Peter Zeihan – The Future of Geopolitics - [Invest Like the Best, EP.123]

I know firsthand how complex the tech stack is for asset managers, and seemingly every new tool and data source makes the problem even worse, adding more complexity, more headcount, and more risk. Ridgeline offers a better way forward, one unified platform that automates away all that complexity across portfolio accounting, reconciliation, reporting, trading, compliance, and more, all at scale. Ridgeline is revolutionizing investment management, helping ambitious firms scale faster, operate smarter, and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgelineapps.com. Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast. I came across Peter via his great books, The Accidental Superpower and The Absence Superpower. We discuss America's changing place in the world and four additional countries poised to do well in the future. Spoiler alert, he believes the U.S. is particularly... Well-positioned while we don't discuss equity markets per se all of what we talk about will obviously impact companies across the world for the remainder of our careers Please enjoy our conversation So Peter, this is a totally unorthodox conversation for me, given I'm normally talking about business and investing, but we're going to talk about sort of history, politics, geography, demographics, all sorts of interesting topics. My world. And your world. And I think a great place to start would be sort of the way, the lenses through which you view history and think about the future. So I've mentioned some of these ideas, demographics and geography, but if you could sort of...

create for us your model of the world, and then we'll take that model and apply it both to history and what might be happening now and in the future. 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. 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 the 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 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. Let's set the stage at the maybe very early in history with the types of qualities that make for a competitive or strategically advantaged country. I've heard you mention that maybe there's like 10 to 12 different countries that sort of have this natural collection of strategic advantage points or resources that make them in a better position, I guess, than the rest of the world to compete in a world maybe that is more disorderly. Maybe highlight what those things are down to the very simple like arable land. Sure. 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. That's, you know. 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 and a better setup, a better alignment of this than anybody else. Obviously, we live in a world that is way more integrated now in terms of supply chains and trade routes and specialization and all these things. Maybe talk a little bit about the history of the Bretton Woods Agreement post-World War II and the sort of... order, the orderly stage that that created from that stage through really where we sit today. I think some history and understanding of that environment will help us understand what's going to happen next. And obviously the specialization that's been possible under fairly stable and peace-like times might be changing in your view. So maybe lay out what happened in that agreement. Sure. 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, in 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 of the manufacturing chain possible in the same location. So we've got these big conglomerate industrial cities. If you had a navigable river, that's great. You could spread out the supply chain system along that river. But ultimately, you'd keep getting a 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. 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. And whatever company or country 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 10 to 100 to 1,000. 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 or that part of a widget cheaper or more effectively, that doesn't really matter 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, and consumption aren't simply physically secure, where they're co-located. Right now, the only place on the planet that happens is North America. Can you talk more specifically about... The security apparatus that has made this possible. So you mentioned oceans, so I go to navies immediately. Some detail on what this actually looks like. How dominant is, let's say, the U.S. Navy relative to the second most competitive Navy? How myriad are the various trade routes? Some details around what the system looks like now would be really interesting. Most people don't realize is 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, we're 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 a... 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 10. And the United States is the only country that fields supercarriers. And we are in the process of unleashing a new class of them upon the world, the forward 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. It's not that the 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 1,000 since the 1930s. About 95% of that is on the water. Now, the United States is a continental system. Our trade is the least integrated in the world. We only trade for 10% to 15% 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 utterly dependent on American commitment. And if that commitment fades or, God forbid, reverses, then you are truly out of luck. So let's talk about how that might happen. So in your second book, which is titled The Absence Superpower, you talk about some of the precipitance for... the US having less interest. I mean, you just mentioned the major one of, we just don't, our commerce is just way lower. Our exports as a percentage of GDP are quite low relative to other major powers in the world. The Navy is obviously one key component or control of global trade routes. But you just mentioned that we're building more, you know, we're strengthening, not weakening our military. So should we expect that the US is going to police those routes less? Is that part of what makes us the absentee superpower? Talk to me about kind of what is actually happening today that makes you think we may care less and act less in the future. 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 moving this direction for some time, 25 years. And this is the presidency under which it all falls apart. And strategically, militarily, I'd argue we've 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 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. The other important angle on all this is energy. So this is a topic that's near and dear to my heart. My family has a long history in the oil business here in the US.

And I'm just fascinated by what's happened in U.S. production, specifically shale in the last 15 years or whatever. So talk to us about what has happened and why it's so significant for this absenteeism and for sort of American disinterest abroad. 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 patched. took advantage of high oil prices, increased production, and developed new technologies. Now, they didn't all work at once, and a lot of them 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 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 1,000 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 has now advanced from the point where it's not profitable at $100 barrel.

To it being marginally profitable at $35 a barrel. Which means that by the end of next year, the U.S. 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... Peak oil. Exactly. Peak oil was 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. What about the difference between light and heavy crude? So my understanding is that the U.S. is already, I guess, an exporter of light crude. You know, heavy is obviously the input used in a whole bunch of functions and that we are lighter on heavier crude production. So true independence would require like a complete stack. So talk about the difference between light and heavy. So light crude is about the consistency of water to nail polish. 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. 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, 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. Enter 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 pools behind a cap rock and that's where you kind of get your gushers. Shale crude 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. 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. Buy low, sell high. I mean, that's kind of the whole point, right? 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 access 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 extra hemispheric heavy crude stop. You could make that 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. One of the things reading your work that I thought about early and often was, so we study market history as much as we can. You know, obviously think history is a good guide, obviously not a perfect guide, but a good guide to the future in terms of what to expect. And one of the things I realized is that the vast majority of data we have on specific country or regional equity markets falls in this period that you would call the global order. And so I always worry, looking at historical data, about data lulling you into this false sense of security. And so I'd love to really spend a lot of time on what this disorder looks like. So if we're moving towards that stage, let's assume that it happens and that you're right. And we'll talk about reasons maybe you might be wrong. assuming it happens and it's right, what does that look like? What are the pieces that us as Americans should be aware of as business people, as investors, et cetera? Walk us through the disorder. Well, you get a complete breakdown and 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. All the time. Yes. We're not used to that. We have no way to process that. Just think about something simple. I mean, air quotes here. The end of the European Union. The European Union is an institution that is 100% 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 the 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 devaluing, 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 the 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, 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. Is it fair to classify these countries? I always like to break stuff in. A couple of major variables. One would be like the percent of GDP that's net exports or something like this. That's a good measure. Maybe it's back to the original thing about do they check the boxes up? of energy dependence, agricultural dependence, et cetera. Is that kind of how you start to break country back? Yeah, 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 an 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. Let's take Germany as like a great case, obviously, because... First of all, just fascinating history and country, like the highs, the lows, talk about hyperinflation and things like this. But right now you think of Germany as maybe the powerhouse of Europe from a production standpoint, just the kind of the renaissance that they've undergone, I guess, really since World War II. That is pretty remarkable. So talk about what this might look like from, say, the German perspective, which I think if you pulled a random sample of the audience, they might say Germany is probably in a pretty good position. But I think you think the opposite. So talk about Germany. Germany is the quintessential.

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. 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 being German again. And you want to talk about something that's going to rewrite the face of Europe. I'm curious how this all manifests in terms of physical conflict. So if you read Will Durant or something, you know that the norm through history is just constant war, right? And you mentioned Germans' interest in... maybe going to war partially to access resources and strategic land positions. What's going to happen in the world, in your view, in this coming era of US, I guess, absenteeism with less of a global order, will that manifest as more physical conflict? And if so, of what variety? Because obviously the technology of war has changed so much, whether it's nuclear weapons or just crazier and crazier technology for fighting, maybe less infantry. I'm curious how you think about the coming world stage and physical conflict. 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 mouths 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 material or with markets beyond the horizon being available, what is close by is simply not. in the right proportions and quantities, whether that happens to be lithium or steel or oil or natural gas or really anything. And so you'll get conflicts over that. Now that will manifest as dozens of brush fire wars, most of which are petty and small and highly localized. You'll also have the wars of national disintegration like we've seen in Syria. There's going to be a lot more of that sort of stuff. I mean, watch Greece very closely if you want to see what happens in a first world country when that goes down. The real globe-spanning wars, the ones with real impact, there's Probably going to be three. The first is probably going to be between the Russians and the Europeans. The Russians are literally dying out as a people. And they see an expansion to something more or less similar to the world's Soviet era boundaries being a far more defensible position than they're in right now. And they're correct. Moving west. Moving west, up to at least the frontier of Poland, maybe all the way to Warsaw. Doing that means the absorption of 11 different countries, half of which happened to be in NATO. And now if NATO still mattered, that would be a problem for the Russians, but it really doesn't. So, you know, there's that opportunity. That knocks a lot of oil offline because Siberian crude can... It's finicky stuff, not so much in terms of quality, but in terms of production. Most of it comes out of the permafrost. And if you get Russian forces moving west, you can count on all the pipelines that send the crude to world market getting shut down, whether out of military strike or just transport disruption. The Siberian wells will freeze in the winter. You can only drill in the winter. So the last time this happened with the Soviet breakdown, it took about 7 million barrels of crude offline. And that was without any shooting.

magnitude of disruption. Or number two is probably going to be in the Persian Gulf. Iran versus Saudi Arabia. You remove the Americans. These are two countries that are quite willing to throw everyone else in the meat grinder in their quest for regional supremacy. We're in this very strange position right now where Iran has become the country of order in the Middle East. They've basically won. And now they're kind of like the dog that caught the car. They just don't know what to do. The Saudi strategy is basically to burn the whole place down. Because if the entire Middle East is on fire, they're on the other side of a desert. So we now are, at least the Trump administration for now, is allied against the country that is trying to hold up some sort of civilization and allied with the country that wants to burn civilization down. You know, this is not a sustainable position for the Middle East. This is not a sustainable position for the United States. But this is where we happen to be right now, no matter how that conflict goes. energy is going to go offline, whether it's Iranian, Kuwaiti, Iraqi, Saudi, all of the above. And that just leaves Northeast Asia. Now, the Northeast Asians import almost all of their crude from the Persian Gulf. There's just nowhere near enough production locally. If you take all of the Asian production put together, it's only about a quarter of what they actually need. So you get the Japanese, the Koreans, the Taiwanese, the Chinese sailing their ships to the Persian Gulf, picking sides in a centuries-old blood feud that has turned into a knife fight, loading the crude themselves, and then shipping it home, and probably raiding each other along the way. Those three conflicts are nothing less than the end of the world that we know. That's the end of global finance and global energy and global agriculture and global shipping. One of the set of work that I've just been fascinated by is two guys, Hans Rosling and a guy named Max Roser, who's operating today. And the thrust of their work is this inexorable march towards higher quality of life in the world, driven by technology, driven by all sorts of different things. But if you look at anything, infant mortality rate or poverty levels or literacy rates, everything just looks in this amazing sort of exponential march. Absolutely correct. The order has done that.

into global continuity and global economies of scale, we have allowed the unleashing of creativity of the human race on a scale we couldn't even have imagined six, seven, eight years ago. And you think that this will unwind that inaugural march? Yeah. I mean, they're absolutely right about everything that they have said, but it's based upon a geopolitical compact that is now broken. Now, everything that they've said doesn't end, but instead of having a single unified global structure, you get a series of regional structures. Some, like in the Western Hemisphere, will probably broadly continue along this path because you're not going to see that kind of disruption. It's not trade dependent. It's not export dependent. It's financially self-sufficient. In fact, with global capital flight, trends we're already seeing today, the money coming to the United States is just... immense, almost obscene. So the underpinnings of these advances should continue in the Western Hemisphere. But in the Eastern Hemisphere, where there's nothing holding up the roof, not so much, the amount of backsliding there is going to be catastrophic. Some of the things you've talked about, like even very scary sounding things like famine, for example, make me wonder, like, so I understand certainly the reasons why the US has less of an interest in... global security and the global order because of our self-sufficiency. But at some stage, is there a precipitant that makes the U.S. just re-engage because this is just an awful outcome? It is definitely an awful – From a humanitarian perspective, from a – everything is so transparent now. I think the ability to weave a narrative around what we should do politically or economically or with our military, it's easier than ever, right? kind of demonstrated this through Twitter and elsewhere. So what might reverse this very grim global outlook? Let me give you two scenarios, one that's shorter term, one that's longer term, because I think we're going to be having them both. First in the shorter term, the tolerance in the US political system for disruption globally is very high. We are entering a period that's relatively narcissistic. We've been here before. It doesn't last forever, but it will last for at least a decade, probably two, maybe three. And during that time, you should not expect to see any significant American intervention in the wider world for humanitarian purposes. And honestly, not even for strategic purposes. American strategic policy is about preventing the rise of any single one ultra bad guy.

whether that's the British Empire, Nazi Germany, or the Soviet Union. There's nothing like that on the horizon for the next generation. So you will see the United States participating in these little... maybe surgical tactical interventions, but not much. And on the humanitarian scale, unless it leads to some sort of impact upon some American community, whether that is geographic in the terms of a town or a sliver of the political system, I really don't see it happening for at least 20 years. Now, during that time, you have accurately pointed out that we're going to still be aware. And so you will get slivers of American communities who will see something that they don't like and they just take off and see if they can do something about it. Now, we've done this before. The late 1800s, early 1900s, we called it dollar diplomacy because you had Americans, whether they were in business or religious groups, would go out and basically be the face of America without any American government leadership at all. Now, as soon as you put Americans abroad, should they get into trouble, The U.S. Navy rides to the rescue, and that can lead to an intervention. But that is a very different sort of intervention than, say, intervening to help with food distribution to prevent a famine. So this sort of dollar diplomacy, it will be a dominant theme in American policy, but don't expect it to do a lot of good if that's what you're after. longer term, the disorder won't last forever. Eventually, there will be winners in these conflicts, and eventually new regional powers will arise. If I had to be a betting man, I'd say that the four countries that look to come out of this looking the best are Japan, France, Turkey, and Argentina. And eventually, they are likely to reach a point in consolidation and influence that the United States is going to take notice. And at that point, a generation from now, the United States will probably re-engage. The question will be, does this happen on a gradual, slow enough time period that the Americans can assimilate the changes and so engage in a maybe constructive way? Or, well, the Turks or the French or somebody else do something that the Americans perceive as a threat.

in which case we get more of a knee-jerk American reaction that is much more disruptive. Now, the power imbalance between the United States and whoever these new powers are is going to be immense. So it's not like you're going to see a catastrophic civilization ending war or anything like that. This is not World War II. This is not World War I. This is probably not even something like Korea. But it really matters whether or not the Americans engage out of... opportunity or out of fear. I'm surprised to hear you say Japan. It's a good excuse to talk about demographics specifically, which we really haven't touched all that much. So far, it's like something more like Turkey, memory serves, has like great demographics, like a fairly young population. Japan is the poster child for more adult diapers sold than baby diapers. And also just from a natural resource standpoint, I'm questioning on that. So what about Japan do you believe is well positioned? First of all, you're absolutely right about Japan from a demographic and a resource point of view. Their internal consumption has stalled and it's shifting towards collapse. They have to basically import every raw material they ever use. However, it's an island nation. And like all island nations, it's... gotten pretty good at a Navy. I would argue that today, Japan still has the second most powerful long-reach Navy in the world. Now, if you were to sail the Japanese Navy against the Chinese Navy in the East Asian theater, the Japanese would get wrecked. The Chinese have a better air force. They've got better cruise missiles. But only 30 Chinese ships can operate a thousand miles from shore, whereas pretty much all the Japanese ships can. So in any conflict... The Japanese basically don't even sail in the general direction of China. They'll go to like, I don't know, Singapore and sink anything that the Chinese have on the ocean. And then that's the end of China's import-export system along with all of their energy supplies. So in a fight, the Japanese, unless they're utterly incompetent, win and win easily. Well, that Navy allows a lot of options. It means that they can secure their own supply chains, whether it's to Southeast Asia or even better yet, the Western Hemisphere. So the tools that they have had to develop in order to maintain any sort of local system just happen to double as the tools that are perfect in order to survive in an era without the Americans providing strategic overwatch. So that just leaves the demographic question.

This isn't a new problem. The Japanese have seen their population aging and shrinking since the 1960s, arguably since they started to industrialize around 1900, which means that the Japanese have always worked on consolidating the footprint. They've had to build up rather than out just because of the geography. It's all about the value added. They're the world leader in robotics for good reason. And so we have seen Japan, despite ever fewer... working age individuals, I've seen their production continually to rise. And when they had their crash back in 1989, their economy really hasn't grown very much since then, like single digit percentages. That hit their export income. That hit their export system overall. That did not hit the domestic market. So they are actually, instead of one of the world's most exposed countries, one of the least exposed. In terms of major... countries that are less involved in the world in terms of economics. The United States is the top of the list. Japan's number three. What's number two? Brazil. Interesting. We'll come back to Brazil. I want to touch on China because this is a fascinating topic, an amazing country with an incredible history that's gone through a renaissance. And I'm curious to take your lens of sort of demographics and global dependence and waterways and arable land, all these things, and apply that lens to China. So what's your view there? Well, let's start with the arable land. You know, the US Midwest is... Perfect. Perfect. Absolutely perfect. The northern Chinese breadbasket is about... 15% the size of the Midwest, and they're feeding a population far times as large. And you can imagine that that's not working very well. Between riotous urbanization, climate change, the advancing of the desert in northern China, and water shortages, the Chinese breadbasket is basically in a period of not-so-slow-motion collapse. They only have one river that's navigable that's in the center of the country, which is an area sharply politically distinct from the northern Han zone that dominates the political system. And then the south is separated by a series of mountains and tropical zones from everybody else. So it's really hard to keep this thing together. They've achieved it by basically following a three-part strategy.

Number one is to beat the crap out of anyone who ever steps out of line. It's a national security state for internal reasons, not external reasons. Number two, they follow a nationwide financial strategy that's kind of like Enron and subprime, where it's all about the throughput. It doesn't really matter if productivity is involved. That generates a lot of bad debt. Now, here in the United States, just giving a scope here. Subprime hit about 3% of the American mortgage market, which came out to dud financial assets that were less than 1% of GDP. Based on who you're asking within the Chinese system, they're already north of 70%. And the economic sectors that are most overexposed, finance, obviously, and agriculture. So when they finally have their adjustment, they don't just... face a meltdown subprime style in every economic subsector at once, they also have a famine problem, which will, among other things, lead to a political split within the system. So that's piece two. Piece three is the global system. Nixon went to China for good reason. He basically inducted Maoist China into the global order in order to buy them as an ally against the Soviets. That only really started in 1980. And it only really got going in 1990. So the entirety of the Chinese success story, the entirety of the Panda Boom, happened during the most internationally abnormal period in human history. And in that time, the Chinese grew to be the world's second largest economy, but also the most overcapitalized, overfinanced, overexposed, overleveraged economy in world history. Of course, this is going to end. The question on the backside is not, will China survive the fall? It won't. The question is, what becomes of the Asian power balances? after China's fall. Fascinating story. The other three countries you mentioned are all quite distinct. And the one that really popped out was Argentina. So maybe that's another one I didn't expect. Talk to that story. I'm imagining there's a lot to do with agriculture there. Oh, agriculture. Yeah, they're one of the best in the world. So the Rio de Plata region is one of the world's handful of zones that actually has navigable waterways that directly overlay arable land. It's kind of like a mini Midwest, just about a third of the size.

The rivers basically go up to Argentina's borders with Brazil, and that's where the navigability stops. So all of the good stuff is on the Argentine side. Argentina is not tropical like Brazil, so they've got a lot lower input costs for all their agriculture. It makes it a lot easier to raise the capital locally in order to generate a manufacturing base, and they've done all this stuff in the past. Now, Argentina is also a good warning case. From the Perón era on, the Argentines basically woke up every morning and they were like, OK, we've got this perfect setup. How can we break it? And after 90 years, you end up with something less like the United States and more like Argentina. But if you look forward to the world we're going to, where rule of law breaks down, where international commerce grinds to a halt, where finance is hard to come by, the Argentines, for them, that's just an average Tuesday. Either they've got the perfect geography and will have a domestic reset like we have under the current government, and they will thrive for decades to come, or the rest of the world breaks down and they just are more familiar working in that sort of environment. Either way, the future of Argentina looks really bright, and the first stage of that will basically be the Argentines dominating the border states of Paraguay, Uruguay, and Bolivia. Second stage is starting to peel off large sections of southern Brazil itself. And this is, in essence, for those of you who know your Latin American history, a repeat of what the Argentines and the Brazilians did in their early years of independence, which is that this time the Argentines are going to win. We've actually talked more about the rest of the world and less about, say, like the U.S., Canada, and Mexico, which is, I think, sort of an interesting collection of countries, obviously, physically. Talk about that, the relationships there. And whether or not in this coming era, in your view of absenteeism, Canada and Mexico are effectively like a surrogate part of the U.S. No, that's exactly what it's going to be. One of the big concerns that I had about the Trump administration in the early months was what was going to happen to NAFTA. Because unlike our trade arrangements with everyone else in the world, which were largely driven by strategy, and so we were willing to sacrifice economics in order to get the countries on board.

The NAFTA accord is really the only major trade deal the United States has that is actually based on the numbers. And so if NAFTA was to go away, the United States would actually suffer a recession. I mean, the rest of the global structure could go to hell and the United States might not even notice. But Canada and Mexico are countries that really matter. Now, things are getting really interesting with those talks. So when the Trump administration was originally interfacing with the Mexicans, the Mexicans didn't want to give anything. Pena's party lost the election and Lopez Obrador came in. And Lopez Obrador, well, I would not consider very good at math. I mean, he's basically the Mexican Bernie Sanders in many ways. Basically realized that he was a populist kind of in the same brand as Donald Trump. And the last thing that he wanted, his term, he saw himself as a domestic renewal guy, kind of like Clinton. The last thing that he wanted was to be in a pissing contest with Trump for his first. few years. So he reached out to Pena during the lame duck period, and he reached out to Trump and said, you know, if you guys can figure out what's next, what NAFTA II looks like, I'll get it ratified. So far, he's a man of his word. And so we have a deal with Mexico. Up in Canada, things are just hilarious. Everything about Canadian foreign policy is rooted in the Cold War. If you look at a polar projection of the Earth, you'll notice that Canada is on all the flight paths for ICBMs from the Soviet Union to the United States. Because of that, the Canadians during the Cold War could have been... free riders in security terms. To their credit, they were not. But they would use that leverage to get concessions out of the United States on economic deals. So Canada during the Cold War would always get just a little bit more. And a lot of times, those deals had to do with something that was happening internally in Canada. So there was always a lot of Quebecois fingers in that pot. Well, the Cold War is over. Trump's the first American president to look at the world in a different light. Probably a more accurate light considering the day. But it takes a while for the bureaucracy and policy to catch up. So Canada was always thinking, you know, we don't have to give anything because we're in this special position. So they, on every negotiating point, they took a hard line. If anything, they were looking for more concessions out of this renegotiation, which of course just cheesed Trump off. And then all of a sudden, Team Trump has a deal with Mexico.

And they just go up and say, look, we've got to deal with the country that matters. We've got a deal with the country that has demographic growth that is complementary to our manufacturing system rather than competitive. They're the country of the future. You are not. You know our terms. Take it or leave it. That refocused minds. And it only took a few days then for the Canadians to finally cave. They are very, very lucky that Team Trump didn't ask for more because they would have had to give more. But that leaves us with a more or less intact North American market. That's already 40% of the American trade portfolio. You throw in a couple of other countries that are undoubtedly going to work out and break the United States' way, Korea, Japan, the United Kingdom, you're the vast majority of the American trade portfolio. That's enough. I mean, obviously, from everything you said, it's clear that you think. The U.S. has enormous leverage in basically every relationship, right? And so I'd just love to spend a minute or two on the quote-unquote trade wars that are ongoing and things like tariffs and get your view on kind of where these things are headed. Are these long-term stories? Are these going to be quick to resolve? How should we think about these ideas? Well, let's see. We got a deal with Korea last year. It's being implemented now. The new NAFTA deal will be ratified this year. It will go through all the normal pain and agony in Congress, but ultimately I think it's going to go through without a major problem. in this country and in Mexico. Canada is a separate issue, but we can deal with that later if you'd like. Japan talks are underway. They will be completed this year because the Japanese don't have a lot of room to go. The Japanese realize that now that the Americans have a deal with Canada and Mexico and Korea, that's four of their five biggest trade partners are already integrating into a new post-order system. It's either get on board or don't, and they're getting on board. Britain has nowhere to turn. Post-Brexit? They're going to have a depression regardless. This was always going to be a hard crash out. And the United States is the only country that can help cushion that. And that's assuming the global order holds. If the global order breaks, there's really nothing else. So those deals are easy. Those deals will be wrapped up this year. Those deals will be ratified probably early next year. And that's enough for the United States, which means that any other trade talk isn't about the money.

And so instead of the United States sacrificing economic access in order to achieve a security goal, the United States now doesn't have to sacrifice anything because the other side is the side that actually needs something out of this. And we've seen the beginning of this with Korea and with Japan and with Canada, and it hasn't really sunk in everywhere else except for maybe China, that this is the new rules of the game. And this is not true. Trump. Trump is just the earliest, least sophisticated iteration of what is going to be the new norm in American foreign policy. And for Trump specifically, you will notice that in the deals that have been penned so far, that automotive steel and aluminum tariffs are not included. Those are now hammers that the United States can use in any bilateral negotiation on any topic that it wants. It's not so much that tariffs are the new normal. It's just the tariffs are the new tool that the US will use whenever it feels like it. Talk about the US political system. So you've mentioned, I think a lot of what appeals to me about your work is many things are sort of laid into the picture already and become almost inevitabilities. And so you mentioned that maybe under Hillary Clinton, a lot of this same stuff would be happening maybe in very different... order or style or time period, but that the seeds were in place for a lot of what we're seeing, regardless of who the leader is. So taking that same sort of view and looking forward, whether it's Trump's second term or some other president that's going to beat him, what are the important major features of the US political system right now? Obviously, it seems I actively try to avoid this topic, but I can't help myself with you. So from the cheap seats, it obviously looks like quite the cauldron right now. of opposing ideas, of shifting bases. So what's your take on the U.S. political system? I would argue that all of the angst and anger and fire and fury that we're seeing in Washington right now is actually a really good sign. Every generation or two, the American political system convulses.

dissolves and then reforms. And we are in that process of transition right now. We're just doing it with social media. Big events that have happened in the past, post-war reconstruction, the War of 1812, the Great Depression, all of these triggered a breakdown in the bipartisan networks. And the parties that we know as Democrats and Republicans have not always existed, and they've certainly not existed with this alignment of factions. So if you want to go back to the last big... That was the Great Depression. That was World War II. Back then, the Democratic Party was the party of big business. And the Republican Party is the party of African Americans. Things change. Start with that. Start with an understanding that the parties that we know are not permanent. We have had the collapse of the Cold War system. Big change. We've had the post-Cold War boom. Big change. And now we're having the collapse of the global order. Big change. Of course, we were going to have another. political reorganization. We're going through that right now. It's just that our 24 hour, well, 24 second news cycle makes it a lot louder and more aggravated than it has been in times past. But this is not new. So what we're seeing is a complete disintegration of the old party structures on the left and the right, and the factions that make up those parties are casting around looking for issues that might allow them to be the nucleus of whatever comes next. So, for example, on the Republican side, Donald Trump broadly considers the business community, the national security community, and the fiscal conservatives to be as ideological. foes. And he has systematically ejected all of them from his administration. And the midterm elections were not notable for how well the Democrats did, in my opinion, but for how badly the fiscal conservatives, national security conservatives, and business conservatives did. They were basically ejected wholesale from Congress, and Trump's version of Republicans rose up to take their spots. Now, on the Democratic side, the unions are gone. They're not Democrats anymore. They are fully frilledged members of the Trump coalition. So Trump is actually fairly advanced in setting up the post-Republican party. Whether it's still called Republicans when this is all said and done, who knows? Whether or not it sticks, who knows? Whether or not it'll outlast Trump, who knows? These transitions usually take about a decade. We are now only in year three. There's a lot of room for this to shake out.

But what that means for us as a country is we don't even have the political structure that's necessary to have a conversation about the big issues right now. We can scream at each other. Social media is great for that. But it's not good for a structured discussion about what we actually want. And so we will get people like Cortez talking about the Green New Deal. And we'll get people like Ted Cruz talking about whatever crazy ass idea he's got next. But we're not going to have much. constructive to say to one another until we get the framework of whatever these new parties happen to be. What do you think those most important policy issues are? So let's say that this emerges. What are the most pressing issues where, if handled well, would be best for the country? Well, if you're looking internationally, the breakup of the order and the start of this disorder is a wildly rare. The United States has the opportunity to figure out what the international agenda is and what the international structure is. And whatever decisions we make in the next five years will stick for the remainder of this century. That just doesn't happen very often. And we're utterly incapable of even having the conversation, much less coming up with a decision. So wasted opportunity. Domestically, the baby boomers are the biggest retirement this country has ever seen. As a percentage of the... They're the largest population we've ever had, and the transition of them from taxpayers to tax takers is, I don't want to use the word catastrophic, but it's certainly transformative. How we manage that will determine the tenor of the American economy for the next 30 years. The kicker is, is that while our baby boomers... Our big group, relative to their peers internationally, they're actually fairly small. And that's because our baby boomers had kids. We know them as the millennials. And while we can talk till we're blue in the face about how they're all wastes of skin, they exist. And they don't in most other... Exactly. There's a lot of them. Which means that... They are consuming now. That's good for the economy. And they'll be investing later. And that's good for the economy. But there are no German millennials or Italian millennials or Japanese or Chinese millennials. Everybody else basically stopped having kids in 1980. So we are the world's largest financial consumption power now.

And in just a decade or two, we're going to be the world's only consumption and financial power. So how we manage this transition, how we get through this tight spot, the snake swallowing the watermelon, all that, you know, that's important. But we're the only country with an opportunity to get through it in one piece. So we can make evolutionary changes without having to have a complete break in our system. That gives us an opportunity if we manage that process right to repair our capital structure, to get ahead of the debt, do all kinds of things that other countries can't even dream of. I'm curious your take on US infrastructure. So this is something that I think naturally you talk about in your books, the Mississippi waterway as... maybe the most advantaged set of water in the world because you can move things so much cheaper through the various Mississippi waterways. We at one point had an amazing infrastructure system. I think of like Eisenhower and the interstate system. What's your view on American and maybe even global infrastructure and the role that that plays in the future? Well, let me start by saying that the relatively decrepit nature of American infrastructure is a real problem, but it's also a massive opportunity. Building roads, not hard. which means that all you have to do is apply the money. And as soon as you do that, economic growth comes from it, both from the construction, what happens on the backside. So I don't see this as a problem. I see this as an opportunity. Second, the waterway structure. So the greater Mississippi is about 13,000 miles of navigable waterway. That is more than the combined systems of the rest of the planet. Now, most of the locks on our system that allow it to be navigable are in excess of 60 years old and a scary proportion of them over a century old. Now, replacing all of them. wholesale every little bit would cost only about $200 billion. So in terms of cost benefit, that's cheap. Now, if we're going to do that, I recommend that we do. The first thing we've got to do is appeal or at least heavily amend the Jones Act of 1920, which basically says that any cargo that is shipped between any two ports must be on a vessel that is American owned, captained, crewed, and built. We don't require that for any other.

transport method we have in this country only for the one that gives us a massive geopolitical advantage, which is stupid. So you change that and the cost of transport internally in the United States plummets. It also takes a lot of trucks off the road, which will make the rest of the infrastructure system. last longer. So it's like there's no downside there unless you happen to be in organized labor and you see the handful of jobs that remain in American shipping is sacrosanct. But again, this is the only transport sector that we do this in, and it's outlived its usefulness a century ago. As you look at the world, what today are the most interesting new technologies that you're tracking? This technological innovation has been a... part of a lot of the stories that you've weaved, Shale, is one great example. What are the most important, whether it's military or agriculture or energy, anything that you're watching carefully now? I would say that most of it comes down to how the technological revolutions, the digital revolutions, have applied to industries that we don't think of very much. So does it improve things like supply chains and manufacturing processes? Certainly. And I don't mean to denigrate that. But let me give you two that most people just never think of. Number one is shipping. It's like, you know, Until very recently, we were still using paper. So the digitization of customs clearings by itself is enough to reduce overall shipping costs by like 15%. And in a world where shipping costs are about to skyrocket, that's monumental. Just fully digitizing that system of information transfer for goods is great. Even more transformative is what is about to happen with agriculture. So we all worry about things like facial recognition and what that means for privacy. Well, the computers don't care if it's a face. Computers can do it for plants now. So what we're seeing with the new combines are the ability of a farmer to load up a combine with herbicides, fungicides, pesticides, fertilizer, all at once. Run it automated through a field and the... cameras on the machinery will take photos of each individual plant and identify whether it's a weed, a crop that's supposed to be there, and if it is a crop that's supposed to be there, whether it's healthy or what it needs. And then it gives it a little jolt of whatever is appropriate. Herbicide, if it happens to be a weed, pesticide, or fertilizer, if it happens to be a plant that maybe needs a little help. Which means that with one

pass. You can do the equivalent of five passes, but with one-tenth the chemical use. So we are on the verge of not only agricultural production increasing by a factor of two or three within the next decade, but of conventional farming turning into conventional gardening. And that means that conventional farming will have a lower pollution rating and a far lower. carbon footprint than anything that's happening in the organic world. Mouth us be damned, huh? Yeah. The last kind of series of questions is around just things that you are watching most closely. So sort of like technology, before we started, I asked like, how do you do your research, right? Like you've got, you're trying to make sense of this global system. You've arrived at obviously major levers that drive history and therefore probably likely drive the future as well. Talk a little bit about that research system. Like what are the information sources that matter most to you? What's most enduring? People that are interested in this stuff, how do you begin to tackle the wealth of information? You mentioned media as one example. I'd love your take there because it sounds kind of interesting. Yeah, unfortunately, we've had quite a breakdown in what is useful. So it started at the end of the Cold War when we started getting the digital revolution in its very early stages. It used to be that every major media outlet and most even regional newspapers would maintain foreign offices. And so you'd have Americans living abroad, writing about the things that were happening abroad, and then sending the stories home, usually by fax. Email comes along. All of a sudden, you don't need as many people abroad. Text messages come along, and all of a sudden, you don't need anybody abroad. You just send the people abroad when you need them, and they can send back the messages that turn into stories. Well, as this got better and better and more and more efficient, eventually, every... media outlet pretty much closed all of their foreign offices. And they might have some headline reporter like Amanpour who goes out and globetrots, but she pretty much travels by herself. There's certainly no supporting infrastructure out there, which meant that the volume and quality of international reporting basically collapsed. And pretty soon that turned into the quality and reporting of domestic stuff collapsed. And so the proportion of actual news versus opinion

And now we're in an opinion 24-second news cycle. That's definitely hit my world because I have gone from being able to tap dozens, if not hundreds, or thousands of sources at any given point to really there only being about a half dozen. If you're looking for something that... covers international news in a meaningful way. There is nothing left in the United States with the possible exception of Bloomberg. About five years ago, they decided they wanted to break into the general news space, but then they had an editorial change about two years ago, and they've kind of backed away from that. They're still by far the best in the United States, but they're not what they used to be. But the same thing has happened with Agence Front Press and with DW and everybody else. So the only real... International coverage that is any good anymore is Al Jazeera. And you can't rely on Al Jazeera for anything that's in the Middle East. So it's ironically, you have to go to the Middle East to get news about the rest of the world, just not the Middle East. China's Xinhua is okay, so long as it doesn't deal with China or the United States. And if you speak French, France 1 is pretty good. But that's about it. Basically, you have to hunt and peck for local sourcing. Luckily, the digital revolution helps that quite a bit, and you can build your own feed based on what you're interested in. But there just is not much any longer. And anything else that we've missed in terms of major topics? I know you're writing another book. We talked about some of the countries that you're going to be writing about, Japan, Turkey, Argentina, France. Anything else major in that book that you're really honed in on right now? The whole point of Disunited Nations, that's the title, is looking at the preconceived notions we have about which countries are the countries of the future and why they're not, and then which ones should be. So we take apart Germany and China and Brazil. And show why these are not countries that we're going to be taking seriously a decade from now and instead looking at the countries that are. Well, I think this conversation has been chock full of food for thought for investors, right? We didn't talk about capital markets all that much. But I think the notion that it's possible.

You know, in your view, very likely that the future looks quite a bit different than the past for which we have the majority of our data that we base our conclusions off of is just great food for thought. So I appreciate everything. The closing question that I ask everybody is for the kindest thing that anyone's ever done for them. I've been very fortunate. So I don't know if I can narrow it down to just one. But, you know, I'm a kid from small town Iowa who leads an international life now. That could not have happened without my parents who were teachers, without my high school guidance counselor who got me out of. very sticky situations without some of the college professors that made it all possible. Without Rotary, who gave me my first scholarship to travel internationally. Without my former colleagues at Stratfor, who beat the crap out of every idea I've ever had and made them stronger. I know it's a little... cliche to say it takes a village, but it really did take a village to raise this idiot. Well, it's wonderful. I actually have to ask one more question, which is given the amount of probably travel that you've done and just the investigation into places around the world that you've done, you mentioned you lived in New Zealand, you've kind of led this really interesting international life. What are some of your favorite places that you've been that you would recommend people spend some time? I hate to push any more tourists in the direction of New Zealand, but oh my God, everything, every preconceived motion you have about New Zealand is wrong. It is so much better than what you're thinking. The best months to go are February because most of the tourists have left home and most of the Kiwis have gone back to work or school. So you kind of have the country to yourself to a degree. Yeah, it's an unbelievable place. I definitely second that. How about one more? Sure. Alberta, Canada. It is as different from the rest of Canada as Texas is from the rest of the United States. And I say that in a good way. Although I will warn you now, only go in the winter if you are a skier because God damn, it's cold. But it's a beautiful place, beautiful people, wonderfully bizarre economy by any modern standards. Well, thanks so much for everything. Again, this has been a fascinating conversation.

My pleasure. Hey, everyone. Patrick here again. To find more episodes of Invest Like the Best, go to InvestorFieldGuide.com forward slash podcast. If you're a book lover, you can also sign up for my book club at InvestorFieldGuide.com forward slash book club. After you sign up, you'll receive a full investor curriculum right away and then three to four suggestions of new books every month. You can also follow me on Twitter at Patrick underscore Oshag, O-S-H-A-G. If you enjoy the show, please leave a quick review for us on iTunes, which will help more people discover Invest Like the Best. Thanks so much for listening.