couple of reasons
why we shouldn't
get rid of it.
So so the first argument
about getting rid of
it is actually that
that idea that there's
first of all, there's
nothing in the US
Constitution, for example,
which is what's supposed
to be,
you know,
limiting the
federal government.
There's
nothing about schools.
There's nothing about,

(50:28):
you know,
education at all.
And then the
argument is like,
do we really want one
size fits all?
I mean, do
I really want
the person
making the decision
of what
my kid
is going to be
learning that
if I live here
in Southern
California versus
living in
Lincoln, Nebraska,
which is more of a
more of a rural
versus Pittsburgh
versus like
everybody has different
needs.
And I have one
group of individuals

(50:48):
or a group of people
in Washington, DC
dictating what
what, you know,
at the local level.
To me,
that's one issue
that gets brought up.
The second is, again,
this redundancy
of red tape.
I mean, we
we were doing
just fine with it
before the 1980s
and nobody can
I don't think anybody
can come and say,
oh my goodness.
The results
have been
staggeringly well.
If we look at
their performance
over the next
40 last 40 years
that somehow

(51:09):
our schools
have gotten better.
I think if you go,
I think if you ask
pretty much
everybody and say,
do you think
schools have gotten
better lately
or gotten worse?
Most will argue
they've either
stay the same
or gone worse.
And then the
the results are just
are just not there.
Now, the argument
against that obviously
is, well,
first of all, they do
provide some funding.
Right?
So they've got it
right now.
Their budget
has been going down,
by the way,

(51:29):
since 20th May.
It peaked at like 600
and something
billion dollars
that my statistics,
which I can't
throw it on this thing
but that we were at
it peaked at 600
and something billion
dollars, 600.
I forget the date,
but it back in 2020
and it's come
all the way down to 103,
which is only about
1% of the
total federal budget.
Most of that
is student aid.

(51:49):
So that gets distributed
to, you know, really
and I'm not even sure
it's K through 12.
It's really more
like college and stuff.
About 15 billion
gets to K through
K through 12.
And then 13 billion
is about
for special education.
Yeah.
The highest
was 637,000,000,000
in 2022.
So only about 10%, about 8
to 9% of the total budget
comes from the
federal government.

(52:10):
Thank you sir.
So it has collapsed there,
there that
there's collapsing
in there.
But,
so it's not
a huge percentage,
but there is
a significant
number, right?
There are billions.
And for some people
and for some districts,
it will be tens of
billions of dollars.
So the question becomes,
how are we going
to fill that gap?
I mean, you
if you pull
this under the rug,
there are
some communities,
some school districts,
some states
that are getting
significant amount

(52:30):
of federal funding.
How is that going
to get replaced?
Is that going to
now the state
going to step up
and raise taxes?
Or how are they going
to get the money
to fit that in?
So that's one of the
the arguments about like,
hey, why are we
getting rid of this
or what's the plan
if we do get rid of it,
what's going to happen
with that funding?
There's been no clarity
as to what
the plan would be.
And then to
Kyle, to your point,
I know you didn't seem
that interested in it,

(52:50):
but yes,
there are some federal.
Right.
You know, those pesky
federal rights that,
that come into play.
And that's something that,
the federal government,
does enforce,
protect civil,
safe civil rights,
civil rights
and equal access.
But the question
is, again,
is is there any reason
why the states
can't can't do it?
There's actually
a couple of states
that already have proposed
regulations or statute.
I think Tennessee's

(53:10):
one of them
that just don't want to.
They don't want to take
any federal funding
and then want to
they want to fill
that gap
at the state level,
because I guess
they just don't
want to have that control.
So anyway,
lots of pros and cons,
but I to me,
just to wrap it all up,
the fact that
this entity didn't
exist prior to 1980
and our fathers
and grandfathers
and grandmother,
our grandparents

(53:31):
did just fine,
if not better,
coupled with the fact
that we already have layer
upon, layer upon layer,
whether it's
the Department
of Education, Department
or corporations,
layer upon layer
upon layer, like we get,
we're only literally
just getting rid
of one layer
and now we're everybody.
Every state has its own
already has its own.
Admin has outpaced
students and teachers

(53:52):
by ten.
It's crazy.
It's like,
why that doesn't
even make sense.
But here's the here's
the thing that I'm, I,
I haven't
heard, like,
I keep hearing we've
got all these layers.
And I'm also
hearing that all
the problems are
the fault of one
particular layer.
Do we have any data that
that indicates that?

(54:12):
Because as far as I know,
the stuff
that the Department
of Education does
isn't stuff
that you would think
conceptually common
sense wise.
I'm not saying
common sense
doesn't always apply.
But from a common sense
standpoint, the stuff
that that the Department
of Education
does shouldn't hurt
education.
For example,

(54:33):
a lot of the money
that that
the department
of Education
spends is for title one,
which is
basically ensuring
that there's money
for poor people
and that kids who wouldn't
have the opportunity
to as good an education
because of their
financial situation,
can making sure kids
actually get breakfast
and lunch in schools,
because we know
that there's
a direct correlation

(54:53):
between being able to eat
and staying alive,
and also being able to eat
and and being able
to learn efficiently.
So title one is huge.
Kyle
one does way
more than that.
So title one and two,
I don't mean that
in a good way.
Title
one is literally
the ability
that they hold

(55:13):
and use force
to get things
that they want.
In the
school, it's
become basically
a batting,
you know, a bat
that they used
to beat over the head
and say,
if you don't do
the things we want,
we're going to smack you
with title one.
So it's become this
stick weapon

(55:34):
that they use to enforce
what they want
over the over
the entire
school districts
of the state.
And I'm, I'm open
to having a discussion
about these things
that that they want
that are
hurting education.
But in general.
And again,
I'm not saying
you're wrong.
I'm just saying
the idea
if implemented right,
if it's being implemented
incorrectly,

(55:55):
obviously that's
horrendously bad.
But if implemented
correctly, title
one has no
ill effects on education,
and it should only just.
Just the entire
concept of like,
we're going
to give you less money
and it's going
to make our education
in the US better.
We're we're going to stop.
We're going to stop,
like helping
poor kids
that that need to learn.

(56:15):
This is the problem.
Why do you think
it would do that.
Yeah.
That in in 1979
they were there
actually we're doing
better from
an educational point
in 1979
like the results
have been going down.
So why would it
we act like
we're going to there
first of all,
all indicators
of what
we're trying
to get output.
All of them have gone down

(56:35):
in the United States
as far as schooling goes.
Even mental health
you're talking about,
I mean, we
we have like
graduation rates.
Like when you look at this
and say output, okay,
why do we think then
taking a federal body
that is
forcing things down to.
What kind of what
we're talking about
giving money
for poor kids.

(56:56):
But that's
what I'm talking about.
So why do we think
that that
because that won't happen
there.
It doesn't
it won't happen
at the state level.
Like I guess
I don't understand why
that that doesn't
make sense.
It's so and so I can't
I can't
speak for your state,
but it's not happening
in my state.
In my state,
they've actually
taken away funding
for for kids
breakfast and lunch.
Ed does it.
No, there's not enough

(57:17):
money from the fed.
So basically there's
they've had to cut
programs here in Florida.
Kids aren't eating
here in Florida
because all they get
is the federal money,
because the state refuses
to participate.
If the federal government,
I have no reason
to believe
that the
federal government
stop giving any money,
there would be zero money.
So if the fed, though,
if it's
their responsibility

(57:37):
and I'm a state
and I say
you're the one
that's supposed
to provide it,
you're
that's your
whole existence.
Why am I
now have to end
in interject
when that is the reason
you exist?
No, we're
not going to do it.
You should do your job
and give us more funding.
You need to provide
more to us.
So in that case,
why isn't the
fed providing
your state more funding?
Because we just said that

(57:57):
it is.
You see what I'm saying?
Like it's it's
their response.
Money is providing
funding for
specific things.
And so I
do I'm happy to argue.
Which.
By the way,
the Congress Congress
is the one who actually
approves the funding
for these things.
So it's not like
the Department
of Education
is just coming up
with these things,

(58:17):
paint paying their money.
So like,
even if we got rid
of the Department
of Education,
all of these programs
would still be funded.
If we want to
have a discussion
about whether
the federal government
should be spending
more money
to make sure kids eat,
let's have
that discussion,
because I'll tell you
what side
I'm going to come down on.
We should be spending
as much money.
Like, I don't
think that's what
I get.
Absolutely the state

(58:38):
and local government
should be doing.
But if the state.
But what
if the state won't do it?
Who are you.
Voting for
over there in Florida
where your state doesn't
do this?
Like, wouldn't
you vote for people
that want to do it?
The federal government
is going to make decisions
on my local kids
and the funding
that we give
in our school system,
everything else.
So let's let's go,
let's go back.
Let's go back to
what Kyle was saying
at the beginning of this.
In the 60s.
We didn't have

(58:58):
civil rights,
we didn't have integrated
schools.
Were the states doing it
without the
federal government
stepping in and saying,
we are going to force you
to do this?
No, because some states
people don't care
about civil rights.
Some states
people don't care
about poor kids eating.
Okay.
But you
what you're saying,
though, Jay,
is that we're taking away
the rights,

(59:19):
abilities and options
because you don't think
that another state
will do what you want.
Now, once again,
I'm not saying
you can enforce law
and say
you can't have segregation
without having the
federal government to say
the states,
you have to do this. Why?
Why can
why do the states
can only do it
if the Department

(59:40):
of Education
exists is the only way
we won't have segregation.
I'm saying that
there are certain,
let's call them
inalienable rights
that people have.
I think
segregation is one.
People have the right
to be integrated
and and not
be forcibly segregated.
So I have no problem
with the government saying
we're going to force
states to do this

(01:00:00):
because it's
the right thing to do.
I'm going to put
feeding kids
and making sure
that poor kids
that don't have enough
money to eat,
I put them in the exact
same category.
Now, I'm not saying
the government
should be giving money
for other things.
We can talk
about other things.
Right now
I'm talking about
total one,
which a big
portion of total
one is ensuring
the kids eat.
And as far
as I'm concerned,

(01:00:20):
that's just as important
as civil rights.
It's just as important.
But honestly,
what's happening here
is, is that like
because Trump's done
this a few times
and like
this is a huge,
complex issue
and the right way
to go through
this is say, hey,
obviously the Department
of Education's broken.
They're not
doing their job
the way they should be.
And the proper way
would be
is to like
go through

(01:00:41):
this forensically
and figure out
which programs
are working,
which programs
aren't working,
which one should
get funding,
where are we overspending
doing all those things.
But like that
would take
a short amount of time.
And we
don't have that time
if you're
if you're just
the executive branch
right now.
So the easier
way is to just say,
hey, let's break it first.
And then
like people

(01:01:01):
are going to fight it
and then we'll figure out
what's actually important
on the back end.
That's
kind of like the M.O.
right now.
And so like to say
like, yes,
we're going to pick out
all these things
that are important
for the Department
of Education
that like,
should get funded.
But at the end of
the day, like
the things that should
be get funded
and the things
that shouldn't get funded
are all mixed together

(01:01:21):
right now.
And they're all just under
the department
of Education and they're
they're getting
lumped together.
So when someone argues
one side,
like AJ saying, like,
the state should
take care of this,
and Jay's saying
like, well,
what about the
funding for food?
Honestly,
the funding for food
should come.
It should probably
not even be
on the Department
of Education.
I don't understand
why these school meals

(01:01:41):
are under
the Department
of Education.
Why isn't it under,
you know, the the
what's the other one?
The how the.
Health and Human Services.
Happened is exactly
why isn't it
not under that service?
Why are they
the ones providing that?
Why is it
the Department
of Education.
That's a
that's a
that's a 100%
reasonable discussion
that we could have.
But it's not layers.
I mean
we're talking about
one department
versus another.

(01:02:02):
I'm not arguing that.
Great.
Maybe it's in
the wrong place.
But that
but if it's in
the wrong place,
let's talk about moving it
not getting
getting rid of it.
Yeah.
Well, that's
part of the problem
is that you're
getting it's
kind of like the
what is that the repeal
and replace thing
where it's like
you're getting
rid of something,
but you don't have a plan
in place, like, okay,
well here's
we're getting rid of it's
going to cause some issues
here and here.
So we're going to
put some funding
and have that covered

(01:02:22):
somewhere else.
So we're going to
give some more
funding to the states.
Or the states
gonna have to do it.
There's no plan in place.
It's just right now
let's just take it out
and figure it out later.
Right?
I mean, that's a concern.
Yeah.
So I think
the disconnect too, at the
at the beginning
with Mauricio,
the how much they get
for funding,
I think
you might have been
taking out the Office
of Federal Student Aid
because there's office.

(01:02:43):
College. Loans.
Is the student loans.
Yeah.
And that's 100
and so of their 268
billion budget,
160 of that's
like 60% of
that is just
a federal money.
Mine showed 68.
Yeah, mine showed 68.
In student
and student aid.
And right.
So but in theory
that's profitable

(01:03:03):
if they get paid
back with interest
in theory.
But also once again
like that doesn't
need to be Department
of Education
like that could, you know,
that could be run
by someone else.
And then
they already Trump
already came came
I think it was the last
couple of days
he came out
and said that,
Bobby Kennedy
could take care of the,
of the of the meals
if they,
if they dismantled this.
So they're like.

(01:03:23):
But once again, as I said,
what they're doing
is they're saying,
hey, let's break
and see
what happens
on the back end.
And so they broke it.
And everyone's like, well,
what about this?
What about this?
What about this?
And they're like, okay,
they're basically
outsourcing.
They're they're their
for thought of this.
They're outsourcing it
to the, the public,
saying like, okay,

(01:03:43):
this is what we're doing,
what are going to be
the effects.
And everyone's like,
what about this?
So like, okay, well,
here's a plan to do this.
And they're
they're making the plan.
They're, they're
jumping in the water
and building
the ship
from the water is kind of
I don't know what the
the analogy is there, but.
Building
building the airplane
on the way down.
And let me just say
before we go any further,
because I,
because I know
I'll get mean
comments about this.
I am not arguing

(01:04:04):
we should be keeping
or not
keeping the Department
of Education.
I don't care about titles.
I don't care
about agencies.
I don't care about people.
All I'm saying is
that there are things
that the Department
of Education
does that
I think are very important
for this country,
and we need to ensure that
those things
are not
don't fall
through the cracks.

(01:04:24):
And so if that is done,
I don't care,
I don't care.
But yeah,
there's way too much
I agree with AJ.
AJ will point out all day
that there's
too much bureaucracy.
He's right.
There's way
too much bureaucracy.
There's too many too much
administrative cost,
too many people.
Let's let's get
rid of that.
But also at the same
time, don't
just use a stupid phrase,
throw out the baby

(01:04:45):
with the bathwater.
Don't, don't just,
I think,
stop cutting 100%.
And I think the reason why
to me, the States,
what we had it
you had problems
with as things
went up
to the federal level
where things like
the after
they started to get
in, you have Hartford now
that gets $686 million.
Ridiculous.
From the

(01:05:05):
federal government.
How big is Harvard's
endowment? It's ridic.
And that's a
that's a whole
different episode.
Or maybe we did want read.
Still, it's
what we're talking about
is education
at the federal level.
What they start doing
then is they start picking
and it becomes a black
box us down
here, our tax, taxes
going to a magical thing.
Now they have a department

(01:05:25):
that is making decisions.
They're allocating
capital.
There's redundancies.
It is not being effective
at the local level. Right.
And so I think the sources
that I agree with Jay,
we need to have them.
I just think
they're distributed
better needs met better
at a local level
as opposed to going up.
And we have this
just mass waste

(01:05:47):
and bureaucracy giving,
you know, hundreds
and hundreds
of millions of dollars
to some of
what are essentially
the biggest hedge
funds in the world.
It doesn't make sense
in colleges.
I think you saw that
flash up there.
I flashed the
I guess I was
the the 2024
was at the 241 billion.
It sounds like
the 2025 is
where it got to 103.
So they keep cutting.

(01:06:07):
It's definitely
going down
in terms of their funding.
So that's interesting
because that's
obviously been happening
over the last three years.
So the way I look at
it is here
I'm just going to
pull up a map.
And this is the
the how much
each state
spends on education.
And so I guess
my point is,
is that it's,
it's fine for us to say

(01:06:28):
like, oh,
the state should
take care of this,
but just demographically
of what where people live.
Like if you think
about like so we're
the reason I moved into
my school district,
is because our,
our funding
per student is over
$30,000
a student per year.
So I know
my kids are going to
get a good education

(01:06:49):
because they get that.
But I also know
if you go to
the next township,
in the next county
in the wrong direction,
that it's half of that.
So how are you saying
that kids are good?
And the problem is,
is that they
can only collect
so much from their
from their demographics.
And in order to
to facilitate that, I, I,
I think I saw a stat
where Detroit,

(01:07:09):
there's a county
in Detroit
that they get half
of their funding
from the federal level,
half of it.
And so if you
look at this map,
you can look so
like in New York,
Pennsylvania,
like New York,
they get 27,000 per pupil
pupil for public schools.
Right.
But if you're
making you're
making a big assumption
I want to challenge that
because the what
and I don't have
any specifically.
But you're making
the assumption

(01:07:30):
that more money equals
better education.
And I
don't know
if that's true or not.
I don't think.
Okay, that
that is an assumption.
But if you want to
look at the difference
between AJ
over here in Idaho,
where he's he's
getting 9000.
Percent,
if he's getting
better results
and he's getting
a better education,
who cares?
So then two,
I also want to challenge
that.
I know that's not true
because in our state,
that's not actually

(01:07:50):
how it works.
I don't know what
they're bringing in.
I've owned a school.
We allocated $8,000
in a private school
per student,
and that was half
of the state's allocation.
And we got double
the results
with still 50 teachers.
We had
hundreds of students.
We did.
We did way

(01:08:10):
more obviously
extracurriculars.
They did all
the stuff, way
more private school.
They had it advanced.
They were almost
two grades at advanced
at half of what
the public
school system provides.
And their results
were not even close
to being met in Seattle
this year.
Enrollments of white
and Asians were down 50%.

(01:08:33):
Whites and Asians
because they were
moving them out
to private schools.
This is private
schools are exploding
across
the United States, right.
So what's happening
is our public
school system
is really flawed
and broken,
and it is not
being handled
on a local level.
And the local we're

(01:08:53):
trying to make
changes locally,
but you have no impact,
no effect.
You just can't do it.
And it's a big problem.
And I agree,
I don't think cost
equals results
because I've seen it,
I've done it.
But there's also to me
there's also a base
level of requirements.
So like I'll throw one
one more up.
And this is what
I was referring to
with with Detroit,

(01:09:14):
like there are just areas
where like
you think about it,
you can
there are certain areas
where if you
if you're below
the poverty level
for the area,
like you don't pay
federal taxes,
you don't pay
taxes in general.
If you're
if your income level
is a certain level,
how are they going
to fund their schools?
Like how
like their township,
their county
isn't going to
fund their schools

(01:09:35):
and therefore
the state it's on the
it would be on the state
to make that up.
And the state currently
relies on
federal funding to make up
for these underprivileged,
low income areas
in order to do this.
So what we would be
taking away
originally
would be all of these
these basically subsidies

(01:09:56):
for lower income
and marginalized and
these areas that need
the need, those effects.
Is there a better way
to do this
where the federal funding
is maybe less targeted
and just given
to the states
in order for them to,
you know, distribute
it as they see fit?
Maybe,
but at the same time,

(01:10:16):
just getting rid of this,
like if you look
like Detroit,
Michigan
has 48% of their school
funding from
from federal funds.
So like,
what's going to happen
to Detroit
if all of a sudden
this is gone?
Like, it's like it's
not something
you could just get rid of
and not find
a solution for.
Their
their scores will go
will double.
That's gonna happen.

(01:10:38):
Like I think they're the
worst performing,
district
in the nation, too.
And I guess
I think it's
the final point
in this, too, is like,
can this even happen?
Like, I don't,
I think, is this to me,
it's just another thing.
As I said,
I think this is
just not necessarily
a negotiation tactic,
but more of
the lines of like,
hey, this is problems.
And it's kind of

(01:10:58):
in Trump's M.O.
if there's a problem, I'm
just going to
take the extreme.
It's almost like
when you're negotiating,
you take the extreme
anchor
and then so
that you can work
your way down from there.
So like I like.
And we didn't talk about
we didn't really
talk about that,
but and I and
I haven't looked it up
but I can't imagine
he has that.
You mentioned something
at the beginning,
like he just wrote
an executive order
and got rid of
the department.
I don't think it works
that way.
I think it's
got to be a congressional.

(01:11:18):
He can
he can do an
executive order
to study, study
the impact of the
getting rid
of the education.
But he can't
unilaterally sign
a executive order
and get rid of.
Anything short of sort of
he cannot
disband the agency
because the agency
was created
through federal law.
So only Congress
can get rid of the agency.
But what he can do
is he can basically say
exactly what what

(01:11:39):
AJ and I were
discussing earlier.
He can say,
so we're going
to move this budget
from the Department
of Education
to Health
and Human Services.
We're going to move
this one over to,
to the Department
of Justice.
We can move loans over
to whoever the loans
move over to.
And basically
at the end of the day,
the the Department
of Education

(01:12:00):
has a budget of zero
as opposed to 600 billion.
The agency still exists,
but it's not being funded
because all that money
is moved to other places.
Now, he can't say, I'm
going to just
cut this program.
I'm going to stop
funding this.
I'm gonna stop
funding that.
But he can move it over
to another agency
if he moves it.
For example,
title one over to Health
and Human Services.

(01:12:20):
Now, what's his face?
RFK can say, well,
I am the head
of this agency.
I choose to defund it.
And so he can no longer
he can say to Congress
next year,
I don't want any
money for this.
And so now
that's how
that's how Trump
potentially saves money,
without having to
force Congress
to do anything.
So so to wrap this up,

(01:12:41):
are we like as investors,
as I said, we take
it really seriously.
Our school districts
like where we invest
like school districts.
Is this something
we're going to
see any changes?
So like should
I stop
looking at any areas?
Should I start looking
at federal funding
for school districts
as an as a
as a indication? Okay.
If you believe that
more or less
federal funding

(01:13:02):
will affect the quality
of the schools, right.
Because
because that's
the assumption
you're making. Right?
So it's
more about the quality.
And people are moving to
those school districts.
They have great schools,
right?
If the school itself is
great, it
regardless of the funding.
So you're
making an assumption.
I'm not saying it
probably.
I mean, the only.
Reason I'm making
that assumption is
I send my kids
to, which is number one,
elementary school
in the state,
and they're also

(01:13:22):
the highest funded.
So yes,
there's not always
going to be a correlation,
but there will be
some correlation
in my opinion.
We literally got an email
ten minutes
before this
podcast started.
My wife showed it to me,
as I was getting ready
for the podcast
that, Florida State
legislature is proposing,
significant budget
cuts around education.

(01:13:43):
And both of my kids
are in an advanced
academic program called
the International
Baccalaureate,
the IB program
that could get cut
at their school.
And literally if those
programs get cut,
we'll leave the state
because that's for us,
that's
how important education
is for the kids.
And so
I think this could
be interesting

(01:14:03):
if we start
seeing major cuts.
If it's going to impact
people moving
to different states,
for, for
educational purposes.
As they should. Yeah.
Yeah, they should.
Absolutely.
So I guess don't freak out
as of now.
The thing is
the is the too long.
Didn't read good.
Ready
to move on to a top ten.

(01:14:23):
Okay. How about top five?
We skipped.
It's already 3:00.
Let's
can we skip the top ten
or do you have a good one?
Let's do a top three.
I'm negotiating. Good.
What's your calendar?
It's a
it's a fast top ten.
I'm just I thought it was.
Come back to top seven.
We were talking about
how Fannie Mae
might get downgraded
as far as their ratings.
And so I thought

(01:14:44):
it might be a
little bit of a
it would be nice to see
what other companies
you could invest in or get
that have higher
actual ratings
than Fannie Mae
or even similar ratings.
And Fannie Mae,
I thought, okay.
I'll just
I'll go up to top four.
You come down to top six,
we'll go to top five.
I'm tired of this, man.
I'm out of here.
I'm not
I'm not going to listen
to your top ten
one more time.
I'm absolutely
done with this.

(01:15:04):
They're they're lame.
I want I boycott,
I boycott your top ten.
Make sure you upload
before you leave. I'm out.
Actually, it.
That would be
kind of funny.
All right.
This is great.
I'll do the top
five companies
by S&P credit rating.
So actually,

(01:15:25):
it's one of those things
where,
the U.S.
government and Fannie Mae
currently only have
a plus.
So back in 2023,
they got downgraded
from triple
AA to double A plus.
So there are right now
two companies
with higher credit
ratings
than the U.S government
and Fannie Mae.
Any guesses?
And anyone.

(01:15:46):
Two companies,
higher credit ratings.
I wouldn't have guessed.
So I'm not going to make a
guess if you and,
Microsoft and Johnson
and Johnson
both have triple A
credit rating.
So theoretically,
if you were to get
corporate bonds
from those two companies,
they would be
higher credit ratings
and safer than Fannie
Mae and had Fannie Mae

(01:16:07):
plus they're in
third place.
Apple also double
AA plus alphabet,
also double A+. Yes.
And then
you have a bunch
of double A's
where you're
talking about,
Amazon, Berkshire
Hathaway, Walmart,
Accenture,
Exxon, those,
those people.
So anyway,
I just thought
it was interesting
that there are companies

(01:16:27):
that are higher credit
rating in the
U.S government.
J you got any,
hypotheticals for. Us?
$1 million a year?
Okay.
But you can only drink
water. Oh.
A million a year. Nope.
Not enough, can I?
Can I turn it off?
I think I do.
I was going to have to go
two different ones
with you and AJ,

(01:16:47):
because I knew
AJ was going to say
no really quickly.
I figured this
is going to be
a good one for you
because.
Can I turn it off?
Could I like,
do it for a year?
When you stop,
you're done.
So like when I
so that's what I mean.
So like I could just
do one year,
take a million bucks
and then.
Yeah.
Yeah,
I think I would do that.
My wife's
been trying to say
we got to drink
less anyway.
So now I would
give it a year,

(01:17:08):
try it out,
see if my life
gets better,
and if it doesn't
take my million
and then
then go back
to the way I was.
There you go.
I would suspect
it wouldn't get better.
It would get
significantly worse.
I the only thing I drink
is basically
water and wine.
And so yeah, I think
I could easily do that.
Yeah.
Well wines
water and wine that

(01:17:28):
that second one's
a big one there.
Jameson,
you got
to take that
into consideration.
So fun fact
Mauricio did leave.
So that's interesting.
He's gone.
So, on the raw
on the plugs, there's,
no plug for Mauricio.
Let's start with Jay.
What do you got the plug?
I don't really.
What do I have?
I don't have any.
RJ, what do you have?

(01:17:49):
I'll let you go first.
I'm sticking with, one
I've been
doing more often,
and I'm not
talking on YouTube.
That's been the
to what I'm doing.
Drew daily.
So,
I've been
plugging that over
the last little while.
You guys check it out,
make sure you guys are
on it.
It's awesome.
It just emails
you every day
and you get to see
the news articles.

(01:18:10):
You get to
see a description
under it.
It's super easy
and very,
very informative.
You could go through
most of it
in under a minute
and you get all the
everything
you need to know
for the day. Exactly.
And it's really keeping
up to speed.
I like to say
basically it's
the information
you need to sound
smart at parties.
Yeah. Yeah, exactly.
Yeah.
And even if,
even if you read

(01:18:30):
every single word,
the whole thing,
it's still under
three minutes.
So like.
It's it's really good.
It's great.
I was going to just
I was just going to plug
whatever AJ did, but
he did the daily.
I'll do AJ
YouTube channel.
Actually I
plugged it on
my Facebook the other day
along with Moriscos.
Imagine.
You had like
a pretty viral
one the other day, right?

(01:18:50):
Yeah. It's been going.
How many it
to get on that one?
I don't know.
The first week
we had one that was.
We had a couple nine
figure ones. Yeah, yeah.
Yeah, it was like a couple
I thought I saw like
$200 or something.
That's crazy man.
Congrats on that.
And it was just you.
Your face.
It was it
I know like,
why would people it.
Maybe
something must
have been broken
on YouTube. I'm not sure.

(01:19:10):
Yeah.
You didn't even have like,
Elon Musk
talking to
with or anything.
It was just you.
So that's,
congrats on that. Yeah.
So go check out AJ.
So you see why he
got 200,000 likes?
I mean,
nobody's going to
comment on my haircut.
I got a haircut two, so.
No, I couldn't
tell the hair.
And you're wearing a hat.
Geez.
We were supposed
to call it like,
what is this?
I feel like you're like,

(01:19:30):
I got to pay attention
when you got haircuts now.
So I make sure
when you get home.
Because I'm
just treating you
the way you.
Treat nice.
Honey looks great, honey.
If I have to do a.
Good job today, you do.
With me.
All right,
I'm going to plug my wife.
Actually, not.
I'm not going to plug
my wife.
I'm going to plug
conference connect.
Just launch ticket sales.
So if you're
if you're,
if you're an
event organizer,

(01:19:51):
you could already
you could have posted
your event
on the, on the site
and get
all those benefits.
But now you could
sell tickets to sold me.
I just sold tickets.
I saw AJ selling tickets
to Conference Connect.
There we go.
Anybody there?
Anybody that sells
any tickets
on conference connect
is going to get a drunk
real estate mug.
So if you have an event,
if you have a conference
or an event.

(01:20:12):
Did they start
selling drunk real estate
mugs at Costco?
Because
the amount of times
you throw it
that people can get drunk.
Real estate mugs, I
they got to be a Costco
by far. You know.
They don't.
My, my
my wife has a hook up.
By the way.
I didn't even know
until I tried it today.
Costco delivers awesome.
Through.
Instacart for them, so.
I didn't know that. Don't.
Oh, I mean,

(01:20:32):
I know they marked it up
and I had to,
you know, tip
the delivery driver
15 bucks or whatever,
but like, no, it's Costco.
It's Costco
these days
can be a nightmare.
Like just getting it
in the parking lot.
You could five minutes
just sitting
in the parking lot
waiting for a spot.
Next week,
I'll I'll tell you
what's going on
at my Costco.
It's a crazy story.
All right. Cool.
It's all I got up.
So 90
were getting close

(01:20:52):
to 100 boys.
Got to figure out
what we're doing there.
And he suggestions
something cool
for us to do.
Episode 100.
It's got to be epic.
So, throw that
down in the comments.
Yeah.
Mauricio, any thoughts?
Oh, nothing from Rachel.
Okay.
All right.
Well, at least you two.
I will see you
next Thursday.
See you guys.

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