The podcast analyzes the Trump-Xi meeting in Beijing, viewing it as a positive step for managing U.S.-China tensions, though not a fundamental shift in their strategic rivalry. The hosts argue that the U.S. military-intelligence complex and Silicon Valley software firms benefit from framing China as a permanent adversary, but a new hardware complex—led by companies like NVIDIA and Tesla—seeks access to Chinese markets. This creates a domestic conflict over U.S. policy. The discussion criticizes past U.S. globalization efforts under Clinton and Bush for failing to redistribute gains or protect intellectual property, while praising Trump’s willingness to use assertive tactics in negotiations. The hosts note that China’s need for advanced semiconductors and Tesla products gives the U.S. leverage, but they question whether Trump’s approach can overcome entrenched interests. Other topics include the Iran War, Saudi non-aggression pacts, Russia’s heavy drone strikes on Ukraine, and protests in Cuba. The episode concludes that while short-term U.S.-China relations may improve, long-term competition remains locked in due to powerful domestic and international forces.
Hello listeners, welcome to a little geopolitical cousins after dark. We hit the US, China, Trump's Xi Jinping meeting, we hit Iran War, we hit Mexico, Cuba, a little bit of US domestic politics and AOC at the end of the episode. Our big trade value leader index coming out next week. So if you are looking for even more cousins, you will have it quite shortly. Otherwise you can email me at Jacob at JacobSupera.com if you have any questions, comments, concerns, etc. that stuff will get to market as well. I think that's it, we'll see you at the next one. Hey listener, yeah, I'm talking to you. It's cousins after dark. How are you doing today? I'm very excited about another after dark session. Let's see what happens. Unfortunately, no alcohol in me, I know some of the fans love it when I've had a beer or two. None, not even caffeine, I'm actually currently sponsored by a cranberry razz lacra. Wow, that's so nice. I'm just on plain old water here, which judging from the New Orleans sewage and water board could be killing me. I could be losing years of my life, literally as I'm talking to you. New Orleans sewage, what is wrong with you, bad? Get some boiling water. Well, I'm supposed to be drinking 120 ounces a day on my protein max journey, so I can't 120 ounces of bottle water a day, taking me to the poor house probably. 120 ounces, that's clearly not TB12, like you should be doing more than 120. Well, you got to build somewhere, I'm not going to start a TB12. All right. We've got a lot to go over, cousin, so it's Thursday, May 14th at 7.23 pm, U.S. Central time. This will come out tomorrow morning. Asia is going to have a day before listeners listen to this, but one of the reasons we pushed back to this evening rather than this afternoon was to see kind of what happened today. What are your, obviously, the big thing is Donald Trump went to Beijing, and there was a summit between Donald Trump and Xi Jinping. There's still the Iran War in the background, which we will talk about. There are all the new reports about Saudi Arabia and non-aggression packs, and the Saudis actually bomb the Iranians. The Russians also hit Ukraine with their heaviest drone strike and the entire war over the last two days. There are protests flaring across Cuba, and then I've got some stuff to talk about with Mexico. So we have plenty of things to kind of check in on, but you really stick to your ground on the positive trajectory of U.S.-China relations, and I think you were ahead of the curve on that what is your first assessment of Donald Trump's trip to Beijing thus far? I mean, you know, the sort of geopolitical, you know, expert take. The take that you have to give as an expert in order to continue to be a card-carrying member of the brooding, you know, contencourous geopolitical analyst is that it doesn't matter, that it's not a big deal, that the Chinese are going to buy some soybeans, and that that's kind of it. But I think that sometimes we get too cute with this, and sometimes, you know, you want to take the busy soccer mom take. You know, what's the busy soccer mom take? Well, in between taking the kids to different practices, make sure the minivan is like fueled up, buying the snacks, cleaning the lunch boxes, like all that stuff, and also having a full-time job because, you know, like gender equality was up, I was like on edge of being canceled there for a second. So I had to swerve into that. You see how I'd rescued myself? I see, I see. But like, you know, the busy soccer mom take is sometimes the right one, which is like holy crap, the US president and Chinese president are meeting, that's kind of nice. They're behaving well. Oh, isn't that so cute? All the little kids waving their flags and jumping up and down, as President Trump is walking by them. I think that from a sentiment perspective, this is good. This is, I think a beginning of the talk. Like legitimately, I think this is what the taunt starts like. It starts off with, you know, vacuous soybean deals, relatively modest purchases of Boeing airplanes. Apparently, I don't know if you saw this, but like Boeing stock fell because the Chinese are only going to buy 200. Was there a soybean deal? I thought that they were not doing the soybeans, but they were doing the. I don't know. I'm just saying that that's kind of like been what everybody has said, like, hey, you know, like, US has cleared some semiconductor sales to China. I'm figuring out that China is going to clear rare earths and is not going to mess with that. I think that is why President Trump went. And yeah, like I think the two countries have decided to, you know, take a beat, spend a couple of years, you know, like trading with one another during which I'm sure that both will continue to try to be as self-sufficient as possible, like, you know, so that they can prepare for World War III. I don't think. I don't think. That was a joke. But I don't think obviously this solves the fact that China and the US arrivals, but I also don't think it's insignificant to point out that they're trying to manage that rivalry, that it's not completely off the rails. As it got right after COVID. Yeah. It's also. There's a lot to disentangle here. Did you see. Part of me is having trouble because the way that the Trump administration is doing the social media in particular on this is very jarring. Did you see that. It's just angry. Well, no, it's not actually. Did you see that video that the White House put out about how America's strength is back on the world stage and it was all these clips from the initial meeting. But the clips were like of Chinese soldiers marching in formation and like large Chinese tanks. And then the Secret Service car pulls up and Trump walks out and shakes Xi Jinping's hand. But it's just like. It's all China. And somehow it's supposed to be that the United States is back on the stage. I don't know if you also saw Trump had a tweet just like two hours ago where he talked about how. When President Xi. I'm paraphrasing here. But when President Xi referred to the US as a declining nation, he was referring to the Joe Biden administration. But he actually congratulated Trump on his tremendous successes. And now the United States is no longer a nation in decline. It's just things like that. But I think you're right that. Well, and the last thing I'll just say on this before I let you cook a little bit is. I think you're right that Trump has the impulse that you're talking about, that he wants to improve US-China relations. I just don't think it's going to work. And I don't think it's going to work because I don't think the electorate is behind him. I don't think it's going to work because I don't think his own cabinet and the military industrial complex in the United States is behind him. And I don't think it's going to work because I don't think China is going to offer any meaningful concessions that will outlive the Trump administration itself. So, like, when I was talking to a client today, one of the things I said was, "Look, you shouldn't be worried about the next six months or 12 months in the US-China relations. I think it's going to be good." And you should enjoy it while it lasts. But after President Trump has gone, like, I don't know that anything has fundamentally changed. And I don't know that there's anything that President Trump could do to fundamentally change the relationship right now between Washington and Beijing. But I don't know. Do you take the other side of that or do you think that they are kind of locked in that long term, strategic competition, like I'd. I don't want to take the other side of a good analysis. I just want to add to it, I think you and our dear cousin Matt Girk can have a very similar perspective in that. I wish we'd have Matt on to talk about this as well. But basically, there is an American industrial complex. What I like to call, because there is no more industry, it's a military intelligence complex. And there's a whole lot of private consulting firms that do all sorts of analysis that kind of exist in that. Northern Virginia, Maryland, DC, Triangle, and they're bred as buttered by America's threats. So obviously, there's this huge industrial complex that wants China to remain an enemy. The very powerful one. I thought there was this very interesting case where the Rand Corporation, out here in Santa Monica, published a report on how to stabilize US China rivalry. You can Google it, folks. You can go out there and Google this, stabilizing the US China rivalry. I think something like that was the title. And then it was pulled. It was pulled from the Rand website. I spoke to a couple of people who were involved. And effectively, he kind of went against some of the advertisers, some of the folks who were funding the Rand Corporation. It's like, hey, whoa, whoa, whoa, whoa, whoa, whoa, let's not stabilize this. Why would we stabilize it? Would anything other than massive build-up of the military? So while I tip my hat to what you guys are saying, there are other very powerful lobbies in the US. And so we should, I think, never apply a silver bullet explanation. And one of the interesting things that's happened, Jacob, is I think there's been a real shift. The tech bros of the software tribe, abandoned China after about 2012. Why? What happened in 2012? You had this guy?
Snowden come out and basically say that American hardware and software was full of all sorts of spy devices And you know like too bad God bless America Chinese stuff has it too, but the Chinese use that to impose all sorts of draconian measures In which they no longer basically buy American software and hardware Once that happens Especially software once that happened Jacob all the tech bros in Silicon Valley became like they read themselves in the American flag Like and I saw that I witnessed this like it it was like instantaneous You know effectively if you're a software Bro in Silicon Valley you think China is going to kill everyone and you know There's Maoism and this permeates from private equity down to the founders and the reason for that is that number one You don't have access to the market so Yolo they're evil and number two You want to make sure that the US government considers you the tip of the spear of the American Fight against China so you are suddenly critical component of the national security complex even though all you're doing is like You know creating a search engine for God's sakes like let's pump the brakes and you fucking you know like changing Change of humanity but suddenly you like The software bros which have led America for most of the last 20 years joined this military Intelligence complex that you and Matt Focus on but what I would say is that there's something new emerging and it's the hardware complex It's nevilleia. It's the chip makers and they're like cool story, bro I'm the largest corporation in human history. Fuck all of you. I want to sell chips to China. What's up? Yeah, what's up? Hey, who was who was out there with his leather jackets? No confirmation whether he signed any boobs But you had the video CEO, baby Yes, one of like 30 also have you seen like the videos going around of Elon like taking selfies of himself while he's like He's at the dinner and he's like taking selfies of himself and he looks like he's on Katerina Jensen Jensen Huang and and I think Elon Musk were in Beijing right who did Elon Yeah, they're 30 there are 30 different CEOs. I mean a whole and a lot of them and a lot of them I would argue are more from the atoms Atoms camp than the bits or the bites camp so the software bros are locked out of China But China can't really live without Jensen and video and it Kind of likes Tesla, you know, they respect Tesla and so there is this other camp now, which is a new thing Obviously Tesla's not a new thing, but like the dominance of Tesla and the video is starting to erode and You know soon maybe Google might also have an interest in China because they two are developing semiconductors This AI race is creating an interesting Interest that interesting interesting argument and so what I've noticed is that the old school They're not old school even though they were you know they're young But like the tech bros from Silicon Valley who are more in the SaaS software space Who did read themselves in the American flag and joined the military intelligence complex they're now opposed by this like new innovators The industrial innovators the manufacturing innovators that maybe do want to do some joint ventures with China and Do want China to crack open for them? So I think that what you've seen is this incredible You know intelligence campaign on the American public in fact you you've had this Propaganda campaign and you know you use you Retweeted this one argument. I forgot who it was. It doesn't even matter But it was this argument like Trump thinks he's gonna open up China What an idiot? That's what we tried in the 90s that will never happen. We have to take into account national security priorities And I'm like wait a minute Don't blame globalization for its pure ex a poor execution Bill Clinton and George W Bush and his dad so George H. W Bush Bill Clinton and George W Bush all failed to open up China But it doesn't mean the globalization is bad. It just means that at the time These three American presidents walked on eggshells The Nike's the Coca-Cola's the other big American corporations stole them listen Just just shut up. We'll do whatever the Chinese want. We just want to go into the market The GM's you know like everybody was like let's just do whatever they ask us and then they realized like holy shit 10 years later They just copy the joint ventures were IP transfer and the Chinese then eventually like came to dominate these industries So there's this lesson like well you can't do business with China Well, maybe the less you should be like well. No, you should actually come into China with your eyes open with a set of carrots and a set of sticks and If the Chinese are mean to you will be fucking mean back to them their respect you for it And that's where Donald Trump is this and and I know I know I'll take I'll take a hit of my TDS DS inhaler in a second You know, but I think the Donald Trump is the first president who's like okay Look we can do business with China, but we got to be an asshole to do it and guess what I'm an asshole So we got to sit down with them and make sure that if we are going to do business with them It like there are massive sticks that we can use to enforce compliance with win-win Mutually beneficial trade like you can't just take our IP and so that's where I do think like the history Has to be rewritten and I think there's a new set of American corporate leaders like NVIDIA Like that slatted or saying like look man. We're gonna do business in China But yeah, like we want the US government to also protect us like that both can be done at the same time I think that last point is is a good one and I think the problem there for Trump though is that his timing is off Because if he had been around if he had been president in the mid 90s to the late 1990s Maybe that would have worked. I just don't think I think he doesn't have the leverage that you're talking about right now I don't think the China really needs much of anything from the United States and if anything the United States needs things from China it's it's a it's really a symbiotic relationship and You know the Both sides yeah They both profit from it Even though I think that the I think that the cards have flipped a little bit though I think that I mean yeah, I mean that there's a there's a level of mutually assured destruction there Maybe it's not good to do sort of comparative suffering when it comes to that But I do think that the hawks from both sides are framing it as a parasitic relationship when I don't think it's a parasitic relationship I think it's actually a symbiotic relationship between the two countries that has been parasitic on the rest of the world Which is one of the reasons why the back and forth between these two Olympians is kind of silly You mentioned Peter Harrell he was the guy whose argument I tweeted he was on my podcast a couple of months ago He's a trade expert and I think you're you don't know much about him But you pegged him correctly, which is he was in the Biden administration And so Biden you know once I mean there's Joe Biden in the 90s and then there's Joe Biden the president Joe Biden the president was an extreme China hawk he doubled down on all of Trump's tariffs and made them sharper and Definitely you know everything from Jake Sullivan to everything else. It was a very hawkish try to strategy and I think Peter is coming at it from that point of view I think though if you put Peter I don't want to put words in his mouth We can have him on to he's a he's a pretty area guy But I think if you had put him in the 90s he probably would have gone along with that I just I want to I want to save your boy George HW though because you had George HW high on your foreign policy list And I don't think he deserves to be thrown in with Clinton And with his son because George HW faced a real challenge with China China was still like nothing basically and then Tiananmen happens and he could have really gone after China for Tiananmen and he didn't and he didn't for the sake of global stability He didn't for the sake of economic opportunity He thought that he needed to have a stable relationship with China and so he was willing to look the other way With Tiananmen rather than make an example out of China, but and I think that was maybe the right choice there It was a nuanced choice though once you get into Clinton land and WTO and George W It's all oh they're gonna become Democrats and we're all gonna hold hands and sink whom by y'all and that's post Cold War thinking George HW was still in the Cold War Like Tiananmen is still at the very end of the Cold War so he's thinking with a different perspective and thinking no I have to engage with China. I can't just turn my back on China for ideological reasons So I just thought I would save your boy there because I think he deserved a little bit of credit That was a tough decision Yeah well I mean look I'm gonna say this like there's a whole slew of academics and like foreign policy people who were sucking on the teeth of globalization in 90s and then To maintain membership in foreign policy elites and relevance They just jumped on the bandwagon of like oh well now we got we're all trade protections And it's like well no no wait a minute. Let's go back to the 90s. Why were you in favor of globalization? Well because it's actually good for everyone There's two problems that America made First and foremost it didn't correctly redistribute the gains of globalization In order to ensure that folks who were hurt by it were compensated in some way shape or form that's America's problem It's not China's problem The second issue is that you know like the negotiations with China The hey like when a corporation the American corporation came to the US government and said hey they're stealing our IP And nobody did anything right to those things the the kind of litany of mistakes that America made that Robert Lighthizer presented to Congress I believe in 2013 the epic testimony he gave which is the foundation
for the American administration, for the President Trump's administration, policy in the first term. Like those are the mistakes. It wasn't like we need to be protectionist. Obviously, these policy makers would try to rescue themselves by saying what China has changed. It's more aggressive, it's bigger. It doesn't matter. That does not matter. The US can still benefit from economic interaction, maybe not with like the most sophisticated things that should be kept secret, but certainly by selling soybeans. So that's the first thing I would say. The second thing I would say is that everyone's kind of surprised by this meeting, but you know, COVID threw off a lot of things. COVID increased the American public's negative attitude towards China. But I always remind my clients and anyone out there, don't forget Trump had this planned from day one that he imposed tariffs on China. It's why the phase one deal was called phase one deal. He hit China with a broad side of tariffs in 2018 and he immediately started negotiating. The phase one deal which was mocked, including my meat. I mean, I'll be honest like, hey, this isn't that much. This is like 19th century exports. Great. Good job. More call experts to China. What are we doing here? But to be fair, it was just going to be phase one. His plan was I'm going to win reelection. The pandemic is just the temporary, you know, flu. It's going to go away. Then we're going to negotiate phase two and phase three. And so I do think that Trump always plans to land the plane. What happened was the pandemic happened. And then Biden came in and two things occurred. One, the pandemic created an anti-China sentiment that was borderline racist. It just was because, yeah, clearly this virus came out of a Wuhan laboratory. And so everybody just blamed the Chinese. Well, one cannot be a racist and still point out that the Chinese did not share the information about the virus when it came out. Yeah, sure, but it weeks before they shared that information. But then it mutated. And then they hoarded personal equipment like everybody else. And then there was vaccine diplomacy. One does not have to call it the Wuhan flu to point out that if China had raised the alarm bell at the WHO when they knew about it, right? That thing would have lied. Six days later, like maybe we would have had a chance. That's fair. But like, we all know why China did that. Any would be the modicum of understanding with Chinese society knows they did that for domestic political reasons. Of course, by the way, I would highly recommend listeners. If you have not watched the documentary, I think it's called 76 days or 74 days. It's this incredible documentary in Wuhan, the first 76 days or whatever of the virus. And they have this just incredible gut-wrenching footage of the hospitals and the fear of the Chinese people and how the Chinese government is reacting to this initially. If you want to like get away from all the politics of it and just watch what the human cost, human fear was like, I cannot recommend that documentary enough. It's a really powerful. But yeah, I think what happened was the combination of this COVID thing, whichever was blamed on China, demutated into all sorts of like, let's not call it racist, but let's call it unseemly, like broad strokes against China. And then that was mixed with the usual insecurity of liberal Democrats, which is that they struggle to land the plane on wars, on amenities, on threats. Democrats and liberals in White House always try to outhawk the hawks because they're afraid of being the Beijing Joe, right? Like that, this is what Joe Biden was worried about. So you've got a bunch of people in the Biden administration, like your buddy Peter, like Jake Sullivan, who probably five years ago were like out in Beijing, like eating peaking duck with Chinese policymakers and taking little snapshots are suddenly foaming at them out and taking us close to World War III. And it was that combination of those two factors that I think is extremely dangerous. And that's why I believe the Donald Trump is truly the only person who can land the plane. They heat himself to coffin. That's why he is like Nixon, the old adage that only Nixon could go to China in the 70s. He referred to the fact that this man had built Richard Nixon, that is, had built a career on almost a singular act of being anti-communist, rabid anti-communist. So he was the only person who could actually make a deal. Similarly, this time, no democratic candidate for president currently in consideration can do anything but make the relationship between US and China worse, whether for good reasons or bad reasons. Like the Republican alternatives to Trump, like they also, I think are insecure in this issue. It's really just Donald Trump. And he either now stabilizes the relationship himself or, you know, we've probably lose the moment for a detente between the two superpowers. Well, and you just hit on why it's not going to work because it wasn't just Nixon. He had Kissinger with him. He had the whole cabinet with him. Carter takes over and takes the baton. You couldn't have two different personalities, the Nixon and Carter and Carter pushes through with everything that Nixon was trying to do with China. And Reagan does it too. And then George H. Jones, so like, let's not forget. Shbrignia Briginski. Exactly. There's a continuous line there, whereas to your point, like you can see how uncomfortable Ruby O is with all of this. You can see, like, look, go look back. Is it at his old comments about China? Like if he is, he is the repub, although did you see the video of him going into the the great meeting hall or whatever? And he's like, look at him and see it. Oh my God. Cool. Like, yeah, Marco, it's cool. China does some really cool shit. But yeah, I just don't think there's anyone. I don't think he has the team behind him to do it. And I don't think he's going to hand the baton. I think whoever takes over will just go back to being mad at China. Okay. So that's interesting, right? That is interesting. And that is something we should double click on and think about. I think ironically, if the Republicans win in 2028, I agree with you more than the Democrats. Because I think the Democratic Party, I think is desperately in favor secretly of this detente. But they just can't come out in favor of it. And I actually think whoever becomes the president after president Trump, I think Trump's foreign policy in some ways. And I know I'm going to get a lot of hate mail for this one. But it's actually more aligned with Obama, I think it is with Joe Biden or with George W. Bush for God's sake. I mean, I think Donald Trump and George W. Bush are far apart. And so I actually think that they both seem to like invading or attacking Middle Eastern countries for the first various reasons. Right, but he massively different ways. I mean, not a single US soldier has entered. He run, right? Okay. Still, still wars on Middle Eastern country. I mean, Obama did not have wars on Middle Eastern countries. Okay. But Obama didn't really like, oh, yeah, that's fine. But that's my point. And so that's the key. That's the key. And not Neocons. Let's not use that word because that's confusing. They're ideological like China's evil because it suppresses democracy in like Hong Kong. China's evil because of Xi Jinping, whereas Obama's like whatever. Terrible, so washing machines. Stop dumping your computer. So, I think that's the key. And that's the key. And not Neocons. They're ideological. Like China's evil because it suppresses democracy in like Hong Kong. China's evil because of Xi Jinping. Whereas Obama's like whatever. Your consumer electronics on America. But I'll make a deal with you. And similarly with Trump, right? Like, look, you can do whatever you want to do domestically, but here's the things. And so what I would say to you is like, I'm not sure that that party is going to be rejected. I don't know. I don't know. I'm not saying I'm not sure in the cocky way. Like, I'm not sure Jacob, you're right. I'm saying that we got to see, we got to see where we are in 2028. And I think that ideological application to foreign policy has universally just a bad name in America. No, I ironically hear, hope you're right. Like I don't think you are. Like I think that I don't think that Trump's going to be able to carry the day here. And in part, I mean, this is a great example of where his tactics get in the way of his strategy because you also made a really important point. He was the one who launched this plane. He was the one who started the propaganda campaign against him. The racism that you talked about with China, who was beating that machine even as he was doing his phase one to try to trade like he did it. And it was all part of the deal. And maybe even the Chinese understand that. I don't think he was. I don't think he was a part of the art of the deal. I think what happened is he always intended to land the plane. That's clear to me. It is because why would you call it phase one deal? The problem was that the phase one deal gets signed officially, I think in January of 2020. And then COVID happens. And then COVID scuttles his presidency. And like a drowning man, he starts clawing and pulling others down with him. And so that's what all that COVID enmity towards China was. I mean, it was like China did this to me to scuttle my presidency, right? Like that was one of the statements he said. Wuhan flew. That was him. I just don't think that was part of the plan. Like in other words, here's what I'm saying to you, Jacob, I think and I have an extremely high conviction of this and I can't prove it. But had there not been a COVID, we would have had phase three by the end of, you know, 2020. I mean, if he had won the 2020 election, no COVID, no pandemic, let's imagine Trump wins, which was not assured, by the way. I know Republican and Maga fans probably will think I'm crazy, but I think he would have probably lost that election, even without pandemic, but sure, whatever. I think you would have had phase two, phase three and we're exactly where we are today with Trump and smiling children in 26, but we were
would have been here, you know, at the end of his second term or beginning. Well, before we leave this and get on and some of the other things, I think the point you made about the Democrats is also important because I think it depends which wing of the Democratic Party takes power. You sent me a text about AOC earlier, we could talk about her too. The left doesn't like China and Biden got seduced by this and he comes by it honestly. He was a union man from Scranton and everything else. He was thinking about the American- He was credit, yes, I would defend that view. He was consistently like anti-super free trade. Yeah. Because he could have, he could have, and I actually thought he was going to. I thought the move would have been get back in the TPP man. He had some authority at the very beginning there to try and get back into it, but he wasn't going to do it. If he was going to do it at all, he was going to renegotiate, he was going to assist on environmental standards and labor issues and things like that. The far left, the AOCs. If somebody from that wing wins the Democratic nomination and starts polling competitively with whoever the Republican competitor is, they're not going to like China for those reasons. They are going to double down on the end of China, I think, because China is going to be in assault on the American worker and distorting markets and things like that. If you get the moderate Democrat, if you get the Bill Clinton type or even the Barack Obama type, then maybe there is an opening there for that type of Democrat to say no. We have to deal with China. This Biden approach didn't work. The far left is not going to hijack this party. If we're going to win in the first place, we have to tack back to the center. I think that's the window. The Democratic Party is up for grabs right now. They're extremely disorganized. I have no clue who's going to come out in the next presidential election. I think we'll learn a lot in the midterms here. I think it depends what the future of the Democratic Party is to see if there is somebody who will take the baton. If it's President AOC, no way. I think she quadruples that. I think ultimately, you may be right. The question for me is, have we learned the lessons of mixing ideology and foreign policy and I'm not sure. I'm not sure. But ultimately, again, going back to the soccer mom watching this flash across the CNN ticker, like Chinese and American presidents talking about strategic initiatives. I think there was a great line that Xi Jinping had. What was it? Chinese rejuvenation and make America great again are compatible, something like that. Sentiment, images, rhetoric, personal relationship, all these things kind of do matter. I think we sometimes, as realists, maybe denigrated too much. So I do think it's positive. It's moving in a positive direction. I've expected it since before Trump was elected. Always thought that this was his ultimate goal. Now we got to see if it's more than soybeans, which as you say, it's not clear if it's even that, but we got to see if there's more than just semiconductors Boeing. This investment board is going to be interesting. What are they going to do? You're right, by the way. It's very interesting to me that American unions and manufacturers don't want anything to do with Chinese products. I was surprised by that. I was surprised that unions don't want more employers in America. And it was explained to me when I was in Washington, DC, when I asked why don't unions want BWD to show up and just build a factory? There was a latent concern. They would import Chinese workers. I was like, what are you talking about? What kind of like this is America? You know what I mean? Well, I was going to say those people are going to ask for more money. If you're going to work, if you're an American factory worker, I'm sure you all work very hard. I'm all about blue collar boys, everything else. Chinese workers work way harder than you. Your Chinese bosses will have much, much, much higher expectations for the amount of work that you're going to be doing. Or they're going to replace you with robot. Do you see that documentary about Chinese, I think, like car glass factory? No. I think Barack Obama actually produced, it was American factory. Yeah. American factory is a 2019 Netflix documentary. It was produced by Barack and Michelle Obama. The Chronicles of Chinese Company, Fuyenio Glass, opening a car glass factory in a former GM plant in Maureen. It highlights cultural clashes, manufacturing challenges between American workers and Chinese management. So anyways, yes. You want to see what this would look like. Watch. Interesting. The Barack Obama presented that. Maybe you're right about Democrats. That'd be so thrilled about China coming into the US. A few more thoughts to this. And then I'm going to back into Iran. Because I'm enjoying our back and forth because I haven't landed myself yet on where I'm at with this meeting. I feel good about my take, but I'm exploring. I think that Louis Gov's piece on China was very good. He's always good when it comes to China. He's of course a firmable, but he made a really good point of throwing out. Look, yes, US-China relationship getting better, whatever. You know, it's also happening. China is going from deflation to inflation. Chinese companies are now producing goods that are genuine global leaders in critical industries, like CATL as a battery maker, BYD, better than anything Tesla has. They're leaders in those industries. The Polo Bureau is no longer sending good money after bad money. They're starting to pull back on domestic self-sufficiency. They're talking about domestic consumption. That's still a long road. Redmondby rising, domestic savings at home, changes in Chinese. Just a lot there to explore. I might also just encourage folks. I thought Ryan Haas had a really good, he did an analysis of the China readout and the US readout of the first day of the meeting. And the readouts are very different, as you would expect. There is nothing that is mutually exclusive. There's nothing like, oh, the US said this and China said the exact opposite, but they are both emphasizing very, very different things. One of his conclusions was that you're not going to get a trade deal probably out of the summit. What you're going to get is both sides saying the things that they want to say, and that by itself will thicken the stability of the relationship. I thought that was a very smart take. And then I've been working my way through Dan Wang, sorry, Dan. Your book, The Engineering State, is excellent. His book is about how China is run by engineers and America is run by lawyers. This is another way that Trump is different because Trump himself is not a lawyer. He will use lawyers to his deputy. He thinks he, well, but he uses the very much bankruptcy law and everything else. But he's a real estate guy. Which is a little different. The Chinese are really engineers. It's been a very good book. And when you're thinking about the problems of translation between someone like Xi Jinping and Donald Trump and between all the guys that Xi brought to the meeting and all the guys that Trump brought to the meeting, you're talking about lawyers versus engineers. And this is why I say that China, I think, has the upper hand. They don't need NVIDIA. One of the things that we learned when Trump went after Huawei was, okay, so you hurt Huawei for a couple years. Then they came back stronger than ever and they were self-sufficient. And they were out competing in different areas. If you're going to go after the engineering state, you better focus on resources on making the US engineering state. And the Trump administration has not done that. They've done nothing close to that. So they're not going to compete on that. It's difficult for the US to engineer innovation. But it can certainly call engineering innovation. I'm talking about engineering. How about we make some highways or build some trains or things like that? Or investing tertiary education, right? Like that. Sure. The Trump administration is literally cutting the funding for critical thinking and advanced research at tertiary institutions. So I completely agree. I will say one thing that you just reminded me of when you were saying like US and China are symbiotes, but like you didn't nail what it is that China needs. What China needs from America, ironically, is the consumer. And I say ironically, because when American corporations went to China in the 90s in early 2000s, the reason they were silent on IP theft, that they were themselves being subjected to, is because of this hope and dream of the Chinese billion people, right? It's the same dream that the Brits had that everybody always has. You go to China and you're like, but there's a billion of these people. You know, I remember when I went to China and my junior analyst was like, Marco, but imagine if just like 10% of Chinese budget book for $1. Like he's that. You start doing math, bro. It's like, it's like when you have a hundred thousand, 200 followers. You're like, but what if they just gave me $10? You know? And then you find out that Chinese consumers are kind of like, you know, well, like Twitter followers or some stack followers, when you start charging, they're going to go away. And so the reality of China is that their consumption story has always been like ephemeral and incorrect. But American consumption story is not. It's 70% of GDP of the most powerful and richest country in the world, America. And guess what China doesn't have? And growth engine. So great, Jacob, they have all these engineers in B.Y.D. makes great EVs. But who's going to buy this crap? Because despite the fact that they have a billion people, America consumes more. And so the, it's almost like the tables are flipped, Jacob, like we need their IP on certain things that America's don't know how to do. I keep making fun of the fact that American companies, other than Tesla, can't even build a sedan for Fox X. Not even build one. You know, like, oh, this is hard. You know, how do you do this? This is crazy. We want to pick up. You know, so China can teach America how to do it.
how to build a car battery or a car, but they need America, because if you look at the components of Chinese GDP growth, not GDP, but what actually contributes to growth, there's still a 2026 massively dependent on US and the rest of the world for that GDP growth. And that's why I don't think they can be so cavalier. So a lot like I respect Louis Gav massively, and he would agree with me with what I just said. I mean like, you know, his point is the China's advance and it become really, really sophisticated, but they do need external markets and that's the leverage that America does have. The other thing that I think just to give Louis also a little bit more props, 'cause I do respect him immensely, we should have him on the show, he's a brilliant guy, he and his family have been in East Asia for a long time and he has a great perspective and one of the things that he said also is that what China can offer to rest of the world is disinflation. So in other words, you've got all these inflation or things going on into world, you've got this war that President Trump has stumbled into without really thinking of an exit. So you've got inflation from Promoos, you've got massive capex being done for data centers that's crowding out everything else and here is China where it's cheap goods. And it's like, yeah, if you're an American policy maker or European politician or whatever, you're trying to transition away from fossil fuels, I mean, if you're an European, you're trying to build data centers, if you're American, you're trying to fight wars in the Middle East. Are you also going to label China as an evil Maoist competitor? 'Cause if you do, you better start preparing for five to 10% inflation for the rest of the decade and maybe beyond. You better start getting ready for it. So what's the easiest one to break? And ironically, Ironically Jacob, it's to make detaunt with China. And you know why? And I go back to this point. And I know the national security hawks and probably 80% of you listening to this are gonna just be like, come on, bro. But China has not proven itself as a villain. If we were casting a Hollywood movie, we would have fired China. We would have sat down in the trailer, told him, listen, settle down, sit down, you need a Coke, get him a Coke. Get China a Coke. Listen, we know you've been great in the past. Tiananmen Square was a great movie. The whole invasion of Vietnam, really good movie. The boxer rebellion, classic, fucking classic man. The way you did that with no weapons, you know, incredible. But you're just not cutting it. So we're gonna have to go with a change. We've already called Vladimir as agent. He's on his way here from Siberia. He's gonna take your role. Like that, like, and that's just my view. Like China has, what have they done? And now here's someone's gonna shake their little fist and be like, well, look what they did to Hong Kong. Like what the fuck did they do to Hong Kong? You gave it up. Like I should have talked to the Brits in '97. Like, oh, but such on the scene, islands. Okay, fair. How many countries is China invaded over the last 25 years? Please tell me, like how many? And how many has, you know, like, it's just that the problem for politicians around the world who are hawks is that you're asking the public, the voter, even if it might make sense in the long term, 'cause China will eat our lunch, you will all have to learn Mandarin and that will suck. But you're asking your voters to give up a lot in order to, like, you know, oppose China. And that's gonna be difficult. In this particular moment, I think American policymakers and European policymakers have just embarked on too many projects at the same time. And you're gonna have to put the China one back in the box 'cause there's just no resources and no patience and no kind of no urgency. Well, I would go back to something you often are the one to bring up between us, which is pain tolerance and pain threshold. Because you're right that China needs, the US market, especially in the rest of the world market, of course, and if it doesn't have access to the US market, it needs the rest of the world market all the more so. Even more, yeah. But I think China can handle lack of access to that market better than the American consumer can handle true lack of access to what China makes. Yes, agreed. Agreed, agreed with that. And when I say, like, the scales are flipped, that wasn't true 20 years ago. It maybe wasn't even true 10 years ago. That's one of the things that Xi Jinping has done. So if you, like, what you said about prepare for inflation, yeah, I'm prepared for inflation. Like, that's already been happening and the layup here would have been to make a deal with China to import that disinflation that hasn't been happening. And I hear you on, you know, oh, yeah, like policymakers aren't gonna do that. But the bigger though, I mean, this is, goes back to the roots of German propaganda, the bigger the lie, the more it's believed. And this is where Trump's tactics really get in the way of himself because he started the lie. Go back to the 2015 campaign trail, the way he talked about this and look at the polls and how Republicans think about China before Trump was elected and after Trump was elected. Like he moved the middle there in a direction that wasn't fair. Fair, I completely agree with you. I will just say one thing, eventually lies have to be backed up by facts, right? I've got America, sorry. Sorry. - They do? - Yeah. - Why? - Well, because they become vacuists and you can already see it in the polling that negative, you have negative sentiment of China peaked and is coming down. Very softly, very gently. - I hope so. I hope you're right. I hope that's not a momentary blip. - But let me tell you why it's coming down though. Compare China to the Soviet Union and you look like an idiot child. - I know that this is where you overestimate the intelligence of the electorate. Have you seen the number of people who can't read in this country anymore? - No, I'm scared. - Or like all the green scores. - But like, and you know, this is, but no, but it's funny, but it is not even the electorate. I mean, we could go, you and I could go, throw a rock in Bethesda, Maryland and hit someone who works in the intelligence and they would tell us, but China has greater capabilities than the Soviet Union. - I'm like, well, perfect segue. Because who recently published a report that talked about how China exploited the war in Iran to maximize its advantage over the United States across military, economic, diplomatic, and other fields produced for the chairman of the Joint Chiefs of Staff has raised a alarm within the Pentagon about the geopolitical cost of the standoff uses what's known as a dime framework to assess China's response and how they have used diplomatic informational military and economic power to totally take advantage of the United States. - Pause, pause, take a please pause. - Can you reread that, but slowly, the dime's framework? - Oh, slowly. - Yes. (laughing) - Just throwing dimes here. I'm throwing dimes. - Okay, I'm producing. - I'm pulling a really Johnson. - I'll just let you know, because we don't have video. While he's reading, I will open a canister of gasoline and slowly douse myself with it. Please go on. - Some people watching you, we do put some of it on YouTube. I'll make sure that the TikTok camera's on for this one. So produced by the joint staffs and intelligence directorate, we have a directorate, I thought we weren't the communist. The report uses what's known as dime framework to assess China's response to Iran. - Damn, damn, a dime framework. - It was the diplomatic informational military and economic. So that China's just taking advantage of it. - So your framework is basically to throw spaghetti in the fucking wall and just like, oh my god. I also, before I let you really self-impa, I also do just wanna say, 'cause this is how we back into the Iran portion of the conversation. Last time you said, why isn't China doing anything? This is their moment to be the savior of the world and I really went at you and I still think you're wrong about that. But shortly thereafter, we should note that Iran's foreign minister was in Beijing and China was talking to him. - And shortly after that. - And shortly after that, 30 ships made their way through the straight of war moves to your point. And any of them were Chinese. - I know. - I know. - I know. - It's after hours. It's after hours. It's fun. The IRGC put out a statement yesterday that said, you know, ships that are from enemy countries not allowed, but we thought that these Chinese ships, or sorry, let me quote them. It was ultimately concluded that a number of Chinese ships requested by this country would pass through this area after an agreement on Iran's straight management protocols. By the way, it does not look like they paid a toll. There are reports that Chinese ships paid tolls earlier on in the country, but it doesn't look like these paid a toll. Was this China, is this the dime framework? Is this China taking advantage of the United States? Is this some kind of deal between the United States and China? - China, the quid pro quo, everything else. - So, Mac, you're on upside down. - Take it away. - We're paying a fucking toll. Okay, look, first of all, the dime framework, Jesus Christ, man. Is what people get paid for at the Pentagon. Where do we begin? I don't even know where to begin. Yes, on some level, of course, China's benefiting from this. Thanks. Thanks. Didn't need the dime-fucking framework for that. And the reason for that is that obviously, the US has proven itself that it has limits to its power, that it's not helpful to its allies necessarily. So you got Saudi Arabia and other GCC countries other than the UAE making deals, side deals with Iran, sorry, in paralleling the petri-dollar of all sorts of things. Yes, on some levels, and you get to observe, this is what the dime framework has told them, militarily China gets to zero. We all know this. I don't need some stupid acronym as a framework, which isn't even a framework, it's just literally, let's just throw everything in the open source at this issue.
But I also want to say that like China is out there actually behind the scenes to your point they just don't want to be in the front. It's just the way this. This is the Yokeich problem, right? Like they just don't want to. It's like hey Yokeich maybe you need to put your fat ass in the paint and score. I don't want to. I want to share the ball. Jesus Christ. Okay. Same with China. They just don't want to. But I do think that behind the scenes they are kind of solving this issue because if if ships destined for China carrying Kuwaiti or Iraqi crew, get to go through Hormuz like low key. This is over. Uh, ye. Well, because the American because oil is getting out. Yeah. Well, I also just just to be clear, like American blockade is not a blockade of all the straits. American blockade is a blockade of Iranian ships. Iranian. And what happens when it's Chinese ships? Well, and Chinese ships carrying Kuwaiti crew like if they have permission from Iran to cross the strait then again, all of Saudi experts are going through Yombo. The Red Sea port. So Saudi experts are fine. UAE is not fine, but they do have a port on the other side. So like if Kuwaiti and Bahraini and Qatar, LNG and Iraqi oil gets through. And what about Iranian oil? We can we can definitely live without it. So Iranian oil exports went to zero in 2012, 13 and 14. For three years, they were at zero. Yeah, but I'm just saying what what if Chinese it's a hypothetical way of Chinese ships are letting Iran in oil through on Chinese ships? What then does the US blockade actually that's supposedly according to both media reports and sources that's been happening. Not much of a blockade there from the United States. Maybe go long Chinese shipping companies. I don't know. Right? Oh, yeah. I mean, one of the things I saved in my database this week was a bunch of Chinese shipping companies and shipbuilders reported their Q1 results. My God. I mean gangbusters. I mean, it's also a very cyclical industry. So you can sort of imagine 10 years from now there's going to be a massive collapse in the price of these things. But I mean, if you look at some of the numbers about like folks that are going to China that say, please build me. Who the fuck holds holds for 10 years, my friend? Come on. Like we're oh, I'm here. I'm here. I'm holding for 10 years. I'm living forever. Why do you think I'm doing all this protein vaccine and drinking however many ounces of water am a day? But yeah, they're also the only game in town. Which goes back to my point, by the way, nobody else is building ships. The Japanese and the South Koreans could build some, but the Chinese are the ones who actually build things. So if you actually want to move something from point A to point B. But think about this crazy scenario Jacob. You know of our China relies on Malaysia and Vietnam to like re-export stuff into America. What if because of all this nonsense, China becomes where all of Middle East commodities have to go as a destination. Yes. Because otherwise, you know, you can't. Middle Kingdom. The Middle Kingdom, baby. This is the this is the Petri one. Like it's not exactly the Petro dollar, but it's been coming. Hey guys, it's a Pentagon. Was that was that good enough to go with the dime framework? But no, it's our it's our nickel. It's our proprietary nickel framework. Yes, nice. But like think about it. Like so if you're a Kuwaiti ship and you want to get out of the Hormuz, like you got to put that stuff on Chinese. Sorry, Kuwaiti oil. So you're Kuwaiti. You want to get your oil out. You don't want to put it on anything other than a Chinese shipping company because Chinese ships, America's they're not willing to start World War Three. Thank God. Thank you, President Trump. Thank you. I sincerely thank you. So they don't want to do that. And Iran is clearly afraid of China because they need their semiconductors from China. They need all like again, guys, Iran has a trade deficit with this country. That's how much crap they buy from China. Like Iran is not a modern entity if it doesn't get Chinese stuff. Period. So the only safe ships are Chinese and then suddenly China gets to import all the Urea and exported all the helium and react exported all the LG and react exported and all the crude refine it and react exported. It's like it's it's kind of like, hey, United States, that's really cute that you're going to make Venezuela the 50th first state and you're going to take their oil. We're going to make the GCC. You know, the people would like ski heels in the desert. Yeah, we got that. The people's Republic of the Gulf Cooperation Council. They're coming to it the other day. All right, fine. Now I feel like I should eat some crow because I'm here. I am making fun of the Pentagon that they're they're hard work. Like they they they workshop that acronym like there were like committees. They were like three-star generals involved. Yeah, which goes back to my point about conclusion, but we have no no, we don't because their conclusion is that China is a peer competitor and enemy and this is one of the reasons why President Trump I think is going to fail in his mission because he's own chairman of the joint chiefs is commissioning reports with dime frameworks that say that China is a threat while Trump is in China while he's in Beijing like what are you doing? Like that's a good point at the same time that they're talking about blockades and oh, we're going to get things out of the straight of hormones. What does the United States doing with the Panama Canal and threatening Chinese ships that want to go through the canal and threatening legitimate Chinese interests in South America and Latin America when I say legitimate like they're legal. They bought things. They bought interest in the United States just going around saying Don Roe doctrine. You can't do that. We're the boss here. Whatever. Like come on. Well, they can sell it too. That's not like like the thing is the thing the funny thing about this the funny thing about the situation and this goes back to what an absolute cluster fuck this conflict is is that at the same time the China is quote unquote gaining influence. It's kind of saving the Trump presidency because if those why shouldn't they the Trump presidency is wonderful for them. This is what they all this is what they learned about in Marxist college and university that somebody like this was going to come along and the United States was going to be in late stage decline and that that very person was going to tweet about how no, no, no, sleepy Joe is the decline guy. I'm the great guy. Everybody thinks I'm wonderful. I'm amazed. Well, I think it's also because they understand what you said earlier and what I also agree with which is he's the he's the only person that can land the plane and I think look, I think China is feeling pretty good about itself for sure. There is a lot of that arrogance in Chinese like social media about how China America is in late stage capitalism and all that stuff but they are still insecure too and I don't think they want to confront the US. And in fact, one thing about the Chinese Nicola Yokich like aloofness is that I'm beginning to and I hate to do this because I'm a realist and I don't care about culture and history and ideology. You know, I want to be cleansed of all that stuff. But the truth is that all the China experts, you know, they would always tell you about the middle king them and how they think differently. Like maybe they're right. Maybe these guys just don't care and they want to be left alone and they're like, look man, we're not going to go and conquer like India. Like are you kidding me? And so we have an even invaded Taiwan. Like to like that's what a Chinese would say. And in those words, like they just want to be left alone. Like yeah, we want the taunt. We want you to land the plane of this so we can just continue being innovating and being awesome and hopefully selling you stuff because our own people are over leveraged and I don't want to buy anything. Nor do they want to have babies by the way. Hey, hey, if they can have a one child policy, they can probably have a three child policy. I wouldn't I wouldn't underestimate there. But you've seen the you've seen the figures, right? Like since China, since they ended the one child policy, the birth rate collapsed at even steep rate, which is yeah, which I mean, there's a couple different things with, you know, it's expensive culture has changed. Also, I mean, the one child policy, I had actually had someone on my podcast months ago now who wrote a book about the one child policy. I mean, I knew it was bad. It was awful. I mean, it was traumatic and terrible and big brother watching you and like people also stealing Chinese babies and sending them for adoption in different parts of the world because I mean, just like like a really horrible thing. So like if you're if that's your experience, of course, you're not like you sort of had a bad case. Um, but yeah, um, okay, before we anything else before we leave this before we leave China, Iran, etc. Um, no, no. Okay, there's two more things I want to talk about briefly before we before we close out because we're at an hour after dark. I think we should go for another 10 or 15 minutes. The first and maybe you want to add some things to this. I have two things on my list that I just think are super important. The first is them as we go into the world cup and as we go into USMCA renegotiations, the US Mexico relationship is in trouble. Just in the past couple of weeks, you've got Mr. Hegseth saying that if Mexico doesn't act against the cartels, the United States will. You had President Trump sort of alluding in a strange comment about how the US is already on the ground there. You had a DEA chief saying that the recent indictment of a scene, a lower governor is just the beginning of what's coming. There was one report that said that Treasury is considering major sanctions against a major Mexican financial institution, details of which will be sort of revealed in the coming weeks. You had a bombshell report from the CNN that said that the CIA has been conducting operations on the ground against cartels in Mexico and it was and was behind the recent
assassination of a cartel leader. There was also that strange report about a month ago. You might remember two CIA guys got hit inside of Mexico. Then you had the New York Times following up with a report today that said, "Oh, the CIA wasn't on the ground. They weren't controlling lethality, but they were cooperating with the Mexican government." And then a flood of different denials from the Mexican government as well. I think this is part of USMCA, but that's an awful lot of smoke. And we talked about this in the trade value index that's coming up earlier. Cloudy is about to be really tested because Cloudy Asshanebaum's strategy with the United States has been to bend the knee. Say nice things, do what the United States wants. You say jump, I say, "How hot? You want tariffs on China? Cool. We want tariffs on China too. Everything else." And it apparently has not bought her any good will because now Trump is starting to cross that line, which is Mexican sovereignty. And she can't keep her numbers up. I don't think if she doesn't start to stand up to some of this. I also worry if you're an American in Mexico. And if American CIA guys are running around on the ground in Mexico, pretty easy for you to get mistaken is one, I'm supposed to be in Laredo in July. A little bit worried about that because if you're an uneducated guy, you might think, "Who's this guy wandering around Laredo? This doesn't seem right. This might be a CIA guy. I'm going to take him off the shelf and what if you're an American who's like in Mexico doing this thing?" And there's also the fracturing of the cartels of this thing too. So there's that. And then also just want to point out in the last sort of week or so, you've got the United States talking about Cuba again and Trump has never really stopped it. But you had major protests in Cuba over the last 24 to 48 hours, basically out of diesel, basically out of fuel, already hyperinflation, medicine shortages, things like that. And literally over the past two hours, CBS News reported that the United States is taking steps to indict Raul Castro, the former president, brother of Fidel in relation with the Downing of Plains 30 years ago. That's sort of your Maduro moment. I remember the United States created a legal fiction to go get Maduro and then they went and got him. You've had reports also that Rubio is in talks with the younger generation of the Castro family. Maybe they're going to find their delsea in the Castro family. And Raul Castro will be booked in a jail in Brooklyn next to Nicolas Maduro. So just like two near abroad things happening in the US geopolitics that have been sort of pinging my radar. Happy to talk about them or if you have things that you want to bring to the six pack before we close, happy to hear those two. I mean, I think the Trump administration just loves Tyler Sheridan. That's a career where we was quite something. Or with Tommy Norris, the legendary landman protagonist says to the cartel guy, you want the US fucking army here? That's just such a great scene when he's negotiating with the cartel guy. And it's all bullshit, by the way. He gets the governor to send the guys who are going to do some training and they accidentally kill some guys. And they're like, oh my god, accidentally killed the guys. And it's like a Taylor Sheridan also has what a lioness is or whatever. And they're going around doing whatever the heck they want in Mexico to your point about Sicaria. Yeah, so look, I mean, I think, you know, what I would say, let me take a crazy take here. And this is just for the sake of the take. So this is content related people just settled on. Okay. What if this is actually what Mexico wants? Now, we, let's, first of all, if you're Mexican right now and I have many friends who are listening to this for Mexicans, you're dousing yourself in gasoline because there's nothing Mexicans obsessed more about than sovereignty. And of course you do. You've been invaded by America like left, right, and center. We don't even call them innovations in America because it's like, it's not innovation. Why does it open door policy? Like, you know, so US troops have like occupied Mexico city and not like 500 years ago. So the point is, I get that, maybe that's why you cannot have plan Colombia and you never could. You know, remember when Mexico and America signed plan, Marida, I do like the Mexican president, I think it was Vichance, the Fox, but I could be wrong. Maybe it was called their own. I'm not sure. But like, they kept saying it's not plan Colombia. It's not plan Colombia. It's different. This is different. It's like, wait, but we're giving you money to buy like guns. Like, how is it not plan Colombia? No, it's not. We're not Colombia. We're totally different. And so why? Why? Because there is real political sensitivity in Mexico to be seen as you say. Like, this is a country that's more obsessed with its own sovereignty than I think any other country. And all countries are obviously very concerned about sovereignty. But Mexico is in particular like they really don't want the US to even be helping. And so is it not then if you do need help? Let's say Mexican law enforcement needs help, which is I don't think oh, like crazy statements to make. Isn't Donald Trump the best thing that ever happened? His crafts, his rude, he might be racist. I mean, this is what they would say. So of course, he's the one impinging on Mexican sovereignty. But like, is that a problem? I mean, Benicio del Toro was pretty bad as his carrier, right? He was. And I hear you. And my thinking has changed on this a little bit from my own research and my own sort of talking to folks on the ground there, which is I think that we underestimate the extent to which the average the median voter in Mexico would welcome US involvement here. That's kind of what I'm seeing. But I, but I think it matters what that involvement is. I think if it was, yeah, the Marines are coming to take out these cartel bros. They'd be cool. That sounds good. Another Marita initiative though, no way that was Calderon. It led to the cartel wars. It was all about enriching the United States. It didn't do anything to actually help. But they're not going to be for is the CIA landestinely fooling around and causing turf wars and civil wars between these cartels and then leaving and not picking up after themselves. Like if the US is going to come great, come, tropic thunder this thing. Like I love the smell of napalm in the morning, show the cartels what a real military force does. Don't send us to CIA geeks who are blowing up somebody so that then Cinaloa has an internal civil war amongst them because each one thinks that the other faction killed each other. That was the whole thing that led to the the fracturing of the cartel environment in the 2010. So I hear you and I think there is a path to that. This is not it. And when you start to combine it with these indictments of a Cinaloa governor who has close ties to Amlow into Marena. And oh, we're going to sanction Mexican financial institution. And all of this is happening a month before we're supposed to get serious about US MCA. Okay. Now you're not actually helping the average Mexican citizen going after cartels. You are using our weakness against us. You're messing with things that you're not going to put back together. And you're going to hold us hostage to trade even though we put the tariffs on China. We didn't go to Davos and make fun of you. We haven't been running around telling people about how they need to take the side of the window. We put signs everywhere. We were burning candles to President Trump and everything. You know? So shots fired to Canada. I feel like. But look. Well, as that's me do it. You know, yes. No, that's cool. It's cool. It's cool. It's cool. I mean, you know, shots fired. It is what it is. It was not for me though. I'm saying if you're if you're in the Mexican office. I get it. Listen, I just want to pause and see how brilliant your take is. Because like it's crazy and it's an upside down world that we live in. You don't like carefully curated and negotiated and married initiative. We're a bunch of elites go to a beautiful town. If you haven't been to Merida, Best City, Best Downing, Mexico. And it's not on the coast. Wow. Look at that. Marco has culture, but whatever. Let's move on. So you've got all these like Zanya suit wearing elites in Merida, making a really kind of liberal institutional approach to fighting drug cartels. And you're saying the Mexican population would prefer the other alternative. I think there's a couple of components here. I think it's the breakdown of institutions, particular law enforcement in Mexico that probably does that, right? Like you don't trust the person who's receiving the funding. But I think there's another aspect here. You get to continue to have the narrative that you're concerned about your sovereignty. Because it's the ugly American. It's the Trump in his callusness coming in and just doing a cowboy style, right? And it takes away the pressure of, you know, basically accepting that you do need America's help. I think that's where Trump's callusness and aggression and caricature as a bad guy comes in handy for a country like Mexico, both the elites and the people. Yeah. Fair. It's just don't send us the CIA, send us the delta force. We don't want the CIA. Think about the track record of the CIA throughout like Latin American history over the past 60 to 75 years. Do you want to take on the cartels? We are guests. Take on the cartels. We don't need the CIA running around Mexico. That wasn't, that's not what the deal was. By the way, we'll stick with our own gut. By the way, I do, like this is such an interesting relationship. We were talking about symbiotic relationships. Mexico and the US, you know, like some great television, some great movies are really produced with this. I mean, we were talking about Sheridan and of course Landman, which has this Sicario. But I think Darkos Mexico is maybe like the best that Netflix has ever produced. I mean, - Let me dig a little bit. - Dude, like, talk about man crushes.
I mean that guy, fuck. - Well, you still haven't seen Andor yet, have you? - I have, I have actually, - Are you sure? - Yes, yes, he's amazing. But like in Narcos, Mexico, he's so good. He's so good. And that, that show was so well done. It shows the regional disparities in regional differences in Mexico. It shows it as a very complicated country that isn't actually unified. It has very, it's like America. In many ways, it's like America, very different parts of Mexico. That's why these cartels hate each other in many ways because they're all cheering for a different soccer team and effectively. But yeah, I just think that maybe this is one of those situations where Trump kind of being a dick would be a solution. - Yeah, I just don't like the other indicators, especially with USMCA, 'cause as you know, like one of my calls was USMCA goes through with flying colors. - Same. - But, yeah, same. So you don't think that, so you don't think that in a way, the chances of clandestine or not, like maybe overt interventions in Mexico would then force the Trump administration to at least give some carrots to Mexico, because like look, like they must know. I know they're, you know, hard-ass national security people out there, but like you must accept the liberal economic arguments that if Mexico real economy is doing well, people will not go and work for drug cartels. Like that, that must be part of your solution if you're in the Trump administration. If you're listening to your Trump administration, like here you go. TDS liberal Jacob Shapiro is out there asking you to send Benicio del Toro's to kill cartels. Crazy. But like, fine, you know, slow clap for you guys, but like you must then compliment it with USMCA going through. No? Am I wrong? - One would hope, one would hope that it's not followed up by sanctions against BBVA or something like that, because that's like what they're talking about apparently, which seems absolutely nuts to me. I get that you want to like follow the money and cut the cartel money off, but think about all the others that you're cutting off. And yeah, just. - Watch when these sanctions, a Canadian bank that's active in Mexico. Instead, we don't, we don't have to go into which one, but like, yeah, that would be crazy. That would be unfortunate. - And yeah, Cuba's Cuba. So anything else before we say goodnight and sweet dreams to the listeners, cousin? - Oh, we didn't talk about Cuba. Okay, fine. We don't have to talk about Cuba. - No, I talked about it. It's happening. Like it's happening slow motion. Like it'll, like, I don't know if it's a month or three months, but like it's happening. Like it's really happening before. - I do want to end on something. - Please. - I sent you a clip of AOC on some podcast. - When you have these systems, when you have corporations, when you have an economic elite, they have not, there's a certain level of wealth and accumulation that is unearned, right? You can't earn a billion dollars. - That's right. - You just can't earn that. - That's exactly correct. - You can, you can get market power, you can break rules, you can do all sorts of things. You can abuse labor laws. You can pay people less than what they're worth. But you can't earn that, right? - That's right. - And so you have to create a myth that since you didn't earn that, you have to create a myth of earning it. And so if you're making minimum wage at a Walmart, and you're making seven bucks an hour, and I mean, Dan, with these cast prices, it takes you seven bucks to get to work. - That's right. - And so as a result, we've kind of internalized this moralized system, right? The people at the top are smarter, better, more sophisticated, and therefore the people at the bottom are uneducated, lazy, et cetera. And so if you are there, and if you have internalized that code, you need somebody under you because you feel like you are kind of good. And the truth is, most like you are, right? But if you've internalized that, you need someone, you need someone to point to that's broken rules. That's lazy, that's whatever. 'Cause in a way, it's like someone else has got to be locked up so that you're not. - Yeah, potentially watch your next president. So it was interesting because she really went after successful people, right? Saying that if you made over-- - Billionaires and pretenders. - If you made over a billion dollars, just no way you earned that. And I know what she means. I know what she means. There's just certainly a level of accruement of interest and capital gains and all sorts of stuff. Sure. And there's other things, when you get to that scale, you start exploiting people just because you've got scale, you know, sure, fine. But it was like an element of this like, real ideological attack against success. And I think it goes back to my point about globalization. You know, all these former pro globalization, like academics and policymakers who are now all of usiferous, card-carrying protectionists. Now you've got all these Democrats who are perfectly fine with capitalism and just taxing successful people are now demonizing. It's like America is incapable of having a technocratic approach to problems. So globalization didn't fail, you fucking failed. You know, you failed. You didn't ask your trade partners to have fair trade. That's not globalization's fault, that's your fault. And capitalism didn't fail, you failed. 'Cause you did not redistribute wealth. Like in incompetent, productive ways, right? - Or create a safety net and a retraining program for all the workers who lost their jobs and give them a way to find meaning and work in the future. - Yeah. - Or whatever, like maybe not, maybe, I don't know. There's all sorts of ways. And so the reason I mentioned this is because it's a really good video to watch. It's only 30 seconds, everybody should, it's a YouTube short, which tells you what I do at night before I go to bed. We're splicing it in the delirium. - Oh, it's splicing, okay. Yeah, so like I think it's interesting. It's just interesting because, you know, like five, six years ago, AOC was talking about, I'm going to tax people at this rate. Now, you might disagree with that, dear listeners, but at least it's a technocratic, it's a mathematical equation. She's not attacking five, six years ago. I remember I wrote this one report at BCR Research in 2019. AOC is going to get what she wants. That was the title. And I meant like we will see federal income tax rate go back to 1950s and 1960s levels, which was for the highest level at 90%. Like we do think we will get to that. But it's interesting because that's a mathematical point. We can debate where that tax rate should be. We can throw equations. But she wasn't denigrating somebody who made money. There's still an element of respect, in fact. Like, hey, thank you for making money. I want to tax you at a higher level because, you know, your contribution to society has to be kind of spread out. Again, we may disagree with that, but it's a mathematical proposition. It's a technocratic debate. What you just heard in the video you spliced is an ideological and it's a normative. Like you are effectively, like you don't deserve what you did. You did something wrong by being successful. And I think that's sharpening of the ideological talents, which is very interesting. - I hesitate to talk about her too much 'cause I don't want to trumpify her. Like one of the reasons Trump is president is because people wouldn't stop talking about him and it just kind of created this self-affilling prophecy. And the same thing is happening with AOC on the right. It's funny. It's like they don't realize that by talking about her all the time they're actually creating her street cred. I do though, I think she is worth talking about because aside from the clip that you shared, and I'll say something about in a second, you can tell she's testing out a run for the presidency or at least to replace Schumer. God, please replace Schumer. What a vegetable. Because she's starting to tack to the middle a little bit and she's starting, like she was at the Munich Security Conference earlier this year. She didn't interview with David Axel-Rod where she was asked about is she gonna run for president and she had this very clever answer that was like, presidents come and go, but single-payer healthcare is forever, which is not a no, right? But it's her like sort of playing to the populist crowd. So she's very obviously, she's good. She's very good and she's gotten a lot better. - Yeah. - I will say though, I thought this clip that you shared with me was an own goal and a mistake. And it's similar to the way she fumbled over Taiwan when she was asked about Taiwan because of course you can earn a billion dollars. Go try it AOC rather than the sour grapes about the people who have done it. Now you have a point in the sense that America has become a bit of an oligopoly and that that has increased under Trump and that there are people who are earning money cough, howard, lotnic, cough, eric, Trump, who they are not earning it or they're earning it because of their sick of fancy and because of their ties to the center by the way, Hunter Biden is an example of this too, less do you think that I only have
Trump derangement center. I have corruption derangement center. But you know, you absolutely can earn a billion dollars. LeBron James has earned every single cent probably hasn't even been paid what he's been. He's earned in the economic activity that he's doing. Thank you. Well, to close it off, man. Yeah. I was trying to find to my wife who's like a huge fan of AOC, you know, like, I mean, obviously you should just get married to me. So, you know, like, it's easy to be a fucking fan of 90 percent. Dexter's butt. I digress. I digress. I was like, trying to find and she kept like swatting all of my suggestions of who has earned it. LeBron James. LeBron James. LeBron James has not. The king. He hasn't. He hasn't been paid market value for what he is because of the salary cap because the owners, and this is where AOC has a point. The owners have not quote, unquote, earned what they are making because they're making it off of capped NBA players who can't make their full potential because it's a weird system. Okay. But going back to the point. So, like, there is a point in there. But by doing that, she's totally shooting herself in the foot. And I brought in LeBron. I would also just say, like, I immediately thought of that very famous, her final parliamentary session where Margaret Thatcher is asked something about this. And she says the guy who asked for the question, he would rather have the poor, poorer provided that the rich were less rich. Margaret Thatcher has lots of problems. But that's the response to AOC. You would rather the poor be poor and just have the rich a little bit less rich. What are you talking about? You are better when you are out there tackling corruption. Not when you're out there saying, oh my God, he earned a billion dollars. There's no possible way you can earn a billion dollars. Yeah. He didn't he didn't. No, I it was it was it was surprising, as you said. And I wonder if this is the product of a massive error enjudgment that the Democrats are about to make. Midterms don't have a high turnout. It does depend on the enthusiasm of like the the zealots. We could have a significant victory for some of the more left leaning more, you know, progressive as we call it in the US. Democrats. And I wonder if there that clip is in indication of an absolute own goal that will give us president little Marco in 2028. Maybe look, AOC is very young. She's very charismatic. And she's gotten a lot better, but she's very young. And I think she's testing things here like this clip will not kill her in the long run. I think she's testing our tri-bloons and I think she was asked to question. She got a little too comfortable and she got back into what she actually thinks versus how she's starting to position herself. So I don't think it kills her. But I would also just say one other thing that it reminded me of was it reminded me of Trump at the debates. I remember when I finally started taking Donald Trump seriously in the first go round. It was when they had that big debate and everybody was on stage. And somebody, I forget the exact question, but it was something like you've donated to Democratic causes. You've like supported Democratic issues. Why should any Republican trust you? And he basically pointed to everybody on stage and said, you see all these guys? I've given them money too. I know how the system works. It's all completely corrupt. I'm going to drain this one. Like you come to me because you want to drain this one. It was the exact same thing because he's done the same shit too. He's part of the system as well. But he was he was willing to say, Hey, like I am I'm the bigger con. And you bring me in because I don't care about all this shit. I'm the one who's going to fix it. And in a way, it's the same thing that AOC said to Axel Roberts. I don't owe presidents come and go, whatever, these guys are all charlatan. This is what I want to do. I want single payer this for Trump. It was different. He has different motives and different ideologies and he's much more narcissistic. I think AOC is but like I always say like you go farther far enough in either direction. Ideology is a spectrum. It's a circle. And you will find I think on that circle, mom Donnie and AOC much, much closer to Trump than to our boy Senator Tillis from North Carolina. Like it is the moderates who are the ones who are far away from these people who are out in the fringes saying crazy things either enriching their cronies or to AOC's point telling people that billionaires didn't earn their money. Like both of these are crazy out their populists. And I don't like. Stop taking pot shots at the king. Which which king? Not you. Not you. Like to say OC stop taking shots at LeBroad James, you know. Yeah, exactly. I mean he may have you know had help from modern science. But other than that, he earned every single dollar. He hasn't been paid what he's earned. And he could earn way more. Which is her point, by the way. Like let the people who actually have talent earn what they can in a more system. Like that is the part that if she can get that across. Yeah, yeah, it is very generous. I'm taking what she's saying and I'm workshopping it for her. I'm like if you really want to capture the attention of the moderates. If you don't want to be crazy AOC on the left with all the bullshit that you've been talking about and making Ben Shapiro light himself with gasoline all the time. Here's the move. Don't do this ideological nonsense. Don't make fun of billionaires. Talk about how the system is corrupt. And you want to be the person that helped break the system. Donald Trump said he was going to drain the swamp. He made the swamp bigger. I'm going to drain the swamp so that somebody can really earn a billion dollars. Like that's the take. Not that nobody's ever earned a billion dollars. You're welcome, AOC. That was definitely not what she said, but I appreciate you trying to help out. Help out potentially the next candidate of the Democratic Party. Well, I'm worried that it's going to be I'm I didn't really take her seriously until the last couple of weeks. I mean, she's the the trial balloons are like the Democrats. No, I always took her seriously, you know, because as you said, she's extremely charismatic and she's real. And I think what we see over and over again is that humans are attracted to, you know, charismatic and authentic people. Like they may be insane. They may be, you know, corrupt. They may be this or that. But I think that authenticity is what sells Trump is authentic. And I mean, he is who he is. Even if you think he's a liar or whatever, he is authentic in who he is. And so is AOC. So, you know, you know, what's not authentic? What? Every single candidate in the California, a gubernatorial, a gubernatorial race. But we don't have time for that because it is time to shut down after hours. And we can talk about who's going to be the leader of like what the eighth? No, wait, eight largest economy on the planet or something. Maybe even higher. It's up there. Top 10 economy in the in the world is going to have the former labor secretary of the Biden administration. Did nobody remembers? And if they do, they think, oh, dude, it's the fourth largest economy in the world recently overt, recently overtook Japan. She is bigger than Japan. Christ. Well, uh, okay, fine. We said it. We were going to finish. But just one thing right now, the race is just insane. It's an insane race. It's an open primary. So top two candidates go to the final general election. It could be two Republicans, by the way. So we could actually have a Republican running California. Currently, the Democratic front runner is, um, Bacara. Bacara. I'm not sure how you say it. He was the labor secretary. He was a labor secretary, right? Uh, human services and labor under Biden. And this is from political.com. In the last several weeks, as former representative Eric Swalwell's flame out, catapulted Bacara to the front of a crowded June primary. Biden White House alumni have been marveling at his stroke of luck. And the growing possibility that a cabinet official who was widely derided and deemed to have been in over his head could soon be the governor of the country's largest state and I did to realize the fourth largest economy in the world. Maybe I should just throw my hat in the ring just belatedly just show up and be like, I have a podcast. Uh, me and my cousin Jacob, we're going to clean this fucking mess. Let's go. Why not? Why not? Bill Simmons thing was always that he hoped that somebody would have him run a NBA basketball team. Like, I mean, I think you and I would rather run some small island in the Caribbean or something. Oh, yeah, no, I'm good. State one. I'm good. I'm good. I'm good. We'll start with a dime framework on California's problems and we'll move from here. All right, cousin. All right, cheers. [Music]
Podcast Summary
Key Points:
The podcast discusses the recent Trump-Xi summit in Beijing, with a focus on its symbolic value and potential to manage U.S.-China rivalry, though long-term structural competition remains.
It highlights the divide between the U.S. military-intelligence complex and software industry, which push for China as an enemy, and a new hardware complex (e.g., NVIDIA, Tesla) that seeks to sell to China.
The analysis critiques past U.S. globalization failures, such as poor redistribution of gains and inadequate IP protection, while arguing Trump’s assertive approach may be more effective than earlier presidents’ appeasement.
Other topics briefly covered include the Iran War, Saudi-Iran tensions, Russia’s drone strikes on Ukraine, protests in Cuba, and U.S. domestic politics.
Summary:
-China tensions, though not a fundamental shift in their strategic rivalry. S. military-intelligence complex and Silicon Valley software firms benefit from framing China as a permanent adversary, but a new hardware complex—led by companies like NVIDIA and Tesla—seeks access to Chinese markets.
S. policy. S.
globalization efforts under Clinton and Bush for failing to redistribute gains or protect intellectual property, while praising Trump’s willingness to use assertive tactics in negotiations. S. leverage, but they question whether Trump’s approach can overcome entrenched interests.
Other topics include the Iran War, Saudi non-aggression pacts, Russia’s heavy drone strikes on Ukraine, and protests in Cuba. -China relations may improve, long-term competition remains locked in due to powerful domestic and international forces.
FAQs
The episode covered US-China relations, Trump's meeting with Xi Jinping, the Iran War, Mexico, Cuba, US domestic politics, and AOC.
The host saw it as a positive sentiment boost and a beginning of talks, with deals like soybean purchases and Boeing planes, but noted it doesn't solve the long-term US-China rivalry.
The host believes the electorate, Trump's cabinet, and the military-industrial complex are not behind him, and China won't offer meaningful concessions that outlast his administration.
It refers to the network of private consulting firms and defense interests in the US that benefit from keeping China as an enemy, opposing improved relations.
After Edward Snowden's revelations in 2012, they stopped selling software to China, became anti-China, and aligned with the national security complex to gain government favor.
Hardware companies like NVIDIA and Tesla want to sell chips and products to China, creating a divide with the anti-China software bros and the military-industrial complex.
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