No Mercy / No Malice: Patient(s) Zero

As read by George Hahn. https://www.profgmedia.com/p/patients-zero Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:18Speaker 02

  Did you know that mosquitoes have killed almost half of all people who have ever lived? Today, people are fighting back. With support from the Gates Foundation, American scientists and partners around the world have developed a new generation of bed nets that can kill up to 90% of mosquitoes exposed to them, helping cut malaria rates in half. The result? A safer, healthier future for everyone. The Gates Foundation, partners of human potential. Search gatesfoundation.org/mosquito to learn more.

• 1:50Scott Galloway?

  I'm Scott Galloway, and this is No Mercy, No Malice. The things you aren't thinking about are the things that cause the most damage. I believe emerging markets, specifically Bangladesh, Egypt, Pakistan, and Sri Lanka, could be patience zero for the next market collapse. Patience zero, as read by George Hahn.

• 2:18George Hahn?

  Sometimes the canary in the coal mine is an early warning system. Other times, a dead canary is a false positive that causes panicked miners to stampede to the surface, crushing each other in the rush for air that was never poisoned. The panic is the poison. Currently, global markets are pricing in the economic fallout of the US-Israel war on Iran and the near closure of the Strait of Hormuz, a choke point for 21% of the world's oil and 20% of global liquefied natural gas.

• 2:54George Hahn?

  Equity markets in the EU, India, Japan, South Korea, and the UAE have declined 8% to 17% since February 28th. Oil hit $127 a barrel. The VIX spiked to 42. Anything above 30 signals panic. Former Defense Secretary Don Rumsfeld would have called this a known known. We saw it coming, we just didn't stop it. But known knowns don't kill markets. Unknown unknowns do. September 11th wasn't on anyone's risk model.

• 3:38George Hahn?

  The 2008 subprime mortgage crisis was contained to subprime until Lehman collapsed and nearly took the global financial system with it. Covid-19 was just a flu until we shut down the world economy for two years. The pattern is always the same. We're staring at the obvious threat: oil prices, inflation, recession, while the real contagion is hiding in plain sight, waiting to metastasize. So let's talk about the market collapse scenario nobody's pricing in, the one that doesn't show up in Bloomberg terminals or Goldman Sachs reports until it's already eating the global financial system from the inside out.

• 4:25George Hahn?

  On the Paramount Plus show Landman, oil fixer Tommy Norris, Billy Bob Thornton, describes the oil market's Goldilocks nature. "You want oil to live above $60 a barrel but below $90. Gas gets up over $3.50 a gallon, it starts to pinch. Oil hits $100, every product in America has to readjust its price." U.S. gas prices reached $3.70 per gallon this week, prompting fears of 1970s-style stagflation and anxiety among Republicans, as the party in power typically pays a political

• 5:08George Hahn?

  price in an economic downturn. Neither of these outcomes is likely to lead to additional economic shocks, as the markets have already priced in these scenarios. "American leadership looks out the window and sees itself, and a world that reacts as we'd hope or expect. First off, the Trump administration is just so incredibly incompetent as to not recognize in war, the enemy gets a say. Another blind spot: A, the rest of the world, specifically emerging economies, where governments are already rationing fuel."

• 5:50George Hahn?

  The question isn't where oil prices peak, but how long they remain elevated. As one analyst told Bloomberg, "The biggest risk in the market is the Strait of Hormuz remaining constrained for a longer stretch, and the market feeling the U.S. and its allies have a limited capacity to alter the dynamic." Some signs that risk may be underappreciated? Last week, the U.S. and other international energy agency members released 400 million barrels of oil from their reserves, the largest distribution in history.

• 6:28George Hahn?

  This week, Trump asked NATO, Japan, South Korea, and even China to send their navies to help open the strait. They declined. Turns out showing a total lack of respect for your allies weakens an alliance. Meanwhile, Trump added shavings of shit to his shit salad by suspending sanctions on Russian oil, undermining Ukraine's war effort. Finally, Treasury Secretary Scott Besant told CNBC the US is "letting Iran continue to ship its oil via the strait to supply the rest of the world." If it sounds like Trump is flailing, trust your instincts.

• 7:14George Hahn?

  Above 26,000 feet, the human body cannot acclimatize. It can only deteriorate. The world's most fragile economies have been living in the financial equivalent of the death zone for years. Unstable debt, thin reserves, and no margin for error. When oil prices spike, energy-dependent emerging economies get hit from three directions at once. The cost of importing energy rises, their currencies weaken against the dollar (oil is priced in dollars and everyone needs more of them), and the investors who lent

• 7:54George Hahn?

  the money start doing the math. That last part is the killer, as dollar-denominated debt is a hidden oil bet. When a country borrows in dollars, it's implicitly betting that its local currency won't weaken. Oil price spikes strengthen the dollar and crush local currencies simultaneously, making the country's debt more expensive to service at exactly the moment it's least able to pay it. That's not one problem. It's the same problem expressed twice.

• 8:33George Hahn?

  Since the war began, oil has spiked and the dollar has hit a 10-month high. Essentially, Trump ordered the surf and turf, and when the bill arrived, asked the server to split it 193 ways.

• 8:49George Hahn?

  It's often said that when America sneezes, the world catches a cold. For Bangladesh, Egypt, Pakistan, and Sri Lanka, this war is the equivalent of RFK Junior dictating health policy to an unvaccinated population.

• 9:06George Hahn?

  A week into the war, Egyptian President Abdel Fattah el-Sisi said his country is in a state of near emergency. Domestic fuel prices have spiked 17%. The Egyptian pound has declined 11% against the dollar, and traders have sold an estimated $5 billion to $8 billion in Egyptian bonds. A Goldman Sachs analyst told Bloomberg that Egypt is "exposed but more resilient than in previous crises," citing the country's $52 billion in currency reserves. But according to Khalid Azim at the Atlantic Council, Egypt holds enough economic and

• 9:51George Hahn?

  geopolitical importance that if financing conditions tighten or external shocks intensify, stress in Egypt could serve as an early signal that broader financial instability is beginning to emerge across the region.

• 10:08George Hahn?

  Pakistan may be the most symptomatic patient on the ward. Just six days after the war start, the Pakistani government raised fuel prices 20% to stop hoarding. Meanwhile, the country carries external debt equal to 315% of its export revenue, meaning for every dollar of value created abroad, it's already promised three to a foreign creditor. That's not an economy. It's a pawn shop selling grandma's fillings.

• 10:43George Hahn?

  Pakistan's equity markets are down 21% year-to-date, while its dollar bonds are down 5% since the start of the war. Exacerbating the problem, long-running border tensions with Afghanistan erupted into war last month. As one analyst told Bloomberg, Pakistan is experiencing "the double shock of a military and an oil price surge."

• 11:11George Hahn?

  According to Pakistan’s army chief, the border war could end just as soon as the Taliban ceases to support militants. Good luck with that. None of this is new for Pakistan, however. The IMF is less a lender of last resort to the country than a permanent fixture of its financial architecture, having provided 24 bailouts since 1958. The 25th cheque may already be in the mail. Sri Lanka is the ghost of Christmas future. It already completed the full cycle: dollar debt, energy dependence, currency collapse, IMF bailout, political implosion, and is being

• 11:55George Hahn?

  asked to absorb another generational shock before it’s recovered from the last one. The island nation is also recovering from a 2025 cyclone that caused $3.5 billion in damage. On the positive side, Sri Lanka has 1% to 2% inflation and is predicted to see GDP grow by 5% this year. Central Bank Governor Nandhalal Wira Singh told Bloomberg Sri Lanka is in a good position to absorb price shocks from the Middle East war, assuming the conflict ends in five or six weeks. In the meantime, the country is rationing fuel.

• 12:36George Hahn?

  Then there’s Bangladesh, which imports 95% of its energy. The government lifted fuel restrictions after nine days of rationing, not because the situation had improved, but to celebrate the end of Ramadan. That doesn’t make economic sense, as Bangladesh risks blackouts and the collapse of its garment industry, the source of 85% of its exports. But in a country fresh off a 2024 student-led revolution that leveraged outrage over a previous financial crisis, the political options are a choice between awful and worse.

• 13:16George Hahn?

  It can use the military to guard fuel depots, or placate the population and hope the crisis in Iran ends before the summer heat spikes energy demand.

• 13:31George Hahn?

  In 1997, the Thai baht collapsed. On its face, Thailand's economic meltdown was containable, until it wasn't. Within months, the crisis had spread across Asia, wiping out equities by 70% and sending $80 billion in foreign capital fleeing the region. The pathogen was fear. Banks didn't stop to calculate losses in each country. They chose instead to pull back all at once. Thirteen years later, Greece, representing just 2% of eurozone GDP, threatened the entire

• 14:14George Hahn?

  European economy, not because it was too big to fail, but because European banks had pledged Greek debt as collateral, packaged it with other assets, and built a financial architecture that had no firewall once the first bond was written down. The question markets asked wasn't "How much Greek debt does Deutsche Bank hold?", it was "What else is on their balance sheet that we don't know about?"

• 14:44George Hahn?

  I believe Bangladesh, Egypt, Pakistan, and Sri Lanka each have the potential to be patient zero. Among European banks, HSBC and Standard Chartered are most exposed. The Middle East accounts for 9% of HSBC's revenue and 12% of Standard Chartered's profit before tax. Different metrics, same direction of risk. Barclays, BNP Paribas, Deutsche Bank, ING, and Societe Generale have limited exposure at less than 1% of revenue. The danger, however, is one the markets can't see.

• 15:29George Hahn?

  The IMF's Global Financial Stability Report, published just months before the war began, warned explicitly about "limited visibility into balance sheets and the interconnectedness of non-bank financial institutions."

• 15:48George Hahn?

  Debt crises share a common feature. The threat isn't the institution or nation that defaults first, but the opaque financial instruments that make everyone else an unwitting cosigner. The unknown unknowns aren't the emerging economies. They're derivatives in Zurich, London, or New York that nobody stress-tested for $110 oil.

• 16:18George Hahn?

  I was a teenager during the two major oil shocks of the 1970s. Those shocks weren't abstract basis points. They upended my mother's household math. Take the bus versus the car. Wear sweaters instead of raising the thermostat. There are hundreds of millions of mothers in Bangladesh, Egypt, Pakistan, and Sri Lanka doing the same math right now. The bankers in London and New York will be fine, but for millions of kids in emerging markets, studying will cease at sunset.

• 16:55George Hahn?

  There were valid arguments for military strikes, but none for war.

• 17:05Scott Galloway?

  Life is so rich.

• 17:18Speaker 02

  Did you know that mosquitoes have killed almost half of all people who have ever lived? Today, people are fighting back. With support from the Gates Foundation, American scientists and partners around the world have developed a new generation of bed nets that can kill up to 90% of mosquitoes exposed to them, helping cut malaria rates in half. The result? A safer, healthier future for everyone. The Gates Foundation, partners of human potential. Search gatesfoundation.org/mosquito to learn more.

• 17:48Speaker 04

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