Good live TV is tough to pull off, especially on CNBC, but once in a while, an otherwise boring debate about the economy or policy will fly 'off the rails' and traders and other financial professionals will turn the volume up and tune in.
That happened back in the spring, when Ventuer Capitalist Chamath Palihapitiya debated CNBC's Scott Wapner about whether the Trump Administration should bail out the airlines, and other industries suffering from the pandemic. Palihapitiya famously asserted that the government should "Let them [the airlines] fail" before explaining that these companies burnt up their rainy day funds and took on unnecessary debt to finance share buybacks. And since airlines are asset rich, the businesses will survive bankruptcy intact, along with all or most of the staff.
This response horrified Wapner, and we chronicled the reulting clash. Thrilled with the response, CNBC has brought Palihapitiya and Wapner together for at least one interview since that initial encounter, and on Wednesday, the pair sat for yet another interview as part of CNBC's "Seeking Alpha" Conference, which was hosted digitally this year.
Remarkably, the two men essentially circled back to their original debate about bailouts, and Palihapitiya delivered on the colorful quotes. Troubled airlines shouldn't be bailed out, Palihapitiya argued, because they have been so poorly managed. Handing government money to the airline CEOS and their boards would be "idiotic and dumb".
CNBC has frequently hosted airline executives and lobbyists to argue the other side - that not delivering on the bailouts could put the industry in jeopardy (while implying that customer safety could ultimately be impacted). But Mnuchin's comments this morning seemed to put hopes for a bail out to rest, even though President Trump promised that the airlines would be taken care of.
But instead of blaming COVID-19 for the airlines' woes, Palihapitiya pointed out that the companies essentially put themselves in this situation. Instead of building up reserve funds, these companies focused on buying back stock and bolstering the company's valuation. It was "the most absolutely horrid and idiotic form of capital allocation you could imagine," he said.
"Not a single extra dollar should go to these companies. All this money should be focused on those people." Chamath Palihapitiya says people out of work should be assisted through unemployment benefits and eviction protections. #deliveringalpha https://t.co/CSZkx3uhQc pic.twitter.com/ManLHAZScj— CNBC (@CNBC) September 30, 2020
If governments are going to hand out money to corporations every 10 years, then the government should impose new restrictions on how that money is spent, Palihapitiya said, hinting at support for making share buybacks illegal, or subject to greater restrictions.
"This has been happening for the last 15 or 20 years," Palihapitiya said. "If you were going to give these folks money, you should have created some much tighter guardrails for what you were going to do in the future."
Instead of topping off the rescue programs instituted by Congress and the Fed, Palihapitiya argued that any future stimulus funds should go to small business owners and individuals only.
“If you really believe in trickle-down economics, then let’s actually see how trickle-down economics would work. Give money into the hands of ordinary Americans...What I guarantee you they will do is they will spend."
"We should be improving unemployment benefits, we should make sure they don't get forced out of their homes, to the extent that they have loans that are coming due...they need to be compensated," Palihapitiya.
Prodded again by Wapner about the tens of thousands of airline employees who may lose their jobs this week, the venture capitalist who recently launched a SPAC of his own, stood his ground and insisted that "not another dollar" should go to "these CEOs and boards".
Moving on to the subject of politics, Palihapitiyah dismissed Tuesday night's debate as "shambolic" and called it a "Dumpster fire" that was "so bad". However, he also said that, in a way, it was also "incredibly clarifying," before cautioning that a shift toward brand over substance could one day lead to Kim Kardashian, the pioneering reality TV starlet, to the White House."not>