How to Solve the Cocaine Problem

Photo of man in gloves opening cocaine package

It would appear that my suggestion for everyone to stop doing cocaine hasn’t solved the problem, so let’s look at some of the solutions others have proposed.

What about domestic cocaine production? The U.S. doesn’t have the extremely specific tropical growing conditions necessary for coca plants. What about legalizing cocaine? Healthcare costs and reduced worker productivity would likely outweigh any savings from reduced law enforcement or tax revenue.

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Transcript

Hey all, Peter Zeihan here, coming to you from Colorado. Today, we are taking a question from the Patreon page. And he says, you keep telling people to not use cocaine. True. But people are going to keep using it. Probably true. So wouldn’t it be better for us to just domesticate it and take advantage of the addiction? Like, oh wow, that’s dark. Let’s start about the the practical restrictions on having a cocaine trade in the United States. 

And we’ll talk about it. It’s a bad idea in general okay. Cocaine is an incredibly finicky plant. It demands subtropical to tropical temperatures year round, is one of the least frost tolerant plants on the planet. Even a light frost will kill the entire plant completely. Won’t come back. It also needs water. Lots of water, at least a meter, preferably two meters of water a year. 

And it can’t have a dry season. So tropical rain year round. But it also hates being wet, so you have to have acidic soils that are very, very well drained. You put those combinations together and you basically have two options. Number one, the Andes, where the mountains prevent the water from sticking around, but at a relatively low elevation, typically about 3000ft maybe. 

So you get the water to drain itself, but you’re low enough that you never have to worry about frost. Now, if you industrialize this production, you could put it in other tropical zones that are lower altitude, that are flatter. But then you have to basically engineer your fields so that they drain, but again, can’t be tropical dry season like say, a lot of Brazil. It has to be fully tropical all year long. No dry season. And that means you’re basically looking at the Andean crest. Or if you want to industrialize, maybe places like Southeast Asia specifically, maybe Indonesia. 

The United States has nothing like that. Even in Florida we get frost from time to time. And so the entire crop would die anywhere further north just would not work. There is just not enough water and not enough reliability. Okay, so from a technical point of view, wouldn’t work. From another point of view, every study I’ve ever seen has always shown that whatever gains we might get by legalizing cocaine in terms of lower costs of law enforcement and maybe higher income from taxes, is going to be wiped from higher care costs and higher worker absentee rates. 

So economically, there’s no case. Environmentally there’s no case. The simplest answer is just not do cocaine. If you’re looking for a horribly destructive drug that we can domesticate production of your answer is fentanyl. It is made from precursor materials that come out of almost any possible chemical company in the United States, is the world’s largest chemical producer, and you can make it in a garage. So if your goal is to have something that destroys your body and mind and you want to grow it domestically, fentanyl is your answer. But just in case it was not clear, don’t do fentanyl either.

The Future of Drone Tech: Ukraine’s Innovation

Camo clad man flying a drone outdoors | License by Envato Elements

The U.S. has finally secured its first contract to manufacture Ukrainian-designed drones, but don’t go celebrating quite yet.

The F10 drone that will be produced is a small FPV quadcopter built entirely from non-Chinese components. This is a big step for the U.S., but it’s not nearly the crème de la crème of Ukrainian tech.

The facility where these drones will be made is yet to be built, so even this initial order of 2,000 drones will take several years to complete. Regardless, this is a step in the right direction that will hopefully lead to further cooperation down the road.

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Transcript

Hey all. Peter Zeihan here. Coming to you from Colorado. Today is the 1st of July and the news is good news. We have our first contract granted by the Department of Defense to have a US manufacturer produce Ukrainian drones under license. There’s not a lot of information out at this point. It’s all super secret, but I’ll share what I know and give you a couple of guesses based on what we know what that means. 

So step one, the American company involved is called Ukrainian Defense Drones. Catchy name. And the Ukrainian company on the other side is called F drones. F drones is one of the big boys in Ukraine for producing ever more innovative policies and doctrines and designs and getting them to the front their F7 drone from last year, 2025, yeah, was basically voted the drone of the year for how good it was against emplacements and vehicles. 

The new drone that the United States is going to be producing is called the F10. We know it’s 100% non-Chinese parts, and aside from that, we just know that the ten means it’s ten inches across, which means it’s a quadcopter and it is a first person drone. So you’re going to have a dude with a controller relatively close to the front line that suggests from its size that it has some range limitations, probably only 25 to 40km, and it probably can only carry a warhead that’s 3 or 4 kilos. 

That’s probably not enough to take out a tank, but more than enough to wreck the day of, say, an artillery crew and go after personnel or trucks. That’s the good news. The bad news is there’s no sign at the moment that the F10 is one of the drones that has the terminal guidance that the Ukrainians have been starting to introduce across the front and across the entire drone fleet this past year. Those are the things that load a decision into the drone, so that when it gets over its target area, it can actually look around and pick a target for itself. And once it does that, it can’t be jammed. Now, this is just a contract. It’s part of the American program to try to get 200,000 drones in active service before the end of 2027, just next year. 

But this is going to be a late bloomer in that, because the facility that has been tagged to build these drones in Ohio hasn’t begun construction yet. We only got go ahead for the construction last week, and they’re not expecting to finish construction until December of 2029. So three and a half years from now, and then they’ll start building out the first packet of drones. 

And they’ve only ordered 2000 of them and at a rate of, say, 650 to $700. You know, these just aren’t particularly sophisticated drones, which is fine. The key thing is that for the first time, we have a direct contract from DoD for Ukrainian equipment, which is something we’ve been desperately to get in this country. I would argue, even though all of our Western allies and Middle Eastern allies are way ahead of us on this front, because they know they can’t rely on American hardware, there’s a lot of things can still go wrong. 

For example, the reason we don’t have a contract until now is that Donald Trump personally despises President Zelensky of Ukraine. And it’s entirely possible at this moment that Trump is unaware that this contract even exists. And as soon as he finds out, he may well squash it. But hopefully it is the first of several thousand contracts to come that it would allow the United States to take advantage of the war zone in Ukraine, to help test an entirely new set of weapon systems and take advantage of the Ukrainian skill sets, which were by far the most advanced in the world when it comes to the designing and the use and the development of doctrine for these new types of hardware. Early days. Once this facility is constructed, it’s supposed to be producing a wide variety of defense equipment, of which Ukrainian drones are just one tiny little piece. So it’s a step in the right direction regardless. And I just hope that’s a small step all around a very long path of tighter partnership. 

That’s probably just wishful thinking from me, but at least we have the first step.

Why Nobody Came to Help the U.S. in Iran

Toy Tank Atop Iranian Currency and Flag | Licensed by Envato Elements: https://app.envato.com/search/photos/3abc94ac-73db-4912-ae0d-3e507dd11191?itemType=photos&term=iran+war

Despite the large rolodex of U.S. allies, nobody has pulled up to the Persian Gulf to support the U.S. There are several reasons for this, though.

Part of the post-WWII deal was that the U.S. would provide global maritime protection, so nobody else had to; as a result, few powers could help out, even if they wanted to (like Japan, the UK, and France). It doesn’t help that the U.S. launched this operation without consulting anybody, but even if they had, most allies wouldn’t touch a Persian Gulf conflict with a ten-foot pole.

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado. Today we’re taking a question from the Patreon crowd, specifically considering how dependent countries like to Pan and the countries of Europe are upon energy imports, specifically from the Persian Gulf. How come they haven’t been helping out with the conflict? Well, let’s look at it. First of all, not a lot of countries maintain naval forces that are capable of rapid projection. 

You basically have them on a degree of standby until something big happens and then everything has to be spun up. So, for example, unless you’re the United States very special case, everybody’s navies are pretty much limited to coastal patrol. So if you do have a long range ship, it’s probably just sitting in dock until it’s needed. And then it’s going to take a few weeks to a few months to get it ready to go. 

That’s one. Number two. The deal that we struck with everybody at the end of World War two was that we will patrol the global oceans and keep the ceilings open for everyone. If in exchange, you allow us to control your security policies. And part of us controlling your security policies is we don’t want you to have any long range power projection, because if you have a long range power projection, you’re going to use your long range power projection. 

You might use it in ways that we don’t want. So with the exception of Japan, which is an island nation and has the second largest navy in the world, and the United Kingdom, which has a bit of an imperial hangover, the only other country in the world that maintains really any long range capability that’s independent is France, and that specifically. 

So it has an independent capacity. So really we’re talking here about three countries. No one else could have even helped if they had wanted to. Which brings us to number three a burden sharing intelligence, sharing whatever you want to call it on February 11th. Netanyahu, Benjamin Netanyahu, the prime minister of Israel, came to the white House, made a pitch to Trump for the United States and Israel to jointly attack Iran. 

He said the war would be over in four days. We can kill the leadership because you know where they are. There will be a revolution. They’ll probably rename the capital to Trump Obelisk, and you will go down as the bravest and most capable American president in history, and you will do something that all the cowards before you refused to do. 

And Trump looked around the room and everyone who knew something about foreign policy, for example, Secretary of State Rubio and the Joint Chiefs of Staff Dean Cain said, Mr. President, this is an horrible idea. We’ve been hearing some version of this for 30 years, specifically from Netanyahu, who has tried to convince multiple American presidents to fight his war. 

For him, the math never checks out. The Strait of Hormuz will be wrecked. But, Mr. President, it’s your call. And then the people who knew nothing about foreign policy, notably Pete Hegseth at defense, said, do it. 

The carrier sailed later that day. So normally when the United States goes to war, we compare intelligence with our allies. That never happened this time. And we now know, even from within the white House four months later, that there wasn’t any intelligence. This was just a pitch deck from Netanyahu, who has been chomping at the bit to get the United States to fight his war for a long time. 

So normally we’d like consult with NATO, especially with the Japanese and the Brits, and we’d arrange for a coalition to put at least a veneer of internationalism on top of whatever it was that we felt we needed to do. None of that happened. So the war began a couple of weeks later. Just just the amount of time that it took to sail to get there. 

And then about in week four of the war, when the Trump administration realized it wasn’t going well, which was difficult because DoD was only showing him like strike footage, because any time they tried to give him an accurate assessment of how this was not going well, he’d kick him out of the room. Well, by four weeks on, it was starting to come at him from all angles that it wasn’t going well. 

And that is when he started yelling at the allies to send forces. But as I’ve mentioned, no one else has forces to send, and the few that might certainly in a hot situation are not going to be sending things through Suez. So even if like, say, the French and the Brits had snapped to at that instant, unlikely they would have needed a month or two to get their forces ready to deploy, and it would have been over another month before they would have actually arrived. 

And in the meantime, you know, Iran went the way Iran did. And we’re now in a situation where we get final point is that nobody outside of Trump and Netanyahu wanted this war in the first place. We now know unequivocally that Iran’s drones are more than capable of taking out every piece of physical infrastructure throughout the Persian Gulf, which can trigger a global energy induced depression. 

We now know that their monitoring of the entirety of the Strait of Hormuz is strong enough that they can even take occasional shots at ships that are hugging Omani waters on the southern side of the strait. And really, even with the US Navy concentrated on the Strait of Hormuz in the Persian Gulf, there’s not a lot it can do, because if those ships stay still, then they become targets to. 

So we’re in this never ending negotiation where negotiations aren’t actually happening. Because this is just horrible. Normally when you’re having a real negotiation, you have your headliners who do the real talks and what are called technical folks do the technical talks so that when the headliners show up, there are only real things to discuss. 

Well, Trump has shut the Department of State to the side and refuses to deal with that at all. Even that’s where most of the policy experts are. 

He made Secretary of State Rubio be in charge of all that because he doesn’t like Rubio either. So all you Rubio fans who think that he might be the successor to MAGA, think again. He also doesn’t like the National Security Council. That does kind of have all the deep thinking as opposed to the diplomacy. 

Not so it could be more efficient in the way that Kissinger did it, but to shove it all to the side. So there were no negotiations with the allies on the front end, and there’s no technical talks happening with the Iranians on the back end. So the last time that Trump’s preferred negotiators, Jared Kushner and Steve Whitcomb, went to Doha this past week, they got to Doha and the Iranians like, yeah, not this week. 

We have technical talks to do. And so there’s still nothing happening. There have been no technical talks since this whole thing started in February. Anyway. If you’re an ally and you’re looking at this, you’re like, why would I develop a military capability that the United States has until now, said I should not have in order to use it to prosecute a war that hurts my economy. 

And then we are at the mercy of a diplomatic situation that doesn’t have diplomats. So, yeah, no, the allies haven’t done anything here that is untoward. We’re just in a bit of a trap caused by a man who refuses to surround himself with anyone but sycophants and is very, very easy to manipulate so long as you’re willing to lie to him, which is not what a good ally does. 

All right, that’s it for me. Until next time.

The U.S. and Ukraine Make a Drone Deal

Image of a drone firing missiles

The U.S. has finally secured its first contract to manufacture Ukrainian-designed drones, but don’t go celebrating quite yet.

The F10 drone that will be produced is a small FPV quadcopter built entirely from non-Chinese components. This is a big step for the U.S., but it’s not nearly the crème de la crème of Ukrainian tech.

The facility where these drones will be made is yet to be built, so even this initial order of 2,000 drones will take several years to complete. Regardless, this is a step in the right direction that will hopefully lead to further cooperation down the road.

Prefer to read the transcript? Click here

Transcript

Hey all. Peter Zeihan here. Coming to you from Colorado. Today is the 1st of July and the news is good news. We have our first contract granted by the Department of Defense to have a US manufacturer produce Ukrainian drones under license. There’s not a lot of information out at this point. It’s all super secret, but I’ll share what I know and give you a couple of guesses based on what we know what that means. 

So step one, the American company involved is called Ukrainian Defense Drones. Catchy name. And the Ukrainian company on the other side is called F drones. F drones is one of the big boys in Ukraine for producing ever more innovative policies and doctrines and designs and getting them to the front their F7 drone from last year, 2025, yeah, was basically voted the drone of the year for how good it was against emplacements and vehicles. 

The new drone that the United States is going to be producing is called the F10. We know it’s 100% non-Chinese parts, and aside from that, we just know that the ten means it’s ten inches across, which means it’s a quadcopter and it is a first person drone. So you’re going to have a dude with a controller relatively close to the front line that suggests from its size that it has some range limitations, probably only 25 to 40km, and it probably can only carry a warhead that’s 3 or 4 kilos. 

That’s probably not enough to take out a tank, but more than enough to wreck the day of, say, an artillery crew and go after personnel or trucks. That’s the good news. The bad news is there’s no sign at the moment that the F10 is one of the drones that has the terminal guidance that the Ukrainians have been starting to introduce across the front and across the entire drone fleet this past year. Those are the things that load a decision into the drone, so that when it gets over its target area, it can actually look around and pick a target for itself. And once it does that, it can’t be jammed. Now, this is just a contract. It’s part of the American program to try to get 200,000 drones in active service before the end of 2027, just next year. 

But this is going to be a late bloomer in that, because the facility that has been tagged to build these drones in Ohio hasn’t begun construction yet. We only got go ahead for the construction last week, and they’re not expecting to finish construction until December of 2029. So three and a half years from now, and then they’ll start building out the first packet of drones. 

And they’ve only ordered 2000 of them and at a rate of, say, 650 to $700. You know, these just aren’t particularly sophisticated drones, which is fine. The key thing is that for the first time, we have a direct contract from DoD for Ukrainian equipment, which is something we’ve been desperately to get in this country. I would argue, even though all of our Western allies and Middle Eastern allies are way ahead of us on this front, because they know they can’t rely on American hardware, there’s a lot of things can still go wrong. 

For example, the reason we don’t have a contract until now is that Donald Trump personally despises President Zelensky of Ukraine. And it’s entirely possible at this moment that Trump is unaware that this contract even exists. And as soon as he finds out, he may well squash it. But hopefully it is the first of several thousand contracts to come that it would allow the United States to take advantage of the war zone in Ukraine, to help test an entirely new set of weapon systems and take advantage of the Ukrainian skill sets, which were by far the most advanced in the world when it comes to the designing and the use and the development of doctrine for these new types of hardware. Early days. Once this facility is constructed, it’s supposed to be producing a wide variety of defense equipment, of which Ukrainian drones are just one tiny little piece. So it’s a step in the right direction regardless. And I just hope that’s a small step all around a very long path of tighter partnership. 

That’s probably just wishful thinking from me, but at least we have the first step.

Status Update on the Persian Gulf

Aerial View of Persian Gulf with Digital Paths | Licensed by Envato Elements: https://app.envato.com/search/all/photos/07ea8bb2-6848-46ea-8372-ec4f58d701a6?term=persian+gulf+satellite+

All right, time for a status update on Persian Gulf shipping. Tanker traffic is slowly resuming, and Gulf producers are gradually restarting exports…but let’s not go counting chickens quite yet.

Global energy flows remain constrained, and exports won’t fully recover for some time. Most of the traffic is the previously stranded cargo flowing out, rather than new tankers entering. And Iran has emerged from this new arrangement with greater influence over the Strait.

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Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. It is the 29th of June, and let’s chat about the status of the Persian Gulf, because so much depends upon it. We’ve had on again, off again violations of the steel by both the Iranians and the United States. One of them hit something and the other one hit something or retaliation. At the moment, they’ve both agreed to disagree and not shoot at each other. 

So technically, the Strait of Hormuz is open if you’re the Americans and it is closed if you are the Iranians. As a result, cargo movements have been very, very slow to pick up. We’ve probably had about 20 tankers a day on average this past week leave, and that is starting to finally drain the stranded ships that are within the Persian Gulf. 

Keep in mind, there were over 1000 that were stranded when the war began and had been there for three months, and that has meant that a fair amount of crude, maybe 35 million barrels, has gotten out. In addition, a number of the Gulf states are incrementally restarting oil exports. The most progress has been made in Saudi Arabia, where there are at least four tankers as of the weekend that were loading successfully. 

Gutter is more of a question mark, and in the case of the United Arab Emirates continuing to use their report, which is actually outside of the Strait of Hormuz on the Gulf of Oman, Kuwait influx, no real information and Iraq doesn’t look like its movement at all. Some people are saying that, okay, look, we’re getting back to normal, but but not really. 

You see, the the Saudis have a bypass pipeline that they cranked up well above design specifications, and it made up for over 90% of their previous exports. And so they were shipping things out through the Red sea. So shipping things now from Ross Tonnerre on the Persian Gulf is just taking some of the stress the off of that transit line. Is that not actually adding any new crude? 

The same more or less is going for the United Arab Emirates. We are getting this one shot deal from the stuff that was locked up that can get out, but very, very few tankers are coming in for what I’ve been able to sell over the weekend. You’re talking about less than 15 ships transited into the Persian Gulf, and only about half of those were tankers. 

Keep in mind that before the war, somewhere between 100 and 150 ships transited each way each day, which means, as a result of the peace deal, the only country that is currently sending ships back and forth through the Strait without restriction is Iran. And I can’t underline enough about how this deal so lopsided serves Iran’s purposes. The Iranians are talking openly now about the regimen, about how they’re going to charge fees or tolls or whatever you want to call it to what’s going on. 

And even Oman, which is, you know, technically not. Iran is talking about how they’re looking forward to coordinating with the Iranians to make that happen. So the most important waterway in the world for energy flows is right now only fully open for business. If you’re Iranian. And the Iranians and others now are working on how to charge everyone else for the pleasure of using it, with that deal supposedly being enforced by the US Navy. 

So this is an ongoing, catastrophic economic and strategic event for the world as a whole, for the United States specifically. 

And we still don’t have a good read on when the fields in the region are going to be getting back up to full production. Probably not this year. All right. That’s everything for me. See you tomorrow.

U.S. Oil Export Restrictions Coming Soon

An oil tanker in the ocean sailing

If global energy supplies remain constrained, the U.S. government will prioritize U.S. consumers over international markets. This would take the form of export restrictions.

These restrictions could take several forms. The first would be halting U.S. crude exports, which would keep more oil at home, but would also strain storage capacity and hurt shale producers and refiners in the process. The more likely option would be taxing exports of refined products, which would lower domestic prices and push the burden onto global markets.

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Transcript

Hey, everybody. Peter Zeihan here coming to you from above the valve at all in New Mexico. We’re coming up on golden hour, so I’m just going to sit here for a little bit. Anywho, today I am taking a question from the Patreon page. Specifically, do I think that the United States government is going to restrict energy exports in order to keep prices under control, as the international system basically loses energy?

And absolutely, absolutely, absolutely. The question is how there are a few options. None of them are great and all of them have side effects. But let’s start with the basics. As of the third week of June, we have somewhere between 1 and 1.3 billion barrels of crude that were never produced and delivered. That has drained global inventories to record lows.

And even if the strait were to open tomorrow, it’s going to be years before Persian Gulf producers can be producing again. So we’re going to have to have some demand destruction. That will probably involve a protracted, sharp price spike. And there is no way that a president is populist, as Donald Trump is going to let that pass without doing something.

So two options. The first one, the legal option is probably the least clean back under the Obama administration, Congress granted the president the right to end all oil exports just by saying so. That would trap the crude in the United States and probably send crude prices in the United States. Negative, because there’s just not enough storage. Well, Let me back up and take that back a little bit. Storage is running really low in the United States because of what’s going on in Iran. So step one would be to fill up all of that storage. And the question would be whether or not the shale wells, which fall off pretty quick, would fall off before the storage was filled.

You see a shale well, it can be brought online in just a few weeks, but half its lifetime production is produced in the first year. So if it takes, say, three months for the storage to fill up and nobody drills at all during that time, things might work out kind of kind of. I don’t want to. I don’t want to ever play that.

If not, prices are going to go negative because there’s just no where to put it. We had the negative price situation for a while in Covid, if you remember. That was all kinds of fun. If you were an oil producer. Anyway, what that does is it floods the system with crude. And if you are a US refiner, you now have basically a bottomless supply of light, sweet crude to shove through your refinery and make product.

However, US refineries don’t like light, sweet crude. They were designed for a different world where we imported a lot of cheap, heavy, sulfur laden crude. Ever since the shale revolution really got going back and say 2010. I mean, we got our first production back in

2007, 2008, and then it just exploded after that. US refineries have been changing their refineries.

Bit by bit by bit. But it’s been very slow. They’ve been fighting it at every step of the way. And in this circumstance, the ones that have basically been dragging their feet would be hosed, because you can damage your refinery if you run the wrong crude through it. And at a minimum, you’re going to have a really high refinery loss anyway.

That’ll go for a few weeks and then we’ll see basically an implosion in the shale fields, because nobody is going to want to produce if they can’t export. A lot of infrastructure is added, especially in Corpus Christi in the last decade to facilitate those exports. And if they go to zero, they go to zero. So probably you’re looking at at another one, maybe one and a half, maybe, if we’re really lucky, 2 million barrels per day of product, of which they will try to make more gasoline and diesel and jet fuel.

So that might, might be half of it, but that’s it. And everything else that’s in the surplus basically gets shut down because there’s nowhere to send it. So it would give a moderate boost to consumers over the mid and long term. Refiners would just be besides themselves with the damage to the refineries and producers would go out of business.

That’s option one. That’s the legal option. Option two is to do something to restrict fuel product exports. Right now, the United States exports about 5 million barrels per day of refined product, which is more than any other country on the planet has ever even exported of crude. And if you were to do something that it would strike that and trap that in the country, that would have an immediate effect on prices and an immediate effect on supplies to the global system, just like shutting off all exports would.

The problem here is that Congress has granted the presidency that power. And there’s a lot of questions as to how you would do it. Probably the most effective would be to just put a really fat export tax on it. I think that would play to Trump’s preferences. It would still result in higher prices in the United States, but nothing compared to everywhere else.

And we wouldn’t have a supply shortage anyway. Those are the two options. Probably find out within a couple of months which one the Trump administration is considering, because we’re getting really close.

We Have a Peace Deal! Sort of…

Flags of the United States and Iran blending. Licensed by Envato Elements

It looks like we finally have a peace deal between Iran and the U.S. (and maybe Israel). Neither side can agree on the terms, so it’s really more of a tentative agreement to stop shooting at each other…at least for now.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from the San Luis Valley in southern Colorado. I’m on my way to New Mexico, and I just heard on the radio that we have a peace deal between the United States and Iran. So I went till I get a blip of data and. Yeah, no we don’t. Okay, let me outline the five big things that supposedly there’s agreement not agreement on. 

Number one, the Strait of Hormuz itself, the idea both sides say that it’s going to be open. The Americans say there’s going to be no charge whatsoever for anyone passing through. Iran is confirmed that there will not be tolls. There will be a service fee that is higher than the tolls they’ve been charging. So air. Number two, Israel’s included, according to the Iranians, and not included according to the United States. 

In fact, in the time it took me to get my blip, the Israelis have carried out several strikes throughout the country. 

number three, the nuclear program. The United States has said that the Iranians will close the entire thing down, and that all the enriched uranium in the country will be removed and spun down to what you would use for power, fuel. 

The Iranians have said no, not even remotely. It’s never leaving the country. We might spin it down to 30% enrichment. By the way, you need 95% for a bomb and only 3.5% for nuclear power. But that’s it, then. Sanctions. Iran says that they’re all lifted immediately in the United States. This says they’ll be lifted in stages, with the first phase being lifted maybe in 60 days, assuming the Iranians behave. 

And then, number five, restitution. The Iranians say that the Americans have agreed to $300 billion of investment to compensate for launching the war. The Americans made no mention of that. The Iranians also said that $25 billion of frozen assets will be freed immediately. And the United States has said, you know, in bits and pieces over the next decade, maybe. 

Why so far apart? I mean, actually, these positions are further apart than we were back in February, the day before the war started. The key thing to remember about all of this is number one. The Iranians are always bastards when it comes to negotiating. Everyone has been trying to hold talks with them in some form for over 40 years. 

And so the idea that this time it was going to be quick, please. Second, there’s not a single American involved in these talks. It’s not just that we have a Pakistani field marshal doing the negotiating. It’s being moderated by Qatar and Saudis. However, the United States does not have an ambassador in Pakistan or Saudi Arabia or gutter or Kuwait for that matter. 

So everything is happening like a game of telephone, three steps removed from any American. And then the State Department isn’t involved because there are no ambassadors. So it’s not a surprise to me that this isn’t going anywhere. What’s the surprise to me is that anyone else thinks it might be going somewhere. Markets, of course, have exploded and all is down, but there’s no reason to think that this is going to be any different. 

If you just need something to underline that, the documents will be signed in Switzerland on Friday remotely, the Americans and the Iranians can’t be bothered to show up. So no, this is not the end. All they’ve agreed is they would prefer to stop shooting at one another. We’ll see how long that lasts.

DHS Gets Funding… A Lot of Funding

DHS building in Washington DC | Photo by Wikimedia COmmons: https://en.wikipedia.org/wiki/United_States_Department_of_Homeland_Security#/media/File:DHS_St_Elizabeth's_Building_1.jpg

ICE and DHS just got approved for a new funding package that expands resources for immigration enforcement and border security. My primary concern is the economic impact of this new funding, rather than the politics of it all.

The U.S. workforce is already under immense demographic pressure, and introducing stricter immigration policies will only worsen labor shortages (especially in sectors that are heavily reliant on immigrant workers). This means higher costs, reduced service levels, and baked-in inflation for the remainder of the decade.

The political side is concerning as well, but Trump’s attempts to limit congressional leverage are nothing new. Just another signal that U.S. power dynamics and party structures are in flux, as more decision-making power is falling into the hands of the executive branch.

Prefer to read the transcript? Click here

Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. Today is the 11th of June, and the news is that the US House of Representatives has given final approval to the new Department of Homeland Security budget. What can I say about this? It will go to the president’s desk. Now. He’s expected to sign it. It includes within it a rough quadrupling of funding for immigration, Customs Enforcement and border control. 

That’s on top of the $75 billion that was part of the big, beautiful bill from last year. And this is for an agency that normally has a total budget of about $10 billion. So over the four year term, this is about a quadrupling of the budget. Now, lots of people are going to say lots of things about immigration and human rights and thuggery in general. 

I’m going to leave those topics to them. Not that they’re pointless, but they’re just not mine. I want to hit this from the point of view where everyone is going to feel it. The United States now is seeing more of its population dying than being born, and the largest generation in American history. The baby boomers are mostly retired, and by the end of this decade, they will all be retired. 

Which means that if you want a growing labor market and the growing economy that goes with it, you need to get the people from somewhere other than natural birth. And the only option until we have cloning, like really good cloning, is immigration. And with this sort of system, at least for the rest of this decade, that’s functionally impossible. 

So that means that every pressure you’re feeling in the economy on the affordability question is about to get significantly worse, because there just isn’t going to be enough people to make everything function. Industries that’ll be hurt hardest. Our agriculture services and health care and construction. Those are the places where people who are not born in the United States tend to carry a disproportionate load. 

So for those of you who are older, look forward to spending lots of long hours and hospitals in a bedpan that hasn’t been changed. For those of you who like to move into new homes, get used to those being significantly more expensive because we won’t have the labor to build them. And for those of you who are used to going to things like restaurants, expect those tables to not turn around because there’s nobody cleaning the dishes. 

And in agriculture, we’ll still be able to do row crop pretty well. But as you get into, say, meats where people are, the animals have to be herded. That’s usually done by immigrant later. And when you’re dealing with fruits and vegetables, where that has to be handpicked immigrant labor as well. So everything gets more expensive on a secular basis now. 

And even if the day Donald Trump leaves office or this term ends and Ice is more reformed, if that’s the right term, and all of a sudden immigration picks back up to something that’s closer to the half century average, it will take another ten years for that to feed into the system. So we are guaranteed now to have significantly higher inflation than we needed to. 

That’s piece one. Piece two is that this is not an annual budget. This is a budget that is designed to fund these agencies through the remainder of Trump’s term, outside of the normal budgeting process. Now, under normal circumstances, Congress would never agree to this because that takes all of the power away from Congress. Congress has the power of the purse, the House specifically, and transfers it to the executive for the remainder of the term by the time Trump signs this, it’ll be codified into law. A couple things from that. Number one, the executive now has full authority to use this however he wants. Congressional check is gone. We’ve been talking on and off for the last few years about how the United States is going through a political transition, with both the Republican and the Democratic Party basically breaking down. 

This basically completes that process for the Republican Party. Trump has ejected a number of high ranking senators and House members via primaries. They’ll be gone in November, and the number that remain are going to be so isolated that they really can’t do anything. They’ve had this last stand, this last two weeks, where they’ve stood up to Trump on a number of issues, and now that is effectively over because they’ve lost their leverage. 

That means that the Republican Party is gone. It’s no longer the party of business or national security or rule of law, certainly not a fiscal conservatism. And this will accelerate what’s next, because we’re not going to have several years of the political right in the United States being completely nonfunctional outside of the person of Donald Trump personally, from a Democratic point of view, from an organizational point of view, this is generally pretty bad. 

It also means that whatever his whim is, is now state policy. And there are really no checks in the congressional branch of government. And so we’ve been seeing these cavalcade and compounding mistakes by Trump, whether it’s in negotiations with Iran or with Russia or domestic regulation or with the tariff policies. All of that is going to accelerate now, because the last of the folks who might have provided some ballast are gone now. 

And this law means that he doesn’t even have to consult anybody. Which means it really doesn’t matter to me what happens in the midterms. Because Trump has barely gone to Congress at all in his first year and a half in office. And now that he’s gutted what’s left of the Republican Party, and even if the Democrats managed to retake both houses of Congress, why would he go to Congress again when the priorities he has have already been funded for the rest of this term? The only way you could change that is if Congress decided to rescind this funding. But that would have to overcome a presidential veto, which requires a two thirds majority. 

So that’s just not going to happen. So all hail the King. He’s got what he needs to do, whatever he wants on the issues that he cares about as long as he’s alive or in office. And yes, there is some gray area between those two.

Insulating the President with Loyalists

Bill Pulte, New Director of National Intelligence official portrait

It looks like we have a new acting Director of National Intelligence, Bill Pulte. You may know his name as he’s both a housing executive and the current head of the Federal Housing Finance Agency.

So, we’ve got a new Director with at least two full-time jobs and no meaningful experience in intelligence…yeah, that sounds about par for the Trump Administration’s nominations. But at least Gabbard is out of the office.

Anyways, this move will likely result in the intelligence agencies losing influence in presidential decision-making and reinforces the trend of Trump isolating himself from anyone smarter than him.

Prefer to read the transcript? Click here

Transcript

Hey everybody, Peter Zeihan here, coming to you from Vegas. Had to find a quiet corner for this one was a little hard with all the people running around anyhow. Today we’re talking about the new acting Director of National Intelligence. Guy by the name of Bill Pulte. If you’re familiar with homebuilding, Pulte homes that Bill Pulte. He already has a position in the government. 

He’s a Trump loyalist. And he’s appointed to the civic of this right FH for the Federal Housing and Financing Agency, which is responsible for, among other things, back stopping about 70% of American mortgages. So big job. And most of the insurance agencies under FHFA, most notably Fannie Mae and Freddie Mac, are in conservatorship and have been since the financial crisis. 

So it’s a big, important full time job. The fact that he comes from housing and is now managing the mortgaging system suggests a conflict of interest. When he was going through confirmation hearing year, several senators piped up about that, most notably Elizabeth Warren. But you know, she hates everybody, so it’s hard to take that too seriously. 

Anyway, he has now been deputized as the acting head of national intelligence, and his job there is to coordinate the dozen plus federal agencies that have intelligence arms, everybody from the NSA and the CIA to law enforcement. Anyway, that is a full time job as well. And what it really tells us is President Trump, doesn’t really care about the national security agencies at all, and he certainly doesn’t want them talking to him about what’s going on in the world. 

Trump feels the need to be the smartest person in the room. And if somebody from the intelligence agency is there talking about Moldova or Kyrgyzstan or Bolivia, they will obviously know them more than the president about that topic. And so they’re just not allowed into the room. Now, the outgoing director of national intelligence was Tulsi Gabbard, who had some foreign leanings and so seen her gone as great, but now replacing her with somebody who is completely unskilled and there’s no background in intelligence or military affairs or project management is really not great either. 

About the only good news I can say is at least this guy is not beholden to foreign interests like Tulsi Gabbard was. He’s a loyalist, so he’s unlikely to tell Trump anything that he doesn’t want to hear. Which probably means that all of the intelligence’s basically now have a ceiling above them, between them and the president. So Trump is continuing to go down this path of being the least informed leader that we have had in modern history. 

The only other one that is even remotely in the same bucket would be Barack Obama, who was famous for not wanting anyone in the room at all. This is just the other side of that coin. So good news. Not really. But considering that Donald Trump doesn’t have anyone in his circle with real foreign policy experience except for Marco Rubio, who has similarly been banished and now heads two agencies State Department, for the similar purposes of keeping him in arm’s length from the president, keeping those institutions away from the president. It’s kind of par for the course.

Ebola Outbreak and Delayed Detection by the U.S.

Doctors in biohazard suits

At least 50 are dead due to a new Ebola outbreak in Central Africa, and the U.S. was the last to hear about it. This is a glaring example of the breakdown in the U.S. public health and monitoring system.

Three programs have traditionally acted as layers of defense: the Agency for International Development, the Centers for Disease Control and Prevention, and the Biomedical Advanced Research and Development Authority. All three have been gutted under the Trump administration, so early detection, disease tracking, and vaccine development have all been sidelined.

Prefer to read the transcript? Click here

Transcript

Hey all, Peter Zeihan here, coming to you from Roccascalegna, totally butchered the pronunciation of that one. Anyway, it’s Castle and there’s a more castle and mountains. Anywho, today I want to talk about something that hasn’t really made the news in the United States, but probably should. There’s a new Ebola outbreak in Central Africa. At least 50 people dead at this point. 

The numbers keep rising by the day, and the topic is why we really haven’t heard of it. There’s kind of a three line system of defense when it comes to new infectious diseases in the United States. The first of all things is USAID, the agency for International Development. That was basically it does development work in countries to help them get on their feet, deal with disaster relief, that sort of thing. 

Recovery in conflict zones. All that good stuff. Normally, this means that we’ve got thousands of American citizens working for the government all around the world, and they notice things. And so while, yes, economic development by far is their credo and their job, they actually serve as kind of a first line of defense for the intelligence community because they see things in the communities that they’re in. 

Well, USAID was dismantled and closed by the Trump administration last year, so we didn’t get any advance warning of this outbreak. Second, you’ve got the center for Disease Control, which does all the genetic testing and mapping of diseases and the epidemiology and all that fun stuff. Well, it’s been gutted and under new leadership, including RFK Jr, who’s in charge of the overall health approach in the United States. 

It’s basically not present in most parts of the world. So normally when an outbreak like this happens, the CDC is the first or the second call that is made to try to figure out what the disease is, how it’s communicated, how lethal it is, all that good stuff that has basically stopped. And it wasn’t until last week that the CDC got the call. 

And that’s well after three weeks after it was discovered locally. The third thing is something called Barda, which is kind of like DARPA, the defense operation that explores new technologies. Bart does the same thing, but it maintains a pipeline for new vaccines. Well, Bart has basically been gutted and funding as well, because RFK has basically decided that vaccines are bad. 

So we’re finding out about this late. Definitely on the back foot. And only now is the sequencing process starting. For those of you who don’t know what a bola is, it’s pretty nasty. It’s a hemorrhagic fever, which is a technical term of saying that you bleed from everywhere eyes, nose, ears, but fingernails, everything. And basically your body falls apart from the inside out. 

It’s a particularly nasty way to go. And at the moment, we’re barely looking for it. So political decisions have consequences. And one of these means that Ebola may be coming to a town here, you. Which is nasty, but the only bright spot I have is from the information that has been reported through the W.H.O., World Health Organization, which the US is no longer cooperating with. 

So this is something they told us out of the goodness of their heart rather than out of any sort of contractual obligation. It does appear at the moment that this new strain, I believe, is how it’s pronounced. Probably butchered. That too is no different from normal Ebola, and that it is spread by bodily fluid contact rather than by respiration. 

Just keep in mind that diseases change all the time. As we learned with Covid, and we’re now in a situation basically where if it does change, we won’t know until it’s here. So food for thought.