Long term consequences of the conflict

Welcome to the Econoclass. On the week that began with Keir Stammer struggling to avoid becoming a former prime minister ever so quickly, on the same week that Donald Trump rejected Iran's latest peace offering, therefore extending his limbo war, during which the world of finance seems to have decoupled fully from the real economy, flying high while most people's economic circumstances have tanked, well on this week, Wolfgang and I seem to be spoiled for choice. So many orthodoxies to depunk, so little time. Yes, uh good morning. I will be talking today about Kirstama, but I agree it's so much happening. It's also, you know, Vladimir Putin seems to have made overtures to peace deal. I mean this has been a very busy week, but I will be talking about Kirstama's peace deal with his own party , whether it's enough politically, and whether his plan will work economically. And I'm going to be talking about one of my own orthodoxies. I'm going to be debunking myself to some extent. Because you will recall that uh in previous episodes I've been arguing that uh Trump was winning everything until the Iran war began, until he started the Iran war , and uh that that choice uh if he may ever made that choice was detrimental to his political project that after that his political defeat would be given. Today what I'm I'm I'm going to just take some chinks out of my own armor by arguing that if you look very carefully at the inner circle, the people that he considers to be his mates, that Trump considers to be his mates, well, they are doing really very well out of this Iran war. So , until later . Before we dive in, a quick heads up. Wolfgang and I are heading back to London for our second Econocrast live recording. We'll be at the brand new town hall in King's Cross, and our guest is none other than Hassan Pijker. That's Friday, June the 5th. So space is extremely tight, so don't wait and grab your tickets at unheard.com forward slash iconoclasts live . Kiers amer gave his uh long awaited speech. The other is putting the UK at the heart of the EU. And the third is a guarantee job offer for young people leaving school. I may be sort of slightly out of consensus on pretty much all of these points here, because you know I think there it seems to be sort of a great excitement amongst UK political journalists that Star mer is finished. I'm not so sure about this. I mean it's actually not that easy to get rid of him. The only candidate in the Labour Party who could unseat him, Andy Burnham, the mayor of Manchester. He doesn't have a seat and Kias Dama already prevented him from becoming a candidate for the Labour Party in a in a constituency race. He can keep on doing this. He has a majority in the party's national executive committee. It's not clear, you know, what avenue Burnham has to actually be be in a position to challenge Thurma because he needs to be an MP in order to do that. The other people who are who may be launching a leadership challenge will probably not win against Star mer. And you know we saw this today, you know, he is rhetorically quite strong. It's not obvious to me at least that you know West Streeting or Angela Reina would bring more convincing arguments to the party, to the membership of the party than Starmer did, because none of them have an alternative policy. I think that one has to sort of remember this. The Labour Party is in the mess that it is in, not because you know Keir Starmer is a bad person or because because he is a a weak leader, as people like to say. They don't have a plan. They never came with a with an agenda for politics for the for the five years. They never had the diagnosis for what went wrong with the United Kingdom. It's unsurprising therefore that they don't have a recipe to fix the problems now that they are in charge. So you know if you wanted to fix the problems, that you know, Kastama isn't your answer, but at least he's the elected prime minister. Whereas the others, I you know, neither have democratic legitimac y, nor do they have a strategy. So I'm really struggling to see what the point of this is. Wouldn't be surprised if what Star mer said is gonna work for him just about it might keep the show on the road for a while. That might be the biggest misjudgment I I'll ever make and I might be sort of, you know, might it might be falsified within three days, but I I think he'll probably stay. The bigger question, the more important question is will any of what he proposes make a difference? Now the brut the nationalisation of British steel, you know I'm not a big fan of nationalizations. I can see the strategic point because it's the last big steel mill in the country. Steel is important in in a this sort of geopolit ical age. You want to have the ability to make your own defense goods. You don't want to be dependent on, you know, even on your allies these days. Putting Britain at the heart of the EU is rhetoric, because I cannot see what that possibly means. I mean, we've been through the Brexit debates. There are substantive decisions one could take on the EU. Obviously, rejoin the EU . Or rejoin the single market or rejoin the customs union . He didn't say that. I thought he might have said I mean I thought it you know if he wanted to be sort of you know make a big policy stunt, he could have sort of at least indicated a changed position, but he didn't. It just putting Britain at the heart of the EU, all its rhetoric about getting a better deal. I mean I I uh the the biggest loser argument that I've sort of always heard in the in any Brexit debates is when somebody says, Oh, I've got a better deal. There's something they they just, you know, people who just don't know anything about the EU. The relationship with the EU is not about the deal you get. It's a bit like what JFK said when he became president. Don't ask what America can do for you, ask what you can do for America. I mean, I've never heard from the remain campaign or nowadays from the rejoin campaign, what the e what UK can do for the EU. That would have actually been a better thing because it's about what you want the EU to achieve, what changes you want to make. It's actually a positive agenda. It was just rhetoric, just the at the heart of the EU nonsense, which is completely meaningless. The problem that happened with the UK dates back a long time. It's not Starman. It dates back to 2008, to the global financial crisis, and the UK has been in decline ever since. And you've had Tory prime ministers, you've had Labour Prime Ministers in that period, you were in the EU, you were outside of the EU, and these problems persisted. So it's it's it's probably a good start to uh to understand why has the labor productivity or the productivity of the entire economy declined in that period. And that's the issue that we want to address. We see this in Germany. Germany's on the same trajectory, France is on the tra same trajectory. This is not just a UK issue. This is a broader European issue. We all suffer from declining pro productivity. We have less money to redistribute redistribute because the growth is lower. So for that reason , we are basically all in the same boat, all have the same problems, but every everybody tries to sort of rhetorically come out with this. The French have their own sort of discourse on this, just as crazy and just as irrelevant. Wolfgang . What surprised me was how unsurprising uh Kirst Thomas' speech was. He delivered it quite well, he must have practiced it a lot, but it's utterly vacuous. There was absolutely nothing new in it. The nationalization of British steel has been announced months ago. The uh possibility lingered today, did it not, that he was going to make in the announcement in order to create uh new facts on the ground, that he was going to uh start a campaign for rejoining the European Union. He didn't say that, as you pointed out. He you know, he cons umed himself with platitudes about being at the heart of Europe without actually saying anything about it. So hey look, if it re works to buy him some time while he's facing or feeling the coldness of the guillotine on he on the back of his neck. That is going only to benefit Andy Burnham, who needs time to um find a way of entering or re entering the House of Commons. But uh I'm not gonna speculate on this. Uh if Kirstama manages to hang on to Ten Downing Street, that would simply mean that Farage is going to be shooing because uh there's no way he can recover any measure of public support while remaining in ten downing street. Look, there's no uh hiding the fact that I was never a fan of Kirstamer. I was always uh extremely wary of him. I had extremely limited expectations of him as prime minister. But truth be told, I had not predicted the efficiency with which he and his inner circle would undermine their own government. At the heart of their failure, the reason why Stummer is so deeply, I mean amazingly unpopular is on the one hand their dictatorial authoritarian nature, him and his mates. And on the other hand, it's their contempt for the people who voted labor. While at the same time, we've seen this now for almost two years now, uh they are they've been courting and flattering those who didn't and who will never vote for them. And remember, if well before he won the general election, he purged the labor party of the most sincere people , people of unquestioned integrity and labor values, like you know, Ken Lodge, the film director, like Jeremy Corbyn, whatever you may think about Jeremy Corbin, he was not thrown out, even by somebody like Tony Blair . Stummer purged the party and then went on the rampage the moment he became prime minister. He cut disability payments. He supplied weapons and intelligence to the Israeli government during its pursuit of the genocide in Gaza. He channeled his inner farage, his inner inok power, I should say, in maligning immigrants . He treated refugees as vermin. He slashed international aid to pretend that he's boosting defense spending. He trashed wildlife and habitats while insulting and abusing the people who try to protect them. He announced draconian anti-protest laws. Trans people were left in legal limbo by his government. From the econom ic point of view, he and Rachel Reeves, his Chancellor, adhered to utterly ridiculous and socially destructive fiscal rules. He allowed Rachel Davis, his Chancellor, to spend more than $105 billion covering the Bank of England's outrageous and unnecessary losses during the quantitative tightening program. 105 billion that further enriched the city's banks without you know any kind of benefit from British society. And at the same time, he was imposing further austerity on government departments and public services. So, you know, what used to be the great hope of the oppressed in Britain, the Labour Party, Stammer's labor has become the oppressor. It's very clear. This is why he's losing. He used to be a human rights lawyer, for goodness sake. And as a former human rights lawyer, he single-handedly plunged Britain into incompetent authoritarianism. These are the real reasons why he had to give this speech after monumental losses in the local government and the country government elections. And now he's a dead man walking. He will re energize the base of the Labour Party, but the the question is will Andy Burnham have a strategy for economic growth. There was a time, and it wasn't that long ago, when parties of the left, center-left, had growth strategies, you know, Keynes was often associated with the center left. That has completely changed. Centre left is these days mostly about in Europe, mostly about redistribution. You cannot be in favor of redistribution in economies that do not generate growth over long periods of time. You hit political problems. But you know, if this wasn't a healthy economy, if this called economy delivered three percent growth year in, year out, you can make policy mistakes. You can you can you can afford that mistake that I agree with you by the way on racial reefs and the quantitative tightening. You could afford this mistake . If three percent growth comes in every year, you don't have to be so tall. You don't have to do all this austerity stuff. And uh you know, you can cut some taxes as well and you you still have you know things to juggle. It's not it's not like you can do everything. But it's not as tight as it is at the moment because you know, with zero growth with zero room for maneuver, now then the alternative would be you know if if they followed your advice and increased the the deficit, there may well be a reaction in the financial markets. If Burma became prime minister and you know, he might unite the left, but you know unless he you know eats his words pretty much immediately, if he were to, you know, increase the deficits, uh, we could see some problems ahead and the UK is sort of in in in sort of the global scene, that's sort of the canary in the in the coal mine, because you see you see the UK yields on ten year yields and thirty year yields or like bond yields. They're really shooting up, shooting through the roof. I would think that the a Burnham Prem Premiership would expose the U K to risks that would become um obvious later. And then we might complain about the financial market. We might just draw up all sorts of conspiracy theories. But you know, we've seen how fickle the UK financial markets are, the guilt markets is. It's very, very fickle. And I, you know, I would probably not want to incur that risk. Now I would want to incur that risk if I understood that this policy were generating growth. So, you know, if you if you say, okay, I'll I'll go for five percent deficit for like a few years, but I do actually expect to and have a reasonable expectation of three percent growth going forward. Now that would be a completely different proposition. Because debt sustainability isn't just about the level of your debt, it's about you know your ability to sustain it in the long run. But what we have here is is no expect ations for higher growth and rising debt, and that combination is toxic. Well, I don't disagree with you. I think you misunderstood what my point would be. Look, three points. First, yes you're absolutely right. I mean nobody has For getting Britain out of its doldrums, whether it this is in the Labour Party or indeed Farage's Reform Party or the Conservatives. That has been the situation yeah now for a while. Second point uh regarding his Kirstarmer's uh just astounding uh uh lack of public support. It's not because he has failed to generate growth, because I don't think the British pub public uh were silly enough to expect any of these politicians to do it. But I think that his genuine nastiness, the nastiness with which he's treated his own pace, the nastiness with which he's treated his own stalwarts within the Labour Party. You know, I mentioned Ken Lodge before, the way he threw him out. He threw out, you know, mayors from North England simply because they didn't believe in the pursuit of genocide in Gaza, the way in which he used the law to utterly to diminish civil liberties, in support of silencing any critics that uh he did n't like uh a human rights lawyer. The fact that he seems to have absolutely no compunction whatsoever to fall into any moral black hole there is, the way that he cynically sided effectively with Farage with a racist light attitude towards refugees, towards both people. So, you know, I don't think that a labor base we expected miracles in the economic realm from Stomer. What they dislike so severely is the panache with which he adopts any reactionary agenda that comes on his desk. But now coming to the to the most important thing. Look, my view is not that you should simply crank up the deficit. Uh that that would, as you say, simply m uh create even greater tensions uh in the the guilt market, in the bond markets, in the debt markets in Britain . And it will undermine whatever government does it tries to do that. What I was advocating years ago when I was um working to some extent with uh John Macdonald, when he was the shadow chancellor under the Jeremy Corbyn leadership of the Labour Party, I was proposing something that I think that you would uh cotton on to or you would agree with. From investment. And the way to do that was to create something equivalent to the European Investment Bank in Britain. Britain used to have the post office savings bank, something like that, which could be issuing its own bonds for the purposes of channeling money into investment, only investment, and to have the Bank of England back it. That would solve the problem of crowding in investments, public and private, into productive capital. This is the discussion, by the way, folks uh who have been watching the econom ics that you may remember from last week, the finance curse that I was referring to. But anyway, look, the tragedy is that nobody's having this agenda at the moment. The chickens are coming home to roost for Keir Star mer, who has combined uh magnificently this lack of a growth agenda, of any agenda, for getting Britain out of the doldrums financially and macroeconomically, with um very serious levels of nastiness, of personal moral failure. I fully agree. The public sector plays an enormous enormous role, but it would also mean you know changing public sector investment priorities towards investment . That's politically difficult, especially for the Labour Party, but it is probably something that, you know, if I had sort of waited for something, you know, brave for Summer to do, and I agree, you know, Summer's not the man who would who would do this, but to say that you know we actually have to do this. We have to do the investment. We have to raise productivity growth and we have to do a few things we don't like. I would respected that. But you know we didn't get that. It was in the two thousand seventeen Labour Party Manifesto. It was quite actually quite well written up back then. But look, we are now simply commenting on the speech by Keith Starmer, which is going to go down history as a pathetic attempt to buy some more time. None of what you you and I are talking about are on his mind. He doesn't give a damn about Europe, about uh investment, about any of this. He doesn't give a damn about anything. This is this is the feeling that most Brits get, and this is why he's in the state that he finds himself in. I think on this note we're gonna wrap up this part of our discussion and we'll uh return after the break. So don't go anywhere . Welcome back. Now for the second part, it's I'll hand over to Yanis for a discussion on Donald Trump and the Iran War. Well, thank you, Walcan. Now, folks, I'm going to go against the grain of my main argument in previous editions of the Econoclasts . Uh some of you will remember that I claimed that until Trump started bombarding Iran, he was winning hands down on everything from tariffs to his relationship with Z with China, especially the European Union and so on. And I m went on to say that his attack on Iran, his assault on Iran, sealed his downfall. Now, I still think this , but today I want to acknowledge that in the medium run, Trump's people , uh, the oilmen he cares about, the plutocracy more generally around him, are doing very well thank you out of the Iran war . Now this may not be enough to save his bacon. I don't think it will be. But given the oligarchic nature of the United States, who knows, it may be. So let me begin with some numbers, shall I? When Russia invaded Ukraine in 202 2 , within 10 weeks of the beginning of the invasion, companies worth at least 10 billion, American companies worth at least at least 10 billion dollars, lost value worth around 2.4 trillion dollars. Now, 10 weeks after the bombs began raining down on Iran, companies worth at least 10 billion have gained 5.6 trillion. Gained, not lost, gained. Then there is the astonishing recovery after the Iran war began of the whole stock exchange in the United States. So let's compare the speed of this recovery with uh previous crisis. Now, 2001, remember the dot-com bubble when it burst? Well, it took the New York Stock Exchange and NASDAQ, it took them about 1,016 days to recover. 1,016 days. After the GFC, the great financial collapse crisis of 2008, the recovery took 1,3 65 days. After COVID, the recovery took 217 days . After Putin's invasion of Ukraine in 2022, it took 338 days. Last year, after you know, remember the Liberation Day of huge tariffs being imposed, it took 57 days for the stock exchange to recover. Now, after the Iran War, it took a mere 12 days . Now, what is the main driver of this post-Iran attack recovery? Well, as everyone knows, it's mainly the splurge on AI . And in particular, investment in the microchips that drive the AI business model. So semiconductor producing companies like Nvidia and TSMC, they gained 26% since the beginning of the war in Iran. In terms of capitalization, companies like Alphabet, the owner of Google, gained 1,03 8 billion. That is more than 1 trillion. Amazon gained six hundred and sixty three billion. Microsoft two hundred and nine billion. Oracle one hundred and forty two billion. And so on. So that is painting a picture, isn't it? Of a Trump still capable of keeping sweet the cloudalists, as I call the tech lords . Now, as far as the pain is concerned, where did it focus on? Where did the most pain concentrate on. It concentrated on sectors whose fortunes gyrate in sync with the prospects of the masses, of the many, of the majority. Companies, for instance, applying consumers have suffered the most. But also the metals and mining sector have tanked. What surprised me, looking at the numbers, is that American arms manufacturers have also fared badly. And you know, what I'm going to say is that the explanation they give is that this is due to the fear that despite a very healthy demand for their lethal products, American arms manufacturers are failing to ramp up production to meet that extra dem and. And now let's go to oil . The oilmen. This is where it becomes fascinating. Now, Trump cares about one particular species of oil man. The people who are involved in the fracking business around the Permian Basin in Texas and New Mexico, the independents, mostly independents. Now they are the Trump power base, not so much ExxonMobil or Shell or Chevron. Now, unlike ExxonMobil , these independent companies, middle mid-sized companies in the Permian base, are doing quite well. Some say almost too well. Now, Exxon suffered. Their capitalization went down by 25 billion, about four percent. Why? Because uh of the serious damage inflicted by Iran's drones and missiles in Qatar, in the Las Lafan facility in Qatar. But Trump doesn't mind this that much. His political base, as I said before, is the Permian Basin. Now the Permian Basin , most of those companies, on average, they have a break-even price of oil about $65, $65 per barrel. Now that was above the actual oil price between 2023 and 2025 . The result was that during that period, there was a loss of about 30% of jobs and of wealth between 2023 and 2025. From their perspective , the ideal price is around ninety per barrel. So now they are producing as if there is uh no tomorrow. And they are supplying uh primarily the European markets. But they're a bit worried that the price is too high. From what I hear, these independent frackers , they don't want a price much above ninety per barrel because their profit maximiz ing, you know, calcul ations, optimization uh program tells them that above 90, there's still too much cost push inflation in the United States, and that's taking its toll on domestic demand . Now, no one can ever be sure of Trump's logic, but from where I'm standing, his decision to halt the war in is consistent with the interest of this permanent base in So let me conclude, Wolfgang. And I won't I'm dying to hear your your opinion on this. Trump's people, unlike other presidents, pre people , think in terms of real estate economics. They look at rents and they look at asset prices that these rents bolster and drive. That's the the only thing they really care about. And while the MAGA base is suffering, the working class base, the blue-collar workers, along with consumers and companies serving consumers, pharmaceutical companies, mining companies, the metal industry, and so on. Nevertheless, and this is the point I want to raise today, Trump's mates are doing rather well as a result of the Iran war . So well that Trump may be convinced that their support may help him recover lost political ground even in the So while I still think Iran is going to cause his political demise eventually, it's not hard to see how all this money making of his nearest and dearest can give him a false sense of security. What do you think, Walfan? I agree. I very much agree. I mean he certainly, you know, his allegiance is with the fracking industry. The industry is doing well. I also agree that there is a maximum price and a and a minimum price. Obviously we know they cannot be profitable below uh below um you know sixty dollars. But too high would also actually you know drive people into the alternative technologies. If it was at $200 , even Americans might just use solar technology and other and other things that would not be beneficial for the fracking industry. You know, I also agree with this point that that Trump is not stupid. I don't think he cares much about the MAGA base. You know, I think he cares much more about his business pals. It's actually more rational for him to do so because his business pals have the money, they support campaigns. I'm probably slightly more um you know, slightly differ about the long term consequences of the I don't think the the war will bury the the American presidency, his presidency, except if he were to end it without a what would be seen as a victory. And it's pretty much impossible for him to end it without the victory unless he unless he were to step up the war. The diplomacy, we see this again and again, you know, he comes up with a proposal, he's keeping everyone sweet by saying yes, there's diplomacy going on. We are in talks with the right people and he's giving some some rather suaging uh comments. There aren't really any talks. The position of Iran hasn't shifted. I think Marco Rubio was fairly clear about this in when he gave a speech on the weekend, when he said there's two things we know, these are red lines for us. You know, we cannot get let Iran develop nuclear bombs and we cannot let Iran control the strait of Hormuz. This is the b the bottom line for both for Iran is the opposite red line. Not only do they want to control the strait for Homose, they've already established an authority that would collect the tolls. Now we all know this is against international law, but they're doing it anyway. It's it's something that that is now becoming a an institutional fact. So Iran would have to change laws and it would have to, you know, dismantle authorities it is setting up. So you know they're locked in a in a long term battle there. And for now they're going the blockade way. The US blockade was supposed to actually be sort of a a way of winning this war. But this cannot last either because Iran has other ways of getting the oil through. We are seeing reports of Iran shipping oil actually through the blockade, switching off the transponder, going under a different flag. I mean the tricks are old. Countries like Iran and Russia, they know this, they've been playing these games for a very long time. I you know, I c calculated the borders. The border of Iran with neighboring countries, the land borders, is about the distance from from uh Boston to Anchorage in Alaska. You know, Iran is a very, very large country and has a lot of land borders and it has trains that connect with China. China built these train routes through its Belt and Road Initiative. So what you're seeing there is now the the trainin busess is booming and the train transport. Now you can't at this point yet, maybe never, uh transport oil in volumes on trains. You you still need ships. But other goods can be shipped. Iran gets supplies from China. The idea, as you know they say in the wild west, to smoke them out, which is what a blockade tries to do. It's not smoke but it's water we're trying here. But it's i ultimately the idea is the same, it's just to to ensure that somebody is deprived of important resources or vital resources for their survival. That's just not happening. Even the CIA has a report was leaked that Iran can can last for three, four months and you know, if somebody can last for three or four months, they might last for eight months. It's not like that this is sort of like a clock is ticking. And three or four months that takes us well into the uh you know November election campaign. So the idea that that this blockade would ultimate and I think we made a very similar misjudgment about the Russians. We thought that our sanctions would smoke them out, our sanctions would put them to on the brink. And people still say this in Europe and saying, Oh, you see that Putin made this over ture towards peace, that means he's losing his nerve. I think one has to be very careful with these assessments and you know, I think there's sort of a public discourse going on which on on Ukraine and Russia was quite wrong actually. And uh and one you know, and the same the US is doing the same on on on Iran. And uh the West is not as large as it thinks it is. And I think this is the ultimate you know delusion about our our our size or you know, our the West's combined size in the rest of the world. The Russia, China, uh So we are probably going into a longer war here. Um, possibly with a buildup of military action, possibly with a ground troop evasion. There could be many, many possibilities here. And you know, I'm not I'm not trying to speculate of what it is, but I can say this is going to take longer. And as it takes longer, the oil price will stay higher, the fracking will become more commercially viable. It'll be good for his his his business body. So yes, I completely share that share that analysis. And the idea that something is bad for Trump usually in the past is usually turned out to be wrong because Trump usually had a sense whether we c we consider him intelligent in sort of the definition that you know in, our own sort of sense, is a is a different matter. But he was usually quite canny in terms of doing things that benefit end up benefiting him and his family and his friends. And he certainly has a talent for that. Well the reason why I still think that uh the Iran war is going to be his uh downfall, at least in the long term or the longer term, is twofold. On the one hand, the Iranians uh cannot be defeated. They cannot be defeated either by uh um boots on the ground. It's uh it's as you said, it's a vast country and it's got a population and military that um essentially is going to uh to bind together against any such invasion. They showed that with the war against Iraq. I mean, it wasn't that the Iranian regime was back then in the early nineteen eighties that popular. Uh it was that the moment Iraq invaded, uh, they all bound together, like most people do. It wasn't that the Communist Party of Vietnam was that strong, it was the fact that the Americans uh uh behaved like an imperial uh overlord and therefore united the country against them. So they're doing the same thing. And also because you know Walking you know, Iran has learned the lessons of history, and that is that the United States goes in thoughtlessly w,hether this is in uh Vietnam or in uh Afghanistan or uh Iraq, and then at some point they get uh tired and they get out. Uh so the Iranians all they have to do is buy their time. Eventually the Americ ans, whether it's Trump or his successor, will, you know, upstumps and leave. The second reason is the AI splurge. What is keeping the stock exchanges buoyant at the moment is the huge investments in AI. But as we have said before in the econom ists, uh, there are two things mitigating against this uh continuing. The first thing is that the price of microchips is going up as a result of the helium shortage, which is again the result of the blockade of the States foremost. And secondly, because AI is very terribly energy intensive. And you know, with the increase in the price of energy, which the Iran war is causing, at some point, you know, the valuations uh are going to have to take into consideration the increasing cause between the revenues of AI companies and their increasing costs. So I still think that the original prognostication that the Iran war in the end was uh the Waterloo of Donald Trump. But in the medium run, as I have been saying, and There is a scenario where where it could work out in the long run. I mean it it all depends. I think I think you you're right. It all depends on AI. I think the effect of AI uh on the global economy will be more positive in the long run than the effect of the Iran war will be negative on the global economy in the long run. We're already seeing the first productivity statistics. They're not they're not big. It's not like there's m a macro factor, but you can already see in certain sectors that productivity has increased. It's not sort of this game changer thing, it's not like our growth will double. No, we're we're talking about you know, estimates of 0.3 percentage points. Studies have shown that during 2019 and 2025 AI had these sort of impacts on certain sectors. We were talking about sort of small decimal points here. But that was also a period when AI was not very strong and it wasn't it wasn't as powerful as it is today. You know, we've seen in AI models uh a massive increase over the last year in terms of it's the powers that they generate and in terms of what they can do. They you know, a year ago that they were still clunky in programming. They did programming and they would they help programmers, but nowadays they're very, very good. It doesn't just increase your productivity by you know fifty percent as it used to do. It just you know, it it's just triples, quadruples, quadruples your productivity. And you know, these are sort of the big step changes that you might we might be looking for. And if that happens, then the industry is big in business, but also the economy as a as a purchase of AI uh uh equipment will be there. And yes, it will cost more energy, but you know, the US the US we have to remember is becoming probably, you know, as some people are saying, the biggest sort of geopolitical event of our time is the US becoming independent an independent oil producer. That has not been the case before. They are now really self sufficient. We Europeans are not. But that may completely change global politics and it has it has economic implications that we we f you know we probably struggle with to understand at this point. Well I think that we should devote a whole episode of the economic class on this. I have a different view. I also think AI is going to boost productivity magnificently, except that I think it will do this in China, not in the United States. But we and I can have a very interesting disagreement on this in some future episode . This is it for now, however. Folks, uh don't forget to come back to the Iconoclasts for your econom ic debunking of orthodoxies that you can very easily live without. And don't forget to rate, like, and subscribe to the Econoclast s