@habits

Peter Zeihan – geopolitical expert, author of new book “The end of the world is just the beginning” (his 4th book)

Lives in Denver

FIRST THEME: De-globalization – US changed world system after WW2 – used navy to patrol global oceans to enable global trade, IF you let us manage your security policy, “guns for butter”, but now US is pulling back from this

SECOND THEME: De-population – urbanization > fewer kids; baby bust so entrenched that most major economies have shrinking demographics now, passed point of return in 90s-00s; running out of workers, labor shortage

**1980-2015 we were in perfect global moment – Cold War winding down, US protecting oceans, global trade growing
But now heading into a fundamentally new – and more uncertain and chaotic – age because of the above 2 themes

Most models of economic growth were based on rising population – but that’s no longer a reality for most countries

**British took 7 generations to modernize, US took 5, China took just 1 – because each learns from the prior

But China also condensed all that economic activity and growth into one demographic generation too – precipitous decline in birthrates
Beijing and Shanghai have lowest birth rates of any urban center in all of human history

Developed world:
US, New Zealand, France have relatively good demographics
China, Japan, Russia have bad demographics

Developing world:
**Argentina, Mexico have good demographics

Once you urbanize, child-raising costs are very high, hard to subsidize this
-Russia tried in 2000s to give cash prizes to every woman with 2nd, 3rd child – but a lot of women would have children and then leave them at the orphanage, now millions of orphaned kids
-Swedes gave 6 months paid leave per baby, but it led to no employer willing to hire women under 35yo

Chairman Xi has stronger cult of personality than Mao
No advisor wants to provide him any information now, too afraid
Putin lied to Xi about Ukraine, none of Xi’s advisors were willing to tell him the truth, and Xi was surprised by Russia’s subsequent invasion
Xi has removed all future government leadership talent because of purges and extreme control
China is preparing for future where economic growth isn’t basis for legitimacy, but rather nationalism – you can eat as long as you’re loyal to party
Covid lockdowns because the homegrown vaccine doesn’t really work
Shut off phosphate exports – because of internal concerns about food security (Russia stopped potash exports, both are key fertilizers)
“This is a national collapse issue, not a recession issue”

How to reduce these risks as a nation-state
-increase diversity of suppliers
-**shift from “just in time” to “just in case”

Global food shortage going to begin Q4 of this year
-already too late for this year’s crop yields
-so tightly integrated / mutually dependent that when you have break in one link, the chain breaks

**Peter believes we’ll lose 1B people because of de-globalization and ongoing food shortages

Ukraine is just one step in many for Russian expansion to ensure its own geopolitical survival
Russia has failed tactically in war – will lose if they face US armed forces – which leaves nukes as only remaining option
Must kill Russian military entirely in Ukraine – otherwise Russia will eventually invade NATO countries and force US into war
Russia has more guns, tanks, people – will eventually rollover Ukraine if Ukraine + allies can’t win by summer

Germans are trying to figure out how to live without Russian energy supplies, seems only nuclear power will enable that in a short time frame

For China to invade Taiwan, scale of casualties will be 5x greater than Russia invading Ukraine (because water = moat)
China actually doing less business with Russia since Ukraine invasion started
China would be more hurt by sanctions (than Russia) if they did invade Taiwan

Most non-consensus belief:
Peter believes inflation today is high, but it will actually be the LOWEST it’ll be for the next 5 years (!)

What he’s changed his mind about:
Shale revolution has become a lot more economically viable than he thought, even though he was initially more optimistic than most

Why Russian ruble is doing well even after invasion?
Government forced every Russian exporter to put 80% of earnings back into ruble – helping stabilize the ruble
Spending all of their foreign currency to strengthen the ruble
“Starvation diet in the long run”

What countries will do well in this new world?

France – see EU as political project not economic one – if EU suffers breakdown, France never fully integrated their economy (as much as say Germany), won’t suffer as much if EU ends

Argentina – second best geography after US, self sufficient in most energy and all food needs
Despite disastrous domestic management, they’ve muddled along, and they’re used to disorder, will do fine in this more disordered global system
WW1 – Argentina was 4th richest country in the world

Where does Peter get his info?
Local news sources have best info on what’s going on, but very time consuming
Among world media sources, Al-Jazeera global news is very good (Mideast news is very biased)