YouSaid · the spoken record

Mitu Gulati

lines on the record: 31
first: 2025-04-18
most recent: 2025-04-18
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Of, say, an auction for Greenland, where the Greenlanders would get the highest price. This talk about security reasons sounds more like a regulatory taking, where we get to take it at the price we set because it is important for security reasons. It is a technique that Trump has used in the past in his property dealings and could try to use here, although I don't think there's any international law equivalent, but we're making up international law in the modern era.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“By Greenland. We could. Now I suspect, okay, I'm building conspiracy theory upon conspiracy theory, and maybe this is just a bridge too far. But if you go back to techniques that Trump was very fond of using, say, in his casino days, he really didn't like market processes where, say, the US would be bidding against Denmark and maybe Germany and maybe France for who would pay the Greenlanders the highest amount in order to acquire Greenland. Instead, there's been a lot of talk about security reasons. The security reasons and the imperative that the US must have Greenland and no talk”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“maybe the property interests to the extent you think of sovereignty interests as property interests lie with the people of Greenland and so the 57,000 quote unquote citizens of Greenland maybe Trump could offer to pay them each 1.5 million dollars in a Swiss bank account and give them each a little house on the beach in Santa Monica and give them one of his golden visas it could happen it would be brand new international law but entirely plausible the question though is where's he going to get the money from he would really have to borrow a large amount of money and so we come back to the question of issuing more US sovereign debt in a Context in which we're trying to reduce the sovereign debt”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“The side that wins does not have to pay the debts of the side that loses. Bondholders, I think, have been quite unaware of this possibility. Now, maybe it will all get worked out, but I don't really see how we can avoid working this out. But back to Greenland. Now, can we get Greenland? Well, yes, we can get Greenland, even though borders are not supposed to change. We could, in theory, there's no international law prohibiting us purchasing Greenland. The question is, who do we purchase it from? In the old days we would adjust purchased it from Denmark. They kind of owned Greenland as property, but now we don't think of post colonial states as property, although we don't quite know.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, this is good too. But can I just go back to what the implications of what Joe's language in that? In the 14th Amendment for Ukraine, if Putin takes the position that what has happened in Ukraine is an independence movement and there was a civil war, then Putin could invoke basically our 14th Amendment and the laws that followed since theirs have been cases where the British took the similar position in the context of the Boer War and say, I am not responsible for any of the debts incurred by Ukraine because that was a civil war context.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“That stuff is so important. Okay, I'm getting so excited, so I apologize for raising my volume. That is the US saying to international creditors, we will not pay if you lend for insurrection. That is civil war. We will not pay, and we think this is fine by international law. Remember, in the early days, we were very concerned, actually none of us remember, we were very concerned about following international law because we didn't want other countries to send in the gunboats because we were violating law. It was accepted arguably at that time that it was okay not to pay for debts incurred by the rebels in fighting in a civil war.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so That last part, when Joe raised this at the beginning of the podcast, I think he was focusing Joke correctly of the devil. On the validity of the devil”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you have brought up one of our favorite topics, the doctrine of odious debts. And the doctrine of odious debts is really about some despotic leader, a kleptocrat who's borrowing a lot of money from usually foreign creditors and then absconds with that money. And should the new government that comes into place after kicking out the kleptocratic leader be responsible to those creditors, especially if those creditors knew they were lending to a kleptocrat? What Joe raised with the change of state borders is a more obscure doctrine that falls within the subset of odious debts, but is a little bit different, and more importantly has much more legal basis for it. So, Joe, can we go back to the 14th Amendment? Okay, can we read that language that you read?”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Or does baby Ukraine pay all of this? Does it get divided? It turns out that the laws from the era of conquest, those are the laws that apply even today of what happens when the borders of a state change, those laws are really unclear. And so we'd have to decide in the modern era how would those old laws apply given that We pretend that borders don't change and we pretend that conquest is not allowed. I mean, Putin takes the position that what's happening in Ukraine is an independence movement that started domestically and that he's just encouraging it. Well, there is a whole set of laws that apply to civil wars. And if they take the position of this is civil war, Then there is nineteenth century debt law that applies to a civil war.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, this is gonna happen. It's not good happen. You're raising an incredibly important question. So there is Greenland, but Greenland's kind of fun to talk about. Although, you know, Trump seems very serious about it. He keeps telling us, don't think this is a joke. We have to have it and I will have it. But it's going to be directly relevant in the context of Ukraine. So let us say that Mr. Putin is able to negotiate with President Trump to take half of Ukraine. So Ukraine becomes baby Ukraine. What happens to the enormous pile of debt that Ukraine has that is unpaid and that was restructured in the context of war, including billions and billions of dollars that are owed to the US and to European allies? Does old Ukraine pay all of this?”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't know. We don't even know. I mean, we know the interest rate is 3%. I've never met anybody who's actually seen the document back in 1917. I don't think it would have been governed by the law of New York or the law of England. So who knows what statute of limitations would be? Who knows today whether or not there is some kind of international statute of limitations that would apply? And would it apply in the context of SEDOF? This is just for lawyers. This is a bonanza. We could be working on this forever. But it seems a bit crazy, but nothing is crazy these days.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“All of that work, but generally in the interest of letting Europe recover, I think the US decided better not to push this. But Congress never allowed those debts to be wiped out completely. And so in some sense, this has always been an option. I have heard treasury officials, people negotiating debt restructurings talk and every once in a while when they can't get the UK to do what they want, US officials will kind of snidely mention, you know, there's that World War I debt that you never paid and everybody laughs and knowing way.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'm not sure. There is extensive writing about the negotiations. I think they went all the way up to the 1970s. And for those who study financial history, post-World War II was a truly horrible time in Europe. The US was trying to help European countries recover. The UK in particular had taken the position after World War I that the US should try to collect this money from Germany because really Germany owed the money to the UK and France in reparations and sort of the consensus was World War I reparations were a stupid idea and resulted in World War II. This is Keynes and”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Those can be, and the legal term is set off. Two sets of debts. Can be set off against each other. It is a technique that is used every day in the markets. It's just who would have thought that it could be applied in this context, but it can be an in fact in the Russia Ukraine context, the Biden administration thought very hard about using setoff techniques to get funding to Ukraine. So this is an idea that's... Out there, current, but applying it to the UK debt and then maybe even applying it to the French debt from World War I would be truly radical. But maybe it wouldn't destroy the markets in the same way as the first swap that we discussed.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“The debts that were owed to the United States by Great Britain after World War I. So I think it's about 4.4 billion or so that was owed. And Great Britain resisted paying and the US tried to get it paid. And then finally we kind of gave up and then we had World War II and all sorts of things. Those debts have never been written off officially. They are still official debts of now the United Kingdom to the US. They had interest rates on them. I think the interest rate was 3%. If you compounded that amount to today's values, that would be many trillions of dollars worth. Okay, so that's old. But how would you engineer this? That's a debt that is owed by the United Kingdom. To the US. The US owes the United Kingdom because the United Kingdom by the treasuries own estimates holds upwards of seven hundred billion in US treasuries”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Legally, that is much more viable. So, this has come up in the context of there's a recent book, very recent, by a senior US Treasury official about the negotiations between Andrew Mellon and Winston Churchill about”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, this language is so important for a variety of reasons relating to multiple debt crises around the world, but I won't go into those. Let's just look at the language about the validity of the U.S. debt. Arguably, that language goes back to the 1800s at least when often Municipalities would say a certain debt was illegally issued by this government in place that did not have the proper authorization to issue it. So if that's the meaning of validity, that it's about the original issuance, the Trump administration could say, we're not challenging the validity. We think your debt is very valid. We're just extending the maturity. And we do promise to pay you. Let's say they extend the maturity by 100 years. We promise to pay you in 100 years.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“I love it that you're bringing up the 14th Amendment and the debt language of the 14th Amendment that my students don't even know exists.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“So my read with no proof is that there are these rare instances where the market thinks, you know, this abrogation of contractual rights, while it looks like a violation of the rule of law in every which way possible is necessary to make us all better. And therefore, instead of penalizing the government that does it, we're going to reward them and we're going to lend even more. Arguably, Greece in 2012, where Greece also legislatively abrogated contractual rights and did something very similar, is a similar situation where the market didn't penalize them anywhere near the amount. That many sages on Wall Street were saying would happen. Now, I'm not saying that that's what would happen now. I mean, this administration seems crazy.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's around 1935. I know I'm going to mess up which year Congress. Did the abrogation, and then when the Supreme Court decision came out, but the predictions were this will destroy the US ability to ever borrow in the future. And that did not happen. There's some famous articles about this.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Moralistic right to having my money paid back at the time when you said you would paid back. Now that's really tough and we have historical precedent for this going back to the 1930s when we were in deep trouble because of gold. We didn't have enough gold to pay everyone in case they invoked their gold clauses, which entitled holders of certain U.S. treasury states to get paid in gold if they had gotten paid in gold or asked to get paid in gold, the US would have essentially gone broke. So the president, backed by Congress abrogated the gold clause protection in contracts, and it was thought that surely the Supreme Court would say this is not allowed. You cannot just Take away people's contractual rights and the Supreme Court in one of the most famous cases of that era said it was okay”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Implausible, but this government has pushed its legal authority in many ways. Now, what is most likely to happen that the U.S. Treasury, if they ever went down this path because they needed money and rates had gone up and they wanted to take advantage of the fact that their old borrowing was at low rates, what they would do, I think, the pattern we have seen is that they would extend the maturities and then Congress would quickly pass a law confirming it. That's what we've seen in all of the other Trump executive orders plus Congress quickly passing a law. And then there would be lawsuits. There would be lawsuits left and right saying this is a violation of the Constitution. Because remember, there's no contractual protection. So now you have to say you've signed. Somehow taken my property and I have an implicit.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, my students asked me this in class a couple of days ago, so I had to sketch it out for them. So I said, step one, the U.S. Treasury Department and the Secretary of the Treasury have authority to manage the maturities of U.S. treasuries. What does manage the maturities mean? It really does mean, you know, issuing bonds of different maturities, managing your yield curve. But could it include unilaterally extending the maturities seems like”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“But the rest of us, dupes, like me, would just have to sit with. US extending the maturities. Now, the details are important, but if you are willing to let me bore you with them, I can sort of sketch out the scenario.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the default for a credit default swap really only applies to the people who are holding credit default protection on U.S. Treasury. So they would be able to get their money back from somebody who had provided them insurance.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have to be clear, and I have to be geeky here in my law professor mode, please. There are at least three different types of default. So there's a default on the contract, something you could sue somebody for breach of contract. It would not be a breach of contract. U.S. government is allowed to do this. Then there's default in terms of would it trigger the handful of credit default swaps that are written on US Treasury? Well, that sort of depends on what the credit rating agencies decide. And based on what we saw in Greece 2012, they probably would say it was a default for credit default swaps. But that doesn't apply to everyone. So those are the two big default scenarios.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Anybody and everybody who holds U.S. treasuries should go and look at the contract terms for their US treasuries and ask the question Do my contract terms restrict the US Treasury Department from saying to me tomorrow? You know we need a little more money, so we're just extending the maturity of your debt by another twenty years at the interest rate that you lent to us. Is there anything restricting that? I don't think you'll find anything.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, and I think so, you know, we talked about Trump and taking him seriously and taking the kinds of things that he has done in the past seriously and what he's willing to do and restructuring distress debt is something that he's done a lot of. And he talked about it prior to his first presidency when he talked about, oh, the US debt. Not a big deal. We could just inflate it away or something like that. A debt swap using the power of US governing law is really not that insane both in historical contexts and in what we could do. It is insane in terms of norms that have been built carefully over the last 60, 70 years. But a trump is not Alexander Hamilton, I think.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“Interested me, which was sort of swapping out short term US treasuries for longer term low interest US treasuries, which was talked a lot about as a debt swap with our allies, but really was just an extension of maturities at a low rate when the market might not actually be giving you the low rate. That has become, I mean, that was, I think, implausible when you guys talked about it. It was just sort of, oh, here's some crazy ideas. People are now emailing and asking sort of respected market people, how could this happen? And what would the legal barriers be? And what are the ramifications?”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I actually think that I heard about it on one of your podcasts, about the Mara Lago. It's all our fault. And then I dug into it and looked at one of the proposals in particular.”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm so excited to be here. I shouldn't be excited about all the crazy loony things that are being discussed, but From an academic perspective, this is just heavenly, even though I might be jobless soon”
2025-04-18 · Odd Lots · Mitu Gulati on Whether Trump Could Restructure US Debt · IDENTIFIED FROM THE TRANSCRIPT · source