Audio Length: 00:56:17

Transcript:

S1: Hello and welcome to the Proxy for Vibes episode of Slate Money, Your Guide to the Business and Finance News of the Week. I’m Felix Salmon of Axios. I’m here with Emily Peck, also of Axios.

S2: Hello.

S1: And we have a very special guest this week, Elizabeth Spiers. Welcome.

S3: Thanks for having me.

S1: Introduce yourself, Elizabeth. We go way back, but who are you and what are you up to these days?

S3: I think I’ve known Felix for two decades now from from early, early blogging days, but I am mostly a political commentator. These days I write a lot of political columns, but I also co-author the Pay Dirt Column here at Slate with my co-author Athena Valentine. And we write about sort of ethics of money issues. We get a lot of letters about people who are very mad at whatever they inherited. So if you have an issue or a problem that you know you’re dealing with where you want advice from either of us, you can email slate anonymously and send us your questions and your problems and we will try to help. Well.

S1: Exciting. We have no personal finance content in this show, but maybe, maybe that can be rectified in a future episode.

S2: Can we do a call-in advice episode of Slate Money? That’d be so fun!

S1: Oh, my God. That sounds terrifying.

S3: I feel like Paydirt is less, you know, what should I do with my 401K than a financial version of Am I the asshole? Because the letters are generally about bad behavior around money.

S1: We might just do that. We might. We might start talking about financial bad behavior, although we do that quite a bit. This week’s episode is all about the Fed, which raised rates this week and what the government, including the Fed, can do to reassure Americans that inflation is not something to worry about. We’re going to talk about the dollar and how strong it is globally and whether that might not be around forever. We’re going to talk about Citigroup and other companies that are providing basic health care availability to the employees in Texas, which means they need to get on planes sometimes, given the law in Texas. It’s a packed show and it’s all coming up on Slate Money. [ad break]

Okay. Elizabeth, big news of the week. We had a Fed hike this week. I can’t remember the last time we had a Fed hike. Everyone keeps on trying to remind me that there were like a few abortive Fed hikes in between the financial crisis and the COVID crisis. But I can barely remember those. They seemed like not a big deal at the time, although apparently people cared about them. This one feels like the beginning of a major tightening cycle. What do you think? Is this a big deal or is this just the Fed being behind the curve now?

S3: I think it’s a big deal. I mean, I think it for one thing, it sets expectations about what’s going to happen with inflation. And that’s been, I think, doubly important post-Bernanke for the Fed to really articulate what they believe is going to happen. So even if you don’t believe that pushing that lever really throttles back inflation in a direct way, there are indirect effects that I think are super important.

S1: So what’s the main indirect effect? What’s the main way that you think increasing interest rates is going to affect inflation?

S3: Well, among other things, it, I think, settles a little bit of the consumer discomfort with the level of inflation that we have now, just by signaling that the Fed is willing to do something. You know, and Powell so far has been very, you know, reluctant to act for historical policy reasons. And I think there’s been a lot of impatience from consumers that, you know, nobody’s there’s a perception that nobody’s really doing anything. He’s not really deviating from what you would expect the Fed to do in a situation like this.

S1: This is, I think, really, really fascinating. I remember writing a while back that for the first time ever, we had a president who wanted the Fed to be more hawkish. And I think what you’re saying is that we, for the first time ever, we have a populace who wants the Fed to be more hawkish. It is generally assumed that the job of the Fed is to, you know, take away the punchbowl just as the party is getting started. And what the people at the party want is more punch and what the Fed says is no more punch for you. Whereas what seems to have been happening is that the party has been going on a long time. The Fed has been like here, have more punch and the people are like, Yeah, no, please take the punchbowl away. We don’t want any more punch. And I can’t remember that at all. I think you’re absolutely right that part of people being worried about inflation was actually people being worried that the Fed was just asleep. And now that the Fed has proved that it’s not asleep, people might be less worried about inflation. And as we all know, being worried about inflation is actually half of the problem here, like beyond actual backward looking inflation.

S3: Yeah. And I think this is exacerbated a little bit by the fact that the administration doesn’t really know how to message around inflation because people don’t fully understand why it happens. I mean, the average consumer doesn’t understand why it happens. And so, you know, they see things that are not central or not part of core CPI going up. And, you know, there’s not any sophisticated analysis happening in the consumer mind. They’re not thinking, okay, well, maybe these goods are price volatile. They’re just going to the gas pump and freaking out because gas is more expensive and the administration can’t directly ... they’re having trouble really articulating to the electorate that the economy is actually doing incredibly well on most fronts because the only thing that people see right in front of their faces is prices going up in categories that they care about and are affected directly by.

S1: Emily You had a great piece in Axios Markets this week about American’s optimism/pessimism about the economy. Consumer sentiment seems to be insanely low for an economy where we have basically full employment, where we have running on all cylinders, you know, hot economy. Do you understand this? Is it just inflation? Is there any other reason why people would be so pessimistic about the state of the economy?

S2: I think people use the state of the economy as a proxy for vibes, basically.

S1: Is there a vibe shift?

S2: Yes. I mean, people aren’t happy now in the United States and that surprises sort of economy wonks because everyone’s like, but but unemployment’s like really low and it’s easy to get a job and wages are going up. How could people be bummed out? But we’re in, you know, year two, year three now, actually, of a pandemic. The threat of World War Three looms. Schools have been weird this whole time. People wear masks, don’t wear masks. It’s confusing to just, like, be alive, and then prices are going up. So I think it’s not surprising, even though the economy is by all. Kind of doing pretty well. Even if you look at inflation, people still have a lot of money in the bank, most people, not the very poorest, of course.

S1: So here’s the question. Right. Compare how people think now to how people thought a year ago. A year ago, unemployment was higher. The pandemic was much worse. A lot of people weren’t vaccinated. We had many more mask mandates and we felt much more constrained. I would imagine that even if things are still bad on a pandemic level and even if there is a war in Europe, objectively it looks like we are in a better place than we were a year ago. Why is consumer sentiment so much worse than it was a year ago?

S3: You know, I wonder if the overall stressors have a kind of cumulative effect where people are so burned out from the pandemic, even if things are getting better. Objectively, they don’t feel that way. And then you pile on top of that, you know, war in Ukraine, and it has a sort of pile on effect where people’s overall satisfaction levels are just going to be lower anyway.

S2: I wrote about a Gallup survey Friday in  Axios Markets, and Gallup asked people like every once in a while, starting in 2010, do you think your employer cares about your well-being? And like now, most people don’t think their employer cares about their well-being. It’s like 25%, one less than one in four, and that’s always how it was. Then, weirdly, in the pandemic, the polling changed and it was like almost half of people said that they think their employer cares about their well-being because I don’t know. People’s bosses were emailing all the time. They were shutting down offices because they cared if you would get sick. At least some people were, not if you worked in like a meatpacking plant, obviously. And so there was this weird blip where everyone kind of, I don’t know, pulled together a little bit or felt the sacrifice and teamed up. But now, in whatever it is, 2022, the number is back to where it was, where everyone is cognizant that their employer doesn’t care about their well-being. Again, I just feel like everyone’s back to being bummed out.

S3: Do you think that has anything to do, though, with we’re getting to the point where people are mandating that employees come back to the office. Now, maybe you felt more benevolent toward your employer when you posted distance from them. Now, the U.S. can deal with them in person. Your satisfaction goes back down.

S2: Yeah, that would definitely, I would assume, play some role in it, although I don’t know most people. I don’t know. I just think people are returning to their state of bummer and things are still weird and bad. And so that’s part of the economic the perception of the economy.

S1: I like this concept of war time. I wrote a few articles very early on in the pandemic, like March 2020 about how. The world was basically going on a war footing, that the effects that you saw on markets, the importance of government response, all of these things were were very similar. There were very strong similarities to what happened during wartime. The war isn’t over and I think people are very unhappy about that. The people who want it to be over and like the COVID skeptics and the Anti-Maskers, they’re all like, Why is this war still going on? And they're upset that they can’t unilaterally declare it to be over. The people who are much more cautious and afraid about going out, the immunocompromised, you know, they’re highly cognizant of the fact that the war isn’t over. And now we have an actual war, you know, and a real war with Russia of all of all countries, which is a, you know, the one country that really looms in the American imagination as the enemy in this kind of atavistic idea that we have of like the good guys and the bad guys. The Russians are the bad guys. Right? And so we are now on some level at war with Russia in a very like real shooting war and the way that we haven’t been basically kind of ever in a weird way, and that feels unsettling as well. And then on top of that, you have inflation, which. Again, like one of the reasons why people don’t like war is because it causes all manner of shortages. You can’t get you know, you get rationing, you get you can’t buy food, you know, this kind of stuff. And inflation is a sort of diluted version of that as well. Right. It creates these weird wartime like shortages and price hikes that it becomes difficult to buy the things you’re used to buying, especially the price volatile stuff, you know, the food and energy stuff, which is what you need to live on is what you need to get around. It’s it’s very important parts of the consumer spending landscape. And then on top of that, there’s been a whole bunch of reporting about what’s happening to rents. And I have relatively little sympathy with people complaining about how expensive it is to buy a house because, you know, that’s a first world problem. But I have a lot of sympathy with people who complain about how expensive it is to rent somewhere to live, because that’s something you really do need to be able to do. We are all born with this housing short. We all need to cover it. And so all of these things are coming together. And I think, yeah, there’s this kind of weird. I don’t know how to put it. I’ve never lived through a war before, but I feel like a lot of people are very unhappy during wartime, and that’s what we’re in right now.

S3: Yeah, I think there’s there’s also an element to this conflict in that it provokes such an immediate and global response. It doesn’t feel like an isolated phenomenon to people who generally don’t follow foreign policy that closely. For some people, that’s actually a little bit heartening. It’s it’s you know, there’s a sort of unified response on the side of Ukraine. But it also sort of underscores that this is not a conflict that is is something that, you know, most Americans are putting in a box somewhere the way they have many of the international conflicts where we’ve intervened. It’s something that’s more, I think, directly in front of them every day, at least in the media and being more heavily discussed.

S2: Can we go back and just what do you guys think about whether the Fed raising rates is actually going to fix this inflation thing or not? Is it just going to make is it just going to raise unemployment? Like I saw quotes from Powell admiring Paul Volcker, who famously kept raising rates in the '70s to crush inflation and drove unemployment up to 10% and,

S1: And caused a major recession.

S2: Yeah. And Powell is quoted being, like, admiring of this man. And I just I’m like, well, I don’t I’d rather pay more money for eggs than lose my job. Or wouldn’t most people? like I just I don’t get it.

S1: Yeah, I think in general, Can we like please stop with the '70s comparisons like there are limits to how useful the '70s comparisons are. And I think we’ve long past exceeded those limits. There it is. It is an article of faith among central bankers that you have to say nice things about Paul Volcker. You know, he is he has this kind of weird sort of laugh today saying he did a bunch of stuff that was difficult to do. And we all applaud him.

S3: He was very tall.

S1: I don’t think that saying nice things about Tall Paul is the same as saying like, I’m willing to raise the Fed funds rate to 15%. And in fact, there’s no way he’s going to raise the Fed funds rate to 15%. That’s not going to happen. But I think Elizabeth is really right on this. The the main thing that he can do. And if you think about that, if you think about the Fed is part of the government, the thing that he’s in charge of is trying to make people not be worried about inflation. That was what Paul Volcker was in charge of do. And the way he did that was by bringing down inflation. Ultimately, inflation will come down. And we just need people to be cool with that and to be happy that inflation will come down. And some people are going to be in wait and see mode and say, I’ll believe it when I see it.  In the seventies and eighties it was so entrenched for so long, he had strong unions and a whole bunch of other stuff that really made it impossible to imagine how it would come down. And so Paul Volcker had a much harder job. I think Jay Powell has an easier job. It’s easy to see in principle how it might come down. We need the messaging from the Fed. We also need some messaging from the White House. I think Elizabeth is quite right that that’s been kind of M.I.A. But we, again, got some good news this week in terms of Biden’s nominees to the Federal Reserve Board. All of them are now going through or have dropped out. So four of them have gone through. One of them has dropped out Sarah Bloom Raskin, which was terrible for separate reasons. But now we have like a Fed board, which is going to be very close to full strength. We have Biden and Powell pulling in the same direction, you know, unlike what we had say under Trump, where we had Trump sort of fighting with Powell all the time and attacking him. So, yeah, I think Republicans are not going to be reassured because they don’t really trust Biden then they don’t really trust Powell. But I think independents and Democrats are going to, with any luck, start thinking, yeah, okay. We we have a government that’s kind of on this now.

S2: It just seems like the way to end inflation is either patience, kind of like, I guess what you’re saying. Felix Like people need to chill and be patient or it’s a recession and people aren’t patient in 2022.

S1: I don’t think a recession would end inflation. I don’t think it’s either necessary or sufficient to end inflation. I think the inflation is here for a bunch of reasons, including, you know, commodity prices, supply chain shortages, wage inflation stuff. And if you had a recession, that might reduce a certain amount of purchasing power of people who no longer had jobs. And but that’s like the demand side stuff. And most of the inflation that we’re seeing is much more coming from the supply side. And so, you know, I don’t think that just because we had a recession that would bring down inflation, I think bringing down inflation is something you actually want. Really, what you want is a bunch of companies competing with each other on price and being able to do that because supply chains are working and then a bunch of consumers being price sensitive and saying like, I’m not going to pay more. I’m going to seek out the cheapest option. Maybe a recession would include would improve the price sensitivity of Americans. But I think Americans are pretty good at being price sensitive. So they’ll jump on cheaper things if they can.

S2: And that has been the Biden administration’s policy. A lot of it has been to talk about antitrust and to talk about, you know, the meat packing industry is monopoly and kind of like push competition as the answer to inflation. But that’s a long project.

S1: And it’s harder now. Like it’s harder in the age of Amazon right there when you used to go to the shop and buy a thing and there was a price next to the thing and you’d be like, That’s the price. And then they would every so often they would raise their prices and that would be something they don’t particularly want to do is very different from the experience of going on Amazon and like whatever the price is is different from what it was 5 minutes ago and it goes up and down so much it’s much harder to see whether the trend is up or down.

S2: And it’s crazy to me. Also, I have this obsession now. This is my idea to bring down inflation worries. Okay, maybe I’ve said it before because it obsesses me, but like, if they would just take the gas prices down from the signs, people would relax because no one knows what anything costs. Like on Amazon pretty much. And there’s been reporting recently in the Times had a great piece about how they - and Felix was just literally saying -  how they change their price all the time and no one kind of notices and big price changes every day, all the time on Amazon. No one’s freaking out. That’s because it’s hard to figure out what things cost if they just took the gas prices off. The signs, people only - some people would realize how much gas costs then, you know, you wouldn’t notice it as much.

S3: There’s also a really irritating media phenomenon where, especially in broadcast news, media outlets will go and find the one gas station outside of Corona del Mar that charges $145 a gallon, whatever, the highest price in the country.

S1: Now that there is, there’s one legendary gas station in Beverly Hills where they all go to. And it’s famous. And you’re absolutely right. And can I just say, in terms of reporting on inflation and reporting on the economy, people complain about the way that the media reports about these things. This is one of the areas where there was just an absolute chasm sized gulf between print reporting and TV reporting. The TV reporting on all of this is terrible. And the print reporting on all of this is generally excellent. So you’ve moaned a couple of times, Elizabeth, I think very reasonably about the messaging, especially from the White House. So now if you if you put on your, you know, political consultant hat and you get what you get dragged into a zoom call with the White House tomorrow, and they say, how can how can we improve this? What should we be doing to reassure Americans on inflation? What would you say they should do?

S3: Well, I think they’re stuck in a kind of mode of messaging that’s several decades old, where you you put out the definitive message and expect that it’s going to be propagated through traditional media channels. And this is where, I don’t want to give Donald Trump credit for anything, but he has an intuitive sense that you have to say the same thing over and over again. You have to say it every day and you have to brag about your wins. And you also have to articulate that for for partisan reasons, that the other side is actively blocking all of the good things that you wanted to do. And that’s not a mentality that, you know, people in the Biden administration really have. You know, part of the brand that they’ve built is, you know, we’re willing to work across the aisle. We’re very interested in developing bipartisan relationships that have been destroyed over the last decade or so. But the downside of that is that it’s very it makes it very difficult for the Biden administration to really break through all the noise and convince the electorate that they’re winning on the economy. I think that without that kind of constant reiteration of what the wins are in a way that probably to most people who’ve been in politics for, you know, the lifers sounds obnoxious and braggy, and they think it’s going to turn off moderates. But the reality is that kind of messaging works because there’s so much noise if you don’t repeat the wins constantly, if you don’t take credit for them, you know, people don’t just internalize that, you know, if gas prices go down, nobody’s going to pat Biden on the back. They’re just going to think, well, that’s good. We’re back to the status quo. Here’s another thing I’ve been happy about. So they’re just not being aggressive enough, I think, because they’re still kind of in an old, older style of messaging that has probably, in their minds, a little more gravitas and more serious makes the office seem, you know, more serious. But they’re just operating in a different media environment. And I think you have to message differently.

S2: I think you’re totally right. And also, since the the war with Ukraine, they have been trying to call the inflation, Putinflation. Because of all the people.

S3: Of course. Oh, God.

S1: Oh, wow.

S2: Yeah. Because conservatives have been calling it Bidenflation. And I think that’s worked a little bit, judging by the emails I get from some readers at Axios and and see on the Internet and stuff about inflation that worked. So.

S1: Putinflation really? like Please God, no. [ad break]

So changing the subject just a little bit, if we’re going to stick with Putin for a minute here, the White House strategy when it comes to Putin has been to try and bully the bully in a certain way. Right? Or to be like to just make him out to be small and weak and predictable. And so you had Tony Blinken coming out before Putin invaded, saying, like, we know what you’re going to do, you’re going to do this on this day, you’re going to do this on this day and just kind of just needle in that way and say, like, who are you? And then when the invasion happened, there was this big international successful attempt to really cut off Russia from the from the dollar system. And the U.S. was like, we have the dollar, we control the dollar. We can cut you off. We can hurt you economically, which is a great form of warfare because it doesn’t kill people and it seems to be working. But Emily, tell me a little bit about this whole like, oh, no, now Saudi is going to accept renminbi maybe in return for oil exports, and maybe that’s bad for dollar hegemony, because I don’t I’ve seen this argument a couple of times and I have to admit, I’m not really convinced about it.

S2: Okay, I’ll try. So the U.S. and its allies in the West sanction the hell out of Russia and everyone the take was, look how powerful the dollar is. The U.S. doesn’t have to fight war with conventional weapons anymore because the dollar is so strong and the U.S. is so powerful. Can cut a country out like you just said. Then the counter to this was, oh no. The U.S. has gone too far with its dollar power and it’s going to piss off people who are at risk of being cut out of the system, such as Russia, such as China, such as Saudi. And they’re going to create a whole alternative system to the dollar. Crypto people like this argument because that’s what they’re trying to do also. And because the US has gone too far, the argument goes, the dollar is actually at a pinnacle at a high point right now and this is it. It’s going to be weakened. Then there was a story in the Wall Street Journal that basically said Saudi Arabia is talking to China about pricing oil in yuan instead of dollars, which apparently Saudi has been doing since the Nixon administration. They they cut a deal and and Saudi Arabia was like, okay, well, we’ll transact oil in dollars and you’ll give us tons of money for weapons and whatever we want. And everything was all good until, you know, 2018 comes along and the Saudis kill a journalist and dismember his body and put in a suitcase. And like that was hard to ignore, blah, blah, blah. Anyways, back to the present day now there’s talk from the Wall Street Journal that, you know, Saudi Arabia is going to start pricing the oil it sells to China in yuan, and that is going to weaken the dominance of the dollar because most of oil is sold in dollars. And so this is like the signal to the people with the countertakes that it’s happening, it’s really happening. Like the dollar is getting weaker. That’s the argument. You don’t agree? I don’t know.

S1: I mean, I clearly don’t agree. You see, I find I find this a little bit of a straw man. I have to admit, I feel like I’ve seen a hint of this argument from a couple of places, but I’ve never really found someone who actually believes this. I mean, I don’t know about you, Elizabeth. Do you do you see this as concern trolling or do you see this as like a real fear?

S3: I think it’s concern trollling. I mean, you know, it’s such a small lever to push in the overall scheme of things. It’s what you would have to do to truly in dollar hegemony is just, I think, way beyond what, you know, even China could do because you’re not just talking about the strength of the currency. You’re talking about, you know, all this infrastructure. You know, what’s the alternative to Swift clearing? Yeah. China has a program that they’re developing, but it’s not really in use.

S1: They don’t even want it to be like. Just to be very clear about this. The Chinese for decades have been very clear. They do not want the yuan to be an internationally convertible currency. If they wanted it to be, they could have done that years ago. They don’t want it to be. They kind of let the Hong Kong dollar serve that role in terms of being the currency for important export into China. But yeah, there’s no way that the yuan is going to become this thing. Like when you - when the currency goes global, a bunch of people use that currency for things - you don’t have any control over. And the Chinese panopticon just doesn’t want people to be using Yuan to pay each other in, say, the United States. If I go into my local coffee shop, they don’t want me to pay for coffee with yuan in New York. So it’s not going to be yuan. It’s what problem gets solved if it becomes the euro, because Europe was just as strong in terms of sanctions as the United States was. It's definitely not going to be Bitcoin. So, yeah,  it’s very hard to see how this is a real threat that anyone should actually be worried about.

S3: And I think, you know, China is doing a lot of signaling right now because I think they don’t want this giant global conflict, they don’t want escalation, but they also don’t want to be perceived as sitting by and letting Russia get pounded by the rest of the world. So, you know, they’re not just, as Felix said, there’s no evidence that China would want that as an outcome. But it does behoove them to let the Saudis run around suggesting that that’s what they’re going to do.

S2: It’s just interesting to think about how powerful the dollar is and there is a demand for it to be less powerful...

S1: From whom?

S2: anyone who was sort of cut out of the system. Right. They’re the ones with it.

S1: Yeah. If you think about it in terms of great power politics. You know, the United States does get a bunch of - it’s known as exorbitant privilege in the literature. It gets a lot of tailwind in terms of being able to project soft power around the world from being able to control the dollar. And one of the ways it has so much power is because it doesn’t use it to excess. And people are saying, like, now you’re using it to what could be considered excess. And like, if you if you abuse your power, then you’ll lose your power. On the other hand, though, if you have all of that power and you never use it, what’s the point of even having it in the first place? So I you know, I think they would, the United States would need to flex its dollar hegemony muscles a lot harder for a lot longer before people were like, we can’t trust the dollar based international system anymore, and we are going to have to try and invent something completely parallel and different. Because just trying to if, you know, it’s impossible to get there from here, basically, it’s so hard to imagine how that would possibly happen. And if it did happen, it would take, I don’t know, 50 years.

S3: And I think the administration is super aware of the optics of what’s happening right now. And so they whenever they’ve issued new sanctions or, you know, t consequences of any sort for Russia, they they’ve tended to let other countries go first in making the announcements to at least create the appearance that the U.S. isn’t calling the shots and everything, because I think they’re aware that everyone, the whole world is sort of watching to see how much the US, you know, flexes its muscle in this respect or they don’t.

S1: And actually, yeah, it’s very much worth noting that when it came to freezing Russian central bank reserves, which is definitely  the single strongest sanction that anyone did that was announced first by Ursula von der Leyen in Europe. And the Fed came out with a very quiet statement which kind of followed what the Europeans were doing. And I’ve been looking for this and I’ve been trying to work out where the details are. Like none of them are releasing details. I don’t think that these central bank reserves are actually frozen. And one of the fascinating things that happened this week, which I just want to sort of very briefly talk about, is that Russia paid its coupon on a bunch of dollar denominated bonds. And I’m like sitting in like what they’re like they have been completely cut off from the entire global financial system. And the reason why you pay your coupon on your external indebtedness is because you fear that if you don’t, then you might, in the worst case scenario, wind up getting cut off from the financial system. Once you’ve already suffered the punishment, why pay millions of dollars in coupon payments? It does you no good at all.

S3: It makes total sense to me.

S2: Moving dollars out of the Russian economy. It makes total sense for the U.S. to decide we’re going to clear the dollar amounts because, you know, you want to make the bondholders all, you want more dollars out of Russia. The question is why? Why is Russia agreeing to make the payments, Emily?

S1: Emilym Why is it doing this?

S3: International capital markets. They want to be part of the global economy. They don’t want to be completely cut off from everything. They’re they’re preserving their optionality. I think Russia has a central bank that’s actually, I think, recognized for being not insane and smart and reasonable. And probably they didn’t want to go to war with Ukraine, I’m betting. And they, I’m sure, want to stay embedded into the global financial system. And the fact that the U.S. allowed this to go through means, you know, they aren’t abusing the sanction power. Right. They’re leaving these little these little threads and crumbs open. They’re leaving these connections secure. It makes sense to me. It’s a, I think, a really positive sign amidst all the horror.

S2: What it also kind of signals that they believe that there there would be more severe consequences for a technical default than what they’re experiencing now. But what do you think the differences would really be?

S1: None. Literally none. The consequences of a bond default are so much milder than the consequences that they have already suffered. The only way in which they might conceivably be worse is that they might be longer lasting in the event, like if Putin changed his mind and withdrew all of his troops from Ukraine tomorrow and in as and as part of that deal, the US and Europe decided to lift all of the sanctions and say, like, everyone go back to trading with Russia again. Then some large part of the degree to which Russia is currently cut off would be reversed and Russia would start coming back into the system. If Russia was in default on its bonds, then that would make it much harder to reintroduce itself into the financial system because there would be this massive lawsuit in London and no one would everyone want be trying to seize assets. And so, yeah, maybe there maybe this is a sign that Russia is playing some kind of medium term game where they somehow expect the sanctions to be lifted. And when the sanctions are lifted, they don’t want this other thing hanging over their head. [Ad break]

Okay. Let’s talk about Citigroup’s annual report, because this is this is my favorite thing - this is one of my favorite news stories of the week, because we love to talk on this show about how CEOs are becoming politicians and they’re driving social policy and they’re reacting to state policies that they don’t like. And Citigroup came out this week and said, look, if you are a woman who works for Citigroup and you’re in Texas or some other state, that makes it hard to get an abortion, then as part of the medical care that we offer you, then we will provide transportation for you to get the medical care that you need, just like we would for any other procedure. They did not do this in some kind of Texas bashing press release. They did not do this even naming Texas, and they did not do this even using the word abortion. They just kind of buried this in the middle of their annual report and it got picked up because, you know, journalists are good at noticing these things. But this was a decision that they made very much, it seems to me, in terms of like just being sensible in terms of medical care and absolutely not in terms of trying to be what you might call like woke leadership.

S2: Yeah, absolutely. They made even though George P Bush in Texas immediately called Citi a woke company doing a PR stunt. This is the exact opposite of any of that. It was totally buried, uncovered by Bloomberg and a very reasonable response, especially compared to what happened in September when Texas effectively banned abortion and there was like a mass freak out and people were calling up all the big tech companies based in Texas, and they were like, say something, do something. And like a few companies said something, did something like Marc Benioff at Salesforce was like, We will pay you if you want to move out of Texas as if like, that’s going to be .. that’s PR, right? And then Match and Bumble both sort of like worked with advocacy advocacy groups and established funds to help, you know, women in Texas who may or may not work for them, which is nice, but like what city did is just very practical thing, which is like update its health care policy. So if you live in Texas or somewhere weird and crazy, sorry, but just true, you can travel and get the health care you need. And Apple kind of was outed for doing this too. Like, I think there was some like secret memo, not secret a memo that Apple sent out to employees that said, oh, yeah, don’t worry. Like if you live in Texas, this is already a part of our health insurance. And they finally had to confirm it this week because I guess reporters like me and other people were sort of badgering them like, what is your policy? What is the deal? And I would suspect that a lot of companies already do. This is like part of their of their care. But we just don’t we just don’t know. And yeah, no company really wants to be out there saying, like, blasting their views on this because it’s so crazy.

S3: Yeah. I don’t even think it was, you know, woke signaling or whatever. It’s there’s a lot of practical ramifications here. And and I think the fact that they, you know, buried it in a in a filing was also a function of the company not having really worked out what the overall policy is going to be. Because particularly with Texas, there are so many logistical complications there. The Texas law allows for a kind of vigilante justice through the courts where any citizen can sue the person who’s trying to get an abortion, anyone who aids them, which in theory includes Citi, if they’re paying for travel, you know, it introduces a level of liability that certainly none of these companies are accustomed to facing. You know, they’re worried about personnel loss if you’re a woman or you’re going to move to Texas to work for Citi. But I also I’m very curious about the logistics of how this would work in practice. Do you have to go to your boss and say, I need an abortion? Could I apply for the travel grant? It’s you know, it affords women to have to disclose things to their employer that they’ve never had to do.

S2: Now. So for some, from what I understand in talking to people, it’s like you wouldn’t go to your employer and be like, I need heart surgery. So I’m just letting like you could say that to your boss, but you don’t have to. You could just say, I’m having that. I need, I need a few sick days to take time off to get something done, and then it’s all handled through, you know, the insurance provider. So hopefully your boss or whoever is not going to find out what you’re doing. Just like they don’t really know what you’re doing at the doctor’s office when you go, it’s sort of akin to that because your company is already paying.

S1: I think they have decent visibility. Like, you know, at the H.R. level, they do have decent visibility on how much is being spent. On whom? For what? You know, we all remember that famous AOL meeting where, you know, with complaints about, you know, expensive babies or whatever. But, yeah, in principle, there is a mechanism here where Citi has instructed the provider of its health care, whichever insurance company that is, to basically just say, like, you know, this is a procedure that if people need it, they need to be able to get it. And if they can’t get it in their home state, they’re going to have to travel to some other state. Then that’s part of something that insurance should pay for, and they’ll just do it that way in practice. I don’t know how how easy that is.

S3: Do you think it also, just in terms of politics, gives Republicans an out to say, you know, these companies are actually fine with this policy because they’re instituting a remedy for it so that their employees don’t have to worry about it. If they are pro-choice and they need an abortion, Citi will, you know, fly them out of the state. Like, I don’t know if that’s really a good argument, but it’s one I could see Republicans making to justify what they’re doing and saying, you know, well, actually, we’re not getting this huge corporate pressure to change this policy. The corporations are just adapting to it.

S2: Yeah, I mean, and that’s that’s true. It doesn’t seem like there’s any corporate pushback. The city buried it in its filing. Apple was forced to say a sentence about it. It’s not like previous, like anti transgender state bills where there was like massive pushback, vocal pushback. There’s really there’s really nothing. And and that I think you’re totally right. Like, that’s a great argument for Republicans to be like, what? Business isn’t leaving the state. It’s fine.

S1: Yeah. So there’s still going to be abortions in America. And if you want an abortion and you live in the red state, then just head to a blue for an abortion. How hard can it be? And all of the health providers are just going to be like, Yeah, sure, we’ll play for plane tickets. No, this is this is a completely insane system, but it does seem to be the one we’re moving to. And it is actually all tied up with the complete original sin. Insanity of your health care is provided by your employer, which is bizarre.

S2: Well, I mean, I don’t know. I mean, there’s already consequences, economic consequences for women in Texas who don’t get to work for Citibank. There’s a good report that I was looking at out of University of Texas at Austin that says, like just in the three months from September to December, after the law passed, like 1400 women had to travel out of state in Texas to access abortions. Some of them had to go as far as Maryland, Washington State. They had to take off days from work. So they lost wages. It costs we know the price of gas is high because we see it on the signs everywhere. It cost hundreds of dollars to travel because Texas shut down like that. There’s increased wait time. So it’s like it’s not like you can just jet out in your car, drive a little bit, get an abortion and come back the next day. You might have to wait several days. A lot of people are going to Oklahoma. They have like their own batty laws there where you have to wait a bunch of days. Da da da da da. It’s like it’s really kind of economically devastating for these women and their families. Most women who get abortions are married and have kids already. There was one woman in the report who’d been fired because she had to take time off. You know, it’s just like companies can’t solve this.

S1: I think it’s time for a numbers round. Emily, do you have a number this week?

S3: Yes, it is 4.16%. That is the the rate on the 30 year mortgage, which crossed 4% for the first time since 2019. Hit the front page of the Wall Street Journal for that. People freaking out. It’s obviously historically quite a low mortgage rate, but it’s up a lot from where we were. And the housing market’s really crazy right now. So it’ll be interesting to see if this matters at all. I kind of think it won’t, actually.

S1: So my number is $3.1 billion, which is the amount of money that Columbia University told U.S. News and World Report that it spends annually on instruction. Columbia University is now in second place on the U.S. News and World Report. Ranking of universities. It’s equal second place with Harvard. And I think Princeton and Yale is number one, something I can’t even remember. This is a famously gamed ranking. And one of the inputs is how much money do you spend on instruction every year? And Columbia claims that it spends $3.1 billion a year on instruction, which seems insane, particularly seems insane when you realize that is more than Harvard, Yale and Princeton combined. And there’s this math professor at Columbia called Dr. Thaddeus, which is a great name, who loves to needle his employer. And he’s like, you, this is completely fake, isn’t it? And they’re like, Yeah, actually, it kind of is. The reason why they managed to get up to $3.1 billion is because Columbia is a teaching hospital, right? They have hospitals. And so if you’re a medical student, then what they do is they include, like all of the patient care costs is instruction because you’re learning from the patients. And that and that, my friends, is how you get to number two on the U.S. News and World Report rankings. Yeah. Elizabeth?

S3: Yeah. My number is 57%, and this is also kind of a plug. I have a client that produces climate risk data for real estate companies and then uses their data. But that’s the number of people who have said that they believe they’ll have to relocate in the next ten years because of climate change. And that number was a little higher.

S1: In the world, in America, in Miami, like where?

S3: In the entire country, when it would ask the factors that would would lead to relocation for most people. They said there’s moderate to high chance that climate change would be one.

S1: So wait, does this mean that more than half of Americans think that they’re going to be forced to move in the next ten years because of climate change?

S3: No, I think what it means is if you’re asking people if you had to relocate or if you envision yourself having to relocate, why? Which is slightly different because then you carve out all the people here like, well, I’m never going to relocate, but it still sounds high to me. I do know people who have relocated because they’re afraid of long term implications for, you know, the real estate that they do own. But that number was surprising to me. I would have expected it to be lower.

S1: It does strike me if you look around the United States and especially where the people live, where the big population centers own land, states almost everywhere is at risk of hurricanes or wildfires or floods. You know, all of these things that are which really do have the potential to force you to relocate, you know. And then on top of that, there’s the massive earthquake risk down from Seattle to San Francisco, which isn’t anything to do with climate change, but it’s also kind of, you know, one of those big shocks. No one is safe.

S3: Yeah. There’s also apparently the U.S. is the worst country to live in for natural disasters just because of our physical, you know, ....

S1: I think Australia has to be worse. Like those wildfires in Australia, they happen every year now. They just never stop. Everyone is going to get burned out of their homes in Australia pretty soon.

S2: Also those island nations like I feel like.

S1: Yeah, and all those countries which are just disappearing. How about Venice? How many people can live in Venice as it keeps on sinking under the sea? Anyway, if you live somewhere safe and happy, you aren’t worried about climate change. Maybe you live in Toronto. I don’t know. I’m trying to think of like, what’s the good place to stay  if you’re worried about climate change? Drop us a note. Slate Money at Slate.com. Thanks for listening. Many thanks to Jane Arraf for producing. And big thanks to Elizabeth Spiers for coming on the show. Thanks, Elizabeth. Awesome.

S3: Thanks for having me.