Sometimes video scripts come easy. 6 years ago I predicted that Saudi Arabia as we know it would be done by 2030. Today I double down on that by addressing the most common objection to the idea I have gotten by far. A week or so back someone tweeted at me that Saudi Arabia was safe because people will always need oil. Within five hours of receiving that tweet I had this script written and ready to go. The world doesn’t have to give up on oil to end the Saudi royal family. We just have to use like 5-10% less of it. In today’s video I describe this simple, under acknowledged economic point, with graphs and the results of a real world experiment that Covid was generous enough to hand us in 2020.
John Oliver is an interesting figure. He’s probably the closest thing we have to an H.L. Mencken, or an Upton Sinclair in our modern digital age. I haven’t watched him consistently since the first or second season of his HBO show, Last Week Tonight, which premiered back in 2014. But whenever he covers something that I’m interested in, I’ll check him out. Usually his take makes me less angry than any other mainstream perspective. The main virtue of his approach is that he gives a single topic 20 minutes to a half hour of his show. Whether the segment is more muck-raking or educational, he’s always able to cover more of the story than any three minute segment. But not even John Oliver is immune to military industrial complex propaganda. Per usual, he does better than most, but even he left some important stuff out in his recent video on Taiwan. So I corrected it for him…
Today’s video is an attempt to bridge a gap I see in a lot of economic discussion on twitter, in academia and in mainstream journalism. There seems to be a growing sense that the US economic consensus is changing in a bigger way that it has for four decades. The old Reaganite consensus seems to be falling apart. Some deplore this shift, but many more seem to love it. What neither the pro- or anti-camp seems to be doing in a serious way is reckoning with how cryptocurrency fits into this picture. This is a major oversight. How can we talk about the economy, money and finance without discussing a growing insurgency against all of those things? Today’s video attempts to put the two pictures together, and point out that Crypto ideology is very much on one side of this broader economic debate.
This Coronavirus thing impacts everything. The oil market is no exception. I’ve committed to some pretty strong predictions about the future of the oil market and how it means the end of the current regime in Saudi Arabia. I still stand by all of those predictions, but it’s hard to say whether this current crisis accelerates the timeline, or slows it down. Starting March 6th, Saudi Arabia went to war against every other producer in the world.
I believe that the US oil industry will be the most prominent victim. The sustained period of low oil and gas prices we are about to experience may bring us to an inevitable future more quickly. Saudi Arabia will be the last oil producer. The crucial question remains the price at which they are able to sell that oil for. It’s now possible to envision a future where Saudi Arabia controls price again… but only briefly. Today’s video explains…
Economies are funny things. I just noticed that I forgot to tie today’s video into one of the central messages of this “Markets Are Dumb” series. That’s the importance of Confidence to markets. I sometimes think that’s all there is to them. In our last installment on the Turkish economy I talked about how the fundamentals of the Turkish economy had been disastrous for half a decade. Everybody knew this. All the experts agreed. Yet the Turkish economy kept trucking along, and sometimes putting up very impressive growth numbers. How did it happen? Confidence.
The Turkish people weren’t exposed to the basic facts of their economy, and their misplaced faith, or confidence, kept the wheels spinning. The growth this led to prompted international investors to keep pouring money it. It seems that this perpetual motion machine may finally have stopped. As today’s video makes clear, Trump can’t be held responsible for any of the disastrous choices that Turkish policy makers have made over the past decade. But he is the guy who finally punctured that last bubble of confidence. And that’s actually pretty important.
With today’s video we go all in on discussing the US stock market. There’s this idea that stock markets are somehow rational, or serious. People who talk about it are always wearing suits, and we put a lot of effort into making all the details of interest rates, portfolio management, and valuations seem boring. The stock market is none of these things. In fact it’s nuts. By going through the history of the “Trump Bump”, I attempt to draw the curtain back a bit.
Unfortunately, watching the video, I think I screwed something up. It’s not that the story I put forward is wrong, it’s just that I left too much out. The video falls into the “Presidents impact everything” school of commentary. I hate that school. The differing views market makers took of Trump and Obama are tremendously important to this particular economic story, but that doesn’t mean that presidents are actually all that powerful. I really don’t want to create that impression, and I apologize if I did so with this video.
Over the next couple weeks I intend to get into China in more detail. I’ve certainly covered China in the past, sometimes discounting the idea that they pose a threat to the US today, but at other points hinting that the US-China relationship SHOULD be our main priority. There is no contradiction here. To clarify that approach, with today’s video I’m returning to my old World War 3 series. The name of the playlist is of course an SEO bid for eyeballs, but it also goes beyond that.
With today’s vid World War 3 IV, I dispel some myths about China’s rise, and point out why it can be an opportunity rather than a threat. I’ve already got the next two installments written, which dive deep into what Syria means for the US-China relationship, and why we should get out of it. I’m very pleased with how this series is developing, and like the idea of revisiting it each year. Check out this playlist I’ve built, that intersperses the vids with other relevant videos from the back catalog…
I wanted to address another aspect of the comparison between Pakistan and Turkey that the cursed article I talk about in today’s video mentions briefly. The article does concede that Pakistan’s dictator led Islamification under Zia ul-Haq was a completely different example than the attempts at Islamification currently being carried out by Turkey’s elected president Erdogan. As I point out in the video, Pakistan remains desperately poor today and this was even more the case in the 1980’s. Zia was using Islam as tool for nation-building. It remains a key part of Pakistan’s sense of itself as a nation today.
As I laid out in my other twovideos on Islam in Turkey, Erdogan does not have the blank slate to work with that Pakistan’s Zia did. Pakistan of course, unlike Saudi Arabia, has an endlessly rich and varied history. But very few among a population that mostly couldn’t read, and was living on the brink of starvation, were able to benefit from that history and culture. Turkey has a very distinct sense of nationalism that is quite separate from Islam, and that is internalized across the population. No matter how powerful Erdogan becomes, he will not be able to eradicate those underpinnings.