Nasty NASDAQ, Of Euro-Bondage, Syria Seems to Be The Hardest Word
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We have before us the opportunity to forge for ourselves and for future generations a new world order. This is Multipolarity, charting the rise of the new multipolar world order. Coming up this week, Tesla is tanking.

On the Nasdaq, the Magnificent Seven have become merely the Seven. The talk is all of quarterly earnings in Musk Towers. But is this just a smokescreen for the fact that DeepSeek has deep-found Silicon Valley in deep doo-doo? Meanwhile in Europe, the dream of rearmament is still alive and well. We'll have a report direct from the front lines of an unreachable fantasia. Finally, do jihadis make good pets?

For a few Washington and Brussels liberals, they have become the accessory du jour. But after the appalling scenes in Syria this week, well, it turns out that befriending beheaders in flatbed trucks might not be such a good idea. More as we get it.

But first, nasty NASDAQ. At the start of the week on Monday, we saw a lot of action in the U.S. stock markets, U.S. and Japan. I'll get back to Japan in a moment. But it was mainly the U.S. that most people were focused on. The long and the short of it is the S&P 500 lost 2%, which is pretty

pretty bad but not totally catastrophic it was the nasdaq that got really badly hit god went down four percent on the day i think it's recovered a little bit since then but it hasn't really truly recovered and it's clearly another leg down on the nasdaq i'll get back to that in a moment um

The VIX index, the volatility index, the fear index, as it's called, also spiked. It was higher than at any time since December. So that means it was also higher than the deep seek sell off that we saw at the end of December.

January. The market mavens, I suppose the financial press, well, I'd say actually the normal press and the financial press has followed along, have tried to pin it on the Trump administration. He gave an interview on Sunday, I think, to Fox News, and they asked him if he was expecting a recession.

He didn't actually say anything clear. I watched the interview. He kind of said something like, I hate predicting things like that, but there's always periods of dot, dot, dot. It takes a little time. It takes a little time. I mean, he was clearly implicitly recognizing that markets have become a little frayed and

in recent months, and that is being attributed by the press at least to his tariff. I don't think that story makes sense at all actually, and I don't think it makes sense for two reasons, well three reasons actually. So the first reason is tariffs don't cause recessions. Tariffs could cause inflation, but they won't cause recessions. Now you could say, well, they could cause inflation and then the Federal Reserve would have to raise interest rates

in order to squash the inflation. Okay. But we're a couple of steps down the line at that point. I don't think markets should really be pricing in a recession. Maybe they should be pricing in US dollar moves. Maybe they should be pricing in inflation.

Pricing in a recession is a little bit much. The second point is that I think, as we'll talk about later, European stock markets are actually doing quite well on the back of talk of war spending and so on. The point on that is that the impact on the stock market seems to be discontinuous across markets. And so I can't really believe that it's all being generated by this tariff stuff.

And then the third kind of positive reason is if you actually followed what was happening on the day, it had nothing to do with tariffs whatsoever. What actually happened was that Tesla led the stock stock decline down. It fell. Its shares fell 15 percent.

Mysteriously, Twitter went offline in the middle of this, which I think Elon Musk blamed on a DDoS attack. But yeah, it's just funny that Twitter went down as Tesla was tanking. Absolutely no connection there, I'm sure. Tesla went down because UBS analysts cut their price target substantially for Tesla. They have an in-house monitoring group to see how many cars are being sold. And they said that they were seeing weak demand. Look, Tesla's had weak demand for its vehicles for almost a year now.

And it's missed a bunch of its earnings calls by substantial amounts. So when UBS comes out and says our internal data is showing that Tesla is going to suck at its next earnings call, that's enough to drive down the price of the stock of Tesla. Tesla is a very good big company. It's correlated to NASDAQ or probably at this station, NASDAQ is correlated to it. That's really what drove the decline on Monday. When you zoom out about three months or two months,

You see that the market's never really recovered from the deep-seek shock back in late January.

And what's happening in the interim with the discussion around deep seek is very interesting. Basically, a lot of people, Mr. Musk included, are trying to cover the ass of the AI industry. There's a big public relations campaign on, et cetera, et cetera. And basically, it's to convince you that deep seek was a drop in the ocean. It wasn't all it was hyped up to be, et cetera, et cetera. And the reason for that is to prop up the tech stocks. OK, that's pretty much what it is.

But the reality is that since the turmoil around DeepSea, NASDAQ is down about 10%.

including the decline on Monday. And of course, the decline on Monday was, you know, 4% and then a little bit of a recovery. So call it, you know, 2%, 3%. So the Nasdaq is pretty close. I saw the Kabachi letter or whatever it's called on YouTube, put out some internal research or external research or whatever it is showing that I think the Nasdaq is now 8% or for bear market or for technical bear market. So if Nasdaq declines another 8%,

at least on a technical basis, the index will be in an official bear market. So what's really happening here is that the tech sector has been badly bruised by poor earnings for Tesla, a bunch of different things coming in all at once.

And there's a very strong PR campaign going on to make you not pay too much attention to the fact that the Magnificent Seven or the Mag Seven, as they're called, these kind of techie stocks, these West Coast stocks are not doing so well on a fundamentals basis on developments in the market like DeepSeek. Big PR campaign on.

to make you not pay attention to that, then to fill the vacuum in comes the mainstream media, the MSM, who don't like Trump and they want to pin it on his tariff policies. And it seems like most people are going around along with that, including the financial press. This leads me to be a little bit nervous that we might be beginning to see the first whispers of what we've talked about on the show multiple times, which is trustification of the Trump administration.

Long-time listeners will remember that I always said this is not a tinfoil hat conspiracy that's cooked up in a dark room. It's an opportunistic thing where markets take a turn for the worse for some reason or bearish sentiment sets in.

And the media start trying to pin it on the administration directly, being the best way of doing that. And then you get a spiraling effect. I'm just highlighting the fact that we are seeing a couple of the necessary preconditions lined up. We're seeing softness in the market. We're also seeing a little bit of softness in credit, in high yield credit and stuff like that. The shakier end of the credit markets. We're seeing, obviously, the stock market declines. We've now had two kind of big shocks.

in only a two-month period, maybe six-week period. We've seen VIX continuously spike. We've seen volatility continuously spike. That's a ripe environment to turn around and start talking down the economy. So it'll be really interesting to watch in the coming weeks whether the media piles all in on this narrative. I think it's reasonable to say, Philip Pilkington, that

For quite a few years now, there has been a lot of talk about the equities market being overvalued. You know, people have been talking about just how high the overall US stock market is valued compared to historical averages of certain metrics. So in that sort of environment, one would have imagined that eventually something would cause it to come down further.

You don't need a wildly irresponsible president to do that. All sorts of things can do that. A lot of investors can end up just very quickly using the opportunity to take profits, for example, and that in itself can cause things to decline. I think from the Trump administration perspective, if somebody wanted to pin the blame on him, of course one way of doing that would say call it tariffs.

You know, it's not necessarily the case that tariffs might cause a recession in and of themselves, but they can cause certain things to happen, whether it be uncertainty about investment decisions, whether it be inflation. These things can eventually, one or two steps removed, cause a recession. The other thing, of course, is the activity of Doge. You know, they've already sacked a large number of people, you know, mostly concentrated around the tri-state area. And...

There may be a fear there among investors that if they continue like this, the job losses within the federal state sector will amount to enough to kind of tip the economy over the edge, essentially. So, you know, I think those are the two things from the Trump perspective. But certainly I, and I'm not expert at all, I don't know anything about Trump.

the stock market. But my impression is that the far more interesting or far more persuasive potential culprit is exactly as you say, it's the China AI shock, it's DeepSeek. And then since DeepSeek, several other companies, whether big ones like Alibaba, or much smaller ones like an AI agent specialist called Manus, have come out with their own AI software that

right near the top of these benchmarks compared to the US giants like OpenAI, like Google, like Facebook. And what people need to remember is that the US stock market had become incredibly concentrated within a small number of stocks, six or seven stocks. And those stocks were in and of themselves concentrated within the tech sector. And the tech sector was in and of itself concentrated on this new technology

This new story of AI, this new growth story, like what's going to be the next growth story? It's going to be AI. And all of the companies associated with AI were going to be big names. So that was like NVIDIA that was going to provide the hardware to do AI. It was companies like Facebook and Google and OpenAI who were going to do the software and so on and so forth. That was like the big story. So anything that would puncture that would puncture that growth story.

Because it seems now that the moat, the barrier for entry to that market, is much lower than was first imagined. It seems like the hardware requirements are going to be much less specific and much less onerous than imagined. So it seems reasonable to imagine as well that a lot of these companies that were showing outsized, or how do they call it in that industry, kind of lofty valuations,

based on the growth potential of that industry, whether it be Nvidia, Facebook, Google, Amazon, whoever, because Amazon also, by the way, provide the data centers for all of this sort of stuff. So they were involved in the story as well.

Any companies that were involved in that were going to take a hit. And because the stock market was concentrated within those companies, the overall stock market would take something of a hit as well. Given the overall stock market's very high valuations, that seems reasonable. I mean, Warren Buffett has been keeping a record amount of cash on the Berkshire Hathaway balance sheet.

for a while now, which suggests that he doesn't think the stock market is a good buy at the moment, does it? He's also recently been seen to be selling shares overall, which seems to suggest he thinks it's overvalued. As a very long-term investor, you know, somebody who has a very long-term investment strategy, a kind of buy and hold investment strategy, that's always something that people pay attention to is when Buffett starts selling. It's a kind of, you know, be fearful when others are greedy.

So, yeah, you know, I think your argument is much more persuasive. And I think what's interesting about your argument is what it says about the broader US economy. It did seem, and we spoke about this on the podcast earlier,

Several weeks ago, when we covered DeepSeek, it did seem that this was the big growth story of the liberal globalists. That, okay, the US had lost its industry. Okay, things weren't going well. Old companies like Boeing. But we've got this amazing industry that is going to take over and control the 21st century.

And we've got this lead in this industry. And what we're going to do is we're going to use our control over certain bottlenecks, whether it be the supply of chips or whether it be the actual algorithms and training programs themselves. We're going to use control over that to maintain this lead in perpetuity. And that's going to be something that supercharges the US economy. This is where we're going to find our growth from.

And it's also going to be geopolitically an incredibly valuable bargaining tool. We said when the deep sea shock hit that it looked increasingly as if that argument, that the argument that was put forward by people like Eric Schmidt and

And it was supported very much by people within that kind of like Obama-Biden nexus of super Democrat elites or Democrat super elites. That whole plan is now looking increasingly that it's not much of a plan at all because the U.S. is not going to be able to maintain a lead. The barriers to entry are going to be much lower than imagined.

And all of the things that they've done are just creating new competitors and weakening their hand. I wonder whether this kind of stock market crash, essentially, if we say that it's not because of Trump's recklessness with regard to tariffs, okay? We don't think it's that. It's not because of the way that Doge are slashing jobs and it's really biting into consumer spend or consumer confidence. If we say it's not that and we look instead...

at the deep-seek shock to the AI story, then I think that says something much more fundamental about the long-term prospects of the US economy and the prospects of being able to leverage leadership in AI and certain aspects of the microchip and semiconductor supply chain for geopolitical advantage. Yeah, I mean, I think it speaks to a broader issue that I've always been implicitly worried about when I'm talking about the trustification thing,

The Trump administration is coming in. It's kind of a revolutionary government that wants to change the world and change the way the business is done by America and everything like that. Look, I'm pretty confident they're going to succeed in most of those goals. You know, their geopolitical pivot, a lot of domestic policy changing just the way America thinks of itself. I think all this stuff is now in the pipeline.

And I don't think it's going to go away. But the big risk to them was always the slight weakness in the U.S. economy. And I don't mean the short term weakness, although there is short term weakness after Biden. It's overextended. It's over leveraged. The U.S. has a big budget deficit. Trade deficit's quite bad. There are a bunch of, you know, big headwinds for the U.S. economy that have been built up in the Biden years because it was so mismanaged. There's no other way to say it.

But I mean the kind of deeper structural problems, like the ones that have built up over the course of 30 or 40 years, deindustrialization, mass financialization, the amount of impact that financial markets can have on your economy, especially if they go awry. I think because we've been in so many kind of crises in the past few years, from the pandemic to the war to everything else, to all the inflation and everything like that, we've kind of lost sight of the fact that

We saw two pretty big financial crises prior to that, and we saw a very large one in 2008, and it's kind of faded from view now. I think even people who are a bit younger than us don't even remember it properly, which is kind of interesting and makes me feel a little bit old.

But the fact of the matter is that the stresses and so on that were there in 2008, which led to that financial collapse, I'm not saying the same ones are still there. The same ones are not there. But the same overextension of markets, very high property prices, everything like that, all the effects of financialization on an economy are still there.

And it only took some interest rate hikes to knock the American economy off its perch in 2008. What the Trump administration is proposing is a massive geopolitical alignment, a change to the way that America trades with the world that we haven't seen since.

since the 1930s, frankly. Didn't work out so well that time either. Maybe these tariffs are bluffs, but right now they're pretending at least as if they're not bluffs. So all this talk is going on against a backdrop of what is still a fairly weak financialized economy.

And one that's just being kind of put through the ringer with the Biden administration has huge government deficits, a pretty overextended stock market, as we're seeing with the jitters and everything now. Very illiquid external bond market. That's still there. And that's a very new problem for America that I don't think they've seen since 1973.

So I just think this has always been the weak part of the Trump stool. There was in the weak leg of the Trump stool that they're gonna go in there. They're gonna create a ton of chaos. They're gonna change a lot of stuff. I'm pretty confident all that stuff's gonna happen now, but you know, it's against this backdrop of a very weak economy and if they end up with a stock market crash,

bond market crisis, something like that, a financial crisis effectively. I mean, it won't throw the entire plan out of whack in a sense. They can keep going the way that they're going, but it'll sap the energy of the Trump administration. Americans will become increasingly unhappy, et cetera, et cetera. So I'm still laser focused on the economy for the spell of the Trump administration in the past.

the volatility in the past week and actually in the past six weeks really is enormously concerned. The last thing I'd say is

I can kind of see the Treasury Secretary Scott Besson chomping at the bit. I think we've mentioned on the show before that he was effectively hired for that role to be the Wall Street guy who was going to right the ship if the markets ever started kicking off. Right now, the administration is like barreling in a different direction. And I'd say Scott Besson is quietly sitting at the end of the table reminding people that markets are going down and so on. But, you know, if this continues, I expect his voice to get a little bit louder.

Trump is an investment guy. He understands markets pretty well. I mean, not in depth or anything like that, but he gets, you know, market sentiment and everything like that. So I'd say the kind of Treasury view will come more to the fore in the Trump administration. But it'll be very hard to break through in the first weeks because there's just so much excitement going on. I'm hearing from people who go to D.C. and are around those political circles right now, like,

It does kind of feel like a revolution over there at the moment. And, you know, telling them to cool their jets because the stock market's selling off. Yeah, I ordinarily would move on, but I just want to ask something else of you, Philip. Like, forget about the geopolitical stuff for a second. Forget about Trump's kind of, in inverted commas, regime change efforts. You know, getting rid of the entrenched, you know, liberal progressive establishment that has...

you know, run Washington for at least kind of 30 years or so, and perhaps even farther back than that. Let's just focus on, you know, the reason that Trump seems to love tariffs. Like, you know, if you drill down on it, the reason that Trump seems to love tariffs is that he really doesn't like trade deficits. He doesn't like current account deficits. And, you know, the U.S. has a big whopping trade deficit. It's a chronic thing. And it has done for, you know, years, decades.

and most of that is accounted for, I think it's fair to say, by the US's trade with China. Now, most economists would say that this is exactly what would happen. You know, you will get huge trade imbalances when two big economies trade with each other, where one of the economy is, you know, a high-savings economy,

And the other is a high-consumption economy. So we've got the US, which is a high-consumption economy. The US consumer is famous for fueling the global economy, in fact. In 9-11...

what did George W. Bush ask Americans to do, not just to come together and to be nice and to be strong. No, no, no, it was go to the shops, spend money, right? Be American consumers, okay? Meantime, China is, you know, famously a high savings economy. You know, they save money and it gets kind of invested in stuff, like in infrastructure and building factories and steel mills and all the rest of it. And

you know the chinese economy for better or for worse has been set up and designed based on a kind of exogenous growth strategy where you export your way to success and you know they to that end they've privileged investment in both infrastructure and housing and also productive capacity so you've got these two economies you know one high savings one high consumption

And economists would say, well, of course, that's exactly what's going to happen when these two economies trade is going to get like a massive trade imbalance. Savings society gets a big trade surplus and the high consumption society gets a big trade deficit. And Trump seems to hate this. He views this taking for better or for worse. I hope people could say I'm not passing judgment here. He views it as basically China is essentially kind of stealing jobs, you know, by running this massive trade surplus. They're kind of

You know, they're taking productive capacity out of the U.S. into China, in effect. But the only way, you know, tariffs might be a kind of predicate to do something about the trade imbalance, you know, like by making it more expensive to make stuff outside the U.S. You increase the incentives for producing stuff in the U.S. itself and then just selling it in the U.S. because then you don't have those tariffs.

But ultimately, what they're going to have to do to achieve some kind of trade balance with China or overall with the world on aggregate is the US is going to have to rebalance its economy away from consumption and toward savings and investment, right? Or savings in general. Okay, it's going to have to start...

consuming less and producing more. And that's the only way to do that. That means people can't buy as much stuff in America. They have to make more stuff and they have to consume less of it to rebalance that economy. And that ultimately is going to lead to a kind of a painful economic adjustment, especially if you don't have buy-in from China and you don't have buy-in from Germany, the two big trade surplus countries,

in terms of going the other way. Like, that readjustment process would be much easier if the Germans and the Chinese said, okay, we'll go the opposite direction. We'll take some painful steps to rebalance our economies toward consumption and away from savings. So, that's...

That process is going to be painful. I'm not quite sure that's kind of sunk into people's heads yet. I mean, ultimately, if you have a more productive economy, ultimately, consumers are also producers. So people have better jobs. They have more stable jobs in theory. You might get improvements in productivity because manufacturing tends to have bigger and faster productivity gains than services.

So ultimately it would lead to a much healthier form of economic growth. It would probably lead to people having more stability within their jobs and their lives and all the rest of it. But that process of adjusting, of consuming less...

And producing more, you know, it's going to be painful people ultimately will live worse at least for a while And I'm not sure that's sunk in yet, you know look back to the early 1980s in Britain You know like Thatcher had to Margaret Thatcher for better or for worse had to smash the unions She had to get rid of all of the state subsidies for all of these businesses that weren't super profitable that led to job losses it led to like a lot of social unrest and

it led to unemployment that was unheard of in the post-war years unheard of like unemployment a fraction of that level had brought down previous governments as recently as 10 years before Thatcher you know like unemployment of a few hundred thousand had brought down the Edward Heath government and here she was posting unemployment figures well over a million which was just crazy and it was like a really bad rough time and

I'm not sure whether, like, people have factored that in. You know, like, if Trump really wants to go for this, whether they've factored it in. And if so, Philip, I mean, surely that offers a great many ripe opportunities for kind of a trustification effort, right?

Yeah, well, I'm not very optimistic about their tariff policy. I don't think it's going to work. I've said on the show before that the economics team around Treasury understands that it's not going to work. They know that the dollar will just readjust to cancel out

any impact to the tariffs. That's why I think it's being used as a threat strategy. In terms of how it's working as a threat strategy, it's actually working. The Canadian dollar is selling off. It's in free fall. I saw just before we came on the show here that Canada's issuing US dollar bonds and all the comments under it were like, yeah, we'll stick it to Trump. It's like, no, you're issuing US dollar bonds to get dollars to prop up your collapsing currency.

So if it's used as a threat, like to get Canada to do whatever they want, you know, fine. But, you know, you're risking instability. Yeah, they have to rebalance the economy if they want to make America great again. And I just don't think tariffs work to do that. I think you need lower consumption, higher investment and stability.

The only way to really get that in the United States is to bring down the value of the dollar. Eventually, we'll get to that debate. We're kind of in a moment now where no one wants to talk about that. But I think that the Treasury team, Bass and Tamir on the Council of Economic Advisors,

few other people knocking around, I think they know that the ultimate question for the Trump administration is going to be the question of the US dollar. If they bring the value of the US dollar down gradually, they could decrease consumption and increase investment. But as you say, they'll need the buy-in of their trade partners. They'll need some sort of arrangement with the Chinese to allow them to

revalue the currencies in relative space. And they'll need to offer something to China to get them to accept that because they're going to lose market share in the United States and so on. I think that something is going to end up being Taiwan because there's nothing really else on the chessboard that they can offer. And Trump is clearly not that interested in Taiwan, but we'll see. Of Euro bondage.

Listeners might have noticed or might have heard from you when you did your solo show, when I was stricken by the evil lurgy, Philip, that last week Germany and other European nations...

agreed that they were going to fund their Rearmament program which they've all suddenly decided that the desperately needed in a wild panic They're gonna fund that through debt and they had the European Union agree to waive all European rules with regards to governments taking on debt and extra debt when it comes to military spending and

In response to that, people probably have noticed that there was a spike in all European sovereign bonds. So when people see the German 10-year bond or the French 10-year, all of those yields went up by the amount of interest, the amount of profit that investors want in order to take, in order to lend to these governments went up.

Now, that, as far as I could see, was a surefire sign that investors were expecting the spending to be inflationary, which is something that you mentioned last week. Basically, they're going to spend all this money on rearmament, but of course, Europe is going through industrialization. That means they probably don't have the industrial capacity to absorb that extra spending, so you're going to have extra money chasing the same amount of product,

and that's going to lead to inflation. So just recently, just in the last day or so, there's been more developments on this story. The first was that German bond yields suddenly declined very briefly when it turned out that the German Green Party was not necessarily brought in

to Kaiser Friedrich Mörter's rearmament plans. And then the Bund's yield spiked back up again when it became clear that this was just going to be a...

a negotiating process and in fact it probably made it worse because now the Green Party had their fingers in their pie and they were going to extract their ton of pork lard in exchange for agreeing to all of this. You've also had at the same time the AfD, the Alternative for Deutschland, the populist right party in Germany.

basically trying to get the Supreme Court of Germany to block the gathering of the Bundestag take their place. Because the reason that they're trying to do this is basically because Germany has this constitutional debt break. It means that Germany cannot run big fiscal deficits outside certain emergency periods. And so what Friedrich Merz wants to do, basically, is he wants to...

make a constitutional change to say that yes we can do this so that we can afford to fund rearmament. The problem with doing that is that AFD and Dailinka, the left party, so the old-fashioned socialist left party and the new populist right party, have enough votes between them per the results of the recent election to block any constitutional changes.

What Mertz wants to do therefore is do an end run around this and get this constitutional change voted through before the newly elected parliament can take its seats essentially. That's currently the situation in Europe. I think that as we've been saying for a couple of weeks now and as anybody who reads our Twitter feeds will know, Philip Pilkington, we think this whole rearmament thing has been incredibly poorly thought out.

We think it's something that's been done in a panic. We think it's not going to work out. We think it's going to cause further political instability, further economic trouble for Europe. And, you know, I think this story, as we're following it with bond yields spiking and then going up and down based on the horse trading between various factions within the Bundestag, the fact that we have AFD now really creating a big stink about all of this,

I think it's played out pretty much as we suggested it would, Philip. I think the part that I missed was that it was going to turn into this grift, this big pork barrel thing, which, as you mentioned, it's turning into as the Greens kind of try and railroad the whole thing. I guess I'm somewhat surprised by that. I mean, I kind of thought that the Germans were a bit more serious than that. In times past, if the Germans wanted to do something, they'd kind of like put the plan on the table and get it done.

And even if it was a dumb plan by our standards, like hadn't thought out necessary supply, you know, where were these munitions going to come from? Where were you going to get the soldiers, given the fact that people don't want to go into the army in Germany? Even if all these things were poorly thought out, you'd think maybe that they, you know, action spending plan, at least that may go awry later on in a kind of German fashion, you know, very efficient and everything like this.

I think the meme that's going around about the Green Party sticking their oar in to get some juice is that they're going to build solar-powered tanks to get compromise on it. And I sort of like that as a picture. I think actually there were memes going around before the Greens intervened with kind of tanks plugged into Tesla ports as a joke. And then the Greens come out and just make the self-parody real, right?

What that tells us is that German politics has got a very unserious, actually. It's become subject to the same politicization, like small factions who have their fringe issue, whether it's green, whether it's LGBT, whether it's immigration, whatever. These small factions that have fringe issues and they, you know, they interfere with actually governing the country unless you take their kind of grievance into account. Yeah.

And what that ends up doing is it sort of balkanizes your society and it turns it into a kind of a grab bag where everyone will try and get their little corner some loot whenever a spending program comes up. This has historically always been the problem with the United States, at least the United States Post.

the late 19th century with the first European immigration waves when it becomes a kind of a society that wasn't as coherent as it probably was prior to the European immigration waves. And what happened was, you know, the Irish would want their shake. That's pretty much what happened in the US. And that's why we've always seen a kind of a

dysfunctional government that can't really spend on the public good. Rather, it's congressmen trying to grab what they can from the public purse. It seems that even Germany's fallen prey to that because these, I mean, effectively these American ideologies have come into Europe. So that's been a bit of a lesson for me. I won't look at Germany the same now after the Greens have tried to extract their pound of flesh from this spending package.

But as you say, that's just one little cherry on top of a generally kind of silly idea. I think now that it is kind of rolling into grift mode in a sense, it'll be interesting to see how much of the apportioned budget is actually spent on defense. Eventually, we're going to find that out. If a lot of it is hived off for other things, for other ventures, even if those ventures are perfectly above board,

If they're not military spending and, you know, German borrowing costs go up, as you've already said, they already are in a sense. They're responding to this. The debt limit is gone. Whatever you think of the debt limit, it kind of defined Germany for a very long time. And it was very popular with the German people who had a lot of pride in it.

If all that stuff is washed away and at the end of it you get the solar powered tanks, you know, I'm joking, but you know what I mean? You get like some military expenditure and some junk pork barrel expenditure. That'll be a big, that'll be a big kick in the teeth for the German voter, you know, because the German voter thinks that they live in a very functional government.

They can be kind of snooty sometimes, sorry to our German listeners, but there's often a sense from Germany and also the Scandinavians that they kind of think that they can do everything really well and all the other people in Europe, and especially the dirty people in America, can't get anything done. And there's some truth to it. They are fairly high-trust, very functional societies. Well, if they bottle this one, if Kaiser Meritz puts together a 900 billion euro fund package,

and it gets looted by various forces in German society. And when we come out the other end, we have a bunch of failed green companies like Solyndra from the Obama era and poor capital allocation because everyone was

sticking their beak into that. And then like, you know, no clear military, like clearly a lot of it was spent on military, but because of the poor planning, you know, planning for soldiers, trying to figure out if you had sufficient supply, seeing if it was actually viable to start up mass shell production, all the stuff they're not thinking through right now. If by the end of it, you get kind of like a janky version of what they actually want,

the German public are going to massively lose faith in the state, and they won't have that kind of highbrow view of themselves anymore. And I don't say that with any relish. I mean, it's always kind of funny to see people who think they're the best people in the world being taken down a notch. But it's not good because that's part of the national character and so on. And when you tamper with those things, it can sometimes lead to negative results. And that ties into some of the things that we've been saying before about

the dangers of militarism rising in Germany again. You don't really want to resurrect those ghosts and so on, and those ghosts are going to be a lot easier to resurrect if people see their state acting dysfunctionally. Just very briefly on German procurement dysfunction, I'd just like to raise the point that the Puma armoured personnel carrier was a German project.

that was every bit as dysfunctional as some of the more nightmarish examples like Ajax in the UK and the Littoral Combat Ship in the US. I believe that one of the requirements was this incredibly sensitive and complicated environmental control system for inside the cabin because it had to be designed to be able to transport heavily pregnant women inside

to the battlefront without damaging the health of them or their babies. I'm not joking about that. And this is the sort of, these are the sort of issues that if governments just start shoveling more money into these kind of black holes of ridiculousness, of procurement catastrophes, then they're just going to get more expensive white elephants than the white elephants that they had before.

Any serious European rearmament strategy would in fact not start with allocating funds from a budget to rearmament. It would actually start with a serious strategy.

it would think, you know, what is the world really like now? And when I say what is it really like, I don't mean in terms of our kind of liberal interventionist, utopian, Manichaean kind of fantasy bubble that we've been living in in the last 15, 20 years. Like, what is it really like? What are the real threats to us? What are our strengths? What are our disadvantages? How can we be secure in this world? What alliances do we need?

You know, it would ask all of these like very big questions and that would involve quite serious public and political debate. And then once it had settled on a strategy, it would say like, look, what military do we need?

to fulfill that strategy like what battles what wars what interventions are we likely to going to have to fight what are the kill chains going to be like on that and so on and so forth and then through that you build a force structure and only once or a target force structure and only once you've got that target force structure do you start figuring out what you need to spend money on

What this is essentially doing is like none of that. It's just saying, okay, let's take on a whole bunch of debt to spend money on the military now because we're all in this huge panic. And that's just bound to lead to a kind of nightmarish story. Because, you know, as you say, they need to figure out their recruitment problems. They need to figure out what capacity they've got. And as I say, that's even after deciding the force structure and the overall grand strategy.

So, you know, I think you're 100% right that this is likely to be, you know, even insofar as it's spent on the military, it might accelerate somewhat the recovery from the Ukraine war because people have to remember that one of the reasons that European leaders are so panicked is because they've sent such a large proportion of their stockpiles into Ukraine to be destroyed.

A British general said it would take 10 years to get back to pre-Ukraine war levels of British stockpiles. And bear in mind that that pre-Ukraine level was already too little to do the job that British politicians expected the military to do.

So, you know, we're talking about accelerating it from like 10, 15 years to maybe what, like seven or eight. But what it's not going to do, it's not going to build a competent military. It's going to be very expensive. It's going to lead to higher borrowing costs. It could lead to higher inflation, etc.

That's not going to be popular. These governments are already fighting tooth and claw, kind of like a desperate rearguard battle to keep populist parties out, many of whom have a much easier story to tell. And that's not, we need to reintroduce conscription and get all young men into the army, and we need to spend, you know, cut social spending or increase taxes or increase borrowing costs and

No, no, no. Some of the populist parties like AFD, for instance, have a simpler story to tell. Let's make friends with Russia so we don't have this security threat. Or at least we buy ourselves time, right? So, you know, you will have parties like AFD making this argument to the public.

At the same time, you've got this kind of like panic spending, which never seems to go well. I do not think all of this bodes well for the European economy, especially when you have on the other side of the Atlantic, a president that seems, as we spoke about earlier on in the podcast, hell-bent on transforming the geo-economic and geopolitical and geostrategic map of the whole globe in a way that Europe isn't in control of. So yeah, I don't think this bodes well at all.

Syria seems to be the hardest word. This week, listeners who are plugged into Twitter will have seen predictable but tragic and gruesome ethnic violence in Syria. The Alawites seemed to, about a week ago or so, get together, band together, join forces and

and stand up to the regime in some way. The information we have is fairly complex, but the response to that has been almighty crackdown that seems to have involved pogroms, mass killings, executions, humiliations, beatings. It's pretty awful stuff, and I'm afraid to say entirely predictable. Part of me wants to say, Philip Pilkington, that look,

As the mainstream media and as establishment figures like Michael McFaul and Rory Stewart and Alastair Campbell and Barry Weiss and the New York Times and the Guardian were all giddily excited about HTS taking power and Joe Larnie personally and CNN was on the ground talking about a new dawn for Syria. We were on multipolarity saying, hang on a second.

These guys used to be jihadists. They were on the US terror watch list. Jalani personally had like an eight-figure bounty on his head from the FBI or the US State Department. He's literally one of America's most wanted men. He is controlling essentially a force of jihadis. And at the same time, the problems that Assad had in terms of keeping Syria together was

because of the ethnic complexity, the multi-ethnic makeup of the country, and also because of the sanctions that have been imposed by the U.S. All of those things are still there. If you can get the sanctions removed from the U.S., then that helps the economy and will provide some relief, but it still doesn't solve any of the ethnic problems. And it seems that that kind of prophecy has very quickly come to pass.

And I think it shows that Syria is a very long way out of the woods, especially as now Israel appears to be occupying a part of the country almost up to the suburbs of Damascus, right? So, you know, you have the Turks occupying one part of the country in the north, the Israelis occupying one part of the country in the south. Are the Americans still there in the Kurdish area? Are they still there?

I mean, you know, is Syria really a country anymore? Can it be held together? Can the Druze and the Alawites and the Shia and the Sunni Muslims and the Kurds, you know, can they all live together? And I'm not sure they can. I think it suggests that for the time being at least, this is going to rumble on. I think it doesn't bode well for...

Jolani's capability or prospect, I should say, of holding the country together.

You know, either these guys are jihadis who are completely off the leash, in which case it looks pretty bad for Jolani in terms of his ability to control his own security forces, or it's him ordering this as a crackdown, in which case it doesn't look very good for peace and reconciliation. It just looks like, you know, one dictator's been replaced for another who may well indeed be rather more bloodthirsty if past behavior is anything to go by than the Assad regime that he created.

You know, this is all yet another disaster for a neoconservative slash liberal interventionist foreign policy, the foreign policy that's held sway for another 30 years. And, you know, this is just that kind of gaping wound that reminds us all of that and really makes any kind of peace and stability in the Middle East increasingly difficult to see coming. I guess there's two things to be said here that are of some value.

The first is, why didn't they see it coming, if it was so obvious? You just had to look at the fact that the guy was on the terror watch list and what happened in the previous Syrian civil war, and you pretty much knew what was going to happen next.

I think the foreign policy establishment in Europe, at least in Europe, and especially in Britain, not so much in the US. I'll talk about that in a moment. But in Europe, in the UK, the foreign policy establishments become completely ossified. They've kind of got these most wanted posters up on the wall, and they haven't taken them down in years. And one of them was Assad. And so it was pretty much the idea was, well, no matter what happens, we must get rid of Assad. And I think as we discussed on the show, when Syria was kicking off,

or at least on the follow-up ones, Assad's position in the region had changed completely before he was ousted by Jilani. He was becoming closer to the Saudis. He was actually looking a lot more manageable, etc., etc. He was moving away from the Iranians, in a sense. That's probably why he ended up falling, ultimately. But, you know, the situation had changed, but they just can't update their most wanted list.

I remember Hillary Clinton's joy at seeing the Gaddafi regime in Libya overthrown made no sense from a geostrategic point of view. It only made sense when you understand that she had a little Gaddafi most wanted poster on her wall that she'd had up there since the 90s or the 80s or something like that.

It speaks to the mindset of these people. I think increasingly it's becoming clear that a lot of the people in these foreign policy circles turn foreign policy spats into personal grudges of some sort, personal slights or something. Tucker Carlson often says that a lot of people in these circles kind of have pretty troubled personal lives.

And they kind of project onto the foreign policy scene as kind of fantasy life. Tucker knows better than I do, so I won't make any comments on that. But it does seem like this personalized element is there, and it's actually very creepy when you start to notice it. The second thing I'd say is the divergent European and American response.

We have some indication that the Americans are going to join the Russians at a UN security conference and vote to condemn, I guess, what's happening in Syria right now. Basically recognize it for what it is, extreme ethnic violence, torture. I mean, the Wall Street Journal had, the Wall Street Journal, you know, a mainstream publication. This wasn't some like French telegram channel.

had an account of people being forced to march around like dogs before they were shot. Like, I mean, this is clear. War crimes are the worst variety. Stuff that you don't see in Ukraine, by the way. Like, I'm sure there's bad stuff going there, but like, this is the next level. This is like, this is where you get into the deep dark ethnic conflict zone.

And at the same time as that report was already out and there were obviously indications that the U.S. was going to move to condemn this,

Kaya Callas and her little outfit at the European Union come out and make a statement basically haranguing pro-Assad forces for shooting back, I guess. I mean, I think that's what they're basically doing. That's what the Alawite rebellion was. It was shooting back against people who were going to murder them. And I think the rationale in Brussels is, as I said, it's this most wanted poster, personalised thinking, and I think they...

They see anyone associated with SAD as being like really bad and deserving it or something like that. Look, that's all pathetic. It's very dark stuff. It's very dark stuff what's going on in the halls of Europe right now. These are weird people. You see the US reporting in their papers of these atrocities being committed, you know, very widely read papers like the Wall Street Journal. You see the US moving to condemn this stuff, try and shut it down, maybe put some pressure on

Al-Jilani could even escalate into another civil war. Maybe the Russians would end up backing the old Assad faction, the Christians, the Alawites. You never know. You never know what direction it'll be in. I'll just note that Hezbollah is freed up again from the Israeli conflict. They could be deployed into Syria again. So we don't know where it goes. But the point is...

that the rest of the world is on one side looking on in horror. And the Eurocrats are there saying, there's nothing going on. We're fine. We sent Annalena Baerbock to put on multiple layers of clothes to meet Al Jelani and he wouldn't shake her hand. We support this.

It's weird, man. It's a real weird look. It's increasingly clear that whatever Europe should do, it should definitely not be in the game of foreign policy ever. I mean, it just clearly cannot handle it. It has complete amateurs in control and they're destroying, like really destroying the image of Europeans all over the world. And it's already an incredibly isolated place. It's an isolated China. It's isolated Russia. It's picking an ideological war with America.

It's isolated everybody and at the same time they're getting behind things that the rest of the world finds completely atrocious. And if you go to Brussels or London, people just live in a little bubble and they'll say, what are you talking about? There's no ethnic violence going on there. Oh, you're making stuff up. That's pro-Putin talking points. And like, it's a small percentage of the world population who believes this and the rest of the world is just watching them and they're going, how did Europe descend into complete barbarism?