Peter Zeihan - 2019 Land Investment Expo - "Millennial consumption"
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"Millennial consumption" has kept us out of recession since 2009" - Peter Zeihan #LandExpo19
PETER ZEIHAN Geopolitical Strategist, Zeihan on Geopolitics
Peter Zeihan is a geopolitical strategist, which is a fancy way of saying he helps people understand how the world works. Peter combines an expert understanding of demography, economics, energy, politics, technology, and security to help clients best prepare for an uncertain future.
Over the course of his career, Peter has worked for the US State Department in Australia, the DC think tank community, and helped develop the analytical models for Stratfor, one of the world’s premier private intelligence companies. Peter founded his own firm — Zeihan on Geopolitics — in 2012 in order to provide a select group of clients with direct, custom analytical products. Today those clients represent a vast array of sectors including energy majors, financial institutions, business associations, agricultural interests, universities and the U.S. military.
Peter is a critically acclaimed author whose books — The Accidental Superpower and The Absent Superpower — have been recommended by Mitt Romney, Fareed Zakaria and Ian Bremmer. Peter is also a highly sought after public speaker. With a keen eye toward what will drive tomorrow’s headlines, his irreverent approach transforms topics that are normally dense and heavy into accessible, relevant takeaways for audiences of all types.
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The post-Cold War global order is ending because the United States no longer has strategic incentive to maintain it, and the Trump administration is actively dismantling it through bilateral trade deals and military retrenchment, which will create regional conflicts and reshape global power but position the US favorably due to its geography, energy independence, agriculture, demographics, and military superiority.
- The US subsidized the post-WWII global trade system to contain Soviet expansion, not for economic benefit; without that rationale, maintaining the order serves no American interest
- Trump's trade team (Bolton and Lighthizer) is deliberately breaking multilateral agreements and imposing bilateral deals to extract maximum leverage from allies
- Most other major economies face demographic collapse, credit crises, or geographic constraints that will prevent them from competing with the US in a post-order world
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Countries with young, consumption-led demographics like India do not necessarily need to trade with the outside world because their young populations can consume most of what the country produces, unlike countries with older demographics that must export to absorb their productive capacity.
“India here is a consumption lead at demographic whenever you have a bulge in your population below age 40 it's all about the spending kids cars college houses pot spend spend spend spend spend it but they're new their incomes have yet to expand to match their needs so it's college loans car loans mortgages it's high growth but also high debt requires a lubricated financial system funny thing about a young demography like India it does not necessarily need to trade with the outside world because all those young people can consume most of what the country produces”
Brazil's agricultural production system is the most expensive input cycle in the world because the tropical cerrado requires clearing fibrous trees, poisoning soil with lime for 20 years, and then using 3-4x fertilizer per crop compared to temperate zones.
“brazil's agricultural zone is an area called the cerrado it is a tropical prairie and it has this kind of weird fibrous tree that kind of crowds out the roots of anything else so if you want to farm the sarado you have to take a bulldozer out there after it rains chained up these trees drag them out by the roots and then spend the next 20 years poisoning the soil with a lime until you kill the acid that leaves you with a soil that's the consistency and nutrient profile of beach sand which means you have to put three and four times as much fertilizer per crop that you would here”
Brazil has the most unequal economy in the world and has been for 200 years because only wealthy people can afford the infrastructure costs to terraform the land for agriculture, leaving everyone else in poverty and creating vast favelas alongside beachfront luxury.
“the reason for the juxtaposition is pretty straightforward they're so little in Brazil that is easy develop that the only people who can become wealthy in Brazil are the people who started wealthy and had the money to put in the infrastructure into terraform the land everyone else is dirt poor this is the most unequal economy in the world and has been for 200 years”
The United States is the least trade-dependent major economy in the world, with only about 8% of GDP coming from exports and roughly half of that within NAFTA, meaning the US can sustain a regional rather than global trade system without significant economic disruption.
“we don't do it trade was the bribe we're the least involved economy in the world last year only about 8% of GDP came from exports about half of that's within NAFTA so the US can have a regional trade system without meeting a global trade system”
Japan is the world leader in automation and robot deployment because its aging population and workforce shortage make it economically necessary, and Japan has responded by adopting automation and 'de-sourcing'—moving industrial plants to other countries to service growing demographics abroad.
“there's a reason though the world leader in automation now a funny thing about robots they don't vote yet which means it doesn't matter where you put them so Japan has become the leader in not outsourcing or resourcing but D sourcing where they pick up big chunks of their industrial plant and plop it down in other countries to get on the right side of currency and political risk but most of all to service a growing demographic”
Iowa has transitioned from 92% coal-dependent electricity to coal-free in under a decade because natural gas from shale production is cheaper than coal, demonstrating economic displacement driven by cost advantage rather than regulation.
“here in Iowa you are in the process of making that transition right now you were a 92% coal state three years ago you're gonna be a zero percent coal state within ten years forget regulation it's just hard to beat with free”
New Zealand is the world's largest dairy operation and exporter because of climate (year-round grazing), rainfall (eliminates supplementary feeding), and government deregulation (Deputy PM eliminates rural regulations), and has doubled its dairy herd in 20 years with likely another doubling to come.
“New Zealand is now the world's largest dairy operation the world's largest dairy exporter couple reasons for that number one climate it doesn't get cold enough in the winter that you have to bring the cows in doesn't get hot enough in the summer that you need to bring cows in it rains every other day so you never have to put supplementary feed out for them lowest production costs in the world they've doubled the Dairy Herd in the last 20 years they're probably gonna double again in the next twenty second reason government support the Deputy Prime Minister is a dude who will do anything move heaven and earth to make sure there are no regulations on any rural residents at all”
Brazilian geography features an escarpment with mountains at the interior same height as the Appalachian chain, forcing all agricultural products to be shipped by truck to the coast on switchbacks with 'highest transport costs for agriculture in the world', with all soy exports dependent on 'one road' that gets 200-mile traffic jams during harvest season.
“geography this is an elevation map and that kind of oranges butterfly down there at the bottom those are mountains that are about the same high as the Appalachian chain you'll notice in the middle of the butter flower there's a break that's the city of Sao Paulo think of Brazil like a table that has had two legs knocked out but the high side is on the coast so any product you ship can't use a navigable waterway Brazil has none it has to go by truck to the top of that escarpment and then zigzag down on switchbacks to the coast highest transport costs for agriculture in the world that also changes the political system oh yeah there's the one road all soy exports one road can you imagine they get 200 mile traffic jams every news it's a harvest season”
The Greater Midwest contains the single largest chunk of contiguous arable temperate zone high-quality farmland in the world, with the Mississippi River system having more navigable waterway than the combined internal systems of the rest of the planet, making North America the most securable and richest territory in the world.
“the tan area is the greater Midwest single largest chunk of contiguous arable temperate zone high-quality farmland in the world as important as that is it's really the blue line so you guys are gonna add you get it moving things from A to B is kind of a but if you floated it's only 1/12 the cost the greater Mississippi by itself has more miles of navigable waterway than the combined internal systems of the rest of the planet in addition forests and lakes to the north deserts and mountains to the south ocean moats on either side our chunk of North America is not just the richest territory in the world it's the most securable”
Only six countries in the world can expand agricultural output in a constrained, difficult maritime future: the United States (capable of expanding 'more than anyone else put together'), Myanmar (rice), Australia (wheat and beef but inconsistent due to 80% desert), New Zealand (dairy leader, can double again), France and Argentina (broad climate zones and navigable rivers).
“there's only six places in the world can actually expand output the first of course is here and we can expand it more than anyone else put together second Myanmar anybody care about rice in the room okay moving on next Australia...next is New Zealand...and then finally France and Argentina...these are the really the only countries you need to worry about in the future”
Global capital flight to the US has exceeded 7 trillion dollars in the last four years, with capital fleeing every major financial center outside the US because the US is the only safe haven in a geopolitically unstable world.
“every single dot up there that's not in the United States has had a net transfer of funds to the United States for each year for at least the last four in total we are talking at this point in excess of seven trillion dollars of capital flight has come to the US market”
The United States possesses overwhelming military superiority: there are 11 supercriers in the world, all American; there are 20 jump carriers globally with half American; and one American supercarrier battle group has more long-range combat capability than the combined navies of the rest of the planet, with other nations only equaling American naval power by 2040 at current build-out rates.
“now on the right you've got a jump carrier on the Left you've got a super carrier there are 20 jump carriers in the world half our American there are 11 super carriers in the world they're all American it takes seven jump carriers to equal the firepower of one super carrier in the deep blue sea one American super carrier battle group has more long-range combat capability than the combined navies of the rest of the planet at current rates of global naval build out the rest of the world combined will roughly equal American naval power in the year 20 to 40”
President Moon of South Korea was the first world leader to negotiate with the Trump administration and immediately caved on all trade concessions because South Korea cannot exist without American troops and must prioritize military alliance over trade advantage.
“president moon of South Korea was the first leader in the door he said I want to deal no matter what version of the world after the order well no matter what it looks like I have to get with North Korea and Japan and China and my country cannot exist without American boots on the ground so whatever you need to do to adjust our trade deal to make sure that you're still involved let's do it they caved on everything”
After the G7 summit collapse with Trudeau, Robert Lighthizer observed that Canada had been dragging its feet in NAFTA talks, and threatened that without Canadian agreement the US would simply proceed with Mexico alone because Mexico has a larger economy, is growing faster, has better demography, and is the country of the future, leaving Canada with only seven days to agree or be excluded.
“and light Heiser's like oh yeah see Canada had been dragging its feet in the talks he's like you know nothing's gonna happen without our agreement we're too important but now that the relationship had collapse he was like we've got a deal with Mexico Mexico is the larger economy Mexico is growing more quickly Mexico has the better demography Mexico is the country the future you're just Canada and without the global order you're nothing so you've got seven days to agree to our terms or we'll just do it without you”
Shinzo Abe thought he had negotiated a deal with Trump on security and naval cooperation, but the US then slapped Japan with aluminum and steel tariffs, signaling that Trump's promise of multilateral alliance building to take down China was not sincere.
“Shinzo Abe a thought he had a deal he was the second world leader to visit Trump after the inauguration and they cut a series of agreements on security and naval cooperation and intelligence and then all of a sudden the United States slaps Japan aluminum and steel tariffs and he's like what's going on here we had a deal you and the caries were being fraught and all the alleys were gonna be hiding to you it was gonna be glorious we were to take down China”
Angela Merkel attempted to convince Trump to maintain US security guarantees by explaining Germany's geography and history—surrounded by rivals, requiring superiority to survive, and threatened by its own strength—but Trump responded by understanding the implication and then billing Germany for services rendered, effectively ending the US-NATO-EU-Germany relationship.
“she came in to explain that Germany's in the middle of the northern European Plain which means that it's got rivals all around it and the only way that the Germans have ever discovered that they can exist in that environment is to be better stronger infrastructure a better educational system and more advanced workforce a more sophisticated technological base but you take anything as big as Germany and you make it as advanced as Germany and it's very existence threatens everyone around it so European history is this horrible pendulum that swings between periods of extreme German strength which causes a pan-european Alliance to tear them down in a war and then extreme German weakness where Central Europe becomes a black hole that sucks everyone in and she says mr. president do you realize that if you do what you say you're going to do if you remove the security overwatch that allows us to get past our history and your geography that that's not just the end of NATO and that's not just the end of the European Union that's the end of my country his response well I do now”
The post-WWII global free trade system was fundamentally a bribe to maintain a Cold War alliance rather than an economic strategy for US benefit, where the US used its Navy to patrol global oceans allowing allies to access raw commodities and export finished goods, but this only worked because allies sided with the US against the Soviets.
“we brought our allies together and we tried this thing called free trade we used our Navy the only one to survive the war to patrol the global oceans so that anyone could go out anywhere and purchase any raw commodity bring it home process it into a finish good and then re export it for hard currency there was just one catch you had to be on our side versus the Soviets we bribed up an alliance”
While the order's collapse will be bad for people in the near term, particularly those dependent on global trade, in the long term it will work out well for the US because of the five structural advantages (trade, energy, demography, geography, military).
“I know that's grew it not great for people in this room in the short term but in the long term it's gonna work really well we'll get there in a minute”
Canada's ratification problem stems from Trudeau losing leverage—his previous advantage was Canadian security importance to the US (missile defense), but Trump has abandoned that framework, leaving Canada with no leverage and forcing Trudeau to accept unfavorable terms.
“Trudeau because of the seismic shift in relations with the United States he's been caught on the back foot it used to be that Canada would leverage its position in American security affairs to get economic concessions well now that the United States no longer needs Canada for you know protecting our flight risk it used to be that the Soviet Union would launch missiles over Canada hit the United States that's why the Canadians always had more leverage that's why they were able to get more exemptions for their agricultural goods particularly from come back well that's all over Canada has no extra leverage now and they are in the process of adjusting to that”
Without the American security guarantees that have underpinned the global order, local powers will pursue regional conflicts to protect their interests, resulting in dozens of brush fire wars concentrated in areas that control three-quarters of global energy shipments, three-quarters of global manufacturing supply chains, and three-quarters of global agricultural shipments—all areas the US has little economic interest in.
“and if you remove the Americans and let the chips fall where they may local powers whether out of desperation or opportunity are going to feel compelled to look after their own interests that means we get dozens of brush filer wars with these being the most intense shooting zones folks that's three quarters of global energy shipments and three quarters of global manufacturing supply chain setups and three quarters of global agricultural shipments and what does it all have in common the Americans really don't care it's not their trade and for the most part it's not even their allies”
With hard Brexit causing 20% GDP loss, the UK is seeking a bilateral trade deal with the US from a position of desperate weakness, mirroring WWII when Churchill asked FDR for aid and had to surrender every US military base in the Western Hemisphere in return, making the UK again a strategic subservient to the US.
“and those are the situations in which the United Kingdom is coming to the United States seeking a bilateral trade deal now the last time Britain was in this situation it was world war two they were on the ropes versus the Nazis and FD I got a call from Churchill and Churchill says look if you're not gonna get in this fight at least give us some equipment...they're not free as payment we'll take every single military base you have in the Western Hemisphere fine...for the next 50 years the United Kingdom was a strategic subservient nation to the United States we're gonna do that again with this new trade deal because the Brits have no leverage”
China attempted to prevent the Trump-Kim summit by forcibly summoning Kim Jong-un to Beijing and putting him in a baby chair opposite Xi in a booster chair, but Kim refused further Chinese engagement and called Trump instead after realizing China would not support North Korea.
“so he's like we're never talking to these people again call Trump's tell them the summit's on the Chinese lose their minds the Chinese forcibly summoned Kim jong-un to Beijing and when they realized they can't talk him out of it they put him live on television and they put him in a little baby chair opposite oh gee who was in a booster chair so he can lecture down to the wayward province and so when Kim finally leaves and gets back on his training goes homes like we're never talking to these people again call Trump's tell them the summit's on”
In 2030, the United States will be the only developed country with both significant consumption power and significant investment capital, while all other wealthy nations will be entering demographic collapse, making the US the unique absorber of global exports at the exact moment when the global order is ending.
“today courtesy of the Millennials the United States at the top consuming power and today courtesy of the boomers the United States is the top investment power but in just 11 years the United States is the only consumption power and the only investment power we are the in the great transition just as the world needs the United States as the United States becomes the only country capable of absorbing global exports it's lost all interest in doing so”
US shale crude production has grown dramatically since 2012 and the United States is functionally achieving energy independence now, with technical energy independence coming within 10-16 months as of the speech date, severing the last economic link between the US and the broader global system.
“back then we produced about 4 million barrels per day of shale crude it was important it was strategically significant but it really wasn't a game changer and it was pricey since then we've had breakthroughs and things like water management seismic and drilling and here's where we were as of three weeks ago folks energy independence is not something for the distant future functionally were there now technically we will probably be there in about ten to sixteen months”
The US has an unprecedented baby boomer generation—the largest as a percentage of the population the US has ever had—whose capital wealth has made the US capital-rich, but in 2022 the majority of baby boomers will move into retirement, shifting from investors to withdrawers and inverting capital costs from historically low levels to quadruple increases.
“I draw attention to you see there's kind of a double ball to the top bulge there that's the baby boomers though the largest generation is a percentage of the population that the United States has ever had and their numbers in that capital rich demographic have made the United States capital rich unprecedented Lee capital rich perhaps just a little too capital rich they're nearing retirement and they're shoving money into investments that are riskier than they would normally go for because they're trying to get that mythical extra 1% of return before they're done”
Brexit was always going to end in a hard divorce because the EU's veto structure means no version of a Brexit agreement could satisfy Ireland, Spain, the Netherlands, Germany, France, and the British Parliament simultaneously, making economic depression and 20% GDP loss unavoidable.
“brexit was always always always going to end with a hard divorce there was never going to be a deal the way the European Union works if there is ever a big issue each individual member has veto power and there is no version of a brexit divorce agreement that could make Ireland and Spain and the Netherlands and Germany and France and the British Parliament happy no way that this could go except for a hard brexit which means the United Kingdom is facing down an economic depression that's going to take 20% off of its headline GDP over the next three years that is unavoidable that is baked in”
North Korea will never denuclearize because its geopolitical position requires nuclear weapons for security, but the Trump-Kim summit successfully eliminated long-range missile capabilities and test facilities, preventing North Korea from threatening the US while allowing it to retain regional deterrent.
“now is North Korea going to denuclearize absolutely not just like the South Koreans are in a tough neighborhood so are the North Koreans they need that nuke but what they don't need is intercontinental ballistic missiles and if you look at the aftermath of the first Trump Kim summit all of the changes of the North Koreans actually made had to do with delivery systems with destroying the test facilities for long-range missiles because if they can deliver a missile a thousand miles that covers all of populous northern China all of Japan and all of South Korea that's all they need they don't need to hit San Francisco and now they can't it's not very nice for the United States to say yeah you know East Asia this is your problem but from a national security point of view it's kind of brilliant”
Private capital to enterprises doubled in seven years during the 2000s boom (subprime), causing a recession that knocked 5% of GDP off, followed by recovery at a more sustainable 'much closer to the century average' pace; the eurozone tripled credit in the same timeframe causing a worse, longer crisis.
“this is the private capital curve this is all capital to all private enterprises that are not financial institutions from 2000 the current that slope up to the peak that is the 2000s boom that is subprime we had a doubling of credit in seven years that was too much too fast we had a recession knocked 5% of GDP off we've since been growing again at something much closer to the century average much more sustainable I'm going to show you the same data but in relative terms instead of absolute so again that blue line doubling of credit in seven years here's the eurozone or the same timeframe they had a tripling their financial crisis hit harder lasted longer”
Donald Trump's core strategic insight is accurate: the post-Cold War global order is no longer serving American interests and has never been intended to serve American economic interests, only to maintain alliance discipline.
“the glory the horror of Donald Trump is at its core he's got a really good point strategically the global order is no more longer serving American interests but economically it was never supposed to we subsidize the Alliance the Alliance fights the Soviets that was the deal”
Bolsonaro is allied with Brazilian agriculturalists and will reduce regulatory burden and increase deforestation, but combined with global capital crunch and single-road bottleneck, this creates conditions for social revolution in Brazil.
“this guy is in league with the agriculturalists of Brazil so expect the regulatory burden and expect a lot more slashing and clearing to happen in the rainforests as they finally have a friend in power but if you combine the inequality of the system and we're just on the verge of a global capital crunch and there's only one road that takes all this stuff to market this is how social revolutions happen”
John Bolton's primary target is the People's Republic of China and the question is not whether Bolton and Lighthizer are trying to wrestle China into a subservient position, but whether they are trying to crash the Chinese system outright because that would be easier.
“the country that he wants to take down as the People's Republic of China now the guy in the left maintains a much lower profile that's Robert light Heiser...now this is not his first stint in government either back in the 1980s he worked for Reagan...this is the guy who's also number one target is the People's Republic the question in my mind is not are these two gentlemen trying to wrestle China into a subservient position it's whether or not they're just trying to crash the Chinese sysm system outright because that would be easier”
Blocking Brazil's single export road would stop all Brazilian agricultural exports, meaning the US faces only a few remaining competitors in global agriculture within the next 5-10 years because most countries will be unable to compete or face instability.
“and since only one road takes it all you only have to cut one road for Brazil to cease being an agricultural exporter we are in the final years of you facing Brazil as a competitor”
During future global energy crises, the US will shut off its export system for oil, capping US oil prices at $60-70 per barrel, but the US will continue using domestic natural gas feedstock for critical inputs, giving US agriculture manageable input costs while competitors face energy crises.
“and that's before we have another global energy crisis which will happen and when that does happen two things will go down number one with the speed of the tweet will shut off our export system and you'll have a ceiling on oil prices here of probably about 60 or 70 dollars a barrel but we actually use a different feedstock for all the inputs we use every day so you have manageable important crisis prices here and all your competitors in the wider world are basically screwed”
In a world without easy maritime trade or finance, most countries cannot feed themselves because they are net importers of grain-based calories, and countries that import more than half their foodstuffs face at least 35% reduction in their ability to feed their population, creating global famine conditions.
“in a world without order in a world without easy transport in a world without easy finance these are the countries facing at least a 35% reduction in their ability to grow the crop in the first place folks this is what famine looks like”
South Korea, facing an aging demographic with a large cohort aged 40-65, must export because mature workers at the height of earning power invest rather than consume, creating a capital surplus and need to export high-value goods like Samsung phones.
“you've got a big bulge there above 40 40 to 65 now this is the mature worker category these are people who the kids have been sent on their way the house has been paid down but they're at the height of the careers their earning power is very high a system like this is gonna have a big tax base and all these folks who aren't spending very much they're investing the difference those was a lot of capital sloshing around a country like South Korea is gonna have great infrastructure good career mid-career tree training with good mid-career training and and highly value-added industry but it has to export because those older workers aren't gonna buy all of those Samsung phones it has to be sent abroad”
Foreign capital seeks three big sinks: T-bills (safe but low-return), residential real estate in gateway cities (which explains high property prices despite vacancies), and shale bonds (hard assets with reasonable returns and implicit government guarantees), but really wants agricultural land in the Midwest, which is the gold standard for capital flight.
“the places that that money is currently going three big sinks number one tea bills not very exciting but you know what's rock-solid number two residential real estate this is one of the reasons why property prices in the big gateway cities like San Francisco Santa Monica Seattle Miami New York have been so strong despite the fact that nobody is living in these apartments and then finally shale bonds because what these foreigners are looking for is a hard asset with a reasonable rate of return and ideally some sort of local government guarantee and all three of these check at least two of those three boxes but you know what they're really after what you have agricultural land in the Midwest has considered the gold standard for capital flight”
Robert Lighthizer, US Trade Representative, served under Reagan in the 1980s and was Reagan's 'hatchet man' assigned to Japan, where he would disassemble his translator's microphone and perform a GI Joe war with the pieces while Japanese negotiators presented their rebuttal, demonstrating willingness to use leverage and disrespect as negotiating tactics.
“Robert light Heiser he's the US Trade Representative and the USTR is responsible for negotiating and implementing all US trade deals he's been a very busy boy of late now this is not his first stint in government either back in the 1980s he worked for Reagan...light Heiser was the Reagan administration's hatchet man assigned to Japan and whenever he got his orders from the White House he'd go over to the Japanese Foreign Ministry lay out the American position and then when the Japanese started with a rebuttal he would take off his translator microphone disassemble it there in front of him and have a little GI Joe war with the pieces while they presented when they were done he put it back together put it back on is like oh well that was that was absolutely riveting but we're gonna do it all we're gonna do it my way right”
Chrystia Freeland, Canada's Foreign Minister, is one of the top 10 smartest people Western civilization has ever produced, but recognized she was the wrong person to negotiate with Trump because Trump requires feeling like the smartest person in the room, which would never happen with Freeland present.
“this is Cristina Freeland she is the Canadian foreign minister in my opinion she's one of the top 10 smartest people Western civilization has ever produced three years ago I beat her in a debate but she's foreign minister so let's just call it a wash she realized five minutes into her first meeting with Donald Trump that she was absolutely the wrong person for the job Trump has this little foible he feels he absolutely must be the smartest person in the room and that was never going to happen as long as Freeland was in the same zip code”
Justin Trudeau is Donald Trump's favorite world leader because he never speaks, just nods and smiles, allowing Trump's inner monologue to fill in the gaps with complimentary thoughts—a strategy Canadians call the 'hug offensive'—until the G7 summit when Trudeau actually had to speak and reality didn't match Trump's expectations, causing the bilateral relationship to collapse in a day.
“Justin Trudeau is by far Donald Trump's favorite world leader because he never speaks he just stands there nods and Trump's inner monologue fills in the voids it's very complimentary the Canadians call it the hug offensive and it was working very well until mid last year when Canada had to host the g7 summit and all of a sudden Trudeau actually had to speak and for the first time a trump presidency what Justin Trudeau was saying was not matching the monologue and he got pissed and relationship the bilateral relationship collapsed in a day”
Millennials, despite their flaws, will provide three critical benefits to the US: sustained consumption spending through at least 2013 to prevent recession, future tax revenue to offset baby boomer fiscal costs, and are the only comparable demographic cohort in the developed world, making the US unique among wealthy nations.
“consumption all those fidgets spinners and all those bedazzled flip-flops and all that fat free soy free gluten free sugar free cruelty free beard butter it all adds up boomer conceptions me millennial consumption has kept the United States out of recession since 2009 and they're young enough and there's enough of them that probably has another four years to run”
President Xi of China called for a summit at a private location because he needed to communicate that China's physical security, economic security, and government continuity are entirely dependent on maintaining Trump's even-keeled mood, revealing desperation about China's position.
“president gee when he finally had his summit last March called ahead he said I don't want to meet in the White House I have things I need to say to you that I cannot say in front of the diplomatic corps in the press corps so they diverted tomorrow lager aware Trump could control the environment and she later dies like you control the global security environment global finance global energy the market we have to have access to we're in a tough time in China we're financially over leveraged we're facing food crises were more dependent on you than we ever had been before”
Chinese citizens engage in massive capital flight through real estate purchases at premium prices, sometimes paying 150% or more above asking price with cash suitcases within 72 hours, because they recognize their financial system is collapsing and will do anything to get money out.
“I've got a friend who works for FBI financial crimes lives in Santa Monica and he had all the stories start the same day I was there sitting in my boxers eating my Cheerios watching cartoons when Dodd there's a knock on his door and it's two Chinese citizen one is a dude who looked like he was in his mid-20s and another one his woman who looked like she was in her mid 120 s and the guy in pretty good English says this is my client Miss min and she would like to buy your condo and he's like I just moved here six weeks ago it's not for sale and he says well that's fine but if you were to sell it how much might you ask he's like well I just moved here so payment for the move I would want at least a hundred percent return ads make it a hundred and fifty percent and I've always wanted to live in Tuscany so how long would it how much would it cost to move to Tuscany for a year and then live there for a year he added up in his head gave him the number there's a quick conversation in Mandarin and the guy says agreed will Kash be fine 72 hours later he literally walked out of the room with an aluminum suitcase full of 20s folks these people will do anything to get their money out they realize their systems is collapsing”
Brazil faces a 'Lost Decade' under normal circumstances but with Bolsonaro should 'pencil in a second Lost Decade', while India and Turkey have 'already elected populist leaders who think nothing of spawning an ethnic race riot that kills a few dozen people whenever they need a pop in the polls' and 'have yet to begin their credit adjustments'.
“here's Brazil under normal circumstances this is what a Lost Decade would look like but with ball scenario let's just go ahead and pencil in a second Lost Decade Indian Turkey to countries who have already elected populist leaders who think nothing of spawning an ethnic race riot that kills a few dozen people whenever they need a pop in the polls they have yet to begin their credit adjustments and they've already gone populist nationalist”
China is 'now the most over credited country in history in both absolute and relative terms' in 'every economic cycle' and 'every economic sector', with agriculture being 'the sector they had that is most in trouble', so 'when they finally have their pop not only do they face an economic depression in every sector at the same time they starve'.
“here's the People's Republic of China which is now the most over credited country in history in both absolute and relative terms every economic cycle that they have every economic sector they have excuse me is already far more over credited than anything that Enron ever did anything that subprime ever did and the sector they had that is most in trouble is agriculture so when they finally have their pop not only do they face an economic depression in every sector at the same time they starve”
With the departure of Mattis, Kelley, and other moderating advisors, Trump becomes 'unleashed' and the pace of policy change will skyrocket, with only two people in the administration retaining authority over foreign, strategic, or economic affairs: John Bolton and Robert Lighthizer.
“that's it they're all gone so this thoughtful deliberative cautious president we've all become used to is now going to change we now get to see Trump unleashed the pace of change is about to skyrocket there's really only two people in the entire administration that have any autonomy or authority to discuss foreign strategic or economic affairs now”
Nuclear weapons in North Korea's hands serve as an 'off-balance' tool to keep the domestic population uncertain about what Kim Jong-un will do next, serving domestic control purposes rather than external deterrence.
“and finally you've kind of gotten your hands around the system until Donald Trump discovers your Twitter feed and he's like whoa fire and fury and kim jeonghun is like oh holy crap that's not what I meant I wasn't trying to piss off the United States so he's like um just wanted to let everybody know that we finished our nuclear program and I've got what I needed and I've got a deliverable nuke and I got a button here in my on my desk but but really we're done so you know it there's no reason to panic”
If the United States completes bilateral trade deals with Korea, Mexico, China, Japan, and Britain, that covers roughly half of the US trade portfolio, which is sufficient for the US to avoid recession even if the global system collapses, and represents the completion of Trump's trade ambitions.
“if the United States has a trade deal with Korea and Mexico and China and Japan and Britain that's already half of our trade portfolio that's the end of the Trump administration's ambitions for trade because that's enough that the u.s. can probably avoid a recession even if the global system burns”
Trump made explicit that trade deals are not negotiated but 'imposed', and 'we can use guns we can use butter and we can use it to get whatever we want from you but if you want any economic relationship with us it's going to be a bilateral deal not that we negotiate that we impose'.
“this is not the order you cannot trade guns for butter we can use guns we can use butter and we can use it to get whatever we want from you but if you want any economic relationship with us it's going to be a bilateral deal not that we negotiate that we impose”
It is 'kind of brilliant' for the US to tell East Asia 'this is your problem' regarding North Korea security, because from a national security point of view, the US only needs to prevent ICBM threats, not maintain regional dominance.
“it's not very nice for the United States to say yeah you know East Asia this is your problem but from a national security point of view it's kind of brilliant”
Donald Trump rode an escalator down, everyone thought it was a joke and he was convinced it was a PR ploy, but a year later he was in the White House and the Republican establishment realized he had been a card-carrying Democrat for 35 years and they scrambled to impose Republican orthodoxy on a freshman president.
“when Donald Trump rode that in gold an escalator down three years ago I think everybody thought it was a joke pretty sure he was convinced it was just a PR ploy then lo and behold and a year later he was in the White House and the Republican establishment was like holy crap how did this happen we didn't even know he was a Republican he was a card-carrying Democrat for 35 years okay but he's got our bumper sticker now so let's put together a team to put in front of him that he can pick from for his new cabinet”
Kim Il-sung, North Korea's founder, died after a military coup-adjacent incident ("slipped in the shower and fell on some bullets") when he was supposed to negotiate reunification terms with South Korea in 1993, preventing Korean reunification.
“Kim il-sung the grandfather the guy who fought the jab in World War two founded Marlin won in North Korea in 1993 he slipped in the shower and fell on some bullets the what happened was three days after he died he was supposed to be in Seoul working out the practical mechanics of reunification”
Kim Jong-il, North Korea's second leader, was 'batshit crazy,' drove the economy into the ground, and his policies caused a famine that killed two million people, causing the first generation military to recognize they had made a mistake removing Kim Il-sung.
“Kim jong-il this guy remember him yeah batshit crazy he came in and drove the economy right into the ground his policies are what caused the famine that killed two million people and the first generation the generals that probably could killed Kim il-sung or like holy crap that's not what we meant”
Congress approval of USMCA is likely in the short term because there is enough centrist Republican and Democratic support, and Mexico also supports ratification, but Canada faces ratification problems because Trudeau's political position has weakened due to failed negotiations.
“I don't think the problems in Congress I think there's enough of a remnant of centrist Republican Democratic support to get it through without a problem I also think that it's not a problem in Mexico so I think what we see ratification of the New Deal this year the problem is in Canada”
Trudeau faces Quebec's political pressure as a Québécois: the Québécois have been treated as a voting bank by the Liberal Party, but the party has suffered international economic catastrophes as its negotiating positions collapsed simultaneously, costing the Liberals control of every Canadian province that matters.
“Trudeau is a québécois but not a very good one my French is probably better than his the québécois had been treated as a vote Bank by the ruling Liberal Party and because of the change in circumstances Canada's had a series of international economic catastrophes as all of its negotiating positions of collapse more or less at the same time and its cost the Liberal Party control of every Canadian province that matters”
Canada's political class lacks successors to Trudeau: the Conservative Party hasn't recovered from defeat four years ago, Alberta is openly debating secession, and provincial elections in two months will likely usher in a conservative separatist alliance with 80% of seats.
“and it's not like there's anyone waiting in the wings Trudeau was kind of like Obama he sucked all the oxygen out of the room there are no pretenders to the throne in the Liberal Party the Conservative Party has still not recovered from the defeat four years ago and Alberta is openly debating secession and in about two months they will have provincial elections that is going to usher in a conservative separatist alliance probably have 80% of the seats in the provisional legislature so Canada is facing nothing shy of a national crisis right now”
General John Kelly, as chief of staff, diagnosed Trump's decision-making problem as relying on three information sources—Twitter, Fox and Friends, and morning wake-ups at 3 AM—rather than State Department and CIA briefing books, and attempted to improve Trump's information feed by taking away his phone.
“general Kelley became the new chief of staff and he did something interesting in his first week in the White House he didn't say a thing he just stepped back and watched the show after a week he step forwards like mr. president I think I figured out the problem you don't read the State Department and the CIA briefing books every morning you wake up at 3:00 a.m. you get on Twitter you watch Fox and Friends those are your only information feeds and you make policy off of that so what we're gonna do is we're gonna improve your information feed so I'm gonna take that phone”
General Mattis, as Secretary of Defense, was the only person in the Trump administration with autonomy to discuss strategic policy, consequences, and context, but in the last three months of 2018 he was excluded from strategic policy meetings, handed orders after decisions were made, and left on New Year's Eve.
“that just left general mattis at the Defense Department he became the only person in the administration that could still talk to the president about things like the consequences and context as a result the last three months of last year he wasn't even allowed in the room when strategic policy was being discussed when the meeting was over someone would hand him in his orders and he can be dismissed off to the Pentagon to implement them his last day was New Year's Eve folks”
John Bolton, as National Security Advisor, has a reputation for being aggressive and has previously served under the W administration where he orchestrated an 18-nation alliance including Russia, China, Japan, and France to board North Korean vessels and stop missile proliferation, with that strategy still working.
“John Bolton he's the national security adviser he has a reputation for being a prick that doesn't mean that he doesn't know what he's doing this is not his first stint in government he served under the W administration he was responsible for the North Korea portfolio and as part of that he basically tricked up an 18 nation alliance that included Russia China Japan and France to go and board North Korean vessels it stopped missile proliferation it worked it's still working”
Jair Bolsonaro was elected in a landslide while running against an imprisoned political opponent, and his primary campaign claim was that the Nazis were too soft on their foes, signaling an authoritarian approach.
“the Brazilians recently elected this dude this is ball scenario his big claim to fame from his campaign was talking about how the real problem with the Nazis is that they were just too soft on their foes one in a landslide go Brazil granted he was running against a guy who was companion campaigning from prison where he'd been convicted of corruption”
Reince Priebus, as Republican National Committee chair and Trump's first chief of staff, attempted to impose Republican orthodoxy on the freshman president and tried to control his thinking, but was gone in a year.
“the first guy in the room was rince previous chair of the Republican National Committee it was his idea to stack the cabinet he became chief of staff and he tried to impose Republican orthodoxy upon the freshman president in essence he tried to tell Donald Trump how to think so he was gone in a year”
Rex Tillerson, as Secretary of State, tried to explain to Trump that US foreign policy should be based on Fortune 100 companies' interests and global financial flows, but was ignored when Trump tweeted contradictory positions, and Tillerson's corporate-focused approach never aligned with Trump's Twitter-driven policy.
“Rex Tillerson came in he said mr. president you got to understand when it comes to foreign policy that most Americans work for a small and medium company and those companies don't trade at all most of America's corporate position in the wider world is the Fortune 100 companies like Exxon so you have to plan policy with that in mind so he started running his policy from a corporate point of view and one big thing that big corporations don't do is read Twitter so Trump would tweet something until ursin would ignore and just do anything else and then never the two would meet so he was gone”
George H.W. Bush was the best president for foreign affairs the US has ever had because he grew up in the DC bureaucracy, ran the CIA, had first-name relationships with every world leader across the political spectrum, and managed the critical 1989 transition period when the Cold War ended.
“the person who is in charge during the transit and back in 1989 was George Herbert Walker Bush who from a foreign affairs perspective is the best president we've ever had he grew up in the DC bureaucracy ran the CIA for a while had first-name relationships with every world leader and everyone who Madeleine on either side of the political aisle here in the United States he was the right person with the right skill set in the right job at the right time”
Barack Obama demonstrated exceptional command of geopolitical context in exit interviews, understanding why green energy technologies don't work, why Israeli-Palestinian peace is unattainable, and Russian motivations, but had a personality flaw of loathing people and avoided meetings with cabinet secretaries and Congress more than any president except William Henry Harrison.
“Barack Obama comes along and Barack Obama was an interesting cat in his final year as president he gave a series of multi our kind of exit interviews with the media where he demonstrated a command of the context that I have never seen an elected leader ever why the technologies for green power as they exist just don't work why the israeli-palestinian process will never generate peace why the Russians do what they do but he had a weird personality quirk he loathed people no American president has ever had fewer meetings with their cabinet secretaries or gone to Capitol Hill than Barack Obama well with the exception of Harrison who died like three weeks on the job from pneumonia Obama beats him but nobody else”
Enrique Peña Nieto was possibly the best Mexican leader for negotiating with the US—spoke fluent English, was pro-American, pro-business, pro-trade—but Barack Obama would not give him the time of day, representing a massive wasted opportunity for bilateral engagement.
“now on the left there you've got pena nieto he is quite possibly the best Mexican leader we've ever had as a negotiating partner on the other side of the border speaks fluent English pro-american pro-business pro trade wanted to do deals with us on security and migration Barack Obama would not give him the time of day and Donald Trump has given him nothing but insults massive wasted opportunity”
Bill Clinton was highly intelligent but lacked consistent foreign policy engagement, crammed for summits like college tests, performed well in individual summits but never followed through, and as a result provided only two months of coherent foreign policy over his eight years.
“Bill Clinton with the possible exception of Jefferson is the most intelligent president we've ever had but he had a how should we say an attention deficit issue he saw himself as a domestic president and so whenever there was a summit he was like okay I guess I got to get ready for it now and he'd hunkered down with the State Department and the CIA and kind of crammed for the summit like he was in college and it was a test the next morning and he would hit it out of the park every single time but there would be no follow-up so in eight years we had two months of foreign policy”
The W (George W. Bush) administration pursued a monochromatic foreign policy focused on one issue in one region while ignoring the rest of the world.
“then we had W and let's call it what it was we had a monochromatic foreign policy that dealt with one issue in one region and to hell with the rest of it”
Andrés Manuel López Obrador combines the ideology of Ted Cruz, the shrillness of Elizabeth Warren, the anti-foreigner sentiment of Donald Trump, and the refusal to engage in mathematics of Bernie Sanders, but positioned himself as a domestic rather than foreign affairs leader and reached out to both Peña Nieto and Trump to achieve NAFTA ratification.
“he's weird cat he combines the blind ideology of Ted Cruz with the shrillness of Elizabeth Warren in the anti-foreigner sentiment of Donald Trump and the body of Nancy Pelosi and the pathological refusal to engage in basic mathematics of Bernie Sanders all-in-one guy therein lies an opportunity he knew that if he tried to be a foreign affairs president he'd just be in a pissing contest with Trump he sees himself kind of like Bill Clinton as a domestic leader domestic renewal so he reached out to Pena and he reached out to Trump and says look of you two guys couldn't agree on what the next NAFTA is going to be I'll get it ratified”
North Korea's military sent Kim Jong-un abroad to Switzerland to learn how the world works, and he attended school there where he apparently was not good at basketball but had competent bodyguards.
“so they sent the entire third generation keep complete with Kim jong-il the current guy you know this guy abroad to figure out how the world really works so Kim jong-un actually went to school in Switzerland where apparently he sucks at basketball because one of my protegees sat next to him in chemistry class apparently his bodyguards really good though so you know it made up for it”