Sree Iyer: Hello, and welcome to PGurus channel. Today is 26th of January, Episode number 83 of Daily Global Insights. I have with me our guest Sridhar Chityala Ji. Sridhar Ji, Namaskar and Welcome to PGurus Channel.
Sridhar Chityala: Namaskar and Good Morning to everybody.
Sree Iyer: SridharJi, Yesterday the articles of the impeachment were delivered by the Congress to the Senate and Senate to start the impeachment hearings from 8th of February and Senator Patrick Leahy is going to be presiding over this, not the chief justice of the Supreme Court of the United States. First off, that itself sounds a little bit odd, we talked about it a couple of days ago. Why do you think the Supreme Court Chief Justice recused himself from this.
Sridhar Chityala: The Chief Justice recused himself for two reasons, first and foremost is that usually, the Supreme Court justice presides over this when the process is about impeaching a sitting president, so this is not about sitting president. That in itself should send sufficient indications to people that this is not a fair and just kind of an approach, you can try on other kinds of things but not an impeachment process because the president has already left. On February 8th it would be almost 18 days since the president has left so that’s the first reason. The second reason is, he made it very clear that he doesn’t want to get into the political quagmire and he wants to preserve the integrity of the Supreme Court or the Scottish preserve the integrity of it but not getting into political writing links. So, those are the two reasons.
Sree Iyer: Now, Jim Jordan representative the top republican on the house judiciary committee is looking to reprise an impeachment trial rapid response group to advise former President Donald Trump’s legal team and speak to the media. What is the meaning of reprising an impeachment trial? What does reprise mean here, sir?
Sridhar Chityala: Well, he’s going to replay the same role that he played before in terms of being part of the defence team on the senate because you have a prosecution team which is usually from the Democratic party and you have what they call as the impeachment leaders so there have been impeachment leaders appointed by the house. So, then you have the defence so, he says I’m going to reprise and be part of the defence and I think about eight republicans are part of the group. I think so, they would be providing all kind of advice and input in helping the Butch Bowers and President Trump in terms of putting up a formidable defence
Sree Iyer: So, about 29 GOP senators are opposing the Trump trial and we also know that a senior Democratic senator Dick Durbin said that impeachment is not the way to go. Is your reading the same as mine in that many people even in the Democratic side of the Senate are not very comfortable with this impeachment process?
Sridhar Chityala: Well, he as you mentioned Dick Durbin, kind of Dick Durbin said that look conviction is highly unlikely, he didn’t say don’t proceed with impeachment. He said that conviction is highly unlikely, those were his words. The person who said is they must go ahead with impeachment but they won’t be conviction is President Biden himself who remained neutral thus far. This is the person who wants to unify the nation but taking a very specific political stance. Now, to your point 29 republican Senators have already said they are not in favour of the impeachment fire, there’s a cast of 100 of Democratic Senators who said there should not be an impeachment only 10 of them cited and liz cheney is facing the consequence of that. They also say that there are some Democratic senators who are in the kind of borderline and contesting for the 2022 senate elections they are also silent and basically stating this may not be auguring well for their own re-election. So, everything is about politics and optics, so this is about politics and optics. There seems to be less and less kind of enthusiasm and almost a foregone conclusion there will not be a conviction, there will be an impeachment but, there will not be a conviction.
Sree Iyer: I wonder if Kevin Mccarthy mocked Biden’s call of unity before or after he made the statement about impeachment, do you know sir the timing of that?
Sridhar Chityala: Yes, the timing of that is prior not after and do you want me to go further or just I’ve given you the answer.
Sree Iyer: You have, he’s sounding like an oracle at this point of time but, we have a lot to cover. So let’s go on from that point the Democrats have called on Biden to fire the postal board for election complicity the postal board was just following instructions, however, misdirected they may have been, I don’t know why the Chief should be fired now that is just my thoughts, I don’t know, what you’re thinking about?
Sridhar Chityala: It’s very clear because the postman helped Nancy Pelosi and Joseph Biden so, therefore, so why would you want to fire them? You want to fire them because Trump was telling them hey these are empty ballots it looks like some ballots have been strewn away okay and how are you and then you have had this dropbox ballots, there seem to be potential compromises have you investigated so it looks like these people are saying when we are conducting this process to be kind of sarcastic everywhere when we are kind of going through and we have used our State Supreme Court justice and the secretary, which is the executive branch in terms of making all these different changes and being adaptive why you should play a role into this particular process? That’s what it seems to imply because otherwise, everything around that whole postal ballot stuff favoured the Democrats when you look at the anecdotal evidence presented. I know the Democrats have already had always kind of stated show me the evidence, show me the evidence and my response if I’m asked that question, which I have been, conduct the investigation evidence will come out, don’t hold back the data and without the evidence. However, without the proper assessment and investigation, you want to conduct an investigation on Capitol Hill riots you want to conduct an investigation on this that and so on why don’t you want to conduct an investigation and then present the facts. Even forensic evidence and forensic screening of any of the stuff that has kind of occurred, so, that’s my response.
Sree Iyer: So, Rand Paul took on George Stephanopoulos yesterday, we covered that and today Nikki Haley perhaps, one other presidential contestant for 2024 has now weighed in and she says a blatant media and tech platform’s bias has helped divide Americans. Now, what are the chances that Nikki Haley might throw her hat into the ring for the Presidential candidates in 2024?
Sridhar Chityala: Oh!! she’s very much a candidate, there’s no question of throwing in, she’s very much a contestant, she’s made that very clear. I’ve met her and I’ve spoken with a few times and she’s very much got ambitions and aspirations to be the President of the country and she has been a governor so, you know and she’s been UN ambassador and she’s very politically astute, so, she’s very much throwing her hat in. And I think that just to answer your question which is namely, it is the case right the media is distinctly biased whether it is right or whether it is left or right. If I go to the right publications which are very few and far you get the right side of the story, you want to go to the kind of the activism and the media stuff then, you go to the well-established names like Reuters, BBC, New York Times, Washington Post, CNBC, ABC, you’re going to any of these things so you have the left-liberal kind of media bias so, depending on you know you catering to the case and she’s right in stating that. And something similar about the tech platforms has played a biased kind of a role in advocating news, the rules remember are framed by them. The rules are not framed by the government or by any independent ombudsman, it has been framed by them. None of the rules has been subjected to a process of validation by an ombudsman, they did not appoint an ombudsman, they appointed people within their own organization to be the arbitrators, viewers.
Sree Iyer: We’ve lost the video link to Sriderji but, his audio link is continuing, so, we’ll continue on until it resources itself. Sridharji, Greg Steube of Florida wants to reform section 230 and his views are that violating first amendment rights and censoring speech like the Hunter Biden story would be a private right of action for the New York Post to go against Twitter, what is he saying that New York Post has grounds for suing Twitter?
Sridhar Chityala: Exactly, because I think that there was no recourse for them, right, there’s no recourse because article 230 gives the tech platform the immunity. So, what they’re saying is if they have data and they have presented the data and for that reason, they have been taken down then, therefore, what is the recourse available to New York Post? What he’s saying is give them but, make them accountable. If 20 people follow this rule which is to say here’s the data they should be punished and each time the punishment is disproportionate to their action, then two things will happen one their board has to wake up. Number two, because they’re public companies, the markets will probably punish just as you are seeing in the case of what’s happening to the enrolment numbers of Facebook and Twitter and so on. And see the skyrocketing numbers of signal and telegram and very soon the regional networks, so, he’s saying keep it there because we have to deal with them using the same law but, amend the law.
Sree Iyer: In the meanwhile, Biden pledges to use taxpayer dollars to invest in American businesses and jobs, how do you think he’s going to do that because he plans to raise the corporate taxes, he also plans to raise a section of the in population. What are your thoughts?
Sridhar Chityala: Well, it’s very interesting because probably you need to look at Janet Yellen’s statement and you need to look even further so Janet Yellen is stating that hey, you know, you want to have overseas business there’s no problem, we’re going to charge you 10% tax. Ireland exempts you from tax, Dubai exempts you from tax, as an example I’m just throwing so you have the tax savings where you park your capital because they give you the benefit. If you put capital resources and employment in that to service to those markets but, we’ll also charge you a 10% tax. So, they say it’s besides increasing the tax there’s also a penalty for offshore capital, one of the principles is that the offshore capital mitigates the rationale for the deployment of that capital within your domestic economy for harnessing for any other purpose including more employment. So, that’s one of the avenues they may be looking at it is very unpopular, it will make American companies uncompetitive and it’ll also make it uncompetitive for them in terms of market expansion around the world.
Sree Iyer: You know, I remember during the last days of Obama regime only one company was dissuaded from doing tax inversion which is US-based company a huge conglomerate would get acquired by a small company in Ireland and then, they would go and become an Ireland-based company just to avoid taxes and this was known for a long time, this was called tax inversion. Many fortune 500 companies even today do this thing, because they want to take advantage of the 12% corporate tax in Ireland and now with Dubai you can get 0%, what the heck, I can go and incorporate myself in Dubai. Now, this has not been stopped, there has been no law passed to stop this from happening and if the corporate rates go up it is going to drive whoever is left in the fortune 500 and the new stars from moving, it’s going to just encourage them to move from the US to other countries, you can just sit and watch. So this is a very self-defeating move, I mean they couldn’t do deadly squat in the eight years of Obama regime, so I’m curious how Biden is going to stop that from happening? We’ll wait and see, let’s not pass judgment on that. Now the next pint sir is on the stimulus, the 1.9 trillion stimulus, viewers we are still working on getting the details. Sridharji is almost there, we are going to have a very detailed discussion we are going to make sure that every penny that is going to go to adversarial nations is counted for so the American public and the world knows where that money that the US is essentially printing for itself is going? On the stimulus, many democratic senators also don’t seem to support it. Do you know why they are not supporting it?
Sridhar Chityala: Well, I think there are two reasons I think I mentioned this in the other conversation. Many of those who are in this vulnerable you know quasi red states or red, I mean California is an example, you know slowly Republicans are winning most seats in California especially in the house, so quite a few of these people are in the house and of course, there is a fine imbalance in the Senate as well, so one is people are concerned that the political consequences of such a big debt hanging on the balance sheet of the government and the consequences to their own kind of economies in terms of capital allocation. Also, mind you, the social security and health care are very big numbers which again were presented, we didn’t go through it item by item, which we will. On the expense side of the government balance sheet and beyond and the revenue side is you know growing very marginally so that’s the first part of it first part of the thing which you asked. The second thing is that, people are unable to explain to their own constituents, they can explain these 2000 Dollars, they can explain the 400 Dollars unemployment, they can potentially also explain or they can explain the child credits but when it comes to this other charge costs which are in the budget, people are kind of struggling, that’s number one. Number two is we have already spent zillions of dollars to get these vaccines and other stuff going, you have added another 100 billion dollars to that vaccines kind of budget. So people are a little bit apprehensive and especially those in the Democratic party who are little more conservative and frugal, especially on managing finances, that’s where you are seeing these objections come from.
Sree Iyer: In the meanwhile, Chuck Schumer has said that we will move on COVID stimulus if needed, without the GOP. How can they do that? They are hoping that the Vice President will cast a deciding vote?
Sridhar Chityala: That’s it,
Sree Iyer: Well, isn’t it a little early in the game to kind of go for the Hail Mary?
Sridhar Chityala: Well Mr Obama, The President wrote to all the Georgian voters, when the two runoffs took place, all of you come and vote, our progressive agenda is at stake, we cannot be defeated by a slender margin, so we have to get our agenda in. So I think Mr Obama has answered that question.
Sree Iyer: 28 vulnerable house Democrats have suddenly lost their tongue on the amnesty for illegal aliens, so even this illegal aliens is not out of love lost. It is just essentially an arithmetic number that the Democrats at least the ones in power feel that by letting in or normalizing the illegal aliens, that, out of gratitude they will vote for them. But that is not how history has turned out. Isn’t it?
Sridhar Chityala: Well, I think the progressives within the Democratic party are pushing this agenda. One is the normalization of this. Second is having the borders you remember we said that we should have borders and we should have transparent borders and we should also have objective assessment taking place rather than forced enforcement and arbitration. So they set up the head of the asylum group which we covered yesterday. This probably is going to open up the pandora’s box and floodgates creating problems. So, many of the people who are in these border states, who look at security, four or five things are pointed out by them. Drugs, paedophiles, child smugglers, illegal trafficking all these kinds of people potentially can come in. This is one of the reasons why this whole issue around illegal aliens and how you normalize and how we bring refugees in without proper documentation etc. But the progressive agenda is we need to be compassionate, we need to be compassionate, we need to be compassionate because we are a big powerful economy. So the whole notion here is the per capita is about 55,000 the highest in the world. So, therefore, let’s socialize and bring the per capita down if required to 30,000 still the United States would not be impacted. By adding more people and being generous in giving not only citizenship but giving all these kinds of allowances and benefits. I may be very facetious but that seems to be the agenda otherwise there’s no justification. When you have high unemployment, on one side you are saying you got to deal with existing people why would you be bringing these thousands and thousands of millions of people and normalize. Where are the jobs?
Sree Iyer: That’s a good question and one would argue that they are already in the United States therefore they have their jobs. But let’s talk about that later. Janet Yellen has gotten confirmation as the first woman to lead the treasury department. She also made an interesting statement and I want you to dwell on this a little bit, ‘Offshoring tax penalty would incentivize US companies to create and maintain jobs at home.’ Isn’t this what we just talked about like tax inversion? How is this different, sir?
Sridhar Chityala: You see Janet Yellen has moved from an economist and central banker, conservative but with socialist kind of a mindset and leaning, but exceptional central banker and a wonderful economist. Now she is trying to be politically aligned treasury secretary. So be it her statement on China which we call the flip-flop, be it her statement in the hearing on tax proposals, it all seems to reflect some kind of training and coaching from Mr Biden in terms of what needs to be done. It’s very integrated.
Sree Iyer: Today’s news about the approach towards China is that the United States is going to continue to be tough after Xi warns against cold war mentality in his speech at Davos. So this means that the United States will continue to impose tariffs.
Sridhar Chityala: No. There is a new word that Mr Biden has coined, ‘we will exercise strategic patience in dealing with China,’ just as Mr Obama coined, ‘we will be leading the world from behind, we will not be leading the world from the front’, when the Libyan incursions and the other stuff took place and then, of course, France and Britain took the lead and these were the famous words that we will be leading the world from behind. And similarly, when incursions and no-fly zones were imposed in the South China Sea and Pacific we sent our bombers with nothing done. So this is probably the continuation of the new mantra. It’s a pretty much a laughing matter, what is strategic patience, will apply strategic patience to deal with China. So the rhetoric has gone down and we have got this new word which simply means China we’re going to keep quiet what.
Sree Iyer: Sir, strategic patience is a word a phrase that comes to mind when you’re dealing with children who don’t really know what they are doing and you have to wait for them to mature or to face the realities of life. Anyway, that’s just me. Italian Prime Minister Conte is set to resign on Tuesday and seek a fresh mandate. The politics in Italy is something that nobody can comprehend because every year the government keeps changing, isn’t it?
Sridhar Chityala: Well, I think that there are essentially three things. One is, there’s always the corruption and polarization that happens and number two, Italy is very unique in terms of its social and tax structures when you have pressures and fissures from that. Number three, which is confronting Italy today is the lockdowns and covid implications and I think that’s not going down very well and the fourth is I think there is still a lot of rumbles and murmurs in terms of Italy’s partnership with China especially in the textile, clothing, and leather industry. So that again is not going down very well. So the rumblings as a result of that, they always seem to have a hair-thin majority, highly vulnerable to the vagaries of what happens locally and it’s very much a local kind of an issue rather than anything to do with any other kind of politics.
Sree Iyer: Indian and Chinese troops clash in Sikkim border with injuries on both sides says Indian media. Experts explain that this is linked with what is happening in the United States. Can you expand that line for us?
Sridhar Chityala: Well, what is happening is that there have been pockets of incidents taking place around the world, we’re not going to get into each one of this but all it points down to is what happened during the first eight years of Obama-Biden administration. There’s a general belief in the world that Biden is soft politically and strategically. He is more focused on domestic consumption. He is also conciliatory in terms of tolerance to activities that happen outside. So, therefore, we saw what happened during the entire South China Sea. So what indications it is giving is that they can negotiate with Biden, pre/post an event which is effectively to say commit an act and then apologize later and then you will get your reward. So you are seeing Iran flex its muscles, you see China flexing its muscles everywhere including the trade deals etc and china flexing its muscle and Xi Jinping saying somehow he has done a deal with EU which is more optics and media rather than the reality. Yesterday, we talked about coast guard being given permission to fire and effectively making another wing of the army. So you are now seeing China exercising its will in the border. Previously, President Trump stood up and Mike Pompeo used to be often in India making a statement that we are with India, we recognize the Chinese incursions. By the way, we are also seeing Chinese troop movements via our satellites hence we are signing the BECS agreement. So this statement is in the broader context that there won’t be Lloyd, they won’t be new Secretary of State, yet to be confirmed, landing in India and raising his hand. There’s not going to be President Biden making a statement on China’s mischief in India. So that’s what the pundits are saying all this is part of the broad orchestration of what is the policy to come from Biden based on what they have seen in the past because the players are all same.
Sree Iyer: Germany is also sending its naval frigate to Japan with an eye on China. So now we have you had France do it, and you have the United States do it, and now Germany. Many countries are giving their quiet support to Japan and to Taiwan in this aggression or aggressive moves being made by China in the South China Sea, isn’t it?
Sridhar Chityala: It is. I just want to make a subtle difference between Emmanuel Macron and Boris Johnson’s efforts in especially integrating their approach and strategy with Quad relative to the position that Germany has taken. Germany came to Indo-Pacific but they still have not formally endorsed the Quad strategy as yet. So Germany also probably eyes capital, also eyes trade with japan, so the story is that this particular German frigate is not only going to go to Japan but it’s also going to pass through Australia, Korea, and Taiwan and passing through some areas of South China Sea to demonstrate its support.
Sree Iyer: Let’s take a quick look at covid and what’s happening? Yesterday, California lifted the stay at home orders which means at least the one step de-escalation. We can actually move about now. The shops and restaurants are opening slowly. Let’s take a quick look at what is happening in for example vaccine area? Fauci has said that the vaccine has to take care of the variants of the covid that is now showing its head. In fact, I think there’s a new variant that has shown just in California, isn’t it?
Sridhar Chityala: Yeah, it is. I think that there are two. There’s one specific variant which they have noticed in California. There’s also one noticed in Minnesota from Brazil which seems to be very highly potent and it mutates faster. So this is on the variant side, but in general, the United States seems to be augmenting its supply of vaccines. There have been some issues around asymmetric distribution of the vaccines for which obviously you blame President Trump. Now you talked about all this stuff being opening, that must be President Trump variant virus because President Trump has gone so now we have shops open, we have restaurants open in New York, Illinois, California. There are no restrictions, we’ve removed the restrictions because the Trump virus has disappeared. So, therefore, you have seen all of these things and all of them seem to be in the liberal states. They’re not in Republican states. So, therefore, they opened up. So the Trump virus is gone, sir, so we should include the Trump virus also into the equation.
Sree Iyer: India has joined the prestigious V5 club and the members there are, United States, United Kingdom, China, and Russia, and India is the fifth member. Did India displace anybody to become the member?
Sridhar Chityala: No, India was a domestic consumer of big vaccines, so India joins the club which not only produces for its own domestic use but it also produces for global consumption. It has produced Vaccines for 15-16 countries. We had actually compiled a chart from the Statista, which published, which shows India as the world’s second-largest producers of vaccines, 3.13 billion units. I think the United States is the largest with about 6.4 billion or 5.4, somewhere 6 billion units, I don’t remember the numbers exactly, and then you have Britain to be the third and then, of course, you have Russia and China. These are the V5 club.
Sree Iyer: Let’s take a quick look at global markets. We are 30 minutes into our program. The main thing for me is, with the Keystone XL pipe closing Canada is going to have a record crude exports to the US, isn’t it?
Sridhar Chityala: Yes, it is. The reason is that we were on net surplus, we were an exporter. Remember, we did an export deal with India of 38 million barrels of oil was supplied, that made up pretty close to about 40-50 billion dollars in economic value pushed the US to be India’s largest trading partner. So what’s going to happen to that we don’t know. But the Keystone XL deal has been disliked. There was an interview yesterday in the press with some of the people. The tribespeople in that region and people were critiquing as to who are these people to make decisions on our behalf and we know how to protect our heritage land etc, So I think it’s a bad decision and this I think we have talked enough about Keystone XL.
Sree Iyer: Sometimes you have to play it out for our audiences, sir. So if this stops then what happens is, the United States might not be able to be a net exporter of crude and that in turn means that India would again be forced to look at much higher price options from other countries to try and fulfil its needs for crude. Because remember that India is now coming back out of the covid. They seem to be weathering that storm rather well and does this one step here mean that crude prices will probably shoot up?
Sridhar Chityala: Well, I think it’s a demand-supply issue. India is welcomed by many oil-exporting nations in the world, so I don’t think it’s a price, but the price would be an impediment. Remember one other important data point, United States was also the strategic reserve for India, so the United States was offering Louisiana, Gulf that part of the seashore as potentially the strategic reserve platform, in case, the United States needed India to draw. They also had given special pricing by which many of the ships which naturally make its way into those waters both as a strategic deterrence but as well as the energy supplier was to be leveraged quite extensively as part of what we call trade security and commerce strategy which was the whole basis for Quad. But that has seen a tremendous impetus be it on the domestic consumption or for the defence. So having a separate institution and capitalizing it and drawing that capital should not mitigate the allocation of capital to other segments of the business. So, therefore, infrastructure has been given due importance. So in my view, they should also start another vertically focused institution or a bank in India. Here we call it as SBA small business administration or small scale businesses or Small and Medium Enterprises SME. I think in India they call it as MSME – Micro Small Medium Enterprises. So they should establish a bank because that segment of the industry again, it happens in the United States as well, seems to be the last in terms of getting the credit when everything is exhausted by the big boys. So I would say that’s something that should be coming.
Sree Iyer: We regret the technical difficulties we just experienced but we are back on now. Sridharji we are done with today’s segment. We’ll be back tomorrow with more news. Please don’t forget to subscribe to our channel and hopefully, the quality of our transmission improves tomorrow. We regret all the technical errors. Namaskar and thank you very much.
Sridhar Chityala: Thank you. We would like to see crossing the 125,000 number crossing soon before we get to 250.
Sree Iyer: Yes. Thank you, sir.
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