An excellent conversation and I always enjoy Niall Ferguson, even if I often disagree with him. I have heard his contention that Trump and his team are playing 4D political chess before and that this behaviour, which appears difficult to understand from the outside, is part of some broader long-term anti-China strategy. This cannot be the most plausible explanation for his behaviour. He is not and never has been a great strategist; his team has been chosen based on loyalty over expertise; and even if you accept the premise there must surely be a less destructive way to achieve the same ends.
Amazing discussion on all possibilities in this new world conflict. I always did believe that Trump and National Security came to a new understanding in order for him to succeed to the presidency for his second term.
On the question of why Europe has underspent on defence over the last 35 years, the answer is the eurozone treaty mechanics. The Maastricht treaty has a so-called 'stability and growth pact' that constrains deficit spending to 3% of GDP. For eurozone states that run a trade deficit (and noting that only a few can run trade surpluses consistently), that puts a hard limit on government spending - they can barely run any fiscal deficit at all. States have therefore prioritised other government spending internally (healthcare, education, public services, internal security etc) over external defence - which they had assumed would always be subsidised by the US.
I see that there is now a paper published by the European Parliament just last week that allows flexibility in the Fiscal Rules: this outlines new fiscal rules that introduce more flexibility for eurozone members, particularly regarding investment in defence. This new reformed framework allows deviations from the standard deficit and debt limits under certain conditions:
Also think it’s underreported that US dominance was underpinned by a subservient ally: weak European defence spending was a feature, not a bug, of Pax Americana. It’s ok for American to step back from that role - but it seems to be forgotten that it’s soft and hard power (which it craved) was underpinned by a weak Europe.
Not sure I agree with Niall’s analysis that Trump/Vance are intentionally doing Europe a favour. MAGA is not consistent with MEGA. Don’t recall Trump telling the electorate it was becoming a weaker nation - a more isolated US is a country that concedes power to China, Russia and Europe.
I wish that I could believe that our technological and scientific talent were planning to stay in the US. Given what is being done to our research and university communities, I think we're about to have massive talent flight.
Return of MFG, China will not sell one vehicle in the US that is not mfg'd here. I think this is also missed in your commentary. The regeneration of the US mfg base will mean two bites at the apple; the first is construction - jobs, second: jobs, higher skilled labor opportunities.
This means the balance of the world which the US alone is THE consumer of the plaent...their gonna hav'ta level up a bit. The dollars available for consumption mean someone is going to have to create NEW CONSUMERS in all those markets. That's good.
Barely touched the two big cancers in the Chinese system: births and real estate. No, they have not cured these and the solution to ONE, the financial side is 10x the 2008 derivatives crash....the China meltdown will be a 'get the popcorn, this is gonna be a good one!" event!
Good interview. I think you both have missed the upside which is the 12 months out perspective someone like my self sees.
The Beauracracy wasted 100,000,000,000 of tax money over the past 4 decades. We are paying for the mostly fraud, some abuse and pure ignorance around accountability and efficiency. In a word: integrity. Elon has pulled back the curtain on the Wizard(s).
When it's 'fix' which will take a min...America will be on a much better footing internally which means OPTIONS, which we do not currently have.
Canada, it'll be a state. It makes 100% common sense...it's about the shipping lanes. Duh. Trump is smart, he is going to seal off the waterway with Greenland to any insertions of china and to control 100% of the shipping traffic in the NA Hemisphere. (the canal has already been reclaimed....inside 70 days, for those keeping score at home....or conf calls@: ) :) )
Really enjoyed this conversation and looking a bit more at why Europe let itself get where it is.
I always like listening to Niall Ferguson and this chat was particularly engaging.
Hopefully Europe is going to deliver on defence and the economic shot in the arm.
An excellent conversation and I always enjoy Niall Ferguson, even if I often disagree with him. I have heard his contention that Trump and his team are playing 4D political chess before and that this behaviour, which appears difficult to understand from the outside, is part of some broader long-term anti-China strategy. This cannot be the most plausible explanation for his behaviour. He is not and never has been a great strategist; his team has been chosen based on loyalty over expertise; and even if you accept the premise there must surely be a less destructive way to achieve the same ends.
Excellent and insightful!
Podcasts and video interviews are great and entertaining. A transcript would also be most welcome.
Excellent conversation. Pleased that you got Niall to contribute.
China is surprisingly under-researched. As usual, it's nuanced.
It's ahead in some areas and behind in others.
I will massively simplify my current perspective:
can China (the Startup) get distribution before the incumbent (America) complete innovation.
Amazing discussion on all possibilities in this new world conflict. I always did believe that Trump and National Security came to a new understanding in order for him to succeed to the presidency for his second term.
On the question of why Europe has underspent on defence over the last 35 years, the answer is the eurozone treaty mechanics. The Maastricht treaty has a so-called 'stability and growth pact' that constrains deficit spending to 3% of GDP. For eurozone states that run a trade deficit (and noting that only a few can run trade surpluses consistently), that puts a hard limit on government spending - they can barely run any fiscal deficit at all. States have therefore prioritised other government spending internally (healthcare, education, public services, internal security etc) over external defence - which they had assumed would always be subsidised by the US.
I see that there is now a paper published by the European Parliament just last week that allows flexibility in the Fiscal Rules: this outlines new fiscal rules that introduce more flexibility for eurozone members, particularly regarding investment in defence. This new reformed framework allows deviations from the standard deficit and debt limits under certain conditions:
https://www.europarl.europa.eu/RegData/etudes/IDAN/2025/764354/ECTI_IDA(2025)764354_EN.pdf
Also think it’s underreported that US dominance was underpinned by a subservient ally: weak European defence spending was a feature, not a bug, of Pax Americana. It’s ok for American to step back from that role - but it seems to be forgotten that it’s soft and hard power (which it craved) was underpinned by a weak Europe.
Not sure I agree with Niall’s analysis that Trump/Vance are intentionally doing Europe a favour. MAGA is not consistent with MEGA. Don’t recall Trump telling the electorate it was becoming a weaker nation - a more isolated US is a country that concedes power to China, Russia and Europe.
China, the USA, Russia....2027/8...in a nice balance, actually. Prarire fires happen, it's part of nature. So when it's all settled out...??
What's next? No.
What's now...
Space...
It's a hellova plan guys.
I wish that I could believe that our technological and scientific talent were planning to stay in the US. Given what is being done to our research and university communities, I think we're about to have massive talent flight.
Return of MFG, China will not sell one vehicle in the US that is not mfg'd here. I think this is also missed in your commentary. The regeneration of the US mfg base will mean two bites at the apple; the first is construction - jobs, second: jobs, higher skilled labor opportunities.
This means the balance of the world which the US alone is THE consumer of the plaent...their gonna hav'ta level up a bit. The dollars available for consumption mean someone is going to have to create NEW CONSUMERS in all those markets. That's good.
Barely touched the two big cancers in the Chinese system: births and real estate. No, they have not cured these and the solution to ONE, the financial side is 10x the 2008 derivatives crash....the China meltdown will be a 'get the popcorn, this is gonna be a good one!" event!
More later...
Good interview. I think you both have missed the upside which is the 12 months out perspective someone like my self sees.
The Beauracracy wasted 100,000,000,000 of tax money over the past 4 decades. We are paying for the mostly fraud, some abuse and pure ignorance around accountability and efficiency. In a word: integrity. Elon has pulled back the curtain on the Wizard(s).
When it's 'fix' which will take a min...America will be on a much better footing internally which means OPTIONS, which we do not currently have.
Canada, it'll be a state. It makes 100% common sense...it's about the shipping lanes. Duh. Trump is smart, he is going to seal off the waterway with Greenland to any insertions of china and to control 100% of the shipping traffic in the NA Hemisphere. (the canal has already been reclaimed....inside 70 days, for those keeping score at home....or conf calls@: ) :) )
more later...