The President's Daily Brief - November 21st, 2022. American Banks are Still Operating in Russia, by Order of... The US Government?

Episode Date: November 21, 2022

It’s November 21st. You’re listening to the President’s Daily Brief. Your morning intel starts now. ------ A good day to you, ladies and gentlemen. I’ve got five briefs for you this morning that are shaping America — and the world. First, an update on the War in Ukraine. Russia has two friends helping it out this morning. The first is the country of Iran – no surprise there. The second is the United States. That is a surprise. We’ll talk about that. Second, North Korea fired off a powerful missile late last week, one that can hit every state in our union. I’ll give you the details. Third, an update on the potential strike of America’s rail-road workers. I’ll refresh our memories on that story and tell you what to expect today. Fourth, some of Europe’s businesses are relocating to the United States, all because of our cheap, reliable energy. But recent events in Oregon and California suggest that that might not last much longer.  Finally, let’s end on a good note today, and let’s talk about a favorite subject of mine: coffee, especially from Brazil. ------ Please remember to subscribe if you enjoyed this episode of the President's Daily Brief. Email: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

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You're listening to the President's Daily Brief. I'm your host and former CIA officer Brian Dean Wright. Your morning intel starts now. A good day to you, ladies and gentlemen. I've got five briefs for you this morning that are shaping America and the world. First, an update on the war in Ukraine. Russia has two friends helping it out this morning. The first is the country of Iran.

No big surprise there. The second, though, is the United States. And that is a surprise. We'll talk about that. Second, North Korea fired off a powerful missile late last week, one that can hit every state in our union. I'll give you the details. Third, an update on the potential strike of America's railroad workers.

I'll refresh our memories on that story and tell you what to expect starting today. Fourth, some of Europe's businesses are relocating to the United States, all because of our cheap, reliable energy. But recent events in Oregon and California suggest that that might not last much longer. Finally, let's end on a good note today and let's talk about a favorite subject of mine, coffee, especially from Brazil. But before we get to that, we got to get started with this. An update this morning in Ukraine as Western back forces battle against Moscow.

We learned on Friday that Russia has entered into a new deal with Iran. That Middle Eastern country will now provide the designs and key manufacturing components for drones. also that Russia can produce what's called the Iran Shahid 13 drone, but on their own soil. Now, that is a change from their last deal, where Iran would manufacture the drones and then ship them either directly to Russian forces in Ukraine or to Russia itself. So why the change? Well, it's probably because it's more secure. Russia can manufacture and then ship those drones directly to Ukraine all via rail, rather than Iran sending them via more risky means like flights or ships.

So, folks, switching to analysis here in exactly what this means, the reason that we ought to care about this latest development is that it demonstrates that Russia still has friends all around the world, and those friends have cash and weapons that will help keep Moscow in the fight. But in turn, it means that you and other American taxpayers are going to have to stay in the fight longer, all to provide Ukraine, our military, and economic aid. Now, the other reason that we ought to care about this story is that these drones have had a devastating

effect on Ukraine's energy sector and the Ukrainian people. So to the point, about half of Ukraine's power capacity has been destroyed, at least according to reasonable assessments on the ground. And it's been in mostly major cities where most of the population lives, like in the capital of Kiev. In fact, the damage has been so immense that Ukraine's president, Volonimir Zelensky, has told both American and European officials that he's running out of replacement parts to bring heat and power back online. And without replacements or the money to buy them, he has said that his country could experience total blackout conditions in the next couple of weeks, right as temperatures in Ukraine drop into the 20s and 30s. And with that, let's actually now pivot to our second Russia-Ukraine update this morning. And it has

to do with American banks supporting Russia's war effort all at the request of the Biden administration. So here's that story with some quick context first. So for months now, U.S. officials have demanded that American and Western businesses drop their operations in Russia in order to cripple Moscow's economy. So those sanctions have had a relatively modest effect. Last week, for instance, Russia's central bank said that the economy will shrink about 4%, at least in this last quarter, and then another 4% heading forward. Although the actual number is probably high. or maybe closer to 8 to 12%. Still, the economic decline means that Russia is hurting,

except some U.S. banks are still operating inside of Russia, despite the sanctions. So at a congressional hearing a couple of months ago, representatives were grilling U.S. bank executives over these continued operations. One congressman from California expressed his outrage that these banking giants, specifically J.P. Morgan Chase, was still servicing accounts and, Moscow to include the Russian energy giant gas prom. To which the CEO of J.P. Morgan Chase said, quote, we are following the instructions of the American government as they asked us to do, end quote.

The congressman was quite surprised, quickly cut him off and then moved on. This humorous exchange, by the way, was captured in a recent report by Bloomberg News. And if you're wondering why the Biden administration is actually encouraging banks to remain active in Russia? Well, here's a reason. So Russian companies like gas prom and their fertilizer company especially called Foss Agro provide a pretty substantial amount of key goods for the world economy. And without them to include Russian oil, gas, fertilizer, and things like aluminum, well, prices globally would probably jump and that would put upward pressure on inflation and pocketbooks everywhere. And so that leaves us with a rather strange situation.

America and Europe are sanctioning Russia on one hand, trying to cut off cash from Moscow's war machine, but on the other hand, we're actually asking U.S. banks to keep operations going in Russia, which ensures that Moscow has enough cash to keep fighting. And if I may, from an analysis perspective and opinion, from my optic, that's a little bit like putting your foot on the brake and on the gas pedal.

But nevertheless, here we are. And I'll let you decide if that, awkward sort of give and take is either smart policy or not so much. And with that, let's now pivot to our second brief this morning, North Korea. As we all might remember, North Korea is a relatively small nation between China and Japan with a very big hatred for America. They've also got some pretty big missiles with nuclear warheads that America's intelligence community has assumed could hit every state in the country, but they didn't know for sure. Well, on Friday, we got a clearer picture of one of those missiles and its range, because the North Koreans successfully

fired one of those things called the Hwasong 17. And unfortunately, that's pretty impressive. It sits on an 11-axle vehicle, a real monster truck of sorts called a tell vehicle, and that allows the missile to be roadworthy and be moved, well, virtually anywhere. And in turn, that makes it tough to find and destroy during a time of war. Now, the missile itself can fly a little over 9,000 miles, which puts it in range of virtually every single city and state in America. And here's the real bad news. It's rumored that this missile can carry multiple nuclear warheads and decoys. It can evade missile defense systems. Folks, all in all, this thing is a nuclear beast. I highlight this story for you for two reasons. First, I would recommend that we all keep a

very watchful eye on North Korea. This test firing, underlines why it's not just say Hawaii or the West Coast of America that might get hit. It's all of us in every state. And second, North Korea is the most sanctioned nation in the world. Virtually every economic industry and every senior leader in that strange country has been on a global naughty list or a sanction list for decades. And yet, despite those crushing sanctions, North Korea has built a nuclear weapons program that works.

and we should keep that in mind when we are thinking about our economic sanctions against not just the North Koreans, but also the Russians. Because if North Korea can escape the worst of the world sanctions, well then not only are those sanctions not working there, they probably won't work against the Russians either. With that, ladies and gentlemen, let's take a quick break. And when we come back, three more critical pieces of news for you all on America's domestic affairs. We'll be right back.

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Your music deserves Bose. Find your perfect product at Bose.com. Welcome back to the PDB. I've got three more critical pieces of news for you this morning. first up today will be an important day for America's economy because in the next couple of hours we will probably learn if members of the two largest railroad unions either voted to accept or turn down a new contract and if they turned it down that could lead to a nationwide strike with some pretty profound effects on the economy and your pocketbook to refresh our memories on this railroad

companies and workers have been in a years long disagreement over a new contract now some of it was over money, but mostly it was over the time and attendance policies. In other words, when and how often workers could request time off, especially for medical appointments. Now, the two sides were unable to come to an agreement this summer, so the Biden administration stepped in with a proposal a couple months back. Now, that was accepted by the union representatives, but not the union workers themselves. They had to vote on it. So of the 12 unions involved, seven have accepted the deal, though honestly, not with much happiness. Meanwhile, three other unions have rejected it outright,

although they have gone back to the negotiating table. That leaves the last two unions, which will be reporting today. They are the biggest unions involved, actually, give or take half of all the employees involved, representing the engineers and conductors. And if they turn down Biden's proposal, well, they'll all go back to the negotiating table to try once again. Well, that'll happen probably over the next two to three weeks.

and if they fail at that point, well, that could trigger a nationwide strike right before Christmas. And if that were to occur, it would have a devastating impact on the economy. And that's because about 40% of the nation's long-distance cargo travels by rail. And all those products end up in industries like manufacturing and energy and agriculture. In terms of dollar figures, that trade accounts for about $2 billion a day. And while it's true that in the event of a strike, some of those goods could get moved via trucks on our highways, there just simply aren't enough trucks or drivers to fully replace rail. So the pain would still be very widespread and immediate.

Lastly, and for what it's worth, the last strike was actually back in 1991, and it lasted for 24 hours before then President Bush signed legislation forcing workers back to their jobs, which could happen again. Either way, I will keep you posted, but you might want to watch for those union vote results today. It's a pretty big deal. Moving on to our next brief this morning, some good economic news in the midst of that potential railroad strike. America is becoming home for a growing number of European businesses, especially manufacturers,

mostly because America has cheap, reliable energy. As reported by the Wall Street Journal last week, America has welcomed $74 billion in something called foreign direct investment, and that's just this year. Again, foreign direct investment or FDI, that's foreign companies that are investing here in America. And of the 74 billion, well, most of those investors were companies fleeing China with many of them headquartered in Europe. And that actually captures something that I've briefed you on previously. It's the idea of reshoring or bringing companies and industries of all kinds back to America from China. But it does raise this, obvious question. Why aren't these European companies going back to Europe? Why are they choosing America?

Well, according to the Wall Street Journal, it's a combination of America's cheap energy, which Europe does not have much of these days, all because of the war in Ukraine, of course. Plus, America has a high-skilled labor force. So while all of this is good news that America is so attractive to global businesses because of our abundant cheap energy and awesome people, well, we kind of had to temper our enthusiasm a bit because of news like this out of Oregon and California. Late last week, the U.S. government authorized the largest removal of hydroelectric dams on the Klamath River between Oregon and California. Four dams in total will be torn out. Now, to understand why, Native American tribes have been demanding the removal of these dams for years,

all in order to save or increase the number of Chinook and Co-O-O-W. salmon. Now, those are endangered species. And that is why, on Thursday, the U.S. Federal Energy Regulatory Commission finally agreed with these native tribes issuing the order of surrendering the dam licenses into proving their removal. Now, as you can probably guess, removing the dams will have a number of costs to include to farmers and ranchers for their irrigation needs. Also, there will be costs to consumers and industry, because the dams provide enough power for 70,000 homes. That's according to Reuters News Service. So that means that some new energy capacity will have to come from somewhere. Finally, there's the cost of physically removing the structures.

It's going to take hundreds of millions of dollars to do, in fact. And that cost will actually be passed on to the states of California and Oregon, plus the dam owner, which is Pacific Corps, who said that they're actually going to be passing along the costs to, you guessed it, their customers. So let me pivot to analysis and opinion here. Folks, all energy comes with a cost. Damns can and do leave an environmental impact, like on fish. But if we are removing these dams at the same time that we're shutting down, say, natural gas, nuclear and coal plants, again, all because of the alleged threat from climate change, well, that leaves us with what? Intermittent power, which of course is solar and wind. And if we do this, if we do this, if we

replace reliable hydro power with unreliable things like solar and wind, if we shut down traditional energy for what I call dirty green energy, then we're going to end up going down the exact same energy path as Europe did 20 years ago, which is ironic because that energy policy in Europe is now driving European businesses here when it failed so badly there. And that just doesn't seem very smart, at least not to me. But as always, I defer to you. And with that, ladies and gentlemen, we conclude your morning brief. But I've got one more thing before I let you go. We'll be right back.

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First, a correction. Last week I reported on how a high-intensity aerobic exercise program like sprinting can actually help reduce metastatic cancer. It was from a study out of the University of Tel Aviv, Israel. And while that study remains accurate, I gave you all one piece of, well, fake news. I referred to one of the lead researchers, Dr. Carmet Levy, as a man. However, Dr. Levy is decidedly a woman, and a PDB listener picked up on that fact, and indeed, they were right, I screwed up. So, to Dr. Levy and all the ladies out there doing great work, my apologies,

and thank you. All right, now let's get to the second piece that I want to talk to you. about some really good news, especially for my coffee lovers and listeners in Brazil. So back in August, I shared with you all about how weather down there has not been kind to them or their coffee crops. Over the past year, it's been fairly dry and fairly hot when the coffee plants needed it cool and wet. Well, I am happy to report that Mother Nature got the message, maybe got a shot of espresso somehow, and she is finally cooperating. We've got some nice weather in Brazil, plenty of moisture, normal temperatures, and some very happy coffee farmers. That means that the coffee crop is looking pretty darn good.

Prices had been at an 11-year high because of the poor conditions, but no longer they've come down about 15 to 20%. So, fingers crossed, of course, that the savings will eventually drip down to consumers like you and I. By the way, do you see what I did there? Drip down, drip coffee? Okay, terrible dad joke. I'll just let myself out. And that, ladies and gentlemen, concludes your morning brief.

As always, we close out the show reminding each other of why we are here, talking about our country and our world. It's the creed of every good spy and every smart American. It's from John, Chapter 8, verse 32. And you shall know the truth. And the truth shall make you free.

Good day.