The President's Daily Brief - September 9th, 2022. A Major US Railroad Strike is Near. US and Europe Buying Russian Aluminum. Putin Might Walk Away From Wheat Deal.

Episode Date: September 9, 2022

It’s September 9th. You’re listening to the President’s Daily Brief. Your morning intel starts now. ------ Today we are going to do a third Big Five Update this week. And I think you’re about to see why. First, America has seven days to avert a major economic crisis, with railroad workers set to strike if a deal doesn’t come through.  Second, some illegal goods are getting into America from China. We’ll discuss what those are and why. Third, the Battle for the South Pacific continues, with an alarming development out of the Solomon Islands.  Fourth, Europe and the United States are buying more Russian aluminum this year than last — this is an important brief. Finally, Russia’s Vladimir Putin says he might walk away from the wheat deal he made with Ukraine. We’ll talk about why. Plus, one more thing before I let you go. A reflection about the passing of Queen Elizabeth, and it’s one of hope. ------ 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

It's September 9th. 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. Ladies and gentlemen, this morning I'm going to do something that I've never done. And that's because we have some very important news to discuss in so many places that it warrants breaking my own rules. Today we are going to do a third Big Five update of the week. And I think you're about to see why. First, America has seven days to avert a major economic crisis, with railroad workers set to strike if a deal doesn't come through. Second, some illegal goods are getting into America from China. We'll discuss what those are and why. Third, the battle for the South Pacific continues with an alarming development out of the Solomon Islands. Fourth, Europe and the United States are buying more Russian aluminum this year than last.

And that is a very important brief. Finally, Russia's Vladimir Putin says he might walk away from the wheat deal that he made with Ukraine. We're going to talk about why. Plus, one more thing before I let you go, a reflection about the passing of Queen Elizabeth, and it's one of hope. But first, let's get to our Big Five update. One week from today at midnight, the freight that moves on America's railroad tracks may grind to a halt. And if that happens, our economy will be thrown into a profound crisis. Before I explain why, let's talk about the stakes here.

We are looking at a potential loss of $2 billion a day with impacts in every economic sector. We are talking retail product shortages, wheat harvests that can't be delivered, widespread manufacturing shutdowns, and a cascade of job losses. That's according to the Association of American Railroads. So here's what's happening. For the last two years, there had been negotiations between the unions' representatives, 15,000 workers and the railroad companies that they work for, 30 companies and all, including big names like Union Pacific and BNSF and CSX. Well, for two years, the unions and companies have

not been able to strike a deal. So Joe Biden stepped in and appointed a presidential emergency board that was back in July, all to help solve the impasse. The board came up with a plan, calling for a 24% raise and thousands and additional bonuses over a five-year contract. But of the 13 unions involved, only five agreed to that deal. The problem is that the current contract expires next Friday, just after midnight. And eight of the unions are not on board, including the nation's largest, which is the sheet metal, air, rail, and transportation workers. The unions have said, in fact, last week, that the presidential emergency board's deal

is a vast improvement over the railroad company's previous proposals, but it just doesn't go far enough. So we have one week to hope that these folks hash out a deal, or one of two things happens. Workers will strike, or Congress can come in and impose the Biden deal all under the Railroad Labor Act. Now, some workers could still strike, illegal as it would be,

but if so, all bets would be off. And if you're thinking that we could swap out the trains with some long-haul trucks, well, that wouldn't work. Diverting shipments to over-the-road options would require an additional 467,000 long-haul trucks per day. And we do not have that capacity. Again, that's according to the Association of American Railroads. One final note here. If there is a strike, you can imagine not only the economic fallout, but the political damage to Joe Biden and the Democrats right before the midterm elections. So that's a lot of the economic fallout. So that's why political analysts are watching this development very closely as a strike would almost certainly crush Democrat chances of hanging on to the Senate and the House.

So no matter what, I will be keeping a very close eye on this story and I will keep you posted. Second, on Labor Day this week, we talked about the remote region of Xinjiang. That's in China. It is a land full of one particular ethnic group, the Uyghurs. And as you'll recall, they are being held in slave labor camps, well over a million of them. forced to pick cotton, work in textile mills, and manufacture solar panels for the world's renewable marketplace. Well, this morning, we have an update, and it is a curious one.

But to properly understand it, we have to remember that Congress previously passed a bill called the Weeger Forced Labor Prevention Act, and it was signed by Joe Biden back in December. Well, the bill was supposed to block goods coming from this region into America, and it was supposed to start in June. But we're learning something very curious. In July, which was the first full month after the U.S. Customs and Border Protection was supposed to inspect and block these goods, we actually saw an increase of these items exported to the United States. In fact, through their highest levels in two years.

The data show continued export of tens of thousands of shirts and pants, jackets, and dresses, as well as millions of pairs of socks. And I'm sorry to say, a top export was also crucial. Christmas decorations. U.S. Customs and Border Protection declined to comment on the official exact numbers out of China. But according to Bloomberg and Reuters and the Wall Street Journal, industry observers were really taken aback by this development.

They did say that it's unclear how many of these goods would ultimately reach U.S. territory, but yes, in fact, the goods have certainly been shipped. But what we know is that some of these goods are already on store shelves. So consider a product that I haven't mentioned. It's called a jujubi date. It's an Asian fruit that's been produced and packaged using slave labor. Congress knows this. The Biden administration knows this.

And it shouldn't be here. But congressional investigators recently found that grocery stores around the country, including in Washington, D.C., are selling these dates. That's according to a letter sent by 27 Republican lawmakers earlier this week, demanding answers from the Treasury Department and Customs and Border Protection. about how these goods are making their way to American shelves. I'll keep you posted, but for now, you might want to take a second look at those tags on your new clothes, and I am very sorry to say, on your new Christmas decorations too.

Third and finally, before we take a quick break, an update on the battle for the South Pacific, the fight, of course, between China and the United States over influence and supremacy in that strategic Southern Ocean. Unfortunately, I've got bad news. The Solomon Islands voted to change the Constitution and delay next year's election. It was a bill pushed by the pro-China Prime Minister Sogavari. He said that he had to pass this bill, and very quickly, in fact this week, for fear that too much debate could actually start riots.

And so his bill passed 37 to 10. The bill was passed so quickly that two lawmakers were actually unable to get there in time to vote. So why did he delay the election? Well, the prime minister said that it would simply be too hard and expensive to conduct the election. Because next year, he explained, the Solomons are hosting an athletic event called the Pacific Games. And hosting that event while also trying to do the election was simply too costly and very, very difficult to do. Again, that's all according to the prime minister. But here's something interesting.

Australia actually said that they would help pay for the election, deposit about 50 million, or so in the country's central bank. But Prime Minister Sogavari said that that would be, quote, foreign interference, end quote. Which is very fascinating for him to say, because as you might recall, the prime minister has no problem accepting cash from China. Beijing has given him a multi-million dollar stipend that he can spend on whatever he would like. Last year, he gave $2.5 million to 39 of the 50 members in parliament just before and right

after they held a vote of no confidence in his leadership, which, surprise, surprise, he survived. So did he cut some more checks this week to pass the bill and amend the Constitution, all to toss out the elections? Well, his critics are suggesting yes, although so far no evidence. All in all, folks, we are losing the Solomon Islands to China. There is just no other way to say that. And with that, we are going to take a quick break and perhaps a much needed breather after those three intense updates. But when we come back, I've got two more updates for you on the War of Attrition and the Wheat Wars.

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UN must be 21 to enter. Welcome back to the PDB and our Big Five update. I've got two more critical pieces of news for you this morning. First, we have an update on the War of Attrition, which of course is the battle between Russia, Ukraine, and the West. And I must say, folks, listen up on this one because it is one of the more remarkable briefs that I have ever given you. And it comes in three connected parts. First, from March through June of this year, the European Union and the United States have both increased their purchases of industrial metals from Russia, specifically aluminum.

So following Russia's invasion of Ukraine, Europe became the biggest importer of Russian unwrought aluminum, pulling in 78,000 tons a month, which was up 13% as compared to last year. At the same time, the United States also increased its purchases of Russian aluminum, averaging 23,000 tons a month, which was up 21% from the same period last year. Now, that data is according to analysis done by Reuters and the United Nations. So, in other words, America and Europe are both increasing our trade with Russia and funneling cash to our opponent in Ukraine. All right, that's the first part. Here's the second.

Europe's aluminum industry is collapsing or on the verge of collapsing. And that's because they can't afford the cost of their electricity bills. So here's what we know. Let's start with Slovakia. There is a plant in the country of Slovakia operated by Norsk Hydro. They are shutting down this month because they can't afford their electricity bill, a bill driven to astronomical heights because of the cost of natural gas. And as you'll recall, they used to get natural gas from.

Russia, but no more because of the war in Ukraine. All right, moving on from Slovakia to Germany. The aluminum company, Speria, will cut production at its smelter by 50% until further notice, citing electricity prices. From Germany, we go to Norway, where Alcoa Corporation said that it would cut its output by a third at its aluminum smelter there. From Norway, we go to France, where Europe's largest aluminum smelter, aluminum, Dunker, aluminum Dunkirk Industries said it's cutting its production by at least 20%.

And folks, it's not just aluminum. We are seeing this exact same thing in zinc smelters, glass manufacturers, the fertilizer industry, all scaling back or shutting down and all because of electricity prices. But just to focus on aluminum once more, output has dropped to levels not seen since the 1970s on that one metal. So here's what the trade group European aluminum said to Bloomberg News. Quote, this is a genuine existential crisis. We need to really sort this out and quite quickly. Otherwise, there will be nothing left to fix. End quote. Okay, so to summarize our two parts so far, Europe and the United States are buying Russian aluminum at increasing levels, all while Europe's aluminum plants are collapsing and shutting down.

Here comes the third part. On Wednesday, the German economy minister Robert Habek was asked whether he expected a wave of bankruptcies of companies throughout the wintertime, especially heavy industries like aluminum, all because companies can't pay their energy bills. The economy minister of Germany, Mr. Hebeck, said, no, I don't think there will be bankruptcies. Instead, I can imagine that certain industries will simply stop producing for a time. My goodness, as my friends in the aluminum industry will tell you, when you shut down an aluminum plant, you almost never restart them back up, ever, because it takes tens of millions of dollars in many months, sometimes a few years, and that's backbreaking work, all to get those plants

functional again. And so companies just mothball them instead. Plus, there's already been a 26% rise in corporate bankruptcies in Germany just last month. That's according to the IWH Economic Institute, which predicts more insolvencies this fall. Finally, the German trade group for small and medium-sized enterprises, the group called DMB, well, they say that its members are struggling to get bank loans to cover their power bills because banks are unwilling to loan them the money without a government guarantee. So ladies and gentlemen, there is your three-part mini-brief on how things are going in the war of attrition. First, Europe and the U.S. are increasing their purchase of Russian products, especially and including aluminum. Second, Europe heavy industry, especially

aluminum plants, are shutting down or on the verge of collapse. And third, the economy minister for Europe's most important economy, Germany, he's not worried about it. So while I defer to you as always, I must say, I never thought I'd be alive to see Europe and the United States, funding the industries of their enemies, aluminum and Russia in this case, while watching its own industries crumble, all while pretending that none of it's true. It's just remarkable. Finally, an update on the wheat wars. As listeners know, of course, we are talking about getting Ukraine's wheat out to market, wheat that has been trapped inside the country due to war. But wonderfully, over two months ago now, Ukraine, Russia, Turkey, and the United Nations signed a deal

that allowed wheat to be exported to market. And it's been working pretty well. Exports are up substantially. But according to Russia's president Vladimir Putin, the wheat isn't getting where it's supposed to go, namely to poor low-income countries. And so he's threatening to blow up the entire deal. On Wednesday, Putin made these allegations

and accused Europe of acting like, quote, colonial powers, end quote. So he went on to claim that only 3% of the grain being exported from Ukraine is going to develop countries while the majority he said is actually going to Europe. So he continued by saying, quote, I will certainly consult on this subject with the president of Turkey, Mr. Erdogan, because it was him and me who worked out a mechanism for the export of Ukrainian grain, end quote.

Well, shortly thereafter, Turkey's president Erdogan said, yeah, he's right. Okay, let me give you the quote. The grain that comes as a part of this grain deal, unfortunately goes to rich countries not to poor countries. Okay, as always, what does the data say? Are these two gentlemen right? Well, mostly they're wrong, but a little bit they're right. The United Nations itself has said that under this Black Sea grain initiative, roughly 30% of grains and other food stuff have made it to low and lower middle income countries like Sudan, Yemen, Kenya, and Somalia. So Putin said it's 3%. That's not right. It's 30%. But

20% has in fact gone to richer countries in Europe, including Spain, Germany, and the Netherlands. So what could come of this nasty little development? Unfortunately, Putin could walk away, although Ukraine is insisting that they cannot, at least according to the agreement, although I'm not really sure that Putin cares about that agreement. Still, the deal has to be renewed every 120 days by all parties. So it expires in late November regardless. Based on this news, we could be in for a very bumpy three months until it does. Either way, I'll keep you posted.

And that, folks, is your big five update for this Friday morning. And I trust that you now see why we had our third Big Five update for the week. We had far too many critical pieces of news to simply let them sit through the weekend. The president would have deserved to note this information, and you did two. And with that, I've got one more thing before I let you go, ending the show on what I think is a pretty hopeful note. We'll be right back.

Welcome back to the PDB, ladies and gentlemen. I've got one more thing before I let you go this morning. A number of you wrote in asking what I thought about the death of Queen Elizabeth, the longest ruling British monarch. Well, I'll tell you that when I saw that she was born in 1926, it made me pause. she was a part of the greatest generation. That's a label given by scholars to a group of people generally born between 1900 and 1930, give or take a couple years.

That generation was so deeply shaped by the Great Depression and World War II. And what a generation of giants it was. Bob Hope, Jack Kennedy, Walt Disney, Jackie Robinson, John Wayne, Jesse Owens, Frank Sinatra, Ronald Reagan. The list goes on and on. That list, it also includes another woman who was also really incredible. Her name was Beverly Wright. She was my grandmother, and she passed last November. And what United Queen Elizabeth and Beverly Wright, and so many of that generation, is that they were tough. They could endure struggle. They understood sacrifice, and I'll tell you what, both very much loved their countries with no apology. But with their passing, we're losing not just

the people, but the wisdom and their tenacity and their grace. Now, to be clear, they were somehow born uniquely wise or tenacious or graceful. They were brought up to be like that, to live like that, and to expect that of themselves and others. And that is what we're losing. But rather than be depressed by that, I take it as a challenge. From them, from that generation, to me and to us. The torch of leadership is being passed. The question is, will we take it and thrive? Or will we drop that torch and run?

And I'm not talking about the leadership of whoever's in the White House necessarily. I really mean in our own homes, in our own house. houses, to be the leaders and the examples to our own families. Because if we can do that, then the good leadership and the wisdom and the tenacity and the grace that comes from that, well, that will flow right out of our homes and into our workplaces, our communities, our states, and eventually the country. So I remember Queen Elizabeth and Beverly Wright this morning for that, for their leadership, their wisdom, their tenacity, and their grace.

And I thank them for all that they have given us. And I accept the challenge of carrying that torch for the generation to come, not just in America, but in my own home. And I hope you feel the same way. And that, ladies and gentlemen, concludes your morning brief. As always, we close out this 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.