#EP85 Dems to move to create DC as 51st state. US to support Japan in Senkoku. PRC annex Pratas?

#DailyGlobalInsights #EP85 Dems to move to create DC as 51st state. US to support Japan in Senkoku. PRC to annex Pratas islands near Taiwan?

Sree Iyer: Hello and welcome to episode number 85 of Daily Global Insights. I am your host Sree Iyer. Today is the 28th of January 2021. As always I have our guest Sridhar Chityalaji. Sridharji, namaskar and welcome to PGurus Channel.

Sridhar Chityala: Namaskar and good morning to everybody.

Sree Iyer: Sridharji, there have been a Spate of executive orders issued by President Joe Biden and this is now becoming a bit of a pattern because if you remember the early days of the Trump Administration also, there was a lot of activity but that’s nowhere close to what you are seeing now with President Joe Biden. And why do you think this is happening and plus with a pandemic raging, what is the reason for the emphasis on clean energy, shutting down Keystone Pipeline, you know and so on and so forth. What do you make of all this flurry of executive orders?

Sridhar Chityala: I think President Joe Biden is remote-controlled or is being managed by the various factions within the Democratic Party. So, the whole objective of this exercise which we discussed was the progressive agenda because many of these activities now beginning to take shape not just purely through executive actions will get to that in a second, but, also through the systemic infusion or systemic communication, that is taking place during the hearings of the various nominees. We have had Janet Yellen, we have had Antony Blinken. We also had you know, Linda Thomas-greenfield the UN Ambassador nominee. Then, we have also had the energy secretary who is being heard, Jennifer Granholm. So, you’re beginning to see a pattern and the pattern that is reflecting here is much closer and closer to proximity to China, for example, in the case of the Paris Accord as well as in the case of climate change, you saw Antony Blinken, raise the point around, while we have differences, how can we work with China? Similarly Janet Yellen making a statement on one day that she has fiscal tools and next day saying well, you know, we have to be united with the other countries and we can’t be unilateral in our approach.

So you’re seeing one strand of thought in fact, yesterday, Ted Cruz basically took John Kelly apart and talked about, hey, you guys are now even introducing Huawei and you also introduced a ban on calling it as China virus during this first hundred days. So, is there are we moving towards, this whole concept of a China surrender and China move and you are surreptitiously bringing it. So, there is one strand of thought which is developing around that and this is being called out, Tom Cotton called out.

Then, you have another strand of thought which is to say now. These are the progressive agendas, what are the progressive agenda? Number one, they stopped the border wall that’s the executive order 5,000 jobs, it is being challenged by CBP (Customs and Border Patrol). Then, you had the Keystone XL pipeline that has been terminated and that is being challenged and there is a hold on that. Then we have stopped of the lease in federal land and federal waters that are being challenged in Wyoming. Then, you have the what you call as the decriminalization of border crossing as well as a zero-tolerance being eliminated through executive that is actually being challenged by the Attorney General of Texas, that case was filed on the 27th, basically saying that you are creating potential security threat to the states by virtue of these actions, we also covered a little bit of that yesterday. So, the latest kind of the salvo that is coming is that the Patrick Morrissey of West Virginia in partnership with five generals of the five other states, Arkansas, Indiana, Mississippi, Montana and, Texas have actually now filed a case or in the process of filing a case. They have sent you a letter before they file the case. They say that before we challenge these executive orders. We will give the opportunity for you to sit with us and discuss. If you don’t give us the opportunity and if you still persist with the orders, but, we have no choice but to challenge. What they are saying is that there is a very fine line agreement as part of the Federation between the role of an executive and that of implementation of various policies within the states. This is the federal-state architecture and they are saying, this is the fundamental tenets of the Constitution is being violated. This is no different to the same concept which was filed during the election, especially by the Texas Attorney General, but given the magnitude of the case that was kind of past and that may probably come up. This is around can one state follow the Constitutional tenets in terms of framing the rules and that those framing of rules resting with the legislature as support to what happened in some of the battleground states, where the rules were framed not by the state legislature, but by the executive branch and the judicial branch. So, you are seeing a strand of activities coming through these executive orders.

Then, you have the minimum wage $15 one is federal, one is State as part of the stimulus package that’s not yet been approved. But, that is very much in the bill. So what we are witnessing is this spate of executive orders coming at a frenzy. The most astonishing part in this is this whole thing around the new energy banning of fracking, John Kerry went on to say the climate Accord is an absolute imperative because to preserve the energy and when asked, what the rationale? It is obviously the Emission controls. And what’s the alternative? Well, you know, we have the alternative through solar wind and other formats and especially solar will create the jobs for these blue-collar workers who are getting displaced from the fracking and that was taken apart which is to state, that’s just a load of rubbish because the reason is as everybody knows that’s not going to be the case. So, as you rightly said that context by saying we have a pandemic and we have unemployment, then, we have a stimulus bill and right on the threshold of that these things are being done with immediate effect, which has job consequences.

Sree Iyer: So, a clarification CBP means Customs and Border Patrol, which is what Sridharji led with, I just wanted to expand that. Also, Sridhaji, the United States government is suspending the sale of arms to the United Arab Emirates and Kingdom of Saudi Arabia. What was the rationale behind that?

Sridhar Chityala: That’s another executive action that has been passed. The thing is that there’s a fundamental difference between the foreign policy of Donald Trump versus foreign policy of President Joe Biden, certain states were excluded from getting access to the arms and for example, maybe some of the middle eastern states which are in the exempt list, some of the other middle eastern states which are now part of West Asia, I’m sorry, if I am using the word interchangeably here. It is not the Middle East, it is West Asia as corrected experts from the region.  So, West Asia, so some of the West Asian countries, which now form part of the group with whom Israel has struck a deal. So they are saying if you have to progress potentially we have to progress the Iranian deal which was floated again by Antony Blinken and to some extent by President Joe Biden. Then, the question that’s going to come up is if you want us to stop enrichment and stop the nuclear, you know, what you call as the creation of nuclear bombs and stop drilling the oil, until, we comply with the conditions. Then, Iran is going to say hey, you have armed those people with teeth, they are hurting us for potentially in Lebanon and Syria and Iran causing a nuclear threat to us. You saw the notes from Israel and also from President Trump. There is also this classification that is going on in Yemen around the Houthis. So, when Iran has got its hands deep you’re going to arm one guy with all the stealth, equipment and planes and on the other side, you are asking me to sit quiet and comply with no right to defend myself. I mean, I am assuming they have not made this very explicit, that’s why they say they would reassess this is the new Administration under Biden and they would reassess my gut instinct says this is what this is all about. This is one a facet going now shifting to the other side to Taiwan. So, you have Taiwan has been given drones and the radar as well as they are also going to be sold some of the F-35 planes and the question, therefore, is China is also another player in the room, which is exerting pressure that why you are giving all these things when you want to work with us, very closely? No, though Biden has not formally indicated to that effect that is going to open the doors, there’s enough noise coming through the confirmation process that says that some of these players are putting pressure on Biden in terms of reassessing the arms sales.

Sree Iyer: Viewers, it is President Biden, even though sometimes we may not say the word president in front of it, we are still getting used to the terminology. No disrespect intended towards the president. He is the president of the United States of America. Moving on Senator Tom Carper of Delaware has introduced a bill to make Washington DC the 51st state of the United States again it begs the question. What is the rush to do it? Because there are so many other pressing problems, the Senate is still not even seeing eye to eye in terms of what to do as for his impeachment is concerned, the stimulus is concerned. So what is the rush to do this thing? I don’t know perhaps, you know, sir. You can explain why, this is so important?

Sridhar Chityala: There are two reasons both Puerto Rico as well as Washington DC’s is in the radar of the Socialist. Remember you have this game of 15, 10  or 35, there is an imbalance that exists in terms of the number of states with Republican and number of states with Democrats. They’re trying to bite on that as quickly as possible, that’s number one. Number two, I think the Democrats have very strong control in Washington DC, they don’t want the policies to be dictated if it is not a state, so, they would like most critical policies around the security and the administration you have seen what has happened in the western state like Washington State and you have seen what’s happening in Portland. You have seen what’s happening in California. You have seen similar incidents in DC, if you are in charge as like in New York, you are in charge, you can enforce policies no better place other than being in DC and embarrassing and presenting a show to the world. That’s exactly what happened here. Now, this is normal political bickering between the Republicans and Democrats. So, if you are a Democratic president, then the Republicans embarrass if you are a Republican president and Democrats embarrassed that was the case. Pandemic or no pandemic doesn’t matter to them, only, what matters is their political rhetoric.

Sree Iyer: I’m reminded of some of these periodic things that come up in the state of California. Two things happened. One is that they won’t California to secede and then somebody will say, ‘oh wait you have to have five states to agree for any state of the United States to secede.’ So there is the next thing they’ll try to say is ‘Oh, we want to split up, California into five parts because it is too big now to govern. These are all stories that come up, cause a ripple and then die away. I don’t know if the 51st state of Washington DC is one such thing, we will wait and see. The Department of Homeland Security see a heightened threat environment from now up until perhaps the progress of the impeachment and they even want to keep the National Guard in the capital city. Some are not for it. This is unprecedented in the sense that the United States is always felt that it can guard itself, after all, DC is a small area, there’s already local police, there’s also Capitol Police. What is the need for still keeping the National Guard, now that the inauguration is come and gone? I don’t see why this is being still kept perhaps you can throw some light on this.

Sridhar Chityala: Well, I told you this whole Washington DC impeachment and many of the actions, the Biden Administration is engaged in presently, I see three major problems: pandemic, economic and the imminent threat of China. In the middle of these three things, there is a power vacuum. Instead of focusing on those three things they are trying to focus on these mundane matters. Basically, there is a suspicion lurking in the mind of the Republicans that something is cooking which is why that has not been made public to us or transparent which is why you have 50 contingent of 15,000 people stationed in Washington DC in the middle of an impeachment hearing or in the imminent threshold of impeachment hearings. So this is what is driving. driving people to nuts, which is to say why what’s the agenda here? Now we are far more organized, far more prepared. There are no 1 million, 2 million people assembling here to run, they use the word insightful session that was conducted by President Trump past-President Trump. So I think there is that part. So that is why Senator Tom Cotton from Republicans from Arkansas has raised this issue. So how do you justify it? You have you justified by saying, there is some noise in the system, which says that there is a potential kind from unknown, dissatisfied people who will be coming. Therefore, we need to have this footprint means. And by the way, these people have to be here till March 31st. That’s the time, the date is March 31st.

Sree Iyer: Looking at Global News. Marco Rubio, Senator from Florida has called for a consensus on dealing with China, by that does he mean inside the United States or across the world.

Sridhar Chityala: So I think before I answer I just want to also make sure that one other important point which I failed to communicate yesterday which is important. This impeachment process which we touched on and we touched on the security is not a foregone conclusion because there are 45 Senators who have stood and voted very clearly against impeachment. So which means there is no clear vote for that. Similarly, I think that there is a Democratic move that is going on which is effectively to say this whole process looks null and void. This is Democratic senator Mr Kane making a move whether we should pass an opposite resolution, which is to stop the impeachment process. This, because of the left media you don’t get the coverage. Remember, all you need is 51 votes. Today, Republicans have 50 notwithstanding 5 swung the other way and of which two people Senator Murkowski and Susan Collins have expressed concerns that now we know there is no vote, what are we going through. And also, Trump is not going to be present, he is only going to give a written response. So under those circumstances there is a parallel move that is going on to reverse this. It’s conceivable that we may see in due course that a resolution passed. All you need is a simple majority 51 – 50. While everybody has been sworn in and ready

and so on and when February 9th comes there may be a resolution or before there is a resolution. So this could go away. I just wanted to leave that point that it is not a fait accompli that this whole process is going to go through. Sorry for making that observation, sir.

Sree Iyer: Back to our question, is Rubio calling for a consensus against China inside the United States or is he meaning the entire world?

Sridhar Chityala: I think that is first and foremost, he is talking about inside the United States which is to have a concerted approach between Democrats and Republicans because clearly as I said the context that the hearings have baffled them and the messages and the news that is coming from the present administration led by President Biden is not very encouraging to the Republican Party.

Sree Iyer: The United States says that it will return to the Iran nuclear deal once Tehran meets its commitment. This is according to the newly appointed Secretary of State, Anthony Blinken. And along with that, the chief of staff of Israel’s Defense Forces said last week that Iran is close, just months or weeks away from developing a nuclear weapon according to the Times of Israel. So if you juxtapose these two things there is no deal.


Sridhar Chityala: Well, there’s no deal and this is where your earlier question comes in, which is, why there is a temporary halt in arms sales to certain nations. It is very clear that Iran and Israel are moving in the opposite direction. Israel has made it very clear that they are days, if not a few weeks or months from a nuclear bomb. They have a fully engaged Uranian. The second, their illegal exports of oil, as well as the pumping of the oil, has gone beyond the threshold of the UN sanctions. Third, even more complicated, they have now found there is a footprint and presence of Al-Qaeda in Iran. So Israel is not bending down and Israel is really saying that we are getting ready for an imminent attack because there’s no point in regretting later. Whereas on the contrary, in their own naivete, the present administration seems to think they can negotiate. I see the remanences of all of this as to what happened during Obama-Biden years in the South China Sea. I know Democrats would like to debate this particular point. I have debated with them. I’ve also debated in policy think tanks on this point. It is Obama and Biden who single-handedly in eight years made sure that the South China Sea and China’s belligerence was strengthened all around the South China Sea. We talked about joining all these international groups: WHO and Paris Accord and all these kinds of groups. When the dispute came between China and the Philippines when the International Court of Justice ruled in favour of the Philippines, China said it cares two hooves in terms of the ICJ and it is not a signatory. So where is all these International Accords? Are these International Accords basically to suit China by the Biden Administration or is it they have a precedent? Same thing on the no-fly zone that was imposed in the Pacific. So what we are witnessing here is similar kind of acts and I hope Iran is not allowed to get away with whatever it is doing and there is some semblance of enforcement. If Biden doesn’t do it, this is not China, Israel will do it.

Sree Iyer: Yes indeed and we have been seeing this. Iran tried to poison the desalination Water Systems of Israel and Israel hit back. They disabled the largest port on the Iranian Seacoast. And they had to manually put back, their computers went down. This is something that happened a few months ago. We have an in-depth hangout on this on PGurus Channel. You can look at that. I just wanted to tell you that this is far from over.

Let’s take a quick look at the markets before we sign off for today, sir. Yesterday across all the segment we had a pullback based on Jeremy Powell’s statement that the economy has a long way to go. How do Futures look today? What do you see for today? And we are also going to talk about the FED, the deficits and all that stuff tomorrow, isn’t it?

Sridhar Chityala: Correct, correct. We’ll try to give the picture of a balance sheet of 2019 and 2020. We will also showcase in that the flow of stimulus, of the consequences, that is to the balance sheet and then the proportionate increase in the deficit that occurred as a result of that. So The markets were quite tepid, initially, they started with tepid and then it tagged more than 600 points, 633 points it tagged. What is the reason for 633 points for it to tag? Basically, there was a very important statement, every word of the FED is watched by the markets very closely. The economy has a long way to go for recovery. So when they said for foreseeable future, two important things. One, the interest rates will continue to be 0. Second, the asset purchase program of $120 billion will continue. We don’t see any inflationary headwinds nor we see any imminent reduction in the unemployment unless there is a sustained capital flow into the system and capital is capital and credit or not constraint. So the story is the capital is coming via stimulus, the credit is through the asset purchase program, opening up little bits and pieces of the balance sheet, opening steadily the balance sheet of the FED. So the story is that that sent the stocks going down. Also yesterday, there were earnings reports from a number of companies baring Apple. Many of the companies did not meet the expectations and you saw even the tech stocks like Microsoft, Alphabet, Tesla, Netflix, AMD, all loose between 4-5% in one single day in the prices. So this is what you are seeing and the FED statement is very very clear which is zero rates, stimulus needed, 120 million. They’re not cutting the $120 billion per month, asset purchase program and the pandemic is ravaging and we need to see. So even the 5% or 4.2% growth only still puts the economy in 2021 slightly below where it was in 2019. So almost, it is not equal to where it was in 2019.

Sree Iyer: So we are going to look at the big picture tomorrow and we’re also going to look at what are the various headwinds that are affecting the United States growth and by extension Wolrd’s growth because the United States has always been the one that has been leading the economies out of the session. At least, quarter to quarter we have experienced a v-shaped recovery. However, with the stimulus talk still going on and we also will look at what happened on the $910 billion stimulus deal that President Donald Trump had signed-off before he demitted office. So you have that and then you have a new 1.9 trillion from President Joseph Biden. So you have a lot of stuff on their plate and that’s where the focus ought to be because I think the unemployment numbers are again inching up. You will not be surprised if it again touches 1 million and we will talk all about this and more tomorrow, Friday. Thanks for watching. Please do subscribe to our Channel and once again Sridharji, heartfelt appreciation for you sparing so much of your time and effort in joining us and keeping us enthralled on this. Thank you very much. Namaskar, and we’ll see you tomorrow.

Sridhar Chityala:  Thank you, Namaskar and have a wonderful day.


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