02 25 18 Peter Zeihan NEW Final Presentation Video V4

but without further ado we have another great speaker who is sitting down here Peter Zion like the National Park he told me so but it's a he's a fascinating speaker he's a geopolitical strategist and he he talks about global energy demographic insecure he's a he's a global energy demographic and security expert so he's got a fascinating story to tell he'll actually explains some of the things that Trump is doing and why he's doing and I don't think he can fully explain that but he can he can try but it's a it's a fascinating talk I heard him speak back in October and with that I'll turn it over to Peter [Applause] everybody it's always a little dangerous to be the guy that goes before the bar opens I can't guarantee that I'm gonna get you there any faster but I can guarantee you're gonna need an extra drink when you do arrive so with that let's talk about the end of the world our world begins in New Hampshire I mean who knew you see before World War two things work differently we didn't have this global trade thing we're more likely to shoot your neighbors and to trade with them and if you saw something you thought you needed you went out and you took it you colonized it you militarized it and you use your Navy to guard the shipments between your colony and your maitland these systems rose into Empire those empires clashed they went to war culminated into World War two which brought the whole system crashing down but well at the end of the war the Americans were the last ones standing and they gathered their allies together here at Bretton Woods New Hampshire where they put on a conference and what do you do at a conference you bait people in with a wonderful location maybe the promise of some golf and you lock them into a room while some blowhard prattle on about how the world is gonna be you've all been there at Bretton Woods the United States laid out the rules for a new age instead of everybody having a separate sequestered Imperial militarized system everything would be pooled anyone would be able to under the guise and protection of the American Navy buy any product from anywhere in the world ship at home turn it into a finished product send that product out to earn export income for the first time we had a global system there was just one catch you had to pick sides the Americans bribed up an alliance to fight and win the cold war and it worked very well global GDP expanded by a factor of 10 the global population tripled it has been the longest period of peace and prosperity in human history unfortunately the flaw had excuse me unfortunately the plan had one flaw we won say what you will about the Germans they may have a slow fuse but once they do get going Wow can they party now what the war is over then President Bush senior put together a team Dick Cheney Brent Scowcroft : Powell set them off figure out what's Bretton Woods - how do we take this alliance the greatest alliance in human history and play it forward for another half century have engaged American preeminence we Americans were so impressed with the accomplishment that we voted him out of office and in the next six consecutive federal election contests we decisively went with the candidate who celebrated his lack of foreign expertise the economic aspects of Bretton Woods the idea that the u.s. is the market of first and last resort that the US Navy will patrol the global Commons that was all allowed to continue but the concept that the Americans would get some sort of quid pro quo as a result of the security outlay that faded away and the world got weird we have seen a rise of countries that historically have really been nothing places like South Africa Brazil or South Korea or Poland or India or Russia and of course China what the hell had this happen will happen because of Bretton Woods countries that had never been able to have a significant economic presence all of a sudden could because the security costs were covered by the United States Trump's got a point he's got a really solid point strategically Bretton Woods is no longer working for the United States but economically it was never supposed to the Americans subsidized the Alliance the Alliance fights the Soviets that was the deal where does the United States fit in this brave new world without the rubric of the Cold War well the short version is we don't at all and that's okay never forget that for the United States trade was never about economics it was about security as a percentage of GDP the United States remains the least involved economy in the world as a percentage of GDP last year less than 8% of our economy came from exports about half of that is within NAFTA the US can easily have a regional trade system without maintaining the global the big fight back in 2016 wasn't about whether we should or shouldn't engage the world it was a debate between two people about how fast should we withdraw under a president Hillary Clinton it would have been a relatively slow orderly withdrawal four to eight years of in PowerPoint and pamphlets and timetables under President Trump is happening so much somewhat quicker forty-eight tweets but we're getting to the same place disengagement now let's look at it by locality the deeper the colors on this map more involved that state is in international commerce can you see the relationship among these colors and the red blue breakdown in our political system nobody that's because there isn't one trick question no relationship no correlation whatsoever between how we run our economies locally and how we filter out international news which means that the Americans can have a globally devastating foreign policy without a ripple discussion at home let's look at it politically the reason that the Republicans tend to win the really big elections is that their coalition is more cohesive so the evangelicals don't want to shut down the navy and the national security voters don't care what you do with your personal life all the factions have a short list of issues that they're really passionate about but those issues don't contradict each other so you can build them into a coherent platform take it to the polls all the factions show up to vote it's reliable they tend to win that's not how it works with the Democrats single mothers don't see why they should have to pay higher taxes to put the Millennials through college gay Americans and African Americans have radically different concepts of what the term civil rights even means unions and greens disagree on every aspect of industrial policy any Democratic candidate that attempts to run on the issues immediately spawns and internecine you within the coalition and entire sections of it don't vote a Hillary Clinton Michael Dukakis cannot possibly win but if the Democrats can float a candidate who runs on charisma papers over the policy differences a Barack Obama a Bill Clinton they'll walk away with it bigger coalition more voters and then in the middle two groups that are kind of hard to nail down they tend to be socially conservative but also economically liberal very squishy this is how it's been since roughly 1944 those of you who were not in a coma in 2016 you may recalled that's not how things actually went down let's break it down business community there's no campaign finance reform right 2016 was the first year those laws were fully in place at the federal level we now put people in prison for that sort of stuff we took the largest chunk of the right Alliance and told them they were no longer welcome national security conservatives maybe two or three of those in this room the military voters solid Republican voters until Donald Trump started picking fights with John McCain and gold star families national security voters actually looked at Secretary Clinton as one of the few people within the Obama team that had any concept as to how the world really worked they became swing voters evangelicals solid right-wing group until we found out that Donald Trump had been in to softcore porn films you haven't eaten for a while if you're gonna google that I guess now's as good a time as they any but you cannot unsee that pro-lifers know that donald trump was a card-carrying democrat for 35 years and the issue that he put most of his money behind when it came to politics was pro-choice groups they didn't trust him they didn't show it's even worst on the Left black Americans loved Barack Obama I mean what's not to love a 40-something black dude from South Chicago they were never gonna get excited about a 60 something white chick who had already lived in the lighthouse they barely showed up at all the Socialists in the under 30s that's the Bernie Sanders crowd and I gotta admit I I just adore senator Sanders he's so reliably and delightfully out of touch he's the gift that keeps on giving when the Clinton political machine finally crushed the Sanders campaign and forced senator Sanders to capitulate live on television in front of his most ardent supporters a third of the audience walked out on him to the degree that these folks voted they didn't vote for Hillary Clinton unions they're opposed to Trump or I'm sorry that they supported Trump on his marriage the anti-free trade rhetoric really resonated the Hispanics were opposed to Trump eight to one in pre-election polling how do you possibly come back from that come election day turns out it was only two to one why the split pollsters forgot to ask if you were a citizen and were allowed to vote relevant detail and then the car and then the Catholics just wanted to take a shower here's where we ended up the two-party system that runs this country for the moment is offline this is normal healthy even technology evolves the balance of power among the states shifts demographics move politics moves with it on a delay the last time both parties broke down at the same time was the 1930s Great Depression World War two FDR it took 12 years for the parties to settle into the form we recognize today remember that the Republicans used to be the big government per regulation party we don't know what this is gonna look like on the out on the other side of this and talking about the terms Democrat and Republican at all right now is incredibly misleading because there's no factions there's nothing but factions in Congress right now it didn't really matter who one because they were whoever did become the president wasn't going to have a party to lead or a party to oppose it's all just a mess right now and it will be until this sorts out it will sort out it'll just take time let's look at it horizontally by slice four people who were born before 1946 this is probably how they still think of the baby boomers those damn liberal hippies that just don't understand oh sorry but they're starting to look a lot more like this these days the boomers are evolving and to get off my lawn conservatives what about the Millennials they were raised a bit differently didn't keep track of the score at soccer games went to university where based on who had the coolest dorms only took jobs that fulfilled them but other aspects of life didn't stop your oldest millennials turned 38 this year and on average they've got two kids and they're discovering that you cannot raise two children in a midtown Manhattan apartment on a barista salary and in droves they are moving back to their hometowns because they need the free childcare that comes from being directly adjacent to the bank of mom and dad life has not turned out the way they promised themselves that idea that the intern would come out and say oh we gonna do in five years oh I'm gonna have your job yeah that didn't happen for anyone they're becoming bitter and angry the days of pooping and getting a trophy are long gone and 45% of them voted for Donald Trump the two great progressive generations in American politics the boomers and the Millennials are descending into narcissistic populism at the same time and while for the Boomers to a degree this is expected you retire you little crotchety it happens the Millennials are going to be the dominant voting bloc in American politics until the twenty 70s and they are establishing lifelong voting patterns right now which means that Donald Trump is likely to be the least populous most international most inclusive president that the United States has in our lives and if you're a foreign leader and the Americans are abandoning the global order and you have to strike a bilateral deal to get by it will only get harder so that's all one the American back out number two is demographics this is a standard demographic profile children at the bottom young adults mature adults retirees at the top women on one side men on the other simple mortality builds this into a pyramid this is India this is a consumption lead demographic it's called that because if you're roughly 40 to 45 and under it's all about the spending kids cars houses college pot spend spend spend spend spend but they're new their income has yet to rise to their expenditure it needs so it's car loans college loans mortgages it's high growth this is most of the modern economy but it's also very high debt fun fact a system like India's does not necessarily need to be involved in a global system because they can consume most of what they produce there's a reason why India is always the stickler at the World Trade Organization talks because I just don't care all that much country that does care South Korea this is an inverted demography also known as an investment led demography people roughly age 40 to 65 it's not about the spending the kids have moved on the house has been paid down for them it's all about preparations for retirement their incomes are high consumption is low all that surplus money goes into investments well at least the part that the government doesn't take that forms the tax base this is the velocity of capital this is what funds infrastructure and social programs and a Defense Force this sort of system has to be part of a global network because there's no way they can consume at home what they produce and eventually you can age into something like Japan Japan faces a strange quandary it has had to figure out how to make a modern economy work without workers there's a reason that the world's leader in automation one of the fun things about robots is they don't vote well not yet which means it doesn't matter where they are so Japan has made the strategic decision to offload a lot of its industrial plants adjacent not just to end users and end consumers but to security guarantors Toyota's top four facilities Kentucky and Texas here's the United States kind of in the middle let's go through the generations from the top down up at the top the Silent Generation these are the people who grew up during World War 2 in the Great Depression their formative political experiences cultural impacts the famine in Ukraine the Chinese Civil War the Holocaust they instinctively understand the benefit of a rules-based international order but because of age they've largely passed from the scene they've handed the torch to the baby boomers baby boomers are the largest generation as a percentage of the population in American history and all of those workers in that capital rich demographic have made the United States capital rich exorbitantly capital rich unprecedentedly capital rich - capital rich all of those investment dollars chasing the same number of opportunities supply and demand has pushed down the cost of capital and forced the baby boomers to search for riskier and riskier investment portfolios in order to get that extra mythical 1% of return before they retire this has pushed them to put their money into things that in retrospect probably weren't the best idea this is the brick boom this is Enron this is subprime this is disco none of this should have ever happened but by the year 2022 the majority of the boomer money will have to come home because the majority of the boomers will have retired so all of those prospective investments that have a kicked global growth around the world up to unprecedented levels will suddenly get sucked out the investment boom of the last 15 years will collapse and all of that money will come back to the United States where won't go into the stock market of the bond market no that's too risky it'll go into cash in t-bills the availability of the Latin investment will collapse the needed capital the velocity of capital will collapse in fact it'll reverse the cost of borrowing will go up by at least a factor of five in just five years next down jet X that's my generation 1974 birth year smallest birth year in American history we were born knowing that we were screwed because no matter what we did we're gonna be outnumbered we will not be able to out revoke the baby boomers until we are in our 70s and we know that the baby boomers will never vote for meaningful changes to Medicare Medicaid and Social Security because they're the beneficiaries we also know that the Millennials won't because if these reforms were to happen and if out payments were to be cut the boomers would have no choice but to move in with their kids and from the Millennials point of view that's strictly a one-way experience they can all agree however that Generation X should pay for everything so we are looking at 75 million retiring boomers relying on 11 Gen Xers not 11 million just 11 marginal tax rate has to go up by at least 50% as a result it's gonna suck until then however it's actually pretty good for Gen X cost of capital is low right I've been able to refinance my house five times in the last six years 2.0 4% eat your heart out it's awesome but it's temporary there's a reason that we all listened to Kurt Cobain in order to soothe our fears I mean you know if that's who you're going for solace to all yeah we're messed up then we got the Millennials those neurotic narcissistic omnipresent Millennials as while they do deserve every shovelful of crap that I send their way and they so do thank god they're there three big reasons first consumption all those bedazzled flip-flops and all those circulation constricting jeans all that fair trade GMO free sugar free soy free dairy free cruelty free beard butter it adds millennial consumption has kept the American system out of recession since 2009 and while there's no guarantees and economic laws they're probably gonna be young and consuming enough to keep us out of recession for another six or seven years that's not bad second if you play this forward to the year 2030 when the Millennials have matured and defined that word however helps you sleep at night they will fill out the tax paying class in a way that Gen X never could so there is a light at the end of the tunnel it is not a training it's just a millennial with the new I boxers or whatever they're called and then finally if you look at the rest of the world there was a baby bust starting in 1970 to 1980 based on where you were and if you look at the combined demography of the rich world without the Americans in it it's an old folks home so today courtesy the Millennials the United States is the world's top consumption power and courtesy of the Boomers the United States is the world's top investment power but by the year 2030 it's the only consumption power and only investment power we are in the midst of the Great transition the United States is becoming the only country that can possibly even theoretically absorb global exports at the same time it's lost all political economic and strategic interest in doing so final piece the shale revolution the broader the bar the greater the volume of crude oil production OPEC is there on the right in black the taller the bar the greater the cost of producing that crude and this is everything from exploration on the front end to transport infrastructure on the back end this is back from 2012 shale is there in light blue on the far left back in 2012 shale was not a big deal but there's been a series of technological breakthroughs that are working the way through their system here's where we were as of three weeks ago the United States and Canada became net oil exporters in the fourth quarter of last year two years from now these technologies that I wasn't mentioning they will push down that blue bar below $25 energy independence is not some hazy future issue functionally it has already happened and that changes the way Americans look at the world this is a political heat map from the height of the Cold War 1985 deep blue that's the front yard in the back yard countries that the Americans were willing to fling nukes to defend medium blue that's the core Bretton Woods system Orange those are the other guys we don't like to talk about them light blue is the field of competition there was a global fight everything mattered everything had consequence now remove energy dependence change the way the Americans define security and the Alliance here's where we're about to be and just because it's orange on that map doesn't mean it's a problem for us it's just a problem for someone there's a lot of gray up there a lot of places that the Americans just don't have a strong opinion on and if you remove the United States for maintaining the system and let the chips fall where they may it is up to local countries whether at a desperation or opportunity to chart their own course to look out after their own interests that will trigger dozens of brushfire wars three of which have global consequences the first involves the Russians post-cold-war there was a 60% drop in the birthrate if the Russians are gonna use military tactics and an attempt to reshape their world now is their last chance and so they're doing it which means you have to look at the world from their point of view the red on this map is areas of ethnic Russian majority populations the other colors aren't empty it just means that's not dominated by ethnic Russians in that zone now in the Western periphery of this red zone you've got a series of huge Geographic barriers that make Kansas look hilly it's wide open easy to march across just ask the Germans usually people don't laugh at that one thank you as the Russian thinking goes defending this frontier with the current army is impossible much less with the army they're about to have but if the Russians controlled to play the rapidly shrinking forces into these five arcs 2,000 miles of wide open terrain drops down to about 450 miles of constrained access the problem for the rest of the world is that this is the Russian oil export network that's seven million barrels a day of crude but if it goes off line going through warzone so usually makes things go off line that's enough for a global energy induced depression a decade in duration minimum war two Persian Gulf now the reason that the Persian Gulf has been so calm for the last forty years and just kind of marinate in that for a moment Bretton Woods we keep it carrier battle group in the Gulf at all times to make sure that the oil can flow not to us the oil flows to the trade order the trade order powers the Security Alliance the Alliance gives us our security but we now define our security differently we're no longer using the Alliance we've never used the trade and courtesy of Shell we don't even really care about the oil every link in the chain of logic that has kept the United States bound to this region for the past generation has more less broken in the last year and a half that leaves it to the local players to figure out who's in charge lo and behold some of them have some really strong opinions on that the two countries that matter the most of the Saudis and the Iranians but we're a largely American audience here right we're all a little sick of hearing about the Middle East so let me just kind of sum it up this way think of it like the struggle between the University of Texas and Texas A&M just with more guns well with more guns that people actually use and like all the world's truly great rivalries eventually fans end up in the wrong bar so down here at Kyle Field you have the world's largest oil-producing asset the GU are super filled living in College Station are two and a half million religious Shia in a Sunni theocracy up here at the UT tower you have three million ethnic Arabs in a Persian ethno-linguistic state that just happened to live on top of 80 percent of Iran's oil and natural gas output the intelligence authorities in both sides are burning the midnight oil attempting to spawn revolutions and the opposing zones working from the very accurate assessment that if you can crush the oil income you've crimped the country that's 11 million barrels per day assuming nobody gets caught in the crossfire so one of those wars look like well war one with the former Soviet Union here we have basically a population density map you'll notice that everything north of this line is pretty empty whereas everybody lives south of it north of it you get an air war an air war that the Russians cannot possibly lose until they get to the coast and then they face the Scandinavian navies and Special Forces teams and it becomes an irregular amphibious warfare versus a dominating error presence it'll be ugly but it's the kind of war that both sides are really good at south of that line we get a German Russian Redux on the northern European plain ugly brutal urban a little cleaner in the Persian Gulf if you can believe it issue with the Persian Gulf again isn't the GWACs super field right there if the Iranians can make it there the game is over because not only will they have taken the oil offline they'll control the infrastructure that leads to all of Saudi Arabia's major cities and there's no way that the Saudis could possibly fight back at that point anybody ever wonder why the Saudis invaded Yemen without ground troops anybody ever wonder why they're bombing urban areas without time on target ground-based intelligence with precision guided munitions it's practice this red zone that's the desert barrier between the infrastructure and Kuwait and the infrastructure in the waar 300 miles of desert they're getting ready for the grand Iranian turkey shoot or three you change the oil flows out of the Persian Gulf you change the oil flows out of the former Soviet space and everything changes this is how oil used to get shipped in 2007 the big demand centers for Western Europe and North America they would take whatever they could get from anywhere anything that was left over would go to East Asia seven years into the shale revolution the Americans learned how do you get by without seven million barrels per day of imports the Europeans had a catastrophic financial crisis and they saw their own demand plummet which meant if you were a producer of crude anywhere in the world your only option was to send it to East Asia all of a sudden the East Asians got pricing power but now throw a crisis in the Persian Gulf in the former Soviet space and the arrows move again the Americans largely exit stage left they don't care the Europeans can't afford to use Russian crude anymore for strategic reasons so they have to dust off their old Imperial playbooks they have to go back and re interface with their former colonies in order to keep their lights on some of those interfaces will be less gentle than others and if you are China or Japan or Korea or Taiwan your only option is to take your Navy sail to the Persian Gulf pick sides in a centuries-old blood feud load up the crude yourself and convoy at home hoping that no one gets in the way because there's no longer enough left for everyone now if this were anywhere else in the world I'd be worried but if there's anything at all we know about Korea and Japan and China and Taiwan is they've got a centuries-old history of brotherly love and cooperation and nothing can possibly go wrong right the place is where the fighting is going to be most intense or the South China Sea the Japanese don't have to use the Japanese have a deep water blue water Navy they can avoid the whole region but the Chinese cannot the Chinese are locked in by the first island chain those blue lines represent the major shipping routes for Persian Gulf crude to the Chinese mainland which means that they have to push south into the South China Sea to at least get partway closer to their end destination and that means among other things seizing control of the two major ports in the region Subic and calm run without those there is no Chinese power projection and remember that in relative and absolute terms the Chinese are now three times as dependent on foreign energy imports as Japan and there's so much more vulnerable there will be a war it will be brutal but it'll probably be brief because the Japanese can interrupt the supply lines 5,000 miles away and be fine that means we get a hot shooting war in these zones where maritime traffic isn't simply a casualty it's a target an express target that's three-quarters of global energy shipments three-quarters of global manufacturing supply chest us three-quarters of global agricultural shipments it's nothing less than the end of the world that we know what does all that have in common the Americans don't really care it's not their trade it's not their oil it's not even their allies we'll have a split in energy markets with the speed of a tweet the oil export ban will coming back into place we get a functional ceiling in North America of 60s $70 a barrel get a functional floor everywhere else of 150 competitive advantage you get a break in agricultural markets with the United States far and away being the world's largest agricultural exporter oh wait we're that already it just gets better and you get the massive massive retooling of the industrial plant that started three years ago as manufacturing moves back to North America to take advantage of cheap energy local rule of law and a local consumption base that is still the largest in the world we're not backing away because we're cold we're not even backing away because we're ignorant we're backing away because we're insulated the tan area on that map that's the greater Midwest largest chunk of arable land in the world as it and as important as its agricultural prowess is and it is important it's really the blue lines that make all the difference moving things from A to B is kind of a but if you can float it it's 112 the cost the greater miss by itself is 13,000 miles of naturally navigable interconnected waterway the greater miss by itself is more miles of internal waterway than the combined waterways of the of the planet in addition deserts and mountains to the south lakes and forests to the north ocean moats on either side our chunk of North America isn't just the richest territory in the world it's the most securable decades of bipartisan effort have yet to screw this up and we're not gonna figure out how to in the next few years you can't say the same anywhere else on the planet let's start with the Chinese it's the country that most people typically worry the most about this area the North China Plain this is the Chinese heartland but you guys have all played risk right you know how no one wants to start in Asia because they can come at you from every direction that's northern China no internal barriers so when the Han ethnicity emerged they were not the only ones in this area and it took twenty five hundred years of ethnic cleansing and warfare for them to basically wipe out everybody else and become the single ethnicity that rules China that we know today this is the land of the militarists the politicos the Nationalists you move down into central China get something different the Yangtze is one of the world's great waterways 2,000 miles long and we think of a successful industrialized China this is what we're thinking of Shanghai this is the mercantilist the manufacturers and if you go further south you get something even more different you get into the tropics rough territory difficult to run infrastructure through and the same thing happens to a Brit that goes into the Niger Delta or an American that goes into Honduras to a northern Chinese citizen who moves into southern China to get bit by string bugs they never heard of before they start bleeding horrible colors and then they die it's a disease belt northern militarists central industrialists southern secessionists how do you get all these people to be on the same side kind of two things you can do number one you can beat the crap out of anyone who steps out of line it's a national security state it will never be a democracy option number two you bribe everybody so they don't feel a need to step out of line you take all of the savings of all of the population forcing to put that money into the state banks use the money in those banks to divvy out loans to absolutely any company not if they've got a business plan not if they're profitable not if they've got a product as long as they can employ people because if everybody has a job they're not all getting together in large groups and going on long walks together because that's how the pull up beer got their job they don't like to see that that generates its own problem now right here in 2007 that was the year of American subprime right that was the most over credited year in our history in 2007 seven total in absolute value Chinese lending surpassed total American lending the economy was less than one-third the size of ours in that year it then tripled in the next 18 months because the financial crisis people stopped buying Chinese exports but the Chinese couldn't actually stop production because that would be laying off people looks like they kind of got it under control but no now we just have this thing called shadow financing which is everything from illegal hedge funds the loan sharking guys I'll remember the Obama stimulus package eight hundred billion dollars 3% of GDP over two years there was a lot of concern among economists that the u.s. just couldn't metabolize that much money that quickly without a lot of fraud reasonable concern this is an Obama stimulus package every 17 days now will you get growth this way sure but it's not healthy it's not sustainable and if anything ever happens to the punchbowl you get an run on a national scale we're gonna skip that one because of time this 25 years after the lunch on policy they're running out of 25 year-olds Chinese are not nearly as good at math as they would have us believe now you may have heard a couple of years ago the Chinese went from a one-child policy to a two-child policy riddle me this how long does it take to raise a 25 year old those of you who are parents don't help the others there's a lot of understanding back in China things are going from bad divorce very quickly this is foreign direct investment going both ways so in orange that's FDI going from the United States to China and in the early part of this graph it's about what you would expect money from the United States go into trying to take advantage of the lower lower labor costs in recent years the Chinese have caught up there the blue that's Chinese money going in the United States or at least that's how it was until the year 2016 this this is not the culmination of a decades-old master plan by the Chinese to dominate the United States and force us to all learn Mandarin no this is Chinese business people getting their money the cough FA out of town while they still can and a lot of what we've seen politically and economically in the last year in China is about cracking down on this sort of activity I got loads of and it's later if you guys want to hear them about how Chinese get their money out rutabagas are my favorite there's a security issue coming the green bars on the far left that's net oil exports the red bars on the far right is net oil imports you'll notice how conveniently far apart they are it's a 7,000 mile sail from guar to Osaka this line is how most of that oil is currently shipped from the Persian Gulf to East Asia now the Japanese and the Chinese both have multiple weapon systems that are eminently capable of interrupting that line in the number of points but if shipments start to use this route the Japanese Navy can operate beyond the island chain and operate globally if they need to they can still protect their shipments the Chinese can't do that and they know it and so what we've seen is a cavalcade of world leaders coming to the United States trying to figure out how they fit in with the Americans in this new era and Shinzo Abe a gets it he was the second world leader to visit Trump he doesn't need the United States to be on Japan's side in the war it would be nice but it's not essential and he understands the new transactional nature of American foreign policy and so in order to solidify the relationship he brought with him a 500 billion dollar bribe investment from the Japanese central government into American infrastructure and industrial plant five hundred billion is it enough don't know good start definitely understands how it works back in China their way around this or a way to try to cope with this is to establish a cult of personality make sure that enough major leaders whose names people recognized or executed live on television so that your average citizen looks up and says you know what it doesn't matter if I've got a job doesn't matter if I can feed my family President Xi is my leader I am Han Chinese and that is enough back in November the Communist Party met here at the Great Hall of the people the way politics works in China is you serve as president for five years the Congress meets you nominate your successor you serve for another five years and it's a transition period period to the new guy last November was the halfway point she was supposed to name his new successor and he did he named his heretofore unheard-of identical twin brother for those of you who missed that he also put his name into the Constitution and the debate right now is oh you know should we just go ahead and make it official and remove term limits you know is that that's what the West would do I guess but it's already done we have a cult of personality officially now he is president for life but that doesn't mean he doesn't recognize risk in fact I would argue that the political consolidation is because of all the economic constriction is true economic and strategic challenges that the Chinese face and so President Xi was the fifth world leader to come and visit Donald Trump to seek a new bilateral understanding and he reached a head and said I don't want to meet in the White House because in the White House the press corps will be there the State Department will be there and I need to have a conversation with you that I can't allow out yet so they met him on our log row and while there she said very simply you hold all the cards that matter in this relationship you control the global sea lanes global financial world the global markets global energy all of it we're working for a transition that might kill us please please please do not pull the rug out from under us especially not now in exchange let's talk about the trade deficit South China Sea North Korea cybercrime all of it and we made more progress in bilateral relations in the next ten months than we have in the previous three presidential administrations is it enough hell no but it's a start and it was an interesting tip of the hand and if you ever think that you've had a really bad day consider she's position the stability strength and continuity of his government his country his person is now wholly dependent upon the even-keeled mood of the man on the left I don't worry about this on a not nearly as accurate topic let's talk about Europe northern European Plain is the second great capital zone in the world eleven major rivers transecting the plain this is where the industry is this is where economic development is cheap and technological development is possible this is the major population zone it's big and investment in consumption and industry all of it world class you leave that zone and Europe kind of goes to hell you get into Islands you get into mountains peninsulas dry zones pylons places where development is expensive it's difficult it's laborious and it's hard to maintain one of the great mistakes the Europeans have made is the Euro politically I get it they wanted to make another war among the European powers unthinkable I applaud the goal the humanitarian in me the politician in me thinks it was wonderful The Economist in me thinks it's the dumbest thing he's ever heard of because they took southern Europe where developments expensive and difficult and merged it financially with Northern Europe orts cheeky easy and every month since the euro has come into existence jobs and industrial plant had been wholesale lifted from the south and moved to the north where it's more effective with every day the Euro continues to exist the periphery falls further and further behind the ones that matter the most of the men in the middle the Germans there are four navigable river ways there it's the densest capital footprint in the world the problems that the Germans have is their location they're right in the middle of the northern European Plain and there's eight significant powers or hard on their borders the Germans have traditionally dealt with this by being better they can never outnumber everyone else so they just have to do better so it's better financing better infrastructure better educational system stronger workforce better industrial plans you take anything as good as German and make it as big as Germany and its mere existence though is a threat to everyone around it and so European history is a pendulum that swings between periods of extreme German strength when it threatens to overwhelm all of its neighbors economically politically doesn't matter that forces a coalition of European power powers to tear it down which leads to a period of extreme German weakness at which point everybody gets sucked into the black hole that then becomes Central Europe the only way that you can stop the pendulum and hope for something better is to bring in an outside force that rewrites what's possible that changes the the laws of the region so that war is no longer legal that indirectly subsidized everybody systems so they don't have to defend themselves you have to bring in the Americans you have to put in Bretton Woods and then and only then can your be United at peace and free remove the United States though and history starts back up and so uncle lemarchal was the third world leader to come to seek new bilateral understandings with the incoming administration and she said mr. president do you realize that if you do what you say you are going to do that that is not just the end of NATO and of the European Union that is the end of Germany itself his response uh-huh merkel didn't understand the new bilateral nature of American foreign policy enjoy the new transactional nature she didn't bring anything to the table she was just coming to ask for the United States to continue doing what it had been and so on her way out the door Donald Trump gave her a parting gift a bill for services rendered for defending Germany since 1946 you can imagine how well that went over back in Berlin for all intents and purposes the American German American European the American NATO relationship is already over and it couldn't happen at a worse time because Europe has the worst demography in the world on the left is Italy this is why the European financial crisis will end in catastrophe because consumption led growth is now absolutely impossible this is a terminal demography because you cannot get people in their fifties to generate kids like their teenagers not even in Italy on the right you've got Germany which is actually worse now if you guys heard what's going on with Deutsche Bank one of Europe's most stable largest most prestigious financial institutions is on the rocks this is why think about how banks make their money it's about the spread between the cost of the funds and the cost of the loans no people in their 20s and 30s means few loans 0% interest rates means no spread small spread fewer loans that's how banks die it's not that I think the Deutsche Bank is the face of Europe's future I think the Deutsche Bank is probably the best case scenario visible that Germans you know they're pretty good at things like you know numbers accounting Italians Deutsche Bank's just being honest give you an idea of how bad it is non-performing loans these are banks bank loans that have gone dud have gone into foreclosure now in the United States we are right here at about 2% of our total loan stock has gone bad this line here is 5% in the United States if your bank hits a 5% threshold the FDIC comes in closes the bank down breaks up the assets distributes them to other financial institutions for remediation and you're just done in Europe the yellow bars are eurozone countries as a whole you can see that most there's a number of them that are a lot higher than us and a few that are dangerously so Italy's there in red here's the fun bit that red bar doesn't use us definitions for NPLs here if you're 31 days late you're in a rares you get a warning if you're 91 days late you go into foreclosure that's a non-performing loan 91 days in Italy if you're 271 days late but you've made a partial payment you're in good standing that uses that definition in relative terms the bad loan stack in Italy today is eighty eight zero times that of US subprime at the height of the subprime crisis there is not enough money on the planet to fix that by the way if you're a China watcher China doesn't issue non-performing loans they haven't since like two thousand four it's a decree they made they were they're all good love China Teresa may was the first world leader to visit she's as Donald can I call you Donald of course I can call you Donald one British Brooks it is a done deal we're leaving we still have to work out all the details but there's no going back which means we have to do a few things differently in London first we have to double our diplomatic and intelligence budget because we can't rely on information from the Europeans any longer in fact in many ways they're the target we would like to share all of that information with you second we have two super carriers that will be coming online in the next few years they will be the only super carriers on the planet that are not American flagged we would like to explore with your navy how we can plug them into your pre-existing battle groups so that the angle Alliance can have a solid single strategic policy the world over and Trump like oh this is huge what can I possibly do in exchange we could really use a free trade deal bilateral done they started talks to the next day fun fact that's illegal in the European Union the European Commission that's their executive branch has sole authority to negotiate all trade pacts on behalf of all members even those that have a foot out the door so all the talk in brussels these days about not just how to punish the brits for leaving but how to punish them for having the audacity to plan for the next day this is not not only is this not wise I'm just kind of like really it's like don't you have a few other things on your plate right now like for example a currency crisis a banking crisis in governing crisis a German coalition crisis a Russia crisis a Ukraine crisis a Syria crisis a turkey crisis and you're dragging in amber waves of refugees but you want to about Britain right now this is not what I would call an institution that can adapt in times of extreme change and it doesn't have a lot of time left I want to close that with Mexico because this is the country that I think is gonna be generating the biggest security problem for us but perhaps not in the way you're thinking so first of all I think Mexico is going to be one of the fastest growing economic systems in the world for the next 50 years they're not part of the global trade order they're just really linked to the United States in Mexico so they don't have to worry about any of that for big reasons first of all the shale revolution not theirs ours one of the side effects of our shale revolution is it's producing huge amounts of natural gas as a waste product now we are using a lot of that natural gas to overhaul our petrochemical space it is driven electricity prices and the United States down for seven years running and we still have a lot of extra so our number one way to get rid of it is to ship it by pipeline to Mexico these are the pipelines that are online right now all of them will come online and finished up within the last couple of years they will all hit full capacity within another 24 months at the dawn of the shale revolution we sent Mexico one BC at the day of natural gas within two years we'll be sending them 12 to 13 so about half of all the electricity generated in Mexico will be derived from an American fuel trying to cool that's an end to their power problems second labor costs here are some Southeast Asian countries that I think are gonna do very well in the days to come here's Mexico right in the middle very competitive and there's China one-child policy people Mexican labor is now half the cost and more highly skilled they've already had over 4 million jobs rish or in the last five years we've had one third demographics its young these advantages will last and they're becoming a consumption led economy in their own right and then finally the drug war which from an economic point of view is quite possibly the best thing that has ever happened to the country I don't walk that back people primarily take advantage of the Mexican market not for consumption purposes although that's changing but to leverage the cost differential between American labor costs up here and Mexican labor costs down here anything that widens that gap like say a mass beheading is really good for business sounds a little ass-backward but holds there's a direct correlation between the violence level and the investment level or of course is a downside to the drug war and that's the drug part this is circa 1985 height of the cocaine trade it would flow up out of the Caribbean coast of Venezuela and Colombia it would have void Cuba like the plague because the Cubans would shoot you on sight if you're removing drugs and into Miami you guys all remember Miami Vice right hookers and blow great family show yeah good times there's a reason why every episode ended on a down point local law enforcement local resources combating a transcontinental economic phenomenon of course they were gonna lose but then the Cold War ended and the u.s. started to redeploy and we started shooting down small planes that we're flying ten feet over the water at night with no lights on the smugglers changed the routes they went on shore into places like Central America and southern Mexico and then wound their way through mountain valleys in Mexico Highlands up to the US border this isn't Mexico isn't the Midwest you know if you're in the mid where my Midwest are there's got to be a few of you in here right yeah straight roads we like those don't we yeah so if you're on a county road in the Midwest and you hit a roadblock or construction or whatever you just back up go to the next County Road and you continue on your merry way you've lost like ten minutes you do that in the Mexican highlands you have to go all the way back down to the base of the mountains and find another pass to go through it can take weeks and what would happen is organized crime groups in those choke points would take a piece of the drug trade and use that money to arm to bribe locals to go to war with their neighbors or to co-opt their neighbors and they'd expand their influence up and down those lines until they became cartels well then the cartels went to war we got the Mexican drug war as of about eight years ago this is kind of what it looked like it was a barely shifting mass these are the seven big cartels the area in the middle there with the hash those are zones or at least three different cartels we're fighting out for supremacy believe it or not the cartel wars were actually a good sign because it pushed off the cost of drugs and meant that a lot less of it made it to our shores but as with all wars eventually someone wins and by the time we got to 2015 there were really only three big coalition's left the ones that matter the most are there on the left the Sinaloa the pink now the Sinaloa was run differently they weren't a normal organized crime group it wasn't anything like The Sopranos it was more like Samsung they'd get all the regional leaders together and El Chapo the leader would lay down the law he's like you're gonna all cooperate with each other you're not gonna shoot at each other if you have a disagreement you bring it to me we'll work it out you're not gonna kidnap and engage in petty crime in the low haldi because that just pisses people off and we want them pissed off at other people not us we are drug runners we are not extortionists act like it dress the part but I do encourage you to diversify your activities we're a corporation and a guy in the back mr. el chapo sir I think that there's a problem with our business model we get all of our drugs from South America we shuttle them up through Mexico we dodge all the other cartels and we get into the United States we don't control the whole supply chain we need our own local source so I would like to propose that we grow some heroin and he's like grow heroin in Mexico we don't have the terrain for we don't the climb is like well I think with some roundup and some irrigation and a little fertilizer we can make some parts of Northwest Mexico you know a bit of a heroin belt and I'd like to try it so we got a grant anyone I tried it and a couple years later he's like I did it we've got heroin now it's really crappy hair when it's black tar heroin it's not fit for a dog and the Americans won't touch it because they were really snooty about their heroin so they at the next company music okay you know Bob here has figured out how to make heroin but nobody wants at north of the border anybody have any ideas and a chemist from the other side of the Alliance is like well we couldn't take it and put it into counterfeit oxycodone pills and then sell it to Midwestern housewives the opioid epidemic in the United States is totally homegrown the fatalities are not that is largely because of counterfeit pills and that is largely because of the Sinaloa the reason I wanted to talk about this is because the Sinaloa proves so successful as a corporation that they became not only the single largest drug trafficking organization in Mexico they became the largest organized crime group in the world and in the United States the orange is their territory say what you will about the Obama administration they realized this was a public safety and health threat they prioritized it with the FBI and the FBI made cranking down on the sinaloa their top priority and in 2016 we got El Chapo and then we lost him and then we got him again here's the problem remove in El Chapo the guy who maintained the peace meant that all of the factions within the Sun hello are now shooting each other again the violence level has already spread to the border where it's entrenched in Tijuana and Juarez where it can be heard from San Diego and El Paso and probably in about six or seven weeks it will made it to Laredo as well which means that all but one of the major plazas on the border will have active inter cartel fighting just in time for our midterm primaries there are 34 seats in the Senate that are up for grabs 25 of them are being defended by Democrats 10 of them are in states the Trump one I think there's going to be a blowout of the midterms I don't think it's gonna what break the way that the Democrats think the problem from an international point of view from my point of view is that just as the United States is picking its candidates for this electoral bout we're gonna be very well aware of the level of violence in Mexico and so voices that are anti trade anti-mexican are gonna be very well represented in the debate I'm not saying that they're gonna sweep the midterms or anything like that it's too hard to tell right now but the voices will be there at the worst possible time guess what else happens in May the NAFTA cords are supposed to be submitted to Congress for ratification so if you're in favor of nafta or if you're in favor of the drug war getting back under control this is really bad timing except for this guy this smug bastard is obrador Mexican politician he combines the blind ideology of Ted Cruz the corruption of Hillary Clinton the shrillness of Elizabeth Warren the anti-foreigner sentiments of Donald Trump and the pathological refusal to engage in basic math of Bernie Sanders all on one guy he's in first place because he's running on an anti Trump campaign and if you think relations between the United States in Mexico are kind of dicey right now holy crap if this guy wins their presidential elections are June 1 oh look out all right I'm overtime if you're looking for a coaster or perhaps a doorstop the left is accidental that's the shape of the world how we got to where we are where we're going the next one absent that's the new guy starts with the shale revolution plays it forward shows how it's remaking the American industrial space and the wars that will erupt around the world because of them you don't need to read them you don't even need to buy them but if everyone could go onto Amazon like right now and review them that would be phenomenal [Applause] and we have any questions from here and I'll be sticking around through the fun and the party later so if you've got questions you don't want to ask in front of other people you'll have your chance let's talk about North Korea let's talk about North freakin Korea Rocket Man all right I got a slide for that just for this sort of emergency okay this is ultimately what we're worried about right that dotted Orange Line is where we currently believe the North Koreans can theoretically hit a missile right covers basically the whole continental United States I guess if you're in I am your state but you know that you're then in Miami so whatever okay there's a number of things to keep in mind here first technically just because you can launch at that part doesn't mean you can do it reliably to just because you have a nuke doesn't mean you can miniaturize it three just because you can miniaturize it and put it on the missile doesn't mean it can survive reentry for just because I can survive reentry doesn't mean you can hit within 20 miles of what you would like to hit all the easy stuff about a nuclear program he has now achieved his congratulations up to 1950s American technology it was silly of us to think he couldn't reach that far now he's got to do the hard part this is not something that I consider danger in the next six months six years maybe he is Korean Koreans are clever but not six months so at 0.1 0.2 you need to understand what's going on North Korea and I'm gonna give you my best guess it's kind of a collection of best guesses because anyone who says they really know is lying because everyone spies have been killed even China's so what I'm about to share with you is kind of the collective best guest at the Chinese American Japanese Russian Canadian British French and German intelligence societies back in 1993 this guy kim ill sung the grandfather of the current leader the guy who fought the Japanese in world war ii slipped in the shower and fell on some bullets in the previous year the Soviet Union hadn't just fallen it had collapsed it was over the Americans and the Chinese had gotten together agreed to put Tiananmen Square behind them and move forward and he knew that there was no place for so Stalinist backwater in the world that was emerging so he had reached out to the South Koreans and three days after he died he was supposed to be in Seoul working out the practical mechanics of reunification and so his generals knowing that no matter what Korea looked like when it was unified it wasn't gonna need as big of an army they killed him they transferred power to this guy you remember him Kim il-sung second generation the technical term for his mental state is batshit crazy I don't like to denigrate the mental capacities of world leaders they just see the world differently because they have a different point of view this guy was nuts he was raised in North Korea drank the kool-aid bought in his economic reforms are the ones that caused the famine that killed 25 percent of the population which is the in percentage terms the biggest man-made famine ever and the first generation stood back oh my god this is totally not what we meant were so sorry so they sent the third generation this guy out to study and not just him his whole cadre hundreds of them the idea being that at some point in the future once they really know what's going on they can come back take over remake North Korea and bring it into the 21st century there's a flaw in the plan Kim il-sung second generation died too soon Kim jong-un and his whole cadre were brought back 15 years too early and at the tender age of 26 he took over the second generation were unceremoniously shoved to the side consider the world from Kim jong-un's point of view the first generation is serious they really do want you to remake the country but not until they're all gone and if you move too fast the first generation was willing to off your grandfather they have no problem rubbing you out the second generation they want you dead now because you just took all our jobs their power the prestige so what do you do you pure erratic you shell the odd South Korean city you lob the odd missile over Japan you have this crazy nuclear program and it's all designed to keep everybody at home off-base and never know what you're gonna do next and every time a member of the second generation is so stupid as to wander in front of an anti-aircraft cannon you hit that button and you purge whoever you can of the second generation whenever you can so his uncle's his half-brothers we're all fair game but at some point in the not-too-distant future there has to be a knight of Long Knives where you kill every single remaining member of the first and second generation at the same time and if you miss one your dad worst job ever problem with his plan someone on the outside noticed and he found himself in a Twitter war with Donald Trump it had never occurred to him that this nuclear stuff could ever cause a problem so he recalled his diplomatic corps last November it's only like 30 people North Koreans they're not really big into ploobis E and he sent them to Europe to ask two simple questions number one is Trump nuts and number two is Trump serious and the Europeans are like you it's like he just walked away from 70 years of alliance think he cares it all about you yes he's serious it's like oh crap so you'll notice since November there's been one Twitter war and it started when I said well yeah you know we got a nuclear weapon and we're good we're good to secure we're not gonna we're not going to proceed with any more tests cuz we don't need to get everything in fact I've got my nuclear button right here on my desk is if it works and of course that started at River world odds are it's totally internal it's a dynastic family struggle it's not about us the problem that they're gonna have now is that we have noticed it's not something's just gonna vanish from American political thought look at what happens this is from the no North Korean missile sites flight lines going to North America there are two things the United States can do about this number one we can hit all the sites we can destroy the nuclear program of weapons we cannot do that with conventional weapons forget their air defenses not that they're insignificant the issue is that the nuclear program is to disperse it's too advanced it's too entrenched it's too fortified we cannot break it with conventional weapons we would have to use nukes multiple nukes on multiple sites we have to glass the country that's option one option two ring the Korean Peninsula with sufficient strike capability and sufficient and endi capability that whenever something is launched we have a potential to shoot it down and then we launch a more conventional strike in there and glass whatever happens to be at the launch site so make it so they can't ever get any more data on anything here's the problem with that these are the flight paths paths from the Chinese known in placements notice the overlap anything the u.s. now does either eliminates China's only ally or eliminates the effectiveness the Chinese nuclear deterrent there is a reason why the Chinese all of a sudden have been more cooperative on this topic of course it ultimately in the end hasn't mattered all that much because the Russians have just stepped in and supplied everything to the North Koreans that the Chinese have stopped but that's kind of where we are right now it's not about us we are not an immediate danger this is China's problem these are good things you guys are shy all right thank you very much [Applause]

Channel: FDCC

Views: 111,895

Rating: 4.8296866 out of 5

Keywords: FDCC, Federation of Defense and Corporate Counsel, Legal Defense, Defense Attorney, Defense Lawyer, Peter Zeihan, Winter Meeting 2018, Amelia Island

Id: u0eJK4Avk2M

Length: 76min 45sec (4605 seconds)

Published: Tue Apr 24 2018

Reddit Comments

[u/kmar81]

What is this guy selling? Himself? Books?

Because I can't remember last time I head so much bullshit in one talk.

Charlatanry at its best. Bits and pieces of fact spun into a narrative that pretends half of the world does not exist. I'm guessing he's a bullshit shill for one specific industry. Am I right?

[u/Haitian-wtaids4Trump]

I thought this was great. Very informative and interesting .

[u/superm8n]

He seems to be leaving out the rush to electric power. The Tesla is already the #1 selling car in Norway.

https://www.ocregister.com/2018/05/04/california-to-become-first-u-s-state-mandating-solar-on-new-homes/

https://oilprice.com/Alternative-Energy/Renewable-Energy/Solar-Is-Surging-In-US-Electricity-Generation.html

http://news.trust.org/item/20180509204651-qp7sa

Edit: links