The New Rules

[MUSIC] Hello listeners, welcome to another episode of Geo Political Cousins. Before we get into this episode, we're going to do another episode this week. It's going to be a mailbag episode. Some of you have sent in questions for me in Marco. You have another roughly 24 hours after this episode goes out to send us in messages that could go to this first mailbag. If we don't get to you, don't worry. We're going to start doing this as a recurring theme. Change your questions to [email protected]. I will make sure that both Marco and I see them before our mailbag episode later this week. Otherwise, take care of the people that you love, cheers, and I will see you out there. [MUSIC] All right, listeners, guess who has two thumbs and is not mentioned in the Jeffrey Epstein files? Cousins, cousins, we're not there. We're good. Us and Dick Cheney, not in the Epstein files. How's it going, cousin? Wow. That's a random reference to throw in there, like Dick Cheney. He was too busy like invading countries. Exactly. What's your excuse? Oh, I know. We're just not successful enough, apparently, because everyone who was successful, this was apparently the thing to do. I can't remember who did this on XY. I apologize, but somebody posted a picture of Dick Cheney and said, so he really just did it all for love of the game. There was really no other incentive besides that. That's right. Is he like Bill Belichick of geopolitics? They kind of looked the same. They're grumpy. They were singularly focused on, I guess, executing. Oh, no. No, but Dick Cheney never had that kind of post-success career. He was just always all-scal. Yeah. I mean, what would the equivalent be of winning the geopolitical super balls? Certainly not anything that Dick Cheney approved. Anyway, we have a ton to check in on, cousin. We've got a six-pack of content. We'll see how much we get through. I did, though, just want to start off. This wasn't on our list immediately, but you probably saw a president Trump is trumpeting a new trade deal with India as of this moment. It's Monday, February 2nd, around noon central. We're posting this probably tomorrow. Tariffs on India are going to go down to 18%. Tariffs from the United States on India going down 25% to 18%. India is lowering its tariffs against the United States to zero. And President Trump says they're committing to buying $500 billion worth of US energy, technology, agriculture, etc. And also that they're not going to buy oil from Russia anymore instead sourcing it from Venezuela. India is one of the only countries that can actually refine that Venezuelan crude. So it's not a nothing there. I actually thought it was an interesting signal in terms of the Russia Crain War. As for the trade deal, it really smacks of the EU announced a real free trade deal with India last week. And President Trump doesn't want to be out showing. So he wants to claim that this deal is there. It's really not as big a deal as the EU deal. Anything you want to say about EU, excuse me, about the US, India trade deal or the shenanigans Marco before we dive in? No, but it was the big one, right? It's not a free trade deal as you point out that's true. But when you think about all the trade deals that have been concluded, there are really two outstanding ones. One was India. There were some rank or over South Korea, of course, which is a small country, but a huge trade partner with the US. And then finally we're still waiting for a final or a more sort of long-lasting China US trade detente. We have a truce right now, but that's the US administration cannot focus on that one. So this was a big deal at least from their sort of April 2nd liberation day slew of trade deals. This was the big left over. Yeah, maybe from a PR perspective, but in terms of long-term relations with India, I mean, really doesn't mean anything. Ironically, and I think India knows this. If you want to increase manufacturing competitiveness within your own country, compete with the rest of the world, don't raise up a bunch of protectionist tariffs and then allocate lots of money in your government budget to make sure that these Indian firms can spend on infrastructure and cat-bex and lead manufacturing-led growth. So I mean, there's a lot of irony in there. And I think the EU India trade deal long term is a much bigger deal than what President Trump is floating here. I did think that if you're trying to put pressure on Russia and Vladimir Putin taking India off the table in terms of oil imports from Russia, like that's not a small thing. So if India follows through on that, if you're now sending that Venezuelan crude to India, you are isolating Vladimir Putin just a little bit more. I thought that was worth talking about. Yeah, that's a good point. I like that angle. All right, let's dive into our six pack. We are going to start with Iran, which, if you listened to the last cousin's podcast, you know how excited I am to discuss this topic. Going into the weekend, Kazan, I didn't even tell you this, I had an Iran security expert on my podcast on Friday. And he scared the shit out of me. He made me feel like war was not only inevitable, but imminent. And one of his, you should go check out the episode, the analyst is Hamid Reza. He's got a great sub-stack. But his point was, basically, look, if they're willing to kill however many thousands of protesters they've killed to restore order to the streets, what do you think they're willing to do if they get into a fight with the United States? Do you really think they're just going to tuck tail and run? Like they're going to go at it. They're going to go after Hormuz and everything else. And they've been sitting on their capacities because they know they did bad in 2025 against Israel. The gloves would be off this time. And I was like, oh my god. The weekend has brought us, I think, some off-ramps and also some anomalies. So the off-ramps is that Iran and the U.S. are supposed to hold nuclear talks on this coming Friday. U.S. Special Envoy Steve Whitkopf is going to go meet the Iranian foreign minister in Istanbul. Apparently, among the attendees of the conference are Qatar, Saudi Arabia, the UAE, and Egypt. So you can imagine that all those countries were probably calling the White House being like WTF. Please don't do this with Iran. We don't really want this right now. Iran said that it was open to negotiations, but it sounds like that the demands that the Trump administration wants is it wants zero enrichment of uranium. It wants limits on Tehran's ballistic missile program, and it wants it to end its support for regional proxies. An Iranian foreign minister, foreign ministry spokesperson said that, okay, we can talk about all of this, but time is of the essence as Iran wants the lifting of unjust sanctions sooner. So that tells you something about what they're thinking about in terms of the Iranian economy. It also sounds like Iran is ready to play ball in the enrichment. They're willing to offer even 400 kilograms of highly enriched uranium over. It's the ballistic missile program that is really the tripping point and has been the tripping point since the JCPOA. As soon as the JCPOA was agreed to, Iran started testing missiles, and this really is the original sin of the relationship in general. So at least we see some off-ramp that is there. The flip side of this is that over the weekend, there was also a pretty significant uptick in violence across Balochistan, which is a southwestern province of Pakistan. It's sandwiched between Iran and Afghanistan, not a great place geopolitically if you want to be sandwiched between two different things. Pakistani security forces say 145 militants were killed in a 40-hour battle. There was a series of coordinated gun and bombing attacks across the province, at least 50 or dead thus far. Pakistan, blaming India at the US, criticized the attacks and condemned them. And this fits in because this borders Iran, I don't exactly know how this puzzle piece fits in there, but when you've got this US Armada off the Persian Gulf, you've got all of these threats. And then suddenly you've got Balochistan popping off feels like too much to be a coincidence. Where do you want to start with this cousin? That was a very thorough rundown. One thing you missed is that there was a news item that there would have life-fire exercises, naval exercises in the Persian Gulf. And then Iran came out, I think, on Sunday. So we're recording this on February 2nd, Monday, but 24 hours ago they basically said, nope, that was a lie. We're not going to have that. That seems like a step down. It seems like there was going to be a life-fire exercise right in the Strait of Hormuz where a ton of oil transits through and then they decided not to. So where do we start? I mean, our listeners are here to kind of be educated about what's going on in the world. We're not here to solve any problems or offer any juicy trades. So I'm just wondering if we should just step back here and you know, where is this all going? Iran and the US have been enemies since 1979. We had a comrade Bokari, our former Stratford colleague on this spot a couple episodes ago and I would definitely encourage everyone to listen to that. I think that Iran's current regime is at the end. You know, and it's at the end because it doesn't have a viable economic growth prospects. It's allies are either extremely weak or ambivalent towards its future and always have been. Russia in particular has been quite ambivalent and quite a poor ally. It dangled the advanced surface to air missiles over Iran for decades. This is something that very few people understand. Russia and Iran are not natural allies. They're actually competitors for Central Asia. And so when it came to arming Iran, Russia actually dangled those air defense systems for a decade, like not delivering them. Finally, they delivered them and apparently they didn't work at all last year in 2025 when Israel and the US attacked them. And then finally China, which has been an ally of Iran, has also deepened its relationship with Saudi Arabia, which is wealthier, has more oil. And it's quite frankly today a greater military power than Iran, which I know a lot of people are not going to agree with because Iran has 90 million people. Saudi Arabia has 23 to 37 depending on like 35 depending on how you count the expats, but the truth is Saudi Arabia just has far more advanced weapons systems and they've been learning how to use them in the war in Yemen. So China is sitting there basically trying to keep these countries from you know, from descending into war. So who can Iran reliably turn to as an ally? Nobody. It's got no economic growth prospects. It's got no allies. And unlike North Korea, because one could say well they can choose the North Korea model. They can just become you know a feudal authoritarian state that just want only murders its citizens. The problem is we've seen over the last you know several months is that that's that's difficult to do in a place as highly educated sophisticated with people who know there's a huge expect community across the world. This is just you're not going to keep Iranians off the internet and often use flow and completely compliant. So I think that this is the end and I think that Donald Trump is definitely concerned about the impact that regime changing around would have on oil prices and the retaliation which we can outline. But I think that he also smells blood into water. You know and I think that that's where the risk is right now I think that the United States of America feels that well Trump maybe himself maybe the establishment maybe everybody maybe the military but it does seem like this is the moment to exert maximum pressure on Iran. And so I do think this is a little bit different than it has been in the past and to give Trump credit I mean yeah it does feel like this is the moments to do it. Yeah I'm I agree with you I think on the I disagree with some of the details but I think you and I are both circling towards the same end point the end point is Iran is not going to become an isolated pariah state and it's going to have to engage with the United States and the United States is going to have to by the way put aside its ideological blinders on Iran and in the same way that Nixon was able to do this with China. President Trump is in a unique position on the US political spectrum to do this with Iran because nobody has been harsher on Iran than President Trump. He's been out there in the same way that nobody was tougher on communism than Nixon. So he had the credentials to go and say okay like let's make up with the Chinese I want to make up with the Chinese nobody can go after my anti-communist credentials like I'm good sort of the same thing here for President Trump in Iran. Where I push back against you and where I am not at all convinced I'm even on a comrades arguments I don't think this regime is done in the slightest and I think the off ramp that we're watching is actually an admission of that you might remember. You know when the protests first started almost a month ago now at the beginning of January President Trump first tweeted you are not alone. Help us coming help didn't come the protesters were crushed we don't know what the exact numbers are but thousands tens of thousands dead at the hands of the Iranian security forces. Those security forces appear to be well and scumbed and in charge now maybe after the supreme leader dies things change but I've been hearing that mode of analysis for literally 15 years when the supreme leaders okay like he will die eventually we can cross that bridge when we get to it but the supreme leader still live he still call in the shots he's calling out great Satan little Satan the Friday prayers like he's still cooking he's not going to Moscow like some people reporting like he still seems to be controlling things from that point of view so I'm not convinced that the regime. His on his last legs but I am convinced that the economic pressure is extreme and that President Trump is likely open to a deal on that Iran is open to a deal I also think this off ramp though is an admission from president Trump that he doesn't have the same kind of power and leverage over Iran that he didn't in Venezuela and then his way like clear hindsight he had del see he knew what he was doing he was substituting one for the other that was going to be friendly to him if he could have done that with Iran I think he would have done it already I don't think he can so I think he's saying you know what I need to deal with this regime let's start the max let's start my art of the deal negotiating process I'll deploy the aircraft area I'll make some absurd demands and let's see what the Iranians do and the Iranians are coming to the table they're saying okay like we'll talk to you on some of these things by the way please move the flow to the U.K. please move the flotilla away like we're not cool with the flotilla that's one of the Teran's apparently requests like okay we're like open to enrichment we're open to talking about this but you need to start moving some of these military assets away from Iran so it'll be interesting to see if that happens but I think it's an admission from the United States that you know what we can't pull off regime change we can't even get rid of the supreme leader and trust that we're going to install somebody who's going to let us work with them but yeah I think on the broad picture you and I are in agreement does that make sense. Yeah I think look I think obviously President Trump has not attacked Iran you know I mean this has been going on since December you're you're absolutely right that this is a completely different story from Venezuela but let's be very focused on what is different aside from you know what we're inferring from the very clean attacking caracas and the fact that suddenly you know the vice president to Maduro is making deals with the U.S. and U.S. all companies there is another huge difference. Let's say that the attacking caracas went terribly wrong there's now American Delta forces held hostage in caracas Maduro is still in Venezuela there is literally nothing but it's all it can do to either the United States America or global economy and so I think the real constraint is not necessarily what you see which is that the regime is stronger although I think you're right. It's more that the pain here is obviously the regime can you know go to the nuclear option and start deploying various assets to cause all prices to double or triple and and and here's here's why I still think though that the regime is at the last legs because we are at that point where that is all they have. You know in truth in truth very like Iran was interesting see let me back up North Korea has only one option and it's the nuclear option like North Korea doesn't really have a way to ratchet up its pressure on the west from zero to 10. I mean can I guess launch some ballistic missiles but North Korea really has nine and 10. Nine is using conventional artillery strikes against Seoul which would estimate about a quarter of the city without using nuclear weapons. That's one thing they can do they can use 1950s technology just large large caliber artillery and because Seoul is in the north of South Korea you can actually hit it with you know basic artillery. The second the 10 out of 10 is nuclear weapons because North Korea has them. The problem for North Korea is that if you were ever to do either nine out of 10 or 10 out of 10 on a scale of retaliation it would be turned into a parking lot. Not by nuclear weapons you know it would be F-16s out of South Korea just turning all the whole country into a parking lot. So that's that's why there's a stasis. Now Iran used to have a five out of 10 a six out of 10 a seven out of 10 on its kind of scale of retaliation you could use Hezbollah. It could use Hamas it can use various other proxies around the region who these in Yemen which are still actively there so maybe they still have like an eight. The problem is that what's left really is especially because we now found out their their own ballistic missiles and cruise missiles are just incapable of hitting anything like I think last year some poor bedowing guy hit by shrapnel and died. So because of that they are kind of becoming like North Korea in that sense not in the sense that they can repress their people and turn into a third tier and state is just that there's nothing left anymore to show to Israel or America or the rest of the west like hey guys like you need to take a seriously we can we can do a little bit of here with has a little bit of here maybe with some ballistic missile. A test or strikes it's come down to this like look if you come here we're just going to cause all price and the problem with that Jacob is that that's a one and done once you do that. Now the US has the domestic political agreement and international agreement to turn you to parking lot and that's why I think that. If you don't like pulling that card is so difficult for Iran if they do that it's game over. I think you're well yeah I think you're right in terms of form I think they have two other dials though that they can turn up the first we mentioned a bunch of the proxies but the one and it's ironic that we started with a dick chaining joke this was not intentional but they do control the proxies in Iraq and they have significant control to turn up the volume there and Iraq is a major oil producer. So if if they still have that lever you can pull that lever in Iraq and maybe you can monkey around with plausible deniability in terms of what. Yeah that's a good one without having to touch the Persian Gulf second is and I don't know how much of this is IRGC propaganda or Iran trying to front this it's very hard to get a good sense of what this is about but you're right in terms of the Israel Iran war last year Iran got spanked it was completely embarrassed but two things first of all you were the one who pointed out that Israel needs to be re up to buy the United States in that fight one of the reasons that ended when it ended was because the United States basically cut them off and said we're not giving you anymore missiles okay like do what you're going to do and let's put this thing to bet so unless the United States is helping Israel you know there's a limit to how long Israel could stay in that fight. And towards the end you're right that they did fire off some rockets they hit the poor better winds but that's in part because the Iranians were holding back some of their best stuff. And towards the end of the 12 days you saw them unveil some of their more sophisticated missiles and you saw them start hitting things with greater specificity whether it was I think it was an air base that they were able to hit in the negative they were starting to show that hey we have some intelligence on where some things are important to Israel we're going to hit those with these missiles we've got this. And to your point was sort of a hold me back fight Iran did not want to escalate at that point because they were getting spanked but they were also showing these rallies like look we can do things that we haven't done quite yet if you don't listen to President Trump and don't hold off a little bit and I think there is a faction within the IRGC that is embarrassed by 2025 and the war with Israel and feels a need to restore some deterrence and wouldn't mind another round of conflict here because that requires then President Trump to write the Israelis a blank check. And as we've seen from your Tucker Carlson's and some of the factions in the mega base like they're not exactly happy with just yeah let's bomb Iran forever and help the Israelis and spend all this money while we're doing so while oil prices increase. So I think they have some five six on the dial maybe it's hard to I think Iraq I think the Iraq one is is is a brilliant point you know and and that's why also I think that this time is a little bit different because President Trump has find has started using Iraq as a lever. He's threatened to intervene to pull support from Iraq if the Shia militias continue to dominate the government if Maliki I can't believe he's still relevant but there he is still cooking. He's still cooking if he were to become the prime minister you know so Trump is and this is important because I think a lot of our listeners are not aware but there was almost a civil war in Iraq in 2022 we talked about this of the part before but for those of you who have joined us. It's late Iraq is the jewel of the Middle East it's not has Bola and Hamas you know those are terrorist organizations Iraq is a state it produces you know 46 million barrels a day depending on the day. It's a serious place yes it's dysfunctional yes courage in the north you know soon he's in the south she is in the middle but for the most part it is in Iran's fear of influence and one of the reasons we've had. Stability in the Middle East even though like it's kind of funny to say that after everything that's happened last year. The truth is you can still go to Dubai and have a great time you can still go visit Riyadh. There's parts of the Middle East that have been completely untouched by conflict and the reason for that is that Saudi Arabia and Iran agreed to disagree on Iraq. And Saudi Arabia pulled its support for various you know kind of nationalist cheers Iran now controls this and so I do think it's very sensitive also that President Trump is now pushing back against that that worries me a little bit and you know why it worries me because. When Iran looks around last year they lost Hamas and Hezbollah they lost Assad in Syria and now and now President Trump is poking them at Iraq at some point at some point. The deal they have with Saudi Arabia which has been the anchor of stability and then most analysts in the west just don't take seriously by the way if you're listening to this part case you've probably never heard that Iran and Saudi Arabia have a detente. Like that is now at risk because at some point like if you're Iran you're just going to be like hey Saudis what's going on here and you know like they're objectively going to say it's not our fault we're not the ones doing this but it doesn't matter like the detente is not useful. If it's outcomes are not being guaranteed and so yes I do think that there's a lot of dials it's not exactly North Korea level. But one thing I would say is that if we can very quickly get to a point in in this situation where we get from six to 10 very quickly and at that point is just the US will use. Overwhelming military advantage to turn Iran into a parking lot and that's where I think the regime will die it will be volatility of three months and then it'll be over and one thing I want to say the flotilla itself is kind of like neither here nor there the United States America doesn't need a flotilla to threaten Iran. Right I mean it has the fifth fleet in Bahrain and it has more than enough air assets in Qatar and the rest of the region turkey yes turkey has said you can't use your for your bases there but you can reposition them you can find. To attack your own yeah I agree with you that the risk is there but I also just want to point out like this was not president Trump poking Iran the only reason we're talking about this is because a month ago there were economic protests inside Iran and those protests got big enough that president Trump fired off a probably a not particularly well thought through tweet and created the sort of the expectation one of the reasons I am so heartened is the wrong word but one of the reasons I am much less worried now about conflict is because if you read the article. Is if you read the articles from yesterday today about negotiations it's just the same old shit it's going back to the stuff that the U.S. and Iran have been negotiating about for literally decades the thing that was different was when president Trump was like you will not kill protesters you will we will come and help that's gone now it's no enrichment and let's talk about the missile program and stop with the proxies there's no like and stop killing the protesters because the protesters are already dead. I hate to say that but like I think the Iranian regime like felt a need to crack down not just because it was sensing a domestic threat but it's sense that if it did not show its teeth and show the United States just how far was willing to go to your point the United States might have thought like we can test these guys we can poke a little bit now we're just back to the same things we've been arguing about for a decade I agree with you can still go the wrong direction you can still get a faction in Iran. That misinterprets maybe the United States decides that this is okay maybe oil goes up another $10 then you can get to a scenario that you're talking about but I'm a little less worried. Well let's let's let's let's put something concrete here for kind of listeners to to to grasp or the disagreement is I feel like where we disagree is that I think you believe that the probability of a major confrontation is lower than I do. I think that would be fair I think that you see this is another in a way like potentially well articulated and executed maximum pressure campaign by President Trump. Whereas I actually think that in this case you know there is a risk higher than you do of a major confrontation that takes us to that point where you know you very quickly kind of fire out your bullets and then the US has to come in and destroy Iran's military capability to its core so I would say that we are at a point where it's 35% probability that we go there. You know that we go to that now and by the way by the way just to be clear that 35% does not include the US using military strikes against military targets and Iran retaliating against American personnel in the Middle East that doesn't count. That happened with General Soleimani being targeted that happened with well last year it happened so I'm talking about a situation 35% probability this gets off the rails and the US has to like over. Course of several weeks systematically destroy Iran in military. Yeah that's a good way of making it concrete because I'm at about 10% for that and the other thing I'm trying to say here is I think that there is a window open and I'll call it 25% or 30% where. Trump can pull off a Nixon in China type moment this can be Trump and Tehran if he wants it I think the opening is there but he's going to have to deal with some fairly on he's going to have to deal with the supreme leader. I don't think he's going to be dealing with the for the shot son or the Iranian student protesters or anything like that it's going to be that kind of that kind of deal but we shall see. Although I just to be clear I just just because this is so important you know like I I definitely respect your view and you know my constraint based framework that ignores preferences and ideologies and blah blah blah tends to definitely you know if it makes an error it errors on the side of caution. I think I think my concern here is definitely not ideology I think you've pointed something really important that we need to emphasize and re emphasize president Trump really is unique on Iran. His first pick for national security adviser were general Michael Flynn who was like who thought Iran was basically Satan like straight up he was what Iran says about America he said about Iran and he was effectively like just destroyed I think by the national security apparatus of United States America so as not to have nuclear war with Iran. Go to conspiracy theory but you know his his his fall was so quick and so swift and for really petty reasons like he met with the Russian ambassador like let's pump the brakes guys you know it wasn't that it's not like he was treason but he was removed very quickly for I think his views on Iran actually and then John Bolton was another hawk was also basically removed from the Trump administration. Trump has had this very interesting relationship with Iran where in his first term he was surrounded by definitely ideological anti Iran hawks who think that there's just no way to make deal with them and then last year he concluded the bombing of photo by saying God bless United States America God bless Israel God bless Iran. So I think that you you're really on to something here and I do think that he thinks that he can do the maximum pressure campaign I just fear that you know this time around with the instability inside of Iran itself I think there's a greater odds that something goes wrong. And that there's too many people in Iran who's back sir up against the wall and so you're not as comfortable negotiating with the U.S. as they may have been pre twenty twenty five. But again I I do usually tend to you know kind of also give out probabilities that are very similar to that like the chances of something epic are probably low but we'll see. Yeah which is I was going to leave this further down the six back let's move it up right now and treat it shortly because I think you're right those the Iran hawks are not next to the throne who's been next to the throne for the entire month little Marco Rubio and what was the executive order that the White House put out put out just a couple of days ago was it about Iran. No I will quote from it quote I find that the policies practices and actions of the government of Cuba constitute an unusual and extraordinary threat which has its source in holder substantial part outside the United States to the national security and foreign policy of the United States a little bit further on. For example Cuba blatantly host dangerous adversaries of the United States inviting them to base sophisticated military and intelligence capabilities in Cuba that directly threaten the national security of the United States. I think Trump wants to deal with Iran I think he wants Cuba and I think you can tell Rubio is ascending it's not Bolton who's playing the Kissinger role it's not your point. Anybody like Flynn it's somebody who's like keep your eye on the prize Venezuela Greenland Mexico cartels Cuba focus president Trump focus like you can do your nuclear deal shenanigans all you want with Iran and if you can push them out great they're terrible but like let's let's keep our eye in the prize I think that's where president Trump is probably searching for. I know you love Cuba you know like and I know you want that beach house like I hear you it's right across the Gulf I got my Panama hat right over here you know it's right you can practically see Cuba for your. From my backyard yeah see right out here there's the Mississippi Cuba just get in get in listen I get it but I do want to say that I mean you know just from a geopolitical context and standpoint. And I don't want to denigrate Cuba as a strategic you know piece of real state of course it is. But United States of America as I've said before has been a great power has been a unipolar power has been a superpower with Cuba in the hands of its rivals right. And so like not solving Cuba for another 20 years like it is what it is Iran if he so in other words let me put this way if you end up being right. With your very bold forecast which I love if you end up being right. What's bigger for president Trump's legacy like flipping Cuba or or solving Iran. And I think it is Iran by by any measure. I not to be wish you watch about I think it all depends on the how if solving Cuba means that the Cuban Communist party makes a deal with the United States but stays in power. Then it's not that impressive in the same way that if solving Iran means you make a pragmatic deal with this current regime like that's temporary. I mean all things in geopolitics are a femoral but that is particularly a femoral that's not going to last that long. Now if you flip Cuba if you bring down the Cuban Communist Party if it becomes state number 52 or 53 that's a huge feather in your cap. If you can have a Nixon and China type moment where if we're turning you know from Iran from adversary to pragmatic economic partner for the next 40 years and a regime. I mean it's not going to liberalize like the Chinese did not liberalize but the cultural revolution stopped like for the most part China was playing by most of the rules and in the special economic zones. It was basically as if you were in the way if you can have that kind of accommodation then yes like that's also a huge one and then that means huge things for the stability of the reason. So it all it all matters the how I think not to be wish. But that's but I see I see your point because it's also far more likely even though your your forecast is still quite controversial and unexpected but it's far more likely that they can. Effect trade the regime change in a place 90 miles from Miami then Iran so the deal the nuclear deal with this regime does not it's not that impactful in a long kind of cycle. So I agree with you unless you know look unless Iran is prepared to do what with its mullahs and the theocracy that they have what we have done with our kings. Like unless they're prepared to do that and you know like I think we're closer to that then. We think you want to I don't want to be a caricature of myself but I mean there's a there's a there's a double standard here with Iran they're not the only theocracy in the region we are quite adapted dealing with theocracies so if all Iran has to do is I mean Toby Keith you know may his memory be a blessing is no longer with us but if we can get Tim McGraw to do a concert in Tehran and the supreme leader agrees to start building movie theaters. And now we could say everything's good like we're good like we're open for business like there is no reason the United States cannot make an accommodation with Iran if it can make an accommodation with Saudi Arabia. Our actions are the US fixation on Iran goes back to the 50s it's it's a it's a cold war conflict that is now outside of the context of the cold war. And if it takes somebody like president Trump who is outside of the national security establishment to say guys what the F are you doing you're fighting a conflict that is literally 70 years old you already beat the country that you were going against it's 2026 can we deal with these guys the way that we deal with all of these unsavory characters and get their oil and do what we want to do rather than focusing on the fact that we're in 1953 Muhammad Mossadeg was cozy up with the Soviets is like come on stop it they don't like Russia either to your point like we can work with these people where's the deal listen listen you don't have to change regime like to be clear like Iran helped the United States America by the way this is this is something for folks listening to this. Iran helped the U.S. against located it helped it helped to the United States sharing and with ISIS yeah I mean Iranian linked she militias in Iraq were effectively calling down airstrikes from American war talks so you're absolutely right one thing you're wrong though I did check because I wanted to make sure I check there are movie theaters in Iran that was just. You were you're rolling though I will I will hold you back but for our Iranian read listeners out there you know just wanted to give them well I I will do you one better I remember vividly this is back when I was still working for George a GPF you remember when we had BBC monitoring I was going through the BBC monitor one day and there was this great reporting BBC monitor about a security operation inside Tehran where some college students were screening Game of Thrones outside of university in Tehran. And the police came through and broke it up because it was unacceptable to your point about how this is different from North Korea I guarantee you they're not screening Game of Thrones in the cafes in Pyongyang like it's a little bit. Yeah there's I mean of all the movies to like I mean you know that's pretty explicit. All right so yeah I think I think I like to disagreement on this I'm a little bit more paranoid than you on this one and I tends to not be paranoid you know so I don't know what that means I could be totally off. Yeah and by the way we didn't address this and I don't know how to I don't know what below just stand has to do with this of anything it's just really weird timing that that's pop up. But no there was actually no there was also last year it was last year is right after I think right after the Israeli attack on Iran but there were anti terrorist anti militant operations by Iranian military in their own parts of Iran where there's various ethnic groups they have. You know kind of conflict with them so there was an anti terror operation in Iran very quickly after the Israeli in the US attacks so I think you're right to point this out as we talked about this last time Iran is only 50% ethnically Persian. And so we talked this with come on there is a lot of potential for you know the society to face like civil war like tensions. Okay let's move on to beer number three we're going to talk now about Germany pushing for a two speed Europe so this report is from January 27 German finance minister was an event last Tuesday in Berlin talking about a Europe of two speeds. To to quote it exactly and according to the letter that Reuters said it saw Germany is inviting France Poland Spain Italy and the Netherlands to this four point agenda and the agenda includes pushing forward a capital markets union moving faster on the savings and investment union creating better financial or financing conditions for European businesses and startups. Point two is the international role of the euro as a safe haven currency based on predictability and the rule of law shots fired at the dollar if you're worried about the position of the dollar the euro should scare you way more than you on just saying defense spending so better cooperation for defenses of priority and then to secure strategic minerals and to increase supply chain resilience around critical minerals and things like that. The initial meeting was just kick off and there's meant to be a follow-up meeting in person on the margins of the next euro group mark cousin this may be just another you know added meetings to the dustbin of history but. French President Emmanuel Macron has been calling for something like this since the day he was first elected and has been talking about how we can't the Europeans cannot be held hostage by Budapest or anybody else countries within the block who want to do things together and don't want to be held up by unity. Need to unify more and then those others can stay as satellites around the main block we have to come together this time it's Germany pushing it and if Germany pushing it. You know also in the context of their increases in defense spending like this is I've been expecting this my bias here is I'm going to be like yes finally the forecast is finally coming through it's a couple years late but here it is where you at. Curious they left. Sorry Belgium. I mean it's just doesn't make sense to your graphically but okay. Welcome Spain welcome to the party yeah I mean Spain yeah well you know Spain Spain did basically Spain is an open revolt a NATO. Which you know respect respect the Spanish were just saying we're not going to spend 5% of our GDP on military sorry Sue us. But they then action us with your army yeah they also then went out and actually called for the creation of an EU army. So you know it was a very kind of an interesting point that Spain is saying like no I don't want to share with Americans. But let's do something as as Europeans I think this is a big deal and one of the things I love about you like you've got that training that we were beaten into us at strat four. Where you just really kind of look at items that just stand out you know it's it's the record skip in the sound it's it's. It's the weird part of a fine leather purse that just the grain isn't just right when you touch it you know. And so this is a very important point I mean especially what you said many have suggested this France has constantly talked about this. The fact that Germany has given up you know on on just keeping Europe as it is. And it's thinking about two speed Europe is very important the reason for this is something that you learn in political science which is a very simple point the more veto players there are in an organization the less likely that organization is going to be effective. You know and it's just like a family you know let's say you and your wife you bring the in laws your parents you guys all go somewhere. You're never going to decide where to eat what movie to watch what poor game to play because there's just too many veto players. It only really work this is why when you go well one day you will notice when your kids are old but when I go on vacation without my wife. It runs extremely smooth and I don't need anything I guess her but even just fired. Even just two adults are too many like when you can just say what you want it's easier the less veto players there are in an organization. Just the smoother it is the objectives are going to be reached you're going to know what the objectives are. The biggest problem leave it to cousin Marco to sort of insidiously make the argument against democracy here at 42 minutes into the podcast. And that's exactly what you know like you are trying to say because if you're trying to get Portugal's like sense and foreign policy like that. Well good luck and the biggest problem with Europe in many ways and the reason that country like United Kingdom was always extremely in favor of enlarging the EU was specifically to dilute the coordination of the continental powers. Let me say it again this is why Charles the goal the president of France who's often seen as your skeptic he wasn't your skeptic. He was Brussels skeptic he was commission skeptic but he wanted a strong united strategic independent Europe. The reason he was against the United Kingdom joining the EU and why they had to wait for the poor man to die before the UK joined the EC. The reason for this is that Charles the goal we said look the Brits are going to be the Trojan horse for Americans. And then when the UK entered the EU it wanted more countries to join it was the strongest push for expanding the EU towards East Europe. Partly to dilute the German the Franco-German coordination which always you know kind of made the Brits a little uncomfortable about you know strong continental power rebuilding the Armada. And so this is why it is a big deal that Germany is doing this because Germany has in the past aligned itself a little bit more with that expansion let's enlarge Europe. And France has been saying like well let's put a let's put a stop on that and try to digest the countries we just swallowed. It's interesting to me that they invited Poland to this because Poland in many ways is still perhaps an Anglo-Saxon Trojan horse in Europe. But that certainly has not been and I think you posted this as well Jacob did you not you posted on X and look how much I pay attention to my cousin's post. You posted basically this poll in in Poland where it shows that the majority of polls now don't see America as a reliable partner. The vast majority like over 70% like scary poll and that's and by the way that is if you're listening to this poll get it but I'll be here I'll be here for another 75. Please step your waitress no but like if you're listening to this from the from the more conservative side the pro Trump side the mega side like let me just pause here and say this is the cost of President Trump's negotiating tactics and nobody has given his negotiating tactics more you know more support than I have like clearly the man delivers in a tactical sense. The problem is that even if you get a marginally better deal on Greenland the effort in getting that does have long term costs. Coles are pro American they always have been they're not pro German I wonder why like you know the Polish people love America they see it as liberators and they are not comfortable hitching their wagon to Germany but they're being forced to do that because they're seeing the reliability of American support whether it's Ukraine whether it's basing troops in Europe or whether it's with things like Greenland and how Denmark is being treated. So I do think that this is interesting that Poland was included I think it's interesting Sweden Norway Denmark are not included it's almost like Germany has already decided in making this pick of countries it's almost like they've decided the Nordics should just have their own closer union. And so I don't think it's so much a two-speed Europe as a multi-region Europe that then will be able to come together for various different alliances so you know one of the things that are. Former boss George Freeman used to obsess about is Vishegrad group I mean I think it's completely useless and it hasn't had any impact at all whatsoever. Vishegrad group is the Central European countries Czech Republic Poland Slovakia Hungary they've had no impact at all but if you push them into their own grouping you push the Nordics into their own grouping maybe there's a Mediterranean union as well. The point is this does seem significant it's basically EMU 5 plus Poland and that would create a pretty synced geopolitical entity it's basically the Charlemagne Europe plus Spain. Yeah there's a couple things to dive into there the first is I mean Vishegrad group I mean they they did become the sub the you know the workforce for the German supply chain so in the sense the one of the reasons the Germany was able to become an export superpower was because they took advantage. Of the V4 so I wouldn't say nothing but yes I think you're right in general also just because these are the five countries that are invited doesn't mean that these are the countries that will agree. Sure these are the ones that you're hoping to at the outset but I think you're right to point out that one of the reasons to take this report more seriously than maybe previous reports about this is whoever is trying to put this proposal together thought pretty hard about it because you need. Poland if you're going to do this in terms of Eastern Europe Poland and Germany have been an odds Poland hasn't liked that the rules set around the EU has basically been written to help the Germans that's their point of view and they've been asking for changes on those rules for literally decades. If Germany is now coming and saying okay let's make some new rules and you get an equal seat at the table like that's something it's going to be really powerful I think in Poland. I think you're also right about the Nordics I think probably if I was Germany you know that the Nordics are going to be along for the ride anyway and to your point you don't want to dilute it too much. What you really need to do is you need to have an anchor in Eastern Europe you need an anchor in the Mediterranean and it also be nice to go to Spanish beaches so like let's make sure we can go to Spanish beaches also to be serious. Spain is the country that was most immune to Russia's invasion of Ukraine because while the rest of Europe and especially Germany was betting on Russian energy as the source of their energy problems. The Spain the Spaniards were importing LNG they were doing solar they were doing all sorts of renewables like they were not really touched by that the French also had nuclear so they were less touched by that as well. Yeah no Spain Spain's economies and fire is the best performing economy in Europe and also they have the influx of really high quality immigrants from Latin America so you know it's a way for Germany to basically have immigration. All these countries share a labor market which means that if you as an immigrant from a like from the United States if you were to get a work visa in Spain you can basically just move to Germany tomorrow. And so I think Spain is an interesting I think Spain is increasingly increasingly important for Europe I mean like extremely important for Europe because not only is economy more dynamic but it also has this incredible influx of very high quality migrants from all Latin America. And to your point it can be a simple I mean this is a little bit simplistic but Germany is not going to be able to metabolize immigrants from the Middle East or from North Africa but if you see a Spanish speaking immigrant on the street in Germany you can just you don't know that that person is not from Spain and if so what if they're from Argentina or so what if they're from Salvador like it's totally well I mean look Europe is lucky in that way you know I think Latin American immigration into United States America has been a net positive. For sure like I think there's there's no real likely to get that to put it lightly yeah but I would say that the immigration of Latin Americans to Europe is even more positive and part of the reason is that it's really difficult to walk or swim to Europe from Latin America. So you're going to get people coming to Europe who are already kind of self filtered for education for you know productivity and so on and so I think that that's something to keep in mind like Spain really really attracts high quality migrants plus on the other side polling has attracted high quality migrants from Ukraine. So one of the things that I think is hilarious is that every time I go on the road and pitch my very positive view on Europe. The number one argument against that is demographics and I one thing that I don't think investors and just regular folks out there understand. Is that for the next five to 10 years I think Europe will absolutely wipe the floor with America when it comes to demographics with demographics because the United States America is basically ending all immigration whatsoever. Whereas Europe has these two incredible veins into right this core one is immigrants from Ukraine which tend to be high quality very easily integrated I mean their kids are basically German now already and then on the other side you have this Latin American immigration which absolutely is a very positive way of immigrants I mean if you think about Spanish speaking immigrants in central core Europe. The Spanish and Portuguese immigrants have been very additive to places like Switzerland or Spain and we're talking the 1950s in 1960s waves of immigrants let alone basically the people from Latin America who will be additive as well. So yeah this is a this is a very it's an interesting idea I think that a lot of countries in the periphery are obviously not going to like this but what I think is important is how much nobody in core Europe cares anymore. You know yeah which is it'll be really interesting to watch what hungry does now in particular because I think Victor Orban I mean as all leaders do everybody has strengths and everybody has weaknesses one of his strengths at least in the 2010s was he was ahead on your skepticism and he kind of understood where the puck was going and I think he was able to steer hungry in a positive direction. And you know he's been around maybe for too long now maybe maybe the strength of that signal is going to be a little bit weaker but one of the several things I would be watching for going forward is what does he do does he smell that there's a real change of foot because if he does we should see a change in Hungary's orientation that's the orientation of these powers. Also Serbia near my home country as well see when when you're one of 30 when you're one of 20 you have a veto like that veto has value you know you're the thorn you're the annoying guy that like you know I want Hawaiian pizza like bro nobody wants a white pizza like we can only order four you gonna take like we're gonna have to be picking off the pineapples although by the way as the side point I love a white pizza. But my point is like that's orbun orbun was the guy ordering Hawaiian pizza everybody had to accommodate him because everybody had to dance around this politically correct like way over everyone's equal in Europe you know and now it's like Germans are like no everyone's not equal in Europe orbun you can do whatever you want we don't care. You want to veto our foreign policy cool we'll have a completely different club right here we're not going to invite you similarly Serbia which has really well I mean you have to argue like it's it's played its cards well it's balanced China Russia Europe the problem is if core Europe just says look we don't care anymore it's you're either do what we say or you know have fun with Russia which just spent a million people on winning West Virginia of Europe. You know I think it becomes a little bit tougher to do that and that's why this is very interesting and you're absolutely correct great idea let's watch how orbun reacts to this. Yeah and I want to rant about demographics for just a moment because anybody who thinks they know something about geopolitics inevitably brings up demographics and I don't know great you guys always for doing that. But if you're doing that I I know then that you've read the fourth turning and I know that you've read our old colleague Peter's Ion and and you know how very smart guy very nice Peter's Ion very smart guy very nice if you just try and use demographics like a crystal ball you're going to get things wrong because what is demographics. Demographics is the sum total of human decisions about immigration and how many babies to have and to your point it can tell you very important things about the growth trajectory of an economy or the problems that it's facing right now or what future policy problems might happen in the future. But to your point demographics can change and it can change fairly rapidly so if you're just going to extrapolate out from demographics today and say oh and that means this is going to happen. You're not doing good analysis all you're doing is looking at a demographic chart and pretending like that's your crystal ball and that's going to tell you one thing or another I can't tell you how frustrated I get when people ask about that because yes some European demographic situations if you're only thinking about where the GDP number is yes problematic but there are things like immigration there are things like the Russia Ukraine war that makes Poland go from some of the worst demographics in the block to some of the best demographics in the block over two to three year time period just just a little rant. And listen listen the other thing is not only do I know what books you've read I also know that you just basically live on YouTube and let it educate you. And that's where I want to say as somebody who has been a somebody who has been a immigrant on an immigrant visa in five different countries and who's gone through naturalization process of two countries and it's a citizen of three. One thing I can tell you about immigration is that whatever you think about the stock of immigrants coming to the country you're probably wrong about it. And who can like obviously different cultural groups and ethnic groups integrate faster or slower into different countries. So somebody from Argentina is going to integrate it to Spain much faster than they will to the United States America. Obviously you know but the fact is some of the some of the narratives out there on Europe are clearly just Islamophobic. I'm sorry guys like you did you're just being Islamophobic stop watching those YouTube clips there are many many Muslim migrants into into Europe who have absolutely integrated. Absolutely you know and so I think that's the other narrative out there that you know European demographics are not just bad because they're not having enough babies but the quality of immigrants is very poor. And the truth is that yes there's some parts of Europe where some Muslim migrants have not integrated and probably maybe never will but that number is much much smaller than the YouTube videos you're watching suggest. And this is one I mean this is to bring it back to the national security strategy I mean the Trump administration thinks civilization or a sure is happening in Europe that's how they're approaching Europe and they're doing it exactly that they're thinking about Europe in the wrong way. This is just an anecdote but I just had coffee with somebody who's in the shipping industry. And we were talking about the shipping industry and he talked about how there have been a lot of advances and research around autonomous ships which sounds pretty cool like you don't need people in the ships anymore they could just go where they need to go makes a lot of sense to me. And I asked him what are those mostly being built in Asia because I know that Japan and South Korea China the big shipbuilders and he said no Europe is leading the way here and there was supposed to be a push to do this in the United States but the unions around the dock workers and the ship workers didn't really like that so much so even though they've pushed the Trump administration to try to do this like they're not able to get any of things they need to do to do this so it's happening in Europe and I was like see like yeah go ahead. Wait wait Europe is good at manufacturing that's a shocker not only manufacturing but a technology like autonomous like okay Tesla you can have your your shitty car that China is going to like lap you on or whatever but who's who's building autonomous ships so that you don't need those immigrants to be on the ships that are traversing the world bringing your products to and fro the Europeans like they're the ones remember they're the original colonizers they're the OG colonizers you think they're just going to walk into that good night. No and that's the problem I also have with this idea of civilization or erasure European civilization is you know it's a syncretic civilization that exhibits a lot of integration throughout its history and America is 250 years old so like you know this is like a country that's 250 years old that has a very clear sense of where it came from because it can like literally point to Plymouth Rock. Telling a civilization that's thousands of years old that you're going to get a race and it's like what are you talking about part of that is that you know like for example Latin American immigrants coming into Europe via Spain and Portugal and is spreading throughout Europe. The reason you're not going to have trouble integrating into Europe is because they are civilization only European you know they are not and and that's where in the United States or America there might be problems with integrating Latin American immigrants culturally at least in the maga camp that's one of the things that motivated President Trump selection and God bless although you know like Hispanics themselves. Voters for Trump in greatest numbers so I to give Trump do their work concerns about crime their work concerns about illegal immigration it wasn't just cultural you know pseudo racism but the point that I'm getting at is that Europe does actually ironically have some advantages in integrating some people from some parts of the world. And perhaps better than the US and I would say Latin America is one of them and is like what half a billion people in Latin America that Europe keep top into. That's a lot. I think this is a good point to bring up another thing that we're going to put in this expect but I think this just glams on here in general the secretary general of the United Nations warned that the organization is in danger of imminent financial collapse due to unpaid fees and a budget rule. That forces the global body to return unspent money they didn't call out the United States directly but the US is supposed to account for roughly 22% of the core budget China's next because you contribute based on the size of the economy of each member state and it looks like there's about 1.5 billion and outstanding do's the US apparently owes 2.19 billion to the regular UN budget and then another couple billion for some other things no immediate response from the state department. I was of two minds of this cousin number one I mean obviously the UN is going to decline in relevance and we probably shouldn't be looking towards the UN or the board of peace or anything else like that I'm focused on two speed Europe as the sort of thing that really animates me I'd also just say though if you're China. I mean the UN is for sale do you want it you want to fill the gap would you like to kick the United States if you're India like I mean you could you could very easily like buy some of the UN if you wanted to it wouldn't take that much and I wonder if there's any value to that but. Goes to this point about multiplayer to the UN was the perfect expression of the liberal international order and how most countries decided to join into that and it is literally going bankrupt in front of our eyes like is there a better metaphor for what we've been talking about all your it's all of it again I love the way you pick these items I think you are truly an artist and this is this is like a canvas that you just paint because every topic you pick is so exciting to me and I can just take into so many different directions you know. We had I think a whole episode of this podcast on symmetry and summits and congresses and I brought up that the last time the planet was multipolar. Summits were the way you resolve issues they weren't permanent they were issue specific congresses and summits so you would say hey. Displays called Bosnia hurts a govina part of the autumn empire like seems to be in this array what do we do with it and an austro hungry says we want to take it and the Russians are like no it's full of slavs we want to take it. And then you have a summit and you get together and you kind of like say okay what do we do with this place let's not get into a war and the truth is that I just think that that's the world we're in you know I don't think the I mean the board of peace what makes sense if it's Gaza focused I actually don't have a problem with it I don't know why liberals are losing their mind over this like what's what's wrong with this why not have board of peace I mean you should totally Blair be on it okay maybe maybe not I don't know seems kind of like reaching for the past maybe you know like but you know on the other hand because it's not about Gaza because he's inviting countries like Belarus to join the board of peace to send a billion dollars along with their membership fee it's fine but like look look let's say it is about Gaza let's say and then you want to have a board of peace for Gaza like that makes sense that that's just that's just not what it is like it's like that was the genesis of the idea and now it's become like oh now it's the Trump club but we'll call it the board of peace and I'd like a billion dollars per membership fees to pay your dues and the only people joining our Kazakhstan and Belarus and some of these others with apologies to the countries that have joined I'm sure I'm sure we know where the money is going to it can be going like I don't I haven't done the I haven't done the research but I assume it goes to Trump somehow I mean he's literally selling pardons and putting the money in his super pack okay like let's let's not be anything but clear out about how this administration is approaching the issue of corruption okay going back to the point I think that and by the way if if anyone thinks that's Trump derangement syndrome everything I just said is 100% factually true so if it's Trump derangement syndrome maybe maybe you have a problem with reality cool sorry go ahead okay so look the UN I just I just think it's a great news item it's a great news item I do think you can expand it beyond just financial troubles of the UN I don't know why China or India would buy it to your point that they can I mean it's it's like buying you know the what is what's it called the hotel in Geneva I think it's called the president or the Woodrow Wilson you know the hotel that spoke there a couple years ago it's nice yeah like we're the league of nations was like right next door it's you know like it's just buying a hotel it doesn't mean anything anymore we are fully today in league of nations territory for the United Nations that's where we are I don't remember the last time that I said oh let me see what's happening at the UN I I genuinely don't know the last time and the funny thing about this is that I got my first girlfriend at a mall United Nations and then I found my wife at a mall United Nations United Nations as well well like I'm two for two and I may have only taken two shots in my whole life I'm not going to either confirm or buy that fact the point is I love the UN I was the model United Nations geek this is you know this is what built me the fact of the matter though is that in today's world it just does not matter it doesn't matter what matters is great powers as Mark Carney said at those what matters is great powers getting together and solving issues and then middle powers kind of having to band each other together to you know not be on the menu but that will require I think an issue specific format so there's a problem in the Congo there should be a summit on the Congo there's a problem in Sudan there should be a summit in Sudan you know and I think that unfortunately I just don't think UN has a has a role to play at all in that world okay well I'm taking from this that I should prepare my daughters to make sure that they're ready for model board of peace meetings because that's where they're going to find a spouse it'll be good yeah I mean it depends how nerdy they are but let me just make one thing clear like who do you think is an alpha in that crowd you know what I mean like you've got slim picking you know like if you're a girl there so I was I was like top of the food chain in that in that gathering I never forgot it all right moving on in our six pack we should probably invite a friend of both of us Tobias Harris on the podcast not basketball player but the Japan expert talking about Japanese elections I would love to talk about Tobias Harris about his career as well like let me know yeah well if we could get a double Tobias Harris episode that would be really I mean fire and maybe maybe we have cousin Gurken on for that conversation as well I admit I had not been following this quite as closely until the last couple of days is the poll number started to come in if you're in macro land you've been thinking about this for the last week because the yield on Japanese bonds has been climbing extraordinarily over the past week or two because Prime Minister Takaichi of Japan has called for a snap election she's also talked about getting rid of austerity she wants more Japanese investment she has said some controversial things about whether the yen is weaker strong and what that means for the Japanese population but the latest polling from and Tobias Harris put this on his sub stack just yesterday and I thought it was very interesting was that new polling suggests that the LDP Takaichi's party could win maybe a super majority in the lower house and that would allow them to overrule the upper house and suddenly now we're getting a very different kind of Japanese political situation and we would have even thought two three months ago where Takaichi was dealing with not even a majority and having to deal with China which was making an example out of Japan with some remarks that she said about Taiwan by the way for the Chinese analysts that are listening yet another example of when China tries to go hard in the paint against someone and it does the opposite of what they hoped maybe they thought they were going to create more instability in Japanese politics looks like the exact opposite thing happened they rallied around the flag we don't have the elections yet but there's a macro story here about Japanese government bonds and about the yen and about Japan's economy going forward and then there's also the geopolitical story about is this finally the moment where Japan gets a strong prime minister who wakes Japan up into this multipolar world I thought maybe it was going to happen after Abe was assassinated and you just didn't have us a Japanese leader with enough support to push through some of the things necessary to do that but if Takaichi comes through with these poll numbers Japan looks like a much more looks like a power with a lot more agency and when Japan has agency and it needs to change usually Japan changes the world so I wanted to at least cook on that a little bit and maybe set the stage for welcoming Tobias on in the coming week or maybe next two weeks to talk about this what do you think of? Oh man so many things that I'm actually thinking about this I think that you know on one side you could say that Takaichi is playing with fire because Japanese debt levels are enormous but their net debt is actually pretty low and that is because they have substantial substantive domestic savings the other issue is that so interest payments are only about one percent of their total collected revenues so think of like all the taxes the country collects like your income you know your income is the money you get paid a salary or whatever endorsement deals because we're such athletes stuff like that obviously but then you have to pay your credit card bill and United States of America spends 12% of all the revenues it raises depends how you calculate it some people get higher I'm a 12 it's fine hold your horses it's a lot 12% of all the dollars all the money America raises tariffs from income taxes from corporate taxes 12% of it more than what America spends in defense goes towards being American interest Japan is only at one one percent one percent and so what's interesting here Jacob what's what's shocking what's stunning what's kind of insane is that it is not irresponsible for her to be super irresponsible with fiscal policy like if they just go crazy and build seven bridges over a river that already has one bridge they shouldn't care because no matter how high the 10 year gets in Japan they're kind of going to be okay but the irony of this is because it's such a huge market and because so many Japanese investors are out there it creates this interesting pool where investors might start looking at the JGB yield which has been suppressed basically artificially by the government might say hey look the JGB is a three percent I expect the yen to appreciate over the next five years I'm okay holding this rather than the US so what's funny what's funny about this situation is that what happens in this election and how Takaichi like response to it from a fiscal perspective from does she spend money do these yields go higher it could cause a bond market right in America this is what I think is interesting it will raise American cost of financing its debt and that's why this is truly a like a big deal Japan being sleepy and obsessed with austerity and trying to be prudent is in a way what's attracted a lot of global investors to American assets there's nothing else you can really buy it's a safe haven it's fine but suddenly the JGB is not just a safe haven which it has been even with low yields but it's actually now also yielding something substantive and then if you factor into that perhaps potential currency appreciation you know you're now you're not talking quite an interesting flow of investors away from the US to Japan anyways I'm just spitballing I don't have a heart conviction view on this I just think that what happens in Japan obviously matters the other thing that she is known for and this is what you point out with China I mean she is kind of a hawk right oboe was her mentor and so not only is she is she potentially revolutionary on the fiscal side she might also be revolutionary on just giving Japan the rebirth that oboe tried yeah I mean there's two things I mean first of all let's just I mean I'll quote her we will end this trend of excessive austerity and insufficient investment and quote so she's clearly saying that she has also talked about her commitment to I mean she's given nods to fiscal responsibility but she's also talked about deploying fiscal resources to support industrial policy and to provide relief from the rising cost of living including with a full embrace of a consumption tax cut on foodstuffs so if she gets like a sizeable majority as a result of the selection like I'm with you I don't have a high conviction of which direction this goes but I have a pretty high conviction of which direction she's going to go like she I think is going to double down on those things the Shinzo Abe comparison is interesting because you know Shinzo Abe was her mentor but one of the interesting things about Abe was he was the one who articulated better than anyone else this return of Japan to pride rather than shame about its past and wanting Japan to be a strong power of strong power again and yet he had a phenomenal relationship with Xi Jinping he was able to maintain really good relations with China and Japanese companies are disproportionately exposed to what's happening in China it causes a lot of economic pain if those supply chains start to go away and Japanese companies were at the forefront by the way of not near-shoring but dual-shoring they were going to have China specific supply chains and then everywhere else supply chains that was the way that they were trying to hedge their risks going into the 2020s and dealing with some of the dynamics that you and I have talked about for a long time and the thing about Takiichi that was interesting was I mean I don't think she meant to cause a problem with China I think she just said something off the cuff and it was very clear China was waiting for her to say something so that they could jump all over her and they wanted to make an issue of it and so none of Shinzo Abe's magic was Xi Jinping seems to be working with Takiichi I don't know if that's something has changed how China approaches Japan I don't know if that's that Shinzo Abe was saying nice things to Xi Jinping behind the scenes while Takiichi is not doing that maybe she's much more of a diet in the world believer and so Abe was less of an ideologue and more of a pragmatist he was not shy of pushing pushing the ideologue button if it served as interest but much more of a pragmatist if you read some of the history about him so yeah I mean it will be really interesting and I also don't know how to think about Japan US relations in this context because you know you mentioned this at the very beginning if we get some kind of US China trade deal what does that mean for Japan and Japan has kind of been left out both by the Biden administration and the Trump administration right in terms of the US approach here so why is there any incentive for Japan to align monetary or fiscal policy in a way that's going to help the US Treasury or help what's got bests and wants because I don't think Donald Trump is thinking about it it's it's an interesting it's an interesting well look a fiscal policy can be extremely positive for the currency I mean it was for the dollar over the course of the last seven years that the US has been running a reciprocal fiscal policy part of that is the monetary policy you know as long as it's like semi orthodox and they're not cutting interest rates but they're offsetting fiscal policy with some hawkishness you know that that will be very positive obviously for like the yen and I think that American policy makers for the most part will be okay with that but I think that what you're pointing out is a bigger thing you know everything you're talking about her in terms of industrial policy in terms of investment you could have read the same thing from Friedrich Merz's Davos speech which very few people listen to you know carney didn't just overshadow Trump you overshadow pretty much everybody else Merz had a great speech as well and what everyone's outlining out there Jacob and I don't want to give too much because this is kind of my main macro view for my clients but what's happening around the world is that Donald Trump is just catalyzed every single country to stop and say wait a minute the gravy train is done like the Americans are not it's not just they're like unreliable geopolitical ally that's not what it is at all it's not about that although yes you can add that it's more like wait a minute you know we we kind of have to think like Trump like the man is right make America great again make Canada great again make Japan great again that's what Trump has actually permanently gifted to the world and I don't necessarily think it's always wrong there are inefficiencies in Canada in Japan in Europe they have just been left to own the side you know because a lot of these countries for the most part could just build something and sell it to Americans who were you know spending like drunken sailors and I think what's interesting about that is that the things that she is saying during her campaign like aici is very similar to what Merz is saying in Germany it's very similar to what Cardi is saying and what Xi Jinping said over the weekend about the remainder and what Chinese policymakers are saying about their domestic consumption we need to be more focused on domestic internal demand and so you know when does when the history is written of the Trump presidency there's many things that are going to be written but I think one thing that most of his critics don't think about and obviously it's not like he necessarily means to do this although sometimes he actually does say it I think one of the things that will be written is that he catalyzed a lot of countries to actually put their own house in order. Yeah Japan is an interesting one though in this context because if you're Mark Hardy in your Canada you're sitting on I mean you're an agricultural superpower you're a potential energy superpower you've got ties to different markets that can help I mean you're you're sitting in a really good position you're you can attract immigration whenever you want it like you're in a position of great flexibility if you're Friedrich Merz and you're thinking about Germany same sort of thing like yes you you made some bad bets on Russia for energy and on China for trade but you're powerful and rich enough that you can metabolize the loss of those bets and make some new bets and you can start thinking about to speed Europe or we can start rearming again let's make the car factories and to tank factories again like there are things that we can do we can attract immigration like we talked about Japan's not the same Japan has to import its food it has to import its energy the reason the Japan turned on the world and on the Pacific and the first part of the 20th century was because in order to sustain all the changes that happened in the major restoration they had to go out and get things they had to go out and get materials they had to go out and get food and that's what brought them into conflict with the United States. So if Japan is going to make Japan great again the only version of make Japan great again that is that does not rely on some kind of liberal international order where all these things are guaranteed is Japan has to go out and get them and has to be has to be strong enough to go out and get them and defend themselves from the people who will prevent them from getting them. And that's a that's a I mean that was tough even in the first half of the 20th century in Japan like got very very close to succeeding if not for a a foolhardy attack on Pearl Harbor maybe it does succeed hard to say that I don't know I don't want to say never with Japan but like that's going to be a much much more difficult square to circle in 2026 than it was in the early 1900s but maybe they can do it I don't want to underestimate. Let me take the other side of that please. I think you and I talked about city states and potential rise of them I think you were excited about that this is I was yeah and you are and I think one of one of the reasons that both of us are kind of excited about the potential of the city states is that automation and AI when combined together can greatly augment and enhance a small population. You know and you can actually already do that with immigrants for example the United Arab Emirates is a very small country but it definitely punches above its you know population and demographics because it has a huge expect community and it is there it's one of the countries that is actually you know really throwing itself into the AI revolution because if it ends up firing its a confidence in doctors it's fine most of the more expats so it's you know it's perfectly fine the reason I say this is because Japan is a leader in robotics already increasingly industrial capability has nothing to do with labor I mean in a United States America the labor force participating manufacturing has collapsed but manufacturing industrial output has increased right we've all seen these charts Japan is obviously at a forefront of that they're not necessarily the forefront of AI but they'll figure it out you know they'll adopt American models or whatever and what I'm getting at is that why not apply the same you know optimism we have about potential for smaller countries and smaller cities to punch above their way due to technological innovation why not apply that also to Japan and I think that this is another one of those countries where demographics is overstated you know they sell more adult diapers than baby diapers like I get it I get all that but it is a very secure very technologically advanced country that is a nuclear power let's just be very clear like Japan could have nuclear weapons in like three months we we all know that they could have intercontinental ballistic missiles tomorrow if they really wanted to so they are completely and utterly safe they cannot be invaded like historically so and they are they're extremely you know like the demographic issue I just don't think it really matters your food point is very very cogent but like okay fine don't invade Pearl Harbor and you'll have all the food you need because the United States America will supply it to you so right I mean like why you know this is where I think I don't want to be the guy who says this is the decade where Japan finally makes it you know because there's it's the widow maker trade I actually love your point so much because I thought where you were going and I think this is where you're kind of going is God stop thinking about Japan like a 20th century geopolitical analyst Tokyo is this is the number one city state in the world like why not Japan as the city state why not like okay Singapore wants to compete in Dubai Japan has you all beaten already like they can just let's go like that's fine for us I mean look I do think that in today's world attracting immigrants you don't need immigrants to like build your like aluminum alting factories you just need immigrants for the cross cultural pollination of thoughts and ideas in diversity not of visible qualities but invisible ones the reason that I think immigration has enriched North America so much is that you know people come from different perspectives and and I do think that Japan would benefit from that and so would South Korea these sort of insular East Asian economies that tend to have a very low immigrant population I do think they lose something in not having more immigrants and again it's not for the low skilled immigrants is for the high school but fine the point is that between AI and automation yeah Tokyo is a huge city state surrounded it's very safe and other than your food point which I think can be easily solved and it and by the way this goes to everyone I don't think we can analyze Japan as a 20th century power but it goes also to China people have very very negative use of China because of demographics you know you even hear stuff like well they won't have enough men to field an army number one that will never be the case like you know what I mean like like how much how many people how many men with guns do you need in 2026 you know I'm pretty sure China will be able to field like two million dudes with guns for the next thousand years okay the math is not that bad on their birth so it relax but the other issue is that again with automation with autonomous drones with autonomous you know naval vessels with AI there is just less of a need to have humans and so yeah I think a sophisticated advanced society like Japan could do really well and we could be again making blade runner movies with Los Angeles looking like Tokyo did you hear there's there's going to be a blade runner TV series blade runner 2099 Amazon Prime looking for that's that's awesome but I mean if he doesn't have Harrison Ford and Ryan Gosling like come on you know I'm gonna give it a chance but I hear you I hear you we're coming up on time but we said we were going to talk for a moment about the Fed share I'll quote President Trump's do it's last night at the Alpha Club I mean this is a you know they're supposed to be some comedy here so I know that he's saying the tongue and she but he apparently at this at this dinner pointed at Kevin Warsh has nominee to be the next Fed chairman and said quote if he doesn't lower interest rates I'm suing his ass off I'm kidding am I I really don't have a lot to say about the Fed share but I'm gonna let you cook on this Marco because I know you think monetary policy doesn't matter oh yeah look so like a couple of things first of all the most important thing that President Trump said was on the plane and he was asked if he expected Kevin Warsh what he expected him to do regarding interest rates and Trump said quote he's going to lower them I mean if you watch him on television you know because I watch interviews and statements I hope he's going to lower them but he's going to have to do what he wants to do and then ask if Warsh had made any commitments to lower interest rates to President Trump Trump said no because I don't want to do that I could do that I guess if I wanted but I didn't do it so so first of all if you're listening to the spot and you're one of the many many many many investors who rushed into gold and silver after it had already gone up 60% and you expected to go to the moon I think one of the reasons that gold and silver are collapsing is actually and this is going to be very very controversial and in the age of verbally I'm going to be hated but I think it's because America's not falling apart so I know we're at the end I know we're hour and 30 minutes into this this deserves its own pod honestly but my thesis here is that first on Minneapolis and immigration the American median voters not happy with President Trump his support is declining and so what did he do he called governor waltz literally while you and I were in the middle of a discussion about this yeah and and there was you know clearly now there is there is an impetus in Congress where bipartisan immigration we might get an immigration comprehensive immigration reform because of this so that's one Greenland Greenland President Trump was accosted and constrained by conservative Republicans on the Senate floor by cabinet members who do not look like smiggle by European and NATO allies and by his own military everybody got together and was like President Trump like yo we don't have to do this and what do we get the Greenland thing lasted a fortnight a fortnight that was it two weeks done over then on tariffs President Trump is starting to see the constraints of American Constitution we have the Supreme Court ruling coming up but also the median voter again like just not popular it's highly unlikely in my view that we're substantively going to raise the current terrible level which is 14.4% if you collect them all together I think he might go down as you know my view and then finally on the central bank governor there was this fear that we will have chocolate Labrador as the head of the you know fed and we don't we have Kevin Warsh who you know a lot of investors believe he was at one time a hawk and a monitor is then look look look look let's just be very clear we did not get a chocolate Labrador at the fed no way this is not some hack this is not some you know loser you've never heard of before who's going to do whatever President Trump wants but of course of course in the interview process it's not like there's not complementarity of use now that said I'm not sure that he's necessarily going to lower interest rates as much as people want not because of what Kevin Warsh thinks in his head but just I'm not sure that that's really what like the economy needs I think economy is fine if it ends up needing a hundred basic points worth of cuts I'm sure the kind of Warsh will do 150 you know of course like but I do think that when I take everything that's happened this month and this month there's been a lot of hyperbole on like just back and forth and a lot of different issues a lot of them are being resolved in a way that proves the checks and balances exist and our cousin Matt Kirkkin you know he just wrote a really kind of again unpopular view where he elucidated this I agree with him and I think that that's why this kind of like super left tail risk which is you know after Russian invasion of Ukraine central bank started buying gold to diversify from the dollar so they don't get caught he became prudent to kind of introduce gold into your portfolio but I do think at some point it got to a point where like you know your buddy who is like a plumber is asking you if you should buy gold it got a little too much you know I've had some serious people tell me they're buying gold because they expect societal collapse like literally and then you're like well maybe it's not gonna collapse and you know Kevin Warsh what do I think about him as a Fed chair I think it's kind of not interesting you know it's it he's obviously you know got an incredible resume so fine but it's not somebody that you can point to and say ah there is someone who's going to be okay with the US dollar collapsing a hundred percent yeah the only boring thing is I'll throw in here is even if Kevin Warsh was a chocolate laboratory to steal your phrase theology he wouldn't be able to snap his fingers and do this like there is a board but there's a yeah thank you you actually you know that there's that part of it too also and you know I you got picked on a little bit on social media for say monetary policy doesn't matter the way I would sharpen it is just to say that I think we're at the point in the economy where the Fed basically believes that interest rates are a magic tool that will fix everything and that by raising interest rates or by lowering interest rates you can you know cause solve the problems that the economy is having I think we're out of the realm in which moving interest rates up or down are going to solve problems in the economy we have so many other different problems in the economy that if if the left hand doesn't know with the right hand and the right foot and the left foot and the other thing are doing like interest rates are actually not going to be the thing or the be all and I'll probably never were the be all end all so I just think we're over indexing on interest rates in part because it's too clean a story like you can write the newspaper article or the Reuters article like oh he wants to raise rates and if he does this many basis points this is what's going to happen at least this mark it's like there's a lot of other instability that's happening and I think we're over focusing well on just that I actually thought literally the Marjorie policy doesn't matter let a layman explain no let me let me let me this is an ontological discussion for like a scotch in a cigar and we're an hour and a half into it but the days when you could pick up the Wall Street Journal and read some interesting article about what the FOMC is thinking and then make money off of that or the days when you could read the minutes of their meetings and then interpret where like interest rates are going those days are over and most people in finance don't get that so for those of you who are listening to this and you're not in finance and investing I'm glad this is an hour and 30 minute of our podcast because you can just do not this isn't really for you you probably never cared what you know people who said short term interest rates did or said the truth is that we're in a world where macro is geomacro there is no other macro this is like geopolitics and politics are so infinitely more important in 2026 and beyond that if you call yourself an investor and all you do is read FOMC statements and try to think where interest rates are going based on what the Fed is going to do like your dinosaur you know you and the cordory pants you wear are going to be buried like this is just this is not your world anymore and I think that Fed the watching which is what we in finance call the art of literally interpretation of FOMC minutes which by the way was always crazy to me that this is what that many people do in finance Fed watching is going to go the way of whaling like there's still there's still like equipment rusting in South Atlantic and South Pacific you know you can still go to like these islands in the middle of nowhere and find huge infrastructure for stripping a whale carcass of its blubber and its oil because this is the only way we had light in large part of the 19th century before we invented the electric bulb like tens of thousands of humans were employed in the whaling industry whole cities in New England were enriched by whale oil and then we invented the electricity and we no longer needed this spearing of sea mammals to bring light similarly we will not need to read FOMC minutes and we I still I don't I don't I don't care what they say because you know why it because they're not price makers anymore they were when inflation and growth had very low volatility because geopolitically and politically the world was very simple America was a unipolar had you on nobody challenged it and on the domestic political scene less if fair capitalism dominated the best practices best practices of rural Reagan Margaret that said government get out of capitalism get out of the economy this is the world where you can read an FOMC statement and think you're an investor we're so far from that world you know we're so far from that world you know God bless camera workshop wish him the best but I will not be paying attention to what he does that thing you said about cabinet ministers who don't look like smegled that might be the funniest thing you've ever said on the podcast by the way I'm going to I'm going to stay with me for quite some time anything else you want to tell the listeners before we get out of here Mark no just a January's over you know I had whoever managed to have a dry January during the last four weeks well done well thank you thank you well I did I did I did well it was I had I had a couple moments there but I did good I'm not much of a drinker so it doesn't really come you know but yeah all right we'll be back later this week probably okay all right can't wait