Thoughts on Trump's weak hand in Beijing, Putin's looming date with destiny, why replace Starmer, private equity's next trick, and can Serbia join Europe's winning side
I would go back and read what Walter Russell Mead was saying almost exactly a year ago - that Ukraine should knuckle under and take whatever deal Trump was offering. Suicidal advice tbh.
And if the Serbs didn't want Kosovo taken away, they shouldn't have committed a coup that ended its autonomy, then use its vote as a part of their plan to take over the Yugoslav ruling council in the 1980s as part of building Greater Serbia, and not then committed genocide in 1999. Actions have consequences, were any of these Serbs sorry about either of those steps?
Great piece as always Simon and absolutely endorse the comment on the CFR interview with Fiona Hill. Been thinking about what she said all weekend. Confronting stuff.
The weak hand analysis is correct and the rare earth oversight is the detail that deserves more weight than it usually gets in the summit coverage. Launching a trade war against the country that controls 70% of refined rare earth processing and 80% of cobalt refining without first securing alternative supply chains is a strategic sequencing error that constrains every subsequent move. You cant threaten economic decoupling from a country that controls the physical inputs your own technology sector depends on. The leverage runs in the wrong direction and Beijing knows exactly where the pressure points sit.
The summit dynamics you describe map onto a specific negotiating structure that I think clarifies why the expectations are so low. Trump needs something from Xi (help with Iran, tariff de-escalation, a headline). Xi needs something from Trump (tariff relief, sanctions easing on Chinese tech firms). In theory thats a deal space. In practice, Trump's weak hand means the price China sets for cooperation will be higher than Washington wants to pay, and the price will be extracted in currencies that dont appear in the communiqué. Semiconductor export controls quietly relaxed. Enforcement actions on Chinese firms quietly dropped. Taiwan rhetoric quietly softened. The official framework will say one thing. The operational adjustments over the following 90 days will say something else.
The PE marked-to-fantasy section connects to something happening in AI valuations right now that runs on the same mecanism. Anthropic is trading at five different valuations across five different markets, from $380B in the primary round to $1.2T on Jupiter's onchain market. The gap between those numbers represents the same category of problem you describe in PE: the absence of mark-to-market discipline creating a valuation environment where the number reflects who's buying rather than what the asset is worth. The IPO wave you mention will do for AI valuations what rising rates did for PE portfolios — force a single price that most holders wont like.
The Starmer section and the Serbia section are both worth reading alongside each other because they tell the same structural story from different angles. Political fragmentation in mature democracies (UK) happening simultaneously with institutional convergance in developing ones (Serbia moving toward EU accession). The centripetal and centrifugal forces are operating in opposite directions across the continent and the question is which dynamic proves more durable.
Interesting point about the AI/Anthropic valuations. Something to come back to
I think the UK and Serbia also link in another way - the challenge for the EU to bring countries in its hinterland with the potential to cause mischief that are not easy candidates for membership into its geopolitical orbit. The problem for the EU is that as a rules-based entity, it struggles to act strategically
Private Equity has always seemed to me to be just a rebranded version of the 80s scam artists/ corporate raiders like Robert Maxwell, Alan Bond and Christopher Skase and was always destined to end in tears
Great article. My only bug: the notion that Chinese Ai models are now basically on par with American, even at an advantage as they are open source. Do the Chinese really have something on the level of Mythos?
I would go back and read what Walter Russell Mead was saying almost exactly a year ago - that Ukraine should knuckle under and take whatever deal Trump was offering. Suicidal advice tbh.
And if the Serbs didn't want Kosovo taken away, they shouldn't have committed a coup that ended its autonomy, then use its vote as a part of their plan to take over the Yugoslav ruling council in the 1980s as part of building Greater Serbia, and not then committed genocide in 1999. Actions have consequences, were any of these Serbs sorry about either of those steps?
Good to read you have "been growing more optimistic"
yet again excellent, succinct & measured- if only it were good news!
Great piece as always Simon and absolutely endorse the comment on the CFR interview with Fiona Hill. Been thinking about what she said all weekend. Confronting stuff.
The weak hand analysis is correct and the rare earth oversight is the detail that deserves more weight than it usually gets in the summit coverage. Launching a trade war against the country that controls 70% of refined rare earth processing and 80% of cobalt refining without first securing alternative supply chains is a strategic sequencing error that constrains every subsequent move. You cant threaten economic decoupling from a country that controls the physical inputs your own technology sector depends on. The leverage runs in the wrong direction and Beijing knows exactly where the pressure points sit.
The summit dynamics you describe map onto a specific negotiating structure that I think clarifies why the expectations are so low. Trump needs something from Xi (help with Iran, tariff de-escalation, a headline). Xi needs something from Trump (tariff relief, sanctions easing on Chinese tech firms). In theory thats a deal space. In practice, Trump's weak hand means the price China sets for cooperation will be higher than Washington wants to pay, and the price will be extracted in currencies that dont appear in the communiqué. Semiconductor export controls quietly relaxed. Enforcement actions on Chinese firms quietly dropped. Taiwan rhetoric quietly softened. The official framework will say one thing. The operational adjustments over the following 90 days will say something else.
The PE marked-to-fantasy section connects to something happening in AI valuations right now that runs on the same mecanism. Anthropic is trading at five different valuations across five different markets, from $380B in the primary round to $1.2T on Jupiter's onchain market. The gap between those numbers represents the same category of problem you describe in PE: the absence of mark-to-market discipline creating a valuation environment where the number reflects who's buying rather than what the asset is worth. The IPO wave you mention will do for AI valuations what rising rates did for PE portfolios — force a single price that most holders wont like.
The Starmer section and the Serbia section are both worth reading alongside each other because they tell the same structural story from different angles. Political fragmentation in mature democracies (UK) happening simultaneously with institutional convergance in developing ones (Serbia moving toward EU accession). The centripetal and centrifugal forces are operating in opposite directions across the continent and the question is which dynamic proves more durable.
Interesting point about the AI/Anthropic valuations. Something to come back to
I think the UK and Serbia also link in another way - the challenge for the EU to bring countries in its hinterland with the potential to cause mischief that are not easy candidates for membership into its geopolitical orbit. The problem for the EU is that as a rules-based entity, it struggles to act strategically
Private Equity has always seemed to me to be just a rebranded version of the 80s scam artists/ corporate raiders like Robert Maxwell, Alan Bond and Christopher Skase and was always destined to end in tears
Indeed, the book recounts the history of characters from that era such as Jimmy Goldsmith...
Private equity’s next trick is not democratization. It is loss-distribution.
When opaque assets can’t clear at marked valuations, the exit route becomes ordinary savers, pension systems, and legitimacy language about “access.”
The public gets inclusion only after insiders need liquidity.
Great article. My only bug: the notion that Chinese Ai models are now basically on par with American, even at an advantage as they are open source. Do the Chinese really have something on the level of Mythos?
Also, the notion that the US security guarantee has been eroded is even more convincing after this read: https://substack.com/@arnaudbertrand/note/p-197292585?r=5t0syv&utm_medium=ios&utm_source=notes-share-action