News Updates

Breaking Points: 10/4/22 FULL UNCUT SHOW Russia’s nuclear convoy, Europe’s difficult winter, gas prices rising, more

Krystal and Saagar cover Russia’s nuclear convoy, Europe’s difficult winter, gas prices rising, housing market, Nevada races, Herschel Walker, NFL concussion coverup, crypto scams, lab leak, & the lack of resistance to the Ukraine war!

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Timestamps: Ukraine: 0:0034:23 Energy: 34:2450:01 Economy: 50:021:04:40 Midterms: 1:04:411:21:29 NFL: 1:21:291:37:00 Krystal: 1:37:011:46:02 Saagar: 1:46:031:54:37 Branko Marcetic: 1:54:382:07:26

10/4 NEWSLETTER: Ukraine Gains, Energy Crisis, Housing Market, Nevada Races, & More!
Welcome to the October 4th, 2022 edition of the Breaking Points with Krystal and Saagar premium newsletter. Remember to get your Chicago tickets: https://www.axs.com/events/449151/breaking-points-live-tickets and lifetime members email james@breakingpoints.com for a refund.
Programming update: CounterPoints with Ryan and Emily will be taped tomorrow because of the holiday weekend. Be on the lookout for the full show in your inbox on Wednesday!
UKRAINE
The nuclear threats from Russia continue to escalate with Vladimir Putin sending a nuclear train through the country to the Russian military branch in control of nuclear arms. The freight train was spotted by a pro-Russian channel and it could be a precursor to large scale nuclear drills. Another indication of Putin’s escalation is a large submarine maneuvering to the frontlines of the battle. Heavy military hardware is not a signal that Russia will use nuclear weapons but it does indicate a willingness to further ratchet up nuclear tensions with the west. Russian military forces typically conduct nuclear preparedness drills in winter and earlier this year, Russia’s defense minister announced the drills would occur for the first time since 2019. Nonetheless, NATO will be concerned about the possibility of Russia using these exercises as preparation for deploying a low-yield nuclear weapon on the front lines in Ukraine.
The Ukrainian forces made more gains in battle overnight on Monday, breaking through Russian defenses in the key city of Kherson. It was included in the Russian annexation announcement last week and has been a central battleground in the southern region of Ukraine. Zelensky has publicly stated his goal of recovering Kherson because of its strategic significance along the Dnipro river. On the eastern front, Ukrainian troops have pushed through Lyman and have set their sights on Svatove, a logistics center in the northeast part of the country. The forces are moving from the northeast edge of the Donetsk province to the Luhansk province within the Donbas region. Russia’s military acknowledged Ukrainian gains and their troops’ withdrawal from Kherson. With the boundaries of annexation continuing to shift, the Russians conceded that they will have to figure out the exact borders of the territory to integrate into Russia. They claim that local populations will be involved in the process without giving any specifics into how it will work.
Heightened nuclear tensions and inflammatory rhetoric have crowded out calls for diplomatic solutions to the war in Ukraine. When Elon Musk proposed a peace deal on twitter, he was roundly mocked by Ukrainian officials and American war hawks. His deal would have featured UN officiated elections in the Donbas, Crimea in Russian hands, and neutral status for Ukraine when it comes to NATO. Ukrainian ambassador Andrij Melnyk told him to ‘f*** off’ and taunted him by saying no Ukrainians will buy Tesla products. Ukrainian President Zelensky called out Musk and questioned his allegiance to the Ukrainian cause shortly after. Similarly, Lithuanian President Nauseda criticized Musk’s proposal for elections in the Russian occupied Donbas region territories. Back in May and early June, Musk’s Starlink internet provider was viewed as a decisive resource for Ukrainian war efforts. His system gave connections to thousands of Ukrainians for military communications and encrypted messages between civilians. The country’s local networks were depleted by Russian shelling and people were relying on Musk’s program to ensure the safety of loved ones and track the latest news. Ukrainian drones have relied on Starlink to track Russian forward positions to drop bombs. Ironically, Zelenskyy has been using the network to update followers on social media and maintain contact with commanders on the ground. Starlink thwarted Russian efforts to cut Ukraine off from the outside world and gave Musk’s fledging network a decisive real world test of its capabilities.
ENERGY
European nations are bracing for a long and difficult winter as energy prices continue to soar across the continent. Crucial weather forecasts predict Europe will suffer a colder winter with less rain and wind than usual according to Financial Times reporting. Early indications for November and December indicate a period of high pressure over Europe, likely to bring it cold spells and less wind and rainfall. It could mean less generation of renewable energy in the forms of wind and hydro power. These projections are a problem for policymakers looking to combat soaring energy prices for businesses and households primarily due to greatly reduced natural gas imports from Russia. Nations across the continent are trying to diversify power sources and reduce dependence on Russian natural gas by making deals with other exporters. EU countries have been conflicted about measures to cap gas prices and curtail excess profits from higher energy costs.
In a meeting on Wednesday, OPEC+ oil producers are considering a historic cut in supply that could push oil prices back up to triple digits. They will talk amongst themselves in Vienna, Austria about cutting one million barrels per day in the group’s first in person meeting since 2020. Oil prices rose 4% Monday morning and futures went up by similar amounts. OPEC is reportedly less worried about oil demand and seeks to protect prices from a recessionary downturn. Other supply sider factors including further European sanctions and exhaustion of the US Strategic Petroleum Reserve could generate higher prices in the months to come. Gas prices have begun to go up across the US, particularly in the west coast states and Alaska. A late rise in gas prices could affect swing state elections in Nevada and Arizona.
ECONOMY
The other major economic news is in the housing market, where home builders are offering investors bulk packages of homes at discounted prices. They are stuck with more homes and land than they can sell to home buyers. Traditional family buyers are backing away from homes because of the dramatic increase in mortgage rates. It’s leading builders to propose home sales to investors at a 20% discount from what buyers would be charged. Last month was the worst September for new buyer traffic since 2012, a sign of depleted home buying demand after a surge in 2020 and 2021. There were 14% more homes under construction this August than last year when the market was stronger. This has made landlords and investment firms with the capability to buy bundles the most eligible customers remaining.
Higher mortgage rates have been driven by the Federal Reserve’s rapid interest rate hikes intended to combat inflation. Another effect of their policy has been to reduce consumer demand by softening the strong labor market for workers. Lower turnover and smaller raises in the job market indicate that the tight labor market is slowly fading. When the demand for labor greatly outstrips supply, the available workers are given more bargaining power with employers because they are not easily replaceable. By raising interest rates and reducing business investment, employment opportunities begin to dry up and the demand for workers levels with the supply. When workers lose bargaining power, they have more difficulty negotiating higher wages and unionizing in the workplace. Inflation has caused workers’ real wages to drop even as nominal wages have gone up for the past two years. These effects and the global economic problems generated by higher interest rates have led the UN to demand a halt on rate hikes by central banks. In an annual report, the United Nations Conference on Trade and Development said the Fed risks causing significant harm to developing countries by raising rates to tackle inflation. Monetary policy tightening can reduce economic output by developing nations to the tune of hundreds of billions of dollars per year. More central banks across the world have raised rates than any period since the early 1970s according to the world bank. They are taking effects on developing countries into consideration when weighing future rate hikes, said Federal Reserve Chairman Jerome Powell.
MIDTERMS
A less closely watched yet tightly contested midterm election state is Nevada, where inflation and economic issues are bolstering a Republican slate of candidates. The state is a microcosm of nationwide trends where voters want change and blame Democrats for economic malaise. High gas prices have hit the state particularly hard, and the GOP is running a slate of less extreme candidates for crucial offices. One such candidate is Senate nominee Adam Laxalt, a former Attorney General and scion to a political dynasty in the state. His opponent is first term Democratic incumbent Catherine Cortez Masto who narrowly won her seat to replace Harry Reid in 2016. Polls between the two put Laxalt ahead by narrow margins after a strong September for his campaign. Masto’s team is worried about latino turnout for her as some consider staying home or voting Republican. Nevada is a state that consistently votes blue in presidential elections and has a more complicated down ballot history. Likewise, incumbent Democratic Gov. Steve Sisolak is facing a formidable challenge from Trump backed GOP Sheriff Joe Lombardo. The governor has touted his record for the state’s covid response and hit his opponent on abortion. The challenger is hitting his opponent on school shutdowns and touting his time in law enforcement. Lombardo has distanced himself from Trump’s comments on the 2020 election and Sisolak has tried to distinguish himself from Joe Biden. Other tight Nevada races are the Lt. Gov, Secretary of State, Attorney General, and multiple swing house districts. Projections are currently predicting Democrats will hold on to the senate despite a strong September for Republican candidates.
Last night, Georgia GOP Senate candidate Herschel Walker’s dirty laundry was aired for all the public to see. He reportedly paid for his girlfriend to get an abortion in 2009 and sent her a get well card after the procedure. The woman has a receipt from the abortion clinic and a check from Walker afterwards to verify that she received an abortion at his direction. He responded by pledging to sue The Daily Beast for its scoop he calls defamatory. Walker accused the Daily Beast of lying and for targeting him because of his race. Soon after the news broke, Walker’s son Christian began criticizing his father for lying and neglecting his family. The son has used his father’s name and wealth to become a prominent conservative social media personality. Now he is speaking out about Herschel embellishing his past and threatening to kill his mother and himself when he was growing up. Other tweets by Christian with more fury at his dad went up before he deleted them. Herschel Walker tweeted out that he loves his son no matter what, and many users identified old posts from Christian with his dad. Family drama airing out in public could put Walker’s lies and character problems back into the forefront of the campaign with only a month to go. He has been narrowly leading incumbent Democratic Sen. Raphael Warnock in the polls for a swing state seat.
NFL
The National Football League’s concussion protocol was thrust back into the national spotlight last Thursday. Miami Dolphins Quarterback Tua Tagovailoa was cleared to play on Thursday night after he was shaken up by a hit in the team’s previous matchup with the Buffalo Bills. After the play, Tagovailoa was visibly wobbling and had to be helped up by two offensive linemen. Referees responded to the play by penalizing the Bills pass rusher with roughing the passer, generally used to curtain late hits on vulnerable QBs. On Thursday night, concussion experts were critical of Tagovailoa taking the field before the game had even begun. Then, in the second quarter, Tagovailoa was sacked by Cincinnati Bengals rushers and the play caused his head to smash into the ground. As the Bengals players celebrated a big play, the Dolphins quarterback began to seizure and his hands froze up. The gruesome video immediately went viral and led to widespread condemnation of the NFL by sports media pundits. Soon after, the NFL Players Association fired an independent neurotrauma consultant who evaluated Tagovailoa and cleared him to play. It was found that several mistakes were made in Tua’s evaluation according to ESPN reporting. The NFL and NFLPA are reviewing the circumstances that led to his clearance and issued modified rules surrounding the league’s concussion protocol. ESPN journalist Adam Schefter reports that the new rules revolve around player instability and will force players to leave the game if a hit makes them unstable. The changes are expected to be approved soon and implemented by week five of the season. What’s less clear is whether the rules will do anything to reduce NFL players’ being put in harm’s way. One consultant receiving punishment for the situation is a convenient fall guy for all the parties involved. Tonight’s Monday Night Football game marks the end of week four of this NFL season. Tua had been showing signs of improvement in his third season after inconsistent play during his first two campaigns.
KRYSTAL
Krystal takes viewers through the settlement between the SEC and Kim Kardashian after the mogul committed fraud by promoting a pump and dump cryptocurrency. She promoted a dead cryptocurrency called Ethereummax in an Instagram post with hashtags indicating she was doing an ad. SEC Chair Gary Gensler was not impressed so his agency ended up charging Kardashian. She is one of a few celebrities to promote Ethereummax which artificially boosted the price before the coin lost 97% of its value. Many celebrities promoted crypto and NFTs to persuade people to invest in them. For them, getting a quick payday for promoting these schemes was easy. The whole system of coins and NFTs was built on hype and selling a story about crypto leading to historic greatness. Government officials are making an example out of Kardashian, shown by Gensler making the media rounds after the announcement. He made a flashy video announcement to use Kardashian’s fine as a warning to investors who might fall for celebrity crypto schemes. They should make it absolutely clear to celebrities that their shameless crypto and nft scam shilling comes with a cost.
Unfortunately, the problem is much larger than a few Instagram posts or tweets. Morning Consult shows a full 20% of American adults saw Kardashian’s Ethereummax post and 19% of those who saw the ad went and invested in the scam. Her million dollar fine was nothing compared to the costs of Kardashian’s crypto scam. What’s more, 45% of crypto owners say they would be more likely to invest in a cryptocurrency if they saw a celebrity endorsement for it. These celebrities do not care about you and if you lose everything after their token or NFT loses 97% of its value. They are cashing in on the celebrity obsessed culture with no interest in the wreckage they leave behind. To really get the scams out of the crypto sector, Gensler must go further than a few celebrity fines. It’s been rife with fraud, lies, rug pulls, pump and dumps, and people getting sold a false bill of goods. Kardashian is just the tip of the iceberg for the crypto industry. After 2008, it was clear the traditional banking system had failed and regulators were complicit in the debacle. One response was demanding Congress shut down the casino and regulate banking in ways we had before. Alternative responses to government stepping in were embodied by the radical libertarian dream of crypto that gave up on government. There was appeal in creating a dissident currency and subverting repressive regimes. But the crypto industry has simply recreated all of the problems in the old system with less avenues for accountability and enforcement from the government. A hollow answer to the problems of our society promoted by the most hollow people among us.
After the monologue, Krystal and Saagar dive into how the crypto industry is trying to generate a relaxed regulatory environment for the industry to keep scamming people. In the middle of the bubble, people put their entire net worth into these tokens and NFTs before the dream died over the past year. All of the celebrities pumping up crypto do not need the money from promoting it to millions of people. Ideally, everyone would ignore their favorite celebrities when it comes to investing decisions, but people who develop parasocial relationships with their favorite ones can be manipulated by them.
SAAGAR
Saagar returns to the lab leak coverup by Dr. Anthony Fauci and his allies that shut down debate about where covid came from. The authoritarianism and corruption that stopped an legitimate inquiry into whether covid leaked from the lab was a microcosm of exactly what went wrong with the debate to begin with. Developments this week show why two years later, the inability to ever have a conversation about the lab leaves us more vulnerable than before. In an unbelievable move, Fauci will be giving a research grant for bat coronaviruses on his way out. The recipient is Peter Daszak of the EcoHealth Alliance, the organization that conducted gain of function research in the Wuhan lab. This type of research involves brewing up new viruses in a lab to predict future pandemics and creating vaccines to treat them. It was banned by the Obama administration before Fauci resumed the practice under Trump.
At the beginning of the pandemic, Fauci funding Daszak’s gain of function research was a major vulnerability for him. To shut down speculation about covid coming from a lab, Fauci and Daszak had a false article published to refute the hypothesis. He set the scientific consensus and tech companies followed suit by censoring inquiries into the lab leak. Quickly the facts began to unravel, beginning with Daszak’s role on the WHO and shutting down the organization’s lab leak investigation. Then, former CDC director Robert Redfield told Dr. Sanjay Gupta that he believes covid emerged from a lab. He was retaliated against for suggesting the lab leak and continues to believe covid came from a lab. Evidence from athletes getting sick and search data to the structure of the virus points to the lab. Even the scientific community has been forced to retract their statements about the lab leak not being plausible. We will never know for sure because of China’s coverup of what happened in Wuhan beginning in 2019. Instead of giving money to liars like Peter Daszak, America should consider not conducting gain of function research because of the risks it poses. But the coverup by Dr. Fauci, his allies, tech companies, and the media prevented debate on the topic and prevented America from learning anything.
After the monologue, Krystal and Saagar question the grant to Daszak and the 50% chance of lab leak being true according to the medical community. What if they engineer an even more deadly virus in the future that escapes a lab? There has been no line of inquiry from the media or risk assessment for future pandemics. There is an insane level of arrogance and irresponsibility to run the same playbook all over again instead of rethinking the process.
BRANKO MARCETIC
Krystal and Saagar are joined by Jacobin Mag writer Branko Marcetic to get his perspective on the lack of interest in ending the war in Ukraine. A poll from the restraint minded think tank Quincy Institute shows Americans support diplomatic efforts by the US, even if it means conceding territory to Russia. Among elites, expressing support for diplomacy or de-escalating from nuclear threats has been shoved out of legitimate debate. Washington is preparing for more aid and more funding without pursuing options to bring the conflict to an end. Very little anti-war resistance has sprouted up in response to DC’s decision, unlike the war in Iraq and other US conflicts abroad. The world is close to nuclear war in the way we were in the 1960s, yet there is no pressure on the powerful to pursue a different path. Politically engaged people do not understand the danger of the situation and come out against it. Russia’s invasion is horrific and morally wrong, but are we willing to make the Ukrainian cause more important than nuclear annihilation? If nuclear war starts, escalation can happen rapidly and other countries across the world will be dragged into the conflict. Ukraine will be the country hurt the most if nuclear weapons wipe it off the map and nobody is pushing back against this at all.
Thank you for reading the Breaking Points with Krystal and Saagar newsletter. The next full show will be on Thursday and CounterPoints will be out tomorrow!

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