Why the CrowdStrike outage is a major warning for banks

Mike Armstrong and Marc Fandetti explain why the CrowdStrike outage is another sharp warning for banks. Google talks to acquire cybersecurity startup Wiz fall apart. GM lifts earnings outlook as US market carries load. Elon Musk has his mojo back. Can you send some mojo to Tesla? Alexa is in millions of households, and Amazon is losing billions. The 401(k) rollover mistake that costs retirement savers billions.

Episode Transcript

(00:00):
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DAV five K Boston is presented byVeterans Development Corporation to face is the Financial
Exchange with Mike Armstrong and Mark Fandetti. Welcome back. A relatively quiet day
on markets this morning, with theDow off about fifteen points, a little

(01:23):
bit less than a tenth of apercent, SMP right now is up about
six about a tenth of percent,and the Nasdaq up about thirty six or
one fifth of a percent. Inearly trading. The Dow and SMP were
earlier in negative territory, and SMPhas since bounced back. But like I
said, relatively quiet day. Wedid receive some data this morning on single

(01:45):
family housing inventory, and what yousaw was a bit of a sales slump
and some concluding. I think theonly reasonable conclusion is that it's pointing towards
more of a buyer's market. Butgenerally speaking, I think the conclusion would
be still overall a seller's market.Even with the increase in supply, which

(02:06):
in June jumped to about one pointthree two million units on the last day
of June, that's still only afour point one month supply at the current
pace of sales, so a verytight overall market still. But inventory levels
for that single family pre owned homeup about twenty three percent compared to this

(02:27):
time last year. And as Imentioned at the beginning of the show,
this is very much a localized phenomenon, where in states like Florida and Texas
you are right now higher than eventwenty nineteen levels at this time of year,
but in places like New England especiallymost states are less than half of

(02:47):
those twenty nineteen inventory levels. Andso if it feels like a tight real
estate market where you are, itvery well may be, especially compared to
any time over the last decade.Any other conclusions on housing that you have
mark before now, I always hatedthat statistic. I know a lot of
people quote it. Researchers who specializein housing quote it the month's inventory enumerator.

(03:09):
It's just a ratio. So it'sgot to you know, top and
numerator topping about him. They're notindependent because month's supply is defined. The
ratio is defined as uh total homesfor sale versus what how many sold in
the previous months, last three months. It's it's they they smooth it out,
so it's like a three month average. But there will be more homes

(03:32):
for sale if the sales pace picksup. It just it shouldn't necessarily settle
down to something. Someone who's morespecialized in this area would correct me,
We're not going to be listening tothis show, so it doesn't really matter.
Lawrence listens all the time. Wehave Lawrence Ewing, the chief economists
the National Association associations. I'm surehe tunes into his he turns into his

(03:54):
own, his own interviews at least. Okay, I know I have.
I have no insight other than tosay that number makes for difficult historical comparison.
It does, Yeah, it doesthat, which is why I prefer
the metric that I've looked at inthe past, which is, you know,
just set a level and I've beenusing five years in the past as

(04:15):
my quote unquote normal housing inventory leveland use that as a baseline. And
that's what I've been utilizing. No, it does not account for population moves
or anything like that, but youhave to pick something, and that's what
I've historically looked at is, hey, let's look at June of twenty twenty
four compared to June of twenty nineteenand see what it tells you. And
what it tells you is that nationally, it's only about seventy percent of the

(04:36):
homes for sale that were for salein twenty nineteen at the same time,
and that amount fluctuates dramatically depending onwhere you are looking. A few days
out now, three business days outnow from the massive IT failure from crowd
Strike, and I think we're startingto learn a little bit more about this,

(04:58):
but quite frankly, we knew quitea bit it almost immediately that an
update pushed by cybersecurity cloud cybersecurity firmcrowd Strike, led to a massive outage
of PCs running windows across the world, led to massive flight cancelations, Banks
that couldn't move money, trading firmsthat couldn't trade, media companies that couldn't

(05:20):
put out their evening news. Justa massive failure across the board. And
naturally you now have regulators as wellas IT firms across the globe, I
think, reacting to it and tryingto figure out what exactly this means for
cybersecurity in twenty twenty four and beyond. One of the criticisms of this failure,

(05:46):
no, this pe this piece whichis an editorial piece, which this
is from Bloomberg rietalk correct, Yeah, okay, so our our commentary.
The author criticizes the fact that somany banks and institutions generally obtain their cloud
storage services from a limited number ofproviders, as if any other model were

(06:10):
possible. I mean, the wholepoint is scale, and the whole point
is if you're making a record,if you're the chief technology officer making a
wreck. If I were making awreck, I'm not CTO of our company.
But if I weren't. I wereto bring you to finalists for a
storage provider and they were both local, yocal companies, you'd say, thanks,
but I want to go through Microsoftthing, So natch, everybody wants
to MBA types. I'm not anMBA, but MBA types call it buying

(06:34):
IBM. It's the safe thing todo. No CEO or whoever makes the
final call is going to reprimand youfor bringing IBM to the table as a
provider. They're proven. Similarly here, you're going to go with one of
the big established providers. Concentration andthe fragility that results from it, the

(06:55):
lack of any backup when something goeswrong, it's probably inevitable. I've been
trying to think of like the lessonshere, and it's it's not the same
lessons that you've gotten over the yearsfrom say that you can do cybersecurity training
on right, Like all the cybersecuritytraining that we do on a daily basis,
mark has to do with detecting incomingattempts to infiltrate our systems. Right,

(07:18):
You and I go through this trainingat least annually and oftentimes more on
an ongoing basis to make us toprevent you know, a bad actor from
infiltrating, trying to fool us withfalse fishing attemps. Yeah, yeah,
actually it's pretty fun. Some ofthem are pretty good. But this has
nothing to do with that. Andyou know, you spent all your time

(07:40):
over the last five years focusing onhow do we prevent this from happening?
And then out of left field,that happened, and nobody was at all
prepared for it. And I don'tthink anybody really has a solution here other
than hey, if you what's theroot of the problem. Here was an
error made by the firm that I'moversimplifying, made by the firm that you
hired indirectly, not directly, toprevent you from to manage your data and

(08:00):
to prevent you from falling victims tothe first problem that I was talking about,
right, you hired this keep yourdata safe, to keep your data
safe, lack of a better way, and they ended up taking down your
systems for a full three days.And so I look at all the conclusions
that people are trying to draw.Right, So you know, the uh
one of the bank right, theone of the bank regulators is talking about

(08:22):
giving certain IT providers the systemically importantdesignation so that they have to undergo certain
audits going forward that already exists tosome degree. I am going to make
it harder to compete and make themeven bigger, will be more concentrated.
That's kind of part of the banksin the last fifteen years. Few or
precisely. The right point is,I'm not saying that you shouldn't have regulation

(08:46):
here, but when you designate somethingis systemically important, what has happened some
not everything, merits a big governmentreaction. Yeah, I don't mean,
I'm not suggesting they shouldn't be lookedinto. I guess it should. It's
just it's not clear to me thatthe solution is a new bureaucracy to monitor
the problem. The other interesting pieceof this, Tucker mentioned the first hour

(09:07):
that there was a deal between Alphabetand this Israeli cyber company Whiz. Doing
a bit of reading, Whiz andCrowdStrike do not appear to compete directly,
but I have to wonder the mergename would have been interesting crowd Whiz,
crowd Whiz, Yeah, I likeit, Whiz Strike. The fact of

(09:30):
the matter is the timing on thisdeal falling apart to me looks like,
oh maybe after this failure on Crowdstrike'spart, Wiz has a new business opportunity
that the door was not previously openedto them on it. And so I
wonder if the valuation that Google wasputting on it, which was, by
the way, twenty three billion dollarsor roughly I think forty six times their

(09:50):
earnings, might not have been juicyenough to make this deal close. Who
knows. It could have been antitrust concerns. It could have been any
number of things, But the factthat it all culminated over the weekend and
fell apart on Monday is suspicious tome in terms of what the root cause
was behind it all. But inneither case, the only conclusion that I

(10:11):
have come to as part of thismost recent event is that I am starting
to think of cyber events more likeI do weather events, where in many
cases completely out of my control.There will be an event that is going
to take down a massive portion ofcomputer networks, and there is not seemingly

(10:31):
a ton that I will be ableto do about it, individually as the
owner of a company, or evenas an industry or with a regulator.
We're looking at Mark Zuckerberg on theBloomberg monitor right now. I was wondering
why you're grinned. Does he looklike James Conn from the nineteen seventies now
or he's really changed his look.Yeah, if he puts on some kind
of me he's we're in a medallion. If you put on a sleeveless if

(10:52):
you put on a sleeveless shirt betterknown as a white beater and in some
groups, then yeah, he might. He might look like a seventies gen.
He's changed his look. It's conscioushe has most certainly. Tune in
for trivia brought to you by Applebee'severy Day at eleven twenty for your chance
to win cool prizes. Text usat six one seven, three, six
two one three eighty five and usekeyword Applebee's. Complete rules are available at

(11:13):
Financial Exchange Show dot com. Thisis the Financial Exchange Radio Network. The
Financial Exchange Show podcast drops every dayon Apple, Spotify, and iHeartRadio.
Hit that subscribe button, then leaveus a five star review. You're listening
to the Financial Exchange Radio Network.Well, when I looked this morning,

(11:33):
I had General Motors stock up aftertheir earnings report and just look now it's
down six percent. And I can'treally tell you why, because they posted
stronger and anticipated second quarter or earningstopping expectations. The profit was fourteen percent
higher than anticipation and generally had apretty good quarter. So I don't know
what markets are reacting to. Maybethere's something disclosed later in the earnings call,

(11:58):
because I was looking prior to that. I think the Arnies call itself
was at seven point thirty. Nonetheless, the average new car price has been
hovering around forty eight thousand dollars formore than a year now. General Motors
said that THEIRS was around fifty thousanddollars. They did book a six hundred
million dollar charge to abandon one oftheir vehicles called the Origin, which was
a robotaxi they've been developing. Instead, they're going to use the Chevy Bolt

(12:22):
for that purpose, which they planto relaunch next year. While the company
still is not making much of anygetting much of any traction in China,
in the United States, seemingly,at least, the pace of purchases for
large SUVs and pickup trucks is notslowing down enough to harm General Motors,
and they're doing now pretty well.Ford and Stilantis, you commented about the

(12:46):
paradox of good earnings, good revenue, decent outlook, down stock price,
Ford Stalantis also down for what thatlittle peer group is worth. There is
a story. We don't have ithere, but it's in the talk.
What am I doing wrong? AmI not into the mic? Oh?
Oh? Do you want to?You know, we're on the radio.
I thought we were just having aconversation here. You're rolling right now,

(13:09):
Marks, Mark's talking like this.Do I go into the mic? Yeah?
If we had any professional radio traininghere, that might help me.
Tucker all right, Radio one onone noon, please yeah, show me
the video. So the Financial Timesof London talks about softening demand, increasing

(13:30):
incentives, which you are a symptomof that. Their outlook is a little
bit less. Their their journalistic takeon the outlook for what it's worth is
a little bit less rosy than itseems, was GMS that that interpretation could
be dragging down all of those socalled Big three certainly, and you do
have used car prices y're over year, coming down and not doing terribly well,

(13:52):
and not that General Motors has amassive investment in that space. But
nonetheless, even with today's losses,by the way, General motorstock h up
nearly twenty nine percent even with today'slosses, so having a pretty solid year
regardless of what's going on this morning. But just the reaction from investors surprised
me a bit, as was afairly no. It was a solid quarter

(14:16):
from General Motors, no matter whichway you cut it. I don't even
know who's is this from? Whatis the piece about Elon Musk from?
Is this from Forbes? Barons?I don't know who wrote this one.
Believe that's Bloomberg Home Let me pullit up market Watch, market Watch,
Lewis Navalier opinion piece from Lewis Navalier. Elon Musk has his mojo back,

(14:37):
and Tesla needs some of that inits earnings. It most certainly does need
some of that in its earnings.I'm really curious what the next year of
Tesla sales are going to look like. And maybe I just pay more attention
to this than the average person,and the average person won't care. But
I'm looking at some polling data fromPew Research Center on the political divide on

(15:01):
feelings of towards EV's and as youprobably won't be surprised to hear, there's
a pretty big political divide. Soif you ask Democrats if evs are better
for the environment, sixty nine percentsay of Democrats say that evs are better
for the environment, whereas only twentyfour percent of Republicans do. If you
say that it costs less to chargeversus fuel, half of Democrats say yes,

(15:26):
twenty five percent of Republicans say yes. Are EV's fund to drive Democrats
seventeen Republicans nine? Are they morereliable? Democrats? Fourteen Republicans five?
The cost is less to purchase thevehicle eight percent say Democrats yes. Republicans
only four percent say that that isthe case. Whereas you asked you know

(15:48):
the opposite question, and it's clearthat Republicans have a far less favorable view
towards electric vehicles than Democrats do.At the same time, Elon Musk has
committed to donating I believe it wasforty five million dollars a month to the
Trump super Pack for his reelection.And again, like I said, maybe

(16:11):
I just pay closer attention to thisbecause we cover it every day in the
news. But I'll be very interestedto see, Hey, does Elon Musk's
involvement in the Trump campaign and youknow, giving vast amounts of his not
portions of his wealth, but vastdollar amounts of his wealth to a reelection
bid for Trump change some minds amongRepublicans about their attitudes towards electric vehicles,

(16:37):
because if not, I do wonderhow many Democrats say, well, you
know, I liked the car andI was willing to put up with Elon
Musk's antics, but once he startedsupporting Donald Trump, I won't buy my
next EV from from Tesla. LikeI know people who would say that,
I'm not saying I agree with thestatement, but like I do wonder openly

(16:59):
will to be something that shifts.Will Republicans' attitudes towards EV's shift because of
Elon Musk, and will Democrats shyaway from Tesla because of it? I
don't think he's doing it for marketingpurposes. I think he in a small
quadra. Oh, I agree.I think there's a general guard out in
Silicon Valley of people who think thatdemocratic republicanism. And I'm not talking about
the parties. I'm talking about thesystem that's operated in this country for a

(17:22):
while now, and just our systemof government generally. I think it's outmoded
and overrated. Musk is one ofthose they right manifestos, they whole little
conferences, and I think he's bettingon Trump being pliable enough. JD.
Vance is all in on this modeof thinking, like democracy is sort of
antiquated protections against overreach or overrated.We can talk about the next ric Break

(17:45):
trivia winners next, followed by somenew chatter on Amazon's devices. Bringing the
latest financial news straight to your radioevery day The Financial Exchange on the Financial
Exchange Radio Network. Find daily interviewsand full shows of the Financial Exchange on

(18:07):
our YouTube page. Like us onYouTube and get caught up on anything and
everything you might have missed. Thisis the Financial Exchange Radio Network, Alexa.
Do you make Amazon any money?Mark? Do you have any smart
speakers in your home? Nope,Tucker, we have one and I'll tell
you what it does. It sitson the counter and changes screens. What

(18:33):
do you mean changes screens. It'lljust change like different information, like you
know, the weather or the time, and it'll just like it's say,
through screens. So it's like asmart TV device from Amazon. I haven't
seen those, but my point isit just sits. It sits there,
just sits there, and doesn't domuch for you. So Amazon, when
they launched these Alexa devices, sorry, buddy, I just I really can't

(18:59):
help myself. I have the GoogleHome ones at home, so a different
version of the same thing. Butwhen they launched them, the idea behind
it was apparently taking a page outof the Gillette playbook, which is,
we're going to make the raizers themselves. Mean, the handles really cheap,
and your first one that you canbuy is going to be pretty inexpensive.

(19:19):
But what we're gonna do is chargeyou an outrageous sum of money for the
replacement blades that go into your Gilletterazor. And quite honestly, while annoying
and getting some blowback, pretty damngood strategy for Proctor, Gamble and Gillette
as far as I'm concerned. Theproblem seems to be. So here's the
theory with Amazon. Hey, ifwe just get all these devices in people's

(19:41):
houses, we'll learn a lot aboutthem, and they'll be far more tempted
to buy stuff from us, andthey'll will increase our sales volumes because people
are going to want to shop onthese devices and just say blank, order
me soap for the dishwasher using mynever done device. Never done it.

(20:02):
I have to Yeah, I havenot either. In granted I don't have
the Amazon devices. I have theGoogle one, so it's not quite that
synced up. I would say myhome smart device is fifty percent setting timers
while I'm cooking, Yeah, andfifty percent playing music on my Spotify account.
I don't even pay. I don'teven use the Amazon Music option on

(20:26):
my devices or Google Music if thatexists. I use Spotify because I think
it's a different, better product.And I have to say, I don't
think anything about having those devices inmy home has made me more willing to
buy products from Amazon or any othercompany. So it seems to be not
working that way. And now CEOAndy Jasse is trying to figure out ways

(20:48):
to monetize this in a different fashion. So they're talking about a you know,
a paid tier of Alexa as soonas this month. I don't know
who would subscribe to that because Idon't know what it's going to do for
you, presumably using some form ofartificial intelligence. To me, the only
way you're going to be able tomonetize these things is if you start killing

(21:10):
the usability unless you're a prime subscriber, or jacking up the price of the
initial sale point on these like thecost for me to have the Ring system
monitoring my home. The Ring systemof products, so I do have that
in my home because I wanted monitoredsmoke detectors in my home so that you

(21:30):
know, it calls the service ifit's having and Ring was the cheapest product
out there, which is owned byAmazon. It is outrageously inexpensive to use
this thing. It's half the price, maybe a third the price of ADT
monthly monitoring. Granted I have toset it all up myself, but it's
it's just a lost leader as faras I can tell from it for Amazon,

(21:51):
and it can't be that they canmake any sort of money by shipping
me. You know those little Amazontiny like puck shaped things. I think
those go for like twenty thirty buckson Amazon, and they were giving them
away with purchases beyond a certain threshold. At one point they recognize the money's
in the data. Data is thenew goal, right. They just haven't

(22:11):
been able to figure out how totease something useful out of the data.
It was always why right, Iwould have said, I would have green
lighted it, so to speak.I think it's what you're going to put
a listening device in people's homes,will get a better read on their habits
and thus be able to extract morerevenue from them. Made good. That's
plausible, and how it hasn't workedout? How big of a disappointment must
that be to be sitting there asAmazon is saying, we had all of

(22:34):
this data and we couldn't be firstto market with a chat GPT like product.
We've had devices in millions of Americansand not even Americans across the globe.
We've had millions of these devices inpeople's home listening to how they talk,
and we couldn't be the first onesto market with a generative AI tool.
It's yeah, I think a prettycompellingly bad result for what they have

(22:59):
put it out there. And maybethey're just focused on the wrong things I
think. I mean, overall,it's a blip. Oh sure, this
is the they've tried that hasn't worked. True, they had to try it,
and the Amazon method is throw everythingat the wall and see what sticks.
And this one just doesn't seem tobe sticking. So I'll be interested
to see how that develops over thenext few years. The United States Virgin

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your trip right now. That's visitUSVII dot com. Mark, you had

(24:22):
a giant smirk on your face whenI said Amazon throws everything wall and see
what sticks. Did you have somethinginsightful there? Or were you gonna no,
no, absolutely nothing insightful kidding Now. Wall Street Journal has a piece
today from their Personal Finance section onthe four toh one K rollover mistake that's
costing retirement savers billions of dollars.And I was naturally curious what they were
going to be talking about here,because you do see a mistake sometimes where

(24:47):
say you've got a small balance ina four oh one K. In some
cases they might just say, youknow what, you're too small for us.
We're just sending you a check andif you end up depositing that,
then you pay out, you know, ten percent penalty if you're over under
fifty nine and a half plus anyof the taxes that you wrote on that
and that's a pretty big mistake inmy view. But they actually talk about
one that I had not considered,which is when you roll money out,

(25:11):
which can be a good idea outof a previous employer's for a one K
plan, because I can't tell youhow many times I'll meet with somebody who
discovers that they have an old accountat an old employer that they didn't even
realize. And so just from aconsolidation and tracking standpoint, I find the
idea of doing four one kruse isa lot. Yes, when I leave
a five dollars bill in my jeansand don't find it for a year,

(25:33):
I get upset. Right, Butyou're a notorious cheapskate, it's true.
Yeah, so different okay, theyyou know, they post your face on
some you know, discount stories likedo not let this man in return?
He is eating us alive. Theidea, the prospect of this is that
oftentimes when people roll money out ofthe four A one K, not only

(25:56):
do they forget it at the oldemployer, but when they when that money
actually goes and arrives that say theirIRA or their new employer plan, the
custodian itself won't necessarily default the moneyinto an investment, and so what they're
talking about in this case is,you know, trying to come up with
an estimate of how much people havelost because they did a four to one

(26:18):
K roll over. They sat themoney into their newly established IRA or four
oh one K, didn't think aboutit, maybe assumed that it was going
to be invested similar to the restof their money, and in fact sat
in cash for five years and missedout on all those gains. But we
don't know how y prior it mighthave been invested conservatively prior to the w
all over too. But I thinkimportant thing for people to realize that,

(26:40):
you know, if you have afour oh one K and you're putting new
cash in it, you can't justassume that it's going to be invested the
same way as everything else. Imean, again, a lot of our
stories have to do with just hey, if you just pay a modest amount
of attention to what you're doing,then you'll realize that, oh, there's
a mistake here. But I willyou know, as many people as I
see with old four one ks oraccounts at different custodians that they're not keeping

(27:03):
track of I will also say that, you know, keeping way too much
money and cash is a pretty notoriousmistake too. I'm thinking all the auto
features that have been implemented since thePension Protection Act of two thousand and six,
when it became safe to do sosafe legally, they may have lulled
people into a sense of false securityabout what happens with retirement. Like right

(27:26):
now you get employed, you startcontributing. Whether or not you want it,
you can turn it off, butyou're defaulted, so to speak,
in and they choose you're defaulted intosomething age appropriate. For the most part,
people could be forgiven for thinking,well, if I put this in
an IRA, it's probably worse thesame way it's a retirement account. They're
going to put me into something ageappropriate it'll be similar. But no,
you're on your own unless you're workingwith a professional. So the auto features

(27:51):
have been good, but they havealso lulled us all into uh made us
lazy, perhaps made us, yeah, a little lazier when it comes to
getting our arms around where our moneyis. Let's maybe let's take a quick
break when we come back to stackRoulette next on Financial Exchange, miss any
of the show catch up at yourconvenience by visiting Financial Exchange show dot com

(28:11):
and clicking the on demand icon,where you'll find all of our interviews in
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(28:41):
for a bit of stacker let andI will kick things off here with a
conversation about universal basic income. MarkI think you did actually mention ubi.
You said the Kamala Harris is afairly big use to be a proponent.
Okay, Well, regardless, SamAltman, who was one of the founders

(29:02):
of open Ai, his company justconcluded, I think a three or four
year experiment on universal basic income.Effectively, they chose approximately a thousand recipients
below the poverty level or at aunder three hundred percent of the poverty line,
to be receiving thousand dollars per monthin basic income payments. They selected

(29:25):
another two thousand people to receive fiftydollars a month to participate in the same
study as a control group, andthey're out with some of the results,
and this is a pretty early takeon them. The researchers found that generally
speaking, the participants use the fundsto buy essentials like food, rent,
transportation, cutting down on unprescribed painkillersand drinking too much. So some positive

(29:48):
result there, I suppose, isthe argument and the conclusion. On the
other hand, they weren't able todraw any sort of conclusion about increased long
term health results as a result ofthis, and you know, granted it
was only a two year study,so I wouldn't expect that, but you
know, that's been one of theitems that has been talked about, is
hey, could it actually be cheaperto use something like UBI as opposed to

(30:11):
food stamps and medicaid as a solutionto poverty in this country, which is,
you know, the other solutions thatwe utilize. It did find that
people had a better chance of youknow, going to the doctor and you
know, the hospital to treat thingsbased on you receiving this UBI, but
there weren't significant increases in higher educationalattainment or the odds of starting a business

(30:36):
compared to the controlled group. Andthose were a couple of the theories that
have been tossed out there that hey, if you give people money, they'll
start their own business. They will, they will lift themselves out of poverty
has been the argument, and Ithink, so far from what I'm reading,
not much evidence that there has beenthrough this thousand dollars a month payment
to the group of the test group, that there's been any significant conclusion that

(30:59):
with that type of payment they wereable to lift themselves up by the bootstraps
and leave poverty. I think isthe conclusion that I've come to with this,
in my mind, pretty irrelevant tobegin with, because today I don't
think anyone's seriously talking about universal basicincome, at least as a broad policy
for the entire United States. Ofcourse, interesting that Sam Altman, the

(31:23):
founder of AI, which could bea massive job replacer, or you know,
theories have abound about that being agiant job replacer in the future have
been coming out. But you know, quite honestly, when you have big
looming issues like the failure of SocialSecurity and Medicare in the not so distant
future, I would imagine that it'sgoing to suck up all the oxygen in

(31:45):
the room to have any sort ofintelligent discussion about universal basic income. That's
a fair point. We've got otherobligations to which the government is statutorily committed,
right, And we talked in thelast out about the size of the
debt and the additions to the debtthe deficit. So there's no there's no

(32:05):
money to do this, probably ona federal level for the foreseeable future.
And furthermore, again some of theyou know, I wish this study did
show that, hey, by givingpeople one thousand dollars a month, they
were able to get themselves off foodstamps or medicaid or any of these.

(32:27):
How it doesn't seem like that's beenthe conclusion. We don't have enough time
stuff. Look, giving people moremoney, of course, is going to
make them better off. I don'tthink you need your wait around for the
empirical A fancy way of saying,you know, like what actually happened when
economists study this stuff for the empiricalresults. Every so often a UBI universal
basic income study is put out thereand they all conclude the same thing,

(32:49):
Hey, people are better off whenyou give them money. Sure, well,
yeah, how does that anything elsebe the case? The question is
can we afford it? Is ita good idea? What long term incentives
or disincentive does it create? Wewon't know until we have a long enough
series to study. So that wasanother conclusion, by the way, that
compared to the control group, thegroup receiving the thousand dollars a month worked

(33:10):
fewer hours. Not surprised that yougave them free money. I'm not saying
don't do it, although philosophically Ithink I'm opposed to it. Just philosophical
I think you are. I don'tlike it. It doesn't even fdr.
For God in goodness sake, thefather of our modern welfare state said,
no dole. You know, youpay in, then you get money out.
I don't get the freebies to newarrivals and to people that have never

(33:32):
paid into the system. It's justkind of against my economic religion. That
said, it's legit to look atthe results of this stuff. Maybe some
of them will be surprising, butI don't see how you could arrive at
any other conclusion that I think,any conclusion other than that, yeah,
free money made the recipients better off. What what do you think is gonna

(33:52):
happen? Yeah? And I thinkmy conclusion is that the results of the
study weren't surprising enough for anybody todraw any dramatic conclusions or policy shait on
it. No, you never getdon't be fooled by researchers who come out
with a strong opinion. It's alwaysprovisional. In economic research, the change
in a modest assumption or the changein a statistical technique can overturn of previously

(34:12):
accepted results. Biggest best examples isminimum wage. For decades, economists taught
higher minimum wage just demand and supplymake labor more expensive, unemployment goes up.
In the nineties, that result wasoverturned with matter statistical techniques and more
evidence, and since then economists havesort of tempered their opinion of the minimum
wage on average. So you know, results are subject to change always.

(34:34):
You've got about thirty seconds here togive me something for stack relate. Oh,
this is this is related. Massachusettshas this is from the globe second
highest cost of living in the country. Yeah, the first time you got
to what I didn't see here wasa nice series of cost of living relative
to wages, which is probably theright metric. They hint at it,
but they don't explicitly do the calculation, which I think would have been easy.

(34:57):
Yeah, it's expensive, but wealso have the highest wage on average,
not to mention great public services,et cetera. Sure, we'd all
like to see lower taxes and slightlysmaller government, at least I would,
but on balance, pretty dark goodstandard of living. Yeah, Like we
can talk about the quality of lifetrade off that you have here in Massachusetts,
but ultimately, there are a fewplaces in the country that I think
most people would look at to say, oh, I've got better opportunity to
build wealth for my future than Masterusetts. Honestly, there are a few.

(35:22):
New York is one of them.San Francisco might be another, depending on
your industry, but there aren't awhole lot of them that you can look
at to say, yeah, thiswould be a better place to build my
career. It's all the time wehave for today. Markets have flipped back
to positive territory in DASDAC now uphalf a percent, s and P up
one third of a percent, nowup seventy six points, or one fifth
of eight percent. We'll have afull market recap for you tomorrow. Folks,

(35:45):
have a great rest of your day, and we will talk to you then.