From the very beginning of the Ukraine conflict last February, Washington's reaction has been out of character. Strange to say the least.
Normally Washington sees itself as a peacemaker. The go-to country when it comes to settling disputes. In Ukraine, Washington would ordinarily become the ideal disinterested third party. And along with perhaps the United Nations would be the perfect forum to begin negotiations to settle this dispute.
President Joe Biden especially has a long history with the Ukrainian leaders and could reach out and bring both sides to the negotiation table. It was the perfect opportunity for the United States to assert itself as the global country standing for peace and tranquility.
And this would have been perfectly consistent with our country's economic stance with this part of the world. As we all know now, we are, or at least were, significant trading partners with both Ukraine and with Russia. Russia supplying us with oil and gas. Ukraine with fertilizers, and grains.
Since the fall of the Soviet Union over 30 years ago, the US relationship with both Russia and Ukraine seemed to be growing stronger. These commercial interests promoted international cooperation.
But instead of putting the pieces of the international trade and cooperation back together. It has been Washington's policy to essentially become a belligerent in the war.
Not to try to settle the conflict, but to enter on the side of Ukraine. The latest $40 billion dollar arms package is a clear sign that America is fighting for Ukraine. Perhaps just short of putting troops on the ground. But providing most other forms of logistic and material support.
Why did peace-loving America, suddenly become a belligerent in the war in Ukraine?
The principal answer, I believe, was the opportunity to advance the agenda of the Green New Deal. The Green New Deal is the American version of what is really a worldwide movement toward a more “environmentally friendly” economy.
Proposed by Representative Alexandra Ocasio Cortez and Senator Ed Markey, two of the most "progressive" members of Congress, this radical proposal would dramatically change our nation's sources of energy. Gone would be traditional “carbon-based” energy sources, such as coal, oil, and gas. Instead, we would use “renewable” sources of energy, wind, solar, and biomass.
In short, we would replace reliable and inexpensive conventional energy. Energy sources like wind and solar, that only work when the wind is blowing or the sun shining. And, as we are discovering currently can be very expensive as a direct replacement for conventional.
Of course, the rational approach to these entire energy questions would be a gradual transition to more environmentally friendly. But that was not the approach that the Green New Deal proposed. They wanted a complete transition. And they wanted it now.
Fortunately, the Senate voted down the Green New Deal.
But as luck would have it, another opportunity arose. This time in the form of the Ukraine Conflict.
Here were two of America's principal suppliers of those carbon-based old energy products. Russia, which shipped to us up to 10% of our oil and gas. And Ukraine provided a substantial amount of petroleum-based fertilizer to our farmers.
To progressives, like Cortex and Markey, and President Biden, here was an opportunity to instantly cut out a portion of those petroleum products. In one fell swoop, the Progressives could achieve much of what the Green New Deal had hoped for.
And whether by luck or planning, that's just what Biden has done. Boycott Russian oil, curtail Ukrainian supplies, and presto, you've achieved the Green New Deal.
Just like that.
What you see today is just the early stages of the Green New Deal.
Want to drive that old gas-powered car. OK, says the Green New Dealers, but you'll have to pay for it. At least $5 per gallon by the last account.
Want to take a flight? Wait until the “fuel surcharges” begin to hit shortly.
I know it's summer. But if you look at the futures market you'll see that heating oil futures are up even more than gasoline.
And don't think that electricity will be immune from all of this. Much of our electric power comes from those old carbon-based power plants.
And the list goes on and on.
For the average American, this most radical move away from carbon-based fuels represents the largest impact on our way of life in memory.
For the Progressives like Cortex, Markey, and Biden, what they couldn't achieve in Congress, they were able to gain by their ability to leverage the Ukraine Conflict.
It's all part of the “Green New Deal.”
It's a “Red Monday” around the world this morning, as markets everywhere are lower. Nearly everywhere I look equities are down more than a percent everywhere. That's true in Asia, where the Nikkei has declined by 2% Over in Europe where every major exchange is down more than a percent.
In fact, looking at the Globe there are only two spots of green. Russia and China. A conspicuous indication of the split in the old world order. As the two leaders of the new break-away countries, at least for this morning, are trading higher.
Turning to Japan, an overnight survey of major industrial companies in Japan, points to much lower levels ahead, as the cost of imported oil principally looks to be a major weight on that country.
Great Britain is reporting that its second Quarter GDP rose at a 3.4% rate. And even though that's only half the level of the quarter before. We may all look back at a better than 3% rise in GDP to be a pretty good number given this Macro Economic Background.
Here in the US, we will get the latest survey of the consumer's expectations for inflation ahead. Expected to remain roughly the same as last month, at a slightly higher than 6% level. Interesting that the US consumer continues to underestimate overall inflation.
In earnings reports today, a couple of west coast technology companies will report this afternoon. Larry Ellison's Oracle System will report after the close. Followed by customer engagement software company Braze Incorporated, Stock Symbol BRZE, also reporting later today.
Have a great day!