EP 218 | Daily Global Insights | Aug 5, 2021 | Global News | US News | India News | Markets

Sree Iyer: Namaskar, Today is August 5th and welcome to Daily Global Insights with Sri and Sree, episode 218. Before we start, our news, a shout out to all those of you viewers, who are watching, please like and share, if you are on Facebook watching this because it will help us spread the message faster and wider. In Global News, the Afghan foreign minister dials the Indian foreign minister to call for an Urgent UNSC – United Nations Security Council session as the war intensifies. Namaskar, Sridharji, and your thoughts on what’s going on in Afghanistan.

Sridhar Chityala: Namaskar. Good morning to everybody. It’s a cloudy day here and I hope wherever you are. It’s a bright day, and it’s a bit too early for Sreeji. What do I think of Afghanistan? I think it’s coincidental that India holds the presidency of the United Nations, Security Council, and it presides over. So naturally, the foreign minister has called Mr Jaishankar and basically indicated you know please summon so that we can have a meaningful dialogue to bring back peace and harmony as Afghan forces converge and closed in around the capital.

Sree Iyer: And in the next news, the US and China, push vaccines as East Asia Summit gets underway. ASEAN picks, Brunei’s Yusof has its Special Envoy to Myanmar. The US and Philippines must preserve alliance to avert a vacuum. Sir, a lot of activity going on in Southeast Asia. Covid is at its peak right now. Your thoughts on how this thing is going to play out?

Sridhar Chityala: Here there are concurrent summits that are going on. One is the ASEAN plus. Then you have the East Asia Summit which is attended by we covered that yesterday, 8 Nations plus 10 ASEAN Nations, then you also have another just ASEAN only Summit. So there are three basic summits that are going on concurrently at this point in time. Some attended by foreign minister some attended by the ASEAN leaders. My conclusions are vaccine is occupying the topmost part that one side that’s one thematic.  We will cover this when we get to the Indian section and the second thing that is going on is the Myanmar topic because they want to have a resolution and restoration to democracy. So they have nominated Brunei’s head as the person to dialogue. Brunei is chairing the ASEAN at the moment, which is very appropriate. They’re going to the five-point formula, which is endorsed by most of the people who are at the table. In the Philippines, if you remember, Austin Davis is attending, he is visiting Singapore Vietnam and the Philippines. The bilateral security relationship is due for extension and everybody is saying that must be extended because Duterte is likely to leave and the next president is likely to come in very soon. And the security partnership because that is one of the flashpoints of troubles in Scarborough Shoal and also the Spratly islands is not too far from there and which is another point of contention between Philippines and China in the South China Sea to avoid vacuum is important, that there is a bilateral treaty agreed between the two Nations.

Sree Iyer: Saeed Ara Jani, head of Iran’s IRGC drone command was behind the Israeli Linked Mercer ship drone attack. Five to six armed, Iranians are responsible for tanker hijack off UAE Coast as per the leaked report. The reasons for this are a little suspicious, so Iran and Israel again in the three “I” that we have defined, very active right now where you think this is all headed, I mean Iran isn’t it shooting itself in the foot? Because it wants sanctions lifted yet, it is showing a lot of belligerences.

Sridhar Chityala: It is. what you’re witnessing is the softness and weakness in the United States leadership. It may not be palatably visible to many, but there is this Persistence of continuing dialogue because somehow to reset and restore the Obama’s peace deal, as the ubiquitous platform for solving the problem is the root cause of the issue, which is namely, nobody has re said where Iran is today. And so what you’re finding is Iran is flexing, its muscle with China and Russia not too far, even Russia is will be taking an anti-Iran position in some instances. But this China Association is making Iran take a very provocative position all around the three “I” that we alluded to. So, you find drone attacks. You find this at attempted hijacks; you find attacks on the ships. You also find their surrogate forces or whatever you want to call them in action in Lebanon and in Syria. So you have a combination of activities, all this stems from the fact that they somehow have determined the United States is weak. So, since the United States is weak and they all seem to have a parallel path or independent access to the US Administration which we have the negotiations continue to happen in the background. So this is what is causing this great dilemma and we have had a change in government. It’s a much wider government with representation in Israel. If it was Benjamin Netanyahu, probably some action would have occurred notwithstanding the fact that Naftali Bennett is considered even far more right. But, he is now running, a very Jamboree Coalition. So he is reliant on his Partners too. So I think this is where you are seeing a set of actions is again, another flashpoint when things were a little bit break out, we don’t know, but that seems to be the trend, not a very positive sign.

Sree Iyer: Iran is 10 weeks away from break out to a nuclear weapon says Israel’s defence minister. Rockets fired from Lebanon towards Israel and IDF responds, that is Israeli Defense Forces. So, again this is a continuation of what we were talking about. So Israel typically doesn’t take the defensive position, it is usually a retaliation whenever it is attacked and I’m kind of seeing now Israel is more defensive than it’s not, you know, responding back in with proportionate force, your thoughts?

Sridhar Chityala: Yes, sir. I think you are observations are absolutely correct. Usually is Israel reacts with disproportionate force. So that there is complete deterrence for any action at least for a period of time that there is an impasse. It is very strange that Naftali Bennett rushes to the Coalition Partners. Hey, we have a problem here, are you need to kind of back then he does what you call. I call it a mute responsive action and then if it is not in Lebanon, it is in Gaza, if it is not in Gaza, it is directly from Iran. If it is not from directly from Iran, it goes into Israeli soft targets such as the, you know, the commercial crew sliders seem to be the target. So you’re beginning to see this multi-prong response from Iran with mute, or what you call as a non-disproportionate reaction from Israel as you rightly point out, sir.

Sree Iyer: A missing Belarusian Activist Living in Exile in Ukraine was found dead in a park.

Belarus Sprinter leaves Tokyo for Vienna after refusing to go Home. This all sounds like the 1980s when Russian athletes use to try and flee Russia when they came to play Olympics games and so on. So, what is happening in Belarus? And why is this such a challenge?

Sridhar Chityala:  Russian influence is very evident in Belarus. So, we’re Belarus is exerting the whole communist you know the concept of the regime in Belarus. And you rightly point out the exact drama that used to happen in the Old Eastern Block is getting repeated, yes, sir.

Sree Iyer: And Sudan takes first steps towards joining International Court. The US aid pledges $56 Million Aid of Life Saving Assistance to bring together Various Factions to a political transition and peace deal. This is in Sudan. Tunisia crisis persists, despite the president seizing power. So, in Tunisia, again, we talked about it last week or the week before that, how the president had dissolved the Parliament. And now looks like the crisis is still persisting. Tunisia is one of those things which is sort of like a barometer because that’s where the Arab Spring also started. Is this a new trend for the Middle East or what are your thoughts?

Sridhar Chityala:  Again, there is Global Leadership weakness, you’re beginning to see people assert actions while Tunisia is going through its own internal turmoil. With the acquisition of the power by the president there was hope that they will be the restoration of democracy and new elections to be called and that has not happened so which is causing concern, whether that is slipping back into some kind of autocratic format. As far as Sudan is concerned the United States has been working with other forces to bring about. Sudan has had both have had a tremendous amount of internal turmoil. They seem to have brought various warring factions together into a cohesive or attempted cohesive government, they have given their aid. So, there is hope because remember Sudan is Again part of the Sahel region, but these are all flashpoints, you know, the terrorist activity and Islamic fundamentalism or whatever you want to call. So you have these activities. Sudan there is hope that there is rest, there is a complete restoration of democracy, so which is I think the US has given 56 million dollars aid as a relief package to bring about. They have lots of issues famine, Covid, etc. Etc.

Sree Iyer: Fulani terrorists murdered 22 unarmed farmers in Kaduna State in Nigeria and burned down 124 houses and mow down crops, this is a systematic destruction of a settlement area, isn’t it?

Sridhar Chityala:  There is systematic destruction again, Nigeria, you are witnessing. If it is not Boko Haram, then you have other forms of what you call rebellious forces, you know, they basically have destroyed Village, they have destroyed the farm produce in the Agriculture and trying to usurp by exerting power. These people have no mercy, no sympathy, no civic value, they target, attack, they don’t like peace and instability and use these types of techniques. Very unfortunate Nigeria could emerge to be one of the very rich countries because of the oil reserves and other types of mining. But, unfortunately, it is also slipping very fast into this fascist type of activity.

Sree Iyer: In US News, a Federal judge blocks Texas Governor’s Move to get-tough policy to block immigrants from leaving a border. Move temporary says the courts and warrants evidence. Texas governor will be appealing this. The border situation is getting out of control in Texas with Covid cases, rising crime and accommodation issues. So, Texas is bearing the brunt of this invasion, I mean not an invasion, but definitely, there is a rise in people trying to come over because somehow there is a perception that the  United States is not checking anything. I thought that those checks and balances are now in place. I’m not a hundred per cent sure, because Biden has started a major shake-up of the ICE operation, it should have never been charged in the first place. These people never seem to learn, predictions of more migrant releases, creation of two separate divisions, one to manage detentions, and want to manage those releases. The Homeland secretary, I don’t know, sir what is really going on? Kamala Harris was supposed to be, you know, overseeing this, I don’t know where she is. What is really going on at the border?

Sridhar Chityala: Very simple, let me just part this. The order of the Texas governor, if you see, your truck carrying a bunch of illegal immigrants then because none of them has been tested, then the police force has the authority to stop that vehicle and arrest and put these people behind bars, or and arrest them and lock them up and then test them for Covid etc, etc and keep them in the Detention Center. This is the order that has been blocked. So if somebody is transporting these people, according to the court judgment, then they can be, until such time Texas proves that these were all illegal aliens who are being carried and they pose a health risk to the community. So this is the data that they have to present because arrest and release is the new policy. They are supposed to go into the mainstream and there are no questions to be asked. So, since they have  Texas has enforced, this is the ruling that the court has stalled and but they have said, give us the proof that these people pose a risk. Apparently yesterday or the day before yesterday, they found at least 5,000 people tested Covid positive.

Now, the second thing that you are alluding to is that Mr Mayorkas and Mr Biden want to have more people released into the community, use the word released into the community, so they’re going to have two types of ICE. ICE is being divided. This is immigration control enforcement, it is no longer enforcement, catch and release is the new policy and monitoring and tracking is the new policy of ICE. So therefore what happens in one department is managing the Detention Center, Detention Center is where these people are housed. The second is, for those who have been released into the community there is going to be a specific group, which is going to oversee, which simply means that they are just going to be released into the community. I think we already reported less than 25% of the people to turn up, even for the court hearings, when they are supposed to come and make the case and establish normalcy. And the message that is coming through his establishment of these two means, they are more people going to be released into the community without testing for Covid.

Sree Iyer: Sir, Covid brought down Trump, and I have no doubt in my mind that it is going to bring down the Democrats 2022. I’m telling you, people are seeing the way this has been mishandled deliberately, I might add and it’s like, taking mud and putting it on your own head and afterwards, it doesn’t matter how many thousands of baths you take that mud doesn’t go away.

Senator Amy Klobuchar told a crowd of voting rights activists that Senate Democrats are close to taking another shot at changing election laws around the country. Pennsylvania, Democrats call for ID to buy ammunition, but no, ID to vote. Amazing, strange, Strange, why is this? Whether it is Democrats or the Republicans? Why are there not looking at the existing technology such as blockchain?  And then say that we are going to have a Voter ID card that will 100% verify that you can indeed vote in the United States which means you have to be a citizen of the United States. Voting is only for those people, try the whole thing as a computer program, and then let people vote in the comfort of their home and say every citizen must vote wherever you are in the world. All this is possible to have today in the United States has this technology. And yet why do the piecemeal solution? I’m asking Amy Klobuchar, you have any doubt have any questions please call me.

Sridhar Chityala: Sir, I think, you used the word blockchain, right? So Democrats have created a blockchain, the blockchain is from Central America Catch and Release. So that’s the first part of the blockchain, then distribute them into the community, so they become part of the ledger, three dynamically identify them and ask them to vote. So they become part of the Democratic voting pattern. Then, dynamically locate them and give them funding that is the infrastructure bill. Now you’re asking them to give an ID, if they give an ID then they are constitutionally invalidated. So, therefore, how do you kind of preserve this new blockchain the Democrats are creating using the illegal surge as the first part of this BlockChain. So this device that you call logical thinking is not the way the Democrats are thinking. Democrats are thinking, how do we bring people in? Israel might like the Indian voting Indian system in the olden days. You wield people in from various places in buses and trucks, then you implant them and they become suddenly voting and everything is paper, so you can construct. This is exactly what is going on. According to Democrats, the constitution is irrelevant. What is important is that everybody who is here must vote with or without an ID. Preferably, there’s no ID anybody can turn up and vote. Tomorrow you will have people who are coming and landing in airports, they’ll count and see which airport has the highest traffic, and then they may direct them to go and vote straight away because you are in the United States. This is the obscenity or this is the absurdity that the United States is slipping into.

Sree Iyer: What I am surprised also is the Supreme Court of United States – SCOTUS, why are they not taking suo moto cognition of the mess that is being created? I don’t know, I have never seen the United States supreme court take suo moto cognizance of anything. Your thoughts, sir.

Sridhar Chityala: Lawmakers become lawbreakers. Supreme Court basically deals with issues that are enacted as a law by lawmakers. So, when lawmakers become lawbreakers, then unless it is taken up… For example, I’ll give you an example moratorium, which we can just finish off at the spot. The moratorium extension for the rental expired or August. Supreme Court said it is illegal to extend the moratorium. So what is President Biden do? President Biden says I will not do anything until it expires so he waits till August 3rd. On August 3rd, he says, I’m going to extend the moratorium because a whole bunch of progressives have lined up and said they want the moratorium extended. So they have extended the moratorium by two months overriding the SCOTUS notice ruling that the moratorium extension is illegal as was filed and contested by the owners of the properties. We already listed close to $15 billion of losses. Jen Psaki, the White House spokesperson has said Mr Biden knows about the law and no law has been broken when it is extended. So, this is my point, which is lawmakers become the lawbreakers and the Supreme Court just says that at that point in time, I said no, they didn’t violate, now they want to contest this new extension come back to SCOTUS. This is the joke.

Sree Iyer: A group of Republican Senators is pushing amendments to the 1.2 trillion infrastructure package to prevent US dollars from benefiting China. Senate also rejects Republican efforts to add border wall to the bipartisan infrastructure bill. So this is also active work going on to try and somehow slow down the wall process. I take it that it is the Democrats who are trying to do that without saying it in so many words. Your thoughts, sir.

Sridhar Chityala: Well, they don’t want it. There’s no question of slowing down, they just don’t want it. Otherwise, all their captive voting audiences will disappear because if there are not captive audiences if they are flying from Cuba in dinghies because they tend to be Republican if you happen to be a Cuban leaving the persecution from the communist, thank you for coming from Central America you probably have a democratic vote stamped even before you land. So, therefore, you are allowing passage on one side, you are denying passage on the other side. So this is the anomaly. So, what Texas said, we are all Red States. We are all affected because communities are affected. We want this border wall. Then, they say no money for the border wall. But they don’t have money in the Infrastructure Bill and other bills for amnesty. They’re going to give amnesty somehow stuck into this. The infrastructure bill is the prevailing dictum here. Let us see when it gets passed what the law looks like.

Sree Iyer: Viewers, I’m curious. Is PGurus part of water-cooler conversations? Let us know via comments. Biden administration officials said in recent days that a Supreme Court ruling on the moratorium meant that the administration could not extend before it expired on Saturday or issue a more targeted version. We touched upon this. As Delta variant makes up over 90% of active cases in the US, Dr Fauci says the Biden Administration will need more local support to vaccinate. This is a joke that continues to happen. I don’t know why Dr Fauci is still hanging around? I don’t know why the Democrats are still hanging onto Dr Fauci? There is clearly evidence that has emerged of his involvement in all this incubation and gain-of-function research. Shocking. That’s all I can say.

India news now. Indian military deploys 4 ships in the Southeast, South China Sea, and Western Pacific as part of Act East Policy. I think this is the first time, India has gone that far east. $ ships including a guided-missile destroyer and a missile frigate will be deployed for two months. Indian Minister of External Affairs highlighted the growing convergence of approaches on Indo-Pacific among different members and also stressed the code of conduct on the South China Sea, with being compliant with the UNCLOS 1982. Sir, is this the first time that India is actually sending ships like this?

Sridhar Chityala: This is the first time that India has gone this far. It has participated in joint exercises but it is now in a patrol position very similar to British, French, German, and of course the US and the other ships. Even Australia has not done it as yet which is what the other QUAD member. The US has done it. Even Japan has not done it. Japan has only navigated around its island, the perimeter of the island. So, now, India is going all the way. This is telling something about what happened between Mr Blinken and Mr Jaishankar during his visit to India. This is very good news. But be prepared because China is not just going to take it easy.

Sree Iyer: India and China are mulling disengagement of troops from the friction point in Ladakh’s Gogra sector. India and European Union to resume dialogue for finalizing comprehensive and flexible trade and investments pact. The Ministry of External Affairs and the UK foreign secretary discuss the trade deal and comprehensive discussions around the road map for 2030. Sir, first of all, this disengagement. There is still a lot of murkiness around it. Still, people in the Indian government are not explaining why they withdrew from Kailash Heights to start with. Anyway, your thoughts, sir. I’ve got some reservations around that. Please go ahead.

Sridhar Chityala: Look, I think that there are two essential principles. Ministry of External Affairs versus whether it is the Armed Forces that is doing the negotiations. But I gather that the negotiations are now completely left to the Armed Forces. They are running the show on the ground. Whether they withdrew or not withdrew or give away the advantages on the Kailash Heights. I think we have touched on this before, the disengagement discussion. I think it’s fairly clear, after the initial blurb, India has recognized that China’s words cannot be believed but at the same time you can’t hide. You have to continue to check. So they’re continuing to discuss with their counterparts in the Chinese Army. So in the event of the skirmish, they know who they’re dealing with. So to that extent, this dialogue is good. No positions have been taken. It is all contemplation what media is reporting and we also have reported in the last  2-3 days that India is prepared, not only to respond but India is prepared to attack, to take back if any ground is lost. So India is organized to that extent. But these dialogues go on as part of the process.

Sree Iyer: ISRO to launch Bhutani satellite in December. Wow, so Bhutan is launching its own satellite into space!

Sridhar Chityala: Well, I think what it’s reflecting is India is empowering its neighbours, empowering them and enabling them rather than saying you don’t need to rely on just us, become part of the team and we will ensure that you have all measures in place. So Bhutan is very much being integrated into these broad East policies. Bangladesh is also being integrated into this along with Nepal. But Bhutan is far more advanced and it’s also at a cutting edge of this in the chicken neck position after the Dokhlam disaster.

Sree Iyer:  India is open to further enhance the exploration and production of oil and gas to reduce imports. Indian government to adopt a flexible lending policy to sugar industry for new ethanol projects. Uttar Pradesh becomes the first state to cross the 5 crore vaccination mark in. India administers 26 lakh, that is 2.6 million jabs in a single day. India edges to the 500 million doses vaccination mark, as it witnesses spikes in the active cases. This has been fueled by a few states, notably Kerala. Sir, your thoughts.

Sridhar Chityala: I think, first and foremost, there is a consistent focus around energy exploration and trying to reduce the imports. There was a very restrictive expansion. Now, the government is saying that they’re moving forward. The Indian government is saying where exactly, they will go and look for these additional reserves. We’ll probably get to know faster. I think they are also saying this alternate fuel which is ethanol. Initially, the sugar industry was restricted, now they’re saying that they will expand it, especially, as this Green Revolution or clean energy revolution takes shape further.

As far as the vaccination is concerned, I think India is doing a commendable job, notwithstanding only 8% of the population is fully vaccinated, but close to 490 million vaccines have been administered. For a nation, which was not, there have been some very sarcastic comments that have come from Bloomberg and even Nikkei, Hamish MacDonald on India and India’s position. But all they need to do is pandemic is the single biggest issue, and excluding China, India has administered the largest advancing dosages in the world, close to 500 million. The United States comes next around 340 – 350 million.

Sree Iyer: You know, a very very interesting that in all these things one never heard any challenges with the state of Odisha where everything has been quiet, in fact, it is one of the quietest states. You don’t see anything happening there but here they are getting about doing things in a very very organized way. Bhuvaneshwar city is completely vaccinated according to one of our viewers. We will have to check that, of course, please provide more data and we will be sure to check that.

In markets, the US consumer debt reaches an all-time high of 14.6 trillion. Disappointing jobs numbers as US battles pandemic and human reluctance to work. Markets are down and oil goes below $70 for the first time. With your permission, first, let me put the debt pictures on there, so you can talk about that, and then we can go from there. Here we go, sir, the picture is up.

Sridhar Chityala: When you see the total debt, I just want to draw attention to the 2008-2009 chart. When you look at the 2008-2009 bank, this is when the GFC – Global Financial Crisis occurred. You can see the delta between the housing debt and the non-housing debt. The non-housing debt comprises student loans, credit cards, and auto finance. So there was a bulge and there was an abrupt bulge in the housing market which caused the bubble because lots of subprime mortgages entered the market. Now, you come to 2021-Q1, at that point in time, we were roughly around $12 trillion in terms of total debt and now you are looking at $14.6 trillion. Fortunately, the mortgage is only a smaller blip, but when you see the band, the band has expanded between what we call housing debt and non-housing debt. The gap in the non-housing debt is driven by two important elements. One, his student loans which have now bulged to about 1.6 trillion and then you have the auto finance loans which has also expanded to about 1.2 or 1.3 trillion. So there is a problem that is building up. So when you have this level of debt and when you have unemployment because people don’t want to go to work. Technically, unemployment is not coming up because they’re being paid and there’s also money being deposited. So, I call it has a double whammy. One is the consumer balance are leveraged, and then you have the government balance sheet which is leveraged, which is going to be $28.5 trillion dollars, even before the new debt comes in. So, your government is borrowing to fund the consumer. The consumer is borrowing to use the borrowed money that the government has given to fund his debt. Only, this can go for a period of time. Is there a crisis looming? No, there’s no crisis looming if you believe in Paul Krugman’s theory. Paul Krugman’s theory is the government can borrow and borrow and borrow and keep on feeding the consumers. Consumers can go on buying, after all, I’m not going to be alive in the next 20 years. Somebody else takes the debt and moves forward. So we have this new kind of magic potion or addiction that we can borrow. Remember, Mr Biden has stated in all of his tenure, he is going to have a $6 trillion budget every year even if he needs to borrow and then if he wins next term, he will also have $6 billion budget. So in other words, we’re going to borrow our way back and the consumers are going to be given the moratorium rental. This is just an example of what the government is doing. So, in other words, there is no incentive to work and the money continues to flow into the system. How long this chart will go on with an interest rate which will see the market index which is around 1.17%. Where this is going to go is unpredictable because we are in uncharted waters. So the purpose of this chart, the purpose of the government borrowing is a reflection of the loosey-goosey economy that we are in the United States right now.

Sree Iyer: I’m just going to put up the numbers for the markets now, sir. Let’s start with the Dow Jones. It was down 323 yesterday. S&P was down 20 and NASDAQ was up 19 points. Sir, you take it away from here.

Sridhar Chityala: Yes. Most of the indexes went down. The good news here is, the oil prices have come down. If you recall, yesterday, they were in the 72-73 bracket. If you go the day before yesterday they were at 74-75, so that’s a good relief for the consumer. If you look at the 10-year bond, it is hanging around 1.17. Remember, this rate about less than a year ago was around 0.43%. It made its way up. There was also a rumour whether it will go to 2%. But the 10-year yield rate of 1.17 usually finances the mortgages and that at least is a healthy sign. Now, in all these things, you look at the crypto, it has gone up by almost 30+% in less than a week. It was around 28, now it is around 39,000. So that’s the summary for the markets. Whenever there is uncertainty, then you see the crypto shooting its way back up. Also, the good news we touched on is around the regulation.

There is also good news coming from Singapore. Singapore is going to set up a formally regulated crypto exchange and more than 170 applications have been received. I think the first is going to be an Australian entity that is going to be approved for establishment. I think there are also two others who are already in existence. When we do crypto, we will cover that part of the discussion.

Sree Iyer: Yes. Indeed and we will do an in-depth session on that, viewers. Thank you for all your support. You responded immediately by liking or sharing this video. We would like this to continue and grow because we know that for some unexplainable reason that there is active tamping down going on of our channels. We can’t prove it, of course, because if we can prove it then we can take people to court. Unfortunately, we cannot prove it. We’re not privy to a lot of stuff that happens in the algorithms of all these different social media companies. Thanks for watching. We’ll be back tomorrow bright and early. Sridharji, Namaskar, and we’ll be back again tomorrow.

Sridhar Chityala:  Namaskar, thank you so much. Have a wonderful day. I hope you enjoyed the session and, you know, we bring up the curtain closer for the week tomorrow.