Is The Economy About To Melt Down? - Transcripts

Signature Bank has also been closed right now. There is now talk about the possibility of other banks following in the footsteps of Silicon Valley Bank and having serious problems on their hands, on their own, that would include, for example, First Republic apparently has similar issues to SVP. So we're going to go through exactly what happened with SVP, why it shut down, and we'll talk about whether there's a system-wide banking issue. The first thing to understand is that the reason for all of this is federal government mismanagement. The reason for all of this is because the federal government blew it on inflation and then had to ramp up the interest rates in order to fight the inflation. So here is what happened. According to the Wall Street Journal, SVP by Financial is the parent company of Silicon Valley Bank, which counts many startups and venture capital firms as clients. So this means that a lot of people are sort of laughing today because look at all the big tech bros who are about to go under. Now here's the reality. What's actually going to happen, as we'll discuss in a moment, is that the federal government is going to bail out the depositors, meaning that all of the people who had their money invested in Silicon Valley Bank, everybody who took their money in put it in Silicon Valley Bank and left it there, and then it would take swing loans in order to pay their staff. All those people will be fine. It's the bank itself that is going to shut down.

This does mean that the federal government is violating its own rules, the Federal Deposit Insurance Corporation, which is supposed to give you back $250,000 of your deposits. This every time you go to the bank, you'll see there's like a little sign on the bank teller window that will say FDIC insured up to $250,000. Well, most people who are running companies keep a lot more than $250,000 there. The FDIC is going to fill in all of those people anyway. This does create a situation of moral hazard. But what happened here is that SVP Financial had billions and billions in total deposits. They had about $200 billion in total deposits by the end of the first quarter of 2022. That was a major increase in the amount of money that they had in deposits from the first quarter of 2020. In 2020, they had $60 billion in deposits. By 2022, they had $200 billion. Why? Well, because between 2020 and 2022, we injected more money into the American economy than any time in human history.

We just shoveled money out the door. And a lot of that money went to the big tech companies. A lot of that money went to firms that didn't know where to put the money. And so they started shoveling it to tech because remember, that was a tech boom. It was really a tech bubble. It was very reminiscent of the dot-com bubble of 1999, 2000, where all of a sudden firms that they really should not have been evaluated at the valuation that they were being provided were suddenly being evaluated at extraordinary prices because people had money just gushing out of their pockets. Like what am I going to do with this? Well, I can go invest in Petco. In Pets dotcom, I can go take my money and I can put it in some weird venture capital attempt and I can just throw the money at it because what else am I going to do with this money? And so all of those companies then took their money and they put it in Silicon Valley Bank. And so you saw the balance sheet expand dramatically for Silicon Valley Bank financial. So this created a question for Silicon Valley Bank because the way the banks actually make money, they don't keep your money in a lock box.

It's not like you have a safety deposit box, and you bring in your million dollars and they take it in cash and they shove it into the wall or something. That's not what they do. Instead, it's all digital and what they do is they then lend out the money to other possible ventures or they go and they buy bonds or they go and they buy stocks, they invest the money themselves, and then they essentially arbitrage the difference between what they have in their coffers and what they owe back to you and what they think they can earn from the markets. So what exactly did SVP Financial do with this massive influx of cash? Well, they started buying tens of billions of dollars of seemingly safe assets, primarily long-term U.S. Treasuries and government-backed mortgage securities, which means that SVP securities portfolio rose from about $27 billion in the first quarter of 2020 to $128 billion by the end of 2021. And so they took all that money that was being thrown out there by the federal government, this inflationary wave by the federal government. They took all that money, and they shoved it back into U.S. Treasuries. Well, normally U.S. Treasuries are supposed to be pretty safe, right? I mean, the way the U.S.

Treasury works is that you take $950, you invest it in a $1,000 bond. And that $1,000 bond is supposed to come to maturity in, say, ten years. And that means that your rate of return on the $1,000 bond is, you know, a few percentage points. And that's fairly safe because you know you're going to get that money back. The problem is, if the interest rates dramatically increase, then the value of your bond drops really dramatically. Because let's say that you buy a bond, and that bond is going to give you a yield of 4%. And then suddenly there is an interest rate increase. And so the government is issuing bonds at a much higher rate. Well, then the market for your bond, which is going to earn you a much lower rate, the market just disappears. Or suddenly your bond is worth nothing. Because I can go down the street, I can get a brand new bond issued by the US government that is going to earn me a much greater yield than the bond that you are now currently, you're gonna have to sell your bond at discount to compete with the new bonds that are being issued by the federal government. This is why when interest rates increase, the prices of bonds that are currently on the market tend to drop, right?

So they tend to work in sort of counterbalance to one another. So what happened here is that SBV Financial thought that they were being safe by buying a bunch of US Treasuries, but they were being stupid because they didn't look at the market and say, okay, wait, inflation is likely to follow here. And so when inflation follows, you're gonna have to ramp up the interest rates. When they ramp up the interest rates, what is likely to follow is that the bonds holdings that we have are going to drop in value. So if there's a run on the bank and all of your money is invested in the bonds are gonna have to sell off those bonds at a loss and that's gonna bankrupt the bank. That's essentially what happened here. We'll get to more of the explanation in just one moment first. In this economic climate, pretty sketchy out there. You need to be cutting your monthly expenses because you just don't know what's about to happen next. PureTalk saves the average family over $900 a year they switch from Verizon, AT&T, or T-Mobile. That is correct. You can save $900 a year on your wireless bill and still enjoy ultra-fast 5G service.

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Again, there's no reason why you should be spending your money when you don't have to be spending your money, and you get the same exact coverage. I use it for my business, calls PureTalk, they do a great job, and I'm saving money. PureTalk.com, enter promo code Shapiro, save 50% off your very first month of coverage. Okay, so good. Again, according to the Wall Street Journal, they bought all of these securities. The problem emerged is that because they pay fixed interest rates for many year securities, that's not necessarily a problem unless the bank suddenly needs to sell the securities. These market interest rates have moved so much higher, those securities are suddenly worth less on the open market than they are valued at on the banks books, and as a result, they could only be sold as a loss. Right. That's what I was telling you. The price on bonds they had bought declined from when they had bought them because of the interest rate increases, necessitated by the inflation. So, as The Wall Street Journal says, at the same time, SVBs deposit inflows turn to outflows because clients were burning cash and they stopped getting new funds from public offerings or fundraising. So remember, all of their clients are tech companies.

Those tech companies are very reliant on inflation. Those tech companies were burning through cash at an extraordinary rate. For about two years there, if you were a company that was in search of public financial capital, you would just seek to get bought up by what was called an SPAC. You sought to be bought up by a publicly traded company that didn't have any content to it. Basically, just a slush fund, then it would buy you, and then you would become the publicly traded company. We've seen a few of these. TruthSocial was funded through a SPAC, for example, but when all the money dried up, then suddenly all of these companies came up short. They've been burning through cash at this extraordinary rate because there so much cash flowing through the system and then, interest rates increased. People stop spending money quite as much. All the investments dried up, and at that point, everybody started trying to draw down their balance at the bank, and when they started to draw down their balance at the bank, suddenly They had to figure out, because everybody is operating on, essentially marginal deposits, right. Everybody at bank. Again, they keep a certain memory in the bank, like what they have to by law.

But then the rest of it is being lent out or bought or whatever. And so suddenly, if everybody goes to the bank at the same time, you have the Mary Poppins scenario. Right? Everybody goes to the bank at the same time, it's a run on the bank, and everybody freaks out because they have to shut the windows. There actually is no money at the bank. And so how do they fill back in that hole? Well, they have to go, and they have to sell all these bonds at a loss, which bankrupts company. So on Wednesday, S.V.B. said it had sold a large chunk of its securities with $21 billion at the time of sale at a loss of about $1.8 billion after tax. The bank's aim was to help it reset its interest rates at today's higher yields and provide it with the balance sheet flexibility to meet potential outflows and still fund new lending. And then it tried to raise about $2.25 billion in capital by selling stock. The problem is that the run was already on.

Everybody went to get their money. On Thursday, customers tried to withdraw $42 billion of deposits, about a quarter of all of the money that was supposed to be held in the bank and it just ran out of cash. And then other banks started to get hit because there were other banks that were invested in this bank. Stocks of other mid-sized lenders like First Republic Bank and Signature Bank were halted on Friday morning and in fact Signature Bank essentially went into receivership for the exact same reason. They were invested in Silicon Valley Bank and also they were heavily invested in bonds. And so the question becomes, okay, so what happens next? So that's two questions. Question number one is, are they gonna bail out SVB? Are they gonna bail out the depositors? How many other banks are in the vulnerable position that SVB was in? How many banks are not telling you they're in that vulnerable position? And nobody really knows the answer to that.

There's a lot of uneas in the markets today because even if the depositors of Silicon Valley Bank are bailed out, well, what happens to all of the, what happens to all the unsecured credit holders in Silicon Valley Bank. There are a lot of people, in other words, who invested in Silicon Valley bank, they're not going to get their money out that money is now gone. And Silicon Valley Bank was a big concern. That means those people are going to lose a lot of money, which means they can't fire means they can't fire. They're bankrupt. I mean, they can bankrupt a lot a lot of people. And so we are in the same situation, financially speaking, that we were not to the same extent as we'll discuss in a moment, during 2007-2008 when you started to see major financial institutions go down because they had made bets that they did not see they did not see as being risky they thought the federal government is going to backstop them. Now, again, this is almost a mirror image in terms of the morality of it of 2007-2008. You had a bunch of financial institutions catintroducing to theamy promise that theig five federal government is going to fill them in, to make risky bets, and then those bets fail and then the federal government does indeed, at least, fill in the depositors. Now, they're not going to save Silicon Valley Bank here. Silicon Valley Bank will not be going concerned from here on out unless they're somebody who comes in, sweeps in, and actually buys up the assets. Now, that could have been done on the open market anyway.

There could have been Elon Musk talked about buying up Silicon Valley Bank, for example, and then going in and finding investors to fill in what depositors were owed, because not like Silicon Valley Bank had no money. It's not like they went from $200 billion in holdings to $0 in holdings. They still were able to liquidate some of the bonds that they had on the market. They would need somebody to come in and buy them up and fill it back in. And people would presumably continue to invest in Silicon Valley Bank once they realized that the run was over. But that's not what the federal government did. So the federal government had basically two concerns here. Concern number one is making sure that this thing did not spread directly from Silicon Valley Bank to the rest of the system, that there wasn't a meltdown where depositors lost their money, and so everybody across the system went, hold up a second, my money is not safe at my bank. I'm going to go do a run on the bank right now, because there is a sort of herd mentality when it comes to this stuff. Is my bank safe? Are they doing the same thing? Are they lying to me?

And everybody goes get their money at the same time, and suddenly a lot of banks start to go under, and it looks very much like 2007, 2008. And the federal government rushes in to fill in the system. The other is the moral hazard created by the simple fact that, over and over and over again, the federal government keeps doing things and people keep relying on the federal government to fill in the gap. In 2007, 2008, the presumption was for everybody who was invested in sub-prime mortgages that the federal government was going to back their play, because Fannie Mae and Freddie Mac, which were quasi-government subsidies, subsequently, they were backing that play. 2007-2008 the SMART money was that the federal government was backing subprime mortgages So what's the big deal if we mix in a bunch of crap subprime mortgages with actually like good mortgages and then we mix it all together or create a credit derivative structure that allows us to create a crap sandwich and then Everybody eats the crap sandwich, but most of the sandwich is not craps was probably okay Well as it turns out the federal government stepped in to save everybody from their own stupidity in relying on the federal government same sort of thing here Because all of these companies relied on the federal government not to raise those interest rates to dramatic levels. That's exactly what happened in SVP. They said, yeah, we can see that you're inflating the currency, but we were bad that you're not going to raise those interest rates to high levels, even as Jerome Powell was saying, we probably will. And then of course, things went south and now they're going to get bailed out by the federal government, at least the depositors are. And it's a question as to how much how many other institutions are going to be guaranteed that way, which raises the question as to if depositors are just getting bailed out by the FDIC, then why exactly is the federal government subsidizing a bunch of banks in the first place to engage in investments they would not make with their own money? Because that's really what you're talking about here. We'll talk about the moral hazard in just one second. First, I love baseball.

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One, we're not gonna bail out SVP.

How exactly? Well, apparently any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on the banks. Certain unsecured debt holders and shareholders will not be protected and also senior management has been removed. So they're decapitating the rest of the company and they're going to pay off the depositors, which again raises the question as to why we aren't banking. I mean, this is what Elizabeth Warren wants. She wants us to just bank directly with the federal government and then the federal government can just give risky loans to everybody else and bail out those people. Well, if you're SVP, that's kind of what this looks like in practice, actually, just without you, just with the federal government as kind of the shadow monster in the background waiting to do all of these things. There's also the Bankterm Funding Program that is going to have... It's going to be a federal lender. SVP problem was it had too much of its money invested in long-term treasuries and mortgage-backed securities that tanked in values that have raised those interest rates. There are other banks with the same problem to make sure they don't suffer the same fate. There's a new agency, yay, new government agencies, who will allow them to access loans with generous terms.

Instead of having to sell off their interest rate-ravaged treasuries, they'll be allowed to use them as collateral for a loan at their original value. So they are going to now get a loan from the federal government on the basis of the bonds that they are still holding. Now, the federal government, of course, has an interest in that, because they don't want to see the bond markets, the secondary bond markets absolutely tank, which again, would force another rate rise, presumably, in the interest rates. Meanwhile, New York Bay Signature Bank was closed, and we'll get the same exact treatment as SVP. This one, this one's pretty spectacular, considering that SVP, you know, that that's one thing. Signature Bank is a person on the board is Barney Frank. Barney Frank is the guy who was involved in Dodd Frank. Barney Frank was the head of the House Financial Services Committee for decades, and he was on the board over at Signature Bank, which shows you that the regulators who are very often in charge of these banks, let's just say that they have a finger in the pie very often. And they never bear the results of their own bad decision making. So in a second, we'll get to the the problems there. There are really two problems here of systemic moral hazard. We'll get to that in a moment first.

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So long as that firm is of sufficient size and scale in the United States economy, you will get your money back. That's a pretty major moral hazard. It means that basically it's now up to the federal government and not to consumers which firms ought to be successful and which ones ought not to be successful. Because again, right now, the too big to fail phenomenon that was supposed to die back in 2007, 2008, that wrong, wrong. Because again, the moral hazard that attaches here is twofold. One, you have, let's say that you run a bank and your generalized feeling is the way that I grow my bank is by promising 9% returns. In order to get to those 9% returns, I'm going to push out risky loans. I'm going to take big swings in the market. And I know that as long as I have $200 billion in deposits, all those people can get their money back. So worst case scenario is that everything goes belly up and I end up in a bad personal situation because the bank goes bankrupt. But best case scenario, I become one of the biggest banks in America because I'm promising 9% returns and all my depositors are going to get back their money. So you are actually incentivized to take these riskier swings.

You are incentivized to do stupid things like buying tons of bonds in a market that is about to increase interest rates rapidly over the course of two years. So that is a moral hazard. It's a moral hazard for the people who run the banks. Second, it's a moral hazard for the depositors. Because if you are a depositor, again, you just put your money where you're promised the highest rate of return. So instead of you actively looking at the bank where you put your money, you say, should I put it in this safe community bank that I know is going to give me back 3% year-on-year, I know the people who run the bank, I vet them, they're not going to take the money and make stupid moves with it in order In order to get me that extra percentage point or two. Instead of that, you just say, well, you know what? I'm getting my money back no matter what. The federal government is going to pay me back. So I totally understand the bailout position because again, the urgent is generally the opposite of what is necessary. The urgent and the necessary are constantly at war with one another in the financial markets. The urgent is, bail it out so the economy doesn't collapse and you don't have more banks that do this because they've all relied on this system.

The necessary is that at a certain point you are actually going to have to have one of these banks go into receivership And the people who have their deposits in the bank. You're going to have to have those people rely on somebody else to come in and fill that back in when the bank is bought for a very low price. Now, presumably, anybody who comes in and buys that bank is going to have to fill back in those deposits. I mean, those deposits do exist. They're outstanding debt secure against the actual assets of the bank, usually. With that said, why not allow this to go to the open market? You could theoretically do that. You could allow it to be open market. Listen, I get the various considerations. It's very much like what happened in 2007, 2008. Everybody was very against TARP, everybody was very against the idea that we're going to bailout the banks. Because again, it was creating incentive structures for banks to make moves like this in the future.

Those incentive structures will continue to exist so long as the federal government is in the belief system of we fill in the mistakes made by big banks. This is why you are seeing the federal government basically take the untrue position that it will cost the taxpayer nothing to do any of this stuff. It'll be totally fine will magic money out of thin air. don't worry, it's not actually a bailout. So that is the big moral hazard. Then there's a secondary moral hazard, which again is that banks like SVP, they had other priorities. Their top priority was not in fact making money for their depositors in a safe and secure way, in a risk neutral way. Instead, SVP, it turns out, was a very, very woke company. They didn't even have, as it turns out, a risk manager. According to the UK Daily Mail, Collapse Lender Silicon Valley Bank operated without a chief risk officer between April 22 and January 2023, while the operation's United Kingdom-based head of risk stands accused of prioritizing pro-diversity initiatives over her actual role. This revelation comes after the firm became the largest bank to collapse since the 2008 financial crisis, disclosing a $1.8 billion loss in its finances. SVP's former head of risk, Laura Izurieta, who formerly performed a similar role at Capital One, left the bank in April 2022.

She was not replaced until almost a year later, when the bank hired Kim Olson, formerly of Japanese bank Sumitomo Mitsui. The bank announced Olson's hiring in January with a press release, saying she brought 30 years of financial services experience. The bank's CEO credited Olson's deep and multifaceted financial services experience as a senior risk leader that positions her perfectly to manage SVP's financial and non-financial risks. But meanwhile, Jay Ursopath, who acts as CRO for the bank in Europe, Africa in the Middle East, the chief risk officer, and who describes herself as a, quote, queer person of color from a working class background, organized a host of LGBTQ initiatives, including a month-long pride campaign and implemented safe space catch-ups for staff. In a corporate video published just nine months ago, she said she could not be prouder to work for SVP, serving underrepresented entrepreneurs. Professional network Outstanding listed Ursopath as a top 100 LGBTQ future leader. Apparently, she is, quote, unquote, allies with gay rights charity Stonewall and her author of numerous articles to promote LGBTQ awareness, and these included Lesbian Visibility Day and Trans Awareness Week. So obviously, there's a lot of people who, you know, I think we're deeply concerned with the things that matter. Deeply concerned with all the things. Bernie Marcus, who is a major investor on his own, he ripped the wokeness of the bank over the weekend. He was like, guys, shouldn't you actually have some priorities like risk assessment?

If you're a smaller bank and this happens to you, do your depositors get back their cash? Does the federal government really step in? I mean, presumably, the answer now is going to be yes, that for all time, the actual real way the banking system in the United States is now going to work, according to the federal government, is any time a bank starts to go under, the federal government is going to step in and it's going to secure the deposits of the people who put their money in the bank. Which does raise the question as to whether these banks actually work for the federal government. Because again, this means the federal government is now subsidizing the risk taking by people who are concerned with things like ESG. Which is a problem, because again, the markets, we're supposed to sort this sort of stuff out. When you fail, you are supposed to actually fail. When you're not good at a thing, you're actually supposed to lose. But again, apparently, the basic idea here is that we got to stop the meltdown while we got to stop the meltdown. While I'm sympathetic to the stop the meltdown mentality, considering that everybody has money in the market at this point, at some point, you are going to actually have to let consequences take place for firms that make bad risk assessment. And those consequences are going to have to hit people who put their money in banks like this and the way that that's going to rejigger the system will allow for better and more meticulous risk planning. So anybody who says that this is a quote unquote failure of capitalism, no, this is a failure of corporatism as always.

When the government creates systemic risk structures that favor too risky behavior and then bail out sort of the downside risk, this is what you get. Not a giant shock. Okay. In just a second, we'll get to the Oscars last night, it was an incredibly dull Oscars, but it was diversity forward, which is the thing that matters most. Okay, let's talk about how you get better employees at your firm. So let's say that you run a bank and you actually would like a risk assessment officer who assesses risk rather than promoting various diversity days. Well, perhaps you should check out zip recruiter. Zip recruiter helps you find the most qualified people for your roles fast right now. You can try zip recruiter for free at ziprecruiter.com. Slash daily wire zip recruiters matching technology helps you find the most qualified candidates for wide range of roles. See a candidate you like, you can easily send them a personal invite. So they are more likely to apply their user friendly dashboard.

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This year the diversity film was indeed everything, everywhere all at once, all the time forever, and that film was likely going to win. Now, normally what happens with the Oscars that there is a film that sort of emerges as the early front runner and then there's a backlash against the film and then some other film wins. A you remember that happened the year there was. Like three billboards at Ebbing was was in the lead. And then all of a sudden just sort of fell away because there was a lot of white people in that movie. We can't do that. And then things sort of happens and a lot well, the Oscar winner last night, the big Oscar winner, that took everything home was everything everywhere. All at once forever for the rest of time. That movie ended up winning Best Actress for Michelle Yowan. It ended up winning best picture. It ended up winning Also, I believe it did win Best Director. I think it won Best Director as well.

All right, one best director, it basically swept. Now, the reason that it's swept is because it fulfills two intersectional check boxes. It fulfills the Asian intersectional check box, and we already had Parasite, the one a couple of years ago, so we've done that, but it's a very gay movie. Everything, ever, all at once, is a very LGBT movie. The main storyline is essentially an Asian immigrant mom who's working really hard and ignoring her family, but she has to learn that her lesbian daughter's girlfriend should be introduced to Grandpa, who has to be taught to accept the new ways of the world, the whole movie's about alternative universes and parallel universes, and in one of them, Michelle Yau herself is lesbian. Oddly, her daughter is a lesbian in all the universes, apparently, but Michelle Yau is a lesbian in some universes with Jamie Lee Curtis in, like, Hot Dog Finger's universe. None of it makes any sense unless you've seen the movie, because the movie itself does not make a whole hell of a lot of sense. It's kind of lukewarm when I first watch it. and the more I reflect on it, the less I like it. There was a Hollywood and quiet ballot that got revealed before this. They said I had to watch, I had to sit there like four times to get through it. I think that's right.

The movie itself is 139 minutes. It's a really, really long movie. I mean, 139 minutes is a two hour, 20 minute film. This movie should have been done about 140. In any case, it's like a horrible movie. It's just kind of nonsensical in a lot of ways and then finishes with sort of the mushy can't we all get along story. In any case, that was sort of the only big political moment of the night. There were a couple of other political moments of the night. That was the big one. Was the Oscar winning director, Daniel Scheiner, saying that I used to dress in drag as a kid and no one's threatened by drag. No one, because I used to dress in drag as a kid.

Now, the big shutout here, and it's worth noting here. The big shutout here is Top Gun. So Top Gun, I believe did not win a single award. Did Top Gun win anything last night? Top Gun may have, it won best sound. It won best sound. Which, okay, best sound. It did not win best production design. It did not win best film editing. It did not win, by the way, it certainly should have won best film editing. The notion that everything everywhere, all at once, One, best film editing is absurd. Everything everywhere all at once needed to be edited with a chainsaw.

But Top Gun Maverick did not win best film editing. It did not win even best visual effects. That went to Avatar The Way of Water. This is a tactical mistake by Hollywood because in five years, nobody's gonna be watching everything everywhere all at once. It's just not gonna happen. It's gonna be a movie like Birdman or The Revenant. Things were in the moment. People were like, oh man, that's a great movie. And then no one ever watches it again. I know that critics fell in love with this movie. Again, I think I know the reasons why, but it's not Top Gun was clearly the phenomenon of the year. The fact that there were so many people who were opposed to Top Gun was a quasi-political statement.

It was sort of along the lines of this piece from MSNBC called Top Gun Maverick is the most insidious movie at the Oscars. It's from Zishan Alim who said that it's insidious because it is very much in favor of the American war machine as a beacon of virtue and excitement. It's a poisonous kind of nostalgia, one that smuggles love of endless war into a celebration of live action. I think that is one of the kind of subtle reasons that Top Gun had to lose because it was kind of too pro-America. I wasn't allowed to win. Speaking of people who are not pro-America, one of the people who spoke last night was a guy named Donnie Yen. Donnie Yen is in John Wick 4. I'm not sure why Donnie Yen was speaking at the Oscars, but as it turns out, Donnie Yen also is a front person for the Chinese regime. So according to NME, there's a petition that was actually set up against Donnie Yen doing this, set up by a Hong Kong activist who claimed the decision showed contempt for the people of Hong Kong and that Yen's presence would damage the image and reputation of the film industry. He had opposed the pro-democracy protests in Hong Kong in 2019, he called it a riot. He was known for starring in the Ip Man series, which is a kind of Kung Fu series. He was in Rogue One, he's in the 2020 live action remake of Mulan, but he is in fact a front man for Chinese positions at the Oscars.

Again, not particularly shocking that the Oscars was perfectly fine featuring all of that. Overall, however, pretty boring Oscars. Jimmy Kimmel kind of hemmed it in. He didn't get too political, which I think the Oscars needed to do. It's not gonna revive the Oscars. The Oscars is still a flagging enterprise by the numbers. It's still going down and down and down and down. Again, the reason for that is because the big movies are the ones, the only two that really did amazing business last year were Top Gun and Avatar, and neither of them really cleaned up at all. Okay, meanwhile, insanity breaking out over at Stanford Law School. So according to the UK Daily Mail, a federal appeals judge appointed by Donald Trump has now demanded an apology from Stanford Law School after he was invited to speak. His name is Judge Kyle Duncan. He's on the Fifth Circuit Court of Appeals.

He's actually ambushed by an associate dean of equity, diversion, and inclusion named Tyrion Steinbach. During a discussion on Thursday night, Steinbach is a former ACLU lawyer who had previously defended freedom of speech. She initially claimed that Duncan had a right to express his views, and then launched into a six minute speech condemning his life work and condemning him in front of the students, which is just perfect chef's kiss woke idiocy from Stanford. One of the reasons all these colleges and universities are too expensive is because they spend hundreds of thousands of dollars per employee to create administrative positions that are just pure nonsense and garbage. This lady is obviously a career useless person,

It's an absurdity. They put out a statement saying, we write to apologize for the disruption of your recent speech at Stanford Law School has already been communicated to our community. What happened was inconsistent with our policies on free speech. We're very sorry about the experience you had while visiting our campus. It's not an experience that he had. The reality is that this DEI administrator should lose her job for this because it turns out that is not your job. It's to berate invited speakers in front of the rest of the students. But this is what it's come to at many of these universities. Again, the goal of many of these administrators is not to actually perform their job. It is to perform in favor of the woke students in order to maintain their job because the woke students and they play an inside outside game where then if they get fired, the woke students protesting create all sorts of trouble at the university. It's a great way of preserving your job is to play this really stupid game by attacking the very people that you have invited. Meanwhile, the White House is an embarrassing basket of lies.

They told a massive whopper on Friday, Korean Jean Pierre, world's worst press secretary. She was talking about the trans movement, movement for trans and all the rest. She just started lying about Michael Moles. So Michael Moles, as you know, is a person who works at Daily Wire, not a friend, Michael Moles is a person who works here. He has a show. He gave a speech at CPAC in which he said that transgenderism as in an ideology, he literally said transgenderism as an ideology, not transgender people. Not people who identify as transgender, that people believe they're a member of the opposite sex, transgenderism is an ideology, which says that men can be women and women can be men, that that ideology ought to be eradicated. The entire media ran with the lie that what Michael had said is that there ought to be a genocide against people who identify as trans, which of course is a lie. It is not true. Karine Jean-Pierre did not even hesitate from the White House podium. She just told the same lie that some members of the media had.

He has a piece the New York Times called Don't Let the Culture Wars Agrade the Constitution and his piece at the New York Times essentially says the culture war is coming from American liberty and red states and blue states alike. And then he talks about Gavin Newsom going after Walgreens, fair enough. And he talks about the federal government, the California government going after religious worship again, true. And then he says this, and then he says this, he says, Florida is one of the hotspots of right-wing censorship and punitive government. It passed an unconstitutional law to control social media moderation in the state, which again, a court will rule on it. And Governor DeSantis took direct action against Disney after the company objected to Florida House Bill 1557. If the right is going to condemn Newsom's action against Walgreens, shouldn't it also oppose DeSantis' attack on Disney? Well, no, because it is not an overtly political move for Walgreens not to sell a particular product that is not allowed in certain states. It is definitely an overtly political move for Disney to sound off on a law that has been duly passed in the state of Florida and it does not relate to their core business. And then to get special tax privileges, I wasn't aware Walgreens got special tax privileges, but put that one aside. That's not the worst part of this column. If David just said that, I'd say, okay, fine, arguable, disagree, but arguable.

Here is the part of the article that is totally wild. He says, because every culture war action against civil liberties has its mirror image on the other side, Governor Greg Abbott of Texas issued a directive to the Texas Department of Family and Protective Services to investigate as abuse, both surgical and pharmaceutical interventions for transgender children, regardless of the good faith and desires of the parents, children, and caregivers involved. To understand the gravity of the state interference with parental authority, it's worth remembering the words of Chief Justice Warren Berger in the 1972 case, Wisconsin versus Yoder, in which he wrote that the primary role of the parents in the upbringing of their children is now established beyond debate as an enduring American tradition. To simply presume that parents are abusive because they made dissent from state consensus on transgender care is to violate this principle of American law. Okay, you're gonna have to hold up now. Now we're gonna have to hold up. This is the part where we get into just plain stupid land, suggesting that it is a culture war against a civil liberty to prohibit the mutilation of children is wild. That's wild. This belief that the government has to be entirely hands-off with regard to how people handle their children is obviously untrue. David, I'm sure, is in favor of mandates that kids get a basic education. I'm sure he's in favor of the idea that you don't get to beat the living hell out of your kids behind closed doors. After all we all raise our kids.

Like I assume David doesn't. I know, David, David doesn't believe that, that apparently David believes that if you have a good faith belief that if you trans your child, but that's okay, then that means that anyone else who opposes that is now opposed to civil liberties. No. This is not a civil liberties question. I'm very much in favor of many of the civil liberties that David is in favor of. This does not count as a civil liberty, taking your children and then hormonally transitioning them preparation for surgically mutilating them is not in fact a civil liberty and pretending that it is is a complete failure to recognize the problem in the first place and David has been you know tweeting about this and and he suggests that um that he's being misinterpreted here uh i i don't really see why i just read you his entire statement he says one reason why i'm becoming more libertarian and reflecting on my life i realized there were things i was once adamant about and i was ultimately wrong given our fallibility the law the ultimate expression of our adamant should tread as lightly as possible in our lives well that is um that is an argument in favor of areas in which we are unsure i am not sure why we should be unsure about the hormonal and surgical mutilation of children that that one does not seem like an area where our opinions are likely to change anytime in the near future okay meanwhile the biden administration continues to fail abroad on literally every front i mean it's amazing how much they are failing on pretty much every front the only front you can say that this administration is not failing on right now is ukraine where they're basically just sort of holding the line but not providing ukraine enough assistance in order to actually win but not providing enough assistance not providing enough impetus for them to actually make a deal so it's kind of just in ersta in ukraine essentially as always joe biden leading from behind meanwhile situation over in mexico continues to be absolutely egregious the texas state government now says that mexico is too dangerous for spring which of course is not a shock considering that people keep getting kidnapped after crossing the border. I remember my wife and I were thinking of vacationing in Cancun about a year ago and my security team was like, no, you're not going to Cancun. They're going into hotels now and actually trying to kidnap people. Well, Senator Bob Menendez of the Democratic Party in New Jersey, he says that he is not even sure that he would declare the cartels terrorist organizations, which is sort of weird.

While Deng built a collective leadership system to protect against one-man rule, gave private enterprises wider room to flourish and marked a separation between the party and the government, Xi has done away with term limits, narrowed the scope of the private sector, and placed the party at the center of Chinese society. And now he has set motion changes to further emphasize the party's leadership over all aspects of governance, according to the Wall Street Journal. He paved the way for giving the party more direct control of the country's financial and technology sectors to cut the staff of the central government by 5%. Meanwhile, even as this is happening, China has built up its power in the South China Sea. The Wall Street Journal reports that Beijing is becoming the dominant force in the South China Sea, through which trillions of dollars in trade passes each year, a position that has advanced step by step over the past decade. With incremental moves that stay below the threshold of provoking conflict, China has gradually changed both the geography and the balance of power in the area. Beijing now claims pretty much all of the South China Sea, which is ringed by Taiwan and other Southeast Asian nations, even though it is in fact the hub of transit for virtually a huge percentage of goods and services across the globe. China has turned reefs into artificial islands, then into military bases, with missiles, radar systems, and airstrips that are a problem for the US Navy. It has built a large coast guard that, among other things, harasses offshore oil and gas operators of Southeast Asian nations and a fishing militia that swarms the rich fishing waters lingering for days. The US missed the moment to actually do anything about it. China continues to expand its power. Meanwhile, China is expanding its power in the Middle East.

As the Biden administration has taken an anti-Israel, anti-Saudi position, this has actually driven the Saudis into the arms of the Chinese, so the Chinese came into the Saudis, who have been, again, put on the ropes by the Biden administration, and they said to them, we love the Iranians. We are working with the Iranians, and we can see that you guys need to triangulate with regard to the Americans, because Joe Biden ain't helping you out. Why don't you come over here and sign an agreement with the very people who wish to destroy your entire government, the Iranians. Seeking to play both sides of the table because they are an independent nation. They were like, okay I guess we'll sign something with Iran This obviously actually increases the possibility of conflict in the region One of the things that was hemming Iran in was an alliance of other nations Arab and Jewish in the entire area That was saying that Iran cannot expand beyond its borders or if it tries to develop a nuclear weapon We're gonna work together to stop it now China is coming in and actually facilitating Iran's dreams By attempting to bribe the Saudis into going along with all this and pledging that it will play neutral arbiter between the Saudis and the Iranians Meanwhile Joe Biden's just sitting there asleep according to the Wall Street Journal When Arab leaders met Xi Jinping at a regional summit in Riyadh last December the Chinese head of state pitched an unprecedented idea a high-level Gathering of Gulf Arab monarchs and Iranian officials in Beijing in 2023 people familiar with the plan said days later Tehran signed on as well By Friday China had brokered a deal to restore relations between Iran and Saudi Arabia Which had gone seven years without ties the broader summit between Iran and the six nation Gulf Cooperation Council Which hasn't previously been reported is on track for later this year according to those people mr Xi's diplomatic initiative shows Beijing sees a central role for itself as a new power broker in the Middle East a Strategic region where the u.s. Has been the most influential outside player for decades No longer focused exclusively on energy and trade flows China's foray into the region's politics signals a new chapter in competition between Beijing and Washington this again is going to actually increase the possibility of a serious war in the region because if The Abraham Accords were a guarantor against war because Iran couldn't go up against everybody combined Especially Israel using Saudi airspace what happens exactly when the opposite occurs when China brokers some sort of cold rapprochement Between Iran and Saudi Arabia and Israel is isolated again while Iran is developing nuclear weapons. It's a real problem apparently the Netanyahu team is blaming the Biden administration for the deal according to anonymous officials quote There was a feeling of American and Israeli weakness So Saudi Arabia turned to other channels now again is this going to change the underlying problem between Iran and Saudi Arabia? Absolutely not But it does mean that China has been able to weigh in in a very powerful way in the Middle East That is to the detriment of America and America's allies and Joe Biden is asleep at the switch as per our usual arrangement Let's do some things. I like and then we'll do some things that I hate so things I like today So there is a a woman who starred in stranger things. I believe it was in the first season Her name is Grace Von Dien and Grace Van Dien She's now a twitch streamer and she was asked why she had turned down acting projects in the recent past Because obviously she's a good actress beautiful woman and she said because I don't feel like being sexually abused by directors

French woman Gabrielle Lebraton sought financial compensation from the city after security guards ordered her to leave the premise when she refused to cover up her breasts. She was with a five-year-old son when the incident happened. That kid's going to grow up healthy and happy, I think. Speaking to German newspaper Die Selt, at the time about why she believed it was gender discrimination, said for me, and I teach this to my son, there is no difference for both men and women. The breast is a secondary sexual characteristic, but men have the freedom to remove their clothes when it is hot and women do not. No, actually, men's chests are not considered generally a secondary sexual characteristic. Excited to see Germany really embracing full-on androgyny. Of course, that is not about androgyny. Teenage boys everywhere in Germany are very excited today. The patriarchy is, again, incredibly, incredibly clever. Great job, everyone. Great job.

And meanwhile, speaking of people who have clever themselves out of existence, Seth Rogen says that he is very happy not to have kids. In this particular case, I will agree with him. He said in a recent interview that he and his wife are very excited

The happiest path generally is to be incredibly narcissistic and to do what you want every day, all day, and then let the consequences fall where they may. This makes it selfish and bad person. Also, it's not a path to actual happiness, it's a path to temporary pleasure, it's not a path to actual happiness. It turns out that this is what happens in a society that says that human beings have no actual telos, they have no actual purpose, they have no actual meaning. Whatever floats your boat is the order of the day. Whatever floats your boat is not a situation that society can sustain, that's what we've been experiencing in Western civilization over the course of time. Seth Rogen can do exactly what he pleases. It's a free society, but a free society without the basis of any moral duty does not, is not meant to last long on this earth. All right, you guys, the rest of the show is continuing right now. You're not gonna wanna miss it. We'll be getting into Anthony Fauci protesting. No one will ever, what could he be prosecuted for?

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