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Confounding and confusing events 3/28/22

As a participant in the Upstate New York Business Leader Survey, I recently received the report dated March 11, 2022. It appears that 32% of business leaders believe they are emerging from Covid stronger than before, and their expectations for revenue, profits and investment are up for the coming year, while 44% are looking to hire but concerns abound because of rising costs, difficulties in recruiting and retaining workforce, energy cost, global political instability and a lack of confidence in government support. This is an exhaustive survey that addresses many significant issues, and provides a basis for understanding what the mindset is of local business leaders. This is an important work that helps many businesses plan and understand their competitive environment.

The war in the Ukraine stumbles on causing great destruction and harm to the Ukrainian people. The fact that the Ukrainians appear to have defeated the Russians, at least in the sense of stopping their advance is remarkable. As NATO leaders gathered this past week, they are being urged to take steps to increase the level of support for the Ukrainians, and it appears on many levels that may well be happening. Let us hope for the Ukrainians that those pleas are heard, and we do, in fact, continue our support for them. No one predicted the Ukrainians would do as well as they have done, and obviously, the Russians under estimated the Ukrainians. So much for intelligence work on both sides.

Continuing with the Russian war on the Ukraine and its broader impacts. Many of the agricultural giants are staying in the Ukraine because the Ukraine is one of the world’s largest bread baskets, and for hundreds of years helped supply Russia. The impact of the war on the broader world in terms of feeding the hungry is now coming into focus, and those agricultural giants are staying and continuing to work because they understand the depth of the need for food throughout the world, particularly Europe, Asia and Africa, as it is less of an issue in North America. This is a good sign that the world recognizes the importance of this region from an agricultural standpoint.

Canada retail sales were up in January 3.2%, but fell .05% in February in month-on-month comparisons. In the US retail sales were up 4.9% in January and .03% in February. This is important information to keep track of, as it will have significant impacts on our economies.

An interesting idea has sprung up along the US/Canadian border, involving a land swap involving Campobello Island off New Brunswick which has a ferry connecting it to Canada, but a bridge connecting it to Lubbock, Maine and Point Roberts, off the State of Washington which dangles off Canada, and had a horrific experience with Covid. In order to get to Point Roberts you have to leave the US, go into Canada and then re-enter the US at Point Roberts. During the pandemic there were times when there was essentially no traffic, including medical and food moving to Point Roberts. If we ceded Point Roberts to Canada, and Canada ceded Campobello Island to us, that would make great sense for the local populations, and have little or no impact on the remainder of the US nor Canadian citizens, nor either government.

The threat to the Ukrainian bread basket is not translating into any benefits for US growers as they can’t cash in because of the complex market through which grain and other futures are sold even as global wheat futures soar. In some parts of the Midwest farmers saw a rise in futures for a bushel of grain by 30%, the highest level in 45 years, but instead of reaping a windfall, these farmers have found they can’t sell their harvest for future delivery because the middlemen in this process, whether it is farm cooperatives, grain elevators, flour millers, exporters, etc., are afraid to purchase because of the fear of being unable to resell the product in the market at a profit. It will likely take some time for this process to settle down. In the meantime, farmers will, as usual, be on pins and needles as they await word as to whether or not they can sell their grain, and sell it at a profit. At the end of the day, we all hope that the farmers will do well in this market, and that their product goes to feed those who need it.

We now move on to Supreme Court Justice Thomas and his wife Ginni. It appears Justice Thomas was hearing cases as his wife was supporting the Big Lie and other activities of the Trump Administration to try and remain in power. I agree, his wife has the right to do as she pleases politically, but he has a responsibility to us to make sure that he can act impartially. I have always questioned his character and now believe that he is susceptible to being impeached, and should be impeached.

Congressman Mo Brooks who is running for the Senate in Alabama had received the endorsement of Donald Trump but lost it recently, and was then quoted as saying, “President Trump asked me to rescind the 2020 elections, immediately remove Joe Biden from the White House, immediately put President Trump back in the White House, and hold a new special election for the Presidency.” He went on to add, “As a lawyer, I repeatedly advised President Trump that January 6th was the final election contest verdict, and neither the Constitution or the US Code permit what President Trump asked, period.” Is this simply revenge by Mr. Brooks for the withdrawal of the endorsement, or was the endorsement simply a bribe to get Mr. Brooks to do what Mr. Trump asked? I wonder what the supporters of the Big Lie will say now?

The variant known as BA.2 appears to be upon us, at least it is moving through Asia and Europe, and likely is here. How contagious this is and how serious, we don’t have a clear read on, but it is likely to be another road block to getting back to normal, both personally and economically.

Judge Jackson had an interesting hearing. The questions coming from the Republicans with the exception of Senator Cornyn from Texas were largely political statements and not real questions about her judicial philosophy, experience nor education. Unfortunately, the Democratic questions were simply political statements moving in the opposite direction. We, as the public deserved to hear clear questions and answers to the fundamental issues involved in a Supreme Court nomination and confirmation. Unfortunately, we got political theatre as we did in the Kavanaugh, and to a lesser extent in the Comey hearings. The majority of the Senators did not acquit themselves well.

As reported in the Wall Street Journal, Russia is beginning to feel the impact of sanctions on oil which is its largest export product representing about 40% of Russia’s budget revenue, thus, obviously, any change would reverberate throughout the Russian economy and government operations. The Russians are also acknowledging that they are having a difficult time with the sale of the oil, and that their inventory may begin to stack up and block the flow of oil from the oil fields to storage facilities and processing facilities. The estimates by experts are that the real sting will occur sometime late in the spring, in May or June. This could definitely have an impact on Russia’s decision-making relative to the war in the Ukraine, as at some point it may need to find a way out in order to reduce or eliminate the sanctions.

Recently, the Supreme Court rebuffed Republicans in Wisconsin with regard to Congressional districts, but sent the state legislative map back for further review by the Supreme Court of Wisconsin. A bit of splitting the baby. But a good sign that the Court is at least making efforts to be reasonably fair.

The Russian war in the Ukraine has generated many emotions amongst the public, most of which are very human responses to the tragedy that is unfolding. It is clear that the Russians have decided to take a page out of the Nazi playbook and to inflict enormous harm on the civilian population of the Ukraine. Many of these acts are clearly war crimes.

Unfortunately, our government and the governments of Europe are walking a very thin line between helping the Ukrainians and potentially broadening the war. There is simply no easy answer, and simplistic solutions are not going to work. The economists warned that “If Mr. Putin prevails today, his next fix will be in Georgia, Moldova, or the Baltic states. He will not stop until he is stopped.” We know this to be true from the history of Adolph Hitler in World War II. That being said, there is the need to balance a response versus the threat of escalation. No easy answer, and the decision-making process will be treacherous, tenuous and has tremendous potential to turn out not as anticipated. These are difficult times and we all need to have incredible sympathy for the Ukrainian people, but how we proceed, will in fact, place us all on very thin ice.

Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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