Hey, everyone. Peter Zeihan here. Coming to you from Austin, Texas. A lot of you have written in over and over and over, asked me what I really do worry about. And so that’s the topic of today’s video. Overall, I am not stressed out about the United States. There aren’t a lot of things that can hurt us. 

We basically have a hemisphere to ourselves. Certainly the best part of the continent. And, we’re energy independent. We’re a massive energy and food exporter, and you can have entire continents catch on fire. And it really doesn’t do anything to the United States. In addition, if you factor out things like food and energy exports, the United States is only integrated with the rest of the world to about the tune of 10% of GDP, which is somewhere between one third and one fifth. 

What more traditional world powers historically have been, whether you’re talking about the British Empire or the China of today? So if things would have to go really bad on a global basis for the United States to really even have a mild problem, that doesn’t mean there aren’t problems. It just means you have to look a little bit closer to home. 

I’m not talking about here politics. I’m talking about drugs. Now, the traditional story has been one of cocaine. And cocaine is, from my point of view, pretty easy to understand because it has straightforward concentrations and straightforward vulnerabilities that you would expect from an agricultural supply chain. So you grow the stuff in a specific type of climate in Bolivia and Ecuador. 

In Colombia, you harvest the leaves, you dry them, you process them oftentimes with gasoline, you make a crystal, you turn that into powder, and then you smuggle the powder, by water and by air into Central American countries. And then you get on land and you go up through the various mountain corridors of Central America and Mexico until you eventually reach the U.S. border, and then you distribute it from there. 

As a rule, looking at this from an economist point of view, it takes about six man hours per dose of cocaine. And the gross is going to vary by person, but it’s going to be less than half a gram unless you just want to like, cheat death or risk death or die. 

A lethal dose is about 1.2g. So, you know, definitely cocaine is bad, but don’t do more than a gram. Okay. That is something that we understand. And there are a number of places in the supply chain where you can not interrupt it. You can try to do crop eradication at the point of source. You can try to work with third governments like Colombia to try to interdict. 

You can work with the Mexicans in order to break up the cartel network that handles distribution. Or you can go against retail distribution in the United States, by going after the gangs. These are all options, and we’ve explored all of them in the past. But none of these really work very well for the new drug, which is called fentanyl. 

Fentanyl, unlike cocaine, is not organic. It’s not an agricultural product. It’s a synthetic, a chemical process. And the process for creating is much simpler than it is for cocaine. You use a number of base materials, and you don’t really need all that many of them. And a lot of the precursors are just flat out legal. 

So what happens is in China, they make the precursors and then American citizens, as a rule, order them and they’re shipped in containers about the size of this. This is about a half a liter. And you get about six equivalent of these, and you get them to the United States. You repackage them, you take them down to the Mexican border, and then you use the Mexican postal system to ship them to wherever they need to go. 

And for the most part, these steps are legal because the precursors can be used in other materials. Once the precursors get to somebody who has a garage set up for chemical work, you basically take the equivalent of people who barely passed high school chemistry. And if you’ve got three of them in a hotplate, you can basically make about a kilogram of finished fentanyl in about a week. 

That assumes that you have relatively incompetent lab techs. If they’re not, Cramer quality, if they actually made it through undergrad, you can probably make about three kilos. That stuff then can be pressed into pills and sent north much smaller volumes involved. So remember cocaine about 1.2g is a lethal dose. That same 12. two grams of fentanyl would be enough to kill over 500 people. 

You’re talking about just a couple grains of sand equivalent is enough to kill someone, and this is why it’s become such a problem in the United States. Because instead of six man hours per dose, it’s just a few man seconds per dose. And it’s a synthetic and there are fewer places that you can interrupt it. 

Now, fentanyl has another problem because it’s so easy to get into the business because with one week of work, you can make a few million dollars. That same fentanyl, doesn’t require the huge sorts of structures, social structures, cultural structures, economic structures that are needed for the cocaine economy. 

So with cocaine, because it’s all about controlling the transit systems, the production sites, you get cartels at the point of production in points of transit, and then you’ve got the gangs and the points of distribution 

in Mexico that has created the cartels, who’ve taken a big chunk out of the transit system and then worked up and down the transit systems to control more and more territory with fentanyl. 

 That doesn’t work so well because fentanyl just needs, you know, three dudes in a garage and, you know, a mailbox. And that means that we’re seeing dozens, if not hundreds of millionaires popping up in New Mexico, organized crime groups that are largely disassociated from the cartels. Or maybe they rely on the cartels for shipping, but they don’t necessarily need to. 

It also means that fentanyl tends to be a lot more lethal, not just because it requires so much less. It’s like the individual mom and pops don’t perceive. The quality control is one of their major concerns, so they just press the stuff in tablets and off it goes. And since it takes so little to kill someone, we’ve had 100,000 people die in 2022 and 2023 from fentanyl overdoses in the United States. 

Now, in recent times, we’ve seen kind of three things happen. Number one, the cartels are starting to fracture. They’re not as powerful as they used to be. And smaller factions are getting into, fentanyl manufacture, thumbing their nose at the central authorities of the cartel leadership, regardless of where in Mexico you are. So we’re actually seeing a lot more violence in Mexico rather than less, in part because now we’ve had a kind of democratization of the supply chain system for illegal drugs in Mexico. 

Second, in the United States, we have seen fatality rates drop. A couple reasons for that. Number one, those mom and pops are starting to realize that if you kill all of your customers, they don’t buy anymore. So four fentanyl pills that have been intercepted by law enforcement, only about half of them now have lethal doses only, as opposed to 70% from 2 or 3 years ago. 

So, you know, from a production point of view, I guess there’s some quality control going in there. A second, if you are a teenager and you look at people in your 20s who are basically killing themselves with fentanyl, you know, maybe that’s not the drug for me. And, other more traditional drugs like it’s methamphetamine and cocaine are making a little bit of a comeback. 

Whether this trend has legs is something that we just don’t know. There’s so much about drugs that are a fad issue, and it’s unclear whether or not today’s, Zoomers have moved on from fentanyl, or they’re just taking a break for a moment. I don’t know what to cheer for. There. Third, because the cartels are breaking down. We’re seeing a few problems with transit. 

If you have lots and lots and lots of cartel and cartel violence, oftentimes the shipment doesn’t make it on time. But probably the biggest reason we’ve seen deaths go down in the United States is it’s not new anymore. 

So hospitals and clinics have a little bit better idea of what to look out for. And they’ve developed some protocols and some medications to help people survive overdoses. It’s kind of like how during the Iraq War, we saw a lot more soldiers live, but with horrible wounds, because medical care had improved, to deal with things like IEDs. 

So if you’re looking for something to worry about, I don’t worry so much about Trump. I don’t worry so much about radical Democrats. I don’t worry so much about Iran or Russia. Unless nukes get involved. I worry about America’s drug habits and how we’ve seen a democratization of the violence in Mexico that is breaking down the social stability of our primary trading partner. 

And if you want something a little bit more at home to worry about, let’s assume for the moment that the Mexicans succeed in driving fentanyl out of their system completely. What only takes three Japanese in a garage to do it? And those Japanese don’t have to speak Spanish. So if Mexico stops being the primary processing place for fentanyl demand in the United States, Americans are perfectly capable of picking up that baton and processing the fentanyl in anyone who has a garage and a power.

Photo by Wikimedia Creative Commons and DEA

Hey everybody, Peter Zeihan here, coming to you from hot and smoky Colorado, where we’re finally getting some much, much, much needed rain to put out the forest fires that are way, way, way too close. Anyway, I’m back for a couple of days, so I want to give you an update on what’s going on at the border.

Now, as we all know, over 2 million people crossed illegally last year. Whether that’s good, bad, or indifferent depends on your politics. From a rule of law point of view, it’s questionable at best. Politically, it’s untenable. But economically, if it hadn’t happened, we’d probably have 10% inflation because of labor shortages. So, pick your poison—what problem do you want to embrace, and which one do you want to work against?

Now that we’re into August, there are two big things going on. First of all, the number of apprehensions at the border has been steadily dropping for the last six months. This is largely due to a package of executive orders that Joe Biden enacted a few months ago. These include summary expulsions and much stricter rules on asylum. These measures were part of a Republican-sponsored project earlier this year to remake the border. The Democrats were forced into it, but then Donald Trump thought this would be a victory for Biden, so he told his allies in Congress to scuttle the deal. In response, Biden went ahead and imposed the Republican ultimatum as a series of executive orders. I don’t want to say it’s working—it’s too soon to know for sure—but tensions at the border have dropped by roughly a third during this time. We’re well below the high levels of detentions and crossings from last year, and preliminary data for July and August suggests that trend is continuing.

The second thing is that folks from beyond Central America are now making up a larger and growing group of those crossing the U.S. border. Remember, the majority of people crossing were from the failed or nearly failed states of Honduras, Nicaragua, and El Salvador. But now, there’s a significant number coming from other places, especially India, Russia, and China. These are people who used to come to the United States legally, but due to the lack of immigration reform through the Obama, Trump, and now Biden years, most legal pathways for immigrants have been closed. So now, people are just coming illegally, which means different tools are being used to regulate the flow.

Specifically, Biden has had a series of deep conversations with his counterpart in Mexico, President López Obrador (AMLO). Behind the scenes, they’ve quietly cut a deal where Mexico acts as the first line of defense. This makes it more difficult for people from those failed states to travel north. Once they get to the northern border, they’re put on buses and shipped back to the southern border. Secondly, Mexico is no longer accepting third-party visas for would-be immigrants coming from places like China. It used to be that you could fly from China to Mexico City and then come up, but not anymore. Now, they’ve been flying to places like Ecuador and trying to connect through to Mexico, but that doesn’t work anymore either. So, they’re trying to go through Bolivia or Africa, but now the Mexicans are saying unless you have a year-long multi-entry visa for all the countries on your trip, we’re just going to ship you back. This means all the countries where they used to start, like Korea, Japan, Vietnam, or Russia, are now having to take deportees on flights from Mexico City.

None of this would have been possible without having a conversation with AMLO. And AMLO is a difficult guy to have a conversation with—just ask Donald Trump. He banged his head against the Mexican administration for a couple of years early in AMLO’s reign. It hasn’t been any easier for Joe Biden, but after a fashion, we have the beginnings of a deal.

Will it work? For the moment, things are trending in a positive direction if you want to keep the border closed. But keep in mind, this border is 2,000 miles long. Even if the United States were to deploy its entire military to the border, that’s only enough people for one dude every 50 feet, assuming no one ever takes a break or sleeps. So, there has to be a political angle to any sort of border management. Simply building a wall won’t work because, as we found out in the early years of the Trump administration, if you can quadruple your income by using a ladder, well, you’re going to use the ladder. The wall hasn’t done much to inhibit people from crossing illegally.

However, a political deal, like the one we saw between Trump and AMLO and now between Biden and AMLO, which turns all of Mexico into a kind of a wall—that works a lot better.

Alright, that’s it for me. Take care.

Hey, everybody. Peter Zeihan here, coming to you from smoky Colorado. We’re definitely in the depths of fire season here; in fact, there’s a forest fire about five miles that way. No stress. Anyway, I’ve been gone backpacking for a couple of weeks, and I’m about to disappear again, so I figured I’d take this opportunity to update you on what has gone down while I’ve been out.

I’m sure lots and lots and lots of you have a long, long list of things you want me to update you on, but there’s really only one thing that I saw that happened that really requires giving you guys the lowdown. That happened in Texas and Mexico last week when a guy by the name of Ismael Zambada, also known as El Mayo, the titular head of the Sinaloa drug trafficking coalition in Mexico, got on a plane, flew to Texas under false pretenses, and was promptly arrested.

Quick background: the Sinaloa cartel is not simply the most powerful drug trafficking organization in Mexico; it’s the most powerful one here in the United States. In fact, it’s the largest organized crime group in the world. The reason it got into that position is because of its previous leader, a guy by the name of El Chapo Guzmán.

El Chapo ran the cartel like an American or Korean conglomerate. The idea was that they were all on the same side—don’t shoot at each other, don’t engage in petty larceny, things that would anger the population. Instead, they branched out into affiliated industries on the side—not just cocaine, but also marijuana, heroin, maybe a little bit of light kidnapping and human trafficking, and even local government, transport, agriculture, and tourism. Anything you could launder money with. He ran it as an institution, which kept the violence rate within his organization relatively low and minimized clashes with local governments. This allowed him to take the Sinaloa cartel to dizzying heights.

The United States named him public enemy number one, and eventually, in a series of operations, we got him. Then he escaped, and we got him again. Now he’s serving a life sentence in some dark hole in the United States. His successor is El Mayo, recently arrested. El Mayo is best known as El Chapo’s accountant. He knows where all the bodies are buried, how the institutions run, who the key players are, where the money flows, and how it’s laundered. So, big win. It’s also noteworthy how he was captured—not a DEA or FBI operation, but a setup by one of the other leaders of the Sinaloa cartel, one of El Chapo’s four sons, who tricked him into getting on the plane to the U.S. under the pretense of looking at an investment property.

El Mayo turned himself in immediately and is basically going through a plea bargain, leaving him with nowhere to turn because the evidence against him is overwhelming, and now there’s another insider involved.

The question is, what kind of operational impact will this have on the Sinaloa cartel? The cartel fractured into several dozen pieces after El Chapo’s fall, with El Mayo controlling the largest chunk. The second, third, fourth, and fifth largest chunks are controlled by those close to him, one of whom just turned him in. We already have another key player in custody in the United States, so two of the four are down, and three of the five kingpins are down.

In the short term, this means a lot of bloodshed in Mexico as these factions, without their leader, splinter and other factions try to grab pieces. Local crime groups in these areas will also try to seize opportunities. Mexico is already coming out of a three-year period that’s the most violent in the country’s history, and this situation isn’t likely to improve that.

However, now that the U.S. has some idea of where the money is flowing and the routes used, we can start dismantling the Sinaloa apparatus within the United States. Don’t expect this to have a huge or immediate impact on the flow of narcotics into the U.S. That is driven by two things: one, Americans really like their cocaine, and two, because cocaine is very expensive per unit of weight in bulk, it’s easy to smuggle. There will always be groups in Mexico and the U.S. willing to push that stuff through, but it just won’t be at the institutional level of the Sinaloa cartel.

If you wanted to make a bigger impact, the target would have been a guy named El Mencho, leader of the counter-group to Sinaloa in Mexico, known as the Jalisco New Generation Cartel. Unlike El Chapo or El Mayo, El Mencho runs his organization as a one-man show and a crime boss, ruling by fear and violence, which is the point of his operation. He just happens to make money on the side selling drugs. Removing him would likely lead to a significant impact on the cocaine flow in the midterm, but it wouldn’t end it. As long as Americans want their coke, this will continue.

But I don’t want to take away from the victory here. The bookkeeper has been brought in, and that will absolutely have significant impacts.

Now, about that other topic you want me to talk about, Biden’s withdrawal from the race. It really doesn’t change things. I made the call two years ago on how this election is going to go, and I don’t see any reason to adjust that now. I made some minor adjustments a few weeks ago during the presidential debate, which showcased the mental incompetence of both candidates. But I would just add one thing: a lot of Americans, roughly 20 to 25% of voters and the vast majority of America’s true independents, have been saying for months that they want someone else to choose from. They don’t want to choose between two people they’ve had to choose from before. Independents are fickle voters; they hate voting for the same person a second time. Well, with Biden out and Harris in, they no longer have to. So what was likely to be a lopsided contest in favor of the Democrats already is now likely to be a rout for the Republicans, unless Vice President Harris absolutely messes things up in some way in the next few months. And that doesn’t seem to be her style.

Okay, that’s all I’ve got. Take care.