The Fire Hose of Chaos: Finance

Money being burned

The US has known that a capital crunch was inbound for decades now. With the Baby Boomers retiring and Trump’s trade policies hitting at the same time, these financial woes might sting a bit more than we thought.

The retirement of the Boomers was always going to cause a capital supply crunch; it’s just what happens when people retire and begin shifting their investments to safer things. So, the cost of capital was already on the rise. Now mix in Trump’s rapid-fire tariffs and aggressive foreign policies…and you magically begin losing capital inflows into the US, exacerbating the US capital problem.

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Transcript

Hey all. Peter Zeihan here coming to you from Colorado. We are continuing our Firehose of Chaos series today about how various Trump administration policies are causing negative effects for the American economy. And today we are going to tackle finance. Now there’s a lot that’s going on in finance. On any given day, the bond market, the stock market, corporate bonds, municipals, blah, blah, blah, blah blah. 

But the bottom line is that it’s ultimately an issue about the supply of capital. The more supply you have, the cheaper that capital is, the faster the economic growth is. And we even before Donald Trump got into office, we’re already facing an adjustment period. And the issue is retirement. When you retire you liquidate your savings. You go from stocks and bonds into T-bills and cash, because if there’s a market crash or a currency adjustment, you have lost out, you haven’t locked in your savings and you no longer have an income to recover. 

So, for example, for those of us who are not retired, we’ve seen the markets drop by somewhere between 10 and 20% over the course of the last three weeks, and we are all feeling that, but we’re all young enough to continue to do contribute to our portfolio. So there’s hope that will emerge on the other side in a better position. 

If you’re over 65, there is no hope because there is no income. So if you had not liquidated, you would be looking at a permanent loss in your portfolio. Even as you continue to draw income out of your savings, which would put you in destitution a few years down line. So if you’re a baby boomer and you hadn’t liquidated your savings already, you’re in trouble and you did everything you weren’t supposed to do. 

Anyway, the issue for the economy writ large is the balance between the number of people who are turning 65 every year and the rest of us. So in the case of this current situation, the issue is the baby boomers, because the baby boomers, the largest generation we have ever had, are already two thirds moved into retirement and the remaining third are going to retire over the next 4 or 5 years. 

As a rule, 70% of total global private capital originates with people who are doing this saving for retirement, people who are over age 55 but have not yet turned 65. Well now the number of people who are over age 65 is rapidly expanding, while the number of people age 55 to 65 is rapidly shrinking. 

And that split has caused most of the movements in the credit market in the last few years. So I would argue that we’ve seen roughly a quadrupling of costs of credit writ large. I’m not talking about any specific credit product, but writ large over the last four years. And while there is a little bit of fed in there, there is a little bit of trump. 

There is a little bit of Biden. It’s mostly just the baby boomers doing what you do when you retire. We expected this. We’ve anticipated this coming for 30 years. And really, no one got ready for it. Certainly not in government financing. But now we’re here and we’re living through it and we’re having to deal with it. So that’s that’s piece one that has nothing to do with the change of administration at all. 

But the second piece does, we have now had 97 official tariff policies in the last 55 days, which is, you know, two orders of magnitude more than we normally get in that sort of time frame. And no one knows what the rules are. In addition, Donald Trump keeps changing his tune every day. It’s either we’re not going to be even going to have a memorandum of understanding with countries that we’re negotiating within six months, or we’re gonna have a finished trade deal in four weeks, both of which are kind of silly. 

We’re not going to get any new manufacturers out of the plants for the first two years. Or maybe it’s going to be ten years. We’re going to have new tariffs on agriculture. Or maybe we’re not. We’re on drugs, or maybe we’re not, or in shipping or yes, we did, but then we didn’t. But then we decided to do port fees. 

The point is that no one knows what the rules of the game are. So no one is doing anything to prepare for whatever the future is, because we don’t know what the future is going to look like in terms of industrial construction, to build the industrial plant that we’re going to need to live in a high tariff world that actually has gone to zero under Donald Trump, because no one knows what is going on. 

On top of that, Trump keeps threatening other countries and not just with tariffs. He’s threatened to invade Canada, make it the 51st state. He’s threatened to invade Greenland, which is a NATO ally. He’s threatened to pull everything back from Ukraine, which is encouraging the Ukrainians, the Romanians, the poles, the Swedes, the Finns and the Germans to all get nuclear arsenals. 

The bottom line is he’s shattering everything that worked and has yet to provide a vision or preparation for whatever might be next. And in that sort of environment, no one really trust the United States. Now the US dollar is the global currency. I don’t mean to suggest that that is in danger. And the US Federal Reserve stands ready to step in to save the government bond market, to prevent a run on the bonds, to prevent a financial catastrophe in this country, because that’s part of its job. 

I don’t worry about those kind of headline disasters, but there’s a lot on the margin that is measured in trillions of dollars. In any given year. We have about $2 trillion of capital flight from the rest of the world to the United States. Now, that comes for its own reasons. And Europe, it’s because the countries of the eurozone are aging out, and you just can’t get a good return in Europe. 

In China, it’s because you have an over financial situation system where capital is considered a political good and you can’t get a good return on it, and the government restricts where you can put your money. So people try to get their money out of these systems and into other systems. And while Canada looks great, it’s not enough. There is only one country that has the liquidity and the depth of capital markets to absorb this sort of capital flows, and that is only the United States. 

And so this is where most of that cash goes, $2 trillion a year, and as we move into circumstances that are more problematic, Europe getting closer to its demographic cliff, China facing a trade war with the United States. Those flows can often increase. So, for example, at the height of the subprime crisis, after an initial shock, we were probably seeing three, $3.5 trillion of capital flight into the United States. 

Now, this helps out the United States in any number of ways. It puts more strength into the real estate market. It keeps borrowing costs down for everybody, especially the federal government. But when you have the United States as the source of the geopolitical uncertainty, and when you have the white House is the single largest source of regulatory uncertainty in the United States, all of a sudden, putting things into US financial assets doesn’t look nearly as attractive. 

And so what we’re seeing is some of that money is no longer coming and some it’s being reversed. So let’s go around the world real quick and see what that looks like. First of all, the Middle East, the Middle East has been desperate to build some sort of alternative financial system that doesn’t work on interest based functionality like the Western system does. 

And that requires basically applying a degree of Sharia law to their financial sector and having their own financial systems to, at a minimum, serve as a bulwark and an intermediary between the Middle Eastern savers and the United States. They’ve been somewhat successful at that. And that has made places like Dubai to be pretty robust financial centers. But what we’re seeing now is the limits of that approach. 

People are realizing that if you put your money into a middle eastern financial center that doesn’t allow interest, you don’t earn interest, and it’s starting to lose some of its shine. And so people are looking for other alternatives. On top of that, most of the oil Emirates in the Middle East, up to and including Saudi Arabia, have vastly overspent their income and simply don’t have money to send abroad at all. 

So, for example, Donald Trump is trying to get Riyadh to invest a few hundred billion dollars in the U.S. and they don’t have the money to do it. They’ve wasted a lot of things on their own white elephant projects. They’re spending a lot more on social programs at home. There’s no money to send to the United States. So what used to be a relatively robust partner is going somewhere else or is shrinking in on itself.  

And, you know, that’s several hundred billion dollars a year. Second is East Asia. Japan has been a big source of capital for the US for decades. China more recently, largely because both of these systems treat capital as a political good. I actually don’t think that this is going to change because the Japanese, the Chinese have known for a very long time that if you keep the money at home, it just can’t do very much. 

The only reason we should expect countries like China and Japan to send less money to the United States is if they figure out that they can build industrial plant for their export industry somewhere else, and there aren’t a lot of good options. What? There are some options in Southeast Asia, but those are under U.S. tariffs as well. So we might see a little bit of weakening, but nothing compared to say what we’re going to have in the Middle East. 

The big movement though is out of Europe. The Europeans have basically started to treat the United States like a security threat, because that’s exactly what the US under Donald Trump has evolved into. They realize they’re going to have to take their militaries in a completely different direction. They realize they’re going to fight on their own. For many of them, that means they have to have nuclear weapons. 

And that means why, why, why, why would you ever send capital to the United States? So what? Until recently, and by recently, I mean January. It was about $1 trillion of capital flight from the eurozone to the United States. Every year has probably gone very close to zero, and in fact, is probably going in reverse as people liquidate their holdings. 

Yeah, that all up. And we’re looking at capital flight into the US financial markets probably dropping by a little bit more than half. And if you put that on top of what’s happening with the baby boomers, it means capital costs are going up as well. And that’s before you consider that the US currency has dropped by about 10 to 15% in the time since. 

All that adds up for significantly more expensive financing, regardless of who you are. If you’re the federal government and you’re issuing T-bills, you now have to pay more money. If you’re looking to buy a car, your car loan is now more expensive. If you want to refinance your mortgage, that goes up as well. 

And it all adds up to slow economic growth across the entire American economic space.

The Fire Hose of Chaos: Port Fees

Photo of port of savannah, GA

Today we’re discussing the Trump administration’s 96th tariff policy which imposes port fees on Chinese ships.

Chinese ships that enter a US port will be slapped with the higher of a $50/ton (rising to $140/ton overtime) fee or $150/container fee. This policy was initially set to be more extreme, but public comments helped scale the fees back as to avoid crippling US port logistics.

The issue with this tariff is that it increases costs for everyone but fails to offer any solutions. Since the US has no capacity to build cargo ships (as military shipbuilding is the priority right now), shipyards are already overwhelmed and dysfunctional. So, the intention is to reduce reliance on China, but there’s no path to doing it…

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey all. Peter Zeihan coming to you from Atlantic City and today we’re talking about something that actually happened a little bit back on April 17th. That’s when the U.S. Trade Representative Office announced the 96th tariff policy of the Trump administration in less than two months. Oh my God. And this one is on port fees. Specifically, any Chinese registered Chinese built Chinese operated vessel will now have a $50 charge per ton, ramping up by $30 a year until it hits under $140 a ton.Or, $150 per container, again ramping up over a few years. Whichever one is higher. 

This one is unique in that it was actually put out for a degree of public comment. And so people pointed out to the administration that there are no American ships. So, some of the more ridiculous versions of this, were rooted out originally was supposed to be like a million, a million and a half, maybe even 3 million per ship per visit. 

Which would have basically taken everything and concentrated it. So, well, China is the source of most of our manufactured goods. It’s not where they’re necessarily manufacturers, where they’re assembled. It, the manufacturer requires basically everyone in East Asia and China is the low man on the totem pole, but the largest one. So it’s where everything’s put together. 

And then it sails in finished form from Shanghai or Tianjin to, Los Angeles or Houston or New York or Savannah. If the old system have gone through, all of our secondary ports would have basically been starved and we would’ve just had endless traffic jams at the biggest one. So they decided to go with a weight slash volume version rather than just a flat fee, which make it a little less onerous. 

From a logistical point of view, anyway, there’s still some problems here because, it’s starting to interface with other problems the Trump administration experiencing. And that has to do with Defense Secretary Pete Hegseth, who is rapidly showing himself to be up there with RFK Jr to be the most unqualified, and, incompetent cabinet secretary in American political history. 

In the last two weeks, he’s basically fired everybody he brought in with him. And so in his office now, it’s just him. It’s wife, his brother, his lawyer, and that’s about it. And then, of course, Trump fired all of the deputy undersecretary, assistant secretaries and everybody and basically hasn’t replace him with anyone who knows what they’re doing. 

And so Pete says big breakthrough in the last few days has been to build a studio and an editing platform, within his office. So he can share videos of himself working out in the morning. Because that’s what we need to prepare for military readiness. Yeah. Anyway, bottom line is that one of the things the Trump administration says it wants to do, which I broadly agrees to build more military ships. 

Okay. Well, I take shipyards. And so basically, we’ve got an incompetent defense secretary managing a underfunded and unplanned shipbuilding program, which basically takes up every berth drydock that is available at every, shipyard the United States has of it’s being managed just completely incompetently. And so if you want to build a civilian cargo vessel, there’s no room and there won’t be for years. 

So step one, if you want to start mucking around with the ports, is to build more ships so that you have options. And just as with steel and aluminum construction and all the other tariffs, the Trump administration has failed to do that. So we if we want stuff at all, we have to now pay more for the stuff because of the tariffs and then pay more at the ports because of these new port fees. 

And there is no alternative for building an American equivalent, because the building blocks of what you need to industrialize still haven’t been done. And everything is just going to cost more for everyone. Yep. That’s it.

Will New Zealand Dive or Thrive?

Flag of New Zealand waving in the wind

In the past, we’ve chatted through the domestic issues facing New Zealand, so let’s discuss the economic future of the ~5 million Kiwis in the context of the shifting global landscape.

New Zealand has one of the world’s most efficient agricultural systems, specializing in dairy, sheep, and wine. Since these industries are some of the most protected, deglobalization will limit export access. How will they cope?

Well, New Zealand is no stranger to hard work, so let’s breakdown their options. They could lean into the NAFTA system and forge stronger ties with the US. Or they could shift production toward things like wheat and soy, which will be in high-demand. Both options would necessitate giving up something important to Kiwis. A third option, which could prove to be a strategic advantage, would be partnering with industrializing nations in Southeast Asia.

Regardless of that need to adapt, New Zealand is resilient and well-positioned to navigate these broader shifts. And they better figure it out, because where else am I supposed to vacation every year…

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey, everybody. Peter Zeihan here. Coming to you from, Francis Glacier and Avalanche Peak. That is Middle Peak over there. And East Peak, because they ran out of names. Any who. Since I’m traveling around in New Zealand, naturally, folks here in New Zealand have been asking me about the future of their country. 

So, here we go. What is New Zealand need to do to thrive? As globalization kicks in, it’s like, okay, so this is a tough one. New Zealand country of 5 million people, probably the most productive agricultural system in the world in terms of the the value of the outputs versus the cost of the inputs. 

And in doing so, they have decided to specialize where they can hit hardest. And that is, dairy sheep and wine. Unfortunately, these are three of the most protected sectors in the world. So, I mean, they outcompete everybody on costs and pretty much everybody on quality. But as any one of the United States knows, trying to import the good wine from a place like France or Italy or Canada or Mexico or New Zealand, is next to impossible because of protection of systems and because we fractured our regulatory system. 

So this is definitely a situation where the Kiwis need the Americans more than the other way around. Dairy is, if anything, even worse. That is arguably the most protected sector in the world, largely because you can’t really export liquid milk, because by the time it gets to wherever it needs to go, it’s gone off. So you have to turn it into value added cheese. 

And I would argue the Kiwis, rival the French for the quality of their cheese. I mean, give me some key. Cranky. But getting it out of the country is next to impossible. You can only get it in, like, Singapore and Fiji. Cheap. It’s a little bit easier, but, you know, anyone with spare land can raise sheep. 

So if you can make it for a little bit cheaper, who really cares? The bottom line is, if the Kiwis produce things at volume that they can’t possibly consume themselves. So they have to sell them abroad. And that requires an open market on a global basis. They got that with globalized fashion, but with globalization going away, that goes away. 

And the only way to keep globalization going is to give the Americans enough things that they want, that they think it’s okay to carry the weight that’s necessary to make it all work. But the Americans don’t feel that way, and the Americans certainly don’t have a shortage of wine or sheep or cows. So there’s really not a lot that the Kiwis can bring to the table except security cooperation. 

But this is the first of the allies during the Cold War that said that the US Navy had to stop coming because they might be carrying nuclear weapons. New Zealand’s been clean and green for a long time, and it’s now caught up in their political definition of themselves. So for New Zealand to do well in the future, it’s going to have to do one of two things. 

Number one, it’s going to have to find some way to get included into the NAFTA system. That’s not as hard as it sounds. Australia has basically done it through a free trade agreement with the United States. But Australia has been arguably America’s most loyal ally going back 50 years. And so when the Bush administration, Bush administration, signed the trade deal with the Australians, it was seen as kind of a reward. 

The Kiwis would have a lot of work ahead of them if they wanted to do something similar. Because while they have been an ally, this is a country of 5 million people. There’s only so much they can do, and they certainly don’t want to change their position on things like nukes. The second thing that they can do is change what they produce. 

Volcanic soils. A lot of water rains almost every day in most of the country. Not today, thank God. Producing things that are going to be in shortage. The problem here is that the Kiwis will be pissing away a lot of their competitive advantage. You can grow anything here. You can grow anything well, here. But you can’t grow everything well, everywhere in the world. 

And if you look at the products agriculturally that are likely to be in shortage on a global basis, at the very, very top of the list is wheat. Wheat is basically a weed. It will grow or nothing else. Does. And so in the world, as we’ve globalized and gotten access to better inputs and tractors and fuels and fertilizers and pesticides, all that wheat has been steadily pushed to the margin so that in most countries, the only places where wheat is now grown are places where only wheat can be grown. 

And so if you disrupt globalization, if you disrupt the flow of those inputs a lot of the wheat that is produced in the world goes away. Well, for New Zealand, it’s no problem. But to go from raising dairy cattle and planting vineyards to produce wine, to producing the lowest cost, highest bulk crop that humans have wheat, it would be quite a drop. 

So regardless of what happens, the Kiwis need to be prepared for changing agricultural markets. And while I I’ve kind of laid out the the broad spectrum or the broad sketch of how things are going to go, it’s a big world. It’s not I’m going to all going to globalize at the same time. And we will absolutely lose some commodities before others. 

So, for example, if Brazil is part of the first tranche of countries to fall apart, we’re gonna have a global soy shortage. The Kiwis could grow that too. 

The Kiwis are gonna have to show a degree of adaptability that most agricultural sectors can’t handle, that this is a country that 40 years ago hardly had any dairy cattle anyway, so they’ve done it before. They can do it again. The question is whether they’re doing it alone or with the United States. 

We’re going to finish this one up from the tan. Our water waterfront. I have high confidence that the New Zealanders are going to come through this, with flying colors. A couple of reasons. Number one, they’ve done some version of this before. I mean, this isn’t the first economic transformation the country has gone have to go through because of changing geopolitical circumstances. 

New Zealand used to be part of the British Empire, and its economy was sculpted to serve the needs of the empire. The Brits needed wool for their troops, and they needed a economic base in the region. And so the New Zealanders grew or raised sheep in the tens of millions. Basically, at one point we had more sheep here than we had in any other particular part of the world. 

And when the, empire fell apart and the Commonwealth ceased to meet all that much, the Kiwis moved on and got into things like dairy and wine and the rest. And by the point of getting to like roughly the 2000, it was a fundamentally different place. And it’s a fundamentally different place now because they’ve chosen to specialize in the things that they can export to China in volume. 

They can do it again. Second, there is a third option, besides going it alone or, buddying up with the United States, there is a middle ground and it involves southeast Asia. If you look at the countries of Indonesia and Vietnam and Myanmar, you know, you got three major countries there with young populations that are rapidly industrializing, that are partnered with countries like Malaysia and Thailand that are already further along the process with an older demographic. 

And Singapore, which is a world leader in technology and finance, the Asean group in the southeast Asian grouping is going to be one of the major nodes of growth in the world. But there as this region, industrialized and urbanized, as it has absolutely no hope in its tropical territories of growing all the food they could possibly need for themselves, they’re going to have to import. 

And the United States agricultural community is going to be part of that. But so is the New Zealand, because it’s just so much closer. And to be perfectly blunt, the Kiwis don’t have nearly the degree of state support outside of dairy that American farmers enjoy. And so they have to be much more aware of market trends, especially when they’re closer to home. 

So New Zealand is one of the handful of countries that, for a mix of regions, I think is going to do great. It doesn’t mean things don’t need to change, but the Kiwis have shown time and time again that change is something that they can handle.

A Concerning Update to the Russian Reach Series

Flags of USA and Russia merging

Well, the Russian Reach series needed an update, and it’s not a pretty one. The infiltration of the US government by Russian interests is growing and I don’t see an end in sight.

We have figures like Tulsi Gabbard with a foot in the White House and the Kremlin. The very institutions which were created to protect the US from these threats are being dismantled under the Trump administration. Don’t even get me started on ‘SignalGate’. Grenell is spewing pro-Russian narratives to whoever will listen. Navarro is echoing Russian propaganda as it relates to economic policy. Trump is still repeating disinformation. Russia is finding more ways to align itself with MAGA through its influencers. Russia wants in on the invasion of Greenland. And to round it out, we have Tucker Carlson as the only media source Trump’s admin is talking to (the guy that features guests like Russian fascist ideologue and genocidal proponent, Alexander Dugin).

I’ll let you sit with that one for a bit…oh, and have a good weekend!

Prefer to read the transcript? Click here

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Learn about medshare here

Transcript

Hey, all. Peter Zeihan here, coming to you from Atlantic City. Today we’re going to update a series that we did last month called The Russian Reached what looked at the logic and the actions of the Russian government and how they were attempting and probably successfully attempting to penetrate deep into the American government right up to and including the white House. So the purpose of this is to give you an idea of how much is involved in just the last 3 or 4 weeks, and it’s unfortunately a very long list. 

First off, keep in mind that the Director of National Intelligence, Tulsi Gabbard, is somebody who most of the intelligence community who is has thought of as a Russian agent for quite a few years and one of the first actions that she… well, let me let me put it this way. If she’s not a Russian agent, she’s probably a traitor because the Venn diagram of her worldview and Vladimir Putin’s are pretty much identical. I mean, there might be a little bit of not overlap like a half of 1%, but that’s largely just hairstyles because, you know, Putin is bald and got rich hair is fabulous. 

Anyway, she’s pretty much completed gutting the counterintelligence arms of our various intelligence agencies. So most of those staff aren’t even doing the jobs that they once did, allowing the Russians to really plow into American society however they want. Also, the Trump administration has largely dismembered the parts of the intelligence community and the State Department that, were there to protect our election integrity from Russian intervention. Same thing for web hacking. And, the Department of Justice has largely stopped investigating white collar crimes, most notably fraud and cryptography. Cryptography. Wrong word like Bitcoin scams. 

Which are another way that the Russians really, really enjoy getting their claws into American society. In the American government. We basically just stopped enforcing those laws. The same goes for white collar crimes in general, which, of course, for a country like Russia that is corrupt and uses US intelligence systems to undermine societal stability all around the world, is something that has made their job a lot easier. 

The next big issue is, of course, signal gate. Now, signal gate, happened back in March, mid-March, when the United States was preparing military assaults against the Houthis, which are the militant group in Yemen. And basically the entire top tier of the American national security team, including defense and intelligence. And Gabbard, of course, basically participated in a chat on the signal chat program. Signal is a platform that supposedly secure, but the week that this all went down, the Defense Department’s internal Intel, indicated that the Russians had probably hacked the encryption protocols. 

So, basically, the American national security apparatus were all using what had become an unsecured platform to communicate, basically operational intelligence. Tulsi Gabbard, again, testified, about halfway through the revelations to Congress that this really wasn’t a big deal. And no one should be overly concerned about it, because, of course, it’s not. 

All right. Let’s see what’s next. Rick Grinnell. He is an on again off again semi diplomat who is, working for the Trump administration. He worked for Trump one, did a really bad job, basically just went around talking to German neo-Nazis the whole time so the Germans wouldn’t deal with him at all. Anyway, he’s back in the administration now, and he’s one of those people that is so unlikable that even Donald Trump doesn’t like to have him around in person. 

So he kind of hovers outside of the West Wing and is basically spewing anti Ukrainian Russian propaganda in the ears of Trump Jr because he can’t get the ear of Trump himself. Specifically, he likes talking about the Budapest Agreement, which was something that dates back to the immediate post-Cold War years, when, the Ukrainians gave up their nuclear weapons. Basically, Grenell is a spouting the Russian equivalent of that deal. Their interpretation of it 15 years on, and basically trying to get the Trump administration to disenfranchise Ukraine as a state and suggesting that they’ve never had a claim to anything in the first place, which is, of course, exactly what the Russians would love the Trump administration to believe. 

Let’s see. Next up, we’ve got Peter Navarro. Who is the manufacturing advisor to the president. Very protective guy. He started using Russian propaganda that has been recently designed and released into the ecosystem. That’s specifically targeting Canada. So Navarro has always been an anti-free trader. Don’t really have a huge problem with that. But it’s interesting to see Russian propaganda popping up in his statements on TV now that are very, very specifically tailored to a very specific issue that really wasn’t an issue in, the Russian propaganda sphere until just a few weeks ago. 

Then we have Donald Trump reporting Russian propaganda on everything from broad strategic issues, to very tactical issues. So, for example, near the end of March, Trump started talking about how Ukrainian troops in Kursk had been encircled by Russian forces. And, you know, this or that should happen. I mean, that never happened. 

The Ukrainians were able to withdraw from the Russian province of Kursk fairly, I don’t want to say easily, but without a lot of casualties. And in fact, that withdrawal had been completed more than 48 hours before. Trump is supposedly asking the Russians to modify their operations in Kursk. So this is something that actually came from internal Russian Federation propaganda that was designed to shape attitudes within Russia itself. But somehow it got on Trump’s desk. If I was a guessing man, I would say that that probably happened via gab or directly. 

On Greenland, the Russians are trying to convince, the MAGA spear that a joint invasion, Russians in the North and Americans in the South would be a keen idea, something that would obviously shatter NATO overnight and end America’s defense alignments with, the Scandinavian countries that, in my opinion, are going to be the future of the American alliance network in Europe, which, of course, is something that the Russians would love to see destroyed. 

You may have heard of Tim Poole. He is a far right influencer that’s very tight in the MAGA space. He has a number of podcast and, video vlogs. Kind of like, you know me a little bit. He’s been basically indicted, I think is the technical term for taking somewhere between $400,000 and $10 million from, the Russian state. 

Basically, they’re shoving money into his platform to help spread disinformation throughout the American MAGA sphere. He claims he didn’t realize that it was going on. That’s his official stance on the investigation is impending. But, you know, he has on any given day, somewhere between a number of followers similar to me and twice as many. And I can guarantee you that if $100,000 per video least that I did suddenly showed with my my bank account, I would not need the FBI to tell me to investigate the shit out of that. 

So let’s just say I don’t take it very seriously. 

But the most important part of this is that Tim Pool is now part of the white House press pool. The Trump administration has brought him into the inside while kicking out, you know, those liberal rags like AP and successful farming. 

And then finally, a name that, you may have started to hear bouncing around Alexander Dugan. He is basically a run of the mill Russian fascist who has been advising Vladimir Putin for over a decade now, basically making up the ideology to justify genocide against anyone they feel is necessary. And until a year ago, most of his vitriol was ultimately, reserved for the United States. 

So preemptive nuking, death camps, that sort of thing. He’s a real peach. Anyway, he has started making the rounds of MAGA, publications, in the United States recently. And of course, the first one in that role, the first of the big ones that he did was none other than Tucker Carlson. Now, you guys may remember, Tucker Carlson used to be a Fox News host. 

Tucker has been fired from every media job he has ever had for lying on air about things on purpose. And since he left Fox, he has now basically migrated directly into the orbit of Russian propaganda. And most of his shows deal with Russian propaganda from it. You know, sharing it with the world point of view. Perhaps the most concerning thing I have in the information space as regards the Trump administration is not this Tim Paul thing, although that’s, you know, not minor. 

But this is the American administration throughout history that has had the least contact with the media of any form. It’s not just that they’re not talking to more liberal groups like, say, the New York Times. They’re not really talking to Forbes or Bloomberg or the Wall Street Journal. They basically shut out everybody. But many members of the Trump cabinet have done extensive one on ones with Tucker Carlson. 

So we basically have a gutting of the normal means by which an administration would normally interact with the country and focused on a very, very few, avenues, of which the bigger ones are already in the Russians pocket. Anyway, I don’t have a lot of great news on that front, and I will leave everyone to their own recognizance as to what’s going to happen next. 

The Fire Hose of Chaos: The Green Transition Is Over

Photo of a plant growing in a lightbulb

The green transition in the US has made great progress in recent years, but the wheels are falling off. This is largely due to economic pressures, lack of financing, and the new tariffs instituted by Trump.

Wind and solar projects require heavy upfront investment, which isn’t a great combo with capital costs skyrocketing and available capital draining from the system (blame the retiring Boomers). The government support for the green transition has also dried up; the Biden admin had the Inflation Reduction Act and other Greentech subsidies, but the Trump admin has pulled support and funding for these programs and projects. And you can’t forget the new tariffs hitting key components for the green transition, which have made solar prohibitively expensive and wind an uncertain gamble at best.

So, it looks like the green transition in the US will effectively be on pause until the US can build out its own manufacturing base. And that’s at least a decade-long process…

Prefer to read the transcript? Click here

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Transcript

Hey, all. Peter Zeihan here. Coming to you from my parents backyard in Iowa. I’m visiting because I’m a good boy. Anyway, today we’re going to talk about the end of the Green Revolution in its current form, at least in the United States. There are three things that have come together to basically completely destroy the economics of the green transition. 

And then a couple of things on the side that are making it more difficult anyway. The first has to do with the baby boomers. Two thirds of them have retired, which means that all of the money that they were saving for retirement has been liquidated. And it’s gone into less exciting financial instruments such as T-bills and cash. 

And that means there’s less capital available for everything. So we’ve roughly seen the cost of capital in the United States increased by a factor of four in the last five years, has nothing to do or very little to do with government policy. It’s just that there’s less money available in the system overall. So mortgage rates go up, car loan rates go up, anything it needs to be financed goes up. 

And that’s a real problem for green tech. When you’re looking at, say, a conventional thermal power plant, coal, natural gas, that sort of thing, you only have to pay for about one fifth of the cost of the life of the plant at the front end. That’s the upfront construction. And then about two thirds of the expense over the full life of that power plant is the fuel, the coal or natural gas. 

And you buy that as you go. That’s not how it works with wind and solar. With wind and solar, about two thirds of the cost has to be paid upfront. And that means it has to be financed. Well, you increase the cost of financing by a factor of four, and all of a sudden you’re talking about a financial commitment. 

That’s just huge compared to what it would have been just five years ago. And that is now happening across the entire space. So that alone would have probably ended 70% of the power plants that are in solar and wind. Just just off the top. The second problem, of course, is that you have to finance everything upfront in the first place. 

Anyone who wanted to do the green transition really needed a helping hand from government, typically at the federal level. And the Biden administration, through things like the IRA Inflation Reduction Act, was very big in providing that financing. Well, that’s basically gone to zero under the Trump administration. So your financing costs have gone up by a factor of four, and you don’t have any outside help. 

But the real killer, especially for solar, has now been the tariffs. Almost all of the photo voltaic cells that are used in solar systems are produced in China, oftentimes with slave labor. And while the green transition folks were willing to overlook the fact that, most of the stuff was ha, I still have a sticker on there. 

Well, most of the folks in the green transition were willing to overlook the slave labor thing, in order to get the panels that they needed. You can’t really overlook 145% tariff. So if the PV cells cost you two and a half times as much and your financing cost has quadrupled, that’s just not going to fly. 

Now, it’s not quite as bad for wind because there are some non-Chinese providers of wind turbines. Most notably in northern Europe. But those were where we have a tariff of at the moment, 10%. It was 20% a week ago, that just introduces a lot of uncertainty into the system. So both of those things are gone. 

Wind a little on the edges. Maybe. Solar’s absolutely out of the question for most people now. The only other remaining piece is batteries. When last year, the Biden administration slapped a lot of tariffs early in the year on Chinese electric vehicle bills to keep them out of the U.S. market. What happened is the Chinese repackaged all of the EV batteries into, container units to be sold as grid storage. 

And so in calendar year 2024, adding battery storage, which is actually the cheapest form of power that you could add to your system. So the Texans in particular, you know, just boned up on that hugely. Because if you can have a battery grid system, it’s actually better economics and say having a natural gas peaker plant because they normally speakers or is would only run a few days of the year. 

The batteries can take that load, but since you now have them. And since Texas is the number one green energy state, they would use their solar system to generate power during the day, store the extra in the batteries, and then use that during peak demand and evening hours when the sun’s going down. 

It worked really well. She was like 48% off of power costs, but now we have 145% tariff on all of those batteries as well. So I don’t want to say that that’s going to stop cold, but the pace of the application is going to slow considerably because the Chinese dominate that space. And we haven’t built the industrial plant here yet. 

That isn’t necessarily to fill the gap for ourselves. So for the moment, minimum two years, probably until we have a better battery chemistry, probably until we have better PVS, certainly until we have more diversified manufacturing base, which is a ten year process. We’re looking at the green transition taking a bit.