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- What do you think investors should hope

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for after the election?

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- So, first of all, they
should hope that we have a,

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a quote unquote clean
election and a clear winner

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and no divisiveness

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because honestly, where
we are in the country,

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if we had something like we
had in 2000 where it came down

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to a handful of hanging chads in Florida,

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that's not gonna be good for anyone.

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Okay. Beyond that,

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I think the market's taken
a pretty clear approach

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and it's actually, I think,
surprising to a lot of people

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that if you just follow the
polls over the last number

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of months, including
when Trump was surging,

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then when Harris was surging,
now it's kind of equaling out

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as we sit here today.

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The market hasn't really seemed to care.

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It's gone up pretty much the whole time

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with very few exceptions.

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And I think that's part of that is

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because the market doesn't
really see a dramatic difference

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for all the, the, you
know, sort of, you know,

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contrast you could draw
between the candidates.

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It doesn't see a dramatic difference in

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the candidates themselves.

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I think when it comes to
control of Congress, that's

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where it really matters.

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And I think there's a
strong consensus brewing

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that if you have a clean
sweep by either party,

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the market won't really like that.

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If we have split government,
essentially the notion

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that gridlock is good,

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and that would limit some of the,

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the more aggressive policies on both

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sides, that's what the market wants.

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- Gotcha. So split government is actually

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maybe good for the market?

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- I think so. At least in the short term.

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Now there are, there
are always longer term

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issues to worry about.

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So one of the things that I
really do worry about is the

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path of our debt.

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And look, there are
incredibly smart people on

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both sides of that issue.

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Some of whom have Nobel prizes

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who argue it's not necessarily the,

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the debt path is not
necessarily problematic.

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I completely disagree.

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I think there are so many
examples through history.

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When you start to get
to the percentage of GDP

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that we are on the path toward,
when you start to crowd out

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other spending, whether it's military,

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just the interest payments alone, now

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that we're in a higher
interest rate environment,

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these are issues that need
to be, need to be dealt with.

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And at some point that's
gonna require hard decisions

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by whatever party is in charge

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or the combination of the parties.

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And we've been down this path

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before, we've tried to
be proactive about it,

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including under Obama back around 2010.

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Nothing has worked and my fear
is it's gonna take a crisis

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to get us to the point
where we actually do have

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to foster some compromise.

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And that may be more difficult
in a divided government.

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So longer term, I'm not so sure that

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what we're gonna really
address that issue.

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But honestly, neither party
is addressing it right now.

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As I said, I think it
may take a crisis for us

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to really be proactive about it.

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- Yeah. And the, when you
say a crisis, I, I think

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of like Barney Frank on TV
like 15 years ago being like,

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we're working on it because,

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and everything is insured,
we're gonna buy all the banks.

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- Yeah. I mean, look, you know, and,

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and again 2008 was a really dark period

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for the financial system in
this country and in the world.

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And the debt situation has
the potential to mimic that.

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Obviously it wouldn't be
a, a a, a complete rerun,

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but there are elements of that

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where trust in the capital
markets can break down.

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And so the thing to watch are
treasury auctions, you know,

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we're financing our debt
not unexpectedly with,

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with, with treasuries.

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If you go back just as
recently as the summer of 2023,

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there was a period there when
the 10 year yield went from,

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you know, well under
4% to about 5% in, in,

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in just several weeks.

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There was basically a buyer strike.

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People didn't wanna buy our debt.

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And that to me was just a little
bit of a coming attraction

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to what could occur if
we don't do something

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- To, to address the issue.

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Talking about what the consequences

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of too much debt look like.

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How do you see it playing out here?

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- Yeah. So again, I think
there's a risk that we do start

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to see treasury auctions
become problematic.

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Rates start to surge,
you know, significantly.

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And we, unfortunately,
we got a, a taste of what

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that was like in 2022 when both equities

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and bonds fell significantly
higher rates are very difficult

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for the fundamental economy.

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They're very difficult for the market.

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So the good news on the debt is

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that there are solutions, right?

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And they just require a compromise.

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And this is not rocket science.

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You probably need to reduce
the pa the path of spending

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that we're on, and you're probably

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gonna need to raise taxes.

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And you could argue, just
raise the taxes on the wealthy

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as frankly the Democrats have done.

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It's not enough. It's gonna
have to be, it's gonna have

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to be shared beyond that.

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There are other things
that we're gonna have to do

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for entitlement programs.

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There are things you
can do such as changing

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retirement age and things like that.

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All of those are painful.

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None of them are particularly
conducive to growth,

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but they will put us on a better path.

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- I mean, the likelihood
of, of both parties sort

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of coming together and being
like, guys, we got a thing.

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Let's take care of it together

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before it's a big issue, I
think is zero to be frank.

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Yeah. So is is a recession
inevitable? Is a crisis

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- Inevitable?

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One thing that is perhaps
comforting is that

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there's no ticking time bomb.

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It's very difficult to say that it,

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that the debt situation is
gonna fester to the point

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where it becomes a major market event this

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year or next year.

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It's very, very difficult to time.

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So I think, you know,

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there's a good chance it could
be three years, five years,

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maybe even 10 years down the road,

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especially if we do some things to try

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and get things under control.

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But there are gonna have
to be fundamental changes

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that are, that are necessary.

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And so our next recession
may very well not be

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caused by the dead issue.

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It may be caused by something else.

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It could be a geopolitical shock
as we saw with, well, a, a,

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a shock to the system.

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Covid being a classic example.

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Or it could just be a
normal cyclical pattern.

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There are a lot of things
that can cause a recession,

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but in terms of things that
could cause severe kind

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of secular pressure, the debt situation

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to me is the number one risk.

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Good.