What The F*ck Is a Framework Trade Agreement???

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jacob Shapiro (00:03):
Well honestly, Marco, I usually introduce this, but you just like,
like got this great concept that we'regonna roll out to the listeners right now.
So tell them why our listenersare enjoying their first
pathogen Shapiro six pack.

Marko Papic (00:15):
Yeah, so, you know, in the ongoing effort to get a six
pack, which will last forever untilI die, uh, and will never work
'cause I'm a chubby Serb like Yoki.
Uh, basically we're going todo an intellectual six pack.
And so when we don't have aprepared gimmick, like the top 20

(00:37):
liters in the world or the tradevalue or whatever, uh, we're just
gonna do a nice little six pack.
And what that means is that, you know,Jacob is gonna have three items of his
own that he didn't necessarily prepme for, except maybe a little bit.
And same with me together, it's asix pack of geopolitical events.

(00:58):
That we think are important forour listeners to hear about.
So there you go.
It's a six pack.
That's what this podcast is.
And every podcast where we don't havea specific topic, we prepared, uh, to
spend like an hour on, like we, youknow, we did one about trade and tariffs.
Uh, listen up.
That was a really good one.
Like, go back and listen toit if you have the chance.

(01:18):
Uh, I'm gonna reference it a littlebit in one of my six, one of my
three items, but whenever we don'thave something, it's just gonna
be a nice little six pack for you.
So there you go.

That's perfect.
That's, that's perfect.
Are, are you more of a, what,what, what is your favorite beer?
I should know this about you.

Uh, oh, that's an interesting, so I'm not a beer drinker,
you know, it's, uh, all my friendsfrom college remember me as the guy
who just walked the dorm hallwayswith like a bottle of, uh, Olli, you
know, like, so I come from Europe, uh,and I went to university in Canada,
university of British Columbia.
Shout out to the Thunderbirds.
And everyone's basicallyan alcoholic, right?

(02:00):
And everyone's drinking beer nonstop.
And I'm like, why are we drinking beer?
Is it somebody's birthday?
And they're like, no, mark, it's Tuesday.
We get drunk.
That's what we do.
And so I was like, okay, but whydon't we cut out the middleman?
I eat the carbs and justgo straight to the alcohol.
Like what's, what's, why, whyis the vessel through which
you consume alcohol only 6%.

(02:22):
Why not go to 40?
Like, I don't understand ifthe point is to get drunk.
So I was the guy with abottle of vodka, right?
And uh, I've never really acquired beer.
Like I still drink like only laggers'cause I'm thirsty and it's super hot.
So yeah, the short answeris it's, I'm still light.

Ugh.
Uh, the log

is nothing, you know?

Yeah.
I got you.
Well, my six pack, I, I've,I've evolved quite a bit.
When I was a, when I was in college, youwould not see me with a bottle of stole.
You'd see me with a six pack ofsome, uh, pretentious IPA, because
you know, that sounds about right.
Course you Cornell

man.

Yeah, Cornell man.
I mean, IHA Cap, Ithink a brewing company.
Great.
But then I OD'ed on IPA to thepoint where now I just want like
the most boring beers possible.
Uh, and actually athletic does thislight non-alcoholic beer, which is
like, it gets you 80% of the way there.
'cause all you're really drinkingthe beer for is you wanna feel
like it's hot and you're at theball game and things like that.
And I find that drinking thenon-alcoholic light beer.

(03:20):
I'm like 80% of the way there and I couldstill function at five o'clock in the
morning with my eight month old the nextday, like clean up a blown out diaper that
covered the entire, that was this morning.
Anyway, not to go on that, but I'll alsosay I've been converted by the great
people in Wisconsin Spotted Cow, which isonly available in the state of Wisconsin.
It's delicious.
And every time I go do a gig orvisit Wisconsin, I bring spotted cow.

(03:41):
I, I buy it in the airport andI bring it back to Louisiana.
I'm basically smuggling it down the bayou.
That's how I think of it myself.
And it's delicious.
They actually, you know, they,they followed me on Twitter.
I tried to get them tocome on the podcast.
No way to talk.
Like geopolitics is beer or geographyof different alcohol consumption.
So, we'll, we'll tweet this FM and seeif No, come on, because I love that

concept.
That's a great concept.
Yeah.
Geopolitics of alcohol consumption.
But I also just want to note thatthe fact that we are, um, you know,
lovingly and longingly calling thisthe six pack, 'cause we don't have one.
We're talking about what beer we drink.
Like, this is clearly a likeearly, like late thirties, early

(04:23):
forties, two dudes talking.
Just, we've definitely aged ourselves.
But yeah, so, uh, it'san interesting segue.
I didn't know we were gonna talkabout beer and alcohol consumption,
but I'm not a beer drinker.
Yeah.

You know, I, I also come by this honestly because if the
Nazis had not taken over Vienna andtried to kill all the Jews, my family,
which was distilling millions ofdollars equivalent worth of alcohol
in Vienna would still be in Vienna.
I wouldn't be sitting here withyou in, uh, in the United States
thinking about geopolitics.
So, wow.
I guess if, if, if you want to thanksomeone for me taking this turn to
geopolitics, you can thank Hitler.

(04:56):
That's an interesting way to getto the reductive odd hit, Lauren.
Anyway, this

is, uh, this is time 74 that you have said something like
that, and I can't comment on it.
Only you can, because you are the Jewon the podcast, and I will just sit
silently and I guess nod like, hmm.
Interesting.

It's the only form of Jewish privilege there is.
Okay.
Yes.
Let's,

I'll not take, I'll not take Aal Hitler for anything, but you are of
course, allowed to do whatever you want.
Uh, cool.
So who starts, all right.
You or me?

Uh, well, it's up to you.
'cause you, you coined the,the bit, so why don't you
pick, you, you wanna go first?
Or, or you wanna give the g the first?
I,

I, I feel, I, I feel like yours are more profound.
Like, I think yours are more profound.
Mine might be more nichey.
So why don't you start, becauseI know you're itching to talk, I
think about the trade deals, right?
This is the first partof our muy six pack.

Yeah.
I'm, I'm itching to talkabout the US and Europe.
Um, let's do, and their,and their trade deal.

And by the way, I just wanna say like, I think one of the
best, uh, reactions to that trade dealis Jacob's reaction, uh, that you,
uh, sent through your Substack, right?
So you have, if you have notsigned up for Jacob's Substack,
you should I read the whole piece?
I thought that you were spot on.
So why don't you tell our listenerswhat's your take of the US EU

(06:15):
trade deal and maybe just outlineit a little bit for our listeners.

Yeah, that, that's very nice of you to say.
I'm, I'm trying to put more workinto substack, putting thoughts out
that are available for people whenthey're cutting room floor in two,
two interesting things about that.
Number one, I've been usinga lot of chat GPT lately.
That piece was the first time in sixweeks where every single word is me.
I didn't use any chat, GPT, and itlanded with readers way more than
anything else I've written recently.
And I think there's a lesson in that.

(06:40):
I think maybe we're over, or atleast I was over indexing on chat
GPT and LLMs for research purposes.
Um, so that was an interesting thing.
The other thing is that that piecewas written while my eight month
old and my three-year-old wereliterally in the room next door.
The door was shut, but at variouspoints, my three-year-old was like
banging on the door, like calling for me.
They were screaming.

(07:00):
My mother-in-law was folding laundry.
I had like, I had these noise cancelingheadphones and like jacked all the way up.
I probably lost a year of hearing'cause I like could not hear myself
as I was typing out those words.
And it really landed with people.
So I guess what I really need towrite well is just sheer chaos and
a sanity around me at all times.
Um, but anyway, so the, the, theUS EU deal quote unquote, uh,

(07:23):
what did, what did Trump call it?
Hold on, lemme quote him.
The biggest deal ever made, uh,since the last deal that he made.
'cause I'm pretty sure he says thatabout literally every single thing.
It's a framework trade agreement.
Marco, I don't know what the fucka framework trade agreement is.
Is it a treaty?
Is it an agreement?
Is it a MOU?
Like I still don't have a, like whatis a framework trade agreement and

(07:43):
how lazy are Reuters in the financialtimes and everybody else that you're
just like, like treating that.
Like that's a thing.
Like it's not a thing.
A framework trade agreement doesn't,anyways, sorry, I don't need to go
Larry David on you, but, um, so there

please do.
This is why you're here.

I know you are

Larry, David and Silla combined in one human being in

one.
This is why I also can'twatch Curb Your Enthusiasm.
Like my wife wants to watch Curb and I'mlike, it, it's a little too close to home.
Like I need to actively resistbecoming that personality.
Uh, it's just not good.
It's not like good for me from amental, this is also why I can't
watch Woody Allen movies too much.
'cause like it's just,it's a little too close.
I need to stay away.
Anyway, so there's this US EU deal.

(08:24):
We don't even reallyknow what the terms are.
There are already reports out therethat the terms are different depending
on who's who's, uh, which side says,um, the US is apparently gonna push
it through via executive order,which I'm pretty sure is illegal.
Um, the EU still has to ratify it at acertain level via majority, but at least
some of the things that we know, EU goods.

(08:45):
Entering the US will be subjectto a 15% baseline tariffs.
Donald Trump had threatened30% by August 1st.
If there wasn't a deal, the tariff willcover, or at least as we think it is,
is gonna cover about 70% of EU exports.
Now, there are other things likepharmaceuticals and timber and lumber.
That is, they have section 232 trade investigations there
that are maybe gonna affect thefinal rates and things like that.

(09:07):
There will be some zero for zerotariffs on things like aircraft and
certain chemicals and certain drugsand certain semiconductor equipment.
Uh, certain doing a lot of work, uh, ina lot of these things, they still have
not decided the most important thing.
To our point on beer, what arethe tariffs on alcohol, wine,
cognac, whiskey, French cheese.
That's the one I really care about.

(09:28):
We don't have those answersyet, so I'm pissed off.
And then also, and those are,

and just, just those are critical.
Yeah, please.
'cause we of, we of course know,uh, the insatiable appetite that
Europeans have for American beer.

Right, right, right, right alongside their American cars.
They'll put the American beer in thecup holder and drive on the auto bond,
uh, with the, with the American cars.
And then to really top it off, um,the EU is gonna invest 600 billion
into the US over Trump's secondterm and is gonna buy energy.
Uh, what, 750 billion?

(10:03):
Was that how much theypromised to buy of energy?
No.
Uh, I

think it's actually been revised to $70 trillion of energy.

Well, there you go.
So the eu, I guess they're just gonna takea bunch of l and g and put it in Hungary
or put it wherever they don't wanna putit so that they can just use it forever.
Um, I don't really understand.
So that, that's the outline of the deal.
I said in my piece, look, I thinkthere's two ways to look at this.
Europe is fundamentally weak and it'sgonna be a battleground in a multipolar
world rather than a poll or, um, andthis goes back to something we've

(10:34):
talked about for a while, Marco.
The people who win trade wars are thepeople who don't fight trade wars.
So the EU basicallydeclined to fight a war.
Ursula of Underlain has taken all theheat from people and saying, all right,
I will be, I will bear this cross.
Um, and we got from 30% to 15% terrorists.
But the real news is that, youknow, Germany just passed a record
budget about enabling, you know, uh,deficit spending and everything else.

(10:58):
Um, even inertial love under underlyingstatement, she said, okay, like, we're
doing this, but this means we haveto take bold action at home to make
sure that Europe is more competitive,more innovative, more dynamic,
you know, all these other things.
Um, Europe could havepushed a little bit more.
They could have said, well, actually,like if you look at services, the trade
deficit surplus situation is reversed.
Mr. Orange, man, do you wanna talk?

(11:18):
They didn't do any of that.
They, they put it aside.
They closed a deal.
And I ended on, I think thisis short-term weakness, but it,
it is for long-term strength.
And I think if you're countingEurope out, you're making a mistake.
And then the last point, I would justmake Marco on this is, and I, I, I feel
like I only realized this a week ago.
Maybe I should have realized it already.
US foreign policy these days.
Makes way more sense if you analyze itas if it was a reality TV show than as

(11:42):
if we were using our geopolitics andpolitical science brains and things
like, all those models don't work.
But if you think of this as justa reality TV show, this is the
apprentice's tariffs edition.
Actually, all of this makes perfect sense.
So I wanted to see where you are, but I,I think you'll be with me in, in Europe
and in, in having some faith in Europe.

I loved your piece, you know, and I loved it because
what you did is you outlined thetwo, two ways to look at this.
And I think that, uh, first of all, bythe way, on, on the quip about TV shows,
I've told my clients, uh, in the financialcommunity, basically when they scoffed
at the idea that Trump would be able toconclude trade deals in three months.

(12:22):
I said that you scoff onlybecause you lack imagination.
And if you are, uh, speakingto way too many learned trade
negotiators, these are not tradenegotiations for Geneva, for the WTO.
These are trade negotiationsfor made for TV trade deals.
Mm-hmm.
That's what I call them.
So we're fully aligned with that.

(12:44):
Um, I think that objectively speaking,like if you just use mathematics and you
objectively look at this trade deal, youobjectively have to say that America won.
If you say anything other than that,you have Trump derangement syndrome.
This is the way I like test people,like who won the trade deal in

(13:07):
objective mathematical terms.
And if somebody tellsme, well, Europe won.
I'm like, uh, guys, Europewill apply two point a half
percent tariff on America cars.
Americans will apply 15%tariff on European cars.
Like this is obviously an America victory.
The problem is that it's a purehick victory, which is like,
it's a rock throwing competition.

(13:28):
It's like two kids.
No, no.
Like here's an analogy ifyou want, it's two children.
Trying to see who's going tothrow the rock more accurate
accurately at the principal's carin the parking lot of your school.
And one kid is purposely like missing andthe other kid is like, fucking nailed it.
And then here comes Mr.

(13:49):
Garrison.
It is like, what the hell did you do?
Right?
Oh, sorry, Mr. Mackey.
Like that was not nice.
Okay, so the point that I'mgetting at here is that, yeah,
America won, but what did it win?
Your, to your point, the wayyou put it was like, you don't
wanna really fight a trade war.
And one of the reasons is that, um,this first order effect is what Reuters

(14:09):
and Bloomberg, and most of my clients,quite frankly, on Wall Street, and
most people on fin Tweet, they'reobsess about first order effects.
Like, yeah, absolutely.
Donald Trump cleaned the floorwith Ursula of Underlaid.
However, tariffs are notgood, like for your economy.
Not because of some petty, idioticreason, like their inflation.

(14:32):
Who cares?
I, I'm, I'm okay with that.
And they will raise revenue.
That's great.
Well done.
You're all like, cool.
The problem is that I'm notsure that you want to protect
your domestic car industry.
This is the land and the path andthe narrative of import substitution.
This is the way thatyou lose productivity.
This is the way you rest on your laurelsand you let the big three, Detroit, which

(14:55):
has effectively ceased to be able toproduce, uh, what's the word, a sedan.
You let them basicallyjust get lazy in fat.
Competition is how you get productive.
I mean, look, obviously if you'rea developing nation and you
don't have a car industry at all,fine slap a 50% tariff on cars.

(15:19):
So you can maybe learn how to build acar domestically, but you wanna take them
off in order to be competitive globally.
And that's what the irony of this islike, yes, America absolutely won.
Objectively speaking, America will nowapply 15% tariff on a European car.
Europe will have to apply 2.5%, but noone's gonna buy American cars in Europe.

(15:43):
You know, other than Tesla, like noAmerican car is gonna be purchased.
You, you could put anegative tariff on them.
Like here, I'll give you 10%.
So if a American car costs two thou20,000 euros, I'll give you 2000 euros.
How are you gonna park in F-150?
How are you gonna parallelpark it in Brussels?

You know, like, I mean as, as, as we've talked about before,
the real market to to capitalizeon for, for trucks is gonna be your
jihadis and your formerly ISIS guy.
Yes.
Make sure.
Yeah.
And they're drivingToyotas, so, yeah, that's

right.
Make sure Afghanistanhas like, look, look.
But seriously, I think that this isthe point of this, I think, I think
there is some level of tariffs theUnited States probably should apply in
order to deal with its fiscal issue.
I think that's where I am morealigned with the Trump administration.
15% is I think, too high and Ithink it's not too high because
the consumers can't take it.

(16:33):
Although yes, that is aconcern of mine as well.
The other concern I have is thatprotecting American industry is a
sure way to ensure that it collapsesnot tomorrow, not in two or three
years, but in five to 10 years.
So if you're listening to this podcastand you don't have like a PhD in economics
or you're not like a CFR member or you'renot somebody who understands these things

(16:55):
'cause you think about 'em all day.
I just wanna make sure you understand.
It is not good to protect your industries.
Just like it's not goodto coddle your children.
Like if you give your children$3,000 monthly allowance, guess what?
You're never going to learn how to do.
Get a job.
It doesn't matter how rich you are.

(17:17):
You should not be coddling yourindustries, especially when you
are a rich, advanced, industrial,productive country like America.
You are not, you're notstarting a car industry.
You have it.
You need to expose it tointernational competition.
You need to ensure that whenCadillac makes a sedan to fight
against BMW three series, it doesn'tneed that 15% tariff to survive.

(17:40):
Rather, people around theworld are like, you know what?
I would like to drive a Cadillac.
Like I actually thinkthat's a really good car.
So right now America makes likepickup trucks and giant SUVs for
family of 14 or Uber drivers.
Like that's it.
If you are in a market for a pickup truckor in a three row sedan, so you can be
an Uber driver, you favor American cars.

(18:01):
Everybody else, no.
Like not, not really.
And so I think that's a problem.
And I think that tariffsare not gonna help.
That.
They're gonna actually impedethat over the long period of time.
They're gonna ensure that Americanindustry actually gets lazy.
So I would say that from thatperspective, it's a mistake.
The other thing you mentioned isthe rest of the world is going to do
what President Trump says right now.

(18:23):
You you, what was theway you phrased this?
Wait and see.
Didn't you have a, like everyone'sjust kind of doing what he wants
right now, but they're buying time.
I think you used the term buying time.
A lot of the countries are going togive President Trump what he wants,
which is the apprentice moment.
You know, you're fired.
Oh, I'm so sorry.

(18:43):
You know, everyone's gonna kowtowpublicly and in those three to five
years, they're gonna learn to weanthemselves off the us I think one
of the greatest powers of the US.
Is that it allows the rest of the worldto become addicted to it, to its market,
to its technology, to its culture.
I don't think you want to start, Imean, again, if your objective is to

(19:05):
preserve American power over the next10, 15 years, not the next two years,
then I don't think it's really smartto be encouraging the rest of the
world, including your allies, to startweaning themselves off of your market.

Yeah.
I

think that's

it.
It, it's funny because in our lastepisode you talked about how Trump was
caught liver oil and now like what Trumpis doing is he's more like a twinie.
Like it's, there's literallyno Well, twin benefit to like,

well, I think he's a twinie to the us.
When I said he's called liveroil, I meant to literally every
country other than the us Yeah.
Which is consistent.
Which is consistent with your view.
You're basically saying like,look, I don't think that
Amer, uh, that Europe lost.
I think Europe is just buying time.
Yeah.
And, and they're buying time to dostuff that Trump is forcing them to do.

(19:50):
But those, that stuff, those reforms willbe good for Europe, not necessarily for
the us and unfettered access to Americanmarkets, which a lot of market camp hates.
They think it's like justwanton, magnanimous without any
concern for national interest.
I disagree with that.
I think that access to the Americanmarket, American consumers, that

(20:13):
access has been one of the greatesttools of American foreign policy.
And it's the stick that America has usedto ensure the rest of the world remains
addicted to its services, products,goods, markets, blah, blah, blah.
And now President Trump hasbasically said like, look, we
will use that access willy-nillyto accomplish whatever we want.
And I think that will be that calledliver oil that forces Canada, Europe,

(20:37):
China, everyone else to say, okay, fine.
Let's make a five year plan tobecome less reliant in the us.

When you said wanton, magnanimous, magnanimous.
I I thought you weresaying wonton for a second.
I thought we were gonna starttalking about wonton soup and South
Park and a bunch of other things.
Um, but I, I have three signals andthen I'll, and then I'll turn it
over to you for our second beer,because there's a lot of noise here.
And I, I put three signals, or Iidentified three signals in all this.
The first, and I just sort of brushed thisaside, but Germany, Germany's government

(21:03):
approved a draft 2026 budget that includesa record investment of 126 billion euros
and borrowing 175 billion euros more for abig package on infrastructure and defense.
So that sound that you can hear inthe background listeners, those are
the gears of German industry gettingready to fuck up the rest of the world.
When they decide that theywanna start doing things,

(21:26):
they will start doing things.
So there's your one signal, yoursecond signal, and this was something
I was ac the, the second, yeah,we'll go back to the Hitler stuff.
Like my distillery was in the crossairs the last time this shit happened.
I am perfectly placed to tell,I hear the sound it's coming.
The second thing, and I was actuallysurprised about this, Marco, if you look
at both non-military and military aidgiven to Ukraine in 22 to 24 versus so far

(21:50):
this year in 2025, it's basically Europe.
It's not the United States.
So we've been hearing for yearsthe Europeans aren't there,
they're not supporting Ukraine.
Oh yeah.
In, in 2025.
You surprised they'vebeen supporting Ukraine?
I, I didn't know it was that big.
Like I thought it was,ah, maybe it's more 50 50.
Maybe it's 60.
It's not, it's like most ofit is coming from Europe.
So like this vision of the Europeansare, are effeminate and puny.

(22:13):
No.
Like they're actually the ones that arestanding up the Ukrainians versus Russia.
And then the last thing is justthink about all the shit that
Wander land has taken for this.
People like the French Prime Minister,by the way, who cares that France
has a prime minister, but whateverlike is is saying she's super weak.
I can't believe we did this.
That's a signal, because that'sthe Europeans being like, we
don't want to be puny and passive.

(22:35):
We want to be strong.
So the next European commissionerbetter be muscular and strong.
I think that's actually, you know,people are showing, oh, that's a
sign that Europe is into Clint.
No, no, no.
The reaction is showing youthat Europe itself, the median
voter in Europe, if you will.
Doesn't like this, wants to makesure that the next time this
happens, it's Europe that's holdingthe cards, not the United States.

(22:56):
So like amidst all the noise, likethose are the three things that like
really brought me to, uh, in the longterm probably better for, for Europe.

Well, you also said something important, again,
I'm paraphrasing your view.
Uh, you mentioned that all the hateand all the criticism for wander laden
is also a sign that is buck passing.
That's a term that Europeananalysts have used for a long time.
Whenever European member statesdon't like something, they blame the
commission, but they do that becauseit's a very painful and, uh, foul

(23:29):
tasting pill they have to swallow.
So they have the commissiondo it on their behalf.
So again, co liver oil.
Donald Trump is out there handing out aspoon with cod liver oil and it's wander
laden who has to swallow it, right?
And everybody is like, oh, that's so bad.
But actually they all need that.
They, she bought them time.
Right.
And look, ultimately, you and I are bothquite bullish Europe and we think that

(23:52):
Europe is gonna do a lot of interestingthings over the next five years.
But at the end of the day, we'regonna be right or wrong on whether
they take this time that Ursula ofunderlaid and bought them with kowtowing
to Donald Trump unceremoniouslyand quite gracious Ungraciously.
If they just wasted again, asEuropeans are known to do, well,

(24:12):
then they will have wasted it.
But the commitment by Germanythat you just cited suggests
to me they're not wasting it.
And you know, it was funny when, uh,when Trump met with Frieder Mertz, I
don't know if you caught that reallycute and funny moment when, uh, Trump
turns to Chancellor Mertz and goes like.
Oh, and now you've committedto great defense spending.

(24:33):
And you go, Germany hasdone that in the past.
Maybe too much.
I don't know.
Something, you know, and it wasjust so funny 'cause it was a Nazi
joke with the German chancellor.
He did like, oh, in the past youguys have maybe done too much defense
spending, I don't know, some say.
And you're like, did you, did youjust, you know, like we all have that

(24:54):
German friend that we've like pushedtoo far and they're like, bro, it's
not actually funny, but FriedrichMez is there in the White House.
And he's like, haha.
Yeah, we, we did too much.
Like, yes.
Oh my God.
Only all Donald Trump.
And listen, if you don't laugh at that,you've got a Trump derangement syndrome.
Man, it's funny.
It's legitimately the president of theUnited States of America is making a

(25:15):
Nazi joke to the German chancellor.
That's 2025 for you.
Alright.

It really, it really like, I mean, Trump has really taken away like
lots of ammo from humor, like South Parkto, to be humorous, has to put him in
bed with Satan to make jokes, right?
Because he is taken everything else.
There's literally nothing elseyou can do except do that anyway.
Open your second beer.

Yeah.
Yeah, that was, yeah.
Okay.
So I'm opening a secondbeer over, uh, six pack.
I'm gonna, I'm gonna go a little obscureand, uh, I'm gonna give a shout out.
Uh, obviously you followedthis stuff, but, uh, I'm not
sure a lot of other people do.
So I'm gonna give a big shout out to ourmutual friend, uh, Matt Kin, who is, uh,
our former colleague from Strat four.

(25:54):
He's my current colleagueat, uh, BC Research.
And basically, um, it has todo with a recall election of
24 legislators in, uh, Taiwan.
So basically, uh, the opposition party,KMT, the Kwame Dong, which is the
original of course, uh, existential.

(26:15):
Opponent to the Chinese Communist Partythat fled the Chinese mainland to Taiwan.
Uh, they're now in the opposition andhave been to the ruling DPP for a while.
They, uh, they're seen as,uh, as, uh, more friendly to
China, uh, in a perverse way.
It's because they believe thatthey are durational rulers
of all of mainland China.

(26:35):
So like, like, let's leave that aside.
But yes,

you have, you have to really appreciate the con the intellectual
consistency, like in a world of suchhypocrisy, like just sticking with it.
I really appreciate it.

I do too.
Yeah.
So KMT basically, uh, has always triedto, uh, reduce tensions across streets.
Um, and they, uh, want the legislativeelection, even though the president
is from the ruling DPP, and heis, uh, you know, pro, I don't
wanna say pro independence 'causethat's not fair, uh, but more pro
sovereignty and definitely anti-China.

(27:05):
And so there was a completelygrassroots campaign.
Not aligned with any party.
To be fair, they tried to, but it wasvery virulently, anti-China grassroots
campaign to recall 24 members of, uh, KMT,um, of their, uh, of their legislative
caucus for basically being Chinese agents.

(27:26):
And, uh, there was a recall electionand, uh, they lost the recall lost
across every single one, including amayoral, uh, uh, actual mayor of one
cities who was a non-GI legislativemember who was also being recalled.
And, uh, the reason it's important,of course, is that it shows that,
uh, Taiwanese people are not likesolely focused on the China issue.

(27:50):
There are other issues.
They did not want to give the DPAlegislative majority because they felt,
well, that's not what we voted for.
We already voted for theopposition to check them.
So the president is opposed byKMT, uh, uh, opposition led.
Legislative.
But the other issue that's importantis that had, uh, the president achieved

(28:14):
legislative majority, one of the thingshe would've tried to push after the
recall is a massive increase in defensespending, which would've of course set
the cross street, um, relations, um,you know, uh, to a different ball game.
I mean, China was obviouslyalready criticizing that.
Um, the reason I wanna bring this up isthat he didn't receive that much coverage,

(28:35):
you know, and, uh, Matt, Matt kin and Iwere in a, in a client meeting actually
yesterday with a sovereign wealth fund.
And, uh, one of the people on thatcall actually mentioned that like, wow,
like nobody really talks about this.
This seems like a really big issue.
And I mentioned, yes, and the reasonI wanted to bring it up is not just
because people in finance shouldlisten to it, but also like just

(28:55):
listeners of this podcast should beaware of a very important reality.
Small countries sometimes change history.
I think too many of us have becomeenamored with this kind of risk
board game view of geopolitics.
Like, oh, it's China versusus, us versus Russia.
But countries that are often the chessboard upon which the game of geopolitical

(29:18):
chess is being played, do, have agencyof their own and they can muck up things.
For example, I'm Serbian, I knowmore about this than anybody else.
Like we literally started World War I, youknow, the original terrorist, what's up?
You know, high Five to mybrethren, assassinated.
You know your archduke apparently.

Yes.
He, he was my archduke.
He sure was.
Yeah.

He was your family's Archduke in Vienna, you know, sitting there trying
to lord over all of continental Europe.
And we were like, no.

And, and he was still much nicer than what came afterwards.
So, four one, actually, actually,actually, that's the irony.

Actually.
This is also ironic in a,in a very typical perhaps.
Historically Serbian fashion.
We did shoot ourselves in the footbecause one of his ideas was to
bring Serbia into the monarchyand to make it Austria-Hungarian,
Serbian Empire, actually.
Really?
Yeah.
That was like, that was his, like, hewas a liberal, like answer to his father.

(30:18):
So actually, you know, but oops.
You know, like, anyways, anyways, details.
We shot that guy down.
You know what I mean?
Anyways, world War, warstarts, world war starts.
Starts.
But the point I'm trying to say is thatGermany, Russia, Vienna, la, Paris, they

(30:40):
had a very complicated balancing game.
And Serb said, hold my beer or more, moreaccurately hold my, yeah, we got this.
And they World War I starts.

It's okay listeners, if, if you're wondering if he just took a
shot of flow of it and he can't hold it.
He didn't, he would be able to hold it.
He just got So, I'm so sorry.

I'm dying.
Oh, I'm dying over here.
But it was, it was such an exciting,uh, but, but my point is that that's why
it's important item that the situation inTaiwan was actually really important and
it could have had really global relevance.
And I feel like we kind of dodgedthe bullet, but it also means that

(31:24):
I feel like we don't spend enoughtime taking Taiwan seriously and
Taiwanese sentiment and politics.
Seriously.

Yeah.
That's inter, and it also, I think oneof the reasons it got covered up was
because you probably saw that Taiwan'spresident was supposed to transit, uh,
New York on a trip to the Americas.
And it th I mean basically the FT wasreporting that the US asked, uh, Taiwan
not to do this so that he would not beon the United States for any of the trip.
People were talking about whetherthat suggests that the United States

(31:53):
wants to defend Taiwan or not as well.
I mean, most of the polls suggest that,uh, most Taiwanese people don't prefer
independence or reunion with China.
They just prefer the status quo.
That is correct.
And really the job of the Taiwanesepresident and Taiwanese leadership
is to maintain the status quo.
It's just, it's probably gonnabe fundamentally impossible for
them to maintain the status quo.
And you Yeah, go ahead.

(32:14):
I can see you wanna take it.

Uh, the, just the reason I know those polls very well.
And actually after 2019, afterthe crackdown in Hong Kong by
China, the sentiment in Taiwandefinitely turned anti-Chinese.
Absolutely.
But since 20 22, 20 23, 20 24, uh,specifically since 2022, they've

(32:37):
had a great front row seat to whatit looks like to be a chess board.
Just talk to a Ukrainian, you know.
Because America hasmany ways to defend you.
One of them is to let you havehundreds of thousands of casualties
as you take the brunt of the largestmilitary in the world, in the face.

(33:01):
So it's interesting between 2019 and 2022,there's a lot of chess beating in Taiwan.
Like, yo, we're not gonnaturn out like Hong Kong.
You know?
And then you see the status quo supportrise over the last three years because
being a chess board sucks a chess board.
And when I say being a chess board,I mean like us and China are clearly

(33:22):
playing a geopolitical game of chess.
You are the chess board, bro, andit's painful to be a chess board.
And so I think that the Taiwanesesentiment has turned towards
the status quo more and more.
It's rising.
Now the, the problem is,as we know in democracies.
The loudest best finance interestgroups often lead policy.

(33:44):
And there is a very loud minority inTaiwan that does want independence, and
they have the pool and the ruling DPP.
It, it, it's a fringe part of theecosystem, but it's one that could
at some point through machinations,like the one you saw right now with
a recall of democratically electedlegislators caused something to happen.

(34:05):
And that's obviouslyhow World War I started.
You know, it's not like the Serbiangovernment, assassinated France
Ferdinand, but various terroristgroups funded in nine in the early
20th century by members of the SerbianMilitary and Intelligence Services.
Absolutely supported those guys,uh, ADA, Bosnia and, and Black Hand

(34:25):
and all that stuff in, in Bosnia.
So like this is the issue.
Uh, Taiwan is a complicated place.
The median Taiwanese, you're correct,does not wanna confrontation with China.
Why would you?
That's idiotic and insane.
But there are always Frenchgroups that, that might do that.
And that's why I think closermonitoring of this Taiwanese politics

(34:47):
is something that we all have to do.
But yes, you are right.
Also, Trump administrationseems to have changed.
It's, it's it's view as well.

But by the way, well, it's been all over the place though.
Remember like when Trump was thefirst time he was elected, do you
remember the first thing he did?
He called Taiwan's president.
I remember at the time being like, ohmy God, a, a precedent has been broken.
And now it's like how many precedentssince then have been broken.
But like there was all that.
But then you, you fast forward nowit seems like only Bridge Kolby cares
about this in DOD like everybody else,whether it's Ruby talking up one China

(35:16):
or Trump pressuring the Taiwanese to givetrade concessions to the United States.
Um, oh yeah.
And just to say like, uh, sort of what,uh, another thing about this is, you
know, you brought up Russia and Ukraine.
The thing is China's not Russia.
Taiwan is not Ukraine.
So I don't think China wants to invade orlike thinks it can invade Taiwan and win.
I think it's gonna take the Hong Kongapproach, which is isolate it, make

(35:38):
sure nobody recognizes it, make surenobody has an incentive to defend it.
And then when Margaret Thatcher comesand says, we wanna renew the lease 99
years, you tell her, okay, but we'regonna cut off the oil, uh, excuse me,
the electricity and the water, uh,and like we're just gonna blockade it.
Is that really what you want?
And then she has to say, okay, I'llgo like pool with the Falklands.
'cause I obviously can'tmess around with this.

(36:00):
So like when you see that like Beijingis isolating Taiwan and also brain
draining them, just like throwing Yuanand all the Taiwanese semi engineers
like, come to Shanghai, have thepenthouse, do whatever you want.
And they're coming like tho thosepeople are listening to that.
And then there's Taiwan,which is not Ukraine.
And this gets to your point, like Taiwan.
I don't think it's gonna defenditself the way that Ukraine has
defended itself against Russia.

(36:21):
I'm, that might hurt some Taiwan'sfeelings and maybe I'm wrong about that.
But my impression based on studyingit is that they're not gonna defend
themselves the way that Ukraine,

well, either way.
I think that there is dangerin being a chess board and I
think they understand that.
But to your, to the point on topTrump that you said, you know,
ambiguity about Trump, I think thatthere is a lot of unfair criticism.
For example, not letting president ofTaiwan transit to the us There is a huge
gulf between not wanting to provoke China

(36:52):
and not wanting to defend Taiwan.
There is some like happy medium inbetween, and I think one of the problems
with the Biden administration was thatit was so concerned with illustrating
domestic strength through aggressionin Ukraine and Taiwan, that it was
leaning more towards provoking China.

(37:13):
I think there's some basic level.
Where the US can both guaranteeTaiwan's, let's say sovereignty, if
not independence, and without havingto provoke, you know, like maybe you
don't wanna send the Speaker of theHouse of Representatives to Taipei.
Maybe that's like unnecessary.

(37:34):
But you can sell weapons, whichthe US has been doing for decades,
you know, and continue to do so.
And through back channels tellChina like, look, we are actually
committed to defense of Taiwan.
Like, but, but if, if you are angry bythe fact that the Taiwanese president
is gonna be transiting throughthe United States America, fine.
He can take a flight through Zurich, greatconnections, best sandwiches at an airport

(37:58):
anywhere in the world, so he'll be happy.
You know, like there is a happy medium.
And I think a little bit of, ofthe, uh, criticism of President
Trump is like, he's not like, what?
Like aggressive, provocative,like asshole enough, eh.
I I don't buy that.

No, I'm with you.
I, I'm gonna ask you an impossiblehypothetical, but why not?
Because this is cousins.
Let, let's say Chinainvades Taiwan tomorrow.
You think the US defends Taiwan?

Well, did the US defend Ukraine?
Not at first, not at all.
I mean, like, what isthe level of defense?
And I think, again, this is one ofthose things that's not a one or a zero.
It's a zero to a 10.
The United States of Americais absolutely not gonna commit
US troops to defend of Taiwan.

So you don't think so?
You don't think that we would send a ba,a carry battle group or anything else
to protect Taiwan from an s assault?

Maybe send it.
But I think that it would be exactlylike the situation in Ukraine.
Just absolute, uh, no holdsbarred technological transfer
of very sophisticated weapons.

Which, which was not what happened at first though.
Like what happened first withUkraine is that we withdrew
our embassy staff to the west.
We were like, okay,like everybody move out.
Good luck.
Sorry guys.
And then after the Ukrainians kickedthem in the teeth and it was like, oh
my God, the Russians are bogged down.
Oh my God, the Russians are notas what we like, get them the
missiles, get them everything.
Let's go.
But the first reaction was, sorry guys.
Like we took, we warned you.

(39:22):
Fuck around and find out.

Well, actually the first, uh, also, the first thing
that the US did was pre-invasion.
And this is where Donald Trump is, right?
And nobody in the mainstreammedia wants to give him credit.
He did give Ukraine travels.

He did in the first term.

Yep.
He was the first US president togive Ukraine offensive weapons.
And now everybody says, oh, that's'cause he was trying to buy them.
So that, you know, like, okay, whatever.
Like, sure, maybe fine, but that's a fact.
So Ukraine was kind of readyfor that initial assault
because of American technology.
But I agree with you, it was Ukrainiansdefending, in an amphibious assault

(40:04):
technology will matter even morethan in a mechanized Dan horn, right?
Because you gotta cross a sea.
So area denial weapons are gonnabe even more, uh, important.
So no, I don't think the US is goingto use, its its own soldiers to
defend Taiwan, but the technologicaltransfer of sophisticated weapons

(40:25):
will have an even bigger, morepositive effect than it did in Ukraine

if the Taiwanese are willing to use them and take the casualty.
But I don't think it's for sure.
Yeah.
Yeah.
I don't think it's, yeah, I mean that's

the question, right?
Like that's ultimatelywhat will the Taiwanese do?
And I guess we'll find out.
But I don't know.
You know, there's a lot ofpeople who have been doubted.
Uh, I would say that nine out of10 of my clients thought Ukrainians
were just gonna be incompetent.
And like I had to remindthem of history of Ukraine.

(40:55):
This is a country that invented partisans.
You know what I mean?
Like I, and, and they werelike, nah, they're corrupt
and it's a sclerotic country.
Everyone's old.
I was like, eh, I don't think so.
I think Ukraine is, aregonna fight viciously.
This is Eastern Europe.
We know how to fight wars.
Like even if we lose them,they're not gonna lay down.

(41:15):
And I think in Taiwan, you know,there's many, many examples I can
use of people who were seen asunwilling to defend themselves.
Like who actually then endedup defending themselves ly.
So we just don't know all

which reasons.
I think China's not gonna do this.
Okay.
Third beer.
This one will be a little bit shorteron the read 'cause it's already getting
murky, but, so we started this morningwith Donald Trump saying that there
are going to be 25% tariffs on India.
They've been negotiate, I think they'vehad what, five or six negotiating rounds.
It seems like the United States hasbeen holding up negotiations because
they want access to Indian markets.

(41:48):
In terms of US agriculture,which is a non-starter, I think
probably for the Indian government.
Uh, president Trump also saidthat there would be penalties on
India for importing Russian oil.
Classic Trump fashion.
We don't know what the penalties are.
He also came out later and said,ah, like, we're still talking.
Maybe there's some wiggle room at thesame pi at the same time, by the way,
China got a 90 day extension for tariffs.

(42:10):
So India, the largestdemocracy in the world.
Howdy, Modi.
You know, the, the Trump Modi bromance,all that is getting slapped on the
wrist this after the Pakistan Indiafight, where Trump has been out there
saying that he should get credit forthe ceasefire because of tariffs, which
has been pissing the Indians off too.
Um, I, I, I bring it up because thereason that the British had a second

(42:32):
lease on their empire was becausethey discovered and conquered India,
basically like the British Empire probablycollapses if they don't integrate India
into the empire, um, in the mid 19thcentury and allows them to carry on to
World War I and probably far beyond.
If you're the United States and you'rethinking about the world and the
multipolar world and all the leversthat you've pulled in the last couple
of years, and administrations of bothparties, you probably want India on your.

(42:55):
It just feels like the Trumpadministration is going out
of its way to piss India off.
I'm not sure that Indiawas ever up for grabs.
They're famously non-aligned.
They wanna do their own thing.
They're very, um, powerful is the wrongword, but I mean that many people that
size market the potential, like they,they have a weight all of their own.
Um, but man, if, if Trump just isn'tlike kicking a potential ally or

(43:19):
at least a balancer against some ofthese other powers in the teeth and
for what, like what, what is theUnited States getting out of this?
I know like, you know, you get thetrade deal, the reality TV show thing,
I guess to show that you're tough, butwhy you would pick on India this way?
I mean, we could ask this questionabout Japan and Canada too, but I'm,
I'm really surprised that, um, the Trumpadministration is treating India like this

(43:39):
and I think they are creating like yetanother center of power in this multipolar
world that is very, very quickly gonnabe skeptical of the United States going
forward and look to balance against it.

I mean, I think, uh, this, uh, maybe I don't really have
as much to to comment on this, but,uh, I think that I do worry that maybe
the markets and media and journalistsand really everybody is not taking
Trump's threats like seriously enough.

(44:14):
You know, on the Russia thing,
the secondary sanctions, I think that wemay not be spending enough time on that.
And you know, obviously India couldbe a casualty of those, uh, as well
as the China US trade negotiations.
Now, those are two parallel things.
I think Beijing can chew gumand walk in the same time.
They can separate American view towardsRussia and um, um, you know, its

(44:41):
negotiations with the US separately.
But I do think we may be coming toa head, and this goes back to what
we talked about in our last episode.
Which is that I think that Trump,you know, hell had no, no fury,
like President Trump's scorned,
right?
Like to re redo that old adage, I dothink that he is seriously angry that

(45:06):
Trump, that Putin has not moved atall towards some sort of ceasefire.
And so, like chi uh, India,US relationship could suffer
further because of that.

It's a, it's a show.
It's so shortsighted.
Like the thing, like we talkedabout the US and the eu.
The things that Trump has done andhow it's gonna affect the future
of US India relations, US Brazilrelations, US Japan relations.
I mean, you can see sentimentturning against the United
States in these countries.
And maybe, you know, maybe, maybe it'sephemeral, maybe things turn around.
But I think something has fundamentallyshifted in these countries.

(45:38):
I think these countries arelooking at what the United States
is doing and they're seeing ifyou're tough, it doesn't work.
If you're friendly, it doesn't work.
You're just gonna getscrewed by the United States.
So we're gonna have tofind alternate options.
Like I think that is the takeawaylesson for these countries.
Maybe Trump has in his mind, oh, if Ican get this thing, I can move Putin.
But that goes back to the classic,okay, instinctually you might
be right and maybe you get thething that you're after right Now.

(46:00):
Was it really worth it to pissoff India for the next 20 years?
'cause that's what you've done withthe combo of the tariff Pakistan, India
thing, and now this thing about thetariffs and the secondary sanctions.
Mm-hmm.
Not exactly a good trade.
We'd have to think of the BA equivalent.
Like maybe you're, you're trading for, uh.
I dunno.
Hired gun for just the end of the year.

(46:21):
I, there's not really many goodexamples of that in the NBA works
where it actually works out.

So you're saying India is kd

No, I, uh, you'd have to think of a, of a deadline deal.
Right?
Like somebody that is acquiredfor just a couple of, maybe like
a Kauai Leonard in this case.

Mm. You know?

Well, that did lead to the championship though.
It did lead to the championship andthen, and then afterwards it led to
nothing and then it led to paying yakperle $120 million for three to four.

So Trump is Messiah Jerry?

Uh, yeah.
That's a nice, uh, cross-culturalinteresting comparison.
Yeah.

All right.
Let's, I'll have to sit on that.
Yeah.
Alright, well

number four.
You, you number four.
This is, you can actually tell this isa six pack because we're getting less
thoughtful as, as we go down as itwould be if we were actually training.

Yes.
Um, I think, uh, my next, uh,actual, uh, subject here is, um.
I would like our listeners to spendan hour of their time listening
to winning the AI race PresidentTrump on the AI action plan.
It's one hour, it's actuallyfeatured on the All In Podcast.

(47:36):
Um, and, uh, it's President Trumpjust riffing for an hour on why
he actually, what's his vision ofhow to compete with China and it's
diametrically different from JakeSullivan slash Joe Biden's vision.
And so, um, I don't know to what extentour listeners are following this, but
effectively the Trump administrationhas decided to cancel some of the

(48:00):
Biden administration restrictions.
This has allowed Nvidia to sell someof its advanced chips semiconductors
to China, which is part of thereason why Nvidia stock is soaring.
Uh, I mean, there's many otherreasons of course, and, uh, it's
very interesting because this.
It's 57 minutes.
If you can, Jacob, just putit in the, in our, we roll.

(48:23):
Yeah,

yeah.

On our notes.
It's worth listening because Trumpeffectively says, I mean, aside from
saying that Joe Biden was wrong 75times, you know, he basically, he
basically articulates a differentstrategy, which is that instead of, uh,
putting these high fences on Americantechnology, president Trump will ensure

(48:44):
that American technology companies makemoney off of China and then reinvest
that money into the r and d so thatthey can continue to be a leading edge.
Those are two diametricallydifferent ways of thinking about
competition in the 21st century.
And I gotta say, I 800% agree with Trump.
I think that the Jake Sullivan view of howto compete with China is abjectly wrong.

(49:12):
That it would ultimately ensurethat China innovated and created a
completely separate architecture onthe AI front on many other fronts.
And subsequent to that, it would ensurethat many countries in the world will
adopt that infrastructure, infrastructurethat China provides, whether that's
Alibaba's ai cloud infrastructure,whether it's China's EV infrastructure,

(49:38):
whether it's payment plans, whatever.
It's, uh, there is a sensible way toprotect cutting edge technology, for sure.
Like you don't want to sell China yourhypersonic cruise missiles, but like
selling China, like letting China gorgeitself on a 10-year-old plane or a

(50:00):
5-year-old semiconductor is not going tochange anything, particularly because many
of your own allies in a multipolar world.
Are not going to abide bio restrictions.
And that was one of the problems thatthe Biden administration found out.
It wasn't widely reported, but therewere certain pretty good journalistic
efforts to un to reveal that companieslike A SML Tokyo Electron would

(50:25):
like say, sure, great, we'll comply.
And then like 12 months later,like go, oh my God, where do
we get this pile of money?
You know?
And, and, and, and, and again because,not because they're evil, not because
they're proin or anti-American.
I mean, if you are the Netherlandsand A SML is your champion, and

(50:46):
Americans come and tell you don't sellyour equipment, your sophisticated
semiconductor manufacturing equipmentto China, you're like, okay, so you
don't want me to sell this stuff toChina, but you also want me to be part
of the anti-China Alliance by, you know,developing high tech, um, industrial
like innovation that helps the West win.

(51:07):
Like, well, I can't do both.
Because the foundation ofgeopolitical power is material wealth.
Let me say this again.
This is a realist view.
The foundation of geopoliticalpower is material wealth.
You need to skim from that surplusto invest in r and d in technology.
And the moment you stop losing sightof that, you know, uh, you lose.

(51:30):
And by the way, this is where thisdistinction between commercial
interests and geopolitical interests,national security interests blurs.
It actually is blurred.
It's very difficult to separate the two.
And so I actually think thatthis is a very good, uh, hour.
Of course, it's like full of trumpisms,you know, and he's like, I'm smart, Joe.
Biden's dumb.
You know, God bless.

(51:50):
Like, sure, knock yourself out.
But it's also an hour of, um, Trump'srhetoric that actually will anchor
both Democrats and Republicans.
This is something that there willbe absolute bipartisan antagonism
towards this model, but thismodern is rooted in history.
If you wanna find out how the UnitedKingdom fought its trade wars, how

(52:13):
United Kingdom became a hegemon and anempire, it was not by, uh, it was not
by cutting off trade with its rivals.
It was actually by making its rivalsbecome addicted to its technology
and to its trade and to its capital.
And I think that President Trump hasactually figured out how to fight, how
to fight rivalries in a multipolar world.

(52:34):
And nobody before him really has.

The problem with that argument is that Trump started this with
his crackdown on Huawei during his firstterm, and that China made the choice
to vertically integrate on these thingsbecause of his restrictions on Huawei.
So the Biden administration wastrying to put a genie back in the
bottle from my point of view, andthat was never actually going to work.
Um, and so now Trump is trying to reversecourse when he actually did the damage.
And to me, he probably reversed coursebecause the CEO of Nvidia was on the

(53:00):
stage with him at the event in the Gulfwith all the investment and things like
that, and probably said, Hey, DonaldTrump, like, uh, things are gonna go badly
if you don't lift these restrictions.
And maybe Trump had some cronieswho were long Nvidia and they
wanted to see Nvidia stock go up.
And so he was able to do that and, andsort of enrich, uh, and, and enrich them.
That's, that's the muchmore cynical way of.

(53:21):
Looking at the approach becauseChina's gonna do that anyway.
You brought up ass ML ASML isthe really interesting one.
You might remember, um, A SMLdidn't say where the money's from.
Ass ML was like, uh, we're notgonna stop selling to China.
Thank you for, for asking.
No, but that's not somethingthat we're going to do.
And when the Dutch government startedgiving them problems, you might
remember last year they were leaking.
We'll, maybe we'll move to France.
Maybe we're not gonna bein the Netherlands anymore.

(53:42):
Uh, and the Dutch government thenstarted pushing back against the
United States along with the,with the Japanese government.
And that's the thing thatthe Chinese can't do.
Like the advanced lithography equipment.
Yeah.
That is the thing that theycan't replicate quickly.
Everything else, they've basicallybeen able to do it and they're making
advances when it comes to lithography.
But you are dependent on A SML nowto hold back the dam and they're not
gonna be able to hold back the dam for,

but your point reveals several points of vulnerabilities
to the Jake Sullivans of the world.
Number one, America doesn't controlall innovation on the planet.
Many of that innovation iscontrolled by the allies.
Number two.
You do not have the carrots and thesticks with which to incite your
allies to follow your orders anymore.

(54:26):
Because number three, China hasnot revealed itself to be an evil
empire like the Soviet Union.

Mm-hmm.

So everything will be solved.
If China invaded Taiwan, that wouldbe perfect for the United States
of America because it could thengo to the Netherlands and Japan and
France and say, aha, we told you sonow we can, can we please now build
high fences around the technology?
But China hasn't done that becauseChina's not, uh, what's the word?
Stupid like the Russians by the way.

(54:55):
Sorry, Russia.
But that's, that's why VladimirPutin's not on our list of top 30.
Right.
But she kind of squirmed his way in.
What, what I'm getting at hereis that, uh, I think the problem
with the Jake Solomon view isthat it's just, it's unrealistic.
It's built on a Cold War infrastructure.
Being able to bully your allies.

(55:16):
And the reason your allies cannotbe bullied is because you don't
have anything to offer them.
That's why.
And

well, and to put it slightly differently, it's also to do
that you need an accompanying push whenit comes to industrial policy, which also
the Biden administration tried to do, butcouldn't complete it, couldn't get, you
know, both houses on board with everythingthey wanted to do, even how big inflation
reduction act haha was supposed to be.
And so you didn't have this sortof space race, uh, mentality.

(55:45):
And then also, like, you're notcompeting with the Soviet Union anymore.
You're now treating with a country ofover a billion people who's at the cutting
edge of many different industries and isahead of you on many different industries.
You're not, you're not against, youknow, some drunken guy in the factory
and the Soviet Union who's just makingup the data so that he doesn't get shot.
Like China's a real dynamiceconomy in a way that the Soviet
Union was not and never could.

So, yeah.
But, but, but that goes to anotherpoint that I would, I would wanna point
out, you know, uh, I'm of the view.
That the greatest, uh, sort oflever that the US can have in China
are those levers that empty Chinaoff its current account surplus.
And I know this is a little bit nerdypoint, but what I mean is that when

(56:29):
China takes its hard earned moneyand takes it abroad for some reason,
that's a point of vulnerability.
Is it?
And if I was running the United States ofAmerica, I obviously am bathed in aloof
nihilism and couldn't care less who wins.
But if my interest was for the US to win,I would say, what is it that China buys?

(56:53):
Where does it take moneyand sends it abroad?
And there's really twothings that it does.
Well, three.
One is oil.
Okay, well, he buys most of thatfrom the Middle East and Russia.
So fine, let's leave that aside.
Can't really play that game.
The other two.
Are semiconductors.
So chips and tourism.

(57:14):
Yeah.
Yes, tourism sounds weird, but pre COVID.
Pre COVID tourism was actuallythe number one source of Chinese
capital outflows because tourism iseffectively counted as an import.
You know, you're taking domestic currencyand you're buying something abroad.
So if I was running to UnitedStates of America, the two things

(57:37):
I would've done is exactly whatDonald Trump just did on the video.
I would say sell everything.
Make them grow addicted to these chips.
You want China to innovate as much as youcan in ai, but you want that innovation
to rest on American infrastructure.
Oh, you want to invade Taiwan,yo normal chips, and you don't

(58:00):
have domestic production.
'cause it was so easy to buy Nvidia.
It's a sword of les.
The second thing I would've done is Iwould've gone in and said, no more visas.
For Chinese tourists, not becauseI don't issue them, but because
I say Chinese tourists cancome to America without a visa.
Let's go.

(58:20):
And I would, I would like addairline flights to China like
50 a day from every major city.
Let's go.
Those are the, that's actuallynuanced, second and third order
thinking, and I think that Joe Bidenand Jake Sullivan had absolutely no
creativity and no domestic politicalbackbone to do anything of that sort.

(58:40):
So they kept fighting with this firstorder, medieval Cold War mentality of
like, oh, let's put up restrictions.
Yeah.
You know what happens in five to 10 years,China has its own AI infrastructure,
doesn't need you and can easily withstandany kind of a blockade you impose on
it, whether it's a capital blockade,whether it's a high tech blockade.

(59:01):
So.

Good job.
Yeah, no, I, I, I agree with you.
I just, I think that would, I thinkthat's true of every single presidential
administration going back to Trumanand Trump started it, like Trump
started it with Huawei, like he wasthe one that started this thing going.
So absolutely pile on the shame for,uh, Sullivan and Biden being small
c conservative when it came to thisand thinking in a very, very old way.

(59:23):
Uh, but I, I really, yeah, yeah.
It's a stretch for me to, it,it's a stretch for me that
Donald Trump is sitting therethinking how you're thinking.
Me like, aha.
I have the sort of dam.
I'm pretty sure he is just like, I gotsome Nvidia stock with that, uh, proceeds
from the Trump coin sales that I did.
Let's go, let's go to the moon.
That's the kind of moon,moon project I want.
You know,

look, we don't, we don't know, but you know,
like we can be open-minded.
That man changed his mind,you know, maybe, yes.
You know, maybe, maybe people aroundTrump finally read some cogent research
that wasn't just parroting the DC likelobbyists and actually convinced Trump
of an alternative way to fight this.
By the way, if you want to know.
How this actually turned out in the 19thcentury read history about the Opium wars.

(01:00:06):
That's exactly what I'm saying.
The United Kingdom didnot stop trade with China.
It sold them heroin.
So when I talk about getting Chinaaddicted to American AI infrastructure,
the British were like, no, no, no, no.
We'll just make them addicted to heroin.
Yeah.
And now,

Jacob Shapiro (01:00:24):
and now China will make us addicted to Fentanyl.
Right.
Like that's the, the OpiumWar has come around, you know?

Marko Papic (01:00:29):
That's right.
Okay.
So your, your turn for,uh, the fifth beer.

Alright.
I mean, we should talk about Thailand,Thailand, and Cambodia, but there's
nothing really to talk about.
They had a border spat.
There's already a cease fire.
Malaysia sort of helped weigh in.
Um, and I there there's a broaderpoint there about how in multipole
in a multipolar world, we'regonna have these brush fires,
but they're gonna be contained.
So I'll say that really fast.
And I'll also just say thatthere was a new poll out about
Trump's approval ratings.

(01:00:54):
Um, it's down.
Oh yeah.
He's down from the beginning of Julyfrom to a new low in his administration,
uh, from 41% to drum roll, 40%, whichis also within the margin of error.
So Trump continues to be the bestanalyst about his own charisma out there.
He could shoot someone on FifthAvenue and no one would give a shit.

(01:01:15):
We've had him.
How long has it been of Jeffrey Epsteinand if we got one percentage point that
is still within the margin of error ona poll for how people are approving of
Donald Trump, do they approve of him?
No.
His approval ratings are 40%,but they're down from 41%.
And as long as the economyis fine, he's probably gonna
be sitting there doing fine.
And maybe he has powers of charismathat will allow him to boot, uh, to

(01:01:36):
weather, uh, a turbulent economy as well.
But those are, I, I just stole two, two.
I had, I was a little minibeer flag that I, I snuck in.
See what I mean?
Uh,

what you did there, what you did there is you, uh, I think
that was a shotgun beer with shotgun.
Oh, yeah.
Yeah.

A shotgun.
There you go.

Just like, you know, uh, okay, cool.
Uh, what do I have to say about that?
Thailand, Cambodia.
Yeah.
That's it.
In a multipolar world.
Get ready for this kind of stuff.
And you know what I called it?
Uh, I wanted to write a really longanalysis on this, and then I realized
I would write, no, wouldn't read

it.
I had the same fee.
I was, it was gonna be, I was supposedto write on substack about Thailand
and Cambodia, and then the US EU dealcame out and I was like, all right,
I've got an hour and a half here.
Yes.
What am I gonna do?
No, I was really looking forward tounderstanding it, but nobody would care.
So,

listen, listen, the way I, I wanted to write about rev schism.

I was, I was.
That's good.

Rev Evangelism is back.
The problem is that like, you know, ifthere's a civil war in the Congo, if
Serbia takes over Republic Seka in Bosnia,

if Azerbaijan takes back in the Gord Kab,

if a tree falls in a forest and nobody hears it, did it fall?
And, and like, I don't wanna only

if only if Israel does it.
If Israel does it, it fell.
But everything else,

well, it depends.
Yeah.
Okay.
Well, I'm gonna let you do that one.
Um, look, what I'm, what I'm getting athere is, uh, I think that we should expect
a lot more of this, you know, because babasically what's happening is the rules
and norms of behavior are breaking down.
Uh, to Trump's credit,though, he did threaten both
countries with like a trade war

who, with tariffs.
I'm sure that really resolved it.
He is just trying to, he is just trying toboost his Nobel Peace Prize application.
No,

no.
I, I totally agree with you,Jacob, but I, I think at least,
like he didn't just ignore it.

I thought it was really interesting that he didn't ignore it.
If he doesn't care about these things andhe is not gonna sit in judgment, why is he
out there threatening them with tariffs?
Maybe because he wantsa Nobel Peace Prize.
I think,

well, maybe, no.
Maybe the CCAs razor is hecares about human lives.
God, Jacob, why does everythinghave to be so cynical?
No, but listen, listen,I don't really care.
I, my point is just that itdoesn't matter what America did.
The fact is this happened, you know,it's gonna keep happening in all sorts
of, so what you and I could maybedo as an idea, here's an idea that

(01:03:57):
comes out of this shotgun, uh, beer.
Maybe what we should do isa whole episode dedicated to
forgotten territorial disputes.
I tism, you know, likeGerman and Poland over Esia.
Like, ooh, you know, like that would be anice continental European just like fight.

(01:04:21):
And it doesn't have to beabout wars breaking out.
Just why don't, why don't you and Ispend like a month preparing a top 10
list of I dentist, ous, territorialdisputes that come back to the surface?
Right?

Yeah.
I love this idea.
Sounds great.

Cool.
Like, maybe we finally havethat war in Latin America.
Like, what was it, the Triple Alliance?
Like

Yeah, that was a big one.

Yeah, that was the biggest one.
You not the only one.
Since then, I, I believe they'vecreated a new rule in, uh, south America
where they just settle everythingthrough, uh, football matches.
Okay.
Uh, my last one, my last beer is, uh,well actually I am, uh, here still in the
British, uh, beautiful British Columbia.

(01:05:07):
So I was setting up this last, uh,part of our six pack and, uh, so I
went to dinner with, uh, this, uh,fantasy, uh, basketball league group
of guys that I've been honored to join.
It's a, it's a, actually aleague that's been going on
for like 35 years, by the way.
It's an incredible story.

(01:05:28):
These guys have been togetherforever, uh, out here in Vancouver.
Uh, basically the commissioner,when he was a kid, his father had
to, uh, drive to point Roberts.
By the way, if you don't know whatpoint Roberts is, it's a piece of the
United States of America that's likesticking off the coast of Vancouver.
It's completely isolated from the us.
It's like a little tinyterritory of America that was

(01:05:50):
cut by the ignite parallel.
And so the dad would've to go tothe, to this tiny little enclave
of America, uh, or Exclave.
I'm not, uh, it's anexclave to by USA today.
So they could by hand, Jacob by hand.
Cole told the statistics becausethis is pre internet, pre everything.

(01:06:12):
Like Microsoft Excel was like,you don't on a floppy desk.
I mean it was just insanity.
Anyways, I have the honor and privilege tobe part of this, uh, fantasy league, and
I thought to ourselves, Jacob, we haven'treally talked about basketball in a while.
Last night I was with these guys.
I keep getting my ass kicked.
I need some help.
And so what I was thinking is whydon't we just spend the last five

(01:06:33):
minutes of our podcast, which weused to do often, and suddenly we've
stopped talking about basketball.
And I was like, let's startthinking who I should draft.
'cause these guys are absolute sharks.
I mean, they've been doing this backwhen they used pencil and paper and
erasers, man, like, I'm overmatched.
I need help.
I need some undervalued assets thatare going to go for very little in

(01:06:55):
the auction, in the next fantasydraft that I should pick up.
So who are, who are the break?
And by the way, we don't haveto have an answer right now.
I'm just like, this is a call for help.
If you're listening to thispodcast, if you're a fan, you should
want one of the cousins to winthis incredibly, incredibly, uh,
prestigious basketball fantasy league.

(01:07:18):
The JBL, that's what it's called,Johnny's Basketball League.
Uh, so help me help Marco win the league,who are the undervalued assets in 2020?
So either veterans who are gonnaoutperform expectations, maybe
Trey Young has a great season.
I know that's probably gonnagive you brain aneurysm, Jacob.

(01:07:38):
'cause you are a, you're an Atlanta Hawksfan who's like, quit because, uh, because
he's such a terrible, terrible player.
Uh, but also like, uh, or someonewho's gonna have a breakout season.
You know, those are my two categories.
All veterans who people have forgotten,but they have a, like a really
sneaky good season or young playerswho finally flower into an allstar.

Well, uh, before I answer that question, I just want you
to know breaking, breaking news here.
Um, on the podcast itself, Gilbert Arenashas been arrested for operating an illegal
gambling business at his Encino home.
And also Kamala Harris says she willnot run for governor of California.
I'm shocked, Kamala, thatyou came to the conclusion

she was gonna like absolutely win that one, you
know, but, but I, uh, yeah.
I mean, I think, you know what?
Gilbert Arenas and Harris.
Maybe good comps to one another.
By the way, Al also Gilbert dos,uh, the reason I know that story,
it's not breaking is becausemy JBL feed has informed me,
like, has already done it, John.

(01:08:40):
Yeah.
This is the

future.
This is the future.
Like, we're no longer gonnago to the internet for news.
We're gonna have personal intelligencenetworks that are gonna ping us that
something's up because you don'tknow whether it's AI slop or not.
Um, I guess my first the I'll, you know,by the way, it's not because I, I hate
Trey Young, that I abandoned the Hawks.
It's because the Atlanta Hawks traded thepick that was going to be Luca donates

(01:09:02):
so that they could draft Trey Young,and then Luca went to the Mavericks.
Uh, so it was, it was that move becauseI, you know, the Hawks were the team
that they drafted Marvin Williamsinstead of Chris Paul, they drafted
Sheldon Williams and Stella, Brandon Roy.
Then they, I just couldn't, Icouldn't stomach it anymore.
And so I embraced the fucking pelicans,which really great timing on that.
Oh, cool.
Thanks Troy.
Joe Dumars.

(01:09:22):
Yeah, I mean, I was just

gonna say, but Joe Dumars is not here.

I know.
So now I'm really now like the universe islike, well part of me is like, you know,
I lived in Austin for almost 10 years.
I have a couple Spurs jerseys,maybe I should just, but I
can't embrace the Spurs now.
'cause that's front running.
Like, oh, when Victor is on yourteam, I'm gonna embrace the Spurs.
Like really?
But anyway, all of this is to say, my deepexperience now with the Pelican says that,
and maybe this is not dark horse enoughfor you, but uh, Trey Murphy third should

(01:09:47):
be on your list, especially the eyes gone.
Zion's probably gonna suck aslong as he can stay healthy.
Like, he's gonna put up a lot of threes.
He's got a lot of opportunitiesdown here, I think.

Okay, that's good.
Uh, mine is Benedict Matran.

Mm-hmm.
A good one.

You know, I just think that he's gonna have a breakout, uh, season,
uh, obviously with Halliburton injured.
So I think that's gonna bea, a really good one also.
Uh, look, you know, like an, uh, anotherway to look at that is Andrew Mhar.
I think, uh, you know, oneof those two probably gonna
have to carry the look right.

I also, um, I really like, um, Grady Dick in Toronto.
I mean, Toronto's kind of aweird team, but I, I think
he's got a lot of potential.
They're in, they're infull on rebuild mode.
Like that might be a good one.

The problem with Grady, Dick, I'll tell you is,
uh, so this, this fantasy leagueis, uh, exclusively Canadian.
And so every single Toronto rep player,yeah, it's just, there's a homer tax,
so he's already like, not just gone, buthe's like gonna go for like 50 bucks.
You know, he's gonna go the same priceas like, I don't know, an all star.

(01:10:54):
So grad Dick is alreadyfully priced in this league.
So you gotta, you gottabe careful with home bias.
Um,

you know, another, another one, um, who, who was the
guy that Milwaukee just signed?
Um, the, the guard, uh,God, what was his name?
Cole Anthony, uh, on for Milwaukee.

Yeah, that's a really good one.
He was in, uh, Orlando,like, right, he was in

Orlando and like, Milwaukee's just desperate.
So they just need anybody tocome in and handle the ball.
'cause they can't just be Giannis andMiles Turner and, like, call Anthony
can score and, and he can do some stuffso that he, he's also just gonna get
some stats by virtue of where he is.
So,

yeah.
Another one, obviously I'm just, uh,picking off, you know, the problem
with these guys are too smart,so it's not gonna really work.
You're looking at like teamswhere like a star is gone.
Like, that's just not gonnawork against these guys.
They're, they just are like a computer.
They're like ai, you know, everythingis like, but Peyton Pritchard, you know,
if you're looking for a breakout season,I mean, he's already gonna be gone.
I think he's a keeper, actually.

(01:11:48):
Uh, so he's not gonna be available.
But I, I like Benton Pritchard,uh, Jayden Ivy in, uh, Detroit.
Also another one.
Yeah.
Uh, that's a good one.
Just because of, uh, you know,speaking of gambling Beasley obviously.
Um, yeah.
But, uh, I don't know.
Uh, I'm not sure.
I think Miles Turner.

Yeah, I mean, I, I have my doubts about what's gonna happen there.
Um,

yeah.
Yeah.
Not, not, not a fan.
Don't think he's gonnalike, put up numbers next.
No,

he's, he's fine.
You know who I've always rootedfor, who's probably never gonna
like, get to like Kevin Herder.
I, I, I'm always rooting for KevinHerder and, you know, he's in Chicago.
Like, maybe he'll, I don't evenknow if Chicago resigned him.
I know that he was at, uh, the Red Mamba.
Red Velvet.
This is another way in which I'mlike, Silla Silla loves Kevin Herder.
And I have also loved Kevin Herdersince the Hawks drafted him.
He's, he's, uh, he, he couldreally do some things if somebody

(01:12:38):
would let him do it, you know?

Alright, well, uh, I just wanted to put that bug in the ear.
It's that time of the year I'mstarting to get a little antsy
that, uh, basketball's been gone.
I mean, like, reread the Skinny LucaMen's Health, uh, article like six times.
Wow.
You are desperate.
Maybe three times.
Yeah.
I am desperate.
Okay.
Um, a couple of things on that.
One thing that I will definitely, sowe haven't talked about basketball

(01:13:01):
for a long time, but next time wedo talk about basketball, I'm going
to be all about the Euro basket.
Hmm.
I think it's gonna be one of themost competitive Euro baskets ever.
So it's happening at the end of August.
Get ready for that.
You've got Yoki playing for Serbia.
I, he's not confirmed, but it lookslike he will, obviously Don is
playing for Slovenia 'cause he's apsychopath and just wants to play

(01:13:23):
every time, which I love so much.
And I think it's gonnabe an epic, epic battle.
Like every team is stacked.
Uh, German, Germany is obviouslycoming off of like a ton of
really great performances.
I don't think they're gonna have itagain, but, you know, uh, what was it?
Uh, Feba, uh, there was that,uh, Feba, uh, Patty Mills.

(01:13:44):
You know, Feba Patty Mills.
There's a feba like Dennis Schroeder.
Like Dennis Schroeder got thishuge contract and I'm like, were
they just going off of his like,international experience, you know?
So, uh, anyways, I think thatit's gonna be a great, uh, great
way to get us into the NB season.
I can't wait.
And, uh, next time you hear from me onbasketball, it's gonna be about what

(01:14:05):
happened at the Euro basket tournament.
Until then, though, everyonegoes listening to this.
If you're a basketball fan,uh, please tweet at me.
Your favorite two, threeundervalued assets.
I need help.
I'm never going to win thisleague unless we crowdsource.
Some, some like competition, you know?
And by the way, I have went Bamaas a keeper, guys on a rookies

(01:14:30):
salary deal for two more years.
If I don't win next two years,it's like over like, oh no, they're
gonna, they're gonna like, makefun of me for the rest of eternity.
So,

yeah.
So really what we need also listenersis somebody who makes sure that
Victor doesn't have a return of hisblood clots because what, what Marco
really needs is sort of Victor tobecome the Thanos of the league that
it looks like he's about to become.

Well I think that, uh, thankfully, uh, you know, there
are, uh, anticoagulants that he cantake, so hopefully he is on them
for the rest of his life, uh, sothat he does not have another blood
clot, you know, fingers crossed.

Wonder what the tariff rate on those is on that note.

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