International
Budget 2023: why the UK’s fiscal watchdog does not share the chancellor’s optimism
There can be no quick fix for deeply rooted economic problems.
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UK chancellor Jeremy Hunt confidently described his first budget of 2023 as a “budget for growth”. He went on to offer a fairly upbeat assessment of both economic performance and future prospects, arguing: “The declinists are wrong and the optimists are right.”
Hunt’s aim to provide a shot in the arm for UK productivity is largely built around plans to increase labour force participation, notably through financial support for childcare, encouraging business investment, and by creating 12 investment zones in struggling towns and cities.
But his optimistic assessment of the UK’s growth prospects seems rather at odds with most expert evaluations. The International Monetary Fund, for example, forecasts that the UK will be the worst performing of the major economies in 2023.
The Office for Budget Responsibility (OBR), Britain’s independent fiscal watchdog, is another key voice on UK economic policy. Established in 2010 to ensure the observance of public spending rules, and to provide independent evaluation and oversight, it exemplifies the technocratic economic governance that has become a common feature in the west.
Its recent economic assessment does offer some positives. UK economic performance is already better than the OBR expected as recently as November 2022. It seems the UK will likely avoid a technical recession (two-quarters of falling GDP), and inflation is forecast to fall from 11% to 3% by the end of 2023.
Overall though, the OBR presents a far less rosy picture of Britain’s growth prospects and the state of its public finances than the chancellor.
Its March 2023 report consistently underlines how “persistent supply-side challenges” such as low investment, labour market inactivity, weak skills and training infrastructure, and sluggish productivity “continue to weigh on future growth prospects”.
It also focuses on very high levels of public debt – currently close to 100% of GDP – and warns: “Jeremy Hunt today needs to work a lot harder than his predecessors just to keep debt from rising in normal times, and normal times have been hard to come by in recent years.”
As tough times for most households continue, the OBR highlights its expectation that living standards will fall by 5.7% until 2024. This dramatic reduction is the largest two-year fall since records began in the mid 1950s. Nor does the OBR see any end in sight, with living standards in 2027-28 still predicted to be lower than pre-pandemic levels.
Meanwhile, the UK’s tax burden is set to reach a a post-war high of 37.7% of GDP, with public spending as a proportion of GDP expected to settle at 43.4% – its highest sustained level since the 1970s.
Put simply, the UK has historically high tax rates and public spending levels, at the same time as living standards are falling. This is unprecedented.
While OBR forecasts – like all economic predictions – will never be wholly accurate, the OBR has gained a strong reputation for judicious, evidence-based evaluation, and for holding government fiscal policies to account.
Growth climate
Beyond the cost of living crisis, the OBR notes a threefold crisis of growth within British capitalism. This speaks to persistent structural weaknesses within the UK economy – some dating back to before the global financial crisis. The OBR’s is a very different story from the chancellor’s talking up of growth prospects.
First, it highlights problems with labour force participation and high levels of inactivity, especially among older workers and those with health problems. These inactivity levels rose sharply with the pandemic.
Second, the OBR notes the “stagnation in business investment” since 2016. Investment uncertainty, it says, has been ramped up by Brexit, and then compounded by COVID, higher energy prices and higher interest rates.
Third, the OBR consistently underlines how UK productivity has grown at only half the rate of what it was before the global financial crisis of 2008. UK productivity performance is notably weak by international standards.
To be fair to him, the chancellor’s latest plan does at least seek to address some of these deep-seated structural problems. Indeed, the OBR has now raised its assessment of potential output (by a modest 0.5% of GDP) by the end of its forecast, partly due to Hunt’s measures to boost labour supply.
But the modesty of this increase, set against the scale of the structural problems, means these measures are unlikely to resolve Britain’s growth crisis. The OBR sees the UK economy’s medium-term potential growth rate as a very meagre 1.75% of GDP.
The overall OBR view is of ongoing “weak underlying momentum” and “subdued” prospects. But those descriptions wouldn’t have sounded as uplifting or politically optimistic as a “budget for growth”.
Ben M Clift has received funding from the Leverhulme Trust.
recession pandemic gdp interest rates uk
International
Escobar: Russia-China Partnership Defangs US Empire
Escobar: Russia-China Partnership Defangs US Empire
Authored by Pepe Escobar,
China’s State Council has released a crucial policy paper…
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China’s State Council has released a crucial policy paper titled 'A Global Community of Shared Future: China’s Proposals and Actions' that should be read as a detailed, comprehensive road map for a peaceful, multipolar future.
That is if the hegemon - of course faithful to its configuration as War Inc. - does not drag the world into the abyss of a hybrid-turned-hot war with incandescent consequences.
In sync with the ever-evolving Russia-China strategic partnership, the white paper notes how “President Xi Jinping first raised the vision of a global community of shared future when addressing the Moscow State Institute of International Relations in 2013.”
That was ten years ago, when the New Silk Roads – or Belt and Road Initiative (BRI) - was launched: that became the overarching foreign policy concept of the Xi era. The Belt and Road Forum next month in Beijing will celebrate the 10th anniversary of BRI, and relaunch a series of BRI projects.
“Community of Shared Future” is a concept virtually ignored across the collective West – and in several cases lost in translation across the East. The white paper’s ambition is to introduce “the theoretical base, practice and development of a global community of shared future.”
The five key points include building partnerships “in which countries treat each other as equals”; a fair and just security environment; “inclusive development”; inter-civilization exchanges; and “an ecosystem that puts Mother Nature and green development first," as Xi detailed at the 2015 UN General Assembly.
The white paper forcefully debunks the “Thucydides Trap” fallacy: “There is no iron law that dictates that a rising power will inevitably seek hegemony. This assumption represents typical hegemonic thinking and is grounded in memories of catastrophic wars between hegemonic powers in the past.”
While criticizing the “zero-sum game” to which “certain countries” still cling to, China completely aligns with the Global South/global majority, as in “the common interests of all peoples around the world. When the world thrives, China thrives, and vice versa.”
Well, that’s not exactly the “rules-based international order” in play.
It’s All About Harmony
When it comes to building a new system of international relations, China prioritizes “extensive consultation” among equals and “the principle of sovereign equality” that “runs through the UN Charter.” History and realpolitik, though, dictate that some countries are more equal than others.
This white paper comes from the political leadership of a civilization-state. Thus it naturally promotes the “increase of inter-civilization exchanges to promote harmony” while elegantly remarking how a “fine traditional culture epitomizes the essence of the Chinese civilization.”
Here we see a delicate blend of Taoism and Confucianism, where harmony – praised as “the core concept of Chinese culture” - is extrapolated to the concept of “harmony within diversity”: and that is exactly the basis for embracing cultural diversity.
In terms of promoting a dialogue of civilizations, these paragraphs are particularly relevant:
“The concept of a global community of shared future reflects the common interests of all civilizations – peace, development, unity, coexistence, and win-win cooperation. A Russian proverb holds, 'Together we can weather the storm.'
"The Swiss-German writer Hermann Hesse proposed, 'Serve not war and destruction, but peace and reconciliation.' A German proverb reads, 'An individual’s effort is addition; a team’s effort is multiplication.' An African proverb states, 'One single pillar is not sufficient to build a house.' An Arabian proverb asserts, 'If you want to walk fast, walk alone; if you want to walk far, walk together.'
"Mexican poet Alfonso Reyes wrote, 'The only way to be profitably national is to be generously universal.' An Indonesian proverb says, 'Sugarcane and lemongrass grow in dense clumps.' A Mongolian proverb concludes, 'Neighbors are connected at heart and share a common destiny.' All the above narratives manifest the profound cultural and intellectual essence of the world.”
BRI Caravan Rolls On
Chinese diplomacy has been very vocal on the need to develop a “new type of economic globalization” and engage in “peaceful development” and true multilateralism.
And that brings us inevitably to the BRI, which the white paper defines as “a vivid example of building a global community of shared future, and a global public good and cooperation platform provided by China to the world.”
Of course, for the hegemon and its collective West vassals, BRI is nothing but a massive debt trap mechanism unleashed by “autocrat China”.
The white paper notes, factually, how “more than three-quarters of countries in the world and over 30 international organizations” had joined the BRI, and refers to the sprawling, ever-expanding connectivity framework of six corridors, six routes, an array of ports, pipelines and cyberspace connectivity, among others via the New Eurasian Land Bridge, the China-Europe Railway Express (a “steel camel fleet”) and the New Land-Sea Trade Corridor crisscrossing Eurasia.
A serious problem may involve China’s Global Development Initiative, whose fundamental aim, according to Beijing, is “to accelerate the implementation of the UN’s 2030 Agenda for Sustainable Development.”
Well, this agenda has been designed by the self-described Davos elites and conceptualized way back in 1992 by Rockefeller protégé Maurice Strong. Its inbuilt wet dream is to enforce the Great Reset – complete with a nonsensical zero-carbon green agenda.
Better Listen to Medvedev’s Warning
The hegemon is already preparing the next stages of its hybrid war against China – even as it remains buried deep down into a de facto proxy hot war against Russia in Ukraine.
Russian strategic policy, in essence, completely aligns with the Chinese white paper, proposing a Greater Eurasian Partnership, a concerted drive towards multipolarity, and the primacy of the Global South/global majority in forging a new system of international relations.
But the Straussian neocon psychos in charge of the hegemon’s foreign policy keep raising the stakes. So it’s no wonder that after the recent attack on the HQ of the Black Sea Fleet in Sevastopol, a new National Security Council report leads to an ominous warning by Security Council Deputy Chairman Dmitry Medvedev:
“NATO has turned into an openly fascist bloc similar to Hitler’s Axis, only bigger (...) It looks like Russia is being left with little choice other than a direct conflict with NATO (...) The result would be much heavier losses for humanity than in 1945."
The Russian Ministry of Defense, meanwhile, has revealed that Ukraine has suffered a staggering 83,000 battlefield deaths since the start of the - failed - counteroffensive four months ago.
And Defense Minister Shoigu all but gave away the game in terms of the long-term strategy, when he said, “the consistent implementation of measures and activity plans until 2025 will allow us to achieve our goals."
So the SMO will not be rounded up before 2025 – incidentally, much later than the next US presidential election. After all, Moscow’s ultimate aim is de-NATOization.
Faced with a cosmic NATO humiliation on the battlefield, the Biden combo has no way out: even if it declared a unilateral ceasefire to re-weaponize Kiev’s forces for a new counteroffensive in the spring/summer of 2024, the war would keep rumbling on all the way to the presidential election.
There’s absolutely no way some sharp intellect in the Beltway would read the Chinese white paper and be “infected” by the concept of harmony. Under the yoke of Straussian neocon psychos, there are zero prospects for a détente with Russia – not to mention Russia-China.
Both the Chinese and Russian leaderships know quite well how the Ray McGovern-defined MICIMATT (military-industrial-congressional-intelligence-media-academia-think tank complex) works.
The kinetic aspect of MICIMATT is all about protection of the global interests of big US banks, investment/hedge funds and multinational corporations. It’s not a coincidence that MICIMATT monster Lockheed-Martin is mostly owned by Vanguard, BlackRock and State Street. NATO is essentially a mafia protection racket controlled by the US and the UK that has nothing to do with “defending” Europe from the “Russian threat."
The actual MICIMATT and its NATO extension’s wet dream is to weaken and dismember Russia to control its immense natural resources.
War Against the New 'Axis of Evil'
NATO’s incoming graphic humiliation in Ukraine is now compounded with the inexorable rise of BRICS 11 – which embodies a lethal threat to the hegemon’s geoeconomics. There’s next to nothing the MICIMATT can do about that short of nuclear war – except turbo-charging multiple instances of Hybrid War, color revolutions and assorted divide-and-rule schemes. What’s at stake is no less than a complete implosion of neoliberalism.
The Russia-China strategic partnership of true sovereigns has been coordinating full-time.
Strategic patience is the norm. The white paper reveals the magnanimous facet of the number one economy in the world by PPP: that’s China’s response to the infantile notion of “de-risking”.
China is “de-risking” geopolitically when it comes to not falling for serial provocations by the Hegemon, while Russia exercises Taoist-style control to not risk a kinetic war.
Still, what Medvedev just said carries the implication that the hegemon on desperation row could even be tempted to launch WWIII against, in fact, a new “axis of evil” of three BRICS nations – Russia, China and Iran.
Secretary of the [Russian] National Security Council Nikolai Patrushev could not have been more crystal clear:
“In its attempts to maintain its dominance, the West itself destroyed the tools that worked better for it than the military machine. These are freedom of movement of goods and services, transport and logistics corridors, a unified system of payments, global division of labor and value chains. As a result, Westerners are shutting themselves off from the rest of the world at a rapid pace.”
If only they could join the community of shared future – hopefully on a later, non-nuclear, date.
Government
“More Deceit”: Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap
"More Deceit": Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap
Update (2155ET): Following the Senate’s passage of the Continuing…
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Update (2155ET): Following the Senate's passage of the Continuing Resolution, Rep. Matt Gaetz took to Twitter, where he was enraged over a side deal made between Speaker Kevin McCarthy and the Democrats for Ukraine funding, which Gaetz says he "didn't tell House Republicans" about until after the vote.
Wow.@SpeakerMcCarthy made a side Ukraine deal with Democrats and didn’t tell House Republicans until after his Continuing Resolution passed.
— Matt Gaetz (@mattgaetz) October 1, 2023
More deceit. https://t.co/LC91laLyTp
Gaetz was responding to Punchbowl News' Jake Sherman, who related a message from House Democratic leadership.
"When the House returns, we expect Speaker McCarthy to advance a bill to the House Floor for an up-or-down vote that supports Ukraine, consistent with his commitment to making sure that Vladimir Putin, Russia and authoritarianism are defeated. We must stand with the Ukrainian people until victory is won."
Nine Senate Republicans voted against the bill; Marsha Blackburn (R-Tenn.), Mike Braun (R-Ind.), Ted Cruz (R-Texas), Bill Hagerty (R-Tenn.), Mike Lee (R-Utah), Roger Marshall (R-Kan.), Rand Paul (R-Ky.), Eric Schmitt (R-Mo.) and J.D Vance (R-Ohio).
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Update (2109ET): The Senate has voted 88-9 to pass the House's Continuing Resolution stopgap funding bill, which stripped out funds for Ukraine, includes $16 billion for disaster relief, and will keep the US government running for another 45 days.
Among the Senate "Yea" votes was Michael Bennet (D-CO), who was absolutely flipping his lid over the lack of Ukraine funding earlier in the day.
The bill, which passed the House earlier in the day by a bipartisan vote of 335-91, was passed with just three hours to go before a shutdown.
Just before the vote, Sen. Majority Leader Chuck Schumer (D-NY) vowed to keep fighting for more US taxpayer dollars for Ukraine, saying that he and Senate Minority Leader Mitch McConnell (R-KY) have "agreed to continue fighting for more economic and security aid for Ukraine."
"We support Ukraine’s efforts to defend its sovereignty against Putin’s aggression," said Schumer - to which McConnell said he's "confident" that the Senate can pass more "urgent assistance to Ukraine later this year. But let's be clear," that the "alternative," a shutdown, "would not just pause our progress on these important priorities, it would actually set them back."
Schumer: “McConnell and I have agreed to continue fighting for more economic and security aid for Ukraine.”
— Greg Price (@greg_price11) October 1, 2023
pic.twitter.com/2UbEHg3Urq
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Update (1755ET): After an afternoon of theatrics from Rep. Jamal Bowman (D-NY), it appears that the stopgap legislation to keep the government running through November 17 will now pass at the 11th hour.
According to the Wall Street Journal, the bill to keep the government funded past 12:01 Sunday includes $16 billion in disaster relief, but does not include Ukraine funds.
The House voted 335-91 for the funding measure, which includes $16 billion in disaster relief but omits aid for Ukraine. It also excludes border-security measures sought by Republicans. The margin exceeded the two-thirds majority needed to clear the bill through the House, which considered the legislation under special procedures requiring a supermajority of votes. All but one Democrat voted in favor of the measure, while nearly half of Republicans voted against it. -WSJ
While White House officials say President Biden supports the measure, the Senate has reportedly been lax in quickly taking up the measure late Saturday, raising the possibility of further malarkey.
Developing...
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(Update 1655ET): So let's get this straight. In the home stretch of negotiations over the House's GOP stopgap bill - while Democrats were actively trying to stall the vote so they could actually read it - a widely reported phenomenon, Rep. Jamal Bowman (D-NY) pulls the fire extinguisher.
His excuse is that he wasn't actually trying to stall the the vote, and that he's essentially an idiot...
"Congressman Bowman did not realize he would trigger a building alarm as he was rushing to make an urgent vote. The Congressman regrets any confusion," said a spokesperson.
Yes. Because this happens all the time.
MSNBC breathlessly repeats the Simple Jack defense.
Yasmin Vossoughian, with a straight face, reports on the fire alarm pulling "'Congressman Bowman did not realize he would trigger a building alarm as he was rushing to make an urgent vote, the congressman regrets any confusion,' just to clarify some things on that." pic.twitter.com/8TbAk5ni71
— Alex Christy (@alexchristy17) September 30, 2023
House Speaker Kevin McCarthy capitalized on the incident, comparing Bowman to a January 6th insurrectionist.
New: McCarthy compares Bowman to J6ers who were charged with ‘obstruction’ pic.twitter.com/VYEHYMW2Z5
— Jack Poso ???????? (@JackPosobiec) September 30, 2023
I'm about to flush the toilet. pic.twitter.com/jCTsXzt2vP
— Rep. Mike Collins (@RepMikeCollins) September 30, 2023
As we noted below... Bowman used to be a public school principal before he was elected to Congress, who rallied against standardized testing, at a private school he founded that has a 27% literacy rate, so... maybe?
Then again, he would be no stranger to fire drills, no?
???? Congressman Bowman regularly brags about his years as a teacher and principal. He's from a state that requires TWELVE fire drills per school year.
— Ginny Gentles (@ginnygentles) September 30, 2023
The man knows exactly how fire alarms work. https://t.co/d7XWGoe2K7 pic.twitter.com/smWPceXRk1
* * *
House before the House finally approved a 'clean' stopgap funding bill to avert a government shutdown (which has since been sent to the Senate for consideration before the midnight funding deadline), Socialist Rep. Jamaal Bowman (D-NY) was caught pulling the fire alarm in a House office building Saturday in order to try and delay a vote on ta House GOP stopgap spending bill.
???????????? BREAKING: Insurrectionist Democrat Rep. Jamaal Bowman has been CAUGHT ON-CAMERA pulling the Capitol fire alarm seconds before critical vote to keep government open.
— Benny Johnson (@bennyjohnson) September 30, 2023
Violation of 1512(c)(2) obstruction of an official proceeding.
ARREST & Prosecute Rep. Bowman IMMEDIATELY! pic.twitter.com/3m883RB88A
The incident in the Cannon Building was caught on camera and confirmed by several witnesses, Politico reports.
"This is the United States Congress, not a New York City high school. To pull the fire alarm to disrupt proceedings when we are trying to draft legislation to AVERT A SHUTDOWN is pathetic…even for members of the socialist squad," Staten Island GOP Rep. Nicole Malliotakis wrote on X, formerly Twitter.
BREAKING: Capitol police release photo of Jamaal Bowman pulling the fire alarm. pic.twitter.com/XpUoEu9lU4
— Greg Price (@greg_price11) September 30, 2023
"Rep Jamaal Bowman pulled a fire alarm in Cannon this morning," House Administration Committee Chairman Bryan Steil wrote on X. "An investigation into why it was pulled is underway."
NEWS: Rep. Jamaal Bowman (D-NY) was caught on camera pulling the Cannon fire alarm ahead of this motion to adjourn vote as Dems tried to delay the CR vote, multiple sources tell me.
— Olivia Beavers (@Olivia_Beavers) September 30, 2023
We have reached out to him for comment - we haven't viewed footage ourselves.
According to Bowman spox Emma Simon, "Congressman Bowman did not realize he would trigger a building alarm as he was rushing to make an urgent vote. The Congressman regrets any confusion."
In other words, he's claiming to be too stupid to have known what he did - and don't believe your lying eyes!
Granted, Bowman used to be a public school principal before he was elected to Congress, who rallied against standardized testing, at a private school he founded that has a 27% literacy rate, so...
Needless to say, the memes are already flying.
— Prison Mitch (@MidnightMitch) September 30, 2023
Meanwhile, the House cleared the 'clean' stopgap bill without funding for Ukraine or the border, by a vote of 335-91. One Democrat and 90 Republicans voted against the measure.
* * *
Update: (1335ET): With a government shutdown just hours away, House Speaker Kevin McCarthy has turned to Democrats for help passing a temporary bill, after House Freedom Caucus members dug their heels in over no funds for Ukraine.
"What I am asking, Republicans and Democrats alike, put your partisanship away," said McCarthy. "Focus on the American public."
McCarthy needs a two-thirds majority to pass their Continuing Resolution (CR), which would require a significant number of Democrats - who have strongly supported more Ukraine aid - to cross the aisle.
The House GOP bill would be a 'clean' Continuing Resolution, which won't include Ukraine funding or border assistance.
"We will put a clean funding stopgap on the floor to keep government open for 45 days for the House and Senate to get their work done," said McCarthy following a meeting. "We will also, knowing what had transpired through the summer, the disasters in Florida, the horrendous fire in Hawaii, and also the disasters in California and Vermont. We will put the supplemental portion that the president asked for in disaster there too."
"Keeping the government open while we continue to do our work to end the wasteful spending and the wokeism and most important, secure our border," McCarthy said.
If the bill does not pass, Republicans plan to bring up several measures to mitigate the effects of a government shutdown, multiple members said.
Those include bills to continue paying service members and extending authorization of the Federal Aviation Administration and National Flood Insurance Program, both of which are also set to expire at midnight unless Congress takes action. Republicans are also examining measures to continue pay for border patrol agents. -The Hill
The Democrats, meanwhile, have been using parliamentary tactics to slow down the vote so they can more carefully read the GOP proposal.
Rep. Matt Gaetz (R-FL), one of the key holdouts in the House, called McCarthy's bipartisan appeal "disappointing," and said that McCarthy's speakership is "on tenuous ground."
When asked what his next move will be, Gaetz said "I guess we'll have to see how the vote goes."
What's next?
According to Goldman, there's a 90% probability of a shutdown before the Oct. 1 deadline.
That said, there will be three upcoming catalysts in the next few weeks that may result in passage.
1) All members of the US military are due to be paid on Oct. 13, and a missed pay date would have serious political ramifications; there is a good chance the House will vote to reopen before or shortly after that date;
2) A few House Republicans have said they might bring a “motion to vacate” that would remove McCarthy as Speaker unless a majority of the House supports him. Whatever the outcome of such a vote, getting past it could set the stage for a reopening;
3) There are procedural moves (a “discharge petition” is the most frequently discussed) that Democrats can make to pass an extension of spending authority in the House over Speaker McCarthy’s objections. However, this would require support from at least 5 House Republicans (assuming that all Democrats sign on). This will not help avoid a shutdown, but could come into play over the next two weeks, as political pressure to reopen grows (particularly when combined with the first point on military pay).
In light of the above, Goldman doesn't expect this to last more than 2-3 weeks, and that the Oct. 13 military pay date will become a focal point in the timeline.
* * *
Update (2157ET): It looks like the Senate isn't willing to strip Ukraine funds from the continuing resolution. In a Friday night tweet, House Speaker Kevin McCarthy (R-CA) said that the "misguided Senate bill has no path forward and is dead on arrival."
After meeting with House Republicans this evening, it’s clear the misguided Senate bill has no path forward and is dead on arrival.
— Kevin McCarthy (@SpeakerMcCarthy) September 30, 2023
The House will continue to work around the clock to keep government open and prioritize the needs of the American people.
Meanwhile, according to Punchbowl News' Jake Sherman and Josh Bresnahan, McCarthy is floating a CR that would last until Nov. 17 at FY2023 funding levels, which would not include border funds or Ukraine funding.
* * *
In an 11th hour Hail Mary in the hopes of averting a government shutdown, House Speaker Kevin McCarthy (R-CA) announced that the only way the House will pass a Continuing Resolution (CR) to fund the government through October is to drop Ukraine funding.
"I think if we had a clean one without Ukraine on it, we could probably be able to move that through," McCarthy told CNN's Manu Raju.
The comment comes hours after McCarthy lost a game of chicken with the House Freedom Caucus, failing to pass a CR which left McCarthy will few options to try and avert a shutdown in less than 36 hours. McCarthy was hoping that the House bill's border security provisions would win over enough holdouts to pass.
Meanwhile, the White House slammed the failed bill over the 'elimination of 12,000 FBI agents,' and 'almost 1,000 ATF agents.'
White House budget director:
— Townhall.com (@townhallcom) September 29, 2023
Republicans’ bill “would eliminate 12,000 FBI agents, almost 1,000 ATF agents!” pic.twitter.com/y5ymbTIDYM
Of note, House Republicans on Thursday narrowly passed the annual defense spending bill, but only after they removed $300 million in Ukraine aid from the legislation (which then cleared in a separate vote because a bunch of Democrats then voted).
Speaker Kevin McCarthy, who failed twice last week to advance the bill to the floor, finally locked down enough Republican votes to pass the bill after the House stripped $300 million to arm Ukraine from the text.
The separate bill carved out to allocate those funds for Kyiv passed Thursday in a 311-117 blowout bipartisan vote. Republicans had won a close procedural vote earlier in the day to separate the Ukraine money from the Pentagon bill, a move meant to flip a handful of GOP holdouts. -Politico
Democrats framed the optics as Kremlin-friendly, with House Armed Services ranking Democrat Adam Smith saying "The Russians are good at propaganda... It will be played as America backing off of its commitment for Ukraine."
Republicans responded that by carving Ukraine out of the defense bill, it allows opponents of either measure (Ukraine aid or the defense bill) to voice their opinions on each independently.
"Why don’t we make sure this gets through? I mean, I’m just mystified that this is somehow a problem," said House Rules Chair Tom Cole (R-OK), according to Politico. "We guarantee you something you want is going to pass the House and you’re upset about it."
And now, McCarthy says there's no way to avert a government shutdown unless the House, and the Senate, agree to nix Ukraine aid from the 30-day stopgap.
Fire and Brimstone...
On Friday, White House top economic adviser Lael Brainard said that a shutdown would pose an "unnecessary risk" to what he described as a resilient economy with moderating inflation.
Treasury Secretary Janet Yellen then chimed in, warning that all of Bidenomics could be negatively impacted.
"The failure of House Republicans to act responsibly would hurt American families and cause economic headwinds that could undermine the progress we’re making," Yellen said from Port of Savannah, Georgia, adding "A shutdown would impact many key government functions from loans to farmers and small businesses, to food and workplace safety inspections, to Head Start programs for children.
"And it could delay major infrastructure improvements."
Goldman has predicted that a shutdown will last 2-3 weeks, and that a 'quick reopening looks unlikely as political positions become more deeply entrenched.' Instead, as political pressure to reopen the government builds, pay dates for active-duty military (Oct. 13 and Nov. 1) will become key dates to pay attention to.
In addition, they think a shutdown could subtract 0.2pp from Q4 GDP growth for each week it lasts (adding the same to 1Q2024, assuming it's over by then).
What's more, all data releases from federal agencies would be postponed until after the government reopens.
More via Goldman:
What are the odds the government shuts down?
A shutdown this year has looked likely for several months, and we now think the odds have risen to 90%. The most likely scenario in our view is that funding will lapse after Sep. 30, leading to a shutdown starting Oct. 1. That said, a short-term extension cannot be entirely ruled out. In the event that Congress avoids a shutdown starting Oct. 1, we would still expect a shutdown at some point later in Q4.
While there is likely sufficient support in both chambers of Congress to pass a short-term extension of funding—this is known as a “continuing resolution” (CR)—that is “clean” with no other provisions attached, the majority of that support would come from Democrats. The Senate is considering a CR that includes aid for disaster relief and Ukraine. House Republican leaders are under political pressure to pass a CR that includes Republican policy priorities that can pass with mainly or exclusively Republican support. At the moment, neither chamber looks likely to pass the other chamber's CR.
The outlook seemed bleak ahead of the debt limit deadline earlier this year, but Congress resolved it in time; why shouldn’t we expect a last-minute deal once again?
The smaller economic hit from a shutdown puts less pressure on Republican leaders to override the objections of some in their party to reach a deal. Ahead of the debt limit deadline earlier this year, Republican leaders reached a deal over the objections of some in their party because the potential hit to the economy from an impasse would have been unpredictable and severe, and even lawmakers most strongly opposed to a compromise agreed that the debt limit must be raised. By contrast, the economic hit from a shutdown would be smaller and more predictable, as there have already been two protracted shutdowns over the last decade. While most lawmakers on both sides of the aisle would prefer to avoid a shutdown, both sides appear more willing to take the chance it occurs.
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Stay tuned...
International
These Are The World’s Top Diamond-Mining Countries, By Carats & Value
These Are The World’s Top Diamond-Mining Countries, By Carats & Value
Only 22 countries in the world engage in rough diamond production…
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Only 22 countries in the world engage in rough diamond production - also known as uncut, raw or natural diamonds - mining for them from deposits within their territories.
This chart, by Visual Capitalist's Pallavi Rao and Sam Parker illustrates the leaders in rough diamond production by weight and value. It uses data from Kimberly Process (an international certification organization) along with estimates by Dr. Ashok Damarupurshad, a precious metals and diamond specialist in South Africa.
ℹ️ Carat is the unit of measurement for the physical weight of diamonds. One carat equals 0.200 grams, which means it takes over 2,265 carats to equal 1 pound.
Rough Diamond Production, By Weight
Russia takes the top spot as the world’s largest rough diamond producer, mining close to 42 million carats in 2022, well ahead of its peers.
Russia’s large lead over second-place Botswana (24.8 million carats) and third-ranked Canada (16.2 million carats) indicates that the country’s diamond production is circumventing sanctions due to the difficulties in tracing a diamond’s origin.
Here’s a quick breakdown of rough diamond production in the world.
| Rank | Country | Rough Diamond Production (Carats) |
|---|---|---|
| 1 | ???????? Russia | 41,923,910 |
| 2 | ???????? Botswana | 24,752,967 |
| 3 | ???????? Canada | 16,249,218 |
| 4 | ???????? DRC | 9,908,998 |
| 5 | ???????? South Africa | 9,660,233 |
| 6 | ???????? Angola | 8,763,309 |
| 7 | ???????? Zimbabwe | 4,461,450 |
| 8 | ???????? Namibia | 2,054,227 |
| 9 | ???????? Lesotho | 727,737 |
| 10 | ???????? Sierra Leone | 688,970 |
| 11 | ???????? Tanzania | 375,533 |
| 12 | ???????? Brazil | 158,420 |
| 13 | ???????? Guinea | 128,771 |
| 14 | ???????? Central African Republic |
118,044 |
| 15 | ???????? Guyana | 83,382 |
| 16 | ???????? Ghana | 82,500 |
| 17 | ???????? Liberia | 52,165 |
| 18 | ???????? Cote D'Ivoire | 3,904 |
| 19 | ???????? Republic of Congo | 3,534 |
| 20 | ???????? Cameroon | 2,431 |
| 21 | ???????? Venezuela | 1,665 |
| 22 | ???????? Mali | 92 |
| Total | 120,201,460 |
Note: South Africa’s figures are estimated.
As with most other resources, (oil, gold, uranium), rough diamond production is distributed unequally. The top 10 rough diamond producing countries by weight account for 99.2% of all rough diamonds mined in 2022.
Diamond Mining, by Country
However, higher carat mined doesn’t necessarily mean better value for the diamond. Other factors like the cut, color, and clarity also influence a diamond’s value.
Here’s a quick breakdown of diamond production by value (USD) in 2022.
| Rank | Country | Rough Diamond Value (USD) |
|---|---|---|
| 1 | ???????? Botswana | $4,975M |
| 2 | ???????? Russia | $3,553M |
| 3 | ???????? Angola | $1,965M |
| 4 | ???????? Canada | $1,877M |
| 5 | ???????? South Africa | $1,538M |
| 6 | ???????? Namibia | $1,234M |
| 7 | ???????? Zimbabwe | $424M |
| 8 | ???????? Lesotho | $314M |
| 9 | ???????? Sierra Leone | $143M |
| 10 | ???????? Tanzania | $110M |
| 11 | ???????? DRC | $65M |
| 12 | ???????? Brazil | $30M |
| 13 | ???????? Liberia | $18M |
| 14 | ???????? Central African Republic |
$15M |
| 15 | ???????? Guyana | $14M |
| 16 | ???????? Guinea | $6M |
| 17 | ???????? Ghana | $3M |
| 18 | ???????? Cameroon | $0.25M |
| 19 | ???????? Republic of Congo | $0.20M |
| 20 | ???????? Cote D'Ivoire | $0.16M |
| 21 | ???????? Venezuela | $0.10M |
| 22 | ???????? Mali | $0.06M |
| Total | $16,290M |
Note: South Africa’s figures are estimated. Furthermore, numbers have been rounded and may not sum to the total.
Thus, even though Botswana only produced 59% of Russia’s diamond weight in 2022, it had a trade value of nearly $5 billion, approximately 1.5 times higher than Russia’s for the same year.
Another example is Angola, which is ranked 6th in diamond production, but 3rd in diamond value.
Both countries (as well as South Africa, Canada, and Namibia) produce gem-quality rough diamonds versus countries like Russia and the DRC whose diamonds are produced mainly for industrial use.
Which Regions Produce the Most Diamonds in 2022?
Unsurprisingly, Africa is the largest rough diamond producing region, accounting for 51% of output by weight, and 66% by value.
| Rank | Region | Share of Rough Diamond Production (%) |
Share of Rough Diamond Value (%) |
|---|---|---|---|
| 1 | Africa | 51.4% | 66.4% |
| 2 | Europe | 34.9% | 32.9% |
| 3 | North America | 13.5% | 52.8% |
| 4 | South America | 0.2% | 2.4% |
However diamond mining in Africa is a relatively recent phenomenon, fewer than 200 years old. Diamonds had been discovered—and prized—as far back as 2,000 years ago in India, later on spreading west to Egyptian pharaohs and the Roman Empire.
By the start of the 20th century, diamond production on a large scale took off: first in South Africa, and decades later in other African countries. In fact between 1889–1959, Africa produced 98% of the world’s diamonds.
And in the latter half of the 20th century, the term blood diamond evolved from diamonds mined in African conflict zones used to finance insurgency or crime.
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