Budget Talk

When Speaker McCarthy wishes to speak to President Biden it is because
he is weak in his House and caucus. He is weak because he has sold the
House to the Radical Right (whether directed by Putin or Trump) to get
the Speakership. Today, House Republicans are sinking in their own swamp
of Santos, Marjorie Taylor-Green, and all the other disgusting nonsense
they produce. President Biden should set aside his sensitivities about
the documents found at his home and just deal with policy for America
with no concern for his own political position. Right now it's a huge
fight and more moderate people must win.

If you recall the 1993-1996 time-frame it was one where Pres. Clinton
got a great first budget and it led the way to a balanced budget. This
huge victory was opposed solidly by the Republicans who voted
unanimously against it until they won in 1994 and the House Speakership
went to Newt Gingrich. It all seemed great for the Democrats until
Gingrich revealed his revolutionary spirit. At first, he cooperated with
Clinton (as McCarthy is set to do) and that secured himself some
authority and identity in the political world. He also got Pres. Clinton
to sign off on NAFTA which was a huge political win for the Republicans
who wanted those policies, but also wanted Democrats to take the blame
if anything went wrong. The public hated NAFTA, and the Clintons.
Gingrich and House Republicans sanctimoniously impeached Pres. Clinton
to put him under the thumb of the Republicans and to give the
Republicans a shot at taking the presidency in 2000. They succeeded
brilliantly and yet the Crazies weren't satisfied -- they kicked out
Gingrich. Clearly, when Clinton was feeling exposed to criticism he was
pushed to a defensive action to protect himself. It failed spectacularly
and the Republicans learned.

Today the Crazies have important positions on House committees and they
would do huge harm to America and especially to Democrats given half a
chance. This budget fight is the first thing to come up, so this is
their battleground. And do not be fooled, they don't care as much about
the policy as in fighting Democrats to make their voters happy and to
score political points. The way they would do that is a replay of the
Gingrich techniques. Talk, work together, pass blame to Democrats, and
then impeach the president over nothing but hot air. They feel certain
that if the economy suffers and Pres. Biden is politically weak that
they can win the presidency in 2024, perhaps even with Donald Trump.
Already for the mid-terms we've seen how the media can talk the economy
down to hurt Democrats. No doubt they will continue to tear it down in
the coming months. That's another reason they don't want a strong budget
which would help the economy and the Democrats in the next elections.

One way to oppose this is to refuse to talk to terrorists, first and
foremost. Second, the Senate should produce a bi-partisan budget which
suits Democrats and aims for financial soundness. It doesn't have to be
extreme, just Obama-esque (let's say). When the House Republicans send
their legislation to the Senate, amend it to replace it entirely with
the Senate version and hand it back to the House. This will require them
to show their Crazy colors even more or fold if some of the Republicans
side with Democrats on the legislation. Where that may lead is anybody's
guess, but the alternative has been tried and it only helps Republicans,
not America.

Don't be afraid in the face of personal challenges. Think of the
well-being of the nation and the Democratic Party.

House Fight with Radicals

Imagine the Democrats needed the votes of a handful of radical Leftists
to get the House Speakership. What would the other more centrist
Democrats do if to get those votes the candidate had to offer Liberals
like AOC the right to "vacate the Chair" and call for a new House
Speaker vote any time they liked? What if the candidate had to give up a
handful of really key powers which didn't fit with the ideas centrist
Dems preferred? How would those more centrist Democrats respond? Would
they go along to get along? Would they go along with anything just to
get the Speakership for that candidate?

And now imagine the House Republican responses to AOC and the other
"radical Liberals" and the process of picking the House Speaker based on
such backroom deals. Would they criticize Democrats for not even giving
their caucus information about which deals were being made and what the
caucus would be giving up to win the Speakership for that one candidate?

You betcha. Republicans would screech and whine and scream at the top of
their lungs.

Now, recall that the Democrats this time were 100% united without ANYONE
having to give up concessions, while the Republicans all but gave Donald
Trump the Speakership by using the radicals as his proxies. At least the
radical Democrats would be House members in their own right. The radical
Republicans take their orders directly from Donald Trump via cell phone
calls to the House floor.

The involvement of foreign or corporate money and Donald Trump and his
radical ideas has truly twisted the Republican Party into a New York
City pretzel, no mustard.

Confusion, Chaos, Complications, and Politics

I see a lot of confusion, chaos, complications, and political
machinations occurring recently. The difficulty of the GOP to find a
Speaker of the House, the fall of Elon's Twitter and Tesla, the Ukraine
war, the short-lived PMship of Liz Truss, the recent weird statements by
France President Macron, these things all indicate the world is a tizzy
with uncertainty about where things are headed.


This is tied to Vladimir Putin and will last while he desperately breaks
his piggy banks to get money for his war and while he shakes up his
puppets here and there to get money from them rather than sending them
money.


How will things sort out? I'd guess the future will be decided against
Vladimir Putin because he's evil, but evil people have survived in the
past, so it's really hard to be certain.

The War in Ukraine

I have several suggestions and observations about the war in Ukraine.

1. Pres. Zelensky is a war leader and may not realize, but should certainly be reminded, that he has resources limited by forces beyond his control. This may even include the support of a war-weary citizenry.

2. As the war continues into winter it isn't so clear how it will proceed or how long it will take, though it is clear today that Ukraine should be able to win.

3. Russia will be loathe to end the war with the loss of Crimea. How long would that part of the war take and can Ukraine withstand war for that long? This is an unknown factor.

4. If the West were to reduce or cease support, then Ukraine would be in great danger and the war might take on a different dimension that nobody today wants.

 

Time for consideration of a shorter path to the end of this war

It's time for all the parties to consider another way to continue. I will suggest such a path. It begins with Pres. Zelensky offering to negotiate with Russia, but not with Putin (or his administration). If Russia accepts then here are suggested terms for the war to end. Russia and Ukraine agree to a cease fire during which Russia will remove its military from Ukraine, except Crimea. If this first step is begun successfully then both parties will have time to recover from the direct effects of the war. The negotiations would continue with Ukraine announcing that they will accept continued Russian occupation of Crimea under a leasing agreement. Negotiations on the leasing of Crimea and the return of any Ukrainian citizens from Russia to Ukraine would then begin. Both parties want these things, so presumably it might happen in a short period of time. Monies which Ukraine can receive from this leasing of Crimea would be welcomed in their rebuilding work. Once it is settled that there will be peace in exchange for continued use of Crimea, Russia must make the next step forward by announcing the retirement of Pres. Putin and his administration. This is key before negotiations involving reparation payments from Russia to Ukraine can be done. If the world were a more perfect place, Pres. Putin would be charged with War Crimes, but this appears not to be possible. Ukraine must accept that fact and simply work toward recovery of their country, restoration of it to good working order and in time normality.

This state of affairs: peace, reparations to Ukraine, retirement of Putin, continued Russian presence in Crimea in exchange for rent, these could have existed before the war and these remain necessary today.

If there are other factors which remain unknown to me, then they would be added to the negotiations where possible.

This framework is simple, but everyone knows that implementing it would not be as easy. Achieving the aim of secure nations must remain in mind.

Al-Zawahiri is Dead, Discussion on Reddit

On Inflation and the Economy

Here are links to some news stories from today about inflation. After
that I give the link to an article from WashingtonMonthly which is more
extensive and includes important history.

https://www.reuters.com/business/energy/which-us-refineries-have-shut-since-global-pandemic-why-2022-06-17/

https://www.reuters.com/business/energy/venezuelan-oil-cargo-eni-departing-supertanker-load-next-document-sources-2022-06-17/

https://www.bloomberg.com/news/articles/2022-06-15/biden-willing-to-use-emergency-war-time-law-to-boost-gasoline

https://www.bloomberg.com/news/articles/2022-06-19/massive-oil-refining-capacity-idle-in-china-even-as-prices-soar

https://www.bloomberg.com/news/articles/2022-06-09/yellen-rejects-idea-corporate-greed-is-to-blame-for-inflation


https://washingtonmonthly.com/2022/06/20/its-the-monopoly-stupid/


If you read these you will see that the Bloomberg and Reuters stories
explain what is happening NOW. That's the nature of "news". it's what is
"new". But, to understand our economic situation better you need some
historical perspective and it gives a very different impression. That's
where the WashingtonMonthly article finishes the puzzle.

That said, the WashingtonMonthly article is talking about economics and
not Russian influences on the Republican party and so many of the things
we see tied to Donald Trump. Still, it's a very good article with its
focus on the issue.


I have no idea why Janet Yellen would say corporate greed isn't the
issue. It is very much at the heart of the issue.

What About OIL ?

I'm going to review things to do with oil and gasoline prices. First, we start with some basic information. These charts are for the last 5 years. The recession is marked with the gray vertical bar on the graph.

Saudi Arabian Oil production (care of investing.com)

This seems to go up & down as the demand for oil fluctuates with economic activity. But, it still hasn't risen to pre-pandemic levels.

U.S. Crude Oil Production (care of investing.com)

This isn't entirely leveled-off. It's kept rising some, as the economy shows strength.

Crude Oil and Gasoline Prices (care of investing.com)

This seems to make no sense past about 2nd or 3rd quarter of 2022. Why have prices kept going up when production is leveled-off?

If prices had leveled off around there or a little before, say March 2022, then it would make sense. But, between January 24th and February 24th, Vladimir Putin decided to go to war in Ukraine and that caused oil to become much more in demand and higher priced. A lot of the world banned purchase of Russian oil and that shrank world supply.

Stock Market -- Dow Jones Index (care of money.cnn.com)

The DOW has done alright in recent years, with the big dip in 2020 being overcome by about the end of that year. It reached a peak in about October 2021 and it seems to be coming down now. Is this an indicator of where gasoline prices are going to go?

25 January 2022 -- OPEC and its Russia-led partners have promised to increase oil production to pre-pandemic levels this year but are falling short of those public commitments, stoking fast-rising global crude markets.  https://www.wsj.com/articles/opec-russian-oil-output-increases-fall-short-of-promises-stoking-prices-11643108001

How much has world oil supply been reduced by cutting off Russian oil? One article said about 10%. Russia supplies a bit more than Saudi Arabia. And together they supply about 40% of the world's demand (20% each). Is Vladimir Putin practicing economics by having a war to raise demand for oil and cutting supply to the world to raise oil and gasoline prices?

Russia Invaded Ukraine 24 February 2022 (care of Wikipedia)

So much for Russia and OPEC increasing oil production (and in effect decreasing prices). What happened between January 25th and February 24th to convince Vladimir Putin to commit to war i Ukraine? Was he afraid of Ukraine developing natural gas which would supply Europe and reduce the value of Russian oil?

4 May 20?? -- Oil prices have soared. Why won't OPEC bring them down?  https://www.bbc.com/news/business-61188579

/quote-from-article

In 2016, when oil prices were particularly low, Opec joined forces with 10 non-Opec oil producers to create Opec+.

Among them is Russia, which also produces over 10 million barrels a day.

Together, these nations produce about 40% of all the world's crude oil.

"Opec+ tailors supply and demand to balance the market," says Kate Dourian, of the Energy Institute. "They keep prices high by lowering supplies when the demand for oil slumps." Opec+ could also lower prices by putting more oil onto the market, which is what major importers like the US and UK want it to do.

Image source, AFP

/end-quote-from-article

It may seem trivial, but it would appear that the trend in America toward renewable energy supplies and away from oil have led the Saudis to put in charge a leader Salman who is happy to switch away from partnership with America and into a strange arrangement with Russia (Vladimir Putin for now). The murder of the journalist Khashoggi has also estranged Saudi Arabia from America and the fact-finding that Salman ordered the murder of Khashoggi has only pushed him away from America and toward Russia. With this new order of things, what are the economic reasons to produce more and keep prices low or steady? If America continues on this trend to replace oil/gasoline, then what might the OPEC+ countries do to harm us?

It seems more necessary than ever to see that Russia loses in Ukraine and that Putin is retired. Whether a replacement is more friendly to America or Europe is almost irrelevant. Perhaps the state of affairs in Saudi Arabia is more relevant since we have a standing defense relationship with them and we have sold them a lot of military equipment.

The transition from oil and other fossil fuels to renewable energy sources is going to take a while and will have many consequences. High gasoline prices and war in Ukraine are among them.