Trump Losing against BRICS Nations? W/Einar Tangen!

All right, hello everybody and welcome to Geopolitical Trends, where truth matters. Excited to be with you even though at this late hour, but hey, I don't care because I have a great guest, my dear friend Einar Tengen. Let me bring Einar here.

Hi Einar, good to see you, David. Thank you for having me.

Of course, we're very excited to have you. The whole community is excited to have you here. So Uh, first of all, for just a heads up, guys, make sure to join me tomorrow. I'm gonna put the link for you in the chat box, so make sure to join me tomorrow because there are some developments regarding Middle East with the Houthis. I'll be addressing this tomorrow in my analysis. And also on Thursday, I will be having my other dear friend— I know, uh, I know Tengen is here, is, is working now, so he will be here on Thursday. So And by the way, guys, I think next time I'm going to bring both my friends Einar Tengen and Warwick Powell together in one show. So anyway, to those who do not know who Einar is, Einar is a senior fellow at Tahi Institute. He is also the founder of The Asia Narrative, in addition to being an economic and political affairs commentator. So I'm going to get into it right away, Einar, because we got a lot to cover. So the first one, it has to— I'd like to have your assessment about the recent BRICS summit that took place in Rio de Janeiro, Brazil. How— what do you make out of it, the outcome of it?

Well, I mean, it was a little bit cautious, but it's gone further than it ever has before. What you had is the countries coming together and not without naming countries in specific. What they did is they condemned this— condemned this unilateral sanctions, the wars that are going on. They were a little bit— they were silent on Ukraine other than condemning Ukraine for, you know, bombing civilian areas and things like that. And, but they were very clear on Gaza, very clear on Iran, and they were very clear on the destructive effects that these unilateral tariffs and non-tariff barriers that have been created by Uh, they didn't say it, but we all know it's the US. Mhm.

Now, there are those, uh, here in Washington, and I read some, and I'm— guys, I will put the link for you later on, uh, that the, uh, the absence of President Xi Jinping suggests that there are more turmoil inside BRICS. Uh, I kind of don't buy this argument, but I am also surprised for President Xi Jinping to miss this time? Because he has not missed the BRICS summits for the last— to my knowledge, for the last 12 to 13 years, he never missed a summit. What, what's the deal with that?

Well, there's, there's a couple of things. I mean, what he cited was a scheduling delay, but they were very vague about that. Um, you know, even within, uh, a well-meaning organization, there are always differences of opinion, and And in particular, I think, um, with India. India sees these groupings as a means to an end. Uh, I've been on Indian TV for the last week, um, on, you know, at least 5 or 6 different channels, and it always comes down to what can India get out of it. Whereas BRICS is really about a collective whole, how to bring things together. It's about trade. It's not about whether or not India gets a seat on the UN Security Council, and that seems to be one of the issues here. Now, you're always going to have these issues, different perspectives and approaches, but it's not a serious divergence. But you do have differences of opinion. If you take India, it's much more on the side of, you know, what's in it for me. If you take Russia, they're saying, look, we need to, we need to pull the bandage off. We can't take it off slowly. Let's rip it off. Uh, the US is unreliable, uh, unilateral tariffs, uh, sanctions, etc. Uh, we want to move on and not replace the US but offer alternatives that allow us to pursue a path to development. China is obviously more towards Russia. Um, Brazil was kind of flirting closer to India's position, but I think Lula understands that, you know, based on what he said and the condemnations and things like that, that, you know, the time has come to grow a spine. South Africa, obviously reeling from the last embarrassment of its president by Donald Trump, and now with this letter instituting huge tariffs. I think it's very clear to them and all the other countries that receive these letters from Donald Trump saying, "I'm increasing the tariffs I'm going to put on you unless you make a deal." This kind of coercive action is exactly what the BRICS were complaining about. They no longer want to be bullied by America for the purpose, not of reshaping the world in a fair way, reshaping the world around the United States.

Yeah, but, but is this means, uh, Einar, since you mentioned that the letters— and I was going to get to it later on, but we, we'll address it right now— since you mentioned the letters that Donald Trump has been sending, which by the way, two of the most staunch allies of the US, Japan and South Korea, received the letter. I saw a copy of the letter that went to Indonesia. Uh, my question to you, Einar, Is this has to do with getting at BRICS more so than just tariffs?

Well, there are two points. I mean, first off, he sent these letters, but then separately he said there's an extra 10% on top of everything if you're in BRICS or you cooperate with BRICS. This is unfortunately for Donald Trump a tell. He thinks he's playing poker and that somehow he's in charge of everything, but the fact is He, uh, by saying, um, I'm going to attack BRICS, he's in essence admitting that he's afraid of what BRICS represents, which is a challenge, uh, to his policy of, you know, coercing, uh, people around. Now, many people will— I, I don't want to miss the question about Xi Jinping. I don't want people to say, oh, he didn't answer that. Xi Jinping didn't see the necessity of up going. He had met Lula twice. I think he was sympathetic to the fact that Putin could not attend because, you know, Brazil said they would enforce the ICC. And, you know, if you, you had a moment there where, you know, Narendra Modi was doing a 5-country tour, he was going to have a state dinner. It's not necessary for Xi to try to upend that. If anything, leaving the stage to Modi is good. I mean, it shows that this is a cooperative venture. It's not about who can drown out who with publicity and things like this, because the future of BRICS is about consensus. It has to bring everybody in. And the question is, how do you achieve that, especially when you're dealing with a very malignant, extremely aggressive, coercive force like the United States? And to a certain extent, a lot of shilly-shallying going on in Europe. They don't seem to know where they fit. They want to fight the US, but they don't want to make friends anywhere else. They don't seem to have a complete plan.

Very, very interesting. And we will get into more about India because I do have some stuff to say about India. I'll get into it later on. But for now, I wanted to really address this issue of Xi Jinping. Not attending. And once again, I want to share a clip with you, please, and I want to have your take into this. Please take a listen here.

Okay. Thank you, gentlemen, for being with me. Uh, Michael, I'd love to start with you. Um, but China's— by the way, guys, this is Michael and director of the China Center at the Hudson Institute, Miles Yu. Thank you, gentlemen, for being with me. Michael, I'd love to start with you. China's obviously very bellicose right now, very bold in their responses to the United States, very strong. But underneath it, it looks like China's economy and China's position shows some real weaknesses that will be exposed over the long term.

Well, that's our hope. That's the dream, is that the Chinese economy is really weak, that Xi Jinping doesn't dare fight a long trade war. That this will be over in another week or two, you know, no problem. It's not my view. I think the Chinese economy is going to grow at what they claim. They stick to their strategy of these high tariffs, still trying to attract foreign investment. It's worked for them for about 20 years now. My source of information is Donald Trump himself. Well, you may not think of Mr. Trump as a China expert, but he is. He's had 5 summits with Xi Jinping, some of them lasting 3 or 4 hours of conversation. He let me tape record his own comments on these 5 summits for my next book. So I'm kind of pro-Trump for that. But his view of the Chinese economy is not that it's collapsing, just that it's got some weaknesses. But I think he's in for the long game. This application of additional tariffs, various ways to hurt each other, not the tariff world, but other things that can be done. I think that's still more to come. I wish Xi Jinping would fold, but I think a lot of the people who advise Xi Jinping about America are telling him America is the weak country. America is about to collapse. The American political system is nasty and vicious to each other. We can manipulate that. So we've got both sides with advisors telling the leader, don't worry, you know, be tough. The other guy is weak.

I'm going to stop it right here, Einar, because it's a long— but we're going to detail into this. First of all, was that statement about China's being a villain cause here just because they took stand against the United States? I mean, what qualifies them to mention that the Chinese economy is collapsing because it's taking stand against the US?

Well, I mean, there are groups and people, Gordon Chang, who've been saying the same thing for 25 years. They've been wrong for 25 years, but it doesn't stop them. There's a whole industry based on, you know, saying that China collapse theory, and this is the year. So yeah, absolutely, there is, uh, you know, there's— this is a running, uh, joke that goes on within, uh, the United States and in other places in the world. So I, I discount that. I mean, this is Fox News. What are they going to say, you know, we're afraid of China because it's, uh, it's doing well? Um, no. They're going to do that. But, you know, some interesting things about what he said. I tend to agree. You know, here in Beijing, they tend to look at the U.S. They see a fractured, you know, society where you have police arresting people who are, you know, basically protesting a genocide. They have armed, masked policemen who aren't identifying themselves who are running around grabbing people off the street because they're immigrants. This is— and then the LA situation. I mean, this is not the signs of a healthy society. Then, on top of that, you have the record-high bankruptcies, the record-high number of people who are in default, whether it's for car loans, for their homes, personal loans, credit cards, or student loans. These are not healthy signs. There's real concerns, and that's why Donald Trump One, because no one had any faith that Kamala Harris had any real economic plan. She was just going to continuation of Biden's kind of, it's all great, don't worry about it. And, you know, he was supposed to control prices. He promised. He said, day one, I will be in the White House, I will control prices. And second, he made it clear MAGA was about not getting involved in foreign adventures, not spending billions and trillions of dollars on these foreign wars. That were not accomplishing anything. He didn't win any of them. So, he's violated both of those kind of third rails that were part of his campaign, and he's betting through this big, beautiful bill, which I see as a malignant, magnificently malignant mandate, that he can buy off the midterms. By, in essence, he backloaded all the pain that's going to happen after the midterm elections. The problem he has is that the moves he's made in terms of the tariffs, those are taxes. Those will be paid by the US citizens. Citizens. Also, you take away immigrants. What does that happen? That means that there are a lot of jobs that are going to either go unfulfilled, or they're going to cost more. Put on top of that the enormous amounts of debt, the increase in the premium that is paid, the interest that's going to be paid on that debt. I mean, the US is going out for over $9 trillion in the next year. That has to be refinanced. Right now, you have central banks around the world at the lowest level of holding US Treasuries. Since 2011. This is not a good sign for the U.S. That means the people on the outside, which accounts for about a quarter of the debt, they are going to be pricing in any kind of risk. Now, why do I say risk? Well, since Donald Trump has been in office, the U.S. dollar has gone down 10%. So it means if I bought treasuries for $100 today, they're worth less than $90. So that is, uh, things if people— and Donald Trump has said he wants to see the US dollar go down further, maybe 20-30%. If that happens, that means that if you invest in the US, um, treasuries, you need to have a much, much higher interest rate to take care of, you know, the loss of your original investment, plus you want interest. So we could be looking at a spiraling interest rate cost that could go 10%, 11%, 12%, 15%. I'm not trying to say that to be alarmist. I'm just saying that I used to do bonds. I was an investment banker. I know how people calculate their return, and this is a real possibility. So you add these things up, and Donald Trump, it doesn't matter what he does on the budget side. What he's done on the trade side and with the debt side is going to come back upon him.

Yeah, and we will detail more about the the big beautiful bill, because a lot of people have no clue what it's going to be doing to the American people moving forward. So I'll, I'll get into that in a minute here. So, uh, there's one thing I want to get your take on, and guys, I'm gonna put the link for you. This is from the remarks, uh, by Li Qiang, uh, that was just issued after the summit of BRICS. It's, it's very, very important if you get a chance to read it. Uh, I want to share this with you, Ayner. I would like to have your take on it. Here is what it says, and I quote: Over the years, Global South countries have grown stronger and become champions of and contributors to the reform and improvements of the global governance system. Standing at the forefront of the Global South We BRICS countries should uphold independence, act with sense of responsibility, take bigger steps to build consensus and synergy, and strive to be the pioneer force in advancing global governance reform. Uh, this is again, uh, this is from the Chinese Premier Li Qiang at the session on peace and security, the global governance reform during the BRICS summit. What do you make out of this statement, uh, Einar? And what does Mr. Qiang— what message is he sending to the, to the collective West, for that matter?

Okay, I boil it down to two words: consensus, which is, uh, the basis of, you know, the Chinese approach, and versus coercion, which is the basis of the U.S. approach. Uh, which, which one is more predictable? Okay, which, which one, uh, allows countries to pursue their security development while maintaining their sovereignty? Uh, and this, this is really what's happening with BRICS, is it's showing that there are alternatives, uh, to knuckling under to the 11-year-old playground bully who's trapped in a 79-year-old body. And this is the most dangerous thing to the United States at this point, because they're saying there is no world order without us, and that you have to, uh, you know, concede to whatever we demand. And, you know, you saw them— we all know about the letters, we've talked about, um, the constant tariff, uh, threats, sanctions, uh, bullying, uh, trying to get, uh, countries to agree to, in essence, target China. This is all part of a world that none— I can't think of any country, except maybe Israel, that supports this. So, the US is increasingly isolating itself, not only in terms of soft power, but in terms of its hard power, because the only effective way to deal with a bully, a powerful bully, is when the rest of the people on the playground said, no, we're not going along with this. You know, you don't want to play fair, we don't want to play with you. And this is something that many people in Washington are trying to calculate how this could pan out. Remember, I mean, Donald Trump is not an ideologue. He can switch, he can turn on a dime, as we know. Emperor Taco. And yeah, Emperor Trump always chickens out. Uh, but I mean, there's a lot of damage in between. I mean, that whole process is causing so much uncertainty. And that's when you start looking at Li Qiang's, uh, you know, he's the premier of China, he's number two, he runs the government. He's being very pragmatic about this. He's saying, look, there's a choice, and it's not simply, oh, we're going to ruin the US or target the US. No, it's just saying we have to gather ourselves, all right, find consensus to protect ourselves and grow markets outside the US because we have to de-risk. What an irony. The US was saying that the rest of the world had to de-risk from China, remember? Years they've been saying that. And now it turns out that the rest of the world needs to de-risk from the US, both financially, militarily, and also politically.

And it's becoming more evident, no more than in Europe. You know, how do you see Europe, Einar? How do you see Europe reacting, first of all, to this statement by Mr. Lee Chang? Because it's a message to me. I read between the lines. It is a loud and clear message as far as where the world is headed with this multipolarity. But how do you see Europe by itself? As you and I know, Europe is not as independent as we might have think. But how do they read this? Will Europe even move east?

Okay, so I mean, let's— Europe is not a cohesive whole. We got 26 parts that are going in basically every direction under the sun. But in addition to that, you have to separate, let us say, you know, the EU in terms of its leadership and the rest of the countries and the people. I think European people are— they've been trained through, you know, all these negative narratives about China to be distrustful. But on the other hand, they're dealing with the reality that the US is playing the playground bully. Trying to force them to, you know, basically turn over their lunch money. And this is causing this kind of disruption in their thinking, and they're trying to say, okay, maybe the US isn't our friend. But, you know, here you have a country that is agreeing to spend 5% on defense, while the US only spends 3.5%. The EU economy is actually larger than the US economy taken as a whole, which means that they would be spending much more than the US. We're talking a trillion dollars more above where they are right now. This, this is insane at a time when the EU is suffering economically, when they need to put money into education, into the digital economy, doing what they can with their universities and, and the strengths that they do have to, you know, be part of this new high-margin, uh, world that is coming with the digital age. Uh, instead, that money is going to be diverted to buy bombs and bullets. And guess, guess what? From whom? The majority of it will be buying from the United States. So here, here's, here's the, the funny thing about that. Well, We can't rely on the United States, all right, so we have to arm ourselves, and we will do that by relying on buying from the US. Does that sound any bit strange to you? And when I've talked to people at the EU, they said, well, you know, maybe we can develop our own defense industries and things like that. And I'm saying, well, yeah, but you don't have any choice. And once you're committed to certain types of military platforms, whether it's fighters or tanks or whatever, it's very hard to change. You don't want a situation where you have two different kinds of ammunition, uh, three or four different types of battle things, and, you know, different jet planes that aren't interchangeable things. And then there's this always this worry. The United States has not been coy. They've said, well, you know, we have a switch. We don't like what you're doing. The planes drop out of the air, the tanks stop working. All right, now they also accuse everybody else of doing that, but that is the common, uh, tactic— accuse others of doing what you are doing yourself. So, um, so they're always saying you can't trust the Chinese, they'll have a kill switch. Well, how about your kill switch? That's different. Yeah, so I mean, there are so many hypocrisies and very odd ironic things that are going on. Unfortunately, because of the amount of emotion that's being injected into this through these false narratives paid for by— guess who— the United States. The CIA is still in business. They're able to overcome— people don't think about, you know, common sense, like why are we arming ourselves from a country that refuses to defend us? Does that even make sense? I mean, if you ask the normal person on the street, what about that? They would be like, what are you, nuts? Why would we do that?

We would be doing that. So you're absolutely correct. And given where— which we will talk about this some other time regarding how many countries— I've read the reports, Einar, that some countries now are really taking a hard look at the Chinese weapon. They are considering purchasing this type of weapon. First of all, they are technically advanced, and second, they are affordable, and some countries are thinking in those terms.

Yeah, that's a trap. I mean, the way to peace is not— I mean, everyone, US always says, you know, the way to peace is through strength. That's nonsense. No. Every time somebody puts together a war machine, they end up using it. So, uh, I, I don't believe that, but I think there's something much more troubling here, David.

Yeah.

And that is, uh, what happened to Iran actually just increased exponentially the desire of countries, because they feel they have no choice, to have nuclear arms. Uh, conventional weapons, okay, so you're a small country, you buy a, you know, Chinese-made planes, and no matter how good they are, you'll be overwhelmed overwhelmed if the US decides to use it. I mean, it's asymmetrical, right? The, the wins for people who have fought with the US have not been on the conventional battlefield. They have been through guerrilla warfare, all right, waiting the US out. We've seen this, uh, in every country that the US has gone into. So this idea that conventional weapons protect you. No, I disagree. But now all of a sudden, because of what Trump did, every country is thinking, we don't have a choice, we need to have a nuclear button of our own, it's the only way to protect ourselves. That is dangerous for the world. So many countries, you know, are subject to this kind of populist democracy where, you know, countries can change very quickly. Radical groups who are very organized. They don't represent the public opinion, but they're organized and they sometimes can get into power. And you worry deeply about what happens if they do and they have a nuclear weapon.

Yeah, that certainly will change the equation and the calculus for everybody. So let's go back to talk about BRICS here because I have one particular statement that was from Lula da Silva, the Brazilian president, when he said, and I quote, "The lack of effective reform in traditional financial institutions has limited for decades the amount and type of credits multilateral bank can offer." End of quote. Yeah, I was going to say, Einar, is this in your opinion a hint to the financial structure that BRICS is moving forward towards?

Oh, no, not a hint. BRICS is moving forward. I mean, when BRICS was formed, remember back then, it was really about trying to say, look, we represent a huge amount of resources, industrial capacity, manufacturing, and markets, and yet we're not included. China in particular felt very, you know, said, look, you know, we're willing to contribute to the United Nations, the IMF, to the World Bank, but we need to have more of a say. We don't want to just give money without having some sort of, you know, better seat at the table. And this is true for the rest of them. They said the Global South is coming, but you guys are hoarding the power. It's kind of a white man's game, very European. Very colonial. And they, they continue to say, no, we're not interested in it. So at a certain point, BRICS shifted. They said, okay, if we're going to be denied access to the existing financial order, we will start addressing our needs through our own. So you have the BRICS Bank, you have BRICS Fund. These are all coming along, and they are the future. Because they provide the resources necessary to create the infrastructure, kind of like the Belt and Road Initiative, and also fund long-term social programs. I mean, one of the biggest issues that is out there is that there's a disconnect between private funding and expectations, which is, you know, 15 to 20 20 years at the most. I most want to do 5 years. And the social needs, if I start a program to increase my country's literacy, it is going to take 40 years to see concrete results. We know that it will come. So the question is, how do you, you know, deal with this gap between private expectations and the public needs? And these are problems that the IMF and the World Bank have not been willing to address. They throw a little money at it, they throw a lot of lip service, but in actuality, uh, the financing is not appearing. So I think this is an area where, uh, the BRICS can say, look, this, this is something— a certain percentage of what we are going to do is going to be this long-term financing, and we're asking the rest of the countries who are involved to be backers of this, because governments are forever, all right? Or as long as— depending on the political situation, but the countries continue. And the idea is that if there is this consensus that education, infrastructure, social development, the social safety net, having hospitals and the schools and the things that are necessary to deliver things, roads, connectivity, If there's a consensus this is necessary, there has to be patience to see it increase. Now, as an investment banker, I can tell you there are ways to make this profitable. You connect the return not to everyday interest, but you connect it to expected return based on the increase in GDP. I say GDP, I don't believe in GDP, but there are better metrics.

Better metrics for that.

Yeah. They can connect to in terms of real value, and that way they can do it. The second part is, and I think this is a very— well, there's two other parts. I think this is a very exciting thing, is that the BRICS could start helping each other develop these new bourses, kind of like OPEC. So there are four countries in the world that control 70% of the coffee trade. Coffee, right? Yeah, and there are 4 companies that control 70% of the coffee market. Guess what? They're not the same companies. Uh, the companies are Global South and that are growing the coffee beans, but the ones who are profiting extraordinarily, all right, are the European and American companies that control the market. And guess what? The price of coffee is going up And what's happening? The amount that they want to pay to farmers is going down. It's time for those 4 countries to come together and put together a coffee bourse, much like OPEC, where they price the coffee so that their farmers get paid, so that there's money there for development and also money to take care of the global climate change situation, which, you know, has been a joke the— there's always promises and short on delivery and delayed delivery and things like that. This isn't something you can delay. If they do that, yeah, it will shift the flow of funds that had been draining into America and Europe and make it more equitable. There are still huge markets in these places. There'll still be trade, but it has to be fair trade. The last part that I I mentioned is that we're entering a new era. The digital tools that are out there in terms of being able to reach interested parties, whether it's through social networks, etc., uh, will allow small and medium-sized business entities to come to the front. They can overcome the issues that used to prevent them from doing international trade because of letters of credit and complex solutions. Negotiations and being unaware of, you know, what the cost will be based on, uh, or what forms need to be filled out in this country in order to do this. All these things, now AI can do that for them. You have platforms that allow you to advertise, platforms that allow you to collect money. These will be, I think, the most important economic driver going through forward, and we need a new economic driver. I mean, if you look at the industries across the world, the major industries are controlled by just a few players, and they tend to tax people, not compete for their business. And it's time to, to put a little bit of the market back in. Uh, I think small, medium-sized enterprises, which are, oh, well over 50% of the world's GDP as currently measured, uh, they— 60% of the world's employments in China. They're 90% of new employments and 80% of existing employments. They contribute 60% of the revenues, uh, to tax revenues to the Chinese government. Imagine growing that at 20 to 30% a year. That is a new driver, and not— it's, it's one that helps everyone. And small and medium-sized business enterprises are able to sell into niche markets, they create jobs. If they, they make the economic multiplier work, and it works for people who are creative and have the gumption instead of just whether you have the money. Yeah.

Wow, 60%, Einar, that's, that's quite a high number. That's, that's, that's impressive if that is the return for that. So, and, and speaking of the, the You mentioned the AI aspect of it. I just read, and please correct me if I'm wrong, that Huawei now is going to be involved in AI development of sort, and we all know what it means moving forward. How is that now going to shape that, that kind of trajectory between the US and China regarding the trade tensions?

Well, I mean, Huawei represents the pinnacle of of Chinese investment in R&D. They were consistently, year after year, putting 50% of their profits back into research and development because they saw that as the future IP. That's why they were, you know, they participated in the issues regarding the standards for 5G. They understood how the game was played and they got involved. This attracted the ire of the United States who said, "This is unfair. We don't want Chinese companies in here doing better than us." Because remember before Huawei was always, "Oh, Chinese, they're not creative. They don't have an original thought. All they can do is copy our stuff." And all of a sudden the tables turned and the US was at a loss. So, what do they do? They don't reflect, and say, okay, we need to compete better. We need a Sputnik moment. We need to double down on our research and development. Uh, and, and this is something, uh, that's very important. When Donald Trump came in during his first term, he introduced a series of tax cuts. In order to pay for them, he took away the deduction for research and development because you used to be able to deduct it in the year that it was incurred. And that employed tens, if not over 100,000 jobs, highly paid research and development people who were in the United States. And he got rid of that. And as a result, those people went away. Now they're returning that in this big, beautiful budget or whatever you want to— massive calculation. Um, but that's, that's good, but it may be too late. Hiring these people, a lot of them have gone overseas. They've done exactly the opposite of what the US has needed. So right now, the US needs to come to terms with its future. Do they want to pursue an economic policy of reindustrialization, which would do what? It would increase the industrial capacity of the world, which means that there would be a dogfight for market share. The US is not in a position to go toe-to-toe with India or Indonesia or China on a cost basis because the differential in labor costs.

Yeah.

And even if you did do that, it's low-margin business. All right. Yeah, you can say the chip business is good, but that's just one small segment. The rest of manufacturing is low margin. So, they're— Donald Trump's idea is, "Let's pursue that." So, low margin, over $2.5 trillion would be necessary. No one talks about where that would come in order to build this out. We're talking about an effort that would take 10 to 15 years, and as I said, at the end of it, make the US less competitive. Or, the US could have said, "Look." Let's double down on the digital economy. It has high margins, creates the future, it's IP, it works well with our educational assets and our ability to attract some of the best and brightest people in the world with this idea of free— I mean, open opportunity. So they've rejected that, in essence. So that means there'll be less money. If they do any of this industrialization, it means less money. For digital side. And that will, in the end, really, really hamper the US until it realizes it's gone in the wrong direction. It's similar to what happened 35 years ago when the US said, "Oh, let's get cheap money and help Wall Street as opposed to— and sacrifice our manufacturing." It was the wrong decision then, wrong decision now. And unfortunately, Donald Trump is doubling down on it because he doesn't see the future. All he sees is the past and he wants to return to it. But as they say, you can never swim in the same water twice in a row.

That's absolutely correct. And that is more evident now regarding— I mean, I know some will disagree with me if I am to use the term Donald Trump's economic policies and plans, it has been clear to me that it's a threat to the sort of the, the foundation of what we call the American prosperity. That, that's became clear to me, and I'm not an economist, but at least it became clear to me when you start to realize that the U.S. deficits now reach, which is about 6.7% of GDP over the past 12 months. And every citizen has no idea what lies ahead moving forward. And this is why I'm starting to realize, uh, Einar, uh, and please correct me if I'm wrong, so, uh, I'm starting to realize what Trump is doing regarding now, for example, for BRICS. You know, this is like a war on BRICS now because it's almost like doesn't want American people to see what the alternatives are.

Well, it's not a question of letting the American people see. What he wants to do is show them that we're tough and strong and we can, uh, you know, coerce the lunch money out of all these countries and they're there to support us. I mean, everything Donald Trump says from the day he gets up in the morning to the night is about the victim narrative, that America, the richest, most powerful, uh, country in the world has somehow been the victim of countries in Africa who can't feed themselves. People have immense shortages. Now, it might work for the US because there is a feeling, and justifiably so, of loss. Consider this. 1971, not so long ago. I was alive then. US had 61% of its population as middle class. Fast forward to last year, it had been reduced to 40%. 40%. And now people say, well, there are a few percentage points of people who went into the upper middle class. That's a fallacy. The fact is the vast majority of people fell down. They're no longer in the middle class. They didn't graduate to the upper class. They are simply low poor. They're on this line. And of course, Of course they're unhappy. Donald Trump phenomena is because people feel betrayed by the existing parties. I've talked to people countless and they say, "Well, I don't know what's going to happen. I don't care. I think Trump's smart, and I don't trust Democrats or Republicans. They've basically been screwing me since the day, for the last 35 years. I haven't seen real increases in my income." wages, my kids don't have a bright future, the country seems to be going to hell. And, you know, depending on your viewpoint, you say, oh well, this isn't right, that's wrong. But, you know, we, we have a divided country, we have economic problems, we have political issues, international issues, and unfortunately all we have to answer them is a 6-time bankrupt convicted fellow.

Yeah, it's troubling. It's so troubling. And then to me, what makes it even worse now that these letters he's sending, it almost feels like, you know, what are, you know, any country, any country that aligns itself with BRICS now will be subject to these tariffs. You know, it's almost, yeah, it feels like, I don't know, who gives us the right to dictate Two countries, what to do?

That's never been an issue. I mean, who gave us the right to do what we did in South America, Africa, Southeast Asia, and Middle East? We're not really concerned about the right. Sometimes we have a justification, American exceptionalism, everything we do is for the greater good. We have to kill a whole bunch of people, that's okay too. I mean, we've lost our moral authority. And that's what BRICS represents. It's just a situation where we're doubling down on our failures, accusing others of what we do, all of these things. So yeah, go back to your original point of your question.

Yeah, yeah, indeed. It's so concerning. So now I want to get your take on, once again, I have to go back to BRICS because that's very, very important to understand. And, and the key aspects of it that I looked at, it was about Vietnam, Vietnam that was attending the, the summit. So when I look at the big picture, Einar, especially in Southeast Asia and so forth, you know, am I saying, am I seeing here the, that, that trajectory that is going, that's it, there is no alternative, there is no going back. So is this now underscoring really a significant shift in the global geopolitical and economic order in your opinion?

Well, okay, so what did Vietnam agree to? They said, well, we agree to 20% tariffs on anything coming out of Vietnam and we agreed to 40% tariffs on anything with something in it from China. Well, it's just not that simple. This is the U.S. effort to try to isolate China. It wants to have these deals with everybody. Whatever tariff you agree to, you have to double that if anything involving China. But yet, China's 35% of the world's manufacturing. If you care to, go back and look. The amount of increased trade between Vietnam and the United States is in direct proportion to the amount of trade between Vietnam and China. China. Vietnam imports goods, some things are assembled, some things suddenly become Vietnamese, and they get exported to the US. The US says, oh, we're going to see through that and do all these things, but it's a game of cat and mouse. You can't do it in Vietnam, they'll go to Thailand. If you can't do it in Thailand, Malaysia, Indonesia, any port of call. I mean, there's a lot of things going through UAE right now. Real questionable how much industry does UAE have? How could it be producing these types of things? Very interesting. And it's not against UAE, I'm just saying that People are going to look for any way to avoid another 20% tariff. So yeah, um, in terms of being a watershed moment, um, China is going to retaliate against Vietnam. You can't have it both ways, right? You can't be in the situation, well, we don't care, you know, it's going to be paid for by the American taxpayers. Well, that's fine, but in essence, you're going along, you're biting the hand that is feeding you, right? And that, that can't continue. And China cannot afford— and they've said, we will take a dim view and retaliate against countries that sign deals that are targeted against China. And that they have to do. You can't just acquiesce to it. So, uh, it's, it's going to be a friction point. Uh, you know, Vietnam will claim, oh, we're the victim here, we're caught in between these two big guys, we're just But let's go a little further. What's actually happening here? Well, a lot of promises are being made, all right? And, you know, you hear of all these corporations and countries tossing around, you know, billion, tens of billions, hundreds of billions, trillions of dollars of investment in the U.S. But then when you start looking at the actual deals themselves, subject to market conditions, depending on what we're doing. There are nothing, nothing really solid about any of these things.

Why?

Because everyone has learned from Trump's first term. He likes big numbers. He doesn't care about what happens afterwards. I will give you a perfect example. I was chairman of the Wisconsin International Trade Council that reported to the legislature and the governor. Shortly after I left, they did a deal with Terry Gou from Foxconn. He convinced them to take a whole bunch of farmland that he had bought and rezone it. I was chair of my city's zoning appeals board. I can tell you, he took farmland that he bought for $400 an acre and then turned it into industrial land that was worth thousands an acre. Why? Because the state put in rail, roads, sewer, water, power, and rezoned it for industrial. So huge amount of money went his way, and he promised 13,000 jobs. Well, you know, right now it's about 1,300 jobs. They're not— most of them are not— have nothing to do with Foxconn. He just turned it into an industrial park And he lures people in because he has very cheap land, all right, cheap opportunity. And he also— anyone who goes there is eligible for tax breaks from the state. So he, he did a terrific deal. Did— does Trump talk about that? Does he go back and said, oh, we were bamboozled by Terry Gou and Foxconn? No. He doesn't. He just goes on to the next thing. Who's going to give me a big boxcar number? All right. I'll go with you. I mean, I'll give you another example, and I've used this before. Donald Trump for 18 years has complained about the American healthcare system, what he calls Obamacare, right? He was asked shortly before the election, what's your plan for the healthcare? And his answer was, I have a framework of concepts.

I might—

he might as well just said, I have no idea, right?

That's basically what it is.

Well, yes. And then, then we get to this big beautiful bill, and what does he do? He's cutting Medicaid. I mean, is this the, the solution everybody wants? Putting another, uh, 12, 12 to 13 million people out of, you know, any kind of medical insurance or payment plan? Cutting the benefits for the elderly who are counting on them. I don't think this is a cohesive plan, but this is emblematic. He doesn't— he goes in things where he can make a big statement, try to garner a lot of attention, get some, quote, deals, but then there's no follow-up in terms of what actually happens. The things that he's negotiated aren't going to happen. It's such a small impetus. Yeah, infinitesimal amount of them will actually be created because look, we all know in 3 and a half years, despite his thought that he's going to run for a third term, uh, that he's going to be gone. All right, quite possibly after the midterms he could lose his mandate and probably will. Well, definitely will in my thing. They used to run elections. I can calculate these things. People unhappy because prices are high, they're not going to reelect the same guy. And, you know, so the political risk is that the new guy comes in and says, oh no, no, let's reverse all that stuff. Well, I, you know, here I put, you know, billions of dollars in investment in, and all of a sudden the political— that's called political risk.

A risk.

And no company that I know is are willing to take that risk unless they're in the defensive industry, which is pretty safe and always growing.

Very, very interesting take. Very interesting take. Uh, I want to get your opinion, Einar, because I can't let you go without having your insights on the big beautiful bill. And the reason what I wanted to ask you about this is because one specific sentence that keeps coming up, and I've been watching since the, the, uh, the ceremony when he signed it on July 4th, it's been coming up that's saying this bill is a win for China, you know. And I'm like, hold on a second. First of all, let's put the dots on the letter, as we say. And there is one specific aspect that I want to get your take on, and this one has to do with the natural, uh, the rare earth minerals and so forth, because because China dominates the market. So, and my conclusion, I know, and this is my opinion, my conclusion is that because we couldn't compete with the Chinese, we decided to go that route by saying to the Chinese, you could have this, but we need to work out something else. Will I be wrong in this assessment?

Well, it's an assessment on a day-by-day, um, basis. Remember Donald Trump, in his autobiography, has said many times, since I wake up every morning and I try to maximize that day, I don't think about tomorrow. Yeah. Just what can I get done today for that day? And that is his approach to politics. He doesn't really think about the future, as I was describing earlier. In terms of the big, beautiful bill, everyone keeps talking about how China's going to take advantage of this. Well, I think you should look at it as the United States is running blindly towards a cliff. China isn't going to— you don't— China doesn't need to push the U.S. off the cliff. It's running there itself. What they're doing is completely amazed that Donald Trump is doing, uh, everything that they could never do. Yeah, they would never have thought of alienating Mexico. Mexico, and Canada. They would never have thought of undermining the relationship between Europe, South Korea, Japan, and all these other allies. That wasn't even something that was in their playbook. They just said, "Well, they'll make their own choices." Now, Donald Trump is forcing all of them to confront the fact that he's playground bully, and he intends to take their lunch money, and they don't like it. So, China is sitting back. Slow playing this whole situation. Remember, Trump keeps saying, we signed a deal. Well, they signed a framework under which they will try to, you know, settle things, uh, to work out deals. Now, Donald Trump thinks that every time, for instance, that the U.S. says, okay, we'll lift certain restrictions on semiconductors, you list restrictions on rare earths. But then Donald Trump does this thing where he attacks China on some other level, whether it's through BRICS or through Huawei, through putting more people on the restricted list, more companies on the, you know, do not come here list, uh, TikTok, you name it. And he thinks, okay, we have a deal over there, this is a separate deal. But that's not the way that China looks at it. And they're saying, you have to deal with this guy for 3 3.5 years. There's no point in trying to rush to a deal, which right now they're saying maybe in September we'll have something. No point in rushing towards a deal because as soon as you've done a deal with Donald Trump, the only thing you know for certain is he'll come back with a new deal. With a new one. Mexico and Canada found that out the hard way. Remember the superlatives he was using to describe The economic deal between Mexico, US, and Canada, best, most beautiful bill, everything. Comes back 4 years later, they're cheating us, we got to undo this. He doesn't say who created it, who concocted this mess. He just said, no, no, no, no, they're cheating us. So, I mean, no one believes it. So what is China's response? Slow play him. Draw out the negotiations, let him keep running off the cliff, alienating everybody, isolating the US. That's up to him, has nothing to do with China. And instead, step in where necessary. Like in Africa, USAID was providing HIV medicines to millions of people. Yeah. And this was stemming the epidemic and the spread. Uh, China quietly stepped in, when the USAID walked out and has been providing those medicines. You know, China is, is, it's not— is filling in where it sees a need. It's not strategic, it's about people. And that is something the U.S. doesn't understand. They see any, anytime you try to help somebody, it's what's in it for me. You know, what's in it for us, the world, and doing it. So My short answer to you is expect a phase 2. Why a phase 2? A phase 2 would be an agreement between the US and America where China would say, we'll buy energy and agriculture and things that you allow us to buy, and in exchange you'll drop a lot of your tariffs and blacklists and stop harassing our companies. Well, If they can reach that agreement, it's transactional. The moment Trump violates the agreement, they stop buying. So he has to put that into his calculus, and they're hoping that he will move on to other things, uh, do whatever it is he's going to do, because we know he's, he's uncontrolled. He will just react on a daily basis. So it's really about outlasting him, not, not trying to antagonize him. But trying to manage the relationship, try to be the adult in the room dealing with an 11-year-old throwing a temper tantrum in the middle of a supermarket.

Will the financial aspect be part of that picture, Einar?

What do you mean by financial aspect? China is not going to buy more treasuries, no.

Okay, that's what I was getting at.

Yeah, it's too risky right now. Budget deficit, uh, debt has gone above $37 trillion, right? You add another $5 trillion on for, you know, his authorization, he can take, he can take it up to $42 trillion without having to go back to Congress, without having to raise the debt limit. And he plans to use quite a bit of it. He's assembling a war chest. He believes that with that extra money and with whatever money he gets from tariffs, which would be in hundreds of billions of dollars, but it's still not enough. He's still taxing the people. You can't take— if I go to you and I take $10 out of your pocket and then I say, oh, here's $5, you'd be like, wait a second, I'm worse off. What's going on here? I think you've swindled me. And that, unfortunately for Donald Trump, is going to be his what comes back to bite him, especially during the midterm elections. And people say, well, whatever you did, it didn't help me, it actually hurt me. So, going— and no country right now, as I said before, the holdings of central banks of US Treasuries is at the lowest point it's been since 2011. And that's not going to change. You're seeing more gold buying, you're seeing more direct currency swaps. You're seeing BRICS trying to have an alternative settlement mechanism. And that's going to continue. It's not because they have to de-risk from the US. And why are they de-risking? Because the US is forcing it.

Yeah. And I'm going to ask this question, Einar, because I'm going to think outside the box. Will we be able to see a common currency in Asia? Will I be thinking too much here?

No, I don't, I don't think there'll be a common currency in Asia. There are problems with that. We've seen that with the EU. You cannot have monetary without fiscal, uh, you know, unity. But what you will have is a robust exchange mechanism that allows— especially when I, I talk about small, medium-sized enterprises, they're not in business to take risk on forex, you know, the ups and downs of the market. So, they can enter into settlement mechanisms that it can be guaranteed by financial resources. So, in essence, I say, "Okay, I'm going to pay you X in your currency." You say, "Okay, that sounds good." And then, there has to be a way of guaranteeing that. And I say, from my side, "Okay, the strike price is you get $100 US dollars, and I'm buying it at not dollars." whatever your local currency is. Uh, in Thailand it would be baht. Uh, I'm gonna give— we strike a deal, so much baht for so much renminbi. And then, uh, the risk on that can be taken up by other entities, by financial entities, and they can earn a fee on that. And that would completely do away with this need for the US dollar. And I think, uh, the BRICS Bank, uh, will continue to go that way, but each country needs to have its own currency. Expect that there will be digital currencies. I think China is going to lead the way in terms of the mature product that allows it. There are a lot of very good reasons for an e-currency. First off, it really cuts down on corruption. You can't explain how you got it, you can't have it. It also allows It also allows, uh, you know, uh, countries to collect revenues, tax revenues at the point of transaction. So no waiting, no hoping you'll be honest. It'll just be, we know what this transaction is, collecting revenues. I used to be in charge of my city's debt commission, and, you know, we were always concerned about revenues. We had to borrow and estimate what the tax collections would be, and you can never be 100% certain. This way you have a real-time dashboard of what's coming in, which helps you in your budget process. It also gives you trend lines and things like this. And it really cuts down on fraud. It cuts down on anybody who's trying to get money out of you illicitly because you can trace all of the transactions in its real name. So it's very, very difficult. So it's a great boon to consumers, certainly to governments. People will say, oh, but I lose my privacy. Well, if your privacy consisted of hiding money, I don't think you're entitled to it.

And we all know how that works. Well, Einar, I can't thank you enough. I can't thank you enough.

Thank you for having me on.

For your insights, really, because I really get happy when the community learns something, literally, because that's my objective for all this, is the knowledge for the community and especially coming from you. So I'm very, very thankful to you for carving out time for us here.

I thank you for the questions because I noticed that whenever I speak, I learn nothing.

Ah, well, I kind of thank you. Yeah, of course, it goes both ways.

Manner.

Uh, for you guys, by the way, you need to go to the Tahi Institute. They have some writings there if you want to educate yourself, whatever. I'm gonna put the link for you in the chat box, this one, just on the, uh, and this way if you want to read up a little bit on, uh, what the Tahi Institute does and so forth, you'll find most of the information over, over there. So The other thing is also you can, uh, access, uh, Einar, uh, in, uh, articles on, uh, LinkedIn. So I'm gonna put the link.

Actually, yeah, um, Substack is probably a better way. Yeah, Substack. So it's Asia Narratives Substack. Yeah, okay. I have different articles. It's not all as, as serious as here. Sometimes I try to mix it up and have something positive to say or examples of things like that, but it is a lot of the same, uh, okay, points that we've been discussing.

Well, great, because I really would like the community to really broaden their intellectual horizon here in understanding and hearing different perspectives here. Because, you know, like I— like we talked today, I know everybody's saying, you know, those emanating from Washington, or the Chinese economy is down and this and that, and when in reality has nothing to do with it. So I'm glad you, you kind of counter that with, with facts, uh, that the community can, can learn from. So, so once again, on behalf of the entire community, Einar, I say thank you and much appreciate you being here.

Thank you, David.

My pleasure. All right, guys, hope you all enjoy listening to Einar. As always, next time I'm going to have him with Uh, uh, Warick Powell together. So we'll have like sort of a panel so you guys can even— it will be more, more interesting, uh, to hear from both of them. Uh, once again, remember tomorrow to join me for the live stream, uh, on, uh, at 12:15. I'll be talking about an update regarding the Houthis, and something just happened in Red Sea and in Israel as well. And on Thursday, I will be having my conversation with, uh, with the, uh, uh, Warrekh, uh, Powell. So it will be here on, on Thursday. Uh, quickly, I want to say thank you to Noel, much appreciate you for your Super Sticker, truly appreciate you. Okay guys, I wish you a good day, good afternoon, good evening, whatever part of the world you're in, and I look forward to seeing you next time. As always, remember, geopolitics impact your daily life in more ways than one. Till next time, guys, bye-bye.