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What Is the Supply Chain? Why Is It Important?

What Is the Supply Chain and How Does It Work?We live in a global economy, powered by a complex network of resources, materials, manufacturing, and transportation,…

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The COVID-19 pandemic and Russia/Ukraine war have snarled global supply chains

Avigatorphotographer from Getty Images for iStockphoto; Canva

What Is the Supply Chain and How Does It Work?

We live in a global economy, powered by a complex network of resources, materials, manufacturing, and transportation, which work together to bring products and services to customers. This is known as the supply chain.

The supply chain is made up of a variety of players ranging from locally based raw material suppliers to large, transnational corporations: Each plays a role in the creation and distribution of the products that fuel everyday life, from the clothing we wear to the roofs above our heads to the food we consume and the chips that power our electronics—to name just a few.

How Was the Supply Chain Constructed?

The supply chain has been around since the Industrial Revolution, but there have been key developments in recent history:

  • World War II is to thank for many breakthroughs in logistics, since weapons and supplies needed to get to troops both quickly and efficiently.
  • After the war, there were other advancements, such as the invention of the storage pallet, which allowed goods to be consolidated and stacked vertically, and the shipping container, which can be moved by boat, truck, and railway car, enabling perishable items to be transported across great distances quickly—and saving both time and money.
  • The expansion of global trade in the 1980s, especially the rise of manufacturing in Asia, created a global division of labor and lowered prices for goods.
  • International trade agreements in the 1990s allowed countries to exchange products as well as raw materials with each other freely, building quite a web.

What Is Supply-Chain Management? What Do Supply Chain Managers Do?

True to its name, supply-chain management makes sure all of the moving parts needed to create a finished product are running smoothly. This includes:

  • Storing the raw materials needed to create a product
  • Sourcing cost-effective manufacturers
  • Assembling basic parts into finished products
  • Warehousing products until they are sold, and
  • Delivering the products to consumers

A supply-chain manager’s job is to maximize efficiencies and prevent shortages. They manage inventory, production, sales, and vendor and customer relations in order to increase profits. For instance, a supply chain manager could develop a strategic partnership with a vendor or lower production expenses by purchasing directly from the source.

Why Is Supply Chain Management Important?

Supply chain management is a critical component to any business’ success. It is important because it can reduce a company’s operating expenses and thus increase profitability.

What Are Some Types of Supply Chain Models?

There are several different kinds of supply chain models, and each business should choose the one best designed for its needs:

  1. The continuous flow model is designed to produce a steady cadence of the same product on high demand, usually for a well-established company. There is little modification to product design here. This model is all about maximizing efficiency. An example of this would be commodity manufacturing.
  2. The fast chain model is built for responsiveness. It’s used for trendy products with short lifecycles. Manufacturers who change their product lines quickly—and can be the first to hit the market—are the ones who win big here. Think apparel companies, like Nike, who can sell mass volumes of a particular design before it goes out of style. When the next trend comes along, they develop a new supply chain around it.
  3. The efficient model is designed for competitive businesses that need an “edge” to get ahead, whether it’s through inventory management, production output, or delivery logistics. The breakfast cereal market is an example of this: Products are very similar, and manufacturers sell to the exact same audience, so a cereal company like General Mills must figure out how to reduce costs, either along the supply chain or among its suppliers, in order to gain an advantage.
  4. Everything about the agile model is made to provide a cost-effective response to what customers want. Companies that follow this model don’t mass manufacture products; rather, they might have a base product that can be customized quickly to meet specific demand. The “copycat” clothing manufacturer, Zara, is one example.
  5. The custom configured model differs from the above models in that it centers around small batches of specialty products. This model requires greater setup time and produces products in limited-edition quantities. An example of this would be a furniture company that lets consumers choose finishes, design styles, etc.
  6. One model that strives to be the best of all worlds is the flexible model. Because of its flexible planning strategies, it can respond to high volume demand at peak season and survive long periods at low demand. An example of this would be the office supply store, Staples. It anticipates increased volume during the back-to-school shopping season but also uses seasonal contracts with suppliers, along with stocking algorithms, to lower production levels the rest of the year. 

What Is Behind the Current Supply Chain Issues? How Does the Supply Chain Impact Inflation?

The COVID-19 pandemic created a global tangle of disruption. Although vaccinations lessened the severity of the virus, the supply chain logjam became even more twisted in early 2022, when new, vaccine-resistant COVID-19 variants were discovered, and a war erupted in eastern Europe. These factors led to production and transportation issues in both food and energy supply chains, which resulted in higher prices—and whenever there’s an increase in prices, inflationary pressures are felt in the economy.

Let’s take a deeper look at each factor:

The COVID-19 Pandemic

The COVID-19 pandemic underscored the importance of a resilient supply chain. When the pandemic began, businesses with complex supply chains were hit especially hard as restrictions shuttered operations, sending workforces home. Borders were closed, which prevented raw materials and product shipments from entering countries.

Consumers who were stuck at home changed their buying habits, and businesses were left with billions of dollars of unsold goods, causing inventories to rise. However, as soon as stay-at-home restrictions were lifted, demand spiked, yet inventories were not able to be replenished quickly enough due to ongoing bottlenecks.

One example everyone remembers has to do with toilet paper. The White House estimates that stay-at-home orders caused a 40% increase in demand for retail toilet paper, which is softer than the kind used in restaurants and offices. Suppliers usually only keep 2-3 weeks’ worth of retail toilet paper inventories on-hand in their warehouses, and so when demand skyrocketed, they simply could not satisfy it fast enough.

Similarly, automotive makers witnessed a decrease in demand at the outset of pandemic and canceled orders of semiconductors, which require a long lead time. Cars are made of steel, rubber, plastic, and semiconductors, which all have their own web of supply chains, and so when demand returned, further delays ensued.

Other sectors affected by the pandemic included the housing market, which was devastated by an increase in commodities prices—spiking as high as 20%. The cost of framing lumber needed for a 2,000 sq foot house, for instance, jumped from just $7,000 in 2019 to more than $27,000 in 2021.

China’s 2022 Lockdown

In early 2022, the city of Shanghai experienced the most widespread COVID-19 outbreak since March 2020, based on the Omicron variant. From February 28 to June 1, 2022, Chinese authorities placed the entire city of 25 million, along with neighboring cities, under a lockdown. China has long held a “zero-tolerance policy” for COVID-19 but had been a bit more lenient with Shanghai, since it was an important manufacturing center as well as the world’s largest port.

Multinational companies with operations in China—,like Apple, which has assembly plants in Shanghai—were hammered. Amazon also operates out of Shanghai, and Adidas made the city its Chinese headquarters in 2017. Not only did the lockdown affect manufacturing, but it also impacted 2022 consumer sales—by as much as $4 billion in Q2 for Apple alone.

Now that the lockdown has ended, some manufacturers, like Volkswagen and Tesla, have been authorized to restart production, although it will take some time to reduce backlogs. The lockdown also snarled traffic for up to 20% of the world’s container ships, as they literally sat for weeks, waiting for their cargo to be offloaded. Some analysts believe shipment delays will be felt as late as 2023.

Russia’s Invasion of Ukraine

Russian President Vladimir Putin announced the Russian army’s invasion of Ukraine on February 24, 2022, saying his aim was to “demilitarize and de-Nazify Ukraine.” In the subsequent months, Russian military forces destroyed cities in the east part of the country, killed thousands of citizens, and displaced millions more.

This part of the world is rich in natural resources—its wheat products are used to feed developing nations, and its raw materials, like palladium and neon, are important components in semiconductors. Russia’s response to Western support of Ukraine was to cut off gas supplies to Poland and Bulgaria, which halted shipments of commodities, causing prices to increase even further.

More importantly, Russia is one of the world’s biggest oil suppliers, and the invasion resulted in the loss of supplies of 3 million barrels of oil per day, which pushed prices higher than $4 per gallon in the US. However, President Biden promised to tap strategic oil reserves in compensation.

The war has also tangled transportation logistics, which now face disruptions in the Black Sea, air restrictions over Russia and Ukraine, and freight issues across Eastern Europe. The whole world waits to see what will happen next.

Is There a Silver Lining?

Before you think the global supply chain is snarled beyond repair, there is some hope: The most recent reading from The New York Federal Reserve’s Global Supply Chain Pressure Index (GSCPI) reveals that pressures declined in May 2022, and its three-month reading indicates that they may have actually stabilized.

This index factors in data from a variety of sources, including backlogs, freight issues, and delivery times, and stretches back to 1997. Changes in pressures are associated with producer price inflation in the United States, making this dataset useful to watch. We look forward to seeing if a peak has occurred.

The GSPCI is released on the fourth business day of every month; the next index will be published on July 6. 2022.

© 2022 Federal Reserve Bank of New York. Sources: Bureau of Labor Statistics; Harper Petersen Holding GmbH; Baltic Exchange; IHS Markit; Institute for Supply Management; Haver Analytics; Refinitiv; authors’ calculations.

How Will Supply Chain Issues Be Resolved?

Throughout globalization, a business’ main objective was to maximize efficiencies. Most companies did this through an inventory management method known as “just in time,” which allowed them to receive goods from suppliers only when they were needed.

Now, as shocks from pandemics, climate change, and war create mass disruption the world over, companies are acknowledging that they need to take delays into consideration through their strategic planning processes. They can do this by identifying the weak links in their networks and prioritizing digital technologies, which might alleviate the need for human drivers.

Their aim has now become the creation of “just in case” backup systems, which guarantee a minimal level of supply during times of crisis. This method involves a greater reliance on robotics, AI, and machine learning.

Are the Terms “Supply Chain” and “Logistics” Interchangeable?

Logistics makes up an important part of the overall supply chain, but the two terms are not interchangeable. The term “supply chain” encompasses much more than logistics and also includes activities like manufacturing and delivery.

What Does Transparency in the Supply Chain Mean?

Transparency is an incredibly important part of the supply chain, and fortunately, most companies pledge to be socially responsible in their business practices in order to be accountable to their customers. How do they achieve this? By making sure their suppliers are acting according to legal and ethical standards in terms of raw material extraction methods, labor practices, and product pricing, to name just a few.

When Will Supply Chain Issues End? Which Supply Chain Shortages Are Coming?

TheStreet.com’s Dan Weil has identified five factors to watch to see if supply chain issues will resolve in 2022.

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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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8 hours ago

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October 1, 2023

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Escobar: Russia-China Partnership Defangs US Empire

Authored by Pepe Escobar,

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.

Tyler Durden Sat, 09/30/2023 - 23:30

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“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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September 30, 2023

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"More Deceit": Gaetz Rages Over McCarthy-Ukraine Side Deal To Pass Stopgap

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. 

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).

*  *  *

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."

*  *  *

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...

*  *  *

(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.

House Speaker Kevin McCarthy capitalized on the incident, comparing Bowman to a January 6th insurrectionist.

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?

*  *  *

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.

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.

"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."

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.

.

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."

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.'

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.

*  *  *

Stay tuned...

Tyler Durden Sat, 09/30/2023 - 17:57

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A Climate Of Fear

A Climate Of Fear

Authored by James Gorrie via The Epoch Times,

The medical, media, and political elites’ focus has shifted from facts…

Published

10 hours ago

on

September 30, 2023

By

A Climate Of Fear

Authored by James Gorrie via The Epoch Times,

The medical, media, and political elites’ focus has shifted from facts to fomenting and magnifying fear.

In Franklin D. Roosevelt’s first inaugural address in 1933, the new president told a nation in the depths of the Great Depression that “the only thing we have to fear is fear itself.”

Those words were true and rightfully spoken at that time. Roosevelt knew that fear is a powerful emotion that limits our ability to reason, act wisely, and work together. It’s also an emotion that’s contagious and not easily diminished or dissipated.

The Power of Fear to Fragment Society

Unfortunately, Roosevelt’s words are even more applicable today.

On a personal level, decisions made under the emotional duress of fear are rarely the best ones and often the worst. Fear can bring out the best in us, but can often bring out the worst. That’s more likely to occur the more fragmented a society becomes. Fear among different groups of people creates an us-versus-them context in the minds of individuals, or even an “every-man-for-himself” attitude, which pits one group against another or even each of us against each other.

Now elevate that sense of fear to the level of the national electorate. A people or a nation that's paralyzed with fear makes rash decisions based on their fears of what could happen, not necessarily what the current situation truly is. When that happens, a society can quickly degenerate, where our base instincts determine our behavior in a law-of-the-jungle social environment.

Roosevelt knew this, as do our leaders today. The difference is that today, rather than seeking to dispel fear, our political and media elites create it, expand it, and revel in it. Rather than promote hope and strength of character in us, in a Roosevelt- or even a Reagan-like fashion, they traffic in fear and its fellow traveler social division in order to fragment our society.

It’s the old but effective divide-and-conquer strategy, and sadly, it works far too well. The mechanism for divide and conquer is the constant drumbeat of the Big Lie, which is also a tried and true method for controlling society. It was first practiced and perfected by Joseph Goebbels in Nazi Germany using the mass media, but has been successfully used by the USSR and every other communist and dictatorial regime in the world since the 1930s.

Social Media Is Magnitudes More Powerful Than Legacy Media

The difference today is the massive and pervasive presence of social media. Its reach and social saturation throughout society are magnitudes greater than have ever been possible before. What’s more, our political and media elites create and exaggerate fear without even mentioning the word. “Fear” is driven into our collective psyches under the guise of our government keeping us “safe,” while demonizing anyone who challenges that narrative.

The repetition by the media and the pharmaceutical industry of how to stay safe from COVID-19 always involves more drugs and less freedom. That’s by design. The elites that run society know that once enough of our friends, neighbors, coworkers, and others with whom we interact become more fearful than rational, they’re easily manipulated and divided into confrontational groups.

Does that sound like a conspiracy theory?

Yes, it probably does, but it’s also how the Stasi, the East German security agency, turned virtually every neighbor into an informant. The result was that people were fearful of doing anything that could be construed as being against the communist East German government. In light of what we’ve been through the last three years—and what looks to be on the horizon—the conspiracy theory accusation has lost its sting.

From Conspiracy Theory to Fact

Recall, for example, how those who received the COVID-19 vaccine turned against those who remained unvaccinated. The contrast and social division couldn’t have been clearer or more deliberate. Vaccinated people were characterized by the media and government agency spokespeople as selfless, smarter, and better human beings than those who refused the vaccine.

On the flip side, the “anti-vaxxers,” as they came to be called, were publicly derided by the medical, pharmaceutical, media, and government elites. They were accused of being low-intelligence conspiracy theory nuts who wouldn’t or couldn’t “follow the science,” even when they followed the science from experts such as Robert Malone, one of the inventors of the mRNA technology, and other medical doctors in Europe and Asia, including former Pfizer Vice President Dr. Michael Yeadon, all of whom were de-platformed from mainstream media and social media.

In fact, any “alternative” remedy to the experimental and highly dangerous mRNA vaccines, such as ivermectin, was summarily dismissed, even though nations that used ivermectin had the lowest mortality rates. As noted above, many media personalities and even medical experts with contrary opinions were silenced, shamed, and shunted into professional oblivion, being substituted by compliant replacements. That practice continues to this day, with Russell Brand being the latest example of being de-monetized by YouTube.

In light of vaccine injuries and deaths, and the staggering profits that vaccines have delivered to the pharmaceutical industry, the number of people who believe the mainstream media, the government, and in the vaccines, is much smaller today than three years ago.

Conspiracy theory narratives have become conspiracy facts.

The Endgame of Fear

So, what’s the endgame of promoting and enforcing a climate of fear throughout society?

It’s simple. Fearful people are far more compliant and, therefore, are easily controlled, pacified, monitored, and dehumanized. Next thing you know, we’ll all be eating bugs and liking it.

The antidote to fear, of course, is freedom and access to real and contrary information so that each person can make up his or her own mind. The encouragement, enablement, and empowerment of private individuals to exercise informed judgment about their health and their livelihoods are also part of the solution. A vibrant, thinking, and active society of informed individuals isn't nearly as vulnerable to the polarizing climate of fear our elites are foisting upon us.

In short, to live in fear is to live in bondage.

Tyler Durden Sat, 09/30/2023 - 20:50

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