Crypto Critics' Corner

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Episode 131 – Elon Musk’s ESG Con (feat. Eric Roesch the ESGHound)

Elon Musk's ESG Con (Feat. Eric Roesch) – Crypto Critics' Corner

Today Bennett and Cas are joined by Eric Roesch to discuss Elon Musk, ESG (environmental, social, governance), and the Golden Age of Fraud. Roesch, an environmental policy expert, tells us about the history of ESG, why it doesn't effectively combat the issues it claims to, and how Elon Musk – the wealthiest man in the world – has used ESG, government subsidies, and asking for forgiveness instead of permission to hoodwink the American public. This episode was recorded September 20th, 2023.

Cas Piancey and Bennett Tomlin are joined by Eric Roesch to discuss Elon Musk’s relationship to regulation and what the best form of regulations are.

This episode was recorded on September 13th, 2023.

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English Transcript:

00:00:05:03 - 00:00:12:00
Cas Piancey
Welcome back, everyone. I am Cas Piancey. I'm joined, as usual, by my partner in crime, Mr. Bennett Tomlin. How are you today?

00:00:12:02 - 00:00:13:09
Bennett Tomlin
I'm doing pretty well. How are you, Cas?

00:00:14:02 - 00:00:30:12
Cas Piancey
I'm doing good. It's early morning here, but today we're joined by a really special guest, somebody who's going to be chatting us through some really fun kind of concepts of fraud, individuals involved that we I'm surprised we haven't discussed before. Eric Roesch, how are you today, sir?

00:00:30:12 - 00:00:31:22
Eric Roesch
I'm all right. How are you guys?

00:00:31:22 - 00:00:32:22
Cas Piancey
Hanging in there.

00:00:33:00 - 00:00:55:22
Cas Piancey
As you said, when we first jumped on, there's a lot of fraud in the world and it is hard to have the find the time to to constantly look into it, which is your job. I reached out to you because I've been reading some of your Elon Musk work, which has been incredibly informative. I'm honestly shocked that Bennett and I have never discussed, I guess we've never discussed in an episode Elon Musk and our issues with him.

00:00:55:23 - 00:00:58:00
Bennett Tomlin
I mean, I've made a bunch of videos.

00:00:58:01 - 00:01:18:07
Cas Piancey
Yes. So, yes. On your personal Channel you and I, who I think we almost equally don't like, this guy has somehow avoided this topic. But Eric, your work on Space X and some of the permitting the issues around the chemicals and the sheer like I don't give a shit about these regulations right. Been on the front lines of this.

00:01:18:07 - 00:01:22:11
Cas Piancey
Can you talk about why you're so into this, why you're so fascinated by it?

00:01:22:11 - 00:01:54:22
Eric Roesch
I actually want to start with a story from 1959. This is actually a piece I'm working on. We're going to go to the corporate headquarters of the Shiso Corporation in Myanmar, the province in in Japan. In December of 1959, the CEO of the Chiso Corporation, which was a chemical company, had a big PR presentation company, had just installed a new water purification system for their wastewater system, and he famously took a glass of water out of the bottom of this purification vessel, and he drank it as a PR stunt.

00:01:54:23 - 00:02:15:21
Eric Roesch
Just that moment in time is really interesting for me, because it was preceded by multiple decades of the Chiso Corporation dumping organic methylmercury into the Bay of Myanmar. It’s an organic liquid. It goes to the bottom. It bio accumulates as it kind of goes up through the ecosystems. The bacteria will kind of incorporate the methylmercury, it stays in the cells and it'll go up to the muscles.

00:02:15:21 - 00:02:36:06
Eric Roesch
And then the fish cat started eating it and they started showing weird symptoms. Children are getting sick. The effects of this disease have gone on and it's still actually going on today. The reason that that moment in time is so interesting is that people knew in advance that there were problems. And it was very clear that this was this was the one kind of chemical dirty company in the area.

00:02:36:10 - 00:03:00:16
Eric Roesch
And so it was easy for people to point at it. And what's really interesting about that PR event is that that was forced to be installed because finally government took action and this is in 1959, but they actually didn't start discharging that chemical for about a decade afterwards. And what's fascinating about it is that treatment technique was basically a way to get out particulates didn't actually treat the methylmercury.

00:03:00:16 - 00:03:23:18
Eric Roesch
The other reason I bring it up is that for the PR stunt and the fact it was ineffective and then also the costs over this huge period of time were were something that shareholders in the company would have wanted to know. That's something that we would have wanted to discuss. And so that's why my my kind of my my blog is kind of focused on these kind of ESG topics, which has become this really kind of crudely discussed topic.

00:03:23:18 - 00:03:36:10
Eric Roesch
But really it's about disclosure and how fraud, genuine things, fraudulent risks can kind of manifest in ways that people don't understand until after the fact. That's where I want to start off that discussion.

00:03:36:10 - 00:03:58:23
Bennett Tomlin
That's an interesting story you told, because I'm imagining this executive drinking this cup of water to prove it's clean. And I'm reminded of a more recent political event that kind of aped that same imagery. And I'm, of course, thinking of Barack Obama visiting Flint, Michigan, after they had completed the first wave of fixing some of the water issues.

00:03:58:23 - 00:04:11:22
Bennett Tomlin
Yes. And they were holding this big press conference. And he makes a big deal of getting this glass of water. He says it's straight from the tap and he drinks it up to prove it safe. Do you have any thoughts on that imagery, that parallel imagery between those two?

00:04:12:00 - 00:04:32:06
Eric Roesch
Well, the reason I brought it up is, is specifically because of that. Well, there's also an example where Halliburton executives and I believe Dick Cheney was at this event as well, they drank basically a diluted version of the fracking fluid out of out of, you know, champagne glasses. And I can see it's safe. And it's really fascinating because it's like you look at like basically that was the first example of that.

00:04:32:06 - 00:04:54:12
Eric Roesch
And we keep doing that. And Obama's I think he's kind of at the inflection point of why we are where we are. And he's a really great segue into like Musk and how he's become kind of untouchable. How are you drinking the glass of water still, Right? Because even if even if it had a toxic amount. Right. Methylmercury is dangerous because it accumulates slowly over time and then works its way up the food chain So you could drink glass.

00:04:54:12 - 00:05:14:03
Eric Roesch
It has a decent amount of methylmercury in it. And like that, water isn't going to do anything. You have to drink that same glass of water. You have to eat those shellfish or those oysters, you know, every day for years. And that it builds up kind of manifests in this debilitating disease. The Obama example is exactly why I still bring that case up, because it's like, have we actually learned nothing?

00:05:14:03 - 00:05:43:07
Cas Piancey
I actually have an even more recent example of exactly this same thing, which is crazy, but I don't know if you guys are familiar. There's a YouTuber named Kyle Hill who does science. Science YouTube stuff, and he was invited to Fukushima because, as you guys know, they're going to be releasing this this radioactive water that they've accumulated because they've if anyone is unfamiliar, they've had to kind of take seawater, pump it into this, completely effed up their reactor core and basically make sure that it doesn't explode again.

00:05:43:09 - 00:06:02:16
Cas Piancey
And they're storing this water because they don't want to just pump it straight out into the ocean. Well, now they're going to be pumping it straight out into the ocean after they've tried to kind of dilute it down and ensure that it's not super full of radiation. But they're getting pushback from places like China and South Korea who are saying, hey, we're not going to eat your fish anymore.

00:06:02:16 - 00:06:20:08
Cas Piancey
We're not going to eat your food anymore. Like this is unacceptable. What you're doing. To be fair, I don't think this is on par with any of the things we've discussed so far. I'm bringing it up because Kyle Hill went to a Fukushima tour and they did exactly what you're talking about. They pulled out bottles of water and said, here, everyone, look at this radioactive water.

00:06:20:12 - 00:06:38:19
Cas Piancey
It's not even radioactive. You guys are fine. Nothing's happening. You're you're not getting hit and your Geiger counters aren't going crazy. Well, it turns out that they're using plastic bottles. So this is, I think, theta radiation. It doesn't go through a thick plastic bottle anyway, Like, nobody is drinking it. Nobody is doing like any of the proof isn't actually proof.

00:06:38:19 - 00:06:47:08
Cas Piancey
This is actually part of what we're talking about in that this is just PR shit. Whether it's Obama doing it, the Fukushima plant doing it, or in their fifties shiso.

00:06:47:13 - 00:07:08:23
Eric Roesch
So that's the other thing. All right. So the Fukushima water rights, you look at the data they've presented, I actually think it's probably not a problem because it's above background. That brings up the question, why do we distrust it right in the choices of corporations? A perfect example. Well, you know, the government's lied about this before. It's the same thing that leaves a lot of vaccine skepticism we see about these things don't just come from nowhere.

00:07:08:23 - 00:07:36:06
Eric Roesch
Right. You see, you know, these these kinds of paranoia as they exist, as kind of this legacy of pastimes. People have lied. And so I think in the in the specific example of Fukushima. Right. Like it's I think it's a foolish PR stunt for the reasons that, you know, I bring up. But but but if you actually look at the data, like as long as the data is what they're presenting, like the radiation is below background, but that skeptics ism exists because we've been lied do before.

00:07:36:06 - 00:07:43:21
Eric Roesch
Good to be skeptical but also creates some of the more dangerous conspiracy type thinking that that still kind of is pervasive today.

00:07:43:21 - 00:08:00:14
Bennett Tomlin
So kind of speaking more to some of those political and societal features that have gotten us to this point where there's kind of this disregard for regulations and this emphasis on appearance of compliance over compliance itself. Do you have thoughts on like what specifically have like led us to this point?

00:08:00:14 - 00:08:23:09
Eric Roesch
I know you guys had Jim Chanos on, and I remember listening to that episode and it's I know he's kind of talked about it before. I work for a basically a legacy company that had a lot of Enron assets, just the physical assets. And you talk to people that were, you know, ex Enron employees at the time. And I think some of this is, you know, we go back to that that 2000 era right from the dot com blow up kind of through Enron.

00:08:23:09 - 00:08:49:01
Eric Roesch
There was a real a real concerted public push to, you know, finally do something against wrongdoers and, you know, say what you will about the, you know, George W Bush Justice Administration. They they went after, you know, the head honchos of these companies hard. And I for myself, you know, kind of fast forwarding to, you know, someone who I graduated university in 2006.

00:08:49:01 - 00:09:09:16
Eric Roesch
Right. So I'm I'm I was graduated right into the teeth when people really started to get laid off going into the, you know, the GFC, you know, and I was a big Obama supporter at the time, partially because of like, well, we need to you know, we need to do something about all of this obvious criminality that led to our entire global economic system blowing up.

00:09:09:16 - 00:09:28:19
Eric Roesch
And then nothing happened. For me, that's like the big inflection point that one. And then kind of a more specific example is that no big executive right went went to prison for their role in blowing up the US economy and all the job losses and, you know, death that resulted. I think a more specific example is like if you look at like for example, Solyndra is a perfect example.

00:09:28:19 - 00:09:51:13
Eric Roesch
That was a juicy kind of, you know, Republican talking point against Obama really wasn't a good thing for it to happen, is that we gave a company that had a technique for making solar cells that wasn't very good, wasn't proven, and they were kind of just lighting money on fire. And the U.S. government under the Department of Energy just handed them $200 million and they blew up kind of like within a year.

00:09:51:18 - 00:10:07:17
Eric Roesch
Right. And there's all sorts of fraud there that was not really ever kind of sussed out. And so I point to those things because I think that was kind of the turning point where we said, you know, fraud will kind of deal with the consequences when it blows up. We're not going to prosecute, you know, really the kind of the big people in charge.

00:10:07:17 - 00:10:25:22
Eric Roesch
And I think that's been policy through the entire Obama administration and then through the Trump administration. I think it's been kind of continuous. And I think that's where you see people like you're Sam Bankman-fried, you know, your Elon Musk's your Elizabeth Holmes. A lot of these things kind of stems from that. I want to say like original sin.

00:10:25:22 - 00:10:43:11
Eric Roesch
I think the inflection point is kind of the beginning of the Obama administration where we said we need to keep, you know, the economy going forward and we're not going to, you know, destroy our big companies. Our special boys, because it's too difficult to deal with the fallout. And we're just going to kind of let things just go along.

00:10:43:11 - 00:10:47:16
Eric Roesch
And I think that's kind of a great explanation of why we are where we are.

00:10:47:17 - 00:11:07:20
Cas Piancey
Do you think that people like your Elon Musk's or, you know, you're Elizabeth Holmes, whatever, do you think these these people actually saw that? And we're like, oh, this is an opportunity. Have free reign. Like, who cares if I make a completely false statement about when a product is going to launch or if it's effective or if they've gotten all the right permits and stuff.

00:11:08:00 - 00:11:20:21
Cas Piancey
I can just do whatever I want and nothing is going to happen to me. And great. I mean, obviously something did happen with Elizabeth Holmes, but I'm just like, do you think that there was actually like a click in their brains to be like, Oh fuck, I can commit fraud now?

00:11:20:21 - 00:11:37:04
Eric Roesch
I think it was an iteration process, if it makes sense. Right? You ratchet up, right? If you say, Why am I going to take this risk and take this risk and take this risk? And then if you never there aren't any consequences for it. So I think, you know, people like, you know, Musk drives me wild. I can't I can't stand kind of a lot of the things he does.

00:11:37:04 - 00:11:51:20
Eric Roesch
But like he's a creation of that ratcheting by point him because I think he's kind of like the end point or almost like, you know, it's like, well, how can you get more absurd than this? But it's not like he's alone out there, right? Even among people who have not really been punished, like we talk about like Travis Kalanick, next.

00:11:51:20 - 00:12:11:12
Eric Roesch
Great example at Uber. Right. You know, there are all these regulations and sometimes they were, you know, really just protection rackets towards, you know, taxis in bigger cities. But they said we're literally going to come in and not comply with the rules and I dare you to stop us. And they kind of didn't stop them. I think it just toddler pushing boundaries or whatever you want to call it.

00:12:11:12 - 00:12:27:16
Eric Roesch
You know, maybe the velociraptor in the original Jurassic Park testing the fence over and over again. Right. And you look for those boundaries. And if there's no punishment for it, then you just keep pushing it and pushing and pushing it. And I think that's a great explanation of of why we are where we are. And that's a huge part of the crypto story.

00:12:27:17 - 00:12:35:18
Eric Roesch
You don't have guardrails, regulatory or otherwise institutional, and people just keep pushing. And we end up with Sam Bankman-fried.

00:12:35:21 - 00:13:04:14
Cas Piancey
It's something I haven't thought about before, but I'm actually now curious, like as you're describing this, right, Like we have this kind of golden age of fraud. We see it play out. It takes a long time as it's ratcheting up, right? We see the the dot com bubble. We see the oh eight financial crisis. And I'm wondering if it was contained, if the massive frauds were more or less contained to the giant capital capitalistic country that has always striven for making the most money and being the most productive.

00:13:04:19 - 00:13:29:17
Cas Piancey
And then crypto kind of has globalized this fraud in that like it seems like it's everywhere now. Like this is not we've got one coin. We've got like a numerous, numerous frauds that are transpiring in big ways. Hindenburg research does really good, really good work on international fraud, whether it's in India or Europe or America. Right. And and I'm just wondering if that was that's the inflection point, right?

00:13:29:17 - 00:13:37:22
Cas Piancey
There is crypto is like, oh, now fraud can be global as opposed to or if or if that again, ratchet up iterations of it slowly. What's going to happen.

00:13:37:22 - 00:13:57:12
Eric Roesch
No matter what? Maybe a little bit of both. But I mean, like let's not forget, right? I mean, if you look at Carson BLOCK, he made his bones, you know, going through like these just hilariously obvious frauds post GFC in in China because they were just making up just entire production companies and industrial sector that didn't exist. Right.

00:13:57:12 - 00:14:14:10
Eric Roesch
I don't know if I would blame it on crypto. I think crypto has kind of normalized it. I seen people that I grew up with being like, you know, on other social media sites like on Facebook or Instagram, it's almost like it's been you've been able to like bootstrap your own, like mini frauds. I think that's, if anything, that's been probably the innovation of crypto in that sector.

00:14:14:10 - 00:14:49:14
Bennett Tomlin
One thing that's kind of interesting to me and we talked about this when Chanos was on, is that most frauds do kind of start with small infractions that eventually put you in a position where you end up making bigger and bigger infractions to deal with the previous things that happen. And sometimes when I'm silly enough to read the replies to some of your articles in tweets, there's a tendency among certain sycophants to describe the violations as petty is not important as insignias account compared to the mission of SpaceX, X or Ilan or whatever not deserving of consideration.

00:14:49:16 - 00:15:02:13
Bennett Tomlin
And I wonder if you think that that kind of cultural belief, that idea around that type of petty rule breaking creates the kind of culture that eventually leads to like the larger macro, really big frauds?

00:15:02:17 - 00:15:20:03
Eric Roesch
I think it does. Do we talk about minor infractions or I think in the United States, one of the cultural touchstones of, you know, why we have, for example, environmental rules, is that the Cuyahoga River, which runs through Cleveland, was catching on fire on a regular basis. Right. And that wasn't one incident of someone or one bad person.

00:15:20:03 - 00:15:39:13
Eric Roesch
Right? That's that's decades of probably small on the margin right discharges and they add up over time. Right. And so we had these rules and you fix stuff and you kind of or you fix every improve it you know greatly and then it's like, well, why can't we I can't be ratchet back up And it's like, well, the rules are say no discharges without X, Y, z.

00:15:39:15 - 00:15:59:21
Eric Roesch
And if you say, well, except for in the case where it's like my my favorite billionaire wants to do it or whatever, then then like if you're selectively enforcing rules, then they don't effectively exist. I think there's certainly some of that. But when it comes to like what what Musk is saying, what people that, you know, go go out and advocate for on social media is like democratized it, right.

00:15:59:21 - 00:16:17:08
Eric Roesch
Where it's like used to have like people go on TV and yell it right or whatever on behalf of the Heartland Institute or whoever, whoever it is. But now it's just kind of been like bread around. We talk about musk like and I'm like screaming about, like ESG or like the regulators or whatever. It's like, it's like literally talking points that Koch brothers would use in the 1980s.

00:16:17:08 - 00:16:42:08
Eric Roesch
You know, they're kind of the stereotypical, like liberal boogeyman, although I think they're a little more complicated than people like to make them out to be better refinery in Minnesota. That's basically a big trader ammonia ongoing discharge for years plumes and the cost to install I think was like a distillation unit or some some sort of separator unit to be able to, you know, prevent this kind of underground plume of discharge would cost like, say, $200 million federal fines.

00:16:42:08 - 00:17:02:12
Eric Roesch
What like would max out at like $10 Million a year. And they would say, well, you know, I could spend this money on this equipment or I could just pay the fine. Right? And they made a rational argument, Well, I'm just going to pay the fine because there's no other consequence. Right? There's no like escalation that doesn't get into like criminal stuff because there's too many layers of separation and and coke companies, too.

00:17:02:12 - 00:17:21:07
Eric Roesch
I mean, I want to say to their credit, at some point they're like, well, this is actually there's there's externalities we haven't thought about, you know, reputational risks like this can start to create other types of fraud. Turns out companies that say, you know, screw off to the rules, they tend to actually perform worse economically. There are some studies on that company.

00:17:21:07 - 00:17:42:02
Eric Roesch
And even the Koch brothers themselves kind of walk back that aggressive stance. But it's kind of coming back and it's just really interesting to see it from like kind of the original, like greenwashing. Yes. Soaking up ESG dollars type of guy. MUSK So I find it really fascinating, but it's cyclical. These types of issues kind of express themselves in different ways as we go forward in time.

00:17:42:04 - 00:18:07:19
Cas Piancey
We had this last launch of the Starship or whatever they're calling it, and it exploded and kind of sent debris across a widespread area in Texas. And as as Bennett was suggesting here, we had sycophants and other people who were just kind of like, what's the big deal? Like, chill out, man. It's just an explosion, just some normal, like plastics in the air, whatever.

00:18:07:19 - 00:18:23:03
Cas Piancey
Like they're just like metal and like, who cares? Whereas you were pointing to some serious issues that could be going on, plus you pointed to serious issues with the launch site itself that need to be like definitely need to be fixed and should have been fixed long before this launch took place.

00:18:23:05 - 00:18:23:18
Eric Roesch
Right.

00:18:23:20 - 00:18:39:07
Cas Piancey
But I don't know if you got to see this, but there was a piece of footage floating around featuring Elon Musk at the All in Summit. And one of the things they were asking him about was like, okay, so you guys have put this star, this starship back up and you're ready to launch again. Why haven't you launched it yet?

00:18:39:07 - 00:19:00:02
Cas Piancey
When are you going to launch this thing? And he's like, Well, we're just waiting for the FAA to approve it. There's no pushback after that, right? The excuses, Oh, well, they haven't approved it yet. Like this is on the government. It's not on me, but nobody's asking, why aren't they letting you launch it yet? It's just fascinating to me that, like, the questioning stops with like, I blame the government and everyone's like, Oh, yeah, me too.

00:19:00:03 - 00:19:07:00
Cas Piancey
Right. Do you want to go into why they're not letting him? Oh, yeah. You want to like, Yeah, sure. The whole thing was just incredible to hear for me.

00:19:07:01 - 00:19:34:10
Eric Roesch
Well, first of all, that site should have not been approved in the manner it was in the first place. And there's some real issues. But the basics were is that, you know, when they're first getting approval to kind of upgrade the site to be able to launch the biggest rocket in history, they went through and they did a process under a law called NEPA, which NEPA has its problems, but it is what it is asks you if you're if your project is going to have a significant impact to the environment, you have to go through this very long process.

00:19:34:10 - 00:19:57:16
Eric Roesch
If it's going to only have a less than significant impact, you can do a bridge process. And so this rocket right, which we've already seen, some of the fallout for the law, requires you to disclose the impacts. And so what they did is, is they effectively brainwashed or kind of minimized the actual impacts so they could claim that this would be an insignificant impact, which is kind of laughable on its face when you look at it.

00:19:57:16 - 00:20:23:05
Eric Roesch
And the reason is their launch site is on like it's under 20 acres surrounded by land that is, you know, protected wildlife habitat. It's beaches that is used for the public. It's owned by the state of Texas and the federal government. So they don't own the land that they're kind of impacting. And if you if you compare it to like one of the big rocket launch sites at Kennedy Space Center, like the actual launch site is like something like, you know, 5 to 10 times bigger by area, right?

00:20:23:05 - 00:20:41:00
Eric Roesch
And that's area that's totally controlled. And then those externalities on top of the rockets spill out over into more area that's owned by NASA. And what's the what what SpaceX is doing is they've got this little postage stamp kind of that surrounded by land that they don't own or control, and they're kind of spilling their externalities on it and they're not doing a great job of disclosing it.

00:20:41:00 - 00:20:58:10
Eric Roesch
I knew the reason when they did this first launch, the kind of one of the big issues was that they didn't have kind of the flowing water deluge or systems to to manage and channel that The flames they were just launching off what you call like a milk still stool. All these people on the Internet were like, well, of course they don't need this.

00:20:58:10 - 00:21:14:12
Eric Roesch
The system or this, you know, flame diverter system, because, you know, SpaceX has the smartest engineers in the world. And so why would they And I looked at, well, they would have these extra permitting requirements. Then they said they wouldn't do this and this would take them years to get approval. And the reason they're doing it is for expediency.

00:21:14:12 - 00:21:35:21
Eric Roesch
It's not because they've actually sat through and modeled it. And I had people screaming at me, you know, before the launch. And then sure enough, the launch happened. And they to be clear, you know, you know, Cass, you brought up, you know, the rocket exploding. The issue was with the rocket exploding, was that the system to automatically terminate the rocket didn't fire off, but but exploding in the air was actually kind of a known and expected outcome.

00:21:35:21 - 00:22:01:14
Eric Roesch
So I'm not actually shocked by that part. But the actual impacts on the ground for them, like blasting this launch pad right into smithereens, they sent just like tons of debris out into the wetlands, into this protected area, kind of a a big cloud of dust, made it into, you know, a city that's like five miles away, is that those impacts were as a result of not building the infrastructure they should have had, which is, you know, kind of this water deluge system in this flame diverter system.

00:22:01:14 - 00:22:17:18
Eric Roesch
And they didn't disclose that as a possible outcome. So in this in this document, when they were getting authorization, they didn't ever describe, you know, these area impacts to this very sensitive wetland. Right. A lot of the area kind of for context, people are like, oh, it's just rocks or dirt is that it's a, you know, an algo wetland.

00:22:17:18 - 00:22:38:09
Eric Roesch
And so you've got this thin algae crust that can take decades to form. So so what they did is their impacts were not properly modeled, they weren't properly disclosed. And then when they, you know, kind of mess up, they're like, well, we're just going to rush back to launch. And part of the problem is that one of the solutions that they did implement for this upcoming launch is, you know, this this water deluge system, which they should have had.

00:22:38:11 - 00:23:00:21
Eric Roesch
But it turns out that the water that's coming off this, which is what we would call, you know, industrial treatment, water is now just being allowed to just run directly into a wetland that's protected under the Clean Water Act. And they've not gotten a permit for it. They need to have one, but they haven't. And so it's just this kind of ongoing, you know, Whac-A-Mole of they picked a site that was inappropriately sized and set up for what they wanted to do.

00:23:00:23 - 00:23:18:10
Eric Roesch
And instead of addressing it years ago, how do we develop this site in a way that is consistent with our peers and that is legal? They're just like, well, let's try this. Let's try this right? Let's try this. And when someone holds them up and says, no, the law clearly says you must do X, Y, Z, then that's when Musk takes to Twitter and just start screaming at people.

00:23:18:10 - 00:23:30:13
Eric Roesch
And I don't ultimately know if there will be a hold up from it. There should be. But that's I mean, I guess that's kind of the that's kind of the short and dirty explanation of kind of what's going on and why it's a problem.

00:23:30:14 - 00:23:47:04
Cas Piancey
Much as Ben and I don't like Elon Musk, it seems like you're even admitting here that like this isn't a Musk issue. This is like a regulatory issue. This is this has very little to do with like while Musk might be the one breaking the rules, if they're not going to do anything about it, it doesn't really matter if he's breaking the rules, Right?

00:23:47:05 - 00:24:04:11
Eric Roesch
That's actually a great way to put it. He does it in such an outrageous manner that it's almost like I'm glad that he's there because, you know, if and when there's a big consequence from something that he does, then we can point to that. There are plenty of executives, including at companies that are well-run, that I would invest if they don't have the public's best interests at heart.

00:24:04:11 - 00:24:24:05
Eric Roesch
Right. But they they know well enough at least pretend to play the game on the surface. And kind of Musk is unique because he's he really is like, I'm not even going to play the game. And so it's kind of helped him be able to like kind of bully people into indeed giving way to him. I think when there is blowback, I think it'll be bad for him because the reason that companies.

00:24:24:10 - 00:24:42:18
Eric Roesch
Right. Do fraud and kind of a granular level like the CEO isn't going out and saying, hey, you need to do this fraud. Right. The CEO says, I need you to make numbers this this quarter and I don't care how it happens and it gets down to the, you know, the director level and the VP level and then the operating manager is like, well, I have to make the numbers.

00:24:42:18 - 00:24:58:14
Eric Roesch
I'm going to get fired. I'm not going get my bonus. And they'll do Pi Jain fraud or they'll they'll break the law. You know, they'll they won't get a regulatory clearance to do something. The CEO is kind of buffered himself from that. And that's kind of the way that they're set up. But Musk does not believe in doing that.

00:24:58:14 - 00:25:10:23
Eric Roesch
I kind of weirdly respect him for it, but that's kind of his whole thing, right? So he's he's short circuited that whole process, which is probably good for him in the short term, but may not be so great when there's kind of consequences down the road.

00:25:11:00 - 00:25:30:00
Bennett Tomlin
It was funny listening to you talk about that and executives insulating themselves because in coverage of some of the like organized crime families in America after like Rudy started going after them with Rico and stuff, you saw many of the leaders take more deliberate steps to try to distance themselves from like the orders that were being given and stuff like that.

00:25:30:06 - 00:25:47:13
Bennett Tomlin
So that it would be harder to pin any particular crimes on them. And so that was just a funny analog that popped into my head when you were telling that story that Musk instead insists and getting down there and dirty in the trenches, not a direct analog. Obviously, Musk isn't running an organized crime family, presumably.

00:25:47:13 - 00:25:56:11
Eric Roesch
Jury's out on that. No, no, I that's that that is not the presumption I would make, although I have described him as going on a multidecade crime spree, which I think is supported by fact.

00:25:56:11 - 00:26:21:06
Bennett Tomlin
Yeah, it feels justified. One of the things that we kind of danced around was we were talking about kind of unequal enforcement of these rules. And that's often kind of my worry here, because when you have certain regulations and they end up applied so unequally, the unequal ness is often a like point of contention where you worry that resulting in equal ness is due to drift, graft or other forms of corruption.

00:26:21:08 - 00:26:47:03
Bennett Tomlin
Right. And I think that that can be seen sometimes in Musk's actions where because of his size, his wealth, the number of corporations he runs and like how connected he is, I think that some regulators and prosecutors are reticent to go after him because he represents like the case. If you go after Musk, there's a good chance that's the case that defines your career.

00:26:47:09 - 00:27:01:06
Bennett Tomlin
And if you lose it, you're always going to be the guy who lost going after Musk and can even prove he did this. Do you have any thoughts on like the interaction between like these unequal enforcement, these laws and regulations and how it interacts with like these different types of companies?

00:27:01:09 - 00:27:20:12
Eric Roesch
Yep. And so I've worked I've worked in an industry and I've also been a regulator myself, a Clean Air Act regulator. And what you see is really interesting is this dynamic. The government doesn't like to be the one that like executes a company, puts it out of business if it's like, you know, doing well, that's kind of true across the board.

00:27:20:16 - 00:27:41:09
Eric Roesch
And so that's why small companies, especially very small companies, kind of get special protections and a lot of rules where they actually get these, you know, special assistance programs. I don't actually entirely disagree with it, but but there's you know, they get kind of some leeway before they they get in trouble. And then the large companies, what happens is that a lot of times the regulations kind of turn into taxes.

00:27:41:11 - 00:28:03:23
Eric Roesch
Right. And so we see. Right. You know, your Facebook, yeah, you have to pay $500 million. You have to pay, you know, billions and billions of dollars at times. And these companies are making so much money that it's like, well, this is just the regulatory tax. Companies in the middle struggle with that a little bit more because they can get you know, they can have big enough operations to cause issues where a regulator will feel like they need to go after them.

00:28:03:23 - 00:28:22:19
Eric Roesch
And the medium sized company doesn't really have the resources or the lobbying power to prevent it. And so they get themselves into trouble where they can be put out of business by the government. But I think ultimately it's that this is and this is kind of what I talk about, that kind of like Obama neoliberal framework is that we want to do all these great things.

00:28:22:19 - 00:28:40:06
Eric Roesch
We don't want to be responsible for like killing our innovators. And I think Musk has really weaponized that. And he's been like, you know, he goes into things and he's like, he's like, got it. You know, he's got a suicide vest on, right? It's like if you go after me at all, I'm going to just, you know, you're going to blow up my company like, let's let's see you do it.

00:28:40:08 - 00:29:02:19
Eric Roesch
I think he's kind of had that attitude, which is pretty unique because he has this scale. But like, you couldn't levy Right. For example, if you were to levy a I know a five or $10 Billion fine against Google, like they would be really mad about it. They'd obviously fight it, but they could just pay it, right? If you were to levy a five or $10 billion penalty against Tesla, like you'd have to raise more money.

00:29:02:19 - 00:29:24:18
Eric Roesch
They would be like functionally insolvent. Right? And so, like there's like this this disconnect between the size of their market capitalization and the impacts they have on kind of how investors, you know, interface with Tesla versus the actual economic realities of how much profit they're generating. So there's a lot of interesting dynamics. But yeah, it's basically that government doesn't want to just be responsible for killing companies.

00:29:24:18 - 00:29:39:05
Eric Roesch
And so they kind of let them hopefully just blow up through their own fraud and they come in afterwards and then, you know, slap the cuffs on, on, on the guy in charge, Right? I mean, like, you know, RTX, you know, get a better example of that, right? You let them blow up and that's like, well, this this this bad, terrible guy.

00:29:39:05 - 00:29:55:00
Eric Roesch
He's he's the one. We're going to slap the cuffs on him and now we're all good. It's been that way for a long time. But I would say it kind of that that oh 8 to 2010 era really is when it just kind of became formalized. And then Musk is just kind of a natural progression from that.

00:29:55:00 - 00:30:17:14
Cas Piancey
As you're explaining this, all I keep thinking about in my head is one of the ways that Elon Musk has managed to keep his companies solvent and profitable is by accepting a shit ton of government money, right? Like whether it's subsidies for electric vehicles or we're talking about StarLink, where they are accepting government contracts and space, where they're accepting government contracts.

00:30:17:14 - 00:30:39:19
Cas Piancey
And I think I just checked and SpaceX made $55 million profit on $1.5 billion revenue last quarter. He's making money from the government. So I can only assume and maybe this is presumptuous of me, but I can only assume that the government really doesn't want to be embarrassed by somebody that they're constantly providing money to to keep his his enormous corporations propped up.

00:30:39:23 - 00:30:56:14
Cas Piancey
And while he attacks them, he constantly is attacking Biden or the Democrats or whoever he wants to attack. At that moment, it sure seems like he's more than willing to accept money from them to keep his companies going. And I I'm just curious if you think that plays a role, these government contracts and.

00:30:56:16 - 00:31:16:19
Eric Roesch
Oh, absolutely it does. And to be clear to to to characterize from what we've seen from space X's own financials, they are not anywhere close to being profitable. They've lump payments in and out to kind of either show like they'll selectively say, oh, we were cash flow positive for the year. They'll say like middle of quarter one or whatever.

00:31:16:19 - 00:31:31:06
Eric Roesch
You're right for some bills have to go out the door and then profits. You can do a lot of stuff. This is the thing with with with Tesla is that they did become, you know, decently profitable. I think it's at the expense of releasing more models in the future. I don't think it's going to just be favorable going forward.

00:31:31:06 - 00:32:03:13
Eric Roesch
But they were able to generate you know, they generated billions of dollars in profits. SpaceX has absolutely not. They've incinerated, I've estimated, somewhere around 10 billion and invested in capital and then, you know, several billion in contract payments upfront. So it's actually really interesting because because not only is Musk reliant on them for their kind of top line, but like he's also reliant on this this ecosystem that allows that that I guess, rewards people to continue to pump capital into companies that don't return that capital ever.

00:32:03:13 - 00:32:21:20
Eric Roesch
It's all connected, right? It's like Musk is paid at both ends. And it's I'm amazed he's been able to get away with it. But it's kind of as I as I said, I kind of appreciate him for it because it kind of shows how farcical that whole circular economy is. And you see it from like every type of regulator, right?

00:32:21:20 - 00:32:39:22
Eric Roesch
So if you look at, you know, sexy guys that are these these really up and coming attorneys, they go around and they turn into corporate counsel. And then if a good enough government gig shows up in presidential administration, they'll they'll they'll get that job And it's this this door and you see it it's in it's very true in the FCC, FAA, FDA.

00:32:39:22 - 00:32:55:09
Eric Roesch
And as long as someone's exploiting that, you're going to have these kind of bureaucratic, you know, enforcement mechanism. They're going to grind to a halt until the public says you have to actually do something about it. I think that's I would like to think that that we're at that at the kind of nexus or the peak of that.

00:32:55:09 - 00:33:01:20
Eric Roesch
But I've been surprised before. So it could just continue on forever or for a lot longer than I would like.

00:33:01:22 - 00:33:37:09
Bennett Tomlin
In kind of like you mentioned, we saw forms of backsliding under Obama and then again under Trump, under both the different parties and like my entire lifetime, basically growing up to this point, I've been hearing the narrative from at least one group that often in our society, the role of these regulations is for existing players by co-opting the regulatory process to create barriers for new entries in what are basically just costs for themselves that they can afford to pay to try to like reduce their competition and make it so that they have more control over the industry.

00:33:37:09 - 00:33:46:14
Bennett Tomlin
In view of that argument and what you know about regulations and regulators, what do you view is the appropriate role of regulations and regulators? What should they be trying to do?

00:33:46:14 - 00:34:16:18
Eric Roesch
There's some truth to that. Absolutely. I kind of struggle with it because it has to be kind of both ways, right. And so one example is there is an EPA rule that was being updated back in like 2015 or something that had to do with a certain very specific type of organic pesticide manufacturing process. It had to do with the Clean Air Act control mechanisms for if you had a scrubber behind a relief valve or and so it's this kind of really esoteric process and it only like there's only like six or seven plants in the U.S. produce this stuff.

00:34:16:19 - 00:34:35:07
Eric Roesch
And so the EPA started like suggesting rules. And then they're like, oh, actually we need to bring the companies that actually produce this product in to make sure that we're not going to make just like a burdensome rule where it says you must do, you know, this exact thing with your, you know, pressure relief systems or whatever. And that's actually not a bad thing.

00:34:35:07 - 00:34:56:03
Eric Roesch
Like, that's a good thing because then you're you're like you're saying, well, we want to make sure that it's not emitting these hazardous chemicals, but also we want to make sure that you can actually functionally run the plant. And so there's there's good reasons to do that, but it's kind of taken on its head. And what that is exactly what happens is that, you know, companies will will lobby for more regulations to create protectionism.

00:34:56:03 - 00:35:16:04
Eric Roesch
That's something that does happen. And so to find a balance between that is really hard. It's not always perfect, but that's why a lot of things need to be disclosed better to the to the public, you know, kind of both the rulemaking themselves and then kind of required disclosure from companies through mechanisms like ESG reporting and stuff like that.

00:35:16:04 - 00:35:33:00
Eric Roesch
And I think that there needs to just be more openness about how it happens. It works both, and there is a way to kind of overregulate and stifle competition. But then also you have to realize that when people say this, that a lot of times they're complaining because it it's going to be a cost to them, I guess, right?

00:35:33:00 - 00:35:57:00
Eric Roesch
Yeah, a rulemaking. I would rather that, you know, kind of on the regulatory front, I would rather regulators and this is how kind of regulators operate they do treat it like they're collecting their toll or their tax. And that's not how it should be. It should be you know, there should be some flexibility within the kind of outlines of the rule where, you know, there's there's different ways that to comply with like an end emission standard or whatever.

00:35:57:05 - 00:36:26:19
Eric Roesch
I'm fine with that. But what what regulators need to do is that when you really step out of bounds and when you really mess up, that the regulator should not be afraid to go and just lop the head off of that company. And I think that's something that we have not been able to do. One other thing that that, you know, before we move on to, the next thing is that there's been this talk that like, you know, that, you know, these regulations are just killing progress in the U.S. and killing industrial, you know, progress in the U.S. And that's simply not true because you can look at U.S. GDP growth.

00:36:26:21 - 00:36:48:03
Eric Roesch
But even more telling is if you actually look at a graph of, liquid natural gas, LNG exports, since like 2010, every single one of those plants that exports liquid natural gas has to go through this very burdensome NEPA approval process, through FERC, the Energy Regulatory Commission, that actually kind of got a lot of teeth. post-Enron for very good reason.

00:36:48:03 - 00:37:09:12
Eric Roesch
But they they have to do this process. And so it's been every single year we've been able to increase and increase and increase exports. And so the people act like it's just killing progress. It's just if you look at any sort of metric that would that would be like number of widgets produce, number of, you know, barrels of oil, produce all these other all these other metrics that would be an indication to prove their point.

00:37:09:18 - 00:37:20:10
Eric Roesch
It just doesn't it doesn't it doesn't flush itself out. Any explanation for kind of shortfalls can almost always be explained by labor costs, which are higher in the U.S. And so that that's that's kind of where I'm at on it.

00:37:20:11 - 00:37:42:21
Bennett Tomlin
One kind of interesting regulatory thing that has been discussed a lot recently because of my job, I end up having to watch a lot of congressional hearings, which I don't recommend if you enjoy your sanity. And one of the things that keeps coming up in the hearings I have to listen to is discussion of the SEC's new ESG disclosure rules and whether or not those are going to fundamentally bankrupt the entire global financial system as soon as they go into place.

00:37:43:00 - 00:37:51:11
Bennett Tomlin
Do you have thoughts and these proposed disclosures and what they mean in terms of like ESG and what ESG is supposed to be accomplishing?

00:37:51:17 - 00:38:18:15
Eric Roesch
Yeah, yes, the ESG question. But I mean, like that's that's the I mean, I named my publication that before it became such a hot button topic. So the first thing that I will say is that ESG reporting was basically revolutionized by oil companies who didn't want to lose their investment dollars from big state pension funds. And so oil companies have been doing this for 12 years, and they do they do a really good job.

00:38:18:19 - 00:38:41:00
Eric Roesch
The most part of disclosing these risks. I'm not saying that the business is fundamentally right. There's not a lot of greenwashing. They absolutely do that. But but in terms of the expectations under that rule, they have met this requirement for eight years and medium size oil companies have done it. Small oil companies have done it. And it is not that burdensome.

00:38:41:00 - 00:39:14:21
Eric Roesch
It is a nexus for more information to the public. So I'm all for it. On a logistical I think any complaints about it, they don't want to disclose more risks, more investing risks to the public. That is what it comes down to. And, you know, I saw, for example, like, you know, Carson BLOCK, who I really respect, kind of went on this like anti ESG tirade, which I agree with in a way, because it's like when you kind of characterize this is like an ESG stock or whatever, or you say it's like a green stock that creates a great opportunity for fraud to come in, which we've seen like I mean, like over and over

00:39:14:21 - 00:39:35:11
Eric Roesch
and over again. I started with Solyndra that. It's it's a tale as old as time. Things like ESG scores or ESG rankings or ESG funds, those are ways to collect fees. But the actual reporting itself, all we're talking about and this is what I am super for, is we need to disclose risks. We need to disclose, you know, risk related to our supply chain.

00:39:35:11 - 00:39:53:14
Eric Roesch
Right. How many are we doing anything about the, you know, the child slave laborers, you know, corporation? Are we like and what are we doing? Have we reduced those numbers? What are we doing to address it? Because these are those types of risks and even things like diversity that people like really melt down about companies with high levels of diversity.

00:39:53:14 - 00:40:14:05
Eric Roesch
Guess what? You know, especially across the management, they have less complaints of sexual harassment. They have less complaints of of of of racial abuse. And those things can cost real money. And so my whole argument is like a lot of the ESG stuff, you know, when it comes down to like the rankings or the discussion points about it, it's very there's really good points that it's being misused.

00:40:14:05 - 00:40:34:23
Eric Roesch
But at the but at a fundamental level, all this stuff is is to disclose risks that will actually truly impact the financial performance of these equities going forward. And I think there's some it's not perfect, it's not great, but there are some real strengths to it. And if you're an investor, I don't care if you're, you know, as right wing as they come.

00:40:35:01 - 00:40:43:22
Eric Roesch
More ESG disclosures just mean more information for you to make good investment based on. And I'm all for that. I always will be. So that's kind of where I stand on it.

00:40:43:22 - 00:41:21:19
Bennett Tomlin
For me, what was most interesting about it is, like you said, most of these disclosures, many of these things that they're going to be asked to disclose, many of these corporations have already been disclosing, perhaps not included in their SEC forms about risk, but in other investor communications or other things like that. And so what's been kind of frustrating for me watching it has been political message making it how the rhetoric has developed around it and how it has become like this divisive issue despite just being a disclosure requirement, like even just being asked to disclose certain information has become this kind of huge sticking point that blows up for months, probably going to be

00:41:21:19 - 00:41:47:09
Bennett Tomlin
years before it finally gets implemented officially in that kind of political situation where we have at least the way I see it and you may disagree with this character, it zation like the Obama administration was really weak on enforcement against white collar criminals. Basically across the board. You see this criminally. I think jesse Eisinger does a good job of describing some of this and like the chickenshit club and stuff like that, and you see it regulatory across the financial regulatory agencies and stuff like that.

00:41:47:11 - 00:42:08:15
Bennett Tomlin
Well, also, as you mentioned, like in the case of Solyndra, creating these very capital rich programs that had a high risk of corruption or misuse. And I look at like the Trump administration and across their main position was it was basically all about reducing or eliminating as many regulations as possible, while also not enforcing and as many of the existing regulations as you can.

00:42:08:17 - 00:42:22:17
Bennett Tomlin
So when you have kind of that political landscape where even disclosure requirements become discussed as if they represent a potential threat to the stability of the global financial system, how do you create meaningful, useful or good regulations?

00:42:22:17 - 00:42:44:15
Eric Roesch
I don't know. And that's been that's been really that. The problem is that we've we've relied on. Right. You talk about environmental regulations. You're talking about the last time there was a major amendment to the Clean Air Act, for example, was in like 92, Right, in 1992. And so people will complain about rules, but like the Clean Air Act specifies mechanisms that the EPA must take every single five years.

00:42:44:15 - 00:43:10:15
Eric Roesch
They must update these standards every single year. They're not allowed to backtrack or whatever. And so people complain about these mechanisms they put in place. But there's been regulatory inaction for decades. Right. And so you're letting these systems that are that truly are imperfect and then probably sometimes do stifle innovation, sometimes probably are overly strict, and then also don't enforce well enough where they should in certain cases, like we don't have an actual federal congressional signed standard on greenhouse gas.

00:43:10:15 - 00:43:29:19
Eric Roesch
So we've had to shoehorn it into the clean Air Act. Right. It doesn't really belong. Yeah, we need regulatory reform. Yeah, we need to rewrite all this stuff. I don't know, because it's kind of been politically untenable. It's like every single politician is kind of okay with allowing these bureaucratic systems to claw along because they have worked well enough.

00:43:29:21 - 00:43:47:18
Eric Roesch
And so then you scream about stuff anytime there's a new roar, you eliminate a rule and it's just it turns into just rhetoric that doesn't make any sense. It's just red meat. And that's what a lot of this anti ESG stuff is. It's just it's red meat. I think the ESG rankings are bad. I think the way it's marketed does allow green washing frauds to suck up capital.

00:43:47:21 - 00:44:05:10
Eric Roesch
And I agree with that 100%. But at the end of the day, if you're talking about like disclosures like that's that's not I mean, like that is not going to tank the global economy. It just turns into just shit flinging. And that's that's what kind of rulemaking has been in Congress for, you know, really probably since you could argue since Obamacare was passed.

00:44:05:10 - 00:44:22:23
Eric Roesch
That's probably a great, great time that there is a a huge regulation that was passed that was really contentious and was pushed forward. And since then, it's been plugging holes in the dams We go. If you're yelling about ESG disclosures like wrecking the global economy, it just like that's not that's not an honest argument. It just isn't.

00:44:23:00 - 00:44:28:14
Bennett Tomlin
Now, what about the argument that it's a secret way to turn the United States communist? Is that a serious argument?

00:44:28:16 - 00:44:43:19
Eric Roesch
No, it's not. I mean, as you know, I mean, it just it's so funny because I reach out to people that I've talked to and I'm pretty smart people and they're just like, you know, what about BlackRock? What about this? What about whatever? And I'm like, Yeah, I don't like those guys. So USG is a way for people to collect fees.

00:44:43:19 - 00:45:04:00
Eric Roesch
And so like if you look at as a way to like collect fees, like, yeah, I mean like you're going to push for it, you know, the whole like communist or whatever. It's like, no, we've had all sorts of regulatory controls and market disclosures and they've been updated with time. It's just exhausting to respond to. There are great critiques of how ESG has been kind of marketed and implement all scream from the rooftops.

00:45:04:00 - 00:45:09:10
Eric Roesch
But I just the rhetoric itself is just doesn't match what we actually see. I guess.

00:45:09:10 - 00:45:28:19
Cas Piancey
On this point, what kind of ended up getting me to reach out to you, Eric, was that I was thinking again about this golden age of fraud concept that Jim Chanos has put forward that we in this time period where it's almost like everyone who can do fraud and make and make money on it is just going for it, right?

00:45:28:19 - 00:45:50:06
Cas Piancey
There's nothing to impede that process. There's no obstacles to just going out and committing the fraud. And I just started thinking to myself, like, it doesn't seem like it's slowing down. It doesn't seem like even we have the collapse of FCX, we have SBF, we have all the all these like very intense large criminal enterprises getting shut down on their own accord.

00:45:50:06 - 00:46:11:00
Cas Piancey
Like nobody did anything to stop. SBF He fucked up. And I think to myself, like, this isn't going to end now. This is going to end up being like, it's already been a generation that has had to deal with this golden age of fraud. Is it going to be another generation and the generation after that? Like what is the optimistic and the pessimistic view here of how we're how this plays out?

00:46:11:00 - 00:46:15:11
Cas Piancey
And like, I'd love to hear your but both both sides of this argument from you.

00:46:15:11 - 00:46:33:12
Eric Roesch
I'll start with the pessimistic one, and that is that it has gone on, I think, a lot longer than people would have expected, having worked in energy and and specifically in oil. And I moved to Houston in 2015. I think that I think the debt blow up at the end of 2015 and into 2016 should have been a wake up call.

00:46:33:12 - 00:47:03:09
Eric Roesch
There were these kind of knock on impacts from from from credit blowups. Right. You had you had companies that were going out and they were raising junk debt, right. To fund EMP projects that were like at best break even on returning the money for these junk bonds. And that was before you considered how far these how quickly the levels from the fracked wells would drop off and with the duration did not match for the for the well life versus the bonds you were taking out.

00:47:03:14 - 00:47:23:03
Eric Roesch
But even if even if it did like it didn't even like include like corporate cost rates all year and a you know, your M&A or your executive compensation, all that stuff even so like the entire scheme was you're expected value return will always be negative if you're buying these bonds and yet they still happen. Right. And so a lot of these started too to roll over and blow up.

00:47:23:03 - 00:47:41:13
Eric Roesch
And I was like, okay, we need to have like a reset in a lot of this stuff. And it didn't happen. Like there was like a mild reset and we basically went back to status quo. You look at the Fed balance sheet, you look at the coordination between, you know, central bankers and basically that this this monetary relief, it's just like you're not going to allow a huge blow up.

00:47:41:18 - 00:48:01:14
Eric Roesch
And I don't think you're going to get regulatory change without a huge blow up. And so I think I think that it should have happened back then. It probably should have happened a few times and hasn't happened means that we can ratchet up and we can we can kind of globalize or we can wallpaper over these these kind of systemic risks that are tied to fraud.

00:48:01:14 - 00:48:20:16
Eric Roesch
I think I think that can go on a lot longer than anyone would like to admit, because we've gone through a few possible credit cycles where they've been wallpapered over. So that's that's I guess the pessimistic view. The optimistic view is that they're called black swan events for a reason. And I'm not hoping for a black swan event.

00:48:20:16 - 00:48:41:06
Eric Roesch
Right. Because you don't there's always pain that comes with kind of economic roiling, but I think that is the opportunity for a moment of clarity and to be able to go after the types of people that perpetuate these frauds because they do cause harm when they unwind, they cause they cause harm the whole way. But the harm isn't obvious until it unwinds.

00:48:41:08 - 00:49:05:11
Eric Roesch
So I don't think the positive case is that there's like a big blowup, which is maybe not positive, but in terms of going forward, if have another, if we have another GFC type thing and you see people, you know, doing something like on Occupy Wall Street or whatever, and there isn't major regulatory reform, we're hosed. But that's that's both I guess the positive and the negative prediction, they're the same thing.

00:49:05:11 - 00:49:05:21
Eric Roesch
I think.

00:49:05:21 - 00:49:22:14
Cas Piancey
I appreciate that. I think that's a pretty level headed glance, if still unfortunate. Eric, is there anything else you want to leave us with before we we sign off here in terms of whether it's about Ellen or the global the global financial system or fraud or whatever, is there anything you care to say as we as we sign off here?

00:49:22:17 - 00:49:40:19
Eric Roesch
There's so much public record out there that you can dig into and learn about stuff that's going on. If there's one positive thing, especially in the US, is that we have really great public disclosure laws and sometimes they're a little bit hard to get around, but you can find all sorts of cool stuff and you can learn things about how the world works.

00:49:40:19 - 00:50:12:00
Eric Roesch
I always encourage people to do that because a lot of times, you know, fraud happens because we don't understand how, you know, companies operate, how governments operate, how individuals operate. And we we have so many tools available that are free and that's kind of my passion is to teach people about that. And so always you can always email or whatever, because I, I think I think there are some positives out there and I think some of the public disclosure rules, especially in the U.S., you can find all sorts of interesting stuff out.

00:50:12:02 - 00:50:29:16
Eric Roesch
I encourage anyone to become their own researcher. One thing I really appreciate about the crypto community is that they do they do like they don't necessarily do a good job of regulating, but when it comes to like doing kind of forensic investigations, they do a really good job. And I really enjoy watching that play out. So there are other avenues you can do that kind of stuff.

00:50:29:16 - 00:50:49:01
Cas Piancey
I think that's a really beautiful note to go out on, actually. And I think I agree with you 100%. I think Ben and I have both learned about so much just by having to explore corporate filings and history of for executives and all of this stuff that I didn't know how to do this five years ago. And now I, I love doing it.

00:50:49:01 - 00:51:06:14
Cas Piancey
So I agree with you 100% on that. If anyone doesn't already follow. Eric, obviously go follow him on Twitter, ESG hound. And if if you can also check out his Substack, which is unbelievably informative and fantastic. And I think yeah, I think that's going to do it. Thank you for joining us, Eric.

00:51:06:15 - 00:51:08:09
Eric Roesch
Thank you for having me. I really appreciate it.
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