The Peter Zeihan Podcast Series - Critical Water Levels in the Panama Canal & MedShare Match || Peter Zeihan

Episode Date: November 14, 2023

Donate to MedShare HERE: https://www.medshare.org/zukraine/ Water levels in the Panama Canal are critically low, and the effects could be devastating. The canal represents one of the world's most important trade routes and plays an essential role in the US trade system. Full Newsletter: https://mailchi.mp/zeihan/critical-water-levels-in-the-panama-canal-medshare-match

Hey, everybody. Peter Zion here coming to you from above Denver, and the Taze topic is the Panama Canal and the impact on trade now that it's largely shut down and partially shut down. But before we get to the bad news, let's cover some good news. I do have good news from the time to time. We have had another matching sponsor come in, adding another $10,000 to the match. So if you would like to donate to MedShare, which is a charity that provides medical assistance to communities who cannot look after themselves for reasons that are not their fault, specifically the Ukraine's, fund where the Russians have started bombing the power grade and attempt to kill as many civilians over the winter as possible. Now is the time because the first $90,000 that is donated to the link work and the QR code that we're attaching to this and all of our videos for the foreseeable future are going to be doubled for the month of November. So up to $90,000,

I mean, basically you're doubling your money. That's a better financial proposition than Bitcoin in my opinion, but you know, bygones. Anyway, now is the time, so please be generous. We're doing everything we can. The money is rolling in. It's looking very positive, but every little bit helps. Okay. With that behind us now, let's talk about Panama. It hasn't rained, really, in Panama in several months. They are in the middle of the most intense El Niño on record, and unlike most canals that, you know, go up and over and therefore have uncontinental lands, and so have lots and lots of water to draw from, Panama is going for ocean to ocean, sea level to sea level, and it has to go up a few hundred feet, which means that aside from the first and the last

lock which touch the ocean, everything else is water that comes from the sky. And it is a mess. So there's not a very large water catchment issue. And that catchment issue also has to supply all of the water for the city of Panama, which is about home to three quarters of the population of the country. So you get a prolonged drought event like they're in the middle of and things are bad. If anything, it's worse than it sounds. Because we're supposed to be in the middle of the wet season right now. The dry season starts in about six to eight weeks. And so they know that this is going to get worse before better, and they're probably going to have to wait until the next wet season, which isn't going to start until the beginning of next summer. In the meantime, the number of ships transiting the canal

have already dropped by over a quarter, and of the ones that are still going through, they've had to reduce their draft by about a quarter, which means that the amount of weight that they can carry is reduced by about 40%. So the bigger ships aren't going in at all, the smaller ships are carrying less, and it adds up to very, very roughly-ish, a 50% reduction in the throughput capacity of the canal. Now, for the United States, this is kind of a big deal. This is the piece of international infrastructure that we use by far the most. Even more than that big bridge over the Great Lakes going to Canada. About 6% of global trade transits the canal.

Most of that trade is from the United States, very heavy in the commodity space, energy and especially food stuffs, going from the Mississippi and the east coast into Panama and then cross the Pacific. The alternate route is a few thousand miles longer. It crosses the Atlantic into the Mediterranean through Suez around India and then up to East Asia. Much more expensive route takes a couple weeks extra. It's not the best solution, even once you consider the extra cost. Keep in mind that really all it takes is one Filipino crew on a container ship throwing a party at the wrong time in the middle of the canal. The ship can get stuck.

And then that shuts down too. There's not a lot that anyone can do here, building up the alternative infrastructure to ensure a backup water supply would require a few billion dollars in several years, and you would still have to wait for it to rain to fill up those reserve reservoirs. So really all we can do here is wait. About the only thing that I could suggest, and this is something that I think it's high time we do anyway, is for the United States to massively expand its production footprint in the processing of the raw commodities that it exports. Not only would you then have a much denser value ratio to weight and bulk for the things that you export, but there'd be a lot more economic activity generated within the continental United States as well before you can get to the export component. Anyway, that's my two cents. That's all I got for today. Everyone take care.