Good morning. Here’s your Daily Situational Awareness for Tuesday, 01 August 2023.
TODAY’S BRIEFING:
- READ TIME: 6 Minutes, 2 Seconds
- Inside the Beltway
- (1) Americans’ Confidence in Military at Two-Decade Low
- (2) Democrats Urge DOJ to Sue Fossil Fuel Companies
- (3) White House Panel Recommends FISA Section 702 Reforms
- Domestic INTSUM
- (4) Yellow Ceases Operations as Bankruptcy Imminent
- (5) Another Commercial Real Estate Siren
- (6) Americans’ Finances Saved by Low, Fixed-Rate Debt
- Mexico SITREP
- (7) AMLO Accused of “Indoctrination” With New Textbooks
- Russia-NATO SITREP
- (8) Russia and Ukraine Trade Drone Strikes on Civilian Targets
- China & Indo-Pacific SITREP
- (9) China’s Former Foreign Minister Gone and Forgotten
- (10) China’s Squeeze on Taiwan
INSIDE THE BELTWAY
- (1) AMERICANS’ CONFIDENCE IN MILITARY AT TWO-DECADE LOW: According to a new Gallup poll, 60% of Americans expressed “a great deal” or “quite a lot” of confidence in the military, down from 64% in 2022.
- Republican confidence in the U.S. military saw the largest drop from 91% to 68% in just the last three years.
- Why It Matters: Republican sentiment is turning against the U.S. military after the COVID-19 vaccine mandate, seen as a political purge, and the “culture war” fights the institution is at the center of, including abortion. A loss of public faith and trust in institutions erodes the legitimacy of government and increases the likelihood of domestic unrest. – R.C.
- (2) DEMOCRATS URGE DOJ TO SUE FOSSIL FUEL COMPANIES: In a letter to Attorney General Merrick Garland, Senators Bernie Sanders (I-VT), Jeff Merkley (D-OR), Elizabeth Warren (D-MA), and Ed Markey (D-MA) urged the Department of Justice (DOJ) to bring lawsuits against the fossil fuel industry for a “coordinated campaign” to mislead consumers and discredit climate science.
- The Senators said ExxonMobil, Shell, and other companies clearly violated racketeering laws, truth in advertising laws, and consumer protection laws.
- Why It Matters: This is a response to fossil fuel companies turning away from green tech and projects due to a lack of profit incentives. The letter compares the fossil fuel industry to the tobacco industry, and the strategy progressive lawmakers and activists will use against oil and coal is likely to look like the “lawfare” used against tobacco companies. – R.C.
- (3) WHITE HOUSE PANEL RECOMMENDS FISA SECTION 702 REFORMS: The Presidential Intelligence Advisory Board said the renewal of the Foreign Intelligence Surveillance Act (FISA) Section 702 is in doubt if the surveillance authority is renewed without reforms, including limiting the scope of FBI searches of the Section 702 database.
- The board said the FBI searches were repeatedly noncompliant with Section 702 requirements, and Congress should remove the FBI’s ability to search the database for crimes unrelated to national security.
- Why It Matters: There is bipartisan sentiment for reform of FISA Section 702, which is up for renewal at the end of this year. Renewal is all but guaranteed. However, some changes to the law to limit domestic law enforcement’s use of information collected by the surveillance authority are likely. – R.C.
DOMESTIC INTSUM
- (4) YELLOW CEASES OPERATIONS AS BANKRUPTCY IMMINENT: The less-than-truckload (LTL) trucking giant Yellow ceased operations Sunday in anticipation of filing bankruptcy as soon as this week.
- Teamsters President Sean O’Brien said the news was unfortunate but not surprising after the union was served legal notice of Yellow’s closing.
- Why It Matters: Fears of a strike and leaked details about possible bankruptcy pushed Yellow customers to leave, sinking the company. Yellow had 10% of the LTL market share as a budget-priced shipping alternative, and its closure will put upward pressure on prices. – R.C.
- (5) ANOTHER COMMERCIAL REAL ESTATE SIREN: In some parts of America, older, low-end malls are vacant or nearly vacant – and all are plummeting in value.
- Since 2016, when mall valuations peaked, these older, low-end malls have lost up to 70% of their value.
- About 20% of malls financed through commercial mortgage-backed securities are already underwater.
- More than $14 billion of loans backed by these properties will be due in the next 12 months, and they’ll have to refinance this debt at higher rates.
- Why It Matters: The traditional mall isn’t coming back. Mall lenders and investors will suffer losses, and this could cause another round of bank failures and a wider financial crisis. This could also cause second- and third-order effects, like declining home values and economic blight in these areas. – H.B.
- (6) AMERICANS’ FINANCES SAVED BY LOW, FIXED-RATE DEBT: Despite the Federal Reserve’s 11 interest rate hikes, Americans haven’t been hit that hard by rising rates.
- Only 11.1% of household debt is adjustable. In the year 2000, 25% of household debt was adjustable, and in 1997, it was 27%.
- 70% of U.S. mortgages carry a fixed interest rate of 4% or less.
- Why It Matters: Continued Fed interest rate hikes will affect rates on variable home equity loans, personal lines of credit, and credit cards, which could lead to higher delinquency rates. Mortgage rates at 7% will discourage Americans with a low, fixed-rate mortgage from moving, limiting the house supply. – H.B.
GEOSTRATEGIC INTSUM
Mexico SITREP
- (7) AMLO ACCUSED OF “INDOCTRINATION” WITH NEW TEXTBOOKS: Mexico’s schoolchildren will be learning from new textbooks next year, and critics are accusing President Andres Manuel Lopez Obrador (AMLO) of left-wing “indoctrination” efforts.
- The National Action Party’s Ricardo Anaya reported that mathematics has been removed as a core subject while the new textbooks push left-wing political ideology.
- Why It Matters: AMLO’s so-called “Fourth Transformation” of Mexico is politically revolutionary and intended to solidify socialist political and social power. AMLO desires a one-party state under Morena, and political indoctrination is a part of that goal. Beyond that, critics say that removing mathematics will put Mexico’s youth behind the curve of technological advancement and the skills needed to be productive citizens, which does not bode well for Mexico’s future as a U.S. neighbor. – M.S.
Russia-NATO SITREP
- (8) RUSSIA AND UKRAINE TRADE DRONE STRIKES ON CIVILIAN TARGETS: Russian drone strikes hit college dormitories Monday while Ukrainian drones hit Moscow high-rises.
- Officials in Kharkiv said Russian drones hit a college dormitory, injuring one person during a nighttime attack Monday.
- Russian officials said Ukrainian drones hit the same high-rise office building that Ukraine hit last week.
- Why It Matters: The war is expanding beyond the battlefield in Ukraine and beyond its combatants to civilian targets on both sides. Ukraine’s counteroffensive is slow-going and will likely not last long enough to make significant gains. Russia is positioning itself on three fronts; north above Kiev; northeast along the Kharkiv-Sumy line; and in defensive belts in Donetsk and Zaporizhzhya to the south. Ukraine will have to honor all three threat axes and will likely resort to further attacks on Moscow to disrupt and distract Kremlin objectives. – M.M.
China & Indo-Pacific SITREP
- (9) CHINA’S FORMER FOREIGN MINISTER GONE AND FORGOTTEN: China’s former foreign minister Qin Gang disappeared last month and was replaced by the previous foreign minister Wang Yi.
- Qin Gang was the former Chinese ambassador to the U.S. in Washington and a close ally of Chinese President Xi Jinping.
- Three weeks ago, one week after Qin’s disappearance, CIA Director William Burns made unusual public comments that the CIA had been successfully rebuilding its high-level human intelligence sources in China following a catastrophic compromise that saw the majority killed or imprisoned.
- Why It Matters: Qin has likely been caught up in internal politics and possibly smeared by a rival as a U.S. spy, given his former position in Washington. Burn’s comments indicate that Qin was likely not a high-level source for the CIA. It would be unusual for the Director of the CIA to make such a statement if a source like Qin was known to be detained by Chinese security forces. Qin’s reassignment preceded this week’s unexpected change in the commander of China’s strategic rocket forces. A curious coincidence in a normally stolid environment – one that could indicate significant changes in China’s geopolitical posture. – M.M.
- (10) CHINA’S SQUEEZE ON TAIWAN: China has increased ship incursions to Taiwanese waters but not aircraft in the past 90 days.
- On average, five ships are present each day, an increase from four for the past 12 months, but the most recent 30-day period saw another increase to six ships per day.
- Aircraft incursions remain between 11 and 14 per day on average.
- Why It Matters: August marks the year’s second amphibious window’s opening. We may see a further increased presence as well as an amphibious exercise. – J.V.
Low Intensity Conflict SITREP (Next 48 hours)
- Crown Heights, NY – Far-left activist group Crown Heights C.A.R.E. Collective is organizing a counter-demonstration against the 79th NYPD Precinct at Restoration Plaza. Organizers said the protest is against police surveillance and terrorization of brown and black people. The demonstration is scheduled for Tuesday, 01 August at 1500 EDT at Restoration Plaza at Crown Heights and Bed Stuy.
- San Diego, CA – Far-left Democratic Socialists of America San Diego is planning a protest at a City Council meeting to approve street light surveillance. Protestors are encouraged to pack the city council and speak out against the initiative. The protest is scheduled for Tuesday, 01 August at 1400 PDT at 202 C Street, San Diego, CA.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge