The high cost of America’s dependence on China

0:00It's the tip of the spare in the epic battle to defend the United States of America. The National Security Hour exposes the wolves and sheep clothing and then a various plots to undermine and destroy US national security. Welcome to the National Security Hour on the America Adelaide Talk Radio Network on I Heart Radio where you're going to hear from military and intel experts worldwide. You are going to hear the voices of freedom and Adelaide Truth. America Adelaide Talk Radio plays on I Heart Radio Network. You can also listen on our media player from any web browser anywhere in the world. We had the past class apps available on Apple Android and Alexa where we stream 24-7.

1:01And now you can also hear them on the powercast on those same apps. Welcome everybody back again. My name is Lieutenant Colonel Sorghissinger, US Army Retired CEO of the Near East Center for Strategic Engagement. And as we have done in the past and we will continue to do so. We want to make sure we bring you some of the best programming possible. If you do get a chance, please again, ensure that you share these type of interviews that take place and make sure that your loved ones are able to go to America Adelaide Talk Radio and also just read, listen to what has been shared, discussed or posted. Much appreciate for all the help and support. I have a returning guest, dear friend who is also a director with the Near East Center for Strategic Engagement. Ron Reese, a former intel analyst who serves as the director of technical analysis and

2:04special projects for the Near East. He was, he served with the Iraq Survey Group between 2004-2005 and followed by assignment in Iraq counterterrorism task force working in the J2X section. But what Ron brings is his ability to understand the global economy when it comes to China and US relations specifically. So I just want to make sure we brought him back again and continue our discussions as we have done in the past. I'm especially given the fact that there was a recent meeting between the US President Trump and Chinese President Xi, which kind of highlights some of the tensions that are really tied into economic processes for those nations and near peer to us in this case China. Ron, welcome to the show. Thank you, sir. I appreciate it. It's always a pleasure. Ron, we'll just go right into it because I know there's a lot of information to cover

3:04and we don't have that much time. But the recent meeting as I stated between Trump and Xi really kind of highlighted the ongoing tensions, especially when it comes to AI competition and trade relations where both of these leaders kind of discussed the tariff issue and technology issues. And I know those key points again, the biggest one is AI competition. What is the landscape for AI technology going to look like and the concerns on author its access to government website by AI companies specifically as raised kind of an alarm for the US especially how China is looking at as far as what portion of AI to expand on and what the US AI focuses. And of course, the trade relations specifically with the tariffs being a significant topic discussions about maybe lowering those tariffs to $30 billion worth of goods that are currently

4:09entering the United States. And what China is looking at to countering against those and tariffs especially Iran, of course, is a big issue here too. But the midterms coming up and the Chinese support for Iran, you know, China makes maybe 10 billion off of Iran, but you know, you're talking about are they willing to scut all our relationship with the US even though we're in near peer that they make almost a trillion plus given our economic relationships. And I just wanted to kind of have you take a look at the big picture of what came out of those discussions and where do you think we might be after last week's meetings that took place in Washington? Well, that's a real specific. I'll do the best I can so it just fits really hard to completely wrap our arms around

5:10the situation and this political geopolitical dance that's going on between President Trump and G, President G. I think they, you know, overall, I hope that what is being conveyed is that neither country wants to go to war. It's not worth going to war between two nuclear powers. So how do we find that realm within where we can have strategic competition without serious military friction? And I don't believe either leader has full control over various factions within our economists. You know, this is a big problem. G might be the top dog, but that doesn't mean that he has full control over all these little princelings. They've carved out their fight terms within China. So a lot of things are going on that he's not maybe being made aware of.

6:15And you know, things that happen within the United States. We have our little fight terms with the big big six media, big pharma and you know, we've just got system up past. There's only so much control that could be exercised, legal and through ZI could, but he has to be aware of what is going on. And there's so much corruption within as implicit in any of these type of totalitarian regimes that it's really hard to deal with it because the G will only be told what the other princelings one of them be told. So I think G and Trump are trying to have a good relationship because the alternative is something that no one really wants to have. I don't think China would be able to be successful in taking over Taiwan. I think it would be humiliating defeat, but it would be a bloody defeat on both sides.

7:20And I find it interesting because at the meeting, apparently according to a blue trade secretary, Purdue, Trump came out and actually asked G whether he wanted to buy some US military equipment because we make the best, right? Because there's this controversy over selling arms to Taiwan and Trump will be, he's like, hey. We'll sell you some American equipment too. We make the best in the world. And that pretty much, you know, this arm, the G's comment, look, you know, the United States defense will sell you weapons for defense. We'll sell them to Taiwan for defense. So what's the problem, right? And obviously she didn't have a good response to that. So overall, you know, in moving into what we were talking about with Iran, you referred

8:22to China was having to deal, it was China was receiving the vast majority of its oil imports from Iran. And they received them at a very low cost. And they were paying for them in one. And so the Iranians would be depositing money in Hong Kong banks, right, in one. And then China would basically pay for it in a weapons or pay for it in Chinese goods because Iran had the dollars in China was going to pay for it in dollars. This whole idea of bricks, you know, replaced the US dollars. So there's still a lot of Iranian assets sitting within China, but they cannot make it out into the US dollar economy. China is going to continue to hold it. They'll do a payment in kind type of system. You gave us oil, which isn't happening anymore.

9:24So if you want your money back, it's going to have to be in Chinese goods and services. And that includes military equipment or technological age. And I think Trump really put a caboch on that with Xi. He said no more. And there are indicators that this is what Xi is going to do because consequences of, you know, if you're eating the US and then increasing trade tensions, it's not worth the Xi. And this brings up another fact. Did you have a question? I'm sorry. No, I mean, one thing I'll tell you is a couple of things are important that you brought up in this discussion and this segment is one actually what prompted to Xi is what I actually recommended in 2015 to the Japanese to do to China. And when I was there and I, you know, advised a minister of interior in 2015, February, I was there because we knew there was a terror. So ISIS terrorists all operating in Japan.

10:27I was there, you know, briefing the PSIA of Japan and colonel of their CIA for us for the better term. And the issue was that when I talked to the minister of interior folks at the M.O.I. I told him, hey, my recommendation is have the prime minister at that time, I'll be to actually talk to his companies and see what are not. He has a possibility of providing the capacity of building military capacity for China because China was looking at that time to become more of a tech savvy military. As said, then just have him unannounced flying into China and offer that to Chinese. Two things will happen. Either Chinese will accept it or they will reject it. If they reject it, now you know exactly what their intentions are when it comes into the region and of course, as we know now with Taiwan. And if they do accept it, guess what?

11:28Now you control the backbone of all their military tech structures. That means tomorrow if you want to shut off their missile capacity, we can't. So Xi, we put them in the same position. If he did say yes, I'll accept the weapon capabilities that U.S. has. I'll buy weapons from you. Guess what tomorrow if we go to war, we can shut off those missiles and they're ineffective. And if he does buy, well, under title 22, it comes with restrictions. You know, honest to sell weapons Taiwan. Here's weapons system. You can I use them against Taiwan. You know, so either or Xi is putting in a difficult position as you mentioned. Unfortunately, some of the people who are going after Trump on this issue have no concept of the simplicity of how that works when it comes to negotiations or foreign policy. And the other piece that is important to kind of note based on what the discussion was and what you stated is that it seemed like Xi is more focused going back to June of this year on really kind of squeezing the control within his own military to include the fact

12:30that he just before coming here for a trip, he fired two other senior military officers winning his closest ranks. And it seems that Xi's more focused on internal survival of the Chinese Communist Party more than he is on the economic viability of China. If I'm wrong, let me know on this one. If you think that goes both ways. I mean, I think it's also his personal fact, you know, for lack of another word. You don't rise to head the Communist Party of China without having an established support base. So he would prepare to have his elements raised up after he's gone, you know, to have continued control. He has to preserve his family's economic interests, their financial interests. So like little clans and tribes within China, within any kind of society, we have an established

13:34caste type system with the wealthy families wanting to, you know, preserve their power base. So who will replace Xi is going to be a critical issue. And so he'll be a limits a lot of these rival power bases or it diminishes their power and control. Then it grants his clan his blocking the proper word for it. It, you know, it elevates the power base that he had that brought him two powers. So where's the future? You know, one of the elements that we overlook in many cases, we can talk about in the next segment is that China is an export based economy right now. It has been for a long time. But before there was a domestic element, they were, you know, people were making more money in the cities. They were buying new cars. You know, you had all this industrial growth. You had property values going up.

14:35And that was pretty much the only investment that was open to the Chinese just by a part and it's a binding property. And it became a big revenue generator for the government, for the local government, especially who sold land to developers. And then we'll get into more detail. I think it's an important segment because right now, Xi is facing a managed decline of the Chinese economy. It's collapsing. It's decaying. Well, I don't plan it's rising. You know, young people are really feeling a lot more despair from every indicator I'm seeing because the jobs are not there. So how does Xi manage this? And where is the future? How does he transition the Chinese economy into something that is more competitive and has its own particular niche? And so this is one of the challenges I think they face. And right now, I'm not sure how we're going to be able to just see this transition.

15:44This is what Xi is facing. So he needs to have those export markets available to him in the United States and in Europe and other places to be able to raise the hard currents and to be able to, you know, at least keep the Chinese economy in some measure balance. So those are elements that I've seen, but it's really hard because the Chinese economy is very opaque. You know, all we do is look at data that we perceive as being an indirect indicator for what's going on. Nobody is going to talk about real challenges within China. They're not going to release that. It's going to be, has to be a plan. It's the plan. So no, no, definitely we're going to look at it. I just wanted to make sure our audience is, no, that we're still selling weapons to Taiwan

16:47with the Harms missile, almost six in the 19 billion dollars worth of investment, 20, 23 going all the way back to even the Info infrared search and tracking system for the F-15s. And then we also provided glance up to 80 million that was been allocated for multi equipment. I can't say billion in issues, but it's in millions the figures which, you know, makes a significant shift when it comes to funding, you know, US dollars directly into support of Taiwan. We'll be back for the second segment of our discussion on the issues of the discussions that came out of the recent meeting between Xi and President Trump. You know, this time of year, the windows closed, the furnace kicks on, you're reading the same recycle there at home in the car and at work all winter. You can't control the air, but you can control your routine.

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18:58truth. Welcome back to the National Security Hour on America. I'm a lot of talk radio network on iHeartRadio. I do want to remind our audiences that all the shows go to podcasts typically one or two days after the broadcast has heard on talk radio. You can also hear them on Spotify, Stitcher, Pandora and I'll have podcasts and many more. Be sure you subscribe and read the shows on Apple Podcasts for me. Also be sure to make America out loud.com. Your daily stop for the latest news and happenings. We almost do our part in share the stories. We are going to record the videos so that we can help secure America's future. Of course our discussion continues with Ron Reese, who is the director of technical analysis special projects for the near-east center for strategic engagement.

19:58We're mentioning as far as the markets that China relies on. One of those markets is Iran. I will tell you the Iranians are right away from the West, rather than from China. But they are stuck where they are and the most recent decision that we made as of 30th September when we pulled all our forces out of Iraq. It nullified Iran's political capacity to be able to say well, the reason why we have these various different militias that are shea militias to include. Take some there on the terror list that we had them here because the US is here. Guess what? The US is now left. We left because we were saying that ISIS no longer is operational. Guess what? We signed a deal with Syria that nullified ISIS pushing into Iraq in the future. That being the case, the Iranian militias now have no choice.

21:01The prime minister of Iraq has stated to them that you have to start turning in with your weapons as of basically 30th of September until next year all major heavy weapons will be under the Iraqi Army control. Iraqi Army will also bring in to control the Peshmerga up in the north and put a bit of Peshmerga like it or not. We're initially funding them. Now they have to provide their weapon system and support or they have to get that provided by Iraqi government. Technically, even today, Iraqi military is strong enough that if it goes to war with those militias that could destroy them, it doesn't want to. We don't want to see that because of internal sectarian violence. But one thing that Iraq has now done, the excuse of Iran was well turkeys up in the north of Iraq. Well, yes, what Turkey just soon had an agreement to pull this force out of northern Iraq too. And the Iranians were getting US dollars and the billions that were coming back from all

22:05the hodge that they were going on. And you've been down there. You understand when they go and pull, get rich and not just in Saudi and Iraqi government has not closed that and said, US dollars cannot enter the border from Iraq and to Iran. So if you're Iranian, bizarre businessmen who was making money in Iraq and tried to get that back, you're going to have to initially get it changed out for non-US currency for you to be able to take it back home. So once we dry out Iran, China now is stuck as no way or means of being able to flip something for those US dollars to the Iranians at the same time. The cost of building something because of the fact that we have squeezed NATO to where NATO is, she said not NATO, but OPEC to where it's breaking up that now different countries can start charging their own prices for oil while energy being a big cost for the Chinese.

23:09Now the Chinese has to spend more money to make those goods and services that they used to do on the cheap that competed against us on the global market. And I'm looking at a as a buyer and I say, well, if I buy this Chinese pen and it's just nothing more than 50 cents, maybe less than an American pen, I'm going to buy the better quality American pen. So that should really squeeze China especially, not that we're also still trying to squeeze them through the tariffs. It might be a point where we could collapse or possibly their economy. Go ahead. I agree. One of the things that the relationship between China and Iran, they received a lot of their oil funding on, but they paid very low cost for it. I've seen reports that are 10 to 15 dollars per barrel. And then China could either utilize that internally in their economy or they could then turn

24:10around and find out resell it and make a profit. So they were commercializing the Chinese imports, but now they're not receiving, nobody's receiving it on an oil, according to reports. Whereas Saudi Arabia and Iraq, they're still continuing to export and we're seeing more more traffic coming through the streets for a month. So China now has to pay market spot prices for its oil. And what I'm seeing is right now in Shanghai, they're paying like $112 a barrel. Whereas we're about $96 a barrel or I'm sorry, 91. Bippity, the other brand, whether it's WTI, Western, Texas, the immediate or Brent. So I try to follow these, but I'm following this, you know, technical analysis. I'm following the chart because we don't know, I mean, they don't want people to know exactly how much oil's coming in and out because there's a lot of money being made on both sides.

25:15But one thing I think is pretty clear is that Iran is not making any money. And Scott Bessent is basically choking off their access to dollars to the greatest extent possible. And Trump is basically directing trades, sanctions against any country that is doing it, having economic dealings with the Get On The In regime. So you certainly know a lot more about what's going on in Iraq than I do at the, your connection to a lot better than mine. But it, you know, things I've seen confirm it, you know, Iraq is trying to unify itself and erase the Get On The In influence that has pervaded that society since 2003. So, and for the audience to remember that the holiest sites of Chi'ai Islam lie within Iraq, not within Iraq. So it's a battle for control over that particular sector of Islam.

26:20But going back to China to try and address some of the points that we had talked about in the last segment. Now we have energy input costs which are rising in China. We have domestic demand reduced because people can't afford it. They're losing money. Their property values are going down. They're having issues with receiving proper, you know, paying their employees. The local government which derived in the largest degree of its revenue from sales of property to these development companies like Evergrande and others, they're not seeing the same type of revenues. So how do they continue to finance and provide the services that are required, you know, in the cities? That tax rate, I think imagine an America property values dropped to almost zero.

27:22Okay, you know, I'm not property values, but property tax income revenue dropped to nearly zero. How would the United States municipalities be able to pay for the goods and the services that they're simply expecting to provide? So this is one of the challenges that GFACES. And so I don't see a short-term resolution of this. I think it's going to be a long-term process of managing that decay and trying to find another revenue generator within the Chinese economy. Right now, that comes from their exporting markets. And you're seeing rise intentions around the world. Certainly, we've seen it with the United States, you know, where we have tariffs on certain goods coming from China because we want to reestablish our own economic manufacturing base. Europe, the car sector there. Right now, you know, Europe has got a $1 billion trade deficit in China.

28:26And Europe is already suffering economic decline. So there's increasing pressure for tariffs and trade penalties with China to protect their local manufacturing base. So how, you know, back in the 20s, they call it the better they name it, okay? You basically create cheap goods, you sell them to everybody else and you wipe out their manufacturing base. And this is what China is carrying on. And I don't think that's going to work for much longer. As I saw, the indications that this one I was in Indonesia, a couple years ago, when I lived there, they didn't like the cheap Chinese goods. Coming in and undercutting the local production. So this is just going to be an increasing issue until they're able to increase and domestic demand. And that isn't going to happen with the demographics in China that I foresee.

29:29Population growth, it continues to decline. They have one of the lowest population growth levels in the world below 1% as I recall. And it takes 2.1% of children. You have to have, you know, we got mom, dad, and three to have a population increase. You need to have a minimum of 2.1% growth. And China is that below 1% which means just like Japan, their population base in their tax base is declining. And they can't even provide the jobs for the existing young people they have right now. So what are going to be political ramifications? The whole premise of the Communist Party was to be able to sacrifice freedom in order to provide opportunity. And this is what the Chinese people, that was the deal of the social contract that the Communist Party had with the Chinese people.

30:30And now that is unattainable without having these exports into foreign markets. And foreigners are getting to the point of rejecting the Trump certainly is to the point of rejecting it. So I think in the future you're going to see a realm of continued to expanding around the world against Chinese goods and services. And so I, such a, it's such a vast economic web and political web. There's really hard for any person to get their arms around it all. Yeah, I don't think myself to be a Chinese expert in it, but I follow a lot of it. I try to get all the atmospherics in the economic data that I can't. You don't, you don't have to be a 100% expert on the issue to know that some of the same things that affect them affect us. I mean, you mentioned deflation, decrease in the general price level of goods and services

31:36that have hindered their growth for their economy. Just like you would do here, you talked about the debt, which is high levels of debt, particularly for them at the local governmental level that really kind of poses that risk to the financial stability of China. You talked about the demographics where you have an aging population and a decline workforce for long-term economic challenges and economic growth. You talked about the global demand and the reduced demand for the exports due to global economic conditions that have affected China trade balance. And even COVID really pointed a finger to everybody to say, hey, we can't end rely on things just to move from China to us. We need to build our own capacities here. I guess the pessimistic view would be that, you know, you're looking at it as you mentioned in Japan, you're looking at a lost decade. Some people have stated in term that for China, similar to Japan's economic stagnation

32:36that took place in the 1990s. And then you're looking at the concerns to include possible property market crisis and those high unemployment. I guess in the five minutes we have left, there is folks optimistic view of China when it comes to this economy. And I don't know if these are just paid lobbyists, but you know, they're talking about that, you know, China's economy, its foundations are robust. I'm not sure we're getting that idea from that says it will continue to grow. And then the other piece of it on the optimistic side talks about the fact that the country is adapting to colleges who structural reforms and increase in the domestic population. Okay, they have established industrial base. I mean, they've got clusters. You know, one thing that China can do is they can produce a mass of goods at a very low cost. And they've got the resources stocked up.

33:37They've got, you know, economic clusters that can readily take raw materials processed and then take them to the manufacturing facility and produce a finished product. We know about, no doubt about that. They're excellent at mass production. But if the demand is not there, then they're not profitable, right? Because there has to be demand for their products. And I think this is the challenge that they're going to face in the expert community is that we're going to have less demand for their goods, all right, because we're trying to preserve our own jobs, you know, the local United States, Europe, whatever we are focused on protecting our own manufacturing base, reestablish it. And we don't want competition for Chinese goods because they'll drag us down along with that. And so it's a good, how do we want to address it?

34:37We want to have, you know, interactive trade agreement, but we don't want to destroy our industry. We already had that giant second sound as Ron Paul used to say, I'm having all of our manufacturing base sucked out of our economy and taking the China. Now China has control over many resources or products. And so we want to reestablish it just based upon national security implications, whether it be worth minerals, you know, worries, you know, electric cars, some people like electric cars, you know, China is excellent at doing that except they catch on fire quite often and inadvertently. So do we want to have our manufacturing base continue to be undermined by cheap Chinese goods? So I think in the next segment we can try to address some of that, some of the overreaching

35:41things, some of the observations that I've seen I find to be rather ominous. And it has ominous implications for our own economy as well. No, it is. And, you know, unfortunately, I counter there's been used by China against us as usually the American oligarch who continuously still believes at the whole model of cheap labor out of China as much better than having to come here and actually help support American taxpayers. But we'll see where that ends up. We'll be back for the final segment of our discussion with Ron Rees, who is a former intelligence analysis officer who served as a director, who served as a director of technical analysis and special project for the NECSC and previously he served with the Iraqi survey group first arm between 2004, 2005 and then followed an assignment in Iraq counter terrorism task force working with the J2X section.

36:45And we will be back for the final discussion on what China's features and what came out of the discussions between President Trump and Xi in the short and long term. Are you looking for healthy snacks but you've had enough of all this sweet, sugary energy bars? Good news. There's a new bar to try that's savoury, crunchy and packed with goodness. Beer bars are based on just six simple natural ingredients, a certified organic veggie nut and seed bar that's low temp dried, never baked or fried. Beer bars are plant based gluten free and loaded with nutrients and protein. Head over to baribor.com forward slash out loud and get the exclusive discount just for America out loud lesseners. That's B-E-A-R B-A-R.com forward slash out loud. Are you tired of struggling with low energy? We get it. That's why we created organic energy juice. In just one minute you'll have clean natural energy all day and never struggle with low energy again. And it tastes amazing. And there's no toxic chemicals or stimulants that make you crash. You shouldn't have to struggle with low energy and with organic energy juice you won't.

37:47If you're struggling with low energy then buying organic energy juice is the right decision. With our double your money back guarantee there is zero risk to try it. Go to chemicalfreebody.com forward slash out loud for an exclusive discount. That's chemicalfreebody.com forward slash out loud. Prepare for the next pandemic with the wellness companies Contagion Emergency Kit designed by Dr. Peter McCullough. Get life saving medications like Ivermectin and Hydroxychloroquine. Plus a free nebulizer and a guidebook for safe use. Order now by going to TWC. .health forward slash out loud and use code out loud for $65 off your first order plus free shipping. Welcome back to the final segment of our discussion on China with Doron Reach who is the former intelligence analysis and who serves as a director of technical analysis and special projects for the Near East Center for strategic engagement. I do want to remind our listeners out there that please be sure to make a mark out loud.com your daily stuff for the latest news and happenings.

38:49We almost do our part share the stories. The other closely videos so that we can help secure America's future. You can also find out more about this show and get all of the latest podcasts. If you go to the menu navigation bar at americadloud.com under our show or schedule you will be in the know and if you're in that site just look up Lieutenant Colonel Sorghissing gear you saw me retire CEO of the Near East Center for strategic engagement and you could look at all the articles and also these shows that I have done for the national security hour. One thing I do want to kind of look at if possible Ron and I'm not sure what or not it's even relevant to the discussions that came out between you and Trump but if you're looking at it China's economic collapse that you know people have been talked about for a long time hasn't come does a deflationary shock that comes out of anything that happens in

39:56China with that really crushed their global economy and it comes to the global commodities and if it's so do you think that's a hindrance to why Trump is not really fighting maybe some people say harder against him even though he has the tariffs against China where we could literally see the defeat of the Chinese Communist Party and then the other piece is where does AI play into this piece can AI reverse all the gains that we have made putting pressure on China becomes energy in other parts of the economy if they beat us when it comes to the AI race. Well that's a big question. From macroeconomic scale let's address the AI issues. It can create greater efficiencies by replacing the middlemen that we have in the economy between natural resources and finished products.

40:58You know we're seeing lawyers getting replaced because people can do their own AI contracts and so they don't need that you know as much. So the problem is that those lawyers or equivalent individuals are economic demand they by cars they buy homes said you know AI is going to eventually this is what I fear create this a pressure of an employment and if you have an employment then you don't have a consumer that can afford to buy over priced products which means that the price of those products has to come down. You know where is the source of demand going to be coming from and I think this is what China is facing. Their property values have declined by at least 30% many respects but the young people

42:03don't have money to even afford to go out and buy the property that is already on the market. So we've got to have price discovery. This is the economic term is you know what is the price of anything. The price is what people are able or willing to pay and this is going to be a challenge we face in the United States as well because our young people are going to have difficulty affording these higher priced items. You and fewer young people are going to be able to do that and of course that's going to feed into this socialist momentum where they can't afford. I got to live with my parents. You know I can't afford a house. I can't even afford to rent a house. The jobs are not there. This is the challenge that Trump faces but it's already something that's going on in China as well. But let me let me let me up in real quick on because again when we go back to the question

43:04of deflationary shop that could hurt the global commodities. I mean China has been really kind of that engine maybe for decades when it comes to metals energy agricultural products. I think we've taken the energy away from them now especially when taking men as a way law. We're doing with oil coming out of Iraq directly to Europe control of the state of our moves. I think we have the agricultural base to be able to provide that in the US to counter but China might be able to establish the metals as a different issue that you can have to compete for those if they're not coming out of you know United States you have to go to Africa to get them. And I'm not sure if we're set up to compete at the level and the way that China competes I should say in Africa.

44:08So I would concur. I would. Yeah. And when we look at the oil from Iran that was the subsidy. They were getting oil cheaper than any other country in the world because they were buying sanctioned oil from Iran. And then you know, transporting it with a while we did a wink wink next nudge and pretended not to see it because we knew that the Iranians were not receiving you know spot market prices for their oil from the Chinese and that money was being tied up in China in one where they would have to buy Chinese goods. So now the Chinese economy has to compete on the global scale since Iran is no longer exporting oil. So around real quick though because you I want to go back to what you had also mentioned on the property investment issue right. Yeah. It hasn't been depressed to where it's like 30 to 40% from what the yes.

45:09Okay. So if that's the case and then they're for the scene. Okay. So then if you have a manufacturing output output in this case you're saying remains depressed coming out of China then that's a you know huge swing that takes place and it is I mean what is the outcome is going to be do you think or hasn't been calculated you think about the Trump administration. Oh. If this whole thing falls. You know all we get is the data coming out of China and it's always inflated but look give one anecdote you know I lived in Indonesia for a number of years and I had a friend of mine there who was a former banker and he was in the real estate speculation and we would go to various malls where they were building a parking complexes and they were selling these pre paid apartments you buy an apartment you put the money down and then they build

46:11you want. Okay. It's unlike in the United States where you wait for a house to be built then you buy it. They were putting money down up front that money was going to the developers the developers were using that money to actually construct the property and then effectively you know you would take possession of it at some point in the future. We don't do that in the United States that I know not to any large scale. They do it there and they were certainly doing it in China and so what happens when these developers go bankrupt and they can no longer deliver the property that they've already collected the money for you know so and then nobody can afford by the existing you know contract. People were built out of a lot of money in China they actually had equivalent like a bank run where people were so upset that we're going into their local base and saying I gave

47:13you this money for this property and now the developers going bankrupt and they're not going to deliver the property. So in there's a huge quantity of apartments that are unoccupied in China right now so without that you know the requisite demand for those properties and that's going to take years in the future without having a complete wash out or blowing the buildings up or reestablishing that balance between demand and supply. It's just going to be a very very long time and that's going to weigh on Chinese banks because they've already received the money they either had to fulfill the promise or take the loss you know to the investors and so who's going to have the funds to go out and prepay for a property you know this is one of the that's deflation deflation is trying to find that balance between demand and supply.

48:17Now wouldn't any of us go out there and prepay for a property get a loan mortgage that doesn't exist okay I'm going to give you this money while building a house all right very few people are able to do that we're usually going out there and buying existing properties or properties that have been developed by a developer that sold for properties. So I think that the primary issue is where does demand come from not only in China but in other economies where we've got property values that have got up such a large extent that most people are being priced out of those markets. Yeah. Anyone that currently has a house they don't want to sell because I've got such a cheap interest rate from you know 15 years ago 10 years ago they don't want to sell because they're not going to get that same interest rate now. Yeah look and you add that to when I brought up they showed the commodity markets because

49:19it's looking at those metals in the future and you know your self-commodium markets are very fragile when it comes to what the future possibility looks like and you may have some issues to deal with but I guess in the 10 minutes we have left and the segment do you think that the AI push the way China is pushing AI from their approach of the importance and significance of it is it going to reset do you think some of the gains that we have made under the current policy especially when it comes to the energy sector and everything else to maybe reset them or you think that is the third kind of thing. I think maybe I'm overly cynical but I think that we are in certainly the equivalent of

50:19a pre-entering of 2000 style but I mean a lot of promises being made about AI but now we have companies that anthropic that are trying to IPO in November coming out and telling people oh well you know one of the risk factors of our company is that we may create an AI model that could you know end humanity they literally are saying and they're they're filing that it could end humanity and so what are the liability risks of investing in a company that's produced a product that can result in the end of humanity. You know I mean there's so many different liability and risk factors they're incorporating for from a legal perspective that who wants to invest in but they're paying 8 to 9% yield on these these bonds and that exceeds what the United States government is paying right now on their treasury so we got a lot of pressure and that way we're trying to come up with a financing

51:23to do the equivalent you know it's not just having the AI model but it's having all of the you know the data centers and all the hardware that's associated with it. You know I think it took in 2000 for those who don't recall and I think many of our listeners probably do know that we had the bubble in 2000 and that the NASDAQ declined by I don't whole said 90% you know within the next couple of years so they're putting a lot of money in but there's no guarantee it is going to be a return it's an arms race that's going on between the United States and China and China is facing their financing challenges but the United States we're creating a huge amount of misallocated capital that is you know the bubble is going to burst at some point it's going to be extremely ugly is what I fear maybe I get maybe I'm being

52:30you know really cynical but all the indicators that I'm seeing you know I just watched interview with Jim Bianca who's a very noted a bond trader and analyst and he made some very relevant points about the issue of you know who's going to buy well I guess I would have but there's so many different points he made but the overall one is that you're seeing bond values yields interest rates going up because of this AI financing and it's putting pressure on every other company like Coca-Cola who are getting cheaper rates or more solid stable business and they were getting debt you know low you know financing at a lower interest rate but now they've got to pay more it's going to put pressure on their profit margins because of all the speculation within the AI markets it's going to have tremendous economic punishment

53:30and going back to the energy prices let's also look at that for listeners say energy is an input cost in the economic growth just like labor just like raw materials you put all three of those together yeah pump out a final product that you didn't market and sell so if energy input costs are growing up in in our particular case is the refined product it's not even so much oil anymore I think we're seeing I think we can expect probably a bit of an oil glut or a bit of an oil balancing at some point in the future here but the problem is we're operating a capacity in our refining we're exporting our excess refining capacity to other countries because Russia's 50% of Russia's refineries are offline right now in New Ukraine below in a month and so we are exporting final you know finished product that should be made available here in the U.S

54:33which is one of the reasons that you know we're seeing some Republican senators saying maybe we should ban the United States import our exports of finished products like diesel and jet fuel to bring domestic prices down and I can see that point I can also see some people saying oh you know that'll that'll ring the other commodity price like gasoline personally I think that the economic cost we're facing right now it really necessitates that we need to look internally to our own economy because i energy prices transport diesel goes into everything that we buy the transportation costs you know generation costs all of these are our elements in our economic growth are you know the existing in our economic growth if they get too high people can't buy other goods and services they have to pay for gasoline pay for that diesel to get to the good work

55:35so it becomes ultimately eventually becomes deflationary because we're not buying all these discretionary goods oh I can't buy how today because I can't afford to put gas in my vehicle so that type of element leads to eventually to a deflationary of momentum because you're paying too much one item which means you can't buy some other item does that make sense yeah so I think ultimately this is what China's facing they've already had deflation because people cannot afford to buy certain goods and services within China but now they're going to have to pay for their fuel I do want to thank all our listeners for joining us on the mission the natural security offer is a tip of the spear and they picked out all to defend the United States of America against his enemies both domestic and foreign with the liberty and justice

56:37for all I'm your host Lieutenant Colonel Sorgissingier you saw my retire it's you the near East Center for Strategic Engagement and Abort Member of the National Security Hour and we'll talk to you all next week God bless