MacroVoices #551 Michael Every: Decoding The Global Geopolitical Puzzle (Part 2)

Episode Summary

Executive Summary: Michael Every argues that global geopolitics is entering a hardening U.S.-China Cold War in which energy, trade, AI, and alliance structures are being weaponized. He links recent developments in the Middle East, Canada, Russia, and Asia to a broader contest over supply chains, security, and strategic autonomy, warning that markets are increasingly subordinate to national security and that capital controls, trade coercion, and even nuclear risks are rising.

Main Topics: U.S.-China Cold War as the master framework (Priority: 5/5): Every frames nearly every major geopolitical event as part of a broader U.S.-China strategic competition, with other regions and alliances being pulled into opposing blocs. Middle East escalation and energy security (Priority: 5/5): He discusses Iran’s threats, the Red Sea/Hormuz disruptions, and the possibility of wider maritime attacks, arguing that energy flows are now part of economic warfare. Diesel export ban and energy coercion (Priority: 4/5): The conversation examines a rumored 90-day U.S. diesel export ban, its likely market distortions, and its potential use as leverage in geopolitical bargaining. Canada’s strategic alignment dilemma (Priority: 4/5): Every criticizes Canada’s apparent drift away from the U.S. and toward Europe, arguing that geographic, economic, and security realities make detachment from the U.S. impractical. AI as a new strategic arms race (Priority: 5/5): The discussion treats AI as a potential equivalent to the nuclear arms race, with U.S. frontier labs, Chinese open-source models, and possible future arms-limitation talks. Capital controls, industrial policy, and deglobalization (Priority: 4/5): Every says markets will increasingly be constrained by national security, state intervention, and cash-strapped governments seeking to redirect capital toward strategic priorities. Nuclear escalation as a tail risk (Priority: 4/5): The episode closes with discussion of how tactical nuclear use could become thinkable in extreme scenarios involving Iran or Russia, even if it is not the base case.

Key Arguments: Most major headlines can be interpreted through the lens of U.S.-China rivalry, with regional conflicts and alliance disputes serving the larger contest. The Middle East is a combined economic and physical war zone, and disruptions in Hormuz, the Red Sea, or the Indian Ocean can sharply alter oil supply and prices. A U.S. diesel export ban would likely create shortages, market chaos, and political leverage opportunities rather than simply solving domestic fuel problems. Canada cannot easily reorient toward Europe without sacrificing economic efficiency and exposing itself to worse strategic risk, especially if it drifts away from the U.S. AI may become the next strategic arms race, but U.S. and Chinese incentives are more likely to produce competition, sabotage, and industrial policy than genuine détente. Open-source Chinese AI may be strategically positioned to undercut expensive U.S. frontier labs by attracting users who want cheaper, air-gapped, locally run models. National-security logic is already overpowering pure-market logic, so governments will increasingly use taxes, capital restrictions, export controls, and industrial policy to shape outcomes. While nuclear war is not the expected outcome, tactical nuclear use becomes a more plausible tail risk if major regional conflicts become unmanageable.

Data Points: Potential diesel export ban duration: 90 days - Politico-reported U.S. policy idea discussed as a geopolitical and market lever. Iran ultimatum window: 1 week - Axios-reported ultimatum for the U.S. to lift the blockade or face renewed asymmetric escalation. Oil spike after Iran headline: about $3 to $3.5 per barrel - WTI rose sharply on reports of Iranian threats and supply concerns. Bonus episode timing: 1 day later / still September 24 - The overtime episode was recorded one day after part one but described as effectively the same date. Macro Voices target length: 45 to 50 minutes - Host says the flagship podcast will remain at this length despite longer guests. Canada population concentration: 90% - Every notes roughly 90% of Canada’s population lives near the U.S. border, reinforcing the integration argument. AI model lag: 3 to 4 months - Reference to Chinese open-source models allegedly trailing U.S. frontier models by only a few months. Potential North Korea troop contribution: 50,000 men - A rumor cited in the discussion about additional North Korean support for Russia. China trade truce extension request: through the end of Trump’s term - Mentioned as a sign China may have been expecting a near-term shift in leverage.

Pivotal Quotes: "Do you really think the US is going to accept a Canada which drifts away from it geopolitically, starts doing deals with China maybe, or with Europe, and then who knows where Europe goes in the future, and have a long, open, undefended border with it?" — Michael Every: On why Canada’s geopolitical detachment from the U.S. is strategically unrealistic. "It's the US with a constellation of countries around it who are themselves involved in various different open and closed negotiations with the US over where they will sit within that block or where they want to sit within it at all." — Michael Every: On the world being organized into competing strategic blocs led by the U.S. and China. "We are not going to be able to live in a world where national security is to the fore, where key commodities like energy and diesel are being thought over in zero-sum contexts, and where at the same time, it's a move your money at the click of a button." — Michael Every: On the coming clash between market freedom and national-security-driven policy.

Implications: Listeners should expect more coercive trade policy, capital restrictions, and security-driven industrial policy. The episode suggests AI, energy, and alliance politics are becoming strategic weapons, increasing volatility and tail-risk for markets.