US PERSPECTIVE: Not Addressing Domestic Problems!

Within the US there is a continually broadening belief by the public that government is no longer serving the people’s needs and addressing real “Kitchen Table” concerns!

Three issues are often cited as to why this is:

1- CONFIDENCE IN LEADERSHIP & DIRECTION

A new poll by the Associated Press-NORC Center for Public Affairs Research shows approval of President Joe Biden has dipped further, nearing the lowest point of his presidency as his administration tries to project a sense of stability while confronting a pair of bank failures and inflation that remains stubbornly high.

A new poll by the Associated Press-NORC Center for Public Affairs Research shows approval of President Joe Biden has dipped further, nearing the lowest point of his presidency as his administration tries to project a sense of stability while confronting a pair of bank failures and inflation that remains stubbornly high.

• • The president notched an approval rating of 38% in the new poll, after 45% said they approved in February and 41% in January.
  • His ratings hit their lowest point of his presidency last July, at 36%, as the full weight of rising gasoline, food and other costs began to hit U.S. households.
  • In recent months, approval of Biden had been hovering above 40%.

Interviews with poll respondents suggest the public has mixed feelings about Biden.

Lowest In 27 Months

2- POLITICAL POLARIZATION & GRIDLOCK

According to PEW Research, on average, Democrats and Republicans are farther apart ideologically today than at any time in the past 50 years.

Both parties have grown more ideologically cohesive. There are now only about two dozen moderate Democrats and Republicans left on Capitol Hill, versus more than 160 in 1971-72.

Across 10 measures that Pew Research Center has tracked on the same surveys since 1994, the average partisan gap has increased from 15 percentage points to 36 points.

3- MIDST OF DISTRACTING CULTURAL WARS

New beliefs, as represented by the movements pushing ideas such as Woke, Transgender, CRT, DEI, ESG, Open Borders, merge with increases in crime, criminal justice leniency, mass killings, domestic terrorism, and cancel culture.

The Economist (Lean Left media bias), shows the distribution of ideology of House candidates who won their primaries in 2018.

Democracy is built on compromise, and historically, a set of shared values tied Americans together and helped those on the Left and Right to come to mutual agreement — even with their differences. But as the overlap between the parties — and the core values they embody — draws ever farther apart, it becomes increasingly hard to imagine how Americans will be able to solve problems through mutual agreement.

EXAMPLES:

• • Government aid. More Democrats and Democratic-leaning independents say the government should do more to help the needy, even if it means going deeper into debt. 54% believed this 6 years ago; now 71% do. Between 2007 and 2011, the share of Republicans expressing this view fell from 45% to 25%.

• • Race. When Pew asked Americans if they believe racial discrimination is the main reason many blacks cannot get ahead, they found a difference of 50 points between Republican and Democratic views. That gap was 13 points in 1994, and 19 points in 2009.

• • Immigration. In 1994, 32% of Democrats said immigrants strengthen the nation; now a whopping 84% do. Republicans are divided: 42% have a positive view of immigrants, and 44% say they’re a burden becasue they take jobs, healthcare, and housing. Yet Republicans have inched closer to Democrats in their views: in 1994, 30% of Republicans had a positive view of immigrants, while 64% said they were a burden.

GLOBAL PERSPECTIVE: The Void In Global Leadership Will Be Seized!

Few have the insights that Victor Davis Hanson has consistently exhibited. He summarized the problem as few can.

Our enemies do not fear us, our allies judge us unreliable, and neutrals assume America is in descent and too dangerous to join…

• • Why is French President Emmanuel Macron cozying up to China while trashing his oldest ally, the United States?
  • Why is there suddenly talk of discarding the dollar as the global currency?
  • Why are Japan and India shrugging that they cannot follow the United States’ lead in boycotting Russian oil?
  • Why is the president of Brazil traveling to China to pursue what he calls a “beautiful relationship”?
  • Why is Israel suddenly facing attacks from its enemies in all directions?
  • What happened to Turkey? Why is it threatening fellow NATO member Greece? Is it still a NATO ally, a mere neutral, or a de facto enemy?
  • Why are there suddenly nonstop Chinese threats toward Taiwan?
  • Why did Saudi Arabia conclude a new pact with Iran, its former archenemy?
  • Why is Egypt sending rockets to Russia to be used in Ukraine?
  • Since when did the Russians talk nonstop about the potential use of a tactical nuclear weapon?
  • Why is Mexican President Andrés Manuel López Obrador bragging that millions of Mexicans have entered the United States, most of them illegally? And why is he interfering in U.S. elections by urging his expatriates to vote for Democrats?
  • Why and how, in just two years, has a confused and often incoherent Joe Biden and team created such global chaos?

Let us answer by listing 10 ways by which America lost all deterrence:

1) Joe Biden abruptly pulled all U.S. troops from Afghanistan. He left behind to the Taliban hundreds of Americans and thousands of pro-American Afghans. Biden abandoned billions of dollars in U.S. equipment, the largest air base in central Asia—recently retrofitted at a cost of $300 million—and a $1 billion embassy. Our government called such a debacle a success. The world disagreed and saw only humiliation.

2) The Biden Administration allowed a Chinese high-altitude spy balloon to traverse the continental United States, spying on key American military installations. The Chinese were defiant when caught and offered no apologies. In response, the Pentagon and the administration simply lied about the extent that China had surveilled top-secret sites. 

3) In March 2021, at an Anchorage, Alaska mini-summit, Chinese diplomats unleashed a relentless barrage at their stunned and mostly silent American counterparts. They lectured the timid Biden Administration diplomats about American toxicity and hypocrisy. And they have defiantly refused to explain why and how their virology lab birthed the COVID virus which has killed tens of millions worldwide.

4) In June 2021, in response to Russian cyber-attacks against the United States, Biden meekly asked Putin to at least make off-limits certain critical American infrastructure.

5) When asked what he would do if Russia invaded Ukraine, Biden replied that the reaction would depend on whether the Russians conducted a “minor incursion.”

6) Between 2021 and 2022, Joe Biden serially insulted and bragged that he would not meet Muhammad bin Salman, the de facto ruler of Saudi Arabia, and one of our oldest and most valuable allies in the Middle East.

7) For much of 2021, the Biden Administration made it known that it was eager and ready to offer concessions to re-enter the dangerous Iran nuclear deal—at a time when Iran has joined China and Russia in a new geostrategic partnership.

8) Almost immediately upon inauguration, the administration moved the United States away from Israel, restored financial aid to radical Palestinians, and both publicly and privately alienated the current Netanyahu government.

9) In serial fashion, Biden stopped all construction on the border wall and opened the border. He made it known that illegal aliens were welcome to enter the United States unlawfully. Some 6-7 million did. He reinstated “catch and release.” And he did nothing about the Mexican cartel importation of fentanyl that has recently killed over 100,000 Americans per year.

10) In the last two years, the Pentagon has embarked on a woke agenda. The army is short by 15,000 in its annual recruitment quota. The defense budget has not kept up with inflation. One of the greatest intelligence leaks in U.S. history just occurred from the Pentagon. The Pentagon refused to admit culpability and misled the country about Afghanistan and the Chinese spy balloon flight. The current chairman of the Joint Chiefs of Staff called his Chinese communist counterpart and head of the People’s Liberation Army to advise him that the U.S. military would warn the Chinese if it determined an order from its commander-in-chief was inappropriate.

This list of these self-inflicted disasters could be easily expanded. But the examples explain well enough why our emboldened enemies do not fear us, our triangulating allies judge us unreliable, and calculating neutrals assume America is in descent and too dangerous to join.

COMMERCIAL OFFICE REAL ESTATE – More Thought Leaders Agreeing With MATASII

John Rubino was co-host of Macro Analytics with me for many years. When John feels as strongly about something as he does here, investors should heed his sage advise! As the author of “Dollar Collapse”, he is a well recognized authority.

John Rubino

“Basically, interest rates have been artificially low for a decade…

… In that time, crazy numbers of office buildings went up and were financed at really low rates… Now, office vacancy rates are spiking, which means office building are not profitable anymore. 

The debts they have at 2% to 3% now have to be rolled over at 5%, 6% or 7%. This means an already unprofitable office building is going to be even more unprofitable because of rising interest rates. Now, they want to sell this office space, and the price cuts that have to be done to get a deal done is 30% to 50%… Some are down by 80%…

Local and regional banks already had their troubles last month, but are going to have bigger troubles when all these buildings turn out to be not worth nearly as much as we thought they were. This paper is in pension funds… they are going to go into crisis. 

So, real estate is liable to be the catalyst in crisis in several other sectors… The government is going to have to let it burn and have a 1930’s style depression, or bail out everybody in sight… at the cost of rising inflation and the dollar tanking.”

Rubino says, “There is no fix…”

“There is no way to refill these buildings. There is no way to refinance them without going bankrupt…

Sometime this year we are going to drop back into negative growth, and it’s going to be a bloodbath. There is no solution, and these guys see it coming and they have no idea what to do about it…

This is the sector we want to watch and will be the catalyst for the next big crisis…

The next bailout crates a lot of new dollars, and that pushes down the dollar, and then, we are in the death spiral where there is no fix.

That is out there waiting to happen, a bailout so huge that it terrifies holders of the currency and Treasury bonds. 

Then it’s game over… This is just a question of when people figure this out. That really is our situation right now.”

“This is a much bigger story than what happens to the dollar as the reserve currency. This is the end of a global monetary experiment that is going to go out with a very fiery end. This is not going to be fun to watch.”

CONCLUSION

CURRENCIES: Currencies Mirror Political & Economic Strength

• • Over time currency will mirror the political strength of a country as shown by policies that deliver a strong economy, the strength of its military and social stability

In this week’s expanded “Current Market Perspectives” we focus on the US Dollar as a follow on from our discussions in the body narrative, as an adjunct to what is happening as a result of, and in concert with, the “Fourth Turning”.

It is quite alarming when the US$ follows the movements in the US Credit Default Swap Rate!