What Has Saved Our Economy?

Welcome to This Week’s Leyendecker View

Whoever controls the media controls minds.
–Jim Morrison

A BIG THINK

In the early 2000s, a loose affiliation between Brazil, Russia, India and China created what was then referred to as the BRIC alliance. Around 2010, South Africa joined the alliance, and the group’s name changed to BRICS.

As the globalization boom continued into the 2000s, the BRICS didn’t really push their weight around economically or politically. Everyone in the world was making more and more money, so no one really wanted to kill the Golden Goose.

Then came Russia’s invasion of Ukraine, which has created a geopolitical divide between Russia’s friends and foes. Russia-friendly countries have surely noticed the economic pressure Western countries have put on Russia. Today, these countries may be wondering if the West will unleash economic war on them. This seems to have put some momentum behind the BRICS alliance.

No surprise, then, that many countries are looking to create formal alliances with others. Just a few months ago, 19 countries representing over 3B people recently requested membership into BRICS to form a more forceful political and economic block. Now even more countries want to join. All together, BRICS economies could soon represent over six billion people. And now, the BRICS and their supporters, 41 countries in total, seem interested in creating their own trading currency.

The Western developed economies are likely larger overall, but if BRICS members and wannabe members begin to pull trade away from the West, this could create economic pain for the US, Europe, and their allies. Keep in mind that BRICS economies have greater growth potential than those of the developed West, plus billions more workers and consumers.

As Europe’s economy stumbles, and as the US and Europe’s growth remains dependent on monetary and fiscal stimulus (which means growing debt to GDP), how fragile, or not, might the developed economic world be?

Russia can buy China’s and India’s technology. China and India can buy Russia’s natural resources. The other BRICS countries can fall in step.

Do the developed Western economies have their heads in the sand over this potentially growing economic risk?

THE ECONOMIC VIEW

The Fed raises rates again
What do they know that we don’t know?
Maybe that growth is accelerating?

The US economy is acting resilient.
Should we thank Taylor Swift?

Consumer confidence is up big
Is it just because of the stock market?

THE INFLATION BOGEYMAN

A semiconductor glut may be coming
That could be deflationary.

India to stop rice exports
Russia thwarts Ukraine grain exports
US beef herd is at a 52-year low
Global food threats are on the rise
Will food inflation surface again soon?

Goldman Sachs sees higher oil prices
Energy inflation waterfalls everywhere.
Gasoline prices at 8-month high

THE LABOR VIEW

By 2030, 12MM workers will need new skills
Because of AI, suggests McKinsey.

UPS and the Teamsters
May have reached a deal

Prime working-age people
Are flooding the job market

Walmart’s warehouse of the future
Will be full of robots

MEANWHILE IN EUROPE

Austerity ruined Europe.
And now it’s back
While ECB raises rates again

Europe’s economy
Is close to recession

Germany’s far right gains record support
Spain’s conservatives seek more influence
Are Europeans tiring of EU bureaucrats?
Poland’s citizens certainly are

GLOBAL

Japan raises rates to 9-year high
How might this affect global markets?

Bolivia is in the catbird seat.
They’ve got the top lithium reserves in the world

Why bet on India?
Better population and economic growth than China

PLAYING WITH FIRE

Baltic countries can help Ukraine.
They are open to exporting Ukraine’s grain

Russia at risk with Turkey and China
Canceling the grain deal has its consequences.

Western asset nationalization starts
Russia takes over Danone and Carlsberg ops.

GEOPOLITICS IN FLUX

Propaganda on Meta’s new Threads
Russia and China want to sway your mind.

Russia wants more allies.
So it’s hosting an African summit
China courts Africa, as well

India and Japan vow to boost chip supply
India plays both sides of the Ukraine debate.

FINANCE

Industries with the most distressed debt
A “nice” little pie chart.

Are LBOs about to make a comeback?
Lots of stars need to align first.

Is the IPO market about to awaken?
Lots of investors would sure like it.

Private credit, the new asset class.
Some good thoughts on why

REAL ESTATE

What’s new in the home sales market?
Seller financing
70%+ of mortgages are below 4%

Where is commercial real estate bottom?
Nobody seems to know

Office sector real estate
May not normalize for 20 years

TECHNOLOGY

Data centers are not
Environmentally friendly

Germany ready to subsidize chipmaking
But we’re already in a chip glut, right?

ChatGPT founder launches Worldcoin
Ready to get your eyeballs scanned?

THE CHAT ON AI

OpenAI has created a very dangerous AI
Don’t worry, they’re not going to release it.

How fast can AI change the world?
It’s already created 100MM musical tracks

Could AI
Put an end to college?

THE NEXT NORMAL

Made in the USA can happen.
This large company has done it

The end of dieting
All you need now is a miracle pill.

Alcohol vending machines are here
Can they chat up a drunk bar customer?

THE WAR ON CARBON

Iceland enters new volcanic era
How much carbon will get spewed out?

The G7 wants an O&G phase-out
The G20 says no

Japan says they can make burning coal cleaner
Critics doubt they can.

THE NEW ENERGY TRANSITION

US solar panel manufacturing
Faces a bleak future
And solar may emit 3X more carbon than natgas
Oops.

Wind power
Has an economic problem
Giant UK wind project is abandoned

Reducing emissions hurts the poor
Not the rich, elite do-gooders.

THE EV DREAM

Tesla is running circles
Around European automakers.
While Ford struggles with EV inventory

More workers die
As more EVs are sold.
Another EV carrier ship burns

Dead EV batteries are gold.
Thanks to government subsidies

THE CHINA SYNDROME

China hits back at Western sanctions
Economic warfare is here.

China warns Japan
Don’t get friendly with NATO.
Japan has big concerns about China and Russia

China’s consumers are pinching pennies
A harbinger of their economic future?

THE WASHING-TONE

New defense bill
Forces battle on social issues

Rubio introduces Providing for Life Act
It proposes major child care policy changes.

Biden wants a fentanyl deal with China
China wants us to be blind to slavery.

MAKING A BETTER YOU

How to become a morning person
If that’s what you’d like to do.

Want to get ahead at work?
Take more vacation

Need to release anxiety?
Listen to the birds

HOW ABOUT A BREAK

The 50 greatest one hit wonders
Which was your favorite?

Timeline for the far future
Some pretty interesting projections.

How birding became cool
All you hear is silence or beauty.

IT’S VACATION TIME

Want to escape oppressive heat?
Here are 20 cool spots.

The best summer beach vacation
May be in Michigan

Yosemite may require reservations
Too many people are visiting there.

SONG OF THE WEEK

“Anyhow”
Tedeschi Trucks Band in the studio.
Lyrics are poetry, you know.

CASTING AROUND THE PODS

What does Vivek Ramaswamy think?
The All-In “besties” interview the presidential candidate.
Or watch on YouTube.

They also interviewed RFK, Jr.…and like him
These are both very important podcasts to listen to.
Or watch on YouTube.

VIDEOS OF THE WEEK

Everything Wrong and Nowhere to Go
Does climate apocalypticism require climate therapy?

The Norman trailer
How did we miss this Richard Gere fun?

The science behind the A-bomb
What Oppenheimer leaves out.

FROM THE HEADHUNTER’S KITCHEN

Cottage cheese makes a comeback
It is pretty yum yum.
How about some cottage cheese alfredo?
16 different ways to use it

The best baguette
May be the one you make at home

Hey tomato, meet goat cheese
In this yammy French tart

THE RANDOMS

Goldman Sachs projects that this year’s fiscal year federal budget deficit will reach $1.7T. That’s “T” as in TRILLION. Its projection for 2024 is $1.65T, and for 2025 it’s $1.8T. How long before $2T annual budget deficits become normal?

Just as a reminder: One trillion dollar bills would stretch nearly from the earth to the sun. It would take a military jet flying at the speed of sound 14 years before it reeled out one trillion dollar bills behind it.

With our astronomical budget deficits in mind, just where are we going to get the money for reparations and universal basic income? Is AI going to make it for us?

Has the enthusiasm over and investment in ChatGPT and AI saved the economy for now? Or has it been Taylor Swift? Or maybe YOLO and FOMO vacationing?

Summer concert tours and vacations will be over soon. Guess we’ll see what our economy looks like then.

FOMO of the AI revolution. FOMO of vacations after the pandemic. FOMO of mega concert events. FOMO on buying stocks when they’re low. Maybe it’s FOMO that has saved the economy for now.

The White House convinced leading technology firms to take an AI safety pledge. You think this pledge will actually compel companies to prioritize safety, human wellbeing, and the protection of jobs over profits? Meta’s pledge may be worth less that it appears.

Only a few weeks ago, chatbots were all the rage. Now they’re old news. Silicon Valley has already turned its sights to “autonomous AI.”

Of course it should be our goal to keep waste to a minimum, but there is no production without waste. That should be a fundamental tenet of economic thinking.

There is no production without waste.

IN CASE YOU MISSED IT

Recession, Postponed
July 21, 2023

A Manufacturing Boom Is Coming
July 14, 2023