Krystal and Saagar talk about the recession arriving, persistent inflation, Highland Park shooting, 2024 election moves, Ukraine battle updates, Karine Jean-Pierre’s rough start as Press Sec, Pete Buttigieg’s inaction on airlines, Biden’s indefinitely timeline for high gas prices, and the large increase in corporate markups!
Niko Lusiani: https://rooseveltinstitute.org/public…
Timestamps: Recession: 0:00 – 19:01 Highland Park: 19:02 – 27:28 2024: 27:29 – 41:00 Ukraine: 41:01 – 52:00 KJP: 52:01– 56:09 Krystal: 56:10 – 1:03:38 Saagar: 1:03:39 – 1:13:02 Niko Lusiani: 1:13:03 – 1:21:30
7/5 NEWSLETTER: Recession Coming, Highland Park, 2024 Election, Ukraine War, & More!
Welcome to the Tuesday 7/5/22 edition of the Breaking Points with Krystal and Saagar
premium newsletter. We hope you all had an enjoyable July 4th holiday with loved ones on a great Summer day. Even in tumultuous times our nation is worth celebrating and fighting for. The ticket sales for the live show went live for non-premium members on Thursday, but you still have time to get your tickets. Click here: https://www.ticketmaster.com/event/0E005CD6DBFF6D47
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Programming note: Krystal has covid-19 and will be doing today’s show remotely. She will be back in the studio for the next show.
Warnings that America is headed for a recession have been growing for months, and now they are more pronounced. The Atlanta Fed
GDP Tracker shows the US economy is likely in a recession, typically defined by two consecutive quarters of negative GDP growth. A range of factors goes into assessments of recession, including employment levels, output, income, and business sales. In the first three months of the year, the economy shrank
at a 1.6% annual pace. Data shows further weakness in consumer spending and inflation-adjusted domestic investment. The big change this quarter is the interest rate hike from the Fed, who says it can tame inflation without bringing a recession. Americans appear much less optimistic about the economy; the Gallup Economic Confidence index is the lowest it’s been since February 2009
, and 85% of Americans believe the economy is getting worse. Unlike in previous recessions
, the job market has remained strong and unemployment continues to be low. The number of Americans on unemployment remains lower than pre-pandemic totals and significantly lower than the 2009 recession. Monthly business payrolls have gone up since the start of the year and these typically track with overall economic activity. June statistics on unemployment and the workforce from the Department of Labor will be hotly anticipated for economic analysts.
Inflation continues to persist in the US economy. Fed Chair Jerome Powell commented
at a central banker summit about how little is currently understood about inflation. He believes
the Fed must embrace the risk of recession to combat inflation and he says restoring price stability must happen to avoid entrenched inflation. Powell’s comments indicate that the Fed will keep raising rates until inflation is under control, even if it means inducing a recession. Policymakers in DC
are bracing themselves for a recession ahead of the 2022 midterms that could dramatically alter the landscape. Wall Street forecasters, investors, and leaders are factoring in an economic slump in their internal discussions. Economists in government and the think tank world are exploring a coming recession on top of inflation. As elites look to act on the realities gripping the American economy, the situation will continue to be a major topic of this show.
A July 4th tragedy is gripping America after a mass shooting broke out in the middle of a holiday parade in Highland Park, Illinois. The predominantly Jewish, affluent suburb of Chicago was attacked in broad daylight, creating a scene of pandemonium
as people feared for their lives. Reports are being updated in real time because the developing situation is still being figured out. So far
, six are dead and 24 others were hospitalized according to police officials at a press conference Monday. The suspect has been identified
as a lone white male who was heavily armed and police took him into custody after an hours long manhunt. His online activity and rap music signal a deranged freak without any ideology aside from nihilism. Warning signs were there on the shooter for a while, and he was known to law enforcement. Multiple victims in the hospital are in critical condition with information about them not yet released to the public. President Biden released a statement
condemning the shooting, consoling victims, and pledging to continue tackling gun violence. When more information comes out about this senseless act of violence, it will be provided on the show.
The midterm elections this November are still approaching, but that has not stopped 2024 speculation from growing. Polls show
71% of Americans do not want Biden to run for re-election for various reasons. The results of his Presidency, age, and needing a change were given as reasons. In the same poll, 61% do not want Trump to run for President again for various reasons. His behavior, divisiveness, and participation in the Jan 6th Capitol riot were given as reasons. A majority of Republicans and Democrats would consider a moderate independent candidate in the election. It’s a dark sign of where America is when nobody wants the two candidates in 2020 to run again, but Biden against Trump is the most likely 2024 outcome. The speculation of other candidates joining the field has been centered around Ron DeSantis. An attack ad
towards him was recently aired in Florida by current California Gov. Gavin Newsom. His name has been included in chatter about a Democratic primary challenge to President Biden after he came out strong in his California electoral contests. The ad targets Californians who moved to Florida during the pandemic, and it demonstrates the seriousness with which national Democrats are taking DeSantis. It shows how high Gavin Newsom’s ambition goes, and it points to the vulnerability of Biden in a Democratic primary. Unlike Trump, Biden is lacking an enthusiastic base within his party and is extremely vulnerable for an incumbent President. To get ahead of Jan 6th revelations and capitalize on Biden’s unpopularity, Donald Trump is weighing an early announcement
of his 2024 campaign. GOP sources have braced themselves for it to come in the first week of July, which remains to be seen.
A notable battle update on the war in Ukraine came to very little discussion over the weekend. The Ukrainians lost the crucial city
of Lysychansk in the Luhansk section of the contested Donbas region in the easternmost part of the country. Troops were withdrawn from the city as Russia advances towards capturing the entirety of Luhansk. The development came after weeks of fighting that resembled the difficult struggle for the Russians in the neighboring city of Sievierodonestsk. In terms of military power, the Russians have adjusted their strategy and demonstrated their might against a Ukrainian army lacking in reinforcements. Their forces have been facing difficulties with the training and skills required to man the western weapons continuing to be shipped to them. The difficult war between the two has become a war of attrition and all signs indicate the conflict will be long and bloody.
Domestic populations in the western backers of Ukraine have dealt with severe ramifications of western sanctions on Russia. The Ukraine fatigue is coming according to Concerned Vets For America polling
in conjunction with YouGov. When asked about Biden’s handling of the war, 44% had an unfavorable opinion compared to a third who were favorable. A quarter supported sending US troops in to fight Russia, with twice as many opposing. A plurality believes the US military footprint globally should be reduced, and a majority opposes sending more troops into the Middle East. The response by the United States to the war has been receiving increased scrutiny
as Ukraine loses ground in the Donbas. Analysts questioned American assessments of outcomes on the ground, Ukrainian strength, and of the Russian military. The scrutiny is fueled by the failed assessments of the situation in Afghanistan that sidestepped evidence of widespread corruption and dysfunction. Information about Afghan forces proved to be incorrect, leading to similar fears about the Ukrainians. The Pentagon has been hesitant to release unflattering information or limitations in US support. Nonetheless, Breaking Points
will be steady in delivering reliable battle updates and geopolitical developments on the show.
White House Press Secretary Karine Jean-Pierre is having a difficult time adjusting to her new position since she replaced Jen Psaki in May. It’s been over a month since she stepped in, and DC buzz
on her tough debut has not been kind. Journalists have been baffled by some of her answers that have made her appear unprepared. White House colleagues have winced at her responses to simple questions. Pentagon spokesman John Kirby has frequently shared the podium with Jean-Pierre and he’s taken the lead on foreign policy questions. Her answers rarely go beyond pre approved talking points and are typically vague. Clips of her infamous plea
to oil companies, extended binder flipping
, and boasting about
Biden’s vitality have all been widely mocked. Black communications officials and allies of Jean-Pierre believe she was set up to fail by having John Kirby take the lead on foreign policy. The former MSNBC commentator came into the position with extended media training and a long career in Democratic party communications. Her tenure as Press Secretary could be short lived if she does not figure out a way to turn things around.
Due to her remote broadcast for today, Krystal will do a brief ‘talker’ on Pete Buttigieg in lieu of the typical monologue. She hones in on his weak response to the dysfunctional state of US airlines after he made a big show out of meeting with them. Buttigieg called on them to step up
after his own flight was canceled on Friday for his holiday weekend. However, little in terms of specifics were proposed after he touted pressing airline executives to ensure a smooth holiday weekend. The opposite came true, and the July 4th weekend saw thousands
of delays and cancellations. Overall numbers might be even worse when figures for the last couple of days come in. Travelers are returning to airports at pre-pandemic levels and the airlines have not been able to meet the demand. Buttigieg said previously that he would wait until after the July 4th weekend to consider taking action against the airlines. Aside from advice
on his Twitter account, Buttigieg did not give any new information on what he plans to do about the situation. His rhetoric
sounded more like a travel agent or airline spokesperson than a hard nosed regular looking to combat industry behavior. Instead of using his power, he is giving consumers tips if their flight is canceled and how the calculations work. Regulators are tasked with cracking down on industries if they are engaging in malpractice, and simple solutions have been proposed that he could implement. The weakness of Buttigieg to handle the airline issues points to a feigned inability for liberal policymakers in the administration to act on any of the issues facing America.
After her talk, Krystal and Saagar go back and forth on the chaos surrounding airlines because of pre-pandemic levels of travel with exponentially higher levels of instability. The government is acting like they cannot do anything about it except for explain how vouchers work. It’s an inherited trait for Biden and his administration to believe that nothing can be done and governance is not possible. Right now, people need the administration to act on their behalf instead of sitting on the sidelines asking what can be done. Buttigieg would much rather fly around the country touting the infrastructure bill than act on airlines. The FAA and other regulators still have tremendous power over airlines, as shown by the ambitious Sanders proposal to address the issue. The chaos now is not sustainable for travelers looking to cash in on saved vacation time.
In his monologue today, Saagar focuses on the failures of the Biden administration and the indefinite timetable of the sanctions regime. At a NATO summit press conference, Biden when asked by a reporter stated the sanctions will continue as long as it takes
. Meaning there is no timetable for relief, because the Russo-Ukraine war is likely to carry on for years. It has to be asked, how much longer does the territorial integrity of Ukraine require higher prices, and is an outright victory even obtainable. Biden’s economic adviser used the ‘liberal world order’ to justify
the high gas prices hammering Americans when asked by CNN. They have to reach for grand principles to justify their idiocy because if given the details, Americans would turn on them in an instant. The war between Russia and Ukraine is now a war of attrition
centered around the eastern Donbas region. The Russians are taking strategically important cities and by any honest measure the Ukrainians are losing the fight in that region. With that said, how many more contested towns and battles in the east are worth economic pain for the entire west, destruction of global supply chains, and a worldwide food crisis.
When framed in this context, even Washington insiders
are having second thoughts. Public pronouncements by the White House about how Ukraine is doing are completely wrong. The Pentagon has quietly stopped publishing assessments of how many Ukrainian soldiers have been killed to hide the reality of a war on attrition creating mass casualties. Their excuse is that doing so would help the Russians, a familiar talking point from the War on Terror about transparency benefitting Al-Qaeda. But the Russians can see on the ground what is going on and they know how well the Ukrainians are doing. The more we are kept in the dark, the less dissent of current policies will be tolerated by MSNBC liberals and elite media figures. The longer it drags on, the more fake schemes will come from Biden to try to lower gas prices. He tweeted
asking gas companies and gas station owners to lower prices. Day after day as territory in Ukraine gets passed back and forth, fake schemes will come and you will keep paying. The cold hard reality is that Americans are within their rights to dissent and be frustrated with rising costs. Biden has been a total failure and he’s not doing right by America.
After the monologue, Krystal and Saagar discuss the quiet part out loud from Biden’s comments on Ukraine. There is no clear victory or defeat in a messy conflict with no grounds for compromise and a deep history beneath the surface. What the goal of the war is has not been articulated despite the tremendous American backing of the Ukrainians. The fight is being portrayed as something just beginning, and the Ukrainian people do not want to concede territory. Western portrayals have been overly rosy, warping perceptions of how Ukraine is doing and what their chance of winning is. We are continuing down this path with no end in sight, and a disservice could be done to the Ukrainians by misleading them on the longevity of their cause. The international support for the Ukrainians might dry up while they lose ground militarily. Americans will not be willing to pay higher prices for gas and food forever, and the basic questions will be asked more strongly soon.
Krystal and Saagar are joined by Niko Lusiani, the Director of Corporate Power at the Roosevelt Institute; a progressive think tank. He co-authored a report
on the sudden spike in corporate markups in 2021, indicating the impact of profiteering on inflation driven by market power. Their report steps back from the ongoing debates to assess how much of inflation is being driven by supply and demand compared to company behavior. They examined financial statements all the way from 1955 to 2021 to look at the crucial indicator of markups. It’s an indicator of the difference between the company’s prices and their marginal cost. A competitive market would make it entirely the same among firms being shaped by market forces. The markup increase is broad across many different types of firms and the pre-pandemic markups serve as a strong predictor of increased 2021 markups. It’s a trend that began in 1980 and went up sharply over the past year, up to 76% over their marginal cost. Market power has been consolidated throughout that time because it spawned the dominance of the shareholder primacy model of corporate behavior. These companies with their market power are price makers in the market as much as they are price takers from supply and demand forces. Firm data typically looks backwards, however there is Fed data for 2022 indicating the inflation issue is a supply problem and a market power issue. There is room to reverse the suddenly high markups without committing economic harm, and doing so would lead to lower prices in the short term. New taxes on excess profits or enforcement of antitrust law could be used to curb this problem.
Thank you for reading the newest edition of the Breaking Points premium newsletter. Remember to buy your tickets with the link at the top and send us your feedback. The next full show will be on Thursday, and enjoy the Wednesday content in the meantime!