Finance Blogger Reunion

Audio Length: 00:50:48

Transcript (not edited)

S1: Hello and welcome to the Finance Blogger reunion episode of Slate Money, Your Guide to the Business and Finance News of the Week. I’m Felix Salmon of Axios, formerly of the Economonitor Blog, Roubini Global Economics, formerly of the Market Movers blog portfolio, formerly of the I guess eponymous Felix Salmon Blog - it didn’t really have a name at Reuters. And I’m joined here by two of the most awesome OG financial bloggers, both from FT Alphaville, Stacy-Marie Ishmael of (unintelligible) and F.T. Tilt, which was itself probably the greatest financial blog of all time. And Cardiff Garcia, welcome.

S2: Hey Felix. You were quite the promiscuous Blogger back, I guess.

S1: How how many different places did you blog, Cardiff?

S2: Yeah, I think it was just F.T. Alphaville with the occasional contribution to till

S3: I feel like I had an R.G. monitor, a guest post like one time.

S2: I mean I was discovered partly by Felix at Cardiff Garcia Dotcom way back in the day, but that wasn’t a paid Blogger

S1: The best blogs are the unpaid blogs. That was my job. And the blogosphere, that’s I remember discovering Rolfe Winckler and bringing him in to Reuters..

S3: He said, I think Rolfe would 100 percent agree because I found Rolfe through you and so many of us. And now he has this incredible career, so shout out to finance blogging.

S1: Cardiff, if you are not blogging anymore, what are you doing now?

S2: That’s right. I’m the host of a new podcast that launches on August 12th called The New Bazaar. And that’s 'bazaar, like the marketplace or I have to explain this to everybody. We hadn’t anticipated that

S1: if only you’d realize that this was an audio thing. People like. I get confused by homonyms.

S2: Exactly. But now it’s called the New Bazaar. It launches on August 12th. And it’s about the economy and the way we live.

S1: I can’t believe we’re plugging our competition here, but go check out the news.

S2: It just like bloggers didn’t compete with each other. They iterated on each other. They fed off each other, you know? Yeah, exactly. Remember, there will be a reverse plug. Don’t you worry. The plug will be reciprocated.

S1: This is a show where we are going to go full, like Blogger punkish, do the thing that bloggers do best, which is dive into random bits of the economy that aren’t necessarily hitting the big headlines in the first place. We’re going to start is Cuba, which is a place where God, if it’s genuinely an expert on what’s going on, we’re going to get up to speed on the Cuba situation. We are going to talk about investment banking bonuses and

S3: and salaries,

S1: salaries and how they skew incentives for the bright young things who work in investment banks. We are going to talk about books or other bookstores. And Stacy in Cardiff are going to have a fight over the relative merits of independent bookstores versus Barnes and Noble. And if you have a view on this, do let us know on Slate Money at Slate Dotcom,

S3: if your view is correct,

S1: only if your view is correct. And you agree with Stacey. We have a whole Slate plus segment on Fed policy and whether that should be a new Fed chair. It’s all coming up on Slate money. Cardiff, there is all manner of awesome stuff happening in Cuba or terrible stuff, and there’s a huge amount of incredibly uninformed opinion and commentary out there, second only to the amount of uninformed opinion and commentary about hungry. For some reason, that seems to be like everyone seems to be an expert on Hungary right now, but you are actually an expert on Cuba. And so we are particularly excited because you can give us the delta on what do we need to know about what’s going on in Cuba and whether it matters?

S2: I would say expert ish, but I have spent some time reporting from the island and I’ve certainly kept up with the events of the last couple of months. But the short version of this is that on July 11th, a very large series of protests that started as a very small series of protests in a municipality outside of Havana called San Antonio that was Benos, started to spread all across the island. And it was the scale of the protest that was something that we really hadn’t seen in Cuba for at least two and a half decades. And maybe even longer than that. The protests were about a number of things. They were somewhat diffused. They started on social media. And so there wasn’t like one coordinated call for something. But it takes place in the context of a really extraordinary economic calamity that’s hit the island for a number of reasons. One is that covid, of course, has directly hit the tourism sector, which in Cuba is especially important because it’s a big source of foreign currency. And in Cuba, the economy so dysfunctional that the island actually still imports the vast majority of its food. So a stock of foreign currency is really important. And so what’s happened in the wake of covid is that there are tremendous shortages of basic goods like food, medicines and other sort of basic household goods. The other thing that’s happened is that Cuba has a huge inflationary problem this year, and that’s the result of having ended or existed as a dual currency system, which also had been in place for a few decades. And that’s kind of complicated.

S1: But let’s come to the dual currency system at the moment, because we have enough getting on with just with this the big picture thing, which is basically foreign tourists stop going to Cuba for obvious pandemic related reasons. Foreign tourists were the main source of foreign currency for Cuba. Venezuela collapsed, and so Cuba lost its main source of oil. And without any foreign currency and without any oil, this was terrible for the economy. There’s now food shortages. There’s demonstrations on the streets. One thing you said did intrigue me. You said it started on social media. What? It’s the social media network of choice in Cuba.

S3: And how are people accessing it given the Internet restrictions?

S2: So Cubans first got the ability to have mobile online plans in twenty eighteen. Right. So they were using things like Facebook and some other social media platforms as well. This specific series of posts that started on Facebook, a Facebook group called La Vida Looma, which roughly translates to Humevale and the specific administrators of this Facebook group in San Antonio that spaniel’s are still anonymous. And what they were calling for was essentially for the government to suffer in the same way that the Cuban people were suffering. So if they have a shortage of food, then they wanted the president, Miguel the Gunnell, to also suffer from a shortage of food, electricity blackouts and all these things. So it started on Facebook. And of course, immediately after the protests started, the Cuban state run company called that fix shut down access to the Internet and to Facebook. And Cubans ever since have been using workarounds from BP ends and other things that are available to them. The Cuban people have gotten better at these kinds of workarounds. But the Internet is still run by a state monopoly company and and it has shut down ever since the protests started. But before that, they did have access to Facebook and some other groups.

S1: Let’s just rewind a little bit here a little bit further. Who is the president of Cuba and how long has he been president of Cuba?

S2: So, Miguel, the gunnell is the president of Cuba. He’s been the president for a couple of years, but he became first secretary of the Communist Party this year, taking over from Raul Castro. Those two positions are sort of like the equivalent of chairman and CEO. So he’s now, Miguel, the scandal is now both. Raul Castro finally stepped down earlier this year. And this, by the way, is a big deal, too, because it was thought that the new sort of generation of leaders in Cuba who are a little bit younger, I mean, relatively speaking, he’s 61, would be more modernizing in that kind of thing. But also, I think this might be a source of hope, a source of courage for Cubans that the Castros are finally stepping away just from. Old age, but it turns out that so far the crackdown’s under Connel have also been quite aggressive, especially after the protests. I mean, they sort of arbitrarily detained some 700 people. But, yeah, it’s me. The scandal is the president of Cuba.

S1: Wow. So is it fair to blame him for I mean, obviously blaming him for the crackdown? He’s the chairman and CEO at this point. Is it also his fault that he managed to fuck up this currency thing, which we can now get to? What exactly did he do with the currency and is that his fault?

S2: I would say that part of it is not his fault. So the background to this is that Cuba has two domestic currency circulating on the island, one which is convertible to U.S. dollars, one which is not. So the national peso, the one that is not convertible, is the one that most Cubans are paid their wages in. So the two thirds of Cubans that work directly for the government, for companies run by the government, get paid in the national currency. People who work in the touristic sector, who interact with foreigners, they get paid in the convertible currency, which is pegged at one to one to the dollar. And that’s what’s crucial to know about this. Everybody would rather get paid in the convertible currency, but most Cubans are not paid in that currency. And it introduces all these tremendous distortions on the island, especially because Cuban state run companies, they do get to exchange the national peso when they sell their products to Cubans and they get paid in the non-convertible peso, they have a special privilege, a subsidy where they can convert it into hard currency, into dollars, which means that essentially Cuban run companies have a massive subsidy, implicit subsidy from the government and all the distortions that this system causes were really becoming while they had been problematic for a while. And so ending the dual currency system is a good idea for the long term health of the Cuban economy. But the timing was absolutely terrible. It happened at a time when there are terrible shortages of goods. And now because they’re phasing out the convertible currency, everybody wants dollars, U.S. dollars. So a big part of the Cuban economy has effectively become dollar sized. And that means that the national currency, the one everybody gets paid in, is increasingly becoming worthless. I mean, inflation now is estimated to be at roughly 500 to 1000 percent. When you’re getting into estimates like that, it’s like,

S3: I’m sorry, 500 to 1000 percent. Yes, that is genuinely actual hyperinflation and not in the way that people in the U.S. are like, oh, my gosh, inflation. Yeah, that’s

S1: like Lebannon levels, right? Wow.

S3: Yeah, it is one of my questions for you, given the kind of the complexity and the nuance of what you’re describing is what is the most annoying, frustrating misinterpretation of what’s happening in Cuba? They are seeing right now

S2: probably that what’s happening now has a lot to do with the U.S. embargo. It really doesn’t. The U.S. embargo is something that actual Cubans on the ground are definitely against. And in the U.S., it becomes kind of part of this political football where every time something happens inside of Cuba, American politicians start debating the embargo. But what the actual Cubans are protesting here is the basic and kind of long standing incompetence of the Cuban government itself. And they’ll tell you that all of the protests have been about the Cuban government. And in the U.S., there’s been a kind of there’s been a kind of back and forth between the usual politicians about whether we should continue with the embargo and the embargo, make the restrictions tighter. I think there’s been a sort of absence of just basic listening from US politicians, and this becomes a part of political football in the US. And I think that’s just been incredibly annoying to somebody who follows Cuba.

S1: If the politicians were listening to the Cubans rather than wanting to just score domestic political points, what would they do? I mean, obviously, Cuba is 90 miles from the United States as well. Within the American sphere of influence. America could presumably do quite a lot here.

S2: Yeah. So there’s, I think, an obvious answer. And then there’s one that I’m not too sure of. I think the obvious answer is that you have a sort of a health care and a humanitarian catastrophe in Cuba. So one thing the U.S. could do would just be to allow private aid channels to reach the island foodstuffs, basic household goods to alleviate some of the shortages. Right now, those things are restricted by the embargo would be quite simple for the Biden administration to allow some of those goods to reach Cuba. That’s one. The second thing and this one I’m less sure of. There have been a lot of calls for the U.S. to provide Internet access somehow to Cuba, to the island. So the Internet is shut off in Cuba right now. There are some workarounds that Cubans have used. And I’m sort of out of my depth on the tech side of this. Should the US make it easier for Cubans to access the Internet? This might. I have some weird, like sovereignty trampling effects that I’m not really sure of. So this sort of gets into the realm of geopolitics, I’m not certain. But those two things and maybe in the long run, allowing more travel to the island, making it easier to travel there, as Obama did and which was overturned by Trump and which would provide Cubans with more direct access to U.S. dollars and which would also help alleviate the hyper inflation problem there and also be a source of commerce and activity.

S3: A thousand things I can’t get over it, huh? Felix. Where else is there inflation?

S1: Is this a Segway to Goldman Sachs bonuses?

S3: These things are obviously comparable. Felix, I

S1: feel like, yeah, there’s a thousand percent inflation in Cuba and there’s a hundred thousand dollars a year for first year Goldman Sachs associates like six of one half of those. And that one of the fascinating parts of this story is if you work as an investment banking analyst, as a first you investment banking analyst, you get one hundred and fifty thousand. Is that right? If you’re just like what? There were two different scales. One was 110 and the other was a hundred and fifty. And I couldn’t work out which is which were why they were different.

S2: Yeah. So that the analysts are making first year. Analysts are making one hundred and ten second your analysts are making one twenty five first year associates, which is what you do after you’re an analyst.

S1: They’re making a first year associate is not the first year they’re

S3: actually every year analyst.

S2: OK, yeah, it’s you get promoted basically or you get hired out of business.

S3: OK, but did investment banking suddenly become a harder. What is driving the salary increase? Is this part of the, you know, the greats resignation?

S1: And just to be clear about this, like Goldman is a laggard here, right? There are other banks which are playing significantly more than.

S2: I think Goldman is doing this in part to catch up, right, that they had been a laggard, but they were also the ones getting the high profile complaints from the junior analysts who were saying, oh, my God, we’re working ninety five hours a week. We feel like we’re being I don’t know what words exactly they used, but they felt like they were being exploited by their managers or whatever. And they put together this PowerPoint, which they somehow found time to do and said, hey, we’ve got we’ve got to do something about this. This isn’t sustainable. Help us out. And amusingly, the response has been to throw more money at them instead of to actually do something about the lifestyle issues. I think part of it those got to be a labor shortage story, right? They’re afraid that these guys are going to go work somewhere else. And so and so they’re raising salaries. That’s what’s hap that’s what happens when people get other options.

S1: But there’s also this idea, which is a very Wall Street idea. But that doesn’t make it obviously false. The way you make it up to someone for making their life absolutely miserable and working them too hard is by paying them lots of money.

S2: Yeah, that’s right. I mean, that is that is the sort of implicit arrangement. I don’t think it’s a surprise to any of these young analysts that they go in there and they’re working a lot. I think they’re experiencing it and knowing that it’s coming or probably two different things. What’s interesting to me about this is that if you actually take these analysts at their word, OK, and they are working 90 something hours a week and they’re getting paid even at one hundred ten thousand dollars, that’s actually in hourly terms, it’s a little bit below average. This is by the way, I’m frontrunning. My numbers around here, I’ll give you the exact number. But it’s like below the average wage in the US economy, according to the Bureau of Labor Statistics. So you are trading something quite valuable, which is your time for the money you’re getting. I would also say this. I think a lot of people who go into investment banking for the salary and affords them the chance to live in an expensive city like New York have a sense that they’ll do this for a few years. And if they don’t like it, they’ll go do something else. But I had one of these jobs a long time ago, and all I can say is that the majority of the people who entered into my class putting this in air quotes into my class at JPMorgan are actually still in finance. It gets really hard to get off that ladder once you’re on it, because, of course, the pay keeps going up and up. And spending all that time doing investment banking work doesn’t leave you with any time to develop any other skills. And so you end up staying in finance, I think, longer than you might expect. So taking one of these jobs, no problem, if that’s what you definitely want to do. But you should know that you might be sealing your professional fate more than more than you realize.

S1: Yeah, there’s definitely this idea that people have in the back of the head, like, oh, yeah, I’ll just do this for a couple of years and save up some money and then do something else. And it’s possible to do that. But it’s much less common than you might think. What’s more common is doing that for a few years. And then the big dream, and this is what Sudip INJ wrote in the 50s when he looked back at his class, I think it was he with Merrill Lynch. That’s what it was, was like a huge number of his guys had done that leap to the buy side. And the buy side is the promised land, because the buy side, which is not the banks of the sell side, that the people who sell the securities, the buyside is the investors, the hedge funds, the private equity companies, the mutual funds. And they’re considered to be like the private firm because they pay just as well, if not more. But the pressures and the hours don’t seem to be nearly as great.

S3: I’m sure that that is not necessarily Ishmael for being like pro buyside working hours, because they might be doing like 60 or 80 hours a week. Unclear.

S1: Just don’t work for Tiger Global. Those guys work like crazy hours.

S3: I mean, I remember I think it was back in March of this year when one of the like the internal Goldman positions went kind of relatively viral, at least on finance Twitter. And the bank came back at the time and said, OK, we’ll give you your Saturdays back. And it was like, OK, great concessions, weekends. But one of the if I remember correctly, one of the things that the investment bankers involved were saying was that there had been so much deal flow from spox. That was one of the reasons that they were having to work so much. And I just I, I Molli just obsessed with the fact that stocks are like stalking every single element of the financial system, including how many hours junior investment bankers.

S1: And it’s not just junior investment bankers, it’s actually senior investment bankers and senior lawyers and the employers ecosystem’s like you have you have like senior partners at law firms who used to do nothing but just take people out for lunch and bringing business and now actually having to, like, get their pens out and start mucking up red lines because everyone is working, because there’s just so much work right now.

S2: Yeah. The other thing to. Think about here every time these first year analyst salaries go up is whether or not we really want a lot of really smart young people who could be otherwise doing different things to do this. This is a tougher question. You guys might have some thoughts on this. I have a feeling that finance, like heavily self, selects for people who tend to be fairly risk averse when they’re young. Anyways, this is a huge salary. It’s a guaranteed path to remaining, quote unquote, respectable in the eyes of your family when you tell people, oh, I have an investment banking job and it sounds great. A lot of these people graduated from the kind of schools that perpetuate that kind of thinking. Could they be doing something else with their time and applying themselves to a different industry? I don’t know the answer to that question. I’m not sort of instinctively to anti finance, but I think that’s something that that we always have to think about. When these salaries spike up like that, there’s

S1: the opportunity cost of a bunch of smart people entering what Adair Turner calls socially useless activities, which definitely includes investment banking.

S2: And, oh, the emails are going to be delightful.

S1: And the idea is that these are the best and the brightest and the human potential could and should be put to better use elsewhere. I think what we’ve seen is a couple of things. Number one is that there’s much less movement into Wall Street than they used to be in the hot jobs wall in Silicon Valley now and a little bit more, maybe just a tiny bit more entrepreneurial, like I think to your point, cut. If those risk averse people, they’re going to be trying to get jobs like Google or Facebook, they’re not necessarily going to be like trying to start something up at Y Combinator. But, yeah, we’re seeing a move to actual businesses rather than just intermediaries and banks. So that’s one thing. But the other thing is the financial journalism is one of those places where burned out investment banker types do tend to wind up, especially inside. And and I’m sure we can all think of a lot of our colleagues and people that we know in the industry who are like, oh, yeah, I used to work at Lehman Brothers. I used to work with Merrill Lynch, Goldman Sachs, Morgan Stanley and. We also, because we’re financial journalists, we deal with bankers all the time and we deal with journalists all the time, and I’m just going to come out and say that. While there are definitely recondite bits of financial knowledge that you pick up as a banker that are very useful as a journalist in terms of just sheer raw abilities, skill and intelligence, I’m not going to say the bank is better than the people who just came in through any other route. I mean, Stacy, you are the best journalist in the world. Are you in that from an investment banking intern?

S3: I was absolutely not invested back into an even though I did go to one of the schools that Cardiff described where those folks were constantly recruiting. But I had a realization that was very helpful, which is I don’t love spreadsheets enough to to have that be my life forever.

S2: I just think there’s a trade off here that people don’t recognize, which is that if you spend two or three years working 95 hours a week, you’re not developing any other skill sets on the side that could make a transition into some other line of work a lot easier. And so you kind of end up in a situation where you really are about to have to start over in some much lower paying profession, except now you’re doing it later on in your 20s. And the comparison point is no longer the entry level salary at Goldman Sachs of one hundred and ten thousand versus some new profession. It’s what you would still be making at Goldman Sachs a few years in which is considerably more than that. And it just it makes it hard just from a strictly financial incentive point of view. But Felix, I agree with you

S1: on a treadmill, right? Like once you get used to that quarter million dollar salary, it’s really hard to go back to something normal.

S3: I remember after the financial crisis, there are all these stories about investment bankers whose backs and jobs didn’t exist any more. They’ll look, I’m going to become a juice entrepreneur. There were like there was like a lot of smoothie carts that got started in whatever your last golden handcuff payment was before your company filed for bankruptcy.

S1: The one thing that does happen if you’re a senior banker who retires and at that point you have like a nice 10 or 11 digit fortune or whatever, and then you become an investor and then you’re like, oh, yeah, I’ve invested in this and I’ve invested in that. And then you never actually need to work for someone again. If you haven’t got so much money that you never need to work for someone again, then you are going to have to take a big pay cut and it is going to feel like a step down in terms of your freedom, even if like on one level you’re like, well, I get to spend my money now. It’s great. But on the other hand, like what? Money in my spending? Because I don’t actually want to move into a smaller apartment.

S2: Yeah, yeah. Also, even if you get to the point where you are, where you are so rich that you basically never have to work for anybody, you can become an investor. And that’s great. That’s a great lifestyle. I’m not knocking that at all, I swear. But if you had dreams one day of doing something totally different, if you had dreams of being a scientist, if you had dreams of being an actor or whatever, those jobs aren’t jobs that you just slide into. And now you’ve been in finance for 10 to 15 years and you need to spend another, I don’t know, ten to 15 years becoming an expert at those other professions before you’re going to be at the place where you have the career that you want. I mean, I spent after I left JPMorgan, it took me, I think, five or six years before I was making again what I was making as a first year analyst. And the salaries were lower back then, even adjusted for inflation. It took me more than a decade in journalism before I was making what I was making as a third year analyst. So it’s a different kind of proposition to leave a job like that later on than it is to just start down the path that you hope to be starting down initially. And that’s the only point that I like to make about this, that there are trade offs and there’s significantly starker than you might realize before you take a job like that.

S1: Yeah, the opportunity cost of leaving your investment banking job just gets bigger and bigger. The longer you stay that you’re holding onto that balloon and the longer you stay, the further the drop when you let go.

S3: Cardiff, we’ve talked about this, right? If I were to ever have the irresponsible fantasy of starting over and something that would probably ruin me financially, it would be a bookstore. And my whole thing is like long live independent bookstores. They’re so charming, they’re fiscally ruinous a lot of the time because of the expense associated with actually running one of these things relative to the average person’s book buying habits. The two of us excepted, I think we both prop up the various and we are

S2: already fiscally ruined by

S3: our buying habits. But one of the stories that I have been following that I find so interesting is kind of the comeback of Barnes and Noble and your proposition especially that they’re actually the good guy in the book markets, which I have thoughts about. But I want to know why you think that that’s true.

S1: I love this story so much because Barnes and Noble, for those listeners who haven’t been following the financial press, used to be the big, bad, like dominant chain store in the United States and then was eaten alive by Amazon. It used to be owned and run basically by this larger than life character named Len Riggio. But at some point he just gave up on it and sold it to Sleep Money, his favorite hedge fund, Elliott Associates, which is famous for being like the vulture fund that brought Argentina to its knees in Peru, to its knees and generally being sort of completely heartless and ruthless. So now that it is owned by a heartless and ruthless hedge fund, what the heartless and ruthless hedge fund goes and does is they install like the friendly face of bookselling from the OCC as the new head of Barnes and Noble and Cardiff. Who is this and how is it going?

S2: Yeah, so his name is James d’Hondt and I love the specific decisions he’s made with Barnes and Noble. But it’s important to note that, like, he took over and then a pandemic hit. So I wouldn’t say it’s going great. Right.

S1: But that’s good for bookstores, right, in general?

S2: Well, I think the Barnes and Noble specific strategy of trying to make the retail experience a lot more beautiful, a lot more pleasant, I think was at least delayed because the bookstores themselves, the physical locations were closed for so long. I think a lot of them have reopened now. The one in my neighborhood certainly has reopened, but it does signal a big change of strategy. You know, in the two thousands, Barnes and Noble went through something like five CEOs in like six years. Right. And now what he’s done is he said, OK, we’re not going to try to compete on Amazon’s turf anymore. We’re not going to try to compete with Amazon on selling books online. That’s obviously still a part of what they do. But it’s not what his strategy is all about. His strategy is all about making the in-person shopping experience much more pleasant than it used to be. So there’s design tricks that he’s using. But what he’s done that’s most interesting to me is that he has devolved power to the local managers who run Barnes and Noble outlets. So essentially trying to mimic the independent bookstore approach. But with these really large retail outlets, which have the enormous selections and the really kind of quiet, huge aisles that are just lovely to browse at and which I enjoy doing quite a bit, which is why I think Stacy and I are at odds about this. She loves independent bookstores and I got no shade for them. Right. Like they should be part of the independent landscape. Listen, some people prefer limited selection and crowded aisles. And, you know, listen, MFA grads need a place to work. I get it right. They need a place to yell at you because you’re not reading the right philosopher. Don’t send me hate mail. It’s fine, but they’re different.

S1: before we adjudicate this like independence versus Chanes debate, which is interesting, we should note that this check comes from Dawn Burk’s, which was like he started with one beautiful bookstore in North London, which is literally the most Instagram friendly bookstore in the world. Everyone loves the, you know, the two tier bookstore with this great sort of atrium situation, Edwardian space mean he then expanded that to what I think like seven or something like that. And then he took over Waterstones, which is like basically the English equivalent of Barnes and Noble, this massive national chain, and did exactly what you said. That was the strategy. He was like, let the friendly local English people in their local towns sell the books that the local English people want to read. And he’s basically just taken that playbook, imported it into the United States and my weekly held opinion. But this is definitely where I stand on this. It doesn’t support the you can’t do to Barnes and Noble what you did to Waterstones that like

S2: these

S1: shopping mall locations and this like green and beige color scheme and just like the general mindset of the entire workforce and the demographics of the people. Going in and the feeling of what’s local in Kansas City is going to be different from what’s local in Topeka or whatever, like none of that reads across and the like, it’s going to be very hard for him to do a Waterstones in the United States by trying to effectively bring. Stacey, would you agree just a few of the Indic here of independent bookstores into the chain?

S3: I was very prepared because I have a very specific perspective on this fight, but I was very prepared to not see that strategy working. And the covers I’ve been reading and certainly in the book Literarian book, Twitter groups that I pay close attention to, one thing that those local store managers have said is the ability to influence by, say, like we have a book, we have an author coming to town, and so we’re going to structure around. This has helped them drive book sales, perhaps at the margin to folks in those neighborhoods. But what I don’t know, Felix your point is how has that scaled across the entirety of this very complex brand that I do agree has a retail presence that is very different in terms of where those stores are concentrated than was true for Waterstones?

S2: Yeah, and I to be clear, I think they’re definitely sailing into the wind as well. I don’t know if it’s going to work. Margins in bookselling have always been quite bad. I think a lot of the reason for the resurgence in independent bookstores in the last few years has been because at least they have these like closer community ties. I think there’s probably an innovation story in there somewhere as well that I haven’t quite pinpoint. I agree. But this is. But this is difficult. Yeah.

S1: What’s your opinion, Stacy, of Book Shop Dog and the way that the independent stores are trying to sort of become a collective.

S3: So when I first found out about Bookshop Dog, I was like, I don’t understand how this works. But two things happened. One was one was the pandemic and two was all of this reporting on Amazon and worker conditions, et cetera, et cetera. And what bookshop dot org proposition is fundamentally that if you buy through us, we will not be the big bad, we will be the big good and we will funnel some percentage of the sales that we make on these books back to local bookshops. And they actually

S1: originate with the local shop.

S3: Right. So it’s like the bookshop isn’t getting 100 percent of the sale, but they’re also less responsible for some of the logistics and transactions and other things because and as much as I love my Indie’s, their websites are not as good as, say, that a bookshop or

S1: often non-existent or good luck if you can just find opening hours

S3: and bookstore dot org. Digg does a lot of interesting things that are explicitly in support of those bookstores. So if you you know, when you enter your zip code, they’ll say like, hey, the bookstore is closest to you. Are these if you wanted to kind of go in and have that retail experience? And I have absolutely seen a big shift in people like when they’re promoting their books, etc.. It used to be like the Amazon link was always first, you know, in the press release from the you know, from the publisher, etc.. But like you, I’ve seen way more bookshop presents in recent times.

S1: I think that one of the things that we’ve seen in media is a willingness to pay more, you know, five dollars a month for a sub stack when you’re getting like even when you don’t open just because you want to, like, support that person and that kind of like you, you serve of discretionary income to support the kind of things that you think ought to be supported. So whether that’s like independent journalists with a sub stack, whether that’s local independent bookstores or whether that’s your local farmer’s market or something like that, there’s definitely been a move to saying I think it’s a good thing if you have a little bit of spare money to spend taxpayer money in this kind of place rather than the bigger, cheaper place. And that has really driven a lot of the resurgence of independent bookstores. And one hundred percent does not apply to Barnes Noble. No one thinks of Barnes and Noble as like a place they should be supporting, whereas and I think this is important, I think people really do kind of like their local Waterstones and they feel like it is actually something worth reporting.

S3: I wouldn’t say that’s true of all Waterstones, is there not? No. So not only distributed in the Fed like that

S1: big one on Picadilly is a lovely. Well, that

S3: one’s a great. I agree.

S2: I mean, look, sample size of one, but I love my local.

S3: Barnes determined that he has sent me photos of him at Barnes Noble.

S1: Is that the one with the windowless basement where I did the event with Cathy O’Neil that time? I know. And that was that felt then I think.

S3: maybe it’s our family. No one, like, definitely go into a space. Well, actually, Felix to that point about author events, one of the interesting innovations of the pandemic has been the rise of the virtual author event. And suddenly I think I have encountered in the wild more friends who have attended some kind of book thing that has ever been true has. Because you no longer have to rely on your local bookshop ever remembering to tell you that a thing is happening and a lot of bookshops have been very clever about this, where they will bundle, they will like you can get a ticket and the ticket will come with like a book and the cost of entry to this thing. And then you’re in the system and they’re marketing to you. And so I do think that in as much as the retail experience hasn’t been helped by people’s either inability or aversion to browsing and store that taking advantage of everybody on Zoome, all book tours went virtual. Let’s figure out how to sell some books and create that community affinity in an interesting way. It has been cool to see.

S2: Yeah, and that is definitely something, by the way, that’s hard to replicate at a Barnes and Noble. Right. But one reason to sort of root for them besides just because I like them is that competitive landscape. It’s great that independent bookstores are doing better. I mean, I joke around about them, but I’m really happy that there’s this kind of different new ish kind of way of approaching book sales. That’s an offset to Amazon. But in between independent bookstores and Amazon, there really is just Barnes & Noble. I mean, Amazon doesn’t have much of a retail presence at all, independent bookstores or a very specific kind of experience. And with Barnes & Noble, sort of the only national retail outlet left that just has this enormous offering in each of their stores, I think for basic competition is good reasons and basic. It makes kind of happy reasons. It’s a good idea to root for them because they are no longer the bad guy and because they’re trying to be more like the good guys than they used to be,

S1: even if they’re owned by Elliotts

S3: Associates, even if they’re owned by.

S1: Cut if you teased your number earlier. So what is it I need to know?

S2: So for the numbers round, I brought a whole calculation, but it’s a simple one, so don’t worry. Goldman Sachs has said it’s going to pay its analysts one hundred and ten thousand dollars a year. Goldman Sachs analysts say they work about 95 hours a year, a week, a week. Excuse me. I would be great, right? Yeah, I write it down to 90 in case they were exaggerating a little bit and then I assumed forty eight weeks of the year. So they actually took some holidays and national holidays and things like that. Well, if you do the calculation, that comes out to about twenty five dollars an hour. All right. And what’s interesting about this is that one hundred and ten thousand dollars a year is roughly twice the average wage in the U.S., according to the Bureau of Labor Statistics. But twenty five dollars an hour is actually less than the average wage. And it’s roughly in line with what dancers and choreographers make. Motor boat operators, construction workers, if you want, like a sort of point of comparison there. So just keep in mind that, yes, you’re getting paid a lot of money and you’re setting yourself up for a lifetime of getting paid a lot of money. But in those early youthful years, you are trading away something for it.

S1: So it’s the kind of math it reminds me of when I became the finance Blogger at Condé Nast Portfolio. And I did some back of the envelope math and worked out what my per word rate was. I’m pretty sure it’s the lowest that Condé Nast has ever paid for words in its entire existence, going back to like the thirties, very

S3: prolific finance Blogger as two people who were competing with you, I can say confidently that you wrote a whole bunch.

S1: Stacey, what’s your number this week?

S3: My number is eight point two percent. That is the unemployment rate for black Americans, which is the lowest since last March, and decline from nine point two percent in June. The problem is a lot of that participation came from black American workers just straight up leaving the workforce. And there’s a kind of a similar trend in Latino woman for

S1: the workforce went up, I thought, in the household survey, the workforce went up.

S3: Well, the numbers that came out this morning,

S1: we were recording this on Friday.

S3: We’re recording this on Friday for the numbers that came out on Friday morning. There was a workforce decline specific to black people and Latina woman over the age of 20.

S1: There was some astonishing declines in unemployment. The overall unemployment rate went down from five point nine to five point four, which is a huge drop. The drop for graduates went down from five point eight to five point oh, which is an even bigger drop. So, yeah, we’re getting back to, dare I say, full employment, but still at five point seven million fewer jobs than we had three pandemics. So it’s a weird jobs situation right now. I think I want to throw in a fun one for my number one point seven billion dollars. So you’re going to like Stacey knows what this one incident done. If they see one,

S2: I’m on the edge of my seat.

S3: Now, you please give our listeners the pleasure.

S1: One point seven billion dollars is the official or Forbes magazine, which is the closest we can come to official net worth of Reanna

S3: Bagian, superstar, philanthropist, genius.

S1: Wow. You can quibble about her philanthropy, but you can’t quibble about her success in the cosmetics industry, which is just like the vast majority of that. One point seven billion is

S3: money that I spent on moisturizer from

S2: and not on her music.

S3: Well, she hasn’t dropped an album in a while. It’s been five

S1: years. It’s literally been five years since her last album. She’s been far too busy being an entrepreneur and starting up fashion lines.

S2: That sounds great. I had no idea she was worth one point seven billion or that she had a fashion line.

S3: But that’s fantastic. This is an example of her branding genius. Amazon is one of the exclusive sponsors of her like fashion show. And it was a stake in the ground in the post Victoria’s Secret angel model for how to do lingerie shows for anybody who is mysteriously into watching lingerie shows on Amazon. It’s a good it’s a good tip, a savage line.

S1: Her lingerie line is not as successful as cosmetics, but it still adds. What was it like to three hundred million to her net worth? It’s it’s up there. Nothing to sneeze at more than her music earnings for sure.

S3: Three reasons. Please do not come for us like we’re not here.

S1: I’m personally just supporting her by streaming her music full of

S3: many of her, many of our own.

S1: OK, I think that’s it for us this week. Thanks so much for listening to Slate Money. Thanks to Jessamine Molli for producing. But most of all, Cardiff Garcia, thanks for coming on the show. It’s awesome to have you.

S2: This was super fun. I think this show, by the way, should be labeled. The bloggers inevitably become. Podcasters save money because we all came up in the blogosphere, right

S3: to fair point,

S1: so we are going to have a slate plus on the Fed chair, which is Jerome Powell, and will remain Jerome Powell. But according to certain people, maybe shouldn’t. We’re going to talk about whether it could or should be Lael Brainard instead. That’s coming up on Slate Plus. But otherwise, we will be back on Tuesday with the final slate. Money goes to the movies with Taffy Rotifer Agnete talking about sense and sensibility. It’s going to be an awesome one. That’s also a really crap movie, which I won’t even mention, which we also talk about. And then after that, next Saturday, even more money. OK, cut, if we have this amazing situation right now at the Federal Reserve, where we have a Republican Fed chair who is super, super dovish, which makes life incredibly easy for President Biden, who can just say, well, this is Trump’s Fed chair. This is a Republican, I believe, in an independent central bank. We have an overwhelming majority of Republicans at the Fed. They want to keep rates low. I’m not going to complain and no one can come at him politically for low rates. Would he have any reason to change that?

S2: Look, I mean, the one reason that’s been given by other people on the left is that, Jerome, how the current Fed chair has been a little bit softer on financial regulation than some folks on the left would prefer. I mean, the Fed overwhelmingly most important responsibility is managing the macroeconomic cycle. Right. And on that, they’re mostly in lockstep with Jerome Powell, as you just mentioned. But it is the case that there’s another candidate who’s also pretty dovish, like Jerome Powell, who’s a current Fed governor. Her name’s Lael Brainard, and she has been tougher on financial reform. So there is a thinking on the left that, well, maybe she would be a better representative of our views. And also, by the way, we’re in power. We won the election. We get to name our person as Fed chair, and we need to stop just sailing through the people who are appointed by our political opponents in a prior in a prior tenure. Right. So that’s roughly what the debate looks like. And so the question is, is that correct or are they underestimating what you said, which is that Jay Powell has the political cover to keep pushing towards a situation of full employment in the US economy towards which she’s really quite evolved away from worrying as much about inflation, which is the other big thing the Fed worries about and towards a very inclusive understanding of full employment. So those are essentially the contours of the debate right now.

S1: Stacey, you’re plugged in to leftist icon Twitter. Do you know anyone who actually who actually thinks the power should be fired and replaced by Lael Brainard?

S3: No, I mean, I really think that some of the more interesting thinking I’ve seen is how do you enable? Because, as Carter says, like regulating large financial firms is not the primary mandate of the Fed. We are absolutely seeing under the Biden administration not just a willingness, but an eagerness to, in some cases, restore regulatory protections or you just regulations that were either kind of dismantled or undone under the Trump administration and in other cases to add new ones. So outside of the Fed, like what’s an interesting role for a person with the pedigree, the resume and the political sensibilities of someone like Bernard? I haven’t seen a good answer to that question, but I think it’s a good question.

S2: Felix you land on a at a place here, too. I, like you seem to clearly be tilting in favor of Powell being

S1: I’m tilting in favor of Powell being Fed. I think I mean, what we’re seeing right now in terms of the attempt to put more krypto regulation into the infrastructure bill, because obviously this proves that actually regulation of any industry, including the financial industry, starts with Congress, not with the Fed. The Fed has an oversight role and important oversight role does the oversight role pretty well. And I guess the one of the reasons why I am not a massive fan of trying to change the Fed chair right now is I don’t actually think that the person who is Fed chair makes a huge difference there and that they can make a few appointments, maybe lower down in the Fed that will have a similar effect without affecting monetary policy nearly as much as I do. I worry the brain that is more hawkish than Powell and would raise rates more quickly. And I don’t think that would necessarily be a good idea.

S3: Would you say that Powell is historically like top three most dovish Fed chairs,

S1: possibly top one?

S2: Yeah, he’s evolved in that direction, though. I mean, that was not the six years he started very much as a sort of continuity Fed chair from his predecessor, Janet Yellen, where they thought that their role as Fed chair was to look into the future. And if it looked like the economy was heating up and if it looked like inflation might be about to take off, they would start sort of tightening monetary policy to slow the economy down a little bit. And he did raise rates in his second year as Fed chair. And it seems like it was a mistake. He is effectively admitted as much and he’s evolved towards a situation where he now thinks that monetary policy should put a much bigger emphasis on the employment situation instead of inflation with a very inclusive definition of it. By the way, he speaks all the time. About how there are historically some groups in the US economy like black and Hispanic workers, who often sort of trail behind white workers in terms of their employment situation, and he says we have to be more inclusive. So full employment doesn’t just mean that overall unemployment rate hits some point. You have to look at the whole economy, including these groups that are traditionally left behind. This is actually quite a revolutionary idea to say that monetary policy doesn’t have to slow the economy down until we’ve actually hit our goals. And it’s clear that we’ve hit our goals instead of trying to anticipate what’s going to happen in the future. This is a big deal and one that I maybe worry that people on the left are underestimating a little bit. So I also tilt in favor of reappointing Powell. Should we get specific about the financial regulatory stuff at all? I mean, there’s one thing in particular that seems to be a big deal.

S3: One thing and one thing.

S2: It’s that the Fed votes periodically on whether or not it should have banks put in place a countercyclical buffer of capital, which essentially means that during the good times when the economy is going really well, that banks should and financial institutions should fund more of their operations with equity rather than with debt. That’s the sort of that’s the TDR version of this and which makes them a little safer. Maybe banks are safe enough already. But Lael Brainard has been the one dissenting vote saying that, yes, there should be a countercyclical buffer. Powell and the other Fed governors have voted against it, and that’s one of the reasons why he’s considered to be softer on on financial reform. But I don’t know that that’s a big enough deal to overturn things. I just thought we should mention it’s in since we brought we brought up financial reform.

S1: There is a case I probably I’m in favor of countercyclical buffers, ie, in favor of banks having more equity in general. I think that’s great for all of us who have PTSD from the financial crisis will be like us. You know, we’ll say like you really can’t have too much equity in banks and especially not at the very biggest banks that Fed the biggest, most important thing that has happened to the global financial system in the past 15 years is this thing called Basel three that no one really understands. Not bad, but did a fantastic job of really shoring up capital at all of the biggest banks in the world. And in fact, basically all of the banks in the world to the point at which I became convinced that we are not going to have another financial crisis. And I remember saying this shortly before the pandemic and then the pandemic hit and everyone was like, Felix, didn’t you say we’re not going to have another crisis? I didn’t say we’re not going have another crisis. I said we’re not going to have another financial crisis. And the banks sailed the all

S3: time amazing hedge.

S1: The banks sailed through this one, like the banks were actually a source of strength in this crisis. They were not a source of fragility. And for all the it would be great for them to be even stronger. I think the one thing we really learned in March and April twenty twenty is that between the stronger bank balance sheets and the increased willingness to act from central banks and especially the Fed is we’re very close to basically having the resilience that we need. And while more would be fine, I think this is way down on my list of priorities, thanks to the domes of Basel

S3: Nome’s, if I was

S2: looking forward to the financial crisis of twenty thirty five, when somebody pulls out this podcast, it is like Leggat Felix Salmon said we’d never have another financial crisis.

S3: Yeah, yeah. That crisis will be caused by SFD.

S1: I’m thanks for listening to Slate. Plus we love you.