The End of the West?

Welcome to This Week’s Leyendecker View

Wrong decisions are a part of life. Being able to make them work anyway is one of the abilities of those who are successful.
–Warren Buffett

A BIG THINK

The End of the West?

Two weeks ago, in my essay “Who’s Killing the Golden Goose,” I wrote that the 1 billion citizens in Western economies risked alienating the other 7 billion citizens of the world. This week, the Biden administration proposed policy that will all but ensure this will happen.

On Tuesday, White House climate envoy John Podesta delivered bombshell remarks on climate and trade policy at a conference organized by Columbia University’s Center on Global Energy Policy.

Podesta said: “Right now, our existing trade policies and the international rules that govern them don’t pay enough attention to the emissions embodied in tradable goods…Instead, we need a smart, 21st century-approach to climate and trade policy that launches a ‘race to the top’ for climate action.”

What’s Podesta saying in practical terms? The Biden administration wants to force global trade rules to change in order to wall off China and any other country that does not abide by Western climate policy standards. In essence, if you don’t adapt to Western climate regulations, then you only get to sell to Western consumers after massive tariffs that make imported goods equal in price to Western goods.

Western companies cannot make EVs, solar panels, batteries or most anything else as cheap as China can. Western companies will not be able to make EVs or other products as cheap as India does. Other countries that are only recently emerging economically will naturally fail to meet Western climate policy standards.

So here we go, with the Biden administration seeking to mirror the EU’s recent Carbon Border Adjustment Mechanism. That “mechanism” is meant to add a tariff (a tax) to imported products that have carbon footprints higher than EU’s preferred limits.

Ladies and gentlemen, this is called protectionism. The goal is to protect Western companies and Western labor that cannot make products as cheap as the emerging economies. In a way, this is a logical policy proposal from Western governments, but it would come with serious consequences.

Do you think the 7 billion non-Western consumers are going to follow the West’s diktats? Or will  they buy cheaper goods from China, India and/or other emerging economies? The answer is simple. Those 7 billion who do not enjoy Western wages subsidized by endless fiscal and monetary stimulus are going to purchase products they can afford. Those products will not likely come from the United States or Europe.

So now we’re possibly going to wall off Western goods producers and all our support industries from the rest of the world. How do you think that’s going to work out? Now all that’s left is for China and/or the BRICS countries to create their own trading currency.

THE ECONOMIC VIEW

Retail sales blow by expectations
Bond and currency markets are not happy
Thrift stores grow faster than traditional retail
Are millionaires holding up the economy?

Fed Chair walks back rate cuts
The economy is too strong.
Are higher rates behind the growing economy?

IMF is bullish on the US
Double the growth of other G7 peers.

INFLATION, DEFLATION, OR BOTH?

What went wrong with US inflation?
Was signaling a rate cut a mistake?

Rents are still rising
And could rise even more
Oil price surge threatens US economy

After inflation is conquered
Power bills will keep rising

THE LABOR VIEW

Only 12% of business transformations succeed
Because companies don’t manage talent well.

A large percentage of Americans
Need a “side hustle” to make ends meet

About 82% of workers at risk of burnout
Really, 82%?!?

MEANWHILE IN EUROPE

Natural gas prices rising in Europe
Will this prove inflationary?
Europe is still addicted to Russian LNG

Europe’s economy trails the US and China
Where did their policy go wrong?
EU car sales are collapsing
Disappointing EV sales jeopardize climate goals

European court says good climate is a human right
When will being rich be a human right?

THE GLOBAL GAME

IMF doesn’t like US budget deficits
They pose significant risks to global economy.

Iran’s oil exports at 6-year high
Are sanctions coming?

Global manufacturing rebounds
Is growth coming from trade realignment?
Global interest rates could be falling soon

THE UKRAINE FIRE

Ukraine needs more troops.
They may allow convicts to be drafted

Russian troops are advancing
Ukraine’s eastern cities in harm’s way.
Slim chances for Ukraine to push out Russia

Russia will lose in Ukraine
Suggests a Chinese expert on Russia.

THE GAZA FIRE

Iran sends over 300 missiles and drones
Thanks to allies’ help, they fizzle
Then Israel bombs Iranian’s nuclear regions
Iran throws out the nuclear threat
What are Iran’s military capabilities?

“We’re crazier than you realize.”
Iran talks big after impotent attack
New Iranian sanctions are coming

Turkey restricts exports to Israel
Demanding a cease-fire.

THE SLIPPERY SLOPE

China could threaten critical US infrastructure
So suggests our NSA chief.
China orders Apple to remove messaging apps
Cheap Chinese steel fuels global backlash

US reimposes sanctions on Venezuela
Why were they relaxed to begin with?

The US fentanyl crisis is exploding.
And China subsidizes fentanyl manufacturers

FINANCE

Pensions moving from equities to bonds
Stock gamblers, watch out below!

Princeton endowment chief dour on PE
“Worst ever” private equity climate.
Blackstone spins similar story
PE exit downturn continues
PE now has to play the long game

Andreessen Horowitz raises $7.2B for AI
Can AI investments make up for PE’s fall?

The private credit boom is wobbling
PIKs are being used to mend and extend.
Moody’s issues private credit warning
Money is leaving junk bond funds

REAL ESTATE

Housing starts are dismal
So are overall home sales
No one wants an expensive mortgage.
Mortgage rates back up above 7%

Is there rent collusion in apartments?
The Justice Department thinks so

There was a warehouse development boom
Now rents are falling
Major market players see a slow down

TECHNOLOGY

The cloud under the sea
Those sea-floor internet cables are essential.

Boston Dynamics has a new robot
Will Atlas change the world?

iPhone sales decline 10%
Is Apple a tech bellwether?

THE CHAT ON AI

Job losses from AI are greater than you think
And the technology is still in infancy.

Generative AI is a marvel.
But was it built on data theft?

An AI music arms race has started
Real musicians will be the losers.
And they are not happy!

OUR GOOD FRIEND, FAILURE

Legalizing weed was a mistake
Oopsie doopsie!
Legalized betting may prove the same

Teachers are disgusted.
They no longer recommend becoming a teacher

Are colleges tiring of student protestors?
Get back to schoolwork, or go home.

THE NEXT NORMAL

Why are so many Americans unhappy?
Maybe it’s a left-wing problem

Fear it, love it or loathe it.
TikTok has changed America

Homicides plummet in US cities
Could legal weed be the reason?

THE WAR ON CARBON

Phasing out fossil fuels needs a “reality check”
Warns JPMorgan.

Coal demand keeps growing
India’s coal use booms
Why aren’t they listening to Greta?

Biden hits drillers with higher royalties
How about hitting tech with bigger taxes?

THE ENERGY TRANSITION

Solar tops new US power generation
For six months in a row.

US power demand to set records in ‘24 and ‘25
Projects needing US grid connection soar

A good update on nuclear
It will be here sooner or later.

THE EV DREAM

Tesla to cut 10% of workforce
Hybrids extend lead over EVs
The market knows better than bureaucrats.
The EV revolution runs out of steam

The EV battery of your dreams is coming
Is it made out of and can it run on air?

There’s an oversupply of EV batteries
And it’s about to get bigger.

THE CHINA SYNDROME

China’s economic growth hits 5.3%
Can manufacturing save their economy?
Making sense of their magical growth

China’s Gen Z turns frugal
And prefers to buy domestic products.

China’s capital markets at multi-decade low
International investors rush for the exits.

THE WASHING-TONE

Biden promised action on the border crisis
We’re still waiting…

Biden seeks to wipe out $7.4B in student debt
Votes, baby, those are votes.

US Steel shareholders vote “yes” for takeover
Biden says it’s not gonna happen
And proposes steep tariffs on Chinese steel

THE ELECTION DISTRACTION

Fireworks are coming to Democrat convention
Not the fun kind.

Biden calls China “xenophobic”
Wait, that wasn’t Trump talking?

Biden wants lower oil prices
Lower gas prices equals more votes?

MAKING A BETTER YOU

You can live 15% longer?
Become an optimist
Why we search for silver linings

Want to get better at problem solving?
Practice mindful meditation

A guide to microdosing
Is it the solution to TMI?

HOW ABOUT A BREAK

Billionaires are geniuses, right?
Nope, mostly just lucky

The Webb telescope makes curious discovery
There’s alcohol out in space.

Cicadas are nature’s weirdos
They pee harder than humans, and more!

PLANNING VACATION?

The most beautiful places in Japan
Japan, the next hot destination?

Breathtaking new frescos
Have been found in Pompeii

6 new sleeper train rides in 2024
That sounds like fun!

SONG OF THE WEEK

“Primrose Hill”
A new song from James McCartney + Sean Ono Lennon.
As in the sons of Lennon and McCartney

A bonus golden oldie…

“Ramblin’ Man”
RIP, Dickey Betts
Lyrics can be poetry, ya know.

CASTING AROUND THE PODS

“When Jamie Dimon Speaks, the World Listens”
Emily Chang of The Circuit interviews the former boy wonder.

VIDEOS OF THE WEEK

Emperor penguin chicks jump off 50-foot cliff
OMG, what are they doing?!?!

Jeanne du Barry trailer.
Johnny Depp does a French film.

A day in a candle factory
Better than a slaughterhouse, eh?

FROM THE HEADHUNTER’S KITCHEN

56 cheeses, 56 grilled cheese
Don’t watch when hungry

Stuffed poblano peppers
Oh me, oh my!

The restaurant menu trends
That define dining today

THE RANDOMS

Finding common ground is the trick to building a relationship. It’s like building a house. First you set the foundation. Then you build on top of it.

The number of millionaires is exploding. Is this an economic red flag, as some claim? Or is it a consequence of inflating financial asset values, thanks to domestic and global monetary stimulus? Or is that also a red flag?

It’s become a buyer’s market in luxury homes. Break out your spare $10MM.

Gallup reports that more than 50% of Americans don’t feel they are sleeping well. Do you think it could be because of constant end-of-the-world narratives? Be it from climate change, robots and AI replacing humans, or the looming end of democracy as we know it? Or could it be the dystopias or  extraordinary violence portrayed in TV and movies? Or maybe it’s the mental health crisis? Or the fact that many people have traded in-person connections for online interactions? Pick your poison.

Iran sent 300 missiles and drones toward Israel. The great majority were destroyed before hitting ground. Does this show Iran’s military weakness? Or did Iran signal its intentions early enough that they could save face and not really start a war?

If your homeowner insurance rates have risen considerably, you can thank climate change hysteria as well as inflation in building materials.

Why is it that diplomacy seems to enable bad actors to keep acting badly? Is this the lesson Israel has learned? Such that they now see their only option as the complete elimination of Hamas?

Climate activists have been trying to bring down companies in hydrocarbon industries for their role in climate change. Seeing that climate activists—and all of us— have been happy to use hydrocarbon energy to improve our own economic circumstances, should each of us be financially liable, as well?

Ever wonder about the old practice of tarring and feathering? Man oh man, can humans be cruel.

IN CASE YOU MISSED IT

The End of an Era
April 12, 2024

What’s Killing the Golden Goose?
April 5, 2024