Good morning. Here’s your Daily SITREP for Thursday, 07 September 2023.
- READ TIME: 5 Minutes, 19 Seconds
- Inside the Beltway
- (1) Gaetz: If McCarthy Doesn’t Impeach Biden, He’s Out
- (2) Hunter Lawyers Calling Biden to Witness Could Blow Up Campaign
- Domestic INTSUM
- (3) Morgan Stanley: The Voluntary Carbon Offset Market is Crashing
- (4) Biden Cancels Alaska Oil Projects Hindering Supply
- Global SITREP
- (5) G20 Leaders’ Summit to Discuss Global Cryptocurrency Regulation
- (6) China Sets Legal Framework to Establish Int’l Victim Narrative
- (7) Serial Pacific Readiness Drills Provoke All Parties
- (8) Mexican Presidential Primary Results Are In
INSIDE THE BELTWAY
- (1) GAETZ: IF MCCARTHY DOESN’T IMPEACH BIDEN, HE’S OUT: Rep. Matt Gaetz (R-FL) said the House Freedom Caucus needs to “seize the initiative” and force a vote on impeaching President Biden, and if Speaker Kevin McCarthy (R-CA) stands in their way he “may not have the job long.”
- A Gaetz aide added that “all options are on the table.”
- Why It Matters: The push to impeach President Biden over alleged connections to overseas Biden family business deals is likely to become another point of contention on a growing list of demands Freedom Caucus members are imposing on Republican leadership in the shutdown fight. If McCarthy avoids a deal with the Freedom Caucus by getting Democrats to cross the aisle on a Continuing Resolution to avoid a shutdown, he will face a Motion to Vacate and a direct threat to his leadership position. – R.C.
- (2) HUNTER LAWYERS CALLING BIDEN TO WITNESS COULD BLOW UP CAMPAIGN: Special Counsel U.S. Attorney David Weiss said Hunter Biden could face a new trial for federal gun charges by 29 September and tax charges in Washington D.C. or California after a plea bargain and pre-trial diversion deal over gun and tax charges imploded.
- Hunter’s defense counsel said they would call President Biden to the stand if the Department of Justice brought Hunter to trial.
- Why It Matters: Hunter’s trial could coincide with an impeachment inquiry against President Biden in the House. Evidence and media coverage of both could drive away even more voters from Biden heading into an election where the majority of the Democratic base wants an alternative. If President Biden is pressured to step out of the race, even if it’s only to tamp down controversy, it will create an opening for an alternative candidate. VP Harris’ staff have already started a messaging campaign against Gavin Newsom, seeing him as the most likely threat to Harris stepping in to replace Biden in 2024. – R.C.
- (3) MORGAN STANLEY: THE VOLUNTARY CARBON OFFSET MARKET IS CRASHING: The $2 billion market for voluntary carbon credits – tradable securities that represent one ton of CO2 reduced or removed from the atmosphere by a “green” project – is facing a “reckoning,” according to Morgan Stanley analysts.
- The voluntary carbon market lacks oversight, and buyers may find that promises by sellers are not true, which leads to losses, according to Bloomberg.
- Green project scandals have led to carbon credit futures prices collapsing by up to 77% this year.
- Why It Matters: When interest rates were low, and capital was nearly free, the voluntary carbon offset market seemed sustainable. But higher interest rates have exposed this market as just wishful thinking by central planners. Like the corporate push for ESG (Environmental, Social, and Governance), the carbon credits market will likely be dead within a few years. – H.B.
- (4) BIDEN CANCELS ALASKA OIL PROJECTS HINDERING SUPPLY: Secretary of Interior Deb Haaland said the Biden administration will cancel oil and gas leases in the Arctic National Wildlife Refuge in Alaska, adding that an Interior Department review found the lease sale was based on “a number of legal deficiencies.”
- Haaland also announced a new proposed rule that would prohibit any new oil and gas leases on 40% of land on the National Petroleum Reserve-Alaska.
- Why It Matters: The Biden administration is continuing to take steps that will constrict oil and gas supply when, according to some analysts looking at the oil industry, we could be heading towards peak shale oil production. This could mean that energy prices will only ever trend upward. The Biden administration’s approach appears to be a grander scale repeat of Obama-era attempts to force the adoption of green alternatives. – R.C.
- (5) G20 LEADERS’ SUMMIT TO DISCUSS GLOBAL CRYPTOCURRENCY REGULATION: Leaders will discuss a proposal for “global baseline” cryptocurrency standards at this weekend’s Group of 20 (G20) summit in India, according to a Reuters government source.
- “Somewhere there should be a common template, and that template should consist of certain measures that are well defined,” said the International Monetary Fund (IMF) official.
- The European Union (EU) has already approved the world’s first comprehensive set of rules for crypto asset markets, but the G20’s minimum standards would potentially go further.
- Why It Matters: Government officials are clearly concerned about cryptocurrencies gaining more adoption. Earlier this year, the IMF pleaded that countries not give cryptocurrencies legal tender status. While governments cannot seize cryptocurrency stored offline in hardware wallets, they could potentially shut down cryptocurrency exchanges – the on and off-ramps to buy and sell crypto. – H.B.
- (6) CHINA SETS LEGAL FRAMEWORK TO ESTABLISH INT’L VICTIM NARRATIVE: China’s National People’s Congress adjusted their State Immunity laws from an absolute standard to a restrictive standard over the weekend.
- Effective January 1st, 2024, this law will allow Chinese courts to take up cases against foreign states for non-sovereign acts, including “disputes arising out of commercial activity,” according to Chinese media.
- The law is in response to the U.S. “smearing and stigmatizing China” over the origins of COVID-19, but can potentially be applied to any nation.
- Why It Matters: Tit-for-tat persecution of citizens will rapidly degrade diplomacy efforts between the two superpowers. It will also fuel persecution narratives similar to Russia’s justification for occupying the Donbas in Ukraine. Additionally, the public-private partnership being pushed in the U.S. could expose U.S. firms to litigation under the commercial activity clause. – J.V.
- (7) SERIAL PACIFIC READINESS DRILLS PROVOKE ALL PARTIES: Three back-to-back naval exercises are happening in the Asia Pacific region.
- The U.S. and Philippine Navies just concluded a joint transit through the South China Sea.
- The People’s Liberation Army Navy and Royal Thai Navy are carrying out an exercise in the Gulf of Thailand until September 10th. This follows Army and Air Force drills from both nations in previous weeks.
- The USS America Amphibious Readiness Group, Canadian Navy, and South Korean Navy will begin an exercise next week commemorating the Battle of Inchon in the Yellow Sea.
- Last week, the U.S. carried out an Air Force Drill with B-1B bombers over the Yellow Sea.
- Why It Matters: All sides frame their opponents’ actions as provocative and their own actions as deterrents. The U.S.’ actions are a stark deviation from the norm as it has not done a major show of force in the Yellow Sea in ten years. As both sides are escalating their shows of force to act as a deterrent, this greatly increases the chance of accidental engagement or misinterpretation by their opponents. This is particularly dangerous as the People’s Liberation Army might be mobilized across from Taiwan for disaster relief in Fujian. – J.V.
- (8) MEXICAN PRESIDENTIAL PRIMARY RESULTS ARE IN: Next year’s presidential elections will be between Morena (National Regeneration Movement) candidate Claudia Sheinbaum and Frente Amplio (Broad Front) candidate Xóchitl Galvéz.
- Marcelo Ebrard, Morena’s second-place finisher, cast doubt on the election results, saying that Mexican President Andres Manuel Lopez Obrador (AMLO) tipped the scales for his preferred candidate Sheinbaum.
- Sheinbaum and Galvéz will face off in the June 2024 presidential election.
- Why It Matters: Ebrard’s accusation is likely true, but he will be expected to fall in line and wait his turn. Next year’s election will pit two female candidates against each other. Mexico has an interesting law regarding violence against women, so expect both candidates to make hay over political attacks against them. Sheinbaum was beating Galvéz by 10 points in recent polling data and is the favorite to win in June to carry on AMLO’s so-called Fourth Transformation of Mexico. – M.S.
— 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
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