Part Two: Sam Zell: the Elon Musk of Real Estate

Samantha McVeigh. How are you? How are you doing? I am wonderful? How are Samantha? Is it true that were I listening looking for a podcast about things that my mother had never told me? That you could help me with that? Yes, as in fact, you can just put stuff mom never told you, and you will find my face and then some other faces as the host. And yes, you can come and listen about things your mother may not have told you. If you have a cool mom, maybe they did tell you. I don't know. That is

extremely based. Um. I'm happy that we're talking today about why the rent is so damn high, But you know what else is too high right now, Samantha, help me. The Great Lakes they actually hit record highs this year, which is causing serious problems for all of the communities who live near those lakes. And Samantha, that's why we got a newcomb. This is his revenge for me telling him. Have you have you have you thought of feelings? Have you thought about how many nukes the United States has

that are just sitting around doing nothing. We spent a lot of money on those nukes. I understand that there is a lot. And it's one of those that I'm like, I really hope I'm in the center of it. So I'm just decimated if it you know, this happens with want to be right there in the middle. We're gonna shoot those missiles right at Lake Superior, Lake, Ontario, the other ones take them out. Doesn't even know the names

of the Great Lakes, but wants to nuke them. Yeah, may I ask why what have they done to you? For what I say? They're at record highs, which is dangerous. For another thing, you were listening to the Gordon Lightfoot song The Wreck of the Edmond Fitzgerald. No, well maybe you should, Samantha. It's about a bootful of brave men who are killed by the vicious Lake Superior during a storm that we could have nuked away. But what were they doing there? And they were trying, they were trying

to take steel from someplace to some other place. They're just being good sailors. Well, we have a lot of we have a lot of Great Lakes sympathizers. This is not a bit, Sophie. This is a serious political exercise. I believe I have the right to advocate politics, Sophie. If I'm remembering, I never knew I needed if the company thing that we had to do recently. You are violating my civil rights by trying to force me to hold a political belief. You actually did you actually do

that video. There's no way you did that on time. There's no absolutely not. I know there is a video and it probably says that you can't stop me from wanting to nuke the Great Lakes. Uh. I haven't seen it either. I haven't done the training either, so I can't could. That's good when you know I did it, it didn't count it and I have to do it again. Very upset about I'm upset about this, Samantha. I'm gonna play a little bit of politics here. I'm gonna play

a little bit of politics. What if I add making us not have to do this thing to the bill that will nuke the Great Lakes? You know, you see a little bit of exactly exactly. This is how we this is how we make sausage. Baby. Sorry to the residents there, no, no, it's good for them. It'll get keep the lakes off their backs. Yeah, it'll be fine. I don't think it's good for them. I don't think they would say that water soaks up radio shoo in real. Well, so it'll be it'll be good. It'll just you know

what it'll be like. It'll be like everybody's got a hot tub for a little while. That's gonna be nice. Anyway, today we are going to start by talking about a bastard, Samuel zel z e l l Now. He was born Schmooley Zilonka. I think I'm saying that close close enough to write on September ninety one. His parents, Rukla and Barrick, were Jewish immigrants from Poland. Um if he hadn't guessed

that they were Polish by the last named Zelonka Um. Yeah, his father had made good money as a grain merchant, and when Germany was gearing up to invade in nineteen thirty nine, he was one of those guys who was like, probably isn't gonna go well probably probably probably time to begin and yeah I think now yeah, yeah, time time to bounce. That was a great time to leave Poland. Um so zell are but our zel Samuel Zel schmooley, But Ammuel. He gets raised in Chicago, where his father

takes up a new business. Oh good, okay, so you guys are both you guys both Chi town babies. You know, No I'm not no, no, no no, no, I just know Sammy. There's no show I think you said, Sammy, I thought you were saying that you're also grown up in Chicago. No that I'm not that cool. Well I don't know. Chicago is certainly a city, so um yeah, his dad and everybody, that's right, that's right. There's only one city we like on behind the bastards, and it's Pittsburgh, where

I have never been. So his father takes up a new business as a jewelry wholesaler. From early on, Samuel was very interested in business. He's one of these kids who decides as a child, capitalism is the thing for him, which another warning sign. Right, Look, this kid is a refugee from war turned Europe. I have a lot of sympathy for that. But no matter what your background is, if at age, let's say twelve, you're talking about how you want to be an entrepreneur, we gotta slow those

kids down. Maybe like put some wasps pray and like the school of ventilation ducks or something, but we gotta slow those kids down. They're not doing any good for us. That's what he's gonna do. I don't know, somebody, if you've just like gotten a little bit more lead maybe, or maybe a little less oxygen, maybe a little bit more CEO two in the house. Anyway, he doesn't, so his he things are fine for him. Um. He starts

his first business at age twelve. He realizes that local kids in his upper class suburb craved pornography, but they couldn't purchase it in any of the stores that they could reach on their bicycles. So Sam found a place in the city where he could buy Playboy magazines in bulk for fifty cents each and then resell them for between a dollar fifty and three dollars each Holy crap, this kid. Okay, that's impressive. Well, it's impressive, but also

that's that's a bad sign. So he later called this but yes, yes, it's a good grift, but it's a bad sign. He later called this his quote first lesson in supply into man Bracking into a two thousand and thirteen meeting of the Urban Land Institute. For the rest of that year, I became an importer of Playboy magazines to the suburbs. Now again, normally I think this is a good thing because the suburbs are desperately boring and

they needed the mid core porn that Samuel, there's entirely good. Look, when I was a kid, my first pornography was porn we found in a little stretch of the woods in the middle of our suburbs that all of me and my cousins would like run to. And you could go, like, there's just like this box of playboys. Many people there's the alleged of Johnny Porno seed. You know, somebody seed

it was from the woods. Thing. Okay, there's so many questions about I guess we don't have the time, but I don't I don't think well, no, I don't think gen Z has this because they've got the Internet. But like I encountered my first porn before the internet was common, and it was porn that was found, Like it was kind of like a little mooted area behind the housing development. You know, everyone had this Texas. Yeah, this is Texas, but I don't many where people have have have found

woods porn wood porn, yeah, which at least nobody. I didn't have to pay for my woods porn. Sure it was kind of moldy and like crumbling, and all of the colors weren't clear, but I was pretty sure you could see some nipples in there, you know what I was like seven. It's because he would try to watch porn on static TV. Yeah, it's exactly like that physical TV. Oh my god, alright, let's goep going he is. He

is peddling mid core pornography to the suburbs. Um Samuel graduates from Highland Park High School because again his parents are rich. That is a nice part of Chicago. He's accepted by the University of Michigan. He is less interested in his studies than he is in finding new ways to make a buck. His roommate mentions to him one day that their landlord was developing a new property, an apartment complex. Samuel thought it would be easy to manage, later saying quote, I had plenty of faith in my

own what I call salesmanship. I could rent them. And most important of all, I was at and it was student housing. I thought I could relate in return for running and maintaining the building. This friend of mine and I each got an apartment. So number one for an idea of kind of how this kid works. He's able to talk a landlord into this arrangement, and then he's able to turn this arrangement into a business that's shocking size.

By the time he graduates the nineteen sixty six, Zell had managed with his partner more than four thousand apartments and personally owned between one hundred and two hundred of them. This is a huge business. He's very good at this um. Now he sells his share of the property management business he had started to his partner, and he moves back to Chicago, where he passes the bar exam and he joins a law firm. Law was what he'd studied to do, and becoming a lawyer had been his goal for years.

But like now that he sells his real estate business and he starts working as a lawyer. He's like, kind of fucking hate being a lawyer, this guy that sucks. Yeah, um so pretty much immediately he quits and decides to go back into real estate and make it his full time career. In nineteen sixty eight, he founded a company and brought in his old business partner and he started buying properties. Now he happened to get into the market right as it was hitting. It was on an overbuilding spree.

Like again one of these times when like they're building way more housing than is needed because there's this irrational exuberance of investors and buyers and whatnot, which leads to a market crash. In nineteen seventy three, multi family residential real estate plummeted in value first, and a lot of commercial property loans went into default. So numerous properties are abandoned mid construction. Right companies like, suddenly we can't finance

finishing this house. So there's just this lot with like a basement dug or some ship on it. And Zel sees this as an opportunity. He can buy up valuable real estate for nothing and cheaply put it into a portfolio that he can profit from later when the market recovers. Right. Um, tale as old as time. So he has other businesses as the years go by. He purchases an agricultural company that's closing, and then a nitrogen plant that's going into bankruptcy.

Then he buys a potash plant and starts like making fertilizers. So he's buying these businesses that are failing and then he integrates them together into one bigger business that's able to succeed. This is a pattern that asserts itself over and over again. Samuel Zel looks for misfortune, finds a business or a property that's fallen on hard times, buys them up at a very low price, then repackages them

and sells them for a profit. In an article for the New York University Reviews, l describe his strategy as dancing on the skeletons of other people's mistakes. Um, this earns him, yeah, I mean, yeah, it's what he's doing. And he gets the nickname Grave Dancer as a result. Oh he's bad. Oh yeah, yeah, I mean that's funny that that is kind of cool. Um, but it's not about to be so sometimes yeah, sometimes he has to

make the grave to dance on it. So he buys a controlling interest in the Tribune Company, which owned the Chicago Tribune and the Los Angeles Times. Um, and I want to quote now from a New York Times article talking about the guy that Zel brings into run the Tribune, a man named Randy Michaels. Quote. After Mr Michael's arrived, according to two people at the bar that night, he sat down and said, watch this, and offered the waitress a hundred dollars to show him her breasts. The group

sat dumbfounded. Here was this guy who was responsible for all these people getting drunk in front of senior people and saying thus this to a waitress who many of us knew. Said one of the Tribune executives present, who declined to be identified because he had left the company it did not want to be quoted. I have never seen anything like it. So um, Mr Michael's denies this happen, saying the people who told the Times the anecdote, we're

lying or mistaken. But boy, a lot of people have similar anecdotes about this guy who Zel brings in to run the Tribune. Now, Zel's plan seems to have been that he buys this company, and he finances the deal. This might sound familiar. So the Tribune massive media company. He's only able to buy it by borrowing heavily. Um, Like,

that's how he finances it. He gets a bunch of banks to front the money that he put up front, and then as soon as he buys it, his plan is to engage in aggressive cost cutting that can make the venture profitable after like trimming all of the employees. It's almost exactly like what Elon Musk is about to do with Twitter, right, super familiar. Yeah, it sounds really familiar.

Zel is doing this same thing. And when he buys the company, he allegedly tells the employees there's a new sheriff in town, which, like, you don't actually say that, Sam, you don't really say that. Nobody says that what So in buying and tanking the Tribune, Zell brought harm to

a number of hugely influential local papers. In addition to the Los Angeles Times, UM and the Chicago Tribune, the Tribune owned the Baltimore Sun, the Hartford Current, the Orlando Sentinel, as well as the Tribune in the l A Times. So he has bought up the most influential local news sources in the country. Um, and he's about to run them into the ground. So as he buys them, he goes on like a tour through all of these different properties,

these different newsrooms, giving speeches. He's famous for cursing a lot, and his speeches, Um, I think to try to be entertaining and stuff. Um. But over and over again, the thing he tries to sell his new staff on is the fact that he's going to make them rich with his new management skills. At one point, he writes to the Tribunes employees, I have said repeatedly that no matter

what happens in this transaction, my lifestyle won't change. Yours, on the other hand, could change dramatically if we get this right. They're not going to get this right. So, for one thing, these are all newspapers, right, that's the that's the fairly large newspapers. Um. The team he brings in to take over management are all radio people. In particular, they're all shock jock DJs. So I know, yeah, Mr Michael's who's running it is a former shock jock. He's

like a Howard Stern type. Um. And so that's the people he's like, you know, who can run a bunch of local newspapers is like drive time radio d j's who curse on the air. That's that's who will turn the newspaper business around. Um. Now, since Mr Michael's is a shock jock, the people that he brings in to help and run the company are also all former shock jocks. And one of the first things they do is they

rewrite the employee handbook quote. Working at Tribune means accepting that you might hear a word that you personally might not use. You might experience an attitude you don't share. You might hear a joke that you don't consider funny. That is, because a loose, fun nonlinear atmosphere is important to the creative process. This should be understood and should

not be a surprise and not considered harassment. Now, yes, of course, if you're working in a creative enterprise based around like writing, people should be aware that they're going to encounter things that are uncomfortable and stuff they might not like and being open minded and people being able to that. But if you're putting that in your handbook with specifically to lead to you shouldn't ever complain about harassment. That's because you want to sexually harass a bunch of people, right,

That's that's why you're putting us. And then you're going to be racist. So all of those things are going to happen, So go ahead and expected pretend like this nineteen nineteen or nine. Essentially, Yeah, it's it's like everything else. Yeah, so they took this, Uh, don't call our harassment harassment seriously. Mr Michaels hired a woman named Kim Johnson to be

his s VP of local sales. In the news release announcing her higher, he said that she was a quote former waitress at Knockers, the place for hot racks and cold bruise. Um. I think this was a joke based on a fake restaurant chain, but anyway, it's it's a weird thing to say about someone you brought on as a VP. But they can say, we have a woman, a woman exactly, we have a woman, and we only a little bit complimented her Knockers and the press release we announce we we put out in the press release

announcing her higher press release. Yeah, so this is like what they're putting out publicly to the industry, like we hired this lady because of her tits. Like that's that's literally you're welcome. Yeah, this is not like people might have thought at first, like oh, this is just like a thing. He said it like an office party. That was inappropriate. No, no, no, yeah. So in his first tour of the company, Zel promise there would be no job cuts, but of course there were many of them.

And what's whereas his business acumen appeared to lead him to try to like refocus all of these legitimate newspapers on cheesy game show tactics quote from The New York Times. The company introduced promotions that seemed to have been drawn from the radio handbook. At four of the company's television stations. An event called cash Grab and which the viewer was led into a bank vault and allowed to scoop up dollar bills, was inserted in the middle of the station's newscasts.

At w p i X TV in New York, the viewers were cheered on by clapping Hooters waitresses, giving the station the appearance of televised shock radio. He literally, you know, like you were seeing RoboCop. Have you ever seen like Idiocracy? Nope, okay, both of those movies have like fake TV news that has like that's just like super trashy and gross and stuff because it's dystopian societies. He's just done that for real.

He's just actually made that as it wasn't there an Eastern European station that actually had women stripping as they were telling news in order to engage viewers. But they're trying to do real news. I feel like I saw it a while a girl, what is happening? Thing that happened to be honest. Having just being like, hey, we're the news and also people will strip on the news is way less gross to me than hey, we're gonna split the news up with cash grab where people stuck

in a bank fault have to grab dollars. That's much grosser to me than just like, yeah, um it's it's pretty clever good. So Zell hired a chief innovation officer who was like a maniac and would regularly right five thousand word type of riddle memos to and lists and editors that they would be forced to read, stuff like rock and roll musically is behind us, All caps news and information is the new rock and roll. This is like a corporate memo. Their director of innovation, the Rock

and Roll. At one point in a meeting, they're talking about the war in Iraq, and somebody brings up that, like Los Angeles Times reporters are actually in Iraq, you know, covering the war like you do. And he shocked that this is allowed. He has no idea that this is how like journalism works, that reporters go to war. What this is the director of innovation for one of the largest newspaper companies in the country, or they one step away of just become a tabloid at this point. Yeah,

I mean that's what he's trying to do. He's trying to, like his ideas that we just make it profitable by yeah, turning it into a tabloid. Stick some tits on there, stick some game shows stuff in there. It'll be great. It's good. Yeah. I don't like this guy, you know what I do like though? Oh, I like that the fact that the Great Lakes, being the largest freshwater bodies on the planet, plenty of room for the US nuclear arsenal. Yeah, apparently. Yeah,

I try to get it there, Sophie. Sophie, Sophie, I just like, don't care anymore. I care about your hometown, and I'm trying to stop it from being in l A. Well, no, just the lakes, just the lakes, Just the lakes. My hometown isn't there, So well, then everything's going to be fine. All right, here's some ads. Uh, we're back. Sophie agreed off screen that my political career has a lot of promise. Um, everything's good. Nuke the Great Lakes the middle of time.

It'll stop it it'll, it'll, it'll, it'll make the world darker. You ever see snow Piercer the first two? I only watched the first. I only watched the first one and a half seconds of snow Piercer. But that's basically my idea each children to work. I didn't see any of those parts of the movie, but I assume all of those things were also positive, because it sounds like it started with a great idea, super positive. So um. James Warren, the former managing editor and Washington bureau chief of the

Chicago Tribune. Instead of Zell's time running the company, quote, they wheeled around here doing what they wished, showing a clear contempt for most everyone that was here, and used power just because they had it. They used the notion of reinventing the newspapers simply as a cover for cost cutting. Now. During his time running the company's l also became a pioneer of click bait advertising quote advertising, yeah, oh yeah, no, he helps make this happen. Advertising has been inserted into

the Los Angeles Times in new and unsettling ways. In March, and ad mimicking the front page for Disney's Allison wonder Land was wrapped around the first section, and in July, a fake version of the newspaper section for late breaking news called L A T Extra was wrapped around the real one, promoting Universal Studios King Kong Attraction with a

lead story that read Universal Studios partially destroyed. In April of two thousand nine, and advertisement posing as a news article about NBC's new show south Land appeared on the front page. In July, the Los Angeles County Board of Supervisors, the governing body of the County of Los Angeles, sent a letter of protest saying the use of advertising disguised as news makes a mockery of the newspaper's mission. Some might argue that, yes, that's that's exactly what it does.

But that's kind of the point. Um. Now, what's interesting, though, is that none of this makes the business profitable, and actually making all of these newspapers much worse um does not make people more likely to use them. Um Zel also had loaded the Tribune with so much debt by the deal right that bankruptcy was basically inefvitable. Was almost impossible for the company to ever turn a profit because

of how much debt he'd loaded it up with. So I would assume with the clickbait that that he's getting money from the advertisers and that's how he was going to make money. That no, because people stopped visiting the website because it's ship. Yeah. Investors hurt by the local by the deal later accused him of basically loading the company up with debt and then sinking it on purpose. Um And I'm gonna quote now from the Chicago Tribune.

Tribune Company, the precursor company, the predecessor company to Tribune Media, filed for bankruptcy and December two thou eight, one year after Chicago billionaire Zell took the company private and a heavily leveraged eight point two billion dollar deal. At the Times, Zell blamed a perfect storm of industry and economic forces the Great Recession but the bankruptcy case turned on charges

leveled by junior creditors that the debt burden was unsustainable. Now, one of the things again I found interesting here two eights prior to the social media age taking off. Really, uh,

it's when we have our last big economic crash. Local newspapers are the primary way people get news, and Zell absolutely crashes them in this multi But he gets to banks to back him this multibillion dollar deal that he could never make a profit on, and then he sabotages the companies that he's bought and destroys them and Fox over a bunch of people and then blames it on

the recession. Elon Musk is currently carrying out at tens of billions of dollar deal on what is a lot of people's source of local news, um, right as we're about to have a recession, and has been talking about how he plans to fire Twitter staffers. It's cool, it's neat that these these billionaires get to just keep fucking with people's ability to get news because of their own egos when they want to. Yeah, they'll be fine, They're

gonna have like a fun year of stories. And then a lot of people's lives will be worse and they will not suffer any consequences, which is good. Yeah, it's great. Uh So obviously legally, nobody ever accepts responsibility for anything. However, there's a bunch of litigation, like ten years of it over this. Zell starts to call it the deal from Hell because of all of the people suing him over this.

Uh And eventually the litigation trust gets around two hundred million dollars to redistribute to creditors as long as no liability or wrongdoing is assumed by Zell and other defendants. So there you go. Uh Now, I want to read to you that above, or I read to you an above exerpt from the Chicago Tribune, which is a summary

of the deal ten years on. I think it's interesting how this New York Times article, which actually focuses on the working people hurt by the deal, describes it more viscerally, because that one is just kind of like, you know this, they lost this amount of money and now there's a big bankruptcy. The New York Times quote is gonna be

a lot grittier. Okay. Less than a year after Mr Zell bought the company, it tipped into bankruptcy, listing seven point six billion dollars in assets against a debt of thirteen billion, making it the largest bankruptcy and the history of the American media industry. More than forty undred people have lost jobs since the purchase, while resources for the

Tribute newspapers and television stations have been slashed. The new management did transform the work culture, however, Based on interviews with more than twenty employees and former employees of Tribune, Mr Michael's and his executive's use of sexual innuendo, poisonous workplace banter, and profane invective shocked and offended people throughout the company. Tribune Tower, the architectural symbol of the staid company, came to resemble a frat house, complete with poker parties, jukeboxes,

and pervasive sex talk. So they crash. This company, lost people, their jobs, caused the largest collapse in the history of American media. But they got to be playboys for a little while. Yeah, just they just paid seven billion dollars to have a house. Yeah yeah, a frat house where they also got to funk with serious people who were trying to report on important local news issues. Right. So Number one, this helps destroy local news nationwide. Like now,

it is effectively dead as a meaningful force. Um. This is not the only reason for that, but it is a big part of it. Uh So that's pretty cool. Um. But obviously, for Zel, fucking with the Tribune was only ever a side project. His treat, his chief love remained real estate. And while all this is going on, he had very savvie sold his profile, or his portfolio of properties off to the Blackstone Group for thirty nine billion dollars,

the largest leveraged buyout in history at the time. So he makes a funkload of money after this, and he sells off a bunch of these rental properties of his to Blackstone right before the sub prime mortgage crisis hit, crashing the real estate market and earning another feather in the cap of the grave Dancer. When the market was at its lowest point, he used some of the pile of cash that he'd earned to buy up more properties.

He currently owns some seventy eight thousand apartments in San Francisco, Southern California, New York, all of these places where rent is surged over the last decade. He is a big part of that. Given what happened with the Tribune. You won't be surprised to learn that Sam Cell has decided to pour millions of dollars into spreading propaganda to stop

the spread of rent controlled housing in any form. So again he destroys all these local news companies, and then he starts putting money in order to like back into it back in well, he starts putting money into basically like pushing propaganda that will lead voters not to select different ballot measures and stuff that will allow for rent like put caps on what rent increases, and ship like

destroys the local media. Then Bright like bribes his way into trying to like push against any kind of housing justice or anything that will reduce the cost to renters.

So was this a big like conspiracy for him to actually tank, as they said, news media so that he could go on and say if they actually do good research and come out with good journalism and say, hey, the housing market and all of this is not just because of these things in ordered for him to control the like, see they're lying, they don't they're not trustworthy. I'm not going to I'm not gonna say whether or not there was intention there because I I can't there's

no evidence of it, certainly. Um, but um, I don't know that's what happens. Like that's the end result of it, right, Uh? Is that? Yeah? He like all this ship gets uh fucked up. Um, so it's it's good. Uh. Now, before we get further into this what Zell and other billionaires are doing to try to stop the passage of like laws that could actually make housing affordable, we should probably

talk a little bit about rent control. This is a subject that is controversial today, largely because of landlords like Zell, who claimant cuts into their profits so much they can't afford to do stuff like handle basic repairs and maintenance. But rent control has a long history of helping people avoid disaster. During and after World War Two, federal rent control in Los Angeles froze rents and narrowed the scope of evictions so that housing construction could catch up to

the population and make the city more affordable. Right. It's this thing where you've got, like, yeah, the population is growing by x amount, housing isn't keeping up, So you institute rent control and you reduce like the evict and you like make it harder to evict people so that folks can hang on until there's more housing. This is the piece that's always missing from those articles that's like, we need to increase the housing supply. Well, that's not

all we need to do. There's other things that have been proven to stop people from winding up on the fucking street, and you're ignoring those in favor of just saying deregulate shit. Alyssa Cats, a researcher at u C l A, examined rent control and housing affordability in l A going back to the nineteen forties. She found that rent control successfully stopped people from becoming unhoused in the forties and then again in the late seventies when inflation

rose again and rent spiked. That time, a rent a stabilization ordinance quote ended dramatic rent increases for incumbent tenants by limiting the rate which by which rents could be increased. When looking at California's modern homelessness epidemic, she put the blame directly on rent prices and urged a repeal of statewide rint control restrictions and the expansion of rent regulation.

She isn't the only academic making these claims. Nicole Montoyo and Stephen Barton released a study through UC Berkeley looking into which of the different proposed solutions to the housing crisis were likely to bear fruit. They found quote, while other proposed remedies to the hows and crisis may take years before they impact housing costs, only expanding rent control can offer immediate relief to tens of millions of people

in danger of being forced from their homes. Another rite up on rent control measures from l A Progressive goes on to add They noted that rent control can stabilize rents for existing tenants, improve affordability for tenants in the future, and preserve the existing affordability of housing that may otherwise

become unaffordable. And the researchers found that claims that rent control has negative effects on development of new housing are generally not supported by research, and that rent control can provide a timely solution to a housing affordability crisis that

the market will not. In a statement, Bartin further pointed out that quote when the housing market is as dysfunctional as it is in many parts of California, tenants are effectively subsidizing landlords with rent payments above what a fully competitive market would allow landlords to charge and what we're actually seeing here with stuff like these fucking program algorithms that allow landlords to jack up prices with guys like Zell put millions of dollars into propaganda to kill rent

control ballot measures in the state, and he's been very active in that in California in particular. Is that the money that is being extorted out of people to keep a roof over their head is being used to fund, like to basically fund propaganda campaigns to stop any kind of rent control, right, Um, it's it's pretty cool. Um, it's pretty cool. I like that you use the term

a lot in this episode. I find it fascinating with exactly what they're doing is just paying into a way to keep money in their pockets, but they're not keeping money in their pockets, as well as the fact that there's so many other conversations like you're keeping people in the house and you're still getting money. Yeah, I don't understand when you're using The thing that's most fucked up

to me. I hadn't really thought about it this way is that And I like that l A progressive frames it this way, is that tenants are subsidizing the campaigns of the landlords. To stop housing reform, Like their money is paying to keep rent high, their money is paying to deregulate the system in order to like make it possible to continue to check on the rent. Yeah, but that's the whole scheme of renting it, Like you never

get anything for it. You're just giving it to the landlords who have now by this time paid off their uh property. They have tax as sure, but there's still not anywhere near what you're getting in rent from your renters. So what the hell? And then you can as a renter, especially in this market, you can't save enough, as you said an episode one, save enough to get your own house and you don't technically own anyway for thirty years. What what what you're doing here, and what guys like

Zel are doing is you're recreating feudalism. You're you're you're making peons, you know, like it's it's keeping. Yeah. I want to continue this quote from l a Progressive because I think it's good. Tenants subsidy is paid for extravagant lifes, lifestyles of many for many of California's largest corporate landlords, who spent tens of millions of dollars to kill rent

control ballot measures in the state. Billionaire Sam Zel, for example, owns posh homes in Chicago, Sun Valley, New York, and Malibu, collects motorcycles and flies around the world in a private jet. Another billionaire, corporate landlord, Stephen Schwarzman, owns mansions in St. Tropez, Jamaica, East Hampton and Palm Beach and throws lavish parties for celebrities and high society friends. At the same time as

sky hire rints force more people onto the streets. Nearly fift hundred homeless people have died in Los Angeles in the Los Angeles area between one so that's half a nine eleven in a year. Um, that's good. Now, when you start talking about yeah, I was gonna saying you're being too with pathetic. Stop it. Yeah, that's that's what our old buddy Roper would say when you're talking about rent control. Anytime you talking about rent control, you're gonna

wind up talking about New York City. Rent controls started there too, as an emerging and see measure during World War Two. At present, around forty five thousand tenants in the city began there who began their leases before nineteen seventy one have rent controlled apartments. Some of these people are like children or even grandchildren of the people who started the least because you can pass it on that way.

Their landlords are forbidden from increasing rent beyond a very mild rate, which means that many of these folks pay rents that are thousands of dollars a month underneath the present market rate. Rent control in New York has allowed for some peculiar situations where people will have apartments the size of small palaces for what amounts to peanuts by

modern standards. It's also led to several murders. In nineteen Mark Glass, a landlord based out of downtown Manhattan, grew frustrated that his tenant, Bridget Marks, wouldn't leave her rent controlled apartment and a former tenement that he bought and renovated.

He hired a hitman to kill her, but that turned out to be a scam, so he tried to kill her with the heroine to overdose that failed to Eventually, she realized he was trying to murder her and got the police involved, and they carried out a sting operation and he wound up put in prison for like seven to fourteen years. In two thousand to a New York landlord named Louis Hubrick grew enraged after trying to bribe

and cadrole his tenants to leave. This worked on everyone but Miss Barbara Kinna, a sixty seven year old school librarian, so Hubrick shot her six times with a thirty eight caliber revolver. He was convicted of murder and sent to prison for the rest of his life. Two years later. Yeah, well got you got that red right now you can now you're now your your kids can fucking renovate the apartment. Get an extra couple of grand out of that place.

So two years later, in two thousand four, one Bassia Guida pled guilty for hiring two of his tenants to murder two other tenants who lived in a controlled three bedroom apartment and his building. They've lived there since they were kids and had legally assumed his father's lease. This enraged Bassia Guida, so he hired two other tenants to break into the apartment and stab Broth brothers, who narrowly survived. Now,

when don't you had to give him free red? The tennants he hired to murder, I think he was probably given them a break on their rent or something like you get like six months off of rent if you stab these like I'm gonna throw in water for free, if you'll murder these people. At the end of the day, it does not work out. Um. So obviously these are spectacular, but like not the only cases. You could find a surprising number of cases of landlords murdering or trying to

murder tenants over rent control departments. Um, I mean that's my solution, murder, Yeah, murder. Well, there's actually the only like, that's the only real solution that any landlords use in stuff like this, because the landlords who go about things the proper way by like evicting stuff legally, are also killing a shipload of people. Um. And we can look at that in terms of like how being houseless, you know, raises the rate at which you're likely to die early.

How being evicted makes it harder to get housing. Um. There's a number of different things that we could talk about, but because we're in the middle of like what you're three of the pandemic right now, I want to talk

talk about that. So I'm gonna quote from a write up by Judd Ligam and test Num Zacharia quote a new study by public health researchers at Johns Hopkins, U c l A and other institutions looked at the impact of the expiration of state based moratoriums during the summer of twenty The researchers tested whether lifting eviction moratoriums was associated with COVID nineteen incidents and mortality. The results are chilling.

The study concluded that lifting eviction moratoriums amounted to an estimated four hundred and thirty three thousand, seven hundred excess cases and ten thousand, seven hundred excess deaths between March thirteenth and September three. The infections and fatalities occurred across twenty seven states that lifted eviction moratoriums during the study period. In Texas alone, the study found that there were four thousand, four hundred and fifty six excess deaths after the state

lifted its eviction moratorium on May eighteenth. The researchers accounted for stay at home orders, mass orders, school closers, testing rates, time trends, and other state characteristics to better isolate the impact of eviction moratoriums. Now that's four thousand, four hundred and fifty six deaths in Texas alone, as a result of the lifting of the eviction moratorium. UM, nationwide pandemic evictions alone have led to at least ten thousand deaths

in the last couple of years. UM. So yeah, no matter what you're talking about, even if you're not shooting them with a thirty eight, you're still killing people. And the amount of of those people are marginalized women oftentimes and they are single mothers. It is so high. Yeah, we had a whole episode about housing and how it's affecting single moms more than it's marginalized Black women essentially more than anyone else, and how this has been impacting them.

Let's not talk about the fact that the credit score is a racist system in itself, but all of these things have been impactable and racist as hell. And who they are trying to kill? I mean, and when you talk about credit scores too, because credit scores there's a lot of like racism in who like that system has

a lot of problems with it. But also because an increasing number of apartments are owned by these gigant to corporations that are backed by like finance industry money by companies like Blackstone, that means that more often and often when I was younger, even if when you went with like a corporate you didn't have to do They didn't care what your credit score was. That's what you need for a mortgage, but that didn't matter for renting a

fucking apartment. Now it does now score Yeah, yeah, it's outrage. I mean again, all of these are We're not trying. I hope nobody thinks I'm trying to give like this is all of the reasons that rent has gotten high. But these are some big ones. These are major factors, and these guys are major factors in it. And that's going to leave me to talk about Steven Schwartzman. Um. Now I mentioned him earlier, right when we talked about he's one of the billionaires in Los Angeles throwing money

into stopping rint control ballot measures. Um. Schwartzman is not as interesting as zel Zel is at least a pretty entertaining piece of sh it. Um. Schwarzman is kind of a boring, soulless, corporate ghoul, but he's probably more influential and why your rent is raised. So Schorzman's dad was a dry goods store owner like sell Like. His family's

kind of upper middle class business owners. He grew up in Philadelphia, but was inspired to become an entrepreneur when he traveled to Israel for the first time as a fourteen year old. In a recent interview, he said this quote, Israel has an incredible entrepreneurial community. Of course it had to, because when it started, there was almost nothing there. Everything

had to be invented by somebody. Now you might you might be saying to that, wasn't there like a whole society of Palestinian people there, with like universities and businesses and like homes, And wasn't there like a lot of stuff there? Wasn't there in fact, communities where thousands and thousands of Jewish refugees fled to during World War Two.

And we're able to survive because there was stuff there um, stuff including like wealthy Palestinian families who helped fund the construction of the first Jewish university and Alistine Anyway, wasn't all of that there anyway? Whatever? Fun like this is pretty normal, like shitty guy stuff like this is not not an abnormal attitude, right, but you get where this guy's coming from. So, like Zel, Schwarzman is also a

child entrepreneur. Again, the worst warning sign. He started a lawn mowing business, where he very quickly stopped mowing any actual lawns. Instead, he got his brothers to do the work while he brought in quiets. Um. Yeah, yeah, yeah, one of those. Again. Look, if you see a kid doing this kind of stuff, I don't know, you just gotta poison him a little bit, a little bit of poison, a little bit, a little bit of child poison as well. Well, it wouldn't be the worst thing. So anyway, I don't know,

we can. I'm gonna. I'm still gonna. I still have to tweak my poison. Yeah, ambitious children plan. But I think there's a lot of future in it. I think it'll Sylvie, you were just I'm plaining about how how your rent is. You know what if we could have stopped that with a little bit of poison, not a lot of poison. Another book on this, you can do another book on this. Yeah, yeah, the poisoning Children driven life with me smiling in a suit. Yeah, yeah, exactly.

M Yeah, it's gonna be good, Sophie. This is gonna be what takes us into the mainstream. Fine, can you just do an adverb? You know, bit when it comes to poisoning children, Nobody does it like our sponsors at whoever our sponsors are. Ah, we're back and we're better than ever. So yeah, I think we're doing good. Sophie. I'm proud of us. Thank you, thank you. I'm glad that you at least can be positive towards me while

Sophie is being so mean. So we're talking about Stephen Schwarzman, who has started a lawnbowing business where he mows no actual lawns because he is that kind of kid again poison His hunger to make a shipload of money did not run in the family. I find this really interesting. His dad is apparently a very different guy, as this

right up from Fintech magazine makes clear. In an interview with The Washington Post in twenty nineteen, Schwartzman explained how his childhood taught him that not everybody was going to be the same. When pushed by a young Schwartzman as to why he didn't want to expand his successful business or open more stores across Philadelphia, Schwartzman's father answered, simply,

because I'm happy the way I am. I thought that was sort of hard to take in Schwarzman told the newspaper his contentment is what made him a remarkable human being. Maybe you could have should have learned something from your dad, like the endless source to extract more wealth and resources out of an area is actually what's going to kill us all and not a healthy attitude. But anyway, I mean, this is why, you know, like is not always a nurtured nature. Seems to be like, look, I have I

have a I have a thriving small business. We live a comfortable life. That's all I need. Everybody's happy, healthy, Let's move on. His kid is going to become highest order. Yeah, So Schwartzman goes to Yale, which is probably where a lot of the ghoul stuff comes in. He joins Skull

and Bones. So he's one of those fucking kids. And then he goes on to do finance at a big, fancy firm after getting his m b A. His first major employer was Lehman Brothers, which he described as quote full of interesting characters x CIA agents, ex military strays from the oil industry, family friends and randoms. Uh. He rose on. Yeah, very quickly he becomes a managing unbelievable red flags. I know, like again. If there's a company like that, I don't know, again, poison poison them once again.

Once again. If you looks in a dating app, you see somebody have their job listen at that company. No, it's just like, yeah, Sophie's giving all the realistic advice while Robbert's over here with his dreams. Just look if if if we had just poisoned the water and a Lehman Brothers company party in the late nineteen eighties, a

lot of problems wouldn't have happened. That's all I'm gonna say, no comment, but yeah, look, look if the CIA s MK Ultra program had been about poisoning Lehman Brothers and other similar corporations with doses of random hallucinogens that destroyed people's minds, nobody would think of them as bad guys. Would be like, oh, yeah, those guys who get rid of the finance industry. Yeah, I like those guys. Those

guys are chill. I'm just letting you know. People would still consider the guys, well, I don't know, less of less of the bad guys. Look, if the CIA takes out like m mackenzie, you know, yeah, yeah, whatever. Anyway, so he leaves he become managing director of Acquisitions at Lehman Brothers at age thirty one, but then he leaves the company to co found an advisory firm, which he calls black Stone. Quote it started, Yeah, he's the guy who founds Blackstone. Yeah, and co founds. But yeah is hyped.

This is this is these are these are some bad dudes. So it started life as a boutique m and a advisory firm. Within a couple of years, Blackstone had launched its first private equity fund and later by nine had branched out into hedge funds using partners his own money. The time of Blackstones initial public offering in two thousand seven, the business head more than eighty eight billion dollars worth

of assets under management. The i p O saw shares finish it over thirty five dollars each, valuing the firm and around thirty and nine billion and enriching the personal fortunes of both Schwarzman and Peterson. Peterson's the guy he starts the company with. So today Blackstone claims to have eight hundred and eighty billion dollars of assets under management, including two hundred and sixty billion in private equity and

two hundred an eighty billion in real estate. Stephen A. Schwarzman is still the company's chairman and CEO, and has indicated he has no intention to retire. He has two children, the film producer Teddy Schwartzman and writer and podcasters Zimby Owens. Um, I'm just happy that his daughter is a podcaster. You know what, let's let's all learn something together. What does Zimby Owens podcast? I don't know, But did you just put us on a target list? Maybe you do, Sophie. Well,

I don't know. I don't know what's good, you know what. I don't know much about this. But her podcast is called Moms Don't Have Time to Read Books? And No, but that doesn't sound great. But I'm on her website. It's a top it's a top literary podcast. She's an awful but um, yeah, she interview it seems like she interviews. Yeah, she's a book fluencer, which is a term. If you're a writer and you ever write the word book fluincer, you should not be a writer. Um, I'm gonna say

that right now. Whatever. No, I think she's like reviewing books as like a mom book reviewer's doing. No, No, I don't. I don't think she's going to be a big fan of my book. Um, I don't. I don't think she's gonna Let's see what essays zim Right, there's a picture of her in her chair. Um, let's see this rabbit hole is Ye. These are mostly just lists of books people can read, so it seems a lot of it's like sco list. She's trying to make her

own like Oprah magazines. She of course she's a book fluincer. Yeah, she's very much like Oprah her. She's like interviewing Ralph Macchio. That's the karate kid guy. Right, there's nothing wrong with that. He wrote a book. Yeah, he just wrote a Book's just like a book influencer. Oh, she's hiring Zimmy Media is expanding their hiring superstars. She must be because she's in y c's most powerful book fluencer. According to Vulture,

she's a book fluencer, Sophie. It's also just like if you're saying someone as an influencer, you can be an influencer in the literature industry. You don't have to call someone a book fluencer, which is a stupid that's not on Zimby. But she brags about it in every page of her website, so it is a little bit on her. Um wow, yeah, Zimmy Media is hiring a funkload of people, it looks like, so get on the zim train fast. Oh she does classes. She does classes. I don't know

why we're attacking her so much. Her dad's the bad guy, but she's never mind. I actually there's nothing we're laughing about this. I can't find anything that's like offensive about her or anything like that. She just we know nothing. She could be a lovely she. She seems fine. I'm sorry,

it's just a lovely individual. Just you know, you can't you know, people, if somebody, if you came to family, if you claim to love larger and somebody calls you a book fluencer, you do have a moral responsibility to the art of writing to say, no, you're not. That's not a term we're gonna use. Is not a word Robert as a blue book fluencer. Nothing is I'm really having I'm even saying the word. So I'm so angry about that. That's all. Honestly, Zimby has done nothing wrong

but use that word. That one word which I've never heard of TikTok book something like that, which is book talk is fine, I think, because you're that makes sense. Book fluencer is fucking nonsense. I've never been angrier. I've never been angrier in my entire life than I am right now. This is so much worse than a lot worse. Well, but and then he doesn't use the word book fluencer.

So most of you probably know what happened to Lehman Brothers, which was forced into bankruptcy after helping to cause the two thousand eight financial crash. Lehman had been a major driver of the fraudulent mortgage backed security business backed by subprime loans, and their collapse nearly took the global economy with them. Shortzman had been out of the company for quite a while by this point, and he and Blackstone

did very well as a result of this procession. They lose a little bit of money upfront, but they're heavily invested in companies like Starward, Waypoint and Invitation Homes, which merge in two thousand seventeen and start buying up all of these fucking properties that like are suddenly farking. Bargain Ben a website for tenants of innovation of invitation homes.

Invitation Tenants dot Com notes they have benefited from the deception and fraud that settled so many families of color with subprime and booby trapped mortgages, leading to foreclosures that

disproportionately affected African American and Latino families. Lower post crisis home prices could have been an opportunity to increase in affordable homeownership, but too often, instead Wall Street buyers swept in, while neighborhood families were left out of the game altogether, unable to compete with cash buyers or denied access to credit.

For these Wall Street speculators, with Blackstone being the biggest one, the recession of two thousand eight was not economically and emotionally devastating as it was for all the families that lost their homes. It was a market opportunity. Blackstone was one of the first private equity firms to begin buying up foreclosed homes in the wake of the financial crisis,

fixing them up and renting them out. The firm, which began buying homes in Earnest in two thousand eleven, is estimated to have spent ten billion dollars and it's foreclosed home to Rinchell bet So that's cool. Uh. In the years since the financial crisis, Blackstone Group has more than doubled the assets under management from n indeed billion dollars to two eighteen billion dollars of real estate assets and

its first five years after the financial crisis alone. As a result, Blackstone today is among the largest corporate landlords in the United States, and it reported its highest earnings ever this year on the strength of rising rents and its real estate portfolio. Here's courts quote on the January with investors, Blackstones executives explained rints for real estate sectors in their portfolio had risen as much as two or

three times faster than the overall inflation rate. Relatively short leases on their properties have allowed them to raise prices quickly, capturing more value from rentors, even as the inflation rate in the US topped seven percent. Awesome, stuff really really good. Again. I don't know much about real estate, nor do I know much about the corporations, especially like black Stone, And it was been a recent thing that I'm like understanding

all of these uh giant buyouts. And I do know they profited off the right for closing on families and leaving them homeless. And we know all of that and houseless, um and without houses. But what's Blackstone involved with all the military buy they wore profits years as well or is that just in the back of my imagination. Oh, I think you may be thinking of black Water. Let me do a check. Okay, I mean they did a lot.

They manage a lot of investments, so it would be surprised if there's some degree to which they're involved in differ one sect. I feel like maybe again, yeah, I might be confusing that, like they had private organizations. I mean they're involved developing, they're involved, like they invest in uh, like they're private equity firms, So they have investments in

aerospace and defense companies. Um. But I mean so you could call them they're definitely like profiting off of the defense industry, but that's not kind of their primary thing. It's just sort of a side effect of the thing they do, which is that they invest in businesses that have reliable rates of return, and that includes the defense industry. UM. Yeah, So I want to close by noting from a right up in the Atlantic in um, which kind of makes

the point that the nature of black Stones business. Both its scale and its single minded pursuit of profits means that tenants nearly always come last. Quote. Some evidence suggests that private equity firms and contrast, are willing to engage in predatory practices to realize short term returns. Black Stones target properties in southern California suggest an investment strategy similar

to flipping single family homes by old properties. Invest in cosmetic upgrades such as new appliances and facade improvements, and then increase the rents. Furthermore, some anecdotal evidence also indicates that private equity firms are less conscientious landlords in the single family rental market. Researchers and journalists have documented concerns about poor quality housing, difficulties raised by tenants trying to communicate with landlords when proper problems arise, and higher rates

of evictions. And we can thank Mr Schwarzman for an awful lot of that. Um. Yeah, so that's it. That's some people who have made the rent high. Uh Stephen Schwarzman, that Zell motherfucker roper, all these assholes fun them all. So let me ask you, as we are looking at possibly repeating history in the next couple of years, where do you see Do you think we're coming upon a crash as well? I'm just, I mean, I mean everyone,

everyone seems to say we're heading for a recession. That would make sense, I was just except for the fact that they're seemingly trying to hedge it off by again charging the individuals and homeowners and renters instead of actually trying to get the corporations to pay out with their billions of dollars and or stop well. Sounds like what's happening is they're trying to the FETE is trying to

cut inflation by raising interest rates. UM and a bunch of companies are using inflation as a hedge for rising prices and making right record profits right now, in part because I think they're getting ready for what you might call an ugly winter, in which they're going to take those profits and can continue doling them out to their shareholders and executives while they cut staff and fire a

lot of people in the unemployment rate rises. Like that's I think more or less what's probably going to happen. I don't know, we'll see how it is. Like was pretty ugly too, that was an early recession, but it didn't last very long. I don't know. I'm not an I'm not an economy guy. Um and I kind of I kind of think most of the people who are economy guys are just engaged in some kind of con

or another. But yeah, it's probably gonna be pretty ugly in the near future, and these are the people who are going to make sure that a lot more folks wind up in on the street when it does. So poison poison is a good solution to keep an eye on kids who express an entrepreneurial desire. Don't trust that. Um yeah, and uh, I don't know. If you don't

call yourself a book fluencer that I'm livid. Okay, So his his son, Teddy, not not the the other kid that he had, is the producer who made the imitation game Invitation or Imitation Imitation Sam. You lose some, you win some, you lose some. I guess I haven't seen that movie. But uh oh no, I have seen that movie. That's the movie about touring that came that was actually pretty good. Yeah, so you know what, Yeah, you win some, you lose some. Right, that's speaking of a film fluencer.

He's a film fluencer movie apparently who produced at least one good movie while his dad was buying up all of the housing that was briefly affordable after the financial crid. You lose some and speaking of winning some, Samantha, do you have any plugables? Yeah, yes, come and visit me over stuff. Mom never told you nowhere near the same. Mom reads doesn't read things. I don't know. I'm not a book fluence, sir. I'm so sorry to say. Yeah,

I can't. Oh, well, that's a new one. Um, And my Twitter is McVeigh Samantha, and then Israel McVeigh dot Samantha. So if you want to see pictures of my dog and me complaining about things, come visit me. Yep. Um, find Samantha on the internet. Find the kid in your neighborhood who starts a lawn mowing business where he doesn't mow any lawns and uh, I don't know it. Just like smoke around him. Smoke real close to that kid. Just hang out next to that kid and smoke a

shipload of cigarettes. My god, it'll be good load of cigarettes. Anyways. Oh, we have a new podcast Uncolsonne Media. It's called Internet En and it's hosted by the one and only bridget Todd checking. Uh you know, yeah, I hit raded up APO podcast wherever you get your podcasts. I can't say that a lot. Yeah, fucking fucking do that. I also have a book called After the Revolution. You can buy it, you know what, which, by the way, my partner loved He just bumped up because he wanted to. Would you

like the book? Oh? Thank you? Well, maybe he can help. Maybe you can help book fluencers, zippy. Yeah, so this is Joe. I hope you can get to say podcast. He really likes the book. He cannot hear you because I have an earpiece and oh you don't have it. Okay, thank you to sell him all smokes and meats, and thank you for that offer of a legal drugs. No, no, no, no, bring up, Samantha, bring him back on, bringing back on. I want to. I want to, I want to get up. I want to get it. I want to get a

neutral opinion about this. Let me give him an earpiece. Okay, yeah, I get work, Joe, Joe, this is Robert. I'm gonna I'm gonna say a word that a person is you thing to describe their job, and I just want you to give me the emotion that hearing this word for the first time inspires in you. Okay, nervous, tell me book fluencer. Oh no, I'm going to call her that intimately. I hope you do that. It's a horrible word, right, it's a terrible word. So do you get that often?

Is that? No? No, that's what we're going to call Robert? Absolutely not. How dare you know? It's it's from all It's from a lady with the forbidding to come up to this podcasts again. You're coming back every week. You made me happy. I'm I'm happy that you added book fluencer to my vernacular, as it is not going to be your titles book fluencer. Al Right, everybody, why don't we all go some motherfucking books. I will come to it like all right, goodbye. Behind the Bastards is a

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