A group of economists led by Mark Zandi, along with his colleagues Cristian DeRitis and Bernard Yaros have prepared an analysis which they recently presented to the Senate Banking Committees – Subcommittee on Economic Policy. The bottom line of the report - If the debt ceiling is not raised for a brief period, the economic impact will be a million jobs lost. If it goes on for months, it could be many millions more jobs lost and will surely throw the economy into a severe recession. This seems to be falling on deaf ears with the Republican right, and it is a question of how well Mr. McCarthy comprehends the risk that he is taking. I suspect if the Republicans cause this to happen, although they may win the deeply red states, they will lose nationally.
The Ukraine only gets worse as the losses mount on both sides, and the chaos continues. Unfortunately, those calling for rational behavior in this circumstance do not understand the irrational behavior of Mr. Putin, and that he will not be troubled by this continuing catastrophe, regardless of how high the death count mounts.
The housing market continues to cool certainly in part because of high interest rates and there is a continuing belief based upon strong economic data that the fed will again raise rates which will have the impact of pushing mortgage rates up even higher. This is something of a vicious cycle which likely leads to substantial reductions in housing prices in many parts of the country.
The Chinese leader, recently elected to a 3rd term, in a presentation before the leaders of the Chinese communist party blamed the United States using terms like suppression of China as his place of embarkation into an attack on the US. This is somewhat unusual for a Chinese leader to be so blunt but reflects the ongoing tension between the US and China over a variety of issues, including Taiwan and the Chinese support of Russia in the Ukraine.
Norfolk Southern had yet another spectacular derailment and it appears time for the Secretary of Transportation to take serious action as the operations of Norfolk Southern one could reasonably conclude - endanger both people and property along its routes. The perception is that they have little control over their operations.
We are seeing some interesting signals coming out of India in terms of its concerns with China. Apparently, India is seeking greater levels of trade with the West in order to avoid domination by China in the trade sector. This is another very large economy that needs to be attended to and utilized for our benefit and to the detriment of China. This, of course, requires both India and the west to come out ahead in these talks and in subsequent trade activities.
It is being reported that Chinese exports fell 6.8% in the first two months of 2023, which continues the pattern from a year earlier. Central bankers are predicting that this trend will continue in part because of taxes which seem to be having some impact on Chinese imports to the US, while consumer spending otherwise seems pretty healthy. Another one of those economic facts that lends confusion to our analysis of whether or not a recession is coming.
Tucker Carlson has pulled off another bait and switch for his audience. First, in the weeks and months following the 2020 election, he supported the claims of President Trump on the air, but, at the same time was distributing e-mails to his colleagues that contradicted those positions. This, of course, has all come to light as the result of the Dominion lawsuit, including his statement that he “passionately” hates Trump. This was reported in the New York Times, and even in the Wall Street Journal, which is one of the major properties of Rupert Murdock who is defending this case as best he can, although he has been the source of much negative information about his online talent during discovery, and, of course, I use that phrase very, very cautiously.
Tucker’s latest foray into providing misleading facts was his recent TV show in which he showed clips of the January 6 insurrection. He only showed those things which saw the crowd walking relatively peacefully through the Capital and ignored all of the other information. He was blasted by the Chief of the Capital Police and even Mitch McConnell. The fact that his audience accepts these clear and blatant lies raises significant questions about the American public’s ability to parse complex facts and thoughts.
President Biden introduced his budget which calls for $3 trillion in deficit reduction over 10 years, or roughly $300 billion a year. It will be interesting to see how Republicans respond, particularly since their focus during the debt ceiling conversations has been on cuts alone. The Budget proposal, at least, puts on the table the idea of cuts, and certainly reduction in the deficit is an important goal. Next, we’ll see the Republican budget.
The crisis in Israel over the anti-democratic actions of the Netanyahu administration as it attempts to reign-in, if you will, the courts and reduce their independence has resulted in many protesting, including one that is upcoming, and most interestingly, a substantial negative reaction to the proposed changes from the IDF (Israel Defense Forces). Mr. Netanyahu is essentially trying to save his own skin as he is under significant investigation which could result in a conviction and his loss of office. He is not going to let that happen, but he may get more than he bargained for in opposition.
President Trump likely gets indited in NYC. One of his stalwart Counsel’s in the big lie admits as part of her censure by the Colorado Court that there was no truth to the allegations of election fraud.
Silicon Valley Bank, as I’m sure you know, has been seized, as has Signature Bank in New York along with a few others. It appears to be being handled in a reasonable fashion by the regulators. Nonetheless, this will be an interesting week although it does not appear as if any significant fraud occurred, just business judgment gone bad. Senator Warren’s op-ed displays how little she knows about baking and business in general. What effect this has on a recession will be interesting to see.
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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