Good morning. Here’s your Early Warning for Wednesday, 22 September 2021. You can receive this daily briefing by signing up at https://forwardobserver.com/daily-sa
TODAY’S BRIEFING:
- New Co-op Cyber attack has Russian origins
- Debt limit fight heads to Senate
- Dollar losing global credibility
- Democrats party-line spending push
SITUATIONAL AWARENESS
CYBER ATTACK: Iowa-based agriculture exchange New Cooperative suffered a ransomware attack perpetrated by the group BlackMatter. Monday’s attack demanded $5.9 million in ransom, but the company hasn’t said if they will pay or continue working with federal authorities for a solution. The BlackMatter group is a suspected offshoot of the now-defunct DarkSide ransomware gang, sharing coding techniques for evasion on compromised networks. Cybersecurity firm Minerva believes BlackMatter and Lockbit 2.0 are working together, but BlackMatter’s ransomware will also encrypt Russian computers. (Analyst Comment: This marks the first attack on critical infrastructure by a Russian-speaking criminal network following President Biden’s warning to Putin. BlackMatter denies their attack rises to that level, despite agricultural disruptions being the cause of panic-buying and exacerbated supply chain disruptions. – D.M.)
DEBT: If the Senate does not pass a budget bill by the end of the month, the government will shut down. In a Moody’s report, analysis shows that failure to raise the debt ceiling could result in 6 million jobs being lost and $15 trillion in household wealth being destroyed. The potential crisis, stemming from default on U.S. debt, would produce an economy similar to the Great Recession. With 6 million jobs lost, unemployment would rise by 3.8% to a total of 9%, and GDP would fall by almost 4%. Compounding the urgent nature of this matter is the already suppressed economy Americans have experienced due to COVID. The government would cut federal aid significantly, and stocks would tumble, making up most of the expected $15 trillion in losses. (AC: The government’s fiscal year begins 1 October and ends 30 September. Budget plans consistently face political battles, and Senate Minority Leader Mitch McConnell asserts that members of the GOP will not compromise with Democrats to suspend the debt limit. -T.W.)
DOLLAR: Jeffrey Gundlach is convinced that the U.S. dollar will lose reserve currency status due to current economic policies currently in place. In an interview with Yahoo Finance, Gundlach says, “My number one conviction looking forward a number of years — I’m not talking about the next few months at all, I’m talking about several years — is that the dollar is going to go down.” (AC: Losing world reserve currency (WRC) status would mean that international transactions are no longer conducted in dollars, but whatever currency replaced it. WRC status is beneficial to United States businesses, as they don’t have to convert dollars to another currency to trade. Instead, other countries face the costs associated with exchanges. The share of Global Official Reserves held in US dollars has declined from 70% in 2000 to nearly 58% for 2020. If this pace continues, we could see the dollar cross below a 50% threshold by the end of 2035. China would likely try to replace the dollar as the WRC with the Yuan, given China has the second-largest economy on the planet. -T.W.)
CONGRESS: Last night, the House voted 220-211 to continue funding the government until 3 December as well as provide $35 billion in aid to “disaster victims and Afghan refugees.” The passage included language which would suspend the statutory debt limit through mid-December 2022, beyond the midterm elections. Warning of continued uncertainty coming out of Washington, Moody’s warned, “the resulting chaos in global financial markets will be difficult to bear.” The bill is likely to face substantial changes in the Senate, meaning the measure will be kicked back to the House for reconciliation. (AC: Far Left priorities, like cutting off Iron Dome funding, are unlikely to receive Senate support as moderates like Sen. Kelly (D-AZ) have broad public support for Defense programs developed in his state. The government is projected to run out of money by the end of October, reducing legislative progress on both sides in favor of partisan bickering for at least another three weeks. – D.M.)
HAZARDS WARNING
HURRICANE SEASON: Tropical Depressions Peter and Rose appear to be slowing in momentum and are likely to turn north-northeast over the next 48 hours, avoiding a U.S. landfall. The mid-Atlantic storm system is expected to organize into a Tropical Depression by the weekend, but its ultimate track remains uncertain.
In today’s Early Warning, Dustin goes over Europe’s natural gas dilemma. Upgrade your Situational Awareness to Early Warning here: https://forwardobserver.com/subscribe
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