Peter is a New York Times bestselling author whose first three books — The Accidental Superpower, The Absent Superpower and Disunited Nations — have been recommended by Mitt Romney, Fareed Zakaria and Ian Bremmer. Peter is also a highly sought after public speaker. With a keen eye toward what will drive tomorrow’s headlines, his irreverent approach transforms topics that are normally dense and heavy into accessible, relevant takeaways for audiences of all types.
Hey everyone Peter Z here coming to you from a very foggy Colorado it is the 16th of February and the news today is that Russian prison authorities have announced the death of Alexi naney who was a political prisoner who had the audacity to criticize uh Vladimir Putin
And run for office long ago years ago uh and has been in prison ever since um he was transferred about a year ago to a high security prison in the middle of nowhere in Siberia it was an old uh Soviet gulag this is basically where the Russian government sends people when
They want them to die because it’s cold it’s brutal there’s no heat and medical service is deliberately denied uh so the idea that he’s dead is not exactly a shock uh the Russian government very well could have actually executed him and no one would know um now back in
2021 the Biden Administration said the death of nany would trigger a collapse in international relations that would really punish the Russians but since then the Russians have launched a war and killed a couple hundred, people in Ukraine so pretty much all of the stops that could be pulled out have been
Pulled out and about the only way to punish the Russians now would be to send a lot more weapons to Ukraine or to do an outright uh block of all of their energy exports neither of which on the moment for mix of political and economic
Reasons are on Deck so I don’t want to say anything weird like you know the Russians are going to get away with this because there’s a lot going on uh but don’t expect any sort of tactical response from the Americans in general um or the West uh now now before anyone
Gets to crying about this couple things to keep in mind number one Russia is not a democracy it hasn’t really been a democracy in over 20 years so uh even if n was allowed to continue to be part of the political conversation in Russia it’s not like he has any chance of
Changing policy he was more of a personal annoyance to Putin and nothing more um there are other people within the ruling party who have decided to run for presidency against Putin on a very nationalist ticket but just be opposed to the war and they’re not being allowed
To participa either so it really doesn’t matter it’s something that pro-democracy activists in the west get really excited about because he’s a name that more people know but he was never going to have any influence uh second careful what you wish for uh naney may have been
A nicer guy than Putin because you know low bar but he was just as Nationalist and his biggest criticism of the Ukraine war wasn’t that it was happening but it just wasn’t being prosecuted very well uh people forget that the the strong predeliction among Russians is to
Continue the war they just don’t want to be part of it personally uh the idea that Russia needs to expand its borders in order to survive is not one that is particularly debated in Russia it’s a generally been their security policy for 400 years that as long as your external
Borders are flat and open you’re not safe so you have to go through Ukraine to get to Romanian and Poland and the rest now of course that’s bad for Romanian Poland and the rest but the Russians are not misreading the map and unfortunately that gets wrapped up in
The political discussion so that folks like nany appear more important than they really are so I mean I feel bad for the guy and his family but if we were probably always going to get here everyone Peter Zion here coming to you from doubtful sound and in this next
In our series of regional geopolitics in a post American World I want to talk about Northern Europe specifically the Scandinavian region uh now this is an area that has been fractured by history you got Islands you’ve got peninsulas you’ve got deao city states uh but while they have been powerful in the past
They’ve kind of been sleeping for the last 300 years and during the Cold War and the post Cold War era it’s been fractured into a number of different governments but I think the best way to think about this is not so much a collection of countries but a family of
Vikings who are getting to know each other again uh the original Vikings were the Danes and the swedes who basically went off raided and pillaged and founded little trading Depots everywhere that they went and some of those Depot eventually Rose to become significant countries in themselves uh think of Ria
In lva or Oso in Norway or ruic in Iceland but um by the time we get to the modern era uh they had been broken into different spheres of influence uh in the post cult War environment however especially now with the Ukraine war happening we’re seeing a changing in of
Fortunes as these countries are rediscovering each other and we’re already in an environment where a lot of them are consider themselves so familial that they already have a lot of joint embassies around the world but if there’s one thing they’re all concerned about it’s Russia uh Denmark is the last
Country approaching the Baltic Sea so that if the Russians ever make a bid to get in the open ocean they go by them uh the Norwegians control the northern coast line so they know the North Point is something they’re responsible for Estonia laia and Lithuania used to be
Russian colonies under the Soviet period and Sweden is a midsize power that was ultimately smashed by Russian power three centuries ago and only recently has kind of emerged whereas Finland was both a Swedish territory and a and a Russian territory based on which time frame you’re looking at and only really
Became independent in a traditional sense in the last decade or so as it’s broken away from its finlandization programs which were basically a way that the Soviets used to crush Finn’s strategic autonomy what we’re seeing now is this whole cluster of countries coming back together all on the same side of the
Same geopolitical orientation no longer fractured by other powers with Sweden absolutely being the center weight of all of it it’s probably best to think of most of these countries not so much as countries but as cities that just happen to own another swath of territory so in
The case of say Ria or Copenhagen or uh Oso over half in fact almost 3/4 of the population is in that one city uh and the rest of the territory just kind of hangs on Sweden is the exception I mean yes Stockholm is by far the largest but
It actually has a population populated Zone in the South that is agricultural there are a number of cities going up and down the Baltic Sea Coast and so it is arguably as powerful if not more powerful than all of the others put together and now that Sweden is emerging
From its traditional neutrality and starting to write its own security policies uh it is going to be a major force to be reckoned with couple things about this reasion we keep in mind number one it is very very Naval uh because of the Baltic Sea because of the
Gulf of bnia this is a zone that if they’re going to survive they have to do so in the context of having a powerful navy to keep the tempal rivals at Bay and that means number two it’s actually fairly easy for them to partner with other powers from out of region assuming
For the moment that those other powers are also Naval because if they were to partner with say the French or the Germans who are primarily land Powers these countries would see themselves overwhelmed they’re not just they’re just not big enough Sweden doesn’t even have 10 million people versus say France
Is roughly 60 uh the whole region put together can’t add up to a France much less a Germany but if if you bring in the United Kingdom you’ve got a very different sort of power Dynamic the United Kingdom like the swedes like the Danes like the estonians really doesn’t
Want to see a single large Mega Power emerge in the Eurasian or the European space because that would be a threat to their Naval Independence and so the Brits have always gotten along spectacularly with all of the Scandinavians and now that the swedes and the fins are ditching neutrality the
Partnership between London and these places is very strong to a lesser degree the United States is in the same place now the United States overall is looking to slim down its security commitments moving forward but it doesn’t take a lot of cooperation between the Americans and say the fins
And the swedes and the Norwegians in order to achieve some outside outcomes because all of the Scandinavians just want to rain Independence which means they’re always going to be to a degree hostile to anything that happens in Moscow and to a lesser degree Continental Europe that means for a very
Small price the United States can really achieve some outsize outcomes working through some very creable Partners so we should start to think of the relationship between the Americans and the baltics and the Norwegians and the Scandinavians however you want to define the cluster as very similar to the American relationship with Australia a
Powerful creative Ally that punches above its weight that’s going to do its own thing for its own reason but which dovetails with American power moving forward all right that’s it for me catch you guys next time good morning from a frigid Colorado it’s a baly 0 degrees this morning and uh
Today I want to tell you A Tale of Three companies and the state of the semiconductor industry from a technological and production point of view now if you go back to the world before 2017 the technology of the day was something called Deep ultraviolet uh which was basically a way
Of producing microchips and Intel the American technological giant was the world leader by pretty much any measure uh and they had gotten a little cocky and they had gotten a little bit lazy so they would design chips 2 three four models out but would only produce the
Next one up because they were so far ahead of everybody else they didn’t feel the need uh to jump steps so they would use duv and they would make a chip that was marginally better than the one before and then at the end of the year
No one was had caught up so they do it again and again and again and they did this for like 15 years I mean they’re they’re very good at what they do but they could have pushed the technological envelope a lot more if had they chosen
To uh in part that was because of the nature of duv Technology uh the problem with it is you have to kind of make micro adjustments and physically adjust the equipment for each type of Chip and you have to do that manually and physically and so with every design you
Had to do it all over and with every machine in a fabrication facility you would have to do it independently so no new chips from different machines are to be quite exactly Alik and it generated a relatively higher loss rate from the final semiconductors than what we have
Today and uh so generated a little bit more waste but again they were the industry leader no one was close well they were always had their eye on the future however and so they invested in new technologies that would take them Beyond duv one of which is euv Extreme
Ultra violet and the company that developed that technology is asml out of the Netherlands and back back in 2016 asml thought the stuff was ready to go so they’re providing demonstrations for Intel showing them how this technology is better you can not only get more
Nodes on a chip and get to smaller and smaller nanometers but it’s all digital so you kind of type in what you want to the machine over the course of a few days to a few weeks and then the machine doesn’t actually have to be physically
Manipulated in the way that duv did now what that would mean is you’d have a higher uh success ESS rate and more efficiency but back in 2016 intel was like I don’t think this technolog is quite right and we’re the industry leader we’re going to give it a few more
Years well asml not very happy with that marketed the technology to everybody else and a company decided to take the plunge that company is tsmc out of Taiwan and when we get to 2017 tsmc suddenly hits the ball out of the park and proves that euv is ready for Mass
Application and over the next couple of years very rapidly overtakes Intel because they have a shorter turnaround time for their chips and they can make chips with smaller nanometer uh sections uh it isn’t until 2022 or 2023 that Intel finally makes its first extreme ultraviolet chip so tsmc in
Taiwan has been the industry leader now for several years now we’ve had a kind of a reverse in the roles now uh asml the Dutch have another another new tech technology called high numerical aperture whose physics I’m not even going to pretend to understand and they have marketed again and this time Intel
Is the one that’s behind and they’re kind of desperate and kind of hungry and tsmc is the one that’s resting on their Laurels so the first delivery of those new machines the high na chips went to Intel in the second week of January of this year and Intel expects two things number
One they plan to overtake tsmc using the euv technology in 2024 uh hoping to get down to 2 nanometers right now the industry lead is it about 3 nanometers and that’s a tsmc product and then next year they hope to leak frog even further provided that these new high na machines work
Which we you know we’ll find out pretty soon anyway that’s where we are right now in terms of the overall geopolitics it’s pretty straightforward right now 90% of all ien chips are made by one company tsmc in one city in Taiwan it’s a high concentration but if intel
Working with asml can pull this off all of a sudden we will have facilities in the United States that are working on the higher end stuff with some of the first facilities that are going to be going online uh outside of Phoenix and Columbus Ohio so stay tuned because the
Geography of these chips is about to evolve pretty significantly if High works and if not yeah we’re still stuck with Taiwan it could be worse hey everybody Peter coming to you from Colorado where we’re about to get another 6 inches of snow we uh a lot of
You have written in about um the Biden administration’s decision to put an operational pause pending further review on liquefied natural gas exports uh there are a lot of people talking a lot of things on all sides um on the energy industry side they’re saying that this is a a breach of proper protocol
And it’s going to really inhibit future Investments across the sector and on the environmentalist side they’re talking about how this is the end of that sector Al together and they’re dancing and singing Kumbaya um everybody’s wrong uh uh let me kind of lay out what this stuff is so natural gas is normally
Transported by pipe because it’s difficult to move it’s difficult to store it’s difficult to produce um and so you’ll have a pipe Network like in North America that is separate from the pipe Network in Europe which is separate from the pipe Network in China you got
Those are the three big ones you got some smaller ones around the world uh they don’t connect and they can’t connect uh and so if you want to link these together what you need to do is have a facility on a coast that will chill the stuff down to something like
Negative 300° or so uh and then it’s a liquid and then you put it into a specially designed tanker that can handle these cryogenic fluids and then you transport it across the ocean to another facility where it unloads and is regasified and then put into the new
System now uh we’ve been doing doing this for a few decades but it’s only in the last 15 years it’s really started to become big uh and the primary reason for that is the Environmental movement uh because natural gas if it’s properly burned in an appropriate facility a
Combined cycle natural gas plant uh generates about half of the CO2 emissions of say a coal plant uh also you can spin up a natural gas facility in just a few minutes as opposed to a coal facility which can take hours to even days uh and so if you want to pair it
With with say wind and solar it’s the perfect complement fuel because when the Sun goes down or when the wind stops you can just turn this thing on uh and so if you want to get the full capacity from your wind and your solar you really have to have a conventional system that’s
Dispatchable like natural gas now the United States currently has enough capacity name plate capacity to chill and ship about 13 billion cubic feet of this stuff per day which makes it the largest exporter in the world already and under construction are facilities that would allow another 12 BCF per day
Which you know if you remove the United States’s existing capacity from that that’s again the world’s largest and then there’s already been stuff permitted for another 16 billion cubic feet per day so you know you add those three together and well I mean where we are right now that’s enough to supply
All of Japan if we bring all of these online that’s almost enough to supply all of Europe uh and the Biden freeze doesn’t touch any of that it is a pause of the review process for new facilities uh now if the United States were to
Bring these all online so 13 today 12 in the few years and and down the road maybe another 16 you know you’re talking what 40 yeah it’s more than 40 BCF and that would be roughly 1/4 to 1/3 of total us consumption of natural gas
If we did get the number that high we’d have a lot more price linkage between the US market and everywhere else remember natural gas is pretty much sequestered and LG has traditionally just kind of played at the margins but if we had this kind of volume then
Americans would start to be exposed to Global natural gas prices uh if that were to happen instead of this $2 to5 range that we’ve kind of become used to and it’s probably going to be our Norm for the next few decades we’d probably see prices regularly going
Above 50 or 20 as we have international price shocks because of things like I don’t know the Ukraine war or I don’t know something blowing up in the Middle East when you only have about 10% exposure or in our cases a little bit no 10% yeah we got about 10 10% exposure uh
The price swings are very muted and so back in 2021 uh when the Ukraine war was hot and heavy and we thought we were going to lose all the Russian gas at the same time uh the Europeans were dealing with natural gas prices that were well
Over 70 for a few months and it was pretty ugly for their indust industrial stuff anyway uh let’s talk about what people are talking about with this uh on the industry side the idea that we’re going to build out past 40 is kind of a stretch anyway so the oil companies are
Just winging because someone’s telling them that they can’t do anything right now uh second the Biden Administration has not oversold this they’re saying it’s a temporary pause of the review process to consider climate change well if you want to consider climate change natural gas is the perfect fuel to ship
Out in bulk because it’s the only thing that really pairs with solar or wind uh you’re not going to do this with coal that would be silly and batteries sound great Until you realize the industrial process that’s required to build them at scale is never going to make them more
Than a niche use in specific areas I’m not saying there’s no use for them there but natural gas is so much easier it’s so much cheaper and by most measures it’s actually a lot cleaner too uh so you’re only going to put batteries in places like uh Phoenix maybe where the
Solar intensity can be really really high and they just need to save some just needs to save some uh for nights uh and then on the environmental side uh the celebrations you know number one this is not forever it’s a temporarily pause of the review process which the Biden Administration can
Reverse with a stroke of his a pen or any additional leader could for reasons environmental economic or strategic remember that a lot of the stuff that’s getting shipped out right now is going to Europe in order to allow the Europeans an option other than sucking down Russian gas so you know this is
Kind of important from that front too uh so everyone’s kind of making a really big deal out of it but I think the thing that is most hilarious is that the Biden Administration has found a way again to satisfy the environmental activists without actually changing the system uh
This is very similar to what he did when he came into the presidency and he put a moratorium on fracking on federal lands and everyone was all wailing and nashing their teeth on one side and screaming bloody Delight on the other side well people forget that 99% of all Shale operations are on
Private land and that is regulated by the state so it was less than 1% of Wells that were affected at all but it made the environmentalist happy and it pissed off the energy industry but it didn’t really change anything at all and Biden is never going to be the preferred
Candidate of the energy industry and he was able to play eight some of his more hardcore supporters he’s now done that again so it’s a fairly savvy political move that actually moves the needle knot at all which you know is one of the smarter things you can say about politics these
Days hey everybody winter is here I’m coming to you from Eastern Washington and today we’re going to talk about winter in Texas now if you guys remember back a couple of years I think it was 2021 uh Texas got hit by a cold storm and basically everything collapsed uh
All of their energy generation especially natural gas just ceased functioning um and 200 people died over the course of a couple of weeks because of the lost electricity uh that has not repeated with this cold front even though by many measures in most parts of the State uh temperatures got a little
Bit lower so five things are different now compared to what happened back in 2021 uh first of all while it did get as cold or even a little colder uh the cold snap wasn’t quite as long it didn’t last like the 2 and 1 half weeks like it did
Last last time so the system wasn’t put under as much long-term stress uh but the bigger issues have to do with organizational and structural changes that the Texans have implemented uh the big driving factor for things on the legal side and the regulatory side um was governor Abbott who had spent a lot
Of time before 2021 making fun of California for their rolling Brown and blackouts uh because they just have a horrible grid and a horrible Energy System and then of course in Texas you had 200 people Di so he was personally motivated to make some changes and he pushed them through the legislature
Which forced the regulatory structures in Texas to adjusted and the biggest part of those changes affected the natural gas industry so Texas before 2021 didn’t have its natural gas system winterized at all and there’s a lot of water vapor that comes up as a byproduct of natural gas production and a lot of
Time it’s in the Gathering pipes so what would happened when we got to subfreezing temperatures is that water vapor would condense into liquid and eventually condense into ice uh and then Clogg the pipes so the entire system um across especially Northern Texas and the Dallas area froze up and so there was no
Fuel to burn to do everything else for political reasons uh Abbott blamed the wind industry because you know the wind did stop going but it was mostly natural gas that carries the backbone of power generation in Texas and that is what failed most spectacularly so in order to
Get things going they actually had to wave almost all of their safety uh regimens and regulations and people were going out with the settling torches to manually melt the pipes and of course natural gas is flamable explosive so we were kind of lucky that that didn’t get
Completely out of hand anyway this time around the changes in regulations forced producers across Texas to actually Implement some of the best winterising technologies that we had back in the 1960s and the Texas grid now is on par with where Arkansas Oklahoma and newx Mexico were about 1975 so you know this
Is some really basic stuff when it comes to things like insulation anyway it was more than enough to make a difference okay so that was the first big structural change um the other big structural changes uh had nothing to do with regulation it’s just how things
Have evolved so the new turbines uh wind turbines that the Texans had put up are more than 200 feet taller than the ones that were up three years ago and that means they reach higher they tap stronger air currents that are more reliable so even though the wind did
Drop we had didn’t see nearly the drop off in power generation capacity because the physical structure is now different second Texas has put up a whole lot of solar and when these witer Storms Come Through Texas usually what you get is a lot of wind a lot of freezing rain maybe
Some snow and then once they blow through it’s cold uh but it’s clear and so when you have temperatures in the 20s solar doesn’t really care what the temperature is unless it’s like crazy low or crazy high so solar was just generating near record energy for the time of year so
You had two different streams of energy coming into the electrical system that they didn’t really have last time and their base load system with natural gas worked a lot better than it did uh this sort of change is the sort of thing we’re going to see in some way across
Not just uh Texas but the entire country in the eventual world uh we’re seeing more and more wind and more more and more solar and it doesn’t always go right the first time and we discover that meshing these systems together is more problematic than kind of the Breezy
Things that the greens say but when you have multiple systems that do feed into the same network you do get a lot of redundancy uh when one works and the other doesn’t the trick is to make sure you have enough spare capacity that you can dispatch at any given time now in
The past solar and wind aren’t very good at that because you can’t dispatch them if the sun’s not out the wind’s not blowing they’re kind of useless and you have to rely on older fossil fuel things like natural gas but what we’re seeing in Texas specifically is that we’re
Already seeing turbines that are 800 M tall and in the next year or two we’re going to be pushing the kilometer tall barrier and again stronger currents more reliable used for base load so I don’t mean to suggest that all of these problems when it comes to storms and
Interruptions are going to go away but as the technology evolves we’re getting better able to adapt and having a little bit more insulation on the back side as well that’s it for me hey everybody Peter Zion here coming to you from hon peak in central Colorado and today we’re going to talk about
Romania uh Romania is one of those middle powers that kind of has been dealt a bad hand it’s got a good chunk of land in the lower danu and it’s bracketed by the carpa in mountains but it’s not quite big enough to kind of stand up to the neighbors so it’s got
These two access three access points really uh you’ve got the uh Vienna Gap to the the Northwest that allows access to the northern European plane you got the best Arabian Gap to the Northeast which allows access to what I call the Eurasian hords and then down south you’ve got the bualan mountains that
Pinch off access to the Sea of maramara region now the northern European plane the hords and Mara are all capable of supporting absolutely massive powers that have dominated history as long as it’s been recorded and Romania is kind of stuck in the middle it has access to
All three of them but could never generate the sort of military force that is necessarily to punch out Beyond those gaps and do anything meaningful in fact because it’s approximate to all of these gaps it is usually one of the first countries that gets conquered or Amalgamated when one of those three Mega
Regions decides that it wants to expand beyond their natural borders and in that sort of environment Romania Fates a double bind number one whether it’s coming from the northern European plane or mamara or the EUR Asian hland it’s got to decide whether it’s going to fight or
Whether it’s going to aede and if it chooses to aede and it is not in charge of its own destiny anymore and it usually ends up being a cog in somebody else’s Empire uh the second problem is that Romania while being the most populace of the countries in this
Squeeze Zone in between is certainly not the only one and there are others that might be a little bit defense more defensible and have a little bit richer geography and Romania is in constant competition with all of them so even if it can make its peace with its large L
Ger neighbors it then has to make peace with its smaller neighbors uh some like Bulgaria usually gets along with pretty well others like Serbia are tety but probably the biggest problem of all of them is Hungary two problems here number one Hungary has a little bit more
Defensive of a geography than Romania so it has a little bit longer history in terms of being an independent power uh especially since it is up against that northern European plane Gap uh best Arabia is 50 m Gap and it’s really hard for a country the size of armania to
Plug that but the Vienna Gap is only a couple miles wide and most of that is the danub river making it fairly easy for even a small country like Hungary to hold the line uh that means that Hungary and Romania are the two countries that tend to find themselves uh fighting more
Often than even the major powers that are in the Lands Beyond and if you want to go just back to the Cold War there were these delightful stories that came out at the end about how yes we were in a Cold War of the West versus the Soviet
Empire but within the Soviet Empire the Hungarian and the Romanian intelligence Services were duking it out behind the scenes while they were technically on the same side now looking forward the Romanians have some decisions to make they know that the European system is of limited duration they know that it’s in
Demographic Decline and they know that there’s going to be a fight for the region once again just like there has in every age of their history that has been recorded to this point until very recently they were convinced that when the Russians came again they’d have to
Cut a deal that they wouldn’t have a choice but the Russians are doing so poorly and Ukraine the uh Romanians are starting to entertain the possibility that there might not even be a major power on the other side of the best arapan Gap again and that means that the
Other Regional power that they would probably have to cut a deal with turkey becomes a lot more digestible turkey’s an up and come in power the relations with Romanians going back uh centuries have been pretty good they’ve been EXC since the Cold War maybe a little cool but certainly professional and if the
Romanians are entering a world where the Russians are no longer a strategic Factor but turkey is then that’s a partnership that’s not vassal Dum and that is could potentially spell the greatest chapter in Romanian history to date there are plenty of caveats in that statement Romania has among the world’s
Worst demographies uh they have are one of the top 10 countries in the world for using abortion as a birth control method and they’re among the worst demographic structures in Europe uh they’re going to have to find a new economic model uh they’re going to have to figure out what
Happens post EU and maybe even post NATO these are all big questions but the fact that they’ve got a rising partner in Turkey right next door but not directly adjacent Bulgaria’s in the way that’s that’s a pretty good setup all right that’s it take care hey everybody Peter Z coming to you
From Colorado uh the big news over the weekend is that a Hong Kong court has ruled that China’s largest property Development Group ever Grant is bankrupt and needs to be broken up uh this is something that the Chinese government has spent a lot of effort on the last
Two years not happening uh because well let me give you a little backstory so there’s two big things that dominate the Chinese economy the first is something I call hyperf financialization the idea that the government both de facto confiscates the savings of the citizen population so it can only go into
Projects funded by Chinese State Banks as well as massively expanding the money supply to a tune of like almost triple what we have here in the United States uh in order uh to make sure that there is plenty of cash sloshing around in the system so that Banks can loan anything
In any amount at low terms to anyone at any time because if they can do that they can expand expand expand and higher higher higher and people who have jobs don’t go onine long walks in large groups together it’s a public stability political control approach to finance it’s not about profit it’s about
Throughput because throughput requires a lot of bodies anyway that’s the goal uh in that sort of situation you get two things number one you get companies like evergrand who gorge on all this bottomless supply of debt to build build build build build even if there’s no demand second you get a population who
Knows that their private savings is almost worthless because the Chinese government is forcing them to keep it in the State Banks and they want to put it into a hard asset that preferably the state can’t control and if they can’t get their money out of the country then
The next best thing is a hard asset in the country which typically is property so you get people pooling their private Savings in order to buy condos and each condo is typically owned by a different Consortium of private individuals uh making untangling it also you have somewhere probably in the vicinity of
1.5 billion units in the country that have never been lived in never will be lived in so you’re talking about 100% overbuild conservatively some estimates say it’s as high as three billion which is just so far beyond stupid anyway ever Grand going down means that their debts
Aren’t going to be serviced anymore and the physical assets they have are going to be parceled up and foreign investors are going to be coming in seeing what bits that they can get none of these things are things that the Chinese Communist Party would normally allow to
Happen so there’s a couple couple ways that this can go none of them are good option number one is we follow a western style bankruptcy and restitution program where this system is broken up and a lot of their assets are sold at pennies maybe dimes on a dollar uh and it just
Goes away if that happens we will have a very clear idea of just how much the over Supply in the market is and you can count on private citizens being up in arms probably I mean the best estimate I’ve seen out of China is at 70% % of
Total private savings is wrapped up in real estate and most of these assets are worth no more than 10 cents on the dollar so if you have a fire sale of the single largest player which controls one sixth of the market holy things are going to get real very very very quickly
Option number two is that the Chinese step in and abgate the Hong Kong ruling now legally this cannot happen but the Chinese Communist party is not really big on legal details when it comes to Hong Kong in particular and I have no doubt that they could stick their noses
In that if that happens that ever Grand goes on some sort of State drip and everything with the system just kind of limps on with the understanding now that Hong Kong has no legal authority over its own Holdings which will start an exodus of what few International firms
Are still there regardless how this goes don’t expect anything in the market to get better this is not like say the tarp program that the United States put into place back in 2008 at the bottom of the sub plim crisis which kind of froze the market and put a floor or things and
Allowed for reforms and economic growth to eventually heal the damage of the subprime crisis no no no no this is this is a one-off decision that is not just holding back one rock from rolling down the hill evergr may be the biggest player in this market but it is by far
Not the only one who’s been doing stupid things like this building condos that have no demand or running it like a Ponzi scheme every development company in the country basically operates this way and the second and third largest players in the industry are state-owned so you can count on the Chinese
Government not using this as an opportunity to break with the old model and put into place something sustainable and even if all of a sudden this place were run by a bunch of Austrian economists it’s too late housing demand legitimate housing demand housing demand for houses that people actually live in
Is dominated by people aged 20 to 45 people who were starting out well 45 years ago the Chinese government instituted the one child policy you combine that with the most rapid urbanization program in human history and there are no longer enough people under age 45 to do anything that is
Consumption-led including home buying so there is no path out of this that follows any pattern that we have established in a market environment which leads us to political and social out comes where the market economics are just atrocious and getting worse by the day with a government that is becoming
Ever more nervous about the state of the economy and the Loyalty of its population I don’t want to say anything overly dramatic is like this is where it all starts to fall apart because we’ve had a lot of things like that go down in the last 18 months uh but this cuts to
The core of what enables the average citizen to actually support the government and there’s no way we move forward from this without a lot of sight damage everybody Peter Z here coming to you from a chilly day in Del Beach Florida well chilly for Florida it’s
Like 50 uh today we’re going to talk about what’s going on in the world of Maritime shipping and why we should be thankful that nothing’s gone horribly wrong yet and why we shouldn’t count on that continua uh just a quick recap of what’s gone down in just the last couple
Of months uh we’ve got Ukraine taking accurate pot shots at Russian energy facilities on the Baltic Sea at a place called usluga and on the Black Sea at a place called Tua and um they’re gearing up for an over ceas kit now we’ve got a drought in Panama which based on whose
Numbers you’re using and whether you’re going by value or tonnage has reduced the throughput of the Panama Canal by somewhere between 1/3 and 2/3 we’ve got htis in Yemen who are taking pot shots at pretty much every other vessel that uh happens to go by them uh which has reduced uh shipping
Through the Red Sea by about 10% for energy and cargo um we’ve got fresh piracy in places like Somalia it’s never really gone away in places like the Gulf of Guinea or the straight of Mala and we’ve got the Chinese making ever louder noises about wanting to change the security environment in their
Own neighborhood even as the Russians are actively making roughly 2third of the Black Sea a noo Zone uh it’s a long list it’s getting longer by the day but but but but but but to this point there has not been a meaningful break in the old system uh a big part of
That is because of the insurance structure where every vessel who’s sailing anywhere has to get some sort of policy to ensure both their hole and their cargo and while with the ever tightening sanctions on the Russians because of the Ukraine war to this point uh that system has not been broken uh it
Has been denied Russian shipping but Indian Chinese and Russian State companies have stepped in to offer policies and so far none of the ships that have had problems anywhere have been under one of those policies so what has happened is we’ve got this dual system where we have the the normal
World where the Americans and especially the Europeans are providing the insurance for most of the shipping when you’ve got this ghost Fleet that’s developed mostly older vessels uh that were about to be decommissioned that have been brought back and given a new lease on life as um second rate cargo
Haulers especially for liquids where they have a Chinese Indian or Russian insurance policy uh this ghost Fleet based on whose numbers you’re using it may be as much as 10% of the global tanker Fleet and there’s also a few bulkers and maybe maybe maybe even a few
Container ships that are kind of joining its ranks now too uh anything that the Russians can do to keep things uh under the table from the point of view of global recordkeeping and shipping now what that means is that the risk has been deferred and absorbed by this Shadow organization that has kind
Of popped up we’re now in a situation where we’re kind of of in a holding pattern where we’re kind of waiting for like a real actual disruption to happen CU so far no real country has targeted any sort of shipping it’s not like the Japanese and the Chinese have tried to
Block each other the US is still using its Naval power to patrol the oceans where it can uh and the biggest beneficiary of that system is none other than China and we don’t have the Russians or NATO deliberately targeting each other’s commercial shipping yet uh in fact everyone is very scrupulously
Sticking to the old structures they’re just kind of trying to maneuver their own ways to get National and Regional advantages now this isn’t going to be long for the world uh this is a very unstable sort of equilibrium that we have reached in early 2024 and the that this is crazy that
Ghost Fleet is the reason why it’s all still working it’s kind of a testament to the Strategic inertia of the system but now the buffer the ghost flead is something that is is largely documented largely under the table and if one of these ships gets into trouble it’s an
Open question of whether or not the US Navy will step into help all of these are unknowns which means as soon as that happens a ghost Fleet ship gets into trouble or a real country starts taking shots at another country shipping we don’t just lose that buffer we lose all
Of the insulation that we’ve managed to build up in the last two years and we get a very quick breakdown much faster than we would have otherwise now based on what happens geopolitically this could all go any number of directions if the United States decides
To take a shot at what the Iranians are doing in the Gulf you know that obviously takes us One Direction the Chinese decide to do something in the South China Sea that takes us another if Ukraine accidentally hits an actual third party vessel in some of its anti-russian operations and goes another
If the Russians uh board and capture somebody going to a Ukrainian Fort that takes another we’re on the edge uh there’s a lot of guns aimed at our heads right now and it honestly from from my normal point of view it doesn’t really matter which way this goes It All Leads to the
Same end place where long range shipping is simply no longer viable and shipping in general for dangerous areas is simply no longer viable and the two biggest plays in the world that benefit from the current system are ironically Russian sanctions busting oil exports which have
To sale all the way around your Asia and Chinese merchandise exports who have to do the same thing those are the longest Hall plays out there all going through dangerous zones uh so when this cracks we see those two things get hurt first but they will be far from alone remember
East Asia is home to half of all manufacturing supply chain steps there is no version of manufacturing in the world especially when it comes to things like Computing and electronics where it works without that setup and that requires global Shipping to be safe so we need to be prepared for the not to
Dist future when all of this just stops working and we have to figure out a fundamentally new model that’s probably going to be more based on regional trade rather than Global okay that’s plenty for the day take care hey everybody Peter Z here coming
To you from Colorado now I get a lot of flak for never having good news so I figured you know here here’s something fantastic that’s happened over the holidays uh there’s an organization called sunia which is a company that produces and transmits electricity that has uh closed funding
And started construction on what will be the largest Green Tech power generation system in the hemisphere uh 3.5 GW which in electrical terms is huge um why does this matter a bunch of reasons number one 11 billion do is how much money they had to raise raising money these days is
Difficult uh because the baby boomers are majority retired all of their capital and all their savings has been put into relatively static things things like cash and T bills and so if you’re trying to raise funding for anything it’s got a lot more expensive uh in addition unlike if you
Were to build say a natural gas power plant or anything that’s fossil fuel-based uh with those systems fossil fuels only about 1th the cost of your fac of your full life cycle cost for your facility has to be raised at the front end to pay for construction but uh
Most of it is instead raised from fees um when you’re generating the pow as go instead with Green Tech 2/3 of the cost is upfront because there’s no fuel cost but The Upfront cost is much higher so you’re talking about 23ds of the total value of the entire life cycle of the
Project has to be raised before day one and so doing that at all is difficult now that Capital costs have roughly tripled but sunia was able to pull it off so number one big achievement for the capital cycle number two the size 3.5 gws biggest in the hemisphere uh if
We are going to do the green transition we need to increase the amount of power generated in the country by at least 50% this is a nice little bite taken out of that uh but from my point of view if we’re going to deal with the post China
World and expand the industrial plant to manufacture everything we need we need to expand it by another 50% so regardless if you’re green if you’re Pro development or both uh this takes us a significant step forward uh we still need like another 500 of these steps but
You know we’re going in the right direction okay uh number three what it is it’s wind um and it’s in New Mexico so wind as a rule is much more cost effective than solar uh in large part because every time the sun goes down all those solar panels just become paper
Weights whereas the wind blows at night in addition while we have had incremental improvements in the capacity of photovoltaic cells over the last 15 years it’s nothing compared to what has gone on with wind it used to be that wind turbines were 100 feet tall well this year we’re going to have prototypes
Are ones that are thousand feet tall you know just massive massive structures and they generate more than an order of magnitude more power than the old ones do and more importantly than their size is their height because they’re reaching wind currents that are far more stable and far stronger and so we’re seeing
Places in Texas in Iowa and now in New Mexico that are using some of these taller turbines to not just generate intermittent power but Bas load power and that’s one of the big problems with Green Tech if the wind stops or the sun goes down you’re kind of out of luck you
Have to switch to a more conventional system or a battery system which is much more expensive but if you are tapping a wind current that never stops you can use it for base load and avoid both of those problems and that’s part of the goal here for the sunia project but
Fourth and I think most importantly is that unlike almost every Green Tech project that we have done in the United States to this point a huge portion of the zonea project is transmission they realize that there aren’t a lot of people in New Mexico and Albuquerque can
Only suck up so much power and so this project includes massive transmission lines that go into Arizona and Link into the network that goes into Los Angeles and of the three and a half GW of power generation that they’re anticipating all but a half a gigawatt of it is for
Export to the Arizona and California markets and the fact that this Taps into the LA Market is beyond awesome um I don’t know how many of you have heard of California but uh doing business There is almost impossible electricity demand is hardly encouraged but in many ways electricity generation is flat out
Illegal uh very heavy regulatory environment the state uh is also very power hungry and they import about a third of their electricity because they’ve made it very difficult for producers to operate in their home state uh Arizona is by far the single largest supplier they have uh and every night
When the Sun goes down and all those panels that California’s built stop working 10 gaw of fossil fuel power comes from Arizona across the border flooding into the LA Zone the sunia project will now be able to put roughly three gaw of power into that Network it
Doesn’t solve it out a stroke but it’s a much more sustainable program from an environmental point of view than anything that we have right now so you know great step forward one of the big things that we forget about in wind and solar is not just the intermittency it’s
Just that not everybody is place is sunny and not every place is windy and most people don’t live in those locations s so our best wind locations are the great PLS from eastern Montana North Dakota going down to the panhandle of Texas and West Texas our best solar
Zone is from Southern California going into West Texas as well New Mexico is on the edge of that Great Plains region great wind potential great solar potential but there aren’t a lot of people in that entire area you got to wire it somewhere and this is one of
Those projects that has managed to work out the details of crossing state boundaries two of them and getting power to where people actually live in Phoenix and Los Angeles so we need many many many many many many many many many more of these for this to go but the fact
That we have our first really big one that’s already started construction first poers expected in 2026 it’s a great start hey everybody Peter design here coming to you from Snowy Colorado where in the last 18 hours we’ve gotten 18 inches of snow which means that this morning is a time for clearing and
Shoveling uh but there is more to Winter than shoveling and icles there is also the fun in games that comes with agriculture in fact winter is arguably the single biggest factor for how our world got to be in the shape it is more or less the century and last century uh
The issue is that when winter hits everything stops and you have a layer of moisture that then insulates the ground this does two things number one it preserves a little bit of moisture in there and then we a little bit back in the spring but more importantly uh the
Thicker the snow the greater the insulation and so you actually still have biological processes going on under the surface even right there in the top soil uh basically you’ve got organic material that is decaying or as Farmers like to call it the formation of free
Fertilizer if you look at the map of the world’s agricultural zones before roughly 1900 the pre-industrial era you’ll notice certain patterns the American Midwest uh to a degree the American in pedmont northern Europe Central Eurasia the Rio Plata Basin in South America and uh the Southeastern
Part of Australia and South Africa oh oh um sorry I forgot Northern China as well what do these areas all have in common gets cold you get some snow and so you get that recharge system uh they’re temperate climates where the free fertilizers is kind of baked into the
Cake if you go outside of those zones pre 1900 it’s not that there’s not agriculture but by definition it’s almost not large scale and most of the crops that feed most of humanity so you’re talking rice soy wheat and corn um those four crops grow best in those
Conditions uh you move out of those zones and you’re talking different crops things like sweet potatoes or yams and it’s not you that you can’t support a population with those things it’s that you can’t support a large population with those things they’re not nearly as amable to row cage um you it’s more
Subsistence farming as a rule now uh that of course chained right right around between 1900 1945 for some countries and then between roughly 1990 and 1995 for the rest uh what happened there was first the development and then the mass application of Industrial Level agricultural inputs things like fuels
And fertilizers which allowed you to plant more traditional crops in zones that normally weren’t really great for it in addition those lower output crops per acre if you started putting things like fertilizer they would do a lot better as a rule the industrialization of Agriculture had a bigger impact on
Marginal lands than it did on the prime lands the prime Lands still saw their output increased by 50% to 150% but it’s the marginal lands that saw a tripling quadrupling or even more now something to keep in mind with all those secondary lands if you’re talking about say a step
Where it’s just dry with agriculture doesn’t nothing really happens if you’re talking about the tropics yes you have a riot of growth but the nutrients are consumed by that growth as soon as the growth rots so if you clear the jungle and the rainforest the soil that’s left
Kind is almost nutrient non-existent and without those Industrial Level inputs you really can’t grow crops at scale in these zones now because of industrialization of Agriculture we haven’t simply seen the part of the world that humans cultivate expand by a factor three we seen the population
Expand by a factor of three as well my concern is that we’re entering an era where the supply chains that allow those industrial inputs to function to exist are going to break down and for countries like China or Brazil Who import the vast vast vast majority of
Those inputs that means the ability to sustain post 1900 levels of population are going to be hugely hit in the case of Brazil they still have portions of the country that are still temperate it’s not like they’re going to starve but they’re no longer going to be a massive agricultural exporter to places
Like Brazil so for those of you who live in a place where you don’t have snow yes you get more time on the beach and you don’t have to shovel but it also means the security of your food supply is decided by people in different climate zones with Supply chains that are a
Continent away that you have no ability to protect or even influence and the world we’re going into that’s going to get a little rough