In This Episode
Porter’s back on deck with Buck this week to welcome media entrepreneur and founder of The Blaze, Glenn Beck. Porter and Buck discuss the real reason Jeff Bezos purchased the Washington Post, big debts in the agricultural sector, consequences of moving away from free markets, and an interesting way to invest in companies that are about to blow up. Glenn Beck reveals the lesson behind the stunning rise of his media empire and how we can come together to be the greatest American generation.
Male: Broadcasting from Baltimore, Maryland and New York City, you're listening to the Stansberry Investor Hour.
Male: Tune in each Thursday on iTunes for the latest episode of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here are the hosts of your show, Buck Sexton and Porter Stansberry.
Buck Sexton: Welcome, everybody, to the Stansberry Investor Hour. I'm Buck Sexton, and of course the man himself, Porter Stansberry back from a little vacation. Porter, great to have you, sir.
Porter Stansberry: Buck, I'm not really that happy to be here. I wish I was still in Bermuda. But, you know, someone's got to pay the bills so I'm back.
Buck Sexton: Did you have a quick anecdote for us, or how big was the biggest fish? What did you catch? You got to have something for us.
Porter Stansberry: We had a very – it's a frustrating tale of woe. I entered my boat; I have a fishing boat, and we entered in some marlin contests in Bermuda. And historically, we've done very well in these contests. So we caught the second-largest fish in the White Marlin Open one year. We generally are in one of the top ten boats at the end of the tournament. But the fish in Bermuda, they're on strike. [Laughs] We had some really bad luck. One day, we hooked into four blue marlin and we lost all four fish.
So instead of being in the lead of the contest, we were at the very bottom. So we did two contests and we caught – we boated a grand total of two fish, which is not the kind of performance that we were hoping for. And I know that makes –
Buck Sexton: But a good time was had by all.
Porter Stansberry: I know that makes our listeners so very sad. [Laughs] "Oh, you were in Bermuda for two weeks and your boat didn't win, how sad for you." Yeah. But, no, we're hoping – we're going to do the White Marlin Open here second week of August, Ocean City, Maryland. If you're out and about in Ocean City, come look for my boat, Two Suns. We'll be at the main weigh station at the end of the T Pier.
Buck Sexton: All righty. So just as a little heads up about what we're going to hit on today's show, we're going to talk about what's on Porter's mind and Buck's mind, just some news of the day, news of the week, what's going on in the world of finance, politics, and markets. Our guest today is the one and only Glenn Beck. Many of you probably know him. He's a radio host, television host. Had his own show for years on FOX, made quite a splash with that. He's a conservative political commentator, author, and entrepreneur.
Porter Stansberry: And a media mogul. He's a –
Buck Sexton: And media mogul and my former boss, too, so this is –
Porter Stansberry: He's a for real media mogul. I can't – I'm hoping he'll open the kimono a little bit and tell us about his new business venture, which is really exciting on a number of different levels. It shows you how the media landscape is changing and it shows you, Buck, the role that talent plays in driving these big budgets.
Buck Sexton: Absolutely. [Laughs] Big budgets, oh no. By the way, before we get into what is on Porter Stansberry's mind, I just want to remind you all to please subscribe to the podcast in iTunes. You can also subscribe to the Stansberry Investor Hour on Google Play or Stitcher. Please leave us a review or a comment by the way. This helps grow the show which has been growing very quickly thanks to all of you. And also it's a way that we can find out how best to serve you so you can give us your comments and thoughts. And as always, if you want to do e-mail, write to us at [email protected] but go to Stansberry Investor Hour and subscribe on iTunes to the podcast and share it with a friend or two.
Porter, can we start with what's top of mind for you as we get into Stansberry Investor Hour here? What's top of mind right now?
Porter Stansberry: I'm still following the same theme, and I think you've gotten tired of hearing about it because economics makes you fall asleep the way politics makes me fall asleep. But the way that the debt that we are adding both publicly and privately is continuing to warp the markets. And I think the best example of this is something that I'm sure we've talked about before and I've written about quite a bit is the commodity markets, the agricultural markets. Deere, John Deere, the tractor company, has been more aggressive than ever before in lending money to farmers to keep production up. And, of course, as a result, you sell a whole bunch of new tractors and suddenly you've got a whole bunch more soybeans and corn.
And that's what's happened. And so commodity prices are at levels – record-low levels especially in terms of real terms, you know, real dollars, they're at record-low levels. And tractor sales continue because Deere is financing them all and leasing these things out. And there's going to be a huge reckoning because obviously farmers can't repay the loans or pay for the tractors if they're not making any profits on the soybeans or the corn. And so there's this – it's where – the commodity markets are where the rubber meets the road in terms of the credit bubble versus the real economy.
So the government's done a great job of making credit super cheap and letting rich people borrow tons of money and buy companies and force up stock prices and blow up another real estate bubble. They've all done that. But they haven't really put people to work at higher wages. They haven't made the average person's life any better. And another example of that is looking at the commodity markets. And so that's what I'm going to be working, again, on the coming days and weeks and I would point you to The Wall Street Journal , which just this afternoon published an article that echoes I mean virtually word-for-word all the stuff I wrote in late-April about the risk that John Deere was running and the huge amount of leverage. Just to be clear, the numbers are really big, Buck. It's like $38 billion in loans to farmers.
Buck Sexton: It seems like a lot of money to farmers.
Porter Stansberry: Yeah, yeah. I think sadly I think we're probably only 12 or 36 months away from another big, big problem in the Farm Belt in terms of bankruptcy and people losing their farms because there's a whole nother credit bubble that's happened. And I just wonder how long we have to go through this rigmarole with our policymakers. Like when are folks going to realize that zero interest rates don't really solve any of the world's core problems. It just makes another one.
Buck Sexton: Well, right now, I think a lot of politicians would point to unemployment. They would point to the stock market and say, "Well, there's some upside to this zero –" right?
Porter Stansberry: Right.
Buck Sexton: I mean in the short-term, it serves their purposes and that's why –
Porter Stansberry: Absolutely. And that's why we keep having them because it's a short-term solution. Do we really have to change anything? No. Do we really need to liquidate General Motors? No, we don't need to do anything tough like that. We can just pretend, paper everything over, give the unions a bunch of money and everything's going to be fine. Well, now look what's happening, right.
You've got default rates over five percent on auto loans. That's a big problem. You've got car sales plummeting. And so we're approaching another period of reckoning in the car business in particular and also in the commodity markets. And I'm just wondering when people are going to wake up and go, "Hey, we really need some fundamental change in this country, not like the Obama change where we just paper everything over but real change." And I know that Trump is saying that. We need tax reform. We need healthcare reform. And I know Glenn Beck's echoed a lot of those same themes, even if he's not exactly a Trump supporter. I don't quite know where Glenn is on Trump. I can't remember.
Buck Sexton: He was never Trump, and I think he's now wait-and-see Trump, that he's – you know, now that he's president.
Porter Stansberry: Right, he's president, yeah. That makes sense. Well, anyway, I just – that's where we're at. I think there are big underlying problems and I think a lot of the prosperity that we have today is phony. And so those are the themes that I'm still working on and we're still talking about.
Buck Sexton: Can we talk a bit about Made in America Week? It's a big initiative from the Trump White House right now. They have companies that are – or Made in USA, Made in America, same thing – they have companies that have Made in USA label showing up in D.C. They're having all these photo ops and Trump is really pushing this. Now, trade deals and China, Mexico, those are things that come up in a lot of Trump's rhetoric, both in the campaign and now. But where do you see manufacturing going? Do you think that it really is possible to bring back –
Porter Stansberry: To Vietnam. [Laughs]
Buck Sexton: Well, I have – actually, my girlfriend is in the fashion and textile business and I'm always like, "So where's all this stuff made?" She's like, "Vietnam."
Porter Stansberry: Vietnam.
Buck Sexton: "Peru, Malaysia."
Porter Stansberry: Miramar.
Buck Sexton: And, yeah, and this is not going to change anytime soon.
Porter Stansberry: No, it's not.
Buck Sexton: Retail –
Porter Stansberry: Thankfully by the way.
Buck Sexton: Retails a whole separate –
Porter Stansberry: And I don't mean to cut you off, but I do think this is one of the most ridiculous political farces of all time. The idea that we as Americans are suffering from free trade is idiotic in my opinion. And if you think about the study of economics, the one part of economics that has been most proven and has been most studied and is agreed to by both sides of the aisle, by any educated economist, is the idea of relative advantage. And that applies across global markets.
So there are places that can make things for less than we can and we benefit when we trade for those items instead of making them ourselves. And that is just pure eco 101. And to suggest that what we need is more low-end, poorly-paying, dirt-cheap sewers [laughs] is not – is just idiotic. We don't need to put 10 million people to work in America sewing socks. That's not going to make our country any wealthier or our standard of living any higher. In fact, if we do anything to make labor more expensive for our economy we will reduce our productivity, we will reduce our standard of living, and we'll end up poorer.
Buck Sexton: One of the problems is that when they look at manufacturing numbers, there's what's salient. There's what useful for politicians. And then there's the reality of the economy, which is what you're talking about, the reality of what makes us wealthier versus what just has the appearance of being a good thing. I mean minimum wage is a great example of this, right.
Porter Stansberry: Oh, it's a classic example.
Buck Sexton: No matter how many studies about how minimum wage does not help the people it's supposed to, it doesn't matter because if you stand up on a soapbox somewhere, you go on TV or you're out on the street and you say, "I'm for a higher minimum wage". Everyone cheers. You seem like a good guy. On manufacturing, it's always about the overall job number and that's what Trump has been pushing. I think one of the problems here, Porter, and you know about this sector-by-sector in a way that very few people do, manufacturing is actually – we make a lot of stuff in this country. There's this notion that we don't make – we actually make more than we've ever made before. We're just making it more efficiently. So in some parts of the economy, there are fewer people employed even though there's a lot more stuff getting made by them.
Porter Stansberry: Well, [laughs] let's just consider what these terms mean. So productivity means what a business can create given X amount of capital and X amount of labor. So as our wealth increases and productivity has to increase, right, you get that productivity's the root of all wealth. So if you're going to have an increase in productivity, you're going to have a reduction in per unit labor inputs. And that reduction in per labor unit inputs allows you to make more of something for less. And that is what makes us wealthier. And the wealthier we become, the more capital we have in excess that we can invest in new industries and new products.
So it's completely natural that America would move on from, say, being a place where cars are manufactured to being a place where cars aren't manufactured. Instead, now we're manufacturing NVIDIA Bitcoin mining chips and other things that are – require more infrastructure, more education, and more capital. That's completely a normal progression in wealth. And you go out throughout history, right, there's even an English word for this. Remember the old textile workers in London, the –
Buck Sexton: Luddites.
Porter Stansberry: The Luddites, yes, thank you. I was having a brain freeze.
Buck Sexton: Named for the apocryphal Ned Ludd.
Porter Stansberry: Right. But where will we be if the government instead of allowing for increasing productivity to change the balance of the labor markets, imagine us trying to freeze everything in time. We'd all still be sewing our own socks. Or one of my favorite examples is do you think America would be a better place if we made it against the law to put wheels on your suitcase? Because we could hire a lot of people to carry suitcases around train stations and airports and hotels. But we're not going to be any wealthier if we do that.
Buck Sexton: A couple things. One is the Luddites, people refer to that now as anyone who has an aversion to technology. That really was a rebellion. I mean there was violence in the UK as a result of this because seamstresses, weavers, people that were making a living that way, it wasn't that they were afraid of the technology which has become the, "Oh, this technology is bad." It's that they wanted the government to step in and protect their jobs because they realized that the skill that they brought to bear was not able to be replicated by people without the training, therefore they were less valuable. So they wanted regulation. They wanted the government to say, "This is how it's going to go." So that's a familiar theme I think for today.
But, Porter, the whole case you just made about how it makes us wealthy or how going from making cars to making microchips to making whatever's coming in the future is good for us, politicians just do not want to make that case to people.
Porter Stansberry: No, they can't.
Buck Sexton: It's so much easier to say, "We're going to bring the jobs back."
Porter Stansberry: Well, think about it. There's – this number might be a little exaggerated, but I was told that there are around 3 million truck drivers in the United States because I was thinking about the impact of automated vehicles. And one of the questions that the politician immediately asked is, "Whoa, that's a teamsters union? That's a lot of money for politics. That's a lot of votes. And I'm going to have to do something right away to protect those 3 million people." The guy who's been driving a truck for 20 years is not going to learn how to do something else.
And so I'm really interested to see as that automation gets better and as you can clearly demonstrate that a computer is a far more reliable and better truck driver than a person. A computer doesn't get tired. Computer doesn't drink. Computer doesn't fall asleep. Computer doesn't need a day off. Computer isn't a member of a union. So the increase and the efficiency of our economy could be tremendous and we could free up 3 million people to do something that's more useful. But politically, that is a nonstarter. And so I think what's going to happen is probably for 20 or 30 years you're going to have people sleeping in the cabs of trucks who are officially the drivers and who are being paid but they're not going to be doing any –
Buck Sexton: They're managing the computer system, yeah. [Laughs]
Porter Stansberry: They're not going to be doing any of the driving. [Laughs] Just imagine the –
Buck Sexton: Yeah. They're there just in case.
Porter Stansberry: Just imagine the idiocy of that, just like by the way when you get enough productivity and you get enough over capacity you end up being General Motors who was paying for 7,000 or 8,000 people to sit in a cafeteria every day. They didn't need the workers but they couldn't politically get rid of them.
Buck Sexton: That's where we're heading with technology because –
Porter Stansberry: Right. And it's total madness, and all it does, of course, is reduce the wealth of our country, lead to wasted capital, and reduce the wealth of everybody.
Buck Sexton: You mentioned retail briefly before, and retail employs about 10 percent of people in the country. And I heard Trump earlier in the week say something to the effect of, "The mall that's closed down near you, we're going to fill it again. The stores that are closed –"
Porter Stansberry: No.
Buck Sexton: And I just want to stand up and be like, "Nah, man, Amazon and all –" it's just not happening. Brick-and-mortar, especially for retail for clothing, those jobs aren't gone in the sense that it's cyclical. Those jobs are going to be gone forever.
Porter Stansberry: Yeah. Don't you remember during the campaign that Trump basically threatened Bezos with antitrust laws?
Buck Sexton: They're bringing it up again. It's coming up this week.
Porter Stansberry: Yeah. And you know what's going to – I just wonder what's going to happen because I would much rather do business with Amazon than listen to anything that Trump wants to say. And I'm not a never Trump. I'm not – I just think it's just politics. For me, it's just all craziness. But I know that Amazon delivers my toothpaste on time. And I know it makes it a hell of a lot easier for me to do other things with my life besides shop. So I'm totally satisfied with Amazon.
Buck Sexton: I think I probably do 75 percent of my shopping on the Amazon app, my day-today shopping, on the Amazon app on my phone which may explain my wardrobe according to some of my friends. But the point being here that that's what you can do now.
Porter Stansberry: I think the politicians that go after Amazon are going to be making a huge mistake because I think for a lot of people in this country, Amazon is seen as a friend and an ally. Look, they can deliver stuff that nobody else delivers, and they don't make any profit on their retail operations. All of Amazon's profit comes from its web services business. So you go after the most popular business in America that has brought Americans a whole higher level of standard of product and of service and for no profit? I don't know how that's going to work. I think you're going to be surprised. If Trump tries to go after Amazon, he might get his ass handed to him.
Buck Sexton: The same phenomenon of popularity over politics has been the case with Uber. In city after city, you've seen the taxi cab unions – I was in Puerto Rico and I didn't know that this was as sensitive as it is there, but I get into an Uber because they have it there, and taxi drivers come over and start pounding on the – there's this huge fight between them, and you say to yourself, "Well, what's the problem here?" I mean this is a technology, using cars, people are getting paid, bringing business to the island. The cab drivers association or union there, just like in a lot of different cities, they want the government to just keep Uber out. But people want it so badly because it's so convenient and better and they prefer it that in city after city they've been winning.
Porter Stansberry: Yeah, and because 9 times out of 10 you get into a cab, it smells like crap, the driver acts like a jerk, he doesn't show up on time to pick you up at your hotel room. Just as a point of reference about this – and Bermuda is a 21-mile island, okay. It's actually on a toll in the middle of the Atlantic Ocean. It's very remote, and about 70,000 people live there. And one of their two core businesses is tourism. The other business is insurance. And they have a law that tourists are not allowed to rent cars. Now you might think, "Well, that makes sense. The roads are narrow and twisty and it's British so they're driving on the wrong side." But really it's an employment campaign, right.
So there are 600 taxis. And every time you want to get anywhere in Bermuda you have to hire a taxi. And I was there for a couple weeks, so I hired a lot of taxis. And I went through this whole process, which is you call them, you have to wait. One time I had to call the taxi firm 29 times in a row because they didn't – their phone system is so antiquated that you just get a fast busy signal. Okay. So if I wanted to get anywhere, it took me at least 45 minutes to get a taxi to my beach house. And I'm thinking, "Bermuda is going to put itself out of business as a tourist destination because they don't have Uber." I mean there's no way I'm ever going back to Bermuda ever again because of how bad their taxis were. And I'm not the only person who's going to say this in national media.
Right. They're going to have a huge reputational problem because the country, the size of it, and the modern demands of transportation have far outpaced the 1950s method of getting around. And they are refusing to make any changes because the people who drive the 600 cabs don't want to have to compete.
Buck Sexton: Right. Politicians always want to go with the incumbent. And in this case, the cab drivers are the incumbent.
Porter Stansberry: But the lesson here is something a little bit deeper, which is that you have to remember, if you're a politician, that your goal is the overall wellbeing of the country. And if you begin to protect industries or favor industries, whether it's truck drivers or whether it's cabs, that's going to have consequences across the economy. So for example, you want to put steel tariffs on because the steel companies, they back Republicans not Democrats. Okay, great. When you put steel tariffs on and now all of a sudden the auto makers have to pay more for steel, and that means the consumers have to pay more for cars. There are always consequences when you move away from the gains in productivity that are inherent in the free market.
And in some economies like Bermuda, it can be catastrophic. So Bermudan tourism is going to collapse because they won't have modern transportation. And the flipside of that in America is somebody going after something like Amazon for political reasons, you know?
Buck Sexton: I think by the way that Amazon's or Bezos acquiring The Washington Post –
Porter Stansberry: Post, yeah.
Buck Sexton:is not an accident.
Porter Stansberry: No.
Buck Sexton: One of the big lessons post-financial crisis when you see Goldman Sachs getting bailed out 100 cents on the dollar by AIG because of the counterparty risk is if you have the political connections, you're Goldman Sachs, everything's fine. If you don't, you're Lehman Brothers and you're toast. And part of political connections is having a very big megaphone. And I think that – I do not think it is accidental that Bezos has a hand – or not a hand in it, Bezos is the owner of The Washington Post. I think they realize that while there's so much that the business side of it can do and determine, politics can trump it all in some circumstances. And so they're trying to hedge their bets.
Porter Stansberry: You know, I was just talking with – we had a big research meeting today. We had our top 20 analysts sitting around a table talking about investment ideas. And I think one of the most interesting potentially very lucrative investments is buying the News Corp and I would say The Washington Post but obviously it's privately owned so we can't buy it, with the New York Times because those guys have also very recently just figured out how to grow the digital subscriber base. So since 2015, the digital subscriber base in New York Times has doubled. And it's sort of under the radar. People have thought about newspapers as being a dead or dying industry for so long that no one's paying attention to it anymore. Meanwhile they're finally getting that business model figured out. And who better to help the industry figure out how to sell things online than Jeff Bezos?
Buck Sexton: Yeah.
Porter Stansberry: So I agree with you there's definitely a lot of political reasons for him to buy that newspaper. And that then enables him to have a voice on all national politics immediately. But I also think there was a surprising business case that he's pursuing, and I think it's just one of the most fascinating things to watch. These properties, The New York Times, The Wall Street Journal, and The Washington Post, for the 50 years after World War II, those were probably the most valuable media properties in the world. Maybe the only one that was more valuable was the Racing Form if you know that business about all the horse handicapping.
But these were such great businesses because they had huge subscriber base. They had dominant positions in the advertising sales spaces. And then in the last 20 years, what's happened? Those businesses have just been torched. They've just been torn apart because media's become so fragmented. Did you see, Netflix's stock jumped 14 percent a few days ago?
Buck Sexton: Yeah.
Porter Stansberry: And the subscriber growth of that business is just incredible. Over – is it a billion subscribers? No, 100 million subscribers at Netflix. It's $1 billion a month in subscription income they have, $10.00 a month.
Buck Sexton: They're spending billions on their own content.
Porter Stansberry: Yeah. But they've got –
Buck Sexton: They're a content company now.
Porter Stansberry: But when you've got 100 million subscribers paying you $10.00 a month, you can afford just about anything.
Buck Sexton: I'm a perfect example. I was a paid employee of CNN, a cable news channel, who hasn't paid a cable subscription in six years, seven years now. I was working in cable news. People say, "Well, how do you watch the news?" I say, "Well, it's all digital. I can watch it on the app on my phone. I can watch on my computer. There's Fox News Go. CNN has the same thing. This is what everyone's doing now. And that's why I think the cable companies now are trying to get cozier and cozier with two entities. One is the content makers and also the providers of internet access, right. That's how you see some of the –
Porter Stansberry: And we're going to have a guest on to talk intimately about all of this because Glenn Beck's a guy who left the cable networks and has established his online network.
Buck Sexton: Yeah. He has insight into what it's like to try to be in the cable game right now from – and when I was at the company as well when I was an employee of Glenn's I was a host there on radio and TV and became more and more involved as the senior folks in the company came to know me and trust me in just what was going on and understanding the strategy side of it. But for example, I mean the cable providers, they have a fat and happy business right now but they know it's just a question of when not if. And they realize that digital is where it's all heading. And there's a lot of politics right now in how you get on cable in the first place.
There's a lot of games that go on behind the scenes about who will get a channel and who doesn't because they don't really need anybody which is what everyone's finding out. So that's a messy game. But on the digital side of things, if you have people that want your content and you're in the digital space you'll be fine basically if you have enough people.
Porter Stansberry: Yeah. Well, let's go get Glenn and talk more about this. But before we go, a quick pitch for one of my own products, so forgive the ridiculous self-promotion. But if you're interested in some of the things I was talking about and the way that these debts are hiding in plain sight in the way they're warping our markets, I mentioned John Deere as an example. There's many others. Go to www.stansberrysbigtrade.com. And you'll see our research on this particular topic. We're targeting certain companies that have huge amounts of excess debt and are very at risk to a turn in the credit cycle, and we suspect that's going to happen next like I said 12 to 36 months.
And there's a way you can make money on that if you're willing to speculate, willing to take a little bit of risk. And if you want to just learn more about it, of course you can read a lot of that content for free, www.stansberrysbigtrade.com.
Buck Sexton: All right, Stansberry folks. We are joined now by our special guest, Glenn Beck. He is a television and radio host, a conservative political commentator, author, network producer, filmmaker, entrepreneur, media mogul, and formerly my boss. Great to have you, Glenn. Really appreciate you calling into us.
Glenn Beck: Listening to that list it's like I can't keep down a job. [Laughs] I've tried everything. One of these will work. [Laughs]
Porter Stansberry: Glenn, Porter Stansberry here. Thanks so much for joining us.
Glenn Beck: You bet.
Porter Stansberry: I'm an enormous fan of your media empire. What you have done is right at the cusp of the breaking wave of the media explosion over the last 15 years and how everything is changing and you have been completely in the vanguard of showing what's possible for people that are creative and brilliant and have talent to build their own worlds. And I just wondered if you – I know your business is private and you probably don't want to share any details, but what can you tell us about how things are going at TheBlaze? As a fellow publisher, I'm very interested in what you've done and I'm just curious to see how it's going.
Glenn Beck: Well, that means a lot coming from you, Porter. Thank you. First, let me say that I think we were on the cutting edge and we were a vanguard. I mean when we first started, the Tribeca Film Festival gave us a Disrupter of the Year Award, which that had to hurt. [Laughs] And the reason why is because at the time I think it was Netflix and Major League Baseball were the only ones doing it. HBO was just starting to get into it. I don't even think they had announced yet. The only people that could provide the service for us was Major League Baseball. And so we were the first to walk out on the edge and just jump and hope that everything was going to work out right. And it's been very good.
But I will tell you that I was out in Los Angeles meeting with some people from Silicon Valley, et cetera, et cetera, as a look at a whole new era of what we're about to launch here this fall. And things change so rapidly that we are behind the pack now. And when you can go from an industry innovator and leader and in five years had a lot of people pass you with new innovations, that's saying something about the times we live in. Every entrepreneur needs to know that there is no rest for the weary ever. If you're not disrupting yourselves you will be disrupted.
Porter Stansberry: Very interesting. Can you tell me anything about your subscriber base? How many people have you got paying you to watch the show on the Internet?
Glenn Beck: We don't talk about that at all. We've never released those numbers. But I will tell you enough to be able to own the historic movie studies of Las Colinas and to employ 250 people and to be launching some pretty exciting new initiatives this fall.
Porter Stansberry: Well, I understand –
Buck Sexton: And to have trained and launched Buck Sexton by the way [laughs] if I may say so, a finished product over here.
Porter Stansberry: Glenn, I – sorry, go ahead, Glenn.
Glenn Beck: One of the things I have to tell you about, one of the things we are going to do is at www.mercuryradioarts.com which is really only used except for people who want to work for us trying to find out something about the company, I'm – one of the things that I want to do right away is take all the crap down about me and just start putting almost like a yearbook, the graduating class of because the people who have come through our doors like Buck have gone on to giant careers. And Buck is a shining star in that one. He is – I mean I really think he is the next generation of talk radio.
Porter Stansberry: I'm betting on that.
Buck Sexton: Thank you, Glenn. Yeah. Thank you. Well, I've got two gentlemen right now who both placed bets on me early on in my career so I appreciate that.
Porter Stansberry: Glenn, I've got another question for you. It's a whole different vein. And let me just say I understand; I have a private company myself and I understand it doesn't do you any good to talk about your subscription numbers. So I appreciate your need for privacy. But my second question relates to the kind of content that I have watch you provide for many, many years. And you do a great job of it. You do it with integrity and I applaud all that. But I have a question about it because I really don't understand it, and I wonder how you think about it.
So I'll give you an example. I was on your website today just preparing for this interview, and you were talking about wanting to reach out to the Forgotten Man in Maryland. I think his name was Allen.
Glenn Beck: Allen, yeah.
Porter Stansberry: There was a guy who called in and said, "Hey, I'm unemployed and my girlfriend can't get me a job," and blah, blah, blah, "I have all these troubles that some people have." And I saw how you responded to it. You responded with a lot of sympathy and empathy and you wanted to talk to him and you wanted to use him as example about how America has left some people behind. And the way you did it and the content you created I'm sure was very – reached your audience and people responded to it. I could see that in what you had done.
Another example of this – the way you bring emotion to the questions of politics and economics and things like constitutional rights, which most people wouldn't think that they're reading about, but you really do bring that up. The latest one, the British baby who was very sick and is now being treated by a neurosurgeon in America. I'm sorry, I forget their names.
Buck Sexton: Charlie Gard.
Glenn Beck: Yeah, Charlie Gard is the baby.
Porter Stansberry: Right. And so you're talking about – you're talking very sincerely about these issues and what the rights of this child should be. And these are complex issues and the people are very heartfelt about it. And I'm just curious, it sounds like such a naïve question but I'm being very sincere, what is it about that kind of political content that you think charges your audience so powerfully?
Glenn Beck: I think honestly it is where conservatives go wrong every single time. And it's very interesting. I don't know if you've read the book by Jonathan Haidt called The Righteous Mind. But everyone should read it. He started – he's a self-described – before he wrote the book – self-described New York NYU liberal professor from New York. So you can't get any more progressive than that. He started to write a book about why the Democrats are losing to people like Donald Trump and what language they need to understand. And he really didn't understand it.
So he went out and he did a research project, and he ended up finding a couple of people that changed his life. I found out much later that I was one of them. He studied all of the talk radio shows but mine in particular and he heard me talk about things differently. To cut to the chase here, he now has an American flag sticker on his car. He does say that he also has a UN sticker just to be fair. He says I'm not a professor. I'm still kind of liberal but I'm not who I thought I was because conservatives are not who I thought I was.
And we always lose because we connect with the head and never the heart. And we're always confused because we feel liberals connect with the heart and never the head. What we have to do is understand that there is an emotional language, and in fact, there's two different languages. One he outlines in his book, The Righteous Mind, and there's another one that is actually from a business book that I read called Tribal Leadership. And we are broken up into tribes and there are different stages of those tribes of where they are emotionally and so what they can hear and what they can't hear. And I know that – I was in Hollywood last week and I was meeting with some big people in Hollywood, and I had dinner with all these guys from either Hollywood or Silicon Valley, and some of the biggest names in the entertainment and information world.
And we were sitting there, and it was a closed meeting. You could only come if – my only request was you can come, I don't care what you believe, but you can't be wearing a jersey. You can't say, "The Democrats are always right," or, "The Republicans are always right." So it was me and about 30 liberals and very deeply progressive liberals. And we started talking about things, and I started using their language and I started by first talking about the mistakes that I have made and the viewpoints that I have come to over the years, but I was using their language. And I started talking about the events of the day using their kind of buzzwords.
About halfway through, a guy who is massively progressive. One of the people on his staff was a liberal whose father was one of the first to go to jail for the blacklist and still considers the family Communist, she and he, they both said at one point we were talking about something, I can't remember, and he said to the group, not looking to me, he said, "You know what? We have all looked at the 10th Amendment and always said that it was racist." He said, "I think we all need to admit right now we were wrong. I always thought it was because of racism but now I see that maybe it's not. Maybe there's something to that 10th Amendment and states' rights". And the room agreed.
When you can take people and speak their language and speak the language of the heart and be good at telling a story, you can at least break through enough to have people say, "You know, I don't agree with that guy, but he's really smart. He's fair. He's decent. And I like him. I just don't agree with him". And that's where we need to get back to.
Buck Sexton: Glenn, I wanted to ask you about – well, it's quite a time for politics considering that it's revolutionary now that the Republicans would actually do what they've been saying they're going to do for years, right. We're in the midst I think of a crisis within the party and the whole country is watching very closely on the healthcare issue and whether they will repeal. But lost in all of this is an issue that I think is even harder to tackle in a serious way. It's one that I heard about many times from you even before I came to work for you. And that's the issue of the debt. I come on the show with Porter and he talks about credit cycles and how there's a lot of debt that can't be paid in the auto loan industry and in different sectors of the economy. And this is going to have ramifications. We're $20 trillion in debt. Whatever happened to the Tea Party? Whatever happened to the political will to do something about that?
Glenn Beck: Okay. So that goes right back to what Porter asked me about, this listener, Allen, who called in who said, "Look, I'm struggling. I'm struggling. I'm working hard. I'm getting up at 4:00 in the morning, and I can't afford my insurance. They just cancelled my cable bill. I barely have enough money to put food on the table and nobody's listening to me." Here's the scary thing that because everybody is screaming at each other and everybody is just, "I'm the Eagles, you're the Redskins, I don't care. You're evil." Because we're playing that game, we're missing some really important things.
I'm watching as I know, Porter, you are watching the default on auto loans. That is the canary in the coal mine I think. When we start to see these auto loans begin to default we're in real trouble. Trying to get the audience that was paying attention to this, they're not paying attention to it now and trying to figure this out, I'm looking at that Tribal Leadership book and seeing that there's people who are in a Stage 2 Tribe, and what that means is a tribe that says – if I put it in the workplace because that's what this was written for, but I look at this as our country – a Stage 2 company with a Stage 2 Tribe says, "You know what, nothing's ever going to change here". Somebody comes in with a new idea and they say, "Yeah, well, we've tried that before. That doesn't work. You know what, just don't work so hard because nothing's going to change and my life sucks because –" fill in the blank. That's a Stage 2 Tribe.
A Stage 1 Tribe is into theft, into violence, lies, cheats, high suicide rate, just basically burn the place down. That is where we're headed and some people are already there. You heard from Trump supporters, some, that were saying things and they didn't mean the actual violence but they meant this literally that Trump would go in and just tear the place apart because they no longer believed anything would work, they're Stage 2. Some of the left and fewer on the right but some on the right, are in Stage 1. Because they've given up hope on everything and Donald Trump I understand him in a completely different way in how he won, he spoke the language. He basically said, "Yeah, you're right. Things suck, right?" And the way he spoke, the way he talked, he convinced them that he's not a billionaire. He's just like them.
And so because he's one of them, they now have stopped looking at the problems and they've put their faith, as Anne Coulter said, in Donald we trust or in Trump we trust. And so it's a really disturbing thing that the ones who are the real guardians of the debt are in so much trouble and have lost so much hope because of the perceived failures of the Tea Party that they are no longer watching that. And I think this is going to come as a massive shock and if we don't play our cards right and start coming back together you're going to see the two parties demonize each other until a strongman can step up and stop the madness.
Porter Stansberry: Glenn, I've got one more question for you. And when I heard you say, "Stage 2," all I could think about was Vince Vaughn in Wedding Crashers complaining that he had a Stage 5 clinger. So thanks for the stage references for us. [Laughs]
Glenn Beck: You're welcome.
Porter Stansberry: But I've got a serious question about politics, and I know almost nothing about politics, but here's what occurs to me as a –
Glenn Beck: Oh man, oh, wait, wait, wait, wait, wait. Just breathe for a minute. Take a chance, take a moment to appreciate what you just said. That's refreshing to hear. But go ahead.
Porter Stansberry: I don't. [Laughs] Politics has always been a complete mystery to me. But –
Glenn Beck: Me, too.
Porter Stansberry: But what I do see is when I look back over the last seven years or so in our economy, I see some really interesting things that have happened that are sort of groundbreaking and I don't think people have as much appreciation for what's gone on. We haven't had any real increase to wages. We haven't had any significant increases to productivity. What we've had is $250 billion in subprime auto loans since 2012. What we have had is about $800 billion in student loans which really should be classified as subprime loans as well. In fact, they're probably riskier than any other loan that's ever been made. [Laughs]
Glenn Beck: Yeah.
Porter Stansberry: Hey, you're 18 years old? Let me give you $30,000.00. What could possibly go wrong?
Glenn Beck: Yeah, right.
Porter Stansberry: What I do see is I do see that one private company – I mean it's publicly-traded but one private entity, John Deere, has lent farmers about $30 billion in the last five years. That's a lot of tractors, man.
Glenn Beck: Have you been to a farm lately? I have a farm. The tractors these guys have, I literally – I looked at my neighbor who just bought this $250,000.00 tractor and thought to myself, "I don't know how you're ever going to pay for that. I don't know how you make ends meet with that."
Porter Stansberry: Well, I have a farm, too, and I can tell you how my farmer paid for his tractor. [Laughs] I wrote him a check. But my point is there's a very, very large amount of capital, much of which has been financed by government and/or the banking system which has been, as you know, really cranked up. And that has created a whole bunch of prosperity of the last five years or so that was never funded by savings and wasn't created by gains in productivity. And I know, Glenn, you know well enough to know that's not going to last. And my concern is if the angry American who has suffered with 40 years without increases to wages and has given up on the political system and sees a lot of people living on the dole but doesn't have any benefits himself really, this guy's angry.
This is your Trump supporter, classic Trump supporter if you will. What's he going to do when, for example, I'm going to throw out a worst-case scenario, when a company like John Deere goes bankrupt or when maybe Ford goes bankrupt because car sales fall apart because subprime lending can't continue? I mean we're in a period of time where the economy in theory is growing and yet all of a sudden people can't pay their auto loans. And when people start defaulting on consumer debts before unemployment starts, you've got a big economic problem that's going to have a lot of consequences. What could the midterms look like next year if we're in a really bad economic situation?
Glenn Beck: Oh, I think – I have an old piece of history. There were only I think eight of them made. They were made for FDR's cabinet. And it's amazing to see. It's probably 40 pages with pie charts all hand-colored because they didn't have Xerox machines, hand-typed and bound, and they were given to the members of the cabinet and it was to decide on the second push of the New Deal. It's 1936. And it says – the embossed cover of this says, "Relief, radicalism, or revolution?" And it makes the case and made the case for FDR, "Here's what's really going on in society and here's what we think people are feeling and here's how bad it really is. And there are radicals and there are revolutionaries. And if we don't give them some sort of relief we're going to lose the country. And I don't know if you put this genie back in the bottle".
I mean you – it's a little like the fools that started the Egyptian revolution or the Arab Spring. If you remember right, I was the only one and I was mocked for it relentlessly to say a caliphate was coming, that this was the beginning of a caliphate. And you cannot put revolution back in the bottle. And we have stoked the fires on our university campuses. We have stoked the fire, we're stoking them now, both sides, on television, in talk radio. And unless we change our approach and unless we start to band back together we will not be our highest ideal of Americans.
There was a great quote I read the other day that said, "People do not rise to their level of expectation. They rise to the level of their preparedness." At least when Barack Obama in office, half of the country was mentally prepared and in some regard physically prepared for tough times. They were talking about food storage. They were talking about being good neighbors. That's all over. And we are not going to rise to the greatest American generation unless there is some leadership out there, and it starts with the three of us, unless there's some leadership out there that says none of us want to live this way, none of us want to see a revolution in this country, it doesn't end well, and we need to take care of our neighbors and the way we can start doing that is to start listening on the local level and us in the national level start talking to our listeners in a different way and listening to them.
And like you pointed out, what is it that these emotional attachments are, we must start validating them and showing them that there is somebody out there listening and they can make a difference if we stick together. If they don't believe that and the election comes down, it's relief, radicalism, or revolution in 2018, 2020, 2024.
Buck Sexton: Glenn, we thank you so much for giving us your time today on the Stansberry Investor Hour. And I obviously want to thank you again for finding me and preventing me from taking on a lot of debt and going to business school and starting my media career. So thank you for that.
Glenn Beck: Ooh, you're welcome.
Buck Sexton: And also everyone listening, if you're not familiar or read it, you should go – well, Glenn has a nationally-syndicated radio show. He also has his own TV channel, his own media company, www.theblaze.com is the news and media website, also www.glennbeck.com for the radio show. Anything else, Glenn, that I'm leaving out that you want to throw in there?
Glenn Beck: No, not at all. Not at all.
Buck Sexton: All right.
Glenn Beck: Thank you, guys.
Porter Stansberry: Glenn –
Glenn Beck: And, Buck, I'm thrilled for your success, and Porter, I'd love to have you on the air sometime because you are really truly a guy who gets what's coming and it's not pretty and we have to find ways to help people.
Porter Stansberry: I'd be happy to, Glenn. And congratulations on your massive success. Thank you very much for being here.
Glenn Beck: Thank you. Bye, bye.
Buck Sexton: All right. Well, that was Glenn Beck on the Stansberry Investor Hour. I've got Porter Stansberry here with me, and I'm Buck Sexton. Porter, that was great, man.
Porter Stansberry: It was. I was just saying to you off air, that guy is – I did an extemporaneous debate in high school, and he would've whipped me and everyone else at every debate tournament because he – it sounds so polished right off the top of his head. And I know he wasn't reading from a script. I know he didn't know what I was going to ask him. I mean that is really – that's a very, very smart guy.
Buck Sexton: Yeah. He is a truly I'm a guy who does three hours of radio a day, and look, I learned from listening to Glenn and listening to Rush, two guys who have had me fill in for them, and he's a gifted radio host. He's been doing it since he was 14 years old and is an autodidact. He's taught himself a lot of stuff about a whole variety of topics. By the way, do you want to get into the mailbag here, Porter? We got some folks listening that want to share their thoughts with you about what happened to Porter and he better be catching some big fish. We miss Porter.
Porter Stansberry: I can't wait to hear the mailbag.
Buck Sexton: All right. We got from the mailbag on the Stansberry Investor Hour here, we've got:
"Dear Porter, I hope you enjoyed your fishing trip. I have not heard or seen anything about Italy's bank bailouts from either you or Doug Casey. I thought this would be a big deal and might even raise their borrowing costs as it should. What say you?" From Walter.
Porter Stansberry: I don't expect that we'll raise their borrowing costs. The euro was invented for lots of reasons but one of which was to prevent banking panics. So, no, I don't think it will. And I've been following the debacle at UniCredit since at least 2011. So, yeah, I just don't think it's going to make any difference.
Buck Sexton: All right. And I'm learning about this right now. So there you go. I got [laughs] I wish I could add something about the Italian bank bailouts but that's not my AO.
Porter Stansberry: By the way, the whole idea of an Italian banking system is – it's just like a bad joke. [Laughs] I mean, you know, all these banks are rotten, the banks in Greece, the banks in Italy, the banks in Spain, they're all just completely corrupt and worthless institutions. And in Italy, it's all controlled probably by the mob and it's just a mess. And so what they're doing is they just keep papering it over. I don't know how many different capital raises UniCredit has done by now, but it's so many that I bet you the share count has gone up by a factor of 10,000 since 2010.
I don't even know. I mean it's so – it's hard to believe the euro still exists. It's hard to believe there isn't runaway inflation in Europe. It's hard to believe that anyone still trusts the euro, the bond market, any of it. It's all corrupt. But the same thing was true in Japan to a greater or lesser extent the same thing is true in the U.S. market. I mean, look, the Federal Reserve purchased something like $4 trillion worth of its own debt. It's a circular system. It's what we call Escher finance. It's all a myth and it's all a mirage. But you never know when the market's going to finally wake up and go, "Okay, this isn't working. We're not doing this anymore."
I mean Greece was bankrupt as a country when they joined the euro in 1997. But the run on the Greek banks didn't start until 2010. I can't explain why. So, no, I don't think that the recapitalization of the Italian banks is going to make any difference to the borrowing costs in Italy. And I also don't expect that any of those moves that have been happening over there are going to improve their economy. Putting more money and credit into the system is not going to make the Italian economy more productive and it's not going to encourage people to invest there.
Buck Sexton: All right. We got one from Michael here:
"Dear Porter and Buck, I have signed up but cannot find the screenshots bonus video from the Porter Valuing a Business Episode. Can you send me that direct link? P.S. Great information, great show. Keep them coming."
Yes, we will totally send you that link, Michael, and we've already got that covered. The Stansberry team has got that sent out to you. And for those who would like a link to the stock valuation video, go to www.investorhour.com and enter your e-mail. You'll receive a link to the video and access to the show archive and transcripts on the Stansberry website. Again, that's www.investorhour.com. And also by the way, on iTunes, you can subscribe to this podcast to the Stansberry Investor Hour on iTunes. You might be listening to it the first time. Subscribing is the best way to go.
We got one more here, Porter, and then we'll wrap up shop.
"Dear Porter, what do you think about Amazon's takeover –" I'm actually really curious. This is a question I would ask you, too. "What do you think about Amazon's takeover of Whole Foods without any other offers coming from competitors? It seems like a very bad strategic move by Kroger or some other large grocers not to at least try to prevent Amazon from purchasing Whole Foods. Amazon's business model of not caring about profits could be very painful for Whole Foods competitors. Enjoy the podcast. Keep up the great work." That's from David. Porter, what do you got?
Porter Stansberry: That's an interesting approach. [Laughs] Your competitor wants to pay too much for a rival business so you offer to pay more? I'm not sure that would be doing Kroger any favors. And I'm sure they're already in all the markets where Whole Foods is. So I don't think you can as a business I can't defensively buy and pay too much for a competitor. I don't think that's going to work. So I would say, no, that's not what Kroger should've done. But I do think that Amazon is going to be a very disruptive force in the retail grocery market eventually. And I think Kroger and the other folks are going to have to accept lower margins and offer better service. And that'll be good for – eventually, of course, that'll be good for the country and good for all the consumers.
But I also think it's going to be harder than that subscriber realizes and perhaps harder than Amazon realizes to compete with those grocers. These guys like ALDI and the other discount grocers, they have been gaining share on Whole Foods because the organic food movement has gone to lower and lower and lower down the retail chain. So there's nothing all that exceptional anymore about a grocery store offering organic products. So Whole Foods had been suffering for the last four or five years because they were kind of lost. Their model was to charge more for organic food. But now you can get organic food at a lower cost at Kroger or other places. So I think it's going to be harder than Amazon thinks to turn that business and that acquisition into a winner.
I also – I don't know him personally, but I know him very well by reputation and we have several mutual friends, the founder of Whole Foods is a very, very good businessman. And my bet is if he wasn't able to grow that business successfully over the last several years, it's going to be harder than Bezos expects. You know, think about where you buy your groceries and why you buy them. I'm not really going to ever order my groceries online. I like to pick out my own cuts of meat. I like to shop carefully for my produce. I know everyone's not like me, and from time-to-time I might order online if I didn't have any other options and I needed the food or something. But I just think that that's a different kind of relationship. People have a different kind of relationship with their groceries than they have with say their shoes or their jackets or their jeans.
The other items are far more commoditized than food is. So we'll see. I know that my wife right now buys a lot of our staples via Peapod, which is a delivery service that I believe is owned by Giant. And so we get things like paper towels and commoditized things like bottled water or whatever, we can order those bulk items, we get them delivered automatically. They end up in our garage. And that way when we go to the store we don't have to deal with any of that stuff. We can just go get the specialty items. And it's interesting because –
Buck Sexton: Right, but you like to pick out your own Chilean sea bass.
Porter Stansberry: That's right. But it's interesting because we buy the bulk items from Giant but when I go to shop for food I almost always go to Fresh Market and it's very expensive, but I'm only there to buy proteins and produce.
Buck Sexton: Fun fact, you know, it used to be called Patagonian Toothfish, Porter, and they changed the name and made it a billion dollar fishery.
Porter Stansberry: Very smart. You know where Upper Matecumbe Island is?
Buck Sexton: No.
Porter Stansberry: Well, today it's known as Islamorada. It's much more popular now.
Buck Sexton: [Laughs] There you go. All right. Well, that's – I think we've got our Stansberry Investor Hour in the books for this week. Everybody who's listening, give us your feedback, please. Let us know how we have delighted, excited, disappointed, or entertained you. We can leave out disappointed unless you really feel the need. [email protected] is where you'd send that e-mail, [email protected] Remember, if we use your question on the show we will send you some Stansberry Research swag. Please do. Go to www.investorhour.com. Check out everything we've got there. And, Porter, anything else?
Porter Stansberry: That's it. Love us or hate us, just don't ignore us.
Buck Sexton: All right. Fantastic. Porter Stansberry, everybody, and I'm Buck Sexton. By the way, iHeartRadio app, you can listen to my politics show for three hours every day, those of you listening, or on iTunes, Buck Sexton with America Now if you want just the sheer political madness that's going on out there.
This has been the Stansberry Investor Hour and we are over and out.
Male: Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to www.investorhour.com and enter your e-mail. Have a question for Porter and Buck?
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