Orgy of Aneurysm

Jacob Shapiro: 00:11 Hello, listeners. Welcome to another episode of Geopolitical Cousins. I have no notes. Take care of the people you love. Enjoy the episode. We'll see you out. Our listeners, before we get started, one last chance to get your mailbag questions in. A bunch of you have sent questions in. I think next episode will probably be a mailbag episode or soon, but keep sending them in. We're getting them. If I don't reply to you, don't worry, I have gotten them, but there's just a lot of them. I'm saving them in a folder. They're very good. Cuz and I, we're recording Friday, October 23rd. This will probably come out Monday, I would guess based on how we're processing things right now, and both Cuz and I have been on the road quite a lot the last week and a half. I don't know if you feel this way, Marco. It's like every single client is trying to squeeze their shit in before the Thanksgiving/Christmas holiday rush, so it just makes October this ridiculous period of life where everything is happening at the same time, and you're just struggling to keep on top of things. And meanwhile, the world is also apparent- I hope the world is doing the same thing. I hope the world is getting its shit out of the way now so that during that Thanksgiving/Christmas time, we can actually get a break. But where do you wanna start? We've got the angry protests in France. We've got Iran war back. We've got pageantry and summits and all sorts of other things. We have other things percolating around, Brazil elections, India free trade agreements. I mean, we can grab bag from just about anything. Where do you want to start?

Marko Papic: 01:25 Midterms, yeah. Midterms. Well first of all you mentioned to all our listeners that they should send you mailbag questions. I also wanna say send us geopolitical events, moments- Mm … personalities that should be turned into movies. So that's another one that we wanna have a nice little episode on that as well. So, like-

Jacob Shapiro: 01:48 Well, yeah, and help me out because Marco's ahead on this, and I tried to do this to prep for this episode to do this exercise, and I actually had a really hard time finding events and figures that did not already have movies made about them. I mean, I don't know, does it count if in 1972 there was a movie about young Winston Churchill's life and we should just do it again with some new person who's doing it? I don't know. But it was actually very hard to find stories that, like-

Marko Papic: 02:10 I think that's a really good rule. No, I agree with you. I think that's really cool. I think you should mention it in our episode if there is something like that and just say, "It's been done. Here's the movies that have been done." And if you wanna keep it on the board, there may be some part of their life that wasn't emphasized, right? We can- Yeah … you know, because it's so hard to make a movie about a whole person's life. Those tend to be terrible. You know, they kind of pick and choose what part of somebody's life to really double-click on. Like the Michael Jackson biopic, which I'm sure I didn't watch it, but I have a sneaking suspicion it doesn't encapsulate the entire experience that is the Michael Jackson show.

Jacob Shapiro: 02:56 Yeah. And I also, I mean, it's gonna be difficult too because I've-- Well, and maybe I'm stepping on this, but it, it's an interesting challenge to think about because I f- the movies that I most like in this sense are the ones that can tell a macro story with individual characters that you actually care about. That's why Game of Thrones was so successful because it was this grand geopolitical… I mean, really if you look at a map of Westeros, you could very easily predict what was gonna happen next based on the simple geopolitics of it. But then you create these characters who you have attachment to, and they become the vessels for these changing geopolitical things. You can do that with movies in general, but then you need to find both the macro sort of condition for talking about that, and then you need the narrative water carriers that are also interesting enough. And honestly, people don't really make movies like that. I mean, for instance, one of the reasons The Battle of Algiers is one of my favorite movies is because it does a really good job talking about a macro geopolitical thing while also giving you a nitty-gritty feel of what was going on with some attachment to individual characters. It's a hard thing to do, I think, in the grand scheme of things.

Marko Papic: 03:59 Anyway. You know, that's a really good point. It's a really good point. It's really difficult to make-- to, for me to think of that. But now that you've bring, brought that up, maybe I might find I might find stories like that. So my favorite movie is like, you know, The Last of the Mohicans, and it was very much geopolitical and very much a moment in time kind of r- like movie.

Jacob Shapiro: 04:26 Mm-hmm.

Marko Papic: 04:27 It's incredibly geopolitical. It's like maybe one of the most important wars ever fought, which is for the dominance of North America. And so I think that… But what's interesting is that obviously it's very much focused on these characters and great acting. But yeah, that's really interesting, like capturing the feel. There's just so much of history that hasn't been tapped, and I just hate the Marvel franchise so much, Jacob. I think it's made us so much dumber. You could make such amazing movies out of the lived human condition. You don't need superheroes to have superheroes, you know? And so that's why I want to do that. I want to do the spot on that. But anyways, we don't have to… Let's cook on that a little bit. No, no.

Jacob Shapiro: 05:11 Yeah, we can cook a little. I would just say, you know, Last of the Mohicans is a great example because first of all, if Daniel Day-Lewis is in your movie, your movie's gonna be good. Doesn't really matter what it's about. But that's also a great example because it's a, it's a macro situation. But James Fenimore Cooper wrote Last of the Mohicans. That's a fictional account. So you needed actually fiction to plug into some of the war that was going on in general. And something that, you know, George Friedman, our original godfather, used to say to me was, "If you want to learn how to be a good geopolitical analyst, it's actually more important to read fiction than it is in some sense to read history, because fiction gives you a deeper sense of the human condition. You can dive deep into it in a way that histories won't." And the prompt of find something that, you know, you can make a story out of that is compelling in a visual sense, it's difficult to do. And I hear what you're saying, that, oh, there's plenty of heroes out there in the real world. Yeah, but it's hard to like really get into their inner life and control everything. It's much easier to take, oh, this grand event is happening, and now I will insert fictional characters and look how they're gonna ping pong off.

Marko Papic: 06:09 Anyway, it's- That's a brilliant point. It's a… No, it's a really brilliant point, and I'm glad you brought up that quip from George because that's, that actually stayed in my mind as well. I still say that to young people when they're like, yeah, you can read, you know, Spence- Spence's Search for Modern China. You can read that book and it'll… It's a really good history book. It's like a foundational text. I think it's Spence. Yeah.

Jacob Shapiro: 06:35 It is, yeah.

Marko Papic: 06:35 But anyways, you can do that, but reading literature written by people living in China in an adjacent way is actually a much better way to get the taste of that moment, you know? Same with movies. I mean, if you're not a big fiction reader, you can just watch movies that were made by people from those countries. Those are good, too. I 100% think that that definitely, … It fills out the crevices of knowledge, you know? Like you can think of history, dates, people, personalities, battles, facts. Those are your scaffolding. Those are your, you know… That's like the brick and mortar of a house, but then the carpet that gives the room a tone, a warmth. That leather antique chair you go and pick while you're antiquing that gives the nice softness, you know. Those are things that you can't really pick up from a history book. Or a history documentary, you have to read about that moment in Berlin in the 1920s, you know, when it was like the center of counterculture and super liberal. How did it go from that to fascism? You know, you can't really do that unless you watch some movies and read some books about that time. So and that brings up your point that maybe the assignment I assigned was like, oh, you know, one of our readers was like, "You need to make a movie about Bismarck or a TV series." That's a personality. We… You know that's an incredible personality. But that becomes too mechanical. It's too obvious of an answer. Mm-hmm. Your point is like, "Hey, French-British war for control of North America is super important," but if you went to the market and said, "Hey, you know what this movie's about? This movie is about the war between French and the German," you know, everyone's asleep. But you're like, "No, Daniel Day-Lewis, incredibly conditioned hair- … lots of bare chest, multiple romantic interests, and you'll learn some history.

Marko Papic: 08:37 Go." Yeah, I'm watching that movie all the time, and an incredible score, you know? Let's go.

Jacob Shapiro: 08:43 Yeah, and I'm dwell- I'm allowing us to dwell on it for a second before we get into geopolitics, 'cause I actually think it's really important when we're thinking about artificial intelligence and the way that it's consuming everything. I think the need for real human stories is gonna become even more stark, because what's gonna be out there is gonna be all of this AI slop. And two examples of movies that really do what we're talking about here, like you mentioned Jonathan Spence, Search for Modern China, incredible, indispensable book. But the movie version of kinda, you know, the end of the Chinese, empire and centuries of humiliation is The Last Emperor of China. Which I don't know how historically accurate that movie is. I've never actually gone and said, "Oh, did they get this right? Did they… " But they got a feeling. There was a feeling they wanted to express. The feeling. Incredible movie. Yes. Yes. I'm watching East of Eden right now on Netflix, which is, A, Steinbeck wrote an incredible novel. They've done an incredible reinterpretation of the feeling of moving West in the United States post-Civil War, and the way they're shooting it, and also the nature of good and evil. It's incredible. But again, it's a fictional account in a historical time period. One of the things I was challenging myself to do as I was trying to prep for the prompt here… And it's funny we're now talking about the prompt, but I actually found it really useful, was, you know, what if you were making a movie about the Trump administration? If you're a filmmaker 50 years from now and you're trying to describe what's happening in the United States, like who is your narrative water carrier? Is it Scott Bessent? Are we gonna make the biopic about Scott Bessent at Treasury? Are we gonna talk about the MAGA guy in Montana who voted for Trump and then lost all of his money because he was betting on, you know, sports betting sites, and also the US started importing a bunch of Argentine… I don't know. You have to find the right story to express some kind of feeling remote. So I've been struggling with the prompt, so listeners- So hear this write in and tell us other things to do.

Marko Papic: 10:25 Go on. Well, I think it's an incredible point. Let's actually… So one of my favorite movies, is… Just a second. One of my favorite movies is called Killing Them Softly. And it's a neo-noir crime film that is actually based on George V. Higgins' novel, Cogan's Trade.

Jacob Shapiro: 10:56 Hmm.

Marko Papic: 10:57 So the book was b- written in the '70s, so lots of that kinda r- sideways rain, shitty cars, post-industrial landscape, right? And it's about basically small-time mafia in a town basically trying to deal with a car game being hit by somebody. It has nothing to do with anything, Jacob, except it's kinda like in this moment of American history, '74 was a shitty year, right? '73 embargo, recession, all this stuff. So the guy who wrote it and directed it, Andrew Dominik, well, actually, what did he do afterwards? He… Interestingly, he's from Wellington. Hmm. A Kiwi. He hasn't really done anything else. He's done Blonde, One More Time with Feeling. I don't even… Chopper. Okay, he did the crime film Chopper. I mean, nothing. Literally, this movie. So he puts Cogan's scale, which is Trade, Cogan's Trade, from 1974 to 2008 presidential election, GFC, global financial crisis, Obama, and the movie is absolutely epic- Mm-hmm … dark, twisted. You know, a little bit of an overly overt analogy between the post-industrial hellscape and these mafiosos killing each other- and the decline of America, but also decline of capitalism at the same time. But it does have one of Brad Pitt's greatest monologues ever, where at the end he comes out to the bathroom, counts the money he was paid for killing some people, and says, "These aren't the prices." And the guy tells him, "It's recession pricing." And, Brad Pitt has, says like, "Hell no, I'm not taking recession prices." And then Obama is giving his victory speech on the TV in the bar.

Jacob Shapiro: 12:47 Mm-hmm.

Marko Papic: 12:48 And that line comes in, "Out of the many, we are one." And the guy paying him, "You see that? That line's for you." And that launches Brad Pitt into the greatest monologue, I think, in 21st century cinema, which we will- Wow splice right now. And so anyways, like that's exactly what you're describing. That's that kind of a movie that is about something completely different. Like Cogan's Trade the book has nothing to do with that moment, but they modified it and put it in and it… My God, man, it was made in 2012, the movie, and it hits that jobless recovery, the Obama secular stagnation. It like, it describes the fertile ground for populism that we're now living in. It like, it basically is the best movie representation of that moment in American history, and it has nothing to do with politics or economics or anything else. It's, at the end of the day, a mob movie, you know? So if you're just like a fan of mob flicks, you're loving it. Anyway, sorry you took me down this rabbit hole, but- No, no, wait, I think it's important … I can't wait for us to actually do this.

Jacob Shapiro: 13:52 I mean, Margin Call is another great example of this because like one- Yes … of the answers to the question should be make a movie about the 2008 financial crisis. But to do that you need to have Jeremy Irons and Kevin Spacey playing fictional characters who are somehow-

Marko Papic: 14:04 Great point expres-

Jacob Shapiro: 14:04 And I've actually- Great point … been dwelling on this quite a bit lately and thinking about how to, almost like ways to record for my kids what life is like right now. Because I do have this sense that everything is… I mean, things are always changing, right? Like that's sort of a banal observation to make. But the way we interact with the internet, the way we interact with screens and machines, the way artificial intelligence is changing what we trust and how, even how we communicate. Like there's some part of me that wants to document the feeling of right now and preserve that, 'cause I think we're just gonna forget. We're just like bobbing on the surface thinking everything is the same, but really things are changing. Anyway, um-

Marko Papic: 14:42 No, but that's what movies do. No, but you nailed it. That's why we wanna do this, right? And I think you've now just elevated the task further. So it can't really be just a mini series about Bismarck. By the way, great suggestion. We'll shout out to the people who suggested on X and who wrote in when we actually do this episode. We've now done 14 minutes on- 11. It's good … like an intro. Is intro to the episode. But you know, you've now elevated the task, I think, Jacob. Like it's almost like what periods of time do you want to revisit? What moments, what splices of human history, and h- what are the stories that you would use as vehicles for that? And I think that's maybe too high of a bar for the two of us who have like 17 jobs to like really take off. But yeah, I think if you would just nail what are the pivotal moments in human history when shit was happening, you know? H- what are those? Let's start there. And I think there's a lot of it that we have not put in film. 19th century for me is not done enough. Mm. 19th century. 19th century. Other than Downton Abbey, you know and romantic thrillers. 19th century just kind of gets the short shift because it doesn't have heroic moments really, but it was an incredibly important period of time. But we just don't spend enough time on it. So that's where I'm gonna go, but I still gotta pick what parts of it are interesting.

Jacob Shapiro: 16:14 Yeah, no, that's why East of Eden is so good. And I would just say, you know, there's a, there's a joke in here too, 'cause we- you can also do the reverse of this. You can say, okay, but you can also make documentaries of fictional characters. I just, I've had a bunch of long plane flights recently, and objectively one of the greatest airplane movies, no matter what version of it is Mortal Kombat. I was saving the new Mortal Kombat movie for a plane ride because what more do you want from a plane movie? It's absolutely perfect. So we should do a Ken Burns documentary of Raiden. Who was Raiden? Where was he born? That would be really great. Anyway, but so the- That's so funny.

Marko Papic: 16:46 I loved Raiden, by the way. I always played that character in Mortal Kombat- He's the best … by the way. I'm a Raiden guy.

Jacob Shapiro: 16:51 Yeah, so we need the… We'll do fictionalize the historical moment, then we also need to documentarize the fictional characters so that they have depth. But you know, when we're talking-

Marko Papic: 16:59 Well, we still have to do computer games. We still have to do computer games. That too. We've got a, we've got a guy, I don't know who's say it is. By the way, he said yes.

Jacob Shapiro: 17:08 Oh, okay, cool. Great.

Marko Papic: 17:09 The greatest American venture capitalist in computer game industry has said yes. Just gonna leave you there. Let it cook. And he's super stoked. Yeah. So we gotta do computer games geopolitical computer games. My problem obviously is I haven't really played any of the new Call of Duties. Did you see the last Call of Duty? Have you seen- No … has your algo hit you with it?

Jacob Shapiro: 17:33 No, it hasn't.

Marko Papic: 17:33 My YouTube algo is like, "Bro, you need to go back into gaming." It's basically the premise… Dude, Jacob, the latest Call of Duty is effectively the Korean dictator dies, the son wants the country to liberalize, and then there's a putsch against him, and you get embedded with some loyalist North Korean troops. It's all in Pyongyang. It is absolute fire. Oh my God. And I'm not even being paid to say this. Go out there. I can't wait for my 13-year-old kid to download it. I'm gonna make him play it, 'cause I don't have time to work my thumbs anymore. I'm just gonna make my son play it so I can enjoy it.

Jacob Shapiro: 18:15 Well, this is the other… Okay, I know we're doing a long intro to the intro, but, you know, making video games about geopolitical futures or scenarios or even- Let's go … past events this is our real calling. So developers who are actually interested in this and wanna make a realistic Age of Empires-type game except it's, you know, a North Korean unification scenario or something I feel like we were born to help with this thing. We could do this thing.

Marko Papic: 18:38 Europa Universalis, which is played by a very small percent of humans, is what I was born to do in modern times. Yeah. Let's go. If there's… Yeah, developers out there, what are you doing? This is Geopolitical Cousins, man. We shouldn't be branding coffees. We should be branding computer games.

Jacob Shapiro: 18:57 All right, here's the segue. You asked about well, what moments should we be thinking about in terms of movies? Well, one of those moments should probably be 1968, the streets of Paris, and that's gonna be our segue in because what I wanna ask you is-

Marko Papic: 19:12 Oh my God.

Jacob Shapiro: 19:12 Is this a 1968 moment for France, or is it just another Friday? And I will also put myself out there and say I already put out a thing last week that was pretty sanguine about France, and I feel very lonely. Louis Gave was out there- … talking about the pr- everybody's out there talking about the problems. I feel very lonely, and it's a uncomfortable place to be because either I know I'm right and I'm ahead, or I'm so far off the track that I'm just completely crazy and I'm gonna look like an idiot. It's the… It's why we do this work. When you're an analyst and everybody disagrees with you and you're questioning your own sanity versus your own brilliance that's when you know you're in the right spot. How are you feeling about France 'cause you're our, you're our resident European expert?

Marko Papic: 19:52 Well, I mean, I w- I would say that first of all, anybody who looks at what's happening now and is like, "Oh my God," there have been protests in France this century. Really quick, I mean, in the '90s there was a pension reform, s- I think it was pension reform. I'm not really sure what it was about, but I think it was a pension reform protest, '95, '96, that forced the government to basically scrap it. Mm-hmm. 2005 was the banlieues riots, which was demographically inclined. So yes, 21 years ago there was a demographic component, an ethnic component. The marginalized Muslim North African youth rioted in banlieues, which is basically French suburbs. Mm-hmm. But since then, most of the protests have not been ethnic, and it's absolutely incorrect and Islamophobic for the American press and the American president to be saying that this is about, Muslim immigrants. That's not what's happening at all. What's happening in the streets of France is the most French thing ever. This is a country whose national anthem has the Marchons line let's go, you know, to the barricades. It's a country that has a history of social unrest and, in a way romanticizes it. So just this century, 2005 banlieue unrest, yes, that w- that had an ethnic component. Fair. 2006 youth protests was not about just demographics. It was broader than that. 2010 was the pension reform protest. We actually covered this, you and I- Mm-hmm … together at Stratfor. It was huge. It was also about, Like it was very much widespread and it was about raising the retirement age from 60 to 62. The Yellow Vest movement, hello-

Jacob Shapiro: 21:46 Big hello …

Marko Papic: 21:47 That was right-wing, libertarian, had nothing to do about immigrants. That was like the rural French people coming out and saying like, "Look, I know you don't have to drive in Paris. I know that it's extremely romantic to get on a bicycle with a little like basket on, in the front and buy a Camembert and a baguette. But where I live, in the middle of nowhere of central Massif, I need a car." You know, France outside of the big cities is America. You know, you're using a car. And so the environmental fuel tax hike was what that protest was about. Oh, and nobody brought up that there was like Muslim hordes then because there weren't. 2023 pension reform unrest again, this time raising the retirement age from 62 to 64, you know? And now we are here where we are. Cost of living, also students. So we have one, two, three, four, five, six, seven if you include '95, '96 in just the last 25 years. And then, you know, your mentioning of May 1968, which was of course the OG of protests. It was an incredible time in France. It was really, really huge. Charles de Gaulle fled the country. In fact, the president of France got into a helicopter and went to a German military base, I belie- sorry, a French military base in occupied West Germany, I think to Baden And he fled there thinking that he's cooked. You know, 1968, there's huge protests. His prime minister, Georges Pompidou, was stumbling around lycée looking for a president, asking everyone, "Have you seen President de Gaulle?" And then one colonel handed him a revolver and said, "You may need to use this today." Like-

Jacob Shapiro: 23:37 Gee, I didn't know that story.

Marko Papic: 23:38 So this is the story of May 1968. The, like… It was like revolt. What happened afterwards is very important and instructive. So 1968, baby boomers are 18 years old, thereabouts, you know, give or take, I don't know, five, seven years. There's a lot of tension. France is a deeply conservative state even though it practices, you know, basically state atheism effectively. There's still a deeply conservative Catholic component. Education is terrible. Conditions for students are absolutely disastrous, and baby boomers are a huge population now wanting better conditions. And so it was really about everything that 1968 was in America, in United Kingdom, in France, everywhere else. It was about sex, drugs, alcohol, fun, but also liberation from the older generations, from that oppressiveness, you know? And so on one ha- side, the protests of 1968 did a lot of good. They jarred the system into modernity. On the other hand, they overshot their march, their mark, and many of the student leaders started talking about a Bolshevik communist revolution. And that's when the workers made a deal with the Charles de Gaulle government and cut out the students. Important point. The workers were like, "Whoa! Cool story, kid. But no." I just want better working conditions and higher pay. So what ended up happening was into subsequent elections and for the next 12 years, France veered to the right. Pompidou becomes the president after Charles de Gaulle, and after that is Giscard d'Estaing who was at the height of French absolute fucking crush, crush-topia. There's a great YouTube video. It's called, Giscard d'Estaing Techno, and it's all like- It's, basically it's just videos of sick French stuff in the '70s to the tune of just hard industrial techno from the '70s.

Marko Papic: 25:45 It's amazing. We're gonna put it in the show notes. Yeah. Effectively, it shows a Peugeot 205 being launched from a aircraft carrier. Peugeot 205, if you lived in Europe in the '80s, you were definitely harsh- You loved that car. Concorde, the internet, the cellphones. France discovered all of it before everyone else, and then totally wasted it and didn't know how to commercialize it, but the '70s, it was awesome. So that's the first thing I will say. Yeah, France is in deep trouble. This has happened before. People have written it off before. In 1968, the president of France fled the country, couldn't be found. His prime minister was handed a revolver. That is not where we are today. And in fact, where we are today is that public polling shows that 60% of French people believe that narrowing the debt and deficits is the most critical priority of the French government. It was 30% five years ago. Mm. And what's happening right now in the streets of France is what happened in '68, in that the students are overshooting, and the silent majority is likely going to elect Marine Le Pen. And she's going to do what she has to do. She's gonna do what Giorgia Meloni did in Italy. She's already talking about, German-style debt breaks, which is the equivalent of Bernie Sanders talking about privatizing Medicare. If you want an ideological… Look, I've been following this stuff for the last 20 years. Marine Le Pen talking about German-style debt breaks, ideologically, that's like your brain should explode in an orgy of aneurysm. You know that's, that is not normal. That is not a normal thing. It should make you go like, "Wait, what?" A lot of people say, "No way she's gonna get it done." Ah, she's not, you know. But as long as France moves in the right direction, it's got the cover of the ECB, the central bank, the rest of Europe. I think that this is going to be a catalyst for some reforms. Now, am I super bullish right now? I think you're trying to catch a falling knife with French bonds.

Marko Papic: 27:50 I don't think that a solution happens in October 23rd. But there's a couple of scenarios. One, we have to just watch France bleed until the election in April. That would suck. Two, Macron does what he always does, which is a mistake, calls another parliamentary election. Jesus, why would you do that? But maybe there Marine Le Pen finds An opening and says, "You know what I'm gonna do? Let's have a government of unity for the next couple of months 'cause you're incompetent." And she effectively becomes a shadow president, and she effectively signs on to painful changes ahead of the election and then just crushes it in the ele- in the election. Because again- Mm … anyone thinking that there's a majority of the French people protesting, that's not the case. The 60%, the majority wants some form of consolidation of debts. And then the final outcome is that they call early elections, and then she wins. And on y va, we now have to, you know, watch France try to reform. How big is the problem? It's big, but it's concentrated in pensions. That's the issue. The vast majority of the deficit and debt is because of pensions, and effectively the country needs to consolidate that. Means-tested, extend the retirement age. I mean, who the hell retires at 64? Come on. You know what I mean? This is, this is- Well, I mean- … 2026 I'm, I'm- You're gonna live-

Jacob Shapiro: 29:08 I'm trying to retire earlier than that, cousin, but, you know.

Marko Papic: 29:12 I mean you know what you're gonna do. You're gonna be crazy, man. Like in, like old Jacob running around. No, man, you're still gonna dabble.

Jacob Shapiro: 29:19 I'm gonna start cashing that un- those universal basic income checks. Come on, artificial intelligence. Okay. Pay me out for all my hard work that-

Marko Papic: 29:25 Fine … that.

Jacob Shapiro: 29:25 I've been doing.

Marko Papic: 29:26 Fine. Well, then, you know, it's a different story. But anyways, look, I just think that those are kind of the outcomes and I'm not worried, just to be clear, and I don't think we should be trying to catch a falling knife at all. But I'm also not… This is not novel. Anyone who says, "Oh my God, look what's happening in France," was born yesterday.

Jacob Shapiro: 29:47 Yeah. Okay. Well, there, there's three things I wanna say. First of all, you, at some point during that incredible explication of what's going on in France and its history, you used the phrase orgy of aneurysm. That's a top five Marcoism right now, so we gotta add that to the top five list. Number two, I think maybe one of the things that is different, maybe one of the things that we can double-click on to steal from you is your point about the workers in 1968. Because I think one of the things that is really different right now in the current context is that the power of labor and the power of workers is not nearly what it wa- once was before, and a lot of that has to do because of the industrial hollowing out of all of these developed economies. It has to do with the decline of the left. It has to do with the rise of AI, so now it's coming for the white collar workers. The workers are now being threatened in a meaningful sense, and I think dealing with that element and how artificial intelligence affects that, we have to wrestle with that. And then the last thing I would throw at you based on what you said was, and you're sort of alluding to this when you switch to don't catch a falling knife language. I think there's… This is one of those great examples of where you can be right about the geopolitics and it honestly has nothing to do with the markets. You have to have a complete other set of ideas and variables and tools to think about how it expresses in markets. I look at France and geopolitically, one of the top 10 powerful countries in the world. I mean, in terms of the resources that it has, the cultural power, the military power, everything. You put it all together, there are very few countries in the world that have the strength and relative resources of France. That does not mean that over the next five years they're gonna outperform on a market level basis. Now, I think they'll be here five years from now. I think they'll be stronger, influential. Maybe that sets them up on a much longer term trade or investment time horizon. I think another great example of this is Brazil right now. Brazil, which has elections this Sunday, probably that we'll have end of result right before this posts, where Brazil from a macro perspective looks incredible. But when you start to go underneath the hood and think about, well, what about Brazilian markets and how are you gonna play that? You know, it doesn't matter that Brazil has all of these geopolitical strengths that will make it a regional power and so influential on the world stage because it also, like France, has huge problems when it comes to deficit spending and really, really tough political reforms that politicians have not been either empowered or felt powerful enough or, you know to go and actually make.

Jacob Shapiro: 32:01 And so you get into these situations where people are frustrated and un-- you know, they're not protesting in the streets. Instead, they're electing the Bolsonaros and turning over the government to a Bolsonaro dynasty. But that's another sort of interesting way to think about it, I think markets versus geo… So take any of those that you want. I think the workers one is one we have to wrestle with though, because one of the ways this is different, we have touched on this in our AI podcast, is that, you know, if all of this, not doom and gloom, but if the conversation about AI is real and if workers are losing what little power they had left and how that reshapes the map and what that means in terms of the Gen Z protests that we've seen around the world in recent years, whether it's Morocco or Nepal or, you know, things that we've been relatively ahead of and how that slots into this. There, there's a broader story there I think we have to tell if we're making the movie about this time period.

Marko Papic: 32:45 But listen, so let's talk about broad- broader stories. First of all, on the market side, you know, my good fe- friend Craig Mellow from Barron's, he just wrote an interesting report, came out I think yesterday. So some of the big French stock market stock picks like LVMH, Michelin, Sanofi, they're getting crushed right now. And it's like, why? It's not like Michelin doesn't sell tires to the French people. You know what I mean? Like the-- there's actually a way, you know, Jacob, where like euro goes down because of this French international companies get hit, and then you can make some money by catching that falling knife, by the way.

Jacob Shapiro: 33:29 Mm-hmm.

Marko Papic: 33:30 I was talking more about yields. But let's talk big picture 'cause you're focusing on AI and what it means for young students and their anxieties, and I think you're right. But one thing is we haven't yet really seen a huge deluge of unemployment. We've seen young- Sure … we've seen young people struggle to get employment, like MBA graduates are not, you know, getting jobs as fast as before and so on. But I wanna be even simpler, Jacob. I think what's happening right now in the West is that it's not really about AI yet. It's about energy costs, and it's a cost of living, which obviously, gee, Marco, thanks. Did you guys start a podcast so you can state the obvious? But you know I don't think that voters would be burning stuff in France, or I don't think that Mississippi voters would be contemplating a Democratic candidate, or I don't think that East Germans would be voting for a neo-fascist party if they didn't think that a lot of the cost pressures are optional and were pursued by elites for ideological, normative, or optional reasons. And so I think broadly speaking, what's happening right now in the West is basically a rejection of war. If you really kind of boil it down, I think AI, yes, that raises the anxiety. "Oh my God, am I gonna have a job in five years?" But I think a more imminent thing is like, "Oh my God, inflation is elevated." And why is inflation elevated? For a German, it's because Europe has basically decided that it's going to pursue defense of Ukraine no matter what.

Jacob Shapiro: 35:14 You know, no matter what.

Marko Papic: 35:15 And it's like, well, why? Maybe Germany should be Machiavellian about how much it defends Ukraine. Is the northwestern corner of Donetsk actually relevant? Ukrainian independence seems pretty relevant to the security of Germany, but like not the recovery of all Ukrainian territory. So why shouldn't German government be negotiating with the Russians? Why shouldn't France, Italy, and Germany start contemplating a world after the war? So there's that conflict, which for Europeans I think is pretty relevant and has led to the support for populist movements who are latching onto this naughty thesis that maybe the war in Ukraine is no longer necessary. Why don't we just end it? And then in the US obviously there's another war, which is Iran. So if you put all the Western elites together, which is difficult to do, 'cause obviously some of them are super liberal, some of them are super conservative, some of them are Trump. If you put them all into the same bucket, if you're just a random French person or a random voter in Kansas The problem is I didn't sign up for all this stuff. This is now too much. In other words, elites together, all together, have bitten off more than they can chew in terms of geopolitical adventurism, you know, just writ large. And what I see this as, Jacob, is that these new generations, post-Cold War, post-Soviet Union, and post 10 years of being told that China's evil and must be stopped, and then you're like, "Okay, but what have the Chinese done in those 10 years? What have they actually done?" Well, they've kind of bullied Hong Kong. Mm-kay. That's mean. That's not nice. But what else have the Chinese-

Jacob Shapiro: 37:08 Yeah, they've also lifted hundreds of millions of people out of poverty, become the world's factory- Well, have they, have they- … responsible, blah, you know? Who…

Marko Papic: 37:13 Yeah, 'cause we… And by the way, the President of the United States of America is meeting with President Xi four times in a year. What are we, what are we doing here? So, so the generations 40 and below, 30 and below, are sitting there and being like, "Wait, time out. Yeah, Russia's evil, fine, but did we not stop them in Ukraine? Are they not stopped? Iran wants a nuke, but we bombed their nuclear facilities, right? So, and we can bomb them again, right?" And so I think where we are is these protests and the fact that President Trump has to go to Kansas, Iowa, and Mississippi. Dude, he was in Mississippi yesterday. Donald Trump was in Mississippi trying to campaign for the Republican candidate. I mean, fact-check me if I'm wrong, but I think he was. When you're starting to defend Republicans in Mississippi, it's basically the equivalent of French people burning cars. Am I right?

Jacob Shapiro: 38:06 Yeah. I mean, that's pretty yikes.

Marko Papic: 38:09 That's… So here, so here's what I'm getting at. What I'm getting at is that I think that what the public is saying is we're… "It's time for you to go and make deals. It's time for the West to take an L." That is what these protests are, I actually think, about. It's more geopolitical than we think because what's happening is the price of living is going up, 'cause energy's an input in everything. Voters feel it, and they're saying "Listen, it's time for you to take an L. You tried to go out there and beat back Russia in Ukraine and recover all the lost territories. Time for you to take an L. You tried to go in there and do regime change in Iran. It's time for you to take an L.

Jacob Shapiro: 38:54 Yeah, it-- So that's an interesting way of thinking about it. I don't know if I agree or disagree, but I'm gonna play devil's advocate just to keep the conversation sort of interesting. Because the way I'll push back is, and it kinda goes to your analysis of the '68 protest, which is there is the initial protest movement, which is a, which is a cauldron of all of these societal tensions, and young people at the front of the barricades sort of bringing things. But to your point- Hormones the second and third order effects- Oh … were not done by the 18-year-olds. The 18-year-olds and the 22-year-olds went back to having sex and doing drugs. They're not gonna be doing at least that, we know, because they don't do drugs, and they don't have sex anymore. But I don't think the 18 and 22-year-olds and, you know, the high school students in France who are protesting, they're not the ones who are gonna decide what happens next year. What's gonna happen next is those elites, the middle class, the ones who are 40, 50, 60 years old, who have wealth, who have power. And the difference now is that I think, and I'll quote from, Matt Casey is a longtime friend of mine. He wrote a great Substack about this. He's been walking around or traveling around the United States, getting a sense of what people were talking about. And he alluded to the idea of Peter Turchin's idea of, you know, elite overproduction and just talking to people, and their common enemy, to your point, was not war or foreign policy. It was more about artificial intelligence, in part because they feel like AI is finally starting to come for their jobs. And I'll just quote him. He said, you know, "Though it is-- Those who protest," basically he's saying, "it's by no means those who consider themselves at the bottom of the K. Robespierre, Lenin, and Castro were all failed as lawyers before turning to revolution." Th-there is something in that- Yeah … that the elite overproduction that we've seen, that the economy that we are creating, we have too many elites. And if you want to rise to the ranks of the elites, the path there is not at all clear. We know this from the mailbag. I mean, how many-- I've been forwarding you the mailbag questions that we've had. How many different mailbag questions are from people in their 20s or 30s who are saying, "Hey, I wanna get to where you are. How do I do that in the context of a media environment where it looked like the internet was about to shut down because of a hack, that we're gonna lose everything as a result of this?"

Jacob Shapiro: 40:55 Are you kidding? I can't access the internet anymore? There is something operative there. So I hear you on war and foreign policy being a common enemy, but I think you can also see that artificial intelligence and the technocrats- I think it can be both are another… It can be both, too. You know- But you gotta pick one eventually, so.

Marko Papic: 41:10 I don't know if you do. I think-- Well, you do-

Jacob Shapiro: 41:14 Well, no … in order to mitigate- Yeah, actually, so sorry. L-- It's not about that. Let me rephrase what I'm saying, 'cause I'm not saying that, actually. What I'm saying is, where these protest movements and these populist political movements go from here, it's not about what people are protesting in the street. It's about the deals that are made by the folks who, you know, like the workers that you're talking about in France in '68. Whatever the equivalent of that is in society today, what deals are they gonna make with the political class? And who are they going to push their chips in with, and what is the cost of those things? So, so here's- It's not g- Whatever is in the streets is actually not gonna do anything.

Marko Papic: 41:48 So, so here's what I would say. First of all, it is absolutely correct that what your friend Matt Casey is saying is correct. AI and anti-AI sentiment is demonstrably very high. We also know that price of living is the reason that people are mad.

Jacob Shapiro: 42:06 Mm-hmm.

Marko Papic: 42:07 So, so both are happening at the same time, and then the final one for the French students in particular is they want better s- like, conditions and more investment in education. What's a common thread amongst all three of these? You quipped jokingly about universal basic income. Hmm. So you've got… If we were growing 10% nominal GDP growth and had no debt or deficits, I don't think young people would be as concerned because they'd be like, "Sick, I'll get UBI." But they know there's no money. Cost of energy is dr- is causing, you know, bond yields to go up, putting pressures on debt. Why is France suddenly in trouble today and not six months ago? What's the difference? Did France just suddenly spend a lot of money over six months on pensions? No. Yields have gone up, in part because the AI story crowding out the rest of borrowing, raising cost of capital, but also oil prices increased inflation, and ECB went and raised rates. So energy and AI anxieties are fundamentally about do we have enough money to handle these problems? And then the final one in the case of the French students is like, "Hey, we want more money for education." Well, where's it gonna come from? And so basically, it's like the West is facing this AI story that will raise unemployment rate if it's even s- modestly correct. If the AI story is even modestly productivity enhancing. Productivity enhancing is a fancy euphemism that we use in economics and markets for people getting canned. The reason AI companies are as expensive as they are Is because we expect them to lead to people getting fired. I mean, that's what you're betting on. And then that's the anxiety level, and then cost of living due to energy costs due to these wars, and then on top of that, well, I want better schools, or I want better healthcare. Well, how are we gonna afford that? And so it's all coming to a head, and I think that, yeah, I mean, where are the deals gonna be? I think there's gonna be a big short, Jacob. Something is gonna have to break. And I think what's easiest to break, Jacob, is the part that everyone who listens to this podcast is gonna hate me saying it.

Marko Papic: 44:30 I just thought of this. I think this is the big short, and the big short is war, defense, and yeah, all those defense stocks that have gone up massively. You wanna know what's not gonna go up in spending? It's gonna have to be that. These are wars of choice. We don't need to defend Ukraine to the max. We don't. We don't. It's probably not good for Ukraine. Why? You don't have… What, you're gonna try to reconquer Donetsk? For what reason? It's gonna drag you down. No, Ukraine, no, rump Ukraine is gonna be the next garrison state. Just that's what the West is gonna have to negotiate. You know? Accuse me of being Chamberlain. Accuse me of Munich. No, no. I don't care. It's like i- there's no more money. Do you know how much money Europe spends on Ukraine? And if you're sitting there as a student in France, you're liberal. You think Putin's evil. You wanna defend Ukraine, but you're like, "Wait a minute, but does it need to conquer some of these territories back, or do I need better school conditions?" What's better for the West, by the way? What's a better tool, use of money? So that's the first. And elites made the decision for that French student, by the way, to your point. Someone else is making these decisions.

Jacob Shapiro: 45:41 Yeah.

Marko Papic: 45:42 And then the second one is like, oh, we all need to, have more defense spending. For what reason? For China? China has been a very poor villain, as we've discussed before. I think what's happening is that something's gotta break. Social welfare state versus butter over guns Ha. It's gonna be guns.

Jacob Shapiro: 46:05 Well, that's an interesting dichotomy in your view though because when we think about, and I think we've talked about it on the podcast before, if you have more multipolarity and you have rising and falling great powers, necessarily you're gonna have more spending on defense because countries are worried about becoming more self-sufficient when it comes to defense, defending their trade and defending supply chains and things like that in a world where there isn't a universal guarantor where the United States was doing it before. So you have all of this military spending and a re-emphasis on spending on defense. And yet to your point, when you have all of that spending going there but you have these crises of inflation, worries about job employment in the future, where are you gonna take the money from? Yes, obviously defense and war is a place to take it from. And one of the… I mean, I only know the US context best, but one of the interesting things here is that often technological progress comes from that defense spending, comes from the war. Like all of the technology that we're using today is born of World War II and the space race and the Cold War with the Soviet Union. If you don't have the government in these public-private partnerships to go to spend in these things, then you're not gonna have all the techn- technological advances that you have going forward. And there is a dichotomy I also think between the tech companies and the governments themselves, where instead of being part of the same system you can sort of feel the tensions between them in a meaningful sense. That's one of the things that's happened in the United States. So and I don't know if I agree with you. I mean, I think the military industrial complex is really strong, and in some sense the compromise deal that might be made is, no, we need this emphasis on security issues. We need… You know, China was a bad villain. Putin's a great one. Let's make him the villain. Let's make Ukraine the patron saint of European rearmament because that is the only path to reindustrialization. That is the only thing where we can tug at people's heartstrings and say, "You know what? Yeah, this isn't in your interest. This isn't gonna give you better schools. It isn't gonna give you better healthcare. But you know what? Better you should be in a school with a hole in its building than speaking German or speaking Russian. So we gotta do this thing first, and then we'll find room for you in the budget to do all these other sorts of things." So I, like I think, I don't know. There, there's a, there's a tension there in what you're saying.

Marko Papic: 48:05 Well, here's a, here's a notch in your belt. A notch in your belt is that defense spending is not that big. For France, for example, you know, they spend almost 15% of their GDP on pensions and 2.5%, on military. They wanna take it to 4. But here's what I'm saying, Jacob. We can agree maybe that We can agree maybe that like, okay, well, defense spending can't go down. But a lot of expectation is that it's gonna double, right? That all these countries in the West have signed on to a lot more of it. I at least think that that can't happen. Basically, look, here, here's the fundamental fact. We've got an AI build-out that's crowding out other in… For those of you listening to this, we had a bond podcast. We talk about bond yields. What's a bond yield? What's an interest rate? Basically just price of money. Money's like a commodity. It's an input. Mm. If you wanna make a farm, what do you need? You need some land, you need some seeds, you need some water, you need some money. That's like the goulash you need. And so the price of money is the interest rate. Well, the problem is when everybody wants money as an input into their investments, the cost of money goes up. So the… We have an AI infrastructure build-out where you, let's say you are just listening to this podcast, you're in your 30s, you wanna buy a home, good fucking luck. You're competing for money with Google. It's the same dollar bill. Google needs it to build a data center. You need it to buy a house. That's why the interest rate is now 7.5% on a mortgage. So that's the first issue we wanna do. Second, we wanna have an energy transition, Jacob. Maybe not in America anymore 'cause we're like, "Fuck yeah, Hemi, let's go." You know, Dodge Ram Hemi. What's up? But the rest of the world is trying to invest in all this new infrastructure, renewables.

Marko Papic: 50:09 That requires money, okay? Then what else are we trying to do? We're trying to pay social welfare. You know, Abdul El-Sayed wants to make Medicare free for all. Okay, cool. All right. You know, basically bring America up to the standard of the rest of the world, by the way, for all of you who think he's like a Marxist. In France, the French government wants to try to pay out most of the pension state. So there's that. And then the final one is now we're gonna have a military build-out. Oh, and sorry, and the fifth one is supply chains and reshoring, bringing semiconductor production domestically. Oh, no, wait a minute. Did you know that drugs are made out of Chinese components? Did you know that? We need to bring that onshore. My point, Jacob, is something's gotta give. We cannot do it all. So we need to start taking some stuff out. In America, we decided energy transition is for losers, right? So we're not gonna do that But we're gonna do, we're gonna triple down on the AI buildup. In some other country they're gonna do the energy transition, but they're not maybe… But the point is we haven't actually as a society sat down and done a ledger, how much savings is on one side, how much money is there, and how much demand for it is on the other. And I gotta tell you, we're doing some of this in my firm, BCA Research, for some very sophisticated clients. Stuff to do all that bottom up, how much money… How much savings is there? Like- Mm-hmm … how much cash do we have on the planet, you know? And how much have we committed to building out? Preliminary result is, oh my God, we're gonna have to cut something. Something's gonna- Yeah … have to be cut.

Jacob Shapiro: 51:56 Yeah, and things have not gotten bad enough, either from an employment perspective or a market perspective, to have a real conversation about that. And in France you know, the-- what, the yields are up 5% or something like that. I forget what the spread exactly was. They are above 5%. Like we're not even close-

Marko Papic: 52:10 Yeah above 5%.

Jacob Shapiro: 52:10 Like we're not even close to the pain point where the real conversation has to happen. But I would just throw a couple things at you. The first is- Yeah … you know, you're talking about that French budget. Education spending is actually up in the French budget that is under discussion right now.

Marko Papic: 52:21 Oh, great.

Jacob Shapiro: 52:21 So there is some part of this that is political theater, where they're actually getting more than most other places that are getting cut, and they're not satisfied with it. So this is where political theater has to come in, and you have to make the young people feel like what they're getting is good 'cause it's a loss of hope. It's a, it's a disillusionment with the system. It has nothing to do with the actual brass tacks. Because if you're just on a relative basis comparing it, they should be kind of happier. I would also just point, as all this is going on, Emmanuel Macron has not fled the country. He's gone to Saudi Arabia and been like, "Yeah, we're taking the fighter jets and the French military forces here to defend Yanbu and all these other places." So he is so- Which is a good move … unfor-

Marko Papic: 52:56 By the way-

Jacob Shapiro: 52:56 It's a great move which is a great move.

Marko Papic: 52:56 Don't spend it on yourself. Don't spend your own money on your own jets. Get someone else to buy it. That's a good move. Yeah. By the way, he also went to a Celine Dion concert, so we can't give him- Yeah, I- … too much praise.

Jacob Shapiro: 53:08 I know. I'm just saying. I mean- Like but, you know, and also the British, who are also up the creek without a paddle, as my father would have said, they're also sending fighter jets to the region as well. So all these countries that don't- Everyone's sending fighter jets out. Everybody's sending fighter jets. Japan's sending PlayStations. But my point to you is just that these are not signals of countries that are giving up on defense spending. And I don't think the military industrial complexes and the markets around them are gonna allow that to happen. The places probably, and I'm, I mean, I'm also playing with this idea, but the two groups that I would be worried about and what you're talking about, like where do the cuts have to happen? I would be worried if I'm an old person, and I'd be worried if I was an ultra-high net rich person. Because the old people, the pensions, the social security, we're not gonna cut spending for weapons and fighter jets. Are you kidding? We're gonna take dignity away from old people. That's incredibly clear to me in terms of how we've decided to make decisions in society in general. And the next is eat the rich, and that's gonna come from both sides of the party from a populist perspec-perspective. We're gonna talk about wealth taxes and all kinds of innovative ways to get taxes- 100% because this is- No, I agree with all that … this is usually how it works. So like tho-those are the places we're gonna pull from before we start saying the military can't have its shiny toys.

Marko Papic: 54:14 I think we're gonna, I think we're gonna do all three. I think there's gonna be a dramatic leftward turn You're seeing it in the US election. I mean, I'm… Can I have the red button?

Jacob Shapiro: 54:27 It's not even a leftward turn, by the way. I mean, remember that Donald Trump has promised us all $5,000 if the Republicans take the House and the Senate? This is all the same- No, but that's- … the same thing Whoa. It's just about- Well- … you know, taking money from one place and giving it to the other.

Marko Papic: 54:38 No, no, no. But see, we don't have money for that. So what we have money for, what we're gonna have to do is raise taxes. So that is different. It is different. That's just regular right-wing- But he has, he has raised taxes.

Jacob Shapiro: 54:48 This is your favorite point The tariffs tariffs.

Marko Papic: 54:51 No, the tariffs. No, no, I know, we're headed… Yeah, for sure. But let me… Look, y- if we had a studio and we had a red button so I can make Charles Barkley guarantee- Yeah … guarantee by 2030 American taxes are way higher, like income, corporate and capital gains. So yes, you're right about that. In France, though… See, there's countries that can raise taxes, there's countries that can't. Like France, like there's, the Laffer curve exists. Right-wing conservatives just pretend it's not a curve. You know, like I love all my conservative friends bringing Laffer curve to the conversation. "Bro, Laffer curve, you raise taxes, growth goes down." I'm like, "No, no, no, no, no. At a certain point of the curve." But if you're on the left side of that curve, you can raise taxes as much as you want, it won't have any effect. That's why it's a curve. Mm. You know? So look, the point is, the point is you're right. I agree with you. We're gonna take dignity away from some old people, although, you know, we can means test a lot of this stuff. Right, why does a millionaire have Medicare? You know, like maybe pay for your insurance in your old age. "But I paid into Medicare." So what? You also paid into military spending. You're not flying an F16. Settle down. Jesus. So we're gonna have to-

Jacob Shapiro: 56:08 Yeah, but that's not, that's not the person we're talking about, but yeah, it's like-

Marko Papic: 56:11 No, no, I know. But we can start with means testing, right? Yes. We're gonna have to do that. We're gonna… And by the way, why are baby boomers gonna ultimately lose? Well, because they're shrinking, right? So that's your point. I think you're also right about taxes going up. But then you're also gonna have to find one of these investment pushes. So let's put all the investment pushes on a hand. Let's go one by one, Jacob. Defense build-out. Okay? Yep. Supply chain adjusting case inventory build-out. So China's evil, we need to build more stuff domestically. So defense, gotta have more onshoring of stuff like pharmaceuticals or components or steel or aluminum. Then what else? AI, that's a build-out. What else? What am I… Oh, energy transition away from fossil fuel Yeah, energy transition.

Jacob Shapiro: 57:05 Sure.

Marko Papic: 57:06 Right? So like there's at least four that I've just-- Maybe I'm forgetting something. My point to you is even if we do everything you say, raise taxes, cut some social welfare spending, and then, you know, like I, I'm still telling you something's gonna be a big short, like a big short. Something where the price in stock market has gone up. Like NVIDIA's gone up expecting us to keep building data centers. Defense companies have gone up expecting us to build more-- that there's more demand for military goods. Mm-hmm. You know, like something-- commodities, copper, industrial metals in a bull market because of expectation that we're gonna build all the supply chains. My point to you is just that something has got to be a sh- we cannot do all of those. All of those are elite desires and wishes. They cannot all be fulfilled. Like you're either gonna have to make a peace with China and say, "You know what? Maybe they're not that evil. Fuck it." You know, "Fuck it. All right, fine. You know what?

Jacob Shapiro: 58:05 We were kidding." I think that's the, that's the one- That's the one! That's the one … or like you have to-

Marko Papic: 58:08 Yeah you have to make peace with China or, I mean- But then you don't need defense either. You know what I mean? That kind of goes- Well- … hand in hand a little bit, you know?

Jacob Shapiro: 58:14 Well, that's why you need Vladimir Putin and the Russians. Ah. You need other- Yes … evil people- God bless him … because you can't have, you know, China. Yes.

Marko Papic: 58:21 He, he's out there just doing the God's work for Lockheed Martin.

Jacob Shapiro: 58:24 He's doing God's work. But it's also-- it's not just about China because, I mean, one of the interesting things I think that's happened in the last week or two, people-- or not people. Various countries have been looking for a free trade agreement with India, like a real free trade agreement with India for literally two decades, and we have the chance. I mean, I, I'm not gonna say that it's happening, but the US is saying they're close. The EU one is technically supposed to go into effect soon. Maybe they're gonna have one with Canada too by the end of the year. So suddenly everybody's looking at India and talking about free trade. I know that we've got the US, Canada problems with the USMCA, but US and Mexico still joined at the hip, and Mexico doing whatever the United States wants, and the United States doubling down on Mexico. So it's either make peace with China, or you have to move to this other place that becomes your dystopian, you know, very low cost of labor, build out everything there that is expensive, and basically take advantage of those regions so that the nice places in the wor- This is, … We go after many dystopian novels and universes here. This is the kind of, Hunger Games scenario where, you know, districts one, two, three, four have to go take the things from the other districts, and that is, Marco, is how you don't cut because you put all the people who you are cutting from in different continents that are far away, and you just take their wealth. Like that's also a version of this I think.

Marko Papic: 59:40 Yeah. I mean, I don't know. I don't know. I just think it's a very interesting thing. I think what everything is, you know, like I think a lot of folks look to us to try to connect the dots in a funny way, and I think we are. There's AI anxiety, and by the way interest rates are rising so that hyperscalers can build a data center that makes your employment impossible. So you can't buy a home because all the money in the world is being sucked away from your ability to use it as a mortgage so that Google can make a data center that replaces you, so you can't, really can't ma- buy a home. Now, obviously, I don't think that somebody out there protesting in the streets of France is making that connection, but, you know, it's all kind of connected. You have anxieties about AI, you've got rising interest rates and costs of borrowing, and then you have energy costs, and so I think policymakers have to start alleviating something somewhere. And what's the easiest in my mind, by the way? I think the easiest is Iran and Ukraine. They are no longer sustainable conflicts. You know, we're sitting here, we've been talking about Iran for the last eight months. We're talking about drones, we're talking about interceptors, we're talking about price of crude, we're talking about this and that, but it's kind of simpler than that. Nobody gives a shit. 13% of Americans, I think it was, 13%. There's been a 25, 30% decline in Americans who think Iran is the number one enemy. It's just not… And you know some neocon is gonna shake their little fist and say, "But you don't get it," you know? Or whatever. Some You know, whatever. People who want a war in Iran, I guess, are gonna shake their fist and say, "But that's 'cause plebs are just dumb." You know? And my point is fine, you can make a very highfalutin, sophisticated argument for why America should make the sacrifice, but I'm telling you, I'm telling you, the polls are clear.

Marko Papic: 01:01:42 Americans don't wanna make a sacrifice. And so the people in charge are gonna have to make that call. I mean, a good example of this, of course, is World War II. America … FDR understood the big, sophisticated argument for why he should take America into World War II. He needed the Japanese to give him that excuse on a platter. So Iran's gonna have to man up if this conflict is gonna go on.

Jacob Shapiro: 01:02:10 Yeah. I mean w- I think the thing that you and I are agreeing on, and I think that everybody's starting to agree on, is that something does have to give. And it's not clear what has to give, and it's not clear what timeline it has to give. It could give in the next three months. It could give in the next 18 months. And if you pull all of your money out of the market today and stuff it under your mattress and you miss 18 months of the boom and the mania you're not doing a really good job either. But so something does have to give, and a lot of the job right now is thinking about vibes and sentiment and where is it gonna give and what is the timeline for doing it. I also don't think you're being far too policymakers are not nearly as brave or as smart as you're giving them credit for, 'cause they don't have to do any of this. Their entire job, Marco, is to kick the can down the road as far as they possibly can so that it doesn't happen. They're just trying to buy time before the crisis actually happens. To your point, like you're-- like FDR is just kicking the can, pushing the crisis, not having to deal with it, and eventually the thing is gonna happen, and then you get to kick into gear and you get to have a fresh conversation because the electorate is now faced not with the fake doom and gloom scenarios about AI killing us all, but the actual, "Oh my God, unemployment is now 12% and interest rates are this high," and nobody knows what's going on.

Marko Papic: 01:03:23 But aren't elections- So we're- But aren't elections those moments, though, of clarity? Like in Germany, the rise of AfD, which you and I have, you know, like poured some cold water on. But still, like AfD is doing well in Eastern Germany. Fine, not necessarily all of the country. In France there's people burning cars. In the US, President Trump is having to like go to Iowa, Kansas, and Mississippi. Like it's crazy. So like my point is just that I see your point. I'm not talking about markets, by the way. Not markets at all. I'm talking about like right now the population is starting to kind of revolt, whether at the ballot box or literally in the street. Wouldn't that motivate policymakers writ large? Doesn't have to be Trump. Let's say Trump misses it- No … 'cause he's,

Jacob Shapiro: 01:04:09 I'm pushing back against you because I think we're not even close to that actually happening. We're at the part of the political cycle where the populace- Interesting … promise bread and circuses, and that tides over the population. Nobody is out there- I think that happens too … with a mandate to make really, really difficult decisions and start cutting things like entitlements or precious golden gooses- No, no. But I think- … to actually balance the budget.

Marko Papic: 01:04:30 Well, that's why I agree with you, but that's why I'm double-clicking on geopolitics. 'Cause at the end of the day, this is Geopolitical Cousins. It's not like- Mm-hmm … Budget Deficit Cousins. But, but- I'm just joking. I'm just joking. But here what I-- here's what-- what am I landing the plane on? Because you are absolutely correct with what you just said. No one has a mandate for austerity. No one has the mandate for like tough, painful decisions.

Jacob Shapiro: 01:04:52 Mm-hmm.

Marko Papic: 01:04:52 Then what, like what is the path of least resistance? Wars in Ukraine and Iran are now wars of choice. They are. Even Ukraine. I know it's politically incorrect to say among nice liberal society. The northwestern corner of Donetsk is irrelevant. And please, for the love of God, don't send me a map showing how the topography of the region makes it a critical fortress. The Russians can't fight a war. If they get this piece of territory, they're not suddenly going to have march on Kiev. They could have invaded Kiev in '22. They tried, they got their ass kicked.

Jacob Shapiro: 01:05:31 Yeah.

Marko Papic: 01:05:31 So the point is, both Ukraine and Iran at this point are the thing, Jacob, that is the easiest. It's like the easiest cut 'Cause there is no existential threat from either. Now, obviously this is where you can have a debate, right? Like somebody c- well, first of all, I think you and I are clearly on the same page with Iran. Like-

Jacob Shapiro: 01:05:51 Yeah you know, obviously.

Marko Papic: 01:05:51 Yeah. But on Ukraine, like we can have a debate. Well, like I don't know. The strongest argument against my view is Munich, and like Putin gets emboldened. And here I-

Jacob Shapiro: 01:06:03 No, I don't think that's the strongest argument. I think the strongest argument against you is much more cynical, which is we need a common enemy, we need a reason to do all of this military defense spending. We will spend Ukrainian blood and take Ukrainian human capital and treasure and all the things… Like it's a beautiful country. It's basically just an imperialist grab of Ukraine in the guise of defending Ukraine- Okay … from a Russian onslaught.

Marko Papic: 01:06:25 So let's say we agree with that, which we do actually. We're on the same page there. That cynical view is correct. My point is that that cynical view is expensive now. It's costing too much. Like look at how much European countries are sending to Ukraine. Like it, it's the equivalent to, I mean it's hundreds of billions- Yeah … of dollars, euros.

Jacob Shapiro: 01:06:46 But also think about all the European companies that are salivating at the prospect of getting contracts- 100% … to rebuild Ukraine. What about all of the resources that Ukraine has, that all these countries think that they're gonna marshal? 100% Also the rally around the flag effect. Like there, I think there are at least enough gains there that the policymakers see it as important- S- … and the populations have not turned against it quite yet. No, you're s- All right, and I don't think it's gonna be the one they turn against, but that's the crux of our disagreement.

Marko Papic: 01:07:09 You are starting to see that though. You are starting to see polls in Europe, including in some weird places like Poland, start to go towards like a majority of Europeans or a plurality now, other than in Spain and Sweden and a couple of other countries. A plurality is saying, "No, no, we want peace even if you make concessions with Russia." That, that has been increasing. You know? Mm-hmm. So, so you are right about everything you say, but then you have riots in France. You know, so how do you… You, you're gonna have… And you, by the way, you don't have to stop using Russia as the boogeyman. Of course not. God bless you. Keep doing that. That's the whole point. Like Ukraine still has to be armed, it needs to be integrated into the West, it needs to be created into garrison state. No one's talking about abandoning it. This isn't a one or a zero. It's just "Hey, do we need to send you hundreds of billions for military? No. Why don't you just join our common market? Why don't you get economic benefits? And we will still supply you with weapons, but not at the same rate." I- all I'm saying is, look, something's gotta give. Now, the good news, if you're, if you're in the camp that wants Ukraine to continue to be armed and supported, the good news is I don't think that the West needs to end both wars at the same time. We're not there yet If the war in Iran ends, you buy more time for the war in Ukraine. If the war in Ukraine ends, you buy more time for the war in Iran. And by the way, that's what I think Trump is trying to do over the last couple of weeks. It's this last-minute Hail Mary effort to try to end the war in Ukraine so that he has more time on Iran I don't think it's gonna work, obviously. No, it's not gonna work. But that's like, you know, he's starting to realize the same thing. These two wars are no longer sustainable at the same time. So I gotta figure something out.

Jacob Shapiro: 01:09:05 The, I mean, this is the… Not to make it a tragic thing about Trump, but I mean, the… I mean, I guess all humans have tragic flaws. His tragic flaw is that he already knew this. He was the one who campaigned on no more foreign wars and on forever wars, and re- I don't think it's Ukraine.

Marko Papic: 01:09:20 Yes. Yes … Yes.

Jacob Shapiro: 01:09:21 And he's- He knows this … he has-

Marko Papic: 01:09:22 Yes.

Jacob Shapiro: 01:09:23 Thank you … everything he's done has been to do- Yes … the opposite because- Yes … and this is his problem. He is an instinctual thinker. I, what we can close on this and the psychoanalysis doesn't really matter. He hasn't realized anything. He, he's just a, he's n- he's a pile of instincts. There is no strategy. There's a reflexive instinctual- 100% … say there's a deal, I will make a deal. I need to fill in this week's episode of the reality TV show president, I will make a deal with Vladimir Putin, and I'll solve the farmers who are mad at me- You know, he would be a great cousin because I'm gonna get them some free diesel. That, that's what he thinks of in his brain.

Marko Papic: 01:09:51 But wait, he would be a great cousin. You know why? 'Cause he's the kinda guy, I can tell, that if you and I showed up at the Oval Office, and you're like, "Look, President Trump," like, "we can show you some polls that tell you this is really stupid." "Don't tell me about polls, you geeks. All you do is tell me about polls. You know, I like the way you look, you good-looking young men-" Oh, about time … "but I don't wanna hear about polls." Right? And he would be- Is he gonna start talking about our asses too in the context of this?

Jacob Shapiro: 01:10:19 He would. 'Cause I don't know if I'm ready for- 100% for homoerotic cousin on all this.

Marko Papic: 01:10:25 Let's go. listen, I think he would be a great cousin because he wants to zag. It's entertaining. It's interesting. It's fun. It makes for great TV, makes for even better podcasts. The problem is yeah, when you keep zagging, you know, you run out of time. But you just nailed it. This is where I'm going. Trump's got good instincts when it comes to what the median voter wants, I think.

Jacob Shapiro: 01:10:46 Yes, I think he does.

Marko Papic: 01:10:46 As you point out. But yet he ignores it. But what, why did he win? Why did Joe Rogan endorse Trump? What was it? It was that Vice President Harris will take us to World War III It wasn't wokeism?

Jacob Shapiro: 01:11:02 I thought it was the whole wokeism thing.

Marko Papic: 01:11:04 It was both. Yes, those two. It was wokeism plus the uni party, you know, as this kind of like post party whatever. The young Joe Rogan voter is like, "No more wars." Trump didn't start any new wars in his first term, first time since Ford and Carter, blah. The point is that is really important That, that line of angst amongst the public is important, and I think the elites are losing their grip on that, just like they lost maybe grip on energy transition, fine, wokeism, sure. You know, COVID stuff, sure. I think that our community, Jacob, our community of geopolitical analysts has this very knee-jerk reaction like y- like you had, which is like, "It cannot be military. It cannot be. This is a multipolar world." And I mean, I'm part of that. I went long defense stocks in like 2017 for fucks sakes. Yeah. You know what I mean? So, so we're all on the same page, and I'm sagging, you know, here for the sake of entertainment. But also- Yeah … like I'm looking for this big short. And I'm just thinking to myself like, "Oh, wait a minute. Look at the reaction in America, man, to him abrogating that promise." He also abrogated a sh- a ton of promises. He talked about tax cuts. He didn't do any of them. He raised tariffs. His popularity got knocked for all of those things, right? But his popularity tanked when he started a war. I think there's like message there. You know? There's like… It's like interesting to me that society- Yeah, well- … is just not buying it anymore. Like it's gonna be harder. You can't just show a puppy being gassed by Al-Qaeda. I remember when CNN showed these little puppies being gassed by Al-Qaeda, bro. I was ready. I was ready. I was like doing pushups right there. Sign me the fuck up. I'm gonna go. I mean, they showed a little puppy, man, dying from g- and then it turned out that was a fake video too. Like everything was fake. this is how you melt-

Jacob Shapiro: 01:12:59 Weapons of mass destruction … the heart of the bathed in indifference nihilist gassing a puppy.

Marko Papic: 01:13:03 I was ready. No, exactly. You nailed it. I'm indifferent, but when I see a puppy dying, bro, like I was ready to join whatever military was gonna send me to the caves of Afghanistan. And my point is we're smarter now, I think, as society. Like people have images on their phones. They're watching like IRGC Lego videos, whatever. You can say they're being fed propaganda, but like so what? Both sides have propaganda. WMD would not be, I think, possible. I know we don't have time to go down that route. But all I'm getting at is that that's what I think that's what's first amongst all of this, is just like there's too much- Yeah geopolitical conflict raising my cost, raising my cost of living, and I voted for you with the expectation that that wouldn't happen.

Jacob Shapiro: 01:13:51 I think you're right in the US context. We ha- We'll have to leave it there, but I will say I think we can keep tabs on this thesis in the sense that if you're right, then Tucker Carlson has put a little position out on being the spokesperson of this on the right. And Jon Ossoff down in the state of Georgia I think is putting out the stake on being the person on the left who is saying this. Is he? And if that really is the- Is he really? Oh, yeah. Yeah, well you would- The illegal war and going after- You are.

Marko Papic: 01:14:17 Georgian. Mm. You're a Georgian. I'm telling you- So would you say to Ossoff… I thought he was more like centrist elite.

Jacob Shapiro: 01:14:25 Yeah, but he's gone after the war extremely hard Okay. Got it And he- it's becoming an increasing talking point for him, I think. But, and I don't know that's gonna be… I still have my doubts whether that's gonna be the thing. But you can see very clearly there are politicians who are, who have not… Maybe they have been listening to the cousins, who know, who are positioning themselves for that like, being the issue. But okay, we'll leave it there. See you soon, cousin.