Media

Breaking Points: 6/16/22 FULL UNCUT SHOW

Krystal and Saagar talk about the GOP primaries, midterm polls, Federal Reserve interest rate raise, Ukraine war strategy, journalist polling, media elitism, Breaking Points profile, war sanction failure, Biden’s lack of imagination, and the scam of ESG investing!

6/16 NEWSLETTER: GOP Primaries, Fed Rate Hike, Ukraine Aid, Media Polls, Sanctions Fail, ESG Investing, & More!
Welcome to the June 16th, 2022 edition of the Breaking Points with Krystal and Saagar premium newsletter. After conducting troubleshooting, the full show will be distributed through the new Supercast email blasts again. If any problems come up for you, email james@breakingpoints.com or support@supercast.com and we will help you. To access premium content through Supercast, visit https://breakingpoints.supercast.com/ if you have not already. As mentioned in the mini block below, Breaking Points has been written about in The New Yorker. Catch the article here and let us know what you think! It is humbling to be named in the piece, but the unsung heroes in the control room who get mentioned deserve tons of credit for making the show run.
Now to the contents of the show, which you can watch here: https://youtu.be/a1R7hwd5Y2A
ELECTIONS
On Tuesday night, a high profile GOP primaries took place across the country that saw the Trump factor loom large. In South Carolina, two Reps who crossed him, Nancy Mace and Tom Rice faced competitive primaries. After the January 6th Capitol riot, Mace blamed Trump’s antics for the riot and Rice voted with Democrats to impeach the former President. Both had Trump endorsed challengers against them, with Mace managing to survive the primary and Rice suffering defeat. Analysts pointed out how Mace likely triumphed because she was able to tow the line between criticism of Trump without appearing to be an enemy of his. The ‘election fraud’ movement backed by Trump has played a large role in Secretary of State contests in various states, as Republican candidates who dispute the 2020 results run for those posts. More Republican nominees for SecState election have not acknowledged Biden won in 2020 than the number publicly acknowledging Biden’s victory.
A special election in a Texas Congressional district along the southern border received national attention in addition to the GOP primaries. The Mexico born Latina Republican Mayra Flores narrowly won a contest for TX34 on an anti-establishment platform centered around gas prices and immigration. She defeated Democrat Dan Sanchez to flip the open seat previously held by moderate Democrat Filemon Vela, a former Vice Chair of the DNC. Vela was part of the ‘unbreakable 9’ group of Democrats in the House that fought against Biden’s Build Back Better legislation. Flores’ victory was due primarily to the realignment of Latino voters in border counties to the GOP according to the county voting data. The trend of Latino voters abandoning Democrats became a national issue in the 2020 general election where Donald Trump performed much better with Hispanics than expected nationwide. Now it is having major electoral ramifications for Democrats who previously considered Latinos a reliable voting block.
Looking ahead, the first polling data for the Pennsylvania general elections has been released. Of likely 2022 midterm voters, 46% expressed support for Democrat John Fetterman and 37% are backing GOP candidate Dr. Oz. The undecided tally is 13% and the rest of those polled voiced support for other third party candidates. In the Gubernatorial contest, 44% are behind Democrat Josh Shapiro and 40% for Republican Doug Mastriano. The undecided count is at 13% and the rest of the voters polled are behind other third party candidates. Democrats will be pleased to see their candidates out ahead, but the large undecided population will be decisive in the crucial swing state of Pennsylvania.
FED
The Federal Reserve announced on Wednesday an interest rate increase of 75 basis points or .75%, the largest single increase since 1994. All officials have projected interest rates to rise up to 3% by the end of the year, up from near zero during the covid pandemic. Their goal is to combat inflation that reached record year over year highs in May, something Fed officials admit is becoming more difficult for the central bank to combat. External factors including the supply chain crisis and the geopolitical instability caused by war in Ukraine are out of the Federal Reserve’s control. Rising rates will have impacts across the economy, most notably in the red hot housing market. Mortgage rates jumped to 6.28% up from 5.5% a week ago for a 30 year mortgage in anticipation of aggression action from the Fed. According to the National Association of Realtors, home sales have dropped for six straight months but home prices have not gone down with the drop in demand. Higher mortgage rates will likely contribute to a sustained drop in demand, especially because the Fed is planning on unloading mortgage backed securities it acquired during the pandemic. The combination of sky high home prices and rapidly increasing mortgage rates is crushing home affordability for new families looking to settle down.
UKRAINE
President Biden promised Ukraine an additional $1billion in weapons and another $225 million in humanitarian aid after Ukrainian President Zelensky pleaded for more support in a Tuesday address. The administration will send howitzers, ammunition, tactical vehicles, Harpoon defense systems, radios, night vision devices, training support, and other battlefield assistance. The humanitarian aid will be for water, medical supplies, food, and cash for families. Secretary of Defense Lloyd Austin met with NATO allies to discuss plans going forward and urged wealthy European nations to step up their efforts in providing military aid. Germany recently sent Ukraine anti-aircraft missiles to help bolster its defense after immense pressure domestically and internationally. The Germans’ refusal to meet NATO defense targets and keep its forces modernized has returned to the spotlight now that security concerns in Europe are a geopolitical flashpoint once again. They have led the effort alongside France to facilitate diplomatic engagement between Zelensky and Russian President Putin with high oil prices driving EU inflation up to American levels. French Prime Minister Macron will join German Chancellor Olaf Scholz in a trip to Kyiv to meet with Zelensky before the much anticipated G7 summit brings powerful world leaders together. With the war between Russia and Ukraine raging on in the Donbas region, the show will keep providing viewers with the most important developments.
JOURNALISM
Pew Research Center just released an extensive survey asking over 11,000 professional journalists about their profession and major questions facing media professionals today. The vast majority of them see turmoil in the industry and retain the passion for journalism that brought them into the media. There were notable tidbits within the study highlighting the divide between journalists and the American people on perceptions of media. While 65% of journalists believe media organizations do a good job of accurately reporting the news, only 35% of Americans believe so. A higher number, 43% of Americans, believe the media does a bad job of reporting the news accurately. Similar numbers are reflected in how journalists feel about covering the most important stories, serving as a watchdog over politicians, giving voices to the under-represented, and handling the spread of false information.
The most telling metric of the survey concerns whether both sides of a story deserve to be covered by the media. In the survey, 55% of journalists expressed their belief that every side does not deserve an equal amount of coverage to 45% who think so. It reflects the growing partisanship in the media and the view among journalists that they should report in a way beneficial to their preferred political party. The distaste for fairness in reporting is a major contributor to the stark drop in media trust by Americans, who consistently see one sided coverage as a reason the media should not be trusted. Journalists no longer believing in balanced perspectives is a significant contributor to political polarization of the American public dividing people in every walk of life. The comprehensive research provided by Pew about the attitudes of media professionals is deeply revealing, and provides hard data for plenty of the media criticism in this show.
SYMONE SANDERS
Building off the previous segment, Krystal and Saagar have set the E block of today’s show aside for media criticism. MSNBC contributor and former Kamala Harris aide Symone Sanders in an interview claimed gas prices will not matter to Americans if democracy is usurped in reference to her feelings about the January 6th hearings. She was responding to criticism that the hearings are much less important to Americans than inflation or the price of gas. Polling data demonstrates runaway inflation is the top issue for American voters in the 2022 midterms. Democrats are counting on changing people’s minds and getting them to prioritize the Capitol Hill riot from back in January 2021. It’s unlikely that to prove successful, especially if wealthy media personalities message their belief in a condescending way like Sanders did in the interview.
MINI BLOCK
The mini block of the show informs viewers of important developments for Breaking Points media representation. Co-host Krystal Ball will be a panelist on HBO’s Real Time with Bill Maher and the show will be broadcast Friday night. Maher’s program is typically available in podcast format the following day. In her last appearance on the famous liberal comedian’s program, a smirk by Krystal went viral back during the days of Rising on The Hill. Additionally, Breaking Points was featured in a long article by The New Yorker’s Cal Newport. Newport includes quotes from his interview of Krystal and Saagar alongside observations from the control room during production. Please read the article here and let us know what you think!
SAAGAR
In his monologue, Saagar breaks down the failure of wartime sanctions against Russia by the West. The 100 day mark of the Ukraine war combined with rapidly rising gas prices has prompted introspection on Biden’s strategic response. When the invasion began, his aim was to give Ukraine’s military necessary support and destroy Putin’s war machine via economic warfare. It led to extraordinary sanctions, pushing Russia out of the global financial system, and bans on Russian oil. The backbone of the Russian economy is its oil exports, yet the targeting by the West has backfired. Oil revenue is soaring for the Russians because artificially reduced supply in western markets created a global price spike, so Russians began selling more oil to other parts of the world at a discounted rate that was still higher than it was previously. The effects on the West have been record high gas prices and a worsening supply chain crisis. In effect, western sanctions have pushed prices for their own citizens to all time highs, created a discounted oil market for Asia, and enriched the Putin war machine. Exactly the opposite of what was intended.
Russia’s consumer economy is poised to suffer a major contraction, but the wartime economy will not feel the downturn. The country’s current account reached a record surplus and reached the highest total since 1994. Its currency, the Ruble, has stabilized because of oil sales and strict capital controls. Due to the war in Ukraine, the Russian economy will take a hit that will not prevent them from waging war against Ukraine. The sanctions package brought the world into uncharted waters and it ended up screwing with the global supply chain in ways extremely detrimental to the west. Skeptics of the immediate, emotional response to the invasion of Ukraine such as the hosts of this show have been vindicated. After being smeared as Russian stooges when skepticism was unpopular, the Biden administration has begun to sour on the sanctions. They underestimated the collateral damage of increased inflation, soaring gas prices, food shortages, and economic retaliation. Companies pulling out of Russia without instruction from the government could lead to economic blowback, and Russians are squeezing the oil flow to Europe even further in a show of strength. The Europeans have seen skyrocketing inflation spurred by an Russian oil ban instituted after pressure from the United States.
Either the Biden administration gravely miscalculated, or it lied to the American people about the effects of such sanctions. Now the tides of war have shifted in Russia’s favor and the West has kneecapped itself by responding with emotions instead of strategy.
After the monologue, Krystal and Saagar discuss the global oil markets and American exports abroad given the domestic political crisis. The West greatly underestimated what the sanctions would inflict on ordinary citizens in Russia and in their own countries. Putin will blame the West for the Russian economic contraction, pushing more Russian citizens to his side on the war effort. America is sancitoning its own people who were supportive of paying more to support Ukraine, the issue is that it’s not helping the war effort whatsoever while imposing major costs domestically.
KRYSTAL
In her monologue today, Krystal looks at the deep failure by the Biden administration to respond to inflation. He is reportedly frustrated with climbing prices and the administration’s inability to combat inflation. In a recent trip to Iowa touting a boost on Ethanol production, Biden lashed out at his staff for what he believed was ineffective policy and a worthless trip. The op-ed Biden wrote about his plans to combat inflation was similarly impotent, outsourcing inflation action to the Fed. His action on gas came via a strongly worded letter asking oil companies to increase production without any policy prescriptions. The Fed tightening being pushed by Biden will lead to a recession that chokes wages further and leads to massive job losses for working Americans. It would make life even harder for millions of Americans and it’s unclear how much monetary tightening will do to combat inflation. The corporate price spikes, supply chain issues, market speculation, fossil fuel reliance, global sanctions, and other root causes will not be addressed. This means a period of stagflation could come to the US economy and destabilize society even further. Biden assures Americans in his op-ed that he will not interfere with Fed operations in a demonstration of his Washington obsession with proceduralism. Based on the established way of doing politics, there is not much a policymaker can do besides hope for the market and institutions to correct themselves. Biden’s lack of political imagination is hindering a Presidential response to the rising inflation.
Creative proposals have come from politicians at the highest level of government, for instance Rep. Ro Khanna’s proposals in the NYT calling for more action. He took aim at Biden’s lack of experimentation and reluctance to intervene directly in the market. Krystal believes in even further actions, but Khanna advocates for a windfall tax, banning oil exports, and government investments in industry. Biden has hesitated to use his executive power to implement any of these ideas because of a lack of political will and fears of Republican blowback. Another ambitious proposal is tackling Wall Street speculation in global oil markets because of their disconnect from the forces of supply and demand. Oil production is up year over year, particularly domestic production that is set to break records. Demand is close to being back at pre pandemic levels pending a few covid scares in significant market players. While the instability caused by war in Ukraine is a factor, Wall Street speculation is a major reason why the market has become detached from economic forces. There are particular loopholes executive action can be used to close and facilitate a decrease in gas prices that Biden will not address. Rejecting peace in Ukraine and pushing a punishing sanctions package on western citizens is a choice of the Biden administration to prolong the ‘Putin price hike’ he blames for inflation. The lack of political imagination is destroying the Biden Presidency as it looks unlikely to change anytime soon.
After the monologue, Krystal and Saagar talk about Biden sending strong words to oil companies without action to back it up. Federal powers exist to regulate and balance the markets, creating many ways to experiment with the markets. They come to policy decisions months late and then they act like nothing can get done, leading to political collapse.
RON IVEY
Krystal and Saagar are joined by writer, researcher, and policy advisor Ron Ivey to better understand the flaws in ESG investing. The ballooning Environmental, Social, and Governance investing trend is raking in billions in profits for Wall Street and allowing them to rebrand their activities as socially conscious. Returns from sustainable investment have brought the attention of regulators who are monitoring fraud in the ESG space. The exact parameters for what constitutes ESG have been a subject of debate, and regulators believe it could be used to mislead investors on financial products. ESG guidelines have drawn controversy for permitting Lockheed Martin and other defense contractors to fall under the label intended for socially responsible industries. Different firms tasked with rating ESG scores for companies have come to different conclusions, and funds pledging to invest in ESG products have not always lived up to their promises. In the instance of Goldman Sachs, the SEC is examining the ESG designation for its blue chip investment fund. Holdings include big tech firms and large pharmaceutical companies not typically viewed as paragons of virtue. Ron Ivey has written extensively about the shortcomings of Wall Street’s ESG investing, which you can read about here.
Thank you for reading the Breaking Points with Krystal and Saagar newsletter for the 6/16 broadcast. Remember to send any feedback to james@breakingpoints.com or drop a comment on YouTube! The next full show will be on Monday and until then, lookout for the weekend content coming in your inbox. There will be segments posted to the YouTube channel and audio uploaded with segments by Krystal & Saagar, and various collaborators. We are deeply grateful for your support and have a great weekend!

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