Bill on Secure Freedom Radio 01/31/22

Frank Gaffney (00:00): Welcome to Secure Freedom Radio. This is Frank Gaffney. Your host and guide for what I think of as an intelligence briefing on the war for the free world. A man who has been rendering some impressive service in that war, particularly in his latter years, he was a master of the universe on Wall Street initially, but he has become a very important figure in the conservative movement and a clarion voice on a whole host of issues through his terrific television podcast program, The Bill Walton Show. He is of course, Bill Walton, and he is a regular here of ours at Secure Freedom Radio of which I am very proud. And we're going to start with him on a couple of issues Bill, that are really perhaps not so much surprising as shocking. Let's start with the COP26 summit meeting as it was called, a few months back in Scotland. And what we've learned about some of the shenanigans that have flowed- Bill Walton (00:59): Frank, it's great talking with you. The COP summit happened actually less than 90 days ago, in November in Glasgow. And it was an assembling of all the luminaries from the global finance industry, among other groups. And they came together with a project they're calling United Nations Glasgow Financial Alliance for Net Zero. That's quite a mouthful and what they did, the big banks and financial institutions around the world, including the Federal Reserve and the treasury had a role in this and they committed something like $130 trillion over the next decade or two to cut greenhouse gas emissions and carbon emissions. And it's an interesting- Frank Gaffney (01:44): ... $130 trillion? Is there that much money in the universe, Bill? I mean, yes, over 10 years, it's less of course per year, but still, that's a staggering sum. Sounds unlikely to be fulfilled. What do you think? Bill Walton (01:59): ... The odds of finding $130 trillion are only somewhat greater than... They're lesser than cutting carbon emissions to net zero by 2050. Go back to the... I don't know, 16th century and gather our heating from cutting down trees and forests, but that's a topic for another day. It's 130 trillion, they think that they can do that by investing in carbon free technologies and companies, and they want to direct their investment capital to that end. And they're very bold. They don't think governments, interestingly, have enough money or have enough purpose to do what they can do. And Larry Fink and who runs BlackRock and Brian Moynihan, who runs Bank of America are just out there saying, "Well look, the governments can't do it, so the private sector's got to come together and make this happen." Bill Walton (02:57): It's sad how to me, how pervasive this has become, you get Joe Amato who runs Neuberger Berman, which is not a small company, they run about a half trillion dollars in assets themselves. And they think that they can redirect their investment portfolio to bring this about. And they think by taking these trillions and investing them in new technologies and new companies, they will bring about the change they want. These are smart guys. These are guys that can really do a good job managing money. And yet when it comes to this green initiative, they seem to have checked their analytical skills at the door. Frank Gaffney (03:35): Well, there may be another explanation for it, Bill and I wanted to talk to you about that. There was a... Well, corruption is the term that I was looking for actually. Talk to us about this article that appeared in the Wall Street Journal just the other day, in which we were informed that as they put it, "Wall Street's green push exposes new conflicts of interest." What's up with that, and how serious a problem do you think this is? Bill Walton (04:05): Well, this is a wonderfully interesting topic. The thing to remember about the financial services industry, is it's not just the commercial banks and the investment banks. There's a whole host of players, auditing firms, bond rating agencies, companies that advice on proxy voting and other kinds of things that put a seal of approval on companies or on bonds or on equities. Bill Walton (04:29): And it's almost comical. Everybody talks about ESG investing, but nobody really knows what it is. And nobody really knows what sort of seal of approval companies should get to be classified as an approved green investor. And they begin splitting... And so you've got all these people rushing into this business, and it has the same conflict of interest that the bond rating agencies have always had, which is they're paid by the issuer to rate the bonds. And we saw how well that turned out in 2007, 2008, where the rating agencies had an incentive to rate the companies more highly than they actually were. And in fact- Frank Gaffney (05:13): As I recall, a little company called Enron in particular, right? Bill Walton (05:17): Well, AAA rated Frank, up until it wasn't- Frank Gaffney (05:21): Until it wasn't. Bill Walton (05:23): I may exaggerate, but we got a very high rating and then the bubble bursts and everything collapses and the rating agencies will say, "Well, look, we were just doing what we were told and work with the information given to us by the companies" and pointing the fingers in all the other directions. Well, they were- Frank Gaffney (05:42): They're only following orders. Bill Walton (05:44): ... Always following orders. It didn't really change the business models, even though there were a lot of problems with it. And so they're still getting paid by issuers to rate the bonds. And now they're seeking to get paid by companies to have them rated as green investors. And it's funny how they begin to split the differences. They're rating, even companies in the oil and gas industries as green. Bill Walton (06:10): There's one company that's in the business and it's a new oil and gas business, but they decided it's a green business because it's only owns the properties, but it actually isn't doing the drilling for the oil. And so therefore, because it's just a property owner, it's a green company. As I said, there's an awful lot of, I think, cynicism in this because Wall Street understands, there's a very popular investment product. There's a lot of people now who want to be thinking they're green investors, investing in environmental, social, and good governance policies and companies that promote that. And so investors want to buy it and the financial services firms and all the rating agencies and what have you, are willing to provide it Frank Gaffney (07:00): A little self dealing along the way, and a lot of smoke and mirrors, it sounds like, and this reminds us of something that apparently is afflicting the Chinese communists or at least their population as well, Bill. Talk a little bit about the property bubble in China and how green is now featuring into some of those shenanigans as well. Bill Walton (07:25): Well, the Chinese are nothing, if not alert and opportunistic. And the Chinese hide this ESG mania and the big property developers in China got into the business of selling ESG green bonds. And, this is another one of these categories that if you're not paying attention, sneaks up on you. Five years ago, there weren't green bonds, now because of the perceived investor appetite, they're slapping green on real estate bond offerings. Bill Walton (07:58): And that worked pretty well until the property collapse in China and the problems with Evergrande and now investors have bought these bonds are now seeing them trade about 30 cents on a dollar and it's not a small business. Chinese property companies issued almost $10 billion of green bonds in 2021, which was up from just two and a half billion the year before. And one company... This junk related Yazu, sold $562 million of green bonds last year. And they only had to pay a little over 6%, which is out outrageously low for a junk bond. And these bonds now, they bid at 21 cents on the dollar. Frank Gaffney (08:46): Is there a reason to believe that American investors have been snookered in this same space as well? Bill Walton (08:55): So we're selling green bonds in the capital markets all over the world. And this gets back to the conversation you and I have had over the last six months, investors have got to do their due diligence. And because your broker says, "Gee, this is a developing country, China's going to grow. You got to put some money in China," or they say to you, "Gee, this bond, this company is a green company and you want to promote cleaner environment, so therefore, this is an attractive security to own." You really got to look under the radar and you really got to do your own work before you jump into something like that. So yeah, it's happening. It hasn't happened as extremely here because we haven't seen something similar to the property collapse that we've seen in China in the last 12 months, but it can happen in any market sector. Frank Gaffney (09:46): I'm actually thinking of U.S investors in those Chinese green bonds, not just whether we're going to see a similar kind of pattern of self dealing and corruption and somewhat- Bill Walton (09:57): But U.S investors are included in the group that are getting these huge haircuts. Frank Gaffney (10:02): Yeah. Bill Walton (10:02): So doesn't matter whether you're Chinese- Frank Gaffney (10:04): That's my point. Bill Walton (10:04): ... or you're U.S, we don't get special privileges. In fact, there was an issue with the Evergrande workout, where they had a bond orders committee and the Chinese initially excluded all non-Chinese actors from the negotiations. And they wanted negotiations just between the local provinces, where the bonds were underwritten and Evergrande and the Chinese bond holders, and a couple of the big investors outside of China got together with a tough New York firm, and I think have fought their way into the negotiating room, but Chinese instincts were not to let them in. Frank Gaffney (10:49): And it remains to be seen, now that they're in, how well they're going to fare inside. Bill Walton (10:54): Not well- Frank Gaffney (10:54): Then again- Bill Walton (10:54): ... Not well. Frank Gaffney (10:55): Bill. And to your larger point, this is a problem of western, specifically, Wall Street capitalists, making substantial sums through commissions and fees and other arrangements with the Chinese, but their clients may not fare so well. And this is particularly why we believe our committee on the present danger of China of which you're... I'm proud to say a member and it's mad as hell campaign, is so important. We need Americans to wake up, as you say, to the reality that their financial manager's interests may not be the same as their own, especially when it comes down to aiding and abetting the threat from China, which brings me Bill, to another topic that I wanted just to touch on- Bill Walton (11:43): Frank, just one point I wanted to make. It's an old saw from the 1920s, there was a book that came out and it was titled, Where are the Customers Yachts? The brokers owned all the yachts and the customers owned barrels. Frank Gaffney (11:57): Yeah, and our friend Steve Bannon makes that point with some regularity. And so right. And if you're expecting a yacht and you don't have one yet, you might want to go to your financial manager and say, "Get me out of China." And there are a lot of good reasons for doing that. And we're going to have more info mention about how you can do it at our committee on the present danger of China. Website, presentdangerchina.org. Frank Gaffney (12:18): Bill, let me just ask you about another piece of the problem with China and what we are doing in under riding it, which of course is the practical effect of those investments. It's money into the Chinese Communist Party and it is used by them for whatever purposes they see fit. And some of it has to do with espionage. Frank Gaffney (12:41): The Department of Justice has... I believe starting in the Trump administration and continuing, to my surprise, somewhat in this administration, had a so-called China Initiative, where they were trying to run down at least those in academic circles in this country who have been involved in, what's known as The Thousand Talents program. Talk to us a little bit about that, and what's going on with this China Initiative at the moment. And whether the problem is bigger than just these academics and academic institutions? Bill Walton (13:19): Well, it is bigger. We've talked about the fact that Chinese have been really integrating themselves, insinuating themselves into every institution in America, whether it's a business or a research lab in a university or on the campus in universities, via the Confucius Institutes. And we have some instances where the Chinese have paid off American scientists. There's one scientist at I think MIT, there was paying $50,000 a month to turn his research over to the Chinese Communist Party. Bill Walton (13:57): And so there's anecdotal and statistical evidence that this is an ongoing push by China. And China's very good at trying to turn the tables on this. And they're taking kind of the thing we're dealing with now, which is pushing back against critical race theory. And they're simply saying, now this espionage, the attempt to capture China or Americans working on behalf of the Chinese Communist Party, is racist. Bill Walton (14:31): And so therefore, we shouldn't be enforcing our laws and protecting our own interests here. And it's working in part, I think it didn't work with Trump, but under the Biden administration and their effort to be seen woke, it would be interesting to see if they continue the justice department crackdown on espionage. And whether our Attorney General there will continue the initiative that Trump has taken. I fear not. Frank Gaffney (15:08): I fear not as well. And the point is, that there's a concerted effort to make him decline to continue to work on this. This whole idea that it's racist and so on feeds into many of the administration's worst instincts. Bill, we're following that closely and I know you will keep doing so. Let me ask you just one last quick question, if I can. Frank Gaffney (15:33): The Chinese company, Huawei, has been a serious problem in this country, to some extent, but really around the world for some time. And to the extent that it has inveigled its way into The Belt and Road Initiative, most especially, but into an awful lot of our allied nations. That problem is becoming more acute it seems, really by the day. And I wondered what your thoughts were on this company, where it stands and whether we are right to be pressing for its exclusion, certainly in our own country, but elsewhere as well. And if the Biden team is up to that? Bill Walton (16:24): The issues with Huawei are real and they are engaged in technology transfer and transfer that helps the Chinese military an intelligence gathering strategies. And so the sanctions we put on are working and they're working in such a way that Huawei's business... It was once the world's largest telecom equipment maker, and yet it's seen its sales drop pretty significantly in the last year or two, but the Chinese being the Chinese and knowing how Washington works, they recently within the last year have hired Tony Podesta, who's the brother of Clinton's White House Chief of Staff, John Podesta, they paid him over a million dollars in the last half year, lobbying The Biden White House. And so it's business as usual in Washington. And unfortunately the Podesta brothers don't see any problem in working with the Chinese to restore mortal enemy or a company that's engaged in part of that activity back to... They want to rehabilitate it. Frank Gaffney (17:39): And again, that activity is espionage. It is data harvesting. It is penetrating this society as well as others where it's been able to get its- Bill Walton (17:50): Well, he's not alone. They've spent over three and a half million dollars in 2021, which is about roughly eight times, which they spent in 2020. And so they're not sitting back- Frank Gaffney (18:06): They're not taking it lying down as they say. Bill Walton (18:09): ... But the question you have to ask is you're sitting in a... Actually, you don't do it so much with the lockdowns and the vaccine passports, but if you're sitting in a Washington restaurant, looking around at the lobbyist, you have to ask yourself, "How many of these lobbyists in this restaurant or on the Huawei payroll?" Frank Gaffney (18:27): Or otherwise working for the Chinese Communist Party. That's a pregnant question to which we'll return with you next week. Bill, thank you so much for joining us. Bill Walton. Check out The Bill Walton Show folks, a must see TV for sure. We appreciate your time. Thank you. We'll talk with you again Monday next week. God bless. Next up. We will speak with Karen Sigmund about the loss of a great American, who he was, why it matters? Right after this.