PRESENTER: Hi, everybody.
And thank you for joining
us today.
We've got a great Google Talk
coming up and I have the
pleasure of introducing our
speaker, Paddy Hirsch.
Paddy is a senior producer at
the American Public Media's
business radio program
Marketplace and is also the
creator of the acclaimed
Marketplace Whiteboard.
His recently published book
Man Versus Markets--
Economics Explained Plain
and Simple, focuses on
demystifying markets and using
stories to explain economic
terms and principles.
He then relates these stories
back to real life examples,
such as the mortgage crisis
of several years back.
But I'll let Paddy
explain more.
Please join me in giving a warm
and Googley welcome to
Paddy Hirsch.
PADDY HIRSCH: Thank
you very much.
Thank you.
It's a pleasure to be here.
Thank you for having me.
Thank you for feeding me.
I've been up here before a
couple of times and I always
forget how good the food is, so
it was a real treat today.
Thanks for that.
So usually when people ask me
to speak, they're usually
very, very specific about
what they want.
It's usually things like, can
you explain monetary policy
and inflation?
Can you talk to me about
the Volcker rule?
Whatever it is.
So I asked, what is it you'd
like me to speak about today?
And the answer that came back
through my publicist was, just
something about technology.
So I thought, OK.
Well, those of you who've read
the book will know that I
actually talk a little bit about
high-frequency trading
in Man Versus Markets.
And so I thought, well,
I could talk about
high-frequency trading.
And then I thought a little bit
about that and I thought,
hang on a second.
That's all about algorithms.
And you guys are kind of
the kings and queens of
algorithms, so there's something
of a risk coming
here and talking to you about
algorithms, right?
It's kind of like me going to
St. Peter and talking to him
about gate security.
So Peter, I think you need
a few dogs over here.
And maybe you need one of those
fingerprint readers.
Get out of here.
So I won't talk about that.
Well, I might talk about
that a little later if
you'd like me to.
But let's talk about something
else that Google really does
specialize in, which is in
identifying and meeting a
need, which is really what Man
Versus Markets is born from.
And could I see a show of
hands, how many people
actually know Marketplace?
The radio show?
OK, that's great.
Do people know the whiteboards,
the video
products that we put
out on the web?
Any takers there?
OK, we kind of need some
more outreach there.
So what happened was--
Marketplace has been
in existence for
quite a long time now.
And we've been doing a great
job, I think, over the last
15, 20 years of actually taking
business news and
breaking it down and delivering
it in a way that
most people can understand--
like regular people can
understand, rather than
people on Wall Street.
And that's really the
battle, is to--
we saw a need back then.
We saw people were reading the
business pages that come out
of the Wall Street Journal or
the back page of the New York
Times or listening to business
commercial radio and saying,
we don't understand what you
guys are talking about.
We don't understand
this language.
So Marketplace was really
invented to meet that need.
To meet the need of regular
people to understand what was
going on in Wall Street, what
was going on in business, so
that they could relate that
to their own lives.
So we then said, well, how
can we improve on that?
And really, we couldn't
really see that many
ways of doing it.
We were really the only people
on the landscape of radio and
television in general
that were doing it.
You had the niche programs like
CNBC, which is already
delivering to a certain
audience.
And it was us, which was
delivering to people like you
and I.
Come the financial crisis, we
realized that there was a gap.
So the financial crisis hit--
already before the financial
crisis, whenever Bear Stearns
started to collapse and we had
this terrible credit crunch that
was really gripping the
economy really badly.
And we realized that even though
we were breaking terms
down, or breaking the language
of Wall Street down, to a
certain extent, we weren't break
it down all the way.
Because suddenly, terms would
just sort of pop out of the
back end of Wall Street like
CDOs, credit default swaps,
collateralized debt obligations,
securitization.
And we started to realize the we
were using that language in
our own programming, because it
was really, really hard to
find a way to break down
those concepts.
They were so dense and so
complicated, we couldn't find
a way to break it down.
So I happened to come
from Wall Street.
I used to work at an
organization called Standard
and Poor's.
I used to work for a division
of them that was like that
little news division
they had reporting
on corporate finance.
And I happened to work
in securitization.
I covered that for many years.
So somebody asked, Paddy,
can you explain
how this stuff works?
So I used an analogy that I
used when I was training
people for Standard and Poor's,
which was to talk
about a cascade of glasses
at a wedding.
Even if you haven't been to a
wedding where they have the
glasses all stacked up on
themselves where you can pour
champagne in the top,
you've probably
seen it in mafia movies.
They have it there.
You pour in the champagne
on the top and it
all cascades through.
So I used this as a way to
explain how a securitization
instrument worked, how one
of these CDOs worked.
Somebody took a photograph or
took a video on one of the
really basic camera phones
that they had then.
And we slung it up onto the
web and we had hundreds of
thousands of hits almost
instantaneously.
It was amazing.
So clearly we saw there was a
real thirst for knowing what
these very exotic instruments
were.
And we thought, this is really
strange, because who really
wants to know what a CDO is.
Really, nobody wants
to know that.
Until it's crashing your
economy, in which case
everybody wants to know it.
So we realized that there was so
many of these very strange,
new-fangled financial
concepts--
and they were relatively new,
because they'd only been
around for about 10 years--
that were intricately bound into
the financial system, so
tightly that when whenever
they started to fail, the
whole system started
to go down.
So we realized, wow, we've got
to do more than just explain
the ins and outs
of Wall Street.
We've got to explain how these
financial instruments work.
So it was a really revelatory
thing for us.
And it was a revelatory thing
for me, because then we
started to tackle-- and I'd
encourage you go and look at
the whiteboards.
These are short videos, single
take, anything between three
and eight minutes, that break
down all of these concepts.
It's really worth having
a look at.
And you can comment on the
bottom and tell me how bad
they are and I'll redo them.
But understanding that need for
explanatory journalism was
really, really key for us.
As you are doing all the time,
we did outreach with our
listeners, outreach to the
consumers, we identified a
need, we saw there was a
problem, and then we found a
way to meet that need.
And that's not something,
frankly, that Public Radio,
and in fact, radio in general,
does that well.
So it was good for us to be at
the front end of that kind of
innovation.
But as we were doing this, and I
was going around and talking
to people, and we were meeting
people and talking about the
product and how Public Radio was
doing things, we realized
that there was actually an even
deeper need than wanting
to know the ins and outs
of these instruments.
We realized that there's
actually a really basic lack
of understanding about even
the most simple financial
instruments.
And it turned out that people
would say to us--
we'd go to meetings and we'd
expect people to say, can you
explain again how this credit
default swap works, or how
futures work?
The really complicated stuff.
People would say, you
know, I really don't
get how a bond works.
What's the difference between
a bond and a debt?
We'd be like, well, there
is no differences.
There's the same.
People would say, what's
the difference
between stock and equity?
We were like, well, there
is no difference.
They're the same.
And suddenly we realized that
the whole lexicon of Wall
Street has become so
complicated, and it's treated
like such a black art, that it's
become impenetrable that
even the most basic things that
those of us who've been
in financial journalism for a
while, that have worked on
Wall Street, we understand
instinctively, regular people
in the street, who have checking
accounts and go to
the bank and use the financial
system every day and are
effected by it, have really no
concept of just real basic
function of the financial system
unless they really,
really want to read in and
work out how to do it.
So suddenly we started
to see another need.
It's just the need for the most
basic explainers for the
things that are going on on Wall
Street, which is really
what the book is about.
So that gave rise to a whole new
series of videos that we
put out, and that really drove
me to put it down on paper as
well, because we found that
while many people love to
watch videos and they like to
listen to the radio, people
still love to have a paper
product in their hand.
I know that's really
disturbing to many
technologists, but it's true.
It's true.
So now that I've told you what
we kind of both do, drawn us
together there, what can I tell
you that you don't know?
I don't think that's anything
that you don't know.
But it's interesting to come
here, because you guys are the
cream of Silicon
Valley, really.
The cream of the American
workforce.
And you do some really, really,
really complicated things.
You think the credit default
swap is complicated?
Wow.
I can't imagine how difficult it
is for some of you guys to
explain exactly what it
is that you do at
dinner parties to people.
Maybe you're an enterprise
technical solutions engineer
or a space planning analyst.
This is what you are.
This is what you do.
And I imagine that it's actually
quite difficult for
you to explain these things to
people who have no idea about
anything about your world.
So if you're an engineer and
you're hanging out with a
bunch of liberal arts majors
at the bar, trying to get
across what it is you do can
be extremely difficult.
So maybe I can help
you with that.
But seriously.
Explaining is useful when you're
trying to explain what
you do at a party, but it's
essential when you're trying
to get your message across in
whatever environment you're
in, whether you're trying to
get a message across to a
client, you're trying to tell
your supervisor about an idea
that you have, or if you've got
a room full of people that
you're pitching your idea to,
you need to have a number of
basic elements to your
presentation.
You need to be succinct.
You need to be speedy.
But most of all, you need to
find ways to connect--
to use concepts in the
explanation that you're
providing that your audience
is familiar with
and can relate to.
So what you really
need is a story.
In radio, in Public Radio in
particular, were always really
interested in the story.
If you ever hear of journalists
talking or if
you're referring to-- many
people refer to news items
that they read in
the newspaper,
they talk about stories.
And there's a reason they
talk about stores.
It's because people can
relate to stories.
Many people relate very
well to data.
Many people relate very
well to just the
facts of the news man.
But most people relate
best to a story.
So the way we look at our news
is, and the way that I look at
delivering information, it's
all about telling a story--
which, if you read this book,
you'll find that what I've
done is I've taken a whole bunch
of analogies and a whole
bunch of stories and kind
of strung them together.
And I've used storytelling
as the rubric to deliver
information about some of the
most complex parts of the
financial markets.
So if you are an enterprise
technical solutions engineer
or a space planning analyst,
tell people a story about what
you do rather than just
delivering the
facts of what you do.
And relate it to what they do.
So of course, first of
all you have to find
out about your audience.
So if you're an app developer,
you might want to ask, do you
know what an app is.
I think you'd be surprised
how many people don't
know what an app is.
If you're a space planner,
maybe you want to ask if
you've ever worked in a cubicle
or what type of office
environment you have.
A little empathetic interviewing
is always a
really, really good
thing to do.
You've got to know
your audience.
It was interesting.
I did a fellowship at Stanford
a couple of years ago.
And I went to work in the
Hasso Plattner School of
Design, the D school
over there.
And it was very interesting
having a bunch of
journalists-- there were about
seven or eight of us
journalists from the fellowship
that had gone
across to work in what's
essentially part of the
engineering department.
I think it's part of the
mechanical engineering
department.
And so we had a lot of interface
with engineers.
And for us, design and the whole
idea of trying to put
ideas together was really,
really difficult.
But engineers find it really,
really simple.
For engineers, going out and
getting information out of
people was really,
really hard.
But of course, it was second
nature to us as journalists.
And that's one of the key parts
of any conversation that
you have-- whenever you're
trying to deliver information
about anything, you need to find
out about your audience.
You've got to find out what your
audience knows, what your
audience doesn't know.
So what I do is I make some
assumptions in this book.
I use analogy and characters
that I assume that most people
are going to know.
I deal with things like turkeys
and ice cream vans and
The Three Little Pigs and The
Godfather, the movie.
So I use all of these things.
And I'm assuming that most
people who are reading the
book will know these things.
And hopefully they will.
If not, they'll have to go
out and read about them.
Or rent the movie The Godfather,
which great.
Which is actually fine.
That's a good bit
of preparation.
That's another point, is that
you need to have some fun.
You don't have to be a comedian,
but you don't want
to take yourself too
seriously either.
So again, this book is about
not taking the financial
markets too seriously.
We all know, they take
themselves way too seriously
anyway, right?
If we haven't seen that over the
last few years, what else
do we know?
So I'm trying not to take the
financial markets too
seriously, poking a little
bit of fun, maybe.
And in a way, I'm poking a
little bit of fun at myself.
And I think that's actually
really key
to explaining anything.
If you show you have a sense of
humor, then you're going to
relate better to people.
So back to empathetic
interview.
Who here would like a quick,
sort of smart, amusing way to
understand the fiscal cliff?
Any takers?
Fiscal cliff, anyone?
Good.
OK, here's another one.
Who's seen the movie
Thelma and Louise?
OK.
Who hasn't seen the movie
Thelme and Louise?
OK, spoiler alert.
There's a scene in this movie
where Thelma and Louise are
driving dangerously fast
towards a cliff.
Now, I'm going to do a
little drawing here.
This is what I do with
this whiteboard
product that I have.
So I'm going to use the magic
of Google technology here to
do a little drawing.
So there we go, can
wee see that?
Yes, I think we can.
All right, so here we are.
Imagine here's our car.
And Thelma and Louise
are in this car.
And as I say, it is
speeding along.
It's like a Sunday afternoon.
Here they are.
This is Thelma.
Here she is.
And here's Louise.
Speeding along in this car.
And they're actually heading
uphill towards a very, very
sharp cliff.
Very fast.
So they're motoring along
here at high speeds.
And the cliff, essentially,
is the economy.
So this is our economy.
Right now, we're actually
pulling up reasonably well.
We're doing pretty well.
Not great.
This slow and sluggish recovery
that we have.
So we're sort of
driving uphill.
But what we're worried about
is that come December the
31st, we're going to go
hurtling over a cliff.
Everybody's worried
about this.
So that's the cliff.
Let's talk about Thelma
and Louise.
I'm going to turn the
page here if I can.
So here's Thelma.
And Thelma is a woman of a
certain age who happens to be
relatively wealthy.
And she benefits hugely from
the Bush tax cuts.
She doesn't have to pay as much
tax, which means she's
got much more money in her
pocket than she had before.
Here's Louise.
Louise is as a government
servant.
In fact, she works in the
Defense Department.
So she's a happy woman,
because we know
defense pays very well.
Now, the problem is that come
the end of the year, a couple
of things are going to happen
if Congress doesn't act.
The first thing that's going to
happen is the Bush tax cuts
are going to expire.
So if the Bush tax cuts expire,
this is going to make
Thelma very unhappy, because
she's going to get taxed more.
She's going to have a lot
less money to spend.
Louise, come the end
of the year--
the other thing that's going
to happen because of the
finagling that we had about a
year ago over raising the debt
ceiling, they said, oh,
well, let it go.
But come the end of this year,
what's going to happen is
we're going to make a bunch
of cuts across the board.
And particularly in the
Defense Department.
So come the end of the year,
Louise here is going
to be out of a job.
So she's going to be pretty
unhappy as well.
So she's going to
be unhappy too.
And what we have is, the money
that people had saved because
of the Bush tax cuts
will dry out.
So there'll be less money in
people's pockets as a result
of the lack of extension
of the Bush tax cuts.
And because you've got a bunch
of people laid off in the
Defense Department, you're
going to have less
money here as well.
Now, we all know that
our economy pretty
much thrives on spending.
We hear this all the time.
Some people talk about 70% of
economic output in the US is
because of consumer spending.
That's actually a fairly
inaccurate number, but it's
still extremely high.
The economy is really, really
dependent on consumer spending.
And if you've got consumers like
Thelma and Louise who've
got a lot less money coming into
their pockets, it means
that-- well, essentially, if
you think of the car as the
economy, it means that they're
not going to be able to pay to
fix the brakes or get
the oil changed.
So when you're heading towards
a cliff, suddenly, there's
nothing stopping you going
over the edge.
It means we're going to
plunge over the edge.
This lack of spending is going
to really put us straight back
into the hole that we've
been in in the past.
So that's how the fiscal
cliff is going to work.
That is, if it's allowed
to occur.
So what I'm trying to do there
is I'm trying to use stories
and analogy to explain
a financial concept.
Were there any holes in
that for you guys?
Did anybody see any holes in
there, some areas that I
didn't cover?
Or have I explained the
fiscal cliff to you?
Well, the government will hold
it because it wants to pay off
its deficits.
So the reason is, remember
we had the debt ceiling
conversation?
It's like we don't want to
increase our deficit, so the
whole idea of having these
spending cuts and having more
tax going into the federal
government means that they can
then use that money to pay off
the debt, as opposed to
injecting it back into the
economy in some way and
helping the economy
grow again.
And remember, the way that
spending works in the economy
is that people like you
and I go out and we
buy a home, for example.
There's a reason that housing
is regarded as one of the
biggest engines of the economic
recovery, is because
people buy a house, but they
don't just buy a house.
They buy carpets, they buy
curtains, they buy fridge
freezers, they buy a car
to put in the garage.
All this stuff.
So all the spending that
they do drives demand.
And that means that
manufacturers then have to
create more.
And the way that they do that
is by hiring more people and
buying more property and
cranking out more stuff.
And then you have this very
positive cycle, because as
more people are employed then
they're going to spend more.
And they're going to go
out and buy houses.
And suddenly you have this very
beneficial effect cycling
through the economy.
At least, that's the theory.
Of course, there are a lot of
people that don't like the
fact that we have mainly a
consumer economy and are very
upset about that.
But right now, that's the
way we're configured.
So that's the way
we're set up.
So the whole point of a book
like this is to take, as I
say, these potentially extremely
complicated terms
and turn them into, really,
stories that
everybody can relate to.
So what I'd like to ask, are
there any other terms out
there that people have
difficulty with when they hear
about them?
When they're listening to the
news or reading the news--
like, I don't understand
what this is.
Are there any sort of hot
points for people?
Any words that we don't
understand?
Yes.
And quantitative easing
is all about--
OK, well, let me use
an analogy that I
actually use in the book.
I want you to imagine--
I'm not going to draw this, this
is really hard to draw,
all right?-- but I want you to
imagine a swimming pool that's
got kind of a dam at
one end of it.
And the swimming pool is--
behind the dam, which is, say,
3/4 of the way up-- behind the
dam it's full of water.
So you have to swim in that
one end of the pool, the
dammed end.
On the other end, you sort
of paddle around.
There's a little bit of
ankle-deep water right there.
The stuff that's behind the dam
is where the banks are.
That's where all the money is.
It's all in the banks.
And what happens is money sort
of sloshes in and slashes out
of the paddling part
of the pool.
You don't want too much money
in that end of the pool,
because not everybody
can swim that well.
You want people to sort
of paddle around.
And that helps things grow in
there, because this is a pool
that's got stuff
growing in it.
So that helps stuff grow.
And people are quite happy
paddling around.
The problem is that the
situation we have now is that
there's not enough water in
that end of the pool.
The banks aren't sloshing
enough water in there.
And what's happened
is that we've got
this sort of dry situation.
And that water is
really money.
That's the money that we used
to go out and borrow to buy
stuff-- to buy those houses,
to buy those cars, to buy
those fridge freezers and
all the rest of it.
Right now, we're not
able to borrow.
It's really, really difficult
for us to borrow.
Usually what happens in the
financial system is we have a
set amount of money
in the system.
And the money sloshes
in and sloshes out.
So the bankers will chuck a
bucket over and then when
we're saving, we'll chuck a
bucket back and all this.
It's usually the same
amount of water.
Quantitative easing is like the
janitor coming along with
a hose pipe and turning it on
and pumping a whole lot of
extra water in there.
And the idea is that he's
flooding that end--
and when I say "in there,"
I mean the banking end.
Not in the shallow end,
in the deep end.
They're pumping extra water
into the deep end.
The idea is to make the bankers
so uncomfortable that
they want to start
bailing water out
much, much more quickly.
Because here's the thing.
Bankers--
this is going to sound really
weird-- bankers hate money.
They hate it.
All right, they don't hate it.
But they hate having--
they hate cash.
They hate having
to sit on cash.
Because cash doesn't make any
money, cash just sits there.
In fact, cash is a depreciating
asset because of inflation.
It's worth less every day.
Only fractionally in our
economy, but it's worth less
as time goes on.
Bankers want to invest money.
But right now, they're really
nervous about investing.
They're like, oh, no, we're
quite happy to just sort of
swim around because we want to
have lots of cash around just
in case something happens.
So they're sitting on
all sorts of cash.
Also, to be fair to the banks,
because the government's
asking them to keep
more cash around.
So by pumping more money into
the banking end of the system,
they're hoping that the bankers
will say, god, we've
got so much of this cash.
It's not making us any money.
Let's find ways to
make it money.
Let's toss it into the other
end of the pool.
So they're hoping that the banks
will throw buckets of
water into the shallow end of
the pool to people like us.
And we'll be like,
oh, yes, please.
Please, feed us.
Help us drink.
And we'll be able to take this
money and run around and spend
it on all sorts of things, and
therefore have this positive
cycle throughout the economy
where people start buying
stuff, employers start hiring
again, and then the economy
starts to grow.
So that's my summing cool
analogy of how quantitative
easing works.
Of course, a lot of people say,
one of the problems is
now we've got all of this money
that's sloshing, this
extra money.
Well, what happens?
And one of the dangers is that
if too much money goes into
the wider economy, we have
inflation, where you've got
much more money chasing
a relatively
small amount of goods.
And what does that do?
It drives the cost
of everything
really, really high.
Now, we've had two--
we're obviously in the
third round of
quantitative easing now.
But the previous two rounds
actually didn't do much in
terms of inflation-- barely
moved the needle.
Wasn't really a problem.
People are still worried
about going forward.
So what happens, you
ask, to that money?
Does it just sit around?
No.
In actual fact, the janitor can
then get a bucket, start
dipping the bucket into the
banker's end, and taking money
back out of there.
That's what Ben Bernanke
will, in fact, do.
This is called the destruction
of money.
This is done through something
called the repo system, which
I can talk about in a little
bit if you want.
But essentially, it is
effectively that janitor, Ben
the janitor, coming along.
dipping a bunch of buckets in to
take the money back out of
the system.
So once again, we have the same
amount of money in the
monetary system that
we had before.
How's that?
Great, thank you.
All right, any other terms that
people are nervous about
or confused about?
Unsure about?
Yes.
Well, yes.
They do that just
through lending.
So if you want to think of--
maybe there's two little
pipes at the
bottom of the wall there.
And one pipe pumps money out.
And that's done through mortgage
lending, through car
lending, student loans,
all the rest of it.
Any kind of lending activity
that sends money out into the
wider economy.
And of course, the other tube
is where we pump it back in,
which, of course, we
do through savings.
And right now, the savings rate
is going up in the US.
People are socking away money.
So you've got cash flowing in
and out of the banking system.
And it's not the entirely--
I don't want to vilify
the banks too much.
It's not entirely the banks'
fault that we're socking away
money like this and actually not
spending it, because we're
being every bit as cautious
as they are.
That's a great question,
thank you.
Well, the gold standard--
does everybody know what--
does anybody--
OK, let me explain what
the gold standard is.
Back in the day, back before
the Nixon administration,
whenever they removed the gold
standard, it used to be that
every dollar was worth a
certain amount of gold.
And in theory, you could take
your dollar and walk in and
say, give me a dollar's
worth of gold.
And they would give you
a tiny little grain.
No, they wouldn't.
But essentially, that was
what it was worth.
So every dollar was backed by
gold, which was in Fort Knox,
or wherever they
kept the gold.
So of course, you now know that
your dollar is actually
worth something real.
So if you have enough of those
dollars, you can walk out with
a nugget or an ingot
or whatever it is.
So there's immense appeal to
that, of knowing what your
dollar's actually worth.
But of course, it gets
complicated if you want to do
things like spend vast amounts
of money on defense spending
or build a whole load of bridges
and freeways around
the country, because maybe you
don't have that much gold.
Suddenly if you want to go out
and get extra gold in order to
print more money, you've got
to go to South Africa or
wherever it is and do a bunch
more mining or go to China and
beg them to sell your gold,
or whatever it is.
And that can get extremely
expensive,
because what happens--
as soon as you have a large
economy that needs more money,
the price of gold is going to
go through the roof because
demand has risen so much.
It's a classic supply
and demand issue.
And what does that do?
That increases the value
of the dollar.
And then you have this terrible
deflation system,
where you've got the dollar has
become so expensive and
goods have become devalued
in comparison.
So people were very nervous
about this.
So they said, well, let's get
rid of this thing, because it
doesn't give us any freedom
as an economy.
If we want to expand, that
really restricts our freedom.
So they created what's
called fiat currency.
And fiat currency basically
means, it is what the
government says it is.
This is worth $1 because the
government says it's worth $1.
Which is a really kind
of weird system.
It means that really, the dollar
is worth only the paper
that it's written on.
And it's only the government's
word that actually makes it
worth any money.
So it can be a very difficult to
thing for people to grasp.
And what it really comes
down to is trust.
You've got to trust
your government.
You've got to trust that your
dollar is going to be worth
the same tomorrow
as it is today.
Or the same in two years
as it is today.
And of course, that
doesn't happen
because we have inflation.
So what we do is we trust the
government to make sure that
inflation is low.
And that our dollars
are not devalued.
So it's not surprising,
especially in an era where we
have all sorts of quantitative
easing, where we have all of
this money that's sloshing
around the system and people
are really worried
about inflation.
They say, maybe we should go
back to the gold standard,
where everything is worth
something real.
So it's totally understandable
why people say that.
But I have to say that now going
back to a system where
every dollar was backed with a
certain amount of gold would
be incredibly difficult to do.
Firstly, there's not that much
gold in the world right now.
I mean, look at the size
of the economies
that we have now.
Can you imagine if China decided
to do the same thing
at the same time
that we did it?
And Europe as well.
How much gold would you be
getting for your euro?
It'd be infinitesimal.
So it's understandable that
people are interested in the
gold standard, but it's a very,
very difficult system to
go back to.
That's a great question.
Thank you.
Well, you have to spend less.
A lot of people talk about
the similarity between a
government and a house--
somebody's individual
bank account, their
own personal economies.
And there's a lot of
truth to that.
The analogy doesn't extend much
further, but essentially,
you've got money coming
in the door and money
going out the door.
And that money coming in the
door comes from whatever
you've sold your ability to work
for plus debt that comes
in the door.
And money that goes out the
door is all the stuff
that you spend on.
All the services that you
have around the home--
electricity, heating,
whatever--
plus your car.
Plus the interest that you're
paying on that debt that's
coming in the door.
So when you look at it like
that, that looks a lot like
the economy.
So really, the only way you can
reduce those costs, those
expenditure costs, is
by cutting back.
It's by heating your
house less.
Maybe it's like wearing
a sweater for longer.
Maybe it's like selling one car
and getting a cheaper car.
But you have to cut
your costs.
Which is what all of the
shenanigans going on in the
government is all about right
now, it's trying to decide
what it is that you cut.
Yes, of course, you could remove
all social programs,
crank the tax rate up.
Suddenly, you've got much more
money coming in the door if
your tax rate is at 40%.
Suddenly you've got way more
money coming in the door if
you remove all of those
entitlement programs--
Medicare, Medicaid, and
all the rest of it.
Suddenly, you've got much less
money going out the door.
And yeah, it's going
to be easy to pay
your debt off then.
Absolutely.
The logic is impeccable.
But the practicality of that
is extremely difficult.
You think about what we spend
as a nation every year, more
than 50% of the money that we
spend is spent on mandatory
spending programs, like Social
Security, like Medicare.
These are programs that cannot--
it's not like a
business, where a business owner
can turn around and go,
you know what?
We're going to get rid of
the Android division.
It's gone.
A company can do that.
A company can say,
you know what?
We're going to get out of
the software business.
Let's get into the health
care business.
A company can do that.
It can make those changes.
An economy cannot.
We are required to provide
those services by law.
Sure, you can trim them down.
And that's a lot of
what the back and
forth is about in Congress.
You can shrink them and
make them smaller.
But getting rid of
them all together
is extremely difficult.
So what's not mandatory, what
they call the discretionary
spending, it's all these really
unimportant things like
education, roads, the Coast
Guard, defense.
This is the discretionary
spending.
This is the stuff that the
government is not required,
mandated, to spend on.
But again, you try and cut that
stuff and boy, people are
going to start to howl.
So yes, in principle,
absolutely right.
You could reduce those programs
and reduce your spending.
But actually making the
decision, the way to go about
making the decisions what to
cut and what not to cut are
extremely difficult and
frought with politics.
One of the things--
what's interesting about the
presidential election is that
you have Mitt Romney walking
around and saying, look, I'm a
businessman.
I've had so much experience in
business, I'm going to know
how to be able to handle
our economy better.
And of course, in many
ways that's true.
It would be great to have
someone who understands how a
business works to run the
economy, especially when its
got business functions.
But Mitt Romney is the
CEO of a company.
When he wants to make a
decision, what he says or what
she says goes.
They're at the top of a pyramid
and everybody reports
up the pyramid.
So essentially, everybody
reports to the CEO.
In an economy that's
not the case.
In a government, he's got
whatever 600-odd people in the
Congress up on Capitol Hill in
the Senate and the House of
Representatives, reporting not
to him but reporting to us.
So if the President goes down
and says, I want you to vote
my way on this bill,
they're like, no.
I report to Jill and
Ben over here.
I don't report to you.
You can't tell me what to do.
So not really a parallel
structure.
So the same rules at that
point do not apply.
Yes.
It's really interesting.
I like to liken our regulatory
system, and the financial
services system within it,
to-- it's kind of like a
teenager who's growing up and
has been wearing the same
clothes since he was
nine years old.
He's now 15, he's starting to
play football, and he's
busting out of these clothes.
Everything is completely
threadbare.
This is what our financial
system is like.
Over the last 20 to 30 years,
our financial system has gone
off on steroids.
It's gone crazy.
All of this financial innovation
that you've heard
about-- this credit default
swap, these CDOs, these are
relatively recent arrivals
in the market.
And what has happened is that
the regulatory system
has not kept up.
The regulatory system in its
current form was really
recreated in the 1930s, after
the Great Depression.
And it was a great system
for its time.
It really, really worked well.
And what we've done since then
is we've just sort of patched
it here and there and
we've cut holes
in it here and there.
It's a bit like a leaky bucket
that's been sort of taped up
and then it's leaked again.
It's taped up again.
And it leaks again and
you tape it up again.
So it's now turned into this
monster of tape and metal and
leaking water everywhere.
That's what our regulatory
system looks like now with
regard to the financial
system.
So you've got these incredibly
smart people who are working
in finance, who are coming up
with all these amazing ideas
about how to make money.
But really, the regulators
are two decades behind.
They don't really under--
if you ever listened to any of
the Congressional statements
that came out after the
financial crisis, it was very,
very clear that people on
Capitol Hill had no idea what
they were dealing with.
They were still thinking stocks
and bonds, whereas Wall
Street was thinking martian
credit default swaps.
It was just ridiculous.
There was no correlation
in knowledge.
So what we really need is a
financial system that is, I
believe-- and this is just a
very personal opinion-- but I
believe we need a financial
system that is simpler and a
lot more robust.
And much, much better policed.
Because what's happened over the
last 50 years, really, is
that the rise of the bank lobby
has forced politicians
to pick the bones of the
policing of the regulatory
system clean.
The SEC has been underfunded,
it's been undermanned, and
really just can't compete
with Wall Street.
And also, it's punched holes in
the system that allow banks
ways to look for ways
around the system in
order to make money.
And nobody's stitched those
loopholes closed.
And in fact, many people have
tried to tear them and make
them bigger.
So that's really what
the problem is.
But don't blame the
banks for this.
The banks are glands.
There's no sensibility there.
There's no morality there.
Their job is to make
money for their
shareholders, plain and simple.
That's what their job is.
They are there to crank out
as much money for their
shareholders, which obviously
includes the board and all the
rest of it--
and, by the way, you and I,
because our 401(k)s and
403(b)s are invested in large
part with the banks.
Their job is to make
money for us.
And they'll do whatever
it takes to make as
much money as possible.
So what stands in the way
of them and hell?
Well, the regulatory system.
Which is why the regulatory
system has to be a lot
simpler, so everybody
can understand it.
Even we can understand it.
And then, most importantly
perhaps, the politicians can
understand it.
And much tighter in terms
of the way it's policed.
That's the question
of the decade.
That's a good question.
That was the fear, right?
That's why Hank Paulson
did what he did.
Think about this.
This was a guy who came
from Goldman Sachs.
He was the kind of person
who would never want to
regulate the banks.
Who would want to get out
of the way of the
banks at all costs.
And let them do what they do for
the good of the economy.
And there he is basically
standing in in the way and
saying, forget the
free market.
Forget that.
Forget all the principles of
Ayn Rand and all the rest.
I'm going to stand here and I'm
going to catch these guys
and cosset them like
a real Democrat.
This was very, very unusual for
someone like that to be
doing what he did.
And the reason was because he
was afraid that the whole
system would just come
crashing down.
The way I describe it
in the book is--
the analogy I use is like it's a
string of mountain climbers.
They're all climbing up
a mountain together.
And anyone who's done any
mountaineering knows that you
rope yourselves together.
You're all roped up.
And the reason you do that is
because if one person falls,
then you hope that the combined
weight of everybody
else will actually stop that guy
or that woman from going
over the edge, and they'll
be able to claw
themselves back up.
But what happened is--
imagine now that one of these
banks is so enormous, or the
precipice is so steep and the
ground is so treacherous, that
when that person goes over the
edge, suddenly everybody's
being pulled with them.
And there's a real danger
that everybody's going
to go over the edge.
That's what Hank Paulson
was worried about.
He was worried that Lehman
Brothers, because of the
system of credit default swaps
that tied everybody together,
and not just that but also the
way that the overnight banking
system worked, and not just that
but the fact that if one
bank goes, then no bank will
ever trust any other back
again and suddenly the
system will freeze.
He worried that it was just
going to drag the entire
system over the cliff.
And it was going to destroy
not just the American
financial system, but the
global financial system.
And he said the risks
were just too great.
Now, if you speak to my father,
he'll say yes, we
should have just let them go.
And let the chips fall
where they may.
But my dad lives in a little
cottage in Northern Ireland in
the middle of nowhere
and doesn't depend
on any of that stuff.
He's retired.
So it's all very well
for him to say that.
But for those of us who are
still invested, and we all are
if we have a retirement account,
if nothing else,
that's a really, really
dangerous thing for us.
If we work for a company that
needs the financial system in
order to get business done,
whether it be to borrow money
in order to buy property around
the world or to hire
more people, or whether it be
because we have a company that
invests in securities, our lives
are intricately tied in
with the financial system.
So there was real fear there.
Now.
2020 hindsight.
If we'd let the banks go,
where would we be today?
Maybe--
if Goldman Sachs is to be
believed, they said that they
had enough money that
they would be able
to withstand that.
So they would actually have a
good enough ice ax that they'd
be able to sort of
hang on there.
And they would have been OK.
And eventually after a little
bit of freezing up, they would
be able to claw themselves
back up again.
JP Morgan said the same thing.
Wells Fargo said
the same thing.
So maybe what would've happened
is Lehman Brothers
would have disappeared,
everything would have frozen
solid for a couple of months,
but then people would've
gradually sort of warmed up and
started lending to each
other again.
And things would
have improved.
And it's a possibility.
But making that call?
I would not like to have been
in that room at the time.
So the point was that
the financial system
is inherently unstable.
And perhaps what we need is a
new foundation, maybe, to--
if I understand you correctly--
to recreate the
fundamentals of the financial
service system.
Maybe.
That's certainly an argument
that I've heard
made a number of times.
I think that the reality is that
we're dealing with the
trading of securities and the
way that you deal with money
is inherently risky.
People are always taking a risk
in order to get a reward.
And we're part of the problem.
The shareholder economy is part
of the problem, because
people like us put our money
into investment funds, which
then go to banks and say,
you'd better make money.
Go to companies and say,
you better make money.
It pushes those companies and
those banks to take risks.
And unless you have a really
good foundation in which they
can take risks, you're in
trouble, because they're going
to fall through the floor.
So I think that yes, the system
is not robust enough.
Do we need a new system?
I don't know.
I think that the original
system that we
had was pretty good.
I think that the system they
designed after the Great
Depression was pretty solid.
We haven't maintained
it properly.
Like I say, we punched a few
holes in it here and there.
And that's a problem.
So I think it needs to be
overhauled, but I don't think
it needs to be replaced.
But what I do think is that we
need to give mind to something
that the Europeans are doing
much more often.
You sound like you're
from Europe.
OK.
So what the Europeans are doing
is they're saying that
there should be a almost a--
this is not specifically what
they're saying, but they're
implying that there should be
a morality clause built
into bank business.
The banks should be required,
almost, to sign up to a sort
of a morality charter that says,
you know what, we're
part of society.
Therefore, we should behave as
though we're part of society.
Now, banks will tell you
here that that's what
they already do.
You know, we're part
of society.
And we give money to charity.
And this and that.
And that's one thing.
They'll say one thing.
But I think that when you
actually see what they do--
yes, of course, they are one of
the mainstays of society,
but when it comes to actually
making money, that part of
thinking about the rest of
us is not really part
and parcel of that.
They think about the rest of us
in the way that Adam Smith
thinks about the rest of us.
It's like enlightened
self interest.
You drive, drive, drive
to make money.
And that will therefore
blossom into good
things down the line.
Now, I think that that logic
only goes so far.
Blocking out all morality
is a real problem.
And I think that what we do need
is some kind of required
structure for banks to invest
in on moral terms, so that
they understand that they're
part of society.
And they shouldn't be risking
all, because if they do, they
will indeed risk all when
it comes to society too.
[INAUDIBLE]?
Ah, this includes
punishment, yes.
Punishment.
So we haven't seen much
punishment, have we?
For the banks.
And I know that's one of the
things that people get really,
really upset about.
And part of the reason for this
is because we have this
poorly understood system that's
very poorly regulated.
Or it's not poorly policed.
So if you don't have a strong
system of rules that address
themselves to every part of the
system and comprehend the
system completely, how can
you have a punishment?
Because wriggle out of it and
somebody says, well, we meant
to do this.
And it looks like this.
And then the regulators are
completely bamboozled because
they don't get it and haven't
been following it, haven't
been paid to follow it
for long enough.
And these people skate free.
So yes, I think you're
absolutely right.
We do need to have sanctions.
But it's very, very difficult to
have sanctions in a system
where even the police don't
really understand what the
heck is going on.
Well, I think that we do have
racketeering laws, of course.
But then, those racketeering
laws were probably put
together in the 1940s to deal
with the mafia, as opposed to
having to deal with people
at an investment bank.
And the other thing is, those
racketeering laws usually
require-- and I'm not an expert
in this, but they
usually require knowledge of
sort of a chain of command
that actually wants you to do
something very, very specific.
And then it happens.
And then you can bring a case.
In the case of the banks, these
people are empowered to
just make money.
It's like, guys, go and make
money the best way you can.
You're smart guys.
You figure it out.
Get it done.
And make sure that it remains
within the law.
And as far as the law is
concerned, it does remain
within the law.
So it's all about your ability
to interpret whether or not
the lines have been overstepped
in these cases.
But you were going
to follow up.
Well, here's the thing.
So if they were selling
something to you and me,
that's illegal.
They can't do that.
So if they're coming to us and
they're saying, you should buy
this investment, it's great--
and people do
go to jail for this.
You have these unscrupulous
investment companies that will
go to old ladies and retired
people, and they'll say, oh,
you should really buy this.
It's going to return
you 9% a year.
Everything's going to be fine.
And then the next thing,
it disappears in the
twinkle of an eye.
That's illegal.
And people go to
jail for that.
What we have in the
investment banking
system is that you have--
say, one investment bank will go
to another investment bank
and say, you should
buy this product.
This product is complete
rubbish.
Put lipstick on that pig.
They know that it's
a bad product.
And what are they doing?
Not only are they selling it to
that-- or they believe it's
a bad product.
They're not only selling it to
that person, to that other
investment bank, but they're
also betting against it.
They're saying, we think it's
so bad, we're actually going
to bet against this thing.
There's a concept in investment
banking called "big
boy language." It
goes into all of
these investing documents.
So you get a bank loan-- if
you buy a piece of a bank
loan, they put this thing in
called big boy language, and
basically it's saying, you
and I are big boys.
We know what's going on here.
This thing could be complete
rubbish, but you're buying it
on site and you know it could
be complete rubbish.
But you're going to
buy it anyway.
And once you've signed the big
boy language, there's nothing
you can do.
The investment bank who bought
it, and it went right into the
toilet 10 seconds later,
can scream and howl
as much as it wants.
The other bank will just flick
this big boy language and say,
look, here it is.
You signed a paper.
So the other point is that it's
kind of like gambling.
If you make a bet on something,
somebody's got to
take the other side
of the action.
You go to a bookie and you make
a bet on a horse, the
bookie's taking the other
side of that action.
The same goes with
investment banks.
They're making bets on things.
And somebody else has to
take the other side.
Somebody's got to sell you
something in order
for you to buy it.
So all they're saying
is, listen, we're
selling you this thing.
We may bet against it.
Here's the big boy language.
But they're like, OK,
we'll take it.
We think it's going to do
better than you do.
And we'll take our chances.
So yes, on the face of it to
us, it sounds incredible.
It sounds illegal.
But in fact it's absolutely
legal and it's been happening
for decades.
Well, I think a lot of people
call taxing consumption--
it's like a regressive tax,
because poor people--
you've got to eat, right?
So if you start taxing them
for pretty much everything
that they consume,
then it really
affects poor people more.
This is a policy discussion
that I
think happens ad infinitum.
And has been happening
for a very long time.
There are many societies
that put a--
I think Singapore, for example,
has very high
consumption tax.
Here, we have relatively
low consumption tax.
I think the UK now has
consumption tax.
So I think most societies
are now doing
something in between.
But it's one of these
open questions.
We could sit down and debate
it afterwards.
But it would be a debate rather
than anything else.
Yes.
Oh, no.
It wasn't empty.
It wasn't really empty.
So yes, this is a very
good question.
So what we had is
virtual water.
Here's the thing.
The way the banking system works
is if I go to a bank and
I put $100 into the
bank, there's a
credit for me for $100.
So say I'm a bank and
you give me $100.
You've now got $100, but it
happens to be in the bank.
I then have to keep,
say, 5% of that.
So I keep $5 in the bank.
And I can turn around and
I can lend you $95.
So now there's $200
in the system.
And then you can go and give
it to another bank.
And suddenly we start to see
exponentially the amount of
money that there is
in the system.
A lot of this is just
notional money.
Because there's only-- if you
came to me today and said, I
want my $100 back,
I'd be like, OK.
And I'd have to turn around
and borrow it
from somebody else.
And this is slightly away from
your question, but what
happens in the banking
system is that this
happens all the time.
Banks run out of money.
It sounds absurd, right?
But they actually run
out of money.
So they have to go to other
banks to borrow money.
So say, for example, this is
what happened in Lehman
Brothers-- well, no.
That's not a good example
because Lehman Brothers was
not a commercial bank.
But say, for example,
I'm the bank.
You want your money from me.
I have to go to another bank.
And that bank says to me, no.
I'm not going to lend you
that money overnight.
Because they usually do
it in what's called
the overnight market.
The bank says to me--
J.P. Morgan says to me, I'm not
lending the Bank of Paddy
Hirsch money overnight,
because I think you're
invested in really
dodgy securities.
What do you mean.
Said, well, if you're invested
in bad securities, it means
that you're not going to
be able to redeem those
securities for any money.
Which means you're not going
to be able to pay me
back, let alone you.
So suddenly I'm bust.
Nobody's lending me any money.
I owe you $95.
I can give you $5.
Sorry.
But I'm bust.
And that's really the root cause
of what happened when we
were worried about the financial
system collapsing.
It was the fact that these
banks would not
lend to each other.
And if banks stop lending to
each other, it's like you stop
the flow of blood
around the body.
And suddenly you have-- you know
what it's like when you
stop blood flowing around a
body, is bits of the body
start to drop off.
They get gangrenous and horrible
and they fall off.
So that's really what happened,
is the lifeblood
started to slow down and
maybe even stop.
And the urgency was keeping
that lifeblood going.
But you had another question,
which was, where
did that money go?
Oh, yes, sorry.
In the financial crisis.
So what happened is, as people
get these credits in their
account, they start behaving as
though that's real money.
So suddenly you have all
this money stacking up.
And if you've taken
all sorts of--
if you've made bets
with people.
And you've, say--
this is what happened with these
credit default swaps.
They'd made bets on peoples'
ability to pay a
loan down the road.
So say, for example, John has
bought a car, for example, and
I want to bet that John's going
to crash his car within
the next five years.
I can take a bet with you.
And I can pay you $5 a week
to take that action.
So every week I'll pay you $5.
And if John does crash his car,
then indeed, you pay me
the entire worth
of John's car.
So this is great.
But what I can do is I can
register that as an asset.
I can say I essentially
own the money that--
so you can register
this as an asset.
So what you had is all of this
financial shenanigans that
allowed people to show all of
this income and this huge
bottom line in their
bank accounts, and
much of it was notional.
It's kind of like when
you own a house and
you value your house.
And you say--
you bought the house
for $300,000.
Then the market jacks
up and now the
house is worth $600,000.
So you take the equity out
and then the house
drops back down again.
Well, that house was never
really worth $600,000.
But yet, you've taken
the money out of it.
And now your houses is under
water and you owe that money
back in again.
That's the kind of place where
all the money disappeared.
It was this notional concept of
the value of certain assets
that just disappeared whenever
the market dropped away.
And that didn't just
happen in housing.
That happened for cars
in many cases.
It certainly happened for
credit default swaps.
It happened for stocks
and shares and bonds.
All sorts of assets.
So this is what they call--
this is where you hear the term
"frothy" in the market.
It was just like froth
on the top of a beer.
That froth looks great.
The beer's this big.
The froth just sort of
slowly goes down.
And that's it.
That's what happens.
So it's all that froth that
we're talking about.
So when people say, where
did all the money go?
Well, the money didn't really
exist in the first place.
It just looked like it did.
Wow.
Thanks for that.
Yes.
It is possible because we can't
use the gold standard.
Yes.
It's one of the downsides.
Definitely.
We're looking for a
happy medium, yes.
I think everybody's looking
for a happy medium.
But I think that really, with
the way the bubbles worked--
and that's one of the things
about gold standard.
They said, well, there were
never any bubbles when we had
a gold standard.
But that's not entirely true,
because you think of the--
you may have heard of the tulip
bubble in the 1500s.
And they have the gold
standard then.
They had a bubble then.
But it was a particular
asset, the value
of these tulip bulbs.
So it's not entirely true that
you don't have bubbles, but
you probably get less of them
with the gold standard because
you don't have the ability
to print money.
Well, let's deal with
the 47% first.
So yes.
What's really interesting about
that statement is that a
significant proportion
of the 47% are
probably Republican voters.
It just drives-- it amazes me.
This falls into the same
rubric as the, get your
government hands off my
Medicare comment.
It's really interesting to hear
him say that, because a
lot of those people
are retired.
They're not paying
any income tax.
And a lot of retired voters
vote Republican.
So it's crazy that he would
make that statement.
I watched the entire
video, or certainly
right up to that point.
So I know that he wasn't quoted
out of context there.
That said, it's true.
We have a system that
is open to abuse.
And some people do abuse it.
But I don't think 47% of the
population abuses it.
Now, the question about the
amount of tax that--
or how you can avoid the AMT.
I mean, you'd have to speak to
a tax advisor about avoiding
the AMT, which I'm sure you
could do if you're--
AUDIENCE: But he's done it.
PADDY HIRSCH: Well, he's done
it because he doesn't get
income, you see.
Not in the way that
we understand it.
He has this thing called
carried interest.
And what this is is if you are
a private equity fund--
usually, we get paid a
paycheck every month.
That's how it works for us.
When you're in charge of a hedge
fund, what happens is
you're making investments.
So as the partner in a hedge
fund, it's almost as though
you're just buying stocks
and shares.
You're obviously buying
more than that.
But it's like you're buying
stocks and shares.
And then every month, you
get paid interest.
So you get paid through
interest.
But interest only gets
taxed at 15%.
And carried interest only occurs
once every couple of
years, because the way that--
I mean, I'm sure most people
know about the venture capital
market more than I do now.
But the way a venture capital
works is that you only get
paid out as an investor whenever
the exit from the
investment occurs.
So that could be like two,
three, five, seven
years down the line.
So a lot of the time this money
is coming in a lump sum,
but it's still only
investment income.
He's not being paid a check
monthly by his employer, by
Bain Capital.
So everything for him, all of
his money, comes in through
investments.
And the reason I think that--
this is entirely subjective
on my part, but one of the
reasons I think that the
Romney campaign was so
reluctant to release this
information is not because
there's anything
illegal in it--
I think it's completely legal.
I think the scary thing is what
you can get away with
that's legal.
I mean, it's, really?
It's like, this is legal?
It's totally legal.
So he didn't do anything
illegal.
But I think it's really kind of
a poke in the eye for the
tax regime that you can get away
with this kind of thing.
And I think a lot of
people think that
it's extremely unfair.
But that's really where
it comes into.
It is investment income,
and not earned income,
as you and I have.
Can we afford Obamacare?
Well, we're paying
for it right now.
So we've got it right now.
Actually, I think that what's
really interesting about the
Romney plan and Obamacare as it
exists today, there's very
little to choose between
them, frankly.
I mean, everybody talks about
the great saving that the Ryan
plan is going to make five years
down the road, which is
exactly the great saving that
Obamacare is already
making right now.
So I think there's not much to
choose between the two plans.
Whether or not we can
afford Obamacare--
I actually don't think so.
I think cuts are going to have
to be a lot deeper than they
are right now.
Just to keep the system funded
is going to be a problem.
But to keep the system funded
and to pay down the deficit to
some extent is going to be
really, really hard to do.
And it's clear that they're
going to have to make deeper
cuts than they've
made right now.
They're going to be extremely
difficult to do politically.
But they've got to be done.
Otherwise, the system,
I think, is
going to bust itself.
So I think as it stands right
now, in the situation we're in
right now, probably not.
No, I don't think we could.
So we're going to have to make
some cuts elsewhere.
All right.
Thank you all very
much indeed.
I really appreciate it.
Thank you.
