Welcome to the Monday June 20th, 2022 edition of the Breaking Points with Krystal and Saagar premium newsletter. We hope you had an enjoyable Father’s Day and a refreshing Juneteenth for those who celebrate. No major announcements here today, but be on the lookout for more information about the live Breaking Points tour coming up.

Now to the 6/20 show, which you can watch here: https://youtu.be/xScMjBKfCEY

Fears of a recession have been building up slowly for a few months, and now they have become top of mind for Americans. When asked about it by ABC’s George Stephanapoulous on Sunday, Treasury Secretary Janet Yellen said a recession was not inevitable and inflation is unacceptably high. Later in the interview Yellen stated the current level of inflation would be locked in for the rest of the year. She vaguely hinted at the administration’s interest in tackling the inflation problem without mentioning specifics. Her comments come as year over year inflation for May 2022 hit 40 year highs with the most dramatic increases happening with food, gas, and shelter. In an interview with The Associated Press, President Biden echoed Yellen’s belief that a recession is not inevitable. He hopes to give the country a greater sense of confidence after the economic instability of the past two years, and blamed the covid pandemic for inflation. Similarly, Biden pushed back on himself being the one to blame for inflation, citing the inflation problems around the world and the economy he inherited. Nonetheless, restoring economic confidence ahead of the midterms is a tall task, and election projections are unlikely to change significantly.

Economic analysts have become increasingly vocal about recession forecasts due to the Federal Reserve’s aggressive rate hikes instituted to tackle inflation. The central bank has pursued near zero interest rates since the 2008 recession and through the covid pandemic. Along with rising rates, the Fed is looking to scale back its quantitative easing program that began in 2008 and expanded in 2020. It would require selling off bonds and other securities purchased to rescue the financial system. However, the Federal Reserve’s actions will mostly affect the demand side of the inflation equation by reducing business investment, likely leading to layoffs and declines in wage growth. It is unclear how much power the Fed has to alter the supply side problems or geopolitical issues at the heart of inflation. Based on new consumer sentiment data, the American people are not optimistic about the future of the economy. The sentiment now is the worst ever recorded; lower than the 2008 recession and stagflation crisis of the late 1970s. The Biden administration and Federal Reserve are facing a gargantuan task of turning this economy around, and in all likelihood it will be gloomy going forward.

The Uvalde police coverup of what happened in the moments of the school shooting that killed 19 children has intensified. A private law firm has been hired by Uvalde and the Uvalde Police to aid their effort in preventing public records from being released including call logs, texts, emails, and body cam footage. The city has an in-house attorney and has brought on additional legal counsel to handle a matter of extreme importance and fight the barrage of public records requests it has received. The Texas Department of Public Safety and other agencies have pursued similar measures to prevent public records from coming out. Questions continue to mount about what the police officers inside the school were doing while the school shooter was massacring children inside a Robb Elementary School classroom. A new report demonstrates the officers inside never tried to open the classroom door to the room where the children were being killed. When asked about the investigations, Texas AG Ken Paxton responded by claiming ‘God always has a plan’ and nothing more. His office has not engaged in the Uvalde investigations, and Paxton himself is still under FBI investigation. The questions about what happened on the tragic day 21 people were slaughtered by a mass shooter in Uvalde will undoubtedly continue to be investigated, and Breaking Points will cover it closely.

Transportation Secretary and former Presidential candidate Pete Buttigieg’s name has been floated as a successor to Joe Biden. For all the speculation, little attention has been provided to his job performance despite major issues with airlines and supply chains. Widespread flight disruptions have been rattling passengers in airports, and Buttigieg had a meeting with airline company executives to press them on the issue. Ironically, his own flight from Washington to New York was canceled, so he had to drive to the meeting. He said that he will push airlines to stress-test their summer schedules to ensure all flights can be operated with the employees they have. The action could pressure airlines into cutting summer schedules especially if there are major disruptions during 4th of July weekend.

The primary actions Buttigieg has conducted so far as Transportation Secretary have been implementing Biden’s infrastructure bill, most of which is routine highway construction and granting permits. According to recent inflation data, airfares have risen faster than the general rate and more than what would be expected based on fuel costs. This comes despite seating capacity still being down from 2019 levels. Demand for airline flights dramatically outpaces supply after the return of normal American life, enabling airlines to reap the profits after suffering mightily for the past two years. To maximize profits, they have failed to hire sufficient crews, leading to last minute cancellations. Consumer groups and airline unions have fought back and issued complaints to the Transportation Department. So far, little action has been taken by Buttigieg and the FAA within DOT to combat airline abuses when it comes to refunds, delays, crew sizes, collusion, and other practices. For more, read Bob Kuttner’s breakdown in The American Prospect here.

President Joe Biden spent the weekend vacationing with his family in Delaware at his beach home. At the end of a bike ride he took at Cape Henlopen State Park, he slowed down in preparation to dismount and greet a crowd of onlookers by the bike trail. When he began to dismount, his foot got caught in the toe cages causing him to fall on his right side. The video immediately went viral for a variety of reasons, some serious and others comedic. It inspired a trove of political and non political memes, GIFs, videos, and comedic tweets. While others asked questions about Biden’s physical fitness and mental capabilities. When an 80 year old man falls, it is a serious issue regardless of one’s political standing and it is uncomfortable for people to watch. The President was wearing a helmet during the fall and appeared to be fine, despite the immediate concern from people nearby. Worries about Biden’s age have grown among the liberal commentariat who have become alarmed by the consistently low poll numbers for Biden and his gaffes on the world stage. In a recent essay for The Atlantic, longtime writer Mark Liebovich made the case against Biden running for re-election primarily because he would be too old to complete another term.

The case against journalist and publisher Julian Assange by the US & UK governments has reached another crucial stage. The UK government has ordered the request to carry out the extradition of Assange to the US to face trial under charges related to espionage and computer misuse. The decision means that Assange is one step closer to extradition, a years-long process that has him in high level prison in the meantime. It comes after higher courts in the UK overruled a decision by a lower court to block the extradition citing high risk of suicide. Wikileaks has announced Assange will appeal the UK government’s order, a separate legal process from his extradition. His brother Gabriel Shipton, a former Breaking Points guest, says the appeal will lead to new information coming out about assassination plots against his brother. Assange will also appeal US government assurances about prison conditions cited by the UK higher courts in their decision to uphold the request for extradition. As all of the legal battles play out across the pond, Assange will remain detained in Belmarsh prison, a high profile UK prison for cases involving national security. His wife Stella Assange has detailed the devastating conditions Assange has faced in prison and will continue to fight for the freedom of her husband. In the US, support for Assange came from Rep. Marjorie Taylor Greene (R-GA) and Rep. Ilhan Omar (D-MN) who have strongly opposed beliefs on most other issues. Aside from these two women, support for Assange against the bipartisan fight to have him extradited to the US is scarce. The leaks from Wikileaks detailing war crimes in Iraq and Afghanistan, and the Clinton 2016 campaign’s plot against Bernie Sanders has made Assange a prime target of the political establishment.

In her monologue, Krystal explores the state of emergency in global politics happening right now. The predicted bread riots have come to Ecuador, a revolt sparked by mass inflation crippling the country’s economy. The country’s President declared a state of emergency in response to the mass protests that featured blocked roads, burned tires, and demands for price freezes. Led by the indigenous communities, protesters also demanded loan forgiveness after rising oil and fertilizer prices have devastated those communities. Ecuador is far from alone, and according to Reuters the countries where food prices have caused unrest include Argentina, Chile, Cyprus, Greece, Guinea, Indonesia, Iran, Syria, Kenya, Palestinian Territories, Peru, Sri Lanka, and more. Cypriot farmers dumped milk and lit hay to protest high food prices. Lebanese truck drivers blocked roads to protest soaring prices. National protests have rocked Iran in response to the government cutting bread subsidies triggering a brutal crackdown. The circumstances are different in every country but the larger circumstances are similar. Covid shakeups, political dysfunction, growing inequality, massive inflation, war in Ukraine, western sanctions, and general hunger have sown the seeds for mass protests.

The areas hurt most by the corresponding crises are the Horn of Africa, Middle East, and Northern Africa. Western sanctions on Russian banks have made it impossible for them to obtain the Russian grain and fertilizer they depend on. The results are 50 million people facing famine with 750,000 already facing catastrophic levels of food insecurity. A massive global food crisis is fast approaching that could be exponentially worse than the Arab Spring a decade ago. The desperation is feeding populist discontent from poor and middle class people all across the world. In Colombia, voters tossed out their political establishment in favor of a Marxist leftist and a Trumpian businessman in the first round, and after the second round the leftist triumphed. He will be the first leftist President in Colombian history riding a left wing wave in South America. In France, parliamentary elections served as a rejection of the centrist President Macron who was recently re-elected. Australia saw major growth in anti-establishment, independent parties in their elections. And deep discontent will likely lead to a massive rejection of the Democratic party here in the United States. With global tumult growing, it’s hard to tell what’s coming next especially as food prices continue to spike.

After the monologue, Krystal and Saagar discuss the crises and protests happening around the globe. The global rejection of domestic political establishments and widespread protests are being ignored by Washington and other states are looking elsewhere for international support. Everything seems to be collapsing around the world and the US press is hardly covering it on the front pages. All of the situations in these countries are unique, but the common threads between each one cannot be overlooked.

Saagar’s monologue today is an examination of historic parallels between President Joe Biden and former President Jimmy Carter who presided over stagflation in the late 1970s. Inflation is sky high, Russia invaded a sovereign country, and the administration has proved incompetent in its response. Ironically, Biden was among the first to come out in support of unknown Georgia Gov. Jimmy Carter during the hotly contested 1976 Democratic primary in the wake of Watergate. At the time Biden cited the need for new leadership in the Democratic party and his endorsement of Carter reeked of blind ambition. Now Biden himself has become the heir to Jimmy Carter with consumer sentiment tanking and inflation reaching 40 year highs. These numbers are strikingly similar to the economic outlook during the Carter administration. Crude oil prices were in a familiar shock due to the Iranian revolution in 1979 after the embargo instituted because of the hostage crisis. At the time Iran was the world’s second largest oil producer and the crisis led to major pain at the pump for Americans.

The ways Biden and Carter got elected are parallel in the lack of base enthusiasm for either candidate. Carter won by outlasting his competition and running on a squeaky clean image. A default choice more than an affirmative one in the same way Joe Biden was in the recent Democratic primary. Carter was chosen to rebuke Nixon and Ford like how Biden was chosen by the electorate to rebuke Trump. The problem for both is that once the opponent is gone, people take a closer look at your performance, leading to tumbling approval ratings. Neither were able to meet the moment brought by larger political conditions and inspire creative thinking. In Carter’s crisis of confidence speech, he blamed gas prices on Americans consuming too much and he sought to raise them further with a plan for developing renewable energy. In the speech Carter proposed a windfall tax on oil companies exactly like the one being floated by Democrats now. Biden is taking on the same game plan by Carter that was rejected resoundingly and will most likely be rejected again. A Republican candidate who could usher in a conservative landslide could be waiting in the winks once again.

After the monologue, Krystal and Saagar talk about the parallels between Biden and Carter with Federal Reserve policy in addition to all of the others. Biden was a sitting US Senator at the time and appears to have learned very little from it. The main difference is that Republicans ended up rejecting Nixon in the 70s and Trump will probably run against Biden again, potentially hampering a red wave in 2024. The policies proposed by Carter in 1979 did not work at the time and Carter knew better from his engineering background. They are highly unlikely to work the second time around.

Krystal and Saagar are once again joined by geopolitical strategist and author Peter Zeihan. A fan favorite of Breaking Points viewers, Zeihan returns to the show to discuss global food markets currently experiencing major shocks. Additionally, Zeihan goes further into his newly released book on how globalization ended and what will come next for inflation on the supply side. The conditions of domestic production and imperial governments shifted to a globalized economy of trade backstopped by the US Navy, creating a total global pool of specialization and diversification. Costs dropped in the globalized economic order that proved a backstop against inflation in an atypical period in history. A nationalist surge, Ukraine war, trade battles, and other global conditions are causing a shift in the world economies bringing back inflation until the new norm gets properly addressed. The era before WWII with limited trade and imperial extraction is unlikely to come back as a whole but a new time is arriving, and countries will draw back from the world. It is an adjustment doable for the United States and North America as a whole; less so for China’s economy dependent on globalization, possibly affecting geopolitics in a major way.