October 30, 2019

Every once in a while on cable news, you'll see something like this enlightening and interesting discussion led by Stephanie Ruhle. She contends that unregulated markets are inadvertently doing their best to prove Elizabeth Warren right. Enjoy!

"Josh, every time you go to a dinner with Wall Street traders and investors, they're panicked about Elizabeth Warren, but do they not see that Adam Newman of We Work walking away from a company that he blew up with 1.7 billion dollars and then soon after, we're going to see 2,000 of their employees get fired, do they not see that will quickly become the rallying cry for Elizabeth Warren's campaign?" Ruhle said.

"The fallout hasn't even concluded yet. We haven't even seen what the damage will be," CNBC contributor Josh Brown said.

"And the thing with We Work is, it's so illustrative and it's so simple to understand, because everyone gets it. It's not one of these complicated finance stories. I think what terrifies Wall Street executives, though, is not just the anti-financial services rhetoric. They've become accustomed to that over the last ten years since the crisis. It's the specificity. There has never been a presidential candidate up until now who understands how private equity has become a trillion dollar industry, who understands where all the pressure points are. I've called her a skilled acupuncturist. When she put out her proposals, she knows exactly where to put the needles. People who work on Wall Street, even Democrats who work in financial services, they are desperate for it to not be Elizabeth Warren."

Ruhle pointed out that they're giving her this platform.

"Yeah, if they want her to be president, they should continue to talk about what's going to happen if she becomes president. They're cementing her as the leader right now," Scott Galloway said.

"The markets are very difficult to predict and one could argue that a disjointed foreign policy, income inequality, record levels of debt while we have record levels of unemployment which we've never seen before exploding our balance sheet, one can make an argument that these are the threats."
"
Brown talked about the newspaper industry. "Those people would argue, you know what, newspapers were a dying industry anyway, it was going to happen. Retail is dying, it was going to happen anyway. What Elizabeth Warren has done is she said, no, no, let me explain to you what's really happening. You're pulling dividends out of the system, cash payment to yourself, you're laying off the risk on the employees of these companies. You are encouraging other banks to lend to a business that's already swimming in debt and making a bad situation worse, and so all of the policies that she's laid out, in her words, not mine, to reign in wall street, again, they're highly specific.

"They're targeted directly at this managerial class within private equity that wins no matter what the outcome is for the business, and what she's trying to do is make it so that the employees have protection in case an LBO, leveraged buyout, goes wrong, trying to make it so that if it blows up, at least pension and retirement will be covered. That's not the case now as we saw with many of the newspapers I referenced. Bernie comes out and says business is bad. She's laying it out for you exactly why it's bad and what she wants to do to change it."

"If CEOs like the CEO of GE doesn't want to see her in power, why freeze the pensions of thousands of your employees?" Ruhle said.

"That's an example of the company whose core competence moved from operations to tax avoidance, and that ultimately came back to bite them," Scott Galloway said.

"What we have is not a failure of markets or a failure of capitalism. We have a failure of regulation. We keep waiting for these companies to call on their better angels and then Mark Zuckerberg is all of a sudden going to discover a concern or a regard for the commonwealth. And he wakes up every morning and quite frankly, he does his job in a pure play capitalism and that is, he focuses on earnings, lies, delays, takes advantage of the Congress with only 4% of the elected officials have a background in technology or engineering and we wake up with a platform that again, four years later is being weaponized by outside forces.

"So waiting for the better angels of these companies is not going to happen. This is so far, the failure of a lack of regulation."

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