Krystal and Saagar discuss nuclear threats by Putin, Ukraine’s offensive, Nordstream pipeline attack, stock ban sabotage, late night TV, 2008 financial crisis, UK financial crisis, & Brazil elections with Glenn Greenwald!
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Timestamps: Nuclear: 0:00 – 33:29 Ukraine: 33:30 – 46:20 Nordstream: 46:21 – 57:57 Stock Ban: 57:58 – 1:05:07 Trevor Noah: 1:05:08 – 1:12:06 Saagar: 1:12:07 – 1:22:49 Krystal: 1:22:50 – 1:32:49 Glenn Greenwald: 1:32:50 – 1:49:17
10/3 NEWSLETTER: Nuclear Threats, Ukraine Offensive, Nordstream Attack, UK Collapse, Brazilian Elections, & More!
We have a few major announcements coming up. One will be the new hire joining me in doing research and production for all programming. The other is going to be the dates and locations for the next live shows. Stay tuned for more details!
The world watched with nervousness as Russian President Vladimir Putin officially announced the annexation of Ukrainian territory on Friday. Reports had just come in about 20 Ukrainian civilians killed by a bombing in the contested city of Zaporizhzhia. In a long speech, Putin positioned himself firmly against the west and at one point he hinted at using nuclear weapons
by blaming the west for setting the precedent. He asserted the right for Russia to defend its territory by all means, which would presumably include nuclear weapons. The question about territory is even more complicated by Putin’s annexation of Ukrainian territory Zelensky will seek to reclaim. A Ukrainian intelligence report
stated it is highly probable that Russia uses a ‘tactical’ nuclear weapon on the frontlines of the war, according to an official and British newspaper The Guardian. Another Russian military officer called for nuclear weapons
to be used in Lyman, a contested eastern city the Ukrainians liberated on Saturday. The campaign in Lyman marked the latest success for Ukraine’s counteroffensive against the Russians in the east and the south. This effort is what prompted Putin’s military mobilization, conscription of eligible men, and annexation of Russian occupied territory.
In response to Putin’s threats, President Biden emphasized
that American allies will not be intimidated by his recklessness. Biden said Putin’s actions are a sign he is struggling as nuclear war games
are played in Washington. Officials in DC and elsewhere
are considering scenarios where Putin deploys ‘tactical’ nuclear weapons to compensate for military failures against Ukraine. His widely unpopular draft, retreating troops, and high casualty rates have exposed Russia’s weakness on the battlefield. American officials believe the possibility Putin uses nuclear weapons is low because he has not moved any of his nuclear assets. The military benefits would be minimal and the international response to any nuclear attack would be explosive. Nonetheless, Putin’s latest round of threats has caused alarm and generated fear in Washington. Nuclear weapons could generate concessions for Putin and reassert Russian power after a humiliating military campaign.
As mentioned in the previous block, Ukrainian military forces achieved a major victory on Saturday by recapturing the city of Lyman. A transportation hub, it represents a major recapture of territory since the beginning of September when their counteroffensive
broke through. They are positioned to keep pushing past Lyman towards the crucial cities of Severodonetsk and Lysychansk taken by the Russians a few months ago. Russia’s defeat in Lyman came only hours
after the city was annexed and included in Putin’s Friday speech. Russian defense officials admitted defeat and claim their troops have withdrawn to more advantageous lines. Nationalist bloggers and other hardliners were scathing in their criticism of Russian forces after Lyman was liberated by Ukraine. On Russian state TV, one pundit
shocked the broadcast by expressing frustration about the failure in Lyman and irrational optimism by his fellow panelists. The segment was rife with optimism about Russian military forces until the lone pundit had to give a dose of reality.
Immediately following Putin’s annexation declaration, Ukrainian President Zelensky announced his country would be submitting an application
to join NATO. He believes they are already a de facto NATO country and Ukraine’s application should be confirmed through an expedited process. Biden’ National Security Adviser Jake Sullivan pushed back
against adding Ukraine to the alliance at this time. The expansion of NATO eastward was a primary security concern for the Russians before they invaded Ukraine. Putin made little mention of it in his speech on Friday. It’s important to note the addition of Ukraine to NATO would necessitate full scale American involvement in a war against Russia. Moreover, Zelensky has all but ruled out diplomacy with the Russians to end the war. He says he will not negotiate
with the current Russian President, winking to calls by the most hawkish American pundits for regime change in Russia.
A third international story to keep an eye on has been the Nordstream pipeline explosion that happened last week. President Biden labeled the attack
a deliberate act of sabotage and announced America will be sending divers to investigate the attack when conditions are workable. In a separate briefing, Jake Sullivan hesitated to place blame
for the attack before results of the investigation are available. Many American media outlets are blaming Russia for the attack, while other theories have put the US and Ukraine at the center of it. Putin himself accused the west of blowing up
the pipeline after Polish politician Radek Sikorski
hinted at it on Twitter. The comments by Sikorski and the entire Nordstream situation were the subject of Saagar’s monologue on Thursday linked below. An investigation
by Sweden and Denmark into the explosion revealed that hundreds of pounds of TNT were required for the attack. Both countries sent the report to the United Nations and say the explosions were a deliberate act. There were two leaks from the pipeline in Sweden’s economic zone and two in Denmark’s zone. Methane is leaking from the Nordstream pipeline after 800 million cubic meters of natural gas escaped into the ocean. A climate and geopolitical crisis, NATO has threatened to retaliate against the act of sabotage.
Meanwhile, the United States and Venezuela have negotiated a prison swap after months of back channel diplomacy. Seven Americans, including five oil executives, were freed in exchange for nephews of Venezeualn strongman Maduro who were jailed for narcotics convictions. The United States denies any change in its harsh policies towards Venezuela, but the swap could open up negotiations to ease crippling oil sanctions. In a time of rising energy prices, Venezuela could be an option for the Biden administration desperate to see more global oil supply. The South American country is holding the largest number of Americans viewed as bargaining chips imprisoned unjustly. Other prisoners were floated for release such as a businessman with close ties to the Maduro regime and former Green Berets implicated in a failed coup attempt against the Venezuelan government. The Biden administration has been hesitant to engage with Venezuela because of the swath of latino voters in Florida who have fled authoritarian regimes in Cuba and Venezuela. However, they have promised a review of certain sanctions if Maduro can create more fair presidential elections in 2024.
The House Democrats’ congressional stock trading ban was designed to fail
according to a bipartisan group of staffers involved in the effort. Democratic leadership is trying to fight off broad, bipartisan support for reforms designed to curtain conflicts of interest in Congress. Discrepancies between previously negotiated versions of the legislation and the version approved by leadership drew enough backlash for the bill to be punted until after the midterms. Issues around the structure of the blind trusts proposed for investment holdings, dependent children, and judicial ethics are non-starters according to a staffer. House leadership made no effort to consult a bipartisan group who had crafted more stringent legislation put forward by Pramila Jayapal (R-WA) and Matt Rosendale (R-MT). Their version had a corresponding bill in the senate put forward by Elizabeth Warren (D-MA) and Steve Daines (R-MT). By introducing a weaker bill and quickly pulling it, leadership is trying to prevent the chances of future negotiations. Moderate Democratic congresswoman Abigail Spanberger led the public criticism
of the bill and called for new leadership in her party. Her stance is significant because other swing state Democrats argued against ethics reforms by claiming it could hurt their electoral chances. Reducing corruption in congress has strong political support on both sides which is consistently reflected in polls.
Host of The Daily Show Trevor Noah announced on Thursday he is leaving his post after seven years on the job. The show made the announcement
by sharing the portion of Noah’s monologue where he breaks the news before the program aired. He did not share specifics about when exactly his exit will take place or who his successor could be. While saying his goodbyes, Noah cited his renewed desire to do standup comedy as one reason for his departure. A representative for comedy central told variety the show will continue and that next steps are being figured out. Noah’s tenure at The Daily Show began as a shock when he was given the task of replacing Jon Stewart. The program became a hit with liberals who gravitated towards Stewart’s no-nonsense style of comedy and commentary. Under Noah’s stewardship, the show Noah focused more on racial and cultural issues, particularly during the presidency of Donald Trump. Ratings for the show did not recover to their highs under Stewart despite Noah being warmly embraced by the entertainment industry.
Saagar revisits the 2008 financial crisis after the anniversary of the largest drop in stock market history passed by with a whimper. On that day, Lehman brothers was collapsing, AIG was being rescued, and Congress failed to pass the initial bank bailout bill. Pandemonium ensued on cable news
as our world changed forever. It is a permanent marker of our era of bank bailouts, declining middle class, and business as usual for the elites. After the crisis, Washington focused on preventing subprime mortgage products from being created and regulations to ensure homeowners meet basic standards for a mortgage. We made sure to have standards for prospective homeowners to meet without doing anything to get people up to those standards. Housing prices are so far apart from wages because workers wages have stagnated since the 1970s and home prices are soaring. Even with higher Federal Reserve rates, the housing market is not going to become more affordable on its way down. In one year, the standard mortgage went up from 3% to 7%, leading to the most severe deterioration
of housing affordability on record. The rate increase means the typical mortgage in the US is up 1000% over the past year as inflation eats away at savings. If you point to places where people want to live most, price increases are the most pronounced. A nearly 100% increase in mortgage payments without any change in sticker price in ten metro markets
This picture is what the future of the housing market will look like. A slight slowdown in prices with very high rates preventing people from buying their first home. When they rent for longer, the increase in renters of existing housing stock leads to rent prices going up. People are pushed downward in quality for the same price and the inflation that gets created eats away at savings. As far as first houses
go, they have become obsolete in housing stock today. The kind of home the average middle class person could afford with 20% down payment is gone with no replacement for them. Housing stock is a major problem and so is housing demand, because houses today are larger which caters to the wealthiest demographic. The affordability of everything has collapsed since 1971
and the path forward begins with identifying the problem.
After the monologue, Krystal and Saagar have a conversation about how the 2008 financial crisis continues to reverberate. We made it so nobody has any wealth to buy a house for everybody else in society. The housing stock problem is only part of it, because the top third of the economy is running everything and doing better than ever. Housing has become a luxury good and it is a major dividing line between different social classes. Homeowners with political power and wealth benefit from a lack of supply and a continued increase in prices forever. Flooding the market with new housing and building more housing to meet demand will help people compete in the market. Banning permanent capital is another tactic for restoring price sanity into the housing market. It is such a critical issue that touches so many people trying to obtain stability and homeownership, especially among newer generations losing out to older, wealthier individuals.
In her monologue, Krystal analyzes the United Kingdom’s political and economic collapse last week. New Prime Minister Liz Truss’ reverse robinhood budget proposal contained huge tax cuts for the rich and favorable provisions for bankers. The backlash was so severe that this morning, she walked it back and ditched the tax cuts to stave off internal rebellion. Her proposal and the fallout is the most thorough indictment of neoliberal economics to date. Once the budget was announced, the market for UK government bonds immediately freaked out
, raising the costs of borrowing for the government. This caused pension funds to collapse because of the dependence on UK bonds in their investment strategy. In the UK defined benefit pension funds, where you are guaranteed a certain payout upon retirement, are still common. When the large funds began panic selling to make margin calls on government bonds, the market as a whole will feel the contagion.
At the same time, UK homeowners and prospective buyers were about to be bit by an interest rate
hike. Their mortgage markets work differently from hours, where mortgages are refinanced every few years instead of locking in a 30 year fixed rate. About a third of homeowners are set to have their rates reset in just two years time. According to an analyst cited by Bloomberg, 1.4 million borrowers will have their rates reset within the year. But it was most brutal for those on the cusp of buying homes because banks pulled a bunch of mortgage products from the market.
To stave off collapse, the UK central bank was forced into action to buy up government gilts and reverse course
on its objectives overnight. The bank had been raising interest rates to get inflation under control as energy prices soar in the UK. Additionally, the British Pound crashed
to its lowest level against the dollar in history. A weaker pound means more expensive imports and even more painful inflation. All of these events created a political crisis for Liz Truss and the Conservatives. She has been robotic and lacking in empathy in response to outrage about the budget. Truss blamed
Vladimir Putin for her problems, shown in her party’s polling collapse
. The center left Labour party surged to its largest lead in 20 years and have a 33 point advantage over the Conservatives. Truss’ budget is radically out of step from where the UK is and is causing a reversal of the UK’s political realignment overnight
. More working class voters had been moving into the Tory party over Brexit, which had propelled Boris Johnson to a sweeping victory a few years prior. The moral of the story is that trickle-down economics is catastrophically bad; a fantasy imagined by delusional minds that has brought disastrous results for ordinary people.
After the monologue, Krystal and Saagar scrutinize the hardline posture of Liz Truss after her budget proposal until anger in her own party caused her to walk it back. Conservatives are returning to Thatcherism and Labour will come back into power without addressing the cultural undertones of the realignment. Boris Johnson and Theresa May ran on Brexit and reforming British conservatism and now the lesson has been totally forgotten. Just like the US, the status quo is back in town and the right’s efforts to shift away from it have failed.
Krystal and Saagar bring journalist Glenn Greenwald back on the show to discuss the Brazilian elections that took place last night. Right wing President Jair Bolsonaro was predicted to lose to former left wing President Lula da Silva, who was freed from prison due to Greenwald’s reporting on corrupt prosecutions. It was the first round of voting, meaning a couple other candidates were running against the two front runners. After ballots were counted yesterday, Lula and Bolsonaro made it to the runoff
happening at the end of the month. Context is very important to understanding this election, first because Brazil is an inherently important country. It’s the largest and most influential country in Latin America and it has vast amounts of resources available to the world. Political polarization has brought real differences to Brazil’s parties and the entire center has virtually disappeared. So there is a lot at stake in the presidential elections and the lower level races. Polls indicated that Lula would win enough to avoid a runoff against Bolsonaro, and the country’s polling industry had a humiliating night yesterday. On the presidential level they greatly underestimated Bolsonaro and down ballot races were even more off. Numbers had left candidates up with major leads in races where Bolsonaro candidates ended up winning by large margins. Extremely radical errors undercounted the support of Bolsonaro in the same way American pollsters have underestimated polls for Trump voters. One theory is the embarrassment factor for people supporting Bolsonaro because of his lack of approval in elite circles. But errors this dramatic in favor of the left show something has gone fundamentally wrong in Brazilian polling. The type of hard right populism destroying the center right is happening in Brazil just like democratic countries around the world. Everywhere neoliberalism has thrived, right wing populism is emerging in response to it, channeling anger towards the establishment. Even Lula in Brazil has governed from more of a center-left angle than hard leftist and he has not been president since 2010. His impressive social programs helped lots of people and Brazil had massive economic growth in his two terms. But it was a long time ago, and his party faced an economic collapse combined with economic scandals. Lula did receive the most votes yesterday because of the personal affection towards him that does not translate to others. He is the favorite to win the runoff election even though it’s more challenging than expected. The election instability and violence some feared has not come to pass in the election thus far. Bolsonaro was a weak president during his first term in his office because Brazilian institutions have limited his movement. He is lacking institutional support and this is preventing him from potentially threatening the election. Bolsonarismo had a major victory last night and will become the largest party in Brazil’s congress. His movement is not going anywhere regardless if Lula wins, meaning the likelihood people distrust the elections is much lower.
Thank you for reading the Breaking Points with Krystal and Saagar newsletter. The next full show will take place tomorrow and be sure to check it out!