Confounding and confusing events 3/6/23
It has been a few weeks since we last chatted, and many of the issues we have been discussing are still in the news.
The Ukrainian war trundles along with Ukraine continuing to ask for increased support. It is getting some tanks and maybe some airplanes. The fact that armaments are in short supply raises real issues for both the Ukrainians and the Russians as they reach out to different sources. The US and China are at one another on the balloon, and potentially on Chinese aid to the Russians for the Ukrainian war. What neither side can ignore is our economic interdependence.
The economy continues to maintain solid footing with economists now saying that the recession will come in late 2023. I think the question is will a recession come? The economic indicators are all over the place.
As we noted, the economy is sending mixed signals. The places to look for some guidance are inflation, the overall economic strength (GDP), the job market, consumers spending and housing. Among that list, the only one that is seeing a substantial negative turn is housing as interest rates have gone up as the result of the fed, the rest of the factors seem to be providing inconsistent information. All of which has been much in the news.
Republicans have embarked in the new Congress on their various investigations, and they have done little else.
Bargaining continues on the debt ceiling, and doesn’t appear to be moving towards a quick resolution. Mr. McCarthy remains in a tight spot as he tries to deal with his right-wing flank who seem to have an agenda all their own. Likely, we walk right up to the line as we have many times before, and then a solution will arise. Unfortunately, that solution is probably available today, and all this is a sideshow.
My prediction is that if a debt ceiling deal is reached, someone on the Right will call for a new vote for Speaker. Watch the chaos.
Chicago’s current mayor, Lori Lightfoot, was defeated by two challengers. The central issue in the campaign was crime, as the challenger receiving the greatest number of votes was primarily focused on this issue. This rings true given the results in a New York Governor’s election last year where that issue became paramount and many believe substantially reduced the margin of victory for Governor Hochul. Democrats need to take note.
We are seeing reports that the Chinese economy is bouncing back which should have a positive impact on the US Stock Market. This has been a tumultuous time in China because of Covid, the government response, as well as inflation and the continued shortage of raw materials, particularly chips which go into the production of many, many products. The Chinese are predicting 5% growth in 2023, far below it’s recent growth rates.
The arcane M-2 money supply calculation has experienced its largest year-over-year decline on record, which many economists are attributing to the interest rate hikes by the fed with one more anticipated at the mid-March meeting. Obviously, this should decrease the supply of money and have the effect of reducing inflation. These are complex economic theories and how they work in reality has been somewhat inconsistent over the years.
Interestingly, some recent studies have disclosed that many undocumented immigrants are departing after decades in the US. In fact, this research indicates that the number of undocumented immigrants has remained relatively steady at slightly over 10 million for years. This runs in contravention of the Republican message about the US being overwhelmed with undocumented immigrants, particularly from Mexico, Central and South America. Another myth debunked by facts which will be ignored.
I understand that our Congresswoman has joined others on the fringe of the Republican party to assert that the US/Canadian border needs to be strengthened, implying that the same issues exist on the northern border as on the southern border. She fails to recognize, understand or simply finds it politically expedient to take this position, when, in fact, there is no truth to it and it will have a detrimental impact on most border communities, including many in her district. This strange behavior which seems to flow from her need to be part of the fringe group is very distressing.
The Governor’s plan to alter the amount of Medicaid revenue shared with the counties and essentially retain it at the state level in order to fund the state’s portion of Medicaid costs appears ill conceived. In effect, this transfers the obligation directly to the taxpayers in each county, and the Governor is not providing any tools with which to reduce Medicaid spending, or make it more efficient. This appears to me to be a significant error on the part of the Governor.
President Biden’s Buy American initiative under which he is proposing to move the US content requirement from 55% to 60% with the ultimate being 75% needs a reality check. First, we need to make sure that Canada and Mexico are excluded from these requirements because they likely violate the USMCA, and secondarily, as pointed out by David Lynch of the Post, there are many examples of products simply not being available in the US; he was able to identify the fact that the electric dock cranes and boat lifts, as well as other equipment, have no US manufacturers, thus, compliance with this standard would be impossible. Thanks to George Will for pointing it out.
On the environmental front, carbon dioxide emissions reached a record in 2022, growing by 9/10’s of 1% to reach 76.8 gigatons. Emissions from coal grew by 1.6% and from oil consumption by airplanes and the rebounding economy grew by 2.5%. If we look around at our weather it becomes obvious even to an uneducated eye that there is something going on in the climate. The predictions are that upstate New York will become in 30 to 50 years the equivalent of Washington, DC and Philadelphia in climate, in other words, its going to be a lot warmer. That will reduce our heating cost, but likely increase our electric costs for air conditioning. I guess the message we should take from this is - buy land and hold it for development.
The study of humans in Europe focused until recently on care points, fertility, figurines, and lion-man statues. In the past few decades, a new tool was added – DNA from the teeth and bones. The results of studies finds 8 waves (4,500 to 5,000 years ago) of hunter gatherers from Europe and Asia with many vanishing after the last Ice Age. Farmers moved in about 8,000 years ago and interacted with the hunter gatherer survivors. Neanderthals still roamed Europe and new branches of humans emerged. A busy time for many of our ancestors.
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.
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