chinese history is replete with examples of how it can all go to hell in a very short period of time
so i am not making a prediction on specifically how it will go down there are just too many
passports sometimes it is overnight sometimes it's over a year sometimes it's over a generation
demographics gives us a hard stop of 10 years so it's between now and then on some sort of time
frame politically speaking this is practically a blink and an eye demographically speaking as well
but let's talk about that finance model um because that kind of puts to pain the the entire idea that
the chinese are good planners they're really not the whole idea of the asian financial model
is that capital cash whatever it happens to be is a good of the state it exists to serve political
purposes not economic ones so in the united states if you take out a loan you have to show a business
plan you have to order for collateral and if you don't follow your plan or if you don't pay back
your loan you lose your collateral you know this is what we consider normal that is not
how it works in china in china you have to show your employment plan and if you can guarantee a
large number of people will be working at a job regardless of what that job does you get money
because it's all about preventing large groups of workers from going on long walks together
development from an american point of view is about building infrastructure building
productive capacity serving a market growing the business and china is about achieving strategic
goals making sure that the population doesn't rebel making sure they can dominate specific
entries industries not on efficiency or on cost but simply because of mass output so they put a
lot of cash into industrial plant not to produce anything in particular just to produce a lot of
stuff and this is one of the many ways that the chinese ended up going from being a backwards
country to producing more steel and more cement than the rest of the world combined as recently
as seven years ago and then they just have to dump it on the international market because there's not
even a capacity in china to absorb it all that's incidentally one of the reasons why one belt
program there we go yeah too many words too early in the morning uh moving forward
um you can apply this to every sector of the chinese system and in the sectors where the
chinese are not as productive they have to put more and more cash behind it and it's more and
more wasteful so the overall sector that is most exposed to this sort of financing is agriculture
chinese land writ large is only about one-fifth the productivity of your of the global average
so they have to put in scads more in case of some fertilizers five and six times as much to get the
same amount of calories out it's particularly bad with infrastructure we are now in the early stages
of the chinese following the japanese program of building roads to places where no one lives
and of course we've all heard about the ghost cities these are not the plans of a country that
is planning 30 40 50 years down the line these are the operations of a country that has one goal
make sure there's not an internal rebellion now separate from the book separate from
the long-term situation we've had a government collapse in china over the last year she is now
it has been proven time and again that sanctions are a boomerang and a double-edged sword
to politicize instrumentalize and weaponize the global economy and to willfully impose sanctions
by taking advantage of one's dominant status in the international financial and monetary systems
will only end up hurting one owns interests as well as those of others
and inflicts suffering on people around the world and so we even got apple like
the quintessential american company that has outsourced its entire supply chain
every time there's been a writing on the wall that there's a genocide or there's a crackdown in hong
kong or there's inefficiency or labor costs are going every single time that something has come up
the apple has doubled down on china so now 92 i believe of their supply chain is internal to
china and even they started looking last month at other options for the first time
lockdowns are their only option to avoid millions of deaths i mean look at omicron b i mean we've
kind of forgotten about this in the united states we've stopped caring about back in january
but omicron b is the most communicable pathogen we've ever had and omicron b is the most lethal
of the covid variants to date now everyone in the united states either has the vaccine or natural
antibodies or both china has neither of those so if they open up they're just absolutely screwed
uh but you're seeing some version of this going on elsewhere with security issues with energy
issues with food issues and so those supply chains that we thought were inviable no longer
are but most importantly and we haven't gotten to this stage yet we're used to trade
physical transport on the water being safe and cheap and that's just not the case anymore we
had the europeans stepped up to the plate with their oil embargo for russian crude this week
and the most important part of that is they're banning all insurance for all vessels that carry
russian product that's the start of the unraveling of what makes transport transport globally
contacts between russian business circles and the business community of the brics countries
are being activated for example negotiations are underway to open indian supermarket chains
in russia to increase the share of chinese cars equipments and machinery in our market in turn the
russian presence in the countries of the five is expanding the volumes of russian oil deliveries to
china and india are growing noticeably cooperation in the field of agriculture is developing
dynamically russia exports significant volumes of fertilizers to the brix countries russian
i.t companies are expanding their activities in india and south africa and our satellites
are already providing tv broadcast to 40 million people in brazil it's kind of a fun thing because
the last 20 years is all in the post-cold war system so the first big wave of globalization
was mostly among the allies during the cold war when the cold war ended most of the rest of the
world came along and so the last 20 30 years that has been the fastest period of growth in trade and
in standards of living and in gdp in human history it's been fantastic but it was always artificial
so what we now have to do is that in reverse and then some of the cold war expansion in reverse
so we're gonna we're in a world right now there are a large number of secondary powers whether
it's china or russia or the eu and they're just not going to survive this transition china is
going to be the biggest splash when it goes down the russians will probably be the loudest all
things considered with the war uh the europeans there's a number of ways that that can break down
not all of them are completely horrific but most of them are going to see a significant breakdown
in europe's ability to trade so we're going to go from kind of a a step above first amongst
equals where we are now to north america south america and then everybody else pretty far below
the everything that we use in the world is transported across international borders but
that's not true for everyone so in the case of north america for example we do the majority of
our non-electronics manufacturing within north america that is reshoring an incredible rate
we are already the world's largest producer of crude oil and natural gas and we are
actually significant exporters of the as well as refined product and we are the world's largest
agricultural producer and the world's largest agricultural exporter so there are definitely
hiccups along the road i mean if you can't just dissolve the world in a day and expect us to not
notice we will it will be awkward but five years ten years from now once this transition
has passed we'll have supply chains that are close to home that involve mexico canada and ourselves
we'll have a transport system that is largely internal and the united states will be in a better
place with stronger growth and lower inflation than any other place in the world but we have to
get there first you don't do that overnight um let me put my personal cards on the table so you know
where i'm coming from i'm a bit of a globalist i'm an atlanticist i see the rapid expansion of things
like nafta and nato to other countries as the most reliable way of ensuring american security
and wealth for the long term uh but people who believe my way have lost all seven of the last
presidential elections so again not an aberration it's a trend uh isolation in the americas in the
american system comes and goes more than it does with most countries because for the united states
you know since we've broadly secured what we need here in north america we always have the option
of looking out and we always have the option of looking in and so when we do see something that's
an opportunity or a threat across the ocean we will rise to the occasion and we will deal with it
maybe not on a time frame that a lot of other countries would like but we do
what was unique about the post-world war ii environment was that for the first time in dealing
with that threat we found ourselves occupying territory because so many countries had fallen
and we felt the need that we had to make sure that imperial japan and nazi germany did not
resuscitate themselves in a short period of time like imperial germany but not into nazi germany
that required boots on the ground and that required something that we usually don't have
in foreign policy in this country a plan and that plan was globalization and it lasted for 70 years
it is the longest term bipartisan foreign policy we have ever had but it achieved its goal 30 years
ago and so there was always going to be a need for if not a withdrawal or rejiggering a redefinition
and the president who tried to get america to have that conversation with itself what sort of
world do we want to leave for the next generation that was george herbert walker bush
and we punished him for it and so you know this this is we're a democracy this is ultimately on us
but then we elected a series of people who have decided that it was time to loosen the ties
that bind between us and the rest of the world and since globalization ultimately was a bribe you let
us write your security policies in exchange you can sell into our market and access anything else
that's a subsidy and when you carry out a subsidy for 30 years but you don't get the strategic
benefit people get annoyed and so we got obama we got trump and now we have biden and if you look
at what say biden is doing with the russians right now you know part of me is thrilled that
we're finally leading a coalition again but you'll notice there's nothing economic about it this is a
fair weather friends coalition when we all have the same strategic goal
there is no guns for butter trade this time around so as soon as this war is finished
that is probably the end of the coalition that's a very different sort of engagement
compared to what we've been used to since world war ii
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