0:03

I'm here in Lower Manhattan,

0:05

outside the courthouse for the Southern District of New York.

0:09

Stevie Hertz is one of The Economist's US

0:11

correspondents, and she's one of the journalists

0:13

who's been jostling to get into court.

0:16

And there's a bunch of press here, there's some

0:18

camera crews, there's lots of cameramen. They

0:21

are there for what is perhaps the

0:24

biggest event in the history of crypto,

0:27

the trial of Sam Bankman-Fried,

0:29

or SBF

0:30

as he's known. He was once

0:33

the van der Kinde of crypto,

0:35

he was the golden boy. He was the head

0:37

of FTX, but now he's on trial

0:39

for seven criminal counts of security fraud

0:41

and money laundering. He's pled not

0:43

guilty to all the counts, but if he's

0:45

convicted he could get what would essentially be

0:48

a life sentence in prison.

0:51

It's not the first time this courthouse

0:54

has seen a high profile trial.

0:56

It's where E. Gene Carroll

0:58

versus Trump, where those civil suits happened. It's

1:00

where Bob Menendez, the US senator, was

1:02

arraigned. But one of the things it's most

1:05

famous for is financial crime. So the junk

1:07

bond king Michael Milken had his

1:09

trial here. Bernie Madoff, the Ponzi

1:11

King, had his trial here. Even

1:13

Martha Stewart had her insider trading trial

1:16

in this courthouse.

1:18

Every day of the trial, SBF

1:20

is transported to the courthouse from a

1:22

jail across the East River in Brooklyn that

1:25

is notorious for its uncomfortable conditions.

1:28

Sam Eichmann-Friede is famously a vegan

1:30

and he said he's been surviving on bread,

1:33

peanut butter and water because the jail isn't providing

1:35

any other vegan food.

1:37

And his appearance has changed too. In

1:40

court today he had lost his

1:42

famous mop of curly hair. It was now

1:44

close cropped. Apparently one of the other detainees

1:47

had cut his hair for him. He was in a suit

1:49

rather than his normal shorts.

1:51

All of this is a far cry from

1:54

the life of luxury that he was living in the

1:56

Bahamas less than a year ago when he

1:58

was first arrested.

1:59

Today, we hear from the man

2:02

who was there to chart his downfall.

2:04

You're

2:14

listening to Money Talks from The

2:17

Economist, our weekly podcast on

2:19

the markets, the economy and the world of business.

2:22

In London, I'm Tom Lee Devlin. In

2:24

Singapore, I'm Mike Bird. In

2:26

Eau Claire, Wisconsin, I'm Alice

2:28

Forwood. And

2:31

today, the first of two shows

2:33

asking what the future is for crypto.

2:36

This week, we speak to Michael Lewis,

2:39

the author of Moneyball, The Big Short,

2:41

and now a new book following the rise

2:43

and fall of Sam Bankman Freed. First,

2:47

Michael tells us some of the problems SPF

2:49

was trying to solve and some of the

2:51

solutions he came up with. The

2:54

idea of paying Donald Trump not to run for president

2:57

or the idea of paying off the Bahamas National

2:59

debt. Then, we hear

3:01

what life was like for those living with

3:03

the crypto billionaires. The only other

3:05

person I've been with, where so much

3:07

wild shit happens when you're with him, is Kanye.

3:11

And finally, what's next for

3:13

Michael Lewis? I hand it in a script

3:15

to Apple for a drama where I run

3:17

the show. Mike,

3:25

Alice, hello. Hey, Tom. Hello.

3:28

I have to admit, Alice, I have not heard

3:30

of Eau Claire, Wisconsin before. Is that some

3:32

kind of little known hub of high finance

3:35

in America? Yeah, it's really not

3:37

at all a little known hub of high finance. It's

3:40

a small lakeside city with

3:42

sort of indie vibe in Wisconsin. It's

3:44

very beautiful this time of year, lots of full foliage.

3:47

But I'm here for our Christmas issue, actually.

3:49

I'm doing a story about women

3:52

and there is newfound enthusiasm for

3:54

DIY. So I came to this part of the world

3:56

to actually do some DIY with

3:58

a woman who lives in another part of the region. It

4:00

is, as they call it, the Bahrain of

4:02

the Upper Midwest of the United

4:05

States. Yes,

4:08

there's nowhere that I won't go for a story. It

4:10

is a pretty stark contrast to last week when I was

4:12

in Bahrain, as you mentioned, and I was there

4:14

to interview Chang-Teng Zhao, who's the

4:16

boss and founder of Binance, and

4:19

we will actually hear that interview on next

4:21

week's show. As we'll hear from Michael Lewis

4:23

later in the episode, Susie, as he is often

4:25

known, was pretty involved in the events that

4:27

ultimately brought down Sam Bankman-Fried. I'm

4:30

really looking forward to what he's got to say.

4:33

Caroline Ellison, SBS

4:36

ex-girlfriend, who ran Alameda,

4:38

his hedge fund business, has testified that one

4:40

of SBS' main priorities was getting

4:43

regulators to crack down on Binance.

4:47

So CZ might not be too upset

4:49

that SBS own exchange collapsed. Still

4:52

the site of exchange is collapsing generally

4:54

is not usually good news to other people

4:56

running exchanges. Yes, well, you'll have

4:58

to wait until next week to actually hear what he has to

5:01

say, because before we hear from Crypto's sort

5:03

of last man standing, we get to hear from

5:05

Michael Lewis, who had a front row seat

5:07

as Sam Bankman-Fried's exchange, FDX, collapsed.

5:10

So have you guys read the book then, Going

5:12

Infinite? I'll say I've speed read

5:14

it, and I'm very nearly finished. Of

5:17

course I've read his book. I've listened to his trial

5:19

podcast and consumed vast quantities

5:22

of other content about Sam Bankman-Fried

5:24

and the trial. What did you guys think of the book?

5:26

Mixed, I guess. Obviously, it's

5:28

always a total joy to read his

5:31

prose, and he had absolutely phenomenal

5:33

access to Sam Bankman-Fried. I loved all

5:35

the stuff early in the book about his James Street

5:37

days and his childhood and how

5:40

unusual a person he is. I

5:42

do think it was a slightly strange choice to

5:46

not really take readers through what

5:48

crimes Sam Bankman-Fried has been accused

5:51

of, even if Mr. Lewis didn't want to

5:53

leave it up to readers to make up their minds about how much

5:55

wrongdoing Sam did. He allegedly

5:57

did. I did think it made the second

5:59

half.

5:59

of the book read slightly strangely?

6:02

Yeah, very similarly. I

6:04

feel like on reading the book you can

6:06

tell very much where different

6:09

parts of the writing started or where different parts of the

6:11

investigation started at least. This

6:13

does not read like a book that started

6:16

with, there's been this potential

6:18

fraud, here's the backstory to that. You

6:20

can feel the fact that this really was in

6:22

the works when the

6:24

book was already considerably reported.

6:26

It reads more like this exploration

6:29

of a

6:29

precocious young billionaire that then gets

6:32

derailed rather than the question of

6:34

the trial that we're obviously preoccupied

6:36

with at the moment.

6:37

I think very similar reaction to both

6:39

of you, Michael Lewis is of course

6:41

a brilliant writer from The Big Short to Flash

6:44

Boys, his work is always fantastic

6:46

and this is another wonderfully written book.

6:48

It reads like this kind of crazy adventure

6:50

story and he does a really nice job I thought exploring

6:53

the quirky sides of his main characters

6:55

but the awkward thing is that those characters

6:58

are now alleged to be criminals that lost billions

7:00

of dollars of customer and investor money

7:02

and that side of the story is not really

7:04

a central focus. Yeah, it's

7:06

not until the final 60

7:07

or so pages of the book,

7:09

which is what I'm in the middle of at the moment, that he really turns

7:12

to the alleged fraud.

7:14

Well, to explain why he tackled

7:16

the subject the way he did and to give us some greater

7:18

insight into Sam Beckman-Fried or

7:20

Sam as Michael Lewis calls him in the book, I

7:23

brought the author into the hot box that

7:25

is our London studio. Michael

7:32

Lewis, thank you so much for joining us on Money

7:35

Talks. Pleasure to be here. Can you

7:37

tell us about your first meeting with Sam

7:39

and how it came about? It was wholly accidental.

7:42

A good friend of mine called me

7:44

in September of 2021 and asked me when

7:49

I meet with his character, he was thinking about doing

7:51

a business deal with. The character was Sam Beckman-Fried.

7:54

They were talking about exchanging shares in each other's

7:56

companies and he was in this awkward position

7:58

he said because while

7:59

he couldn't believe how fast FTX

8:02

was growing. He had no sense of Sam.

8:04

He said, this guy has become a multi-billionaire

8:08

and nobody knows who he is. Could you like spend

8:10

a little time with him? And so he tumbled

8:12

out of an Uber in his shorts and his

8:14

t-shirt in my office in Berkeley, California.

8:17

And I spent a couple of hours with him. At the end

8:19

of the couple of hours I said, I don't

8:22

know where this is going but I'd like to

8:24

kind of just watch. And starting

8:26

kind of towards the end of that year I sort of moved into his

8:28

life.

8:29

And you had a front row seat to all

8:31

the developments that came next. How

8:34

would you summarize Sam as a person?

8:37

Complicated. The first impression he

8:39

gave me, he was really like one of these

8:41

characters from Moneyball but instead of using

8:44

probabilistic judgments to evaluate baseball

8:46

players, he was using it for every decision

8:48

in his life including like whether to have children

8:51

and making these expected value calculations.

8:53

In addition, he seemed unbelievably

8:57

determined, like very strong-willed,

9:00

very ambitious

9:01

and

9:02

partly because he had a pile of 22 billion dollars.

9:05

Thinking about problems in ways I just hadn't heard them thought

9:07

about. For example, the idea

9:09

of paying Donald Trump not to run for president or

9:12

the idea of paying off the Bahamas national

9:14

debt. And this is going to sound

9:16

strange in light of what happened but at first meeting

9:19

him, kind of ingenuous, like

9:22

willing to answer questions you wouldn't think someone with 22

9:24

billion dollars would answer. If you asked

9:27

the right question you got answers that

9:29

surprised you. He admittedly

9:32

had never felt love, he never really

9:34

felt pride. He said there

9:36

was this range of feeling he heard about from other people

9:39

that he himself didn't experience. Every

9:41

time I thought I had a box to put him in, he

9:44

somehow crept outside the box. Every

9:46

time I thought, oh he's that kind of person,

9:49

there's some name for what he's got or what he is,

9:51

he'd do something that suggests

9:53

no that's not quite right. Seldom

9:56

do I think of people as unique. Usually they

9:58

fall in the kind of categories. He felt

10:00

unique. When was the last time

10:02

you spoke to Sam? Are you still in contact?

10:05

I haven't actually spoken with him since

10:08

he was taken away to jail. That was August

10:11

the 11th. But before

10:13

that, I was in pretty

10:15

steady contact with him. I mean the prosecutors

10:17

did me this massive service by essentially putting

10:19

him under house arrest an hour from my home in California.

10:22

So I was able to spend a lot of time while I

10:24

was working on the book with him.

10:26

This book has been criticized as being

10:28

too soft on a man who ultimately did

10:30

Weilay $8 billion

10:33

of customers' money. In

10:35

my mind, there's really three possibilities

10:38

here. The first is that Sam

10:40

is a kind of crypto-Bernie Madoff

10:43

who stole customers' money with no intention

10:45

of ever giving it back. The

10:47

second is that he was reckless

10:49

with the money and took excessive risks with it. And

10:52

then the third is that he was merely

10:55

incompetent or at least in over his head and

10:57

lost track of the funds amid the complexity of

11:00

the crypto world. Which

11:02

story do you think is closest to

11:04

the truth here?

11:05

If those are the three choices, if you want

11:07

to complete the spectrum, total

11:09

innocent. He's not totally innocent

11:12

of any kind of understanding of what he was doing. That's

11:15

very clear. It's clear in the book. Crypto-Bernie

11:18

Madoff does not ring true to me. If

11:20

it had rung true, I would have written it. Crypto-Bernie

11:23

Madoff, I would say, is probably the consensus

11:25

of crypto-Twitter and the crypto community.

11:28

There are just too many things that

11:31

don't rhyme with Bernie Madoff, with

11:33

that kind of thing. Like, for example,

11:37

if FTX was all along this

11:39

diabolical plot to separate customers

11:41

from their money, why was he so reluctant

11:43

to actually even start FTX? It's

11:45

an accident. Second, every

11:48

time I raise this, people say, oh, that doesn't matter. But

11:50

I think it does matter. With Bernie

11:52

Madoff, the money was gone. It

11:55

wasn't a business. I mean, in the case of FTX,

11:58

it was a real business.

13:59

But who am I to say? Why do you say it would

14:02

be very Sam Bankman free?

14:04

There's a darkly comic dimension

14:07

to everything that happens to him and everything

14:09

he does. It's not pure comedy.

14:11

It's not just funny,

14:13

but it's sort of funny. And

14:16

there's this way of how everything just gets a little

14:19

screwed up when he touches it, sometimes

14:22

in very interesting ways.

14:24

Someone said to me while I was working

14:26

on the book, it was someone who spent

14:28

a lot of time with celebrities, was in Sam's

14:31

life for some reason or other. And he

14:33

said, the only other person I've been with

14:36

where so much wild shit happens when you're with him

14:39

is Kanye. He says you attach yourself to

14:41

Kanye and you just know wild stuff you've never seen

14:43

before is going to happen. And

14:45

it's the same as true with Sam. It's

14:48

just like bizarre original situation

14:50

after bizarre original situation.

14:52

Why do you think Sam granted you

14:55

such intimate access to his life? I

14:57

think it changed slightly over time, but I

14:59

think the original reason

15:01

was, I mean it's bizarre

15:03

in retrospect, but you could remember that this is a person

15:06

whose competitive advantage was trust. He

15:08

was becoming the trusted person in

15:10

crypto. And they were the business that

15:12

was seeking regulation, seeking

15:15

licenses, seeking to be inside

15:17

of countries rather than kind of stateless. And

15:20

the holy grail was get regulated

15:23

in the United States and be allowed to trade

15:25

Bitcoin futures and

15:26

other products in the United States. And

15:29

I think he thought

15:31

that it would earn him credibility

15:33

with regulators if I wrote a book

15:36

about him. I think as time went

15:38

on,

15:39

this happens with all my subjects. I mean, I was with

15:41

him for, what is it?

15:43

I mean a year and a half, kind of, and

15:47

with him a lot and around

15:49

him a lot.

15:50

And at some point

15:52

I became part of the furniture and he stopped,

15:55

I think, even thinking about why I was there.

15:57

And at some point also...

17:21

and

18:00

that I do pay attention to, but

18:02

wasn't as much of a problem this time as it has been

18:05

in the past, and you form

18:07

some emotional attachment to the person.

18:10

You can't help but become kind of friends in some

18:12

way. And I've had that happen with previous subjects,

18:14

and I've had to kind of fight it when I sit down to write.

18:18

Sam Bankman Freed had no

18:20

capacity to feel anything from me. It

18:23

was very hard for me to generate a capacity to

18:25

feel for him.

18:26

It wasn't an emotional relationship.

18:29

The only thing on my shoulder, if you think

18:31

about what I'm doing, I'm sitting down and writing at the end of January

18:34

about a man who is universally loathed.

18:37

It's the knowledge that if I don't

18:39

join the mob in its loathing of

18:41

him, if I write him as I see him, that

18:44

everybody's going to be upset. I mean, I knew

18:46

exactly what was going to happen when I published

18:48

this thing, that there was going to be a crowd of people

18:51

who had already made up their minds about

18:53

him, whose narrative would be jostled

18:55

by mine. But what am I supposed

18:57

to do? I had to portray him the way I saw him.

19:00

And so I did.

19:06

So, Alice, Mike, that's the first

19:09

half of the interview. And just putting aside

19:11

the question of guilt or innocence

19:13

for one moment, I find this tension

19:16

around objectivity and how close

19:18

you should get to your subject really

19:21

fascinating from a journalistic perspective. I'm

19:23

not sure if you guys read Walter Isaacson's

19:26

new Elon Musk biography, but he

19:28

also received quite a lot of criticism for being

19:31

too soft on his subject. And

19:33

in Isaacson's case, he actually followed Musk

19:35

around for two years,

19:36

including through the whole saga of his acquisition

19:39

of Twitter and many other controversial episodes

19:42

over that time. And on the one hand,

19:44

I think getting close to your subject is obviously

19:47

essential for writing an insightful biography.

19:50

Perhaps there is a risk that you start to be

19:52

drawn a little too closely into

19:54

that person's perspective on events and

19:56

can end up in this position of trying

19:59

to almost defend them.

20:00

Yeah, I think that's a really interesting question to

20:02

think about. And I guess if we as readers

20:04

want these deeply reported biographies

20:06

where people spend hours and hours and hours with their

20:09

subjects, then there's always a risk, I

20:11

guess, that they might come to kind of like

20:13

them. And I don't really know how you

20:15

resolve that as a human being interacting with another human

20:18

being. The bit that I found most

20:20

interesting so far is, if

20:22

we think about the scenarios Michael discussed,

20:24

so he's maybe innocent, reckless, or

20:27

the second coming of made off, a

20:29

lot of the testimony from the courtroom falls between

20:31

those latter two points. So

20:34

far, obviously, it's only the prosecution that has

20:36

made its case. But if you believe the

20:38

witnesses they have brought, that's Gary Wang,

20:40

Nisheong Sing, and Caroline Ellison, who were

20:42

all former FTX or Alameda employees.

20:45

Sam did know for a long time that

20:47

there was not enough money left in Alameda

20:50

to pay FTX

20:51

customers back if they all came at once.

20:54

Caroline said he knew that when she

20:56

paid back some loans that Alameda had taken

20:58

out in June 2022, that there would not be

21:00

enough money left to pay out customers.

21:02

The others have testified at various other points. He

21:05

was definitely aware. Nishad

21:06

actually described having this conversation

21:08

with him about it in September 2022 after

21:10

he realised his depth of the issues at Alameda. And

21:13

it sounded like he was pretty devastated. He

21:15

said that he felt like five

21:17

years of blood, sweat and tears from me and

21:19

so many employees driving towards something

21:21

that I thought was beautiful and forced for good

21:24

had turned out to be so evil. Of course,

21:27

SDF's defence team is yet to lay out its

21:29

version of events so that narrative could change

21:31

pretty dramatically in the coming weeks.

21:34

So one thing that I found really interesting

21:36

there, aside from this question

21:38

of the legal case is with someone like

21:40

Michael Lewis, I'm always really interested in how

21:42

you select the characters. Because if

21:45

you're writing about business and finance, it's

21:47

not enough that someone just has a lot of money

21:49

or there's a lot of money at stake. That is the case

21:51

in all of these cases. There has to be

21:54

a level of interest in the person as well. And

21:57

the thing that Michael Lewis said

21:59

there,

21:59

about

22:01

SPF, everything he did

22:03

being darkly comic in a way. The

22:05

description that everything he does has something

22:08

funny to it, really hit the nail

22:10

on the head to me for why there's quite

22:12

so much interest in him. He has,

22:14

for better or worse, this watchable

22:16

element. It's very easy to see now how

22:18

he's become this main character. Rather

22:21

than a star quality, he has this sort

22:23

of meme quality. And I think

22:26

we can basically say that

22:28

when this book came out, for sure, there

22:31

was always going to be some group

22:33

of people that, because of that meme quality,

22:36

was not going to be happy with the way

22:38

his portrayal ended up. So listening

22:40

to that, I do understand a bit

22:42

better, I think, where Michael Lewis is coming from on

22:45

all of this.

22:46

After the break, we'll hear about the role

22:48

CZ may have played in Sam Bagnum

22:50

and Fried's downfall, and whether Michael

22:53

Lewis worries that his sympathetic portrayal

22:55

of SPF may come back to bite

22:57

him.

22:58

But before that, we have an important

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25:06

Before the break, we heard what Michael

25:08

Lewis' time with SPF was like.

25:11

Next, I wanted to dig into how

25:13

that left him feeling about the future of crypto,

25:16

and whether he regretted the way that he portrayed

25:18

Sam in the book.

25:24

Michael, after your time with FTX,

25:26

were you left feeling that crypto is something

25:28

that's good for the financial system, for the

25:30

world, or is it just kind of a new form of gambling?

25:34

So, mainly a new form of gambling,

25:36

but not only. It wasn't my

25:38

first encounter with crypto.

25:40

I had been

25:41

several times entreated by crypto

25:43

enthusiasts to come write a book about it. I

25:46

really tried to get interested by several different points,

25:49

and each time I felt like I

25:52

was hearing about a solution looking for a problem,

25:55

and they hadn't figured out what it was for. And

25:58

each time the story slightly changed. In

26:00

the very beginning, it really was being sold as, is this

26:03

going to replace the dollar? This is going to replace fiat

26:05

currency as a means of exchange.

26:08

Then it became an uncorrelated asset. It

26:10

was obviously not uncorrelated. It moved up and down with

26:12

everything else. It became it was the new

26:14

gold. It always felt

26:17

unpersuasive to me as

26:19

a story. The people behind it always felt

26:21

like they were just talking their own book, like write

26:23

a book about crypto so crypto goes up. That doesn't

26:26

mean there's nothing there. I

26:28

was and am

26:30

attracted

26:31

to the possibility that

26:33

it

26:34

eliminates the need for a lot of financial intermediation,

26:37

that this ability to transact

26:40

without having people in the middle might

26:42

ultimately be very useful. I

26:45

don't want to dismiss that,

26:47

but it does feel overblown. How

26:50

significant a role do you think that Binance's

26:53

CZ, who you portray as this

26:56

sort of arch nemesis to Sam in the book,

26:58

how significant a role do you think that he

27:00

played in Sam's downfall?

27:03

He's not that big a character in the book, but in

27:05

a way he created Sam. Sam

27:07

thought that CZ created him, that

27:10

when Sam got out to Asia and had no idea

27:12

how to start an exchange and he first thought

27:14

he was going to hope CZ would start the exchange

27:16

and he would just take a little piece of it. CZ

27:19

blessed him. CZ not only invested in him,

27:21

but had him do his conference, had him on stage. CZ

27:24

sort of conferred a credibility on Sam. He

27:27

was important in creating him.

27:30

In the unraveling, it's

27:33

hard to know how mistrust

27:35

happens, but

27:37

everybody's on pins and needles by November

27:39

about crypto. Sam has been playing this

27:41

role of the last man standing

27:43

in crypto.

27:45

The balance sheet of Alameda, sort of balance sheet

27:47

of Alameda gets published, creating some

27:49

doubt. It really isn't until CZ

27:52

starts tweeting about it that there's this big run, you

27:54

know, it seemed to trigger the run. I

27:57

think he did play a role. I think if there's no CZ, maybe Sam would

27:59

be able to do it. Sam skates through that period, eventually

28:02

if the customer's money is sitting in the wrong place,

28:05

it's unstable and risky and eventually maybe it

28:07

comes unraveled. But I think it's easy to put an important

28:09

role there. The other thing he did,

28:12

it was an interesting play, was he

28:14

kind of pretended to be interested in

28:16

buying FTX and it gave him

28:18

the first clear view of

28:21

Alameda's balance sheets and

28:23

what was inside the place and then

28:25

he became authoritative on the subject.

28:28

Any hope that Sam might have had

28:30

at rescuing the place ends when CZ says, I've

28:32

kind of seen it and it's awful. You

28:35

talk in the book about how one Silicon Valley

28:37

VC said he thought Sam had a shot

28:39

at being the world's first trillionaire

28:41

and in one of your early conversations with Sam, he

28:43

said he had used for quote, infinity

28:46

dollars. Do you think an even richer

28:48

Sam Bank of Manfred would have been a good thing

28:50

for the world? Yeah, I think he would have

28:52

been. It's not what I would have done with a trillion dollars,

28:55

but this idea of attacking

28:57

existential risk

29:00

in particular, my last book was about

29:02

the pandemic, it was called Premonition. One

29:04

of the things that just dropped out of that story,

29:07

it's very obvious to all the main characters

29:09

in the story who are experts in disease control,

29:12

was the need for a global

29:15

system of disease prediction

29:18

for prevention. So the equivalent of like

29:20

a weather service for disease, doable,

29:23

like doable, but very expensive. And

29:25

that was top of Sam's list. If

29:28

governments seemed to be unwilling to do these

29:30

things, it would have been terrific if

29:32

someone had gone and done these things. Do

29:35

I think after that on

29:37

Sam's to-do list, the other

29:39

things were quite as valuable? I

29:41

don't know. I don't know if AI slipping

29:44

its leash and killing us all was on his list too, but

29:46

that problem seems intractable. I don't know what you'd do

29:48

about that. But I think that he was

29:51

aimed at problems that

29:53

you would like governments to address and that governments

29:55

aren't addressing. And part of the reason I think

29:57

people were

29:58

attracted to him was...

29:59

It's not just the fact he had $22 billion, but

30:02

he seemed to fill a hole that institutions

30:05

had left behind. I think it would have

30:07

been a good thing. I think it would have been a good

30:10

thing. Given your relatively sympathetic

30:12

portrayal of Sam in the book, are you worried

30:14

about what it might mean for you and your reputation

30:16

if he is found guilty? No, because

30:19

I don't think I've declared him innocent.

30:21

I think I've left it to the reader to decide how to feel

30:23

about this. I mean, I'll tell you, oddly,

30:26

it's funny to me this thing

30:28

about, oh, a sympathetic portrayal of Sam. It

30:31

is a human portrayal of him. You get a

30:33

real sense of the person in a way you wouldn't from,

30:35

say, Twitter.

30:36

But

30:37

I've had lawyers tell me who have

30:39

looked at the thing

30:41

that you've added to the government's case, that

30:43

you've added to the facts that they will have

30:46

to deploy in their

30:48

story, that there's

30:49

not less but more stuff that's

30:51

damning in there. I mean, for example, when

30:54

I asked him if

30:56

I had asked you,

30:58

is Alameda subjected to the same risk

31:00

engine that every other investor on the exchange is,

31:02

I said, what would you have said? He

31:04

says I would have answered a different question or I would have made a word salad.

31:07

I mean, there are half a dozen moments like that. So

31:10

I don't think the story

31:12

leads you to Sam's innocence, but

31:15

it does lead you to Sam's humanity. To

31:17

close this off, Michael, you have a knack

31:20

for finding incredible stories.

31:22

Have you already found your next FTX? Any hints

31:25

as to what's coming next?

31:26

You know, oddly, the day before

31:29

the Hollywood writers strike, I handed in

31:31

a script to Apple for a drama where

31:33

I run the show, and they

31:35

seemed very enthusiastic about it.

31:38

And if they want to make it, that's what I'll be doing.

31:40

It won't be writing a book. However,

31:42

if you put a gun in my head right now and

31:44

said,

31:45

you've got to generate a book for me in six or

31:47

eight months, what would it be? It would be

31:49

a very short book on the trial and the justice

31:52

system. It felt like the end of the story

31:54

when FTX collapsed and the start

31:56

of another story when he gets sucked into this process.

32:00

It's got a lot of interest to it, not

32:02

the least of which is he's a child of two

32:04

law professors who are having

32:06

their first real experience

32:08

with the criminal justice system and they can't quite

32:11

believe what they're seeing. Michael Lewis,

32:13

thank you so much for your time. Thanks for melting me

32:15

in your studio.

32:18

Sorry. Sorry,

32:25

Alice, Mike, what did you think of that?

32:27

I mean, I'm thrilled that we got to talk to him and

32:29

for all of the controversy about the book, I

32:32

loved reading it. It was very enjoyable to read. My

32:34

understanding of SBS is so much deeper

32:36

for having read it and I'm

32:38

also very glad that Michael Lewis was there as

32:40

this empire was crumbling because it means we get all

32:43

kinds of tidbits about it that we otherwise

32:45

would never have known. I think the

32:47

impression I get from having listened to Michael

32:49

is that he seems much more ambivalent

32:52

about Sam's alleged

32:54

wrongdoing than the impression that

32:56

I got from the book. And perhaps that's because

32:58

he's now actually being asked the question over

33:01

and over again that he wanted to leave readers

33:03

with, which is what do you think he did wrong

33:05

and how bad was it? And he wanted

33:07

to leave that to readers to make up their own minds,

33:09

but now that he's on book tour, he's being asked that

33:11

question by everyone. Yeah. I mean,

33:13

on the one hand, it's just a great story, whether

33:15

you're interested in the sort of

33:17

revenge of the nerds element, the crypto

33:19

industry generally, the legality or illegality,

33:22

the philosophy that SPF

33:24

had or has, it's sort of got all

33:26

of these things. And so it's inherently interesting.

33:29

The bigger story to me, I

33:31

think the book sort of raises more questions

33:34

for than it resolves. And that's partly

33:37

about this media relationship with

33:40

SPF and the whirlwind of publicity

33:42

that ended up creating him as

33:44

a character. There's a really interesting bit in

33:46

the book about Forbes and how

33:49

he was partly elevated to

33:51

this ridiculous level by putting

33:53

him on the rich list and talking about

33:55

how rapidly his wealth had grown. Obviously,

33:58

we know now that that was at

34:00

least to some extent questionable.

34:03

And we had some freedom

34:05

money talks, and I think if we'd had

34:07

him on during this crypto crash in 2022,

34:10

we would have been pleased to do that. And

34:13

I think the media as a whole sort of contributed

34:16

to that rise in a way that we

34:18

probably need to think about, and the media in general,

34:20

the financial media probably needs to think about.

34:22

Michael Lewis is definitely right on at least one

34:25

thing, that one of the important things here was trust,

34:28

and who had trust and who sort of facilitated

34:30

that. So yeah, I think on some

34:33

of these issues, just sometimes, not all

34:35

the time, the media has a difficulty in balancing

34:37

hype and newsworthiness

34:40

and skepticism in sort of appropriate

34:42

measures. And I think it'll take a long time

34:45

to say for certain how we did

34:47

on this one, but it's worth thinking about.

34:49

The whole story really does seem

34:52

a bit like a kind of unnecessary tragedy

34:54

to me. If Sen Bangman Fried had

34:56

simply shut down Alameda

34:58

after FTX had gained traction, he

35:01

wouldn't be facing jail time, and he'd still be

35:03

a very rich man. I'm not sure if

35:05

he made the expected value calculation

35:08

on that one, but if he did, I think he probably

35:10

underweighted the probability of the kind of downside

35:13

scenario of losing everything and going

35:15

to jail. And he had all these

35:17

big altruistic visions that he talked

35:19

about using all of his billions of

35:22

dollars for like setting up a global

35:24

warning system for pandemics, for example.

35:26

And assuming that the talk was genuine,

35:29

which I think we can because he was already giving

35:32

a lot of his money away, actually. It all just seems

35:34

like a bit of a shame, really.

35:36

Yeah, so the next time you're in the middle of

35:38

a lockdown for a horrible infectious disease,

35:41

you can thank the Southern District of New York

35:43

for taking away your global warning system

35:45

for pandemics.

35:47

Well, with that, I think it's time for us

35:49

to pivot to our stats of the week. Mike,

35:51

Alice, what have you got for us? Yes, great,

35:54

I'll go first. My statistic of

35:56

the week is 88%.

35:58

This relates...

35:59

to something called pumped

36:02

storage hydropower, which

36:04

I've been reading a bit about this week. It's

36:07

basically a way of storing

36:10

and using renewable energy with

36:13

different reservoirs. And basically,

36:15

you'll have energy created by solar

36:17

or wind usually, and that will be used

36:19

to pump water into

36:21

a given reservoir. And then it will be used in

36:24

the future whenever it's needed by

36:26

running it back out into the other reservoir again. The 88%

36:30

is the amount of hydropower

36:33

pumped storage that is

36:35

currently under construction in China.

36:38

That's 88% of the world's total of

36:41

this, which I found a pretty

36:43

astounding figure even in the context

36:46

of China's very large investment in its

36:48

grid recently. Yeah, I was pretty taken

36:50

aback by that.

36:51

This idea of using renewables to sort of pump

36:53

water up a hill so that you can use more renewable

36:56

energy in the future seems like such a good idea that

36:58

I can't believe I'm only hearing about it now. Did

37:00

we already just come up with this? I don't think

37:02

so. I think some people have known about this for

37:04

ages. You and I may have just found

37:06

out about it.

37:08

My session week this week is $299 plus $20 a month.

37:10

That is what it would cost you

37:15

to buy a META headset

37:17

from META formerly known as Facebook and

37:20

the monthly subscription fee for

37:22

a subscription to OpenAI. Given

37:24

that with its last upgrade, ChatGPT

37:27

can now hear and speak in addition

37:30

to communicate via text.

37:32

That combination of device and service

37:35

would allow you to generate artificial

37:37

chatbots that you could interact with

37:39

in the nettiverse. Mark Zuckerberg

37:41

went on another podcast to say that

37:43

this is peak screen time. In the future, everyone

37:46

is going to be using these better headsets to

37:48

chat with, I guess, their imaginary

37:51

artificial friends,

37:52

which sounds pretty bleak.

37:54

Now, obviously that's a decent chunk

37:56

of money. Did Mark Zuckerberg explain whether

37:58

they've gotten the legs? Well, yes.

37:59

Because you know, chat GPT

38:02

is great, but I don't want to talk to it if they've

38:04

messed up the legs. I don't know

38:06

if there were any groundbreaking updates on

38:08

the legs, Mike. You might be waiting a bit longer for those.

38:11

Well, on the topic of rubbish

38:13

technology, my stat of the week

38:16

is $3.5 trillion, which

38:19

is the total economic toll

38:21

that the Lloyds Insurance Market

38:23

here in London estimates that a widespread

38:27

cyber attack on the global payment system

38:29

could have over a five-year period. This

38:32

is based on a scenario where hackers sneak

38:34

some mischievous code into transaction

38:37

software and that then spreads and allows

38:39

the hackers to siphon off

38:41

massive amounts of funds, which then grinds the

38:43

global payment system to a halt.

38:45

And most of that $3.5 trillion

38:48

cost is not insured, Lloyds

38:50

reckons. So in case you felt like you didn't

38:52

have enough to worry about already today, there's also

38:54

that.

38:55

I feel like that even sounds

38:56

a little low. I think global GDP is something

38:58

like $100 trillion. Spreading

39:01

it out over five years, that's only 0.7% of GDP a

39:03

year, which

39:05

obviously is a big number. But if you

39:07

manage to get some sort of massive global

39:09

attack on payment systems, I think it would be very

39:12

catastrophic. Well, if you wanted

39:14

to be more terrified, Alice, I'm sure you'd

39:16

be pleased to know that that was the mid-case

39:19

in their scenario, and they think it could

39:21

be as high as $16 trillion, which is a

39:24

lot of dollars. I think that's a lot over a five-year

39:26

period. There we go. There's my sort of doomsday

39:29

scenario that I've sniffed out of you. The worst

39:31

case. Make it worse. Up the ante.

39:33

Yeah.

39:35

And on that happy note, all that's left to do

39:38

is thank Michael Lewis. And

39:40

thank you for listening to Money Talks. Don't

39:42

forget to subscribe to Economist Podcast

39:44

Plus. There's more info in the show notes,

39:47

along with a link to sign up for that special offer.

39:49

You can always write to us at podcast

39:52

at economist.com. Today's

39:54

show was produced by Dan Asher, Marie

39:57

Keyworth and Stevie Hertz. Our

39:59

sound engineer.

39:59

This is Tingley Lin. And the executive

40:02

producer is Marguerite Howell. I'm

40:04

Tom Lee Devlin. I'm Mike Bird. I'm

40:07

Alice Fullwood. And this is The

40:09

Economist.