While the US is in shambles, President Biden wants to size up a trans Eurasia project to “compete” with China’s Belt and Road Initiative.
March 29, 2021
By: Bobby Casey, Managing Director GWP
It feels like normalcy is in a bit of a hostage situation. People want their lives back. They want to make plans to go out or to travel, but they can’t. Either it’s not open, or they no longer have the means to afford it.
The goal posts are more nomadic than I am! There’s always another wave of sickness waiting in the wingtips or a new strain of something.
The distancing recommendations went from 6 feet to 3 feet; while the mask recommendations went from one to two. This is all coming in nearly a year after the first “stay home” orders rolled out in 2020.
My cynical spidey senses tell me the politicians really don’t want to let all this power and control go.
People need to work and make a living. They need money, food, housing, healthcare, and they aren’t getting it because they simply can’t. While small degrees of some activities are returning, hospitality is struggling in large part because tourist attractions, entertainment, and recreation are still on hold.
The cruise line industry is at a halt, with no recourse for them whatsoever. Unlike restaurants or retailers who limit occupancy, cruise lines were not trusted with the same autonomy. So their entertainers, waitstaff, crews are all without jobs.
If we can’t have live shows, or gatherings at full capacity in auditoriums, there’s limits on admission to see exhibits, and wait times for restaurants are doubled because some seating is blocked off, then you have a large contingent of people not working. The graph below shows the job loss by industry:
Of course people can go out to eat, fly on planes, and stay in hotels. But if we removed the pandemic from the equation, they’d be doing that in much greater number, and more people would be working.
It is looking all but hopeless for those deemed “non-essential”, as in some cases these industries are the life’s blood for many cities and countries.
Enter the “Vaccination Passport”. After over a year of plummeting revenues and profits, travel, hospitality, and entertainment industry leaders are looking to the Vaccination Passport as a golden ticket out of lock down.
Singapore Airlines and Qatar Airlines have both started trials of passport apps, while Carnival Cruiselines has said no one can board its ships without proof of vaccination. American Airlines has started experimenting with the VeriFly app (as has Hyatt Hotels) and United has developed its own app that allows passengers to upload their vaccination records.
In the EU, on March 17, a “Digital Green Certificate” was given the green light. It could take up to 3 months before it is implemented and can be used.
Biden supports it, and is looking to develop one for the United States.
Let’s set aside the part where other countries and private businesses would be entitled to view your medical information, and just look at the practicality. Even if everyone wanted the vaccine, they can’t get it. It’s being rolled out in different phases in each country, and in some places isn’t even available.
If industries most dependent upon a return to open markets is this vaccine passport, then we are back to square one which is they are still without recourse.
The recovery time for each destructive delay in reopening markets back to full capacity is disproportionately longer than the time it took to impose the damage in the first place.
All this to say, the US is heading toward another stagflation era. No one can afford anything and inflation continues to jack up prices.
In fact, 77% of Americans are concerned about inflation (as they should be), and those with the least means are the most adversely affected by it. If you’re living off unemployment, the higher gas and food prices are hitting particularly hard. Sadly, the Keynesians in office and over at the Federal Reserve continue to insist they can just… POOF… inflate the debt away.
Given that, you’d think with all this spending, if Biden wasn’t going to do anything to reopen the economy, at the very least he might consider doing something about the kids-in-cages? Six hundred more per day being added to their number, and two-thirds of the way through his first hundred days, no sign of correction there either.
What is the old boy up to, you ask? He wants to embark on a project that rivals what China is doing with the Belt and Road project across Asia! Context is everything, and in this case it explains very clearly why this is a preposterous idea:
1. The US is not in a financial position to even look at something like that given the conditions laid out earlier in this blog.
2. Despite how broke the US is, Congress is nonetheless about to release details for their multi-trillion dollar infrastructure reboot and upgrade plan for the US in the next week or so.
3. President Xi Jinping has been working on and negotiating for the B&R project going on eight years. To add some color on what that entails:
China’s BRI has involved over 100 countries signing agreements with China on huge undertakings that’s seen China-constructed railways, highways, ports and new energy plants dot Eurasia. It’s included some 2,600 projects at a cost of an estimated $3.7 trillion.
4. China’s plan to build a Eurasian trade super-highway, included a recent deal with Iran. While the US struggles to make any inroads on its dealings with the Islamic Republic, China managed to seal a $400 billion over 25 years trade deal: Iranian infrastructure in exchange for oil.
5. China and the US are not only in a trade war, but a sanction war. Tensions are running high between the US and China, and Biden hasn’t done much to assuage those conditions. If he’s going to turn his attention toward the east, then mending these tears would make more sense as a starting point.
The United States has squandered its good will and wealth not only internationally but domestically. There is no “competing with China” on a Belt and Road project in Asia. Evidently Biden sees this as an international pissing match:
“China has an overall goal … to become the leading country in the world, the wealthiest country in the world, and the most powerful country in the world,” he told reporters at the White House. “That’s not going to happen on my watch because the United States is going to continue to grow.”
What is the US in store for? More international commitments while the US is left living hand to mouth? The US isn’t the only one spending and printing indiscriminately. Canada is even caught up in this whirlpool of inflation and spending.
The government isn’t coming to help anyone but it’s cronies. Time to figure out a plan to work around the mess.
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