EP 112: Senate passes 1.9T Stimulus bill, E Sreedharan BJP CM candidate, Fed warns of inflation

Sree Iyer: Namaskar, Hello and welcome to PGurus Channel. I’m your host Sree Iyer. Today is the 5th of March, episode number 112 and Sridhar Chityalaji is joining me. Sridharji, welcome to the PGurus channel as always it’s a bright and sunny morning in California. How are things over there, sir?

Sridhar Chityala: Well, I think that it is bright and sunny and we’re on the cusp of another great day as we wrap up the weekend.

Sree Iyer: And in our main points, yesterday the Senate also passed the 1.9 trillion stimulus bill with zero Republican votes. So it is obvious that vice president Kamala Devi Harris cast her vote to make this thing to pass. With this now, this bill goes to the president’s desk for his signature.

Sreedharan as we had predicted is going to be the chief ministerial candidate for the BJP party in the upcoming State Assembly elections of Kerala. Do tune in, we have done a series of Hangouts with Dr. Sreedharan and we are going to be coming out with these interviews in the next few days. Please watch our Channel PGurus and you will get to know about a person who is 88 years young with clear and concise thought processes. You are going to love it.

The US called the German warships plane to sail South China support for Rules-based Order. So this is a new thing that is going on. In addition to the French now, the German ships are also patrolling the South China border.

Fed Chairman Jerome Powell said inflation is likely to rise as the economy recovers, but it will be a temporary measure.

And in our main points with the US and LATAM news, as debt toll mounts the United States could be looking at a hundred trillion debt over the next 30 Years according to the Congressional Budget office. Sir, should the US be a concern because it has been letting it run-up since the Reagan days.

Sridhar Chityala: Well, I think what is brought to the surface today is we had close to 4 trillion dollars of stimulus 3.6 and a deficit of about another 600. So, we had about 4.3 to 4.5 trillion, which we covered in the 2020 budget. We have 2 trillion dollars plus another 2 trillion dollars coming up which is out in the public. So, we could be hitting 30 to 34 trillion dollars very soon as we wrap up in 2021. There is a tremendous concern in the CBO that has this debt toll takes on the balance sheet, there is no way by which this debt can be reduced because there’s no reduction Program. We are only talking about reducing the deficit that means the gap between the revenue and the expenditure side of the government balance sheet. So there are no formal debt reduction programs in place. So as this debt mounts, it raises a number of questions around the currency, the interest rates the strength of the US economy as a basis for others to invest Etc. So, the warning signs are being given that 30 years is not too far away. There’s a responsibility for this generation of politicians. What they do has a consequence for the next generation to come and a lot more caution needs to be exercised and there have to be some programs to see how this issue is going to be tackled.

Sree Iyer: And in other news senior Democrat breaks with Pelosi on the election overhaul in the interests of my constituent. Now you had predicted this that some of the places where there is a border and the Democrats may be a little bit vary of doing it. So, is this one of those things, Sir?

Sridhar Chityala: I think Bennie Thompson from Jackson Mississippi is concerned that, what happens here could happen in his constituency. His constituency is dominated by African-Americans. So, what he’s saying is if you can do this to some other constituency, what’s the guarantee that you will not do this to me? Because there’s an asymmetry concentration of the population. So he’s basically saying I don’t support this. This is not a fair way by which one can run an election.

Sree Iyer: Now, I need you to help me understand this a little bit more pentagon’s anti-extremism cull risks converting the US military into a left-wing praetorian guard. Can you please establish a bit of context for our viewers on what a praetorian guard is, Sir?

Sridhar Chityala: I think that what is happening here is they have been asked to review. Who are they? The defence secretary and the officials have been asked to review the entire composition and construct of the Army and the people who man in various positions. And to identify those who have extremist views. Identify those who have potentially polarizing influence. All these stem from the fact that there was this fear that Trump could use the Army. All this stems from the fact. And they were this allegation that was made that you know, Ex veterans were part of the January 6 insurrection. So, therefore they said in other words without munching words, they would like to have very similar to the progressive government that is coming in place your progressive, a left-wing praetorian guard guarding the Armed Forces whether in power or outside the power, the Democrats can have your persuade not just the Democrats but the left-wing Democrats and the Progressive Democrats can hold control. So, remember that Nancy said before you do anything in Iran, you got to let us know. Before you press the nuclear buzzer, you got to let us know. Hey, watch out if they are Republicans. In other words, they are not saying those words. They are too many Republican-aligned people within the Army. Then, you got to make sure such people are not part of the process and they should be within the rationalization of the program. There’s no other word. There’s nothing to mince words, but this is a most what I would call as shamable act in terms of what has occurred.

Sree Iyer: Sridharji, for decades now, the army tends to vote Republican. There is no surprise about it because the Army sees Republicans as being more in tune with as far as foreign policy is concerned. What an armed Soldier / Armed Forces person thinks and they feel like the Republican Party represents them closer than perhaps the Democratic Party. So, now is that being called into question or they going to look at the Facebook post the tweets of all armed personnel and then they are going to cull out those they feel as being loyal to one party.

Sridhar Chityala: Well, I think that we’ve mentioned this time and time again in several of our shows. We have seen both Republican and Democratic presidents over the last N number of years, but you have never seen a Democratic Administration that is coming in with such profound sweeping changes with absolutely no input from the other side. 80% is not equal to 50% is not equal to or 56% is not equal to 100%. So, there is still 44% if the objective of the 56% is to exclude the other 44% in every decision of policymaking then you have a problem. I think that’s where we are heading as far as this is concerned because in the next bullet point we talked about the real misinformation campaign of January 6^th both these are correlated. When you take a look at the January 6^th there is a lot of allegation of armed insurrection, the word used armed insurrection. So, he should be impeached. The FBI and the guards found no arms, no stash of arms cashed in the Capitol. So where is the armed insurrection? Then, they said, N number of groups were identified except when you go deep into it. It was a republican rally conducted by President Trump. They were almost saying all Republicans should be branded this way because they were you know, leading the insurrection but on the contrary, when you look at the truth, Christopher Ray has not identified an isolated anybody. So they’re going one step further and making sure that the community and the Army. Because, the Army is the one as you rightly said, historically swears allegiance to the flag. Look at the new Progressive. There’s no flag, swears allegiance to the state, there’s no State. because we are talking about everybody kind of coming in. There’s a rule. There are no rules. All rules have failed.  There is an interconnection between these two. So therefore even the Ex Armed Forces veterans are raising concerns at this specific set of actions that are being contemplated. Now, they have changed. They got a broader retired guy to be the defence secretary because who is a kind of you know, thumbs what you call finger thumb man of the present kind of the regime. So which raises these questions around what exactly is the shape of things to come under this President? And this is a very sensitive area.

Sree Iyer: And the Republican congressmen and senators have expressed concern at the rising number of people wanting to cross into the United States. This is something that has been on the iron will, since, the time were Biden assumed the presidency on the 20th of January now, what is the plan? I mean are they going to just open the thing and say just come on in until we decide to stop this.

Sridhar Chityala: I think that’s the way it looks to keep advancing the program, to give you an answer in one sentence. That’s what it looks like. Now apparently in the border people are now turning up with Biden t-shirts. So, he is now opening up more tents to house the people. I don’t know what exactly is the inner workings by that actually these are Biden’s decisions or the decisions are being made on behalf of Biden because we saw I think yesterday or day before here, he spoke and when he was about to take some questions when he said I’m prepared to take some questions. The feed was cut off. So, no journalist could ask him any questions. So I think that look we don’t want to read too much in but there is a real kind of a problem that is developing. There is no strategy.

Sree Iyer: Hmmm. And can you please give us a quick update on the confirmation on some of the members of the Biden cabinet, sir?

Sridhar Chityala:  Well, I think that Deb Haaland, you know, 1 by 11-9 the committee. This is a committee before it goes to the Senate, the committee vote of which Lisa Murkowski shifted Republican and voted and that’s how you get that 11-9 number, it is a highly controversial kind of a figure and polarizing as well, but she says, she will give the benefit of the doubt and do it, so, that got through. Now as far as Xavier Becerra is concerned that’s deadlocked. So the vote is 14-14. He is going to be the internal secretary, no, no, Deb is internal and the Becerra is a Homeland and Health Services again, you know, he has some views on abortions and so on as you know, Republicans and Democrats are diametrically opposite sides on the pro-life versus pro-choice situation. So that’s why that’s clearly held up, Deb goes through.

Sree Iyer: And in India news, and in Orissa ArcelorMittal Nippon steel is going to set up a mega steel plant in Kendrapara with rupees 50,000 crores investment.

Sreedharan is the BJP chief ministerial candidate and for Kerala and is expected to contest from Kochi.

Ayodhya Rama Mandir trust buys adjoining land as part of expanding the temple complex to 107 Acres.

India has attracted a total of FDI foreign direct investment inflows of 67.54 billion in the first nine months of the fiscal year 2021 that’s impressive, sir. Would you like to comment on this before I go to the other items from India?

Sridhar Chityala: I think that my only comment is that just shows the stellar trajectory that India is in. There is one specific point that I would like to highlight which we are not covering here but we discussed it on Twitter. When India as a bilateral trading partner is concerned, there is trade in goods and trade in services. Goods comprise of imports and exports. Some of the services components comprise of investments that are coming in. Everybody is trying to point out, they say, ‘oh China is now back at the helm and India and the US are relegated. They do not use the word trade, but goods and services when you combine, there’s no comparison. China does not invest a level of money that the United States does and the United States has access to, for two reasons. One is a long-standing relationship and second, there’s a mutual trust to some extent between India and the United States versus China where we have constant skirmishes. So that’s the thing that I would like to point out, look at the number 150, 140, 160 billion. These are not the numbers that mainstream media in India is projecting which are 70 – 90 billion, that’s only imports and exports.

Sree Iyer: Arunachal government is going to develop three model villages along the India-Tibet border. India needs the flexibility to conduct joint battles in a digitized battlespace according to the Chief of Defense staff Bipin Rawat. In a String of Pearls Port acquisition strategy, Adani Ports buys a 31.5% stake in Gangavaram Port in Andhra Pradesh.

In Asia News, we are going to share a very important graphic here. The Us is going to build an Anti-China Missile Network along the first island chain as part of 27.4 billion spendings in the next six years. To understand what the first island chain is and I’d like to point to this graphic.

Sridhar Chityala: The key thing to remember in this is what China is attempting to do via its South China Siege is to cut off the United States effectively between East and South China and then threaten the nation in between. It is called Denial of Access and Denial of Trade. Further, the first chain comprises of, you can see from the map; all the way from the Okinawa Japan making its way across Taiwan through the Taiwan Strait then into Scarborough Shoals, into the Philippines, bending past the Spratly Islands then around winding down Malaysia and then making its way into Cambodia and Vietnam. So this is what they call the First Island Chain. The First Island Chain covers a vast part of the South China Sea. So they are trying to build a natural deterrence mechanism with a whole combination of forces comprising of Naval positions,  Air Force positions well as the Artillery. So, basically, this is acting as a deterrence. It’s a fascinating strategy that was conceived and now it is coming to fruition. The second will go further into the East China Sea, but more around the West Pacific. This starts all the way from the other side of Japan and covers islands such as Guam, Indonesia, and the Pacific. So they have effectively covered both the areas and this is the strategic Maritime Gateway which has access to close to 66% of the global trade and this is a phenomenal strategy. Also, on the map, you will find two little red dots on the Indian border; one is the Arunachal Pradesh area, which is being disputed and contested by China and I think we just informed you that India is taking a strategic position by building its own infrastructure and is also building some villages around that border. And then further-up which is the hot point of a contest which is the Galvan Valley and Ladakh and Leh region, at the Line of Actual Control. So these are the other points where India is defending in its own way. In the prior Trump Administration both the US, France, as well as Israel and the UK, had committed even boots on the ground to protect the sovereignty of India against any of the Chinese incursions.

Sree Iyer: Viewers, please disregard the fact that Pakistan occupied Kashmir is not represented in this map. This map is merely a reference the doesn’t reflect our stand. All we are trying to do is to point to you the places where the First Island Chain and the Second Island Chain are located. The Chinese Parliament is set to reverse the Hong Kong march to democracy. So, is this a new development or they are just trying to make it even tighter?

Sridhar Chityala: No, they are formalizing it. They will impose because the autonomy is gone and there is no more independent legislative council members. There is no cross parliament, it will be only rah-rah-rah. Everybody is Xi Jinping and wave the red flag. That’s what it is.

Sree Iyer: The US and Japan plan an inaugural 2 plus 2 of the Biden era. Is this going to be a new era in March that the US and Japan will continue to work even closer than what they have been working?

Sridhar Chityala: I think the way I read this is, the 2 plus 2 dialogue was constructed actually by India. It was India-US-India 2 plus 2 dialogue comprising of the Defense Minister or the National Security Adviser and the External Affairs Ministers. A vast amount of policies and the strategic map and strategic work was laid out via these 2 plus 2 meetings. Then Japan picked up. So Japan has 2 plus 2 dialogue and using the same protocol. Then India and Japan established a 2 plus 2 protocol. What is very conspicuous in all these discussions is India is absent.

Sree Iyer: And that is a new Biden Doctrine, it looks like and we have to see what consequences that is going to have, whether the Biden Administration is messaging to India, and that would be really strange because the vice president has Indian American roots, and I would love to know how vice president Kamaladevi Harris is responding in some of these meetings. Anyway, that’s just amusing.

Myanmar Security Forces shoot at 13 anti-coup protesters despite a call for restraint. Singapore has advised citizens to consider leaving Myanmar as soon as they can. I think if this continues more countries will start advising their citizens to leave Myanmar, isn’t it, sir?

Sridhar Chityala: Correct.

Sree Iyer: So, this is a bit of a concern, we have to see how quickly, in our opinion I think Sridharji you’ll agree with me, that ASEAN as a block should come together and resolve this thing as quickly as possible before it starts escalating into a bigger crisis.

In the next news, Australia rolls out a 10-year critical mineral plan as Beijing looms over Global Supply. Australia became rich because the Chinese were importing so many raw materials from there and recently their relations have been strained. So does this mean that as part of Quad, now the other countries such as India, Japan, and the US will be directly working more with Australia to get some of the raw minerals and to make up for the loss of trade from China? What are your thoughts?

Sridhar Chityala: I think, it is a strategic deterrence, which is effective to state that China could hoard or China could dictate terms, so the net result of this is Australia is developing a strategy in terms of how to harness and be the supplier. I think India is also involved in the Discovery and Harness of the Rare Minerals much needed around the world, especially for the US and this strategy of Australia is very much driven by US putting pressure on Australia to come up with a plan.

Sree Iyer: A third strong earthquake of 8.1 on the Richter scale off the New Zealand coast triggers a Tsunami warning. We have to wait and see whether that happens or not.

In Europe news, nine people were killed in an army helicopter crash in the Eastern Turkey region in the Kurdish part of Turkey. The US blacklists two leaders of the Yemen Houthi movement, which is a flip-flop because they lifted all sanctions as soon as they assumed power. Now Mansour Al-Saadi and Ahmad Ali Ahsan Al-Hamzi have been blacklisted again. Sridharji is the left hand not knowing what the right hand is doing in the Biden Administration and this soon?

Sridhar Chityala: Well, there are two great flip-flops in the Democratic Administration. One is Mr Kelly, who is going to be the Environmental Advisor and then we have Mr Biden himself. So, the story here is that I think Mr  Mansour Al-Saadi is in the Navy and Mr  Ahmad Ali Ahsan Al-Hamzi is Air Force. So two key people, one in the Navy and one in the Air Force are being blacklisted. This is just less than two weeks. Two weeks ago they lifted and now they see more and more attacks coming from Houthi and they say that it has an Iranian back. I think it’s very hard to see where these guys are going. But at least they have done the good thing. And by the way, on Monday will be hearing about what they’re doing to Mohammed-Bin-Salman and the Kingdom of Saudi Arabia.

Sree Iyer: Yes, indeed and in markets, Jerome Powell said that there is a possibility that inflation might be going up in the short term and that sent the markets tumbling. Paint us the big picture here, sir. How long do you think inflation might be a concern before things settle down and what are your thoughts on the crude production inside the United States for the next 18 months.

Sridhar Chityala: First and foremost, I think that we had expected that in the first quarter would they would be a gyration and there would be volatility in the markets driven by three factors. This excess stimulus is being crept into the system. Nobody can comprehend why you need this size of a stimulus. The second is there has always been pressure on the bond rates because there’s been a flight of capital. So, therefore, I think that the markets are saying that we need to raise the rates because the rates are not set by, what we call in the United States the Bond Vigilantes. And then you have the third factor which is the fuel hike. We anticipated a fuel hike because it has been fairly depressed and the oil economies have been very badly hurt coming out of the covid they needed to find a way to fund all these different deficits and there has to be revenue. But what has compounded the problem is, here the supplies from the United States is going down because of all the bans that are coming into play. Now, to your question, one of the big oil refining companies have stated that the United States will not return in terms of the local production to the pre-pandemic levels. But does anybody care? No. So that is a reason why JPMorgan predicted a five to ten dollar price increase in the crude. We are already close to $5.

Sree Iyer: And that brings us to a close for today’s news. Stay tuned, as always. We’ll be back tomorrow. Same time. In fact, I take that back. We’ll be back on Monday morning at the same time, the same location. Thanks for joining and Namaskaram.

Sridhar Chityala: Namaskar and have a wonderful weekend.