What Happens When Cities Go Bankrupt: Municipal Finance Expert on COVID Economic Crisis

Vance Crowe [00:00:03] As the crow flies on the Vans Crow podcast, Tim Hausler, welcome back to the podcast.

Tim Hosler [00:00:12] Exciting to be here on the almost one year anniversary. Yeah,

Vance Crowe [00:00:15] It's two days away. And you were my very first guest that I had a year ago, and I didn't even plan this, that we would have some kind of reunion anniversary show. The reason that I contacted you late on like a Friday night, I think I wrote you a text message at like 11 o'clock, was I have visions that cities are not going to be able to pay their debts, and we are entering another phase in the Coronavirus pandemic, which is what happens when you shut everything down and the tax rules that you were used to having come in are no longer coming in. And you are the only person I could think of that might give us some interesting novel answers. So my first question for you today is, do you think cities are going to default on their debt?

Tim Hosler [00:01:02] You know, a a, a very interesting question and that certainly the potential exists. We, we've seen it already happen with Detroit, right? Even before the pandemic, Detroit went through some really challenging times financially and did enter into what people would call bankruptcy, although there is no such thing for bankruptcy in, in, in municipalities quite the same way that there is for businesses. So yeah, it's very possible that there'll be a lot of cities, maybe the ones that were kind of deepest in trouble or states deepest in trouble, that were attacked by this pandemic and have lost a lot of the revenue they were counting on. It's quite possible that they would have some serious repercussions financially from the fact that the coronavirus and, and their own efforts to flatten the curve resulted in, or a severe reduction in revenue and ultimately their inability to make debt service payments.

Vance Crowe [00:02:14] So you, for a while were in the bond market, right? You were selling city bonds or helping them raise money. What does this look like to you? Yep,

Tim Hosler [00:02:22] Yep. Spent a lot of time in the municipal finance world, and you and I have talked about this before, but there's a, there's an entire industry around helping finance municipalities evaluating their credit parameters. And, and long before the pandemic happened, there were already issues that, you know, conversations around what's gonna happen to a state like Illinois, what's gonna happen to a state like New Jersey, where the results were not what people had hoped. You know, we had a really strong economy, and of course when there's a strong economy and growing incomes, generally that means growing receipts for states. But, but even with those growing receipts from a healthy economy, there were quite a few states that were having issues with, you know, how are we gonna provide the services we want to our citizens? How are we gonna meet our debt service? How are we gonna fund underfunded pension obligations and liabilities? So really a lot of demand on certain political municipal subdivisions that, you know, need to survive and, and be well for their citizens to survive and be well.

Vance Crowe [00:03:50] So if you were in the bond market right now, or if you were doing that same job, would this be an exciting, fun time or would this be a terrifying nerve wracking jump off a building time?

Tim Hosler [00:04:02] You know, it's interesting, there's probably a double-edged sword, right? There are a lot of municipalities that will need an influx of capital, and the only way that, you know, the principal way that they do that is through bond issuance. So, you know, things like the MTA in New York City and the trouble that they're having there, they don't operate with a tremendous amount of reserves in, in normal times. So now when ridership is way down, they still have a lot of costs. So it's not just cities and states, it's also the services and the organizations that provide services for cities and states that are separately funded and and financed. In Missouri, we have by state, you know, it runs the buses, it runs the light rail, and you know, when ridership goes down, they're in revenues go down, and they still have a need to make their debt service payments and pay their employees and manage their operations. So on the one hand, when, when you have a circumstance like this, people need to raise money and they raise money through bond issuance. On the other hand, when they need to raise money and they, and they are having challenges associated with meeting their debt service, it makes raising money more difficult. So you, you know, I think it, it could be for many people a fun time.

Tim Hosler [00:05:38] I think for the people, you know, in the trenches managing those organizations and political entities, it's probably not a fun time at all.

Vance Crowe [00:05:48] What do you think? Are you nervous about the future of the economy or was $2 trillion enough to buoy us and get us off into the future?

Tim Hosler [00:05:57] You know, the, the, the, the results of what's happened in the last 60 days are extremely challenging to digest. I don't know that anybody really understands what the impact is going to be. You know, they talk about the idea of a U-shaped or a V-shaped recovery, and of course, V-shaped is preferred because you, you know, you quickly come back to where you were U-shaped can be, you know, a big U. So I, I think the federal government is doing what they can to keep things moving in, in a, in a way that they need to move. So markets need liquidity and, and the Fed is providing liquidity companies need, you know, the essentially grants and 5 0 1 C3 not-for-profit organizations through this PPP loan Payroll Protection Program loans, effectively the government is granting money into these organizations in large part to supplement, you know, revenue declines and, and help people continue to be employed. So the, again, I, it, it's hard to say whether this is gonna be enough for too much it, we don't know yet. The other side of flooding the economy with invented money is you generate inflationary pressures, but for the last, I don't even know, decade, there's been a lot of talk about how inflation is not at the fed's target of 2% a year.

Tim Hosler [00:07:46] They may hit it this year based on, you know, the influx of all the, of the funds into the economy. But, but for now, I think the feeling is that they're doing the right thing to create liquidity and provide resources that organizations need to keep people employed.

Vance Crowe [00:08:07] A couple of weeks ago, I had Dr. Lacey hunt on from the Hoisington report, and he came on and said, inflation is not the problem that you are looking for. The problem you're looking for is actually deflation. And he gave a very sophisticated argument for the problems with deflation. But I have to admit that even after his long explanation, I'm still of the mindset that it makes no sense to me that you could add $2 trillion, and I know you're financing it, so you're, you're putting it out as bonds as opposed to just printing the money and injecting it directly. But to me, it seems like we are splitting hairs here and inflation is inevitable. W why is this not correct?

Tim Hosler [00:08:47] Well, you know, inflation is all about the amount of money chasing the amount of goods. And if you have too much money chasing too few goods, you get inflation. People are willing to pay more for the scarcity of product. When you have too much product and too few buyers, then you end up with a situation where, you know, prices theoretically or expected to fall. So I think there are, you know, at, at, at the margins, at the extremes, there are problems with deflation, there are problems with inflation, and the Federal Reserve tries very, very hard in, in their work and study and analysis of the economy to make sure that they've got the right balance. That we don't have, you know, too much inflation, which is a problem we suffered with in, in this country in my lifetime. I mean, I do remember, you know, 15 and 16% treasury bond yields because inflation was substantially higher than what we're trying to focus on today at 2%. I don't know that I, I'm, I'm pretty certain that I haven't experienced a deflationary environment in the United States to any great degree, but I'm sure you know, there are examples of other economies that suffer from deflation, not enough purchasing power to support the, you know, the goods and services that the economy wants to provide.

Vance Crowe [00:10:20] It strikes me that if you are a saver of money, if you have held onto cash or you've been able to preserve something that like really high interest rates would be a really good thing. I mean, it would allow you to put your money away and not have to have it at risk in the same way that right now, the only way I can beat inflation is if I put my money in the stock market and just pray it keeps going up.

Tim Hosler [00:10:42] You know, the answer's interesting, but you can find community of people who benefit from any economic scenario, right?

Vance Crowe [00:10:50] So

Tim Hosler [00:10:51] In, in my position as a saver, high interest rates would be terrific, but I don't buy as much as I did before. I'm not buying and replacing cars and trying to buy a new house and, and in products to raise a family. So in, in an environment where you are a saver, having an attractive yield that, you know, just reigns 9% back on you every year would be fun. But, you know, the other side of that is generally that's fueled by a lot of inflation, which means product costs are going up as rapidly as the rate of interest. You don't, in, in, in my experience, you don't normally get a 9% interest rate on your treasury securities and a 2% rate of inflation, right? It's obviously much closer together. So, you know, in, in recent years when we've had effectively zero interest rates through really most of the, from 2008 up until almost very recently, rates have been close to zero, the savers are saying, Hey, you know, there's no way for me to make a return on my money in retirement. It's very hard, and that's absolutely true, but people who were buying and raising families were finding very little price increases because inflation was low.

Tim Hosler [00:12:24] So there's always somebody who is benefited when you're inside the norms. I think you referenced the gentleman that came on and talked about deflation, that that's, you know, we're talking about inflation and deflation sort of outside the norms. So it's, it's not, you know, that might be dangerous for everybody.

Vance Crowe [00:12:48] What do you think? When do we start seeing the $2 trillion that was put into the market start, start flooding into the economy? Or maybe it already is by the $1,200 checks that people are getting, but that's only a fraction of it.

Tim Hosler [00:13:01] Yeah, we, we've had a very consumer driven economy for quite some time, and the, you know, the things that I would read were, were saying, and poor tending bad futures based on the fact that companies weren't investing. And so, you know, the corporate spend and the reinvestment and the durable goods and, you know, that was low in terms of where, you know, what makes up GDP and of course, government spending and consumer spending were what would driving the growth that we were getting quarter over quarter. I think the effort with the, the 2 trillion the CARES Act activity is to, is to keep the consumer aspect strong and, you know, keep purchasing up. Although I can tell you in my own experience, you know, my wife and I aren't purchasing as much in the last, you know, 45 to 60 days as we were in the period of time before that. So I think there's, you know, that's the intention is to, is to inject stimulus money and, and additional unemployment insurance money and these payroll protection loans to help people, keep people employed, to help organizations keep people employed. And I do believe that's working. I mean, in my own experience, I know of a number of organizations that have decided, rather than reducing compensation or laying employees off, they've taken this payroll protection program loan, and at least for the eight week period after their loan, they have resources to keep their businesses in, you know, fully staffed and, and keep their fingers fully crossed that at the end of that eight week period, they're gonna be able to get their business cranking again and produce the revenues they wanna produce in order to make profits.

Vance Crowe [00:15:07] I was in a message group and there was somebody complaining about how wasteful they saw people spending that $1,200, right? They were saying like, well, that's just, they're out there blowing it. And it was like, that's exactly why they gave it to consumers and not companies, because companies would've said, let's hold back and see what the future is and what you wanted to see was that money continue to keep the credit cards paid, the rent paid, and people spending so the economy can keep moving.

Tim Hosler [00:15:33] It, it, it's very interesting, but, you know, if, if you don't have a, a political bias and you just sit back and look at the CARES act, it, it was, it was pretty ingeniously developed over a really short period of time. So I, I do commend the people that were in the room and, and the, I don't know if it was six or 56 that hammered out the right outcome, but there was stimulus money sent directly to consumers, you know, the $1,200 per person, $600 per child check, there was unemployment insurance protection, so that if you did get laid off, you had, you know, more money coming in supplemented by the federal government, and then there was money injected directly into corporations and organizations by the payroll protection plan loans and other credit and, and stimulus activity with corporations. So there's a little something for everybody, and I do think that, that the intention was people do need to keep paying their rent. People do need to keep paying their regular car loan bills and their insurance and healthcare and premiums and, and all those things. So if we can keep that going until we get our hands around the pandemic, then we have a better chance of fewer people suffering.

Tim Hosler [00:17:13] And I think, I think that's gonna be the outcome.

Vance Crowe [00:17:15] You, so you are, you're, you're like, thumbs up, this was the, this was the right way to do it. This was, I mean, you're calling it ingenious.

Tim Hosler [00:17:22] Yeah. You know, I, I think time will tell, right? If, if, if Sweden's approach is more sensible than what the United States did, you know, where they didn't, they weren't as intense on sort of locking people down, but ultimately, you know, the whatever we did to prevent as much as 2 million people from perishing from this virus, I, I think, you know, you gotta look back and say it was worth it. If, if that's indeed the, you know, what, what the result was, I don't know how long we're gonna be dealing with the effects of the virus or the effects of trying to suppress the virus. I mean, both of that, those, there's still a lot of uncertainty around both.

Vance Crowe [00:18:20] My impression is $2 trillion is on par with whatever kind of spending we were doing during World War II to be able to get ready for building battleships and things like that. And you could say, you know, there is no coming back from that. You've made the, you've made a trajectory change and you'll never see the end of, of the way that that impacted the world for better or for worse, right? You just sent us on a different path,

Tim Hosler [00:18:44] You know, that that's definitely, I, I think a realistic approach that, that what we invested in America in World War ii in the way of spending on today's dollars, you know, I I think people would argue it was worth it. You know, we're speaking English today and not German or, or Japanese. So, yeah, you know, it was worth it. The, the other way to sort of look at the 2 trillion is our gross national product on an annual basis is 20 trillion. I I don't know the exact number, but that

Vance Crowe [00:19:20] Sounds about right. Yeah.

Tim Hosler [00:19:22] So 2 trillion is like 10%, which is a little bit more than five weeks, six weeks of, of total spending by everybody in the economy. So if the federal government ordinarily spends X and now they're spending x plus 2 trillion and, and the business and consumer spend y and now they're spending y minus 1.8 trillion, theoretically we would be better off as a GDP, we would have more GDP than we would've had, had this not happened because,

Vance Crowe [00:20:00] But then why not? Why not just do a $2 trillion injection in November of 2019? Like, if, if the economy can work where you can just like punch up a bunch of money, why not do it all the time?

Tim Hosler [00:20:12] I think, because the answer is the economy doesn't work if the federal government punches in $2 trillion every six months. I think ultimately it, it, it does create pressures in the economy that you don't want, whether it's inflation, whether it's credit deterioration, if, if the federal government, you know, and there are some people that think, oh my god, you know, the federal government is borrowing 2 trillion and they can't even pay back the 20 some trillion that's already on the books. And, and that's legitimate. I mean, there are people who are really concerned that we're already way over our skis with, you know, government spending money they don't have. But if, if you look at the possibility of repeating this on a regular basis, then you end up in a situation where at some point people say, I'm just not gonna borrow money from the United States anymore because, you know, they're paying me back with dollars that are worth less and less and less and less because they're just flooding their economy with money. So again, go back to that inflation, same amount of goods being produced, but now we've got twice the much money you would expect prices would go up. So I do think it's a delicate balance that, you know, we've had the reason right now to kind of move outside of the norms in the comfort zone in order to fight for our future as a result of this pandemic.

Vance Crowe [00:21:59] My buddy Keaton Kruger always says over and over and over again, it really doesn't matter what we do because the economy is based on what are, what are we doing relative to the other countries? So as long as they wanna buy our debt, as long as they keep making worse decisions than us, then we can keep on this, on this system. And that may be a vast oversimplification of his point, but it strikes me as like, man, that's like playing Russian roulette, isn't it? Like, well,

Tim Hosler [00:22:26] Yeah, it's a race to the bottom, everybody in the bottom, you know, I, do you wanna be at the bottom? I'd say no.

Vance Crowe [00:22:34] So we're looking ahead, we've got an election coming up. Do you believe that coronavirus and the economy will be back up to a regular world, you know, by November? Or what, what are you anticipating by the time the election season rolls around?

Tim Hosler [00:22:50] I know that there's one gentleman that that is gonna work very hard to see that it is, and, and I think, you know, in, in a lot of respects, his reelection hopes hinge a little bit on how successful we are in, in the fall and what things are happening in the fall. But, you know, it is, again, extremely hard to predict what's gonna happen. There are an awful lot of variables at play in, in this year's election that we ordinarily don't have to incorporate into our, you know, analysis and evaluation.

Vance Crowe [00:23:28] So we started off talking about with municipal bonds and cities and states, and I think even back in our very first interview we talked about like, how does all of this work if, because you can't just go in and fire the CEO of the state, right? If you, if you fire that governor, another governor pops up and they've still still got all the same problems. Do you sell all of the municipal buildings? Like do you sell what the state owns? How, how does all this work?

Tim Hosler [00:23:52] Yeah, well, I think, again, we've got a, a really interesting case study in Detroit, and if you think about the fact that you have a dollar of revenue and you've got a dollar 60 of expenses, then if you can borrow 60 cents from somebody, you can make it all work out, right? Then you have a dollar 60 of income and a dollar 60 of expenses. The problem comes when you can't borrow any longer, and then you have a dollar of revenue and a dollar 60 of expenses, and you have to start cutting the expenses. So the first expenses that were cut in the city of Detroit were the debt service expenses, the cash going out to pay bonds. That may not be fair. I mean, I'm sure there were people laid off and, and services suspended, but, but on the whole, the bond holders suffered because the city couldn't make debt service and the pensioners suffered because the city couldn't make pension fund contributions and the citizens suffered because the city couldn't provide services. So you don't go down to zero, right? It's not like the city is gonna have zero revenue, the city's gonna have some revenue coming in from tax receipts and license fees and, you know, tickets being issued for speeding or what have you.

Tim Hosler [00:25:26] So there is gonna be some revenue coming into the city funds, the general fund and the other funds that the city has. Then you need to do a right sizing, right? Somebody needs to come in, just like they did in Detroit. They set up a, you know, a, a committee led by a person that said, we can afford to do this, we can't afford to do that. We've got this much money we can count on, we've gotta cut here. And, you know, they made some, you know, pretty arbitrary determinations based on what rights you thought you had as a bond holder or as a pensioner. They made some pretty arbitrary determinations of what they would take the cash in and deliver it out. The, you know, that is the reason why you wanna elect a governor and administrations that operate with, you know, fiscal sustainability in mind because it's easy to say, Vance, if you vote for me, I'm going to flood you with money from the state coffers in some variety of forms. And, and the other gal is saying, oh no, Vance, we have to be fiscally conservative and we have to sustain ourselves. Well, some people are gonna vote for the person that says we have to be conservative and sustain ourselves. And some people are gonna say, Hey, I like, I like the idea of getting, you know, a new Camaro, so I I I want the money from the government.

Tim Hosler [00:27:03] And, and you end up in a situation where if that happens for long periods of time and you're not focused on fiscal sustainability, you create dire situations where the, there isn't enough money coming in to pay out all the hands that are out and you have a failure. And the next in line, you know, a lot of people think is the state of Illinois, you know, they have had really difficult trouble the way that they are managed. They have a relatively low state income tax as compared to other states, and they have a relatively high property tax rate. They have extremely poorly funded pension funds. They have extremely high sort of bills due, right? So if, if you, I think we talked about this even a year ago. If you mow the grass at the state capital, it's gonna be like 17 months before you get paid because they're that far behind paying their bills and nothing is,

Vance Crowe [00:28:18] And what business can hold that? Like what business can afford to pay for the gasoline and the labor and the, and the fixing of their lawnmowers to be able to do that. Eventually some people will say, well, I just won't mow the lawn for you anymore,

Tim Hosler [00:28:30] Right? And, and so the state has an a way of being able to say, well, so if a business did what the state did, at some point the banks would say, we're not gonna lend you any more money because we don't see a way to get it paid back. What the state of Illinois has done, and what other states have done is they've said, well, we're gonna capture our sales tax instead of just sort of using it in our normal, you know, general activity. We're gonna ring fence that money and we're gonna issue a bond where your guaranteed first call on our, on our sales taxes. So they're able to borrow more in an environment when their credit's getting really shaky because they enhance the bond so that you're willing to buy it and put a yield on it that they're willing to accept. But

Vance Crowe [00:29:26] Are you willing to buy Illinois bonds?

Tim Hosler [00:29:29] You know, I, I don't at this particular point, I don't know enough about what's going, probably don't wanna rely on the next 20 years of my life being financed by debt service from a general obligation bond in the state of Illinois.

Vance Crowe [00:29:48] So one of the things that I think happens as a result of a pandemic like Coronavirus is that the Overton window, the frame of acceptable ideas in a society opens up. And perfect example is, you know, a month and a half ago, if you'd have said we were gonna inject $2 trillion into the economy, that would've been a non-starter. People would've freaked out. But then you have this crisis, so people are open to new ideas. My Overton window idea is let's get the state of Illinois to cut off East St. Louis and sell it to St. Louis and give it, give it to Missouri and let us have that manufacturing space and let us, let us run that part of the state.

Tim Hosler [00:30:25] While I appreciate your creativity, the state of Missouri might have to be paid to take East St. Louis away from Illinois. I don't think East St. Louis is a huge contributor to the state of Illinois. So, you know, I don't know that we're gonna pay a whole lot of money for that land when that land isn't terribly productive. Now

Vance Crowe [00:30:48] That's not, I I think it could be, I think if it wasn't with Illinois, I mean, like you take a look at that side of the shoreline, people don't realize this. You go over to the other side of the Mississippi River and you look over it is like being in Brooklyn, looking over onto Manhattan. It's beautiful and there's all sorts of industrialized parks. We're having trouble with meat packing plants. Let's open up some of the Old East St. Louis stocky yards, and we're gonna reshore all of this chemical manufacturing that we had over in China. Hey, let's, let's use all that area, let's start turning those factories back on, give it to Missouri and let's put it to good use.

Tim Hosler [00:31:22] I would rather Missouri buy Alaska as long as we're dreaming there's a lot more wealth in buried in Alaska than there is in the, you know, mineral deposits and so on underneath East St. Louis, I would suspect.

Vance Crowe [00:31:42] So what is your over 10 window idea when, when you look around and you say, Hey, there's not very many opportunities when you get to take a big swing at doing something different. What's your big swing idea that we need to do? But we wouldn't do unless we were in crazy times?

Tim Hosler [00:31:57] You know, that's not something I've thought a lot about. The question is very intriguing. I mean, the idea that, you know, what do we need to do? And I, I guess I would go back to, you know, venture financing. It, it is so terribly difficult to raise venture capital in good markets. It's nearly impossible in bad markets. Most of the things that we enjoy today in our lives came from somebody's brilliant idea to do something that had never been done before. And then that idea somehow got funded with, you know, bootstraps or venture capital or my rich uncle or something. So I think if it were me and, and you know, we had the opportunity to swing for the fences, I would take the kind of money that was invested by the federal government in renewable power, which is an important thing to invest in, or art, which is an important thing to invest in. I would carve off a big piece and I would basically finance a lot of venture capital business development

Vance Crowe [00:33:22] Through the government money through tax dollars.

Tim Hosler [00:33:25] Yeah, it's been done before at state levels. It's been done not with tremendous effective results because of course it's very easy to give money away to poor ideas when you've got a big old pile of it. I don't know if there's a crowdsourcing way to determine, you know, who deserves the money versus, you know, putting Tim Hostler in a chair and saying, okay, now you've got a trillion dollars of the federal government's money, decide who should get it. I think that's probably not the right idea, the the right way to do it. I don't know what the amount should be, but there is definitely, right now in our world, in our country, tremendous demand for startup capital. And I, I think that would be a swing for the fences idea. I don't expect it to happen because of the same reasons that, you know, the the political fallout of putting $500 million into Lyra. It's, it's that problem. But I think there's a way to manage an injection of venture type financing that could be done a little bit more sensibly where, you know, maybe it's the current infrastructure, but there's just a, a government contribution.

Vance Crowe [00:34:53] What about just getting rid of all the accredited investor requirements?

Tim Hosler [00:34:58] You know, I, I see both. So

Vance Crowe [00:35:00] For people that don't know, like a guy like me, if I don't have X amount, I, I don't even know what it is, like $2 million in, in reserves or something like that. You are not allowed to invest in private funding of venture capital unless it's, it's very weird rules,

Tim Hosler [00:35:16] Right? There's a few tests, it has to do with a net worth test and an income test, but really it's a, it's an effort to protect people from themselves. So, you know, again, the venture capital snake oil, it, it, you know, there's some similarities. So if I get you to let loose of a hundred grand on my brilliant idea and my brilliant idea in order to really make a difference needs 200 grand, well then you've built half a bridge, right? There's, you can't really do anything with the a hundred thousand dollars that leads to results. So the, you know, part of this rule of accredited investing is that people theoretically have the wherewithal to lose what they are willing to invest. And the, the levels are kind of arbitrary, but it's somebody long ago's interpretation of the amount of money you would need to be able to lose in private investing. So I, I don't know that relaxing the accredited rules is a, a good idea and, and frankly, I think that's why I gravitated to the, you know, swing for the fences idea of having the government inject some of that venture capital because I'm not sure it should come from Mon Palm America.

Tim Hosler [00:36:52] I don't know that that's the right place to, to get the money, although that's a lot of where it comes from now.

Vance Crowe [00:36:59] I mean, I think my disagree, I I like intuitively disagree with you. I'm thinking through this idea. I think one of the things that we could point out would be, you know, NIH funding going to the same types of people every time, the amount then of the way that that grants are given out through universities, I don't think that that has meted us the biological revolutions that we were hoping would happen or the revolutions in physics or these other areas because I don't think the government is very good at picking, I don't think that they're optimized for picking payback winners, right? They're optimized for some other goal that's not the same way that capitalism is oriented.

Tim Hosler [00:37:36] I definitely agree with you and that's why I said I don't think the right mechanism for giving the money out is to make one person sort of the king. And, and that's what they did. You know, historically in part the Department of Agriculture was, you know, handing out these funds for putting up plants that make chemicals out of corn and plants that make electricity out of sunlight. So there were Department of Energy and department of of agriculture programs that said, we're gonna decide who gets the money picking the winners and losers. And I do think we demonstrated that that probably isn't the most effective way to do it. And again, i, I don't know that I have the most effective way to do it, but, but I I, but I definitely think that when you look at all the parts of the economy where the most good is done for the least amount of money, I, I think venture investing, it's the riskiest, right? I mean, it's, most of the money is, is lost, but an awful lot of good has come from those ideas being financed into economic viability.

Vance Crowe [00:39:04] What do you think during this pandemic, people should be paying attention to that they're not? What, what aspect of the economy or how things are playing out that, that you think is overlooked right now?

Tim Hosler [00:39:17] Another really good question. You promised me some softballs,

Vance Crowe [00:39:21] Softballs.

Tim Hosler [00:39:25] I, I think the thing that's being overlooked is what the objective was with the government orders, the objectives with the government orders for shelter in place and shutdown and the recommendations to sort of stem the tide of the pandemic. The objective was to keep our healthcare capability larger than our healthcare demand. And I don't think it was to keep people from dying. I don't think it was to, you know, stop the coronavirus completely. I don't believe that anybody really thought that, you know, two or three months of sheltering in place was gonna eradicate the virus. The virus needs to be eradicated with, you know, medicines and, and vaccines. And, and so now I, I fear that what's happening is that, you know, you're gonna see headlines, red state opens up, death toll rises to highest in history. And, and so that creates this sense of fear that the people who should be in control of helping us make the right decisions aren't in control.

Tim Hosler [00:40:57] And they're making decisions for the wrong reasons to help somebody get reelected or to, you know, accomplish some other objective. In, in truth, about 8,000 people in America die every day about 8,000. And, and in truth, every year, you know, 40 to 60,000 people die in the United States of the flu that goes around. And everybody has an opportunity to get a vaccine and not everybody gets one. So for some reason, we're not afraid of the flu, we are afraid of the coronavirus. And I will acknowledge that part of that fear initially was because we didn't understand it very well. I think we understand it better now. So I think the thing that, you know, if you were to ask me that question after I, you know, thought on my feet here for three minutes, I think I would say, you know, an understanding of, of what the mitigation was intended to do. And, and what I hear now is I listen to Fauci and, and Dr. Burkes is we've been mostly successful with what we intended the mitigation to accomplish. And now we can kind of go back about our business, but the fear lingers. So are people gonna go to the movies? Are people gonna go to dinner?

Tim Hosler [00:42:28] Are people gonna go to sporting events? They did all through the winter last year when we had the flu that killed, you know, a certain number of people who got it. And, and, and I know, you know, the, the mortality rate is much higher here. So there's two things going on. It's like, well, there's a lot more people that have it than we know that have it, and the mortality rate is really high. Well, both of those things can't be as true as presented right now. If more people have it, the mortality rate's lower. And every year, on average, 30 to 60 million people get the flu and 40 to, you know, 30 to 50,000 people pass away as a result of it. And it's the same sort of risk class of people. It's, it's preexisting conditions, it's the elderly, it's nursing, you know, I mean, it's the same sort of group of people. So I, I think we need to figure out how to dissipate the fear more rapidly. And I think that's the whole point of, you know, the testing where you can prick your finger, you know, drop a drop of blood into a plastic stick and it says, oh, you're okay to go outside. I think that's what people would love to see. I don't know that we're gonna get to that.

Vance Crowe [00:43:47] Yeah, I was looking up the statistics yesterday on malaria, you know, every two minutes in this world a child dies of malaria, 200 million cases of malaria e every year. Now we don't have very much malaria in the United States, but we, like, you have to wonder what the Kenyans think of coronavirus when they're like, you know, we have this terrible disease and we have these other terrible diseases. That, and, and, and maybe that's a, you know, a first world problem in the sense that we have raised the profile of our risk mitigation so much because it's cost so much to educate people or they have such a high standard of living. But it does seem that the goalposts are moving and we've, we've lost all, we've lost a lot of perspective regarding what kind of risk were we taking every day when we went outside.

Tim Hosler [00:44:36] You talk about the goalpost moving and, and I think that's right. I have a very good friend that I talk to a great deal who's I respect a lot with respect to healthcare matters. And you know, I said to him, in our lifetime, are we gonna end up with science that allows a virus like this to be eradicated weeks after discovering its, you know, DNA criteria? And he says, you know, I think so I think we are headed in the direction. So now the expectation on the part of people is, you know, what the hell we've been suffering this with, you know, with this for 90 days, where is the government cure? Right? Where is the federal government cure to make all of us, you know, not have to worry about the fact that this virus exists? And boy, wouldn't that be fantastic if we had the capacity at some time in the, you know, coming future to be able to go from, oh, there's a, a new virus we've never seen before to an anecdote in a vaccine in a short period of time because somebody's, you know, tweaking the DNA settings. That would be extraordinary.

Vance Crowe [00:46:00] Yeah, the, the question I have been asking people has been, what do you think the world will look like in two weeks? But I think that things have slowed down enough that that is not that enthralling of a question now. So the question I've switched to is, what is something you are buying now that Coronavirus says, you know, lapped our shores that you weren't buying before in January of 2020?

Tim Hosler [00:46:25] Eggs.

Vance Crowe [00:46:26] Eggs. Tell me more about that.

Tim Hosler [00:46:29] My wife and I would go out for brunch every Saturday and Sunday. That's where we went. And we would meet my kids and, and my beautiful grandson on Saturday and we'd meet my parents on Sunday. Now we can't go out. So, you know, I've bought more dozen eggs in the last 60 days than we probably did in the last 60 months.

Vance Crowe [00:46:59] That's a good answer. Well, Tim Hausler, thank you so much for, for stopping by. You are right now the fractional CFO of a very interesting company that I've known about actually since Keith Alpert started it. But why don't you tell everybody a little bit about Geniecast? 'cause I think it's worth knowing about during this crisis.

Tim Hosler [00:47:19] It, it's very interesting that I'm associated with this now. So Keith, you mentioned our founder, Keith Alper. He has spent his whole life producing events, live events with great success all over the country for all kinds of organizations, large and small. And about four years ago, he was doing an event for a, a company called the Young President's Organization. And Julian Assange had just, you know, dropped a bomb of emails on the world and the YPO audience wanted access to Julian Assange. But the only problem is Julian Assange couldn't leave the Ecuadorian embassy in London for fear of being arrested. So Keith designed a way to bring Julian Assange to this event virtually. He put cameras on the audience monitors for Julian Assange, high quality audio and video satellite feeds, and boom, Julian Assange was in the room. And what Keith reports is that the experience he had watching the interaction, people thought it was magic. It was actually better than if he had been there. And Keith said it was like a punch in the gut. He thought, oh my god, this people should be doing this. So immediately he started geniecast to be an organization that would bring speakers into an audience virtually.

Tim Hosler [00:48:54] And we quickly realized that the opportunity is bigger than just speakers, keynote speakers going to a large audience. We started putting consultants and thought leaders and authors into companies to help them consult. And if you wanted to get Simon Sinek, you know, the author of Starts with y to come to your organization and consult with your senior leadership, you're gonna have to pay a significant amount of money. We we're able to get Simon Sinek into your offices for substantially less. And at first people said, well, this idea is never gonna work. People won't pay for virtual help. They want the person to be there. And other people said, well, Simon Sinek isn't going to cannibalize his own speaking fees and, and charge you less to speak virtually. But the three years of experience we have, we've proven both of those things to be wrong. The audiences love engaging with people, virtually speakers love, and we call them genies, just geniecast speakers love not having to travel, love having more of their day available. And so both parties will pay us to make it happen well and easy. And that's really been our model. So we've been learning, learning, learning for three years. We've been proving out this concept. We think there's application to what we're doing well beyond business to business activity.

Tim Hosler [00:50:28] We think there's sports applications, religious applications, music applications. Imagine if, if you think there ever will be another cruise in the Mediterranean, I think there will be. Imagine that you, you know, you're walking back from dinner and on the loudspeaker they say Tony Bennett will be in the Lido Lounge at eight 30. And you go, oh, Tony Bennett, how nice. We wanna go see Tony Bennett. And there on the stage as a three dimensional hologram is Tony Bennett sitting on a stool sitting next to a piano singing, I left my heart in San Francisco talking about Vance's anniversary. And so the application in music and entertainment, we have a cast tonight.

Vance Crowe [00:51:12] So you just made a big jump there because you went from being video to three dimensional hologram. You guys have the capability to do holograms.

Tim Hosler [00:51:19] We can bring people in virtually. It's really all about allowing people to be in two places at the same time. The form that they are in, whether it's on a screen live and interactive or as a 3D hologram live and interactive, what we're trying to do is develop and utilize the technologies that allow people to be in two places at once. So we're, we're seeing an opportunity to do well beyond just business activity and that's where we think we're headed. So it's a very exciting space to be in for sure right now. Well,

Vance Crowe [00:51:57] I definitely, for years I've known Keith and then I knew you got involved and I always, I mean, I looked into it and I thought it was neat. I like traveling. I go give a lot of speeches and it wasn't until Coronavirus hit that I was like, whoa, that'd be a really valuable company. So I'm glad you guys are doing it. I'm glad to see you guys be successful. I know you're a really busy, so thank you for, for jumping on here, Tim, and doing this on the one year anniversary.

Tim Hosler [00:52:22] You know, you talked Vance about how, how I was your first guest and, and as a result, I know you got off to a very slow start. I can paying a lot of attention and I think what you're doing is really spectacular. So congratulations to you on your near one year anniversary.

Vance Crowe [00:52:39] Thank you so much, Tim. You've, you were, you were the guy that got me started, so thank you. Alright, we'll see you later man.