Jacob Shapiro: Well honestly, Marco, I usually introduce this, but you just like,
like got this great concept that we're gonna roll out to the listeners right now.
So tell them why our listeners are enjoying their first
pathogen Shapiro six pack.
Marko Papic: Yeah, so, you know, in the ongoing effort to get a six
pack, which will last forever until I die, uh, and will never work
'cause I'm a chubby Serb like Yoki.
Uh, basically we're going to do an intellectual six pack.
And so when we don't have a prepared gimmick, like the top 20
liters in the world or the trade value or whatever, uh, we're just
gonna do a nice little six pack.
And what that means is that, you know, Jacob is gonna have three items of his
own that he didn't necessarily prep me for, except maybe a little bit.
And same with me together, it's a six pack of geopolitical events.
That we think are important for our listeners to hear about.
So there you go.
It's a six pack.
That's what this podcast is.
And every podcast where we don't have a specific topic, we prepared, uh, to
spend like an hour on, like we, you know, we did one about trade and tariffs.
Uh, listen up.
That was a really good one.
Like, go back and listen to it if you have the chance.
Uh, I'm gonna reference it a little bit in one of my six, one of my
three items, but whenever we don't have something, it's just gonna
be a nice little six pack for you.
So there you go.
Jacob Shapiro: That's perfect.
That's, that's perfect.
Are, are you more of a, what, what, what is your favorite beer?
I should know this about you.
Marko Papic: Uh, oh, that's an interesting, so I'm not a beer drinker,
you know, it's, uh, all my friends from college remember me as the guy
who just walked the dorm hallways with like a bottle of, uh, Olli, you
know, like, so I come from Europe, uh, and I went to university in Canada,
university of British Columbia.
Shout out to the Thunderbirds.
And everyone's basically an alcoholic, right?
And everyone's drinking beer nonstop.
And I'm like, why are we drinking beer?
Is it somebody's birthday?
And they're like, no, mark, it's Tuesday.
We get drunk.
That's what we do.
And so I was like, okay, but why don't we cut out the middleman?
I eat the carbs and just go straight to the alcohol.
Like what's, what's, why, why is the vessel through which
you consume alcohol only 6%.
Why not go to 40?
Like, I don't understand if the point is to get drunk.
So I was the guy with a bottle of vodka, right?
And uh, I've never really acquired beer.
Like I still drink like only laggers 'cause I'm thirsty and it's super hot.
So yeah, the short answer is it's, I'm still light.
Jacob Shapiro: Ugh.
Uh, the log
Marko Papic: is nothing, you know?
Jacob Shapiro: Yeah.
I got you.
Well, my six pack, I, I've, I've evolved quite a bit.
When I was a, when I was in college, you would not see me with a bottle of stole.
You'd see me with a six pack of some, uh, pretentious IPA, because
you know, that sounds about right.
Course you Cornell
Marko Papic: man.
Jacob Shapiro: Yeah, Cornell man.
I mean, IHA Cap, I think a brewing company.
Great.
But then I OD'ed on IPA to the point where now I just want like
the most boring beers possible.
Uh, and actually athletic does this light non-alcoholic beer, which is
like, it gets you 80% of the way there.
'cause all you're really drinking the beer for is you wanna feel
like it's hot and you're at the ball game and things like that.
And I find that drinking the non-alcoholic light beer.
I'm like 80% of the way there and I could still function at five o'clock in the
morning with my eight month old the next day, like clean up a blown out diaper that
covered the entire, that was this morning.
Anyway, not to go on that, but I'll also say I've been converted by the great
people in Wisconsin Spotted Cow, which is only available in the state of Wisconsin.
It's delicious.
And every time I go do a gig or visit Wisconsin, I bring spotted cow.
I, I buy it in the airport and I bring it back to Louisiana.
I'm basically smuggling it down the bayou.
That's how I think of it myself.
And it's delicious.
They actually, you know, they, they followed me on Twitter.
I tried to get them to come on the podcast.
No way to talk.
Like geopolitics is beer or geography of different alcohol consumption.
So, we'll, we'll tweet this FM and see if No, come on, because I love that
Marko Papic: concept.
That's a great concept.
Yeah.
Geopolitics of alcohol consumption.
But I also just want to note that the fact that we are, um, you know,
lovingly and longingly calling this the six pack, 'cause we don't have one.
We're talking about what beer we drink.
Like, this is clearly a like early, like late thirties, early
forties, two dudes talking.
Just, we've definitely aged ourselves.
But yeah, so, uh, it's an interesting segue.
I didn't know we were gonna talk about beer and alcohol consumption,
but I'm not a beer drinker.
Yeah.
Jacob Shapiro: You know, I, I also come by this honestly because if the
Nazis had not taken over Vienna and tried to kill all the Jews, my family,
which was distilling millions of dollars equivalent worth of alcohol
in Vienna would still be in Vienna.
I wouldn't be sitting here with you in, uh, in the United States
thinking about geopolitics.
So, wow.
I guess if, if, if you want to thank someone for me taking this turn to
geopolitics, you can thank Hitler.
That's an interesting way to get to the reductive odd hit, Lauren.
Anyway, this
Marko Papic: is, uh, this is time 74 that you have said something like
that, and I can't comment on it.
Only you can, because you are the Jew on the podcast, and I will just sit
silently and I guess nod like, hmm.
Interesting.
Jacob Shapiro: It's the only form of Jewish privilege there is.
Okay.
Yes.
Let's,
Marko Papic: I'll not take, I'll not take Aal Hitler for anything, but you are of
course, allowed to do whatever you want.
Uh, cool.
So who starts, all right.
You or me?
Jacob Shapiro: Uh, well, it's up to you.
'cause you, you coined the, the bit, so why don't you
pick, you, you wanna go first?
Or, or you wanna give the g the first?
I,
Marko Papic: I, I feel, I, I feel like yours are more profound.
Like, I think yours are more profound.
Mine might be more nichey.
So why don't you start, because I know you're itching to talk, I
think about the trade deals, right?
This is the first part of our muy six pack.
Jacob Shapiro: Yeah.
I'm, I'm itching to talk about the US and Europe.
Um, let's do, and their, and their trade deal.
Marko Papic: And by the way, I just wanna say like, I think one of the
best, uh, reactions to that trade deal is Jacob's reaction, uh, that you,
uh, sent through your Substack, right?
So you have, if you have not signed up for Jacob's Substack,
you should I read the whole piece?
I thought that you were spot on.
So why don't you tell our listeners what's your take of the US EU
trade deal and maybe just outline it a little bit for our listeners.
Jacob Shapiro: Yeah, that, that's very nice of you to say.
I'm, I'm trying to put more work into substack, putting thoughts out
that are available for people when they're cutting room floor in two,
two interesting things about that.
Number one, I've been using a lot of chat GPT lately.
That piece was the first time in six weeks where every single word is me.
I didn't use any chat, GPT, and it landed with readers way more than
anything else I've written recently.
And I think there's a lesson in that.
I think maybe we're over, or at least I was over indexing on chat
GPT and LLMs for research purposes.
Um, so that was an interesting thing.
The other thing is that that piece was written while my eight month
old and my three-year-old were literally in the room next door.
The door was shut, but at various points, my three-year-old was like
banging on the door, like calling for me.
They were screaming.
My mother-in-law was folding laundry.
I had like, I had these noise canceling headphones and like jacked all the way up.
I probably lost a year of hearing 'cause I like could not hear myself
as I was typing out those words.
And it really landed with people.
So I guess what I really need to write well is just sheer chaos and
a sanity around me at all times.
Um, but anyway, so the, the, the US EU deal quote unquote, uh,
what did, what did Trump call it?
Hold on, lemme quote him.
The biggest deal ever made, uh, since the last deal that he made.
'cause I'm pretty sure he says that about literally every single thing.
It's a framework trade agreement.
Marco, I don't know what the fuck a framework trade agreement is.
Is it a treaty?
Is it an agreement?
Is it a MOU?
Like I still don't have a, like what is a framework trade agreement and
how lazy are Reuters in the financial times and everybody else that you're
just like, like treating that.
Like that's a thing.
Like it's not a thing.
A framework trade agreement doesn't, anyways, sorry, I don't need to go
Larry David on you, but, um, so there
Marko Papic: please do.
This is why you're here.
Jacob Shapiro: I know you are
Marko Papic: Larry, David and Silla combined in one human being in
Jacob Shapiro: one.
This is why I also can't watch Curb Your Enthusiasm.
Like my wife wants to watch Curb and I'm like, it, it's a little too close to home.
Like I need to actively resist becoming that personality.
Uh, it's just not good.
It's not like good for me from a mental, this is also why I can't
watch Woody Allen movies too much.
'cause like it's just, it's a little too close.
I need to stay away.
Anyway, so there's this US EU deal.
We don't even really know what the terms are.
There are already reports out there that the terms are different depending
on who's who's, uh, which side says, um, the US is apparently gonna push
it through via executive order, which I'm pretty sure is illegal.
Um, the EU still has to ratify it at a certain level via majority, but at least
some of the things that we know, EU goods.
Entering the US will be subject to a 15% baseline tariffs.
Donald Trump had threatened 30% by August 1st.
If there wasn't a deal, the tariff will cover, or at least as we think it is,
is gonna cover about 70% of EU exports.
Now, there are other things like pharmaceuticals and timber and lumber.
That is, they have section 2 32 trade investigations there
that are maybe gonna affect the final rates and things like that.
There will be some zero for zero tariffs on things like aircraft and
certain chemicals and certain drugs and certain semiconductor equipment.
Uh, certain doing a lot of work, uh, in a lot of these things, they still have
not decided the most important thing.
To our point on beer, what are the tariffs on alcohol, wine,
cognac, whiskey, French cheese.
That's the one I really care about.
We don't have those answers yet, so I'm pissed off.
And then also, and those are,
Marko Papic: and just, just those are critical.
Yeah, please.
'cause we of, we of course know, uh, the insatiable appetite that
Europeans have for American beer.
Jacob Shapiro: Right, right, right, right alongside their American cars.
They'll put the American beer in the cup holder and drive on the auto bond,
uh, with the, with the American cars.
And then to really top it off, um, the EU is gonna invest 600 billion
into the US over Trump's second term and is gonna buy energy.
Uh, what, 750 billion?
Was that how much they promised to buy of energy?
No.
Uh, I
Marko Papic: think it's actually been revised to $70 trillion of energy.
Jacob Shapiro: Well, there you go.
So the eu, I guess they're just gonna take a bunch of l and g and put it in Hungary
or put it wherever they don't wanna put it so that they can just use it forever.
Um, I don't really understand.
So that, that's the outline of the deal.
I said in my piece, look, I think there's two ways to look at this.
Europe is fundamentally weak and it's gonna be a battleground in a multipolar
world rather than a poll or, um, and this goes back to something we've
talked about for a while, Marco.
The people who win trade wars are the people who don't fight trade wars.
So the EU basically declined to fight a war.
Ursula of Underlain has taken all the heat from people and saying, all right,
I will be, I will bear this cross.
Um, and we got from 30% to 15% terrorists.
But the real news is that, you know, Germany just passed a record
budget about enabling, you know, uh, deficit spending and everything else.
Um, even inertial love under underlying statement, she said, okay, like, we're
doing this, but this means we have to take bold action at home to make
sure that Europe is more competitive, more innovative, more dynamic,
you know, all these other things.
Um, Europe could have pushed a little bit more.
They could have said, well, actually, like if you look at services, the trade
deficit surplus situation is reversed.
Mr. Orange, man, do you wanna talk?
They didn't do any of that.
They, they put it aside.
They closed a deal.
And I ended on, I think this is short-term weakness, but it,
it is for long-term strength.
And I think if you're counting Europe out, you're making a mistake.
And then the last point, I would just make Marco on this is, and I, I, I feel
like I only realized this a week ago.
Maybe I should have realized it already.
US foreign policy these days.
Makes way more sense if you analyze it as if it was a reality TV show than as
if we were using our geopolitics and political science brains and things
like, all those models don't work.
But if you think of this as just a reality TV show, this is the
apprentice's tariffs edition.
Actually, all of this makes perfect sense.
So I wanted to see where you are, but I, I think you'll be with me in, in Europe
and in, in having some faith in Europe.
Marko Papic: I loved your piece, you know, and I loved it because
what you did is you outlined the two, two ways to look at this.
And I think that, uh, first of all, by the way, on, on the quip about TV shows,
I've told my clients, uh, in the financial community, basically when they scoffed
at the idea that Trump would be able to conclude trade deals in three months.
I said that you scoff only because you lack imagination.
And if you are, uh, speaking to way too many learned trade
negotiators, these are not trade negotiations for Geneva, for the WTO.
These are trade negotiations for made for TV trade deals.
Mm-hmm.
That's what I call them.
So we're fully aligned with that.
Um, I think that objectively speaking, like if you just use mathematics and you
objectively look at this trade deal, you objectively have to say that America won.
If you say anything other than that, you have Trump derangement syndrome.
This is the way I like test people, like who won the trade deal in
objective mathematical terms.
And if somebody tells me, well, Europe won.
I'm like, uh, guys, Europe will apply two point a half
percent tariff on America cars.
Americans will apply 15% tariff on European cars.
Like this is obviously an America victory.
The problem is that it's a pure hick victory, which is like,
it's a rock throwing competition.
It's like two kids.
No, no.
Like here's an analogy if you want, it's two children.
Trying to see who's going to throw the rock more accurate
accurately at the principal's car in the parking lot of your school.
And one kid is purposely like missing and the other kid is like, fucking nailed it.
And then here comes Mr.
Garrison.
It is like, what the hell did you do?
Right?
Oh, sorry, Mr. Mackey.
Like that was not nice.
Okay, so the point that I'm getting at here is that, yeah,
America won, but what did it win?
Your, to your point, the way you put it was like, you don't
wanna really fight a trade war.
And one of the reasons is that, um, this first order effect is what Reuters
and Bloomberg, and most of my clients, quite frankly, on Wall Street, and
most people on fin Tweet, they're obsess about first order effects.
Like, yeah, absolutely.
Donald Trump cleaned the floor with Ursula of Underlaid.
However, tariffs are not good, like for your economy.
Not because of some petty, idiotic reason, like their inflation.
Who cares?
I, I'm, I'm okay with that.
And they will raise revenue.
That's great.
Well done.
You're all like, cool.
The problem is that I'm not sure that you want to protect
your domestic car industry.
This is the land and the path and the narrative of import substitution.
This is the way that you lose productivity.
This is the way you rest on your laurels and you let the big three, Detroit, which
has effectively ceased to be able to produce, uh, what's the word, a sedan.
You let them basically just get lazy in fat.
Competition is how you get productive.
I mean, look, obviously if you're a developing nation and you
don't have a car industry at all, fine slap a 50% tariff on cars.
So you can maybe learn how to build a car domestically, but you wanna take them
off in order to be competitive globally.
And that's what the irony of this is like, yes, America absolutely won.
Objectively speaking, America will now apply 15% tariff on a European car.
Europe will have to apply 2.5%, but no one's gonna buy American cars in Europe.
You know, other than Tesla, like no American car is gonna be purchased.
You, you could put a negative tariff on them.
Like here, I'll give you 10%.
So if a American car costs two thou 20,000 euros, I'll give you 2000 euros.
How are you gonna park in F-150?
How are you gonna parallel park it in Brussels?
Jacob Shapiro: You know, like, I mean as, as, as we've talked about before,
the real market to to capitalize on for, for trucks is gonna be your
jihadis and your formerly ISIS guy.
Yes.
Make sure.
Yeah.
And they're driving Toyotas, so, yeah, that's
Marko Papic: right.
Make sure Afghanistan has like, look, look.
But seriously, I think that this is the point of this, I think, I think
there is some level of tariffs the United States probably should apply in
order to deal with its fiscal issue.
I think that's where I am more aligned with the Trump administration.
15% is I think, too high and I think it's not too high because
the consumers can't take it.
Although yes, that is a concern of mine as well.
The other concern I have is that protecting American industry is a
sure way to ensure that it collapses not tomorrow, not in two or three
years, but in five to 10 years.
So if you're listening to this podcast and you don't have like a PhD in economics
or you're not like a CFR member or you're not somebody who understands these things
'cause you think about 'em all day.
I just wanna make sure you understand.
It is not good to protect your industries.
Just like it's not good to coddle your children.
Like if you give your children $3,000 monthly allowance, guess what?
You're never going to learn how to do.
Get a job.
It doesn't matter how rich you are.
You should not be coddling your industries, especially when you
are a rich, advanced, industrial, productive country like America.
You are not, you're not starting a car industry.
You have it.
You need to expose it to international competition.
You need to ensure that when Cadillac makes a sedan to fight
against BMW three series, it doesn't need that 15% tariff to survive.
Rather, people around the world are like, you know what?
I would like to drive a Cadillac.
Like I actually think that's a really good car.
So right now America makes like pickup trucks and giant SUVs for
family of 14 or Uber drivers.
Like that's it.
If you are in a market for a pickup truck or in a three row sedan, so you can be
an Uber driver, you favor American cars.
Everybody else, no.
Like not, not really.
And so I think that's a problem.
And I think that tariffs are not gonna help.
That.
They're gonna actually impede that over the long period of time.
They're gonna ensure that American industry actually gets lazy.
So I would say that from that perspective, it's a mistake.
The other thing you mentioned is the rest of the world is going to do
what President Trump says right now.
You you, what was the way you phrased this?
Wait and see.
Didn't you have a, like everyone's just kind of doing what he wants
right now, but they're buying time.
I think you used the term buying time.
A lot of the countries are going to give President Trump what he wants,
which is the apprentice moment.
You know, you're fired.
Oh, I'm so sorry.
You know, everyone's gonna kowtow publicly and in those three to five
years, they're gonna learn to wean themselves off the us I think one
of the greatest powers of the US.
Is that it allows the rest of the world to become addicted to it, to its market,
to its technology, to its culture.
I don't think you want to start, I mean, again, if your objective is to
preserve American power over the next 10, 15 years, not the next two years,
then I don't think it's really smart to be encouraging the rest of the
world, including your allies, to start weaning themselves off of your market.
Jacob Shapiro: Yeah.
I
Marko Papic: think that's
Jacob Shapiro: it.
It, it's funny because in our last episode you talked about how Trump was
caught liver oil and now like what Trump is doing is he's more like a twinie.
Like it's, there's literally no Well, twin benefit to like,
Marko Papic: well, I think he's a twinie to the us.
When I said he's called liver oil, I meant to literally every
country other than the us Yeah.
Which is consistent.
Which is consistent with your view.
You're basically saying like, look, I don't think that
Amer, uh, that Europe lost.
I think Europe is just buying time.
Yeah.
And, and they're buying time to do stuff that Trump is forcing them to do.
But those, that stuff, those reforms will be good for Europe, not necessarily for
the us and unfettered access to American markets, which a lot of market camp hates.
They think it's like just wanton, magnanimous without any
concern for national interest.
I disagree with that.
I think that access to the American market, American consumers, that
access has been one of the greatest tools of American foreign policy.
And it's the stick that America has used to ensure the rest of the world remains
addicted to its services, products, goods, markets, blah, blah, blah.
And now President Trump has basically said like, look, we
will use that access willy-nilly to accomplish whatever we want.
And I think that will be that called liver oil that forces Canada, Europe,
China, everyone else to say, okay, fine.
Let's make a five year plan to become less reliant in the us.
Jacob Shapiro: When you said wanton, magnanimous, magnanimous.
I I thought you were saying wonton for a second.
I thought we were gonna start talking about wonton soup and South
Park and a bunch of other things.
Um, but I, I have three signals and then I'll, and then I'll turn it
over to you for our second beer, because there's a lot of noise here.
And I, I put three signals, or I identified three signals in all this.
The first, and I just sort of brushed this aside, but Germany, Germany's government
approved a draft 2026 budget that includes a record investment of 126 billion euros
and borrowing 175 billion euros more for a big package on infrastructure and defense.
So that sound that you can hear in the background listeners, those are
the gears of German industry getting ready to fuck up the rest of the world.
When they decide that they wanna start doing things,
they will start doing things.
So there's your one signal, your second signal, and this was something
I was ac the, the second, yeah, we'll go back to the Hitler stuff.
Like my distillery was in the cross airs the last time this shit happened.
I am perfectly placed to tell, I hear the sound it's coming.
The second thing, and I was actually surprised about this, Marco, if you look
at both non-military and military aid given to Ukraine in 22 to 24 versus so far
this year in 2025, it's basically Europe.
It's not the United States.
So we've been hearing for years the Europeans aren't there,
they're not supporting Ukraine.
Oh yeah.
In, in 2025.
You surprised they've been supporting Ukraine?
I, I didn't know it was that big.
Like I thought it was, ah, maybe it's more 50 50.
Maybe it's 60.
It's not, it's like most of it is coming from Europe.
So like this vision of the Europeans are, are effeminate and puny.
No.
Like they're actually the ones that are standing up the Ukrainians versus Russia.
And then the last thing is just think about all the shit that
Wander land has taken for this.
People like the French Prime Minister, by the way, who cares that France
has a prime minister, but whatever like is is saying she's super weak.
I can't believe we did this.
That's a signal, because that's the Europeans being like, we
don't want to be puny and passive.
We want to be strong.
So the next European commissioner better be muscular and strong.
I think that's actually, you know, people are showing, oh, that's a
sign that Europe is into Clint.
No, no, no.
The reaction is showing you that Europe itself, the median
voter in Europe, if you will.
Doesn't like this, wants to make sure that the next time this
happens, it's Europe that's holding the cards, not the United States.
So like amidst all the noise, like those are the three things that like
really brought me to, uh, in the long term probably better for, for Europe.
Marko Papic: Well, you also said something important, again,
I'm paraphrasing your view.
Uh, you mentioned that all the hate and all the criticism for wander laden
is also a sign that is buck passing.
That's a term that European analysts have used for a long time.
Whenever European member states don't like something, they blame the
commission, but they do that because it's a very painful and, uh, foul
tasting pill they have to swallow.
So they have the commission do it on their behalf.
So again, co liver oil.
Donald Trump is out there handing out a spoon with cod liver oil and it's wander
laden who has to swallow it, right?
And everybody is like, oh, that's so bad.
But actually they all need that.
They, she bought them time.
Right.
And look, ultimately, you and I are both quite bullish Europe and we think that
Europe is gonna do a lot of interesting things over the next five years.
But at the end of the day, we're gonna be right or wrong on whether
they take this time that Ursula of underlaid and bought them with kowtowing
to Donald Trump unceremoniously and quite gracious Ungraciously.
If they just wasted again, as Europeans are known to do, well,
then they will have wasted it.
But the commitment by Germany that you just cited suggests
to me they're not wasting it.
And you know, it was funny when, uh, when Trump met with Frieder Mertz, I
don't know if you caught that really cute and funny moment when, uh, Trump
turns to Chancellor Mertz and goes like.
Oh, and now you've committed to great defense spending.
And you go, Germany has done that in the past.
Maybe too much.
I don't know.
Something, you know, and it was just so funny 'cause it was a Nazi
joke with the German chancellor.
He did like, oh, in the past you guys have maybe done too much defense
spending, I don't know, some say.
And you're like, did you, did you just, you know, like we all have that
German friend that we've like pushed too far and they're like, bro, it's
not actually funny, but Friedrich Mez is there in the White House.
And he's like, haha.
Yeah, we, we did too much.
Like, yes.
Oh my God.
Only all Donald Trump.
And listen, if you don't laugh at that, you've got a Trump derangement syndrome.
Man, it's funny.
It's legitimately the president of the United States of America is making a
Nazi joke to the German chancellor.
That's 2025 for you.
Alright.
Jacob Shapiro: It really, it really like, I mean, Trump has really taken away like
lots of ammo from humor, like South Park to, to be humorous, has to put him in
bed with Satan to make jokes, right?
Because he is taken everything else.
There's literally nothing else you can do except do that anyway.
Open your second beer.
Marko Papic: Yeah.
Yeah, that was, yeah.
Okay.
So I'm opening a second beer over, uh, six pack.
I'm gonna, I'm gonna go a little obscure and, uh, I'm gonna give a shout out.
Uh, obviously you followed this stuff, but, uh, I'm not
sure a lot of other people do.
So I'm gonna give a big shout out to our mutual friend, uh, Matt Kin, who is, uh,
our former colleague from Strat four.
He's my current colleague at, uh, BC Research.
And basically, um, it has to do with a recall election of
24 legislators in, uh, Taiwan.
So basically, uh, the opposition party, KMT, the Kwame Dong, which is the
original of course, uh, existential.
Opponent to the Chinese Communist Party that fled the Chinese mainland to Taiwan.
Uh, they're now in the opposition and have been to the ruling DPP for a while.
They, uh, they're seen as, uh, as, uh, more friendly to
China, uh, in a perverse way.
It's because they believe that they are durational rulers
of all of mainland China.
So like, like, let's leave that aside.
But yes,
Jacob Shapiro: you have, you have to really appreciate the con the intellectual
consistency, like in a world of such hypocrisy, like just sticking with it.
I really appreciate it.
Marko Papic: I do too.
Yeah.
So KMT basically, uh, has always tried to, uh, reduce tensions across streets.
Um, and they, uh, want the legislative election, even though the president
is from the ruling DPP, and he is, uh, you know, pro, I don't
wanna say pro independence 'cause that's not fair, uh, but more pro
sovereignty and definitely anti-China.
And so there was a completely grassroots campaign.
Not aligned with any party.
To be fair, they tried to, but it was very virulently, anti-China grassroots
campaign to recall 24 members of, uh, KMT, um, of their, uh, of their legislative
caucus for basically being Chinese agents.
And, uh, there was a recall election and, uh, they lost the recall lost
across every single one, including a mayoral, uh, uh, actual mayor of one
cities who was a non-GI legislative member who was also being recalled.
And, uh, the reason it's important, of course, is that it shows that,
uh, Taiwanese people are not like solely focused on the China issue.
There are other issues.
They did not want to give the DPA legislative majority because they felt,
well, that's not what we voted for.
We already voted for the opposition to check them.
So the president is opposed by KMT, uh, uh, opposition led.
Legislative.
But the other issue that's important is that had, uh, the president achieved
legislative majority, one of the things he would've tried to push after the
recall is a massive increase in defense spending, which would've of course set
the cross street, um, relations, um, you know, uh, to a different ball game.
I mean, China was obviously already criticizing that.
Um, the reason I wanna bring this up is that he didn't receive that much coverage,
you know, and, uh, Matt, Matt kin and I were in a, in a client meeting actually
yesterday with a sovereign wealth fund.
And, uh, one of the people on that call actually mentioned that like, wow,
like nobody really talks about this.
This seems like a really big issue.
And I mentioned, yes, and the reason I wanted to bring it up is not just
because people in finance should listen to it, but also like just
listeners of this podcast should be aware of a very important reality.
Small countries sometimes change history.
I think too many of us have become enamored with this kind of risk
board game view of geopolitics.
Like, oh, it's China versus us, us versus Russia.
But countries that are often the chess board upon which the game of geopolitical
chess is being played, do, have agency of their own and they can muck up things.
For example, I'm Serbian, I know more about this than anybody else.
Like we literally started World War I, you know, the original terrorist, what's up?
You know, high Five to my brethren, assassinated.
You know your archduke apparently.
Jacob Shapiro: Yes.
He, he was my archduke.
He sure was.
Yeah.
Marko Papic: He was your family's Archduke in Vienna, you know, sitting there trying
to lord over all of continental Europe.
And we were like, no.
Jacob Shapiro: And, and he was still much nicer than what came afterwards.
So, four one, actually, actually, actually, that's the irony.
Marko Papic: Actually.
This is also ironic in a, in a very typical perhaps.
Historically Serbian fashion.
We did shoot ourselves in the foot because one of his ideas was to
bring Serbia into the monarchy and to make it Austria-Hungarian,
Serbian Empire, actually.
Really?
Yeah.
That was like, that was his, like, he was a liberal, like answer to his father.
So actually, you know, but oops.
You know, like, anyways, anyways, details.
We shot that guy down.
You know what I mean?
Anyways, world War, war starts, world war starts.
Starts.
But the point I'm trying to say is that Germany, Russia, Vienna, la, Paris, they
had a very complicated balancing game.
And Serb said, hold my beer or more, more accurately hold my, yeah, we got this.
And they World War I starts.
Jacob Shapiro: It's okay listeners, if, if you're wondering if he just took a
shot of flow of it and he can't hold it.
He didn't, he would be able to hold it.
He just got So, I'm so sorry.
Marko Papic: I'm dying.
Oh, I'm dying over here.
But it was, it was such an exciting, uh, but, but my point is that that's why
it's important item that the situation in Taiwan was actually really important and
it could have had really global relevance.
And I feel like we kind of dodged the bullet, but it also means that
I feel like we don't spend enough time taking Taiwan seriously and
Taiwanese sentiment and politics.
Seriously.
Jacob Shapiro: Yeah.
That's inter, and it also, I think one of the reasons it got covered up was
because you probably saw that Taiwan's president was supposed to transit, uh,
New York on a trip to the Americas.
And it th I mean basically the FT was reporting that the US asked, uh, Taiwan
not to do this so that he would not be on the United States for any of the trip.
People were talking about whether that suggests that the United States
wants to defend Taiwan or not as well.
I mean, most of the polls suggest that, uh, most Taiwanese people don't prefer
independence or reunion with China.
They just prefer the status quo.
That is correct.
And really the job of the Taiwanese president and Taiwanese leadership
is to maintain the status quo.
It's just, it's probably gonna be fundamentally impossible for
them to maintain the status quo.
And you Yeah, go ahead.
I can see you wanna take it.
Marko Papic: Uh, the, just the reason I know those polls very well.
And actually after 2019, after the crackdown in Hong Kong by
China, the sentiment in Taiwan definitely turned anti-Chinese.
Absolutely.
But since 20 22, 20 23, 20 24, uh, specifically since 2022, they've
had a great front row seat to what it looks like to be a chess board.
Just talk to a Ukrainian, you know.
Because America has many ways to defend you.
One of them is to let you have hundreds of thousands of casualties
as you take the brunt of the largest military in the world, in the face.
So it's interesting between 2019 and 2022, there's a lot of chess beating in Taiwan.
Like, yo, we're not gonna turn out like Hong Kong.
You know?
And then you see the status quo support rise over the last three years because
being a chess board sucks a chess board.
And when I say being a chess board, I mean like us and China are clearly
playing a geopolitical game of chess.
You are the chess board, bro, and it's painful to be a chess board.
And so I think that the Taiwanese sentiment has turned towards
the status quo more and more.
It's rising.
Now the, the problem is, as we know in democracies.
The loudest best finance interest groups often lead policy.
And there is a very loud minority in Taiwan that does want independence, and
they have the pool and the ruling DPP.
It, it, it's a fringe part of the ecosystem, but it's one that could
at some point through machinations, like the one you saw right now with
a recall of democratically elected legislators caused something to happen.
And that's obviously how World War I started.
You know, it's not like the Serbian government, assassinated France
Ferdinand, but various terrorist groups funded in nine in the early
20th century by members of the Serbian Military and Intelligence Services.
Absolutely supported those guys, uh, ADA, Bosnia and, and Black Hand
and all that stuff in, in Bosnia.
So like this is the issue.
Uh, Taiwan is a complicated place.
The median Taiwanese, you're correct, does not wanna confrontation with China.
Why would you?
That's idiotic and insane.
But there are always French groups that, that might do that.
And that's why I think closer monitoring of this Taiwanese politics
is something that we all have to do.
But yes, you are right.
Also, Trump administration seems to have changed.
It's, it's it's view as well.
Jacob Shapiro: But by the way, well, it's been all over the place though.
Remember like when Trump was the first time he was elected, do you
remember the first thing he did?
He called Taiwan's president.
I remember at the time being like, oh my God, a, a precedent has been broken.
And now it's like how many precedents since then have been broken.
But like there was all that.
But then you, you fast forward now it seems like only Bridge Kolby cares
about this in DOD like everybody else, whether it's Ruby talking up one China
or Trump pressuring the Taiwanese to give trade concessions to the United States.
Um, oh yeah.
And just to say like, uh, sort of what, uh, another thing about this is, you
know, you brought up Russia and Ukraine.
The thing is China's not Russia.
Taiwan is not Ukraine.
So I don't think China wants to invade or like thinks it can invade Taiwan and win.
I think it's gonna take the Hong Kong approach, which is isolate it, make
sure nobody recognizes it, make sure nobody has an incentive to defend it.
And then when Margaret Thatcher comes and says, we wanna renew the lease 99
years, you tell her, okay, but we're gonna cut off the oil, uh, excuse me,
the electricity and the water, uh, and like we're just gonna blockade it.
Is that really what you want?
And then she has to say, okay, I'll go like pool with the Falklands.
'cause I obviously can't mess around with this.
So like when you see that like Beijing is isolating Taiwan and also brain
draining them, just like throwing Yuan and all the Taiwanese semi engineers
like, come to Shanghai, have the penthouse, do whatever you want.
And they're coming like tho those people are listening to that.
And then there's Taiwan, which is not Ukraine.
And this gets to your point, like Taiwan.
I don't think it's gonna defend itself the way that Ukraine has
defended itself against Russia.
I'm, that might hurt some Taiwan's feelings and maybe I'm wrong about that.
But my impression based on studying it is that they're not gonna defend
themselves the way that Ukraine,
Marko Papic: well, either way.
I think that there is danger in being a chess board and I
think they understand that.
But to your, to the point on top Trump that you said, you know,
ambiguity about Trump, I think that there is a lot of unfair criticism.
For example, not letting president of Taiwan transit to the us There is a huge
gulf between not wanting to provoke China
and not wanting to defend Taiwan.
There is some like happy medium in between, and I think one of the problems
with the Biden administration was that it was so concerned with illustrating
domestic strength through aggression in Ukraine and Taiwan, that it was
leaning more towards provoking China.
I think there's some basic level.
Where the US can both guarantee Taiwan's, let's say sovereignty, if
not independence, and without having to provoke, you know, like maybe you
don't wanna send the Speaker of the House of Representatives to Taipei.
Maybe that's like unnecessary.
But you can sell weapons, which the US has been doing for decades,
you know, and continue to do so.
And through back channels tell China like, look, we are actually
committed to defense of Taiwan.
Like, but, but if, if you are angry by the fact that the Taiwanese president
is gonna be transiting through the United States America, fine.
He can take a flight through Zurich, great connections, best sandwiches at an airport
anywhere in the world, so he'll be happy.
You know, like there is a happy medium.
And I think a little bit of, of the, uh, criticism of President
Trump is like, he's not like, what?
Like aggressive, provocative, like asshole enough, eh.
I I don't buy that.
Jacob Shapiro: No, I'm with you.
I, I'm gonna ask you an impossible hypothetical, but why not?
Because this is cousins.
Let, let's say China invades Taiwan tomorrow.
You think the US defends Taiwan?
Marko Papic: Well, did the US defend Ukraine?
Not at first, not at all.
I mean, like, what is the level of defense?
And I think, again, this is one of those things that's not a one or a zero.
It's a zero to a 10.
The United States of America is absolutely not gonna commit
US troops to defend of Taiwan.
Jacob Shapiro: So you don't think so?
You don't think that we would send a ba, a carry battle group or anything else
to protect Taiwan from an s assault?
Marko Papic: Maybe send it.
But I think that it would be exactly like the situation in Ukraine.
Just absolute, uh, no holds barred technological transfer
of very sophisticated weapons.
Jacob Shapiro: Which, which was not what happened at first though.
Like what happened first with Ukraine is that we withdrew
our embassy staff to the west.
We were like, okay, like everybody move out.
Good luck.
Sorry guys.
And then after the Ukrainians kicked them in the teeth and it was like, oh
my God, the Russians are bogged down.
Oh my God, the Russians are not as what we like, get them the
missiles, get them everything.
Let's go.
But the first reaction was, sorry guys.
Like we took, we warned you.
Fuck around and find out.
Marko Papic: Well, actually the first, uh, also, the first thing
that the US did was pre-invasion.
And this is where Donald Trump is, right?
And nobody in the mainstream media wants to give him credit.
He did give Ukraine travels.
Jacob Shapiro: He did in the first term.
Marko Papic: Yep.
He was the first US president to give Ukraine offensive weapons.
And now everybody says, oh, that's 'cause he was trying to buy them.
So that, you know, like, okay, whatever.
Like, sure, maybe fine, but that's a fact.
So Ukraine was kind of ready for that initial assault
because of American technology.
But I agree with you, it was Ukrainians defending, in an amphibious assault
technology will matter even more than in a mechanized Dan horn, right?
Because you gotta cross a sea.
So area denial weapons are gonna be even more, uh, important.
So no, I don't think the US is going to use, its its own soldiers to
defend Taiwan, but the technological transfer of sophisticated weapons
will have an even bigger, more positive effect than it did in Ukraine
Jacob Shapiro: if the Taiwanese are willing to use them and take the casualty.
But I don't think it's for sure.
Yeah.
I don't think it's, yeah, I mean that's
Marko Papic: the question, right?
Like that's ultimately what will the Taiwanese do?
And I guess we'll find out.
But I don't know.
You know, there's a lot of people who have been doubted.
Uh, I would say that nine out of 10 of my clients thought Ukrainians
were just gonna be incompetent.
And like I had to remind them of history of Ukraine.
This is a country that invented partisans.
You know what I mean?
Like I, and, and they were like, nah, they're corrupt
and it's a sclerotic country.
Everyone's old.
I was like, eh, I don't think so.
I think Ukraine is, are gonna fight viciously.
This is Eastern Europe.
We know how to fight wars.
Like even if we lose them, they're not gonna lay down.
And I think in Taiwan, you know, there's many, many examples I can
use of people who were seen as unwilling to defend themselves.
Like who actually then ended up defending themselves ly.
So we just don't know all
Jacob Shapiro: which reasons.
I think China's not gonna do this.
Okay.
Third beer.
This one will be a little bit shorter on the read 'cause it's already getting
murky, but, so we started this morning with Donald Trump saying that there
are going to be 25% tariffs on India.
They've been negotiate, I think they've had what, five or six negotiating rounds.
It seems like the United States has been holding up negotiations because
they want access to Indian markets.
In terms of US agriculture, which is a non-starter, I think
probably for the Indian government.
Uh, president Trump also said that there would be penalties on
India for importing Russian oil.
Classic Trump fashion.
We don't know what the penalties are.
He also came out later and said, ah, like, we're still talking.
Maybe there's some wiggle room at the same pi at the same time, by the way,
China got a 90 day extension for tariffs.
So India, the largest democracy in the world.
Howdy, Modi.
You know, the, the Trump Modi bromance, all that is getting slapped on the
wrist this after the Pakistan India fight, where Trump has been out there
saying that he should get credit for the ceasefire because of tariffs, which
has been pissing the Indians off too.
Um, I, I, I bring it up because the reason that the British had a second
lease on their empire was because they discovered and conquered India,
basically like the British Empire probably collapses if they don't integrate India
into the empire, um, in the mid 19th century and allows them to carry on to
World War I and probably far beyond.
If you're the United States and you're thinking about the world and the
multipolar world and all the levers that you've pulled in the last couple
of years, and administrations of both parties, you probably want India on your.
It just feels like the Trump administration is going out
of its way to piss India off.
I'm not sure that India was ever up for grabs.
They're famously non-aligned.
They wanna do their own thing.
They're very, um, powerful is the wrong word, but I mean that many people that
size market the potential, like they, they have a weight all of their own.
Um, but man, if, if Trump just isn't like kicking a potential ally or
at least a balancer against some of these other powers in the teeth and
for what, like what, what is the United States getting out of this?
I know like, you know, you get the trade deal, the reality TV show thing,
I guess to show that you're tough, but why you would pick on India this way?
I mean, we could ask this question about Japan and Canada too, but I'm,
I'm really surprised that, um, the Trump administration is treating India like this
and I think they are creating like yet another center of power in this multipolar
world that is very, very quickly gonna be skeptical of the United States going
forward and look to balance against it.
Marko Papic: I mean, I think, uh, this, uh, maybe I don't really have
as much to to comment on this, but, uh, I think that I do worry that maybe
the markets and media and journalists and really everybody is not taking
Trump's threats like seriously enough.
You know, on the Russia thing,
the secondary sanctions, I think that we may not be spending enough time on that.
And you know, obviously India could be a casualty of those, uh, as well
as the China US trade negotiations.
Now, those are two parallel things.
I think Beijing can chew gum and walk in the same time.
They can separate American view towards Russia and um, um, you know, its
negotiations with the US separately.
But I do think we may be coming to a head, and this goes back to what
we talked about in our last episode.
Which is that I think that Trump, you know, hell had no, no fury,
like President Trump's scorned,
right?
Like to re redo that old adage, I do think that he is seriously angry that
Trump, that Putin has not moved at all towards some sort of ceasefire.
And so, like chi uh, India, US relationship could suffer
further because of that.
Jacob Shapiro: It's a, it's a show.
It's so shortsighted.
Like the thing, like we talked about the US and the eu.
The things that Trump has done and how it's gonna affect the future
of US India relations, US Brazil relations, US Japan relations.
I mean, you can see sentiment turning against the United
States in these countries.
And maybe, you know, maybe, maybe it's ephemeral, maybe things turn around.
But I think something has fundamentally shifted in these countries.
I think these countries are looking at what the United States
is doing and they're seeing if you're tough, it doesn't work.
If you're friendly, it doesn't work.
You're just gonna get screwed by the United States.
So we're gonna have to find alternate options.
Like I think that is the takeaway lesson for these countries.
Maybe Trump has in his mind, oh, if I can get this thing, I can move Putin.
But that goes back to the classic, okay, instinctually you might
be right and maybe you get the thing that you're after right Now.
Was it really worth it to piss off India for the next 20 years?
'cause that's what you've done with the combo of the tariff Pakistan, India
thing, and now this thing about the tariffs and the secondary sanctions.
Mm-hmm.
Not exactly a good trade.
We'd have to think of the BA equivalent.
Like maybe you're, you're trading for, uh.
I dunno.
Hired gun for just the end of the year.
I, there's not really many good examples of that in the NBA works
where it actually works out.
Marko Papic: So you're saying India is kd
Jacob Shapiro: No, I, uh, you'd have to think of a, of a deadline deal.
Right?
Like somebody that is acquired for just a couple of, maybe like
a Kauai Leonard in this case.
Marko Papic: Mm. You know?
Jacob Shapiro: Well, that did lead to the championship though.
It did lead to the championship and then, and then afterwards it led to
nothing and then it led to paying yak perle $120 million for three to four.
Marko Papic: So Trump is Messiah Jerry?
Jacob Shapiro: Uh, yeah.
That's a nice, uh, cross-cultural interesting comparison.
Yeah.
Marko Papic: All right.
Let's, I'll have to sit on that.
Yeah.
Alright, well
Jacob Shapiro: number four.
You, you number four.
This is, you can actually tell this is a six pack because we're getting less
thoughtful as, as we go down as it would be if we were actually training.
Marko Papic: Yes.
Um, I think, uh, my next, uh, actual, uh, subject here is, um.
I would like our listeners to spend an hour of their time listening
to winning the AI race President Trump on the AI action plan.
It's one hour, it's actually featured on the All In Podcast.
Um, and, uh, it's President Trump just riffing for an hour on why
he actually, what's his vision of how to compete with China and it's
diametrically different from Jake Sullivan slash Joe Biden's vision.
And so, um, I don't know to what extent our listeners are following this, but
effectively the Trump administration has decided to cancel some of the
Biden administration restrictions.
This has allowed Nvidia to sell some of its advanced chips semiconductors
to China, which is part of the reason why Nvidia stock is soaring.
Uh, I mean, there's many other reasons of course, and, uh, it's
very interesting because this.
It's 57 minutes.
If you can, Jacob, just put it in the, in our, we roll.
Yeah,
Jacob Shapiro: yeah.
Marko Papic: On our notes.
It's worth listening because Trump effectively says, I mean, aside from
saying that Joe Biden was wrong 75 times, you know, he basically, he
basically articulates a different strategy, which is that instead of, uh,
putting these high fences on American technology, president Trump will ensure
that American technology companies make money off of China and then reinvest
that money into the r and d so that they can continue to be a leading edge.
Those are two diametrically different ways of thinking about
competition in the 21st century.
And I gotta say, I 800% agree with Trump.
I think that the Jake Sullivan view of how to compete with China is abjectly wrong.
That it would ultimately ensure that China innovated and created a
completely separate architecture on the AI front on many other fronts.
And subsequent to that, it would ensure that many countries in the world will
adopt that infrastructure, infrastructure that China provides, whether that's
Alibaba's ai cloud infrastructure, whether it's China's EV infrastructure,
whether it's payment plans, whatever.
It's, uh, there is a sensible way to protect cutting edge technology, for sure.
Like you don't want to sell China your hypersonic cruise missiles, but like
selling China, like letting China gorge itself on a 10-year-old plane or a
5-year-old semiconductor is not going to change anything, particularly because many
of your own allies in a multipolar world.
Are not going to abide bio restrictions.
And that was one of the problems that the Biden administration found out.
It wasn't widely reported, but there were certain pretty good journalistic
efforts to un to reveal that companies like A SML Tokyo Electron would
like say, sure, great, we'll comply.
And then like 12 months later, like go, oh my God, where do
we get this pile of money?
You know?
And, and, and, and, and again because, not because they're evil, not because
they're proin or anti-American.
I mean, if you are the Netherlands and A SML is your champion, and
Americans come and tell you don't sell your equipment, your sophisticated
semiconductor manufacturing equipment to China, you're like, okay, so you
don't want me to sell this stuff to China, but you also want me to be part
of the anti-China Alliance by, you know, developing high tech, um, industrial
like innovation that helps the West win.
Like, well, I can't do both.
Because the foundation of geopolitical power is material wealth.
Let me say this again.
This is a realist view.
The foundation of geopolitical power is material wealth.
You need to skim from that surplus to invest in r and d in technology.
And the moment you stop losing sight of that, you know, uh, you lose.
And by the way, this is where this distinction between commercial
interests and geopolitical interests, national security interests blurs.
It actually is blurred.
It's very difficult to separate the two.
And so I actually think that this is a very good, uh, hour.
Of course, it's like full of trumpisms, you know, and he's like, I'm smart, Joe.
Biden's dumb.
You know, God bless.
Like, sure, knock yourself out.
But it's also an hour of, um, Trump's rhetoric that actually will anchor
both Democrats and Republicans.
This is something that there will be absolute bipartisan antagonism
towards this model, but this modern is rooted in history.
If you wanna find out how the United Kingdom fought its trade wars, how
United Kingdom became a hegemon and an empire, it was not by, uh, it was not
by cutting off trade with its rivals.
It was actually by making its rivals become addicted to its technology
and to its trade and to its capital.
And I think that President Trump has actually figured out how to fight, how
to fight rivalries in a multipolar world.
And nobody before him really has.
Jacob Shapiro: The problem with that argument is that Trump started this with
his crackdown on Huawei during his first term, and that China made the choice
to vertically integrate on these things because of his restrictions on Huawei.
So the Biden administration was trying to put a genie back in the
bottle from my point of view, and that was never actually going to work.
Um, and so now Trump is trying to reverse course when he actually did the damage.
And to me, he probably reversed course because the CEO of Nvidia was on the
stage with him at the event in the Gulf with all the investment and things like
that, and probably said, Hey, Donald Trump, like, uh, things are gonna go badly
if you don't lift these restrictions.
And maybe Trump had some cronies who were long Nvidia and they
wanted to see Nvidia stock go up.
And so he was able to do that and, and sort of enrich, uh, and, and enrich them.
That's, that's the much more cynical way of.
Looking at the approach because China's gonna do that anyway.
You brought up ass ML ASML is the really interesting one.
You might remember, um, A SML didn't say where the money's from.
Ass ML was like, uh, we're not gonna stop selling to China.
Thank you for, for asking.
No, but that's not something that we're going to do.
And when the Dutch government started giving them problems, you might
remember last year they were leaking.
We'll, maybe we'll move to France.
Maybe we're not gonna be in the Netherlands anymore.
Uh, and the Dutch government then started pushing back against the
United States along with the, with the Japanese government.
And that's the thing that the Chinese can't do.
Like the advanced lithography equipment.
Yeah.
That is the thing that they can't replicate quickly.
Everything else, they've basically been able to do it and they're making
advances when it comes to lithography.
But you are dependent on A SML now to hold back the dam and they're not
gonna be able to hold back the dam for,
Marko Papic: but your point reveals several points of vulnerabilities
to the Jake Sullivans of the world.
Number one, America doesn't control all innovation on the planet.
Many of that innovation is controlled by the allies.
Number two.
You do not have the carrots and the sticks with which to incite your
allies to follow your orders anymore.
Because number three, China has not revealed itself to be an evil
empire like the Soviet Union.
Jacob Shapiro: Mm-hmm.
Marko Papic: So everything will be solved.
If China invaded Taiwan, that would be perfect for the United States
of America because it could then go to the Netherlands and Japan and
France and say, aha, we told you so now we can, can we please now build
high fences around the technology?
But China hasn't done that because China's not, uh, what's the word?
Stupid like the Russians by the way.
Sorry, Russia.
But that's, that's why Vladimir Putin's not on our list of top 30.
Right.
But she kind of squirmed his way in.
What, what I'm getting at here is that, uh, I think the problem
with the Jake Solomon view is that it's just, it's unrealistic.
It's built on a Cold War infrastructure.
Being able to bully your allies.
And the reason your allies cannot be bullied is because you don't
have anything to offer them.
That's why.
And
Jacob Shapiro: well, and to put it slightly differently, it's also to do
that you need an accompanying push when it comes to industrial policy, which also
the Biden administration tried to do, but couldn't complete it, couldn't get, you
know, both houses on board with everything they wanted to do, even how big inflation
reduction act haha was supposed to be.
And so you didn't have this sort of space race, uh, mentality.
And then also, like, you're not competing with the Soviet Union anymore.
You're now treating with a country of over a billion people who's at the cutting
edge of many different industries and is ahead of you on many different industries.
You're not, you're not against, you know, some drunken guy in the factory
and the Soviet Union who's just making up the data so that he doesn't get shot.
Like China's a real dynamic economy in a way that the Soviet
Union was not and never could.
Marko Papic: So, yeah.
But, but, but that goes to another point that I would, I would wanna point
out, you know, uh, I'm of the view.
That the greatest, uh, sort of lever that the US can have in China
are those levers that empty China off its current account surplus.
And I know this is a little bit nerdy point, but what I mean is that when
China takes its hard earned money and takes it abroad for some reason,
that's a point of vulnerability.
Is it?
And if I was running the United States of America, I obviously am bathed in aloof
nihilism and couldn't care less who wins.
But if my interest was for the US to win, I would say, what is it that China buys?
Where does it take money and sends it abroad?
And there's really two things that it does.
Well, three.
One is oil.
Okay, well, he buys most of that from the Middle East and Russia.
So fine, let's leave that aside.
Can't really play that game.
The other two.
Are semiconductors.
So chips and tourism.
Yeah.
Yes, tourism sounds weird, but pre COVID.
Pre COVID tourism was actually the number one source of Chinese
capital outflows because tourism is effectively counted as an import.
You know, you're taking domestic currency and you're buying something abroad.
So if I was running to United States of America, the two things
I would've done is exactly what Donald Trump just did on the video.
I would say sell everything.
Make them grow addicted to these chips.
You want China to innovate as much as you can in ai, but you want that innovation
to rest on American infrastructure.
Oh, you want to invade Taiwan, yo normal chips, and you don't
have domestic production.
'cause it was so easy to buy Nvidia.
It's a sword of les.
The second thing I would've done is I would've gone in and said, no more visas.
For Chinese tourists, not because I don't issue them, but because
I say Chinese tourists can come to America without a visa.
Let's go.
And I would, I would like add airline flights to China like
50 a day from every major city.
Let's go.
Those are the, that's actually nuanced, second and third order
thinking, and I think that Joe Biden and Jake Sullivan had absolutely no
creativity and no domestic political backbone to do anything of that sort.
So they kept fighting with this first order, medieval Cold War mentality of
like, oh, let's put up restrictions.
Yeah.
You know what happens in five to 10 years, China has its own AI infrastructure,
doesn't need you and can easily withstand any kind of a blockade you impose on
it, whether it's a capital blockade, whether it's a high tech blockade.
So.
Jacob Shapiro: Good job.
Yeah, no, I, I, I agree with you.
I just, I think that would, I think that's true of every single presidential
administration going back to Truman and Trump started it, like Trump
started it with Huawei, like he was the one that started this thing going.
So absolutely pile on the shame for, uh, Sullivan and Biden being small
c conservative when it came to this and thinking in a very, very old way.
Uh, but I, I really, yeah, yeah.
It's a stretch for me to, it, it's a stretch for me that
Donald Trump is sitting there thinking how you're thinking.
Me like, aha.
I have the sort of dam.
I'm pretty sure he is just like, I got some Nvidia stock with that, uh, proceeds
from the Trump coin sales that I did.
Let's go, let's go to the moon.
That's the kind of moon, moon project I want.
You know,
Marko Papic: look, we don't, we don't know, but you know,
like we can be open-minded.
That man changed his mind, you know, maybe, yes.
You know, maybe, maybe people around Trump finally read some cogent research
that wasn't just parroting the DC like lobbyists and actually convinced Trump
of an alternative way to fight this.
By the way, if you want to know.
How this actually turned out in the 19th century read history about the Opium wars.
That's exactly what I'm saying.
The United Kingdom did not stop trade with China.
It sold them heroin.
So when I talk about getting China addicted to American AI infrastructure,
the British were like, no, no, no, no.
We'll just make them addicted to heroin.
Yeah.
And now,
Jacob Shapiro: and now China will make us addicted to Fentanyl.
Right.
Like that's the, the Opium War has come around, you know?
Marko Papic: That's right.
Okay.
So your, your turn for, uh, the fifth beer.
Jacob Shapiro: Alright.
I mean, we should talk about Thailand, Thailand, and Cambodia, but there's
nothing really to talk about.
They had a border spat.
There's already a cease fire.
Malaysia sort of helped weigh in.
Um, and I there there's a broader point there about how in multipole
in a multipolar world, we're gonna have these brush fires,
but they're gonna be contained.
So I'll say that really fast.
And I'll also just say that there was a new poll out about
Trump's approval ratings.
Um, it's down.
Oh yeah.
He's down from the beginning of July from to a new low in his administration,
uh, from 41% to drum roll, 40%, which is also within the margin of error.
So Trump continues to be the best analyst about his own charisma out there.
He could shoot someone on Fifth Avenue and no one would give a shit.
We've had him.
How long has it been of Jeffrey Epstein and if we got one percentage point that
is still within the margin of error on a poll for how people are approving of
Donald Trump, do they approve of him?
No.
His approval ratings are 40%, but they're down from 41%.
And as long as the economy is fine, he's probably gonna
be sitting there doing fine.
And maybe he has powers of charisma that will allow him to boot, uh, to
weather, uh, a turbulent economy as well.
But those are, I, I just stole two, two.
I had, I was a little mini beer flag that I, I snuck in.
See what I mean?
Uh,
Marko Papic: what you did there, what you did there is you, uh, I think
that was a shotgun beer with shotgun.
Oh, yeah.
Yeah.
Jacob Shapiro: A shotgun.
There you go.
Marko Papic: Just like, you know, uh, okay, cool.
Uh, what do I have to say about that?
Thailand, Cambodia.
Yeah.
That's it.
In a multipolar world.
Get ready for this kind of stuff.
And you know what I called it?
Uh, I wanted to write a really long analysis on this, and then I realized
I would write, no, wouldn't read
Jacob Shapiro: it.
I had the same fee.
I was, it was gonna be, I was supposed to write on substack about Thailand
and Cambodia, and then the US EU deal came out and I was like, all right,
I've got an hour and a half here.
Yes.
What am I gonna do?
No, I was really looking forward to understanding it, but nobody would care.
So,
Marko Papic: listen, listen, the way I, I wanted to write about rev schism.
Jacob Shapiro: I was, I was.
That's good.
Marko Papic: Rev Evangelism is back.
The problem is that like, you know, if there's a civil war in the Congo, if
Serbia takes over Republic Seka in Bosnia,
Jacob Shapiro: if Azerbaijan takes back in the Gord Kab,
Marko Papic: if a tree falls in a forest and nobody hears it, did it fall?
And, and like, I don't wanna only
Jacob Shapiro: if only if Israel does it.
If Israel does it, it fell.
But everything else,
Marko Papic: well, it depends.
Yeah.
Okay.
Well, I'm gonna let you do that one.
Um, look, what I'm, what I'm getting at here is, uh, I think that we should expect
a lot more of this, you know, because ba basically what's happening is the rules
and norms of behavior are breaking down.
Uh, to Trump's credit, though, he did threaten both
countries with like a trade war
Jacob Shapiro: who, with tariffs.
I'm sure that really resolved it.
He is just trying to, he is just trying to boost his Nobel Peace Prize application.
No,
Marko Papic: no.
I, I totally agree with you, Jacob, but I, I think at least,
like he didn't just ignore it.
Jacob Shapiro: I thought it was really interesting that he didn't ignore it.
If he doesn't care about these things and he is not gonna sit in judgment, why is he
out there threatening them with tariffs?
Maybe because he wants a Nobel Peace Prize.
I think,
Marko Papic: well, maybe, no.
Maybe the CCAs razor is he cares about human lives.
God, Jacob, why does everything have to be so cynical?
No, but listen, listen, I don't really care.
I, my point is just that it doesn't matter what America did.
The fact is this happened, you know, it's gonna keep happening in all sorts
of, so what you and I could maybe do as an idea, here's an idea that
comes out of this shotgun, uh, beer.
Maybe what we should do is a whole episode dedicated to
forgotten territorial disputes.
I tism, you know, like German and Poland over Esia.
Like, ooh, you know, like that would be a nice continental European just like fight.
And it doesn't have to be about wars breaking out.
Just why don't, why don't you and I spend like a month preparing a top 10
list of I dentist, ous, territorial disputes that come back to the surface?
Right?
Jacob Shapiro: Yeah.
I love this idea.
Sounds great.
Marko Papic: Cool.
Like, maybe we finally have that war in Latin America.
Like, what was it, the Triple Alliance?
Like
Jacob Shapiro: Yeah, that was a big one.
Marko Papic: Yeah, that was the biggest one.
You not the only one.
Since then, I, I believe they've created a new rule in, uh, south America
where they just settle everything through, uh, football matches.
Okay.
Uh, my last one, my last beer is, uh, well actually I am, uh, here still in the
British, uh, beautiful British Columbia.
So I was setting up this last, uh, part of our six pack and, uh, so I
went to dinner with, uh, this, uh, fantasy, uh, basketball league group
of guys that I've been honored to join.
It's a, it's a, actually a league that's been going on
for like 35 years, by the way.
It's an incredible story.
These guys have been together forever, uh, out here in Vancouver.
Uh, basically the commissioner, when he was a kid, his father had
to, uh, drive to point Roberts.
By the way, if you don't know what point Roberts is, it's a piece of the
United States of America that's like sticking off the coast of Vancouver.
It's completely isolated from the us.
It's like a little tiny territory of America that was
cut by the ignite parallel.
And so the dad would've to go to the, to this tiny little enclave
of America, uh, or Exclave.
I'm not, uh, it's an exclave to by USA today.
So they could by hand, Jacob by hand.
Cole told the statistics because this is pre internet, pre everything.
Like Microsoft Excel was like, you don't on a floppy desk.
I mean it was just insanity.
Anyways, I have the honor and privilege to be part of this, uh, fantasy league, and
I thought to ourselves, Jacob, we haven't really talked about basketball in a while.
Last night I was with these guys.
I keep getting my ass kicked.
I need some help.
And so what I was thinking is why don't we just spend the last five
minutes of our podcast, which we used to do often, and suddenly we've
stopped talking about basketball.
And I was like, let's start thinking who I should draft.
'cause these guys are absolute sharks.
I mean, they've been doing this back when they used pencil and paper and
erasers, man, like, I'm overmatched.
I need help.
I need some undervalued assets that are going to go for very little in
the auction, in the next fantasy draft that I should pick up.
So who are, who are the break?
And by the way, we don't have to have an answer right now.
I'm just like, this is a call for help.
If you're listening to this podcast, if you're a fan, you should
want one of the cousins to win this incredibly, incredibly, uh,
prestigious basketball fantasy league.
The JBL, that's what it's called, Johnny's Basketball League.
Uh, so help me help Marco win the league, who are the undervalued assets in 2020?
So either veterans who are gonna outperform expectations, maybe
Trey Young has a great season.
I know that's probably gonna give you brain aneurysm, Jacob.
'cause you are a, you're an Atlanta Hawks fan who's like, quit because, uh, because
he's such a terrible, terrible player.
Uh, but also like, uh, or someone who's gonna have a breakout season.
You know, those are my two categories.
All veterans who people have forgotten, but they have a, like a really
sneaky good season or young players who finally flower into an allstar.
Jacob Shapiro: Well, uh, before I answer that question, I just want you
to know breaking, breaking news here.
Um, on the podcast itself, Gilbert Arenas has been arrested for operating an illegal
gambling business at his Encino home.
And also Kamala Harris says she will not run for governor of California.
I'm shocked, Kamala, that you came to the conclusion
Marko Papic: she was gonna like absolutely win that one, you
know, but, but I, uh, yeah.
I mean, I think, you know what?
Gilbert Arenas and Harris.
Maybe good comps to one another.
By the way, Al also Gilbert dos, uh, the reason I know that story,
it's not breaking is because my JBL feed has informed me,
like, has already done it, John.
Yeah.
This is the
Jacob Shapiro: future.
This is the future.
Like, we're no longer gonna go to the internet for news.
We're gonna have personal intelligence networks that are gonna ping us that
something's up because you don't know whether it's AI slop or not.
Um, I guess my first the I'll, you know, by the way, it's not because I, I hate
Trey Young, that I abandoned the Hawks.
It's because the Atlanta Hawks traded the pick that was going to be Luca donates
so that they could draft Trey Young, and then Luca went to the Mavericks.
Uh, so it was, it was that move because I, you know, the Hawks were the team
that they drafted Marvin Williams instead of Chris Paul, they drafted
Sheldon Williams and Stella, Brandon Roy.
Then they, I just couldn't, I couldn't stomach it anymore.
And so I embraced the fucking pelicans, which really great timing on that.
Oh, cool.
Thanks Troy.
Joe Dumars.
Yeah, I mean, I was just
Marko Papic: gonna say, but Joe Dumars is not here.
Jacob Shapiro: I know.
So now I'm really now like the universe is like, well part of me is like, you know,
I lived in Austin for almost 10 years.
I have a couple Spurs jerseys, maybe I should just, but I
can't embrace the Spurs now.
'cause that's front running.
Like, oh, when Victor is on your team, I'm gonna embrace the Spurs.
Like really?
But anyway, all of this is to say, my deep experience now with the Pelican says that,
and maybe this is not dark horse enough for you, but uh, Trey Murphy third should
be on your list, especially the eyes gone.
Zion's probably gonna suck as long as he can stay healthy.
Like, he's gonna put up a lot of threes.
He's got a lot of opportunities down here, I think.
Marko Papic: Okay, that's good.
Uh, mine is Benedict Matran.
Jacob Shapiro: Mm-hmm.
A good one.
Marko Papic: You know, I just think that he's gonna have a breakout, uh, season,
uh, obviously with Halliburton injured.
So I think that's gonna be a, a really good one also.
Uh, look, you know, like an, uh, another way to look at that is Andrew Mhar.
I think, uh, you know, one of those two probably gonna
have to carry the look right.
Jacob Shapiro: I also, um, I really like, um, Grady Dick in Toronto.
I mean, Toronto's kind of a weird team, but I, I think
he's got a lot of potential.
They're in, they're in full on rebuild mode.
Like that might be a good one.
Marko Papic: The problem with Grady, Dick, I'll tell you is,
uh, so this, this fantasy league is, uh, exclusively Canadian.
And so every single Toronto rep player, yeah, it's just, there's a homer tax,
so he's already like, not just gone, but he's like gonna go for like 50 bucks.
You know, he's gonna go the same price as like, I don't know, an all star.
So grad Dick is already fully priced in this league.
So you gotta, you gotta be careful with home bias.
Um,
Jacob Shapiro: you know, another, another one, um, who, who was the
guy that Milwaukee just signed?
Um, the, the guard, uh, God, what was his name?
Cole Anthony, uh, on for Milwaukee.
Marko Papic: Yeah, that's a really good one.
He was in, uh, Orlando, like, right, he was in
Jacob Shapiro: Orlando and like, Milwaukee's just desperate.
So they just need anybody to come in and handle the ball.
'cause they can't just be Giannis and Miles Turner and, like, call Anthony
can score and, and he can do some stuff so that he, he's also just gonna get
some stats by virtue of where he is.
So,
Marko Papic: yeah.
Another one, obviously I'm just, uh, picking off, you know, the problem
with these guys are too smart, so it's not gonna really work.
You're looking at like teams where like a star is gone.
Like, that's just not gonna work against these guys.
They're, they just are like a computer.
They're like ai, you know, everything is like, but Peyton Pritchard, you know,
if you're looking for a breakout season, I mean, he's already gonna be gone.
I think he's a keeper, actually.
Uh, so he's not gonna be available.
But I, I like Benton Pritchard, uh, Jayden Ivy in, uh, Detroit.
Also another one.
Yeah.
Uh, that's a good one.
Just because of, uh, you know, speaking of gambling Beasley obviously.
Um, yeah.
But, uh, I don't know.
Uh, I'm not sure.
I think Miles Turner.
Jacob Shapiro: Yeah, I mean, I, I have my doubts about what's gonna happen there.
Um,
Marko Papic: yeah.
Yeah.
Not, not, not a fan.
Don't think he's gonna like, put up numbers next.
No,
Jacob Shapiro: he's, he's fine.
You know who I've always rooted for, who's probably never gonna
like, get to like Kevin Herder.
I, I, I'm always rooting for Kevin Herder and, you know, he's in Chicago.
Like, maybe he'll, I don't even know if Chicago resigned him.
I know that he was at, uh, the Red Mamba.
Red Velvet.
This is another way in which I'm like, Silla Silla loves Kevin Herder.
And I have also loved Kevin Herder since the Hawks drafted him.
He's, he's, uh, he, he could really do some things if somebody
would let him do it, you know?
Marko Papic: Alright, well, uh, I just wanted to put that bug in the ear.
It's that time of the year I'm starting to get a little antsy
that, uh, basketball's been gone.
I mean, like, reread the Skinny Luca Men's Health, uh, article like six times.
Wow.
You are desperate.
Maybe three times.
Yeah.
I am desperate.
Okay.
Um, a couple of things on that.
One thing that I will definitely, so we haven't talked about basketball
for a long time, but next time we do talk about basketball, I'm going
to be all about the Euro basket.
Hmm.
I think it's gonna be one of the most competitive Euro baskets ever.
So it's happening at the end of August.
Get ready for that.
You've got Yoki playing for Serbia.
I, he's not confirmed, but it looks like he will, obviously Don is
playing for Slovenia 'cause he's a psychopath and just wants to play
every time, which I love so much.
And I think it's gonna be an epic, epic battle.
Like every team is stacked.
Uh, German, Germany is obviously coming off of like a ton of
really great performances.
I don't think they're gonna have it again, but, you know, uh, what was it?
Uh, Feba, uh, there was that, uh, Feba, uh, Patty Mills.
You know, Feba Patty Mills.
There's a feba like Dennis Schroeder.
Like Dennis Schroeder got this huge contract and I'm like, were
they just going off of his like, international experience, you know?
So, uh, anyways, I think that it's gonna be a great, uh, great
way to get us into the NB season.
I can't wait.
And, uh, next time you hear from me on basketball, it's gonna be about what
happened at the Euro basket tournament.
Until then, though, everyone goes listening to this.
If you're a basketball fan, uh, please tweet at me.
Your favorite two, three undervalued assets.
I need help.
I'm never going to win this league unless we crowdsource.
Some, some like competition, you know?
And by the way, I have went Bama as a keeper, guys on a rookies
salary deal for two more years.
If I don't win next two years, it's like over like, oh no, they're
gonna, they're gonna like, make fun of me for the rest of eternity.
So,
Jacob Shapiro: yeah.
So really what we need also listeners is somebody who makes sure that
Victor doesn't have a return of his blood clots because what, what Marco
really needs is sort of Victor to become the Thanos of the league that
it looks like he's about to become.
Marko Papic: Well I think that, uh, thankfully, uh, you know, there
are, uh, anticoagulants that he can take, so hopefully he is on them
for the rest of his life, uh, so that he does not have another blood
clot, you know, fingers crossed.
Jacob Shapiro: Wonder what the tariff rate on those is on that note.