Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Merin Trugs Money Weekly round Up, our debrief on the biggest stories in markets and economics. I'm Merin Zumzet, Web Editor at Large for Bloomberg UK Wealth.
And I'm joint therapey, author of the Money Distilled newsletter and senior reporter for Bloomberg.
Excellent, John, your Scottish?
Yes, can you tell?
And you said to me the other day that I was the token Scott in the run, but kind of I'm not.
You're You're the actual Scott in the run.
So you will have noticed that a court has just ruled that the consent for two new Scottish oil and gasfield has been granted unlawfully and their owners must seek fresh approval from the UK government before product you can begin. And I thought I would just mention that because we're going to talk about a couple of things today, and the first thing we're going to talk about is Rachel Reeves and her drive for growth, because it is her mission, her.
Drive for growth.
And then we're going to talk about deep seek and the US dot market and AI a little bit. But I just thought a fabulous introduction to talking about who we now call poor Rachel Reeves is this fact that every way a government turns, there's a court there, often with Greenpeace behind it, say actually, no, you can't.
And do you remember poor Rachel? Last week she said?
The answer can't always be no. She said that Davil didn't she Well, you know what, Rachel, The answer always is no.
What's she going to do about it? What is she going to do about it? John?
Normally I would feel that it's not necessarily a good thing you have a lawyer as a prime minister. But I'm starting to feel that maybe that is the kind of wine great sport about Kirstana's being the prime minister. It's like the level of I mean, people call it judicial activism, and I get that. But the only reason that this stuff can happen is because a politician passed a lot at some point in the past that Noney
has quite noticed the repercussions of at the time. So we need, we do need to do something about this. It shouldn't really be up to a small pressure group bringing i mean quite a fringe kind of case that can then shut down something that the democratically elected government has already approved. This isn't okay. Actually the course of going too far. There's a lot of examples of this
sort of stuff and it needs to stop. Unfortunately, I'm not a lawyer, nor a politician, not someone who is deeping the weeds on this stuff, so I don't know how this has come about, but we need to get idiot. It just needs to end because it's not acceptable we have this kind of thing continuously stopping is from getting in.
It's absurd.
And when you look at the I'm just going to say before we start here, hate mail directly to John not me, right, because he's Scottish, so probably he was the one who wanted these oil fields in the first place.
Not me totally, but yes.
But the case is we talked about Aberdeen last week, didn't we. But the cases were bought by two environmental campaigning groups, and Greenpeace obviously and another one called Uplift. And I haven't done this yet, but I'm pretty sure that if we check where the cash that goes to Uplift and Greenpeace comes from, we'll find that quite a lot of it comes one way or another via our tax contributions.
So we are caught in this ridiculous situation.
By time after time after time you find the government thoughted by government taxpayer financed organizations, and this.
Is what we have here.
So we're a fifty seven page judgment where the judge said there's a public interest in having the decision remade on a lawful basis because of the effects of climate change, which you said outweighed the interests of developers. Of course, you know, maybe something like this, the Rosemanck oilfield and the jack Door gasfield. Rose is a bit north of Shetland and Jackdaw is a bit too, the east of Aberdeen. I would say this isn't just about the interest of
the developers. It's about the interests of the ordinary, ordinary population of the UK and their living standards. But hey, that's just me. Anyway, onto Rachel Rage and all the other things that she isn't going to be able to get done.
There's the Heathrow runway, right, yeah.
I mean if she can't get a couple of oil
fields opened, then I do wonder. I mean, Rachel Reaves was actually on Bloomberg Telly and she said that she wants speeds to be in the ground by the end of this parliament and I mean, the normal circumstances tell me that you're going to start on an extension in four years time would seem like a long time, but that seems miraculously fast for you know, an extra kind of runway that's already been delayed by you know, countless times over various legal challenges, and you know, and obviously
you've already got side Can saying that he's definitely going to take it to court. So I am going to be interested to see how this happens.
He's going to take it to court. He's going to take it to court, and he's going to.
Use climate change legislation net zero all that stuff, and he's going to have green Place and Uplift with him. And once again, this is how low fair is used in the UK to for the government.
Well, I mean, let's say one thing that I am interested in, and you know, obviously made an awful lot of criticisms of the government and the decisions that it's made, but I am curious to see if someone who is as presumably versed in law fare and this way of doing things as Kirstarmer presumably is, has got a way to counteract it. Now that he's the one that's you know, taking the flag from it. I am hoping that if nothing else comes about, we will see a pushback against
this basically governance via the courts. But you're right the other thing and also also getting ready gift aid, gift aid needs to stop, you know.
All of this kind of get rid of gifted.
Garridy, gifted. You've been saying it for the ages. You know, anything, any any grant to any charity should be much more transpardoned. I mean, in an idea world, I would say, don't give any tax payer money to charities at.
All, or whether every single.
Team is hinded it in fifty were saying that the population nice to be for it or something like that, because this is just going beyond their jok.
No grants to charities of any kind out of taxpayer money. The government should do what the government should do. And charities are outside the government, and I'm not sure that any of them, any of them be it squirrels or greenpeace,
and should be financed by government, by taxpayer. The government should you know, for phillip democratic mandate, which is to do what the population wants, not to give money to organizations that are doing things that the population might not necessarily want, which brings me very neatly to something that I've been looking at this week. We haven't really finished on growth. We'll come back to growth. But this is connected.
Over half of gen Z.
I can never remember which gens which, but let's say young people, over half of gen Z wants to the UK to become a dictatorship. Now, why do they want the UK to become a dictatorship. There's all sorts of theories out there, but I can't answer that for you. It's because they would like to see something, just something, anything, get done.
They see the.
Electorate going out them voting again and again and again. Build stuff, do stuff, make a smaller state, have lower taxes, reduce immigration, whatever it is people vote for over and over. These things never happen. Nothing anybody votes for ever happens. So they think to themselves, well, if anything's ever going to get done, maybe we should just have a dictator.
Hey, maybe the stuff that gets.
Done won't be what we want, but something will happen.
I mean, do you think that's it.
I mean, there's probably an element of them wanting a better drama in the lives. Yeah, I mean, obviously we all of these, said SVIs, I'd take me a massive pinch of salt, because I don't I don't think the more I mean generations said, this is the generation that's actually older than old kids, but younger than the millennials. So I know, twenties.
Oh, they're really difficult ones, aren't they.
Yeah, they're kind of like they are kind of yeah, I mean the other interesting things. I mean, you know, maybe maybe it's just not true, but people say about young people getting more being more left wing, they're just want the opposite of what they've got.
Now, well, it depends what they want to communist dictator or right wing to dictator. I mean, no one said them, No one said, did they want a fascist or a communist?
I mean, they didn't get the right choices, I guess.
So we don't know whether they're extreme left or extreme right, or if they yet know that extreme left and extreme right are the same thing.
Maybe they don't know that yet. The young they may not.
And also, I don't know, they've got a lot I'm not sure that they I'm not sure left and right make a lot of sense anymore. I think I think whenever I think about all of the things that are going on. You can basically split any people who are still pro something resembling progress and that kind of and that kind of degrow with anti growth nihilism on the
other side. And did those two things, And I think that then makes a little bit more sense of the voting for a dictatorship element, because that's quite a nihilistic way look at things on nihilistic and I'm never prety sure you pronounced that. So I think that that then makes more sense than them thinking about I don't think they're thinking, you know, a woint, a stylin or a woint.
They're thinking, A want somebody who's going to set my enemies whoever they are straight, if you know what I mean, I mean they want a dictators on their said, yeah, I.
Suspect it's more it's more about or it's a lot about the absolute lack of growth over the last couple of decades. So you have an entire generation here that they've never really experienced the growth, the innovation, the creativity, etcetera. That leads to sustained economic growth that you and I saw when we were young.
So we maybe have more of a growth.
Mindset, as they now say in the school's growth mindset, and I that growth is the default that it's possible, that it should be, that things should be improving.
And getting better all the time.
And therefore the idea that wealth should constantly be redistributed isn't necessary because the pie is growing. Whereas if you are perhaps generations, that your default belief, which is entirely reasonable, is that the pie isn't growing, and crucially that, particularly with poor Rachel in charge, it isn't going to grow.
So what you need is a.
More extreme level of redistribution than democracy will allow. So if you don't get growth, and you don't get living standards growing, again, what is it that you would expect except for maybe this?
Yeah, I mean that's yeah, that's really true. And I do forget that we grew up in the nineties and the nineties were very much everything did to keep getting up particuli at your political level.
We had great jobs, we could have you know, we were educated for free, We had great jobs, we could afford houses. You know, we have children, we had them at a reasonable age, et cetera, et cetera. A lot of the things that people stuck in a no growth mindset and a no growth assumption find very hard to think that they will ever have, So I totally understand this, But I've gone off topic again. This is not that
kind of podcast. So let's I think we've talked quite a lot in the past on this podcast about what Rachel Reeves could do to allow growth rather than to pretend that she can create growth. So I would suggest anyone who wants to hear a little more about that goes back to the podcast that we did with Simon French, which was excellent on all that, the main thing being that.
If Rachel really believes that growth.
Is a fight, she's fighting the wrong thing. You know, she doesn't need to fight. She needs to get out of the way. Less fighting, less fighting, and less of course you are fighting the course, which he's going to be doing for a while. Onto something, John, Onto something that you've written about a lot this week and which we already released what we don't call an emergency podcast but we call an early podcast on Tuesday. AI Deep
Seek and the effect on the US technology sector. Are you in the camp that says deep Seek It's great. Everything just goes better for US tech as a result of Deep Seek, and we should all buy more and more in video or are you in the camp that says, oh, look, China one, this stuff can be done cheaply and easily with low energy. Therefore, no one wants to own a
video chips anymore. It's all over for them, and it's all over everyone who's spent billions and billions and billions on building or attempting to build an AI infrastructure that doesn't look like it's already needed. Oh, and could buy nuclear energy at the same time. Oh, you could be somewhere in the middle. I guess, But those are the two camps, right.
Don't think I mean I that camp, and I think the only count I'm actually in is more that this has remainded people, That unexpected stuff throws spinals in the walks all the team and the one the mental problem here has been the AI bubble. I feel like, let's call it the AI bubble has been massively overinflated. So stocks are very overvalued compared to anything but the most perfect event unfolding. And the one thing that Deepseek shows
is that you don't know the future paths. You can't assume that it's going to be perfect, and you can't assume that in the video is going to be the only contender for the rest of eternity, and therefore probably there should be a little more room for uncertainty in the price, which means that the current price, or the price you know, a couple of days ago, was probably not the right price. And I think that's about the only useful thing that especially, I mean anno specialist like me,
but even you know, the specialists unfortunate. If you're a non specialist, you don't know the details we are talking about. But if you're a specialist, you're two way far too into the details to be able to give a decent big picture look. So I think that, yeah, I mean, I think that's it. I think all we knew before, for almost sure, was that these thoughts were overvalued. And this is a remainder why they were overvalues, because they were placing and perfection rather than anything else.
My takes would be that one exactly never pay for perfect because you're never going to get perfect. And you know, the dynamic of of all of history is that some technology that looks expensive and difficult is always disrupted by someone who can do it at a fraction of the cost, where a fraction of the effort happens every single time.
That would be my first takeaway. The second one would be the weirdness of I don't know when when you and I were reading all the stuff about Davos, where we weren't by the way, you know, a lot of the talk at Davos was about deep seek, right, this was new information. It had been out there before, but
it only hit the stock market on Monday. That was really interesting because everyone's at worst talking about how there you know, the market gets hold of information before anybody else and it's a perfect waging machine.
E cetera, et cetera.
But actually it was a long time in market terms for the information about deep seek and what it could do and how it had been trained to do it to move from DeVos chatter to the market. Information doesn't matter until suddenly it really mattered. That's also I thought very interesting. Yeah, that from the non expert point of view, cheap AI might not be good for big tech, and might not be good for anyone who's just promised to check one hundred billion into Donald Trump's AI infrastructure ideas.
Maybe not good for that, but really good surely for productivity across the board, which brings us back to poor Rachel Reeves and her desperation to create growth. But she
might not necessarily have to do that. But she can't do that, but she might be able to step back and just say, well, hang on, if cheap AI is out there and it's going to make its way round the economy without her having to do anything, that could be conceivably a huge cheap productivity boat boost will give us growth anyway, not just here but in the US of course as well. And then we have the classic
situation where you have a bubble, massive capex bubble. You have the creation of the technology of some kind or another. You have a product productivity boom, but we don't actually see any profitability to the big companies. You may have developed the technology in the first place for a good decade, like well, like the Internet, like railways, all.
This kind of thing.
I'm amusing myself at the moment looking at mini bubbles, and you know, the AI bubble fits perfectly into the dynamic of a mini bubble right above a sector bubble inside a market.
Yeah, no, I mean's this it's one of those. It's like a productive bubble. So like the entern they ultimately boys our productive bubble and the minute boss that I actually didn't cause that much damage. It's only when you've get stuff like properly that you've got a real problem. But you know, I mean, the the I thing I do find fascinating then you know, I mean, obviously if they've found the way they do chat GP, but like you know, one hundredfold cheaper, it's then that's that's great.
That's like, you know, that's fantastic. It's very hard to say that's a bad thing. My going back to Rachel Reeves and growth. The one issue that I have and just to be clear, I'm not an AI skeptic. I can see that it's useful for stuff, but the sorts of things that it would be really useful for, like the kind of you know, AI and medicine, AI and law.
I can see that sort of stuff being kind of held up by you know, the guilds, if you like, in those areas the human element rather than the technological element. And I think that is again that's sort of is a little bit like what we've been talking about earlier. We you know, the kind of battle against the courts to actually get anything done. It's not that we can't
do any of this stuff. Is that if you like, the kind of social structures around them are stopping is you know, it's highly qualified lawyers and highly qualified doctors aren't going to want to introduce you know, it can have EI and the workflow for the same reason the printer was back when the print and unions were around. Didn't want desktop publishing software coming in and getting over that is going to be difficult. I think maybe I'm wrong, Yeah, just.
The misery guts.
I'm much more optimistic about it.
It's true.
I think ai AI is one of those things that can kind of, you know, creep creep through the system without being noticed in quite that way.
But we will see.
As you say, neither neither of us are proper experts here anyway that I want to go back if you don't mind. Two mini bubbles sector bubbles inside markets, okay, And obviously we have a we've collected a lot over the years, the Great Diving Bell bubble and you know that kind of thing. I've got a new one I've been looking at, which was the listed nursing home company bubble, the Fevered fifty they were called. That was a bubble
in the late sixties and early seventies. Wow, you know, obviously there was a lot of all sorts of regulatory change. That meant that people started manically building nursing homes and they would list them before they'd finished the construction, all that kind of thing. There were only a couple listed in nineteen sixty six. By nineteen seventy there were ninety, and then suddenly the bottom fell out completely in nineteen
seventy one. There was a big fraud case. Of course, there's always a big fraud case, and that meant that everyone started going, whoa, whoa, whoa. We we can't return of twenty percent a year and you've got that much done. You haven't even built the nursing home yet. Over the collapse anyway, talking to someone about this the other day, and he said to me, had I ever heard of the great cryonics bubble crygenics bubble?
Come?
Yeah, And I cannot find anything about this on the internet anywhere, not even with the little use of AI. So this is a call out to our listeners. Does anybody know anything about the cryonics bubble or the cryogenics bubble, depending on what you call it, which I understand happened in the early eighties, when there was a great boom in the technology of freezing people's heads or freezing people's
bodies to wake them up. Later on various scandals where bodies turned out not we've been frozen after all, people turning the electricity off at night, this kind of thing, and then this mini bubble crash. But I can find nothing about it. Anybody knows anything about this bubble, or indeed has another favorite mini bubble they'd like to tell us about.
Please do get in touch. Was that in the US?
Yeah, that's really interesting. I have no idea.
Yes, it's really interesting. But I have asked.
I have asked our two favorite financial historians. I've asked Russell Napier and I've asked Eddie Chancellor. I've asked both of them if they know of the freezing people's body's bubble.
And as I thought, what we are scooped, I mean, that would be tough to end up. We could have some of these heads in the Library of mistakes. That would be great.
That It's not where I was expecting the conversation to go. But yes, we could indeed have a defrosted body in the Library of mistakes. I mean, the problem John of course is you know, and the reason why all these companies go wrong is because it's really really expensive to keep bodies frozen at an appropriate level so that you can bring them back.
To life later.
It's very expensive, very high fixed costs things.
Yeah, exactly, you're not get brilliant cash flows from that business side.
Well, each each body needs a permanent portfolio with it, right, So every time you take your body, it's like giving a house to the National Trust in the old days, right, you hand it over it and you have to give a portfolio for its upkeep at the same time.
Ah, you know what it would be like a different benefit patient scheme exactly.
So if you were to be a successful cryonics company, which clearly none of them were, you would also have to be a very expert manager of a permanent portfolio. And I'm guessing that these two skills don't normally go together.
I think we need to end this podcast.
No, I was just saying, there's an opportunity here. Well, you know, active managers another ESG. That's kind of going away, I know, but this is your chance, you know, or can like deep freeze deep frees of clients the cleogenic portfolio. So there's something going on here.
I think we'll come back to this one. We'll come back to this one. Let's lets see if we can find a couple of.
Fund managers who would tell us how they would run a permanent portfolio designed to finance the cost of keeping the original client's body frozen in. Definitely anyone who'd like to be on that part. Also do get in touch. Thanks for listening to this week's Marrin Talks Money debrief. If you like our show, rate review, and subscribe wherever you listen to podcasts. Also be sure to follow me in John on ex or Twitter at marinas w and
John Underscore Stepic. This episode was produced by Summersidi and Moses and Brendan Francis Newnham is our executive producer. Question and comments on this show and I think there might be a lot and all our shows always welcome. Our show email is Merrin Money at Bloomberg dot net.