5 Days Left In Our June MedShare Donation Match

There are only a few days left in our donation matching drive for the month of June. In addition to the $50,000 in donations that Zeihan on Geopolitics will be matching, an anonymous donor has agreed to match an additional $50,000 in donations. That means $100,000 in donations could be matched this month to our chosen charity partner, MedShare International. If you really want to maximize your impact, I encourage you to donate before the end of the month!

From the ongoing medical crisis in Ukraine, to life-saving maternal and child health programs in developing countries and support for vital safety-net health facilities in vulnerable communities in the U.S. and around the world, our donations serve as a force multiplier for MedShare.

Please click the link below to donate, and all of us at Zeihan on Geopolitics, thank you for your generosity.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Russians In Space…Well, Maybe Not Much Longer

Last week, I talked about how Ukraine has been targeting Russian air infrastructure to prepare for the arrival of their F-16s. Well, Ukraine launched a rocket attack on occupied Crimea and destroyed some air defenses and one of Russia’s deep space satellite communication stations.

The loss of that deep space satellite communication station is the focus for today. This isn’t great news for Russia’s already struggling civilian space program, given they’ve depleted their old ICBMs used for satellite launches. This will also reduce tracking and communication with Russia’s military satellites, which complicates things for any other nations relying on Russia for maintenance or launches. The final kicker is that Russia’s GLONASS system – their version of GPS used in precision-guided munitions like glide bombs – could be jeopardized or degraded.

This attack could significantly impact Russian capabilities, but we’ll have to wait for final reports to determine the full extent of the damage and impacts.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zain here coming to you from Colorado. It’s the 24th of June. And as we’ve been discussing on and off for the last couple of weeks, the Ukrainians are hoping to take out as much of the Russian air defense network as possible before they get F-16 Mirage fighter jets over the summer. The idea is if they can establish local air superiority, even if just for an hour at a time, then ground forces can then advance without fear of massive artillery barrage is hitting them, and that helps them clear out, say, minefields and actually penetrate into, Russian lines. 

Anyway, over the weekend, we had a significant ly the largest rocket attack I’ve seen yet from Ukraine into occupied Crimea. And while we’re going to be looking at the damage reports from this for several days to figure out how much was destroyed, it looks like several air defense systems were taken out again. But the one I want to talk about today is the Russian deep space satellite communications network. 

You use a deep space system to basically keep track of all your satellites in orbit and communicate among them into the ground. And since satellites typically are, you know, you need several of these stations, around the world in order to provide good coverage. Now, the Russians have never had that, because the Russians have never had a series of allies that they can trust on a global basis. 

So they have four of these networks within the Russian Federation, and that’s it. And apparently one of them was completely destroyed within the last 36 hours. this has three implications. Number one, it pretty much is the end of the Russian civilian space program. And it was already floundering, wasn’t economically viable, especially with the advent of space-x, because the Russians used to use their old ICBMs as launch vehicles. 

Basically, you use one of them and then it’s gone, and then you use another one, and you keep doing it until they’re all gone. And, well, they’re all gone now, unless they actually want to go into their active reserve. They were using the ones that were decommissioned after the end of the Cold War. So they’re no longer cost effective at all. 

And now they can’t even keep track of things as they orbit the planet. second, military satellites, most military satellites, most, like most civilian satellites, are whipping around the planet. And now the Russians have lost one quarter of what was left of their capacity to track and communicate with them. That’s going to provide a real problem for the Russians in terms of satellite communications. 

Not to mention anyone who was looking at getting the Russians to launch and maintain a military satellite for them now has to find someone who is not Russia to maintain it. And if your goal was to get away from the United States, there just aren’t a lot of options here because the Chinese don’t have a good network for this either. 

so basically, you’re down to Europe, with the Airbus consortium and EADS or the United States. Third, and perhaps most significant moving forward is with the loss of this. The Russians are losing the ability to not just keep tabs on their satellites, but, gets good telemetry for things like repairs. And if the Russians lose the capacity to do that, then their glossiness system, which is their equivalent of GPS, starts to fall off line. 

Now, there are already parts of the world that don’t have very good coverage all that often. But if you remove meaningful launch capability and modern capability and maintenance capability from the Russian system, you know, losing one more radar system would probably do that. Then you’re talking about the Russians losing the capacity to use precision guided munitions using geographic tags. 

that would be an end to things like, say, glide bombs, which are the newest military innovation that the Russians have used, basically dropping one to 2 to 3 ton bombs, from within Russian territory and then having them glide and hit targets. If you lose their ability for satellite communication, that goes away, too. So very significant outcome. 

we will still be tallying the damage from this weekend for several days. It’ll be interesting to see what else is now gone. 

Does Size Matter? Exploring the Geopolitics of Micro-States

Micro-States like Monaco and San Marino aren’t often included in major geopolitical discussions, but every so often they get called up to the big leagues. Next up to the plate: San Marino.

San Marino, located in Italy, has recently gotten some attention…and not the best kind. As the Ukraine War rages on, Europe has tightened its intelligence operations and foiled the covers of many Russian agents. However, many of these agents have found San Marino to be quite accommodating in facilitating their entry into the European Schengen zone.

As you could imagine, Italy isn’t too happy with San Marino becoming a hub for Russian activity. So, to answer the age old question – does size matter? – I’ll give you every strategists favorite answer, it depends.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here coming to you from the hills above Monaco and San Marino. A Monaco is one of the microstates here in Europe. Pretty much. They’re all, in your opinion, I think about it. And I’m not talking about here like small places like Luxembourg. I’m talking about micro states that are just a few square miles. Monaco here, it’s under a square mile itself, second smallest state in the world. 

the existence of micro states is kind of a weird little story. Basically, you get a geography that is rugged enough that little patches can be carved out, and they’re difficult to access from other places. So, for example, Liechtenstein is it occupies a specific mountain pass between Austria and Switzerland. And either they’ve been able to be tough enough to conquer that you leave them be or they’re useful as kind of a diplomatic go between. 

In the case of Monaco, it traded hands a lot, from the post-Roman period, into the Italian civil wars and reunification, ultimately into World War two. And ever since then, independence. and now, of course, Monaco is most famous for the Grand Prix, which plays well by the time you guys see this or be over, an at gambling. 

basically, if you’ve seen James Bond, you’ve seen Monaco. it’s also I can see this with authority. Great place to have lunch. microstates rarely, rarely play a big role. I mean, the micro, but every once in a while, a certain constellation of factors comes together and makes them really matter. So the one that matters right now is San Marino. 

Now, that’s not here in France. That one is down in Italy. but during the Ukraine war, the Russians have discovered that most of their normal avenues for intelligence gathering have been shut off, because instead of just having the Americans go after their spies, everybody in Europe did at the same time. And one of the things you normally do when you have a spy is if you get caught, you just redeploy them somewhere else in the world. 

Well, when something like two thirds of the Russian diplomatic corps and spies were declared persona non grata in some form, everyone started exchanging biographical information about all the agents. And so you could no longer deploy those people anywhere in the world unless you had a government was like, oh yeah, we’re okay with bunch of Russian spies. That’s fine. 

And that doesn’t happen. So basically, something like half the roster of Russian intelligence agents got vaporized. and they’re gonna have to be deployed for other things. San Marino comes in because San Marino has been a location where some of these people are getting recycled. And in addition to, like, the normal money laundering things that micro states her famous for, San Marino is now providing diplomatic cover for the Russians to get whoever they want into the European Schengen zone, which is the free transport union that the Europeans have. 

So the Italians are starting to get a little aggro at San Marino for serving as this bastion for Russian intelligence, diplomatic and financial power in the heart of their country hasn’t gotten to the point now yet that they’re starting to renegotiate forcibly some of the treaties that allow San Marino to function. But the Italians are starting to look at it. 

Mr. Putin Goes to Hanoi

With Russian President Vladimir Putin heading to Vietnam, some American security experts are getting concerned about the future of the US-Vietnam relationship. To understand why the Vietnamese are working with Russia, we need to take a quick history lesson.

Every American remembers the Vietnam War…the French have an even worse history in Vietnam…but both of those histories pale in comparison to China’s two millennia of conflict with Vietnam. All that to say, the relationship we’re seeing between Russia and Vietnam is simply a materialization of the phrase – “The enemy of my enemy is my friend.”

Essentially, Vietnam is using Russia as a bit of a counter-balance to China; think of it as an extra layer of security for the Vietnamese peace of mind. Don’t let that fool you though, US-Vietnam interests are aligned against China and will continue to grow closer over the coming years.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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Transcript

Hey, everybody, Peter Zeihan here. Coming to you from the Turks Trail near Denver, Colorado. It is the 20th of June, and the news today is that Russian President Vladimir Putin is on a state visit to Vietnam. He landed in Hanoi last night. He’ll probably be seeing this tomorrow anyway, some American security folks are having a bit of a conniption fit because, they thought Vietnam was now firmly in the American camp. 

And that is not a very, nuanced understanding of why Vietnam and the United States are going to be good allies in the future. quick story. So there is a plaza, kind of an open air museum in Hanoi, near the Capitol complex where they commemorate basically all the conflicts of the past. And there’s this two foot tall structure, little obelisk to commemorate the U.S. Vietnamese military know was the Vietnam War. 

I was about 20 years. And right next to it, there’s another structure about ten feet tall to commemorate the France Vietnamese War, which lasted about two centuries. And next to that is the largest structure in the facility, which is about two stories tall, which is to commemorate the Chinese Vietnamese conflict, which lasted the better part of two millennia. 

you see, American and Vietnamese interests are converging because they are both concerned about China. And for Vietnam, this is typically their first and foremost, their their first or last, their only security concern because they’ve been conquered more than once. And if any number of military conflicts with a vastly superior power in terms of numbers, and they fought back just like they did and are now over and done pretty well for themselves anyway. 

Bottom line is that, will always see its security interest through that lens. And so if you go back to the Vietnam War, when we were on the other side, they saw it the same way. And so in the Vietnam War, you’re talking about things that happened after the Sino-Soviet split. And when you all of a sudden had Maoist China and Soviet Russia staring down one another, all of a sudden Vietnam came into play from the Russian point of view. 

So the Russians were back in Vietnam, not just because we were involved, but because the Chinese were involved. And so the Vietnamese became used to having the Russians as a counterweight to Beijing, not just Washington, and said, if you look at the relations that the Russians have with everyone around the world, they’ve gotten significantly worse with almost everyone with the West, with the United States, with the northeast, Asian countries like, Korea, Taiwan and Japan. 

That’s pretty straightforward. It’s straight up Ukraine war, but with other countries it has to do with military contracting. Russian weapons systems have proven to be not a lot advanced, especially when it comes to things like jets and air intake aircraft and missiles. And so countries like India that have literally soaked billions of dollars into the Russian military complex, only to discover that most of the money now was stolen. 

And most of the technologies that the Russians said they were developing just weren’t. And then, of course, there’s the weapon systems, the legacy weapon systems, billions of dollars of that going back years that don’t work as well as they thought they did. And the Russians are even combing the world for things like artillery shells and hoovering them up in order to have them in the war. 

This doesn’t really affect Vietnam. Vietnam doesn’t have an artillery army. It doesn’t use a lot of aircraft. It doesn’t use a lot of missiles. It doesn’t use a lot of armor. They want machine guns. They want RPGs. They want things that can be shoulder launched. They want anti-ship missiles. These are things that haven’t underperformed, in the Ukraine war to this point. 

So from Vietnams point of view, it’s almost unique in the world of arms, absorbers importers that they haven’t been disappointed yet by the performance of what’s gone on in the war. And so for the Americans out there who are concerned about the ally of the future, maybe not being all that, don’t worry about it. For the issues that matter to the United States in the region, we’re actually on the same page. 

It’s trying to trying to trying and trying to China. Now, I don’t doubt if you fast forward a couple of years, failures in the Russian military complex means it won’t have the capacity to export arms to Vietnam any longer. And then that part of the conversation changes, too. We’re just not there yet. 

Russia and the Changing Nature of the Spy Game

If you ask a fifth grader what the key to being a good spy is, they would likely respond with some variation of being sneaky or concealing your identity. Well, on today’s episode of “Are You Smarter than a 5th Grader”, we’re placing Russian Spies in the hot seat.

Since the start of the Ukraine War, Russian spies throughout Europe have been disappointing those 5th graders’ expectations. With most European nations collectively deciding to share information and expel Russian spies from their embassies, Russian intelligence operations in the West have been experiencing quite the disruption.

In places like Germany, the Russians are replacing their spies with bribes and payments to individuals for information. Obviously this isn’t a great strategy, but a little info is better than none. As for those spies who had their identities revealed, they’ll still be of use to Russian intelligence…just on domestic assignments from now on.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. today we’re doing a little spy addition. the news is that Thomas, all the wearing of the very fast on Schultz. No, very fast on Schultz for forcing Schultz. That’s basically the, German equivalent of the FBI responsible for domestic security. Anyway, he has said that, most Russian attempts to achieve espionage operations within, Germany in the last few months have been basically the Russians just paying people. 

there’s at any number of ways that intelligence service can get at their information. And paying people has always been a classic, but it’s usually less effective because then you’re reliant on the people, being continuing to give you good stuff. And if you pay them, they will come up with stuff to give you, even if it’s not good stuff. 

And if you stop paying them, there is a chance that they will turn you in. So it’s generally pretty far down the list in terms of reliability. a better way is just to have your own assets in place and the way that the Russians have normally done this, the way most countries do this is by taking their intelligence assets and giving them diplomatic cover. 

So you basically say this person is a diplomat when really they’re trying to steal industrial secrets. the Russians have always, always, always excelled at this and used it heavily because they don’t have the technical skills to maybe do something like electronic eavesdropping, like the United States tends to prefer, and they can’t attack it from a mass approach like the Chinese can, because they just don’t have the people. 

So you focus on a handful of highly trained people that you put into every single embassy you possibly can. That strategy worked very well for the Soviets and worked even better for the post-Soviet Russians until the Ukraine war, when the Europeans collectively decided that the Russians were persona non grata in Europe. They took some steps. Now, normally there’s this ongoing cat and mouse game among, the Russians and the western states and everyone else when it comes to diplomatic espionage. 

Basically, you’re always try to keep track of the personalities that are involved, the potential spies. And every once in a while, you do a little bit of purge, but you don’t purge everyone that, you know, making the other side wonder if their agent was really exposed or not. And it’s a grand old game. but one of the problems you have with the strategy is you don’t necessarily share your list of spies that you’ve uncovered with everybody else, because maybe you don’t trust their information control systems. 

And if it got out, that, you had identified one and not the other, then all of a sudden your counterintelligence operations are a bit bonk. Well, with the Ukraine war, basically, the Europeans decided all at the same time that all spies in all embassies everywhere would not only be determined to be persona non grata and sent home the list of everyone who fell into that category would be shared not just with the Europeans, but with everyone across the world. 

So basically, you had 25, almost 35 years of Russian efforts to infiltrate Western institutions and governments, and everyone was exposed all at the same time. And then there was list of everyone who was exposed went global. So in the past, if you were to purge 3 or 4, they would end up at someone else’s embassy within a year. 

Doesn’t work like that anymore. I mean, the Brazilians might not have hostile relations with the Russians, but when the Europeans and the Americans come with this list of 5000 diplomatic personnel who were actually spies, and then all of a sudden they all end up in the Brazilian embassy, the Brazilians get a little cheesed off, too. So what we’ve seen is the most effective way the Russians have of hacking into society, has been gutted. 

It’s not that these people can’t do anything, but if you’re training someone for covert operations in diplomacy, you can’t just turn around and turn them into assassins or analysts. there’s an extensive period of retraining, and the Russians aren’t as young as they used to. And one of the big reasons for the Ukraine war is the demographic collapse. 

And all that good stuff is all very relevant. the most likely use for most of these people moving forward is to back up the Intel system within Russia. Russia has far more spies operating within the Russian Federation than beyond, because Russia isn’t a nation state. It’s a multi-ethnic empire. And the way it holds, it’s everything together is by basically shooting through its own population with spies to make sure that there are no rebellions forming. 

So it’s not that the Russians have no use for these people. It just has no use for these people abroad. 

Strong American Growth (and Something to Worry About)

If you don’t want to start your day with beautiful beach views and economic forecasts, you may want to skip the video. Today we’ll be discussing recent changes to the US economy and what future impacts might look like.

Trump and Biden boosted the economy with massive stimulus packages post-COVID, but things are beginning to settle down. There’s some minor issues starting to pop up, like a rise in loan delinquencies and higher interest rates, but the US economy still looks strong overall.

The bigger concern revolves around government spending surpassing private sector growth for the first time ever. This indicates a potential shift toward government-driven economic growth, that could undermine long-term dynamism and efficiency in the US economy.

This isn’t something that will happen overnight, but if left unaddressed, the US could face significant economic challenges down the road.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everybody, Peter Zeihan here coming to you from Monarch Bay in Southern California. today we’re going to do kind of a big picture economic take of the United States. because, you know, a lot has gone down in the last 25 years. I think it’s good for me to kind of put my stamp on the ground and where we are. 

we might be getting back to some version of normal. It is a bunch of light here. Let me kind of spell that out from the back side. If you remember back to the transition from the Trump administration to the Biden administration, there was a contest among the two of them about who Americans would like more because they had been paid to, like. 

the incoming Biden administration had made it very clear that the first thing he was going to do was $1 trillion stimulus that would put money in people’s hands, to get over Covid. And as soon as Trump heard about this, he’s like, well, I want to do that too. So I want to be like an administration to leave on a high point. 

things, but work out that way. But he did put, I think it was $900 billion into the system in his final few weeks. and if you remember back, Covid was pretty much over by then. So we had $2 trillion dumped in and a quarter, into a system that was already experiencing rapid economic growth as one of the many reasons why we had an inflation pulse in the early Biden administration. 

Anyway, you combine that with all the stimulus that was still rolling around in the system from the Covid crisis, and Americans conservatively entered the Biden administration with over $2 trillion in savings that they hadn’t had before, according to the San Francisco Fed. They didn’t finish burning through that extra capital until the first quarter of 2024. which means we’re only now finding the ability to like, oh, look at that. 

A third of the economy with a more normal supply and demand dynamic. And at the moment, things look pretty good. yes. Loan delinquencies are rising, but we are pretty close to record lows still, nor nowhere near the average, or certainly nowhere near the numbers that we had back in the last technical recession in 2007. interest rates are higher, but delinquency rates are far lower than they were at the period before we entered any other recession. 

So I’m not saying that this is like we’re going to grow forever or anything like that, but at the moment the mechanicals look pretty positive, and I wouldn’t expect the United States to enter into recession. This calendar year. And some things would have to get a lot worse for us to consider a recession in next calendar year. At the current moment. 

if there is a concern, it’s more the structural because, it has to do with the balance between private credit and government spending. Now, normally, private credit rises and falls based on the job conditions. And if it rises too fast, you get a bubble, which leads to a correction. the last, of course, big instance. And we had that was the subprime building from 2000 to 2007, where we roughly doubled total private credit in seven and a half years. 

And as a result, we had the Great Recession, which was no fun for anyone. nothing like that is in the books this time. private credit has been growing for the last 15 years. It’s something much more along the lines of the century average. normally, private credit only drops or goes negative in times of recession because banks and stock holders generally restrict their play of capital on the system at a time when everything is over leveraged. 

we’re not seeing that today. Instead, what we’re seeing is more government activity. Normally, the balance between these two factors is private credit is in the driver’s seat, except in times of recession, which is when the government steps in. And if you add the two together, you get actually a pretty even. Why? What has changed in calendar year 2023 is that relationship broker. 

And for the first time in modern American history, total new government spending, not just the deficit, but the increase in the deficit year on year, that number surpassed the total increase in private spending for the first time in American history outside of a recession. Now, this is only one data point. I don’t want to overplay this, but for the first time in American history, the government has become the primary driver of economic growth in the country. 

This is not a healthy position to be in. This is a very Zimbabwe, South African, Venezuelan sort of approach to economic management. Now there’s still trillions of dollars of private investment. There’s still tens of trillions of dollars of private economic activity. this is not something I’m overly stressing about right now. But if the numbers from last year repeated this year and based on the Biden administration spending, it looks like they will be. 

And then next year, which Biden has indicated they probably will be, or if Trump wins. Absolutely. And if they do these plans to expand the government, then we’re in a different era of it. And if you remove the private sector as the primary driver of American economic growth, yes, you might get a little bit more populous support for the government or a particular candidate, but it comes at the cost of long term dynamism and size of the American economy, which has served the United States very well these last 200 years. 

Now, the degree of populism was always going to be in the cards, not just because of the politics, but because of our demographics. The baby boomers, the largest generation ever. There pass halfway through retirement. They’re going to be sucking at the government teat for Medicare and Medicaid and Social Security until the day they die. So government outlays have to go up, which means deficit spending has to go up. 

And there is no, appetite on either side of the American political aisle to do anything about that, because it’s not a vote winner. and if this sticks, we will have a problem down the line. This is a much bigger problem than the federal deficit, because this changes the complexion of the American economy and how we can adapt to shifts in the future, because the government just isn’t nearly as efficient. 

It can be quick, but it’s not efficient. And ultimately, the efficient use of capital is half of the American story. So you’re looking for something to worry about? I’d worry about that. But in the meantime, government spending is stimulatory. And that suggests that for this calendar year and next, we’re not looking at a recession. So, you know, take your good news where you can. 

Ukraine: F-16s, Offensives, and Abject Humiliation

Ukraine is gearing up for one of its most important offensives to date, but what makes this one so different from the rest?

The main driver of this offensive is a delivery of F-16s from NATO, which was preceded by some large arms packages from Europe and the US. Now this is all very exciting, but we’re still a little ways out from this going down. In the meantime, Ukraine will be laying down the groundwork to help ensure that this offensive can successfully break through the stalemate that has defined much of the battlefield this year.

So what does that groundwork look like? You can expect to see Ukraine ramp up its strikes on Russian air defenses all throughout the occupied territory and even deep into Russia and Crimea. This will (hopefully) allow the Ukrainians to establish regional air superiority and use those F-16s to their full capabilities.

It doesn’t mean Ukraine will be flying into Moscow tomorrow and ending the war, but cutting off Russian logistics in Crimea and other areas could cause significant losses to Russia – and Putin’s ego. Expect further updates once all of this kicks off.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Colorado. it appears that we’re about to see a major offensive by the Ukrainians. now, the next couple of days or anything like that. Probably going to be a couple months off. but they’re definitely preparing the ground. what’s going on is that the Ukrainians are preparing to receive a large, allotment of F-16s from NATO countries. 

and that’s right on the heels of a significant arms package, one from Europe, one from the United States, that is allowing the Ukrainians to start to shape the battlefield. What we’ve seen in the last few weeks is the Ukraine is becoming much more aggressive, not just turning the Russian assault on Kharkiv in the northeast into a killing ground for Russian troops. 

not only picking up the pace for some of the counter assaults south of the Dnieper River, where there have been some battles where the Russians have suffered 21 casualty ratios. those are actually the sideshow, the really big stuff in terms of, military strategy is using, middle range rockets and missiles to go after, Russian aviation assets deep within Russia, in some cases 500 miles from the border, and also throughout the Crimean Peninsula, going after anti-aircraft batteries, specifically, the S-300 is in the more advanced S-400s. 

the S-400s are considered the best in the world, and at least the last two weeks, the Ukrainians have taken out at least four batteries, one of which had only been up and running for a few days at the point where it was taken out. what the Ukrainians are doing are trying to deny the Russians as much air defense as possible before the F-16s arrive, because if the Ukrainians can establish regional air superiority or even just local, it is for moments, they can start using some of the training and some of the equipment that the NATO allies provided them a year and two years ago. 

if you remember back to the first wave of counter offenses we had in 2022 and into 2023, the Russians really hadn’t fortified anything. So the Ukrainians were able to punch in and take out a few specific nodes and then just chop up the Russians, inflicting massive casualties and cause massive, if not retreat routes from places like Kherson or near Kharkiv. 

but as the war moved on, the Russians started to take things a little bit more seriously and laid layer after layer after mines, building these multilayered defenses that the Ukrainians had had to punch through NATO training for a lot of Ukrainian forces taught them how to use combined arms, basically combined infantry with mounted infantry with tanks, with helicopters, with missiles, with aircraft. 

But but but the Ukrainians didn’t have the equipment to pull that off, most notably the airpower. So they’d launch this big assault, but they didn’t have air power. And so the Russians were able to call in artillery strikes because they had maybe not air superiority, but the ability to deny the Ukrainians, the skies. And that made these subsequent, counter-offensive basically bogged down in even after a lot of casualties and a lot of equipment and a lot of time, the Ukrainians only made minimal gains. 

Well, what the Ukrainians are attempting to do this time is to prepare the battlefield so they don’t have that air power problem again. So that the new aircraft, when they do arrive, can operate in a less contested environment. And if that happens, then the Ukrainians can return the favor. And any time the Russians try to concentrate forces, they get hit with Ukrainian artillery rather than the other way around. 

we have seen the Ukrainians basically get better and better at this without airpower over the last few weeks, taking out any number of strategic, radar systems deep within the Russian space. So if we get to the point in about a month when these F-16s start to arrive, the Ukrainians might actually have regional air superiority over most of the peninsula. 

And at that point, cutting the remainder of the infrastructure links from Russia proper into the southern front should be pretty easy, because there’s really only two links left. You’ve got the Kerch Bridge itself, which is already damaged, and then you’ve got a supplementary rail system that goes through occupied Ukraine on the southern coast, which is already within artillery range. 

What we’ve been waiting for to the war, this point is for the Ukrainians to use superior speed, innovation and reach in order to chop up the Russians logistical capacity at ease, and basically isolate large pockets of troops and generate the sort of political humiliation that in the past has triggered a Russian climbdown or maybe even a collapse of the government. 

I’m not saying that that’s what’s going to happen this summer. I’m saying that’s what the goal is. And with the way that they are preparing the battle space, it looks like we’re going to have some of these decisive conflicts later in this year. Assuming for the moment, of course, the Ukrainians proved to be as adept on the F-16s as they have been on everything else. 

Still a lot of moving parts, still a lot of unknowns. But we actually do see things building to at least, in Crimea, a bit of a head. that does not mean that the entirety of the war is over. I mean, hell, even if the Ukrainians were able to completely capture Crimea, Russian logistics going into the Donbas in eastern Ukraine are far more robust. 

This war is not over. But if you can trigger a global humiliation. In the past, about half of the Russian governments that have collapsed have been because of a major military defeat. And this is the first potential battle of this war that might fall into that category. 

Why Did Russia Choose Invasion Over Nukes? || Ask Peter

For years I’ve warned that a war between Russia and Ukraine was inevitable, but why didn’t Putin just play the nuke card? As an add-on, we’ll also be touching on some new Russian alliances that could rub the US the wrong way.

The Russians are no strangers to wars and territorial expansions, so despite having nukes, they still prefer their tried and true method of occupation. This may seem foolish given their nuclear capabilities, but the Russian goal is to establish a buffer they control easily, not a zone they have to patrol wearing hazmat gear.

The Ukraine War has also brought up conversations of Russian alliances with some unsavory characters, i.e. North Korea, Iran, and China. I’m really not too worried about these alliances either. The logistics alone make them all dealbreakers.

The conversation about the American-led global order being disrupted is less about Russia’s moves and more about how the Americans decide to proceed with their global strategies.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

You’re someone who has famously for a long time predicted and tried to warn people that, not only is Russia’s war with Ukraine inevitable, but Russian national security, national strategy, doctrine dictates that the Russians are likely to expand their war westward from Ukraine. But given this framing of this conflict or this aggression as being from a national security standpoint, why does Russia need to do this if they have such a large nuclear, arsenal? 

And I guess part of it, maybe a tagalong would be, why is Russia enduring what it is in Ukraine if it has nukes, is that sort of a faster way for giving things? The, the non-UK approach has been the Russian strategy for a lot longer than we’ve had. So there’s always that little inertia thing in terms of people’s minds. 

But one of the things that the Russians have discovered since 1990 is they thought they thought that they could do this on the cheap, that they could infiltrate societies, use disinformation, use plants, bribe people, and basically break the democratic processes and the strategic commitments of countries from Estonia to Bulgaria, to Azerbaijan to to take a stand. And what they’ve discovered is they’ve just pissed everyone off. 

The idea was that they could get all the strategic goodies that they thought they needed without actually having to occupy the places, and that has fallen apart everywhere except for Belarus. And so the question then is, can we threaten people to not take strategic decisions that we don’t like? So the United States, we’re going to nuke you unless you give us an aircraft carrier that doesn’t fucking fly. 

And that’s basically the strategy that you’re recommending here, is that we, as they threaten countries between them and the Western world in order for them to do exactly what Moscow wants. the Russians have discovered very, very clearly that the only way to make someone do what you want is to occupy yourself. And while we in the West might not see our way of life as threatening the existence of the Russian state, they obviously have a different opinion on that. 

the only time the Russians have ever, ever felt secure is after World War Two, when Stalin succeeded in conquering all the buffer states and concrete, all of the access points into the Russian heartlands, and that held until 1992. And the Russians are desperate to have that back. Unfortunately for them, the only way they can have that back is to by occupying countries with a combined population of more than their own population, that’s not going to fly in those countries. 

It’s not going to fly in the West. It’s not going to fly in the United States. And so we have a war. Russia’s invasion of Ukraine has pushed Moscow to seek some nontraditional, material supply, alliances or partnerships with some of the countries most antagonistic to American leadership. The role and think about North Korea. It’s, you know, in a tighter economic embrace with China. 

It’s getting drones from Iran. Do we see the potential for the emergence of a Moscow led kind of NATO? And I think, you know, we’ve seen this once before. It was the, the US saw it, but, the North Korea, China, Russia, Iran, lesser Cuba into the mix, too. it’s Friday. Do we need, these I hesitate to call them powers, but there’s this assembly of, foreign. 

America’s like the bad guys together, present a considerable credible, worrisome threat to, the American that global order. No. Well, I mean, I don’t think the American led world order is doing that great or is going to last that much longer. But no, I don’t think this is what’s going to tear it down. keep in mind that even at the height of the Cold War, the only Soviet ally that ever deployed troops out side of its own country was Cuba. 

And that was to Angola. You never had Polish troops in Romania, Romania, troops in eastern Germany. and so even at the height of Soviet dominance, they were never able to pull this off. From a purely logistical point of view, forget political or economic. So you might have places like North Korea and China and Russia and Iran and Cuba not liking how things are going if you’re there on the world, but them deploying is a completely different situation. 

In addition, keep in mind that while Russia has figured out how to deploy a small number of troops and things like Wagner, China has only ever had one deployment outside of its home country that’s in Djibouti. That barely counts. North Korea’s never done it, ever. Cuba is not nearly as powerful now as they were 30 years ago. 

So the capacity just isn’t there. Much less coordination, much less the deployment capacity. Now, the dangerous the American let order are primarily in the United States from interest. And I still still still see the biggest danger to that order will be when the United States wakes up one day and realizes that the countries that are benefiting most from its presence are the countries that it is most opposed to, because without America providing global naval coverage for civilian shipping, there is no Russian energy industry. 

There is no Chinese manufacturing sector, there is no Iranian trade. There’s not even anything for Cuba. And if the U.S. starts to use its navy to interfere with those flows, instead of protecting those flows, we’re in a very different world the next day. And the countries if the United States thinks of as the problems are gone the day after. 

Thank you very much for your time, Peter. I enjoyed the conversation and thank you for all our subscribers and followers for your questions. please continue to send them in and I’ll look forward to having conversation like this with you again. Thank you. Take care. 

Talks of the Trade: A Continued Conversation on Globalization with James Fraser & J.P. Morgan

Our June MedShare Donation Match of $50,000

I’m pleased to announce our donation matching drive for the month of June. We will be matching up to $50,000 in donations this month to our chosen charity partner, MedShare International.

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A few months ago I sat down with J.P. Morgan Payments’ Global Head of Trade and Working Capital, James Fraser, for episode 2 of “Talks of the Trade.” They’ve recently released an extended cut of that episode that I’d like to share with you.

In this new episode, we discussed a host of topics including generative AI, globalization, national security, technology and international tensions.

Click the link below to watch other episodes or to learn more about Trade and Working Capital at J.P. Morgan Payments…

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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Major European Powers Lean Right in Recent Elections

The recent European elections yielded some significant gains for hard-right parties in a number of countries. Today, we’ll be focusing on Germany, Italy, and France, and whether these shifts are game-changers or more political minutia.

The weak coalition government under Chancellor Scholz has greatly diminished Germany’s role leadership role in Europe. The Italian right wing leader, Giorgia Meloni, solidified her position at the table in the recent elections. France is the one we all need to pay attention to.

President Macron’s party underperformed at the polls, which led him to call snap elections. Macron is gambling that the far-right movement will fall flat on its face when a bit of pressure is applied…but if he’s wrong and the snap elections go the other way, France might be getting some updates to their government.

So keep an eye on the French, but let’s not get too worried just yet. There’s a slew of levels to this and altering the power dynamics of Europe will take more than French snap elections.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Florida. sorry. No beach scene today. I’m kind of in a bit of a hurry, but a lot of people have written in expressing an interest in what’s going on in European elections and since that happened. So I figured I would cover a little bit of that today. the short version is that we’ve got this thing called the European Parliament, which technically is the legislative arm of the European Union, and they have elections every few years.

They just completed them and in Italy, Germany and France, the hard right, racked up significant gains, significantly higher in France, in Germany than the ruling party did. and so the question, of course, is this, a game changer? Let’s start with the Germans. the German government under Schultz is a three party coalition that is very weak because the three parties agree on very little.

So whenever something happens in Europe, the three parties have to get together and have a coalition meeting to hammer out a common position before they start bringing in discussions with other countries. So it’s a long, laborious process. It’s really tedious. And because the coalition is so weak and because the chancellor of Germany, Olaf Schultz, is a weak leader, Germany has basically vanished from being a significant player in most European affairs.

or at least not not very much of a leader like it used to be. in the case of Italy, you’ve got a government, led by, Meloni, who actually is of the hard right. If you want to use a term that some people find is a little bit weird. and so when her party did, well, everyone’s like, oh, she’s the up and coming leader, and there’s might be something to that.

And then third, you’ve got France, which as always is a special case. in France again, the leaving party under President Macron, excuse me, did very poorly. And it was the National Front, which is kind of a traditional rightist party that did very well. Macron took this as kind of a personal insult to his view of everything and called snap elections in France.

So France will now have full parliamentary elections, in order to figure out, who’s been around the country. now, there’s a lot of if ends and buts that go with this, this. But basically France is going to have elections less than two weeks after the European parliamentary elections results, which is not a lot of time to get them to be shaped up.

the criticism that a lot of folks have is that Macron is, a little arrogant, like he’s a French president. Of course he’s a little arrogant. That’s not a reasonable criticism. Certainly it’s nothing new. and so what is in play here? Well, we’ve got, kind of two things you need to keep in mind. First of all, the European Parliament is not all that.

It, basically is only responsible for one thing. And that is saying whether or not the European Commission, which is the kind of the executive arm of the EU, is allowed to stand, they can, vote it down if a new one is formed. Like we will be seen here in a few months. they can say no, we reject the slate of commissioners, and that’s really all the power they’ve got.

So don’t read this for more than it is, because it’s not a huge deal in that respect. The European Parliament is not what makes the decisions in Europe. That is the Council of Ministers, which is the group of prime ministers and presidents that all countries directly, basically they work by either unanimity or something called qualified majority voting from time to time in order to decide what happens at the European level.

So what you normally happens is you have a European Union election, the EPP European Parliament that goes one way and then everyone takes a breather and then we get back to politics as normal, where the far right doesn’t do nearly as well. Now, what Macron is doing is betting that that is still the case, and he can take the political wind out of the sails of what was basically a protest vote in a very short period of time.

not in the least like nine things behind anyway. So he’s betting that history is on his side on this one. And, you know, we’re going to find out real soon in just a few days. Okay. Second, Macron’s personal leadership is not on the docket here. It’s not on the chopping block. It’s not at risk in any way, because the political system of France is significantly different from the one in Germany or in the United States.

So here you vote for the president in Germany, you vote for party here. The president controls foreign economic policy in Germany, you vote for the party. You get coalitions within their parliament, the Bundestag, and that coalition decides who the prime minister is. So you have a singular leader in both places who makes most of the decisions for Cabinet Office.

Not how it works in France and France, it’s split. So the Parliament selects the Prime minister and they are responsible for domestic affairs. But there’s a separate set of elections for the presidency. And that’s when Macron has been elected independently. So let’s assume for the moment the Macron was right. Well then the far right will be shown to be a flash in the pan and they go back to old politics.

Let’s assume for the moment that Macron is wrong. And these snap elections that he’s called go the other way. Well then the government falls. We get a new prime minister. But Macron is still president. And in that scenario, we’ve got something called cohabitation, which basically means that not everybody agrees in France, you know, whoop de. So I don’t want to make this up for more than it is.

And even in the worst case scenario for the Macron government, you basically would have a split prerogative. The real issue where this may matter is going to be a national election, possibly in Germany later, but that’s going to be three years away. Unless, of course, the government falls. And then we have a different problem.