The Trade Wars Have Begun | Ep 006 Lemonade Stand 🍋

With all the economic turmoil going on, I have decided to invest in a secure asset.

Finally, which one?

Fartcoin?

You can probably guess.

I would say fart coin.

It's a stable reserve.

No, no, older than that.

Oh,

come coin.

Older than that.

That one is.

Like, what?

What do you want me to reach for?

Litecoin?

Ethereum.

No, no, no.

Older.

You're investing in Ethereum.

My brain before 2009.

That's right.

I went on eBay and I purchased a real 1776 Spanish gold doubloon, which I now own in its entirety right here, ladies and gentlemen.

I am ready.

Now it is a little bit smaller than I expected.

Ladies and gentlemen, my nesting.

Is it really?

Is that

it's really a gold Spanish doubloon?

It's about 250 years old.

And Parsons gave their life to try and get this

$600 and this is my hedge against tariffs.

You're in the gold club.

I'm so excited to have you.

And what's cool is I bought this from Spain before the tariffs, so I didn't have to pay.

You're playing world markets like a fiddle.

Gonna be honest.

A lot smaller than I expected.

This is real?

This is real.

It's so much smaller than I would have expected.

I've been told you my whole life.

I thought, like,

pirates are the killer deals.

It's like barely, I can't even, it's smaller than a dime.

It's actually minuscule.

So, how much is this actually worth?

$660.

Are you serious?

I thought it would be bigger.

It just runs out.

That's kind of nuts.

It's kind of nuts, dude.

What kind of topics are we talking about today, Amy?

Well,

you know, I, unlike Doug, chose to buy another CS GO skin this week.

So we'll see how that pays out.

But today we'll be talking about the ongoing, you know, not that many changes, not many pieces of news about the ongoing trade war with China.

Any news at all?

Tariffs,

tariffs around the world, especially those with China that we are not only keeping, but expanding.

In contrast to last week, Doug talking about overbuilding and how building too much could be bad in the context of China.

And also, I may or may not be revisiting the reason that we're getting a Korean child in this year.

You got it the balloon, you get a Korean child, and I'll get a

nest eggs.

Yeah.

A hedge against terrorists is a Korean hope and dreams into this Korean child.

Yeah, I think it's going to pan out.

Once he starts winning starcraft tournaments it'll pay off i mean he's gonna get really into brood war and win those like thousand dollar daily schools they have i have been getting really into brood war it's sick it's honestly sick there is no money in it okay well obviously if you're coming from last episode you may have noticed that even within the span of us recording that episode things changed when we recorded it that day we didn't have the calculation for how the global tariffs that were listed uh were actually made.

So I wanted Atriok to briefly explain that and just make a correction on what we were talking about last week.

And also, if you want to just jump into how things have changed in the past week.

It was so much sillier than I thought it was.

I mean, for context, what he announced it like an hour, two hours before we recorded last week.

Yeah, right.

Same thing happened today.

He has done another supposedly 4D chess move.

today, which we are now processing.

Which is actually pretty lucky.

I think we're, I am super glad that Trump is making these big announcements on Wednesday morning.

So, this is us, real journalists, get ahead of it.

Because if he announced them on Thursday, everything we say would be completely out of date.

The tariff calculation, we had to came up with the big board in the Rose Garden and said, this is what they charge us.

It turns out that was a mathematical calculation based on basically imports minus exports divided by imports.

It just basically said, if we buy more of their stuff than they buy of us, then that counts as them charging us a tariff.

That's what they did.

And they used that number, which is again, I think made up, to charge them a reciprocal tariff.

But

a lot has happened since then, Aiden.

We're in a fucking different world.

So as of today, you know, I say up until yesterday, markets were reacting horrendously, horrendously.

The stocks were plummeting.

We're having red day after red day.

There was one day where it started green.

Everyone said, oh, what recession?

And

it went red by the end of the day.

And they were, you know, so it's been bad.

And you might have mentioned this off-pod or on pod, but one of the theories that has been espoused as to a reason why we might want these tariffs is that if the stock market is crashing, it is going to push everyone to buy U.S.

bonds.

We're going to go buy U.S.

bonds.

And when you buy them, it drives down our cost of borrowing so that we can refinance our many trillions of debt.

That was one of the ideas espoused by Scott Besson.

Well, in the last few days, the opposite was happening.

Our cost of borrowing was ramping up.

It was getting more expensive.

And it was largely because countries were dumping their U.S.

treasuries.

Japan was a major one.

They were dumping them.

So we were getting a rising U.S.

long bond and we were getting a crashing stock market, which is the worst of both worlds.

So I don't know if this is 4D chess.

I don't know what happened, but today there was a big pivot because both those things were happening at once yesterday.

Every tariff on any country that didn't retaliate is paused, except for a universal 10% tariff.

that is still staying on everyone.

So everybody still has the 10% tariff.

Everybody still has a 10%.

But if you didn't didn't retaliate, if you're like Vietnam or something and you didn't retaliate, then we're getting rid of the 43 and it goes back down to 10.

Market rebounding.

Switch tariff lifted.

What recession?

Yeah, that's true.

So the market did have the biggest day in like, I don't know, 60 years.

It had a massive single green day.

And

yeah, Vietnam is bound to a 10%.

So a lot of things that like Twitch do are coming.

But overall, still a 10%.

Like compared to the old world, before all this, 10% on everybody.

And China, which did retaliate, the war has now begun.

The trade war has now begun.

It was a, like, you know, I'll give you a quick brief timeline.

We announced Rose Garden 34% tariffs on China.

China goes, no, this is bullying or whatever.

They say, fuck you.

They announced 34% back.

Trump says, big mistake, buddy.

Announces an extra 50% on top of that.

Total 104.

Then today, when he like removed on everybody else, he added more.

So now we're at like just a couple hours ago, bringing the total to 125%, which when I someone saw someone mention this in a message, I thought they were joking.

Yeah.

Because as we dove into last week, you know, a direct personal business investment in how this Chinese tariff specifically shakes out in the next few months.

Yeah.

And I, I had a quick question for you.

Yeah.

Because

one thought I was trying to like put into layman's terms basic questions that I could ask you this week about kind of why this is going on.

125 to me, knowing that something like Chinese EVs already had a hundred percent tariff on them before all this, and that's like a big part, the main reason why Chinese EVs can't be sold in the U.S.

Right.

What is the point of raising something from 104 to 125?

Aren't we already at a point where there's basically

no reason to raise that?

I don't understand.

What I will say is a 125% tariff tariff is essentially a total trade decoupling.

That is like no good can really be sold profitably at 125% markup.

And is 104 not that already?

You know, for some small goods, I think China is so much better at manufacturing, like, you know, making certain nuts, bolts, certain thing that we have no factory comparable.

So yeah, if there is no alternative, then yeah, they'll, we'll still pay it for certain things.

Yeah, exactly.

So it is a troll.

I mean, the number is astronomically high, though.

It basically means total trade decoupling from us and China.

And the only real big question that wasn't answered today, I just want to get this before we go back to China, is the EU did retaliate.

So the EU before today's announcement did like a 25% counter tariff back on America.

And then today we're like, our allies are good.

God is good.

We're back only on focusing on China.

And someone yelled out the question, what about the EU?

And they ignored it.

So I don't know exactly.

I don't know where we stand on that because EU is our massive trading partner, one of our biggest and the second biggest economy block.

I don't know where we're standing on that because they said if you retaliated, we're keeping the tariff.

So I don't know.

That's the one that I will know by tomorrow, maybe.

We don't know now.

Before I jump into my villain chair questions that I have this week,

I was, my first thought when I saw this was, wow, more immediate inconsistency.

Like, this does nothing to fix the concerns around uncertainty.

We just hit a 90-day pause on these tariffs for the majority of the countries that they were set on.

This feels similar to the back and forth that was happening with Canada and Mexico at the beginning of the year.

And because it changes so frequently, it doesn't really give me any, removing the China factor from the situation and just thinking about this in a global sense, this doesn't really do anything for me.

personally just really settled.

Like, I can't imagine it being the guy with a bunch of capital to make the investments in factories in america or wanting to make invent investments abroad and this being that comforting yeah i saw a great joke that was like you know the guy who started a factory in america yesterday is feeling pretty stupid right the guy who saw these 40 tariffs and it's like oh i'll move to america no one was actually doing that but the idea the argument that this is going to bring factory jobs from all these different countries to america Seems pretty foolish now that it's up and down.

Mug mug factory was getting built already.

Yeah, we were moving it.

Enough mugs in America.

Finally, we can bring those jobs back.

The thing is, it may happen with China.

I mean, this China thing is the real thing because they can't sell in America now directly.

I don't know what it's a new world order.

I think we hadn't mentioned it last week, too.

Something interesting that I saw was they lifted the exception rule to where you could avoid tariffs by ordering directly from China for things valued under $800, which is how companies like Team U and I think Wish

made basically their entire business model was based off of that existing

and now that exception is gone.

Yeah, I had a chatter who I think works at the North American branch of Shein and he talked to his boss and they were like, yeah, I mean, if this doesn't get figured out, we're fine.

There's no way to do that profitably.

Everything is 100% more expensive.

So I don't know.

I think it's a good time actually to

just jump into this.

I want to.

Oh, you want to show that Scott Besson?

Oh, yeah.

Yeah, show that.

Should I?

Should I for the title?

Interesting thing here.

So, Scott Besson, as far as I can tell, correct me if you guys have heard others.

There's like three main players in the Trump administration who are advocating for tariffs.

Essentially, everyone else, including all the people on the right, hate them.

There is Scott Bessant, who's the Secretary of Treasury.

Yeah.

There is Howard Luttnock.

Would you hate his name even?

Howard Luttnick, he's the

Commerce Secretary.

And then there is Peter Navarro, who's a senior advisor to the White House.

So Howard Luttnick, having watched a little more of his stuff, seems to be a hype man with no substance.

I hate that guy.

Yeah, I was trying to maybe give the benefit of the doubt.

He just, any question he's asked about tariffs, he's just like, American people are going to be so stoked.

And it's like, no, that's not what we were asking.

He also,

he specifically said, and this is the first time I've seen a commerce secretary do this.

He said to Camera, you should buy Tesla.

It's undervalued.

He's had a specific stock you should buy, man.

And it's down from there.

So you can't do that.

You can't pick and choose as commerce secretary specific stocks to pump peter navarro is is advocating a whole bunch for tariffs he supposedly is like the big guy that is convincing trump about the value of tariffs and i listened to an interview with him on uh cbs i believe and then again doesn't really answer the questions and he has this belief when asked about how long it would take manufacturers to move factories to america he's like I don't want to hear about it during COVID.

We got things set up in two months.

It's not going to take years.

So he has this belief that like America can

remanufacture factories in a couple of months if we wanted to.

He also, Peter Navarro, has over half a dozen books where he quoted an economist named Ron Varra to make up a justification for some of his beliefs.

Ron Varra is his last name rearranged.

It's made up.

He made up this person.

This has been exposed.

He has made up a source that's himself.

So again, I'm not

two out of the three out of my.

But if you get to Scott Besson.

What's beast mode?

That's beast mode.

That's some Harry Potter, Voldemort, Tom Riddle shit.

he's in the chamber of secrets whipping up the reasons for why for why this is actually and then and then trump found his journal and has been reading from it learning about tariffs he's been talking yeah he's been talking to the bathroom

lonely trump finally found navarro's journal yeah peter navarro um he he recently has been saying that car manufacturers are just assembly lines here in the u.s and they need to start making everything here and he talks about how elon has been advocating against tariffs and saying there should be free trade right he's been pushing back.

Navarro has gotten into a tip and said, well, Elon is a car guy and they should be manufacturing everything here in America.

This so upset Elon, who to Tesla's credit, they do make most stuff in America.

They're fairly integrated here, is now recalling Peter Navarro publicly on Twitter

Peter Rotardo.

And so that's the new...

He's now using like Trump-Eskian slurs against.

the people in the cabinet.

So there's this strange kind of fracturing happening.

It's a big fracturing.

Yeah, it's very, very very strange.

It is so awesome to watch two high-level government officials act like the people in my CS solo queue games.

That's insane.

That isn't, I don't, maybe it's not awesome.

Elon should have covered B-sight, as I'll be saying, right?

Yeah.

So, uh, however, we do have an opera here.

Uh, his name is Scott Bessant.

So, Scott Bessant, Secretary of Treasury, he, I, I, you know, Atri, please elaborate more.

I was going to say, I like Scott Bessant of all the options that could have been picked.

I think he's a reasonable, smart guy.

I think he's got a background in what he's talking about.

I read his stuff before he ever was part of this administration and thought he had, it is funny, though, because when I read his stuff, he used to be like, yeah, tariffs are pretty fucking stupid.

And now he's in the administration.

And I think he has to toe the line, but he might be like, I don't know, an operative on the inside who's like trying to, he has to cozy up the Trump and say the nice things, but he's like trying to get reason to what we're doing.

And so this is his statement.

Yeah, so he last week was advocating for everything about how tariffs are great, how this is good.

He was advocating how if we bring the bond yield down, that's going to allow us to refinance debt and save a whole bunch of money on the debt.

Which didn't happen, just to be clear.

Yeah, which didn't happen.

If you pull this up, Perry, so this is him after a straight week, right, of talking about how tariffs are brilliant.

This is Trump's plan.

We're going to do this.

Here's the video.

And all this was, again, this was driven by the president's strategy.

He and I had a long talk on Sunday, and this was his strategy all along.

And that, you know, you might even say that he goaded China into a bad position.

They responded.

They have shown themselves to the world to be the bad actors.

Damn.

Okay, give it a go, go.

There's a little bit more.

Yeah, yeah, yeah.

And we are willing to cooperate with our allies, the allies, with our trading partners who did not retaliate.

It wasn't a hard message.

It's like, dude, if like we were hanging out, right?

Yeah.

At like a basketball court or whatever.

And then I pull out a gun and I start pointing at you guys.

I'm going to shoot you, right?

And Atriok, you say, hey, please don't shoot me, right?

Please don't.

I'll do whatever you want.

And Aiden pulls out his own gun and says, I'll shoot you back if you shoot me.

Don't fucking do that.

And I put the gun away and I say, that was a test.

Aiden, you're not a good friend.

I'm only hanging out.

That is a perfect example.

I'm only hanging out with Atriok for now.

He's my ally.

Yeah, he's my ally.

And in this case,

if we were following this with the EU example, Atriok also pulled a gun out and said he was able to pull a gun out.

You're still friends with him.

No, it's crazy.

Because, again, I've talked about this before, and I want to do a little presentation about why possibly coordinated tariffs on China make sense.

There could be a reason for it.

But the idea that this was all a master plan to get us and our allies, no, we want allies.

We pissed off everybody.

I got a video we may be able to pull up of like the Australian PM.

Australia buys more of our stuff than we do of theirs.

They're not even, even in the weird formula they used, Australia is our friend.

We still put 10% on them.

They have, there's Singapore, same thing.

All their leaders are like, this sucks.

This is, we're mad at you.

And that's supposed to be our allies that we like let off the hook.

It's crazy.

I mean, there's nobody in any country that's like more friendly to us.

We still have long-standing relationships that haven't totally dissolved that can sort of be allies here.

Again, I can see the rationale behind a China tariff.

I think this is like a last ditch.

Oh, shit.

Everything was breaking.

Because again, when the stocks are down and the bond yields are up, and I want to explain that right now because you asked for a little bit more of a clarification.

I think when people say the word bond, people's eyes start to glaze over.

And when you say bond yield, people's eyes roll back in their head.

Yeah, I think this is a good thing to explain, like in general, because I think a lot of people don't know about this stuff to begin with.

And then for me specifically, like my main interaction with this stuff is I, you know, I bought some treasury bonds last year.

So, how, how does this work?

At one point, you had a portfolio of 50% treasury bonds, 50% CSGO knives.

Yeah, the most responsible portfolio

and and guess what that portfolio right now would be holding up

like you and warren buffett have the same strategy okay so a quick quick primer if you're a rich person uh or a pension fund or a government someone with a lot of money i'm cursing a lot today you could pick a lot of things to invest in because you don't want to hold it in cash right so you could put it in stocks you can put it in bonds you could put it in gold you can put it in real estate and what bonds is are essentially iouus from governments they pay you back okay A lot of time, especially lately, people have been putting their money into stocks because they've been going up.

They've been, they've had so many good years.

A lot of money's been in stocks.

But the idea is, based on historical patterns, when stocks have a bad period, when they're crashing, when they're down, people flee to safety.

So they go to things like real estate, gold bonds.

And bonds has always been the bigger one of the three.

And correct me if I'm wrong, bonds generally are going to be lower yield, but it's lower risk, right?

It's like if you just want safe money, that's pretty much guaranteed, that's where you go to, but stocks is the higher return.

Exactly.

Bonds are guaranteed.

So So if you buy an IOU from the government, if you're America and you're like, can I borrow $100 million?

And I give it to you, you offer me a guaranteed 4%.

And historically, I think the idea is that American bonds are the most, are the best thing you could be putting your money in because, you know, the dollar is the reserve currency.

It has the U.S.

government behind it.

It's basically a guaranteed return with no risk, whatever that return happens to be.

Exactly.

And the way bonds work, this is a little, this bar gets a little confusing, is it's like an auction system.

So I say, I'm the U.S.

government.

I need to borrow $100 million.

I'll offer you 2% interest.

And everyone goes crickets.

They say no.

And I say, well, I'll offer you 2.5% crickets.

I say three crickets.

I say four.

They go, all right, I'll buy some.

And they buy some of our debt.

So the more demand there is for bonds, the lower that auction, the more easier it is for me to get a low.

Yeah, I can go for 2% and everyone buys it.

That's not what would happen.

That's why it's so crazy because that was the big idea of tariffs is like, okay, we're going to crash the stock market, but everyone's going to buy U.S.

debt and we're going to get a real low interest payment.

And this idea of it being refinanced at a lower rate, from my understanding, is that if bonds are available right now and we can list those bonds at a lower rate, but the economic situation elsewhere is dire enough, it doesn't matter that the rate on the bonds is 1% or lower.

People will want to buy those bonds, which is refinancing the debt at a lower rate than what it's been sold at for the last couple of years during inflation.

They don't want to lose money in stocks.

Everything else is unpredictable, but I can get a guaranteed 1% or 2% from America.

I'll buy their bonds.

And the reason that's so relevant right now is because we are ridiculously far in debt.

We owe a bunch of money.

We have to raise more money to keep paying down the debt.

So if the U.S.

government can raise money via bonds while paying less because the bonds are low, that saves the U.S.

government a ton of money.

A ton of like massive amounts of money.

Interest expense is like almost as big as our military budget right now.

So we really need to get the interest breaks down.

So that was the idea.

The problem is people were not buying American bonds.

They just weren't doing it.

In fact, they were selling them, which drives up, makes the bar, you have to go up 4.5%, half percent, five percent.

So it was rising because Japan was dumping.

China technically didn't dump, but a lot of people were dumping.

And so it was creating the opposite effect.

And when both things are bad, it's chaos.

I mean, it's like it could break the whole system.

So I think that's why he panicked today.

This was my big question for you: is that I think that was the part I did not understand.

So, from my perspective, as somebody who's bought a you know a treasury before, a bond,

I could could I have sold it for the period of time that I had it, like the the right, I guess, the right right to get the payout yeah and why does uh them selling their bonds at is it because they're selling bonds that they bought at the like four or five percent during inflation so if the government's selling at the time they have to offer similarly high rates exactly yeah okay it's exactly what it is they're selling their bonds people can just buy it from them they don't need to buy it from america at whatever rate so you have to go higher to offer that's the idea so you know probably more than anyone needs to know but a good way to understand like the plumbing of the financial system and what was happening and why it was so chaotic as of yesterday Because the bonds were spiking, the stocks were going down, and that is a terrible double combo that needed something to change because it could get disastrous.

So now we're into the situation.

People were flooding into the doubloon market.

Kidding.

So we have our little stock game where we all drafted some stocks.

The number one stock yesterday in the whole competition was gold, was just gold.

Oh, the gold stock

directly tied to the value of the building gold.

Bricks of gold was number one because everything was chaotic.

That's not true today because everything's bounced back, but as of yesterday.

yesterday so i i want to do a little presentation here and i want to i want to catch people up because we're going to talk about china today i think this is a good intro into why a china tariff might make sense but why i think we went around it a weird way so uh this video tariffs are on tariffs are off we've been out of duck season rabbit season we don't know what's going on i want to flash back to world war ii and give like a super brief primer on how we got here and what's going on because you were there

you know what it's like

you know what i think actually not only was i there some other people were there so there was the axis powers as you can see here that was a good transition these are the axis powers and um they were fighting

i'm sorry historical images can we please uh focus here these are the axis powers from uh germany italy and japan

for the episode and then these were the allied powers okay the guy in the bottom right kind of played both sides he was kind of like

part of the war he was on one side part of the other

so we had the axis and allied powers okay turns out at the end of the war the allied powers won and the bottom two here the american president famously only had like two-thirds of a head

yeah i was just gonna

style at the time right that was the right fdr that's why he couldn't walk

he was just missing

a lot of brain

polio a lot of people don't know that yeah it's not it was brain rot anyway uh the the allies win these bottom two here were kind of destroyed though uh uk and Russia were kind of destroyed.

So it's kind of like an American empire, not an American golden age.

All right, post-World War II, America still got all the infrastructure.

They got everything built.

And it's a great time.

And because they're the most powerful country in the world at the time, biggest military, best manufacturing, they set up the global world order basically in a way that benefits them.

So there's the UN, there's the World Trade Organization, there's a bunch of other things that the United States sets up and is like the leader of, that sort of organized global trade.

And that is run for decades.

Through the Cold War, it was the only other power that kind of opposed America, was Russia.

But then by the 90s, they're gone, collapse.

So now it's, they called it the end of history kind of in 92.

America's won.

It's over.

There's no other.

This way of working is going to be the end.

Okay.

Then in 2000, again, this is like all we're little kids.

The year 2000, something significant happens.

I think Bill Clinton's the president of the time.

They welcomed China into the WTO.

which is the World Trade Organization.

They say, China, you are now getting the same trade rules as everyone else in the WTO.

You can trade freely.

There's no tariffs on you.

You're all part of the thing.

We talking Dang era?

Is that...

You know, I don't know the Chinese leader at the time, but so it's 2000.

At the time this happened, these are the nations that traded more with America in blue and ones that traded more with China in red.

Okay?

This is the state of the world at the time of the WTO entering China.

Flash forward just 24 years,

the world is drastically different.

Now, almost everybody trades more with China than they do with us.

China now makes a third of all manufactured goods more than U.S., Japan, Germany, and South Korea combined.

They have just leapfrogged the globe in terms of manufacturing.

Half of the new world's industrial robots were made in China.

Global shipbuilding, 55% in China.

Actually, not an important thing.

They control the lithium-ion battery industry.

They control the drone industry.

They're leading in electric vehicles.

There's a lot of areas that China has now become a strategic power in in

over the course of the last 24 years of trade.

And, you know, whether it's fair, there's many arguments that most sides will make about who's being unfair and what's going on and whether China stole IP or what there's a lot to talk about.

And I think there's merits on all sides here.

But what I think America is seeing, I think through a really

kind of

unfortunately foggy, dense Donald Trump lens, but it's like that something is going on here.

Something we're falling behind.

In some way, we need to stop this.

And that is where the impulse to get these tariffs on China specifically comes from.

And again, it's not just America.

So I wanted to point this out, because I think it's really important, is that China has really focused on exports to grow their economy.

That's their main thing.

They had a real estate bust.

Their internal stuff's kind of actually struggling, but exports are great.

They're crushing exports.

They're selling EVs all over the world.

And every other country in the WTO, not just America, has been reporting more and more challenges.

They've been flagging.

They've been issues.

This is a spike you can see in 24, but also just rising over the time of other countries doing W2O complaints or investigations against China.

Specifically on the right, you can see they're coming from India, EU, Brazil, Australia, Turkey.

Everyone has been kind of mad that China's, all the manufacturing is leaving their countries and going to China, which has been just the global mecca superpower of manufacturing.

So that's where we find ourselves.

And that's why it's such an interesting time.

Even the tariffs of Trump's first term did not stop this rise.

In fact, it's grown in the past few years.

Biden kept the things.

So

that's where we find ourselves.

And that's why a coordinated global, having a lot of allies working with you to maybe do a slowly but increasing tariff on China to keep some of the manufacturing out of there makes some sense.

But when you're pissing off everybody, I want to show this clip.

This is Australia.

The unilateral action that the Trump administration has taken today against every nation in the world does not come as a surprise.

For Australia, these tariffs are not unexpected, but let me be clear, they are totally unwarranted.

President Trump referred to reciprocal tariffs.

A reciprocal tariff would be zero.

God, that's all you really need to say.

And he says not 10%.

And we have a 10% on Australia.

Australia would be a partner that we'd really want on our side if you were trying to make some deal against China.

And that's why you can see, I mean, this year hasn't ended yet, but in 25, the probes against China have dropped because people are focusing on America.

Every one of these countries in the WTO is more worried about what America is doing than what China is doing with manufacturing.

So that's where we find ourselves.

But I wanted to set the stage on like

how much has changed in the past 20 years and why this is like a big issue that's being talked about.

One of the interesting things I was reading about some folks who run factories and were just giving

their experiences with this.

One of the things they mentioned is that even like, it's not just raw materials to make things.

It's even, for example, you showed all the automation robots to build things in factories.

The idea that America is going to rebuild or any of these countries that basically the manufacturing has been lost because China just exports to everywhere and reduces their need to manufacture themselves.

Like they make all the equipment that you would use to make a factory.

Like you can't, if you were like, you know what, we are going to build our factories here.

Okay, where are we going to buy the robots?

Where are we going to buy the parts?

Where are we going to, where are we going to buy, where's the expertise for building these things?

It's all from china so it's like yeah it's it's crazy like the and and why i have been shocked at the you know again those couple people who have been saying like oh yeah we can definitely rebuild like peter navarro we can build in america it just feels it it's not lined up with reality at all so i mean what you're saying is if you had kept the the allies in in good standing with you with the us like if the u.s had treated everybody better along the way and had said let's come up with a plan to build manufacturing

globally in a way that doesn't allow China to dominate this market in this way.

We can all work together to make that change.

But we're isolating ourselves from them as well.

Yeah, that's why that's the part that makes me the most frustrated because it feels like a self-own for no gain.

There's like not even a strategy to that.

Pissing off Australia and Europe and all these partners at the time when we need them the most for a coordinated plan.

You bring up a really good point.

And

the reason why we need to have coordinated efforts is not just because it's a nice thing to do or because it might work better, is because in the past, what happens when you tariff a country like China is, let's say, it's a thing called trans shipping.

Okay.

If they're sending goods to America and we put a 50% tariff on them, then usually what happens is they stop sending it from America and they send it to Thailand first or Vietnam first and they put a bow on it or they add one little thing or they, and now it's suddenly made in Thailand or made in Vietnam or made in Mexico.

Yeah, the classic example in clothing is that you put the you put literally just the tag on yeah, the final tag of the good, and then you send it on for there.

And now it's under a Vietnam tariff of 10% instead of 50.

And that

there's no answer to that unless you have that, unless that country's working with you, and this is what's going to happen.

Even when they're not working with you, I mean, it's so hard to clamp down on global trade when someone is a better manufacturer.

So, here's an example: we've had a pretty coordinated global

blockade or something on Russia.

Sanctions on Russia.

In the meantime, suddenly, Finland and Kazakhstan are buying a lot more European and American goods than they ever were before.

And it's finding its way across the border into Russia.

You know, luxury cars that are not allowed to be sold in Russia are ending up in Finland and suddenly ending up in St.

Petersburg.

That's just what happens.

And that's with like a coordinated effort.

It's like, it's very hard to clamp down on it.

When if they can't make the cars and they want to buy them, it's going to end up there.

They'll find a way.

It's like how you want the Xiaomi su7 and you're going to illegally import it through mexico yeah you can talk about that on and off the pod

i have thought about it and then i found out that i would be uh arrested for smuggling

it could be a massive jail sentence and fines i do want that su7 we should bring chinese evs back to america yeah

i want what's ours yeah yeah

respectfully that brings up one last story i want to say which is about uh this is a chinese company named CIMC.

They make like tractor trailers,

like the chassis for a trailer.

They just take steel, they bend it, they make it good, they make it cheap.

It's amazing.

They're really good at it.

They were selling them in America and undercutting everybody because they were just better at it.

American chassis tractor trailer guys were pissed and they demanded a tariff, some way to stop it.

That was his first Trump term.

It was granted.

So what CIMC did is they rebranded to CIE manufacturing with an American star and eagle.

And they set up a factory in America.

They did what everyone wants.

They made a factory in America.

They brought their knowledge and expertise.

They set up in a cheap

area of America and they started making these things.

And then they noticed they were getting out-competed by their American counterparts.

They were like, damn, this is crazy.

We just can't do it in America.

And they looked into it and they found out that their American counterparts were

buying Chinese ones from Vietnam, shipping them in and rebranding them.

So the Chinese company was competing against American companies that were actually Chinese.

You know, it's a whole weird system that is happening that creates these weird incentives.

And what I'm trying to get across is like the best solution is just to be the one that can make it good.

If you're good at manufacturing, all these problems disappear.

But if you're not, there's so many loopholes and whack-a-mole you have to do to try and protect your less competitive industries.

A couple episodes, we talked about, I think, subsidies.

Is that that's kind of the other end of this, right?

Like the carrot instead of the stick is that if you wanted to put something into place to help an actual American manufacturer compete with a Chinese company, you could subsidize it instead of applying tariffs to the Chinese goods and go that route as well.

Yeah, I think that was like the Build Back Better plan a bit.

They tried some of that.

They did with the SHIPS Act.

There was.

you know, it's mixed because we've had, there's like real problems with getting the funding.

Companies that got the funding did pretty well.

There was some growth in manufacturing.

It's tough to say, but

I would lean more towards that than this entirely stick route because I just don't think it deals with these very obvious workarounds that are.

Why also seems so clearly that the tariff should be targeted rather than blanket?

Because then you can be really focused and say, like with chips, that's a huge, huge, huge security vulnerability for America and anybody to have to depend on Taiwan for chips.

right if if if china goes and takes taiwan which is you know the kind of nuclear scenario that people worry about, like chips are in everything.

They are in everything.

They're in your car door handle, not just your car.

Your car door handle.

They're in our important Switch 2s.

They're in our Switch 2s.

It's not just the things you think about, like your phone.

It's in everything.

It's in our fridges.

It's on our smart devices around, like everything uses chips now.

And there is an increasing level of production that the rest of the world is trying to do, particularly China with less sophisticated chips, but the best ones still come from Taiwan.

That's what powers everything right now, including military stuff as we start to get military drones and the crazy like sci-fi stuff.

And so it is so critically important to have chips.

And right now that it's, it's like not being manufactured.

Up until recently, TSMC has opened a factory in Arizona.

That's starting to get up to speed and doing well.

But that was like a big focus with the Biden administration that I think they did well.

I think it was called the Chips Act, right?

Yeah.

With the Chips Act, where that was like, okay, TSMC, the company who makes all these chips in Taiwan, basically the only one in the world who's doing this, we got them to come build a factory in America.

And that's like a critical vulnerability that is not solved, but it's better now.

In the process of fixing it.

Yes.

Yeah.

My understanding is like that's such a small amount of the number of chips that we need for any kind of sustainable future that if right now Taiwan were to be taken by China and China says, fuck you, Donald Trump, no chips for you.

You don't get our chips.

Like we are super boned, like super insanely boned.

Yeah.

I mean, it's stuff from Taiwan's POV because like if they do build the best chip manufacturing in America, then America doesn't have incentive to protect them, right?

Like right now, the entire rest of the world is super incentivized to not allow China to take Taiwan because then everybody else in the world is mega fucked.

Yeah, yeah.

That was my first thought when I started reading about this specific topic.

I was like, if I was Taiwan, I would do this.

I would not do this.

I would not do this.

It's like slowly getting rid of my big shield and then handing it to somebody else.

You'll protect me, right?

Yeah.

All right.

Okay.

Say, I'm in the villain chair.

I think he is playing 4D chess.

Okay.

I think there was no problem with the across the board tariffs.

I think this is all a part of the plan, and I think we need to shake the system up to make significant change.

Okay.

You've been saying that off the pod.

And I've been saying that on and off the show.

One of the things I had basically a few questions to try and get you to push against these arguments.

I don't think a lot of, it's interesting because I don't think that many people are necessarily even in this camp, even if they did vote for Trump.

It is interesting to see the public divergence on opinions of him right now.

The first thing I wanted to bring up is the stock market gets mentioned all the time.

It's like we're plummeting, we're going into recession, stock market used as an indicator of economic health.

But I would argue, hey, I'm just a normal guy.

I'm like, I have a middle income job.

I don't have a lot invested in stocks, maybe nothing invested in stocks, like most people in the country don't.

And if the market's going up or crashing, that affects, you know, the rich people.

And it's not a very good indicator of economic success in the country.

What would you say to something like that?

Because I do feel like that argument comes up a lot.

And the reverse of this argument is when stocks are exploding in value, but wages are stagnating, people are struggling, and people point to it then as like, well, the stock market's going up.

Nvidia just 300x,

but I still make the same salary I made five years ago and inflation's digging into it.

So from the other side of it, now that it's crashing, why is that something I should care about?

I totally agree.

I don't think stocks are the perfect indicator of economic health.

I think stocks can be up and the economy can be doing bad for regular people.

However, stocks crashing is certainly not good for regular people for two reasons.

Number one is most, you say most Americans don't have stocks.

Most Americans actually do.

It's just that the most of them are owned by rich people, but they do actually own stocks and they have them in a 401k, which is largely in the SB 500.

So when the SB 500 drops, especially for people who are nearing retirement age, they are fucked.

We are seeing people actually flooding social media saying, I have to now retire five years later.

I have to postpone my retirement because I was counting on this to sell and retire on.

And now it is 20% lower, 15% lower than it was.

So that's part of it.

The other part of it is the thing called the wealth effect, where people that have

a certain number of stocks that have been up, that are green, they feel comfortable spending.

They don't clamp down on spending.

They feel like they'll buy that RV or they'll go on the vacation or the one thing because they feel like they're in a good spot.

When things are down, they clamp down.

They tighten spending.

They keep saving.

They hold back, which slows the economy down.

The third thing, and probably most important, and you could probably deal this with

your

Mogul merch, is like, if you are importing a bunch of goods from, let's say, China or Vietnam or anything that has a tariff.

And it gets to the harbor and you have to pay that tariff, you need working capital.

You need money in your bank account ready to pay that.

And if you don't have that, which most companies don't, you have to do immediate layoffs just to get your goods out of the harbor.

Because if you don't get them out, they auction them.

And then you're competing against your own goods that are being sold at auction.

So, what we're seeing, and this was happening already, we only had one day of real tariffs or 10% now, but companies are having to do immediately, like close plants, do layoffs immediately.

There's no delay.

And that means working-class jobs lost instantly.

So there's a lot of making this argument as

the 28-year-old who isn't retiring who doesn't have a lot invested you're still saying that the downstream effects of something like this happening do so trickle-down economics is real there's no good downstream effects

that was my point what i'm saying

actually reminds me speaking of trickle down the chinese communist party a people's twitter account tweeted a Ronald Reagan speech on tariffs.

Yeah.

We're in the upside down world.

That's crazy.

I saw it.

I don't know.

Yeah, I don't know what, but that was.

Reagan was a Chinese plant.

That was a long time

saying it the whole time.

The whole time.

That's 40 chess.

They sent us Reagan 50 years ago.

Damn.

Part of the deal.

Okay, fair enough.

Eloquent answer.

But haven't there been times in Atriok, haven't there been times in history where tariffs were necessary for the U.S.

to succeed and grow?

I remember something from a very own stream of yours where you mentioned that tariffs used in the 1800s when the US was trying to develop its own manufacturing sector

used tariffs against countries like the UK in order to protect from competition of countries that already industrialized.

And then they utilized those tariffs to grow in the 1800s.

I believe you said that in a video.

First of all, never

used my words against me.

So I'm wondering, Atriok, if it worked back then, and we can point to an example of it working at least once in the past that I do remember that you brought up.

Why couldn't it be that happening again now?

So what I would say

What I would say to that is that that sounds like a targeted tariff on a specific industry that you think is critically important.

I think in this case, it was shipbuilding, where like America wanted to build its own shipbuilding so that, and the UK could do it better, so they tariffed so they could build their own.

I am not necessarily opposed to it in a very targeted case to get one industry you think is critically important.

As a broad case, and I think in the 1800s, this happened anyway, it still creates rising tensions, trade wars, tit-for-tat tariffs where they try to counterbalance on you that ends up with everyone being poorer.

That's my overall stance.

I think if we thought EVs are so important to have an America that we're going to tariff them, and I don't get my nice Xiaomi SU7 EV that I can drive around and look cool in, I can at least understand.

I'm mad about it, but I can understand it.

But trying to do all goods at all once, every country is disastrous.

It's crazy.

I feel like you're deconstructing my generalized argument and making very specific points that aren't difficult to argue with.

So I would like.

So you're a piece of shit.

You're a piece of shit.

Old, old, ball.

Old balls.

Okay.

Okay.

I had another thought.

I had another thought.

All right.

The current

Argentinian president, who I forget the name of, Javier Malay, basically campaigned on this idea that in order to repair the economic circumstances that we're in, we are going to need to go through a period of pain in order to succeed and come out the other side more successful.

The pain that we're feeling right now is a part of the plan.

It has to happen in order to create large economic change in the country.

In order to get to a state where we're a happier, better, financially better off country, we need to go through a period of damage like this in order for that to happen.

And Javier ended his speech calling you bald.

And then he did mention.

This is the period of pain I'm going through to grow.

And then he calls me bald.

In private, he apparently is buying a lot of Spanish doubloons.

Yeah.

Okay.

Last one I want to say on this.

That is fucking insane.

That was the dumbest thing you've ever seen.

Because, because I want to tell you.

That's the dumbest thing I've ever seen.

Because Javier Millay, not that I agree with everything he said, but had a completely opposite viewpoint.

He's completely anti-tariff, totally open, free trade, totally.

So it's like saying,

if I shoot you in the leg and you're like, oh, I'm in pain.

I'm like, well, Javier Millay said going through a period period of pain.

It's an entirely different thing.

It's not a relevant example.

It doesn't mean all pain will always lead to growth.

It just means that guy thought in that instance.

Javier says, anytime you're in pain, it's good.

I disagree.

I disagree wholeheartedly.

Okay, Counterpoint, in the 1800s, we used to do bloodletting to heal people.

That was me guilty.

I'm old now.

Yeah, okay.

I used to bloodlet.

No, listen, I don't know.

Again, I think

I'm trying to be as generous as I can to what I think is a pretty dumb idea.

I think it

I think we're not benefiting.

Okay.

I have one more question.

And

this is something a little more genuine, less fill and cherry.

Is you mentioned last week that a big part of becoming a more developed economy is you sort of naturally lose these manufacturing jobs over time to developing nations behind you that kind of pick up those jobs and are able to supply them with like lower cost of labor, right?

Yeah.

But you mentioned that the develop developed country like the US, maybe the Norways or the Denmarks or France, you move on to producing more complicated goods that those countries aren't able to produce.

And you're specializing in offering like new services that allow your country to keep making things, basically.

Yeah, like move up the value chain.

You move up the value chain.

That was the way you described it.

Is there no, what is the end game of moving up the value chain though?

We could, there's forever, you're forever progressing in a game where countries are chasing your country and trying to catch up.

Is it not worth fighting to maintain the original base manufacturing jobs in some way?

Because even if I move up the value chain, maybe 20, 30 years from now, those jobs are being chased by Vietnam because they developed even further along the way.

Do you know what I'm saying?

I sort of know what you're saying.

That's not a problem I can solve in this chair.

I feel like we've been solving so many global issues along the way in Lemonade.

I know after we talked about terrorists last week, they went away.

They're gone now.

Yeah, he dropped on the point.

And they went away before we recorded our next episode.

Right.

Right.

That's a good point.

I think

he's going to watch it.

I think he's hooked.

I don't know.

I think you had a good point.

Actually, last week, you were talking about this, where it's like,

if you lose the base manufacturing, eventually you kind of lose the skill set that allowed you to get to the, you're, you know, if like you can't make that, you just can't make the hospital.

Yeah, I'm not convinced that we will just be higher on the value chain than the rest of the world forever.

I don't think there's many indicators that we as Americans or people in the West are inherently, I mean, it's like, if you just think about like most of the centuries where the West has dominated the global world, right, and technology.

China, India, the global southeast, like it's been, they've been in immense poverty.

And then over the past few decades, you've had, what, 2 billion people lifted out of poverty?

The idea that we are some sort of like

God race is just insanity.

And like, I don't see, if you just look at what's coming out of China and Taiwan and Singapore and India and the sheer number of people, it's like, I don't see how America maintains its position as like, we are the ones high on the value chain.

We should be managing everything.

So I'm somewhat pessimistic about this.

Like, the tech industries are exploding in other parts of the world.

Totally.

I think a good demonstration of this actually is Chinese manufacturing because I think up until recently, and now that these discussions are more popular and more in the news,

I think people used to have this idea of sweatshop in China, like getting together this like shittily made good, and that's what Chinese manufacturing is.

And people have that idea from a really long time ago.

But what people don't realize is that the manufacturing industry and this push for exports is they specialized and developed supply chains to create really complex high-end goods.

Even doing something within the world of clothing that I gave the example of, is it's not just about doing like things more cheaply, it's about offering more refined services that are not,

they do not really exist in other countries a lot of the time.

They're the ones moving up the value chain.

Yeah, the level of specialization is yeah, we don't have in America, we don't have people who can make these factories.

And China has just this obscene obscene amount of like STEM graduates who are focusing specifically on manufacturing.

It's like, dude, they're lapping us.

Like they're going so far beyond any other country.

And like, it feels a little daunting.

I don't see how it stops.

And I don't think Trump's shit is helping at all, but I don't know, man.

It's funny because to maybe, do you have something, one more thing?

Well, I want to say, I don't have the graph in front of me, but what I saw recently is that China is kind of going through.

the very beginnings, the baby steps of a similar thing where the bottom part of the value chain is going going somewhere else.

Yes.

Yes.

Like it's going to Vietnam.

It's going to Indonesia.

It's going to India, where it's like, it's now too expensive for that very basic level to do in China.

So they're going somewhere else.

So it might be a cycle.

You know, I think at the end of the day, you want to be the one making the electric vehicle or the Boeing jet or the tech company rather than the company making the toasters and the

t-shirts.

I think.

I believe in that, but I can see the value of having some competency at the base level.

The cap to this conversation, in my mind, is this stuff is changing literally day to day, almost hour by hour.

So it's hard to draw like a conclusion about what even the short term will be.

I'm very curious if this 90-day pause will last.

I'm very curious to see if it just comes back or if a bunch of the countries.

Dude, if in 90 days we're in the exact same situation, I'm going to freak out.

I'm going to freak out.

I'm going to lose it.

Like, I'm assuming this 90-day pause is a nice way of saying we're going to go out and get deals with everybody, bring it all down except for China, and focus.

I assume that the best case scenario, that's what they're doing.

But if we end up with no negotiations, no deals, and in 90 days, we're back to this, it's going to be good content, I guess.

It's going to be disastrous.

Well,

I have a very different topic that I was thinking about bringing up last week that I thought was really interesting,

which was recently the South Korean government came out and for the first time ever took public accountability for the fact that they were basically just selling kids for for a long time.

They uh post-Korean war, there was a bunch of South Korean children that were adopted primarily to the U.S.

I think there was over 200,000 children total in this like kind of post-war period.

You bought a couple of them, right?

You were you were

yeah, back when I was back post-Korean war, I was like, why don't I get a couple kids?

Korean kids.

This is a different life for me back then, though.

I was a a different guy.

And the,

and of those like 200,000, 150,000 of them were kids that went to America.

The thing is, in this, you know, this is kind of during the period of Korean economic miracle, like a rapid growth in the country.

And

there's two sides to this issue that are coming up.

And a lot of these kids abroad realized over time that they had fake like background or history given to them through a variety of

the they made it up no or kind of so the most common example I could find uh is in a lot of cases these adoption agencies in Korea which are making money off of like letting foreigners adopt the kids would run into situations where maybe a child in their care would die

so I as an American who wants to adopt a child maybe thinks, oh, I would love to help out this orphan from the Korean War.

And I learned her name, and I want to bring her over, adopt her, bring her into my family, right?

And I go through that process, and the agency gives me all their background information.

I adopt the child.

I sign like paperwork in the U.S.

to make them a U.S.

citizen.

But on the other side of this is the adoption agency that quietly, that child passed away during the time they're switching the kid.

And they just swap a new kid in that who's, for example, whose parents are still still alive so a lot of the kids weren't orphans at these agencies right they're just kids put up for adoption

with their birth parents still alive and then a bunch of these uh korean adoptees over time found out that their backgrounds were fake not orphans and that this large-scale basically adoption fraud had been happening in korea throughout all this time and a bunch of people have challenged this uh and tried to take these cases to the south korean government and to get them to acknowledge that this happened and to get an apology, to get like payments for damages, different types of things, right?

And I sort of first encountered this story, I think, six or seven years ago, way before this apology happened, because there's a short vice piece on this Korean adoptee in the U.S.

whose name is Adam.

And he was adopted by a family that abused him.

They were a really shitty family.

He lived basically a terrible childhood.

And the family he got stuck with never filled out the paperwork in the U.S.

to make him a citizen.

And then, because of his, like, I would say because of his upbringing, he wound up in a lot of situations where he

wound up committing like crimes when he was younger through like his teenage years and his 20s.

He cleans up his act, becomes a business owner, has a wife, has a kid.

Now he's

now in his 40s, right?

Okay.

And he applied through this process,

eventually finds out that his paperwork was never done properly and then submits an application for a green card, like he should be eligible for.

But because he submits that application, it flags the system that if you have any criminal history and you're an illegal immigrant, they deport you.

But he hasn't lived in Korea.

He doesn't speak Korean.

He doesn't know anything about Korean culture.

And then he gets sent to Korea.

And this is a big story back then.

During my research of this general story around Korea apologizing for their end of the fuck-ups here, I followed up on Adam's story now that it's been years later.

And he managed to successfully sue the Korean government for the situation that he was in.

And he got paid out $75,000.

But he can't go back to America?

But he still cannot go back to the U.S.

So he was stuck in South Korea.

As of of 2023, he was still stuck in South Korea and couldn't come back to the United States.

And this is a bizarre situation where

in the wake of

this economic growth period for Korea coming out of the Korean War, at least within the ceasefire deal that they had, the Korean companies have this awful incentive to get through, basically get as many kids as they can into their facilities and sell them off as adoptees to as many families as they can because uh of the money they were bringing in and then on the other end there uh the american process if the family wasn't willing to do the paperwork or just made mistakes on the other end it has long uh long-term consequences for the adoptees on the american side uh and i thought that was a pretty wild fucking story that's fucking crazy uh and then uh this one more like little tie-in that uh i thought is you know in the wake of the trump presidency there's been a lot of changes to the way like immigration and deportations have been happening.

There's a big story right now with this guy named Abrego Garcia, who basically is from Maryland.

And he's originally from El Salvador.

He came to escape gang violence in El Salvador when he was 16.

He's now 29.

And he has his

paperwork.

He has asylum in the country.

The reason that this happened is in 2019, he got arrested or pulled over on accusation of being involved in gang activity in the U.S.

And he gets let off because the gang activity accusation is totally baseless.

They're saying he's an operative of like MS-13 in New York.

He's literally never lived in New York.

He's from Maryland.

And through this process, he's granted legal asylum and protection that he cannot be deported.

He's now like legally living in the United States.

And now he, you know, just normal, basically normal citizen in the U.S., has a U.S.

citizen wife, has a kid, and gets deport, is in the group of deportees that just got sent to El Salvadorian prisons.

So he's in the El Salvador prison right now.

And he legally could be in the U.S.

And the Trump administration said directly that this is just an administrative error, that it was just an accident.

Oops.

But now that he's there, the Trump administration is like, he's under El Salvador's control.

We can't do anything about it.

And they're not bringing him back.

And he's still there right now,

which is, which is insane to begin with.

And this has been litigated.

It's gone to like a circuit court.

They demanded that he be returned by like Monday of this week.

And then the Supreme Court just overruled that and said, like, you can't give that deadline.

It's like unrealistic.

That it doesn't make sense that you, as the Supreme Court, they just overruled the deadline?

Just the deadline.

But they're not commenting on whether or not he needs to come back or not.

And the Trump administration's whole argument is like, this is just out of our hands now.

We can't do anything about this.

So, this guy who was illegally in the U.S.

through the asylum process is now stuck in a prison in El Salvador

because of an acknowledged, quote, administrative error, which I think is insane.

And I think these are just two examples.

I think I have like pretty, pretty, you know, hard opinions about like anyone being deported in the first place.

But I think these two stories

years apart, you know, in Adam's case,

I think his may have been in the first Trump presidency, but I think his type of case, it's like, wouldn't have mattered if Biden was president or not.

Like, that is nothing, nothing necessarily would have changed.

It's just two examples of like where technicalities like ruin people's lives and uh put them in in unwinnable positions because of the way we like choose to conduct this process, and then on the other end of it, it's like people being like having their history robbed from them because of money.

And uh, I

just thought this was all like really interesting and the different examples of it's actually a sad, it's very

interesting wasn't the word, yeah, that's incredibly depressing.

Me talking to a guy in the prison, this is so interesting, man.

Yeah, I obviously, sorry, you know what I mean.

It's not the right, not the right word.

I'm sorry.

I'm so interested.

So, yeah, I just dug into that.

It's like the, you know, the greed, the greed of the adoption agencies, the immigration process.

Is your point that we should start an adoption agency?

Because there should be good money.

And I was, well, if we start adopting Korean kids, I think

we would just do it right.

I think we should do the agency.

The agency side is making the money.

They're selling the kids, right?

Oh, so we do want to make the money.

We do want to sell the kids.

Where's the profit?

You have to pay $75.

Well, we got to get higher on the value chain.

Exactly.

You know what's wild?

Speaking of.

Hey, speaking of selling orphans who have parents,

a little segue.

When I was 18, I went to Nepal for three months and volunteered an orphanage.

And that sounds great, right?

Like, wow, what a virtuous young man.

How smart and humble and handsome.

which, you know, it's all good.

And there's all these pictures of me like, which I love.

And I am and was.

Yeah, Perry and I went to the same high school.

They wrote an article about me.

It's like, Doug went off to Nepal to help the children in the hills.

No, this is real.

Yeah, yeah, yeah.

And so I did this.

This was right after high school.

And,

you know, I was like, okay, this thing seemed to seem a little off, but it's a good organization, all that.

And then over the subsequent years, turns out that a lot of, particularly in Nepal, these orphanages that are a sort of popular place for foreigners to go and volunteer at to help these orphans.

A lot of them aren't orphans because the parents in the rural countrysides of Nepal realize that if they send their child to this orphanage in Kathmandu, the city, that a bunch of foreigners will come and support them with money and then they will get a better education.

And so, really, what I did is I went and like hung out near a school that said it was an orphanage that had parents, like a boarding school, I guess.

And so, already it felt a little weird when I was there.

It's like something felt kind of odd.

You can see the kids' parents right over there.

Yeah, yeah, they're like peeking over the corner or whatnot.

So, it's strange that I think well-intentioned, I mean, certainly people running the orphanage were very well-intentioned.

They were trying to help orphans, right?

And there were legitimate orphans, but this reminds me of that story of like this orphanage in Korea is literally selling children who have parents.

Like, that's a lot more, I think, vile than what was happening in Nepal or is.

I don't know, but it's weird that that's a common thing, apparently.

Well, I think the theme that hits both these stories and almost everything we've talked about is like not enough discussion of incentives.

You know, that's.

If there's an incentive, because there's money to be made from people are willing to abuse it.

People will abuse it.

And it may may not be everybody, right?

It's not that everybody has the same moral code and always faced with the same decision.

Everybody would be, you know,

robbing those Korean kids of their history.

It's just that because the position is allowed to exist, the guy willing to make the decision is willing to step up to do it.

Yeah.

Which is

like bat.

It is bat.

It is fucking bad.

No, no, no.

You said it was interesting.

He said it was interesting.

I think he said he kind of liked it.

I remember what he said.

Yeah.

It was like a little smile.

Give a little smirk.

For the audio listening.

He gave us a toothpick.

I know he suffered in you.

You have trauma about your whole history being robbed from you, but I just like I'm the chair on a podcast.

Every time Aiden sees a really depressing story, he smiles because he knows he can get content.

It's getting green, dude.

He's green.

Oh, man.

Maybe I need to be lighter.

I'm sorry.

No, no, no, no.

I mean, I don't know what to say about it, to be honest.

It's really depressing.

It's sad.

No, I don't think it's funny because it's

funny.

It's so funny.

It's funny.

Funny and interesting.

It's interesting and funny.

Aiden Calvin.

Funny and interesting story about children

being sold.

If you show any of these stories,

if you approach almost anyone at an individual level and you confront them personally about one of these stories and the human being behind it, there is

almost every single person would come to an agreement about, oh, this is bad.

This is a bad thing that is happening.

Why do we do this?

We should fix this.

It shouldn't work this way.

The easiest example is like, or a personal example in my life is

Shake, who edits for Ludwig, is a DACA recipient.

And if Shake, you know, if Shake had a maybe a harder life growing up in the U.S., he came from the Czech Republic when he was like two.

And he made some mistakes when he was younger and like, and, you know, committed a crime.

He makes mistakes now.

He works for Ludwig.

He's made many mistakes.

Well, he's made, you know, that's not a a felony so far.

And

the taxes get out.

If something just happened, like if he made a mistake along the way,

then he could just be deported from the country.

And it's like his, you know, his primary identity.

It's like he does appreciate that he's checked from like talking to him about it.

But then you can just have all of that robbed from you basically on a technicality.

And

even I think the idea behind this is like, you don't want to protect people

that are criminals.

You don't want to deal with them in the system or deal with them in your country.

But I think it's kind of on the obligation of the system or the country that these people existed within to

deal with it.

Yeah, I mean it's like even if it even if this person were like imagine Shake is a violent criminal.

Imagine.

I don't even imagine.

I can visual examples.

He goes on a little rampage and he's been in the U.S.

his whole life.

I don't feel like it's chill to just send him back to the Czech like everything's chill.

You I should have jail him here.

Yeah, I feel like we should deal, we should take responsibility of that action at them very much.

Shape drizzle is our problem.

They start building those Venezuelan prisons back here in America.

Put the prison.

Thank you, Doug.

And that's where I wanted to circle back to.

And if we could, if we could give all of those jobs to private prison, private prison companies,

min max the profit of all of those companies and maybe dump a little money in the shares of those of those companies.

Maybe we did that.

No, you bring up a point that I think ties in too, which which is like

i don't think i'm even at the point where i can disagree ideologically because i don't like the implement i think the implementation is so random you know i'm saying if if you're of the opinion that we have to i don't know reduce the number of doca recipients we give out a year and you're like measured doing that that's something you could argue about but when you're like if you're if you're randomly setting someone up for 30 years to think one way and then you cut it out from under their foot that's that random cruelty that i think really bothers me the idea that you're you're not making a measured change to like the future, you are undercutting things you've promised in the past, or you're like, you're, you're causing damage no one could have prepared or planned for.

That, I think that's the really frustrating thing.

It's something, it's a basic situation that anybody would look at and agree is unfair.

And I think the,

I think it helps to boil things down into these specific examples of issues because then if you can all so clearly agree about it, then it kind of points to what we were talking about last week is maybe it can be easier to work towards to change.

That's what you would hope, at least uh i think we changed the tariffs we can change this where everything we talk about in this show will get fixed yeah this i think this actually loops in to last week because a lot of people had positive and negative things to say about uh the idea behind abundance the book the idea that building is kind of the future of solving problem uh problems like building up the supply side of things so that the demand for it can be matched uh housing was the specific example that you dove into into really heavily.

I want to come to the other side of that, if we have time, to talk about building too much.

Yes.

Because you had talked about that.

On a lighter note from this, God, this

extremely sad orphan stuff, let's talk about this power plant in Ecuador collapsing and all the people there dying.

Oh my God.

Let's lighten the mood a bit.

Okay, so the main thing I want to chat about today is China and the Belt and Road Initiative, which is their thing around the world that they are basically trying to help all of these countries around the world build build up a whole bunch of infrastructure.

And it's an interesting counterpoint to what the U.S.

has done.

I do want to quickly follow up on some of the things that were said last week, because I was very heated in the way I discussed things and saw a lot of comments that match that passion in various ways.

So just a few follow-ups just to

touch on things that I saw in the comments about what I had said last week.

I talked a lot about housing, about like red versus blue states.

I just want to follow up and acknowledge that yes, a city like Houston is blue.

And I understand that, but the point is more about the fact that so many people are moving from blue states to red states that in an electoral college, the way our presidential system works, that will actually majorly affect the ability of the Democratic nominee to win.

That is the relevancy of red versus blue in the context of building a lot of housing.

I might not have expressed that super clearly, but the point isn't that Houston is blue.

It's that it's in a red state.

That is what is relevant to that particular conversation.

On top of that,

I think people felt frustrated that I conflated Democrats and various groups on the left, and that's a fair criticism.

I will be more cognizant of that going forward.

I also realized it'd be really frustrating if you're, if you see yourself as, for example, progressive, you're also very frug up, fed up with the way that the Democratic Party is governing, as I have been, and then I am sitting here like lumping you all together and being like, you're all doing a bad fucking job.

Like that would be very frustrating.

And so I can very much empathize with that.

I'll be more thoughtful of that going forward.

Again, though, for me, this is not.

meant to be a left versus right thing with building.

It's just, I think the country doesn't build enough and we just need to build more stuff.

And of course, there's a lot of complexities of homelessness, like empty units held by corporate interests.

I don't personally think that would solve affordability.

Maybe that helps with homelessness, but there's many nuances to that that obviously we didn't get into.

I wanted to at least touch on those things.

And again, I hate nuance.

And I hate you, and I'm going to leave a comment about it.

Yeah.

The fact that you would cave like this, I have so much respect.

Be fucking cave.

Don't let them shake you.

Yeah.

Triple down, Doug.

I appreciate constructive criticism.

And

I think there's valid things.

It's not like I want to get riled up by every single comment, but I think to be fair, maybe I didn't express some nuance to the extent that I could have in my passionate rant.

And I think at the end of the day, like, I just want people's lives to be better.

And I think building is necessary for like people being able to afford to live.

It's necessary for the future being better with like medicine and healthcare and new technologies and a better life.

And it's necessary to solve the climate crisis because we have to build a lot of stuff to solve climate.

So I I just think building,

I'm not saying the right is doing some great job.

I don't think that.

I just, we just need to build.

And there's examples in abundance specifically that I kept highlighting over and over that

I, again, to me, not about Democrats versus Republicans, really.

It's just build more or you don't build too much, which is what China's done.

So let's segue into it.

So as you actually mentioned earlier,

we're back to China.

We're back to China.

Okay.

And I think it's an interesting counterpoint.

It's always back to China.

Because again, you know, I was, I was bitching and moaning about how America doesn't build anything.

And China has basically done the exact opposite.

So in the 90s and 2000s, China was massively ramping up in production.

And then based on largely the financial crisis, is my understanding.

This is from an article by Noah Smith, who's an economist.

Due to the financial crisis, China's economy was hit really hard.

Basically, they were manufacturing all this stuff for people.

And then suddenly they weren't buying as much because Europe, America are in this huge recession, right?

And so to compensate for that for two-ish decades, they started building tons and tons and tons of housing and other infrastructure.

And so because they were just building this absolutely obscene amount of stuff, one of the stats is they were spending about 44% of their GDP every year on infrastructure compared to like 20% that other countries do.

So they're like massively investing

at like a double rate of anybody else.

And then that bubble sort of bursts in 2018.

The housing prices cratered and they've now shifted to this like heavy export model, like you talked about, which is like conflict you know causing a lot of the problems in the world um so that's interesting on on its own um but then the belt and road initiative is an interesting part of this so the belt and road initiative is their global plan that they started in 2013 where they're going to go to a whole bunch of countries around the world there's 150 of them signed up right now that and they're going to loan them money to do all these big high infrastructure projects where we're going to go into kenya we're going to build a train we're going to go into ecuador we're going to build a power plant we're going to go into kazakhstan we're going to build a whole bunch of trains airports or big uh I was going to say ports.

There's like a big one in Sri Lanka.

Yeah.

And so, and so they have this plan, and this sounds good on paper, right?

It's like, oh, yeah, no, that's that's awesome.

Um, and so this kicked off, and at first, it was doing great.

And the first five years, all these, you know, they were building stuff, all these countries were happy with it.

And then there started to be issues.

So if you look at the list of projects that China has done under Belt and Road Initiative, it is crazy.

It is like

so many of the major

infrastructure projects in Africa are being funded and planned by Chinese contractors and the Chinese government working with the African government.

Same with South America now.

Same with the Middle East.

Same with

like, you know, Kazakhstan, that whole area.

Like it's everywhere around the world.

China is helping countries to build stuff.

It's crazy.

Do you know how there's a big industry in the Congo of like mining cobalt and other

like with your hands or something and you're dying?

I mean, that is all.

That is part of it.

I think there's an unfortunate reality to the mining there: it's not being done ethically.

But if you watch these undercover reporting videos of stuff like that,

of these like mineral mines in Africa in general, there's so many Chinese intermediaries there.

Yes.

And you can watch people go with like, you know, little spy cams on their chest and they go check out the mine and the human rights abuses.

And then they go to where the, the,

the, the minerals are being sold at a market and it's dude so many chinese companies operated in these spaces yep like a giant percentage of the infrastructure investment is going to chinese companies in in africa a lot of the countries it's like 40 is something the number i saw um it's crazy they so they've china has successfully become incredibly impactful around the world building all these projects and that contributes to this like trade that that you talked about earlier brandon where like

Now China is the main partner for most of the world in terms of trading, in terms of infrastructure.

And to their credit, right, they've been building building such an absolutely obscene amount, often to their own detriment, like they caused this housing crash for themselves a few years ago.

But they have just been building an insane amount.

So they do have the expertise.

Could you speak a little more to that?

Because I know this is a topic you've talked about a lot too.

And you mentioned 2018.

And I know that the real estate sort of crisis that was ongoing, like they had a huge, I want to say one of the their biggest, was it one or two shuttered, like two of their biggest real estate companies?

Two of the biggest companies in the world.

Why, what is the consequence of, how did building too much tie into that specifically?

So basically they tried to get out of this problem where they weren't growing in other areas like exports by basically saying, we are as a country are going to invest massively in housing and infrastructure.

And we as the government, we're going to put huge, huge, huge quantities of our money into just building tons and tons and tons and tons of stuff.

And so there's one of like Guangzhou is the province, I think.

They, they like are so proud of the fact they have like 1500 bridges and 11 airports and they're like 400 billion dollars in debt.

The province is like the size, it's smaller than Arizona.

It's like a small area.

I mean, not small, it's China, right?

And there's a ton of people there, but like they way overbuilt.

They're way in debt.

And that was kind of how they funded things.

That's what how we as America are funding a lot of things.

We just keep throwing money at the problem and getting deeper in debt.

And they just kept doing this.

And the reason everybody was like, yeah, let's keep doing this is because the housing prices kept going up, but it didn't make sense because they're building so many.

I can pull up the numbers in this giant stack of paper somewhere, but like they have like hundreds of millions of empty apartments because they just overbuilt.

And the problem is just like the financial crisis in the U.S., all of the citizens invested their money into housing as an asset.

They were like, this is going to be our investment.

So they were paying insane rates to buy into housing.

This bubble kept growing, but the actual value wasn't there.

It didn't make sense.

They had built way too many housing.

They don't need that many apartments.

The quality turned out to be really bad in a lot of cases, which gets, which what we're about to get to with Belt and Road.

Turns out massive rapid building isn't perfect.

It doesn't work all the time.

The quality part is interesting to me because I do think how this ties into what we were talking about earlier is this idea of something like Chinese manufacturing being like cheap and like badly made.

And so I think when you present the argument initially about homes not being made well,

that is as a counter argument is like this

disdain of the idea of that Chinese building is cheap.

But on this topic specifically, somebody came into the yard discord.

She's originally from China and she talked about how this is a really big issue, that the quality of housing in a lot of areas in the country is super low.

Like they've built it and it's available, but it's very bad.

Yeah.

And then all these Chinese citizens like put their entire net worth into buying one of these things because they're like, this is one of the few ways as a Chinese citizen, I can invest in my future.

You don't really have the same options of the stock market necessarily that we do.

It's much more controlled by the government.

Same with the tech sector or IPOing.

And so they were like, we're going to put all of our money into this.

But then, like you said, it doesn't make sense and all these problems with the building.

So that actually segues into the Belt and Road thing, right?

On paper, China over the past decade, 12 years, has with hundreds of countries, I guess hundred,

has built all of these incredible things of infrastructure, including successfully a train in Kenya or Kazakhstan or Ecuador building this giant power plant.

There's many, many, many examples of successfully completed projects.

But if you pull up this Wall Street Journal article, Perry, this is basically

they're all falling apart.

And so, this Wall Street Journal article literally called China's Global Mega Projects Are Falling Apart.

And some of, I mean, if you can just kind of like scroll down through this, like some of the quotes are insane.

Low quality construction on some of the Belt and Road projects risk crippling key infrastructure and saddling nations with even more costs.

In Pakistan,

officials shut down the Neelam-Jhelum hydroelectric power plant last year after detecting cracks.

Uganda's power generation company says it has identified more than 500 construction defects in a Chinese-built 183-megawatt hydropower plant on the Nile.

Ugandan officials have blamed a Chinese-built hydropower plant.

In Angola, the vast social housing project is the locals there are saying it's not well built.

Even Indonesia's high-speed rail line in Jakarta, which is sometimes

successfully said, like, oh, this is one of our big key success stories of Belt and Road, has had massive cost overruns and fell years behind schedule.

It turns out these things are not working well.

And so, if you go to,

there's another Wall Street article journal that is about, I think it's down here.

So, this Ecuador power plant that they made with the Chinese, Chinese offer them a bunch of money to make it.

And there's so many problems now with it.

There's 17,000 cracks in the power plants, eight turbines.

This in Ecuador, a small poor country, which was a lot of cracks or like,

yeah, to be fair, I don't have a good I feel like every turbine has a few cracks.

I actually have a quote for that.

No crack is acceptable, the utility said in response to questions from the Wall Street Journal.

That's the first question you want to ask.

In my head, if you told me 100 cracks is chill, I would have been like, oh, that's fine.

Yeah, it doesn't seem like that many cracks.

Turns out, no, you don't want any cracks in your hydroelectric power plant.

And this was like, so this is a huge investment for the country.

This whole area, it powers like 160,000 homes that weren't powered consistently before.

Great thing.

except now it's potentially shutting down.

And this thing costs so much money to make the Ecuador is now in dire straits.

And the president, or sorry, energy minister Fernando Santos told

the media in November, over my dead body will I accept this poorly built plant.

And so at first they're like, this is awesome.

China's coming in.

They're going to help us with their expertise and their money.

We're going to build all these amazing stuff.

We're going to get infrastructure that we wouldn't have done otherwise.

And then the quality of so many of these projects is so bad that these countries are getting extremely concerned because the problem with this whole Belt and Road initiative is that it's not investment, really.

If you and I, Brendan, want to go and we want to make a power plant together, if you're, I don't know, you guys have been talking about it.

We haven't been talking about it.

We've been off the podcast.

We said crack-free.

Yeah.

We're going to go crack free on this one.

In a bold new vision.

I'm going to bring some crack, but we're going to have a crack free.

What if we had no cracks?

Yeah.

We could just fill it with spackle.

I don't understand why it's a big deal.

Duct tape.

What's the slap?

Flex tape.

Flex tape.

Let's flex tape it.

That's why we earn this profit in a minute.

The Ecuadorian president talks about putting flex tape on it.

Unbelievable.

I think it's relationship.

Yeah, they're just not.

Okay, so we're going to build a power plant.

You and me.

All right.

Yeah.

So we're going to build a power plant, you and me.

If the way, let's say you're Ecuador, the way we might do this as partners is you say, hey, Ecuador, you invest 10 billion.

I, China, will invest 10 billion.

We make it together.

And then if it does well and it makes money, we're both well off, right?

And it pays back our loans and we benefit in totality, right?

That is normally how investment works.

That's not what's going on with Bolton Road.

What China's doing is loaning the money.

So I'm saying, hey, Ecuador, you historically don't have the funds for this.

You don't have the tax revenue for this.

I'm going to lend you billions of dollars.

And then I want you to pay me and my contractors to build your power plant.

And then you have to pay it all back at the end.

It's just a loan.

But if you don't pay it back, then I get control of the power plant.

Yeah.

That is how these are structured.

And so from China's perspective, it's like, this is great, dude.

You loan money, you make them pay your contractors so your companies and your country get a bunch of work.

And then they have to pay you back.

And then if they don't, you get key infrastructure in these major areas.

Like, for example, Sri Lanka, which is a small city south of India.

They have a giant port in Colombo, which is their capital.

And China loaned them money to build a new port in Hamban Tota, which is the south.

It's like the small fishing village, right?

And so China helps them build it and nobody's really using it.

And so instead instead of it being a co-built thing that they're doing together, like Sri Lanka is basically like, we can't fund, we can't pay you back for this stuff.

And so, in 2017, Sri Lanka had to give China back the port.

So, China just has for a hundred years, they have controlling equity stake and a hundred-year lease on this port, which people are now worried China is going to use as like a naval military base because it's just in the it's just in the Indian Ocean, right?

And on the day that China got control, the uh China official news agency tweeted another milestone along the path of Belt and Road.

They completely fucked Sri Lanka.

It's wild.

I do think there's merit to what you're saying.

I wanted to push back a little bit because I also read about this specific port today.

Because this is one of the ones that I've heard about and known about for a long time.

is

yeah,

it didn't go back to like the state, which you clarified.

A company has like a controlling percentage of ownership.

And then there's like a 99 year year late.

They're always doing 99 year lease.

99, baby.

It's always 99.

And

the

efficiency of the port since this takeover has gone up.

Like the amount of traffic that goes through this port and the amount that it's used has increased greatly since this change was made.

I think it speaks to something of like, okay, well, it actually is being managed and used more effectively since then.

And then if you were to give like the good faith interpretation of this, it would be that their intention in their export strategy is to create a bunch of bullet points like around this like region so that trade is

more viable in this whole region of the world, right?

Yes.

I do think that one of the main criticisms that has come along with this strategy in general is that

these loans don't come.

I mean, the loans don't come for free beyond like not expecting to get paid back.

You expect to have, would you call it, I don't think you'd call it hard power, right?

You'd call it soft power

through the influence of like giving all these countries money.

And then I have kind of the pushback to that, if you will,

that China is offering these opportunities and loans at lower stakes and lower cost, not just monetarily than the IMF is before them.

And this is one of the big pushbacks is like these countries would normally be going to the IMF, but it's not like the IMF is not abusing the the position when they finally give these struggling countries the loans.

And the argument is that it has been better for a lot of these places to take the Chinese loan for infrastructure than the IMF one.

Yeah.

It's been called debt trap diplomacy.

And people, there's a lot of articles that are written about China's side of it, but I think the IMF and the World Bank have kind of done a similar thing over the years.

International money.

It's kind of just like countries that don't have a lot of power get, you know, it's like poor people with high-interest credit cards and loan sharks.

I think countries that don't have a lot of economic heft are often getting abused by bigger, more powerful countries, regardless.

I mean, that is just what it seems to be.

So I agree that this is happening,

but they are in a spot where they have to take a kind of a bad deal to get this infrastructure they need.

So it's interesting because I think this kind of loops back to another question that I was thinking about.

Because if I were to take maybe my interpretation of Doug a week ago, if we were to ignore the, if we were to ignore, which is a pretty bad aspect a big aspect of this the debt trap aspect of it yeah and i were to just say well isn't this build a lot and build fast strategy better than the alternative is this not just a normal consequence of when you try to like create this much change in a short period of time and you're trying to build great things yes is this just not a downside of doing that yeah so that's why this is so interesting and it's such an interesting counterpoint to what we were talking about last week which is build more and again you have on one side america just building extremely little and china building i would say too rapidly and too recklessly and this is causing huge problems it's it doesn't matter if you build a hydropower plant in ecuador really fast if it doesn't if it doesn't stay up right then everybody's screwed and so they're they're obviously we have to land in the middle you should not be on the extremes and there needs to be a degree of sort of uh you know

scrutiny around like how this stuff is built um it actually leads into what's happening so the past few years if you pull up the second article perry um this so this is from noah smith an article that he wrote about China dropping investing.

Basically, at around 2020, a few years before, their investments into new belt and road initiatives have plummeted.

So China, in response to all of these projects failing, right, of these high-profile cases where it's like, hey, we helped Ecuador build a power plant.

We helped Uganda do this.

And those things failing.

And the government's basically being like, China, you have fucked us.

They are now dropping investment dramatically.

And they're saying, essentially, they're putting the brakes on the expansion plans and saying, wait, sorry, we're going to become more focused on the viability of our existing projects.

So, is this more a response of the demand for this fading or China choosing to offer it less?

You're saying that the

countries have been badly afflicted by these choices so many times that there's less people lining up to.

No, no, no, no.

So, if you go to the next one, so this is a story from Bloomberg where they talk about how there is a train.

And actually, if you scroll to the top here, so this is in Kenya.

This was one of the big success stories, right?

They built a train in Kenya from Mombasa, which is on the coast on the east, to Nairobi, which is the capital in the middle.

They didn't have that before.

So this was one of the first big projects.

It was lauded by the president, who is saying this is one of our big infrastructure.

This is a huge deal for Kenya.

This is massive.

And they've estimated the amount of GDP and economic activity and stimulus this has done.

So now, if you scroll down,

recently China said we're not funding anymore.

So they had, if you look at the map, they had made this training walk the last bit, yeah, yeah.

Well, no, the last bit is half of Kenya.

I was, I was like looking at the graph, and I was like, damn, that's a long way.

Yeah, no, that's a long way.

So, this black line, they did successfully go from Mombasa to Nairobi, and China had said, We're going to help you fund all the way to Uganda, and they were going to connect Kenya and Uganda.

So, there's this East African infrastructure and transit route that would really, really help these countries.

Great stuff.

And they've built 75 miles out of Nairobi.

And then China just said, nope, we're done.

They were supposed to give them like $4 billion more to do this and just backed out.

So China's the one pulling the pull.

China is the one who is in response to the projects being received so badly or having so many issues, or at least that's, you know,

and not being paid back, right?

It's like it's a bad investment.

Right.

They don't want like the Sri Lankan port.

That's a strategic port for them to have.

They don't need a broken hydroelectric power plant in Ecuador.

Because they're not getting paid back for the president's saying they're not going to pay.

Right.

That's not helpful.

So that's just lost money.

We have to assume what China, the reason, you know, they're just saying we're going to tighten our belt.

We're going to focus on the viability of existing projects.

That's, that's kind of what they're saying.

I mean, this all ties in.

I mean, this is the same impulse they had to overbuild in the country.

This is the, they had that building era where they were just, everything was funded through building.

And when that sort of stopped working, they made this massive pivot to fuck it.

We're going all in on exports.

Yes.

And that is why we're in, that's, you know, everything has a consequence.

Now we're in the area where they're, they're dominating global exports and everyone's pushing back, especially the United States.

Yeah.

And so everything leads to each other thing.

Like

so this, what you're saying is that this approach, like these type of projects, don't necessarily map very well to the current strategy.

Their current strategy.

No, I don't think that.

Well, I think it did for about 12 years.

It mapped their thing of we are just going to build immensely.

And then the past couple of years, unlike some of the other parts of their economy, they're saying we are going to pull back from just mass infrastructure as a way of getting ourselves out of these problems.

So they are pulling back from Belt and Road as a major global initiative.

And to me, it's like, okay, as much as I want to sit here and rant about we should build non-stop build constantly, this is a real cautionary tale of like, it matters if you build shitty stuff.

Like this is totally absolutely crippling some of these economies.

Like Kenya now is trying to go around raising $3.6 billion

from all these different private companies, right?

Like they're, this is like a disaster for them.

And they just have this, all these plans that are done now.

Yeah, it's, it's bad.

Yeah, I mean, if you go to like a Kenya, or I don't know if it's Kenya, but a Central African country now, or if you go to Kazakhstan now, or you go to the countries where there used to be trying to build power plants or railroads, what they're doing now is they're selling you BYD cars.

They're selling them.

They're just exporting them.

Like that's what, that's their news.

It was, we are going to build infrastructure in China and around the world.

That's our way to get out of our problems.

And as that has been failing the past few years, it's now we're just going to build an absolutely obscene amount of stuff in China and sell it to the entire world.

We're all going to buy it.

Everybody else in the world is going to buy it.

Well, because one of my thoughts with this is when you said they were pulling back on this, I was like, oh, is this soft power strategy maybe fading away?

Maybe that was never as big of a part of it as I thought or it had been reported because it seems to be very much about money and not getting paid back on these loans and them deciding not to do this anymore.

But if you're the exporter of all goods to the rest of the world, you also exert soft power, a different kind of soft power in that way.

And people end up falling in line for like different reasons.

So it's very, very interesting.

It's, I, it just is, I said it.

We got to be somewhere in the middle.

That's, that's the crazy thing that I assume everybody agrees with.

Mr.

Middle of the road.

Until you're making a village here.

Mr.

Middle of the road.

Robot.

Looks like we need to find a compromise.

Yeah, fucking win an election on that one, Doug.

Anyway, I think building responsibly and affordably is good if it doesn't cause any problems.

And a hint.

And And we've done it again.

We've done it again.

Lemonade Stand does it again, folks.

Lemonade Stand does it again.

So thank you for watching this week's episode of Lemonade Stand.

We'll be back next week with 60 different updates on how the tariffs changed again.

And honestly, you guys can,

can we do a little leak?

It's not a big announcement, but maybe a little leak.

We're going to be launching.

a Patreon alongside the show.

A lot of people have been asking, a discord community to you engage in.

You're going to be able to give more feedback on stories or things that we talk about in the episodes.

You'll be able to submit stories as possibilities of what we talk about on the show.

We're going to be doing a book club every month and doing some additional episodes in tandem with the book club, following up to comments.

And the main benefit, a bonus hour of the show every week.

So, yeah, should be hype.

And every single Patreon sub,

Doug will eat a lemon.

Yeah, yeah, yeah, yeah.

Full lemon on camera, and Aiden will.

What are you going to do?

I just double down on the lemon thing.

To be honest with you, if you're.

Yeah, you will adopt a Korean child.

The problem is, if Doug is dead set on the lemon thing and he's the one who eats it every time, he's going to die within the next two years.

So we better adopt that.

That's easy to do.

Did you show me that?

Did you show me patrons?

This is how we fund it.

Dude, there's at least a thousand people who want me to die from lemons.

I don't want you to die, Doug.

Get into the Discord so you can hurt my feelings more closely to me.

Really, just dig in, you know?

I need to, I can't be in this chair forever.

I need you to take back up the mental

health.

I'll be back.

Don't worry.

Next week, a hot new AI is going to do it.

You're Gollum and you're Sam.

You can't.

Next week's Crypto Week.

Who's down?

Crypto Week.

Actually, crash out.

All right.

Thank you guys for watching Lemonade Sam.

We'll see you guys next week.

Crypto Week is canceled.