Nearly a century ago, after years of investors on a champagne high and warning signs ignored, a stock market crash led to a descent into a global depression. Andrew Ross Sorkin, a New York Times financial journalist and author of the bestseller 1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation, joins GoodFellows regulars Niall Ferguson, John Cochrane, and H.R. McMaster to discuss how the events of 1929 resonate to this day, what’s misunderstood about the fabled crash, whether Herbert Hoover (only seven months into his presidency when disaster struck) gets a fair shake, plus what the future holds for Federal Reserve independence, the bidding war for Warner Bros. Discovery, and Wall Street’s relationship with Washington. After that: The three fellows look back on 2025 with their choices for individual of the year, the most significant or ignored stories, what they learned in 2025, plus predictions and resolutions for the new year. Finally, a surprise visit by Hoover Institution visiting fellow Kris Kringle, who asks the panel for its holiday wishes (oddly enough, H.R. is never around when jolly old St. Nick shows up).
Subscribe to GoodFellows for clarity on today’s biggest social, economic, and geostrategic shifts — only on GoodFellows.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
(people chattering)
- Don't look now,
but there's something funny
going on over there at the bank, George.
- Hmm?
- [Driver] I've never really seen one,
but that's got all theearmarks of being a run.
(mysterious music)
- [Bill] It's Tuesday, December 16th,
and welcome back to Good Fellows,
(00:20):
a Hoover Institution broadcast
examining matters of history
and current events,
economics, and geopolitics.
I'm Bill Whalen,
I'm a Hoover Distinguished Policy Fellow
and I'll be your moderator today,
moderating a conversation featuring
three very wise men,
who here at Hoover Institution,
we call the "Good Fellows",
referring of course to the historian,
Sir Niall Ferguson,
the economist John Cochrane,
and former PresidentialNational Security Advisor,
(00:41):
Lieutenant General HR McMaster,
Niall, John
and HR are all Hoover Senior Fellows.
Gentlemen, good to see you,
and welcome to the lastshow of 2025 in our B-Block,
we're going to look back on the year
and review,
and get your choicesfor various categories
like Story of The Year,
Individual of The Year,
and so forth.
But, for our opening segment?
Well, nothing says"spreading holiday cheer"
like talking about an economic calamity
(01:02):
of nearly a century ago,
and that is the Market Crash of 1929,
and the possibility of it happening again,
perhaps in the near future.
Joining us to talk about this,
it's a great honor towelcome to Good Fellows,
Andrew Ross Sorkin.
- Thank you for having me, guys.
- Mr. Sorkin is a business
and financial columnist,
and the Founder & Editorof The New York Times
Deal Book Business & Policy Newsletter,
he's also Co-host of CNBC's Squawk Box,
(01:23):
and co-creator of oneof my favorite shows,
the Showtime series "Billions", Team-X.
He's here to discuss his bestselling book,
"1929, Inside The Greatest Crash
inside the greatest crashof Wall Street History,
And How It Shattered A Nation".
Mr. Sorkin, welcome to Good Fellows.
- [Andrew] Thank youso much for having me,
I mean, I'm such huge fans of all yours',
it's kinda crazy to be with you.
- Thank you.
You should know that I have a screen
behind the screen onwhich I'm talking to you,
(01:43):
and on it is a piece of notepad paper,
which has written in giant letters,
"Andrew Ross Sorkin"
because nothing is worse as a moderator
than to get somebody's name wrong,
God forbid I confuse you
with the other guy named Sorkin
who writes for a living, but-
- [Andrew] There's a more famous Sorkin,
and his name is Aaron,
nice guy too by the way.
- Let me ask you thisquestion then Andrew,
if I were to include a movie
in a time capsule about money
(02:05):
and America,
and the first decade of the 20th century,
would it be Aaron Sorkin's"The Social Network",
the screenplay about thefounding of Facebook?
Or, would it be two movies
based on your fine work,
"The Big Short"
and "Too Big To Fail",
about the '08 financial crisis?
- I'm gonna choose one other,
there was a fabulousmovie called "Margin Call"
that actually toucheson the financial crisis
(02:26):
in it's own way,
it's a dramatic versionof it fictionalized,
but I actually think that it...
It does a remarkable job
at sort of capturing that moment,
and the feeling of that moment
in a very special way.
- [Bill] Okay, good choice.
All right Mr. Sorkin,
so you know the rules of Good Fellows,
I want you to interact with John,
Niall, and HR,
I will now drop the puck
and then, turn it over to them.
(02:46):
Let me now ask you this question,
I've read your excellentbook over the holidays,
perfect for airplane ride,
early in the book,
you say, "The market crash in 1929,"
is in the exact word you'd choose
is a misunderstood financial disaster.
Question, what is notunderstood about 1929,
and are you concerned thatthis generation of investors
doesn't understand currentworking conditions?
(03:09):
- I think both,
and I think they'reinterrelated to some degree,
I think that the greatest misunderstanding
just in the popular conception
of what happened in 1929,
is I think a lot of peoplethink there was a crash
that happened on one day in October,
and that somehow,
magically we had a Great Depression,
and I think that,
that's a complete myth,
and I think when you getunder the covers of it,
you realize that thecrash was just the first
(03:30):
of a series of dominoes,
with the other series of dominoes
being policy choices
that ultimately led toThe Great Depression,
it wasn't pre-ordained that,
that crash unto itself had to create
a depression of the kindof magnitude that we had
back in 1932,
and 1933,
and beyond.
So, I would say that's sortof one misunderstanding.
(03:51):
As to the sort ofmisunderstanding of today,
I think the interrelated part of this
is that you know,
back in 1929,
and arguably in 2008,
every financial crisisis a function of leverage
in the system,
I think we saw that inboth of those contexts,
and I think there's now aquestion in terms of today
and how the investorclass thinks about it,
(04:12):
of whether we have a full appreciation
of what really creates a panic,
how systemic a panic in crash can be,
and what are the component parts
of what's happening in our economy today,
that might have some similarities,
that is not to suggest thatwe have to have anything
like what happened in 1929,
but I think we're getting closer
to something that mightfeel a little panicky
(04:35):
sooner or later.
- Andrew, one of the things I really loved
about your book which kinda takes
"Too Big To Fail"
and applies it to the Roaring '20s,
is you capture that there'sa sort of tech mania,
there's a kinda tech boom to the '20s,
it's RCA, which is oneof the really hot stocks
(04:56):
of that time,
something that I don't think
gets enough attention in standard accounts
of the 1920s economy,
and that I started to see patterns
that were recognizable
that I hadn't quite expected to see,
particularly in the kind ofinteraction of Wall Street,
and increasing theretail-focused financial sector,
(05:20):
drawing people in toenter the equity market,
with stories abouttechnological wonders to come.
As you were writing it,
were you thinking to yourself,
"Hang on, this is actually more familiar,
this is more 2020s than I was expecting
when I set out to write the book."?
- Oh goodness, way more.
I mean, I think you
and I spoke about this project
probably close to a decade ago
(05:41):
when I first started thinking about it,
I don't think that I went into it
expecting to see these parallels,
but the very phrase thatwas used in the 1920s
about democratizing finance,
which was sort of the watch-word,
or watch-phrase of the day
about trying to get ordinary investors
into the markets,
and creating all sorts ofnew financial instruments
to do that,
(06:02):
set against the backdrop as you said,
of the sort of remarkable,
technological shift taking place,
radio being you know,
probably the greatest example,
it was sort of the Nvidia of it's time,
and people were betting on the future,
and that's so much
of what I think is happening today,
we have you know,
AI is that technological backdrop,
(06:23):
and then, layered on top of that right now
is this idea that we're trying
to democratize finance again,
in some ways,
we're taking some of the guardrails off
that we had,
to create all sorts of new products
to get more people in,
and there's a sense,
maybe also similarly,
you know, there was a remarkable
amount of inequality in the '20s,
there's a remarkableamount of inequality today
in just the sort of psyche
of how I think a lot ofpeople felt back then
(06:45):
and feel today,
that their opportunity out,
or their only opportunity out
is to buy the lottery ticket, right?
Is to get in...
Is to engage themselves in all of this.
And so, I think you know,
when I think about some of the parallels,
that's sort of the middle-U,
which I think they live in.
- Well, let me ask then,
my job as ex finance professor,
I read the book over the weekend,
(07:06):
and it's beautifully written,
I gotta really hand it to ya on that,
and it seems to be mostly the story
of the people involved.
- Yep.
- Which is fun.
I learned a lot sort ofinstitutional detail,
but it's not...
I hope your next book will dig in more
to the mechanism,
there's remarkably little cause
and effect language,
or kind of factual language in there.
(07:28):
Although, I do...
I gotta, you know,
the first thing you said,
"Leverage, we are right now
slashing capital standards once again,
here we go."
But, okay close parentheses.
And, I wonder if you can dig in,
I mean, there is sortof a standard narrative,
Coolidge didn't anything,
greed, and inflated of the bubble,
it popped, the recession came,
(07:48):
Hoover did nothing,
Roosevelt saved us,
financial regulation means
this'll never happen again.
Now, that's false,
and sort of a wholegeneration of scholarships
said it's false,
it's a whole bunch of new ideas on,
"Why do stocks...
What are these repeatedphenomenon of these stocks,
booms, and busts?
Why did The Great Depression happen?"
I noticed you know,
(08:09):
Milton Freeman doesn't show up
in your bibliography,
or Ben Bernanke,
which is find, I just...
I'm hoping the next book,
or today you can geta little more on cause
and effect,
and this is to me,
a couple specifics,
on the boom,
so just optimism,
and people coming in,
that's kinda empty.
Their speculation is natural, that's...
The markets are there for information
(08:30):
about interesting,
new technologies to get in the prices,
but there are features of the markets
that mean speculativeactivity in huge volume,
which you document,
you know, optimism doesn't create volume,
volume is churned.
There's mechanisms in the market
that they cause a biased to upward prices,
including the marginlending that you explained,
it's just amazing what was going on.
(08:51):
The Fed was lendingmoney to banks in our...
So that banks could then lend money
to stock speculators,
I really wasn't quite clear
how open the discount window.
So, the credit...
And, short sales are hard,
as you documented,
you couldn't just sit there
and say, "This is overpriced."
(09:12):
So, there's that biastowards up, which I...
Which, a lot of those features
are not there anymore,
so that's one reason for hope.
But then, on The Great Depression,
you know, the standard narrative says,
"Oh, the crash is the first domino."
But, it wasn't the first domino,
the other policy choiceswere really important,
and there, I think yousorta showed the tale...
(09:33):
Of course, this isn't a book
about The Great Depression,
but I think it's worth emphasizing,
it wasn't the stock market crash
that caused the...
The big New York City banks did not fail,
how a national city didn't fail
is just beyond me me.
It was the small banks
throughout the country that failed,
and their...
You know, that if you're...
The book is lying,
'cause I don't knowwhat your book is about,
but I think it's worth emphasizing,
this wasn't inevitable,
(09:54):
given the stock market crash,
we coulda had 1921 all over again,
we coulda had 2000 all over again,
but the Fed failed in it's job
as lender of last resort,
banking regulations meant that small banks
could not recapitalize,
couldn't be bought out,
the bank crashes clearlycaused the economy to fail,
and the stock market's pretty rational
once all the banks have closed down
for other reasons,
(10:15):
it's perfectly rational for stock prices
to keep on falling down.
And then, you know,
that a whole bunch of scholarship
kinda likes Coolidge these days,
and Hoover,
and Roosevelt's energetic efforts
seem to have really hurt things.
So anyway, I'm...
That was a long introduction,
but I'm hungry for more of the cause
(10:36):
and effect,
and the you know,
what's the real narrative
of the financial markets
and The Great Depression?
- So, let me just add to that,
a couple things.
One piece of this,
'cause you mentioned technology
that I actually think it's important,
doesn't get enough attention
is actually that one of the reasons
I think we had a crash,
was actually a technologyproblem unto itself,
the actual, physical technology
(10:58):
undermined confidence to a degree
that I don't think is appreciated,
and as a result,
people just were selling stocks
almost indiscriminately,
because they didn't know
what the actual price was.
You know, today we have our phones
and we can look at you know,
by the millisecond,
exactly what the stock price was,
back then it was you know,
(11:18):
so very different,
even people who were standing on the floor
of the exchange,
looking up at the big board,
were looking at numbersthat were often three,
four, five-hours behind,
I had never appreciated it actually
'til I would start working this project,
every time you'd see those famous pictures
of thousands of peoplestanding in the street
outside of the New York Stock Exchange,
you know, on those crashdays in October of 1929,
(11:39):
what they were doing there.
The reason they had all gone down there,
the reason they were standing there,
was 'cause they were tryna find out
what was happening to their money,
like literally/physically,
'cause even if they were at a brokerage
at 57th Street, they were...
You know, if you were three or four-hours
in the wrong direction
on the floor of the exchange,
you know, a couple blocksaway you were even worse,
(11:59):
and so, I think that actually really did
suck some of the oxygen out of the system.
But, I think you're 100% right
that it wasn't the crash unto itself
that created The Great Depression,
in fact, the other sort of component part
that I don't think I appreciated
was by the end of the year of 1929,
the stock market was only down 17%,
(12:21):
and in fact I think Hoover interestingly
looked at the stock market as a barometer
or indicator of how hefelt things were going.
What I think was missedthough in that thinking,
to some degree,
was the down draftbetween September of 1929,
and call it November 13th,
which was the lowest day of the market,
was about 50%.
(12:41):
And, because everybody was so...
Living on borrowed money,
that's so on-margin,
oftentimes 10 to 1,
they were caught in it...
The reason that peoplewere selling their homes,
and mortgaging their houses was because...
And, they couldn't benefit
when the stock came back,
because they...
They already...
They had already had to sellout.
So, I do think that sucked
some of the confidence out of the system,
(13:02):
but it doesn't answer the question,
how we got to The Great Depression,
I think it's a confluenceof raising taxes,
or wanting to raise taxes,
implementing tariffs,
I think what the Fed did
in terms of sitting on it's hands...
We haven't talked about the debate
over the gold standard,
I mean, that is a hugecomponent part to this,
had we been able to print money earlier,
(13:23):
I don't think we would'vebeen talking about
necessarily the kind of bank failures
that we did in 1932,
that ultimately led
to the unemployment picture being 25%.
- Yeah, 'cause 30% deflation is huge
when you have to pay back borrowed money.
I just wanna...
Here's how to not win theNew York Times Bestseller,
write a book about financial plumbing.
But, there's a lesson in here,
kinda beautifully between the lines,
(13:43):
the plumbing matters,
and when you're...
Instead of buying a call option,
if you think you have a free call option
by being on margin,
and then, I'll sell on the way down,
sorry, nobody understood that,
but Andrew...
But, I had to say it.
- Yes.
- That is an illusion,
a perpetual illusion,
they didn't have good call options.
And then, you have to be ready
to sell instantly,
and if the market's closed,
or if the tape is behind,
(14:05):
you can't do that.
So, those plumbing issues matter a lot.
- Yeah Andrew, hey what I loved about it
is the description of the people,
and the sense of agency,
that people make decisions, right?
And, that has an effect.
And you know,
I'm kind of the...
I'm kind of the residentoptimist here, you know?
But, optimism was not really a virtue
in this book man,
I'm thinking of like you know,
sunshine, Charlie Mitchell,
(14:26):
you know?
And so, what I'd like to ask you is,
who do you think is...
Was responsible atcertain critical elements
of the story?
And, what they could've done differently?
I'm thinking of like the opening scene
in Steinbeck's "Grapes of Wrath",
remember when the guy's getting...
His farm's getting repossessed?
And, he comes out with his rifle you know,
(14:47):
the guy behind the...
He wants to shoot somebody?
And he says,
"Well, who do I shoot?"
Like, who...
So, I guess, who should...
Who should we shoot inretrospect for making
particularly poor decisions?
- But see, there's two questions.
One, is you know,
what could you do on the front-end
to prevent the crash unto itself?
But then, as John said,
if you don't believe that the crash
(15:08):
is what ultimately ledto The Great Depression,
that unto itself is a...
So, I do believe it's a domino of a sort,
I don't think it's the...
But, I don't think
it's even the most instrumental domino,
I think it's the one thatsucks the confidence first,
that then leads to a whole series
of almost irrational decisions.
You know, sometimes I think to myself,
(15:29):
"What could've Hoover done?
Or, if Benjamin Strong was still alive
in the spring of 1929,
was there something they could've done
to really tamp down the speculation?"
By the way,
one of the reasons the Fed did nothing
was 'cause they were scared.
This goes to the sort ofquestion about politics
and even Fed independence,
they were worried
that if they raisedinterest rates too much,
(15:50):
that they would actuallytip the economy over,
and not just that they'd get hauled
in front of congress,
but that they'd you know,
the great experiment thatwas the Federal Reserve
would just end,
they had lived throughbeing blamed in 1921
and I think didn't wanna repeat that,
so that was sort of in terms
of trying to understand that, Hoover's...
You know, he's only inoffice starting March 4th,
(16:11):
you know, the inaugurationwas different back then,
in terms of the timing.
And so, I don't know how much time
he really had to sort of jump
in front of the train,
if you could've even done that.
- Wanting the government
to notice bubbles happening,
and stop them ahead oftime is pretty ambitious.
I think that policy mistakes
in the wake of the crashare more significant.
(16:31):
- One of the things I loveabout the book Andrew,
is precisely the people...
You'll notice that Professor Cochrane's
objection to it,
is that it has people in it
and not plumbing,
but of course,
people make history really,
plumbing? Not so much.
And, you show really rather importantly,
congress mattered,
(16:52):
and that's part of the pressure
that's on policy-makers,
that there's a lot of congressional
suspicion of the Fed,
and I think one of thebeauties of the book
is that we get the fulldramatized persona,
a lot of characters involved
in American government,
it's not just that thepresident sits there,
(17:13):
and either does well,
or does badly.
Herbert Hoover after whomour institution is named,
gets a very bad press,
as if the president is king,
but in fact,
you show that congress
is a very important player,
you give appropriate billing in your drama
to Carter Glass the Senator,
very interesting figure,
(17:34):
you properly bring him out,
who ends up being one of the co-authors
of the famous Glass-Steagall Act.
But, I think it's the beauty of the book
that we see all of thesedifferent characters
in their different roles,
including the treasury's secretary,
and another potentialvillain of the piece,
Andrew Millen,
all making these decisionsthat taken together
(17:56):
make matters much worse,
but you show why theytake these decisions,
and how their complex pasts,
their personalities,
ultimately influence the outcome.
So, that's...
That's why I think it'ssuch a terrific book,
why it's selling so well.
I've read many books aboutThe Great Depression,
probably as many as John over the years,
(18:17):
I can't think of many,
including even some of the classic,
like Galbraith's,
that give us a sense of why the people
did what they did,
and you do that very well.
- And, I just wanna add,
there's a temptation,
as HR went you know,
"Who are the villains here?"
And you went after probablythe most likely villains,
the big, rich bankers,
and my reading Niall,
came off pretty sympathetic,
(18:38):
I mean, yeah there were you know,
doing shady stuff,
but it was all basically legal.
(attendees speaking together)
- Wait, this is what I like though,
because I mean,
I like your attendanceto human nature, right?
You describe them in the book as flawed,
self-interested,
and complicated.
And, in the portraits thatyou paint of these people,
(18:58):
they're not simplistic, right?
You understand like theirfamily relationships,
where they came from,
their anxieties.
I mean, you know...
I mean, there waseverything from you know,
people who committed suicide, right?
To those...
To those who were sortof almost disinterested
in what was happening to other people,
because they were...
You know, they made out okay.
(19:18):
So, I mean,
I just think it was...
It's great in terms of the portraits
of the people,
and again, the sense of agency, right?
'Cause people made decisions.
And just quick,
I'd like to ask you tocomment on Hoover as well,
because Hoover struck me as you know,
kind of a taciturn guy, you know?
But, somebody who triedto do the right thing,
and I'm thinking of like...
Of the letter,
(19:39):
the cable that he sends to Roosevelt,
and says,
"Hey, you know,
here's my suggestion to you."
Right? And it's delivered,
it was a telegram,
and Roosevelt was on a train maybe,
I think, or something?
It was a great story.
And then, of course partisan politics man,
I mean, Roosevelt doesn'tdo the right thing,
so I mean-
- Doesn't do the right thing,
and that to me is a fascinating
(20:01):
glimpse into Hoover.
I would argue by the way,
Hoover made a series of terrible mistakes
along the way,
and then, recognized those mistakes,
and in that moment,
he had actually now lostthe election to Roosevelt,
and it was during thatsort of interim period
where he was handing over the reigns
before the inauguration,
where he realized,
"We gotta save these banks."
(20:22):
'Cause, that's when thingsstarted to get you know,
really, really terrible.
By the way,
one other surprise for me at least,
was actually if...
When you look at the time,
people who were polled,
thought the economy was getting better,
and actually probablywould've voted for Hoover
based on the economy,
the reason Hoover lost
was not because of the economy,
(20:42):
but because he was a fan of prohibition,
which was another sortof revelation to me.
But, in that four-month ignorant period,
he realized there was a problem,
and needed to save the banks,
but also knew that theonly way to save the banks
was to get Roosevelt onboard,
otherwise there wouldn'tbe enough continuity,
nobody would believe
what the government wasultimately gonna do,
of course Roosevelt says,
(21:03):
"Talk to the hand."
Because he doesn't wannaget blamed with this,
and then, it does...
It does happen-
- It was interestingly noted that
it was sort of the response
that Hoover expected, right?
I think you...
In the book you say,
before he even opened the response,
he kinda knew what was in there-
- Knew the answer.
But, one other thing to themotivation piece of this,
which I think is interesting,
and at least I went back to try to find
(21:24):
somebody on the other end of it,
oftentimes I try to think to myself,
put myself in their shoes back then,
even when you see peoplemaking terrible decisions,
or even things you mightthink of are immoral,
or wrong, especially retrospect today
with the laws we have,
back then, there was no SEC,
there was no insider trading rules,
there was you know,
no bank capital requirements,
(21:46):
there was no nothing,
there was no prospectuses for companies,
and I say that only because,
I think in a...
You know, I often think of the markets
are a game of people
trying to outwit the other side.
And so, whoever is buying a stock
thinks they're smarter than the person
selling the stock,
and whoever's sellingthe stock in that moment,
oftentimes thinks they're smarter
than the person who'sbuying it from 'em, right?
(22:06):
That's just what it is.
And so, when you see them doing things
that today we wouldthink of as manipulation,
I think a lot of themjustified it in their head
as just another way ofoutwitting the other side.
And, I went looking for people,
I wanted to find someexample of some person
who didn't participate in these things,
(22:27):
because they somehowthought it was immoral,
and I couldn't find them.
And, I only say that
because I think it goes to the concede,
or concept of just you know,
what was going on in thatday in age with people,
and how people thought aboutthese rules of engagement.
- Andrew, I'd like to shift now
and talk about a few thingshappening in the 2020s
(22:48):
as opposed to 1920s,
let's begin with Scott Bessent,
who recently youinterviewed at your summit.
That was quite a summit by the way,
between him,
and Halle Berry,
and Gavin Newsom, well done.
- [Andrew] Thanks.
- Can you explain the difference
between a treasurysecretary's role in the 2020s
versus the 1920s?
Bessent versus Andrew Mellen?
And then secondly,
I want your opinion on what kind of...
(23:08):
How good of a job the Trump Administration
does on selling the economy.
- Oh goodness, that'ssuch a great question.
You know, I'm not sure
actually Scott Bessent's job is...
I'm very curious to hearwhat everyone here thinks,
I don't think his job isactually that different
than the role that Andrew Mellen played,
I mean, he's...
I think in this case,
Bessent has a much better relationship
it seems like with President Trump
(23:31):
than Mellen ever hadwith President Hoover,
President Hoover sortof kept Mellen around
because he thought he neededsomebody like that to...
- But he's very much out front
pushing back against you in the economy,
and then he's...
John will probably tell us this,
he's probably picking the next Fetcher,
so it strikes me he's much more hands-on
than Mellen was.
- Yes, but I think that's in part
because Trump has you know,
(23:53):
delegated some of these responsibilities,
but not really,
because in the end,
the decision will be made by the president
in a way that where I felt
like Hoover was maybe hands-on...
John, you're making-
- I'm gonna disagree.
So, I think Bessent's job is to make sense
of whatever Trump wants,
and to sell the administration policy,
we have a very active
administration policy these days,
(24:13):
unlike the previous one.
Mellen really shownduring Coolidge's time,
that he worked with Coolidge
to cut the federal budget dramatically,
to cut the top marginal tax rate from 70%
to 20%, bigger even than Reagan's cut,
and to oversee a tremendous economic boom
that no, did not sew the seeds inevitably
of the recession that followed.
(24:34):
So, his job was taxpolicy behind the scenes,
and not to get on TV
and explain you know,
why we're having tariffs today.
- So, you think today he's become
much more of just a spokesman
for the White House?
Or maybe every cabinet member
has become that in this day
and era/age?
- Well, there's much more get-on-TV,
and you know,
what are we doing today?
Policy-policy-policy.
(24:55):
I kind of...
I think you were kindamean on poor old Coolidge,
I kinda look back fondly on being quiet
and softly fixing the government.
- [HR] Yeah, his wifemade up for his you know,
for his personality,
she was quite a bubbly personality,
and a big socialite, you know?
- [John] There's a greatquote from your book,
I have three that I'm gonnawanna read, but one...
"One thing was certain,
(25:16):
Calvin Coolidge's style of governance,
taciturn, aloof,
and minimal, was about to be retired,
and the US would get a chance
to see what a presidentimbued with optimism,
ideas, and energy could accomplish
at a time when the rest of the nation
seemed to be overflowing with them."
Hmm, I wonder if the...
If all this energy
and ideas,
and so forth has turned out so well-
(25:36):
- Well, that might've been a mistake,
I'm not suggesting it wasn't.
And by the way,
it was interesting,
prior to Hoover winning the election,
and even it being inaugurated,
there was a view on Wall Street
that he might turn out
to be a terrible president.
And then, for whatever reason,
in literally the weeksbefore his inauguration,
the market started to move much higher,
and people started to get...
(25:57):
There was a...
In the same way there was a Trump Bump,
there was a Hoover Bump.
- Well, it should've ended,
I mean, you know,
it could...
There's a counterfactual history
where The Great Depressionwas another 1921
and all the banks didn't fail,
and Smoot-Hawley didn't come in,
and the National Reconstruction Act
didn't destroy the economy,
and we didn't have deflationof the gold standard,
and you know,
we went back.
(26:18):
- But, that's counterfactualabout the Fed John,
because remember,
you brought up Milton Friedman,
the reason you brought Milton up
was that his monetaryhistory of the United States
co-authored with Anna Schwartz,
tells the story of The Great Depression,
primarily as a series ofmonetary policy disasters,
and I often used to say to people,
(26:39):
"In the period of 2008/2009,
if you want to understand Ben Bernanke,
just assume that he'sdoing the exact opposite
of what the Fed did duringThe Great Depression.
Andrew you, you know,
had a ringside seat for that crisis,
the Fed is the key institution,
both in 1929 to '32
(26:59):
when it gets it all wrong.
And then, in 2008,
to I guess 2010/'11
when I think one has to say,
does a lot better.
What's you're view ofthe future of the Fed?
It's a hot topic all acrossthe country these days,
or at least it is in New York,
and Washington.
Do you see a danger ahead for a Fed
(27:19):
that might be losing it's independence?
- Well, I think...
Look, I think one of the lessons
is that the independenceof the Fed does matter,
and I think that was actually...
I don't, you know...
Hoover was not telling the Fed what to do
back in '29,
but it's clear that the right answer,
at least thus far,
in terms of the crisis we've had
(27:40):
is to do things like BenBernanke did in 2008,
and arguably by the way,
what even Powell did duringthe pandemic to some degree,
which is throw...
When you have a crisis,
you need to throw money at the problem,
as politically,
and palatable as that may very well be.
The question to me is,
that playbook has worked thus far,
(28:01):
and that was the lesson of 1929,
which was that we didn't throw money
at the problem.
What I don't know is,
if there is some red line
that we are going to cross in the future,
you know, back then in 1929,
there was a budget surplus in America,
we weren't talking about debt
the way we talk about debt today,
and I just don't know
when the bond-holders of the world
raise their hand
and say, "Excuse me,
(28:23):
this doesn't work for us,
we're very happy to loanyou money in the future,
but you know,
we're gonna have to do it
at a much higher interest rate."
In which case,
you create a really vicious,
and painful cycle,
potentially for the whole country.
And so, I don't know...
It's gonna be very interesting to see
if that moment ever comes,
I thought that moment would come
a long time ago,
and it hasn't.
So, what do I know?
- Well, I wanna ask you what you know,
(28:45):
'cause this segues intofinancial regulation.
We look at the Fed,
and we're just up
and down, the overnight interest rate,
that's boring.
The financial regulationis the interesting part.
Yes, we are still stuckin bailout like crazy,
and then, pass hundreds ofthousands of regulations
that don't work,
and then, we bailout like crazy again,
and exactly what you said,
(29:06):
in the next crisis,
Uncle Sam wants to throw
another couple trillionairedollars around,
who knows if we actually have it
without printing money,
and it turning into inflation?
So, I'm curious you know,
you've watched the first crisis,
you've watched the Dodd-Frank Act,
which of course,
made sure that we would never have
any failures again, you know?
You watched Silicon Valley Bank that shows
that they have no idea what they're doing.
(29:27):
And, there's the secondquote I want to read,
"As the major inevitabilityof reforms sank in,
Aldrich, and the Rockefellers showed them
the necessity of jockeying
for whatever regulatoryadvantage they could get.
This is how the game would be played."
There's a certain...
A certain rot in crony capitalism going on
in our financial regulatory system.
So, where do you see thestate of that whole affair?
(29:48):
- Well, two things,
one is, I had a view
before I started writing this book,
that somehow the good old days
didn't have lobbying,
and didn't have cronyism,
and that somehow you know,
our laws were passed bypeople of great you know...
- Virtue.
- Virtue.
- Virtue.
And then, here I am...
By the way,
(30:08):
I had this impression that Carter Glass
had created Glass-Steagall,
and it was done for the right reasons,
and all these other things,
and then you realize that the bill...
Half the bill was written by a banker,
who was trying to screwover another banker,
I mean, the whole thingwas shocking to me.
So you know,
in terms of the laws,
you know, we're alwaysas you know, fighting...
It feels like we're fighting the last war,
(30:29):
maybe some of the laws
that were put in place post-2008,
I do think you know,
hopefully help the system,
some of them invariably went too far,
I think the next question
which we don't know about yet,
is you know,
what happens in theprivate credit industry?
I mean, one of the thingsthat happened post-2008
because of Dodd-Frank
(30:50):
and all the other rulesthat were put in place
is the entire loaning...
Loan business has just moved
from the banking system,
which was regulated,
to the private credit system,
and now we don't have disclosure
or transparency over there,
and you know,
I think a few of you talked to folks
at the Federal Reserve,
they don't have a dashboard to know
where all of the leverage law...
So, that to me is the next concern,
(31:13):
and I imagine at somepoint we'll have a problem,
and I imagine that pointwill have more legislation
that will have you know,
solved some problem,
and created a new one.
- Andrew, I'd like to getyour thoughts on something
that's probably occupied
a lot of your time on Squawk Box,
and that's the biddingwar for Warner Bros,
what does it say about the times
in which we live?
I watched the story,
I'm kinda reminded ofBarbarians at the Gate,
in the LBO regardingregarding RJR Nabisco,
(31:35):
and now granted that was after
the '87 Crashout began,
but what is unique aboutthis Warner Bros situation?
- Oh, to me what's most unique
about the Warner Bros situation,
to hear of as an assetthat for the most part,
the public investor classwas not happy about,
it's sort of a trophyasset given its you know,
(31:58):
how close it is to the center of culture
in some way,
you have one family in the Ellison's
that obviously wanna buy it,
and then you haveNetflix on the other end.
To me, the most interesting feature
is this Washingtonpiece of this, you know?
It's really the first time
I think at least maybe the quiet part
is being said aloud,
I think in the past,
there have been timeswhere you've had bankers,
(32:20):
or CEOs maybe quietly say certain things
to the White House or the administration,
typically through you know,
other channels,
HR McMaster could probably speak to this.
But, this time you have both CEOs
literally going to theWhite House itself though,
sitting in the Oval Office,
you know, effectivelylobbying the president
on their behalf.
(32:41):
- No, it wasn't Durantsneaking in at night,
like that story you tell,
which I love that,
it's a great story, you know?
- [John] Let me pile in on this one,
I think we're seeing the final
utter emptiness of theentire anti-trust regime,
that started under the idea of,
"Oh, monopolies are bad,
and we need to have regulators
to stop monopolies."
Ended it now completely falling apart to,
(33:02):
it's just you know,
crony capitalism,
run to Washington,
and it's entirely political,
I wish we could throwthe whole business out,
totally rotten to the core.
- So, what would you do?
What's the solution?
- The solution is competition,
there is no durable monopoly,
other than that offeredby the Federal Government.
- I think it's wonderful to hear
American professors of finance talk about
(33:25):
there being insufficient competition
in American finance,
when the United States
is the most de-centralized banking system
of any developed country,
it has the most competitivefinancial institutions
of any peer country.
- But, Niall this is acompetition in Hollywood,
so does the FederalGovernment need to intervene
(33:46):
to make sure that monopolies
don't take over Hollywood,
and raise prices on us?
Come on, that's ridiculous.
- But, isn't the broader issue
the one that you raised a minute ago,
about financial regulation?
Because I think...
I think what we learnt in 2008/'9,
was that perversely,
it was the mosthighly-regulated institutions,
banks, that turned out to be the problem,
(34:08):
and my analysis at that time
was that much of the regulation
was the disease of which itpurported to be the cure.
It was unregulated entities like Headfonts
was supposed to be the problem,
and it turned out to be the banks
that were the problem.
When you go back to 1920s America,
go back 100-years,
it's a different issue,
(34:29):
'cause that is at least on paper,
a very unregulated financial system that,
you can't blame what happens after 1929
on the regulators,
or perverse incentives
and regulation,
something else went on there, which is...
Which is harder...
In some ways harder to explain,
and can I just put in a good word John,
(34:50):
if you can let me?
- Yes-
- For an academic book thatis coming out next year,
by our former colleagueTyler Goodspeed, "RECE$SION".
And, what Goodspeed does,
it's gonna be a fantastic hit next year,
is to show that,
to explain a shock as bigas The Great Depression,
you need many,
(35:11):
many different causes,
here I think he agreeswith your point Andrew
that it's just one of the dominoes
that come cascadingdown on the US economy,
and the dominoes includeall sorts of things
that you wouldn't think of,
like plagues of locusts
devastating large partsof American agriculture,
turns out that locusts
probably were moreresponsible for bank failures
(35:31):
than anything thatanybody did in Washington.
And so, I think we've got tounderstand financial crises
as being more than can be explained,
they're caused by morethan just bad regulation,
or bad monetary policy,
you actually need a wholebunch of different shocks
to tip something as big as the US economy
(35:52):
into a 30% deflation of the sort
that we saw in the early 1930s.
I find this a very refreshing approach
to the problem that webegan by discussing,
I mean, Locusts are not in Andrew's book,
why should they be?
'Cause Andrew's book is about
the people on Wall Street,
(36:12):
and their part in the drama.
But, Goodspeed's book shows
that there's a whole lotof other things going on,
particularly in American agriculture,
which today would seemcompletely unimportant,
but then, were a reallybig part of the economy.
- Let me just disagree there,
what failed in the 1930s were the banks,
and the banks were quite regulated,
in fact, it's exactly the regulations
(36:33):
against branch-making,
against interstate banking,
against banks you know,
that caused all the small banks-
- [Niall] But, the pointof those regulations John,
was to keep...
Was to avoid centralization,
and to avoid-
- Okay, but they had beenunintended, you know?
You can't say it wascompletely deregulated,
there was regulations,
and they caused all the banks to fail.
Second thing, I do think the book
(36:56):
sort of painted all theregulation as inevitable,
"Well, we had to have the SEC,
we had to have deposit insurance,
we had to have regulation."
There was in fact a big debate,
and I wanna you you know,
put my finger in the airfor the Chicago Plan,
there was an alternative to where we went,
guarantee all deposits,
try to regulate assets,
which has failed over,
and over again,
which was narrow-deposit-taking,
equity-finance-making,
we could've gone there,
(37:16):
and perhaps we will sometime.
- [Andrew] Well look, by the way,
Hoover, as you saw,
Hoover, and Roosevelt
were actually both against the idea
of the FDIC,
the whole idea of ensuring deposits
was something that I think most people
in the political class,
in the investor classactually didn't want,
in part because of the you know,
moral hazard issues,
(37:36):
and other things,
the flip side was-
- They got the central problem,
that if you have ensured deposits,
then depositors don't care
if the bank's any good,
and the bank has free money to go
and invest in whatever we want,
and we count on regular-
- Even Carter Glass agrees with you.
- Yeah, they all understood the problem.
Beautifully written.
(John chuckling)
- The public didn't,
(37:56):
that was the...
And, that was the problem.
- Well, when...
Run, you had said it earlier,
when a run breaks out,
you gotta stop it with a flood of money,
that's the only way to stop the run,
and then try to bottleup the moral hazard.
- Andrew, we have abouta couple minutes left,
so final question for you,
it's the same politicallineup in 2026 as 1929
and Republican Congress
Republican president,
should the market godrastically south in 2026,
(38:19):
what do you thinkWashington does differently?
- Well look, I think if the market
goes drastically south,
you'll see the Dems win the house,
I don't think the Dems,
even if the market goes drastically south,
I'm not sure they win the senate,
I think then you'll bein form of gridlock,
which the truth is,
the market will like the gridlock,
the market would be very happy
(38:39):
to have a little bit ofgridlock in Washington,
don't you think?
- I'm not so sure Andrew,
because it might lead toyet another impeachment,
and a general sense thatthe administration's
a lame duck.
I mean, market likes the administration
if truth be told on awhole bunch of levels
that we haven't touchedon in this conversation,
(39:00):
deregulation, more of whichis supposed to be coming,
I'm not sure,
I think if the house is lost,
then I think the administration's over,
and what market won't like that?
- Right. Andrew, ourtime unfortunately is up,
I wanna congratulateyou again on the book,
it's "1929, Inside The Greatest Crash
of Wall Street History,
And How It Shattered A Nation".
If you're watching this,
or listening to this,
(39:20):
you still have time to get it,
to put it under somebody'stree for Christmas.
Question for ya Andrew
before you bounce,
I hope there is a video treatment
of this great book,
Netflix just showed thatyou can do a series,
"Death by Lightning",
there is an appetiteout there for history,
so hopefully the the veto treatment.
Question for you sir,
I don't know if you'll end up
writing that video treatment,
or maybe being an executive producer,
(39:40):
but I am looking at three people
who might wanna be in that show.
- We will find you some cameo spots,
or maybe, I don't know,
what do you think?
John, who do you wanna be?
- Well, ideally Calvin Coolidge,
but I think I'm veryill suited for the role.
- [Bill] I don't know,
HR McMaster, what do you think?
- Hey, I'm the optimistic guy,
(40:00):
I guess I'm Mitchell, right?
If I'm the optimist, right?
- [Andrew] You could be Mitchell, totally.
I think that Niall...
Niall, are you-
- No, I'd like to be one of the guys
standing in the street going,
"Hey, what happened to my money?"
That would be the perfect role for me.
- [Andrew] Bill, what do you say?
You're not Carter Glass, are you?
- I'll just be in the pit
screaming like everybody else.
- [Andrew] Okay.
(40:20):
(Bill laughing)
- [Bill] Andrew, thanks again
for joining us today,
and congratulations againon an excellent book.
- Thanks guys, I'll see ya.
Enjoy the rest of the show, you guys...
You guys need to take on...
I mean, you guys are betterthan the All-in Guys,
so go for it,
I'll see ya.
(wind whooshing)
- Okay gentlemen,
on with the B-Block of the show,
BS and Bye-Bye 2025,
I'm gonna ask you a series of questions,
(40:42):
and I want your thoughts,
beginning with this.
What was the biggest,
most important event of the year? Niall?
- I'm gonna say Trump's 100-days,
because I can't thinkof another presidency
since Franklin Roosevelt,
talking of the 1930s
that opened so explosively,
with so many executive orders
and actions, it was astonishing,
(41:05):
and that I'm gonna say is the...
It's the big event of the year,
transformative, disruptive,
call it what you like,
it drove the year.
- Mhm. General McMaster?
- Yeah, I would say it wasIsrael's counter-offensive,
and so, that's just not one event,
but it's the counter-offensiveagainst Hasbulla,
which had a ripple effect into Syria,
and then, the verysuccessful 12-day campaign
(41:28):
against Iran, which theUS joined at the end,
so I think that has fundamentally shifted
the dynamics in the Middle East.
- John Cochrane?
- Well, since I can't have the 100-days,
but that's okay,
I always have something in my back pocket.
I'll take the end of the 100-days,
Liberation Day.
- My fellow Americans,
this is Liberation Day,
waiting for a long time.
(41:49):
- [John] When Trump turned to tariffs,
which I regard as sortof beginning of the end,
it'll be...
Our successors will have this
as the counterfactual history,
sort of like you know,
we all love to play this game,
"What if Hitler had not bombed London,
instead of wiping out the RAF?"
Trump turned to tariffs, why?
This is the idea of one man?
Of course, produced by men in ministration
(42:11):
that had learned that loyalty mattered
over then honesty,
but here's where theself-inflicted wound starts,
and I think that the beginning
of what will be regarded as the end
of the Trump era.
- [Bill] Okay. My choice?
June 22nd, Operation Midnight Hammer,
the destruction of Irannuclear facilities.
All right, question two,
the under-reported,
or ignored story of the year? John?
(42:31):
- I'll choose the quiet revolution
in the regulatory agencies,
education, energies,
SEC, small business,
a lot is going on under the screen,
I wish I knew more about it,
I wish the media would report about it.
- Mhm, Niall?
- I still can't get over the fact
that 38% of Stanford undergraduates
(42:51):
are registered as having a disability,
the Hoover Institution
sits at the center of the Stanford campus,
who knew that we were an island
in a sea of disability?
I don't think most of us
have really got our heads around
what's going on with Gen Z,
it's bizarre,
(43:13):
and it will take future historians
a lot of hard work to sort out.
But, that seems to me an amazing fact,
and not by any means unusual
if you look at universitiesacross the country.
- Niall, let me forecast
miraculous recoverystarting graduation day
and when job applications go in.
(John and Niall chuckling)
- HR, the under-reportedstory of the year?
- Hey, the astonishing degree
(43:34):
to which this access of aggressors,
and authoritarians are working together.
You know, we keep tryingto separate you know,
what's happening in Ukraine,
from the competition with China.
Hey, China's underwritingthe whole war effort.
You know, you have...
You have Iran providing the technology
for Russia's drones,
and North Korean slave laborersassembling those drones.
And then, if you come to our hemisphere,
(43:55):
you have medoral you know,
propped up, by Russian intelligence
an security forces,
along with the Cubans
underwritten to a large extent by China,
and it's technologically enabled
Orwellian police state.
And, Iran also involved,
and Hasbulla, involvedwith fundraising activity
associated with the drug trade.
So, I just think the connections
(44:15):
between these adversaries
are really important to expose,
and for people to understand.
- Mhm. My choice is Jimmy Lai,
the Hong Kong pro-democracy activist
who, the other day was convicted
by a Hong Kong court
on charges of sedition
and collusion with foreigncountries, it's ignored.
Which raises the question gentlemen,
what, if anything,
can the United States do?
- Hey, we can do a lot, you know?
(44:37):
We can do a lot!
I think...
You know, actually,
I think what's also under-reported
is the degree to which these...
This access of aggressors
is weak at this moment, you know?
And, I think China inthis race to surpass us,
has created real frailtiesin their economy.
You know, Russia is abasket case economically,
although Putin,
his ruse is to try to appear...
(44:58):
To appear strong.
Israel exposed a profoundweakness of Iran,
which is I think on the brink of collapse,
they're about to runout of water in Tehran.
So hey, I think we can do a lot,
I think we should be,
you know, as I saidmany times on this show,
Americans, not Americants,
and when you treat somebody like Jimmy Lai
the way he's been treated,
(45:20):
somebody who's spoken here at Hoover,
I think that...
I think there's a lot that we can do
to impose costs on I think,
a Chinese communist party
that is in a position of relative weakness
at the moment.
- Mhm.
- And certainly don't ignore them.
This is, as I've said multiple times,
Cold War II,
and there are dissidents aplenty,
(45:42):
in all the authoritarian regimes
HR has been talking about,
and we do them a disservice
if we don't speak out,
and honor them as proponents of freedom
in unfree societies.
- The Nobel Laureate who was just beaten,
drug out by her hair
and re-imprisoned in Iran,
(46:03):
comes to mind as well.
- Yeah, there's thousands of Jimmy Lai's,
and not just the ones who were in the news
with good international connections,
but all of them, we just...
Let's start by caring,
and talking about it.
- Well put, John.
We don't have any actualhardware to give away,
but gentlemen, your choices
for the Good FellowsPerson of The Year award?
So Niall, you wanna go first?
(46:24):
- [Niall] You know, I think
you have to give it to Scott Bessent,
because John mentioned Liberation Day,
I think Liberation Day,
the reciprocal tariffs day
came close to causing amajor economic accident,
and I think ScottBessent played a key role
in postponing the tariffs,
(46:46):
and creating breathing space for the US,
and the global economy.
He's emerged, as I think the key figure
in the administration,
almost prime ministerin the British sense.
And, for somebody whosebackground was Wall Street,
and hedge funds,
he's turned out to be an extraordinarily
adept political player in the...
(47:08):
In the swamp that is Washington,
so I'm gonna give it to Scott.
- Mhm. HR?
- It's predictable maybe,
based on the theme thatwe've been talking about,
but Maria Corina Machado,
and obviously recognizedfor her profound courage,
in remaining in Venezuela,
in hiding, as theprincipal opposition figure
(47:28):
who won the election againstMaduro earlier this year.
And then, made thatharrowing sort of journey,
you know, through the...
Through the Caribbean in rough seas,
to receive her Nobel Prize.
So, she'd be the one that I...
That I would give the honor to.
- Mhm. John?
- Well, I think these are people
(47:50):
who deserve recognition.
The most important person in the year
was of course Trump himself.
Niall's 100-Days...
The 100-Day whirlwind wasreally amazing what happened,
the slew of executive orders.
And, Trump personifying the vibe shift,
this is real...
We live in really interesting times.
The center-left elite
(48:13):
that had kinda stagnated into a big blob
is just imploded,
it's a global vibe shift,
I don't know where it's going,
or what happens next,
but he personified that,
so you know,
give credit where credit is due,
he's still taking upall the air in the room.
- My choice is Andrzej Bargiel,
who is he, you ask?
He is a Polish mountaineer
(48:34):
who on September 22nd,
became the first person
to descent from Mount Everest Summit
back to base camp on skis,
without using supplemental oxygen,
and an 11,000ft drop over rugged snow
and ice.
Niall, for you I know it sounds
like a slow day in Montana.
- Well, in Montana,
you need snow to do that kind of thing,
currently there ain't any,
and it's a sort of considerable
(48:55):
disgruntlement in the Ferguson household.
- Which seems to be a theme here,
because John, we weretalking before the show
about what's going on up in Truckie,
up in the Sierras, no snow.
- Yeah, I had a lovely weekend
hiking in 60° weatherwith no snow evident,
and rain in the forecast.
- Right. But then again,
who cares about snow HR?
Because there's always paddle-boarding.
- Absolutely.
(49:16):
(attendees laughing)
- All right HR,
let's stick with you.
What is the best thing you read
or watched this year?
- Oh gosh, well you know,
I mean, so many great...
I mean, I've plugged it so many times,
our viewers are gonna get tired of it.
But, the first two volumes
of the trilogy on therevolution by Rick Atkinson,
it's fantastic,
you know, it's really well done.
And then, just to stick with that theme,
(49:38):
I did enjoy the Ken Burns documentary
on the Revolution,
I think he did a very good job you know,
at hitting the criticalthemes of the Revolution,
the experience,
and bringing home thedegree to which really,
this was a very near-run thing,
our independence, obviously.
And, it took a lot of courage,
and a lot of perseverance.
And so, you know,
I think these works,
(49:58):
you know, Atkinson's books,
he was interviewed you know,
quite extensively in theKen Burt series as well,
I think oughta inspire us you know,
to appreciate you know,
the freedoms that weenjoy in this country,
to recognize our republic was
and always has been awork in progress, right?
And, I think you know,
get us in the right mood to celebrate
(50:20):
the 250th anniversary of the founding.
- Mhm. John?
- I'm not much of a popular culture guy,
and what I've-
- No, that can't be true-
- 1929.
(attendees laughing)
- What I've seen this year,
you know, everything I've seen this year
has been an outbreak of bad writing,
it's really a puzzleto me as an economist,
that they spend hundreds
of millions of dollars on movies,
(50:41):
and they can't seem tohave a decent script.
And so, let's mention in memory
of poor Rob Reiner,
who I was really sad to hear of.
What happened to movies
where the central dangerous plot element
was rodents of unusual size?
- Wesley, what about the ROUS'?
- Rodents Of Unusual Size?
(51:02):
I don't think they exist.
(rodent growling)
- [John] Bring back movies like that.
- [Bill] John, do you havea favorite runner film?
Ah, well Princess Bride, obviously.
- [Bill] Okay, so Niall?
- [Niall] Two Scottish items
for your cultural delectation.
A novel, Alexander Starritt's
(51:23):
Drayton and Mackenzie,
one of those rare forays into fiction
of the business world,
it's the story of a company
formed by an odd couple,
who go to Oxford together,
then to Mackenzie,
and then they end upfounding an energy company.
And, it's one of themost brilliant portrayals
(51:43):
of a business partnership
that I've ever read,
and that's the best novelthat I read this year.
The best thing I watched this year,
was Scotland qualifying for the World Cup
by knocking out Denmark.
- [Announcer] And McTominay!
(crowd roaring)
- [Niall] One of the mostextraordinary football,
(52:04):
and I use the term advisedly,
football game,
that I think Scotlandfans have ever witnessed,
with all the best goals
that Scotland have ever scored
in one astonishing game,
nothing else came close.
- My choice, we mentioned it
with Andrew Ross Sorkin,
it's Netflix Death by Lightning,
which details the shooting
and malpractice that led to the death
(52:24):
of James Garfield in 1881.
If you're not a videant,
you can read the book"Destiny of The Republic"
by Candice Millard onwhich the story is based,
Niall, let's stick with you,
one thing you learned in 2025?
- I learnt not to take along-haul flight every week,
because you will get hypertension.
That's what I learned.
(52:45):
- HR?
(HR laughing)
- I learned not to,
along the same lines,
you know, not to just leave home
for like 3½-weeks in one suitcase,
I felt like I was back in a...
Like, in a past middle-aged version
of ranger school,
living out of my rucksack.
So, like Niall,
(53:05):
maybe a New Yearsresolution for both of us
will be, travel a bit less, you know?
And maybe maximize the grandkid time more.
- Amen.
- John?
- I had a more currentevents Good Fellows,
rather than personal thing.
Like you know,
just reading the news was astonishing,
we learned that the...
The whole AID business early on,
(53:27):
the way our government works,
we don't actually to do anything anymore,
we just hand out billions of dollars
to politicize non-profits
and don't...
And, that's where it goes.
The shutdown I thoughtwas very revealing, 40...
You know, that is,
"Oh, 40-million Americansare on food stamps,
and they'll go hungry."
What? 40-million Americansare on food stamps?
And then, "We have to extend
the Obama Care subsidies."
(53:48):
Wait-wait, you took over this market,
and now it costs like 25-grand
to get health insurance,
and so, of course nobody can afford that,
and taxpayers have to pay for everything?
Budget? What happened here?
So, there was lots of...
I learned lots of...
In the chaos,
we learned lots of how actually,
things are really stuck in Washington.
- What I learned in 2025
(54:09):
is I have to get more sleep,
which means I'm seriously considering
deleting YouTube from my series of apps
that I'm also starting to think that
that app may have to bereclassified as a drug.
- As long as you're notscrolling through TikTok videos,
Bill, you're okay man,
you're all right.
(attendees laughing)
- All right gentlemen,
one big prediction for 2026?
HR, you wanna kick it off?
- Hey, so my prediction
(54:30):
is that we're going to see real frailties,
again, on this kind of same theme
within authoritarian regimes.
I do think that you know,
they appear strong from the outside,
but I think they're quite brittle,
and I'm hoping that inthe 250th anniversary,
that we'll restore some confidence,
confidence in our common identities.
Americans, that's my prediction.
And, confidence in our future as a nation,
(54:52):
and as a free people.
- Mhm. John?
- Well, looming over us
is when the next greatfinancial crisis happens,
but you never know when that's gonna come,
so I won't forecast it for next year.
I'll forecast, you wanted a forecast?
I think the democrats will take over
the house in the midterms,
and party's over.
And, I think we will start to see
(55:13):
the interesting question,
"What is the left's new cause?"
They've gone from inequality,
to the climate crisis,
to gender, race, pacifism.
What are they gonna do next?
Affordability doesn'tsound like their forte,
though, that's where they're going,
they'll have to figure out something,
and we'll see what it is.
- Mhm. My big prediction for 2026,
(55:35):
Condoleezza Rice's beloved Denver Broncos
are going to the Super Bowl,
and we have it on video
that Sir Niall Ferguson has promised
that he will go with her.
- [Niall] I think I'll have to reciprocate
by taking our director
to see Scotland beatBrazil in the World Cup.
But actually, my oneprediction of 2026 is...
I'm gonna really stick my neck out here,
(55:56):
I don't think Scotland will beat Brazil
in the World Cup.
- I have to add one,
'cause I forgot,
and it's very important,
'cause Beth reminds me.
Just to annoy Bill,
Travis, and Taylor will get pregnant.
- [Bill] That does annoy me.
- [John] Bill said noTaylor Swift forecasts.
- No Taylor Swift forecast.
All right, finally gentlemen,
your New Years resolution. HR?
(56:17):
- New Years resolution
is really just to maximizetime with grandkids
who are just a joy, you know?
And we're especially looking forward
to the holidays with them.
But yeah, that's it.
- Mhm. John?
- Prepare better,
and do a better job on Good Fellows.
- Mhm. Sir Niall?
- Well, I used this program
to announce the arrivalof my first grandchild
(56:37):
just the other day,
but my New Years resolution
is to take a new dog for a walk every day,
that's the big reveal.
But, please viewers,
do not tell Campbell,
it's supposed to be a Christmas surprise.
- All right, mine?
My resolution is to get in better shape,
that's an obvious one.
(56:58):
But, I plan to spend the holidays
reading some work by a Hoover colleague,
Bill Damon,
who has written a lot about what it means
to live a more purposeful life,
so that will be my holiday break.
And, that's it for 2025...
Oh, wait.
Wait, we have a visitor,
it's Hoover Visiting Fellow Chris Cringle.
Mr. Cringle, thanks for dropping by.
- Ho ho ho,
I heard that everyone'sbeen very nice this year
(57:18):
at Good Fellows.
Niall has...
Sir Niall's been very,
very nice,
although he's been a bit tardy
to a few of our recordingsessions here, I think.
And, John?
John is not the grumpy,
he is as we've said...
I've heard people say many times,
he is the huggy economist.
And I think Bill,
you need something extraspecial in your stocking
(57:40):
for the great job thatyou've done on Good Fellows
throughout the whole season.
But, you know who gets,
I think the best presents of all?
Are the Good Fellows audience
who are just fantastic,
I just love the questionsthat they send in
to you Good Fellows.
Ho ho ho,
Merry Christmas to all.
- Okay, the good news Santa,
because we're doing this virtually,
Niall and John don'tget to sit on your lap,
(58:00):
that's a break for you.
John, do you have a Christmas wish?
- Just more happiness
and productivity to all of us.
(attendees laughing)
- And, Sir Niall?
- You know, I just you know,
wish HR were here to give Santa his wish
for a new tank,
(58:22):
but maybe I can just pass it on
on his behalf?
Santa, our fellow Good Fellow,
he just misses his tank so bad,
and the paddler board isjust not doing it for him.
So, could you...
Could you just shove an Abrahams
in the stocking for him?
He'd so appreciate that.
Merry Christmas.
- New one with the...
(58:42):
The new one with the hybrid motor,
I'm sure he'd like that one.
(attendees laughing)
- The EV Tank!
- All right,
and Santa, my wish given the events
of the past weekend,
just peace on earth
and goodwill toward men, we just...
We need a more restful,
less stressful 2026.
- Absolutely. Let's all hope
and pray for that.
- Amen.
(59:03):
- Well, I don't know whathappened to General McMaster,
I guess he is starting
the holiday season early.
So, I will conclude our 2025
by thanking you all for your patronage
for Good Fellows,
we couldn't do this show without you,
and wishing you all the best in 2026.
On behalf of the Good Fellows,
Sir Niall Ferguson,
Lieutenant General HR McMaster,
and John Cochrane by the way,
looking very CaliforniaChristmassy I might add,
by the way.
(59:23):
We wish you all,
all the best this season,
we look forward toseeing you again in 2026.
Mr. Cringle, save travelsover the holidays.
Gentlemen, the same to you,
and we'll see you againin January, take care.
- Ho ho ho.
Happy Hanukkah.
Merry Christmas to everybody.
- You see, most blokes
are gonna be playing at 10.
You're on 10 here all the way up,
all the way up.
- Yeah.
- All the way up.
You're on 10 on your guitar,
(59:44):
where can you go from there? Where?
- I don't know-
- Nowhere, exactly.
What we do,
is if we need that extrapush over the cliff,
you know what we do?
- Put it up to 11-
- 11, exactly.
One louder.
- Why don't you just make 10 louder,
and make 10 be the top number,
and make that a little louder?
- These go to 11.
(people chattering)
- Don't look now,
but there's something funny
going on over there at the bank, George.
- Hmm?
- [Driver] I've never really seen one,
but that's got all theearmarks of being a run.
(mysterious music)
- [Bill] It's Tuesday, December 16th,
and welcome back to Good Fellows,
(00:20):
a Hoover Institution broadcast
examining matters of history
and current events,
economics, and geopolitics.
I'm Bill Whalen,
I'm a Hoover Distinguished Policy Fellow
and I'll be your moderator today,
moderating a conversation featuring
three very wise men,
who here at Hoover Institution,
we call the "Good Fellows",
referring of course to the historian,
Sir Niall Ferguson,
the economist John Cochrane,
and former PresidentialNational Security Advisor,
(00:41):
Lieutenant General HR McMaster,
Niall, John
and HR are all Hoover Senior Fellows.
Gentlemen, good to see you,
and welcome to the lastshow of 2025 in our B-Block,
we're going to look back on the year
and review,
and get your choicesfor various categories
like Story of The Year,
Individual of The Year,
and so forth.
But, for our opening segment?
Well, nothing says"spreading holiday cheer"
like talking about an economic calamity
(01:02):
of nearly a century ago,
and that is the Market Crash of 1929,
and the possibility of it happening again,
perhaps in the near future.
Joining us to talk about this,
it's a great honor towelcome to Good Fellows,
Andrew Ross Sorkin.
- Thank you for having me, guys.
- Mr. Sorkin is a business
and financial columnist,
and the Founder & Editorof The New York Times
Deal Book Business & Policy Newsletter,
he's also Co-host of CNBC's Squawk Box,
(01:23):
and co-creator of oneof my favorite shows,
the Showtime series "Billions", Team-X.
He's here to discuss his bestselling book,
"1929, Inside The Greatest Crash
inside the greatest crashof Wall Street History,
And How It Shattered A Nation".
Mr. Sorkin, welcome to Good Fellows.
- [Andrew] Thank youso much for having me,
I mean, I'm such huge fans of all yours',
it's kinda crazy to be with you.
- Thank you.
You should know that I have a screen
behind the screen onwhich I'm talking to you,
(01:43):
and on it is a piece of notepad paper,
which has written in giant letters,
"Andrew Ross Sorkin"
because nothing is worse as a moderator
than to get somebody's name wrong,
God forbid I confuse you
with the other guy named Sorkin
who writes for a living, but-
- [Andrew] There's a more famous Sorkin,
and his name is Aaron,
nice guy too by the way.
- Let me ask you thisquestion then Andrew,
if I were to include a movie
in a time capsule about money
(02:05):
and America,
and the first decade of the 20th century,
would it be Aaron Sorkin's"The Social Network",
the screenplay about thefounding of Facebook?
Or, would it be two movies
based on your fine work,
"The Big Short"
and "Too Big To Fail",
about the '08 financial crisis?
- I'm gonna choose one other,
there was a fabulousmovie called "Margin Call"
that actually toucheson the financial crisis
(02:26):
in it's own way,
it's a dramatic versionof it fictionalized,
but I actually think that it...
It does a remarkable job
at sort of capturing that moment,
and the feeling of that moment
in a very special way.
- [Bill] Okay, good choice.
All right Mr. Sorkin,
so you know the rules of Good Fellows,
I want you to interact with John,
Niall, and HR,
I will now drop the puck
and then, turn it over to them.
(02:46):
Let me now ask you this question,
I've read your excellentbook over the holidays,
perfect for airplane ride,
early in the book,
you say, "The market crash in 1929,"
is in the exact word you'd choose
is a misunderstood financial disaster.
Question, what is notunderstood about 1929,
and are you concerned thatthis generation of investors
doesn't understand currentworking conditions?
(03:09):
- I think both,
and I think they'reinterrelated to some degree,
I think that the greatest misunderstanding
just in the popular conception
of what happened in 1929,
is I think a lot of peoplethink there was a crash
that happened on one day in October,
and that somehow,
magically we had a Great Depression,
and I think that,
that's a complete myth,
and I think when you getunder the covers of it,
you realize that thecrash was just the first
(03:30):
of a series of dominoes,
with the other series of dominoes
being policy choices
that ultimately led toThe Great Depression,
it wasn't pre-ordained that,
that crash unto itself had to create
a depression of the kindof magnitude that we had
back in 1932,
and 1933,
and beyond.
So, I would say that's sortof one misunderstanding.
(03:51):
As to the sort ofmisunderstanding of today,
I think the interrelated part of this
is that you know,
back in 1929,
and arguably in 2008,
every financial crisisis a function of leverage
in the system,
I think we saw that inboth of those contexts,
and I think there's now aquestion in terms of today
and how the investorclass thinks about it,
(04:12):
of whether we have a full appreciation
of what really creates a panic,
how systemic a panic in crash can be,
and what are the component parts
of what's happening in our economy today,
that might have some similarities,
that is not to suggest thatwe have to have anything
like what happened in 1929,
but I think we're getting closer
to something that mightfeel a little panicky
(04:35):
sooner or later.
- Andrew, one of the things I really loved
about your book which kinda takes
"Too Big To Fail"
and applies it to the Roaring '20s,
is you capture that there'sa sort of tech mania,
there's a kinda tech boom to the '20s,
it's RCA, which is oneof the really hot stocks
(04:56):
of that time,
something that I don't think
gets enough attention in standard accounts
of the 1920s economy,
and that I started to see patterns
that were recognizable
that I hadn't quite expected to see,
particularly in the kind ofinteraction of Wall Street,
and increasing theretail-focused financial sector,
(05:20):
drawing people in toenter the equity market,
with stories abouttechnological wonders to come.
As you were writing it,
were you thinking to yourself,
"Hang on, this is actually more familiar,
this is more 2020s than I was expecting
when I set out to write the book."?
- Oh goodness, way more.
I mean, I think you
and I spoke about this project
probably close to a decade ago
(05:41):
when I first started thinking about it,
I don't think that I went into it
expecting to see these parallels,
but the very phrase thatwas used in the 1920s
about democratizing finance,
which was sort of the watch-word,
or watch-phrase of the day
about trying to get ordinary investors
into the markets,
and creating all sorts ofnew financial instruments
to do that,
(06:02):
set against the backdrop as you said,
of the sort of remarkable,
technological shift taking place,
radio being you know,
probably the greatest example,
it was sort of the Nvidia of it's time,
and people were betting on the future,
and that's so much
of what I think is happening today,
we have you know,
AI is that technological backdrop,
(06:23):
and then, layered on top of that right now
is this idea that we're trying
to democratize finance again,
in some ways,
we're taking some of the guardrails off
that we had,
to create all sorts of new products
to get more people in,
and there's a sense,
maybe also similarly,
you know, there was a remarkable
amount of inequality in the '20s,
there's a remarkableamount of inequality today
in just the sort of psyche
of how I think a lot ofpeople felt back then
(06:45):
and feel today,
that their opportunity out,
or their only opportunity out
is to buy the lottery ticket, right?
Is to get in...
Is to engage themselves in all of this.
And so, I think you know,
when I think about some of the parallels,
that's sort of the middle-U,
which I think they live in.
- Well, let me ask then,
my job as ex finance professor,
I read the book over the weekend,
(07:06):
and it's beautifully written,
I gotta really hand it to ya on that,
and it seems to be mostly the story
of the people involved.
- Yep.
- Which is fun.
I learned a lot sort ofinstitutional detail,
but it's not...
I hope your next book will dig in more
to the mechanism,
there's remarkably little cause
and effect language,
or kind of factual language in there.
(07:28):
Although, I do...
I gotta, you know,
the first thing you said,
"Leverage, we are right now
slashing capital standards once again,
here we go."
But, okay close parentheses.
And, I wonder if you can dig in,
I mean, there is sortof a standard narrative,
Coolidge didn't anything,
greed, and inflated of the bubble,
it popped, the recession came,
(07:48):
Hoover did nothing,
Roosevelt saved us,
financial regulation means
this'll never happen again.
Now, that's false,
and sort of a wholegeneration of scholarships
said it's false,
it's a whole bunch of new ideas on,
"Why do stocks...
What are these repeatedphenomenon of these stocks,
booms, and busts?
Why did The Great Depression happen?"
I noticed you know,
(08:09):
Milton Freeman doesn't show up
in your bibliography,
or Ben Bernanke,
which is find, I just...
I'm hoping the next book,
or today you can geta little more on cause
and effect,
and this is to me,
a couple specifics,
on the boom,
so just optimism,
and people coming in,
that's kinda empty.
Their speculation is natural, that's...
The markets are there for information
(08:30):
about interesting,
new technologies to get in the prices,
but there are features of the markets
that mean speculativeactivity in huge volume,
which you document,
you know, optimism doesn't create volume,
volume is churned.
There's mechanisms in the market
that they cause a biased to upward prices,
including the marginlending that you explained,
it's just amazing what was going on.
(08:51):
The Fed was lendingmoney to banks in our...
So that banks could then lend money
to stock speculators,
I really wasn't quite clear
how open the discount window.
So, the credit...
And, short sales are hard,
as you documented,
you couldn't just sit there
and say, "This is overpriced."
(09:12):
So, there's that biastowards up, which I...
Which, a lot of those features
are not there anymore,
so that's one reason for hope.
But then, on The Great Depression,
you know, the standard narrative says,
"Oh, the crash is the first domino."
But, it wasn't the first domino,
the other policy choiceswere really important,
and there, I think yousorta showed the tale...
(09:33):
Of course, this isn't a book
about The Great Depression,
but I think it's worth emphasizing,
it wasn't the stock market crash
that caused the...
The big New York City banks did not fail,
how a national city didn't fail
is just beyond me me.
It was the small banks
throughout the country that failed,
and their...
You know, that if you're...
The book is lying,
'cause I don't knowwhat your book is about,
but I think it's worth emphasizing,
this wasn't inevitable,
(09:54):
given the stock market crash,
we coulda had 1921 all over again,
we coulda had 2000 all over again,
but the Fed failed in it's job
as lender of last resort,
banking regulations meant that small banks
could not recapitalize,
couldn't be bought out,
the bank crashes clearlycaused the economy to fail,
and the stock market's pretty rational
once all the banks have closed down
for other reasons,
(10:15):
it's perfectly rational for stock prices
to keep on falling down.
And then, you know,
that a whole bunch of scholarship
kinda likes Coolidge these days,
and Hoover,
and Roosevelt's energetic efforts
seem to have really hurt things.
So anyway, I'm...
That was a long introduction,
but I'm hungry for more of the cause
(10:36):
and effect,
and the you know,
what's the real narrative
of the financial markets
and The Great Depression?
- So, let me just add to that,
a couple things.
One piece of this,
'cause you mentioned technology
that I actually think it's important,
doesn't get enough attention
is actually that one of the reasons
I think we had a crash,
was actually a technologyproblem unto itself,
the actual, physical technology
(10:58):
undermined confidence to a degree
that I don't think is appreciated,
and as a result,
people just were selling stocks
almost indiscriminately,
because they didn't know
what the actual price was.
You know, today we have our phones
and we can look at you know,
by the millisecond,
exactly what the stock price was,
back then it was you know,
(11:18):
so very different,
even people who were standing on the floor
of the exchange,
looking up at the big board,
were looking at numbersthat were often three,
four, five-hours behind,
I had never appreciated it actually
'til I would start working this project,
every time you'd see those famous pictures
of thousands of peoplestanding in the street
outside of the New York Stock Exchange,
you know, on those crashdays in October of 1929,
(11:39):
what they were doing there.
The reason they had all gone down there,
the reason they were standing there,
was 'cause they were tryna find out
what was happening to their money,
like literally/physically,
'cause even if they were at a brokerage
at 57th Street, they were...
You know, if you were three or four-hours
in the wrong direction
on the floor of the exchange,
you know, a couple blocksaway you were even worse,
(11:59):
and so, I think that actually really did
suck some of the oxygen out of the system.
But, I think you're 100% right
that it wasn't the crash unto itself
that created The Great Depression,
in fact, the other sort of component part
that I don't think I appreciated
was by the end of the year of 1929,
the stock market was only down 17%,
(12:21):
and in fact I think Hoover interestingly
looked at the stock market as a barometer
or indicator of how hefelt things were going.
What I think was missedthough in that thinking,
to some degree,
was the down draftbetween September of 1929,
and call it November 13th,
which was the lowest day of the market,
was about 50%.
(12:41):
And, because everybody was so...
Living on borrowed money,
that's so on-margin,
oftentimes 10 to 1,
they were caught in it...
The reason that peoplewere selling their homes,
and mortgaging their houses was because...
And, they couldn't benefit
when the stock came back,
because they...
They already...
They had already had to sellout.
So, I do think that sucked
some of the confidence out of the system,
(13:02):
but it doesn't answer the question,
how we got to The Great Depression,
I think it's a confluenceof raising taxes,
or wanting to raise taxes,
implementing tariffs,
I think what the Fed did
in terms of sitting on it's hands...
We haven't talked about the debate
over the gold standard,
I mean, that is a hugecomponent part to this,
had we been able to print money earlier,
(13:23):
I don't think we would'vebeen talking about
necessarily the kind of bank failures
that we did in 1932,
that ultimately led
to the unemployment picture being 25%.
- Yeah, 'cause 30% deflation is huge
when you have to pay back borrowed money.
I just wanna...
Here's how to not win theNew York Times Bestseller,
write a book about financial plumbing.
But, there's a lesson in here,
kinda beautifully between the lines,
(13:43):
the plumbing matters,
and when you're...
Instead of buying a call option,
if you think you have a free call option
by being on margin,
and then, I'll sell on the way down,
sorry, nobody understood that,
but Andrew...
But, I had to say it.
- Yes.
- That is an illusion,
a perpetual illusion,
they didn't have good call options.
And then, you have to be ready
to sell instantly,
and if the market's closed,
or if the tape is behind,
(14:05):
you can't do that.
So, those plumbing issues matter a lot.
- Yeah Andrew, hey what I loved about it
is the description of the people,
and the sense of agency,
that people make decisions, right?
And, that has an effect.
And you know,
I'm kind of the...
I'm kind of the residentoptimist here, you know?
But, optimism was not really a virtue
in this book man,
I'm thinking of like you know,
sunshine, Charlie Mitchell,
(14:26):
you know?
And so, what I'd like to ask you is,
who do you think is...
Was responsible atcertain critical elements
of the story?
And, what they could've done differently?
I'm thinking of like the opening scene
in Steinbeck's "Grapes of Wrath",
remember when the guy's getting...
His farm's getting repossessed?
And, he comes out with his rifle you know,
(14:47):
the guy behind the...
He wants to shoot somebody?
And he says,
"Well, who do I shoot?"
Like, who...
So, I guess, who should...
Who should we shoot inretrospect for making
particularly poor decisions?
- But see, there's two questions.
One, is you know,
what could you do on the front-end
to prevent the crash unto itself?
But then, as John said,
if you don't believe that the crash
(15:08):
is what ultimately ledto The Great Depression,
that unto itself is a...
So, I do believe it's a domino of a sort,
I don't think it's the...
But, I don't think
it's even the most instrumental domino,
I think it's the one thatsucks the confidence first,
that then leads to a whole series
of almost irrational decisions.
You know, sometimes I think to myself,
(15:29):
"What could've Hoover done?
Or, if Benjamin Strong was still alive
in the spring of 1929,
was there something they could've done
to really tamp down the speculation?"
By the way,
one of the reasons the Fed did nothing
was 'cause they were scared.
This goes to the sort ofquestion about politics
and even Fed independence,
they were worried
that if they raisedinterest rates too much,
(15:50):
that they would actuallytip the economy over,
and not just that they'd get hauled
in front of congress,
but that they'd you know,
the great experiment thatwas the Federal Reserve
would just end,
they had lived throughbeing blamed in 1921
and I think didn't wanna repeat that,
so that was sort of in terms
of trying to understand that, Hoover's...
You know, he's only inoffice starting March 4th,
(16:11):
you know, the inaugurationwas different back then,
in terms of the timing.
And so, I don't know how much time
he really had to sort of jump
in front of the train,
if you could've even done that.
- Wanting the government
to notice bubbles happening,
and stop them ahead oftime is pretty ambitious.
I think that policy mistakes
in the wake of the crashare more significant.
(16:31):
- One of the things I loveabout the book Andrew,
is precisely the people...
You'll notice that Professor Cochrane's
objection to it,
is that it has people in it
and not plumbing,
but of course,
people make history really,
plumbing? Not so much.
And, you show really rather importantly,
congress mattered,
(16:52):
and that's part of the pressure
that's on policy-makers,
that there's a lot of congressional
suspicion of the Fed,
and I think one of thebeauties of the book
is that we get the fulldramatized persona,
a lot of characters involved
in American government,
it's not just that thepresident sits there,
(17:13):
and either does well,
or does badly.
Herbert Hoover after whomour institution is named,
gets a very bad press,
as if the president is king,
but in fact,
you show that congress
is a very important player,
you give appropriate billing in your drama
to Carter Glass the Senator,
very interesting figure,
(17:34):
you properly bring him out,
who ends up being one of the co-authors
of the famous Glass-Steagall Act.
But, I think it's the beauty of the book
that we see all of thesedifferent characters
in their different roles,
including the treasury's secretary,
and another potentialvillain of the piece,
Andrew Millen,
all making these decisionsthat taken together
(17:56):
make matters much worse,
but you show why theytake these decisions,
and how their complex pasts,
their personalities,
ultimately influence the outcome.
So, that's...
That's why I think it'ssuch a terrific book,
why it's selling so well.
I've read many books aboutThe Great Depression,
probably as many as John over the years,
(18:17):
I can't think of many,
including even some of the classic,
like Galbraith's,
that give us a sense of why the people
did what they did,
and you do that very well.
- And, I just wanna add,
there's a temptation,
as HR went you know,
"Who are the villains here?"
And you went after probablythe most likely villains,
the big, rich bankers,
and my reading Niall,
came off pretty sympathetic,
(18:38):
I mean, yeah there were you know,
doing shady stuff,
but it was all basically legal.
(attendees speaking together)
- Wait, this is what I like though,
because I mean,
I like your attendanceto human nature, right?
You describe them in the book as flawed,
self-interested,
and complicated.
And, in the portraits thatyou paint of these people,
(18:58):
they're not simplistic, right?
You understand like theirfamily relationships,
where they came from,
their anxieties.
I mean, you know...
I mean, there waseverything from you know,
people who committed suicide, right?
To those...
To those who were sortof almost disinterested
in what was happening to other people,
because they were...
You know, they made out okay.
(19:18):
So, I mean,
I just think it was...
It's great in terms of the portraits
of the people,
and again, the sense of agency, right?
'Cause people made decisions.
And just quick,
I'd like to ask you tocomment on Hoover as well,
because Hoover struck me as you know,
kind of a taciturn guy, you know?
But, somebody who triedto do the right thing,
and I'm thinking of like...
Of the letter,
(19:39):
the cable that he sends to Roosevelt,
and says,
"Hey, you know,
here's my suggestion to you."
Right? And it's delivered,
it was a telegram,
and Roosevelt was on a train maybe,
I think, or something?
It was a great story.
And then, of course partisan politics man,
I mean, Roosevelt doesn'tdo the right thing,
so I mean-
- Doesn't do the right thing,
and that to me is a fascinating
(20:01):
glimpse into Hoover.
I would argue by the way,
Hoover made a series of terrible mistakes
along the way,
and then, recognized those mistakes,
and in that moment,
he had actually now lostthe election to Roosevelt,
and it was during thatsort of interim period
where he was handing over the reigns
before the inauguration,
where he realized,
"We gotta save these banks."
(20:22):
'Cause, that's when thingsstarted to get you know,
really, really terrible.
By the way,
one other surprise for me at least,
was actually if...
When you look at the time,
people who were polled,
thought the economy was getting better,
and actually probablywould've voted for Hoover
based on the economy,
the reason Hoover lost
was not because of the economy,
(20:42):
but because he was a fan of prohibition,
which was another sortof revelation to me.
But, in that four-month ignorant period,
he realized there was a problem,
and needed to save the banks,
but also knew that theonly way to save the banks
was to get Roosevelt onboard,
otherwise there wouldn'tbe enough continuity,
nobody would believe
what the government wasultimately gonna do,
of course Roosevelt says,
(21:03):
"Talk to the hand."
Because he doesn't wannaget blamed with this,
and then, it does...
It does happen-
- It was interestingly noted that
it was sort of the response
that Hoover expected, right?
I think you...
In the book you say,
before he even opened the response,
he kinda knew what was in there-
- Knew the answer.
But, one other thing to themotivation piece of this,
which I think is interesting,
and at least I went back to try to find
(21:24):
somebody on the other end of it,
oftentimes I try to think to myself,
put myself in their shoes back then,
even when you see peoplemaking terrible decisions,
or even things you mightthink of are immoral,
or wrong, especially retrospect today
with the laws we have,
back then, there was no SEC,
there was no insider trading rules,
there was you know,
no bank capital requirements,
(21:46):
there was no nothing,
there was no prospectuses for companies,
and I say that only because,
I think in a...
You know, I often think of the markets
are a game of people
trying to outwit the other side.
And so, whoever is buying a stock
thinks they're smarter than the person
selling the stock,
and whoever's sellingthe stock in that moment,
oftentimes thinks they're smarter
than the person who'sbuying it from 'em, right?
(22:06):
That's just what it is.
And so, when you see them doing things
that today we wouldthink of as manipulation,
I think a lot of themjustified it in their head
as just another way ofoutwitting the other side.
And, I went looking for people,
I wanted to find someexample of some person
who didn't participate in these things,
(22:27):
because they somehowthought it was immoral,
and I couldn't find them.
And, I only say that
because I think it goes to the concede,
or concept of just you know,
what was going on in thatday in age with people,
and how people thought aboutthese rules of engagement.
- Andrew, I'd like to shift now
and talk about a few thingshappening in the 2020s
(22:48):
as opposed to 1920s,
let's begin with Scott Bessent,
who recently youinterviewed at your summit.
That was quite a summit by the way,
between him,
and Halle Berry,
and Gavin Newsom, well done.
- [Andrew] Thanks.
- Can you explain the difference
between a treasurysecretary's role in the 2020s
versus the 1920s?
Bessent versus Andrew Mellen?
And then secondly,
I want your opinion on what kind of...
(23:08):
How good of a job the Trump Administration
does on selling the economy.
- Oh goodness, that'ssuch a great question.
You know, I'm not sure
actually Scott Bessent's job is...
I'm very curious to hearwhat everyone here thinks,
I don't think his job isactually that different
than the role that Andrew Mellen played,
I mean, he's...
I think in this case,
Bessent has a much better relationship
it seems like with President Trump
(23:31):
than Mellen ever hadwith President Hoover,
President Hoover sortof kept Mellen around
because he thought he neededsomebody like that to...
- But he's very much out front
pushing back against you in the economy,
and then he's...
John will probably tell us this,
he's probably picking the next Fetcher,
so it strikes me he's much more hands-on
than Mellen was.
- Yes, but I think that's in part
because Trump has you know,
(23:53):
delegated some of these responsibilities,
but not really,
because in the end,
the decision will be made by the president
in a way that where I felt
like Hoover was maybe hands-on...
John, you're making-
- I'm gonna disagree.
So, I think Bessent's job is to make sense
of whatever Trump wants,
and to sell the administration policy,
we have a very active
administration policy these days,
(24:13):
unlike the previous one.
Mellen really shownduring Coolidge's time,
that he worked with Coolidge
to cut the federal budget dramatically,
to cut the top marginal tax rate from 70%
to 20%, bigger even than Reagan's cut,
and to oversee a tremendous economic boom
that no, did not sew the seeds inevitably
of the recession that followed.
(24:34):
So, his job was taxpolicy behind the scenes,
and not to get on TV
and explain you know,
why we're having tariffs today.
- So, you think today he's become
much more of just a spokesman
for the White House?
Or maybe every cabinet member
has become that in this day
and era/age?
- Well, there's much more get-on-TV,
and you know,
what are we doing today?
Policy-policy-policy.
(24:55):
I kind of...
I think you were kindamean on poor old Coolidge,
I kinda look back fondly on being quiet
and softly fixing the government.
- [HR] Yeah, his wifemade up for his you know,
for his personality,
she was quite a bubbly personality,
and a big socialite, you know?
- [John] There's a greatquote from your book,
I have three that I'm gonnawanna read, but one...
"One thing was certain,
(25:16):
Calvin Coolidge's style of governance,
taciturn, aloof,
and minimal, was about to be retired,
and the US would get a chance
to see what a presidentimbued with optimism,
ideas, and energy could accomplish
at a time when the rest of the nation
seemed to be overflowing with them."
Hmm, I wonder if the...
If all this energy
and ideas,
and so forth has turned out so well-
(25:36):
- Well, that might've been a mistake,
I'm not suggesting it wasn't.
And by the way,
it was interesting,
prior to Hoover winning the election,
and even it being inaugurated,
there was a view on Wall Street
that he might turn out
to be a terrible president.
And then, for whatever reason,
in literally the weeksbefore his inauguration,
the market started to move much higher,
and people started to get...
(25:57):
There was a...
In the same way there was a Trump Bump,
there was a Hoover Bump.
- Well, it should've ended,
I mean, you know,
it could...
There's a counterfactual history
where The Great Depressionwas another 1921
and all the banks didn't fail,
and Smoot-Hawley didn't come in,
and the National Reconstruction Act
didn't destroy the economy,
and we didn't have deflationof the gold standard,
and you know,
we went back.
(26:18):
- But, that's counterfactualabout the Fed John,
because remember,
you brought up Milton Friedman,
the reason you brought Milton up
was that his monetaryhistory of the United States
co-authored with Anna Schwartz,
tells the story of The Great Depression,
primarily as a series ofmonetary policy disasters,
and I often used to say to people,
(26:39):
"In the period of 2008/2009,
if you want to understand Ben Bernanke,
just assume that he'sdoing the exact opposite
of what the Fed did duringThe Great Depression.
Andrew you, you know,
had a ringside seat for that crisis,
the Fed is the key institution,
both in 1929 to '32
(26:59):
when it gets it all wrong.
And then, in 2008,
to I guess 2010/'11
when I think one has to say,
does a lot better.
What's you're view ofthe future of the Fed?
It's a hot topic all acrossthe country these days,
or at least it is in New York,
and Washington.
Do you see a danger ahead for a Fed
(27:19):
that might be losing it's independence?
- Well, I think...
Look, I think one of the lessons
is that the independenceof the Fed does matter,
and I think that was actually...
I don't, you know...
Hoover was not telling the Fed what to do
back in '29,
but it's clear that the right answer,
at least thus far,
in terms of the crisis we've had
(27:40):
is to do things like BenBernanke did in 2008,
and arguably by the way,
what even Powell did duringthe pandemic to some degree,
which is throw...
When you have a crisis,
you need to throw money at the problem,
as politically,
and palatable as that may very well be.
The question to me is,
that playbook has worked thus far,
(28:01):
and that was the lesson of 1929,
which was that we didn't throw money
at the problem.
What I don't know is,
if there is some red line
that we are going to cross in the future,
you know, back then in 1929,
there was a budget surplus in America,
we weren't talking about debt
the way we talk about debt today,
and I just don't know
when the bond-holders of the world
raise their hand
and say, "Excuse me,
(28:23):
this doesn't work for us,
we're very happy to loanyou money in the future,
but you know,
we're gonna have to do it
at a much higher interest rate."
In which case,
you create a really vicious,
and painful cycle,
potentially for the whole country.
And so, I don't know...
It's gonna be very interesting to see
if that moment ever comes,
I thought that moment would come
a long time ago,
and it hasn't.
So, what do I know?
- Well, I wanna ask you what you know,
(28:45):
'cause this segues intofinancial regulation.
We look at the Fed,
and we're just up
and down, the overnight interest rate,
that's boring.
The financial regulationis the interesting part.
Yes, we are still stuckin bailout like crazy,
and then, pass hundreds ofthousands of regulations
that don't work,
and then, we bailout like crazy again,
and exactly what you said,
(29:06):
in the next crisis,
Uncle Sam wants to throw
another couple trillionairedollars around,
who knows if we actually have it
without printing money,
and it turning into inflation?
So, I'm curious you know,
you've watched the first crisis,
you've watched the Dodd-Frank Act,
which of course,
made sure that we would never have
any failures again, you know?
You watched Silicon Valley Bank that shows
that they have no idea what they're doing.
(29:27):
And, there's the secondquote I want to read,
"As the major inevitabilityof reforms sank in,
Aldrich, and the Rockefellers showed them
the necessity of jockeying
for whatever regulatoryadvantage they could get.
This is how the game would be played."
There's a certain...
A certain rot in crony capitalism going on
in our financial regulatory system.
So, where do you see thestate of that whole affair?
(29:48):
- Well, two things,
one is, I had a view
before I started writing this book,
that somehow the good old days
didn't have lobbying,
and didn't have cronyism,
and that somehow you know,
our laws were passed bypeople of great you know...
- Virtue.
- Virtue.
- Virtue.
And then, here I am...
By the way,
(30:08):
I had this impression that Carter Glass
had created Glass-Steagall,
and it was done for the right reasons,
and all these other things,
and then you realize that the bill...
Half the bill was written by a banker,
who was trying to screwover another banker,
I mean, the whole thingwas shocking to me.
So you know,
in terms of the laws,
you know, we're alwaysas you know, fighting...
It feels like we're fighting the last war,
(30:29):
maybe some of the laws
that were put in place post-2008,
I do think you know,
hopefully help the system,
some of them invariably went too far,
I think the next question
which we don't know about yet,
is you know,
what happens in theprivate credit industry?
I mean, one of the thingsthat happened post-2008
because of Dodd-Frank
(30:50):
and all the other rulesthat were put in place
is the entire loaning...
Loan business has just moved
from the banking system,
which was regulated,
to the private credit system,
and now we don't have disclosure
or transparency over there,
and you know,
I think a few of you talked to folks
at the Federal Reserve,
they don't have a dashboard to know
where all of the leverage law...
So, that to me is the next concern,
(31:13):
and I imagine at somepoint we'll have a problem,
and I imagine that pointwill have more legislation
that will have you know,
solved some problem,
and created a new one.
- Andrew, I'd like to getyour thoughts on something
that's probably occupied
a lot of your time on Squawk Box,
and that's the biddingwar for Warner Bros,
what does it say about the times
in which we live?
I watched the story,
I'm kinda reminded ofBarbarians at the Gate,
in the LBO regardingregarding RJR Nabisco,
(31:35):
and now granted that was after
the '87 Crashout began,
but what is unique aboutthis Warner Bros situation?
- Oh, to me what's most unique
about the Warner Bros situation,
to hear of as an assetthat for the most part,
the public investor classwas not happy about,
it's sort of a trophyasset given its you know,
(31:58):
how close it is to the center of culture
in some way,
you have one family in the Ellison's
that obviously wanna buy it,
and then you haveNetflix on the other end.
To me, the most interesting feature
is this Washingtonpiece of this, you know?
It's really the first time
I think at least maybe the quiet part
is being said aloud,
I think in the past,
there have been timeswhere you've had bankers,
(32:20):
or CEOs maybe quietly say certain things
to the White House or the administration,
typically through you know,
other channels,
HR McMaster could probably speak to this.
But, this time you have both CEOs
literally going to theWhite House itself though,
sitting in the Oval Office,
you know, effectivelylobbying the president
on their behalf.
(32:41):
- No, it wasn't Durantsneaking in at night,
like that story you tell,
which I love that,
it's a great story, you know?
- [John] Let me pile in on this one,
I think we're seeing the final
utter emptiness of theentire anti-trust regime,
that started under the idea of,
"Oh, monopolies are bad,
and we need to have regulators
to stop monopolies."
Ended it now completely falling apart to,
(33:02):
it's just you know,
crony capitalism,
run to Washington,
and it's entirely political,
I wish we could throwthe whole business out,
totally rotten to the core.
- So, what would you do?
What's the solution?
- The solution is competition,
there is no durable monopoly,
other than that offeredby the Federal Government.
- I think it's wonderful to hear
American professors of finance talk about
(33:25):
there being insufficient competition
in American finance,
when the United States
is the most de-centralized banking system
of any developed country,
it has the most competitivefinancial institutions
of any peer country.
- But, Niall this is acompetition in Hollywood,
so does the FederalGovernment need to intervene
(33:46):
to make sure that monopolies
don't take over Hollywood,
and raise prices on us?
Come on, that's ridiculous.
- But, isn't the broader issue
the one that you raised a minute ago,
about financial regulation?
Because I think...
I think what we learnt in 2008/'9,
was that perversely,
it was the mosthighly-regulated institutions,
banks, that turned out to be the problem,
(34:08):
and my analysis at that time
was that much of the regulation
was the disease of which itpurported to be the cure.
It was unregulated entities like Headfonts
was supposed to be the problem,
and it turned out to be the banks
that were the problem.
When you go back to 1920s America,
go back 100-years,
it's a different issue,
(34:29):
'cause that is at least on paper,
a very unregulated financial system that,
you can't blame what happens after 1929
on the regulators,
or perverse incentives
and regulation,
something else went on there, which is...
Which is harder...
In some ways harder to explain,
and can I just put in a good word John,
(34:50):
if you can let me?
- Yes-
- For an academic book thatis coming out next year,
by our former colleagueTyler Goodspeed, "RECE$SION".
And, what Goodspeed does,
it's gonna be a fantastic hit next year,
is to show that,
to explain a shock as bigas The Great Depression,
you need many,
(35:11):
many different causes,
here I think he agreeswith your point Andrew
that it's just one of the dominoes
that come cascadingdown on the US economy,
and the dominoes includeall sorts of things
that you wouldn't think of,
like plagues of locusts
devastating large partsof American agriculture,
turns out that locusts
probably were moreresponsible for bank failures
(35:31):
than anything thatanybody did in Washington.
And so, I think we've got tounderstand financial crises
as being more than can be explained,
they're caused by morethan just bad regulation,
or bad monetary policy,
you actually need a wholebunch of different shocks
to tip something as big as the US economy
(35:52):
into a 30% deflation of the sort
that we saw in the early 1930s.
I find this a very refreshing approach
to the problem that webegan by discussing,
I mean, Locusts are not in Andrew's book,
why should they be?
'Cause Andrew's book is about
the people on Wall Street,
(36:12):
and their part in the drama.
But, Goodspeed's book shows
that there's a whole lotof other things going on,
particularly in American agriculture,
which today would seemcompletely unimportant,
but then, were a reallybig part of the economy.
- Let me just disagree there,
what failed in the 1930s were the banks,
and the banks were quite regulated,
in fact, it's exactly the regulations
(36:33):
against branch-making,
against interstate banking,
against banks you know,
that caused all the small banks-
- [Niall] But, the pointof those regulations John,
was to keep...
Was to avoid centralization,
and to avoid-
- Okay, but they had beenunintended, you know?
You can't say it wascompletely deregulated,
there was regulations,
and they caused all the banks to fail.
Second thing, I do think the book
(36:56):
sort of painted all theregulation as inevitable,
"Well, we had to have the SEC,
we had to have deposit insurance,
we had to have regulation."
There was in fact a big debate,
and I wanna you you know,
put my finger in the airfor the Chicago Plan,
there was an alternative to where we went,
guarantee all deposits,
try to regulate assets,
which has failed over,
and over again,
which was narrow-deposit-taking,
equity-finance-making,
we could've gone there,
(37:16):
and perhaps we will sometime.
- [Andrew] Well look, by the way,
Hoover, as you saw,
Hoover, and Roosevelt
were actually both against the idea
of the FDIC,
the whole idea of ensuring deposits
was something that I think most people
in the political class,
in the investor classactually didn't want,
in part because of the you know,
moral hazard issues,
(37:36):
and other things,
the flip side was-
- They got the central problem,
that if you have ensured deposits,
then depositors don't care
if the bank's any good,
and the bank has free money to go
and invest in whatever we want,
and we count on regular-
- Even Carter Glass agrees with you.
- Yeah, they all understood the problem.
Beautifully written.
(John chuckling)
- The public didn't,
(37:56):
that was the...
And, that was the problem.
- Well, when...
Run, you had said it earlier,
when a run breaks out,
you gotta stop it with a flood of money,
that's the only way to stop the run,
and then try to bottleup the moral hazard.
- Andrew, we have abouta couple minutes left,
so final question for you,
it's the same politicallineup in 2026 as 1929
and Republican Congress
Republican president,
should the market godrastically south in 2026,
(38:19):
what do you thinkWashington does differently?
- Well look, I think if the market
goes drastically south,
you'll see the Dems win the house,
I don't think the Dems,
even if the market goes drastically south,
I'm not sure they win the senate,
I think then you'll bein form of gridlock,
which the truth is,
the market will like the gridlock,
the market would be very happy
(38:39):
to have a little bit ofgridlock in Washington,
don't you think?
- I'm not so sure Andrew,
because it might lead toyet another impeachment,
and a general sense thatthe administration's
a lame duck.
I mean, market likes the administration
if truth be told on awhole bunch of levels
that we haven't touchedon in this conversation,
(39:00):
deregulation, more of whichis supposed to be coming,
I'm not sure,
I think if the house is lost,
then I think the administration's over,
and what market won't like that?
- Right. Andrew, ourtime unfortunately is up,
I wanna congratulateyou again on the book,
it's "1929, Inside The Greatest Crash
of Wall Street History,
And How It Shattered A Nation".
If you're watching this,
or listening to this,
(39:20):
you still have time to get it,
to put it under somebody'stree for Christmas.
Question for ya Andrew
before you bounce,
I hope there is a video treatment
of this great book,
Netflix just showed thatyou can do a series,
"Death by Lightning",
there is an appetiteout there for history,
so hopefully the the veto treatment.
Question for you sir,
I don't know if you'll end up
writing that video treatment,
or maybe being an executive producer,
(39:40):
but I am looking at three people
who might wanna be in that show.
- We will find you some cameo spots,
or maybe, I don't know,
what do you think?
John, who do you wanna be?
- Well, ideally Calvin Coolidge,
but I think I'm veryill suited for the role.
- [Bill] I don't know,
HR McMaster, what do you think?
- Hey, I'm the optimistic guy,
(40:00):
I guess I'm Mitchell, right?
If I'm the optimist, right?
- [Andrew] You could be Mitchell, totally.
I think that Niall...
Niall, are you-
- No, I'd like to be one of the guys
standing in the street going,
"Hey, what happened to my money?"
That would be the perfect role for me.
- [Andrew] Bill, what do you say?
You're not Carter Glass, are you?
- I'll just be in the pit
screaming like everybody else.
- [Andrew] Okay.
(40:20):
(Bill laughing)
- [Bill] Andrew, thanks again
for joining us today,
and congratulations againon an excellent book.
- Thanks guys, I'll see ya.
Enjoy the rest of the show, you guys...
You guys need to take on...
I mean, you guys are betterthan the All-in Guys,
so go for it,
I'll see ya.
(wind whooshing)
- Okay gentlemen,
on with the B-Block of the show,
BS and Bye-Bye 2025,
I'm gonna ask you a series of questions,
(40:42):
and I want your thoughts,
beginning with this.
What was the biggest,
most important event of the year? Niall?
- I'm gonna say Trump's 100-days,
because I can't thinkof another presidency
since Franklin Roosevelt,
talking of the 1930s
that opened so explosively,
with so many executive orders
and actions, it was astonishing,
(41:05):
and that I'm gonna say is the...
It's the big event of the year,
transformative, disruptive,
call it what you like,
it drove the year.
- Mhm. General McMaster?
- Yeah, I would say it wasIsrael's counter-offensive,
and so, that's just not one event,
but it's the counter-offensiveagainst Hasbulla,
which had a ripple effect into Syria,
and then, the verysuccessful 12-day campaign
(41:28):
against Iran, which theUS joined at the end,
so I think that has fundamentally shifted
the dynamics in the Middle East.
- John Cochrane?
- Well, since I can't have the 100-days,
but that's okay,
I always have something in my back pocket.
I'll take the end of the 100-days,
Liberation Day.
- My fellow Americans,
this is Liberation Day,
waiting for a long time.
(41:49):
- [John] When Trump turned to tariffs,
which I regard as sortof beginning of the end,
it'll be...
Our successors will have this
as the counterfactual history,
sort of like you know,
we all love to play this game,
"What if Hitler had not bombed London,
instead of wiping out the RAF?"
Trump turned to tariffs, why?
This is the idea of one man?
Of course, produced by men in ministration
(42:11):
that had learned that loyalty mattered
over then honesty,
but here's where theself-inflicted wound starts,
and I think that the beginning
of what will be regarded as the end
of the Trump era.
- [Bill] Okay. My choice?
June 22nd, Operation Midnight Hammer,
the destruction of Irannuclear facilities.
All right, question two,
the under-reported,
or ignored story of the year? John?
(42:31):
- I'll choose the quiet revolution
in the regulatory agencies,
education, energies,
SEC, small business,
a lot is going on under the screen,
I wish I knew more about it,
I wish the media would report about it.
- Mhm, Niall?
- I still can't get over the fact
that 38% of Stanford undergraduates
(42:51):
are registered as having a disability,
the Hoover Institution
sits at the center of the Stanford campus,
who knew that we were an island
in a sea of disability?
I don't think most of us
have really got our heads around
what's going on with Gen Z,
it's bizarre,
(43:13):
and it will take future historians
a lot of hard work to sort out.
But, that seems to me an amazing fact,
and not by any means unusual
if you look at universitiesacross the country.
- Niall, let me forecast
miraculous recoverystarting graduation day
and when job applications go in.
(John and Niall chuckling)
- HR, the under-reportedstory of the year?
- Hey, the astonishing degree
(43:34):
to which this access of aggressors,
and authoritarians are working together.
You know, we keep tryingto separate you know,
what's happening in Ukraine,
from the competition with China.
Hey, China's underwritingthe whole war effort.
You know, you have...
You have Iran providing the technology
for Russia's drones,
and North Korean slave laborersassembling those drones.
And then, if you come to our hemisphere,
(43:55):
you have medoral you know,
propped up, by Russian intelligence
an security forces,
along with the Cubans
underwritten to a large extent by China,
and it's technologically enabled
Orwellian police state.
And, Iran also involved,
and Hasbulla, involvedwith fundraising activity
associated with the drug trade.
So, I just think the connections
(44:15):
between these adversaries
are really important to expose,
and for people to understand.
- Mhm. My choice is Jimmy Lai,
the Hong Kong pro-democracy activist
who, the other day was convicted
by a Hong Kong court
on charges of sedition
and collusion with foreigncountries, it's ignored.
Which raises the question gentlemen,
what, if anything,
can the United States do?
- Hey, we can do a lot, you know?
(44:37):
We can do a lot!
I think...
You know, actually,
I think what's also under-reported
is the degree to which these...
This access of aggressors
is weak at this moment, you know?
And, I think China inthis race to surpass us,
has created real frailtiesin their economy.
You know, Russia is abasket case economically,
although Putin,
his ruse is to try to appear...
(44:58):
To appear strong.
Israel exposed a profoundweakness of Iran,
which is I think on the brink of collapse,
they're about to runout of water in Tehran.
So hey, I think we can do a lot,
I think we should be,
you know, as I saidmany times on this show,
Americans, not Americants,
and when you treat somebody like Jimmy Lai
the way he's been treated,
(45:20):
somebody who's spoken here at Hoover,
I think that...
I think there's a lot that we can do
to impose costs on I think,
a Chinese communist party
that is in a position of relative weakness
at the moment.
- Mhm.
- And certainly don't ignore them.
This is, as I've said multiple times,
Cold War II,
and there are dissidents aplenty,
(45:42):
in all the authoritarian regimes
HR has been talking about,
and we do them a disservice
if we don't speak out,
and honor them as proponents of freedom
in unfree societies.
- The Nobel Laureate who was just beaten,
drug out by her hair
and re-imprisoned in Iran,
(46:03):
comes to mind as well.
- Yeah, there's thousands of Jimmy Lai's,
and not just the ones who were in the news
with good international connections,
but all of them, we just...
Let's start by caring,
and talking about it.
- Well put, John.
We don't have any actualhardware to give away,
but gentlemen, your choices
for the Good FellowsPerson of The Year award?
So Niall, you wanna go first?
(46:24):
- [Niall] You know, I think
you have to give it to Scott Bessent,
because John mentioned Liberation Day,
I think Liberation Day,
the reciprocal tariffs day
came close to causing amajor economic accident,
and I think ScottBessent played a key role
in postponing the tariffs,
(46:46):
and creating breathing space for the US,
and the global economy.
He's emerged, as I think the key figure
in the administration,
almost prime ministerin the British sense.
And, for somebody whosebackground was Wall Street,
and hedge funds,
he's turned out to be an extraordinarily
adept political player in the...
(47:08):
In the swamp that is Washington,
so I'm gonna give it to Scott.
- Mhm. HR?
- It's predictable maybe,
based on the theme thatwe've been talking about,
but Maria Corina Machado,
and obviously recognizedfor her profound courage,
in remaining in Venezuela,
in hiding, as theprincipal opposition figure
(47:28):
who won the election againstMaduro earlier this year.
And then, made thatharrowing sort of journey,
you know, through the...
Through the Caribbean in rough seas,
to receive her Nobel Prize.
So, she'd be the one that I...
That I would give the honor to.
- Mhm. John?
- Well, I think these are people
(47:50):
who deserve recognition.
The most important person in the year
was of course Trump himself.
Niall's 100-Days...
The 100-Day whirlwind wasreally amazing what happened,
the slew of executive orders.
And, Trump personifying the vibe shift,
this is real...
We live in really interesting times.
The center-left elite
(48:13):
that had kinda stagnated into a big blob
is just imploded,
it's a global vibe shift,
I don't know where it's going,
or what happens next,
but he personified that,
so you know,
give credit where credit is due,
he's still taking upall the air in the room.
- My choice is Andrzej Bargiel,
who is he, you ask?
He is a Polish mountaineer
(48:34):
who on September 22nd,
became the first person
to descent from Mount Everest Summit
back to base camp on skis,
without using supplemental oxygen,
and an 11,000ft drop over rugged snow
and ice.
Niall, for you I know it sounds
like a slow day in Montana.
- Well, in Montana,
you need snow to do that kind of thing,
currently there ain't any,
and it's a sort of considerable
(48:55):
disgruntlement in the Ferguson household.
- Which seems to be a theme here,
because John, we weretalking before the show
about what's going on up in Truckie,
up in the Sierras, no snow.
- Yeah, I had a lovely weekend
hiking in 60° weatherwith no snow evident,
and rain in the forecast.
- Right. But then again,
who cares about snow HR?
Because there's always paddle-boarding.
- Absolutely.
(49:16):
(attendees laughing)
- All right HR,
let's stick with you.
What is the best thing you read
or watched this year?
- Oh gosh, well you know,
I mean, so many great...
I mean, I've plugged it so many times,
our viewers are gonna get tired of it.
But, the first two volumes
of the trilogy on therevolution by Rick Atkinson,
it's fantastic,
you know, it's really well done.
And then, just to stick with that theme,
(49:38):
I did enjoy the Ken Burns documentary
on the Revolution,
I think he did a very good job you know,
at hitting the criticalthemes of the Revolution,
the experience,
and bringing home thedegree to which really,
this was a very near-run thing,
our independence, obviously.
And, it took a lot of courage,
and a lot of perseverance.
And so, you know,
I think these works,
(49:58):
you know, Atkinson's books,
he was interviewed you know,
quite extensively in theKen Burt series as well,
I think oughta inspire us you know,
to appreciate you know,
the freedoms that weenjoy in this country,
to recognize our republic was
and always has been awork in progress, right?
And, I think you know,
get us in the right mood to celebrate
(50:20):
the 250th anniversary of the founding.
- Mhm. John?
- I'm not much of a popular culture guy,
and what I've-
- No, that can't be true-
- 1929.
(attendees laughing)
- What I've seen this year,
you know, everything I've seen this year
has been an outbreak of bad writing,
it's really a puzzleto me as an economist,
that they spend hundreds
of millions of dollars on movies,
(50:41):
and they can't seem tohave a decent script.
And so, let's mention in memory
of poor Rob Reiner,
who I was really sad to hear of.
What happened to movies
where the central dangerous plot element
was rodents of unusual size?
- Wesley, what about the ROUS'?
- Rodents Of Unusual Size?
(51:02):
I don't think they exist.
(rodent growling)
- [John] Bring back movies like that.
- [Bill] John, do you havea favorite runner film?
Ah, well Princess Bride, obviously.
- [Bill] Okay, so Niall?
- [Niall] Two Scottish items
for your cultural delectation.
A novel, Alexander Starritt's
(51:23):
Drayton and Mackenzie,
one of those rare forays into fiction
of the business world,
it's the story of a company
formed by an odd couple,
who go to Oxford together,
then to Mackenzie,
and then they end upfounding an energy company.
And, it's one of themost brilliant portrayals
(51:43):
of a business partnership
that I've ever read,
and that's the best novelthat I read this year.
The best thing I watched this year,
was Scotland qualifying for the World Cup
by knocking out Denmark.
- [Announcer] And McTominay!
(crowd roaring)
- [Niall] One of the mostextraordinary football,
(52:04):
and I use the term advisedly,
football game,
that I think Scotlandfans have ever witnessed,
with all the best goals
that Scotland have ever scored
in one astonishing game,
nothing else came close.
- My choice, we mentioned it
with Andrew Ross Sorkin,
it's Netflix Death by Lightning,
which details the shooting
and malpractice that led to the death
(52:24):
of James Garfield in 1881.
If you're not a videant,
you can read the book"Destiny of The Republic"
by Candice Millard onwhich the story is based,
Niall, let's stick with you,
one thing you learned in 2025?
- I learnt not to take along-haul flight every week,
because you will get hypertension.
That's what I learned.
(52:45):
- HR?
(HR laughing)
- I learned not to,
along the same lines,
you know, not to just leave home
for like 3½-weeks in one suitcase,
I felt like I was back in a...
Like, in a past middle-aged version
of ranger school,
living out of my rucksack.
So, like Niall,
(53:05):
maybe a New Yearsresolution for both of us
will be, travel a bit less, you know?
And maybe maximize the grandkid time more.
- Amen.
- John?
- I had a more currentevents Good Fellows,
rather than personal thing.
Like you know,
just reading the news was astonishing,
we learned that the...
The whole AID business early on,
(53:27):
the way our government works,
we don't actually to do anything anymore,
we just hand out billions of dollars
to politicize non-profits
and don't...
And, that's where it goes.
The shutdown I thoughtwas very revealing, 40...
You know, that is,
"Oh, 40-million Americansare on food stamps,
and they'll go hungry."
What? 40-million Americansare on food stamps?
And then, "We have to extend
the Obama Care subsidies."
(53:48):
Wait-wait, you took over this market,
and now it costs like 25-grand
to get health insurance,
and so, of course nobody can afford that,
and taxpayers have to pay for everything?
Budget? What happened here?
So, there was lots of...
I learned lots of...
In the chaos,
we learned lots of how actually,
things are really stuck in Washington.
- What I learned in 2025
(54:09):
is I have to get more sleep,
which means I'm seriously considering
deleting YouTube from my series of apps
that I'm also starting to think that
that app may have to bereclassified as a drug.
- As long as you're notscrolling through TikTok videos,
Bill, you're okay man,
you're all right.
(attendees laughing)
- All right gentlemen,
one big prediction for 2026?
HR, you wanna kick it off?
- Hey, so my prediction
(54:30):
is that we're going to see real frailties,
again, on this kind of same theme
within authoritarian regimes.
I do think that you know,
they appear strong from the outside,
but I think they're quite brittle,
and I'm hoping that inthe 250th anniversary,
that we'll restore some confidence,
confidence in our common identities.
Americans, that's my prediction.
And, confidence in our future as a nation,
(54:52):
and as a free people.
- Mhm. John?
- Well, looming over us
is when the next greatfinancial crisis happens,
but you never know when that's gonna come,
so I won't forecast it for next year.
I'll forecast, you wanted a forecast?
I think the democrats will take over
the house in the midterms,
and party's over.
And, I think we will start to see
(55:13):
the interesting question,
"What is the left's new cause?"
They've gone from inequality,
to the climate crisis,
to gender, race, pacifism.
What are they gonna do next?
Affordability doesn'tsound like their forte,
though, that's where they're going,
they'll have to figure out something,
and we'll see what it is.
- Mhm. My big prediction for 2026,
(55:35):
Condoleezza Rice's beloved Denver Broncos
are going to the Super Bowl,
and we have it on video
that Sir Niall Ferguson has promised
that he will go with her.
- [Niall] I think I'll have to reciprocate
by taking our director
to see Scotland beatBrazil in the World Cup.
But actually, my oneprediction of 2026 is...
I'm gonna really stick my neck out here,
(55:56):
I don't think Scotland will beat Brazil
in the World Cup.
- I have to add one,
'cause I forgot,
and it's very important,
'cause Beth reminds me.
Just to annoy Bill,
Travis, and Taylor will get pregnant.
- [Bill] That does annoy me.
- [John] Bill said noTaylor Swift forecasts.
- No Taylor Swift forecast.
All right, finally gentlemen,
your New Years resolution. HR?
(56:17):
- New Years resolution
is really just to maximizetime with grandkids
who are just a joy, you know?
And we're especially looking forward
to the holidays with them.
But yeah, that's it.
- Mhm. John?
- Prepare better,
and do a better job on Good Fellows.
- Mhm. Sir Niall?
- Well, I used this program
to announce the arrivalof my first grandchild
(56:37):
just the other day,
but my New Years resolution
is to take a new dog for a walk every day,
that's the big reveal.
But, please viewers,
do not tell Campbell,
it's supposed to be a Christmas surprise.
- All right, mine?
My resolution is to get in better shape,
that's an obvious one.
(56:58):
But, I plan to spend the holidays
reading some work by a Hoover colleague,
Bill Damon,
who has written a lot about what it means
to live a more purposeful life,
so that will be my holiday break.
And, that's it for 2025...
Oh, wait.
Wait, we have a visitor,
it's Hoover Visiting Fellow Chris Cringle.
Mr. Cringle, thanks for dropping by.
- Ho ho ho,
I heard that everyone'sbeen very nice this year
(57:18):
at Good Fellows.
Niall has...
Sir Niall's been very,
very nice,
although he's been a bit tardy
to a few of our recordingsessions here, I think.
And, John?
John is not the grumpy,
he is as we've said...
I've heard people say many times,
he is the huggy economist.
And I think Bill,
you need something extraspecial in your stocking
(57:40):
for the great job thatyou've done on Good Fellows
throughout the whole season.
But, you know who gets,
I think the best presents of all?
Are the Good Fellows audience
who are just fantastic,
I just love the questionsthat they send in
to you Good Fellows.
Ho ho ho,
Merry Christmas to all.
- Okay, the good news Santa,
because we're doing this virtually,
Niall and John don'tget to sit on your lap,
(58:00):
that's a break for you.
John, do you have a Christmas wish?
- Just more happiness
and productivity to all of us.
(attendees laughing)
- And, Sir Niall?
- You know, I just you know,
wish HR were here to give Santa his wish
for a new tank,
(58:22):
but maybe I can just pass it on
on his behalf?
Santa, our fellow Good Fellow,
he just misses his tank so bad,
and the paddler board isjust not doing it for him.
So, could you...
Could you just shove an Abrahams
in the stocking for him?
He'd so appreciate that.
Merry Christmas.
- New one with the...
(58:42):
The new one with the hybrid motor,
I'm sure he'd like that one.
(attendees laughing)
- The EV Tank!
- All right,
and Santa, my wish given the events
of the past weekend,
just peace on earth
and goodwill toward men, we just...
We need a more restful,
less stressful 2026.
- Absolutely. Let's all hope
and pray for that.
- Amen.
(59:03):
- Well, I don't know whathappened to General McMaster,
I guess he is starting
the holiday season early.
So, I will conclude our 2025
by thanking you all for your patronage
for Good Fellows,
we couldn't do this show without you,
and wishing you all the best in 2026.
On behalf of the Good Fellows,
Sir Niall Ferguson,
Lieutenant General HR McMaster,
and John Cochrane by the way,
looking very CaliforniaChristmassy I might add,
by the way.
(59:23):
We wish you all,
all the best this season,
we look forward toseeing you again in 2026.
Mr. Cringle, save travelsover the holidays.
Gentlemen, the same to you,
and we'll see you againin January, take care.
- Ho ho ho.
Happy Hanukkah.
Merry Christmas to everybody.
- You see, most blokes
are gonna be playing at 10.
You're on 10 here all the way up,
all the way up.
- Yeah.
- All the way up.
You're on 10 on your guitar,
(59:44):
where can you go from there? Where?
- I don't know-
- Nowhere, exactly.
What we do,
is if we need that extrapush over the cliff,
you know what we do?
- Put it up to 11-
- 11, exactly.
One louder.
- Why don't you just make 10 louder,
and make 10 be the top number,
and make that a little louder?
- These go to 11.
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