8/5/26: Abdul Wins In Michigan, Houthis Hit Saudi Ship, US Bails Out Japan

29:22And then it looks like Ann Arbor, the insurgents won Ann Arbor mayor race and elsewhere and a bunch of other races that we talked about yesterday. It looks like not a completely clean sweep, but a pretty significant one. But not the case in Missouri. Think about it. When it comes to your own food, you can walk into a restaurant, see what's being made and know exactly what you're getting. But with dog food, most brands keep that completely hidden. Just Food for Dogs does the opposite. They've built their entire brand around open kitchens. You can actually walk in and watch them prepare your dog's meals with real human-grade ingredients like chicken, beef, carrots, and peas cooked right there in front of you.

30:07No mystery, no behind-the-scenes you're not allowed to see. That kind of transparency is rare in the pet food world. And it's a big reason they've become the number one vet-recommended fresh dog food, earning trust from pet parents who want to feel confident in what they're feeding. When a brand is willing to show you exactly how your dog's food is made, it says a lot about the care, quality, and standards behind every meal they produce. Nothing to hide. Everything to love. Go to JustFoodForDogs.com and get 50 % off your first order. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough.

30:45Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. Fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at O-D-O-O dot com. That's Odoo dot com. This is Ashley Akinetti from the Ben and Ashley I Almost Famous podcast. Ben, I've been reflecting a lot lately on how many big life moments our listeners have experienced with us.

31:27Yeah, it's pretty wild. They've watched us go from dating shows to engagements, weddings, babies, buying homes. Every stage comes with new decisions. The milestones are the fun part, but the planning is where things get real. That's why Klarna stands out. Klarna gives people smarter tools to help manage everyday money with flexible ways to pay, cash back that builds automatically, everything in one place, and support that makes everyday decisions feel less overwhelming. Since life moves so fast, the right tools can help you feel more confident. Download the Klarna app today or visit Klarna.com to learn more.

32:07California resident loans made or arranged pursuant to a California finance law license and MLS number 1353190. Klarna balance account required to be eligible for cashback points. Limitations, terms and conditions apply. Now where it stands in Missouri is Wesley Bell has, let me pull this back up. Wesley Bell in District 1 has 59.2 % of the vote. This is with just about all of the votes. And Cori Bush is at 36.9%. So resounding victory for Wesley Bell. Not exactly a surprise. Are we surprised at all by the margin of victory for Wesley Bell?

32:45Probably not, unfortunately. This was a real long shot for her. And I talked about this last night, but the weird internal polling just showed that the negatives on Cori Bush really stuck. And the main thing that they hit her for was missing too many votes. You know, she talked about she had two bouts of COVID, which is what led to the votes being missed. But it's not like they give context in attack ads. And Jamal Bowman was telling us last night on the stream when he was going around St. Louis, You guys can take that off by now. When he was going around St. Louis, people were excited about her but would say, like, wait, I saw, didn't I see that she didn't do her job?

33:30She never showed up to vote. Like, those ads were absolutely everywhere. And they still hit her with voting against the infrastructure bill in order to try to get the Build Back Better bill, you know, through. And so the negatives on Wesley Bell, for whatever reason, weren't landing in the same way. And she didn't have also didn't have the money this time to kind of really drive those home. Yeah. And didn't have a lot of, you know, you didn't have Bernie, you know, backing coming to the district. There were, you know, some she didn't have all the sort of organizational endorsement pieces there.

34:06And I also think, you know, just in terms of where the left is strongest, I think there was, you know, this is a demographic area, an area demographically that was going to be a challenge as well. So it seems like all of that was just too much to overcome. So APEC did get at least one win there last night, which I'm sure they'll be very, very happy about. I mean, just to remind people, when Cori Bush was originally defeated by Wesley Bell, this was the most expensive. At that time, this was the most expensive primary that had ever happened because they were bound and determined to get her out of there, and they succeeded with her, with Jamal Bowman as well.

34:44I think if she was an incumbent and they were trying to run that same playbook, I don't think that it would work. But there's a lot of advantages to incumbency. And I think you're right, Ryan, that some of the things, you know, the claims about absentee voting, there were also some alleged sort of corruption stories involving her and her husband that probably dinged her image in the district as well. So all of those efforts paid off for them. Right. The things that land are, you know, people think you're if people think you're petty corrupt, like self-dealing. And if you're not and and if you're not voting like that, like that, it hits in these attack ads.

35:24Like because like for, you know, I think for voters are like you're getting paid six figures. Your job is to go vote. Go vote. Like if I was there thinking if I was getting paid six figures, I would vote. And like I said, in an attack ad, you don't get a chance to say, well, here's the reason I missed these votes. It's just she had the worst voting record in Congress or whatever the whatever the hit it was. Right. And I mean, they tried a similar on the sort of petty corruption front. They tried a similar tactic with Abdul that I'm sure also dinged his image with all of Haley Stevens really spent a lot of time focusing on where's your tax return?

36:01Where's your financial disclosure, which she ends up releasing. But, you know, she'd raise these questions about, well, where did this money come from? Where did that money come from? And so to create this similar impression and to muddy the waters as she was getting hit hard for a sort of corruption by taking all of this corporate and lobby money for her campaign. Well, let's finally go to Washington District 9, where Adam Smith has, according to results right now, got 53 percent of votes in. He's not just advancing to the general election, but had 51 percent. So over 50 percent of the vote there in Washington 9.

36:41The Republican candidate, Doug Basler, at 23.8 percent. So that's what the general election will look like. Again, 53 % of the votes in. So we don't know if these particular margins stick, but over the 50 % margin for Adam Smith right now. Yeah. So this will be a lock for him in the general because it's a very liberal district, you know, just sort of like suburban Seattle. Obviously, we had both Adam Smith and his socialist challenger, Kashama Sawant. In Washington, they do a top two primary. So everybody runs in what's called a jungle primary. And then the top two move on to the general election.

37:16So that's why you see Socialists, Republican, Democrat all mixed together there in the results. Yeah. And Doug Basler, the Republican, raised less than one hundred thousand dollars in the primary. So, you know, he's not a serious candidate. He's not going to be a threat to Adam Smith. Kshama Sawant is currently in battling for third with Melissa Chaudhary. She's current results have her with eight thousand, a little over eight thousand votes. She's 800 votes ahead of Melissa Chaudhary. There's still about 60 ,000 votes to be counted. So it's possible Chaudhary could overtake her, but it doesn't matter.

37:52Third or fourth, either way, you don't make it into the top two there. Right. Yeah. Yeah. And Marie Glusenkamp-Perez, by the way, did win. She did make the top two. She had a left wing challenger who was trying to squeeze her out of the top out of the top two. But she she made it through. So it'll be her against a Republican to defend her seat. Yep. So some interesting results there. And, you know, I think perhaps the lack of the DSA endorsement for Kashama was significant there, too, just given, again, the organizing muscle. And when you have – there were multiple challengers there to Adam Smith's left, so there was – you know, there wasn't an ability to consolidate and be able to get past the Republican.

38:43Partisanship is a hell of a drug. You know, if you have an R or a D next to your name, there's a certain block of voters that's just going to be there for you. So you're not starting from vote number one. And, you know, it can provide an advantage. And then real quick before we finish, I'm going to put up a four. AIPAC did have another win here. This is Haley Stevens' district. To replace her, the pro-Israel candidate ended up with. nearly 50 % of the vote. Ayesha Faruqi with 32%. So fairly comfortable win, an expensive win for the pro-Israel crowd here in Stevens' district. But this will be, I think, probably a prime target in the next cycle if the opposition can kind of consolidate around a single candidate.

39:37They had a bunch of different challengers, and they could never really kind of organize the energy behind a single one. Kyle Blomkos there at 36%. Oh, yes. Yes. In the Upper Peninsula, district one. Yes. Yeah, we had Kyle on. He ended up also spent about 100 grand. I ended up losing by 20 points in his Democratic primary. Interesting, interesting candidacy, though. We talked to him about data centers as well. And we'll have, honestly, some similar things to discuss next week after the Wisconsin results. So should we move on to Iran updates, everyone? Just one last question for Ryan on the elections, which is just, you know, what's kind of your overall takeaway for the strength of the left within the Democratic primary base and, you know, how people should be thinking about these things overall.

40:29You know, we did a survey with DropSite and Zateo sponsored a survey back in, I think, April it was. And it basically found that Abdul El-Sayed did not have a path to victory in a one-on-one race against either Haley Stevens or Mallory McMorrow, and that his only chance was if all three of them stayed in. and it was right around that time that we did our survey, we put our survey into the field just as the kind of Hassan Piker thing was blowing up where McMorrow and Third Way were demanding that he be denounced and that ended up polarizing the race around him and around Israel-Palestine and sinking McMorrow's candidacy.

41:15So if you would have told me at the time that McMorrow was going to drop out and that El-Sayed was still going to beat Haley Stevens, I would have been very surprised because that was a very tough path for him to walk. And if we had told you she'd also get the Whitmer endorsement on top of it. Gary Peters would come in. Whitmer would come in. She'd have$60 million plus of ads telling people that Obama was supporting her and that you'd have almost 300 ,000 people vote in Wayne County and that he would still win, I would have been very surprised and I would never have expected that anybody would have been suggesting that there was going to be a 15-point victory.

41:58I don't know where on earth that kind of came from out of nowhere. Plus, if you also tell me, oh, by the way, Donovan McKinney is going to come from behind and win. Let's see if he does, but he's up now. And Will Lawrence is going to win in mid-Michigan. that's a pretty dominant performance for the populist wing of the party kind of across across the ideological and racial spectrum in a party that is very obsessed with with identity and it also came as the party establishment after having destroyed Graham Plattner was able to focus all of its energy on trying to take down Will Lawrence who they threw the entire kitchen sink at you know oppo was just coming relentlessly uh and abdul al-sayed they were going after him uh him and will lawrence with with really everything they had and so um that that's that's kind of how i take take it away rather than um the the squeaker but it's it's going to be a very tough race um and and they're gonna like i said they're gonna have to really lock in i don't know what's what's your 30 000 foot look at this morning you know what i was thinking about is like Like, you know, in the past, the populace left.

43:13There have been lots of sort of like moral victories for us. Like, well, we didn't win, but Bernie came really close. You know, if only X and Y and Z had gone different, really gave him a scare. I feel like now the shoe's on the other foot where it's like the centrists are kind of taking like a moral victory. And, you know, I'm personally glad to be moving into the realm of actual victories, not moral victories. So I think you're right that the bar has been raised so extraordinarily high now that in another cycle, just taking out one incumbent, Shree Tanidar, if that holds, you know, with Donovan McKinney, that would be seen as a really sort of landmark event in the way AOC taking out, you know, Crowley was this kind of watershed moment, etc.

44:01So I think it shows you how much the party has shifted, how much the landscape has shifted. But also, obviously, you can see the perils of the way they are able to fight back, the amount of resource that they're able to bring to bear. The frankly, you know, deeply cynical tactics that they're willing to use. You know, the constant weaponization of identity is a theme that goes back, you know, certainly to the Hillary Clinton versus burning campaigns as well. So, you know, I think it's a I think it's a reminder that there are still very, very strong forces that will do everything they can to oppose a true populist movement that will oppose money in politics, will oppose oligarchy.

44:40And that is to be taken seriously, both inside of the Democratic Party and in the, you know, the general election. Yeah, nothing's going to be handed to anybody if you want it. You got to take it. That's for sure. Most dog food brands don't really want you seeing how their food is made. Just Food for Dogs is the opposite. They actually invite you in. You can walk into any of their kitchens and see real human-grade ingredients like chicken, beef, carrots, and peas being prepared right in front of you. It's real food made in real kitchens. Nothing is hidden behind labels. And that kind of transparency says a lot.

45:16Nothing to hide. Everything to love. Go to justfoodfordogs.com and get 50 % off your first order. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at odoo.com.

45:57That's odoo.com. This is Ashley Akinetti from the Ben and Ashley I Almost Famous podcast. Ben, I've been reflecting a lot lately on how many big life moments our listeners have experienced with us. Yeah, it's pretty wild. They've watched us go from dating shows to engagements, weddings, babies, buying homes. Every stage comes with new decisions. The milestones are the fun part, but the planning is where things get real. That's why Klarna stands out. Klarna gives people smarter tools to help manage everyday money with flexible ways to pay, cash back that builds automatically, everything in one place, and support that makes everyday decisions feel less overwhelming.

46:39Since life moves so fast, the right tools can help you feel more confident. Download the Klarna app today or visit Klarna.com to learn more. California resident loans made or arranged pursuant to a California finance law license. NMLS number 1353190. Klarna balance account required to be eligible for cashback points. Limitations, terms and conditions apply. Well, we have some breaking news now, actually, in the Red Sea. We could toss this tear shape up on the screen. This is from The New York Times right now reporting this morning. Houthis threatened to expand Red Sea attacks and claim strike on Saudi tanker.

47:14The Houthis, they report, said Wednesday they had struck a Saudi oil tanker in the northern Red Sea, and they threatened to intensify attacks there in an effort to close, quote-unquote, all access routes to Saudi oil shipments. This obviously comes as the Trump administration is struggling to get itself out of the Iran conflict more broadly. We can put B1 up on the screen now. Just yesterday, this is going to be a thought. Just one moment, I'll set it up for us. Treasury Secretary Scott Besant is saying on CNBC, at least as of yesterday, that a deal was really, really close. And we also have some details to come on a potential deal between Iran and Oman about opening the Strait of Hormuz.

47:58But for now, let's start here just listening to 24 hours ago, Scott Besant, talking about how very, very close we were. We've seen President Trump last week threatened what would have been one of the largest military campaigns or the largest military campaigns since World War II against the Iranians. And now we are, because of that, we are in talks with the Iranians. And I think there is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict. And that's because their air force is wiped out, their navy is wiped out, substantial portion of their missiles are wiped out.

48:44More importantly, their missile production capability is wiped out. So, you know, anything that happens in the Gulf will benefit Japan and indeed the rest of the world, Joe. If we put the next element up on the screen, the talks of how close this deal were sent, the stock market surging yesterday. And now, obviously, there's also this conversation from reading here from Joyce Karam at Almonitor. The next element shows reporting, Hormuz deal seen close. Iran controls entry. Amman exits. Iran has the ability to intervene in the waterway. Potential service fee revenue split. That's according to the New York Times.

49:25And Besson was, of course, saying that this could happen any day. Crystal, now that there's additional conflict in the Red Sea and the Houthis seem to be escalating, what do you think this does to the bigger picture in the Middle East right now? Well, I mean, the funny thing is Scott Besson talking about we're going to have a deal, but the deal isn't with us. It's between Iran and Oman. And so and when you say a revenue split, that is going to also not involve us. That is between Iran and Oman. And Iran is saying it has nothing to do with the bigger, the broader war. Yes, exactly right. And Iran is saying, no, we are not negotiating with the United States right now.

50:04And I think the Houthi, you know, action this morning really shows that for their view, the war is very much still on and they're still going to enforce their red lines, both, you know, in the Red Sea and with the Strait of Hormuz. So nothing has really shifted, if anything, the acceptance from the U.S. of this Iranian Oman negotiation is another acknowledgement of the weakness of our position, because, you know, just to back up, what happened here is we had this MOU, Memo of Understanding. There was some ambiguity in the language around what would happen with the Strait of Hormuz, but the Iranians certainly understood it as we are going to retain control because we secured that on the battlefield and we have no intention of giving that up.

50:48The U.S. trying to undermine that deal and see what they could get away with by establishing these separate corridor through the Strait of Hormuz. Iran was not having that. And so that's why we ended and then we ended up in this, you know, tit for tat situation, which is basically where we are today. So, you know, it continues to be one of the primary issues in terms of the conflict. And the Iranians have no intention of ever giving up control over the Strait of Hormuz. So for Besant to, you know, tout this quote unquote deal as something that's positive for the U.S. is kind of extraordinary spin to this, because, again, it's it's sort of de facto an admission of how little control and leverage we have in all of this.

51:31I want to put up, I think this is B6 up on the screen. Every day we learn something new about how little we have left in our stockpiles. So yesterday we learned that we are virtually out of long range missiles. Now we get some reporting from CNN that the U.S. military has used up nearly 80 percent of key missile interceptors, as commanders warn once again, that stockpiles are dangerously low. So that's the other thing that is, I guess, amusing about Besant talking about, oh, we destroyed their Navy, we destroyed their Air Force. You know, we've kind of destroyed ourselves here. There's a reason why Trump issues these threats and then backs off, because not only does he, I guess, realize that even if he acted on these alleged threats, it would be unlikely to change the dynamics at the negotiating table.

52:22But we also just literally don't have what we would need to do to go forward with the sort of mass bombing campaign that we launched this war with. Yeah. Reading from the CNN report here, Trump decided to back off after talking with Middle East allies on Saturday who told him they were afraid of Iranian retaliation, specifically retaliatory attacks on their energy infrastructure, according to an official, a senior Trump official. Trump agreed to hear them and Iran out. He subsequently told Hegseth to stand down for now, but is not taking the planned strikes off the table for a future date. And again, in the CNN report, it says Gulf allies have also raised fresh concerns about how a shortage of air defense systems could impact their ability to warn off potential Iranian retaliation if Trump decides to escalate the ongoing conflict.

53:10It is just a stunning embarrassment. I mean, not stunning because it's surprising, but stunning because the administration slept walked into exactly what would have been predicted, was predicted indeed several months ago. This is what we were leading up to, Crystal. So it's not a surprise to, I guess, people who were always skeptical of this, we would be here in August if the conflict was still going on. I think Trump said at the beginning it was going to be three to four weeks at one point. I mean, his timeline was obviously all over the map. But we're now, it's August 5th. And now our Gulf allies are worried because our interceptor supply has been so depleted that they wouldn't be able to fight off an Iranian attack.

53:55It is such a dramatic contrast with how our power was being described by our leaders in early March. Yeah, and it really underscores why you had top military officials saying, We have to choose at this point, given how low our stockpiles are, between defending Israel and defending the homeland. Forget about the Gulf Arab allies or our bases in the region. I mean, most of those, I think, have been basically abandoned at this point. There's been a sort of retrenchment in Jordan. Then you had, you know, that deadly attack in Jordan as well with the Iranians showing that they could hit us there as well.

54:32So, you know, the whole situation in every respect is a complete disaster. And yet I don't think that Trump and the U.S. have felt enough pain for him to accept what would be required, which is, you know, to effectively acknowledge defeat at the negotiating table. keeps trying to find a way out of that impossible predicament, which is why I continue to be fearful of him doing something truly insane, whether it's an invasion, whether it's a tactical nuke, something of that nature to try to get himself out of the absolute bind that he has placed himself into. Yeah. And meanwhile, Brett Stevens, this is interesting, very pro-Israel columnist at The New York Times is warning about this public letter that Matan Vilnai, as a retired deputy chief of staff to the IDF, sent Trump just a few days ago.

55:25And this is actually Brett Stevens worrying about a potential third intifada. So in the New York Times, Stevens is writing, there's an immediate danger in that the spiraling West Bank violence, which is what Vilnai warned Trump about, quote, could easily produce a third intifada that an exhausted Israel can ill afford militarily or diplomatically to say nothing of the human cost in both Israeli and Palestinian lives, there's still a greater long-term risk that the Netanyahu government's excuse making for Jewish lawlessness and terrorism leads to what the scholar and diplomat Michael Oren in a prescient commentary essay from 2009 called the hemorrhaging of sovereignty.

56:00So, Crystal, we are now again in August after we heard all of the rosy outlooks in March that were being, and those same people that were promulgating those rosy outlooks were telling everybody who predicted what's coming to pass right now, where you have chaos in Israel, you have chaos in the U.S. military, and no end in sight in this conflict, potentially looking at Israeli supporters saying a, quote, third intifada because of spiraling violence in the West Bank. It is a complete and total disaster, and it is a complete and total vindication for people who were predicting it and being dunked on constantly in March and April about what was to come.

56:45Yeah, and obviously I have a million issues with the way Brett Stevens frames this thing and always putting Israel's interests above anything else, including international law or basic human rights, etc. But to see him use the words Jewish terrorism, I think, is very significant in The New York Times as a conservative columnist and someone who is a diehard supporter of the Zionist cause. And in terms of the West Bank, obviously, we've been covering the pogroms there, the extraordinary. And it's not just the settlers who are committing that violence. They're very much backed up by the IDF, those attacks, how our state-sanctioned.

57:24They have escalated dramatically over the past several years, but specifically in the past several weeks. And in addition to that, Israel has really been trying to economically squeeze the West Bank and sort of starve them in that way as well. So, yeah, you're going to get people who are very angry about that. Anyone would be very angry about that. You're going to get a lot of people who are very desperate in an existential way. And no, that's not good for the people who are being, you know, who are having their land stolen and who are being abused and assaulted and imprisoned. It's certainly first and foremost not good for them, but it's not good for anyone's safety to have this level of endemic violence.

58:09You know, turning back to the economic piece here, we had some interesting comments again from from Scott Bessent talking about the state of the economy. And, you know, the thing is that if this was another region of the world, perhaps you could put this thing on the back burner and just have this sort of low-grade tit-for-tat or the U.S. could even just up and leave and sort of like, ah, we'll figure it out later. Because of how crucial this region of the world is for everything in terms of the global economy with, you know, the fossil fuels backing basically our entire economic structure. We don't really have the luxury of that.

58:46So the economic piece continues to really be at the center of this entire war. So in any case, Besant was asked about the current state of the economy and made some interesting comments. This is B5. Let's take a listen. So we are starting to see. I got sick of hearing about this K-shaped economy. I can say here definitively the K-shaped economy is over. Come on. K-shaped economy is over. Just for people who aren't in the know of what that means. It means that the richest are doing really well and then everybody else is screwed. And the K-shaped economy, Emily, is certainly not over, especially gas prices are going to be one of the things that hit working class people the hardest.

59:28Inflation is one of the things that is going to hurt working class people the hardest because, you know, budgets are already stretched. Wages are not going up to keep pace with the level of inflation and just the increase in gas prices alone. So the K-shaped economy is only further diverging at this point. Well, yeah, we just mentioned earlier in the block that the stock markets were surging yesterday on this apparent news that we were close to a deal. What that actually means? Different question, as we talked about earlier. So when you have markets stop being attached, well, this has been going on for a long time.

1:00:01It's actually where the entire K-shaped economy formula comes from, being detached from the reality of the middle class on the ground. That's not an end to the K-shaped economy. It's like exactly when you're seeing the MAG-7 take up, what is it, like 30 % of the S &P 500, somewhere around there. The stocks keep going up and up and up. Meanwhile, in Michigan, which we covered earlier in the show because it had so many elections yesterday where populist candidates found success, gas is at$4.28, according to AAA's daily average. $4.28 a gallon in Michigan. again. So that's just a crazy thing to say.

1:00:43It's obviously a political problem for Republicans going into the election, but a genuine problem for Americans right now as well. Crystal, obviously, the K-shaped economy is unfortunately alive and well. Yeah. And we talked, Ryan talked about how Democratic establishment maybe doesn't really care all that much about taking back the Senate and is, I guess, at the very least cross-pressured on whether or not they would want Abdul Asayyad to win in Michigan. But I don't think Trump really cares that much about whether Republicans win in the Senate. He's certainly not really acting like it outside of some shady behind-the-scenes election-rigging maneuvers that he's making.

1:01:23But, you know, I don't think that he is particularly committed to whether or not Republicans hold on to the House or the Senate. So you got a weird dynamic of both, I guess, party leaderships being like, yeah, whatever. Gas is over$4 in Maine and in Ohio as well. So major swing states. Bessent saying the K-shaped economy is over on CNBC might be a good, clever way to spin and frame what he thinks is happening. But it's obviously not accurate. And it's just completely the more that they try to do exactly what we saw the Biden administration do by saying it's fine inflation. Don't worry about it.

1:02:06We've got it under control or blaming the other person or blaming like you cannot do that when you're in charge. And I guess maybe that's why Scott Besson is trying to come up with some new spin. I don't know. That's my best guess at what's going on there. Good luck with that, buddy. Yeah, seriously. All right. Well, speaking of Scott Bessett, boy, do we have a story out of Japan. Let's get to it. Most dog food brands don't really want you seeing how their food is made. Just food for dogs is the opposite. They actually invite you in. You can walk into any of their kitchens and see real human grade ingredients like chicken, beef, carrots and peas being prepared right in front of you.

1:02:44It's real food made in real kitchens. Nothing is hidden behind labels. And that kind of transparency says a lot. Nothing to hide, everything to love. Go to justfoodfordogs.com and get 50 % off your first order. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR, fully integrated, easy to use, and built to grow with your business.

1:03:25Thousands have already made the switch. Why not you? Try Odoo for free at odoo.com. That's odoo.com. This is Ashley Akinetti from the Ben and Ashley I Almost Famous podcast. Ben, I've been reflecting a lot lately on how many big life moments our listeners have experienced with us. Yeah, it's pretty wild. They've watched us go from dating shows to engagements, weddings, babies, buying homes. Every stage comes with new decisions. The milestones are the fun part, but the planning is where things get real. That's why Klarna stands out. Klarna gives people smarter tools to help manage everyday money with flexible ways to pay, cash back that builds automatically, everything in one place, and support that makes everyday decisions feel less overwhelming.

1:04:15Since life moves so fast, the right tools can help you feel more confident. Download the Klarna app today or visit Klarna.com to learn more. California resident loans made or arranged pursuant to a California finance law license and MLS number 1353190. Clown a balanced account required to be eligible for cashback points. Limitations, terms and conditions apply. So in a sign of the massive impact that the Iran war is having on the global economy, certain things are starting to break. In particular, the Japanese yen, the Japanese currency, which has taken a massive hit. And I'll get into some of the mechanics, although it's a little bit complicated, of what exactly is going on there.

1:04:57But extraordinary scene here. We've got this Scott Besson, almost like he's right now on a grocery list, put C1 up on the screen. We've got a notepad and an eagle-eyed photographer was able to capture the note that was written here. It says, to do, buy Japanese yen,$5 to$10 billion. dollars. So the TLDR here is that because of the Iran war causing all kinds of problems for Japan, including surging inflation in a place that has not had inflation famously for decades up until COVID, and they got a little bit of inflation. But now, you know, with gas prices going up in Japan being an island, it has to import most of what they consume.

1:05:40It's causing massive issues for them. And so we're jumping in to bail them out and to help prop up their currency. The reason we care about that and the reason we're doing that is not out of the kindness of our hearts, Emily, and or because we love the Japanese and their great allies or anything like that, although I'm sure the fact that they're allies certainly helps to make the case. But the reason we're doing that is because in order for them to be able to prop up their own currency, they were going to have to sell off a lot of U.S. treasuries. And they are one of the largest holders of U.S.

1:06:16treasuries in the entire globe. So if they begin to sell off the holdings of treasury bonds that they have, that would in turn mean that we would have to pay a higher interest rate in order to get more people to buy our debt. So that means our debt, which is quite high. Japan actually has an even larger debt, which is part of their problem because they've had de facto 0 % interest rates for years and years and years. Our debt is also quite high. If you have to pay a higher interest rate on that, that puts a lot of financial strain. And judging by the way Trump has, you know, the cycle of the Trump taco in this war and also with regard to his tariff scheme, he is very closely attuned and paying very close attention to what that interest rate is on the Treasury bond yield.

1:07:10So that is what's going on here. But again, you know, if you want to gloss over some of the more technical mechanics, the TLDR here is that the Japanese are getting screwed because of our war in Iran. And it has reverberating impacts on us and our budget and the stabilities of our Treasury market. So we are jumping in to bail them out to the tune of five to ten billion dollars. Yep.

1:07:36I really don't even know what to say, Crystal. It kind of reminds me a bit. It's not, it's obviously apples and oranges, but it reminds me a bit of Besant and Argentina, which you and I covered, I think, at the time. Yeah. He's just wheeling and dealing. Like, he still works at a hedge fund. That's what it looks like from the outside. Yeah. Well, this is, you know, part of how he, I mean, it really is the way that he made his fortune, was working with George Soros. on these currency trades. And so that, you know, this is his bread and butter. This is where he shines, propping up foreign currencies and manipulating currency markets is kind of where he does his thing.

1:08:18We can put C2 up on the screen just to see, you know, how much the yen has fallen. This says the worries that drove Uncle Sam to buy the yen. The weakness of the Japanese currency was a problem, not just for Tokyo, but also Washington. The yen had slid to a 40-year low indirectly threatening to bump up U.S. interest rates and risk throwing a wrench in plans to pull billions of dollars of Japanese investment into the U.S. Let me explain that part of it. So as part of our trade deal with Japan, you know, they made one of these promises of, oh, we're going to invest billions and billions of dollars, et cetera.

1:08:50Well, if you have a very weak yen, that means it's going to, in their currency terms, cost much more to be able to make those investments, and they wouldn't be able to afford to invest as much in the U.S. So that's the other way in which this was posing a problem for Trump and for the U.S. because they were unlikely to make good on some of their commitments here. There was a great video explaining some of the sort of longer backstory. story. Japan is a really fascinating economy because they have, unlike most of the world, they have had this long period of either 0 % inflation or even deflation.

1:09:34So whereas we're very used to, you know, OK, things are going up in price a little bit year over year. And obviously that's spiraled and escalated in the past few years. They've had this long stretch, which was a problem for them economically of price stability. So because of that, they have kept their interest rates at 0%. That means that if you are a global financier, you can borrow money at basically 0 % in Japan, then you can convert it and invest in anything, any sort of US tech stock or anything that's going to create some sort of a return. So this Japanese carry trade has been a very important part of investments, not only in treasuries, which we discussed about, discussed, but in our entire stock market, you know, the tech build out, all of that stuff.

1:10:25So that's the other issue is maintaining that carry trade ends up being very important for Japan, for sort of stability, for the U.S. Treasury market, et cetera. A YouTuber named Andre G explained the dynamics here in a way that I think was very understandable and got into the background of what is going on overall in the Japanese economy. It's worth listening to if you're curious about these sorts of things. Let's go ahead and take a listen to him explaining this carry trade. Now, the yen carry trade meant if you were a hedge fund or a bank or an investor, you could borrow yen at 0 % interest, convert it to dollars, you could buy basically anything in the world that paid you more than zero.

1:11:06Meaning you could buy U.S. treasuries paying 4-5%, you could buy tech stocks, Bitcoin, anything you wanted. And you made free money. That's estimated to be worth trillions of dollars of investments all around the world. Funded by borrowed Japanese money. So Japan was like, we want to get in on this too. So Japan took its savings overseas because for 30 years, there was nothing worth buying in Japan. Japanese pension funds, insurers, banks, households, they all shipped their money overseas to get some of that interest. And in the process, Japan became the world's biggest foreign holder of U.S. government debt, holding something like over a trillion dollars of U.S.

1:11:52treasuries. Japan's pension fund, for example, the GPIF, which is the biggest pension fund in the world, holds hundreds of billions of dollars in U.S. bonds and stocks. So think about it like this. When the U.S. borrows money, when tech stocks go up, when Bitcoin goes up, there is a strong chance that somewhere in that process, it was partially funded by Japanese money. But remember, this only works because interest rates were zero. They are no longer zero. Japan's interest rates are going up. So as we know from our own, you know, the way our central bank operates, okay, what do you do when you start to have inflation, which Japan in COVID and now exacerbated by the Iran war has begun to have some inflation?

1:12:37You raise rates. So if you raise the rates, now this carry trade no longer makes sense because you can no longer just borrow, you know, 0 % in Japan and then use it to fund all these tech stocks and buying US treasuries, et cetera. And so that is creating a lot of challenges for them. If they raise the rates, then they're going to have bond prices that are very high. It's going to be a problem for us in terms of our investment. They have this massive amount of debt that they accumulated because they could borrow at 0%. So it didn't cause major economic issues for them in the past. So when their interest rates go up on their debt, it's a major problem.

1:13:14However, then, if you don't raise interest rates, that's when you see these massive problems with the yen and the depreciation there. And obviously, inflation continues to climb. This is a major problem for a country of savers. So all of their savings are being eaten away by inflation. So they've really been in this bind, which is why they're kind of damned if they do, damned if they don't, which is why now the Treasury Secretary is deciding to jump in and bail them out, because this problem is creating issues for us as well with our treasuries and with our stock market. So I think it's just, Emily, the bottom line here is, I mean, first of all, I think a lot of people are going, wait, why are we bailing out Japan?

1:13:55Like, isn't there, aren't there a lot of other things we could do with that$5 to$10 billion in Japanese yen? What is going on here? We sold off euros for the yen, right? I believe so, yeah. But the other, I think the broader point to make here is just the global economy is very complicated and it's very interconnected. And we are really straining it with what we've decided to do in Iran. So, you know, I would not have been thinking about, as we got into this, you know, I'm thinking about oil markets. I'm thinking about the obvious things. I wouldn't have been thinking about, oh, this is going to cause a currency crisis in Japan that we're going to have to intervene in or else our stock market is going to fall apart and our debt is going to skyrocket in costs.

1:14:40That is, you know, a second order of effect that myself as a layperson would not have imagined. And there are even going to be third and fourth order effects that even people who do this for a living are not going to be able to foresee because we saw that all unfold with regard to COVID. So to me, it's just a sign of the level of fragility in the global economy and how much it is being stressed by, you know, what we've decided to do with this war in Iran. Well, not even just the economy. I'm reading from an NBC News report. Actually, I'm sorry, it's a Reuters report this morning. North Korea's Kim Yo-jong, the powerful sister of leader Kim Jong-un, warned on Wednesday that Pyongyang would adopt, quote unquote, additional military options in response to what she called Japan's transformation into a military power after Tokyo test fired a U.S.-made Tomahawk cruise missile.

1:15:27And Crystal, all of these pieces come together and emphasize just the fragility of geopolitics right now to your point about the economy, to your point about the economy and being tied up with Iran. This is this this situation is obviously very fragile to say the least. I want to read from this Financial Times piece that we can put up on the screen as well. The headline is Japan vows further yen intervention with U.S. if needed. Japan has confirmed the historic joint intervention. The finance ministry intervened on Friday. And then further, they said, we will not hesitate to conduct further joint intervention.

1:16:05That's such a weird way to put it. We will not hesitate to conduct further joint intervention. It's like a threat, Crystal, at this point from Japan. Really odd. Yeah, indeed. A very dicey situation here. So in any case, one aspect of the war that is creating massive issues for Japan, but also for the global economy and even for our own debt and stock market. So definitely one to keep an eye on. Yeah, absolutely. New updates in the Epstein investigation from Capitol Hill. Let's get to that.

1:17:02We'll be right back.

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