Sri Lanka Is Screwed

June 23rd, 2022

Remember how Sri Lanka managed to wreck agricultural yield by forcing the country to use organic fertilizer? “Not only had Sri Lanka’s ban on fertilizers, pesticides, weedicides, and fungicides resulted in massive food shortages, it also led to the doubling in price of rice, vegetables, and other market staples.”

Turns out that was just the tip of the iceberg.

Sri Lanka’s prime minister is increasing efforts to revive the country’s “completely collapsed” economy amid a lack of foreign exchange reserves and severe shortages of essential items.

“We are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity, and food. Our economy has faced a complete collapse,” Prime Minister Ranil Wickremesinghe told parliament on June 22.

“It is no easy task to revive a country with a completely collapsed economy, especially one that is dangerously low on foreign reserves,” he said.

This video goes into more depth of just how badly Sri Lanka is screwed.

Some takeaways:

  • “The government’s gross mismanagement in agriculture is just a small symptom in a much larger problem. Sri Lanka has run out of money and is now facing down the barrel of complete economic collapse.”
  • “In a span of just two years, its reserves of foreign currency has gone from $9.2 billion to just $50 million, not enough to cover a single day’s worth of imports, and not nearly enough to cover the $6.6 billion it needs to make loan payments. On April 12th, the government announced it will no longer be making such payments as a result it’s been cut off from international loans.”
  • “Basic necessities are hard to come by and daily rolling blackouts are shutting down businesses.”
  • Sri Lanka may be the first poorly managed developing country to fall, but it won’t be the last.
  • On paper, it shouldn’t be a basket case. It had a thriving tourism industry before a 2019 terrorist attack and 2020’s Flu Manchu.
  • “Sri Lanka, being a small developing country, imports a huge amount of commodities. As such, it’s been running a large trade deficit.”
  • Enter the nepotism:

    Strongman Gotabaya Rajapaksa Gota built a name for himself viciously ending the civil war as head of the ministry of defense, with his brother Mahinda acting as president from 2005 to 2015. Gota ran on the promise of bringing forth vistas of prosperity and splendor in wake of an opposition party seen as too weak to handle domestic threats. Gota’s party won a landslide victory in parliament and he appointed his brother as prime minister. With a two-thirds majority, Gota quickly got to work rewriting the constitution, allowing him to appoint many top-level officials, including ministers and judges. He stuffed these positions with relatives, and has been slowly cementing greater unrestrained power.

  • How did he deal with the tourism downturn? He started printing money. “The budget deficit widened and its stockpile of foreign currency started to burn away.”
  • “Now more than ever, Sri Lanka was burning through its foreign reserves. This was further accelerated by the government’s desire to keep the rupees exchange rate at 200 rupees equal to one US dollar.” In the post-Bretton Woods world, fixed exchange rates are disasters waiting to happen.
  • The attempt to defend the rupee meant that foreign currency reserves went from $9.2 billion to just $1.6 billion in 2021.
  • “This caused the government to enact strange policies, like banning the importation of fertilizer in hopes of easing its trade deficit. Claiming the ban was to make Sri Lanka organic was simply a way to conceal its dire situation.” Yes, cutting back the ability of your own people to grow food in order to hide the manifest incompetence of your economic policies is quite the recipe for happiness.
  • Then Russia invaded Ukraine, and prices for food and energy skyrocketed.
  • “Basic necessities in Sri Lanka have become too expensive. The rupee is now just half of its original value. Schools have stopped testing for certain grades because they can’t buy ink.”
  • “The government has instituted daily 15 hour blackouts to save on energy imports but they have crippled industries. The nation has declared a state of emergency as massive mobs attack politicians and even set roadblocks to prevent them from escaping the country.”

    Sri Lanka may be the first, but it won’t be the last.

    With rapid global commodity inflation, supply shortages, and the likely coming global recession, many nations appear to be on the tipping point. There is growing unrest in Tunisia because of prices. Pakistan’s currency is plummeting and Argentina’s economy is straining under the weight of massive debt. The longer current conditions persist, the more likely we are to see what is happening in Sri Lanka to happen across the globe.

  • Russo-Ukranian War Update for June 22, 2022

    June 22nd, 2022

    The general course of the Russio-Ukrainian War seems the same (Russia grinding out slow gains in the Severodonetsk front, while Ukraine gains back territory on the wings near Kharkiv and Kherson), but there are a lot of interesting stories out on the periphery of the conflict.

    First, the requisite map snap:

    (These snapshots are not the end-all and be-all of the situation, but back when I was covering the war against the Islamic State, I found that they were helpful in jogging my memory reviewing the course of the war at later dates.)

    Now some links:

  • ISW’s assessment.

    Members of the Russian military community continue to comment on the shortcomings of Russian force generation capabilities, which are having tangible impacts on the morale and discipline of Russians fighting in Ukraine. Russian milblogger Yuri Kotyenok claimed that Russian troops lack the numbers and strength for success in combat in Ukraine. Kotyenok accused Russian leadership of deploying new and under-trained recruits and called for replenishment of forces with well-trained recruits with ground infantry experience—though the Russian military is unlikely to be able to quickly generate such a force, as ISW has previously assessed. Despite growing calls for increased recruitment from nationalist figures, Russian leadership continues to carry out coercive partial mobilization efforts that are only producing limited numbers of replacements while negatively impacting the morale and discipline of forcibly mobilized personnel. Ukraine’s Security Service (SBU) claimed that Russian authorities in Luhansk are arranging gas leaks in apartment buildings to force men who are hiding from mobilization into the streets. The Ukrainian Main Intelligence Directorate (GUR) additionally reported that Russian soldiers in occupied Tokmak, Zaporizhia Oblast, are appealing to local Ukrainian doctors to issue them certificates alleging medical inability to continue military service.

    Ukrainian forces conducted a drone strike (likely with a loitering munition, though this cannot be confirmed) on a Russian oil refinery in Novoshakhtinsk, Rostov Oblast, on June 22. Russian Telegram channel Voenyi Osvedomitel claimed that the strike, which targeted Russian infrastructure within 15 km of the Ukrainian border, originated from Donetsk Oblast. Ukrainian forces have not targeted Russian infrastructure for several weeks, and this strike is likely an attempt to disrupt Russian logistics and fuel supply to Russian operations in eastern Ukraine.

    Though they also note that Russia has been using its anti-air capabilities to better deal with Ukrainian drones.

  • Ukraine attacked long-occupied gas platforms off the coast of Crimea. It also reportedly hit occupied Snake Island, though there seems to be some dispute over this.
  • Did a Russian cyberattack trigger the Freeport LNG explosion on June 8?

    Well, a June 14 press release from Freeport LNG notes that “the incident occurred in pipe racks that support the transfer of LNG from the facility’s LNG storage tank area to the terminal’s dock facilities. … Preliminary observations suggest that the incident resulted from the overpressure and rupture of a segment of an LNG transfer line, leading to the rapid flashing of LNG and the release and ignition of the natural gas vapor cloud. Additional investigation is underway to determine the underlying precipitating events that enabled the overpressure conditions in the LNG piping.” The statement added that federal authorities were assisting with its investigation.

    However, what was not explained is how a critical overpressure event could have occurred without safety systems kicking into action. Two LNG pipeline experts I talked to, who both asked to remain anonymous due to potential retaliatory damage to their business interests, say that pipeline corrosion and other material failures can cause critical incidents. Still, the FBI’s investigative involvement, the specific nature of this explosion, and the scale of damage incurred do raise major questions. The experts suggested that piping from a storage tank to a terminal, as in this explosion, should have extensive safeguards to prevent overpressure events. One expert was highly confident that control of pipeline flows would be undertaken from a networked control facility.

    That brings us to the Russian cyber unit involved in the targeting reconnaissance against Freeport LNG.

    Named XENOTIME by researchers, the unit has utilized boutique TRITON/TRISIS malware developed by the Russian Ministry of Defense’s Central Scientific Research Institute of Chemistry and Mechanics. That malware is designed for the seizure of industrial control systems and the defeat of associated safety systems. In 2017, GCHQ (Britain’s NSA-equivalent signals intelligence service) outlined the need for network compartmentalization to protect safety systems against this malware better. In March 2022, the FBI warned that TRISIS malware remained a threat.

    XENOTIME is assessed by the U.S. and British governments as a critical infrastructure-focused, advanced persistent threat actor. The unit’s modus operandi involves targeting industrial control systems and supervisory control systems in order to effect unilateral control of a network. XENOTIME has caused specific concern in Western security circles for its targeting of safety systems that would otherwise mitigate threats to life during a cyberattack. XENOTIME’s activity has escalated in 2022. Evincing as much, an April 13 U.S. government cybersecurity warning noted, “By compromising and maintaining full system access to [industrial control system]/[safety] devices, [threat] actors could elevate privileges … and disrupt critical devices or functions.”

    Snip.

    While the Freeport LNG explosion remains under investigation, multiple sources told me they were struck by the overpressure event along a key pipeline transit route and the evident failure of safety systems to engage. This fits with XENOTIME’s modus operandi.

    That’s an “interesting but unproven” in my book… (Hat tip: Jim Geraghty at NRO.)

  • Switzerland Imports Russian Gold for First Time Since War.”

    More than 3 tons of gold was shipped to Switzerland from Russia in May, according to data from the Swiss Federal Customs Administration. That’s the first shipment between the countries since February.

    The shipments represent about 2% of gold imports into the key refining hub last month. It may also mark a change in perception of Russian bullion, which became taboo following the invasion. Most refiners swore off accepting new gold from Russia after the London Bullion Market Association removed the country’s own fabricators from its accredited list.

    While that was viewed as a de facto ban on fresh Russian gold from the London market, one of the world’s biggest, the rules don’t prohibit Russian metal from being processed by other refiners. Switzerland is home to four major gold refineries, which together handle two-thirds of the world’s gold.

    Almost all of the gold was registered by customs as being for refining or other processing, indicating one of the country’s refineries took it. The four largest — MKS PAMP SA, Metalor Technologies SA, Argor-Heraeus SA and Valcambi SA — said they did not take the metal.

    In March, at least two major gold refineries refused to remelt Russian bars even though market rules permit them to do so. Others, such Argor-Heraeus, said they would accept products refined in Russia prior to 2022, so long as there were documents proving that the gold had not been exported from Russia after beginning of the war, and that accepting them would not benefit Russia, a Russian person or entity anywhere in the world.

  • Though this piece is two weeks old, Frederick Kagan is not impressed with Russia’s Severodonetsk offensive.

    he fight for Severodonetsk is a Russian information operation in the form of a battle. One of its main purposes for Moscow is to create the impression that Russia has regained its strength and will now overwhelm Ukraine. That impression is false. The Russian military in Ukraine is increasingly a spent force that cannot achieve a decisive victory if Ukrainians hold on.

    Russian President Vladimir Putin is therefore trying to turn his invasion of Ukraine into a brutal contest of wills. He’s betting his army on breaking Ukrainians’ collective will to fight on in their country. His own won’t likely break. Fortunately, Ukraine doesn’t need it to. If Ukrainians can weather the current Russian storm and then counterattack the exhausted Russian forces they still have every chance to free their people and all their land.

    Putin amassed the wreckage of Russian combat forces into a lethal amalgam around the cities of Severodonetsk and Lysychansk in Ukraine’s eastern Luhansk Oblast. That amalgam is crawling forward using massive artillery barrages to obliterate everything in its path allowing Russia’s demoralized and frightened soldiers to walk into the rubble.

    The Ukrainian defenders are wisely withdrawing in the face of this reckless barbarism, but at a high price to their own morale and their will to continue the fight. Ukrainian soldiers and citizens are criticizing their government for not supporting the troops on the front lines. Ukrainians are starting to doubt that they can prevail for the first time since they won the Battle of Kyiv. Delays in the provision of Western aid and refusals by the U.S. and other countries to provide certain needed weapons systems are helping to fuel those doubts. And now voices are rising in the West calling on Ukraine to offer concessions.

    All of which is exactly what Putin needs. He cannot defeat Ukraine militarily as long as Ukrainians retain the will to fight and the West the will to back them. So he attacks the will of both by forcing his own troops into the most vicious and brutal offensive of this war, hoping to persuade everyone that he’s finally harnessed the mass and power of Russia that Stalin wielded to defeat Hitler—and thus that resistance to his demands is futile. Putin also holds hostage critical export supplies of Ukrainian food and fuel, hoping to impose high enough costs on the West to persuade it to abandon Ukraine.

    Neither Ukrainians nor their friends around the world must give in to Putin or be deluded by the current mirage of Russian success and power he is presenting in the Battle of Severodonetsk. For mirage it is. Russia’s drive in Luhansk is the desperate gamble of a dictator staking the last of the offensive combat power he can scrape together in hopes of breaking his enemies’ will to continue the fight. and let him claim that he’s taken all of Luhansk Oblast. It is a historical rhyme with Hitler’s determination to seize Stalingrad in 1942 or to hold Kharkov in defiance of his commander’s advice. There are no Russian large reserves coming behind this force to carry its successes forward. On the contrary, Putin has created it only by denuding other key axes of the forces they need to defend against Ukrainian counterattacks. This offensive will likely culminate soon because even this slow, grinding advance will exhaust the forces conducting it. Putin will then be unable to launch another for quite some time.

  • I thought this would be a longer update, but I’m running out of day…

    Lithuania Blocks Russian Rail To Kaliningrad

    June 21st, 2022

    EU and NATO member Lithuania has announced that they’re applying international sanctions to rail traffic that crosses their territory from Russia (via Belarus) to the Russian enclave exclave of Kaliningrad.

    Lithuania has begun a ban on the rail transit of goods subject to European Union sanctions to the Russian far-western exclave of Kaliningrad, transport authorities in the Baltic nation said on June 18.

    The EU sanctions list includes coal, metals, construction materials, and advanced technology.

    Anton Alikhanov, the governor of the Russian oblast, said the ban would cover around 50 percent of the items that Kaliningrad imports.

    Alikhanov said the region, which has an ice-free port on the Baltic Sea, will call on Russian federal authorities to take tit-for-tat measures against the EU country for imposing the ban. He said he would also seek to have more goods sent by ship to the oblast.

    The cargo unit of Lithuania’s state railways service set out details of the ban in a letter to clients following “clarification” from the European Commission on the mechanism for applying the sanctions.

    Previously, Lithuanian Deputy Foreign Minister Mantas Adomenas said the ministry was waiting for “clarification from the European Commission on applying European sanctions to Kaliningrad cargo transit.”

    The commission stated that sanctioned goods and cargo should still be prohibited even if they travel from one part of Russia to another but through EU territory.

    The European Union, United States, and others have set strict sanctions on Moscow for its unprovoked invasion of Ukraine.

    As to why Russia ended up with a formerly German enclave between Poland and Lithuania, History Matters provides a handy guide:

    The importance to Kaliningrad is that it’s Russia’s only ice-free port on the Baltic Sea and home to the Russian Baltic fleet at Baltiysk.

    Anyone who remembers the history of the Cold War knows that there’s no love lost between Lithuanians and Russia.

    Peter Zeihan (him again) explains why this is such a big problem for Russia. “Russia is already shitting solid gold kittens over this…in any sort of meaningful conflict between Russia and NATO, Kaliningrad would probably fall in a matter of days if not hours.” So Russia is likely to put in more nuclear missiles.

    Plus a bit on Europe abandoning their green delusions to embrace coal, and how German accounting chicanery artificially inflates the amount of renewable energy they’re actually generating and ignore a lot of coal generation for official figures.

    Interesting times…

    John Cornyn Booed Over Guns

    June 20th, 2022

    Last month, Gun Owners of America blasted Texas Senator John Cornyn for playing footsie with the usual gun grabbers. (And not for the first time.) There have been a lot of pieces on why red flag laws (part of Cornyn’s pander) are unconstitutional garbage, to pick just one bad idea from the still nebulous proposal.

    Given that, it’s no surprise that Cornyn was booed at last week’s Texas GOP convention.

    Before he could get a word out, the boos descended upon Sen. John Cornyn (R-TX) during his speech at the Texas GOP convention.

    After getting up to the podium, about a minute and a half went by before Cornyn could even begin his speech. The crowd’s objections were a direct response to the role Cornyn is playing in the U.S. Senate in bartering a gun reform bill pushed in the wake of the Uvalde shooting.

    Cornyn knew full well he was walking into the lion’s den, stating, “I will not approve any restrictions for law-abiding gun owners, and that’s my red line. And despite what some of you may have heard, that’s what our plan does.”

    Citing conservative lodestar William F. Buckley, the founder of National Review, Cornyn added, “Someone needs to stand athwart history, yelling stop.”

    Each time he repeated this formula, the crowd returned fire, yelling “Stop!” at Cornyn.

    The senior Texas senator did receive some applause when touting Trump-appointed judges and pro-life legislation, and when criticizing critical race theory and rising crime rates.

    Right after Cornyn left the stage, Attorney General Ken Paxton took the stage and delivered a tacit shot at the senator — with whom he has sparred before.

    “We have some Republicans who are trying to run from the fight (to preserve gun rights), and we need to remember their names next time they’re on the ballot,” Paxton warned. Earlier this month, Paxton said Texas “will be the first to sue” if the federal government passes a gun bill that “infringes on our Second Amendment Rights.”

    Here’s some video to judge for yourself:

    If it’s just a matter of “enforcing existing laws” as Cornyn states, why isn’t he holding hearings on why the Biden Administration refuses to enforce those laws? Why cooperate with the party that seeks complete civilian disarmament rather than actually stopping criminals?

    Says Michael Quinn Sullivan: “The senator seemed stunned by the response, clearly not expecting grassroots activists to understand what he had been pushing in Washington with the Democrats.”

    The longer Cornyn has been in office the squishier he’s gotten (a sadly familiar pattern), not only on gun control but also illegal alien amnesty. He’s gone from “pretty reliable conservative” to someone whose feet you have to hold to the fire to keep from drifting left on the latest burst of media hot air, and the latest chorus of boos shows that Republican activists know it.

    The imperfect status quo in gun laws is vastly preferable to any “reform” the current congress is likely to cook up.

    Border Security Win For Abbott?

    June 19th, 2022

    Here in Texas, some of Governor Greg Abbott’s border security moves (like sending the National Guard to the border) have been derided as all hat and no cattle. But it appears that Abbott has scored a definite border security win.

    According to a very interesting report by Todd Bensman of the Center for Immigration Studies, the record-sized 15,000-strong caravan has run into interference from the Texas governor and his counterpart in the adjacent Mexican state of Coahuila, who had the foresight to sign an agreement in April about border security. Bensman writes:

    AUSTIN, Texas — When Mexico last week granted federal humanitarian travel permits to 15,000 U.S.-bound third-country migrants who’d formed the largest caravan in Mexican history, most planned to head straight to the border to cross illegally into the Texas towns of Del Rio and Eagle Pass.

    But now those thousands of federal permit holders have collided with an unusual and wide-ranging Coahuila State police roadblock operation that is systematically halting buses carrying the migrants all over that state, detaining and deporting some, and thwarting federal government will.

    Few, if any, of those thousands are finding their way over the Rio Grande into the Border Patrol’s Del Rio Sector. Mexican state police are blocking northbound commercial buses at the bus station in the Coahuila state capital of Saltillo, and at many other stations, and emptying migrants from trucks and vans at checkpoints on all roads leading into that state’s border cities of Piedras Negras, across from Eagle Pass, and Acuna, across from Del Rio, according to Mexican press reporting.

    The migrants who thought they were a day or two away from crossing into Texas, where the Biden administration will admit most of them, are reported to be infuriated. In many cases, the state authorities are “deporting” the immigrants they catch, although it was unclear to where. The operations have sparked civil disobedience disturbances in Saltillo, protests elsewhere, and closure Tuesday of the international bridge between Eagle Pass and Piedras Negras when 100 of the caravan migrants tried to hop a train over and battled Mexican authorities who stopped them.

    The migrants think they’re pretty entitled to enter the U.S. free of charge and vetting.

    What happened here was that Abbott and his Mexican counterpart in Coahuila, Gov. Miguel Angel Solis, signed a security agreement two months ago to keep the border area secure.

    The impetus for the agreement was Abbott’s shutdown of Texas-Coahuila border trade, with intense truck inspections that slowed commerce as Abbott’s troopers searched vehicles for evidence of migrant-smuggling.

    It was a very Trumpian move on Abbott’s part to slow roll the Mexican trucks, and he received a lot of heat for it, but like many Trumpian moves, it worked by threatening something the other party desperately wanted (the economic security of Coahuila).

    What drew headlines at the time was Abbott’s transport of illegal migrants to Washington, D.C., but the power move on his part was in the laborious truck inspections, which were a problem for the Mexicans. The Mexican governor wanted that stopped, because it was hurting the normal economic activity of Coahuila, and he (along with three other Mexican governors, according to Bensman) signed the agreement with Abbott to get it stopped.

    That’s why the roadblocks and ship-backs in Coahuila, courtesy of Mexican state police, are going strong now. The Mexican state cops aren’t putting up with these caravans from the migrants from some 150 countries at the expense of their own economy. They’re breaking these cartels up and sending the migrants back, one truck at a time.

    The president of Mexico permitted their sending, and Joe Biden, of course, had planned to welcome all comers. But the two governors wanted normal life to go on, and the Mexican governor got busy with his end of the bargain to put a stop to the whole thing right then and there.

    Between this and the Texas lawsuit win against the Biden Administration’s policy of not detaining illegal aliens, the State of Texas has scored significant wins for border security and the rule of law this week.

    (Hat tip: Director Blue.)

    Japanese Boobs 1, Feminists 0

    June 18th, 2022

    From Japan comes the heartwarming story of radical feminists being defeated by the holy power of boobs:

    No country is too far from the grasp of social justice values to try to take hold, and sure enough, the country of Japan has been enduring its own attempts by the far left to infiltrate and take over the culture.

    Particularly, a feminist movement in Japan had been growing within it, but it would appear that the young women it was attempting to seduce are rejecting it thanks to several factors, but one of them is their breasts.

    Visual Aid

    No, I’m not kidding.

    According to Datosjam, feminists are losing ground in the land of the rising sun due to the fact that the movement is attacking women. Just like in the west, woke culture is attempting to eliminate femininity and make being a woman seem weak and problematic. It’s a narrative that has found a ton of success in the west thanks to decades of pushing it through mainstream culture, but in Japan, this narrative is failing.

    Another Visual Aid

    Apparently, Japanese women like their femininity. Specifically, their feminine bodies which the feminist movement over there is attempting to shame women for. Particularly their breasts.

    Yet Another Visual Aid

    An article by Japanese writer Raiden Bell described how feminists were attacking women with large breasts and telling them that in order to be less discriminatory with gender they would have to hide them.

    Hide large breasts? What happened to “My body, my choice?”

    Still another visual aid of what Japanese feminists evidently hate

    One of the controversies prompting an exodus occurred when an image posted by a business on social media using free advertisement images given to them by Japanese model Saya Akane caused an uproar. Feminists claimed that the image highlighted Akane’s breasts. The image actually shows no emphasis on her breasts. She is in modest office casual clothing and is speaking on a phone. Akane just happens to have a larger than normal breast size.

    The girl that evidently has feminists all hot and bothered.

    “Aren’t they crushing diversity in an attempt to embrace diversity?” asked Akane.

    Feminists went so far as to suggest that she reduce her breasts surgically and that not doing so is “selling your sex.” They hurled insults at her such as calling her a “typical penis-loving woman without honor” and “trying to take advantage of men’s sexual desires.”

    As woke culture has attempted to push on us here in the west, a woman attempting to appeal to the male gaze is the height of sin for a woman.

    Moreover, Japanese feminists have declared that larger breasts are “deformed” and “associated with mental disability.”

    I’m not seeing any deformity here.

    That was a bit too much for Japanese women who began rejecting the feminist movement and began stating that the constant criticisms are enough to move away from the movement. Funny enough, it didn’t stop there, and further rejection of feminism came from its criticism of an unlikely source.

    Manga artists tend to draw women with tiny waists and larger breasts, or at the very least, they tend to draw women in ways that make them more sexually appealing than normal. Feminists in Japan are naturally angry about this, but interestingly, data shows that around 70 percent of manga artists are women according to the article. Moreover, the majority of these artists are in their 20s and 30s.

    Warrior against wokeness

    To be anti-breast is to not only be anti-woman, but anti-human.

    Hey! You! Feminists! Leave those breasts alone!

    (Hat tip: Stephen Green at Instapundit.)

    LinkSwarm for June 17, 2022

    June 17th, 2022

    The Fed goes Volcker, more Welcome Back Carter cosplay, Big Yellow moves to Texas, and Florida Man makes a run for the ocean.
    
    FYI, Blue Host has been acting weird today, giving errors when you tried to save, even though everything appears to be there upon reloading. (Shrugs.)
    
    

  • Fed hike rates 75 basis points. The attempt to Volckerize inflation during the Biden Recession has begun.
  • Speaking of St. Volcker, there were a lot of other factors that helped kill inflation in the early 1980s:
    • Oil was one of the primary causes of the 1970s inflation and everyone remembers the oil crisis. During the decade, oil ran all the way from $2 to $39. However, the flipside to this story is that with a lag, high oil prices will eventually incentivize production. The issue was that the US specifically disincentivized US producers and importers. Ronald Reagan signed an Executive Order in January of 1981 to eliminate oil price controls and then removed Jimmy Carter’s idiotic Windfall Profits Tax a few years later. As expected, global production expanded rapidly and with the removal of price controls, that production flooded into the US. By the middle of the decade, despite repeated production cuts by OPEC, there was a global glut of oil and by 1985, oil had collapsed all the way to $7. It wasn’t interest rates that made oil decline, it was government policy on the deregulation side, along with rapid production increases from non-OPEC countries.
    • President Reagan’s Economic Recovery Tax Act was signed into law in August of 1981, designed to reduce tax rates and incentivize investment by rewarding risk-taking by businesses. In particular, the Accelerated Cost Recovery System served to accelerate depreciation, reducing taxes for those that invested in productive capacity. Once again, government policy, not interest rates led to an increase in investment and ultimately supply, helping to tame inflation.
    • It wasn’t just Reagan working on de-regulation; The Staggers Act of October 1980, deregulated the railroads, The Motor Carrier Act of July 1980, deregulated the trucking industry, and the Airline Deregulation Act of October 1978 effectively deregulated transport industries. The net effect was dramatic price competition, better ability to invest and innovate, and the ability to eliminate unprofitable business that was funded by profitable business. Almost immediately after passage, pricing for transport services collapsed and the ease of transporting goods expanded.
    • Organized labor was also dealt a near-fatal blow when Reagan fired the air traffic controllers in August of 1981. This may have reduced the wages for a generation of middle-class workers, but it sure wasn’t inflationary. It also accelerated the decline of unions which had already peaked out as a percentage of workers. More importantly, it reduced the militancy of unions and took the teeth out of their ability to disrupt businesses, leading to better efficiency and lower costs for consumers.
    • At the same time, when it comes to macroeconomics, demographics equals destiny. In this case, Volcker simply got lucky. Think of the Baby Boom generation, the last of whom was born in 1964. By 1982, these last Boomers hit 18 and started joining the workforce. The eldest Baby Boomers, born in 1946, were already 36 by then. Look at the massive increase in workers starting in the late 1970s and into the 1980s, which tamped down wages and tamed inflation—especially as female participation in the workforce expanded dramatically. This added labor slowed a key component of the inflation.

    The Biden Administration looks capable of pursuing none of those policies, and the Baby Boomers are starting to retire…

  • More Biden Magic: “The Dow has now had 11 down weeks out of the last 12. This has never happened before… (in Nov 1929, The Dow fell for 10 of 11 weeks)…”
  • How did we get here? Well, in addition to those SUPERgeniuses in the Biden Administration, decades of deficit spending, and loose Fed money printing, there’s the Flu Manchu lockdowns.

    For weird reasons, some people, many people, imagined that governments could just shut down an economy and turn it back on without consequence. And yet here we are.

    Historians of the future, if there are any intelligent ones among them, will surely be aghast at our astounding ignorance. Congress enacted decades of spending in just two years and figured it would be fine. The printing presses at the Fed ran at full tilt. No one cared to do anything about the trade snarls or supply-chain breakages. And here we are.

    Our elites had two years to fix this unfolding disaster. They did nothing. Now we face terrible, grim, grueling, exploitative inflation, at the same time we are plunging into recession again, and people sit around wondering what the heck happened.

    I will tell you what happened: the ruling class destroyed the world we knew. It happened right before our eyes. And here we are.

    Last week, the stock market reeled on the news that the European Central Bank will attempt to do something about the inflation wrecking markets. So of course the financial markets panicked like an addict who can’t find his next hit of heroin. This week already began with more of the same, for fear that the Fed will be forced to rein in its easy-money policy event further. Maybe, maybe not; but recession appears impending regardless.

    The bad news is everywhere.

  • More Welcome Back Carter 70s throwbacks: labor unions want to wage war strikes against the U.S. food chain.
  • A closer look suggests that Democrats are actually doing worse than their horrible polls suggest.

    The polling error for the 2020 election was roughly 4% nationwide, the largest in the last 40 years.

    Fast-forward to today. Inflation is 8+ percent, the price of food and gasoline is way up, crime is up, there is a nationwide shortage of baby formula, and don’t get me started on the border crisis. Yet Joe Biden’s job approval is close to 40% positive. That means almost four out of every ten Americans think Joe is doing a good job if you believe the RealClearPolitics average. And I don’t.

    Snip.

    If the polls are overestimating approval numbers for Biden and other Democrats, how bad is it? The political climate today is different since the 2020 election, but the Democrat poll bias seems intact, which was 4% nationwide. Since nonresponse bias, 4%, and registered voter bias, 2.6%, should be mutually exclusive, we can add them together. This gives us a total Democrat bias of roughly 6.5%

    What does this mean? Until pollsters switch to sampling likely voters right before the election, you can subtract a solid 6 percent from Joe Biden’s approval numbers. And if nothing changes before the election, any Democrat who leads by 3 percent or less is likely to lose.

  • Another Russian ship sunk.
  • “Paxton Wins Lawsuit Against Lax Biden Immigration Policy.”

    Texas Attorney General Ken Paxton is enjoying a victory against a Biden administration policy that has allowed illegal aliens to cross the southern border without consequence.

    In 2021, President Joe Biden’s Department of Homeland Security issued a rule giving immigration law enforcement officials the power to decide whether or not to detain illegal aliens who attempt to cross the border (in contradiction to federal law, which says they must all be detained).

    This policy caught the attention of Texas Attorney General Paxton and Louisiana Attorney General Jeff Landry, who sued to stop the rule change, arguing that Biden was violating federal law when refusing to take custody of criminal migrants.

    Paxton bashed President Biden, arguing that the policy was contrary to federal law and was instituted without following the proper procedure. Over a year since the original lawsuit was filed, a federal judge issued a ruling against the Biden administration on Friday.

    Federal District Judge Drew Tipton said in his decision that the rule was “an implausible construction of federal law that flies in the face of the limitations imposed by Congress.” Tipton added, “Whatever the outer limits of the authority, the executive branch does not have the authority to change the law.”

    After a legal fight lasting almost a year, Texas judges ruled a final judgment banning Biden’s detention-discretion rule.

  • The Sheriff’s Office of Isabella County, Michigan has to stop responding to some 911 calls due to rising gasoline prices.
  • Sixty years ago came the birth of the New Left via Tom Hayden, Students for a Democratic Society and the Port Huron Statement. (Hat tip: Stephen Green at Instapundit.
  • Most of what you know about Watergate is probably wrong. (Hat tip: Dwight.)
  • Leaked internal emails showing Twitter employees debate banning Libs Of Tik-Tok for crimes against social justice.
  • Round Rock ISD Trustee Sues Superintendent Over Alleged Illegal Investigation. The saga continues in Round Rock ISD as trustee Mary Bone files against scandal-plagued Superintendent Hafedh Azaiez.”
  • Caterpillar is moving their headquarters to Texas.

    (Hat tip: Stephen Green at Instapundit.)

  • Elon Musk: “Democrats ‘Would Rather Tesla Was Dead Than Be Alive And Non-Unionized.'” Of course they would. If they can’t rake graft off you, or harvest votes from your ghetto, you’re worse than useless to them.
  • Speaking of Musk: Several snowflakes working at SpaceX circulated a letter calling Musk “an embarrassment” and demanding the company be more “inclusive.” Result: He fired their ass. Good.
  • McDonald’s gives up on healthy food.
  • Florida Man Crime Blotter: Accused Medicaire fraudster Ernesto Graveran captured trying to escape to Cuba on a jet ski. (Hat tip: Dwight.)
  • How bad is the Biden economy? There’s now a Sriracha shortage.
  • San Antonio symphony orchestra shuts down and files for Chapter 7 bankruptcy. “The last bargaining session between the Symphony Society and the Musicians’ Union took place on March 8, 2022 after which the Union declined to return to the bargaining table, despite efforts of federal mediators and the Symphony. The Musicians’ Union has made it clear there is no prospect of the resumption of negotiations, absent the Board agreeing to a budget that is millions of dollars in excess of what the Symphony can afford.” (Hat tip: Dwight.)
  • “School District Announces Summer Enrichment Program For Kids Who Need Extra Grooming.”
  • Swim like no one’s watching.

  • Everyone Hates Soros-Backed LA DA George Gascon…Including His Own Prosecutors

    June 16th, 2022

    In the wake of the successful recall of Chesa Boudin in San Francisco, LA DA George Gascon is the next Soros-backed DA recall target.

    And according to Bari Weiss, the recall is coming from inside the building.

    On May 31, 2018, Desiree Andrade was scrolling through Facebook when she saw a local news report about the body of an unidentified man found at the base of a canyon in the forest north of Los Angeles. Andrade’s son, Julian, who was 20, had disappeared two days earlier. So she called the police. “I was giving facial features,” she told me, “and the lady on the other end said, ‘You know, ma’am, facial features aren’t going to work. He doesn’t have a face.’”

    Andrade told the dispatcher there was a rose tattoo on Julian’s left hand. A few minutes later, a detective called her back to confirm that the dead man was her son.

    Five men were charged in Julian Andrade’s death—beating and stabbing him, and then throwing him off a cliff, and then, when they heard him thrashing about, climbing down to pummel him some more. Two of them had known him in high school. They thought he’d stolen their weed.

    He died slowly—from head trauma, blood loss and the cold. By the time his body was recovered, two days later, it had been ripped apart by bears or mountain cats.

    Prosecutors told Desiree Andrade it could take up to five years for the case to inch its way through the system but assured her that justice would ultimately be served. Then Covid hit, and everything slowed down. And then, while the city was still hunkered down, George Gascon became Los Angeles County district attorney.

    The day after Gascon’s inauguration, on December 7, 2020, Phil Stirling, the lead prosecutor on the case, called Desiree Andrade. She was at her home in Whittier on a conference call. (Like everyone, she was working remotely.)

    The new D.A., Stirling explained, had issued nine directives that, among other things, eliminated “enhancements”—extra penalties for more serious crimes. Stirling had been hoping for life without parole for “the three heavies.” (The other two defendants were not thought to have played a central role in the murder.) But without the enhancement—Julian Andrade hadn’t simply been murdered but murdered during the commission of a kidnapping—the best they could hope for, he said, was 25 years in prison, which probably meant 20, since convicts often wind up serving 80 percent of their sentence.

    “I felt betrayed,” Desiree Andrade told me.

    Her son’s case was one of thousands that, in the waning weeks of 2020, were suddenly, inexplicably downgraded. The stories of justice denied, and the rage and heartbreak of mothers and fathers like Desiree Andrade, combined with a rise in violent crime, ignited a firestorm across the city. In December 2021, angry Angelenos, including Andrade, launched a recall campaign against Gascon.

    The campaign has reeled in more than 500,000 signatures. If it gets the 566,857 it needs by July 6, voters will decide come November whether to fire the D.A. (Given that organizers recently mailed out 3.6 million more petitions, including return envelopes, that seems likely.)

    The revolt—as was the case in San Francisco, with the campaign against Chesa Boudin, another uber-progressive prosecutor—is coming from inside the house, too.

    In February, the prosecutors’ union, the Association of Deputy District Attorneys, conducted a vote to see where its members stood on the recall: Nearly 98 percent supported it. Last week’s recall of Boudin gave the anti-Gascon organizers a major boost. “Everyone is talking about it in the office,” a prosecutor said. “Literally everyone.”

    To a person, these prosecutors said that the problem was that Gascon had portrayed himself on the campaign trail as a progressive, and they thought that was a lie. They thought that he was captive to a radical agenda; that he wanted to blow the whole place up; that Black Lives Matter was now in charge of the criminal-justice system in Los Angeles; and that all of this was hurting the people the activists claimed to care about the most.

    Check, check, check and check.

    They meant people of color, mostly Latino, some black, mostly confined to the east side of the city. The people who lived next to the freeway overpasses, between strip malls and empty lots and homeless encampments, whose kids had spent most of the past two years at home, who were always fending off disaster, who lived among the gang members and drug dealers and the dealers of illegal guns and car thieves and armed robbers. The people who needed them.

    Snip.

    John Lewin, a deputy D.A. who has been in the Major Crimes Division for nearly two decades, said: “What happened is the D.A.’s Office was taken over by somebody who, in my opinion, has no interest in prosecuting criminals.” Another longtime deputy D.A. who voted for Gascon and has since revised his opinion told me: “Voters expect their district attorney to protect the public. Instead, they got a Trojan horse—a D.A. and his coterie of radicals and sycophants who are hellbent on blowing up the criminal-justice system in the name of ‘progress.’”

    The recall and all the energy behind it aren’t just about Gascon, prosecutors told me.

    It was about all the right-thinking people who had backed him—George Soros; Netflix CEO Reed Hastings; Los Angeles Mayor Eric Garcetti; Bernie Sanders; Elizabeth Warren; and, of course, Patrisse Cullors, the BLM co-founder who had piloted the movement into a successful house-hunting enterprise—and it was about the moment that birthed him. With the tailored suits and the retro sunglasses, Gascon was radical chic. He was cool. Hollywood had been in love with him. (“Jackie Lacey is so out of step with right now,” a Democratic bundler told me a few months before Gascon’s election, referring to the black, female incumbent D.A., whom Gascon defeated.) Gascon was the antidote to over-incarceration and George Floyd. He was the prosecutor who didn’t like prosecutors—like the other Soros-backed D.A.s who had recently taken office: Boudin; Larry Krasner, in Philadelphia; and Kim Foxx, in Chicago. Like other “reform-minded” prosecutors, as The New York Times put it, in Austin, Orlando, Columbus and beyond.

    Eric Siddall, a deputy D.A. and the vice president of the prosecutors’ union, said no one had ever thought that much about the district attorney before. There was a system, and sometimes it moved a little in one direction or another, but it always basically worked the same way, and now it seemed to be imploding in slow motion. “It’s never been as politicized as it has been by George Gascon or Chesa Boudin or Larry Krassner or Kim Foxx,” Siddall said.

    “It was kind of a perfect storm,” said Richard Doyle, who used to run the D.A.’s Compton branch. “I don’t think the voters understood how radical the changes were that he was proposing. I think that allowed him to sneak in the back door.”

    Snip.

    In the mass email, Gascon also announced a new mission statement. Moving forward, the D.A.’s Office would advance “an effective, ethical and racially equitable system of justice.” He called the office “a learning organization that believes in reduced incarceration.”

    “In Gascon’s and his supporters’ twisted view, it is the offenders committing the violent crime who they consider to be the victims,” John Lewin, the deputy D.A., said. “They draw no distinction between those individuals who are committing the violence and those individuals who are having the violence committed upon them.”

    Gascon assured prosecutors that decarceration would lead to lower recidivism rates and that the data backed him up. Prosecutors, including many who called themselves liberal Democrats, were skeptical.

    It didn’t help that Gascon’s inner circle mostly included former public defenders who thought the D.A.’s Office and the Los Angeles Police Department were shot through with systemic racism—who basically assumed the deputy D.A.s, many of whom were black or Latino, were enthusiastic enforcers of or, at best, cogs in the prison industrial complex.

    One of those former public defenders, Tiffiny Blacknell, who was now Gascon’s community and government affairs liaison, had been especially vocal. On her Instagram, Blacknell, who is black, had posted a picture of herself in a t-shirt that said, “THE POLICE ARE TRAINED TO KILL US,” and another photo of herself in a shirt that said, “THEY CAN’T KILL US ALL.”

    The true believers carrying water for Gascon seemed to imagine themselves doing battle with a white gerontocracy—stiff, staid, backward-looking prosecutors who just did not get it. “They think we’re dinosaurs and we’re standing in the way of change,” a deputy D.A. told me.

    “Without even knowing us, he basically spelled out that we were an office of systematic racism,” added deputy D.A. Maria Ramirez. Ramirez is suing the D.A.’s Office for demoting her for, she claims, refusing to toe the party line.

    The change could be felt across the county.

    Richard Doyle, the head of the Compton branch office, was directed by one of Gascon’s lieutenants, Mario Trujillo, to drop felony charges against three BLM protesters who had dragged a metal barricade onto some metro tracks, threatening to derail a train full of passengers. When Doyle protested, he was slapped with a “letter of reprimand” and later transferred to the Environmental Crimes Division. (Trujillo did not reply to requests for comment.)

    Snip.

    Phil Stirling, the lead prosecutor on the Andrade case, pointed out what pretty much everyone in the city’s rougher neighborhoods already knew: “Ninety-nine percent of the victims of gang murders and gang rapes and gang robberies and gang beat downs are minorites—black and brown people,” he said. “That’s what’s crazy about this whole racist prison bullshit.”

    But that “racist prison bullshit” has had a profound and negative impact. Since Gascon took office, roughly 300 deputy D.A.s have left. On top of that, job applications are down. The D.A.’s Office usually hires every two to three years, and it gets about 2,000 applications each hiring season. This year, 240 people applied for 60 spots, a longtime deputy D.A. told me. “And you should see who these people are,” he said. ​​“It’s people who no one else will hire.”

    Everywhere the racist ideas of social justice have been tried, it is poor minorities who are hurt worst by the crime and chaos it brings. That, in fact, seems part of the entire point: To destroy the foundations of America’s Constitutional system of ordered liberty so that radical, neo-Marxist ideas can be imposed.

    To the Soros network, the destruction of so many American lives is a feature, not a bug.

    (Hat tip: Director Blue.)

    Republicans Flip Another Hispanic Texas House Seat

    June 15th, 2022

    Republican inroads into Texas Democratic Hispanic strongholds continue apace.

    According to unofficial results, Republican Mayra Flores has won the special election to represent Texas’ 34th Congressional District, anchored in Cameron County.

    The 34th is a sprawling district that includes a lot of rural southern Texas between San Antonio and the Gulf Coast. Cameron County is where the Rio Grande empties into the Gulf of Mexico, and includes Brownsville, Harlingen and South Padre Island.

    It’s an 85% Hispanic district that went for Obama by 61% in 2012, but for Biden by only 51% in 2020, an indication of the steady erosion of Democratic support among Texas Hispanics. And it’s also a district that suffers greatly under the Biden Administration’s continued refusal to deport illegal aliens.

    It’s also where Elon Musk’s SpaceX launch facility in Boca Chica is located. A small house Boca Chica is also Musk’s legal residence, and Musk announced on Twitter that he voted for Flores.

    Flores’ victory represents a major upset for the historically Democratic seat.

    A Republican has not won the seat since the district was drawn in the last redistricting cycle 10 years ago. In fact, over the past forty years, a Republican has only won the seat once, in 2010.

    Flores squeaked past the 50 percent mark just after 9 p.m. on Tuesday night. At the time, runner-up Dan Sanchez, a Democrat, had just over 43 percent of the vote.

    Flores enjoyed a clear advantage over Sanchez in the election day vote count. Among early voters only, the gap between the two candidates was fewer than 300 votes. Election day voters preferred Flores to Sanchez by well over a thousand votes.

    The special election pitted candidates from both parties in a four-way race on the same ballot. However, party leaders largely rallied behind Flores and Sanchez.

    Flores, a respiratory care practitioner, had already won the Republican primary in March before the incumbent Filemon Vela (D-TX-34) announced his retirement. Flores enjoyed the endorsements of Governor Greg Abbott and Texas GOP Chairman Matt Rinaldi.

    On the Democratic side, Rep. Vicente Gonzalez (D-TX-15), who currently represents a neighboring congressional district in South Texas, won the Democratic nomination on March 1. However, Vela’s abrupt resignation announcement meant that Gonzalez would have had to leave his current seat to run for the 34th district instead of waiting for a regular transition in November.

    Gonzalez decided not to leave his current seat, endorsing Sanchez in his stead.

    Sanchez also nabbed Vela’s endorsement among other prominent Democrats, such as attorney general candidate Rochelle Garza.

    However, there’s a caveat:

    Bolstered by ongoing political trends in South Texas, timing gave Republicans an advantage.

    The voting population included in District 34 under the current map leans 54 percent Democratic based on data from the past two general elections. But the voting population of the newly adopted district map leans 63 percent Democratic.

    In other words, if Vela had not retired and triggered a special election, his replacement would have been decided in November by a more Democratic voting population than what the district currently includes.

    Flores may face a greater challenge in November when the regular election takes place under the new map with a more Democratic voting population.

    Between the impact of the Biden Recession and the continued flight of Hispanics from the Democratic Party, if ever there were a year for Republicans to defend a marginal seat, 2022 is it. Expect Flores to get all the help she needs from the state and national party to hold the seat.

    Can Republicans trust her to not go squishy on border security once in office? Since she’s married to a border patrol agent, I’m go to go with “Yes”…

    Banks Runs In China?

    June 14th, 2022

    Reader Kirk suggested Chinese bank runs might be the next story to cover. I think I covered bank runs at smaller rural Chinese banks in a previous “China is screwed” post. Is a wider run in progress? Maybe.

    Multiple sources contacted by Asia Markets, have confirmed deposits at the following six banks have been frozen since mid-April.

  • Yuzhou Xinminsheng Village Bank (located in Xuchang City, Henan Province)
  • Zhecheng Huanghuai Bank (City of Shangqui, Henan Province)
  • Shangcai Huimin Rural Bank (Zhumadian City, Henan Province)
  • New Oriental Village Bank (City of Kaifeng, Henan Province)
  • Huaihe River Village Bank (Bengbu City, Anhui Province)
  • Yixian County Village Bank (Huangshan City, Anhui Province)
  • It’s understood the banks with branches across the Henan and Anhui Provinces successively issued announcements in April, stating they would suspend online banking and mobile banking services due to a system upgrade.

    At the same time, clients reported their electronic deposits in online accounts, mobile apps and third-party platforms could not be withdrawn.

    This led to depositors rushing to local bank branches, only to be told they were unable to withdraw funds.

    By late May, images emerged on Chinese social media of demonstrations at the front of numerous bank branches. Asia Markets has verified these images with local contacts.

    Snip.

    Regardless of the cause, the developments raise serious questions about the health of China’s and its regulatory oversight. The more immediate concern, however, is the prospect of contagion, which could see the (so-far) rural-only bank run spread to bigger cities.

    There’s evidence this is already happening.

    In one of the only mainstream international media articles to report on the unfolding situation, local residents highlighted the seriousness of the situation and the likelihood of contagion.

    From the Financial Times on June 9:

    “Some depositors such as Xu have already lost trust in the system. The 39-year-old said he had withdrawn all of his deposits from 10 other small banks that had promised him an annualised yield of more than 4 per cent.

    “Another depositor, a 30-year-old father, said he had placed more than Rmb900,000 in his village’s banks since 2020 at a return of 4.1 per cent. “I felt like being slaughtered,” he said, declining to give his name. He drove overnight to negotiate with the banking regulator in Zhengzhou, capital of Henan, in mid-May. “This is the money my wife and I have saved together since we got married. I had to lie to her that I was away for work.”

    On Twitter, a video of a large line at an ICBC Bank in China (one of China’s largest state-owned banks) posted on Tuesday, June 9, suggest contagion is in progress.

    Translated to English, the tweet reads “The bank card system is locked, and these people are here to unlock it. Massive runs are coming.”

    Blogger, Jennifer Zeng, has reported major issues with withdrawing cash from banks in Shanghai in recent days. The uncertainty no doubt exacerbated by the prospect of more lockdowns as COVID cases again spike.

    “All banks in Shanghai have restricted depositors from withdrawing money… A bank run is about to sweep China,” she said.

    Maybe. This, from five days ago, suggests Shanghai banks are limiting total transactions to 300 a day.

    While I’m always willing to believe the worst about China’s smoke-and-mirrors economy, it’s possible that Shanghai’s problems are just temporary post-lockdown issues that will subside, assuming China doesn’t lock that city down again. (Don’t count on it.)

    All the reports of bank runs I’m seeing either link to that Asia Markets piece, or the Hal Turner radio show piece that largely reprints it.

    Right now I’m going to go with “Not Yet Proven” for current bank runs in China.

    Though Lord knows if I were stuck in China (and had somehow managed not to get imprisoned or executed), I’d be pretty intent on getting my money out of Yuan entirely and into something more stable like gold, silver, or even U.S. dollars…