Odd Lots Podcast Summary: "Lots More on the Coming 20-Year Storm with Viktor Shvets"

Podcast Information

• Title: Odd Lots
• Hosts: Joe Weisenthal and Tracy Alloway
• Guest: Viktor Shvets, Global Strategist and Author of The Twilight Before: How to Avoid a World on Fire
• Release Date: November 29, 2024
• Description: Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday.

1. Introduction: Setting the Stage for the 20-Year Storm

The episode delves into the geopolitical and economic tensions shaping the next two decades. Viktor Shvets introduces the concept of a "20-Year Storm," highlighting the intersection of domestic and international pressures that could redefine global order.

Notable Quote:

• Victor Shvets (00:00): "Direct lending has been one of the most dynamic areas of the private alternative space these last few years..."

2. Trump's Tariff Threats: Negotiation Tactics or Genuine Policy?

Joe and Tracy discuss recent developments where former President Trump has threatened to impose significant tariffs on goods from China, Mexico, and Canada. The conversation explores whether these threats are strategic negotiation tactics or indicative of Trump's genuine policy intentions.

Notable Quotes:

• Joe Weisenthal (01:10): "And by the way, I respect that he still uses Truth Social."
• Tracy Alloway (02:52): "To what extent is this a negotiating tactic?... Or again, how serious is Trump actually about this?"

3. The Political Trilemma: Globalization, Nation States, and Democracy

Viktor Shvets introduces the concept of the political trilemma, originally described by Danny Roderick of Harvard University. The trilemma posits that globalization, nation-state sovereignty, and democracy cannot all coexist simultaneously. Viktor explains how current events reflect the tension between these three pillars.

Notable Quotes:

• Victor Shvets (04:21): "You cannot have globalization and economic integration, nation states and democracy all at the same time..."
• Joe Weisenthal (05:08): "Because there is a lot of tension about the cost of living... how much does it... debt..."

4. Corporate Politicization: Navigating a Divided Society

The hosts examine how cultural and political tensions are infiltrating the corporate sector. Examples include Tractor Supply rolling back DEI initiatives, Bud Light facing boycotts, and Walmart reversing diversity policies. The discussion centers on how corporations are balancing shareholder interests with societal expectations.

Notable Quotes:

• Tracy Alloway (08:32): "We have also seen [culture wars] creep into the corporate sector, where companies basically are forced into choosing a side."
• Victor Shvets (09:17): "If societies decided that burning witches is the right thing to do, we probably would have been burning witches."

5. The Three I's: Inflation, Inequality, and Immigration

Viktor outlines the "Three I's" — Inflation, Inequality, and Immigration — as critical factors driving current and future economic and political landscapes. He emphasizes that addressing these issues is paramount to mitigating cultural conflicts and achieving societal stability.

Notable Quotes:

• Victor Shvets (07:24): "I usually describe it as three I's, inflation, inequalities, immigration..."
• Joe Weisenthal (12:03): "How much does the US Standard of living... sustain our middle class... influx of cheap immigrant labor..."

6. Historical Parallels: The 1930s and Current Tensions

Drawing parallels to the 1930s, Viktor discusses the similarities in economic distress and the rise of protectionism. He highlights the Smoot-Hawley Act and mass expulsions as historical precedents to current tariff threats and immigration policies.

Notable Quotes:

• Victor Shvets (17:53): "US was doing six times expulsions in 1930s than they were doing in 1920s."
• Tracy Alloway (18:25): "America has a long history of expelling immigrants."

7. Potential for International Retaliation

The discussion shifts to the potential for retaliatory actions by other countries in response to US tariff policies. Viktor argues that while aggressive actions reminiscent of the 1930s are unlikely, there remains a risk of heightened economic tensions and volatility in global markets.

Notable Quotes:

• Victor Shvets (18:58): "If you become aggressive, as it happened in 1930s, yes, you could have retaliatory actions very quickly."
• Tracy Alloway (18:42): "What is the potential for retaliation by other countries?"

8. Military Spending and Economic Implications

Joe raises concerns about the economic impact of increased military spending prompted by geopolitical tensions. Viktor provides historical context, comparing current defense expenditures to those during the Cold War, and assesses their potential inflationary effects.

Notable Quotes:

• Joe Weisenthal (21:01): "How inflationary is that? If every... there's a major rearmament..."
• Victor Shvets (22:08): "As long as we're staying around the area of the Cold War of 1950s, 1960s... no significant inflationary impact."

9. Optimism for the Future: Productivity and Generational Change

Despite the challenges, Viktor offers an optimistic outlook for the next 20 years. He predicts significant productivity gains and a generational shift towards more community-driven and state-involved societal models. This consensus, he believes, will lead to improved economic and social conditions.

Notable Quotes:

• Victor Shvets (24:28): "Over time, productivity arises... health care improves, longevity improves."
• Victor Shvets (28:17): "I keep looking in this book into Millennium and Z generations... they will identify exactly the frontiers, the borders..."

10. Conclusion: Navigating the Storm Ahead

The episode concludes with reflections on the complex interplay of economic policies, societal values, and global dynamics. The hosts acknowledge the uncertainties but leave listeners with a cautiously optimistic view, emphasizing the potential for societal adaptation and economic resilience.

Notable Quotes:

• Joe Weisenthal (28:25): "It feels like things are going to get better because we're really all primates..."
• Tracy Alloway (29:38): "Good. I feel reassured."

Key Takeaways

• Globalization vs. Sovereignty vs. Democracy: Balancing these elements is challenging, and current policies reflect ongoing tensions.
• Corporate Responses to Societal Pressures: Companies are increasingly navigating politicized environments, affecting their operational strategies.
• Historical Insights: Lessons from the 1930s suggest potential risks and pathways for current economic and political strategies.
• Optimistic Outlook: Despite present challenges, advancements in productivity and generational changes may foster improved societal conditions within two decades.

Final Thoughts

"Lots More on the Coming 20-Year Storm with Viktor Shvets" offers a comprehensive analysis of the multifaceted pressures shaping the future. Viktor Shvets provides historical context and strategic insights, while Joe Weisenthal and Tracy Alloway facilitate a nuanced discussion on the interplay between economics, politics, and societal values. This episode is essential listening for those seeking to understand the complexities of the current global landscape and its trajectory over the next twenty years.