Cartels Part 2: Origins of the Drug Trade

Flashback to the 80s with me for a moment…we can leave out the big hair and leg warmers…but let’s talk drugs. Most of the cartel activity came from one place, Colombia. If you’ve ever seen Miami Vice, you get the idea. But once the US caught onto the cartels’ “distribution strategy,” new ways of getting “product” into the US had to be created.

Money started flowing through Mexico, and the drug trafficking business was the place to be; it wasn’t long before the cartels we know today began to form. It’s important to note that not all of these cartels operated the same.

To most cartels, violence was a necessary aspect of the drug trade. The Sinaloa Cartel worked a bit differently; they treated this like a business, and El Chapo was the “CEO.” They partnered with the community, bribed law enforcement, and crime stayed relatively low while they were around.

Once El Chapo was captured and the Sinaloa Cartel started to fall off, groups like Jalisco New Generation surged back onto the scene. Unfortunately, this new wave of cartels brought back the violence and crime levels we see today.

For the US, carrying out military strikes on these cartels across the border just doesn’t make sense…it would be like shooting a fly with a handgun. However, beefing up border security to prevent these cartels from crossing into the states is probably a good idea.

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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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TRANSCIPT

Hey Peter Zeihan here, still in Vegas, still talking about cartels. The thing to remember is if you go back to the 1980s, most cartel activity was not Mexican, it was Colombian because that’s where the cocaine came from. And it would flow up into the Caribbean. It would avoid Cuba like the plague, because the Cubans would just kill everybody who was associated with the drug trade at that time and would flow into Miami almost exclusively. And this is literally the setting for the show. Miami Vice, all the drug wars, continental in scope, going into a single place. But by the time we got to the 1990s, the United States started to shoot down small planes that were flying ten feet over the water at night with no lights on because those were not scuba divers and the cartels were forced to change the way they shipped. And so they started sending shorter hops not to the United States directly, but into Central America, where they go on land and then go up through Mexico to the U.S. border where there’s a 2000 mile border. And before you say, building a wall will help with drugs. No, no, no, no, no, no. You can put a half a million dollars of product in your backpack. A wall is not going to impede you, especially since a wall requires 50 construction roads going down to the border to build the road in the first place. Which means you have no obviated half of the physical border of a Sonora in the Chihuahuan Desert. So if anything, the road has made it a lot easier for illegal migrants and drugs to get into the country. So remember Donald Trump, most pro narcotic, most pro illegal migration president the United States has ever had. Now, where was I? All right. Okay.

So when the cartels were going on land, that meant that the Colombian cartels had to either find middlemen and or bribe the locals in order to help with transit that generated the money flows that ultimately led to the rise of drug trafficking groups within the Mexican system itself. Now, if you fast forward to about 2012 to 2015, one of these cartels took a fundamentally different view of drugs from the rest. The other saw it as a means to power, and they were basically gangs at scale. But the Sinaloa cartel rose up and thought differently. It saw drugs as a business, and anything that interfered with the core business was something to be ruthlessly rooted out from within the organization. So you don’t steal ladies purses, you don’t shoot up the cops, you buy them off, you make them your friends. Because as long as you can bring drugs through a community, you are making money. And that is your primary reason to be. And that sort of attitude allowed them to put roots deep into Mexican society and expand north of the border fairly easily, where they interfaced with the American gang infrastructure.

If it was a Hispanic gang, you had the choice of joining them or dying. Most died. And if you were a black gang, you were probably just killed. One of the reasons that the murder rate in the United States dropped so precipitously in the 2000s is that the Sinaloa in the United States killed the people who were doing the killing. So use that to inform our general assessment of how much progress we’ve made. Now in the United States this allowed Sinaloa to not just become the largest cartel in Mexico, but in the United States and the largest organized crime group in the world. So the Obama administration worked with the Mexican government to capture the leader of that cartel, El Chapo. And then he got out and we got him again. And this started the disintegration of the Sinaloa cartel. El Chapo’s former accountant has tried to take over a chunk of it. Some of his lieutenants have tried to take a chunk of it. Some of his sons have tried to take a chunk of it. One of his sons is on the process of being extradited to the United States right now, but they all lead their own factions. And so this umbrella organization that was Sinaloa really doesn’t exist anymore in the way that it used to. And whenever you’ve got factions in a system, you’ve got violence. And it’s going to sound weird. But when El Chapo was in charge and when Sinaloa was a top down organization, Mexico was reasonably peaceful because there wasn’t infighting within his own organization and Sinaloa was able to cut a series of deals with the Mexican government to go after the other cartels.

Now, on the other side of the equation, the cartel that suffered the most from that alliance with the Gulf or the Zetas cartel. Two different groups that have kind of interwoven history. One group was the enforcers to the other. But once the government and the Sinaloa both turned on them, they basically shattered. And if you go to the eastern third of Mexico, you’re in a situation which is gang on gang violence, nominally under the name of Gulf and Zetas. And the Americans who disappeared and were kidnaped and killed this past week were people who fell in with the Gulf and the Zetas. So if you want to go with this idea of wanting military strikes south of the border against the Gulf, that’ll do nothing, because that’s basically going after the Crips or the Bloods with military hardware. It will do nothing to change the environment because there is no hierarchical organizational structure to disrupt in the first place. You’d literally be going after street thugs, and that’s just not the right tool for the job. And this group, it’s breakdown. That is the primary reason why Mexican murder rates are so high, because you just have gang on gang action, not just at the regional level or the city level, but the block by block level. And they’re fighting over the income that comes from the drug trade.

Now, in the middle, you have another group that used to be at least partially affiliated with Sinaloa that calls itself a Jalisco New Generation. They were led by a dude named El Mencho. Now, El Mencho does not have the same view of El Chapo. So El Chapo, you could basically sum up his position as don’t shit where you sleep. Well for El Mencho the violence is the point.

We’re a gang that gets money from drug trafficking, not we’re drug traffickers who happen to be a gang. So the first thing he tells his people to do when they move into a town is go shoot up the mayor’s office, the police office and any gang headquarters that you can find. Make it very clear to everyone who’s in charge and who has the guns and what the penalty for noncooperation happens to be. And that has made Jalisco New Generation very hierarchical, very violent, and has contributed massively to the violence south of the border. Now they are in the process of attempting to go north of the border to challenge Sinaloa in basically what is the the great fields of income generation opportunities in the United States. They haven’t succeeded yet and if there is a fight to be had in the United States, it is at the plazas and the border cities to make sure all this go. New generation does not cross in because if they do, wow, we think our murder rate went up because of COVID. Holy crap, Jalisco would go into Phoenix and Dallas and El Paso and Houston and Austin and San Diego and just start killing people to prove to everyone that they can. And if you want a 1930 Chicago level of violence in the United States and every city within 500 miles of the border, that’s exactly what will happen if Jalisco New Generation punches forward.

So military strikes south of the border. This isn’t going to fix anything, but perhaps an increased security presence in the city specifically to prevent Jalisco from crossing north that might be a pretty good idea.

Alright. Next time, we’ll talk about some of the economics of drugs and those things have changed.

Iran Discovers a Huge Deposit of Lithium

photo of lithium

The Iranians have stumbled upon what every Green dreams of…a massive store of lithium ore. If the numbers prove true, it would be the 2nd largest deposit ever discovered. But is it too good to be true?

Before I go crushing your dreams, I want to acknowledge that this is an exciting discovery, and it’s obviously a good thing that we found more Lithium. However, it will be a while before this lithium moves the needle…if at all.

The lithium was found in a very inconvenient spot, so transportation is going to be a pain in the ass. If the Iranians want to process this stuff themselves, they’ll have to build out the infrastructure from scratch. On top of all that, Iran’s policy towards private & foreign investment is…less than friendly. So maybe we’ll hold off on the lithium parties for now.

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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Cartels Part 1: Americans Caught in the Crossfire

Mexico's flag

On March 7th, two of the four US citizens kidnapped shortly after crossing the border into Mexico were found dead. This raises several questions, but perhaps the most significant is how this will change the United States’ policy on Mexican cartels.

The cartels have a long and deep-rooted history of flushing the American system with drugs, laundering money, and other illicit activities. However deserving of the designation as a terrorist group, we have seen in recent history how our actions on terrorist groups have played out…just look at Pakistan.

Any action taken against the cartels would ultimately damage American and Mexican relations. As the US moves away from its ties with the Chinese, that’s the last thing anyone wants. It’s a tricky situation, and the solution isn’t black and white…but maybe everyone should lay off the white stuff for a while.

Prefer to read the transcript of the video? 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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TRANSCIPT

Hey everybody. Peter Zeihan here coming to you from Las Vegas. Today is the 7th of March. And if you’ve been following the news, you knew that there were a few Americans who went down to Mexico to get some tummy tuck surgery. And shortly after they crossed the border, they were assaulted, kidnaped. And some of them have now turned up dead. And so the discussion in Washington is whether or not we should designate cartels in Mexico as terrorist groups and start doing cross-border strikes. I’m not saying I’ve got a solution to this problem because I do not. Well, actually, I do. We’ll get to that. But military strikes on Mexico are not not not the solution. It’s not that the cartels are not deserving. I mean, these are people who have basically been preying on civilians now for decades, shoving drugs into our system. First cocaine, now fentanyl. And they’re into any number of criminal enterprises and they’re trying to launder their money through other licit sectors in Mexico, in the United States, which has made the money go deep and go far.

However, we have seen exactly this sort of situation in recent American history. We know exactly where it leads. So during the Afghan war, we discovered that there were militants operating in northwest Pakistan in a place called North-West Frontier Province that were launching assaults against American forces and Afghan forces backed by the United States north of the border in Afghanistan. And then they would retreat back south of the border. And so we ended up carrying out a number of military operations on both sides of the border to chase them down. The problem we rapidly discovered is that Pakistan is a weak state and they do not control North-West Frontier Province. And by launching strikes south of the border we were inflaming local passions of Pakistanis, even if they were not in support of these militant groups. And we ended up weakening the Pakistani state, which made it even easier for these groups to operate.

So in this case, strikes across the border just poured fuel on the fire. If we were to do this in Mexico, two problems. Number one, Mexico is a weaker state than Pakistan. And so anything that inhibits its ability to function would probably make the situation even worse. And second, the most pro-American portion of Mexico are the northern tier of states where we would be likely to launch these strikes. So we’d be taking our regional allies who are not just political allies, but economic partners. Remember that the United States and Mexico are now each other’s largest trading partners, and especially if we decide we want to move away from the Chinese system, we need help with mid-skill, mid-range manufacturing. And that is a sector in which Mexico absolutely excels, is arguably the world leader. And launching military assaults on what is the location of our most important and most tightly integrated supply chain networks would be a disaster for aerospace and automotive and manufacturing in general. So I really would encourage you to think otherwise.

This is a thorny problem. The solution is not to not get tummy tucks in Mexico, although I would argue that maybe common sense would tell you that you don’t need to do that anyway. The solution is to stop using so much goddamn cocaine, because as long as we are providing the financial existence of the system, it’s going to persist.

Now, this is far too big of a topic for me to do in a single video, so I’m going to be breaking this into a few different topics where you talk about some of the individual cartels and the economics of the drug war and how it has evolved in recent years. So think of this as a starter, and in the days to come, we’re going to be turning this into a full on series. So stay tuned. See you soon.

Can the US Military Fight Russia and China?

With the potential for the Americans to get caught up in simultaneous wars with the Russians and Chinese, do I think the US can handle it? The short answer is that the US will be fine, but if you had asked me this during the Cold War – it would have been a cakewalk for the Americans.

While I don’t think it’s likely (and it is most certainly not recommended), simultaneous wars with the Russians and Chinese wouldn’t be overwhelming for the US military. That is because those two wars would boast extremely different circumstances.

War with the Russians would be a war of supply, providing munitions – specifically the decommissioned and outdated stuff – to the Ukrainians. On the flip side, war with the Chinese would be fought on the seas; the navies would be doing much of the heavy lifting.

The military assets needed to fight these wars would strain different structures, allowing the US military to operate at a manageable and sustainable level.

Prefer to read the transcript of the video? 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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TRANSCIPT

Hey everybody. Peter Zeihan coming to you from California. A lot of people have written in some questions about U.S. military strategy in light of the Ukraine war and perhaps hostilities with the Chinese. Back during the Cold War, the United States maintained a military policy of being able to fight two and a half wars. The idea that there would be two major conflicts with the Soviets. And, you know, we still need enough dry powder to fight like a small brushfire conflict and in the post-Cold War era that’s basically shrunk down to one. The idea that the United States assets are now more concentrated than they used to be, and that means they need to be more focused. And so if we end up into a conflict with the Russians and the Chinese at the same time, am I concerned that we can’t pull that off?

And the short version is no. Now, the nature of the conflict in Ukraine is one where the United States feels it can’t become directly involved because the risk of a nuclear escalation will be huge. And that means we’re supplying the Ukrainians to fight the war for us…from a certain point of view. And in doing so to this point, the military assets that are being transferred are things that we don’t use. Most of this is equipment that dates back to the seventies and the eighties that was decommissioned in the nineties in the 2000s. And honestly, the United States doesn’t think of that as part of its balance sheet in terms of its order of forces. It’s stuff that we had to dispose of, actually. So in many ways, the Ukrainians are saving us money in a weird sort of way. That means that the army is still available to do whatever with all of the equipment that it would use anyway. There hasn’t been anything taken off the top except for maybe some ammo, and we’re already producing five times as many artillery shells a day as we did before the war. So I’m not really overly concerned there.

In addition, if we do get into a clash with the Chinese, which I don’t think we will, but if we do, that is going to be primarily a naval fight. So it’s entirely possible, if not necessarily recommended, that the United States could be involved in a land war on the western end of Eurasia, while being involved in a naval war on the Eastern End. And the sort of military supplies that go to those two different types of forces are ones the United States is perfectly capable of providing simultaneously.

So while I’m not advocating for a war with either power, and I don’t think a war with either power is likely, the United States actually is capable of doing both of those at the same time. This is not chewing and walking. This is doing two radically different things with radically different command structures and especially military assets that don’t necessarily need to be in the same place at the same time.

Alright. Hope that makes a few people feel a little bit better about a few things. See you guys next time.

Interfering with the Russian Gold Trade

The Russians are taking a page from the Iranians by using gold to avoid the sanctions imposed on the Euro and USD. But before we look at how the Europeans are trying to disrupt their gold usage, we must understand why gold makes sense for Russia.

First off, Russia is a top producer of gold…it’s got stockpiles of the stuff. Smuggling it is also relatively easy, thanks to it being so value dense. But gold and Russia go hand in hand because they’ve got gold in almost every form: gold bullion, partially processed gold, and the important one to note – gold concessions.

The Europeans are desperate to interfere with Russian trade activity, and imposing sanctions on their gold concessions might be the only way. The problem with this plan is the Wagner Group is the one getting paid in concessions…and if you come for Wagner – you can bet they’ll be coming for you.

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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COVID: What Really Happened in Wuhan?

In early 2020, reports of a virus sweeping across the globe hit the headlines. But where did it come from? How did it start? This week’s news is that the Department of Energy released a low-confidence statement that COVID originated from a lab leak within the Chinese System.

Was there a breakthrough in the evidence? Did they find the smoking gun everyone has been looking for? No. And much of the scientific community still believes this was a Mother Nature special and just jumped from a different species to humans.

So without any concrete evidence, why has a chest-thumping-contest broken out in the American political system over who hates China the most? Regardless of the origins of COVID, the Chinese knew there was a breakout in Wuhan. They shut down all domestic flights in and out of the region, but you know what they didn’t stop…International flights. They intentionally let the virus spread across the globe.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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TRANSCIPT

Hey everybody. Hello from California. I just want to take a couple of minutes real quick to talk about the news this week. We’ve got a number of folks in the United States government who are taking a firmer stance on China, on COVID related history. Specifically, the Department of Energy is now saying with low confidence that it believes that COVID originated in a lab leak out of the Chinese system. And the director of the FBI concurred with the general statement that this is the bureau’s standing position.

Couple of things real quick. First, don’t blow it out of proportion. Low confidence means that there’s actually no smoking gun or firm evidence of any kind. It just means that this is the opinion of the agency and there’s a lot of circumstantial evidence that points in that general direction. There’s no new breakthrough. There’s been no information brought to light that indicates that the lab leak is indeed where COVID came from. And as a rule, about two thirds of the American intelligence community officially is on the position that this is a 100% Mother Nature special, that jumped from one species to humans, somewhere in the Wuhan area. So there’s really no movement in terms of policy here or in terms of information.

I will outline two things. Number one, the Department of Energy in the FBI are as a rule, not known for medical expertise. So when they come out and say things like this, you should take it. Not so much with a grain of salt. Just put it in the context. Second, no one has any information or smoking gun or evidence pointing to it not being a lab leak. So while the general position of the scientific community is, it would probably jump from animal to human, that doesn’t mean that we know that that is what happened. It could be either way.

Now, a couple of things here. First of all, politics. There is now a competition across the American political spectrum as to who is going to be more anti-Chinese. And so there are resolution after law after amendment across Congress to prove that the Republicans or the Democrats happened to be the ones that hate China the most. Gone are the days that the business community was even part of this conversation, and now it’s all political and everyone is competing to see who can beat their chest the most. That should be your first big take away that relations with the Chinese. On the American side of the equation are breaking down because they no longer have a defender, they only have attackers. So whether you like Trump or Biden or hate Trump or Biden, everyone has decided that they don’t like the Chinese very much. That’s number one. What’s number two?

Oh, yeah. There’s plenty of reasons why we should still be mad about the Chinese, even if it’s not a lab leak. So the lab leak theory is based on the idea that either through carelessness, negligence or accident, it leaked out. So accidental being the key word there. And obviously, if the Chinese did allow it to escape from a lab and hushed up, that is bad. But that is ultimately accidental. What we know for sure, what there is no dispute of what have been the Chinese admit publicly is that for the two weeks after the Chinese realized they were dealing with a respiratory pathogen in Wuhan, they banned domestic flights to and from Wuhan, but they allowed international flights to continue to and spread the virus worldwide.

The lab leak would be embarrassing, but what we know for certain was that the Chinese intentionally allowed the virus to spread globally. And from my point of view, that means it’s perfectly reasonable for the Democrats and Republicans to compete as to who is more anti-Chinese these days. Alright. That’s it for me. Until next time.

Demographics Part 7: The Northeast Asian Crash

Today we’re talking about another region of the world competing for the title of “worst demographics” – and that, of course, is none other than Northeast Asia.

China is its own beast, and for those of you that have followed me for a while, you know where they stand…to summarize, yikes.

Japan is one of the few countries that has been able to look at this situation from a long-term view, allowing them to prepare for this (far) better than their neighbors.

South Korea is the poster child for all of the issues at hand, but if there’s a country that can somehow find a strategy to get itself out of this situation…it would be them. (and hopefully, they share it with the rest of us)

Taiwan has been able to delay the demographic problems that these other countries are facing, but that doesn’t mean they get off scot-free. They just have some time to think about what’s coming.

I know that was a lot of doom and gloom, but at least you have Southeast Asia to look forward to.

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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

The Fight for Ukraine – Global Alts 2023

At iConnections’ Global Alts cap intro event earlier this year, I had the pleasure of sitting alongside Daniel Bilak, a Ukrainian Volunteer Serviceman and Partner at Kinstellar, to discuss the status of Ukraine’s fight against Russia.

This video is roughly 30 minutes long, and we touch on key battlefield dynamics, current global repercussions and long-term implications for the world. I hope you enjoy it!

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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Inflation: The Gift that Keeps on…Taking

a vacuum sucking up dollar bills

Over the past few years, every aspect of life has been trapped in a constant state of flux…thanks COVID. Unfortunately, the economy’s lack of stability forced inflation to skyrocket to 9%. The effect was devastating.

Supply chains catching up, a decrease in energy demands, and higher agricultural yields have ushered in a reduction in inflation rates. I suspect this trend will continue over the next few months, but it won’t last forever.

All this change and disruption (I’m talking electric infrastructure build-out, Ukraine War impacts, energy struggles in Germany and don’t even get me started on China) will gravely affect inflation rates.

Executive orders aren’t going to fix anything. We need sharp policy change. Without that, the low inflationary times of 22-23 will likely be the best we’ll see for a long time.

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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Is India the Next China?

When I get the question – “Is India the next China?” – to the surprise of many, I respond with a resounding NO! And the Indians should be extremely happy about that. When most people look at India, they see a ton of people and cheap labor. But once you dive a little deeper, the stark differences between India and China start to appear.

Thanks to globalization, China became the manufacturing powerhouse it is today; India missed the globalization train. So India will probably be just fine when the rug gets pulled out from under the global system.

China’s economy owes much of its success to hyper-financialization due to the government flooding projects with loans and capital. Great for the appearance of economic growth, but wildly inefficient and unproductive. In India, capital availability is low, so the projects that get funding are actually productive.

And finally, my favorite topic, demographics. China is a mess; just go watch my videos on that. India is just now industrializing, so their demography has shifted into the chimney we often see (having the same amount of people in their 40s, 30s, 20s and so on). However, this has happened much later and is proceeding much slower than their peers.

On top of all that, India is geographically blessed with access to food and energy right around the corner. Don’t get me wrong, India has its own set of issues, but they are all on a magnitude lower than what China’s got going on.

Prefer to read the transcript of the video? 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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zeihan here coming to you from the great golf course wilds of Ojai, California. Today, I wanted to do something that a lot of folks have been asking for a while and talk about India. So this is kind of like half in the demographic series, half on its own.

Lots of folks are always wondering if India is going to be the next China because it’s a big country. It has more people now. It has a faster growth rate. And, you know, it’s a legitimate question, but I have to give it a resounding no. And that is something the Indians should be very happy about. Chinese success to this point has been based on three factors. First of all, the strategic largesse of the United States in creating the globalized system, to allow the import and the export of everything on a global basis without having to first secure territory or sea lanes militarily. This came about as a result of not just the American globalization push after the Second World War, but when Nixon went to see Mao in China and to engineer the Soviet Sino split, which ultimately made China an ally of the United States in the later years of the Cold War. That is what created the manufacturing powerhouse that we know as China today.

Now, the United States have lost interest in that, and the United States sees China as a rival. So the continued existence of the Chinese economic model is dependent upon the ongoing strategic largesse of the United States, which is a very bad plan. And we’re seeing the United States hack out bit after bit after bit. It’s already happened in agriculture and energy, in manufacturing, especially in semiconductors. And the United States has the ability to kill any of this overnight if it should choose to. So the economic future of China is, one, without exports and imports and market access. And I don’t know how they can square that circle.

In the case of India. India never joined the system. India was pro-Soviet during the Cold War, and even when the Soviet system went away, the Indians kind of reflexively remained a degree pro-Russian in the years since. So their system is never internationalized. Now that means they missed out on the big growth push that the Chinese had in the eighties, 19, 20 and 2010s. And that’s why the Indian economy is so much smaller. But it also means that when the rug gets pulled out, India really doesn’t suffer all that much.

The second big piece of China’s success is hyper financialization. The idea that the state confiscates the bank deposits and the savings of the population and just floods would be projects without money, making sure that everybody has a bottomless supply of 0% loans so that everyone can have a job. Now you will get economic growth with this, but it will be wildly inefficient and in many cases flat out nonproductive. The closest comparison we have in the United States is Enron and subprime. We know how that went. Now, imagine doing that for every single economic subsector throughout the entire economic structure, which means when it goes down. And it will go down. You don’t just have a financial and a housing crisis. You have an everything crisis. And the economic sector that has been most exposed, that is most dependent to this capital is agriculture. So you can toss a famine on top of that. This isn’t a problem in India.

Now, the Indians system is capital poor, no navigable waterways of note, very high population per person capital availability in India is among the lowest in the world, lower than most of sub-Saharan Africa. But that means that the Indians actually treat capital like money. It’s an economic good as it should be, as opposed to a political good as it is in China, which can be thrown at whatever you want. So again, you don’t get the growth, but you also don’t get the instability.

The third big factor is demographics. Now, we’ve already talked about China at length in terms of just the hollowing out of the entire system. This simply hasn’t happened in India at all. Now, India has, like everybody else, started to industrialize. And so India has, like everyone else, slowly transition to kind of that chimney demography where they have as many people in their forties as the thirties of their twenties. Those are teens. But the process started a lot later than it did in China, and it’s proceeding a lot slower. And so while India is in the midst of rapid aging, it’s from a very late start, at a relatively slow speed compared to a lot of other countries in their peer group, much less the Chinese, which really are in a category all their own. Which means that India today has plenty of people under age 40 to do consuming and even still have kids. If they can find a way to reverse some of these trends. And that means in 10, 20, 30, 40 years, India is going to have a lot of people aged 40 to 65 who are going to be capital rich and high value add and in a system with one and a half billion people, even if that’s only 10% of the population, and it’s more, that’s still a whole lot going on.

Now, in the worst case scenario, where birthrates continue to shrink and the Indian population continues to age, we are still talking about it still being the world’s largest population for at least another half a century. And they won’t be in a European style crunch for their demographic within 40 years. So even if they do everything wrong, even if everything turns against them, the future of India looks pretty good. And they’ve got one other thing going for them that the Chinese don’t. They’re a lot closer to the things that they need. Australia is a much more friendly nation to the Indians than it is to China, and so there’s always going to be some extra food supply or mineral supply that’s available. And India, the subcontinent is the first stop out of the Persian Gulf.

So India is one of the last countries in the world that you should expect to ever have an energy crisis. Whereas China, is the last country on a very, very long easy to disrupt chain. So all of the normal issues that we think about when we think of India inefficiency, women’s rights issues, what that means for their economic growth, the fact that Pakistan is right there. Now, these are all relevant along with corruption. These are things we should worry about. But they’re an order of magnitude less than the problems that are plaguing China now, and they’re all survivable.

There are solutions that the Indians can come up, and even if they can’t, they can cope with these as they continue to grow. Whereas China, we are very close to the end. Alright. That’s it for me. See you guys next time.