YouSaid · the spoken record

Peter Zeihan

lines on the record: 79
first: 2019-03-05
most recent: 2019-03-05
sittings or episodes: 1
sources: podcast

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“I mean, that's a really complex question. Let me start with the United States. So if the United States is not a significant trading nation, it is one of the few places that has the financial wherewithal and the technological wherewithal to really move to the next generation of warfare. Now, because of the bad taste in our mouse and the strategic hangover of the Middle Eastern conflicts, I do not expect the United States to be involved in any significant large-scale infantry-driven wars for the next 15, 20 years. We're just done. That doesn't mean the United States won't play favorites. That doesn't mean that the United States won't get involved. But it does mean you're not going to see a lot of boots on the ground. So a lot more special forces, a lot more drone warfare, the odd naval fight, but not what we have come to think of as the wars of the last 20 years. So that's the United States. Everywhere else, wow. It's not exactly a struggle of all against all, but there literally is not enough to go around. And without supplies for this or that.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“And their energy comes from Russia, from the Middle East, very little of it from within Europe itself. So the Germans in a day have to go from being basically Scandinavian socialists to be in German again. And you want to talk about something that's going to rewrite the face of Europe.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Germany is the quintessential example of a country that can thrive under the global order. Because the global order removed the need for the Germans to be, well, to be blunt, German. It's like all of a sudden they didn't have to fight for anything. Everything that they fought for in World War II, market access and resource access? The Americans just walked in and said, yeah, you can have that. You just have to be on our side against the Soviets. And so for the first time, the Germans didn't have to worry about strategy or military tactics at all. The Americans took care of all of that. And they could just focus all of their attention on manufacturing. And lo and behold, they kicked some serious ass. What happens the day that ends? The supply chain system is spread throughout a dozen countries in Europe. Their military system is a joke. It's arguable that they don't even have a navy or an air force right now.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, if you're going to get into technical factors, those definitely work. I probably normally draw the net a little bit broader because I don't usually speak to exclusively financial audience. I look for countries that have the propensity and preferably the experience in maintaining their own continuities without outside assistance. So, for example, France is on the extreme western end of Europe. It has never integrated to the degree with the rest of the European structures that say the Germans have, and they've got an independent military capacity, an independent food supply system, an independent energy supply system. So I don't mean to suggest that the French aren't going to suffer significantly when the European system cracks, but it's going to be nothing compared to what happens to Germany or Poland.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Northern European banking structures go to zero. I mean, there's no way out of this in which integration, which is dependent upon American involvement continues. And the more integrated you have become, the more you have advanced under these global structures, the greater the distance you have to fall. Now that the areas that are likely going to experience the greatest disruption are in those zones that have experienced the greatest growth. That's kind of the frontier between the European Union and the Russian system. That's the Persian Gulf, and that's the Northeast Asian core. Those are the areas that until the global order had always been laggards in terms of economic development and financial prowess. And those are the areas which as a result had the biggest base effect in terms of expanding under the order system. That all now unwinds.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. We're not used to that. We have no way to process that. Just think about something simple, meaning air quotes here. The end of the European Union The European Union is an institution that is a hundred percent dependent upon the global order without American strategic largesse and access to the global market, the Europeans cannot hold together as a single entity because they can't defend themselves, they start competing, and that is the end of, for example, the Eurozone. What does that do? Well, look at southern Europe. Everybody knows they're indebted, everybody knows they're indebted in euros. Do you really think they're going to keep a northern European dominated currency when this system ends? So then the question becomes what are all these loans denominated in? So if you're in Italy, do you want to keep paying in euros when your own currency is devaluating, which means that you will default, which means that the northern European banking structures will go to zero? Or do you pay in Lira, in which case...”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you get a complete breakdown of disassociation of everything that makes the global system possible. And so, I mean, you want to talk about the dangers of survivorship bias. I mean, here we are. We're in a system right now where global norm is stability. That's not normal. That's just normal in our lifetimes. If you go back to the world before 1946, the world was not a single financial space. Direct arbitrage among the various markets was thin to non-existent, and markets, not to mention countries, went to zero often.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Switch in 18 months if you wanted to, if you really needed to. So we are looking at a transition period here in the United States that may have a few bumps in it. But imagine what happens everywhere else. We're looking at the United States being a net exporter of crude in about a year and has the capacity to not even need to tap the broader global system in a year and a half. So we might have some tightness here, but it's not going to be that bad. Everyone else just has to figure out how to do without.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“As order gives way to disorder and global transport breaks down, that's going to be less possible. Now we'll still be able to take heavy crude from places like Canada and assuming they don't completely implode Venezuela. But most of the world's other heavy crude is going to be in a different hemisphere, and the axis is going to be lost. So we are going to have to dumb down a refining complex. Now every refinery in America over the course of the last five years has worked steadily and diligently to change their preferred mix or to add different facilities to their existing refinery so they can process a greater proportion of the light sweet stuff. That process is not complete, will not be complete for at least a few more years unless things dramatically change and they have to accelerate that. But even in the worst case scenario, I mean, let's assume that the disorder starts tomorrow and that imports of extrahemispheric heavy crude stop. You could make that”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“So all of a sudden, the United States has this refining base that is designed for the crappiest crude in the world, which it buys at a discount, yet we're producing some of the best quality crude in the world. And you've got that split. So the United States tends to export the light stuff, import the heavy stuff, and make gobs of money on the arbitrage between the two. So in an ideal system, this would continue. Low, sell high. I mean, that's kind of the whole point, right?”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if the light crude is selling at a premium, we've got the technology in the capital to develop refineries that can deal with stuff that's not ideal. So we, starting in the mid-1970s, started retooling our entire refining base to run on the thick, crappy stuff because we knew that that was the direction that global oil was going and to shale. The reason that heavy crude is heavy is because it percolates through the rock formation and picks up contaminants as it goes. Eventually it gets to a place where it pulls behind a cap rock and that's where you kind of get your gushers. Shale crew doesn't work that way. It's trapped at almost the microscopic level within the rock formation and you have to drill horizontally and frack the rock just for it to get out. So when it comes out, it's never been contaminated. It's basically infant oil if you want to think of it that way.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, Light Crude is about the consistency of water to nail polish. It's super, super thin. It's not dark. It's not exactly clear, but there's not a lot of color to it. And you can use it to make things like gasoline and a lot of high-end products. It's not that it's bad crude. It's just different crude. A heavy thick crude. Now, that's the direction that the Global Crude Stream has been going for decades. The light stuff is easier to refine, and so it's usually what folks have been after. And the technology to tap much less exploit the heavy crude didn't even start to exist until the 1970s. So all of the light stuff was developed first. We moved in the direction of heavy. The heavy stuff is thick with things like mercury and sulfur. It's thick, it's gooey. Some of the really heavy stuff is actually a solid at room temperature. I mean, this stuff is just difficult to move, difficult to produce difficult to process. Now, the United States being the most heavily capitalized system in the world, looks at this, and by the United States, I mean American refiners, like, okay.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“She has now advanced from the point where it's not profitable at a hundred dollars barrel to it being marginally profitable at thirty five dollars a barrel, which means that by the end of next year the US shale industry is going to be cost competitive with Saudi Arabia, and that will make the United States shale industry the lowest cost producer on the planet. That is something that we are only now starting to kind of get our mind around. I mean, it wasn't that long ago that we were Exactly. Peak oil is less than 10 years ago. And now we're looking at the United States being already the largest producer of natural gas, the largest producer of crude, and the largest exporter of refined product on the planet. And the trend lines there are going vertical.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Ever part of that eventually manifested as the subprime crisis, which is no good, but it meant that capital was available for absolutely anything, and it didn't have to have a rate of return at that time. Enter shale. So the idea of drilling down a mile and then turning your drill bit and going horizontally 600 feet, you know, you got to admit that doesn't sound very cost effective and it's not. But in an environment where 0% return is not seen as a negative and where the capital is always going to be available, you can start doing that. And you'll get a little crude. You'll get a little natural gas, but the more you do it, the better you get. So 600 feet turned into a thousand feet, turned into 2,000 feet, turned into 6,000 feet today. You can have laterals going three, four miles. And that's assuming you're only drilling one lateral. In some of these wells, you're getting 30. So the technology...”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the United States has had three oil shocks in recent memory, 1979, 1983, and then 2006 to 2007. In each one, the United States oil patch took advantage of high oil prices, increased production, and developed new technologies. Now, they didn't all work at once and 11 didn't work at all. But by the time we got to 2007, we were in a fundamentally different structure. Not only had some of the technologies that we had started to tinker with 30 years ago really started to come of age, but the availability of capital in that environment was immense. Now, everyone here in New York thinks of 2007 as a financial crash, and it was. But it happened in the environment of the most oversupplied capital markets in human history. We've got the baby boomers preparing for retirement. They've got a lot of spare capital that they're investing trying to get that mythical extra 1% of return. That drove interest rates and borrowing costs to the lowest.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“To be a bit by bit collapse of the global order when it happens and it becomes apparent that either the Americans can't or won't guarantee global commerce, the whole thing more or less falls apart at once. And you want to talk about something the markets are not ready for, it's that.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategically, militarily, I'd argue we'd been moving this direction almost as long, patrolling the global oceans means that you must maintain a sufficiently large navy to deter intervention on the seas everywhere at the same time. That was half of the reason we used to have a 600 ship navy. Well, now our Navy is fewer than 300 ships. And it's heavily, heavily clustered around those 11 aircraft carriers, which means the United States has mobile bases that can sail anywhere in the world, one at a time, three at a time, whatever it takes, and really smash the crap out of anything that it perceives as a threat. But those aren't the type of naval deployments that you use to actually patrol the sea lanes. Regardless of whether or not the United States wants to patrol global commerce anymore, I'd argue that it no longer has a navy that is appropriate for that task, which means that this isn't going to”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“I wouldn't say it's a less issue. I would say it's a not at all issue. Two sides to that. One politically. The United States has been moving away from interest in the global system for four presidents now. Under Herbert Walker Bush, there was talk of a new world order. You remember the thousand points of light? That was his attempt to get Americans talking about this so we could figure out what we want from the world a generation from now. And of course, us being Americans, we voted him out of office for it. And he was the last guy who really gave a damn. Then we had Clinton who saw himself as a domestic president. We had W who ran a one issue foreign policy for eight years. And then we had Barack Obama who really didn't have a foreign policy at all. So we've been moving in the direction of something like Donald Trump for 25 years. And now we're here. So this is the presidency under which it all ends. It's not because it's Trump. It's just because it's what's next. It probably would have happened with Hillary Clinton too. It just would have been a little bit better organized. So politically we've been”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“United States can't get hurt. It is that the United States can choose the time and the place of whatever conflict it wants. Now for trade, we have seen global trade expand roughly by a factor of a thousand since the 1930s about 95% of that is on the water. Now the United States continental system, our trade is the least integrated in the world. We only trade for 10 to 15 percent of GDP based on whose numbers you're using for the Chinese the number is double for the Germans it's triple and unlike everybody else's commerce most of ours is held internally within the NAFTA system so of that 15% about half of it is within North America and doesn't use the ocean really at all so the United States is the deterministic power of the global system and it doesn't use that system and so if you are Germany or China or Japan or anybody else who actually depends upon the ocean blue you are”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“And we are in the process of unleashing a new class of them upon the world. The Ford class, which are more powerful than the ones that came before. So at least for the next decade or two, you're looking at that gap between the United States and the combined navies of the rest of the world actually increasing rather than decreasing. Now, at rates of global naval buildup, and the Chinese are floating a lot more ships, you're probably looking at the global navy roughly equating to the strength of the American Navy in the year 2240. Now this is not the sort of thing I lose a lot of sleep over. Now, this doesn't mean that the U.S. Navy can sail anywhere at any time. And a lot of the strategic angst we've seen among the military community in the United States is, oh no, we can't take an aircraft carrier within sight of the Chinese shore. It might get hit. It's like, okay, well, why would you do that? I always find it amusing when people are thinking that primacy means omnipotence. And no, that's not it.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Most people don't realize that World War II was kind of a blowout from a naval point of view. The major powers that entered the war with the exception of the Brits and the Americans, everybody lost every ship they had. And so by the time we got to the end of the war, there really only was one navy because the Brits were basically sailing as an adjunct to the American system at that point. And then because the Americans said, hey, everybody were on the same side and we'll use our Navy to protect you, nobody really felt the need to float a Navy. There was no point. As a result, the United States went in the direction of the supercarriers and everybody else went in the direction of downsizing. So by the time we got to the end of the Cold War, the U.S. Navy was about seven or eight times as powerful as the combined Navies of the rest of the planet. And then, of course, with the post Soviet collapse, the Russian Navy went away. And so that number today is probably a factor of ten. And the United States is the only country that fields supercarriers.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“If you don't have the local consumption or the local resource base or the local security that's needed to guarantee it. So we're going to see a collapse of global manufacturing from these far-flung gangly multi-continent supply chain systems into much more constrained networks where inputs, production, consumption aren't simply physically secure, where they're co-located. Right now, the only place on the planet that happens is North America.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“could have a competitive advantage at whatever step of the production process. That is where that facility would go. So we went from having facilities in one location to two to ten to one hundred to one thousand. The iPhone touches 1,200 different facilities in 50 different countries today. And that's allowed us to have a huge advancement in the human condition and to spread wealth and democracy far and wide. This is all an inadvertent outcome of the strategic order the Americans set up, but this was never the goal. This is a side effect. Well, without the Americans, without the order, this all now happens in reverse, and all these economies of scale that we have gotten from this new continuity goes away. And if you are a place that can build this part of this or that part of a widget cheaper or more effectively, that doesn't really matter.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“We basically paid everybody to be on our side. It worked. That changed how we built things. Because if the ocean is now safe and if international transport is cheap, then there's no need to have your entire manufacturing base in one place. And so we started to see diversification. We started to see supply chains.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's probably good to tell it in the story from the point of view of manufacturing, how those two have interacted. So in the time before Bretton Woods and the time before the order in the imperial age, if you were going to build a widget, you basically built it all in one place. You'd bring in your capital, you'd bring in your technology, and you'd have local labor and local infrastructure do every step the manufacturing chain possible in the same location. So we got these big conglomerate industrial cities. If you had a navigable river, that's great. spread out the supply chain system along that river. But ultimately, you'd keep you in house. And then when you had your finished product, that is what was distributed. The order comes along and changes that. The whole idea of Bretton Woods was that we're all on the same side and that international commerce is no longer a viable target. The U.S. Navy will prevent that from happening. Now this was a strategic bribe. It was very effective in bringing everybody into the American network during the Cold War.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, you think about it like a good candy. You want to be crunchy on the outside and gooey in the middle. Mountains make great borders. Oceans make better borders. You want to make sure that people can't park their tanks on your lawn. Kind of factor number one. Number two, you don't want that crunchiness in the middle. That's gross. You want flat, arable, temperate land. You want it to be temperate with winter so that you don't have to worry about the tropics and bugs and disease. You want it to be arable so you can grow your own food. And if you can pull it off, you want a navigable river. Moving things from A to B is one of the most expensive and difficult things that humans do. And if you can float it, it costs about one twelfth as much. So if you look at the really powerful countries through world history, they have this kind of mix of factors, whether it's Russia or France or Germany or the United Kingdom or Japan to a certain degree China. And of course the United States has more of it in a better setup, a better alignment.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“Goodies that are out there right now all of a sudden have to figure out how to do without. And we are entering the fourth age of human history. We are entering the disorder. And whether you're the Chinese Communist Party or the European Union, everything that has made your system work for the last two generations is about to end.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“And in this global order, we fought and won the Cold War, and it worked. And then what? So phase three was the Americans just kind of letting this system run on autopilot, where there's no foe. And this brought us the biggest boom in capital generation in world history, which led to a series of economic outperforming countries and a lot of technological development, and this is the time of the brick boom, for example. We're ending the third age now, because the Americans have realized that this global order structure is no longer appropriate for their needs of the day. They're not quite sure what their needs of the day are, but they're pretty sure that it doesn't require the rest of the world. They're probably right, which means that every country that has reworked its political system, its economic system, its financial network, in order to take full advantage of all the geopolitical”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source
“You can really break the entire global structure, all of human history into four neat chunks. Chunk one is the imperial age when you basically had a few countries based in some really good geographies with good capital generation and internal trade capabilities, large populations, that sort of thing, that were able to not so much dominate their neighbors, but to then reach out and dominate large chunks of the planet. And the imperial age brought us most of the technological advancement that we're familiar with, but it also led to a series of catastrophic wars that ultimately ended in World War II. Phase two, the Americans pick up the pieces. Americans are the last ones standing after the war, and they say, let's try something a little bit different. So instead of these imperial corps dominating large chunks, we told everybody whether they were an imperial corps or a colony that everyone's independent now. Everyone can trade with everyone else, and we'll use our navy to protect everyone. All you have to do is side with us against the Soviets.”
2019-03-05 · Invest Like the Best · Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123] · IDENTIFIED FROM THE TRANSCRIPT · source