1 hr 25 min

Bethany McLean - Enron, FTX, 2008, Musk, Frauds, & Visionaries The Lunar Society

    • Society & Culture

This was one of my favorite episodes ever.
Bethany McLean was the first reporter to question Enron’s earnings, and she has written some of the best finance books out there.
We discuss:
* The astounding similarities between Enron & FTX,
* How visionaries are just frauds who succeed (and which category describes Elon Musk),
* What caused 2008, and whether we are headed for a new crisis,
* Why there’s too many venture capitalists and not enough short sellers,
* And why history keeps repeating itself.
McLean is a contributing editor at Vanity Fair (see her articles here) and the author of The Smartest Guys in the Room, All the Devils Are Here, Saudi America, and Shaky Ground.
Watch on YouTube. Listen on Spotify, Apple Podcasts, or your favorite podcast platform.
Follow McLean on Twitter. Follow me on Twitter for updates on future episodes.
If you enjoyed this episode, please share. Helps out a ton.

Timestamps
(0:04:37) - Is Fraud Over?
(0:11:22) - Shortage of Shortsellers
(0:19:03) - Elon Musk - Fraud or Visionary?
(0:23:00) - Intelligence, Fake Deals, & Culture
(0:33:40) - Rewarding Leaders for Long Term Thinking
(0:37:00) - FTX Mafia?
(0:40:17) - Is Finance Too Big?
(0:44:09) - 2008 Collapse, Fannie & Freddie
(0:49:25) - The Big Picture
(1:00:12) - Frackers Vindicated?
(1:03:40) - Rating Agencies
(1:07:05) - Lawyers Getting Rich Off Fraud
(1:15:09) - Are Some People Fundamentally Deceptive?
(1:19:25) - Advice for Big Picture Thinkers
Transcript
This transcript was autogenerated and thus may contain errors.
Dwarkesh Patel: the rapid implosion of a company worth tens of billions of dollars. Insider dealing and romantic entanglements between sister companies, a politically generous c e o, who is well connected in Washington, the use of a company's own stock as its collateral, the attempt, the short-lived attempt to get bought out by a previous competitor, and the fraudulent abuse of mark to market account.[00:01:00] 
We are not talking about ftx, we are talking about Enron, which my guest today, Bethany McClean, uh, first broke the story of and has written an amazing and detailed book about, uh, called The Smartest Guys in the Room. And she has also written, uh, a book about the housing crisis. All the devils are here, a book about Fannie and Freddy Shaky Ground, and a book about fracking Saudi America, all of which we'll get into.
She's, in my opinion, the best finance nonfiction writer out there, and I'm really, really excited to have this conversation now. So, Bethany, thank you so much for coming on the podcast. 
Bethany McLean: Thank you so much for the, for the probably Undeserved Conference, for having me on the show. 
Dwarkesh Patel: My first question, what are the odds that Sbf read the smartest guys in the room and just followed it as a playbook, given the similarities there?
Bethany McLean: You, you know, I, I love that idea. I have to, I have to admit, I guess I love that idea. I don't know. That would make me responsible for what, for what happened, . So maybe I don't love that idea. L let me take that back . [00:02:00] Anyway, but I, I, I actually think that, that, that even if he had read the book, it would never have occurred to him that, that there was a similarity because self-delusion is such a, Strong component of all of these stories of business gone wrong.
It's very rare that you have one of the characters at the heart of this who actually understands what they're doing and understands that they're moving over into the dark side and thinks about the potential repercussions of this and chooses this path. Anyway, that's usually not the way these stories go.
So it's entirely possible that Sbf studied Enron, knew all about it, and never envisioned that there were any similarities between that and what he was doing. 
Dwarkesh Patel: Oh, that's a fascinating, um, which I guess raises the question of what are we doing when we're documenting and trying to learn from books like yours?
If somebody who is

This was one of my favorite episodes ever.
Bethany McLean was the first reporter to question Enron’s earnings, and she has written some of the best finance books out there.
We discuss:
* The astounding similarities between Enron & FTX,
* How visionaries are just frauds who succeed (and which category describes Elon Musk),
* What caused 2008, and whether we are headed for a new crisis,
* Why there’s too many venture capitalists and not enough short sellers,
* And why history keeps repeating itself.
McLean is a contributing editor at Vanity Fair (see her articles here) and the author of The Smartest Guys in the Room, All the Devils Are Here, Saudi America, and Shaky Ground.
Watch on YouTube. Listen on Spotify, Apple Podcasts, or your favorite podcast platform.
Follow McLean on Twitter. Follow me on Twitter for updates on future episodes.
If you enjoyed this episode, please share. Helps out a ton.

Timestamps
(0:04:37) - Is Fraud Over?
(0:11:22) - Shortage of Shortsellers
(0:19:03) - Elon Musk - Fraud or Visionary?
(0:23:00) - Intelligence, Fake Deals, & Culture
(0:33:40) - Rewarding Leaders for Long Term Thinking
(0:37:00) - FTX Mafia?
(0:40:17) - Is Finance Too Big?
(0:44:09) - 2008 Collapse, Fannie & Freddie
(0:49:25) - The Big Picture
(1:00:12) - Frackers Vindicated?
(1:03:40) - Rating Agencies
(1:07:05) - Lawyers Getting Rich Off Fraud
(1:15:09) - Are Some People Fundamentally Deceptive?
(1:19:25) - Advice for Big Picture Thinkers
Transcript
This transcript was autogenerated and thus may contain errors.
Dwarkesh Patel: the rapid implosion of a company worth tens of billions of dollars. Insider dealing and romantic entanglements between sister companies, a politically generous c e o, who is well connected in Washington, the use of a company's own stock as its collateral, the attempt, the short-lived attempt to get bought out by a previous competitor, and the fraudulent abuse of mark to market account.[00:01:00] 
We are not talking about ftx, we are talking about Enron, which my guest today, Bethany McClean, uh, first broke the story of and has written an amazing and detailed book about, uh, called The Smartest Guys in the Room. And she has also written, uh, a book about the housing crisis. All the devils are here, a book about Fannie and Freddy Shaky Ground, and a book about fracking Saudi America, all of which we'll get into.
She's, in my opinion, the best finance nonfiction writer out there, and I'm really, really excited to have this conversation now. So, Bethany, thank you so much for coming on the podcast. 
Bethany McLean: Thank you so much for the, for the probably Undeserved Conference, for having me on the show. 
Dwarkesh Patel: My first question, what are the odds that Sbf read the smartest guys in the room and just followed it as a playbook, given the similarities there?
Bethany McLean: You, you know, I, I love that idea. I have to, I have to admit, I guess I love that idea. I don't know. That would make me responsible for what, for what happened, . So maybe I don't love that idea. L let me take that back . [00:02:00] Anyway, but I, I, I actually think that, that, that even if he had read the book, it would never have occurred to him that, that there was a similarity because self-delusion is such a, Strong component of all of these stories of business gone wrong.
It's very rare that you have one of the characters at the heart of this who actually understands what they're doing and understands that they're moving over into the dark side and thinks about the potential repercussions of this and chooses this path. Anyway, that's usually not the way these stories go.
So it's entirely possible that Sbf studied Enron, knew all about it, and never envisioned that there were any similarities between that and what he was doing. 
Dwarkesh Patel: Oh, that's a fascinating, um, which I guess raises the question of what are we doing when we're documenting and trying to learn from books like yours?
If somebody who is

1 hr 25 min

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