12/19/2022 - Carrie and Mark Predict the Future

[PIANO MELODY] [FUNKY MUSIC]

CARRIE NORDLUND: Hello from the Watson Institute for International and Public Affairs. It's Mark and Carrie.

MARK BLYTH: Indeed, it is. It's Mark and Carrie does the news with the sort of weird new intro that they made us do. But that's OK. So the World Cup, hello.

CARRIE NORDLUND: Yeah, I'm assuming you watched?

MARK BLYTH: Oh, yeah. It was really-- we talked about this on the last pod, that I felt totally conflicted. And then I realized that hypocrisy was the way to resolve the contradiction.

CARRIE NORDLUND: [CHUCKLES] Yes, totally.

MARK BLYTH: And I happily resolved it through hypocrisy as everybody else did. It's kind of worked out pretty well for Qatar. The way you saw this at the end-- you saw the game. Did you watch the presentation ceremony afterwards?

CARRIE NORDLUND: I watched a little bit of it. But I just had to say, as someone who knows zero about soccer internationals, not really anything-- I mean, I call it soccer-- I was really enthralled with it. It was super exciting. Again, I think that Pele still plays for-- I don't know for even what country. But he's the only soccer person I even know. So I was-- I thought it was really an exciting game.

MARK BLYTH: Yeah, it was an incredible game. But what was also incredible was watching the presentation seen afterwards, where three things happened in a row.

CARRIE NORDLUND: Yeah.

MARK BLYTH: The first one is, you get this canonization of Messi. Literally, the sort of the ruler of Qatar or his underling puts this giant cape around him, which is just weird.

CARRIE NORDLUND: Oh, jeez.

MARK BLYTH: And then you had-- [LAUGHS] you had this brilliant moment where they have the Golden Glove, which is the goalie of the tournament. And they gave that to the Argentine guy, who then proceeded to tunnel his giant hand prize into a kind of like phallic gesture towards the entire stadium, which was a wonderful way of summing up both sides of the World Cup and not regard.

And then there was the weird sight of Emmanuel Macron, who turns out to be only about 2 inches taller than Messi. That was the best-- that was my revelation. I was like, holy crap! He's really short. He's hugging Mbappe as he's going past. And Mbappe-- it's just pure like-- sort of like, I'm consoling Mbappe.

And it's just like you were so ingratiating yourself for a publicity shot. It's ridiculous, right? And Mbappe didn't look into his eyes once.

CARRIE NORDLUND: Oh, really? Wow.

MARK BLYTH: He just stared right ahead. So then you get this brilliant sort of shot at the end, where you've got Messi on one side, and Mbappe on the other side, and then some dude from FIFA. And you think about what Qatar-- what does Qatar got here?

Well, Qatar got the sports-wash its way through one of the greatest World Cups ever. The whole sort of controversy over the workers and so on and so forth really got shoved into touch. And they managed to squash that ball. And what you're looking at when you look at the scene is the triumph of Qatar. And I'll explain why.

Both Messi and Mbappe play for the same team in Paris, Paris Saint-Germain, which is owned by the Qatari Sports authority.

CARRIE NORDLUND: Oh, jeez, wow.

MARK BLYTH: So they set up the battle of the titans that they both owned.

CARRIE NORDLUND: Yeah, wow.

MARK BLYTH: I was like, wow, that was pretty amazing. So it's not that that kind of took the shine off. I don't want to go on that kind of moral high ground because, of course, I have no moral high ground at this point. We've established this. But it was this moment of like, wooh, global capitalism in sports, what a marriage.

CARRIE NORDLUND: Well-- and so I was watching Fox Sports.

MARK BLYTH: Oh, you poor thing. I was literally stealing the British commentary off of the internet and then playing the Spanish feed.

CARRIE NORDLUND: Oh, interest-- so you were getting even less of the sports-washing because the Fox commentators-- and there's an article in the paper about this as well-- we're going on about how it was like the best put on World Cup because, of course, Murdoch owns Fox. So it was just basically Qatar should host it for the rest of time. And these wonderful leaders, like have been the best--

MARK BLYTH: The authoritarians we like, yes.

CARRIE NORDLUND: Yes-- oh, and it's been so well organized. And look at all the fans that are there. And it's just so incredible. So I thought that was-- I thought that was interesting. On a different thought, I'm curious what your perspective on this is. It looked to me that the entire French team is Black.

MARK BLYTH: Well, no, they're not. For a start, no, that's not true.

CARRIE NORDLUND: Or the majority?

MARK BLYTH: Yeah, the majority on the field. But that sort of-- this is what's happened across loads of European teams, is you're drawing-- soccer traditionally draws from, if you will, the poorer strata of society. And as that poorer strata of society becomes more and more immigrant-based, when you think about who you're going to get coming through that talent pool-- so if you think about England, you've got Harry Kane. But you've already got Bukayo Saka who's there.

So I think this is something that's not unique to France. So there's this kind of drawing from a more diverse pool at the bottom. And it's one of the real virtues of soccer. So there's a really interesting socioeconomic story in that observation, I think.

CARRIE NORDLUND: Well, and the Argentinean team has more homegrown talent. Is that a fair statement or no? I mean--

MARK BLYTH: Well, they're all homegrown. They need to be citizens to some degree or shape or form. It's just that Argentina, unlike Brazil, was primarily a 19th century European settler society as opposed to having that longer history, one which included a history of slavery, which is what you get in Brazil.

So Brazil's far more ethnically mixed because of that, which is one of the reasons that basically the Argentinians bug the rest of Latin America-- because they think that they're actually different from the rest of Latin America. And in a way, their lineage, et cetera really is. They regard themselves as the Europeans that eat steak three times a day.

CARRIE NORDLUND: Right, that's right, because Buenos Aires is like the Paris of South America.

MARK BLYTH: Yeah, I don't know if you saw the shots of all the Argentines in the main sort of drag and down there. It was amazing. I've never visited, and I've always wanted to. But it does look like a pretty amazing city.

CARRIE NORDLUND: Yeah. Well, so I've been there a couple of times. And the one thing I will say is that when you fly in, you land and you feel like you're in Cranston, Rhode Island only because there's a Walmart. And there's just several American chain stores. And you're like, oh, shucks. I just flew all this way, and there's a Walmart.

But did you also see who else was in attendance at the World Cup game in one of the boxes? I'm sure you saw this.

MARK BLYTH: What was that?

CARRIE NORDLUND: Elon with Jared Kushner.

MARK BLYTH: Elon and Kushner were there?

CARRIE NORDLUND: [CHUCKLES] Yeah, yeah.

MARK BLYTH: I thought he was too busy screwing up Twitter.

CARRIE NORDLUND: I know, right? He-- no, he-- well, he can do both maybe at the same time.

MARK BLYTH: Well, obviously, he can. It is one of those things where, is there a kind of curse of success here? And so I've spoken before about the billionaire curse, which is you have no margin for failure because you have always got a big cushion of money to fall on. So that's part of that.

And although he's now being sued by Tesla stockholders because they're undervalued-- basically, you're causing a collapse in the value of Tesla because you're dumping so many on the market to fund yourself destruction of Twitter. Now, this is a guy that made SpaceX rockets profitable. This is a guy that basically said, I'm going to do electric cars. And everybody laughed at him. And he's still got the best brand and the best mark.

So there is an idea that he is the genius that can do something with Twitter that nobody else can. But it could also just be an astonishing act of hubris, that he has no idea what he's doing. And he's literally about to bomb 3 or 40 billion in cash.

CARRIE NORDLUND: So there's a theory out there that he is trying to devalue or-- this is how I understand it-- make it so Twitter is worth a lot less, so he can cut his losses on this and essentially make it so the money that he owes to the banks as opposed-- they'll take $0.10 to the dollar as opposed to $0.05 to the dollar or something on the debt.

Does that make any sense to you? Or is it-- is that part of that evil genius thing? He's trying to drive it into the ground so that he doesn't owe as much money on it.

MARK BLYTH: He doesn't strike me he's the type of guy that engages in voluntary bankruptcies.

CARRIE NORDLUND: That's it.

MARK BLYTH: I just-- I don't know. He's going to try and do something with this. Whether he knows what he's doing or not, I don't know. The stuff he's been pulling with Twitter, banning journalists, about doxing people who-- people who give real-time locations-- in other words, him and people like him-- that sort of stuff. It's very much in flux.

I'm still using it because as we've established, I'm a hypocrite. But I got to say-- and this is a common thing that I've seen-- I'm using it less.

CARRIE NORDLUND: Yeah.

MARK BLYTH: I'm just-- I don't go up myself, oh, I'll go on Twitter now. I just know it just doesn't happen anymore. If I have something to post that I think people are interested in, I'll send it out. But I don't feel like engaging with the platform anymore. It's got to sort of maladroit about the whole thing, though.

CARRIE NORDLUND: Are you looking for a different-- are you looking at any different ones? Or you're just in--

MARK BLYTH: Oh, the thought of-- the thought of sort of transferring everything and doing-- I want to spend less time doing this. Maybe it isn't a catastrophic blowup. Maybe this is just an opportunity for all of us to remember that Twitter isn't real.

CARRIE NORDLUND: Yeah, yeah.

MARK BLYTH: Right? The metaverse doesn't exist, that there are real people out there with real issues and real things. And maybe we can engage with them.

CARRIE NORDLUND: Yeah, yeah, I hear you. Speaking of real things, since we last spoke, Sam Friedman-Bank-- Bank-Friedman was arrested in the Bahamas.

MARK BLYTH: I know.

CARRIE NORDLUND: So much for MIT, Stanford Law parents, all of that, even they can be arrested.

MARK BLYTH: Well, apparently, the both sets of parents-- him and his erstwhile girlfriend-- sometimes squeezed in the penthouse, which was a big orgy fest apparently modeled on an imperial Chinese harem. There's an article about this.

CARRIE NORDLUND: I mean, that is--

MARK BLYTH: Pretty mental.

CARRIE NORDLUND: How about stereotype?

MARK BLYTH: I know. It's just like-- it's all so wrong. What is it about super rich people that they all become not just racist, they become biological racists?

CARRIE NORDLUND: Yes.

MARK BLYTH: Right? They start to get fascinated by things like the Hindus and stuff. You're like, where are you going with this?

CARRIE NORDLUND: It's happening, right?

MARK BLYTH: I know. Anyway, so yeah, so apparently both sets of parents are now voluntarily retired. In other words, they're getting a lot of time. And yes, their progeny have been exposed as essentially giant fraudsters, who had no idea what they were doing, taking people's money and just burning it. Seems to be the case.

CARRIE NORDLUND: Well, and I had heard something on a podcast somewhere that the girlfriend is now getting her own legal representation. And of course--

MARK BLYTH: I'm sure she is. [CHUCKLES]

CARRIE NORDLUND: Right? Yeah, I'm going to pretend-- I'm looking out for number one here, yeah.

MARK BLYTH: Well, think about it, though, because the dumbest bar strike. I always look back upon prior episodes of financial shenanigans. And the weird thing about Two Thousand-Eight was because it was so big, there was no one person you could kind of pin it on and become the poster child for it.

And once one goes, the other one goes. So you go about a savings and loans crisis. People don't know there's 5,000 bank executives and savings and loans executives went to jail because of that-- 5,000.

CARRIE NORDLUND: Wow. I would not-- yeah.

MARK BLYTH: Yeah, Two Thousand-Eight, none-- maybe one bloke from Goldman who wrote stupid emails. If you go back to the dot-com bust, that's fascinating. Who is the person who went to jail that allowed everyone to say-- that's it, we've dealt with it. It's all over. Do you remember who that was?

CARRIE NORDLUND: No, I don't. I can only think of Martha Stewart insider trading.

MARK BLYTH: That's it.

CARRIE NORDLUND: Oh, is it Martha? OK.

MARK BLYTH: It was Martha Stewart. That's it. She was the only-- she was the poster child of it going-- and we thought that the poster child was going to be Elizabeth Holmes.

CARRIE NORDLUND: Right.

MARK BLYTH: Right? She has gone down for some serious time. But now they've got an opportunity to really get a grip and just go, this is what happens if you play with fire. So I think these prosecutions are going to be extremely serious. All right. So anyway, that's all the fun about orgies and hierarchy and Chinese harems.

Let's talk about something pure-- politics. What happened with those midterms that were super important that we've all forgotten about?

CARRIE NORDLUND: Well, yeah, there was an election 2 weeks ago-- 2 and 1/2 weeks ago that we've all forgotten about. And that is Raphael Warnock won the Senate seat in Georgia against Herschel Walker. So that means that the Democrats have the Senate, 51-49.

The House was finally settled. Those two last races hanging out there settled. So the House is going to be Republican, 222 to 213, so just a 9-seat advantage in the House. And then right after Warnock wins, Kyrsten Sinema, the senator from Arizona, decides that she's going to be independent.

I didn't read any behind the scenes accounts. But you'd have to think this was clearly orchestrated, that if this happens, then this happens. Though, when-- maybe she just decided to go her own way and do her own thing. But I do kind of wonder--

MARK BLYTH: Could it be as simple as she just doesn't want to face a primary?

CARRIE NORDLUND: Well, yeah, yeah, because I think she was going to if she was Democrat, yeah.

MARK BLYTH: Right, exactly because they really didn't like her. And her own staff was leaving in droves. So you just hold on to the asset as long as you can. I love the joke that said, when Kyrsten Sinema announced that she was going independent, most Democrats were shocked to find out she was meant to be a Democrat.

CARRIE NORDLUND: (LAUGHINGLY) Yeah, that's true. That is true. I do wonder if Manchin's next. But then I think, I don't know if anyone-- if he goes independent, does that help? I mean, to your point, is there any political advantage that--

MARK BLYTH: Right. Nobody's going to primary him down there. He's fine. So he's not facing that one. But yeah, so we're back to basically almost the same kind of equilibrium we had before, where the switch in the House is very narrow.

But you just thought-- you tell me, are we going to now get everybody jumping in and say, and now, we need to do Hunter Biden Volume 7? Is that going to be what they're going to be occupied with next year?

CARRIE NORDLUND: Yes. And I think it will be-- Biden will be impeached in the House. It won't go anywhere in the Senate. But I think that's the number one thing on the Republicans' to-do list.

MARK BLYTH: What would be the grounds for impeachment?

CARRIE NORDLUND: Unclear. We talked about this-- maybe something Ukraine. I don't know how they'll-- will they try to wrap in Hunter Biden's laptop?

MARK BLYTH: Yeah, they'll have to have something. It has to be some kind of gun that may have originally had some smoke in it because basically, we don't like you. And we didn't want as much as we wanted, seems to be a pretty weak reed to run that one on.

CARRIE NORDLUND: You are correct. And yeah, here's the thing that I do wonder, after the bloodbath of deciding who the Speaker of the House is going to be and whether Kevin McCarthy is going to win, is that if, in fact, they do go in that way-- I mean, it's a total misread of this election.

I don't know if anyone-- if any of the true believers on the Republican side really care about that. But it does seem like the voters are saying, we just want to move on from this. And we actually care about the kitchen table types of issues.

MARK BLYTH: So here's a question for you then, Carrie. This week, Trump issued-- and they all sold out-- superhero figurines or trading cards or whatever. And he made quite a bit of cash off that. He's still immensely popular with the base. But it seems that the party is no longer fully in lockstep behind them.

Where do you think this is going? Has he kind of like stale at this point? Is that-- or is it just a question of, he just needs to wait until it gets close to election time and ramp it up, and they'll all just fall on top of him again?

CARRIE NORDLUND: Well, I think it's a little bit like relevancy, so to stay relevant, like Elon. I think part of Elon is saying he has to stay in this conversation and keep doing crazy stuff just to stay at the top of the conversation. And I think Trump has to maintain that relevancy in whatever way he can.

But the other thing is that I think big donors have left Trump and are like, we don't want to do this anymore. Ron DeSantis or whoever seems reasonable to us. And so he's losing some of those big donors. When we talked about this lapse podcast about the Murdoch family, that they're not supporting him anymore.

So it's-- Trump will always get-- he's got to do a big rally. He's got to get big-- get a big crowd. But once the donors leave, you wonder how he can maintain his relevancy. Unless-- he kind of has to keep doing the crazy stuff, like Elon.

MARK BLYTH: And also, what he had-- what he had last time was he had the shock value of saying things that nobody else was saying that was kind of obvious, like, you shipped your entire industrial base to China, and now they're screwing you back. What do you expect? People care about immigration. I'm willing to talk about it. Nobody else is.

And that was his real strength, was the ability to basically, in a sense, walk into a coalition that had already been formed, identify with that, and then just walk out with the support. It's not-- the world moves on. It's not clear that that works the same way. Coming back and just going, China, China, again, is that really going to do it this time? Is he capable of a reinvention?

CARRIE NORDLUND: Yes. And can looking backward the Twenty Twenty election exactly to what you just said, is that-- does that have any power? I don't think-- people want to look forward. They're like, OK, Twenty Twenty, sorry, sour grapes. I just-- I'm not sure that that's a particularly powerful message.

MARK BLYTH: I feel exactly. So other things, thinking about this year in review, it's not been a great year for authoritarians in general. A quick tour of the globe, China-- well, it turns out they're like-- you can piss off the Chinese people enough that they'll even rebel against Xi and surveillance communism.

They've eased the COVID lockdowns. And then of course because the vaccination rates are lower particularly amongst older people, you're now beginning to get spikes in the cities. And it's not clear what they do.

Going forward, given the fact that so much stuff is made in China, this is just a continuing nightmare for supply chains. So this has implications. But just in terms of the authoritarian stuff, it's like, these guys were great. They could do no wrong, whatever. Well, he seems to have screwed that one up.

Iran is just a horror show-- public executions of protesters, top actors being arrested for suggesting support on social media. This is a deeply unpopular regime that's kind of fighting for its existence. And if it wasn't for the Revolutionary Guard, they would be very much in trouble.

And then it's interesting with Russia. You've got notions of a possible winter offensive, which is historically not what anybody ever does when you're fighting in Russia, possible rumors of Belarus coming in from the north, all this sort of stuff. But there's also rumors that the elites are finally turning against them, that he might be pensioned off to Venezuela or one of these places.

CARRIE NORDLUND: That's interesting.

MARK BLYTH: So it's a very mixed signals. But overall, a bit of a shitty year if you're an authoritarian person relying on a combination of personal charisma and violence.

CARRIE NORDLUND: That would be a great perfume or fragrance to--

[CHUCKLING]

--to put out there as a holiday gift. It shows that they're-- they have weak spots. They're not-- you can be the strong person, but you actually do have some-- there is a soft underbelly somewhere.

And especially thinking about Xi, that they gave in kind of fast, too-- gave in, meaning ending the lockdowns. I thought it was going to be much more strongman behavior, keep it as it is. And then maybe loosen things up. But I was really-- I thought that they would-- I didn't think that they would move as quickly as that.

I don't know that there's a lot of holiday cheer in what was just said because you were-- I mean, I guess I'm always worried that they-- there's some weakness. But then they come back even stronger on somebody's back.

MARK BLYTH: Yeah, I kind of think that-- it's not to say that the populist moment has passed, far from it. I can imagine if I was French and I was watching Macron basically hang out in Qatar and embrace Mbappe and sort of try and be the man of the people thing, knowing that basically you had this huge conflict just recently with the Yellow Jackets.

And you had this whole thing called the Grand Debate. And you're meant to listen to the whatever. And essentially, what it is, is just the same technocrats basically said, oh, we're listening. We're listening. Now, please go home.

But there's another side to this, which I think these regimes are showing us. You can go well beyond populism to full blown authoritarianism. And people hate that, too. That's not popular. It's not as if sort of the weaknesses of democracy are corrected by a certain amount of populism and it maintains it.

If it falls all the way over-- as China went from basically a very soft authoritarian, quite open, quite pluralistic society-- into the much harder version, it turns out people like that even less than a shitty democracy.

CARRIE NORDLUND: Yeah. And that people actually will break-- will move against it. And at the risk of their own lives, actually protest. There's only so much humans can take in terms of that. Yeah, I agree.

MARK BLYTH: Then the people-- unarmed protesters in Iran, in particular-- being targeted, women being shot in the face and all that sort of stuff by the security forces, and yet they're still coming out. It's just incredible bravery.

CARRIE NORDLUND: Well, and I thought-- maybe we already talked about this or I talked about it in my head-- that after Iran lost to the US, that people in Tehran were honking and like-- because showing that they thought the team was an arm of the government. And so--

MARK BLYTH: Right.

CARRIE NORDLUND: Just another illustration of the people hating their government.

MARK BLYTH: Yeah, exactly.

CARRIE NORDLUND: Yeah.

MARK BLYTH: So that's an interesting one to think for as we go through '23. You know what happens on these ones because this was kind of the new axis of, if not evil, then at least different. And now, it seems that you've got Iran full-throated support with drones and supplies for Russia.

China is basically saying to the Saudis, why don't you allow us to pay for oil in our currency rather than dollars? They're definitely trying to find their groove, find more expansion. But it's a question of who wants to be in bed with that troika?

CARRIE NORDLUND: I know.

MARK BLYTH: It's just like-- this is like three rotten regimes. Do you really want to be the ones that are siding with them? I suppose for some cheap oil, you'll do it. But it's interesting one with the Saudis, though. They really are playing with fire. Everything is contingent upon the US security guarantee. And they pretty much think they don't need it anymore. And now, they don't care about the US. And it's like, well, we'll see how far that one goes.

CARRIE NORDLUND: Would you travel to Saudi Arabia? They're doing the big push for tourism, and they have all the ads in the glossy travel magazines.

MARK BLYTH: I'm obviously not looking at the glossy travel magazines. It's not that-- I don't want to say I don't like a country. I don't to go to a place or whatever. But I just can't imagine what possible things would bring me there if it wasn't just a giant bag of cash.

CARRIE NORDLUND: Yeah, yeah.

MARK BLYTH: Right? I just-- and even then, maybe I do have some models after all. There's probably limits on that one as well.

CARRIE NORDLUND: Well, and I was just thinking of they have the Petra stuff spread into Saudi Arabia. So there's the cultural stuff. But as a woman traveling there, can I go there? There'd be so many constraints on what I could do or not do. And it just seems like a-- beyond the obvious, that it would just seems like it would be kind of not so much fun.

Speaking of not so much fun, I had-- thinking about what the Fed did in terms of interest rates, I had some questions for you. Because I did a quick scan of the front page of the FT a couple of days ago, and I was like, oh, this is good stuff to ask Blyth. What do you think is happening with emerging markets and the defaults? And isn't the big one-- people are worried about Turkey? That's the question.

MARK BLYTH: Yeah, they're worried about Turkey. They're worried about a bunch of smaller ones as well-- El Salvador, places like this. It went from-- basically, there was two countries that were possibly on the verge of downgrade to default level. Now, there's about 13. So it's a real thing.

Now, this-- then we've spoken about this many times. It's dead obvious. You push interest rates here in Two Thousand-Nine, Two-Thousand Ten down to zero, then people looking to make money will push it somewhere where you get a higher return. So the money flows out of the US and flows into everyone else.

And if you continue to raise interest rates in the United States, what you're saying is you can get a risk-free rate of 5%, 6%, whatever. Why would I have my money in Turkey when I can get 6% for showing up in Citibank? So all the money flows out. And then you start to get currency crises. The currency devalues. They've got dollar denominated debt. And that's when you get the insolvency problem.

So it's pretty straightforward. Now, the good news is the Fed know this. They're not going to talk about it in public. But they absolutely know this. And this is why Powell talks are really, really big game and then does a half a point raise.

It's almost to say, you thought we were going to be soft. But we're not going to be soft. The federal funds rate-- I didn't check it this morning. What is it, 4.5, 4.75?

CARRIE NORDLUND: Yeah.

MARK BLYTH: We still haven't had 5%. If inflation is still 7.9%, you still got a negative real rate. So it's one of those things where it's like there's a bark and there's a bite. And they're trying to calibrate both. But yeah, what they don't want is a set of cascading sovereign defaults across all major debt markets and capital flight out of these countries. So I think that's ultimately the constraint on the Fed raising rates.

Now, there's another problem for-- the number two, they're beginning to figure out is two things. A lot of the sort of non-volatile stuff that may come back-- like supply chain related, fuel related, et cetera-- it turns out that we are effectively deglobalizing. We are friend-shoring. We're going to do all this stuff.

And we're doing this with a much smaller labor market than we thought we had-- in part because the boomers are retiring, in part because a million people died because of COVID, in part because long COVID has taken half a million people out of the US labor market by some estimates, et cetera.

So you've got tight labor markets as a consequence you'll see. In unionization efforts, you see wages rising. And all of which, in a sense, I applaud because they've been ridiculously low and all that. And tons have gone to capital for far too long.

But the Fed, being the Fed, has to look at that and say, that could be persistent inflation. Now, does that mean that you end up with positive real rates all the time? Well, we have to go back before Two Thousand-Eight. We have to go back to the nineteen-nineties, go back to the nineteen-eighties.

We used to live-- we had a pretty reasonable economy when interest rates were always between 6% and 4%. We've completely forgotten that. We think that free money is normal. But what free money did was it gave us FTX. It gave us NFTs. It gave us spox. It gave us massive distortion of investment and utter nonsense.

So in a sense, I'm trying to get my head for '23 and going forward on the world having-- at least the United States having-- positive growth but positive real rates and actual real inflation baked into the cake, which bespeaks a rather different type of economy going forward over the long term.

CARRIE NORDLUND: So it would mean possibly that my house that was going to be worth like-- I bought it for a dollar. And now, it's been more like $3 trillion tomorrow That sort of-- and a stock market that's just like, up, up, up. That stuff is going to-- is maybe something--

MARK BLYTH: Yeah, it actually-- it might actually mean revert to more normal returns. Because if you can't basically just constantly refi your house, take out money and spend it, then guess what. If you can't market your house as an ATM, it's just the house, maybe it will appreciate like a house should.

CARRIE NORDLUND: Right, yeah, yeah. I was thinking about your example from a couple of pods ago, about your-- in Boston, that is just a straight line up.

MARK BLYTH: Totally, totally.

CARRIE NORDLUND: Well, how else can we predict the future here at the end of the year?

MARK BLYTH: Well, one thing we could do is to say the United Kingdom is in for a bad time. We used to-- remember during our earlier pods, we used to do the Brexit saga, what's the latest on Brexit, all the rest of it? Well, it's all kind of all come to a head now.

The whole country is on strike. The FT published a guide. It was a table for the month of December. Just everybody-- Border Force, out, nurses, out, driving instructors-- who are public employees bizarrely-- out, all the sort of stuff-- everybody's on strike. You've got a real cost of living crisis.

There's a piece in The New York Times that somebody sent me today. I don't have a sub so they had to gift me the articles I could read. But it's about Scotland. It's about a place that I'm familiar with in Glasgow-- or at least their house, which has always been a very poor marginal-- marginalized part of Glasgow.

And now, they say that the estimate was that a fuel poverty is defined as at least 10% of your post-tax income spent on fuel and heating. 61% of Scotland will be in fuel poverty by early next year.

CARRIE NORDLUND: That's incredible.

MARK BLYTH: And Scotland's not one of the poorest parts of the United Kingdom. There are much, much-- places that are much, much worse off. London is not. But go north of London, you'll find incredible deprivation. So we've been saying this for a while, but they are in a bad place.

And the tragedy is whether it's the Conservatives or the Labour, none of them seem to have any idea about what to do about it. They just seem utterly bereft of ideas.

CARRIE NORDLUND: Yeah, and it's just thinking that the FT, so conservative to be publishing this, all the--

MARK BLYTH: And the thing this time, back-- the Conservative Party are old Thatcher's children. And they can never escape her shadow. And back in the day, Thatcher was able to capitalize on popular resentment of the unions abusing their position and getting inflationary wage claims. And you could make that claim stick of a wage price bite or whatever.

Nobody's believing that this time. Basically, the Conservative Party is turned into your angry auntie who now hates everybody. And it's like this list every day of who's against Iran. Well, it's the immigrants. And it's the EU. And it's the workers. And it's the public sector workers, the nurses-- those horrible nurses.

And it's just this huge pile of grievance. And it's like, you don't govern by grievance. It's just awful. Stop it.

CARRIE NORDLUND: Yeah. Well, and especially, given-- coming out-- I don't even know if we're coming out of COVID. And all of the different-- essential workers, you'd think it's really hard to beg on them. But I guess--

MARK BLYTH: Oh, that's a bad one, ain't it? When you're basically going after the nurses, you basically are doing the most stressful and important job for 27,000 quid a year.

CARRIE NORDLUND: Yeah, yeah, yeah.

MARK BLYTH: I mean, come on, really?

CARRIE NORDLUND: Yeah, beat up on puppies.

MARK BLYTH: So let's predict the future. In closing, let's do it. Let's go for '23, and we can be held accountable. You go first.

CARRIE NORDLUND: Yes. [CHUCKLES] So I had two things. And that is about the Supreme Court, which we haven't talked about in a while. So--

MARK BLYTH: Oh, yeah.

CARRIE NORDLUND: --this month, right after Thanksgiving, they heard a case called 303 Creative. And that is a woman who hasn't actually gotten a job to do this but doesn't want to create websites for same-sex couples and is worried that if she was asked, she was-- she was like, religious reasons that this would-- that this would be a lawsuit.

So she proactively went and settled her-- create her own lawsuit. So the court heard this. And my prediction on this is that even though Biden-- the House, and the Senate, and Biden just signed the Respect for Marriage Act, which then codifies same-sex interracial marriage, that the court is going to take-- not to overturn Obergefell or overturn the Respect for Marriage Act but do an incremental sort of thing, where it's like, well, you can get married.

But you can't have access to a minister. You can't have access to a religious house of worship. You can't have a website. You can't-- we're not going to bake you cake. You're not going to be able to do a reception hall. And so it will just be little-- the little drip, drip sort of stuff that this course-- that this court will allow to happen. So that's my one prediction.

The other big case-- and we talked a little bit about this-- was the affirmative action case, the Harvard and that--

MARK BLYTH: Yeah, what's happened with that?

CARRIE NORDLUND: Yeah, it was an interesting set of arguments. I think these two, which are the big cases, we probably won't know the decisions until June. But I think it's fairly clear that that's a 6-3, no more affirmative action in higher ed admissions. So those would be my two-- my two predictions about the Supreme Court.

And then the other thing I would say-- well, I guess I already said this-- is that I do think that there'll probably be a court-- well, in the new year, the Republicans will seek to impeach the president.

MARK BLYTH: Now, all right. That's--

CARRIE NORDLUND: So happy holidays.

MARK BLYTH: --three things. Happy holidays. That's not bad. But what's mine? We will all die in nuclear flame. No, we're not going to. That's fine. What will happen is-- all right, three things. Number one, everyone will get sick to death of Harry and Meghan. OK, that's already happened. We're good. That's it. So my first prediction is guaranteed.

All right. What else? I think that we're not going to see the back end of this inflation problem. I don't think we're going to see-- I think we're going to get to that world whereby having 4% or 5% inflation is normal. We're just going to have to deal with it-- and with occasional spikes pushing it that way.

In terms of how this works out, I think that this one is going to be really, really tough politically in Europe, and particularly in the UK. And this is, again, populist forment coming from a different direction. I'm not sure how that one is going to play out.

The one thing we know is the governing Conservative Party are dead, dead, dead. They are completely done. It's a question of what Labour do with that. And that's kind of replicated throughout Europe, in the sense that if this is a really, really tough one or for millions of people, then, yeah, the incumbents are going to get voted out.

But do the alternative actually have a clue? Do they have some kind of idea about what to do with it? To me, that's even more scary, that if-- to take Labour as the example. In two years from now, they finally take power. And they don't really do anything with it. And then they are-- again, after five years, then that's really kind of what's the point of the system if the system is unable to respond type stuff. So we'll see where we're going with that one.

Where else? What else is going on? I think '23-- I don't know. It's a hard-- hm, hard to see the future is. I think the authoritarians that we were talking about are basically going to just double down on being authoritarians. And it's a question of whether they are able to just completely suppress what millions, if not hundreds of millions, of people as a permanent business model or whether something cracks.

Can Russia really just sustain this? Or is there a moment where Putin basically shoved-- either falls or is pushed. They would be the ones. But the one thing I do want to highlight that we haven't-- and that was something kind of monumental, we hope-- was the whole nuclear fusion moment about a week ago.

Whereby, yes, you didn't account for the fact that you had to use all this electricity to power the lasers. But once you shot the lasers, you got more out than you put in. So this proves that it can be done. And therefore, it's really just-- and I say just with great respect-- just an engineering challenge to basically stabilize and then move this along.

You've got the European. They don't work on ignitions, ETTAR and Europe is a very different thing. They've been building this thing for years. But they can use the information from this and the technologies that follow from this to make ETTAR even more of a challenge that the attempt to build one of these things at scale.

And at the end of the day, what we've learned this year is that when the wind doesn't blow, which happens sometimes, and when it's really, really cold and you live in northern Europe, renewables ain't going to help. So we do have a kind of carbon dependency, which is why oil prices went up. And we have a fuel crisis and all that sort of stuff.

But just long term, it's never going to be there in my lifetime probably. And I hope to live a very long one. But nonetheless, if 20 years from now, you begin to really see the first kind of like fusion generation, that would be brilliant. That would solve so many things. It would be utterly transformative. So I think rather than getting bogged down in sort of all the bad stuff that might happen next year, let's elevate our gaze to a broader horizon.

CARRIE NORDLUND: Oh, I like that, elevate your gaze to a broader-- that's really-- I feel like that should definitely be one of the posters with the sunrise on it. But I--

MARK BLYTH: It's that one of those inspiration cards.

CARRIE NORDLUND: Yes.

MARK BLYTH: Yes, the one where it says, winners, people who never quit. That kind of shit.

CARRIE NORDLUND: I just wanted to double back on your point about the-- if Labour gets voted in and they don't do anything and it's clear the Tories don't have a plan. I think this is what I was trying to get at with Republican-- House Republicans but couldn't get there, is that--

MARK BLYTH: Yeah, exactly.

CARRIE NORDLUND: --they didn't have a plan.

MARK BLYTH: It's very similar, right. There is no plan. The plan is to disrupt. The plan is to own the Libs.

CARRIE NORDLUND: Yes.

MARK BLYTH: That's the plan. So once you've kind of won the social media battle of owning the Libs, what happens next?

CARRIE NORDLUND: Yeah, yeah. And we're into health care, all the stuff. But there's no plan. We'll impeach-- we'll go after the woke snowflakes. And then hopefully, they'll be--

MARK BLYTH: There is one place where they have a plan-- and you'll really beginning to see. I've mentioned this before-- is the kind of fatwa that has been declared on ESG investments.

CARRIE NORDLUND: Yeah, yeah.

MARK BLYTH: Right? So they're really stepping this up now. And they've made Vanguard, one of the big firms, leave the Net Zero alliance, et cetera. And they're politicizing this and really going against it. And partly, it's sort of the economic self-interest of the carbon-dependent states. But it is also just this kind of like the next stage of climate change denial.

It's not to deny climate change but to say that these metrics don't work in the really socialism, which is what they're doing. So in '23, we can look forward to the fatwa really, really getting into gear on ESG.

CARRIE NORDLUND: I don't know how to turn this. But I couldn't-- I have to say something about Harry and Meghan because like the glutton that I am, I've watched all six hours of that thing.

MARK BLYTH: That was-- so in my prior comment there, I haven't seen it. I was just trying to trigger you.

CARRIE NORDLUND: Oh, yeah, yeah.

MARK BLYTH: I was trying to get you--

CARRIE NORDLUND: Yeah, yeah, here I am, yeah. Here's my big-- my big takeaway is I think William and Kate are like cold robots. And Harry and Meghan are just kind of annoying. They're kind of boring and annoying. And I just-- so you can kind of see what the breakdown is.

Like OK, what do you want? You guys are just annoying. We're just going to be our cold-- our cold robots and just do what we're just programmed to do. And I think that's the breakdown. But I kind of think Harry and Meghan, they're just kind of-- I mean, which is-- the worst thing for me is that you're kind of boring. It could have been like an hour and a half. Six hours boiled down to like an hour and a half.

MARK BLYTH: Yeah, exactly. Well, this is why I didn't even watch the hour and a half. I was just relying on triggering you for you to give me the summary. So now--

CARRIE NORDLUND: There you go. That's the summary.

MARK BLYTH: So I guess that's it. I guess this is-- believe it or not, folks, this was the Christmas Special. Happy Christmas.

CARRIE NORDLUND: Yeah.

MARK BLYTH: Till the next year beckons.

CARRIE NORDLUND: As always, it's been so much fun to do this. Hopefully, we'll have something-- some optimistic sunrise type of thing to talk about.

MARK BLYTH: We will keep our eyes on a broader horizon.

CARRIE NORDLUND: Yeah.

MARK BLYTH: That's what we will do.

CARRIE NORDLUND: Yes, I like that a lot. Happy new year, everyone. Thank you for listening.

MARK BLYTH: Bye.

CARRIE NORDLUND: Bye.

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